ADR Case Updates
Buyers Real Estate Broker May Compel Arbitration Of Buyers Claim Against Buyers But Not Against Sellers Broker, 01/05/08
In case you have not seen them, the California Courts of Appeal have rendered six ADR decisions (all dealing with arbitration) since my last update of October 31, 2007. They may be viewed at: http://www.courtinfo.ca.gov/cgi-bin/opinions.cgi.
Perhaps the most notable is Nguyen v. Tran, ___ Cal. App. 4th___, 2007 WL 4284896 (Dec. 7, 2007), a real estate broker case. The residential purchase agreement that was signed by buyers and seller, but not either broker, included a clause that required buyers and sellers to mediate and arbitrate any disputes against each other and either or both brokers provided either or both brokers shall have agreed to such mediation or arbitration prior to, or within a reasonable time after, the dispute or claim is presented to brokers.
Several years after escrow closed, buyers sued sellers, cooperating brokers and listing brokers, alleging a failure to disclose that the guest house on the property was constructed without the necessary building permits. Cooperating brokers filed a petition to compel arbitration. Buyers and listing brokers opposed the petition. The trial court denied the petition.
Reversed in part. The general rule is that only parties to an arbitration agreement may be compelled to arbitrate. However, a limited number of exceptions exist. One such exception is when a nonsignatory and one of the parties to the agreement have a preexisting agency relationship that makes it equitable to impose the duty to arbitrate on either of them. Therefore, cooperating brokers, as buyers agents, could compel arbitration against the buyers even if cooperating brokers did not sign the agreement. The order denying the petition to arbitrate is thus reversed as to the buyers.
As to the listing brokers, there is no authority for the proposition that a nonsignatory to the agreement may compel arbitration against another nonsignatory. Absent an agreement between the listing brokers and any other party seeking to compel, they could not be forced to arbitrate, and the trial courts order denying the petition as to the listing brokers is affirmed.
In Mitri v. Arnel Management Company, ___ Cal. App. 4th___, 2007 WL 4328443 (Dec. 12, 2007), an employment sexual discrimination case, the court refused to compel arbitration. Although the company handbook stated that all employees must sign an arbitration agreement, the employer cannot compel arbitration without producing the actual arbitration agreement signed by plaintiff employees.
In Warfield v. Summerville Senior Living, Inc., ___ Cal. App. 4th___, 2007 WL 4472259 (Dec. 24, 2007), a residential care facility cannot compel arbitration of elder abuse claims by dementia patient based upon husbands signature without evidence of agency relationship marital relationship alone is insufficient.
In Ortega v. Contra Costa Community College District (2007) 156 Cal. App. 4th 1073, an employment FEHA case, employees pursuit of grievance procedure under a collective bargaining agreement does not bar a claim under the Fair Employment and Housing Act.
In Titolo v. Cano (2007) 157 Cal. App. 4th 310, a medical malpractice case, the scope of an arbitration agreement between patient and physician covering medical services encompasses allegedly improper or unauthorized communication by doctor and patients disability insurer, so the physician may compel arbitration of the patients claim.
In Segal v. Silberstein, (2007) 156 Cal. App. 4th 627, a dispute involving real estate acquisition and development joint venture, operating agreements of parties business entities require arbitration, even though those agreements purport to make arbitration optional in other states.
These cases demonstrate the public policy in favor of arbitration, but also the limits of that policy. Absent the limited exception of a preexisting agency relationship, they require a valid arbitration agreement signed by a party, or her authorized representative, as an essential prerequisite before the court will compel arbitration against that party.
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