Case Number: EC068262 Hearing Date: June 01, 2018 Dept: A

Samanukorn v JPCL Development LLC

MOTION TO COMPEL ARBITRATION

Calendar: 15

Case No: EC068262

Hearing Date: 6/1/18

Action Filed: 3/14/18

Trial: Not set (CMC 8/14/18)

MP: Defendants JPCL Development LLC, Ping Xiao Lin, and Shiann Chen

RP: Plaintiffs Yuwanda Samanukorn and Kan Xie

FACTUAL ALLEGATIONS:

This action involves a dispute regarding real property located at 8946 Emerson Place, Rosemead, CA 91770. Plaintiffs Yuwanda Samanukorn and Kan Xie (“Plaintiffs”) allege they are first time buyers of real estate. They allege that on July 18, 2017, Plaintiffs with the representation of their real estate agents (Defendants Essex Financial, Inc. dba Century 21 Dynasty (“C21”), Hoang M. Chu, and Jade Ngoc Chu), entered into the Residential Purchase Agreement for the property in the amount of $608,000.00 and the sale closed on July 18, 2017. The owner of record and seller of the property was Defendant JPCL Development LLC (“JPCL”), through its agents Defendants CHD Investments Inc. dba IRN Realty (“IRN”) and Ted Ru-Hao Chen. Plaintiffs allege that Defendants Ping Xiao Lin (operating manager of JPCL) and Shiann Chen (alleged spouse of Ping Xiao Lin) worked in concert to use JPCL to deceive and conceal material matters concerning the property from Plaintiffs. Plaintiffs allege that Defendants failed to disclose that the property had easements for ingress and egress for use by three adjacent property owners and is used as a driveway or access road to the other properties.
The complaint, filed March 14, 2018, alleges causes of action for: (1) fraud and deceit; (2) negligent misrepresentation; (3) constructive fraud; (4) breach of statutory duty; (5) breach of fiduciary duty; (6) breach of contract; (7) professional negligence; (8) negligent misrepresentation; (9) professional negligence; and (10) breach of implied covenant against encumbrances.

RELIEF REQUESTED:

Defendants JPCL Development LLC, Ping Xiao Lin, and Shiann Chen move to compel arbitration.

DISCUSSION:

Legal Standard

CCP §1281.2 permits the Court to order parties to a written arbitration agreement to arbitrate a controversy, if the Court determines that an agreement to arbitrate the controversy exists. (Mission Viejo Emergency Medical Associates v. Beta Healthcare Group (2011) 197 Cal.App.4th 1146, 1153.) Sections 1281.2 and 1290.2 create a summary proceeding for resolving petitions to compel arbitration. (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972.)

The moving party bears the burden of proving the existence of a valid arbitration agreement by a preponderance of the evidence, while a party opposing the petition bears the burden of proving by a preponderance of the evidence any fact necessary to its defense. (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236.) The trial court sits as the trier of fact, weighing all the affidavits, declarations, and other documentary evidence, and any oral testimony the court may receive at its discretion, to reach a final determination. (Engalla, supra, 15 Cal.4th at 972.) General principles of contract law determine whether the parties have entered a binding agreement to arbitrate and the party seeking arbitration bears the burden of proving the existence of an arbitration agreement. (Pinnacle Museum, supra, 55 Cal.4th at 236.)

Analysis

Existence of Agreement

Defendants JPCL, Ping Xiao Lin, and Shiann Chen move to compel arbitration on the grounds that the parties’ written Residential Purchase Agreement provides for arbitration of the disputes that have arisen between the parties regarding the property.

The Residential Purchase Agreement is attached as Exhibit A to the motion. At section 22 (DISPUTE RESOLUTION), the Agreement provides that the parties agree to mediate any dispute or claim arising between them out of the Agreement or any resulting transaction, before resorting to arbitration or court action. (Residential Purchase Agreement, §22.A.) In subsection B, the Agreement provides that the parties agree that any dispute or claim in law or equity arising between them out of the Agreement or any resulting transaction, shall be decided by neutral, binding arbitration. (Id., §22.B.) The parties also agree to arbitrate any disputes or claims with brokers who agree to such arbitration prior to or within a reasonable time after the dispute or claim is presented to the broker. By initialing the arbitration provision, the parties agree that any dispute shall be subject to binding arbitration

Here, JCPL, Ping Xiao Lin, and Shiann Chen have shown that an agreement to arbitrate the claims exists. The Agreement is signed by buyers/Plaintiffs and seller/Defendant Ping Xiao Lin as manager for JCPL. The Agreement is also signed by real estate broker C21 by Jade Chu, but the Court notes that the arbitration provision was not adopted by or initialed by C21.

Thus, the Court discusses whether the arbitration agreement is enforceable and covers the scope of the claims presented in this action.

First, Plaintiffs argue that the parties did not first mediate the, prior to resorting to arbitration or litigation. Plaintiffs argue that they sent a demand for mediation to JCPL on November 27, 2017 and to all interested parties, but that JCPL refused to mediate. Thus, Plaintiffs argue that JCPL waived its right to elect arbitration as a result. However, a review of section 22 of the Agreement, shows that the failure to mediate is not necessarily a prerequisite to arbitration or filing a lawsuit. Rather, the mediation provision states that if a party fails to initiate mediation of a dispute or the other party refuses to mediate, then that party shall not be entitled to recovery attorney’s fees. Thus, the failure to mediate does not amount to a waiver to arbitrate the claims.

Second, Plaintiffs argue that the Residential Purchase Agreement is void because Plaintiffs were victims of their own real estate agent, Hoang M. Chu. Plaintiffs provide their declarations, stating that when they signed and initialed the Agreement, Hoang M. Chu did not read them the Agreement, they were not given time to read the Agreement, they were not informed about the arbitration provision, and English is not their primary language. (Samanukorn Decl., ¶¶3, 5-6; Xie Decl., ¶¶3, 5-6.) They state they were not provided the Agreement until months after the closing. (Samanukorn Decl., ¶4; Xie Decl., ¶4.)

However, Plaintiffs have not shown that they entered into the arbitration agreement by fraud. (See Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 973; Rosenthal v. Great W. Fin. Securities Corp. (1996) 14 Cal.4th 394, 416.) Their declarations fail to show that they Hoang M. Chu misrepresented the nature of the Agreement that they signed or that they even asked Hoang M. Chu to translate and read them the terms of the Agreement. In addition, reasonable diligence requires a party to read a contract before signing it. (Brown v. Wells Fargo Bank, NA (2008) 168 Cal.App.4th 938; Brookwood v. Bank of Am. (1996) 45 Cal.App.4th 1667, 1674.) Ordinarily one who signs a contract is bound by its terms even though he signs it without reading it. Thus, Plaintiffs’ failure to read the Agreement or their failure to understand it (and seek translation) are not excuses upon which Plaintiffs may rely. Because “it is generally unreasonable … to neglect to read a written agreement before signing it” (Rosenthal, supra, 14 Cal.4th at 424), the failure to read an arbitration agreement does not prevent the enforcement of the agreement, unless the party shows his or her signature was obtained through fraud or coercion. (Id at 423; Bolanos v. Khalatian (1991) 231 Cal.App.3d 1590.) As discussed above, Plaintiffs have not shown that their signatures were obtained by fraud or coercion.

Thus, Plaintiffs have not shown that the Agreement is void.

Third, Plaintiffs argue that non-signatories and third-parties to the Agreement cannot be bound to the arbitration provision. They argue that the claims in this action exceed the scope of the claims that are subject to arbitration because specific claims are brought against non-signatories.

As briefly stated above, the arbitration provision was initialed only by buyers/Plaintiffs and Defendant Ping Xiao Lin, who was signing on behalf of JCPL as manager. No other parties are signatories to the arbitration provision of the Residential Purchase Agreement. At most, the arbitration provision may be binding upon JCPL and non-signatories Shiann Chen and Ping Xiao Lin, since even Plaintiffs allege in the complaint that these co-defendants were each the alter ego of one another and that they conspired against Plaintiffs. (See Compl., ¶13; Comer v. Micor, Inc. (9th Cir. 2006) 436 F.3d 1098, 1101 [stating nonsignatories of arbitration agreements may be bound by the agreement under ordinary contract and agency principles].)

However, numerous other defendants in this action are not signatories to the Residential Purchase Agreement’s arbitration provision, including Defendants SDH Investments Inc. dba IRN Realty, Ted Ru-Hao Chen, C21, Hoang M. Chu, Jade Ngoc Chu, and Glenn Leonard. The moving papers fail to state how these non-signatories are bound to the arbitration agreement and they will not be compelled to arbitrate claims and give up their right to a jury trial without their consent.

While the Agreement is signed by real estate broker C21 by Jade Chu, the Court notes that the arbitration provision was not adopted by or initialed by C21. According to the arbitration provision, the broker may be bound by the arbitration agreement if he agrees to it prior to or within a reasonable time after the claim is presented to him. There is no showing that C21 or Jade Chu agreed to be bound by the arbitration provision.

The Court has authority to stay or deny arbitration where: (1) some of the parties the action are not parties to the arbitration agreement and (2) proceedings in different forums—arbitral and judicial—could result in conflicting rulings on a common issue of fact or law. (Valencia v. Smyth (2010) 185 Cal.App.4th 153, 156-57.) Here, eight of nine of the defendants are not signatories to the arbitration provision (or at least six of nine are non-signatories if considering the alter ego allegations). As such, arbitrating claims as against some defendants, while the civil action proceeds against the remaining defendants would be inefficient and possibly result in conflicting rulings. This is a compelling ground to deny the motion.

Accordingly, the Court will deny the motion to compel arbitration.

RULING:

Deny Defendants JCPL, Ping Xiao Lin, and Shiann Chen’s motion to compel arbitration.