2014-00158169-CU-PT

M. Rashid Saeed vs. Immobiliare Properties, Inc.

Nature of Proceeding: Petition to Compel Arbitration

Filed By: Gray, Richard H.

Petition to Compel Arbitration is denied.

Respondents’ evidentiary objections to the Declaration of Faraz Saeed are sustained.

Respondents’ evidentiary objections to the Declaration of M Rashid Saeed are
sustained.

Petitioners’ evidentiary objections are sustained.

On April 8, 2013 a Commercial Property Purchase Agreement and Joint Escrow
Instruction was signed by defendants, as buyers, and “seller” defined as Rashid
Saeed. The contract was for the sale of real property and a business for a total price
of $1,100,000.

Thereafter, it was discovered that Rashid Saeed was not the owner of the property,
and an Addendum was signed on April 11 identifying the seller/landlord as M.Rashid
Saeed/Northwest Dealerco Holding Co. LLC.

The only agreement that contains an arbitration clause is the April 8, 2013 agreement.
Petitioner M. Rashid Saeed and Petro Star seek to compel arbitration relying on the
April 8, 2013 sales agreement. However, Petro Star was not a party to the sales
agreement and M. Rashid Saeed was not the owner of the real property or the
business that was the subject of the April 8, 2013 agreement.

The parties later determined that it was necessary to execute two sales agreements,
one for the real property and one for the business. On June 7, 2013 a second
purchase and sale agreement was entered into between defendants and the owner of
the property, Northwest Dealcro Holdings, LLC. (Exhibit D to Declaration of Joginder
Chima). That agreement was for sale of the property only, for a price of $750,000,
not the business. That agreement contains no arbitration clause.

The terms of the sale of the business were set forth in the Asset Sale Questionnaire,
Ex B to the Escrow Instructions for the sale of business assets (See Ex. E to
declaration of Jogincer Chima) The Asset Sale Questionnaire, dated June 14, 2013, is
attached as Ex. A to the Reply Declaration of Faraz Saeed. The parties to the Asset
Sale agreement are Faraz Saeed and the defendants. There is no agreement to
arbitrate disputes contained in the Asset Sale Questionaire or the Escrow Instructions.
The last page of the Asset Sale Questionnaire, “Ex. B, summary of sale terms” states
that the date of the parties sale agreement was April 8, 2013, which contradicts the
Escrow Instructions that state that the terms of the sale are set forth in the June 14,
2013 document.

The dispute that has arisen between the parties concerns the sale of the business, not
the real property. The defendants contend that after they discovered numerous
problems with the business, including that it had been closed for code violations, the
purchase price of the business was reduced from $250,000 to $12,500. (Declaration
of Robby Chima, ¶¶ 8,16) The copy of the escrow instructions attached to Chima’s
declaration contains what purport to be signatures of the seller, Faraz Saeed, and
buyer Joginder Chima, dated July 18, 2013, next to the change in price of the
business. (Ex. E Chima Decl.)

Neither the asset questionnaire nor the Escrow Instructions for the sale of the business
contain an arbitration clause. The Petitioners herein were not signatories to the either
of these documents.

“…[W]hen a petition to compel arbitration is filed and accompanied by
prima facie evidence of a written agreement to arbitrate the controversy,
the court itself must determine whether the agreement exists and, if
any defense to its enforcement is raised, whether it is enforceable.
Because the existence of the agreement is a statutory prerequisite to
granting the petition, the petitioner bears the burden of proving its
existence by a preponderance of the evidence. If the party opposing the
petition raises a defense to enforcement-either fraud in the execution
voiding the agreement, or a statutory defense of waiver or revocation
(see § 1281.2, subds. (a), (b))–that party bears the burden of producing
evidence of, and proving by a preponderance of the evidence, any fact
necessary to the defense. Rosenthal v. Great Western Fin. Securities Corp (1996) 14
Cal.4th 394, 413. See also AT&T Technologies v. Communications Workers (1986)
475 U.S. 643, 649.

Unless the parties clearly and unmistakably provide otherwise, the question of whether
the parties agreed to arbitrate is to be decided by the court, not the arbitrator. The trial
court must resolve the conflicting factual evidence to properly adjudicate a petition to
compel arbitration. Engalla v. Permanente Medical
Group Inc. (1997) 15 Cal. 4th 951, 981.

In reviewing the various agreements between the various different parties, the Court is
persuaded that the April 2013 sales agreement containing the arbitration clause was
superseded by the second sales contract for the real property (Ex. D to Declaration of
the Chimas) and the contract for the sale of the business (Ex. E to Chima Declaration
and Ex. A to Reply Faraz Saeed Declaration). Therefore, the parties to the sale of the
business did not agree to arbitration.

The right to arbitration is dependent upon contract; the Court may not force a
nonsignatory to participate in arbitration. County of Contra Costa v. Kaiser
Foundation Health Plan, Inc. (1996) 47 Cal. App. 4th 237, 245. As a general matter,
one cannot be required to submit a dispute to arbitration unless one has agreed to do
so. Goldman v. KPMG, LLP, (2009) 173 Cal. App. 4th 209, 219. Here, the operative
agreements do not contain an arbitration provision.

The prevailing party shall prepare a formal order for the Court’s signature pursuant to
C.R.C. 3.1312.