Case No.: 1-15-CV-276349

This is a construction defect action. Plaintiff Luna Owners’ Association (“Plaintiff”) petitions the Court to compel arbitration and stay this action pending completion of binding arbitration.

Generally, “[o]n petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists. . . .” (Code Civ. Proc., § 1281.2.) Plaintiff contends that the Declaration of Covenants, Conditions and Restrictions of Luna at Terra Serena (“CC&Rs”), to which the parties are subject, contains an arbitration provision requiring construction defect claims to go to binding arbitration. The provision in question states:

10.6.2 Arbitration: Notwithstanding California Code of Civil Procedure Section 1298.7, if a Dispute is not resolved through mediation, Owner, the Association and Builder shall resolve the Dispute exclusively through binding arbitration conducted in accordance with the rules for residential construction then in effect for the America Arbitration Association (“AAA”). If the rules for residential construction do not exist, then the AAA Commercial Arbitration Rules shall apply.

(CC&Rs, § 10.6.2.)

Defendants KB Home South Bay Inc. and LB/L-KB Terra Serena LLC (collectively, “Defendants”) argue that section 10.6.2 does not apply to this lawsuit. Defendants refer to the language of section 10.6 of the CC&Rs:

10.6 BINDING ARBITRATION: Subject to the provisions of Sections 10.5.1 (Actions Against Declarant), any Dispute involving Builder that is not (a) subject to the provisions of Section 10.5.2 (Warranty Claims) or Section 10.5.3 (Title 7 Claims), and (b) which is either not subject to Section 10.5.4 (Civil Code Section 1363.840) or finally resolved by the procedures described in Section 10.5.4 shall be resolved in accordance with the provisions of this Section 10.6.

Defendants contend that the claims in this lawsuit are mainly warranty and Title 7 disputes and therefore are not subject to section 10.6. The relevant provisions in the CC&Rs state:

10.5.2 Warranty Claims: The resolution and enforcement of all claims brought by any Owner or the Association under any warranty provided by Builder, including but not limited to any alleged violation of the Fit & Finish Warranty provided to an Owner or the Association by Builder in accordance with the provisions of California Civil Code Section 900 and any disagreement concerning an Owner’s or the Association’s notification under a warranty shall be governed solely by the dispute resolution provisions provided in the applicable warranty.

10.5.3 Title 7 Claims: Any disputes between any Owner and Builder or between the Association and Builder regarding any matters that arise from or are in any way related to Title 7, whether contractual, statutory or tort, including, but not limited to, the condition, design, construction or materials used in construction of any portion of the Project or any deficiency, as that term is defined in California Civil Code Section 896, shall be resolved in accordance with the procedures described in the applicable Title 7 Notice.

Plaintiff’s Complaint sets forth the following causes of action: [1] Breach of Title 7 Functionality Standards; [2] Negligence; [3] Strict Liability; [4] Breach of Implied Warranty; [5] Breach of Express Warranties; [6] Breach of Subcontracts; [7] and Breach of Fiduciary Duty and Conspiracy to Breach Fiduciary Duty. These causes of action include Title 7 claims, warranty claims, and general tort claims. Therefore, several different dispute resolution and arbitration provisions apply to Plaintiff’s causes of action. In its moving papers, Plaintiff addresses only section 10.6.2 and does not mention the other relevant sections of the CC&Rs at all. In its reply, Plaintiff refers to a document submitted by Defendants in connection with their opposition as the Title 7 Notice and argues that the notice requires arbitration. Plaintiff makes no argument regarding whether the breach of warranty causes of action are subject to arbitration. Plaintiff does not sufficiently establish which arbitration provisions apply to the different causes of action in the Complaint, but simply contends that the entire case must be sent to arbitration based on the general arbitration provision in section 10.6.2 and the Title 7 arbitration provision.

Further, the CC&Rs require the parties to submit disputes to mediation prior to commencing arbitration. (CC&Rs, §§ 10.6.1-10.6.2.) Plaintiff states in its moving papers that the parties were scheduled to attend mediation on January 30, 2015, but counsel for Defendants canceled the mediation the day before. Plaintiff then makes the conclusory statement that Defendants failed to strictly comply with the provisions of SB800 and/or any alternative dispute resolution procedures in the CC&Rs. Plaintiff does not explain how Defendants’ cancellation of the mediation excuses the parties from complying with the requirement to mediate prior to commencing arbitration. In sum, Plaintiff has not established that all pre-arbitration requirements have been satisfied.

For the reasons discussed above, Plaintiff has not met its burden of establishing a right to arbitration at this time. Accordingly, Plaintiff’s motion is DENIED WITHOUT PREJUDICE.