Case Number: BC538331    Hearing Date: July 23, 2014    Dept: 58

JUDGE ROLF M. TREU
DEPARTMENT 58
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Hearing Date: Wednesday, July 23, 2014
Calendar No: 10
Case Name: Figueroa Center, LLC v. Staples Properties, Inc.
Case No.: BC538331
Motion: Motion to Compel Arbitration
Moving Party: Defendant Staples The Office Superstore, LLC (successor to Staples Properties, Inc.)
Responding Party: Plaintiff Figueroa Center, LLC
Notice: OK

Tentative Ruling: Motion to compel arbitration is granted. No attorney fees are awarded.
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On 3/4/14, Plaintiff Figueroa Center, LLC filed this unlawful detainer action against Defendant Staples Properties, Inc. arising out of the lease of commercial property. Plaintiff alleges that the lease was a fixed-term lease that expired. Complaint ¶ 9. On 4/29/14, Defendant Staples The Office Superstore, LLC (successor to Staples Properties, Inc.) filed an answer admitting that it is in possession of the premises (Answer ¶ 3), denied Plaintiff’s allegations (Answer ¶ 8), and asserted various affirmative defenses including arbitration (Answer p. 2:21-26). Court trial is set for 8/25/14.

Motion to Compel Arbitration –
On 6/27/14, Defendant filed a motion to compel arbitration. In deciding a petition to compel arbitration, trial courts must first decide whether an enforceable arbitration agreement exists between the parties, and then determine the second gateway issue of whether the claims are covered within the scope of the agreement. Omar v. Ralphs Grocer Co. (2004) 118 Cal.App.4th 955, 961.

1. Request for Judicial Notice
Defendant requests judicial notice of the Complaint, Answer, and its Case Management Statement filed in this action. The RJN is granted.

2. Arbitration Agreement
Defendant submits that the parties’ predecessors in interest entered into a lease agreement on 5/21/93 which contains the following arbitration provision:
Except those disputes arising out of the breach by tenant without a claim of set-off or abatement provided for herein, of (A) Sections 4.2 or 4.3 (provided tenant pays to landlord the amount in dispute prior to demanding arbitration regarding same, or (B) of Section 4.1 of this lease, any dispute between the parties relating to the interpretation and enforcement of their rights and obligations under this lease shall be resolved solely by arbitration in accordance with the provisions of Section 12.3.2 below.
Colarusso Decl. ¶¶ 4-5, 7, Ex. A § 12.3.1.

Defendant notes that the exceptions to the arbitration provision pertain to the base rent, taxes, and insurance contributions. Id. §§ 4.1-4.3. Defendant argues that this action is subject to the arbitration provision.

3. Plaintiff’s Opposition
In opposition, Plaintiff asserts several arguments.

First, Plaintiff argues that this action will result in result in delay of the trial. However, this is not a factor to be considered in determining a motion to compel arbitration. See, e.g., Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 219 (citing to CCP § 1281.2(a)-(b) concerning waiver or grounds for revocation).

Second, Plaintiff argues that the arbitration provision only applies to the “interpretation and enforcement” of rights and obligations under the lease, which Plaintiff submits was terminated by Defendant’s failure to give notice of intend to extend. See Ma Decl. ¶¶2-4, Exs. A-C. However, the Court notes that the substantive merit of Defendant’s contentions (i.e., denying that the lease expired) is not considered. See CCP § 1281.2(c) ¶ 2.

Third, Plaintiff argues that it did not sign the lease or initial the arbitration provision. However, Plaintiff offers no evidence to dispute Defendant’s showing that the parties’ predecessors in interest entered into the lease agreement and agreed to the arbitration provision. In the absence of any contrary provisions, the arbitration provision is a binding covenant under privity of estate. Melchor Investment Co. v. Rolm Systems (1992) 3 Cal.App.4th 587, 592-93; Kelly v. Tri-Cities Broadcasting, Inc. (1983) 147 Cal.App.3d 666, 679.

Fourth, Plaintiff argues that the lease agreement intends to except unlawful detainer actions, citing to Section 12.1. However, that section provides in pertinent part that if a tenant fails to pay base rent and cure after receiving notice, the landlord “shall have the right to terminate this Lease . . . and thereupon may recover possession of the Premises in the manner prescribed by law.” Colarusso Decl. Ex. A § 12.1. Plaintiff fails to establish that this section broadly exempts all unlawful detainer actions from arbitration. Section 12.1 is limited to circumstances where the tenant fails to pay base rent, and the arbitration provision exempts breaches by the tenant. Plaintiff’s action concerns neither of these circumstances and instead alleges that the lease expired because of the failure to renew.

4. Ruling
Plaintiff’s arguments in opposition are without merit. The Court finds that Defendant has carried its burden to establish an enforceable arbitration agreement. Therefore, the motion to compel arbitration is granted. This action is stayed pending arbitration pursuant to CCP § 1281.4.

5. Attorney Fees
Defendant requests attorney fees, relying principally on Acosta v. Kerrigan (2007) 150 Cal.App.4th 1124, 1132, and Benjamin, Weill & Mazer v. Kors (2011) 195 Cal.App.4th 40, 73-80. However, both these decisions have been disagreed with and criticized by more recent decisions. See Frog Creek Partners, LLC v. Vance Brown, Inc. (2012) 206 Cal.App.4th 515, 544-46; Roberts v. Packard, Packard & Johnson (2013) 217 Cal.App.4th 822, 841-42. The Court agrees with the reasoning as stated in Frog Creek Partners and Roberts.

Neither the arbitration attorney fee provision (Colarusso Decl. Ex. A § 12.3.2(d)) nor the general contractual attorney fee provision (id. § 14.11) are similar to the attorney fee provision considered in Acosta. See, e.g., Roberts, 217 Cal.App.4th at 842-43. Defendant’s motion was filed in a pending lawsuit: there has been no determination of a prevailing party in arbitration and the Court’s ruling on the motion does not result in a prevailing party in an action. Roberts, 217 Cal.App.4th at 833.

Defendant attempts to distinguish Roberts on the ground that the general contractual attorney fee provision in the lease agreement applies to any “dispute” (Colarusso Decl. Ex. A § 14.11). However, the rationale underlying this argument would extend a general contractual attorney fee provision beyond Civil Code § 1717 (see Frog Creek Partners, 206 Cal.App.4th at 545-56).

Defendant’s request for attorney fees is denied.