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New Cases of Interest - April 30, 2012
Lindlemann v. Hume (2012) 204 Cal.App.4th 556. A purchaser of a newly built home brought a civil action against the developer and the real estate agents involved in the sale, alleging negligent design and construction of the home, and also nondisclosure claims. The purchase agreement contained an arbitration clause that applied to all disputes or claims arising between the seller and the buyer arising out of the transaction, and the seller/developer sought arbitration under that provision.
The arbitration petition was however denied, with the court finding that there was a potential for inconsistent rulings and that potential was sufficient to allow the trial court to stay the arbitration pursuant to CCP §1281.2(c). The court noted that the claims made by the sales agents for indemnity were outside the scope of the arbitration provision, which covered only disputes between the seller and the buyer, and that created the potential for inconsistent rulings. It’s not necessary that inconsistent rulings are inevitable, but only that they are possible in order for a trial court to exercise discretion under CCP §1281.2(c).
Thomas v. Westlake (2012) 204 Cal.App.4th 605. This is another arbitration case but in this case the court upholds a petition to compel arbitration. The petition was brought by a financial services company, its parent company and a broker to compel arbitration of claims asserted by an investor’s successor in interest which alleged mismanagement of the investor’s accounts. The investor had signed agreements which contained arbitration provisions. The complaint named as defendants some parties who were not signatories to the arbitration agreement. The complaint also alleged that each defendant acted as the agent of every other defendant in connection with the investor’s transactions.
Although the trial court denied the petition to compel arbitration, the court of appeal reversed and issued directions to enter an order granting the petition to compel arbitration and staying all other proceedings until the arbitration was completed. In this case the court held that arbitration should not have been denied under CCP §1281.2(c) noting that the agency allegations were an exception to the general rule that a nonsignatory could not invoke an agreement to arbitrate. The allegations of agency were sufficient to allow the alleged agents to invoke the arbitration agreement, even though the agents were not parties to it.