Developments of Interest

New Cases of Interest - March 23, 2020

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03/23/2020

Aldea Dos Vientos v. CalAtlantic Group (2020) 44 Cal.App.5th 1073.  An arbitrator dismissed claims made against a developer because no membership vote was taken prior to the condominium association’s commencement  of arbitration, and the association’s governing documents required a majority vote of the members prior to arbitration.

The court of appeal reversed finding that the award exceeded the arbitrator’s power under CCP Section 1286.2(a)(4) because the provision in the association’s governing documents requiring a majority vote was against public policy, citing Health and Safety Code Section 50001, Civil Code Sections 896, 897 and 941, and was also an unreasonable servitude pursuant to Civil Code Section 5975(a).  The court also found that the statutory prohibition against provisions in governing documents limiting suits against developers applied retroactively because the arbitration decision was based on a procedural defect and not on the merits.

Gamma Eta Chapter of Pi Cappa Alpha v. Helvey (2020) 44 Cal.App.5th 1090.  There was an arbitration agreement between a housing corporation and an international fraternity which the local chapter of the fraternity ntended it was not bound by but the court concluded that the local chapter was in fact bound as simply a subordinate component of the international fraternity and the international fraternity wanted arbitration as to the housing corporation.  The local chapter had no power to disagree with the international fraternity.

Constellation-F, LLC v. World Trading 23, Inc. (2020) 45 Cal.App.5th 22.  This was an action by a landlord seeking to recover past due rent, late fees, interest, failure to maintain and repair damages, and costs incurred by not being able to use the premises earlier as well as holdover rent.  The trial court awarded damages to plaintiff except for the holdover rent which the court found was an unenforceable penalty.  The court of appeal reversed, allowing the plaintiff holdover rent and finding that it was not an unlawful penalty.  The defendants were at complete liberty to have avoided this higher rent by merely leaving.  The provision was also not an illegal liquidation of damages.  Defendants did not prove that plaintiff had overwhelming market power to force this provision on all tenants.  

 
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