Alexandro Filippini vs Ray Mahboob et al

Case Number

22CV03015

Case Type

Hearing Date / Time

Fri, 01/31/2025 - 10:00

Nature of Proceedings

CMC; Motion to Compel

Tentative Ruling

1. For the reasons set forth herein, Cross-Defendant Marcia Bischoff’s motion to compel arbitration is granted as follows:

            a. Marcia Bischoff, individually and as Trustee of Trust A of the Craviotto Family Revocable Trust Dated April 20, 1979, Ray Mahboob, Michelle Bischoff, and Village Properties are ordered to submit to binding arbitration any disputes they have against each other relating to the property located at 4011 Primavera Road, Unit A, Santa Barbara, as agreed to in the subject Residential Purchase Agreement and listing agreement.

            b.   This action is ordered stayed pending the completion of arbitration.

2. The demurrers of Marcia Bischoff, to plaintiff’s first amended complaint, are taken off-calendar to be reset for hearing, if necessary, following completion of arbitration.

Background:

This action commenced on August 4, 2022, by the filing of the original verified complaint by plaintiff Alexandro Filippini (“plaintiff”) against defendants Ray Mahboob (“Ray”), Mohammad Mahboob (“Mohammad”), and Gity Mahboob (“Gity”) (collectively “Mahboob defendants”), for Violation of Santa Barbara Municipal Code section 26.40.010 and Injunctive Relief. (Note: Due to common surnames, some parties will be referred to by their given names for clarity. No disrespect is intended.)

The original complaint relates to the Mahboob defendants’ attempted eviction of plaintiff from premises located at 4011 Primavera Road, Unit A, Santa Barbara (“the property”), after the Mahboob defendants purchased the property.

The Mahboob defendants answered the original complaint on September 26, 2022, admitting some allegations, denying some, and representing a lack of sufficient information to either admit or deny other allegations. The Mahboob defendants also asserted 15 affirmative defenses.

On April 19, 2023, the Mahboob defendants filed a cross-complaint against Marcia Bischoff, Trustee of Trust A of the Craviotto Family Revocable Trust Dated April 20, 1979 (“Marcia” or “the Trust”), Michelle Bischoff (“Michelle”), and Village Properties, Inc. (“VPI”) (collectively “cross-defendants”) for: (1) Implied Contractual Indemnity, (2) Breach of Contract, (3) Negligence, (4) Fiduciary Duty, (5) Failure to Disclose, and (6) Intentional Misrepresentation.

As alleged in the cross-complaint:

The Mahboob defendants purchased the property from the Trust, which failed to disclose to defendants that the Trust had not offered plaintiff a one-year lease as required by law. (Cross-Compliant, ¶ 4.) Instead, cross-defendants assured the Mahboob defendants that the property would be vacant upon closing. (Ibid.) Michelle, of VPI, acted as a dual real estate agent, representing both buyer and seller, in the sale. (Ibid.) Following closing, plaintiff still occupied the property, in derogation of cross-defendants’ promise that the property would be vacant. (Ibid.) Plaintiff claims that he remains entitled to a one-year lease at his existing rental rate. (Ibid.)

On March 21, 2022, Ray and the Trust entered into a contract. (Cross-Complaint, ¶ 9.) At no point during escrow did Michelle, or anyone else on behalf of the cross-defendants, ever disclose that plaintiff wished to remain in the property and asserted a right to a one-year lease. (Id. at ¶ 10.) Despite their knowledge that plaintiff wished to remain in the property and was claiming a right to a one-year lease, cross-defendants promised to serve plaintiff with a 60-Day Notice to Vacate prior to the close of escrow. (Id. at ¶ 11.)

On November 1, 2024, plaintiff filed his first amended complaint (“FAC”), against Ray, Mohammad, Gity, Michelle, VPI, the Trust, and Marcia for: (1) Fraud; (2) Negligent Misrepresentation; (3) Failure to Provide One-Year Lease Per Statute; (4) Failure to Comply with Just-Cause Eviction Statutes; (5) Unlawful Increase of Rental Rate; (6) Unfair Business Practices; and (7) Declaratory Relief.

The FAC essentially supplements the allegations of the original complaint and adds allegations against the cross-defendants and newly named direct defendants.

On October 23, 2024, Marcia, individually and as trustee of the Trust, filed a motion to compel arbitration and stay proceedings based on mediation and arbitration clauses contained in the property listing agreement and the residential purchase agreement.

The motion to compel arbitration is opposed by plaintiff, Michelle, and VPI.

On December 5, 2024, Marcia and the Trust filed general and special demurrers to the FAC.

The demurrers are opposed by plaintiff.

Analysis:

            Motion to Compel Arbitration and Stay Proceedings

The residential purchase agreement, for the purchase of the property, contains the following language:

“A. The Parties agree that any dispute or claim in Law or equity arising between them out of this Agreement or any resulting transaction, which is not settled through mediation, shall be decided by neutral, binding arbitration. The Parties also agree to arbitrate any disputes or claims with Agents(s), who, in writing, agree to such arbitration prior to, or within a reasonable time after, the dispute or claim is presented to the Agent. The arbitration shall be conducted through any arbitration provider or service mutually agreed to by the Parties, . . . The arbitrator shall be a retired judge or justice, or an attorney with at least 5 years of residential real estate Law experience, unless the Parties mutually agree to a different arbitrator. Enforcement of, and any motion to compel arbitration pursuant to, this agreement to arbitrate shall be governed by the procedural rules of the Federal Arbitration Act, and not the California Arbitration Act, notwithstanding any language seemingly to the contrary in this Agreement. The Parties shall have the right to discovery in accordance with Code of Civil Procedure § 1283.05. The arbitration shall be conducted in accordance with Title 9 of Part 3 of the Code of Civil Procedure. Judgment upon the award of the arbitrator(s) may be entered into any court having Jurisdiction.

“B. EXCLUSIONS: The following matters are excluded from mediation and arbitration: (i) Any matter that is within the jurisdiction of a probate, small claims or bankruptcy court; (ii) an unlawful detainer action; and (iii) a judicial or non- judicial foreclosure or other action or proceeding to enforce a deed of trust, mortgage or installment land sale contract as defined in Civil Code § 2985.

“C. PRESERVATION OF ACTIONS: The following shall not constitute a waiver nor violation of the mediation and arbitration provisions: (i) the filing of a court action to preserve a statute of limitations; (ii) the filing of a court action to enable the recording of a notice of pending action, for order of attachment, receivership, injunction, or other provisional remedies; or (iii) the filing of a mechanic’s lien.

“D. AGENTS: Agents shall not be obligated nor compelled to mediate or arbitrate unless they agree to do so in writing. Any Agent(s) participating in mediation or arbitration shall not be deemed a party to this Agreement.

“E. “ ‘NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE ‘ARBITRATION OF DISPUTES’ PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL. BY INITIALING IN THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS THOSE RIGHTS ARE SPECIFICALLY INCLUDED IN THE ‘ARBITRATION OF DISPUTES’ PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY.’ ”

"WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING OUT OF THE MATTERS INCLUDED IN THE ‘ARBITRATION OF DISPUTES’ PROVISION TO NEUTRAL ARBITRATION.’ ” (Grokenberger Dec., ¶ 3 & Exh. 1.)

The provision is initialed by both buyer, Ray Mahboob, and seller Marcia on behalf of the Trust.

As noted above, the listing agreement also contains a substantially similar arbitration agreement that covers, among other things, “any dispute or claim in Law or equity arising, or having arisen, between [the parties to the contract] out of the . . . Listing Agreement, . . . or any resulting transaction, which is not settled through mediation . . .” (Grokenberger Dec., ¶ 3 & Exh. 2.) Both agreements specify that any arbitration shall be governed by the Federal Arbitration Act. The listing agreement is initialed, and signed, by the seller, Marcia, and the broker Michelle, on behalf of VPI.

“California law, like federal law, favors enforcement of valid arbitration agreements.” (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 97.)

“Under both federal and California state law, arbitration is a matter of contract between the parties.” (Badie v. Bank of America (1998) 67 Cal.App.4th 779, 787.)

Arbitration agreements are valid and enforceable under both California and Federal Law. “A written agreement to submit to arbitration an existing controversy or a controversy thereafter arising is valid, enforceable and irrevocable, save upon such grounds as exist for the revocation of any contract.” (Code Civ. Proc., § 1281.)

“The party seeking arbitration bears the initial burden of demonstrating the existence of an arbitration agreement. Once the moving party has satisfied its burden, the litigant opposing arbitration must demonstrate grounds which require that the agreement to arbitration not be enforced.” (Harris v. TAP Worldwide, LLC (2016) 248 Cal.App.4th 373, 380-381.)

In opposition, neither plaintiff, Michelle, or VPI contest that the arbitration clauses are valid and binding as between them and Marcia on behalf of the Trust. Marcia and the Trust have met their initial burden of demonstrating the existence of a valid arbitration agreement. It is therefore up to the parties opposing enforcement of the agreements to demonstrate grounds which would require that the agreements not be enforced.

“On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party to the agreement refuses to arbitrate that 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, unless it determines that:

“(a) The right to compel arbitration has been waived by the petitioner; or

“(b) Grounds exist for rescission of the agreement.

“(c) A party to the arbitration agreement is also a party to a pending court action or special proceeding with a third party, arising out of the same transaction or series of related transactions and there is a possibility of conflicting rulings on a common issue of law or fact. For purposes of this section, a pending court action or special proceeding includes an action or proceeding initiated by the party refusing to arbitrate after the petition to compel arbitration has been filed, but on or before the date of the hearing on the petition. This subdivision shall not be applicable to an agreement to arbitrate disputes as to the professional negligence of a health care provider made pursuant to Section 1295.

“(d) The petitioner is a state or federally chartered depository institution that, on or after January 1, 2018, is seeking to apply a written agreement to arbitrate, contained in a contract consented to by a respondent consumer, to a purported contractual relationship with that respondent consumer that was created by the petitioner fraudulently without the respondent consumer’s consent and by unlawfully using the respondent consumer’s personal identifying information, as defined in Section 1798.92 of the Civil Code.

“If the court determines that a written agreement to arbitrate a controversy exists, an order to arbitrate that controversy may not be refused on the ground that the petitioner’s contentions lack substantive merit.

“If the court determines that there are other issues between the petitioner and the respondent which are not subject to arbitration and which are the subject of a pending action or special proceeding between the petitioner and the respondent and that a determination of such issues may make the arbitration unnecessary, the court may delay its order to arbitrate until the determination of such other issues or until such earlier time as the court specifies.

“If the court determines that a party to the arbitration is also a party to litigation in a pending court action or special proceeding with a third party as set forth under subdivision (c), the court (1) may refuse to enforce the arbitration agreement and may order intervention or joinder of all parties in a single action or special proceeding; (2) may order intervention or joinder as to all or only certain issues; (3) may order arbitration among the parties who have agreed to arbitration and stay the pending court action or special proceeding pending the outcome of the arbitration proceeding; or (4) may stay arbitration pending the outcome of the court action or special proceeding.” (Code Civ. Proc., § 1281.2.)

All opposing parties argue that a separate arbitration will likely result in inconsistent or conflicting rulings. Michelle and VPI additionally argue that there are no disputes between Michelle, VPI, and Marcia, and that Marcia has waived her right to compel arbitration by engaging in discovery and waiting over a year to move to compel arbitration. Other than quoting a portion of Code of Civil Procedure section 1281.2, Michelle and VPI’s opposition is devoid of any legal authorities.

Importantly, the Mahboob defendants did not file any opposition, or other response, to the motion to compel arbitration. However, only Ray Mahboob is a signatory to an arbitration agreement. Mohammad and Gity are not signatories and will not be ordered to arbitrate absent their agreement to do so.

The court has reviewed the pleadings, argument, and evidence submitted by the parties, both in support of the motion and in opposition to the motion, and does not find that ordering the parties to comply with the arbitration agreements is likely to result in inconsistent rulings. At most, the arbitration ruling could result in the favorable outcome of limiting the parties and the arguments for liability in the underlying matter.

Nor does the court find that Michelle and VPI’s argument, that there are no disputes between themselves and Marcia, compelling. Plaintiff has brought an action, by way of the FAC, against all three parties. The Mahboob defendants brought a cross-complaint against the three other parties subject to arbitration agreements. The allegations are overlapping and, as a result, there are competing interests between Marcia on one hand, and Michelle and VPI on the other. It is not dispositive that three of the four parties have not brought suit against one another. A dispute exists, and the filing of a suit is not required to demand arbitration based on those disputes. Prior to bringing the present motion, Marcia requested that all three of the other parties submit to arbitration, and they did not agree. (Grokenberger Dec., ¶ 4.)

The court will further find that Marcia and the Trust did not waive the right to demand arbitration by engaging in extensive discovery. The evidence before the court is that Marcia and the Trust have participated in very minimal discovery, and the only law and motion practice, besides the current motion, has had to do with the status of the pleadings. Further, as no trial date has yet been scheduled, there will be no prejudice to the parties.

Arbitration will be ordered to take place among Marcia individually, and as Trustee of the Trust, VPI, Michelle, and Ray. This action will be stayed pending the completion of arbitration.

            Demurrers

As the motion to compel arbitration will be granted, and this action will be stayed pending completion of arbitration, the demurrers of Marcia Bischoff, to plaintiff’s first amended complaint will be taken off-calendar, to be reset for hearing, if necessary, following the completion of arbitration.