1240-1250 Glenoaks LLC vs Gerald T Derose et al
1240-1250 Glenoaks LLC vs Gerald T Derose et al
Case Number
25CV03733
Case Type
Hearing Date / Time
Mon, 12/15/2025 - 10:00
Nature of Proceedings
CMC; Motion: Compel Arbritation and to Stay Proceedings; Declaration of Jill L. Friedman
Tentative Ruling
1240-1250 Glenoaks LLC v. Gerald T. DeRose, et al.
Case No. 25CV03733
Hearing Date: December 15, 2025
HEARING: Motion to Compel Arbitration
ATTORNEYS: For Plaintiff 1240-1250 Glenoaks LLC: Varand Gourjian, Armen Papazian, Brianna Douzoglou, Gourjian Law Group
For Defendants Gerald T. DeRose and Sue A. DeRose, co-trustees of the DeRose Family Trust dated January 29, 2014: Jill L. Friedman, Myers, Widders, Gibson, Jones & Feingold, L.L.P.
For Defendants Pickford Real Estate, Inc., and Ken Switzer: Jesse D. Obrand, Obrand Law Group, APC
TENTATIVE RULING:
(2) The demurrer and motion to strike of defendants Ken Switzer and Pickford Real Estate, Inc., now on calendar for February 2, 2026, are ordered off calendar, to be reset for hearing after the stay is lifted.
Background:
On June 16, 2025, plaintiff 1240-1250 Glenoaks LLC (Glenoaks or plaintiff) filed its original complaint in this action asserting six causes of action: (1) breach of contract; (2) violation of Civil Code section 1102 et seq.; (3) fraudulent concealment; (4) negligent misrepresentation; (5) violation of Civil Code section 2079; and (60 constructive fraud. Plaintiff’s claims arise out of the purchase of real property located at 1007 & 1023 Olive Street, Santa Barbara (the Property). (Complaint, ¶ 1 & exhibit A.) The first through fourth causes of action are asserted against defendants Gerald T. DeRose and Sue A. DeRose, as co-trustees of the DeRose Family Trust dated January 29, 2014 (collectively, DeRose). The third and fourth causes of action are asserted against DeRose and also against defendants Pickford Real Estate, Inc., dba BHHS California Properties (BHHS) and Ken Switzer. The fifth and sixth causes of action are asserted against BHHS and Switzer only.
Plaintiff alleges that plaintiff, as buyer, entered into a written purchase and sale agreement (PSA) with DeRose as sellers. (Complaint, ¶¶ 2 & exhibit A [the PSA].) BHHS is alleged to be a licensed real estate brokerage company and Switzer is a sales representative for BHHS. (Complaint, ¶¶ 3-4.) Switzer and BHHS are alleged to have represented both plaintiff and DeRose in the transaction involving the Property. (Complaint, ¶ 4.)
On September 19, 2025, DeRose filed this motion to compel arbitration as to the claims between DeRose and plaintiff and to stay the action in its entirety. In addition to service on counsel for plaintiff, the motion was also served on counsel for Switzer and BHHS.
On October 8, 2025, Switzer and BHHS filed a demurrer and motion to strike, both noticed for hearing on February 2, 2026.
On December 1, 2025, plaintiff filed opposition to the motion to compel arbitration.
On December 2, 2025, DeRose filed a reply to plaintiff’s opposition.
No other opposition or response has been filed to the motion to compel arbitration.
Analysis:
“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.” (Code Civ. Proc., § 1281.2, subds. (a), (b).)
“ ‘Section 1281.2 requires a court to order arbitration “if it determines that an agreement to arbitrate ... exists....” [Citation.]’ [Citation.] Sections 1281.2 and 1290.2 create a summary proceeding for resolving petitions to compel arbitration. [Citations.] The petitioner bears the burden of proving the existence of a valid arbitration agreement by a preponderance of the evidence, while a party opposing the petition bears the burden of proving by a preponderance of the evidence any fact necessary to its defense. [Citation.] The trial court sits as the trier of fact, weighing all the affidavits, declarations, and other documentary evidence, and any oral testimony the court may receive at its discretion, to reach a final determination.” (Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 841–842.)
DeRose present the arbitration clause found in the PSA upon which Glenoaks bases its complaint, which states in part:
“Mediation: The Parties agree to mediate any dispute or claim arising between them out of this Agreement, or any resulting transaction, before resorting to arbitration or court action through the C.A.R. Consumer Mediation Center … or through any other mediation provider or service mutually agreed to by the Parties. … If, for any dispute or claim to which this paragraph applies, any Party (i) commences an action without first attempting to resolve the matter through mediation, or (ii) before commencement of an action, refuses to mediate after a request has been made, then that Party shall not be entitled to recover attorney fees, even if they would otherwise be available to that Party in any such action. This mediation provision applies whether or not the arbitration provision is initialed. Exclusion from this mediation provision are specified in paragraph 31C.” (PSA, ¶ 31(A), bolding omitted and capitalization altered.)
“Arbitration of Disputes: 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 shall have a right to discovery in accordance with Code of Civil Procedure §1283.05. In all other respects, the arbitration shall be conducted in accordance with Title 9 of Part 3 of the Code of Civil Procedure. … Exclusions from this arbitration agreement are specified in paragraph 31C.” (PSA, ¶ 31(B), bolding omitted and capitalization altered.)
“Additional Mediation and Arbitration Terms: [¶] … [¶]
“(2) 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.” (PSA, ¶ 31(C)(2).)
There is no dispute between the parties that the PSA is a written agreement between the parties and that the PSA contains an arbitration agreement that includes plaintiff’s claims as with the scope of that agreement. Plaintiff, however, argues that the arbitration agreement does not apply to require arbitration by its terms because of the failure of DeRose to mediate. In support of this argument, DeRose provide the following evidence:
On August 6, 2025, counsel for plaintiff, attorney Varand Gourjian, sent a letter to counsel for DeRose, attorney Jill L. Friedman, stating that the complaint in this action was filed to preserve all applicable statutes of limitation. (Gourjian decl., ¶ 3 & exhibit B.) The letter further states: “Now that the statutes have been preserved, Plaintiff will stay the pending case, and does hereby formally request mediation under the terms of the PSA.” (Gourjian decl., exhibit B.)
Also on August 6, Friedman sent a letter to Gourjian following up a telephone conversation. (Gourjian decl., ¶ 4 & exhibit C; Friedman decl., ¶ 3.) The letter asserts that the negligent misrepresentation claim is time-barred, that plaintiff’s failure to mediate before filing suit bars any recovery of attorney fees, and that there is no basis for a claim of punitive damages. (Gourjian decl., exhibit C.) The letter concludes by demanding arbitration. (Ibid.)
Also on August 6, Friedman sent an email that states that Gourjian’s letter was received two minutes after Friedman sent her letter. (Gourjian decl., ¶ 5 & exhibit D.) The email addresses the issue of preserving the right to attorney fees. (Gourjian decl., exhibit D.) The email also states: “I am trying to give Mr. DeRose time to be with his dying wife and to grieve. I do not want to discuss the potential for mediation with him until we try in good faith to resolve the issues regarding the sufficiency of the Complaint I raised in the letter.” (Ibid.)
On August 21, 2025, Gourjian sent a letter to Friedman and to attorney Jesse Obrand, counsel for Switzer and BHHS, stating Gourjian’s understanding that Friedman would not be recommending mediation to her clients at this time and renewing the request for mediation. (Gourjian decl., ¶ 6 & exhibit E.)
By email response on September 4, 2025, Friedman disagreed with Gourjian’s positions and stated among other things: “Under no circumstances will my clients waive their right to assert that your client has waived its right to attorney’s fees. Attorney’s fees can be decided later. Given your insistence that any mediation be conditioned on an agreement that your client has not waived the right to attorney’s fees, my clients respectively declines.” (Gourjian decl., ¶ 7 & exhibit F.)
Based on this exchange, plaintiff argues that because DeRose refused to participate in mediation, under the arbitration provision, DeRose is barred from compelling arbitration. Plaintiff alternatively requests that the court determine that DeRose will not be entitled to attorney fees or costs in subsequent litigation or arbitration.
DeRose argues that mediation is not a condition precedent to arbitration.
Neither party has presented any authority construing the arbitration provision at issue or any extrinsic evidence as to the interplay of the mediation and arbitration provisions.
Plaintiff’s argument focuses upon the language in paragraph 31(A) that the “Parties agree to mediate any dispute or claim” and upon the language in paragraph 31(B) that arbitration applies to “any dispute or claim … which is not settled through mediation.” By refusing to mediate (as characterized by plaintiff), DeRose breached paragraph 31(A). Because paragraph 31(B) presupposes an unsuccessful mediation, the arbitration provision does not apply to this dispute.
DeRose argues that this language does not condition the agreement for arbitration on an earlier mediation, but rather applies to those claims which are not settled by mediation. The mediation provision is separate from the arbitration provision and has a separate remedy relating to attorney fees. DeRose also argues that by filing the action before requesting mediation, plaintiff breached the mediation provision and is barred from an award of attorney fees.
The arbitration provision states that the parties agree to binding arbitration of any dispute “which is not settled through mediation.” The interpretation question is in the meaning of this clause. As a starting point, it is useful to note that arbitration agreements are ordinarily viewed as an agreement of the parties separate from the other terms of the agreement: “The mere fact of a contractual breach in no way impairs the continuing efficacy of the arbitration provision: the very purpose of arbitration is to resolve the controversy created by the alleged breach.” (Thorup v. Dean Witter Reynolds, Inc. (1986) 180 Cal.App.3d 228, 237.)
Thus, breach of the mediation provision would not, without more, negate the effectiveness of the arbitration provision. The arbitration provision does not expressly, for example, make arbitration conditional upon performance (or excuse from performance) of the mediation provision. Plaintiff seeks to make arbitration conditioned upon such performance or excuse only by negative implication. The clause “which is not settled through mediation,” by this reasoning, would necessarily require participation in the mediation process. By contrast, the agreement itself involves contingencies to the performance of a purchase and sale of real property. This form agreement handles conditions clearly and expressly where events are intended to be conditions to performance. No such language appears in the arbitration provision.
A more reasonable reading of the “which is not settled through mediation” clause is more direct: those disputes which are settled through mediation are excluded from the arbitration agreement. Disputes arising from a mediated settlement agreement may reasonably be expected to be handled differently. Such disputes necessarily arise in an adversarial environment in which the parties are making a new agreement. How such disputes would be handled may be reasonably would be left to the legal default of a court proceeding unless the parties agree otherwise.
This interpretation of “which is not settled through mediation” is consistent with the mediation provisions that provide a separate remedy where the formal dispute process is engaged without a party participating in required mediation. This interpretation is also consistent with the practical facts that both parties have actually sought arbitration of this dispute, albeit at different times: Plaintiff conceded that if the dispute is not resolved through mediation it must be submitted to binding arbitration when it requested mediation under the PSA. (Gourjian decl., exhibit B.) DeRose demanded arbitration by letter and by this motion to compel arbitration.
The court finds that there is an enforceable arbitration agreement which covers the claims here at issue. The court also finds that plaintiff has not shown that any exception to arbitration applies. The motion to compel arbitration will be granted.
The court makes no findings as to the application, if any, of mediation provision to a subsequent request for an award of attorney fees. Attorney fees are a matter for disposition in the arbitration. The court also denies plaintiff’s request in opposition for an award of sanctions.
“If a court of competent jurisdiction, whether in this State or not, has ordered arbitration of a controversy which is an issue involved in an action or proceeding pending before a court of this State, the court in which such action or proceeding is pending shall, upon motion of a party to such action or proceeding, stay the action or proceeding until an arbitration is had in accordance with the order to arbitrate or until such earlier time as the court specifies.” (Code Civ. Proc., § 1281.4.)
This motion to compel arbitration also requests a stay of this litigation, in all respects, pending disposition of the arbitration. The motion to compel was served on Switzer and BHHS, who filed no opposition or response. The action will be stayed.