King v. Larsen Realty, Inc.

• Decision Date: 24 June 1981
• Citation: 175 Cal.Rptr. 226,121 Cal.App.3d 349
• Court: California Court of Appeals Court of Appeals
• Parties: Charles R. KING, Respondent, v. LARSEN REALTY, INC., a California Corporation, Barbara Larsen, Bud Doty andDoes I through X, Inclusive, Appellants. Civ. 61582.

Page 226

175 Cal.Rptr. 226

121 Cal.App.3d 349

Charles R. KING, Respondent, v. LARSEN REALTY, INC., a California Corporation, Barbara Larsen, Bud Doty andDoes I through X, Inclusive, Appellants.

Civ. 61582.

Court of Appeal, Second District, Division 1, California.

June 24, 1981.

Martin Wolff, San Luis Obispo, for appellants

Collison & Kersten, Santa Barbara, for respondent.

Lasky, Haas, Cohler & Munter and Moses Lasky, San Francisco, for amicus curiae California Ass'n of Realtors.

SPENCER, Presiding Justice.

INTRODUCTION

Appellants (respondents below) Larsen Realty, Inc., Barbara Larsen and Bud Doty appeal from a judgment confirming an arbitration award in favor of respondent (petitioner below) Charles R. King. Appellants opposed the petition for confirmation on the ground that there had been no lawful arbitration.

STATEMENT OF FACTS

On July 16, 1979, the California Association of Realtors advised members and appellants Barbara Larsen and Bud Doty that member and respondent Charles R. King had requested interboard arbitration of a controversy between the parties over a real estate sales commission. At that time, appellants were members of the Paso Robles Board of Realtors and respondent was a member of the Santa Ynez Valley Board of Realtors. Appellants filed, by letter, an objection to the jurisdiction and authority of the California Association of Realtors on the ground that they had not entered into a written agreement to the arbitration of interboard disputes. Appellants' counsel subsequently advised the California Association of Realtors that any attempt to force appellants into interboard arbitration would be opposed. In response, appellants were advised that their proper course of action was "to complete and return (the) action in this matter so that it may be determined on all issues, including jurisdiction."

On October 2, 1979, appellants received a notice of hearing of the proposed arbitration bearing the notation "The response has not been received from the Respondent (appellants herein), however the hearing will proceed without it." Appellants' counsel replied, referring to the earlier letter in objection to jurisdiction as a filed written response and stating that, "Under the circumstances your only remedy to force arbitration is through the appropriate action in Superior Court for mandamus." Counsel further advised that appellants would not appear at the scheduled hearing.

On October 30, 1979, appellants were advised that the California Association of Realtors intended to proceed with arbitration in their absence, to which appellants' counsel replied that a unilateral arbitration would be considered an abuse of process. On November 20, 1979, the California Board of Realtors interboard arbitration panel held an arbitration which respondent attended but appellants did not. After taking evidence, the arbitrator made an award in favor of respondent, a copy of which was duly mailed to appellants. Thereafter, respondent sought confirmation of the award.

When appellants applied for membership in the Paso Robles Board of Realtors they agreed "to abide by the Code of Ethics of the National Association of Realtors, and the Constitution, Bylaws and Rules and Regulations of the Paso Robles Board of Realtors, California Association of Realtors, the State Association, and National Association of Realtors, the National Association." The bylaws of the Paso Robles Board of The California Association of Realtors Code of Ethics and Arbitration Manual Part Two, Section 15 imposes on members a duty to submit to interboard arbitration in the event that local bylaws contain a similar requirement and arbitration facilities are available. The California Association of Realtors Inter-Board Arbitration Manual establishes facilities for the arbitration of disputes between members of different local boards affiliated with the state association. Section 5, subdivision (c) provides that the party complained of is bound to arbitrate if so bound by local bylaws regardless of whether he submits a response to the arbitration complaint. Section 14 provides that an arbitrator may hear and determine the controversy upon the evidence produced at a hearing scheduled at the request of either party, notwithstanding the failure to appear of one duly notified party.

Realtors require applicants to agree to abide by the constitution and bylaws of the state association (Art. V, § 1), and impose upon members the duty to arbitrate as set forth in the Arbitration Manual (Art. VII). The bylaws of the Santa Ynez Valley Board of Realtors contain identical provisions. Appellant Larsen read the bylaws of the Paso Robles Board of Realtors upon applying for membership while appellant Doty read his application for membership prior to signing it and enjoyed familiarity with the Arbitration Manual.

CONTENTIONS

I

Appellants contend that Code of Civil Procedure section 1281.2 provides an exclusive statutory procedure to compel arbitration upon a party's refusal to comply with a demand for arbitration.

II

Appellants further assert that the trial court lacked the authority to make a post-arbitration finding that the arbitration was lawfully conducted pursuant to an underlying written agreement.

DISCUSSION

I

There is no merit to appellants' contention that Code of Civil Procedure section 1281.2 ¹ provides an exclusive statutory remedy to compel arbitration. It is well settled that an arbitration agreement may be self- executing, its provisions obviating the need to resort to statutory proceedings. (Brink v. Allegro Builders, Inc. (1962) 58 Cal.2d 577, 579, 25 Cal.Rptr. 556, 375 P.2d 496; Mitchum, Jones & Templeton, Inc. v. Chronis (1977) 72 Cal.App.3d 596, 600, 140 Cal.Rptr. 160; Kustom Kraft Homes v. Leivenstein (1971) 14 Cal.App.3d 805, 810-811, 92 Cal.Rptr. 650.) The statutory scheme embodied in section 1281.2 was designed to afford a remedy where the parties have not provided for the contingency of refusal to comply with a request to arbitrate. (Brink v. Allegro Buildings, Inc., supra, 58 Cal.2d 577, 579, 25 Cal.Rptr. 556, 375 P.2d 496.) An arbitration agreement is self-executing where it "permits and provides for arbitration under rules therein incorporated." (Mitchum, Jones & Templeton, Inc. v. Chronis, supra, 72 Cal.App.3d 596, 601, 140 Cal.Rptr. 160.)

In the instant case, the application for membership in the Paso Robles Board of Realtors which appellants signed provide that the member agrees to abide by the constitution, bylaws, rules and regulations of the local board and the state association. The Paso Robles Board of Realtors Bylaws impose upon members the duty to arbitrate on the terms set forth in the California Association of Realtors Arbitration Manual. The Arbitration Manual sets forth a complete scheme for arbitration, including interboard arbitration providing facilities are available and the Interboard Arbitration Manual establishes the requisite facilities. Hence the entire scheme of interboard arbitration was incorporated into the bylaws of the Paso Robles Board of Realtors. When the rules set forth in the Interboard Arbitration Manual providing that arbitration properly demanded by either disputant may proceed in the absence of a party who refuses to appear are read into that provision of the application for membership which requires members to abide by the bylaws of the Paso Robles Board of Realtors, the contract of membership is comprehensive enough to be a self-executing arbitration agreement.

Appellants' assertion that the preamble to the Code of Ethics and Arbitration Manual of the Board establishes a contractual duty to petition a court to compel arbitration is specious. The preamble does no more than set forth considerations of prudence with respect to Board conduct, providing guidance aimed at the "protection ... against (the) necessity of expensive and unjustified legal action." Accordingly, the preamble advises that, in determining whether to discipline a member for refusing to fulfill his arbitration duties or to petition a court to compel arbitration or enforce an arbitration award, the "Board should consider lawfulness but also prudence and take the course which exposes the Board to no litigation or to the least expensive litigation or to litigation least likely to result in liability, bearing in mind the uncertainties of all litigation." No logical construction of this language creates any limitation on the right to enforce a self-executing arbitration agreement.

We note that the only limitation imposed on the compulsory duty to arbitrate is contained in Part Two, Section 13 of the Arbitration Manual, incorporated by reference into the Paso Robles Board of Realtors Bylaws. Section 13, subdivision (b) provides: "Every nonmember shall be entitled to invoke the arbitration facilities of the Board in any dispute with a member, however, it shall be optional with the member as to whether he will submit a claim to arbitration by a nonmember who is engaged in the real estate business."

Appellants' attempt to wrest from this language the existence of no more than a permissive opportunity to arbitrate interboard disputes, rather than a mandatory duty, must fail. The whole of a contract is to be taken together so as to give effect to every part. (Civ.Code, § 1641.) Part Two, Section 15 of the Arbitration Manual creates a mandatory duty to submit to interboard arbitration. Hence, when read with Section 15, the permissive privilege granted in Section 13 clearly applies only to intraboard arbitration (i. e., arbitration before a local board of realtors rather than the California Real Estate Association's interboard facilities).

Finally, we note that appellants' argument that even a self-executing arbitration...