Mansouri v. Superior Court

• Decision Date: 28 January 2010
• Docket Number: No. C062366.,C062366.
• Citation: 181 Cal.App.4th 633
• Court: California Court of Appeals Court of Appeals
• Parties: ZARI MANSOURI, Petitioner, v. THE SUPERIOR COURT OF PLACER COUNTY, Respondent. FLEUR DU LAC ESTATES ASSOCIATION, Real Party in Interest.

181 Cal.App.4th 633

ZARI MANSOURI, Petitioner, v. THE SUPERIOR COURT OF PLACER COUNTY, Respondent FLEUR DU LAC ESTATES ASSOCIATION, Real Party in Interest.

No. C062366.

Court of Appeals of California, Third District.

January 28, 2010.

CERTIFIED FOR PARTIAL PUBLICATION^*

Manatt, Phelps & Phillips, Andrew A. Bassak and Benjamin G. Shatz for Petitioner.

No appearance for Respondent.

Sproul Trost, Thomas G. Trost, Gregory L. Maxim and Jason M. Sherman for Real Party in Interest.

OPINION

CANTIL-SAKAUYE, J.

A dispute arose between petitioner Zari Mansouri and her homeowners association, the Fleur du Lac Estates Association (Association), after Mansouri remodeled her condominium's patio. The Association obtained a court order compelling arbitration of the dispute under an arbitration provision contained in the Second Restated Declaration of Covenants, Conditions and Restrictions for the Association (CC&R's). The trial court awarded attorney fees to the Association for its expense in bringing the petition to compel arbitration. We granted an alternative writ in this mandamus proceeding to consider (1) whether the arbitration provision in the CC&R's is unenforceable and unconscionable; (2) if the arbitration provision is valid, whether this dispute falls outside of the scope of the arbitration provision; and (3) whether the Association complied with the applicable statutory requirements for a petition to compel arbitration. We conclude the arbitration provision is enforceable, is not unconscionable, and is applicable. However, in the published portion of this opinion, we conclude a party seeking to compel arbitration under Code of Civil Procedure section 1281.2 (section 1281.2) must establish it demanded arbitration under the parties' arbitration agreement and that the other party refused to arbitrate under the agreement before it is entitled to an order granting a petition to compel such arbitration. As the Association here failed to show it requested Mansouri to arbitrate under the arbitration provision of the CC&R's and that Mansouri refused to arbitrate under such provision, its petition to compel such arbitration should have been denied. We will issue a writ of mandate requiring the trial court to vacate its order compelling arbitration and awarding attorney fees and to enter a new order denying the Association's petition.

BACKGROUND^*

DISCUSSION

I., II.^*

III. THE ASSOCIATION FAILED TO COMPLY WITH THE APPLICABLE STATUTORY REQUIREMENTS FOR A PETITION TO COMPEL ARBITRATION

Prior to filing the petition to compel arbitration, the Association wrote Mansouri requesting that she agree to submit the dispute to binding arbitration before a single arbitrator, unilaterally preselected by the Association. The letter indicated that if Mansouri did not agree, the Association would file "a court action for injunctive and declaratory relief and attorneys fees to enforce [her] compliance." (Italics added.) The letter made no reference to the arbitration provision of the CC&R's (section 16.10), did not offer the three person form of arbitration set forth in section 16.10, and did not inform Mansouri that a petition to compel arbitration would be filed if she refused.

Mansouri claims the trial court erred in granting the Association's motion to compel arbitration because the Association failed to properly satisfy its obligation under Civil Code section 1369.520 (section 1369.520), subdivision (a), to endeavor to submit the dispute to alternative dispute resolution before it filed its petition to compel arbitration. Mansouri contends section 1369.520 requires the Association to offer her the kind of arbitration (three person) specified under the arbitration provision of the CC&R's as a prerequisite to filing the petition to compel arbitration. The Association claims substantial evidence supports the trial court's finding that it did "in good faith endeavor[] to submit this dispute to alternative dispute resolution before the filing of this court action[]" as required by section 1369.520.

Section 1369.520, subdivision (a), reads: "An association or an owner or a member of a common interest development may not file an enforcement action in the superior court unless the parties have endeavored to submit their dispute to alternative dispute resolution pursuant to this article." Subdivision (b) of section 1369.520, however, limits the application of the section "to an enforcement action that is solely for declaratory, injunctive, or writ relief, or for that relief in conjunction with a claim for monetary damages not in excess of the jurisdictional limits stated in Sections 116.220 and 116.221 of the Code of Civil Procedure."

Section 1369.520, subdivision (a) does not apply to this case; the Association did not file "an enforcement action" as defined by section 1369.520. (§ 1369.520, subd. (b).) Although the Association threatened to file a court action for injunctive and declaratory relief in its letter to Mansouri offering arbitration, it subsequently took the position that the dispute fell within the binding arbitration provisions of the CC&R's, section 16.10, and filed the petition to compel arbitration that is the subject of this writ. The applicable statutory provision for the Association's petition to compel arbitration is not Civil Code section 1369.520, but Code of Civil Procedure section 1281.2.

Subject to exceptions not applicable here, section 1281.2 provides that: "On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such 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...." (Italics added.)

We requested and received supplemental briefs from the parties addressing whether a demand for arbitration under the parties' agreement to arbitrate and a party's refusal to arbitrate under the agreement are preconditions of a petition to compel arbitration under section 1281.2.

The Association filed a supplemental brief that fails to address whether section 1281.2 requires a demand and refusal under the agreement before a petition to compel arbitration under the agreement is appropriate. Instead, the Association argues the CC&R's do not contain such a prerequisite; Mansouri forfeited her right to assert the claim that the Association failed to satisfy section 1281.2 when she failed to raise the issue before the trial court; and that Mansouri's conduct waived and/or excused the Association of any requirement that it demand arbitration under the terms of section 16.10 prior to filing its petition to compel arbitration.

(1) Before we consider whether section 1281.2 contains a statutory prerequisite of a prior demand and refusal to arbitrate under the agreement,⁶ we consider whether Mansouri's failure to argue section 1281.2 to the trial court forfeits the issue here. In support of its argument for such result, the Association cites case law expressing the well-settled rule that "`[a] party is not permitted to change his position and adopt a new and different theory on appeal. To permit him to do so would not only be unfair to the trial court, but manifestly unjust to the opposing litigant. [Citation.]'" (Richmond v. Dart Industries, Inc. (1987) 196 Cal.App.3d 869, 874 , quoting Ernst v. Searle (1933) 218 Cal. 233, 240-241 ; see Bogacki v. Board of Supervisors (1971) 5 Cal.3d 771, 780 [97 Cal.Rptr. 657, 489 P.2d 537]; Bank of America v. Cory (1985) 164 Cal.App.3d 66, 78, fn. 4 ; 9 Witkin, Cal. Procedure (5th ed. 2008) Appeal, § 407, pp. 466-468.)

However, this rule is discretionary with the reviewing court and subject to several exceptions. (Watson v. Department of Transportation (1998) 68 Cal.App.4th 885, 890 .) First, "[t]he general rule confining the parties upon appeal to the theory advanced below is based on the rationale that the opposing party should not be required to defend for the first time on appeal against a new theory that `contemplates a factual situation the consequences of which are open to controversy and were not put in issue or presented at the trial.' [Citation.]" (Ward v. Taggart (1959) 51 Cal.2d 736, 742 .) Consequently, "an appellate court may allow an appellant to assert a new theory of the case on appeal where the facts were clearly put at issue at trial and are undisputed on appeal." (Richmond v. Dart Industries, Inc., supra, 196 Cal.App.3d at p. 879.) Second, a "`court may refuse to follow the doctrine where the error is too fundamental to be ignored, e.g., in cases of illegality, unclean hands, complete failure to state a cause of action, or variance so fundamental as to constitute "departure" or failure of proof. [Citations.]'" (Watson v. Department of Transportation, supra, at p. 890, italics added.) Both of these exceptions appear applicable here.

In the trial court, Mansouri opposed the petition to compel arbitration on the ground, inter alia, that the Association did not in good faith endeavor to submit this dispute to alternative dispute resolution under section 1369.520. In making this argument, Mansouri specifically contended the Association's offer of binding arbitration by a single arbitrator contradicted her right under the CC&R's to a panel of three arbitrators. This argument placed at issue the facts surrounding the Association's request for arbitration and its subsequent communications and negotiations with Mansouri regarding possible arbitration. The Association was on notice from that point that Mansouri claimed the Association improperly offered her arbitration only by a preselected single arbitrator. In its reply to Mansouri's opposition, however, the Association never asserted it had in fact offered arbitration with a panel of three arbitrators under the terms of section 16.10. The Association never submitted the supplemental evidence,...