Woolls v. Superior Court, No. B177992.

CourtCalifornia Court of Appeals
Writing for the CourtKlein
Citation25 Cal.Rptr.3d 426,127 Cal.App.4th 197
PartiesPaul WOOLLS, Petitioner, v. SUPERIOR COURT of Los Angeles County, Respondent; Thomas C. Turner et al., Real Parties in Interest.
Decision Date28 February 2005
Docket NumberNo. B177992.
25 Cal.Rptr.3d 426
127 Cal.App.4th 197
Paul WOOLLS, Petitioner,
v.
SUPERIOR COURT of Los Angeles County, Respondent;
Thomas C. Turner et al., Real Parties in Interest.
No. B177992.
Court of Appeal, Second District, Division 3.
February 28, 2005.
Review Denied June 8, 2005.

[25 Cal.Rptr.3d 428]

Paul Woolls, in pro. per., for Petitioner.

No appearance for Respondent.

Law Offices of John A. Belcher, John A. Belcher and Nicholas W. Song, Pasadena, for Real Parties in Interest.

KLEIN, P.J.


127 Cal.App.4th 200

Petitioner Paul Woolls (Woolls) seeks a writ of mandate to set aside respondent superior court's order denying his petition to vacate an arbitration award obtained by real parties in interest Thomas C. Turner and Thomas Turner dba T & T Construction (collectively, Turner). Woolls moved to vacate the award on the ground the arbitration agreement failed to comply with Business and Professions Code section 7191.1

Section 7191 requires arbitration provisions in contracts for work on residential property of one to four units to satisfy certain disclosure requirements, including an advisement to the consumer that he or she is giving up the right to have the dispute litigated in a court or jury trial.

25 Cal.Rptr.3d 429

(§ 7191, subd. (b).) The essential issue presented is the consequence of an arbitration agreement's noncompliance with section 7191.

We conclude the noncompliant arbitration provision cannot be enforced "against any person other than the licensee." (§ 7191, subd. (c).) Therefore, we grant Woolls's petition for writ of mandate.

FACTUAL AND PROCEDURAL BACKGROUND

1. The two arbitration provisions.

On October 8, 2002, Woolls, a homeowner, and Turner, a contractor, entered into a written agreement for the renovation and expansion of Woolls's single family residence (the Agreement). The Agreement, signed by the parties, contained the following arbitration provision: "All claims, disputes, and other matters in question between the parties to this Agreement, arising out of or relating to this Agreement or the breach thereof, shall be decided by mediation and then arbitration in accordance with the Construction Industry

127 Cal.App.4th 201

Arbitration Rules of the American Arbitration Association then obtaining unless the parties mutually agree otherwise. Notice of demand for arbitration shall be filed in writing with the other party of this Agreement and with the American Arbitration Association." (Italics added.)

On the same date, Woolls and Turner also initialed the cover sheet of a second, unsigned document which contained specifications for the project (Specifications). The Specifications contained the following arbitration provision: "Claims or disputes between the Contractor and the Owner arising from this Agreement that are not settled through negotiation shall be offered for mediation according to the rules of the American Arbitration Association. Disagreements not settled by mediation shall be offered for arbitration as per the rules of the American Arbitration Association. Work shall not be halted or slowed by the Contractor during negotiation, mediation, or arbitration of such disputes." (Italics added.)

Neither of these arbitration provisions included an advisement that by agreeing to arbitration, a party is waiving the right to a court or jury trial.

2. Disputes arise and lead to Turner's instituting arbitration proceedings against Woolls.

During the course of the work, disputes arose among Woolls, Turner and Stock Building Supply of California dba Terry Lumber (Terry Lumber)2 regarding Turner's performance of the terms of the contract and Terry Lumber's billing for building materials. Ultimately, Woolls replaced Turner with other contractors to complete the work.

On or about October 8, 2003, Terry Lumber recorded a mechanics' lien against Woolls's property for the sum of $6,936.81.

On January 5, 2004, Terry Lumber filed suit against Turner and Woolls. The first cause of action against Turner pled a breach of contract. The second cause of action against Woolls sought foreclosure of the mechanics' lien.

On February 2, 2004, Woolls answered the complaint and filed a cross-complaint against Terry Lumber and Turner.

Turner initiated an arbitration proceeding against Woolls pursuant to the arbitration clause in the construction contract.

127 Cal.App.4th 202

3. The arbitration proceeds, notwithstanding Woolls's objections, and concludes in an award for Turner.

On March 16, 2004, prior to the start of the arbitration, Woolls submitted written

25 Cal.Rptr.3d 430

objections to the arbitrator, contending the arbitration agreement failed to comply with section 7191 in various particulars so as to render the arbitration clause unenforceable against Woolls.

Despite a pending motion by Woolls to stay the arbitration, and despite Woolls's objections to the arbitrator, the arbitrator proceeded with the hearing on March 16 through 18, 2004. According to the writ petition, Woolls participated in the arbitration "to preserve his rights and to prevent a runaway default judgment."

On April 5, 2004, the arbitrator issued an award, directing Woolls to pay $46,881.58 to Turner, as well as administrative fees, the arbitrator's compensation and expenses.

4. Woolls unsuccessfully moves to vacate the award for noncompliance with section 7191.

Turner filed a petition to confirm the award and Woolls filed a petition to vacate the award. Woolls again argued the arbitration agreement did not comply with section 7191, rendering it unenforceable.

On August 9, 2004, after hearing the matter, the trial court issued an extensive minute order, concluding the arbitration provision was enforceable against Woolls, "despite the absence of full compliance with the cautionary statements set forth in [section] 7191." The ruling provides:

"The parties do not dispute that they entered into two contracts for the construction on this project, both of which contained arbitration provisions. The parties also do not seriously dispute that neither of these arbitration provisions complies strictly with the requirements set forth in Business & Professions Code § 7191.... [¶] ... [¶]

"This statute, although enacted in 1994, has not yet been interpreted in any published appellate decision. Woolls argues the proper interpretation of [section 7191,] subdivision (c) is that an arbitration provision which does not comply with the prior subdivision regarding font size and language cannot be enforced against anyone other than the licensee. [Turner] argues that the use [in subdivision (c) ] of the term `may' permits discretion of the part of the trial court with respect to the enforcement of the provision, and that circumstances here dictate against strict enforcement of this provision and in favor of

127 Cal.App.4th 203

enforcing the arbitration provision against the home owner. There is a strong public policy in favor of arbitration of disputes and any doubts concerning the scope of arbitrable disputes should generally be resolved in favor of arbitration. [Citation.] When interpreting agreements to arbitrate, the court should generally liberally interpret such an agreement, and arbitration should be ordered unless the agreement clearly does not apply to the dispute in question. [Citation.] This statute, as it [a]ffects the enforceability of arbitration agreements, presumably should also be read in this context of favoring arbitration.

"In interpreting a statute, the court begins with the language of the statute as the most reliable indicator of legislative intent. [Citation.] Accordingly, where the word `may' is used in a statute, it has been held that the word may be read to make the provisions permissive, rather than mandatory. [Citation.]

"Here, the statute instructs that the arbitration provision `may not' be enforced against a particular party, not that it `shall not' be enforced. In these circumstances, the court finds that the use of the term `may' gives rise to a permissive meaning, and may be construed to read that the court `may' enforce a non-complying arbitration provision if the circumstances so warrant. Such circumstances

25 Cal.Rptr.3d 431

are present here. The statute appears primarily directed to putting a residential consumer on notice that he or she is giving up any rights to a jury trial and/or to an appeal of the arbitrator's decision. Business and Professions Code § 7191(b). Here, however, Woolls is a licensed attorney, who was fully aware that by signing an arbitration provision, he was waiving his right to a jury trial and his right to appeal. In fact, Woolls has testified that he objected to the inclusion of the arbitration provision in the agreements, that the parties actually negotiated this point, and that Woolls voluntarily executed the agreement knowing it contained an arbitration provision. Moreover, even though Woolls raised the issue of fraud in the procurement of the provision at several junctures in the proceeding, he did not raise the issue of the provision's technical failure to follow Business & Professions Code § 7191 as a ground for this argument until the first day of the arbitration. Instead, Woolls has argued all along that he voluntarily signed the agreement, knowing it contained an arbitration provision, but that he agreed to arbitration based on fraudulent statements by Turner that Turner never had any client complain about his work. He has never argued that he did not fully appreciate the meaning and effect of the arbitration provision.

"On the day of the arbitration, rather than pursue his then recognized rights under the Business & Professions Code, Woolls instead voluntarily participated in the arbitration, and raised his own cross claims. These circumstances indicate enforcement [of] the arbitration provision against

127 Cal.App.4th 204

Woolls is justified despite the absence of full compliance with the cautionary statements set forth in Business & Professions...

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43 practice notes
  • Baltazar v. Forever 21, Inc., B237173
    • United States
    • California Court of Appeals
    • 20 Marzo 2013
    ...” (Hedges v. Carrigan (2004) 117 Cal.App.4th 578, 585–586, 11 Cal.Rptr.3d 787, citations omitted.) In Woolls v. Superior Court (2005) 127 Cal.App.4th 197, 25 Cal.Rptr.3d 426, the Court of Appeal addressed whether the FAA governed a dispute between a homeowner renovating his single family ho......
  • VALENCIA v. SMYTH, No. B216753.
    • United States
    • California Court of Appeals
    • 1 Junio 2010
    ...language of the Agreement, not an analysis of interstate commerce, dictates the applicable law. (See Woolls v. Superior Court (2005) 127 Cal.App.4th 197, 211-214, 25 Cal.Rptr.3d 426 [party asserting that state law is preempted by FAA has burden of proving transaction involved interstate com......
  • Leos v. Darden Rests., Inc., B241630
    • United States
    • California Court of Appeals
    • 11 Septiembre 2013
    ...a substantial way.’ ” (Hedges v. Carrigan, at pp. 585–586, 11 Cal.Rptr.3d 787, citations omitted.) In Woolls v. Superior Court (2005) 127 Cal.App.4th 197, 25 Cal.Rptr.3d 426, the Court of Appeal addressed whether the FAA governed a dispute between a homeowner renovating his single family ho......
  • Carbajal v. CWPSC, Inc., G050438
    • United States
    • California Court of Appeals
    • 26 Febrero 2016
    ...800199 Cal.Rptr.3d 341(Lane ); Hoover,supra, 206 Cal.App.4th at p. 1207, 142 Cal.Rptr.3d 312 ; Woolls v. Superior Court (2005) 127 Cal.App.4th 197, 211, 25 Cal.Rptr.3d 426 (Woolls ); cf. Shepard,supra, 148 Cal.App.4th at p. 1101, 56 Cal.Rptr.3d 326.)245 Cal.App.4th 239For example, in Lane, ......
  • Request a trial to view additional results
43 cases
  • Baltazar v. Forever 21, Inc., B237173
    • United States
    • California Court of Appeals
    • 20 Marzo 2013
    ...” (Hedges v. Carrigan (2004) 117 Cal.App.4th 578, 585–586, 11 Cal.Rptr.3d 787, citations omitted.) In Woolls v. Superior Court (2005) 127 Cal.App.4th 197, 25 Cal.Rptr.3d 426, the Court of Appeal addressed whether the FAA governed a dispute between a homeowner renovating his single family ho......
  • VALENCIA v. SMYTH, No. B216753.
    • United States
    • California Court of Appeals
    • 1 Junio 2010
    ...language of the Agreement, not an analysis of interstate commerce, dictates the applicable law. (See Woolls v. Superior Court (2005) 127 Cal.App.4th 197, 211-214, 25 Cal.Rptr.3d 426 [party asserting that state law is preempted by FAA has burden of proving transaction involved interstate com......
  • Leos v. Darden Rests., Inc., B241630
    • United States
    • California Court of Appeals
    • 11 Septiembre 2013
    ...a substantial way.’ ” (Hedges v. Carrigan, at pp. 585–586, 11 Cal.Rptr.3d 787, citations omitted.) In Woolls v. Superior Court (2005) 127 Cal.App.4th 197, 25 Cal.Rptr.3d 426, the Court of Appeal addressed whether the FAA governed a dispute between a homeowner renovating his single family ho......
  • Carbajal v. CWPSC, Inc., G050438
    • United States
    • California Court of Appeals
    • 26 Febrero 2016
    ...800199 Cal.Rptr.3d 341(Lane ); Hoover,supra, 206 Cal.App.4th at p. 1207, 142 Cal.Rptr.3d 312 ; Woolls v. Superior Court (2005) 127 Cal.App.4th 197, 211, 25 Cal.Rptr.3d 426 (Woolls ); cf. Shepard,supra, 148 Cal.App.4th at p. 1101, 56 Cal.Rptr.3d 326.)245 Cal.App.4th 239For example, in Lane, ......
  • Request a trial to view additional results

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