Académique Documents
Professionnel Documents
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S167651
INTHE
Respondent.
INTE.RGULF CONSTRUCTION
CORPORATION, et al.
IN THE
Respondent.
INTERGULF CONSTRUCTION
CORPORATION, et al.
Page No.
Table of Authorities ii
Introduction 1
Conclusion 15
Legal Argument 19
Certificate of Compliance 22
Table of Authorities
Page(s)
FEDERAL CASES
STATE CASES
11
Harper v. Ultimo
(2003) 113 Cal.App.4
th 1402 19
McManus v. CIBC World Markets Corp.
(2003) 109 CaLApp.4th 76 19
Nahrstedt v. Lakeside Village Condominium Assn
(1994)8 Cal.4th 361 7, 13
Pardee Construction Company v. Superior Court
(2002) 100 Cal.App.4th 1081 20
Share v. Casiano Bel-Air Homeowners Assn.
(1989) 215 Cal.App.3d 515 13
Villa Milano Homeowners Assn. v. Ii Davorge
(2000)84 Cal.App.4th 819 4, 11, 12, 19
STATE STATUTES
RULES
CONSTITUTIONAL PRovisIoNs
111
OTHER AUTHORITIES
iv
INTRODUCTION
TRIAL”. (Exh. 60, pp. 1532, 1626-1632; Exh. 67, p. 2547:1-5; Opinion, p. 5.)
This provision, beginning on page 83 of the 86-page CC&Rs, states that all
manage and maintain the building exterior and structural elements of the project
section 638.’ (Id.) The Judicial Referee would be empowered under this CC&R
provision to resolve not only all legal and factual disputes, but also to determine
I
Before the Association existed as an independent entity, and before any of
the condominium units were sold, Interguif unilaterally drafted, signed, and
recorded the CC&Rs. (Exh. 60, pp. 1532-1634; Opinion p. 14.) The CC&Rs
to resolve any disputes with Intergulf under the terms of Interguif’ s Judicial
the bearing walls of the high rise buildings, and equipment between floors and
ceilings, whereas the individual owners are generally responsible for only the unit
design and construction defects. (Opinion, p. 3.) Intergulf moved the trial court
for an order appointing a Judicial Referee for all purposes including trial, pursuant
to section 638, solely relying upon the CC&Rs as its contract. (Id.)
Interguif represented to the trial court that its motion was based solely on
the CC&Rs, and not any of the purchase contracts for the individual condominium
units. (Exh. 24, 23 5:2 — 236:3.) The Court of Appeal also noted the individual
purchase contracts were not applicable to the proceeding. (Opinion, p.2, fn. 2.) By
the time the legal action was filed, 60% of the members of the Association were
condominium owners who bought their homes on the secondary market, and
2
therefore had no purchase contract with Interguif. [Exh. 26, p 264:12 265:3; Exh.
-
constitute a “written contract” for judicial reference between the Association and
Developer as required by section 638 and that even if it was a “written contract,” it
contemplated the term in the context of section 638. (Opinion, pp. 11-13.) Citing
this Court’s opinion in Grafton Partners v. Superior Court (2005) 36 Cal.4th 944,
965-966, the Court of Appeal noted the “Legislatures, when providing for the
contractual waiver of that right, are particularly concerned with the formalities of
the process and the actual existence of a mutual agreement to waive the right.”
analysis” on the question of whether CC&Rs fall within the ambit of section 638.
(Petition, p. 7.) Interguif rebukes the Court for its conclusion that the relationship
CC&Rs “lacks the majesty” of a written contract. (Id.) Citing case law
Because of this conclusion, the Court of Appeal did not need to address the
alternative assertion the jury waiver is unconscionable. (Opinion, p. 14.)
3
recognizing some similarities between CC&Rs and contracts in other contexts,
For all of its bluster and sarcasm, Interguif cannot escape the fact that the
Decision in this case is well supported by both statutory and decisional law
Graflon Partners) the Court of Appeal actually agreed with the holding of Villa
Milano that CC&RS for a common interest development lack the requisite mutual
12.) Here, the Court of Appeal reasoned that although certain contractual
principles may be applied to CC&Rs and may provide a means for analyzing a
controversy arising under the CC&Rs “when the issue involved is the operation or
owners and the association,” CC&Rs are not identified in section 638 as the type
Association’s design and construction defect claims against the developer. (Id.)
the Constitution requires any expansion of a statute providing for a jury trial
4
waiver come from the Legislature, not the Judiciary. Interguif’ s Petition should be
I.
In its Petition, Interguif contends the Association waived its right to a jury
trial by entering into the CC&Rs, and seeks to enforce the waiver under section
638. The Court of Appeal disagreed, based on its thoughtful analysis of this
reference under section 638 is the waiver of the right to jury trial.”
4 (Opinion, p.
4.) The Court of Appeal then recognized jury trial waivers must be analyzed
under a special set of rules “anchored in our Constitution and the policy that the
right is a fundamental one and that, while it may be waived, the circumstances and
maimer of its waiver are serious matters requiring actual notice and meaningful
5
The Court of Appeal further explained:
In Grafton the court held that the rules under which the
parties to a lawsuit may waive jury trial must be prescribed by the
Legislature and that the power to do so may not be delegated to the
courts. (36 Cal.4th at pp. 952-955.) The court noted this restriction
existed because the right to trial by jury is” ‘too sacred in its
character to be frittered away or committed to the uncontrolled
caprice of every judge or magistrate in the State.’” (36 Cal.4th at p.
956, quoting Exline v. Smith (1855)5 Cal. 112, 113.) The court
also noted that the right to trial by jury is “considered so
fundamental that [any] ambiguity in the statute permitting such
waivers must be ‘resolved in favor of according to a litigant a
jury trial.’ [Citation.]” (Grafton Partners v. Superior Court, supra,
36 Cal.4th at p. 956.) The court noted the right is so important it
must be “zealously guarded’ in the face of a claimed waiver.”
(Ibid.) The court observed that doubts in interpreting the
waiver provisions of section 631 had been resolved in favor of a
litigant’s right to jury trial. (Id. at pp. 956, 958.)
6
unregulated freedom of contract; rather, they seek to protect the
constitutional right to jury trial with a number of safeguards not
typical of commercial law, including requirements that the party
seeking to enforce the agreement bear the burden of proving that the
waiver clause was entered into knowingly and voluntarily,
restrictions on the type of contracts that may contain jury waivers,
presumptions against a finding of voluntariness, inquires regarding
the parties’ representation by counsel as well as relative bargaining
power and sophistication, and consideration of font size and
placement of waiver clause within the contract.” (Grafton Partners,
supra, 36 Cal.4th at pp. 965-966.) (Opinion, pp. 9-11, bold added.)
Thus, in rendering its opinion, the Court of Appeal faithfully applied the
claim under section 638, a statute resulting in a waiver of the right to jury trial.
concluding the Treo CC&Rs did not constitute a “written contract” between
Turning first to the statutory authority for CC&Rs and then to Supreme
Court precedent interpreting CC&Rs, the Court of Appeal observed CC&Rs for
the association, or by both.” (Opinion pp. 6, 8-11.) Relying upon this Court’s
Cal.4th 361, the Court of Appeal further reasoned the doctrine of equitable
7
servitudes was created to provide for “enforcement of promises restricting land
use when there is no privity of contract between parties seeking to enforce the
privity) with Intergulf’s claim the CC&Rs are a “written contract between the
The Court also noted the “CC&Rs are 86 pages long. They deal with a
myriad of matters ranging, for example, from the right of owners to the exclusive
lengthy, are adhesive in nature, are written by developers perhaps years before
many owners buy, and often, as here with regard to the waiver of trial by jury,
cannot be modified by the association. Further, the document is not signed by the
parties.” (Opinion, p. 14.) The Court of Appeal concluded CC&Rs are not a
8
Interguif camouflages its request for a judicial expansion of section 638 by
avoiding the plain language of the statute. Section 638 only applies to (a) written
contracts and leases containing a reference agreement, and (b) only when the
Because of the unilateral manner in which the Developer drafts, signs, and
records the CC&Rs before the association exists independently, the CC&Rs is
clearly something other than a “contract or lease” between the association and
The Court of Appeal simply applied well settled principles this Court has
afready pronounced in the context ofjury trial waivers. Section 638 does not
already, in effect, dispensed with the crux of Intergulf’s Petition, as follows: “[a]s
9
prescribes a jury waiver method, we cannot enforce it.” Graflon Partners, supra,
36 Cal.4t at 956.
that authority for a jury trial waiver must come from the Legislature, not the
Judiciary, as a jury trial can only be “waived by the consent of the parties
The Legislature has been prolific over the past fifteen years in establishing
Legislature has yet to expand section 638 to apply to the CC&Rs for a common
interest development.
[E}xcept in the most extreme cases where legislative intent and the
underlying purpose are at odds with the plain language of the statute,
an appellate court should exercise judicial restraint, stay its hand,
and refrain from rewriting a statute to find an intent not expressed by
the Legislature.” Unzueta v. Ocean View School Dist. (1992) 6
Cal.App.4th 1689, 1700, citing Wells Fargo Bank v. Superior Court
(1991) 53 Cal.3d 1082, 1098.
This Court should deny review, and defer this issue to the Legislature.
Through the Legislative process, the myriad of due process concerns that would
arise from such a statutory scheme could be thoroughly negotiated and addressed.
10
D. The Decision Is Consistent With Fourth District, Division Three’s
Decision In Villa Milano v. Ii Davorge (2000) 84 cal.App.4th 819.
clause (an arbitration clause) the developer included in the CC&Rs for a
arbitration agreement between the Association and Developer, the Court went on
to hold the “agreement” in the CC&Rs was so devoid of mutual consent that the
In its Petition, Interguif boldly ignores the central holding of Villa Milano
that the arbitration clause lacked mutual consent and was unenforceable in an
effort to manufacture a conflict of law that does not exist. The Court of Appeal’s
Decision in this matter is in accord with Villa Milano on this fundamental point.
The Villa Milano court conceded “..the cited cases do not provide an
analytical framework for addressing the issue why the homeowners association,
which makes no purchase, is also bound contractually. However, neither the
Association nor Ii Davorge raises this point, so we need not address it at length.
....“84 Cal.App.4
’ 819 at 826 (fn. 4).
t
11
In analyzing Villa Milano, the Court of Appeal aptly noted Villa Milano
preceded Graflon Partners. (Opinion 11.) Neither side in Villa Milano raised the
Constitutional issues that a jury trial waiver implicates, or the standard of review
applicable to a statute providing for jury waivers. More importantly, the Court of
Appeal in this case — in a manner entirely consistent with Villa Milano’s holding
an arbitration clause buried in the CC&Rs lacks mutual consent of the parties --
correctly observed the CC&Rs unilaterally created by the developer lacks the type
a jury trial under section 638. (Opinion 12-14.) Treo and Villa Milano reached the
same conclusion: CC&Rs are not the proper vehicle for a jury trial waiver under
The remaining cases Intergulf cites for the proposition the CC&Rs
constitute a “written contract” between the Association and Developer are cases in
which the reviewing courts observed CC&Rs create obligations between owners,
or between the owners and the association, not the association and developer.
and some of the opinions discuss the hybrid nature of CC&Rs (part property, part
12
contract). See Citizens for Covenant Compliance v. Anderson (1995) 12 Cal.4th
345, 366 (owner versus owner dispute; CC&Rs are enforceable equitable
B.C.E. Development, Inc. v. Smith (1989) 215 Cal.App.3d 1142, also relied on by
Interguif, is a quirky case in which the developer (by the express consent of the
owners, unlike here) continued to control the Architectural Committee long after
sales were completed. B.C.E., supra, does not support Interguif’s Petition. Like
the other cases, the B. C.E. Court did not refer to the CC&Rs as a contract but as an
equitable servitude relating to the use of the property (because there was no
property law, and some principles from contract law. None of these cases stand
for the notion CC&Rs are “written contracts” between a developer and the
See also Frances T. v. Village Green Owners Assn. (1986) 42 Cal.3d 490,
512-513; Share v. Casiano Bel-Air Homeowners Assn. (1989) 215 Cal.App.3d
515, 522-523; Franklin v. Marie Antoinette Condominium Owners Assn. (1993) 19
Cal.App.4th 824,828, 833-834; Fourth La Costa Condominium Owners Assn. v.
Seith (2008) 159 Cal.App.4th 563-575, all owner/association disputes..
13
association, as defined by the Civil Code, and as strictly required under section
638. In fact, all the cases Interguif relies on stand for the proposition CC&Rs are a
means to enforce promises regarding the use of the property, in the absence of a
contract. The Court of Appeal was correct to stop at this threshold issue under
section 638.
In Ross v. Moffitt, 417 U.S. 600, 617 (1974), Chief Justice Rehnquist noted
that a grant of review “depends on numerous factors other than the perceived
correctness of the judgment [the Court is] asked to review.” For example, “the
Court prefers to take cases in which the facts are simple and clear and the legal
[cited by Allapattah Servs., Inc. v. Exxon Corp. (11th Cir.2004) 362 F.3d 739,
This case does not present a suitable vehicle for Supreme Court review of
whether CC&Rs are a proper means to enforce a jury trial waiver under section
638. Other issues complicate the ultimate disposition. Andrulonis v. US. (2nd
Cir. 1994) 26 F.3d 1224, 1228-1229 [“relatively unusual and complicated facts”].
As set forth above, the Association’s opposition to Interguif’s motion was two
fold. First, the CC&Rs do not constitute a “written contract” between the
14
Second and in the alternative, the Association argued if the CC&Rs are deemed a
The Court of Appeal agreed the CC&Rs are not a “written contract”
between Interguif and the Association under section 638 and consequently did not
reach the alternative issue of unconscionability. Thus, review by this Court will
not fully or cleanly resolve the dispute between these parties. At the very least,
this Court would either have to remand to the Court of Appeal for further
Additional Issue for Review.) See White v. Finkbeiner (7th Cir. 1985) 753 F.2d
540, 546, fn. I [“By allowing issues to percolate up through the various circuits,
the Supreme Court .. . [benefits] from observing the treatment of issues in different
contexts, the alternative resolutions of issues, and even the mistakes of appellate
courts.”]. In sum, these issues are not “cleanly presented” to this Court.
CONCLUSION
The Court of Appeal faithfully applied the principles this Court has already
pronounced, that the Constitution requires any purported jury trial waiver be made
beyond its express terms to apply to CC&Rs would be improper, and that is the
bedrock upon which the Decision properly rests. Review of the Court of Appeal’s
decision is not necessary, as there is no conflict of law and the Decision is well
15
supported. Interguif’s Petition does not present any other basis for invoking this
By:
Jon H. Epsten, Esq.
Anne L. Rauch, Esq.
Attorneys for TREO @ KETTNER
HOMEOWNERS ASSOCIATION
16
STATEMENT OF ADDITIONAL IS SUE
In the event this Court grants review on the issue framed by Interguif’s
Petition, Association requests the Court consider the following additional issue.
This additional issue was included in Association’s Petition for Writ of Mandate
as an alternative argument to its first position that the CC&Rs are not a “written
development, stating that all disputes between the homeowners association and the
developer for construction defects must decided by a Judicial Referee, who can
decide all issues of law and disputed facts (even in the context of a motion for
1. Prior to Interguif s sale of any of the units within the Treo @ Kettner
condominium complex located in downtown San Diego, Interguif recorded a
drafted, executed, and recorded the CC&Rs against the Treo @ Kettner project.
(Exh. 60, Page 1532, 1634.)
17
2. There was no negotiation or expression of mutual consent to the
CC&Rs by and between Interguif and the Association. At the time the CC&Rs
controlled the Board of Directors for the Association. (Exh. 13, Page 162:15-19.)
which may be brought by the Association against Interguif for construction defects
enforceable) the Association’s right to a jury trial. (Exh. 60, Pages 1532, 1626-
1632; Exh. 67, Page 2547:1-5.) The Judicial Referee would be empowered to
make all fact determinations not only during trial but also on a motion for
project, and maintains the Common Area of the project, which includes the
Recreational facilities, the structure of the building, the exterior building envelope,
certain common grounds, and other components within the walls and floors of the
building. (Exh. 34, Pages 330, 331, 340, 375.) Owners only maintain their Units,
which are measured (generally speaking) from the interior surfaces of the walls
individual purchase contracts with the purchasers of the individual units, these
provisions related to disputes Owners may have with respect to their separate
18
interests (Exh. 42, Page 1311), as the Owners do not maintain the common areas
of the condominium complex which is the structure of the building. (Exh. 34,
Page 349.) In addition, the Association is an entity separate from the individual
Owners with its own rights, remedies, and obligations for maintenance of the
common areas. (Exh. 34, Page 330 (Section 2.7) and Page 349.)
Association are successor Owners who purchased from someone other than
Intergulj and therefore did not enter into a purchase contract with LNTERGULF
and had no opportunity to negotiate with the developer on any issue including
judicial reference. [Exh. 26, Page 264:12 265:3; Exh. 34, Pages 430-1056
-
Legal Argument
unconscionable because the Association did not expressly consent to it, nor did the
sliding scale analysis. While both must be present, they need not be present in
equal amounts. “There is a sliding scale where the greater the evidence of
19
unconscionability.” McManus v. CIBC World Markets Corp. (2003) 109
Mobile USA, Inc. (2008) 152 Cal.App.4th 571, 579. As set forth above, the CC&R
right to a jury trial in a manner not expressly provided for by statute, and is
therefore against public policy. As the Fourth District Court of Appeal, Division
Court (2002) 100 Cal.App.4th 1081, there are a number of statutes which, taken
together, evince a public policy favoring jury trials in construction defect actions.
(See Civil Code section 1375, providing for trial following alternative dispute
resolution process. See also Code of Civil Procedure section 1298.7, rendering
defect context.)
basic principles of fairness in the law and motion leading up to trial, including the
20
provision which purports to permit the Judicial Referee to decide disputed issues
Association’s claims for design and construction defects against Interguif are
By:
Jon H. Epsten, Esq.
Anne L. Rauch, Esq.
Attorneys for TREO @ KETTNER
HOMEOWNERS ASSOCIATION
21
CERTIFICATE OF COMPLIANCE RE WORD COUNT AND FORMAT
in Times New Roman 13-point font, as counted by the Microsoft Word word
By:
Anne L. Rauch, Esq.
Attorneys for TREO@KETTNER
HOMEOWNERS ASSOCIATION
22
SUPREME COURT OF THE STATE OF CALIFORNIA FOR COURT USE ONLY
TREO@KETTNERHOA
V.
SUPERIOR COURT OF THE STATE OF CALIFORNIA,
FOR THE COUNTY OF SAN DIEGO
INTERGULF_CONSTRUCTION_CORPORATION,_et al,_Real_Parties_in_Interest
Jon H. Epsten (SBN 110480) Tel: (858) 527-0111
Anne L. Rauch (SBN 182990) Fax: (858) 527-1531
EPSTEN GRINNELL & HOWELL, APC
9980 Carroll Canyon Road, 2 Floor
San Diego, CA 92131
DECLARATION OF SERVICE
I, the undersigned, declare: that I am, and was at the time of service of the papers herein referred to, over the age of 18 years,
and not a party to the action; and I am employed in the County of San Diego, California, within which county the subject service
occurred. My business address is 9980 Carroll Canyon Road, 2’’ Floor, San Diego, CA 92131. On November 3,2008, I served
the
following documents:
X (BY MAIL). On November 3, 2008, I caused such document(s) to be placed in an envelope with postage thereon
fully
prepaid to be placed in the United States mail at San Diego, California. I am readily familiar with the practices of Epsten
Grinnell & Howell, APC, for collection and processing of correspondence for mailing with the United States Postal Service,
-‘ Federal Express and UPS. Such correspondence is deposited with the United States Postal Service, Federal Express,
or
UPS the same day in the ordinary course of business. A list of the parties served via First-Class Mail is attached hereto
as
Exhibit “A.”
(BY ELECTRONIC TRANSMISSION). I caused service of such document(s) through the Courtlink system. Upon completion
of said transmission of said document(s), a certified receipt is issued to filing party acknowledging receipt by
Courtlink’s
system. Once Courtlink has served all designated recipients, proof of electronic service is returned to the filing
party.
(BY OVERNIGHT MAIL). I caused such documents to be mailed via overnight mail.
I declare under penalty of perjury that the foregoing is true and correct and that this Declaration was executed
on
November 3, 2008, at San Diego, California.
Dutch Masonry, in pro per East & West Alum Craft, Ltd.
% Klaas Renes % Lindsay Piccoli
1360 Seven Oak Road
7465 Conway Avenue
Escondido, CA 92026
Tel: (760)741-2740 Burnaby, British Columbia Canada V5E 2P7
Fax: (604)438-4021
Attorneys for PROFESSIONAL SERWCE INDUSTRIES Attorney for STARLINE WINDOWS, INC.
Attorneys for VULCAN MATERIALS COMPANY Attorneys for WILLIAM KELLY & SONS, CALIFORNIA, INC.
James Morris, Esq. Office of the Attorney General
KENNEDY & SOUZA, APC Post Office Box 85266
1230 Columbia Street, Suite 600 San Diego, CA 92186
San Diego, CA 92101
Tel: (619)233-8591 On behalf of The People of California
Fax: (619)233-8593