Guerra v. Aurora Loan Services CA6 ( 2014 )

Filed 9/19/14 Guerra v. Aurora Loan Services CA6
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SIXTH APPELLATE DISTRICT
JOE GUERRA, H038331
(Santa Clara County
Plaintiff and Respondent, Super. Ct. No. 1-11-CV215595)
v.
AURORA LOAN SERVICES, LLC,
Defendant and Appellant.
Aurora Loan Servicing, LLC (Aurora) appeals from a judgment confirming an
arbitration award in favor of Joe Guerra. Aurora contends that the trial court erred in
granting the motion to compel arbitration. We agree and reverse the judgment.
I. Procedural and Factual Background
On April 1, 2006, Raul Chairez and Guerra entered into an agreement entitled
“LEASE AGREEMENT with OPTION TO PURCHASE & EXTEND” (agreement).
Pursuant to the agreement, Chairez rented the property at 15439 National Avenue in Los
Gatos to Guerra. Both parties lived at the property and Guerra was required to pay
$1,000 per month “in the form of cash or construction services” to Chairez. The
agreement, which was in effect until April 1, 2014, contained an arbitration provision.1
In July or August 2007, Chairez obtained a loan of approximately $1.1 million by
signing a note and a deed of trust. On July 30, 2007, Chairez notified Homecomings
Financial, LLC of the agreement. The note and deed of trust encumbering the property
were recorded on August, 15, 2007.
After Chairez defaulted on the loan in 2009, Aurora commenced nonjudicial
foreclosure proceedings. Aurora was the winning bidder at the trustee’s sale and took
title to the property as the grantee of the trustee’s deed of sale. When Aurora discovered
that Guerra occupied the property, it brought an unlawful detainer action to recover
possession. In defending that action, Guerra presented Aurora with the agreement.
Aurora then dismissed its unlawful detainer action and served Guerra the 90-day notice
as required by the Protecting Tenants at Foreclosure Act of 2009 (Pub.L. No. 111-22, div.
A, tit. VII, §§ 702-704 (May 20, 2009) 123 Stat. 1660).
On January 19, 2010, Aurora filed a second complaint for unlawful detainer
against Guerra. Guerra then brought a motion to compel arbitration, and Aurora opposed
the motion.
1
There are two versions of the agreement in the record. They are identical with the
exception of part of the arbitration provision. Both arbitration provisions essentially
state: “In the event any controversy or claim arising out of this agreement cannot be
settled, such controversy or claim shall be settled by arbitration . . . [¶] and judgment
upon the award may be entered in any court having jurisdiction thereof. And the
prevailing party shall be awarded reasonable attorney’s fees and court costs.” However,
one version states that “the arbitrator has been selected by mutual agreement of the
parties and shall be LightSpeed Company.” The other states that “the arbitrator will
selected [sic] by mutual agreement of the parties. [¶] In the event that an agreement
cannot be reached selecting a [sic] arbitrator, each party will have their attorney select a
[sic] independent arbitrator.”
2
On April 22, 2010, the trial court ordered the matter submitted for binding
arbitration with “LightSpeed Arbitration,” and stayed all further proceedings pending
confirmation of the arbitration award.
In October 2010, the parties submitted their briefs to the arbitrator, Rudy Guzzetta.
According to Guerra’s verified petition to confirm the arbitration award, Aurora did not
appear at the arbitration proceeding.
On March 9, 2011, the arbitrator ordered Aurora to grant deed the property to
Guerra, to cancel its note to the property, and to request that the trustee reconvey the deed
of trust. Guerra was also awarded $14,000 in attorney’s fees. On the same day, the
arbitration award was served on Aurora’s counsel.
On December 23, 2011, Guerra filed a petition to confirm the arbitration award.
On March 13, 2012, Aurora filed opposition to Guerra’s petition to confirm the
arbitration award and requested vacation of the award under Code of Civil Procedure
section 1286.2. Aurora argued: the arbitration provision was void ab initio under Civil
Code section 1953 [arbitration provision in rental agreement is unenforceable as contrary
to public policy]; the arbitrator failed to provide the required conflict of interests
disclosures; the award was procured by means of fraud, corruption or undue means; and
the arbitrator failed to continue the hearing. It also claimed that it had never received the
arbitration award or letters from LightSpeed Company. Guerra filed a reply
memorandum. He argued that the arbitration award was served on Aurora’s counsel
twice before the expiration of the 100-day period in which to challenge an arbitration
award under Code of Civil Procedure section 1288, and disputed Aurora’s history of the
case and the accusations of fraud. Guerra also argued that Civil Code section 1953 was
inapplicable.
On April 26, 2012, the trial court issued an order granting the petition to confirm
the arbitration award. The trial court adopted its tentative ruling in which it found that
Aurora had failed to file a timely petition to vacate the arbitration award under Code of
3
Civil Procedure section 1288. Judgment on the arbitration award was entered on
May 3, 2012. On May 16, 2012, Aurora filed a notice of appeal.
II. Discussion
A. Timeliness of Notice of Appeal
Noting that his counsel had filed a notice of limited scope representation, Guerra
contends that the failure to serve him personally with the notice of appeal renders it
untimely and subject to dismissal. We disagree.
Guerra’s counsel filed a notice of limited scope representation indicating that he
would represent Guerra at the hearing on April 3, 2012, and any continuances of that
hearing as well as until submission of the order after hearing.
California Rules of Court, rule 3.36(b)2 states: “After the notice [of limited scope
representation] in (a) is received and until either a substitution of attorney or an order to
be relieved as attorney is filed and served, papers in the case must be served on both the
attorney providing the limited scope representation and the client.” Here, the notice of
appeal was served on Guerra’s counsel, but not on Guerra. However, rule 8.821(a)(3)
states that the “[f]ailure to serve the notice of appeal neither prevents its filing nor affects
its validity, but the appellant may be required to remedy the failure.” Thus, any defect in
the service of the notice of appeal is remedied by later corrective service, not dismissal of
the appeal. Moreover, Guerra has failed to demonstrate prejudice. Aurora served its
notice of appeal on his counsel, who is representing him on appeal. Guerra has not
indicated that Aurora’s failure to serve him personally affected his ability to protect his
appellate rights. Accordingly, we reject Guerra’s contention that the instant appeal must
be dismissed as untimely.
2
Further references to rules are to the California Rules of Court.
4
Guerra’s reliance on Schwab v. Rondel Homes, Inc. (1991) 53 Cal.3d 428(Schwab), Palmer v. GTE California, Inc. (2003) 30 Cal.4th 1265 (Palmer), and Lydon v.
State Bar (1988) 45 Cal.3d 1181 (Lydon) does not persuade us otherwise. None of these
cases involved the validity of a notice of appeal. Schwab held that a plaintiff must serve
a notice of damages on the defendant before taking a default. (Schwab, at p. 430.)
Palmer held that service of a copy of the file-stamped judgment met the statutory
requirement of service of written notice of entry of judgment. (Palmer, at p. 1267.)
Lydon held that the State Bar met the statutory notice requirements. (Lydon, at p. 1186.)
B. Subject Matter Jurisdiction
Aurora contends that the judgment should be reversed because the trial court erred
in ordering the parties to submit to arbitration.
“The standard of review for an order on a petition to compel arbitration is either
substantial evidence where the trial court’s decision on arbitrability was based upon the
resolution of disputed facts, or de novo where no conflicting extrinsic evidence was
admitted in aid of interpretation of the arbitration agreement. [Citation.]” (Hartnell
Community College Dist. v. Superior Court (2004) 124 Cal.App.4th 1443, 1448-1449.)
In the present case, de novo review is appropriate because no extrinsic evidence was
admitted on the interpretation of the arbitration agreement.
We also note that Aurora may challenge the order compelling arbitration in its
appeal from the judgment confirming the arbitration award. As the court explained in
United Firefighters of Los Angeles v. City of Los Angeles (1991) 231 Cal.App.3d 1576(United Firefighters), “appellants are not appealing the correctness of the [arbitration]
award. Rather, they are attacking the authority of the trial court to compel them to submit
the matter to arbitration. An order to compel arbitration is an interlocutory order which is
appealable only from the judgment confirming the arbitration award, or in certain
exceptional situations is reviewable by writ of mandate. [Citations.] As Professor
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Witkin has observed: ‘A party does not waive his right to attack the order by proceeding
to arbitration; the order is reviewable on appeal from a judgment confirming the award.
[Citations.]’ [Citation.]” (Id. at pp. 1581-1582.) Moreover, “[l]ike a constitutional
provision or statute, the arbitration agreement confers subject matter jurisdiction on the
trial court to order the parties to arbitration. Since an objection to subject matter
jurisdiction may never be waived [citation], appellants can challenge on appeal whether
the trial court erred by ordering [Aurora] to arbitration.” (Id. at p. 1582.)
“The right to arbitration depends on a contract, and a party can be compelled to
submit a dispute to arbitration only if the party has agreed in writing to do so. Arbitration
is a favored method of resolving disputes, but the policy favoring arbitration does not
eliminate the need for an agreement to arbitrate and does not extend to persons who are
not parties to an agreement to arbitrate. [Citation.]” (Matthau v. Superior Court (2007)
151 Cal.App.4th 593, 598 (Matthau).)
Here, Guerra relied on his agreement with Chairez when he brought his motion to
compel arbitration. Though the agreement contained an arbitration provision, Aurora
was not a party to the agreement. Guerra does not identify any other writing in which
Aurora agreed to submit any dispute with Guerra to arbitration.
“ ‘There are exceptions to the general rule that a nonsignatory to an agreement
cannot be compelled to arbitrate and cannot invoke an agreement to arbitrate, without
being a party to the arbitration agreement.’ [Citations.]” (JSM Tuscany, LLC v. Superior
Court (2011) 193 Cal.App.4th 1222, 1236-1237.) One of these exceptions is “based on
the existence of a relationship between the nonsignatory and the signatory, such as
principal and agent or employer and employee, where a sufficient ‘identity of interest’
exists between them.” (Jones v. Jacobson (2011) 195 Cal.App.4th 1, 18, fn. 9.) Other
relationships that involve an identity of interest are those of the parent/child,
husband/wife, decedent/heir, and a partnership. (Matthau, supra, 151 Cal.App.4th at
p. 599.) However, these relationships are not similar to the lender/borrower relationship
6
between Aurora and Chairez. Arbitration agreements have also been enforced against a
nonsignatory when “a benefit was conferred on the nonsignatory as a result of the
contract, making the nonsignatory a third party beneficiary of the arbitration agreement.”
(County of Contra Costa v. Kaiser Foundation Health Plan, Inc. (1996) 47 Cal.App.4th
237, 242.) Aurora’s title to the property was allegedly burdened by the agreement, and
thus Aurora was not a third party beneficiary. Another exception to the general rule is
based on the principles of equitable estoppel. Under these principles, a “ ‘party may be
estopped from asserting that the lack of his signature on a written contract precludes
enforcement of the contract’s arbitration clause when he has consistently maintained that
other provisions of the same contract should be enforced to benefit him. . . . [¶] A
nonsignatory is estopped from refusing to comply with an arbitration clause “when it
receives a ‘direct benefit’ from a contract containing an arbitration clause.” [Citations.]’
[Citation.]” (Boucher v. Alliance Title Company (2005) 127 Cal.App.4th 262, 269.)
Here, Aurora’s unlawful detainer action did not seek enforcement of any of the
provisions in the agreement between Guerra and Chairez.
Guerra asserts that Aurora “never opposed the motion” to compel arbitration and it
did not argue in its arbitration brief “that it should not be compelled to arbitration because
it never signed the arbitration agreement.” However, Guerra stated in his verified
petition to confirm the arbitration award that Aurora “oppos[ed] the petition to compel
arbitration.” He also stated in his reply memorandum of points and authorities in support
of his petition to confirm arbitration that “Aurora opposed this motion [to compel
arbitration] with extensive submission.” Even assuming that Aurora did not oppose the
motion to compel arbitration or make this argument to the arbitrator, a party cannot waive
subject matter jurisdiction. (United Firefighters, supra, 231 Cal.App.3d at p. 1582.)
In sum, since Aurora did not agree in writing to submit its unlawful detainer action
to arbitration and the present case does not involve circumstances in which the arbitration
provision was enforceable as to Aurora, the trial court erred in granting Guerra’s motion
7
to compel arbitration.3 Accordingly, the judgment confirming the arbitration award is
reversed.
III. Disposition
The judgment is reversed. Aurora is awarded their costs on appeal.
3
Since we have concluded that the trial court did not have subject matter
jurisdiction, we need not consider Aurora’s contention that the arbitration provision was
void under Civil Code section 1953.
8
_______________________________
Mihara, J.
WE CONCUR:
______________________________
Elia, Acting P. J.
______________________________
Grover, J.
9