HomeLatest NewsFeatured HomebuildersHome Buyer ResourcesBinding ArbitrationResource LinksSubmit ComplaintsView ComplaintsTake Action 101!Report Mortgage FraudMortgage Fraud NewsForeclosure NewsConstruction DefectsHome DefectsPhoto GalleryFoundation ProblemsHomeowner Website LinksHOA Reform

HUD FEATURE
1981 - 2015 HUD's
Legacy of Scandals

HOBB-Over 1M visits monthly
Daily Visitors Over 37,000
 Highest Daily 70,723

Main Menu
Home
Latest News
Featured Homebuilders
Home Buyer Resources
Binding Arbitration
Resource Links
Submit Complaints
View Complaints
Take Action 101!
Report Mortgage Fraud
Mortgage Fraud News
Foreclosure News
Construction Defects
Home Defects
Photo Gallery
Foundation Problems
Homeowner Website Links
HOA Reform
Featured Topics
Builder Death Spiral
Report Mortgage Fraud
Foreclosure Special Report
Mold & New Home Guide
Special News Reports
Centex & Habitability
How Fast Can They Build Them?
TRCC Editorial
Texas TRCC Scandal
Texas Watch - Tell Lawmakers
TRCC Recommendations
Sandra Bullock
People's Lawyer
Prevent Nightmare Homes
Choice Homes
Smart Money
Weekly Update Message
HOBB Archives
About HOBB
Contact Us
Fair Use Notice
Legislative Work
Your House

 HOBB News Alerts
and Updates

Click Here to Subscribe

Support HOBB - Become a Sustaining Member
Who's Online
ABC Special Report
Investigation: New Home Heartbreak
Trump - NAHB Homebuilders Shoddy Construction and Forced Arbitration

Property Rights Denied!
Protecting HOA Members' Rights is NOT The #1 Priority
of Managed Communities
The High Price of Managed Living, Books and Records Hidden
gives appearances of impropriety
Editorial Feature: Part One - Are Homeowners' Rights a Myth? 

Part Two: HOA Bureaucrats Overstep Their Authority

California Court of Appeal in Sacramento Rules Against CC&Rs Brinding Arbitration Clause
Sunday, 06 March 2011

CC&R Provisions Mandating Binding Arbitration of Construction Defect Claims Ruled Unenforceable
"CC&Rs are not an effective means of obtaining an agreement to arbitrate a homeowners association's construction defect claims against a developer." "Treating CC&Rs as a contract such that they are sufficient to waive the right to trial by jury does not comport with the importance of the right waived." 
The Villa Vicenza Declaration of CC&Rs was recorded unilaterally by Nobel Court Development, the developer, and was, thus, imposed on the Association and its members. The Association was never given the opportunity to accept or reject the terms of the CC&Rs and did not sign them.


CC&R Provisions Mandating Binding Arbitration of Construction Defect Claims Ruled Unenforceable
CC&R's are not an effective means of obtaining an agreement to arbitrate a homeowners association's construction defect claims against a developer

On January 11, 2011, the California Court of Appeal in Sacramento ruled that:

"CC&Rs are not an effective means of obtaining an agreement to arbitrate a homeowners association's construction defect claims against a developer."1

In Villa Vicenza Homeowners Association v. Nobel Court Development, LLC, the court explained that neither federal nor state law countenance imposition of arbitration where no agreement to waive judicial remedies exists. No monetary or other consideration was provided by the Association to Nobel, the developer, nor did the Association affirmatively approve the terms of the Declaration of CC&Rs or execute any documents in favor of Nobel in connection with the deed transferring common areas to the Association.

In reaching its conclusion, the court drew on the 2008 opinion of the Fourth District Court of Appeal in San Diego in Treo @ Kettner Homeowners Association v. Superior Court which held that a CC&R provision requiring submission of construction defect claims to judicial reference2 procedures was unenforceable.

The appellate courts in both Villa Vicenza and Treo @ Kettner relied on the Supreme Court's 2005 decision in Grafton Partners v. Superior Court in which the Court considered the circumstances in which parties may agree in a contract to waive a jury trial. The Supreme Court held that a pre-dispute agreement between parties to waive a trial by jury in any dispute that may arise between them and have the dispute decided by a judge without a jury is unenforceable. In Grafton Partners the Court noted that the right to a jury trial is an inviolate right guaranteed by the California Constitution and is considered so fundamental and important that it must be zealously guarded in the face of a claimed waiver.

Earlier appellate decisions invalidating mandatory binding arbitration clauses in contracts and association declarations of CC&Rs have done so based on findings that the provisions in question are unconscionable, applying judicially-developed principles of procedural and substantive unconsionability which focus on oppression or surprise resulting from the unequal bargaining power of the parties, or overly harsh or one-sided effects of the arbitration provision. (e.g., Thompson v. Toll Dublin, LLC, a 2008 decision of the First District Court of Appeal in San Francisco in which the successful homeowners were represented by Berding & Weil partner, Scott Barton; Baker v. Osborne Development Corp., a 2008 decision by the appellate district court in San Diego). Significantly, neither Villa Vicenza nor Treo @ Kettner considered principles of unconscionability in concluding that the provisions before those courts were unenforceable. Rather, both based their determinations of unenforceability on the considerations articulated by the Supreme Court in Grafton Partners concerning the circumstances in which the constitutionally protected right to a trial by jury may be waived. In Treo @ Kettner Homeowners Association v. Superior Court the Court of Appeal unequivocally stated with reference to Section 638 of the California Code of Civil Procedure that provides for submission of a particular dispute to judicial reference by means of a written contract between the parties to the dispute:

"When the Legislature stated in section 638 that the right [to a jury trial] could be waived by written contract, did it mean the term contract to include equitable servitudes created by the CC&Rs of common interest communities? We do not believe that it did."

Referring specifically to Grafton Partners, the court reiterated that the right to a trial by jury is anchored in the California Constitution and that the right is a fundamental one. While the right to a jury trial may be waived,

“the circumstances and manner of its waiver are serious matters requiring actual notice and meaningful reflection. . . . Treating CC&Rs as a contract such that they are sufficient to waive the right to trial by jury does not comport with the importance of the right waived.”

These same sentiments underpin the most recent appellate decision in Villa Vicenza Homeowners Association v. Nobel Court Development Company. "We conclude the Legislature did not intend that CC&Rs be sufficient to effectively and permanently waive the constitutional right to trial by jury."

The court noted that both the Federal Arbitration Act and the California Arbitration Act impose arbitration only on those parties who have agreed to forego resorting to judicial remedies. The Villa Vicenza Declaration of CC&Rs was recorded unilaterally by Nobel Court Development, the developer, and was, thus, imposed on the Association and its members. The Association was never given the opportunity to accept or reject the terms of the CC&Rs and did not sign them. Moreover, the court observed, the CC&Rs state an intent to benefit the Association and its members as owners of the separate interests in the Villa Vicenza development and state no purpose whatever to benefit Nobel in its capacity as developer. In that regard, the CC&Rs are entirely consistent with Civil Code section 1354.3 Therefore, under legal principles of contract formation, the CC&Rs do not constitute an agreement to arbitrate between the Association and Nobel.

Villa Vicenza and Treo @ Kettner together constitute the most recent pronouncements of the California Court of Appeal on the effect of CC&R provisions purporting to impose binding arbitration of construction defect claims on associations. At least until such time as the California Supreme Court may say otherwise, these two appellate decisions, one from northern California and the other from southern California, constitute binding legal precedent and ordain that such CC&R provisions are unenforceable.

1 The court acknowledged that the issue it was deciding is presently pending before the California Supreme Court in a case entitled Pinnacle Museum Tower Association v. Pinnacle Market Development ( US ), LLC which the Supreme Court agreed to hear in November of last year. Presumably the Supreme Court's decision in the Pinnacle Museum Tower case will, when issued, constitute the definitive ruling on the issue in California, but as the Supreme Court only recently granted review in that case and the appeal has not yet been fully briefed, the Court's ruling is not likely to be forthcoming very soon. Meanwhile, the appellate court opinions in Villa Vicenza and Treo @ Kettner constitute the latest judicial decisions in California on their related issues.

2 In a judicial reference, a pending court action is sent to a referee for hearing, determination and a report back to the judge.

3 The covenants and restrictions in the declaration . . . shall inure to the benefit of and bind all owners of separate interests in the development . . . and may be enforced by any owner of a separate interest or by the association or by both."
http://www.berding-weil.net/articles/ccr-provisions-mandating-binding-arbitration-of-construction-defect-claims.php

 

 
< Prev   Next >

 Texas, First Home Lemon Law Debated in the Nation
Homebuyers Need a Home Lemon Law

Search HOBB.org

 Beware of HOA Payment Plan! 

HOA Foreclosures Big Business 
ON THE COMMONS with Shu Bartholomew
Dr. Evan McKenzie HOA Governments

Reckless Endangerment
BY: GRETCHEN MORGENSON
and JOSHUA ROSNER

Outsized Ambition, Greed and
Corruption Led to
Economic Armageddon


Amazon
Barnes & Noble

 Feature
Rise and Fall of Predatory Lending and Housing

NY Times: Building Flawed American Dreams 
Read CATO Institute: 
HUD Scandals

Listen to NPR:
Reckless Endangerman
by
Gretchen Morgenson : How 'Reckless' Greed Contributed
to Financial Crisis - Fannie Mae

ATTENTION TAXPAYERS:
 
Pulte-Centex $900 Million Grant
Bad Guys at Countrywide Profit on Mortgage Toxins

NPR Special Report
Part I Listen Now
Perry Home - No Warranty 
Part II Listen Now
Texas Favors Builders

Washington Post
The housing bubble, in four chapters
BusinessWeek Special Reports
Bonfire of the Builders
Homebuilders helped fuel the housing crisis
Housing: That Sinking Feeling

Arbitration Fairness Now!
Sen Feingold, Rep Johnson
Introduce Consumer Justice
 
Senate Passes Franken
Binding Arbitration Amendment
  
   
Public Citizen Report 
Home Court Advantage
 

 (See photos) & Latest News

Judiciary & Civil Jurisprudence
 Arbitration Hearing,
Video of Homeowners
Testimony Advance to 1:55

Arbitration Bill Passes Senate
Four years to fight to get in court is not a day in Court, Jamie Leigh Jones 

 


Legislative
Watch
TEXAS ABOLISHES BUILDERS
PROTECTION AGENCY TRCC
 


Texas Regulates Homebuyers
 
Texas Comptroller Condemns TRCC Builder Protection Agency
TRCC is the punishment phase of homeownership in Texas

HOBB Update Messages

Consumer Affairs Builder Complaints

 TRCC Implosion
 TRCC Shut Down
 Sunset Report

IS YOUR STATE NEXT?
As Goes Texas So Goes the Nation
Knowledge and Financial Responsibility are still Optional for Texas Home Builders

OUTSTANDING FOX4 REPORT
TRCC from Bad to Worse
Case of the Crooked House

Perry's Gifts Keep on Talking
Sun Never Sets On Politicians Taking Homebuilder Money

TRCC AN ARRESTING EXPERIENCE
The Pat and Bob Egert Building & TRCC Experience 

Homebuilder's Right-To-Repair Illusion

Builders Looking for Federal Handouts

How Texas Home Building Industry shaped the TRCC to regulate buyers 

SpotLight
LiveTalk Internet

Build it right the first time
An interview with Janet Ahmad

HUD's Broken System
From HUD's Deregulation to Disgrace
Did HUD Secretary Cisneros
 Mastermind Predatory Lending?

Take Action
Ban Binding Mandatory Arbitration

Send a message urging your Congressman to support all legislation banning this unfair practice

Voting Texas Style
What Lawmaker is Voting for you?

Most Read

 Give Me Back My Rights Campaign
Model State Arbitration Legislation
Fair Homebuyer Contract Model

Bad Binding Arbitration Experience?
This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
or call 1-210-402-6800

NCPIRG
Homebuyers' Bill of Rights
Tips for a Better Built Home and to Protect Your Investment

Drum Major Institute
for Public Policy

Tort Deform
Report Your Arbitration Experience

Homebuilding Texas Style
And the walls came
tumblin' down

 Texas Homebuilder
Bob Perry Political Contributions

  The Agency Bob Perry Built
 TRCC Connection News
Tort Reform

NPR Interview - Perry's
Political influence movement.
Click to listen 

Texas Homebuyers
Fight for Rights

TRCC Abolish or Fix
or Pass Home Lemon Law
or
Homebuyers Bill of Rights

POLICYHOLDERS OF AMERICA POLL
82% would not vote back in office any legislator, regardless of party, that is soft on bad homebuilders?

REWARD
MOST WANTED

ARIZONA REGISTRAR OF CONTRACTORS
Have you seen any of these individuals

Pulte Homeowner Survey
Warranty & Mortgage Experience
 Click to participate

Tort Reform Feature
Texas Monthly
 Hurt? Injured? Need a Lawyer? Too Bad!

Special Money Report
Big Money and Shoddy Construction:Texas Home Buyers Left Out in the Cold
Read More
Read Report: Big Money…
Home Builder Money Source of Influence

Letters to the Editor
Write your letters to the Editor

Homeowner Websites

top of page

© 2024 HomeOwners for Better Building
Joomla! is Free Software released under the GNU/GPL License.