1240-1250 Glenoaks LLC vs Gerald T Derose et al

Several units experienced repeated flooding due to clogged drains, faulty grading, and inadequate drainage infrastructure, including unconnected or debris-filled drains that caused water to flow directly toward the foundation. (Compl., P.P. 16-19.) These issues were well known to tenants and professionals who worked on the Property. (Compl., P. 20.) Glenoaks contacted Switzer who confirmed the DeRoses were aware of these water intrusion issues before entering into the PSA. (Compl., P. 21.) Despite the DeRoses' prior knowledge of these defects, the DeRoses failed to disclose them to Glenoaks as part of the PSA. (Compl., P.P. 10-13, 22-24.)

Glenoaks alleges the disclosures made by the DeRoses during the PSA were false. (Compl., P. 23.) Had Glenoaks been made aware of these defects, it would not have entered into the PSA on the same terms, if at all. (Compl., P. 26.) Glenoaks suffered damages and continues to incur expenses related to ongoing remediation efforts. (Compl., P.P. 26-27.)

On September 19, 2025, the DeRoses filed a motion to compel the claims by Glenoaks against the DeRoses to arbitration pursuant to the arbitration agreement (Arbitration Agreement) in the PSA. The motion requested that the court stay the claims by Glenoaks against the Brokers, who did not expressly agree to arbitration, pending the completion of arbitration between the DeRoses and Glenoaks. On December 15, 2025, the court granted the motion to compel arbitration filed by the DeRoses. The claims against Brokers were not compelled to arbitration. No party requested that the Brokers be compelled to arbitration. The court stayed this action in its entirety, including the claims against the Brokers, pending disposition of the arbitration between the DeRoses and Glenoaks.

On March 17, 2026, plaintiff Glenoaks filed the present motion to compel the Brokers to arbitration on the basis of agency or equitable estoppel. The Brokers oppose this motion on the grounds that they never agreed to arbitration and these doctrines do not apply under these facts. The DeRoses did not take a position on this motion and filed no response or opposition.

Analysis: (1) Standard of Review "[W]hen a petition to compel arbitration is filed and accompanied by prima facie evidence of a written agreement to arbitrate the controversy, the court itself must determine whether the agreement exists and, if any defense to its enforcement is raised, whether it is enforceable. Because the existence of the agreement is a statutory prerequisite to granting the petition, the petitioner bears the burden of proving its existence by a preponderance of the evidence.

If the party opposing the petition raises a defense to enforcement--either fraud in the execution voiding the agreement, or a statutory defense of waiver or revocation (see Sec. 1281.2, subds. (a), (b))--that party bears the burden of producing evidence of, and proving by a preponderance of the evidence, any fact necessary to the defense." (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413.)

"In these summary proceedings, the trial court sits as a trier of fact, weighing all the affidavits, declarations, and other documentary evidence, as well as oral testimony received at the court's discretion, to reach a final determination." (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972.) "Private arbitration is a matter of agreement between the parties and is governed by contract law." (Platt Pacific, Inc. v. Andelson (1993) 6 Cal.4th 307, 313.) "There is no public policy favoring arbitration of disputes which the parties have not agreed to arbitrate....

Whether the parties formed a valid agreement to arbitrate is determined under general California contract law. [Citations.] Hence, when ruling on a petition to compel arbitration, the superior court may consider evidence on factual issues such as contract formation bearing on the threshold issue of arbitrability." (City of Vista v. Sutro & Co. (1997) 52 Cal.App.4th 401, 407.) "Under both federal and state law, the threshold question presented by a petition to compel arbitration is whether there is an agreement to arbitrate." (Fleming v.

Oliphant Financial, LLC (2023) 88 Cal.App.5th 13, 19, internal quotation marks omitted.)

"It is essential to the existence of a contract that there should be: [P.]

1. Parties capable of contracting; [P.]

2. Their consent; [P.]

3. A lawful object; and, [P.]

4. A sufficient cause or consideration." (Civ. Code, Sec. 1550.) "The consent of the parties to a contract must be: [P.]

1. Free; [P.]

2. Mutual; and, [P.]

3. Communicated by each to the other." (Civ. Code, Sec. 1565.) "Consent is not mutual, unless the parties all agree upon the same thing in the same sense...." (Civ. Code, Sec. 1580.) "The existence of mutual consent is determined by objective rather than subjective criteria, the test being what the outward manifestations of consent would lead a reasonable person to believe. [Citation.] Accordingly, the primary focus in determining the existence of mutual consent is upon the acts of the parties involved." (Monster Energy Co. v. Schechter (2019) 7 Cal.5th 781, 789.) If consent to arbitrate is established, subject to certain exceptions and generally applicable contract defenses, "the court shall order the petitioner and the respondent to arbitrate the controversy ...." (Code Civ. Proc., Sec. 1281.2.)

(2) The Arbitration Agreement The parties do not dispute that Glenoaks and the DeRoses agreed to the Arbitration Agreement in the PSA. The parties also agree that the Brokers did not execute the Arbitration Agreement, which provides in part as follows: "The Parties agree that any dispute or claim in Law or equity arising between them out of this Agreement or any resulting transaction, which is not settled through mediation, shall be decided by neutral, binding arbitration. The Partles also agree to arbitrate any disputes or claim with Broker(s), who, in writing, agree to such arbitration prior to, or within a reasonable time after, the dispute or claim is presented to the Broker.

The arbitrator shall be a retired judge or justice, or an attorney with at least 5 years of transactional real estate Law experience, unless the parties mutually agree to a different arbitrator. The Parties shall have the right to discovery ln accordance with Code of Civil Procedure Sec. 1283.05. ln all other respects, the arbitration shall be conducted in accordance with Title 9 of Part 3 of the Code of Civil Procedure. Judgment upon the award of the arbitrator(s) may be entered into any court having jurisdiction.

Enforcement of this agreement to arbitrate shall be governed by the Federal Arbitration Act, Exclusions from this arbitration agreement are specified in paragraph 31C." (Opp., Ex. 1 at P. 31(B); Compl., Ex. A at P. 31(B).)

"BROKERS: Brokers shall not be obligated nor compelled to mediate or arbitrate unless they agree to do so in writing. Any Broker(s) participating in mediation or arbitration shall not be deemed a party to the Agreement." (Opp., Ex. 1 at P. 31(C); Compl., Ex. A at P. 31(C).) The Arbitration Agreement in the PSA was initialed by the buyer and seller, but not by the Brokers. (Opp., Ex. 1.) The Brokers signed the PSA on page 12 as to the status of the Brokers as duel agents. The PSA clarified that the "Brokers are not parties to the Agreement between Buyer and Seller." (Compl., Ex. A at p. 12.)

(3) Agency Glenoaks argues that even through the Brokers did not sign the Arbitration Agreement and were not parties to it, they nonetheless can be bound by it under the doctrine of agency or equitable estoppel. However, as discussed below, these legal doctrines do not support these arguments under the facts presented in this motion. "The strong public policy in favor of arbitration does not extend to those who are not parties to an arbitration agreement, and a party cannot be compelled to arbitrate a dispute that he has not agreed to resolve by arbitration." (Buckner v.

Tamarin (2002) 98 Cal.App.4th 140, 142 (Buckner).) Absent "the existence of an agency or similar relationship between the nonsignatory and one of the parties to the arbitration agreement ... courts have refused to hold nonsignatories to arbitration agreements." (Ibid.) "Every California case finding nonsignatories to be bound to arbitrate is based on facts that demonstrate, in one way or another, the signatory's implicit authority to act on behalf of the nonsignatory." (Jensen v. U-Haul Co. of California (2017) 18 Cal.App.5th 295, 304 (Jensen).)

"First, an agent can bind a principal. [Citations.] Second, spouses can bind each other. [Citations.] And, third, a parent can bind a minor child. [Citations.]" (Buckner, supra, 98 Cal.App.4th at p. 142.) Examples include parents binding a minor as to a medical services contract (Doyle v. Giuliucci (1965) 62 Cal.2d 606, 609-610), and agreements entered by a partnership binding the general partner as to arbitration (Keller Construction Co. v. Kashani (1990) 220 Cal.App.3d 222, 228). "The essential characteristics of an agency relationship as laid out in the Restatement are as follows: (1) An agent or apparent agent holds a power to alter the legal relations between the principal and third persons and between the principal and himself; (2) an agent is a fiduciary with respect to matters within the scope of the agency; and (3) a principal has the right to control the conduct of the agent with respect to matters entrusted to him." (Garlock Sealing Techs., LLC v.

NAK Sealing Techs. Corp. (2007) 148 Cal.App.4th 937, 964.)

"Proof of an agency relationship may be established by 'evidence of the acts of the parties and their oral and written communications.' [Citations.] Proof of authority, either actual or ostensible, likewise may be established by circumstantial evidence." (van't Rood v. County of Santa Clara (2003) 113 Cal.App.4th 549, 573.) "The existence of an agency relationship is usually a question of fact, unless the evidence is susceptible of but a single inference." (Violette v. Shoup (1993) 16 Cal.App.4th 611, 619.)

The agency relationships are noted in paragraph 2 of the PSA, indicating that the Brokers were representing both sides of the PSA, Glenoaks and the DeRoses, as a duel agent. (Opp., Ex. 1 at P. 2; Compl., Ex. A at P. 2.) The Brokers concede they were acting as agents for Glenoaks as to the PSA transaction. (Opp., p. 4, ll. 5-6.) Although neither party presented evidence of the agency relationship between the Brokers and Glenoaks beyond what is stated in the PSA, the PSA itself indicates that the Brokers would be able to receive counter offers on behalf of Glenoaks. (See Compl., Ex.

A.)

However, there is no evidence presented by Glenoaks that the inverse is true, i.e., that Glenoaks was acting as an agent for the Brokers with implicit or explicit authority to bind the Brokers to the Arbitration Agreement. (See Jensen, supra, 18 Cal.App.5th 295 at pp. 304-305.) Indeed, the PSA expressly provides that, the "Brokers shall not be obligated nor compelled to mediate or arbitrate unless they agree to do so in writing. Any Broker(s) participating in mediation or arbitration shall not be deemed a party to the Agreement." (Opp., Ex. 1 at P. 31(C)(3); Compl., Ex. A at P. 31(C)(3).) Whatever the scope of the agency relationship between the Brokers and Glenoaks, the evidence before the court demonstrates that Glenoaks did not have agency to bind the Brokers to the Arbitration Agreement. (Ibid.) Glenoaks has not carried its burden on the issue of agency.

(4) Equitable Estoppel "Under the doctrine of equitable estoppel, 'if a plaintiff relies on the terms of an agreement to assert his or her claims against a nonsignatory defendant, the plaintiff may be equitably estopped from repudiating the arbitration clause of that very agreement.' " (Molecular Analytical Systems v. Ciphergen Biosystems, Inc. (2010) 186 Cal.App.4th 696, 714.) "For the doctrine to apply, 'the claims the plaintiff asserts against the nonsignatory must be dependent upon, or founded in and inextricably intertwined with, the underlying contractual obligations of the agreement containing the arbitration clause.' " (Id. at p. 715.) "[A] nonsignatory defendant may invoke an arbitration clause to compel a signatory plaintiff to arbitrate its claims when the causes of action against the nonsignatory are 'intimately founded in and intertwined' with the underlying contract obligations." (Boucher v.

Alliance Title Co., Inc. (2005) 127 Cal.App.4th 262, 271.)

This doctrine has been extended to situations involving nonsignatory plaintiffs when the plaintiff is suing on the contract containing the arbitration clause. "When that plaintiff is suing on a contract--on the basis that, even though the plaintiff was not a party to the contract, the plaintiff is nonetheless entitled to recover for its breach, the plaintiff should be equitably estopped from repudiating the contract's arbitration clause." (JSM Tuscany, LLC v. Superior Court (2011) 193 Cal.App.4th 1222, 1239-1240.)

Here, the Brokers are not nonsignatory defendants seeking to compel a signatory plaintiff to arbitration. Moreover, the Brokers are not nonsignatory plaintiffs seeking to enforce terms of a contract containing an arbitration clause. The Brokers are nonsignatories who do not wish to arbitrate. There is no apparent basis in equity to compel the Brokers to arbitrate when they have not agreed to do so. This is particularly true where the PSA expressly provides that the Brokers are not subject to the Arbitration Clause "unless they agree ... in writing." (Opp., Ex. 1 at P. 31(C)(3); Compl., Ex.

A at P. 31(C)(3).) It is undisputed that the Brokers did not agree in writing to arbitration. Equitable estoppel does not apply.

(5) Potential Inconsistent Results The court has also considered the parties' arguments about potential inconsistent results between arbitration and the matters not compelled to arbitration. The court does have discretion under certain circumstances to stay or join certain matters, or to refuse to compel arbitration to avoid potentially inconsistent results. (See Code Civ. Proc., Sec. 1281.2, subd. (c).) However, the court does not have discretion, as argued by Glenoaks, to compel the nonsignatory Brokers to arbitration absent the application of an agency or equitable doctrine. As discussed above, these doctrines do not apply. There is no support for the relief sought by Glenoaks in the law or facts cited by Glenoaks. The court declines to grant the relief sought by Glenoaks. For all these reasons, the court will deny Glenoaks' motion to compel arbitration.

Tentative Ruling: Estate of Michael Fitzpatrick

Tentative Ruling: Estate of Michael Fitzpatrick