Deborah Stein v. Headlands II Owners Association et al.

Defendant Joseph Aiello’s (“Defendant”) Motion to Compel Arbitration and Stay the pending litigation pursuant to California Code of Civil Procedure section 1281.2 is DENIED.

Background

This action arises out of alleged water intrusion into plaintiff Deborah Stein's (“Plaintiff”) condominium at 242 Headlands Court, Sausalito, California. Plaintiff alleges she incurred damages because of this water intrusion and the subsequent repair attempts, including mold contamination, property damage, and loss of use.

Plaintiff filed her original complaint on May 29, 2025. The Second Amended Complaint (“SAC”), filed on October 15, 2025, is the operative pleading. The SAC names Headlands II Homeowners Association, Schmitt Heating Co., Inc., Enviro-Star Corporation, Everest General Contractor LLC, and Grayson Property Management LLC, along with Doe Defendants 1 through 25 as defendants. It was not until April 25, 2026, that Defendant Aiello was added through a Doe Amendment (as Doe 6) as the individual believed to be the owner of the condominium above Plaintiff's own and from which Plaintiff alleges the water intrusion, at least in part, originated.

Defendant Aiello filed the present Motion to Compel Arbitration on July 13, 2026, although two other Motions to Compel were previously filed and withdrawn prior to their hearing dates.

Objections to Evidence

Plaintiff’s Objections to Evidence Nos. 1-10 are OVERRULED.

Legal Standard

The California Arbitration Act (“ CAA”) articulates a strong public policy in favor of arbitration. “The CAA ‘represents a comprehensive statutory scheme regulating private arbitration in this state. [Citation.] Under section 1281.2, the court is required to “order contractual arbitration in a proper case.” (Molecular Analytical Systems v. Ciphergen Biosystems, Inc. (2010) 186 Cal.App.4th 696, 704,)

The existence of a valid agreement to arbitrate is a “question of arbitrability” to be decided by the court unless the parties expressly agree otherwise. (Howsam v. Dean Witter Reynolds, Inc. (2002) 537 U.S. 79, 83 [questions of arbitrability include whether parties are bound by an arbitration clause or whether binding clause applies to particular case or controversy].) The party seeking to arbitrate must prove the existence of the agreement. (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236 [internal quotations and citations omitted].)

If it does so, the burden shifts to the party opposing arbitration to “demonstrate that an arbitration provision cannot be interpreted to require arbitration of the dispute” or that the agreement is otherwise unenforceable. (Coast Plaza Doctors Hospital v. Blue Cross of California (2000) 83 Cal.App.4th 677, 686-87.)

However, arbitration – whether under the CAA or Federal Arbitration Act – “is a matter of consent, not coercion ... a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.” (Pinnacle, supra, 55 Cal.4th at 236.)

Discussion

Existence of Agreement to Arbitrate

In support of this Motion, Defendant relies on the Declaration of Covenants, Conditions and Restrictions Headlands II Homeowners Association (“CC&Rs”) recorded on April 27, 2017 in Marin County and the arbitration clause contained within those CC&Rs.

The CC&Rs state:

12.3(c)(2) “Owner-to-Owner Disputes: Mediation/Arbitration. in the event of a dispute between Owners, affected Owners shall attempt to resolve any dispute by mediation. The cost of the mediator shall be borne equally. If the parties cannot agree on a mediator to provide this service, the Association can recommend and/or facilitate the use of an Alternative Dispute Resolution provider. In the alternative, any party can request the president of the Marin County Bar Association to identify a local low cost mediation service provider, and such designation shall be binding. If mediation fails and the dispute continues, the parties shall proceed with binding arbitration administered by the American Arbitration Association and in accordance with the applicable procedures established by that organization.”

(Pollack Decl., Ex. B.)

To establish that the agreement is enforceable by Defendant as an owner, the Motion attaches Plaintiff’s SAC which alleges in part:

“Additionally, any condo owners sharing one or more adjoining walls, floors, or ceilings with Ms. Stein’s condo within the Headlands Complex, including Defendant Joseph Aiello (herein “Aiello”), owed Ms. Stein a duty of care to ensure their adjoining condo was sufficiently maintained and repaired such that it did not cause damage to Ms. Stein’s condo. Likewise, any third parties hired by adjoining condo owners, such as Defendant Mr. Aiello, to maintain and/or repair their condo owed a duty of care to Ms.

Stein to ensure any maintenance and repair performed did not cause damage to Ms. Stein’s unit. Ms. Stein was a third-party contract beneficiary of any such contracts. From approximately February 2022 to as recently as August 2025, Ms. Stein experienced water intrusion issues within her condo that, upon information and belief, originated from the common areas of the Headlands Complex and from Aiello’s condo situated above hers, which she promptly reported to both Defendant Headlands HOA and Defendant Aiello....

Upon information and belief, the water intrusion was the result of Defendant Headlands II HOA, failure to adequately maintain and/or repair common areas and/or the result of Defendant Aiello’s failure to adequately maintain and/or repair his condo, such that it impacted and caused damage to Ms. Stein’s condo. It was later discovered by Ms. Stein that Defendant Comcast, believed to have been hired by Defendant Mr. Aiello and/or Defendant Headlands HOA, had altered the condition of the doorframe between the inside of Aiello’s condo to the outside deck in order to run a cable through that area and had failed to adequately seal the frame, allowing dry rot to develop and water to intrude into Ms.

Stein’s condo.”

(SAC, GN-1.)

Defendant’s Reply confirms he is relying on Plaintiff’s SAC to establish his ownership. (Reply p. 2:17.) However, not every factual allegation in a complaint automatically constitutes a judicial admission. (Watson v. Pro. Bus. Mgmt. Corp. (2026) 120 Cal.App.5th 860, 869–70.)

Otherwise, a plaintiff would conclusively establish the facts of the case by merely alleging them, and there would never be any disputed facts to be tried. (Ibid.) Instead, “a judicial admission is ordinarily a factual allegation by one party that is admitted by the opposing party. The factual allegation is removed from the issues in the litigation because the parties agree as to its truth. Thus, facts to which adverse parties stipulate are judicially admitted.” (Ibid.)

In Watson moving party wished to hold plaintiff to the agency allegations contained in the complaint only for the purposes of the motion to compel arbitration, but wished to retain the right to prove to the arbitrator that the allegation is false. (Id., at p. 71.) As the Barsegian court explained, “[t]hat is not how judicial admissions operate.” (Id., citing Barsegian v. Kessler & Kessler (2013) 215 Cal.App.4th 446, 453.) In Watson, moving party had already denied the agency allegations via its answer to the complaint. (Id.)

Here, Defendant has not yet filed an answer, and it is unclear whether he will or will not admit he is the owner of a condo under the CC&Rs. The Reply seems to suggest that he will so admit, but as counsel for Defendant pointed out in the responses to objections to evidence, arguments made in memoranda are just that – arguments – not evidence. The insistence on relying on statements made in an unverified complaint suggests gamesmanship when a simple declaration from Defendant could effectively admit the fact.

Defendant has therefore not met his burden to demonstrate the existence of an agreement to arbitrate between the parties.

Even if the Court had found the allegations in the SAC were sufficient to admit the fact that Defendant is an owner, the Motion would still be denied.

3rd Party Litigation Exception

The CAA contains an exception to mandatory arbitration in section 1281.2(c). That statute “addresses the peculiar situation that arises when a controversy also affects claims by or against other parties not bound by the arbitration agreement.” (Cronus Invs., Inc. v. Concierge Servs. (2005) 35 Cal.4th 376, 393.) Under Code of Civil Procedure section 1281.2(c), contractual arbitration “may have to yield if there is an issue of law or fact common to the arbitration and a pending action or proceeding with a third party and there is a possibility of conflicting rulings thereon.” (Mercury Ins. Group v. Superior Court (1998) 19 Cal.4th 332, 348.)

The third-party litigation exception applies when (1) “[a] party to the arbitration agreement is also a party to a pending court action or special proceeding with a third party”; (2) the third-party action “aris[es] out of the same transaction or series of related transactions”; and (3) “there is a possibility of conflicting rulings on a common issue of law or fact.” (Code Civ. Proc., § 1281.2, subd. (c).) If all three of these conditions are satisfied, then section 1281.2(c) grants a trial court discretion to either deny or stay arbitration despite an agreement to arbitrate the dispute. (Laswell v.

AG Seal Beach, LLC (2010) 189 Cal.App.4th 1399, 1405.) The court may choose to: (1) “refuse to enforce the arbitration agreement and ... order intervention or joinder of all parties in a single action or special proceeding”; (2) “order intervention or joinder as to all or only certain issues”; (3) “order arbitration among the parties who have agreed to arbitration and stay the pending court action or special proceeding pending the outcome of the arbitration proceeding”; and (4) “stay arbitration pending the outcome of the court action or special proceeding.” (Code Civ.

Proc., § 1281.2(c).) The trial court, in selecting the appropriate remedy under section 1281.2(c), has “broad discretion.” (Birl v. Heritage Care, LLC (2009) 172 Cal.App.4th 1313, 1322.)

Here, there is no question that Plaintiff’s claims against the co-defendants arise out of the same series of related transactions and that given the commonality of the issues presented in the SAC, “[a] myriad of conflicting rulings is possible.” (Id., at p. 1321.) For these reasons even if Defendant had met his burden to demonstrate the existence of an agreement to arbitrate between the parties, the Court would elect to refuse to enforce the agreement under section 1281.2.

The motion is denied.

All parties must comply with Marin County Superior Court Local Rules, Rule 2.10(B) to contest the tentative decision. Parties who request oral argument are required to appear in person or remotely by ZOOM. Regardless of whether a party requests oral argument in accordance with Rule 2.10(B), the prevailing party shall prepare an order consistent with the announced ruling as required by Marin County Superior Court Local Rules, Rule 2.11.

The Zoom appearance information for August, 2026 is as follows: https://marin-courts-ca-gov.zoomgov.com/j/1605267272?pwd=908CbP6TV2mhCAyai1nzo6lyz2dKaw.1

Meeting ID: 160 526 7272 Passcode: 026935 If you are unable to join by video, you may join by telephone by calling (669) 254-5252 and using the above-provided passcode. Zoom appearance information may also be found on the Court’s website: https://www.marin.courts.ca.gov