Passerelle v. Palomar Community College Dist. CA4/1 (2015) · DecisionDepot
Passerelle v. Palomar Community College Dist. CA4/1
California Court of Appeal Apr 29, 2015 No. D065528Unpublished
Filed 4/29/15 Passerelle v. Palomar Community College Dist. CA4/1 NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
PASSERELLE, LLC, D065528
Plaintiff and Respondent,
v. (Super. Ct. No. 37-2013-00052094- CU-BC-NC) PALOMAR COMMUNITY COLLEGE DISTRICT,
Defendant and Appellant.
APPEAL from orders of the Superior Court of San Diego County,
Earl H. Maas, III, Judge. Reversed in part, dismissed in part.
Allen Matkins Leck Gamble Mallory & Natsis, Valentine S. Hoy VIII and
Charles L. Pernicka for Defendant and Appellant.
Kring & Chung, Scott M. Bonesteel and Robert P. Mougin for Plaintiff and
Respondent.
A dispute arose between Palomar Community College District (the District)
and Passerelle, LLC (Passerelle) concerning the construction by the District of
certain infrastructure improvements on land purchased by the District from
Passerelle. Passerelle sued the District for allegedly failing to complete all of the
promised improvements. The District appeals orders denying its motion to compel
arbitration, staying arbitration pending the outcome of this appeal, and denying relief
The Option Agreement requires the arbitration "of any dispute or controversy
concerning this Agreement or the rights of the parties hereunder, including whether
the dispute or controversy is arbitrable." The District argues the dispute concerns the
Option Agreement and the rights of the parties under the Option Agreement.
Accordingly, the District contends the trial court erred when it denied the motion to
compel arbitration because the District's assertion that the dispute is arbitrable is not
wholly groundless, making the question of arbitrability for the arbitrator to decide.
We agree.
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As we shall explain, the Second Amendment modified the Amended Option
Agreement, incorporated the Improvement Agreement into the Amended Option
Agreement and made the Improvement Agreement an exhibit to the Amended Option
Agreement. The Amended Option Agreement contains a promise by the District to
"immediately commence, and diligently pursue to completion" all of the provisions
of the Improvement Agreement. This action concerns those improvements.
Accordingly, a breach of the Improvement Agreement may amount to a breach of the
Amended Option Agreement, making the alleged breach of the Improvement
Agreement subject to the arbitration provision in the Option Agreement, which
remained in full force and effect despite the subsequent amendments. Accordingly,
the District's claim that the instant dispute is arbitrable is not wholly groundless.
Preliminarily, the parties dispute the standard of review. The question
presented is essentially one of contract interpretation, which is subject to de novo
review. (Fitz, supra, 118 Cal.App.4th at p. 711.) Passerelle submitted extrinsic
evidence, a declaration from Bruce Tabb, Passerelle's manager and the party who
executed the Improvement Agreement on behalf of Passerelle, stating the parties
never discussed whether the Improvement Agreement would be subject to arbitration.
This declaration, however, is not controverted. The existence of this declaration does
not change the standard of review. (Brookwood v. Bank of America (1996) 45
Cal.App.4th 1667, 1670 ["Whether an arbitration agreement applies to a controversy
is a question of law to which the appellate court applies its independent judgment
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where no conflicting extrinsic evidence in aid of interpretation was introduced in the
trial court."].)
Here, we must determine whether the District's claim of arbitrability is wholly
groundless. To do so, we examine the allegations contained in Passerelle's first
amended complaint to ascertain whether the Option Agreement, the contract
containing the arbitration clause, is relevant to a breach of the Improvement
Agreement as alleged in Passerelle's operative complaint. If the Option Agreement is
relevant to an alleged breach of the Improvement Agreement, then the District's
claim of arbitrability is not wholly groundless and the motion to compel arbitration
must be granted and the litigation stayed to allow the arbitrator to determine
arbitrability.
We acknowledge Passerelle's argument that the trial court found Passerelle's
operative complaint sought relief under the Improvement Agreement, which does not
include an arbitration clause and does not expressly incorporate the arbitration clause
from the earlier Option Agreement. In our de novo review, however, we note the
parties' first amendment to the Option Agreement created the Amended Option
Agreement. The Second Amendment, in turn, modified the Amended Option
Agreement.
The Second Amendment provided that the Amended Option Agreement
remained in full force and effect, which necessarily included the provision in the
Option Agreement requiring the arbitration "of any dispute or controversy
concerning this Agreement or the rights of the parties hereunder, including whether
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the dispute or controversy is arbitrable." The Second Amendment also made the
Improvement Agreement an exhibit to the Amended Option Agreement. Thus, the
Second Amendment incorporated the Improvement Agreement into the Amended
Option Agreement.
The Second Amendment also provided that all references to
Grading/Infrastructure in the Amended Option Agreement "are replaced with and
superseded by the provisions of the Improvement Agreement." Making this
substitution, the Amended Option Agreement contains a promise by the District to
"immediately commence, and diligently pursue to completion" all of the provisions
of the Improvement Agreement. Moreover, the Improvement Agreement recited that
"[t]he District purchased the District Property in accordance with the Option
Agreement . . . pursuant to which the District agreed to complete the improvements
. . . ." Thus, the Improvement Agreement acknowledges that the District agreed to
make the improvements under the Option Agreement. Accordingly, a breach of the
Improvement Agreement may amount to a breach of the Amended Option
Agreement, making the alleged breach of the Improvement Agreement subject to the
arbitration provision in the Option Agreement as a matter concerning the rights of the
parties under the Amended Option Agreement.
Notably, in its operative complaint, Passerelle alleged the District breached
the Improvement Agreement by failing to timely complete all infrastructure
improvements. This allegation amounts to a breach of the District's promise in the
Option Agreement, as amended by the parties, to "diligently pursue to completion"
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all of the provisions of the Improvement Agreement. Thus, the alleged breach of the
Improvement Agreement concerns the rights of the parties under the Option
Agreement. Accordingly, the District's claim of arbitrability is not wholly groundless
and the trial court should not have decided the threshold issue of the arbitrability of
Passerelle's claims. Rather, the trial court should have granted the motion to compel
arbitration and stayed the litigation pending the arbitrator's decision on the ultimate
question of his or her own jurisdiction over the claims alleged in Passerelle's
operative complaint. (Dream Theater, supra, 124 Cal.App.4th at p. 553.)
Passerelle asserts the District's argument is wholly groundless because it
disregards a provision in the Improvement Agreement indicating the Improvement
Agreement was to be interpreted as an agreement that "supersedes all negotiations,
stipulations, understandings, agreements, representations and warranties" regarding
the subject matter of the Improvement Agreement. We reject this argument as it
ignores that the parties made the Improvement Agreement an attachment to the
Amended Option Agreement and expressly incorporated the Improvement
Agreement into the Amended Option Agreement. Thus, all of the agreements must
be considered together. (Civ. Code, § 1642; Versaci v. Superior Court (2005) 127
Cal.App.4th 805, 814 [" 'It is a familiar rule . . . that where several papers covering
the same subject matter are executed by . . . the same parties . . . , all are to be
considered together, and with the same effect as if all had been incorporated in one
document.' "].)
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DISPOSITION
The order denying the District's motion to compel arbitration is reversed. We
dismiss as moot the District's appeal of the orders staying arbitration pending the
outcome of the appeal and denying relief from stay. The matter is remanded to the
trial court to enter an order staying this action pending the arbitrator's determination
of his or her own jurisdiction. Appellant is entitled to its costs on appeal.
MCINTYRE, J.
WE CONCUR:
MCCONNELL, P. J.
AARON, J.
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AI Brief
AI-generated · verify before citing
Holding. The court held that the District's claim of arbitrability was not wholly groundless because the Improvement Agreement was incorporated into the Amended Option Agreement, which contained a broad arbitration clause. Consequently, the trial court erred by deciding the threshold issue of arbitrability instead of compelling arbitration and staying the litigation for the arbitrator to determine jurisdiction.
Issues
Whether the trial court erred in denying the District's motion to compel arbitration by determining that the dispute fell outside the scope of the arbitration agreement.
Whether the District's claim of arbitrability was 'wholly groundless' under the applicable standard of review.
Disposition. Reversed in part, dismissed in part, and remanded.
Quotations verified verbatim against the opinion
“the District's claim that the instant dispute is arbitrable is not wholly groundless.”
“the trial court should have granted the motion to compel arbitration and stayed the litigation pending the arbitrator's decision on the ultimate question of his or her own jurisdiction”
“all of the agreements must be considered together.”