Bunker Hill Park Ltd. v. U.S. Bank National Ass'n
231 Cal. App. 4th 1315
| Cal. Ct. App. | 2014Background
- BHPL and U.S. Bank are successors under a 99-year ground lease; ground lease runs to 2077 unless terminated for fault, with improvements to transfer to BHPL upon termination.
- U.S. Bank can terminate the ground lease with 60 days’ notice and may assign or sublet; subleases exist under the lease.
- Dispute arose over the 2013–2014 basic net rent adjustment; arbitration provision covers disputes arising under the Ground Lease and related amendments.
- Arbitration award in 2014 increased basic net rent substantially; dispute over subleases’ fate upon lease termination remains unresolved.
- BHPL sought to compel arbitration on the sublease issue via CCP sections 1280/1281.2; U.S. Bank opposed, arguing no live, arbitrable controversy and potential advisory opinion.
- Trial court denied petition, finding the issue not ripe or justiciable; BHPL appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the sublease-contingent dispute is arbitrable under 1281.2 | BHPL: broad ‘any and all disputes’ arbitration clause covers the sublease issue. | U.S. Bank: issue is hypothetical/contingent and not an actual controversy; subtenants not parties. | Yes; petition to compel arbitration should be granted under 1281.2. |
| Whether ripeness/justiciability prevents arbitration | Ripeness not a prerequisite for arbitrability; contract governs scope. | Ripeness needed to avoid advisory opinions in court. | Ripeness not a prerequisite; arbitration allowed notwithstanding potential future events. |
| Whether the broad arbitration clause forecloses any unwritten justiciability requirement | Clause covers ‘any and all disputes, controversies or claims’ relating to the Ground Lease. | Extratextual justiciability restrictions may apply. | No unwritten restriction; enforce arbitration scope as written. |
| Whether petition to compel arbitration is improper due to third-party subtene rights | Subtenants’ rights would be affected but not necessary to join for arbitration. | Subtenants not parties to the ground lease/arbitration; live controversy lacking. | Not a bar to compelling arbitration; petition properly seeks to resolve contract dispute. |
Key Cases Cited
- Coopers & Lybrand v. Superior Court, 212 Cal.App.3d 524 (1989) (controversy requirement and arbitration scope)
- Coopers & Lybrand v. Papke, 212 Cal.App.3d 534 (1989) (arbitration scope; arbitration of contract-based issues)
- Coopers & Lybrand v. Papke, 212 Cal.App.3d 534 (1989) (expansive view of controversy under 1280(c))
- Coast Plaza Doctors Hospital v. Blue Cross of California, 83 Cal.App.4th 677 (2000) (broad interpretative approach to arbitration scope)
- Graphic Arts International Union v. Oakland National Engraving Co., 185 Cal.App.3d 775 (1986) (petition to compel arbitration requires factual statement of issues)
- Moncharsh v. Heily & Blase, 3 Cal.4th 1 (1992) (strong public policy favoring arbitration)
- Pinnacle Museum Tower Association v. Pinnacle Market Development (US), LLC, 55 Cal.4th 223 (2012) (arbitration policy; avoid unwritten procedural requirements)
- Wagner Construction Co. v. Pacific Mechanical Corp., 41 Cal.4th 19 (2007) (arbitration: limits of courts’ role; not weighing merits)
- Rebolledo v. Tilly’s, Inc., 228 Cal.App.4th 900 (2014) (arbitration agreements; limited judicial role)
- Graphic Arts International Union v. Oakland National Engraving Co., 185 Cal.App.3d 775 (1986) (reason for Graphic Arts holding)
- Acquire II, Ltd. v. Colton Real Estate Group, 213 Cal.App.4th 959 (2013) (ripe/arbitration standards in §1281.2 context)
- Gueyffier v. Ann Summers, Ltd., 43 Cal.4th 1179 (2008) (arbitration powers limited by agreement)