32 Cal. App. 5th 972
Cal. Ct. App. 5th2019Background
- Plaintiff sued Alain Pinel Realtors (Pinel), certain individual brokers/owners, Rhesus, Inc., and Fidelity-related defendants in a putative class action alleging unlawful sublicensing and related claims arising from use of TransactionPoint; suit filed in 2015 for transactions from 2004–2011.
- The Pinel defendants moved to compel arbitration relying on an arbitration clause in the 2008 residential listing agreement; the statutory section 1298(c) notice block had a space for broker initials that was blank on the produced copy (plaintiff's initials present).
- Pinel submitted a declaration by managing broker Lisa Crosby-Torres stating office policy/custom that she would initial paragraph 19B on behalf of Pinel when a client initialed it, and that files (including the original listing agreement) were later destroyed under the firm’s five-year retention policy.
- Trial court denied the motion, concluding Crosby-Torres’s declaration did not establish that she actually initialed plaintiff’s specific agreement, and that the contract language contemplated mutual assent shown by initials; court rejected Bello and adopted reasoning of Marcus & Millichap.
- Defendants appealed; the Court of Appeal affirmed, holding custom/habit evidence here insufficient to prove broker’s initials on that particular contract and that other conduct did not demonstrate mutual assent.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether custom/habit evidence can establish that the broker initialed the section 1298(c) arbitration notice on the specific listing agreement | Broker’s initials are absent; no evidence proves Pinel actually assented on this contract | Crosby‑Torres’s declaration of office policy/custom and file-destruction shows she would have initialed the contract, so initials should be inferred | Custom/habit evidence insufficient: defendants failed to show Crosby‑Torres actually received or reviewed this specific agreement, so cannot compel arbitration |
| Whether a party may be bound to arbitration by conduct other than initials (e.g., later demand to arbitrate) | The listing’s clause and statutory notice require initials; failure to initial prevents enforcement | Assent can be shown by other conduct (performance, invoking arbitration); Serafin and Basura support enforcing despite missing initials | Court did not decide the general question but held on facts no other conduct showed Pinel’s assent: demand years later (and after suit) did not establish mutual assent or prevent revocation |
Key Cases Cited
- Serafin v. Balco Props. Ltd., LLC, 235 Cal.App.4th 165 (employer’s conduct can establish assent to arbitration despite missing signature)
- Basura v. U.S. Home Corp., 98 Cal.App.4th 1205 (contemporaneous initials on other contracts can permit inference of intent to be bound despite missing initials)
- Sully‑Miller Contracting Co. v. Gledson/Cashman Constr., Inc., 103 Cal.App.4th 30 (offer to arbitrate may be revoked before acceptance)
- Marcus & Millichap Real Estate Inv. Brokerage Co. v. Hock Inv. Co., 68 Cal.App.4th 83 (interpreting listing agreement as requiring mutual assent evidenced by initials)
- Grubb & Ellis Co. v. Bello, 19 Cal.App.4th 231 (discussed but rejected by trial court—addressed enforceability of listing agreement arbitration clauses)
- Hughes v. Pacific Wharf & Storage Co., 188 Cal. 210 (limits of habit/custom evidence without proof of procedural step connecting the habit to the specific act)