Laymon v. J. Rockcliff, Inc.
A147464
| Cal. Ct. App. | Jun 9, 2017Background
- Plaintiffs (two consolidated class actions) sued their real estate brokers and third‑party settlement service providers alleging undisclosed sublicense fees/kickbacks paid through TransactionPoint, asserting breach of fiduciary duty, fraud, unfair competition, unjust enrichment, and seeking disgorgement.
- Defendants moved to compel arbitration based on three different standard form agreements used in the sales: the RLA (Residential Listing Agreement), the 2007 RPA (Residential Purchase Agreement), and the 2010 RPA; arbitration clauses required initials to be effective.
- Different plaintiffs had initialed different clauses: some had only the RLA, some only the 2007 RPA, some the 2010 RPA, and some multiple forms.
- The trial court held the RLA and 2007 RPA clauses did not cover plaintiffs’ claims but found the 2010 RPA clause did and compelled arbitration for the plaintiffs who signed it; it also applied equitable estoppel to let nonparty service providers invoke the 2010 RPA.
- On appeal, the court reversed the trial court as to the RLA and 2007 RPA, holding those clauses cover the claims (noting disgorgement implicates sellers’ obligation to pay compensation and that the 2007 RPA’s “consistent with 17A and B” phrase governs procedure, not subject‑matter limitation), and remanded to compel arbitration for all plaintiffs; the cross‑appeal of plaintiffs ordered to arbitration was dismissed as nonappealable.
Issues
| Issue | Plaintiffs' Argument | Defendants' Argument | Held |
|---|---|---|---|
| Whether RLA arbitration clause (disputes "regarding the obligation to pay compensation") covers plaintiffs’ claims | Himpler/McCants: claims seek return of brokers’ ill‑gotten gains and do not dispute sellers’ obligation to pay commissions | Defendants: disgorgement challenges brokers’ right to retain commissions and thus implicates sellers’ obligation to pay under the RLA | Held: RLA covers claims because disgorgement disputes the brokers’ entitlement to commissions and therefore implicates the obligation to pay; plaintiffs who executed RLA must arbitrate |
| Whether 2007 RPA arbitration clause (party/broker arbitration "consistent with 17A and B") covers plaintiffs’ claims | Laymons/McCants: "consistent with" limits party/broker arbitration to disputes involving both buyer and seller; clause adhesive/lacking mutuality | Defendants: clause requires buyers/sellers to arbitrate disputes involving brokers; "consistent with" relates to mediation/arbitration procedures and exclusions, not subject‑matter limitation | Held: 2007 RPA covers party/broker disputes here; "consistent with" governs procedural conditions (mediation, exclusions), not a substantive bar; clause not adhesive or non‑mutual when initialed |
| Whether nonparty service providers can invoke 2010 RPA via equitable estoppel | Plaintiffs: service providers cannot compel arbitration as nonparties | Defendants: equitable estoppel permits nonparties to invoke arbitration tied to claims that are intertwined with contract obligations | Held: Trial court correctly allowed service providers to rely on equitable estoppel under the 2010 RPA (appellate challenge not sustained) |
| Whether order compelling arbitration is appealable (Hernandez group cross‑appeal) | Hernandez group: cross‑appeal from order compelling arbitration | Defendants: order compelling arbitration is not appealable; dismissal of cross‑appeal warranted | Held: Cross‑appeal dismissed; California law permits appeal from order denying arbitration but generally not from order granting it |
Key Cases Cited
- Rice v. Downs, 248 Cal.App.4th 175 (summary of arbitration motion/interpretation standards)
- Korea Supply Co. v. Lockheed Martin Corp., 29 Cal.4th 1134 (disgorgement as restitution/remedy discussion)
- Sierra Pacific Industries v. Carter, 104 Cal.App.3d 579 (disgorgement as penalty/remedy discussion)
- Hock Investment Co. v. Marcus & Millichap, 68 Cal.App.4th 83 (arbitration clause initialing and mutuality/offer acceptance)
- Nguyen v. Applied Medical Resources Corp., 4 Cal.App.5th 232 (order compelling arbitration not appealable)
- Gastelum v. Remax Internat., Inc., 244 Cal.App.4th 1016 (appealability and arbitration statutory scheme)