Metis Development LLC v. Bohacek
200 Cal. App. 4th 679
| Cal. Ct. App. | 2011Background
- MPC 823 LLC formed to pursue residential development in Menlo Park; Bohacek and Metis are members; Metis members Wellman and Bennett.
- Operating Agreement (Jan 1, 2008) required arbitration of disputes; amended/restated version retained arbitration provision.
- Loan for development guaranteed by Bohacek, the 2000 Bohacek Family Trust, Metis, Wellman, and Bennett; loan default occurred.
- California Bank & Trust sued in 2010 for foreclosure and related relief; Bohacek and Puja Bohacek (as trustee) named; cross-claims filed by Bohaceks against Metis and others.
- Respondents’ cross-claim against Bohaceks and Bohacek Ventures alleged fraud and related claims arising from investment in MPC 823; 19 causes of action asserted.
- Appellants filed a petition to compel arbitration on June 18– July 6, 2010; trial court tentatively denied based on waiver and risk of conflicting rulings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Duty to issue a statement of decision | Bohaceks requested a statement under CCP 632, and 1291; court must issue. | Court treated as law/motion; no statement required. | Statement of decision required; trial court erred in denying |
| Waiver of the right to arbitrate | Litigation activity alone with prejudice not shown; no waiver. | Litigation activity and conduct constitute waiver under CCP 1281.2(a). | Waiver determination reversed; need remand to consider waiver with proper record |
| Possibility of conflicting rulings under CCP 1281.2(c) | There is a risk of conflicting rulings if arbitration proceeds for some parties. | Staying or other remedies could avoid conflicts; denial warranted given potential conflicts. | Remand to assess whether conflict risk warrants denial or alternative relief; not an automatic denial |
Key Cases Cited
- Rosenthal v. Great Western Financial Securities Corp., 14 Cal.4th 394 (Cal. Supreme Court, 1996) (petition to compel arbitration involves trial-like considerations; need for statement of decision when facts are contested)
- In re Marriage of Fong, 193 Cal.App.4th 278 (Cal. App. 4th Dist., 2011) (distinguishes trial concept for purposes of statements of decision and §632 applicability)
- Lien v. Lucky United Properties Investment, Inc., 163 Cal.App.4th 620 (Cal. App. 2d Dist., 2008) (exception to general rule—statements of decision may be required for certain arbitration-related proceedings)
- Central Valley General Hospital v. Smith, 162 Cal.App.4th 501 (Cal. App. 3d Dist., 2008) (distinguishes evidentiary vs. ultimate facts in statements of decision)
- St. Agnes Medical Center v. PacifiCare of California, 31 Cal.4th 1179 (Cal. Supreme Court, 2003) (waiver and prejudice considerations in arbitration/alternative forum rulings)
- Painters Dist. Council No. 33 v. Moen, 128 Cal.App.3d 1032 (Cal. App. 3d Dist., 1982) (foundational analysis relating to section 632 and statements of decision)