O'Donoghue v. Superior Court
161 Cal. Rptr. 3d 609
Cal. Ct. App.2013Background
- Guarantors signed personal continuing guaranties for a $20 million construction loan on a San Francisco project, each containing a judicial reference clause.
- Clause 5.11 provides for a single referee under CCP sections 638 et seq., with the referee hearing all issues and reporting a decision; costs shared equally.
- Plaintiff Performing Arts, LLC acquired the note and brought breach-of-guaranty claims; defendants responded with various defenses and cross-claims.
- Plaintiff moved to appoint a referee under section 638; the trial court granted the motion and appointed a referee.
- Defendants challenged the reference provision as non-jury waiver, unconscionable, waivable by plaintiff, and an abuse of discretion under Tarrant Bell.
- Court held the reference provision waived the right to a jury trial, was not unconscionable, plaintiff did not waive its right, and there was no abuse of discretion; writ denied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the reference provision waive the right to a jury trial? | Provision shows forum other than judicial with a referee; waiver implicit. | No explicit jury-waiver language; lack of actual notice/meaningful reflection invalidates waiver. | Waiver valid; jury trial right waived. |
| Is the reference provision unconscionable (procedural or substantive)? | Unconscionability absent; provision clear and procedurally minimal. | Adhesive take-it-or-leave-it terms; substantive and procedural unconscionability due to one-sidedness. | Not unconscionable. |
| Has plaintiff waived its right to judicial reference by delay or conduct? | Waiver analysis should be based on arbitration precedent; no waiver due to lack of prejudice. | Delay and litigation conduct show waiver under six-factor test. | No waiver; no substantial prejudice established. |
| Was granting the reference motion an abuse of discretion under Tarrant Bell? | Reference promotes efficiency; no dual-track detriment. | Dual tracks risk inconsistent rulings and duplicative proceedings; harms economy. | Not an abuse of discretion. |
Key Cases Cited
- Madden v. Kaiser Foundation Hospitals, 17 Cal.3d 699 (Cal. 1976) (arbitration need not expressly waive jury rights)
- Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC, 55 Cal.4th 223 (Cal. 2012) (arbitration/reference waivers not require explicit language)
- Badie v. Bank of America, 67 Cal.App.4th 779 (Cal. App. 4th 1998) (clear forum-forum switch suffices to show waiver of jury trial)
- Woodside Homes of California, Inc. v. Superior Court, 142 Cal.App.4th 99 (Cal. App. 4th 2006) (explicit or implicit waiver analysis; adhesive terms not dispositive)
- Greenbriar Homes Communities, Inc. v. Superior Court, 117 Cal.App.4th 337 (Cal. App. 4th 2004) (discusses notice and conspicuousness of reference provisions)
- Trend Homes, Inc. v. Superior Court, 131 Cal.App.4th 950 (Cal. App. 4th 2005) (definition and effect of judicial reference under CCP §638)
- Tarrant Bell Property, LLC v. Superior Court, 51 Cal.4th 538 (Cal. 2011) (dual-track risk of inefficiency and inconsistent judgments)
- Treo @ Kettner Homeowners Assn. v. Superior Court, 166 Cal.App.4th 1055 (Cal. App. 4th 2008) (distinguishes CC&Rs from contracts under CCP §638)
- Grafton Partners v. Superior Court, 36 Cal.4th 944 (Cal. 2005) (set forth framework for section 638 reference)
- Kaneko Ford Design v. Citipark, Inc., 202 Cal.App.3d 1220 (Cal. App. 3d 1988) (arbitration-related considerations in contract disputes)
- Augusta v. Keehn & Associates, 193 Cal.App.4th 331 (Cal. App. 4th 2011) (six-factor waiver framework applied to arbitration)
- Brown v. Superior Court, 216 Cal.App.4th 1302 (Cal. App. 4th 2013) (waiver analysis in arbitration context)
- Keating v. Superior Court, 31 Cal.3d 584 (Cal. 1982) (standard for waiver analysis in civil procedure)
- St. Agnes Medical Center v. PacifiCare of California, 31 Cal.4th 1187 (Cal. 2003) (six-factor waiver test for arbitration)