Snowcreek IV Owners' Assn. v. Amerigas Propane CA3
C090163M
| Cal. Ct. App. | Jun 29, 2021Background
- In 1987 Dempsey Construction entered a recorded agreement with Turner Propane to provide a permanent propane distribution system for Snowcreek; the agreement "runs with the land" and states modifications require a writing signed by all parties.
- Turner sold to Heritage Propane; AmeriGas acquired Heritage in 2012 and thereafter supplied Snowcreek customers.
- Beginning in 2014 AmeriGas mailed repeated "Terms and Conditions" (2014, 2015, 2017, 2018) with a clause stating they "modify or replace all prior agreements" and containing an arbitration clause; customers did not sign these documents or opt out.
- Plaintiffs (Snowcreek homeowners associations and homeowners) sued for declaratory relief after AmeriGas threatened new contracts and pricing; AmeriGas moved to compel arbitration, asserting the mailed Terms & Conditions bound plaintiffs.
- The trial court denied the motions to compel arbitration (including as to individual plaintiff Newbry and two owners’ associations), finding AmeriGas failed to prove an agreement to arbitrate and could not unilaterally add arbitration to the 1987 Agreement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiffs agreed to arbitrate disputes arising from the 1987 Agreement | 1987 Agreement governs; it requires written signed modification and was not modified by AmeriGas’s mailed Terms; plaintiffs never agreed to arbitration | Successive mailed Terms & Conditions (with arbitration clause) and plaintiffs’ continued payment/acceptance of service implied acceptance and modified the 1987 Agreement | Held: AmeriGas failed to meet its burden; no agreement to arbitrate—the Terms mailed did not effect the required written modification and plaintiffs’ conduct was not inconsistent with the 1987 Agreement |
| Whether customers’ continued use/payments can establish implied acceptance of new arbitration terms | Continued use does not modify a contract that requires signed written modification | Continued use after receipt of Terms & Conditions (and failure to opt out) is evidence of implied acceptance | Held: Implied acceptance doctrine inapplicable here; conduct did not waive the 1987 Agreement’s signed-modification clause and did not create a new bilateral contract replacing the 1987 Agreement |
| Whether individual homeowner Newbry is bound by arbitration | Newbry was covered by the recorded 1987 Agreement (title report) and did not consent to AmeriGas’s unsolicited Terms | Newbry purchased in 2015 and affirmatively signed up for service, so he accepted AmeriGas’s Terms & Conditions including arbitration | Held: Newbry is not bound; same analysis as other plaintiffs — no proven agreement to arbitrate |
| Whether two homeowners’ associations are bound to arbitrate as agents of members or successors | Associations are successors/third‑party beneficiaries under the 1987 Agreement and did not agree to AmeriGas’s Terms; cannot be bound if members aren’t | Associations are agents of their members and therefore bound if members accepted arbitration | Held: Associations not bound — with no showing members agreed to arbitrate, associations cannot be forced to arbitrate on that basis |
Key Cases Cited
- Brown v. Wells Fargo Bank, N.A., 168 Cal.App.4th 938 (appellate standard of review for denial of motion to compel arbitration)
- Serafin v. Balco Properties Ltd., LLC, 235 Cal.App.4th 165 (implied acceptance/ratification can establish arbitration agreement in some contexts)
- Daugherty Co. v. Kimberly-Clark Corp., 14 Cal.App.3d 151 (conduct inconsistent with a written contract can imply modification)
- Rosenthal v. Great Western Fin. Securities Corp., 14 Cal.4th 394 (party opposing arbitration bears burden to prove defenses like waiver)
- Engalla v. Permanente Medical Group, Inc., 15 Cal.4th 951 (procedural rules re burden on party opposing petition to compel arbitration)
- Keener v. Jeld-Wen, Inc., 46 Cal.4th 247 (forfeiture: points not raised below are generally not considered on appeal)
- Garrison v. Edward Brown & Sons, 25 Cal.2d 473 (writing requirement for modification may be waived by conduct when intent to modify is shown)