As we reported in our August 17, 2012 Update, the California Supreme Court upheld the enforceability of provisions in condominium project CC&Rs requiring binding arbitration of construction defect claims against the project developer. The Court’s opinion in Pinnacle Museum Tower Association v. Pinnacle Market Development (US), LLC, S186149, is an important decision for condominium developers, who should benefit from the typically more streamlined and cost-effective process of arbitration, rather jury trial.
Pinnacle was not the only case pending before the Supreme Court on the issue of enforceability of binding arbitration for construction defect claims in condominium CC&Rs. The Court also accepted for review four other California Court of Appeal cases involving the enforceability of such arbitration clauses: Villa Vicenza Homeowners v. Nobel Court Development, LLC, S190805; Diaz v. Buckey, S194150; Promenade at Playa Vista Homeowners Association v. Western Pacific Housing, Inc., S198722; Verano Condominium Homeowners Association v. La Cima Development, LLC, S202596.
On October 10, 2012, the Supreme Court transferred back to the California Courts of Appeal the Villa Vicenza, Diaz, Promenade and Verano cases for vacation of the Court of Appeals’ previous decisions and reconsideration of the cases in light of the Pinnacle decision. We expect the Courts of Appeal to follow suit and uphold the arbitration provisions at issue in the respective cases. However, due to the different facts of each case, the decisions in the Court of Appeal cases may turn on different issues and result in different outcomes. We will continue to monitor these cases as they progress through the courts and provide future updates on their outcomes.
The issues discussed in this update are not intended to be legal advice and no attorney-client relationship is established with the recipient. Readers should consult with legal counsel before relying on any of the information contained herein. Reuben & Junius, LLP is a full service real estate law firm. We specialize in land use, development and entitlement law. We also provide a wide range of transactional services, including leasing, acquisitions and sales, formation of limited liability companies and other entities, lending/workout assistance, subdivision and condominium work.
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