Jaramillo v. JH Real Estate Partners, Inc.

3 Cal. Rptr. 3d 525, 111 Cal. App. 4th 394, 2003 Daily Journal DAR 9268, 2003 Cal. Daily Op. Serv. 7411, 2003 Cal. App. LEXIS 1248
CourtCalifornia Court of Appeal
DecidedAugust 15, 2003
DocketH024665
StatusPublished
Cited by11 cases

This text of 3 Cal. Rptr. 3d 525 (Jaramillo v. JH Real Estate Partners, Inc.) is published on Counsel Stack Legal Research, covering California Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Jaramillo v. JH Real Estate Partners, Inc., 3 Cal. Rptr. 3d 525, 111 Cal. App. 4th 394, 2003 Daily Journal DAR 9268, 2003 Cal. Daily Op. Serv. 7411, 2003 Cal. App. LEXIS 1248 (Cal. Ct. App. 2003).

Opinion

Opinion

ELIA, J.

Defendants JH Real Estate Partners, Inc., JH Management Co., LLC and United Dominion appeal from the denial of their motion to compel arbitration. (Civ. Code, § 1294, subd. (a).) The case involves the enforceability of an arbitration provision contained in a residential lease.

On appeal, defendants assert that the trial court erred by denying their motion because the arbitration provision was not unconscionable and did not lack mutuality. We asked the parties to discuss, in supplemental briefs, the effect of Civil Code 1 sections 1942.1 and 1953 on the issue of unconscionability of the arbitration clause and whether section 1953, subdivision (a)(2) to (a)(4), precluded compelled binding arbitration. After careful consideration of these issues, we affirm the trial court’s ruling.

A. Procedural History

On March 7, 2002, Dino Jaramillo and Kim Jaramillo (the Jaramillos) filed a complaint against JH Real Estate Partners, Inc., JH Management Co., LLC, and United Dominion, later corrected to read United Dominion Realty, L.P. They alleged causes of action for general negligence, intentional tort, premises liability, breach of contract, breach of the implied warranty of habitability, and unfair business practices and false and deceptive advertising.

*397 In regard to general negligence, the Jaramillos alleged in their complaint that beginning on October 5, 2000 and continuing thereafter, the defendants “negligently inspected, maintained or repaired the subject premises resulting in water incursion and dangerous and unhealthful levels of moisture in walls and ceilings, mold, mold mycotoxins, airborne mold spores, fungus, and bacteria in the rental unit occupied by plaintiffs.” The Jaramillos further alleged that this dangerous condition and its negligent cause was not discovered, and could not have been discovered in the exercise of reasonable diligence, until January 2002.

In regard to intentional tort, the Jaramillos alleged in their complaint that beginning on October 5, 2000 and continuing thereafter, defendants intentionally caused damage to them by failing and refusing to “provide a clean, sanitary and habitable living space for plaintiffs despite defendants’ knowledge that defendants’ negligence as described herein above had caused plaintiff’s [ric] rental unit to be in an unsafe, unsanitary and dangerous condition due to the presence of mold, mold spores, mycotoxins, fungus, and bacteria.” They further alleged that during “about January 2002, defendants improperly caused one or more three-day notices to pay rent or quit to be served on plaintiffs in retaliation for plaintiffs’ filing a report with the Monterey County Health Department concerning the unsanitary living conditions in their unit, intentionally causing plaintiffs severe emotional distress.”

In regard to premises liability, the Jaramillos stated in their complaint that they had “suffered physical injury and severe emotional distress as a result of unhealthful and unsanitary conditions” in their rental unit. They also averred that, about April 2001, Kim Jaramillo slipped and fell on a concrete ramp located on the premises and she injured her knee, and the injury was proximately caused by the defendants’ failure to inspect and to repair or maintain the ramp.

In regard to the breach of the implied warranty of habitability, the Jaramillos alleged that defendants failed to provide and maintain a clean, sanitary and habitable rental unit.

In regard to violation of Business and Professions Code sections 17200 and 17500 et seq., the Jaramillos alleged that defendants’ actions constituted unfair business practices. They further averred that defendants “falsely advertised and represented that rental units at the subject premises were in a clean and sanitary condition, complied with all applicable health, safety and building laws and ordinances, and were safe and were fit for human habitation ...”

On May 14, 2002, defendants moved for an order compelling arbitration based on the arbitration provision contained in the JH Management Rental Agreement between the JH Management Company, LLC, the landlord’s *398 agent, and the Jaramillos. The arbitration clause provides for binding arbitration of personal injury disputes in a provision titled “Arbitration of Personal Injury Disputes.” Section 22 of the agreement states in small, boldface print: “Any dispute between the parties relating to a claim for personal injury, directly or indirectly relating to, or arising from, the condition of the leased premises, or the apartment community, shall be resolved by arbitration conducted by the American Arbitration Association.” Although the arbitration provision states that the American Arbitration Association rules govern, it also imposes the restriction that any demand for arbitration be made in writing “within 180 days after the claim, dispute or other matter in questions [sic] has arisen.” The section provides in small, nonboldface print that the arbitration shall be conducted before three arbitrators and all administrative fees and costs shared equally by the landlord and resident and “all such fees must be advanced prior to the arbitration ...” The section also states in small, nonboldface print: “Nothing in this section shall be deemed to limit the Landlord’s rights in the event of Resident’s breach or default under this agreement, including without limitation, Landlord’s right to bring an action for Unlawful Detainer under the laws of the State of California.”

In their memorandum of points and authorities in opposition to the motion, the Jaramillos argued that the arbitration clause was unconscionable and should not be enforced. They contended that they were the parties with the weakest bargaining power and the requirement of arbitration before three arbitrators and payment of their half share of the costs in advance constituted “an undue economic burden” and put them at a “gross economic disadvantage relative to the corporate landlord.” They also asserted that the court had authority to deny the motion because there was a possibility of conflicting rulings since not all defendants were parties to the arbitration clause, citing Code of Civil Procedure section 1281.2, subdivision (c). The Jaramillos maintained that their claims for property damage, intentional infliction of emotional distress, and punitive damages were outside the scope of the arbitration clause.

In their reply memorandum, the defendants argued that all of the Jarmillos’ claims arose from the condition of the leased premises and fell within the purview of the arbitration clause. The defendants maintained that the plaintiffs failed to show that the rental agreement was a contract of adhesion or that the arbitration clause was outside the reasonable expectations of the weaker party or unconscionable. They declared that “the arbitration provision was prominent, conspicuous, simple and straightforward” and its terms and burdens applied equally to plaintiffs and defendants.

The motion was heard on June 14, 2002. The Jaramillos’ attorney first asserted that the arbitration clause was unconscionable because the terms of *399

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3 Cal. Rptr. 3d 525, 111 Cal. App. 4th 394, 2003 Daily Journal DAR 9268, 2003 Cal. Daily Op. Serv. 7411, 2003 Cal. App. LEXIS 1248, Counsel Stack Legal Research, https://law.counselstack.com/opinion/jaramillo-v-jh-real-estate-partners-inc-calctapp-2003.