Pinnacle Museum v. Pinnacle Market Dev. 7/30/10 CA4/1

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State: California

Court: 1st District Court of Appeal 1st District Court of Appeal

Docket No: D055422

Case Date: 11/12/2010

Preview:Filed 7/30/10

CERTIFIED FOR PUBLICATION

COURT OF APPEAL, FOURTH APPELLATE DISTRICT DIVISION ONE STATE OF CALIFORNIA

PINNACLE MUSEUM TOWER ASSOCIATION, Plaintiff and Respondent, v. PINNACLE MARKET DEVELOPMENT (US), LLC et al., Defendants and Appellants.

D055422

(Super. Ct. No. 37-2008-00096678-CU-CD-CTL)

APPEAL from an order of the Superior Court of San Diego County, Ronald L. Styn, Judge. Affirmed. Wood, Smith, Henning & Bermann LLP, Daniel A. Berman, Sheila E. Fix, R. Gregory Amundson and Nicholas Gedo for Defendants and Appellants. Feinberg Grant Mayfield Kaneda & Litt LLP, Daniel H. Clifford, Joseph Kaneda, Charles Fenton and Bruce Mayfield for Plaintiffs and Respondent.

A homeowners association filed a construction defect action against the developer of a condominium project on its own behalf and as a representative of its members for damage to common areas, property owned by the association, and property owned by individual members. We conclude that an arbitration provision in a declaration of covenants, conditions and restrictions (CC&R's) recorded by the developer of the condominium project, which may not be changed by the association without the written consent of the developer, did not constitute an "agreement" sufficient to waive the constitutional right to jury trial for construction defect claims brought by the homeowners association. Additionally, assuming the homeowners association is bound by a jury waiver provision contained in purchase and sale agreements signed by the individual condominium owners, we conclude that the jury waiver provision in the purchase and sale agreements is not enforceable because it is unconscionable. Accordingly, we affirm the trial court's order denying the developer's motion to compel arbitration. FACTUAL AND PROCEDURAL BACKGROUND Pinnacle Market Development (US) LLC, Pinnacle International (US) LLC, Pinnacle Market Development (Canada) LTD, Michael De Cotiis, and Apriano Meola (collectively Pinnacle) constructed and sold condominiums in a common interest development project in downtown San Diego known as the Pinnacle Museum Tower Condominium (Project). Pinnacle recorded CC&R's forming the Pinnacle Museum Tower Association (Association), a California nonprofit mutual benefit corporation, to manage and repair the Project's common areas. Pinnacle pledged to convey certain property, including easements and drainage facilities and utility installations, to the 2

Association before conveyance of the first condominium. Pinnacle also retained the right to convey property to the Association at any time. Pinnacle conveyed to each buyer of a condominium an undivided fractional interest as tenant-in-common to the common areas. Under the CC&R's each condominium owner must be a member of the Association, and pay an assessment to the Association for its maintenance and repair of the common areas. The second page of the CC&R's states, in capital letters, that article 18 contains a mandatory procedure for the resolution of construction defect disputes that includes the waiver of the right to a jury. Article 18 contains an arbitration provision reciting in capital letters that Pinnacle, the condominium owners and the Association agree to resolve any construction dispute through binding arbitration in accordance with the Federal Arbitration Act (FAA, 9 U.S.C.

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