Opinion
D060986
02-07-2013
VERIZON WIRELESS (VAW), LLC, Plaintiff and Respondent, v. MARISOL VILLASENOR, Defendant and Appellant.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Super. Ct. No. 37-2010-00074865-
CU-PA-SC)
APPEAL from a judgment of the Superior Court of San Diego County, William S. Cannon, Judge. Affirmed.
Marisol Villasenor appeals from a judgment confirming an arbitration award in favor of Verizon Wireless (VAW), LLC (Verizon). Villasenor also appeals from the court's earlier order granting Verizon's motion to compel arbitration. We reject Villasenor's contentions and affirm the judgment.
Orders granting motions to compel arbitration are subject to review on appeal from the final judgment confirming the award. (See Muao v. Grosvenor Properties, Ltd. (2002) 99 Cal.App.4th 1085, 1088-1089.)
FACTUAL AND PROCEDURAL BACKGROUND
In 1996, Verizon's predecessor in interest (AirTouch Cellular) leased property in Chula Vista from the property owner, Sin Fin Corporation. The property was to be used for a cell phone tower and support building. The written lease agreement (Lease) was for an initial five-year term with four options to extend. The Lease required the lessor to execute necessary documents for permits and contained an arbitration provision requiring arbitration for "all controversies or claims arising out of or relating to this Lease."
This arbitration provision states in relevant part: "[A]ll controversies or claims arising out of or relating to this Lease or any agreements or instruments relating thereto, or their enforcement or interpretation, or arising out of or relating to any alleged breach, default, or misrepresentation in connection with any of the provisions under this Lease, or any agreements or instruments relating thereto, shall be resolved by submission to final and binding arbitration at the offices of Judicial Arbitration & Mediation Services, Inc. ('JAMS') located in San Diego, California. Such arbitration shall be conducted in accordance with the most recent version of the JAMS Rules of Practice and Procedure for the Arbitration of Commercial Disputes ('JAMS Rules') as of the date of this Lease."
Six years later, in 2002, Verizon acquired AirTouch Cellular and became the tenant on the property and began paying rent. The next year, in about August 2003, Villasenor purchased the property and took title subject to the Lease. Although the Lease itself was not recorded, Villasenor had notice of the Lease through her purchase agreement and a recorded Memorandum of Lease incorporating the Lease terms by reference. Beginning in January 2004 and during the next five or six years, Verizon paid monthly rent to Villasenor and Villasenor accepted each rent payment.
In January 2010, Verizon filed a petition in the superior court seeking to compel arbitration of various disputes between Verizon and Villasenor. Verizon attached a copy of the Lease that had been signed by the parties' predecessors in interest, Sin Fin Corporation and AirTouch Cellular. Verizon submitted a declaration from one of its managers indicating that Verizon was a successor in interest to AirTouch Cellular and that Villasenor was a successor to the original landlord. The manager also attached a letter reflecting that Villasenor's agent had previously acknowledged that Verizon was AirTouch Cellular's successor tenant on the property.
Villasenor opposed the petition on several grounds: (1) Villasenor was unaware of the arbitration provision because the Memorandum of Lease was the only recorded document putting her on notice of the Lease, and this document did not contain the arbitration provision; (2) Verizon was in default of the Lease for unpaid rent; (3) Verizon failed to renew necessary governmental permits for the cell tower; (4) Verizon's notice to exercise its option violated the Lease terms; and (5) the arbitration clause was unconscionable. Villasenor did not raise any challenge to the fact that Verizon was a tenant on the property and a proper successor party to the original tenant on the Lease.
After considering the papers and holding a hearing, the court found Villasenor's contentions did not provide a basis for refusing to enforce the contractual arbitration provision. Villasenor filed a writ petition challenging the order. We summarily denied the petition.
Several months later, in October 2010, an arbitration hearing was held in which both parties were represented by counsel and both parties presented documentary evidence and witness testimony. At the hearing, Villasenor reasserted her argument that the arbitration was an improper forum for the parties' disputes because she was not the original signatory on the Lease and was unaware of the Lease terms. Villasenor additionally argued that: (1) Verizon owed back rent for several months in 2003 when Villasenor first acquired the property; (2) Verizon did not properly exercise its option under the Lease terms and thus the Lease was terminated; and (3) Verizon was in default of the Lease because Verizon failed to renew its governmental permit. Verizon opposed these arguments, and asserted that Villasenor breached the Lease by refusing to: (1) execute documents necessary to renew its governmental permit; and (2) recognize Verizon's proper exercise of its option to extend the Lease term.
After considering the parties' arguments and evidence, the arbitrator (Retired Superior Court Judge Richard Haden) found in Verizon's favor. With respect to Villasenor's argument that the matter should not be in the arbitration forum, Judge Haden stated:
"Villasenor objects to the arbitration forum because she was not an original signator of the lease and claims the party from whom she purchased the property never provided her a copy. However, her purchase agreement provides seller shall provide buyer with all current leases . . . . Further, she must have known she had a lease with Verizon because she has accepted their rent for five years . . . . The lease provides any controversies arising out of the lease shall be resolved by binding arbitration at JAMS . . . . As a rent-paying tenant under the lease, Verizon is entitled to arbitration. See Melchor Investment Co. v. Rolm Systems (1992) 3 Cal.App.4th 587. The covenant to arbitrate, like the covenant to pay rent, runs with the land. The lessor-lessee relationship involves both privity of contract and privity of estate. [Citation.]"
On the parties' remaining claims, Judge Haden found: (1) Villasenor did not prove Verizon owed any money for back rent, and in any event the statute of limitations expired on this claim; (2) Verizon properly exercised its option to extend the Lease; and (3) Verizon is not liable for failing to renew its permit because Villasenor refused to cooperate with city requirements for obtaining the permit. Judge Haden ordered Villasenor to cooperate with Verizon and issued a final award finding Verizon was the prevailing party entitled to reasonable attorney fees and costs of $55,700.50.
Verizon then moved to confirm the award in superior court. (Code Civ. Proc., §§ 1285, 1293.2.) Villasenor (in propria persona) opposed the motion and petitioned to vacate the arbitration award, arguing that the award must be set aside because there was no contractual relationship between herself and Verizon and therefore the arbitrator had no jurisdiction to hear the matter. In support, she submitted two lengthy declarations discussing (primarily on information and belief) facts relevant to the parties' assumption of the Lease from their predecessors in interest.
In her declaration, Villasenor said that when she purchased the property in August 2003, she understood Verizon was a lessee on the premises. The seller told Villasenor that she no longer had a copy of the lease, but gave Villasenor a copy of the recorded Memorandum of Lease document. Villasenor said she was told by the seller that "while Air Touch Cellular was the tenant which executed the subject lease, that Verizon Wireless had become Air Touch Cellular and that Verizon Wireless made all lease payments under the agreement." (Italics added.) Villasenor further stated that it "is my understanding from my review of the public records filed on behalf of Verizon Wireless that Verizon Wireless was a new entity created in 2000 AFTER the purchase of Air Touch Cellular by Great Britain based Vodafone in 1999. Months later, Vodafone merged with Atlantic Bell. Allegedly, Verizon was created out of a merger of the assets of these companies and their holdings." Based on these asserted facts, Villasenor requested the court to vacate the arbitration award, claiming that there has never been a lease contract between herself and Verizon and thus the arbitrator "exceeded his powers . . . ."
In reply Verizon submitted a lengthy declaration from its manager Steven Wechsler explaining the manner in which Verizon acquired ownership over the prior tenant (AirTouch Cellular) and that the prior landlord was given notice of this change in February 2002. Wechsler also asserted that Verizon was an " 'affiliate' " of AirTouch Cellular under the Lease, and therefore no landlord approval was required for the assignment.
With respect to the ownership change, Wechsler stated: "[O]n or about June 30, 1999, AirTouch Communications (the parent company of AirTouch Cellular) merged with UK-based Vodafone Group Plc, and the new company was called Vodafone AirTouch Plc. — contrary to the statements in the Villasenor Declaration, Vodafone did not purchase AirTouch Cellular. In addition, . . . on or about in September 1999, Vodafone AirTouch Plc entered into a joint venture with Bell Atlantic Corp., which joint venture began operations as Verizon Wireless on April 4, 2000. It is my understanding that AirTouch remains in existence and that it is 100% owned by Verizon Wireless (VAW) LLC, which is in turn 100% owned by Cellco Partnership."
Villasenor later submitted an additional declaration, stating she was not aware of the contents of the Lease when she purchased the property, nor was she ever aware the Lease contained an arbitration provision.
After considering the papers, the court denied Villasenor's motion to vacate the award and granted Verizon's motion to confirm the arbitration award. The court also awarded Verizon $1,440 in attorney fees incurred in bringing the motion to confirm.
DISCUSSION
Villasenor appeals from the order granting Verizon's motion to compel arbitration and the orders confirming the arbitration award and denying her motion to vacate the award. We address these challenges separately.
I. Order Compelling Arbitration
Villasenor first contends the court erred in granting Verizon's motion to compel primarily because the parties were not signatories to the original Lease agreement. In examining this contention, we review only the facts that were before the court when it ruled on the motion. (See In re Zeth S. (2003) 31 Cal.4th 396, 405.)
A. Applicable Legal Principles
A party to an arbitration agreement may petition the court to compel other parties to arbitrate a dispute governed by their agreement. (Code Civ. Proc., § 1281.2; see Jones v. Jacobson (2011) 195 Cal.App.4th 1, 15 (Jones); Segal v. Silberstein (2007) 156 Cal.App.4th 627, 633.) The petitioner bears the burden of proving by a preponderance of the evidence the existence of a valid arbitration agreement and that the dispute falls within the scope of the arbitration clause. (See Jones, supra, 195 Cal.App.4th at p. 15.) When the party seeking arbitration was not a signatory to the arbitration agreement, the party must also show its right to enforce the agreement. (Ibid.)
Although generally only a signatory to a contract can enforce a contractual arbitration clause, there are exceptions to this rule. (Jones, supra, 195 Cal.App.4th at pp. 16-18; Boucher v. Alliance Title Co., Inc. (2005) 127 Cal.App.4th 262, 268.) Three exceptions are relevant here.
First, a successor in interest or an assignee of a signatory party has the right to enforce contractual provisions, including an arbitration provision. (See California Wholesale Material Supply, Inc. v. Norm Wilson & Sons, Inc. (2002) 96 Cal.App.4th 598, 605; Whittaker v. Otto (1961) 188 Cal.App.2d 619, 624; K. & M., Inc. v. LeCuyer (1951) 107 Cal.App.2d 710, 716-717.) In this case, the Lease specifically stated that "each and every covenant and condition herein is intended to benefit the Premises and shall extend to and bind the heirs, personal representatives, successors and assigns of the parties hereto."
Second, under California law, when a tenant assigns a lease, the new tenant — while in possession of the property — is bound by the arbitration clause, even if the new tenant did not expressly assume the lease obligations. (Melchor Investment Co. v. Rolm Systems (1992) 3 Cal.App.4th 587, 592-593 (Melchor); accord, Kelly v. Tri-Cities Broadcasting, Inc. (1983) 147 Cal.App.3d 666, 679.) "An arbitration clause in a lease is held to 'touch and concern' and 'run with' the land . . . . Thus, an assignee or sublessee in possession of the property may compel and be compelled to arbitrate disputes regardless of whether he or she assumed the lease." (Knight et al., Cal. Practice Guide: Alternative Dispute Resolution (The Rutter Group 2011) ¶ 5:277, p. 5-198.2.) Under these principles, a tenant in possession of the property may compel arbitration against the lessor, regardless whether the tenant specifically assumed the obligations of the lease. (See Melchor, supra, 3 Cal.App.4th at pp. 592-593.)
Third, under an estoppel theory, a nonsignatory party is bound by an arbitration provision in the contract if the party obtained direct benefits from the contract and/or sought to enforce other provisions in the contract. (See JSM Tuscany, LLC v. Superior Court (2011) 193 Cal.App.4th 1222, 1237-1239; Boucher v. Alliance Title Co., Inc., supra, 127 Cal.App.4th at pp. 268-273.)
In reviewing a court's order granting a motion to compel arbitration, we examine the court's factual findings under the substantial evidence standard and review the court's legal conclusions under the de novo standard. (See Bono v. David (2007) 147 Cal.App.4th 1055, 1061-1062; City of Vista v. Sutro & Co. (1997) 52 Cal.App.4th 401, 407.)
B. Analysis
On appeal, Villasenor contends the court erred in granting Verizon's motion to compel arbitration because Verizon did not sign the original Lease. The argument lacks merit. In support of its motion to compel, Verizon submitted a declaration of one of its managers who indicated that Verizon was the successor in interest to the signatory party (AirTouch Cellular) and that Verizon is currently in possession of the property. Verizon additionally submitted letters written by Villasenor's agent acknowledging that Verizon was in possession of the property, had been paying rent, and was a successor to the original tenant. Under tenant-in-possession principles and/or an estoppel theory, this evidence was sufficient to meet Verizon's burden to show it was a proper party to enforce the arbitration provision contained in the Lease. (See Melchor, supra, 3 Cal.App.4th at pp. 592-593; Boucher, supra, 127 Cal.App.4th at pp. 269-272.)
In opposition to the motion, Villasenor did not challenge Verizon's status as a successor in interest and tenant-in-possession, nor did she present any evidence to counter Verizon's right to enforce the Lease. Thus, Villasenor has waived any such challenge on appeal. In her appellate brief, Villasenor asserts numerous arguments concerning Verizon's corporate status and its corporate relationship to the original signatory party (AirTouch Cellular), and cites to various supporting documents. Because Villasenor never raised these arguments or presented these documents in the motion to compel proceedings, these arguments are waived. (See Brantley v. Pisaro (1996) 42 Cal.App.4th 1591, 1601.)
In any event, even assuming Villasenor is correct regarding the details of Verizon's assumption of the Lease, a tenant in possession has the right to enforce an arbitration provision in an existing lease regardless of how the tenant came into the possession. (Melchor, supra, 3 Cal.App.4th at pp. 592-593; Kelly v. Tri-Cities Broadcasting, Inc., supra, 147 Cal.App.3d at p. 679; Knight, et al., Cal. Practice Guide: Alternative Dispute Resolution, supra, ¶5:277, p. 5-198.2.) This is particularly true where, as here, Villasenor obtained the benefits of the Lease by knowingly accepting Verizon's rent payments for many years and seeking to enforce other terms of the Lease. (See Boucher, supra, 127 Cal.App.4th at pp. 269-272.)
Villasenor alternatively argues that she was not bound by the arbitration provision because she was unaware of the Lease terms. However, she provided no supporting evidence in opposition to Verizon's motion to compel. A landlord who is an assignee of a lease is presumed to know the contents of the lease. An assignee stands in the shoes of the assignor with respect to contract terms, and the relevant knowledge is that of the original landlord. (See 1 Witkin, Summary of Cal. Law (10th ed.) Contracts, § 734.) Additionally, because the undisputed evidence shows that Villasenor had been collecting rent payments under the Lease from Verizon for at least five years, she was estopped from denying the existence of the Lease agreement with Verizon. (See Boucher, supra, 127 Cal.App.4th at pp. 271-273.)
Villasenor's reliance on Benasra v. Marciano (2001) 92 Cal.App.4th 987 is misplaced. In that case the court held an individual is not bound to an arbitration agreement if he signed the agreement solely in his corporate capacity. That holding has no relevance to the specific issues before us.
During oral argument, Villasenor's counsel argued for the first time that under a recent California Supreme Court decision pertaining to arbitration provisions in CC&R's, an arbitration provision in a lease is not binding on successor parties unless the lease is recorded. (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223 (Pinnacle).) The argument is waived because it was not raised in Villasenor's appellate brief filed after the Pinnacle decision was issued.
Moreover, counsel's argument has no merit. In Pinnacle, the issue was whether a developer could compel the arbitration of disputes with a homeowners association based on an arbitration provision in the governing CC&R's. (Pinnacle, supra, 55 Cal.4th at pp. 231-232.) The court held that under the Davis-Stirling Act, each condominium unit owner is deemed to have accepted the terms in a recorded declaration, and thus an arbitration clause contained in the recorded declaration is subject to enforcement against the homeowners association. (Id. at pp. 236-246.) This holding does not suggest an arbitration provision in a lease cannot be enforced against a successor party unless the lease was recorded. In Pinnacle, the recording was an essential part of the court's holding because—under the applicable statutes—it is the act of recording that binds the later-purchasing individual condominium purchasers and the homeowners association to the CC&R's terms. (Id. at pp. 236-238.) There is no similar statutory recording requirement applicable to private lease agreements.
The trial court did not err in granting Verizon's motion to compel arbitration.
II. Order Confirming Arbitration Award and Denying Motion To Vacate
Villasenor next contends the court erred in confirming the arbitration award and denying her motion to vacate the award.
A. Applicable Legal Principles
California law reflects a " 'strong public policy in favor of arbitration as a speedy and relatively inexpensive means of dispute resolution' [and therefore] courts will ' "indulge every intendment to give effect to such proceedings." ' [Citations.]" (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 9 (Moncharsh).) To further that policy, arbitration awards are generally final. (Id. at p. 10.) Unless the parties' contract expressly provides otherwise or certain exceptional circumstances exist, courts may review an arbitration award only on the extremely narrow statutory grounds identified in Code of Civil Procedure sections 1286.2 and 1286.6. (Id. at pp. 27-28, 32; see Cable Connection, Inc. v. DIRECTV, Inc. (2008) 44 Cal.4th 1334, 1340; Richey v. AutoNation, Inc. (2012) 210 Cal.App.4th 1516, 1524-1526; Pierotti v. Torian (2000) 81 Cal.App.4th 17, 23-26.)
Code of Civil Procedure section 1286.2 authorizes a court to vacate an arbitration award if (1) "[t]he award was procured by corruption, fraud or other undue means"; (2) "[t]here was corruption in any of the arbitrators; (3) "[t]he rights of the party were substantially prejudiced by misconduct of a neutral arbitrator"; (4) "[t]he arbitrators exceeded their powers and the award cannot be corrected without affecting the merits of the decision upon the controversy submitted"; (5) the arbitrator substantially prejudiced a party's rights by refusing to postpone the hearing despite a showing of good cause or by refusing to hear material evidence; or (6) the arbitrator failed to make the required disclosures or disqualify himself or herself based upon a proper request. Code of Civil Procedure section 1286.6 sets forth the limited circumstances under which a court may correct and then confirm the award.
Unless the parties' agreement expressly provides otherwise or exceptional circumstances exist, courts may not review an arbitrator's decision for errors of law or fact, nor may they review an arbitrator's reasoning or the sufficiency of the evidence to support his or her award. (Moncharsh, supra, 3 Cal.4th at p. 11; see Cable Connection, Inc. v. DIRECTV, Inc., supra, 44 Cal.4th at p. 1340.)
B. Analysis
Villasenor contends the trial court erred in confirming the award because Verizon was not a proper party to the Lease and thus the arbitration agreement was unenforceable. She relies on facts she presented for the first time in responding to Verizon's motion to confirm the arbitration award. However, Villasenor raised the issue of enforceability of the arbitration clause in the superior court before proceeding to arbitration. Thus, all evidence relevant to the issue should have been presented at that time. In ruling on the motion to confirm, the trial court properly rejected Villasenor's attempts to relitigate the issue in the superior court on new facts.
Moreover, Villasenor requested the arbitrator to rule on the issue of the enforceability of the arbitration provision, and the arbitrator ruled against Villasenor based on the factual record before it. The arbitrator's ruling is binding on the trial court and on this court. The correctness of an arbitrator's factual or legal conclusion is not a basis to vacate an arbitration award.
In apparent recognition of the limited grounds upon which an arbitration award can be vacated, Villasenor sets forth several arguments in support of her claim the arbitrator "exceeded [its] powers." None has merit.
For example, Villasenor claims the arbitrator "exceeded" his authority in concluding Verizon was a party to the Lease and that she was bound by the agreement despite that she had no knowledge of the agreement. However, Villasenor raised these issues at the arbitration hearing, and in response to her arguments the arbitrator found Verizon had the right to enforce the contract terms as a "rent-paying" tenant in possession of the property and that Villasenor had constructive knowledge of the Lease terms based on her purchase agreement and on the recorded Memorandum of Lease. Given the comprehensive nature of the arbitration provision and the issues presented to the arbitrator by the parties, these conclusions were within the scope of the arbitrator's authority.
Villasenor also contends the arbitrator exceeded his jurisdiction when he ruled on issues other than payment of rent. For example, Villasenor contends the arbitrator's order requiring that she execute the documents necessary for Verizon to obtain a conditional use permit from the city was beyond the court's jurisdiction because this Lease requirement does not "run[] with the land." This argument is unsupported. The arbitrator's ruling that Villasenor must reasonably cooperate with her tenant in obtaining a new permit for the cell tower was not beyond the arbitrator's jurisdiction.
Villasenor devotes much of her brief to discussing legal and factual issues raised during the arbitration proceeding and/or the new evidence presented for the first time at the motion to compel/vacate proceeding. However, in ruling on a petition to confirm and/or vacate an arbitration award, neither the trial court nor the appellate court has the power to review the merits of the issues determined during arbitration or to consider new evidence that could have been — but was not — presented at the hearing. The sole task of the trial court and this court is to determine whether there was any statutory ground for vacating the award. Because there were none, the court did not err and we do not further discuss these issues.
Villasenor requests that we take judicial notice of certain documents that were not before the trial court. We decline to do so. Generally, documents not before the trial court are beyond the scope of appellate review. (See Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 444, fn. 3; Pulver v. Avco Financial Services (1986) 182 Cal.App.3d 622, 632.) With respect to the requested judicial notice of the Chula Vista Municipal Code and the Federal Code of Regulations, we may consider these documents without a request for judicial notice. We nonetheless find they do not support Villasenor's appellate contentions.
DISPOSITION
Judgment affirmed. Appellant to bear respondent's costs on appeal.
HALLER, J. WE CONCUR: NARES, Acting P. J. O'ROURKE, J.