PINNACLE MUSEUM TOWER ASSOCIATION v. PINNACLE MARKET DEVELOPMENTRespondent's Answer to Petition for ReviewCal.Sep 17, 2010IN THE SUPREME COURT OF THE STATE OF CALIFORNIA PINNACLE MUSEUM TOWER ASSOCIATION, Plaintiff and Respondent, Vv. PINNACLE MARKET DEVELOPMENT(US), LLC, ET AL., Defendants and Appellants. SUPREME COURT [LED SEP 1 7 2018 Frederick K. Ohirich Clerk Deputy Case Number S186149 [California Court of Appeal, Fourth ‘Judicial District Division One Case No. D055422]) San Diego County Superior Court No. 37-2008-00096678-CU-CD-CTL The Honorable Ronald L. Styn RESPONDENT’S ANSWERTO PETITION FOR REVIEW Daniel H. Clifford, 114302 Joseph Kaneda, 160336 Charles Fenton, 200764 Bruce Mayfield, 057730 FEINBERG GRANT MAYFIELD KANEDA & LITT, LLP Lakeshore Towers 18101 Von Karman Avenue,Suite 1940 Irvine, CA 92612 Telephone: (877) 520-3455 firstname.lastname@example.org Attorneysfor Plaintiff and Respondent IN THE SUPREME COURT OF THE STATE OF CALIFORNIA PINNACLE MUSEUM TOWER ASSOCIATION, Plaintiff and Respondent, Vv. PINNACLE MARKET DEVELOPMENT(US), LLC, ET AL., Defendants and Appellants. Case Number §$186149 [California Court of Appeal, Fourth Judicial District Division One Case No. D055422] San Diego County Superior Court No. 37-2008-00096678-CU-CD-CTL The Honorable Ronald L. Styn RESPONDENT’S ANSWERTO PETITION FOR REVIEW Daniel H.Clifford, 114302 Joseph Kaneda, 160336 Charles Fenton, 200764 Bruce Mayfield, 057730 FEINBERG GRANT MAYFIELD KANEDA & LITT, LLP Lakeshore Towers 18101 Von Karman Avenue, Suite 1940 Irvine, CA 92612 Telephone: (877) 520-3455 email@example.com Attorneys for Plaintiff and Respondent TABLE OF CONTENTS TABLE OF AUTHORITIESW000... cccecceeeenneeeeeeeeeeessessnaaaeeeeesssneaees va INTRODUCTION 1...ees ecsceesceeeesseeesaneecssneesensaeeeesesccneeeeeeseeateesssaeeeenes 2 LEGAL DISCUSSIONoieeee cseeeneeeeteneeeeesaneaeeeeseneeeeeesseseeecessaeeeteas 3 I. THERE ARE NO GROUNDSFOR THIS COURT’S REVIEW............. 3 II. THE COURT OF APPEAL’S OPINION IS NOT IN CONFLICT WITH THE FEDERAL ARBITRATION ACT.........ccccccccsceceesesessseees 5 CONCLUSION ou.cececeesseecnseeeeseeeeeeeeeseeeesaeeseaeeesseeeeensensessssssessaeeeenees 7 CERTIFICATION OF LENGTH 000. ceccecceceeeeceseseeeeeeessaeeceessnesesseenes 8 PROOF OF SERVICE... eeccceesseceesseeeeseneeeeesaeaeeeessesaceeseesessesessseneaeees 9 TABLE OF AUTHORITIES California Cases D’Amico v. Board ofMedical Examiners (1974) 11 Cal.Bd Licciccceeceesceeeecesseesseeeeeneeseensesseecereneseessesseessseeeaseasenes 4 Grafton Partners v. Superior Court (2005) 36 Cal.4t 944 oo... eeeceeeccessssseeeeeseeseeeeeeeseneeessneeseeneensaeenseatseeaeenees 4 Nahrstedt v. Lakeside Village Condominium Association, Inc. (1994) 8 Cal.4th 361 .ceeccesssssssssesssesssssesssccsssccessecessesseseseeesnsesasesseeesseeessess 5 Treo@Kettner Homeowners Association v. Superior Court (2008) 166 Cal.App.4*® 1055.0... ccccecsesseeerteeeeeeeereteeeneneeeenneeeetnaney 4 Villa Milano Homeowners Association v. Il Davorge (2000) 84 Cal.App.4*® 819... ecceeescssnrecsteetteeeeertteseetseareeenseeespassim Federal Cases Allied-Bruce Terminix Cos., Inc. v. Dobson (1995) 513 U.S. 265 ooo... eeesseeeeseeeeeeeeseeenneeseeessneeersaesesessnsasesssaeeenes 5,6 Statutes Civil Code section 1354 .....ccccccsccescceccecneccescnceenecaeecsccetceeeeeseeeeeeseeseeeeeeeesenes 5 Code of Civil Procedure Section 688 ........c.cccccccsecceeceeenereeeeeseesaensaeeeeeeeenenees 4 Rules California Rules of Court, rule 8.51 .....ccccccscessecesesessessseeseeeeeeseeseeeeeneneaaoes 3 il IN THE SUPREME COURT OF THE STATE OF CALIFORNIA PINNACLE MUSEUM TOWER ASSOCIATION, Plaintiff and Respondent, Vv. PINNACLE MARKET DEVELOPMENT(US), LLC, ET AL, Defendants and Appellants. Case Number S186149 [California Court of Appeal, Fourth Judicial District Division One Case No. D055422] San Diego County Superior Court No. 37-2008-00096678-CU-CD-CTL The Honorable Ronald L. Styn RESPONDENT’S ANSWERTO PETITION FOR REVIEW COMES NOW Pinnacle Museum Tower Association (hereinafter “Association” or “Respondent”) to answer the petition for review Pinnacle Market Development (US) LLC; Pinnacle International (US), LLC; Pinnacle Market Development (Canada), Ltd.; Michael De Cotiis; and Apriano Meola (hereinafter, collectively, “Pinnacle”) as follows: INTRODUCTION The petition for review in this unremarkable appeal by the unsuccessful respondent in a construction defect action challenges a judgment upholding the trial court’s denial of a petition to compel arbitration. Pinnacle was the developer of a multi-use condominium project located in a high-rise tower in downtown San Diego, California (“Subject Property”) that is governed by the Association. Even before the Association was formed, Pinnacle drafted and recorded a declaration (“Declaration” or “CC&Rs”) that required the Association to arbitrate all claims of defective construction of the Subject Property, and thereby waive the Association’s right to trial by jury, that became effective when Pinnacle unilaterally deeded the common areas and other property to the Association. The CC&Rs prohibited an independent Association from amending only the arbitration provisions without Pinnacle’s written approval. After complying with all statutory pre-litigation requirementsfor construction defect claims, the Association brought a judicial action against Pinnacle. Pinnacle petitioned the trial court for an order compelling arbitration of the Association’s claims, which petition was denied by the trial court and affirmed by the Court of Appeal, Fourth Appellate District, Division One. In this petition Pinnacle contends review is necessary because: (1) the published opinion holding that arbitration provisions in the CC&Rs is not a contract for purposes of compelling arbitration is in conflict with the Court of Appeal, Fourth Appellate District, Division Three’s holding in Villa Milano Homeowners Association v. Il Davorge (2000) 84 Cal.App.4t® 819, 825-826, review denied (2001); and (2) the published opinion violates the United States Supreme Court’s instructions regarding the federal arbitration act (“FAA”), 9 U.S.C. § 2 because the published opinion singles out only the arbitration provisions while allowing the other CC&Rs provisions to remain enforceable. Neither of these contentions have merit. There is no conflict between the published opinion and Villa Milano and the CC&Rs remain enforceable only in the governance of the Association and the relationship between the Association and owners and between owners in which Pinnacle has no interest. LEGAL DISCUSSION l. THERE ARE NO GROUNDSFORTHIS COURT’S REVIEW. Review should be denied because this case presents neither an important question of law nor a necessity to secure uniformity of decision. (See Cal. Rules of Court, rule 8.51(a)(1).) In its attempt to create an artificial conflict between the instant opinion and Villa Milano, the petitioner ignored or overlooked the important fact that in Villa Milano, after finding that the arbitration provision hiddenin the prolix CC&Rs was a contract as between the association and the developer, the court found the “contract” was unenforceable as being procedurally and substantively unconscionable. (Villa Milano, 84 Cal.App.4*5 at p. 835.) In the instant decision, the Court of Appeal determined that the arbitration provision was not a contract as between the Association and Pinnacle, but, based on the assumption “that the Association is bound by the jury waiver provision contained in the purchase and sale agreements’ (Slip Opn. 18) that merely referenced the arbitration provision in the CC&Rs, the court found the arbitration provision was unconscionable and unenforceable. (Slip Opn. 19-25.) This is the sameconclusion that the trial court reached. The mere fact that in this case the court below found the arbitration provision was not a contract, and the Villa Milano court found that the arbitration provision before it was a contract is no basis for reversal or review. A decision correct in law “will not be disturbed on appeal merely because given for a wrong reason.” (D'Amicov. Board of Medical Examiners (1974) 11 Cal.3d 1, 19.) On the one hand, the Villa Milano court concluded that the arbitration provision was an unenforceable contract and on the other hand the court below found that if this arbitration provision is a contract, it is unenforceable. Accordingly, there is no meaningful conflict between Villa Milano and the instant opinion. Furthermore, Pinnacle’s reference to Treo@Ketiner Homeowners Association v. Superior Court (2008) 166 Cal.App.4** 1055, 1066-1067, review denied (2008) is unwarranted. As Pinnacle argued in the court below, the question in Treo was whethera provision in the CC&Rs was a contract for purposes of enforcementof a judicial reference pursuant to Code of Civil Procedure section 638. (Jd. at p. 1067; see also Slip Opn. 12-13.) Treo had nothing to do with the enforcement of arbitration provisions and pursuant to the FAA, the court below refused to make the constitutional analysis, based on Grafton Partners v. Superior Court (2005) 36 Cal.4th 944, in this case that it made in Treo. (Slip Opn. 7.) The Court of Appeal correctly noted “other than Villa Milano, we are aware of no California cases treating CC&Rs as a contract between anyone other than as between owners, or between owners and a homeowners association.” In other words, there is no necessity to secure uniformity of decision. THE COURT OF APPEAL’S OPINION IS NOT IN CONFLICT WITH THE FEDERAL ARBITRATION ACT. Pinnacle urges review because the Court of Appeal, as Pinnacle contends, invalidated the arbitration provision while letting the other provisions stand in violation of the United States Supreme Court decision in Allied-Bruce Terminix Cos., Inc. v. Dobson (1995) 513 U.S. 265, 281. (Petition **.)! This contention has no merit. As explained in Nahrstedt v. Lakeside Village Condominium Association, Inc. (1994) 8 Cal.4t» 361, 372-377, CC&Rs are equitable servitudes for the governance of common interest development communities that are enforceable “by any ownerof a separate interest or by the association, or by both.” (Civ.Code, § 1354, subd. (a).) In the instant case, Pinnacle has disposed ofall of its property interests in the Subject Property. The arbitration provisions in the CC&Rsare limited to resolution of construction disputes between the Association and/or the owners and Pinnacle. These provisions have absolutely no application to the governanceof the Association or to the relationship either between the Association and the owners, or between owners. It is inconceivable that Pinnacle would have any interest in the enforcement of any of the other provisions of the CC&Rs, especially after it has completed its construction and marketingactivities and sold, or otherwise disposed of all of its property interests. ' Thepetition is not paginated. Accordingly, unlike the “basic terms” of price, service and credit addressed by Allied-Bruce that exist and continue to bind the contracting parties upon elimination of an arbitration provision, the remaining provisions of the CC&Rs are totally independent of the arbitration provisions that purportedly create a “contract” between the Association and Pinnacle and have no bindingeffect on the Association vis-a-vis Pinnacle. Said another way, the Court of Appeal eliminated the entire “contract” between the Association and Pinnacle and the instant decision does not run afoul of the High Court’s instructions regarding the FAA. CONCLUSION The Court of Appeal correctly affirmed the trial court’s determination that the arbitration provisions hidden in the CC&Rsare unconscionable and unenforceable — exactly as did the Villa Milano court in the case that was before it. There is no meaningful difference between the two cases, nor does the instant decision conflict with any other published decision. Because the arbitration provision was independent of the equitable servitudes that govern the Association, its elimination creates no conflict between California and federal law. Thepetition for review must be denied. Dated: Ybd frorw Respectfully submitted, FEINBERG GRANT MAYFIELD KANEDA & LITT, LLP ypift and Respondent ower Association DlH. eeif ¥714302 Pinnacle Museum, CERTIFICATE OF COMPLIANCE I certify that the attached Answerto Petition for Review uses 13 point Century Schoolbook font and contains 1,245 words as counted by Microsoft Word for Mac. Dated: W1¢/2012 Respectfully submitted, FEINBERG GRANT MAYFIELD KANEDA & LITT, LLP Attorneys for Plais iand Respondent Pinnacle Museum * ower Association PROOF OF SERVICE State of California Orange County I am employed in the Orange County, California. I am over the age of eighteen years and not a party to the within action; my business address is Lakeshore Towers, 18101 Von Karman Avenue, Suite 1940, Irvine, California 92612. On September iS, 2010, I served the following document(s) described as Answerto Petition for Reviw on the interested parties in this action as follows: SEE ATTACHED LIST BY MAIL: I placed true copies of the foregoing document(s) enclosed in sealed envelopes addressed as shown on the Service List. I am “readily familiar’ with Feinberg Grant Mayfield Kaneda & Litt’s practice for collecting and processing correspondence for mailing with the United States Postal Service. Under that practice, it would be deposited with the United States Postal Service that same day in the ordinary course of business. Such envelopes were placedfor collection and mailing with postage thereon fully prepaid at Irvine, California, on the same day following ordinary business practices. (Code Civ. Proc., §§ 1013, subd. (a) and 1013, subd.(a). I declare under penalty of perjury under the lawsof the State of California that the forgoing is true and correct. Executed on September 16. 2010, at Irvine, California All \koe Trish Watson SERVICE LIST Pinnacle Museum Tower Association v. Pinnacle Market Development, etal. California Court of Appeal, Fourth Appellate District Division One Court of Appeal Case No. D055422 San Diego Superior Court Case No. 37-2008-00096678-CU- R. Gregory Amundson Wood, Smith, Henning & Berman, LLP 505 North Brand Boulevard, Suite 1100 Glendale, California 91203 Attorneys for Petitioners (1 Copy) Supreme Court of California Los Angeles Office Ronal Reagan Building 300 S. Spring Street, Floor 2 Los Angeles, California 90013 (18 Copies) CD-CTJ San Diego Superior Court 330 West Broadway San Diego, California 92101 Case No: 37-2008-00096678-CU-CD-CTJ Hon. Ronald L. Styn, Dept. 62 (1 Copy) California Court of Appeal Fourth Appellate District, Division One Symphony Towers 750 B Street, Suite 300 San Diego, California 92101 (1 Copy) 10 PROOF OF SERVICE Re: Case Number: $186149 Case Title: Pinnacle Museum Tower Association v. Pinnacle Market Development (US), LLC, ET AL. Thereby declare that I am a citizen of the United States, am over 18 years of age, and am nota party in the above-entitled action. I am employed in the County of Orange and my business address is: 18101 Von Karman Avenue, Suite 1940, Irvine, California. On September 16, 2010, I served the attached document describedas: Respondent’s Answerto Petition for Review on the parties in the above-namedcase. I did this by depositing it in a box or other facility regularly maintained by Federal Express, an express service carrier providing overnight delivery, or delivering it into an authorized courier or driver authorized by the express service carrier to received documents, in a package designated by the expressservice carrier, with overnight delivery fees paid or providedfor, clearly labeled to identify the person(s) being served at the address(es) shown below: Supreme Court of California 350 McAllister Street San Francisco, 94102 (Original plus 13 copies) L Abb/A J¢rv€&_, declare underpenalty ofperjury that the foregoing is true and correct. Executive on September 16, 2010, at rg , M, , , California.