Court Opinion

ID: 4700196
Source: CourtListenerOpinion
Date Created: 2021-06-30 22:04:01.865203+00
Date Added: 2024-06-11T08:06:08.590115
License: Public Domain

Filed 6/30/21 MCB Valley Properties v. Etter CA1/1
                  NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or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.

          IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                      FIRST APPELLATE DISTRICT

                                                   DIVISION ONE

 MCB VALLEY PROPERTIES, LLC
 ET AL.,
             Defendants and Appellants,                                   A161159

 v.                                                                       (Humboldt County
 MARY V. ETTER, Individually and as                                        Super. Ct. No. CV2000752)
 Trustee of the MARY V. ETTER
 TRUST, ET AL.,
             Plaintiffs and Respondents.

         Defendant MCB Valley Properties, LLC (MCB) leased ranch property
from plaintiffs Mary V. Etter, Mary S. Etter, and the Mary V. Etter Trust
(collectively, the Etters).1 The lease contains two provisions that are
seemingly at odds. One allows the Etters “to proceed by appropriate judicial
proceedings” for certain violations of the lease. The other states that “[a]ny
unresolved controversy or claim arising out of or relating to this Lease shall
be submitted to arbitration.” After MCB allegedly failed to pay rent and
otherwise violated the lease, the Etters brought this unlawful detainer
proceeding. Relying on the second provision, MCB sought to compel

       Future references to MCB include defendant Greenfield Farm
         1

Holdings LLC, which allegedly subleased all or a portion of the ranch from
MCB.
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arbitration, which the trial court denied. MCB appeals from the denial, and
we affirm.
                                    I.
                          FACTUAL AND PROCEDURAL
                               BACKGROUND
      The Etters own a ranch in Honeydew. In June 2018, they leased the
ranch to MCB for agricultural purposes, including growing commercial
cannabis. A couple of years later, the Etters sent MCB two notices of default
in accordance with the terms of the lease. The first notified MCB that it was
in violation of the lease for allowing vegetation to become overgrown and
failing to maintain buildings and other improvements. The second notified
MCB that it was in violation of the lease for not paying rent, taxes, and
utilities totaling over $178,087.
      After MCB allegedly failed to cure the violations, the Etters filed this
unlawful detainer action. In response, MCB moved to compel arbitration,
relying on section 30(g) of the lease. Section 30 is titled “Miscellaneous,” and
paragraph (g) provides that “[a]ny unresolved controversy or claim arising
out of or relating to this Lease shall be submitted to arbitration.”
      The trial court denied the motion based on sections 21 and 22 of the
lease. Section 21 describes “Events of Default.” One such event is the
tenant’s failure to pay rent within 10 days after being given notice of non-
payment. Other such events include the tenant’s failure to timely perform or
observe other lease terms, conditions, and covenants without beginning to
rectify the failure within 30 days after being given notice.
      Section 22 is entitled “Remedies,” and paragraph (a) explains that
certain provisions apply if the lease “is terminated pursuant to Section 21 or
if Landlord reenters or obtains possession of the Premises by summary
proceedings or any other legal action or proceeding.” Paragraph (c) states

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that the “Landlord may elect to proceed by appropriate judicial proceeding,
either at law or in equity, to enforce the performance or observance by
Tenant of the applicable provisions of this Lease and/or to recover damages
for breach thereof. Each right and remedy of Landlord provided for in this
Lease shall be cumulative and shall be in addition to every other right or
remedy provided for in this Lease[,] . . . and the exercise . . . by Landlord of
any one or more of the rights or remedies provided for in this Lease . . . shall
not preclude the simultaneous or later exercise by Landlord of any or all
other rights or remedies provided for in this Lease.”
      In giving effect to section 22(c), the trial court found that “[b]y the very
terms of the lease, [the Etters] reserved the right to initiate eviction
proceedings and this is specifically identified in the REMEDIES section of the
agreement.” As an alternative ruling, the court suggested that section 30(g)’s
arbitration clause was unenforceable because the court did “not find that the
. . . clause complies with California law, nor does the Court find that this is
an issue tied to interstate commerce which would potentially make the
Federal Arbitration Act [FAA] applicable.” MCB appealed the denial of its
motion to compel arbitration.
                                        II.
                                   DISCUSSION
      This case turns on whether the trial court correctly interpreted the
terms of the lease to permit the Etters to bring this unlawful detainer action
without arbitrating the dispute. We conclude it did.2
      We review questions of contract interpretation de novo. (Thee Aguila,
Inc. v. Century Law Group, LLP (2019) 37 Cal.App.5th 22, 27.) Specifically,

      2In light of this conclusion, we need not resolve the parties’ extensive
arguments over whether the trial court correctly found that section 30(g)’s
arbitration clause was unenforceable because it did not comply with
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whether a contract includes an enforceable arbitration provision is a question
of law reviewed de novo when, as here, the parties did not present conflicting
extrinsic evidence regarding the contract’s meaning. (Avery v. Integrated
Healthcare Holdings, Inc. (2013) 218 Cal.App.4th 50, 60.)
      In applying this standard, we are guided by several legal principles.
First, contract terms are interpreted to be given effect, and terms that are in
tension must be harmonized whenever possible. Under Civil Code
section 1641, “[t]he whole of a contract is to be taken together, so as to give
effect to every part, if reasonably practicable, each clause helping to interpret
the other.” This directive is premised on the idea that “ ‘[g]enerally the
parties to an instrument intend every clause to have some effect and in some
measure to evidence their agreement, and this purpose should not be
thwarted except in the plainest case of necessary repugnance. Even where
different parts of the instrument appear to be contradictory and inconsistent
with each other, the court will, if possible, harmonize the parts and construe
the instrument in such way that all parts may stand and will not strike down
any portion unless there is an irreconcilable conflict wherein one part of the
instrument destroys in effect another part.’ ” (Southern Pacific Land Co. v.
Westlake Farms, Inc. (1987) 188 Cal.App.3d 807, 822.)
      We are also guided by the principle that there is “ ‘ “ ‘no policy
compelling a person to accept arbitration of controversies which they have
not agreed to arbitrate.’ ” ’ ” (RN Solution, Inc. v. Catholic Healthcare West

California and/or federal law. (See Tiri v. Lucky Chances, Inc. (2014)
226 Cal.App.4th 231, 239–240 [federal and state law on the enforceability of
arbitration agreements are similar].) Accordingly, we deny MCB’s request for
judicial notice of various materials it claims are relevant to whether the FAA
applies to the lease, as they are unnecessary to the resolution of this appeal.
(See JRS Products, Inc. v. Matsushita Electric Corp. of America (2004)
115 Cal.App.4th 168, 174.)
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(2008) 165 Cal.App.4th 1511, 1523.) Parties may agree to arbitrate some
issues and not others. (Amalgamated Transit Union Local 1277 v. Los
Angeles Metropolitan Transportation Authority (2003) 107 Cal.App.4th 673,
688; Kroll v. Doctor’s Associates, Inc. (7th Cir. 1993) 3 F.3d 1167, 1171.)
“[E]ven if a court finds that the parties have agreed to arbitrate some
disputes it must find, to order arbitration, that the parties have agreed to
arbitrate the dispute in issue.” (Century Indem. Co. v. Certain Underwriters
at Lloyd’s, London (3d Cir. 2009) 584 F.3d 513, 523.)
      With these principles in mind, we turn to consider the relevant lease
provisions here. As we have said, section 22(c) provides that the Etters “may
elect to proceed by appropriate judicial proceedings, either at law or in
equity, to enforce the performance or observance by [MCB] of the applicable
provisions of this Lease.” The Etters may so elect “[i]f this Lease is
terminated pursuant to Section 21 [i.e., upon a notice of default and failure to
cure] or if [the Etters] reenter[] or obtain[] possession of the Premises by
summary proceedings or any other legal action.” The trial court found, as a
matter of contract interpretation, that these provisions give the Etters the
right to initiate eviction proceedings without first resorting to arbitration
notwithstanding section 30(g)’s arbitration provision. We agree.
      It is true that section 30(g) states that “[a]ny unresolved controversy or
claim arising out of or relating to this Lease shall be submitted to
arbitration.” But we agree with the trial court that the lease as a whole
cannot be interpreted to mandate arbitration for eviction proceedings. Such
an interpretation would completely negate the Etters’ rights under
section 22(c) to seek a remedy through an “appropriate judicial proceeding.”
If, as MCB insists, section 30(g) requires arbitration of all disputes, no
dispute whatsoever would fall within the ambit of section 22(c). Such an

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interpretation would completely foreclose the Etters from seeking any
remedy for any violation through a judicial proceeding. This cannot have
been the parties’ intent.
      Such an interpretation would also render meaningless section 22(a)’s
reference to the possibility of the Etters “reentering or obtaining possession of
the Premises by summary proceedings.” The phrase clearly contemplates the
possibility of summary judicial proceedings, which would be categorically
unavailable under MCB’s interpretation. An unlawful detainer action is
“summary in character[, and] ordinarily, only claims bearing directly upon
the right of immediate possession are cognizable.” (Vella v. Hudgins (1977)
20 Cal.3d 251, 255.) We have no basis to conclude that the parties included
the language of sections 22(c) and 21(a) in the lease but wanted those
provisions to have no meaning or effect. As we have said, a court “must
interpret contractual language in a manner which gives force and effect to
every provision, and not in a way which renders some clauses nugatory,
inoperative[,] or meaningless.” (City of Atascadero v. Merrill Lynch, Pierce,
Fenner & Smith, Inc. (1998) 68 Cal.App.4th 445, 473.)
      MCB claims in its reply brief that section 30(g) should apply to all
disputes because it contains the mandatory term “shall,” while section 22(c)
contains the permissive term “may.” MCB argues that Benihana of Tokyo,
LLC v. Benihana Inc. (S.D.N.Y. 2014) 73 F.Supp.3d 238 (Benihana) is on
point and “completely applicable.” The case does not aid MCB. In Benihana,
the court interpreted a contract term that stated “a party ‘may’ elect to
submit a dispute to binding arbitration.” (Id. at p. 249.) The term applied
equally to both parties, and the court unsurprisingly interpreted it to mean
that, while neither party was obligated to initiate arbitration, once a party
initiated arbitration, the other party could not “neutralize that choice by

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insisting on litigating in court.” (Ibid.) One of the reasons for the court’s
conclusion was that a contrary interpretation—i.e., one that would require
the consent of both parties to arbitrate—would leave the arbitration provision
meaningless, and “ ‘[a]n interpretation of a contract that has the effect of
rendering at least one clause superfluous or meaningless is not preferred and
will be avoided if possible.’ ” (Id. at p. 250.)
      Unlike the contract term in Benihana, section 22(c) does not apply
equally to both parties. It confers a right on the Etters. It states, “Landlord
may elect to proceed by appropriate judicial proceedings, either at law or in
equity, to enforce the performance or observance by Tenant of the applicable
provisions of this Lease and/or to recover damages for breach thereof.”
MCB’s view that, notwithstanding this language, section 30(g) requires the
Etters to proceed by arbitration would render section 22(c) superfluous and
meaningless. As Benihana reminds us, such a result should be avoided. And
if anything, Benihana’s holding actually supports the Etters’ interpretation of
the lease. Benihana held that once a party elected to proceed with an
arbitration (under the term stating that the party “may” so elect), the other
party could not “neutralize that choice by insisting on litigating in court.”
(Benihana, supra, 73 F.Supp.3d at p. 249.) Applying this holding here means
that once the Etters elected to proceed with a judicial proceeding (under
section 22, which states that they “may” so elect), MCB could not neutralize
that choice by insisting on arbitration.
      In its reply brief, MCB also insists that the parties “intended that the
arbitration clause prevail.” More specifically, it says, “The parties intended
to use arbitration as a means to deal with any unresolved issues concerning
the Lease, including non-payment of rent or an unlawful detainer action.”
But these statements are no more than conclusory assertions that do nothing

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to explain why the parties included section 22(c) if it has no meaning or
effect. We agree with the trial court that it makes more sense to harmonize
section 22(c) with section 30(g) by concluding that arbitration is not
mandated for unlawful detainer proceedings, even if it may be mandated for
other disputes.
      We need not decide here the types of other disputes that might be
subject to section 30(g)’s arbitration provision. We simply conclude that
section 22(c) authorized the Etters to bring this unlawful detainer action
without having first proceeded with an arbitration. In light of this
conclusion, we need not resolve the parties’ arguments about whether the
arbitration of an unlawful detainer proceeding supports or undermines
considerations of public policy.
                                       III.
                                   DISPOSITION
      The trial court’s order denying MCB’s motion to compel arbitration is
affirmed. The Etters are awarded their costs on appeal.

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                                          _________________________
                                          Humes, P.J.

WE CONCUR:

_________________________
Banke, J.

_________________________
Sanchez, J.

MCB Valley Properties, LLC et al. v. Etter et al. A161159

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