Court Opinion

ID: 9894207
Source: CourtListenerOpinion
Date Created: 2023-10-31 20:04:07.288763+00
Date Added: 2024-06-11T09:09:13.420756
License: Public Domain

Filed 10/31/23 Amesbury v. Heger CA3
                                           NOT TO BE PUBLISHED
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 This opinion has not been certified for publication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
                                      THIRD APPELLATE DISTRICT
                                                       (Nevada)
                                                            ----

 TOM AMESBURY et al.,                                                                          C096962

                    Plaintiffs and Respondents,                                 (Super. Ct. No. CU21-085893)

           v.

 BARBARA HEGER,

                    Defendant and Appellant.

         Defendant Barbara Heger appeals from an order denying her motion to compel
arbitration of plaintiffs Tom and Lisa Amesburys’ claims against her. There is no real
dispute that Heger and Tom and Lisa Amesbury entered into a valid agreement to
arbitrate these claims, and the law provides that when such an agreement exists, the trial
court “shall” order the parties to arbitrate. (Code Civ. Proc., § 1281.2; further
undesignated statutory references are to the Code of Civil Procedure.) The trial court,
however, appears to have denied the motion to compel on the ground that an exception to
arbitration exists — namely, when “[a] party to the arbitration agreement is also a party

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to a pending court action or special proceeding with a third party, arising out of the same
transaction or series of related transactions and there is a possibility of conflicting rulings
on a common issue of law or fact.” (§ 1281.2, subd. (c).) We disagree and thus reverse.
                  FACTUAL AND PROCEDURAL BACKGROUND1
       In April 2020, Tom and Lisa Amesbury (the Amesburys) purchased a house from
Heger using a standard form entitled “California Residential Purchase Agreement and
Joint Escrow Instructions” (the Purchase Agreement). The Purchase Agreement
identifies the Amesburys as the “Buyer” and the Barbara Heger Living Trust as the
“Seller.” We will refer to “Barbara Heger in her capacity as the trustee of the Barbara
Heger Living Trust,” simply as “Heger.” Heger happens to be a real estate broker, and as
she acted as her own broker in this transaction, she is identified in the Purchase
Agreement as the seller’s broker.
       The Purchase Agreement provides the property is sold “ ‘AS-IS’ in its PRESENT
physical condition,” subject to the buyer’s inspection and investigation rights. It also
provides, “Seller shall . . . DISCLOSE KNOWN MATERAL FACTS AND DEFECTS
affecting the Property . . . and make any and all other disclosures required by law.”
Finally, it contains the arbitration clause that is at issue in this case. The clause is labeled
“ARBITRATION OF DISPUTES,” it is in bold type, and it provides, “The Parties agree
that any dispute or claim in Law or equity arising between them out of this Agreement or
any resulting transaction . . . shall be decided by neutral, binding arbitration.” The
Amesburys and Heger both initialed the clause, signifying their agreement to be bound by
its terms.

1     The factual background is taken from the motion to compel, and the first amended
complaint and attached exhibits. The parties do not dispute the truth of the allegations in
the complaint or the authenticity of the attachments for purposes of resolving this appeal.

                                               2
       Prior to completing the purchase, the Amesburys hired Kevin Minto of Signet
Home Inspections, LLC, to inspect the property, which he did. Minto’s inspection
apparently did not turn up any major issues.
       Sometime after they purchased the property, the Amesburys claim they discovered
defects in it, including “a poorly designed drainage system, an inadequate electrical
system, a failed foundation system, defective siding on the garage, and a failed well water
system.” They sued Heger in her capacity as both the seller and the broker, and Minto.
They asserted six causes of action against Heger, for negligence, breach of contract,
nuisance, intentional misrepresentation, failure to disclose, and negligent
misrepresentation. All causes of action against Heger arise out of the allegation that she
failed to disclose defects in and made false representations about the property. The
Amesburys asserted one cause of action against Minto for professional negligence arising
out of the allegation that he negligently inspected the property. A copy of the Purchase
Agreement was attached to the complaint and incorporated into it by reference. The
Amesburys acknowledged that the Purchase Agreement contained an arbitration clause,
but they alleged “neither the Realtor Defendants[2] nor Kevin Minto of Signet Home
Inspections are privy to that contract, thereby making those remedies extra-contractual
and inapplicable to this claim.”
       Heger, representing herself, filed a motion to compel arbitration, arguing the
arbitration clause was legally binding and enforceable and covered all claims asserted
against her. She submitted a declaration attaching a copy of the arbitration clause in the
Purchase Agreement, and stating she had asked the Amesburys to arbitrate but they
refused. In meet and confer e-mails between the parties, the Amesburys’ counsel stated
they refused to arbitrate because they “[did] not believe arbitration can be compelled in

2       The complaint does not define the term “Realtor Defendants.” Presumably it
refers to Heger in her capacity as broker.

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light of the addition of the Whole House Inspector to the lawsuit, since he is not a
signatory” to the agreement to arbitrate, and because they “never agreed to arbitrate with
the home inspector, another defendant in this matter.”
       The Amesburys opposed the motion to compel arbitration. Although they tacitly
acknowledged the existence of a valid agreement to arbitrate, they argued the motion
should be denied pursuant to section 1281.2, subdivision (c) (hereafter, section
1281.2(c)), which provides arbitration agreements shall be enforced unless “[a] party to
the arbitration agreement is also a party to a pending court action or special proceeding
with a third party, arising out of the same transaction or series of related transactions and
there is a possibility of conflicting rulings on a common issue of law or fact.” The
Amesburys argued the arbitration agreement was between the Amesburys and Heger in
her capacity as seller, and that Heger in her capacity as broker and Minto were not parties
to the agreement within the meaning of this provision. They acknowledged, however,
that their claim against Minto was “not based on the same facts” as, and arose from a
“different duty” than, their claims against Heger.
       Heger filed a reply, arguing that the exception in section 1281.2(c) did not apply
because the Amesburys acknowledged their claim against Minto and their claims against
her were based on different facts and duties.
       A hearing on the motion was held, but we have not been provided with a
transcript. Following the hearing, the trial court issued an order that stated, in full,
“Plaintiff’s [sic] Motion to Compel Arbitration is Denied.”
       Heger filed a timely appeal. (§ 1294 [“An aggrieved party may appeal from: [¶]
(a) An order . . . denying a petition to compel arbitration”].)

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                                       DISCUSSION
                                               I
                          Governing Law and Standard of Review
       California has “ ‘ “a strong public policy in favor of arbitration,” ’ ” and a trial
court is thus generally “required to order a dispute to arbitration when the party seeking
to compel arbitration proves the existence of a valid arbitration agreement covering the
dispute.” (Laswell v. AG Seal Beach, LLC (2010) 189 Cal.App.4th 1399, 1404-1405,
italics added.) Section 1281 provides, “A written agreement to submit to arbitration an
existing controversy or a controversy thereafter arising is valid, enforceable and
irrevocable, save upon such grounds as exist for the revocation of any contract.” And
section 1281.2 provides, “On petition of a party to an arbitration agreement alleging the
existence of a written agreement to arbitrate a controversy and that a party to the
agreement refuses to arbitrate that controversy, the court shall order the petitioner and the
respondent to arbitrate the controversy if it determines that an agreement to arbitrate the
controversy exists, unless” one of three exceptions applies. (Italics added.) One of those
exceptions is where “[a] party to the arbitration agreement is also a party to a pending
court action or special proceeding with a third party, arising out of the same transaction
or series of related transactions and there is a possibility of conflicting rulings on a
common issue of law or fact.” (Section 1281.2(c).) We will generally refer to this as the
“third party exception.” Its primary purpose is “to prevent conflicting rulings resulting
from arbitration proceedings and . . . related litigation arising out of the same
transaction.” (Whaley v. Sony Computer Entertainment America, Inc. (2004)
121 Cal.App.4th 479, 488.) Whether the third party exception applies generally raises an
issue of statutory construction, and we accordingly apply the de novo standard of review.
(Lindemann v. Hume (2012) 204 Cal.App.4th 556, 566 [“the correct interpretation of
section 1281.2, subdivision (c), like any other issue of statutory interpretation, is a
question of law subject to de novo review”]; Laswell v. AG Seal Beach, LLC, supra,

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189 Cal.App.4th at p. 1406 [“whether a defendant is in fact a third party for purposes of
Code of Civil Procedure section 1281.2, subdivision (c), is a matter of law subject to de
novo review”]; Whaley v. Sony Computer Entertainment America, Inc., at p. 484 [where
sole issue on appeal is whether trial court erred in denying arbitration based on the third
party exception, “we apply a de novo standard of review”].)
                                               II
                                           Analysis
       The parties do not dispute that the Purchase Agreement contains a valid arbitration
clause pursuant to which the Amesburys and Heger agreed to arbitrate all claims arising
out of the purchase and sale of the house. The parties also do not dispute that the
arbitration clause is broad enough to include all of the Amesburys’ claims against Heger
(at least in her capacity as seller). The sole issue is thus whether the trial court properly
denied the motion based on the third party exception. Again, the requirements of that
exception are (1) a party to the arbitration agreement (here, both the Amesburys and
Heger are parties to the arbitration agreement) is also a party to a pending court action
(i.e., the Amesburys’ lawsuit) with a third party (i.e., someone who is not a party to the
arbitration agreement), (2) that arises out of the same transaction or series of related
transactions as the controversy that is subject to arbitration, and (3) that results in the
possibility of conflicting rulings on a common issue of law or fact.
       There are two potential third parties here: (1) Heger in her capacity as broker, and
(2) Minto. We discuss each in turn.
       1. Heger is not a third party within the meaning of the third party exception.
       The Amesburys note that they sued Heger in her capacity as both the seller and the
seller’s broker, and that she only signed the arbitration agreement in her capacity as the
seller. They argue that Heger effectively wore two hats vis-à-vis the transaction (i.e., a
seller’s hat and a broker’s hat), and that she is a third party within the meaning of the
exception when wearing her broker’s hat. Heger disagrees and argues the fact that she

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happens to be a broker does not make her a third party to the arbitration agreement in that
capacity (or as she puts it, in her capacity as seller and broker she is “the same legal
person”). We agree with Heger, for two reasons.
       First, as relevant to the facts in this case, a real estate broker is a person who sells
property on behalf of another. (See Robinson v. Murphy (1979) 96 Cal.App.3d 763, 767.)
When a broker sells her own property rather than the property of another, it is
“universally accepted” that she “is not acting as a broker.” (Garcia v. Wetzel (1984)
159 Cal.App.3d 1093, 1097; see also Froid v. Fox (1982) 132 Cal.App.3d 832, 840 [“A
person is not acting as a broker when he deals with his own property”].) “A broker is the
agent of [her] principal, and [her] role is to bring buyer and seller together with the aim of
consummating a sale [citation]. The normal brokered sale is thus seen to be a tripartite
transaction,” involving a broker, a buyer, and a seller. (Robinson, at p. 767.) When a
broker sells her own property, however, she “utilize[s] [her] professional expertise and
resources without surrendering [her] status as a principal. Although a broker is involved,
this role is subsumed within the superseding characterization of the person as a principal
to the transaction: [her] ancillary status as a broker is not sufficient to alter the
fundamentally bilateral nature of such a sale. Stated differently, an individual who is by
profession a real estate broker is not, by virtue of this fact, deprived of the right to act as a
principal in the sale of [her] own property. Thus it has been held that ‘when one deals
with [her] own property [her] negotiations with reference to the sale or exchange thereof
do not constitute [her] a broker . . . .’ ” (Id. at pp. 767-768.) In other words, a broker like
Heger who sells her own property does not wear two hats (i.e., a seller’s hat and a
broker’s hat); she wears only one hat (i.e., the hat of a seller who just so happens to be a
broker). Heger in her capacity as broker is thus not a third party within the meaning of
the third party exception.
       Second, for purposes of the third party exception, a third party “ ‘must be
construed to mean a party that is not bound by the arbitration agreement.’ ” (Laswell v.

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AG Seal Beach, LLC, supra, 189 Cal.App.4th at p. 1407.) “[I]n many cases, nonparties
to arbitration agreements are allowed to enforce those agreements where there is
sufficient identity of parties. For example, defendants who are not signatories to an
arbitration agreement, but who are acting as agents for the party to the arbitration
provision, may be allowed to enforce the arbitration clause.” (Valley Casework, Inc. v.
Comfort Construction, Inc. (1999) 76 Cal.App.4th 1013, 1021; see also Thomas v.
Westlake (2012) 204 Cal.App.4th 605, 614 [where “a defendant acted as an agent of a
party to an arbitration agreement, the defendant may enforce the agreement even though
the defendant is not a party thereto”].)
       In Berman v. Dean Witter & Co., Inc. (1975) 44 Cal.App.3d 999, for example, the
plaintiffs had an account with Dean Witter & Co. (Witter), a securities broker. They
purchased on margin five short-term future contracts for Japanese yen, and the purchase
was handled by Norman Sobel as an agent of Witter. The plaintiffs claimed that Witter
and Sobel acquired the future contracts at grossly excessive prices and negligently
concealed their inexperience in currency markets and other relevant information. The
plaintiffs thus sued Witter and Sobel for negligence and breach of a fiduciary
relationship. Witter and Sobel moved to compel arbitration pursuant to an arbitration
clause in the written customer agreement between the plaintiffs and Witter. (Id. at
p. 1001.) The plaintiffs opposed the motion, arguing, among other things, that Sobel was
not a signatory to that agreement. (Id. at p. 1003.) The trial court denied the motion,
Witter and Sobel appealed, and the appellate court reversed, holding, as relevant here,
that although Sobel was not a signatory to the arbitration agreement, he was “acting as
agent[] for the signator[y]” and thus “is as entitled to the benefit of arbitration as is his
principal Witter.” (Id. at p. 1004; see also Thomas v. Westlake, supra, 204 Cal.App.4th at
p. 614 [even though only one defendant signed arbitration agreement, all defendants were
entitled to compel arbitration because the plaintiff alleged each defendant acted as agent
of the others].)

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       So, too, in this case. As noted above, a real estate broker acts as an agent for the
seller, who is the principal. Thus, if we accept the Amesburys’ contention that Heger
should be viewed as wearing two hats, then Heger in her capacity as broker was acting as
agent for a party to the arbitration agreement (i.e., Heger in her capacity as seller), and is
entitled to enforce the arbitration agreement.
       We thus agree with Heger that she is not a third party within the meaning of the
third party exception.
       2. The third party exception does not apply as to Minto
       That leaves Minto. He is a third party within the meaning of the third party
exception (i.e., he is not a party to the arbitration agreement and may not enforce it), but
we hold the Amesburys’ claim against him does not arise out of the same transaction or
series of related transactions as their claims against Heger, and/or there is no possibility
of conflicting rulings on a common issue of fact or law if the Amesburys are compelled
to arbitrate their claims against Heger while litigating their claims against Minto.
       The Amesburys’ claims against Heger arise out of her sale of the property, and
their claim against Minto arise out of his inspection of the property. These are not the
same transaction — and the Amesburys do not suggest otherwise. They do suggest —
albeit with no discussion or citation to authority — that their claims against Heger and
Minto arise out of a “series of related transactions” all having to do with the sale of the
property. Even if we were to assume this is true, we find no “possibility of conflicting
rulings on a common question of fact or law,” largely because we find no common
question of fact or law between the two sets of claims. (Section 1281.2(c), italics added.)
       The Amesburys acknowledge in their opposition to the motion to compel that their
claim against Minto is “not based on the same facts” as their claims against Heger. We
agree. They also acknowledge in both their brief on appeal and their opposition to the
motion to compel that Minto owed them “a different duty” of care than Heger owed.
Again, we agree.

                                               9
       As to Heger, the gravamen of the Amesburys’ claims is that she failed to disclose
known defects about the property. “ ‘In the context of a real estate transaction, “[i]t is
now settled in California that where the seller knows of facts materially affecting the
value or desirability of the property . . . and also knows that such facts are not known to,
or within the reach of the diligent attention and observation of the buyer, the seller is
under a duty to disclose them to the buyer. [Citations.]” [Citations.] Undisclosed facts
are material if they would have a significant and measurable effect on market value.
[Citation.]’ A seller’s duty of disclosure is limited to material facts; once the essential
facts are disclosed a seller is not under a duty to provide details that would merely serve
to elaborate on the disclosed facts. [Citation.] Where a seller fails to disclose a material
fact, he may be subject to liability ‘for mere nondisclosure since his conduct in the
transaction amounts to a representation of the nonexistence of the facts which he has
failed to disclose [citation].’ ” (Calemine v. Samuelson (2009) 171 Cal.App.4th 153, 161,
italics omitted.) “The real estate agent or broker representing the seller is under the same
duty of disclosure.” (Reed v. King (1983) 145 Cal.App.3d 261, 265, fn. 3.) In addition to
claiming Heger failed to disclose known defects about the property, the Amesburys also
allege she made false representations about the property. (See Buist v. C. Dudley De
Velbiss Corp. (1960) 182 Cal.App.2d 325, 332 [“Fraud may consist of suppression or
concealment of facts respecting the property in the knowledge of one party and not
known to the other where there is a duty to declare, as well as in the declaration of that
which is false”].) The claims against Heger will thus involve determining what she
knew, what she disclosed, and whether she lied. In contrast, the gravamen of the
Amesburys’ claim against Minto is professional negligence — i.e., that he failed to
“ ‘conduct [the] home inspection with the degree of care that a reasonably prudent home
inspector would exercise.’ ” (Evans v. Hood Corp. (2016) 5 Cal.App.5th 1022, 1051
[discussing professional negligence].) The claim against Minto will thus involve
determining what the standard of care is and whether Minto breached it. The claims

                                              10
against Heger and the claim against Minto are based on different legal theories and raise
different legal issues.
       Because we see no common questions of fact or law between the claims against
Heger and the claim against Minto, it stands to reason that there is no possibility of
conflicting rulings, and the trial court thus erred in denying the motion to compel
arbitration.
                                      DISPOSITION
       The order denying the motion to compel arbitration is reversed and the matter is
remanded with directions for the trial court to enter a new order granting the motion.
Heger shall recover her costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1), (2).)

                                                      /s/
                                                  EARL, P. J.

We concur:

    /s/
HULL, J.

    /s/
ROBIE, J.

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