Opinion
B310158
03-07-2022
AMLAP ST, LLC et al., Plaintiffs and Appellants, v. DAVIES LEMMIS RAPHAELY LAW CORPORATION et al., Defendants and Respondents.
Catanzarite Law Corporation, Kenneth J. Catanzarite, Nicole M. Catanzarite-Woodward and Eric V. Anderton for Plaintiffs and Appellants. Marshall & Associates, John A. Marshall and Rodger C. Jensen for Defendants and Respondents
NOT TO BE PUBLISHED
APPEAL from judgment of the Superior Court of Los Angeles County, No. BC459858 Daniel J. Buckley, Judge. Reversed and remanded with directions.
Catanzarite Law Corporation, Kenneth J. Catanzarite, Nicole M. Catanzarite-Woodward and Eric V. Anderton for Plaintiffs and Appellants.
Marshall & Associates, John A. Marshall and Rodger C. Jensen for Defendants and Respondents
PERLUSS, P. J.
The superior court granted the petition filed by Merton R. Davies and the Davies Lemmis Raphael Law Corporation (collectively Davies parties) to confirm an arbitration award dismissing the investment fraud and legal malpractice claims of Amlap ST, LLC and Superstition Lookout Delaware, LLC (collectively Amlap investors) as barred by governing statutes of limitations; denied the Amlap investors' petition to vacate or correct the award; and entered judgment in favor of the Davies parties. The arbitration was conducted pursuant to the arbitration provision in the cotenancy agreement between BH & Sons, LLC, on the one hand, and tenant in common investors in commercial property located on East La Palma Avenue in Anaheim (the Amlap property), including Amlap ST, on the other hand. On appeal the Amlap investors argue, among other contentions, arbitration should not have been compelled because their fraud and related claims based on acquisition of their interest in the Amlap property were outside the scope of the cotenancy agreement's arbitration provision.
The Amlap investors' claims of fraud and the early procedural history of the litigation spawned by their investments are described in detail in our opinion in the related case, Amlap ST, LLC v. Asset Management Consultants, Inc. (Mar. 14, 2016, B263056) [nonpub. opn.], in which we reversed a prior order compelling arbitration of certain of those claims. The Davies parties were attorneys for Asset Management Consultants, Inc., its principal, James Hopper, as well as BH & Sons, an affiliate of Asset Management Consultants. Among other work for those clients, the Davies parties prepared the tenant in common purchase and sale agreement by which the Amlap investors acquired their interest in the Amlap property.
Amlap ST is a special purpose entity formed to facilitate Superstition's investment in the Amlap property.
We addressed the identical issue in Ahern v. Asset Management Consultants, Inc. (2022) 74 Cal.App.5th 675 (Ahern 2022), in which the same investment fraud claims (filed by the same plaintiffs' counsel) were ordered to arbitration based on the arbitration provision in the cotenancy agreement, signed in that case by a different tenant in common investor ("the Ahern parties") in the Amlap property. We reversed the judgment confirming the arbitration award in that case, agreeing with the Ahern parties the trial court had erred in compelling arbitration of their claims pursuant to the arbitration provision in the cotenancy agreement. (Id. at p. 679.)
We first explained the tenant in common purchase and sale agreement by which the investors acquired their interests in the Amlap property, allegedly due to fraudulent representations in promotional materials developed and distributed by Asset Management Consultants, Inc., and its affiliate BH & Sons, contained no arbitration provision. The cotenancy agreement, which concerned the operation and management of the Amlap property and the respective rights of the tenants in common in those decisions once the investment interests had been acquired, did require arbitration, but its language was particularly narrow. It specifically provided for arbitration only of disputes arising in connection with the interpretation and enforcement of provisions of the cotenancy agreement, omitting any general reference to disputes "related to" the agreement.
Paragraph 9.8 of the cotenancy agreement provided, "Unless the relief sought requires the exercise of the equity powers of a court of competent jurisdiction, any dispute arising in connection with the interpretation or enforcement of the provisions of this Agreement, or the application or validity thereof, shall be submitted to arbitration."
We then considered various arguments advanced in support of the order compelling arbitration, concluding none had merit: "[T]he Ahern parties' lawsuit does not involve the interpretation or enforcement of a provision of the cotenancy agreement; their claims are not 'rooted in' the cotenancy agreement; and applying Civil Code section 1642's interpretative tool does not justify requiring arbitration of a dispute that relates to the acquisition of the Amlap investment, not to its management and operation." (Ahern 2022, supra, 74 Cal.App.5th at p. 675.)
Because the arguments of the Amlap investors and the Davies parties concerning the scope of the arbitration provision in the cotenancy agreement and the propriety of the trial court order compelling arbitration of the Amlap investors' claims are essentially the same as the arguments we addressed in Ahern 2022, after we filed our opinion in Ahern 2022, we invited the parties to address in supplemental briefing why reversal of the judgment in the instant appeal was not required by the analysis and holding in that case. In response counsel for the Davies parties "acknowledge[d] that the Court's ruling in Ahern 2022 is controlling, to the extent that the Court has found that the allegations of fraud and related claims in connection with the offer and sale of interests in the subject properties are outside the scope of the arbitration provision." Accordingly, for the reasons discussed in Ahern 2022, the judgment is reversed.
DISPOSITION
The judgment confirming the arbitration award is reversed. The matter is remanded with directions to deny the petition to confirm the arbitration award, to grant the petition to vacate the award and to vacate the November 20, 2013 order compelling arbitration. The Amlap investors are to recover their costs on appeal.
We concur: SEGAL, J., FEUER, J.