Procedural Posture

Procedural Posture

Defendant builders appealed an order from the Superior Court of Los Angeles County (California), which denied their motion to compel arbitration of plaintiff homeowner’s construction defect claims pursuant to an arbitration clause in the parties’ purchase agreement.

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Overview

The trial court found that the arbitration clause, from which a sentence had been stricken, was susceptible to conflicting interpretations as to its scope. The trial court considered extrinsic evidence, which included the homeowner’s declaration stating that the sentence had been stricken for the purpose of ensuring that she would retain all of her rights against the builders under California law, including the right to assert construction defect claims in court. The trial court held an evidentiary hearing at which oral testimony was taken. The court held that the trial court acted within its discretion when it opted to receive extrinsic oral testimony as to the parties’ intent at an evidentiary hearing. Although the purchase agreement was integrated, striking the sentence created ambiguity as to what the parties intended by doing so; thus, parol evidence was admissible under Code Civ. Proc., § 1856, to assist the trial court in giving effect to the mutual intention of the parties pursuant to Civ. Code, § 1636. Sufficient evidence supported the ruling, which established that the homeowner did not enter into an agreement with the builders to arbitrate construction defect disputes.

Outcome

The court affirmed the order.