Arbitration/Appealability/Homeowners: Court Of Appeal Dismisses Appeal Of Order Denying Motion To Compel Arbitration Because Order Did Not Effectively Terminate Arbitration

Ordinarily, Denial Of A Motion To Compel Arbitration Is Appealable – But Not Here, And The Court Explains Why . . .

     Hayward Renaissance Walk Corporation v. Olson Urban Housing, LLC, A148372 (2/1 12/20/16) (Margulies, Humes, Dondero) (unpublished) does something satisfying that we like cases to do:  it makes sense and imposes order on somewhat confusing rules.   In this instance, the rules are those governing the appeal of arbitration rulings under Code of Civ. Proc., section 1294. 

     Here is the context.  Plaintiff, a homeowners association, sued various parties, alleging construction defects.  Plaintiff then filed a petition for an order staying its action and compelling arbitration.  However, plaintiff and defendants, while ultimately agreeing about a right to arbitrate, disagreed over which provision in the CC&Rs governed the arbitration.  The trial court agreed that the provision preferred by defendants, a so-called limited warranty provision, governed.  Because that provision required a demand for arbitration, the trial court gave plaintiff 14 days to submit a demand for arbitration.  When the association failed to submit proof of a timely demand, the court denied the petition to arbitrate, and plaintiff appealed the denial of its petition.

     As the Court of Appeal helpfully explains for those of us who could not otherwise remember all the rules governing the appeal of arbitration rulings, “what each of these appealable orders has in common is that they effectively terminate further proceedings with respect to the arbitration.”  In other words, the orders are sufficiently final to be appealable.  For that very reason, the denial of a petition to compel arbitration, which ordinarily terminates further arbitration proceedings, is appealable.

     But not here.  The trial court’s order denying the petition to arbitrate did not put an end to arbitration.  If the trial court’s order were affirmed, the trial HOA would probably file a demand for arbitration under the limited warranty, whereas if the trial order were reverse, the HOA would probably seek an order compelling arbitration under its preferred section.  So because the trial court’s order lacked sufficient finality to be appealed, the Court of Appeal dismissed the appeal.

     What happens next?  Query whether there is room for more do-si-do in the trial court, because plaintiff failed to seek arbitration within 14 days.