California Supreme Court Accepts Case to Decide Whether Developers Can Enforce Arbitration Provisions in CC&Rs Against Homeowners Associations

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Back on November 11, 2010, the California Supreme Court granted review in Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US) LLC. We reported on the Pinnacle Court of Appeal decision last August. The Court of Appeal, Fourth Appellate District, held that CC&Rs are not a binding agreement between the homeowners association and the developer. As a result of the grant of review, the Court of Appeal opinion cannot be cited as precedent in California courts.

The California Supreme Court will probably issue its decision in Pinnacle between 12 and 24 months from now. The parties and amici curiae will file a new round of briefs on the merits. The first sign that the case is ready for decision will be the court’s notice setting argument.

Meanwhile, the Fourth Appellate District still has the same issue before it in another case. As we reported in June, that was the first case in which the court held that developers cannot enforce arbitration agreements in CC&Rs against associations. But the court granted our petition for rehearing. A new decision in that case is due by late January.

If other courts issue decisions on the enforceability of CC&Rs between developers and associations, the California Supreme Court is likely to grant review and stay proceedings in those cases until it decides Pinnacle.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Kathleen Carpenter, Esq., Luce Forward Hamilton & Scripps | Attorney Advertising

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