California Real Property Journal

Official Publication of the Real Property Law Section State Bar of California

Vol. 28, No. 3, 2010

Secured Guaranties and Third Party Deeds of Trust . . . . . . . . . . . . . . . . . . . . . 3
By Michael T. Andrew
This article examines issues raised when a third party encumbers its real property to support credit extended to a borrower, in the form of
either a deed of trust directly securing the borrower’s obligation or a guaranty secured by a deed of trust. The article focuses on suretyship
law and the one-action and antideficiency rules.

California Law on Contract Zoning, Conditional Zoning, and Spot Zoning: An
Analysis of Recent Case Law and Contours of Permitting Agencies' Powers to
Settle Land Use Disputes Without Contracting Away Their Police Powers . . . . 15
By Mark A. Rothenberg
An explanation of unlawful contract zoning and its impact on the ability of developers and local governments to settle land use disputes.

MCLE Self-Study Article: When Real Property Can Mean Real (Prison) Time:
A Brief Overview of the Federal Prosecution of Real Estate-Related
White Collar Crimes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
By Jeffrey Rabkin
This article provides a broad overview of the basic statutory framework for the federal prosecution of white collar cases, briefly describes
emerging trends in fraudulent real estate schemes and finally reviews several federal cases involving real estate-related crimes recently
charged in the Northern District of California.

Arbitration: Determining the Collateral Estoppel Effect of a Private Arbitration
Award On Non-Parties In Subsequent Litigation . . . . . . . . . . . . . . . . . . . . . . 34
By Zachary D. Schorr
California is one of the few jurisdictions that does not recognize the collateral estoppel effect of a private arbitration award on non-parties
to the arbitration in subsequent litigation. This article discusses the nuances of the res judicata and collateral estoppel effect of private
arbitration awards on subsequent litigation.

Black Hills Revisited: Repercussions and Defenses . . . . . . . . . . . . . . . . . . . . . 40
By Robert Miller
The 2007 decision in Black Hills Investments, Inc., v. Albertson’s , Inc. established that a purchase contract was void if it permitted either
party to waive a condition requiring that any portion of the subject parcel be made into a separate legal parcel prior to closing. This
article explores the impact of that case in the wake of the dramatic decline in real estate prices since it was decided and how contracts can
be structured in the future to comply with the requirements of the Black Hills decision.

Distributed at no extra charge to members of
the real property law section of the state bar of california
The statements and opinions herein are those of the contributors and not necessarily those of the State Bar of
California, the Real Property Law Section, or any government body.

res judicata does not merely imaginable. then the parties to the II. broker in the superior court based on the adverse private arbitra- tion awards? If so. contain arbitration provisions requiring the parties privies. whether they agreed that their arbitration award could have such an Any contractual arbitration provision that does not cover effect. collateral estoppel. under what circumstances? The short answer is tion award. in general terms.”3 Res judicata also includes a broader princi- tracts containing arbitration provisions commonly involve real ple. do the doctrines of res judicata and estopped from pursuing his/her nondisclosure claim against the collateral estoppel apply to court actions following private arbitra. In this situation. from relitigating a cause of action [finally resolved in a to resolve potential disputes by binding arbitration. in broad terms. the parties [thereto] or their privies…. Between April 2005 and March 2010. the sellers’ real estate agent and/or broker must maintain two and protect litigants from harassment by vexatious litigants. allows a litigant. commercial and [prior] litigation [may be] conclusively determined as [against] residential purchase and sale agreements. Private arbitration is a very common form of dispute III. Many standardized forms used in California for real bar relitigation of identical claims or causes of actions. ing. Only the party against whom the purchase and sale agreement in binding arbitration. the What’s the effect of an arbitration award on a subsequent issue becomes whether plaintiff buyer is prevented from making superior court action in California? Does it matter whether the a similar non-disclosure claim against the broker in the court arbitration involves the same issues and the same parties? What if action given the private arbitrator’s factual findings. the court must decide whether the buyer is collaterally the arbitration? In other words. ings made against his current adversary in an earlier proceed- which may occur if the court action is stayed for arbitration. who was separate court action against the real estate agent and/or broker.8 separate actions: (1) an arbitration against the seller. to take advantage of find- If the arbitration comes to a final award before the court action. many contracts.’”4 Thus. the California Association of Realtors Form therein decided against him. whenever the collateral ticipate in binding arbitration. INTRODUCTION arbitrator determined that the buyer did not prove his/her rea- sonable reliance on the seller’s disclosures (or lack thereof ). construction contracts. also preclude a party to prior litigation from redisputing issues For example.9 Thus. although not agreeing to be bound by the arbitration prior private arbitration awards depends on the parties involved and award. and nearly every other type of contract a different cause of action. I. However. Schorr ©2010 All Rights Reserved. Res judicata in its narrowest form “precludes parties or their standardized. not a party to the prior litigation. As we will see brokers and agents are generally not parties to the purchase and below. of the private WITH NON-PARTIES arbitrator’s prior findings against the parties to the arbitration. This situation can be further complicated when the that the applicability of res judicata and collateral estoppel based on broker.1 Indeed. even when those issues bear on dif- Residential Purchase and Sale Agreement (the agreement com. LEGAL BACKGROUND resolution. court action and reach a final resolution. If dictions that does not recognize collateral estoppel based on private the arbitrating parties conduct a private arbitration ahead of the arbitration when sought by a third party. both standardized and non. prior proceeding]. if the private litigation consequences far beyond the foreseeable limits of the 34 California Real Property Journal • Volume 28 Number 3 . and (2) a Collateral estoppel.591 arbitration cases. HOW COLLATERAL ESTOPPEL ISSUES ARISE court action must determine the weight. the American A. the buyers and sellers are required to par. collateral estoppel is intended to preserve the to commence a non-disclosure action against the seller and integrity of the judicial system. “it may estate transactions mandate arbitration of disputes.2 When doctrine is invoked must be bound by the prior proceedings. a buyer plaintiff seeking As a whole. required that the earlier and later proceedings involve the iden- ers and sellers agree to resolve all disputes arising out of the tical parties or their privies. if any. all parties involved in the dispute can give rise to this issue. ing arbitration provision and are not obligated to participate This distinction is very significant. the parties’ real estate estoppel defense arises in successive court a subsequent lawsuit on employment contracts. reported resolving 62. Absent such an agreement.7 such disputes arise. they are not parties to the bind. promote judicial economy. For example. collateral estoppel is not so readily available when a party sale agreement. the loss of a particular issue against a particular the court must determine the collateral estoppel effect. Accordingly. ferent claims raised in a later case.6 It is not California) contains an arbitration provision wherein the buy. In other one of the parties in the superior court action did not participate in words. if any. California is one of the few juris. Arbitration: Determining the Collateral Estoppel Effect of a Private Arbitration Award On Non-Parties In Subsequent Litigation By Zachary D. in the arbitration. participates in the arbitration. whereby an issue “‘necessarily decided in estate issues ranging from commercial leases. The Law of Res Judicata and Collateral Estoppel Arbitration Association. This rule holds true. opponent in one forum may impose adverse and unforeseeable of the private arbitration award. These con. seeks to assert it as a defense based on a private arbitration award.”5 monly used in residential purchase and sale transactions in Collateral estoppel need not always be mutual.

claiming damages In cases involving nonmutual collateral estoppel.”11 Courts examine the judi. The function of the court An arbitration award. the arbitrator awarded nal litigation may forever be bound by the adverse ruling in Eller the original contract price. Crum appealed. California Law on Binding Arbitration Thibodeaus were barred from litigating the driveway issue California has a comprehensive statutory scheme regulat. has is limited to confirming the award as made. A party cannot by negligence or design proceedings. but also to arbitration proceedings. COLLATERAL ESTOPPEL BASED ON PRIVATE determined that the mere fact that the arbitration award had not ARBITRATION AWARDS been confirmed (due to the Eller bankruptcy petition) was of no consequence. save upon such grounds as damages after a one day trial. Nonmutual collateral estoppel cases require close examination to Following the Eller bankruptcy filing.16 tration. Collateral by the Thibodeaus and other allowance items.19 After a three-day hearing. applicable in another forum. Paul Eller & Associates for the construction of a single-family lateral estoppel by a non-party to the original action against home.24 Crum argued. arbitrator. the Thibodeaus initi- determine whether the use of collateral estoppel against a prior ated a superior court action against Michael Crum. its legal formality. “We conclude that the essential adjudication in an A.23 As a result.”15 The it despite the fact that it was not in fact expressly pleaded statutory scheme sets forth the basic characteristics of arbitration or otherwise urged. by the same parties. and efficient means of dispute resolution. generally. expe. the opportunity for judicial review of adverse rulings. the limited judicial review applicable to arbitration pro. it is conclusive on matters of fact and law and all mat- plaintiffs Peter and Judy Thibodeau entered into a contract with ters in the award are thereafter res judicata.”30 “Once a valid award is made by the this issue in the context of a construction dispute. including enforcement of agreements to arbitrate. Crum. Thus. which jurisdiction. the Thibodeau court expressly held that estoppel based on private arbitration awards.”31 California Real Property Journal • Volume 28 Number 3 35 . enforceable and irrevocable.12 the arbitration award was never corrected or confirmed. the court of appeals conclusively determined provided by the statutes. so to avoid delays incident to a civil action to obtain an adjustment that it could have been raised. the arbitrating parties were required to place and the identifying circumstances in which arbitrators’ awards before the arbitrator all matters within the scope of the arbi- may be judicially vacated. award included an offset of $2. a party who against Eller based on claims of unexcused delay and poor work- has an adverse factual finding rendered against it in an origi.’”17 There is limited appellate review of an arbi. the parties ‘evince [their] intent to bypass the pass the chunks in the driveway but not the cracks.933 in is valid. its procedural safeguards. or privies thereof.18 Indeed. res judicata applies to matters litigated in prior actions appellate levels.’”26 establishing the rules for the conduct of arbitration proceedings. Necessarily encompassed within the and agreement is designed to be efficient. statute for their enforcement is to encourage persons who wish related to the subject-matter and relevant to the issues. or to vacate it within the limitations and as Thibodeau v. confirmed or unconfirmed.22 Prior to the hearing on their petition. The Thibodeaus initiated an arbitration proceeding pur- a prior participant is called “nonmutual collateral estoppel. as an affirmative defense. Eller arbitration. the subcon- party litigant is fair and appropriate. related to the subject matter and relevant to the issues Note.original case.13 Essentially. or to correct and the same res judicata effect as a court judgment. in confirm it as correct.” suant the terms of the construction contract. that the B. withhold issues and litigate them in consecutive actions. confirmed. in the driveway were not encompassed within the Thibodeau/ inherent in the nature of the arbitral forum as an informal. of particular impor. manship. Mutual Collateral Estoppel arbitration proceeding is the award. “‘If the matter was within the scope of the action.”14 “The policy of the The Court of Appeal overturned the trial court decision law in recognizing arbitration agreements and in providing by holding. corrected. tractor who had completed the cement work on the Thibodeaus’ driveway. plus amounts for changes made subsequent actions between it and future litigants. they most certainly should have been. “a written agreement to Eller arbitration.21 of the dispositive effect of nonmutual collateral estoppel and The Thibodeaus subsequently filed a petition in the supe- the dangers it poses to a litigant. attorney fee award. Part of that efficiency court’s decision was that a contractor and its subcontractor involves eliminating appellate review on most grounds. Eller cial nature of the prior forum. In that case.25 The trial court rejected Crum’s res judicata submit [either a present or future controversy] to arbitration… affirmative defense and awarded the Thibodeaus $23. because that matter had already been resolved in the Thibodeau/ ing private arbitration. This were privities for purposes of res judicata. as well as those matters trator’s award to enable and protect the expedited process that that should have been litigated in the prior action because of arbitration is supposed to provide. “[t]he doctrine of res judicata applies not only to judicial pro- ceedings. the scope of the filed a Chapter 11 bankruptcy petition in federal court. In other words. In other judicial system and thus avoid potential delays at the trial and words. triggered an automatic stay under bankruptcy law. tance. arbitration by statute the close nexus of facts. By choosing there was no logical reason why the arbitration should encom- private arbitration. and enforced. and. the judgment is conclusive on of their differences by a tribunal of their own choosing. the court IV.261 for “Concrete Driveway Courts determine whether collateral estoppel is fair and repair” based on the Thibodeaus’ claims that concrete chunks consistent with public policy on a case-by-case basis because had broken off the driveway in certain areas.”28 and ditious. This determination is largely rior court to correct certain portions of the arbitration award dependent “on the character of the forum that first decided the affecting the prevailing party determination for purposes of the issue later sought to be foreclosed.20 The arbitrator’s estoppel is a powerful tool. characteristic has a significant impact on the scope of collateral As part of its ruling.”29 And. exist for the revocation of any contract.27 The court concluded that “if the radiating cracks ceedings “is a well understood feature of private arbitration.10 The use of col.

will not have The trial court granted summary judgment based on col- nonmutual collateral estoppel effect under California law unless lateral estoppel. maintenance and use of the tanks.” 43 The court reasoned.36 parties. those policies ment between Vandenberg and Boyd to do so. California Does Not Recognize Nonmutual “sudden and accidental” triggered the policy exclusion in their Collateral Estoppel insurance contracts based on the collateral estoppel (nonmutual) The California Supreme Court has held that a private effect of the Boyd arbitration. not only is a private arbitration improper installation. pute in a formal manner. Generally. filed a motion for summary judgment on the B.37 of law.33 private arbitration decision nonmutual collateral estoppel effect Vandenberg involved arbitration and subsequent litigation without the arbitral parties’ consent… because private arbitra- arising out of damage to a parcel of land. “absent a contrary agreement by the arbitral par- being bound by a ruling in a private arbitration in unforeseeable ties. First. of justice and equity. Vandenberg leased a tion lacks significant safeguards of court litigation.47 The Court explained. Boyd and USF&G ultimately reached a judicially action. with transcribed proceedings. the Court determined that the insurance Vandenberg tendered the claims to his commercial general companies could not give the arbitrator’s decision nonmutual liability insurance carriers. in part. are Boyd released all claims against Vandenberg except those based often the very reasons that parties agree to resolve their disputes on the theory that the contamination constituted a breach of through arbitration. in turn. informal and imprecise nature of arbitration. the Court explained that California’s statutory waste oil storage tanks on the subject property to prepare the scheme does not provide for a private arbitration award to be property for sale. As a result. even if judicially confirmed.39 contemplate such remote and collateral ramifications when they As part of the arbitration award. in favor of strangers to the arbitration. not strictly waste oil tanks and was caused. “arbitra- some of the policies excluded damage caused by a pollutant or tors. The appel- California prohibits an unsuspecting arbitration participant from late court held.42 arbitration award. the Court noted that these same their lease agreements. extensive “common sense weighs against the assumption that parties evidence. arbitration award. by Vandenberg’s bound by evidence. Vandenberg discontinued his business and delivered possession The decision stemmed on private arbitration’s role in the legal of the land back to Boyd.” The arbitrator awarded over $4 ing are also subject to collateral estoppel. The Court of Appeal then issued peremptory there was an agreement to that effect in the particular case. alleging an agreement. and argument. may base their decision upon broad principles of justice Only one of Vandenberg’s insurers. Indeed. The seminal case in California on this issue is Vandenberg action. the arbitrator determined that agree to arbitrate controversies between themselves…The very the contamination stemmed primarily from the underground fact that arbitration is by nature an informal process. This 1992 case has since been Vandenberg’s insurers rejected his subsequent claim for distinguished by the California Supreme Court for nonmutual indemnification. a claim a party might successfully have asserted in a judicial Vandenberg. a non-confirmed million to Boyd. suggests reasonable 36 California Real Property Journal • Volume 28 Number 3 .38 vantages if issues decided by the arbitrator can later be leveraged Vandenberg and Boyd arbitrated their breach of lease dis.”46 This ability to base their decision on broad principles supervised settlement agreement. Boyd’s allega. law or judicial oversight. representation by counsel. along with the lack of judicial review. “It would not be fair to give a v. Thus. a party to private arbitration is not barred from re-litigating future litigation. United States Fidelity and and equity.34 After thirty years The California Supreme Court affirmed. And.35 Boyd’s subsequent underground testing binding in favor of nonparties in litigation involving different revealed contamination of the soil and groundwater under the causes of action where the arbitral parties have not reached such property. particularly parcel of land for an automobile dealership from Boyd under a the right to full judicial review. ferent case involving a different adversary and different cause of tion. However.41 judicata in the mutual context.32 writs of mandate reversing the summary judgment.40 The award enforceable by collateral estoppel. unless specifically required to act in conformity with rules contaminant except for a “sudden and accidental” discharge. out of their failure to defend. and in so doing so may expressly or impliedly reject Guaranty Company (USF&G) agreed to provide a defense. The insurers. Boyd then removed underground system. Superior Court of Sacramento County. Non-Mutual Collateral Estoppel grounds that there was no coverage under the policies because the arbitrator’s determination that the contamination was not 1. He then filed an action against them arising collateral estoppel purposes. it is not an inherent or expected feature of tions focused on Vandenberg’s installation and operation of private arbitration that is implicitly accepted by the arbitrating waste oil storage tanks causing this contamination. This rule differs from most other jurisdictions issues decided by the arbitrator when those issues arise in a dif- because of California’s public policy concerns regarding arbitra.45 provided coverage to Vandenberg for sums he was “legally obli. mutual collateral estoppel based on a private arbitration award. with whom he had contracted over collateral estoppel effect against Vandenberg absent an agree- the thirty years he leased the property. settle or indemnify him. As part of the agreement. Boyd and Vandenberg agreed to resolve features can have serious unexpected consequences and disad- that issue through binding arbitration. briefing. rejecting non- of using the land as an automobile sales and service facility. However. Boyd then filed an action against Vandenberg. Because of the absence of any such statutory lan- a myriad of causes of action based in contract and tort arising guage regarding nonmutual collateral estoppel based on a private out of the contaminated soil and groundwater. not “sudden and accidental. under Thibodeau. but all matters that arbitrator further indicated that discharge of contaminants was reasonably should have been heard in the arbitration proceed. The California Supreme Court also based its decision on the gated to pay as damages” because of property damage.”44 series of leases for a period of thirty years. which was subsequently confirmed by a supe- private arbitration award does not affect the applicability of res rior court judgment.

many of the efficiencies of arbitration will be eliminated because it will force parties to be concerned 2. Parties would be forced to arbitrate issues to Differently finality.52 impact unfairly on judicial decision making. litigate the issue to be foreclosed. denying the Alternatively. Other Jurisdictions View Nonmutual Collateral about the collateral estoppel effect of the arbitration award on Estoppel Based on Private Arbitration Awards future litigation. Code of a judicial opinion whether the prior arbitration afforded the Civil Procedure section 1281. and Idaho interpret silence Nearly eleven years have passed since the Vandenberg deci- regarding nonmutual collateral estoppel to imply consent. even in favor to believe that a lack of protection from nonmutual collateral of nonparties to the arbitration. but neglect or fail to negotiate of law or fact.”48 binding decision. It is doubtful that parties will chose arbitration solely based dominant view in other jurisdictions is that “unless the arbitral on an understanding that any award will be immune from parties agreed otherwise. That said. rights. nonmutual collateral estoppel. Finally.2 should be fully explored before losing party a full and fair opportunity to litigate the matter litigating and arbitrating causes of action arising out of a com- to be foreclosed. its resolution will depend on parameters of this rule are not the subject of this article. Likewise. warn parties that the arbitrator’s award may be used against including subsequent litigation involving third parties. it necessarily does not involve tion. collateral estoppel causes no injustice a private arbitration award will foreclose an unforeseen factual when the party to be bound had a full and fair opportunity to issue in future litigation. there is a general policy against re-litigation of issues ties can freely arbitrate disputes without significant worry that already decided. silence cannot be interpreted ties really have incentive to make such an agreement.” The result creates uncertainty and requires mon set of facts. arbitrator’s award is outside the judicial system. In way. the contractual nature of private arbitration dictates by simply agreeing that the arbitration award will have a col- that the scope and intent of an arbitration award must derive lateral estoppel effect for all purposes—including nonmutual from the parties’ consent. and protect litigants from harassment by vexatious the overburdened judicial system by motivating parties to agree litigation. California’s arbitration act does provide a award collateral estoppel effect has no adverse impact on judicial possible way to avoid a duplication of efforts where less than integrity. With this rule in place. Can a Duplication of Efforts Be Avoided? opportunity to litigate the matter. Instead. which eliminates arbitration as a distinct alternative Other jurisdictions addressing nonmutual collateral estop. if the arbitrator actually and estoppel will necessarily complicate and formalize an area of necessarily decided the issue sought to be foreclosed and the dispute resolution that has been traditionally more freeform. or on third party Some jurisdictions have adopted a case-by-case approach.51 doing so could have the unintended consequence of motivating The California Supreme Court also refused to accept the additional third party litigation. New Jersey. parties may still desire to avoid a duplication ing” arbitration necessarily implies the possibility of collateral of effort and having to prove up a factual case in more than one estoppel. does not be dispositive on all issues determined therein for all purposes. party against whom estoppel is invoked had full incentive and 3.’” 55 In such a situation. in a closely related court proceeding involving ‘a common issue parties who agree to arbitrate. In such situations. that the parties are able to agree in advance. Under a case-by-case approach. The issue then becomes whether the par- nature of arbitration proceedings. And third. a judicially confirmed private arbitra. These sion and there is no indication that California will join the jurisdictions justify their decision to allow nonmutual collateral majority of jurisdictions that recognize the nonmutual collateral estoppel based on a private arbitrator’s award in several ways.54 pel disagree with California’s position on this issue. in a single proceeding. because of the informal collateral estoppel.”49 Pennsylvania.56 While the ever arises in future litigation. Oklahoma. Nevertheless. par- First. the court determined that because a private to arbitration.4. Minnesota. will not know arbitration. when a party to an arbitration agreement is also a litigant which California also rejects. by forcing the parties to hedge against a different adversaries and claims. and perhaps in their The court reasoned that California’s private arbitration statutes. “final” and “bind. the doctrines of res argument that nonmutual collateral estoppel must be recognized judicata and collateral estoppel are well recognized principles in to preserve the integrity of the judicial system. the parties to “hedge” against the possibility that the decision California Real Property Journal • Volume 28 Number 3 37 . arbitration agreements. California’s Code of Civil Procedure provides “specific re-litigation or undermine judicial integrity by requiring the and ample means of assuring that private arbitrations will not duplication of the same issue.53 “If the issue arbitration or court litigation should proceed first. impose forced joinder of some or all parties or issues in advance whether a court will later find the arbitration bind. However. because as consent. or use stay power to determine whether ing in favor of third parties on different claims. Ultimately. that any private arbitration award will including Code of Civil Procedure section 1287. to litigation. there is good reason tion award will have collateral estoppel effect. parties can finally resolve factual issues for all purposes arbitration. New York. estoppel effect of private arbitration. promote judicial ordinary litigation—allowing an arbitration exception may ease economy.50 the logical converse of the rule expressed in Vandenberg suggests The California Supreme Court rejected these arguments. the court may: deny a specific disclaimer of collateral estoppel effect. In this them by third persons to resolve different causes of action. particularly when the law gives judicially confirmed venue—arbitration and the superior court. Second. The pre.parties would hesitate to agree that the arbitrator’s findings in will later be deemed binding in different litigation with other their own dispute should thereafter bind them in cases involving parties. arbitration awards the same force and effect as civil judgments. because private arbitration does not involve all of the parties in a dispute have agreed to binding arbitra- the use of a judge or courtroom.

were not liable to Triple A because Grinham exceeded California at Davis. does not permit non- contract against Grinham and Hydrex San Jose. Schorr is the principal litigator at Fielders objected to the arbitration by arguing that that they Los Angeles-based Schorr Law. Grinham further claimed that because the Fielders contested 8 Id. 2d 601.2. pel against a third party. v. 4th 1. 3 Cal. their lack of liability as collateral estoppel because they were 6 Lucindo v. He received his for $14. The arbitration award was later confirmed and the court entered judgment therein.57 Grinham Resolution of this issue will necessarily involve an analysis of the involved a construction dispute regarding certain construction level of participation and the parties’ privies. 21 Cal. 60 Cal. His practice focuses on a broad not obligated to arbitrate the dispute. Pest Co. 4. The Sale Agreement. 4th judgment. A Professional were not parties to the contract with Triple A. the scope of his authority as their actual or ostensible agent. 4th at 828. as participation in the arbitration by the third party seeking to Grinham’s employers in their claim. App. title disputes. 604 (1962)). 828 (1999) (citing Teitelbaum Furs. et seq. Ct. Paragraph 17. 384 U. report. 2d 601.822. collateral estoppel should 10 Kelly v. Co. Los Angeles and his law degree from the University of County. Triple A filed Endnotes an action in Ventura County to set aside allegedly fraudulent transfers Grinham made to avoid the judgment. Utah Constr.”64 Grinham appealed the granting of summary 4 Vandenberg v.8. including commercial leasing disputes. issues. Ct. 3 Teitelbaum Furs. While ordinarily a private arbitration award cannot be used as collateral estop- While the Vandenberg ruling remains the rule in California.60 In June of 1999. “had no liability. mutual collateral estoppel based on an arbitration award absent tion agreement provided for mandatory arbitration. superior court granted summary judgment on collateral estop. App. 20 Id. in turn. v. where the party seeking to benefit from & Blase. The court reasoned that the Fielders participated 12 United States v. presenting testimony and raising (1966). the court of 15 Moncharsh v. Grinham 1 American Arbitration Association. undergraduate degree from the University of ally and doing business as Hydrex Pest Control of Santa Clara California. 4 Cal. of San Jose did not exist. and The arbitrator decided that Grinham was liable to Triple A related real estate litigation. Inc. 4th at 828 (citing Moncharsh v. 4th at 829. 58 Cal.. 4th 749 (1992). On appeal. Vandenberg. Globe Travel Bureau. 195. 3d not apply. Inc. 341 (1990).96 Data Collection Requirements for declaratory relief and contribution. both individu. 3d 335. range of real estate litigation and arbitration the Fielders participated in the arbitration and presented testi. San Jose and its contractor Grinham agreed to perform for Triple A Machine V. 17 Vandenberg. Dominion. Whittling Down California’s Rule Through Active Thus.. and 1290-1294. legal arguments concerning Grinham’s actual and ostensible 13 CCP § 1280. § 1281.”65 7 Id. Heily & Blase. and therefore were Corporation. purchase and sale disputes. of Sacramento County. The construc. 21 Cal. 51 Cal. at 752-53. unlike most jurisdictions. Dominion. CONCLUSION Shop (“Triple A”). jurisdiction and the arbitrator found that they were “not bound 9 Vandenberg. sought summary judgment based on the defenses of res judicata 2 California Association of Realtors Residential Purchase and and collateral estoppel arising out of the arbitrator’s award. at 343. 21 Cal. 3 Cal.S. at 753. authority to bind Hydrex Pest Control of Santa Clara County 14 Id. provide arbitration. to arbitrate the dispute” with Triple A.58 Triple A was dissatisfied with the work the contractors performed so it brought a claim for breach of California. the arbitration award had not participated in the arbitration.95.66 Thus. Fiedler. Inc. 604 pel grounds based on the arbitrator’s finding that the Fielders (1962). if that third party participates in the subsequent decisions. 202 (1976). 9 (1992). mony regarding their non-liability. Heily ferent from Vandenberg. 815. Super. arbitrator’s decision absolving them of liability as sufficiently dif. the Grinham decision muddles the otherwise straight- Participation in Arbitration forward principle set forth in Vandenberg. 21 Cal. Grinham and the Fielders appeared before an arbitrator. Trans. third parties to the arbitration who “specially appeared. Crum.62 com or 310-954-1877. like that in Grinham v. appeal viewed Fielder’s participation in the arbitration and the 16 CCP §§ 1281. After Grinham failed to satisfy the judgment.63 The Fielders. 1285-1288. Triple A. 421-422 in the arbitration completely. 18 Thibodeau v. 4th at 829. the 58 Cal. Fielders could not rely upon the arbitration findings regarding 5 Vandenberg. Code of Civil Procedure cross-complained against the Fielders. 21 Cal. 19 Id. to a construction contract with Triple A. alleging causes of action (CCP) section 1281.2-1281. the possibility of collateral estoppel may be revived. The court of appeal distinguished these facts from 11 Vandenberg. work that Hydrex Termite Pest Control Co. 4th at 10). He also decided that the Fielders.59 Triple A (1) the parties’ express agreement or (2) a substantial level of joined the Fielders and Hydrex Pest Control of Santa Clara. He can be reached at zschorr@schorr-law. after it learned that Hydrex benefit from the arbitration award. The Zachary D. further clarity as to the scope of collateral estoppel. 38 California Real Property Journal • Volume 28 Number 3 . Grinham argued that under Vandenberg. Super.61 Despite their objection. 394.

939 (1977)). 42 Id. 37 Id. at 821. at 1053 41 Id. 25 Id..6.. at 836. 48 Id. 44 Id. App. at 826. 92 Cal. at 1054. 56 Vandenberg. 43 Id. at 758 (citing CCP § 1286.C. 71 (1988)). Fielder. 11 U. § 362.Tel: (510) 835-8181 or Email: david@rothrealestatelaw. Arbitration and Collateral Estoppel: 3d 933. at 827. at 833. Ins. 29. (1940)). at California Real Property Journal • Volume 28 Number 3 39 . 30 Id. at 825. Co. App. 2d 195. 39 Id. 35 Id.E. at 1051. (citing Lehto v. 468 (1989). 26 Id. at 832.. State Farm Mut. 4th at 835. 289 U. n. 45 Id.. 4 Cal. 66 Id. 22 Id.S. 31 Id. 21 Cal. 4th at David Roth -. 4th 749 (1992). 803 (1977). at 837. 63 Tul. 54 Id. 55 Vandenberg. 50 Am. 15 Cal. Leland Stanford Jr. Messenger. 62 Id. 61 Id. 60 Id. at 755 (citing Stutphin v. 29 Id. 57 Grinham v. 65 Id. 21 Cal. 10 (citing Volt Info. 3d at 939). 1051 (2002). Speik.Tel: (415) 268-1990 or Email: scott. Univ..21 Id. Ins. 21 Cal. 202 49 Id. 64 Id. at 753-54. 53 Id.S. Underground Constr. 40 Id. at 1052. Co. Crum. Auto. 69 Cal. 4 Cal.4th at 824.2. App. at 753. 3d 51 Vandenberg. 4th 1049. 4th at 836.) 33 Vandenberg. 69 Cal. 1004 (1979). App. (citing Lehto v. 24 Id. Do you have an article you would like published? Or maybe an idea for one? The California Real Property Journal welcomes and encourages the submission of articles from its readers and others! For more information please contact: Scott Rogers -. 46 Id. 28 Thibodeau. CCP § 1286. Underground 63 Id. 38 Id. Sciences v. L. 23 Id. at 826-27. Co. 52 Id. Using Preclusion to Shape Procedural Choices. 32 Thibodeau v. 36 Id. App. 34 Id. CCP § 1281.2). App. 47 Id. 59 Id. n.2d 798. 832. 371 N. 58 Id. (Citing Motomura. 99 Cal. 21 Cal. Co. 10. 27 Coral v. Rev. 4th at 756.