gno.law

Passerelle v. Palomar Community College Dist. CA4/1

California Court of Appeal · D065528 · 2015-04-29 · Unpublished

Proceeding
appeal from orders
Trial court
Superior Court of San Diego County · No. 37-2013-00052094-CU-BC-NC
Trial judge
Earl H. Maas, III
Outcome
reversed in part — Reversed in part, dismissed in part.
Area
civil
Panel
McINTYRE (author), Judith D. McConnell, Cynthia Aaron

Analysis

A model's reading — qwen3.8-27b, prompt v1, 2026-10-13T06:18Z · confidence high

The trial court denied the District's motion to compel arbitration, finding that Passerelle's claims under the Improvement Agreement did not fall within the Option Agreement's arbitration clause. The Court of Appeal reversed, holding that the Improvement Agreement was incorporated into the Option Agreement, making the District's claim of arbitrability not wholly groundless and requiring the arbitrator to decide jurisdiction.

Ruling reviewedStandardThe courtThe model
Order denying the District's motion to compel arbitration
“We reverse the order denying the District's motion to compel arbitration.”
de novoerroragree with court
The appellate court correctly applied the standard that a motion to compel arbitration must be granted if the claim of arbitrability is not wholly groundless. By interpreting the contract documents together, the court found a plausible link between the breach of the Improvement Agreement and the Option Agreement, satisfying the threshold for arbitration.
Order staying arbitration pending the outcome of the appeal
“This renders moot the District's appeal of the orders staying arbitration pending the outcome of the appeal and denying relief from stay.”
mixednot reachedagree with court
The appellate court dismissed this portion of the appeal as moot because the reversal of the underlying order denying the motion to compel arbitration rendered the stay orders ineffective. This is a standard procedural disposition when the predicate order is reversed.
Order denying relief from stay
“This renders moot the District's appeal of the orders staying arbitration pending the outcome of the appeal and denying relief from stay.”
mixednot reachedagree with court
Similar to the stay order, the denial of relief from the stay became moot upon the reversal of the order denying the motion to compel arbitration. The court correctly identified that no effective relief could be granted on this issue.

Authorities

  • relied: Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1 — California has a strong public policy in favor of arbitration as a speedy and relatively inexpensive means of dispute resolution.
  • relied: Freeman v. State Farm Mut. Auto. Ins. Co. (1975) 14 Cal.3d 473 — The right to arbitration depends upon contract and a petition to compel arbitration is simply a suit in equity seeking specific performance of that contract.
  • relied: Platt Pacific, Inc. v. Andelson (1993) 6 Cal.4th 307 — Private arbitration is a matter of agreement between the parties and is governed by contract law.
  • relied: Bank of the West v. Superior Court (1992) 2 Cal.4th 1254 — The fundamental goal of contractual interpretation is to give effect to the mutual intention of the parties, and clear and explicit language governs.
  • relied: Fitz v. NCR Corp. (2004) 118 Cal.App.4th 702 — When there is no conflicting extrinsic evidence, the appellate court reviews a trial court's determination on whether an arbitration agreement applies to a particular controversy de novo.
  • relied: Bruni v. Didion (2008) 160 Cal.App.4th 1272 — Parties can agree to arbitrate almost any dispute, including a dispute over whether the underlying dispute is subject to arbitration.
  • relied: Dream Theater, Inc. v. Dream Theater (2004) 124 Cal.App.4th 547 — Unless a claim of arbitrability is wholly groundless, the court should stay proceedings pending the arbitrator's determination of his or her own jurisdiction.
  • relied: Brookwood v. Bank of America (1996) 45 Cal.App.4th 1667 — Whether an arbitration agreement applies to a controversy is a question of law to which the appellate court applies its independent judgment where no conflicting extrinsic evidence in aid of interpretation was introduced.
  • relied: Versaci v. Superior Court (2005) 127 Cal.App.4th 805 — Where several papers covering the same subject matter are executed by the same parties, all are to be considered together, and with the same effect as if all had been incorporated in one document.
  • relied: Cucamongans United for Reasonable Expansion v. City of Rancho Cucamonga (2000) 82 Cal.App.4th 473 — An appeal should be dismissed as moot when the occurrence of events renders it impossible for the appellate court to grant appellant any effective relief.

The appellate opinion: sound — The opinion is sound because it correctly applies the 'wholly groundless' standard for compelling arbitration and properly interprets the contract documents as a unified whole under California contract law principles. It effectively addresses the respondent's argument regarding the supersession clause by noting the express incorporation of the Improvement Agreement into the Option Agreement.

How this analysis was made · dispute it

unusual disposition

A model's reading — claude-fable-5-1, prompt v1, 2026-10-13T04:31Z · confidence low

The trial court denied Palomar Community College District's motion to compel arbitration of Passerelle's claims, finding the first amended complaint sought damages under the Improvement Agreement rather than the Option Agreement containing the arbitration clause, and later stayed arbitration pending appeal and denied relief from that stay. The Court of Appeal reversed the order denying the motion to compel, held the District's claim of arbitrability was not wholly groundless so the arbitrator must decide arbitrability under the delegation clause, dismissed the appeal from the stay orders as moot, and remanded with directions to stay the action.

Ruling reviewedStandardThe courtThe model
Denial of the District's second motion to compel arbitration on the ground that the amended complaint alleged breach of the Improvement Agreement, which contains no arbitration clause, rather than the Option Agreement
“The trial court denied the motion, finding the allegations of the amended complaint did not fall within the provisions of the Option Agreement and rather sought damages under the provisions of the Improvement Agreement.”
de novoerror (law misapplied)agree with court
The Option Agreement's arbitration clause expressly delegates arbitrability to the arbitrator, and under Dream Theater a court must send the matter to the arbitrator unless the claim of arbitrability is wholly groundless. The Second Amendment left the Amended Option Agreement in full force, attached the Improvement Agreement as an exhibit, and substituted the Improvement Agreement's provisions for the grading obligations the District promised to diligently pursue, so a breach of the Improvement Agreement plausibly concerns rights under the Option Agreement. The court correctly applied de novo review because the Tabb declaration was uncontroverted (Brookwood), and correctly rejected the integration-clause argument under Civil Code section 1642 and Versaci because the documents were executed by the same parties on the same subject and expressly incorporated. The result is supported by the cited authorities.
Orders staying arbitration pending the outcome of the appeal and denying the District relief from that stay
“This renders moot the District's appeal of the orders staying arbitration pending the outcome of the appeal and denying relief from stay.”
unclearnot reachedagree with court
Once the order denying the motion to compel was reversed and the matter remanded to stay the action pending the arbitrator's jurisdictional determination, no effective relief remained to be granted regarding the interim stay orders, so dismissal as moot under Cucamongans United was appropriate.

Authorities

  • relied: Dream Theater, Inc. v. Dream Theater (2004) 124 Cal.App.4th 547 — Where parties have delegated arbitrability to the arbitrator, the court should stay proceedings for the arbitrator to decide jurisdiction unless the claim of arbitrability is wholly groundless, which requires only limited construction of the agreement.
  • relied: Fitz v. NCR Corp. (2004) 118 Cal.App.4th 702 — Whether an arbitration agreement applies to a particular controversy is reviewed de novo absent conflicting extrinsic evidence.
  • relied: Brookwood v. Bank of America (1996) 45 Cal.App.4th 1667 — Applicability of an arbitration agreement to a controversy is a question of law reviewed independently where no conflicting extrinsic evidence was introduced.
  • relied: Bruni v. Didion (2008) 160 Cal.App.4th 1272 — Parties may agree to arbitrate almost any dispute, including whether the underlying dispute is arbitrable.
  • relied: Versaci v. Superior Court (2005) 127 Cal.App.4th 805 — Several papers covering the same subject matter executed by the same parties are to be construed together as if incorporated into one document (Civ. Code, § 1642).
  • relied: Cucamongans United for Reasonable Expansion v. City of Rancho Cucamonga (2000) 82 Cal.App.4th 473 — An appeal should be dismissed as moot when events make it impossible for the appellate court to grant effective relief.
  • relied: Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1 — California has a strong public policy favoring arbitration as a speedy and inexpensive means of dispute resolution.
  • relied: Bank of the West v. Superior Court (1992) 2 Cal.4th 1254 — The goal of contract interpretation is to give effect to the parties' mutual intention; clear and explicit language governs.
  • relied: Platt Pacific, Inc. v. Andelson (1993) 6 Cal.4th 307 — Private arbitration is a matter of agreement governed by contract law.
  • relied: Freeman v. State Farm Mut. Auto. Ins. Co. (1975) 14 Cal.3d 473 — The right to arbitration depends on contract; a petition to compel arbitration is a suit in equity for specific performance of that contract.
  • relied: Los Angeles Police Protective League v. City of Los Angeles (1988) 206 Cal.App.3d 511 — There is no public policy favoring arbitration of disputes the parties have not agreed to arbitrate.

The appellate opinion: sound — The court correctly identified the express delegation of arbitrability in the Option Agreement, applied the then-governing wholly-groundless test from Dream Theater, and traced the Second Amendment's incorporation of the Improvement Agreement to show the dispute plausibly concerns rights under the arbitration-bearing contract. It answered Passerelle's standard-of-review and integration-clause arguments with apt authority (Brookwood, Civil Code section 1642, Versaci), and the mootness dismissal of the ancillary stay orders followed directly from the reversal.

How this analysis was made · dispute it

Opinion

Filed 4/29/15 Passerelle v. Palomar Community College Dist. CA4/1 NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

PASSERELLE, LLC, D065528

Plaintiff and Respondent, v. (Super. Ct. No. 37-2013-00052094- CU-BC-NC) PALOMAR COMMUNITY COLLEGE DISTRICT, Defendant and Appellant.

APPEAL from orders of the Superior Court of San Diego County, Earl H. Maas, III, Judge. Reversed in part, dismissed in part.

Allen Matkins Leck Gamble Mallory & Natsis, Valentine S. Hoy VIII and Charles L. Pernicka for Defendant and Appellant.

Kring & Chung, Scott M. Bonesteel and Robert P. Mougin for Plaintiff and Respondent.

A dispute arose between Palomar Community College District (the District)

and Passerelle, LLC (Passerelle) concerning the construction by the District of certain infrastructure improvements on land purchased by the District from Passerelle. Passerelle sued the District for allegedly failing to complete all of the promised improvements. The District appeals orders denying its motion to compel arbitration, staying arbitration pending the outcome of this appeal, and denying relief from stay.

We reverse the order denying the District's motion to compel arbitration. This renders moot the District's appeal of the orders staying arbitration pending the outcome of the appeal and denying relief from stay. Accordingly, we dismiss the appeal of these orders as moot. (Cucamongans United for Reasonable Expansion v. City of Rancho Cucamonga (2000) 82 Cal.App.4th 473, 479 ["An appeal should be dismissed as moot when the occurrence of events renders it impossible for the appellate court to grant appellant any effective relief."].)

FACTUAL AND PROCEDURAL BACKGROUND

In June 2005, the parties executed the "Option Agreement & Joint Escrow Instructions" (the Option Agreement) whereby the District purchased an option from Passerelle to acquire some of Passerelle's land (the Property) to expand its facilities.

The Option Agreement provided that Passerelle would complete "Grading/Infrastructure improvements" described therein if certain trigger conditions occurred. If these conditions did not occur, then the District would complete the Grading/Infrastructure improvements. The Option Agreement required the arbitration "of any dispute or controversy concerning this Agreement or the rights of the parties hereunder, including whether the dispute or controversy is arbitrable."

2 In September 2005, the parties amended the Option Agreement. In June 2007, the parties entered into another amendment of the Amended Option Agreement, the Second Amendment. In the Second Amendment, the parties referred to the first amendment together with the Option Agreement as the Amended Agreement. For ease of reference, we will refer to the first amendment together with the Option Agreement as the Amended Option Agreement.

The parties entered into the Second Amendment because Passerelle did not complete the "Grading/Infrastructure improvements" described in the Option Agreement. The Second Amendment modified certain terms of the Amended Option Agreement, including removing an attached exhibit and replacing it with two new exhibits, the "Improvement Agreement" and the "Easement Agreement." Otherwise, the Amended Option Agreement remained in full force and effect, including the provision in the Option Agreement requiring the arbitration of all disputes.

A dispute arose between the parties regarding work done by the District on the Property, including construction, grading, excavation and installation of water lines and roads. In June 2013, Passerelle sued the District alleging claims for negligence, breach of contract, breach of express warranty, breach of implied warranty, and fraud. The District moved to compel arbitration and stay the action, but the trial court denied the motion without prejudice and granted Passerelle leave to file an amended complaint.

Passerelle filed a first amended complaint alleging the same five causes of action, but eliminating the allegation that the District breached the Amended Option 3 Agreement, focusing instead on an alleged breach of the Improvement Agreement, which was an exhibit to the Amended Option Agreement. The District again moved to compel arbitration. The trial court denied the motion, finding the allegations of the amended complaint did not fall within the provisions of the Option Agreement and rather sought damages under the provisions of the Improvement Agreement. The District appealed from this order. Thereafter, the trial court granted Passerelle's application for an order staying arbitration. The District then sought relief from the stay, which the trial court denied.

DISCUSSION

I. General Legal Principles California has a detailed statutory scheme governing arbitration through which our Legislature has expressed a " 'strong public policy in favor of arbitration as a speedy and relatively inexpensive means of dispute resolution.' " (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 9.) There is no public policy favoring arbitration of disputes which the parties have not agreed to arbitrate. (Los Angeles Police Protective League v. City of Los Angeles (1988) 206 Cal.App.3d 511, 514.) Rather, the right to arbitration depends upon contract and a petition to compel arbitration is simply a suit in equity seeking specific performance of that contract. (Freeman v. State Farm Mut. Auto. Ins. Co. (1975) 14 Cal.3d 473, 479.)

Because private arbitration is a matter of agreement between the parties, it is governed by contract law. (Platt Pacific, Inc. v. Andelson (1993) 6 Cal.4th 307, 313.) "The fundamental goal of contractual interpretation is to give effect to the 4 mutual intention of the parties. (Civ. Code, § 1636.) If contractual language is clear and explicit, it governs. (Civ. Code, § 1638.)" (Bank of the West v. Superior Court (1992) 2 Cal.4th 1254, 1264.) When there is no conflicting extrinsic evidence, we review a trial court's determination on the issue of whether an arbitration agreement applies to a particular controversy de novo. (Fitz v. NCR Corp. (2004) 118 Cal.App.4th 702, 711 (Fitz).)

Parties "can agree to arbitrate almost any dispute—even a dispute over whether the underlying dispute is subject to arbitration." (Bruni v. Didion (2008) 160 Cal.App.4th 1272, 1286.) "Unless a claim of arbitrability is wholly groundless, the court should stay proceedings pending the arbitrator's determination of his or her own jurisdiction. [Citation] This necessarily requires the courts to examine and, to a limited extent, construe the underlying agreement." (Dream Theater, Inc. v. Dream Theater (2004) 124 Cal.App.4th 547, 553 (Dream Theater).)

II. Analysis The Option Agreement requires the arbitration "of any dispute or controversy concerning this Agreement or the rights of the parties hereunder, including whether the dispute or controversy is arbitrable." The District argues the dispute concerns the Option Agreement and the rights of the parties under the Option Agreement.

Accordingly, the District contends the trial court erred when it denied the motion to compel arbitration because the District's assertion that the dispute is arbitrable is not wholly groundless, making the question of arbitrability for the arbitrator to decide.

We agree.

5 As we shall explain, the Second Amendment modified the Amended Option Agreement, incorporated the Improvement Agreement into the Amended Option Agreement and made the Improvement Agreement an exhibit to the Amended Option Agreement. The Amended Option Agreement contains a promise by the District to "immediately commence, and diligently pursue to completion" all of the provisions of the Improvement Agreement. This action concerns those improvements.

Accordingly, a breach of the Improvement Agreement may amount to a breach of the Amended Option Agreement, making the alleged breach of the Improvement Agreement subject to the arbitration provision in the Option Agreement, which remained in full force and effect despite the subsequent amendments. Accordingly, the District's claim that the instant dispute is arbitrable is not wholly groundless.

Preliminarily, the parties dispute the standard of review. The question presented is essentially one of contract interpretation, which is subject to de novo review. (Fitz, supra, 118 Cal.App.4th at p. 711.) Passerelle submitted extrinsic evidence, a declaration from Bruce Tabb, Passerelle's manager and the party who executed the Improvement Agreement on behalf of Passerelle, stating the parties never discussed whether the Improvement Agreement would be subject to arbitration.

This declaration, however, is not controverted. The existence of this declaration does not change the standard of review. (Brookwood v. Bank of America (1996) 45 Cal.App.4th 1667, 1670 ["Whether an arbitration agreement applies to a controversy is a question of law to which the appellate court applies its independent judgment 6 where no conflicting extrinsic evidence in aid of interpretation was introduced in the trial court."].)

Here, we must determine whether the District's claim of arbitrability is wholly groundless. To do so, we examine the allegations contained in Passerelle's first amended complaint to ascertain whether the Option Agreement, the contract containing the arbitration clause, is relevant to a breach of the Improvement Agreement as alleged in Passerelle's operative complaint. If the Option Agreement is relevant to an alleged breach of the Improvement Agreement, then the District's claim of arbitrability is not wholly groundless and the motion to compel arbitration must be granted and the litigation stayed to allow the arbitrator to determine arbitrability.

We acknowledge Passerelle's argument that the trial court found Passerelle's operative complaint sought relief under the Improvement Agreement, which does not include an arbitration clause and does not expressly incorporate the arbitration clause from the earlier Option Agreement. In our de novo review, however, we note the parties' first amendment to the Option Agreement created the Amended Option Agreement. The Second Amendment, in turn, modified the Amended Option Agreement.

The Second Amendment provided that the Amended Option Agreement remained in full force and effect, which necessarily included the provision in the Option Agreement requiring the arbitration "of any dispute or controversy concerning this Agreement or the rights of the parties hereunder, including whether 7 the dispute or controversy is arbitrable." The Second Amendment also made the Improvement Agreement an exhibit to the Amended Option Agreement. Thus, the Second Amendment incorporated the Improvement Agreement into the Amended Option Agreement.

The Second Amendment also provided that all references to Grading/Infrastructure in the Amended Option Agreement "are replaced with and superseded by the provisions of the Improvement Agreement." Making this substitution, the Amended Option Agreement contains a promise by the District to "immediately commence, and diligently pursue to completion" all of the provisions of the Improvement Agreement. Moreover, the Improvement Agreement recited that "[t]he District purchased the District Property in accordance with the Option Agreement . . . pursuant to which the District agreed to complete the improvements . . . ." Thus, the Improvement Agreement acknowledges that the District agreed to make the improvements under the Option Agreement. Accordingly, a breach of the Improvement Agreement may amount to a breach of the Amended Option Agreement, making the alleged breach of the Improvement Agreement subject to the arbitration provision in the Option Agreement as a matter concerning the rights of the parties under the Amended Option Agreement.

Notably, in its operative complaint, Passerelle alleged the District breached the Improvement Agreement by failing to timely complete all infrastructure improvements. This allegation amounts to a breach of the District's promise in the Option Agreement, as amended by the parties, to "diligently pursue to completion"

8 all of the provisions of the Improvement Agreement. Thus, the alleged breach of the Improvement Agreement concerns the rights of the parties under the Option Agreement. Accordingly, the District's claim of arbitrability is not wholly groundless and the trial court should not have decided the threshold issue of the arbitrability of Passerelle's claims. Rather, the trial court should have granted the motion to compel arbitration and stayed the litigation pending the arbitrator's decision on the ultimate question of his or her own jurisdiction over the claims alleged in Passerelle's operative complaint. (Dream Theater, supra, 124 Cal.App.4th at p. 553.)

Passerelle asserts the District's argument is wholly groundless because it disregards a provision in the Improvement Agreement indicating the Improvement Agreement was to be interpreted as an agreement that "supersedes all negotiations, stipulations, understandings, agreements, representations and warranties" regarding the subject matter of the Improvement Agreement. We reject this argument as it ignores that the parties made the Improvement Agreement an attachment to the Amended Option Agreement and expressly incorporated the Improvement Agreement into the Amended Option Agreement. Thus, all of the agreements must be considered together. (Civ. Code, § 1642; Versaci v. Superior Court (2005) 127 Cal.App.4th 805, 814 [" 'It is a familiar rule . . . that where several papers covering the same subject matter are executed by . . . the same parties . . . , all are to be considered together, and with the same effect as if all had been incorporated in one document.' "].)

9 DISPOSITION

The order denying the District's motion to compel arbitration is reversed. We dismiss as moot the District's appeal of the orders staying arbitration pending the outcome of the appeal and denying relief from stay. The matter is remanded to the trial court to enter an order staying this action pending the arbitrator's determination of his or her own jurisdiction. Appellant is entitled to its costs on appeal.

MCINTYRE, J.

WE CONCUR:

MCCONNELL, P. J.

AARON, J.

Cites, in this corpus