[author: Meredith Jones-McKeown]
The California Supreme Court recently ruled that developers – by including an arbitration provision under the Federal Arbitration Act (FAA) in Homeowners’ Association Covenants, Conditions and Restrictions (“CC&R’s”) – may require that construction defect actions be resolved through arbitration rather than by jury trial. In Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC, 55 Cal. 4th 223 (2012), California’s high court ruled that such provisions are consistent with the Davis-Stirling Act and that the homeowners’ associations can be bound by the arbitration provision in the recorded CC&R’s.
The Pinnacle case did not directly address how CC&Rs requiring arbitration will interact with California’s Developer “Fix-It” Law (Civil Code § 895, et seq., commonly referred to as “SB800”). But Pinnacle appears to support a developer’s right under Civil Code §914 to draft an alternative to the detailed SB800 pre-litigation procedures that includes a requirement of binding arbitration. Following Pinnacle, the Court vacated the rulings in several other construction defect cases involving arbitration provisions and gave instructions to the appellate courts to reconsider those cases in...
