For the third time in two years, the Fourth District of the California Court of Appeal chipped away at the ability of developers to enforce jury trial waivers in construction litigation. On January 11, 2011, the Court of Appeal upheld an earlier ruling in the case of Villa Vincenza Homeowners Association v. Nobel Court Development LLC, denying a developer’s motion to compel a homeowners association (HOA) to arbitrate a construction defect suit because the subject arbitration agreement was not contained in any contract with the HOA. Rather, it was contained in the association’s Covenants, Conditions and Restrictions (CC&Rs), which were recorded before the sale of any of the condominium units. The court held that the CC&R’s were not contracts and that the right to a jury trial can only be waived upon actual notice.
Developers should continue to include explicit and conspicuous jury trial waivers in their purchase and sales agreements if they want to enforce arbitration or judicial reference with homeowners. As for obtaining an enforceable jury trial waiver against a HOA, such a waiver appears unlikely, pending the outcome of the Pinnacle Museum Tower Associate case currently in front of the California Supreme Court, unless it is negotiated after the developer relinquishes control of the HOA.
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