Wednesday, March 10, 2010

Gravillis v. Coldwell Banker (Cal. Ct. App. - Feb. 26, 2010)

Kenny Gravillis bought a home in L.A. for $500,000 using Coldwell Banker as his broker. After buying the house, he concluded that Coldwell Banker had done a terrible job, and had failed to disclose some significant known defects in the house, so he sued 'em.

But the standard brokerage agreement had an arbitration clause. So Coldwell Banker filed a motion to compel arbitration, which Gravillis opposed. At the hearing, the trial court denied the motion to arbitrate, and asked Gravillis to prepare an order. Which it did -- to which Coldwell Banker responded by "objecting" to the proposed order with a reiteration of its arguments at the hearing. Inexplicably, this tactic worked, and rather than signing the proposed order, the trial court compelled arbitration.

At which point Gravillis filed a motion for reconsideration. Which also worked. At which point the trial court entered an order denying arbitration.

So Coldwell Banker filed an appeal. And the Court of Appeal reversed, and compelled the matter to be arbitrated.

All of this, as you might imagine, took years and years: We're talking way back in 2004 and 2005. So lots of transaction costs and attorney's fees.

So eventually, in 2008, Coldwell Banker gets its requested arbitration hearing. At which the arbitator awards plaintiff almost $400,000 in damages.

Coldwell Banker, not surprisingly, files a motion to vacate, which the trial court denies. Coldwell Banker then again appeals, claiming that the arbitrator failed to follow California law.

But you asked for it, you got it. The Court of Appeal affirms.

Lesson of the Day: Be careful what you wish for.