Waived!

Von Becelaere Ventures, LLC v. Zenovic, No. D0702620 (D4d1 Jun. 6, 2018)

Construction dispute between a Builder and a Property Owner. The relevant contract has an arbitration clause. But Property Owner brings a construction defect case against Builder in state court in San Diego. Builder—who apparently didn’t get paid—then sues Property Owner in Orange County to enforce and foreclose on a mechanics lien he has on the property. Eventually everything gets transferred and related to a single case in San Diego. Builder moves to compel arbitration of the construction defect case. But the trial court denies the motion, reasoning that by filing the mechanics lien case, Builder waived the right to compel arbitration.

There’s a statute—Code of Civil Procedure § 1281.5—right on point. It preserves the statutory foreclosure remedy in circumstances where there’s an arbitration contract. The idea is that the lienholder files the lien case, immediately stays it, and then if it wins the arbitration, it can go back to court to enforce the award through the lien.

But to invoke § 1281.5, plaintiff’s complaint must indicate that the dispute is subject to arbitration, that the plaintiff does not intend to waive that right, and that plaintiff will move to stay the lien case pending arbitration, either concurrently with the complaint or within the next thirty days. Builder didn’t put any of that stuff in his OC complaint. So he waived.

Affirmed.