A recent court ruling unraveled a developer’s creative attempt to avoid construction defect litigation related a new common interest community.  Pinnacle Market Development designed and constructed the Pinnacle Museum Tower Condominiums in San Diego California, and included a clause within the Association’s governing documents which stated that all disputes with the developer must be decided through arbitration rather than a jury trial.  After the Association pursued construction defect claims for damage to the common elements caused by poor construction, the developer filed a motion with the court to dismiss the case and enforce the arbitration clause from the governing documents.  

The court found that, from a contractual standpoint, such an agreement in the governing documents could never be enforceable.  The Association was created after the governing documents were drafted, and the developer controlled the decisions of the Association until the unit owners were able to be elected to the board.  Because the Association did not exist at the time the "contract" was made and the developer was essentially contracting with itself, the court refused to enforce the arbitration clause.  The lawsuit permitted the Association to continue to recover damages for various construction defects and deficiencies.