Evans v. Centerstone Development Co.

• Decision Date: 21 November 2005
• Docket Number: No. G034551.,G034551.
• Citation: 134 Cal.App.4th 151,35 Cal.Rptr.3d 745
• Court: California Court of Appeals Court of Appeals
• Parties: Kirk S. EVANS et al., Plaintiffs and Appellants, v. CENTERSTONE DEVELOPMENT CO. et al., Defendants and Respondents.

35 Cal.Rptr.3d 745

134 Cal.App.4th 151

Kirk S. EVANS et al., Plaintiffs and Appellants, v. CENTERSTONE DEVELOPMENT CO. et al., Defendants and Respondents.

No. G034551.

Court of Appeal, Fourth District, Division 3.

November 21, 2005.

Law Offices of Randall S. Waier and Randall S. Waier for Plaintiffs and Appellants.

Wendell, Rosen, Black & Dean, Charles A. Hansen and Amanda M. Steiner, Oakland, for Defendants and Respondents.

OPINION

RYLAARSDAM, Acting P.J.

After we decided two earlier appeals related to the disputes noted here, plaintiffs Kirk S. Evans (Evans), Kirk S. Evans, Inc., KSE Development, Inc., and the Kirk and Laurie Evans Trust now appeal from a judgment entered after confirmation of an arbitrator's award. They also appeal from orders compelling arbitration, denying a petition to vacate or modify an arbitration award (this is not appealable but can be reviewed from the judgment) (Mid-Wilshire Associates v. O'Leary (1992) 7 Cal.App.4th 1450, 1453-1454, 9 Cal.Rptr.2d 862), and denying and striking requests for trial de novo. They contend the arbitrator acted in excess of his powers and committed misconduct and that the order compelling arbitration was improper. We disagree with all of these assertions and affirm the judgment.

Defendants CenterStone Development Company, a California corporation (CenterStone), Ernest V. Castro, Sr., Harold G. Woods, Jr., Harri Keto, CenterStone Carlsbad, LLC, A California Limited Liability Company, CenterStone Cerritos, LLC, and Beaumont Holdings filed a motion for sanctions, arguing that plaintiffs' briefs violated the Rules of Court and their appeal was frivolous. We agree with both contentions and grant the motion. We publish this opinion because this case presents a prime example of a frivolous appeal and of flagrant violations of the rules pertaining to appeals. We also publish this opinion to discourage parties to arbitration agreements from frivolously seeking judicial review of matters not cognizable in our courts.

FACTS

CenterStone, a real estate development company, was owned by Evans, Castro, and Woods, with Evans acting as president. After disputes arose among the principals, Evans was ousted. In August 2000, the parties entered into a written settlement agreement resolving litigation among them.

The agreement contained an arbitration provision that stated disputes would be decided by arbitration conducted by the Judicial Arbitration and Mediation Services (JAMS) using its Streamlined Rules; discovery was to be governed by Code of Civil Procedure section 1283.05 "as determined by the retired Judge hearing the matter." The settlement agreement also contained a confidentiality provision, which stated that the "parties ... shall not discuss, reveal, or disclose to any third party, other than their lawyers or accountants ... on a need to know basis, any of the facts, circumstances, [or] disputes leading up to the Litigation and shall keep the terms and conditions of this Agreement strictly confidential, unless otherwise compelled under law, or as may be needed to defend against or prosecute any litigation."

At the time CenterStone terminated Evans, it also discontinued using the services of two brokers, JoAnn Ulvan and William Geller (brokers), who subsequently sued defendants. Defendants contended plaintiffs provided information to the brokers, in violation of the confidentiality provision in the settlement agreement, to support the brokers' lawsuit against defendants. Defendants initiated arbitration proceedings against plaintiffs for breach of the agreement and sought damages that "could exceed $2,000,000."

Thereafter, JAMS sent the lawyers for the parties a letter confirming the commencement of arbitration. It included a copy of its Streamlined Rules and a list of three proposed arbitrators. The parties were advised that if they could not agree on an arbitrator, they should each strike a name from the list and rank the other two in order of preference. Defendants selected Judge Smith as their first preference. Evans himself called, e-mailed, and faxed JAMS advising he wanted Judge Ryan to act as arbitrator. JAMS telephoned plaintiffs' attorney to explain that, since Judge Ryan was not one of the three arbitrators on the list, the parties had to agree to her or plaintiffs had to use the strike list. Plaintiffs' attorney never responded, and in May 2002 Judge Smith was assigned as the arbitrator.

When JAMS notified the parties of the selection, it also sent a disclosure statement, revealing it had found no matters where Judge Smith had acted as an arbitrator in any cases involving the parties or their counsel. The notice also gave the parties 15 days to disqualify Judge Smith; neither side did so.

Part of the settlement agreement required defendants to pay certain sums to plaintiffs. In December 2002, alleging defendants had breached the agreement, plaintiffs filed an action in the Superior Court to compel payment or rescind the agreement. Defendants then filed a motion to compel arbitration pursuant to the terms of the settlement agreement, which the court granted. Although defendant Keto was not a party to the settlement agreement, he agreed to have the claims against him also submitted to arbitration.

The arbitration of all the claims occurred during September 2003 and written closing briefs were all filed by October 9. The arbitrator issued his preliminary award on November 5, finding that plaintiffs had breached the confidentiality provision and the covenant of good faith and fair dealing in the settlement agreement by disclosing information to the brokers. He awarded defendants almost $1.1 million, which constituted the amount of attorney fees and costs they had spent defending the brokers' action.

The award also found plaintiffs were entitled to an offset of $900,000 for monies defendants had withheld once plaintiffs breached the settlement agreement. It reserved jurisdiction to determine accrued interest on the offset funds owed to plaintiffs, to determine the amount of attorney fees and costs to be awarded to defendants, including time for additional briefing and to correct clerical errors and issue a final award.

On November 19, plaintiffs filed a motion to reopen or for reconsideration, which the arbitrator denied. In late November, defendants made a motion for attorney fees and costs. On December 17, the last documents regarding this motion were filed.

On February 13, 2004, the arbitrator issued his final award, which set out the amount of attorney fees awarded to defendants but otherwise was essentially identical to the preliminary award. It again reserved jurisdiction for 60 days to determine the amount of interest and to correct clerical errors.

On March 8, plaintiffs filed motions for new trial in the Superior Court as to their action against defendants. While we found nothing in the record, we assume they were denied. A few days later, they applied to the arbitrator to modify the final arbitration award to insert the amount of interest on the accrued monies owed to them. Another few days thereafter, plaintiffs filed another motion before the arbitrator to reopen the arbitration, which was again denied. On March 23, they filed an opposition to defendants' application as to the amount of interest.

On March 24, plaintiffs sent a letter to the arbitrator objecting to the award on the grounds it was not "`complete'" because it still required a calculation of interest owed to them, and therefore was not final. They argued the Streamlined Rules required the award be rendered 30 days after the hearing was completed.

On March 30, the arbitrator issued his corrected and supplemental final award, which included the specific sum of accrued interest. Defendants then filed a petition to confirm the award. Plaintiffs filed opposition to the petition, a petition to vacate the award, and requests for trial de novo. The court granted defendants' motion to strike the requests and confirmed the award; it denied the motion to vacate. Plaintiffs then made a motion for a new trial and to vacate or modify the judgment. The trial court denied this motion as well.

DISCUSSION

Introduction

Public policy supports minimal judicial participation in arbitration proceedings. (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 9, 10 Cal.Rptr.2d 183, 832 P.2d 899 (Moncharsh).) Courts do not review arbitration awards for factual or legal errors (Jones v. Humanscale Corp. (2005) 130 Cal.App.4th 401, 407, 29 Cal.Rptr.3d 881), including sufficiency of the evidence or reasoning of the arbitrator (Moncharsh, supra, 3 Cal.4th at p. 11, 10 Cal.Rptr.2d 183, 832 P.2d 899). When a court does review an award, it draws all reasonable inferences to support the decision and "displays substantial deference towards the arbitrator's determination of his or her contractual authority. [Citations.]" (Jones v. Humanscale Corp., supra, 130 Cal.App.4th at p. 408, 29 Cal.Rptr.3d 881.)

The Arbitrator Did Not Act in Excess of His Powers.

One of the limited bases on which an arbitration award may be vacated is when an "arbitrator[] exceeded [his] powers and the award cannot be corrected without affecting the merits of the decision...." (Code Civ. Proc., § 1286.2, subd. (a)(4); all further statutory references are to this Code unless otherwise stated.) Scattered throughout their briefs, plaintiffs make several claims, apparently, although not clearly, on grounds the arbitrator acted in excess of his powers. None of them have merit.

Streamlined Rules

A theme underlying several of plaintiffs' arguments is the applicability of the JAMS Streamlined Rules. Plaintiffs contend the 2000 version of the rules in effect at the time the settlement agreement was signed apply. We disagree.

Preliminarily we note that, despite their heavy reliance on the 2000 version of the rules, plaintiffs never clearly gave a record reference to enable us to review them. All of their direct citations...