Musighi v. Mossighi
| Decision Date | 24 March 2022 |
| Docket Number | B310927 |
| Court | California Court of Appeals Court of Appeals |
| Parties | ISAAC MUSIGHI, Plaintiff and Appellant, v. PARVIZ MOSSIGHI, Defendant and Respondent. |
NOT TO BE PUBLISHED
APPEAL from an order of the Superior Court of Los Angeles County No 20STCP01325, Steven J. Kleifield, Judge. Affirmed.
Ecoff Campain Tilles & Kay, Lawrence C. Ecoff, and Alberto J Campain for Plaintiff and Appellant.
Freeman, Freeman & Smiley, Curtis A. Graham, and Dawn B Eyerly for Defendant and Respondent.
Brothers Isaac Musighi (Isaac) and Parviz "Daniel" Mossighi (Daniel)[1] arbitrated the dissolution of their wholesale diamond business, and the trial court confirmed that arbitration award in a $9 million judgment for Daniel. The brothers thereafter reached a settlement resolving disputes related to Isaac's refusal to comply with the judgment. Still unhappy with the results of the arbitration, Isaac petitioned the trial court to compel 50 assorted claims to a new arbitration on the basis that the settlement agreement included an arbitration clause. The trial court denied the petition. Because the claims Isaac has identified on appeal are barred by res judicata, not encompassed within the scope of the arbitration clause, or cannot be arbitrated because the preselected arbitrator has a conflict of interest, the trial court was correct in denying the petition.
In the early 1980s, brothers Isaac and Daniel joined forces in the diamond wholesale business and created the company Pacific M. International Corp. (PMI). Isaac was the self-proclaimed "rainmaker," while Daniel handled the finances and customer service. Over time, however, the brothers' relationship deteriorated, and they ultimately decided in 2013 to part ways.
To facilitate the dissolution of PMI, the brothers approached a senior member of the Diamond Club West Coast Inc., a professional organization for diamond merchants to which Isaac belongs, to arbitrate the terms of the dissolution. PMI's accountant was later added as a co-arbitrator. From 2013 to 2016, Isaac and Daniel signed three agreements to be "legally bound" to the decision of the arbitrators. Isaac also acknowledged no less than three times that the arbitration would be "binding"; Isaac even suggested "hir[ing] a forensic accountant" as a "preliminary step[]" for the arbitration, but for whatever reason elected not to do so.
The arbitrators held a hearing in November 2016, and at the end of that hearing, the arbitrators auctioned off PMI as a company; Isaac outbid Daniel. In December 2016, the arbitrators issued a "binding order" (initial arbitration award). The initial arbitration award specifies that (1) Isaac owes Daniel $9, 018, 291 to be satisfied by Isaac's purchase of PMI for $800, 000 and the balance paid in installments; (2) Daniel must "cease use of the [PMI] name immediately"; (3) each brother is to keep his own purchased inventory, except for a prized blue diamond to be held by Daniel but which the brothers are to work together in selling; (4) the brothers would split the funds held in one specified bank account; and (5) each brother is to be allocated specific outstanding accounts receivables.
Dissatisfied with the initial arbitration award and believing it was based on undisclosed and inaccurate financial data Daniel had provided to the arbitrators, Isaac asked the arbitrators and Daniel to reopen the arbitration to consider "64 separate questions"; they agreed to do so. The brothers then signed a new agreement in April 2017 acknowledging that the further hearings would be "binding" and that "there is no right to further review."
The further hearings were held in April and May 2017 and the arbitrators issued an "amended binding order" in June 2017 (amended arbitration award). The amended arbitration award was identical to the initial arbitration award, except that (1) Isaac was to pay Daniel the $9, 018, 291 owed under an "adjusted" payment schedule, and (2) although the blue diamond was still to be owned equally by the brothers, Isaac was required to deliver it to Daniel within three days and the brothers were to (a) agree to sell the diamond to a third party (with the proceeds split equally) and (b) if a third party made an offer, any brother who refused to sell would have to buy out the other brother at the price offered by the third party.
In September 2017, Daniel petitioned the trial court to confirm the amended arbitration award.[2] Isaac opposed the petition and also moved to vacate the award, both on the ground that the award had been secured by fraud. After further briefing and a hearing, the trial court in October 2017 entered a judgment confirming the amended arbitration award; the judgment ordered Isaac to pay $9, 018, 291 plus interest and to turn over the blue diamond to Daniel within seven days.
Apart from appealing the judgment itself, Isaac took affirmative steps to interfere with Daniel's efforts to enforce and collect on the judgment. Specifically, Isaac filed a shareholder's derivative action against Daniel and PMI, and also evaded postjudgment discovery (resulting in a court order compelling him to respond and imposing monetary sanctions).
Daniel was not deterred. He filed a creditor's suit against Isaac, Isaac's businesses, and Isaac's wife and family. Daniel also filed an application for a turnover order directing Isaac to deliver the blue diamond. The trial court granted that application and ordered Isaac to turn over the diamond within three days or face a contempt order. Instead of complying with the court order, however, Isaac flouted the order by shipping the blue diamond to New York on consignment for sale. The trial court set contempt trial for May 24, 2018.
As the day of Isaac's contempt trial approached, he enlisted Gary Barnett, an "old friend," to help him resolve all of the pending matters regarding enforcement and collection of the judgment. On the day before the contempt trial was to begin, Isaac and Daniel executed a "binding" settlement agreement (the enforcement agreement). As pertinent here, the enforcement agreement provided that (1) Daniel would agree to accept approximately $2 million less from Isaac than the judgment required, and (2) both brothers would dismiss all of their pending lawsuits and appeals. The enforcement agreement further provided that Isaac would satisfy his $7 million debt to Daniel as follows: (1) Isaac and his wife would assign to Barnett their rights in $5 million worth of real estate in an investment "controlled by" Barnett, and Barnett would in turn pay Daniel $5 million within 90 days; (2) Isaac and his wife would pay $500, 000 directly to Daniel (or more, if payment is delayed); (3) Isaac and his wife would give up their rights to half of the balance of a joint bank account; and (4) Isaac would give up his right to half of the blue diamond, but if Daniel sold the diamond during the two years after the settlement for more than $5 million, any amount over $5 million was to be split between the brothers. The enforcement agreement also provided that (1) Daniel was to return five "Fancy Yellow . . . Radiant Cut" diamonds to Isaac; (2) any recovery from a pending "Custom's audit," as well as "legal fees and costs" incurred to pursue that audit, would be shared equally by the brothers; and (3) Isaac was to "own PMI, solely and exclusively."
Also as pertinent here, the enforcement agreement contains an arbitration clause stating that "[i]f issues arise between Isaac and [his wife], and Daniel, they agree that [Barnett] will be the sole and binding arbitrator of all such issues."
As required by the enforcement agreement, Isaac and Daniel dismissed all the pending proceedings against one another, Isaac and his wife assigned to Barnett their $5 million interest in the real estate venture, Isaac paid Daniel $500, 000, Isaac relinquished his rights to the bank account, and Isaac handed over the blue diamond.
On April 13, 2020, Isaac filed a verified petition in the trial court (1) to "set aside" the judgment, and (2) to compel a new arbitration of "approximately 50 issues" to revisit the dissolution of PMI based on a forensic audit Isaac had recently commissioned and which, in Isaac's view, revealed "embezzlement" by Daniel.[3]The petition itself only identified 13 of the issues; the rest were buried in a spreadsheet attached as an exhibit to Isaac's declaration in support of the petition. Isaac sought to invoke the arbitration clause in the enforcement agreement. Isaac maintained he was entitled to at least $28 million.
After further briefing and a hearing, the trial court denied the petition on January 20, 2021. To the extent Isaac was attempting to overturn the amended arbitration award, the court ruled that Isaac's petition constituted both an untimely petition to vacate that award and an untimely motion for reconsideration. To the extent Isaac was attempting to initiate a new arbitration, the court ruled that the "particular controversies raised" in the petition "are not arbitrable" under the enforcement agreement's arbitration clause because that "clause applies to any disputes regarding the enforcement of the [enforcement] agreement"-that is, "for the collection of the judgment"-and the parties had "already satisfied the judgment," so there "there is nothing to be arbitrated" pursuant to that...
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