Sametc, LLC v. Elms
| Docket Number | A161771 |
| Decision Date | 18 July 2023 |
| Parties | SAMETC, LLC, Petitioner and Respondent, v. TED ELMS et al., Defendants; REGINALD HINDLEY Appellant. |
| Court | California Court of Appeals Court of Appeals |
NOT TO BE PUBLISHED
Order Filed Date: 8/4/23
It is ordered that the opinion filed herein on July 18, 2023, be modified as follows:
On page 5, the first and second sentences of the first full paragraph beginning, is changed to: Sametc moved for reconsideration of the Initial Arbitration
Award. It argued Arbitrator Block should allow Jacques's sale to Sametc to proceed, conditionally approved on Epstein divesting himself of any interest in Sametc and the TIC thereby eliminating any conflict of interest.
There is no change in judgment. The petition for rehearing is denied.
In 2014, the San Francisco Superior Court issued a judgment (the 2014 Judgment) confirming an arbitration award (the 2014 Arbitration Award) that allowed respondent Sametc, LLC (Sametc) to maintain its tenant-in-common (TIC) ownership interest in certain San Francisco real property (the Property).
At the heart of this appeal is a provision in the 2014 Arbitration Award-as confirmed and incorporated in the 2014 Judgment-ordering that Sametc could maintain its TIC interest in the Property provided that Mark Epstein, a Sametc member and counsel to some of the tenants in the TIC arrangement must withdraw from Sametc membership and not otherwise become an owner or hold a TIC interest in the Property. Since the entry of the 2014 Judgment, the parties have engaged in a series of disputes on a variety of matters, including whether it was appropriate several years later for Epstein to regain membership in Sametc and purchase a TIC interest in the Property.
The dispute over Epstein's ability to regain a TIC interest turns on an ambiguity in the provisions in the 2014 Judgment barring Epstein from holding an ownership interest in the Property. In the interpretation of appellant Reginald Hindley, who participated in the underlying arbitration, the bar is permanent and therefore Epstein may not hold any interests in Sametc or directly in the Property-ever. In Sametc's interpretation, the bar was temporary, and is no longer operative given the changed circumstances years later.
This appeal arises out of a Superior Court proceeding in which Hindley sought enforcement of the 2014 Judgment, arguing that Epstein "secretly" evaded what Hindley claims is permanent banishment from Sametc and any TIC ownership in the property. Rather than accept Hindley's characterization of the underlying arbitration award, the court found his motion to be procedurally defective and suggested that Sametc move for clarification of the 2014 Judgment.
Sametc took up the suggestion and filed a clarification motion (the Clarification Motion). The court ruled for Sametc in 2020 determining that the disputed language in the 2014 Judgment was a temporary bar that remained in place to guard against conflict of interest risks and other potential sources of friction arising out of extant circumstances when the 2014 Arbitration Award was rendered. The court then remanded the matter to arbitration to determine whether any such circumstances continued to exist.
Hindley's effort to enforce a permanent bar on Epstein's involvement in Sametc and TIC ownership in the Property having backfired, he now appeals from that 2020 court order on a variety of grounds, attacking the order procedurally as a threshold matter, and then attacking it on the merits as wrong. Specifically, he claims Sametc lacked standing to bring its Clarification Motion; the court lacked jurisdiction to issue its 2020 order; and finally, on the merits, the court erred in determining that the provision in the 2014 Arbitration Award putting the disputed bar in place was only temporary.
Sametc, for its part, argues that Hindley has appealed from a non-appealable order, and on the merits contends that the trial court's 2020 order was correct in all respects.
We conclude that (1) Sametc had standing to bring the Clarification Motion; (2) Hindley has appealed from an appealable order; (3) the superior court had jurisdiction to determine whether the bar contained in the 2014 Judgment is temporary or permanent; (4) and the court correctly ruled that the bar is temporary; but that (5) the court erroneously remanded the matter to an already completed arbitration proceeding.
Hindley, Sametc, and Epstein are the current TIC owners of the Property, a six-unit residential building in San Francisco. This appeal stems from years of disputes between them, and others, regarding the Property. We summarize only those matters relevant to this appeal.
In January 2014, Hindley and certain individuals who are not parties to this appeal, John Sollner, Ted Elms (and his wife Pauline), and Scott Jacques, held TIC ownership interests in the Property. They were bound by a tenant-in-common agreement (TICA), pursuant to which they were required to arbitrate any dispute related to the Property that was not resolved through mediation, including any deadlock between them.
That same month, Jacques sold his ownership interest in the Property to Sametc, a limited liability company which included Epstein as one of its three members. Epstein was then a partner in a law firm, Seiler Epstein Zielger &Applegate, LLP (SEZA), which was representing some of the owners in an arbitration proceeding, as well as in lawsuits against third parties, all regarding the Property. SEZA prepared an agreement, known as the "Four-Way Agreement," that governed the acquisition and disposition of units in the Property by Solner, Ted and Pauline Elms, Jacques, and Hindley.
Hindley and Elms disapproved of Jacques's sale to Sametc, creating a deadlock. Pursuant to the arbitration clause in the TICA, the TIC owners arbitrated issues regarding that sale and other matters before JAMS arbitrator Steven Block. Hindley and Elms asserted numerous reasons for their disapproval of the sale, including potential conflicts of interest resulting from Epstein being both a member of Sametc and counsel for Property-related litigation, especially because Hindley and Elms were required to reimburse Jacques and Sollner for some of the fees incurred by SEZA in the litigation against third parties as a common expense of the TIC under the Four-Way Agreement. Hindley contended SEZA represented him because he was obligated to pay a part of this common expense.
In February 2014, Arbitrator Block, in a written ruling, ordered that Jacques's sale to Sametc was null and void, among other reasons, because a majority of the three TIC owners (Hindley and Elms) had disapproved of the sale and because it was a conflict of interest for Epstein to hold an interest in both Sametc and the TIC at that time and "in the future" (Initial Arbitration Award). According to Arbitrator Block,
Jacques moved for reconsideration of the Initial Arbitration Award. He argued Arbitrator Block should allow his sale to Sametc to proceed, conditionally approved on Epstein divesting himself of any interest in Sametc and the TIC, thereby eliminating any conflict of interest. In April 2014, Arbitrator Block granted Jacques's reconsideration motion and issued the 2014 Arbitration Award. He approved the sale, conditioned on Epstein "divesting himself of a membership" in Sametc and not "otherwise becoming an owner or tenant in common" in the Property. Arbitrator Block wrote: (Underline in the original). He ordered,
Arbitrator Block addressed other arbitration issues in another award issued shortly thereafter (Multiple Issues Arbitration Award). In the Multiple Issues Arbitration Award, he indicated that SEZA represented Jacques and Sollner only in litigation work regarding third parties.
Sametc and Sollner petitioned the San Francisco County Superior Court in case number CPF-14-513720 (CPF-14-513720) for a judgment confirming the 2014 Arbitration Award. Over opposition from Hindley and Elms, the court determined that Epstein had divested himself from Sametc, confirmed the 2014 Arbitration Award, and entered the 2014 Judgment. The court adjudged Sametc to be standing in the shoes of Jacques as the owner of his interest in the Property.
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