Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County, Super. Ct. No. SC092592 Elizabeth A. Grimes, Judge.
Law Offices of Robert B. Mobasseri, Robert B. Mobasseri and David Alan Cooper, for Defendant and Appellant.
Sragow & Sragow, Allen P. Sragow and Michael O. Libraty for Plaintiff and Respondent.
TURNER, P. J.
I. INTRODUCTION
Defendant, Benny Newman, appeals from a judgment confirming an arbitration award in favor of plaintiff, Amusement Industry, Inc., in the amount of $400,681.75 plus costs. Defendant asserts the award is predicated upon an illegal contract for the sale of real property which violates the statute of frauds. (Civ. Code, § 1624.) Defendant argues the award should not have been confirmed because his wife and co-owner of the property, Jasmine Newman, did not sign either the sales contract or a document allowing him to sell her one-half interest. We affirm the judgment confirming the arbitration award.
II. BACKGROUND
On May 21, 2007, plaintiff filed a specific performance complaint regarding a written contract to purchase real property owned by the Newmans as tenants-in-common. The complaint was initially brought against the Newmans and an escrow company. The only parties to this appeal are plaintiff and defendant, who were ordered to arbitrate their dispute on July 27, 2007. Plaintiff dismissed its complaint against Mrs. Newman on December 4, 2007.
Plaintiff’s arbitration complaint sought as remedies specific performance and damages for contract breach, fraud and negligent misrepresentation. Plaintiff subsequently withdrew the specific performance request. The statute of frauds was raised as an affirmative defense in the Newmans’ first amended answer to the complaint “insofar as” Mrs. Newman was concerned. The first amended answer was filed prior to the filing of the arbitration complaint. The record on appeal does not show that defendant expressly raised the statute of frauds defense before the arbitrator. Rather, at the arbitration, defendant asserted, among other things: the property was community property and thus subject to the requirements imposed by Family Code section 1102, subdivision (a) requiring that both spouses execute an instrument conveying the parcel; defendant never stated he had the power to bind Mrs. Newman; defendant never represented she would sign the contract; and after Mrs. Newman exercised her right to void the sales contract, it was unenforceable.
The arbitrator found defendant breached a valid contract to sell the property. In rejecting defendant’s Family Code section 1102, subdivision (a) defense, the arbitrator found that, contrary to their testimony, the Newmans did not always hold the property as community property. The couple acquired the property as a limited partnership and then converted it to a tenancy-in-common. Mrs. Newman had also executed two quitclaim deeds to defendant which converted the parcel to his separate property. The parcel was not converted back to community property for a lengthy period of time. The arbitrator found that the couple did not hold the property as tenants-in-common by accident or inadvertence. The award stated: “The Arbitrator was not convinced or persuaded that they always intended to hold all of their property as community property. They had knowingly held property as separate property and as limited partners....” According to the arbitrator, the Family Code section 1102, subdivision (a) defense for community property was unavailable to defendant because the property was held with Mrs. Newman as tenants-in-common. As a tenant-in-common, defendant had the right to contract to convey his one-half interest in the property to plaintiff. The arbitrator found that defendant’s conduct regarding the sale was not fraudulent. Defendant was found to have made negligent misrepresentations which plaintiff justifiably relied upon. But, the arbitrator found defendant did not make any misrepresentations with intent to defraud. The arbitrator awarded plaintiff contract damages in the amount of $275,000 plus $14,657.50 for transactional work. The arbitrator also awarded plaintiff its attorney fees in the amount of $109,500 plus $1,524.25 in costs.
On June 16, 2009, plaintiff filed a petition to confirm the arbitration award. Defendant opposed the petition arguing the trial court should postpone its ruling on the petition to confirm the award pursuant to Code of Civil Procedure section 1281.2, subdivision (c). This was because Mrs. Newman had a pending cross-complaint to void the sale contract. And, as such, defendant asserted there was a possibility of inconsistent rulings between the arbitrator and the trial court. Defendant reminded the trial court that the issue of inconsistent rulings had been raised arguendo in response to plaintiff’s petition to compel arbitration. Plaintiff replied that defendant had not raised any issues in response to the petition which precluded the trial court from confirming the award. And, plaintiff argued, section 1281.2, subdivision (c) did not authorize the trial court to postpone the confirmation of an award under section 1286. Plaintiff’s petition to confirm the award was granted. After judgment was entered against defendant, this timely appeal followed.
All further statutory references are to the Code of Civil Procedure unless otherwise indicated.
III. DISCUSSION
Defendant argues the award must be vacated because the sales contract was illegal in that it violated the statute of frauds. We disagree. First, defendant has forfeited any statute of frauds defense by his failure to raise the issue in the trial court in response to the petition to confirm the arbitration award. (In re Marriage of Benson (2005) 36 Cal.4th 1096, 1104, fn. 3; Howards v. Adams (1940) 16 Cal.2d 253, 257; Secrest v. Security National Mortgage Loan Trust 2002-2 (2008) 167 Cal.App.4th 544, 551-552.) We disagree with defendant that the issue was preserved because the statute of frauds was raised in the first amended answer to the complaint as to Mrs. Newman and through implicit arguments at the arbitration. This is because defendant did not assert the defense prior to entry of the judgment on the petition to confirm the award and may not do so for the first time on appeal. (Howards v. Adams, supra, 16 Cal.2d at p. 257 [even though statute of frauds was raised in answer, party waives right to rely on defense in an appellate court when it is not pursued in the trial court]; see also Secrest v. Security National Mortgage Loan Trust 2002-2, supra, 167 Cal.App.4th at pp. 551-552.)
Second, even if the statute of frauds defense had not been forfeited, the issue is not subject to judicial review. Normally, judicial review of an arbitration award is limited to those situations enumerated in section 1286.2 to vacate an award or section 1286.6 to correct the award. (Advanced Micro Devices, Inc. v. Intel Corp. (1994) 9 Cal.4th 362, 366; Moncharsh v. Heily & Blasé (1992) 3 Cal.4th 1, 26-28.) Furthermore, our Supreme Court has held that the general rule is that an arbitrator does not exceed his or her powers simply by erroneously deciding issues of law or fact. (Cable Connection, Inc. v. DIRECTV (2008)44 Cal.4th 1334, 1360; Gueyffier v. Ann Summers, Ltd. (2008) 43 Cal.4th 1179, 1184; Moshonov v. Walsh (2000) 22 Cal.4th 771, 775-777; Advanced Micro Devices, Inc. v. Intel Corp., supra, 9 Cal.4th at pp. 372-375.) Unless the parties expressly agree otherwise, an arbitrator’s award may not be vacated on the ground that a legal error was an act in excess of the arbitrator’s power. (Cable Connection, Inc. v. DIRECTV, supra, 44 Cal.4th at pp. 1360-1361; Gueyffier v. Ann Summers, Ltd., supra, 43 Cal.4th at p. 1184; Moshonov v. Walsh, supra, 22 Cal.4th at pp. 775-776; Moncharsh v. Heily & Blasé, supra, 3 Cal.4th at p. 28.) Our Supreme Court has further noted, “‘Inherent in that power is the possibility the arbitrator may err in deciding some aspect of the case.’” (Cable Connection, Inc. v. DIRECTV, supra, 44 Cal.4th at p. 1360 quoting Gueyffier v. Ann Summers, Ltd., supra, 43 Cal.4th at p. 1184.)
Section 1286.2 provides: “(a) Subject to Section 1286.4, the court shall vacate the award if the court determines any of the following: [¶] (1) The award was procured by corruption, fraud or other undue means. [¶] (2) There was corruption in any of the arbitrators. [¶] (3) The rights of the party were substantially prejudiced by misconduct of a neutral arbitrator. [¶] (4) The arbitrators exceeded their powers and the award cannot be corrected without affecting the merits of the decision upon the controversy submitted. [¶] (5) The rights of the party were substantially prejudiced by the refusal of the arbitrators to postpone the hearing upon sufficient cause being shown therefore or by the refusal of the arbitrators to hear evidence material to the controversy or by other conduct of the arbitrators contrary to the provisions of this title. [¶] (6) An arbitrator making the award either: (A) failed to disclose within the time required for disclosure a ground for disqualification of which the arbitrator was then aware; or (B) was subject to disqualification upon grounds specified in Section 1281.91 but failed upon receipt of timely demand to disqualify himself or herself as required by that provision. However, this subdivision does not apply to arbitration proceedings conducted under a collective bargaining agreement between employers and employees or between their respective representatives. [¶] (b) Petitions to vacate an arbitration award pursuant to Section 1285 are subject to the provisions of Section 128.7.”
Section 1286.6 provides: “Subject to Section 1286.8, the court, unless it vacates the award pursuant to Section 1286.2, shall correct the award and confirm it as corrected if the court determines that: [¶] (a) There was an evident miscalculation of figures or an evident mistake in the description of any person, thing or property referred to in the award; [¶] (b) The arbitrators exceeded their powers but the award may be corrected without affecting the merits of the decision upon the controversy submitted; or [¶] (c) The award is imperfect in a matter of form, not affecting the merits of the controversy.”
Third, notwithstanding the limited scope of judicial review, defendant claims the award is subject to judicial review because the sales contract was illegal due to the noncompliance with the statute of frauds. Civil Code section 1624 provides in part: “(a) The following contracts are invalid, unless they, or some note or memorandum thereof, are in writing and subscribed by the party to be charged or by the party’s agent.... [¶] (3) An agreement for the leasing for a longer period than one year, or for the sale of real property, or of an interest therein; such an agreement, if made by an agent of the party sought to be charged, is invalid, unless the authority of the agent is in writing, subscribed by the party sought to be charged.” It is well-established that the word “invalid” as used in the statute of frauds means the contract is voidable. (O’Brien v. O’Brien (1925) 197 Cal. 577, 586; Masin v. Drain (1984) 150 Cal.App.3d 714, 717-718; Zimmerman v. Bank of America Nat. Trust and Savings Ass’n (1961) 191 Cal.App.2d 55, 57, 59; see also Long v. Rumsey (1938) 12 Cal.2d 334, 344; Guthman v. Moss (1984) 150 Cal.App.3d 501, 509.) Thus, a contract which is not executed in compliance with the statute of frauds is not null and void; rather, it is merely voidable. (Masin v. Drain, supra, 150 Cal.App.3d at pp. 717-718; Zimmerman v. Bank of America Nat. Trust and Savings Ass’n, supra, 191 Cal.App.2d 57, 59; Peyton v. Cly (1960) 184 Cal.App.2d 193, 196; see also Costa Serena Owners Coalition v. Costa Serena Architectural Committee (2009) 175 Cal.App.4th 1175, 1193.) Furthermore, if the statute of fraud invalidates a contract, the document is invalidated as to enforcement and only against the party who has not signed the agreement. (Far West Services, Inc. v. Livingston (1984) 156 Cal.App.3d 931, 938-939; see also Angell v. Rowlands (1978) 85 Cal.App.3d 536, 540-541.) The agreement is valid as to all parties who signed it. This is true even though the signature of other persons or entities may be required unless there is an express intention that the contract is not binding if all parties do not sign. (Cavanaugh v. Casselman (1891) 88 Cal. 543, 550; Rael v. Davis (2008) 166 Cal.App.4th 1608, 1617-1618; Angell v. Rowlands, supra, 85 Cal.App.3d at pp. 540-541; Kaneko v. Okuda (1961) 195 Cal.App.2d 217, 225.) In this case, the arbitration award was between two signatories of the real estate sales contract—plaintiff and defendant. Because defendant signed the sales contract, it is valid as to him. In any event, the statute of frauds defense is unavailable to defendant after he signed the contract agreeing to convey his interest in the property.
Defendant argues the purchase agreement could not be construed to validate only his interest without Mrs. Newman’s interest being part of the bargain. Rather, according to defendant, because Mrs. Newman did not sign the agreement purporting to convey the entire interest, there was never a binding contract as stated by our Supreme Court in Tewksbury v. O’Connell (1862) 21 Cal. 60, 69. In Angell v. Rowlands, supra, 85 Cal.App.3d at pages 540-543, the Court of Appeal explained the issue was in conflict by reason of two lines of authority—Tewksbury and Cavanaugh v. Casselman (1891) 88 Cal. 543, 549. The rule in the Tewksbury line of cases held an agreement is not complete or binding unless it is signed by all the parties who are purportedly bound by the contract. (Angell v. Rowland, supra, 85 Cal.App.3d at pp. 540-541.) By contrast, in Angell, the Court of Appeal explained, “[T]he Cavanaugh line of cases holds that a signer cannot escape liability unless he affirmatively establishes that the signatures of all parties were contemplated as being a condition precedent to the validity of the contract.” (Angell v. Rowland, supra, 85 Cal.App.3d at pp. 540-541.) Angell adopted the Cavanaugh line of cases and articulated the following standard: “[A] contract is invalid if not signed by all parties purportedly bound only when it is shown, either by parol or express condition, that the contract was not intended to be complete until all parties had signed. Conversely, in the absence of a showing that the contract is not intended to be complete until signed by all parties, the parties who did sign will be bound.” (Angell v. Rowland, supra, 85 Cal.App.3d at p. 542; see Peterson Development Co. v. Torrey Pines Bank (1991) 233 Cal.App.3d 103, 113-114.) Here, defendant signed the sales agreement. Thus, the contract was clearly binding as to defendant as to any interest possessed. (Fagelbaum & Heller LLP v. Smylie (2009) 174 Cal.App.4th 1351, 1365; see Johnson v. Lehtonen, supra, 151 Cal.App.2d at p. 581 quoting Miller v. Dyer (1942) 20 Cal.2d 526, 529.)
The arbitrator ruled defendant was a tenant-in-common. As such, defendant had the right to dispose of his undivided interest. (See Buller v. Buller (1944) 62 Cal.App.2d 694, 698 [tenant-in-common has the right to dispose of his or her own undivided share but may not sell the whole property]; Payne v. Callahan (1940) 37 Cal.App.2d 503, 517 [same] disapproved on a different point in La Laguna Ranch Co. v. Dodge (1941) 18 Cal.2d 132, 138; Waterford Irr. Dist. v. Turlock Irr. Dist. (1920) 50 Cal.App. 213, 217 [same].) The agreement was binding as to any share defendant could convey. (See Johnson v. Lehtonen (1957) 151 Cal.App.2d 579, 581 quoting Marshall v. Caldwell (1871) 41 Cal. 611, 615.) Given the facts and the state of the law, a court is not authorized to vacate the award. (Cable Connection, Inc. v DIRECT TV, supra, 44 Cal.4th at pp. 1360-1361; Moshonov v. Walsh, supra, 22 Cal.4th at pp. 775-776.) Thus, the trial court did not err in entering a judgment confirming the award against defendant as no grounds existed for vacating or correcting it. (§§ 1286, 1287.4; Graham v. Scissor-Tail, Inc. (1981) 28 Cal.3d 807, 811; Rubin v. Western Mutual Ins. Co. (1999) 71 Cal.App.4th 1539, 1545.)
IV. DISPOSITION
The judgment is affirmed. Plaintiff, Amusement Industry, Inc., is awarded its costs on appeal from defendant, Benny Newman.
We concur: ARMSTRONG, J., MOSK, J.