Opinion
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
APPEAL from orders of the Superior Court of Los Angeles County. No. BP087902 Mitchell L. Beckloff, Commissioner. Reversed and remanded to the trial court with directions.
Oldman Cooley Sallus Gold Birnberg & Coleman, Marc L. Sallus and Justin B. Gold for Plaintiff and Appellant Marlene Cohen.
Cohen & Associates, Inc. and Steven Cohen for Plaintiffs and Appellants Steven Cohen and Venmar Development, Inc.
Valensi Rose, Wayne R. Johnson, Bruce D. Sires, Lynda I. Chung and Laurie Murphy for Plaintiff and Appellant Valensi Rose.
Law Offices of Paul F. Cohen and Paul F. Cohen for Plaintiff and Appellant Scott Cohen.
Hinojosa & Wallet, Andrew M. Wallet and Rebekah E. Swan for Defendant and Respondent.
ASHMANN-GERST:, J.
These consolidated appeals are brought by Marlene Cohen (Marlene), Steven Cohen (Steven), Venmar Development, Inc. (Venmar), and Paul F. Cohen (Paul) as guardian ad litem for Scott Cohen (Scott) (collectively the Cohen parties), and also Valensi Rose, PLC (Valensi). In the midst of litigation over the division of assets in the Wells Family Trust (trust) and other issues, the Cohen parties and Dolores Burger (Burger) attended a 19-hour mediation with Honorable Robert M. Letteau (Ret.) and entered into a settlement agreement. When a dispute arose regarding the allocation of estate taxes, the Cohen parties requested binding arbitration before Judge Letteau. They argued, in part, that the settlement agreement was invalid because there was no meeting of the minds regarding the payment of estate taxes. Judge Letteau agreed and entered an order invalidating the settlement agreement. The trial court, however, concluded that Judge Letteau exceeded his powers and remanded the matter back to Judge Letteau to interpret the disputed provisions. On appeal, the Cohen parties raise a host of arguments, one of which is that Judge Letteau did not exceed his powers. Because we agree, we need not reach the other arguments.
Marlene is the cotrustee of the residuary and marital subtrusts of the Wells Family Trust.
Because multiple parties share Cohen as a last name, we have opted to use their first names for ease of reference.
The following orders of the trial court are reversed: (1) the order granting Burger’s motion to enforce the settlement agreement; (2) the order denying Marlene’s petition for orders confirming the findings of Judge Letteau; (3) the order denying Marlene’s motion to vacate the minute order approving settlement; and (4) the order awarding Burger attorney fees.
FACTS
The trust
In 1975, Sam and Tamara Wells executed the trust and named themselves as trustees and trustors. They executed a restatement of the trust in 1983 (restatement). Sam Wells died on April 20, 1988. Pursuant to the restatement, the trust was divided into three subtrusts: the survivor’s trust, the marital trust, and the residuary trust. Tamara Wells was the sole trustee. Eventually, Seymour S. Matthew (Seymour) took over as trustee of the survivor’s trust. Burger and Marlene took over as cotrustees of the marital trust and residuary trust.
The various petitions and actions arising from the trust
Seymour filed a petition for instructions requesting the probate court to allow the sale of real properties held in the trust, or to allow the majority vote of Burger, Marlene and Seymour to determine how to manage the real properties. Burger filed a petition to determine that Scott and Marlene violated the no contest clause due to Scott’s request for the sale of trust properties. That action was dismissed. Burger filed and amended additional petitions to remove Seymour and Marlene as trustees, for an accounting and surcharge, and for the appointment of Burger as sole trustee of the survivor’s trust, marital trust and residuary trust. After various demurrers, Seymour was dismissed and all that remained were issues pertaining to the marital and residuary trusts. Marlene filed a petition for declaratory relief requesting a determination that her response to Burger’s petition did not violate the no contest clause. Burger filed a petition for declaratory relief seeking to remove Seymour as trustee and to surcharge Seymour, Marlene, Steven, and Venmar. Paul filed a petition for declaratory relief seeking to have the no contest clause enforced as to Burger. Burger was named as a defendant in a malicious prosecution action.
Valensi is a law firm. It represented Seymour.
The settlement agreement; the request for approval; the dispute over the order
The parties mediated their disputes before Judge Letteau and settled. They signed a global settlement agreement to resolve all the pending petitions and actions. Paragraph 28 provided: “Any disputes in the interpretation of this agreement shall be submitted to Judge Letteau for binding, non-appealable arbitration.” Marlene filed the settlement agreement with the probate court and asked that it be approved. At the approval hearing, one of the parties read some supplemental language for the settlement agreement into the record. As supplemented, the settlement agreement was approved. Prompted by the parties, the probate court ruled that all matters would be dismissed upon the filing of a proposed order setting forth the terms of the settlement.
Despite negotiations, the parties could not agree on the meaning of the settlement agreement for purposes of the proposed order. Marlene’s counsel requested that Judge Letteau arbitrate the interpretation of the settlement agreement and resolve the dispute.
The arbitration
In an August 23, 2006, letter, Marlene’s counsel wrote to Judge Letteau and averred: “Eight weeks after our 19-hour mediation session, it has become apparent that the [settlement agreement] has failed. I wish to make clear what the issues are that are going to be before you on the hearing of September 13[, 2006].” A long list of issues was presented. Then, in the second to last paragraph, the letter opined that if the parties did not have a meeting of the minds on material terms, and if the settlement agreement could not be reformed, then “a determination should be required that no enforceable [settlement agreement] exists.”
In a responsive letter dated September 1, 2006, Burger’s counsel stated that “[c]ontrary to [Marlene’s] assertion, we do, in fact, having a binding [settlement agreement].” Burger’s counsel went on to argue why the settlement agreement was enforceable.
In Marlene’s arbitration brief, she once again argued that, due to a lack of mutual assent, the settlement agreement was not enforceable. Paul, as guardian ad litem for Scott, also argued that the settlement agreement could not be binding if the parties failed to agree on essential terms.
When the parties convened, Judge Letteau recognized that some of the parties wanted the settlement agreement invalidated. Burger’s attorney stated: “I will maintain there’s an agreement.” Then, while making a long statement, he said that “[w]hat [the Cohen parties are] saying is incredulous to me and amazing to me. We don’t have a meeting of the minds, . . . . With respect to what happened in the allegations, you know, so be it, but I think [the] bottom line is, we have a meeting of the minds, we have a settlement, we adjusted for the taxes for who got what, and we expressly said that.”
Judge Letteau asked Burger’s counsel: “If there was a mistake, an honest mistake [and] . . . [a] failure of the meeting of the minds, you know, maybe—we’re all together, you are extremely competent, experienced lawyers[,] but if there was such a mistake[,] by undoing this [settlement agreement], what’s the prejudice to your clients?” Burger’s counsel answered: “Well, we have a—we have a tremendous amount of costs going forward if we have to litigate this.”
Eventually Judge Letteau stated that he would probably set aside the settlement agreement if Burger was repaid her mediation costs. Burger’s counsel told the judge: “I am very concerned by the choice given because I don’t think, with all due respect, you can make that ruling. Either we have an agreement or we don’t.” Subsequently, Burger’s counsel stated that “all parties agreed that [Judge Letteau] would be the arbiter and make a final decision . . . if we find ourselves in this situation.”
Burger contends that when her counsel made this statement, he was objecting to Judge Letteau’s power to invalidate the settlement agreement. The context shows otherwise. Her counsel was saying that Judge Letteau could not negotiate with the Cohen parties and essentially tell them that even though there is a valid settlement agreement, he will set it aside if they pay Burger’s costs. In other words, her counsel was trying to suggest that if Judge Letteau really thought there was no meeting of the minds, then he could not place conditions on invalidating the settlement agreement. We express no opinion regarding Judge Letteau’s ruling.
Later, Judge Letteau stated: “I thought we had an agreement. I thought we all understood that agreement. I’m persuaded now that we weren’t on the same page.” He set aside the settlement agreement, explaining: “I just don’t think there was a meeting of the minds.” Burger’s counsel asked: “Your honor, with all due respect, with no settlement agreement, how do you have any authority to make any kind of order?” The Cohen parties’ counsel replied: “We submitted it.” And Judge Letteau said: “Because they made that offer and I accepted the offer.”
According to Burger, this statement was an objection to the arbitrability of the issue of the settlement agreement’s invalidity. It was not. For the sake of argument, Burger’s counsel assumed the invalidity of the settlement agreement. Burger’s counsel was merely questioning how Judge Letteau had the power to rule if his power stemmed from an invalid agreement. This issue has not been raised. But—as we explain in the body of this opinion—an arbitration provision is generally severed from an invalid agreement and remains enforceable.
On September 26, 2006, Judge Letteau signed an order setting aside the settlement agreement. It was served on October 16, 2006.
The petition to confirm; the petition to enforce
Marlene filed a petition to confirm Judge Letteau’s findings and a motion to vacate the minute order approving the settlement agreement, and Burger filed a petition to enforce the settlement agreement. Finding that the parties’ arbitration agreement was akin to the limited arbitration agreement in California Faculty Assn. v. Superior Court (1998) 63 Cal.App.4th 935 (California Faculty), the trial court ruled that Judge Letteau exceeded his authority. It granted Burger’s motion to enforce the settlement agreement and remanded the matter back to Judge Letteau for an interpretation of the estate tax provisions, among others.
Burger argued, and the trial court agreed, that her counsel objected that Judge Letteau lacked the power to invalidate the settlement agreement. As a result, the trial court found that she was not estopped from challenging the validity of his order. We note that we have found no evidence in the record that Burger’s counsel objected to Judge Letteau’s ability to rule as he did. She states in her brief: “During the [bizarre] arbitration hearing, [Burger’s counsel] repeatedly stated his objection to Judge Letteau’s ability to set aside the [settlement agreement].” She cites to pages 2032, 2051-2055, 2063 and 2079 of the appellants’ appendix. Those pages appear in the transcript of the arbitration. Burger’s counsel never objected to the arbitrability of the issue of invalidity, nor did he suggest that the parties should obtain a ruling from the trial court regarding the scope of Judge Letteau’s powers.
The Cohen parties moved for a new trial. The motion was denied.
The Cohen parties and Valensi appealed the trial court’s orders of December 19, 2006, January 10, 2007, January 22, 2007, and January 24, 2007, in which it denied Marlene’s petition to confirm Judge Letteau’s findings and her motion to vacate the order approving the settlement agreement, and it granted Burger’s motion to enforce the settlement pursuant to Code of Civil Procedure section 664.6. Subsequently, Burger was awarded $38,448.50 in attorney fees she incurred in moving to enforce the settlement agreement. The Cohen parties appealed the May 9, 2007, award of attorney fees. All appeals were consolidated.
Valensi contends that it is an aggrieved party and has standing to appeal. This is not challenged by Burger.
DISCUSSION
I. Judge Letteau did not exceed his powers.
The parties dispute whether Judge Letteau had the power to set aside the settlement agreement. We conclude that he did. The issues presented are legal. Thus, below, we parse the issues in the first instance. (Rayyis v. Superior Court (2005) 133 Cal.App.4th 138, 150.)
a. The scope of an arbitrator’s powers.
An arbitrator’s powers spring from the agreement to arbitrate. (Advanced Micro Devices, Inc. v. Intel Corp. (1994) 9 Cal.4th 362, 375.) Awards in excess of those powers can be corrected or vacated by a court. (Ibid.) That said, “[a]rbitration is a favored method of dispute resolution and agreements to arbitrate disputes are liberally interpreted. ‘In California, the general rule is that arbitration should be upheld unless it can be said with assurance that an arbitration clause is not susceptible to an interpretation covering the asserted dispute.’” (Izzi v. Mesquite Country Club (1986) 186 Cal.App.3d 1309, 1315.) It is no shield to arbitration that an opposing party asserts the invalidity of the agreement containing an arbitration clause. (St. Agnes Medical Center v. PacifiCare of California (2003) 31 Cal.4th 1187, 1198.) Arbitration clauses are separable from the contracts in which they are embedded. When parties agree to arbitrate, they established “‘their intent that disputes coming within the agreement’s scope be determined by an arbitrator.’” (Id. at p. 1199.)
b. The rules of interpretation.
Interpretation of an arbitration agreement is a question of law unless it turns upon conflicting evidence. In the absence of conflicting evidence, an appellate court will employ the rules of contract interpretation and independently determine the agreement’s meaning. (Duffens v. Valenti (2008) 161 Cal.App.4th 434, 443; Segal v. Silberstein (2007) 156 Cal.App.4th 627, 631.) The “language of a contract is to govern its interpretation, if the language is clear and explicit, and does not involve an absurdity.” (Civ. Code, § 1638.) Generally, the “intention of the parties is to be ascertained from the writing alone, if possible.” (§ 1639.) But that is not always possible. If a contract is ambiguous—it is reasonably susceptible to more than one interpretation—other rules of interpretation will apply. (Oceanside 84, Ltd. v. Fidelity Federal Bank (1997) 56 Cal.App.4th 1441, 1448; Palmer v. Truck Ins. Exchange (1999) 21 Cal.4th 1109, 1118.) For example, words are to be understood in their ordinary and popular sense (§ 1644), and a contract can be explained by reference to the circumstances under which it was made (§ 1647).
All further statutory references are to the Civil Code unless otherwise indicated.
Bono v. David (2007) 147 Cal.App.4th 1055, 1067, cited by Burger, explained that “the decision as to whether a contractual arbitration clause covers a particular dispute rests substantially on whether the clause in question is ‘broad’ or ‘narrow.’ [Citations.] A ‘broad’ clause includes those using language such as ‘any claim arising from or related to this agreement’ [citation].”
c. California Faculty.
The trial court relied on California Faculty in finding that the arbitration provision in the settlement agreement was narrow and did not empower Judge Letteau to reach the submitted issue of invalidity. Burger relies on California Faculty on appeal. We take the time to explicate it in depth.
In California Faculty, the facts were these. The president of a university denied tenure and promotion to a probationary faculty member (grievant). The matter was submitted to arbitration pursuant to a grievance procedure in a collective bargaining agreement. The procedure provided, in part: “‘(d) The arbitrator’s award shall be based solely upon the evidence and arguments appropriately presented by the parties in the hearing and upon any post-hearing briefs. [¶] ‘(e) The arbitrator shall have no authority to add to, subtract from, modify or amend the provisions of this Agreement. [¶] ‘(f) The authority of an arbitrator with respect to granting appointment, reappointment, promotion or tenure shall be as follows: [¶] ‘In cases involving appointment, reappointment, promotion or tenure, the arbitrator shall recognize the importance of the decision not only to the individual in terms of his/her livelihood, but also the importance of the decision to the institution involved. [¶] ‘The arbitrator shall not find that an error in procedure will overturn an appointment, reappointment, promotion, or tenure decision on the basis that proper procedure has not been followed unless: [¶] ‘1. there is clear and convincing evidence of a procedural error; and [¶] ‘2. that such error was prejudicial to the decision with respect to the grievant. [¶] ‘The normal remedy for such a procedural error will be to remand the case to the decision level where the error occurred for reevaluation, with the arbitrator having authority in his/her judgment to retain jurisdiction. [¶] ‘An arbitrator shall not grant appointment, reappointment, promotion or tenure except in extreme cases where it is found that: [¶] ‘1. the final campus decision was not based on reasoned judgment; [¶] ‘2. but for that, it can be stated with certainty that appointment, reappointment, promotion or tenure would have been granted; and [¶] ‘3. no other alternative except that remedy has been demonstrated by the evidence as a practicable remedy available to resolve the issue. [¶] ‘The arbitrator shall make specific findings in his/her decision as to the foregoing. [¶] ‘In the event the [university] seeks to vacate an arbitration award in the manner prescribed by the California Code of Civil Procedure, the court may, among the other matters it considers, determine whether or not the arbitrator has exceeded his/her authority with respect to the foregoing.’” (California Faculty, supra, 63 Cal.App.4th at pp. 941–942.) The arbitrator overturned the president’s decision and directed that the university grant tenure to the faculty member and promote her to the rank of associate professor. (Id. at p. 937.)
The trial court vacated the arbitration award, which was affirmed on appeal. (California Faculty, supra, 63 Cal.App.4th at p. 937.) The appellate court noted that “the agreement in this case does not contain a standard arbitration clause, whereby the parties typically agree to arbitrate any or all disputes arising out of a particular contractual relationship.” (Id. at p. 945.) It concluded that “the decision on tenure and promotion is not submitted to arbitration in the first instance” and that the two tier scope of review regarding faculty decisions reflected “an intent that the arbitrator have only limited authority in this area.” (Id. at pp. 945–946.)
The court explained that “the arbitrator’s limited task is to review the decision-making process, under certain specific standards. If the arbitrator finds, by ‘clear and convincing evidence,’ that there has been error in the procedure which was prejudicial to the grievant, the arbitrator is authorized to remand the case ‘to the decision level where the error occurred’ so that the decision-makers can reevaluate and correct the error. . . . Only in ‘extreme cases’ is the arbitrator authorized to directly grant tenure or promotion. If the arbitrator takes this extreme measure, he or she must make three specific findings supporting that action. He or she must find that the decision made by the president regarding faculty status ‘was not based on reasoned judgment.’ Second, the arbitrator must be able to state ‘with certainty’ that, but for the lack of reasoned judgment, the candidate would have been granted tenure or promotion. Finally, the arbitrator must find that there was ‘no other . . . practicable remedy available to resolve the issue.’” (California Faculty, supra, 63 Cal.App.4th at p. 946.)
The procedure treated faculty decisions differently than other disputes. In the court’s view, the limitation on the arbitrator’s review furthered university policy providing that faculty decisions be made “only after a comprehensive peer review process to assess and evaluate a candidate’s professional qualifications and achievements.” (California Faculty, supra, 63 Cal.App.4th at p. 946.) Additionally, the court reasoned that “important public policy interests are served by restricting judicial, or as in this case arbitral, review of a [u]niversity’s decisions regarding lifetime academic tenure. Such decisions, because they ‘“comprehend discretionary academic determinations which . . . entail review of the intellectual work product of the candidate . . . [are] most effectively made within the university . . . .”’ [Citations.] ‘“[T]he peer review system has evolved as the most reliable method for assuring promotion of the candidates best qualified to serve the needs of the institution.”’ [Citation.]” (Id. at pp. 946–947.) A university is deserving of special consideration, and to that end courts are careful not to substitute their judgment for that of the university with respect of the qualifications of faculty members for tenure and promotion. (Id. at p. 947.)
The issue presented to the arbitrator was whether the grievant had submitted an extreme case where the president’s decision was not based on reasoned judgment. The California Faculty court determined that the arbitrator exceeded his authority because he simply substituted his judgment for the president’s. The arbitrator disagreed with the president’s finding that the grievant’s scholarly productivity was meager, and the arbitrator offered his own interpretation of the university’s appointment, retention, tenure and promotion policy standards and criteria, which were matters outside the collective bargaining agreement. He believed that the decisionmakers had not evaluated the evidence properly. Moreover, the arbitrator “stated he believed he was in a better position than the president to evaluate the grievant’s performance because” because the president reviewed a “‘cold record’” whereas the arbitrator heard testimony and could form impressions of what witnesses knew and did not know about the grievant’s scholarship and service. (California Faculty, supra, 63 Cal.App.4th at p. 951.) As a result, the “arbitrator based his decision in large part on evidence which the president could not have considered under [the appointment, retention, tenure and promotion policy]. The arbitrator weighed this evidence and wrote that he was ‘very impressed by the testimony of witnesses . . . who commented favorably on all aspects of the [grievant’s] performance including scholarship,’ while he discounted the views of some of the faculty reviewers who had voted to deny tenure, finding it ‘obvious’ that they had ‘little or no idea what the [grievant] has accomplished in her publications.” (Id. at pp. 951–952.) Last, the arbitrator noted that he was impressed by a committee member who was not present when the recommendations were made. (Id. at p. 952.)
The court concluded that the “arbitrator disregarded the clear intent of the parties as expressed in the restrictive language of the agreement describing a deferential review. Instead he undertook a reevaluation of the evidence, interpreted the applicable criteria and formed his own opinion regarding the grievant’s scholarly achievement. The award thus fails to conform to the specific limitations on the parties’ submission and intrudes on areas outside the scope of the arbitrator’s authority.” (California Faculty, supra, 63 Cal.App.4th at p. 952.)
d. Application of the law.
The question presented is whether the power to interpret the settlement agreement included the power to invalidate it. Restated, can it be said with assurance that Judge Letteau could not rule as he did?
We start with the language at issue. It applies to any disputes in the interpretation of the settlement agreement. The word “any” suggests an arbitration agreement with a broad scope that is only delimited by the meaning of “interpretation.” But that meaning is not readily apparent. It could be narrow, referring to a determination of the agreed terms. Or it could be broad, permitting the arbitrator to assess the legal effect of the document as a whole, including whether it is a nullity. The word “any” suggests the latter definition, not the former. Confronted with two competing definitions, we are faced with a dilemma.
We note that section 1638 implores us to avoid absurdities, and to that end we have analyzed the consequences of the competing interpretations in search of what is warned against. If the word interpretation is given a narrow meaning, then the arbitration agreement asks Judge Letteau to decide the agreed terms even in a situation where there was no agreement. This is an absurdity. The only way to avoid this conundrum is with a broader reading.
No less deserving of attention is section 1643. It provides that “[a] contract must receive such an interpretation as will make it lawful, operative, definite, reasonable, and capable of being carried into effect, if it can be done without violating the intention of the parties.” The arbitration provision becomes indefinite and unreasonable if it requires Judge Letteau to tell the parties what the settlement means even though there was no meeting of the minds. It is indefinite because it does not state that he has the power to unilaterally impose terms on the parties, and it is unreasonable because it left Judge Letteau in legal limbo.
The anatomy of this analysis would be incomplete without section 1647. The circumstances surrounding the settlement include the fact that it was achieved after a 19-hour mediation with Judge Letteau. Given that Judge Letteau was in a better position to determine whether there was a meeting of the minds, it is logical to conclude that the parties intended that he, rather than the trial court, have the authority to set aside the agreement for lack of mutual assent. As a practical matter, we must ask how an arbitrator can inquire into whether there is intent but be prohibited from determining that there is no intent. In the case of no intent, the arbitrator would become the author of a contract that neither party agreed to.
We arrive at this: The word interpretation can be construed broadly to mean assessment of the legal effect as well as meaning of the settlement agreement. And, in our view, this is a more a reasonable reading that a narrower one. Thus, we cannot say with assurance that Judge Letteau exceeded his powers. Our conclusion is consistent with precedent. (Vianna v. Doctors’ Management Co. (1994) 27 Cal.App.4th 1186, 1189 [California favors arbitration and it should be required unless the parties’ arbitration agreement clearly does not apply]; Hayes Children Leasing Co. v. NCR Corp. (1995) 37 Cal.App.4th 775, 788 [“Any ambiguity in the scope of the arbitration, . . . will be resolved in favor of arbitration”].)
e. Analysis of Burger’s arguments.
Burger exhorts us to follow the lead of the trial court and conclude that this case is controlled by California Faculty. We decline.
In contrast to the very specific and detailed grievance procedure in California Faculty, the settlement agreement’s arbitration provision was set forth in a single sentence that is capable of more than one reading. And, unlike in California Faculty, a restrictive reading leads to an absurdity. Nor are there policies cutting against broad arbitral review such as a policy of restraint similar to the one that curbs review of discretionary academic decisions. It can be said with assurance that the grievance procedure in California Faculty did not permit the arbitrator to substitute his judgment for that of the university’s president. There is no such assurance regarding the meaning of the settlement agreement.
Next, Burger argues the meaning of the word interpretation. She states: “As the lower court explained, the ordinary meaning of the word ‘interpretation’ is ‘to explain the meaning of or to elucidate’ . . . . Judge Letteau’s authority as arbitrator is therefore limited to ‘explaining the meaning of’ the provisions of the Settlement Agreement over which there is a dispute.” We agree, but not in the way Burger envisions. One explanation of the meaning of a provision, for example, is that it is nonbinding due to the parties’ lack of mutual assent.
We are pressed by Burger to adjudge what transpired below as an attempt by the Cohen parties to renegotiate the meaning of the estate tax provision. This we cannot do. Maybe Burger is correct, but if the issue was properly submitted to Judge Letteau (it was), neither the trial court nor we can review his decision for an error of law or fact. (Lindenstadt v. Staff Builders, Inc. (1997) 55 Cal.App.4th 882, 889.) In all respects, this argument is beyond a court’s reach.
Continuing on, Burger contends that because the parties intended to permanently resolve their dispute with the settlement agreement, as demonstrated by their waiver of the right to rescind, it must be that the parties did not intend Judge Letteau to have any powers of nullification. She would have us accept this as fait accompli. But if there was no meeting of the minds, there was no waiver. And—to underscore an obvious point—this case does not involve a rescission. Parallel to this, Burger argues that the Cohen parties waived the right to appeal an order approving the settlement agreement. But once again: no meeting of the minds, no waiver.
Other than California Faculty, Burger puts great stock in Coady v. Ashcraft & Gerel (1st Cir. 2000) 223 F.3d 1 (Coady). There, a lawyer and his former firm sued each other over employment related issues. They submitted to arbitration under an employment agreement that authorized that arbitration of “ambiguities and questions of interpretation of this contract.” (Id. at p. 4.) The arbitration panel found that the lawyer should have received a bonus and awarded him $45,000. The circuit court concluded that the arbitrators exceeded their authority because the arbitration clause did not cover issues of breach of contract and calculation of the bonus. (Id. at p. 6.) And, due to stipulations between the parties, there were no ambiguities or questions of interpretation regarding the lawyer’s bonus. (Ibid.) Bolstering this analysis, the circuit court noted that the parties clearly knew how to draft a broader arbitration clause because they did so in a prior agreement providing for arbitration regarding the document’s construction, interpretation or application. (Ibid.)
Coady does not change our minds.
Burger finds analytical sanctuary in Coady because the federal circuit court stated that “there is no public policy favoring arbitration of disputes which the parties have not agreed to arbitrate.” In other words, Burger is saying we should construe the arbitration provision narrowly. This argument has been dealt with and shown lacking. Suffice it to say, there is no analogy to Coady. If Judge Letteau had determined that one party was in breach and awarded money to the other party, it would be a different story. Coady, however, did not tangle with the issues that are presented herein.
Tangentially, and without giving us a clear roadmap to her purpose, Burger points out that Coady reiterated the federal rule that courts should not assume that parties agreed to arbitrate the issue of arbitrability unless there is clear and unmistakeable evidence that they did so. (Coady, supra, 223 F.3d at p. 9.) But arbitrability was not submitted to Judge Letteau, so this point is moot.
Relying on law arising under the Federal Arbitration Act, Burger cites to Preston v. Ferrer (2008) 552 U.S. ___ [128 S.Ct. 978] (Preston). According to the United States Supreme Court, “when parties agree to arbitrate all disputes arising under their contract, questions concerning the validity of the entire contract are to be resolved by the arbitrator in the first instance, not by a federal or state court.” (Id. at p. 981.) This citation does not countermand anything that preceded it. Recapitulated, nothing in Preston prevents parties from submitting the validity of a contract to arbitration even though other disputes may have been reserved for the courts.
II. Remaining issues.
Because Judge Letteau set aside the settlement agreement, the trial court erred when it enforced the settlement agreement and denied Marlene’s petition to confirm the arbitration findings and motion to vacate the minute order approving the settlement agreement. Also, because the motion to enforce the settlement agreement should not have been granted, the trial court erred when it awarded Burger the attorney fees related to that motion. Due to the foregoing, we need not address the other issues raised and briefed by the parties.
DISPOSITION
The trial court’s orders enforcing the settlement agreement, awarding Burger attorney fees, denying Marlene’s petition to confirm Judge Letteau’s finding that the settlement agreement was invalid, and denying Marlene’s motion to vacate the minute order approving the settlement agreement are reversed. The matter is remanded back to the trial court for adjudication of the parties’ disputes over the trust. The Cohen parties and Valensi are entitled to their costs on appeal.
We concur, DOI TODD, Acting P. J., J CHAVEZ J.