Opinion
B317103
05-30-2023
NATIONAL SALES NETWORK, Plaintiff and Respondent, v. CLIFTON MOSELEY et al., Defendants and Appellants.
Law Office of Michael J. Curls, Michael J. Curls and Nichelle D. Jordan for Defendants and Appellants. Buchanan Ingersoll &Rooney, Kimberly Arouh and Natalie Peled for Plaintiff and Respondent.
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County No. 20STCV11669, Timothy Patrick Dillon, Judge.
Law Office of Michael J. Curls, Michael J. Curls and Nichelle D. Jordan for Defendants and Appellants.
Buchanan Ingersoll &Rooney, Kimberly Arouh and Natalie Peled for Plaintiff and Respondent.
LAVIN, Acting P. J.
INTRODUCTION
Defendants and appellants Clifton and Faye Moseley (the Moseleys) appeal an order confirming an arbitration award. Plaintiff and respondent National Sales Network (NSN) filed suit against the Moseleys alleging that the Moseleys, who were members of the board of the Los Angeles chapter of NSN (NSN Los Angeles), embezzled funds from the NSN Los Angeles checking account and used the NSN Los Angeles credit card for unauthorized purposes. The Moseleys moved to compel arbitration based on a memorandum of understanding with NSN containing an arbitration provision signed by Clifton. They argued to the court that the arbitration agreement extended to Faye, who was a non-signatory, by its terms and under estoppel principles. The arbitrator found in favor of NSN. The court confirmed the arbitrator's award and entered judgment.
Because the Moseleys share a last name, we refer to them by their first names for clarity. No disrespect is intended.
The Moseleys assert that the judgment cannot stand because NSN lacked standing and capacity to sue or maintain its lawsuit. They further assert that the award should not have been confirmed because they did not consent to arbitration and because the arbitrator failed to set forth his legal reasoning. We disagree and affirm.
FACTS AND PROCEDURAL BACKGROUND
NSN is a 501(c)(3), not-for-profit membership organization with its headquarters in Atlanta, Georgia. NSN maintains 20 local chapters throughout the country, including a chapter in Los Angeles. During the periods relevant to this litigation, Clifton served as the board chairman of NSN Los Angeles. Faye also served as a board member of NSN Los Angeles. The Moseleys are residents of Los Angeles County, California.
In March 2020, NSN filed a complaint against the Moseleys in Los Angeles Superior Court. The complaint alleged that Clifton was entrusted with managing all monies and financial contributions received by NSN Los Angeles as its president and was the only individual with authority to sign checks on behalf of NSN Los Angeles. In April 2018, NSN launched an audit of NSN Los Angeles, which revealed that, as of January 2015, the Moseleys had willfully and fraudulently embezzled funds from NSN Los Angeles. According to the complaint, "NSN owned and/or had a right to possess the funds in bank accounts maintained by [NSN Los Angeles]."
Specifically, the audit showed that, between May 2015 and December 2017, Clifton wrote 16 checks to himself totaling $8,364.97. Although the memo lines for the checks indicated that they were for legitimate corporate expenses, the audit did not recover any supporting documentation for these alleged reimbursements. The audit also revealed that, between March 2016 and April 2018, Clifton wrote six checks to his wife totaling $21,146.40. Finally, the audit revealed that, between January 2015 and March 2018, Clifton used the company debit card on at least 80 occasions without providing any explanation or supporting documentation. These expenses totaled $29,018.83. The Moseleys did not reimburse NSN for any of the amounts withdrawn from the NSN Los Angeles bank account via checks to Clifton and Faye or for any of the credit card purchases made without supporting documentation.
NSN sent a series of letters and communications to the Moseleys demanding a detailed written accounting consisting of explanations for the expenses, substantiation and documentation supporting the explanations, and contemporaneous corporate approval for the expenses. The Moseleys failed to produce any documentation accounting for the withdrawals from the NSN Los Angeles bank account or for the identified purchases made on the corporate card. NSN asserted five causes of action against the Moseleys: (1) conversion, (2) fraud, (3) breach of fiduciary duty, (4) unlawful, unfair, and fraudulent business acts under the California Business and Professions Code section 17200, et seq., and (5) unjust enrichment.
The Moseleys filed a demurrer to the complaint in which they asserted: (1) that NSN lacked standing to sue because it was a non-qualified foreign corporation transacting intrastate business in California; and (2) that the complaint was uncertain, ambiguous, and unintelligible. The Moseleys also filed a motion to dismiss or, in the alternative, to stay proceedings and compel arbitration. The Moseleys argued that the action was based upon a dispute arising out of a written agreement between the parties entitled National Sales Network Memorandum of Understanding (the MOU) signed by Clifton in March 2013. The MOU contained an arbitration provision stating that: "The parties will resolve any claim or dispute arising out of or relating to this Agreement through binding arbitration before one arbitrator conducted under the rules of the American Arbitration Association or JAMS in Atlanta, GA. The law of the state of Georgia will be the governing law. The arbitration award will be enforceable in any state or federal court." The Moseleys asserted that the MOU contained a valid arbitration agreement encompassing the claims in the action and that the agreement applied to Faye Moseley under principles of equitable estoppel, even though she was not a signatory to the MOU. The Moseleys also argued that Los Angeles was not the proper venue for the action, relying on the forum selection clause in a licensing agreement that was attached as an exhibit to the MOU and which provided that the parties consented to the personal jurisdiction of the state and federal courts of Georgia and agreed that any action arising out of that agreement "may be venued in either the state or federal courts located in Fulton County, Georgia." In a declaration submitted with the Moseleys' reply brief, Clifton confirmed that the signature in the MOU was his. He stated that he was "informed that as the president of the Los Angeles Chapter, [his] signature was required to bind myself, other chapter officers and chapter members to the terms contained therein" and that "other board members and chapter members . . . would be bound by the terms of the agreement as a whole." He also stated that he "understood that any violation of this agreement would be resolved in arbitration ...."
The court granted the motion to compel arbitration and stayed proceedings pending the arbitration and concluded that the demurrer was moot. The court also concluded that the language of the licensing agreement did not require litigation in Georgia and that California was an appropriate forum for the action.
The arbitration took place before the American Arbitration Association with Michael Kohler as the arbitrator. In May 2021, the arbitrator issued a "Partial Final Award" ruling in favor of NSN and awarding NSN $22,391.86 from Clifton and $21,146.40 from the Moseleys jointly. In June 2021, the arbitrator issued the final award, which awarded attorney's fees and costs to NSN.
In August 2021, NSN filed a petition to confirm the contractual arbitration award. Shortly thereafter, the Moseleys filed another motion to dismiss. The Moseleys once again argued that NSN was not qualified to do business in California. The Moseleys further contended that the forum selection clause in the MOU and the California Arbitration Act prevented the arbitration award from being enforced in California. In support of their motion to dismiss, the Moseleys filed a request for judicial notice of documents concerning the standing of NSN or affiliated entities in different jurisdictions, including a certificate of good standing for NSN in the state of New Jersey and business searches with the California Secretary of State for different NSN chapters in California, which indicated that these chapters were domestic nonprofit corporations.
The Moseleys also filed an opposition to NSN's petition to confirm the arbitration award, which challenged the award on five grounds: (1) that NSN lacked standing to bring the action in Los Angeles Superior Court; (2) that the petition was not properly before the court; (3) that Faye did not waive her right to judicial review; (4) that the rights of the parties were substantially prejudiced by the arbitrator's manifest disregard of the law; and (5) that the arbitrator's reasoning was unsound. In support of their opposition, the Moseleys and their attorney filed declarations in which they asserted that Faye did not consent to binding arbitration and was not aware that the arbitration would be binding on her when she participated in it.
In November 2021, the court issued an order denying the Moseleys' motion to dismiss and granting NSN's petition to confirm the arbitration award. The court noted that the Moseleys' argument that NSN lacked standing to sue because it was not qualified to do business in California was an argument concerning capacity to maintain a suit, rather than of standing. It concluded that the Moseleys had failed to meet their burden of establishing that NSN lacked standing or capacity. The court further found that the question of whether the court lacked jurisdiction in light of the forum selection clause was previously decided and that the Moseleys had not timely moved for reconsideration. The court further concluded that, if the issue were properly before it, the court's previous rulings were correct.
With respect to the petition to confirm the arbitration award, the court was "unpersuaded by [Faye's] current representations" that she was not bound by the MOU's "[b]ecause [Faye] expressly represented to the court that she, although a non-signatory, is bound by the agreement to arbitrate." The court further stated that it found her claims to the contrary to be "not credible." It concluded that "[Faye] sought the arbitration order and ratified the order to compel arbitration."
The court further concluded that the arbitration provision's non-specific choice of law provision and the language providing that an arbitration award could be enforced "in any state or federal court" meant that California law would apply to the enforcement of the arbitration, whereas Georgia substantive law applied to the merits of the dispute. Under California law, the court concluded that it could not relitigate the issues determined by the arbitrator. The court also observed that the Moseleys had failed to demonstrate that the result would be different if Georgia law applied. It therefore confirmed the arbitration award and entered judgment.
After judgment was entered in the court below, the Superior Court of Fulton County, State of Georgia, denied a petition filed by the Moseleys in that court to vacate the arbitrator's award. The court concluded that the Moseleys had not met their burden of demonstrating that the arbitration award should be vacated under the relevant Georgia statute.
We grant NSN's motion for judicial notice of the order of the Georgia court. (See Williams v. Wraxall (1995) 33 Cal.App.4th 120, 130, fn. 7 ["We may take judicial notice of the existence of judicial opinions and court documents, along with the truth of the results reached-in the documents such as orders, statements of decision, and judgments ...."].)
CONTENTIONS
The Moseleys contend that the order confirming the arbitration award cannot stand because NSN lacks standing and capacity to sue in California. The Moseleys also argue that they did not consent to binding arbitration. They further assert that the arbitration award could only be enforced in Georgia and that the court erred in confirming an award that did not set forth legal analysis explaining the arbitrator's findings for NSN on each cause of action. Finally, the Moseleys contend that the Georgia legal rate of interest should apply, rather than California's.
In contrast, NSN contends that the Moseleys failed to meet their burden of demonstrating that NSN lacked standing or capacity to bring and maintain the lawsuit. They argue that the Moseleys' current claim that they did not know that they were engaging in binding arbitration is disingenuous and that substantial evidence supports the court's conclusion that the parties ratified and were bound by the order to compel arbitration. NSN further argues that the Moseleys' attack on the arbitrator's reasoning is legally impermissible and that they have failed to identify any valid grounds to vacate the arbitration award. Finally, NSN argues that confirmation of the award in Los Angeles County Superior Court was supported by the arbitration agreement and that the result would be the same under Georgia law, as demonstrated by the order issued by the Superior Court of Fulton County.
DISCUSSION
1. The Moseleys fail to establish a lack of standing.
The Moseleys argue on appeal that the trial court erred in failing to address their arguments that NSN lacked standing to sue the Moseleys and that we must remand to the trial court to make this determination. We disagree.
" 'There is a difference between the capacity to sue, which is the right to come into court, and the standing to sue, which is the right to relief in court.'" (Color-Vue, Inc. v. Abrams (1996) 44 Cal.App.4th 1599, 1604.) "A plaintiff lacks standing to sue if, for example, it [is] not a real party in interest." (Id. at p. 1604, fn. 4.) Incapacity, on the other hand, is merely a legal disability that can be cured during the pendency of the litigation. (Ibid.) While standing is jurisdictional and the lack of standing may be raised at any time, incapacity is a plea in abatement that" 'must be raised by defendant at the earliest opportunity or it is waived.... It is a technical objection and must be pleaded specifically.'" (Ibid.)
The Moseleys argue that, if this court were to decide that NSN lacked standing to sue, we would not need to reach the merits. However, they failed to advance a single argument in their opening brief as to why NSN lacks standing to sue. At most, the Moseleys assert that it was error for the court below not to determine whether NSN had standing to sue. However, the trial court understandably interpreted the Moseleys' purported standing arguments as asserting that NSN lacked capacity to sue or maintain the action. The Moseleys argued that a Georgia corporation bearing the name National Sales Network, Inc. had been dissolved in 2010. However, they conceded that National Sales Network, Inc. was a New Jersey corporation in good standing. Indeed, their request for judicial notice filed below attached a certificate from the treasurer of the state of New Jersey stating that National Sales Network, Inc. was an active business in good standing as of July 2020. In any event, "[s]uspension of corporate powers results in a lack of capacity to sue, not a lack of standing to sue." (Color-Vue, supra, 44 Cal.App.4th at pp. 1603-1604.) They further argued that "there is no NSN entity that is qualified to do business in California." As the court correctly noted, "[w]hile [the Moseleys] frame this as a standing or jurisdiction issue, the courts have identified it as a capacity issue-not the capacity to sue, but the capacity to continue to maintain the lawsuit." (See The Capital Gold Group, Inc. v. Nortier (2009) 176 Cal.App.4th 1119, 1132.)
Although the Moseleys did not raise any real challenge to NSN's standing below, we may address the issue for the first time on appeal. "[T]he issue of standing is so fundamental that it need not even be raised below-let alone decided-as a prerequisite to our consideration." (Payne v. Anaheim Memorial Medical Center, Inc. (2005) 130 Cal.App.4th 729, 745; Steadman v. Osborne (2009) 178 Cal.App.4th 950, 955 [addressing issue of standing on its merits although it was not raised in the trial court].) Where the facts are not in dispute, we review a question of standing de novo. (Brewer v. Superior Court (2017) 16 Cal.App.5th 1019, 1023.)
The Moseleys argue for the first time in their reply brief that NSN lacks standing because it is not a real party in interest. According to the Moseleys, "[i]f we are to believe that NSN is composed of local chapters operating independently throughout the country, then it would follow that all monies belong to their respective chapters," and thus the Moseleys allegedly embezzled money from the Los Angeles chapter of NSN, not NSN itself. Thus, the NSN Los Angeles chapter is the real party in interest and NSN lacks standing.
We are not persuaded. "A 'real party in interest' is generally defined as 'the person possessing the right sued upon by reason of the substantive law. [Citation.]' [Citation.]" (Windham at Carmel Mountain Ranch Assn. v. Superior Court (2003) 109 Cal.App.4th 1162, 1172.) The complaint alleged that NSN owned and had a right to possess the funds in bank accounts maintained by NSN Los Angeles, from which the Moseleys allegedly embezzled money. The MOU states that, upon cessation of chapter operations, the chapter was required to provide NSN with access to all bank account information and financial statements for the chapter and that "[a]ny misappropriation of funds will result in legal action." This further supports that NSN had oversight of and the ultimate right to NSN Los Angeles' accounts. The Moseleys do not identify any allegations or evidence to the contrary. Rather, the Moseleys' sole argument appears to be that NSN cannot argue that it owned the money in the accounts of the NSN Los Angeles chapter and claim that it did not engage in intrastate business. However, whether NSN's ownership of the money in the accounts of its chapters means that it engaged in intrastate business for which it is not qualified is a question of capacity and is an entirely separate inquiry from whether NSN is a real party in interest with standing to sue. Thus, we conclude that NSN had standing to sue the Moseleys.
2. The Moseleys fail to identify the relevant standards of review in their opening brief and thus concede an absence of error.
Although standing is a jurisdictional requirement that may be raised for the first time on appeal, this is not true of the Moseleys' remaining arguments. Rather, they were required to raise their contentions below to preserve them for review. (In re S.B. (2004) 32 Cal.4th 1287, 1293 ["[A] reviewing court ordinarily will not consider a challenge to a ruling if an objection could have been but was not made in the trial court."].) Further, "it is a fundamental principle of appellate procedure that a trial court judgment is ordinarily presumed to be correct and the burden is on an appellant to demonstrate, on the basis of the record presented to the appellate court, that the trial court committed an error that justifies reversal of the judgment." (Jameson v. Desta (2018) 5 Cal.5th 594, 608-609.) To demonstrate reversible error, the Moseleys were required to identify the relevant standard of review with respect to each issue and tailor their arguments to that standard. (See Ewald v. Nationstar Mortgage, LLC (2017) 13 Cal.App.5th 947, 948.)
In their opening brief, the Moseleys do not identify the relevant standard of review for any of their claims." 'Failure to acknowledge the proper scope of review is a concession of lack of merit.' [Citation.]" (Ewald v. Nationstar Mortgage, LLC, supra, 13 Cal.App.5th at p. 948; see also People v. Foss (2007) 155 Cal.App.4th 113, 126 [when appellant fails to tailor arguments to appropriate standard of review, "the appellant fails to show error in the judgment"].) The Moseleys seek to remedy this error in their reply brief, but their omission in the opening brief was not simply the failure to cite the relevant standard of review, but the failure to tailor their arguments to show reversible error under those standards. Although we will address the Moseleys' contentions on the merits, this fundamental shortcoming in their briefing is sufficient grounds to find that the Moseleys have failed to demonstrate error.
3. The Moseleys fail to demonstrate any basis to overturn the order confirming the arbitration award.
3.1. Standard of Review
"We subject the trial court's rulings and the underlying [arbitration] award to different standards of review. To the extent the trial court made findings of fact in confirming the award, we affirm the findings if they are supported by substantial evidence. [Citation.] To the extent the trial court resolved questions of law on undisputed facts, we review the trial court's rulings de novo. [Citation.] [¶] We apply a highly deferential standard of review to the award itself, insofar as our inquiry encompasses the arbitrator's resolution of questions of law or fact. Because the finality of arbitration awards is rooted in the parties' agreement to bypass the judicial system, ordinarily' "[t]he merits of the controversy between the parties are not subject to judicial review." [Citations.]' [Citation.]" (Cooper v. Lavely &Singer Professional Corp. (2014) 230 Cal.App.4th 1, 11-12.) Rather, "judicial review of private, binding arbitration awards is generally limited to the statutory grounds for vacating [citation] or correcting [citation] an award; [our Supreme Court] rejected the view that a court may vacate or correct the award because of the arbitrator's legal or factual error, even an error appearing on the face of the award." (Moshonov v. Walsh (2000) 22 Cal.4th 771, 775.)
3.2. The court did not err in concluding that NSN had capacity to sue.
The Moseleys contend that the trial court erred in confirming the arbitration award and denying their motion to dismiss the action on the ground that NSN lacked capacity to sue. We disagree and hold that the Moseleys failed to meet their burden of showing that NSN, a non-qualified foreign corporation, transacted intrastate business and thus lacked capacity to maintain its lawsuit.
3.2.1. We review the question of NSN's legal capacity de novo.
The parties do not address whether a trial court's ruling regarding whether an entity has capacity to sue or maintain a lawsuit is a question of law we review de novo or of fact that we review for substantial evidence. The Moseleys simultaneously moved to dismiss on the grounds of lack of capacity and argued that NSN's lack of capacity prevented the court from confirming the arbitrator's award. The Moseleys relied solely on the allegations of the complaint and on documents of which they sought judicial notice. In essence, the Moseleys reargued their demurrer, which the court held was moot because it ordered the case to arbitration. Cases have held that a nonstatutory motion to dismiss serves the same function as a demurrer. (See McKay v. County of Riverside (1959) 175 Cal.App.2d 247, 248-249; Barragan v. Banco BCH (1986) 188 Cal.App.3d 283, 299.) "We independently review a trial court's order overruling a demurrer." (California Department of Tax and Fee Administration v. Superior Court (2020) 48 Cal.App.5th 922, 929.)
The propriety of the Moseleys' nonstatutory motions to dismiss is not raised on appeal.
In their reply brief, the Moseleys assert that the relevant standard is abuse of discretion. In support of this assertion, they cite Code of Civil Procedure section 583.320, subdivision (a), which addresses the time within which an action must be brought to trial after a new trial is granted. They fail to explain how this provision is relevant.
In any event, we need not decide which standard applies, as we perceive no error in the trial court's ruling even when applying the de novo standard of review, which is the least deferential alternative before us.
3.2.2. Analysis
Under Corporations Code section 2105, subdivision (a), "[a] foreign corporation shall not transact intrastate business without having first obtained from the Secretary of State a certificate of qualification." Corporations Code section 2203, subdivision (c), states: "A foreign corporation subject to the provisions of Chapter 21 (commencing with Section 2100) which transacts intrastate business without complying with [s]ection 2105 shall not maintain any action or proceeding upon any intrastate business so transacted in any court of this state, commenced prior to compliance with [s]ection 2105 until it has complied with the provisions thereof and has paid to the Secretary of State a [specified] penalty[,]" as well as certain fees and taxes.
The Corporations Code defines "transact intrastate business" as "entering into repeated and successive transactions of its business in this state, other than interstate or foreign commerce." (Corp. Code, § 191, subd. (a).) "A foreign corporation shall not be considered to be transacting intrastate business merely because its subsidiary transacts intrastate business or merely because of its status as . . . [a] shareholder of a domestic corporation." (Id., subd. (b).) Further, the statute expressly excludes from the definition of intrastate business such activities as "[h]olding meetings of its board or shareholders or carrying on other activities concerning its internal affairs" and maintenance of a bank account. (Id., subd. (c)(2), (3).)
When a nonqualified foreign corporation commences an action purportedly regarding intrastate business, "[t]he defendant bears the burden of proving: (1) the action arises out of the transaction of intrastate business by a foreign corporation; and (2) the action was commenced by the foreign corporation prior to qualifying to transact intrastate business." (United Medical Management Ltd. v. Gatto (1996) 49 Cal.App.4th 1732, 1740.)
The Moseleys rely on allegations concerning their connection with NSN Los Angeles and their presence and activities in California in arguing that NSN conducts intrastate business. However, NSN and NSN Los Angeles are referred to as different entities in the complaint. Further, the California Secretary of State business search records of which the Moseleys sought judicial notice support that the California chapters were domestic nonprofit corporations, while NSN is a New Jersey corporation. We agree with the court that the allegations of the complaint and the judicially noticed documents at most indicate that the NSN local chapters are subsidiaries of NSN. As discussed, the Corporations Code provides that the activities of a subsidiary in California cannot support a determination that the parent company has transacted intrastate business. (Corp. Code, § 191, subd. (b).) Thus, there is insufficient basis in the complaint and judicially noticed documents to conclude that NSN and NSN Los Angeles are the same entity, such that the Moseleys' acts as board members of NSN Los Angeles in California may be attributed to NSN.
According to the Charter License Agreement, which the Moseleys submitted along with the MOU as an exhibit to the motion to dismiss, NSN Los Angeles was a licensee of NSN and NSN and NSN Los Angeles operated as independent contractors. The parties do not address the propriety of relying on evidence outside the complaint and any judicially noticed documents on a motion to dismiss, and the Moseleys rely solely on the allegations of the complaint in asserting that NSN lacks capacity to sue. Thus, we reach our decision without considering this evidence.
The complaint also alleged that NSN "owned and/or had a right to possess the funds in bank accounts maintained by NSN LA Chapter." The Moseleys point to no allegations addressing how NSN funded NSN Los Angeles's accounts and whether NSN "enter[ed] into repeated and successive transactions" in California by providing funds to NSN Los Angeles. (Corp. Code, § 191, subd. (a).) We find none in the complaint. Even if we attributed the accounts to which NSN Los Angeles had access to NSN, it would not be a sufficient basis to conclude that NSN transacted intrastate business. The Corporations Code provides that maintaining a bank account in California is not a basis to conclude that an entity has transacted intrastate business in this state. (Id., subd. (c)(3).) The Corporations Code further provides that being a shareholder in a domestic corporation does not mean that a foreign corporation transacted intrastate business. (Id., subd. (b).) Thus, to the extent that NSN's ownership of funds to which NSN Los Angeles had access supports an inference that it had an interest in NSN Los Angeles, that fact alone would not support the conclusion that Corporations Code section 2105 applies to NSN.
Allegations that NSN performed an audit on NSN Los Angeles' use of funds that NSN owned or had a right to possess do not, in our view, support a claim that NSN transacted intrastate business. Rather, as the trial court observed, conducting an audit of funds that NSN owns seems to be the conduct of internal business, which is not intrastate business under the Corporations Code. (Corp. Code, § 191, subd. (c)(2).) At most, the allegations of the complaint support that NSN has a business relationship with a California entity. However," '[b]y excluding acts done by a foreign corporation in this state in interstate or foreign commerce from its definition of the words "transact intrastate business," [the Legislature] clearly recognized that a corporation may do business in this state without transacting intrastate business.'" (Mediterranean Exports, Inc. v. Superior Court (1981) 119 Cal.App.3d 605, 616.)
As the court pointed out, in contrast to the scant facts alleged here concerning NSN's presence and activities in California, evidence supported that the defendant in Mediterranean Exports, Inc. v. Superior Court, supra, 119 Cal.App.3d 605 had a telephone listed in its name in California, was registered with the Employment Development Department as an employer in California, reported California employees on its payroll, and leased property in California. (Id. at pp. 610-613.) The court nevertheless concluded that the evidence was "clearly insufficient to establish as a matter of law that Mediterranean was transacting intrastate business in California." (Id. at p. 616.)
Thus, the Moseleys have failed to carry their burden of demonstrating that NSN transacted intrastate business in California as defined by the Corporations Code.
Finally, the Moseleys also contend that "NSN's corporate status could be fatal to their ability to maintain an action and recover on their judgment in this case." The Mosel eys vaguely suggest that the complaint was ambiguous as to which entity was intended by NSN, but do not support their argument with any law or legal analysis and do not refer the court to any specific portion of the complaint. Rather, they direct the court to the entirety of their request for judicial notice filed below. This contention is therefore waived.
3.3. Substantial evidence supports the court's determination that the Moseleys consented to binding arbitration.
The Moseleys contend that they did not expressly consent to binding arbitration and that, in the absence of such consent, the arbitration award was unenforceable. We conclude that this contention is both meritless and forfeited as to Clifton. With respect to Faye, we conclude that substantial evidence supports the court's conclusion that she consented to arbitration and ratified the order compelling arbitration.
3.3.1. Whether the Moseleys consented to arbitration is a question of fact.
The Moseleys argue in their reply brief that "[t]he determination of the parties [sic] agreement to binding arbitration must be reviewed de novo." We disagree. The Moseleys do not challenge the legal basis for the court's determination in the motion compelling arbitration that the arbitration agreement also applied to Faye. Rather, their challenge to the enforceability of the arbitration agreement is based on declarations in which they assert that they did not understand that the arbitration was binding. Whether the Moseleys knew the arbitration was binding and consented to arbitration are questions of fact. Thus, we review the court's findings for substantial evidence.
Toal v. Tardif (2009) 178 Cal.App.4th 1208 (Toal), a case on which the Moseleys rely, supports this conclusion. In Toal, the Court of Appeal held that the trial court had erred in granting plaintiffs' petition to confirm the award without determining whether defendants consented to or ratified the arbitration agreement. (Id. at p. 1223.) The court noted that, "[b]ased on the reporter's transcript of the hearing, it does not appear the court ever considered the issue," and concluded that, even if the court had made an implied finding, it "was unsupported by substantial evidence." (Ibid.) Thus, the court clearly recognized that substantial evidence was the relevant standard. (See also Bannister v. Marinidence Opco, LLC (2021) 64 Cal.App.5th 541, 544 [rejecting contention that the existence of agreement to arbitrate should be reviewed independently and reviewing trial court's ruling that an agreement did not exist for substantial evidence].)
Under the substantial evidence standard of review, we are required to view the evidence in the light most favorable to the prevailing party, giving that party the benefit of every reasonable inference and resolving all conflicts in that party's favor. (Jessup Farms v. Baldwin (1983) 33 Cal.3d 639, 660.) Thus," 'we must presume the court found every fact and drew every permissible inference necessary to support its judgment, and defer to its determination of credibility of the witnesses and the weight of the evidence. [Citation.]' [Citation.]." (Engineers &Architects Assn. v. Community Development Dept. (1994) 30 Cal.App.4th 644, 653.) With regard to implied findings," '[a]n appellate court will not disturb the implied findings of fact made by a trial court in support of an order, any more than it will interfere with express findings upon which a final judgment is predicated . . . So far as it has passed on the weight of the evidence or the credibility of witnesses, its implied findings are conclusive." (Griffith Co. v. San Diego College for Women (1955) 45 Cal.2d 501, 507-508.)
3.3.2. Analysis
With these principles in mind, we turn to the merits of the Moseleys' contentions. "[I]t is the general rule that parties to a private arbitration impliedly agree that the arbitrator's decision will be both binding and final. Indeed, 'The very essence of the term "arbitration" [in this context] connotes a binding award.' [Citation.]" (Moncharsh v. Heily &Blase (1992) 3 Cal.4th 1, 9, fn. omitted.) Further, "[i]t is clearly the law in California that a party 'may not agree to arbitrate a question and then, if the question goes against it, litigate the question in another proceeding.' [Citation.]" (Hydrothermal Energy Corp. v. Fort Bidwell Indian Community Council (1985) 170 Cal.App.3d 489, 497; see also Lovret v. Seyfarth (1972) 22 Cal.App.3d 841, 860 [" '[C]laimant may not voluntarily submit his claim to arbitration, await the outcome, and, if the decision is unfavorable, then challenge the authority of the arbitrators to act' "].)
Clifton personally signed the MOU, confirming his agreement with it. The MOU stated: "The parties will resolve any claim or dispute arising out of or relating to this Agreement through binding arbitration before one arbitrator conducted under the rules of the American Arbitration Association or JAMS in Atlanta, GA." (Italics added.) Clifton also confirmed in a declaration that the signature in the MOU was his and that he understood that any violation of the agreement would be resolved in arbitration. The Moseleys utterly fail to contend with these facts. Their claim that Clifton did not consent to binding arbitration is therefore unpersuasive. (See Marin Storage &Trucking, Inc. v. Benco Contracting &Engineering, Inc. (2001) 89 Cal.App.4th 1042, 1049 [Generally, "one who signs an instrument[,] which on its face is a contract[,] is deemed to assent to all its terms."].) Even if it were not, the challenge is forfeited, as the Moseleys only argued below that Faye did not expressly waive her right to judicial review.
Thus, we turn to the question of Faye's consent, which was preserved for appeal. The court found that Faye sought the arbitration order and ratified the order to compel arbitration. We conclude that the court's findings are supported by substantial evidence. The Moseleys argued to the court that the parties agreed to arbitration, that the agreement covered the dispute at issue, and that the agreement should extend to Faye under principles of equitable estoppel and because "the MOU applies to past, current, and future officers of the NSN LA Chapter." The Moseleys quoted the language stating that any arbitration before AAA or JAMS would be binding in their motion to compel arbitration. The Moseleys reaffirmed their position that the dispute was subject to arbitration in their reply in support of their motion, arguing that, "[b]y its own terms, the agreement to arbitrate applies to [Faye]" because "the agreement was drafted by NSN with the expectation that chapter board directors, such as [Faye] be bound by its terms for the specific allegations alleged by NSN in their complaint." In support of this brief, Clifton submitted a declaration stating that he was "informed that as the president of the Los Angeles Chapter, [his] signature was required to bind myself, other chapter officers and chapter members to the terms contained therein" and that "other board members and chapter members . . . would be bound by the terms of the agreement as a whole." In other words, Clifton understood that his signature on the MOU also bound Faye to comply with its provisions. Although the Moseleys failed to provide us with a transcript of the arbitration proceedings, there is no dispute that Faye willingly participated. This supports that, to the extent that Faye was initially unaware that she was bound by the MOU's arbitration clause (despite her husband's understanding of this fact) and that arbitration had been pursued on her behalf, she nevertheless endorsed those positions and the court's order and agreed to arbitration. (See Cabrera v. Plager (1987) 195 Cal.App.3d 606, 613, fn. 8 ["appellants' appearance at the arbitration hearing and participation therein without raising any objection to the jurisdiction of the arbitrator estops them from challenging it afterwards"]; Cummings v. Future Nissan (2005) 128 Cal.App.4th 321, 329 ["a party who knowingly participates in the arbitration process without disclosing a ground for declaring it invalid is properly cast into the outer darkness of forfeiture"].)
"' "Ratification is the voluntary election by a person to adopt in some manner as his own an act which was purportedly done on his behalf by another person, the effect of which, as to some or all persons, is to treat the act as if originally authorized by him." '" (Behniwal v. Mix (2005) 133 Cal.App.4th 1027, 1039.)
Although Faye asserted that she believed that she was only participating in the arbitration to support Clifton, the trial court was "unpersuaded by [Faye's] current representations that she is not . . . bound" by the arbitration and found her claims to this effect "not credible." There is no evidence to support that Faye at any point communicated her understanding to the arbitrator or to NSN. Thus, we defer, as we must, to the court's express determination that this claim was not credible. We also defer to its implied findings that the declarations of Clifton and of the Moseleys' attorney, which contained similar representations concerning Faye's ignorance of the binding nature of the arbitration, were likewise not credible.
The circumstances here are plainly distinguishable from Blanton v. Womancare, Inc. (1985) 38 Cal.3d 396 (Blanton), one of the cases on which the Moseleys rely. In that case, a client told her attorney she would consent to arbitration only so long as her right to go to trial was preserved. (Id. at p. 399.) Ignoring these directions, her attorney stipulated to binding arbitration. (Id. at p. 400.) Three months later the client learned for the first time the facts concerning the stipulation. She immediately objected, fired the attorney, and sought to invalidate the stipulation with new counsel. (Ibid.) The trial court affirmed the validity of the agreement for binding arbitration based on its belief the agreement concerned a procedural matter within the scope of an attorney's unilateral discretion. (Id. at p. 401.) The Supreme Court reversed, holding that the client's lawyer lacked implied authority to relinquish her fundamental right to a trial and needed her express consent. The court based its ruling on principles of agency law, holding the attorney had "no apparent authority to bind his client to an agreement for arbitration." (Id. at p. 407.) But the court in Blanton emphasized the equally important agency principle of ratification through which "unauthorized acts of an attorney may be binding upon . . . [a] client." (Id. at p. 408.) The court noted that ratification did not apply because the client immediately fired her prior attorney upon learning of the arbitration agreement, hired new counsel to set it aside, and arbitrated her case only after her new attorney was unable to persuade the trial court to set aside the order negotiated by her previous attorney. (Ibid.)
In this case, unlike in Blanton, the court did not reject Faye's contentions because it thought that her attorney had the right to agree to arbitration on her behalf, which is a question of law. Rather, the court determined that Faye's representation that she did not know that she was participating in binding arbitration not to be credible and that she ratified the order to compel arbitration, which are questions of fact. Further, the attorney in Blanton did not move to compel arbitration based on an existing agreement but stipulated on the client's behalf to arbitration. Here, there was an arbitration agreement in a contract signed by one of the two represented individuals, who are husband and wife, and the husband set forth his understanding that his signature also bound his wife in a declaration signed under penalty of perjury. Further, the client in Blanton objected as soon as she learned of the stipulation and before she participated in arbitration. The Moseleys asked the court to believe that Faye remained ignorant of the binding nature of the arbitration through the time the motion to compel was brought, granted, she participated in the arbitration, and an adverse arbitration award issued. Further, they chose to remain represented by the same attorney who purportedly made fundamental decisions regarding their case on their behalf without consulting them, both when challenging the motion to confirm the arbitration order below and on appeal.
The circumstances here are also distinguishable from those present in Toal. Here, the Moseleys successfully sought to compel arbitration and the court concluded that an agreement to arbitrate existed. Thereafter, NSN sought to confirm the arbitrator's award with the court. In contrast, in Toal, there was no prior determination by the trial court that a valid arbitration agreement existed, and the trial court apparently did not even consider the issue. (Toal, supra, 178 Cal.App.4th at p. 1223.)
In sum, substantial evidence supports the trial court's determination that Faye consented to binding arbitration. We find no basis to overturn an award following an arbitration that was actively sought by the same parties who now seek to challenge its validity.
3.4. The court did not err in concluding that the arbitration award could be enforced in Los Angeles County Superior Court.
The Moseleys argue that the forum selection clause in the licensing agreement attached to the MOU prevents the arbitration award from being enforced in California. However, they utterly fail to address the court's conclusion that it was barred from reconsidering the issue of whether the forum selection clause required the matter to be litigated in Georgia. In its order granting the motion to compel arbitration, the court held the contractual language of the licensing agreement did not require litigation in Georgia and that California was an appropriate forum for the action. In the order confirming the arbitration award, the court concluded that the Moseleys did not timely move for reconsideration of the court's ruling with respect to their claims regarding venue and jurisdiction under Code of Civil Procedure section 1008. "Code of Civil Procedure section 1008 places strict jurisdictional limits on a litigant's ability to seek reconsideration of a prior ruling. [Citation.] Any application for reconsideration must comply with the provisions of section 1008 in order for the court to consider the request. [Citation.]" (Kinda v. Carpenter (2016) 247 Cal.App.4th 1268, 1278.) The Moseleys therefore waive any challenge to this ruling.
Even if we were free to consider this issue, we would conclude that the arbitration award was enforceable in Los Angeles County Superior Court.
Since the interpretation of a contract is a question of law for the court, we review de novo the question of whether the arbitration agreement or California law required the action be filed in Georgia under the MOU. (Boyd v. Oscar Fisher Co. (1989) 210 Cal.App.3d 368, 378 [" '[i]nterpretation of a contract presents a question of law unless it depends on conflicting evidence' "].) The arbitration provision in the MOU provides: "The parties will resolve any claim or dispute arising out of or relating to this Agreement through binding arbitration before one arbitrator.... The law of the state of Georgia will be the governing law. The arbitration award will be enforceable in any state or federal court." (Italics added.) The Moseleys claim that the MOU required that the action be filed in Georgia but rely on language in the licensing agreement between NSN and Clifton that was attached to the MOU, and which does not contain an arbitration provision. Even if the provision in the licensing agreement were applicable, it stated only that an action "may be venued in either the state or federal courts located in Fulton County, Georgia." (Italics added.) The Moseleys make no attempt to rebut the court's conclusion that the forum selection clause in the licensing agreement was permissive rather than mandatory and that California was the more appropriate forum. Thus, they waive any contention that the court erred.
The only other argument the Moseleys advance is that Los Angeles County is the improper forum for this action under Code of Civil Procedure section 1292.2. Section 1292.2 provides: "Except as otherwise provided in this article, any petition made after the commencement or completion of arbitration shall be filed in a court having jurisdiction in the county where the arbitration is being or has been held, or, if not held exclusively in any one county of this state, or if held outside of this state, then the petition shall be filed as provided in Section 1292." It is undisputed that the arbitration was held in Georgia. Thus, we turn to section 1292, which states: "Except as otherwise provided in this article, any petition made prior to the commencement of arbitration shall be filed in a court having jurisdiction in: [¶] (a) The county where the agreement is to be performed or was made. [¶] (b) If the agreement does not specify a county where the agreement is to be performed and the agreement was not made in any county in this state, the county where any party to the court proceeding resides or has a place of business...." Even assuming that the MOU concerning NSN Los Angeles was not intended to be performed in Los Angeles, Los Angeles County is an appropriate venue under section 1292 because the Moseleys reside in that county.
3.5. We cannot entertain the Moseleys' challenge to the legal and factual bases for the arbitrator's decision.
The Moseleys, citing Georgia law, argue that the arbitrator erred in failing to cite legal authority and to provide legal analysis in support of his conclusion that the Moseleys were liable to NSN on each of the causes of action. NSN, citing California law, argues that the Moseleys have failed to establish any of the exclusive statutory grounds for overturning an arbitration award.
The court concluded that, although Georgia substantive law applied to the arbitration, California law applied to its enforcement. The Moseleys do not advance any arguments regarding whether and how the court erred or how they were prejudiced by this error. In the absence of any showing of error, we presume the court's ruling that California law applies to enforcement is correct. (See Jameson v. Desta, supra, 5 Cal.5th at pp. 608-609.)
In any event, under both California and Georgia law, there is no basis to overturn the arbitrator's award." '[Code of Civil Procedure] Section 1286.2 sets forth the exclusive grounds for vacating an arbitration award. Except on these grounds, arbitration awards are immune from judicial review in proceedings to confirm or challenge the award.' [Citation.]" (Maaso v. Signer (2012) 203 Cal.App.4th 362, 371.) These grounds include where "[t]he award was procured by corruption, fraud or other undue means," "[t]here was corruption in any of the arbitrators," and "[t]he rights of the party were substantially prejudiced by misconduct of a neutral arbitrator." (Code Civ. Proc., § 1286.2, subd. (a)(1)-(3).) "Because the [Georgia Arbitration Code] 'was designed to preserve and ensure the efficacy and expediency of arbitration awards' the basis on which a reviewing court may grant a party's application to vacate an arbitration award is 'strictly limited to five statutory grounds set forth in OCGA § 9-9-13 (b).' [Citation.]" (Brazzel v. Brazzel (2016) 337 Ga.App. 758, 761.) These grounds include "[c]orruption, fraud, or misconduct in procuring the award," "[a]n overstepping by the arbitrators of their authority or such imperfect execution of it that a final and definite award upon the subject matter submitted was not made," and "[t]he arbitrator's manifest disregard of the law." (Ga. Code Ann. § 9-9-13, subd. (b)(1), (3), (5).) The record here does not support that the arbitration award was procured by corruption, undue means, misconduct of the arbitrator, or manifest disregard of the law.
The Moseleys advance no challenges on these grounds, but instead argue that the award was not reasoned or adequately explained. This is not a sufficient basis to overturn the award under either California or Georgia law. Under California law, "failure of an arbitrator to make a finding on even an express claim does not invalidate the award, so long as the award 'serves to settle the entire controversy' [citation]. This is a corollary of the proposition that arbitrators are not obliged to find facts or give reasons for their award [citation]." (Rodrigues v. Keller (1980) 113 Cal.App.3d 838, 843.) Georgia law similarly provides that "[t]he authority of courts to review an award, pursuant to a motion to vacate, is very limited; courts cannot inquire into the merits of an arbitrable controversy; arbitrators are free to award on the basis of broad principles of fairness and equity; and an arbitrator need not make findings or state the reasons in support of the award. [When] reviewing a motion to vacate, appellate courts cannot make determinations as to the sufficiency of the evidence, as such judicial intervention would only frustrate the purpose of arbitration. The prohibition against considering the sufficiency of the evidence as grounds for vacating an arbitration award is unconditional. Therefore, a reviewing court is prohibited from weighing the evidence submitted before the arbitrator, regardless of whether the court believes there to be sufficient evidence, or even any evidence, to support the award." (A&M Hospitalities, LLC v. Alimchandani (2021) 359 Ga.App. 271, 278, fn. omitted.)
The Moseleys suggest that the arbitrator's failure to recite facts and set forth legal analysis explaining the arbitrator's decision-making was contrary to "the express provision of the Preliminary Hearing Order." Although capitalized, this term is not defined anywhere in the Moseleys' brief, nor do they provide a record citation identifying the language of any order purportedly requiring the arbitrator to set forth his reasoning. Thus, this contention is waived. (Utility Consumers' Action Network v. Public Utilities Com. (2010) 187 Cal.App.4th 688, 697 ["If a party fails to . . . support an argument with the necessary citations to the record, we may deem the argument waived."].)
Even if not waived, our independent review of the record indicates that the arbitrator issued a preliminary order stating only that he would "issue a reasoned award." The preliminary order does not state that the arbitrator was obligated to or would set forth his legal reasoning in the award.
The arbitration provision in the MOU does not require that the arbitrator set forth his legal reasoning. Thus, the circumstances are unlike those in King v. King (2020) 354 Ga.App.19, on which the Moseleys rely. In that case, the parties' arbi tration agreement contained an express provision requiring findings of fact and conclusions of law and "the arbitrator failed to issue an award in the form explicitly required by the parties' contract" by failing to include those findings and (Id. at pp. 25 26.)
The fact that a Georgia court denied the Moseleys' petition to vacate the arbitration award bolsters our conclusion that Georgia law, like California law, fails to provide a basis to overturn the arbitrator's determination.
In sum, under the "highly deferential standard of review" applicable here (Cooper v. Lavely &Singer Professional Corp., supra, 230 Cal.App.4th at p. 12), there is no basis to overturn the arbitrator's award.
3.6. The Moseleys fail to demonstrate that the court erred in applying the California legal rate of interest.
Finally, the Moseleys argue that the maximum legal rate of interest that can be applied under Georgia law is 7 percent, not the 10 percent entered by the court under California law. However, as discussed, the Moseleys make no attempt to demonstrate that the the court's conclusion that the arbitration award could be enforced according to California procedural law was erroneous. Thus, we reject the contention that Georgia law should apply with respect to the legal rate of interest.
DISPOSITION
The judgment is affirmed. NSN shall recover its costs on appeal.
WE CONCUR: EGERTON, J., BENKE, J.[*]
[*] Retired Associate Justice of the Court of Appeal, Fourth Appellate District, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.