Opinion
B306193
09-30-2021
ANN SIMONS, Petitioner, v. THE SUPERIOR COURT OF LOS ANGELES COUNTY, Respondent; THE ENTERPRISE et al., Real Parties in Interest.
Sauer & Wagner, Gerald L. Sauer and Gregory P. Barchie for Petitioner. Greenberg Traurig, Eric V. Rowen, Scott D. Bertzyk, and Matthew R. Gershman for Real Parties in Interest.
NOT TO BE PUBLISHED
Petition for writ of mandate. Los Angeles County Super. Ct. No. 19STCP01994 Randolph M. Hammock, Judge. Writ issued.
Sauer & Wagner, Gerald L. Sauer and Gregory P. Barchie for Petitioner.
Greenberg Traurig, Eric V. Rowen, Scott D. Bertzyk, and Matthew R. Gershman for Real Parties in Interest.
No appearance for Respondent.
EDMON, P. J.
Petitioner Ann Simons (Simons) and real parties in interest Gilad Lumer, Harry Lumer, Nathan Rubin, and David Wank ran a business known as the Enterprise. When disputes about managing the Enterprise arose between the parties, Simons demanded arbitration, asking that the Enterprise be dissolved and for monetary damages based on the Enterprise's alleged breaches of fiduciary duty. After proceedings spanning a decade, the arbitrator issued an award dividing the Enterprise's real properties among the parties-the so-called in-kind division or distribution.
Simons petitioned the trial court to vacate the award on the grounds the arbitrator was not impartial because she had objected to a proposed increase in his rate, he failed to comply with his disclosure obligations, and he exceeded the scope of his power by ordering the in-kind division. The trial court rejected all contentions, confirmed the arbitration award, and entered judgment.
Simons appealed. Treating the appeal as a petition for writ of mandate, we conclude that the trial court properly denied the petition to vacate the arbitration award but should have entered an interlocutory judgment as opposed to a judgment. We further conclude that there is no merit to Simons's objections to the arbitrator's award.
BACKGROUND
I. The parties' agreement and initiation of arbitration
Decades ago, five families started the Enterprise, a business that primarily owned and operated parking lots across the nation, including Los Angeles. One family, represented by Simons, owned 22 percent of the Enterprise. Four other families, represented by the individual real parties in interest, owned the remaining 78 percent.
The parties' agreement governing the Enterprise required arbitration of “any dispute arising under or in connection with this agreement or any agreement relating to any of the entities.” Any arbitration had to conform and be subject to the applicable rules and procedures of the American Arbitration Association (AAA). Also, the agreement was to be “governed by and construed and enforced according” to the laws of California “applicable to agreements made and to be performed entirely in such State without giving effect to the conflicts of laws principles thereof.”
When the Enterprise grew to encompass other commercial real estate ventures, the families restructured how the business was managed and removed Simons from her management position. Unhappy with the restructuring, Simons initiated arbitration in 2008 with AAA. Simons's arbitration demand sought to rescind an amendment to the agreement removing her as executive manager.
In 2009, the Honorable John Zebrowski (Ret.) was appointed arbitrator at an hourly rate of $550. He divided the arbitration into phases, with Phase I concerning so-called governance issues. Phase I concluded in 2010 with a partial award in real parties in interest's favor that was confirmed by the trial court.
II. Phase II proceedings
The arbitration then lay dormant for four years while the parties tried to settle. When new disputes arose, the matter proceeded to Phase II in 2014, still before Justice Zebrowski as arbitrator. At that time, AAA informed the parties that Justice Zebrowski's hourly rate had increased to $675; however, on Simons's confidential objection to the increase and to Justice Zebrowski remaining arbitrator, AAA determined that his original $550 rate would remain applicable and that he would continue to preside over the case.
At the arbitrator's request, Simons updated her arbitration demand. Her updated demand alleged breaches of fiduciary duty and self-dealing in connection with three real estate transactions. She further alleged that real parties in interest breached their fiduciary duties by failing to follow generally accepted accounting principles, to pay Simons her fair share from the sale of some of the Enterprise's assets, and by using a management services company. Based on these allegations, she asked (1) that the Enterprise be dissolved, (2) for money damages based on real parties in interest's alleged breaches of fiduciary duty, and (3) that she be appointed executive manager to wind up the Enterprise's affairs.
In March 2016, the arbitrator ordered the arbitration to proceed in two more phases. Phase II would address Simons's request for liquidation and winding up of the business. Phase III would then address Simons's claims for monetary damages based on real parties in interest's alleged breaches of fiduciary duty. As to Phase II, the arbitrator found that “ongoing strife” between the parties made it infeasible for them to continue in business together and that a “full value buy-out” by one party of the other that allowed the business to continue as a going concern was the preferred remedy. The arbitrator intended to appoint three disinterested appraisers to value the Enterprise. However, the arbitrator warned that if “such financial performance” did not occur, “resort to other less attractive procedures may then be required to achieve separation of the warring parties.”
An evidentiary hearing commenced in August 2017 but did not conclude until a year later. By the time of the hearing, the arbitrator had abandoned the idea of using three appraisers to value the property. Instead, during the arbitration, each side presented evidence, including expert testimony, about the Enterprise's value. Even so, the arbitrator and the parties continued to discuss how to value the Enterprise and how best to achieve the parties' business separation.
Only portions of the reporters' transcripts from the hearing have been submitted on appeal. According to real parties in interest, the evidentiary hearing took 18 days.
At a hearing on September 13, 2017, real parties in interest agreed to accept Simons's property valuations if the parties could then split the properties in accordance with their percentage interests (78 and 22 percent), an in-kind division having tax benefits over a cash distribution. Counsel for Simons did not reject the proposal and instead said he needed to talk to his client. The hearing proceeded and did not conclude until August 2018.
Simons's counsel asked for the proposal in writing, which he says was never provided.
III. The Phase II arbitration award
The arbitrator issued his Phase II arbitration award in February 2019. In it, the arbitrator noted that he had abandoned his original idea of appointing appraisers to value the Enterprise. He had also abandoned having “each separate element” of the Enterprise appraised. Instead, counsel “chose to rely primarily on macro metrics analysis such as cash flow, weighted average cost of capital, cap rates applied across a span of Enterprise assets and the like, rather than focused appraisals of different operating entities.”
Although the arbitrator had considered a full cash buyout, neither side had sufficient funds to accomplish this, there were financing issues, and the parties presented widely divergent absolute valuations. “Consequently, the possibility of a full cash buy-out was rejected, and a division in kind is now being ordered.”
The arbitrator found that the valuation evidence created “significant credibility issues, ” which he considered when distributing the properties. The arbitrator further found that Simons's gross valuation diverged “substantially” from the Enterprise's actual value, but real parties in interest's valuations were “much closer” to its true value. Taking that into account, the award directed various properties to be sold and allocated other properties between the parties, with only out-of-state properties being allocated to Simons.
IV. Simons petitions the trial court to vacate the award.
Simons petitioned the trial court to vacate the arbitration award. The petition first asserted that the arbitrator should have been disqualified after proposing the rate increase and that although AAA had assured Simons the arbitrator would not be informed of her objection, such “pretense of confidentiality was illusory.” Second, the arbitrator violated his ethical obligations by failing to disclose other offers to serve as an arbitrator in matters involving the real parties in interest or their counsel. Third, the arbitrator exceeded his powers by pivoting without notice from a cash buyout remedy to the in-kind division.
Real parties in interest petitioned to confirm the award.
Simons also asserted that the arbitrator refused to hear material evidence but does not raise this on appeal.
Real parties in interest opposed the motion. As to Justice Zebrowski's proposed change to his hourly rate, they argued there was no evidence either that he knew who objected to the increase or that, if he did know, it impacted his impartiality. They next argued that the arbitrator complied with all disclosure requirements and Simons relied on inapplicable authority to argue to the contrary. Finally, the arbitrator did not exceed his authority by ordering an in-kind division because AAA's rules allowed its arbitrators to grant any just or equitable relief. Moreover, Simons was not blindsided by the chosen remedy, which had been discussed and briefed at length by the parties.
V. The trial court denies the petition to vacate the award and confirms the arbitration award.
The trial court denied Simons's petition to vacate the arbitration award. The trial court first found that Simons had not shown any “ ‘corruption' ” by the arbitrator arising from Simons's objection to the proposed rate increase. There was no evidence the arbitrator knew of Simons's objection, and AAA said he would not be so informed. The trial court found that Simons's argument that the arbitrator was biased against her because he could have inferred she had objected to the rate increase required “too many inferences.”
The trial court also found Simons's second argument, that the arbitrator should have been disqualified because he failed to make supplemental disclosures about other employment with parties to the arbitration, to be meritless. There was no evidence he had accepted such employment, he said he had made all required disclosures, and Simons relied on inapplicable authority to argue to the contrary.
Finally, the trial court was unconvinced that the arbitrator exceeded his power by ordering an in-kind division, given that he provided a tentative plan and invited comment on it and that AAA's rules allowed arbitrators to grant any just and equitable remedy or relief within the scope of the parties' agreement. Citing Logoluso v. Logoluso (1965) 233 Cal.App.2d 523, the trial court found that dissolution can result in an in-kind distribution of property.
The trial court therefore confirmed the arbitration award and entered judgment. Simons appealed.
DISCUSSION
I. Jurisdiction and appealability
Before turning to the substantive merits of the appeal, we address two procedural issues: whether the trial court had jurisdiction to consider the petition, and whether the judgment was appealable. As we explain, we conclude that the trial court did have jurisdiction to review the petition; however, we treat the appeal as a writ.
At our request, the parties submitted supplemental briefs on these issues. They agree that the trial court had jurisdiction and the judgment is appealable. But neither their agreement nor the arbitrator's designation of his award as final renders it an award within the meaning of section 1283.4. (Kaiser Foundation Health Plan, Inc. v. Superior Court (2017) 13 Cal.App.5th 1125, 1143; see City of Gardena v. Rikuo Corp. (2011) 192 Cal.App.4th 595, 604 [parties cannot confer appellate jurisdiction where it does not exist].)
We begin with a brief overview of some core arbitration principles, a primary one being that public policy favors arbitration as a speedy and inexpensive way to settle disputes. (Hightower v. Superior Court (2001) 86 Cal.App.4th 1415, 1431 (Hightower).) By agreeing to arbitrate, parties expect that the delay and expense often associated with litigation in court will be avoided and the arbitrator's decision will be final and binding. (Ibid.) It is therefore often observed that an arbitrator's decision “should be the end, not the beginning of the dispute.” (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 10 (Moncharsh).) This goal of arbitral finality thus “results in a broad authority to the arbitrator to decide cases in a way that might not be justified in a court” (Hightower, at p. 1432) and in judicial deference to the arbitrator's broad authority to fashion creative remedies (id. at pp. 1432-1434).
In the interest of arbitral finality, an arbitration award must “include a determination of all the questions submitted to the arbitrators the decision of which is necessary in order to determine the controversy.” (Code Civ. Proc., § 1283.4.) Thus, arbitration awards that decide only preliminary or threshold issues are not final awards within the meaning of section 1283.4, and trial courts lack jurisdiction to review them.
All further undesignated statutory references are to the Code of Civil Procedure.
Under section 1294, a party may appeal: “(a) An order dismissing or denying a petition to compel arbitration. [¶] (b) An order dismissing a petition to confirm, correct or vacate an award. [¶] (c) An order vacating an award unless a rehearing in arbitration is ordered. [¶] (d) A judgment entered pursuant to this title. [¶] (e) A special order after final judgment.”
Maplebear, Inc. v. Busick (2018) 26 Cal.App.5th 394, for example, involved a class action arbitration demand filed by same-day grocery shoppers and deliverers claiming they had been misclassified as independent contractors. The arbitrator issued a partial final award finding that they could move for class certification. The partial final award did not otherwise address the propriety of class certification or the underlying claim that their employment status had been misclassified. (Id. at p. 398.) As the award left “unanswered almost every question raised” in the arbitration demand, the ruling was not an award under section 1283.4. (Maplebear, at p. 403; accord, Kaiser Foundation Health Plan, Inc. v. Superior Court, supra, 13 Cal.App.5th 1125 [award deciding only preliminary preemption issue did not qualify as award under section 1283.4].) Maplebear therefore found that the trial court properly dismissed the petition because the trial court had no jurisdiction to review the award.
Although partial awards that decide only preliminary, threshold issues do not constitute judicially reviewable awards under section 1283.4, the principle of arbitral finality does not “preclude the arbitrator from making a final disposition of a submitted matter in more than one award.” (Hightower, supra, 86 Cal.App.4th at pp. 1433-1434.) An award that resolves critical areas of dispute but reserves issues that may arise as a result of implementing the remedy is a final award that a trial court has jurisdiction to review. (Id. at p. 1419.)
Hightower, supra, 86 Cal.App.4th 1415, involved the alleged breach of a shareholder agreement containing a buy-sell provision. The arbitrator issued a decision giving one shareholder the option to obtain financing to buy the shares of the other shareholder. However, the arbitrator reserved jurisdiction to decide issues that might arise depending on whether the option was exercised. Hightower found this “incremental process” to be “reasonably necessary, if not essential, to the effective establishment and enforcement of the remedy.” (Id. at p. 1439.) Otherwise, the arbitrator left no issues undecided but had resolved the essential dispute, leaving only “those potential and conditional issues that necessarily could not have been determined” when the partial award was issued. (Ibid.) The court found this procedure consistent with state law, which permits an arbitrator to use a “multiple incremental or successive award process as a means, in an appropriate case, of finally deciding all submitted issues.” (Id. at p. 1434; see also Roehl v. Ritchie (2007) 147 Cal.App.4th 338, 352 [arbitration awards may “contemplate future proceedings”].)
Real parties in interest place these cases on a spectrum, with Maplebear on one end and Hightower on the other. While acknowledging that this case does not fit neatly on either end of that spectrum, real parties in interest argue that it falls closer to the Hightower end.
We agree. In essence, Simons's updated arbitration demand asked for two things: (1) dissolution of the Enterprise and (2) money damages for real parties in interest's alleged breaches of fiduciary duty primarily arising out of various real estate transactions. The arbitrator decided to address dissolution first, reserving the money damages issues for a subsequent phase.
In the Phase II award addressing dissolution, the arbitrator made statements showing his intent that the award be considered final within the meaning of section 1283.4. He stated that it was “intended as a final award” and was partial only because he had previously decided the governance issues and because claims focused on certain properties and transactions remained to be adjudicated. The award further stated that it was intended to be “separately enforceable according to its terms, ” and it was expected that the parties would petition to confirm the award.
Further, the issue decided in the Phase II award, dissolution, cannot be characterized as a preliminary or threshold issue, as were the class certification and preemption issues in Maplebear and Kaiser. Rather, as in Roehl and Hightower, dissolution was a core issue, if not the core controversy. In that respect, the award the arbitrator issued falls closer to those cases because they too resolved the core controversies.
Indeed, in deciding that core issue, it is unclear whether Justice Zebrowski addressed or resolved any of the money damages claims. One of those claims, for example, involved real parties in interest's alleged self-dealing in buying the Lacey Marketsquare property for the Enterprise. The arbitrator ordered that property to be sold.
Even so, there is a difference between the scenario before us and that in Hightower. The arbitrator in Hightower resolved all issues before him, reserving jurisdiction only over any further disputes that might arise regarding the remedy. In contrast, the money damages issue that the arbitrator reserved here was unrelated to dissolution. Stated otherwise, the money damages issue constituted a separate cause of action from which dissolution was severable. It does not appear that any award the arbitrator might issue in any Phase III proceeding would bear on the Phase II award. Therefore, the reservation of jurisdiction has nothing to do with implementing dissolution, whereas the reservation of jurisdiction in Hightower was to implement the remedy. Thus, if Hightower stands for the proposition that an arbitrator can reserve jurisdiction only over those issues necessary to effectuate a remedy ordered in an earlier award, then Hightower does not support what the arbitrator did here.
But we do not read Hightower either that narrowly or as the last word on arbitral finality under section 1283.4. Hightower and its progeny were, of course, driven by the core principles underlying arbitration that we highlighted above, such as deference to the arbitrator to craft remedies and to structure the proceedings in ways to promote efficiency and economy. (See, e.g., Hightower, supra, 86 Cal.App.4th at pp. 1433-1436.)
It seems to us that the arbitrator in this case tried to promote those notions by structuring the process in three separate and distinct phases. And, in the specific and unique circumstances before him, this made sense. The arbitration was initially filed in 2008 and resulted in an award in 2010 regarding governance issues. The matter then lay dormant for four years before new disputes arose between the parties that led to the updated arbitration demand. Informed by this history, the arbitrator then exercised the creativity and flexibility the parties bargained for in choosing arbitration by further dividing the arbitration into phases and addressing dissolution first. In doing so, he decided the main controversy between the parties. If, as in Hightower, an arbitrator may properly reserve jurisdiction to effectuate the remedy, it seems that an arbitrator should also be able to decide a self-contained controversy needing no further action, while reserving other, secondary issues for a separate phase. Doing so furthers, and does not contravene, the arbitration principles from which section 1283.4 and jurisdiction are based.
It does not appear that anyone raised jurisdictional and appealability issues when a petition to confirm that partial award was filed in the trial court.
That being said, we do not agree that an appeal lies from the issuance of a partial or interim arbitration award such as the one before us. Again, Hightower is instructive. In that case, the trial court denied Hightower's petition to vacate the partial arbitration award but did not confirm it either. (Hightower, supra, 86 Cal.App.4th at p. 1429.) Hightower then sought a writ of mandate to compel the trial court either to vacate the award or to confirm it and enter judgment so that he could attack it on appeal. (Ibid.) After finding that the award was an interim one under section 1283.4, Hightower, at pages 1440 to 1441, found that confirmation of the award was an interlocutory judgment subject to review by extraordinary writ. (See also Kaiser Foundation Health Plan, Inc. v. Superior Court, supra, 13 Cal.App.5th p. 1149 [Hightower “indicated that partial awards satisfying section 1283.4 should be subject to confirmation, and the interlocutory judgment of confirmation would be subject to review by writ”]; but see VVA-Two, LLC v. Impact Development Group, LLC (2020) 48 Cal.App.5th 985, 1001 [“that an otherwise final judgment reserves continuing jurisdiction for the court or an arbitrator to address particular issues does not automatically render that judgment interlocutory or nonappealable”].)
Hightower further found that such a procedure did not offend section 1283.4, other statutory provisions, or the arbitration agreement at issue in that case. (Hightower, supra, 86 Cal.App.4th at p. 1441.) Instead, the process, among other things, was consistent with the broad authority granted to arbitrators by the applicable rules.
Following Hightower, we agree that the process the arbitrator employed here was consistent with his broad authority and with section 1283.4. We accordingly deem the appeal to be a writ of mandate and, as such, turn to its merits.
II. The grounds to vacate arbitration awards and standard of review
As we have said, when parties decide to arbitrate grievances, thereby evincing an intent to bypass the judicial system and to avoid potential delays at the trial and appellate levels, “arbitral finality is a core component of the parties' agreement to submit to arbitration.” (Moncharsh, supra, 3 Cal.4th at p. 10.) Appellate review is therefore limited, and we generally cannot review arbitration awards for errors of fact or law, even when they appear on the face of the award or cause substantial injustice to the parties. (Id. at pp. 6, 28.) Instead, we may vacate an award if, as pertinent here, it was procured by corruption, fraud, or undue means or issued in excess of the arbitrator's powers. (§ 1286.2, subd. (a)(1), (4).)
An arbitration award also may be vacated if the arbitrator failed to disclose all matters that could cause a person aware of the facts to reasonably entertain a doubt that the arbitrator would be able to be impartial. (§§ 1281.91, subd. (a), 1281.9, subd. (a), 1286.2, subd. (a)(6), 170.1, subd. (a)(6)(A)(iii); Cal. Rules of Court, Ethics Standards for Neutral Arbitrators in Contractual Arbitration (2003) (Ethics Standards).)
An arbitration award may also be vacated as in excess of the arbitrator's powers “ ‘if it is so utterly irrational that it amounts to an arbitrary remaking of the contract between the parties.' ” (Advanced Micro Devices, Inc. v. Intel Corp. (1994) 9 Cal.4th 362, 377.) But the “critical question with regard to remedies is not whether the arbitrator has rationally interpreted the parties' agreement, but whether the remedy chosen is rationally drawn from the contract as so interpreted.” (Ibid.) A party thus may successfully challenge an arbitration award if the relief granted was in violation of restrictions in the arbitration agreement. (Emerald Aero, LLC v. Kaplan (2017) 9 Cal.App.5th 1125, 1140 (Emerald Aero).) A party may also challenge an arbitration award if the relief granted violated restrictions in the claims submitted to the arbitrator or the arbitration rules. (Ibid.)
We review de novo a trial court's determination that the arbitrator did not exceed his powers and made required disclosures. (Haworth v. Superior Court (2010) 50 Cal.4th 372, 383; Sargon Enterprises, Inc. v. Browne George Ross LLP (2017) 15 Cal.App.5th 749, 763.) To the extent the trial court's ruling rests on a determination of disputed factual issues, we apply the substantial evidence test to those issues. (Malek v. Blue Cross of California (2004) 121 Cal.App.4th 44, 55.)
III. There were no facts that would cause a person reasonably to entertain a doubt about the arbitrator's impartiality.
Simons asserts that the arbitrator's proposed rate increase and her objection to it were facts that would cause a person reasonably to entertain a doubt as to his impartiality. We disagree.
Before addressing the merits of this assertion, some additional background is helpful. As we have said, Justice Zebrowski's hourly rate was $550 when he was appointed in 2009. At that time, he agreed that any change to his rate after his appointment would not apply to this case. (See generally Ethics Standards, std. 16(b) [arbitrator must inform parties in writing of terms of compensation].) When the arbitration was reactivated in 2014, AAA notified the parties that Justice Zebrowski's hourly rate had increased to $675 and asked them to advise AAA of any objections to his appointment. AAA further advised of dates the arbitrator was available for a status conference if no objection were lodged. AAA assured the parties that the arbitrator “shall not be copied on any comments related to the disclosure.”
Simons lodged a confidential objection not to be shared with Justice Zebrowski that asked for his disqualification. She reasoned that if her objection to increasing his rate were sustained, he would infer-or perhaps real parties in interest would let the “ ‘cat out of the bag' ”-that it was she who had objected.
Real parties in interest opposed Simons's request to disqualify Justice Zebrowski, characterizing it as a “thinly veiled effort to change horses mid-stream” to gain an improper “ ‘new life' ” in the case and to delay it. Otherwise, Simons's objection improperly supposed AAA would violate its rules and disclose to Justice Zebrowski that Simons had objected to the rate increase. Simons further erroneously assumed that even if the Justice did find out about the objection that it would impact his impartiality.
After reviewing the parties' positions, AAA reaffirmed Justice Zebrowski as arbitrator at his original hourly rate of $550.
The trial court found that the proposed rate increase did not require Justice Zebrowski's disqualification. In so finding, the trial court said in its written order that Simons failed to show “ ‘corruption' ” on Justice Zebrowski's part.
Relying on the trial court's use of the word “corruption, ” Simons now argues that the trial court applied the incorrect legal standard and mistakenly required her to prove Justice Zebrowski was actually biased-i.e., “corrupt”-under section 1286.2, subdivision (a)(1), as opposed to showing that a person aware of the facts could reasonably doubt his impartiality under section 1286.2, subdivision (a)(6).
The totality of the record, however, shows that the trial court understood the grounds on which Simons was seeking to disqualify the arbitrator and imposed no requirement that Simons prove actual bias. At the hearing on Simons's motion, the trial court said it “appreciate[d]” that Simons did not have to show actual bias and acknowledged the general rarity of evidence of actual bias. Instead, the trial court asked whether there was any evidence Justice Zebrowski knew that Simons had objected to his proposed rate increase. In response, Simons proffered speculation that he would have guessed she was the one who objected because she was on the losing end of Phase I; as the sole claimant, she bore half the arbitrator costs; and the status conference had to be continued once she asserted her objection.
Speculation is not evidence. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 864.) As the trial court said, Simons's argument was based on “too many inferences, ” and there were no facts that reasonably could lead a person to entertain doubts about Justice Zebrowski's impartiality. Impartiality entails the absence of bias or prejudice in favor of or against a party, as well as maintaining an open mind. (Haworth v. Superior Court, supra, 50 Cal.4th at p. 389.) The test for impartiality is based on the well-informed, thoughtful, reasonable person, and not on someone who is hypersensitive or unduly suspicious. (Ibid.) The appearance of bias thus must not be so broadly construed that recusal can be mandated based on mere unsubstantiated suggestion. (Ibid.)
That is what the trial court found here-the suggestion that Justice Zebrowski knew or could infer Simons objected to his rate increase was nothing more than unsubstantiated inference upon inference. There was, for example, no evidence AAA informed Justice Zebrowski of the objection. The evidence was to the contrary: AAA stated he would not be informed of any objection.
Nor do we agree that Justice Zebrowski would have guessed Simons was the sole objector merely because a status conference was continued (perhaps so that AAA could consider Simons's objection), Simons had lost Phase I, and Simons bore one-half of arbitration costs. None of these circumstances was remarkable. There was simply no reason for the arbitrator to think that Simons had objected as opposed to real parties in interest. Indeed, the arbitrator could have believed that both sides had objected.
Moreover, even if Justice Zebrowski did manage to surmise that Simons objected, this would still not be a sufficient fact on which one could reasonably entertain a doubt as to his impartiality. Parties frequently object to an arbitrator's or judge's statements, decisions, and rulings. That is the nature of litigation. We cannot presume that an arbitrator becomes biased against a party based on that party's mere assertion of an objection, even if the objection is to increasing the arbitrator's rate, or find such an objection a fact sufficient to raise a doubt as to an arbitrator's impartiality. (See People v. Hernandez (1984) 160 Cal.App.3d 725, 746 [“There is a presumption in the honesty and integrity of our judicial officers.”]; see, e.g., Greenspan v. LADT, LLC (2010) 185 Cal.App.4th 1413, 1456-1460 [party's separate lawsuit against arbitrator arising out of a prior arbitration did not raise issue as to his impartiality in current arbitration].) Indeed, even after the rate issue was resolved, Justice Zebrowski denied a request that real parties in interest had made to sanction Simons, demonstrating that he retained his impartiality.
Also, although Simons suggests that real parties in interest alerted the arbitrator that she had objected to his proposed rate increase in that request for sanctions, we fail to see that it did. The sanctions issue arose when AAA asked the parties to remit $11,000 each for anticipated compensation. When Simons did not pay her share, AAA informed the parties that if payment were not made, the arbitrator could decide to proceed, resign, or suspend the case. In a letter to AAA, real parties in interest decried Simons's failure to pay as part of her ongoing “strategy of delay” and “habitual” gamesmanship. Among other remedies, real parties in interest asked that Simons be sanctioned for her delay tactics. Soon after real parties in interest sent its letter, AAA received Simons's payment. Nonetheless, real parties in interest wanted their sanctions request heard. The arbitrator heard and denied the motion for sanctions.
We therefore conclude that a person aware of the facts would not reasonably entertain a doubt about the arbitrator's impartiality.
IV. There is no evidence the arbitrator violated his disclosure obligations.
Simons next argues that Justice Zebrowski should have been disqualified because he failed to disclose whether he received or accepted other offers of employment from real parties in interest. Not so.
When Justice Zebrowski was appointed arbitrator in 2009, his disclosure statement said he would consider accepting other cases involving a party, lawyer or law firm involved in this arbitration. No party objected to this disclosure. And, under the applicable Ethics Standards, Justice Zebrowski was not required to inform the parties if in fact he received or accepted any offer of employment. (Ethics Standards, stds. 7(b)(2), 12(b).)
Simons argued in the trial court that the 2014 amendments to the Ethics Standards required a supplemental disclosure but now concedes that those amendments were inapplicable.
After Justice Zebrowski issued his Phase II award in 2019, Simons asked him to supplement the disclosure. In response, AAA informed the parties that Justice Zebrowski's 2009 disclosure complied with the Ethics Standards and its rules. “As to the ongoing disclosure requirement” in the Ethics Standards and AAA's rules, “there has been nothing to disclose during the pendency of this matter.” To date, Justice Zebrowski “had no family, attorney-client, or significant relationship with a party or lawyer in the arbitration” or any financial or other interest in its outcome, and he was unaware of any matter that would cause a person aware of the facts reasonably to entertain a doubt he would be able to be impartial. AAA added that there were no additional disclosures necessary as to counsel and parties who had joined the case after the arbitrator made his initial disclosures.
Additionally, Justice Zebrowski sent his own letter to the parties informing them that the “disclosures provided to date have been reviewed and considered. My conclusion is that all disclosures required in this matter by California law have been made.”
Based on this, the trial court found no evidence the arbitrator accepted other employment from a party, and it accepted the arbitrator's representation that he had made all required disclosures. The trial court thus found Simons's contention that Justice Zebrowski failed to comply with his disclosure requirements without merit, “as there is no evidence that there was anything to disclose that the arbitrator did not disclose.”
Simons now faults this ruling for supposedly ignoring AAA's own disclosure provisions imposing an ongoing obligation on arbitrators to disclose any direct or indirect relationship with case participants for the length of their service in a matter. These provisions do not help Simons, first because it is undisputed that Justice Zebrowski complied with the governing Ethics Standards. The Ethics Standards, along with the Code of Civil Procedure, describe an arbitrator's disclosure obligations. (Honeycutt v. JPMorgan Chase Bank, N.A. (2018) 25 Cal.App.5th 909, 922.) They establish a minimum standard of conduct for neutral arbitrators to guide their conduct, protect participants, and promote public confidence in the arbitration process. (Ibid.) Under those Ethics Standards, once Justice Zebrowski disclosed that he would consider other offers of employment, he had no further duty to tell the parties if such offers were either made or accepted. (Ethics Standards, stds. 7(b)(2), 12(b).) Simons cites no authority-other than general provisions of the Civil Code-that AAA's general disclosure rule supersedes or is inconsistent with the Ethics Standards.
Second, AAA represented that Justice Zebrowski had complied with his ongoing disclosure obligations described in its rules. Therefore, even if we agreed that AAA's rules required him to make a supplemental disclosure, apparently none was required.
Third, nothing in the record suggests that Justice Zebrowski entertained or accepted an employment offer from someone associated with this case. As the party seeking to vacate the arbitration award, Simons had the burden of establishing that one of the grounds to do so applied and that she suffered prejudice. (Royal Alliance Associates, Inc. v. Liebhaber (2016) 2 Cal.App.5th 1092, 1106.) However, Simons does not specify what, if anything, prompted her request for a supplemental disclosure. On this record, and in the absence of such evidence, she cannot establish prejudice.
Finally, Simons's objection on this ground was untimely. She did not raise any issue regarding Justice Zebrowski's disclosures until after he had issued the Phase II award, which she viewed as unfavorable to her. However, a “party aware that a disclosure is incomplete or otherwise fails to meet the statutory disclosure requirements cannot passively reserve the issue for consideration after the arbitration has concluded. Instead, the party must disqualify the arbitrator on that basis before the arbitration begins.” (United Health Centers of San Joaquin Valley, Inc. v. Superior Court (2014) 229 Cal.App.4th 63, 85; see Dornbirer v. Kaiser Foundation Health Plan, Inc. (2008) 166 Cal.App.4th 831, 843 [party cannot wait to raise disclosure issue to see if award is favorable, when party could have raised issue before arbitration].) Simons had an opportunity to object to the disclosure in 2009, but she did not do so. Perhaps she could have objected in 2014 when the arbitration was reactivated. Having failed to object at those times, her 2019 objection, raised after a lengthy and intense process, was untimely.
V. The award did not exceed the arbitrator's power.
Simons contends that ordering an in-kind division of the Enterprise's property exceeded the arbitrator's authority because that remedy (1) was prohibited by the parties' agreement, (2) violated statutory public policy, (3) was not rationally related to the breaches Simons alleged, and (4) was imposed without notice to Simons. We address, and reject, each in turn.
A. The remedy did not violate the parties' written agreement.
Simons argues that the arbitrator's remedy violated a provision in the parties' agreement prohibiting partition. Per that provision, the parties (or owners as they were called in the agreement) agreed that the real properties owned by the Enterprise and any parts of the business were unsuitable for partition. Each owner therefore irrevocably waived any and all rights to maintain a partition action relating to the properties, entities, or the Enterprise's business.
Simons did not cite this provision to the trial court, and it is not clear she cited it during the arbitration. However, she suggests that her general argument in the trial court-that the remedy was not rationally derived from the contract and the alleged breach-was sufficient to lead the trial court to this specific provision and to preserve the argument for appellate review. It was not. Neither the trial court nor we have an obligation to decipher a party's opaque intentions. (See, e.g., Cahill v. San Diego Gas & Electric Co. (2011) 194 Cal.App.4th 939, 956 [we do not develop arguments for appellant].) The trial court had no obligation to read the 31-page written agreement and attached schedules and guess which of its many provisions might support Simons's position. Her failure to cite the provision to the trial court forfeits any issue regarding it on appeal. (See, e.g., Morgan v. Imperial Irrigation Dist. (2014) 223 Cal.App.4th 892, 913 [appellate court will not review issue not raised in trial court].)
And, as we discuss post, the record shows that Simons agreed toan in-kind distribution of property as a remedy.
Even if the issue were properly before us, we would not be persuaded that the provision prohibited what the arbitrator did here. Rather, arbitrators act in excess of their power if they grant relief expressly precluded by the arbitration agreement. (Emerald Aero, supra, 9 Cal.App.5th at pp. 1139-1140.) Where, for example, an agreement expressly prohibited forfeiture of a partner's capital account, even in the event of a partner's wrongful withdrawal from the company, the arbitrator exceeded his power by ordering forfeiture. (O'Flaherty v. Belgum (2004) 115 Cal.App.4th 1044, 1057.) Forfeiture was also problematic in that case because the parties' agreement precluded the arbitrator from altering, amending, modifying, or changing any terms of the agreement or granting any remedy prohibited by its terms or not available in a court of law. (Id. at p. 1049.)
The Enterprise agreement does not contain similar provisions. Rather, the partition provision prohibits the Enterprise's owners from pursuing partition. The provision does not prohibit an arbitrator from using it as a remedy. And no provision in the Enterprise agreement forbade the arbitrator from granting a remedy prohibited by its terms or unavailable in a court of law. In the absence of provisions like those in O'Flaherty, arbitrators generally have great discretion to fashion remedies. (Emerald Aero, supra, 9 Cal.App.5th at p. 1138.) The partition provision placed no limit on the arbitrator's discretion.
B. The remedy did not violate statutory public policy.
Simons next argues that the arbitrator's remedy violated the public policy expressed in Corporations Code section 16402, which states, “A partner has no right to receive, and may not be required to accept, a distribution in kind.” We do not agree with this argument.
Not every statute expresses a fundamental public policy. “[M]any statutes simply regulate conduct between private individuals, or impose requirements whose fulfillment does not implicate fundamental public policy concerns.” (Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, 669.) In the absence of an explicit legislative expression of public policy, courts should be reluctant to invalidate an arbitrator's award on the ground of illegality. (Moncharsh, supra, 3 Cal.4th at p. 32; see also Department of Personnel Administration v. California Correctional Peace Officers Assn. (2007) 152 Cal.App.4th 1193, 1195 [arbitrator exceeds powers if award violates statutory right or well-defined public policy].) This is the general rule because the “Legislature has already expressed its strong support for private arbitration and the finality of arbitral awards” in the Code of Civil Procedure. (Moncharsh, at p. 32.) “Absent a clear expression of illegality or public policy undermining this strong presumption in favor of private arbitration, an arbitral award should ordinarily stand immune from judicial scrutiny.” (Ibid.; see, e.g., Sargon Enterprises, Inc. v. Browne George Ross LLP, supra, 15 Cal.App.5th at pp. 766-770 [award violated clearly articulated statutory right to have court preliminarily determine arbitrability].)
The Supreme Court made this statement in the different context of deciding whether a tort action for wrongful discharge based on an alleged breach of public policy may be based on policies derived from a statute, the constitution or some nonlegislative source. (Foley v. Interactive Data Corp., supra, 47 Cal.3d at p. 669.) The court found that regardless of its source, there had to be a disparagement of a public policy alleged. (Ibid.)
Given this authority, we cannot agree that Corporations Code section 16402 clearly expresses a fundamental public policy such that we could base vacating the arbitration award on it. Rather, the section is part of the Uniform Partnership Act of 1994 (Corp. Code, § 16100) and simply describes how a partner's distribution should occur. As such, it describes something more akin to private than public conduct. Indeed, rather than a bare assertion that the section expresses a fundamental public policy, Simons does not clarify what well-defined policy inuring to the public benefit it vindicates or furthers. As we discern none that could trump the well-defined public policy favoring the finality of arbitral awards, we reject this argument.
C. The remedy is rationally related to the agreement and arbitration claim.
Simons also contends that the arbitrator exceeded his powers because the remedy was not rationally related to either the parties' agreement or any breach. We are unpersuaded.
Arbitrators do not exceed their powers by imposing a particular remedy if it bears a rational relationship to the underlying claim or arbitration submission or breach, even if a jury or court could not have awarded the remedy. (Emerald Aero, supra, 9 Cal.App.5th at p. 1139; Kelly Sutherlin McLeod Architecture, Inc. v. Schneickert (2011) 194 Cal.App.4th 519, 529.) Further, AAA rules allow arbitrators to grant any remedy or relief they deem just and equitable and within the scope of the parties' agreement. (AAA Commercial Arbitration Rules and Mediation Procedures, Rule R-47(a).) Arbitration submissions are broadly construed, and arbitrators are authorized to determine all questions necessary to resolve the controversy. (Kelly Sutherlin, at p. 529.) Absent an express and unambiguous limitation in the arbitration submission, an arbitrator has authority to award any relief rationally related to the factual findings. (Emerald Aero, at p. 1140.)
The parties' arbitration agreement provided that the arbitration would be subject to applicable AAA rules and procedures.
All further rule citations are to the AAA Commercial Arbitration Rules and Mediation Procedures.
When the arbitration here was reactivated in 2014, Simons updated her arbitration demand to ask for dissolution of the Enterprise and for money damages for real parties in interest's alleged breach of fiduciary duties. Real parties in interest asked for disassociation. Per his March 2016 order, the arbitrator decided to address dissolution first and then address in a separate phaseSimons's claim for monetary damages arising from real parties in interest's alleged breaches of fiduciary duty.
How to characterize what the arbitrator did (dissolution, disassociation, in-kind division) has been the subject of dispute. The dispute is immaterial for our purposes, and we use “dissolution” as shorthand for what occurred rather than in any strict legal sense.
Simons argues that this was impermissible because dissolution depended on her claim for monetary damages. Stated otherwise, Simons urges that the arbitrator put the cart before the horse by dissolving the Enterprise before finding there was a breach of the Enterprise agreement. Not so. The arbitrator had considerable discretion to control how the proceedings were conducted. (§ 1282.2, subd. (c) [arbitrator shall rule on questions of hearing procedure]; Rule R-32 [arbitrator has discretion to conduct proceedings with view to expediting resolution of dispute and may bifurcate proceedings and direct parties to focus on issues which could dispose of all or part of case]; see Schlessinger v. Rosenfeld, Meyer & Susman (1995) 40 Cal.App.4th 1096, 1105-1107 [arbitrator could decide matter using summary-adjudication procedure rather than a live hearing].)
Nor were issues concerning ending common ownership of the Enterprise dependent on Simons's claim for monetary damages. The monetary damages claims were based on allegations of real parties in interest's self-dealing in connection with specific real estate transactions. In one transaction, for example, Simons alleged that the Enterprise bought real property known as Lacey Marketsquare for more than its fair market value. Simons further alleged that, unbeknownst to her, certain real parties in interest had interests in Lacey Marketsquare and personally profited off its sale.
Even assuming that Simons prevails on this or any of her claims in Phase III, an award of monetary damages can occur regardless of what happened in Phase II. This case does not present a scenario involving election of remedies. Election of remedies, generally speaking, refers to choosing between two or more concurrent but inconsistent remedies based on the same set of facts. (Roam v. Koop (1974) 41 Cal.App.3d 1035, 1039.) We discern nothing inconsistent in what the arbitrator did, especially since the record before us shows that Simons knowledgeably proceeded with Phase II and dissolution. (See ibid. [if plaintiff unequivocally and knowledgeably proceeds on one remedy, she may be barred recourse to the other].) And, as we have said, the arbitrator was well within his discretion to decide the dissolution issue first before, for example, the Lacey Marketsquare matter.
Instead of basing dissolution on a finding that real parties in interest breached a fiduciary duty, the arbitrator based his decision to dissolve the Enterprise on a finding that maintaining common ownership of it was not feasible because of ongoing strife between the parties. This finding accords with partnership law. That is, depending on its type, a partnership may be dissolved by the express will of half or all the partners, on application by a partner that the partnership's economic purpose is likely to be unreasonably frustrated, or because a partner has engaged in conduct relating to the business making it not reasonably practicable to carry on the business with that partner. (Corp. Code, § 16801.)
We accept Simons's characterization of the Enterprise as a partnership but make no finding that it was a partnership.
Simons, however, complains that her arbitration claim never used the words “ongoing strife” as a basis for dissolution, and therefore the arbitrator went beyond the strictures of her claim. Simons confuses what she asked for (dissolution) and the arbitrator's finding of fact why dissolution was appropriate (ongoing strife). As the trial court aptly observed, Simons's argument that the arbitrator could order dissolution only on a finding of malfeasance committed by a real party in interest presented an issue “not so much with the remedy” as with the factual basis for it. We do not review an arbitrator's findings for substantial evidence. (Hotels Nevada, LLC v. L.A. Pacific Center, Inc. (2012) 203 Cal.App.4th 336, 359.) Considering the limited nature of judicial review of arbitral awards, this was not a ground to vacate the award, even if the result was based on a factual finding other than the ones Simons believed supported her request for dissolution.
In any event, this finding is hardly controversial. That there was ongoing strife between the parties was a statement of the obvious and well within the arbitrator's discretion to find based on the arbitration submission and the evidence adduced throughout the proceedings. (See, e.g., Navarro v. Perron (2004) 122 Cal.App.4th 797, 801 [trial court's statement that parties' relationship had so deteriorated as to make common ownership impossible was a “statement of the obvious”].)
Nor was the specific remedy the arbitrator ordered-an in-kind division-otherwise in excess of the arbitrator's powers. Parties can agree to divide partnership property in kind in a dissolution court proceeding. (Logoluso v. Logoluso, supra, 233 Cal.App.2d at p. 530.) Simons, however, argues that Logoluso is no longer good law because the Uniform Partnership Act (Corp. Code, § 16100, et seq.) has superseded it. Even were that correct, it would not render what the arbitrator did invalid. Rather, in choosing arbitration, parties have bargained that the arbitrator will exercise flexibility, creativity, and a sense of fairness in selecting a remedy. (Emerald Aero, supra, 9 Cal.App.5th at p. 1138.) In light of that flexibility, “the principle of arbitral finality which forbids judicial inquiry into the legal correctness of the arbitrator's decisions on submitted issues, and the related principle that remedies available to a court are only the minimum available to an arbitrator (unless restricted by agreement), ” an order is not in excess of an arbitrator's powers just because the same relief is or might not be available in a judicial action. (Advanced Micro Devices, Inc. v. Intel Corp., supra, 9 Cal.4th at pp. 390-391; accord, Kelly Sutherlin McLeod Architecture, Inc. v. Schneickert, supra, 194 Cal.App.4th at p. 529.)
This case is therefore not like Harshad & Nasir Corp. v. Global Sign Systems, Inc. (2017) 14 Cal.App.5th 523. In that case, the arbitration claim alleged only that the parties had entered into various invoices on which money remained owing. (Id. at p. 544.) The arbitrator, however, decided a claim of lost profits and, in doing so, exceeded his authority. (Id. at pp. 542-546.)
In contrast, Simons's arbitration claim asked for dissolution. Dissolution is what the arbitrator granted. Distributing the Enterprise's assets in kind was rationally related to dissolution, the Enterprise agreement, and the arbitration submission.
D. Simons had adequate notice.
Simons's final argument why the arbitrator exceeded his powers is she received inadequate notice under AAA rules that he was going to do an in-kind division of property rather than a cash buyout. Again, we do not agree.
A party may successfully challenge an arbitration award if the relief granted violated arbitration rules. (Emerald Aero, supra, 9 Cal.App.5th at pp. 1139-1140.) Under AAA rules, a party must specify in the arbitration demand “the relief sought and the amount involved, ” and parties must provide written notice of any changes to the claim information. (Rules R-4(e)(iv), R-6(a).) Rule R-6(a), on which Simons specifically relies, requires a partyto give written notice to the opposing party and the arbitrator of a changed or increased claim. It also provides that any new or different claim shall be made in writing and filed with AAA, and a copy provided to the other party, who shall have 14 days from the date of transmittal to answer. (Rule R-6(b).) After the arbitrator is appointed, however, no new or different claim may be submitted except with the arbitrator's consent. (Rule R-6(b).)
Rule R-6 does not help Simons. It concerns what notice a party seeking to assert a new or changed claim must give. Neither Simons nor real parties in interest were raising a new claim. The rule does not concern what notice an arbitrator must give to the parties when the arbitrator is considering a certain remedy. For this reason, Emerald Aero, supra, 9 Cal.App.5th 1125, on which Simons relies on, is distinguishable. In that case, the plaintiffs in an arbitration gave notice of their new claim for punitive damages within 24 hours of the arbitration hearing. (Id. at p. 1141.) The Court of Appeal found that this was inadequate notice under Rule R-6. (Emerald Aero, at p. 1141.)
To the extent the arbitrator had to give notice of the remedy he was considering, the issue is more one of fundamental fairness, which focuses on whether the parties received notice and a fair opportunity to be heard. (Emerald Aero, supra, 9 Cal.App.5th at p. 1142.) We therefore ask, did the arbitrator conduct a fair hearing? (See, e.g., Royal Alliance Associates, Inc. v. Liebhaber, supra, 2 Cal.App.5th at p. 1105 [fairness of arbitration process is subject to judicial review].)
Our ability to answer this question, however, is impeded by the record. Simons, as appellant, has the burden of providing an adequate record for review. (See generally Rhue v. Superior Court (2017) 17 Cal.App.5th 892, 897.) Although we have no desire to add to an already lengthy record, to the extent Simons contends she never agreed to or had notice of an in-kind division, she was required to provide the court with a record containing the entirety of the evidentiary hearing, rather than just the fragments provided. Simons's failure to provide an adequate record on an issue requires that the issue be resolved against her. (See, e.g., ibid.)
Even on the record provided, however, it is more than clear that the hearing was fair. Early in Phase II, the arbitrator expressed that the difficulty was how to achieve the parties' business separation. To be sure, the arbitrator initially said that a cash buyout was the best way to achieve that goal. In November 2015, for example, the arbitrator referred to separating the parties via a buyout mechanism and identified an objective of structuring a buyout process that would end common ownership of the Enterprise, place ownership in the hands of one party, and preserve the business's value as a going concern. The March 2016 order similarly identified a “full value buy-out” by one party of the other to be the preferred remedy. But the arbitrator also warned that if “such financial performance” did not occur, “resort to less attractive procedures may then be required to achieve separation of the warring parties.”
When the evidentiary hearing began in August 2017, the goal apparently still was a cash buyout. Even so, at the outset of those hearings, the arbitrator and the parties were still debating how to achieve a full business separation of the parties.
The so-called “pivot” from a cash buyout to an in-kind division occurred on September 13, 2017. At that time, counsel for real parties in interest proposed that the parties split the properties according to their percentage interests of 78 and 22 percent. Counsel then described how he believed the process could play out. In response, Simons's counsel said the idea was complex and he needed to talk to his client. He suggested an adjournment for a month and asked for the proposal in writing. It is unclear what precisely happened next, except that the hearing went on until it concluded in August 2018.
But what is clear is the “pivot” from a cash buyout to an in-kind division of property occurred in 2017, one year before the evidentiary hearing concluded in August 2018. This is obviously different than the less than 24 hours' notice that was found to be inadequate in Emerald Aero, supra, 9 Cal.App.5th at page 1141.
The notion of an in-kind division also was not a complete surprise to Simons. An in-kind settlement had been discussed as an option before the arbitrator issued his March 2016 order directing the arbitration to proceed in two more phases. In a March 2016 letter to the arbitrator concerning the valuation procedure, for example, Simons acknowledged that “potential asset swaps” were a possible component of a remedy and referred to direct negotiations between the parties in which certain assets could be allocated to the parties. The arbitration award thus noted that an in-kind division had been “discussed as an option before the Phase II evidentiary hearing commenced.”
Aside from the more-than-adequate notice Simons had that the arbitrator might do an in-kind division of property, Simons agreed to the so-called pivot to this remedy. Other than asking for the opportunity to discuss the issue with his client and objecting to going forward with witnesses whose testimony might be irrelevant to an in-kind division, there is no evidence Simons's counsel asked for or needed a continuance of the hearing to address any issue concerning an in-kind division or otherwise objected to it. (See, e.g., Mesecher v. County of San Diego (1992) 9 Cal.App.4th 1677, 1685 [appellant may waive right to attack error by expressly or impliedly agreeing at trial to ruling or procedure objected to on appeal].)
Rather, Simons's counsel confirmed in closing argument that real parties in interest had “decided to pivot to the in kind” division and Simons had agreed to “take it.” And when discussing the tax consequences of Simons receiving cash for properties or doing an in-kind exchange, her counsel commented that her preference was for “property, not cash. I'm pretty certain of that.”
Simons also fails to point us to any clear objection she made that the proposed remedy exceeded the arbitrator's power. (See K.C. Multimedia, Inc. v. Bank of America Technology & Operations, Inc. (2009) 171 Cal.App.4th 939, 949-950 [failure to object to proposed procedure forfeited issue on appeal].) Instead, Simons participated in, for example, argument on the issue, submitted a proposal in July 2018 about how to distribute properties, made a closing argument based on an in-kind division, and submitted post hearing briefs on the issue.
The award itself also supports that she raised no clear objection. In it, the arbitrator referred to an objection Simons made to the award on the ground that “each Enterprise element must be separately appraised to create a basis for a division in kind.” However, the arbitrator did not refer to any general objection to the remedy itself as opposed to the evidentiary basis for it.
The record before us thus shows that the remedy was proposed early in the evidentiary hearing and that Simons agreed to the proposal. Simons therefore had notice that the arbitrator would divide the property in kind, and she had an opportunity to respond. In short, she received a fair hearing.
DISPOSITION
Let a peremptory writ of mandate issue directing the trial court to modify its judgment confirming the Phase II partial final award by entering an interlocutory judgment confirming the Phase II partial final award. Real parties in interest may recover their appellate costs. The request for judicial notice filed May 3, 2021 by real parties in interest is denied.
We concur: LAVIN, J. HILL, J. [*]
[*] Judge of the Santa Barbara Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.