Singleton v. Amazon.com CA4/1 ( 2015 )

Filed 3/20/15 Singleton v. Amazon.com CA4/1
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COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
STANLEY E. SINGLETON, D066091
Plaintiff and Appellant,
v. (Super. Ct. No. 37-2013-00041646-
CU-CO-CTL)
AMAZON.COM et al.,
Defendants and Respondents.
APPEAL from an order and judgment of the Superior Court of San Diego County,
Ronald S. Prager, Judge. Affirmed.
Stanley E. Singleton, in pro. per., for Plaintiff and Appellant.
Stoel Rives, J. Will Eidson and Jonathan A. Miles for Defendants and
Respondents.
Plaintiff and appellant Stanley E. Singleton sued defendants and respondents
Amazon.com and Evan James (Amazon), on theories of breach of contract and fraudulent
misrepresentation, regarding their disputes over the Amazon Services Business Solutions
Agreement (the "Agreement") that Singleton had signed to enable him to sell
merchandise on Amazon's website. This action was stayed while arbitration proceeded
under an arbitration clause in the Agreement. (Code Civ. Proc., § 1286 et seq.; all further
statutory references are to the Code of Civil Procedure unless otherwise noted.) The
arbitrator ruled for Amazon.
This is Singleton's appeal from a trial court order denying his petition to vacate the
arbitration award (the award) and granting Amazon's cross-petition to confirm it, and
from the judgment of dismissal. Singleton contends the trial court failed to recognize that
the award should be vacated because the underlying Agreement was void due to a
fraudulent provision, and thus the award was procured through corruption. (§ 1286.2,
subd. (a)(1).) He also argues the arbitrator prejudicially refused to hear evidence material
to the controversy, such as his claims about lack of adequate notice before termination of
his account or entitlement to punitive damages. (§ 1286.2, subds. (a)(3), (a)(5).)
In response, Amazon argues the trial court correctly denied the petition to vacate,
because none of the grounds to vacate an award, as listed in section 1286.2 et seq., exists
in this case. Amazon contends the trial court properly confirmed the award, because
Singleton's objections to its conclusions on fraudulent misrepresentation, or the manner
in which the hearing was conducted, had no basis in fact or law. The record supports
Amazon's claims and the judgment of dismissal of Singleton's action, with prejudice, is
affirmed.
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I
BACKGROUND FACTS
A. Arbitration
Singleton, as "Stan's Big Savings," agreed with Amazon to sell his goods online.
Paragraph 3 of the Agreement allowed either the seller or Amazon to terminate or
suspend the Agreement immediately by giving notice, for any reason at any time. Under
paragraph 18 of the Agreement, the parties agreed to submit any disputes about the
Agreement to arbitration.
Paragraph 18 of the Agreement incorporates the provisions of Amazon's "Service
Terms and the applicable Program Policies," as a subagreement. Those terms include
criteria for seller performance measurement and targets for performance, and a
performance review and notification process. The policy states that "in most cases, we
contact sellers with poor performance to ask for measurable improvements within 60
days of the first warning. Occasionally, we remove the selling privileges of accounts
with very poor performance immediately."
After Singleton failed to meet its performance standards, Amazon terminated his
seller account. Singleton attempted to initiate contractual arbitration but the Agreement
contained the wrong address (outdated) for such a request to its agent, and his letter was
returned. Singleton complained to the Better Business Bureau, which investigated.
Additional defendant Evan James represented Amazon in that matter. About two weeks
later, Singleton was provided with the correct address to contact Amazon's agent, and he
decided to file his complaint for fraud and breach of contract.
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Amazon and James successfully petitioned the trial court to have the matter sent to
arbitration. Counsel for Amazon provided the trial court with a declaration stating that it
had nevertheless received Singleton's letter sent to the erroneous address.
At the arbitration hearing on February 5, 2014, Amazon, represented by counsel,
sought a declaration that it had terminated Singleton's seller account consistent with the
terms of the Agreement. Representing himself, Singleton presented evidence and
argument about his four counterclaims for breach of contract (lost profits) and
misrepresentation, such as claiming Amazon did not provide him proper notice before
cancelling his account. He defended against Amazon's claims.
The arbitrator rendered his award on February 19, 2014. He ruled that Amazon
had properly terminated Singleton's seller's account because of his high order default rate
and numerous buyer complaints. Singleton's counterclaims were denied, but were not
found to be frivolous, only misguided. The arbitrator's award charged all fees and costs
to Amazon.
B. Petitions
In the pending action in the trial court, Singleton sought to have the arbitration
award vacated under section 1286.2, on the ground that it had been procured by
corruption (false address for claims provided in the Agreement). (§ 1286.2, subd. (a)(1).)
He also argued misconduct by the arbitrator had substantially prejudiced him, when the
arbitrator refused to hear evidence material to the controversy. (§ 1286.2, subds. (a)(3),
(a)(5).)
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In Singleton's declaration in support of his petition to vacate, he claimed he was
"denied [his] right to present punitive damages against the defendants" for his
misrepresentation claim, and that he was "denied [his] right to present evidence that
defendant failed to provide [him] notice before they terminated [his] seller account."
Singleton argued the arbitrator did not fairly consider his case because, "On information
and belief all the arbitrator wanted to do was hurry up so that he could go on his vacation.
[¶] He mentioned it several times about his vacation, with his wife. [¶] On information
and belief too me his mine [sic] was not in the case [sic] before him but on his vacation."
Singleton's declaration lodged supporting exhibits.
In response, Amazon moved to confirm the award. Its opposing declarations
explained what had occurred at the arbitration, including testimony being presented by
Singleton about his alleged damages, including but not limited to a punitive damages
claim. As shown in the award, Singleton told the arbitrator about the incorrect address in
the Agreement and claimed that Amazon did not provide him adequate notice before it
terminated his seller account.
The court denied Singleton's motion to vacate, ruling that Singleton (1) "failed to
present sufficient evidence" to show that any of the reasons argued for vacating the award
existed, and (2) failed to rebut the evidence supplied by Amazon that he was allowed at
arbitration to argue he was not given proper notice of his termination, and that he
sustained different kinds of damages. Further, the court denied Singleton's contention
that the arbitration was corrupt, as "conclusory" and "unsupported by any facts." The
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court expressly ruled, the fact "that the arbitrator mentioned his vacation plans during the
proceedings was not a proper basis for vacating the award."
Accordingly, the award was deemed to resolve the action in its entirety and was
confirmed, and judgment of dismissal entered for Amazon. (§§ 1286, 1287.4.) Singleton
appeals.
II
STANDARD OF REVIEW
On review of the trial court's judgment confirming the arbitration award, we apply
the standards of section 1286, requiring " 'the court shall confirm the award as made . . .
unless in accordance with this chapter it corrects the award and confirms it as corrected,
vacates the award or dismisses the proceeding.' " (Ikerd v. Warren T. Merrill & Sons
(1992) 9 Cal.App.4th 1833, 1841.) "Our review of an arbitration award requires us to
extend to it every intendment of validity and the party claiming error has the burden of
supporting his contention." (Ibid., citing Cobler v. Stanley, Barber, Southard, Brown &
Associates (1990) 217 Cal.App.3d 518, 526; Evans v. Centerstone Development Co.
(2005) 134 Cal.App.4th 151, 157 (Evans).)
As explained in Pearson Dental Supplies, Inc. v. Superior Court (2010) 48 Cal.4th
665, 676, " 'It is well settled that "arbitrators do not exceed their powers merely because
they assign an erroneous reason for their decision." [Citations.] A contrary holding
would permit the exception to swallow the rule of limited judicial review; a litigant could
always contend the arbitrator erred and thus exceeded his powers.' " (Ibid.) However,
there are " 'some limited and exceptional circumstances justifying judicial review of an
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arbitrator's decision' such as when 'granting finality to an arbitrator's decision would be
inconsistent with the protection of a party's statutory rights.' " (Ibid.) In that case, the
high court answered questions about "the proper standard of judicial review of arbitration
awards arising from mandatory-arbitration employment agreements that arbitrate claims
asserting the employee's unwaivable statutory rights." (Id. at p. 679.)
Singleton argues that the rationale of Pearson Dental Supplies v. Superior Court,
supra, 48 Cal.4th 665, should apply here. However, this is not a case of "an employee
subject to a mandatory employment-arbitration agreement [who] is unable to obtain a
hearing on the merits of his FEHA claims, or claims based on other unwaivable statutory
rights, because of an arbitration award based on legal error." (Id. at p. 680.) Instead, we
are reviewing the trial court's ruling after arbitration on an ordinary commercial contract.
" 'In determining whether an arbitrator exceeded his powers, we review the trial
court's decision de novo, but we must give substantial deference to the arbitrator's own
assessment of his contractual authority.' " (Kelly Sutherlin McLeod Architecture, Inc. v.
Schneickert (2011) 194 Cal.App.4th 519, 528; Evans, supra, 134 Cal.App.4th 151, 157.)
We examine the terms of the Agreement and its interpretation by the arbitrator, including
the subagreement incorporated into the Agreement, and the trial court's application of
these legal standards. We thus review the trial court's order (not the arbitration award)
under a de novo standard, giving it every intendment of validity. (Malek v. Blue Cross of
California (2004) 121 Cal.App.4th 44, 55-56.)
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III
ISSUES PRESENTED; ANALYSIS
A. Fraud
We understand Singleton's first claim as asserting that he has statutory rights to be
free from contractual fraud, and thus that the trial court should have vacated the award.
(§ 1286.2, subds. (a)(1)-(6).) Singleton cites to Civil Code section 1607, which states,
"The consideration of a contract must be lawful within the meaning of Section 1667."
Civil Code section 1667 explains, "That is not lawful which is: [¶] 1. Contrary to an
express provision of law; [¶] 2. Contrary to the policy of express law, though not
expressly prohibited; or, [¶] 3. Otherwise contrary to good morals." In the trial court, he
raised the applicability of Civil Code section 1608, to the effect that illegality of
consideration for the object of a contract will render the entire contract void.
Singleton thus objects to the merits of the arbitrator's decision to deny his
fraudulent misrepresentation claim, which was based upon his argument that the
underlying Agreement was void due to fraudulent provisions (incorrect address). To the
extent that Singleton argues the arbitrator erroneously denied his fraud claim (when
reasoning that arbitration had gone forward anyway), we do not reach the merits of such
an argument. "Arbitrators do not ordinarily exceed their contractually created powers
simply by reaching an erroneous conclusion on a contested issue of law or fact, and
arbitral awards may not be vacated because of such error, for ' "[t]he arbitrator's
resolution of these issues is what the parties bargained for in the arbitration
agreement." ' " (Gueyffier v. Ann Summers, Ltd. (2008) 43 Cal.4th 1179, 1184.)
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B. Adequacy of Hearing
Singleton's next claim appears to be that the arbitrator made legal errors that
barred him from obtaining a full hearing on the merits of his claims, i.e., the punitive
damages requests or the failure of Amazon to provide adequate notice before termination
of his account, within the terms of the subagreement incorporated into the main
Agreement.
Absent proof of one of the statutory grounds for vacating an arbitration award,
" '. . . a court may not vacate an award, even if the arbitrator commits legal or factual
errors which appear on the face of the award and which cause substantial injustice.' "
(Roitz v. Coldwell Banker Residential Brokerage Co. (1998) 62 Cal.App.4th 716, 722.)
Singleton claims the award was invalid because the arbitrator did not allow him to
present his entire case, instead somehow rushing through the procedures in anticipation
of his vacation.
To prevail on such a claim, Singleton had to supply proof that his rights were
"substantially prejudiced" by the arbitrator's conduct, and that he supplied "sufficient
cause" that should have caused the arbitrator to hear more material evidence, thus
extending the hearing. (§ 1286.2, subds. (a)(3), (a)(5).) Singleton would have to
demonstrate to the trial court that " '. . . the record reveals facts which might create an
impression of possible bias in the eyes of the hypothetical, reasonable person.' " (Roitz v.
Coldwell Banker Residential Brokerage Co., supra, 62 Cal.App.4th 716, 723.)
Here, however, the trial court concluded in light of the material contained in the
moving and opposing papers that Singleton had failed to present any sufficient evidence
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to support his generalized claims that the award should be vacated. Singleton had not
rebutted the evidence supplied by Amazon that he was allowed, during arbitration, to
argue about a lack of proper notice of this termination, and to present his claims about
different kinds of damages. The trial court was aware that Singleton was claiming that
the arbitration was corrupt, but found those claims to be "conclusory" and "unsupported
by any facts." The court did not find that Singleton's emphasis on the mention by the
arbitrator of his vacation plans was justified or amounted to a proper basis for vacating
the award. The record fully supports those conclusions, and the trial court correctly
determined that the statutory requirements for vacating the award under section 1286.2,
subdivisions (a)(1) through (a)(5) were not met. The trial court did not err in confirming
the arbitration award, and we affirm. (§§ 1286, 1287.4.)
DISPOSITION
The order and judgment of dismissal are affirmed. Each party to pay its own costs
on appeal.
HUFFMAN, J.
WE CONCUR:
McCONNELL, P. J.
HALLER, J.
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