EHM Productions, Inc. v. Starline Tours of Hollywood, Inc. ( 2018 )

Filed 3/28/18
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION TWO
EHM PRODUCTIONS, INC., B281594
Plaintiff and Respondent, (Los Angeles County
Super. Ct. No. BS164473)
v.
STARLINE TOURS OF HOLLYWOOD,
INC.,
Defendant and Appellant.
APPEAL from a judgment of the Superior Court of Los
Angeles County. Michael J. Raphael, Judge. Affirmed.
Lex Opus, Mohammed K. Ghods, Jeremy A. Rhyne, and
Lori Speak for Defendant and Appellant.
Boies Schiller Flexner, Linda M. Burrow and Kelly L.
Perigoe for Plaintiff and Respondent.
Starline Tours of Hollywood, Inc. (appellant) appeals from a
judgment confirming an arbitration award. The arbitration
involved a contract dispute between appellant and EHM
Productions, Inc. doing business as TMZ (respondent) regarding
appellant’s duty to defend respondent in a lawsuit brought by
appellant’s bus drivers. Respondent obtained an award requiring
appellant to defend respondent in the bus driver action.
Following arbitration, the award was confirmed by a JAMS
appellate panel. Respondent filed a petition to confirm the
award, which was granted. Appellant appealed, and this court
affirmed the award on October 4, 2017.1
After respondent filed its petition to confirm the arbitration
award, the JAMS appellate panel determined that appellant
owed respondent $41,429.92 in costs. Following confirmation of
the initial arbitration award, respondent sought, and received,
confirmation of the cost award. Appellant now appeals from the
second judgment granting respondent’s petition to confirm the
cost award. Appellant’s sole contention on appeal is that the trial
court erred by entering two consecutive judgments resulting from
the same arbitration. We find that appellant has failed to
demonstrate error, therefore we affirm the second award.
BACKGROUND
In August 2012, appellant and respondent entered into a
written contractual agreement captioned “TMZ-Starline Tour
Bus Agreement.” The agreement solidified the parties’ intent to
run a “TMZ branded, multi-media Hollywood bus tour in
Southern California.”
In December 2012, several bus drivers filed a putative class
action against appellant alleging that it had violated certain
1 EHM Productions, Inc. v. Starline Tours of Hollywood, Inc.,
B277311 [nonpub. opn.].
2
wage and hour laws. The named plaintiffs sought to represent all
similarly situated employees regardless of whether they worked
in connection with the TMZ tour or one of appellant’s other tours.
On June 14, 2013, the putative class action complaint was
amended to add TMZ Productions, Inc. (TMZ Productions) as a
defendant.
Respondent tendered its defense to appellant. Appellant
responded that it had no duty to indemnify TMZ Productions, but
offered to indemnify under certain conditions.
In August 2013, respondent retained counsel to represent
respondent and TMZ Productions. Between June 2013 and
January 2014, respondent voluntarily agreed with the plaintiffs
in the underlying lawsuit to be added as a defendant in order to
secure the dismissal of TMZ Productions. The plaintiffs added
respondent as a defendant in January 2014 and voluntarily
dismissed TMZ Productions in April 2014.
PROCEDURAL HISTORY
The arbitration
On June 2, 2014, respondent filed a demand for arbitration,
alleging breach of contract by appellant arising from its refusal to
defend respondent in the underlying lawsuit. Respondent sought
a declaration that appellant was required to defend TMZ
Productions and respondent. Respondent sought an award of its
costs and fees incurred through January 31, 2015, and a
declaration that appellant is required to pay respondent’s
reasonable attorney fees as they are incurred going forward.
The partial final award
On June 8, 2015, the arbitrator issued a “partial final
award.” The arbitrator found that appellant was obligated to
defend TMZ Productions and respondent in the underlying
lawsuit. The arbitrator ordered appellant to pay respondent
$185,725 for its attorney fees and $15,836.83 for its costs
3
incurred in the underlying action through January 31, 2015. The
arbitrator further ordered appellant to pay respondent’s
reasonable attorney fees and costs in the underlying action going
forward. The arbitrator expressly reserved jurisdiction over the
matter “to ensure enforcement of [appellant’s] defense obligation,
payment of [respondent’s] reasonable attorneys’ fees and costs,
and to resolve any dispute regarding indemnity, if necessary.”
Appellant appealed the award under the JAMS Optional
Appeal Procedure, as permitted in the parties’ agreement. The
appellate panel affirmed the arbitrator’s partial final award in its
entirety. The determination of costs on appeal was reserved for
further decision.
On May 9, 2016, respondent filed a petition to confirm the
partial final award in Superior Court. Starline opposed the
petition on numerous grounds. On June 21, 2016, the trial court
granted the petition, ordering respondent to give notice and
prepare and serve a proposed order. Appellant objected to the
proposed order. The court held a hearing on July 27, 2016. At
the conclusion of the hearing, the court signed an amended
judgment confirming the arbitration award.
On August 26, 2016, appellant filed an appeal from the
judgment. On October 4, 2017, this court filed an opinion
affirming the judgment in full.
Award of costs for the JAMS appeal
On May 12, 2016, three days after respondent filed its
petition to confirm the partial final award, the JAMS appellate
panel issued its “Final Award on Appeal” (cost award),
determining respondent’s costs for the JAMS appeal.2 The cost
award granted respondent $41,429.92 in costs.
2 The JAMS appellate panel had reserved this issue in its
April 11, 2016 order.
4
On August 22, 2016, respondent petitioned for confirmation
of the cost award. Appellant opposed the petition, arguing,
among other things, that respondent waived its right to obtain
confirmation of the cost award by failing to present it for
confirmation prior to the entry of the first judgment.
The trial court rejected appellant’s arguments and entered
a judgment confirming the cost award on January 23, 2017. The
court ordered appellant to pay respondent $41,429.92 in
accordance with the cost award. The court cited Hightower v.
Superior Court (2001) 86 Cal. App. 4th 1415, 1434 (Hightower), for
the proposition that “‘utilization of a multiple incremental or
successive award process’ may be appropriate.”
Appeal of the cost award
Appellant filed a timely notice of appeal of the cost award
on March 20, 2017.
DISCUSSION
I. Standard of review
The trial court’s decision granting respondent’s petition to
confirm the cost award is reviewed de novo. (Advanced Micro
Devices, Inc. v. Intel Corp. (1994) 9 Cal. 4th 362, 376, fn. 9.) If the
trial court’s ruling relies on a determination of disputed factual
issues, we apply the substantial evidence test on those particular
issues. (Toal v. Tardif (2009) 178 Cal. App. 4th 1208, 1217.)
Where error is shown, this court may not set aside the order
unless the error prejudiced the appellant. (Cal. Const. art. VI,
§ 13; Code Civ. Proc., § 475.)
We briefly review the procedures leading up to
confirmation of an arbitration award. Pursuant to Code of Civil
Procedure section 1285, any party to an arbitration in which an
award has been made may petition the court to “confirm, correct
5
or vacate the award.”3 Once a petition to confirm an award is
filed, the superior court must select one of only four courses of
action: it may confirm the award, correct and confirm it, vacate
it, or dismiss the petition. (Cooper v. Lavely & Singer
Professional Corp. (2014) 230 Cal. App. 4th 1, 11.) “[I]t is the
general rule that, with narrow exceptions, an arbitrator’s
decision cannot be reviewed for errors of fact or law.”
(Moncharsh v. Heily & Blase (1992) 3 Cal. 4th 1, 11.) Under
section 1286.2, the court may vacate the award only under “‘very
limited circumstances.’” (Roehl v. Ritchie (2007) 147 Cal. App. 4th
338, 347.) Neither the trial court, nor the appellate court, may
“review the merits of the dispute, the sufficiency of the evidence,
or the arbitrator’s reasoning, nor may we correct or review an
award because of an arbitrator’s legal or factual error, even if it
appears on the award’s face. Instead, we restrict our review to
whether the award should be vacated under the grounds listed in
section 1286.2. [Citations.]”4 (Ibid.)
3 All further statutory references are to the Code of Civil
Procedure.
4 Pursuant to section 1286.2, a court may vacate an
arbitration award if the court determines any of the following:
“(1) The award was procured by corruption, fraud, or other
undue means.
“(2) There was corruption in any of the arbitrators.
“(3) The rights of the party were substantially prejudiced
by misconduct of a neutral arbitrator.
“(4) The arbitrators exceeded their powers and the award
cannot be corrected without affecting the merits of the decision
upon the controversy submitted.
“(5) The rights of the party were substantially prejudiced
by the refusal of the arbitrators to postpone the hearing upon
sufficient cause being shown therefor or by the refusal of the
arbitrators to hear evidence material to the controversy or by
6
II. Appellant has failed to show that the one final
judgment rule precludes confirmation of the cost award
Appellant argues that the incremental judgments entered
in this case violate the one final judgment rule. (Fleuret v. Hale
Constr. Co. (1970) 12 Cal. App. 3d 227, 230 (Fleuret) [“[o]rdinarily
there may be but one final judgment in an action”].) Appellant
argues that “‘“[p]iecemeal disposition[s]”’” in a single action are
“‘“oppressive and costly”’” and may result in multiple appeals.
(Kurwa v. Kislinger (2013) 57 Cal. 4th 1097, 1101 (Kurwa).)
Appellant argues that no case sanctions the entering of multiple
independent judgments on an arbitration award and its
subsequent cost award arising from a single arbitration.
The authority cited by appellant does not support
appellant’s position that the one final judgment rule prevented
the trial court from confirming the cost award in this case.
Fleuret involved a direct action and a cross-action. The trial
court found in favor of the cross-defendants on the cross-
complaint and entered a judgment that the cross-plaintiff take
nothing on his cross-complaint. However, the issues raised in the
direct action, and the resulting damages, had not been
determined, and no judgment had been entered on the original
complaint. Under those circumstances, the court determined
that “[a] cross-complaint is not considered sufficiently
independent to allow a separate final judgment to be entered
upon it. [Citation.]” (Fleuret, supra, 12 Cal.App.3d at p. 230.)
other conduct of the arbitrators contrary to the provisions of this
title.
“(6) An arbitrator making the award either: (A) failed to
disclose within the time required for disclosure a ground for
disqualification of which the arbitrator was then aware; or (B)
was subject to disqualification upon grounds specified in Section
1281.91 but failed upon receipt of timely demand to disqualify
himself or herself as required by that provision.”
7
The case does not address a situation where, as here, a cost
award is entered subsequent to the entry of a partial final award
in arbitration.
Nor does Kurwa. Kurwa explains that “[u]nder California’s
‘one final judgment’ rule, a judgment that fails to dispose of all
the causes of action pending between the parties is generally not
appealable. [Citations.]” (Kurwa, supra, 57 Cal.4th at p. 1100.)
The case posed the question of “whether an appeal may be taken
when the judgment disposes of fewer than all the pled causes of
action.” (Ibid.) In Kurwa, the judgment disposed of certain
counts by dismissal with prejudice. The remaining counts were
dismissed without prejudice, and operation of the statute of
limitations was waived. Under those circumstances, the
judgment was not appealable. The case does not suggest that the
trial court erred in confirming the cost award in this case.
Appellant has failed to provide legal support for its
argument that the one final judgment rule precludes
confirmation of the cost award in this matter. Further, as the
trial court pointed out, Hightower suggests that an incremental
award process may be appropriate in situations where not all
issues may be resolved at the time of the initial partial final
award. (Hightower, supra, 86 Cal.App.4th at p. 1419.) In
Hightower, an arbitrator issued a partial final award denying
Hightower’s claims against his business partner and lifting a
preliminary injunction preventing a buyout of Hightower’s
shares. The arbitrator specified that the award was a partial
final award, so that the parties could return to Superior Court to
dissolve the injunction and confirm the award. The arbitrator
specifically reserved jurisdiction to determine several remaining
issues, including costs and damages. (Id. at pp. 1427-1428.)
8
On appeal, the appellant argued that the partial final
award was invalid because it violated section 1283.4.5 The Court
of Appeal disagreed, reasoning that the “principle of arbitral
finality . . . does not preclude the arbitrator from making a final
disposition of a submitted matter in more than one award.” (Id.
at p. 1433.) The utilization of “a multiple incremental or
successive award process” is not foreclosed in an appropriate
case. (Id. at p. 1434; see also Roehl v. Ritchie, supra, 147
Cal.App.4th at p. 351 [rejecting challenge to arbitrator’s power to
make incremental decisions].)
Appellant questions the relevance of Hightower based on
the disposition in that case. The Court of Appeal issued a writ of
mandate directing the trial court to confirm the partial final
award, enter “[a]n appropriate interlocutory judgment” and
“send[] the matter back to the arbitrator for such further
proceedings as may be required to permit the issuance of a final
award resolving all remaining issues.” (Hightower, supra, 86
Cal.App.4th at p. 1441.) Appellant argues that here, respondent
did not seek to amend an interlocutory judgment but instead
sought a separate judgment on the cost award in a brand new
action.
While the procedure undertaken by respondent in this case
may not be identical to that in Hightower, appellant has cited no
law supporting its position that the procedure undertaken in this
case was error. Hightower supports the incremental award
process used by the arbitrator in this matter, thus the cost award
was the proper subject of a petition to confirm.
5 Section 1283.4 provides that an arbitration award “shall
include a determination of all the questions submitted to the
arbitrators the decision of which is necessary in order to
determine the controversy.”
9
Appellant also attempts to distinguish Hightower because
it involved costs that had not yet been incurred. In contrast,
appellant argues, in this case there were no “potential and
conditional issues” at hand. (Hightower, supra, 86 Cal.App.4th at
p. 1439.) Instead, all that had to be decided was how much
respondent should be awarded in costs already accrued.
Appellant argues that it makes no sense to seek confirmation of
such costs, which are likely to be determined shortly after the
substantive award, as a separate action.
Hightower approved an incremental process where it is
“reasonably necessary, if not essential” to the establishment and
enforcement of the remedy that the arbitrator has fashioned.
(Hightower, supra, 86 Cal.App.4th at p. 1439.) At the time that
the partial final award was affirmed by the JAMS appellate
panel, respondent had no way of knowing when, or if, a cost
award would issue. Thus, costs remained a “potential and
conditional” issue. (Ibid.) The cost award was not issued until
after respondent had filed a petition to confirm the partial final
award in the trial court. While the most efficient means of
obtaining confirmation may have been to amend the petition once
the cost award was issued, Hightower does not require such
action. Appellant has cited no authority requiring amendment of
a petition to confirm arbitration award under the circumstances
of this case.
When presented with a petition to confirm an arbitration
award, the court’s role is to “confirm, correct, or vacate the
award, or dismiss the petition entirely. [Citations.]” (Cinel v.
Christopher (2012) 203 Cal. App. 4th 759, 765.)6 As an
6 Appellant has requested that this court reverse the trial
court judgment and direct the trial court to enter an order
“denying” the petition. The statutory scheme does not provide an
option for “denial” of a petition to confirm arbitration, as
10
incremental award permitted under Hightower, the cost award
was subject to confirmation, unless the court found that the
award was subject to dismissal or vacation under section 1286.2.
The petition was not subject to dismissal, and appellant does not
suggest on appeal that the order should be vacated pursuant to
section 1286.2. Thus, the trial court properly confirmed the
award. No error occurred.
III. Principles of waiver and estoppel do not preclude
confirmation of the cost award
Appellant next argues that respondent should not be
permitted to seek separate confirmation of awards and cost
awards in sequential fashion when those awards co-exist before
any judgment has been entered. Appellant asks that we
determine that appellant has waived any right to obtain, or
should be estopped, from seeking confirmation of the cost award.
Appellant cites Oakland Raiders v. Oakland-Alameda County
Coliseum, Inc. (2006) 144 Cal. App. 4th 1175, 1194, for the
proposition that: “Whether denominated ‘estoppel’ or ‘implied
waiver as a matter of law,’ the operative principle is exactly the
same -- where a party’s conduct is so inconsistent with the intent
to enforce a legal right, the intention to give up that right will be
presumed, notwithstanding evidence that the party did not
subjectively ‘intend’ to relinquish it. [Citation.]”
Appellant notes that respondent had four years to confirm
the underlying arbitration award, (§ 1288), thus could have
waited for the cost award prior to filing a petition to confirm.
Appellant cites several cases as examples of situations where an
arbitration award and subsequent cost award were presented
appellant has requested. (Law Offices of David S. Karton v.
Segreto (2009) 176 Cal. App. 4th 1, 9 [“If the trial court which does
not dismiss the petition also does not correct or vacate an
arbitration award, it must confirm the award”].)
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simultaneously to the trial court for confirmation.7 What
appellant fails to provide is legal authority requiring this
procedure, or suggesting that a winning party in arbitration is
not entitled to confirmation of a fee award unless it is presented
to the trial court simultaneously with the substantive arbitration
award. Under the circumstances, we decline to apply the
doctrines of waiver or estoppel to reverse the trial court
judgment.
Appellant criticizes respondent’s choice not to present the
cost award to the trial court via amended petition. Appellant
cites In re Marriage of Corona (2009) 172 Cal. App. 4th 1205, 1212,
as an example of a case in which the petitioner filed an amended
petition to confirm after the final award. However, in the absence
of a rule requiring an amended petition to confirm a cost award
under the circumstances of this case, there is no basis for
reversal.8
7 (See, e.g., DiMarco v. Chaney (1995) 31 Cal. App. 4th 1809,
1817; Rebmann v. Rohde (2011) 196 Cal. App. 4th 1283, 1288;
Greenspan v. Ladt, LLC (2010) 185 Cal. App. 4th 1413, 1421-1422;
Caro v. Smith (1997) 59 Cal. App. 4th 725, 730; Safari Associates
v. Superior Court (2014) 231 Cal. App. 4th 1400, 1405-1406.)
8 We note that the arbitrator in this matter has reserved
jurisdiction to enforce appellant’s defense obligation going
forward. Thus, the arbitrator may enter future substantive and
cost awards. Appellant’s position that there may be only one
final judgment for one arbitration could arguably prevent
confirmation of such future awards in this matter. Under the
circumstances of this case, where appellant has an ongoing
enforceable obligation to defend respondent, such a result would
be inequitable.
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DISPOSITION
The judgment is affirmed.
CERTIFIED FOR PUBLICATION
____________________________, J.
CHAVEZ
We concur:
__________________________, P. J.
LUI
__________________________, J.
ASHMANN-GERST
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