Milder v. Holley CA2/5 ( 2021 )

Filed 12/16/21 Milder v. Holley CA2/5
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on
opinions not certified for publication or ordered published, except as specified by rule
8.1115(b). This opinion has not been certified for publication or ordered published for
purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FIVE
ANDREW MILDER B299122
Plaintiff and Appellant, (Los Angeles County
Super. Ct. Nos.
v. BS164577, BS165902,
and BS167341)
SHAWN HOLLEY et al.,
Defendants and Respondents.
APPEAL from a judgment of the Superior Court of Los
Angeles County, Susan Bryant-Deason, Judge. Affirmed in part,
reversed in part, and remanded.
Andrew Milder, in pro. per., for Plaintiff and Appellant.
Nemecek & Cole, Jonathan B. Cole, Mark Schaeffer, and
Marshall R. Cole, for Defendants and Respondents.
Andrew Milder (plaintiff) initiated arbitration proceedings
against his former attorney, Shawn Holley (Holley), and her law
firm, Kinsella Weitzman Iser Kump & Aldisert, LLP (collectively,
defendants). Plaintiff later sought to resist arbitration, however,
and he ultimately refused to attend the arbitration hearing. In
this appeal from a judgment confirming an arbitration award in
defendants’ favor, we are principally asked to consider whether
consumer arbitration rules concerning disclosures and prevailing
party attorney fees apply in the context of an attorney-client
dispute. We also consider whether the arbitrator abused his
discretion in declining to postpone the arbitration pending
resolution of plaintiff’s appeal in a lawsuit challenging the
validity of the arbitration provision in the retainer agreement
signed by the parties.
I. BACKGROUND
A. Engagement and Initial Demand for Arbitration
Plaintiff hired defendants to represent him in a criminal
matter in 2011. Plaintiff and defendants executed a retainer
agreement that included provisions to govern resolution of
disputes, should they arise, between the parties to the
agreement.
The dispute resolution section, set forth beneath an
underlined heading, “Arbitration,” states “it is always possible
that some dispute may arise which cannot be resolved by
discussion between us. We believe that such disputes can be
resolved more expeditiously and with less expense to all
concerned by binding arbitration than by court action.”
Following a brief, general description of arbitration, the
agreement states that “[a]rbitration usually results in a decision
2
much more quickly than proceedings in court, and the attorneys’
fees and other costs incurred by both sides are usually
substantially less.” The agreement further provides, in bold type:
“By signing this letter, you agree that, in the event of any dispute
arising out of or relating to this agreement, our relationship, or
the services performed . . . , such dispute shall be resolved by
submission to binding arbitration . . . .” The arbitration section of
the retainer agreement closes with a paragraph that provides,
subject to exceptions not applicable here, “The prevailing party in
any action, arbitration, or proceeding . . . will be awarded
reasonable attorneys’ fees and costs incurred in that action,
arbitration, or proceeding . . . .”
In the criminal case that gave rise to the retainer
agreement, Holley moved to be relieved as plaintiff’s attorney
after a few months, citing an undisclosed conflict with plaintiff.
Pursuant to the retainer agreement, plaintiff initiated arbitration
against Holley in September 2014 and alleged she “failed to
comply with her own written agreement, causing serious harm.”
In February 2015, plaintiff filed an amended demand for
arbitration against Holley and her law firm alleging breach of
contract, breach of fiduciary duty, fraud, and unfair business
practices based on defendants’ failure to deliver the “highest
quality legal services” as promised in the retainer agreement.
B. Plaintiff’s Fraudulent Inducement Action
In May 2015, plaintiff filed a civil complaint against Holley
and her firm. In addition to reiterating the allegations in his
amended demand for arbitration, he sought a declaratory
judgment that the retainer agreement’s arbitration provision was
3
void.1 Plaintiff alleged he was fraudulently induced to agree to
the arbitration provision based on the false assertion that the
attorney fees and other costs incurred by both sides in arbitration
are “usually substantially less” than in court proceedings. We
will refer to this civil action, Los Angeles Superior Court Case
No. BC581072, as the fraudulent inducement action.
Soon after he filed the fraudulent inducement action,
plaintiff filed an ex parte application for a temporary restraining
order prohibiting defendants from proceeding with the
arbitration. The trial court denied the application and plaintiff
did not appeal. As we shall discuss, the arbitration proceeded to
a hearing and final award.
In October 2015, the trial court sustained a demurrer to the
complaint filed in the fraudulent inducement action and entered
judgment for defendants. The trial court reasoned plaintiff’s
theory of fraud in the inducement must be decided by the
arbitrator rather than the trial court. Plaintiff appealed, and this
court reversed, explaining that although claims of fraud in the
inducement of a contract as a whole are decided by the arbitrator,
claims of fraud in the inducement as to an arbitration provision
in particular must be decided by the court. (Milder v. Holley
(Jan. 31, 2017, B267974) [nonpub. opn.] (Milder I).)
On remand, the trial court ruled plaintiff was bound by the
arbitration agreement because the statements regarding
1
Plaintiff’s other causes of action were for fraud, breach of
fiduciary duty, breach of contract, violation of Business and
Professions Code section 17200, unjust enrichment, and
intentional infliction of emotional distress. Shortly after filing
this complaint, plaintiff filed a second amended demand for
arbitration incorporating the complaint’s allegations and claims
for relief.
4
expenses associated with arbitration were non-actionable opinion
and plaintiff chose not to inquire about the basis for defendants’
opinion.2
C. Arbitration
Plaintiff rejected two arbitrators proposed by defendants
and one proposed by ADR Services before ADR Services
appointed retired judge Michael D. Marcus (Judge Marcus) as the
arbitrator in May 2015. In June 2015, ADR Services sent the
parties a disclosure statement for Judge Marcus. Plaintiff
responded in a letter expressing his objection “to the arbitration
moving forward in any way” before the fraudulent inducement
action was decided. He further stated he was “unable to object or
consent” to Judge Marcus’s appointment because his disclosures
were “insufficient in this consumer arbitration.” As we shall
discuss in more detail, the ethics standards for arbitrators in the
California Rules of Court include special disclosure requirements
for arbitrators in consumer arbitrations. Following extensive
correspondence between the parties and ADR Services as to
whether the arbitration was a consumer arbitration, ADR
Services directed the parties in July 2015 to “make a motion to
the court” because ADR Services had “no authority” to decide the
issue.
The appellate record, however, does not reflect an attempt
by any party to put the consumer arbitration issue before the
trial court. Instead, nearly two months later, ADR Services
contacted the parties to schedule a status conference with Judge
2
Plaintiff noticed appeals from this ruling, which we decide
in a separate opinion filed concurrently with this one. (Milder v.
Holley et al. (Dec. 16, 2021, B303175, B298984) [nonpub. opn.].)
5
Marcus. Through counsel, plaintiff requested a stay of the
arbitration pending resolution of his appeal of the trial court’s
order sustaining defendants’ demurrer in the fraudulent
inducement action. Plaintiff also asserted Judge Marcus had no
authority to act in the matter until he provided additional
disclosures.
When ADR Services informed the parties that a status
conference would be held the following month in October 2015,
plaintiff responded he would not attend and he was “compelled to
object” to Judge Marcus’s appointment. A status conference was
held in plaintiff’s absence and Judge Marcus later issued a ruling
concluding consumer arbitration disclosure rules did not apply
and plaintiff waived any objection to his appointment as
arbitrator.
An arbitration hearing was held in May 2016. Plaintiff
again did not appear, and Judge Marcus dismissed his complaint
with prejudice. In an interim arbitration award, Judge Marcus
ruled defendants were the prevailing parties and accordingly
entitled to attorney fees and costs under the retainer agreement.
Judge Marcus ultimately awarded defendants the full amount of
their requested attorney fees ($59,892.50) plus most of their
requested costs ($19,705.98).
D. Competing Petitions to Vacate and Confirm the
Arbitration Award
The interim and final arbitration awards spawned three
related trial court actions: a petition by plaintiff to vacate the
interim arbitration award (Los Angeles Superior Court Case No.
BS164577); a petition by plaintiff to vacate the final arbitration
award (Los Angeles Superior Court Case No. BS167341); and a
6
petition by defendants to confirm the final arbitration award (Los
Angeles Superior Court Case No. BS165902). Plaintiff contended
the arbitration award should be vacated because his agreement
to arbitrate was fraudulently induced, Judge Marcus should have
postponed the arbitration pending further proceedings in the
fraudulent inducement action, Judge Marcus’s disclosures and
the fee-shifting provision of the retainer agreement violated
consumer arbitration rules, and the arbitration agreement was
unconscionable.
The trial court rejected plaintiff’s arguments and entered a
judgment confirming the arbitration award.3 The trial court
found plaintiff’s fraudulent inducement argument was previously
rejected in the fraudulent inducement action and plaintiff
forfeited the argument that the arbitration provision in the
retainer agreement was unconscionable. Additionally, the court
found Judge Marcus did not abuse his discretion in declining to
postpone the arbitration because the trial court’s denial of his
application for a restraining order meant the arbitration was
“required to proceed.” The trial court further found Judge
Marcus’s determination that consumer arbitration disclosures
3
Several months after entering judgment confirming the
arbitration award, the trial court issued an order denying
plaintiff’s petition to vacate the final arbitration award. The trial
court opened the hearing by explaining, “[t]his is a petition to
vacate the arbitration award, which the court has already
confirmed and judgment has been entered. [¶] . . . [¶] Okay. I
believe, at the last hearing, [plaintiff] requested to file leave to
amend [his petition to vacate the arbitration award]. And I
believe that the court said no. But I think that [plaintiff] went
ahead and did it anyway. Anyway, we considered it. So here we
go.”
7
were unnecessary was not subject to judicial review and
Plaintiff’s argument that the retainer agreement’s fee-shifting
provision was illegal was forfeited and meritless in any case
because consumer arbitration rules do not apply to attorney fee
disputes.
II. DISCUSSION
In this case, plaintiff forfeited the issue of whether the
arbitrator did not make adequate disclosures for a “consumer”
arbitration by failing to timely seek to disqualify Judge Marcus.
That means there is no basis to vacate the arbitrator’s dismissal
of his complaint in arbitration; the remainder of the scattershot
reasons plaintiff advances to achieve the same end are either also
forfeited or unpersuasive. Plaintiff did not, however, forfeit the
same point in connection with his objection to the attorney fees
and costs the arbitrator ultimately assessed against him. We
hold the arbitration agreement here is within the common
understanding of a consumer arbitration and fees and costs are
accordingly not recoverable. So we will order the trial court to
strike those amounts from the arbitration award and otherwise
confirm it.
A. Plaintiff Forfeited Any Issue with the Arbitrator’s
Disclosures by Failing to Move to Disqualify the
Arbitrator
Code of Civil Procedure4 section 1281.9 requires proposed
arbitrators to disclose “all matters that could cause a person
aware of the facts to reasonably entertain a doubt that the
4
Undesignated statutory references that follow are to the
Code of Civil Procedure.
8
proposed neutral arbitrator would be able to be impartial,”
including discussions with the parties regarding employment
opportunities, the names of parties to certain arbitrations in
which the arbitrator has served, and various relationships to the
parties, the lawyers, and their families. (§ 1281.9, subd. (a).)
Arbitrators are also required, by statute, to make disclosures
required under the California Rules of Court, Ethics Standards
for Neutral Arbitrators in Contractual Arbitration (Ethics
Standards). (§ 1281.9, subd. (a)(2).)
In addition to supplementing statutory disclosure
requirements by specifying, for example, the types of family
relationships requiring disclosure (Ethics Standards, std. 7(d)(2)),
the Ethics Standards include special disclosure requirements for
“consumer arbitrations.” The Ethics Standards define a
consumer arbitration to include an arbitration conducted under a
contract (1) “with a consumer party,” (2) “drafted by or on behalf
of the nonconsumer party,” and (3) under circumstances in which
“[t]he consumer party was required to accept the arbitration
provision in the contract.” (Ethics Standards, std. 2(d).) The
Ethics Standards define “consumer party,” in turn, to include
“[a]n individual who seeks or acquires, including by lease, any
goods or services primarily for personal, family, or household
purposes . . . .” (Ethics Standards, std. 2(e)(1).)
Pre-arbitration disclosure obligations unique to consumer
arbitrations are primarily set forth in Standard 8. Standard 8
builds on the generally applicable disclosure requirements set
forth in Standard 7 by requiring proposed arbitrators in
consumer arbitrations to disclose relationships between the
dispute resolution provider organization (here, ADR Services)
and a party or lawyer in the arbitration. (Ethics Standards, std.
9
8(b).) If any such relationship is disclosed, the proposed
arbitrator must also disclose information regarding their
relationship with the provider organization, including any
financial interest in the provider organization, the provider
organization’s policies concerning recruitment of arbitrators
generally and selection for specific cases, and “[a]ny role the
provider organization plays in ruling on requests for
disqualification of the arbitrator.” (Ethics Standards, std. 8(c).)
Additional consumer arbitration disclosure rules are set
forth in Standards 12 and 7. Standard 12 sets forth conditions
under which arbitrators may entertain certain offers (e.g., to
serve as an arbitrator in another case) from parties or lawyers in
pending arbitration. (Ethics Standards, std. 12(b).) If the
arbitrator plans to entertain such offers, they must disclose this
fact and, if the pending arbitration is a consumer arbitration, the
disclosure must inform the parties the arbitrator will notify them
(as required under Standard 12(d)) if they receive such an offer
while the arbitration is pending. (Ethics Standards, std.
12(b)(1).) Arbitrators in non-consumer arbitrations who have
disclosed that they will entertain such offers are generally not
required to notify the parties when an offer is received. (Ethics
Standards, std. 12(d)(4).) Standard 7 includes a provision
essentially restating the consumer arbitration rules set forth in
Standard 12.
Here, Judge Marcus’s disclosure statement listed past
arbitrations and mediations in which defendants and their
lawyers were involved, but it did not include any Standard 8
disclosures regarding relationships between the parties
(including their lawyers) and ADR Services. Additionally, Judge
Marcus disclosed he would continue to entertain offers of
10
employment as a neutral arbitrator from the parties and lawyers
while the arbitration was pending, but, “[s]ince this is a non-
consumer arbitration,” he would “not inform the parties if he
receive[d] such offer[s] . . . .”
Plaintiff cannot now challenge Judge Marcus’s conclusion
that this was not a consumer arbitration because he did not
timely serve a notice of disqualification during the proceedings
below. Section 1281.91, subdivision (a) provides that “[a]
proposed neutral arbitrator shall be disqualified if he or she fails
to comply with Section 1281.9 and any party entitled to receive
the disclosure serves a notice of disqualification within 15
calendar days after the proposed nominee or appointee fails to
comply with Section 1281.9.” Subject to exceptions not applicable
here, “[t]he right of a party to disqualify a proposed neutral
arbitrator pursuant to this section shall be waived if the party
fails to serve the notice pursuant to the times set forth in this
section . . . .” (§ 1281.91, subd. (c).)
Plaintiff indicated he was “unable to object or consent” to
Judge Marcus’s appointment within 15 days of Judge Marcus’s
disclosures, but he took no further action when ADR Services
directed the parties to resolve the issue in the trial court in July
2015. Instead, he responded to ADR Services’ attempts to
schedule a status conference with Judge Marcus by contending
Judge Marcus’s appointment was “not effective” until he provided
consumer arbitration disclosures. It was not until October
2015—four months after the date of the letter enclosing Judge
Marcus’s disclosure statement—that plaintiff stated he was
“[r]egretfully . . . compelled to object” to Judge Marcus’s
appointment as arbitrator. Even if Judge Marcus’s refusal to
provide consumer arbitration disclosures warranted his
11
disqualification, there are no grounds to vacate the arbitration
award in the absence of a timely notice of disqualification.
(§ 1286.2, subd. (a)(6)(B) [permitting vacatur of an award if the
arbitrator “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”]; Soni
v. SimpleLayers, Inc. (2019) 42 Cal.App.5th 1071, 1085 [“The
exclusive grounds for vacating an arbitration award are provided
in . . . section 1286.2”].)
B. Plaintiff Did Not Forfeit His Challenge to the Award
of Attorney Fees and Costs, and that Challenge Has
Merit
Section 1284.3, subdivision (a) provides that “[n]o neutral
arbitrator or private arbitration company shall administer a
consumer arbitration under any agreement or rule requiring that
a consumer who is a party to the arbitration pay the fees and
costs incurred by an opposing party if the consumer does not
prevail in the arbitration, including, but not limited to, the fees
and costs of the arbitrator, provider organization, attorney, or
witnesses.” (§ 1284.3, subd. (a).) Plaintiff also never timely
raised section 1284.3 as reason not to go forward with the
arbitration and that forfeits any challenge to the arbitration
generally and the arbitrator’s dismissal of his complaint in
arbitration specifically. (See Cummings v. Future Nissan (2005)
128 Cal.App.4th 321, 328 (Cummings) [“[I]f a party believes the
entire contractual agreement or a provision for arbitration is
illegal, it must oppose arbitration on this basis before
participating in the process or forfeit the claim”], citing
Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 31 (Moncharsh).)
12
Insofar as the purpose of section 1284.3 is to remove an obstacle
to consumers seeking legal redress,5 there is no reason to permit
plaintiff—who was not deterred from pursuing his claims—to use
it to vacate an adverse ruling.6 (Cummings, supra, 128
Cal.App.4th at 329 [“[A] party who knowingly participates in the
arbitration process without disclosing a ground for declaring it
invalid is properly cast into the outer darkness of forfeiture”].)
The element of the arbitrator’s award awarding attorney
fees and costs to defendants, however, is another matter.
Plaintiff cited section 1284.3 in opposing defendants’ motion for
attorney fees and costs and there are important public policy
considerations at play in prohibiting an award of fees and costs
against a consumer in arbitration. (See, e.g., Sea & Sage
5
As explained in one legislative analysis, “[t]he reason for
the policy proposed by this bill is evident: particularly where
there is great disparity in wealth and power between
adversaries—as is typically true of mandatory consumer
arbitrations—the prospect that a losing consumer party may be
required to pay the high attorneys’ fees and expenses of a
corporate opponent may be so daunting as to deter the consumer
from pursuing his or her case at all.” (Assem. Judiciary Com.,
Analysis of Assem. Bill No. 2915 (2001-2002 Reg. Sess.) May 7,
2002, p. 6.) The Legislature did not intend to “flatly ban or
invalidate” all consumer arbitration agreements including fee-
shifting provisions: “Rather, [section 1284.3] simply prohibits the
large private judging companies from administering such
consumer arbitrations unless the parties agree to modify this
term.” (Ibid.)
6
Plaintiff was represented by counsel when he filed his
amended demand for arbitration in February 2015, months
before he filed the fraudulent inducement action.
13
Audobon Society, Inc. v. Planning Com. (1983) 34 Cal.3d 412,
417.) There is therefore no forfeiture concern with respect to that
segregable portion of the arbitration award.
At the time Judge Marcus and the trial court ruled on the
applicability of section 1284.3, there was no controlling statutory
definition of the terms “consumer” or “consumer arbitration.”7
Thus, giving the terms their ordinary understanding, we do not
believe “consumer” would exclude plaintiff here. It is not unusual
to speak of “consumers of legal services.” (See, e.g., Schatz v.
Allen Matkins Leck Gamble & Mallory LLP (2009) 45 Cal.4th
557, 564; Aguilar v. Lerner (2004) 32 Cal.4th 974, 981.) True, it
may be more common to think of consumers in connection with
what the arbitrator and defendants’ describe as more “prosaic”
services, but that does not mean prospective law firm clients fall
outside the scope of people understood to be consumers. The
additional observation by the arbitrator, trial court, and
defendants in concluding to the contrary—that the negotiation of
an attorney fee agreement is generally “an arm’s-length
transaction” (Ramirez v. Sturdevant (1994) 21 Cal.App.4th 904,
913 (Ramirez))—does not distinguish such negotiations from
7
Defendants and the trial court’s reference to the Ethics
Standards to define “consumer arbitration” for purposes of
section 1284.3 is misplaced. Unlike the statute addressing
disclosure requirements for arbitrators (§ 1281.9, subd. (a)(2)),
section 1284.3 does not incorporate the Ethics Standards. As of
January 1, 2020, however, the California Arbitration Act defines
“consumer” to mean “an individual who seeks, uses, or acquires,
by purchase or lease, any goods or services for personal, family,
or household purposes.” (§ 1280, subd. (c).)
14
consumer transactions generally or establish that was the
manner in which the retainer agreement here was signed. And
nothing in the text of sections 1280 or 1284.3 suggests the latter
protects only those consumers who are subject to coercive or
deceptive practices.
Judge Marcus accordingly acted in excess of his authority
in requiring plaintiff to pay the fees and costs of the opposing
parties when he did not prevail in the arbitration. (§ 1284.3,
subd. (a) [“No neutral arbitrator or private arbitration company
shall administer a consumer arbitration under any agreement or
rule requiring that a consumer who is a party to the arbitration
pay the fees and costs incurred by an opposing party if the
consumer does not prevail in the arbitration, including, but not
limited to, the fees and costs of the arbitrator, provider
organization, attorney, or witnesses”]; cf. Little v. Auto Stiegler,
Inc. (2003) 29 Cal.4th 1064, 1075 [discussing severance of
offending provisions in an arbitration agreement]; Gutierrez v.
Autowest, Inc. (2003) 114 Cal.App.4th 77, 92 [severance available
for costs provision].) Because it is possible to correct the order to
pay fees and costs “without affecting the merits of the decision
upon the controversy submitted,” the trial court must do so.
(§ 1286.6, subd. (b).) On remand, the trial court shall strike the
award of fees and costs and confirm the award as corrected.8
(§ 1286.6.)
8
The trial court “shall” correct a defective award (§ 1286.6),
but it “may not” do so in the absence of a petition to correct the
award unless a petition to vacate the award has been filed and
“(1) All petitioners and respondents are before the court; or [¶] (2)
All petitioners and respondents have been given reasonable
notice that the court will be requested at the hearing to correct
the award or that the court on its own motion has determined to
15
C. Plaintiff’s Unconscionability and Withdrawal
Arguments Are Forfeited
A party contending an arbitration agreement is
unconscionable must raise the issue in court when they first
resist arbitration. (Pearson Dental Supplies, Inc. v. Superior
Court (2010) 48 Cal.4th 665, 681; Moncharsh, supra, 3 Cal.4th at
30-31; Cummings, supra, 128 Cal.App.4th at 328-330.) Here,
plaintiff did not raise unconscionability in the fraudulent
inducement action or before the arbitrator.9 He first raised the
issue in his petition to vacate the interim arbitration award. The
issue was accordingly forfeited. (Reed v. Mutual Service Corp.
(2003) 106 Cal.App.4th 1359, 1372-1373 [declining to address
unconscionability argument raised for the first time in petition to
vacate award], disapproved on another ground in Haworth v.
Superior Court (2010) 50 Cal.4th 372, 382, fn. 6.)
Plaintiff also contends, for the first time in his reply brief,
that he “lawfully withdrew” from the arbitration he initiated.
Plaintiff forfeited this argument by failing to raise it in his
correct the award and all petitioners and respondents have been
given an opportunity to show why the award should not be
corrected.” (§ 1286.8, subd. (b).) We will not order a new hearing
on remand because defendants invite us to sever the
impermissible prevailing party fees and costs award from the
retainer agreement and leave the rest of the award intact.
9
Plaintiff insists he did raise unconscionability before the
arbitrator and cites a letter dated October 8, 2015, in which he
objected to Marcus’s refusal to stay the arbitration proceedings
and provide consumer arbitration disclosures. The letter,
however, makes no reference to unconscionability.
16
opening brief. (Safeway Wage & Hour Cases (2019) 43
Cal.App.5th 665, 687, fn. 9.)
D. The Arbitrator’s Refusal to Postpone the Arbitration
Was Not an Abuse of Discretion
Subject to exceptions not relevant to this case, a neutral
arbitrator appoints the time and place for arbitration. (§ 1282.2,
subd. (a)(1).) “On request of a party to the arbitration for good
cause, or upon his own determination, the neutral arbitrator may
postpone the hearing to a time not later than the date fixed by
the agreement for making the award, or to a later date if the
parties to the arbitration consent thereto.” (§ 1282.2, subd. (b).)
An arbitrator’s hearing scheduling decision is reviewed for abuse
of discretion (SWAB Financial, LLC v. E*Trade Securities, LLC
(2007) 150 Cal.App.4th 1181, 1196-1198), and an award must be
vacated if a party’s rights “were substantially prejudiced by the
refusal of the arbitrator[ ] to postpone the hearing upon sufficient
cause being shown therefor.” (§ 1286.2, subd. (a)(5).)
Plaintiff contends Judge Marcus abused his discretion in
declining to postpone arbitration while his appeal from the trial
court’s order sustaining defendants’ demurrer in the fraudulent
inducement action was pending. Although there is no general
prohibition against proceeding with arbitration while a challenge
to arbitrability is pending in the trial court, plaintiff contends
Judge Marcus’s decision to proceed “usurped the court’s authority
to determine the issue of arbitrability.”
That is not so. If the trial court had found the agreement to
arbitrate to be the product of fraud, the resulting award would be
subject to vacatur. (§ 1286.2, subd. (a)(4) [award must be vacated
if “[t]he arbitrators exceeded their powers and the award cannot
17
be corrected without affecting the merits of the decision upon the
controversy submitted”].) Judge Marcus made no ruling
purporting to address fraud in the inducement, and we need not
address in this opinion plaintiff’s arguments concerning a ruling
the arbitrator never made.
Plaintiff also contends a postponement was necessary
because he faced a dilemma: he could “either refuse to appear at
the arbitration so as not to waive his objections to its illegality by
actively participating in it [and thereby risk dismissal] or risk
such waiver by appearing and presenting evidence in support of
his claims.” The dilemma, however, is chimerical; plaintiff
imagines he had more options than he did. By the date of the
arbitration hearing, he had not preserved any objections to the
arbitration. We have already explained that plaintiff waived his
objection to Judge Marcus’s appointment and forfeited the section
1284.3 issue long before the hearing.
18
DISPOSITION
The judgment confirming the arbitration award is reversed
and the matter is remanded for the trial court to enter a new and
different order correcting the arbitration award by striking the
award of attorney fees and costs and, so modified, confirming the
arbitration award. The parties shall bear their own costs on
appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
BAKER, J.
We concur:
RUBIN, P. J.
KIM, J.
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