Leeor Builders v. Forehand CA2/4 ( 2022 )


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  • Filed 10/26/22 Leeor Builders v. Forehand CA2/4
    NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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    has not been certified for publication or ordered published for purposes of rule 8.1115.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 FOUR
    LEEOR BUILDERS, INC.,                                                   B316785
    Plaintiff and Appellant,                                      (Los Angeles County
    Super. Ct. No. 21STCV15470)
    v.
    ORDER MODIFYING
    LEROY FOREHAND,                                                       OPINION AND DENYING
    REHEARING
    Defendant and Respondent.                                   [NO CHANGE IN JUDGMENT]
    COURT:*
    IT IS ORDERED the opinion in the above-entitled matter
    filed on October 6, 2022, be modified as follows:
    1. Starting on page 14 through page 15, delete the paragraph
    beginning “Second, for the first time on appeal,” and
    replace as follows:
    “Second, Leeor asserts that the Forehands’ home was
    owned by LeRoy and Elizabeth as trustees of the Forehand
    Trust, and that under Probate Code section 15620, the
    signatures of both were required to ‘activate a provision on
    behalf of the trust.’ We find this argument without merit.
    Leeor entered into an agreement with Elizabeth and LeRoy
    as individuals, not as trustees to the Forehand Trust.
    Indeed, Leeor’s complaint named LeRoy in his individual
    capacity, not as trustee. In short, we conclude the parties
    had a valid arbitration agreement that LeRoy was entitled
    to enforce.”
    2. Footnote 12 is renumbered as footnote 11, and footnote 13
    is renumbered as footnote 12.
    Except as provided above, the petition for rehearing is
    denied.
    There is no change in the judgment.”
    ____________________________________________________________
    *MANELLA, P. J.       COLLINS, J.           CURREY, J.
    2
    Filed 10/6/22 Leeor Builders v. Forehand CA2/4 (unmodified opinion)
    NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 FOUR
    LEEOR BUILDERS, INC.,                                                                B316785
    Plaintiff and Appellant,                                                 (Los Angeles County
    Super. Ct. No. 21STCV15470)
    v.
    LEROY FOREHAND,
    Defendant and Respondent.
    APPEAL from a judgment of the Superior Court of Los
    Angeles County, Theresa M. Traber, Judge. Affirmed.
    Law Office of Yossi Noudel and Yossi Noudel for
    Plaintiff and Appellant.
    Retz & Aldover and Kirk J. Retz for Defendant and
    Respondent.
    INTRODUCTION
    Respondent LeRoy Forehand and his wife Elizabeth
    entered into a contract with appellant Leeor Builders, Inc.
    for home improvements.1 The contract contained an
    arbitration provision and a box on the first page requiring
    the initials of the “Owner” in order for the arbitration
    provision to be effective. Elizabeth’s initials appear in the
    box, as well as on the page containing the language of the
    arbitration provision, where initials of “Direct Contractor”
    also appear. In July 2020, after Elizabeth had passed away,
    LeRoy brought a demand for arbitration, initially seeking
    $299,999. Over Leeor’s objections, both the trial court and
    the Arbitrator ruled the arbitration provision was
    enforceable. In a closing brief submitted in the arbitration,
    LeRoy sought additional damages. The Arbitrator
    ultimately awarded LeRoy $869,000 in damages, plus costs,
    for a total of $902,749.38. The Arbitrator expressly found
    that Leeor had been on notice of the claims and of the
    additional damages sought. The trial court confirmed the
    award, rejecting Leeor’s argument that in exceeding the
    original demand, the Arbitrator’s award was fundamentally
    unfair.
    On appeal, Leeor contends the court erred in finding
    the parties had agreed to arbitrate because “Owner”
    necessarily meant both Elizabeth and LeRoy, and thus
    1     Because they share a surname, we refer to LeRoy and
    Elizabeth by their first names.
    2
    Elizabeth’s initials alone were insufficient to render the
    arbitration provision effective. Leeor further contends the
    court impermissibly deferred to the Arbitrator on the
    question whether there existed an agreement to arbitrate.
    Finally, Leeor contends the court erred in confirming an
    award that substantially exceeded the original demand.
    We reject Leeor’s construction of the contract (which it
    drafted) as requiring both LeRoy’s and Elizabeth’s initials to
    render the arbitration provision effective. Accordingly, we
    agree with both the trial court and the Arbitrator that
    Elizabeth’s initials were sufficient. Additionally, because
    both the trial court and the Arbitrator concluded the parties
    had agreed to arbitrate, we need not address whether the
    court erred to the extent it deferred the issue of the existence
    of an arbitration agreement to the Arbitrator.2 Finally, we
    conclude the court was required to accept the Arbitrator’s
    factual finding that Leeor was on notice of the damages
    sought and discern no fundamental unfairness in the award.
    We therefore affirm.
    STATEMENT OF RELEVANT FACTS
    A.    The Parties Enter into an Agreement
    In June 2018, LeRoy and Elizabeth Forehand entered
    into a “Home Improvement Contract” with Leeor. The top of
    the first page of the agreement stated it was an
    2     Similarly, we need not address Leeor’s challenge to the
    court’s alternative holding that LeRoy could enforce any
    arbitration agreement between Leeor and Elizabeth.
    3
    “AGREEMENT BETWEEN DIRECT CONTRACTOR AND
    PROPERTY OWNER.” Beneath this statement on the
    left-hand side appeared a stylized logo with the words
    “Greener Solution Group.”3 To the right of this logo was the
    word “And” followed by six blank lines, underneath which
    were instructions about what information was to be filled in
    the blanks. The first blank line was for “Property Owner’s
    Name,” and “Leroy [sic] & Elizabeth Forehand” was
    handwritten in that blank.
    Near the bottom of the first page was a box containing
    the following text: “ARBITRATION [¶] OWNER: Initial this
    box if you agree to arbitration. Review the ‘Arbitration of
    Disputes’ section attached.” The box was large enough to fit
    only one set of initials, and contained the initials “EF.”
    Underneath the box was a blank line over text stating:
    “(Owner Sign Here – Read notice on Arbitration, Mechanics
    Lien Warning).” Elizabeth’s signature appeared in this
    blank. Below that was another blank line over text stating:
    “(If more than one Owner, please Sign Here).” LeRoy’s
    signature appeared here.
    The “Arbitration of Disputes” section provided, in
    relevant part, that all claims relating to the contract would
    “be settled by binding arbitration in accordance with the
    construction industry arbitration rules of the American
    3    Greener Solution Group is Leeor’s DBA.
    4
    Arbitration Association [AAA].”4 Near the bottom of the
    provision was a line stating, “I agree to arbitration” followed
    by an “x,” followed by an underlined blank space, under
    which “(Direct Contractor’s Initials)” was written. The
    initials “OA” were written in that blank.5 On the same line
    was another statement of “I agree to arbitration” followed by
    an “x” and an underlined blank space, under which
    “(Owner’s Initials)” was written. The initials “EF” were
    written in that blank. Below the space for initials, the
    contract provided that “in the event that Contractor and
    Owner have not each initialed the arbitration provision
    above, then it shall be conclusively agreed without a
    subsequent written agreement by all parties, that neither
    party agrees to arbitrate and the arbitration of disputes
    provision shall not be deemed to be a part of this
    agreement.”
    B.   LeRoy’s Demand for Arbitration; Arbitration
    Proceedings6
    In July 2020, LeRoy filed a demand for arbitration,
    alleging Leeor should be liable for construction deficiencies
    in the work it performed at his house, for failing to complete
    4     The entirety of the “Arbitration of Disputes” section was
    printed in bold, capital letters, omitted here for readability.
    5    OA may have stood for “Oshri Azoulay,” a salesperson
    working for Leeor.
    6      Except where noted, the facts in this section are taken from
    a recitation in the Arbitrator’s July 2021 Final Award.
    5
    the work required in the contract, and for committing elder
    abuse. The demand sought $299,999 in damages.
    In September 2020, the Arbitrator held a preliminary
    hearing and issued a scheduling order. According to an
    e-mail from the Arbitrator, Leeor objected to AAA’s
    jurisdiction and the Arbitrator acknowledged Leeor’s
    participation in arbitration would not be deemed a waiver of
    its right to object to jurisdiction; the Arbitrator encouraged
    Leeor to bring a motion to dismiss as soon as possible, either
    before the superior court or the Arbitrator. LeRoy filed a
    Statement of Claims, detailing his claims and damages.
    In November 2020, Leeor filed a “Response to the
    Statement of Claims,” asserting numerous affirmative
    defenses. Leeor also attempted to file a counterclaim
    including several third parties, but it was rejected as
    untimely and noncompliant with AAA rules. The Arbitrator
    held another preliminary hearing, and issued a second
    scheduling order, extending deadlines to comply with the
    initial scheduling order.
    In April 2021, LeRoy filed a motion to bar Leeor from
    introducing evidence at the arbitration hearing because
    Leeor had failed to comply with the Arbitrator’s scheduling
    orders, including directives to produce documents and
    identify witnesses. Leeor opposed the motion on April 19
    and also challenged AAA’s jurisdiction to conduct the
    arbitration. On April 20, 2021, the Arbitrator denied
    LeRoy’s motion on the condition that Leeor produce
    documents by a certain date. Leeor’s challenge to AAA’s
    6
    jurisdiction was bifurcated, to be addressed at the outset of
    the April 28, 2021 arbitration hearing. Leeor subsequently
    brought a motion to dismiss before the Arbitrator on April
    28. That motion was denied.
    C.     Leeor’s Complaint; Court Proceedings
    On April 23, 2021, nine months after LeRoy had
    petitioned for arbitration and less than a week before the
    scheduled arbitration hearing, Leeor filed a complaint in the
    superior court against “LEROY FOREHAND, an individual”
    and others. The complaint alleged that although the
    agreement signed by Leeor and the Forehands contained an
    arbitration provision, it was ineffective because LeRoy had
    failed to initial it. The complaint asked the court to enjoin
    the arbitration and declare that the agreement did not
    provide for arbitration. Leeor also alleged that LeRoy
    breached the parties’ agreement by filing for arbitration.7
    Five days later, Leeor filed an ex parte application for a
    temporary restraining order and order to show cause to
    enjoin the arbitration, arguing that LeRoy’s failure to initial
    the arbitration provision conclusively established the parties
    did not agree to arbitrate. LeRoy disputed Leeor’s purported
    construction of the agreement, contending the provision
    required only one set of initials each -- of an owner and of a
    7     The remainder of the complaint alleged essentially that
    other contractors and sureties were responsible for the damages
    LeRoy claimed to have sustained, and demanded indemnity or
    contribution.
    7
    contractor. LeRoy further argued that to the extent the
    agreement could be read to require more than one owner to
    initial the arbitration provision, the contract was ambiguous
    and must be construed against Leeor. The court denied
    Leeor’s application, finding an “unreasonable delay in
    seeking relief,” and further concluding that Leeor had failed
    to show a likelihood of success on the merits on its claim that
    it was not “bound by an arbitration agreement that it
    signed.”
    In May 2021, following three days of the arbitration
    evidentiary hearing, LeRoy moved to compel arbitration in
    lieu of answering Leeor’s complaint. Leeor opposed the
    motion, again arguing LeRoy’s failure to initial the
    arbitration provision rendered it ineffective. Included with
    the opposition was a declaration from Oshri Azoulay, a Leeor
    salesperson, who averred that LeRoy “did not want to initial
    the arbitration clause because he indicated that he does not
    trust or want that type of proceeding[].” Directly
    contradicting this assertion, LeRoy submitted a declaration
    stating, “I agreed to arbitrate all disputes with Leeor
    Builders when I signed the contract . . . .” Of Azoulay’s
    assertion that LeRoy did not “trust or want” arbitration,
    LeRoy stated, “This is false. I never said that I did not want
    to arbitrate.”
    In July 2021, the court granted LeRoy’s motion to
    compel, finding that “[t]he clause at issue does not require
    that ‘all’ owners initial the provisions to create an
    enforceable agreement but only that there be an initial from
    8
    . . . ‘each’ of the following parties: the ‘contractor’ and
    ‘owner.’· That only one of the owners needs to initial the
    arbitration agreement is reinforced by the signature lines on
    the first page of the contract. The first signature line
    indicating ‘Owner Sign Here’ is followed by ‘Read notice on
    Arbitration, Mechanics Lien Warning.’ In contrast, the
    signature line for an additional owner does not direct the
    second owner’s attention to the arbitration provision.
    Clearly, one signature on ‘each’ side of the contract is
    sufficient to create an enforceable arbitration provision.”
    D. Arbitration Award; Petition to Confirm
    According to the Arbitrator’s Final Award, the
    evidentiary hearing took place on April 28, 29, and 30, and
    May 27, 2021. On May 28, 2021, LeRoy filed his closing
    brief. On June 2, Leeor filed its closing brief.8 The
    arbitration hearing was “closed” on June 8, 2021. The
    Arbitrator, as had the trial court, rejected Leeor’s argument
    that no agreement had been formed. The Final Award
    further found that Leeor was sufficiently placed “on notice of
    the nature of each claim and the damages sought.”
    Specifically, the Arbitrator found “[Leeor] was served with a
    detailed Statement of Claims as well as expert reports giving
    [Leeor] more than adequate notice of each claim being
    brought by [LeRoy] and ample opportunity to defend those
    claims.” The Arbitrator also referenced LeRoy’s “Closing
    8    Neither party’s brief is in the record.
    9
    Brief” in which LeRoy “correctly restated all claims as
    traditional causes of action.” The Final Award found Leeor
    liable to LeRoy for $869,000 plus costs, for a total of
    $902,749.38.
    In August 2021, LeRoy petitioned to confirm the
    arbitration award and enter judgment. Leeor opposed the
    petition, arguing the court could not enter judgment because
    the parties had not agreed to arbitrate, and further
    contending that an award significantly in excess of the
    original demand was fundamentally unfair and violated due
    process.9 LeRoy countered that “[b]oth in opening
    statements and in written closing arguments, Mr. Forehand
    asked for approximately $900,000 in damages,” and noted
    that the Arbitrator had specifically found Leeor was “‘on
    notice of the nature of each claim and the damages sought.’”
    The court granted LeRoy’s petition. As to the parties’
    agreement to arbitrate, the court noted that it had
    previously found the arbitration provision enforceable. It
    further observed that the Arbitrator had “explicitly
    addressed and firmly rejected” the challenge to the
    enforceability of the arbitration provision. As to the award
    exceeding LeRoy’s initial demand, the court noted the
    Arbitrator’s finding that LeRoy gave written notice of the
    increased demand in his closing brief before the close of
    arbitration, which satisfied AAA rules. The court further
    9    While Leeor made other arguments, it expressly abandons
    them on appeal.
    10
    noted that the Arbitrator’s Final Award expressly found that
    the claim was sufficiently pled ‘“and placed [Leeor] on notice
    of each claim and the damages sought,’” noting that LeRoy
    “served ‘a detailed Statement of Claims as well as expert
    reports giving [Leeor] more than adequate notice of each
    claim,’” and that Leeor had “‘ample opportunity to defend
    against those claims.’” Finally, the court rejected Leeor’s
    argument that in exceeding the original demand, the
    Arbitrator’s Award was fundamentally unfair and violated
    due process. The court entered judgment in November 2021.
    Leeor timely appealed.10
    10    On appeal, Leeor requests that we judicially notice: (1) that
    the arbitration resulting in the Final Award was conducted with
    AAA under the Regular Track Procedures of the Construction
    Industry Arbitration Rules; (2) that the rules located at AAA’s
    website are also in the record; (3) the text of AAA rule R-6; (5)
    that LeRoy filed an arbitration demand in July 2020 against
    Leeor; (6) that the demand sought damages of $299,999; (7) that
    the demand was not modified to increase the amount demanded;
    (8) that the Award was for $902,749.38; (12) a printout
    purporting to be a public property record for LeRoy’s house; (13) a
    quit-claim deed relating to LeRoy’s house; (14) a recorded
    affidavit relating to LeRoy’s house; and (15) that from 1990 to
    2019, LeRoy’s house was owned by LeRoy and Elizabeth as
    “trustees of the FOREHAND TRUST.” (Leeor’s request
    intentionally omitted requests 4, 9, 10, and 11.) LeRoy has not
    opposed Leeor’s request. We grant Leeor’s first and third
    requests relating to the rules of the arbitration and deny the
    remainder. We deny requests 5, 6, and 8 because the information
    appears in the record already. We deny request 7 because Leeor
    has failed to provide an accurate source from which we can
    (Fn. is continued on the next page.)
    11
    DISCUSSION
    A.     The Agreement Contained an Enforceable
    Arbitration Provision
    “Where the evidence is not in conflict, the appellate
    court independently interprets the language of a written
    contract.” (Rael v. Davis (2008) 
    166 Cal.App.4th 1608
    ,
    1617.) The parties’ agreement provided that “in the event
    that Contractor and Owner have not each initialed the
    arbitration provision above, then it shall be conclusively
    agreed without a subsequent written agreement by all
    parties, that neither party agrees to arbitrate and the
    arbitration of disputes provision shall not be deemed to be a
    part of this agreement.” It is undisputed that while both
    Leeor’s representative and Elizabeth initialed the
    arbitration provision, LeRoy did not. Leeor contends that
    “‘Owner’” therefore did not initial the provision because
    “‘Owner’ is defined on the first page as: ‘Le Roy [sic] &
    Elizabeth Forehand.’” We disagree.
    The trial court rejected Leeor’s contention: “The clause
    at issue does not require that ‘all’ owners initial the
    provisions to create an enforceable agreement but only that
    there be an initial from . . . ‘each’ of the following parties: the
    ‘contractor’ and ‘owner.’· That only one of the owners needs
    to initial the arbitration agreement is reinforced by the
    signature lines on the first page of the contract. The first
    ascertain this information. We deny requests 2, 12, 13, 14, and
    15 because the documents and information Leeor asks us to
    notice are irrelevant to this appeal.
    12
    signature line indicating ‘Owner Sign Here’ is followed by
    ‘Read notice on Arbitration, Mechanics Lien Warning.’ In
    contrast, the signature line for an additional owner does not
    direct the second owner’s attention to the arbitration
    provision. Clearly, one signature on ‘each’ side of the
    contract is sufficient to create an enforceable arbitration
    provision.” We agree. We note also that the second
    signature line contained the instruction “If more than one
    Owner, please Sign Here.” The phrase “more than one
    Owner” implied that “Owner” denoted a single person. If
    “Owner” were defined to mean both Elizabeth and LeRoy,
    “more than one Owner” would be nonsensical. (Civ. Code,
    § 1644 [“The words of a contract are to be understood in their
    ordinary and popular sense, rather than according to their
    strict legal meaning; unless used by the parties in a
    technical sense, or unless a special meaning is given to them
    by usage, in which case the latter must be followed”].)
    Additionally, the text box on the first page of the agreement
    for the “Owner” to indicate agreement to arbitration was
    large enough to permit only one set of initials. Considering
    the agreement as a whole, we conclude the initials of only
    one Owner were sufficient to render the arbitration provision
    effective. (Civ. Code, § 1641 [“The whole of a contract is to
    be taken together, so as to give effect to every part, if
    reasonably practicable, each clause helping to interpret the
    other”].)
    To the extent the agreement was ambiguous as to who
    was required to initial the arbitration provision, such
    13
    ambiguity is construed against the drafter. (People ex rel.
    Department of Public Works v. Ward (1968) 
    258 Cal.App.2d 15
    , 21 [“An ambiguity is to be construed more strongly
    against the party who prepared the document”]; Civ. Code,
    § 1654 [“In cases of uncertainty not removed by the
    preceding rules, the language of a contract should be
    interpreted most strongly against the party who caused the
    uncertainty to exist”].) Nevertheless, Leeor contends two
    pieces of extrinsic evidence demonstrate both LeRoy and
    Elizabeth were required to initial. First, Leeor claims we
    must consider “the undisputed words of Respondent: he
    didn’t want to agree to binding arbitration, and Appellant
    acceded to that by proceeding on the job.” This flatly
    misstates the record. LeRoy declared unequivocally that he
    “agreed to arbitrate all disputes with Lessor Buiders when I
    signed the contract,” and characterized Azoulay’s contrary
    assertion as “false.”
    Second, for the first time on appeal, Leeor asserts that
    the Forehands’ home was owned by LeRoy and Elizabeth as
    trustees of the Forehand Trust, and that under Probate Code
    section 15620, the signatures of both were required to
    “activate a provision on behalf of the trust.” By failing to
    raise this argument below, Leeor has forfeited it. (Asbestos
    Claims Facility v. Berry & Berry (1990) 
    219 Cal.App.3d 9
    , 26
    [“[I]t is fundamental that a reviewing court will ordinarily
    not consider claims made for the first time on appeal which
    14
    could have been but were not presented to the trial court”].)11
    In short, we conclude the parties had a valid arbitration
    agreement that LeRoy was entitled to enforce.
    B.The Court Did Not Err in Confirming the
    Award
    Leeor complains that LeRoy’s arbitration demand
    alleged $299,999 in damages, yet the arbitrator awarded
    him $902,749.38. The trial court accepted the Arbitrator’s
    finding that LeRoy gave sufficient notice of his increased
    demand.12 Leeor argues: (1) the court erred “in relying solely
    11    Even were we to consider this argument, we would find it
    without merit. Leeor entered into an agreement with Elizabeth
    and LeRoy as individuals, not as trustees to the Forehand Trust.
    Indeed, Leeor’s complaint named LeRoy in his individual
    capacity, not as trustee.
    12     AAA rule R-6 is entitled “Changes of Claim or
    Counterclaim” and provides:
    “(a) A party may at any time prior to the close of the
    hearing or by the date established by the arbitrator increase or
    decrease the amount of its claim or counterclaim. Written notice
    of the change of claim amount must be provided to the AAA and
    all parties.
    “(b) Any new or different claim or counterclaim, as opposed
    to an increase or decrease in the amount of a pending claim or
    counterclaim, shall be made in writing and filed with the AAA,
    and a copy shall be provided to the other party, who shall have a
    period of 14 calendar days from the date of such transmittal
    within which to file an answer to the proposed change of claim or
    counterclaim with the AAA. After the arbitrator is appointed no
    (Fn. is continued on the next page.)
    15
    on the arbitrator’s findings that there was ample notice with
    no other evidence”; and (2) even if Leeor was given adequate
    notice of the increased demand, the Arbitrator’s Award
    “establishes fundamental unfairness.” We reject the
    contentions.
    1.      The Court Was Bound by the
    Arbitrator’s Finding That Leeor Was on
    Notice of LeRoy’s Increased Demand
    “[I]t is within the ‘powers’ of the arbitrator to resolve
    the entire ‘merits’ of the ‘controversy submitted’ by the
    parties. [Citation.] Obviously, the ‘merits’ include all the
    contested issues of law and fact submitted to the arbitrator
    for decision.” (Moncharsh v. Heily & Blase (1992) 
    3 Cal.4th 1
    , 28.) Here, the Arbitrator expressly found that Leeor had
    been placed “on notice of the nature of each claim and the
    damages sought,” referencing the statement of claims, expert
    reports, and LeRoy’s closing brief. In so doing, the
    Arbitrator necessarily found that LeRoy had given sufficient
    notice of his claims and damages under AAA rules. “[C]ourts
    are bound by the arbitrator’s findings of fact.” (Meat Cutters
    Local No. 459 v. Olson Bros., Inc. (1960) 
    186 Cal.App.2d 200
    ,
    203.) Not only was the court not required to identify “other
    evidence” in support of the Arbitrator’s finding as Leeor
    suggests, it was bound by such finding.
    new or different claim or counterclaim may be submitted without
    the arbitrator’s consent.”
    16
    2.      The Judgment Is Not Fundamentally
    Unfair
    As he did below, Leeor relies on Emerald Aero, LLC v.
    Kaplan (2017) 
    9 Cal.App.5th 1125
     (Emerald Aero), to argue
    that even if LeRoy gave proper notice of the increased
    demand, the Arbitrator’s Award was fundamentally unfair.
    Leeor requests we either reverse the judgment or reduce the
    amount awarded to $299,999. We decline to do so.
    In Emerald Aero, after the plaintiffs’ initial arbitration
    demand of $1,000,000 was served, the arbitration was stayed
    for the defendant’s criminal proceedings, and the defendant’s
    attorney asked to withdraw. (Emerald Aero, supra, 9
    Cal.App.5th at 1132-1134.) Twenty months after the initial
    demand was filed, a one-day, telephonic evidentiary hearing
    was held. (Id. at 1135.) A day before this hearing, plaintiffs
    served on the Arbitrator and the defendant -- but not his
    counsel -- an e-mail stating: “‘Attached please find
    [plaintiffs’] default prove up brief for tomorrow’s hearing
    along with a supporting declaration and proof of service.”
    (Ibid.) Nothing in the body of the e-mail indicated plaintiffs
    had added additional claims or increased their demand. (Id.
    at 1142.) However, the attachment provided that plaintiffs
    were now seeking over $10 million in damages, as well as
    three times that amount in punitive damages not previously
    sought. (Id. at 1135.) The Arbitrator awarded plaintiffs over
    $30 million, and the trial court confirmed the award. (Id. at
    1130.)
    17
    The appellate court reversed, holding that the
    plaintiffs’ submission of their increased demand violated
    AAA rules because “[r]easonably understood, the notice
    required under AAA rule R-6 means providing the opposing
    party with the time and opportunity to review and
    understand the contents of the notice, and the opportunity to
    respond to the notice.[13] Under the circumstances here,
    attaching a brief to an e-mail less than 24 hours before the
    merits hearing did not constitute notice calculated to apprise
    the opposing party of a new and substantially increased
    monetary claim, nor did it provide the opposing party with a
    fair opportunity to assert a challenge to the new punitive
    damage claim.” (Emerald Aero, supra, 9 Cal.App.5th at
    1141-1142.) The court further rejected the plaintiffs’
    argument that the late notice did not prejudice the
    defendant because he had already decided not to participate
    in the evidentiary hearing, finding that “the record also
    supports that if [defendant] had been provided reasonable
    prior notice that plaintiffs were seeking $30 million in
    punitive damages, he would have likely reconsidered this
    decision by retaining a new attorney or appearing at the
    hearing to at least notify the Arbitrator that punitive
    damages had never before been part of plaintiffs’ claim.” (Id.
    at 1142.) The court concluded that “[o]n the record before us,
    plaintiffs’ counsel took unfair advantage of the situation by
    13    The AAA rule R-6 considered by the Emerald Aero court
    was substantively identical in pertinent part to the rule R-6 at
    issue here. (Emerald Aero, supra, 9 Cal.App.5th at 1140-1141.)
    18
    making a last-minute demand for more than $30 million in
    punitive damages.” (Ibid.)
    Here, by contrast, nothing suggests Leeor’s counsel did
    not receive and review LeRoy’s closing brief, or respond to it
    in its own closing brief, filed five days later. LeRoy’s brief
    was filed 11 days before the close of arbitration, yet nothing
    in the record indicates Leeor sought to reopen the
    evidentiary hearing to rebut LeRoy’s increased damages
    number; nor did he claim to have any evidence that could do
    so. Moreover, the Arbitrator expressly found LeRoy “placed
    [Leeor] on notice of the nature of each claim and the
    damages sought,” noting Leeor “was served with a detailed
    Statement of Claims as well as expert reports giving [Leeor]
    more than adequate notice of each claim being brought by
    [LeRoy] and ample opportunity to defend those claims.”
    Leeor had “the time and opportunity to review and
    understand” LeRoy’s claims and damages request and “the
    opportunity to respond . . . .” (Emerald Aero, supra, 9
    Cal.App.5th at 1141.) The instant circumstances are thus
    materially different from those found unfair in Emerald
    Aero, and they require neither reversal nor reduction of the
    judgment.
    19
    DISPOSITION
    The judgment is affirmed. Respondent is awarded his
    costs on appeal.
    NOT TO BE PUBLISHED IN THE OFFICIAL
    REPORTS
    MANELLA, P. J.
    We concur:
    COLLINS, J.
    CURREY, J.
    20
    

Document Info

Docket Number: B316785M

Filed Date: 10/27/2022

Precedential Status: Non-Precedential

Modified Date: 10/27/2022