Vaca v. Howard CA2/4 ( 2015 )

Filed 10/29/15 Vaca v. Howard 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NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication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
ANA VACA, B256065
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. BC436404)
v.
NEIL M. HOWARD,
Defendant and Respondent.
APPEAL from a judgment of the Superior Court of Los Angeles County, Deirdre
Hill, Judge. Affirmed.
Law Office of Nick A. Alden, Nick A. Alden and Aleksey Sirotin for Plaintiff and
Appellant.
Philip D. Dapeer for Defendant and Respondent.
Appellant Ana Vaca sued her former attorney, Neil Howard, alleging that Howard
breached his fiduciary duties and committed professional negligence. Six months after
the complaint was filed, Howard filed a petition to compel arbitration pursuant to Code of
Civil Procedure section 1281.2.1 The trial court granted the petition, and we denied
Vaca’s petition for a writ of mandate. (Vaca v. Superior Court of Los Angeles County
(June 1, 2011, B232417) [nonpub. order].) Vaca did not participate in the arbitration
proceedings, which culminated in an order granting Howard’s motion for summary
judgment. Approximately two years after the arbitrator issued his order, Howard filed a
petition to confirm the award pursuant to section 1285. Vaca timely appealed from the
court’s grant of that petition.
Vaca contends that the trial court erred by granting the petitions to compel
arbitration and confirm the award. She argues that the trial court should have denied the
petition to compel arbitration because she did not knowingly agree to arbitrate, any
purported agreement to arbitrate was unconscionable, and Howard waived his right to
arbitrate by participating in the litigation before filing the petition to compel arbitration.
Vaca also argues that the trial court should have denied the petition to confirm the
arbitration award because the award lacked a legal basis, permitted Howard to benefit
inequitably from the negligence of Vaca’s bankruptcy attorney, and validated her claims
that she could not afford to participate in arbitration.
We reject Vaca’s contentions and conclude that the court did not err in granting
either petition. With regard to the petition to compel arbitration, we conclude that Vaca
and Howard entered into a valid agreement to arbitrate that was not unconscionable. We
further conclude that Vaca forfeited her claim of waiver by failing to present it below.
With regard to the petition to confirm the award, we agree with Howard and the trial
court that it would be improper to review the substantive merits of the arbitrator’s award.
1
All further statutory references are to the Code of Civil Procedure unless
otherwise indicated.
2
FACTUAL AND PROCEDURAL BACKGROUND
Vaca hired Howard in 2007 to represent her and her eleven siblings in a suit
alleging the wrongful death of her mother. Howard entered into a retainer agreement
with Vaca and her brother, Enrique Vaca (Enrique), on April 10, 2007. Vaca does not
speak or read English and has only a third-grade education in Spanish. Enrique and Vaca
signed a Spanish translation of the retainer agreement, which a court-certified interpreter
has attested is a proper translation.
The 16-paragraph retainer agreement contained an arbitration provision. That
provision, Paragraph 11, stated in full, with emphases: “The CLIENTS and the
ATTORNEY agree that any controversy or claim (including but not limited to claims for
legal malpractice, breach of fiduciary duty, and attorney fee disputes) arising out of or
relating to this agreement, or breach of this AGREEMENT, shall be settled by binding
arbitration. Binding arbitration means that neither the ATTORNEY nor the CLIENT
may appeal the arbitration award, except for those reasons set forth under Section 1286.2
of the Code of Civil Procedure. The arbitration shall be administered by Judicate West.
Judgment on the award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. In the event of arbitration, the CLIENTS and the ATTORNEY agree
that the above referenced controversy shall be submitted to one arbitrator selected by the
CLIENTS and the ATTORNEY. If the CLIENTS and the ATTORNEY are unable to
select an arbitrator, Judicate West shall provide the names of three arbitrators. The
CLIENTS and the ATTORNEY will then have the right to eliminate one arbitrator. If the
CLIENTS and the ATTORNEY eliminate two arbitrators, the remaining arbitrator will be
appointed the arbitrator. If the CLIENTS and the ATTORNEY eliminate the same
arbitrator, and remains two arbitrators, then the arbitrator at the top of the list shall be
appointed as the arbitrator. All costs associated with the arbitration shall be borne
equally by the CLIENTS and the ATTORNEY. By signing this AGREEMENT, the
CLIENTS acknowledge, that CLIENTS are given the opportunity to consult with
independent counsel, concerning any provisions of this agreement, in particular with
respect to provisions set forth in this paragraph. The CLIENTS acknowledge that he
3
may cancel or reject this agreement within ten (10) days from the date of signing this
AGREEMENT.”
Howard did not discuss the arbitration provision with Vaca. His assistant, Frank
Maldonado, a fluent Spanish speaker, gave Vaca and Enrique the retainer agreement on
April 10, 2007. 2 Maldonado orally advised Vaca and Enrique in Spanish that they had
the option to review the agreement and return it by mail. Vaca and Enrique instead
reviewed the agreement in front of Maldonado and signed and returned the Spanish
version the same day. Maldonado gave Vaca and Enrique each their own copy of the
signed agreement. Vaca never asked Maldonado any questions about the agreement or
the arbitration provision.
Howard negotiated a $1.275 million settlement in the wrongful death action.
Howard deducted his contingency fee, issued Vaca two checks totaling $886,223.52, and
directed her to settle the matter with and distribute the proceeds among her siblings.
Vaca distributed $140,000 of the settlement proceeds to Enrique and gave $50,000 to her
sister, Laura Garcia. Vaca invested most if not all of the remaining settlement proceeds
in her family residence, which she allegedly purchased with cash.
Enrique disputed Vaca’s distribution of the settlement proceeds. He enlisted the
assistance of Howard, who filed a misappropriation suit against Vaca, his former client.
Although the suit was filed on behalf of all eleven of Vaca’s siblings, nine of them
2
Vaca suggests that Maldonado’s declaration should not be considered because it
“belatedly and mysteriously materialized with Howard’s Reply papers, and was not
submitted with the moving papers.” However, it is unclear from the record whether she
raised this objection in the trial court, and, even if she did, the trial court expressly
overruled all objections raised in conjunction with Howard’s petition to compel. We
accordingly consider Maldonado’s declaration, as well as the declarations of Vaca and
her attorney to which Howard objected below. The record does not reflect any rulings on
the objections Howard made to the declarations Vaca submitted in opposition to his
petition to confirm the arbitration award, nor on Vaca’s request that the court take
judicial notice of previous filings in the case and in Vaca’s bankruptcy proceedings. For
purposes of this appeal, we treat the request for judicial notice as granted (Aaronoff v.
Martinez-Senftner (2006) 136 Cal. App. 4th 910, 918-919) and the objections as overruled
(cf. Reid v. Google, Inc. (2010) 50 Cal. 4th 512, 534; Zucchet v. Galardi (2014) 229
Cal. App. 4th 1466, 1480, fn. 7.)
4
dismissed their claims before trial and a tenth, Garcia, denied retaining Howard as her
attorney and represented herself at trial. Vaca also represented herself at trial, after the
attorney she retained allegedly absconded with her retainer and withdrew from the case.
The court ruled in favor of Enrique and Garcia, awarding them a total of approximately
$400,000. Vaca, represented by another attorney, appealed the ruling. (Vaca v. Vaca
(B219105).) The appeal was dismissed pursuant to California Rules of Court, rule
8.140(b) for failure to designate the record on appeal. (Vaca v. Vaca (Oct. 28, 2009,
B219105) [nonpub. order].)
Vaca retained her present counsel, Nick Alden, and on April 26, 2010 filed the
instant suit against Enrique, Garcia, Howard, and the two attorneys who allegedly
mishandled the misappropriation lawsuit and appeal.3 Vaca alleged that Howard
breached his fiduciary duties to her and committed professional negligence by, among
other things, delegating distribution of the settlement proceeds to her, filing suit against
her, and allegedly eliciting false testimony from Enrique and Garcia during the trial of
that suit.
By letter dated September 21, 2010, Howard demanded that Vaca arbitrate her
claims against him pursuant to the arbitration provision of the April 10, 2007 retainer
agreement. After receiving no response from Vaca, Howard filed a petition to compel
arbitration on October 15, 2010. He subsequently filed a special motion to strike under
section 425.16, the anti-SLAPP statute, on October 29, 2010. 4 It doesn’t appear that’s
true, as the file stamp on the petition to compel arbitration is October 15, 2010, which
certainly predates the November 30, 2010 resolution of the anti-SLAPP motion. The
3
Alden also represents Vaca in a separate, subsequently filed lawsuit against
Howard and Sheldon Lewenfus. (L.A. Superior Court Case No. BC479045). In that suit,
Vaca alleges that Howard and Lewenfus conspired to obtain Vaca’s home through a
fraudulent sheriff’s sale, which Howard initiated to enforce the judgment against Vaca in
the misappropriation action. In an unpublished opinion, we reversed the trial court’s grant
of Lewenfus’s special motion to strike in that case. (See Vaca v. Lewenfus (Feb. 5, 2015,
B249885) [nonpub. opn.].)
4
SLAPP is an acronym for Strategic Lawsuit Against Public Participation.
5
anti-SLAPP motion itself does not appear in the record and the minute order denying it
does not indicate when it was filed, but the case summary date lists a “Motion to Strike”
filed on October 29, 2010. The October 29, 2010 date is consistent with the November
30, 2010 hearing date. See § 425.16, subd. (f) [requiring a hearing not more than 30 days
after service of an anti-SLAPP motion].)~ Howard also filed a demurrer, though it is
unclear from the record when that filing was made.
While Howard’s petition to compel arbitration, anti-SLAPP motion, and demurrer
were pending, Vaca filed for Chapter 7 bankruptcy on November 24, 2010. Vaca did not
disclose her claims against Howard in her bankruptcy filing. Vaca alleges this omission
was due to the negligence of her bankruptcy attorney, who is now disbarred.
The trial court heard and denied Howard’s anti-SLAPP motion on November 30,
2010. The court also overruled Howard’s demurrer, which was predicated on the same
grounds as his anti-SLAPP motion, during the hearing. The court further noted that
Howard and another defendant had filed “a number of discovery motions,” which it
removed from its calendar in light of section 425.16, subdivision (g), which stays
discovery during the pendency of an anti-SLAPP motion. The court did not consider the
petition to compel arbitration.
After two stipulated continuances, the court heard Howard’s petition to compel
arbitration on February 22, 2011. In a subsequent order, the court expressly overruled all
evidentiary objections pertaining to the motion to compel and ordered Vaca’s claims
against Howard severed and arbitrated. Neither Vaca nor Howard requested a statement
of decision, and the court’s tentative ruling does not appear in the record. The minute
order granting Howard’s petition to compel does not explain the court’s reasoning for
doing so.
Vaca did not participate in the arbitration proceedings. The arbitrator heard
Howard’s unopposed motion for summary judgment on September 12, 2011. The
arbitrator granted the motion, concluding that Vaca’s failure to disclose her claims
against Howard in her bankruptcy filings judicially estopped her from pursuing those
claims against him. The arbitrator served notice of his decision on September 14, 2011.
6
Vaca did not petition to correct or vacate the award, and Howard did not
immediately petition to confirm it. On July 11, 2012, ten months after the award was
issued, Vaca filed an ex parte application to reopen her bankruptcy proceedings to add
the previously omitted claims against Howard to her petition. The bankruptcy court
granted her request on July 30, 2012. Howard moved to vacate the order reopening
Vaca’s bankruptcy petition because he had not been properly served. The bankruptcy
court denied the motion without prejudice.
On July 19, 2013, the trial court issued an order to show cause “re: defendant, Neil
Howard’s failure to appear and status conference re: setting of any motion for
confirmation of arbitration award.” Howard filed a petition to confirm the arbitration
award three months later, on October 22, 2013. Vaca opposed the petition. The court
granted the petition on February 4, 2014, explaining in a written ruling that it could not
and would not revisit the substantive merits of the arbitrator’s decision. The court
entered judgment confirming the award on March 10, 2014, and Vaca timely appealed on
May 2, 2014.
DISCUSSION
I. Order Compelling Arbitration
A. Appealability
Vaca contends that neither the petition to compel arbitration nor the petition to
confirm the award should have been granted. Her notice of appeal, which she filed after
the petition to confirm was granted, indicates that she is appealing from the “[j]udgment
confirming arbitration award, under Code of Civil Procedure section 1294.” Howard
suggests that Vaca’s omission from her notice of appeal of any mention of the petition to
compel arbitration precludes her from challenging the court’s order granting that petition.
We disagree.
Although an order denying a petition to compel arbitration is directly appealable
(§ 1294, subd. (a)), an order granting such a petition is not. (Ashburn v. AIG Financial
Advisors, Inc. (2015) 234 Cal. App. 4th 79, 94). An order granting a petition to compel
arbitration is reviewable on appeal from a subsequent judgment on the award, however.
7
(Id.at p. 94; see also §§ 1294 & 1294.2.) “Both as a general rule and with specific
reference to arbitration, appellate review following a final judgment properly
encompasses ‘any intermediate ruling, proceeding, order or decision’ of the trial court
that ‘involves the merits’ or ‘necessarily affects’ the judgment or ‘substantially affects the
rights of a party. . . .’ (Code Civ. Proc., §§ 906, 1294.2; see generally Eisenberg et al.,
Cal. Practice Guide: Civil Appeals and Writs (The Rutter Group 2002) ¶ 2:261, p. 2-
118.)” (Abramson v. Juniper Networks, Inc. (2004) 115 Cal. App. 4th 638, 648-649.)
The notice of appeal need not mention specifically these intermediate rulings to preserve
them for appellate review. (See Johnson v. Alameda County Medical Center (2012) 205
Cal. App. 4th 521, 531.) Vaca properly preserved her challenges to the order granting
Howard’s petition to compel arbitration.
B. Analysis
1. Legal Framework
California courts have uniformly acknowledged that there is a strong public policy
in favor of arbitration. (E.g., Wagner Construction Co. v. Pacific Mechanical Corp.
(2007) 41 Cal. 4th 19, 25-26; Engalla v. Permanente Medical Group, Inc. (1997) 15
Cal. 4th 951, 971-972; Moncharsh v. Heily & Blase (1992) 3 Cal. 4th 1, 9.) This public
policy is embodied in Title 9 of the Code of Civil Procedure (§ 1280 et seq.), which sets
forth a comprehensive statutory scheme regulating private arbitration. (Moncharsh v.
Heily & Blase, supra, 3 Cal.4th at p. 9.) Under that scheme, “[a] written agreement to
submit to arbitration an existing controversy or a controversy thereafter arising is valid,
enforceable and irrevocable, save upon such grounds as exist for the revocation of any
contract.” (§ 1281.) Thus, when a party files a petition alleging the existence of a written
agreement to arbitrate a controversy and a party to that agreement refuses to arbitrate the
controversy, the court “shall order the petitioner and the respondent to arbitrate the
controversy if it determines that an agreement to arbitrate the controversy exists, unless it
determines that: [¶] (a) The right to compel arbitration has been waived by the
petitioner; or [¶] (b) Grounds exist for revocation of the agreement.” (§ 1281.2, subds.
(a) & (b).)
8
2. Waiver
Vaca contends that the court should have denied the petition to compel arbitration
under section 1281.2, subdivisions (a) and (b). She argues that Howard waived his right
to compel arbitration (§ 1281.2, subd. (a)) by engaging in litigation conduct inconsistent
with an intention to arbitrate. She asserts that before filing his motion to compel
arbitration, Howard noticed her deposition four times, filed and renewed a motion to
compel her deposition, propounded written discovery, and filed an anti-SLAPP motion—
a course of action she characterizes as “testing the water before taking the swim.”
(McConnell v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (1980) 105 Cal. App. 3d 946,
951.)
The fact that the party petitioning for arbitration has participated in litigation, short
of a determination on the merits, does not by itself constitute a waiver, however.
(Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal. 4th 348, 375
(Iskanian).) Generally, the determination of waiver is a question of fact for the trial court
that we review for substantial evidence. (Ibid.) The Supreme Court has articulated, and
recently reaffirmed in Iskanian, supra, 59 Cal.4th at p. 375, six factors relevant to the
inquiry: “‘“‘(1) whether the party’s actions are inconsistent with the right to arbitrate; (2)
whether “the litigation machinery has been substantially invoked” and the parties “were
well into preparation of a lawsuit” before the party notified the opposing party of an
intent to arbitrate; (3) whether a party either requested arbitration enforcement close to
the trial date or delayed for a long period before seeking a stay; (4) whether a defendant
seeking arbitration filed a counterclaim without asking for a stay of the proceedings; (5)
“whether important intervening steps [e.g., taking advantage of judicial discovery
procedures not available in arbitration] had taken place”; and (6) whether the delay
“affected, misled, or prejudiced” the opposing party.’”’ (St. Agnes Medical Center [v.
PacifiCare of California (2003)] 31 Cal.4th [1187,] 1196, [ ].)” (Iskanian, supra, 59
Cal.4th at p. 375.)
We need not weigh these factors here, as we agree with Howard that Vaca
forfeited her waiver argument by neglecting to assert it properly below. “‘“[I]t is
9
fundamental that a reviewing court will ordinarily not consider claims made for the first
time on appeal which could have been but were not presented to the trial court” and
“[g]enerally, issues raised for the first time on appeal which were not litigated in the trial
court are waived. [Citations.]”’ [Citation.]” (Bank of America, N.A. v. Roberts (2013)
217 Cal. App. 4th 1386, 1398-1399.)
Vaca claims she presented the argument to the trial court, but she cites only to the
introduction of the memorandum of points and authorities she filed below. In that
introduction, she recited Howard’s litigation conduct and then averred, “After Howard
realized that things are not going his way in the Superior Court, he decided to have the
Court reference [sic] the case to arbitration. ‘[a] [sic] defendant may not participate in
litigation in such a manner as to constitute ‘testing the water before taking the swim.’
(McConnell v. Merrill Lynch, Pierce, Fenner & Smith, Inc.[, supra, ] 105 Cal.App.3d [at
p.] 951 [164 Cal. Rptr. 751].)” This vague allusion to waiver is insufficient to present the
argument below or preserve it for appeal. Vaca did not mention section 1281.2,
subdivision (a) anywhere in her memorandum, did not include waiver as a formal
argument, and did not raise the issue at the hearing on the petition. Determining whether
Howard’s actions were sufficient to constitute waiver is a fact-intensive determination,
and by failing to adequately address the issue below, Vaca deprived the trial court of the
opportunity to make any relevant findings. We will not make those fact determinations
for the first time on appeal. Vaca cannot raise the issue of waiver for the first time in this
court.
3. Agreement to Arbitrate
Vaca has preserved her contention under section 1281.2, subdivision (b) that no
valid agreement to arbitrate existed. She argues that “the evidence showed that the
alleged agreement to arbitrate between Appellant and Respondent was not ‘openly and
fairly entered into’ by Appellant,” and further asserts that whether an agreement to
arbitrate exists “turns on the determination whether there was consent to arbitration by
both parties.” Consent was lacking here, Vaca claims, because she does not speak or read
10
English and has limited reading skills in Spanish, and Howard did not discuss the
arbitration provision with her.
Whether the parties have mutually consented to a contract is a question of fact.
(Alexander v. Codemasters Group Limited (2002) 104 Cal. App. 4th 129, 141.) Vaca
contends in her opening brief that we should review this question de novo, but argues in
her reply brief that “the evidence before the trial court was not sufficiently substantial to
indicate that Appellant ‘openly and fairly entered into’ an arbitration agreement with
Respondent.” Vaca’s latter argument is the better one. To the extent the trial court’s
order on a petition to compel arbitration is based upon the resolution of disputed facts, we
review only for substantial evidence. We conduct a de novo review only where the
decision below turned on a question of law. (Robertson v. Health Net of California
(2005) 132 Cal. App. 4th 1419, 1425.)
Here, the record indicates only that the petition to compel arbitration was granted;
we do not know the basis of the court’s decision. Vaca’s contention that she did not
consent to arbitrate is fundamentally a factual one, however. Our review is therefore
confined to whether the court’s order granting the petition—and implicit conclusion that
the parties consented to arbitrate—is supported by substantial evidence. Substantial
evidence is evidence that a reasonable person “might accept as adequate to support a
conclusion,” (Estate of Teed (1952) 112 Cal. App. 2d 638, 644), or evidence “that is
reasonable, credible and of solid value.” (Roddenberry v. Roddenberry (1996) 44
Cal. App. 4th 634, 651. ) If there is substantial evidence which supports the disputed
finding, we will uphold the judgment even though substantial evidence to the contrary
also exists and the trier of fact might have reached a different conclusion had it believed
other evidence. (Howard v. Owens Corning (1999) 72 Cal. App. 4th 621, 631.)
The party seeking to compel arbitration bears the burden of proving the existence
of a valid arbitration agreement by a preponderance of the evidence, and the party
opposing the petition to compel arbitration bears the burden of proving any fact necessary
to its defense by a preponderance of the evidence. (Engalla v. Permanente Medical
Group, Inc., supra, 15 Cal.4th at p. 972.) Howard as the petitioning party therefore had
11
the burden of proving the existence of a valid arbitration agreement. He presented
evidence that Vaca signed an arbitration provision that was translated accurately into her
native language, as well as evidence indicating that Vaca refused to arbitrate the dispute.
(See § 1281.2.) This was substantial evidence that an agreement to arbitrate existed. So
too was Howard’s reply evidence, a declaration from his assistant Frank Maldonado in
which Maldonado attested that after explaining to Vaca in Spanish that she had the option
to review the contract and return it by mail, he observed Vaca read through the entire
agreement, sign it, and return it to him. The court was entitled to credit this evidence
over the evidence Vaca submitted, a declaration entitled “Declaration on Ana Vaca”
which began with the statement “I, Maria Hernandez, declare as follows.” (Sic.) In that
declaration, Vaca declared that she completed third grade in Mexico, does not speak,
read, or write English, and did not understand the contract she signed.5 She further
averred that Howard never discussed arbitration with her and that she would have
objected to an arbitration provision if he had.
Vaca contends that her limited literacy skills precluded her from knowingly
agreeing to arbitrate disputes with Howard. This argument is not persuasive.
“Ordinarily, one who accepts or signs an instrument, which on its face is a contract, is
deemed to consent to all its terms, and cannot escape liability on the ground that he or she
has not read it. If the person cannot read, he or she should have it read or explained.” (1
Witkin, Summary of Cal. Law (10th ed. 2005) Contracts, § 118, p. 157; see also Randas
v. YMCA of Metropolitan Los Angeles (1993) 17 Cal. App. 4th 158, 163.) Maldonado
advised Vaca in Spanish that she could take some time to review the retainer and return it
by mail. The arbitration provision of the agreement further indicates, in bold italics, that
the signing potential clients “are given the opportunity to consult with independent
counsel, concerning any provisions of this agreement, in particular with respect to
provisions set forth in this paragraph,” and further affords the clients the option to cancel
or reject the agreement within 10 days of signing it. There is no evidence in the record
5
The declaration includes a signature by an interpreter stating that he provided a
Spanish translation of the declaration for Vaca before she signed it.
12
suggesting that Vaca was unable to read these straightforward provisions or understand
Maldonado’s advice.
Vaca also argues that Howard “had to submit evidence that he discussed the
arbitration clause with Appellant, so that she could knowingly consent to such an
agreement.” However, Vaca has not cited to any authority holding that a lawyer has a
sua sponte duty to discuss an arbitration provision with a prospective client or an
obligation to submit evidence of such a discussion to the trial court in connection with a
petition to compel arbitration.6
The facts and issues in this case are distinguishable from those of the cases she
does cite. In Windsor Mills, Inc. v. Collins & Aikman Corp. (1972) 25 Cal. App. 3d 987,
993, the arbitration provision was inconspicuous and the contractual nature of the retainer
agreement was not obvious. Here, the arbitration provision was contained in a document
entitled “RETAINER AGREEMENT,” was in the main body of the document in the
same size font as the rest of the text, and was conspicuous in that it was the sole provision
that contained bold and italicized typeface. This case likewise is distinguishable from
Ellis v. McKinnon Broadcasting Co. (1993) 18 Cal. App. 4th 1796, which did not involve
arbitration, concerned unconscionability rather than contract formation, and featured a
superseding contract the plaintiff “was asked to sign the contract without warning and
told it was a mere ‘formality.’” (Ellis, supra, 18 Cal.App.4th at p. 1804.)
Vaca’s final argument regarding the formation of the agreement is a legal one.
She contends that the arbitration provision is void as a matter of law because it does not
apprise her of her constitutional right to a jury trial and does not contain an express
waiver of that right. The California Supreme Court has rejected this argument. In
Madden v. Kaiser Foundation Hospitals (1976) 17 Cal. 3d 699 (Madden), the Court held
that an otherwise enforceable agreement to arbitrate need not contain an express waiver
6
In the portion of her brief discussing unconscionability, Vaca suggests that
Howard defrauded her by failing to inform her that she was waiving her right to a jury
trial. There is no evidence in the record that Howard defrauded Vaca or even made
misleading representations to her.
13
of the right to jury trial. The Madden court explained, “to predicate the legality of a
consensual arbitration agreement upon the parties’ express waiver of jury trial would be
as artificial as it would be disastrous” because “[w]hen parties agree to submit their
disputes to arbitration they select a forum that is alternative to, and independent of, the
judicial—a forum in which, as they well know, disputes are not resolved by juries.
Hence there are literally thousands of commercial and labor contracts that provide for
arbitration but do not contain express waivers of jury trial. Courts have regularly enforced
such agreements. . . .” (Id. at pp. 713-714.) The Supreme Court more recently
reaffirmed this principle in Pinnacle Museum Tower Association v. Pinnacle Market
Development (US), LLC (2012) 55 Cal. 4th 223, 245 (Pinnacle), where it declined to read
unwritten procedural requirements into the arbitration statute in light of the strong public
policy favoring arbitration. The Court of Appeal has applied the holding of Madden in
the context of initial attorney retainer agreements. (See Powers v. Dickson, Carlson &
Campillo (1997) 54 Cal. App. 4th 1102, 1108-1109.)
Lawrence v. Walzer & Gabrielson (1989) 207 Cal. App. 3d 1501, 1506 is not to the
contrary. There, the court concluded that an arbitration provision that by its terms
applied to “fees, costs, or any other aspect of our attorney-client relationship” was limited
to disputes concerning financial matters because a broader construction could
misleadingly “extract[ ]” from a client the “significant yet inconspicuous relinquishment
of the client’s rights regarding future claims of malpractice.” The arbitration provision
here expressly encompassed “claims for legal malpractice, breach of fiduciary duty, and
attorney fee disputes.” The arbitration provision here also was not presented to Vaca
under conditions similar those in Wheeler v. St. Joseph Hospital (1976) 63 Cal. App. 3d
345, 360-362, in which an arbitration provision was included in documents patients
signed before being admitted to a hospital. In contrast, after an oral advisement in
Spanish, Vaca was given the opportunity to carefully review the agreement and
arbitration provision carefully before signing it and returning it by mail.
In sum, we are not persuaded the trial court erred in concluding that a valid
arbitration agreement existed.
14
4. Unconscionability
Vaca also relies upon section 1281.2, subdivision (b) for her alternative argument,
that the agreement she entered with Howard, “or at least the Arbitration Clause,” is
subject to revocation for being unconscionable.
Unconscionability is a valid defense to a petition to compel arbitration. (AT&T
Mobility LLC v. Concepcion (2010) 563 U.S. 333, 131 S. Ct. at p. 1746; Sonic-Calabasas
A, Inc. v. Moreno (2013) 57 Cal. 4th 1109, 1142 (Sonic-Calabasas).) Under California
law, courts may refuse to enforce any contract found “to have been unconscionable at the
time it was made[,]” or may “limit the application of any unconscionable clause. . . .”
(Civ. Code, § 1670.5, subd. (a).) Whether an agreement or provision thereof is
unconscionable is a question of law subject to de novo review. (Sanchez v. Carmax Auto
Superstores California, LLC (2014) 224 Cal. App. 4th 398, 401.)
The unconscionability doctrine is aimed at ensuring that contracts do not impose
unduly oppressive or unfairly one-sided terms that are unreasonably favorable to the
more powerful party. (Sonic-Calabasas, supra, 57 Cal.4th at p. 1145.)
“Unconscionability consists of both procedural and substantive elements. The procedural
element addresses the circumstances of contract negotiation and formation, focusing on
oppression or surprise due to unequal bargaining power. [Citations.] Substantive
unconscionability pertains to the fairness of an agreement’s actual terms and to
assessments of whether they are overly harsh or one-sided. [Citations.] A contract term
is not substantively unconscionable when it merely gives one side a greater benefit;
rather, the term must be ‘so one-sided as to “shock the conscience.”’ [Citation.]”
(Pinnacle, supra, 55 Cal.4th at p. 246.)
“The party resisting arbitration bears the burden of proving unconscionability.
[Citations.] Both procedural unconscionability and substantive unconscionability must
be shown, but ‘they need not be present in the same degree’ and are evaluated on ‘“a
sliding scale.”’ [Citation.] ‘[T]he more substantively oppressive the contract term, the
less evidence of procedural unconscionability is required to come to the conclusion that
15
the term is unenforceable, and vice versa.’ [Citation.]” (Pinnacle, supra, 55 Cal.4th at p.
247.)
Vaca contends that the retainer agreement was procedurally unconscionable
because it was a contract of adhesion. A contract of adhesion is a standardized contract,
imposed and drafted by a party of superior bargaining strength, that is presented to the
weaker party on a take-it-or-leave-it basis. (Armendariz v. Foundation Health Psychcare
Services, Inc. (2000) 24 Cal. 4th 83, 113.) Typically, the stronger party drafts the
adhesive contract and gives the weaker party no opportunity to negotiate its terms, and
the weaker party has no realistic opportunity to look elsewhere for a more favorable
contract, but must adhere to the standardized agreement. (Cubic Corp. v. Marty (1986)
185 Cal. App. 3d 438, 449.) “‘Generally speaking, there are two judicially imposed
limitations on the enforcement of adhesion contracts or provisions thereof. The first is
that such a contract or provision which does not fall within the reasonable expectations of
the weaker or “adhering” party will not be enforced against him. The second — a
principle of equity applicable to all contracts generally — is that a contract or provision,
even if consistent with the reasonable expectations of the parties, will be denied
enforcement if, considered in its context, it is unduly oppressive or “unconscionable.”’
[Citation.]” (Cubic Corp., supra, at p. 450.)
Here, even if the contract was adhesive, the other hallmarks of procedural
unconscionability are minimal. (See Lane v. Francis Capital Management LLC (2014)
224 Cal. App. 4th 676, 689 (Lane) [the mere fact that a contract is adhesive is insufficient
to invalidate an arbitration agreement].) There was disparity in the bargaining power of
the parties: Howard, the drafting party, is an attorney, and Vaca, the “adhering” party,
does not speak English and has only a third-grade education in Spanish. There is no
evidence that Howard held all the bargaining power, however. Howard presented the
agreement to Vaca in the language she spoke and read and did not obfuscate the
arbitration provision. Vaca was afforded the opportunity to consult with independent
counsel and to cancel or reject the agreement within ten days of signing it. Vaca’s
brother was present and reviewed the agreement with her. And as Howard points out, he
16
“was hardly the only medical malpractice lawyer in town who could take Vaca’s case on
a contingency fee basis.”
Howard did neglect to include with the agreement the rules under which any
disputes would be arbitrated, which “could be a factor in support of a finding of
procedural unconscionability where the failure would result in surprise to the party
opposing arbitration.” (Lane, supra, 224 Cal.App.4th at p. 690.)7 Even if the omission of
the rules did result in surprise to Vaca, the failure to attach rules by itself, is insufficient
to sustain a finding of procedural unconscionability. (Ibid.) And here, the other indicia
of procedural unconscionability are lacking. On the record before us, we conclude that
the retainer agreement and arbitration provision it contained was not procedurally
unconscionable.
Even if it was, any minimal procedural unconscionability would have to be
accompanied by significant substantive unconscionability to render the agreement or
arbitration provision unenforceable. (See Pinnacle, supra, 55 Cal.4th at p. 247.)
Substantive unconscionability focuses on the “overly harsh” or “one-sided” nature of an
agreement. (Armendariz, supra, 24 Cal.4th at p. 114.) Vaca argues that the the
arbitration provision was substantively unconscionable because it lacked an express
waiver of her jury trial right, and required her to share the costs of arbitration equally
with Howard. These terms do not render the agreement or arbitration provision
substantively unconscionable.
As discussed above, an arbitration provision need not contain an express waiver of
the jury trial right to be valid. (Madden, supra, 17 Cal.3d at pp. 713-714.) Vaca’s
allegation that Howard suffers from “Jury Phobia” does not render the agreement’s lack
of an express waiver overly harsh or one-sided.
7
Vaca argues that the failure to provide arbitration rules renders an agreement
substantively unconscionable, but we have held that the “failure to attach the arbitration
rules could be a factor in support of a finding of procedural unconscionability.” (Lane,
supra, 224 Cal.App.4th at p. 690.) We accordingly discuss the absence of arbitration
rules in connection with procedural unconscionability.
17
Neither does the clause obligating Vaca to share the costs of arbitration equally
with Howard. Vaca relies exclusively on Higgins v. Superior Court (2006) 140
Cal. App. 4th 1238, 1254, for the proposition that the cost-sharing clause of the arbitration
agreement was substantively unconscionable. However, that case concluded only that a
cost-sharing provision was an “[a]dditional element[] of substantive unconscionability,”
not that a cost-sharing provision standing alone renders an agreement or provision
substantively unconscionable. Moreover, section 1284.2 establishes cost-sharing as the
default rule in the arbitration context: “Unless the arbitration agreement otherwise
provides or the parties to the arbitration otherwise agree, each party to the arbitration
shall pay his pro rata share of the expenses and fees of the neutral arbitrator, together
with other expenses of the arbitration incurred or approved by the neutral arbitrator, not
including counsel fees or witness fees or other expenses incurred by a party for his own
benefit.” The judicially created exception to this rule set forth in Armendariz, supra, 24
Cal. 4th 83 at p. 102 and Little v. Auto Stiegler, Inc. (2003) 29 Cal. 4th 1064, 1077, has not
been extended beyond the context of employment litigation. (Boghos v. Certain
Underwriters at Lloyd’s of London (2005) 36 Cal. 4th 495, 507-508). Vaca’s claim that
she could not afford to pay the arbitration fees more than three years after the agreement
was signed cannot alter this result, as unconscionability is assessed at the time the
contract is signed. (Civ. Code, § 1670.5, subd. (a).) There is no evidence in the record
that Vaca could not afford to share the costs of arbitration at the time she signed the
agreement.
II. Order Confirming Award
A. Request for Judicial Notice
In his response brief on appeal, Howard asserts that the appellate record is
“woefully deficient” because it lacks statements of decision from the trial court and
Vaca’s ex parte application to reopen her bankruptcy case. In reply, Vaca argues that no
statements of decision were required because the trial court did not hold a trial, and
explains that she did not include her ex parte application because she did not “believe this
is necessary for the Court’s decision.” To assuage Howard’s concerns, however, Vaca
18
filed a motion for judicial notice in which she requests that we take judicial notice of her
ex parte application to reopen her bankruptcy proceedings and the docket in those
proceedings. Vaca contends these documents are properly noticeable under Evidence
Code section 452, subdivisions (d) and (h), and are relevant “to show the basis of re-
opening of Appellant’s bankruptcy case and also the abandonment by the Chapter 7
Trustee of Appellant’s claims against Respondent Howard and other Defendants.” She
concedes that the documents were not presented to the trial court.
Howard opposes the motion. He argues that the documents are irrelevant and
cannot be considered for the truth of the matters asserted therein. In reply, Vaca asserts
that Howard’s “180 degree turn” is “not well taken.” She also points out that the ex parte
application was submitted to the trial court in connection with the request for judicial
notice she made below, and clarifies that she is not asking us to take judicial notice of the
truth of the matters contained in the proffered documents.
We agree with Vaca that Howard’s claim that the documents are not relevant is
not well taken in light of his earlier assertion that the appellate record was “woefully
deficient” in their absence. We grant the motion for judicial notice pursuant to Evidence
Code sections 452, subdivision (d) and 459, subdivision (a). We take notice only of the
documents’ existence, not the truth of the matters asserted therein. (Arce v. Kaiser
Foundation Health Plan, Inc. (2010) 181 Cal. App. 4th 471, 483.)
B. Standard of Review
Our review of a judgment confirming an arbitration award is limited. “[B]ecause
the Legislature has provided certain statutory grounds to overturn or modify an
arbitrator’s decision, courts should not subject such decisions to standard judicial
review.” (Aguilar v. Lerner (2004) 32 Cal. 4th 974, 982 (Aguilar ), citing Moncharsh v.
Heily & Blase (1992) 3 Cal. 4th 1, 26-28.) The general rule is that an arbitrator’s decision
cannot be reviewed for errors of fact or law. (Aguilar, supra, 32 Cal.4th at p. 982.) The
scope of judicial review is that which is exclusively defined by the applicable statutes
providing for vacation (§ 1286.2) and correction (§ 1286.6) of awards (Jordan v.
California Department of Motor Vehicles (2002) 100 Cal. App. 4th 431, 443), neither of
19
which timely was invoked in this case (see § 1288). We review the trial court’s order
confirming the arbitration award de novo. (Advanced Micro Devices, Inc. v. Intel Corp.
(1994) 9 Cal. 4th 362, 376, fn. 9.)
C. Analysis
Vaca contends that the trial court should not have confirmed the arbitration award
because the arbitration proceedings “validated” her opposition to Howard’s petition to
compel arbitration, the arbitration award no longer has a legal basis because she
subsequently reopened her bankruptcy proceedings to correct the omission of her claims
against Howard, and the arbitration award was inequitable in that it allowed Howard to
“hide his own negligence behind another attorney’s negligence.”
Vaca’s latter two arguments are in essence claims that the arbitrator’s decision was
factually and legally erroneous. These types of arguments are not cognizable; arbitrators’
decisions cannot be reviewed for such errors. (Aguilar, supra, 32 Cal.4th at p. 982.) Had
Vaca wanted to challenge the award as “procured by . . . undue means” (§ 1286.2, subd.
(a)(1)), the appropriate course of action would have been to file a petition to vacate the
award. The time to raise these claims has long since lapsed. (§ 1288 [100-day time
limit].)
Vaca’s first claim, though novel, is barred for the same reason. Vaca opposed the
petition to compel arbitration on the grounds that she could not afford to arbitrate, and
now contends that her subsequent lack of participation in the arbitration proceedings
validated her assertions of indigence and unfairly permitted Howard to “sail through the
arbitration unscathed.” Thus, she essentially claims that the arbitration award was
“procured by corruption, fraud, or other undue means.” (§ 1286.2, subd. (a)(1).) This
argument does not provide a basis to deny confirmation of the award. The trial court
“shall confirm the award as made” provided that the party seeking confirmation duly
serves and files its petition (§ 1286), and Vaca has not alleged an infirmity in Howard’s
petition or the service thereof.
The trial court did not err in confirming the arbitration award.
20
DISPOSITION
The judgment of the trial court is affirmed. The parties are to bear their own costs
on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
COLLINS, J.
We concur:
WILLHITE, Acting P. J.
MANELLA, J.
21