Lonky v. Patel ( 2020 )

Filed 7/2/20
CERTIFIED FOR PARTIAL PUBLICATION*
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION TWO
STEWART LONKY et al., B295314 (consolidated with
B297632)
Plaintiffs and Appellants,
(Los Angeles County
v. Super. Ct. No. BC564427)
PARYUS PATEL,
Defendant and Appellant.
APPEAL from a judgment and post-judgment order of the
Superior Court of Los Angeles County, Samantha Jessner and
Yolanda Orozco, Judges. Judgment reversed with directions, and
post-judgment order affirmed.
Roxborough, Pomerance, Nye & Adreani, Drew E.
Pomerance and Joseph C. Gjonola, for Plaintiffs and Appellants.
The Annigian Firm, Jason D. Annigian, James T. Ryan,
P.C., James T. Ryan, for Defendant and Appellant.
* Pursuant to California Rules of Court, rules 8.1100 and
8.1110, this opinion is certified for publication with the exception
of part II of the Discussion.
******
An arbitrator’s power to modify any of her rulings is
severely curtailed if that ruling constitutes an “award” within the
meaning of Code of Civil Procedure section 1283.4.1 Where, as
here, an arbitrator issues a series of rulings during an arbitration
proceeding, how does a court determine which of those rulings
constitutes an “award”? We hold that a court does so (1) by
asking whether the ruling (a) determines all issues necessary to
resolve the entire controversy and (b) leaves unaddressed only
those issues incapable of resolution at that time because those
issues are potential, conditional or contingent, and (2) answers
those questions by looking to the specific procedures adopted in
the arbitration at issue. Because the parties in this case
trifurcated the arbitration proceedings and because the
arbitrator’s second of three rulings did not determine all issues
necessary to the controversy and left unaddressed issues that
could have been addressed at that time, the arbitrator acted
within her authority in modifying that second ruling prior to
issuing her third and final ruling that constituted an “award.”
Consequently, the trial court erred in refusing to confirm that
award on the ground that the arbitrator had exceeded her powers
in incorporating a modification of the second ruling into the
award. We therefore vacate the judgment with instructions to
enter a new and different judgment in accordance with the
award. We reject the parties’ further attorney fees-based
challenges, but award attorney fees on appeal to the prevailing
party on appeal.
1 All further statutory references are to the Code of Civil
Procedure unless otherwise indicated.
2
FACTS AND PROCEDURAL BACKGROUND
I. Facts
A. Underlying conduct
Dr. Stewart Lonky (Lonky) is a cardiologist who obtained
his medical license in 1973 and started a practice called Medical
Associates of Westchester (MAW) in 1988. In 1996 Dr. Paryus
Patel (Patel) joined Lonky’s practice as a 50/50 partner. Lonky
and Patel signed a written Agreement of Partnership (the
agreement) memorializing the arrangement.
Between 2009 and 2014, Patel stole money from Lonky and
MAW by secretly intercepting reimbursement checks sent to
MAW in the mail and depositing them in his own account(s). To
facilitate this fraud, Patel also forged Lonky’s signature on bank
documents. During this period, the total amount of diverted
checks came to $558,266.
B. Litigation and arbitration
1. Litigation
On November 19, 2014, Lonky and MAW (collectively,
plaintiffs) sued Patel. In accordance with the arbitration clause
in the agreement, the parties stipulated in April 2015 to stay the
lawsuit and proceed by way of arbitration.
In their operative pleading, plaintiffs alleged claims
against Patel for (1) conversion and embezzlement, (2) breach of
fiduciary duty, (3) breach of contract, and (4) dissolution of the
medical practice. Patel cross-claimed against Lonky, MAW and
Lonky’s wife (who was MAW’s office manager) for (1) breach of
the agreement, (2) breach of the duty of loyalty, (3) breach of the
duty of care, (4) concealment, (5) an accounting, (6) declaratory
3
relief, (7) dissolution of the medical practice, (8) conspiracy to
commit fraud, (9) conversion, and (10) constructive trust.2
2. Arbitration
Although the arbitrator’s two scheduling orders initially
proposed to break the arbitration proceeding into two phases, the
parties ultimately agreed to break the proceedings into three
phases: (1) a first phase where the arbitrator would decide issues
of liability, the amount of compensatory damages and eligibility
for punitive damages, (2) a second phase where she would decide
the amount of punitive damages and entitlement to attorney fees
and costs, and (3) a final phase where she would decide the
amount of attorney fees and costs. In accordance with the
agreement, the arbitration was to be “conducted pursuant to the
California Arbitration Act.”
a. Phase One
i. Hearing
The arbitrator held five days of evidentiary hearings in
early May 2017.
ii. First Interim Ruling
On August 14, 2017, the arbitrator served a 33-page
written award entitled “Interim Award” (First Interim Ruling).
The arbitrator sustained all of plaintiffs’ claims against
Patel. The arbitrator found that Patel had stolen $558,266 in
checks from MAW. Patel’s “theft of checks,” the arbitrator ruled,
constituted conversion and embezzlement, a breach of fiduciary
duty and a breach of the agreement. Because Patel had
“concealed” this theft, the arbitrator continued, the delayed
discovery rule applied and plaintiffs could recover the full
2 Patel also brought a claim for defamation, but voluntarily
dismissed it early on.
4
amount of diverted money they proved up—that is, all $558,266
substantiated by the bank records from 2009 forward.3 The
arbitrator also awarded plaintiffs prejudgment interest on one-
half of that amount, and ordered the partnership dissolved.
Aside from a $91,811.50 set off that plaintiffs conceded was
appropriate because Wells Fargo drew upon one of Patel’s
accounts to fund a line of credit for MAW, the arbitrator rejected
each and every one of Patel’s cross-claims.
The arbitrator also found that the “facts constituting the
breach of fiduciary duty allow for a consideration of punitive
damages” because Patel’s conduct in methodically stealing from
his long-time partner was “intentional and can fairly be
. . . described as bad faith, fraudulent, malicious, oppressive and
outrageous.”
In its final section, the First Interim Ruling specified (1)
the amounts awarded for compensatory damages and
prejudgment interest as well as the offset, (2) that “Patel shall
pay Lonky” “punitive damages,” but left the amount blank and
noted that the “[a]mount” was “to be determined in a Phase II
hearing in this Arbitration,” and (3) that plaintiffs are “the
prevailing party in this Arbitration,” but left blank the amount of
attorney fees and costs. The First Interim Ruling concluded with
the following language: “[insert in Final Award only] This award
resolves all issues submitted for decision in this proceeding[.]”
3 The arbitrator awarded plaintiffs the full amount of stolen
checks (rather than one-half the amount to which Lonky was
contractually entitled under the parties’ 50/50 percentage
interests) because awarding plaintiffs only the contractual
amount “would effectively mean there is no punishment for
[Patel’s] theft.” This ruling is not challenged on appeal.
5
iii. Modification of First Interim
Ruling
On August 21, 2017, Patel filed an application with the
arbitrator to correct the First Interim Ruling. Patel argued that
his theft of checks should be viewed as several discrete acts, such
that plaintiffs’ recovery should be limited pursuant to the
continuous accrual doctrine to those checks diverted within the
pertinent statute of limitations period. Because the statute of
limitations for breach of fiduciary duty and conversion is three
years, Patel argued, plaintiffs’ compensatory damages should be
limited to the checks diverted in the three years immediately
prior to the filing of their lawsuit. That amount came to
$310,138.62.
On October 13, 2017, the arbitrator granted Patel’s motion
in a written order. This order was issued and served on the
parties 60 days after the First Interim Ruling was served.
b. Phase Two
i. Hearing
The arbitrator held a one-day hearing on October 25, 2017.
ii. Second Interim Ruling
On January 16, 2018, the arbitrator issued and served a
40-page written award entitled “Corrected Phase II Interim
Award” (Second Interim Ruling).4
The Second Interim Ruling largely cut and pasted the
analysis from the First Interim Ruling with two notable
exceptions. First, the arbitrator awarded plaintiffs compensatory
damages for three years’ worth of diverted checks in accordance
4 It was designated the “Corrected Phase II Interim Award”
because this award corrected typos contained in an order issued
four days earlier.
6
with its earlier order modifying the First Interim Ruling. Second,
the arbitrator awarded plaintiffs $1 million in punitive damages
after finding that Patel’s conduct was “sufficiently reprehensible
as to warrant the imposition of punitive damages” and that the
“totality of the evidence” established that a $1 million punitive
damages award was “sufficient to punish Patel and deter further
similar behavior.”
In its final section, the Second Interim Ruling specified (1)
the reduced amounts for compensatory damages and
prejudgment interest as well as the offset, (2) the $1 million
punitive damages award, and (3) that plaintiffs were the
“prevailing party,” but left blank the amount of attorney fees and
costs. Like the First Interim Ruling, the Second Interim Ruling
also concluded with the following language: “[insert in Final
Award only] This award resolves all issues submitted for decision
in this proceeding[.]”
iii. Request to modify Second Interim
Ruling
On January 18, 2018, plaintiffs wrote a letter to the
arbitrator asking her to correct the Second Interim Ruling.
Plaintiffs argued that, if their recovery was to be limited by the
continuous accrual doctrine, the pertinent limitations period was
four years, not three years, because Patel’s diversion of checks
also constituted a breach of contract (for which the statute of
limitations is four years). The checks diverted in the four years
immediately preceding plaintiffs’ lawsuit came to $434,158.25.
As explained next, the arbitrator accepted plaintiffs’
argument in its third order. That order was issued and served on
April 27, 2018, which is 101 days after the Second Interim Ruling
was served.
7
c. Phase Three
i. Hearing
The arbitrator conducted a telephonic hearing on March 26,
2018.
ii. Final Award
On April 27, 2018, the arbitrator issued and served a 12-
page written award entitled “Final Award” (Final Award).
Rather than cut and paste the content of the First Interim
Ruling and Second Interim Ruling, the Final Award
“incorporated” their content “by reference” with one exception.
The arbitrator granted plaintiffs’ request to correct the Second
Interim Ruling and, on that basis, increased the compensatory
damages to $434,158.25. In doing so, the arbitrator rejected
Patel’s argument that she had the statutory authority to correct
the Second Interim Ruling only within 30 days of its issuance,
reasoning that this limitation applied only to final awards and
that “[t]he prior awards were Interim Awards only and not yet
final.”
The Final Award also awarded plaintiffs attorney fees and
costs. The arbitrator rejected Patel’s attempts to collaterally
attack her earlier rulings that plaintiffs were the prevailing
party. The arbitrator went on to find that plaintiffs were
accordingly entitled to attorney fees of $690,886.15 and costs of
$100,940.11.
In its final section, the Final Award specified that plaintiffs
were entitled to (1) $434,158.25 in compensatory damages
(corresponding with the four-year limitations period) and
prejudgment interest of $122,528.64 as of March 23, 2018, less an
offset of $91,881.50, (2) $1 million in punitive damages, and (3)
$791,826.26 in attorney fees and costs. The total came to
8
$2,256,631.65. The Final Award concluded with the following
language and without any bracketed, qualifying language: “This
award resolves all issues submitted for decision in this
proceeding.”
II. Procedural Background
A. Post-arbitration proceedings to confirm and
correct award
Plaintiffs and Patel filed competing petitions regarding the
Final Award. Plaintiffs filed a petition to confirm, while Patel
filed a petition to correct on the ground that the arbitrator
exceeded her powers by increasing the compensatory damages
awarded in the Second Interim Ruling more than 30 days after
that award was served.
Following briefing and court-ordered supplemental briefing
as well as two hearings, the trial court issued a written order
granting Patel’s petition to correct and denying plaintiffs’ petition
to confirm. Specifically, the court ruled that the arbitrator had
“exceeded her powers” when she increased the compensatory
damages to $434,158.25 in the Final Award because (1) that
amount was “in direct contradiction” to the Second Interim
Ruling (and thus effectively “corrected” the Second Interim
Ruling), (2) an arbitrator only has 30 days to “correct” and “serve”
an “award” under section 1284, and (3) the Final Award was
issued and served more than 30 days after the Second Interim
Ruling. Thus, the court corrected the Final Award to award the
compensatory damages amount set forth in the Second Interim
Ruling—that is, $310,138.62.
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On January 18, 2019, the court entered judgment in
plaintiffs’ favor in the amount of $2,091,560.23.5
B. Attorney fees
Following the entry of judgment, plaintiffs filed a motion
for attorney fees and costs incurred in the post-arbitration
proceedings in court. Patel filed a competing motion for attorney
fees and costs, claiming that he had prevailed because he
succeeded in getting the court to reduce the judgment amount.
After briefing and a hearing, the trial court issued a 10-
page order. The court ruled that, despite Patel’s success at
reducing the compensatory damages (and, by extension, the
prejudgment interest calculation), plaintiffs were still the
“prevailing party” because they were “ultimately successful in
procuring a large judgment against [Patel].” The court found
that most of the attorney fees sought by plaintiffs were
reasonable, except for $9,009 in fees it found to be
“unreasonabl[y]” incurred. The court ultimately awarded
plaintiffs $65,197 in attorney fees and $320 in costs incurred in
the post-arbitration judicial proceedings.
C. Appeal and cross-appeal
Plaintiffs filed a timely appeal from the judgment.
Both plaintiffs and Patel filed timely appeals from the post-
judgment order awarding plaintiffs attorney fees and costs.
DISCUSSION
This appeal and cross-appeal present two issues. The first
is whether the trial court erred in granting Patel’s petition to
correct the Final Award on the ground that the arbitrator
5 The judgment also noted that Patel had, on May 24, 2018,
already paid $1,956,631.65 in partial satisfaction of the
judgment.
10
exceeded her powers in modifying the Second Interim Ruling.
The second is whether the trial court properly awarded attorney
fees and costs in the post-arbitration judicial proceedings and
whether we should award such fees and costs in this appeal.
I. Correction of Final Award
Plaintiffs argue that the trial court erred in granting
Patel’s petition to correct the Final Award and, correspondingly,
in denying their petition to confirm that award. Our review of
this issue is de novo because the trial court’s ruling turns on its
determination that the arbitrator exceeded her powers, on its
interpretation of the California Arbitration Act (the Act) (§ 1280
et seq.), and on its application of the Act to undisputed facts.
(Richey v. AutoNation, Inc. (2015) 60 Cal. 4th 909, 918, fn. 1
(Richey) [“the question whether the arbitrator exceeded his
powers . . . is generally reviewed on appeal de novo”]; Union of
Medical Marijuana Patients, Inc. v. City of San Diego (2019) 7
Cal. 5th 1171, 1183 [“Statutory interpretation is ‘an issue of law,
which we review de novo.’ [Citation.]”]; Martinez v. Brownco
Construction Co. (2013) 56 Cal. 4th 1014, 1018 [where the “issue
involves the application of law to undisputed facts, we review the
matter de novo”]; cf. Cooper v. Lavely & Singer Prof. Corp. (2014)
230 Cal. App. 4th 1, 11-12 (Cooper) [where the trial court made
factual findings based on disputed facts, we review those findings
for substantial evidence].)
A. Pertinent law
Under the Act, a trial court has the authority to “correct”
an arbitration “award” in only three statutorily enumerated
circumstances. (§ 1286.6.) One of those circumstances is when
“[t]he arbitrator[] [has] exceeded [her] powers” (assuming, as
well, that the “award may be corrected without affecting the
11
merits of the decision”). (Id., subd. (b).) Although an arbitrator
does not exceed her powers by issuing an award that “erroneously
decid[es] a contested issue of law or fact” (Advanced Micro
Devices, Inc. v. Intel Corp. (1994) 9 Cal. 4th 362, 366 (Advanced
Micro)), she does exceed her powers by “issuing an award that
violates a party’s unwaivable statutory rights . . .” (Richey, supra,
60 Cal.4th at p. 916; Kelly Sutherlin McLeod Architecture, Inc. v.
Schneickert (2011) 194 Cal. App. 4th 519, 534 [“‘An arbitrator
exceeds his or her powers if the arbitration award violates a
statutory right . . .’”]).
Here, the trial court ruled that the arbitrator exceeded her
powers by issuing the Final Award that effectively corrected the
Second Interim Ruling, and that this correction violated section
1284 because it did not comply with that statute’s time limits for
“correct[ing]” an “award.” Because section 1284’s time limits, by
its plain language, apply only to a ruling by an arbitrator that
qualifies as an “award” (§ 1284 [detailing when “[t]he arbitrator[]
. . . may correct the award], italics added), the implicit but
necessary premise of the trial court’s ruling is that the Second
Interim Ruling constitutes an “award.”
The question we must answer is: Does it?
As this case highlights, whether an arbitrator’s ruling
constitutes an “award” is a significant event.
If a ruling constitutes an “award,” an arbitrator’s power to
modify that “award” is limited both substantively and
procedurally. Substantively, an arbitrator may only (1) “correct”
an “award” if (a) “[t]here was an evident miscalculation of figures
or an evident mistake in the description of any person, thing or
property referred to in the award” (§§ 1284, 1286.6, subd. (a)), or
(b) “[t]he award is imperfect in a matter of form, not affecting the
12
merits of the controversy” (§§ 1284, 1286.6, subd. (c)); or (2)
“amend” an award if doing so “resolve[s]” an “issue” “omitted”
from the award but “necessary to decide the parties’ controversy”
and where the omission was due to the arbitrator’s “mistake,
inadvertence, or excusable neglect.” (Heimlich v. Shivji (2019) 7
Cal. 5th 350, 363-364; A.M. Classic Construction, Inc. v. Tri-Build
Development Co. (1999) 70 Cal. App. 4th 1470, 1476, 1478 (A.M.
Classic); accord, Britz, Inc. v. Alfa-Laval Food & Dairy Co. (1995)
34 Cal. App. 4th 1085, 1105-1106 [allowing arbitrator to modify
award to add amount of attorney fees not previously calculated,
albeit characterizing it as a defect as to “form”].) These powers to
correct and to amend do not include the power to “reconsider the
merits of the original award.” (Landis v. Pinktertons, Inc. (2004)
122 Cal. App. 4th 985, 992 (Landis); see also, Severtson v.
Williams Construction Co. (1985) 173 Cal. App. 3d 86, 95-96 [not
allowing arbitrator to modify amounts of attorney fees and costs
previously set forth in award].) Procedurally, the deadline for
correcting an award is “not [more] than” 30 days after the
“award” was “served” (§ 1284), while the courts are split on the
deadline for amending an award—some hold that amendment is
timely as long as it is prior to “judicial confirmation of the
original award” (A.M. Classic, at p. 1478; Delaney v. Dahl (2002)
99 Cal. App. 4th 647, 658-659), while others hold that amendment
must occur within the deadline for correcting an award (Century
City Medical Plaza v. Sperling (2001) 86 Cal. App. 4th 865, 881,
distinguished on other grounds, Law Offices of David S. Karton v.
Segreto (2009) 176 Cal. App. 4th 1, 5-6; Landis, at p. 992).
If a ruling constitutes an “award,” the trial court also
acquires jurisdiction to confirm, correct or vacate the award.
(§ 1285 [“Any party to an arbitration in which an award has been
13
made may petition the court to confirm, correct or vacate the
award.”], italics added; Cooper, supra, 230 Cal.App.4th at pp. 18-
19.) The issuance of an “award” is what passes the torch of
jurisdiction from the arbitrator to the trial court.
By negative implication, a ruling that is not an “award” is
neither subject to the above stated limits on an arbitrator’s power
to modify that ruling nor subject to confirmation, correction or
vacation by a trial court.
So how does a trial court determine whether an arbitrator’s
ruling constitutes an “award”?
It does so by examining whether the ruling meets the
statutory definition of “award” when considered in the context of
the arbitration proceedings agreed to by the parties. The Act
defines an “award” as a written ruling that “include[s] a
determination of all the questions submitted to the arbitrators
the decision of which is necessary in order to determine the
controversy.” (§ 1283.4.) This statutory definition necessarily
looks to the particulars of the arbitration at issue: The parties
who have contractually agreed to arbitrate get to decide how to
structure their arbitration proceeding (subject to the arbitration
entity’s governing rules) and, thus, which “‘questions [are to be]
submitted to the arbitrator[]’” (Kaiser Foundation Health Plan,
Inc. v. Superior Court (2017) 13 Cal. App. 5th 1125, 1131 (Kaiser)
[“Parties generally have broad leeway to structure an arbitration
as they see fit, free from statutory constraints”]; see generally,
First Options of Chicago, Inc. v. Kaplan (1995) 514 U.S. 938, 943
[arbitration “is . . . a matter of contract between the parties”]),
and “the arbitrator[]” gets “to determine what issues are
‘necessary’ to” determine the controversy under section 1283.4
(Advanced Micro, supra, 9 Cal.4th at p. 372). But this leeway
14
granted to the parties and their arbitrator does not relieve a trial
court from its duty to assess for itself whether the ruling of the
arbitrator at issue meets the statutory definition of an “award.”
(Cinel v. Christopher (2012) 203 Cal. App. 4th 759, 767 [“the trial
court has a duty, in order to follow the dictates of section 1283.4,
to ensure that the arbitrator’s ‘award’ is an ‘award’ within the
meaning of that statute”]; cf. Maplebear, Inc. v. Busick (2018) 26
Cal. App. 5th 394, 407 (Maplebear) [“parties to an arbitration
agreement cannot confer jurisdiction on courts to review
arbitrator’s rulings by agreeing to . . . allow immediate review of
some interim [rulings]”]; Kaiser, at p. 1142 [“An arbitrator’s
designation of his or her ruling as an ‘award’ does not make it one
under section 1283.4.”].) That is because, as explained above,
whether a ruling constitutes an “award” is what confers
jurisdiction upon trial courts (§ 1285), and because the parties
may not by their consent move the statutory boundaries of a
court’s jurisdiction (Jennings v. Marralle (1994) 8 Cal. 4th 121,
127 [“jurisdiction may not be conferred by consent of the
parties”]; Judge v. Nijjar Realty, Inc. (2014) 232 Cal. App. 4th 619,
636 (Judge) [same]).
Although parties to an arbitration often (and, indeed,
presumptively) structure their arbitration proceedings to produce
a single, final “award” subject to judicial review (Moncharsh v.
Heily & Blase (1992) 3 Cal. 4th 1, 9; Hightower v. Superior Court
(2001) 86 Cal. App. 4th 1415, 1432 (Hightower)), parties may
expressly agree to have an arbitrator issue a series of rulings in
the course of resolving their dispute (Hightower, at p. 1433;
Kaiser, supra, 13 Cal.App.5th at p. 1131 [parties may “conduct
the arbitration in phases and ask the arbitrators . . . to issue
phase-specific, interim” rulings]). As noted above, whether any
15
particular ruling constitutes an “award” turns on whether that
ruling satisfies the statutory definition of an “award.” And in the
context of a series of rulings, this means that a particular ruling
is an “award” only if that ruling (1) “determine[s] all issues that
are necessary to the resolution” of “the controversy” being
subjected to arbitration, and (2) leaves unresolved only those
“issues” that are “potential,” “conditional” or that otherwise
“could not have been determined” at the time of that ruling.
(Hightower, at p. 1439 [ruling is an “award” because it resolves
all but “those potential and conditional issues that necessarily
could not have been determined” at the time of the ruling];
Kaiser, supra, 13 Cal.App.5th at p. 1149 [ruling is an “award”
when it leaves open for future resolution “issues” that “could not
have been decided” at that time “because their nature and scope
were uncertain as of the award date”]; Judge, supra, 232
Cal.App.4th at pp. 633-634 [same].)
Conferring “award” status only upon those rulings that
resolve every part of the parties’ controversy that can be resolved
at that time furthers the underlying purpose of arbitration.
Arbitration is designed to provide “‘an efficient, streamlined’”
mechanism for resolving disputes. (Sonic-Calabasas A, Inc. v.
Moreno (2013) 57 Cal. 4th 1109, 1140.) Ensuring that trial court
jurisdiction is reserved for only those arbitral rulings that
effectively determine all issues presented for arbitration that are
capable of determination at that time means that parties may not
seek seriatim judicial review of an arbitrator’s interlocutory
rulings, which is critical because such piecemeal judicial
intervention would slow down the dispute resolution process as
the parties bounce back and forth between the arbitral and
judicial fora. (Maplebear, supra, 26 Cal.App.5th at pp. 403-404;
16
Kaiser, supra, 13 Cal.App.5th at pp. 1145-1146; see also
Mossman v. City of Oakdale (2009) 170 Cal. App. 4th 83, 91 [“an
arbitration award is expected to be a final and conclusive
resolution of the dispute”].)
Applying this standard, courts have held that an
arbitrator’s ruling did not constitute an “award” when it decided
whether the parties may seek class certification (Maplebear,
supra, 26 Cal.App.5th at p. 403), whether a plaintiff’s claim was
preempted by federal law (Kaiser, supra, 13 Cal.App.5th at p.
1144), and whether claims asserted on a classwide or
representative basis were subject to arbitration (Judge, supra,
232 Cal.App.4th at pp. 622, 633-634). These rulings were not
“awards” because they left much of the parties’ controversy
unresolved. Conversely, courts have held that an arbitrator’s
ruling did constitute an “award” when it allowed one party the
opportunity to obtain financing to buy out the other but “reserved
jurisdiction” to review any “additional issues” that might arise in
the future (Hightower, supra, 86 Cal.App.4th at pp. 1424-1428,
italics omitted), when it decided whether a particular asset of an
estate was community or separate property but reserved
jurisdiction to make further determinations “‘in light of new
developments’” (Roehl v. Ritchie (2007) 147 Cal. App. 4th 338, 340-
341 (Roehl)), and when it ruled that one party had a duty to
defend but retained jurisdiction to award costs should a cost
award be requested in the future (EHM Productions, Inc. v.
Starline Tours of Hollywood, Inc. (2018) 21 Cal. App. 5th 1058,
1062, 1066-1067 [at the time of the first ruling, arbitrator had “no
way of knowing when, or if, a cost award would issue”]).
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B. Application
Under this framework, the Second Interim Ruling does not
meet the definition of an “award” on the basis of the following
undisputed facts: That ruling made findings that plaintiffs were
entitled to compensatory damages, that plaintiffs were entitled to
punitive damages, and that plaintiffs were the “prevailing party”
for purposes of awarding attorney fees and costs. That ruling
also fixed the amount of compensatory damages and punitive
damages. But it did not fix the amount of attorney fees and costs.
Because it left this last issue unresolved, the Second Interim
Ruling did not determine all issues necessary to the resolution of
the controversy between the parties. What is more, the issue of
attorney fees and costs was not potential, conditional or incapable
of determination at the time of the Second Interim Ruling. The
arbitrator could have fixed the amount at that time, but the
arbitrator and the parties agreed she would defer doing so
pending further briefing and a further hearing. Because the
Second Interim Ruling does not meet either element of the above
stated definition of “award,” it is not an “award” and thus was not
subject to the substantive and procedural limits on modifying
awards. The arbitrator therefore did not exceed her statutory
authority to incorporate a modification to the Second Interim
Ruling in the Final Award. The trial court’s ruling to the
contrary was therefore incorrect, and the Final Award should
have been confirmed, not corrected.
Patel resists this conclusion with what boil down to two
categories of arguments.
First, he argues that plaintiffs are judicially estopped from
arguing that the Second Interim Ruling is not an “award”
because they previously argued to the trial court that all three of
18
the arbitrator’s rulings (including the Second Interim Ruling)
were “awards.” It is true that plaintiffs—as part of a broader
argument—argued that the Second Interim Ruling was an
“award,” but this does not judicially estop plaintiffs from arguing
on appeal that the Second Interim Ruling is not an “award.” The
doctrine of judicial estoppel may be invoked only when “‘(1) the
same party has taken two positions; (2) the positions were taken
in judicial or quasi-judicial administrative proceedings; (3) the
party was successful in asserting the first position (i.e., the
tribunal adopted the position or accepted it as true); (4) the two
positions are totally inconsistent; and (5) the first position was
not taken as a result of ignorance, fraud, or mistake.’” (Aguilar v.
Lerner (2004) 32 Cal. 4th 974, 986-987.) In this case, plaintiffs
withdrew their argument that all three of the arbitrator’s rulings
were “awards” at the hearing held prior to the trial court’s ruling;
indeed, Patel complained about their shift in position.6 What is
more, the trial court never adopted plaintiffs’ position: Although
the court did find that the Second Interim Ruling was an
“award,” the court also declined to find that the First Interim
Ruling was an “award”; yet plaintiffs’ position (prior to
abandoning it) was that both Interim Rulings were “awards.”
Given these facts, we would in any event also decline to exercise
our discretion to apply the doctrine even if we assume that its
6 Contrary to what Patel asserts, the fact that plaintiffs
again shifted position after the trial court issued its ruling in a
filing asking the court to confirm the First Interim Ruling is not a
basis for applying judicial estoppel. By that point in time, the
court had already issued its ruling and adopted a position at odds
with plaintiffs’ position.
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prerequisites were met. (MW Erectors, Inc. v. Niederhauser
Ornamental & Metal Works Co., Inc. (2005) 36 Cal. 4th 412, 422.)
Second, Patel offers three reasons why the Second Interim
Ruling is an “award” within the meaning of section 1283.4. To
begin, he argues that it is an award because it “resolved all issues
submitted for decision” in the second phase of the arbitration.
We reject this argument. What matters is whether the ruling
“resolve[d] the parties’ controversy, not a question within the
controversy.” (Kaiser, supra, 13 Cal.App.5th at p. 1146, italics
added.) Were the rule otherwise, almost every ruling would be an
“award” because almost every ruling decides the issue it was
called upon to decide. Next, Patel argues that a ruling is not an
“award” only when it deals with “preliminary” issues, such as
class certification (as in Maplebear), preemption (as in Kaiser), or
the propriety of representative claims (as in Judge). Because the
arbitrator’s Second Interim Ruling in this case resolved the main
issues of liability as well as compensatory and punitive damages,
Patel continues, it was in no sense “preliminary.” While some of
the cases certainly refer to the arbitrator’s rulings as “resolv[ing]
only a preliminary issue” (Maplebear, supra, 26 Cal.App.5th at p.
405), what makes the resolution of that issue “preliminary” is not
that it is preliminary along the time horizon of a case but rather
that it is preliminary to the full resolution of the issues to be
decided. As noted above, the Second Interim Ruling is
preliminary to the full resolution of the issues to be decided
because it had yet to fix the amount of the attorney fees and costs
to which it had already determined plaintiffs were entitled.
Finally, Patel argues that the arbitrator never used the words
“not final” in the Second Interim Ruling. This argument is
without merit. Legally, as noted above, the arbitrator’s choice of
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label is not dispositive. Factually, the arbitrator could not have
been clearer that it was not resolving every issue and was leaving
at least one issue unresolved: The arbitrator called the ruling a
“Second Interim Award” (and interim, by definition, means “not
final”), left the amount of attorney fees and costs blank, and
qualified that its declaration that “[t]his award resolves all issues
submitted for decision in this proceeding” was not to be
“insert[ed]” until the “Final Award.” And in case there was any
lingering ambiguity, the arbitrator clarified in the Final Award
that “[t]he prior awards were Interim Awards and not yet final.”
* * *
In light of this analysis, we have no occasion to evaluate
plaintiffs’ alternative argument for reversal—namely, that if the
Second Interim Ruling is an “award,” then so is the First Interim
Ruling, such that the arbitrator’s modification of that First
Interim Ruling was untimely and that the compensatory
damages award of $558,266 in that First Interim Ruling must be
reinstated.
II. Attorney Fees and Costs
A. Reduction in attorney fees award
Plaintiffs argue that the trial court erred, when awarding
them attorney fees and costs incurred in the post-arbitration
judicial proceedings, in declining to award them the attorney fees
they incurred in filing a petition to confirm the First Interim
Ruling after the trial court granted Patel’s motion to correct the
Final Award. A party who prevails in post-arbitration judicial
proceedings is entitled to its costs, including attorney fees if the
parties have a contract providing for the award of such fees and
costs. (§§ 1293.2 [“The court shall award costs upon any judicial
proceeding” in accordance “with [section] 1021.”], 1021 [looking to
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“agreement . . . of the parties”], 1032, subd. (b) [entitlement to
costs is mandatory], 1033.5, subd. (a)(10)(A) [costs include
attorney fees “authorized by . . . [c]ontract”]; accord, Marcus &
Millichap Real Estate Investment Brokerage Co. v. Woodman
Investment Group (2005) 129 Cal. App. 4th 508, 513.) We review a
trial court’s determination of the prevailing party and of the
amount of attorney fees to award for an abuse of discretion.
(Olive v. General Nutrition Centers, Inc. (2018) 30 Cal. App. 5th
804, 824 [prevailing party]; Walent v. Commission of Professional
Competence etc. (2017) 9 Cal. App. 5th 745, 748-749 [amount].)
The trial court did not abuse its discretion in concluding
that the agreement here provided for the award of attorney fees
to “the party in whose favor a final judgment or award is
entered,” that plaintiffs were that party in the post-arbitration
judicial proceedings (because, as we conclude above, they were
entitled to a confirmation of the Final Award), or in declining to
award plaintiffs the $9,009 in attorney fees they incurred in filing
the petition to confirm the First Interim Ruling. By the time
plaintiffs filed that petition, the trial court had already accepted
the argument that the Second Interim Ruling was an “award”
and rejected the argument that the First Interim Ruling was also
an “award” on the ground that plaintiffs had waived that
argument by not previously moving to confirm the First Interim
Ruling. Whether or not that waiver ruling was correct, plaintiffs’
petition was designed to emphasize to the trial court the logical
consequence of that ruling that could have been raised in a
motion for reconsideration; the trial court was thus within its
discretion in finding that the petition constituted an “improper
motion for reconsideration.” Because trial courts have the
discretion to discount a fee request when the “amount requested
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is based upon unnecessary or duplicative work” (Wilkerson v.
Sullivan (2002) 99 Cal. App. 4th 443, 448), the court acted within
its discretion in declining to award fees for this unnecessary and
duplicative petition.
B. Award of post-arbitration attorney fees and
costs to plaintiffs (rather than Patel)
Patel argues that the trial court erred in denying his
motion for attorney fees incurred in the post-arbitration judicial
proceedings. His argument is premised on the fact that he is a
“prevailing party” entitled to fees because he prevailed on his
petition to correct the Final Award and that plaintiffs did not
prevail on their petition to confirm that Final Award (or any of
plaintiffs’ other successive petitions). Because we have
determined that the trial court erred and should have granted
plaintiffs’ petition to confirm, we have necessarily also
determined that Patel’s petition to correct should have been
denied and that he did not prevail in any aspect of the post-
arbitration judicial proceedings. This definitively disposes of his
argument.
C. Attorney fees on appeal
Plaintiffs also argue that they are entitled to attorney fees
for this appeal. As we have concluded, plaintiffs prevailed in the
post-arbitration proceedings before the trial court. As noted
above, they have also prevailed on appeal. Because the attorney
fees clause in the agreement is broad enough to include fees on
appeal from a judgment confirming, correcting, or vacating an
arbitration award (Ajida Techs., Inc. v. Roos Instruments (2001)
87 Cal. App. 4th 534, 551-552; Harbour Landing-Dolfann v.
Anderson (1996) 48 Cal. App. 4th 260, 263; MBNA America Bank,
N.A.. v. Gorman (2006) 147 Cal. App. Supp. 4th 1, 13-14; see also
Villinger/Nicholls Development Co. v. Meleyco (1995) 31
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Cal. App. 4th 321, 329 [“Where a contract or a statute creates a
right for the prevailing party to recover attorney fees, the
prevailing party is also entitled to attorney fees on appeal.”]), we
grant plaintiffs’ request for attorney fees on appeal and leave it to
the trial court to fix the reasonable amount of those fees.
DISPOSITION
The judgment denying plaintiffs’ petition to confirm the
arbitration award and granting Patel’s petition to correct the
arbitration award is reversed. We otherwise affirm the trial
court’s order awarding plaintiffs’ attorney fees and costs. We also
find that plaintiffs are entitled to costs and reasonable attorney
fees incurred in this appeal. We therefore remand with
directions to grant plaintiffs’ petition to correct the Final Award
and enter judgment for plaintiffs in the amount of that award
(less the amount of satisfaction of the judgment paid by Patel, if
any), and to determine the amount of costs and reasonable
attorney fees plaintiffs incurred on appeal.
CERTIFIED FOR PARTIAL PUBLICATION.
______________________, J.
HOFFSTADT
We concur:
_________________________, P. J.
LUI
_________________________, J.
CHAVEZ
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