Goodwin v. Comerica Bank, N.A.

Filed 1/5/22 (unmodified opn. attached)
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION FOUR
MARK GOODWIN,
A160909
Plaintiff and Appellant,
(Alameda County
v. Super. Ct. No. RG17855144)
COMERICA BANK, N.A., ORDER MODIFYING OPINION
AND DENYING REHEARING;
Defendant and Respondent. NO CHANGE IN JUDGMENT
THE COURT:
It is ordered that the opinion filed herein on December 15, 2021, be modified
as follows:
On page 16, line 6, after the words “Goodwin’s petition to confirm the award,”
add as footnote 10 the following footnote,
10 To the extent Comerica suggests that the arbitrator’s misleading
description of the Hernandez resolution was an affirmative misrepresentation
independently bringing his impartiality into question and requiring his
disqualification, the same analysis applies. Comerica learned the correct facts prior
to submitting its opposition to Goodwin’s fee motion and failed to raise the issue
until after the arbitrator ruled on the motion, thereby forfeiting the issue.
There is no change in the judgment.
The petition for rehearing is denied.
Dated: January 5, 2022 ___________________________ P. J.
1
Trial Court: Alameda County Superior Court
Trial Judge: Honorable Julia Spain
Counsel for Plaintiff and EAST BAY COMMUNITY LAW CENTER,
Appellant: A CLINIC OF BERKELY LAW SCHOOL
Kara Acevedo
Miguel Soto, Jr.
WILCOX LAW FIRM, P.C.
Ronald Wilcox
Allison Krumhorn
DUPRE LAW FIRM, P.C.
Ben E. Dupre
Counsel for Defendant and BUCHALTER, A Professional Corporation
Respondent: Peter G. Bertrand
Harry W.R. Chamberlain II
Cheryl M. Lott
NUKK-FREEMAN & CERA, L.P.
Stacy L. Fode
Sabrina E. Lim
2
Filed 12/15/21 (unmodified opinion)
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION FOUR
MARK GOODWIN,
Plaintiff and Appellant,
A160909
v.
COMERICA BANK, N.A., (Alameda County
Super. Ct. No. RG17855144)
Defendant and Respondent.
Mark Goodwin appeals two concurrent orders denying his petition to
confirm an arbitration award and granting Comerica Bank’s (the bank)
petition to vacate the award on the ground that the arbitrator made a
material omission or misrepresentation in his disclosure of prior cases
involving the parties’ lawyers. (See Code Civ. Proc.,1 § 1281.9.) The disclosure
described a prior case involving Goodwin’s lawyers as “settled prior to final
award” without disclosing that the case had settled after the arbitrator
issued an interim award in favor of the client of Goodwin’s lawyer. On appeal,
the parties debate whether section 1281.9 required the arbitrator to disclose
the interim award and whether the omission was sufficiently material to
require vacation of the award. We need not decide those questions because
the bank forfeited any right to disqualify the arbitrator on that basis by
failing to file a notice of disqualification within 15 days of discovering that
All statutory citations are to the Code of Civil Procedure unless
1
otherwise specified.
1
omission. We will thus reverse the orders at issue and remand with
instructions to enter an order confirming the award.
Factual and Procedural History
Goodwin subsists on disability benefits that are direct-deposited to a
Comerica bank account. In April 2016, he alleges, the bank failed to prevent
identity thieves from taking most of his benefits for the month, and then
failed to respond fairly to his requests to rectify the situation. He filed this
action in 2017.
The bank invoked an arbitration clause in the parties’ “Terms of
Service” agreement, and the parties agreed to submit the matter to the
Honorable Read Ambler (Ret.), who practices in association with JAMS, a for-
profit provider of alternative dispute resolution services, and who had
previously arbitrated cases in which parties were represented by the lawyers
representing both parties in this dispute.
In January 2018, the arbitrator timely served a disclosure statement
pursuant to section 1281.9. That statute requires an arbitrator, within
10 days of service of a proposed appointment, to disclose “all matters that
could cause a person aware of the facts to reasonably entertain a doubt that
the proposed neutral arbitrator would be able to be impartial,” including all
matters within six listed categories. (§ 1281.9, subd. (a).) The categories
relevant here are: “(1) The existence of any ground specified in Section 170.1
for disqualification of a judge. . . . [¶] (2) Any matters required to be disclosed
by the ethics standards . . . . [¶] (3) . . . [and] [¶] (4) The names of the parties to
all prior or pending noncollective bargaining cases in which the proposed
neutral arbitrator served or is serving as a neutral arbitrator, and the results
of each case arbitrated to conclusion, including [specified details].” (Ibid.)
2
The arbitrator included in his disclosure statement a report generated
by JAMS that listed cases involving the parties and their lawyers. It listed
two arbitrations involving Goodwin’s lawyers:2 “Hernandez, Edgar, et al. v.
Robinson Tait, P.S. . . . [¶] . . . [¶] Case Result(s): Settled Prior to Final
Award—05/07/2013” (Hernandez) and “Private Party v. Dent-A-Med, dba HC
Processing Center . . . [¶] . . . [¶] Case Result(s): case on-going” (Dent-A-Med).
The statement also noted that “Each JAMS neutral, including me, has an
economic interest in the overall financial success of JAMS,” and that,
“because of the size and nature of JAMS, each side should assume that one or
more of the other neutrals who practice with JAMS has participated in . . .
[a] dispute resolution proceeding with the parties, counsel[,] or insurers in this
case and may do so [again].”
Neither party exercised their statutory right to object to the proposed
arbitrator within 15 days based on matters listed in the disclosure statement.
(§ 1281.91, subd. (b)(1); see discussion, post, at pp. 9–10.)
Between February 2018 and September 2019, the parties litigated the
merits of the case before the arbitrator. The litigation included contested
discovery motions and the filing of briefs accompanied by exhibits, in lieu of a
live evidentiary hearing. The arbitrator heard oral argument in August 2019
and accepted supplemental briefs in September 2019.
On November 1, 2019, while the matter was under submission, the
arbitrator served an amended disclosure statement accompanied by a “notice”
from a JAMS employee stating, “The initial disclosures previously served in
this matter were incomplete and as a result, we are providing a new disclosure
2The disclosure report indicated that Hernandez involved Ronald
Wilcox and Ben Dupre (as well as Dupre Law Firm, P.C.), while Dent-A-Med
involved Mr. Wilcox and Wilcox Law Firm, P.C. We refer to Wilcox and Dupre
and their firms, jointly and severally, as “Goodwin’s lawyers.”
3
checklist and report.” Among other things, the report listed additional matters
involving the bank’s lawyers and disclosed that, in May 2018, the arbitrator
had issued an award in Dent-A-Med in favor of the client of Goodwin’s lawyer
in an unspecified amount.3 Neither party requested further information or
served a notice of disqualification.
Nineteen days later, on November 20, 2019, the arbitrator issued an
interim award in Goodwin’s favor. He ruled that Goodwin was entitled to
$133,000 in damages, as well as attorney fees and costs in an amount to be
determined by subsequent motion. The interim award set a briefing schedule
for the fees motion and added that the “further determinations” to be made
based on that motion “shall be embodied in the Final Award, which shall also
incorporate the contents of the Interim Award. It is not intended that this
Interim Award be subject to review . . . pursuant to [the federal or California
Arbitration Act].”
Goodwin filed his fees motion on December 4, 2019, requesting a total of
approximately $925,000 in fees and costs, or $1.8 million after a proposed
multiplier. The bank filed an opposition on January 10, 2020, contending that
the fees sought were excessive and should be reduced to roughly $375,000.
While preparing that opposition—that is, between December 4, 2019 and
January 10, 2020—the bank’s lawyers learned that before the settlement in
Hernandez the arbitrator had entered an interim award of attorney fees and
3 The report also stated that the arbitrator is among JAMS’s “owner
panelists,” explaining: “[A] little over one quarter of JAMS neutrals have an
equal ownership share in the company. Owners are not privy to information
regarding the number of cases or revenue related to cases assigned to other
panelists. No shareholder’s distribution has ever exceeded 0.1% of JAMS[’s]
total revenue in a given year. Shareholders are not informed about how their
profit distributions are impacted by a particular client, lawyer[,] or law firm[,]
and shareholders do not receive credit for the creation or retention of client
relationships.”
4
costs in favor of the claimant represented by Goodwin’s lawyers, and against
the defendant debt collector, in the amount of $322,800.4 They also learned
that a party to the Dent-A-Med arbitration had petitioned a federal court to
vacate that award on the basis that the arbitrator had failed, in the
Dent-A-Med arbitration, to disclose the interim award in Hernandez.5 The
bank did not thereafter file a notice of disqualification or raise the
nondisclosure of those matters in its opposition to the fees motion.
4 In Hernandez, the parties had reached a settlement of the merits of
their dispute pursuant to which the respondents agreed to pay the claimant
$50,000 plus reasonable attorney fees and costs in an amount to be
determined by the arbitrator. The arbitrator issued an interim award of fees
and costs in the amount of $322,800 but retained jurisdiction to address a
claim for additional fees, after which the parties settled.
The trial court found that “[s]ometime between November 2019 and
January 2020, defendant learn[ed] about the Hernandez arbitration award
and the amount of the Dent-A-Med arbitration award and discover[ed that]
the defendant in Dent-A-Med challenged the award in federal court on the
grounds of nondisclosure of the Hernandez award.” Comerica does not dispute
the accuracy of that finding and itself asserts that its lawyers discovered the
Hernandez interim award at some point in “December 2019 and January
2020 . . . [w]hile the post-award fee issues [were] being briefed and argued to
the arbitrator.”
5 The bank requested judicial notice below of papers filed with the
motion to vacate the arbitration award in Dent-A-Med, as well as a transcript
of the hearing on that motion. The court took judicial notice of the papers but
not the transcript. On appeal, Goodwin challenges the partial denial of the
bank’s request and himself requests that this court judicially notice the
hearing transcript. We deny that request, as the federal court’s comments on
and resolution of the motion in Dent-A-Med are immaterial to the resolution of
this appeal. We also deny Goodwin’s request for judicial notice of his reply
brief to the arbitrator in support of his fees request, which is immaterial to the
resolution of this appeal. We grant Goodwin’s request for judicial notice of the
JAMS Comprehensive Arbitration Rules and Ethics Guidelines, which the
bank concedes is proper.
5
On February 27, 2020, the arbitrator issued a final award reiterating
the interim award on the merits and awarding Goodwin just over $900,000 in
fees and costs, plus interest.
Goodwin filed a petition to confirm the final award. The bank opposed
that petition and filed a petition to vacate the award based on the arbitrator’s
(1) failure to disclose the interim award in Hernandez; (2) 18-month delay in
reporting his issuance of an award to the client of Goodwin’s lawyers in
Dent-A-Med, and ongoing failure to disclose its amount; and (3) delay in
disclosing his ownership interest in JAMS.
The court granted the bank’s petition and denied Goodwin’s. It held that
the arbitrator’s failure to disclose that he had made an interim award of fees in
Hernandez constituted a “fail[ure] to disclose within the time required for
disclosure a ground for disqualification of which the arbitrator was then
aware.” (§ 1286.2, subd. (a)(6).) The court noted that section 1281.9 requires a
proposed arbitrator to disclose, with regard to all prior cases involving the
parties’ counsel, “the results of each case arbitrated to conclusion.” (§ 1281.9,
subd. (a)(4)) If that duty is breached, the court observed, section 1286.2,
subdivision (a)(6), requires it to vacate the arbitrator’s award without regard
to whether the violation caused prejudice. (Haworth v. Superior Court (2010)
50 Cal.4th 372, 383.) The court also noted that, while section 1281.91
requires a party to serve a notice of disqualification within 15 days after a
proposed arbitrator serves an initial disclosure statement pursuant to section
1281.9, an exception applies if the arbitrator made “a material omission or
material misrepresentation in his or her disclosure.” The court held that
Hernandez qualified as a “case arbitrated to conclusion” for purposes of section
1281.9, even though it settled before the arbitrator issued a final award, and
that the failure to disclose the interim award amounted to a material omission
6
or misrepresentation. The court rejected Goodwin’s argument that the
disclosure of the existence of the Hernandez matter put the bank on inquiry
notice, and that its failure to request further information was an implicit
“waiver” of any objection.6
Goodwin filed a timely notice of appeal.
Discussion
Because there are no pertinent disputed facts, this court reviews
de novo whether the bank forfeited any right to disqualification by failing to
timely raise the arbitrator’s failure to make complete and accurate disclosures.
(See Honeycutt v. JPMorgan Chase Bank, N.A. (2018) 25 Cal.App.5th 909, 921
[order vacating arbitral award is reviewed de novo except insofar as it
depends on trial court’s resolution of factual disputes].) In doing so, we
assume without deciding that the trial court correctly ruled that the
arbitrator was obligated to disclose in his initial disclosure statement that he
had issued an interim award in Hernandez (§ 1281.9, subds. (a)(1), (2), and
(4); Cal. Rules of Court, Ethics Standards for Neutral Arbitrators in
Contractual Arbitration (ethics standards), std. 7(d)(4)), and that his
description of the arbitration as “settled prior to final award,” without
6 The court also rejected the bank’s other grounds for vacating the
award—that is, the delays in disclosing the arbitrator’s ownership interest in
JAMS and issuance of an award in the Dent-A-Med arbitration. The court held
that the bank forfeited any right to disqualification based on the delay in
disclosing the Dent-A-Med award by failing to raise the issue within 15 days of
the belated disclosure, and that the bank’s failure to offer evidence of when the
arbitrator became a JAMS owner panelist made it impossible to find his
disclosure of that status untimely.
7
mention of the interim award, was a material omission and did not put the
bank on inquiry notice.7
1. Caselaw and Statutory Provisions Governing Forfeiture of the Right
to Seek Disqualification.
The Fourth Appellate District recently summarized the relevant
principles governing an arbitrator’s failure to make adequate disclosure: “If a
party learns the arbitrator failed to disclose information relevant to
disqualification, the party must object ‘at the earliest practicable opportunity
after discovery of the facts constituting the ground for disqualification.’
[Citation.] ‘While failure to disclose properly a ground for disqualification
generally mandates vacation of the award, this rule only applies if the party
moving to vacate “had no reason to know of the existence of a nondisclosed
matter.” [Citation.] If a party is “aware that a disclosure is incomplete or
otherwise fails to meet the statutory disclosure requirements,” the party
“cannot passively reserve the issue for consideration after the arbitration has
concluded.” ’ ” (Alper v. Rotella (2021) 63 Cal.App.5th 1142, 1152–1153.) In an
older opinion, that court put the matter more vividly: “[A] party who
knowingly participates in the arbitration process without disclosing a ground
for declaring it invalid is properly cast into the outer darkness of forfeiture.”
(Cummings v. Future Nissan (2005) 128 Cal.App.4th 321, 329.) A party who
7 In view of our conclusion that the bank forfeited its right to seek
disqualification on this ground, we need not consider whether the trial court
was correct that the omission was sufficiently significant to justify vacating
the award if timely raised (cf. Dornbirer v. Kaiser Foundation Health Plan,
Inc. (2008) 166 Cal.App.4th 831, 842 [“not every item of information . . .
required to be disclosed under section 1281.9 constitutes a ‘ground for
disqualification’ as the term is used in section 1286.2”]), or whether the court
was right to deny relief based on the bank’s other grounds for disqualification
—the arbitrator’s untimely disclosures of his status as an “owner panelist” of
JAMS and of his issuance of an award in the Dent-A-Med arbitration. Our
forfeiture analysis applies equally to those alternative grounds.
8
learns of a basis to disqualify an arbitrator cannot “wait and see how the
arbitration turn[s] out before raising the[] issue[],” which would allow the
party to “play games” with the arbitration and “not raise the issue” “until
[they] los[e].” (Honeycutt v. JPMorgan Chase, supra, 25 Cal.App.5th at
pp. 926, 927.)
In accordance with these principles, sections 1281.9 and 1281.91, as
supplemented by the ethics standards promulgated by the Judicial Council
pursuant to section 1281.85, establish a timeline for arbitrators to disclose
potential grounds for disqualification and for parties either to promptly seek
disqualification or forfeit the right to do so.
Section 1281.9 requires an arbitrator, within 10 days of notice of a
proposed appointment, to “disclose all matters that could cause a person
aware of the facts to reasonably entertain a doubt that the proposed neutral
arbitrator would be able to be impartial, including [certain specific matters].”
(§ 1281.9, subd. (a).) Section 1281.91 provides: If the arbitrator “fails to
comply with Section 1281.9 and any party entitled to receive the disclosure
serves a notice of disqualification within 15 calendar days,” the arbitrator
“shall be disqualified.” (§ 1281.91 subd. (a).) If the arbitrator timely serves a
disclosure statement, he or she “shall be disqualified on the basis of the
disclosure statement after any party . . . serves a notice of disqualification
within 15 calendar days after service of the disclosure statement.” (Id.,
subd. (b)(1).) Subdivision (c) of section 1281.91 provides, “The right of a party
to disqualify a proposed neutral arbitrator pursuant to this section shall be
[forfeited8] if the party fails to serve the notice pursuant to the times set forth
8The statute uses the term “waived,” but it is clear in context that the
Legislature meant “forfeited.” Waiver and forfeiture are distinct doctrines
with different substantive requirements, despite the informal shorthand by
9
in this section, unless the [arbitrator] makes a material omission or material
misrepresentation in his or her disclosure.” As discussed in more detail below,
subdivision (c) adds, “Except as provided in subdivision (d), in no event may a
notice of disqualification be given after a hearing of any contested issue of
fact relating to the merits of the claim or after any ruling by the arbitrator
regarding any contested matter.” Subdivision (d) provides that “If any ground
specified in section 170.1 exists, a neutral arbitrator shall disqualify himself
or herself upon the demand of any party made before the conclusion of the
arbitration proceeding. . . .”
To the extent of any uncertainty in the statutory provisions, ethics
standard 10 specifies the procedure and time requirement for disqualifying an
arbitrator who “makes a material omission or material misrepresentation in
his or her [initial] disclosure.” That provision, which the parties do not
discuss, states that an arbitrator is disqualified if “[a] party becomes aware
that an arbitrator has made a material omission or material misrepresentation
in his or her disclosure and, within 15 days after becoming aware of the
omission or misrepresentation and within the time specified in . . . section
1281.91(c), the party serves a notice of disqualification that clearly describes
the material omission or material misrepresentation and how and when the
party became aware of [it].” (Ethics Standards, std. 10(a)(4), italics added.)
Like section 1281.91, that provision reinforces the basic principle that a party
which lawyers and courts often indiscriminately—and at times confusingly—
use “waiver” to refer to both. (United States v. Olano (1993) 507 U.S. 725,
733–734 [“Waiver is different from forfeiture. Whereas forfeiture is the
failure to make the timely assertion of a right, waiver is the ‘intentional
relinquishment or abandonment of a known right.’ ”]; People v. Simon (2001)
25 Cal.4th 1082, 1097, fn. 9 [“[T]he terms ‘waiver’ and ‘forfeiture’ long have
been used interchangeably.”].)
10
who learns of a ground for disqualification must either raise it promptly or
forfeit it. (See Alper v. Rotella, supra, 63 Cal.App.5th at pp. 1152–1153.)
2. Analysis.
Here, as we assume the trial court correctly ruled, the arbitrator
“ma[de] a material omission or material misrepresentation in his or her
[initial] disclosure [statement].” (§ 1281.91, subd. (c).) However, the bank did
not learn of the omission until after the 15-day window to demand
disqualification, based on the initial statement, had passed (see § 1281.91,
subd. (b)) and after the arbitrator had heard and decided the merits of the
controversy. (See § 1281.91, subd. (c).) The bank learned of the arbitrator’s
failure to disclose the interim award in Hernandez while it was briefing
Goodwin’s fee motion, which subsequently resulted in an award of attorney
fees, costs, and interest comprising approximately 90 percent of the total
award.9
The parties’ appellate briefs, like the court’s order, focus on whether
the arbitrator’s initial disclosure of the existence of the Hernandez
arbitration put the bank on inquiry notice that he might have made interim
rulings before the arbitration settled. The trial court did not address
Goodwin’s distinct argument that the bank forfeited its right to seek
disqualification by failing to do so once it had actual notice of the Hernandez
award, and in its initial briefing the bank made only a cursory response to that
argument. Relying on the second sentence of subdivision (c) of section 1281.91,
the bank argued that, by the time it learned of the Hernandez interim award,
9 The bank learned of its other grounds for disqualification—the
arbitrator’s delays in disclosing his ownership interest in JAMS and his
issuance of the Dent-A-Med award—in November 2019, while the merits of
this case were under submission. Thus, as noted above, the same forfeiture
analysis applies to these asserted grounds for disqualification.
11
it was too late to file a notice of disqualification, because the hearing was
underway and the merits of the dispute had already been decided. We thus
asked the parties pursuant to Government Code section 68081 to brief
whether the bank forfeited its right to challenge the arbitrator
notwithstanding the second sentence of section 1281.91, subdivision (c).
As noted above, subdivision (c) of section 1281.91 states, “Except as
provided in subdivision (d), in no event may a notice of disqualification be
given after a hearing of any contested issue of fact relating to the merits of
the claim or after any ruling by the arbitrator regarding any contested
matter.” (Ibid.) Read in isolation, that sentence may support the bank’s
position. But on that reading, if a basis for disqualification is not discovered
until after the arbitration hearing has begun, either the party learning of the
basis for disqualification would have no recourse or that party would be
required to await the outcome of the arbitration and, if unfavorable, raise the
ground for disqualification for the first time in a petition to vacate. Neither
outcome would be sensible or fair, and the second would contravene long-
settled policy. (See, e.g., Caminetti v. Pacific Mut. Life Ins. Co. of Cal. (1943)
22 Cal.2d 386, 392 [“ ‘It would seem . . . intolerable to permit a party to play
fast and loose with the administration of justice by deliberately standing by
without making an objection of which he is aware and thereby permitting the
proceedings to go to a conclusion which he may acquiesce in, if favorable, and
. . . avoid, if not.’ ”].)
For this reason the statute contains an exception to subdivision (c),
provided in subdivision (d) of section 1281.91. Subdivision (d) provides, “If
any ground specified in Section 170.1 exists, a neutral arbitrator shall
disqualify himself or herself upon the demand of any party made before the
conclusion of the arbitration proceeding.” (Italics added.) The arbitrator’s
12
failure here to disclose the sizable interim fee award he made to Goodwin’s
attorney in another arbitration proceeding, we continue to assume, comes
within the grounds for disqualification “specified in section 170.1.”
Section 170.1 was enacted to identify grounds for disqualifying a judge,
but it applies by reference to arbitrators. (§ 1281.91, subd. (d); § 1281.9,
subd. (a)(1); Ethics Standards, std. 10(a)(5).) It states that a judge is
disqualified if, among other things, “For any reason, . . . [a] person aware of
the facts might reasonably entertain a doubt that the judge would be able to
be impartial.” (§ 170.1, subd. (a)(6)(A)(iii).) That standard is identical to the
standard in section 1281.9 requiring the arbitrator to disclose matters that
“could cause a person aware of the facts to reasonably entertain a doubt that
the proposed neutral arbitrator would be able to be impartial” (§ 1281.9,
subd. (a).) As noted, the trial court held here that this standard compelled
disclosure of the omitted information.
Accordingly, to obtain the arbitrator’s disqualification, the bank was
required to “object ‘at the earliest practicable opportunity after discovery of
the facts constituting the ground for disqualification’ ” (Alper v. Rotella, supra,
63 Cal.App.5th at p. 1152), and in compliance with the more specific
obligation under ethics standard 10(a)(4) to serve a notice of disqualification
“within 15 days after becoming aware of the omission or misrepresentation” in
the arbitrator’s disclosure statement. Having failed to do so, it forfeited the
right to demand disqualification when it subsequently learned of the
arbitrator’s adverse fee award.
The bank is in no position to dispute this conclusion. In petitioning the
trial court to vacate the award it relied on section 1281.9, subdivision (a). At
its urging, the court held that “the mischaracterization of the Hernandez
matter satisfies the ‘might cause a reasonable person to question’ standard of
13
. . . section 1286.2 and the ‘cause a person aware of the facts to reasonably
entertain a doubt that the arbitrator would be able to be impartial’ standard of
[ethics standard] 7(d), and was a material omission and material
misrepresentation.” The bank’s supplemental brief defends those findings.
Hence, the bank has effectively acknowledged that the identical “might
reasonably entertain a doubt” standard of section 170.1, subdivision (a)(6)(A)
was satisfied, and therefore the objection could be raised at any time “before
the conclusion of the arbitration” (§ 1281.9, subd. (d)).
None of the three cases the bank emphasized at oral argument and in its
letter brief responding to the court’s request for supplemental briefing affects
our conclusion. In Gray v. Chiu (2013) 212 Cal.App.4th 1355, the defendants
argued that the plaintiff had forfeited the right to seek vacatur of an award
based on nondisclosure of a ground for disqualification of which she “knew or
should have known.” (Id. at p. 1366.) There was no explicit finding or
concession, as here, that the plaintiff did learn of the ground during the
arbitration. Even if she did, the Second District’s analysis of the forfeiture
claim was unsound. It held that the plaintiff could not have forfeited the
issue because section 1281.85, subdivision (c) “prohibits waiver of the ethics
standards. ‘The ethics requirements and standards of this chapter are
nonnegotiable and shall not be waived.’ ” (Ibid.) But as the Fifth District has
since explained, Gray v. Chiu misread section 1281.85. (United Health
Centers of San Joaquin Valley, Inc. v. Superior Court (2014) 229 Cal.App.4th
63, 85.) That statute bars the advance contractual waiver of rights conferred
by the ethics standards—not the forfeiture of such rights by failing to timely
assert them after learning of a breach. (Id. at pp. 79–85.)
In Mt. Holyoke Homes, L.P. v. Jeffer Mangels Butler & Mitchell, LLP
(2013) 219 Cal.App.4th 1299, it was “undisputed that [the party seeking to
14
have an award vacated] did not discover until after the arbitration” the fact
warranting disqualification. (Id. at p. 1314.) While the court rejected an
argument that the party forfeited her objection because she had “constructive
knowledge” of that fact during the arbitration, it noted that “[a]n arbitrator's
failure to make a required disclosure presumably would not justify vacating
the arbitrator’s award if the party challenging the award had actual
knowledge of the information yet failed to timely seek disqualification.” (Id. at
pp. 1313–1314.) That is the case here.
The recent decision in Jolie v. Superior Court (2021) 66 Cal.App.5th
1025 also strongly supports our analysis. Addressing a challenge to a
temporary judge based on his belated disclosure of new cases in which he was
involved with the lawyers for one party (Pitt), the Second District applied the
“person aware of the facts might reasonably entertain a doubt” standard of
section 170.1, subdivision (a)(6)(A). (Jolie, supra, at p. 1046.) Pitt contended
that the other party (Jolie) forfeited her objection to the temporary judge
because the judge’s initial disclosures had put Jolie “on notice that [he] had a
significant history of serving in cases in which [Pitt’s lawyers] represented one
of the parties.” (Ibid.) Citing numerous cases, the court reaffirmed that “[a]
delay in seeking to disqualify a judge ‘constitutes forfeiture or an implied
waiver of the disqualification.’ ” (Ibid.) In rejecting the argument that Jolie
forfeited her objections because she was on inquiry notice, and directing the
trial court to order the temporary judge disqualified, the court emphasized
that, “[u]pon receiving th[e] new information, Jolie promptly sought
disqualification.” (Id. at p. 1043; see also id. at pp. 1035–1037 [Jolie sought
recusal two days after learning details of new matters, then promptly filed a
disqualification statement, and then filed a writ petition.].) The facts there
contrast sharply with the bank’s silence upon learning the facts here.
15
Because the bank failed to seek the arbitrator’s disqualification within
15 days of discovering the facts requiring disqualification and before the
arbitrator decided the pending fee motion, it forfeited the right to demand
disqualification. The order vacating the award based on the arbitrator’s
disqualification thus must be reversed. Because the bank has identified no
other grounds for denying Goodwin’s petition to confirm the award, that
petition must be granted.
Disposition
The order granting the bank’s petition to vacate the arbitration award
and the order denying Goodwin’s petition to confirm the award are both
reversed, and the matter is remanded with directions to issue orders denying
the bank’s petition to vacate and granting Goodwin’s petition to confirm.
POLLAK, P. J.
WE CONCUR:
BROWN, J.
ROSS, J.*
*Judge of the Superior Court of California, County of San Francisco,
assigned by the Chief Justice pursuant to article VI, section 6 of the
California Constitution.
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Trial Court: Alameda County Superior Court
Trial Judge: Honorable Julia Spain
Counsel for Plaintiff and EAST BAY COMMUNITY LAW CENTER,
Appellant: A CLINIC OF BERKELY LAW SCHOOL
Kara Acevedo
Miguel Soto, Jr.
WILCOX LAW FIRM, P.C.
Ronald Wilcox
Allison Krumhorn
DUPRE LAW FIRM, P.C.
Ben E. Dupre
Counsel for Defendant and BUCHALTER, A Professional Corporation
Respondent: Peter G. Bertrand
Harry W.R. Chamberlain II
Cheryl M. Lott
NUKK-FREEMAN & CERA, L.P.
Stacy L. Fode
Sabrina E. Lim
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