FARMHOUSE DTLA INC VS DAVID VAYNTRUB ET AL

Tentative Rulings

Case Number: ****1251    Hearing Date: May 27, 2021    Dept: 54

Hearing Date: May 27, 2021

Department 54, Judge Maurice A. Leiter

Motion to Confirm Arbitration Award

Moving Party: Plaintiff Farmhouse DTLA, Inc.

Responding Party: Defendant Los Angeles Farmers, Inc. (fka AHPS-Absolute Herbal Pain Solutions)

T/R: PLAINTIFF’S MOTION TO CONFIRM ARBITRATION AWARD IS GRANTED.

PLAINTIFF TO NOTICE.

The Court considers the moving papers, opposition and reply.

Any party to an arbitration in which an award has been made may petition the court to confirm, correct or vacate the award.  (CCP ; 1285.)  Plaintiff has complied with CCP ; 1285.4: Plaintiff has attached a copy of the arbitration agreement, set forth the name of the arbitrator, Hon. Victor Kenton (Ret.), and attached a copy of the arbitration award. (Pet., Attachments 4(b), 8(c).) Defendant was served by email with the petition and notice of hearing.

The award provides that Plaintiff is entitled to 49% of Defendant’s business pursuant to an agreement between the parties. The arbitrator appointed a monitor to perform an accounting, “to report to the Arbitrator what proceeds or profits are due to Farmhouse, and to set up a system whereby Farmhouse’s 49% interest is protected, and proper distributions are made.” (Award p.7.)

In opposition, Defendant asks the Court to vacate the award. “Except for the very limited grounds set forth in section 1286.2 and 1286.6, awards are immune from judicial review.” (Cinel v. Christopher (2012) 203 Cal. App. 4th 759, 767, n.5 [citing Moncharsh v. Heily & Blase (1992) 3 Cal. 4th 1, 12–13.) CCP ; 1286.2(a) permits the Court to vacate an arbitration award for any of these reasons:

(1) The award was procured by corruption, fraud or other undue means.

(2) There was corruption in any of the arbitrators.

(3) The rights of the party were substantially prejudiced by misconduct of a neutral arbitrator.

(4) The arbitrators exceeded their powers and the award cannot be corrected without affecting the merits of the decision upon the controversy submitted.

(5) The rights of the party were substantially prejudiced by the refusal of the arbitrators to postpone the hearing upon sufficient cause being shown therefor or by the refusal of the arbitrators to hear evidence material to the controversy or by other conduct of the arbitrators contrary to the provisions of this title.

(6) An arbitrator making the award either: (A) failed to disclose within the time required for disclosure a ground for disqualification of which the arbitrator was then aware; or (B) was subject to disqualification upon grounds specified in Section 1281.91 but failed upon receipt of timely demand to disqualify himself or herself as required by that provision. . . .

Arbitrators do not “exceed their powers” merely by rendering an erroneous decision on a legal or factual issue. (Moncharsh, supra at 28.)

Defendants assert the award should be vacated because (1) it fails to adjudicate all issues submitted for consideration at the Arbitration, including Farmhouse’s claim for damages, (2) it provides for ongoing relief that is insufficiently definite to allow for enforcement by judgment, (3) it is insufficiently clear, and (4) while the Award found that Farmhouse did not prove damages, it grants a form of relief for specific performance, not requested in Farmhouse’s Complaint or Claim for Damages and for which adequate notice was not provided.

1. Farmhouse’s Claim for Damages

Defendant asserts that the arbitrator failed to resolve Plaintiff’s claim for damages. This is contrary to the plain language of the award. The award addresses monetary damages and states: “[t]he Arbitrator does not consider that money damages are an appropriate remedy.” (Award, p.7.) The award provides that damages could not be calculated given Defendant’s status as a cash business and the lack of sufficient evidence establishing the value of Defendant’s business. (Id.) The arbitrator found that specific performance was the appropriate remedy. (Id.)

2. Ongoing Relief

Defendant argues the award is an improper interim award and cannot be confirmed until it is a final award. Defendant says the award does not state it is a “partial final award” subject to judicial confirmation and has not resolved all of the issues, citing Hightower v. Superior Court (2001) 86 Cal.App.4th 1415. Hightower held that an arbitrator may issue a partial or interim award and retain jurisdiction to resolve any remaining issues. (Id. at 1439-1440.) Here, the arbitrator resolved the dispute between the parties, concluding that a contract exists, Plaintiff performed, Defendant breached, and Plaintiff is entitled to specific performance. The arbitrator then retained jurisdiction to oversee the monitor. This complies with Hightower.

3. Appointment of Monitor

Defendant contends the appointment of the monitor is a form of relief that cannot be rendered in a judgment. Defendant argues this is akin to a “make whole” award, which is not permissible under Mossman v. City of Oakdale (2009) 170 Cal.App.4th 83. The arbitrator’s award in this case is not analogous to that in Mossman. Here, the arbitrator has appointed a monitor to perform an accounting and set up a system to ensure that Plaintiff receives 49% of the business going forward. This is sufficiently clear.

4. Specific Performance

Defendant asserts that the arbitrator lacked authority to order specific performance. The award provides that “specific performance of the SCA is the preferred and logical result, as permitted by the Judicate West Commercial Arbitration Rules, which the parties elected to follow.” “Unless expressly restricted by the parties' agreement, an arbitrator has the authority to fashion such relief as he or she considers just and fair under the circumstances existing at the time of the arbitration, “ ‘so long as the remedy may be rationally derived from the contract and the breach.’ ” (Hightower, supra 86 Cal.App.4th at 1437; emphasis in original.) Here, the parties agreed that disputes arising from the contract would be resolved by arbitration and the parties chose Judicate West. Nothing in the contract restricts the remedies an arbitrator may tailor. The Court defers to the arbitrator’s decision.

Defendant has failed to establish grounds to vacate the award. The motion to confirm the arbitration award is GRANTED.