On 12/18/2017 ROSE DIPLOMAT LLC filed a Property - Other Real Property lawsuit against MARY NELSON. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judges overseeing this case are ELIZABETH ALLEN WHITE and LAURA A. SEIGLE. The case status is Pending - Other Pending.
Pending - Other Pending
Los Angeles County Superior Courts
Stanley Mosk Courthouse
Los Angeles, California
ELIZABETH ALLEN WHITE
LAURA A. SEIGLE
ROSE DIPLOMAT LLC
DOES 1 THROUGH 50
HANOVER PAMELA M.
FRITZ JULIANNA PAINE
CRESTA PROPERTIES LLC
BANNING WILLIAM L.
BANNING THOMAS JR.
PARKER GARY W.
FORGUES NORAH GAIL
PARKER TERRY R.
MANATT PHELPS & PHILLIPS LLP
ROCHMAN HARVEY L.
SHAFRON SHELLY JAY ESQ.
LEIPZIG SCOTT J. ESQ.
5/13/2019: Notice of Ruling
11/13/2020: Reply - REPLY BRIEF IN SUPPORT OF PLAINTIFF ROSE DIPLOMAT, LLCS MOTION TO VACATE ARBITRATION AWARD
9/5/2019: Minute Order - MINUTE ORDER (NON-APPEARANCE CASE REVIEW FOR JOINT STATUS REPORT)
10/7/2019: Notice - NOTICE OF STATUS CONFERENCE
3/20/2020: Notice Re: Continuance of Hearing and Order
10/23/2020: Proof of Service (not Summons and Complaint) - PROOF OF SERVICE (NOT SUMMONS AND COMPLAINT) AMENDED
10/26/2020: Proof of Personal Service - PROOF OF PERSONAL SERVICE AMENDED
2/21/2018: ANSWER TO FIRST AMENDED COMPLAINT BY DEFENDANTS MARY NELSEN, ERRONEOUSLY SUED AS MARY NELSON, ETC
9/14/2018: OPPOSITION OF DEFENDANTS CHRISTINE E. NELSEN STRATTON AND DONALD STRATTON, INDIVIDUALLY AND AS TRUSTEES FOR THE STRATTON FAMILY REVOCABLE TRUST; MARY NELSEN, AN INDIVIDUAL ERRONEOUSLY SUED AS MARY NEL
9/19/2018: NOTICE OF RULING
11/26/2018: Declaration - Declaration of Defendant Emily Paine in Support of Defendants' Opposition to Plaintiff's Motion for a Preliminary Injunction
2/13/2019: Certificate of Mailing for - Certificate of Mailing for Minute Order (Court Order Overruling Objections by Defendants Christine E. ...) of 02/13/2019
4/8/2019: Opposition - OPPOSITION PLAINTIFF ROSE DIPLOMAT LLC OPPOSITION TO LANDLORD DEFENDANTS EX PARTE APPLICATION; DECLARATION OF HARVEY L ROCHMAN
4/16/2019: Notice - NOTICE OF FILING OF THE SIGNED DECLARATION OF AVY AZEROUAL IN SUPPORT OF OPPOSITION TO MOTION FOR SUMMARY ADJUDICATION
4/29/2019: Notice of Ruling
5/9/2019: Motion to Compel Arbitration
5/13/2019: Minute Order - MINUTE ORDER (HEARING ON PLAINTIFF ROSE DIPLOMAT, LLC'S EX PARTE APPLICATIO...)
5/22/2019: Opposition - OPPOSITION TO MOTION TO COMPEL ARBITRATION AND STAY LITIGATION
Hearing05/18/2021 at 08:30 AM in Department 48 at 111 North Hill Street, Los Angeles, CA 90012; Status ConferenceRead MoreRead Less
DocketNotice (of Withdrawal of Attorney of Record); Filed by Mary Nelsen Erroneously Sued As Mary Nelson (Defendant)Read MoreRead Less
Docketat 08:30 AM in Department 48, Laura A. Seigle, Presiding; Status Conference (ReArbitration) - Not Held - Continued - Court's MotionRead MoreRead Less
DocketNotice of Ruling; Filed by Rose Diplomat, LLC (Plaintiff)Read MoreRead Less
Docketat 08:30 AM in Department 48, Laura A. Seigle, Presiding; Hearing on Motion for Attorney Fees - Held - Motion GrantedRead MoreRead Less
DocketCertificate of Mailing for ((Hearing on Motion for Attorney Fees) of 01/12/2021); Filed by ClerkRead MoreRead Less
DocketOrder Appointing Court Approved Reporter as Official Reporter Pro Tempore ((Kevin Andrew Roldan, CSR #13463)); Filed by Rose Diplomat, LLC (Plaintiff)Read MoreRead Less
DocketMinute Order ( (Hearing on Motion for Attorney Fees)); Filed by ClerkRead MoreRead Less
DocketObjection (of Defendants and Their Counsel to Proposed Order); Filed by Mary Nelsen Erroneously Sued As Mary Nelson (Defendant)Read MoreRead Less
DocketReply (BRIEF IN SUPPORT OF PLAINTIFF ROSE DIPLOMAT, LLC?S MOTION FOR (1) ATTORNEYS? FEES AND COSTS PURSUANT TO COURT ORDER DATED NOVEMBER 23, 2020 AND (2) MONETARY SANCTIONS; SUPPLEMENTAL DECLARATION OF HARVEY L. ROCHMAN IN SUPPORT THEREOF); Filed by Rose Diplomat, LLC (Plaintiff)Read MoreRead Less
DocketFirst Amended Complaint; Filed by Rose Diplomat, LLC (Plaintiff)Read MoreRead Less
DocketSummons; Filed by Rose Diplomat, LLC (Plaintiff)Read MoreRead Less
DocketNOTICE OF CASE MANAGEMENT CONFERENCERead MoreRead Less
DocketNotice of Case Management Conference; Filed by ClerkRead MoreRead Less
DocketNOTICE OF PENDENCY OF ACTION (LIS PENDENS)Read MoreRead Less
DocketNotice; Filed by Rose Diplomat, LLC (Plaintiff)Read MoreRead Less
DocketSUMMONSRead MoreRead Less
DocketSummons; Filed by Rose Diplomat, LLC (Plaintiff)Read MoreRead Less
DocketCOMPLAINT FOR DECLARATORY RELIEFRead MoreRead Less
DocketComplaint; Filed by Rose Diplomat, LLC (Plaintiff)Read MoreRead Less
Case Number: BC687057 Hearing Date: January 12, 2021 Dept: 48
[TENTATIVE] ORDER RE: MOTION FOR ATTORNEY FEES AND COSTS; MONETARY SANCTIONS
On December 18, 2017, Plaintiff Rose Diplomat, LLC (“Plaintiff”) filed this action against Defendants Mary Nelsen, Emily Paine, Franklin Paine, Julianna Paine Fritz, Donald Stratton, Christine Stratton, Raymond Weamer, Joan Weamer, Pamela Hanover, Thomas Banning, Jr., William L. Banning, Patricia Hanover, Margaret Parker, Norah Gail Forgues, Terry R. Parker, and Gary W. Parker (collectively, “Defendants”) regarding rent readjustment to be determined by three appraisers pursuant to the rules of the American Arbitration Association (“AAA”). The parties conducted the arbitration, and the arbitrators issued an award. Plaintiff then filed a motion to vacate the arbitration award based on alleged misconduct by one of the three arbitrators.
On November 23, 2020, the Court granted the motion, vacated the interim arbitration award, and ordered the parties to arbitrate this matter before a new panel. The Court also awarded Plaintiff its costs and contractual attorney fees incurred in connection with the motion to vacate the arbitration award, subject to the filing of a noticed fee motion. (Code Civ. Proc., § 1293.2.) On December 17, 2020, Plaintiff filed this motion for attorney fees and monetary sanctions.
The Court does not rule on Defendants’ objections to the Rochman Declaration and Plaintiff’s objections to the Shafron and Hanover Declarations, as the material objected to is not relevant to this decision.
Plaintiff requests a total of $667,991.47 in fees and costs, consisting of (1) $425,046.15 in attorney fees; $26,955.31 in costs; $125,818.75 in expert fees; and $63,171.26 in neutral compensation and AAA expenses. (Motion at p. 8.) These fees and costs represent work done since January 2020 in connection with the first arbitration, as well as fees and costs incurred in connection with the motion to vacate the arbitration award. (Id. at ¶ 7; Rochman Decl. ¶¶ 18-22 & Ex. D.) Plaintiff also requests an additional $43,936.20 in attorney fees for this motion. (Reply at p. 10; Rochman Suppl. Decl. ¶ 6.)
Code of Civil Procedure section 1293.2 states, “The court shall award costs upon any judicial proceeding under this title as provided in Chapter 6 (commencing with Section 1021) of Title 14 of Part 2 of this code.” (Code Civ. Proc., § 1293.2.) The referenced “judicial proceedings” include a motion to vacate an arbitration award. (Corona v. Amherst Partners (2003) 107 Cal.App.4th 701, 707.) “The award of costs pursuant to section 1293.2, including attorney fees when authorized by contract, is mandatory.” (Marcus & Millichap Real Estate Investment Brokerage Co. v. Woodman Investment Group (2005) 129 Cal.App.4th 508, 513.)
Plaintiff argues that the Court’s ability to award fees and costs under section 1293.2 includes not only fees and costs in post-arbitration judicial proceedings, but also fees and costs incurred during the arbitration. There are at least three problems with this argument.
First, section 1293.2 does not state that a court has the authority to award fees and costs incurred during the arbitration. By its own terms, the statute refers to an award of costs “upon any judicial proceeding.” An arbitration is not a judicial proceed. If the legislature had intended to give a court the authority under this statute to award fees and costs incurred during the arbitration, it would have stated so. (Austin v. Allstate Ins. Co. (1993) 16 Cal.App.4th 1812, 1815-1816 [“It is apparent that the Legislature has distinguished between costs incurred in an arbitration proceeding and costs incurred in superior court to enforce an arbitration award, allowing costs to the prevailing party only in the latter”].)
Second, an award of attorney fees and costs incurred in the arbitration depends on the contents of the arbitration agreement and the disputes the parties submit to arbitration. (Corona v. Amherst Partners (2003) 107 Cal.App.4th 701, 705 [“Where parties have agreed to submit their dispute to private arbitration, scope of the arbitration and the powers of the arbitrator are defined in accordance with the agreement”].) “Although the parties, by agreement, can certainly exclude specific questions from arbitration, in the absence of such restriction an arbitrator has the power to decide the submitted matter on any legal or factual basis, whether or not any party has relied upon that particular basis.” (Moshono v. Walsh (2000) 22 Cal.4th 771, 777.) If the parties’ arbitration agreement does not exclude the question of attorney fees from arbitration, then the arbitrator’s decision about awarding fees based on the arbitrator’s interpretation of the parties’ agreement is not subject to correction by the court. (Id. at p. 778; see also Corona, supra, 107 Cal.App.4th at p. 706 [“because the parties’ stipulation did not limit the issues to be resolved through arbitration, the issue of [a party’s] entitlement to attorney fees and costs, as requested in his complaint, was subject to determination in arbitration proceeds”].) When the parties have agreed their dispute will be resolved by arbitration, the parties cannot “recover an award of fees and costs incurred in the arbitration in the judicial proceedings that followed the arbitration.” (Corona, supra, 107 Cal.App.4th at pp. 706-707.)
Plaintiff contends the arbitration agreement “only provides that the appraised value of the Property is to be arbitrated, nothing else.” (Reply at p. 6 n.3.) That conclusion is not readily apparent. The parties’ agreement states that if the parties cannot agree on the value of the premises, “the value shall be determined by arbitration.” (Lease at p. 23.) “In the event that it becomes necessary by the terms of this lease to make any determination by arbitration or in the event that any controversy arises between the Landlord and the Tenant which by the terms of this lease is to be determined by arbitration, then the same shall . . . be referred for decision by arbitration.” (Lease at p. 24.) The attorney fees provision states, “In the event that either party to the herein lease shall institute and prevail in any action or suit for the enforcement of any of its rights hereto, the party not prevailing will pay to the prevailing party a reasonable attorney fee on account thereof.” (Lease a p. 28.) Here, the parties apparently interpreted these provisions to include the prevailing party’s fees as a matter submitted to the arbitrators because they filed fee applications with the arbitrators. (Rochman Decl., ¶ 13.) Indeed, Plaintiff learned the basis for its motion to vacate the arbitration award when Plaintiff saw Defendants’ time entries in Defendants’ fee application to the arbitrators. (Ibid.) If the parties had not intended to submit the issue of prevailing party fees to the arbitrators, they would not have submitted the fee applications in the arbitration. Therefore, the Court cannot conclude that it, rather than the arbitrators, has the authority to award fees and costs incurred during the arbitration.
Third, the arbitration is not yet completed. The Court vacated the arbitration award and ordered the parties back to arbitration. Therefore there is not yet a prevailing party in the arbitration on the issue of the value of the premises.
All that being said, Plaintiff is entitled to an award under section 1293.2 for the fees and costs incurred in making the motion to vacate. But Plaintiff did not break out the amount of fees and costs incurred for the motion to vacate. Therefore, the Court calculated the amount from Plaintiff’s billing records. Plaintiff filed the motion to vacate on October 22, 2020, and based on the billing records, Plaintiff’s counsel started working on the motion on October 10, 2020. The entries from that date through November 23, 2020 show approximately $45,381 in fees billed in connection with the motion to vacate. The motion, reply, and accompanying papers were lengthy, detailed, and well-argued and researched. The Court finds the time billed was reasonable.
Defendant argues that Plaintiff’s attorneys’ rates are too high and need to be discounted by a third. Defendant cites no evidentiary basis for this assertion. Based on the evidence presented by Plaintiff’s counsel and the 10% discount applied to the bills, the Court finds the rates are reasonable given Plaintiff’s counsel’s background and expertise and the complicated and specialized issues in dispute.
Plaintiff’s list of costs shows approximately $1,000.00 in costs billed during this time, but because the list includes little if any description of the costs, the Court cannot identify if the costs are allowable. The parties’ agreement contains a provision awarding the prevailing party attorney fees, but does not mention costs. (Lease at p. 28.) Therefore, Plaintiff is limited to its statutory costs. Plaintiff did not show which costs are allowable under Code of Civil Procedure section 1033.5.
Accordingly, the Court awards $45,381.00 to Plaintiff for fees incurred in making the motion to vacate.
Plaintiff also requests that the fees and costs be awarded as sanctions under Code of Civil Procedure section 128.5 due to Defendants’ misconduct in the first arbitration, arguing that Plaintiff now has to pay twice for the same arbitration. (Motion at pp. 10, .) “A trial court may order a party, the party’s attorney, or both, to pay the reasonable expenses, including attorney’s fees, incurred by another party as a result of actions or tactics, made in bad faith, that are frivolous or solely intended to cause unnecessary delay.” (Code Civ. Proc., § 128.5, subd. (a).) “ ‘Frivolous’ means totally and completely without merit or for the sole purpose of harassing an opposing party.” (Code Civ. Proc., § 128.5, subd. (b)(2).)
In its order granting the motion to vacate, the Court concluded that one of the arbitrators had not disclosed grounds for disqualification. Those ground were accepting employment on other matters with defense counsel’s firm while the arbitration was pending without disclosing the financial relationship, as well as ex parte communications between defense counsel and the arbitrator, which the arbitrator did not disclose.
The arbitrator’s accepting of employment on other matters with defense counsel’s firm and then not disclosing those matters was not conduct by Defendants or defense counsel done in bad faith that was frivolous or solely intended to cause unnecessary delay. The defense counsel’s ex parte communications were not done solely to cause unnecessary delay, and the arbitrator’s failure to disclose the communications was not an act of defense counsel or Defendants. Therefore, to support sanctions, defense counsel must have made the ex parte communications in bad faith and they must be frivolous. As detailed in the November 23, 2020 order, some of the ex parte communications were administrative matters (e.g., setting the time and place of hearings). There is no evidence defense counsel made those communications in bad faith or that they were frivolous. Defense counsel also sent a list of substantive questions to the arbitrator to ask during the hearing, which was improper, and the arbitrator failed to disclose this substantive communication.
This improper ex parte communication was not similar to the situation in Sherman v. Kinetic Concepts, Inc. (1998) 67 Cal.App.4th 1152, where the defense counsel intentionally concealed material information in discovery and in the testimony of its corporate witnesses, depriving the plaintiffs of their ability to obtain evidence for trial. (Id. at p. 1162.) Here, defense counsel did not conceal material information in discovery. The problem with the ex parte communication was not that it concealed material evidence that would have helped Plaintiff prove its case. Rather, the list of questions to ask during the arbitration raised questions about the arbitrator’s impartiality. Nor did Plaintiff submit evidence that defense counsel acted in bad faith in sending the list. Defense counsel admits he made a mistake, but not every mistake is done in bad faith.
In sum, there were multiple reasons necessitating vacation of the arbitration award, most of which were the fault of the arbitrator, not acts of defense counsel. Also, it is not correct to say that all of the fees incurred in the first arbitration were for naught. For example, the discovery, preparation for the arbitration hearing, and testimony from the first arbitration will be useful in the second arbitration. If Plaintiff is ultimately the prevailing party, Plaintiff will be able to recover its reasonable fees incurred in the arbitration under the parties’ agreement. Therefore, the request for sanctions under section 128.5 is denied.
Accordingly, Plaintiff’s motion for attorney fees and costs is GRANTED IN PART, in the amount of $45,381.00 in fees.
Moving party to give notice.
Parties who intend to submit on this tentative must send an email to the Court at SMCDEPT48@lacourt.org indicating intention to submit. Parties intending to appear are STRONGLY encouraged to appear remotely.
Case Number: BC687057 Hearing Date: November 23, 2020 Dept: 48
[TENTATIVE] ORDER RE: MOTION TO VACATE ARBITRATION AWARD
On December 18, 2017, Plaintiff Rose Diplomat, LLC (“Plaintiff”) filed this action against Defendants Mary Nelsen, Emily Paine, Franklin Paine, Julianna Paine Fritz, Donald Stratton, Christine Stratton, Raymond Weamer, Joan Weamer, Pamela Hanover, Thomas Banning, Jr., William L. Banning, Patricia Hanover, Margaret Parker, Norah Gail Forgues, Terry R. Parker, and Gary W. Parker (collectively, “Defendants”) regarding rent readjustment to be determined by three appraisers pursuant to the rules of the American Arbitration Association (“AAA”). The parties conducted the arbitration. Plaintiff then filed this motion to vacate the arbitration award based on alleged misconduct by one of the three arbitrators.
On January 22, 2018, a representative of AAA notified the parties that David Gribin was invited to serve as a neutral in the matter. (Rochman Decl., Ex. 2.) On January 25, 2018, the parties received a Notice of Appointment directed to Gribin and containing his disclosures and sworn oath. (Rochman Decl. ¶ 6, Ex. 3.) The Notice of Appointment stated he had a continuing obligation to disclose past or present relationships with the parties or counsel. Gribin accepted the appointment.
On March 9, 2018, the parties agreed to stay the arbitration until the Court decided the governing method of appraisal. (Rochman Decl. ¶ 7, Ex. 4.) On April 29, 2019, the Court granted Plaintiff’s motion for summary adjudication and concluded that Humphries Investments, Inc. v. Walsh (1988) 202 Cal.App.3d 766 controlled the appraisal. On June 5, 2019, the Court granted Plaintiff’s motion to compel arbitration, ordered Plaintiff and Defendants to resume arbitration, and stayed the action pending the completion of arbitration.
During this time, from January 12, 2018 through October 7, 2019, Shelly Jay Shafron, counsel for Defendants, communicated with Gribin via telephone and email regarding Gribin’s acceptance of the arbitration position and the selection of other arbitrators. (Shafron Decl. ¶ 5 and Ex. 10; Defendants’ Compendium of Exhibits, Ex. 2 at pp. 1-2.) Shafron sent lease papers to Gribin on February 22, 2018. (Defendants’ Compendium of Exhibits, Ex. 2 at p. 1.) Also, in October 2019, Shafron’s firm retained Gribin’s appraisal firm to determine the fair market value of a property on Fountain Avenue. (Gribin Decl. ¶ 9.) Shafron’s client paid Gribin’s firm $2,500.00, of which Gribin received $362.50. (Id. at ¶ 10.)
On January 7, 2020, AAA issued a Report of Preliminary Hearing and Scheduling Order that included the provision, “There will be no ex-parte communications with the arbitrator.” (Rochman Decl., Ex. 8.)
On January 21, 2020 and May 22, 2020, Shafron spoke with Gribin about the status of arbitration and a forthcoming decision about whether experts could testify and provide reports. (Shafron Decl. ¶ 6, Ex. 10; Defendants’ Compendium of Exhibits, Ex. 2 at p. 3.)
In April 2020, Shafron’s firm retained Gribin to be the sole arbitrator for a determination of fair market rental value of a dental space at 3000 Whittier Boulevard. (Gribin Decl. ¶¶ 6-7.) Shafron’s client paid Gribin’s firm $2,500.00, of which Gribin received $812.50. (Id. at ¶ 7.)
On July 14, 2020, Shafron sent an email to Gribin with a copy of Defendants’ arbitration brief. (Rochman Decl., Exs. 12 [Exhibit 6], 13.)
On July 17, 2020, Shafron sent an email to Gribin stating, “Pursuant to our conversation, attached please find a list of questions for the arbitration panel.” On July 20, 2020, Shafron sent another email to Gribin with a corrected list of questions. The attachments contained substantive questions for the arbitrators to ask about the issues in dispute. (Rochman Decl., Ex. 12 [Exhibits 7, 7A]; Defendants’ Compendium of Exhibits, Ex. 2 at p. 3.)
The arbitration hearing was conducted on July 27-29, 2020, and AAA served an interim award on September 9, 2020. (Rochman Decl. ¶¶ 13-14 & Ex. 9.) On September 21, 2020, the parties filed applications for attorney fees before the issuance of a final award. (Id. at ¶ 15.) Through Defendants’ application, Plaintiff learned of Shafron’s ex parte communications with Gribin. (Id. at ¶ 15.) Plaintiff informed AAA, and Defendants submitted a response and evidence to AAA. (Id. at ¶¶ 15-17.) On October 2, 2020, AAA gave the parties Gribin’s supplemental disclosures, which contained information about Gribin’s two appraisals for Shafron’s firm and a few of the ex parte communications. (Id. at ¶ 18 & Ex. 13.) Plaintiff objected, and on October 9, 2020, AAA informed that parties that it had removed Gribin as an arbitrator. (Id. at ¶¶ 19-20 & Exs. 14-15.) AAA stated that pursuant to Rule 20 regarding vacancies, the remaining arbitrators would proceed with the determination of attorney fees and costs. (Id., Ex. 15.) Plaintiff objected to this process. (Id., Ex. 16.)
On October 22, 2020, Plaintiff filed this motion to vacate the arbitration award. On October 28, 2020, the remaining panel stayed the arbitration matter pending this Court’s decision. (Defendants’ Compendium of Exhibits, Ex. 18.)
The Court shall vacate an arbitration award if an arbitrator making the award “failed to disclose within the time required for disclosure a ground for disqualification of which the arbitrator was then aware.” (Code Civ. Proc., § 1286.2, subd. (a)(6).) A proposed arbitrator must 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 “[a]ny matters required to be disclosed by the ethics standards for neutral arbitrators adopted by the Judicial Council pursuant to this chapter.” (Code Civ. Proc., § 1281.9, subd (a)(2).)
Under the Judicial Council’s Ethics Standards for Neutral Arbitrators in Contractual Arbitration, “[a] proposed arbitrator or arbitrator must disclose all matters that could cause a person aware of the facts to reasonably entertain a doubt that the arbitrator would be able to be impartial, including, but not limited to . . . [if the] arbitrator or a member of the arbitrator’s immediate family is or, within the preceding two years, was an employee of or an expert witness or a consultant for a party or for a lawyer in the arbitration . . . [a]ny other professional relationship not already disclosed under [prior sections] that the arbitrator or a member of the arbitrator’s immediate family has or has had with a party or lawyer for a party,” and any other matter that “[m]ight cause a person aware of the facts to reasonably entertain a doubt that the arbitrator would be able to be impartial.” (California Rules of Court, Ethics Standards for Neutral Arbitrators, Standard 7(d)(8), (d)(9), (d)(15).) This duty to disclose is a continuing duty from service of the notice of the arbitrator’s proposed nomination or appointment until the conclusion of the arbitration proceeding. (California Rules of Court, Ethics Standards for Neutral Arbitrators, Standard 7(f).) An arbitrator must disclose any matters within 10 calendar days after he becomes aware of the matter. (Id., Standard 7(c)(2).) Additionally, “[f]rom the time of appointment until the conclusion of the arbitration, an arbitrator must not entertain or accept any offers of employment or new professional relationships as a lawyer, an expert witness, or a consultant from a party or a lawyer for a party in the pending arbitration.” (Id., Standard 12(a).)
Plaintiff contends that Gribin violated ethical standards: (1) by accepting employment with Shafron’s firm during the time the arbitration was pending; (2) not disclosing his financial relationship with Shafron’s firm; and (3) conducing ex parte communications with Shafron, including emails about questions for the hearing, and not disclosing the communications. (Motion at pp. 10-11.)
Defendants do not deny these events. Instead, Defendants first argue that the remaining arbitrators have the jurisdiction to decide if the interim award should be vacated and how to proceed, pursuant to AAA Rules 7(a) and 20. (Opposition at p. 8.) AAA Rules 7(a) and 20 do not address vacating arbitration awards and do not state that the remaining arbitrators rather than the court decides whether to vacate. Codes of Civil Procedure section 1286.2, subdivision (a) (6)expressly states that “the court shall vacate the award if the court determines” an arbitrator failed to make required disclosures. Defendants cite no law that Rules 7(a) and 20 supersede section 1286.2.
Next Defendants argue Gribin did not have actual awareness that he was required to disclose what Defendants describe as minor involvement in the unrelated projects with minimal indirect compensation. (Opposition at p. 10.) That is not the standard. “A proposed neutral arbitrator must timely disclose to the parties ‘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, without limitation, specified information.” (Mt. Holyoke Homes, L.P. v. Jeffer Mangels Butler & Mitchell, LLP (2013) 219 Cal.App.4th 1299, 1310.) The Notice of Appointment informed him of his continuing disclosure obligation and attached sections of the Ethics Standards for Neutral Arbitrators (including sections 7 and 12). (Rochman Decl., Ex. 3.) In his disclosures, Gribin circled “No” in response to the question, “While the instant arbitration is pending, will you entertain offers of employment or new professional relationships in any capacity other than as a lawyer, expert witness, or consultant from a party or a lawyer for a party, including offers to serve as a dispute resolution neutral in another case?” (Ibid.) Thereafter Gribin accept an offer from Shafron’s firm to serve as an arbitrator in another case, which he did not disclose.
Defendants argue that Gribin’s business relationships were not significant enough to disclose. (Opposition at p. 11.) Defendants’ cases do not support their position. In Casden Park La Brea Retail LLC v. Ross Dress for Less, Inc. (2008) 162 Cal.App.4th 468, an arbitrator’s $500.00 donation to the 2001 political campaign of the defendant’s party arbitrator did not require disclosure during a 2005 arbitration proceeding. (Id. at pp. 474, 477.) The arbitrator also had no duty to disclose his employer’s dealings with the other arbitrator because he had “no pecuniary interest in profits generated by his employer’s business relationship with a party or a party’s representative.” (Id. at p. 478.) In Michael v. Aetna Life & Cas. Ins. Co. (2001) 88 Cal.App.4th 925, the appraiser did not know that the defendant was the source of funds for his services in another matter. (Id. at pp. 941.) In Howev Guseinov v. Burns (2006) 145 Cal.App.4th 944, the arbitrator was not required to disclose that he previously served as a volunteer mediator in another unrelated matter in which the plaintiff’s counsel represented someone else. (Id. at p. 958.) In Ray Wilson Co. v. Anaheim Memorial Hospital Assn. (1985) 166 Cal.App.3d 1081, the defendant objected to the arbitrator due to the arbitrator’s disclosed relationship with the plaintiff’s subcontractor. (Id. at pp. 1086-1087.) The arbitrator remained on the panel, but the court later granted the defendant’s motion to vacate the award. (Id. at pp. 10-84-1085.) The appellate court reversed and found that an acquaintance relationship between an arbitrator and a party did not require vacating the award and membership in the same professional organization was not a credible basis for inferring bias. (Id. at pp. 1087-1088; see San Luis Obispo Bay Properties, Inc. v. Pacific Gas & Elec. Co. (1972) 28 Cal.App.3d 556, 567.) In Comerica Bank v. Howsam (2012) 208 Cal.App.4th 790, the court addressed whether the award should be vacated as secured through corruption, fraud, or other undue means pursuant to section 1286.2, subdivision (a)(1), not due to failure to disclose pursuant to section 1286.2, subdivision (a)(6). (Id. at p 824-825.)
Defendants then argue that the communications with Gribin before the January 7, 2020 Preliminary Hearing Order were harmless and permitted, and later communications were courtesy and administrative matters that did not prejudice Plaintiff. (Opposition at p. 14.) Although some ex parte communications about “administrative matters, such as setting the time and place of hearings or making other arrangements for the conduct of the proceedings” are permitted, the arbitrator must promptly inform the other parties and give them an opportunity to respond. (California Rules of Court, Ethics Standards for Neutral Arbitrators, Standard 14(b).) Even if some of the ex parte communications were purely administrative, Gribin’s failure to disclose them was a violation. Shafron’s list of substantive questions to ask during the arbitration hearing was not purely administrative and is certainly the type of matter that could cause a person to reasonably doubt that the arbitrator would be able to be impartial. (See Code Civ. Proc., § 1281.9, subd (a)(2).)
Because Gribin did not timely disclose grounds for disqualification and matters required to be disclosed by ethics standards, the interim arbitration award must be vacated. (Code Civ. Proc., §§ 1281.9, subd (a)(2), § 1286.2, subd. (a)(6).)
Finally, Defendants contend that if the Court vacates the award, the other two arbitrators on the panel should not be prevented from participating in future proceedings because AAA Rule 20 provides for their continued involvement. (Opposition at pp. 5-6, 15.) Upon vacating an award, a court may order rehearing before a new panel. (Code Civ. Proc., § 1287.) Because the Court cannot determine that Gribin’s potential bias and ex parte communications did not unfairly impact the arbitration proceedings, deliberations with the other arbitrators, and interim award, rehearing before a new panel is appropriate. (Wheeler v. St. Joseph Hospital (1976) 63 Cal.App.3d 345, 372.)
Accordingly, the motion to vacate arbitration award is GRANTED. The interim arbitration award issued on September 9, 2020 is VACATED. Plaintiff and Defendants are ordered to arbitrate this matter before a new panel. The Court sets a status conference re arbitration for January 20, 2021 at 8:30 a.m.
Plaintiff is awarded its costs and contractual attorney fees incurred in connection with this motion, subject to the filing of a noticed fee motion. (Code Civ. Proc., § 1293.2.)
Moving party to give notice.
Parties who intend to submit on this tentative must send an email to the Court at SMCDEPT48@lacourt.org indicating intention to submit. Parties intending to appear are STRONGLY encouraged to appear remotely.