WOODS, J.
The appeal is from a judgment of the Los Angeles County Superior Court confirming an arbitration award. For the reasons hereafter stated, we affirm the judgment.
On November 11, 2002, a written agreement between Science of Mind Publishing (SOM")
The agreement contained an arbitration clause worded as follows:
SOM appeals, contending that the arbitrator exceeded his powers, exceeded subject matter jurisdiction and exercised discretion where none existed. As stated previously, we find no error and affirm the judgment in its entirety.
Thornton became head of advertising sales for Science of Mind Magazine in November 2002 and continued in that position through the end of 2008. Her prior employment had been as a fundraiser for a nonprofit charity. Thornton entered into a simple commission-based contract in the Fall of 2002, enabling her to receive a flat 15 percent on all advertising she placed with the magazine. Essentially this would enable her to receive a 15 percent commission on both new advertisers she obtained for the magazine as well as two preexisting advertisers, Hay House and Ponder. The contract had an effective date of November 14, 2002.
SOM and Thornton's client list soon numbered close to 100 advertisers. Thornton established ongoing and often personal relationships with her clients so that many placed ads in multiple issues of Science of Mind magazine, garnering it hundreds of thousands of dollars in advertising revenues.
The Thornton-SOM agreement was drafted by SOM. The contract states at paragraph 7 that "SOM agrees to pay Contractor commissions owed for any given publishing period within 15 calendar days of the close of such publishing period. Additionally, SOM agreed "to pay [Thornton] commission for any approved advertising contracts secured by [Thornton] which are still in effect when the final agreement is terminated, until the end of said advertising contracts." Thornton accepted the habit of being paid after SOM was paid by advertisers. The contract did not require this. The contract also provided that after 90 days, "[E]ither party had the right to terminate the Agreement without further notice."
In mid-2008, SOM's management changed hands and it made the decision to move from Burbank, California to Golden, Colorado. Thornton's position was eliminated and she was terminated in June 2008; the parties continued this termination date to October 31, 2008, during which time Thornton continued selling space for ads that were to run the remainder of 2008 and throughout 2009. Thornton eventually developed a conflict with one Donna Mosher, purportedly an inexperienced editor, and on November 5, 2008, Thornton was forbidden to represent SOM.
As collection problems developed in late 2008, SOM's new management withheld Thornton's commissions, refused to provide her with a proper accounting, and offered her insubstantial sums for a release of all her rights against SOM.
Thornton estimated that SOM owed her $33,737.80, none of which had been paid to her. SOM refused to pay or to mediate the dispute.
On August 27, 2009, Thornton filed a claim with the American Arbitration Association (AAA) under the contract's arbitration clause, requesting an amount (including a future commissions estimate) of $38,980.05. Thornton contended that there were at least 13 accounts for which commissions were owed for 2008 and 2009.
The contract's arbitration clause is exactly the "short form" arbitration clause recommended by the AAA. It states: "Any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be settled by arbitration administered by the American Arbitration Association in accordance with its Commercial [or other] Arbitration Rules [including the Optional Rules for Emergency Measures of Protection], and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof."
The arbitrator found that Thornton had introduced numerous exhibits showing it was customary for the magazine to accept unsigned, undated invoices throughout 2008-2009, contrary to SOM's contention Thornton should not have accepted "unsigned contracts." Prejudgment interest was calculated at 10 percent per annum, amounting to $2,893.62. The arbitrator went on to find that Thornton established successful accounts with approximately 85 advertisers, and that commissions due her amount to $15,064.30 for 2008 and $18,673.50 for 2009. The award also included an order that SOM was to pay "15% on all future advertising sales for all ads placed by the 85 Thornton `new advertisers' which are actually published in SOM commencing with the January 2010 issue . . ." and continuing thereafter, and an attorneys' fees award of $45,000.
Thornton filed a petition and then an amended petition to confirm the award. SOM filed a cross-petition to correct or vacate the award. Both petitions were heard on May 6, 2010. The trial court confirmed the award and denied SOM's petition to vacate or correct the award. After the hearing, Thornton filed a motion for post-petition attorneys' fees and costs. SOM opposed the motion. The motion for attorneys' fees was heard and granted on July 22, 2010, in the reduced sum of $18,545.63. Judgment was entered on all orders on July 22, 2010. Notice of entry of judgment was also served July 22, 2010.
SOM filed a timely notice of appeal.
SOM appeals from the orders entered May 6, 2010 and July 22, 2010, and judgment entered thereon contending the following:
The parties are in disagreement as to the standard of review. Both parties are partially correct. Thornton maintains that the standard of review is under the well known standard of substantial evidence supportive of the judgment. SOM, on the other hand, contends by and large, that the standard is de novo review.
We look initially to Code of Civil Procedure section 1286.2 for the stated grounds authorizing vacation of an award. The only ground relevant to the facts of this case are set forth in Code of Civil Procedure section 1286.2, subdivision (4) as follows: "(4) The arbitrators exceeded their powers and the award cannot be corrected without affecting the merits of the decision upon the controversy submitted."
We find the "substantial evidence" standard of review to be accurately stated by Thornton where she states as follows:
"It is the court's confirmation of the award — not the arbitration itself — which is reviewed by this Court. [(Toal v. Tardif (2009) 178 Cal.App.4th 1208, 1217.)] To the extent the trial court's ruling and the arbitrator's ruling, rest upon a determination of disputed factual issues, the Court of Appeal does not apply a de novo standard, but rather a substantial evidence test to those issues. [(Ibid.)] The reviewing court accepts the trial court's (in this case an arbitrator's) resolution of disputed facts when supported by substantial evidence and presumes the court found every fact and drew every permissible inference necessary to support its judgment [the `Substantial Evidence Standard']. [(Betz v. Pankow (1993) 16 Cal.App.4th 919, 923.)] To the extent that there are factual findings, the Court of Appeal reviews the superior court's relevant findings of fact under this highly deferential standard of review. [(Agri-Systems, Inc. v. Foster Poultry Farms (2008) 168 Cal.App.4th 1128, 1140; Luce, Forward, Hamilton & Scripps LLP v. Koch (2008) 162 Cal.App.4th 720, 734; Guseinov v. Burns (2006) 145 Cal.App.4th 944, 957; Reed v. Mutual Service Corp. (2003) 106 Cal.App.4th 1359, 1365.)]"
All of SOM's contentions are governed by the substantial evidence standard of review with the exception of contention number 10 to which we apply the de novo standard of review in determining whether the arbitration clause is binding. The issue is given life on appeal in view of the lack of a statement in the arbitration agreement that "binding arbitration" is intended.
As stated by Thornton, "In enacting Title 9 of the Code of Civil Procedure, the Legislature expressed a `strong public policy in favor of arbitration as a speedy and relatively inexpensive means of dispute resolution.' [(Moncharsh v. Heily & Blasé (1992) 3 Cal.4th 1, 9.)] The Courts will `indulge every intendment to give effect to such proceedings.' [(Ibid.)] There is a presumption favoring the validity of an arbitration award and appellant bears the burden of establishing the invalidity of the award. [(Betz v. Pankow (1993) 16 Cal.App.4th 919, 923.)]
"Arbitration judgments are subject to extremely narrow judicial review and the exclusive grounds for vacating an arbitration award are the statutory grounds set forth in Section 1286.2 of the Code of Civil Procedure. [(Marsch v. Williams (1994) 23 Cal.App.4th 238, 243-244, citing Moncharsh v. Heily & Blasé, supra, 3 Cal.4th at p. 11, `[I]n the absence of some limiting clause in the arbitration agreement, the merits or the award, either on questions of fact or law, may not be reviewed except as provided in the statute.'; Pearson Dental Supplies, Inc. v. Superior Court (2010) 48 Cal.4th 665, 676 quoting Moncharsh v. Heily & Blasé, supra, 3 Cal.4th at p. 25, `Unless one of the enumerated grounds exists, a court may not vacate an award even if it contains a legal or factual error on its face which results in a substantial injustice.'; . . . Haworth v. Superior Court (2010) 50 Cal.4th 372, 380.)]"
In its award, the arbitrator found the following facts, all supported by evidence contained in the record, as follows: "I, THE UNDERSIGNED ARBITRATOR, having been designated in accordance with the arbitration agreement entered into between the Claimant JOAN THORNTON and Respondent UNITED CHURCH OF RELIGIOUS SCIENCE dba SCIENCE OF MIND PUBLISHING, a California Non-Profit Corporation dated November 11, 2002, and having been duly sworn, and a hearing having been held on January 26, 2010, and having heard sworn testimony and reviewed written evidence and briefs submitted by both sides, David Z. Ribakoff, Esq. appearing for Claimant and Michael J. Lancaster, Esq. appearing for Respondent, hereby issues the following Award:
On November 11, 2002, Claimant and Respondent entered into a written agreement (`the Agreement'), drafted by Respondent, under which Claimant agreed to sell advertising on a commission basis for Respondent's magazine `Science of Mind' (`SOM'). Respondent agreed to pay Claimant a `15% commissions on all advertising sales' for `all new advertisers,' which were defined as clients that were not advertising in the issue of SOM that was current as of the signing of the Agreement, as well as Hay House and Ponder.
"Respondent agreed to pay Claimant `commissions owed for any given publishing period within 15 calendar days of the close of said publishing period.'
"Respondent also agreed `to continue to pay [Claimant] commissions for any approved advertising contracts secured by [Claimant] which are still in effect when the final agreement is terminated, until the end of said advertising contracts.'
"After 90 days, either party had the right to terminate the Agreement without further notice.
"The parties operated under the Agreement for about five and a half years. By that point, Claimant had generated a client list of approximately 85 advertisers. Virtually all of these advertisers would place orders verbally which orders were confirmed by an `Advertising Insertion Order Invoice' (`the Invoice'). Although the Invoice had a place for the advertiser to sign and insert the date, no Invoices signed by any advertisers were introduced in evidence, and Claimant introduced numerous Invoices covering 2008 and 2009, none of which were signed.
"Although the Agreement provided that Respondent would pay Claimant `commissions owed for any given publishing period within 15 calendar days of the close of said publishing period,' the parties got in the habit of paying Claimant after amounts were paid by the advertisers.
"In or about June, 2008, ownership of the magazine changed hands and operations moved to Colorado. The new management terminated Claimant in June 2008, however the parties agreed to extend the termination date to October 31, 2008, during which time Claimant continued to sell advertising to run in 2008 and 2009. On November 5, 2008, Respondent gave Claimant written notice to `immediately cease and desist from any and all representations' of SOM.
"Based on the advertising actually run in SOM in 2008 and 2009, Claimant calculated that the commissions due to her for 2008, less what she had been paid, came to $15,064.30 and for 2009, for which she has not been paid anything, came to $18,673.50.
"Claimant established that the following were new advertisers which she secured:
"Respondent did not contest the foregoing list.
"Despite having claimed at the outset of the Hearing that Claimant was not owed any further commissions whatsoever, by the end of the Hearing, Respondent conceded that Claimant was owed $9,793.62 for 2008. In an Amended Arbitration Brief filed the day after the Hearing, Respondent also conceded that Claimant was owed $2,059.65 for 2009. Consequently, Respondent concedes that on its own theory of the case, Claimant is owed $11,853.27.
"Initially, Respondent argued that the arbitration clause in the Agreement was incomplete, unenforceable, unconstitutional and non-binding. At the conclusion of the Hearing, Respondent withdrew all of these defenses."
This court notes that the aforementioned list of 85 Thornton new advertisers went uncontested by SOM during the arbitration hearing but we deem it prudent to recapitulate the categories of evidence adduced by Thornton and considered by the arbitrator as substantial evidence and supportive of the award:
We discern that the near gravamen, if not the gravamen, of SOM's appeal pertains to the finding of the arbitrator entitling Thornton to future damages on the 85 new advertisers, uncontestedly acquired by Thornton during the contract period. We note that in the amended arbitration demand, Thornton sought past due, unpaid commissions for ads purchased by self-developed clients based on produced bills for 2008-2009 and "declaratory relief as to commission on future ad sales" as well as other relief. This was precisely the relief which the arbitration award granted Thornton, based both upon Thornton's amended arbitration demand and the specific language in the parties' contract, as interpreted by the arbitrator.
The arbitration clause allowed the arbitrator broad powers in fashioning relief that he in fact granted. The clause specifically incorporated the AAA Commercial Arbitration Rules which "has been described as `a broad grant of authority to fashion remedies.'" (Advanced Micro Devices, Inc. v. Intel Corp. (1994) 9 Cal.4th 362, 383-384.) Because the arbitrator stayed within the scope of the clause, it would be a quantum leap in logic for this court to hold that the arbitrator exceeded his powers in awarding future damages to Thornton based on the conceded 85 new customer list aforementioned. As our high court stated in Advanced Micro Devices, Inc., "[A]rbitrators, unless expressly restricted by the agreement of the parties, enjoy the authority to fashion relief they consider just and fair under the circumstances existing at the time of arbitration, so long as the remedy may be rationally derived from the contract and the breach . . . . It follows the parties entering into commercial contracts with arbitration clauses, if they wish the arbitrator's remedial authority to be specially restricted, would be well advised to set out such limitations explicitly and unambiguously in the arbitration clause." (Id. at pp. 383-389; italics in original.) The arbitration clause at issue contains no restrictions on the arbitrator's powers to fashion relief.
Additionally, an arbitrator's choice of remedy may be based not only on legal rules, but on broad principles of justice and equity. "The choice of remedy, then, may at times call on any decisionmaker's flexibility, creativity and sense of fairness. In private arbitrations, the parties have bargained for the relatively free exercise of those faculties." (Advanced Micro Devices, Inc. v. Intel Corp., supra, 9 Cal.4th at pp. 374-375.) "Were courts to reevaluate independently the merits of a particular remedy, the parties' contractual expectation of a decision according to the arbitrators' best judgment would be defeated." (Id. at p. 375.)
Even if the court had agreed with SOM's motions and ignored facts and law, awards must be confirmed and arbitrators "do not exceed their powers merely by rendering an erroneous decision on a legal or factual issue, so long as the issue was within the scope of the controversy submitted to the arbitrators." (Taylor v. Van-Catlin Constr. (2005) 130 Cal.App.4th 1061, 1065-1066.) As stated by the California Supreme Court, "arbitrator decisions cannot be judicially reviewed for errors of fact or law even if the error is apparent and causes substantial injustice." (Moncharsh, supra, 3 Cal.App.4th at p. 25.)
For all the foregoing reasons, the arbitrator clearly acted within his powers and the court was correct in affirming the award. Consonant with the findings of the arbitrator and the trial court, this court finds substantial evidentiary and legal support in awarding future damages to Thornton.
SOM makes the argument that because the arbitration clause "[d]oes not state that it is binding, on its face . . . it is not." First, the word "binding" does not need to be present in the arbitration clause for the arbitration to be a binding proceeding. By definition, if judgment can be rendered on an arbitration award, it must be the result of binding arbitration. There is no authority or logic to the contrary. In fact, California courts have stated that "the well established rule is that parties to a private arbitration impliedly agree that the arbitrator's decision will be both binding and final. (Evans v. CenterStone Development Co. (2005) 134 Cal.App.4th 151, 159.)
Second, as noted in the Arbitration Award, SOM entirely waived its argument that the arbitration was non-binding. As the Moncharsh decision states, "[e]ven in the absence of an explicit agreement, conclusiveness is expected; the essence of the arbitration process is that an arbitral award shall put the dispute to rest." (Moncharsh, supra, 3 Cal.4th at p. 10 quoting Comment, Judicial Deference to Arbitral Determinations: Continuing Problems of Power and Finality (1976) 23 UCLA L.Rev. 948-949.)
Third, since the arbitration agreement, and indeed the entire contract was written by SOM, any ambiguity or uncertainty in the document will be construed against SOM as the drafter. As stated in Civil Code section 1654, "[i]n cases of uncertainty not removed by the preceding rules, the language of a contract should be interpreted most strongly against the party who caused the uncertainty to exist."
Accordingly, the mere absence of the adjective "binding" from an arbitration/agreement does not make decisions rendered according to the agreement non-binding, and the trial court was correct in rejecting SOM's contention.
The judgment and orders are affirmed. Respondent to recover costs of appeal.
We concur:
PERLUSS, P.J.
ZELON, J.
