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TRAIL ASSET MANAGEMENT, LLC v. OLEN COMMERCIAL REALTY ENCUMBRANCE I CORP., G044312. (2011)

Court: Court of Appeals of California Number: incaco20110728086 Visitors: 14
Filed: Jul. 28, 2011
Latest Update: Jul. 28, 2011
Summary: NOT TO BE PUBLISHED IN OFFICIAL REPORTS OPINION MOORE, J. Appellant has many complaints about an arbitrator, but has not provided the court with evidence it was substantially prejudiced by any of the arbitrator's rulings. The superior court did not err in confirming the arbitrator's award. We affirm. I FACTS Trail Asset Management, LLC, as successor in interest to Trail Properties, LLC, (collectively referred to as Trail), respondent, and Olen Commercial Realty Encumbrance I Corp. (Olen),
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NOT TO BE PUBLISHED IN OFFICIAL REPORTS

OPINION

MOORE, J.

Appellant has many complaints about an arbitrator, but has not provided the court with evidence it was substantially prejudiced by any of the arbitrator's rulings. The superior court did not err in confirming the arbitrator's award. We affirm.

I

FACTS

Trail Asset Management, LLC, as successor in interest to Trail Properties, LLC, (collectively referred to as Trail), respondent, and Olen Commercial Realty Encumbrance I Corp. (Olen), appellant, had a dispute concerning the valuation of property as the expiration of a lease approached. The lease stated disputes about the fair market value of the leased land "shall be determined by arbitration" before three arbitrators. The parties agreed to use a single arbitrator instead and selected Robert Thomas. The arbitration was scheduled for April 15, 2010.

On April 1, the parties exchanged witness lists. Trail informed Olen it objected to witnesses other than Olen's two appraisers, and "that if the Arbitrator were to allow such additional witnesses to testify, Trail would request the right to take their depositions." At an arbitration management conference, Trail renewed its objection to the five additional witnesses listed by Olen. The arbitrator ruled the witnesses could testify if Olen made arrangements for their depositions as soon as possible prior to the arbitration. Two of the witnesses were made available and their depositions were taken by Trail on April 9 and April 12. The remaining three witnesses were not made available.

On April 12, the arbitrator ruled that any witness failing to submit to a deposition before the arbitration would be excluded from testifying at the arbitration. On April 14, 2010, Olen's lawyer, Julie A. Ault, wrote a letter to the arbitrator and Trail's counsel: "This correspondence shall constitute a notice of withdrawal by Olen Commercial Realty Encumbrance I Corp. from the above referenced arbitration proceedings. Said proceedings were entered into on a voluntary basis on the prospect that such a forum would provide a full, fair and swift resolution to the disputes which have arisen under the terms of the subject lease. To my client's dismay, such a forum has not been provided due to the unorthodox manner in which this matter has proceeded as well as the unwarranted restrictions placed upon Olen in its presentation of evidence. [¶] Olen Commercial Realty Encumbrance I Corp. will be asserting all its claims arising out of the subject ground lease in the Superior Court forthwith."

Also on April 14, the arbitrator held a telephone conference to discuss Olen's letter purporting to withdraw from the arbitration. The arbitrator ruled the depositions of the other three witnesses could be taken on the day they were each scheduled to testify, prior to their testifying at the arbitration. The arbitrator also ruled the arbitration would go forward on April 15.

On April 15, 2010, the arbitration commenced. Olen did not appear. The arbitrator's final award, included costs and attorney fees of $109,489.75. Trail filed a petition to confirm the arbitration award.

Olen's opposition included a "request to vacate or in the alternative to correct the arbitration award." The declaration of Ault is attached to the opposition. In it, Ault states that Olen "expended time, energy and funds in good faith to present the support for its opinion as to the valuation of the Property in the informal proceeding," and that Olen "was summarily denied access to a full and fair presentation of the evidence in its case by how the procedure was actually conducted by the Arbitrator." She uses such phrases as "various necessary individuals," also states a few times the witnesses excluded were material. Ault's declaration goes on to say that "Olen was unable to force all of its witnesses to appear in such a short time frame."

The superior court confirmed the arbitrator's award. Judgment was entered on September 22, 2010.

On appeal, Olen argues the superior court erred when it did not vacate the award because the arbitrator excluded witnesses and refused to postpone the arbitration, and that it was substantially prejudiced. It also argues the award must be corrected because there was no contractual agreement to support the award of attorney fees.

II

DISCUSSION

Standard of Review

"We conclude that when, as here, an arbitrator exercises discretion in denying a continuance request, there are two issues to be resolved in vacatur proceedings. First, the trial court must determine whether the arbitrator abused his or her discretion by refusing to postpone the hearing upon sufficient cause being shown. Second, if there was an abuse of discretion, the trial court must determine whether the moving party suffered substantial prejudice as a result. Moreover, on appeal from the trial court's order granting or denying a request to vacate the arbitration award, our review is de novo. In other words, in this case, we must consider whether the arbitrators abused their discretion and there was substantial prejudice in denying plaintiff's continuance motion. Only if the arbitrators abused their discretion and there was resulting prejudice could the trial court properly vacate the arbitration award. As noted, in the face of disputed evidentiary matters, we apply the differential substantial evidence test." (SWAB Financial, LLC v. E*Trade Securities, LLC (2007) 150 Cal.App.4th 1181, 1198.)

Prejudice

Olen claims it was substantially prejudiced by the arbitrator's rulings, and contends the court is required to vacate an arbitration award pursuant to Code of Civil Procedure section 1286.2, subdivision (a)(5). (All further statutory references are to the Code of Civil Procedure.) But Trail points out that Olen never offered any evidence of what its witnesses were expected to say and that "Olen does not claim on appeal that it presented evidence of non-cumulative testimony from . . . witnesses, either in the arbitration or in the trial court below. It only offers evidence that Olen held an opinion that the witnesses would offer relevant testimony . . . ." Trail further states: "Olen cannot prevail because it never made an offer of proof to the arbitrator (or the trial court below) that the witnesses had material non-cumulative testimony to offer. In addition, because the arbitration was a valuation, where the appraisal evidence predominates, without any proof of the three witnesses' expected testimony or the witnesses' potential impact on the competing appraisals, Olen cannot show the requisite substantial prejudice necessary to overturn the arbitration award."

"Every reasonable intendment will be indulged to give effect to arbitration proceedings. [Citations.] Therefore, an award will not be vacated for any error that does not prejudice the rights of the party complaining. [Citation.]" (Davey Tree Surgery Co. v. International Brotherhood of Electrical Workers (1976) 65 Cal.App.3d 440, 450.)

Ault's declaration in opposition to the motion to confirm and in support of her motion to vacate the arbitration award is the only evidence we were able to find in the record relating to the evidence Olen claims was excluded.1 Failure to provide citation to the record is a violation of California Rules of Court, rule 8.204(a)(1)(C). Any point raised that lacks citation to the record may be deemed waived. (Del Real v. City of Riverside (2002) 95 Cal.App.4th 761, 768.)

In her declaration, Ault does not state who the witnesses were, what they were expected to say, why they were essential, what efforts were made to secure their depositions in order to comply with the arbitrator's order. In other words, she asked the superior court, and asks this court, to take her word regarding all these matters, despite the statutory mandate requiring the court to make a determination petitioner was "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." (§ 1286.2, subd. (a)(5).)

We conclude there is no showing in this record that Olen was substantially prejudiced by anything done by the arbitrator. Accordingly, we need not address the numerous allegations of arbitrator error other than attorney fees.

Attorney Fees

Olen argues the arbitrator's award of attorney fees must be corrected because there was no contractual agreement for fees. Trail says the ground lease provides for prevailing party attorney fees.

The lease states: "In the event either Lessor or Lessee shall bring any action or proceeding for damages for an alleged breach of any provision of this Lease, to recover rents, or to enforce, protect or establish any right or remedy of either party, the prevailing party shall be entitled to recover as a part of such action or proceedings reasonable attorneys' fees and court costs." The arbitrator here apparently interpreted the agreement to provide for an award of attorney fees against Olen.

In Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, the California Supreme Court concluded parties to an arbitration have a strong expectation of finality in the arbitration process, requiring that "judicial intervention in the arbitration process be minimized." (Id. at p. 10.) An arbitration award must be upheld "so long as it was even arguably based on the contract . . . ." (Advanced Micro Devices, Inc. v. Intel Corp. (1994) 9 Cal.4th 362, 381.)

The essence of Olen's argument is that the arbitrator wrongly interpreted the lease contract, but this type of "contractual interpretation is precisely the type of decision by an arbitrator to which courts must grant deference. Under Moncharsh and Advanced Micro Devices, this decision was within the province of the arbitrator." (Delaney v. Dahl (2002) 99 Cal.App.4th 647, 656.)

III

DISPOSITION

The judgment is affirmed. Trail shall recover its costs on appeal.

WE CONCUR:

RYLAARSDAM, ACTING P. J.

FYBEL, J.

FootNotes


1. An unverified witness list of Olen is attached as exhibit A to exhibit 14 to Trail's petition to confirm the arbitration award. No declaration describes exhibit A to exhibit 14. Nor is reference to exhibit A to exhibit 14 cited on appeal, except in Olen's reply brief. Aside from being unverified, the list provides no details about which two witnesses were produced for deposition or which three remained undeposed, why the remaining three witnesses were essential to Olen's case or why they could not be deposed on the days they were scheduled to testify at the arbitration.

In its reply brief, Olen also cites to pages 203-206 in the clerk's transcript on appeal. Those pages appear to be part of exhibit 15 to Trail's petition to confirm the arbitration award. Once again, the items stated on those pages are not under oath. And again the pages do not explain how Olen was prejudiced by the arbitrator's rulings.

Source:  Leagle

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