Opinion
B297865
04-15-2020
FOCUS ONE REHAB SERVICES, INC., Plaintiff and Respondent, v. ROSE GARDEN SUBACUTE & REHABILITATION et al., Defendants and Appellants.
Ronald D. Tym for Defendants and Appellants. Gore & Associates and Mark J. Sarni for Plaintiff and Respondent.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Los Angeles County Super. Ct. No. BS171619) APPEAL from a judgment of the Superior Court of Los Angeles County. Holly J. Fujie, Judge. Affirmed. Ronald D. Tym for Defendants and Appellants. Gore & Associates and Mark J. Sarni for Plaintiff and Respondent.
Appellants Rose Garden Subacute & Rehabilitation Center, LLC (Rose Garden), Legacy Healthcare Center, LLC (Legacy), Serrano Healthcare, LLC (Serrano), Serrano Post Acute, LLC (Serrano Post), and Maclay Healthcare, LLC (Maclay) (collectively, defendants) appeal from the judgment confirming an arbitration award of approximately $1.5 million in favor of respondent Focus One Rehab Services, Inc. (plaintiff). We affirm the judgment.
Rose Garden is also known as Rose Garden Subacute or Rose Garden Convalescent Center; Legacy is also known as Legacy Healthcare, LLC or Legacy Care of Pasadena; Serrano is also known as Serrano Healthcare, Serrano North Convalescent Hospital, or Hollywood Premier Healthcare Center; Serrano Post is also known as Serrano Post Acute, Serrano South Convalescent Hospital or Palazzo Post Acute; and Maclay is also known as Maclay Healthcare Center or Lifehouse Maclay Healthcare Center.
BACKGROUND
Plaintiff filed a complaint and a verified petition to compel arbitration against defendants on November 22, 2017. The complaint asserted causes of action for breach of contract, account stated, open book account, goods and services rendered, and quasi-contract for amounts owed under written contracts. Attached to the complaint were copies of five contracts between plaintiff and each of the defendants. Each contract contained an arbitration clause. Only two of the five contracts bore a defendant's signature; however, the complaint alleged that all parties had acted upon the contracts, whether or not signed, as if they were in full force and effect.
Plaintiff subsequently located two additional signed contracts and provided them to defendants as attachments to a declaration in support of an application for writ of attachment filed in the superior court on March 22, 2018. --------
Defendants filed an answer to the complaint on January 24, 2018, generally denying the allegations. They did not respond to the petition seeking to compel arbitration; however, they remitted payment to the American Arbitration Association in February 2018 for their portion of the arbitration fees.
On March 7, 2018, defendants' counsel sent an email to the American Arbitration Association denying the allegations in plaintiff's demand for arbitration, incorporating by reference the entirety of the answer defendants filed in the superior court, and attaching a copy of the answer. In a March 19, 2018 email exchange, defendants' counsel agreed that plaintiff's counsel should inform the superior court clerk that the parties had agreed to arbitrate their dispute. Defendants' counsel filed a case management statement in the superior court in March 2018 indicating that the parties had agreed to participate in binding private arbitration.
The parties selected Michael Roth as the arbitrator. On May 1, 2018, the arbitrator issued a scheduling order regarding discovery. Pursuant to that order, plaintiff served on defendants form interrogatories, special interrogatories, a request for admissions, and a request for production of documents.
In their discovery responses, defendants admitted that (1) the contracts attached to plaintiff's complaint were the agreements between the parties and there were no modifications to those agreements; (2) there was no breach of any of the agreements; (3) performance under the agreements was not excused; (4) no agreement had been terminated; (5) no agreement was unenforceable; and (6) no agreement was ambiguous. A dispute arose between the parties, however, concerning the sufficiency of defendants' discovery responses generally.
The disputed discovery issues were the subject of a case management conference before the arbitrator on July 6, 2018. Shortly before that date, defendants' current counsel substituted in as defendants' counsel of record. After the case management conference, the arbitrator issued a supplemental order requiring defendants to produce additional information and documents by July 27, 2018.
On July 27, 2018, defendants' counsel informed the arbitrator and plaintiff's counsel that defendants were filing motions in the superior court for a protective order to stay discovery in the arbitration and to lift the court stay of the civil case based on misrepresentations by plaintiff's counsel regarding defendants' obligation to arbitrate, unsigned and unenforceable contracts between the parties, and poor advice by defendants' former counsel. Defendants asked the arbitrator to stay the arbitration pending the court's ruling on the intended motions. The arbitrator denied that request.
On August 1, 2018, defendants filed their motion for a protective order in the superior court. The court denied the motion.
Defendants served supplemental responses to plaintiff's discovery requests on July 30 and 31, 2018. In their supplemental responses, defendants denied the existence of any contracts with plaintiff and any binding arbitration provisions. Plaintiff thereafter filed with the arbitrator a motion for terminating sanctions, or in the alternative, for issue/evidentiary sanctions, based on defendants' breaches of the discovery orders. Defendants opposed the motion.
The arbitrator issued tentative rulings in September 2018 stating that he would grant plaintiff's request for issue sanctions based on defendants' material failure to comply with discovery orders and their "continuing pattern of failing to act in good faith with respect to the discovery process." The tentative rulings included the following factual findings: plaintiff timely provided monthly invoices to defendants; defendants made no payments to plaintiff on invoices for services rendered from May 1, 2017 to November 19, 2017; defendants never disputed those invoices, but represented to plaintiff that the invoices would be paid in full; plaintiff only billed defendants for services actually provided and did not bill defendants for services that were not requested by them, and plaintiff competently performed all services for which it invoiced defendants. Based on those findings, the arbitrator concluded that plaintiff had established the elements of its account stated cause of action.
Defendants filed a written opposition to the arbitrator's tentative rulings, arguing that the rulings exceeded the arbitrator's authority. Defendants further argued that they had never agreed to arbitrate.
On October 22, 2018, the arbitrator issued a written ruling adopting his previous tentative rulings. The arbitrator rejected defendants' argument that he had exceeded his authority by imposing issue sanctions, resulting in findings of fact that established plaintiff's account stated cause of action. The arbitrator also rejected defendants' claim that no valid arbitration agreement existed, noting that the arbitration was "replete with communications" between the parties that "flatly contradict" that claim. The arbitrator further noted that defendants had participated in the arbitration and that their counsel had not limited defendants' participation by making a special appearance for the sole purpose of contesting the arbitrator's jurisdiction.
On December 6, 2018, the arbitrator issued a final award against defendants as follows: $237,047.99 against Rose Garden, $178,325.91 against Legacy, $287,835.30 against Serrano, $305,008.14 against Serrano Post, and $466,345.30 against Maclay.
Plaintiff filed in the trial court a petition to confirm the arbitration award. Defendants opposed the petition, arguing, among other things, that plaintiff had fraudulently induced them into submitting to arbitration by falsely representing that binding arbitration agreements existed. Defendants claimed that no valid arbitration agreements existed because the contracts attached to plaintiff's petition to compel arbitration were unsigned and referred to defendants by different names. The trial court rejected those arguments and granted plaintiff's petition to confirm the arbitration award. Judgment was subsequently entered in plaintiff's favor. This appeal followed.
CONTENTIONS ON APPEAL
Defendants contend the arbitrator exceeded his authority by proceeding with the arbitration after defendants sought to withdraw from the arbitration. Defendants further contend the trial court committed reversible error by not making a determination as to whether enforceable agreements to arbitrate existed before confirming the arbitration award.
DISCUSSION
I. Arbitrator's authority
Code of Civil Procedure section 1286.2, subdivision (a) sets forth the exclusive grounds for vacating an arbitrator's award. These include circumstances in which the arbitrator acts in excess of his or her authority. (§ 1286.2, subd. (a)(4).) We review de novo defendants' contention that the arbitrator acted in excess of his powers. (Advanced Micro Devices, Inc. v. Intel Corp. (1994) 9 Cal.4th 362, 376, fn. 9.) While our review is de novo, the scope of that review is very narrow. (Moshonov v. Walsh (2000) 22 Cal.4th 771, 775.) A court cannot review an arbitrator's decision for errors of fact or law. (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 11 (Moncharsh).) In addition, a court cannot review the sufficiency of the evidence supporting an arbitrator's award. (Ibid.)
Arbitration is a matter of contract, and as such, whether a particular dispute is subject to arbitration is strictly a matter of the parties' consent. (Douglass v. Serenivision, Inc. (2018) 20 Cal.App.5th 376, 386 (Douglass).) Under California contract law, a contract may be express (either written or oral) or implied in fact (its existence and terms "manifested by conduct"). (Civ. Code §§ 1619-1621; Douglass, at p. 387.) Accordingly, parties may expressly agree to arbitration in a contract signed before a dispute arises. (Douglass, at p. 387.) Alternatively, "parties may enter into an implied in fact agreement to arbitrate through their conduct (which may additionally be deemed to estop them from denying such an agreement). [Citation.]" (Ibid.) Consent to arbitration will not be inferred from a party's conduct of appearing in the arbitral forum solely to object to the arbitrator's exercise of jurisdiction; however, the party must make that objection before participating in the arbitration. (Ibid.)
The arbitrator here expressly found that defendants knowingly and voluntarily participated in the arbitration, that neither defendants' original counsel nor current counsel of record limited defendants' participation by making a special appearance to contest the arbitrator's jurisdiction, and that the record was "replete with communications" that "flatly contradict" defendants' argument that no binding arbitration agreement existed between the parties. Defendants' challenge amounts to a request that we conclude the arbitrator's factual findings were wrong. We cannot do so. (Moncharsh, supra, 3 Cal.4th at p. 11.)
Defendants, moreover, did not have the unilateral right to withdraw from the arbitration. "'Once a controversy is submitted to arbitration, it remains before the arbitrators until they have completed their determination of the matter, unless the parties mutually agree to withdraw it.' [Citation.]" (Arietta v. Paine, Webber, Jackson & Curtis, Inc. (1976) 59 Cal.App.3d 322, 329-330.) American Arbitration Association Rule R-31 similarly provides: "Unless the law provides to the contrary, the arbitration may proceed in the absence of any party or representative who, after due notice, fails to be present or fails to obtain a postponement."
The arbitrator did not exceed his authority by proceeding with the arbitration and by issuing an award after defendants sought to withdraw from the arbitration.
II. Alleged trial court error
We review de novo the trial court's decision granting the petition to confirm the arbitration award. We review its factual findings for substantial evidence. (Douglass, supra, 20 Cal.App.5th at p. 386.)
By confirming the arbitration award, the trial court implicitly found that valid agreements to arbitrate existed. (Thompson v. Asimos (2016) 6 Cal.App.5th 970, 981 [the doctrine of implied finding requires us to "'infer . . . that the trial court impliedly made every factual finding necessary to support its decision'"].) Because that finding resolved disputed factual issues, we review the trial court's determination for substantial evidence. (Douglass, supra, 20 Cal.App.5th at p. 386.)
Viewing the evidence in the light most favorable to the judgment (Cox v. Bonni (2018) 30 Cal.App.5th 287, 300), we conclude substantial evidence supports the trial court's finding. Defendants' conduct before and during the arbitration, including their communications with plaintiff's counsel and the American Arbitration Association, their case management statement filed with the trial court, and their subsequent participation in the arbitration proceedings, contradict their assertion that no valid agreement to arbitrate existed. (Douglass, supra, 20 Cal.App.5th at p. 387 [parties may enter into an agreement to arbitrate through their conduct "which may additionally be deemed to estop them from denying such an agreement"].) Defendants' challenge to the validity of the written contracts with plaintiff is therefore unavailing. Defendants raised no objection to those contracts before participating in the arbitration. Their discovery responses did not challenge the validity or enforceability of the contracts, but rather, admitted that the contracts were enforceable and that performance under them was not excused.
Toal v. Tardif (2009) 178 Cal.App.4th 1208, which defendants cite as support for their position, is distinguishable. In that case, attorneys for both parties signed a stipulation to arbitrate, but the petition to confirm the arbitration award presented no evidence that the defendants had consented to arbitration. (Id. at pp. 1213-1214.) Because attorneys do not have implied authority to submit their clients' claims to binding arbitration, and clients whose attorneys agree to arbitration are bound only if they consent to or ratify the arbitration, the record in Toal, lacked substantial evidence that the defendants had so consented or ratified. (Id. at pp. 1221, 1223-1224) The court in Toal therefore reversed the order confirming the arbitration award and remanded the matter for an evidentiary hearing on the issues of consent and ratification. (Id. at p. 1224.)
Defendants do not contend their attorneys lacked authority to represent them throughout the arbitration. Rather, defendants' conduct both before and during the arbitration evidenced their voluntary participation in the arbitration proceedings. Defendants pre-arbitration communications and court filings, their appearance and participation in the arbitration proceedings, and their responses to discovery propounded in the arbitration acknowledged, explicitly and implicitly, that their agreements with plaintiff to arbitrate the dispute were valid and enforceable.
The record discloses no error by the trial court.
DISPOSITION
The judgment is affirmed. Plaintiff is awarded its costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.
/s/_________, J.
CHAVEZ We concur: /s/_________, P. J.
LUI /s/_________, J.
HOFFSTADT