Opinion
B315151
10-18-2022
BLEAU FOX, Plaintiff and Respondent, v. NAIFEH AZAR et al. Defendants and Appellants.
Chananel H. Nakasaka and Alan D. Irwin for Defendants and Appellants. The Mueller Firm and Troy M. Mueller for Plaintiff and Respondent.
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County, No. 19STCV31697 William F. Fahey, Judge.
Chananel H. Nakasaka and Alan D. Irwin for Defendants and Appellants.
The Mueller Firm and Troy M. Mueller for Plaintiff and Respondent.
EGERTON, J.
Defendants Naifeh Azar and S.A. Mission Corporation (SAMC) appeal a judgment confirming an arbitration award in favor of plaintiff Bleau Fox on a breach of contract claim. As best we can discern from defendants' briefs, they contend their former attorney failed to file a substitution of counsel form to represent the corporate defendant and the attorney stipulated to arbitration without defendants' consent. The trial court rejected these contentions, implicitly finding defendants had in fact authorized the stipulation to arbitrate. Defendants have not presented an adequate record or sound legal argument demonstrating the court erred. We affirm.
FACTS AND PROCEDURAL HISTORY
SAMC is a California corporation. Azar is an officer of SAMC. Azar executed a "Legal Services Agreement" (LSA) individually and on behalf of the company, retaining plaintiff to provide legal services in connection with a lawsuit for wrongful termination of certain franchise agreements.
The LSA contains the following arbitration clause: "If any dispute arises between the Attorney [plaintiff] and the Client [defendants] under this retainer agreement, including but not limited to, disputes over attorney's fees and costs both Attorney and Client hereby agree to submit the dispute to binding arbitration under the rules of the Judicate West Alternative Dispute Resolution services located in Los Angeles, California. The decision of the arbitrator shall be binding upon both parties as if rendered by a court of law and may be entered as a judgment in any court having jurisdiction over the parties."
On September 5, 2019, plaintiff filed this action against defendants, asserting a single cause of action for breach of contract. The complaint alleged defendants breached the LSA by failing to pay fees totaling $219,857.05 for legal services and costs rendered on defendants' behalf.
On December 26, 2019, defendants filed motions to compel arbitration as provided in the LSA's arbitration clause. In her supporting declarations, Azar declared, "In October of 2019, through my attorney, Robert M. Moss/The Law Offices of Robert M. Moss, Inc. I requested in writing Plaintiff commence arbitration as Plaintiff is required to do per our written agreement"-i.e., the LSA. Azar authenticated the LSA and submitted it as an exhibit to her declaration. Consistent with Azar's declarations, defendants' motions listed Moss as the attorney for Azar and SAMC.
On January 24, 2020, the parties, through their attorneys, executed a stipulation for binding arbitration and stay of the action. The stipulation recited that the parties had entered into the LSA; incorporated the LSA by reference; and provided for submission of the matter to "binding arbitration pursuant to the [LSA]." The parties also stipulated to a stay of the action pending resolution of the arbitration. The trial court granted the stipulation; ordered the parties to arbitrate all claims "arising out of the [LSA], pursuant to the procedures and provisions set forth in the Stipulation"; and stayed the action.
On December 2, 2020, Azar executed substitution of attorney forms on behalf of herself and SAMC. Moss also executed the forms and consented to the substitution in his capacity as defendants' "[f]ormer legal representative" (boldface omitted), and Jonathan D. Matthews executed the forms and consented to the substitution as defendants' new attorney.
The same day, in contravention of the court's January 27, 2020 order staying the action pending arbitration, SAMC filed a demurrer to the complaint. Among other things, SAMC argued plaintiff had breached the LSA by filing the complaint in violation of the "mandatory Arbitration Clause." Because "[p]laintiff breached the contract first," SAMC asserted "the court should allow excuse of any performance required by defendants."
Also the same day, plaintiff filed an ex parte application to appoint an arbitrator and award sanctions.
On December 4, 2020, the trial court granted plaintiff's application in part, ordering the arbitration to commence on or before January 29, 2021. The court declined to impose sanctions.
On December 31, 2020, SAMC filed an ex parte application for an order setting aside and vacating all orders related to arbitration. SAMC argued it could not be compelled to arbitrate under the stipulation that Moss executed on the company's behalf because "Moss filed two Substitution of Attorney forms electronically . . ., which were both for only Naifeh Azar as an individual." (Underlining and boldface omitted.) Exhibits attached to Azar's supporting declaration showed that, on December 26, 2019, defendants filed two substitution of attorney forms naming "Naifeh Azar" as the party making the substitution; however, while Azar signed one of the forms on her own behalf, she executed the other on behalf of SAMC. SAMC argued this evidence proved Moss "never properly subbed in," as the substitution form "was filled out wrong and . . . was not filed on behalf of Defendant [SAMC]." Thus, the company argued, "prior-acting attorney for [SAMC] lacked legal capacity to stipulate to Arbitration on behalf of [SAMC] in this instant case." (Underlining and boldface omitted.)
Plaintiff opposed the ex parte application. It argued SAMC's assertion that Moss failed to obtain the company's authorization was a "dubious one," as the company's first appearance in the case was a motion to compel arbitration and SAMC had recently filed a substitution of counsel form where it expressly identified Moss as the company's former counsel.
The trial court placed defendants' demurrer and ex parte application off calendar, effectively denying the requested relief.
The parties arbitrated the matter before a Judicate West arbitrator. After receiving post-hearing briefing, the arbitrator issued a final arbitration award awarding plaintiff a total of $227,285.50, consisting of $193,624.10 on the breach of contract claim against defendants and $33,661.40 for attorney fees incurred litigating the claim.
Plaintiff filed a petition to correct and confirm the arbitration award. The petition sought to confirm the full amount of the award and to correct clerical errors related to the names of the parties listed in the award.
Defendants opposed the petition on the grounds that the notice was defective and the award was excessive.
The trial court granted plaintiffs petition, confirming and correcting the arbitration award as requested, and entered judgment on the award.
Defendants filed a motion to set aside and vacate the judgment as void. They again argued their former attorney Moss did not properly substitute on behalf of SAMC before stipulating to arbitration. Thus, defendants maintained the order compelling arbitration based on the stipulation violated their due process and Seventh Amendment rights. In a supporting declaration, Azar declared she "did not stipulate" to arbitration; Moss signed the stipulation "without her knowledge"; and neither she, nor any other officer of SAMC, had knowledge that a motion to compel arbitration had been filed.
The trial court denied the motion to vacate. This appeal followed.
DISCUSSION
As best we can discern from defendants' largely incoherent briefs, it appears defendants challenge the judgment confirming the arbitration award on two grounds. First, they contend Moss never became SAMC's "attorney of record" because he neither filed a response to the complaint nor an attorney substitution form on the company's behalf. Second, defendants contend Moss failed to obtain their consent before entering into the stipulation to arbitrate. Neither contention has merit.
We have reviewed defendants' opening brief a number of times. It is a tangled knot of disjointed ideas, consisting mainly of a more-than-20-page near-verbatim excerpt from defendants' motion to vacate the judgment, which itself appears to have been copied nearly verbatim from defendants' earlier ex parte application to vacate the arbitration order. The reply brief reads like an outline of notes taken from the opening brief and appellate record-not a coherent argument for challenging the judgment. To the extent defendants might contend they raised any other issues, we deem those issues waived due to defendants' failure to articulate an intelligible argument. (Luckett v. Keylee (2007) 147 Cal.App.4th 919, 927, fn. 11.)
Where the trial court's order compelling arbitration is based on a legal question-such as the interpretation of a statute-our review is de novo. (Omar v. Ralphs Grocery Co. (2004) 118 Cal.App.4th 955, 959.) On the other hand, when the order is based on a factual finding-such as whether a party authorized its attorney to stipulate to arbitration-we review the decision for substantial evidence. (Trinity v. Life Ins. Co. of North America (2022) 78 Cal.App.5th 1111, 1121-1122 (Trinity) [challenge to arbitration" 'claiming forgery or fraud in the factum'" reviewed for substantial evidence].) Under the deferential substantial evidence standard,"' "[a]ll factual matters will be viewed most favorably to the prevailing party [citations] and in support of the judgment." '" (Id. at p. 1121, quoting Campbell v. Southern Pacific Co. (1978) 22 Cal.3d 51, 60; accord, Western States Petroleum Assn. v. Superior Court (1995) 9 Cal.4th 559, 571; see Nissan Motor Acceptance Cases (2021) 63 Cal.App.5th 793, 818 ["We must not review the evidence to determine whether substantial evidence supports the losing party's version of the evidence. Instead, we must determine if there is any substantial evidence, contradicted or uncontradicted, to support the trial court's findings."].)
"As a general proposition the attorney-client relationship, insofar as it concerns the authority of the attorney to bind his client by agreement or stipulation, is governed by the principles of agency. [Citation.] Hence, 'the client as principal is bound by the acts of the attorney-agent within the scope of his actual authority (express or implied) or his apparent or ostensible authority; or by unauthorized acts ratified by the client.'" (Blanton v. Womancare, Inc. (1985) 38 Cal.3d 396, 403 (Blanton).) "As in the case of any other agency, . . . apparent authority is created, and its scope defined, by the acts of the principal in placing the agent in such a position that he appears to have the authority which he claims or exercises. If authority is lacking, then nothing the agent does or says can serve to create it." (Id. at p. 406.)
As a matter of policy and practice, our courts have recognized a strong presumption that an attorney who appears on behalf of a litigant is authorized to represent that party and to make tactical litigation decisions on the party's behalf. (Blanton, supra, 38 Cal.3d at pp. 403-404; Garrison v. McGowan (1874) 48 Cal. 592, 600 (Garrison); Gagnon Company v. Nevada Desert Inn (1955) 45 Cal.2d 448, 460.) After an attorney has made such an appearance, the burden rests on the party who disputes the authority of the attorney who purports to represent it" 'to take prompt action'" and to establish the attorney's lack of authority" 'by cogent and strong evidence.'" (Garrison, at p. 600.)
We begin with the contention that Moss was not authorized to stipulate to arbitration on behalf of SAMC because he neither filed a response to the complaint nor an attorney substitution form to become the company's attorney of record. With respect to the first part of this contention, defendants rely upon Code of Civil Procedure section 1014. The statute provides a "defendant appears in an action when the defendant answers, demurs, files a notice of motion to strike, files a notice of motion to transfer moves for reclassification . . ., gives the plaintiff written notice of appearance, or when an attorney gives notice of appearance for the defendant." (§ 1014.) Because a motion to compel arbitration is not among the acts listed in section 1014, defendants contend Moss did not become SAMC's attorney when he filed the motion on the company's behalf in response to the complaint. Established case law interpreting section 1014 is to the contrary.
Statutory references are to the Code of Civil Procedure, unless otherwise stated.
As our Supreme Court explained more than a century ago, the "construction of section 1014" that "a defendant 'can appear in no other way' than by demurrer, answer, or formal written notice, is doubtless too broad." (Davenport v. Superior Court (1920) 183 Cal. 506, 511 (Davenport); Chitwood v. County of Los Angeles (1971) 14 Cal.App.3d 522, 526 ["While section 1014 . . . lists acts which amount to a general appearance, that list is not necessarily exhaustive."].) "An act of a defendant by which he intentionally submits himself to the jurisdiction of the court in that action for the purpose of obtaining any ruling or order of the court going to the merits of the case . . . or the making of stipulations, . . . which may reasonably be construed to imply that the court has, in that action, acquired jurisdiction of the person of the defendant, will be equivalent to an appearance, although not strictly in accordance with the terms of section 1014." (Davenport, at p. 511.) "The underlying theory of a general appearance is that it is effected when a defendant takes any part in the action or proceedings, e.g., by pleading or by participating in the trial, other than to specifically contest the court's jurisdiction over his person." (Chitwood, at p. 526.)
Here, SAMC unequivocally invoked the trial court's jurisdiction to enforce the arbitration clause in the LSA by moving to compel arbitration. (See § 1281.2 [procedure for petitioning the court to compel arbitration].) Thus, to the extent the record shows SAMC retained Moss as its attorney and directed him to file the motion to compel arbitration on its behalf, the act constituted a general appearance under section 1014 and was sufficient to establish Moss's authority to act for SAMC in the action. (Davenport, supra, 183 Cal. at p. 511; Garrison, supra, 48 Cal. at p. 600.)
The second part of defendants' contention is premised on the first. Because they maintain the motion to compel arbitration was not a "core response" under section 1014, defendants argue Moss could not "enter an appearance" on SAMC's behalf without filing a substitution of counsel form for the company. As we just explained, defendants' premise is flawed-the motion to compel arbitration constituted a general appearance under the governing law. No notification of a substitution of attorney was required. (Cf. § 284 [providing procedural requirements by which an attorney "may be changed" in an action]; § 285 [requiring written notice when "an attorney is changed" as provided in § 284]; see also Warden v. Lamb (1929) 98 Cal.App. 738, 742-743 [where record showed attorneys "appeared for the defendant at the trial of the action" and "were entered of record as attorneys for the defendant," purported failure to comply with sections 284 and 285 was insufficient to support reversal of judgment].)
Moreover, the substitution of counsel form in question hardly proves SAMC did not consent to Moss representing it in the action. Defendants assert Moss filed "two" substitution of counsel forms "for the purpose of representing Naifeh Azar as an individual only." However, while both forms list Azar as the party making the substitution, Azar signed one of the forms on behalf of SAMC to indicate the company's "consent to [the] substitution." Consistent with that consent, nearly a year later, Azar signed another substitution of counsel form on SAMC's behalf listing Moss as the company's "[f]ormer legal representative." (Boldface omitted.) To the extent defendants rely upon an apparent typographical error on the earlier form, they plainly have not produced" 'cogent and strong evidence' " establishing Moss's lack of authority. (Garrison, supra, 48 Cal. at p. 600.)
While the record establishes Moss had apparent authority to represent defendants in the action, this does not mean he was necessarily authorized to stipulate to binding arbitration for his clients. "An attorney is not authorized, . . . merely by virtue of his retention in litigation, to 'impair the client's substantial rights or the cause of action itself [Citation.] For example, 'the law is well settled that an attorney must be specifically authorized to settle and compromise a claim, that merely on the basis of his employment he has no implied or ostensible authority to bind his client to a compromise settlement of pending litigation.'" (Blanton, supra, 38 Cal.3d at p. 404.) Similarly, because a stipulation for binding arbitration "entails a waiver of all but minimal judicial review"-a consequence that, by any test, affects the "substantial rights of the client"-our Supreme Court has held "an attorney, merely by virtue of his employment as such, has no apparent authority to bind his client to an agreement for arbitration." (Id. at p. 407.)
Thus, we must address defendants' second contention- namely, that they could not be bound by the stipulation to arbitrate because Moss failed to obtain their consent before entering it. The trial court rejected that contention, implicitly finding defendants gave their consent for the stipulation. We review that finding for substantial evidence. (Trinity, supra, 78 Cal.App.5th at pp. 1121-1122.) More accurately, because the burden rested with defendants to prove Moss did not have authority to enter the stipulation (see Garrison, supra, 48 Cal. at p. 600), the question on appeal is whether defendants'"' "evidence was (1) 'uncontradicted and unimpeached' and (2) 'of such a character and weight as to leave no room for a judicial determination that it was insufficient to support a finding.'" '" (Trinity, at p. 1121.) It plainly was not.
The record shows that, before stipulating to arbitration as provided in the LSA, Moss filed motions to compel arbitration under the LSA on behalf of each defendant. Critically, Azar offered declarations in support of both motions in her individual capacity and in her capacity as an officer of SAMC. In both declarations, Azar confirmed, under penalty of perjury, that "through my attorney, Robert M. Moss/The Law Offices of Robert M. Moss, Inc. I requested in writing Plaintiff commence arbitration as Plaintiff is required to do per our written agreement [citation] instead of litigating this fee/cost dispute in the Los Angeles County Superior Court." The trial court could reasonably infer from these declarations that defendants not only authorized Moss to move to compel arbitration under the LSA, but also authorized their attorney to stipulate to the arbitration that they had sought to compel. Azar's declarations plainly contradicted her later assertion that she did not consent to the stipulation to arbitrate. (See Trinity, supra, 78 Cal.App.5th at pp. 1121-1122.)
Because the parties did not address Azar's declarations in their appellate briefs-indeed, defendants failed to designate the motions to compel arbitration and supporting declarations for inclusion in the record, and then failed to augment the record with these items when we directed defendants to do so-we requested supplemental briefing on whether the declarations were sufficient to support the trial court's factual finding that defendants consented to arbitration as provided in the stipulation. (See Gov. Code, § 68081.) In their brief, defendants simply reassert that "[a]ny paper filed with Attorney, [sic] Robert Moss's name on the top would be void" because he "need[ed] to file a signed Substitution of Attorney as to both Defendant [SAMC] and for Naifeh Azar" before he could be defendants' "attorney of record." We take defendants' failure to address Azar's declarations as an implicit concession that the declarations were sufficient to support the trial court's finding. Defendants have failed to establish reversible error.
DISPOSITION
The judgment is affirmed. Plaintiff Bleau Fox is entitled to costs.
We concur: LAVIN, Acting P. J., ADAMS, J. [*]
[*] Judge of the Los Angeles County Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.