Opinion
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
City & County of San Francisco Super. Ct. No. CGC-05-442840.
Pollak, J.
After it attempted in midstream to withdraw without prejudice from an arbitration with Advanta Mortgage Corp. USA and Advanta Mortgage Conduit Services, Inc. (collectively, Advanta), Goodrich & Pennington Mortgage Fund, Inc. (G&P or Goodrich) requested a refund of the deposit it had advanced to the American Arbitration Association (the AAA) to cover the second phase of the proceedings. The AAA issued a partial refund, but G&P brought this action to recover the remainder of the deposit and to enjoin the AAA from further administering the dispute. The trial court sustained the AAA’s demurrer without leave to amend, concluding that the suit is barred by the doctrine of arbitral immunity. We conclude that G&P’s complaint fails to state a cause of action, and thus need not reach the issue of arbitral immunity. We shall therefore affirm the judgment.
BACKGROUND
This dispute between G&P and the AAA is tangential to the dispute between G&P and Advanta, described more fully in our concurrent opinion in case number A114262. Under the aegis of the AAA, G&P and Advanta entered into arbitration of a dispute arising out of Advanta’s purchase of home loans originated by G&P. The arbitrator divided the proceedings into two phases, first generally to determine whether Advanta had breached the agreement between the parties in any of the various respects alleged by G&P, and second to determine damages, if any, to which G&P was entitled.
On July 6, 2005, G&P filed a complaint “for temporary restraining order, preliminary and permanent injunctions, and damages” naming the AAA and Doe defendants. The complaint alleged that on June 17, 2005, after the arbitrator had issued an interim award in the first phase of the proceedings, “G&P requested that the AAA replace [the arbitrator] or that [the arbitrator] recuse himself.” “On or about June 27, 2005, having received no response from the AAA to G&P’s request that [the arbitrator] be replaced, and further considering that pre-hearing exchanges were due on that date, G&P determined to withdraw its arbitration claim from the AAA without prejudice.” G&P alleged that it was then “advised by the AAA that G&P could not withdraw its claim, that the matter would be referred to [the arbitrator] for further consideration, and that Advanta had to consent to the withdrawal,” and that on June 28 the AAA denied the request to replace the arbitrator.
On June 30, 2005, the arbitrator ruled that G&P had no right to withdraw without prejudice. On July 1, G&P having declined to participate in further hearings, the arbitrator ruled that G&P’s withdrawal was with prejudice and that Advanta was the prevailing party.
G&P alleged that the AAA was acting in accordance with an “unwritten rule” when it denied G&P’s request to replace the arbitrator because “claim withdrawal procedures . . . are not contained within the AAA Commercial Arbitrator Rules, located anywhere on the AAA’s website . . ., or published in any other reference guide, procedure guide, or manual that is readily available for review by parties who contract to submit their arbitration claims to the AAA for a binding and non-appealable decision.” G&P requested “a temporary retraining order, a preliminary injunction, and a permanent injunction, all enjoining defendants, and each of them, and their agents, servants, and employees, and all persons acting under, in concern with, or for them as follows: [¶] a. to cease and desist from entering any order issued by [the arbitrator] after [the case against Advanta] was withdrawn from the AAA by G&P on June 27, 2005; [¶] b. to cease and desist from taking any further acts to exercise jurisdiction over the dispute embodied in the Demand for Arbitration, Statement of Claim, First Amended Statement of Claim, and any amendments thereto . . .; [¶] c. to cease and desist from enforcing unwritten rules or procedures that are not contained within the AAA Commercial Arbitration Rules; [¶] d. to cease and desist from dismissing [the case against Advanta] with prejudice; and, [¶] e. to close the case file for [the case against Advanta] due to the withdrawal of all claims by G&P on June 27, 2005.” The complaint also sought damages “in an amount to be proven, plus damages in such further sums as may be sustained and as are ascertained before final judgment in this action,” as well as attorney fees and costs.
The trial court denied the request for a preliminary injunction. The AAA then demurred, arguing that the complaint was barred by the doctrine of arbitral immunity, and that the AAA was not a necessary or proper party because G&P had “expressly agreed not to bring suit against the AAA.” The trial court sustained the demurrer and granted G&P 10 days leave to file an amended complaint. G&P filed an application requesting the trial court to vacate the order sustaining the demurrer, and the AAA stipulated that the court could do so. The trial court granted the application and scheduled a hearing on the demurrer, but before the demurrer was heard, G&P filed a first amended complaint, to which the court later sustained a demurrer with leave to amend.
This sequence of events appears in G&P’s application for an order vacating the order sustaining the demurrer, although the order itself does not appear in the clerk’s transcript.
G&P subsequently filed a second amended complaint. This complaint repeated the allegations regarding the background of the arbitration proceedings and alleged that the governing cancellation policy, set forth in a document described more fully below and attached as an exhibit to the complaint, “allowed a party to an arbitration to receive a refund of hearing fees ‘in entirety’ if the party cancelled fourteen days or more prior to the hearing.” The amended complaint continues, in June 2005, “G&P requested that the AAA replace [the arbitrator], or in the alternative, that [the arbitrator] recuse himself. [¶] Having received no response from the AAA to G&P’s request that [the arbitrator] be replaced, . . . G&P withdrew its arbitration claim from the AAA on June 27, 2005 without prejudice.” G&P’s June 27 letter is also an exhibit to the complaint. “On or about June 28, 2005, after G&P had withdrawn its claim, the AAA denied G&P’s request that [the arbitrator] be replaced.”
On “June 30, 2005, [the arbitrator] ruled that G&P could not withdraw its remaining claims without prejudice, and advised the parties that by 12:00 p.m. on July 1, 2005, he would either (1) enter a dismissal of all remaining claims with prejudice as to Advanta (and without prejudice to any claims G&P asserts it may have against Chase Manhattan Mortgage Corporation) or (2) permit the July 11, 2005 ‘Phase II’ arbitration to proceed as scheduled.” “On July 1, 2005, [the arbitrator] ruled that ‘[t]he withdrawal shall be deemed to be with prejudice as to [G&P’s] claims against Advanta, but without prejudice to any claims [G&P] asserts it may have against Chase Manhattan Mortgage Corporation. Since the claims against Advanta have been withdrawn, the Phase II hearings scheduled for July . . . are cancelled.”
The second amended complaint alleges that “[o]n August 11, 2005, counsel for G&P sent a letter to the AAA in which G&P requested a full refund of the $48,375.00 hearing fee that G&P had paid in contemplation of the then-impending July 11, 2005 hearing. Since G&P first requested vacation of the July hearing dates on June 17, 2005, and tendered timely notice of its withdrawal of claim on June 27, 2005, both of which occurred within the 14 day cancellation period stated in [the AAA’s appointed arbitrator’s procedures] at the outset of the arbitration, . . . G&P anticipated that it would receive a full refund of its $48,375.00 hearing fee.” “[T]he AAA replied to G&P that it would only refund a ‘credit balance’ of $26,100.00, less an additional $3,375.00 for ‘anticipated time to be spent [by the arbitrator] concluding this matter.’ Without citing any AAA Rules as the basis for its decision, the AAA indicated that G&P’s refund would amount to less than one-half of its deposit paid in contemplation of the cancelled July 2005 hearing, or $22,725.00.”
The amended complaint alleges a cause of action for money had and received for $25,650.00, a cause of action for injunctive relief, alleging that “the AAA has wrongfully and unlawfully continued to administer G&P’s claim against Advanta, resulting in a substantial and inequitable award against G&P,” and a cause of action for an accounting, alleging that “[t]he amount of money due from the AAA to G&P is unknown, and cannot be ascertained without an accounting of the receipts and disbursements.” The prayer seeks an injunction ordering the AAA “to cease and desist from administering and processing G&P’s withdrawn claim and return the status quo to before June 27, 2005, including any order or award for attorney’s fees issued by [the arbitrator] . . .; [¶] [ ] to cease and desist from taking any further acts to exercise jurisdiction over the dispute embodied in the Demand for Arbitration, Statement of Claim, First Amended Statement of Claim . . .; [¶] [ ] to cease and desist from enforcing unwritten rules or procedures that are not contained within the AAA Commercial Arbitration Rules; [¶] [ ] to close the case file for [the case against Advanta] . . . without any declaration of ‘prevailing party’ or final award.” G&P also sought an accounting and “payment over to G&P of the amount due from the AAA as a result of the accounting” and attorney fees and costs.
The AAA demurred to the second amended complaint. G&P then requested that its third cause of action for an accounting be dismissed, and the trial court granted the request. At the hearing on the demurrer, G&P “agree[d] that the injunctive relief cause of action is now moot because the AAA has completed its process.” The trial court sustained the demurrer without leave to amend on the ground that “the complaint fails to state facts sufficient to constitute a cause of action [Code Civ. Proc., § 430.10, subd. (e)] for the reason that the causes of action for money had and received and injunctive relief are barred by the doctrine of arbitral immunity.” Judgment was entered in favor of the AAA and G&P timely appealed.
DISCUSSION
“In reviewing the sufficiency of a complaint against a general demurrer, we are guided by long-settled rules. ‘We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. [Citation.] We also consider matters which may be judicially noticed.’ [Citation.] Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context. [Citation.] When a demurrer is sustained, we determine whether the complaint states facts sufficient to constitute a cause of action. [Citation.] And when it is sustained without leave to amend, we decide whether there is a reasonable possibility that the defect can be cured by amendment: if it can be, the trial court has abused its discretion and we reverse; if not, there has been no abuse of discretion and we affirm. [Citations.] The burden of proving such reasonable possibility is squarely on the plaintiff.” (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)
In their initial briefing to this court, the parties disputed the trial court’s conclusion that the AAA is insulated from liability by the doctrine of arbitral immunity. In support of the trial court’s ruling, the AAA cites, among many other authorities, Stasz v. Schwab (2004) 121 Cal.App.4th 420, 430 (Stasz) (“the AAA enjoys common law immunity because, just as an arbitrator is immune from liability for bias or the failure to stay arbitration proceedings, so is the organization that sponsors the arbitration”; see also, e.g., American Arbitration Assn. v. Superior Court (1992) 8 Cal.App.4th 1131, 1133-1134.) G&P argues that its claim for a refund of fees pursuant to the terms of its agreement with the AAA is not an attack upon the arbitrator’s decision and thus is not protected by arbitral immunity. Stasz, it contends, recognized such a distinction (Stasz, supra, 121 Cal.App.4th at p. 437 [“ ‘even though the arbitrator is immune from liability for quasi-judicial acts, she nonetheless has contractual duties that may form the basis for a valid cause of action’ ”]) and approvingly cited Caudle v. American Arbitration Ass’n (7th Cir. 2000) 230 F.3d 920, 922 (“Suppose [the plaintiff] had paid the full $9,200 the AAA specified, and the Association had pocketed the money without arbitrating the dispute; it is unlikely that the AAA could claim ‘immunity’ in response to a demand for a refund.”) The AAA rejoins that arbitral immunity has been held to apply to administrative as well as to adjudicatory functions. (See, e.g., Thiele v. RML Realty Partners (1993) 14 Cal.App.4th 1526, 1530; see Stasz, supra, 121 Cal.App.4th at pp. 431-432.)
Were G&P’s request for injunctive relief still before the court, the assertion of immunity would have greater force. However, as indicated above, G&P acknowledged in the trial court that the request for an injunction had become moot, and it makes no argument on appeal that it is entitled to any such relief. Its remaining claim for the money it contends the AAA is contractually bound to refund presents a more difficult question. The cases on which the AAA relies do not go so far as to establish an absolute immunity for the breach of all its contractual obligations, no matter how unrelated to its conduct affecting the adjudication of the dispute between the arbitrating parties. In this case, however, the AAAsupported by Advantacharacterizes G&P’s claim for a refund as an indirect attack on the merits of the arbitrator’s decision that G&P could not withdraw its claim without prejudice and that when it refused to proceed the withdrawal was with prejudice and Advanta was the prevailing party entitled to its costs and attorney fees. We need not decide whether G&P’s claim for a refund could be honored without disturbing the results of the arbitration, or whether if G&P’s claim were valid it would fall beyond the limits of the immunity doctrine. From the face of the amended complaint it conclusively appears that its claim is without merit, which provides sufficient grounds for sustaining the demurrer without leave to amend.
After this case was fully briefed, this court requested supplemental briefing on the following question: “May the order sustaining the demurrer without leave to amend be upheld . . . on the ground that, without regard to the doctrine of arbitral immunity, the second amended complaint fails to state facts sufficient to constitute a cause of action because it conclusively appears that the defendant American Arbitration Association, Inc., did not breach the terms of the cancellation policy.” (Gov. Code, § 68081; see, e.g., Lee v. Bank of America (1990) 218 Cal.App.3d 914, 919-921 [affirming judgment after the trial court sustained demurrer without leave to amend on a theory different from that used by the trial court].) Having reviewed the additional briefing received from the parties, we are satisfied that the question must be answered in the affirmative.
The refund policy on which G&P relies appears in a document attached to its amended complaint as exhibit B. This document, on the AAA letterhead and provided to the parties in connection with the selection of the arbitrator, contains the curriculum vitae of the arbitrator. Following sections captioned, “Current Employer-Title,” “Profession,” “Work History,” Experience,” “Alternative Dispute Resolution Experience,” “Alternative Dispute Resolution Training,” “Professional Licenses,” “Professional Associations,” “Education,” and “Publications and Speaking Engagements,” there appears a three sentence section entitled “Compensation.” The second sentence of this section reads: “Cancellation/Postponement policy: deposit paid in entirety if within 14 days of scheduled hearing unless scheduled dates can be filled.”
This cancellation policy speaks explicitly to the inverse of G&P’s claim, i.e., the deposit will be paid in full if the arbitration is cancelled within 14 days of the scheduled hearing (unless the arbitrator is able to fill the scheduled dates with other matters). It says nothing about how much, if any, of the deposit will be returned if the hearing is cancelled more than 14 days before it is scheduled. Arguably there is an implication that there may be a refund if the hearing is cancelled sufficiently far in advance, although not necessarily for the full amount since the arbitrator presumably will be entitled to compensation for time spent preparing for the hearing or conducting other preliminary matters prior to the cancellation. All that is clear in this respect is that there is no right to a refund if the cancellation occurs within 14 days of the hearing, absent rescheduling by the arbitrator. Indeed, in its supplemental letter brief, G&P acknowledges, “If cancellation was less than 14 days prior to the hearing, G&P understood that the arbitrator was entitled to retain the full deposit unless he was able to fill the dates he had blocked off for the parties cancelling or postponing the hearing.”
Thus, the viability of the amended complaint turns on whether the Phase II hearings scheduled to commence on July 11, 2005 were cancelled at least 14 days in advance. In our opinion in the companion case, No. A114262, we have described in detail the circumstances culminating in the cancellation of the Phase II hearings. The chronology of those events establishes that the cancellation did not occur before the 14 day window had closed. G&P contends that the hearings were effectively cancelled on June 27, 2005, when it wrote the AAA advising, “effective today, Claimant Goodrich & Pennington Mortgage Fund, Inc. hereby withdraws its Demand for Arbitration, First Amended Statement of Claim, Amendment to First Amended Statement of Claim and the entire matter, without prejudice in the above referenced case. Please close your file, remit a final invoice and unexpended deposit to Claimant.” (Emphasis in original.) June 27 was the 14th day before the scheduled July 11 hearing. However, as the arbitrator subsequently concluded, G&P’s purported withdrawal without prejudice was ineffective as it had no right to withdraw without prejudice. The hearings were not cancelled until July 1, when the arbitrator ruled that G&P would be deemed to have withdrawn its claim with prejudice and the Phase II hearings were cancelled. The propriety of the arbitrator’s rulings has been affirmed in the companion appeal. Those rulings are not subject to reevaluation in this action against the arbitration association. Under the facts established by the arbitration, it conclusively appears that the hearing scheduled for July 11, 2005, was not cancelled 14 days in advance. G&P therefore may not have been entitled to any refund, and its claim for a greater refund than it received was properly dismissed.
Disposition
The judgment is affirmed.
We concur: McGuiness, P. J., Horner, J.
Judge of the Alameda County Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.