Opinion
NOT TO BE PUBLISHED
APPEAL from an order of the Superior Court of San Diego County No. GIN057015, Lisa Guy-Schall, Judge. Dismissed as moot.
BENKE, Acting P. J., HUFFMAN, J.
NARES, J.
Marshall Kenny, Dusan Popovic and Jeffrey Quade (collectively, plaintiffs) are former employees of automobile dealerships North County Ford, Inc., The Automotive Group, Inc., and Lake Elsinore Ford, Inc. (collectively defendants), who brought an action against defendants alleging, among other things, nonpayment of wages, negligence and fraud. The parties arbitrated their claims and plaintiffs prevailed. Plaintiffs subsequently sought injunctive relief to prevent defendants and others from dissipating assets. The court denied the request for injunctive relief, and plaintiffs appealed.
During the pendency of this appeal, the arbitration award was appealed to a second arbitrator under language in the arbitration agreement that allowed such appellate review of the award. The arbitration award was reversed, and the matter was ordered to be arbitrated again before a different arbitrator. Based upon this reversal, defendants brought a motion to dismiss the appeal, asserting that because the arbitration award was reversed, the appeal was moot as there was no basis for an injunction against defendants. Defendants also requested sanctions based upon plaintiffs' refusal to voluntarily dismiss their appeal.
Following the reversal, plaintiffs brought a petition in the superior court to vacate the reversal of the arbitration award. That petition was denied.
We conclude that because the arbitration award in favor of plaintiffs has been reversed, we can no longer grant plaintiffs effectual relief, and, therefore, plaintiffs' appeal is moot. Therefore, we must dismiss plaintiffs' appeal. Defendants' request for sanctions is denied.
Because we are dismissing the appeal as moot, we shall limit our background discussion to the procedural history of this matter relevant to our decision to dismiss.
Plaintiffs, former employees of defendants, sought commissions allegedly owed to them by their former employers, defendants. Plaintiffs also named as defendants individual officers and agents of defendants.
Pursuant to an arbitration clause in the plaintiffs' employment contract with defendants, the parties arbitrated their claims before the Honorable Robert J. O'Neill, retired, of ADR Services (the arbitrator).
Following the arbitration, defendants were found liable to plaintiffs and the arbitrator awarded them a total of over $5 million dollars in compensatory and punitive damages, attorney fees and costs. However, the arbitrator found the individual officers and agents of defendants not liable.
The arbitration clause gave the losing party a right to appeal before a second arbitrator, who would "proceed according to the law and procedures applicable to appellate review by the California Court of Appeal of a civil judgment following court trial." Pursuant to this clause, defendants appealed the arbitrator's decision. The parties agreed that the appeal would be heard by retired California Court of Appeal Justice John K. Trotter.
During the pendency of the arbitration appeal, plaintiffs sought injunctive relief to prevent dissipation of assets, arguing that defendants had sold or listed for sale some of their assets, had improperly transferred assets, and that the corporations were underfunded. Defendants opposed the request, submitting evidence and denying each of plaintiffs' allegations, and arguing the request was premature given the pending appeal of the arbitration award.
The court denied plaintiffs' request for injunctive relief. In doing so, the court found that "a balancing of the hardships favors Defendants in this action pending a determination by the appellate arbitrator, [Justice Trotter]. This Court concludes that the Defendants in this case will suffer greater injury if the preliminary injunction is granted...."
Plaintiffs brought this appeal, arguing the court abused its discretion in denying their request for injunctive relief.
During the pendency of this appeal, defendants brought to this court's attention the fact that on July 14, 2009, Justice Trotter reversed the arbitration award. The reversal was based upon the fact that the arbitrator failed to disclose the fact he had previously acted as a mediator for parties related to defendants and had been privy to confidential information in that mediation relevant to the arbitration. Justice Trotter concluded, based upon the arbitrator's handling of the arbitration and the defendants' request he recuse himself, that someone aware of the facts "might reasonably entertain a doubt as to the impartiality of the Trial Arbitrator." Justice Trotter remanded the matter with instructions to the parties to select a new arbitrator and proceed with a new arbitration.
The plaintiffs brought a motion for reconsideration, which the appellate arbitrator denied.
Defendants brought a motion to dismiss this appeal, arguing that, based upon the reversal of the arbitration award, there was no basis for injunctive relief, and the appeal was moot. Defendants have also requested sanctions, asserting that plaintiffs' continued maintenance of the appeal is frivolous given the fact it is moot.
Plaintiffs opposed the motion to dismiss, arguing that because they had filed a petition to vacate the appellate arbitrator's reversal in the trial court, the appeal is not moot. The petition to vacate the award asserted the appellate arbitrator exceeded his power and jurisdiction in considering the disqualification issue. They have also opposed the request for sanctions, arguing that this appeal is not moot given the pendency of a petition to vacate, which, if granted, will restore their arbitration award.
We ordered the motion to dismiss to be heard concurrently with the appeal.
On October 2, 2009, the trial court denied plaintiffs' petition to vacate the appellate arbitrator's reversal of the arbitration award, finding "[t]here is no statutory procedure that would allow this Court to review an interim arbitration ruling─in this case, the decision of an appellate arbitrator─that has not resulted in a final arbitration award." The court also found that to the extent plaintiffs were challenging the sufficiency of the evidence to support the appellate arbitrator's decision, relief could not be granted because arbitration awards may not be challenged on that ground. Finally, the court found that even if review were possible by the court, the appellate arbitrator did not exceed his powers in addressing the recusal issue and reversing the arbitration award.
DISCUSSION
I. THE APPEAL IS MOOT
An appeal becomes moot when, through no fault of the respondent, the occurrence of an event renders it impossible for the appellate court to grant the appellant effective relief. (Eye Dog Foundation v. State Board of Guide Dogs for the Blind (1967) 67 Cal.2d 536, 541; In re Jessica K. (2000) 79 Cal.App.4th 1313, 1315-1316.) " '[T]he duty of this court, as of every other judicial tribunal, is to decide actual controversies by a judgment which can be carried into effect, and not to give opinions upon moot questions or abstract propositions, or to declare principles or rules of law which cannot affect the matter in issue in the case before it. It necessarily follows that when, pending an appeal from the judgment of a lower court, and without any fault of the defendant, an event occurs which renders it impossible for this court, if it should decide the case in favor of plaintiff, to grant him any effectual relief whatever, the court will not proceed to a formal judgment, but will dismiss the appeal.' " (Consolidated Vultee Aircraft Corp. v. United Auto., etc. (1946) 27 Cal.2d 859, 863.)
Here, plaintiffs' request for injunctive relief to prevent dissipation of assets was predicated upon the arbitration award in their favor. Because that award has been vacated and the matter must proceed through the arbitration process again, there is no basis for us to determine whether the court abused its discretion in denying injunctive relief, and thus we cannot grant plaintiffs effectual relief by way of this appeal. Accordingly, it must be dismissed as moot.
Further, as the court found in denying the plaintiffs' petition to vacate the appellate arbitrator's decision, it had no power to review such an interim ruling, but only a final arbitration award, and this court similarly could not review that decision by way of this appeal. (Rubin v. W. Mut. Ins. Co. (1999) 71 Cal.App.4th 1539, 1544-1547.)
It should be noted that plaintiffs have indicated they are considering filing a petition for writ of mandate challenging the trial court's denial of their petition to vacate the appellate arbitrator's reversal. That petition shall be considered when and if it is filed, but may not be considered as grounds for denying the motion to dismiss as it is not properly before us on this appeal.
II. DEFENDANTS ARE NOT ENTITLED TO SANCTIONS
Defendants have requested sanctions for their costs and fees incurred in bringing the motion to dismiss based upon plaintiff's failure to voluntarily dismiss their moot appeal following reversal of the arbitration award. We conclude that sanctions are not warranted on this record.
California Rules of Court, rule 8.276(a) provides:
"On motion of a party or its own motion, a Court of Appeal may impose sanctions, including the award or denial of costs under rule 8.278, on a party or an attorney for: [¶] (1) Taking a frivolous appeal or appealing solely to cause delay; [¶] (2) Including in the record any matter not reasonably material to the appeal's determination; [¶] (3) Filing a frivolous motion; or (4) Committing any other unreasonable violation of these rules."
In In re Marriage of Flaherty (1982) 31 Cal.3d 637, 649-650, our high court "set forth two alternative tests for determining a frivolous appeal. The first test is subjective: Was the appeal prosecuted solely for an improper motive, such as to harass the respondent or delay the effect of an adverse judgment? [Citation.]... [¶] The second strand of Flaherty is objective: Was the appeal so indisputably without merit that any reasonable attorney would agree it was totally devoid of merit?" (Tomaselli v. Transamerica Ins. Co. (1994) 25 Cal.App.4th 1766, 1773.) "The two standards are often used together, with one providing evidence of the other. Thus, the total lack of merit of an appeal is viewed as evidence that appellant must have intended it only for delay." (Flaherty, supra, at p. 649.)
Sanctions should be imposed sparingly "so as to avoid a serious chilling effect on the assertion of litigants' rights on appeal." (In re Marriage of Flaherty, supra, 31 Cal.3d at p. 650.)
There is no indication that plaintiffs sought to continue this appeal for an improper purpose or that it is objectively frivolous. Rather, they declined to voluntarily dismiss the appeal while they pursued their petition to vacate the reversal of the arbitration award. While they were ultimately unsuccessful in that endeavor, that does not mean they were not entitled to seek that relief. Had they been successful in vacating Justice Trotter's reversal of the arbitration award, it would have been reinstated and the appeal would not be moot. On this record, we decline to impose sanctions on plaintiffs for their continued maintenance of this appeal following reversal of the original arbitration award.
DISPOSITION
The appeal is dismissed as moot. Defendants' request for sanctions is denied. Defendants shall recover their costs on appeal.
WE CONCUR: BENKE, Acting P. J., HUFFMAN, J.