Opinion
A148830
11-21-2018
MATT KUYKENDALL, Plaintiff and Respondent, v. MICHAEL TINER, Defendant and Appellant.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Contra Costa County Super. Ct. No. MSN15-2146)
Self-represented litigant Michael Tiner appeals a judgment confirming a contractual arbitration award and denying his petition to vacate that award (Code Civ. Proc., §§ 1286.2, 1287.6). We modify the total monetary amount of the judgment to conform with the arbitration award. In all other respects, we affirm.
Statutory references are to the Code of Civil Procedure. We recite only those facts germane to the issues on appeal. Our factual summary is taken in part from the amended arbitration award.
FACTUAL AND PROCEDURAL BACKGROUND
Matthew Kuykendall, Tiner, and others founded the heavy metal band "All Shall Perish" (band). Kuykendall conceived of the band's name. The band created a common law trademark in the name All Shall Perish for compositions, performances, and merchandise. The name was owned equally by the four original band members. The band released a studio album in 2003. In 2004, the five band members—including Kuykendall and Tiner—entered into a partnership agreement. The purpose of the partnership was to sell the band's merchandise and live performances. Profits were to be divided equally among the partners. The partners agreed to arbitrate "[a]ny controversy or claim . . . relating to" the partnership agreement.
The band later entered into an agreement with a record label and released other albums and music videos. The band also performed music on tour. In 2008, four band members formed the corporation All Shall Perish, Inc. (corporation). Each of the members, including Kuykendall and Tiner, owned 250 shares of the corporation. At some point, a GoDaddy account was opened for the band's website.
In 2010, Kuykendall was "kick[ed] . . . out of the band" and "froze[n] out" of the partnership. The band continued to perform without Kuykendall. Kuykendall's password to the GoDaddy account was deleted. Tiner converted most of Kuykendall's shares in the corporation "to others and to benefit himself." Kuykendall did not receive his share of the band's royalties. Tiner withdrew significant sums of money from the partnership's bank account for himself. He also distributed band assets "to persons who did not own them."
Arbitration
A dispute arose between Kuykendall and Tiner; in 2015, they submitted the dispute to binding arbitration. Kuykendall alleged claims against Tiner for involuntary dissolution of the corporation, assumpsit, breach of implied contract, quantum meruit, and unjust enrichment. Kuykendall sought dissolution of the corporation and monetary damages. Tiner alleged counterclaims and requested termination of Kuykendall's rights in the band's name, recordings, and assets.
Attorney Suzanne K. Nusbaum presided over the nine-hour arbitration hearing in September 2015. Nusbaum considered numerous exhibits and heard testimony from several witness, including Kuykendall and Tiner. After the hearing, Nusbaum requested additional evidence. Tiner submitted documents, including a declaration from accountant Dennis N. Middleton, who opined on a discrepancy on a 2012 federal tax return prepared for All Shall Perish, Inc. Kuykendall objected to the declaration. Nusbaum considered all of Tiner's documents except the Middleton declaration. Nusbaum concluded the declaration was "untimely presented," without a showing of "good cause why Mr. Middleton's testimony could not have been presented" at the arbitration hearing. Nusbaum also determined the declaration was cumulative.
In late 2015, Nusbaum issued, and later amended, an arbitration award. The 37-page amended arbitration award recited 149 findings of fact, including Kuykendall and Tiner's respective copyright ownership status in the band's compositions and lyrics. Nusbaum concluded Kuykendall was "excluded from the band." Nusbaum also determined Tiner absconded with the band's profits earned from licensing or use of the copyrights, and failed to account for them, and that Tiner breached the partnership agreement, the implied covenant of good faith and fair dealing, and his fiduciary duty to Kuykendall. Nusbaum also concluded Tiner failed to account in violation of Corporations Code section 1501.
Among other things, the arbitration award (1) dissolved the partnership and awarded the band name and all other rights owned or controlled by the partnership or the corporation to Kuykendall; (2) awarded Kuykendall all stock in the corporation not already owned by him; (3) ordered Tiner to pay Kuykendall damages of $239,650, with interest at the rate of 10 percent per year on amounts unpaid after January 1, 2016; (4) declared copyright ownership; (5) declared Kuykendall the sole owner of the GoDaddy account; and (6) prohibited Tiner from using the band name All Shall Perish in any medium or commercial manner, or in connection with personal appearances, except that Tiner was permitted to refer to himself as a former member of All Shall Perish in biographical materials.
Nusbaum concluded Kuykendall incurred $1,500 in legal fees and $6,000 in arbitration filing fees as a result of Tiner's failure to account (Corp. Code, § 1501), but Nusbaum did not award Kuykendall those fees.
Judgment Confirming Arbitration Award
Kuykendall petitioned in propria persona to confirm the arbitration award. Tiner opposed the petition in propria persona, and petitioned to vacate the award. Following a hearing, the court granted Kuykendall's petition to confirm and denied Tiner's petition to vacate. The court entered judgment for Kuykendall and denied Tiner's motion for reconsideration.
DISCUSSION
Tiner argues the court erred in confirming the arbitration award and denying his petition to vacate that award. Our review is " 'very limited . . . .' [Citation.] We do not review the merits of the dispute, the sufficiency of the evidence, or the arbitrator's reasoning, nor may we correct or review an award because of an arbitrator's legal or factual error, even if it appears on the award's face. Instead, we restrict our review to whether the award should be vacated under the grounds listed in section 1286.2." (Roehl v. Ritchie (2007) 147 Cal.App.4th 338, 347.) As relevant here, section 1286.2 provides the court shall vacate the arbitration award if it determines "[t]he award was procured by . . . fraud or other undue means"; "[t]he arbitrators exceeded their powers and the award cannot be corrected without affecting the merits of the decision upon the controversy submitted"; or "[t]he rights of the party were substantially prejudiced by the refusal of the arbitrators+ . . . to hear evidence material to the controversy . . . ." (§ 1286.2, subd. (a).)
" 'In relatively rare instances the court may also vacate or correct an arbitration award, "[w]here 'according finality to the arbitrator's decision would be incompatible with the protection of a statutory right' or where the award contravenes 'an explicit legislative expression of public policy.' " ' [Citations.] [¶] ' "On appeal from an order confirming an arbitration award, we review the trial court's order (not the arbitration award) under a de novo standard. [Citations.] To the extent that the trial court's ruling rests upon a determination of disputed factual issues, we apply the substantial evidence test to those issues." ' " (ECC Capital Corp. v. Manatt, Phelps & Phillips, LLP (2017) 9 Cal.App.5th 885, 899-900 (ECC Capital).)
I.
The Court Properly Granted the Petition to Confirm the Arbitration Award
and Denied Tiner's Motion to Vacate that Award
Tiner claims Kuykendall procured the arbitration award "by fraud or undue means" because he lied about the GoDaddy account at the arbitration hearing. "That issue was not raised in the trial court, and we decline to address it in the first instance on appeal." (Los Angeles Police Protective League v. City of Los Angeles (2002) 102 Cal.App.4th 85, 93.) In the trial court, Tiner claimed Nusbaum failed to consider evidence regarding the GoDaddy account; he did not urge the court to vacate the arbitration award based on fraud or undue means. The argument also fails on the merits. To vacate an award based on fraud or undue means, the moving party must show the fraud or undue means could " 'not have been discoverable upon the exercise of due diligence prior to or during the arbitration.' " (Pour Le Bebe, Inc. v. Guess? Inc. (2003) 112 Cal.App.4th 810, 830.)
The court concluded Tiner's claim that Kuykendall " 'hack[ed]' " into the GoDaddy account was conclusory, speculative, and incomprehensible.
Here, Tiner notified Nusbaum of Kuykendall's alleged misuse of the GoDaddy account before the arbitration hearing. And because Tiner knew about Kuykendall's alleged misuse of the GoDaddy account before the arbitration, he must have known Kuykendall was "lying" to Nusbaum at the arbitration hearing. " '[W]here the fraud or undue means is not only discoverable, but discovered and brought to the attention of the arbitrators, a disappointed party will not be given a second bite at the apple.' " (Pour Le Bebe, Inc. v. Guess? Inc., supra, 112 Cal.App.4th at p. 831.) Tiner's claim fails for the additional reason that the ownership of the GoDaddy account was a relatively minor aspect of the arbitration. As a result, Tiner has not shown the alleged fraud or undue means materially affected the arbitration proceedings. (See ECC Capital, supra, 9 Cal.App.5th at p. 909; Pour Le Bebe, at p. 830.)
Next, Tiner argues Nusbaum exceeded her contractual authority by "ruling on an issue which was not submitted to arbitration," i.e. by "affecting an involuntary transfer of copyright." The trial court determined Nusbaum did not exceed her authority. Courts "look both to the contract and to the scope of the submissions to determine the arbitrator's authority." (J.C. Gury Co. v. Nippon Carbide Industries (USA) Inc. (2007) 152 Cal.App.4th 1300, 1305.) Here, the partnership agreement and the parties' submissions at the arbitration demonstrate Nusbaum had the authority to decide copyright ownership. In the partnership agreement, the parties agreed to arbitrate "[a]ny controversy or claim . . . relating to" the partnership agreement. The partnership agreement was established to conduct business regarding the band's music and merchandise; a controversy regarding copyright ownership "relat[ed] to" the agreement. In addition, the parties submitted briefs and evidence at the arbitration hearing concerning their respective entitlement to the band's recording and performance income, which implicated copyright ownership.
"In determining whether the arbitrator exceeded [her] powers in making the . . . arbitration award, we . . . 'pay substantial deference to an arbitrator's determination of [her] own authority.' [Citation.] Any doubts about the arbitrator's power to decide these issues must be resolved in [her] favor. [Citation.]" (Roehl v. Ritchie, supra, 147 Cal.App.4th at pp. 347-348.) In the arbitration award, Nusbaum stated: "I am not altering or reducing anyone's copyright ownership. I am merely declaring the status of the copyright ownerships based upon the evidence I was provided during their ownership transfers . . . ." We defer to Nusbaum's determination of her authority and conclude she did not exceed that authority by declaring the status of the parties' copyright ownership.
Tiner also claims the arbitration award violates his "unwaivable statutory rights." This claim fails because it is premised on the mistaken contention that Nusbaum "affect[ed] an involuntary transfer of copyright." Nusbaum stated she was not transferring copyright ownership but rather stating the parties' respective copyright ownership status based on the evidence presented at the arbitration hearing. Tiner's disagreement with Nusbaum's conclusions regarding copyright ownership does not establish a basis for vacating the arbitration award. (See Richey v. AutoNation, Inc. (2015) 60 Cal.4th 909, 917.)
Tiner's contention that Nusbaum improperly failed to hear material evidence—the Middleton declaration—fares no better. A court may "vacate an arbitration award when '[t]he rights of the party were substantially prejudiced . . . by the refusal of the arbitrators to hear evidence material to the controversy.' " (ECC Capital, supra, 9 Cal.App.5th at p. 909.) Nusbaum declined to admit the declaration because it was submitted after the arbitration hearing, without showing of "good cause why [the] testimony could not have been presented" at the arbitration. She also determined the declaration was cumulative. The trial court recognized its review of the arbitrator's evidentiary rulings was " 'severely limited' " and concluded Nusbaum's "facially reasonable ruling" was not arbitrary, and that Tiner had not established prejudice.
We agree. In conclusory fashion, Tiner claims the declaration "would have . . . drastically changed" the arbitration award but he makes no persuasive effort in his opening brief to justify his late submission of the declaration. He does not cite any authority compelling an arbitrator to accept evidence offered after the conclusion of an arbitration hearing, without a showing of good cause. Tiner's claim in his reply brief that the declaration was "timely" is not persuasive. Section 1286.2, subdivision (a)(4) operates as "a safety valve in private arbitration that permits a court to intercede when an arbitrator has prevented a party from fairly presenting its case." (Hall v. Superior Court (1993) 18 Cal.App.4th 427, 439.) Here, Tiner had a full and fair opportunity to present his case. The arbitrator considered thousands of pages of documents and heard testimony from witnesses at the arbitration hearing. "There was no unfairness." (ECC Capital, supra, 9 Cal.App.5th at p. 909.) Tiner has not established Nusbaum's refusal to consider the Middleton declaration required the trial court to vacate the arbitration award. (Ibid.)
II.
The Judgment is Modified to Conform to the Arbitration Award
We conclude the court properly granted the petition to confirm the arbitration award and denied the petition to vacate that award. But as we discuss below, the judgment must be modified to conform to the arbitration award.
A. Background
As discussed above, the arbitration award ordered Tiner to pay Kuykendall damages of $239,650, with interest at the rate of 10 percent per year on amounts unpaid after January 1, 2016. The arbitration award notes that Kuykendall incurred $1,500 in legal fees and $6,000 in arbitration filing fees as a result of Tiner's failure to account (Corp. Code, § 1501), but it does not award Kuykendall those fees.
The court entered judgment on March 25, 2016. The judgment restates the terms of the arbitration award and attaches the award. As relevant here, paragraph 3 orders Tiner to pay Kuykendall $239,650, "together with interest at the rate of 10% per annum on any amounts that are unpaid on an after January 1, 2016." Paragraph 10 states: "As of February 22nd 2016, no payments have been made to Matt Kuykendall by Michael A. Tiner towards the damages sum owed of $239,650.00. As per the interest ordered at the rate of 10% per annum on any amounts that are unpaid on and after January 1, 2016. The amount added to the total for year 2016 is $23,965.00, making the amount owed to Matt Kuykendall by Michael A. Tiner for damages in relation to the arbitration award now $263,615.00." Paragraph 11 states: "Additional monies owed to Matt Kuykendall by Michael A. Tiner, as awarded in the arbitration are as follows: $6,000.00 for Arbitration filing fees and $1500.00 for legal fees, which . . . totals $7,500." Paragraph 12 awards Kuykendall $935 in costs as the prevailing party.
B. The Judgment Must be Modified
" 'Unless a statutory basis for vacating or correcting an award exists, a reviewing court "shall confirm the award as made . . . ." ' " (Maaso v. Signer (2012) 203 Cal.App.4th 362, 378.) " 'An order confirming an award is to be reduced to a judgment.' [Citation.] . . . [S]section 1287.4 provides: 'If an award is confirmed, judgment shall be entered in conformity therewith.' " (Cal Sierra Development, Inc. v. George Reed, Inc. (2017) 14 Cal.App.5th 663, 678, fn. 5.) The entry of a judgment not in conformity with a confirmed arbitration award violates section 1287.4. (Devonwood Condominium Owners Assn. v. Farmers Ins. Exchange (2008) 162 Cal.App.4th 1498, 1506, 1509.)
Here—as Kuykendall acknowledges—the trial court confirmed the arbitration award and entered judgment, but the judgment is not "in conformity" with the award because the prejudgment interest calculation in paragraph 10 is incorrect. Paragraph 10 awards prejudgment interest for the entire 2016 calendar year, when only 84 days passed between January 1, 2016 and March 25, 2016, the date the judgment was filed. Because Tiner appealed from the judgment, we may correct the trial court's error. Paragraph 10 of the judgment is modified to read: "The amount owed to Matt Kuykendall by Michael A. Tiner for damages in relation to the arbitration award is: $245,165.23, comprised of the following: $239,650 in damages, plus $5,515.23 in interest (interest at the rate of 10 percent per annum for the 84 days between January 1, 2016 and March 25, 2016)."
Paragraph 11 of the judgment—which awards Kuykendall $7,500 in arbitration filing fees and legal fees—is stricken. The arbitration award does not include these fees and Kuykendall agrees the paragraph should be deleted. Paragraph 12—which awards Kuykendall $935 in costs—is also stricken. Under section 1287.4, "the trial court did not have authority to issue a judgment containing this additional language, which was not included in the arbitration award or trial court order granting [the] petition to confirm the award." (SunLine Transit Agency v. Amalgamated Transit Union, Local 1277 (2010) 189 Cal.App.4th 292, 312; Maaso v. Signer, supra, 203 Cal.App.4th at p. 380 [noting lack of authority providing "the trial court with an independent basis for a cost award to a prevailing party where those costs were not part of the arbitration award"]; see also § 1284.2.) "Because the trial court exceeded its authority by adding to the judgment relief not mentioned in the arbitration award or trial court order granting confirmation of the award, the inappropriate language is not in conformity with the arbitration award and therefore must be stricken from the judgment." (SunLine Transit Agency, supra, at p. 312.)
DISPOSITION
The judgment is modified as follows:
Paragraph 10 of the judgment is modified to read: "The amount owed to Matt Kuykendall by Michael A. Tiner for damages in relation to the arbitration award is: $245,165.23, comprised of the following: $239,650 in damages, plus $5,515.23 in interest (interest at the rate of 10 percent per annum for the 84 days between January 1, 2016 and March 25, 2016)." Paragraphs 11 and 12 of the judgment are stricken.
As modified, the judgment is affirmed.
Each party is to bear their own costs on appeal. (Cal. Rules of Court, rule 8.278(a)(5).)
/s/_________
Jones, P.J. We concur: /s/_________
Simons, J. /s/_________
Needham, J.