Opinion
G054598
06-26-2018
FRANCISCO ROLDAN et al., Plaintiffs and Respondents, v. QUINTILONE & ASSOCIATES et al., Defendants and Appellants.
Quintilone & Associates, Richard E. Quintilone II, Alvin B. Lindsay, and George A. Aloupas; AlvaradoSmith, William M. Hensley for Defendants and Appellants. Law Offices of Steven R. Young, William F. Zulch and Steven R. Young for Plaintiffs and Respondents.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 30-2009-00303966) OPINION Appeal from orders of the Superior Court of Orange County, Ronald L. Bauer, Judge. Affirmed. Quintilone & Associates, Richard E. Quintilone II, Alvin B. Lindsay, and George A. Aloupas; AlvaradoSmith, William M. Hensley for Defendants and Appellants. Law Offices of Steven R. Young, William F. Zulch and Steven R. Young for Plaintiffs and Respondents.
Richard E. Quintilone II and his law firm Quintilone & Associates (hereafter Quintilone), and Callahan & Blaine, and its attorneys Edward Susolik and Lee Burrows (collectively Callahan), represented a group of elderly residents living in an apartment building contaminated with toxic mold. After five years, the residents reluctantly settled their cases after these attorneys attempted to have them declared legally incompetent so that a guardian ad litem could be appointed to cooperate with the attorneys' efforts.
In 2009, several of the residents sued the attorneys, who in turn sought to compel arbitration of the dispute. In 2011, we considered an appeal filed by Quintilone after the trial court denied his petition but granted Callahan's petition to compel arbitration in a lawsuit filed by former clients Francisco and Joan Roldan (the Roldans). (Roldan v. Quintilone (Aug. 31, 2011, G044097) [nonpub. opn.].) The court determined the Roldans did not agree to arbitrate their tort-based action for elder abuse and other related claims in their contingency fee agreement with Quintilone. The court granted Quintilone's request to stay the litigation until completion of the arbitration between the Roldans and Callahan. (Ibid.)
Thereafter, the Roldans' lawsuit was consolidated with similar actions filed by two more elderly residents, Gail Cudacoff and Jenni Mendoza (hereafter the Roldans, Cudacoff, and Mendoza will be collectively referred to as the Clients, unless the context requires otherwise). In 2013, we considered the Clients' appeal from the trial court's decision to deny their motion seeking an order compelling Callahan to advance the entire upfront costs of the arbitration forum that was forced upon them. (Roldan v. Callahan & Blaine (2013) 219 Cal.App.4th 87.) The Clients argued they were indigent and could not afford to share the substantial expenses required to arbitrate a dispute. (Id. at p. 89.) We reversed the order and directed the trial court to consider the Clients' financial status and issue an order specifying Callahan had the option of either paying for those who are financially unable to do so, or "waiv[e] its right to arbitrate that plaintiff's case and allowing the case to proceed in court." (Id. at pp. 89-90.) After the case was remanded, the parties stipulated to arbitrate all disputes against both Callahan and Quintilone, with the attorneys paying for the arbitration forum. The parties agreed retired Judge David C. Velasquez would be their arbitration judge.
Shortly thereafter, Callahan settled with the Clients for $395,000. After considering the case, the arbitrator found in the Clients' favor on one cause of action, and awarded each of them economic and noneconomic damages. The arbitrator offset Callahan's settlement offer against the award of economic damages, but denied Quintilone's motion for an offset against the noneconomic damages (totaling $135,000).
Quintilone then asked the trial court to "correct the award" by applying the offset to eliminate the entire $135,000 award, pursuant to its authority under Code of Civil Procedure section 1286.6, subdivision (a). The court denied Quintilone's petition to correct the award and his subsequent motion to vacate the arbitration award for the limited purpose of having the arbitrator allocate fault between Quintilone and Callahan and offset the award against Quintilone. The court confirmed the Clients' petition to confirm the arbitration award.
All further statutory references are to the Code of Civil Procedure, unless otherwise indicated.
In this appeal, Quintilone maintains the trial court had authority to review and "correct" the arbitrator's legal error in failing to offset the award by the Callahan settlement amount. We disagree. As determined by the trial court, the nature of Quintilone's argument in both of his petitions was to attack the arbitrator's legal reasoning, i.e., the arbitrator made legal mistakes in calling the damages noneconomic and then refusing to offset them with the settlement. Section 1286.6 only permits the trial court to correct an arbitration award when there has been an evident miscalculation of figures. The trial court could not correct the arbitration award merely because Quintilone disagreed with the arbitrator's choice of remedy. It is well settled an arbitrator's decision cannot be reviewed for errors of fact or law. (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 10 (Moncharsh)). Accordingly, we affirm the trial court's orders denying the petition to correct, denying the petition to vacate, and granting the petition to confirm the arbitration award.
FACTS
We incorporate by reference the factual discussions contained in our two prior opinions (issued by a different panel of this appellate court). (Roldan v. Callahan & Blaine (2013) 219 Cal.App.4th 87; Roldan v. Quintilone (Aug. 31, 2011, G044097) [nonpub. opn.].) Our factual summary here begins with a brief review of the September 2016 final arbitration award.
The arbitrator summarized the nature of the complaint as follows: "[The Clients] sued their former attorneys . . . firstly, based on events concerning the manner in which the underlying case for exposure to toxic mold was handled . . . . [The Clients] allege the defendants negligently mishandled the prosecution of that underlying claim by not hiring necessary experts resulting in a 'below value' resolution. [¶] Secondly, [the Clients] allege they were coerced, threatened, and abused by the defendants in order to force [the Clients] into accepting a settlement they did not wish to accept all in breach of [their] fiduciary duty to [the Clients]."
It is unclear if the arbitrator's use of the generic term "the defendants" refers to the two defendants remaining in arbitration (Quintilone and his law firm), or to Quintilone and the settling codefendants (the Callahan defendants). Accordingly, we have not changed the wording of the award.
The arbitrator discussed the events leading up to and the downfall of the toxic mold case. "One often regrets in hindsight giving an opinion before having all of the facts. That was a factor here contributing to the eventual break down of the attorney-client relationship. Too early in the case, . . . Quintilone expressed to [the Clients] his opinion of the value of their cases. It may have been a problem in how the numbers were conveyed to [the Clients], but once stated, [the Clients] became fixated on those unrealistic values. [¶] The case was vigorously defended by the [landlord's attorneys]. [¶] By the summer of 2007 . . . Quintilone was running out of resources to fund experts, which would be necessary to prove the underlying case. As the case progressed . . . it became clear that he would not be able to present persuasive expert opinion on the cause of [the Clients'] medical condition[s] as a result of exposure to alleged toxic mold. . . . [I]n about September[] 2007 . . . Quintilone associated [Callahan] into the case . . . because of that firm's resources to support the litigation, including its ability to finance the cost of experts."
The arbitrator explained the landlord made disappointing settlement offers. He determined that when the Landlord offered $875,000, Quintilone realized "[t]he unreasonable expectations of [the Clients] made allocation of the proceeds virtually impossible." In addition, "Each plaintiff was entirely implacable in his or her belief that each deserved the entirety of the $875,000 offer . . . without reimbursement [to] the attorneys for the costs incurred to date. [¶] Counsel had not anticipated, or planned on a course of action to allocate the settlement proceeds in the situation they were then in. None of the present defendants obtained adequate waivers of conflict from [the Clients] . . . [and they] complained that counsel were making settlement proposals which the clients had not authorized in advance."
The arbitrator noted the landlord decreased the amount of subsequent settlement offers and ended with a total offer of $435,000. He concluded, "The fabric of the attorney-client relationship began to unravel once counsel realized [the Clients] would have no part of the settlement, no matter what counsel explained to them. And so in reaction, the defendants acquiesced in a plan to coerce [the Clients] to settle." In one e-mail, it was proposed counsel should take away the Clients' "'feelings of empowerment.'" Callahan threatened to withdraw from the case, leaving Quintilone with inadequate funds to proceed to trial. The arbitrator concluded, "By November[] 2007, discourse between [the Clients and their counsel] deteriorated, sometimes to shouting matches. At times the defendants berated [the Clients] through name-calling, and accusations [they] were stupid and greedy. The tenor of the attorney-client communication was so bad at times that the elderly [Clients] were afraid to talk with their attorneys. [The Clients'] nerves were placed on edge. Each . . . felt as if his or her blood pressure was rising. At times, [the Clients] refused to answer telephone calls from the defendants, or to return calls."
Other tenants settled with the landlord, who agreed to "'settle around [the Clients]' presumably to the advantage of [the] other [tenants] and to the potential disadvantage of [the Clients]." Matters got worse after the Clients refused to sign substitution of attorney forms. Mendoza's health declined and her daughter participated in the action on her behalf. "The defendants" told the Clients they would have to pay all the costs if the case went to trial. In an effort to pressure the Clients to settle, counsel breached their attorney-client privilege and spoke to the Clients' children without their permission. After the trial court denied the motion to withdraw as counsel, "the defendants soon sought an order to appoint a guardian ad litem for each [client]." The arbitrator noted, "This was done without [the Clients'] consent or authority. At the same time, [the Clients] were told the defendants had not hired an expert to testify that [the Clients'] medical ailments were caused by toxic mold. [¶] Upon being served with the motion for appointment of a guardian ad litem, [the Clients] sought help of new counsel to oppose the motion. The motion caused [the Clients] extreme distress because they believed the scope of an order appointing a guardian ad litem would take away their independence and ability to control their own financial affairs in all aspects of their lives." The new attorney asked the Clients to undergo mental evaluations to support the argument they were able to handle their own affairs. Despite being represented by counsel, "Quintilone was still communicating with . . . Roldan about the motion, and the need to settle the case . . . ." Quintilone threatened her to accept the settlement offer because "'tomorrow [would be] her last day' presumably to avoid the appointment of someone else to make decisions for her."
The arbitrator noted that although the motions to appoint guardians failed, the Clients each incurred $7,500 in costs (for attorney fees and the medical evaluation). The attorney client relationship with Quintilone and Callahan did not improve. "Quintilone accused [the Roldans] of being greedy and vengeful." In May 2009, the Clients agreed to a global settlement offer of $435,000.
The arbitrator stated that to prevail in a case for professional negligence, the Clients must prove the "'case-within-the-case'" and failed to do so. They were unable to present any evidence their medical conditions were caused by the toxic mold. However, the arbitrator concluded, "Quintilone's breach of fiduciary duty caused [the Clients'] economic and noneconomic damage[s]." He added, "[The Clients] contend the defendants intentionally caused them mental distress, emotional upset, and economic loss by the attorneys' extreme psychological abuse and breaches of professional ethics in order to coerce [the Clients] into accepting settlement offers they did not wish to accept." The arbitrator reasoned the Clients were subjected to intentional and affirmative misconduct by their attorneys, warranting the recovery of noneconomic damages. It discussed the elements needed to prevail on breach of fiduciary duty/breach of loyalty claim.
The arbitrator concluded, "In our case, the arbitrator finds [the Clients] have proved . . . Quintilone breached his fiduciary duty causing serious mental distress and upset, and financial loss. [¶] A plaintiff has the right to recover damages for emotional distress suffered as a result of ethical violations amounting to a breach of fiduciary duly, including the duty of loyalty. . . . Quintilone violated these duties by threatening to abandon this clients, by coercing them to accept a settlement they did not wish to accept, by disrespecting the [Clients'] desire to have a trial, by taking away the [Clients'] 'sense of empowerment' to choose a course of action in settling a case, by taking a position adverse to the clients in seeking the appointment of a guardian ad litem where the [Clients] were not incompetent, by interfering with the relationship between the client and his/her separate attorney by communicating with the [Clients] about the motion to appoint a guardian ad litem during the pendency of that proceeding, and by disclosing privileged information without the [Clients'] permission. [¶] As to the remaining causes of action, [the Clients] were not good historians, and therefore, they have failed to carry their burden to prove each essential element of the cause of action whether by the preponderance of the evidence or clear and convincing proof where required." The arbitrator denied the Clients' request for punitive damages. It awarded each client $7,500 for their economic damages and differing amounts of noneconomic damages as follows: Francisco Roldan ($10,000), Joan Roldan ($50,000), Chudacoff ($50,000), and Mendoza ($25,000).
Quintilone filed a motion asking the arbitrator to offset the award by the settlement sum paid by Callahan. In the final arbitration award, the arbitrator offset economic damages against the settlement sum, but refused to reduce the noneconomic damage awards. The final award contains a collective total of $135,000 in noneconomic damages.
In superior court, Quintilone filed a petition to correct the award, raising the same arguments regarding setoff that the arbitrator rejected. The trial court denied the petition. On the record, the court stated Quintilone's counsel improperly focused on the contents of the pleadings. It commented, "Your motion extensively quotes from the pleadings in this case which, of course, have no value at the present time in determining what the award was . . . . [¶] Surely the pleadings accuse lots of people and often collectively as defendants doing wrong things, but that doesn't help us very much here."
In making its ruling, the court stated, "The court has concluded that [the arbitrator] made all the apportionment that he thought appropriate and considered the issues that are raised in this motion. [¶] As you read his final award it is evident to this court that he is focusing on the misdeeds of Quintilone. I can recite the various places where he specifically commented about Quintilone, they are throughout this document. . . . [¶] . . . [T]his award is, in my opinion, an award tailored to . . . Quintilone . . . and [his] participation. [¶] . . . [¶] And if [the arbitrator] is wrong, that probably is his error and not reviewable here, but I think that it is clear that he has made some decisions here about apportionment."
At the next hearing, the superior court granted the Clients' petition to confirm the award and denied Quintilone's motion to vacate it. The reporter's transcript reflects the court told Quintilone's counsel that his briefing gave very "short shrift" to the issue of whether the trial court had any "authority, the power to accede to your request." It stated, "You have collectively selected a different mechanism for the resolution of your dispute, and the courts tell me that once you make that selection you ride that horse to the end. [¶] . . . [T]he point is that the arbitrator is empowered to make the decisions and to make mistakes, that's what the Supreme Court tells us. [¶] And you have suggested that we should not correct the arbitrator's decision but to send it back. But the arbitrator is done. The arbitrator has made its decision."
The court added, "[A] mistake is within the powers of the arbitrator. [¶] In this little soliloquy, I am not by any means suggesting that the arbitrator did make a mistake, but I am suggesting that you have to show that we have the authority to intervene, I don't think you have."
At the hearing, Quintilone referred to his prior motion asking the trial court to correct the award due to the arbitrator's failure to offset damages to avoid a windfall. He asked the court to send the matter back to the arbitrator to "satisfy his obligation" to allocate and apportion fault between Quintilone and Callahan regarding emotional distress damages. The court replied, "[W]hen all is said and done [the arbitrator] has satisfied his obligation because he has rendered what he believes to be the correct decision on the disputes assigned to him. That's what an arbitrator does, and the court does not intervene. There are exceptions, I don't deny that. [¶] Since the Moncharsh case was decided there has been some expressions of possible exceptions in the appellate opinions, but this is not one[.] [T]his is just a point where you disagree with what [the arbitrator] did. [¶] And you may be thinking right now, as I say that, that you don't disagree with what he did, you just think he didn't do it all. That's the same. You just disagree with what he did or didn't do and that's beyond my purview. [¶] [The arbitrator] fully met his assignment. [¶] And, again, through all this discussion I haven't once said whether I agree or disagree with his decision, because I think that's not my task."
DISCUSSION
In his opening brief, Quintilone discusses the following legal errors: (1) Quintilone is entitled to an offset because Proposition 51 is inapplicable; (2) emotional distress damages are not recoverable in a legal malpractice action; (3) the facts presented during the arbitration support a legal malpractice action seeking economic damages; (4) Quintilone was entitled to full credit for the Callahan settlement under section 877; (5) the superior court should have exercised its authority under section 1286.6, subdivision (a), by correcting the award and applying the offset. In the brief's concluding paragraph, Quintilone asserts that due to the above legal errors, this court applying our de novo standard of review should reverse the trial court's orders and remand the matter with instructions the award must be "mathematically corrected to reflect a full setoff by [the] . . . $395,000[] settlement of the entirety of the $135,000[] awarded to [the Clients]."
Judicial review of an arbitration award is ordinarily limited to the statutory grounds for vacating an award under section 1286.2, and correcting an award under section 1286.6. (ECC Capital Corp. v. Manatt, Phelps & Phillips, LLP (2017) 9 Cal.App.5th 885, 899-900.) Noticeably absent from Quintilone's briefing is any legal discussion or citation to legal authority, holding any of the purported legal errors listed above can be reviewed under section 1286.2 or 1286.6. What statutory factors apply to permit judicial review of an arbitrator's purported legal or factual error? As described in our factual summary, the trial court had the same problem with Quintilone's arguments. It found dispositive Quintilone's failure to address the threshold issue of why the court had authority to intervene. Yet on appeal, it is apparent that Quintilone made no effort to modify his argument to address this dispositive issue regarding judicial review of an arbitration award.
This dubious tactic appears to be at the heart of the Clients' motion for sanctions on appeal pursuant to California Rules of Court, rule 8.276. The motion is based on two grounds: (1) the appeal is frivolous due to the rules of arbitral finality; and (2) Quintilone's briefing violates appellate rules. We will address this motion separately after addressing the merits of the appeal.
I. Overview of Arbitral Finality & Judicial Review
Over two decades ago, our Supreme Court clarified the general rule of arbitral finality in the Moncharsh case. "Ensuring arbitral finality thus requires that judicial intervention in the arbitration process be minimized. [Citations.] Because the decision to arbitrate grievances evinces the parties' intent to bypass the judicial system and thus avoid potential delays at the trial and appellate levels, arbitral finality is a core component of the parties' agreement to submit to arbitration. Thus, an arbitration decision is final and conclusive because the parties have agreed that it be so. By ensuring that an arbitrator's decision is final and binding, courts simply assure that the parties receive the benefit of their bargain." (Moncharsh, supra, 3 Cal.4th at p. 10, fn. omitted.)
"Moreover, '[a]rbitrators, unless specifically required to act in conformity with rules of law, may base their decision upon broad principles of justice and equity, and in doing so may expressly or impliedly reject a claim that a party might successfully have asserted in a judicial action.' [Citations.] As early as 1852, this court recognized that, 'The arbitrators are not bound to award on principles of dry law, but may decide on principles of equity and good conscience, and make their award ex aequo et bono [according to what is just and good].' [Citation.] 'As a consequence, arbitration awards are generally immune from judicial review. "Parties who stipulate in an agreement that controversies that may arise out of it shall be settled by arbitration, may expect not only to reap the advantages that flow from the use of that nontechnical, summary procedure, but also to find themselves bound by an award reached by paths neither marked nor traceable and not subject to judicial review." [Citation.]' [Citation.] [¶] Thus, both because it vindicates the intentions of the parties that the award be final, and because an arbitrator is not ordinarily constrained to decide according to the rule of law, it is the general rule that, 'The merits of the controversy between the parties are not subject to judicial review.' [Citations.] More specifically, courts will not review the validity of the arbitrator's reasoning. [Citations.] Further, a court may not review the sufficiency of the evidence supporting an arbitrator's award. [Citations.]" (Moncharsh, supra, 3 Cal.4th at pp. 10-11, italics added.)
"Thus, it is the general rule that, with narrow exceptions, an arbitrator's decision cannot be reviewed for errors of fact or law. In reaffirming this general rule, we recognize there is a risk that the arbitrator will make a mistake. That risk, however, is acceptable for two reasons. First, by voluntarily submitting to arbitration, the parties have agreed to bear that risk in return for a quick, inexpensive, and conclusive resolution to their dispute. [Citation.] . . . 'In other words, it is within the power of the arbitrator to make a mistake either legally or factually. When parties opt for the forum of arbitration they agree to be bound by the decision of that forum knowing that arbitrators, like judges, are fallible.' [Citation.]" (Moncharsh, supra, 3 Cal.4th at p. 11, italics added.)
"A second reason why we tolerate the risk of an erroneous decision is because the Legislature has reduced the risk to the parties of such a decision by providing for judicial review in circumstances involving serious problems with the award itself, or with the fairness of the arbitration process. . . . Section 1286.2 sets forth the grounds for vacation of an arbitrator's award. It states in pertinent part: "[T]he court shall vacate the award if the court determines that: [¶] (a) The award was procured by corruption, fraud or other undue means; [¶] (b) There was corruption in any of the arbitrators; [¶] (c) The rights of such party were substantially prejudiced by misconduct of a neutral arbitrator; [¶] (d) The arbitrators exceeded their powers and the award cannot be corrected without affecting the merits of the decision upon the controversy submitted; or [¶] (e) The rights of such party were substantially prejudiced by the refusal of the arbitrators to postpone the hearing upon sufficient cause being shown therefor or by the refusal of the arbitrators to hear evidence material to the controversy or by other conduct of the arbitrators contrary to the provisions of this title.'" (Moncharsh, supra, 3 Cal.4th at p. 12.)
"In addition, section 1286.6 provides grounds for correction of an arbitration award. That section states in pertinent part: '[T]he court, unless it vacates the award pursuant to [s]ection 1286.2, shall correct the award and confirm it as corrected if the court determines that: [¶] (a) There was an evident miscalculation of figures or an evident mistake in the description of any person, thing or property referred to in the award; [¶] (b) The arbitrators exceeded their powers but the award may be corrected without affecting the merits of the decision upon the controversy submitted; or [¶] (c) the award is imperfect in a matter of form, not affecting the merits of the controversy.'" (Moncharsh, supra, 3 Cal.4th at p. 13.)
Accordingly, "Once a petition to confirm an award is filed, the superior court has only four courses of conduct: to confirm the award, to correct and confirm it, to vacate it, or to dismiss the petition. [Citation.] The trial court is empowered to correct or vacate the award, or dismiss the petition, upon the grounds set out in the pertinent statutes; '[o]therwise courts may not interfere with arbitration awards.' [Citations.]" (Cooper v. Lavely & Singer Professional Corp. (2014) 230 Cal.App.4th 1, 11.) B. Standard of Review
"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. [Citations.]" (Lindenstadt v. Staff Builders, Inc. (1997) 55 Cal.App.4th 882, 892, fn. 7 (Lindenstadt).) C. Petition to Vacate Award
Section 1286.2, subdivision (a)(4), provides the trial court must vacate the award if it determines "[t]he arbitrators exceeded their powers and the award cannot be corrected without affecting the merits of the decision upon the controversy submitted." In his petition to vacate, Quintilone asserted the arbitrator exceeded his powers by failing to apportion fault and properly apply an offset for the Callahan settlement. He did not cite any other provisions of section 1286.2 or any other reason to vacate the award.
With respect to subdivision (a)(4), Quintilone provided no legal authority describing when "an arbitrator exceeds their powers." Consequently, it is unclear on what theory he believed the arbitrator exceeded his powers in deciding the merits of this controversy. (See e.g., Advanced Micro Devices, Inc. v. Intel Corp. (1994) 9 Cal.4th 362, 381 (Advanced Micro Devices) [award remedies expressly forbidden by arbitration agreement or submission]; Malek v. Blue Cross of California (2004) 121 Cal.App.4th 44, 56 [award beyond arbitrator's powers to decide legal validity of arbitration agreement].) Quintilone does not suggest the arbitrator decided matters unrelated to the parties' dispute submitted to arbitration. He merely cites general legal authority regarding offsets and allocation of fault, suggesting the arbitrator made a mistake in applying these legal principles and selected the wrong remedy. He then jumps to the conclusion the arbitrator exceeded his powers by misapplying the law.
However, "It is well settled that 'arbitrators do not exceed their powers merely because they assign an erroneous reason for their decision.' [Citations.]" (Moncharsh, supra, 3 Cal.4th at p. 28.) Moreover, "The choice of remedy . . . may at times call on any decisionmaker's flexibility, creativity and sense of fairness. In private arbitrations, the parties have bargained for the relatively free exercise of those faculties. Arbitrators, unless specifically restricted by the agreement to following legal rules, '"may base their decision upon broad principles of justice and equity . . . ." [Citations.] As early as 1852, this court recognized that, "The arbitrators are not bound to award on principles of dry law, but may decide on principles of equity and good conscience, and make their award ex aequo et bono [according to what is just and good]." [Citation.]' [Citation.] Were courts to reevaluate independently the merits of a particular remedy, the parties' contractual expectation of a decision according to the arbitrators' best judgment would be defeated." (Advanced Micro Devices, supra, 9 Cal.4th at pp. 374-375, fn. omitted.) We conclude the arbitrator did not act in excess of his powers in fashioning a remedy based on its determination Quintilone breached his duty of loyalty and intentionally caused the Clients "serious mental distress and upset, and financial loss." After all Quintilone vehemently fought to have the dispute "be bound by the decision of that forum knowing that arbitrators, like judges, are fallible.' [Citation.]" (Moncharsh, supra, 3 Cal.4th at p. 12.) D. Petition to Correct Award
Quintilone's petition to correct refers to only one subdivision of section 1286.6. The statute provides, in relevant part, "Subject to [s]ection 1286.8, the court, unless it vacates the award pursuant to [s]ection 1286.2, shall correct the award and confirm it as corrected if the court determines that: [¶] (a) There was an evident miscalculation of figures or an evident mistake in the description of any person, thing or property referred to in the award[.]"
Section 1286.8 provides the court cannot correct an award unless certain procedural conditions are satisfied, such as a properly served and filed petition, reasonable notice, etc.
Quintilone maintains the court erred in not correcting the award under subdivision (a), because "the mathematical correction in the [a]rbitrator's mistaken calculation of the setoff due under . . . . [section] 877 is properly made pursuant to . . . [section 1286.8, subdivision (a)] and does not constitute an impermissible modification of the award." He maintains this theory is supported by the decision in Wade v. Schrader (2008) 168 Cal.App.4th 1039 (Wade). The case is factually distinguishable.
In the Wade case, plaintiff sued several minority shareholders in a start-up company claiming defendants wrongfully deprived him of his stock in the company after they fired him. (Wade, supra, 168 Cal.App.4th at p. 1042.) The trial court determined plaintiff's settlement with several defendants was in good faith pursuant to section 877. (Ibid.) Plaintiff and the remaining defendants resolved the dispute in binding arbitration. The arbitrator awarded less than the amount plaintiff received from the settling co-defendants. (Ibid.) The trial court confirmed the award and entered judgment in plaintiff's favor. (Id. at p. 1043.) Thereafter, defendants asked plaintiff to acknowledge satisfaction of the judgment based on the good faith settlement. When he refused, defendants sought relief in the trial court. The court concluded defendants were entitled to partial satisfaction of the judgment, "leaving unsatisfied only the portion of the judgment attributable to costs." (Id. at p. 1044.) The matter was appealed, where the ruling was affirmed as "an appropriate exercise of the superior court's discretion in enforcing a money judgment." (Id. at p. 1042.)
The Wade court noted the superior court was "very limited in its ability to vacate or correct an arbitration award" and this case did not concern a timely filed petition to vacate or correct the award. (Wade, supra, 168 Cal.App.4th at p. 1045.) It noted there was case authority holding where a judicial arbitration award is silent as to costs, the prevailing party "was entitled to recover costs by filing a memorandum of costs" following entry of judgment. (Id. at p. 1045, citing Guevara v. Brand (1992) 8 Cal.App.4th 995, 998 (Guevara).) The Wade court referred to the following analysis from the Guevara case: "'An arbitration award has the same force and effect as a judgment in a civil action or proceeding, and is subject to all provisions of law relating to a civil judgment.' [Citation.] 'A cost bill does not affect the arbitrator's determination of the merits, which is the basis of the award . . . .' [Citation.] Under both the rules of court and the statute allowing costs to a prevailing party, the plaintiff was entitled to recover his costs 'as a matter of right and it was 'entirely appropriate' to file a memorandum of costs to assert that right even though the arbitrator had failed to include costs in the award. [Citation.]" (Wade, supra, 168 Cal.App.4th at p. 1045.)
The Wade court concluded that although the case involved contractual arbitration and not judicial arbitration, the same reasoning applied. (Wade, supra, 168 Cal.App.4th at p. 1045.) "[L]ike a prevailing party who is entitled to costs, nonsettling defendants are entitled, as a matter of right, to reduce their liability to a plaintiff in the amount of the credit provided by section 877. Section 877, subdivision (a), provides that a good faith settlement with co-tortfeasors cuts off the right of the nonsettling tortfeasors to seek contribution or indemnity from the settling tortfeasors and at the same time reduces the nonsettling tortfeasors' ultimate liability to the plaintiff. [Citation.] This scheme is designed 'to provide for equitable sharing of damages among the parties at fault and to encourage settlement.' [Citation.] Insulating the settling defendants from future indemnity claims encourages settlement. Allowing the nonsettling defendants a credit against a future judgment promotes equitable sharing of fault and prevents the plaintiff from obtaining an unfair double recovery. Thus, the settlement credit is a 'fundamental feature' of the good faith settlement process. [Citation.] It 'assures that a plaintiff will not be enriched unjustly by a double recovery, collecting part of his total claim from one joint tortfeasor and all of his claim from another.' [Citation.]" (Id. at p. 1046.)
The Wade court recognized not all section 877 credits should be applied automatically. "Sometimes a defendant's entitlement to a section 877 settlement credit involves subsidiary issues of fact. [Citation.] In such a case, we assume that it would be appropriate to submit those issues of fact to the arbitrator for decision. But 'where there is an admission "that a settlement has been made with one or more joint tortfeasors in a certain amount there is no factual question to be resolved . . . respecting the settlement."' [Citation.] That is the situation here. There was never any dispute [plaintiff] had received a total of $170,000 through settlements with the minority shareholders, that the settlements were judicially determined to have been in good faith, and that the settlements were for the same claims [plaintiff] had alleged against [defendants]. Thus, [defendants'] entitlement to the credit of $170,000 arose by operation of law when the pretrial settlements were judicially declared to have been in good faith." (Wade, supra, 168 Cal.App.4th at p. 1046.)
The court rejected plaintiffs argument the arbitrator took the settlement credit into consideration and any correction would modify the award and give defendants a "double credit." (Wade, supra, 168 Cal.App.4th at pp. 1046-1047.) It reasoned, "Since there was never any dispute concerning the fact or the amount of the settlement credit, it was not a claim or right requiring adjudication. . . . [S]ince [defendants] did not ask the arbitrator to rule on the point, it follows that the arbitrator's award would not have taken the credit into account. Indeed, the arbitrator made an award in the exact amount of the value of the stock, which clearly demonstrates that the award was not reduced by the amount of the settlement credit." (Id. at p. 1047, italics added.) It also rejected the argument the issue was waived because defendants did not bring a petition to correct or vacate the arbitration award. It concluded the section 877 settlement credit is like an equitable setoff and defendant's motion to compel acknowledgment of satisfaction of a judgment was an acceptable procedure. (Id. at p. 1048.)
Unlike the Wade case, the one before us concerned noneconomic damages not an undisputed economic loss. Quintilone was not automatically entitled, as a matter of right, to reduce his liability unless it was undisputed Quintilone and Callahan were jointly and severally liable for emotional distress damages. The trial court made the factual determination the arbitrator awarded damages for the Clients' emotional distress directly caused by Quintilone's mistreatment and there was no need to apportion damages between codefendants. The trial court decided this conclusion was supported by evidence the arbitrator offset economic damages, recognizing the codefendants were jointly and severally liable. Evidence that the arbitrator refused to offset noneconomic damages, and referred to Quintilone's misconduct, supported the conclusion the arbitrator awarded emotional distress damages attributable only to Quintilon e. Our review of the trial court's factual findings is not de novo. As mentioned, when "the trial court's ruling rests upon a determination of disputed factual issues, we apply the substantial evidence test to those issues. [Citations.]" (Lindenstadt, supra, 55 Cal.App.4th at p. 892, fn. 7.)
We note Quintilone does not argue there was insufficient evidence to support the trial court's order. Rather, his arguments focus on pointing out legal error with the arbitration award. Quintilone focuses on the legal error in awarding emotional distress damages when the legal malpractice action was filed primarily for economic damages. Quintilone contends Proposition 51's rule applying to personal injury defendants simply does not apply to legal malpractice lawsuits. These legal arguments are premised on the factual determination the dispute was solely about professional negligence and economic loss. It ignores the trial court's determination the arbitrator considered a dispute that included a request for personal injury damages. There was substantial evidence to support this conclusion. Plainly stated in the award is the arbitrator's characterization of the dispute. He wrote the Clients "contend the defendants intentionally caused them mental distress, emotional upset, and economic loss . . . ." Moreover, the arbitrator devoted two pages of the award discussing legal authority permitting the award of emotional distress damages for breach of fiduciary duty/duty of loyalty. (See, e.g., Stanley v. Richmond (1995) 35 Cal.App.4th 1070, 1097, and cases cited therein). It determined the Clients' case involved a tort distinct from their professional negligence cause of action. The above evidence supports the trial court's determination that the arbitrator fashioned a remedy based on all the disputes presented in this arbitration.
Quintilone asserts the award is subject to a mathematical correction by a complete offset of the $135,000 awarded. Quintilone's proposed remedy is not so much a correction as a complete annihilation of the arbitrator's award. The trial court made the reasonable factual finding, based on statements in the award, that the arbitrator believed Quintilone alone was responsible for causing the specified amount of noneconomic damages. The arbitrator was well aware of the settlement, and agreed to offset its award of economic damages to prevent the Clients' from receiving a windfall. The arbitrator's clear decision to reject Quintilone's request to offset noneconomic damages supports the trial court's determination those damages are entirely attributable to Quintilone's misconduct. Quintilone failed to suggest why there was insufficient evidence to support the trial court's determination the award does not contain a mathematical error requiring correction.
As noted by the trial court, the only alleged error is the arbitrator's legal reasoning in first awarding noneconomic damages and then refusing to offset the award. Allowing this type of contention to warrant "correction" would be inconsistent with the rule of arbitral finality. (Moncharsh, supra, 3 Cal.4th at p. 23.) An arbitrator does not exceed his powers because they gave an erroneous reason or even if the evidence was insufficient to support the award. "'"A contrary holding would permit the exception to swallow the rule of limited judicial review; a litigant could always contend the arbitrator erred and thus exceeded his powers. . . ." [Citation.]'" (Kelly Sutherlin McLeod Architecture, Inc. v. Schneickert (2011) 194 Cal.App.4th 519, 536.) C. Sanctions
We decline to analyze two cases Quintilone cited for the first time at oral argument: Board of Education v. Round Valley Teachers Assn. (1996) 13 Cal.4th 269, and Pearson Dental Supplies, Inc. v. Superior Court (2010) 48 Cal.4th 665.
The Clients filed a separate motion for sanctions, as required by the California Rules of Court, rule 8.276(b). They ask for $37,280 on the grounds the appeal was frivolous and brought solely for the purpose of delay, and the briefing violated various court rules. Quintilone filed an opposition as part of his reply brief asserting he did not misrepresent the underlying facts and the appeal "is indeed a righteous case of first impression on" several points.
By any objective measure, Quintilone's appeal is indisputably without merit. His appeal of the trial court's order refusing to "correct" the award to eliminate it, and denying his motion to vacate the award was without factual or legal support. Given the clarity and frequency with which our Supreme Court has rejected attempts to obtain judicial review of arbitration awards, no reasonable attorney could have concluded otherwise. (In re Marriage of Flaherty (1982) 31 Cal.3d 637, 650.)
As noted by the Clients, Quintilone's briefing was far from exemplary. He omitted many material facts and inaccurately described others. Some of the alleged misstatements of fact are minor or relate to differences of opinion. Yet we found one misstatement to be significant because it attempted to mislead this court on a material point. Specifically, Quintilone asserted the trial court considered the petition for correction "concurrently" with the petition to confirm the arbitration award. He complained the superior court "summarily denied" the petition seeking correction. This is simply untrue. We reviewed the record. The reporter's transcript shows the trial court announced the basis for its decision on the petition for correction. Over a month later, at a different hearing, the court confirmed the award and denied Quintilone's motion to vacate. Thus, the correction petition was not summarily denied nor concurrently considered with the other petition.
In Quintilone's response to the motion for sanctions, we were surprised by the vehement argument in support of a parties' "right" to omit facts and mischaracterize the record. Quintilone stated, "[I]t is entirely unclear in an adversarial system . . . that [Quintilone's] alleged failure to zealously volunteer or advocate facts their adversaries view as helpful to their posture, are in any way properly sanctionable under any known rule or statute." Quintilone asserts, "[I]n no instance did [he] ever misstate the record, or engage in any falsity as accused by [the Clients]. If there were any misstatements of the record they were solely by [the Clients] in erroneously characterizing [the] case history as devoid of support in the record."
California Rules of Court, rule 8.204(a)(2)(C) requires that an appellant's opening brief provide "a summary of the significant facts limited to matters in the record," and rule 8.204(a)(1)(C) requires all appellate litigants to "[s]upport any reference to a matter in the record by a citation to the volume and page number of the record where the matter appears." Contrary to Quintilone's theory, "Sanctions are warranted for a party's unreasonable violations of the rules of appellate procedure. [Citations.]" (Evans v. Centerstone Development Co. (2005) 134 Cal.App.4th 151, 165.)
Both Code of Civil Procedure section 907 and California Rules of Court, rule 8.276(a) grant us broad discretion to determine the amount of the sanction. Generally, appellate sanctions are imposed to discourage frivolous appeals and to compensate for losses caused by such an appeal. (In re Marriage of Economou (1990) 223 Cal.App.3d 97, 104-105.) An accepted measure of loss is the amount of attorney's fees incurred in opposing the appeal. (Young v. Rosenthal (1989) 212 Cal.App.3d 96, 134-135.) The Clients' counsel declared his attorney fees, including those anticipated for oral argument, would total $37,280. Quintilone does not assert this amount is unreasonable. We conclude this sum, in addition to the recovery of costs on appeal, will be sufficient to discourage Quintilone and his firm from further frivolous litigation and to adequately compensate the Clients. (Pierotti v. Torian (2000) 81 Cal.App.4th 17, 32.) Accordingly, we impose sanctions in the amount of $37,280 against Quintilone and his firm, jointly and severally.
DISPOSITION
The orders are affirmed. The motion for sanctions is granted. Quintilone and his firm (Quintilone & Associates) shall pay $37,280 to Respondents (through their counsel). Respondents shall also recover from Appellants their costs on appeal.
Attorney Richard E. Quintilone and the clerk of this court are each ordered to forward a copy of this opinion to the State Bar upon return of the remittitur. The clerk of this court shall also notify attorney Richard E. Quintilone this matter has been referred to the State Bar. (Bus. & Prof. Code, §§ 6086.7, subd. (a), 6068, subd (o)(3).)
O'LEARY, P. J. WE CONCUR: MOORE, J. IKOLA, J.