Opinion
H035661
01-13-2012
JOANNE ROSSO, Plaintiff and Appellant, v. FENN C. HORTON III et al., Defendants 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Santa Clara County Super. Ct. No. CV116458)
Defendants Fenn C. Horton III (Horton) and Pahl & McCay (Pahl) provided legal services to plaintiff Joanne Rosso. Rosso filed a first amended complaint alleging professional negligence and breach of fiduciary duty against defendants, and the matter went to arbitration. Rosso appeals from a judgment of confirmation of the contractual arbitration award (award) in favor of defendants. We find no error and affirm.
Pahl (formerly known as Pahl & Gosselin) is a professional law corporation of which Horton is a shareholder.
I. Factual and Procedural Background
In late October 2006, Rosso contacted Horton about his representation of her in a lawsuit filed against her by Robert Bruce Pittman. This case had been pending since March 2004, and trial was set for March 12, 2007. On January 25, 2007, Rosso and defendants entered into a fee agreement in which defendants agreed to provide legal services to Rosso. At that time, defendants received an advance of $3,000 to specially appear at a deposition that was scheduled for January 26, 2007. However, the agreement stated that defendants would become Rosso's attorneys of record beyond this date only if she paid an additional $25,000 or the parties entered into another written agreement. Rosso paid the $25,000 retainer in the first week of February 2007. The fee agreement contained an arbitration clause.
The arbitration clause provided: "Any controversy between us regarding interpretation or application of the terms of this letter or our performance under those terms, or any claim arising out of these terms or their breach ('Dispute'), will be submitted to binding arbitration if either of us requests arbitration in a writing served on the other party. A Dispute includes, without limitation, those involving fees, costs, billing, claims of professional negligence, malpractice, and breach of ethical or fiduciary duties."
After being retained by Rosso, Horton filed a motion to continue the trial date, which was denied. On March 7, 2007, Horton represented Rosso at a hearing in which the terms of a settlement agreement in connection with Pittman v. Rosso (Super. Ct. Santa Clara County, No. 104-CV-016593) were recited on the record.
On May 16, 2007, Rosso hired The Deckard Law Firm and defendants were substituted out as Rosso's attorney of record.
After Rosso refused to pay the remaining balance of the fees owed to defendants, she filed a request for arbitration with the Santa Clara County Bar Association. Following a hearing, the arbitrators issued an award in favor of defendants in the amount of $21,389.97. In August 2008, the trial court confirmed the award and entered judgment in defendants' favor.
Meanwhile, on July 1, 2008, Rosso filed a complaint for professional negligence and breach of contract against defendants. The following day, defendants sent Rosso a letter in response to her complaint and requested that the matter be submitted for JAMS arbitration pursuant to the terms of the fee agreement. Shortly thereafter, defendants filed a motion to compel arbitration and stay the court proceedings. On September 9, 2008, the trial court granted defendants' motion. At that time, Rosso was not represented by counsel.
After Rosso hired counsel, the arbitration case with JAMS began. The first prearbitration conference with the arbitrator was in August 2009, and the arbitrator issued "Prehearing Order No. 1." This order outlined the procedures to be followed, including giving Rosso the opportunity to file a first amended complaint, allowing each party one deposition, and giving defendants the option to have their statute of limitations affirmative defense heard at the beginning of the hearing. The arbitration hearing was also scheduled for November 2, 2009.
Rosso filed a first amended complaint, which alleged causes of action for professional negligence and breach of fiduciary duty. The first cause of action alleged that Horton failed to exercise reasonable care when he "did not retain a forensic accountant to establish Plaintiff Rosso's damages" so "Plaintiff Rosso was effectively abandoned and forced to accept a settlement no reasonable attorney would advise had the attorney acted competently." The second cause of action alleged that "[i]n assuring Plaintiff Rosso that he would file the motion to re-open discovery to obtain an accounting, Defendant Horton breached his fiduciary duty to his client to be honest and forthcoming."
On September 22, 2009, the arbitrator issued "Prehearing Order No. 2." This order referred to the payment of fees and stated that Rosso was to be ready to proceed if the trial court granted her attorney's motion to withdraw as counsel.
After Rosso failed to appear for a deposition, defendants filed a motion to compel. In "Prehearing Order No. 3," the arbitrator ordered her to appear for deposition and to pay sanctions. The order also allowed Rosso to propound not more than 35 special interrogatories.
In October 2009, the trial court granted the motion to withdraw filed by Rosso's counsel.
At the commencement of the arbitration hearing, the arbitrator proposed, and the parties agreed, to bifurcate the liability issue from the damages issue.
After the hearing, Rosso submitted a written closing argument. She contended: (1) the one-year statute of limitations in Code of Civil Procedure section 340.6, was inapplicable in a legal malpractice action based on an attorney's breach of fiduciary duty claim; (2) Horton should not have agreed to represent her if he had insufficient time to prepare for trial; and (3) she was not required to present expert testimony because the arbitrator was a retired judge and thus competent to determine the applicable standard of care and whether it had been breached. She also argued that Horton: (1) failed to follow her instructions to file a motion that explained why there had been no discovery or forensic accounting; (2) did not contact her former attorney; (3) missed the deadlines for discovery and payment of jury fees; (4) did not understand Rosso's " 'increase in net-worth' " aspect of the partnership agreement; (5) did not prepare evidence of Pittman's breach of fiduciary duty; (6) billed her for reviewing documents that had not yet been delivered; (7) failed to conduct an adequate investigation of court records in Pittman v. Rosso; (8) did not seek a forensic accounting; and (9) did not protect her rights during the mandatory settlement conference.
On December 15, 2009, the arbitrator issued an award in favor of defendants in the amount of $4,612.36 for costs. The arbitrator concluded that Rosso's claims were barred by the one-year statute of limitations in Code of Civil Procedure section 340.6, subdivision (a), and that even if her claims were not barred, they had no merit.
In December 2009, defendants brought a motion for an order confirming the award of $4,612.36. In February 2010, Rosso requested a continuance of the hearing on defendants' motion, which was granted. Shortly thereafter, Rosso filed a motion to vacate the award. She attached to her petition several pages of what appears to be her personal summary of what occurred in the case of Rosso v. Pittman and the arbitration hearing. However, she presented no facts under penalty of perjury to support the allegations that she made in her motion.
In March 2010, Rosso filed a memorandum of points and authorities in support of her motion to vacate the award, which was set for hearing on April 20, 2010. The grounds for vacating the award were: (1) "[r]efusal to hear material evidence"; (2) "[m]isconduct of the Arbitrator"; and (3) "[t]he Arbitrator exceeded his authority." She argued: (1) the arbitrator should not have relied on the one-year statute of limitations (Code Civ. Proc., § 340.6, subd. (a)) because defendants did not present this defense in their original response in July 2008 or in their September 2008 and July 2008 appearances in court; and (2) the arbitrator limited her to 35 special interrogatories, and then only required defendants to answer nine of them while she was ordered to appear for a deposition for one full day. She also argued that the arbitrator's restriction of evidence prevented her from presenting: (1) evidence that the statute of limitations began to run in November 2007 rather than in March 2007; (2) evidence of defendants' fraudulent billing practices; and (3) evidence of when she paid the $25,000 and that defendants first provided legal services to her in October 2006. Rosso attached her declaration to support her motion to vacate the award. Her declaration stated that she did not agree to the bifurcation of the liability and damages issues, and that the arbitrator restricted evidence to the period from February 1, 2007 through March 7, 2007. Her declaration also purported to summarize the arbitration hearing, including the arbitrator's statements and the testimony of her previous attorney and Horton.
On April 7, 2010, defendants filed opposition to plaintiff's motion to vacate the award. They argued that Rosso had failed to establish substantial prejudice caused by the arbitrator's exclusion of evidence at the hearing. According to Horton's declaration, the arbitrator did not limit the evidence to the period between February 1, 2007 and March 7, 2007. Horton's declaration also stated that Rosso agreed to the bifurcation of liability from damages, never objected to the bifurcation during the hearing, and did not request that she be allowed to provide additional evidence. Defendants argued that the issue of the reasonableness of fees had already been litigated.
Following hearings on April 8 and 20, 2010, the trial court denied Rosso's motion to vacate the award and entered judgment confirming the award in favor of defendants. Rosso has filed a timely appeal.
II. Discussion
As the California Supreme Court has explained, "[w]hen parties contract to resolve their disputes by private arbitration, their agreement ordinarily contemplates that the arbitrator will have the power to decide any question of contract interpretation, historical fact or general law necessary, in the arbitrator's understanding of the case, to reach a decision. [Citations.] Inherent in that power is the possibility the arbitrator may err in deciding some aspect of the case. Arbitrators do not ordinarily exceed their contractually created powers simply by reaching an erroneous conclusion on a contested issue of law or fact, and arbitral awards may not ordinarily be vacated because of such error, for ' "[t]he arbitrator's resolution of these issues is what the parties bargained for in the arbitration agreement." ' [Citations.]" (Gueyffier v. Ann Summers, Ltd. (2008) 43 Cal.4th 1179, 1184 (Gueyffier).) Thus, "the scope of judicial review of arbitration awards is extremely narrow." (California Faculty Assn. v. Superior Court (1998) 63 Cal.App.4th 935, 943.) Code of Civil Procedure section 1286.2 sets forth the exclusive grounds for vacating an arbitration award. (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 28.) At issue in the present case is whether the award may be vacated on the ground that "[t]he rights of the party were substantially prejudiced . . . by the refusal of the arbitrators to hear evidence material to the controversy . . . ." (Code Civ. Proc., § 1286.2, subd. (a)(5).)
"We review de novo the trial court's order confirming the arbitration award. [Citations.]" (Gravillis v. Coldwell Banker Residential Brokerage Co. (2010) 182 Cal.App.4th 503, 511.) However, "we must accept the trial court's findings of fact if substantial evidence supports them, and we must draw every reasonable inference to support the award." (Alexander v. Blue Cross of California (2001) 88 Cal.App.4th 1082, 1087 (Alexander))
Rosso contends that the arbitrator's "spontaneously" bifurcated the issues of liability and damages, and thus she was deprived of her right to present evidence of her claims. She also contends that the arbitrator "showed an unfair bias and prejudice by not allowing evidence of Plaintiff/Appellant's portion totaling $1.7 million of partnership assets." There is no merit to these contentions.
Here, the award states in relevant part: "At the start of the hearing, and with the concurrence of the parties, the Arbitrator bifurcated the issues for hearing, with the first phase being devoted to the 'liability' issue . . . . The issue of damages would be heard at a second phase . . . ." (Italics added.) Since Rosso acquiesced in the arbitrator's proposal to bifurcate the issues, she has forfeited the issue on appeal. (See Shaw v. County of Santa Cruz (2008) 170 Cal.App.4th 229, 285-286 ["Forfeiture, otherwise known as waiver [fn. omitted], may result from action or inaction, though falling short of express waiver that demonstrates acquiescence in the error."].)
Rosso, however, argues that she never agreed to the bifurcation of these issues. Though Rosso's declaration supported her argument, Horton's declaration stated that Rosso agreed to the bifurcation of liability from damages, never objected to the bifurcation during the hearing, and did not request that she be allowed to provide additional evidence. This court "must accept the trial court's findings of fact if substantial evidence supports them, and we must draw every reasonable inference to support the award." (Alexander, supra, 88 Cal.App.4th at p. 1087.) Thus, given Horton's declaration and the language in the award, there was substantial evidence to support the trial court's implied finding that Rosso agreed to the bifurcation of the issues. Accordingly, we reject her claim that the arbitrator refused to hear relevant evidence.
Rosso also claims that the arbitrator made an order limiting the evidence to the period between February 1, 2007 and March 7, 2007. She argues that this restriction prevented her from presenting evidence regarding the effective date of the fee agreement, when the statute of limitations began to run, and the "provisions of care due the Plaintiff/Appellant." While Rosso's declaration supported her claim, there was conflicting evidence on this point. Horton's declaration stated that the arbitrator "did not make any order before, during, or after the arbitration hearing that might be construed as limiting the evidence to matters that occurred between February 1, 2007 and March 7, 2007." Neither the arbitrator's prehearing orders nor the award referred to any limitations on the presentation of evidence. Moreover, the summary of facts in the award included several references to facts that were not limited to the period between February 1, 2007 and March 7, 2007. Since there was substantial evidence to support the trial court's implied finding (Alexander, supra, 88 Cal.App.4th at p. 1087), we reject Rosso's claim.
Rosso asserts that there were "more than 50 bundles of relevant evidence" which were not considered by the arbitrator. She does not explain how this evidence was relevant to the allegations of her first amended complaint.
Rosso also argues that the arbitrator improperly excluded evidence of the parties' contract at the arbitration hearing. However, it appears that the arbitrator reviewed the fee agreement because he refers to it in the award. In any event, Rosso fails to show how the exclusion of this evidence was substantially prejudicial to her.
Rosso also argues that "[t]he arbitrator is a retired judge; and therefore an expert witness. The arbitrator deliberately did not apply his vast knowledge of California partnership law; and procedures on partnership cases in civil courts to substantially prejudice" her. (Capitalization & boldface omitted.) She essentially argues that the evidence supported her claims of professional negligence and breach of fiduciary duty. However, as previously stated, an arbitration award will not be vacated on this ground. (Gueyffier, supra, 43 Cal.4th at p. 1184.)
Rosso next asserts that the arbitrator improperly limited her to "only 9 questions in written special interrogatories while defendants were awarded a full day deposition." (Capitalization & boldface omitted.) Thus, she claims that the arbitrator gave defendants "favorable treatment." The record does not support her claim. Pursuant to Prehearing Order No. 2, Rosso was also allowed one deposition.
Rosso next argues that the arbitrator failed to acknowledge the basis of the underlying case, which she asserts was a breach of fiduciary duty in a partnership. She appears to be arguing that this failure deprived her of her right to present evidence that substantially prejudiced her. This argument is without merit. Rosso's first amended complaint alleged that defendants failed to exercise reasonable care in performing legal services by failing to retain a forensic accountant and that they breached their fiduciary duties by telling her that they would file a motion to reopen discovery to obtain an accounting. The arbitrator addressed these allegations in the final arbitration award. Given the allegations in the first amended complaint, the nature of the underlying case was irrelevant.
Rosso's reliance on Pearson Dental Supplies v. Superior Court (2010) 48 Cal.4th 665 (Pearson) and Burlage v. Superior Court (2009) 178 Cal.App.4th 524 (Burlage) are misplaced.
In Pearson, the California Supreme Court held that "when . . . an employee subject to a mandatory employment arbitration agreement is unable to obtain a hearing on the merits of his [Fair Employment and Housing Act] claims, or claims based on other unwaivable statutory rights, because of an arbitration award based on legal error [erroneously finding the claim time-barred], the trial court does not err in vacating the award." (Pearson, supra, 48 Cal.4th at p. 680.) In contrast to Pearson, here, Rosso was not an employee whose claims were based on unwaivable statutory rights.
Burlage is also readily distinguishable from the present case. In Burlage, after the plaintiffs purchased a house from the defendant, they learned that the defendant failed to tell them that the swimming pool and a fence encroached upon land owned by a country club. (Burlage, supra, 178 Cal.App.4th at p. 527.) Before the arbitration on the dispute was held, the title company paid the country club for a lot-line adjustment that gave the plaintiffs clear title to the encroaching land. (Id. at pp. 527-528.) However, the arbitrator excluded evidence of the lot-line adjustment, and awarded the plaintiffs over $1.5 million in compensatory damages, punitive damages, and attorney's fees and costs. (Id. at p. 528.) Burlage held that the trial court properly vacated the arbitration award, since the exclusion of evidence that the plaintiffs had suffered no damages substantially prejudiced the defendant. (Id. at p. 530.) Here, the arbitrator admitted evidence relevant to the issue of liability as alleged in Rosso's first amended complaint. Since the arbitrator found that Rosso had failed to prove that defendants had engaged in professional negligence or breached their fiduciary duty, the evidence of any alleged damages was not relevant.
Rosso also argues that the arbitrator erred in relying on the one-year statute of limitations in Code of Civil Procedure section 340.6 because "to the best of [her] knowledge," defendants did not present this defense until the arbitration hearing. We reject this argument for two reasons. First, even when an arbitrator makes an error of law or fact on a contested issue, an arbitration award will not be vacated. (Gueyffier, supra, 43 Cal.4th at p. 1184.) Second, an appellant "has the burden of showing reversible error by an adequate record." (Ballard v. Uribe (1986) 41 Cal.3d 564, 574.) Where the appellant has failed to provide an adequate record as to any issue the appellant has raised on appeal, the issue must be resolved against him or her. (Maria P. v. Riles (1987) 43 Cal.3d 1281, 1295-1296.) Here, there is nothing in the record to support Rosso's argument that defendants first presented this defense at the arbitration hearing.
Rosso next contends that the trial court made its ruling before reviewing Rosso's motion to vacate the award.
In December 2009, defendants filed a motion for an order confirming the award. Rosso requested a continuance, and the matter was continued to April 8, 2010. On February 26, 2010, Rosso filed a motion to vacate the award. On March 16, 2010, Rosso filed a memorandum of points and authorities in support of her motion, and the matter was set for hearing on April 20, 2010. On April 7, 2010, defendants filed opposition to Rosso's motion. On April 8, 2010, a hearing was held on the motion to confirm the award. The trial court indicated that it had reviewed the filings for this hearing. Rosso informed the trial court that the documents which she had filed for the April 20 hearing were not in the file. After hearing argument, the trial court adopted its tentative ruling to grant the motion for an order confirming the award. On April 14, 2010, Rosso filed a reply to defendants' opposition to the motion to vacate the award. After hearing argument on April 20, 2010, the trial court concluded that there was no basis to vacate the award, and denied the motion. The trial court then entered judgment confirming the award in favor of defendants. Thus, even assuming that Rosso is correct that the documents which she had filed in opposition to the motion to confirm the award were not in the court file on April 8, and thus the trial court had not yet reviewed them, there was a hearing on April 20 on the motion to vacate the award. The trial court did not issue its order denying the motion to vacate until after this hearing. Accordingly, Rosso has failed to show prejudice.
In sum, we conclude that the trial court properly denied Rosso's motion to vacate the award and entered judgment in favor of defendants.
III. Disposition
The judgment is affirmed.
Mihara, J.
WE CONCUR:
Elia, Acting P. J.
Judge of the Santa Clara County Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.