Opinion
B194069
4-18-2008
BOE & ASSOCIATES, Plaintiff and Appellant, v. MGA ENTERTAINMENT, INC., Defendant and Appellant.
Biersdorf & Associates, Dan Biersdorf and Bill Butler for Plaintiff and Appellant. Berkes Crane Robinson & Seal and Ronald M. Greenberg for Defendant and Appellant.
NOT TO BE PUBLISHED
MGA Entertainment, Inc. (MGA), appeals from (1) a judgment incorporating an arbitrators award including attorney fees and costs in favor of Boe & Associates, LLC (Boe) as the prevailing party, and (2) the courts denying MGA contractual and statutory attorney fees and costs. Boe appeals from the judgment insofar as the court (1) ruled the California Independent Wholesale Sales Representatives Contractual Relations Act of 1990 (Act; Civ. Code, §§ 1738.10-1738.17) does not apply, (2) denied Boe a summary adjudication that its sales representative agreement with MGA was automatically renewed, and (3) denied Boes motion for further arbitration of issues. We find no error in the courts confirming the arbitration award, including the award of prejudgment interest, costs and attorney fees to Boe, or in the courts denial of MGAs motion for costs and attorney fees. We hold the trial court properly granted MGAs motion for summary adjudication, and it properly denied Boes motion for summary adjudication and motion for further arbitration. We therefore affirm the judgment.
FACTS
1. The Parties
MGA, a California corporation, manufactures and distributes toys, including the popular "Bratz" dolls. Boe is a Minnesota limited liability company that acts as a sales representative for toy manufacturers.
2. The Agreement
On May 10, 2000, Boe and MGA entered into an "Authorized Independent Representative Agreement" (Agreement) whereby Boe agreed to become a sales representative for MGA. The Agreement was for a one-year term expiring on May 9, 2001. The Agreement provided it would automatically renew for additional one-year periods unless, at least 30 days prior to the May 9 expiration date, either party gave written notice to the other party of an intent not to renew.
Paragraph 1(d) of the Agreement provides, "This appointment shall expire on May 9, 2001, after which it shall automatically be renewed for an additional one-year period on each expiration date, unless it is otherwise canceled. Both parties reserve the right to not renew this agreement by notifying the other party in writing at least thirty days prior to such expiration date." (Italics added.) Paragraph 11(a) further provides that "Either party may terminate this Agreement at any time, with or without cause, for any reason or for no reason at all, by giving the other party a thirty-day written notice to the effective date of termination." (Italics added.)
Boes territory covered seven Midwestern states: Minnesota, North Dakota, South Dakota, Missouri, Kansas, Iowa and Nebraska. However, in the Agreement, the parties agreed to the use of California law as the governing law and the use of arbitration in California for dispute resolution.
Paragraph 16(a) of the Agreement required "[a]ny controversy or claim between the parties" to be settled "exclusively by arbitration in the County of Los Angeles, State of California . . . ." The Agreement further stated, "judgment upon the award rendered by the arbitrators shall be final and binding upon the parties . . . ."
Paragraph 16(d) also provided that "[t]he failure or refusal of [Boe] to submit to binding arbitration . . . shall be deemed to be a breach of this Agreement" and "[i]f either party seeks and secures judicial intervention requiring enforcement of this arbitration provision, such party shall be entitled to recover from the other party all costs and expenses, including reasonable attorneys fees and costs." The parties agreed in paragraph 24 that "[i]n any action, proceeding, or arbitration between the parties arising out of this Agreement, the prevailing party shall be entitled to reasonable attorneys fees and costs."
Paragraph 17 set forth the requirements for notice and service of process. In pertinent part, the paragraph provides that "[a]ny notices, reports, requests, acceptances and other communications required or permitted under this Agreement shall be in writing. They shall be deemed noticed when (a) delivered personally, or (b) sent by commercial overnight courier with written verification or receipt." (Italics added.)
The parties agreed in paragraph 18 that the Agreement set forth the entire agreement between the parties and it "may not be changed, altered, amended or modified except in writing by both parties." (Italics added.)
3. Modification and Renewal of Agreement
The parties signed three subsequent addendums or amendments to the agreement revising the commission structure. The last amendment to the Agreement was accomplished by an exchange of e-mails.
On May 10, 2001, the Agreement automatically renewed as neither party gave a written notice of intent not to renew the Agreement.
4. Termination of Agreement
On the morning of April 9, 2002, MGAs vice president of sales, Gary Thomson, telephoned Boes principal, Mike Boe, to inform him that MGA was terminating Boe. Thomson followed up the call later in the day by sending an e-mail to Boe to the same effect. The e-mail, which Mike Boe admittedly received and printed on April 9, stated: "As per the following attachment MGA Entertainment will be terminating our representation agreement with Boe and [A]ssociates." Attached to the e-mail was a letter from Thomson to Boe confirming MGAs desire to terminate the Agreement. Thomsons letter stated: "I would like to inform you that we will be terminating our representation agreement with Boe and Associates. As per the [A]greement we will be giving you a thirty day written notice. All commissions will be paid as per our agreement dated May 20 [sic], 2000." Mike Boe understood from the telephone conversation and the e-mail that MGA intended to not renew their relationship.
The same afternoon, MGA faxed a copy of Thomsons letter to Boe. Mike Boe acknowledged receiving the faxed letter on April 9.
On the following day, April 10, 2002, MGAs general counsel sent a letter to Boe, by Federal Express and by certified mail, confirming the April 9, 2002 notice of termination. She invited Mike Boe to contact her if he had any questions or concerns. Boe received the letter by Federal Express on April 11, 2002, and by certified mail on April 12, 2002. Boe did not subsequently contact MGA as invited.
During the month following receipt of these communications, Boe informed Target Corporation (Target), its primary customer, that MGA was "firing" Boe and would be assuming responsibility for dealing with Target directly. Boe obtained Targets cooperation in accelerating forthcoming Target purchases to occur within the month following the notice of termination.
After May 9, 2002, Boe did not act as a sales representative for MGA with respect to Target. MGA itself took over handling the Target account from then on.
PROCEDURAL HISTORY
1. Complaint and Amended Complaint
On December 10, 2003, Boe filed an action against MGA asserting claims for breach of contract and violation of the Act, specifically Civil Code section 1738.15. MGA answered Boes amended complaint and alleged as an affirmative defense that Boes claims were subject to arbitration.
Civil Code section 1738.13, subdivision (a) requires a written contract "[w]henever a manufacturer, jobber, or distributor is engaged in business within this state and uses the services of a wholesale sales representative, who is not an employee of the manufacturer, jobber, or distributor, to solicit wholesale orders at least partially within this state, and the contemplated method of payment involves commissions." (Italics added.)
Civil Code section 1738.15 provides, "A manufacturer, jobber, or distributor who willfully fails to enter into a written contract as required by this chapter or willfully fails to pay commissions as provided in the written contract shall be liable to the sales representative in a civil action for treble the damages proved at trial."
Civil Code section 1738.16 further states that "[i]n a civil action brought by the sales representative pursuant to this chapter, the prevailing party shall be entitled to reasonable attorneys fees and costs in addition to any other recovery."
2. Motions for Summary Adjudication
Boe moved for "summary judgment" seeking an adjudication that (1) the Agreement was not timely terminated and therefore was automatically renewed for the period May 10, 2002, to May 9, 2003; and (2) MGA owed Boe approximately $ 1.1 million in unpaid commissions on Target sales during the period April 9, 2002, to May 9, 2003.
Although Boe entitled its motion as one for summary judgment, it requested that the court determine certain issues as established. We will therefore refer to this motion as one for summary adjudication.
MGA too moved for summary adjudication, asking the court to determine that (1) the Agreement was timely terminated on April 9, 2002; (2) the Act did not apply to Boes claims, arbitration being Boes exclusive remedy under the Agreement; (3) Boe was estopped from claiming unpaid commissions; and (4) Boe had waived its right to claim unpaid commissions.
The court denied Boes motion for summary adjudication but granted MGAs motion.
The court found there was no triable issue of fact that MGA had given Boe timely notice of termination and nonrenewal of the Agreement. Specifically, the court concluded that MGAs April 9, 2002 e-mail gave notice that "[a]s per the [following] attachment MGA Entertainment will be terminating our representation agreement with Boe and Associates" and that the attachment stated, "I would like to inform you that we will be terminating our representation agreement." The court concluded that "while the attachment to the e-mail does state that `we will be giving you a thirty day written notice[,] the e-mail also clearly states, `[a]s per the . . . attachment MGA Entertainment will be terminating our representation agreement with Boe and Associates[.] Thus, it is clear that the e-mail was notifying [Boe] of the termination."
The court noted Mike Boes declaration in support of Boes motion for summary adjudication specifically admitted he personally received MGAs e-mail, in addition to the phone call, to that effect on April 9. The court found no triable issue that Boe had received timely written notice of nonrenewal on April 9, 2002.
Mike Boes declaration recited, " `on April 9, 2002, MGAs vice president of sales, Gary Thomson, called me and informed me that MGA did not intend to renew my agreement "and "[a]lso on April 9, 2002, I received an e-mail from Mr. Thomson indicating that MGA would be providing me with 30-day written notice of its intent not to renew the contract."
Boe had argued that neither the e-mail nor fax could constitute appropriate notice under the Agreement. Rejecting this argument, the court found that paragraph 17 of the Agreement did not dictate the form of notice "in writing." The court stated paragraph 17 consisted of " `two separate and distinct "provisions, namely: (1) notices, reports, requests and other communications required or permitted under the Agreement "shall be in writing"; and (2) such writing shall be "deemed noticed" when delivered personally or sent by commercial overnight courier with written verification or receipt. (Italics added.) Agreeing with MGA, the court concluded, " `There is nothing in the Agreement which requires or mandates that written notices must be delivered personally or sent by commercial overnight courier with written verification or receipt or, for that matter, sent or delivered by any other means. All that the portion of [paragraph] 17 of the Agreement which deals with method of transmission does is allow written notice to be deemed noticed if transmission is made by one of the specified methods. " As to Boes motion for summary adjudication, the court found that "there is no indication that [Boe] solicited `wholesale orders at least partially within this state " under the Act. The court accordingly concluded that Boes cause of action for violation of the Act lacked merit.
Boe continued to inject this issue throughout the subsequent proceedings despite the courts decision that the Act does not apply.
3. Reference for Arbitration of Compensation Due and Offer To Compromise
Pursuant to the stipulation of the parties, the court ordered the matter to binding arbitration as to "any compensation allegedly due [Boe] up to May 9, 2002." (Italics added.) The order declared, "All claims of compensation allegedly due [Boe] on or after May 9, 2002, are summarily adjudicated in [MGAs] favor." (Italics added.)
The court referred the matter to arbitration before the Honorable John Zebrowski, retired Associate Justice of the Court of Appeal.
Boes statement of claim for arbitration alleged MGA failed to pay Boe more than $305,000 in commissions earned from May 10, 2000, to May 10, 2002. Boe also alleged it suffered damages in excess of $305,000 as a result of MGAs violation of the Act. It claimed to be entitled to treble damages under Civil Code section 1738.15 and attorney fees and costs under section 1738.16.
MGA asserted in response to the arbitration claim that Boes claims were barred by the trial courts order granting and denying the motions for summary adjudication.
On July 20, 2005, while the arbitration was pending, MGA tendered to Boe an offer to compromise the action under Code of Civil Procedure section 998 (section 998)for the sum of $300,000, including costs and attorney fees. The offer was not accepted.
4. Preliminary Arbitration Award
In October 2005, the arbitrator issued a preliminary arbitration award, as follows.
A. Scope of Arbitration
The arbitrator first examined the scope of the arbitration. He concluded the scope did not encompass the issue whether MGA was liable for any violation of the Act because (1) the court had already summarily adjudicated the issue against Boe, and its order had submitted to arbitration only the issue of commissions owing; and (2) the parties, including Boe, had voluntarily submitted the question of the applicability of the Act to the court, and arbitration was not the proper forum for review of court orders. The arbitrator also concluded the arbitration order encompassed commissions payable to Boe for orders placed through May 9, 2002, even though payable on a later date.
B. Parties Contentions on Arbitration
1. Orders Placed Before May 10, 2002, Cancelled and Later Re-placed
Boe contended it was entitled to commissions on orders written prior to May 10, 2002, that were cancelled and subsequently re-placed by Target. The arbitrator rejected this claim.
The arbitrator found that Mike Boe was a former Target employee who maintained a cordial relationship with Target. After being notified of the termination by MGA, Boe was able to call upon this relationship to obtain large advance orders from Target for products to be shipped after May 9, 2002. Normally, such products would have been ordered in smaller quantities over time rather than in a few large orders for the entire season, if at all. The arbitrator found Targets subsequent cancellations of such orders and re-placement of orders for some of the same products were the result of legitimate business considerations rather than any collusion between MGA and Target to deprive Boe of commissions. He found no evidence the subsequent orders were "caused, procured, or in any way affected by the existence or non-existence of an earlier cancelled pre-May 9 order."
2. Deductions for End of Year Allowances
MGA contended it was entitled to deduct from any commissions owed Boe an amount for "End of Year" allowances it extended to customers to stimulate sales. The arbitrator disagreed. He concluded the Agreement did not provide for such deductions from net proceeds even if Boe never objected when MGA had taken such deductions in the past.
C. Preliminary Commissions Award
The arbitrator concluded Boe was entitled to commissions of some $213,000, subject to certain reservations. Without waiver of review, the parties stipulated that $213,000 would be the correct sum due based on the arbitrators findings.
D. Attorney Fees, Costs and Prejudgment Interest
Both parties applied to the arbitrator for an award of attorney fees and costs, and Boe also sought prejudgment interest on the award.
MGA sought attorney fees under section 998 of approximately $33,000 and costs of approximately $2,500 incurred after its offer of settlement. MGA argued the arbitrators award was less than its $300,000 offer to Boe.
Boe sought attorney fees of approximately $90,000, costs of about $10,000 and prejudgment interest of $60,000, for a total award of more than $370,000. Boe asserted that it was obliged to pay its counsel one third of any amount recovered under a contingency fee arrangement and, as the party with the net monetary recovery, it was the prevailing party entitled to contractual attorney fees under Civil Code section 1717. Boe argued its total recovery therefore would exceed the $300,000 MGA had offered in settlement.
Each party objected to the other partys application.
5. Final Arbitration Award
The arbitrator issued a final award determining Boe was entitled to approximately $213,000 in commissions.
The arbitrator found that, because the amount of commissions was a "matter of arithmetic" capable of being made certain by calculation, Boe had the right to recover prejudgment interest under Civil Code section 3287. He also found Boe, as the party with the net monetary recovery, to be the "prevailing party" entitled to costs under Code of Civil Procedure section 1032.
The arbitrator further found Boe to be the prevailing party as to interest and attorney fees. The arbitrator noted that Boe was obligated to pay its attorney a contingent fee of one-third of its recovery. He determined a one-third contingency fee was not unreasonable in light of the issues raised, the complexity of the issues, the nature and detail of the subject matter, the legal skill and other knowledge required, counsels past experience in cases of this type, the practicalities of Boes situation and the risk of nonrecovery. Although further evidence of the hours expended, tasks performed and other information would be relevant, the arbitrator noted, "such evidence is not a sine qua non to a finding of reasonability."
A more complex issue presented was whether MGAs $ 300,000 section 998 offer cut off Boes entitlement to costs and fees. The arbitrator reasoned preliminarily that the Acts treble damages provision was beyond the scope of the arbitration because the court had not referred the question whether MGA had violated the Act to the arbitrator. Whether Boes recovery, without reference to the Act, exceeded the section 998 offer, had to be measured by the amount of commissions plus the prejudgment interest owing as of the date of the offer. This amount was approximately $266,000. Because Boe had not shown what legal work was done prior to or following the section 998 offer, the arbitrator stated he could not make an analysis of the reasonableness of the attorney fees based on time expended multiplied by the hourly rate. Nevertheless, he concluded the full one-third contingency was reasonable and awardable by the time of the section 998 offer because the fee had been "reasonably earned" by that time. He therefore found the total recoverable by Boe at the time of the offer exceeded the amount of MGAs offer.
MGA argued it could not have known, and had no right to know, that Boe had contracted for a contingency fee prior to the section 998 offer. Although the arbitrator found "some legitimacy" to the argument, he concluded the appropriate test was the reasonableness of the claimed attorney fees, and he found the contingency fee to be both earned and reasonable under the circumstances at the time of the section 998 offer.
The arbitrator thus found Boe entitled to a total award of approximately $380,000, including commissions, prejudgment interest, attorney fees and costs. He rejected MGAs claim for fees and costs under section 998 and under the theory it was the prevailing party under Civil Code section 1738.16 of the Act. He denied MGAs subsequent requests to correct the award.
6. Order Confirming Arbitrators Award
Boe moved to confirm the arbitration award. Boe also moved to compel further arbitration of claims under the Act as to commissions earned on or before May 9, 2002.
MGA in turn moved for an order confirming the arbitration award in part and vacating or correcting the award in part or, alternatively, vacating the arbitration award. MGA further asked the court to award it attorney fees as the prevailing party under the Agreement, Civil Code section 1738.16 of the Act and section 998.
The court denied MGAs motion to vacate portions of the arbitration award and entered an order confirming the arbitration award, including the award of attorney fees and costs to Boe. The court ruled the arbitrator was well within his authority in (1) finding a prevailing party and (2) awarding attorney fees and costs under the Agreement. To the extent MGA claimed the attorney fees and costs were excessive and in violation of section 998, the court ruled that, even if the arbitrator was in error, errors of law committed by the arbitrator, no matter how gross, are not grounds to challenge the arbitrators award under California law. The court ruled neither the merits of the controversy nor the sufficiency of the evidence to support the arbitrators award was a matter for judicial review.
The court, on the other hand, denied Boes motion to compel further arbitration, ruling the arbitrator had properly found the issue of pre-May 9, 2002 claims under the Act was not before him because the parties had stipulated that any matters involving the Act would be decided by the court. The court ruled Boe, orally and in writing, had waived any right to have the issue of compensation under the Act determined by arbitration. Specifically, Boes counsel had expressly waived arbitration on the issue at the hearing on motions for summary adjudication. The court found Boe also had submitted the issue to the court in its motion for summary adjudication and in its opposition to MGAs motion for summary adjudication; Boe further had failed to interpose any objection to the courts jurisdiction or authority to decide the issue.
At the hearing of the motions for summary adjudication, the parties had stipulated as follows:
"[Boes counsel:] You asked him to rule on the applicability of the sales representative act?
"[MGAs counsel]: That issue would normally be decided by an arbitrator. It goes to damages. However, I have said I will agree that the court can decide that issue if they want it. [¶] But both of us have to agree to carve that issue out. I am willing to do that."
"[Boes Counsel]: . . . I have no problem with the court ruling on that."
"The Court: All right. I will take a look at it and we will notify you by minute order."
"[Boes counsel:] . . . I will stipulate to that."
7. Reconsideration and Judgment
Each party sought reconsideration of the courts order confirming the arbitration award. The court denied the motions for reconsideration and entered judgment in Boes favor for approximately $400,000.
Both parties timely appealed the judgment.
STANDARDS OF REVIEW
It is well established that the standard of review from an appeal from the grant of a summary judgment or summary adjudication is de novo. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 854-855; Fishermans Wharf Bay Cruise Corp. v. Superior Court (2003) 114 Cal.App.4th 309, 320.)
As to the arbitration award, when parties submit a matter to private arbitration, they impliedly agree that the arbitrators decision will be binding and final. (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 9 (Moncharsh).) Accordingly, "it is the general rule that, with narrow exceptions, an arbitrators decision cannot be reviewed for errors of fact or law." (Id. at p. 11.) In such case, courts may not review the merits of the dispute, the sufficiency of the evidence supporting an arbitration award or the arbitrators rationale. (Ibid.; Moore v. First Bank of San Luis Obispo (2000) 22 Cal.4th 782, 788 (Moore); Reed v. Mutual Service Corp. (2003) 106 Cal.App.4th 1359, 1365.) This is so even if the mistake appears on the face of the award and causes substantial injustice. (Moncharsh, supra, at p. 33; Reed, supra, at p. 1365.) The sole grounds for vacation or correction of an arbitration award are set forth in Code of Civil Procedure sections 1286.2 (to vacate) and 1286.6 (for correction).
Code of Civil Procedure section 1286.2, subdivision (a)(4) provides that a court shall vacate an arbitration award when "[t]he arbitrators exceeded their powers and the award cannot be corrected without affecting the merits of the decision . . . ." Code of Civil Procedure section 1286.6, subdivision (b) provides that a court shall correct an arbitration award when "[t]he arbitrators exceeded their powers but the award may be corrected without affecting the merits of the decision . . . ."
"Arbitrators do not exceed the scope of their authority because they erroneously decide a contested issue of fact or law; the parties expectation of finality from a binding arbitration requires that `judicial intervention in the arbitration process be minimized. " (Moncharsh, supra, 3 Cal.4th at p. 10.) Moreover, the arbitrators award is presumed correct, and the appealing party bears the burden of establishing otherwise. (Betz v. Pankow (1993) 16 Cal.App.4th 919, 923.)
We review the trial courts order confirming an arbitration award de novo, but with substantial deference to the arbitrators assessment of his contractual authority. (Advanced Micro Devices, Inc. v. Intel Corp. (1994) 9 Cal.4th 362, 376, fn. 9, 381.) The question whether an arbitrator exceeded his powers is a question of law, which is reviewed de novo on appeal. (California Faculty Assn. v. Superior Court (1998) 63 Cal.App.4th 935, 945; Creative Plastering, Inc. v. Hedley Builders, Inc. (1993) 19 Cal.App.4th 1662, 1666.)
In reviewing a judgment confirming an arbitration award, we must accept the trial courts findings of fact if substantial evidence supports them, and we must draw every reasonable inference to support the award. (SWAB Financial, LLC v. E*Trade Securities, LLC (2007) 150 Cal.App.4th 1181, 1196; Malek v. Blue Cross of California (2004) 121 Cal.App.4th 44, 55-56.)
The proper interpretation and application of a statute to undisputed facts are questions of law subject to our de novo review. (International Engine Parts, Inc. v. Feddersen & Co. (1995) 9 Cal.4th 606, 611.) We review the courts denial of a motion for reconsideration for abuse of discretion. (Golden Eagle Refinery Co., Inc. v. Associated Intern. Ins. Co. (2001) 85 Cal.App.4th 1300, 1318.)
DISCUSSION
1. MGAs Appeal
MGA contends its appeal does not involve any decision by the arbitrator on the merits of the dispute ordered to arbitration by the court. MGA states it is not disputing the arbitrators unpaid commissions award or the award of prejudgment interest, except for the postoffer portion. It argues that the arbitrator exceeded his power when he refused to ascertain and include only the amount of Boes section 998 pre-offer attorney fees and costs in determining if Boes award exceeded the amount of the settlement offer. MGA asserts this violated the public policy of encouraging settlements. MGA further contends the trial court erred in denying MGA attorney fees and costs as the prevailing party under the Agreement with respect to (1) termination, (2) violation of the Act and (3) enforcement of the arbitration provision through judicial intervention. We disagree.
In the present case, both parties submitted the question of attorney fees and costs to the arbitrator. They requested such fees and costs in their pleadings and in express requests to the arbitrator. MGA in particular asked the arbitrator to award it attorney fees and costs under section 998 and under the Act. MGA also argued to the arbitrator that Boes requested attorney fees would be "inappropriate" under Civil Code section 1717. MGA thus expressly acknowledged the arbitrators authority to determine the issues of fees and costs in this action. Having tendered such issues and submitted them to the arbitrator, MGA cannot maintain the arbitrator exceeded his powers in deciding those very same issues. As noted, so long as the arbitrator had the power and authority to decide the issues, which we so find, his decision cannot be reviewed for errors of fact or law, even if a mistake appears on the face of the award or results in substantial injustice. (Moncharsh, supra, 3 Cal.4th at pp. 11, 33.)
MGA claims the arbitrator exceeded his jurisdiction because it was a violation of the public policy of encouraging settlements to include Boes entire contingent fee in deciding whether the section 998 offer exceeded the arbitrators award. Such an argument, at best, is an argument that the arbitrator committed an error of law on a submitted issue. An error of law on a submitted issue is not in excess of the arbitrators powers within the meaning of Civil Code sections 1286.2 and 1286.6. (Moore, supra, 22 Cal.4th at p. 788; Moshonov v. Walsh (2000) 22 Cal.4th 771, 779 (Moshonov).) This is so even when such a denial of attorney fees would be reversible legal error if made by a court in civil litigation. (Moore, supra, at p. 784.)
MGA acknowledges as much in its reply brief when it states, "Given the law cited in MGAs Opening Brief on how to implement the [section] 998 public policy is so well established, and the fact that the arbitrator recognized this law in his analysis of the pre and postoffer prejudgment interest issue, the question is how did he go so wrong in his analysis of the pre and postoffer attorney fees issue. . . . [¶] . . . [¶] Unfortunately, though correctly framing the issue as the amount of reasonable attorneys fees `incurred in the arbitration prior to the [section] 998 offer, the arbitrator chose to ignore this well established California law in making his decision." (Italics added.)
As the trial court correctly noted, the arbitrators authority stemmed from the Agreement. The Agreement states, in paragraph 24, "In any action, proceeding, or arbitration between the parties arising out of this Agreement, the prevailing party shall be entitled to reasonable attorneys fees and costs." The arbitrator acted well within his power in determining the prevailing party and in awarding attorney fees and costs to Boe. (See Persson v. Smart Inventions, Inc. (2005) 125 Cal.App.4th 1141, 1173, 1176 [in contingency fee case, reasonable attorney fees and costs may be awarded].) Such determination properly included the issue of whether MGAs section 998 offer exceeded the amount of Boes recovery. The arbitrator had the power to decide the entire matter of recovery of pre-termination commissions including the recovery or nonrecovery of attorney fees, costs and prejudgment interest under the Agreement. (Moshonov, supra, 22 Cal.4th at p. 776; Moncharsh, supra, 3 Cal.4th at p. 28.) The arbitrators resolution of these issues is precisely what the parties bargained for in entering the Agreement. The arbitrators decision as to such issues thus was final and not judicially reviewable for error. (Ibid.) "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." (Ibid.; Creative Plastering, Inc. v. Hedley Builders, Inc., supra, 19 Cal.App.4th at p. 1666.)
We further reject MGAs argument that the trial court erred in failing to determine who the "prevailing party" was as to each ground upon which attorney fees was awardable. Specifically, MGA argues that attorney fees and costs were separately and independently awardable on the basis of section 998, under paragraph 24 of the Agreement, under Civil Code section 1738.16 of the Act and to the party "who secures arbitration through judicial intervention" under paragraph 16(d) of the Agreement. MGA asserts that when there are multiple rights to attorney fees and costs, the court must determine which party is the "prevailing party" as to each such right. With the sole exception of claimed violation of the Act and posttermination commissions, however, "the entire controversy, including all questions as to the ingredients of the award, was in fact submitted to the arbitrator[] in this case." (Moore, supra, 22 Cal.4th at p. 787; see also Moshonov, supra, 22 Cal.4th at p. 776.)
The authorities that MGA cites are distinguishable. For example, Arntz Contracting Co. v. St. Paul Fire & Marine Ins. Co. (1996) 47 Cal.App.4th 464, 491, and Hunt v. Fahnestock (1990) 220 Cal.App.3d 628, 630, as MGA admits, both involved several contracts. The courts in those cases held that when more than one independent, unrelated contract are involved, attorney fees under Civil Code section 1717 may be awarded to the prevailing party on each contract whether or not that party is a prevailing party in the lawsuit. (Arntz, at p. 491; Hunt, at p. 632.) In such a circumstance, "[t]he fact that a party `obtained a higher net recovery in the lawsuit is irrelevant to the determination of which party prevailed on any particular action on a contract. [Citation.]" (Arntz, at p. 491.)
In the present case, however, only one contract is involved. Each party asserted entitlement to attorney fees and costs on different theories. As discussed, the issue of who is the prevailing party was within the scope of the arbitrators decision and authority. The arbitrator determined Boe was the "prevailing party" on the basis of net monetary recovery (Code of Civ. Proc., § 1032) and as to interest (Civ. Code, § 3287) and attorney fees (Code of Civ. Proc., § 998). The trial court properly declined to vacate or correct that decision. (Pierotti v. Torian (2000) 81 Cal.App.4th 17, 26 ["Who is the prevailing party is a mixed question of law and fact, and we simply have no power to second-guess the arbitrators decision on that issue"]; Creative Plastering, Inc. v. Hedley Builders, Inc., supra, 19 Cal.App.4th at p. 1666 [decision of which party prevailed "is properly based . . . on the arbitration results as a whole" and is "immune from judicial interference"].) MGA fails to provide any citable authority for our holding otherwise.
2. Boes Appeal
Boe contends the trial court erred in denying its motion for summary adjudication because MGA failed to provide a timely and proper notice of nonrenewal of the Agreement. It also contends the court erred in ruling Boe did not have a right to assert claims under the Act. Finally, Boe argues the court erred in denying Boes postarbitration motion to remand to the arbitrator for additional damages under the Act. We reject these contentions.
A. Timely Notice of Nonrenewal
Boes first contention is without merit. The undisputed facts as recited above establish that Boe received timely notice of the Agreements nonrenewal on April 9, 2002, by way of an e-mail and attachment. Mike Boe testified at deposition that he received, read and printed the e-mail on April 9, 2002, following which he "pulled the contract out and reread it." The communication was also faxed to Boe on April 9, and Mike Boe also acknowledged he received the fax on that date. The undisputed facts thus establish Boes timely receipt of written notice of nonrenewal.
Under California law, e-mails and faxes are "writings." (Evid. Code, § 250.)
Boe loosely paraphrases paragraph 17 and argues that under the Agreement "notice is deemed effective only when: (a) delivered personally; or (b) sent by commercial overnight courier with written verification or receipt." But that is not what paragraph 17 actually provides. Paragraph 17 states that "[a]ny notices, reports, requests, acceptances and other communications required or permitted under this Agreement shall be in writing. They shall be deemed noticed when (a) delivered personally, or (b) sent by commercial overnight courier with written verification or receipt." The question is what this language means.
We employ traditional rules of contract interpretation in ascertaining the meaning of a contract. The fundamental goal of contractual interpretation is to give effect to the mutual intention of the parties at the time of contracting. (Civ. Code, § 1636.) If the language of a contract is clear and explicit, it governs. (Civ. Code, § 1638.) In interpreting an unambiguous contractual provision, we give effect to the plain and ordinary meaning of the language used by the parties. (Coast Plaza Doctors Hospital v. Blue Cross of California (2000) 83 Cal.App.4th 677, 684; see also Bank of the West v. Superior Court (1992) 2 Cal.4th 1254, 1264.)
The plain language of the Agreement does not support Boes interpretation. The first quoted sentence merely provides that "[a]ny" notices, reports, requests, acceptances and other communications required or permitted under the Agreement "shall be in writing." The second sentence states that "[t]hey," meaning "communications," shall be deemed noticed when (a) delivered personally, or (b) sent by commercial overnight courier with written verification or receipt. The second sentence does not purport to limit the definition of "writing" in the first quoted sentence but merely provides that communication shall be "deemed noticed" when it is sent by either of the two specified means. There are thus two ways under the Agreement in which, if complied with, notice must be presumed. However, the second sentence does not include the word "only" in referencing the two ways of "deemed effective" notice. The language does not purport to preclude a party from giving notice by other means, such as by e-mail or fax. The language of the Agreement is clear and explicit: by its terms, the Agreement allows a broad definition of appropriate notice "in writing." Had the parties intended that notice "in writing" may only be given by personal delivery or commercial overnight courier with written verification or receipt, the Agreement should have so provided. But that is not what the language of the Agreement provides. When " `contract language is clear and explicit and does not lead to absurd results, we ascertain intent from the written terms and go no further. " (Shaw v. Regents of University of California (1997) 58 Cal.App.4th 44, 53.)
If notice must be given only by personal delivery or commercial overnight courier with verification, the reference to "deemed noticed" would be rendered superfluous and of no effect. An interpretation of a contract that gives a reasonable, lawful and effective meaning to all of the terms is to be preferred over an interpretation that leaves any part unreasonable, unlawful or of no effect. (1 Witkin, Summary of Cal. Law (10th ed. 2005) Contracts, § 750, p. 840.)
We further note that Boe has never contended it failed to receive notice of nonrenewal from MGA. Boes argument is that it failed to receive notice in a technically correct manner.
In fact, it is undisputed that, as a result of Mike Boes telephone conversation with Thomson and the subsequent e-mail and fax, Boe clearly understood on April 9, 2002, that MGA did not intend to renew the Agreement and that the Agreement would come to an end on May 9, 2002. The parties actions indicated they understood their contractual relationship would come to an end as of May 9, 2002. Following receipt of the April 9 notices from MGA, Boe informed Target that Boe had been terminated and MGA would assume responsibility for the account on May 10, 2002. Boe never questioned the propriety of its termination until filing suit and never acted as MGAs sales representative after May 9, 2002. Boe also persuaded Target to depart from its normal practice and place orders for the entire season in the month following notice of termination, so that Boe could have the benefit of its commission on such sales. Such conduct indicated Boe was not under any illusion that further notice was required or forthcoming from MGA. On its part, MGA proceeded to service the Target account directly through its employees after May 9, 2002. Although its counsel gave additional written notice of the May 9 termination by overnight express and certified mail, MGA consistently treated May 9 as the termination of its contract with Boe.
If there were any ambiguity about the nature of a "writing" under the Agreement, the parties practical construction of their agreement leaves no doubt of the parties understanding that notice under the Agreement was not limited solely to writings personally delivered or sent by commercial overnight courier with written verification or receipt. "[W]hen a contract is ambiguous, a construction given to it by the acts and conduct of the parties with knowledge of its terms, before any controversy has arisen as to its meaning, is entitled to great weight . . . ." (Universal Sales Corp. v. California Press Mfg. Co. (1942) 20 Cal.2d 751, 761.)
As noted, the parties agreed in paragraph 18 that the Agreement "may not be changed, altered, amended or modified except in writing by both parties hereto." During the course of their dealings, the parties had previously modified the commission to be paid Boe by an exchange of e-mails, an indication they considered electronic media constituted a "writing" under the Agreement.
The court therefore properly interpreted the Agreement in determining MGA gave Boe appropriate and timely notice of termination.
B. Claims Under the Act
The court also properly ruled Boe did not have a right to assert claims under the Act. The only evidence before the court with respect to the motions for summary adjudication established that MGA was a manufacturer in California and Boe was a Minnesota company representing MGA in seven Midwestern states. MGA showed that Boe did not "solicit wholesale orders at least partially within this state," as required under Civil Code section 1738.13, subdivision (a). Boe failed to refute that showing.
Boe contends the trial court erred because Boe did not and could not stipulate to expand the superior courts jurisdiction to hear its claims under the Act "absent a signed writing." This argument is disingenuous in light of Boes course of conduct in these proceedings.
Boe filed a complaint and amended complaint placing before the court the issue of MGAs alleged violation of the Act. In opposing MGAs motion for summary adjudication, Boe argued it had presented a triable claim to the court under the Act. In claiming the trial court should retain and decide the issue of application of the Act, Boe argued to the trial court that paragraphs 12 and 13 of the Agreement purported to limit Boes damages to only orders "written by" it and therefore its remedies as to recovery of "commissions, attorney fees and treble damages for willful failure to pay commissions" would be limited if sent to arbitration.
Mike Boe further provided a written declaration in opposition to MGAs motion for summary adjudication, implicitly acquiescing to the courts determining whether the Act applied. Boe therefore took the directly opposite position regarding this issue in the trial court that it now takes on appeal.
Finally, as set forth in footnote 6, ante, Boes counsel orally stipulated on the record for its claim under the Act to be determined by the court. It was only after the court rendered an unfavorable decision that Boe questioned the propriety of courts deciding the issue. Mere participation in litigation, of course, is not a waiver of arbitration. (St. Agnes Medical Center v. PacifiCare of California (2003) 31 Cal.4th 1187, 1203.) But waiver may be found when, as here, there has been judicial litigation of the merits of an otherwise arbitrable issue and the other party thereby has suffered prejudice. (Id. at p. 1204; Guess?, Inc. v. Superior Court (2000) 79 Cal.App.4th 553, 557-558.)
In denying Boes motion for reconsideration, the trial court observed that the parties had stipulated that any matters involving the Act would be decided by the court by way of summary adjudication, and "[Boe] cannot modify the agreement, go to arbitration, seek to confirm the arbitration award and then, when [Boe] feels it did not get all of the damages it claimed, decide that the stipulation was improper and, thus, begin with more arbitration and, if successful, new motions to confirm. Such would `work a great injustice on both [MGA] and this Court."
Boe further argues that the parties stipulated in the Agreement that the Act would apply to their relationship. As MGA notes, however, that is not the case. Paragraph 16(e) merely states the Agreement shall be "construed and interpreted" according to the laws of the State of California. The plain meaning of that provision is that California law would apply in construing and interpreting the Agreement, nothing more and nothing less. The Act itself has nothing to do with construing or interpreting an agreement. It merely establishes a remedy to wholesale sales representatives who fall within its preview.
Boe has pointed to no other provision establishing the parties agreed to apply the Act under the Agreement. The evidence before us is to the contrary. Specifically, Paragraph 16(b) expressly provides that the arbitrators shall not have the power "to award damages or other remedies expressly prohibited by this Agreement." Paragraph 8(a) provides that "MGA assumes no risk and shall not be liable for any damages, including without limitation, direct, indirect, special, incidental, consequential or punitive damages, or loss of profits sustained by [Boe], or by any person dealing with [Boe], in connection with the PRODUCTS." As noted above, Boe expressly argued to the trial court that the Agreement would preclude award of treble damages and other damages under the Act.
We do not decide that such a provision would be valid or enforceable under the Act. (See Civ. Code, § 1738.13, subd. (e) ["No contract shall contain any provision which waives any rights established pursuant to this chapter. Any such waiver is deemed contrary to public policy and void"].) We hold merely that the language of the Agreement does not establish the parties agreed to be bound by the Act.
The Act, Civil Code section 1738.13, subdivision (a) in particular, provides it applies to situations in which a manufacturer or distributor is engaged in business within California and "uses the services of a wholesale sales representative . . . to solicit wholesale orders at least partially within this state . . . ." (Italics added.) Boe asserts that it satisfies the precondition expressed in section 1738.13, subdivision (a) because a substantial portion of the orders it obtained from Target were delivered by MGA to Targets California stores. In opposing MGAs motion for summary adjudication, Mike Boe asserted only that he was "familiar with" Targets retail and distribution chain, that Target had a "significant retail presence" in California and "some percentage" of the products he sold to Target was "ultimately resold" in California. We find as a matter of law that such conclusory assertions are insufficient to establish that Boe solicited "wholesale orders at least partially within this state." There was simply no evidence that Boe solicited wholesale orders even partially in this state. Moreover, the Agreement clearly stated that Boe was not allowed to obtain orders in this state. Accordingly, Boe has not shown the Act applies in this case.
In support of Boes motion for reconsideration, Mike Boe asserted he engaged in "solicitation activities" in California by such acts as "contacting and corresponding with Target . . . while I was physically present in California" and "contacting MGAs California personnel from my Minneapolis office for the purpose of obtaining product samples and product information to provide to Target in aid of my solicitation of wholesale sales orders from Target." Even were such belated "evidence" properly considered, such derivative activities do not amount to "solicit[ing] wholesale orders at least partially within this state." The trial court did not abuse its discretion in disregarding such evidence.
In its reply brief, Boe for the first time argues that Civil Code section 1738.15 has no requirement for the wholesale sales representative to solicit wholesale orders "at least partially within this state." It asserts section 1738.15 requires only that the manufacturer be doing business within this state. Boes argument depends on a tortured reading of section 1738.15, which provides that a manufacturer who "willfully fails to enter into a written contract . . . or willfully fails to pay commissions as provided in the written contract shall be liable . . . ." (Italics added.) The reference to "the written contract" plainly refers to any "written contract" that the manufacturer is obligated to enter with its wholesale business representative by reason of section 1738.13.
Further, the federal authority that Boe relies on, Schoenduve Corp. v. Lucent Technologies, Inc. (9th Cir. 2006) 442 F.3d 727, is not binding on this state court. (Alameida v. State Personnel Bd. (2004) 120 Cal.App.4th 46, 61.) In any event, Schoenduve is not helpful to Boe. In that case, the court merely held that the arbitrator properly could find the manufacturer was liable under Civil Code section 1738.13, subdivision (a) for failure to enter into a written contract but not under section 1738.15 when there was no willful failure to do so. (Schoenduve, supra, at p. 736.)
C. Motion for Further Arbitration
The same considerations apply to Boes contention that the trial court erred in denying its postarbitration motion to remand for a determination of additional damages under the Act. The court did not err in denying the motion for further arbitration.
DISPOSITION
The judgment is affirmed. Each party is to bear its own costs.
We concur:
COOPER, P. J.
RUBIN, J.