Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County No. BS121573, Coleman A. Swart, Judge.
Law Office of Brenda D. E. Yanoschik and Brenda D. E. Yanoschik for Defendant and Appellant.
Derek S. Whitman and John T. Thornton for Plaintiff and Respondent.
SUZUKAWA, J.
Jefferson 38, LLC (Jefferson) appeals from a judgment and order confirming an arbitration award in favor of CB Richard Ellis, Inc. (CBRE). Finding no abuse of discretion, we affirm.
FACTUAL AND PROCEDURAL HISTORY
In March 2004, CBRE and Jefferson entered into an exclusive sales listing agreement (listing agreement) that provided that CBRE would use its best efforts to sell property owned by Jefferson, and Jefferson would pay a brokerage commission of 6 percent of the property’s gross sales price if the property were sold during the listing period. The listing agreement contained an arbitration clause, which provided in part as follows: “In the event of any dispute between Owner and Broker relating to this Agreement, the Property or Owner’s or Broker’s performance hereunder, Owner and Broker agree that such dispute shall be resolved by means of binding arbitration in accordance with the commercial arbitration rules of the American Arbitration Association, and judgment upon the award rendered by the arbitrator(s) may be entered in any court of competent jurisdiction.”
On about December 24, 2004, Jefferson entered into a contract for the sale of the property, and escrow on the property closed in July 2005, a date within the listing period. The gross sales price for the property was $11,800,000. It is undisputed that Jefferson did not pay CBRE a brokerage commission in connection with the sale of the property.
On July 12, 2006, CBRE filed a demand for arbitration with the American Arbitration Association (AAA) in connection with the unpaid brokerage fees. A preliminary hearing was held on December 4, 2007, and an evidentiary hearing was set for August 4, 2008. The evidentiary hearing was continued to September 22, 2008, and then to November 10, 2008.
In October 2008, the AAA sent invoices to the parties for deposits to cover the arbitrator’s past and anticipated future fees, as well as arbitration expenses. CBRE deposited its share of the fees, but Jefferson refused to contribute its share. Accordingly, the arbitrator suspended the arbitration.
AAA Commercial Rules, rule R 50, provides that the expenses of arbitration “shall be borne equally by the parties, unless they agree otherwise or unless the arbitrator in the award assesses such expenses or any part thereof against any specified party or parties.” Rule R 52 further provides that the AAA “may require the parties to deposit in advance of any hearings such sums of money as it deems necessary to cover the expense of the arbitration, including the arbitrator’s fee....” Rule R 54 provides that the arbitrator may order the suspension or termination of arbitration proceedings if arbitrator’s compensation or administration charges have not been paid in full.
In December 2008, CBRE filed a petition in the superior court to compel Jefferson to pay its share of the arbitration fees or to be barred from participating in arbitration proceedings. The petition noted that the parties’ arbitration agreement required each party to pay a pro rata share of the arbitration fees, and while the AAA rules permitted the arbitrator to suspend arbitration if one party failed to pay its fees, they did not require the arbitrator to do so. Further, it noted that the AAA rules could not be interpreted to limit the arbitrator’s powers in the event of nonpayment, as such a construction would permit any party to avoid arbitration simply by refusing to pay its share of the fees. Thus, CBRE asked that Jefferson be required to pay its share or, if it did not do so within 10 days, be barred from participating in the arbitration.
Jefferson opposed the petition. It contended that it did not have a source of funds from which to pay the costs of arbitration and that the AAA rules did not permit a party to be barred from participating in arbitration for nonpayment. Further, it contended that CBRE would not suffer prejudice if it were ordered to pay Jefferson’s share of the arbitration costs because “CBRE would have to pay those same costs even if Jefferson 38, LLC were barred from further participating in the Arbitration.”
The superior court (Judge Wiley) granted the petition. In relevant part, the court found as follows:
“Someone sold some Southern California property for about $12.1 million. Petitioner CB Richard Ellis claims a commission on this sale, amounting to some $726,000. CB Richard Ellis is trying to arbitrate this claim with respondent Jefferson 38, LLC. The arbitration costs some $32,000, and each side is supposed to pay half. But Jefferson 38 says it has not paid its half of the arbitration fee because it has no bank account left anymore to pay anything. Jefferson 38 pleads poverty today, it says, because back in 2005 this LLC distributed the $12.1 million to its members and to others. So Jefferson 38 has no money left and, it argues, this is a good reason not to pay its half of the arbitration fee. Jefferson 38 suggests CB Richard Ellis should pay the entire $32,000 tab.
“Jefferson 38’s tactic fails. Jefferson 38 does not dispute that it signed an arbitration agreement with CB Richard Ellis. Jefferson 38 does not dispute that this agreement requires the sides to split the arbitration fee. It is not a valid defense to a contractual obligation to say, ‘I once had millions, but I no longer can afford to do as I promised I would.’
“Jefferson 38 argues this court has no jurisdiction to act, because the matter is in arbitration. Actually, it is not in arbitration in a meaningful way, because Jefferson 38 has failed to pay its share of the arbitration fee, and this tactic has frozen the arbitration. The superior court does have the power ‘to entertain a petition by the plaintiff for judicial assistance in moving the arbitration forward where the matter is foundering for reasons beyond plaintiff[’s] control.’ (Bosworth v. Whitmore (2006) 135 Cal.App.4th 536, 548 [quoting Preston v. Kaiser Foundation Hospitals (1981) 126 Cal.App.3d 402, 407].) Jefferson 38’s jurisdictional argument fails.
“Jefferson 38 also argues CB Richard Ellis has unclean hands and is guilty of laches. Jefferson 38 claims it did not know or suspect CB Richard Ellis would be requesting a commission on the property deal when Jefferson 38 distributed its assets and closed its bank accounts. This argument is factual in character and fails for want of proof. Jefferson 38 offers no proof that it lacked notice of CB Richard Ellis’s claim when the LLC wound up its affairs. There are no declarations, for instance, from the LLC’s decisionmakers about their unsuspecting states of mind when they closed Jefferson 38 down.”
Notwithstanding the superior court’s ruling, Jefferson did not pay its share of the arbitration fees. Accordingly, an evidentiary hearing proceeded as an uncontested prove-up hearing on May 19 and 20, 2009. Jefferson’s counsel was present at the hearing, but she was not allowed to participate. CBRE offered documentary evidence and the testimony of four witnesses. At the conclusion of the hearing, the arbitrator found that the parties had entered an exclusive sales listing agreement with a term of one year, and Jefferson had entered into a contract for the sale of the subject property within the year. Accordingly, CBRE was entitled to commission of 6 percent of the gross sales price, or $708,000. The arbitrator thus awarded CBRE $708,000, pre-award interest of $206,578.05, and attorney fees and costs of $46,071.25, for a total of $960,649.30.
CBRE filed a petition to confirm the award. Jefferson did not file a petition to vacate, but in its response to CBRE’s petition, it requested that the court vacate the award. The superior court granted the petition to confirm and entered judgment on September 21, 2009. Jefferson timely appealed.
DISCUSSION
As a general rule, the merits of an arbitrator’s decision are not subject to judicial review. (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 11; Jones v. Humanscale Corp. (2005) 130 Cal.App.4th 401, 407-408.) The Supreme Court has explained: “[I]t is the general rule that, ‘The merits of the controversy between the parties [to a private arbitration agreement] 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.] [¶] Thus, it is the general rule that, with narrow exceptions, an arbitrator’s decision cannot be reviewed for errors of fact or law.” (Moncharsh v. Heily & Blase, supra, 3 Cal.4th at p. 11.)
Code of Civil Procedure section 1286.2 (section 1286.2), subdivision (a), which sets forth grounds for vacating an arbitration award, is an exception to the general rule precluding judicial review. Section 1286.2, subdivision (a)(5) requires a court to vacate an arbitration award if “[t]he rights of the party were substantially prejudiced by the refusal of the arbitrators... to hear evidence material to the controversy.” The Courts of Appeal have held, “[Section 1286.2, subdivision (a)(5) is] a safety valve in private arbitration that permits a court to intercede when an arbitrator has prevented a party from fairly presenting its case.” (Hall v. Superior Court (1993) 18 Cal.App.4th 427, 439; accord, Schlessinger v. Rosenfeld, Meyer & Susman (1995) 40 Cal.App.4th 1096, 1111.)
When a party to an arbitration seeks to vacate an award (or to reverse an order confirming an award) there are two issues to be resolved. “First, the trial court must determine whether the arbitrator abused his or her discretion” by refusing to hear the excluded evidence. Second, “if there was an abuse of discretion, the trial court must determine whether the moving party suffered substantial prejudice as a result.” (SWAB Financial, LLC v. E*Trade Securities, LLC (2007) 150 Cal.App.4th 1181, 1198.)
On appeal from the trial court’s order granting or denying a request to vacate the arbitration award, our review is de novo. Thus, in this case, we must consider whether the arbitrator abused his discretion and Jefferson suffered substantial prejudice. Only if the arbitrator abused his discretion and there was resulting prejudice could the trial court properly vacate the arbitration award. (See SWAB Financial, LLC v. E*Trade Securities, LLC, supra, 150 Cal.App.4th at p. 1198 .)
The only substantive argument Jefferson makes in support of its contention that the arbitrator abused his discretion is that “[t]he American Arbitration Association’s Commercial Arbitration Rules do not allow for a party to be barred from participating in arbitration for non-payment.” The AAA rules do not support Jefferson’s claim. Rule R 54, on which Jefferson relies, says that if payments are not made, the arbitrator “may” order the suspension or termination of the proceeding. It does not say that the arbitrator must do so, or that suspension is the only available remedy. Accordingly, Jefferson’s claim that the arbitrator’s ruling violated the AAA’s rule is without merit.
Moreover, in the present case the arbitrator precluded Jefferson from participating in the arbitration proceeding pursuant to an order of the superior court, not on his own authority. Accordingly, to show an abuse of discretion, Jefferson must, at a minimum, demonstrate that the trial court’s order was in error. As to that issue, Jefferson has cited no record or case support. It thus has forfeited the issue. (People ex rel. Reisig v. Acuna (2010) 182 Cal.App.4th 866, 879 [“‘An appellate brief “should contain a legal argument with citation of authorities on the points made. If none is furnished on a particular point, the court may treat it as [forfeited], and pass it without consideration.”’”]; People v. Stanley (1995) 10 Cal.4th 764, 793 [same].)
DISPOSITION
The judgment confirming the arbitration award is affirmed. Respondent shall recover its costs on appeal.
We concur: EPSTEIN, P.J., WILLHITE, J.