Opinion
NOT TO BE PUBLISHED
Appeal from a judgment of the Superior Court of Orange County, Robert D. Monarch, Judge (Retired judge of the Orange Super. Ct. assigned by the Chief Justice pursuant to art. VI, § 6 of the Cal. Const.)., Super. Ct. No. 06CC01081.
Spach, Capaldi & Waggaman, Madison S. Spach, Jr., Thomas E. Walling for Plaintiff and Appellant.
Caldwell Leslie & Proctor, Christopher G. Caldwell and Sandra L. Tholen for Defendants and Respondents.
O’LEARY, ACTING P. J.
Salah Hassanein sued his former employer, Warner Bros. Entertainment Inc., and Time Warner, Inc. (collectively Warner), seeking to collect unpaid bonuses for his work as president of Warner’s international theater operations. The parties reached a settlement on some claims, and agreed to arbitrate others, including their dispute over whether Hassanein was entitled to an additional bonus for his work in Japan. An arbitrator then found in favor of Warner, and awarded attorney fees. Over Hassanein’s objections, the arbitration award was confirmed by the trial court. On appeal, Hassanein argues: (1) the arbitrator exceeded his jurisdiction by awarding attorney fees; (2) the trial court should not have confirmed the arbitration attorney fees award; and (3) the trial court erred in granting additional attorney fees to Warner. We find these contentions lack merit and affirm the judgment.
Facts
Hassanein’s written employment agreement dated March 16, 1989, does not contain an arbitration clause. The agreement was amended three times, in March 1991, October 1992, and November 1993. None of the amendments contained arbitration clauses. By the terms of his contract, it was agreed Hassanein would receive a cash bonus of five percent of the annual pretax profits of the international business.
In 1997, Hassanein filed a lawsuit based on his disagreement with Warner over the calculation of his bonuses. The court appointed retired appellate Justice Elwood Lui to serve as a referee pursuant to Code of Civil Procedure sections 638 and 639. Justice Lui was authorized to hear and decide all accounting issues raised by the parties, and any issues of contract interpretation relevant or necessary to determine the accounting issues.
All further statutory references are to the Code of Civil Procedure, unless otherwise indicated.
Two years later, following mediation, the parties entered into a written settlement agreement (Agreement). The Agreement begins with a discussion of the purpose and scope of Justice Lui’s appointment, and noted that hearing was scheduled for June 7, 1999. Paragraph 2.6 of the Agreement stated, “It is the intention of the parties hereto to settle and dispose of, fully and completely, any and all claims, demands and cause or causes of action . . . arising out of, connected with or incidental to the dealings and relationships between the parties hereto . . . .”
Article 3, titled “PAYMENT” states Warner will give Hassanein $2 million “in full and complete satisfaction of all of [his] claims . . . except as otherwise specifi[ed in the Agreement]. Such payments shall be allocated and treated as follows: [¶] 3.2 One million dollars . . . of the settlement payment shall be with respect to the bonus provisions of the Employment Agreement with regard to territories other than Japan.” The parties agreed the reference hearing before Justice Lui would go forward as scheduled and his “determination as to whether Hassanein’s bonus calculation was performed correctly and whether Hassanein [was] entitled to any additional bonus with regard to territories other than Japan shall be a final and binding arbitration award, not subject to any further review or appeal. There shall be no allegations of fraud or intentional wrongdoing, and no claim for consequential or punitive damages.”
In addition, the parties clarified “Justice Lui shall determine only the amount, if any, of additional bonus to which . . . Hassanein is entitled with regard to the international business, excluding Japan, without interest, costs, or attorney[] fees.” If Justice Lui determined Hassanein was entitled to more, Warner agreed to pay the additional sum within 10 days of the award, but if he received too much, Warner was entitled to recover its attorney fees within 10 days in an amount not to exceed $75,000.
Next, paragraph 3.3 stated, “One million dollars . . . of the settlement payment shall be an advance against any additional bonus with regard to Japan beyond the $775,000 already advanced. This payment shall be nonrefundable, but recoupable from any bonus for Japan otherwise payable to Hassanein. Any and all disputes concerning Hassanein’s Japan bonus, including without limitation the interpretation or precedential nature of Justice Lui’s award and findings, and the interest, if any, associated with the $1 [million] recoupable advance shall be resolved by [former U.S. District Judge] Layn R. Phillips as provided herein below. Any disputes concerning Japan shall be limited to only accounting and contract issues regarding the proper calculation of the bonus, and there shall be no allegations of fraud or intentional wrongdoing, and no claim for consequential or punitive damages with regard to the Japan bonus calculation or any other matters provided for herein.”
Article 4 of the Agreement contained the arbitration provisions. It begins, “4.1 The parties intend to and hereby do establish an expeditious, final and binding out of court dispute resolution procedure in the event any claim, dispute or controversy should arise out of, in connection with, or relating to this . . . Agreement, the calculation of Hassanein’s Japan Bonus, any other issues between the parties, including without limitation any disputes concerning pre-judgment interest or attorney[] fees, if any, or any issues concerning the arbitrability of any such claims, disputes or controversies.”
Paragraph 4.2, provided Judge Phillips would resolve by binding arbitration: “Any claim, dispute or controversy arising out of, in connection with, or relating to this . . . Agreement, in calculation of Hassanein’s Japan bonus, any other issues between the parties, or any issues concerning the arbitrability of any such claims, disputes or controversies . . . .” It was agreed the arbitration would be conducted in accordance with the rules and procedures of the Alternative Dispute Resolution (ADR) Center.
The remainder of the Agreement was comprised of miscellaneous provisions, a confidentiality provision, a general release provision, and a discussion of Hassanein’s duty to dismiss with prejudice his lawsuits “as to all parties, each party bearing its own costs . . . .” Located within the miscellaneous provisions, paragraph 10.7 contains an attorney fees clause stating, “In the event of any litigation or arbitration arising out of or relating to this Agreement, or otherwise involving the parties hereto, the prevailing party shall be entitled to attorney[] fees, costs and expenses.”
After an evidentiary hearing that lasted several days, Justice Lui issued a decision that addressed some of the issues submitted by the parties, but asked the parties to try to reach a settlement on the amount of the international bonus. When the parties could not reach an agreement, Justice Lui conducted a second hearing. After receiving the arbitrator’s supplemental decision, Warner revised its calculations and sent Hassanein an additional $24,000. Hassanein was still not satisfied, and after additional briefing Justice Lui held a third hearing and issued a final decision, awarding Hassanein an additional $224,000.
In 2003, Hassanein notified Warner he was initiating arbitration with respect to the Japan bonus, i.e., was he entitled to more than the $1,775,000 already advanced to him plus attorney fees and costs. Judge Phillips held a hearing in 2006 and found in favor of Warner. A few months later, the arbitrator awarded Warner $374,802 for its attorney fees and costs, as the prevailing party in the arbitration.
Warner petitioned the trial court to confirm the arbitration award. Hassanein petitioned to vacate the award. Judge Robert D. Monarch considered both petitions and confirmed the award, including the attorney fees. Hassanein appealed. The following month, Warner moved to recover attorney fees incurred during the process to confirm the arbitrator’s decision. Judge Monarch granted the motion, awarding $47,980.50.
Discussion
A. The trial court properly refused to vacate the arbitrator’s award of attorney fees against Hassanein.
A final arbitration award may be vacated only under very limited circumstances. (§ 1286.2.) Section 1286.2, subdivision (a)(4), provides: “Subject to section 1286.4, the court shall vacate the award if the court determines . . . [¶] . . . [¶] [t]he arbitrators exceeded their powers and the award cannot be corrected without affecting the merits of the decision upon the controversy submitted.”
As noted by the Supreme Court in Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 10 (Moncharsh), parties to an arbitration have a strong expectation of finality in the process, requiring “that judicial intervention in the arbitration process be minimized. [Citation.]” After discussing the historical development of the principle of arbitral finality, the court reiterated the general rule that courts must pay substantial deference to an arbitrator’s determination of his own authority. (Id. at pp. 8-13.) “When an arbitrator acts beyond the scope of his authority, however, the court retains the power to vacate an award, but only if ‘the award cannot be corrected without affecting the merits of the decision upon the controversy submitted.’ (§ 1286.2, subd. (a)(4).) These statutory and common law limitations on the ability of a court to change or vacate an arbitrator’s decision fulfill the public policy requirement that interference with the final decisions of arbitrators be minimized.” (Delaney v. Dahl (2002) 99 Cal.App.4th 647, 655 (Delaney).)
Hassanein contends the judgment must be reversed because the arbitrator exceeded his authority by awarding attorney fees in favor of Warner. He maintains the Agreement and general release do not allow for attorney fees in relation to the Japan bonus dispute. He concludes the issue, therefore, fell outside of the arbitrator’s jurisdiction and the trial court should have vacated the award as invalid.
Specifically, Hassanein asserts the Agreement clearly distinguished the Japan bonus arbitration process as being different from the other disputes, and the Agreement strictly limited the parameters of the arbitration on that issue. He focuses on paragraph 3.3 which he claims limits the scope of Judge Phillips’s arbitration of the Japan bonus dispute as follows: “Any disputes concerning Japan shall be limited to only accounting and contract issues regarding the proper calculation of the bonus, and there shall be no . . . claim for consequential or punitive damages . . . or any other matters provided for herein.” Hassanein maintains attorney fees necessarily falls into the category of the “other matters” and, therefore, was excluded from the arbitrator’s scope of authority. He argues the arbitration regarding the Japan bonus was subject only to paragraph 3.3, and no other provisions. He reasons that because paragraph 3.3 is silent as to attorney fees, and it makes no reference to the attorney fees provision (paragraph 10.7), the arbitrator lacked jurisdiction to award attorney fees.
As further support for the above interpretation, Hassanein reads paragraphs 4.1 and 4.2 as clearly differentiating between claims arising from the Agreement and the contractual disputes regarding the Japan bonus calculations. Those provisions contain a list of possible disputes to be covered by arbitration, and it makes separate reference to both Justice Lui’s agreement and Judge Phillips’s Japan bonus calculation. Hassanein reasons the attorney fees provision (paragraph 10.7) awards fees only to the prevailing party in arbitration “arising out of or relating to [the] . . . Agreement” and fails to include fees for the arbitration arising out of the Japan bonus calculations. In addition, Hassanein argues his interpretation of the contract is “buttressed by the fact that . . . [paragraph] 3.2, setting for the procedure for the International Bonus Arbitration [before Justice Lui], also limits the scope of the arbitrator’s powers.”
Finally, Hassanein points out the general release provisions found in paragraph 7 differentiate between claims arising from the Agreement and disputes regarding the Japan bonus calculations. It also specifies “Any and all disputes regarding any accounting or bonus for the Japan operations shall be resolved as provided for in paragraph 3.3 above.”
Hassanein argues Warner and the arbitrator misinterpreted the contract. Under Warner’s interpretation, paragraph 10.7 broadly authorizes the arbitrator to award fees to the prevailing party in any arbitration arising out of or relating to the Agreement. It reads paragraph 3.3 as limiting the parameters of the liability issues: The clause “limits the scope of the liability issues to accounting and contract issues—excluding allegations of fraud or intentional wrongdoing and claims for consequential or punitive damages—[but] does not preclude an award of fees to the prevailing party in the arbitration of those issues.” Paragraph 3.3 also provides Judge Phillips is to arbitrate Hassanein’s Japan bonus “as provided hereinbelow” and immediately following the paragraph is Article 4 titled “Arbitration.” Paragraph 4.1 recites the parties’ agreement to arbitrate the specifically mentioned disputes as well as “any other issues between the parties, including without limitation any disputes concerning pre-judgment interest or attorney fees, if any, or any issues concerning the arbitrability of any such claims, disputes or controversies.” (Italics added.) Paragraph 4.2 specifies Judge Phillips is to arbitrate the parties’ claims “or any issues concerning the arbitrability of any such claims, disputes or controversies . . . .” Finally, Warner asserts its interpretation is supported by the fact paragraph 3.2, concerning the procedure of the International Bonus Arbitration before Justice Lui, specifically limited the scope of the arbitrator’s authority to “the amount, if any, of additional bonus . . . without interest, costs, or attorney[] fees.” Similar exclusionary language was not repeated in paragraph 3.3 concerning the scope of Judge Phillips’s authority concerning arbitration of the Japan bonus dispute.
We need not decide whose interpretation is correct. All that matters for purposes of this appeal is that Judge Phillips had to interpret the Agreement to conclude it provided for an attorney fees award to the prevailing party for fees incurred in the arbitration proceedings. While Hassanein claims the Judge Phillips’s decision exceeded the limits of his powers conferred by the Agreement, we conclude he is really just arguing the arbitrator wrongly interpreted the written contract on the issue of liability for fees incurred during the arbitration itself. “This contractual interpretation is precisely the type of decision by an arbitrator to which courts must grant deference.” (Delaney, supra, 99 Cal.App.4th at p. 656.)
Hassanein’s reliance on Thompson v. Jespersen (1990) 222 Cal.App.3d 964, 967-968 (Thompson), is misplaced. He asserts the case supports his theory that because paragraph 3.3 is silent on the issue of attorney fees, the arbitrator was without jurisdiction or authority to bind the parties to an award of those fees and costs. But, Thompson was decided prior to the Supreme Court’s decision in Moncharsh, and therefore, has limited precedential value. Moreover, the case is factually distinguishable. In the Thompson case, an arbitration panel awarded fees to the prevailing party even though neither the arbitration agreement nor the applicable arbitration rules provided for a fee award. (Id. at pp. 966-969.) In contrast, the Agreement at issue in this case makes several references to attorney fees. In addition to a broadly worded express attorney fees provision, Article 4 grants authority to the arbitrator to decide issues of attorney fees, as well as any disputes concerning the arbitrability of those fee claims. There is no dispute Judge Phillips awarded fees based on his reading of the contract, and it is Hassanein’s claim the arbitrator simply read it wrong.
We find Moshonov v. Walsh (2000) 22 Cal.4th 771 (Moshonov), instructive. There the arbitrator refused to award attorney fees to the prevailing party, despite an attorney fees provision in the arbitration contract. The arbitrator concluded the attorney fees provision applied only to contract-based claims and the dispute involved a tort claim. (Id. at p. 775.) The court reasoned, “the arbitrator had the power to decide the entire matter of recovery of attorney fees. The recovery or nonrecovery of fees being one of the ‘contested issues of law and fact submitted to the arbitrator for decision’ [citation], the arbitrator’s decision was final and could not be judicially reviewed for error.” (Id. at p. 776, quoting Moncharsh, supra, 3 Cal.4th at p. 28.) It concluded, “Because the disputed issue of contractual interpretation—whether the purchase agreement’s attorney fees clause was broad enough to encompass the causes of action against defendants—was committed to final adjudication by the arbitrator, rather than the courts, we decline . . . to consider the issue’s merits.” (Moshonov, supra, 22 Cal.4that p. 779; see also Moore v. First Bank of San Luis Obispo (2000) 22 Cal.4th 782.)
Similarly here, Hassanein’s arbitration notice stated he was seeking by arbitration an “accounting . . . and payment of monies due [pursuant to the terms of the employment agreement] together with attorney[] fees and costs.” The arbitration provisions expressly authorized Judge Phillips to decide disputes concerning attorney fees, as well as issues concerning the arbitrability of any such disputes. The parties submitted the issue to the arbitrator. The arbitrator’s decision was entitled to deference by the trial court and could not be vacated.
B. The trial court did not err in awarding Warner attorney fees incurred in confirming the arbitration award.
Hassanein’s argument on this issue is found in a one-sentence paragraph in his opening brief. He asserts that for the same reasons Warner was not entitled to an attorney fee award from the arbitrator, Warner should have been granted “the additional attorney fees and costs” by the trial court.
We lack jurisdiction to consider this argument. In December 2006, Hassanein filed a notice of appeal from the November 20, 2006 judgment confirming the arbitration award. It was not until February 2007 that the trial court awarded Warner the attorney fees incurred during those judicial proceedings. Hassanein then filed a motion to augment the record on appeal with the court documents relating to the 2007 trial court attorney fee award. This court’s decision to grant the motion to augment has no bearing on the rules requiring Hassanein to separately appeal this postjudgment attorney fee order. (See Eisenberg et al., Cal. Practice Guide: Civil Appeals and Writs (the Rutter Group 2006) ¶¶ 2:156, 2:156.1, pp. 2-72.12 to 2-73.)
In any event, even if this court had jurisdiction to consider the matter, we find no error. “A court must award costs in a judicial proceeding to confirm, correct or vacate an arbitration award. (. . . § 1293.2 . . . .) Attorney fees are recoverable as costs if authorized by contract. (. . . § 1033.5, subd. (a)(10)(A).)” (Corona v. Amherst Partners (2003) 107 Cal.App.4th 701, 707.) Paragraph 10.7 of the Agreement plainly states, “In the event of any litigation or arbitration arising out of or relating to this Agreement, or otherwise involving the parties hereto, the prevailing party shall be entitled to attorney[] fees, costs and expenses.” Here, the court denied Hassanein’s petition to vacate the arbitration award and granted Warner’s petition to confirm the award. Hassanein does not dispute Warner was the prevailing party in these trial court proceedings. The attorney fee provision is broadly written to include this kind of judicial action “involving the parties” and relating to the Agreement.
Disposition
The judgment is affirmed. Respondents shall recover their costs on appeal.
WE CONCUR: MOORE, J., ARONSON, J.