Opinion
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
Appeal from a judgment of the Superior Court of Orange County No. 06CC01593, 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.)
Catanzarite Law Corporation, Kenneth J. Catanzarite, Jim Travis Tice and Richard Vergel de Dios for Defendant and Appellant.
Law Offices of Neil L. Shapiro and Neil L. Shapiro for Plaintiffs and Respondents.
OPINION
ARONSON, J.
Harry W. Humphreys appeals from a trial court judgment confirming an arbitration award in favor of Jeffrey Howard, Richard Wieler, and their dental corporation, Howard & Wieler (collectively, H & W). Humphreys sought to purchase the H & W dental practice as an assignee of the original buyer. Humphreys contends the arbitrator exceeded his authority by concluding the sales contract for the dental practice forbade assignment. But by committing themselves to arbitrate “any controversy or claim or dispute . . . arising out of, or relating to” the sales agreement, the parties handed the question of assignment to the arbitrator, and an arbitrator’s legal conclusions are not subject to judicial second-guessing. In sum, even if the arbitrator erred, which we do not suggest or decide, “[i]t is well settled that ‘arbitrators do not exceed their powers merely because they assign an erroneous reason for their decision.’” (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 28 (Moncharsh).) We therefore affirm the trial court’s judgment confirming the arbitration award.
I
FACTUAL AND PROCEDURAL BACKGROUND
H & W contacted Bette Robin, a licensed dentist, real estate agent, and lawyer, in October 2004 to handle the sale of the dental practice they had operated for 35 years in Thousand Oaks. H & W entered a single purchaser listing with Robin but, when the buyer they contemplated fell through, H & W engaged Robin to market the practice more broadly. Robin soon expressed interest in purchasing the practice herself and moving to Thousand Oaks. H & W agreed to a substantial discount off the list price for her, and the parties signed a written purchase contract in January 2005.
Under the terms of the contract, H & W agreed to help foster patient goodwill by staying on as associate dentists in the practice for at least 90 days. The contract provided that “Sellers understand that Buyer would prefer that Sellers stay on for a significantly longer period of time, but Sellers are not obligated to do so.” The contract specified “the goodwill being purchased and sold herein shall include the use and maintenance of the names, ‘Howard and Wieler, A Dental Corporation,’ ‘Jeff Howard, D.D.S.’ and ‘Richard Wieler, D.D.S.’ on the marquis at the office, on the office door at the Dental Practice, in appropriate telephone directories and in telephone answering procedures . . . for one year after Seller is last associated with the Dental Practice as an associate dentist or otherwise . . . .” H & W also agreed not to refer dental patients to any other practice for five years.
The contract identified Robin as the buyer, providing further that “Buyer may be re-defined . . . to additionally include a professional dental corporation that Buyer intends to form prior to the close date of this transaction.” The contract also stated: “All items of this Agreement and the Exhibits attached hereto shall be binding upon the respective successors, heirs and assigns of the Parties hereto, and shall inure to the benefit of and shall be enforceable by the Parties hereto and their respective heirs, executors, personal representatives, successors and assigns.” As noted, the parties agreed to a broad arbitration agreement governing “any controversy . . . arising out of, or relating to” the contract, and they specified arbitration “shall be final and binding and may be enforced by judgment upon application to a court of competent jurisdiction.”
The parties sailed into rough waters before closing. After Robin declined to complete the transaction, H & W responded with a letter lamenting, “We are sorry and unhappy that you have decided not to proceed with the purchase of our dental practice. Your announcement was a real surprise to both of us, coming as it did well into our protracted escrow. Obviously, much effort and expense has already gone into this transaction by all parties. More importantly, time has been lost.”
H & W assured Robin in their letter that, “[i]f your main concern is staff resistance to your plans, we are prepared to make any and all personnel changes you may deem necessary. . . . Candy has offered to resign, if she is the problem. The same applies to all the other employees.” Noting they had cleared up a utility issue with their landlord, resulting in a credit to their account, H & W queried, “Are there any other issues involved that we can address?” Reiterating their dismay “that you have decided not to proceed,” the pair concluded: “We would consider this to be an anticipatory breach and therefore request that within ten days from the date of this letter you provide to us assurances, reasonably satisfactory to us, that you are ready and able to proceed with the transaction.”
Robin responded with an e-mail suggesting she wanted to settle the matter without losing her deposit, rather than consummate the deal. She entitled the e-mail, “Settlement discussions,” and wrote: “As you know, I am a single mother with two college daughters and now an ailing mother to deal with, and the thought of losing my $20,000 deposit and being sued and having to sue you is a bitter pill to swallow . . . .” She made no mention of moving to Thousand Oaks to take over the dental practice as agreed, speculating instead that she might “assign my rights in the contract to another dentist or maybe buy it myself and re-sell it immediately.” She proposed meeting “to discuss the issues and see if we can’t reach a settlement in order to all move on with our lives.”
Finding no reassurance in Robin’s email, H & W terminated the contract on March 23, 2005. Anxious to recoup her $20,000, Robin located another dentist, Humphreys, who was interested in assuming H & W’s practice. Robin and Humphreys executed an agreement in which Humphreys assumed Robin’s rights and obligations under the contract she signed with H & W. Humphreys paid Robin $20,000 and agreed to indemnify, defend, and hold her harmless for any liability arising out of his plans to compel H & W to sell their dental practice to him under their contract with Robin.
When H & W declined to recognize the assignment, Humphreys sought arbitration under the terms of the contract, claiming he was entitled to specific performance of Robin’s right to take over H & W’s practice. Following discovery, substantial briefing, admission of 80 exhibits, and testimony from six witnesses over a two-day hearing, the arbitrator rendered a written award, as follows in pertinent part:
“Claimant has failed to satisfy his burden of proving that the parties intended that the Agreement was assignable. [¶] Although the Agreement does not expressly permit or prohibit assignments, various provisions of the Agreement and the circumstances surrounding its execution clearly show that Respondent doctors’ primary concern was to find a buyer they could recommend to their patients and could trust with the use of their names and reputations during the year the buyer was entitled to use them.” Noting “Respondents had come to know Dr. Robin and were comfortable and enthusiastic about entrusting their patients to her” and that H & W agreed to a “favorable purchase price to close the sale to her” (italics added), the arbitrator concluded buyers were not “fungible” under the contract.
The arbitrator also concluded: “Furthermore, even if the Agreement were assignable, Dr. Robin’s notification to Dr. Howard on March 8, 2005, that she was not going to buy the practice constituted a repudiation of her obligations which she did not withdraw by providing reasonable assurance of her performance of the agreement. In her email on March 16 under the Subject: Settlement Discussions, Dr. Robin lamented the thought of losing her deposit and being sued by Respondents and suing them. She suggested the possibility that she might take actions she had good reason to know would not be welcomed by Respondent who might even have been inclined to return all or a portion of her deposit to avoid the legal complications inherent in the possible alternatives she mentioned. Respondents’ termination of the Agreement under these circumstances was proper. [¶] Claimant is not entitled to relief. Respondents are the prevailing party and upon application are entitled to reasonable attorneys fees and costs.”
Humphrey now appeals from the trial court judgment confirming the arbitrator’s award.
II
DISCUSSION
Acknowledging that California law prohibits de novo review of an arbitrator’s factual or legal conclusions (Moncharsh, supra,3 Cal.4th at p. 11), Humphreys attempts to fit his argument into the exception that prohibits an arbitrator from awarding a remedy not rationally drawn from the parties’ contract. (See Advanced Micro Devices, Inc. v. Intel Corp. (1994) 9 Cal.4th 362, 381 [“arbitrators may not award remedies expressly forbidden by the arbitration agreement or submission”].) Here, however, the arbitrator’s conclusion Humphreys was not entitled to his requested remedy, specific performance of the sale of the dental practice, followed rationally — indeed inexorably — from the arbitrator’s conclusion the contract impliedly barred assignments. The exception therefore does not apply.
According to Humphreys, the arbitrator misinterpreted the contract by reading an anti-assignment clause into it. Humphreys insists the contract was assignable as a matter of law, both because the law generally favors assignment and because a paragraph in the agreement referenced not only heirs, executors, personal representatives, and successors, but also “assign[ee]s.” As noted, however, second-guessing an arbitrator’s interpretation of contract terms is beyond the scope of the trial court’s review or ours. (Moncharsh, supra,3 Cal.4th at p. 11 [“courts will not review the validity of the arbitrator’s reasoning”].)
Here, the parties’ broad arbitration clause committed interpretation of the contract, including whether it was assignable, to the arbitrator. True, courts may vacate an award that exceeds the arbitrator’s authority (Code Civ. Proc., § 1286.2, subd. (d)), but “[s]o long as an arbitrator has . . . the power and authority to decide [an] issue, his decision thereon cannot exceed his powers within the meaning of section 1286.2, subdivision (d).” (Creative Plastering, Inc. v. Hedley Builders, Inc. (1993) 19 Cal.App.4th 1662, 1666.) “Even if that decision constituted or was generated by the arbitrator’s error of law or fact, it nonetheless binds the parties and is immune from judicial interference.” (Ibid.) So it is here.
Humphreys contends an integration clause in the contract prohibited the arbitrator from considering parol evidence concerning assignment, and he also argues a “meet and confer” term in the agreement eliminated H & W’s right to invoke anticipatory repudiation. But again, the general rule that “arbitration awards are . . . immune from judicial review” applies here. (Moncharsh, supra,3 Cal.4th at p. 11.)
III
DISPOSITION
The judgment of the trial court is affirmed. Respondents are entitled to their costs on appeal. (Cal. Rules of Court, rule 8.276.)
WE CONCUR: SILLS, P. J., O’LEARY, J.