Opinion
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
APPEAL from a judgment of the Superior Court of Los Angeles County, Super. Ct. No. BS109598, Judith C. Chirlin, Judge. Affirmed.
Russ, August & Kabat, Steve Goldberg, Eric B. Carlson for Defendant and Appellant.
Munger, Tolls & Olson, Richard E. Drooyan, Mark H. Epstein for Plaintiff and Respondent.
BOREN, P.J.
Defendant Alan Casden appeals a judgment confirming an arbitration award in favor of his former law firm, plaintiff Howrey LLP, finding Casden liable for unpaid attorney fees, as well as costs and interest, totaling approximately $5 million, plus interest until the judgment is paid. The arbitration award arose because Casden had failed to pay Howrey’s bills for several legal matters that Howrey handled for Casden and his related companies.
We affirm because the arbitrator’s decision was well within the scope of his authority under the parties’ arbitration agreement, which encompassed the arbitration of “any dispute concerning [Howrey’s] representation, including disputes regarding the amount of fees or the quality of [Howrey’s] services.” Casden argues the defense of accord and satisfaction, and he claims a lack of joint and several liability with his companies and thus Casden’s purported lack of individual responsibility for the legal fees incurred. However, Casden is precluded on appeal from re litigating issues within the scope of the arbitrator’s authority.
FACTUAL AND PROCEDURAL SUMMARY
As set forth in a 1999 attorney engagement letter and retainer agreement, Casden and two of his affiliated companies, Casden Investment Corporation (CIC) and Casden Properties, Inc. (CPI), retained Howrey to represent them in connection with litigation entitled Casden v. Casden filed against them by Casden’s brother. Casden signed the 1999 retainer agreement twice, once in his individual capacity and a second time above the designation “Chairman” on behalf of CIC. The agreement was also signed by Andrew Starrels as General Counsel on behalf of CPI.
Accompanying and made part of the 1999 retainer agreement was a client representation memorandum, which described the terms and conditions of Howrey’s representation of Casden and his companies. The memorandum specified that “[i]n the event that you request us to undertake additional matters for you or if the scope of our representation is expanded, such additional representation will be governed by the terms and conditions of this agreement unless we mutually agree otherwise.”
Regarding arbitration, the client representation memorandum provided, in pertinent part, that “any dispute concerning [Howrey’s] representation, including disputes regarding the amount of fees or the quality of [Howrey’s] services . . . shall be determined by binding arbitration under the Commercial Arbitration Rules of the American Arbitration Association by one arbitrator appointed in accordance with said Rules.” The provision also specified that the arbitrator had the “discretion to order that the costs of arbitration, including fees, other costs and reasonable attorneys’ fees, shall be borne by the losing party.”
For several years, Howrey successfully protected Casden’s interests in a series of complex litigation matters. In each case, Casden in his individual capacity was a party to the action and personally benefited from Howrey’s work.
Howrey sent monthly billing statements to show the legal work done, and until the end of 2003 Casden never objected or complained about the amount or quality of the work or about the bills. Nonetheless, Casden was delinquent in the payment of legal fees. By January of 2004, according to Howrey, Casden owed Howrey approximately $8 million in delinquent fees and costs.
In January of 2004, Howrey and Casden negotiated an agreement for the payment of fees then owed to Howrey for the litigation it had been handling for Casden and his various companies, and for the payment of future invoices on a “current basis.” That agreement was memorialized in a 2004 letter agreement, which was addressed to Casden as “Chairman and Chief Executive Officer [of] Casden Properties LLC,” and it was signed by Casden “as Chairman.” Casden and his entities paid the various amounts of money set forth in the 2004 letter agreement, with Casden personally paying over $500,000 and various companies paying the balance.
However, after the 2004 letter agreement, neither Casden nor his various companies paid anything on the bills that Howrey thereafter submitted. By the end of 2004, Casden was delinquent again and, according to Howrey, owed it over $3 million in fees for its services.
In June of 2005, Howrey filed with the American Arbitration Association a demand for arbitration and a statement of claim, seeking approximately $3.2 million from Casden for unpaid legal fees and costs due pursuant to the 1999 retainer agreement and the 2004 letter agreement. In response, Casden raised a number of affirmative defenses, but did not challenge the arbitrator’s authority.
Casden also filed a response to Howrey’s motion for summary judgment. Casden’s response to the motion acknowledged that he was Howrey’s client because he signed the retainer agreement both as Chairman and “in his individual capacity” and, for that reason, asserted he was entitled to invoke statutory protections which permit a client to void agreements for legal services if certain requirements are not satisfied. (See Bus. & Prof. Code, § 6148.) The arbitrator rejected Casden’s statutory protection theory and ruled that he “cannot void the 1999 retainer agreement or avoid paying fees based on Howrey’s hourly rates.”
Without objecting to the arbitrator’s jurisdiction, Casden then actively participated in the evidentiary hearing which spanned 11 days and ended in December of 2006. After further briefing and closing arguments, in April of 2007, the arbitrator issued a partial final award in which he found that “Casden was personally liable for [Howrey’s] fees under the 1999 Agreement.” The arbitrator found that although Casden “cannot be held personally liable” under the 2004 letter agreement, which he signed only as Chairman of Casden Properties LLC, he “remain[ed] responsible for payment of Howrey’s ongoing fees pursuant to the 1999 Agreement.”
The arbitrator awarded Howrey $3,171,456.80, plus interest of $852,043.59 through the date of the interim award, and interest in the amount of $868.89 per day until paid. The arbitrator noted that the “entire amount is awarded pursuant to the 1999 Agreement, except for the sum of $51,476.82 for the political contributions matter, which is awarded on a quantum meruit basis separate from that Agreement.” He also found that Howrey was the prevailing party in the arbitration for the purposes of attorney fees and costs.
Thereafter, Howrey filed a petition for attorney fees and costs. In Casden’s objections to Howrey’s request for attorney fees, he asserted for the first time that “the arbitrator lacks power and jurisdiction over Mr. Casden under either of the agreements upon which the arbitrator’s . . . Award was purportedly based.” The basis for Casden’s claim that the arbitrator lacked authority was that Casden purportedly was not responsible for any of Howrey’s attorney fees and costs pursuant to the 1999 retainer agreement, and that the 2004 letter agreement was an accord and satisfaction substituting for and replacing the retainer agreement. These same arguments were considered and rejected by the arbitrator when he ruled that Casden was liable for Howrey’s fees under the 1999 agreement.
In June of 2007, the arbitrator adopted his partial final award as the final award (with some additional sums awarded). Also, the award specified that it was “intended to resolve all claims, defenses and issues submitted for decision” and indicated that “[a]ny claims, defenses and contentions not specifically mentioned herein are hereby denied.”
Howrey thereafter moved to confirm the arbitration award. Casden opposed the motion and argued in large part that the arbitrator had exceeded his authority in finding Casden individually liable for all of Howrey’s unpaid attorney fees incurred in representing various Casden-related entities in numerous legal matters.
The superior court granted Howrey’s motion to confirm the arbitration award and denied Casden’s petition to vacate the award. On September 10, 2007, the superior court entered judgment in favor of Howrey in the amount of $5,044,762.80 (including prejudgment interest), plus additional interest of $1,097.75 per day from September 5, 2007. Casden appeals.
DISCUSSION
I. Judicial review and general principles of arbitration.
An appeal may be taken from a judgment entered after the trial court confirms an arbitration award. (Code Civ. Proc., §§ 1287.4, 1294, subd. (d).) When the parties have elected to submit to binding contractual arbitration, the court will make every effort to give effect to such proceedings. (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 9 (Moncharsh).) “The arbitrator’s decision should be the end, not the beginning, of the dispute.” (Id. at p. 10.) As a result, “‘[t]he merits of the controversy between the parties are not subject to judicial review.’” (Id. at p. 11.) In brief, we cannot review the validity of the arbitrator’s reasoning, nor the sufficiency of the evidence supporting the arbitrator’s award, nor any errors of fact or law. (Ibid.)
Unless otherwise indicated, all further statutory references are to the Code of Civil Procedure.
To encourage parties to settle their disputes through a process intended to be binding, final, and relatively speedy and inexpensive, the scope of judicial review following an arbitration award is “extremely narrow.” (Marsch v. Williams (1994) 23 Cal.App.4th 238, 243.) An arbitration award which has been confirmed by the superior court “is not subject to judicial review except on the grounds set forth in sections 1286.2 (to vacate) and 1286.6 (for correction).” (Moncharsh, supra, 3 Cal.4th at p. 33.) The reviewing court “shall confirm the award as made,” unless there is a basis for correcting or vacating the award. (§ 1286.)
Here, the statutory basis alleged for vacating the award is that the arbitrator “exceeded [his] powers and the award cannot be corrected without affecting the merits of the decision.” (§ 1286.2, subd. (a)(4).) It is well settled that “this provision does not supply the court with a broad warrant to vacate awards the court disagrees with or believes are erroneous.” (Gueyffier v. Ann Summers, LTD. (2008) 43 Cal.4th 1179, 1184.)
“When parties contract to resolve their disputes by private arbitration, their agreement ordinarily contemplates that the arbitrator will have the power to decide any question of contract interpretation, historical fact or general law necessary, in the arbitrator’s understanding of the case, to reach a decision. [Citations.] Inherent in that power is the possibility the arbitrator may err in deciding some aspect of the case. Arbitrators do not ordinarily exceed their contractually created powers simply by reaching an erroneous conclusion on a contested issue of law or fact, and arbitral awards may not ordinarily be vacated because of such error, for ‘“[t]he arbitrator’s resolution of these issues is what the parties bargained for in the arbitration agreement.”’ [Citation.]” (Gueyffier v. Ann Summers, LTD., supra, 43 Cal.4th at p. 1184.)
Moreover, consistent with the fundamental nature of the arbitration process, arbitrators may apply both legal and equitable principles and, unless specifically required to act in conformity with the rules of law, arbitrators may act contrary to substantive law and base their decisions upon broad principles of justice and equity. (Sapp v. Barenfeld (1949) 34 Cal.2d 515, 523; Woodard v. Southern Cal. Permanente Medical Group (1985) 171 Cal.App.3d 656, 662.) “The entire statutory arbitration scheme is designed to give the arbitrator the broadest possible powers.” (Marcus v. Superior Court (1977) 75 Cal.App.3d 204, 210.)
“[I]n reviewing a judgment confirming an arbitration award, we must accept the trial court’s findings of fact if substantial evidence supports them, and we must draw every reasonable inference to support the award. [Citation.] On issues concerning whether the arbitrator exceeded his powers, we review the trial court’s decision de novo, but we must give substantial deference to the arbitrator’s own assessment of his contractual authority.” (Alexander v. Blue Cross of California (2001) 88 Cal.App.4th 1082, 1087.)
An arbitration award generally may not be overturned simply because a court believes that the arbitrators committed legal or factual error. (In re Marriage of Assemi (1994) 7 Cal.4th 896, 908.) Nor may an award be vacated even if it contains a legal or factual error on its face which causes substantial injustice. (Moncharsh, supra, 3 Cal.4th at pp. 27-28.) Thus, even the erroneous resolution of a legal or factual issue by the arbitrator generally may not be overturned “so long as the issue was within the scope of the controversy submitted to the arbitrators.” (Moshonov v. Walsh (2000) 22 Cal.4th 771, 775.)
II. The arbitrator’s decision was well within the scope of his authority under the parties’ arbitration agreement.
In the present case, the arbitration clause was contained in a client representation memorandum which accompanied and was made part of the 1999 retainer agreement signed by the parties. The arbitration clause--mention of which is conspicuously absent in Casden’s opening brief--defined the scope of the arbitrator’s authority and power in rendering the award. The arbitration clause broadly provided, in pertinent part, as follows: “in the unlikely event of any dispute concerning [Howrey’s legal] representation, including disputes regarding the amount of fees or the quality of [Howrey’s] services, such dispute shall be determined by binding arbitration under the Commercial Arbitration Rules of the American Arbitration Association by one arbitrator in accordance with said Rules. . . . The arbitrator shall have the discretion to order that the costs of arbitration, including fees, other costs and reasonable attorneys’ fees, shall be borne by the losing party.”
Casden purports to challenge the arbitration award on the grounds that the arbitrator exceeded his authority and power in rendering the award. However, Casden points to absolutely nothing in the arbitrator’s award that exceeded the scope of his authority granted pursuant to the parties’ written agreement to arbitrate. The arbitration clause, by its very terms, broadly and unambiguously covers “any dispute concerning [Howrey’s] representation, including disputes regarding the amount of fees.” (Italics added.) Thus, the arbitration of the parties’ dispute over the fees and costs that Casden owed to Howrey fell squarely within the their written agreement to arbitrate, and the arbitrator acted well within the scope of his power and authority.
Casden’s contentions on appeal are all improperly directed to the merits of the arbitrator’s decision, rather than to the scope of the arbitrator’s authority under the parties’ arbitration agreement, and are not grounds for overturning the award. Casden claims that the arbitrator exceeded his authority because he decided that Casden was responsible for all of the unpaid attorney fees even though Casden purportedly never agreed to become individually responsible for all of the legal fees and costs at issue in the case.
Specifically, Casden argues that the 2004 letter agreement he signed as chairman of Casden Properties LLC was an accord and satisfaction that “is fatal to any claim” that Howrey had against him individually pursuant to the 1999 retainer agreement because it was extinguished and replaced by the 2004 letter agreement. Casden also argues that the 2004 letter agreement did not subject him to any individual liability for Howrey’s fees and expenses, and that the 1999 retainer agreement did not render him jointly and severally liable for the fees and costs based upon various principles of contract interpretation. Casden seeks, in essence, to argue that the arbitrator exceeded his authority because he rejected Casden’s defenses in arbitration. Casden ignores the “well settled [principle] that ‘arbitrators do not exceed their powers [even if] they assign an erroneous reason for their decision.’ [Citations.] 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.” (Moncharsh, supra, 3 Cal.4th at p. 28.)
Thus, we need not address Casden’s defenses raised before the arbitrator and raised again on appeal. It is also unnecessary to address, for example, Howrey’s counter-arguments (1) that the 2004 letter agreement was not an accord and satisfaction because Casden did not sign it in his individual capacity and thus the two agreements were not “‘between the same parties’” (Moving Picture etc. Union v. Glasgow Theaters, Inc. (1970) 6 Cal.App.3d 395, 402), and (2) that there was no evidence rebutting the statutory presumption of joint and several liability by parties who make a single promise and receive a benefit (Civ. Code, §§ 1659, 1660). Nor need we address Howrey’s claim that Casden waived his right to challenge the scope of the arbitrator’s authority and power because he raised that claim for the first time only after the arbitrator decided the matter against him. (See J.C. Gury Co. v. Nippon Carbide Industries (USA) Inc. (2007) 152 Cal.App.4th 1300, 1306.)
Accordingly, because the arbitrator’s decision was well within the scope of his authority under the parties’ arbitration agreement, the judgment of the superior court confirming the arbitration award must be affirmed.
DISPOSITION
The judgment is affirmed.
We concur: ASHMANN-GERST, J., CHAVEZ, J.