Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of San Diego County, Super. Ct. No. GIC879938. Jeffrey B. Barton, Judge. Affirmed.
O'ROURKE, J.
Respondent Darren Quinn petitioned the trial court to confirm an arbitration award. Appellants Judith and Dennis Schuelke opposed and petitioned to vacate the award. The trial court granted the petition to confirm. It denied the Schuelkes' motion to vacate the award. The Scheulkes contend the trial court erred because the arbitrator substantially prejudiced their rights by: (1) improperly giving them erroneous legal advice that they did not need expert witness testimony; (2) refusing to consider their evidence supporting the malpractice claim; and (3) refusing to grant them a continuance to obtain expert testimony. We affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
Attorney Darren Quinn sued the Schuelkes for legal fees. The Schuelkes counterclaimed and alleged causes of action for fraud, legal malpractice, and breach of fiduciary duties, stemming from the professional services Quinn rendered to them in prosecuting the underlying securities-fraud action.
At the end of the first day of the arbitration proceedings, the arbitrator called attention to the Schuelkes' lack of expert testimony, and made an interim ruling: "[B]ased upon the evidence at least to this point in the process — it strikes me given that there's no legal standard of care[] expert testimony being proffered by [the Schuelkes] here and with this really being a case that truly sounds in legal malpractice, that I'm going to limit the presentation of the evidence from this point forward only to such remaining evidence that Mr. Schuelke would like to offer relative to intentional misrepresentation or fraud."
At the start of the second day of arbitration, Schuelke requested a continuance "until such time that we could reconvene and continue this with an expert witness." Quinn objected to this request, stating, "Mr. Schuelke has been forewarned, forearmed probably prior that he needed an expert witness prior to the time that he had any discussion with you regarding this matter. He consulted an attorney. He filed a lawsuit in the superior court." Schuelke responded, "As far as not being able to retain an attorney, that is absolutely not true. The facts of the matter lent themselves to — they are so open and obvious that it was a basic recommendation to go ahead and go on this and let an arbitrator see these."
The arbitrator, relying on the rules of arbitration that required him to "conduct the proceedings with a view to expediting the resolution of the dispute," denied the continuance request. He ruled that it "is terribly prejudicial to the other party, who has prepared for the hearing and it delays things even more. And once it's kind of game day, we have to go forward and then that presents all kinds of problems in terms of basically abuse of process. [¶]... [¶] So I don't want to take you folks money [sic], drag this out five days, I get paid for five days of hearing time to have you go through all of this on standard of care and then basically give it zilch weight because it's coming from a layperson."
The arbitrator stated in the award that Quinn's fees were "fair and reasonable, and necessary and proper [for him] to effectively represent[] [the Schuelkes'] interests in the underlying securities-fraud litigation... [and he] rendered his services honestly, competently, and in good faith, with [the Schuelkes'] best interests in mind." The arbitrator denied all of the Schuelkes' claims and ruled that Quinn had proffered "competent and persuasive expert testimony in establishing that his work in all respects complied with the requisite legal standards of care and the governing ethical canons." Conversely, "[the Schuelkes] proffered no competent evidence, by expert testimony or otherwise, to substantiate their legal malpractice and breach of fiduciary claims" and they "in no way established that they would have obtained a more favorable judgment than they did in the underlying securities-fraud litigation had [Quinn] otherwise prosecuted their interests in a different, and arguably more effective [sic] manner." Therefore, the arbitrator awarded Quinn $83,914.20 in accrued legal fees, as well as pre-judgment interest.
On December 19, 2007, the award was served on the Schuelkes. Thereafter, Dennis Schuelke filed an application for modification of the award, which Quinn opposed.
On January 29, 2008, the arbitrator denied Schuelke's application as untimely and affirmed the arbitration award. The arbitrator nonetheless addressed his claim, ruling: "[N]o just cause exists for modification in that Applicant was afforded a full and fair opportunity to present his claims and defenses in the underlying arbitration.... The Arbitrator finds, and the record of hearing demonstrates, that the matters alleged in the application are devoid of any legal or factual basis whatsoever. [¶] In this regard, the applicant was permitted wide latitude in presenting his claims and defenses, particularly in the light of his election to proceed in propria persona. As the arbitrator announced to both parties at the first preliminary hearing and thereafter, Applicant could in fact elect for self-representation in this arbitration.... And the Arbitrator announced that evidence otherwise deemed inadmissible in formal litigation, e.g., lay opinions where expert testimony is required, would generally be admitted in arbitration, but weighed accordingly, in the Arbitrator's judicious exercise of arbitral discretion.... In this light, Applicant's post-award contentions to the effect that he was in some manner misled or misinformed in his self-election to forego engaging the representation of counsel and the services of an expert witness are wholly unfounded. Indeed, Applicant's election to proceed without legal counsel or an expert witness was misguided, given the scope and complexity of his legal malpractice claims. Nonetheless, the Arbitrator's Code of Ethics, of necessity, precludes the Arbitrator from rendering legal advice to either party."
On March 4, 2008, Quinn petitioned the trial court to confirm the award under Code of Civil Procedure, section 1285.
All further statutory references are to the Code of Civil Procedure unless otherwise stated.
On April 11, 2008, the Schuelkes opposed the petition and instead petitioned to vacate the award on grounds that in a prehearing conference the arbitrator had informed them they could present their professional negligence claim without expert testimony. They asserted that during the arbitration, he told them they needed expert testimony and denied their claim for lack of it. Furthermore, they mentioned the arbitrator refused to allow them a continuance to obtain expert testimony; therefore, they were substantially prejudiced by the arbitrator's conduct. They contended their petition to vacate was timely. They noted they had brought an ex parte motion in the trial court, in part, to determine whether service of the petition to confirm the arbitrator's award was proper, in light of the arbitration agreement's silence on the proper way to effect service.
The trial court granted the petition to confirm the award. It denied the Schuelkes' petition to vacate the award, finding it was "late using any standard." Specifically, the court found Quinn had filed the petition to confirm the award before the expiration of 100 days from the date the award was served. Consequently, under section 1290.6, the Schuelkes were required to serve and file a response by 30 days after service of the petition to confirm because the Schuelkes were served outside the State of California. Therefore, the Schuelkes were required to respond on or before April 5, 2008, but did not do so until April 11, 2008.
Nonetheless, the trial court exercised its equitable power to relieve the Schuelkes of the requirement to timely respond, reasoning that "[the Schuelkes] had appeared ex parte to request the court to continue the time to respond on March 24, 2008, challenging, in part, the service of the petition to confirm. [The Schuelkes] concede that the court did not authorize at that time leave to file a late response, instead referencing the hearing of March 28, 2008, which was continued until April 1, 2008. The tentative ruling of March 25, 2008, did allow plaintiffs to respond to the motion. [¶] This is not a case where plaintiffs simply ignored the time requirements and even retained counsel to resolve these issues. The time issues as set forth in the cases are not straight[forward], especially when combined with the second award date. Conceivably, had the court ruled on the date of the notice of ex parte hearing that there was no extension, plaintiffs' attorney could have filed a response prior to the deadline."
The trial court addressed the merits of the Schuelkes' motion to vacate, finding they did not submit to the trial court a transcript of the pre-hearing telephone conference or provide a declaration. However, Quinn stated in a declaration that during the prehearing telephone conference he had warned the Schuelkes they probably needed an expert witness. The court found, based on the transcript of the arbitration proceeding, that the Schuelkes "may have misunderstood what the arbitrator discussed." It concluded the Schuelkes "have not met their burden to show arbitrator misconduct." The court further ruled the Schuelkes had not shown "how a continuance to find an expert would have resulted differently or how they have been substantially prejudiced. There still is no expert testimony or even a declaration for plaintiffs that had an expert testified, the result would have been different."
DISCUSSION
A.
The parties to an arbitration may petition the court to confirm, correct or vacate the award. (§ 1285.) However, such a petition must be served and filed "not later than 100 days after the date of the service of a signed copy of the award." (§ 1288.) If a party requests confirmation within the 100 days specified in section 1288, a response may be filed seeking vacation of the award. Under section 1290.6, any such response must be filed within 10 days of the date the petition is served, or 30 days if the petition is served on an out-of-state party under section 1290.4, subd. (b)(2) . (Elden v. Superior Court (1997) 53 Cal.App.4th 1497, 1511.)
Section 1290.4, subdivision (b)(2) states, "Service outside this State shall be made by mailing the copy of the petition and notice and other papers by registered or certified mail.... the petition may not be heard until at least 30 days after the date of such service."
We conclude the trial court did not err in concluding the Schuelkes' petition to vacate the award was untimely. Quinn filed the petition to confirm the award on March 4, 2008; therefore, under section 1290.6, the Schuelkes had at the most 30 days, or until April 5, 2008, to respond by filing the petition to vacate the award. They did not do so until April 11, 2008. The court nevertheless relied on its inherent power to relieve the Schuelkes from their failure to comply with the statute, and addressed their claims on the merits.
Quinn contends "the jurisdictional deadlines should not be extended pursuant to the court's equitable powers." In DeMello v. Souza (1973)36 Cal.App.3d 79 (DeMello), the court approved the trial court's application of its inherent equitable power to relieve a party from failure to comply with the 100-day limitation of section 1288.2 for filing and service of a request to vacate or correct an arbitration award. (DeMello, at p. 85.) The DeMello court stated that even where section 473 did not apply, a trial court has the inherent equitable power to excuse a party from a deadline related to arbitration proceedings when the party demonstrates the existence of a mistake that prevented a fair hearing of the claim, a satisfactory excuse and diligence in seeking relief after discovery of the facts. (DeMello, supra, at p. 85; see also Humes v. Margil Ventures, Inc. (1985) 174 Cal.App.3d 486, 499.) We accept the trial court's resolution of conflicting facts, and affirm if the decision has not exceeded the bounds of reason in light of all the circumstances. (Alvarado v. City of Port Hueneme (1982) 133 Cal.App.3d 695, 705-706.)
Section 473, subdivision (b) provides: "The court may, upon any terms as may be just, relieve a party or his or her legal representative from a judgment, dismissal, order, or other proceeding taken against him or her through his or her mistake, inadvertence, surprise, or excusable neglect." Here, the Schuelkes did not allege in the petition to vacate the award that their petition was late due to any of the section 473 criteria; rather, they asserted the petition was timely.
We conclude the trial court did not abuse its discretion in exercising its inherent authority to relieve the Schuelkes of the obligation to timely file their petition to vacate the award. We cannot say that the trial court acted out of the bounds of reason in deciding that the Schuelkes acted in good faith in bringing their ex parte motion to resolve the issue of whether the petition to confirm the award was properly served, and that the trial court's delayed ruling on the ex parte motion likely contributed to the Schuelkes' untimely petition to vacate. We therefore proceed to the merits of the Schuelkes' claims.
The California Legislature "has expressed a 'strong public policy in favor of arbitration as a speedy and relatively inexpensive means of dispute resolution.' [Citations.] Consequently, courts will ' "indulge every intendment to give effect to such proceedings." ' " (Moncharsh v. Heily & Blase (1992)3 Cal.4th 1, 8-9, 10.) As a general rule, the merits of an arbitrator's decision are not subject to judicial review. (Id. at p. 11.) Section 1286.2, subdivision (a) is an exception to the general rule precluding judicial review, and sets forth specific grounds for vacating an arbitrator's award.
Under section 1286.2, subdivision (a)(1-6), the court may vacate the award on any of the following grounds: "(1) The award was procured by corruption, fraud or other undue means. [¶] (2) There was corruption in any of the arbitrators. [¶] (3) The rights of the party were substantially prejudiced by misconduct of a neutral arbitrator. [¶] (4) The arbitrators exceeded their powers and the award cannot be corrected without affecting the merits of the decision upon the controversy submitted. [¶] (5) The rights of such party were substantially prejudiced by the refusal of the arbitrators to postpone the hearing upon sufficient cause being shown therefor or by the refusal of the arbitrators to hear evidence material to the controversy or by other conduct of the arbitrators contrary to the provisions of this title. [¶] (6) An arbitrator making the award either: (A) failed to disclose within the time required for disclosure a ground for disqualification... or (B) was subject to disqualification."
The Schuelkes contend the arbitrator " 'violate[ed] his oath of office' by improperly advising [them] that they did not need an expert witness to present their legal malpractice claim," thus he substantially prejudiced them under section 1286.2, subdivision (a)(3) because "they reasonably relied on the arbitrator's incorrect advice and were not prepared to present expert witness testimony at the arbitration hearing."
The Schuelkes acknowledge there was no transcript of the pre-hearing conference in which the arbitrator purportedly gave the Schuelkes legal advice. The trial court noted they did not provide a declaration to support their claim. " 'A fundamental principle of appellate practice is that an appellant " 'must affirmatively show error by an adequate record.... Error is never presumed.... "A judgment or order of the lower court is presumed correct. All intendments and presumptions are indulged to support it on matters as to which the record is silent...." ' " ' [Citation.] [¶] 'When a litigant is appearing in propria persona, he is entitled to the same, but no greater, consideration than other litigants and attorneys.' " (Bianco v. California Highway Patrol (1994) 24 Cal.App.4th 1113, 1125-1126.) It is the appellant's responsibility to include in the appellate record the portions of the reporter's transcript relevant to his or her issues on appeal. (Id. at p. 1125.) " ' "Matters not presented by the record cannot be considered on the suggestion of counsel in the briefs." ' " (In re Hochberg (1970) 2 Cal.3d 870, 875, disapproved on other grounds as stated in In re Fields (1990) 51 Cal.3d 1063, 1070.) We conclude this claim is forfeited because of the lack of record support for it.
The Schuelkes also rely on the following statement the arbitrator made in ruling on the application to modify the award: "As the arbitrator announced to both parties at the first preliminary hearing and thereafter, [the Schuelkes] could in fact elect for self-representation in this arbitration.... [a]nd, the arbitrator announced that evidence otherwise deemed inadmissible in formal litigation, e.g., lay opinions where expert testimony is required, would generally be admitted in arbitration, but weighed accordingly, in the Arbitrator's judicious exercise of arbitral discretion and pursuant to [the arbitration rules] and prevailing decisional law."
Based on the above statement, we cannot conclude that the arbitrator gave the Schuelkes legal advice. Understood in context, he merely explained that in arbitration proceedings the rules of evidence are more informal than those applied in formal court proceedings. He gave the specific example of lay opinion testimony being sometimes acceptable in arbitration, although in court proceedings expert opinion might be required instead. Consistent with his statement, the arbitrator initially allowed the Schuelkes an opportunity to provide lay opinion regarding both their legal malpractice and fraud causes of action, but he later found lay opinion testimony insufficient to prove legal malpractice.
We also note the Schuelkes were on notice regarding the importance of submitting expert testimony. Specifically, respondent's attorney states in a declaration submitted in opposition to the Schuelkes' motion to vacate the award: "Both parties had the opportunity to designate an expert witness pursuant to the arbitrator's scheduling order. The right to designate an expert witness was specifically preserved in the arbitrator's pre-hearing report." The attorney also declared he served and filed Quinn's arbitration brief, in which he stated, " 'The Schuelkes need to identify each alleged breach of duty by Quinn to determine whether any expert testimony on that issue will be required... Expert testimony is typically always required in legal malpractice cases.' " The Schuelkes concede, "There is no dispute on the record here that the issue of whether [a]ppellants needed an expert witness to testify in support of their legal malpractice claim was a topic of significant discussion," and that "Respondent's counsel specifically warned [them] that they needed an expert witness to testify in support of their malpractice claim."
We conclude the trial court did not err in declining to vacate the award under section 1286.2 subdivision (a)(3).
B.
The Schuelkes contend that the arbitrator erroneously denied their request for a continuance to obtain expert testimony although he permitted respondent to put on expert testimony, and therefore they were substantially prejudiced under section 1286.2, subdivision (5), mandating vacation of the award.
Section 1282.2 states in part: "Unless the arbitration agreement otherwise provides, or unless the parties to the arbitration otherwise provide by an agreement which is not contrary to the arbitration agreement as made or as modified by all the parties thereto: [¶].... [¶] (b) The neutral arbitrator may adjourn the hearing from time to time as necessary. On a request of a party to the arbitration for good cause, or upon his own determination, the neutral arbitrator may postpone the hearing to a time not later than the date fixed by the agreement for making the award, or to a later date if the parties to the arbitration consent thereto."
"Of course the decision whether to grant a continuance lies in the first instance with the arbitrator." (SWAB Financial, LLC v. E*Trade Securities, Inc. et al. (2007) 150 Cal.App.4th 1181, 1196.) "[W]hen, as here, an arbitrator exercises discretion in denying a continuance request, there are two issues to be resolved in vacatur proceedings. First, the trial court must determine whether the arbitrator abused his or her discretion by refusing to postpone the hearing upon sufficient cause being shown. Second, if there was an abuse of discretion, the trial court must determine whether the moving party suffered substantial prejudice as a result. Moreover, on appeal from the trial court's order granting or denying a request to vacate the arbitration award, our review is de novo. In other words, in this case, we must consider whether the arbitrators abused their discretion and there was substantial prejudice in denying plaintiff's continuance motion." (Id., at p. 1198.)
Unless "failure of attorney performance is so clear that a trier of fact may find professional negligence unassisted by expert testimony," such testimony is required "on the standard of care and the attorney's performance in relation to that standard." (Wilkinson v. Rives (1981) 116 Cal.App.3d 641, 647-648; Fergus v. Songer (2007) 150 Cal.App.4th 552, 578.)
When the Schuelkes requested the continuance, they stated that they elected not to have an expert witness because the malpractice cause of action was provable without it. However, the arbitrator had heard part of the Schuelkes' testimony and concluded he could not give it any weight on the issue of legal malpractice. Rather, they needed to put on expert testimony. The Schuelkes did not show sufficient cause for not having timely obtained expert testimony, particularly because they conceded they knew from the prehearing documents and discussions that such testimony likely was necessary. Rather, they apparently elected to proceed without expert testimony, in the erroneous belief that they could prove manifest malpractice. They also did not indicate that they would be able to obtain such testimony within a reasonable time frame or any specific time frame. Instead, they simply asked for an open-ended continuance "until such time that we could reconvene and continue this with an expert witness." The arbitrator decided that to grant the continuance would have been prejudicial to Quinn, who had prepared for the specific hearing dates. We conclude the arbitrator did not abuse his discretion in denying the continuance.
The Schuelkes also contend that another basis for vacating the award was the arbitrator's refusal "to hear evidence material to the controversy" under section 1286.2 subdivision (a)(5). This contention was not presented to the trial court, and therefore it is forfeited. It is fundamental that a reviewing court will ordinarily not consider claims made for the first time on appeal. (Yeung v. Soos (2004) 119 Cal.App.4th 576, 582-583.)
Nonetheless, the contention fails. On appeal, the Schuelkes have not set forth the particular evidence the arbitrator excluded. Rather, they base the contention on the arbitrator's interim ruling. However, the arbitrator did initially hear the testimony the Schuelkes presented but concluded he had heard sufficient to know that even if he spent the entire 5 days scheduled for the hearing listening to more of it, such lay testimony could not support their legal malpractice claim. Under section 1286.2, subdivision (a)(5), the Schuelkes have not shown that they were prejudiced by the "refusal of the arbitrator[] to hear evidence material to the controversy." The Schuelkes' "conclusionary statement that [their] rights were 'substantially prejudiced' is not sufficient.... The failure to set forth what... evidence was not heard by the arbitrator... renders the petition fatally defective." (Gonzales v. Interinsurance Exchange (1978) 84 Cal.App.3d 58, 66-67.)
DISPOSITION
The judgment is affirmed. Darren Quinn is awarded costs on appeal.
WE CONCUR: HUFFMAN, Acting P. J., AARON, J.