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Filed 11/4/16 C e r tified for publication 11/29/16 (order attached)

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION ONE

GENE CONDON, Plaintiff and Respondent,

v. DALAND NISSAN, INC., et al., Defendants and Appellants. A145613
(San Mateo County Super. Ct. No. CIV 517001)

Plaintiff Gene Condon prevailed in an arbitration against defendants Daland Nissan, Inc., Federated Mutual Insurance Company, and Wells Fargo Dealer Services. Facing a total award in excess of $100,000, defendants sought a new arbitration in
accordance with the terms of the arbitration provision in the parties’ contract . Because Condon objected, the arbitral forum would not proceed with a new arbitration without a
court order. The trial court refused to order a new arbitration and, instead, confirmed the
award. In the court’s view, because the arbitral forum lacked separate “appellate” rules
, it could not conduct a second arbitration. It also was of the view defendants were improperly asking for a new arbitra l forum

. W e reverse . The arbitral forum , ADR Services, Inc., did not refuse to conduct a second arbitration because of the lack of “appellate” rules; it declined to conduct a de novo arbitration solely because Condon objected. Defenda nts, in turn, specific ally told the trial court they would be “perfectly happy” to return to th at arbitral forum.2 B ACKGROUND Condon purchased a car from Daland. B eliev ing the dealership knowingly failed to disclose prior damage to the car, Condon sued it, i ts insurer, and the entity that acquired the sales contract

. The sales contract require d arbitration of disputes : “A ny claim or dispute .

. . (including the interpretation and scop e of this Arbitration Clause
, and the arbitrability of the claim or dispute)
, between you and us .

. . shall, at your or our election, be resolved
b y neutral, binding arbitration.” T he purchase r was entitled to choose the arbitration provider, either the National Arbitration Forum, the American Arbitration Association, or any other provider subject to approval.
The arbitration provision further state d an arbitration award would be final, unless “the arbitrator’s award for a party is $0 or against a party is in excess of $100,000, or includes an award of injunctive relief against a party .” In such case, “ that party may request a new arbitration under the rules of the arbitration organization by a three

arbitrator panel. The appealing party requestin g new arbitration shall be responsible for the filing fee and other arbitration costs subject to” further consideration by the panel.
After Condon refused a request to arbitrate, d efendants petitioned to compel
arbitration. Condon maintained the arbitr ation provision was unconscionable, in part
because of the possibility of a second arbitration , a provision he claimed unfairly favored
the car dealer. The trial court rejected his unconscionability argument and ordered
arbitration. The parties chose ADR as their arbitral forum. The ADR arbitrator found for
Condon and issued a corrected interim award that order ed him reimbursed “for all amounts paid in connection with the purchase” of the overvalued vehicle, “less an offset of $13,516, which will be d eemed the proper purchase price.” The award also excused Condon from making any fu rther payments. The arbitrator then invited a motion for
costs and fees. Condon duly filed a motion, which defendants did not oppose. The
arbitrator ’s final monetary awar d was solely for costs and fees of $180,175.343

( approximately $23,000 in costs and $107,000 in incurred fees plus a 1.5 multiplier of $50,000 )

. Daland requested ADR to proceed with a new arbitration pursuant to th e provision allowing for a second arbitration whe n an award exceed s $100,000

. Condon objected
and claimed the “ ‘ new ’ arbitration” clause should be severed on the ground of
unconscionab ility

. ADR then wrote a letter to the parties stating “ [ t ] here is no w a disagreement between the parties as to whether ADR

. . . should proceed with the selection of the three

arbitrator panel in response to” the new arbitration demand. ADR concluded it lacked authority to resolve the parties’ disagreement over whether a new arbitration was proper. Therefore, it would “not proceed with the selection of the three

- arbitrator panel.” Instead, ADR directed the parties to ask the court “for an order determining whether
ADR

. . . should proceed with the selection of the three

- arbitrator panel” and advised it
would “follow the directions” of the court. Notably, ADR did not state it was unable to provide a three

- arbitrator panel for a new arbitration.
At this point, Condon returned to the trial court and petitioned to confirm the
arbitration award. Defendants objected, asked the court to vacate the award
, and sought an order enforcing the clause providing for a second arbitration. Defendants ’ briefing further requested : “ [S] ince ADR

. . . has declined to do its job by honoring Defendant’s [sic] lawful request for a new arbitration panel, Defendant [sic] requests that the order compelling the new arbitration before a three arbitrator panel include a specific referral to
the American Arbitrat ion Association.” In supplemental briefing, defendants also argued
the court had already ruled they were entitle d to arbitration and, at the very least , their
entitlement to a second arbitration was a question for the three

- arbitrator panel upon

commencem ent of a new arbitration. At the hearing on the competing motions
, defendants explained their request for
referral to AAA instead of to ADR. It had nothing to do with the rules and procedures of ADR, but with the fact Condon had refused a three

- arbitra tor panel at ADR. Absent his4

agreement to ADR, defendants wished to proceed before AAA. Defendants, themselves, had no preference and would be “ perfectly happy if Your Honor wants to order the appeal to go back to ADR.”
T he court confirmed the arbitration award and denied defendants ’ request for a
second arbitration. The court gave two reasons for its refusal to order a new arbitration. One, t he “agreement does not provide” for when “the arbitration organization selected by the parties does no t have a process by which a new arbitration may be had before a three

arbitrator panel.” Second, “ the agreement certainly does not provid e for a party to return to Court and request a new arbitration before an entirely new arbitral forum.” The superior c ourt entered judgment for $180,175.34

. D ISCUSSION On appeal from an order confirming an arbitration award, or from an order denying arb itration, our review is de novo unless the order hinges on a factual finding,

w hich w e review for substantial evidence . ( Bunker Hill Park LTD. v. U.S. Bank National
Assn. (2014) 231 Cal.App.4th 1315, 1324 ; Toal v. Tardif (2009) 178 Cal.App.4th 1208,
1217 .)
Condon obtained an arbitration award of over $180,000. Under the terms of the arbitration provision, if “the arbit rator’s award for a party is $0 or against a party is in excess of $100,000, or includes an award of injunctive relief against a party, that party may request a new arbitration under the rules of the arbitration organization by a three

arbitrator panel.” Defendants invoked this provision and asked for a new arbitration, first from ADR directly and then, when ADR declined to proceed in the face of Condon’s objection, from the court. Although Condon advocated before ADR and the trial court that the provis ion for a second arbitration was unconscionable, he has not advanced this contention on appeal in support of the order affirming the award and denying a second arbitration

. This is unsurprising in light of the Supreme Court’s decision in Sanchez v. Valencia Holding Co., LLC (2015) 61 Cal.4th 899, 915

– 917 , in which the court held a similar “new
arbitration” clause in a similar auto sales contract enforceable against the purchaser.5

Rather, Condon argues substantial evidence supports the trial court ’ s finding that
ADR lacked special rules for “ appeals

. ” Indeed, t here seems to be no dispute that ADR
has no “appellate” rules. Condon maintains that in the absence of “appellate” rules, no arbitration can be held as provided for by the parties’ agreement , since it specifies a “party may request a new arbitration under the rules of the arbitration organization by a
three

- arbitrator panel.” Condon further notes the arbitration provision uses the term “appealing party” once in specifying that the “appealing party requesting new arbitration shall be responsible for the filing fee and other arbitration costs subject to” further

co nsideration by the panel. What Condon overlooks, however, is that the arbitration provision does not
authorize an appeal as tha t term is used in our judicial system, involving different procedures than those used in the trial courts
, and before different courts of defined, and often limited, review. Rather, the arbitration provision authorizes , at a party’s request, a

“ new arbitration under the rules of the arbitration organization by a three

- arbitrator panel .” (Italics added.) In other words, in certain circumstances, the arbitration agreement permits a “do

- over”

— governed by the same rules that applied to the first
arbitra tion. The single reference to an “appealing party”

— wh o asks for a “ new arbitration ”

— does not change the fact that what that party will receive is an arbitration repeat. The correspondence with ADR demonstrates , moreover, that it was ready and able to pro vide a new arbitration before a three

- member panel and declined to do so only because it perceived it lacked the authority to impose the new arbitration on Condon
absent a court order. In short, the fact ADR has no specialized “appellate” rules
, is
irrele vant to the arbitration dispute in this case.
Condon also focuses on the permissive language of the provision

— that an aggrieved party “ may request a new arbitration under the rules of the arbitration organization by a three

- arbitrator panel

. ” ( Italics ad ded.) He reads this to mean that
while a party suffering a $100,000

- plus award may request a second arbitration, even if
th at party does so, such a request can, in either the arbitral forum’s or court’s discretion, be refused or denied. This is not a reasonable reading of this provision. On the contrary,6

the provision imbues the aggrieved party with a choice, to accept the awa rd or ask for a new arbitration. If the party chooses an arbitration re

- do, it is, by the plain language of the arbitration agreement, entitled to that recourse. Finally, Condon maintains defendants never asked the superior court to order a new arbitrat ion before ADR and the arbitration provision can in no way be read to allow defendants to jump from one arbitral forum to another (i.e., from ADR to AAA). We agree the arbitration provision requires any new arbitration to be “under the rules of the
arbitr ation organization” that the consumer chose for the first arbitration. The context of the term “arbitration organization” throughout the provision demonstrates this. We do not agree, however, that defendants insisted on a new arbitration before AAA, rather than ADR. To begin with, defendants asked ADR to conduct a new
arbitration. ADR declined to do so only because Condon refused to agree. In the trial court, defendants initially asked that arbitration be ordered before AAA, but that was
because C ondon appeared to be objecting to arbitration before ADR. Defendants subsequently made it clear they were “perfectly happy” to return to ADR. We therefore conclude the trial court’s orders cannot stand. The lack of “appellate rules” is no impedimen t to ADR providing a new arbitration. And defendants did not
insist on a new arbitral forum. Condon’s motion to confirm the award should have been denied, and defendants’ request for an order requiring a new arbitration should have been granted, specifyi ng arbitration before ADR.
D ISPOSITION The judgment confirming the arbitration award and order denying a new
arbitration are reversed. The superior court shall order the petition to confirm dismissed7

as premature and order the parties to proceed with a new arbitration before a three

arbitrator panel at ADR

. 1 Costs on appeal to defendants.

_________________________ Banke, J.

We concur:

_________________________ Humes, P.J.

_________________________ Dondero, J.

1 Should defendants abandon a second arbitration, Condon would be entitled to seek confirmation of the first award.1

Filed 11/29/16 CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION ONE

GENE CONDON , Plaintiff and Respondent
,
v. DALAND NISSAN, INC., et al
., Defendants and Appellants

. A 145613
(San Mateo County Super. Ct. No. CIV 517001 )

ORDER CERTIFYING OPINION FOR PUBLICATION AND DENYING PETITION FOR REHEARING

NO CHANGE IN JUDGMENT

THE COURT: The opinion in the above

- e ntitled matter filed on November 4 , 2016, was not certified for publication in the Official Reports. After the court’s review of a request under California Rules of Court, rule 8.1120, and good cause established under
rule 8.1105, it is hereby ordered that the opinion should be published in the Official Reports. Respondent’s petition for rehearing is denied.

Dated: ____________ ________________________________ P.J.2

Trial Court: San Mateo County Superior Court
Trial Judge: Hon. Joseph C. Scott

Counsel:
Toschi, Sidran, Collins & Doyle, David R. Sidran and Thomas M. Crowell for Defendant and Appellant.
Law Office of Otto & Guillen, PC, Ian Otto and Michele M. Tuman for Plaintiff and Respondent.