Court Opinion

ID: 9892629
Source: CourtListenerOpinion
Date Created: 2023-10-24 17:08:05.931943+00
Date Added: 2024-06-11T08:24:32.444228
License: Public Domain

Filed 10/24/23 Phair v. Renzulli Properties CA4/1

                   NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or
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                 COURT OF APPEAL, FOURTH APPELLATE DISTRICT

                                                       DIVISION ONE

                                              STATE OF CALIFORNIA

 JEFF PHAIR et al.                                                            D081458

            Plaintiffs and Respondents,

            v.                                                                (Super. Ct. No. 37-2022-00046736-
                                                                              CU-BC-CTL)
 RENZULLI PROPERTIES, LLC et al.,

            Defendant and Appellant.

          APPEAL from an order of the Superior Court of San Diego County,
Matthew C. Braner, Judge. Reversed and remanded with instructions.
          Pennington Law Firm and Walter Allen Pennington for Defendant and
Appellant.
          Paul Vincent Carelli IV, Gil Abed and Mark C. Mazzarella for Plaintiffs
and Respondents.
      This case involves a dispute over the sale of a parcel of real property by
defendants Renzulli Properties, LLC and Thomas Renzulli (collectively,
Renzulli) to plaintiffs Jeff Phair doing business as the Phair Company, LLC
and Green Phair Scripps Partner, LLC (collectively, Phair). As provided for
in the purchase and sale agreement (PSA), Phair conducted an extended due
diligence review on the property. Before this review was completed, however,
the COVID-19 pandemic began, shutting down local government offices
including the planning department that issued permits and processed
entitlements for the property. Relying on the way the planning department
operated before the shutdown, the parties agreed to extend escrow until the
department “re-opened” for “in-person meetings.” But when the planning
department changed its procedures, eliminating in-person meetings in most
instances, a dispute arose as to whether the department had in fact reopened
and therefore whether Phair had to close escrow.
      Pursuant to the terms of the PSA, the parties submitted their dispute
to arbitration. The arbitrator determined that the department had not “re-
opened” because it was closed indefinitely for in-person meetings. At the
same time, she found that the parties “did not envision an open-ended
COVID Extension.” The arbitrator ultimately concluded that the parties
intended the extension to last a “reasonable” period of no more than 12
months and directed Phair to close escrow in 30 days or pay damages.
      Phair petitioned the trial court to vacate the arbitrator’s award, while
Renzulli asked to confirm the award. The court ruled that the arbitrator had
exceeded her power by violating arbitration rules and reforming the contract
outside of Renzulli’s arbitration demand. It also found that the award
violated fundamental fairness in that Phair did not have adequate notice
reformation was sought.

                                       2
      On appeal, Renzulli argues the trial court erred in setting aside the
arbitration award because an arbitrator is vested with broad discretion to
determine the appropriate remedy. Moreover, it is for the arbitrator to
determine if notice was adequate and, if not, whether the opposing party
suffered any prejudice. We agree on both points, reversing and remanding
with directions to confirm the award.

              FACTUAL AND PROCEDURAL BACKGROUND

A.    The Purchase and Sale Agreement and the COVID Extension

      In March 2018, Renzulli agreed to sell Phair a parcel of real estate in
San Diego for approximately $16 million. Their PSA gave Phair an initial
due diligence period of six months with three compensated options that could
prolong the time to inspect the property by two years. The PSA also had a
close of escrow provision, which allowed for 12 consecutive extensions of one
month each.
      By October 2019, Phair had paid the fees due for the first and second
due diligence extensions. The parties then amended the PSA and changed
the starting dates for the third due diligence extension and close of escrow
extension. Under these amendments, the due diligence period could be
extended to February 2021 and the close of escrow could be extended to
February 2022. In February 2020, Phair began making $8,000 monthly
payments for the third due diligence extension.
      In March 2020, the City of San Diego Planning Department closed due
to COVID. The parties did not know how long the planning department
would be closed, so they amended the PSA’s close of escrow extension to
address the closure:

                                        3
      “Close of Escrow Extension: Buyer may extend the close of escrow
      based on the COVID-19 global pandemic impacts on the City of
      San Diego Planning Department (CSDPD) operations for the
      time period that the CSDPD has been closed for in person
      meetings plus an additional two (2) months. This time period
      shall be calculated based on either a city document or email from
      the city stating when the CSDPD closed for in person meetings
      and when they reopened.
      “If after the abovementioned COVID-19 extension has been
      exercised and has expired, the Buyer may further extend the
      close of escrow for up to twelve (12) one (1) month periods by
      depositing “good funds” into escrow in the amount of $20,000 per
      month for each extension period. Each $20,000 deposit shall be
      immediately released to the Seller each month as a
      nonrefundable deposit and is NOT applicable to the purchase
      price, but in addition to.”

      By December 2020, Phair had paid Renzulli for all three sets of due
diligence extensions. The remaining extension was the 12-month close of
escrow extension, which would begin once the planning department reopened
and the COVID extension expired.

B.    A Dispute Over the COVID Extension

      In February 2022, Renzulli claimed the planning department had
opened for in-person meetings as of May 2020 and that escrow would be
cancelled if Phair did not start making $20,000 monthly payments. The same
month, Phair made a $20,000 payment to escrow without conceding it was
due and stating that it was “provisional upon a restructuring of the escrow
contract.” Phair did not make any subsequent monthly payments.
      In April 2022, Renzulli filed an arbitration complaint for breach of
contract, cancellation of the contract, specific performance, and contract
interpretation, demanding arbitration of the dispute pursuant to the PSA.
Renzulli’s demand asserted that the planning department reopened for in-

                                       4
person meetings and that all the PSA extensions, including the COVID
extension, had expired. It also alleged that Phair exercised the option to
extend escrow, made the first $20,000 payment in February 2022, and failed
to make the second payment in March 2022. According to the demand, the
time to perform had expired and the contract was cancelled.
      In the prayer for relief, Renzulli requested that the arbitrator find that
Phair breached the contract and that the contract terminated as a result.
It also requested “[t]hat the arbitrator determine the rights and obligations of
the parties and the performance due” and asked for “[o]ther legal and
equitable remedies as determined . . . .”

C.    The Arbitration Award

      Following briefing and a hearing on the merits in October, the
arbitrator issued her award in November, 2022. She found that the COVID
extension clearly stated that the parties “must rely on a City document or
email from the City stating when the [planning department] closed for in-
person meetings and when it reopened.” While observing that there was
undisputed evidence of the planning department’s March 2020 closure, there
was no notification “directly stating” that it was “open for in-person
meetings.”
      The arbitrator then explained that the planning department was
largely conducting its permitting and entitlement processes online and that
there was “no indication” it would “be open for regular in-person meetings in
the foreseeable future.” The parties failed to “anticipate or foresee” that the
City would decide to continue conducting the planning department’s
“business, hearings, and meetings on virtual platforms as the pandemic
phase of the COVID crisis subsides,” while other public and private entities
reopen for in-person events. In agreeing to the COVID extension, the parties

                                       5
“did not intend for the agreed condition to excuse or delay Phair’s
performance obligation indefinitely.” The parties had a “contractual right” to
rely on the COVID extension for “a reasonable period.” A “reasonable
time . . . is a question of fact” that depends on the “situation of the parties,
the nature of the transaction, and the facts of the particular case.”
      The arbitrator found that a “reasonable limitation” on the length of the
COVID extension was 12 months based on “the intent of the Parties when
they agreed” to the amendment. Because the COVID extension lasted only
12 months after the in-person meetings closed in March 2020, she
determined that the COVID extension ended in March 2021. After that date,
Phair could pay $20,000 per month for another 12 months if Phair exercised
the “Close of Escrow Extensions.” Finding it would be “inequitable” to
declare a breach retroactively, the arbitrator permitted Phair 30 days to pay
Renzulli obligatory fees to cover escrow extension payments from March 2021
to close of escrow and required escrow to close within 30 days of the final
award.

D.    Proceedings in the Superior Court

      Phair filed a petition to set aside the arbitrator’s award and Renzulli
filed a petition to confirm it. After hearing arguments in December 2022, the
trial court issued a ruling declaring that it was “mindful that the scope of
judicial review of arbitration awards is extremely narrow,” but that an award
“must be set aside” when the arbitrator exceeded his or her powers.
      The court explained that there were two issues in dispute: (1) whether
the planning department “was open for in person meetings, thus triggering
expiration of the ‘COVID-19 extension’ ” and a potential breach of contract by
Phair for failing to close escrow; and (2) whether Phair had exercised the
close of escrow extension in February 2022, thus triggering the obligation to

                                         6
make monthly payments of $20,000. It noted that “[a]bsent from the demand
is any indication that [Renzulli] believed tethering the COVID-19 extension
to the reopening of in person meetings was unclear, unfair, unreasonable, or
unconscionable. It is also undisputed that [Renzulli] did not seek approval to
submit any new or different claims” pursuant to the arbitration rules.
      The court found that the arbitrator exceeded her powers when she
reformed the terms of the COVID-19 extension: “Here, by raising and
deciding the issue of the reasonableness of the COVID extension term itself –
as opposed to deciding whether in-person meetings had reopened as a factual
matter – the arbitrator effectively reformed the contract and in so doing,
exceeded her authority.” Renzulli’s demand for arbitration “did not raise the
issue of the reasonableness of the COVID Extension” and “did not seek
reformation of the contract.”
      The court rejected Renzulli’s argument that the “demand for
arbitration was broad enough to encompass the decision by the arbitrator.”
It concluded that both the demand for arbitration and the arbitrator’s
decision clearly set forth the disputed issues,” and the arbitrator, in the
judge’s view, “exceeded her authority by going beyond those issues.”
      Additionally, Phair did not have “adequate notice and [an] opportunity
to respond to the grounds relied on by the arbitrator in her decision.” As a
result, Phair “was deprived of a fair hearing” and the award had to be
vacated “because it was procured by an undue means.”
      Accordingly, the court granted Phair’s petition to set aside the award
and denied Renzulli’s petition to confirm it.

                                        7
                                   DISCUSSION

      Through the California Arbitration Act (Code of Civ. Proc.,1 § 1280
et seq.), the Legislature has expressed a “ ‘strong public policy in favor of
arbitration as a speedy and relatively inexpensive means of dispute
resolution.’ ” (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 9.) “To
promote this alternative means of dispute resolution, the law minimizes
judicial intervention in the proceedings, in part, by the doctrine of arbitral
finality.” (Jones v. Humanscale Corp. (2005) 130 Cal.App.4th 401, 407.)
And while acting in excess of authority is a recognized basis for vacating an
arbitration award (§ 1286.2, subd. (a)(4)), this ground is “narrowly
construed.” (Emerald Aero, LLC v. Kaplan (2017) 9 Cal.App.5th 1125, 1138
(Emerald Aero).) Parties to an arbitration agreement “have bargained for the
relatively free exercise” of the arbitrator’s “flexibility, creativity and sense of
fairness” in choosing a remedy. (Advanced Micro Devices, Inc. v. Intel Corp.
(1994) 9 Cal.4th 362, 374 (Advanced Micro Devices).) “In determining
whether an arbitrator exceeded his [or her] 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.” (Jordan v.
Department of Motor Vehicles (2002) 100 Cal.App.4th 431, 443–444.)

A.    Reformation Was A Remedy Within the Scope of the Arbitrator’s Broad
      Powers and the Applicable JAMS Rules

      1.     Arbitrator’s Powers

      The trial court found that the arbitrator “exceeded her authority” when
she “effectively reformed the contract.” “Although ‘reformation’ is sometimes
casually referred to as a cause of action, it is actually a remedy. Reformation

1     Undesignated statutory references are to the Code of Civil Procedure.
                                         8
is not the court creating a new agreement but rather enforcing the actual
agreement already made by the parties.” (Panterra GP, Inc. v. Superior
Court (2022) 74 Cal.App.5th 697, 713–714.) An arbitrator’s “discretion to
determine the extent of remedies is as great as his or her discretion to
determine the related question of what issues are necessary to the decision.”
(Advanced Micro Devices, supra, 9 Cal.4th at pp. 374–375 [“Were courts to
reevaluate independently the merits of a particular remedy, the parties’
contractual expectation of a decision according to the arbitrators’ best
judgment would be defeated.”].)
      After hearing evidence and argument, the arbitrator determined there
was “nothing in the language of the Second Amendment that envisioned an
open-ended COVID Extension. No one anticipated and neither [p]arty
assumed the risk that the [the planning department] would pivot to almost
exclusively virtual meetings indefinitely.” She concluded that the close of
escrow condition was “unreasonably open ended” and decided to set
“a reasonable date for the expiration of the COVID Extension.” The
reasonable date was March 15, 2021, based on “the intent of the [p]arties
when they agreed” to the extension.
      Because arbitrators have broad authority to determine what issues are
arbitrable, the trial court was mistaken when it found that the arbitrator
“exceeded her authority” when she “rais[ed] and decid[ed] the issue of the
reasonableness of the COVID extension term itself—as opposed to deciding
whether in person meetings had reopened as a factual matter.” The PSA
broadly authorized the arbitrator to resolve “[a]ll disputes arising between
the Parties with respect to the subject matter of this Agreement.” “[W]e defer
to the arbitrator’s determination as to what issues were arbitrable, and we
cannot review that determination on the merits.” (Greenspan v. LADT, LLC

                                       9
(2010) 185 Cal.App.4th 1413, 1446 (Greenspan); see also Morris v. Zuckerman
(1968) 69 Cal.2d 686, 690 [“It is for the arbitrators to determine which issues
were actually ‘necessary’ to the ultimate decision.”]; East San Bernardino
County Water Dist. v. City of San Bernardino (1973) 33 Cal.App.3d 942, 954
[“The arbitrators, not the courts, have the task of defining the issues between
the parties”].)
      Here, Renzulli’s arbitration demand included the precise language of
the COVID extension along with a broadly worded request to interpret it and
award all possible legal and equitable remedies. It set forth Renzulli’s belief
that the planning department had reopened and that Phair had failed to
perform. Renzulli specifically requested that the arbitrator find that Phair
breached the contract and that the contract was terminated because of the
breach. It also raised the question of contract interpretation, asking that the
arbitrator determine the “ ‘rights and obligations under the PSA concerning

the performance due from Buyer Phair.’ ”2
      Consistent with Renzulli’s demand, the arbitrator analyzed the COVID
extension. Although she agreed with Phair as a factual matter that the
planning department had not reopened for in-person meetings, she also found
that the parties “did not anticipate or foresee the City’s decision to continue
conducting [planning department] business, hearings, and meetings on
virtual platforms as the pandemic phase of the COVID crisis subside[d].” She
further determined that the phrase “in-person meetings” was intended to
reference “the test of whether things had returned to normal.”
      The ruling framed one issue as “whether the condition agreed to in the
[COVID extension] was satisfied thus creating Phair’s performance obligation

2     In the prayer, Renzulli again requested that arbitrator “determine the
rights and obligations of the parties and the performance due.”
                                       10
– did [the planning department] open for in-person meetings and[,] if so,
when?” In construing the COVID extension, she felt it was necessary to
analyze whether the parties “intend[ed] for the agreed condition [of the
reopening of the planning department for in-person meetings] to excuse or
delay Phair’s performance obligation indefinitely.” Her analysis was based
on the provision’s language and the facts before her regarding the parties’
intent. It was within her authority and discretion to make this
determination. (Gueyffier v. Ann Summers, Ltd. (2008) 43 Cal. 4th 1179,
1182 (Gueyffier) [“[A]n arbitrator has the authority to . . . interpret the
contract, and award any relief rationally related to . . . her factual findings
and contractual interpretation.”].)
      Nor is Phair correct that the arbitrator exceeded her powers by
awarding a remedy—reformation of the PSA—that was expressly precluded
by the parties’ agreement. Phair suggests that reformation was not a remedy
authorized by the PSA, but express authorization is not the issue. An
arbitrator has the power to fashion relief that she considers just and fair so
long as the remedy may be “rationally derived” from the contract and the
breach. (Advanced Micro Devices, supra, 9 Cal.4th at p. 383.) The relevant
question is whether the arbitration agreement “explicitly and unambiguously
limited [the arbitrator’s] powers.” (Gueyffier, supra, 43 Cal.4th at p. 1185.)
Moreover, “ ‘any doubts as to the meaning or extent of an arbitration
agreement are for the arbitrators and not the court to resolve,’ ” and courts
must “refrain from substituting” their own judgment in determining the
scope of the arbitrator’s powers. (Advanced Micro Devices, at p. 372.)
      In Gueyffier, for instance, the parties specifically agreed that the
arbitrator would have no power to modify or change any term of the contract.
(Gueyffier, supra, 43 Cal.4th at p. 1185.) The Supreme Court concluded that

                                        11
while this language would have been effective to bar an actual change or
modification, thus preventing reformation of the contract, it did not preclude
the arbitrator from excusing performance of a contract term by finding that
provision inapplicable. (Id. at pp. 1185–1186.) Here, in contrast to Gueyffier,
there is no language in the parties’ agreement that “explicitly and
unambiguously” limits available remedies or otherwise prohibits reformation
of the PSA.
      The trial court’s reliance on Pacific Crown Distributors v. Brotherhood
of Teamsters (1986) 183 Cal.App.3d 1138 (Pacific Crown) was misplaced.
In Pacific Crown, the parties “ ‘stipulated the only issue submitted to the
arbitrator was whether or not the discharge of [the former employee] was in
accordance with the collective bargaining agreement, and if not, what shall
be the remedy.’ ” (Id. at p. 1142.) Based on that stipulation, the Court of
Appeal determined that there was “a ‘two step process’ to be undertaken;
first, the arbitrator was to decide whether or not [the former employee’s]
discharge was in accordance with the collective bargaining agreement, and,
if not, then a determination of the remedy was to follow.” (Id. at p. 1144.)
To the Court of Appeal, the parties’ stipulation seemed “clear enough, the
remedy question was to be addressed only if the discharge was not in accord
with the agreement.” (Ibid.) Because the arbitrator determined that the
“ ‘first step’ ” was fulfilled, the arbitrator should not have proceeded to the
“ ‘remedial step.’ ” (Ibid.) Here, the arbitrator did not violate any similar
stipulation or explicit instruction by the parties.
      In short, the arbitrator in this case was within her authority to
determine the meaning of the COVID extension term and fashion any
appropriate remedy that was not expressly precluded by the parties’
agreement. (See Advanced Micro Devices, supra, 9 Cal.4th at p. 378

                                        12
[An arbitrator’s award will not be overturned “ ‘as long as the arbitrator is
even arguably . . . acting within the scope of his authority’ ”]; California Dept.
of Human Resources v. Service Employees Internat. Union, Local 1000 (2012)
209 Cal.App.4th 1420, 1430 [“A trial court may vacate an award interpreting
a contract if and only if it ‘rests on a “completely irrational” construction of
the contract [citations] or . . . amounts to an “arbitrary remaking” of the
contract.’ ”].)

       2.     JAMS Rules

       Phair also contends the arbitrator exceeded her authority because she
violated “ ‘specific restrictions’ ” in “ ‘the rules of arbitration.’ ” According to
Phair, the arbitrator’s authority was limited by the JAMS arbitration rules,
“which became part of the . . . Arbitration agreement, and which provide the
Arbitrator was not to consider any issue not alleged in Renzulli’s Demand for

Arbitration and Complaint.”3 In accepting this argument, the trial court

3      According to the arbitration ruling, all parties agreed “that the
arbitration will be governed by the JAMS Comprehensive Arbitration Rules
and Procedures (JAMS Rules).” The record does not include a written
agreement to be governed by the JAMS Rules. The full, up-to-date text of
those rules is available on the JAMS website at
<https://www.jamsadr.com/rules-comprehensive-arbitration/> archived at
<https://perma.cc/2F9B-VDCT> (as of Oct. 24, 2023). Having given the
parties appropriate notice before oral argument that we proposed to take
judicial notice of the rules on our own motion (Evid. Code, § 459, subds. (c) &
(d)), we now do take judicial notice of the JAMS Rules, effective June 1, 2021.
(See Evid. Code, § 452, subd. (h) [permitting judicial notice of “[f]acts and
propositions that are not reasonably subject to dispute and are capable of
immediate and accurate determination by resort to sources of reasonably
indisputable accuracy”]; Cooper v. Lavely & Singer Professional Corp. (2014)
230 Cal.App.4th 1, 6, fn. 1 [noticing JAMS Rules]; Boghos v. Certain
Underwriters at Lloyd’s of London (2005) 36 Cal.4th 495, 505, fn. 6 [noticing
American Arbitration Association’s commercial arbitration rules].)

                                         13
mistakenly emphasized JAMS Rule 9(a) to the exclusion of other provisions
in the rules. JAMS Rule 9 is entitled, “Notice of Claims.” Subdivision (a)
begins by requiring each party to “afford all other Parties reasonable and
timely notice of its claims.” It further provides that “[n]o claim, remedy,
counterclaim or affirmative defense will be considered by the Arbitrator”
without prior notice to the other parties or a determination that no party

would be prejudiced without such notice.4 Thus, the rule is not so much a
limitation on the arbitrator’s authority as it is an obligation imposed on the
parties to provide reasonable notice of their claims. It does not further define
what is “reasonable,” and it specifically permits the arbitrator to consider an
issue if she determines that no party has been prejudiced by the lack of
notice. For that same reason, Emerald Aero, supra, 9 Cal.App.5th 1125, on
which Phair relies on, is distinguishable. In that case, the plaintiffs gave
notice of their new claim for punitive damages within 24 hours of the
arbitration hearing. (Id. at p. 1141.) The Court of Appeal found that this
was inadequate notice under the arbitration rules. (Ibid.)
      In focusing on JAMS Rule 9(a), the trial court failed to acknowledge the
arbitrator’s expansive authority under the JAMS Rules to “grant any remedy
or relief that is just and equitable.” (Id., Rule 24(c).) JAMS Rule 24(c), is
nearly identical to the arbitration rule analyzed in Advanced Micro Devices,
which the Supreme Court said did not indicate any intent “to place any

4     JAMS Rule 9(a) provides: “Each Party shall afford all other Parties
reasonable and timely notice of its claims, affirmative defenses or
counterclaims. Any such notice shall include a short statement of its factual
basis. No claim, remedy, counterclaim or affirmative defense will be
considered by the Arbitrator in the absence of such prior notice to the other
Parties, unless the Arbitrator determines that no Party has been unfairly
prejudiced by such lack of formal notice or all Parties agree that such
consideration is appropriate notwithstanding the lack of prior notice.”
                                       14
special restrictions on the arbitrator’s discretion to fashion remedies.”
(Advanced Micro Devices, supra, 9 Cal.4th at p. 384.) As such, an arbitrator’s
award is within the arbitrator’s broad equitable powers if it is “even arguably
based on the contract.” (Id. at p. 381.)
        It is true that JAMS Rule 9(a) restricts an arbitrator to awarding
remedies that have been the subject of proper notice, but it is for the
arbitrator to decide whether notice was adequate or otherwise excused.
We have no way of knowing what was discussed with counsel during
argument and what might have led the arbitrator to conclude the parties
should have been aware reformation was being considered. Moreover,
the JAMS Rules give the arbitrator wide discretion to interpret and apply the
rules themselves. JAMS Rule 11(a) provides that the arbitrator “shall
resolve disputes about the interpretation and applicability of these Rules and
conduct of the Arbitration Hearing. The resolution of the issue by the
Arbitrator shall be final.” (See Greenspan, supra, 185 Cal.App.4th at p. 1455
[“Under JAMS Rule 11(a), the arbitrator’s interpretation and application of
the Rules is final. We therefore defer to the arbitrator’s decision that the
Rules permitted him to render the awards in the manner . . . he chose.”].)
In short, it was for the arbitrator to determine whether Phair received
reasonable notice that reformation was a possibility and, if not, whether it
was prejudiced by the lack of notice. The arbitrator did not exceed her
powers by concluding that reformation was appropriate on the facts of this
case.

B.      The Arbitrator Did Not Commit Fraud or Violate Phair’s Due Process
        Rights

        Sounding a related theme, Phair argues that the arbitrator committed
“extrinsic fraud” and violated its due process right to a fair hearing by

                                        15
granting reformation of the contract without proper notice. (§ 1286.2,
subd. (a)(1).) As we have already explained, however, the arbitrator had the
authority to determine whether the issue of reformation was raised with
adequate notice.
      Moreover, although “arbitration procedures that interfere with a
party’s right to a fair hearing are reviewable on appeal” (Hoso Foods, Inc. v.
Columbus Club, Inc. (2010) 190 Cal.App.4th 881, 888), a party must show
prejudice to have an award set aside. (Government Employees Ins. Co. v.
Brunner (1961) 191 Cal.App.2d 334, 337 [“To justify the setting aside of the
award on account of error it must be shown that the rights of one of the
parties is prejudiced by the award.”]; see also § 1286.2, subd. (a)(3) & (a)(5)
[showing of prejudice required to vacate award].) The “prejudice query . . . is
an examination of the proffered but rejected evidence to determine the
impact of its omission under the theory adopted by the arbitrators.” (Royal
Alliance Associates, Inc. v. Liebhaber (2016) 2 Cal.App.5th 1092, 1109.)
      Here, Phair complains the arbitrator went outside the record and
considered evidence she obtained from the City planning department’s
website. It further asserts that had it known the arbitrator was
contemplating reformation of the contract, it would have sought to introduce
additional evidence as to when the planning department might reopen for in-
person meetings.
      We reject the suggestion that the arbitrator obtained and considered
extra-record evidence that Phair never had an opportunity to address. (See
§ 1282.2, subd. (g) [disclosure is required if arbitrator “intends to base an
award upon information not obtained at the hearing”].) Phair’s appellate
counsel emphasized this contention at oral argument, asserting that the
arbitrator independently reviewed the planning department’s website.

                                       16
But Phair had directed the arbitrator to that website when it requested
judicial notice of its content, including the services that were available for in-
person appointments. As such, Phair cannot now claim prejudice. (Canadian
Indem. Co. v. Ohm (1969) 271 Cal.App.2d 703, 708 [violation of section
1282.2, subdivision (g) requires showing that “the rights of the complaining
party were substantially prejudiced”].)
      Moreover, the record is devoid of any indication that Phair has ever
identified—for the arbitrator, the trial court, or this court—what specific
additional evidence it would have presented had it received what it believed
was adequate notice that reformation was being considered. And even if
there was evidence available at the time of the arbitration as to when the
planning department might reopen, the arbitrator had already determined
that the parties did not intend the COVID extension to last more than one
year from the date of the initial planning department closure in March 2020.
When the arbitration was conducted in October 2022, the planning
department had been closed for nearly three years, and evidence of a future
planned reopening would have had no effect on the arbitrator’s conclusion.
      Whether reformation was appropriate was a judgment call for the
arbitrator based on the circumstances of the case that were fully litigated by
the parties. We have no reason to believe there was any additional evidence
that would have led the arbitrator to make a different award. (See Hall v.
Superior Court (1993) 18 Cal.App.4th 427, 439 [“To find substantial prejudice
the court must . . . conclude that the arbitrator might well have made a
different award had the evidence been allowed.”].)
      Phair argues that its “due process rights” were violated “similarly” to
the violations discussed in Pacific Crown, supra, 183 Cal.App.3d 1138. But
Phair’s allegations are nothing like the allegations there. In Pacific Crown,

                                        17
despite the parties’ “mutual agreement . . . stating that section 9.2(1) [of a
new collective bargaining agreement] would not be raised in the arbitration
hearing” (Pacific Crown, at p. 1144), one of the parties argued the point in its
posthearing brief and the arbitrator’s decision ultimately concluded that the
provision had been violated. The Court of Appeal upheld the trial court’s
finding that “the arbitrator’s award was procured by fraud, corruption and
undue means,” accepting the argument that the “appellant violated the
parties’ agreement . . . and ‘deprived [respondent] of an opportunity to

present evidence.’ ”5 (Pacific Crown, at p. 1146, italics added.) In contrast
to Pacific Crown, there are no allegations that Renzulli took any action to
deceive Phair.
      In short, reforming the contract to include a reasonable date for the
expiration of the COVID extension did not “constitute misconduct [n]or
[was it] so profound as to render the process unfair.” (Heimlich v. Shivji
(2019) 7 Cal.5th 350, 368.) The court, therefore, erred when it granted
Phair’s petition to vacate the arbitration award. Because the arbitrator here

5       In Pacific Crown, the record included a transcript of the arbitration
hearing. (183 Cal.App.3d at p. 1148, fn. 7.) The Court of Appeal concluded
that “[t]he record can support no other conclusion than that reached by the
trial court when it found ‘[by] asserting [the section 9.2(1) [of a new collective
bargaining agreement] issue] for the first time in its posthearing brief
[appellant] intentionally and fraudulently deprived [respondent] of its
opportunity to present evidence in arbitration concerning the nonexistence of
section 9.2(1) on the date of [the former employee’s] discharge.’ ” (Pacific
Crown, at p. 1149.) The “impropriety” of appellant’s conduct was “apparent
in the record when, in a . . . meeting between the parties, respondent
protested inclusion of section 9.2(1) in appellant’s brief. Appellant responded,
“ ‘I lived up to my word and we did not bring it up in the hearing. . . . I can’t
control what my attorney does.’ With such evidence in the record we find the
trial court’s finding of intentional fraud justified.” (Pacific Crown, at p. 1149,
fn. 10.)
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was at least “arguably . . . acting within the scope of [her] authority”
(Advanced Micro Devices, supra, 9 Cal.4th at p. 378), we reverse the court’s
order and remand with directions to confirm the arbitration award.

                                 DISPOSITION

      The trial court’s order is reversed. The matter is remanded with
directions to the trial court to confirm the arbitration award and enter
judgment in favor of Renzulli, who is entitled to recover costs on appeal.

                                                             DATO, Acting P. J.

WE CONCUR:

DO, J.

KELETY, J.

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