Court Opinion

ID: 9902240
Source: CourtListenerOpinion
Date Created: 2023-11-24 17:00:39.661347+00
Date Added: 2024-06-11T09:21:48.099600
License: Public Domain

NOT FOR PUBLICATION                          FILED
                   UNITED STATES COURT OF APPEALS                       NOV 24 2023
                                                                     MOLLY C. DWYER, CLERK
                                                                      U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

PETER GELLMAN, an individual;                   No.   22-55728
PALMERSTON GROUP INDEMNITY
SOLUTIONS, LLC, a New Jersey limited            D.C. No.
liability corporation,                          3:18-cv-02641-BAS-AGS

                Petitioners-Appellees,
                                                MEMORANDUM*
 v.

ANDREA HUNSINGER, an individual;
ANDREA HUNSINGER JOLLY, AN
INSURANCE SERVICES
CORPORATION, DBA Advanced Wealth
Plan, a California corporation,

                Respondents-Appellants.

                  Appeal from the United States District Court
                     for the Southern District of California
                  Cynthia A. Bashant, District Judge, Presiding

                    Argued and Submitted November 17, 2023
                              Pasadena, California

Before: RAWLINSON, CLIFTON, and HURWITZ, Circuit Judges.

      Andrea Hunsinger appeals a district court order confirming an arbitration

award entered in favor of Peter Gellman in a dispute over a commission-sharing

      *
            This disposition is not appropriate for publication and is not
precedent except as provided by Ninth Circuit Rule 36-3.
agreement. We have jurisdiction under 28 U.S.C. § 1291 and 9 U.S.C. § 16. We

affirm.

      1.     Under the Federal Arbitration Act, a court may decline to enforce an

arbitration award “where the arbitrators exceeded their powers, or so imperfectly

executed them that a mutual, final, and definite award upon the subject matter

submitted was not made.” 9 U.S.C. § 10(a)(4). “Arbitrators exceed their powers

when they express a manifest disregard of law, or when they issue an award that is

completely irrational.” Bosack v. Soward, 586 F.3d 1096, 1104 (9th Cir. 2009)

(cleaned up). An award is irrational when it “fails to draw its essence from” the

underlying agreement. Comedy Club, Inc. v. Improv W. Assocs., 553 F.3d 1277,

1288 (9th Cir. 2009) (quoting Hoffman v. Cargill Inc., 236 F.3d 458, 461–62 (8th

Cir. 2001)). And an award is in manifest disregard of the law when it is “clear from

the record that the arbitrator recognized the applicable law and then ignored it.” Id.

at 1290 (cleaned up). “Neither erroneous legal conclusions nor unsubstantiated

factual findings” suffice. Kyocera Corp. v. Prudential-Bache Trade Servs., Inc.,

341 F.3d 987, 994 (9th Cir. 2003). “[T]he FAA provides no authorization for a

merits review.” Biller v. Toyota Motor Corp., 668 F.3d 655, 664 (9th Cir. 2012).

The district court correctly confirmed the arbitrator’s award under this highly

deferential standard of review.

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       a.    Hunsinger contends that the arbitrator manifestly disregarded

California law in finding the commission agreement enforceable, claiming that it

did not apply to her pre-existing clients and was invalid because Gellman was not

licensed to sell insurance in California. But the arbitrator reviewed the contract and

found no exception for prior clients. And, in rejecting the licensing claim, he

reviewed and applied relevant California statutes, and noted that the insurance

policy underlying the dispute was issued in Nevada.

      b.     The arbitrator also did not manifestly disregard California law in

awarding punitive damages. Although California cases prohibit the award of

punitive damages for litigation misconduct, Hunsinger has not identified a case

extending this principle to arbitration, and at least one district court has found that

an arbitrator may base a punitive award on misconduct during arbitration. See Fund

Raising, Inc. v. Alaskans for Clean Water, Inc., No. CV 09-4106, 2012 WL

2456255, at *6–7 (C.D. Cal. June 26, 2012).

      c.     Hunsinger argues that her conduct could not give rise to tort liability.

See, e.g., PM Grp., Inc. v. Stewart, 64 Cal. Rptr. 3d 227, 235 (Ct. App. 2007) (“[A]

contracting party is incapable of interfering with the performance of his or her own

contract . . . .”). Even assuming that this argument is correct, it does not establish

that the arbitrator, who cited and applied California law in finding tort liability,

engaged in the manifest disregard of law required to deny confirmation of an award.

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The FAA requires that the Court leave an award resulting from an arbitrator’s “mere

error[s] in the law” untouched. Bosack, 586 F.3d at 1104.

      2.     The arbitrator did not err in awarding Gellman legal fees incurred in

compelling arbitration and the share of arbitration fees that Hunsinger refused to

pay. The suit to compel arbitration was required when Hunsinger’s wholly-owned

company refused to arbitrate. And, the underlying agreement required the parties

to bear “an equal share of the arbitrators’ and administrative fees of arbitration.”

Contrary to Hunsinger’s contentions, the arbitrator analyzed her ability to pay these

damages.

      AFFIRMED.

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