Court Opinion

ID: 4700577
Source: CourtListenerOpinion
Date Created: 2021-07-01 19:05:30.073169+00
Date Added: 2024-06-11T08:06:11.368217
License: Public Domain

Filed 7/1/21 Crowder v. Freeman, Freeman & Smiley CA2/1
   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 ordered published, except as specified by rule
8.1115(b). This opinion has not been certified for publication or ordered published for
purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                      SECOND APPELLATE DISTRICT

                                    DIVISION ONE

ROBERT S. CROWDER,                                              B303397

        Petitioner and Appellant,                               (Los Angeles County
                                                                Super. Ct. No. BS171615)
        v.

FREEMAN, FREEMAN & SMILEY
LLP,

        Respondent.

      APPEAL from a judgment of the Superior Court of Los
Angeles County, Richard J. Burdge, Judge. Affirmed.
      Arent Fox, Malcolm S. McNeil and David Bayles for
Petitioner and Appellant.
      Robie & Matthai, Kyle Kveton for Respondent.
              ___________________________________
       Robert Crowder, an attorney, and Freeman, Freeman &
Smiley LLP (Freeman), his former law firm, disputed the
payment due Crowder upon his withdrawal from the partnership.
Pursuant to the partnership agreement, the dispute proceeded to
arbitration before the Judicial Arbitration & Mediation Service
(JAMS). The arbitrator disposed of the principal issues by way of
summary adjudication and ultimately rendered an award in favor
of Freeman. Crowder petitioned the superior court to vacate the
award on the ground that the arbitrator refused to hear evidence
material to the controversy and conducted a hearing for which
Crowder was unavailable. He also moved to disqualify the trial
judge, who had once rented office space from Freeman’s counsel.
Freeman moved to confirm the award. The trial court denied the
disqualification motion, denied Crowder’s petition, and confirmed
the award.
       We affirm.
                          BACKGROUND
A.     Arbitration Agreement
       Crowder joined Freeman in 2008, and on January 1, 2015,
was made an equity partner. Crowder was required to sign a
partnership agreement as a condition of becoming an equity
partner.
       The agreement provided that a partner could withdraw
from the partnership at the end of any calendar month but must
give 30 days written notice. The agreement further provided that
after giving notice, the partner and firm must “cooperate in good
faith to develop a transition plan to deal equitably with issues
arising in connection with the withdrawal,” including collection of
the partner’s accounts receivable, organization of files and
workflow, notices to clients, allocation of responsibility for work

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in process, and the filing of appropriate substitutions of attorney.
The withdrawing partner’s interest in the partnership would be
redeemed for a price equal to the partner’s vested “profit
percentage” times 60 percent of the firm’s “adjusted book value.”
“Payment of all sums owing to the withdrawing Partner [was]
specifically conditioned on such partner having given timely and
proper written Withdrawal Notice, and the withdrawing
Partner’s good-faith compliance with the transition plan.”
       The partnership agreement contained an arbitration
provision, which stated: “Any dispute or controversy in
connection with this Agreement which cannot be settled by the
parties shall be submitted to Judicial Arbitration and Mediation
Service (JAMS) in Los Angeles County, California, and the
parties shall follow all applicable procedural rules set forth by
JAMS to conduct the arbitration; any arbitration award will be
final and binding upon the parties, and judgment thereon may be
entered in any court of competent jurisdiction. The arbitrator
may award reasonable attorneys’ fees and arbitration costs to the
prevailing party.”
B.     Arbitration, Stage One
       At approximately 10:30 a.m. on August 16, 2012, Crowder
sent an email to Freeman’s executive management committee,
advising that he would withdraw from the firm at the end of the
day. Crowder left the firm that day without making efforts to
transition pending work to himself or to attorneys in the firm.
The next day, he demanded that the firm make certain payments
to him, but by November 2012 the parties were unable to resolve
their differences.
       On November 16, 2016, Freeman filed an arbitration
demand with JAMS, seeking a declaration “as to the parties’

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respective rights and obligations as to Mr. Crowder’s payment
demands.” Freeman contended that the manner of Crowder’s
withdrawal from the firm breached several provisions of the
partnership agreement, thereby forfeiting compensation that
would have otherwise been due. The firm also contended that
Crowder failed to meet production requirements specified in the
partnership agreement, and therefore owed the firm money.
       Crowder cross-complained, contending the firm breached
the partnership agreement and its ethical and fiduciary duties to
him and his clients, forcing him to withdraw from the
partnership. He contended the firm owed him compensation for
reduced draws and distributions, and the provisions in the
partnership agreement that would deprive him of compensation
upon his un-noticed withdrawal were unreasonable and void.
       Freeman answered the cross-complaint, contending
Crowder was owed nothing under the partnership agreement
because he breached the agreement, breached his fiduciary duties
to the firm, and failed to fulfill conditions precedent to the firm’s
performance.
       Crowder filed a motion seeking summary adjudication of (1)
whether the partnership agreement’s forfeiture provisions were
enforceable, (2) whether enforcement would be unreasonable, and
(3) whether Freeman had already been “more than fully
compensated.”
       Freeman filed a cross-motion for summary adjudication of
its request for a declaration of the parties’ rights and obligations
under the partnership agreement as to Crowder’s payment
demands and Freeman’s affirmative defenses.

                                 4
       Neither motion, nor much of any supporting matter (such
as exhibits, separate statements, oppositions, and objections)
appears in the record.
       On June 6, 2017, the arbitrator issued a 19-page tentative
order on the cross-motions. In it she stated that Freeman
claimed Crowder owed it $13,260.60, and that Crowder’s claim
under the partnership agreement amounted to $36,789.10.
       The arbitrator tentatively found that Crowder violated the
partnership agreement by failing to provide sufficient notice
before withdrawing from the firm and failing to help transition
clients to other attorneys, and Freeman therefore owed Crowder
no post-departure compensation. The arbitrator thus tentatively
granted Freeman’s motions for summary adjudication of its
request for declaratory relief and its affirmative defenses, denied
Crowder’s motion for summary adjudication, and concluded
Freeman owed Crowder nothing.
       On June 16, 2017, the arbitrator conducted a telephonic
hearing on the motions. At the hearing, Freeman represented
that it had received some of the money Crowder owed it, but was
still owed approximately $13,000. After taking parties’ motions
under submission to reexamine evidence, objections, and
authorities, the arbitrator suggested that should the tentative
ruling become final, a further one-day hearing could be held July
25, 26, or 27 to discuss the amount of any award Freeman should
receive. Crowder agreed to a hearing on July 26.
       The arbitrator thereafter issued a preliminary conference
order setting the final arbitration hearing for July 26, 2017, and
reminding the parties that arbitration fees were to be paid in
advance of the hearing.

                                 5
       On June 20, 2017, the arbitrator issued a 19-page interim
award in which she ruled on evidentiary objections and basically
affirmed the tentative ruling. She determined that the notice
and transition requirements of the partnership agreement were
reasonable, there was no material fact disputing that Crowder
failed to comply with them, and that such compliance was a
condition precedent to the firm owing him any compensation
upon his withdrawal. The arbitrator rejected Crowder’s
contention that enforcement of the forfeiture provisions would be
unfair or unreasonable under the circumstances, and his claim
that the firm had been fully compensated. The arbitrator
concluded that Freeman owed Crowder nothing.
C.     Arbitration, Stage Two
       On June 20, 2017, the arbitrator sent the parties an invoice
for the upcoming hearing to be held on July 26, requiring that
each side pay $6,700. On June 21, 2017, the arbitrator sent a
notice of the hearing to each side, which stated that all fees must
be paid by July 12.
       On July 11, 2017, Crowder informed the arbitrator that in
light of the interim award, he was willing to pay the
approximately $13,000 Freeman claimed was still due, as he
could not afford to continue the arbitration.
       Freeman paid its portion of the arbitration fees for the
upcoming July 26, 2017 hearing but Crowder did not.
       On July 13, 2017, the case manager informed the parties
that the July 26 hearing was off calendar because JAMS had not
received all the fees due. The manager invited the parties to
contact him to reschedule. Freeman immediately paid Crowder’s
portion of the fees.

                                 6
       On July 17, 2017, the case manager informed the parties
that the matter was back on calendar. Crowder immediately
informed the manager that between the matter being taken off
calendar and put back on, he had “scheduled a number of
activities,” and would no longer be available. Crowder reminded
the manager that a further hearing would be a waste of
resources, as he was willing to pay Freeman the approximately
$13,000 remaining at issue.
       JAMS responded that the arbitrator would be available for
a two-hour hearing on July 28 or 31, 2017, to which Crowder
responded, “I do not consent to this hearing. Please see my
correspondence of July 11 and July 17.”
       On July 21, 2017, the arbitrator sent notice to both sides
that a final hearing would be held on July 28, 2017. The hearing
went forward on that date, but Crowder did not attend.
       On August 14, 2017, the arbitrator issued a final award,
declaring that Freeman owed Crowder nothing and Crowder
owed Freeman $13,260.60 (without interest) plus “reasonable
expenses (attorney fees) and costs” in the amount of $78,936.99.
       As regards to the attorney fees and costs, the arbitrator
found that Crowder “significantly increased the expenses and
costs of the arbitration by making a meritless motion to
disqualify [Freeman’s] counsel and a meritless cross-motion for
summary adjudication on the Cross-Complaint. It is fair to say
that [Freeman’s] attorney fees and the JAMS fees or costs, both
of which are fairly substantial, would have been significantly less
except for Mr. Crowder’s litigation strategy. Although Mr.
Crowder characterizes himself as a ‘victim’ in his Opposition,
that simply is not so. His claim that he tried to settle the case
ignores the fact that he initially – and continuing through the

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summary adjudication stage – insisted that [Freeman] owed him
a substantial amount of money (approximately $120,000); and his
post-summary adjudication settlement offers did not include the
substantial attorney fees and JAMS costs [Freeman] had
incurred by the end of the summary adjudication process.”
D.     Litigation
       On November 22, 2017, Crowder petitioned the superior
court to vacate the arbitration award, contending: the arbitrator
prevented him from presenting evidence—and demonstrated
bias—by sustaining Freeman’s evidentiary objections, ignoring
Crowder’s evidence, and summarily adjudicating essentially all
the issues; improperly considered evidence that had not been
produced in discovery; improperly held the July 28, 2017 hearing;
improperly considered Freeman’s untimely filings; improperly
denied Crowder’s motion to disqualify Freeman’s counsel; and
made mistakes of law.
       Freeman filed a cross-petition to confirm the award.
       Crowder filed a challenge to the assigned Judge, Richard
Burdge, under Code of Civil Procedure section 170.1, contending
reasonable doubt existed that Judge Burdge could be impartial
because for three and a half years beginning in 2011 he leased
office space from Freeman’s counsel’s firm and occupied an office
that was two doors down from the office of Kyle Kveton,
Freeman’s lead counsel, and he remained socially friendly with
Kveton. On April 3, 2019, Judge Burdge ordered Crowder’s
statement of disqualification stricken on the ground that it set
forth no facts constituting grounds for disqualification. Crowder
petitioned this court for a writ of mandate reversing the order,
which we denied.

                                8
       On October 25, 2019, the trial court issued a tentative
ruling, which it adopted after the hearing. It found that
“Crowder does not argue that the Arbitrator refused to hear
evidence material to the controversy; rather he argues that the
Arbitrator sustained Freeman’s objections to his evidence,” but
an arbitration award may not be vacated because of evidentiary
errors or mistakes of law. Regarding Crowder’s contention that
the arbitrator improperly refused to postpone the July 28, 2017
hearing but instead held it in his absence, the court found that
Crowder never asked that the hearing be postponed, and in any
event JAMS rules permit an arbitrator to hold a hearing in the
absence of a party.
       The trial court therefore denied Crowder’s motion to vacate
the award and granted Freeman’s to confirm it, and entered
judgment accordingly.
       Crowder appeals.
                           DISCUSSION
A.     An Arbitration Award May Not Be Vacated Due to
Legal Errors
       Crowder contends his rights were substantially prejudiced
by the arbitrator’s refusal to hear material evidence. He argues
that by sustaining Freeman’s objections to his evidence, the
arbitrator prevented him from properly presenting his case. We
disagree.
       As a general rule, “parties to a private arbitration impliedly
agree that the arbitrator’s decision will be both binding and
final.” (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 9.)
Courts therefore may not review an arbitrator’s decision for
sufficiency of the evidence or errors of fact, law, or reasoning. (Id.
at p. 11.)

                                  9
       A court shall, however, vacate an arbitration award if it
determines that “[t]he rights of the 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 . . . .” (Code Civ. Proc., § 1286.2, subd. (a)(5).) But
“section 1286.2, subdivision (a)(5) does not contemplate vacation
of an award merely because arbitrators refuse to consider
evidence they find legally irrelevant, even if the irrelevance
determination rests upon an incorrect legal foundation.”
(Heimlich v. Shivji (2019) 7 Cal.5th 350, 369.)
       “On appeal from an order confirming an arbitration award,
we review the trial court’s order (not the arbitration award)
under a de novo standard. [Citations.] To the extent that the
trial court’s ruling rests upon a determination of disputed factual
issues, we apply the substantial evidence test to those issues.”
(Lindenstadt v. Staff Builders, Inc. (1997) 55 Cal.App.4th 882,
892, fn. 7.)
       Here, Crowder identifies no evidence he was precluded
from presenting or the arbitrator refused to consider. He argues
that the arbitrator sustained Freeman’s objections to “essentially
all” of his evidence, but evidence to which an objection has been
sustained has not been ignored, it has simply been deemed
inadmissible.
       Crowder refuses to accept this point. At the hearing below,
the trial court explained that “whether you agree or disagree with
[the arbitrator’s] evidentiary rulings,” superior court review is
limited to whether the evidence was considered—even if only for
the purposes of ruling on objections. Crowder argues that this
explanation establishes that the court “abdicated its

                                10
responsibility to adequately review the record sufficiently to
determine the issues.” Not so. The trial court properly
considered the relevant issue, which was whether the arbitrator
considered Crowder’s evidence. She did so—before sustaining
Freeman’s objections to it. To sustain an objection to evidence is
not to ignore it.
       Even if the arbitrator’s evidentiary ruling was in error, an
erroneous legal ruling resulting in the exclusion of evidence “is
not judicially reviewable.” (Heimlich v. Shivji, supra, 7 Cal.5th
at p. 370.)
       Crowder moreover fails to describe how the arbitrator’s
evidentiary rulings substantially prejudiced him (other than
arguing that certain nominal legal issues went unconsidered and
that he ultimately suffered an adverse award). To vacate an
arbitration a petitioner must show how his rights were
substantially prejudiced by the arbitrator’s refusal to hear
evidence. (Blatt v. Farley (1990) 226 Cal.App.3d 621, 626.)
       “ ‘In the typical arbitration, an arbitrator must make
numerous decisions about admission of evidence and in doing so
may exclude material evidence. No doubt there will often be
aggrieved parties who believe they have been “substantially
prejudiced.” Decisions about materiality cannot be made without
familiarity with the issues and evidence in the arbitration. If the
superior court must, with or without a transcript of the
arbitration, routinely review the arbitrator’s decision on
materiality before reaching the question of substantial prejudice,
the legislative goal of arbitral finality will be unattainable.
Instead of saving time and money, the arbitration will be
supplemented by lengthy and costly judicial second-guessing of

                                11
the arbitrator.’ ” (Schlessinger v. Rosenfeld, Meyer & Susman
(1995) 40 Cal.App.4th 1096, 1110.)
      Crowder argues at length that the arbitrator failed to
consider or credit his declaration, failed properly to balance what
evidence it did consider, and erroneously deemed certain legal
issues to be irrelevant. But even if true, neither evidentiary,
factual, nor legal errors are grounds to vacate an arbitration
award. “By agreeing to arbitration, parties anticipate a relatively
speedy, inexpensive and final resolution, one that may be based
on ‘broad principles of justice,’ rather than strictly the rule of
law.” (Toal v. Tardif (2009) 178 Cal.App.4th 1208, 1218.)
B.    The Prove Up Hearing Accorded No Basis to Vacate
the Award
      Crowder argues the prove up hearing violated JAMS
procedural rules. We disagree.
      The JAMS rules permit the arbitrator to proceed with a
hearing in the absence of a party, so long as proper notice is
given. (JAMS Rules, rule 22(j).)
      Crowder relies on JAMS rule 19(b), which provides that
when a party has failed to participate in the arbitration process,
a hearing may be held in the party’s absence only upon 30 days
notice. He argues he received no such notice for the July 28, 2017
hearing. But Crowder was not a party who failed to participate
in the arbitration process; he participated at length. He refused
only to attend the last hearing. Therefore, JAMS rule 19(b) did
not apply.
C.    The Trial Court’s Ruling on Crowder’s
Disqualification Order is Nonappealable
      Crowder argues the trial court improperly denied his
motion to disqualify Judge Burdge. Such a ruling is not an

                                12
appealable order. (Code Civ. Proc., § 170.3, subd. (d) [“The
determination of the question of the disqualification of a judge is
not an appealable order and may be reviewed only by a writ of
mandate”].)
D.    Conclusion
      For the reasons discussed above, the trial court properly
denied Crowder’s motion to vacate the arbitration award.
                         DISPOSITION
      The judgment is affirmed. Respondent is to recover its
costs on appeal.
      NOT TO BE PUBLISHED

                                                 CHANEY, J.

We concur:

             ROTHSCHILD, P. J.

                             *
             FEDERMAN, J.

      *
       Judge of the San Luis Obispo County Superior Court,
assigned by the Chief Justice pursuant to article VI, section 6 of
the California Constitution.

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