Court Opinion

ID: 2788794
Source: CourtListenerOpinion
Date Created: 2015-03-24 19:03:22.258825+00
Date Added: 2024-06-11T11:28:48.236797
License: Public Domain

Filed 3/24/15 Vista International Ins. Brokers v. Bernstein CA2/3
                  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication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 THREE

VISTA INTERNATIONAL INSURANCE                                         B247681
BROKERS,
                                                                      (Los Angeles County
         Plaintiff and Appellant,                                     Super. Ct. No. BC404320)

         v.

MAUREEN BERNSTEIN,

         Defendant and Appellant.

         APPEAL from judgment of the Superior Court of Los Angeles County,
Daniel Buckley, Judge. Affirmed in part, reversed in part, and remanded with direction.

         Law Offices of Samuel Kornhauser and Samuel Kornhauser for Plaintiff and
Appellant.

         Gersh | Derby, Jeffrey F. Gersh and James A. Sedivy for Defendant and Appellant.

                                            _____________________
                                     INTRODUCTION
        Plaintiff Vista International Insurance Brokers appeals from a partial entry of
judgment confirming an arbitration award in favor of its former employee, Defendant
Maureen Bernstein, who cross-appeals. We exercise our discretion to construe these
appeals as writs of mandate. Vista asserts that the court erred in denying its request for a
preliminary injunction, in ordering the parties to arbitrate, and in entering judgment on
the arbitration award. In her cross-appeal, Bernstein argues that the court wrongfully
excluded Vista’s equitable claim from the judgment entered on the arbitration award.
       As to Vista’s arguments, we affirm the judgment because the preliminary
injunction was not appropriate where it was unlikely Vista would succeed on its trade
secret claim, the court avoided inconsistent rulings by compelling Vista and Bernstein to
arbitrate their claims while staying other related litigation, and Vista failed to establish a
basis for vacating the award. In regard to Bernstein’s cross-appeal, we conclude that the
court erred in excluding Vista’s claim for injunction from the judgment it entered in favor
of Bernstein on the arbitration award. We thus reverse the judgment solely on that basis
and remand with instructions to the trial court.
                    FACTS AND PROCEDURAL BACKGROUND
       Bernstein, a successful insurance broker, entered into an employment agreement
with Vista in 2000 to perform brokerage services for Vista’s clients. The employment
agreement contained provisions stating that Bernstein owned the customer accounts that
she brought with her to Vista and that she would acquire a percentage of ownership in
accounts that she developed at Vista. The agreement provided that Vista had the “right of
first refusal to acquire” the accounts upon Bernstein’s departure from Vista. Another
section of the employment agreement stated that the information concerning Vista’s
accounts and information reflecting client identity was confidential information that
Bernstein could not disclose to third parties or subsequent employers, or use to compete
with Vista. The employment agreement also contained an arbitration clause, which
mandated the arbitration of any dispute or controversy arising out of or relating to any
interpretation, construction, performance or breach of the agreement.

                                               2
       In 2008, Bernstein left Vista and began working for another brokerage company,
Kaercher Campbell & Associates (KCA). When Bernstein ended her employment with
Vista, she told Vista that she did not intend to comply with the right of first refusal
portion of her employment contract. Bernstein then sent announcements to all of her
Vista accounts, informing them that she was leaving Vista and that KCA was her new
employer. Although, these announcements did not expressly suggest or urge the clients
to follow her, many clients followed her to KCA.
       Vista subsequently sued Bernstein and her new employer, alleging causes of
action for breach of contract, injunctive relief, misappropriation of trade secrets, unfair
competition and business practices, intentional interference with prospective economic
advantage, breach of confidential relationship, and conspiracy. In addition, Vista sought
a preliminary injunction to enjoin Bernstein and KCA “from using [Vista]’s trade secret
and confidential customer list and customer information to solicit or contact Vista
insurance customers.” The court denied the preliminary injunction, stating that
“injunctive relief as a provisional remedy at the outset of litigation [was] not practical in
this case.”
       Bernstein petitioned the court to compel Vista to arbitrate its claims against
Bernstein, pursuant to the employment agreement. The court granted the petition in
March 2009, and stayed the litigation between Vista and KCA until the arbitration was
resolved. In July 2012, the arbitrator issued its final award, concluding that Bernstein
had not misappropriated any trade secrets because there was no substantial evidence that
Bernstein made use of confidential information. The arbitrator concluded that the
evidence only indicated that Bernstein used client contact information to send clients an
announcement of her changed employment, which was permitted under California case
law. The arbitrator further stated that Vista suffered no recoverable damages with regard
to Bernstein’s breach of the right of first refusal clause of the contract.

                                               3
       Bernstein then petitioned the trial court to confirm the arbitration award and enter
judgment on it. Vista opposed entry of judgment and petitioned the court to vacate the
award. At the hearing, the court described the arbitration award as “well-reasoned” and
concluded that “the arbitrator did not do anything that warrants vacation of the award.”
After the court decided to confirm the award, the parties disputed how the judgment was
to be entered based on their varying interpretations of the March 2009 order compelling
them to arbitrate. Bernstein asserted that the arbitration disposed of all claims and that
judgment should be entered on all equitable and legal claims. In contrast, Vista argued
that the 2009 order only sent legal claims to arbitration and reserved Vista’s injunctive
claim for trial. The trial court sided with Vista’s interpretation and entered judgment on
all claims with the exception of Vista’s claim for injunctive relief.
                                       DISCUSSION
1.     We Construe the Appeal and Cross-Appeal as Writ of Mandate Petitions
       Both parties improperly appeal from a judgment that only partially disposes of
Vista’s claims against Bernstein. The trial court expressly stated that judgment was
“entered in favor of Ms. Bernstein and against Vista on all claims in accordance with the
Award, . . . except for injunctive relief, which claim was not submitted for arbitration as
it was reserved pursuant to the March 9, 2009 Order.” This is not an appealable order
because “an appeal cannot be taken from a judgment that fails to complete the disposition
of all the causes of action between the parties even if the causes of action disposed of by
the judgment have been ordered to be tried separately, or may be characterized as
‘separate and independent’ from those remaining.” (Morehart v. County of Santa
Barbara (1994) 7 Cal. 4th 725, 743.)
       “However, (1) under unusual circumstances, and (2) where doing so would serve
the interests of justice and judicial economy, an appellate court may use its discretion to
construe an appeal as a petition for writ of mandate.” (Mon Chong Loong Trading Corp.
v. Superior Court (2013) 218 Cal. App. 4th 87, 92.) These unusual circumstances exist
“where requiring the parties to wait for a final judgment might lead to unnecessary trial
proceedings, the briefs and record include[] in substance the necessary elements for a

                                              4
proceeding for a writ of mandate, there [i]s no indication the trial court would appear as a
party in a writ proceeding, the appealability of the order [i]s not clear, and all the parties
urge[] the court to decide the issue rather than dismiss the appeal.” (H. D. Arnaiz, Ltd. v.
County of San Joaquin (2002) 96 Cal. App. 4th 1357, 1367, citing Olson v. Cory (1983)
35 Cal. 3d 390, 400-401.) Under such circumstances, it would be needlessly dilatory,
inefficient, and circuitous to dismiss the appeal rather than construe it as a writ of
mandate. (Olson v. Cory, at p. 401.)
       Bernstein requests that we treat her appeal as a writ. Although Vista does not
make the same request, we exercise our discretion to hear both Vista’s appeal and
Bernstein’s cross-appeal as petitions for writs of mandate due to the unusual
circumstances of this case and in the interest of judicial economy. Here, the parties have
briefed the issues raised by the judgment entered on the arbitration award, and the record
includes the documents necessary for us to decide the issues raised. Both parties urge us
to decide their respective issues, and there is no indication that the trial court would be a
party to a writ proceeding in this context. Importantly, the aspect of the judgment at issue
in the cross-appeal is precisely what inhibits the judgment from being final and
appealable: Bernstein argues in her cross-appeal that the court should have entered
judgment on all claims. For reasons explained below, we agree with Bernstein that the
court improperly excluded equitable claims from its judgment. Thus, the court’s
judgment should have disposed of all claims between the parties and should have been
final and appealable. Therefore, requiring the parties to wait for a final judgment would
lead to unnecessary trial proceedings and litigation.
       We consequently exercise our discretion and construe the appeal and cross-appeal
as petitions for writ of mandate in the interest of judicial efficiency.

                                               5
2.     The Court Erred in Excepting Plaintiff’s Equitable Claims from the Entry of
Judgment
       In her cross-appeal that we construe as a writ of mandate, Bernstein argues that the
trial court improperly excluded claims for injunctive relief when it entered judgment on
the arbitration award in her favor. As mentioned above, the trial court’s order stated that
judgment was “entered in favor of Ms. Bernstein and against Vista on all claims in
accordance with the Award, . . . except for injunctive relief, which claim was not
submitted for arbitration as it was reserved pursuant to the March 9, 2009 Order.”
Bernstein argues that the court improperly interpreted the 2009 order in making this
ruling and that the claims associated with injunctive relief have already been arbitrated.
We review this issue of law de novo. (Breslin v. City and County of San Francisco
(2007) 146 Cal. App. 4th 1064, 1077; American Civil Rights Foundation v. Los Angeles
Unified School Dist. (2008) 169 Cal. App. 4th 436, 448 [“The interpretation of the 1981
final order of the superior court is an issue of law subject to de novo review.”].)
       Bernstein’s employment contract has an arbitration clause, which contains two
parts, stating:
       “9. Arbitration and Equitable Relief
                  (a)   Arbitration. Except as provided in Section 9(b) below, the
       parties hereto agree that any dispute or controversy arising out of or relating
       to any interpretation, construction, performance or breach of this
       Agreement, shall be settled by Arbitration to be held in Los Angeles,
       California . . . . The arbitrator may grant injunctions or other relief in such
       dispute or controversy. The decision of the arbitrator shall be final,
       conclusive and binding on the parties to the arbitration. Judgment may be
       entered on the arbitrator’s decision in any court having jurisdiction. . . .
                  (b)   Equitable Remedies. Employee agrees that it would be
       impossible or inadequate to measure and calculate the company’s damages

                                               6
       from any breach of the covenants set forth in Sections 5, 6 and 8[1] herein.
       Accordingly, Employee agrees that if Employee breaches any of such
       Sections, the company will have available, in addition to any other right or
       remedy available, the right to immediately obtain an injunction from a court
       of competent jurisdiction restraining such breach or threatened breach to
       specific performance of any such provisions of this Agreement, pending the
       selection of an Arbitrator under paragraph (a).
                     Employee further agrees that no bond or other security shall
       be required with obtaining such equitable relief and hereby consents to the
       issuance of such injunction and to the ordering of specific performance.”
       Per Bernstein’s petition, the court ordered the parties to arbitrate the matter in
2009 based on this section of the contract. In the 2009 order, the court held that “[t]he
petition [to compel arbitration] is granted in part, and denied in part (as to claims falling
within Section 9(b) of the employment agreement). [¶] Plaintiff and defendants [sic]
Maureen Bernstein shall arbitrate the entire First Amended Complaint, with the exception
of any claim for an equitable remedy pending the appointment of an arbitrator set forth in
Section 9(b) of the employment [agreement].”
       After Bernstein succeeded in arbitration against Vista, in 2012, she petitioned the
trial court for entry of judgment against Vista confirming the arbitration award.
A different judge than the one who issued the 2009 order compelling arbitration heard
Bernstein’s petition for entry of judgment. Vista argued that judgment could only be
entered as to legal claims based on the language of the March 9, 2009 order. Bernstein
argued that the arbitration disposed of all legal and equitable claims. The new judge
agreed with Vista and stated that Vista’s claim for injunctive relief was not disposed of
in arbitration based on the language of the March 9, 2009 order.

1
       The court stated that “Sections 5, 6 and 8 relate to confidential information, the
return of company documents upon end of employment, and solicitation of company
employees.”

                                              7
       After a thorough review of the record, we conclude that the court erred in
excluding the claim for an injunction from its final order. Here, the court ordered all
claims to arbitration, “with the exception of any claim for an equitable remedy pending
the appointment of an arbitrator set forth in Section 9(b) of the employment
[agreement].” Section 9(b) of the employment agreement makes it clear that the all
disputes related to the contract must be arbitrated, with the exception that Vista may
“immediately obtain” an injunction from a court “pending the selection of an Arbitrator.”
Meaning, Vista has a right to obtain a preliminary injunction prior to the appointment of
an arbitrator. The contract’s use of the word “immediately” to modify the verb “obtain”
supports this interpretation, as an arbitrator, not yet selected, would be unable to provide
such immediate and preliminary relief. The phrase “pending selection of an Arbitrator”
also indicates that this judicial injunctive relief is limited to the timeframe occurring prior
to commencement of arbitration.
       Our interpretation is further supported by the contractual terms highlighted by the
court’s 2009 order. In the order, the court noted that Vista alleged a cause of action for
injunctive relief in its complaint. The order also stated that the arbitrator has authority to
grant injunctions. Vista’s proposed interpretation of the employment contract, which
would require all claims for injunctive relief to be litigated in court, is contrary to the
terms of the employment contract which expressly provide for injunctive relief in
arbitration and is incongruent with the court’s description of the contract in the 2009
order. Furthermore, other portions of the 2009 order corroborate that the court intended
the claims for injunctive relief to be arbitrated. In a separate section of the March 9, 2009
order, the court refers to the clause in section 9(b) as “the preservation to the employer of
the right to seek preliminary injunctive relief pending selection of the arbitrator.” The
arbitrator also omitted any mention of equitable claims against Bernstein, when he listed
the claims that were stayed pending the arbitration. There, the arbitrator stated that the
“claims against [KCA] are stayed pending arbitration of the claims against Bernstein.”

                                               8
       Additionally, Vista’s claim for an injunction cannot stand alone, and even Plaintiff
admits that it was premised on the same causes of action for which Vista sought damages.
The 2009 order expressly states that “[t]he claims set forth in the [first amended
complaint] come within the broad language of the arbitration agreement.” All of these
causes of action were addressed and disposed of by the arbitrator, who determined that
Bernstein did not solicit the clients and that Vista incurred no damage. As Vista lost on
the merits of its claims, injunctive relief was not appropriate.
       In sum, we interpret the court’s 2009 order to mean that Vista and Bernstein were
required to arbitrate all claims both legal and equitable, with the exception of injunctive
relief that could be sought and issued prior to the arbitrator’s appointment. We therefore
reverse the trial court’s judgment to the extent that it excludes claims for injunctive relief,
and issue a writ mandating the trial court to enter judgment on all claims (both legal and
equitable).2
3.     The Court Did Not Abuse Its Discretion in Denying the Preliminary Injunction
       Vista argues that the court erred in denying its motion for a preliminary injunction
to enjoin Bernstein and her new employer, KCA, from using the customer list and
customer information to solicit or contact Vista insurance customers. When determining
whether to issue a preliminary injunction, the trial court weighs two interconnected
factors: the likelihood of the success on the merits by the party seeking the injunction,
and the harm that would be caused by issuing or not issuing the injunction. (Law School
Admission Council, Inc. v. State of California (2014) 222 Cal. App. 4th 1265, 1280.) “The
trial court’s determination must be guided by a ‘mix’ of the potential-merit and interim-
harm factors; the greater the plaintiff's showing on one, the less must be shown on the
other to support an injunction. [Citation.]” (Butt v. State of California (1992) 4 Cal. 4th
668, 678 (Butt).) Nonetheless, “[a] trial court may not grant a preliminary injunction,

2
        To the extent the judgment excepts Bernstein’s claims for attorney fees and costs,
which were denied by the arbitrator, we affirm as neither party has appealed this portion
of the judgment. On remand, judgment should be entered in favor of Bernstein as to all
claims, except Bernstein’s claims for attorney fees and costs.

                                              9
regardless of the balance of interim harm, unless there is some possibility that the
plaintiff would ultimately prevail on the merits of the claim.” (Ibid.) “ ‘The law is well
settled that the decision to grant a preliminary injunction rests in the sound discretion of
the trial court.’ [Citation.] ‘A trial court will be found to have abused its discretion only
when it has “ ‘exceeded the bounds of reason or contravened the uncontradicted
evidence.’ ” ’ [Citation.] ‘Further, the burden rests with the party challenging the [trial
court’s ruling on the application for an] injunction to make a clear showing of an abuse of
discretion.’ ” (Shoemaker v. County of Los Angeles (1995) 37 Cal. App. 4th 618, 624.)
       Here, the trial court denied the preliminary injunction request after properly
weighing Vista’s likelihood of success on the merits and the harm that would be caused
by issuing or not issuing the injunction. In seeking the preliminary injunction, Vista
asserted that its customer list was a trade secret, that it would likely succeed against
Bernstein for misappropriation of the trade secret customer list, and that allowing
Bernstein and her new employer to continue to use the customer list would result in
irreparable financial harm and reputational damage to Vista.
       The court explained that pursuant to the employment contract, Bernstein and Vista
jointly owned the customer list and the percentage owned by each party varied from
customer to customer. The court stated that “[i]t further appears from the agreement
between the parties that they contemplated the eventual dissociation of defendant
Bernstein from her employment with [Vista], that defendant Bernstein would take some
of the customers whose identity she had learned through her employment with [Vista]
with her when she left, and that the parties would negotiate or litigate, by formulae set
forth in the agreement, how the future revenue from said customers would be shared
between the parties.” The court assessed that “[u]nder such circumstances plaintiff is not
likely to prevail in proving that defendant Bernstein misappropriated any trade secret
from plaintiff.” The court also stated that based on the agreement, each party had an
adequate remedy in the form of monetary damages. The court found that “injunctive
relief as a provisional remedy at the outset of litigation is not practical in this case.”

                                               10
       Vista argues that the court “erroneously held that [Vista] did not meet the
requirements for issuance of preliminary injunction relief because [Vista] made an
alternative claim for damages and therefore, has a legal remedy.” We disagree. The
court’s analysis was not premised on an alternative remedy, but was grounded in
balancing the likelihood of Vista’s success with the potential harm.
       As set forth above, the court determined that the list was not misappropriated and
thus there was no probability that Vista would succeed on its trade secret
misappropriation claim. This alone is fatal to the preliminary injunction request as it
cannot be granted unless “there is some possibility that the plaintiff would ultimately
prevail on the merits of the claim.” (Butt, supra, 4 Cal.4th at p. 678.) To the extent that
the court considered Vista’s legal remedies, it did so in the context of examining Vista’s
harm. As the parties appeared to have anticipated the division of client accounts at the
end of Bernstein’s employment and provided for a formula to calculate the value of each
account, harm to Vista did not appear irreparable or so great as to require injunctive
relief, particularly where Vista’s success on the merits was unlikely. Furthermore, “ ‘an
injunction is an unusual or extraordinary equitable remedy which will not be granted if
the remedy at law (usually damages) will adequately compensate the injured plaintiff.’ ”
(Department of Fish & Game v. Anderson–Cottonwood Irrigation Dist. (1992) 8
Cal. App. 4th 1554, 1565.) As damages appeared to be a sufficient remedy to make Vista
whole, the harm here was not great enough to require extraordinary relief like an
injunction. The court’s consideration of Vista’s legal remedy in this context was not an
abuse of discretion.
       Vista asserts that it did have a likelihood of success on the merits because the
customer list satisfied the definition of a trade secret and injunctive relief was necessary
to prevent Bernstein’s solicitation to clients on that list. Yet, the court did not find that
the customer list was not a trade secret. Rather, it concluded that Vista was “not likely to
prevail in proving that defendant Bernstein misappropriated any trade secret.”
Misappropriation inherently requires that the defendant improperly acquire, disclose, or
use a trade secret that is owned by another person. (Civ. Code, § 3426.1, subd. (b)

                                              11
[defining misappropriation as “(1) [a]cquisition of a trade secret of another . . . or [¶]
(2) [d]isclosure or use of a trade secret of another . . . ”]; DVD Copy Control Assn., Inc. v.
Bunner (2003) 31 Cal. 4th 864, 874 [defining when trade secret misappropriation
occurs].) Here, the contract indicated that Bernstein was the full owner of some client
accounts and partial owner of other accounts. Bernstein cannot misappropriate a list of
clients that she owns. As such, the court did not abuse its discretion in finding that Vista
was not likely to succeed on its trade secret misappropriation claim.
       We therefore affirm the trial court’s denial of Vista’s request for a preliminary
injunction, as Vista would not likely succeed on the merits and the potential harm to
Vista was not substantial. We conclude that the court did not exceed the bounds of
reason or contravene uncontradicted evidence in making its ruling.
4.     The Order Granting the Motion to Compel Arbitration and Staying the
       Litigation Against KCA Was Proper
       Vista argues that the trial court committed reversible error by ordering arbitration
of Vista’s claims against Bernstein. Vista makes two arguments in this regard. First,
Vista contends that arbitration is not available where, as here, a plaintiff employer seeks
to enjoin a former employee from stealing or using the employer’s trade secrets. Second,
Vista contends that the court abused its discretion by not staying arbitration under Code
of Civil Procedure3 section 1281.2, subdivision (c). We address each in turn.
       a.     Arbitration Was Appropriate and Consistent with the Employment
              Agreement
       Section 1281.2 states that, subject to several exceptions, “[o]n petition of a party to
an arbitration agreement alleging the existence of a written agreement to arbitrate a
controversy and that a party thereto refuses to arbitrate such controversy, the court shall
order the petitioner and the respondent to arbitrate the controversy if it determines that an
agreement to arbitrate the controversy exists.” Since the parties do not dispute the

3
      All subsequent stator references are to the code of Civil Procedure, unless
otherwise indicated.

                                              12
language of the arbitration agreement or any extrinsic evidence related to this issue, we
review the court’s order granting the motion to compel arbitration under section 1281.2
de novo. (Bono v. David (2007) 147 Cal. App. 4th 1055, 1061-1062.)
       As extensively quoted in the section two of this opinion, the arbitration clause
expressly states that Vista and Bernstein are to arbitrate all disputes and controversies
arising out of or relating to any interpretation, construction, performance, or breach of the
employment agreement. Vista’s entire lawsuit against Bernstein stems from the
employment agreement and her alleged breach of it by soliciting clients from the client
list, which Vista claims to be a trade secret. Thus, pursuant to section 1281.2, arbitration
was appropriate.
       Vista contends that “arbitration is not available where a plaintiff employer seeks to
enjoin a former employee from stealing or using the employer’s trade secret customer list
and/or to enjoin the former employee (and employee’s new employer) from unfairly
competing in violation of the unfair competition laws by using the employer’s trade
secret customer list and customer information to solicit the employer’s customers.” Vista
cites Mercuro v. Superior Court (2002) 96 Cal. App. 4th 167, 175-176 (Mercuro) and
O’Hare v. Municipal Resource Consultants (2003) 107 Cal. App. 4th 267, 275-276
(O’Hare) to support its argument. Yet it is unclear how either case supports Vista’s
contention. Mercuro and O’Hare both involve non-mutual, substantively
unconscionable, and thus unenforceable arbitration clauses. (Mercuro, supra,
96 Cal.App.4th at pp. 174-179; O’Hare, supra, 107 Cal.App.4th at pp. 273-279.) Vista
never alleged that the arbitration clause was unconscionable, and Vista’s brief does not
elucidate how either case supports its argument that arbitration is not available when
prosecuting a trade secret misappropriation claim.
       On the contrary, Mercuro indicates that an arbitration clause is properly
enforceable in a case like this, where both employer and employee are required to litigate
trade secret claims. The Mercuro court explained that the contract in that case was
unconscionable because, “[a]n employee terminated for stealing trade secrets, for
example, must arbitrate his wrongful termination claim under the agreement but [the

                                             13
employer] can avoid a corresponding obligation to arbitrate its trade secrets claim against
the employee by the simple expedient of requesting injunctive or declaratory relief.”
(Mercuro, supra, 96 Cal.App.4th at p. 176.) The arbitration clause here is mutual and
thus enforceable, even as to Vista’s trade secret and competition claims. The court thus
appropriately enforced the arbitration clause over Vista’s objection in this regard.
       b.     The Court Did Not Abuse Its Discretion in Staying the Litigation and
              Ordering the Arbitration to Proceed
       Second, Vista argues that under section 1281.2, subdivision (c), the court should
not have ordered arbitration because Vista sued Bernstein as well as Bernstein’s new
employer KCA, which was not subject to the arbitration agreement. Vista asserts that
because the arbitration involved some of the same transactions which are involved in its
litigation with KCA, arbitration should have been stayed pending the outcome of the
pending litigation.
       Section 1281.2, subdivision (c) states that a court shall order arbitration of the
controversy if it decides that there is an agreement to arbitrate, unless it determines that
“[a] party to the arbitration agreement is also a party to a pending court action or special
proceeding with a third party, arising out of the same transaction or series of related
transactions and there is a possibility of conflicting rulings on a common issue of law or
fact.” If the third party exception stated in subdivision (c) applies, the court has several
options: “the court (1) may refuse to enforce the arbitration agreement and may order
intervention or joinder of all parties in a single action or special proceeding; (2) may
order intervention or joinder as to all or only certain issues; (3) may order arbitration
among the parties who have agreed to arbitration and stay the pending court action or
special proceeding pending the outcome of the arbitration proceeding; or (4) may stay
arbitration pending the outcome of the court action or special proceeding.” (§ 1281.2,
subd. (c), emphasis added.) “If the third party exception applies, the trial court’s
discretionary decision as to whether to stay or deny arbitration is subject to review for
abuse.” (Laswell v. AG Seal Beach, LLC (2010) 189 Cal. App. 4th 1399, 1406; Metis
Development LLC v. Bohacek (2011) 200 Cal. App. 4th 679, 692-693 (Metis) [Section

                                              14
1281.2, subdivision (c) “gives the court several options, including denying the petition
for arbitration, staying the arbitration pending disposition of non arbitrable claims in the
court, or staying the litigation pending completion of the arbitration. [Citation.] What
the trial court chooses to do in this situation is a matter of its discretion, guided largely by
the extent to which the possibility of inconsistent rulings may be avoided.”].) “We will
not disturb the court’s discretionary ruling unless it exceeded the bounds of reason.”
(Fitzhugh v. Granada Healthcare & Rehabilitation Center, LLC (2007) 150 Cal. App. 4th
469, 475.)
       Here, the court determined that the third option was appropriate and ordered
arbitration of Vista’s claims against Bernstein, staying the pending court action between
Vista and KCA. The heart of Vista’s argument on appeal is that the court abused its
discretion in choosing that third option (proceeding with arbitration between Bernstein
and Vista and staying litigation between Vista and KCA), rather than selecting the fourth
option under section 1281.2, subdivision (c) (staying arbitration between Bernstein and
Vista and proceeding with litigation between Vista and KCA). Vista asserts this was
error and that the court should have stayed arbitration “to allow the claim against the
defendant[,] who cannot assert arbitration[,] to go forward in order to avoid possible
inconsistent outcomes.”
       Yet, the court effectively assuaged such concerns regarding inconsistency by
preventing both proceedings from going forward simultaneously. In ordering the
arbitration be adjudicated first, the court ensured that it would not make conflicting
rulings on common issues of law or fact in the litigation between Vista and KCA as such
litigation would occur after the entry of judgment on claims against Bernstein. Reversing
the order of the arbitration and the litigation, as proposed by Vista, would have been no
more effective in preventing inconsistent rulings. Furthermore, the decision to proceed
with arbitration claims first was practical, given that the weight of Vista’s factual
contentions and claims were against Bernstein. Vista asserted all of its eight causes of
action in the first amended complaint against Bernstein, whereas Vista asserted only six
against KCA. More importantly, Vista’s entire case revolves around Bernstein’s alleged

                                              15
misappropriation of trade secrets and breach of contract. Vista’s claims against KCA are
entirely derivative from Bernstein’s alleged wrongdoing, and premised on the allegation
that Bernstein stole the customer list from Vista and provided it to KCA. It thus made
sense to address the claims against Bernstein first.
       As the Supreme Court has explained, section 1281.2, subdivision (c) “is not a
special rule limiting the authority of arbitrators. It is an evenhanded law that allows the
trial court to stay arbitration proceedings while the concurrent lawsuit proceeds or stay
the lawsuit while arbitration proceeds to avoid conflicting rulings on common issues of
fact and law amongst interrelated parties. Moreover, ‘[s]ection 1281.2(c) is not a
provision designed to limit the rights of parties who choose to arbitrate or otherwise to
discourage the use of arbitration. Rather, it is part of California’s statutory scheme
designed to enforce the parties’ arbitration agreements . . . . Section 1281.2(c) addresses
the peculiar situation that arises when a controversy also affects claims by or against
other parties not bound by the arbitration agreement.’ ” (Cronus Investments, Inc. v.
Concierge Services (2005) 35 Cal. 4th 376, 393 (Cronus).) Consistent with the intent
behind section 1281.2, subdivision (c), the court evenhandedly enforced the arbitration
agreement and avoided inconsistent rulings as to the claims against KCA.
       Furthermore, the court’s decision to proceed with arbitration is also supported by
public policy. “California has a strong public policy in favor of arbitration and any
doubts regarding the arbitrability of a dispute are resolved in favor of arbitration.
[Citations.] As the Supreme Court recently noted, ‘ . . . the decision to arbitrate
grievances evinces the parties’ intent to bypass the judicial system and thus avoid
potential delays at the trial and appellate levels . . . .’ [Citation.] This strong policy has
resulted in the general rule that arbitration should be upheld ‘unless it can be said with
assurance that an arbitration clause is not susceptible to an interpretation covering the
asserted dispute. [Citation.]’ [Citation.] [¶] . . . [I]f there is any reasonable doubt as to
whether [the plaintiff]’s claims come within the . . . arbitration clause, that doubt must be
resolved in favor of arbitration, not against it. [Citations.]” (Coast Plaza Doctors
Hospital v. Blue Cross of California (2000) 83 Cal. App. 4th 677, 686–687.) Here, the

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court’s enforcement of the arbitration clause honors the contracting parties’ intent to
arbitrate the disputes. The court’s decision to proceed with arbitration properly heeds this
public policy while preserving Vista’s right to sue KCA in court.
       To the extent that Vista cites Volt Info. Scis. v. Bd. of Trs. (1989) 489 U.S. 468,
479 and Cronus, supra, 35 Cal.4th at pp. 380, 387, to support its arguments that the court
erred in ordering arbitration and staying litigation, these cases have nothing to do with the
exercise of discretion involved in section 1281.2, subdivision (c) that is at issue on
appeal. Neither address the court’s discretion in choosing between two alternative
methods of avoiding inconsistent rulings when the third party exception applies. We thus
find Vista’s reliance on these cases unavailing.
       Based on the foregoing, we conclude that the court did not abuse its discretion in
ordering Vista and Bernstein to arbitrate and staying the litigation between Vista and
KCA.
5.     The Court Properly Confirmed the Arbitration Award
       Lastly, Vista argues that the arbitrator’s award must be vacated. However, based
on the strong public policy in support of arbitration, courts generally do not review
arbitration awards for factual or legal errors (Jones v. Humanscale Corp. (2005)
130 Cal. App. 4th 401, 407 (Jones)), including sufficiency of the evidence or reasoning of
the arbitrator (Moncharsh v. Heily & Blase (1992) 3 Cal. 4th 1, 11 (Moncharsh)).
Arbitration awards are usually final. (Id. at p. 10.)
       Section 1286.2 sets forth limited exceptions to this general rule. Under section
1286.2, a court shall vacate an arbitration award if “[t]he arbitrators exceeded their
powers and the award cannot be corrected without affecting the merits of the decision
upon the controversy submitted.” (§ 1286.2, subd. (a)(4).) The “merits” described in this
section encompass all contested legal and factual issues before the arbitrator.
(Moncharsh, supra, 3 Cal.4th at p. 28.) A court must also vacate an award where it was
procured by fraud or where the rights of the party were substantially prejudiced by the
misconduct of the arbitrator. (§ 1286.2, subds. (a)(1) & (a)(3).)

                                              17
       On appeal from a trial court’s order granting or denying a request to vacate an
arbitration award, our review is de novo. (SWAB Financial, LLC v. E*Trade Securities,
LLC (2007) 150 Cal. App. 4th 1181, 1205.) To the extent the trial court’s ruling rests
upon a determination of disputed factual issues, we apply the substantial evidence test.
(Ibid.) When determining whether an arbitrator has exceeded his or her powers, we
afford “substantial deference towards the arbitrator’s determination of his or her
contractual authority. [Citations.]” (Jones, supra, 130 Cal. App. 4th 401 at p. 408.)
“All reasonable inferences must be drawn in support of the award. [Citation.]” (Ibid.)
       a.     The Arbitrator’s Finding that Bernstein Did Not Misappropriate Trade
              Secrets Did Not Exceed Its Authority
       Vista asserts that the arbitrator erred in determining that Bernstein did not
misappropriate trade secrets because her announcements to the clients regarding her
change of employment did not constitute solicitation. (See Morlife, Inc. v. Perry (1997)
56 Cal. App. 4th 1514, 1524-1525 [acts of solicitation are equated with misappropriation
of protected information; informing a former employer’s customers of one’s change in
employment, without more, is not solicitation].) This ruling was clearly within the scope
of the arbitrator’s power as defined by the employment contract, which stated that “the
parties hereto agree that any dispute or controversy arising out of or relating to any
interpretation, construction, performance or breach of this Agreement, shall be settled by
Arbitration . . . .” The language of the arbitration agreement is broad, covering disputes
not only arising out of the contract in question but disputes “relating to” the agreement.
Under the plain language of the contract, it was within the power of the arbitrator to
determine issues relating to trade secrets, as they arose entirely out of Bernstein’s
employment with Vista and the confidentiality of such information was set forth in the
contract.
       Vista fails to explain how the arbitrator exceeded his powers in rendering his
decision on the trade secret issue. Rather, Vista’s arguments deal wholly with the
arbitrator’s alleged factual or legal errors. As explained above, we will not review

                                             18
arbitration awards, like this one, for factual or legal mistakes. (Jones, supra,
130 Cal.App.4th at p. 407.) We thus affirm the award in this regard.
       b.     The Award Did Not Exceed the Arbitrator’s Powers Because It Bears a
              Rational Relationship to the Contract
       Next, Vista argues that the arbitrator’s award exceeded the arbitrator’s powers and
must be vacated because it is “completely irrational” and “remakes the contract.”
(Capitalization omitted.) Specifically, Vista asserts that “the arbitrator irrationally and
bizarrely held that despite her patent breach and refusal to honor her obligations under the
contract to assist [Vista] in retaining the clients she was servicing for [Vista], Bernstein
could do just the opposite because she supposedly had a common law right to send
‘announcements’ to those clients to induce them to leave [Vista] and follow her to her
new employer.” Vista asserts that this decision had no rational relationship to the
contract, and had “the effect of completely rewriting the terms of the contract.” Vista
relies heavily on Pacific Gas & Electric Co. v. Superior Court (1993) 15 Cal. App. 4th
576, 592-593, for the proposition that an arbitration award can be set aside if “the
application or construction of the contract presents such an egregious mistake that it
amounts to an arbitrary remaking of the contract between the parties.”
       However, the test set forth in Pacific Gas is no longer valid. The “arbitrary
remaking of the contract” test has been abrogated by the Supreme Court, in favor of a test
which asks whether “the remedy . . . bears a rational relationship to the underlying
contract as interpreted, expressly or impliedly, by the arbitrator and to the breach of
contract found, expressly or impliedly, by the arbitrator.” (Advanced Micro Devices, Inc.
v. Intel Corp. (1994) 9 Cal. 4th 362, 367 (Advanced).) In describing the “rational
relationship” requirement, the court stated: “[t]he required link may be to the contractual
terms as actually interpreted by the arbitrator (if the arbitrator has made that
interpretation known), to an interpretation implied in the award itself, or to a plausible
theory of the contract’s general subject matter, framework or intent. [Citation.] The
award must be related in a rational manner to the breach (as expressly or impliedly found

                                              19
by the arbitrator).” (Id. at p. 381.) In sum, an award may not be vacated as long as it
draws its essence from the contract. (Ibid.)
       In this case, the arbitration award sets forth the rational relationship between the
award, the contract, and the breach. Within the award, the arbitrator notes that Vista had
the right of first refusal as to the client list, and that Bernstein anticipatorily refused to
honor this right. The arbitrator explained that despite this breach, Vista had no damages.
The arbitrator found that, “[t]he problem for Vista is that the legal effect of the
‘acquisition’ it would have received from Bernstein under the contract, if she had
honored the option, would merely be the right to have Bernstein refrain from actively
soliciting the ‘acquired’ clients.” The arbitrator stated that because the law “allows a
former employee to announce to her former employer’s customers her departure and her
new place of business,” such vanilla announcements, like those at issue here, did not
constitute solicitation.
       The arbitrator concluded that although it was uncontested that Bernstein sent out
an announcement of her change of employment to virtually all of her clients and that
many of them followed her to KCA, “Vista must show more than that” to succeed on its
claims. Vista needed to show active solicitation by Bernstein. Despite its opportunity
and significant efforts to do so, Vista failed to prove that Bernstein engaged in
solicitation that would give rise to recoverable damages. Although Vista attempted to
prove solicitation in five ways, the arbitrator addressed each of these and explained why
Vista’s evidence failed to prove active solicitation giving rise to damages.4

4
        We note that there was evidence that Bernstein actively solicited one client, who
refused to follow Bernstein to KCA. There was no other evidence of active solicitation.
The arbitrator concluded that no damages resulted from this solicitation, as the client did
not buy insurance from KCA. Moreover, Vista was required to prove that it had more
than $200,000 in damages, as Vista was required to pay Bernstein that amount for the
“acquisition” of the customer list and the right to prevent Bernstein from soliciting those
customers pursuant to the employment contract. Damages from this isolated incident did
not rise above $200,000.

                                               20
       We conclude that the arbitrator’s analysis in the award is firmly grounded in the
law, the contract, and the facts of this case. The Supreme Court has held that “[m]erely
informing customers of one’s former employer of a change of employment, without
more, is not solicitation. Neither does the willingness to discuss business upon invitation
of another party constitute solicitation on the part of the invitee.” (Aetna Bldg.
Maintenance Co. v. West (1952) 39 Cal. 2d 198, 204.) The arbitrator interpreted the
employment contract in the context of this case law, and deemed Bernstein’s vanilla
announcements to be insufficient to prove solicitation.
       Vista argues that the arbitrator’s reasoning has no rational basis because pursuant
to the contract, Bernstein had an obligation to assist Vista in retaining those customers’
business goodwill and thus contracted away her right to make announcements indicating
her change of employment. Yet, the arbitrator disagreed with this interpretation of the
contract. The arbitrator expressly stated that it did “not interpret the ambiguous word
‘acquire,’ as used in this Employment Agreement, to override the right an employee
otherwise has to make that announcement [regarding her new place of business].” The
arbitrator explained that Vista’s option to purchase the client list did not amount to a
covenant-not-to-compete, and thus did not require her to refrain from doing business with
Vista clients or facilitating their transfer to her new employer. In sum, the arbitrator
found that “[o]nce the client itself responds to the neutral announcement by initiating a
request to transfer the business, there are then no limits on the broker’s ability to take all
steps needed to effectuate the [client] transfer.”
       Vista’s disagreement as to how the contract and law should be interpreted fails to
show us how the arbitrator exceeded his authority. Simply because Vista disagrees with
the arbitrator’s interpretation does not make the court’s award irrational. Furthermore,
“[i]t is well settled that ‘arbitrators do not exceed their powers merely because they
assign an erroneous reason for their decision.’ [Citations.] A contrary holding would
permit the exception to swallow the rule of limited judicial review; a litigant could
always contend the arbitrator erred and thus exceeded his powers.” (Moncharsh, supra,
3 Cal.4th at p. 28.) Even assuming without deciding the arbitrator’s reasoning was

                                              21
erroneous, the award was rationally related to the contact, as the award thoroughly
analyzed and interpreted the contractual terms. It is well established that “[t]he award
will be upheld so long as it was even arguably based on the contract; it may be vacated
only if the reviewing court is compelled to infer the award was based on an extrinsic
source.” (Advanced, supra, 9 Cal.4th at p. 381, italics omitted.) We conclude that there is
no reason to infer the award was based on an extrinsic source.
       To the extent that Vista asserts that the arbitrator should have awarded unjust
enrichment because Bernstein breached the option contract by sending announcements of
her move to clients, we disagree because the arbitrator expressly found that Vista
incurred no damages as a result of a wrongful act by Bernstein and that the contract did
not inhibit Bernstein from sending such announcements. Vista also asserts that at
minimum, it should have been awarded at least nominal damages for Bernstein’s breach
of contract. Yet, “arbitrators, unless expressly restricted by the agreement of the parties,
enjoy the authority to fashion relief they consider just and fair under the circumstances
existing at the time of arbitration, so long as the remedy may be rationally derived from
the contract and the breach.” (Advanced, supra, 9 Cal.4th at p. 383.) “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.”
(Id. at p. 375.) The arbitrator exercised its broad discretion in determining not to award
any damages to Vista based on what he thought was just and fair. We will not second
guess the arbitrator’s best judgment in determining not to award nominal damages.
       c.     The Award Was Not the Product of Fraud or Undue Influence
       Vista asserts that the award should also be vacated because Bernstein procured it
by fraud and undue means. In particular, Vista takes issue with a statement Bernstein
made in a posthearing brief, regarding her financial status, to which Vista did not have
the opportunity respond. That statement is: “In three and a half years of litigation, which
has left Bernstein financially devastated, Vista has failed to prove that the customers that
followed Bernstein to [KCA] were solicited.” Notably, Vista only takes issue with the
first half of that sentence regarding Bernstein being financially devastated by the

                                             22
litigation. Vista asserts that it should have been afforded the opportunity to obtain and
present rebuttal evidence regarding this statement. Vista also states that Bernstein’s
comment “was a blatant attempt to curry sympathy so that the arbitrator would feel sorry
for her and not award [Vista] the damages it actually suffered . . . .” (Underscoring
omitted.)
          We may only vacate an award where there is an occurrence of extrinsic fraud,
meaning “conduct which ‘results in depriving either of the parties of a fair and impartial
hearing to their substantial prejudice.’ [Citation.]” (Pacific Crown Distributors v.
Brotherhood of Teamsters (1986) 183 Cal. App. 3d 1138, 1147.) We begin with the
presumption that the arbitrator did not reach the award by fraud, undue means, or
corruption. (Pour Le Bebe, Inc. v. Guess? Inc. (2003) 112 Cal. App. 4th 810, 833-834.)
The burden is on “the moving party . . . to demonstrate a nexus between the award and
the alleged undue means used to attain it.” (Id. at p. 834.)
          We conclude that Bernstein’s statement does not constitute extrinsic fraud.
Bernstein made the statement simply to provide context for the dearth of evidence Vista
had regarding solicitation. The statement was minor and innocuous, and was not
essential to any legal issue ruled on by the trial court. It was unnecessary for Vista to
rebut the remark with evidence, as it appears that Bernstein did not submit evidence of
her financial condition to support such a statement. We reason that inclusion of this
statement in Bernstein’s brief had no risk of depriving Vista of a fair hearing and was
highly unlikely to result in any substantial prejudice toward Vista. Furthermore, Vista
provides us no evidence of a nexus between the award and this statement. We therefore
presume the arbitrator reached its decision without unfairly prejudicing Vista. We thus
affirm.

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                                     DISPOSITION
      Let a writ of mandate issue commanding the Los Angeles County Superior Court
to vacate its January 22, 2013 judgment, and enter judgment in favor of Defendant
Maureen Bernstein and against Plaintiff Vista International Insurance Brokers as to all
legal and equitable claims, except for Defendant Bernstein’s claims for attorney fees and
costs. The judgment is affirmed on all other grounds. Defendant Maureen Bernstein is
awarded her costs on appeal.

      NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

                                                 KITCHING, J.

I concur:

                    EDMON, P. J.

                    ALDRICH, J.

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