Court Opinion

ID: 6334755
Source: CourtListenerOpinion
Date Created: 2022-04-25 23:01:32.667624+00
Date Added: 2024-06-11T09:23:41.585917
License: Public Domain

Filed 4/25/22 Syverson v. Reeves 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   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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has not been certified for publication or ordered published for purposes of rule 8.1115.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

ERIK SYVERSON,                                             B312663

         Plaintiff and Appellant,                          (Los Angeles County
                                                           Super. Ct. No.
         v.                                                20STCV00592)

BARBARA REEVES et al.,

         Defendants and
         Respondents.

     APPEAL from a judgment of the Superior Court of Los
Angeles County, Steven J. Kleifield, Judge. Affirmed.
     Pick & Boydston, Brian D. Boydston for Plaintiff and
Appellant.
     Long & Levit, Joseph P. McMonigle, Jessica R. MacGregor,
and Nicola M. Till for Defendants and Respondents.
                  ____________________________
       The trial court sustained demurrers to an original and a
first amended complaint filed by Erik Syverson against Barbara
Reeves and JAMS, Inc. (sometimes collectively referred to as
JAMS) with leave to amend. In response to Syverson’s second
amended complaint, JAMS and Reeves filed demurrers that
raised the arbitral immunity doctrine as a defense for the first
time. The trial court sustained the demurrers to the second
amended complaint without leave to amend and entered
judgment.
       Syverson contends that Code of Civil Procedure section
430.41, subdivision (b) prohibited JAMS from raising arbitral
immunity as a basis for demurrer for the first time in response to
the second amended complaint.1 We need not determine whether
Syverson’s contention has merit, however, because Syverson has
not demonstrated that the trial court’s consideration of arbitral
immunity was prejudicial. Absent prejudice, we must affirm.

                         BACKGROUND
      In July 2018, Raines Feldman LLP submitted a demand for
arbitration to JAMS along with a statement of claims against
Syverson, a former Raines Feldman partner. In the statement of
claims, Raines Feldman alleged that Syverson had breached a
settlement agreement that contained an arbitration clause.
JAMS commenced the arbitration based on Raines Feldman’s
demand and statement of claims. Syverson declined to
voluntarily arbitrate the matter, and Raines Feldman
successfully moved the trial court for an order compelling
arbitration.

      Further statutory references are to the Code of Civil
      1

Procedure unless otherwise specified.

                                2
      During the course of the arbitration, Syverson sought to
disqualify the first, second, and third arbitrators JAMS
appointed. According to the allegations in Syverson’s second
amended complaint2 against JAMS and Reeves, after Syverson
objected to the first three arbitrators, JAMS sought to appoint
Reeves to arbitrate Raines Feldman’s dispute with Syverson.
Syverson alleges that he objected to the appointment and that
JAMS overruled the objections and appointed Reeves as
arbitrator in September 2018.
      In her initial disclosures to the parties, dated September
18, 2018, Reeves did not disclose that she was a part owner of
JAMS.
      On October 22, 2019, the United States Court of Appeals
for the Ninth Circuit issued its opinion in Monster Energy
Company v. City Beverages, LLC (2019) 940 F.3d 1130, holding
that “before an arbitrator is officially engaged to perform an
arbitration, to ensure that the parties’ acceptance of the
arbitrator is informed, arbitrators must disclose their ownership
interests, if any, in the arbitration organizations with whom they
are affiliated in connection with the proposed arbitration, and
those organizations’ nontrivial business dealings with the parties
to the arbitration.” (Id. at p. 1138.) The Ninth Circuit vacated
the arbitration award in that case because, it concluded, “the
Arbitrator’s failure to disclose his ownership interest in JAMS . . .
creates a reasonable impression of bias and supports vacatur of
the arbitration award.” (Ibid.)

      2The second amended complaint was the subject of the
demurrers resulting in the judgment against Syverson.
Consequently, unless otherwise specified, when we refer to the
“complaint,” we mean the second amended complaint.

                                 3
       On October 29, 2019, Reeves disclosed to Raines Feldman
and Syverson that she is “an owner panelist of JAMS.” JAMS
made additional supplemental disclosures on October 30, 2019.
Syverson submitted a request to disqualify Reeves as the parties’
arbitrator on October 30, 2019. JAMS notified the parties by
letter dated November 6, 2019 that Reeves was disqualified and
that another arbitrator would be appointed. On December 2,
2019, JAMS sent the parties a letter that states, in full: “Based
on Mr. Syverson’s actions, complaints and threats, JAMS declines
to serve as the arbitration provider in this matter. A full refund
to the parties will be processed and sent under separate cover.”
       Syverson filed the original complaint in this matter on
January 6, 2020, alleging causes of action against Reeves and
JAMS for violations of the Consumers Legal Remedies Act (Civ.
Code, § 1750 et seq.), “conspiracy,” fraudulent concealment, false
advertising (Bus. & Prof. Code, § 17500 et seq.), and unfair
business practices (Bus. & Prof. Code, § 17200 et seq.). JAMS
and Reeves demurred to the original complaint.
       Syverson filed his first amended complaint on June 1, 2020.
In it, he alleged the same causes of action as in the original
complaint. Reeves and JAMS again demurred. At a hearing on
September 30, 2020, the trial court sustained JAMS’s demurrers
and granted Syverson 15 days to file a second amended
complaint—the complaint that is the subject of this appeal.
       Syverson filed the second amended complaint on October 8,
2020, alleging the same five causes of action that he had alleged
in the original and first amended complaints. On December 10,
2020, JAMS filed demurrers to the second amended complaint.
In support of their demurrers to the second amended complaint,
JAMS and Reeves argued that each of Syverson’s causes of action

                                4
was barred by the doctrine of arbitral immunity—an argument
that no party had advanced in support of demurrers to the
original or first amended complaints.
      The trial court heard the demurrers on January 29, 2021.
The trial court concluded that each of the causes of action in the
second amended complaint were barred by the arbitral immunity
doctrine and sustained demurrers to the complaint without leave
to amend. The trial court entered judgment for JAMS and
Reeves on March 16, 2021.
      Syverson filed a timely notice of appeal.

                           DISCUSSION
       “The standard of review governing an order sustaining a
demurrer without leave to amend is long-settled. [Citation.]
‘ “We treat the demurrer as admitting all material facts properly
pleaded, but not contentions, deductions or conclusions of fact or
law. [Citation.] We also consider matters which may be
judicially noticed.” [Citation.] Further, we give the complaint a
reasonable interpretation, reading it as a whole and its parts in
their context. [Citation.] When a demurrer is sustained, we
determine whether the complaint states facts sufficient to
constitute a cause of action.’ [Citation.] We ‘ “determine de novo
whether the complaint alleges facts sufficient to state a cause of
action or discloses a complete defense.” ’ ” (San Francisco CDC
LLC v. Webcor Construction L.P. (2021) 62 Cal.App.5th 266, 276.)
       “Although a general demurrer does not ordinarily reach
affirmative defenses, it ‘will lie where the complaint “has
included allegations that clearly disclose some defense or bar to
recovery.” ’ [Citations.] ‘Thus, a demurrer based on an
affirmative defense will be sustained only where the face of the
complaint discloses that the action is necessarily barred by the

                                5
defense.’ ” (Ivanoff v. Bank of America, N.A. (2017) 9 Cal.App.5th
719, 726.)
       Syverson’s only contention on appeal is that the trial court
was precluded from sustaining demurrers based on arbitral
immunity by section 430.41, subdivision (b). That provision
states: “A party demurring to a pleading that has been amended
after a demurrer to an earlier version of the pleading was
sustained shall not demur to any portion of the amended
complaint, cross-complaint, or answer on grounds that could have
been raised by demurrer to the earlier version of the complaint,
cross-complaint, or answer.” (§ 430.41, subd. (b).)
       The parties agree that arbitral immunity was not raised as
an argument in support of demurrers to the original complaint or
the first amended complaint, and that the first time the
demurring parties made the argument was in support of
demurrers to the second amended complaint. The trial court’s
order on JAMS’s demurrers notes as much: “While the Court
would have preferred that the arbitral immunity argument was
made in support of the demurrer to the First Amended
Complaint, Defendants are not precluded from doing so now.”
The trial court appears to have reasoned, however, that JAMS’s
inclusion in the demurrers to each complaint of a statutory
ground for a demurrer—“[t]he pleading does not state facts
sufficient to constitute a cause of action”—satisfies section
430.41, subdivision (b).
       Ultimately, however, if Syverson has not demonstrated
that he was somehow prejudiced by the trial court’s purported
error, then we need not determine in the first instance whether it
was error for the trial court to consider the arbitral immunity
doctrine in connection with demurrers to Syverson’s second

                                 6
amended complaint. “[F]or over 100 years, the California
Constitution has . . . expressly precluded reversal absent
prejudice.” (F.P. v. Monier (2017) 3 Cal.5th 1099, 1107.)
        Syverson declined to discuss the merits of the arbitral
immunity doctrine in his briefing in the trial court. In his
opening brief here, his entire argument was that based on section
430.41, subdivision (b), JAMS could not raise the defense for the
first time in connection with demurrers to the second amended
complaint because it could have been raised in demurrers to the
first amended complaint. JAMS’s brief here likewise did not
discuss the merits of the arbitral immunity doctrine. Instead,
JAMS argued that Syverson had forfeited any discussion about
the merits of arbitral immunity both here and in the trial court,
and had therefore not demonstrated prejudice on this appeal.
Syverson did not file a reply brief.
        Assuming without deciding that the trial court erred when
it considered arbitral immunity when it was raised as an
argument for the first time in demurrers to a second amended
complaint, whether that error was prejudicial turns on whether
arbitral immunity operates as a complete bar to Syverson’s
complaint. If arbitral immunity does not bar the complaint’s
causes of action, the trial court’s order has obviously prejudiced
Syverson. If arbitral immunity does apply, however, then it could
have been raised later in the proceedings and still would have
operated as a complete bar to Syverson’s complaint. “A motion
for judgment on the pleadings,” for example, “can be filed at any
time (even if a demurrer cannot).” (Beames v. City of Visalia
(2019) 43 Cal.App.5th 741, 785.) Indeed, “[t]he court may upon
its own motion grant a motion for judgment on the pleadings.”

                                7
(§ 438, subd. (b)(2).) Likewise, the issue could have been raised
on a motion for summary judgment (§ 437c, subd. (c)) or even as
late in the proceedings as a motion for directed verdict (§ 630; see
Brassinga v. City of Mountain View (1998) 66 Cal.App.4th 195,
210). The effect of the purported trial court error in this instance,
then, is that judgment was entered earlier than it otherwise
might have been had the issue been raised by some other
procedural mechanism.
       Because no party briefed the merits of the arbitral
immunity doctrine in this court as it applies to this matter, we
requested supplemental briefing from the parties.
       “ ‘Arbitral immunity shields all functions which are
“integrally related to the arbitral process.” . . . [A]rbitrators . . .
are exempt from civil liability for failure to exercise care or skill
in the performance of their arbitral functions.’ ” (Stasz v. Schwab
(2004) 121 Cal.App.4th 420, 431-432.) “California courts have
extended arbitral immunity to organizations that sponsor
arbitrations . . . .” (Id. at p. 433.)
       The trial court based its order on La Serena Properties,
LLC v. Weisbach (2010) 186 Cal.App.4th 893 (Weisbach),
concluding that it was directly on point. Weisbach explained that
“[i]n determining whether absolute immunity applies to the
conduct of a public or private arbitrator, ‘the courts look at “the
nature of the duty performed [to determine] whether it is a
judicial act—not the name or classification of the officer who
performs it . . . .” ’ ” (Id. at p. 901.)
       “Central to impartial decision-making by arbitrators and
judges alike,” Weisbach explains, “is the need for them to make
disclosures that may give rise to a challenge to the judge’s
impartiality by one of the parties, even if the judge or arbitrator

                                  8
concludes that he or she is not disqualified.” (Weisbach, supra,
186 Cal.App.4th at p. 902.) “[A] person serving as an arbitrator
pursuant to an arbitration agreement has statutory and ethical
duties to comply with certain disclosure requirements.” (Ibid.)
“[T]he alleged failure to make adequate disclosures of potential
conflicts of interest falls within the scope of the absolute
immunity for quasi-judicial acts. Arbitrators are mandated by
law to make disclosures for precisely the same reasons that
judges must do so. Therefore, the process of making these
disclosures is virtually identical to the ‘ “functions normally
performed by judges.” ’ ” (Id. at p. 903.)
       A party’s remedy for an arbitrator’s or arbitration
organization’s failure to disclose or improper disclosures,
Weisbach explained, is not a civil suit, but rather is vacatur of an
arbitration award. (Weisbach, supra, 186 Cal.App.4th at p. 904.)
       Each of Syverson’s causes of action is based on the same
basic set of allegations against JAMS and Reeves. Syverson
alleged that both JAMS and Reeves knew that Reeves was a part
owner of JAMS and that JAMS had been a repeat provider for
Raines Feldman. He alleged that JAMS and Reeves omitted
disclosure of those facts, which Syverson alleged were material,
in initial disclosures to the parties. Syverson alleged that he
would have included that information in his original objection to
Reeves’s appointment. And he alleged that he was damaged by
having to “endure the work, cost and annoyance of participating
in the arbitration between August 13, 2019 and October 29,
2019”—the point at which the information that led to Reeves’s
disqualification was disclosed to the parties.
       Weisbach appears to squarely foreclose Syverson’s
complaint.

                                 9
      We agree with the trial court’s arbitral immunity analysis.
We conclude, as did the trial court, that the causes of action
alleged in Syverson’s second amended complaint against Reeves
and JAMS are barred by the arbitral immunity doctrine.
(Weisbach, supra, 186 Cal.App.4th at pp. 907-908.)
      Based on our conclusion that the arbitral immunity
doctrine operates as a complete defense to the causes of action in
Syverson’s second amended complaint, Syverson has not
demonstrated that he was prejudiced by any trial court error.
JAMS and Reeves would have been entitled to judgment as a
matter of law whether the argument had been raised in
demurrers to Syverson’s original or first amended complaint, or
had it been raised later in the proceedings.

                        DISPOSITION
      The judgment is affirmed. Respondents are awarded their
costs on appeal.
      NOT TO BE PUBLISHED

                                           CHANEY, J.

We concur:

             ROTHSCHILD, P. J.             CRANDALL, 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.

                                10