Court Opinion

ID: 6327499
Source: CourtListenerOpinion
Date Created: 2022-03-28 21:02:22.855905+00
Date Added: 2024-06-11T09:22:25.798721
License: Public Domain

Filed 3/28/22 Cazares v. Beckstoffer Vineyards XX, LP CA1/2

             NOT TO BE PUBLISHED IN OFFICIAL REPORTS
      California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not
      certified for publication or 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 This opinion has not
      been certified for publication or ordered published for purposes of rule 8.1115.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

                                 FIRST APPELLATE DISTRICT

                                               DIVISION TWO

       RENEE CAZARES et al. ,
       Plaintiffs and Respondents,
                                                                    A163078
       v.
       BECKSTOFFER VINEYARDS                                        (Napa County
       XX, LP,                                                       Super. Ct. No.
                                                                     16CV000228)
       Defendant and Appellant.

      Following an earthquake in Napa, a dispute arose between a landlord
and its tenants regarding the extent of damage to the building, and thus
issues of repair, the upshot of which was the landlord declared the lease
terminated. The tenants sued the landlord, which successfully moved the
matter to arbitration, which occurred in 2020. Following seven days of
hearing and several post-hearing briefs, the arbitrator found for the tenants
on one of their five claims, that for breach of contract, and awarded them
damages, attorney fees, and costs that were a fraction of what they sought.
      The landlord moved to vacate the award on several bases including, as
pertinent here, that the arbitrator failed to disclose certain documents and
pleadings in two lawsuits in Los Angeles County, the first a 2004 lawsuit
involving a construction company owned by the arbitrator and her husband,

                                                            1
the second a 2008 lawsuit in which it was alleged that the arbitrator had
made a fraudulent conveyance. The trial court denied the landlord’s motion
in a comprehensive order, following which judgment was entered confirming
the award. The landlord appeals, contending the court erred in not vacating
the award—that the trial court got it wrong. Our de novo review leads to a
contrary conclusion—that the trial court got it right. And we affirm the
judgment.
       The Parties and the General Setting
       In 1999, plaintiffs and respondents Renee and Jose Cazares (plaintiffs)
leased the ground floor of a building located at 1202 First Street, Napa, a
two-story, unreinforced masonry building built in 1905, where plaintiffs
operated a restaurant, Sushi Mambo. In April 2014, defendant and appellant
Beckstoffer Vineyards XX, LP (Beckstoffer) purchased the building and
assumed the Sushi Mambo lease, which at that point had 21 more months to
run.
       In August 2014, a magnitude 6.0 earthquake struck the city of Napa,
causing extensive damage to numerous buildings, including 1202 First
Street. Issues thereafter arose between plaintiffs and Beckstoffer as to
paragraph 9 of the lease, entitled “Damage or Destruction,” which paragraph
defines “ ‘Premises Partial Damage’ ” to mean damage that can reasonably be
repaired in six months or less, and “ ‘Premises Total Destruction,’ ” to mean
“damage or destruction which cannot reasonably be repaired in six months or
less from the date of the [destructive event.]” Under paragraph 9.1(b), the
landlord must notify the tenant within 30 days whether a destructive event
caused partial or total damage, i.e., whether repairing the damage will take
more or less than six months. And if total destruction has occurred, the lease
“shall terminate sixty (60) days following” the destructive event.

                                       2
         Various persons inspected the damage, following which Beckstoffer
obtained one report that repairs would take a year and cost some $2 million.
Another report projected completion of the repairs no earlier than May 2015,
more than six months after the earthquake. So, representing that best
available estimates would be that repairs would take nine to 12 months, by
letter dated September 10 Beckstoffer invoked the “Premises Total
Destruction” clause of the lease, and that the lease will terminate on October
23, 2014, sixty days after the earthquake.
         The Lawsuit and the Appeal
         In April 2016, plaintiffs filed a lawsuit in Napa County Superior Court,
alleging five causes of action. Beckstoffer filed a petition to compel
arbitration, and the trial court granted it in part, ordering arbitration of one
of the five causes of action, which arbitration it ordered stayed. Beckstoffer
appealed, and in July 2018 we filed our unpublished opinion reversing and
remanding the case for further proceedings consistent with our opinion:
Cazares v. Beckstoffer Vineyards XX, LP (Jul. 12, 2018, A150986) [nonpub.
opn.].
         The Arbitration
         In January 2019, plaintiffs filed a claim in arbitration asserting five
claims, for breach of contract, fraud and deceit, trespass to real property,
trespass to personal property, and conversion. Following the rules and
procedures of the American Arbitration Association (AAA), the parties
ranked and/or struck various of the proposed arbitrators, the result of which
was that the AAA appointed Wendy Fassberg to act as arbitrator, the
circumstances of which are the heart of Beckstoffer’s appeal and will be
discussed in detail below.

                                          3
      The arbitration hearing was held over seven days in August 2020, prior
to which the parties had filed pre-hearing briefs. Arbitrator Fassberg heard
from 16 witnesses, 12 on behalf of plaintiffs and four on behalf of Beckstoffer,
and numerous exhibits were introduced.1 The parties submitted post-hearing
briefs, and then supplemental briefs on a limited issue, following which, on
November 2, Arbitrator Fassberg re-opened the hearing for further briefing
on plaintiffs’ claim for “tax neutralization damages” in connection with any
compensatory damage award. Following receipt of that briefing, on
November 16, the hearing was re-closed.
      On December 8, Arbitrator Fassberg issued her award, 22 pages of
discussion and analysis. Following descriptions of the procedural and factual
background, the award analyzed in detail, two of plaintiffs’ claims, beginning
with their claim for breach of contract. Arbitrator Fassberg held for plaintiffs
on that claim where, following an exhaustive discussion of the evidence, the
arbitrator concluded as follows: “[Beckstoffer] failed to present any credible
evidence to show that they had the necessary information before terminating
[plaintiffs’] lease and demolishing the interior of the Premises so that there
was no going back. In fact, as stated above, the evidence showed that
[Beckstoffer] made no effort to actually secure that information within the
required notification window, or at all. As of September 17, 2014, one week
after the Termination Letter, ZFA [Structural Engineers] send [sic] a letter to
[Andy Beckstoffer] that included as one of its tasks defining ‘project scope,
prepare preliminary budget estimates, project timeline and outline project
process for Owner review.’ [Citation.] Consequently, [Beckstoffer] failed to

      1 The parties devote many pages in their briefs setting forth their
version of the facts developed at the arbitration. We see no need for any such
detail here.

                                       4
meet the requirement that they make a good faith effort to determine
whether a [Premises Total Damage], or a [Premises Partial Damage] had
occurred before terminating the Lease, thereby breaching their obligations
under the Lease. [Beckstoffer] is therefore liable to [plaintiffs] for breach of
contract.”
      As to the damages, Arbitrator Fassberg awarded plaintiffs $225,888,
significantly less than sought. She also denied plaintiffs’ claims for economic
damages based on a lease extension and for pre-judgment interest, and also
their non-economic damage claims for punitive damages and emotional
distress, as well as their claim for tax neutralization. And on plaintiffs’ claim
for attorney fees, the arbitrator awarded $582,860, approximately 27.5
percent of the $1,936,951 they had sought.2 Finally, on plaintiffs’ claim for
costs, she awarded $13,365, some 10 percent of the $127,249 claimed.
      As to the plaintiffs’ four other claims, the award specifically analyzed,
and rejected, their claim for fraud and deceit. Concerning the remaining
claims—trespass to real property, trespass to personal property, and
conversion—the arbitrator concluded there was “insufficient evidence
presented to sustain the stated causes of action. Moreover, at the close of the
evidentiary hearing, in accordance with the claims asserted in [plaintiffs’]
Closing Brief, these claims are no longer asserted and are therefore
DENIED.”
      Post-Award Proceedings
      On January 4, 2021, plaintiffs filed a petition to confirm the award.
      On February 19, Beckstoffer filed its response to the petition. That
same day it filed the pleading leading to the issue here, a motion to vacate

      Plaintiffs sought attorney fees of $768,470, plus a lodestar
      2

enhancement of $1,152,711, plus $15,770 paid to a prior attorney Paynter.

                                        5
the award. The motion to vacate asserted it was based on Code of Civil
Procedure sections 1281.9, 1283.4, 1286.2, subdivision (a)(2), 1286.2,
subdivision (a)(4), and 1286.2, subdivision (a)(6),3 and asserted three grounds,
only the first of which is pertinent here: (1) “the arbitrator failed to disclose
within the time required for disclosure a ground for disqualification of which
the arbitrator was aware, including without limitation matters that could
cause a person aware of the facts to reasonably entertain a doubt that the
arbitrator would be able to be impartial.”4
      The motion was accompanied by a lengthy memorandum of points and
authorities; a declaration of Beckstoffer attorney Kevin Block (that with its
attachments and exhibits comprised 318 pages); and a request for judicial
notice, requesting notice of nine documents. Mr. Block’s declaration was only
15 short paragraphs of testimony, almost all of which referred to various
exhibits pertaining to the arbitration. Most significantly, Beckstoffer’s
request for judicial notice included a request to put before the court some
specific records and pleadings from two cases filed in Los Angeles County,
including the following:
      (1) The corrected judgment entered on March 24, 2005 in the case of
Fassberg Construction Co. v. Housing Authority of City of Los Angeles
(Super. Ct. Los Angeles County, 2003, No. BC 290195), which case ultimately

      3 Hereafter, all undesignated statutory references are to the Code of
Civil Procedure.
      4The other grounds were that the arbitrator (1) “exceeded her powers
by arbitrarily remaking the parties’ contract and deciding a question that
was not before her and that the award cannot be corrected without affecting
the merits of the decision upon the controversy submitted” and (2) “failed to
decide a question submitted to her, the decision of which is necessary to a
determination of the controversy.”

                                        6
resulted in a published opinion in the Court of Appeal: Fassberg
Construction Co. v. Housing Authority of City of Los Angeles (2007)
152 Cal.App.4th 720 (the Housing Authority lawsuit); and
      (2) The second amended complaint filed in the 2008 case of Fidelity and
Deposit Company of Maryland v. Abraham Fassberg, et al (Super. Ct. Los
Angeles County, 2008, No. BC 389072) (the Fidelity lawsuit).
      Mr. Block’s declaration ended with these three paragraphs:
      “I was unaware of litigation involving Wendy Fassberg and Fassberg
Construction Company before I received Arbitrator Fassberg’s award. I
relied on the biographical information she provided to me via AAA and her
representation that it was accurate and complete. It was only after receiving
her award that I discovered the lawsuits described in defendant’s motion to
vacate. Had I known of the allegations against Fassberg beforehand, I would
not have agreed to her appointment as arbitrator.
      “In reviewing the docket of the Fidelity case, a copy of which is
attached to defendant’s request for judicial notice, I saw that it ended with a
voluntary dismissal by Fidelity after two years of hard-fought litigation. I
assumed that this reflected a settlement. To make sure, I called the lead
attorney for Fidelity in the Fassberg case, David Veis, who confirmed that the
case had settled. He did not have access to the settlement agreement, he
said, because his office was closed due to the pandemic, but he recalled that
the settlement agreement contained a confidentiality clause.
      “I asked Mr. Veis if, without revealing any of the terms of the
settlement, he could sign a declaration that the case had ended in a
confidential settlement. He said he felt comfortable doing so. I drafted a
declaration for him, a copy of which is attached to this declaration as
Exhibit X. When I sent it to him for review, however, he refused to sign,

                                       7
sending me the e-mail attached to this declaration as Exhibit Y. I then
contact[ed] the second chair in the case, David Lynch, who refused to sign the
declaration for the same reason as David Veis, as reflected in the e-mail
attached as Exhibit Z to this declaration.”
      Nowhere in Mr. Block’s declaration or, for that matter, anywhere else
in the record, is there any evidence as to how he or Beckstoffer learned of the
two cases—or when.
      The essence of Beckstoffer’s claim of non-disclosure by Fassberg begins
with the AAA’s providing a list of potential arbitrators that included Wendy
Fassberg, whose biography describes her history as a real estate and
construction attorney, specifically noting that she has been involved “on
multiple levels” with real estate and construction projects and involved in “all
manner of disputes.” As noted, following the AAA rules and procedures,
Fassberg was appointed, after which the parties received her arbitrator
disclosure form in which she denied any knowledge of matters that (i) might
cause a reasonable person to entertain doubts about her impartiality or (ii)
would otherwise lead her to believe that her disqualification would further
the interests of justice. And at the end of the form, she signed an arbitrator’s
oath that the biographical information provided to the parties is current,
accurate, and complete.
      This, Beckstoffer contends, was false in light of certain documents
referred to in its request for judicial notice, which documents contained
material that should have been disclosed, including the corrected judgment in
the Housing Authority lawsuit. That lawsuit—not incidentally, involving
Fassberg Construction, not Fassberg individually—began when the
construction company sued the Housing Authority for breach of contract. The
Housing Authority cross-complained for fraud, breach of contract, and breach

                                       8
of the implied covenant of good faith and fair dealing, alleging that Fassberg
Construction failed to complete work on numerous projects and submitted
fraudulent claims for payment. (See Fassberg Construction Co. v. Housing
Authority of City of Los Angeles, supra, 152 Cal.App.4th at pp. 730−731.)
And, Beckstoffer’s motion argued, the corrected judgment revealed that the
jury awarded the Housing Authority almost $4 million in compensatory and
punitive damages and penalties, which Fassberg was under a duty to
disclose.
      As to the second lawsuit, Beckstoffer’s motion to vacate argued that
Fassberg failed to disclose that between 2008 and 2010, she was a defendant
in the Fidelity lawsuit, an action filed against her and her husband by a
surety that had issued construction bonds on 13 construction projects for
which Fassberg Construction was the general contractor. Focusing on the
allegations in Fidelity’s verified second amended complaint, Beckstoffer
pointed out that Fidelity alleged that Fassberg submitted false financial
statements to induce Fidelity to issue the bonds, and breached contracts of
indemnity with Fidelity that she signed in her individual capacity to obtain
the bonds; and that once Fassberg Construction’s default became clear,
Fassberg fraudulently conveyed over $10 million in personal assets to an
offshore tax haven in order to place them beyond Fidelity’s reach.
      Fidelity sought a preliminary injunction in the lawsuit, in response to
which Fassberg submitted a lengthy declaration, described in detail below.
Suffice to say here that while Fassberg admitted she transferred some assets
overseas, she denied any intent to defraud her creditors, claiming that asset
transfers were motivated by an overseas investment strategy that she had
been considering since 2002, various personal issues, and a desire for
increased security for her assets after some $2 million was stolen from a

                                       9
personal bank account in the United States. We cannot tell from the register
of actions whether Fidelity’s request for injunction was granted or denied,
and Beckstoffer’s papers are silent on the issue. What we do know is that in
2010 the Fidelity case was resolved on the eve of trial by confidential
settlement.
      On February 9, plaintiffs filed their opposition to the motion to vacate,
and on February 19, Beckstoffer filed its reply, along with 10 pages of
objections to plaintiffs’ evidence.
      The motion to vacate came on for hearing on February 26, prior to
which the trial court had issued a tentative ruling denying the motion; and at
the conclusion of the hearing, the court took the matter under submission.
Later that day, the trial court filed its order denying the motion to vacate,
rejecting all three of Beckstoffer’s claims. It was a comprehensive nine-page
single-spaced order that, as pertinent to the issue here, rejected Beckstoffer’s
claim of failure to disclose. Citing to, and quoting extensively from,
Haworth v. Superior Court (2010) 50 Cal.4th 372 (Haworth), the trial court
saw no connection between the claimed dishonesty and Fassberg’s ability to
be impartial, going on to note that disclosure requirements are designed to
ensure lack of bias, not moral rectitude. The court added that, even if any
past misconduct were to raise doubts about Fassberg’s capacity for bias, there
was no evidence that any actual bias occurred in this case, rejecting as
“conjecture” Beckstoffer’s suggestions as to how Fassberg’s conduct as alleged
in the Fidelity lawsuit could distort her view of Beckstoffer’s alleged fraud
and bad faith, adding that the lawsuit ended in a settlement, meaning that
the allegations against Fassberg were “never proven.” Finally, the court
noted that the Fidelity lawsuit and the arbitration were “wholly unrelated”:
one a surety/fraudulent conveyance case, the other a lease dispute.

                                       10
      On March 1, plaintiffs refiled their petition to confirm the award.
Beckstoffer filed brief opposition, and plaintiffs a brief reply. On April 28, the
trial court entered judgment confirming the award, from which Beckstoffer
filed its appeal.
                                    DISCUSSION
      Introduction
      Beckstoffer makes one argument on appeal, that the award “should be
vacated for corruption under Code of Civil Procedure section 1286.2 based on
(1) the arbitrator’s failure to disclose serious and credible allegations of
dishonesty against her and (2) her active concealment of those allegations by
signing a false arbitration oath.” Beckstoffer argues that failure to disclose a
matter that must be disclosed constitutes “corruption” within the meaning of
section 1286.2 (O’Flaherty v. Belgum (2004) 115 Cal.App.4th 1044, 1104;
Michael v. Aetna Life (2001) 88 Cal.App.4th 925, 937), and requires that the
award be vacated. (Benjamin, Weill & Mazer v. Kors (2011) 195 Cal.App.4th
40, 73.)
      The trial court rejected the claim, which presents a mixed question of
fact and law, with our review de novo. (Haworth, supra, 50 Cal.4th at
pp. 384−385.) And that review leads us to reject the claim as well. It has no
merit.
      The Law of Arbitrator Disclosure
      Section 1281.9 requires a proposed arbitrator to disclose “all matters
that could cause a person aware of the facts to reasonably entertain a doubt
that the proposed neutral arbitrator would be able to be impartial.” (§1281.9,
subd. (a).) This is the same standard set forth in the California Judicial
Council Ethics Standards for Neutral Arbitrators (Ethics Standards),
compliance with which is mandatory. (§1281.85, subd. (a).) “An arbitrator’s

                                        11
duty to disclose arises under the same circumstances that give rise to a
judge’s duty to recuse, that is, if ‘[f]or any reason . . . [¶] . . . [¶] . . . [a] person
aware of the facts might reasonably entertain a doubt that the judge would
be able to be impartial.’ (§170.1, subd (a)(6)(A)(iii).” (Haworth, supra,
50 Cal.4th at pp. 388−389.)
       Disclosure standards are intended to (a) inform and protect the parties
to arbitration and (b) promote public confidence in the integrity of the
arbitration system. (Ethics Standards, Standard 1, subd. (a).) As another
Code of Ethics puts it, “Any doubt as to whether or not disclosure is to be
made should be resolved in favor of disclosure.” (American Bar Association
Code of Ethics for Arbitrators in Commercial Disputes, Canon II,
subsection D; AAA California Arbitrator Oath Form, page 1), which is
perhaps why we have heard it said that the guidance given to arbitrators is
“disclose, disclose, disclose.”
       Arbitrators are responsible for implementing the standards so as to
promote and protect public confidence. (Ethics Standards, Standard 1,
subd. (b).) Thus, some courts have noted that parties do not have an
obligation to discover information, even public information, about an
arbitrator that should have been disclosed. (Mt. Holyoke Homes, L.P. v. Jeffer
Mangels Butler & Mitchell, LLP (2013) 219 Cal.App.4th 1299, 1313 (Mount
Holyoke).) The obligation to make the required disclosure rests at all times
with the arbitrator. (Ibid.)
       The test to be applied for disclosure is an objective one, which “focuses
on a reasonable person’s perception of bias and does not require actual bias.”
(Mount Holyoke, supra, 219 Cal.App.4th at p. 1311) Put slightly differently,
the question is not a subjective question of whether the arbitrator was
actually biased, but whether an objective, reasonable person aware of the

                                            12
facts reasonably could entertain a doubt that he or she could be impartial in
the case. (Haworth, supra, 50 Cal.4th at pp. 385–386.)
      As Haworth went on to describe, “ ‘[t]he “reasonable person” ’ ” under
this test “is not someone who is ‘hypersensitive or unduly suspicious, but
rather is a “well-informed, thoughtful observer.” ’ [Citations.] ‘[T]he partisan
litigant emotionally involved in the controversy underlying the lawsuit is not
the disinterested objective observer whose doubts concerning the judge’s
impartiality provide the governing standard.’ [Citations.] [¶] ‘An impression
of possible bias in the arbitration context means that one could reasonably
form a belief that an arbitrator was biased for or against a party for a
particular reason.’ ” (Haworth, supra, 50 Cal.4th at p. 389.) In this context,
“ ‘[i]mpartiality’ entails the ‘absence of bias or prejudice in favor of, or
against, particular parties or classes of parties, as well as maintenance of an
open mind.’ ” (Ibid.) And, Haworth cautioned, a party raising the issue has a
heavy burden to “clearly” establish the appearance of bias: The “appearance-
of-partiality ‘standard “must not be so broadly construed that it becomes, in
effect, presumptive, so that recusal is mandated upon the merest
unsubstantiated suggestion of personal bias or prejudice.” ’ ” (Ibid.)
      Haworth involved the arbitration of a battery and medical malpractice
claim against a male doctor who performed cosmetic lip surgery on a female
patient. The arbitrator issued an award for the doctor. The arbitrator, a
retired judge, had been publicly censured 15 years before the arbitration for
misconduct that included making suggestive remarks to female staff
members, a fact not disclosed in his disclosure statement.
      Based on that, Haworth moved to vacate the award. The trial court
granted the motion, and the Court of Appeal denied the doctor’s petition for
mandamus. The Supreme Court reversed, holding that the award was not

                                         13
subject to vacation under section 1286.2, subdivision (a)(6)(A) because the
censure was not a matter that required disclosure under section 1281.9,
subdivision (a) and the Ethics Standards for neutral arbitrators. (Haworth,
supra, 50 Cal.4th at p. 377.) Doing so, the court rejected the argument that
the censure would cause a person to reasonably conclude the arbitrator might
be biased against a female plaintiff in a medical malpractice case involving
cosmetic surgery. (Id. at p. 389.) In particular, the court noted, the conduct
for which the former judge had been censured occurred some 15 years before
the subject arbitration and did not involve litigants or take place while court
was in session. The court also observed that the fact the former judge was
censured rather than removed from office reflected the Supreme Court’s view
that his conduct did not indicate he could not be fair to female litigants
generally. (Id. at p. 390.) And since possible inferences to be drawn from the
censured conduct could point either in favor of the female patient or in favor
of the male physician, the public censure “simply provides no reasonable
basis for a belief that [the former judge] would be inclined to favor one party
over the other in the present proceedings.” (Id. at p. 391.)
      Finally, the Supreme Court highlighted the importance of a subject
matter link between the current arbitration and the matter claimed to be
subject to disclosure, noting that “the subject matter of this arbitration was
not such that the circumstance of gender was material, or that gender
stereotyping was likely to enter into the decision made by the arbitrators.”
(Haworth, supra, 50 Cal.4th at p. 391.) “ ‘Judges, like all human beings, have
widely varying experiences and backgrounds. Except perhaps in extreme
circumstances, those not directly related to the case or the parties do not
disqualify them.’ [Citation.]” (Id. at p. 389.)

                                        14
      Applying those principles here leads to the conclusion that Fassberg
did not violate the rules of disclosure.
      Fassberg Had no Duty to Disclose the Documents in the Prior
      Lawsuits
      In claimed support of its one argument, Beckstoffer has three bold-
faced statements, the first of which is that “the allegations of fraud and bad
faith . . . are serious, credible, and bear directly on the dispositive issue in the
arbitration case.” We begin by noting that we agree with Beckstoffer that the
“allegations . . . are serious.” That they are “credible” was never determined.
And that they “bear directly on the dispositive issue” in the arbitration is
hardly apparent, as neither case has any relationship whatsoever to any of
the facts in the arbitration, no relation to any party to this action, and no
connection with any of the attorneys or law firms involved in it.
      As the trial court noted, what Beckstoffer refers to are “allegations,”
allegations made in the Fidelity lawsuit, a suit against Fassberg and her
husband that had five causes of action, including for specific performance,
breach of contract, indemnity, fraudulent transfer, and injunctive relief. As
noted above, in opposition to Fidelity’s request for a preliminary injunction,
Fassberg submitted a lengthy, nine-page declaration testifying at length the
reasons she claimed that led to the various transfers, the transfers
Beckstoffer claimed were fraudulent. Those reasons began in 2002 or 2003,
via a presentation to her and her husband about overseas investments. In
early 2003 Fassberg’s mother was diagnosed with cancer (she died in 2004);
later in 2003 Fassberg’s husband was diagnosed with leukemia. Then, in
mid-2004, a “devastating experience occurred”: their bank account was
“ravaged,” and “almost all of our funds—more than two million dollars were
stolen.” And so beginning in 2005, they began to fund the overseas trust. As
noted also above, while we do not know whether Fidelity’s request for

                                           15
injunction was granted or denied, we do know that in 2010 the Fidelity
lawsuit was settled. In short, there is much more to the allegations of
fraudulent transfer than Beckstoffer would have it.
      But Beckstoffer’s reliance on the Fidelity lawsuit pales in comparison
to its reliance on the corrected judgment in the Housing Authority lawsuit,
which judgment awarded the Housing Authority a total of $3,960,500 on its
cross-complaint following a jury verdict that the construction company
breached its construction contract by submitting 2,983 false claims. That
may have been the story in the trial court. It was not the end of the story.
      Both sides appealed and the Court of Appeal reversed in great part,
with most of its holding in favor of Fassberg Construction. These holdings
included that: (1) the evidence did not support the finding of 2,983 false
claims and did not establish a sufficient basis for the civil penalty; (2) the
evidence did not support the finding that the Housing Authority suffered
$455,000 in damages for false claims and did not support the treble damages
award; (3) the damages awarded for breach of contract were excessive; (4) the
award of compensatory damages for misrepresentation was not supported by
substantial evidence; and (5) the construction company was entitled to
recover retention proceeds. (Fassberg Construction Co. v. Housing Authority
of City of Los Angeles, supra, 152 Cal.App.4th at pp 768−769.)
      In short, the argument Beckstoffer attempted to put before the trial
court was based on a less than complete picture. Regardless, it does not
demonstrate that Fassberg had a duty to disclose what Beckstoffer claimed
she did. And Beckstoffer’s arguments to the contrary, however vigorous, are
unavailing.
      In claimed support of its position, Beckstoffer uses strong language to
describe Fassberg and her conduct. These three paragraphs are illustrative:

                                        16
      “In the eyes of a layperson, Fassberg’s guilt, if she feels any, may
predispose her to lash out and judge others’ actions more harshly than her
own, in an effort to minimize her own transgressions. A layperson may
reasonably conclude that if Fassberg believes she was wrongly accused, she
may be moved to inflict similar injustice on others.
      “Either way, a reasonable person could reasonably question whether
Fassberg has the objectivity to pass judgment on what the duty of commercial
good faith requires. [Beckstoffer] need not prove whether or how the Fidelity
trauma undermined Fassberg’s objectivity, only that there is reason to
question whether it did.
      “Fassberg may have concluded [Beckstoffer’s] witnesses were lying to
cover up [Beckstoffer’s] bad faith. Based on the Fidelity allegations, a
reasonable person could conclude that Fassberg perjured herself to evade her
indemnity obligations. A serial liar cannot judge impartially whether
someone else lied, because the liar’s judgment will inevitably be tainted by
her own dishonesty.”
      While “serial liar” may be an easy label to throw around, such label
appears belied by Fassberg’s experience as described by the AAA: “Thirty-six
years as a real estate, construction, commercial, and business litigator, as
well as a transactional practitioner in those specialties. Owned and operated
a property management company for many years and licensed real estate
broker for over 21 years. Arbitrated, mediated, as well as litigated countless
landlord/tenant matters. . . . Over the years, arbitrated and mediated
disputes involving owners, developers, contractors, subcontractors, and
design professionals, and have represented and served as in-house counsel for
several of them. Construction matters have involved all manner of disputes,
including those ranging from fundamental to complex construction defect

                                       17
claims, to delay claims, to breach of contract claims.” Fassberg’s background
also includes membership in no fewer than five Bar Associations, service on
numerous commissions and organizations, and the speaker/presenter on
numerous education panels.
      Beckstoffer also asserts a “reasonable person could also question
whether Fassberg was biased in favor of the underdogs”—or, as Beckstoffer
put it below, “the little guy.” Beckstoffer describes how the lawsuit by
Fidelity, “a large corporation,” threatened the existence of Fassberg’s family
construction company and the loss of personal wealth. And, so the argument
runs, Fassberg would have sympathy with plaintiffs on “an emotional level,”
awarding them compensation from a “wealthier defendant, regardless of the
merits.” Hardly.
      As described in detail above, most of plaintiffs’ claims were denied; the
damages awarded were significantly less than they sought; their requests for
attorney’s fees and costs were slashed; their request for tax neutralization
adjustment was refused; and their request for expert costs denied. If this is
evidence of bias in favor of the “little guy,” it comes in a novel guise.
      Indeed, as plaintiffs point out, a fair reading of the situation is that
Arbitrator Fassberg may have been biased in favor of someone sued for fraud
as she was, and against which allegations she fought a vigorous defense, just
as Beckstoffer fought hard against the allegations of fraud posed against it by
plaintiffs. Again Haworth is apt: Even if we accept, arguendo, that
allegations of dishonesty are sufficient to show a capacity for bias, there is no
evidence presented here from which “ ‘one could reasonably form a belief that
[the] arbitrator was biased for or against a party for a particular reason.’ ”
(Haworth, supra, 50 Cal.4th at p. 389.) The situation “simply provides no

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reasonable basis for a belief that [Fassberg] would be inclined to favor one
party over the other in the present proceedings.” (Id. at p. 391.)
      On top of all that, another factor mentioned in Haworth is applicable
here, the length of time some of the complained of conduct occurred. There it
was 15 years after the public censure that the arbitration occurred. Here, it
was 14 years from the corrected judgment in the Housing Authority lawsuit,
10 years from the second amended complaint in Fidelity.5
                                  DISPOSITION
      The judgment is affirmed. Renee Cazares and Jose Cazares shall
recover their costs on appeal.

      5Beckstoffer makes the somewhat novel argument that Fassberg’s
appointment was procured by “fraud,” apparently her non-disclosure of facts
that should have been disclosed. This appears to be just another way of
arguing what had to be disclosed, which we have rejected. Nothing more
need be said.

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                                   _________________________
                                   Richman, Acting P.J.

We concur:

_________________________
Stewart, J.

_________________________
Miller, J.

Cazares v. Beckstoffer Vineyards XX, LP (A163078)

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