Court Opinion

ID: 9919205
Source: CourtListenerOpinion
Date Created: 2024-01-17 18:02:52.686837+00
Date Added: 2024-06-11T08:06:10.325352
License: Public Domain

Filed 1/17/24 1600 Barberry Lane 8 v. Mikles CA4/1

                   NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for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.

                 COURT OF APPEAL, FOURTH APPELLATE DISTRICT

                                                       DIVISION ONE

                                              STATE OF CALIFORNIA

 1600 BARBERRY LANE 8, LLC et al.,                                            D081775

            Plaintiffs and Appellants,

            v.                                                                (Super. Ct. No. 37-2016-
                                                                              00019030-CU-BT-CTL)
 TODD A. MIKLES et al.,

            Defendants and Respondents.

          APPEAL from a judgment of the Superior Court of San Diego County,
Ronald F. Frazier, Judge. Affirmed.
          Catanzarite Law Corporation, Kenneth J. Catanzarite, and Tim James
O’Keefe for Plaintiffs and Appellants.
          Thomas E. Walling for Defendants and Respondents.

          Plaintiffs 1600 Barberry Lane 8, LLC and 1600 Barberry Lane 9, LLC
invested in real property managed by defendants Todd A. Mikles, Daymark
Residential Management, Inc., Daymark Properties Realty, Inc., and
Sovereign Capital Management Group, Inc. (SCMG). The plaintiffs brought
a putative class action against the defendants in San Diego Superior Court,
asserting claims for breach of fiduciary duty, fraud, and breach of contract.
After the lawsuit was filed, the parties stipulated to arbitrate the dispute.
The arbitrator dismissed the claims and awarded the defendants their
attorney’s fees and costs. Thereafter, the dismissal and attorney fee award
were confirmed by the trial court, and judgment was entered in favor of the
defendants.
      On appeal from the judgment, the plaintiffs assert the trial court erred
by granting the defendants’ petition to confirm the arbitration award for
several reasons. They contend the arbitrator exceeded his authority by
denying them leave to amend their claims. With respect to the attorney’s
fees awarded, the plaintiffs contend the arbitrator exceeded his authority by
awarding fees for services rendered by an out-of-state lawyer and for fees
unrelated to the arbitration. In addition, the plaintiffs argue that because
SCMG’s corporate powers were suspended at the time of the arbitration
decision, the arbitrator’s decision was voidable as to that entity. As we shall
explain, we reject each of these arguments and affirm the judgment.
              FACTUAL AND PROCEDURAL BACKGROUND
      In 2008, the plaintiffs acquired investment interests in a residential
apartment complex located in a suburb of Atlanta. The investments, as well
as other similar investments throughout the country, were promoted by
Grubb & Ellis Company (GEC), which required investors in the properties to
execute a Property Management Agreement (PMA) and a Tenant in Common
Agreement (TICA). The properties were managed by Daymark Residential
Management, Inc. (Daymark), which at the time was an affiliate of GEC.
      According to the plaintiffs’ complaint, in 2011, GEC sold Daymark to
Mikles. The following year, Mikles caused Daymark to hire Cottonwood
Residential O.P., L.P. (Cottonwood) to manage its portfolio of residential

                                       2
properties, including the Atlanta apartment complex in which the plaintiffs
invested. The plaintiffs allege Cottonwood paid Daymark and Mikles
$8 million, which they contend was a kickback, and that the terms of the
PMAs and TICAs allowed Cottonwood to collect fees and commissions in
excess of market rates.
      The plaintiffs initially filed the underlying lawsuit in June 2016,
alleging the transaction between Cottonwood and Daymark was not
adequately disclosed to investors and that the defendants breached fiduciary
duties they owed to the investors. In July 2017, the trial court entered a
stipulation and order to arbitrate the plaintiffs’ claims in accordance with the
arbitration provision in the PMA. That provision states:
      “Binding Arbitration. Any dispute, claim or controversy arising
      out of or related to this Agreement, the breach hereof, the
      termination, enforcement, interpretation or validity hereof,
      including the determination of the scope or applicability of this
      Agreement to arbitrate, shall be determined by arbitration in
      Orange County, California, in accordance with the rules of The
      American Arbitration Association, and judgment entered upon
      the award rendered may be enforced by appropriate judicial
      action pursuant to the California Code of Civil Procedures. The
      arbitration panel shall consist of one (1) member, which shall be
      the mediator if mediation has occurred or shall be a person
      agreed to by each party to the dispute within thirty (30) days
      following notice by one party that he desires that a matter be
      arbitrated. If there was no mediation and the parties are unable
      within such thirty (30) day period to agree upon an arbitrator,
      then the panel shall be one (1) arbitrator selected by the Orange
      County office of the American Arbitration Association which
      arbitrator shall be experienced in the area of real estate and who
      shall be knowledgeable with respect to the subject matter area of
      the dispute. The losing party shall bear any fees and expenses of
      the arbitrator, other tribunal fees and expenses, reasonable
      attorney’s fees of both parties, any costs of producing witnesses
      and any other reasonable costs and expenses incurred by him or
      the prevailing party or such costs shall be allocated by the

                                       3
      arbitrator. The arbitration panel shall render a decision within
      thirty (30) days following the close of presentation by the parties
      of their cases and any rebuttal. The parties shall agree within
      thirty (30) days following selection of the arbitrator to any
      prehearing procedures or further procedures necessary for the
      arbitration to proceed, including interrogatories or other
      discovery.

           BY EXECUTING THIS AGREEMENT YOU ARE
      AGREEING TO HAVE CERTAIN DISPUTES DECIDED BY
      NEUTRAL ARBITRATION AND YOU ARE GIVING UP ANY
      RIGHTS YOU MIGHT POSSESS TO HAVE SUCH DISPUTES
      LITIGATED IN A COURT OR JURY TRIAL. BY EXECUTING
      THIS AGREEMENT YOU ARE GIVING UP YOUR JUDICIAL
      RIGHTS TO DISCOVERY AND APPEAL. IF YOU REFUSE TO
      SUBMIT TO ARBITRATION AFTER AGREEING TO THIS
      PROVISION, YOU MAY BE COMPELLED TO ARBITRATE.
      YOUR AGREEMENT TO THIS ARBITRATION PROVISION IS
      VOLUNTARY.”

      After the trial court entered the stipulation to arbitrate, in August
2017, plaintiffs filed a demand to arbitrate and statement of claims with the
American Arbitration Association (AAA) to decide the claims in their civil
complaint. After an arbitrator was appointed, the defendants requested the
opportunity to file a dispositive motion. The arbitrator granted the request
and also provided the plaintiffs with the opportunity to amend their claim.
Thereafter, in December 2018, the defendants submitted a motion to dismiss
the plaintiffs’ amended statement of claims in accordance with the
arbitrator’s ruling.
      The arbitration was then stayed after defendants Daymark Residential
Management, Inc. and Daymark Properties Realty, Inc. filed for bankruptcy.
The proceedings resumed in 2021 after the finalization of a settlement
agreement in the bankruptcy proceeding. Once the arbitration resumed, the
parties submitted several additional briefs in support of their positions. In

                                       4
their briefing, the defendants raised the issue of collateral estoppel based on
an intervening decision of the Utah state court in a case brought by the

plaintiffs against Cottonwood while the arbitration was stayed.1 The
arbitrator then allowed the plaintiffs to address the issue in additional
supplemental briefing. In that brief, the plaintiffs asked the arbitrator to
allow an additional amendment to their claim.
      On February 9, 2022, the arbitrator issued an order dismissing the
plaintiffs’ claims. As an initial matter, the arbitrator found that under the
PMA’s terms, the dispute was governed by the “internal laws of the State
where the Property is located,” which was Georgia. The arbitrator also found
that under the PMA’s arbitration and venue provisions, “the arbitration itself
is procedurally governed by the rules of the American Arbitration

Association.”2
      With respect to the merits of the claims, the arbitrator found that the
Utah court’s decision that Cottonwood owed no fiduciary duty to the investors
to charge fees at or below market rates or to disclose whether the fees they
charged were above market rates was both correct and also barred the
plaintiffs’ claims under the doctrine of collateral estoppel. The arbitrator also
concluded that the failure to disclose the payment by Cottonwood to Daymark
to assume the management of the properties was not fraudulent. Thus, the

1     The trial court dismissed Cottonwood for lack of jurisdiction in this case
before the parties stipulated to arbitrate the dispute.

2     The agreement’s governing law and venue provision states: “This
Agreement shall be governed by and construed in accordance with the
internal laws of the State where the Property is located without regard to any
choice of law rules. Any action relating to or arising out of this Agreement
shall be subject to binding arbitration in Orange County, California, as
provided in Section 13.15.”
                                       5
arbitrator dismissed the fraud claim without leave to amend on grounds that
“it [did] not state facts sufficient to constitute a cause of action.” Finally, the
arbitrator concluded the breach of contract claim was properly dismissed in
the Utah case because the plaintiffs had failed to state a claim for breach of
contract, and was thus barred in the present action by the doctrine of
collateral estoppel.
      Thereafter, the defendants filed a motion for attorney’s fees and costs,
with supporting documentation for their request. The plaintiffs opposed the
request, arguing (1) all of the fees requested were excessive and that the
defendants had not shown the fees were actually paid, (2) the attorney’s fees
incurred to defend claims in the separate bankruptcy proceeding were not
recoverable under the arbitration agreement, and (3) the defendants were not
entitled to fees for the services of an attorney, Robert Sparks, who was not
licensed to practice law in California. The arbitrator agreed with plaintiffs
that the arbitration provision did not encompass attorney’s fees incurred in
connection with the bankruptcy proceeding and reduced the fee award
accordingly. The arbitrator rejected the plaintiffs’ other arguments. The
arbitrator awarded defendants $258,136 in attorney’s fees, $64,200 for
Spark’s consultation services, and costs of arbitration of $21,250.
      The parties then filed competing petitions in the Superior Court on the
arbitration award. The plaintiffs sought to vacate the award, or in the
alternative to correct the award to exclude fees awarded for Sparks’s services
and attorney’s fees not related to the arbitration. The plaintiffs argued the
arbitration award was voidable as to SCMG because it had forfeited its
corporate status and thus lacked capacity to contract. They also argued that
the arbitrator exceeded its authority under Code of Civil Procedure

                                         6
section 1286.2, subdivision (a)(4)3 by not allowing plaintiffs to amend their
claim, awarding fees for Sparks’s services, and by not excluding fees that did
not arise from the arbitration. The defendants filed a petition to confirm the
arbitration award, as well as a response to the plaintiffs’ petition. In their
response, the defendants argued the plaintiffs had provided no valid grounds
to vacate the arbitrator’s decisions.
      After a hearing on the competing petitions, the trial court denied the
plaintiffs’ petition to vacate or modify the arbitration award, rejecting each of
the plaintiffs’ arguments and continuing the hearing to consider the
defendants’ petition to confirm the arbitration award. After the additional
hearing, the court granted the petition to confirm and directed the
defendants to prepare a judgment for entry. The court entered judgment in
favor of the defendants and plaintiffs timely appealed.
                                 DISCUSSION
      On appeal, the plaintiffs make the same arguments that were rejected
by the trial court. The plaintiffs argue that the arbitrator exceeded its
powers in three ways: by not allowing them to amend their claims, by
awarding fees for Sparks’s services, and by including fees that were not
related to the arbitration. The defendants respond that these arguments lack
merit because none satisfy the narrow requirements that would allow a court
to upset the parties’ arbitration agreement.
      The plaintiffs also contend the trial court erred by failing to void the
arbitration award as to SCMG based on their assertion that the company’s
corporate powers were suspended by the California Secretary of State at the
time the award was confirmed. In response, the defendants argue the

3    Subsequent undesignated statutory references are to the Code of Civil
Procedure.
                                        7
plaintiffs waived this argument by failing to raise it in the arbitration
proceeding, and that the trial court correctly found that the plaintiffs had
failed to satisfy the requirements of the Revenue and Taxation Code sections
on which they base their argument.
                                        I
                                Legal Standards
      “The parties in this case submitted their dispute to an arbitrator
pursuant to their written agreement. This case thus involves private, or
nonjudicial, arbitration.” (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 8
(Moncharsh).) “In cases involving private arbitration, ‘[t]he scope of
arbitration is ... a matter of agreement between the parties’ [citation], and
‘ “[t]he powers of an arbitrator are limited and circumscribed by the
agreement or stipulation of submission.” ’ ” (Ibid.) “Title 9 of the Code of
Civil Procedure, as enacted and periodically amended by the Legislature,
represents a comprehensive statutory scheme regulating private arbitration
in this state. (§ 1280 et seq.) Through this detailed statutory scheme, the
Legislature has expressed a ‘strong public policy in favor of arbitration as a
speedy and relatively inexpensive means of dispute resolution.’ ”
(Moncharsh, at p. 9.)
      “Consequently, courts will ‘ “indulge every intendment to give effect to
such proceedings.” ’ [Citations.] Indeed, more than 70 years ago [the
California Supreme Court] explained: ‘The policy of the law in recognizing
arbitration agreements and in providing by statute for their enforcement is to
encourage persons who wish to avoid delays incident to a civil action to
obtain an adjustment of their differences by a tribunal of their own choosing.’
(Utah Const. Co. v. Western Pac. Ry. Co. (1916) 174 Cal. 156, 159.) ‘Typically,
those who enter into arbitration agreements expect that their dispute will be

                                        8
resolved without necessity for any contact with the courts.’ ” (Moncharsh,
supra, 3 Cal.4th at p. 9.)
      Because of the strong public policy in favor of arbitration, “arbitration
awards are generally subject to extremely narrow judicial review. Courts will
not review the merits of the controversy, the validity of the arbitrator’s
reasoning or the sufficiency of the evidence supporting the arbitrator’s
award.” (Hoso Foods, Inc. v. Columbus Club, Inc. (2010) 190 Cal.App.4th
881, 887 (Hoso).) “The arbitrator’s decision should be the end, not the
beginning, of the dispute. [Citation.] Expanding the availability of judicial
review of such decisions ‘would tend to deprive the parties to the arbitration
agreement of the very advantages the process is intended to produce.’ ”
(Moncharsh, supra, 3 Cal.4th at p. 10.)
      “ ‘When parties contract to resolve their disputes by private arbitration,
their agreement ordinarily contemplates that the arbitrator will have the
power to decide any question of contract interpretation, historical fact or
general law necessary, in the arbitrator’s understanding of the case, to reach
a decision. [Citations.] Inherent in that power is the possibility the
arbitrator may err in deciding some aspect of the case. Arbitrators do not
ordinarily exceed their contractually created powers simply by reaching an
erroneous conclusion on a contested issue of law or fact, and arbitral awards
may not ordinarily be vacated because of such error, for “ ‘[t]he arbitrator’s
resolution of these issues is what the parties bargained for in the arbitration
agreement.’ ” ’ ” (Hoso, supra, 190 Cal.App.4th at p. 887.) “Moreover,
consistent with the fundamental nature of the arbitration process, arbitrators
may apply both legal and equitable principles and, unless specifically
required to act in conformity with the rules of law, may act contrary to

                                        9
substantive law and base their decisions upon broad principles of justice and
equity.” (Ibid.)
      “Consistent with this limited role, a court may vacate an arbitral award
only on certain statutorily enumerated grounds. [Citation.] These are laid
out in the Code of Civil Procedure, and reflect not error in the merits of the
decision, but ‘ “circumstances involving serious problems with the award
itself, or with the fairness of the arbitration process.” ’ [Citation.] The
situations in which the code provides a basis for vacatur include when:
(1) the award fails to fully ‘determin[e] ... all the questions submitted to the
arbitrators[,] the decision of which is necessary in order to determine the
controversy’ (§ 1283.4; see M. B. Zaninovich, Inc. v. Teamster Farmworker
Local Union 946 (1978) 86 Cal.App.3d 410, 415); (2) ‘[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)); and (3) ‘[t]he rights of the party were substantially prejudiced
by the refusal of the arbitrators ... to hear evidence material to the
controversy … .’ (§ 1286.2, subd. (a)(5).)” (VVA-TWO, LLC v. Impact
Development Group LLC (2020) 48 Cal.App.5th 985, 998.)
      In addition, “[s]ection 1286.6 permits a trial court to correct an
arbitration award in three circumstances: ‘(a) There was an evident
miscalculation of figures or an evident mistake in the description of any
person, thing or property referred to in the award; [¶] (b) The arbitrators
exceeded their powers but the award may be corrected without affecting the
merits of the decision upon the controversy submitted; or [¶] (c) The award is
imperfect in a matter of form, not affecting the merits of the controversy.’ ”
(E-Commerce Lighting, Inc. v. E-Commerce Trade LLC (2022) 86 Cal.App.5th

                                        10
58, 63–64.) “Whether an arbitrator exceeded his authority is a question of
law we review de novo.” (Hoso, supra, 190 Cal.App.4th at p. 888.)
      Further, an appellant’s brief must “point out portions of the record that
support the position taken on appeal. The appellate court is not required to
search the record on its own seeking error.” (Del Real v. City of Riverside
(2002) 95 Cal.App.4th 761, 768; see City of Santa Maria v. Adam (2012) 211
Cal.App.4th 266, 286–287 [“to demonstrate error, an appellant must supply
the reviewing court with some cogent argument supported by legal analysis
and citation to the record”]; Cal. Rules of Court, rule 8.204(a)(1)(C).) In
addition, “[a]ppellate briefs must provide argument and legal authority for
the positions taken. ‘When an appellant fails to raise a point, or asserts it
but fails to support it with reasoned argument and citations to authority, we
treat the point as waived.’ ” (Nelson v. Avondale Homeowners Assn. (2009)
172 Cal.App.4th 857, 862.) “We are not bound to develop appellants’
arguments for them.” (In re Marriage of Falcone & Fyke (2008) 164
Cal.App.4th 814, 830.)
                                        II
                 The Arbitrator Did Not Exceed His Authority
      The plaintiffs assert the arbitrator exceeded his authority under
section 1286.2, subdivision (a)(4) in three ways. They argue the arbitrator
was required to provide them an opportunity to amend their claims before
dismissal; the arbitrator could not award attorney’s fees for the services of
Sparks; and the arbitrator mistakenly awarded attorney’s fees associated
with services that were not related to the arbitration that should have been
excluded. In addition to seeking reversal on the third ground, the plaintiffs
also seek a modification of the award under section 1286.6 to exclude what
they contend were the excessively-awarded fees.

                                       11
                                         A
              Denial of Plaintiff’s Request to Amend Their Claims
      The plaintiffs argue that the arbitrator exceeded his authority by
failing to allow them to amend their claims to add an allegation that the
defendants breached the PMA by charging management fees in excess of the
3% specified in that contract. Without further explanation, the plaintiffs
assert this decision exceeded the arbitrator’s powers under section 1286.2,
subdivision (a)(4) because it denied them a fair proceeding. In response, the
defendants contend the trial court correctly concluded that the arbitrator’s
decision not to allow an amendment was a legal determination within the
authority given to the arbitrator by the parties’ agreement. Specifically, they
assert that the arbitrator’s legal determination that the claims were barred
by the doctrine of collateral estoppel precluded the amendment the plaintiffs
now seek and falls within the scope of authority given to the arbitrator by the
parties’ agreement.
      As discussed, when parties agree to arbitrate their dispute, the role of
the courts is extremely limited. In addition, “[i]t is well-settled that a trial
court’s judgment is presumed correct and conclusory claims of error are
deemed to be without foundation and require no discussion by the reviewing
court. [Citation.] It is not our place to construct theories or arguments to
undermine the judgment and defeat the presumption of correctness. When
an appellant fails to raise a point, or asserts it but fails to support it with
reasoned argument and citations to authority, we treat the point as
forfeited.” (Delta Stewardship Council Cases (2020) 48 Cal.App.5th 1014,
1075 (Delta).)
      The plaintiffs assert they “were denied a fair hearing through the
Dismissal Order by being prevented from alleging valid claims.” They then

                                        12
refer to the Utah Court of Appeals decision on which the arbitrator based its
collateral estoppel decision and explain that they requested an amendment
but the arbitrator’s “analysis in the Dismissal Order does not discuss [their]
request to amend what was the initial complaint filed in 2016, prior to the
Utah Court of Appeal ruling, to allege that in fact the management fees
charged were greater than the 3% limit [contained in the PMA].” The
plaintiffs then state, without any legal support or further explanation that
“such an amended pleading would not be subject to collateral estoppel by the
August 22, 2019 Utah Court of Appeal decision.”
      These arguments are insufficient to overcome the strong public policy
in favor of finality of the arbitration proceeding agreed to by these parties.
Further, the plaintiffs’ arguments are devoid of any explanation as to how the
arbitrator’s decision to deny an amendment fell outside the scope of its
authority. Of particular note, the plaintiffs have not explained on what
authority an amendment would be required under the rules of the AAA,
which governed the proceedings under the parties’ agreement. This
shortcoming in the plaintiffs’ argument dooms its appeal on this issue. (See
Delta, supra, 48 Cal.App.5th at p. 1075 [“conclusory claims of error are
deemed to be without foundation and require no discussion by the reviewing
court”].)
      The plaintiffs also state, again without legal support or further
explanation, that because the arbitrator did not afford them a hearing on the
dismissal motion, they did not receive fair process. This argument is also not
sufficient to show that the arbitrator’s decision fell outside the purview of the
arbitrator’s authority under the parties’ agreement. The arbitrator was not
bound to follow the procedural requirements that apply in a judicial
proceeding and the plaintiffs have not supplied this court with AAA’s rules or

                                       13
asserted the arbitrator’s process did not follow the applicable rules. (See e.g.,
Schlessinger v. Rosenfeld, Meyer & Susman (1995) 40 Cal.App.4th 1096, 1108
[the “rules of civil procedure typically do not apply in arbitration
proceedings”].) In sum, the plaintiffs have failed to show the arbitrator acted
outside its authority, as required by section 1286.2, subdivision (a)(4), by
denying their request for an amendment.
                                        B
                 Award of Attorney’s Fees for Sparks’s Services
      The plaintiffs next ask this court to invalidate the attorney’s fees
awarded by the arbitrator to the defendants for the services of Sparks, who is
licensed to practice law in Nevada but not California. In essence, the
plaintiffs ask this court—as they did in the trial court—to reconsider the
arbitrator’s determination that the arbitration agreement allowed the
defendants to recover fees related to services rendered by an attorney not
licensed in this state. That is not the role of this court. As discussed, only
limited avenues of relief are available to challenge an arbitrator’s decision.
The determination of whether particular fees and costs are encompassed
within the parties’ agreement is an issue that is left to the discretion of the
arbitrator under that agreement. The parties’ agreement, as discussed,
required arbitration of “[a]ny dispute, claim or controversy arising out of or
related to” the PMA and required the losing party to pay the attorney’s fees
and “any other reasonable costs or expenses incurred” by the prevailing
party.
      The PMA contains two attorney’s fees provision governing the
arbitrator’s decision. The first, section 13.4 of the PMA, states: “Attorneys’
Fees. In any action or proceeding between Property Manager and the
Tenants in Common arising from or relating to this Agreement or the

                                       14
enforcement or interpretation hereof, the party prevailing in such action or
proceeding shall be entitled to recover from the other party all of its
reasonable attorneys’ fees and other costs and expenses of the action or
proceeding.” The second, contained within the PMA’s arbitration provision
(section 13.15, set forth in full in the factual and procedural background
section of this opinion) states: “The losing party shall bear any fees and
expenses of the arbitrator, other tribunal fees and expenses, reasonable
attorney’s fees of both parties, any costs of producing witnesses and any other
reasonable costs or expenses incurred by him or the prevailing party or such
costs shall be allocated by the arbitrator.”
      In his order on the defendants’ motion for attorney’s fees and costs, the
arbitrator concluded that the defendants were the only prevailing party, and
that under the arbitration provision they were entitled to all reasonable
attorney’s fees and costs related to the arbitration. The order explicitly
addressed the argument the plaintiffs now make with respect to Sparks,
finding that he was retained by the defendants’ California counsel, not by the
defendants themselves, to provide legal research and litigation advice to the
retained attorneys and that this did not constitute the unauthorized practice
of law in California. The arbitrator then ruled that the defendants were
entitled to the costs of those services.
      As the defendants argue, this court cannot revisit the determinations of
the arbitrator with respect to the fee award. The question of whether or not
the services rendered by Sparks were recoverable by the defendants falls
within the scope of the parties’ arbitration agreement, which granted the
arbitrator the authority to award fees and costs associated with the
arbitration proceeding. (See Gueyffier v. Ann Summers, Ltd. (2008) 43
Cal.4th 1179, 1182 [“Absent an express and unambiguous limitation in the

                                           15
contract or the submission to arbitration, an arbitrator has the authority to
find the facts, interpret the contract, and award any relief rationally related
to his or her factual findings and contractual interpretation.”].)
      The plaintiffs argue the arbitrator’s decision ignored Sparks’s
statements in his declaration that he “was counsel for” Mikles and SCMG,
which they assert shows he was retained directly by the defendants. The
plaintiffs, therefore, challenge the arbitrator’s conclusion that Sparks did not
directly represent the defendants and instead was retained by counsel to
assist with preparation for the arbitration proceeding. But this court cannot
revisit such factual findings. (See Olivera v. Modiano-Schneider, Inc. (1962)
205 Cal.App.2d 9, 14 [“Findings of arbitrators on questions of fact are final
and conclusive and are not subject to judicial review, except under certain
circumstances specified by statute ....”].) Rather, whether Sparks engaged in
the unauthorized practice of law and if his fees should be excluded as a result
were questions for the arbitrator. The arbitrator issued a reasoned decision
finding Sparks had not engaged in the unauthorized practice of law and that
his fees, except those not directly related to the arbitration, were recoverable.
Plaintiffs have not shown the arbitrator exceeded the scope of his authority
by rejecting their assertion that fees paid by the defendants for Sparks’s
services were not recoverable.
                                        C
      Attorney’s Fees Incurred Prior to the Commencement of Arbitration
      The plaintiffs also ask this court to revisit the arbitrator’s award of
attorney’s fees incurred prior to the plaintiffs’ August 23, 2017 arbitration
demand. They contend that because the arbitrator concluded the arbitration
provision’s fee clause “applie[d] only to the arbitration [and] not to the entire
dispute” and excluded fees related to the bankruptcy proceeding that stayed

                                       16
this case, any fees incurred before the precise date of the demand were not
recoverable and mistakenly awarded by the arbitrator. The defendants
respond that the arbitrator’s decision on which fees to award and exclude was
within the scope of authority granted to him by the parties’ arbitration
agreement, and that plaintiffs have provided this court with no basis to
revisit that decision. We agree with the defendants.
      As noted, the scope of fees and costs recoverable by the prevailing party
is an issue falling within the parties’ arbitration agreement. The clause
concerning attorney’s fees in the arbitration provision delegated this
determination to the arbitrator. The arbitrator reasonably determined that
fees incurred with respect to the bankruptcy claims were not recoverable, but
that fees incurred before the parties reached a stipulation to arbitrate were
within the terms of the arbitration agreement, which states “[t]he losing
party shall bear any fees and expenses of the arbitrator” and “other tribunal
fees and expenses” incurred by the prevailing party. (Italics added.)
      In addition, the plaintiffs have not shown—either by way of the
arbitrator’s decision or their own parsing of the defendants’ attorney’s fee
billing submissions to the arbitrator—that the fees were mistakenly included
in the award. Although the arbitrator’s fee award makes clear that it is
excluding work performed relating exclusively to the bankruptcy proceeding,
as the plaintiffs argued it should, the fee award is silent with respect to the
fees and costs that were incurred before the stipulation to arbitrate. It is
reasonable (and within the arbitrator’s authority) that the arbitrator
considered the defendants’ submissions and concluded that the work
performed prior to the stipulation was recoverable. Thus, we reject the
plaintiffs’ claim that the fees for services that occurred prior to the
arbitration demand were mistakenly awarded.

                                        17
                                       III
          Revenue & Taxation Code Section 23304.1, Subdivision (a)
      The plaintiffs’ final argument on appeal is that the arbitration award,
with respect to SCMG, should be deemed voidable because SCMG forfeited its
privileges as a California corporation in 2020 by failing to pay tax obligations.
The defendants respond that the plaintiffs waived the argument by failing to
raise it during the arbitration. Additionally, the defendants assert the trial
court correctly found the plaintiffs had not presented sufficient evidence to
show SCMG was a forfeited corporation. Finally, the defendants argue the
plaintiffs cannot invalidate the arbitration decision under this provision
because, as the trial court found, they did not satisfy Revenue and Taxation
Code section 23304.5, which requires a party to a contract that is voidable
under section 23304.1, subdivision (a) to bring a lawsuit to invalidate the
contract and to provide the company with “a reasonable opportunity to cure
the voidability....” (Rev. & Tax. Code, § 23304.5.)
      The plaintiffs argue the contract became voidable on December 1, 2020
when SCMG’s corporate privileges were forfeited. However, the plaintiffs do
not dispute that they did not raise the issue of SCMG’s corporate status in
the arbitration proceeding, and that the arbitrator issued the dismissal
decision over a year after the alleged forfeiture of privileges. Citing a
certificate issued by the California Secretary of State, the plaintiffs assert
that “SCMG’s privileges to conduct business in California was forfeited by the
California Franchise Tax Board” on December 1, 2020 and that the entity
was forfeited on May 25, 2022. However, the arbitrator issued the dismissal
decision in February 2022 and the attorney fee award in March 2022, well
after the company’s privileges were allegedly forfeited. The plaintiffs’ failure
to assert the argument in the arbitration prevents our judicial intervention

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now. (See Color-Vue, Inc. v. Abrams (1996) 44 Cal.App.4th 1599, 1602, 1604
[“Because a corporation’s failure to pay its franchise taxes results in a lack of
capacity to sue or defend, not a lack of standing,” the defense “ ‘must be
raised by [the opposing party] at the earliest opportunity or it is waived....
The proper time to raise a plea in abatement is in the original answer or by
demurrer at the time of the answer. [Citation.] It is a technical objection and
must be pleaded specifically.’ ”].)
      Even if the plaintiffs had not waived the issue, we would still reject the
argument on the merits. If, as plaintiffs argue, SCMG’s forfeiture triggered
the application of Revenue and Taxation Code section 23304.1,
subdivision (a) in this situation, the plaintiffs have not shown the trial court
erred by finding the plaintiffs had not satisfied Revenue and Taxation Code
section 23304.5, a requisite to obtaining the right to void a contract under
Revenue and Taxation Code section 23304.1, subdivision (a).
      Revenue and Taxation Code section 23304.1, subdivision (a) provides
that “[e]very contract made in this state by a taxpayer during the time that
the taxpayer’s powers, rights, and privileges are suspended or forfeited
pursuant to Section 23301, 23301.5, or 23775 shall, subject to Section
23304.5, be voidable at the request of any party to the contract other than the
taxpayer.” Revenue and Taxation Code section 23304.5, in turn, states: “A
party that has the right to declare a contract to be voidable pursuant to
Section 23304.1 may exercise that right only in a lawsuit brought by either
party with respect to the contract in a court of competent jurisdiction and the
rights of the parties to the contract shall not be affected by Section 23304.1
except to the extent expressly provided by a final judgment of the court,
which judgment shall not be issued unless the taxpayer is allowed a

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reasonable opportunity to cure the voidability under Section 23305.1.” (Italics
added.)
      Plaintiffs presented no evidence in the trial court showing these
requirements were satisfied. Rather, the record shows the plaintiffs asserted
the issue only in this litigation, and did not provide any opportunity for
SCMG to cure the forfeiture. Accordingly, we agree with the defendants that
the trial court did not err by finding the provision inapplicable here.
                                DISPOSITION
      The judgment is affirmed. The costs of appeal are awarded to
Respondents.

                                                            McCONNELL, P. J.

WE CONCUR:

O’ROURKE, J.

IRION, J.

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