Court Opinion

ID: 6354381
Source: CourtListenerOpinion
Date Created: 2022-06-24 20:01:59.501664+00
Date Added: 2024-06-11T09:13:30.249828
License: Public Domain

Filed 6/24/22 Choe v. Pressed Down CA2/8
   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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has not been certified for publication or ordered published for purposes of rule 8.1115.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 EIGHT

 CHUL LIM CHOE et al.,                                               B313970

           Plaintiffs and Appellants,                                Los Angeles County
                                                                     Super. Ct. No. 21STCP00191
           v.

 PRESSED DOWN, LLC, et al.,

           Defendants and Respondents.

     APPEAL from a judgment of the Superior Court of
Los Angeles County, Mark V. Mooney, Judge. Affirmed.

      The Wagner Firm, Avi Wagner and Charissa Morningstar
for Plaintiffs and Appellants.

     Jamison Empting Cronin, Kevin D. Jamison, Erin N.
Empting, and Justin F. Cronin for Defendants and Respondents.

                                    ____________________
       Chul Lim Choe and Protech Minerals, Inc. appeal from a
judgment confirming an arbitration award. They contend a
remedial provision exceeds the arbitrator’s powers and ask us to
vacate or to correct it. We affirm.
                                   I
       The arbitration spanned 10 days and involved hundreds of
exhibits, most of which are absent from the appellate record.
Following our Supreme Court’s lead, we draw from the
arbitrator’s final award in outlining the parties’ dispute, and we
take the arbitrator’s findings as correct. (See Advanced Micro
Devices, Inc. v. Intel Corp. (1994) 9 Cal.4th 362, 367, fn. 1
(Advanced).) Because this appeal mainly attacks one paragraph
of the 45-page final award, we focus on facts relating to the
disputed paragraph.
       Choe ran a family-owned minerals processing business
called Protech Minerals, Inc. We refer to this entity and Choe
together as Seller.
       In 2016, Choe embarked on selling the business to Michael
Mattox and Mattox’s new company, Protech Minerals, LLC. We
refer to the buying parties as Buyer.
       There were multiple related contracts between the parties,
including separate agreements concerning business operations
and the sale of real property.
       The current dispute concerns the sale of various business
assets of Protech Minerals, Inc. in exchange for, among other
things, a $3.2 million promissory note and an equity interest in
the new company. As the arbitrator explained, “The essence of
the dispute is whether certain assets were included in the
transaction, or whether the assets at issue were to be part of a
second sale and escrow.”

                                2
       The documents providing for the sale are the Asset
Purchase Agreement (the Agreement) and the First Addendum to
this agreement (the Addendum). The two documents bear the
same date: June 23, 2016.
       Choe signed the transaction documents for Seller. He
stayed on for a while to “manage the business” for the new
company. In the first half of 2017, he loaned the company
$311,625 through three promissory notes. The notes say they are
“given in exchange for a loan made solely for a commercial
business purpose.”
       This appeal concerns these postclosing notes and a hotly
contested business asset: the mining claims. The parties also
call these “placer mining claims,” “placer claims,” “surface mining
claims,” and “BLM Claims.” (“BLM” stands for Bureau of Land
Management.) Buyer explained that “[a] placer mine is an un-
deeded and unpatented mine on federal lands, from which a
miner has a right to extract minerals located on the surface.”
The mines at issue are located in Inyo and Kern counties.
       According to Buyer, Protech Minerals, Inc. alone operated
the placer mines; the mines were crucial to the business; claims
to these mines need to be renewed annually or else they lapse;
and individual “locators” hold interests in the mining claims.
       The Addendum identifies the relevant mining claims and
locators’ names.
       Seller maintained it did not convey the mining claims
under the Agreement and Addendum. Rather, Seller argued, the
parties entered into a separate verbal agreement whereby Choe’s
company would convey the claims in a second escrow in exchange
for a tax savings exceeding $1 million.

                                 3
       Buyer maintained it bought the mining claims in full in the
original transaction; it knew the mines were crucial to the
operation of the business, and they were crucial to the deal.
According to Buyer, Choe represented he controlled all of the
placer mines and the claimants, who were all family members.
Further, the Agreement obligates Seller to cooperate to obtain
the approval of third parties after closing, if this became
necessary. Seller shirked this obligation, Buyer argued, and then
continued to renew the bargained-for mining claims, preventing
their transfer to Seller.
       Buyer made an arbitration demand alleging breach of
contract, breach of the implied covenant of good faith and fair
dealing, and various torts by Seller. Buyer sought declaratory
and injunctive relief, actual and punitive damages, and specific
performance. Seller counterclaimed, alleging financial elder
abuse and other causes of action.
       The arbitrator sided with Buyer on the key issue—the
mining claims. In his October 2020 final award, the arbitrator
rejected the second escrow theory and found Seller intended to
convey all of the mining claims and these claims were included in
the sale. The arbitrator also found Choe had engaged in “over
the top” conduct that kept the bargained-for mining claims out of
Buyer’s reach. In passing, the arbitrator noted Choe’s relatives’
claims were “sham claims.”
       On the key issue, the arbitrator denied damages but
granted Buyer injunctive relief and specific performance of the
Agreement and Addendum. The injunctive relief portion of the
award spanned six pages. Seller challenges one part of this
relief—paragraph 22—which reads:
       22. Protech Minerals Inc. and Choe are restrained
       from taking any action to collect upon any of the

                                4
       obligations owed by any of the Claimants or any
       guarantee of any obligation owed by any of the
       Claimants, including without limitation any of the
       notes executed in connection with the closing of the
       Asset Purchase Agreement or any of the three
       promissory notes executed by Protech Minerals LLC
       post-closing and payable to Choe, until such time as
       one of the following occur:
       a.    Protech Minerals Inc. delivers to Protech
             Minerals LLC quitclaim deeds for Tecopa #2, 3,
             4, 10 and 11, the Tecopa Millsite and the White
             Point No. 3 Claims; and the BLM LR 2000
             system shows that the Tecopa #1, 2, 3, 4, 10,
             and 11, the Tecopa Millsite and the White
             Point No. 3 Claims are held solely in the name
             of Protech Minerals LLC;
       b.    The BLM LR 2000 system shows that the
             Tecopa #2, 3, 4, 10 and 11, the Tecopa Millsite
             and the White Point No. 3 Claims are closed on
             all areas covered by the aforementioned claims
             that are open to mining claim location, with no
             intervening claims of Protech Minerals, Inc.,
             Choe, any directly or indirectly related party,
             or anyone claiming by or through them (or any
             of them); . . .
       Condensed for clarity, paragraph 22 bars Seller from
collecting on notes (including the three postclosing promissory
notes) until the relevant government database shows the
disputed mining claims either are held solely by Protech
Minerals, LLC or are closed altogether. Or as Buyer phrases it,
the provision stays enforcement of the notes until Seller conveys
the mining claims as agreed or allows them to lapse.
       Seller challenged this part of the award as exceeding the
arbitrator’s powers and petitioned the trial court to vacate or to
correct it. Buyer cross-petitioned to confirm the award.

                                 5
       The trial court denied Seller’s petition, granted Buyer’s,
and entered judgment in accord with the award.
                                  II
       Seller argues the injunctive relief in paragraph 22 exceeds
the arbitrator’s authority in two ways. First, it improperly
requires nonparties to forfeit their interests in the mining claims
before Seller may collect on debts owed by Buyer, even though
the locators were not parties to the underlying transaction or the
arbitration and did not agree to arbitrate their claims. Second,
the provision reaches promissory notes that are unrelated to the
contract and are beyond the arbitration’s scope.
       We reject both arguments and explain why in the next two
sections. But first we provide some legal background.
       Arbitration is a matter of contract. The parties’ agreement
delineates the arbitrator’s powers. (Advanced, supra, 9 Cal.4th
at p. 375.) Parties may move to vacate or correct awards that
exceed these powers. (Ibid.; Code Civ. Proc., §§ 1286.2, subd.
(a)(4) & 1286.6, subd. (b).) Awards that decide an unsubmitted
issue or provide an unauthorized remedy are subject to this
attack. (Advanced, at p. 375.)
       We independently review the trial court’s decision
regarding arbitrator overreach. But we accord substantial
deference to arbitrators’ determinations of their authority,
including their authority to fashion remedies, and we resolve
doubts in their favor. (Roehl v. Ritchie (2007) 147 Cal.App.4th
338, 347–348; Advanced, supra, 9 Cal.4th at p. 376.) We
generally do not review the merits of the dispute, the sufficiency
of the evidence, or the arbitrator’s reasoning; nor may we review
the award for factual or legal error. (Roehl, at p. 347.) The
principle of arbitral finality and the practical demands of picking

                                 6
an appropriate remedy demand such deference. (Advanced, at p.
376.)
                                   A
       The arbitrator did not exceed his powers by awarding
injunctive relief that may affect the interests of nonparty
locators.
       The parties’ contract required them to arbitrate any
dispute relating to the Agreement or its breach. It empowered
the arbitrator “to enter injunctive and other relief.” Similarly,
the JAMS arbitration rules adopted by the agreement provide for
such relief.
       The disputed injunction enjoins Seller from collecting on
various notes until such time as Seller fully tenders the mining
claims or enables them to close. It does not enjoin the locators. It
does not require them to do anything or prevent them from doing
anything. Even Seller can comply by doing nothing—by simply
allowing the claims to lapse. Only Seller bears the consequence
of noncompliance with the injunction.
       The parties submitted to the arbitrator the key issues of
whether Seller represented it had the authority to convey the
mining claims and whether it agreed to convey them in full in the
Agreement and Addendum. The arbitrator found for Buyer on
these issues. Seller would have us delve into the merits and
overturn these findings, something we may not do. (See Gueyffier
v. Ann Summers, Ltd. (2008) 43 Cal.4th 1179, 1186 (Gueyffier)
[“it was for the arbitrator to find the facts, not for the superior
court or this court”]; Moncharsh v. Heily & Blase (1992) 3 Cal.4th
1, 28 [arbitrators act within their powers in resolving all
contested issues of law and fact presented and do not exceed their
powers by erring].)

                                 7
       The same is true of Seller’s claim the arbitrator
inappropriately labeled the locators’ interests “sham” interests:
we cannot overturn this descriptor as erroneous.
       Seller’s position in the arbitration undermines its current
concern for nonparty locators’ interests. Seller tendered the issue
of its authority to sell the mining claims because it argued these
claims were part of a supposed second escrow whereby Choe
would convey them to Buyer in a “later separate deal” for
additional consideration. Buyer repeatedly emphasizes this point
on appeal, but Seller does not answer it. Seller’s refusal to
engage the issue is telling.
       Seller’s claim of arbitrator overreach is simply a claim the
arbitrator was wrong in adopting Buyer’s view of the contract
and the events surrounding its execution. We may not review
such a claim. (See Moore v. First Bank of San Luis Obispo (2000)
22 Cal.4th 782, 787 [“Having submitted the fees issue to
arbitration, plaintiffs cannot maintain the arbitrators exceeded
their powers . . . by deciding it, even if they decided it
incorrectly.”]; VVA-TWO LLC v. Impact Development Group, LLC
(2020) 48 Cal.App.5th 985, 1005 [“Courts must defer to an
arbitrator’s assessment of the merits—here, the interpretation
and enforcement of the [contracts].”].)
       Paragraph 22 of the award seeks to compel performance of
the parties’ bargain: the complete transfer of the mining claims.
This was a central issue, if not the central issue, of the
arbitration.
       This case is not like Comedy Club, Inc. v. Improv West
Associates (9th Cir. 2009) 553 F.3d 1277, where the arbitrator
exceeded his authority by enjoining nonparty “Affiliates”—
defined broadly to reach “collateral relatives” such as former

                                 8
spouses and grandparents of company principals—from opening
or operating other comedy clubs in the United States. (Id. at pp.
1282–1283, 1286–1288.) The injunction here enjoins only Seller.
                                   B
       The arbitrator similarly did not exceed his powers by
imposing injunctive relief implicating promissory notes that
postdate the Agreement and Addendum.
       Arbitrators have leeway in fashioning remedies to address
the harm flowing from a party’s breach of contract. (Advanced,
supra, 9 Cal.4th at pp. 374, 386.) They may draw on their
“flexibility, creativity and sense of fairness” and order relief
beyond what the contract contemplates and beyond what a court
could award, provided the contract does not forbid such relief.
(Id. at pp. 374, 376, 382, 384, 386; see also id. at p. 374 [“Passage
of time and changed circumstances may have rendered any
remedies suggested by the contract insufficient or excessive.”].)
       California courts simply require the remedy be rationally
related to the parties’ contract and to the breach. A link to “a
plausible theory of the contract’s general subject matter,
framework or intent” can suffice. (Advanced, supra, 9 Cal.4th at
p. 381.) The required link to the breach is met where the award
aims to compensate for or alleviate the effects of the breach. (Id.
at p. 381, fn. 12.)
       We accord deference to the arbitrator’s choice of remedy, as
the arbitrator is better positioned than we are to decide what
relief is just and fair under the circumstances. (Advanced, supra,
9 Cal.4th at pp. 374–375, 383; see also Taylor v. Van-Catlin
Construction (2005) 130 Cal.App.4th 1061, 1066 [court may not
vacate or correct award merely because it disagrees with

                                  9
arbitrator’s chosen remedy].) “In close cases the arbitrator’s
decision must stand.” (Advanced, at p. 381.)
       Here, the Agreement permitted the arbitrator to award
injunctive relief. It imposed no limits on this “inherently flexible”
remedy. (See Advanced, supra, 9 Cal.4th at p. 390.)
       Seller asserts it did not seek relief on the postclosing notes,
the award otherwise does not concern these notes, the notes do
not mention the Agreement or the Addendum and vice versa, and
the notes do not contain an arbitration clause. While all of this
may be true, Seller submitted the postclosing notes into evidence
as part of the arbitration and incorporated them into its case.
The notes are tied to the apparent intent of the parties’
transaction—to enable Buyer to assume Seller’s mining business.
The Agreement required cooperation between the parties
postclosing. The notes themselves evidence a continuing
relationship between the parties to enable continued operation of
the business.
       The arbitrator found Choe had frustrated the contract and
further found his postclosing conduct was “over the top”: Choe
continued to submit placer claims with the relevant entities,
refused to have his relatives cooperate in signing over their
claims, and interfered with the mining activities of Protech
Minerals, LLC by posting no trespassing signs, intimidating its
workers, and secreting equipment that was part of the
transaction.
       The arbitrator concluded specific performance, not
damages, was the way to make Buyer whole. But due to the
aggravated nature of Choe’s breach and persistent interference,
the arbitrator sensibly concluded something more was needed to
make Seller fulfill its contractual obligations and to act promptly.

                                 10
Tying collection on the notes to Seller’s contractual performance
was the “something more” the arbitrator decided was necessary.
It raised the stakes for Seller and averted intransigence. This
creative tool restored Buyer’s benefit of the bargain and
prevented further damage from Seller’s breach and Choe’s
continued meddling.
       Buyer’s arbitration demand claimed Seller knew Buyer was
relying on the successful operation of the business to generate
distributions to pay its obligations yet embarked on a scheme to
frustrate the continued operation of the business, including by
pursuing mining rights it had agreed to transfer. The arbitrator
did not exceed his authority in believing Buyer.
       The arbitrator did not reach beyond the parties’ submission
to adjudicate the postclosing notes. The notes only come into play
should Seller fail to comply with the award by performing the
contract. As mentioned, Seller can perform by doing nothing.
       Including the notes as part of the injunctive relief awarded
Buyer was sensible and equitable. This relief rationally relates
to the underlying transaction and to the effect of Seller’s breach.
       “Absent an express and unambiguous limitation in the
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.” (Gueyffier, supra, 43 Cal.4th at p.
1182.) The arbitrator acted within his authority here.

                                11
                       DISPOSITION
     We affirm the judgment and award costs to the
respondents.

                                       WILEY, J.

We concur:

             STRATTON, P. J.

             GRIMES, J.

                               12