Court Opinion

ID: 9943591
Source: CourtListenerOpinion
Date Created: 2024-02-23 21:02:58.433961+00
Date Added: 2024-06-11T13:47:24.593247
License: Public Domain

Filed 2/23/24 Kapur v. Superior Court CA2/1
   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                         SECOND APPELLATE DISTRICT

                                        DIVISION ONE

 RAHUL KAPUR et al.,                                                  B324023

           Petitioners,                                               (Los Angeles County
                                                                      Super. Ct. No. 19SMCV02112)
           v.

 THE SUPERIOR COURT OF
 LOS ANGELES COUNTY,

           Respondent;

 EDWARD D. PAN et al.,

           Real Parties in Interest.

     ORIGINAL PROCEEDINGS in mandate.
Mark H. Epstein, Judge. Petition denied.
     Law Offices of Harold J. Light, Harold J. Light and
Bruce A. Gilbert for Petitioners.
     No appearance for Respondent.
      Haight Brown & Bonesteel and Arezoo Jamshidi for
Real Parties in Interest.
                  ____________________________
       Rahul Kapur and Gretchen Kapur (the Kapurs) appeal
from the trial court’s denial of their petition to vacate an
arbitration award in favor of respondents Edward D. Pan and
Leonie Pan (the Pans). The Kapurs contended the arbitrator
showed bias when, on the eve of the deadline for the Pans to
request attorney fees, the arbitrator informed the parties that the
memorandum of costs the Pans filed was not the proper method
to seek fees, and directed them instead to file a noticed fees
motion. The trial court rejected the Kapurs’ claim of arbitrator
bias.
       An order denying a petition to vacate an arbitration award
is not appealable; to avoid unnecessary delay, however, we
construe this purported appeal as a petition for a writ of mandate
and address the merits. We hold the Kapurs have failed to put
forth evidence from which a reasonable person might believe the
arbitrator was biased against them. Accordingly, we deny their
writ petition.

                        BACKGROUND
      The arbitration at issue concerned the Kapurs’ claims for
breach of contract and fraud arising from the Pans’ selling them a
home.
      On July 28, 2021, in advance of the arbitration, the
arbitrator issued an order stating, inter alia, “The Arbitrator’s
decision shall be in writing setting forth Arbitrator’s findings of
fact and conclusions of law. Where applicable, attorneys’ fees are

                                    2
to be sought by separate motion and costs by Memorandum of
Costs after an Interim Award is issued.”
       The arbitration took place over four days from August 10 to
August 13, 2021. On February 28, 2022, the arbitrator issued an
interim award finding in favor of the Pans on all claims. The
award stated, “This Interim Award is binding and is intended to
address all issues in dispute even if not expressly discussed
herein, except as to the determination of an award of expenses to
[the Pans], to the extent allowable. Any claim for expenses,
attorney’s fees and costs shall be made within 15 days of service
of this Interim Award. If a claim for expenses is submitted, any
opposition shall be submitted within 10 days following service of
the claim for expenses. Any reply shall be submitted within 5
days of service of the opposition. If no claim for expenses is
timely made, this Interim Award shall be issued as the Final
Award of the Arbitrator.”
       On March 14, 2022, the Pans’ counsel sent an e-mail to the
arbitrator and the Kapurs’ counsel attaching a cost memorandum
that included $252,282 in attorney fees.
       Approximately five hours later, a case manager from the
arbitration services provider sent an e-mail to all counsel (case
manager’s e-mail). Because the case manager’s e-mail is central
to the Kapurs’ arguments on appeal, we quote it at length.
       The e-mail stated, “The Arbitrator [h]as advised me to
inform the parties as follows: [¶] ‘Absent agreement by the
parties for an award of attorney fees, an arbitrator has no power
under California state rules to award attorney fees in arbitration
proceedings. The statutory default in arbitrations is that each
party must bear his or her own fees and expenses and share the
costs of the arbitration. (CCP § 1284.2; Thompson v. Jespersen

                                   3
(1990) 222 Cal.App.3d 964, 967–968.) Where the parties’
agreement authorizes an award of fees and costs to either party,
it is properly enforced by the arbitrator. (See Civil Code § 1717.)
[¶] Here, the Interim Award provides that any claim for
attorneys’ fees and costs is required to be made within 15 days
following issuance of the Interim Award. The Arbitrator is in
receipt of a Memorandum of Costs. Given the law above, the
party seeking fees and costs bears the burden of establishing a
legal right to fees and costs and must make the request pursuant
to a notice[d] motion. A memorandum of costs, which allows the
Court to enter costs on a judgment, does not have the same
procedural effect in Arbitration. Additionally, the inclusion of
attorneys’ fees in the memorandum of costs is only allowed where
the statutory or contractual amount is fixed. Otherwise, a
noticed motion is required. [¶] Please proceed accordingly.’ ”
(Boldface omitted.)
       On March 15, 2022, the Pans submitted a notice of motion
and motion for attorney fees and costs. The Kapurs opposed,
arguing, inter alia, the case manager’s e-mail constituted legal
advice to the Pans, and therefore demonstrated bias on the part
of the arbitrator.
       On April 12, 2022, the arbitrator issued a ruling awarding
the Pans $252,282 in fees and $55,231.15 as costs. Responding to
the Kapurs’ claim of bias, the ruling stated that in the Interim
Award, “[t]he Arbitrator did not specify that fees and costs would
need to be sought by noticed motion. Upon receipt of the
Memorandum of Costs from [the Pans’] counsel, and in order to
clarify the ambiguity in the Interim Arbitration Award, the
Arbitrator provided procedural information regarding [the Pans’]
burden of proof and need to file a noticed motion, not just a

                                    4
memorandum of costs. [¶] Legal advice was not provided. Only
procedural information regarding the inapplicability of a
memorandum of costs only for seeking fees and costs in
arbitration.”
      On April 27, 2022, the arbitrator issued the final award.
On June 8, 2022, the Kapurs filed a petition in the trial court to
vacate the award, again asserting the case manager’s e-mail
demonstrated the arbitrator’s bias.
      The trial court issued a written tentative ruling denying
the petition to vacate. The court disagreed that the case
manager’s e-mail constituted legal advice or otherwise
demonstrated bias. “The arbitrator was merely setting forth the
proper way by which a fee award could be sought, as the
arbitrator later clarified.” Following argument the court adopted
the tentative “as amplified by the comments on the record today”
as the order of the court.
      Notice of the trial court’s order was filed on August 19,
2022. The Kapurs filed a notice of appeal from the order on
October 7, 2022.

                       APPEALABILITY
       A denial of a motion to vacate an arbitration award is not
an appealable order—rather, “[r]eview of an order denying a
petition to vacate may only be had upon appeal from
the judgment of confirmation or by writ of mandate.” (Ahdout v.
Hekmatjah (2013) 213 Cal.App.4th 21, 30; see Mid-Wilshire
Associates v. O’Leary (1992) 7 Cal.App.4th 1450, 1454.) Here, the
trial court has neither confirmed the arbitration award nor
entered judgment in favor of the Pans.
       The Kapurs urge us nonetheless to treat the trial court’s
order denying their motion to vacate as an order confirming the

                                   5
award. The Kapurs claim the Pans have been dilatory in seeking
confirmation of the award, the implication being that it is the
Pans that have prevented the Kapurs from obtaining a final
ruling from which to appeal.1
      The Kapurs could have resolved this procedural quandary
below, despite any purported delay by the Pans. Code of Civil
Procedure2 section 1285 provides, “Any party to an arbitration in
which an award has been made may petition the court to confirm,
correct or vacate the award.” Section 1286, in turn, provides, “If
a petition or response under this chapter is duly served and filed,
the court shall confirm the award as made, . . . unless in
accordance with this chapter it corrects the award and confirms it
as corrected, vacates the award or dismisses the proceedings.”
Section 1287.4 then directs that “[i]f an award is confirmed,
judgment shall be entered in conformity therewith.”
      The significance of section 1286 is that “ ‘once a petition to
confirm, correct, or vacate is filed, the superior court has only

      1  At the time the Kapurs filed their notice of appeal, the
Pans had not yet petitioned the trial court to confirm the award.
Eleven months later, after the Kapurs had filed their opening
brief, the Pans filed a petition to confirm. On October 13, 2023,
the trial court denied the Pans’ petition without prejudice “as the
Court is not confident that it has jurisdiction.” The trial court
stated that if it had jurisdiction, “the petition would be granted.”
On our own motion, we take judicial notice of the Pans’ petition
and the minute order, although they do not affect our holdings
either as to appealability or to the merits of the Kapurs’
challenges to the trial court’s ruling. (Evid. Code, §§ 452,
subd. (d), 459.)
      2Undesignated statutory citations are to the Code of Civil
Procedure.

                                    6
four choices: It may (1) confirm the award , (2) correct the award
and confirm it as corrected, (3) vacate the award, or (4) dismiss
the proceedings.’ [Citation.]” (Law Offices of David S. Karton v.
Segreto (2009) 176 Cal.App.4th 1, 8 [David S. Karton].) “ ‘Upon a
petition seeking any of those results,’ ” therefore, “ ‘the
court must confirm the award, unless it either vacates or corrects
it. [Citation.]’ [Citation.]” (Ibid.)
       Section 1286 ensures that when the trial court denies a
petition to vacate, the petitioner is not stuck in procedural limbo,
unable to appeal because the prevailing party has yet to seek
confirmation of the award and final judgment. (See David S.
Karton, supra, 176 Cal.App.4th at p. 9.) This is because, upon
denying the petition to vacate, the trial court “ ‘must confirm the
award.’ ” (Id. at p. 8.) The Kapurs could have asked the trial
court, having denied their motion to vacate, to confirm the award
and enter judgment so the Kapurs could take their appeal.
       That said, it would cause unnecessary delay and burden on
the parties, the trial court, and this court to dismiss this appeal,
when the inevitable and legally mandated outcome will be for the
trial court to confirm the award and enter judgment, after which
the Kapurs would refile their appeal. We therefore grant the
Kapurs’ alternative request to treat their appeal as a petition for
a writ of mandate, and address their arguments on the merits.
(See Olson v. Cory (1983) 35 Cal.3d 390, 401 [“To dismiss the
appeal rather than exercising our power to reach the merits
through a mandate proceeding would, under the unusual
circumstances before us, be ‘ “unnecessarily dilatory and
circuitous.” ’ ”].)

                                    7
                          DISCUSSION

A.    Governing Law
       When “an arbitrator has issued an award, the decision is
ordinarily final and thus ‘is not ordinarily reviewable for error by
either the trial or appellate courts.’ [Citation.]” (Sheppard,
Mullin, Richter & Hampton, LLP v. J-M Manufacturing Co., Inc.
(2018) 6 Cal.5th 59, 72.) This is so “ ‘whether or not such error
appears on the face of the award and causes substantial injustice
to the parties.’ ” (SingerLewak LLP v. Gantman (2015)
241 Cal.App.4th 610, 616, quoting Moncharsh v. Heily & Blase
(1992) 3 Cal.4th 1, 6 (Moncharsh).) The reason for this rule is
that “parties who enter into arbitration agreements are
presumed to know the arbitrator’s decision will be final and
binding; ‘arbitral finality is a core component of the parties’
agreement to submit to arbitration.’ [Citation.]” (SingerLewak,
at p. 616, quoting Moncharsh, at p. 10.)
       The Code of Civil Procedure specifies grounds upon which
the trial court may vacate an arbitration award despite the
general rule of finality. (See § 1286.2, subd. (a).) The Kapurs
sought to vacate the award under section 1286.2,
subdivision (a)(1)–3, which apply when “[t]he award was
procured by corruption, fraud or other undue means,” “[t]here
was corruption in any of the arbitrators,” or “[t]he rights of the
party were substantially prejudiced by misconduct of a neutral
arbitrator.”
       “On appeal, we review de novo a trial court’s decision on
undisputed facts to confirm, correct or vacate an arbitration
award.” (Taska v. The RealReal, Inc. (2022) 85 Cal.App.5th 1, 9.)
Like the trial court, “we may not ‘ “review the merits of the
dispute, the sufficiency of the evidence, or the arbitrator’s

                                    8
reasoning, nor may we correct or review an award because of an
arbitrator’s legal or factual error, even if it appears on the
award’s face. Instead, we restrict our review to whether the
award should be vacated under the grounds listed in
section 1286.2.” ’ [Citation.]” (State Farm Mutual Automobile
Ins. Co. v. Robinson (2022) 76 Cal.App.5th 276, 282.)

B.    The Kapurs Fail To Demonstrate the Arbitrator
      Was Corrupt or Biased
       The Kapurs contend that the case manager’s e-mail, which
“explain[ed] the legal reasons why the Cost Memorandum was
not sufficient to allow an award of attorney’s fees,” then
“instruct[ed] counsel for the Pans to ‘proceed accordingly’ ”
“constitute[d] legal advice” to the Pans. The Kapurs contend this
demonstrates “manifest bias on the part of the Arbitrator
favoring the Pans for the corrupt purpose of ensuring that the
day before the deadline to request an award of attorney’s fees,
counsel for the Pans did not fail to file a required motion for those
fees.” The Kapurs argue the arbitrator’s misconduct prejudiced
them because “had the Pans failed to submit a timely fee motion,
they would have been unable to collect any of the attorney’s fees
they sought to recover from the Kapurs.” “[I]nstead of standing
back and letting the cards fall where they may, the Arbitrator . . .
acted as the Pans’ benefactor, in defiance of the Kapurs’ right to
have a neutral arbitrator, and contrary to the Arbitrator’s official
duty of impartiality and fairness.”
       The Kapurs contend the arbitrator’s bias is made yet
clearer by the arbitrator’s response to the Kapur’s challenge to
the fees award, in which the arbitrator stated the case manager’s
e-mail was intended not as legal advice, but to “clarify the
ambiguity in the Interim Arbitration Award” as to how the Pans

                                     9
were to request fees. The Kapurs argue there was no ambiguity,
because the Interim Award was clear, and the July 28, 2021
pre-arbitrator order expressly stated that “attorneys’ fees are to
be sought by separate motion and costs by Memorandum of Costs
after an Interim Award is issued.” The Kapurs further note the
case manager’s e-mail made no reference to any ambiguity in the
interim award. The Kapurs thus argue the arbitrator’s
explanation that he was clarifying an ambiguity mischaracterizes
the record, and “unquestionably further evidences arbitrator
corruption.”
      The Kapurs additionally argue the arbitrator demonstrated
bias by ruling against them on all of their claims “despite the
clear and irrefutable evidence and law supporting certain of those
positions.” The Kapurs contend, “Especially in light of [the
arbitrator’s] later actions” described above, the arbitrator’s
rulings against their claims “without any doubt evidenced an
impression of possible (if not actual) bias in respect to this
matter.”
      “ ‘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 v. Superior Court (2010) 50 Cal.4th 372, 389.)
Reviewing the matter de novo, we agree with the trial court that
there is no evidence upon which a reasonable person might
believe the arbitrator was corrupt or biased in favor of the Pans.
Through the case manager’s e-mail, the arbitrator was in essence
issuing a tentative decision denying the cost memorandum on
procedural grounds and allowing the Pans to submit a new fee
request under the proper procedures. (See Holloway v. Quetel
(2015) 242 Cal.App.4th 1425, 1434 [courts “routinely” “clearly

                                  10
identify[ ] the defects or omissions in the moving party’s papers”
in tentative rulings].) This is no different than if the arbitrator
had denied the cost memorandum as procedurally improper, then
granted a continuance for the Pans to submit a proper motion,
actions that are fully within the powers of a court or arbitrator
and that no reasonable person would conclude suggested bias.
      Indeed, in the absence of limitations in the arbitration
agreement itself, arbitrators have greater flexibility when it
comes to procedure than trial courts do. (See Sanchez v. Western
Pizza Enterprises, Inc. (2009) 172 Cal.App.4th 154, 177 (Sanchez)
[arbitrators have “broad discretion with respect to the procedures
and law governing the arbitration,” except to the extent “the
parties otherwise agree”]; Moncharsh, supra, 3 Cal.4th at p. 11
[“ The arbitrators are not bound to award on principles of dry
law, but may decide on principles of equity and good conscience,
and make their award ex aequo et bono [according to what is just
and good].’ ”].)
      The Kapurs’ contend that “had the Pans failed to submit a
timely fee motion, they would have been unable to collect any of
the attorney’s fees they sought,” but fail to cite any authority
suggesting the deadline set by the arbitrator was jurisdictional or
otherwise unchangeable. Again, had the arbitrator denied the
cost memorandum on procedural grounds after expiration of the
deadline, the arbitrator would have been within his authority to
grant the Pans more time to submit a proper fees motion. (See
Sanchez, supra, 172 Cal.App.4th at p. 177.)
      We reject the Kapurs’ argument that the arbitrator
mischaracterized the record by stating that the case manager’s
e-mail was just clarifying an ambiguity in the interim award, and
the mischaracterization evidences the arbitrator’s bias. The

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Kapurs cite no authority that misstating the record is evidence of
bias as opposed to simple error. Regardless, there was no
mischaracterization here. The interim award nowhere suggested
the Pans should request fees and costs through two different
methods, but instead referred to “[a]ny claim for expenses,
attorney’s fees and costs,” which arguably suggests all could be
sought via a single “claim.” Although the pre-arbitration order
stated that fees should be sought by noticed motion whereas costs
could be obtained through a memorandum, the arbitrator issued
that order seven months before issuing the interim award, and
the order’s language arguably was in tension with the interim
award’s language suggesting all fees and costs could be combined
in a single claim. The arbitrator’s conclusion that the interim
award was ambiguous as to the method of requesting fees and
costs is a fair reading of the record.
       We also reject the Kapurs’ contention that the arbitrator’s
rulings against their breach of contract and fraud claims are
further evidence of bias. “When making a ruling, a judge
interprets the evidence, weighs credibility, and makes findings.
In doing so, the judge necessarily makes and expresses
determinations in favor of and against parties. How could it be
otherwise? We will not hold that every statement a judge makes
to explain his or her reasons for ruling against a party constitutes
evidence of judicial bias.” (Moulton Niguel Water Dist. v.
Colombo (2003) 111 Cal.App.4th 1210, 1219.) This reasoning
applies equally to arbitrators. Given our conclusion the case
manager’s e-mail and the arbitrator’s subsequent explanation of
that e-mail do not establish bias or an appearance of bias, we
have no basis to examine the arbitrator’s merits rulings.

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       The Court of Appeal in David S. Karton, upon concluding
there was no basis to correct or vacate the award, directed the
trial court on remand to confirm the award. (See David S.
Karton, supra, 176 Cal.App.4th at p. 10.) We requested
supplemental briefing from the parties as to whether we should
do the same, assuming we upheld the denial of the Kapurs’
petition to vacate. The Pans urge us to do so. The Kapurs
concede we have the authority to do so. Because we conclude the
trial court properly denied the Kapurs’ petition to vacate the
award, we direct the trial court to confirm the award and enter
judgment in favor of the Pans. (§§ 1286, 1287.4; David S. Karton,
at p. 10.)

                        DISPOSITION
      The petition for a writ of mandate is denied. The matter is
remanded with directions for the trial court to enter an order
confirming the arbitration award and to enter judgment in
conformity therewith. The Pans are awarded their costs in this
proceeding.
      NOT TO BE PUBLISHED.

                                          BENDIX, J.

We concur:

      ROTHSCHILD, P. J.                   WEINGART, J.

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