Judge: Anne Richardson, Case: 23STCP02479, Date: 2024-03-20 Tentative Ruling

Case Number: 23STCP02479    Hearing Date: March 20, 2024    Dept: 40

Superior Court of California

County of Los Angeles

Department 40

I. Background

A. Petition to Confirm Arbitration Award

On July 17, 2023, Petitioner Swift Financial LLC, as Servicing Agent for WebBank (Swift Financial) filed a petition to confirm a contractual arbitration award as against Defendants Respondents Passu, Inc., d/b/a Dims (Passu Inc.), Eugene Kim, and Does 1 to 10 inclusive.

The arbitration award of $85,244.16 in Swift Financial’s favor was made on April 13, 2023, by arbitrator Brent O.E. Clinkscale of the American Arbitration Association, related to the breach of a business loan agreement, and is attached to Swift Financial’s petition.

The petition prays for confirmation of the award, judgment according to the award, interest at the statutory rate, costs according to proof, attorneys’ fees according to proof, and prejudgment interest from April 13, 2023, to the date of judgment.

B. Relevant Procedural History

On July 24, 2023, the Court set a status conference regarding the petition to confirm arbitration award for August 23, 2023.

On July 25, 2023, Swift Financial filed a notice of motion and motion on petition to confirm arbitration award, setting a hearing for September 27, 2023.

On August 23, 2023, the Court held a status conference, at which the Court noted the upcoming hearing on the petition to confirm arbitration award, and Plaintiff’s counsel noted attempts at serving Passu Inc. and Eugene Kim in this matter, with the possibility of a continuance if service of the petition could not be effected before the September 27, 2023, hearing.

On September 27, 2023, the Court continued the hearing on Swift Financial’s petition to December 5, 2023.

On October 4, 2023, Swift Financial filed a declaration of due diligence relating to efforts to locate Passu Inc. and Eugene Kim for service.

On October 26, 2023, Swift Financial filed an application for an order permitting service on Passu Inc. through service on the California Secretary of State.

On October 27, 2023, Swift Financial filed an application for service by publication in relation to Eugene Kim.

On November 16, 2023, Judge Mark E. Windham signed an order for publication.

On November 20, 2023, Swift Financial served notice of the Court’s continuance of the hearing on Swift Financial’s petition to December 5, 2023.

On December 5, 2023, the Court continued the hearing on Swift Financial’s petition to March 20, 2023.

That same day, the Court signed an order permitting service on Passu Inc. through the California Secretary of State.

On December 7, 2023, Swift Financial filed a proof of service showing the December 5, 2023, service of the petition and other documents on the Secretary of State.

On January 16, 2023, Swift Financial filed a proof of publication for service by publication on Eugene Kim between December 13, 2023, and January 3, 2024, in the Los Angeles, California-based Metropolitan News-Enterprise.

No opposition or cross-petition appears in the court record.

Swift Financial’s petition is now before the Court.

II. Petition to Confirm Arbitration Award: GRANTED.

A. Legal Standard

“Any party to an arbitration in which an award has been made may petition the court to confirm, correct or vacate the award.” (Code Civ. Proc., § 1285.)

“A proceeding under th[e] [Arbitration title of the Code of Civil Procedure] in the courts of this State [i.e., pursuant to Code Civ. Proc., §§ 1280-1294.4] is commenced by filing a petition. Any person named as a respondent in a petition may file a response thereto. The allegations of a petition are deemed to be admitted by a respondent duly served therewith unless a response is duly served and filed. The allegations of a response are deemed controverted or avoided.” (Code Civ. Proc., § 1290.)

The petition must: “(a) [s]et forth the substance of or have attached a copy of the agreement to arbitrate unless the petitioner denies the existence of such an agreement”; “(b) [s]et forth the names of the arbitrators” and “(c) [s]et forth or have attached a copy of the award and the written opinion of the arbitrators, if any.” (Code Civ. Proc., § 1285.4.) The petition must also “name as respondents all parties to the arbitration and may name as respondents any other persons bound by the arbitration award.” (Code Civ. Proc., § 1285.) A petition to confirm an award must be served and filed within four years after the date the petitioner was served with a signed copy of the award. (Code Civ. Proc., § 1288.)

If a petition or response requesting confirmation is duly filed and served, the court must confirm, correct and confirm, or vacates the award or dismiss the proceeding. (Code Civ. Proc., § 1286; see Horn v. Gurewitz (1968) 261 Cal.App.2d 255, 258; Pacific Law Group U.S.A. v. Gibson (1992) 6 Cal.App.4th 577, 580; Cooper v. Lavely & Singer Professional Corp. (2014) 230 Cal.App.4th 1, 10.)

“The court may not vacate an award unless … [¶] [a] petition or response requesting that the award be vacated has been duly served or filed ….” (Code Civ. Proc., § 1286.4, subd. (a).)  A response seeking to correct and confirm or vacate an arbitration award must be served and filed within ten days of service of a petition to confirm that same arbitration award, unless the timeframe is extended by agreement of the parties or “for good cause, by order of the court.” Thus, a court may not vacate an award pursuant to a petition for that relief that was not duly served or filed. (See Oaktree Capital Mgmt., L.P. v. Bernard (2010) 182 Cal.App.4th 60, 64 [a response served out of the ten-day window has not been “duly served” as required for relief by Code Civ. Proc., § 1286.4].)

Statutes set forth specific grounds upon which an arbitrator’s award may be vacated. (See Code Civ. Proc., § 1286.2.) Except on these grounds, arbitration awards are immune from judicial review in proceedings to challenge or enforce the award. (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 12-13 (Moncharsh).) Thus, courts will not review the sufficiency of the evidence to support the award. (Morris v. Zuckerman (1968) 69 Cal.2d 686, 691.) Nor will courts pass upon the validity of the arbitrator’s reasoning. (Ibid.) The court simply may not substitute its judgment for that of the arbitrator. (Ibid.) Further, errors of fact or law committed by the arbitrator, no matter how egregious, are not grounds for challenging the arbitrator’s award under California law. (Moncharsh, supra, at p. 11.)

“If an [arbitration] award is confirmed, judgment shall be entered in conformity therewith. The judgment so entered has the same force and effect as and is subject to all the provisions of law relating to, a judgment in a civil action of the same jurisdictional classification; and it may be enforced like any other judgment of the court in which it is entered, in an action of the same jurisdictional classification.” (Code Civ. Proc., § 1287.4.)

B. Analysis

1. Procedural Requirements

Here, Swift Financial’s Petition satisfies the procedural requirements for a petition to confirm an arbitration award.

The Petition (1) attaches a copy of the loan agreement executed by WebBank’s President and Eugene Kim as owner of Passu Inc. and guarantor on the loan, which contains the relevant arbitration clause (Petition, Attach. 4(b), § 7(b)), (2) sets forth the name of the arbitrator, Brent O. E. Clinksale (American Arbitration Association) (Petition, § 6), and (3) attaches a copy of the arbitration award (Petition, Attach. 8(c)). (Code Civ. Proc., § 1285.4.)

Swift Financial’s petition also names as respondents Passu Inc., Eugene Kim, and Does 1 to 10. (Code Civ. Proc., § 1285; see Petition, § 1.)

Last, Swift Financial’s petition was served and filed within four years after the date the petitioner was served with a signed copy of the award. (Code Civ. Proc., § 1288; see Petition, p. 1 [filed Jul. 7, 2023] & Attach. 8(c) [Apr. 13, 2023, Award]; 12/7/23 Proof of Service; 1/16/24 Proof of Publication.)

2. Substantive Discussion

Here, service of the petition has been effected on Passu Inc. and Eugene Kim. (12/7/23 Proof of Service; 1/16/24 Proof of Publication.) Yet, the record fails to reflect that Passu Inc. or Eugene Kim filed a petition to vacate the arbitration award in favor of Swift Financial within 10 days of service. Swift Financial’s petition is thus unopposed.

For the sake of completeness, the Court notes that a review of the relevant loan agreement and the arbitration award shows that the requested relief here—confirmation of the award, judgment according to the award, interest at the statutory rate, costs according to proof, attorneys’ fees according to proof, and prejudgment interest from April 13, 2023, to the date of judgment—is proper, though the Court makes a note below relating to fees.

The loan agreement executed by WebBank’s President and Eugene Kim as owner of Passu Inc. and guarantor on the loan contains an arbitration clause providing that upon default upon the relevant loan agreement, if WebBank prevailed in an action between the parties for that default, WebBank was entitled to attorneys’ fees and court costs. (Petition, Attach. 4(b), § 7(b).) Here, Swift Financial stands as servicing agent for WebBank. (Petition, § 1.)

The arbitrator determined: “Claimant is the prevailing party and is awarded $79,419.16 in damages jointly and severally against Respondents. Claimant is also awarded $1,800.00 in attorney’s fees jointly and severally against Respondents, jointly and severally, pursuant to the loan agreement. The administrative fees of the American Arbitration Association totaling $1,925.00, and the compensation of the arbitrator totaling $2,100.00 shall be borne by Respondents, jointly and severally. Therefore, Respondents, jointly and severally, shall reimburse Claimant the sum of $4,025.00, representing that portion of said fees in excess of the apportioned costs previously incurred and paid by Claimant.” (Petition, Attach. 8(c); cf. Petition, § 10 [seeking confirmation of the arbitration award, which includes a specific award of attorneys’ fees and administrator costs].)

Based on the above, the Court determines that a confirmation of the award of $85,244.16 is proper, as is a judgment relating thereto, to include costs and attorneys’ fees (where the arbitration award already includes fees for the arbitration proceedings), and pre- and post-judgment interest at the applicable rates. 

III. Conclusion

Petitioner Swift Financial, LLC’s Petition to Confirm Arbitration Award is GRANTED with the caveat that any additional request for fees shall not include any of the fees granted herein.

Petitioner Swift Financial, LLC to file a proposed judgment, as well as a memorandum of costs and motion for fees.