Judge: Colin Leis, Case: 20GDCV01085, Date: 2022-08-09 Tentative Ruling

Case Number: 20GDCV01085    Hearing Date: August 9, 2022    Dept: 3

SUPERIOR COURT OF CALIFORNIA

COUNTY OF LOS ANGELES – NORTHEAST DISTRICT

DEPARTMENT 3

MOVING PARTY:                Petitioner Hillcrest Main Street Associates, L.P.

RESPONDING PARTY:       Respondent Fitness International, LLC

Petition to Confirm Contractual Arbitration Award

The court considered the moving papers, opposition, and reply filed in connection with this motion.

BACKGROUND

            On December 14, 2020, Hillcrest Main Street Associates, L.P. (“Hillcrest”) filed a complaint for unlawful detainer against Fitness International, LLC (“Fitness”) for non-payment of rent (Case No. 20GDCV01082). Also on December 14, 2020, Fitness filed a complaint for breach of written contract against Hillcrest (Case No. 20GDCV01085). Fitness operates health clubs and fitness centers and leased commercial property from Hillcrest for that purpose. Fitness alleges that Hillcrest breached the lease agreement by demanding payment of rent during the pandemic-related closure of Fitness’s gym. The two actions were consolidated on March 8, 2021. On April 23, 2021, the court issued an order staying the case and compelling arbitration of the entire action pursuant to an arbitration provision in the lease agreement. (Gooch Decl., ¶ 2, Ex. A.) The unlawful detainer complaint had been voluntarily dismissed by Hillcrest on April 16, 2021.

            On May 20, 2021, the parties commenced arbitration proceedings by filing a copy of Fitness’s complaint with the American Arbitration Association. On November 17, 2021, Hillcrest filed counterclaims against Fitness. Arbitration hearings were held on February 28, 2022, and March 2, 2022, before arbitrator Rebecca Callahan. (Gooch Decl., ¶ 10.) On April 18, 2022, the arbitrator issued an interim arbitration award in favor of Hillcrest. On June 28, 2022, the arbitrator issued a final award in favor of Hillcrest and awarding Hillcrest $502,543.59 in damages and $311,835 in attorney’s fees. (Gooch Decl., ¶ 12, Ex. C.)

Hillcrest now moves to confirm the final award.

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. The petition shall 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 under this chapter shall: (a) Set 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) Set forth the names of the arbitrators. (c) Set forth or have attached a copy of the award and the written opinion of the arbitrators, if any.” (Code Civ. Proc., § 1285.4.) “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 proceeding.” (Code Civ. Proc., § 1286.) Any response to the petition is required to be filed and served within 10 days after service of the petition. (Code Civ. Proc., § 1290.6.)

A response to a petition to confirm an arbitration award may request the court to dismiss the petition or to confirm, correct, or vacate the award. (Code Civ. Proc., § 1285.2.) The specific grounds upon which an arbitrator’s award may be vacated are set forth in Code of Civil Procedure section 1286.2, subdivision (a). Arbitration awards are otherwise immune from judicial review in proceedings to challenge or enforce the award. (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 11.) “Neither the merits of the controversy ... nor the sufficiency of the evidence to support the arbitrator's award are matters for judicial review.” (Morris v. Zuckerman (1968) 69 Cal.2d 686, 691.)

DISCUSSION

The court finds that Hillcrest has established that the procedural requirements have been met. In response, Fitness argues that the arbitrator exceeded her authority by making an award of attorney’s fees to Hillcrest arising from the unlawful detainer action and, therefore, that the award should be corrected to remove those fees from the final award. (Code Civ. Proc., § 1286.6, subd. (b).)

“Arbitrators ‘exceed[] their powers’ by acting without subject matter jurisdiction, deciding an issue that was not submitted to arbitration, arbitrarily remaking the contract, upholding an illegal contract, issuing an award that violates a well-defined public policy or a statutory right, fashioning a remedy that is not rationally related to the contract, or selecting a remedy not authorized by law.” (Greenspan v. LADT, LLC (2010) 185 Cal.App.4th 1413, 1436 [internal citations omitted].)

The arbitration provision in the lease agreement excepts from arbitration unlawful detainer actions. (Gooch Decl., ¶ 2, Ex. A, p. 43.) And so in awarding attorney’s fees incurred by Hillcrest in the unlawful detainer action, the arbitrator exceeded her powers and decided an issue that was not submitted to arbitration. In order to award Hillcrest the unlawful detainer attorney’s fees, the arbitrator necessarily had to decide that Hillcrest was the prevailing party in the unlawful detainer action. But the unlawful detainer action was never submitted to arbitration and thus issues relating to the unlawful detainer action were outside the arbitrator’s jurisdiction. Fitness also argues that the arbitrator erroneously concluded that Hillcrest was the prevailing party in the unlawful detainer action, but “[i]t is well settled that ‘arbitrators do not exceed their powers merely because they assign an erroneous reason for their decision.’” (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 28.)

Hillcrest also sets forth a reservation of rights in its petition, namely that “[t]o the extent Hillcrest advanced any AAA costs or fees on behalf of Fitness, Hillcrest reserves the right to seek reimbursement for such fees from Fitness.” (Pet., ¶ 14.) Fitness argues that this is an improper attempt to seek costs denied by the arbitrator. In reply, Hillcrest confirms that it will not be seeking such reimbursement, so the issue is moot.

Lastly, Fitness argues that Hillcrest may not recover any costs related to the instant petition because the lease agreement provides that, with few exceptions not applicable here, the parties will bear their own costs. The court agrees, and the $60 requested for the filing fee for this petition is denied.   

Accordingly, the court finds that the arbitration award, corrected to exclude $21,185.75, is proper to confirm. “If [an] award is confirmed, judgment must be entered in conformity therewith.” (Jones v. Kvistad (1971) 19 Cal.App.3d 836, 840.)

CONCLUSION

Based on the foregoing, the court grants in part Plaintiff’s motion to confirm arbitration award. The final arbitration award is corrected to $502,543.59 plus $290,649.25 ($311,835 - $21,185.75) for attorney’s fees. The court also awards Hillcrest $9,070 ($9,130 - $60) for the attorney’s fees incurred in bringing this petition.

The court orders Plaintiff to file and serve a proposed judgment within 10 days of the date of this order.

Plaintiff is ordered to give notice of this ruling.

IT IS SO ORDERED.

DATED:  August 9, 2022

_____________________________

Colin Leis

Judge of the Superior Court