Judge Daniel M. Crowley, Case Number: 24STCP01101, Date: 2024-07-12 Tentative Ruling

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Petitioner Blue Bear Waste Services, LLC’s petition to confirm the contractual arbitration award is granted. Petitioner is awarded the award against Respondent in the principal amount of $993,419.48, post-judgment interest at 8% per annum from March 25, 2024 ($23,733.20), attorneys’ fees in the amount of $242,046.00, costs in the amount of $108,783.27, and administrative fees in the amount of $67,887.50, for the total amount of $1,435,869.45, less any amounts of the award Respondent has already paid to Petitioner prior to this ruling.

Petitioner Blue Bear Waste Services, LLC’s demurrer to Defendant Bond Enterprises, Inc.’s Answer is sustained without leave to amend.

Petitioner Blue Bear Waste Services, LLC (“Blue Bear”) (“Petitioner”) petitions this Court to confirm the contractual arbitration award issued in its favor and against Respondent Bond Enterprises, Inc., dba Bond Consulting Services (“Bond”) (“Respondent”). (See Petition, pg. 1.)

Petitioner demurs to Respondent’s Answer to Petitioner’s Petition on the basis Respondent’s Answer is untimely and fails to state any viable defenses which Respondent is permitted to raise by the California Arbitration Act. (Notice Demurrer, pgs. 1-2; C.C.P. §§430.20, 431.30, 1280-1288.8.)

This dispute arises from Respondent’s agreement to develop software for Petitioner in exchange for payment, subject to certain terms and conditions of the agreement. (See Petition ¶5.) Respondent did not develop the software it agreed to develop, did not notify Petitioner of problems that arise as required by the agreement, and did not provide a source code to the Petitioner as agreed. (See Petition ¶5.) Petitioner and Respondent agreed to binding arbitration on January 31, 2022 (“Agreement”). (Petition ¶¶4(a), (c); Exh. A at ¶32.)

The Arbitration hearing occurred from January 9 to 12, 2024, before Arbitrator Janice L. Sperow, AAA, in a remote hearing from Fresno, California. (Petition ¶¶6-7.) Arbitrator Sperow issued the Final Arbitration Award on March 25, 2024. (Petition ¶8; Attachment 8c.)

Petitioner filed the instant petition to confirm the arbitration award on April 8, 2024. Respondent filed an opposition on July 5, 2024.

Petitioner filed the instant demurrer on May 21, 2024. Respondent filed its opposition on July 1, 2024. Petitioner filed its reply on July 5, 2024.

The party seeking judicial enforcement of a private arbitration award has the burden of proving the award as well as the existence of a valid arbitration agreement. (Toal v. Tardif (2009) 178 Cal.App.4th 1208, 1223 [holding burden not met by submitting copy of contract with arbitration provision signed by party’s attorney rather than by party personally].)

The specific grounds upon which an arbitrator’s award may be vacated are set forth in C.C.P. §1286.2. Except for such grounds, arbitration awards are immune from judicial review. (See Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 10-11 [limiting grounds for judicial review effectuates the parties’ agreement that the award be final and also reflects that arbitrators need not follow the law and may base their decisions on “broad principles of justice and equity . . . paths neither marked nor traceable by judicial review”].) Generally, errors of law committed by the arbitrator are not grounds for challenging the arbitration award. (Id. at pg. 11.) The sufficiency of evidence to support the award is immaterial and courts cannot review the same. (See Morris v. Zuckerman (1968) 69 Cal.2d. 686, 691.) Courts cannot pass upon the validity of the arbitrator’s reasoning and cannot substitute its judgment for that of the arbitrator. (See Moncharsh, 3 Cal.4th at pg. 11.)

Petitioner has met its burden to prove the arbitration award and the existence of a valid arbitration agreement. (Petition ¶¶4(a), (c); Attachments 4(b) at ¶7; Petition ¶8(c), Attachment 8c.)

1. For claimant on the First Cause of Action for Breach of Contract in the amount of $188,682.75;

1. For claimant on the First Cause of Action for Breach of Contract based on Breach of the Covenant of Good Faith and Fair Dealing in the amount already stated;

2. For claimant on the Second Cause of Action for Negligence in the amount of $688,480.24 based upon respondent’s professional negligence and in the amount already stated;

3. The Arbitrator dismisses with prejudice claimant’s Second Cause of Action for Negligence as a matter of law under the Economic Loss Rule to the extent claimant based it upon economic losses stemming from respondent’s failure to satisfy its contractual duties;

4. For claimant on the Third Cause of Action for Negligent Misrepresentation in the amounts already stated;

5. For respondent on the Third Cause of Action for Negligent Misrepresentation to the extent claimant based its claim upon respondent’s predictions, statements, and opinions regarding future events;

6. The Arbitrator dismisses with prejudice claimant’s Third Cause of Action for Negligent Misrepresentation as a matter of law under the Economic Loss Rule to the extent claimant based its claim upon economic losses caused by respondent’s misrepresentations stemming from its contractual duties;

7. For claimant on the Fourth Cause of Action for Fraudulent Misrepresentation in the amount of $116,256.49 and the amounts already stated based upon respondent’s misrepresentations stemming from independent duties;

8. For respondent on the Fourth Cause of Action for Fraudulent Misrepresentation to the extent claimant based its claim upon respondent’s predictions, statement, and opinions regarding future events;

9. The Arbitrator dismisses with prejudice claimant’s Fourth Cause of Action for Fraudulent Misrepresentation as a matter of law under the Economic Loss Rule to the extent claimant based its claim upon economic losses caused by respondent’s misrepresentations stemming from its contractual duties;

10. For respondent on claimant’s Fifth Cause of Action for Fraudulent Nondisclosure;

11. For respondent on claimant’s Sixth Cause of Action for Fraudulent Concealment;

12. For claimant on the Seventh Cause of Action for Conversion in the amounts already stated;

14. For claimant on Ninth Cause of Action for Misappropriation of Trade Secrets in the amounts already stated;

16. For claimant on its request for sanctions in an amount subsumed by claimant’s attorney fees;

18. For claimant on its request for pre-judgment interest on its First Cause of Action in an amount already subsumed by claimant’s breach of contract damages

19. For respondent on claimant’s request for pre-judgment interest on claimant’s remaining claims;

22. For claimant on its request for post-award interest at 8% per annum as to the entire amount of the Final Award from the date of the Final Award; and

23. For claimant on claimant’s request for injunctive relief as modified and set forth above.

Claimant is the prevailing party in this matter. The administrative fees and expenses of the American Arbitration Association totaling $16,475.00 shall be borne $16,475.00 by Bond Enterprises, Inc. dba Bond Consulting Service, and the compensation and expenses of the Arbitrator totaling $103,125.00 shall be borne $103,125.00 by Bond Enterprises, Inc. dba Bond Consulting Service. Therefore, Bond Enterprises, Inc. dba Bond Consulting Service must pay Blue Bear Waste Service, LLC, an amount of $67,887.50.

This Final Award amends and supersedes the Second Interim Award dated March 2, 2024, and the initial Interim Award dated January 24, 2024, in their entirety.

This Final Award is in full settlement of all claims submitted in this arbitration. All claims not expressly granted herein are hereby denied. This final award resolves all issues between all parties and represents the final adjudication of all claims and defenses between the parties.

The Court determines the Petition is proper. Accordingly, the Court confirms the award and enters judgment according to it. Petitioner is awarded the award against Respondent in the amount of $993,419.48, post-judgment interest at 8% per annum from March 25, 2024 ($23,733.20), attorneys’ fees in the amount of $242,046.00, costs in the amount of $108,783.27, and administrative fees in the amount of $67,887.50, for the total amount of $1,435,869.45 less any amounts of the award Respondent has already paid to Petitioner prior to this ruling.

Petitioner’s petition to confirm the Arbitration Award is granted. Petitioner is awarded the award against Respondent in the principal amount of $993,419.48, post-judgment interest at 8% per annum from March 25, 2024 ($23,733.20), attorneys’ fees in the amount of $242,046.00, costs in the amount of $108,783.27, and administrative fees in the amount of $67,887.50, for the total amount of $1,435,869.45, less any amounts of the award Respondent has already paid to Petitioner prior to this ruling.

Before filing a demurrer pursuant to this chapter, the demurring party shall meet and confer in person, by telephone, or by video conference with the party who filed the pleading that is subject to demurrer for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer. (C.C.P. §430.41(a), emphasis added.) A declaration must be filed with a demurrer regarding the results of the meet and confer process. (C.C.P. §430.41(a)(3).)

Petitioner’s counsel declares he attempted to meet and confer telephonically with Defendant’s counsel on May 20, 2024, and there was no answer, so he left a voicemail indicating Petitioner’s intent to file the instant demurrer. (Decl. of Cooledge ¶2.) Petitioner’s counsel declares he has not heard back from Respondent’s counsel. (Decl. of Cooledge ¶2.) Petitioner’s counsel’s declaration is sufficient under C.C.P. §430.41(a). Accordingly, the Court will consider the instant demurrer.

Petitioner demurs to Respondent’s Answer to the Petition to Confirm Arbitration Award on the basis the Answer is untimely and fails to state any viable defenses that Respondent can raise under the California Arbitration Act. (Notice of Demurrer, pg. 2; C.C.P. §§430.20, 431.30, 1280-1288.8.)

“[A] demurrer tests the legal sufficiency of the allegations in a complaint.” (Lewis v. Safeway, Inc. (2015) 235 Cal.App.4th 385, 388.) A demurrer can be used only to challenge defects that appear on the face of the pleading under attack or from matters outside the pleading that are judicially noticeable. (See Donabedian v. Mercury Insurance Co. (2004) 116 Cal.App.4th 968, 994 [in ruling on a demurrer, a court may not consider declarations, matters not subject to judicial notice, or documents not accepted for the truth of their contents].)

A demurrer to an answer may be brought on any of the following grounds: (a) the answer does not state facts sufficient to constitute a defense; (b) the answer is uncertain, meaning ambiguous and unintelligible; or (c) where the answer pleads a contract, it cannot be ascertained from the answer whether the contract is written or oral. (C.C.P. §430.20.)

Petitioner demurs to Respondent’s Answer on the basis the Answer does not allege any facts in support of most of its purported defenses, and only alleges that Petitioner received a partial payment.

A petition to confirm an arbitration award can only be challenged by a petition to vacate or correct an arbitration award. (C.C.P. §1285.2.) C.C.P. §1286.2 sets forth the grounds on which an arbitration award may be challenged.

Here, Respondent’s Answer is an inappropriate procedural mechanism to challenge Petitioner’s petition. Further, Respondent’s Answer does not challenge Petitioner’s petition on the grounds that the arbitration award was procured by corruption, fraud or other undue means or corruption in any of the arbitrators; that the arbitrator exceeded her powers; or that the arbitrator failed to timely disclose grounds for disqualification. (C.C.P. §1286.2.)

Accordingly, Respondent’s Answer fails to state facts sufficient to constitute a defense and is sustained without leave to amend.

Petitioner’s demurrer to Respondent’s Answer is sustained without leave to amend.