Judge: Gail Killefer, Case: 22STCP02041, Date: 2022-08-03 Tentative Ruling

Case Number: 22STCP02041    Hearing Date: August 3, 2022    Dept: 37

HEARING DATE:                 August 3, 2022     

CASE NUMBER:                  22STCP02041

CASE NAME:                        Mix & Match Apparel, Inc. v. Edward Kim

MOVING PARTY:                Petitioner, Mix & Match Apparel, Inc.

OPPOSING PARTY:             Respondent, Edward Kim

TRIAL DATE:                        None

PROOF OF SERVICE:          OK

MOTION:                               Petition to Confirm Arbitration Award

OPPOSITION:                       June 22, 2022   

REPLY:                                  June 28, 2022    

TENTATIVE:                         MMA’s Petition is granted. The Award is confirmed. MMA is to give notice and prepare a proposed judgment.

Background

This is a petition to confirm arbitration award. According to the Petition, Mix & Match Apparel, Inc. (“MMA” or Petitioner) and Edward Kim AKA Kyung Ho Kim dba KNY Apparel (“Respondent”) entered an agreement to arbitrate on January 12, 2022. Pursuant to this agreement, the parties arbitrated their dispute before the Dale J. Park, Esq. (the “Arbitrator”) The Arbitration took place on February 9, 2022. MMA initiated the Arbitration as a result of disputes in connection with goods and payments which were completed between the parties as of December 31, 2021.

 The Arbitrator issued his award (the “Award”) on March 31, 2022, finding MMA to have overpaid for goods and deliveries in the amount of $458, 902.48 and requiring this amount to be refunded to MMA or duly credited toward future transactions between the parties.

MMA petitions for the Award to be confirmed. Respondent opposes the petition.

Evidentiary Objections

Petitioner’s Objections to Declaration of Edward Kim

Objection 1: sustained-in-part as to all paragraphs except 13-16, and 18-24. Declarant seeks to reassess the merits of the case.

Discussion 

I.                   Procedural Requirements 

CCP § 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.  The petition shall name as respondents all parties to the arbitration and may name as respondents any other persons bound by the arbitration award.” MMA’s petition was filed on May 31, 2022, and names Respondent. The Petition satisfies the requirements of CCP § 1285.

The petition must: “(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.”  (CCP § 1285.4.) The Petition attaches a copy of the arbitration agreement as attachment 4(b) and a copy of the Award as attachment 8(c). Importantly, the Petition also includes as Exhibit B true and correct copies of the Arbitration Agreement written in both English and Korean with signatures. The Petition also identifies the Dale J. Park, Esq. as the arbitrator. This is sufficient for purposes of CCP § 1285.4.

The Petition may not be served and filed until at least 10 days after service of the signed copy of the award upon the Petitioner.  (CCP § 1288.4.) The Award was electronically served on all parties on March 31, 2022. On June 21, 2022, MMA filed a Notice and Acknowledgment of Receipt indicating that Respondent was served with the Petition on June 17, 2022. This satisfies the requirements of CCP § 1288.4.

II.                Legal Standard

California law favors the resolution of disputes in arbitration “as a speedy and relatively inexpensive means of dispute resolution.”  (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 9 (Moncharsh), internal quotations omitted.)  As a consequence, the grounds for challenging an arbitration aware are limited: “[I]t is the general rule that, with narrow exceptions, an arbitrator’s decision cannot be reviewed for errors of fact or law.”  (Id. at p. 11.)  The court must confirm the award as made unless, in accordance with the Code of Civil Procedures, it corrects the award and confirms it as corrected, vacates the award, or dismisses the proceeding.  (CCP § 1286.)   

The court may vacate an arbitration award only on the grounds set forth in CCP § 1286.2.  (Moncharsh, supra, 3 Cal.4th at pp. 12-13.)  Section 1286.2 provides that the court shall vacate the award if it determines any of the following: 

1. The award was procured by corruption, fraud, or other undue means; 

2. There was corruption in any of the arbitrators; 

3. The rights of the party were substantially prejudiced by misconduct of a neutral arbitrator; 

4. The arbitrators exceeded their powers and the award cannot be corrected without affecting the merits of the decision upon the controversy submitted; 

5. The rights of the party were substantially prejudiced by the refusal of the arbitrators to postpone the hearing upon sufficient cause being shown therefore or by the refusal of the arbitrators to hear evidence material to the controversy or by other conduct of the arbitrators contrary to the provisions of this title; or 

6. An arbitrator making the award either: (A) failed to disclose within the time required for disclosure a ground for disqualification of which the arbitrator was then aware; or (B) was subject to disqualification upon grounds specified in Section 1281.91 but failed upon receipt of timely demand to disqualify himself or herself as required by that provision. However, this subdivision does not apply to arbitration proceedings conducted under a collective bargaining agreement between employers and employees or between their respective representatives. 

(CCP § 1286.2(a).)   

III.             Analysis

MMA contends that the Award must be confirmed because none of the circumstances permitting the court to vacate the Award exists and the Petition conforms to all of the statutory requirements.

Respondent first asserts that he “did not even read the content of the [Agreement] and signed it.” (Response, 5.) Respondent then contends that he did not fully understand what the Arbitration Agreement meant and did not seek legal counsel after agreeing to arbitrate. (Response, 5-6.) Here, the court disregards Respondent’s assertions entirely as MMA has filed copies of the Agreement in both English and Korean, Respondent’s native language.

Respondent then contends the Award must be vacated because the Arbitrator failed to make a written disclosure of his previous business proceedings with MMA. (Response, 9.) However, while Respondent stresses that no written disclosures were made, Respondent does not claim that the Arbitrator did not disclose orally the previous relationship before the Arbitration. As Attachment 8(c) to the Petition clearly states:

“[t]he arbitrator disclosed a prior relationship with the representative of Mix & Match Apparel, Inc., Mr. Steve Jun, in which the Arbitrator was attorney for Mr. Jun’s companies in two litigation cases and legal advisor for Mr. Jun and his companies. On February 9, 2022, the parties further verbally confirmed and agreed that the arbitration award would be final and binding. The verbal agreement was recorded with permission of both parties.” (Attachment 8(c), 1.)

Further, Petitioner in their reply correctly point out that CCP § 1281.91(a) “requires a party to serve a notice of disqualification within 15 calendar days after the proposed nominee of appointee failed to comply with Section 1281.9 to disqualify a proposed neutral arbitrator, otherwise, the right is waived per Code Civ. Proc., § 1281.91(c).” (Reply, 3.) MMA therefore points out that “arbitrator fully and candidly disclosed his prior professional relationship” and yet, “neither Arbitrator nor [Petitioner] had received any required notice from [Respondent] within those 15 days of time.” (Reply, 4.) The court agrees with Petitioner and continues its analysis.

Respondent also contends that the Award should be vacated because the Arbitrator exceeded his powers and the Award “lacked a rational relationship to the amounts invoices and services rendered.” (Response, 13.) According to Respondent, the calculations as determined by the Arbitrator are incorrect since they are much lower than the invoiced amounts presented to the Arbitrator. (Id.) Lastly, Respondent contends that it was substantially prejudiced since the Arbitrator refused to hear evidence regarding some purchasing charges. (Response, 13-14.) However, aside from conclusory language regarding Arbitrator’s refusal, Respondent fails to show how he has been substantially prejudiced.

In reply, MMA clarifies that while Respondent’s cited figures include amounts from January 2022, the parties agreed to arbitrate only disputes as to transactions completed as of December 31, 2021. (Reply, 4-5.) MMA also points to the Award and its findings that Respondent “applied randomly and arbitrarily applied its own increased rates... different from what had been agreed by the parties,” and further, that Respondent “cannot arbitrarily change the rates just because it would not realize the expected income, or its profit margin would be decreased.” (Reply, 5-6; citing Attachment 8(c), 5.) The Arbitrator also found that freight charges and duties charged to MMA were unsupported by Respondent. (Id.) As such, MMA asserts “it is clear from the award that Arbitrator indeed properly and thoroughly considered all of the evidence... and made a reasonable conclusion and decision not to accept it” since it “lacked any evidentiary proof.” (Reply, 6.) In further support, MMA also points out that existing precedent has also emphasized that where disclosure “is incomplete or otherwise fails to meet the statutory disclosure requirements,” the party “cannot passively reserve the issue for consideration after the arbitration has concluded.” (Reply, 7; citing Cox v. Bonni, (2018) 30 Cal.App.5th 287.)

The court agrees with Petitioner. While the failure to provide written disclosure is noteworthy, both the Arbitrator and Petitioner have attested that some form of disclosure was made prior to the arbitration proceedings, which Respondent also does not refute. Furthermore, Respondent does not explain or elaborate how the Arbitrator exceeded his powers or failed to consider all the evidence, where the record shows the Arbitrator did consider, and chose to disregard, unauthenticated invoices created after the transactions, or unsupported charges which MMA was forced to pay. Aside from conclusory allegations, Respondent has failed to meet its burden to show why this Award should be vacated.

MMA’s petition demonstrates that no basis to vacate the Award exists. For these reasons, MMA’s petition is granted.

Conclusion

MMA’s Petition is granted. The Award is confirmed. MMA is to give notice and prepare a proposed judgment.