Judge: Gail Killefer, Case: 22STCP03304, Date: 2023-03-13 Tentative Ruling

Case Number: 22STCP03304    Hearing Date: March 13, 2023    Dept: 37

HEARING DATE:                 March 13, 2023     

CASE NUMBER:                  22STCP03304

CASE NAME:                        Gerolyn Howard v. Consumer Action Law Group, et al.     

MOVING PARTY:                Petitioner and Plaintiff, Gerolyn Howard

OPPOSING PARTIES:          Respondents and Defendants, Yelena Gurevich, Consumer Action Law Group, and Lauren Rode (“Respondents”)

TRIAL DATE:                        None



MOTION:                               Petition to Confirm Arbitration Award; Respondents’ Motion to Vacate Arbitration Award

OPPOSITION:                       Defendants’ Opposition to Petition—February 27, 2023  

REPLY:                                  Plaintiff’s Opposition to Motion to Vacate—March 1, 2023   


TENTATIVE:                         Defendants’ motion is denied. The parties are instructed to submit supplemental briefing regarding correcting the Award.  Plaintiff is to give notice.




This is a professional negligence action arising out of Defendants Consumer Action Law Group (“CALG”), Yelena Gurevich (“Gurevich”), and Lauren Rode’s (“Rode”) representation of Gerolyn D. Howard (“Plaintiff”), in the underlying action against Plaintiff’s lender in foreclosure proceedings for breach of a modification agreement (“Underlying Action”).  According to the Petition, Defendants breached their fiduciary duty and committed legal malpractice in their representation of Plaintiff in the Underlying Action.

As Plaintiff signed a retainer agreement (the “Retainer”) with Defendants regarding her representation in the Underlying Action with an arbitration provision, the parties filed a demand for arbitration and commenced arbitration proceedings with the American Arbitration Association (“AAA”) in the arbitration entitled Gerolyn D. Howard v. Consumer Action Law Group, et al., Case 01-17-0004-9814 (the “Arbitration”).

On November 4, 2021, the parties attended arbitration before the Honorable Anita Rae Shapiro (Ret.) (“Arbitrator Shapiro”). Arbitrator Shapiro conducted the Preliminary Hearing on October 15, 2018, and the matter proceeded to an arbitration trial. On November 8, 2021,  Plaintiff/Petitioner provided several complaints to the AAA requesting the removal of her counsel and Arbitrator Shapiro (“November 8 Complaint”). Arbitrator Shapiro denied the request for the Arbitrator’s removal, but Plaintiff’s request for removal of counsel was granted (“Shapiro Ruling”).

On November 18, 2021, AAA removed Arbitrator Shapiro despite Defendants’ objections. (“Shapiro Removal”). On January 19, 2022, AAA appointed arbitrator Honorable George J. Kovacevich (“Arbitrator Kovacevich”) and all parties to the Arbitration accepted his appointment. On February 10, 2022, AAA confirmed the appointment of Arbitrator Kovacevich. On April 13 and 15, 2022, the parties conducted further evidentiary hearings.

Arbitrator Kovacevich made his award on June 17, 2022 (the “Award”), which requires Defendants to pay: “(i) $321,000.00 for the loss of her home, (ii) emotional distress damages in the amount of $420,000.00, and (iii) attorneys' fees in the sum of $30,780.00.” (Petition, Exh. 2.) The Award also provides in pertinent part as follows:

“Accordingly, I AWARD in favor of Claimant's claims and DENY CALG's counterclaim as follows:

1. CONSUMER ACTION LAW GROUP, YELENA A. GUREVICH and LAUREN RODE, are jointly and severally liable for and shall pay to GEROLYN D. HOWARD compensatory damages in the amounts of (i) $321,000.00 for the loss of her home, (ii) emotional distress damages in the amount of $420,000.00, and (iii) attorneys' fees in the sum of $30,780.00.

2. Interest shall accrue on these sums at the California post-judgment statutory rate from the date of this Award until paid in full.

3. CONSUMER ACTION LAW GROUP shall take nothing on its counterclaim.

4. The administrative fees of the American Arbitration Association totaling $2,200.00 and the arbitrator compensation totaling $8,750.00 shall be borne as incurred.

5. The above sums are to be paid on or before thirty days from the date of this Award.

6. This Award is in full settlement of all claims submitted in this Arbitration. All claims not expressly granted herein, are hereby denied.”

(Petition, Exhibit 2, p. 16.)

Plaintiff now petitions to confirm the Award. Defendant now moves to vacate the Award. The parties oppose the countering motions. As the arguments and analysis regarding both motions are identical, the court now hears both motions concurrently.



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.”  Defendants filed their Petition on October 13, 2021, and named Plaintiff as a respondent. This is sufficient to comply with the requirements of section 1285. (See 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.)   


Plaintiff’s Petition names Arbitrators Shapiro and Koracevich. (Petition, 2-3.) Plaintiff attaches a copy of the Retainer Agreement for Legal Services as Exhibit 1 to the Petition, and a copy of the Award as Exhibit 2 to the Petition. Plaintiff’s Petition complies with the requirements 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 served on all parties on June 17, 2022. (Petition, 3.) Plaintiff’s Petition was filed on September 7, 2022. The Petition complies with 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. (Moncharshsupra, 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 failed to disclose a ground for disqualification or was subject to disqualification but failed upon receipt of timely demand to disqualify himself or herself. 


(CCP § 1286.2(a).)   


III.             Analysis


Plaintiff 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. (Plaintiff’s Notice of Hearing and Memorandum of Points and Authorities in Support of Petition (“P. Motion”), 4-7.)


In their opposition and motion to vacate, Defendants contend that the Award must be vacated for the following reasons: (1) the AAA allegedly committed misconduct in removing Arbitrator Shapiro in violation of their Consumer Rules; (2) Arbitrator Koracevich exceeded his powers by issuing the Award and refusing to hear Defendants’ material evidence; (3) Arbitrator Koracevich failed to rule on Defendants’ motion to enforce the Shapiro Ruling, which is still pending. (Opp., 10-11.)  


In opposition to Defendants’ motion to vacate, Plaintiff contends AAA made the administrative decision to remove Arbitrator Shapiro, duly appointed Arbitrator Koracevich with no objections from any party to the case, AAA’s decision did not prejudice Defendants, and no grounds exist to vacate the Award. (P. Opp., 4-9.)


A.     Whether AAA Violated AAA Rules 14, 19(a) and 19(b)


The parties do not dispute that AAA’s consumer arbitration rules apply to the arbitration. AAA Rule 19 (“Disqualification of Arbitrator”) provides as follows:


(a)   Any arbitrator shall be impartial and independent and shall perform his or her duties carefully and in good faith. The AAA may disqualify an arbitrator who shows

a.       (1) partiality or lack of independence;

b.      (2) inability or refusal to perform his or her duties with diligence and in good faith; or

c.       (3) any grounds for disqualification provided by applicable law.


(b)   If a party objects to the continued service of an arbitrator, or if the AAA should so decide to raise the issue of whether the arbitrator should continue on the case, the AAA will decide if the arbitrator should be disqualified. After gathering the opinions of the parties, the AAA will decide and that decision shall be final and conclusive.


(Defendants’ Exhibits in Support of Opposition, Exh. 4, p. 19)


AAA Rule 14 (“Jurisdiction”) provides as follows:


(a) The arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope, or validity of the arbitration agreement or to the arbitrability of any claim or counterclaim.


(b) The arbitrator shall have the power to determine the existence or validity of a contract of which an arbitration clause forms a part. Such an arbitration clause shall be treated as an agreement independent of the other terms of the contract. A decision by the arbitrator that the contract is null and void shall not for that reason alone render invalid the arbitration clause.


(c) A party must object to the jurisdiction of the arbitrator or to the arbitrability of a claim or counterclaim no later than the filing of the answering statement to the claim or counterclaim that gives rise to the objection. The arbitrator may rule on such objections as a preliminary matter or as part of the final award.” (Exhibit 4, p. 17.)


According to Defendants, AAA violated Rule 14 and 19 because Howard did not object to Arbitrator Shapiro’s appointment to the matter until the third day of trial, Arbitrator Shapiro had issued the Ruling following the November 8 Complaint after the AAA had requested comments following the November 8 Complaint. (Opp., 11-12.) “Arbitrator Shapiro gave full weight and consideration to Howard’s argument and properly exercised her power to remain on the case with the granting of additional time for Howard to seek new counsel prior to the 3rd and final day of the nearly completed arbitration trial.” (Opp., 12.) Additionally, Defendants assert that none of the requirements were met under 19(a) to justify Arbitrator Shapiro’s removal. (Opp., 13-14.) “Arbitrators should avoid being overly cautious about being perceived as partial and, at the slightest provocation, resign without a basis for doing so. Even in such circumstances, the decision to resign is that of the arbitrator.” (Id.) In support, Defendants attach AAA’s November 18, 2021 letter to show a violation of 19(a) and 19(b) as no reason was provided for removal and the opinions of the parties were not gathered before the removal. (Id.; Exh. 9-10.) The attached letter states the AAA “has reviewed [the parties’] respective contentions and inasmuch as the objection was unopposed, Hon. Anita Rae Shapiro will be removed as arbitrator...” (Id.)


However, Plaintiff’s opposition also includes as Exhibit D, a December 7, 2021 letter from AAA which provides further context regarding the removal:


“This will acknowledge receipt by the American Arbitration Association (AAA) of the enclosed correspondence dated December 6, 2021 from Mr. Hirota and Mr. Panzarella. Mr. Panzarella's email was directed to Harold Coleman, Senior Vice President of AAA Mediation. Mr. Coleman provided this correspondence to the Consumer Management Team, who referred it to me for response. Please be advised that pursuant to the enclosed AAA-ICDR Standards of Conduct for Parties and Representatives, all case-related communications are to be directed to me as I am your Case Administrator.


The AAA is aware that the arbitrator ruled on the objection; however, the Claimant's objection was directed to the AAA's attention as well. As a result, the AAA followed the process outlined in Consumer Rule R-19(b) by requesting the comments of the Respondent and making a determination in accordance with the Rules, which was provided in our November 18, 2021 letter. We understand the Respondent's position; however, the AAA has removed the arbitrator and anticipates proceeding with administration. Furthermore, the AAA will not move a case backward in administration unless there is party agreement to do so.


As of now, the AAA is working on inviting an arbitrator to serve on this case. If the Parties want to discuss a timeframe for the setting of a hearing, we can use that information to help with the administrative appointment of an arbitrator. Furthermore, please note that the arbitrator compensation deposit will be assessed according to the applicable November 1, 2020 Consumer Costs of Arbitration. The parties will be notified of the appointed arbitrator and informed of the opportunity for an objection.” (P. Opp. Exh. D.)


Defendants further contend that as AAA allegedly violated its own rules, Arbitrator Koracevich had no authority to rule on the matter at hand. (Opp., 15-19.)


In response, Plaintiff’s opposition contends no grounds still exist, even under a consideration of AAA rules 14, 19(a-b), to deny confirmation of the award as questions of sufficiency are not in the court’s purview. (P. Opp., 5-7; Moncharshsupra, 3 Cal.4th at 9.)


The court finds that the AAA and Arbitrator Koracevich did not exceed their authority in deciding to remove Arbitrator Shapiro and issuing the Award as a ruling on the instant matter. The court finds Defendants have failed to show a violation of rules 19(a) or 19(b) as the AAA’s extensive correspondence has shown the opinions of the parties were collected and considered, and the parties did not object to the appointment of Arbitrator Koracevich before the final Award was issued. The court is not persuaded by Defendants’ arguments, as the court finds Defendants fail to show how the appointment of another arbitrator, and further time to present their evidence, operate as prejudice against Defendants which would justify vacating the Award.


B.     CCP § 1286.2 (a)(5): Prejudice


Defendants further contend that the Award must be vacated because the Arbitrator erroneously decided to exclude portions of Defendants’ material evidence regarding Plaintiff’s damages and their cross-claims during the hearings before Arbitrator Koracevich. (Opp., 22-24.) According to Defendants, such actions by the Arbitrator substantially prejudiced their rights because Defendants were not able to “to present their evidence pertinent and material to this controversy, which severely undermines the fundamental fairness of this proceeding.” (Id.) Defendants cite to cases, including Heimlich v. Shivji, (2019) 7 Cal. 5th 350, 367  (Heimlich), in support of this argument.


In Heimlich, the California Supreme Court stated that ““by voluntarily submitting to arbitration, the parties have agreed to bear the risk [of uncorrectable legal or factual error] in return for a quick, inexpensive, and conclusive resolution to their dispute.”” [citation omitted] (Id. at 367.) The arbitrator in this action refused to consider a party’s request for costs on the grounds that he lacked jurisdiction to consider the request. (Id.) Although the California Supreme Court held that the arbitrator’s conclusion about jurisdiction was incorrect, the Heimlich court also noted that “ordinary errors in ruling on costs are not subject to correction, nor do they serve as a basis for vacating an award.” (Id.) Additionally, the Heimlich court expressly rejected an argument that the award must be vacated because arbitrators “have the power to amend their decisions to add cost and fee awards.” (Id.) According to the Heimlich court, “if an arbitrator elects not to amend a decision in order to add costs or fees, these cases do not hold that a court may overrule that refusal.” (Id. at 368.)


In reply, Plaintiff contends that Defendants’ rights were not prejudiced by Arbitrator Koracevich’s evidentiary determinations. (P. Opp. 7-8.) According to Plaintiff, the Arbitrator’s decision did not refusal to hear material evidence but was rather a determination by counsel during trial. (Id.) The court notes, sua sponte, that an Arbitrator’s decision to ignore certain evidence he finds irrelevant does not constitute grounds to vacate the award under CCP § 1286.2(a)(5).


“Here, CALG makes conclusive statements about the evidence that it failed to present. Nowhere does CALG cite a decision by the Arbitrator to exclude evidence. These were choices made by counsel during trial. Further, the Arbitrator was willing to go extra days and allowed briefing after trial to submit additional evidence. But without CALG citing the specific evidence and how they were impacted, they fail to meet their burden in this motion.” (Id.)


The court is persuaded by the Heimlich court’s ruling and agrees that the Arbitrator’s decision to exclude or not consider certain evidence does not substantially prejudice Defendants. While Defendants may believe that the Arbitrator’s decision is incorrect, this does not constitute a basis for the court to vacate the Award. Further, the court finds Defendants fail to explain how the Arbitrator’s failure to rule on a pending motion regarding Arbitrator Shapiro’s removal has substantially prejudiced Defendants as well. (Opp., 24-25.)


Lastly, Defendants contend the Award is “legally flawed” as it granted emotional distress damages on claims for loss of property, in contravention of California caselaw. (Opp., 19-22; citing Camenisch v. Superior Court, (1996) 44 Cal. App. 4th 1689, 1694; Smith v. Superior Court, (1992) 10 Cal. App. 4th 1033, 1036.) Defendants contend the court should vacate the Award as a result of this “clear legal error.” (Id.) However, in support, Defendants only cite caselaw before the Moncharsh, and even concede that the Moncharsh ruling “stated that ‘legal error on face of the award’ is not grounds to vacate an arbitration award.” (Id.) Defendants therefore ask this court to overturn Moncharsh without sufficient support, and fail to justify why this court should make such undertaking.


While this court refuses to overturn binding precedent, the court recognizes Defendants are correct in their assertion that the Award incorrectly provides for emotional distress damages for claims which authorities have provided should not receive emotional distress damages.


CCP § 1286.6 provides “[s]ubject to Section 1286.8, the court, unless it vacates the award pursuant to Section 1286.2, shall correct the award and confirm it as corrected if the court determines that: (a) There was an evident miscalculation of figures or an evident mistake in the description of any person, thing or property referred to in the award; (b) The arbitrators exceeded their powers but the award may be corrected without affecting the merits of the decision upon the controversy submitted; or (c) The award is imperfect in a matter of form, not affecting the merits of the controversy.”  


“The court may not correct an award unless: (a) A petition or response requesting that the award be corrected has been duly served and filed . . . and: (1) All petitioners and respondents are before the court.” (CCP § 1286.8.) 


Therefore, the court instructs the parties to submit supplemental briefing regarding the correcting of the Award only to strike emotional distress damages.


Because the court finds that no basis to vacate the Award exists, Defendants’ motion to vacate the Award is denied.




Defendants’ motion is denied. The parties are instructed to submit supplemental briefing regarding correcting the Award.  Plaintiff is to give notice.