Judge: Holly J. Fujie, Case: BC713448, Date: 2023-02-08 Tentative Ruling

Case Number: BC713448    Hearing Date: February 8, 2023    Dept: 56

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES - CENTRAL DISTRICT

AND CONSOLIDATED ACTION

MOVING PARTY: Defendants

RESPONDING PARTY: Plaintiffs

The Court has considered the moving, opposition and reply papers. 

BACKGROUND

            This action concerns a dispute involving the Biafora Family Limited Partnership (“BFLP”).  Among the claims alleged in Plaintiffs’ currently operative second amended complaint (the “SAC”) is a cause of action for dissolution of BFLP.  In September 2019, during the pendency of this action, Defendants initiated buyout proceedings pursuant to a provision in the BFLP partnership agreement (the “BFLP Agreement”). 

            On November 20, 2020, the Court appointed Nevin Sanli (“Sanli” or the “Appraiser”) as the third appraiser after the appraisers appointed by Plaintiffs and Defendants did not agree on BFLP’s appraisal value. 

            On January 17, 2022, Defendants filed a motion to confirm the Appraiser’s valuation (the “Motion”). 

EVIDENTIARY OBJECTIONS

            Plaintiffs’ objections to the Declaration of Heather Mills (“Mills Decl.”) numbers 1-6 and 8 are OVERRULED.  Plaintiffs’ objection to the Mills Declaration number 7 is SUSTAINED.

DISCUSSION

            Under California Code of Civil Procedure (“CCP”) section 1285, any party to an arbitration in which an award has been made may petition the court to confirm, correct or vacate the award.  (CCP § 1285.)  An agreement to conduct an appraisal pursuant to a contract is a form of arbitration that is subject to statutory contractual arbitration law.  (Lambert v. Carneghi (2008) 158 Cal.App.4th 1120, 1129.)  Despite the fact that an appraisal is a special form of limited arbitration, there are significant differences between the powers of an arbitrator and those of an appraiser.  (Doan v. State Farm General Ins. Co. (2011) 195 Cal.App.4th 1082, 1094.)  Appraisers' powers are far more limited.  (Id.)  The function of appraisers is to determine the amount of damage resulting to various items submitted for their consideration.  (Id.)  It is certainly not their function to resolve questions of coverage and interpret provisions of the policy.  (Id. (discussing insurance appraisals).)

Section 9.04 of the BFLP Agreement states:

“Any Limited Partner may be expelled from the Partnership on the

decision of the Managing General Partner and a Simple Majority Vote of the Limited Partners (not including the expelled Partner).

Upon the expulsion of any Partner, the Partnership shall be required to pay to such Partner an amount equal to the fair market value of such expelled Partner’s Partnership interest. The fair market value of such expelled Partner’s Partnership interest shall be determined by an independent appraisal performed by an independent qualified business appraiser with an acceptable certification or designation agreed to by the Managing General Partner and the expelled Limited Partner, whose decision in this matter shall be conclusive. The cost of the

independent qualified business appraiser shall be borne equally by the expelled Limited Partner and the Partnership. If the Managing General Partner and the expelled Limited Partner are unable or unwilling to agree upon a business appraiser, then the Managing General Partner and the expelled Limited Partner shall each designate and hire a certified independent business appraiser who shall fix an appraised value agreed on by both business appraisers and such value shall be conclusive. If the two selected business appraisers cannot agree on an appraised value, they shall select another qualified appraiser whose appraisal shall establish the value of the Expelled Partner’s Partnership interest and such value shall be conclusive. The cost of the qualified appraiser selected by the two previous business appraisers shall be borne equally by the expelled Limited Partner and the Partnership.”  (Mills Decl., Exhibit A at § 9.04.) 

               The Court appointed Sanli on November 20, 2020, upon considering nominees submitted by Plaintiffs and Defendants (the “Parties”) after their respective independent appraisers arrived at different valuations and were unable to agree upon a third appraiser.  The Court indicated to the Parties that it would decide the issue of BFLP’s valuation after considering evidence presented during trial.  The procedure for appointing Sanli, though borne of necessity due to the Parties’ appraisers’ inability to arrive at a consensus, deviated from the process set forth in the BFLP Agreement.  The Court has never expressed that it was appointing Sanli for the purpose of conducting the conclusive appraisal of BFLP; rather, the Court has indicated that it would consider all relevant evidence in deciding the proper metric for BFLP’s valuation.  The Court therefore DENIES the Motion.

Moving party is ordered to give notice of this ruling. 

In consideration of the current COVID-19 pandemic situation, the Court¿strongly¿encourages that appearances on all proceedings, including this one, be made by LACourtConnect if the parties do not submit on the tentative.¿¿If you instead intend to make an appearance in person at Court on this matter, you must send an email by 2 p.m. on the last Court day before the scheduled date of the hearing to¿SMC_DEPT56@lacourt.org¿stating your intention to appear in person.¿ The Court will then inform you by close of business that day of the time your hearing will be held. The time set for the hearing may be at any time during that scheduled hearing day, or it may be necessary to schedule the hearing for another date if the Court is unable to accommodate all personal appearances set on that date.¿ This rule is necessary to ensure that adequate precautions can be taken for proper social distancing.

Parties who intend to submit on this tentative must send an email to the Court at SMC_DEPT56@lacourt.org as directed by the instructions provided on the court website at www.lacourt.org.  If the department does not receive an email and there are no appearances at the hearing, the motion will be placed off calendar. 

                                                                                      Dated this 8th day of February 2023