BC709417       OCEAN BLUE INVESTMENTS LLC ET AL VS SAEED FARKHONDEHPOUR

Defendants’ Amended Motion for Correction and/or Relief Under CCP 473(B) Respecting the Partial Final Award as Clarified

TENTATIVE RULING:  The motion is DENIED.

Background

 

On June 8, 2018, Plaintiffs Ocean Blue Investment, LLC, Morad Behrooz Neman, Sion Neman, and Hersel Neman filed a complaint against 17 defendants. The complaint asserted sixteen causes of action: (1) breach of fiduciary duty, (2) breach of contract, (3) breach of contract, (4) accounting, (5) specific performance, (6) specific performance, (7) conversion, (8) violation of CA Penal Code 496(c), (9) negligence, (10) fraud and deceit, (11) negligent misrepresentation, (12) intentional infliction of emotional distress, (13) equitable/implied indemnity, (14) contribution, (15) declaratory relief, and (16) injunctive relief.

 

The Court ordered the action to arbitration. On August 10, 2021, the Court granted Defendants Investment Consultants, LLC and Saeed Farkhondehpour’s petition to confirm a March 9, 2021 partial final award. On February 17, 2022, the Court entered judgment in accordance with the Final Partial Arbitration Award issued by Hon. Charles W. McCoy, Jr. (Ret.).

 

On June 16, 2022, the Court denied Defendants’ petition to vacate the award of the arbitrator or for compensatory adjustment.

 

On August 10, 2022, the Court issued an order directing the Receiver to record all deeds for The Medallion, Inc. except as to Lot 29.

 

Motion

 

On August 29, 2022, Defendants filed Saeed Farkhondehpour and Illusion Holdings, LLC filed their amended motion for correction and/or relief under Code of Civil Procedure section 473(b) respecting the partial final award as clarified.  Defendants filed a notice of errata on November 18, 2022.

 

Opposition

 

In opposition, Plaintiffs argue Defendants’ motion is untimely and Defendants’ motion also fails on the merits.

 

Reply

 

In reply, Defendants argue their motion is timely and the judgment and award must be corrected because it would violate the Subdivision Map Act and result in a windfall for Plaintiff Neman.

 

Motion to Vacate

 

In the notice of motion, Defendants state they “move the Court for orders  that:

 

1. The “Partial Final Award” of Arbitrator as “clarified” by the Arbitrator on July 5, and deemed final by order of the Arbitrator on August 15, 2022, contains an evident mistake in the description of property; and results in an unenforceable, illegal contract in violation of the Subdivision Map Act, California Government Code § 66499.30;

 

2. In the alternative, for relief from an Interlocutory Judgment which is the result of mistake, surprise or excusable neglect pursuant to California Code of Civil Procedure §473(b).”

 

Standard

 

Code of Civil Procedure section 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.” (Code Civ. Proc. § 1286.8.)

 

“The court may, upon any terms as may be just, relieve a party or his or her legal representative from a judgment, dismissal, order, or other proceeding taken against him or her through his or her mistake, inadvertence, surprise, or excusable neglect. Application for this relief shall be accompanied by a copy of the answer or other pleading proposed to be filed therein, otherwise the application shall not be granted, and shall be made within a reasonable time, in no case exceeding six months, after the judgment, dismissal, order, or proceeding was taken.” (Code Civ. Proc. § 473(b).) This relief is discretionary.

 

Defendants’ Motion is Untimely and the Court Cannot Grant the Relief Sought

 

On March 9, 2021, the arbitrator issued his Partial Final Award, (Marks Decl. Ex. B), which Defendants did not provide in their initial moving papers. The Partial Final Award was reduced to judgment on February 17, 2022. In relevant part, the award and judgment required Ocean Blue Investments, LLC, Hersel Neman, Morad Behrooz Neman and Sion Neman to transfer to Saeed Farkhondehpour “Medallion Land” and further required Saeed Farkhondehpour a/k/a Saeed Farkhondepour individually and as trustee of The 1993 Saeed Farkhondehpour Family Trust, and Investment Consultants, LLC to transfer “Medallion Building” to Morad Behrooz Neman. Both the award and judgment contain the following definition for these terms:

 

“Medallion Land” and “Medallion Building” shall be described as set forth in the legal description contained in the loan documents and trust deeds held by First Credit Bank.

 

(Marks Decl. Ex. B at 5 n.3.)

 

Defendants’ motion is directed at a July 5, 2022 arbitration document, which Defendants also did not provide in their moving papers, that provides:

 

The Court has sought clarification of the Partial Final Award, indicating that it is not clear whether Lot 29 is included with the Medallion Building or Medallion Land.

 

The intent and meaning of the Partial Final Award and its footnote 3 was to define the terms ‘Medallion Land’ and ‘Medallion Building’ in direct conformity with the legal descriptions contained in the loan documents and trust deeds held by First Credit Bank, and to award Respondent Saeed Farkhondehpour all right, title and interest in Medallion Land and to award Claimant Morad Behrooz Neman all right, title and interest in Medallion Building as so described. The operative term ‘Medallion Building’ includes Lot 29, and ‘Medallion Land’ does not include Lot 29.

 

(Marks Decl. Ex. E.) On August 15, 2022, the arbitrator issued Order No. 82 stating “[t]he arbitrator hereby finds that the arbitrator does not now possess jurisdiction to further hear or decide the factual or legal issues set forth in Respondents’ Request For Correction And/Or Rehearing Of Clarification Of Partial Final Award With Regard To Lot 29, Issued July 5, 2022.” (Def. Ex. 13.)

 

Defendants filed their initial motion on August 26, 2022 and their amended motion on August 29, 2022. Contrary to the arbitrator’s clarification, Defendants contend “Lot 29 is not part of ‘Medallion Building. . . . Indisputable evidence shows the larger blue bound trapezoidal northerly portion of former Lot 29 goes with ‘Medallion Land’ (Ex. 3) and the smaller triangular blue bound southerly portion of former Lot 29 goes with the ‘Medallion Building.’ (Ex. 4).” (Mot. at 16:4-7.) However, this Court “may not review the merits of the controversy, the validity of the arbitrator's reasoning, or the sufficiency of the evidence. [Citation] Indeed, an arbitrator's decision is not generally reviewable for errors of fact or law, even if the error appears on the face of the award and causes substantial injustice.” (Jordan v. California Dept. of Motor Vehicles (2002) 100 Cal.App.4th 431, 443.)

 

In opposition, Plaintiffs contend Defendants’ motion is untimely. (Opp. at 4:18-7:20.) Defendants’ initial motion does not address the timeliness of their motion under the provisions of the California Arbitration Act. “A petition to vacate an award or to correct an award shall be served and filed not later than 100 days after the date of the service of a signed copy of the award on the petitioner.” (Code Civ. Proc. § 1288.) This deadline is mandatory and jurisdictional. (Santa Monica College Faculty Assn. v. Santa Monica Community College Dist. (2015) 243 Cal.App.4th 538, 544; Abers v. Rohrs (2013) 217 Cal.App.4th 1199, 1211.)

 

The Court agrees Defendants’ motion is untimely. Defendants do not cite any authority for the proposition that the July 5, 2022 clarification document, which does not substantively alter the Final Partial Award, is a separate award capable of correction under the relevant statutes. The provisions of the California Arbitration Act are the exclusive grounds for vacating or correcting an arbitration award. (See Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 28; Soni v. SimpleLayers, Inc. (2019) 42 Cal.App.5th 1071, 1086 (“The exclusive grounds for correcting an arbitration award are contained in Code of Civil Procedure section 1286.6.”).)

 

The Final Partial Award, at all times, defined “Medallion Land” and “Medallion Building” in relation to “the legal description contained in the loan documents and trust deeds held by First Credit Bank.” (Marks Decl. Ex. B at 5 n.3.) The Final Partial Arbitration Award was issued on March 9, 2021 and reduced to judgment on February 17, 2022. The time to seek a correction of the Final Partial Award has long expired. (Code Civ. Proc. § 1288; Knass v. Blue Cross of California (1991) 228 Cal.App.3d 390, 394 (“Knass waived his opportunity to challenge the award by allowing the 100–day period to expire. The fact the award was reduced to a judgment does not resurrect his opportunity to challenge it.”); Portico Management Group, LLC v. Harrison (2011) 202 Cal.App.4th 464, 478 (“Having accepted and confirmed the arbitration award against the HCT, without any attempt to have either the arbitrator or the court correct it . . . , Portico is bound by the terms of the arbitration award.”).)

 

Defendants argues “Judge Beckloff effectively re-opened the Arbitration by ordering the Arbitrator to clarify his Award,” (Reply at 8:2-6), citing no authority. A request for clarification does not reopen the merits of the arbitration. (See Mossman v. City of Oakdale (2009) 170 Cal.App.4th 83, 91.) Defendants cite Loving & Evans v. Blick (1949) 33 Cal.2d 603 and Sheppard, Mullin, Richter & Hampton, LLP v. J-M Manufacturing Co., Inc. (2018) 6 Cal.5th 59 to argue their motion is timely because, Defendants claim, the Partial Final Award regarding Parcel 29 violates the Subdivision Map Act. (Reply at 8:5-23.) However, neither Loving nor Sheppard addressed the timeliness of a motion to correct an arbitration award as raised by Plaintiffs.

 

As argued by Plaintiffs, claims that the arbitration award violates a statute are subject to the same 100-day jurisdictional deadlines. (Santa Monica, supra, 243 Cal.App.4th at 546 (“We decline to construe South Bay Radiology as authorizing judicial review of untimely challenges to arbitration awards whenever those challengers assert that the award contravenes a statute; to do so would create an exception that would swallow the general rule hinging jurisdiction on the timeliness of the challenge.”); Law Finance Group, LLC v. Key (2021) 67 Cal.App.5th 307, 322 n.8 (“In Santa Monica, we rejected the argument that a trial court is empowered ‘to entertain a challenge to an arbitration award based on the award's illegality, even when the challenging party missed the 100-day filing and service deadline.”).) Defendants failed to meet this deadline and their motion is untimely.

 

Defendants also cite Code of Civil Procedure section 473(b), (Mot. at 3:18-28, 11:7-16:2; Reply at 8:24-9:18), which does not provide a separate basis for relief. Section 473(b) does not extend the time to file a petition to correct an arbitration award. (Abers, supra, 217 Cal.App.4th at 1212.) As noted by Plaintiffs, Defendants’ motion, filed on August 26, 2022 and amended August 29, 2022, was filed more than six months after entry of the February 17, 2022 judgment and therefore is untimely under Code of Civil Procedure section 473(b). (Thompson v. Vallembois (1963) 216 Cal.App.2d 21, 24 (“Relief can not be granted under section 473 of the Code of Civil Procedure if the proceeding invoking relief is instituted or the motion made more than six months after the date of entry of the [judgment]. The motion was made too late, and the trial court simply lacked jurisdiction to act under it.”).)

 

Defendants cite, without proper pin citations, Gibson, County Treasurer v. River Farms of California (1942) 49 Cal.App.2d 278 and Barnes v. Chamberlain (1983) 147 Cal.App.3d 762 in support of their contention that “the time for a Section 473(b) Motion has yet to run.” (Mot. at 15:20-24; Reply at 9:2-3.) Defendants also cite Frantz v. Mallen (1928) 204 Cal. 159, which directed the trial court to amend a demurrer ruling to allow for leave to amend where the plaintiff filed a motion to amend the complaint three weeks after the demurrer order. None of these cases involved relief under Section 473(b) and are therefore inapposite.

 

The Court finds Defendants’ motion untimely and the Court lacks jurisdiction to entertain it on the merits.

 

The Court also notes the order sought by Defendants would not be available under Code of Civil Procedure section 1286.6. The “power to correct an award after it has been issued to the parties is limited to evident miscalculations of figures or descriptions of persons, things or property [Citation] and non-substantive matters of form that do not affect the merits of the controversy. [Citation].” (Century City Medical Plaza v. Sperling, Isaacs & Eisenberg (2001) 86 Cal.App.4th 865, 877.) Defendants’ request does not identify a non-substantive matter of form or an improper description such as an incorrect address, but rather argues the manner in which the arbitrator divided the property was not supported by the evidence. The arbitrator issued the Partial Final Order containing the definitions at issue and, in the clarification document, reiterated that the language was as intended. The Court will not correct that determination. (See also Cooper v. Lavely & Singer Professional Corp. (2014) 230 Cal.App.4th 1, 12 (“courts will not review the arbitrator's reasoning or the sufficiency of the evidence supporting the award.”); Rifkind & Sterling, Inc. v. Rifkind (1994) 28 Cal.App.4th 1282, 1290 (“[T]he substantive grounds for . . . correcting an arbitration award . . . does not reach the intrinsic validity of the award.”); DeMello v. Souza (1973) 36 Cal.App.3d 79, 87 (“where, as here, the arbitrator decided a point pursuant to a valid contract, the parties are bound by the award even if the decision of the arbitrator is wrong.”).)