Judge Ralph C. Hofer, Case EC067583 2023-03-24 Tentative Ruling

Plaintiff Pointe Assets, LLC, the successor in interest to Catalina Media Development, LLC (“CMD”), alleges that CMD owns real property in Burbank, commonly referred to as “The Pointe,” an office building and parking garage. Plaintiff alleges that in early 2006, plaintiff entered into an agreement with Krismar Construction Co. concerning construction of the Pointe, which, in turn, for the benefit of CMD, entered into a subcontract with defendant Benson Industries, Inc. (Benson) to design and build an exterior curtain wall glazing system. Benson then hired for the benefit of CMD, defendant Viracon, Inc. (Viracon) which manufactured and supplied certain IG Units for the curtain wall glazing system. Plaintiff alleges that a sealant for the system, PIB, was manufactured and supplied to Viracon by defendants Quanex I.G. Systems, Inc. (Quanex) and/or Truseal Technologies, Inc. (Truseal).

Plaintiff alleges that the project was substantially complete in April of 2009, but in April of 2016 a tenant notified CMD’s property manager of a dirty window. It was then discovered that the problem was not dirt but film formation comprised of PID forming between the panes of glass in the sealed IG units, so that there is no way to clean the film formation or repair the PIB without damaging the IG Units, and the exterior curtain wall glazing system.

The pleading alleges that Benson acknowledged in the subcontract that CMD is a third-party beneficiary of that contract, and plaintiff alleges breaches of the warranties of that subcontract, as well as various theories of product liability, negligence, and breach of warranty against defendants.

The court informed counsel that several defendants had joined in the motion to compel arbitration, and the court would continue the motion to compel arbitration from the other defendants concerning whether the motion was moot, or was to go forward. Supplemental briefing was ordered, and the matter continued to June 22, 2018.

At the hearing on June 22, 2018, the court’s tentative ruling was that the motion to compel arbitration was moot in light of the dismissal of the moving party, and to deny the “joinders” without prejudice, and indicated that if the joinder defendants represented that they would file new stand-alone motions to compel arbitration, the court would keep the stay of the matter in place pending the court’s adjudication of those motions, so long as such motions were filed within 30 days of the hearing date. At the hearing, the court asked counsel if any of the joined parties were considering filing their own motion, there was a response in the positive, and the minute order states, “Court orders the stay to remain in effect.” The minute order also states, “Court remarks that you have thirty (30) days to do so.”

On July 20, 2018, defendant Viracon filed a motion to compel arbitration, which was set for hearing on November 30, 2018. On July 23, 2018, defendants Quanex and Truseal filed a motion to compel arbitration and joinder in Viracon’s motion, which was also set for hearing on November 30, 2018.

The matters were continued to December 14, 2018, and heard. The court granted the motion by defendant Viracon, and ordered: “Plaintiff Pointe Assets, LLC and Defendant Viracon, Inc. are ordered to arbitrate this matter according to the Agreement set forth in the subject Subcontract.”

The arbitrator in its May 4, 2020 ruling had determined there was no agreement requiring plaintiff and Viracon to arbitrate the limited remedies before the arbitrator pertaining to the claim or counterclaim, found that resolution of the dispute was not within the jurisdiction and powers granted to the arbitrator, and dismissed the counterclaim and Viracon’s claim without prejudice.

“The Court finds that the Arbitrator exceeded the arbitrator’s powers in declining to conduct arbitration of the claim of plaintiff, and that the award cannot be corrected without affecting the merits of the decision upon the controversy submitted, which this Court has previously found is a decision on the merits to be made in arbitration.

The Ruling on Respondents’ Second Motion Objecting to Jurisdiction, dated May 4, 2020 is vacated, and plaintiff Pointe Assets, LLC and defendant Viracon, Inc. are again ordered to submit the entire controversy between them to binding arbitration pursuant to the terms of the subject Subcontract.

On February 24, 2023, the court heard a motion to file three documents in opposition to the motion under seal. The court continued the motion to March 17, 2023 for supplemental briefing, finding that the showing made did not establish that an overriding interests would be prejudiced if the documents were not filed under seal. The court ordered the parties to engage in good faith meet and confer regarding the factual basis for plaintiff’s confidentiality designations, and whether the documents could be redacted of confidential information only, and specified what information was to be included in the supplemental briefing.

The minute order also indicated, “If the parties stipulate in advance that the documents are to be filed as public records, the parties must notify the court of such a circumstance no later than the date the first supplemental brief is due.” The first supplemental brief was ordered due by March 2, 2023.

On March 2, 2023, defendant filed a Stipulation to Withdraw Defendant Viracon, Inc.’s Motion to File Three Documents Under Seal and to Refile Them with Redactions of One Document, indicating the parties had agreed to file two of the three documents publicly, and to file publicly a “redacted” version of Exhibit F (Membership Interests Purchase and Sale Agreement) to the Ekman Declaration in opposition to the motion to confirm arbitration. The parties also stipulated that Viacom withdrew its motion for file documents under seal. There was no order of the court requested or made permitting the filing of the redacted document.

On March 3, 2023, defendant filed a Supplemental Declaration of John C. Ekman, which included Exhibit F, which appears to have redacted certain information from paragraphs 2.2 and 2.3 of the document, and possibly other information. The document is over 50 pages long, the redacted items appear to be whited out rather than blacked out so that it is difficult to locate the redactions. It was not specified by the parties what information had been redacted or why it could not be publicly disclosed and qualified for a sealing order. The Stipulation and Supplemental Declaration were not accompanied by a motion to permit the filing of the redacted document under seal, and no unredacted copy of Exhibit F had been submitted to the court other than in connection with the motion to seal which had been withdrawn.

On March 17, 2023, the matter was called for hearing. The court, on its own motion, pursuant to CCP section 436, ordered stricken Exhibit F from the Supplemental Declaration of John C. Ekman, as not filed in conformity with the law. The court ordered defendant Viracon to file with the court and serve an unredacted document identified as Exhibit F (Membership Interest Purchase and Sale Agreement), to be attached to a further declaration with the document clearly identified in the caption and further declaration as “Unredacted Copy of Exhibit F.” The court ordered that the order to file and serve the unredacted Exhibit F would not become effective until March 22, 2023, at noon, to permit plaintiff, if plaintiff so chose, to promptly apply for a sealing order before the unredacted record, Exhibit F, was filed as a public record. The parties at the hearing indicated the matter of Exhibit F could be taken care of and requested that the proceedings be continued to March 24, 2023.

On March 22, 2023, defendant Viracon filed a “Second Supplemental Declaration of John C. Ekman in Support of Defendant Viracon Inc.’s Opposition to Motion to Confirm Arbitration Award and Request for Dismissal of Action or to Vacate Award or Dismiss Proceedings with Unredacted Exhibit F.” The Second Supplemental Ekman Declaration indicates “Attached as Exhibit F is an unredacted copy of the Membership Interests Purchase and Sale Agreement (“MIPSA”), dated September 14, 2017.” [Second Supp. Ekman Decl., para. 7]. The court has reviewed Exhibit F and finds that the information previous redacted from paragraphs 2.2 and 2.3 of MIPSA is now provided in unredacted form. The court has considered the unredacted document Exhibit F.

“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.”

Under CCP §§ 1286.4 and 1286.8, governing the conditions for vacating or correcting an award, the court may not vacate or correct an award unless a response requesting that the award be corrected or vacated has been duly served and filed. Such a response to a petition must be filed within 10 days after service of the petition. CCP § 1290.6.

The petition filed by plaintiff satisfies the statutory requirements. As indicated above, if a petition is duly served and filed, the court shall confirm the award, unless it either corrects or vacates the award or dismisses the proceeding in accordance with the sections governing those proceedings. CCP § 1286.

The moving papers also identify the arbitrators on the arbitration panel, indicating that a Statement of Claim was filed with the American Arbitration Association, and “A three-member panel of arbitrators was subsequently selected, comprising [sic] of the Honorable Robert C. Bonner, G. Christian Roux, Esq., and Michael J. Bayard, Esq.” [Allayee Decl., para. 13].

The moving papers also submit the 93-page Interim Award issued by the arbitration panel on June 15, 2022, and the 126-page Final Award issued by the arbitration panel on December 7, 2022, following the filing of post interim award briefs ordered by the arbitration panel. [Allayee Decl., paras. 18, 20, Exs. 13, 14]. That award was executed on December 7, 2022, but has a date on its face of December 8, 2022.

(5) The rights of the party were substantially prejudiced by the refusal of the arbitrators to postpone the hearing upon sufficient cause being shown therefor 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.

(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.”

It is the general rule that “the merits of an arbitration award, either on questions of fact or of law, are not subject to judicial review.” Board of Education, at 275, citing Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 8-13. Instead, judicial review is limited to the statutory grounds provided with respect to arbitration awards. Moncharsh, at 13.

With respect to CCP §1286.2 (a) subdivision (4), it is recognized that great deference is due an arbitrator's decision on the merits of a controversy, but that the court retains authority to overturn awards as beyond the arbitrator's powers, "whether for an unauthorized remedy or decision on an unsubmitted issue." Advanced Micro Devices, Inc. v. Intel Corp. (1994) 9 Cal.4th 362, 375.

“Thus, it is the general rule that, with narrow exceptions, an arbitrator's decision cannot be reviewed for errors of fact or law. In reaffirming this general rule, we recognize there is a risk that the arbitrator will make a mistake. That risk, however, is acceptable for two reasons. First, by voluntarily submitting to arbitration, the parties have agreed to bear that risk in return for a quick, inexpensive, and conclusive resolution to their dispute.(See That Way Production Co. v. Directors Guild of America, Inc. (1979) 96 Cal.App.3d 960, 965 [158 Cal.Rptr. 475] [hereafter That Way].) As one commentator explains, “the parties to an arbitral agreement knowingly take the risks of error of fact or law committed by the arbitrators and that this is a worthy 'trade-off' in order to obtain speedy decisions by experts in the field whose practical experience and worldly reasoning will be accepted as correct by other experts.” (Sweeney, Judicial Review of Arbitral Proceedings (1981-1982) 5 Fordham Int'l L.J. 253, 254.) “In other words, it is within the power of the arbitrator to make a mistake either legally or factually. When parties opt for the forum of arbitration, they agree to be bound by the decision of that forum knowing that arbitrators, like judges, are fallible.” (That Way, supra, at p. 965.)”

The California Supreme Court in Richey v. AutoNation, Inc. (2015) 60 Cal.4th 909 discussed the scope of a trial court’s role in confirming or vacating an arbitration award, reviewing the California Arbitration Act and the Federal Arbitration Act and the history of case law, and again set forth only narrow grounds for vacating an award, including, evident miscalculation or mistake, issuance in excess of the arbitrator’s powers, imperfection in form, where a party claims an arbitrator has enforced an entire contract or transaction which is illegal, or where an arbitration award involves parties’ nonwaivable statutory rights. Richey, at 916-919.

Defendant argues that because all damages associated with the IGU replacement project were incurred by CMD Investment I and Catalina Media Partners, and not by CMD, plaintiff Pointe Assets lacks standing to recover those damages and interest on those damages. Defendant argues that damages that were never incurred by CMD could not be assigned to Pointe Assets by CMD, and that as a result, this court lacks jurisdiction to confirm the award.

Defendant relies on federal case law for the proposition that if an assignee fails to establish its assignor suffered the injury for which the assignee seeks recovery, the assignee lacks standing. See MAO-MSO Recovery II, LLC v. Farmers Insurance Exchange (C.D. Cal. 2022) 2022 WL 1690151, at *2, 14; In re Countrywide Fin. Corp. Mortgage-Backed Securities Litigation (C.D. Cal. 2012) 860 F.Supp.2d 1062, 1079.

Defendant argues that Pointe Asset’s assignor, CMD, did not incur any of the damages for which Pointe Asset is seeking recovery through confirmation of the final award. Defendant indicates that on September 14, 2017, CMD Investment I and the Buyers signed the Membership Interest Purchase and Sale Agreement (MIPSA), which transferred CMD Investment I’s membership interest in CMD to the Buyers. Defendant argues that of the $350 million for which its membership interest sold, $16,850,264.94 was deducted from CMD Investment I’s closing proceeds and placed into escrow to fund all costs of replacing the IGUs installed on The Pointe. Defendant indicates that Catalina Media Partners then deposited the remaining $1,149,735.06 to fully fund the $18 million holdback escrow account and argues that all amounts incurred to replace the IGUs were to be paid, and ultimately were paid, from this escrow account, and that any amounts remaining in the account were to be returned to CMD Investment I and Catalina Media Partners, not to CMD or Pointe Assets.

Defendant argues that CMD was not a party to the MIPSA, had no obligation to replace the IGUs or to fund the holdback escrow account, and thus CMD had no injury in fact, but the specific purpose of the holdback provision was to shield CMD and the buyers from suffering any injury, while guaranteeing that the IGUs would be replaced at the expense of CMD Investment I and Catalina Media Partners. Defendant relies on a portion of the MIPSA language which states:

“Buyer, Seller and CMP acknowledge and agree that the Window Remediation Holdback is intended to give Buyer assurance that sufficient funds are available to achieve the Window Remediation Completion, but that same shall not be a limitation on Seller’s or CMP’s obligation to absolutely and irrevocably, relieve Buyer and any affiliate of Buyer from any liability or obligation in connection with the replacement of the windows as expressly contemplated by the Window Remediation Plan and in furtherance of the foregoing, Seller and CMP shall have an affirmative obligation to contribute or make available any additional amounts necessary to achieve Window Remediation Completion in accordance with the Window Remediation Plan, including the scope, timing and using the contractors set forth therein (such additional amounts, a “Window Remediation Shortfall”). Seller, CMP and Warranty Assignee agree to make available any Warranty Proceeds actually received by them to pay any Window Remediation Shortfall that actually is incurred by the Buyer (or the Company, as applicable).”

An initial problem with this showing is that the opposition memorandum points to no evidence in support of the facts relied upon, other than a reference to the MIPSA language, in the copy of the MIPSA attached to the declaration of counsel, who would have no personal knowledge concerning the authenticity or meaning of this documentation. There is no evidence offered pursuant to which this court could independently determine what was transferred or intended to be transferred pursuant to the MIPSA. The opposition points to no evidence concerning the timing or terms of the Assignment pursuant to which the arbitration panel determined that plaintiff had been assigned certain rights with respect to the damages claimed.

The argument appears to be an extension of an argument previously made by defendant during the arbitration, which resulted in a finding by the arbitration panel that certain of the damages sought by plaintiff were part of the “holdback funds” used to cover the repair and replacement costs and consequential damages associated with replacement and did not belong to CMD and were not part of CMD’s assignment to Pointe Assets. Defendant cites to “Award, p. 84.” [Opposition, p. 14]. Defendant does not specify whether the reference is to the Interim Award or the Final Award. The court has reviewed page 84 of both the Interim Award and the Final Award and finds no such language concerning the referenced issue.

A review of the portion of the Final Award which does address this issue, at pages 79-83, suggests that the arbitration panel considered carefully what had been the subject of the Assignment upon which damages were awarded, and found a lack of standing on the part of plaintiff only as to the claim for loss of use of the holdback funds, not a lack of standing with respect to the Assignment of the claim for damages to the building occasioned by defendant. [See Allayee Decl., Ex. 14, Final Award, at 79-83].

The section is entitled, “Viracon’s Defense Based on Lack of Standing is Meritorious and Therefore Point Assets’ Claim for Loss of Use of Capital Fails.” [Allayee Decl., Ex. 14, Final Award, p. 79]. This discussion shows that Viracon made a lack of standing argument in the arbitration proceeding, which the arbitration panel considered and analyzed.

The opposition seems to attempt to expand the scope of this decision by the arbitration panel. This argument that none of the damages awarded were incurred by or transferred by the assignor does not appear to be a matter upon which this court can find that the arbitration panel acted in excess of its authority, or otherwise engaged in conduct which would justify vacating the award.

The arbitration panel found that the damages awarded had been incurred by the assignor and assigned to the assignee. The Final Award expressly concludes, “After completion of the project, CMD sold The Pointe to a new entity. As part of that transaction, ownership of any claims with respect to the allegedly defective IGUs was assigned to another new entity, Point Assets, LLC (the claimant).” [Allayee Decl., Ex. 14, Final Award, pp. 8-9]. There have been no facts which have developed since this finding which would somehow change the jurisdictional posture since that time or plaintiff’s standing or justify this court in finding it now lacks jurisdiction.

Plaintiff points out that this expanded standing argument was in fact expressly rejected by the arbitration panel in its Final Award, in which it distinguished the arbitration panel’s ruling on the issue of loss of use of capital funds to the broader standing issue evidently argued by Viracon in connection with prejudgment interest in supplemental briefing submitted after the Interim Award had been served:

In contrast, as part of the Purchase and Sale Agreement relating to the sale of the Pointe Assets property, CMD assigned to Pointe Assets all of the rights it held to claims and damages arising out of defective window systems. See PA Exhibit 78, Exhibit Q. This assignment would include the right to recover prejudgment interest. Therefore, Pointe Assets has standing to seek such damages herein.”

The Assignment is attached to the Second Supplemental Ekman Declaration, entitled the “Assignment and Assumption of Warranties, Claims and Related Proceeds,” dated September 14, 2017, the same date as the MIPSA. [Second Supp. Ekman Decl., Ex. A]. Under the Assignment, Catalina Media Development, LLC, Assignor, “absolutely and unconditionally transfers and assigns to POINTE ASSETS, LLC,” as Assignee, “all of Assignors right, title and interest in and to,” all actions and claims “for all costs, damages of any and all kinds, liabilities, proceeds and remedies” with respect to “the existing or to be replaced windows” on the subject building. [Second Supp. Ekman Decl., Ex. A, p. 1].

The Assignment appears valid on its face, and the arbitration panel made findings in its Final Award, at least twice, that the Assignment was valid, covered the claims at issue, and conferred standing on the assignee, the arbitration claimant, to pursue those claims. [See Allayee Decl., Ex. 14, Final Award, pp. 8-9 (“ownership of any claims with respect to the allegedly defective IGUs was assigned to another new entity, Point Assets, LLC (the claimant)”); Final Award, pp.108-109 (“CMD assigned to Pointe Assets all of the rights it held to claims and damages arising out of defective window systems…. Pointe Assets has standing to seek such damages herein.”)].

Under the legal authority cited by defendant, “[a]n assignee stands in the shoes of the assignor, and, if the assignment is valid, has standing to assert whatever rights the assignor possessed.” MAO-MSO Recovery II, at *14, quoting Spinedex Physical Therapy USA Inc. v. United Healthcare of Arizona, Inc. (9th Cir. 2014) 770 F3d 1282, 1291. Plaintiff as assignee is appropriately pursuing the rights assigned in this matter. No lack of standing has been established here.

Defendant argues that the delayed resolution of the standing issue results entirely from plaintiff’s failure to timely produce the MIPSA in response to discovery. The argument seems to be that the MIPSA was withheld from discovery for nearly four years before it was produced. However, it appears from the declaration relied upon that the MIPSA was in fact produced on August 27, 2021. [Second Supp. Ekman Decl., para. 14, Ex M].

This was well before the arbitration was conducted in January of 2022, and, as discussed above, the arbitration panel in its Interim Award and Final Award reference that document, and the specific provision relied upon here, section 9.10. Any delay in producing the document clearly did not result in any inability on the part of defendant to make a standing argument in the arbitration proceeding based on the document, as defendant actually did so with respect to loss of use of funds damages, as well as in connection with prejudgment interest. The argument in connection with lack of standing to recover prejudgment interest as damages was in fact rejected by the arbitration panel, as discussed above.

Plaintiff also indicates that this document was used in the depositions of plaintiff’s witnesses Jeff Worthe and Stephanie Fulkerson, attached to the deposition transcripts as Exhibit 78, and that the witnesses were questioned regarding that document. [Reply Allayee Decl., para. 7].

Plaintiff points out that the showing submitted with the opposition does not include any specific request for the subject documentation, or show defendant expressed any dissatisfaction with the discovery produced until just prior to the actual production of the MIPSA, and also that there had been a stay imposed in this matter by the court. [See Second Supp. Ekman Decl., Exs. B-D, I, J; Reply Allayee Decl., Exs. 2-4, para. 8]. It appears that following the stay, the MIPSA was first requested in July of 2021, and produced in August of 2021, only a month later. [Reply Allayee Decl., para. 8; Second Supp. Ekman Decl., paras. 11-14, Exs. J-M].

In sum, there is no overall lack of standing established by defendant at all, other than with respect to the loss of use of funds issue recognized by the arbitration panel. There is no broader lack of standing established that arose at any point in the arbitration or this proceeding. This is particularly significant because the arbitration panel expressly rejected an argument expanding the purported lack of standing to prejudgment interest as damages. There is no sufficient showing that there was some excusable delay on the part of defendant in raising the issue, let alone a delay occasioned by plaintiff. The court will not vacate the award on the ground of lack of jurisdiction on the part of this court due to a purported lack of standing.

Plaintiff relies on Moncharsh, supra, in which the California Supreme Court applied a rule finding that in the circumstances of the case before it, the issue of purported illegality of contract was one which was arbitrable and was a question for the arbitrator in the first instance. The Court further observed:

“The issue would have been waived, however, had Moncharsh failed to raise it before the arbitrator. Any other conclusion is inconsistent with the basic purpose of private arbitration, which is to finally decide a dispute between the parties. Moreover, we cannot permit a party to sit on his rights, content in the knowledge that should he suffer an adverse decision, he could then raise the illegality issue in a motion to vacate the arbitrator's award. A contrary rule would condone a level of “procedural gamesmanship” that we have condemned as “undermining the advantages of arbitration.” (Ericksen, supra, 35 Cal.3d at p. 323 [rejecting a rule permitting determination by courts of preliminary issues prior to submission to arbitration]; see also Christensen v. Dewor Developments (1983) 33 Cal.3d 778, 783-784 [191 Cal.Rptr. 8, 661 P.2d 1088] [condemning filing of pre-arbitration lawsuit in order to obtain pleadings that would reveal opponent's legal strategy].) Such a waste of arbitral and judicial time and resources should not be permitted.

Plaintiff points out that here defendant filed joinders in then-pending motions requesting that the court send plaintiff’s claims to arbitration based on the Benson subcontract with defendant Viracon, to which plaintiff was not a party, and to which plaintiff objected. [See Allayee Decl., Exs. 1- 4]. The court then also accepted defendant Viracon’s position that the matter be arbitrated in ordering the matter back to arbitration after the original arbitrator determined that he did not have jurisdiction to adjudicate plaintiff’s claims. [See Allayee Decl., Exs. 6-11].

Now that defendant has had the benefit of conducting the arbitration which it pursued, and in the face of a damages award against it, defendant cannot now raise what defendant is arguing is a new issue which it was previously unable to raise due to the MIPSA not being turned over until several months before the arbitration was conducted. The standing issue is not new, as it was considered and determined in the arbitration, as discussed above. The MIPSA was also in defendant’s possession for sufficient time in advance of the arbitration to bring any issue raised by the MIPSA to the attention of the arbitration panel. Defendant in fact did so. If the issue were being raised for the first time in this request to vacate the award, which defendant concedes is a jurisdictional challenge which is not based on any new facts or change which has occurred since the arbitration was conducted, plaintiff makes a strong argument that defendant would have waived any such issue by not having raised it in the arbitration itself.

Defendant next argues that the arbitration panel exceeded it powers by adjudicating the injuries of non-parties to the arbitration. The argument is evidently made pursuant to CCP § 1286.2 (a)(4), under which a ground for vacating an arbitration award includes, “The arbitrators exceeded their powers and the award cannot be corrected without affecting the merits of the decision upon the controversy submitted.”

Defendant argues that the arbitration panel incorrectly adjudicated the injuries of CMD Investment I and Catalina Media Partners, which are not parties to this lawsuit, and were absent from the arbitration. The memorandum points to no decision in the Final Award which would support this argument. It appears that the rights determined were those conveyed by assignment of the warranties made by defendant Viracon to the assignor, and there is no authority cited under which the rights of and obligations owed to an assignor cannot be determined in an action brought by the assignee of such rights and obligations against the party who owed the obligations assigned. Defendant evidently had a full opportunity at the arbitration to make arguments concerning the validity or scope of the Assignment. As discussed in detail above, the arbitration panel expressly found that the warranties and rights had been assigned to the claimant.

Defendant also argues that the arbitration panel incorrectly considered the impact of the award on Viracon’s parent company in setting the amount of punitive damages. Defendant argues that the panel improperly awarded punitive damages, at least in part, for the purpose of deterring Viracon’s parent company. Defendant relies on the language in the Final Award in which the panel stated, “An additional $4,000,000 awarded as punitive damages, will not go unnoticed in the board room of Viracon or its parent company.” [Allayee Decl., Ex. 14, Final Award, p. 103]. Defendant argues it was error to tie the amount of punitive damages to a figure that would “not go unnoticed” by defendant’s parent company, which is not a party here.

It is clear even from the argument itself that the arbitration panel primarily considered the impact exemplary damages would have on Viracon, and a reading of the passage in context confirms this conclusion, as the passage appears in a section of the Final Award which actually rejects a request by plaintiff for a multiplier awarding even larger damages in connection with the punitive damages award, stating:

“The cases for a multiplier cited by Pointe Assets all involve conduct far more egregious than is the case here. Robinson, as noted, not only involved affirmative fraudulent representations, but the potential adverse effects on safety of pilots, passengers, and persons on the ground if a defective clutch failed. A critical point of the specification at issue there was to make sure that helicopters did not crash.

We are not unmindful that “California also has a legitimate and compelling interest in preserving a business climate free of fraud and deceptive practices.” Diamond Multimedia Systems, Inc. v. Superior Court, 19 Cal.4th 1036, 1064 (1999). However, as few of the reprehensibility factors warranting punitive damages are present, we are not persuaded that a multiplier is called for either as punishment or deterrence. Given that this is purely an economic loss case and the facts indicate that the conduct is at the low end of the reprehensibility scale, we believe a punitive damage award of $4,000,000 is appropriate and will accomplish the objective of sending a strong message to Viracon management respecting conduct that occurred fifteen years ago.

Defendant’s argument also omits the footnote to the quoted statement, in which the arbitration panel again indicates it was rejecting awarding an even higher punitive damage award, stating, “Although Viracon no doubt has a sizeable net worth, we do not read the cases as requiring that some percentage of net worth or profits is necessary or appropriate to achieve the purposes of punitive damages.” [Allayee Decl., Ex. 14, Final Award, p. 105, fn. 18]. The statement at issue was made to justify the sufficiency of the punitive damages award in response to arguments that a higher amount of punitive damages should have been awarded, not to justify the base amount of the award. There is no conduct by the arbitration panel in excess of jurisdiction here.

Moreover, as observed above, the trial court cannot in evaluating an arbitration award for purposes of determining whether arbitrators exceeded their authority under the statute vacate an award on the ground even an entirely erroneous legal standard was applied. Moncharsh, at 11-13.

Here, the moving papers and the award show that the award was based at least in part on the standard the moving party concedes is an appropriate standard; the deterrence of defendant company from engaging in improper conduct. The arbitration panel did not award even higher punitive damages based on a multiplier or a percentage of net worth of Viracon evaluation. There has been no ground established that the arbitration panel acted in excess of its authority here, and the award will not be vacated on this ground.

Finally, defendant argues that the court should vacate its order compelling arbitration, or dismiss the proceedings entirely, as a sanction for fraud on the court. Defendant does not rely on any provision of CCP § 1286.2, but argues that trial courts retain inherent authority to set aside orders obtained through fraud on the court.

The purported fraud on the court is that plaintiff falsely asserted in multiple pleadings that its assignor, CMD, had incurred or would continue to incur costs associated with the repair and replacement of the IGUs installed on The Pointe, then refused to produce the MIPSA, which would eventually give light to the falsity. Defendant argues that had it promptly been made aware that CMD did not and would not incur any repair and replacement costs, defendant would have brought a motion to dismiss for lack of standing at the beginning of the case.

The court finds that defendant has established no grounds to vacate the award or dismiss the proceedings. The petition to confirm the award will accordingly be granted. The court will confirm the Final Award of the arbitration panel, which will become the judgment of this court.

Judgment will be entered in favor of plaintiff Point Assets, LLC and against defendant Viracon, Inc., in the amount of $20,018,729.63. The award is to accrue simple interest at the rate of ten percent (10%) per annum from December 8, 2022 until the award is entered as Judgment by the Court, which interest will be added to the Judgment. [Allayee Decl., Ex. 14, Final Award, p. 117].

Please make arrangement in advance if you wish to appear via LACourtConnect/Microsoft Teams by visiting www.lacourt.org to schedule a remote appearance. Please note that LACourtConnect/Microsoft Teams offers free audio and video appearance. Counsel and parties (including self-represented litigants) are encouraged not to personally appear. With respect to the wearing of face masks, Department D recognizes that currently, the Los Angeles Department of Public Health strongly recommends masks indoors, especially when interacting with individuals whose vaccination status is unknown; for individuals who have a health condition that puts them at higher risk for severe illness; individuals who live with someone who is at higher risk; and for individuals who are around children who are not yet eligible for vaccines. In accordance with this guidance, it is strongly recommended that anyone personally appearing in Department D wear a face mask. The Department D Judge and court staff will continue to wear face masks. If no appearance is set up through LACourtConnect/Microsoft Teams, or otherwise, then the Court will assume the parties are submitting on the tentative.