Judge Randolph M. Hammock, Case Number: 23STCP03468, Date: 2023-12-21 Tentative Ruling

Judge: Randolph M. Hammock, Case: 23STCP03468, Date: 2023-12-21 Tentative Ruling

Petitioner Ken-Lar, LLC, brings this petition to correct the arbitration award entered after binding arbitration between Petitioner and Respondent, Chestnut Holdings, Inc. Respondent opposed.

Under Code of Civil Procedure section 1285, any party to arbitration in which an award has been made may petition the court to correct the award. (Code Civ. Proc., § 1285.) The petition must be duly served and filed, and all petitioners and respondents must be before the court or “have been given reasonable notice that the court will be requested at the hearing to correct the award or that the court on its own motion has determined to correct the award and all petitioners and respondents have been given an opportunity to show why the award should not be corrected.” (Code Civ. Proc., § 1286.8.)

As to arbitration awards, “[o]nly limited judicial review is available; courts may not review the merits of the controversy, the validity of the arbitrator’s reasoning, or the sufficiency of the evidence supporting the award.” (Shahinian v. Cedars-Sinai Medical Center (2011) 194 Cal.App.4th 987, 999–1000.) “Thus, with ‘narrow exceptions,’ an arbitrator's decision is not reviewable for errors of fact or law.” (Ibid.) “This is so even if the error appears on the face of the award and causes substantial injustice.” (Ibid.)

This matter arises from a dispute over the purchase of real property located at 301 S. Kenmore Ave., Los Angeles, CA 90020. (See “Arbitration Award,” Attachment 8(c).) In connection with Respondent Chestnut Holdings, Inc.’s attempt to purchase the property from Petitioner Ken-Lar, LLC, Chestnut submitted a $1 Million dollar security deposit in escrow. Chestnut later cancelled the transaction and demanded return of the security deposit. Ken-Lar refused to permit escrow to release the funds. (Id.)

On or about July 14, 2021, Chestnut filed suit against Ken-Lar in Los Angeles Superior Court, Case Number 21STCV25936. (Id.) On or about September 27, 2021, the parties stipulated to stay the action pending binding arbitration. (Id.)

The parties arbitrated the action during a four-day hearing before arbitrator Richard A. Stone (Ret.) from June 20 through June 24, 2022. (Id.) On November 27, 2022, the Arbitrator issued an Interim Arbitration Award in favor of Respondent. (Id.) As part of the award, the Arbitrator concluded Respondent was entitled to its reasonable costs and fees, to be determined by noticed motion. (Id., Appendix, Exh. C., p. 84.)

After briefing the issue of attorney’s fees and costs, the Arbitrator awarded Respondent fees and costs, which included $40,950.00 reflecting amounts paid by Respondent to expert Cojito Realty Partners (Appendix, Exh. D., page 91); and $116,450.00 reflecting amounts paid by Respondent to the arbitrator. (Appendix, Exh. D., page 94). These costs now form the basis of the instant motion to correct the award.

On or about March 6, 2023, the Arbitrator issued an Order on Motion for Attorney’s Fees (the “Fees Order”), granting the entirety of the Disputed Fees. (Appendix, Exh. I, pp. 335-344.) On or about June 14, 2023, the arbitrator issued a Final Arbitration Award, incorporating both the Interim Award and Fees Order (the “Arbitration Award”). (See Attachment 8(c).)

In support of its motion to correct the award, Ken-Lar contends the Arbitrator exceeded his powers by awarding Chestnut expert fees and the arbitrator’s fees. (See Petition Attachment, ¶¶ 19, 22, 24.) Ken-Lar asserts that neither applicable law nor the Signature Resolution rules supported the Arbitrator’s determination that such fees or costs were recoverable. Thus, Ken-Lar asks this court to correct the award by removing the arbitrator’s fee and expert witness fees from the final award.

Chestnut opposes the Petition. Chestnut notes that the Arbitrator based his award on the parties’ underlying agreement, the relevant law, and Signature Resolution’s rules governing the award of fees and costs. (Response 2: 11-17.) It further argues the issue of fees and costs was solely within the jurisdiction and discretion of the Arbitrator. This court agrees.

Here, Ken-Lar has failed to demonstrate that the Arbitrator abused or exceeded his authority in resolving the issue of fees and costs in Chestnut’s favor. The underlying Agreement itself provided that “[i]n any…arbitration between Buyer and Seller arising out of this Agreement, the prevailing Buyer or Seller shall be entitled to reasonable attorneys fees and costs from the non-prevailing Buyer or Seller.” (See Steinberg Decl., Exh. B, ¶ 34.) Based on this agreement and relevant authorities, the Arbitrator determined Chestnut could recover the disputed fees.

A reviewing court’s ability to correct or vacate an award is limited. “[A]n arbitrator's decision is not generally reviewable for errors of fact or law, whether or not such error appears on the face of the award and causes substantial injustice to the parties.” (Moncharsh v. Heily & Blase¿(1992) 3 Cal.4th 1, 6.) “Arbitrators do not exceed their statutory powers merely by rendering an erroneous decision on a legal or factual issue, so long as the issue was within the scope of the controversy submitted to the arbitrators.” (Roehl v. Ritchie (2007) 147 Cal.App.4th 338, 348.)

Where, as here, a contract contains a clause that authorizes an award of attorneys’ fees and costs, the arbitrator has the power to award fees and costs. (Kahn v. Chetcuti (2002) 101 Cal.App.4th 61, 65-66.) “So long as an arbitrator has . . . the power to decide that issue, his decision thereon cannot exceed his powers….” (Creative Plastering, Inc. v. Hedley Builders, Inc. (1993) 19 Cal.App.4th 1662, 1666; (Maaso v. Signer (2012) 203 Cal.App.4th 362, 378, internal quotations omitted [“where the entitlement to attorney fees is within the scope of the issues submitted to binding arbitration, arbitrators do not exceed their powers by denying a party's request for attorney fees, even where such a denial order would be reversible legal error if made by a court in civil litigation”].) Therefore, there are no grounds to correct the award in Ken-Lar’s favor.

Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept49@lacourt.org by no later than 4:00 p.m. the day before the hearing. All interested parties must be copied on the email. It should be noted that if you submit on a tentative ruling the court will still conduct a hearing if any party appears. By submitting on the tentative you have, in essence, waived your right to be present at the hearing, and you should be aware that the court may not adopt the tentative, and may issue an order which modifies the tentative ruling in whole or in