Judge: Theresa M. Traber, Case: BC673670, Date: 2024-06-07 Tentative Ruling

Case Number: BC673670    Hearing Date: June 7, 2024    Dept: 47

Tentative Ruling

Judge Theresa M. Traber, Department 47

HEARING DATE:     June 7, 2024               TRIAL DATE: NOT SET

CASE:                         Samson Michael, as Trustee of the Mishael Family Trust of 2004, derivatively on behalf of Hillcrest Cetner, LLC v. Simontov Eshaghian, individually and as Trustee of the Eshagian Family Trust dated November 8, 1995, et al.

CASE NO.:                 BC673670           

PETITION TO CONFIRM ARBITRATION AWARD

MOVING PARTY:               Defendant/Cross-Complainant Simontov Eshaghian

RESPONDING PARTY(S): Plaintiff/Cross-Defendant Samson Michael, as Trustee of the Mishael Family Trust of 2004

CASE HISTORY:

·         08/24/17: Complaint filed.

·         01/28/19: First Amended and Verified LLC Member Derivative Complaint filed.

·         08/29/19: Cross-Complaint filed.

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

Plaintiff alleges that Defendant Eshaghian, the other member of Hillcrest Center, LLC, drove the LLC into financial ruin and converted its real estate holdings to his own use, and conspired with co-Defendants to acquire the underlying loan and foreclose on the property. Defendant Eshaghian has filed a cross-complaint for judicial dissolution of Hillcrest Center, LLC. 

Defendant petitions for confirmation of an arbitration award.

TENTATIVE RULING:

            The Petition to Confirm Arbitration Award is GRANTED.

DISCUSSION:

Defendant petitions for confirmation of an arbitration award.

Legal Standard for Confirmation of Arbitration Award

Any party to an arbitration award may petition the court to confirm, correct, or vacate the award. (Code Civ. Proc. § 1285.) “If a petition or response under this chapter is duly served and filed, the court shall confirm the award as made, whether rendered in this state or another state, unless in accordance with this chapter it corrects the award and confirms it as corrected, vacates the award or dismisses the proceeding.” (Code Civ. Proc. § 1286, bold emphasis added.) A petition to confirm a binding arbitration must name as respondents all parties to the arbitration and may name any other parties to be bound by the award. (Code Civ. Proc. § 1285.) The petition shall (1) set forth the substance of or have attached a copy of the agreement to arbitrate unless petitioner denies the existence of such an agreement; (2) set forth the name(s) of the arbitrator(s); and (3) set forth or have attached a copy of the award and written opinion of the arbitrator. (Code Civ. Proc. § 1285.4(a)-(c).)

The petition to confirm must be served and filed no later than four years after the date of service of a signed copy of the award on the petitioner (Code Civ. Proc. § 1288) but may not be served and filed until at least 10 days after service of the signed copy of the award upon the petitioner.  (Code Civ. Proc. § 1288.4.)

Procedural Compliance

Here, all parties to the arbitration are named in the petition. (Petition ¶ 1.) The agreement to arbitrate is attached to the Petition. (Attach. 4b) The name of the arbitrator, the Hon. Victor B. Kenton (ret.), is set forth in the Petition. (¶6.)

A copy of the executed arbitration award, dated April 12, 2024, is also attached to the petition and was served on Respondent on that same day. (Attach. 8c.) The petition to confirm was filed on May, 2024, and served the same day by email. (See Proof of Service.) These dates are all within four years from the date the award was served and more than ten days after the award was served.

Timeliness of Response

Plaintiff filed and served a response to the petition on May 28, 2024. Pursuant to Code of Civil Procedure section 1290.6, any response to a petition to confirm an arbitration award must be served and filed within 10 days of service of the petition, unless the parties stipulate otherwise in writing or if the Court finds good cause to order otherwise. (Code Civ. Proc. § 1290.6) Here, however, the response to the petition was filed and served well past that deadline for a petition filed and served on May 1. Plaintiff’s counsel concedes this defect and states that his office calendared the deadline to oppose the petition as if it were a regularly noticed motion under Code of Civil Procedure section 1005(b). (Declaration of George Shohet ISO Opp. ¶ 4.) Although Defendant objects to the late filing of the response, Defendant does not demonstrate any prejudice caused by the late service and filing of the response. The Court therefore finds good cause to permit the late filing of Plaintiff’s opposition and to address that opposition on its merits.

Plaintiff’s Response to Petition

Plaintiff/Cross-Defendant objects to the petition and argues that the Court should not confirm the arbitration award because the arbitrator did not fully address the issue of the cross-complaint which was submitted to him. An arbitrator is obligated to determine “all the questions submitted to the arbitrator[], the decision of which is necessary in order to determine the controversy.” (Code Civ. Proc. § 1283.4.) The Court is obligated to vacate the award if the arbitrator’s failure to determine a necessary matter constitutes either an excess of authority which cannot be corrected without affecting the merits of the decision (Code Civ. Proc. § 1286.2(a)(4)) or a situation where “[t]he rights of the party were substantially prejudiced . . . 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.” (Code Civ. Proc. §1286.2(a)(5).)

Plaintiff contends that the arbitration award should be vacated because the arbitrator did not decide the issue of the Cross-Complaint which demanded dissolution of the LLC. The arbitration award addresses the merits of the underlying complaint, concluding that Defendant did not breach any of his fiduciary duties to the LLC or to Plaintiff, while Plaintiff breached his duties to both. (Attach. 8c. p.7:4-7.) As to the Cross-Complaint, the award acknowledges that the Cross-Defendant argued that dissolution of the LLC was impossible because it is suspended, and “defer[red] to the Superior Court to determine this issue if the parties continue to disagree,” and offered recommendations on the appropriate form of that dissolution, without ruling. (Id. p.7:8-15.)

Plaintiff contends that determination of the cross-complaint was necessary and that the arbitrator’s failure to conclusively rule on the matter prejudiced his interests. Defendant, in reply, argues to the contrary, construing the arbitrator’s award as declining to grant the request for dissolution but offering suggestions on the appropriate form that measure should take if it were ever enacted. As Defendant argues, “[i]t is for the arbitrators to determine which issues were actually ‘necessary’ to the ultimate decision.” (Morris v. Zuckerman (1968) 69 Cal.2d 686, 690 [citing Grunwald-Marx, Inc. v. Los Angeles Joint Board (1959) 52 Cal.2d 568 589-90.) The failure to make a finding on even an express claim does not invalidate the award if the award serves to settle the entire controversy. (Sapp v. Barenfeld (1949) 34 Cal.2d 515, 522-23.)

More crucially, Plaintiff/Cross-Defendant does not explain how the failure to award Defendant/Cross-Complainant the relief sought constitutes substantial prejudice to Cross-Defendant’s rights. In addition, Defendant now concedes that so long as the LLC is suspended, dissolution is impossible, and contends that there can be no prejudice to Plaintiff’s interests in that respect because Defendant, as the Cross-Complainant, is abandoning the request for dissolution to secure confirmation of the award and an end to the dispute. (See Reply p. 10:4-7.) An order confirming the arbitration award would therefore obviate any risk of prejudice to Plaintiff/Cross-Defendant, because Cross-Complainant would be bound to that judicial admission in any potential future action. Further, that concession renders the claim for dissolution, in the Court’s view, non-essential because the party asserting it is now expressly abandoning that claim as legally invalid so long as the suspension remains in effect.

The Court is therefore not persuaded that the arbitration award must be vacated on any of the bases asserted by Plaintiff/Cross-Defendant.

CONCLUSION:

            Accordingly, the Petition to Confirm Arbitration Award is GRANTED.

            Moving Party to give notice.

IT IS SO ORDERED.

Dated:  June 7, 2024                           ___________________________________

                                                                                    Theresa M. Traber

                                                                                    Judge of the Superior Court

            Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept47@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 part.