Judge: Thomas D. Long, Case: BC708800, Date: 2022-09-13 Tentative Ruling

Case Number: BC708800    Hearing Date: September 13, 2022    Dept: 48

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES - CENTRAL DISTRICT

On June 4, 2018, Douglas Emmett 2013 LLC (“Douglas Emmett”) filed this action against I&G Direct Real Estate 10, LP (“I&G”) for appointment of an appraiser.  On July 5, 2018, I&G filed a cross-complaint for declaratory relief and an injunction prohibiting further efforts to continue the appraisal process.

On November 21, 2018, the Court granted Douglas Emmett’s motion to appoint an appraiser.  Following an appeal, the parties stipulated to the appointment of an appraiser and agreed that the appraisal process should be stayed pending the Court’s resolution of the dispute about the method of appraisal.  The parties also stipulated to filing cross-motions for summary judgment.

On March 5, 2021, Douglas Emmett and I&G each filed a motion for summary judgment of the cross-complaint, seeking a judicial determination of the proper interpretation of the lease for assessing the fair market value of the property.  On June 8, 2021, the Court denied Douglas Emmett’s motion for summary judgment, which argued that the property is not restricted to office use and determination of the fair market value must include the assessment of all general office, commercial, and related or ancillary uses, including all uses permitted by the applicable commercial zoning ordinances.  The Court granted I&G’s motion for summary judgment, which argued that the appraisers may not consider residential use or a use combining both residential and commercial uses for purposes of fair market valuation.

The parties conducted the arbitration on April 20 and 21, 2022.  On April 29, 2022, the arbitrators issued a determination of the fair market value of the property.

On August 5, 2022, Douglas Emmett filed a petition to vacate the arbitration award.  On August 17, 2022, I&G filed a response that included a request to confirm the award, and on August 30, 2022, I&G filed an opposition.

A party may petition the court to confirm, correct, or vacate an arbitration award, and a response to a petition may request that the court dismiss the petition or confirm, correct, or vacate the award.  (Code Civ. Proc., §§ 1285, 1285.2.)  The court must either confirm the award as made, correct the award and confirm it as corrected, vacate the award, or dismiss the proceeding.  (Code Civ. Proc., § 1286.)

The court must vacate the award if it determines that (1) the award was procured by corruption, fraud, or other undue means; (2) there was corruption in any of the arbitrators; (3) the rights of the party were substantially prejudiced by misconduct of a neutral arbitrator; (4) the arbitrators exceeded their powers and the award cannot be corrected without affecting the merits of the decision upon the controversy submitted; (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; or (6) an arbitrator making the award failed to make required disclosures or failed to disqualify himself.  (Code Civ. Proc., § 1286.2, subd. (a).)

Douglas Emmett contends that the arbitrators exceeded their authority and the award cannot be fairly corrected.  (Petition § 10c.)  Douglas Emmett argues that the panel exceeded its authority “by limiting ‘“commercial use” in Section 8.01 [of the Ground Lease] as referring to uses in connection with an office building rather than residential or mixed uses,’ thereby improperly excluding non-office commercial and related uses such as apartments and other multi-family commercial uses from the arbitration panel’s fair market value determination.”  (Petition § 10c(2).)

The arbitration award states that the arbitrators “reviewed court documents related to this matter, including the Order Granting I&G’s Motion for Summary Judgement of June 8, 2021.  To the best of [the arbitrators’] abilities, [they] have followed the requirements of the lease documents and court rulings in reaching a determination through this arbitration.”  (Petition, Ex. 8c.)  The arbitration included consideration of appraisal reports, testimony, and additional evidence and arguments presented pursuant to “the agreed-upon protocol for the arbitration.”  There is no indication that the arbitrators exceeded their authority or failed to follow the Court’s order on the proper interpretation of the lease for assessing the fair market value of the property.  Indeed, Douglas Emmett acknowledges that “[t]he arbitration panel’s error resulted from its good-faith application of this Court’s ruling on cross motions for summary judgment,” and this petition is “intended only to ensure that all issues related to the cross motions for summary judgment are preserved for appeal.”  (Petition § 10c(2).)

Accordingly, the motion to vacate the arbitration award is DENIED.  The request to confirm the arbitration award (Response at p. 4) is GRANTED.  (Code Civ. Proc., § 1286.)

Moving party to give notice.

Parties who intend to submit on this tentative must send an email to the Court at SMCDEPT48@lacourt.org indicating intention to submit.  Parties intending to appear are encouraged to appear remotely and should be prepared to comply with Dept. 48’s new requirement that those attending court in person wear a surgical or N95 or KN95 mask.

         Dated this 13th day of September 2022