>Diamond Mfg.
& Engineering Co. v. Equipment Parts Wholesale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Filed
11/4/13  Diamond Mfg. & Engineering Co.
v. Equipment Parts Wholesale CA5

 

 

 

 

 

 

 

 

 

 

NOT
TO BE PUBLISHED IN THE OFFICIAL REPORTS

 

California
Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or
relying on opinions not certified for publication or ordered published, except
as specified by rule 8.1115(b).  This
opinion has not been certified for publication or ordered published for
purposes of rule 8.1115.

 

 

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIFTH APPELLATE DISTRICT

 
>

DIAMOND MANUFACTURING & ENGINEERING CO.,   Plaintiff, Cross-defendant and Respondent,                           v.   EQUIPMENT PARTS WHOLESALE, LLC et al.   Defendants, Cross-complainants and Appellants.

F064701   (Super. Ct. No. 05CECG02942)     >OPINION

 

            APPEAL from
a judgment of the Superior Court of href="http://www.adrservices.org/neutrals/frederick-mandabach.php">Fresno
County.  Alan M. Simpson, Judge.

            Perkins,
Mann & Everett and Douglas V. Thornton for Defendants,
Cross-complainants and Appellants.

            Peel/Garcia,
Chester E. Walls and Manuel Garcia for Plaintiff, Cross-defendant and
Respondent.

-ooOoo-

            Plaintiff Diamond Manufacturing & Engineering Co.
(Diamond) entered into a contract with defendant Equipment Parts Wholesale, LLC
(EPW) under the terms of which Diamond was to manufacture certain quantities of
a machine known as a scissor lift, which would be purchased by EPW for
resale.  After delays and other problems
occurred in Diamond’s manufacturing efforts, EPW elected to terminate the
contract.  Diamond then sued for damages
based on alleged breach of contract and related causes of action, and EPW filed
a cross-complaint against Diamond.  The
parties agreed to resolve their dispute in binding arbitration.  Arbitration proceedings were held and, after
considering the evidence and arguments presented by the parties, the arbitrator
issued an award in favor of Diamond in the sum of $386,847.14.  Diamond petitioned the trial court to confirm
the arbitration award pursuant to Code of Civil Procedure section 1285.href="#_ftn1" name="_ftnref1" title="">^[1]  In response, EPW requested that the trial
court either (i) vacate the award since the arbitrator allegedly failed to
disclose a potential conflict creating an appearance of bias or (ii) correct
the amount of the award based on an alleged evident miscalculation of
figures.  The trial court denied both of
EPW’s requests, confirmed the arbitration award and entered judgment in favor
of Diamond.  EPW timely appealed.href="#_ftn2" name="_ftnref2" title="">^[2]  We conclude that the trial court properly
confirmed the arbitration award.  Therefore, the judgment is affirmed.

FACTS AND PROCEDURAL HISTORY

            In 2003,
EPW decided to expand its business from being a seller of replacement parts in
the lift industry to selling completely manufactured scissor lifts.  To effectuate this goal, EPW purchased the
assets and design plans of a former scissor lift manufacturer.  However, EPW needed to find a company that
would undertake the manufacturing process. 
After other prospects fell through, EPW settled on using Diamond as the
manufacturer.  EPW was aware that Diamond
did not have any experience in manufacturing scissor lifts. 

In 2004, EPW and Diamond reached
contractual terms for the manufacture of scissor lifts by Diamond that would be
purchased by EPW for resale.  Diamond was
to manufacture a total of 700 scissor lifts under the terms of two purchase
orders.  The first purchase order (dated
April 27, 2004) called for Diamond to manufacture and EPW to purchase 350 model
No. 2633 lifts at a unit price of $5,400, for a total purchase price of
$1,890,000, with payments due “net thirty days.”  The second purchase order (dated May 5,
2004) called for the manufacture and purchase of 350 model No. 1932 lifts at
a unit price of $3,600, for a total purchase price of $1,260,000, also with
payment terms of “net thirty days.”  The
purchase order for the model No. 2633 lifts included a delivery schedule. 

Production was much slower than
either party anticipated, but each side had differing explanations for what
caused the delayed output.  Diamond
contended the delays were due to unexpected problems such as inability to
secure parts within needed time frames, problems with the platforms on lifts
that were partially built by a third party before Diamond became the
manufacturer, nonpayment by EPW of its invoices, and normal problems in
learning and implementing a new manufacturing system.  On the other hand, EPW claimed that the problems
were due to the fact that Diamond failed to adequately staff its facility with
personnel qualified to manage the production lines and meet inventory
demands.  EPW also referred to Diamond’s
nonpayment of vendors, which created delivery delays and required EPW to step
in and pay delinquent accounts to vendors to make sure the parts kept
coming.  EPW also expressed concerns
regarding quality and safety issues. 

On September 24, 2004, shortly
after Diamond moved to a bigger production facility in Selma that was shared by
EPW, EPW notified Diamond that their contractual relationship was
terminated.  EPW also informed Diamond
that EPW’s new affiliate, CMEC, would be taking over the production.  At the time EPW terminated the contract,
Diamond had completed approximately 51 of the model No. 2633 lifts and 60
of the model No. 1932 lifts, although additional lifts were finished
before Diamond left the premises. 

One year later, on September 16,
2005, Diamond filed its complaint against EPW, asserting causes of action for
breach of contract, common counts and fraud. 
The complaint also named EPW’s related entity, CMEC, as a
defendant.  EPW filed a cross-complaint
against Diamond.  By the time of the
arbitration proceedings, EPW’s operative pleading was its first amended
cross-complaint, setting forth causes of action against Diamond for href="http://www.mcmillanlaw.com/">breach of contract, breach of implied
covenant of good faith and fair dealing, negligent misrepresentation and fraud.
 

The parties entered a stipulation
for binding arbitration of their dispute. 
On June 14, 2010, the trial court appointed Timothy J. Buchanan, an
attorney with the law firm of McCormick Barstow et al., to serve as the neutral
arbitrator to conduct the arbitration of the case.  The arbitration hearings, including
presentation of evidence, were held on May 9, 10, 11, 12, 13, 16, 17, 18, 19
and 20, 2011.  On June 29, 2011, the
arbitrator issued and served his written arbitration award.  After considering all the offsetting and/or
conflicting claims between the parties, the arbitrator awarded to Diamond the
sum of $386,847.14 in damages, payable jointly and severally by EPW and
CMEC.  The award also held that Diamond
was entitled to statutory costs under section 1032, upon a proper application
to the trial court for such costs, except that the costs of the arbitration and
the attorney fees of each party would be borne by the party incurring
them. 

On September 20, 2011, Diamond
filed a motion in the trial court to confirm the arbitration award.  On October 5, 2011, EPW filed its response
thereto, seeking to have the award vacated due to the arbitrator’s alleged
failure to make a required disclosure. 
Specifically, EPW argued the arbitrator was required to disclose that,
in a recently filed federal court action involving unrelated parties and
claims, the arbitrator was serving as the attorney for the plaintiff therein,
while, at the same time, one of the attorneys in the law firm that represented
EPW was representing the defendants in that same federal action.  According to EPW, this situation had to be
disclosed because it might cause a reasonable person to doubt whether the
arbitrator would be impartial in the arbitration.  Alternatively, EPW’s response to Diamond’s
motion to confirm requested that the trial court correct the amount of the
arbitration award due to an alleged damage calculation error.  After a reply by Diamond and a surreply by
EPW, the trial court confirmed the arbitration award on December 15, 2011.  Judgment was entered based on the confirmed
arbitration award.  EPW appealed, arguing
that its request to vacate or correct the award should have been granted.

DISCUSSION

I.          Questions Presented and Standard of
Review

            Preliminarily,
we observe that the grounds for challenging a contractual arbitration award are
exceptionally limited.  Courts may not
review the merits of the controversy, the arbitrator’s reasoning, or the
sufficiency of the evidence supporting the award.  (Moncharsh
v. Heily & Blase (1992) 3 Cal.4th 1, 11 (Moncharsh).)  Even “an error
of law apparent on the face of the award that causes substantial injustice does
not provide grounds for judicial review.” 
(Id. at p. 33.)  The sole grounds for challenging an
arbitration award are those set forth in sections 1286.2 and 1286.6, which
provide that an award shall be vacated or corrected in certain limited
circumstances.  (Moncharsh, supra,> at p. 33.)  “Although the parties to an arbitration
agreement accept some risk of an erroneous decision by the arbitrator, ‘the
Legislature has reduced the risk to the parties of such a decision by providing
for judicial review in circumstances involving serious problems with the award
itself, or with the fairness of the arbitration process.’  [Citations.]” 
(Haworth v. Superior Court
(2010) 50 Cal.4th 372, 380 (Haworth)
[referring to §§ 1286.2 & 1286.6].)

            Under
section 1286.2, one of the grounds for vacating an arbitration award is that
the arbitrator “failed to disclose within the time required for disclosure a
ground for disqualification of which the arbitrator was then aware .…”  (§ 1286.2, subd. (a)(6).)  A person appointed to serve as a neutral
arbitrator is required to disclose “all matters that could cause a person aware
of the facts to reasonably entertain a doubt that the proposed neutral
arbitrator would be able to be impartial .…”  (§ 1281.9, subd. (a).)  Following such disclosures, the parties are
afforded a window of time in which to disqualify the proposed neutral
arbitrator by serving a timely notice or demand.  (§ 1281.91, subds. (b) &
(d).)  However, if the arbitrator failed
to make the required disclosures, “the court shall vacate the award.”  (§ 1286.2, subd. (a)(6).)  In the present appeal, EPW argues the trial court
should have vacated the arbitration award because, according to EPW, the arbitrator
failed to disclose a disqualifying relationship.

            The parties
dispute the standard of review that is applicable where an arbitration award
was challenged in the trial court on the ground that the arbitrator failed to
disclose circumstances creating an appearance of partiality.  The recent case of Haworth has clarified the applicable standard of review.  (Haworth,
supra, 50 Cal.4th at
p. 383.)  In Haworth, the Supreme Court held that the issue of whether an
arbitrator was required to disclose a particular matter is “a mixed question of
fact and law that should be reviewed de
novo.”  (Id. at p. 385, italics added.) 
That is, where the underlying facts are not in dispute, the question of
whether, under the given circumstances, an objective reasonable person would
entertain doubts about the arbitrator’s ability to be impartial is reviewed de
novo.  (Id. at pp. 385-386.)  In
so holding, the Supreme Court noted that concerns of judicial administration
militate in favor of de novo review in such cases.  (Id.
at p. 386.)  Post->Haworth appellate decisions have
routinely applied the de novo standard of review to cases such as ours.  (See, e.g., Gray v. Chiu (2013) 212 Cal.App.4th 1355, 1362 [appeal from
judgment confirming arbitration award—disclosure issue reviewed de novo]; >Nemecek & Cole v. Horn (2012)
208 Cal.App.4th 641, 647 (Nemecek)
[same]; Benjamin, Weill & Mazer v.
Kors (2011) 195 Cal.App.4th 40, 52 [same].)

In the Haworth case, the
underlying facts were not in dispute (Haworth, supra, 50
Cal.4th at p. 383), which is also the case here.  To the
extent that the trial court’s ruling rests upon a determination of disputed
factual issues, we apply the substantial evidence test to those underlying
factual issues.  (See >Maaso v. Signer (2012) 203 Cal.App.4th
362, 371; Malek v. Blue Cross of
California (2004) 121 Cal.App.4th 44, 55-56.)

            The other issue before us stems from
the fact that, in confirming the arbitration award and entering judgment, the
trial court rejected EPW’s request to correct alleged miscalculations in the
award.  EPW contends on appeal that the
trial court should have corrected the amount of the award because, allegedly,
“[t]here was an evident miscalculation of figures or an evident mistake in the
description of any person, thing or property referred to in the award .…”  (§ 1286.6, subd. (a).)  As with the disclosure issue, the parties
dispute the applicable standard of review we should apply to this question.  We conclude that the same de novo standard is
applicable to our review of the trial court’s order, which concurrently
confirmed the award and denied EPW’s request that the award be corrected under
section 1286.6.  In this regard, we
simply follow the general rule in appeals such as this:  “‘On appeal from an order confirming an
arbitration award, we review the trial court’s order (not the arbitration
award) under a de novo standard.  [Citations.]
 To the extent that the trial court’s
ruling rests upon a determination of disputed factual issues, we apply the
substantial evidence test to those issues.’ 
[Citation.]”  (>Toal v. Tardif (2009) 178 Cal.App.4th
1208, 1217; Lindenstadt v. Staff
Builders, Inc. (1997) 55 Cal.App.4th 882, 892, fn. 7; accord, >Giorgianni v. Crowley (2011) 197
Cal.App.4th 1462, 1471, citing Advanced
Micro Devices, Inc. v. Intel Corp. (1994) 9 Cal.4th 362, 376, fn. 9.)

>II.        Trial Court Properly Denied EPW’s
Challenge to Award Based on Alleged Nondisclosure by Arbitrator

            As noted above, EPW sought to vacate
the arbitration award on the ground that the arbitrator failed to disclose a
potential conflict.  The purported
conflict stemmed from the arbitrator’s legal representation of a client
in a federal action where the opposing party in the action was represented by
Attorney John Branch of the law firm representing EPW, Perkins, Mann &
Everett (PME).  The federal action was
filed on April 12, 2011, by the arbitrator, Mr. Buchanan, acting as
local counsel for the plaintiff in the federal action, Interplexus
Corporation.  The federal action was
based on alleged trademark infringement and misappropriation of trade
secrets.  Mr. Branch represented a
defendant in the federal action, T.E. Neesby, Inc.  EPW
argued that this relationship had to be disclosed by the arbitrator because it
created an appearance of bias; that is, according to EPW, a reasonable person
would entertain doubts that the arbitrator would be able to be impartial.  The trial court disagreed, finding the
purported conflict was not a matter that had to be disclosed since there was no
appearance of bias or partiality created by it under the circumstances.

            In reaching that conclusion, the
trial court summarized the underlying chronology of events, as follows:  “[O]n January 11, 2011, Mr. Branch of PME
sent notice to an attorney in Washington state, Mr. [Frank] Siderius, that PME
would be representing the defendants in that dispute.  There is nothing on the face of that letter
that would indicate that Mr. Siderius had yet associated in the McCormick
Barstow LLP firm or Mr. Buchanan.… 
[¶]  The federal action was filed
by Mr. Buchanan on April 12, 2011.… 
Service of the complaint in the federal action was effectuated on May 9,
2011, the same date the arbitration in this action commenced.…  [¶] 
Before the federal action was initiated and served, Mr. Branch’s only
communications had been with Mr. Siderius, the Washington attorney.…  [¶]  On
or about May 25, 2011, Mr. Branch contacted Mr. Buchanan to request
an extension of time to respond to the federal action.…  There is nothing to indicate that
Mr. Buchanan knew before that date that Mr. Branch or PME was representing
Neesby and that he should disclose the purported conflict.  Certainly, it seems Mr. Branch and
Mr. Thornton^[href="#_ftn3" name="_ftnref3" title="">^[3]>^] did not know that Mr. Siderius had
associated in McCormick Barstow LLP.… 
[¶] … [¶]  It was not until May
25, 2011, that [EPW] knew that the arbitrator in this action, Mr. Buchanan,
allegedly had a conflict he had failed to disclose, when Mr. Branch contacted
Mr. Buchanan to request an extension of time to respond to the federal action,
five days after the arbitration ha[d] been concluded.” 

            Based on all of the circumstances,
including the fact that there was no evidence the arbitrator or the parties
knew of the purported conflict until May 25, 2011, five days after the
arbitration hearings had concluded, the trial court concluded that a reasonable
person would not entertain a doubt that the arbitrator would be able to be
impartial.  The trial court also noted,
in language strongly suggesting but not explicitly referring to a waiver, that
EPW waited until October 5, 2011, “some 98 days after service of the
arbitrator’s award” to seek to vacate the award.  That is, rather than promptly moving to
disqualify the arbitrator after it learned of the purported conflict on
May 25, 2011, EPW waited.  The award
was issued on June 29, 2011.  EPW did not
move to vacate the award until the time of its response to Diamond’s petition
to confirm.  The trial court noted
further that EPW’s discussion of the nondisclosure issue was perfunctory at
best:  EPW devoted only two paragraphs to
that issue, while the vast majority of the motion concerned the matter of
possible correction of the amount of the award. 


            We now must take a closer look at
the disclosure requirements to evaluate the issue of whether the trial court
was correct that the arbitrator was not obliged to disclose the purported
conflict.

            A.        Overview of Arbitrator’s Duty to
Disclose

            Section 1281.9, subdivision (a),
sets forth the general requirement that a proposed neutral arbitrator “shall
disclose all matters that could cause a person aware of the facts to reasonably
entertain a doubt that the proposed neutral arbitrator would be able to be
impartial .…”  Thereafter, the
subdivision (i) provides a nonexclusive list of specific matters that must
be disclosed under this general requirement and (ii) incorporates other
standards from other sources requiring disclosure of any matters that would
have to be disclosed under those other standards.  (Agri-Systems,
Inc. v. Foster Poultry Farms (2008) 168 Cal.App.4th 1128, 1136.)  The specific matters listed in the
subdivision that must be disclosed include, among other things, “(4) The
names of the parties to all prior or pending … cases involving any party to the
arbitration or lawyer for a party for which the proposed neutral arbitrator
served or is serving as neutral arbitrator .…  [¶] 
(5) Any attorney-client relationship the proposed neutral
arbitrator has or had with any party or lawyer for a party to the arbitration
proceeding.  [¶]  (6) Any professional or significant
personal relationship the proposed neutral arbitrator … has or has had with any
party to the arbitration proceeding or lawyer for a party.”  (§ 1281.9, subd. (a).)  The incorporated disclosure standards include
“(1) The existence of any ground specified in Section 170.1>^[href="#_ftn4" name="_ftnref4" title="">^[4]>^] for disqualification of a judge.…  [¶] 
(2) Any matters required to be disclosed by the ethics standards
for neutral arbitrators adopted by the Judicial Council pursuant to this
chapter.”href="#_ftn5" name="_ftnref5"
title="">^[5]  (§ 1281.9,
subd. (a).)

            In Haworth, our Supreme Court provided the following synopsis of the
above requirements:  “The applicable
statute and standards enumerate specific matters that must be disclosed. name=clsccl3> The arbitrator must
disclose specified relationships between the arbitrator and the parties to the arbitration,
including involvement in prior arbitrations, an attorney-client relationship
with any attorney involved in the arbitration, and any significant personal or
professional relationship with a party or an attorney involved in the
arbitration.  (§ 1281.9, subd.
(a)(3)-(6).)  The arbitrator also must
disclose ‘any ground specified in Section 170.1 for disqualification of a
judge,’ as well as ‘matters required to be disclosed by the ethics standards
for neutral arbitrators adopted by the Judicial Council.’  (§ 1281.9, subd. (a)(1), (2); see Cal.
Rules of Court, Ethics Stds. for Neutral Arbitrators in Contractual
Arbitration .…)  The Ethics Standards
require the disclosure of ‘specific interests, relationships, or affiliations’
and other ‘common matters that could cause a person aware of the facts to
reasonably entertain a doubt that the arbitrator would be able to be impartial.’
 (Ethics Stds., com. to std. 7.)  Specific matters that must be disclosed include,
for example, the arbitrator’s financial interest in a party or the subject of the
arbitration, the arbitrator’s knowledge of disputed facts relevant to the
arbitration, and the arbitrator’s ‘membership in any organization that
practices invidious discrimination on the basis of race, sex, religion, national
origin, or sexual orientation.’  (Ethics
Stds., std. 7(d)(13); see id., std. 7(d)(9), (10), (12).)”  (Haworth,
supra, 50 Cal.4th at p. 381.)

The statutory scheme requires an arbitrator to make the disclosures at
the very outset—within 10 calendar days of his or her proposed appointment (§
1281.9, subd. (b)).  After the
disclosures are made, the parties would then have an opportunity to disqualify
the arbitrator by serving a timely demand (§ 1281.91, subd. (b)(1)
[disqualification based on disclosed matters must be requested within 15
calendar days after service of disclosure statement]).  An arbitrator’s disclosure obligations >continue until the conclusion of the
arbitration proceedings. 
(§ 1281.91, subd. (d).)href="#_ftn6" name="_ftnref6" title="">^[6] 
Standard 7(f) of the Ethics Standards clearly affirms:  “An arbitrator’s duty to disclose the matters
described in subdivision[s] (d) and (e) of … standard [7] is a continuing
duty, applying from service of the notice of the arbitrator’s proposed
nomination or appointment until the conclusion of the arbitration proceeding.”

            B.        Analysis
of Disclosure Issue

            Here, the
purported conflict did not come within any of the specifically listed matters
that must be disclosed under the above provisions.  As the trial court correctly concluded, “the
purported conflict [was] not a recognizable conflict under the conflict rules
applicable to arbitrators,” and EPW does not argue otherwise.  EPW’s sole contention is that the
arbitrator’s representation of a client in the federal action had to be
disclosed under the general requirement that a neutral arbitrator must
“disclose all matters that could cause a person aware of the facts to
reasonably entertain a doubt that the … arbitrator would be able to be
impartial .…”  (§ 1281.9, subd.
(a); see also Ethics Stds., std. 7(d) & § 170.1, subd. (a)(6)(A)(iii)
[stating same general requirement]j.)href="#_ftn7" name="_ftnref7" title="">^[7]

In deciding whether disclosure is
required under that standard, “[t]he question … is how an objective, reasonable
person would view [the arbitrator’s] ability to be impartial” under the
circumstances.  (Haworth, supra, 50
Cal.4th at p. 385.)  “The test is an
objective one—whether the facts might create an impression of possible bias in
the eyes of the hypothetical reasonable person.”  (Ceriale
v. AMCO Ins. Co. (1996) 48 Cal.App.4th 500, 506.)  “An impression of possible bias in the
arbitration context means that one could reasonably form a belief that an
arbitrator was biased for or against a
party for a particular reason.”  (>Betz v. Pankow (1995) 31 Cal.App.4th
1503, 1511, italics added.)

In considering this question, we
keep in mind that arbitrators often have dealings and experience in the legal
or business community, and their familiarity with such matters is often the
reason they were selected to serve; they are not expected to be free of
business contacts or professional relationships in their particular field of
practice.  (Nemecek & Cole v. Horn, supra,
208 Cal.App.4th at pp. 646-647.)  Judges
and arbitrators, “‘like all human beings, have widely varying experiences and
backgrounds.  Except perhaps in extreme
circumstances, those not directly related to the case or the parties do not
disqualify them.’  [Citation.]”  (Haworth,
supra, 50 Cal.4th at p. 389.)  The disclosure requirements are only intended
to ensure the impartiality of the arbitrator, not to mandate disclosure of “all
matters that a party might wish to consider in deciding whether to oppose or
accept selection of an arbitrator.”  (>Id. at p. 393.)  Moreover, an overly broad interpretation of
the appearance of partiality “could subject arbitration awards to
after-the-fact attacks by losing parties searching for potential disqualifying
information only after an adverse decision has been made.”  (Id.
at pp. 394-395.)  “‘If the impression of
possible bias is not to emasculate the policy of the law in favor of the
finality of arbitration, the impression must be a reasonable one.’  [Citation.]” 
(Id. at p. 394.)

Applying the reasonable person test
to the matter before us, we fail to see how the relationship at issue would
lead a reasonably objective person to doubt the arbitrator’s ability to be
impartial.  There was no evidence or
finding that either party to the federal action had any legal or financial
interest to any of the parties to the arbitration or to the arbitrator.  The two cases, and the parties involved, were
entirely unrelated.  The mere fact that
the arbitrator provided legal representation to a client—the plaintiff in the
federal action—while an attorney in the law firm representing EPW provided
legal representation to one or more of the defendants in that same federal
action does not by itself create a reasonable basis for doubting the
arbitrator’s ability to be impartial in the arbitration.  Therefore, the trial court correctly
concluded that the arbitrator was not required to disclose that matter.  (See, e.g., Luce, Forward, Hamilton & Scripps, LLP v. Koch (2008) 162
Cal.App.4th 720, 734-735 [arbitrator was not required to disclose service on
board of professional organization with the plaintiff’s counsel, even if the
defendants asserted they were uncomfortable with that relationship]; >Guseinov v. Burns (2006) 145 Cal.App.4th 944, 959 [the arbitrator’s prior
service as uncompensated mediator on case handled by an attorney in the
arbitration did not create impression of bias]; Gonzales v. Interinsurance Exchange (1978) 84 Cal.App.3d 58, 66
[friendly acquaintance between arbitrator and senior partner of a party’s law
firm insufficient to give impression of bias]; Agri-Systems, Inc. v. Foster Poultry
Farms, supra, 168 Cal.App.4th at
pp. 1139-1143 [affirming trial court’s holding that prior representation
by arbitrator’s law firm of a company that was financially adverse to a party
to arbitration did not create reasonable doubt as to the arbitrator’s ability to
be impartial where the representation was attenuated and apparently unknown to
arbitrator].)

Although what we have said above is
sufficient to conclude the matter, we note that two additional factors in this
case tend to further support our conclusion.  First, the purported conflict in this case was
somewhat attenuated by the fact that different attorneys from the PME law firm
were involved in each matter:  the
individual attorney representing EPW in the arbitration was Douglas Thornton,
but the individual attorney representing the defendants in the federal action
was someone else, John Branch.  Second,
the parties and the arbitrator did not learn of the purported conflict until
May 25, 2011, after the arbitration hearings were over and the arbitration
process was relatively close to completion. 
On the record before us, these factors comport with our conclusion that
a reasonably objective person learning of the alleged conflict, after
consideration of all of the facts and circumstances, would not have an impression
of possible bias or entertain a doubt about the arbitrator’s ability to be
impartial.

            C.        Waiver

An additional ground for upholding
the trial court’s confirmation of the arbitration award and denial of EPW’s
request to vacate the award is that of waiver or forfeiture.  The trial court’s finding, supported by
substantial evidence, was that EPW knew of the purported conflict on May 25,
2011, when Mr. Branch contacted the arbitrator to request an extension of time
to respond to the federal action.  “Upon
learning of the purported failure to disclose, [EPW] did not file [its]
petition to vacate the award under … section 1286.2; instead, they waited until
… October 5, 2011.”  Implicitly, the
trial court was emphasizing such facts to indicate a waiver on the part of
EPW.  We quite agree.  A party who knows of a purported conflict,
but unreasonably waits until after the arbitrator’s award to bring it up should
be found to have waived the matter. 
(See, e.g., Fininen v. >Barlow (2006) 142 Cal.App.4th 185, 190-191
[motion to vacate award properly denied where a party to arbitration recognized
arbitrator from a prior settled case, but the party failed to investigate or
raise the issue until after the award was issued in favor of his opponents]; >Woolley v. Superior Court (1937) 19
Cal.App.2d 611, 619 [“Courts must guard
against the possibility of a party, who claims the trial judge is biased or
prejudiced, refraining from raising that question, trusting to get a favorable
verdict, and thereafter raise the question”]; Caminetti v. Pac. Mutual L. Ins.
Co. (1943) 22 Cal.2d 386, 392 [“‘It would seem … intolerable to permit a
party to play fast and loose with the administration of justice by deliberately
standing by without making an objection of which he is aware and thereby
permitting the proceedings to go to a conclusion which he may acquiesce in, if
favorable, and which he may avoid, if not.’”]; cf. § 170.3, subd. (b)(2)
[waiver prohibited as to certain grounds for disqualification not present here].)

III.       Trial
Court Properly Denied Request for Correction of Award

            Section 1286.6 sets forth the
grounds for correction of an arbitration award, which include the
following:  “(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; [¶] â€¦ [¶]  (c) The award is imperfect in a matter
of form, not affecting the merits of the controversy.”  The miscalculation, “to be evident, must
appear on the face of the award [citation] or be so readily apparent
from the documentation in the case that explanation by proofs is not
necessary.”  (Severtson v. Williams Construction Co. (1985) 173 Cal.App.3d 86,
94.)

In denying EPW’s request for correction of the award, the trial court
explained:  “If there was an evident
miscalculation of the figures, any such miscalculation has not been
demonstrated by way of admissible evidence. 
This court does not have the power to review the arbitrator’s award and
his reasoning used to arrive at that award in the guise of reviewing it for a
miscalculation or imperfection that is not clear on its face or is demonstrated
to the court by way of admissible evidence.” 
EPW contends the trial court erred because the award allegedly credited
incorrect amounts for inventory and advances and used inconsistent dates for
computing such amounts.  We reject EPW’s
argument.  There is nothing on the face
of the award or otherwise readily apparent that demonstrates there was an
evident mathematical or calculation error. 
EPW is, instead, asking us to remedy the arbitrator’s allegedly flawed reasoning
and/or factual determinations—something we may not do.  (Moncharsh,
supra, 3 Cal.4th at p. 11.)  We conclude the trial court correctly denied
the request for a correction of the award.

IV.       Motion for Sanctions

            During the
pendency of this appeal, Diamond filed a motion asking that we impose sanctions
against EPW on the ground that EPW’s appeal was allegedly frivolous or for the
sole purpose of delay.  (See >In re Marriage of Flaherty (1982) 31
Cal.3d 637, 649-650.)  Diamond asserts
that EPW’s appeal was frivolous because of EPW’s position that our standard of
review herein is de novo.  Contrary to
Diamond’s argument, however, EPW was essentially correct in regard to the
appropriate standard of review. 
Additionally, we do not believe EPW’s appeal concerning the disclosure
issue was frivolous.  Therefore,
Diamond’s motion for sanctions is denied.href="#_ftn8" name="_ftnref8" title="">^[8]

DISPOSITION

            The
judgment confirming the arbitration award is affirmed.  Costs on appeal are awarded to Diamond.

                                                                                                            _____________________

Kane, Acting P.J.

WE CONCUR:

 

_____________________

Detjen, J.

 

_____________________

Franson, J.