Filed 6/24/26 Shifrin v. Strata Equity Global CA4/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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.
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
JUSTIN SHIFRIN, D085526
Plaintiff and Respondent,
v. (Super. Ct. No.
37-2021-00054291-CU-BC-CTL)
STRATA EQUITY GLOBAL, INC.,
Defendant and Appellant.
APPEAL from a judgment of the Superior Court of San Diego County,
Katherine A. Bacal, Judge. Affirmed.
Ellenoff Grossman & Schole, Eric Landau and Travis Biffar for
Defendant and Appellant.
Noonan Lance & Boyer, David J. Noonan, James R. Lance and
Genevieve M. Sauter for Plaintiff and Respondent.
Defendant and appellant Strata Equity Global, Inc. (Strata), the former
employer of plaintiff and respondent Justin Shifrin, appeals a judgment
denying its motion to vacate an arbitration award and confirming that award
in Shifrin’s favor on Shifrin’s claims against it for breach of contract and
failure to timely pay wages under Labor Code section 204.1 The arbitrator
found Strata wrongfully withheld wages owed Shifrin in the form of bonus
compensation, and awarded Shifrin over $12,000,000, consisting of the
unpaid wages, a 25 percent penalty on the withheld wages (§ 210),
prejudgment interest, attorney fees and costs. Strata contends the
arbitration award is flawed and the superior court erred by confirming it.
More specifically, Strata contends the arbitrator manifestly disregarded the
law in various ways including by applying inapposite California law rather
than federal law under the Federal Arbitration Act (FAA) and implausibly
interpreting the governing employment agreements in reaching her
conclusions. Strata argues section 204 does not apply to nonpayment of
wages and thus the arbitrator could not award section 210 penalty interest,
attorney fees or prejudgment interest. It maintains that even if section 204
applied, penalty interest cannot be awarded for a first violation absent a
finding of willful or intentional conduct. According to Strata, the superior
court legally erred in confirming the award by relying on Oman v. Delta Air
Lines, Inc. (2020) 9 Cal.5th 762 as support for the arbitrator’s ruling and also
by permitting Shifrin to amend the award to include “compound”
prejudgment interest. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND2
1 Undesignated statutory references are to the Labor Code.
2 We state the underlying facts largely from the arbitrator’s findings.
(Accord, Valencia v. Mendoza (2024) 103 Cal.App.5th 427, 433, fn. 2.)
2
Shifrin’s Employment
Strata is a real estate investment company. At the relevant times,
Carlos Michan was Strata’s founder and chairman; Michan’s son David was
its president/chief executive officer. In 2014, Strata (then Strata Equity
Group, Inc.) began employing Shifrin as a part time analyst. The terms of
Shifrin’s part time employment and bonus program participation were
contained in an offer letter he received that year.3
In 2015 Strata began employing Shifrin full time. Shifrin documented
his “employment agreement, including salary, benefits, and profit
participation percentage” in an e-mail to both Michans. They negotiated
Shifrin’s profit participation to be increasing percentages, eventually to 1.5
3 The offer provided that Shifrin would receive one percent of the
sponsor’s “promote profit” from cash flows and profits from projects acquired
after start of employment, which bonus percentage would vest immediately,
and one percent of the profits of Strata Equity Group’s management net
income after reserves, which bonus percentage would vest immediately. The
offer provided that the “percent participations may be revised up or down
depending on the performance of the employee, number of executives
participating in the bonus program, and/or the aggregate percentage the
Owners decide to share with the executives.”
3
percent in 2018 and thereafter, which Shifrin stated would “apply to all deals
from [his] hire date.”4
In 2020, Strata promoted Shifrin to director of acquisitions and the
parties again renegotiated his compensation package. In August 2020, they
agreed via e-mail that Shifrin would receive “1.50 [percent] profit
participation on all past deals and 1.75 [percent] on all new deals, including
Wilk 13.” Shifrin signed an arbitration agreement providing in part that the
parties “agree[d] that [Shifrin’s] employment and this agreement involve
interstate commerce and the interpretation and enforcement of this
agreement to arbitrate will be governed by the provisions of the Federal
Arbitration Act, [title] 9 [United States Code section] 1 et seq.” Between 2015
and 2020, Strata paid Shifrin his negotiated salary and the net percentage of
4 Copies of e-mails attached to a declaration in support of Strata’s motion
to vacate the arbitration award show that on December 14, 2015, David
Michan responded to a proposal by Shifrin for a profit participation vesting
schedule. Michan told Shifrin he “like[d] his proposal” then stated “the
vesting schedule would look as follows: [¶] 2015-1.00 [percent] [¶] 2016-
1.1667 [percent] [¶] 2017-1.3334 [percent] [¶] 2018-1.50 [percent]
thereafter.” Shifrin responded in part, “That profit percentage schedule is
perfect. [¶] Thank you for agreeing with these terms to apply to all deals
from my hire date.” In August 2020, Shifrin requested a $150,000 annual
salary and profit participation of “1.50 [percent] on all past deals” and “1.75
[percent] on new deals.” He added, “You would agree that this includes Wilk
13 since this discussion should have occurred at YE 2019 or beginning of
2020 and Wilk closed in March 2020?” David Michan responded in part: “Be
sure that you are recognized among the team. We can include Wilk in the
bonus calc. [¶] And to confirm the $150k will start as of Aug 1st.” Shifrin’s
first amended complaint refers to Wilk as the “Wilkinson 13 portfolio
acquisition (13 communities with 3,177 apartment units) . . . .”
4
profits they had negotiated for each of those years, without regard to the
percentages Strata allocated to its executive bonus program.5
In 2018, Strata sold 50 percent of the company to another entity. In
2021, Strata and its co-owner decided to sell over 90 percent of their assets,
resulting in Strata receiving over $600 million in net profits. They decided to
allocate 12 percent of the net proceeds to the executive profit participation
plan, though Strata had allocated between 17 and 20 percent every year from
2014 to 2020. In November 2021, Shifrin learned he would not be receiving
his regular bonus and that Strata would not be allocating 20 percent of its
net profits to the executive profit-sharing pool. Using the 1.5 percent figure
(and 1.75 percent for certain properties), he calculated his expected bonus on
the net sales profits to be $9,253,905.
Strata, however, offered to pay Shifrin a $5,452,000 bonus for 2021. It
informed Shifrin that to receive that bonus, he was required to sign a release,
an economic interest agreement, and an issuance agreement for a new
venture, SEG Exec Trifecta. Shifrin learned the bonus would not be all cash
like previous years, but 60 percent cash and 40 percent reinvested in the new
venture that would vest in three years as long as he was not terminated from
Strata. Shifrin did not agree to sign the release or agreement. In December
2021, Strata paid Shifrin a $1,761,000 bonus, which was .29 percent of
Strata’s 2021 net profit.
Shifrin’s Lawsuit
Shifrin sued Strata for breach of express and implied contract, breach
of the covenant of good faith and fair dealing, nonpayment of wages and
5 The arbitrator noted: “The percentages are not exact but very close.
For example, in 2020 [Shifrin] was given a bonus of $461,150.00 which
was calculated to be 1.49 [percent] of net profits instead of 1.5 [percent].”
5
failure to pay wages due under sections 204 and 206, as well as for a violation
of section 226 for failing to provide him with certain records. Shifrin alleged
a claim for promissory estoppel and sought a constructive trust as well as
declaratory relief. Strata successfully moved to arbitrate the dispute, and the
parties proceeded to arbitration.
Arbitrator’s Ruling
On April 2, 2024, the arbitrator found Shifrin had met all of the
elements of breach of contract; that the Michans knew they owed Shifrin his
bonus based on the fixed negotiated percentages of its net profits, and that
Shifrin was damaged for that breach in the amount of $9,253,905, less the
$1,761,000 he received in bonus payment. The arbitrator found Strata did
not pay Shifrin his full 2021 contracted bonus, which was considered wages
under California law, and thus Shifrin was entitled to the remaining unpaid
bonus of $7,492,905 plus a penalty of 25 percent of the wrongfully withheld
amount under section 210, subdivision (a)(2). The arbitrator accepted
Shifrin’s expert’s calculation of the total sum: $10,978,856, including
$1,874,076 in penalties and $1,611,875 in interest. Shifrin was awarded
$957,640.27 in attorney fees and costs.6
Parties’ Postarbitration Motions to Confirm and Vacate the Award
Shifrin filed a form petition to confirm the arbitrator’s award. In
addition to the attorney fees awarded by the arbitrator, Shifrin sought
$16,422.80 in prejudgment interest from April 1, 2024, to the date the award
was served on April 8, 2024, ($2,052.85 daily) and 10 percent prejudgment
interest on the $12,057,614.27 final award ($3,303.46 daily) under section
6 The decision indicates the arbitrator awarded $907,564.50 in fees and
$50,615.77 in costs, which totals $958,180.27. The parties do not mention the
discrepancy.
6
218.6 and Civil Code (erroneously referenced as Code of Civil Procedure)
section 3289 from April 9, 2024, through the date of entry of judgment. He
requested 10 percent postjudgment interest under Code of Civil Procedure
section 685.010, subdivision (a)(1) from the date of entry of judgment. Shifrin
asked for attorney fees for the time spent opposing Strata’s anticipated
motion to vacate the award.
Strata moved to vacate the arbitration award. It argued that because
the parties had agreed the FAA governed the arbitration agreement and its
enforcement, section 10 of the FAA (9 U.S.C. § 10) applied to its motion, and
thus the court could vacate the award for the arbitrator’s manifest disregard
of the law. According to Strata, the arbitrator manifestly disregarded the law
by rewriting the parties’ agreements to double count Shifrin’s discretionary
bonus when computing damages and by awarding 10 percent statutory
interest, 25 percent penalty interest, and attorney fees based on violations of
section 204, which it argued did not apply to the parties’ dispute. Strata
argued that because section 204 did not apply, the arbitrator could not award
Shifrin attorney fees or prejudgment interest, whether based on sections
218.6 or 204. Additionally, Strata argued the arbitrator could not award
prejudgment interest under Civil Code section 3287 because Shifrin’s
damages were not ascertainable. Strata argued that even if section 204
applied, Shifrin was not entitled to 25 percent penalty interest because
Shifrin’s claim was his first asserting a section 204 violation, and the
arbitrator in its final award did not find Strata’s actions willful or
intentional, a prerequisite to section 204 penalty interest. Strata filed a
separate opposition to Shifrin’s petition to confirm the award.
In response to Strata’s motion to vacate, Shifrin argued Strata sought
to relitigate the arbitrator’s contractual interpretations and factual findings,
7
and that the California Arbitration Act (CAA) provided the applicable
standards for Strata’s motion. He argued that even if the FAA’s manifest
disregard of the law principle applied, Strata could not meet its burden to
establish that standard, as there was no evidence the arbitrator understood
the law, correctly stated it, then disregarded it. Shifrin further argued the
arbitrator’s contractual interpretation was rational and plausible. He argued
the arbitrator correctly found section 204 applied, and that Strata’s cited
authority showed the arbitrator did not manifestly disregard the law with
regard to the section 204 penalty because the arbitrator found bonus wages
were owed, Strata knew the bonus wages were owed, and Strata wrongfully
withheld them. He argued the arbitrator properly awarded attorney fees,
prejudgment interest and section 210 penalties.
The parties then provided supplemental briefing on whether the
vacatur provisions of the FAA applied as well as whether those provisions
were procedural or substantive. Pointing to the arbitration agreement’s
language, Shifrin argued section 10 of the FAA was procedural and did not
apply in the state court proceeding. He argued that even if it did apply,
Strata could not establish the FAA’s manifest disregard standard or
demonstrate the arbitrator’s contract interpretation was completely
irrational. Strata argued in part that where parties agree enforcement would
be governed by the FAA as Strata and Shifrin had done, California courts
recognized section 10 of the FAA applied to confirmation and vacatur of
arbitration awards.
In July 2024, the court granted Shifrin’s petition and denied Strata’s
motion. It ruled that even assuming the parties had agreed to enforce the
award under the FAA, Strata did not show the FAA required the award be
vacated; that is, it did not show the Arbitrator “understood and correctly
8
stated the law but proceeded to disregard it.” It reached this result in part
because Strata did not cite the main case it relied upon in its vacatur
motion—See’s Candy Shops, Inc. v. Superior Court (2012) 210 Cal.App.4th
889—to the arbitrator. The court further found that the California Supreme
Court’s decision in Oman v. Delta Air Lines, Inc., supra, 9 Cal.5th 762
supported its conclusion that the arbitrator did not manifestly disregard the
law. The court found Shifrin was the prevailing party entitled to mandatory
attorney fees and costs under Code of Civil Procedure section 1293.2, as well
as prejudgment and postjudgment interest.
Several days later, Shifrin served a proposed judgment. Strata
objected in part on grounds the judgment included “overinflate[ed] interest”
based on the entire final award, rather than just on the due and unpaid
wages owed.7 Strata also unsuccessfully moved for reconsideration. After
considering briefing and argument on the issue of prejudgment interest, the
court entered a $12,933,400.15 judgment in Shifrin’s favor in accordance with
the arbitrator’s final award. Specifically, the judgment included
$12,057,614.27 for the full amount of the final award; $130,655 in attorney
fees and $1,946.88 in costs; $16,422.80 in prejudgment interest at a $2,052.85
daily rate from April 1, 2024, through April 8, 2024; $726,761.20 in
prejudgment interest from April 9, 2024, to the December 3, 2024 entry of
7 Shifrin’s counsel stated in a declaration that the first proposed
judgment was rejected for a technical error, then resubmitted. Strata
objected to both the original and refiled proposed judgments. Shifrin’s
counsel at the same time filed a supplemental declaration reiterating that
Shifrin was requesting the additional prejudgment interest under Civil Code
section 3289 (again misidentified as the Code of Civil Procedure) and Labor
Code section 218.6, from April 9, 2024, through the date of entry of judgment,
on the $12,057,614.27 final award amount at a $3,303.46 daily rate.
9
judgment calculated at a $3,303.46 daily rate; and postjudgment interest on
unpaid amounts at 10 percent per annum from the date of entry of judgment.
Strata filed this appeal from the judgment and various other orders.8
DISCUSSION
I. Standard of Review
California law (the CAA, Code Civ. Proc., § 1280 et seq) and Federal
law (the FAA, 9 U.S.C. § 10 et seq.) favor arbitration as a viable means of
resolving legal conflicts. (Richey v. AutoNation, Inc. (2015) 60 Cal.4th 909,
916; Ramirez v. Charter Communications, Inc. (2024) 16 Cal.5th 478, 492; see
Nitro-Lift Technologies, L.L.C. v. Howard (2012) 568 U.S. 17, 20 [FAA
“ ‘declare[s] a national policy favoring arbitration’ ”]; Scherk v. Alberto-Culver
Co. (1974) 417 U.S. 506, 510-511 [FAA was “designed to allow parties to avoid
‘the costliness and delays of litigation,’ and to place arbitration agreements
‘upon the same footing as other contracts’ ”]; Cronus Investments, Inc. v.
Concierge Services (2005) 35 Cal.4th 376, 384 (Cronus) [section 2 of the FAA
“is a congressional declaration of a liberal federal policy favoring arbitration
agreements”].)
“ ‘Because the decision to arbitrate grievances evinces the parties’
intent to bypass the judicial system and thus avoid potential delays at the
trial and appellate levels, arbitral finality is a core component of the parties’
8 In arbitration proceedings, the Legislature has identified several orders
as specifically appealable in addition to a final judgment. (Code Civ. Proc.,
§ 1294.) Strata’s notice of appeal identifies orders that are subsumed in the
judgment such as the order granting confirmation and denying Strata’s
motion to vacate the award, as well as the order awarding prejudgment
interest. The notice of appeal includes the court’s orders denying Strata’s
motions for reconsideration, which are not separately appealable. (Annette F.
v. Sharon S. (2005) 130 Cal.App.4th 1448, 1459.) The notice of appeal also
purports to appeal from the arbitrator’s interim and final awards, which we
do not review. (Toal v. Tardif (2009) 178 Cal.App.4th 1208, 1217.)
10
agreement to submit to arbitration.’ ” (Richey v. AutoNation, Inc., supra, 60
Cal.4th at p. 916.) Thus, both “[t]he [CAA] . . . and the [FAA] . . . provide
limited grounds for judicial review of an arbitration award. Under both
statutes, courts are authorized to vacate an award if it was (1) procured by
corruption, fraud, or undue means; (2) issued by a corrupt arbitrator; (3)
affected by prejudicial misconduct on the part of the arbitrator; or (4) in
excess of the arbitrator’s powers.” (Richey, at p. 916, citing Code Civ. Proc.,
§ 1286.2, subd. (a); 9 U.S.C. § 10(a); see Oxford Health Plans LLC v. Sutter
(2013) 569 U.S. 564, 568 [“Under the FAA, courts may vacate an arbitrator’s
decision ‘only in very unusual circumstances’ ”; the “limited judicial review
. . . ‘maintain[s] arbitration’s essential virtue of resolving disputes
straightaway’ ”]; VIP Mortgage Incorporated v. Gates (9th Cir. 2025) 162
F.4th 1010, 1014-1015.)
Under California law, “ ‘[g]enerally, courts cannot review arbitration
awards for errors of fact or law, even when those errors appear on the face of
the award or cause substantial injustice to the parties.’ ” (Law Finance
Group, LLC v. Key (2023) 14 Cal.5th 932, 957, quoting Richey v. AutoNation,
Inc., supra, 60 Cal.4th at p. 916.)
Section 10 of the FAA permits vacatur of an arbitration award only in
four narrow circumstances.9 Under section 10(a)(4) of the FAA, authorizing
9 These are: “(1) where the award was procured by corruption, fraud, or
undue means; [¶] (2) where there was evident partiality or corruption in the
arbitrators, or either of them; [¶] (3) where the arbitrators were guilty of
misconduct in refusing to postpone the hearing, upon sufficient cause shown,
or in refusing to hear evidence pertinent and material to the controversy; or
of any other misbehavior by which the rights of any party have been
prejudiced; or [¶] (4) where the arbitrators exceeded their powers, or so
imperfectly executed them that a mutual, final, and definite award upon the
subject matter submitted was not made.” (9 U.S.C. § 10(a).)
11
a federal court to set aside an arbitral award “ ‘where the arbitrator[ ]
exceeded [his] powers,’ ” the “party seeking relief . . . bears a heavy burden.
‘It is not enough . . . to show that the [arbitrator] committed an error—or
even a serious error.’ [Citation.] Because the parties ‘bargained for the
arbitrator’s construction of their agreement,’ an arbitral decision ‘even
arguably construing or applying the contract’ must stand, regardless of a
court’s view of its (de)merits. [Citations.] Only if ‘the arbitrator act[s]
outside the scope of his contractually delegated authority’—issuing an award
that ‘simply reflect[s] [his] own notions of [economic] justice’ rather than
‘draw[ing] its essence from the contract’—may a court overturn his
determination. [Citation.] . . . [T]he sole question . . . is whether the
arbitrator (even arguably) interpreted the parties’ contract, not whether he
got its meaning right or wrong.” (Oxford Health Plans LLC v. Sutter, supra,
569 U.S. at p. 569; see also Countrywide Financial Corp. v. Bundy (2010) 187
Cal.App.4th 234, 249.) “ ‘ “It is only when [an] arbitrator strays from
interpretation and application of the agreement and effectively ‘dispense[s]
his own brand of industrial justice’ that his decision may be unenforceable.”
[Citations.]’ [Citations.] Even gross, ‘ “painfully clear” ’ or ‘obvious’ errors
are insufficient to permit vacatur under [9 U.S.C. § 10](a)(4).” (Countrywide
Financial Corp., at pp. 249-250.)
II. Does the CAA or FAA Apply to the Parties’ Respective Motions to Confirm
or Vacate?
We first address a threshold question not reached by the superior court:
which standards apply to the parties’ respective requests to confirm or vacate
the award, those under the CAA or the FAA? The answer matters because
Strata does not argue on appeal that the superior court should have vacated
the award under California standards. Thus, if FAA standards are not
12
applicable, we may uphold the court’s confirmation of the award on forfeiture
principles alone. As we explain, the question turns on the content of the
arbitration agreement. (Cronus, supra, 35 Cal.4th at pp. 383, 385
[“ ‘Just as [parties to an arbitration agreement] may limit by contract the
issues which they will arbitrate [citation], so too may they specify by contract
the rules under which that arbitration will be conducted’ ”], quoting Volt Info.
Sciences v. Leland Stanford Jr. U. (1989) 489 U.S. 468, 479, fn. 6 (Volt).)
The parties agreed Shifrin’s employment and the arbitration agreement
involved interstate commerce. Consequently, “the substantive provisions of
the FAA govern the arbitration agreement . . . . As the high court has said,
‘the FAA’s “substantive” provisions—§§ 1 and 2—are applicable in state as
well as federal court . . . .’ ” (Los Angeles Unified School Dist. v. Safety
National Casualty Corp. (2017) 13 Cal.App.5th 471, 478, quoting Volt, supra,
489 U.S. at p. 477, fn. 6.)
But the FAA’s procedural provisions—which include 9 U.S.C. § 10—
apply only to proceedings in federal court, unless the contract contains a
choice-of-law clause expressly incorporating them. (Judge v. Nijjar Realty,
Inc. (2014) 232 Cal.App.4th 619, 630-631; see Cronus, supra, 35 Cal.4th at p.
394; Swissmex-Rapid S.A. de C.V. v. SP Systems, LLC (2012) 212 Cal.App.4th
539, 544; Valencia v. Smyth (2010) 185 Cal.App.4th 153, 173-174 (Valencia)
[identifying the FAA’s “procedural provisions” as 9 U.S.C. §§ 3, 4, 10, 11].)
“ ‘[T]he FAA contains no express pre-emptive provision, nor does it reflect a
congressional intent to occupy the entire field of arbitration.’ ” (Cronus, at p.
385, quoting Volt, supra, 489 U.S. at p. 477; Judge, at p. 630.) Thus, “ ‘[t]he
procedural provisions of the CAA . . . apply in California courts by default
. . . . [T]he parties may “expressly designate that any arbitration proceeding
[may] move forward under the FAA’s procedural provisions rather than
13
under state procedural law.” [Citation.] Absent such an express designation,
however, the FAA’s procedural provisions do not apply in state court.’ ”
(Nixon v. AmeriHome Mortgage Co., LLC (2021) 67 Cal.App.5th 934, 945; see
Cronus, supra, 35 Cal.4th at p. 394.) This is because “[t]here is no federal
policy favoring arbitration under a certain set of procedural rules; the federal
policy is simply to ensure the enforceability, according to their terms, of
private agreements to arbitrate.” (Judge, at p. 630, quoting Volt, at p. 476.)
Absent an agreement by the parties to apply the procedural provisions of the
FAA to their arbitration, federal procedural rules apply only where state
procedural rules conflict with or defeat the rights Congress granted in the
FAA. (Judge, at p. 631.)
“The question of whether [an arbitration agreement] incorporated the
FAA’s procedural provisions, thereby eliminating the trial court’s authority
under [Code of Civil Procedure] section 1281.2[, subdivision] (c), ‘is a question
of law involving interpretation of statutes and the contract (with no extrinsic
evidence). We therefore apply a de novo standard of review.’ ” (Victrola 89,
LLC v. Jaman Properties 8 LLC (2020) 46 Cal.App.5th 337, 346 (Victrola),
quoting Valencia, supra, 185 Cal.App.4th at pp. 161-162.)
Here, the parties’ arbitration agreement provides the FAA would
govern the “interpretation and enforcement of this agreement to arbitrate
. . . .”10 In Victrola, the court held that when an arbitration agreement
provides that its “enforcement” shall be governed by the FAA, the FAA
10 The agreement further provides that arbitrable disputes “shall be . . .
administered by JAMS pursuant to its Employment Arbitration Rules and
Procedures (available at <https://www.jamsadr.com/rulesemployment-
14
governs a party’s petition to compel arbitration. (Victrola, supra, 46
Cal.App.5th at p. 348 [analyzing the phrase “ ‘Enforcement of this agreement
to arbitrate shall be governed by the [FAA]’ ”].) But does the phrase
“enforcement of this agreement to arbitrate” encompass postarbitration
procedures such as the confirmation or vacation of an award resulting from
arbitration? Stated another way, is this language an “express[ ]
designat[ion]” to incorporate the procedural provisions of the FAA rather
than the CAA? (Cronus, supra, 35 Cal.4th at p. 394.)
Based on Cronus and Victrola, we answer the question in the
affirmative. Both Cronus and Victrola pointed out that the court in Mount
Diablo Medical Center v. Health Net of California, Inc. (2002) 101
Cal.App.4th 711 (Mount Diablo) had interpreted contractual language stating
the agreement’s “ ‘validity, construction, interpretation and enforcement’ ”
would be governed by California law. (Cronus, supra, 35 Cal.4th at p. 387;
Victrola, supra, 46 Cal.App.5th at pp. 346-347; Mount Diablo, at p. 716.) The
high court in Cronus agreed that choice of law provisions similar to that in
Mount Diablo incorporated California’s arbitration rules. (Cronus, at p. 387.)
Victrola explained that while the arbitration agreement in Mount Diablo
involved interstate commerce and thus the FAA presumptively applied, the
parties’ choice of law provision “compelled application of state procedural
Arbitration>).” Rule 25 of the JAMS Employment Arbitration Rules &
Procedures, of which we may take judicial notice (Haydon v. Elegance at
Dublin (2023) 97 Cal.App.5th 1280, 1291, fn. 5) provides in part:
“Proceedings to enforce, confirm, modify or vacate an Award will be controlled
by and conducted in conformity with the [FAA], 9 U.S.C. § 1 et seq., or
applicable state law.” (Emphasis added.) Though the parties agreed these
rules would govern their agreement (Judge v. Nijjar Realty, Inc., supra, 232
Cal.App.4th at p. 636), the rule identifying both the FAA “or applicable state
law” does not resolve the question.
15
law.” (Victrola, at p. 347, citing Mount Diablo, at p. 722.) Victrola further
observed that the court in Valencia, supra, 185 Cal.App.4th 153
distinguished Mount Diablo in a case where the arbitration agreement stated
only that its interpretation would be governed by the FAA. (Victrola, supra,
46 Cal.App.5th at pp. 347-348.) Valencia stated, “ ‘We do not read Mount
Diablo to suggest that an explicit reference to “interpretation,” by itself,
would determine the applicable procedural law.’ ” (Victrola, at p. 348,
quoting Valencia, at p. 179.) Victrola concluded: “If, as the courts in Mount
Diablo and Valencia . . . held, contracting parties’ explicit reference to
‘enforcement’ under California law required the trial court to consider any
motions to compel arbitration under the CAA, it follows that the instant
parties’ reference to ‘enforcement’ under the FAA required the court to
consider the [moving parties’] motion to compel arbitration under the FAA.”
(Victrola, supra, 46 Cal.App.5th at p. 348.)
In sum, by stating the FAA would govern the agreement’s
“enforcement,” the agreement designated the FAA’s “procedural law.”
(Victrola, supra, 46 Cal.App.5th at p. 347; Mount Diablo, supra, 101
Cal.App.4th at p. 722; see Cronus, supra, 35 Cal.4th at p. 394.)
Shifrin points to Cable Connection, Inc. v. DIRECTV, Inc. (2008) 44
Cal.4th 1334 and Siegel v. Prudential Ins. Co. (1998) 67 Cal.App.4th 1270,
1290 as rejecting claims that the FAA’s grounds for judicial review of
arbitration awards, including manifest disregard of the law, preempt their
CAA counterparts. It is true that at the referenced pages Cable Connection
Inc. cited to Cronus and its statement that “ ‘the United States Supreme
Court does not read the FAA’s procedural provisions to apply to state court
proceedings.’ ” (Cable Connection, Inc., at p. 1351, quoting Cronus, supra, 35
Cal.4th at p. 389.) It explained that “the provisions for judicial review of
16
arbitration awards in sections 10 and 11 of the FAA are directed to ‘the
United States court in and for the district where the award was made’ ” and
observed that Cronus had held similar language elsewhere in the FAA
reflected Congress’s intent to limit the application of those provisions to
federal courts. (Cable Connection, Inc., at p. 1351, citing Cronus, at pp. 388-
389.) But preemption is different from the question of whether the parties
have expressly designated FAA procedural provisions to be applicable. As
Cronus emphasized, the parties may do so notwithstanding its holdings
regarding preemption. (Cronus, at p. 394 [“Our opinion does not preclude
parties to an arbitration agreement to expressly designate that any
arbitration proceeding should move forward under the FAA’s procedural
provisions rather than under state procedural law”]; see also Valencia, supra,
185 Cal.App.4th at p. 157; Victrola, supra, 46 Cal.App.5th at pp. 346-348.)
III. Strata’s Arguments Concerning the Arbitrator’s Asserted Manifest
Disregard of the Law
A. Contentions
Strata makes a series of attacks on the arbitrator’s reasoning that
appear intended to invoke a federal court doctrine permitting an arbitration
award be vacated for the arbitrator’s “manifest disregard of the law.” (See
17
VIP Mortgage Incorporated v. Gates, supra, 162 F.4th at p. 1014.)11 Strata
first claims that the arbitrator had “acknowledged the parties agreed to the
application of substantive law under the FAA to the arbitration proceedings
. . . .” It argues the arbitrator “conflated [the] timely payment of wages with
an underpayment of a bonus” and knew her ruling that incentive bonus
payments constituted wages was incorrect in part because she “relied
on precedent under California law, instead of decisional law under the
FAA . . . .” Strata argues it provided the arbitrator with the correct definition
of wages under section 204 with citations to federal precedent. It states the
arbitrator’s cited California cases do not support the conclusions reached, but
that even if California law were applicable, Prachasaisoradej v. Ralphs
Grocery Co., Inc. (2007) 42 Cal.4th 217 “has made clear that discretionary
bonus amounts do not become ‘wages’ until the final amount is calculated
pursuant to the company’s discretionary bonus formula, including after any
condition precedent have [sic] been satisfied.” According to Strata, under
either the FAA or state law, it “timely paid [Shifrin’s] bonus once calculated.”
Strata concludes that the arbitrator knew the law, intentionally misapplied
it, and refused to fix errors when it objected.
11 It is “uncertain” whether the “manifest disregard of the law” doctrine
remains legally viable. (Countrywide Financial Corp. v. Bundy, supra, 187
Cal.App.4th at p. 253.) The Countrywide court observed that the U.S.
Supreme Court has called the doctrine into question, but later applied it
assuming it remained viable. (Id. at p. 252; see Stolt-Nielsen S.A. v.
AnimalFeeds International Corp. (2010) 559 U.S. 662, 672, fn. 3 [“We do not
decide whether ‘ “manifest disregard” ’ survives . . . as an independent ground
for review or as a judicial gloss on the enumerated grounds for vacatur set
forth at 9 U.S.C. § 10”].) Countrywide nevertheless evaluated the award in
that case under the test, as the U.S. Supreme Court had done. (Countrywide,
at p. 253.) We do the same here.
18
Strata next argues the arbitrator’s award conflicts with Shifrin’s
employment agreements. It maintains that the arbitrator knew various
contract interpretation principles from her “years on the bench” as well as its
pretrial arbitration brief. Strata argues these rules are well-defined and
explicit for purposes of the manifest disregard doctrine. Pointing to Shifrin’s
original 2014 employment agreement, Strata argues that “[w]hen [Shifrin]
asked to ‘keep’ his [one percent], he meant ‘to retain [it] in his possession or
power’ ”: and he “kept the ‘discretionary’ [one percent] bonus percentage,
meaning the amount of any subsequent award was ‘left to [Strata’s]
individual choice or judgment.’ ”
Strata argues that section 204 does not apply to the underpayment of
wages, much less underpayment of discretionary bonuses. It points to
numerous federal cases addressing section 204, some of which state that the
section deals solely with the timing of wages, and not whether correct wages
were paid. Strata also cites See’s Candy Shops, Inc. v. Superior Ct., supra,
210 Cal.App.4th 889 for the same proposition: that section 204 does not apply
to the question of how wages are calculated or what wages are owed. It
argues it directed the arbitrator to the controlling law precluding section
204’s application, but the arbitrator “manifestly disregarded all precedent
and impermissibly converted a contract dispute over whether any additional
bonus amounts were owed to [Shifrin] into a ‘timing of payment’ issue,
presumably for the sole purpose of adding punitive penalties to the Final
Award.”
Strata finally argues that because section 204 is inapplicable, Shifrin is
not entitled to penalty interest, attorney fees, or prejudgment interest.
Strata continues that even if section 204 were applicable, Shifrin would not
be entitled to penalty interest because this was its first violation, and the
19
arbitrator did not find its actions were willful and intentional as it must
under section 210. It argues the prejudgment interest award cannot stand
under Civil Code section 3287 because rather than Shifrin’s damages being
certain or capable of being made certain, “the facts bearing on the calculation
of [Shifrin’s] 2021 annual bonus were hotly disputed.”
B. Manifest Disregard Standard
As indicated above, the FAA sets a “ ‘high standard for vacatur.’ ” (VIP
Mortgage Incorporated v. Gates, supra, 162 F.4th at p. 1014; HayDay Farms,
Inc. v. FeeDx Holdings, Inc. (9th Cir. 2022) 55 F.4th 1232, 1240 (HayDay).)
Courts “will not disturb even an incorrect legal decision by an arbitrator
unless it was completely irrational or reflected manifest disregard of the law.
For example, courts do not ‘decide the rightness or wrongness of the
arbitrators’ contract interpretation’—we must only decide ‘whether the
panel’s decision “draws its essence” from the contract.’ [Citation.] We cannot
‘vacate an award simply because we might have interpreted the contract’ or
statute ‘differently.’ ” (VIP Mortgage, at p. 1014; HayDay, at p. 1240.)
“ ‘[M]anifest disregard of the law’ means something more than just an error
in the law or a failure on the part of the arbitrators to understand or apply
the law.” (Lagstein v. Certain Underwriters at Lloyd’s, London (9th Cir.
2010) 607 F.3d 634, 641.)
“ ‘To demonstrate manifest disregard, the moving party must show that
the arbitrator understood and correctly stated the law, but proceeded to
disregard the same.’ [Citation.] ‘There must be some evidence in the record,
other than the result, that the arbitrators were aware of the law and
intentionally disregarded it.’ ” (HayDay, supra, 55 F.4th at p. 1241.) And the
law purportedly ignored by the arbitrator must be “well-defined, explicit, and
20
clearly applicable to the case.” (Countrywide Financial Corp. v. Bundy,
supra, 187 Cal.App.4th at p. 253.)
Errors of fact do not generally constitute manifest disregard of the law,
unless the arbitrator “intentionally ignored a critical, undisputed fact that
would have determined a legal issue in the arbitration.” (VIP Mortgage v.
Gates, supra, 162 F.4th at p. 1015; HayDay, supra, 55 F.4th at p. 1241.)12
This “legally dispositive fact” exception applies where, for example, an
arbitrator is on notice of a critical fact but ignores it as a form of compromise
so as “to apply his own form of justice.” (VIP Mortgage, Inc., at p. 1016.)
C. Analysis
Here, Strata has not presented specific facts demonstrating the
arbitrator here manifestly disregarded the law or ignored a legally dispositive
fact in reaching the final award. The arguments outlined above amount to a
12 The Ninth Circuit in VIP Mortgage Incorporated v. Gates explains:
“[T]he ‘legally dispositive fact’ basis for vacatur applies if (1) the factual error
was so critical to the disputed legal issue that it determined the outcome of
that issue, and (2) the fact was so obvious and undisputed that the arbitrator
must have known about it when she decided the legal issue.” (VIP Mortgage
Incorporated v. Gates, supra, 162 F.4th at p. 1015.) There, the court held the
arbitrator’s failure to remember that the parties had agreed to bear their own
fees for certain counterclaim did not fall within this narrow carveout for
“legally dispositive facts.” (Ibid.) The plaintiff met the first prong, but not
the second, as “[b]y the time the arbitrator issued the final award, it had been
over a year since she had entered the order approving the stipulation to
dismiss the counterclaims.” (Ibid.) And “[c]ritically, [the plaintiff] did not
rely on, or remind the arbitrator of, the stipulation’s fees provision when it
objected to the motion for attorneys’ fees fourteen months later. [¶] Given
that the fees request for the counterclaims was a minor issue in the
arbitration, the arbitrator may not have remembered the details of that
stipulation. And because [the plaintiff] did not mention that stipulation in its
briefing, the arbitrator awarded attorneys’ fees without distinguishing
between time spent on [defendant’s] claims and that devoted to the
counterclaims.” (Ibid.)
21
claim that the arbitrator may have been mistaken in interpreting the parties’
contracts, applying California law or construing section 204 to permit
Sillman to recover penalty interest for Strata’s underpayment (versus
untimely payment) of his bonus. Under the principles discussed above, it is
not enough to show the arbitrator was wrong, misunderstood the law, or
interpreted it imperfectly; Strata must present evidence that the arbitrator
“understood and correctly stated” controlling law, but intentionally
disregarded it. (HayDay, supra, 55 F.4th at pp. 1240-1241, italics added.)
“ ‘The risk that arbitrators may construe the governing law imperfectly in the
course of delivering a decision that attempts in good faith to interpret the
relevant law, or may make errors with respect to the evidence on which they
base their rulings, is a risk that every party to arbitration assumes, and such
legal and factual errors lie far outside the category of conduct embraced by [9
U.S.C. §] 10(a)(4).’ ” (New Frontier Investment AG v. BitCenter, Inc. (N.D.Cal.
2024) 715 F.Supp.3d 1245, 1258; see also id. at p. 1262 [“Reduced to its
essence, Petitioners argue the Arbitrator made an ‘erroneous legal
conclusion.’ This type of error is insufficient to warrant vacatur”].) We will
not vacate an award because we might have interpreted the law differently.
(VIP Mortgage Incorporated v. Gates, supra, 162 F.4th at p. 1014.) As Shifrin
points out, the fact Strata submitted authority to the arbitrator that she
ignored does not meet the “manifest disregard” standard. (New Frontier, at
p. 1258 [“ ‘[t]he mere submission of authority to an arbitrator (even when
the arbitrator requests it, which happens in most if not all arbitrations),
cannot possibly give rise to a claim that the arbitrator “recognized” that
authority’ ”].)
Nor is it enough that the arbitrator should have known basic principles
of contract interpretation that Strata maintains compelled a resolution in its
22
favor. Absent any indication that the arbitrator stated applicable and settled
principles but elected to ignore them, the claim fails. Strata argues that such
principles, properly applied, means that Shifrin only agreed to keep a
discretionary one percent portion of his bonus as evidenced by his original
employment agreement. It argues the arbitrator “does not mention these
material terms” and suggested she “ignore[d] all of the words in [Shifrin’s]
employment agreements that establish a discretionary bonus.” We see this
argument in effect as one that the arbitrator should have come to a different
factual finding—that the e-mails did not reflect a new agreement. Such an
argument does not warrant vacatur. (See Biller v. Toyota Motor Corp.
(9thCir. 2012) 668 F.3d 655, 669 [“ ‘[m]anifest disregard of the facts [alone] is
not an independent ground for vacatur in this circuit’ ”].) And the record does
not establish the arbitrator disregarded critical undisputed facts, rather, she
rationally interpreted the parties’ December 2015 e-mails to conclude they
reflected a new agreement about Shifrin’s profit participation.
We hold the arbitrator’s award reflects a “plausible interpretation of
the parties’ contracts” and thus was not completely irrational. (HayDay,
supra, 55 F.4th at p. 1242.)13 The arbitrator ruled that after the initial 2014
agreement, Shifrin and David Michan had entered into a new agreement via
e-mail (see footnote 4, ante) to give Shifrin a fixed interest in Strata’s net
13 To decide whether an arbitrator’s award is “ ‘completely irrational,’ ”
the court decides “ ‘only whether the arbitrator’s decision draws its essence
from the contract, not the rightness or wrongness of the arbitrator’s contract
interpretation.’ [Citation.] An award is completely irrational if it ignores
controlling terms of the parties’ contract. [Citations.] [¶] Further, ‘[a]n
arbitrator does not exceed its authority if the decision is a plausible
interpretation of the . . . contract.’ [Citation.] ‘Accordingly, the court must
defer to the arbitrator’s decision as long as the arbitrator even arguably
construed or applied the contract.’ ” (HayDay, supra, 55 F.4th at p. 1241.)
23
proceeds each calendar year without regard for the amount allocated to the
executive bonus program, and that Strata had paid him the agreed-upon
percentage every year from 2015 to 2020. The arbitrator found Shifrin
presented clear and convincing evidence of a new contract or novation, even
though such a finding was not necessary in light of its other findings.
“Because the complete irrationality standard ‘is extremely narrow and is
satisfied only where the arbitration decision fails to draw its essence from the
agreement [citation], [Strata’s] effort to vacate the award on that ground . . .
fails.” (HayDay, supra, 55 F.4th at p. 1242.) To hold otherwise would grant
Strata “an unwarranted do-over.” (Ibid.)
Even if we assume arguendo See’s Candy Shops, Inc. v. Superior Ct.,
supra, 210 Cal.App.4th 889 clearly demonstrated the arbitrator reached the
wrong result, we would not disturb the award. Strata in its trial/arbitration
brief did not cite to that case, thus we may conclude the arbitrator was
unaware of it when it fashioned the award, and thus did not manifestly
disregard it. Strata points to its combined objections to the arbitrator’s
interim award and reconsideration motion, saying it alerted the arbitrator to
See’s Candy Shops. Strata’s papers cited the case at the end of a lengthy
footnote for the proposition that section 204 deals solely with the timing of
wages and not whether these wages were paid. But Strata does not point to
authority standing for the proposition that informing an arbitrator of case
law after the fact equates to an arbitrator acknowledging and stating that
law but ignored it in making its award. In any event, we rely on the cases
saying that mere submission of authority is not enough. (See New Frontier
Investment AG v. BitCenter, Inc., supra, 715 F.Supp.3d at p. 1258; Jenks v.
DLA Piper (US) LLP (N.D.Cal. 2014, No. 13-cv-05381-VC) [2014 WL
3381947, at *7].)
24
Strata’s remaining arguments—that the arbitrator (1) incorrectly
applied section 210 to award a penalty because any violation was its first,
and not willful or intentional and (2) incorrectly awarded attorney fees and
prejudgment interest based on the arbitrator’s application of section 204—
again ask us to simply review the arbitrator’s decision for error. It does not
point to evidence in the record, other than the result, that the arbitrator
recognized and correctly stated controlling law but intentionally disregarded
it. (HayDay, supra, 55 F.4th at pp. 1240-1241; Biller v. Toyota Motor Corp.,
supra, 668 F.3d at p. 665 [“ ‘To vacate an arbitration award [for manifest
disregard of the law], “[i]t must be clear from the record that the arbitrators
recognized the applicable law and then ignored it” ’ ”].)
IV. Court’s Reliance on Oman v. Delta Air Lines, Inc. to Confirm the Award
Strata contends the superior court committed a “clear error of law” by
creating “new and unsupportable grounds” to confirm the award (or to deny
its motions to reconsider and/or vacate). Specifically, Strata criticizes the
court’s reliance on Oman v. Delta Air Lines, Inc, supra, 9 Cal.5th 762 to
support the arbitrator’s application of section 204 to Shifrin’s claims. Strata
argues Oman does not address the issue, and the arbitrator could not have
relied on the case because Shifrin raised it for the first time in opposition to
its motion to vacate the award.
Regardless of the specific questions addressed by the court in Oman, it
explained generally the public policies served by section 204 include full and
complete payment of wages: “Section 204 serves the ‘public policy in favor of
full and prompt payment of an employee’s earned wages,’ which ‘is
fundamental and well established: “ ‘Delay of payment or loss of wages
results in deprivation of the necessities of life, suffering inability to meet just
obligations to others, and, in many cases may make the wage-earner a charge
25
upon the public.’ ” ’ [Citations.] Section 204, insofar as it applies to the
entirety of an employee’s wages, directly serves this policy. It is less
apparent how the policy is meaningfully advanced by requiring payment of
California-earned wages on a California-specified timeline when those wages
represent just a small fraction of the earnings an employee relies on for
support.” (Oman v. Delta Air Lines, Inc., supra, 9 Cal.5th at p. 777, italics
added, citing in part Voris v. Lampert (2019) 7 Cal.5th 1141, 1148, [“prompt
and complete wage payments are of critical importance to the well-being of
workers, their families, and the public at large,” italics added].)
Strata in reply characterizes Oman v. Delta Air Lines, Inc., supra, 9
Cal.5th 762 as saying “nothing about [s]ection 204 applying to unpaid as
opposed to untimely paid wages, and . . . nothing supportive of the
arbitrator’s decision to turn a promise of a bonus based on net profits into
‘wages’ due to [Shifrin] under section 204.” It argues that “Oman stands for
the entirely unremarkable proposition that California public policy favors the
timely payment of wages earned.” But Oman’s references to full and
complete payment of earned wages and the impact of lost wages belie that
point. Notably, based on the Labor Code definition of “wages,” the California
Supreme Court recognizes that “[i]ncentive compensation, such as bonuses
and profit-sharing plans . . . constitute wages.” (Schachter v. Citigroup, Inc.
(2009) 47 Cal.4th 610, 618, citing in part Neisendorf v. Levi Strauss & Co.
(2006) 143 Cal.App.4th 509, 522 [“bonuses are considered ‘wages’ within the
meaning of . . . section 200”]; see also Davis v. Farmers Ins. Exchange (2016)
245 Cal.App.4th 1302, 1331, fn. 20 [“wages include not just salaries earned
hourly, but also bonuses, profit-sharing plans, and commissions”].)
Strata’s second point is that the superior court in considering whether
to confirm the arbitration award erred by citing cases not relied upon by the
26
arbitrator because its focus in applying the manifest disregard standard
should have been on what the arbitrator knew or relied upon. It argues “[i]t
should be axiomatic that the arbitrator could not have implicitly relied on a
case for a proposition never advanced before her.” Strata makes this
proposition in its opening brief without authority. “ ‘When legal argument
with citation to authority is not furnished on a particular point, we may treat
the point as forfeited and pass it without consideration.’ ” (G.F. Galaxy Corp.
v. Johnson (2024) 100 Cal.App.5th 542, 550, fn. 4.) For the first time in reply,
it cites authorities setting out the manifest disregard standard as support for
this proposition. Out of fairness to Shifrin, we will not consider the
procedural point or whether these authorities support Strata’s argument
because Strata “do[es] not explain the delayed presentation of those
arguments.” (Allen v. City of Sacramento (2015) 234 Cal.App.4th 41, 65.)
V. Award of Civil Code Section 3287 Postaward, Prejudgment Interest
Shifrin’s form petition to confirm the arbitration award sought interest
from April 1, 2024, “at the statutory rate.” As summarized above, along with
the petition, Shifrin’s counsel submitted a declaration stating that in addition
to the prejudgment interest awarded by the arbitrator and the prejudgment
interest from April 1, 2024, to April 8, 2024, Shifrin sought “additional
prejudgment interest at the rate of ten percent per annum pursuant to Code
of Civil Procedure [sic] section 3289 and Labor Code Section 218.6, from April
9, 2024, through the date of entry of judgment, on the final award amount of
$12,057,614.27 (which includes the attorneys’ fees and costs awarded in the
final arbitration award dated April 2), which is a daily rate of $3,303.46.”
When disputes arose over Shifrin’s request for additional prejudgment
interest, the parties briefed the matter. Shifrin argued that as the prevailing
party, he was entitled to prejudgment interest on the full amount of the final
27
award under Civil Code section 3287, subdivision (a). He argued the full
amount of the final award became a “new, fixed, liquidated liability” when it
was issued on April 8, 2024. Shifrin argued authorities were clear that a
prevailing party in arbitration was entitled to an award of prejudgment
interest from the date of the final arbitration award to the date of entry of
judgment on the entire amount of the award, including attorney fees,
punitive damages, and costs.
Strata characterized Shifrin as making an untimely and
“impermissible” request for reconsideration or amendment of the court’s
order confirming the arbitrator’s award so as “to increase the prejudgment
interest awarded to him by the arbitrator.” Strata pointed out Shifrin’s
notice of his motion to confirm the arbitration award only asked that the
award be confirmed “as made pursuant to section 1286 of the Code of Civil
Procedure” and that the petition did not mention a Civil Code section 3287
adjustment. It argued such an adjustment would give Shifrin an undeserved
windfall of almost $175,000, including prejudgment interest on penalty
interest and attorney fees in violation of the Labor Code.
The court awarded Shifrin $726,721.20 in postaward, prejudgment
interest, calculating it at $3,303.46 daily from April 9, 2024, to the December
3, 2024 entry of judgment.
A. Contentions
Strata challenges the superior court’s order granting Shifrin
postaward, prejudgment interest. It characterizes the court’s order as an
“untimely reconsider[ation]” of Shifrin’s motion to confirm, and the award as
“compound interest.” Strata first asserts that Shifrin did not ask for such
interest under Civil Code section 3287 either in the notice of his petition to
28
confirm the award, nor in his supporting and reply briefs. It says “this clear
and unequivocal statutory requirement” for notice is required by due process.
Strata also asserts Shifrin failed to give notice he intended to seek
prejudgment interest on any amounts other than wages, such as attorney
fees, penalty interest, and prejudgment interest. Citing Westbrook v.
Fairchild (1992) 7 Cal.App.4th 889, Strata argues that imposition of 10
percent prejudgment interest on the previously awarded prejudgment
interest violates Article XV, section 1, subdivision 2 of the California
Constitution, mandating simple interest of not more than 10 percent on
awards.
B. Legal Principles
Civil Code section 3287 provides: “A person who is entitled to recover
damages certain . . . and the right to recover which is vested in the person
upon a particular day, is entitled also to recover interest thereon from that
day . . . .” (Civ. Code, § 3287, subd. (a).)
A prevailing party in arbitration is entitled to prejudgment interest on
the entire award, including attorneys’ fees, from the date of the final award
to entry of judgment. (Civ. Code, § 3287, subd. (a); Britz, Inc. v. Alfa-Laval
Food & Dairy Co. (1995) 34 Cal.App.4th 1085, 1106-1107 (Britz); Pierotti v.
Torian (2000) 81 Cal.App.4th 17, 27-28; Tenzera, Inc. v. Osterman (2012) 205
Cal.App.4th 16, 21-22 [citing Britz and Pierotti].) If the statutory conditions
are satisfied, the court must award such interest (Tenzera, Inc., at p. 21); that
is, such an award is mandatory. (Espejo v. The Copley Press, Inc. (2017) 13
Cal.App.5th 329, 376.) The purpose of such an award is to compensate the
prevailing party for the loss of money during the period before entry of
judgment. (Tenzera, at p. 21.)
29
In Britz, the Court of Appeal upheld an award of prejudgment interest
under Civil Code section 3287 to successful parties in arbitration even where
they had not demanded such interest in their petition to confirm the
arbitrator’s award. (Britz, supra, 34 Cal.App.4th at p. 1106.) The court
analogized the situation to one where a party’s complaint contained no prayer
for interest; it reasoned “ ‘that in a contested action on a money claim which
can be made certain by calculation, the matter of interest for the withholding
of the money is “embraced within the issue” (Code Civ. Proc., § 580) and the
appropriate interest may be allowed even though not prayed for . . . .’ ” (Ibid.)
Additionally the Britz court rejected a claim that the award improperly
“ ‘pile[d] “damages” (interest) on top of other “damages” (attorneys’ fees and
costs) which were themselves awarded on [the successful parties’] modest
breach of contract damage claim.’ ” (Britz, supra, 34 Cal.App.4th at pp. 1106-
1107.) It explained the argument “misconceives the subject of the superior
court petition. The petition was not for an award of damages and attorney
fees on the original contracts. That underlying dispute was the subject of the
arbitration, and had been concluded by the time of the superior court petition
to confirm the award. The arbitration award itself resulted in a new and
fixed liability (see Code Civ. Proc., § 1287.6)[14]. Regardless of the individual
elements that comprised that liability, respondents were entitled to payment
of the fixed sum upon issuance of the award.” (Britz, at p. 1107, italics
added.)
14 “An award that has not been confirmed or vacated has the same force
and effect as a contract in writing between the parties to the arbitration.”
(Code Civ. Proc., § 1287.6.)
30
C. Analysis
The foregoing principles compel us to reject Strata’s arguments and
uphold the court’s award of prejudgment interest. In his petition to confirm
the arbitration award, Shifrin did in fact request interest “at the statutory
rate” from April 1, 2024, and his counsel specifically stated Shifrin would
seek 10 percent prejudgment interest on the $12,057,614.27 final award,
calculated at $3,303.46 daily, from April 9, 2024, through the date of entry of
judgment. Though counsel did not specifically identify Civil Code section
3287 (instead stating the award was sought under Labor Code section 218.6
and Code of Civil Procedure [sic] section 3289), Strata was nevertheless on
notice that Shifrin sought postaward, prejudgment interest. Under Civil
Code section 3287, subdivision (a), the court lacked discretion to not award
such interest where the statutory conditions were met.
Thus, Shifrin’s request for postaward, prejudgment interest was not
untimely. But even if he had not asked for such interest in his petition to
confirm, under Britz, Shifrin could have sought such an award in any event.
(Britz, supra, 34 Cal.App.4th at p. 1106.) In reply, Strata states that Britz is
no longer legally sound, based on Heimlich v. Shivji (2019) 7 Cal.5th 350,
which assertedly “rejected it sub silencio,” holding “a court may not overrule
an arbitrator’s decisions in the amount of the award, including prejudgment
interest.” The point mischaracterizes Heimlich. There, the arbitrator
refused to award costs to a party to an arbitration despite the other party’s
failure to obtain a more favorable result than an offer made under Code of
Civil Procedure section 998. (Heimlich, at pp. 356, 357.) The California
Supreme Court held that even though the party’s request for costs was timely
(id. at pp. 359, 366), the arbitrator’s decision, though incorrect, was not
reviewable. (Id. at p. 367.) Heimlich pointed out the party seeking costs
31
cited Britz, which held arbitrators have power to amend their decisions to
add cost and fee awards, but distinguished the case: “[I]f an arbitrator elects
not to amend a decision in order to add costs or fees, these cases do not hold
that a court may overrule that refusal.” (Heimlich, at p. 368.) Heimlich did
not overrule Britz at all, much less on the issue of when and how a trial court
may award postaward, prejudgment interest in an arbitration proceeding
under Civil Code section 3287. And this is not a situation where the
arbitrator here either granted or denied postaward, prejudgment interest,
and the superior court sought to reach a different decision. Heimlich does not
change our conclusion.
Finally, Strata’s complaint about interest upon interest is unavailing.
Its cited authority Westbrook v. Fairchild, supra, 7 Cal.App.4th at p. 894,
recognizes an “exception to the rule that interest on interest (i.e. compound
interest) may not be recovered is in situations in which interest is included in
a judgment which then bears interest at the legal rate.” (Id. at p. 894.) Such
is the case here, where “[t]he arbitration award was the contractual
equivalent of a judgment in [Shifrin’s] favor.” (Britz, supra, 34 Cal.App.4th
at p. 1107.) Britz reasoned: “In the context of a judicial judgment, it is clear
that interest after judgment accrues as to the entire award, including
attorneys’ fees. [Citation.] The prejudgment interest awarded respondents
served the same purpose here. Although the interest was pre-‘judicial
judgment’, it was post-‘contractual judgment.’ Any result that denied
respondents this postaward interest would punish them for using arbitration
instead of the court system to resolve their dispute with appellants.” (Ibid.)
32
DISPOSITION
The judgment is affirmed. Shifrin shall recover his costs on appeal.
O’ROURKE, Acting P. J.
WE CONCUR:
DO, J.
CASTILLO, J.
33