Filed 10/19/26 The Waffle v. Tucker Investment Group CA2/7
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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not been certified for publication or ordered published for purposes of rule 8.1115.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
SECOND APPELLATE DISTRICT
DIVISION SEVEN
THE WAFFLE, LLC, B341347
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. SC129215)
v.
TUCKER INVESTMENT
GROUP, LLC et al.
Defendants and
Respondents.
APPEAL from a judgment of the Superior Court of
Los Angeles County, Mark H. Epstein, Judge. Affirmed.
Ellis George, Eric M. George and Serli Polatoglu for
Plaintiff and Appellant.
Saul Ewing, William E. Adams and Matthew A. Young for
Defendants and Respondents.
__________________________
The Waffle, LLC appeals from a judgment in favor of
William Tucker and Tucker Investment Group, LLC (TIG;
collectively, the Tucker defendants) after the trial court granted
the Tucker defendants’ motion to confirm an arbitration award in
their favor and denied The Waffle’s motion to vacate the award.
The Waffle contends the trial court erred because the arbitrator
exceeded the scope of his authority by relying on findings made
by the court in phase I of a trial on related issues; failed to issue
a “reasoned award” that addressed the principal argument raised
by The Waffle; and erred in awarding attorneys’ fees for work
performed on behalf of defendants who had settled. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
A. The Restaurant Lease and Notice of Breach
Tucker is the managing member of TIG. In 2014 TIG
signed a 10-year master lease under which it leased a commercial
property in Westwood, Los Angeles (the premises). In 2016 or
2017 Tucker and The Waffle began negotiating a potential
sublease of the premises with The Waffle’s principal, Gavin
Polone. The Waffle had an existing restaurant in Hollywood and
sought to open a second location in Westwood. On March 30,
2017 TIG and The Waffle entered a 10-year lease for a restaurant
space on the premises (the lease). Under an addendum to the
lease and an attached construction work letter, TIG agreed to
provide a “4-inch grease waste line connected to a 3000 gallon
grease interceptor in compliance with code” (the interceptor).
The lease did not contain a deadline to install the interceptor or
require installation before TIG delivered possession of the
premises to The Waffle.
2
Instead, the lease contained a cure provision that provided
time limits for performance of TIG’s obligations under the lease
upon a claimed breach by The Waffle. Section 13.6,
subsection (a), provided: “Lessor shall not be deemed in breach of
this Lease unless Lessor fails within a reasonable time to
perform an obligation required to be performed by
Lessor. . . . [A] reasonable time shall in no event be less than
30 days after receipt by Lessor . . . of written notice specifying
wherein such obligation of Lessor has not been performed;
provided, however, that if the nature of Lessor’s obligation is
such that more than 30 days are reasonably required for its
performance, then Lessor shall not be in breach if performance is
commenced within such 30 day period and thereafter diligently
pursued to completion.” Section 31 of the lease provided
attorneys’ fees to the prevailing party in any action or proceeding
involving the premises.
After the parties signed the lease, TIG’s project manager,
Johnnie Morgan of Coastline Construction Management, Inc.
(collectively, the Coastline defendants), started to analyze the
feasibility of installing the interceptor in an elevated area behind
the premises. From late 2017 to early 2018, TIG, Tucker,
Morgan, Polone, The Waffle’s architect, and The Waffle’s
mechanical and plumbing engineer discussed the feasibility of
installing the interceptor at the premises. The viability of the
installation was impacted by the interceptor’s large size, location
(which required excavation of the slope behind the premises), and
installation costs. Morgan also reached out to the City of Los
Angeles Sanitation and Environment Department to discuss the
interceptor, and he arranged a site visit by the City. Given the
challenges to install the interceptor, the parties discussed as an
3
alternative a Schier grease trap (the Schier). The Waffle
remained skeptical that the Schier was an acceptable alternative.
On December 11, 2017 Morgan emailed The Waffle’s
architect with plumbing plans that included the Schier instead of
the interceptor. Tucker and Polone continued to discuss the
Schier as an alternative to the interceptor. Polone expressed
skepticism that the Schier would work given the amount of
grease the restaurant would produce, and Tucker explained that
the Schier was feasible and would not pose the same challenges
as the interceptor. On February 15, 2018 Polone emailed Tucker
that he had “‘no reason to think your proposal for substituting
the [interceptor] called for in our agreement for the Schier unit
will be acceptable.’” Tucker responded on February 17, “‘I don’t
understand why you are not open to being cooperative and
reasonable . . . . [Y]ou seem to say that you now won’t work with
us even if [the Schier] is shown to be a great option.’” On
March 9 Polone emailed Tucker, “‘[W]e must resolve the issues
with the . . . grease interceptor.’”
On March 19, 2018 The Waffle sent Tucker a letter (the
notice) providing “notice of your breach of our March 30, 2017
Lease.” The notice cited the requirement in the lease to provide
the interceptor and explained The Waffle refused to sign off on
the plans for the premises because the Tucker defendants did
“not provide for the required 3,000 gallon grease [interceptor].”
The notice concluded, “We ask that you instead provide plans
consistent with the [construction] [w]ork [l]etter and the Lease,
and because to date you have failed to do so, we are providing
this notice per Section 13.6(a) of our Lease.” The next day Tucker
sent Polone a letter to confirm receipt of the notice, in which he
explained that TIG had not inserted the Schier into the plans.
4
Tucker added, “‘[W]e understood you had reserved your rights
with respect to the grease interceptor to be installed. We were
simply request[ing] [the plans] be initialed’” per the terms of the
lease.
After further discussions, on April 6, 2018 Polone emailed
Tucker to decline the Schier as an alternative, stating, “As I have
said many times, I did not think this substitution would be
acceptable and this decision is now final.” Tucker responded,
“FYI, I’m now going back to engineers about installing the 3,000-
gallon [interceptor].” Tucker then spoke with both a plumbing
engineer and a civil engineer about the interceptor. On April 16
Tucker emailed Polone to state he was “‘interviewing shoring
engineers for the design work of both the [interceptor] and the
structural impact on the building. Will keep you posted when we
know more about the timeline.’”
B. The Lawsuit and Stipulation To Bifurcate Trial
On May 2, 2018 The Waffle filed a lawsuit against the
Tucker and Coastline defendants. The operative third amended
complaint alleged causes of action against the Tucker and
Coastline defendants for fraud and negligent misrepresentation
and against TIG for rescission, breach of written contract, and
declaratory relief. The Waffle alleged with respect to the fraud
and negligent misrepresentation causes of action that the
defendants acted fraudulently before and after executing the
lease, made false promises, and concealed and misrepresented
key issues relating to the grease interceptor.1 On
1 TIG subsequently filed a cross-complaint against The
Waffle for breach of the lease and related causes of action, which
it later voluntarily dismissed.
5
November 16, 2021 the parties stipulated to bifurcate the trial,
with a bench trial on the breach of contract cause of action
against TIG (phase I) and a subsequent jury trial on the
remaining causes of action against the Tucker and Coastline
defendants (phase II).
C. Phase I: The Bench Trial on the Breach of Contract Cause of
Action
In November 2021 the trial court held a six-day bench trial
on The Waffle’s breach of contract cause of action against TIG.
On December 6, 2021 the court orally announced its ruling. The
court explained that under the “odd” language in section 13.6,
subsection (a), of the lease, “even if there is a clear failure by the
landlord to perform an unambiguous requirement in the contract
that the landlord is required to do, it is still not a breach . . . until
the tenant gives the landlord notice, specifies the duty that the
landlord has not yet performed, and 30 days has expired subject
to the [condition allowing for additional time if the duty cannot
be cured in 30 days].” Under the lease, therefore, the landlord is
not in breach unless “it is not finished within 30 days,” or, if the
duty cannot be reasonably completed in 30 days, “it is not
commenced within 30 days and thereafter diligently pursued.”
Because installation of the interceptor “was not a 30-day cure,”
TIG “need[ed] to commence [installation] within 30 days and
diligently proceed thereafter to completion.” The court explained
Tucker “did do something. He did start. He did say, ‘I will talk
to the engineers,’ and he did talk to his team. He did talk to
Mr. Morgan. And he did say, ‘Okay. We are going to have to go
with the 3,000-gallon grease interceptor.’” Tucker “had given up
on the Schier grease [interceptor] . . . and had instructed
6
Mr. Morgan to move forward with putting in the 3,000-gallon
grease interceptor.” The court found TIG did not breach the lease
and ruled in favor of TIG on the breach of contract cause of
action.
D. Phase II: The Jury Trial on the Remaining Causes of
Action
In March and April 2022, the trial court held a jury trial on
The Waffle’s fraud and negligent misrepresentation causes of
action against the Tucker and Coastline defendants. During the
trial the parties presented their arguments; called witnesses,
including experts; and presented documentary evidence of the
parties’ communications. The court excluded any mention of the
disposition of phase I of the trial. On April 4, 2022 the jury
returned a verdict for the Coastline defendants on The Waffle’s
negligent misrepresentation claim but was deadlocked on the
remaining causes of action against the Tucker defendants (for
fraudulent and negligent misrepresentation) and the Coastline
defendants (for fraudulent misrepresentation), resulting in a
mistrial. Instead of retrying the remaining causes of action
against the Tucker and Coastline defendants, the parties agreed
to arbitrate the claims.
E. The Stipulation To Arbitrate
On June 28, 2022 the parties signed a stipulation agreeing
to “submit all remaining claims and issues (including any
motions for attorney fees) in the above-captioned litigation to
private binding arbitration.” The stipulation directed the
arbitrator to apply the substantive law of California on the
merits and “follow the procedural rules of ADR Services, Inc.”
7
The parties agreed to “waive any right to appeal the decisions
made during the action, and further agree[d] to be bound by the
determination of the arbitrator absent evidence of any activities
described in California Code of Civil Procedure Section 1286.2.”2
The stipulation “permitted” and “encouraged” the “use as
evidence during arbitration the written discovery, documents,
deposition transcripts and trial transcripts exchanged and
prepared during the action” and “deemed admitted for purposes
of arbitration” the trial exhibits “admitted during [p]hases I and
II.” The stipulation specifically excluded “any evidence relating
to the financial condition of the [defendants]” unless certain
conditions were met. Paragraph 7 of the stipulation stated, “The
parties agree to present at arbitration only those issues that were
presented to the jury during phase II of the Action.”
F. The Arbitration
The arbitration was held on January 3, 4, 5, and 9, 2024.
The Waffle argued the Tucker defendants fraudulently induced it
to enter the lease by misrepresenting that TIG would install the
interceptor, despite having no intention of doing so. The Tucker
defendants argued they did not fraudulently induce The Waffle to
enter into the lease, persuade The Waffle to accept an alternative
to the interceptor in order to deny The Waffle the benefits under
the lease, tell The Waffle they would not install the interceptor,
or delay installation of the interceptor after The Waffle declined
the Schier. The arbitrator received opening and closing briefs,
admitted 78 exhibits, received testimony from 12 witnesses
2 Further undesignated statutory references are to the Code
of Civil Procedure.
8
(including 6 experts), and heard extensive arguments from each
side.3
On January 16, 2024 the Coastline defendants settled with
The Waffle for $5,000 and agreed not to seek their attorneys’ fees
from The Waffle.
G. The Arbitration Award and Order on the Tucker
Defendants’ Motion for Attorneys’ Fees
On January 23, 2024 the arbitrator issued an interim
arbitration award, and on March 13 he heard further arguments
from the parties during a telephonic hearing. On March 26, 2024
the arbitrator issued a 43-page final arbitration award. The
award described the procedural history of the case; set forth
13 findings the trial court made in phase I; described the causes
of action presented to the jury in phase II, which were the subject
of the arbitration pursuant to the stipulation; listed the admitted
exhibits and witnesses who testified; and made 63 findings of fact
3 On appeal The Waffle filed a motion to augment the record
to include the certified transcripts from the January 2024
arbitration, which the Tucker defendants separately lodged. The
parties cite the transcripts with respect to the Tucker defendants’
contention The Waffle conceded during the arbitration that the
arbitrator should consider the trial court’s phase I findings.
Because we do not reach this issue and the transcripts are not
necessary to our resolution of this appeal, we deny the motion
(which we construe as a request for judicial notice). (See
Jordache Enterprises, Inc. v. Brobeck, Phleger & Harrison (1998)
18 Cal.4th 739, 748, fn. 6 [judicial notice denied where “the
requests present no issue for which judicial notice of these items
is necessary, helpful, or relevant”]; Appel v. Superior Court (2013)
214 Cal.App.4th 329, 342, fn. 6 [judicial notice denied where
materials are not “relevant or necessary” to the court’s analysis].)
9
“[b]ased upon the oral and documentary evidence received into
evidence.”
The award summarized the testimony of six expert
witnesses and cited over four pages of relevant authorities
(including applicable ADR Services rules, California authorities
relating to the misrepresentation causes of action, and relevant
CACI jury instructions). The arbitrator noted the trial court
found in favor of Tucker on the breach of contract causes of action
in phase I and listed 11 factual findings made by the court (a
subset of the 13) that “impact[ed] the decision of this Arbitrator
on the remaining fraud and negligent misrepresentation claims.”
The award explained the court’s finding that “[e]nough was done
to show that the landlord had commenced and there was
reasonable diligence to install the 3,000-gallon grease
interceptor” was “especially important to this Arbitrator’s
analysis of the remaining claims because the acts of reasonable
diligence to install the 3,000-gallon grease interceptor are
relevant to the fraud and negligent misrepresentation claims.”
The award continued with over 11 pages of analysis, setting
forth the arbitrator’s conclusions and the factual findings he
made that supported each conclusion. The arbitrator concluded,
“[The Waffle’s] filing of the lawsuit on May 2, 2018 prevented the
installation of the grease interceptor . . . . [The Waffle] did not
prove that [Tucker] either did not intend to install a 3,000-gallon
grease interceptor at the time of the lease or that they had no
reasonable grounds to believe that they could not install the unit
when they agreed to do so in the lease. (CACI 1900, 1902, and
1903) Therefore, the causes of action for fraud and negligent
misrepresentation against Respondents William Paul Tucker and
Tucker Investment Group, LLC have not been proven.” Finally,
10
the arbitrator awarded the Tucker defendants approximately
$2.2 million in attorneys’ fees and costs, explaining its reasoning
in a separate 31-page order on the Tucker defendants’ motion for
attorneys’ fees.
H. Confirmation of the Arbitration Award
On April 9, 2024 Tucker filed a motion to confirm the
arbitration award. The Waffle filed an opposition and request to
vacate the award. The Waffle argued the arbitrator violated the
arbitration agreement when he relied on the outcome of phase I
in “contravention of the parties’ arbitration agreement,” failed to
issue a reasoned award that addressed one of the Waffle’s key
defenses that “abiding by a contract does not foreclose liability for
fraud or negligent misrepresentation,” and exceeded his
authority by improperly awarding fees relating to work
performed for the settling defendants who waived their right to
fees and were not signatories to the lease.
On June 13, 2024 the trial court granted Tucker’s motion to
confirm and denied The Waffle’s motion to vacate. The court
disagreed that the arbitrator “exceeded his authority by relying
on this court’s rulings in Phase I,” explaining that “[w]hile the
arbitrator found the court’s rulings in Phase I to have an effect on
Phase II, the arbitrator did not just ignore the evidence and rule
that defendants would win in Phase II because they won in
Phase I. . . . [¶] The arbitrator was not told to ignore Phase I in
deciding the issues before him, and there was nothing wrong with
his adverting to the court’s findings. But that said, the arbitrator
plainly considered the evidence before him, including the
testimony from the various witnesses. He issued a decision that
11
is over 40 pages long going through the evidence and setting forth
his reasoning in some detail.”
The trial court also rejected The Waffle’s argument that the
arbitrator “did not consider what they claim is one of their
principal arguments,” explaining it was not “fatal” because the
arbitrator considered many arguments and the “fact that he did
not discuss one of the arguments does not mean that he exceeded
his authority or failed to give a ‘reasoned’ decision (as he was
required to do).” Finally, the court rejected The Waffle’s
attorneys’ fees arguments because it constituted “a disagreement
with the arbitrator’s conclusions of fact and law, neither of which
is something this court can review.” The court entered a
judgment in favor of the Tucker defendants on July 31, 2024.
The Waffle timely appealed.
DISCUSSION
A. Governing Law and Standard of Review
“California law favors alternative dispute resolution as a
viable means of resolving legal conflicts. ‘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’ agreement to submit to arbitration.’” (Richey v.
AutoNation, Inc. (2015) 60 Cal.4th 909, 916; accord, Valencia v.
Mendoza (2024) 103 Cal.App.5th 427, 440.) “‘The scope of judicial
review of arbitration awards is extremely narrow.’” (E-Commerce
Lighting, Inc. v. E-Commerce Trade LLC (2022) 86 Cal.App.5th
58, 63.) “‘There is a presumption favoring the validity of the
award, and appellant bears the burden of establishing [its] claim
12
of invalidity.’” (Valencia, at p. 442; accord, Rivera v. Shivers
(2020) 54 Cal.App.5th 82, 94.)
The California Arbitration Act (§ 1280 et seq.) provides
“only limited grounds for judicial review of an arbitration award”;
under the statute, “courts are authorized to vacate an award if it
was (1) procured by corruption, fraud, or undue means; (2) issued
by corrupt arbitrators; (3) affected by prejudicial misconduct on
the part of the arbitrators; or (4) in excess of the arbitrators’
powers.” (Cable Connection, Inc. v. DIRECTV, Inc. (2008)
44 Cal.4th 1334, 1344, citing § 1286.2, subd. (a); see Soni v.
SimpleLayers, Inc. (2019) 42 Cal.App.5th 1071, 1085-1086, fn.
omitted [“The exclusive grounds for vacating an arbitration
award are provided in [section] 1286.2.”].)
There are limited circumstances under which a court may
vacate a final arbitration award on the ground that the arbitrator
exceeded his or her powers. (See Advanced Micro Devices, Inc. v.
Intel Corp. (1994) 9 Cal.4th 362, 372-374, 367 (Advanced Micro
Devices); Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 11, 28
(Moncharsh); Gravillis v. Coldwell Banker Residential Brokerage
Co. (2010) 182 Cal.App.4th 503, 514.) “‘[A]rbitrators do not
exceed their powers merely because they assign an erroneous
reason for their decision.’ [Citations.] A contrary holding would
permit the exception to swallow the rule of limited judicial
review; a litigant could always contend the arbitrator erred and
thus exceeded his powers.” (Moncharsh, at p. 28; accord,
Gravillis, at p. 514.) “We do not review the merits of the dispute,
the sufficiency of the evidence, or the arbitrator’s reasoning, nor
may we correct or review an award because of an arbitrator’s
legal or factual error, even if it appears on the award’s face.”
(Roehl v. Ritchie (2007) 147 Cal.App.4th 338, 347; accord, Law
13
Finance Group, LLC v. Key (2023) 14 Cal.5th 932, 957
[“‘Generally, 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.’”].)
We review de novo a trial court order confirming an
arbitration award, including its determination whether the
arbitrators exceeded their powers in granting relief. (Advanced
Micro Devices, supra, 9 Cal.4th at pp. 375-376, fn. 9; Valencia v.
Mendoza, supra, 103 Cal.App.5th at p. 442.) In determining
whether the arbitrators exceeded their powers within the
meaning of the section 1286.2, subdivision (a)(4), we give
“substantial deference to the arbitrators’ own assessments of
their contractual authority . . . .” (Advanced Micro Devices, at
p. 373.)
B. The Trial Court Did Not Err in Granting the Motion To
Confirm and Denying the Motion To Vacate
1. The Arbitrator did not exceed the scope of his
authority
The Waffle argues the arbitrator exceeded his authority
when he relied on the trial court’s phase I findings after the
parties limited their arbitration to “those issues presented to the
jury during phase II.” Specifically, The Waffle argues the
arbitrator exceeded his authority by acknowledging the trial
court’s factual findings “impact[ed]” his decision and stating the
court’s finding that TIG acted with reasonable diligence to install
the interceptor was “important” to his analysis and “relevant to
the fraud and negligent misrepresentation claims.” The court did
not err in rejecting these contentions.
14
The arbitration agreement governs which contested issues
of law and fact are submitted to the arbitrator for decision.
(Moncharsh, supra, 3 Cal.4th at p. 28; Kahn v. Chetcuti (2002)
101 Cal.App.4th 61, 65 [“The pivotal question a court must
answer when deciding whether an arbitrator exceeded his powers
is whether the arbitrator had the authority to rule on a particular
issue under the terms of the controlling arbitration agreement.”].)
“[C]ourts should generally defer to an arbitrator’s finding that
determination of a particular question is within the scope of his
or her contractual authority.” (Advanced Micro Devices, supra,
9 Cal.4th at p. 369.)
The parties expressly agreed to submit “all remaining
claims and issues” to binding arbitration. The arbitrator followed
this directive, determining in his award which “claims” remained
after the bench and jury trials. The arbitrator explained that
“[a]s part of the stipulation, the parties ‘agreed to present at
arbitration only those issues that were presented to the jury
during Phase II of the action.’ Those causes of action are:
1. Fraudulent misrepresentation against [Tucker and TIG];
2. Negligent misrepresentation against [Tucker and TIG]; and
3. Fraudulent misrepresentation against [Coastline] and/or
[Morgan].” The arbitrator did not make any determination of
The Waffle’s breach of contract claim, nor did he decide any
claims other than the three he listed.
Further, the parties’ stipulation “permitted” and
“encouraged” the parties to use the phase I evidence, testimony,
and trial transcripts “exchanged and prepared during the action,”
and it provided for admission in the arbitration of the “[t]rial
exhibits previously admitted during Phases I and II.” As
discussed, the arbitrator admitted 78 exhibits; it considered
15
deposition and trial testimony from experts and witnesses (read
by counsel at the arbitration); and Tucker, Polone, and Morgan
testified at the arbitration. At the conclusion of the arbitration,
the arbitrator made 63 independent findings of fact (over
15 pages of the award) based “upon the oral and documentary
evidence received into evidence.” The award makes clear that the
arbitrator did not rely on the trial court’s findings from phase I
(or its ruling).
The arbitrator found, for example, that Tucker “testified
that it was his intention to install the [interceptor] unit at the
time of the execution of the lease and thereafter he explored an
alternative with [The Waffle],” and if an agreement had not been
reached, “he would have installed the one provided for in the
lease.” The arbitrator also found based on emails between
Tucker and Polone and Tucker’s testimony that after receiving
the notice, Tucker informed Polone he was “going back to [his]
engineers” about installation of the interceptor; he reached out to
plumbing and civil engineers to discuss installation of the
interceptor; and he informed Polone that he was interviewing
shoring engineers for the design work. The arbitrator found
Tucker was not aware of the specifications and issues regarding
the interceptor or the Schier alternative before he executed the
lease, citing Tucker’s testimony “at the Arbitration that he should
have ‘vetted the installation of a 3,000-gallon grease interceptor
before signing the Lease.’”
Similarly, in concluding that Morgan and Tucker first
became aware of potential installation issues with the interceptor
in November of 2017 (eight months after entering the lease), the
arbitrator cited emails sent between the parties and testimony
from a City sanitation employee. In his finding that the Tucker
16
defendants “took steps to install the 3,000-gallon grease
interceptor,” he cited 10 independent factual findings he made in
the award (in addition to three of the trial court’s findings).
The cases relied on by The Waffle are inapposite. In
Bonshire v. Thompson (1997) 52 Cal.App.4th 803, 806, the Court
of Appeal reversed the trial court’s order confirming an
arbitration award on the basis the arbitrator exceeded his
authority by admitting extrinsic evidence to interpret the
underlying contract despite the contract’s integration clause
stating “‘no extrinsic evidence whatsoever may be introduced in
any judicial or arbitration proceeding, if any, involving this
agreement.’” (Italics omitted.) In Cobler v. Stanley, Barber,
Southard, Brown & Associates (1990) 217 Cal.App.3d 518, 530-
532, the Court of Appeal reversed the trial court’s confirmation of
an arbitration award as beyond the scope of the arbitrator’s
authority where the arbitrator awarded damages for emotional
distress even though only contract issues were submitted for
arbitration, not professional negligence or other torts. In contrast
to Cobler, the parties here explicitly agreed to “use as evidence”
materials, exhibits, and testimony submitted in phase I.4
4 Courts after Cobler have criticized its holding to the extent
it examined whether the arbitrator committed legal error in
finding the submitted claims did not support damages for
emotional distress, on the basis that Cobler’s review of legal error
is inconsistent with the Supreme Court’s subsequent decision in
Moncharsh, supra¸ 3 Cal.4th at page 11. (See, e.g., Hall v.
Superior Court (1993) 18 Cal.App.4th 427, 435 [“Cobler was
decided before Moncharsh and relied heavily on . . . a decision
Moncharsh disapproved”].)
17
2. The Arbitrator issued a reasoned award
“It is well-established an arbitrator derives his or her
powers from the parties’ arbitration agreement, including their
agreement to the rules that will govern the arbitration.”
(Advanced Micro Devices, supra, 9 Cal.4th at p. 375; accord,
Greenspan v. LADT, LLC (2010) 185 Cal.App.4th 1413, 1438
[“the rules of a provider like JAMS may determine the scope of
the arbitrator’s powers”].) Consistent with the principles of
limited judicial review, we “defer to the arbitrator’s
interpretation and application of the [arbitral] [r]ules” unless the
parties have agreed to submit the interpretation of the arbitral
rules for judicial review. (Greenspan, at p. 1451.)
In this case, the parties elected to have “the procedural
rules of ADR Services, Inc.” govern their dispute. ADR Services
Rule 34(c) states in relevant part: “The Arbitrator is required to
render a written, reasoned Award enumerating the disposition of
each claim and the relief, if any, as to each claim.”5 The parties’
stipulation does not specify further requirements for a “reasoned
award.” We are aware of no California decision defining a
reasoned award under the ADR Services rules (or other
arbitration rules), but we look to federal and other state court
decisions interpreting similar rules for guidance. We conclude a
reasoned award must set forth the basic reasoning of the
arbitrator on the central issues, but it does not need to delve into
5 On our own motion, we take judicial notice of the applicable
ADR Services Rules in effect at the time of the arbitration. (See
Evid. Code, § 452, subd. (h); Boghos v. Certain Underwriters at
Lloyd’s of London (2005) 36 Cal.4th 495, 505-506, fn. 6; Cooper v.
Lavely & Singer Professional Corp. (2014) 230 Cal.App.4th 1, 6,
fn. 1.)
18
every argument raised by the parties or to provide findings of fact
and conclusions of law on each issue raised in the arbitration.
(See Leeward Construction Co., Ltd. v. American University of
Antigua-College of Medicine (2d Cir. 2016) 826 F.3d 634, 640 [“[A]
reasoned award is something more than a line or two of
unexplained conclusions, but something less than full findings of
fact and conclusions of law on each issue raised before the
panel.”]; Rain CII Carbon, LLC v. ConocoPhillips Co.
(5th Cir. 2012) 674 F.3d 469, 473-474 [a “‘“reasoned award” is
something short of findings and conclusions but more than a
simple result.’”]; Cat Charter, LLC v. Schurtenberger
(11th Cir. 2011) 646 F.3d 836, 844 [a “‘reasoned’ award is an
award that is provided with or marked by the detailed listing or
mention of expressions or statements offered as a justification”
for the arbitrator’s decision].)
The arbitrator’s award met that standard. The award
explained the disposition of each of The Waffle’s claims in detail,
setting forth the arbitrator’s reasoning on the central issues of
fraudulent and negligent misrepresentation. The 43-page award
contained dozens of key factual findings, referenced numerous
exhibits and witness testimony, provided multiple pages of
relevant legal authorities, and thoroughly analyzed the elements
of The Waffle’s claims. Further, the arbitrator stated he had
“considered all evidence presented and all theories and
arguments of counsel” and that the award was “intended to
address all issues in dispute even if not expressly discussed
herein.” The trial court correctly determined the arbitrator
issued a reasoned award.
19
The Waffle contends the award was not “reasoned” because
the arbitrator did not address the Waffle’s argument based on
Las Palmas Associates v. Las Palmas Center Associates (1991)
235 Cal.App.3d 1220, 1240 (Las Palmas) that partial
performance of a contract does not defeat a claim for fraud as a
matter of law.6 There was no need, however, for the arbitrator to
address The Waffle’s Las Palmas argument because he did not
find that the Tucker defendants’ partial performance defeated
The Waffle’s fraud claim. Instead, the arbitrator determined
Tucker’s acts of reasonable diligence during the 30-day period
provided in the lease were “relevant to the fraud and negligent
misrepresentation claims” and that Tucker could not be liable for
fraud because he was not aware of the interceptor issues before
signing the lease.
The Waffle’s authorities are not to the contrary. In Stage
Stores, Inc. v. Gunnerson (Tex. App. 2015) 477 S.W.3d 848, 861,
the Texas Court of Appeals concluded a four-page arbitration
award that failed to address one of the party’s key defenses was
not “reasoned” where the defense “was significant enough to
merit some reasoning in the award.” In the unpublished decision
in Smarter Tools Inc. v. Chongqing SENCI Import & Export
Trade Co., Ltd. (S.D.N.Y., Mar. 26, 2019, No. 18-CV-2714 (AJN),
2019 WL 1349527), the district court held an award was not
6 In Las Palmas Associates v. Las Palmas Center Associates,
supra, 235 Cal.App.3d at page 1240, sellers of a shopping center
argued they could not be held liable for fraud as a matter of law
because they had partially performed their contractual
guaranties. The Court of Appeal concluded the sellers’ legal
contention was “unavailing” because they relied on unconvincing
evidence of partial performance; the court did not reach whether
partial performance would have barred a finding of fraud. (Ibid.)
20
reasoned where an arbitrator summarily rejected a party’s
liability claims without providing any rationale other than that a
witness was not credible. Moreover, the court in Smarter Tools
clarified (as we conclude) that a reasoned award “need not delve
into every argument made by the parties.” (Id. at *3.)
3. The Arbitrator did not exceed the scope of his
authority in issuing the attorneys’ fees award
The Waffle contends the attorneys’ fees award exceeded the
scope of the arbitrator’s authority because it had no rational
relationship to the parties’ dispute. Specifically, The Waffle
argues the award included attorneys’ fees the Tucker defendants
incurred to defend the Coastline defendants after the Coastline
defendants agreed as part of their settlement not to seek
attorneys’ fees, and further, the Coastline defendants were not
signatories or third-party beneficiaries under the lease. The trial
court correctly concluded The Waffle’s challenge to the attorneys’
fees award was based on alleged legal error not reviewable by the
court.
In his 31-page order on attorneys’ fees, the arbitrator spent
four pages addressing whether to apportion the attorneys’ fees to
account for the attorney time spent on behalf of the Coastline
defendants. The order set forth the legal standards and case law
for apportionment, addressed the legal authorities relied on by
The Waffle, and analyzed the application of the law to the facts.
Based on this analysis, the arbitrator “decline[d] to apportion
liability for attorney’s fees among [the Tucker and Coastline
defendants]” given the interrelated nature of the work performed.
21
Although The Waffle characterizes its argument as one
questioning the scope of the arbitrator’s authority, it is more
appropriately characterized as a claim that the arbitrator
committed legal error in determining that apportionment of
attorneys’ fees was not appropriate. As discussed, legal error,
including in an award of attorneys’ fees, is not subject to judicial
review. (Moncharsh, supra, 3 Cal.4th at p. 28; see Harris v.
Sandro (2002) 96 Cal.App.4th 1310, 1315 [refusing to review
claims that the arbitrator erred in awarding fees for services
claimed by attorney]; Moore v. First Bank of San Luis Obispo
(2000) 22 Cal.4th 782, 787 [“The recovery or nonrecovery of fees
being one of the ‘contested issues of law and fact submitted to the
arbitrator for decision’ [citation], the arbitrators’ decision’ was
final and could not be judicially reviewed for error. ‘The
arbitrator’s resolution of these issues is what the parties
bargained for in the arbitration agreement.’”].)
The parties agreed by stipulation to have “any motions for
attorneys’ fees relating to any phase of trial” decided by the
arbitrator. The stipulation did not limit or define the arbitrator’s
power such that our review would be appropriate. (See Cable
Connection, Inc. v. DIRECTV, Inc., supra, 44 Cal.4th at p. 1361
[“[T]o take themselves out of the general rule that the merits of
the award are not subject to judicial review, the parties must
clearly agree that legal errors are an excess of arbitral authority
that is reviewable by the courts.”].) Accordingly, the asserted
legal error was not subject to judicial review.
22
DISPOSITION
The July 31, 2024 judgment is affirmed. The Tucker
defendants are to recover their costs on appeal.
FEUER, J.
We concur:
MARTINEZ, P. J.
SEGAL, J.
23