Filed 6/29/26 Barrows v. Inlow CA2/5
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FIVE
MICHAEL BARROWS et al., B342248
Plaintiffs and Appellants, (Los Angeles County
Super. Ct. No.
v. 23STCP04344)
RONALD J. INLOW,
Defendant and Respondent.
APPEAL from a judgment of the Superior Court of Los
Angeles County, Christopher K. Lui, Judge. Affirmed.
Law Office of Robert Beauchamp and Robert Beauchamp
for Plaintiffs and Appellants.
Law Offices of Montgomery G. Griffin and Montgomery G.
Griffin for Defendant and Respondent.
Appellants Michael Barrows and Eric Ludovico
(collectively, appellants) appeal from a judgment in favor of
respondent Ronald Inlow (respondent) following orders
confirming an arbitration award and denying appellants’ petition
to vacate the award. Appellants contend a member of the
arbitration panel exceeded his powers because he was improperly
classified as a “public arbitrator” under Financial Industry
Regulatory Authority (FINRA) arbitration rules. We are asked to
decide whether the trial court erred in denying appellants’
petition to vacate the arbitration award as untimely and lacking
merit.
I. BACKGROUND
A. The Arbitration
In a statement of claim for arbitration filed with FINRA,
respondent alleged, among other things, that appellants violated
federal security laws in selling him a certain investment.
Appellants agreed to submit the dispute to FINRA arbitration.
The arbitration was decided by three public arbitrators,
with Stephen Howard Marcus (Marcus) serving as the presiding
chairperson. As we will discuss in more detail, “the general gist”
of the distinction between public and non-public arbitrators is
that “public arbitrators should not be too closely tied to the
securities industry, while non-public arbitrators should have
significant securities-related experience.” (Stone v. Bear, Stearns
& Co., Inc. (E.D.Pa. 2012) 872 F.Supp.2d 435, 439.)
FINRA notified the parties of Marcus’s appointment to
chair the panel in October 2022. Around the same time, FINRA
provided the parties with Marcus’s “Oath of Arbitrator,”
“Arbitrator Disclosure Checklist,” and “Arbitrator Disclosure
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Report,” which included information relevant to his classification
as a public arbitrator. At all times relevant to this case, the
FINRA arbitration rules governing customer disputes required
the chairperson to be a public arbitrator.1 (FINRA Rule
12403(a)(1)(C).) The parties accepted the arbitration panel in
November 2022.
The arbitration hearing was held over several days in
September 2023. The arbitrators ruled appellants were jointly
and severally liable to respondent for $1,035,360.46, plus
interest, hearing fees, and certain costs. A signed copy of the
award was served on appellants on October 30, 2023.
B. Appellants’ Petition to Vacate the Arbitration Award
Appellants filed a petition to vacate the award in the trial
court. Relying on disclosures that Marcus provided before they
accepted the panel, appellants argued Marcus was improperly
classified as a public arbitrator and was therefore ineligible to
serve as the panel’s chairperson.2 Appellants argued this meant
1
On our own motion, we take judicial notice of FINRA Rules
12100 and 12403, available at
(Evid. Code, §§ 452, subd. (h), 459, subd. (a).)
2
Appellants attached to their petition a version of Marcus’s
Arbitrator Disclosure Report, the accuracy of which Marcus “last
affirmed” in May 2023. With respect to the relevant excerpts,
this report is identical to the version provided to the parties
before they accepted the panel.
3
Marcus exceeded his powers and the award must be vacated
under Code of Civil Procedure section 1286.2, subdivision (a)(4).3
Appellants cited FINRA rules 12100(aa)(3) and
12100(aa)(7), which generally provide that a person may not be
classified as a public arbitrator if they devoted 20 percent or more
of their professional time to disputes concerning the financial
industry for either a total of 15 years or in any one of the last five
years.4 Notwithstanding Marcus’s affirmance in his Arbitrator
3
Undesignated statutory references that follow are to the
Code of Civil Procedure. Section 1286.2, subdivision (a)(4)
provides a trial court shall vacate an arbitration award if it
determines “[t]he arbitrators exceeded their powers and the
award cannot be corrected without affecting the merits of the
decision upon the controversy submitted.”
4
Appellants erroneously cited FINRA Rule 12100(aa)(3) as
13100(aa)(3) in the trial court.
At all times relevant to this case, FINRA Rule 12100(aa)(3)
provided as follows: “A person shall not be designated as a public
arbitrator, who was, for a total of 15 years or more, an attorney,
accountant, expert witness or other professional who has devoted
20 percent or more of his or her professional time annually to
representing or providing services to parties in disputes
concerning investment accounts or transactions, or employment
relationships within the financial industry.”
At all times relevant to this case, FINRA Rule 12100(aa)(7)
provided as follows: “A person shall not be designated as a public
arbitrator who is an attorney, accountant, expert witness or other
professional who has devoted 20 percent or more of his or her
professional time, in any single calendar year, to representing or
providing services to parties in disputes concerning investment
accounts or transactions, or employment relationships within the
financial industry unless the calendar year ended more than five
calendar years ago.”
4
Disclosure Checklist that neither of these conditions apply to
him, appellants argued two statements in his Arbitrator
Disclosure Report suggest otherwise.
First, appellants cited Marcus’s disclosure that, during his
time as an associate and then a partner at a law firm between
1985 and 1997, “‘the cases [he] handled included [National
Association of Securities Dealers (NASD)] arbitration matters.’”
Next, appellants cited Marcus’s disclosure that, since 1997, he
has served as “the primary business litigation attorney” for a
different firm, “practic[ing] general business and transactional
law for the firm’s clients” and “represent[ing] clients in FINRA
and NASD arbitration matters (which were resolved by
settlement short of hearing).”
Respondent opposed appellants’ petition both as untimely
and lacking merit. With respect to timeliness, respondent argued
that although appellants had filed their petition to vacate within
100 days of being served with a signed copy of the award as
required under section 1288, they had not satisfied section 1288’s
100-day service deadline.5 Moreover, they had not demonstrated
any basis for tolling the service deadline.
As to the merits, respondent argued Marcus’s disclosures
did not establish he devoted 20 percent of his time in any given
year to relevant financial industry disputes. Moreover, he
argued, appellants waived their objection to Marcus’s
classification as a public arbitrator by failing to raise it in the
5
Section 1288 provides that “[a] petition to vacate an award
or to correct an award shall be served and filed not later than 100
days after the date of the service of a signed copy of the award on
the petitioner.”
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arbitration. To the contrary, appellants accepted the panel even
after receiving the disclosures cited in their petition to vacate the
award.6
In reply, appellants argued waiver does not apply in this
context and their late service of the petition should be excused
because they were representing themselves for some time after
filing the petition. They did not address respondent’s argument
that they failed to establish Marcus was misclassified.
The trial court denied appellants’ petition to vacate the
award and granted respondent’s petition to confirm the award.
The trial court determined appellants’ petition was not timely
served and declined to consider their argument that late service
should be permitted because this was presented “for the first time
in the reply in a portion which exceed[ed] the 10-page reply limit
set forth in Cal. Rules of Court, Rule 3.113(d) . . . .” (Footnote
omitted.) The trial court further determined appellants waived
their objection to Marcus’s classification based on disclosures
available to them in the arbitration because “allow[ing] [them] to
withhold their objection . . . and only assert it once they were
unsuccessful in the arbitration[ ] would be to permit [them] to
utilize an ace-in-the-hole which undermines the advantages of
arbitration.” In any case, the trial court determined appellants
failed to “demonstrate[ ] that Marcus exceeded the 20 percent
threshold” that would preclude his classification as a public
arbitrator. The “background information” Marcus provided in his
Arbitrator Disclosure Report was “not so inconsistent with the
6
Respondent also argued appellants failed to demonstrate
they were prejudiced by Marcus’s purported misclassification as a
public arbitrator.
6
statements on the disclosure form [(i.e., the Arbitrator Disclosure
Checklist)] that it would render the disclosure obviously false on
its face.”
II. DISCUSSION
The argument section of appellants’ opening brief is a near-
verbatim reproduction of the memorandum of points and
authorities they filed in the trial court, which did not anticipate
respondent’s arguments in opposition. Consequently, appellants
do not engage with any of the three independent grounds for the
trial court’s order denying the petition. Naturally, affirmance
will be the result.
First, appellants do not address their untimely service of
the petition under section 1288. They argue only that the
petition was timely filed. They do not argue that late service
should have been permitted under the circumstances. The issue
is forfeited, and this alone is sufficient to affirm the trial court’s
order. (See People v. JTH Tax, Inc. (2013) 212 Cal.App.4th 1219,
1237 [“When a trial court states multiple grounds for its ruling
and [the] appellant addresses only some of them, we need not
address [the] appellant’s arguments because ‘one good reason is
sufficient to sustain the order from which the appeal was
taken’”].)
Appellants also do not address the trial court’s
determination that they waived any objection to Marcus’s
classification as a public arbitrator by failing to object during the
arbitration. This issue is likewise forfeited. The trial court was
correct, in any case, in reasoning that permitting appellants to
“sit on [their] rights” and raise the issue for the first time in a
petition to vacate an adverse award “would condone a level of
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‘procedural gamesmanship’ that [our Supreme Court] ha[s]
condemned as ‘undermining the advantages of arbitration.’
[Citations.]” (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 30.)
Appellants also do not engage with the trial court’s
substantive determination that they did not establish Marcus
was misclassified as a public arbitrator because there is no
indication he spent more than 20 percent of his time in any given
year on matters relating to the financial industry. The issue is
forfeited and, again, the trial court was correct in any event.
Appellants’ speculative inference from an isolated portion of
Marcus’s disclosures is insufficient to satisfy their burden on a
petition to vacate the arbitration award. (Royal Alliance
Associates, Inc. v. Liebhaber (2016) 2 Cal.App.5th 1092, 1106
[“The party seeking to vacate an arbitration award bears the
burden of establishing that one of the six grounds listed in
section 1286.2 applies and that the party was prejudiced by the
arbitrator’s error”].)
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DISPOSITION
The judgment is affirmed. Respondent is awarded costs on
appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
BAKER, J.
We concur:
HOFFSTADT, P. J.
KIM (D.), J.
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