On June 30, , Cinel commenced this action for securities fraud and related claims against defendants, and filed his operative first amended complaint FAC on November 13, On March 9, , Barna filed a petition to compel arbitration pursuant to an arbitration clause in the PPM, and on April 3, , the trial court granted the petition to compel arbitration. The parties commenced two separate arbitrations with the AAA because although defendant had commenced arbitration, Cinel felt he should be deemed the claimant in the arbitration.
The parties later stipulated to consolidate the two arbitrations. During the period June through December , the parties selected three arbitrators. On January 11, , the AAA requested payment from each of the parties for the initial deposit of the arbitrators' fees.
Of the six defendants, only Barna and Christopher paid their share of the fees. The AAA suggested that the paying parties could advance the fees of the nonpaying parties; some of the parties suggested that the panel be reduced to one arbitrator. However, on March 15, , the AAA issued its order suspending the arbitration pending payment in full of the fee deposit. Cinel submitted a motion to modify the order suspending the arbitration, requesting that the order be changed to provide that if the parties who compelled arbitration, Christopher and Barna, wished to continue, that they pay the fees of the nonpaying parties, and if they did not, that the panel issue an order terminating the arbitration and returning the matter to the superior court.
In response, Christopher and Barna, joined by Kirkpatrick and Cotton, argued Cinel's proposal was unfair because Cinel, as a billionaire, had more assets. On June 7, , the panel rejected Cinel's proposal, and suggested the paying parties agree to pay a pro rata share of the deposits of the delinquent parties.
On July 7, , the Panel terminated the arbitration due to the nonpayment of fee deposits. On July 16, , Christopher submitted a proposed form of written order to be signed by the panel, but the panel refused to sign it on the grounds it no longer had jurisdiction. On November 15, , the trial court reasserted jurisdiction over the case. On January 11, , Christopher moved in the trial court to confirm the award and dismiss Cinel's complaint.
He argued that pursuant to section In opposition, Cinel argued that the termination order was not an "award" or "decision" subject to confirmation by the court, and an administrative termination restarted the matter in the trial court.
The trial court denied the motion, stating, "Nothing happened [at the arbitration]. It should go back. And we'll set it for trial here. If you don't want to go to arbitration, then you're going to have a trial here. People don't want to pay fees.
It comes back. You have one person who doesn't [pay], there's no judgment, I won't confirm an arbitration award where nothing really took place because someone didn't want to pay the fees.
As a threshold issue, we must determine whether the trial court's order denying Christopher's petition is an appealable order. Code of Civil Procedure section 3 identifies the orders appealable after an arbitration.
Section provides that an aggrieved party may appeal from an order "dismissing a petition to confirm, correct or vacate an award. Section , however, does not provide for an appeal of the denial of a petition to confirm, vacate, or correct an award. As a result, Christopher contends under section , the trial court had no authority to simply deny such a motion.
Rather, he contends, when confronted with a petition to confirm, correct, or vacate an award, under section the court has four options: confirm the award; vacate the award; correct and affirm the award; or dismiss the petition, and courts construe an order purporting to deny a petition to confirm as an order vacating the award, which is an appealable order.
See, e. Karton v. Segreto Cal. Cinel contends, relying on Mid-Wilshire Associates v. O'Leary 7 Cal. We conclude that the statutory scheme dictates that we construe the court's "denial" of Christopher's petition to confirm as a "dismissal," which renders it an appealable order. An arbitration award is not directly enforceable; until confirmed or vacated by court proceedings, the award is no more than a contract between the parties to the arbitration. Loeb v. Record Cal.
The prevailing party in an arbitration therefore may petition the court to confirm an award; the losing party may petition to modify or vacate the award entirely. Collins 15 Cal.
In response to such a petition, the court must confirm, correct, or vacate the award, or dismiss the petition entirely. Thus, the statutory scheme contemplates that an arbitration award may either be confirmed, vacated, or corrected in the trial court; in response, a party may request the court to dismiss the petition to confirm, correct, or vacate the award.
Consistent with this, section identifies the orders appealable after an arbitration. Section provides that an aggrieved party may appeal from an order dismissing a petition to confirm, correct or vacate an award.
Section also provides that an aggrieved party may appeal an order "dismissing or denying a petition to compel arbitration. As explained in Karton, supra, Cal. If a trial court dismisses the petition, it results in an appealable order. If the trial court which does not dismiss the petition also does not correct or vacate an arbitration award, it must confirm the award.
Entry of judgment in conformity therewith is required [pursuant to section Similarly, if the non-dismissing trial court does not confirm the award or confirm it as corrected, the court must vacate it, resulting in an appealable order under [section , subdivision c ].
All possible outcomes are provided for under [section ]; confusion only arises when a trial court enters an order outside the scope of its powers as itemized in [section ].
Thus, although section does not specifically refer to an order "denying" a petition to confirm an award, the statutory framework dictates that in such instance the court's "denial" must be treated as a "dismissal," thus rendering the order immediately appealable.
This result makes sense in light of the other statutory options under sections , Under section , if an award is confirmed, the appeal lies from the judgment entered on the award. Second, if an award is vacated, an appeals lies unless the matter is referred back to arbitration.
Third, if petition to vacate or correct is denied, the matter is not appealable, but is reviewable on appeal from the judgment of confirmation.
Mid-Wilshire Associates, supra, 7 Cal. The remaining option, where neither correction, vacation, or confirmation takes place on the petition, is dismissal. In all instances under section , either the order itself is appealable, or an appeal lies from the subsequently entered judgment. However, if the court simply denies the petition to confirm, as the court did here, under Cinel's construction of the statute, the parties are left in limbo.
Without a confirmed award, or a vacated or corrected award, no judgment thereon can be entered. Therefore, the legislature did not include the word "denial" in section , subdivision b because such a situation would never occur. As a consequence, we must construe the "denial" of Christopher's petition to confirm to constitute a "dismissal" of the petition, and hence it is immediately appealable under section , subdivision b. Furthermore, caselaw does not hold otherwise. Unlike the situation here, in Mid-Wilshire Associates the issue was whether the denial of a petition to vacate or correct an award was an appealable order, not whether the denial of a petition to confirm was an appealable order.
Mid-Wilshire Associates concluded the denial of a petition to vacate or correct was not appealable because such an order was appealable after the judgment of confirmation. In other words, the award would either be vacated or confirmed as corrected, which case it would be appealable, either from the final judgment or the order vacating the award pursuant to section , subd.
Christopher contends that we may not review the merits of the arbitrator's order to determine that it did not constitute an award, that the trial court's "denial" of the motion was tantamount to an unauthorized vacation of the award, and the court erred in lifting the stay and setting the matter for trial. We disagree. Section Before confirming an award, the trial court has a duty, in order to follow the dictates of section To do so, it may inquire into the substance of the award without violating the prohibition against judicial review of arbitration awards except in very limited circumstances.
Rather, the trial court "denied" the petition to confirm because there was no substantive award to confirm, correct or vacate. For that reason, Young v. Ross-Loos Medical Group, Inc. The plaintiff filed amotion in the superior court to vacate the dismissal of the lawsuit.
Young interpreted the arbitrator's action indismissing the arbitration as a conclusion that the plaintiff hadfailed to proceed with reasonable diligence, and "[i]t was thearbitrator's decision that [the plaintiffs] take nothing on theirclaims by reason of their dilatory prosecution.
Such an order, evenif regarded as in the nature of a sanction, is as much an 'award' asany other final resolution of the arbitration proceeding. Contrary to defendants' assertion, Cinel argued he had no obligation to pay defendant's fees; rather, the arbitrator had suggested that Cinel do so, subject to later reallocation.
On March 30, , the court's tentative ruling was to deny the motion to compel arbitration unless the parties agreed to return to arbitration and pay their share of the nonpaying parties' fees.
The court admonished the paying parties to "work it out," or the matter would proceed to trial. The court continued the hearing to April 11, to determine whether the parties could resolve the payment issue. On April 11, , Barna advised the court he did not have the funds to pay for the nonpaying parties to the arbitration.
The court denied the motion to compel. Barna argues the trial court had already determined a valid arbitration agreement existed, and he has not waived or revoked the agreement to arbitrate under section We disagree. Arbitration is a creature of contract. Hence, arbitration "only comes into play when the parties to the dispute have agreed to submit to it.
Design Center of Los Angeles Cal. Although the law favors agreements for arbitration of disputes, "'"there is no policy compelling persons to accept arbitration of controversies which they have not agreed to arbitrate.
Superior Court 40 Cal. Under section Grounds for revocation include fraud, duress, and unconscionability. Revocation issues are not present here. Rather, defendants have waived their right to arbitrate by refusing to reach a resolution with Cinel on the fee dispute.
Contractual rights are subject to waiver, and waiver may be expressed or implied from the parties' conduct. Agnes Medical Center v.
PacifiCare of California 31 Cal. In the arbitration context, waiver does not require relinquishment of a known right, but arises from a party's failure to perform an act it is required to perform, regardless of the party's intent to relinquish the right to arbitration.
Agnes, at p. There is a presumption against waiver, and the party seeking to demonstrate waiver bears a heavy burden of proof. A party seeking to prove waiver of a right to arbitration must show " 1 knowledge of an existing right to compel arbitration; 2 acts inconsistent with that existing right; and 3 prejudice to the party opposing arbitration.
Park Place Associates, Ltd. Acts inconsistent with the right to arbitrate include 1 "pursuing a lawsuit on the same issue as [the issue] to be arbitrated"; 2 "expressly repudiating the arbitration agreement," or 3 "failing to invoke the right to arbitration.
Union, Local v. County of San Joaquin Cal. Central Valley General Hospital v. Smith Cal. Breach by repudiation is often referred to as "'anticipatory breach. In the arbitration context, it is grounds for a finding of waiver of the arbitration agreement.
Services Employees, supra, Cal. Agnes, supra, 31 Cal. We determine whether the trial court's findings are supported by substantial evidence. Adolph v. Coastal Auto Sales, Inc. Continental Airlines, Inc. Here, by refusing to agree among themselves to pay the fees of the nonpaying parties, both plaintiff and defendant Barna 6 have waived the arbitration agreement by their collective and simultaneous repudiation of it through their refusal to reach an agreement as ordered by the arbitrator over the payment of fees.
The panel, under the authority of the AAA Rules, ordered the parties to split the fees of the nonpaying parties; when the paying parties refused to do so, the arbitration was terminated. By failing to come to an agreement that would permit them to proceed with the arbitration, the parties have collectively waived their right to arbitrate. Unless and until the parties agree to pay the pro rata share of the nonpaying parties per the panel's order, there can be no arbitration.
As a consequence, Barna may not unilaterally assert the right to arbitration because he has waived his right to claim the benefits of the agreement. Nor can Barna force Cinel to pay anything other than his pro rata share, as ordered by the panel, of the nonpaying parties' fees. Premier Diabetic Servs.
Finally, Barna cannot use the nonpaying parties as a proxy to extort payment of the entire amount of the nonpaying parties fees' from Cinel, who did not demand arbitration in the first place. Sink v. Aden Enterprises, Inc. Plaintiff Sink sued his employer Aden Enterprises, Inc. Aden , and the matter proceeded to arbitration pursuant to Sink's employment agreement. Aden was obligated to pay the arbitration costs but refused to do so, and the arbitrator cancelled the proceedings due to nonpayment of fees.
Plaintiff obtained a default from the arbitrator, and returned to the trial court and sought to have default judgment entered in the underlying litigation. After the court refused to enter default judgment, Aden advised the court it had obtained the money needed to fund the arbitration, and made an oral motion to refer the matter back to the arbitration.
The trial court refused, finding Aden was in default of the arbitration and had waived its arbitration rights and set the matter for trial. The Sink court affirmed the finding of default, and found that because of the default, Aden could no longer compel arbitration. Sink observed that "[a]ccepting Aden's reading of the FAA would also allow a party refusing to cooperate with arbitration to indefinitely postpone litigation. Under Aden's interpretation, the sole remedy available to a party prejudiced by default would be a court order compelling a return to arbitration.
The same offending party could then default a second time, and the prejudiced party's sole remedy, again, would be another order compelling arbitration. This cycle could continue, resulting in frustration of the aggrieved party's attempts to resolve its claims.
Here, Barna could compel a return to arbitration only to refuse to pay what the panel has ordered, resulting in another termination for nonpayment of fees. We decline to endorse such a result. As we conclude the parties the parties have waived their right to return to the arbitration forum, we need not consider whether or not the panel's jurisdiction over the matter was terminated. All further statutory references are to the Code of Civil Procedure unless otherwise indicated.
A portion of our factual statement is taken from a prior appeal in this matter, Cinel v. Only defendant George Barna is a party to this appeal. The AAA Rules, which the parties incorporated into their arbitration agreement, provide that the expenses of the arbitration "shall be borne equally by the parties, unless they agree otherwise. The AAA Rules also provide that if the arbitration expenses are not paid in full, "the AAA may so inform the parties in order that one of them may advance the required payment.
If such payments are not made, the arbitrator may order the suspension or termination of the proceedings.
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