Estate of Mapes CA1/2 ( 2014 )

Filed 6/23/14 Estate of Mapes CA1/2
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION TWO
Estate of JOHN R. MAPES, Deceased.
A136086
JOHN R. MAPES, JR., et al.,
Petitioners and Appellants, (Alameda County
v. Super. Ct. No. P-253702)
TONJIA MAPES, ORDER MODIFYING OPINION
Objector and Respondent. AND DENYING REHEARING
[NO CHANGE IN JUDGMENT]
THE COURT:
It is ordered that the opinion filed on June 3, 2014, be modified as follows:
On page 14 of the opinion, second paragraph, second sentence beginning with “It
is clear, however, . . .” is changed to read as follows:
Regarding this particular form of professional relationship, however, by
incorporation of the Ethics Standards, the Legislature limited the relationship that
would be viewed as potentially causing “a person aware of the facts to reasonably
entertain a doubt that the proposed neutral arbitrator would be able to be
impartial” to one that existed within two years of the arbitrators appointment.
(§ 1281.9, subd. (a), Ethics Stds., std. 7(d).)
The petition for rehearing is denied. There is no change in the judgment.
Dated: _________________________ _________________________
Kline, P.J.
1
Filed 6/3/14 Estate of Mapes CA1/2 (unmodified version)
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION TWO
Estate of JOHN R. MAPES, Deceased.
JOHN R. MAPES, JR., et al.,
Petitioners and Appellants,
v. A136086
TONJIA MAPES,
(Alameda County
Objector and Respondent. Super. Ct. No. P-253702)
Brothers John Jr., Stephen and Clifford Mapes appeal from a superior court order
denying their petition to vacate several arbitrator’s awards. They contend the awards
should have been vacated due to the arbitrator’s failure to disclose his prior professional
relationship with counsel for the opposing party in the arbitrations. We affirm.
STATEMENT OF THE CASE AND FACTS
John R. Mapes (decedent) died on November 27, 1999, survived by his wife,
Tonjia, and three adult sons from a prior marriage.1 In 1993, decedent had executed a
will and established a trust, naming Stephen executor of the will and trustee of the trust.
The beneficiaries of the trust include appellants, Tonjia, Tonjia’s mother, and a number
of grandchildren. Decedent’s will was admitted to probate and Letters Testamentary
1
For convenience, as the parties share the same surname, this opinion will refer to
respondent and appellants by their first names. No disrespect is intended.
1
were issued to Stephen in March 2000. The will devised all of decedent’s estate to the
trust.
During 2000, disputes arose between Tonjia and appellants, and Tonjia filed a
number of petitions for relief. Tonjia was represented by Bette Epstein, of Crosby,
Heafey Roach & May (Crosby), and Keith Schiller, of Schofield and Schiller. Stephen,
as trustee, was represented by John Hartog. John and Clifford were not represented by
counsel.
The parties participated in a settlement conference before Judge Richard Hodge on
February 14 and 15, 2001, and reached an agreement, the terms of which were read into
the record. Among other matters, the settlement agreement confirmed ownership of
property located at 4507 Birchwood Court in Union City to appellants, with Tonjia’s
mother to have a life estate in that property and the right to live there rent free, and
appellants to assume the costs of maintenance, real estate taxes, assessments, insurance,
upkeep and operating costs for the property. The trustee was to grant deed an undivided
one-half interest in the real property at 5 Sandringham Road in Piedmont to Tonjia, as her
community property interest in the residence. Tonjia was to pay half of the expenses
related to this property and appellants the other half. To this end, upon entry of the order
confirming the settlement agreement, $14,000 (half from Tonjia and half from appellants)
was to be deposited into a joint account under the control of the trustee (Sandringham
fund). At the beginning of each subsequent calendar year, the parties and the trustee
were to agree upon an estimated budget for the costs and expenses expected that year.
Within 60 days of entry of the order confirming the settlement agreement, appellants
were to pay Tonjia half the appraised fair market value of real property in San Diego in
which Tonjia held an undivided one-half interest.
The parties agreed that a new, independent trustee would replace Stephen, and the
settlement agreement specified the procedure for choosing the new trustee. The parties
further agreed that future disputes concerning the trust would be submitted to binding
arbitration before William A. Quinby or another arbitrator selected by Quinby. Quinby
2
had been a partner at Crosby until July 1996, when he left the firm to become an
arbitrator. At Crosby, Quinby had been a member of the firm’s Business Litigation
Practice Group and chaired the firm’s Alternative Dispute Resolution Practice Group.
The settlement agreement provided for reasonable attorney fees to the prevailing party if
any judicial remedy or arbitration was necessary to enforce or interpret the agreement or
any party’s rights and duties.
Judge Hodge explained that the settlement agreement would be binding once the
terms were placed on the record. Clifford, who was not present for the second day of the
settlement conference, would also be bound because he had delegated his authority to
Stephen as his agent. After the terms were placed on the record, each of the parties
verbally agreed to be bound by those terms. Judge Hodge stated his opinion that the
terms were fair and advised the parties to live with the deal and not make life miserable
for each other. The court’s order approving the settlement agreement and modifying the
trust was filed on May 7, 2001.
By letter dated July 16, 2001, to Quinby, Tonjia requested arbitration pursuant to
the settlement agreement, stating that appellants had not paid her the money due for the
San Diego property or performed repairs for the Birchwood Court property that were
required by the settlement agreement, and owed her legal fees and expenses for the
appraisal of the San Diego property. The enclosures sent with this letter included the
Settlement Agreement and the order approving it, which reflected Epstein’s
representation of Tonjia in the settlement proceedings. So far as the record discloses, this
was the point at which Quinby had notice he had been appointed to arbitrate disputes
arising under the settlement agreement.
After a hearing on July 27, 2001, at which the parties appeared without counsel,
Quinby issued an award requiring appellants to perform the required repairs within 30
days, to pay Tonjia $225,000 (half the market value of the San Diego property), with
interest, and to pay fees and costs of $3,471 ($2,250 for the arbitration fee, $76 for
Tonjia’s airline ticket to San Diego, $275 for the appraisal, and $870 for attorney fees
3
incurred “in connection with this arbitration”). The award stated that Tonjia had obtained
an appraisal of the property within the time specified in the settlement agreement that set
the value at $455,000; appellants admittedly did not comply with terms of the settlement
agreement but later obtained an appraisal setting the value at $420,000; that the parties
asked the arbitrator to place a fair market value on the property; and that after
consultation with the appraisers, the arbitrator set the value at $450,000.
Leonard Soloway began acting as successor trustee on August 2, 2001.2 In May
2004, Soloway requested arbitration due to a dispute with appellants over the budget and
money due for the Sandringham fund, accusing appellants of engaging in obstructive
behavior and abusing the process that was designed to avoid contentious and costly
disputes. According to Soloway’s arbitration brief, the parties complied with the
trustee’s requests for contributions to the fund in 2002 and 2003. At the end of
December 2003, the trustee requested payments of $21,000 each from appellants and
Tonjia, based on a $42,000 projected budget for 2004. Tonjia remitted $21,000 while
John and Stephen, through their attorney Craig Finta, remitted $10,000 and a list of
questions about the propriety of various expenses. The trustee responded to the questions
in letters to Finta and on March 11 informed appellants they were in default of the
settlement agreement. Further correspondence and meetings among the trustee, Finta and
Epstein failed to resolve the dispute. In April 2004, appellants formally rejected the
trustee’s proposed budget for 2004, John and Stephen each paid an additional $85 based
on their own proposed budget, and Clifford was notified to pay $5,085, which he
eventually paid in December 2004.
According to Soloway, when Quinby responded to his May 2004 request for
arbitration by requesting scheduling information and confirmation that all parties agreed
to proceed with arbitration, Finta indicated that John and Stephen did not agree and that
Finta would not be available until August 9, and challenged Quinby’s qualification to act
2
Tonjia states that Soloway was the candidate appellants suggested and she
agreed because she knew they would not accept her candidate, Debra Dolch.
4
as arbitrator because his state bar membership was inactive. State Bar records indicated
that Quinby’s membership status had been “inactive” since January 1, 2001. In June,
Quinby declined the request for arbitration because he was only available when Finta was
not. Appellants rejected an alternate arbitrator suggested by the trustee in August, then
failed to respond when the trustee suggested two other potential arbitrators or Quinby.
Appellants, for their part, believed Soloway was using the Sandringham fund to
pay for various expenses not contemplated by the settlement agreement, such as Tonjia’s
utility bills and improvements to the property rather than solely maintenance and repairs.
They claimed that Soloway unilaterally set the budget for 2002 ($35,000) and 2003
($39,000) after consultation with Tonjia only, not with appellants. While they paid their
designated shares for 2002 and 2003, when Soloway unilaterally set the 2004 budget at
$42,000, appellants refused to comply and paid $15,000 (rather than $21,000) to the fund.
In January 2004, appellants asked Soloway to explain his practice of paying Tonjia’s
personal expenses from the fund and he replied that the trust was required to assist
Tonjia’s occupancy of the residence, which in turn required utilities and basic telephone
service. Appellants attribute the failure of negotiations with Soloway to the trustee’s
refusal to recognize there were limitations on the use of money in the fund.
On October 13, 2004, John and Stephen filed a petition in probate court seeking
removal of the trustee, appointment of a successor trustee, appointment of a successor
arbitrator due to Quinby’s unavailability, recovery of fund property, and an accounting.
At a hearing on January 19, 2005, the court ordered John and Stephen to file papers
showing cause as to why the matters raised in their petition were not subject to the
arbitration agreement. No such papers were filed and the petition was dismissed on
March 9, 2005. Meanwhile, the trustee’s attorney, Wilfred Roberge, discussed the
expenses and proposed 2005 budget with Finta and demanded that appellants each pay
$8,915 to defray the amounts still owing for 2004 expenses and some 2005 expenses,
which did not include items amounts to which appellants had objected. This demand was
ignored and the trustee took out a line of credit secured by the Sanringham property in
5
order to pay the expenses related to the property. In May, Tonjia demanded that the
trustee pursue arbitration and Roberge again asked appellants to participate in arbitration.
On October 4, 2005, John and Stephen filed another probate court petition,
seeking a determination that the arbitration clause did not apply to claims against the
trustee by beneficiaries seeking removal of the trustee, recovery of fund property and an
accounting. In addition to allegations pertaining to the above stated issues, the petition
alleged that an actual dispute existed between the parties and the trustee concerning
“whether or not William A. Quinby is willing to continue serving as arbitrator as set forth
in the Settlement Agreement” due in part to his state bar membership having been
inactive since 2001. This petition was initially not served on the trustee, who
subsequently filed a response in December. On January 10, while the petition was
pending, Quinby activated his bar membership. The petition was dismissed in February
2006.
Meanwhile, on October 27, 2005, the trustee had served his complaint in
arbitration. In his arbitration brief, Soloway represented that as of April 2006, appellants
owed the trust $55,290.05 in unpaid expenses for the residence plus $65,375.86 in
administrative and legal fees.
An arbitration proceeding before Quinby was held in August 2006. As the
arbitrator summarized the issues in this second arbitration, the trustee sought recovery of
$197,124.44 from appellants for amounts they were required to contribute to the fund and
attorney fees and expenses incurred in connection with the dispute, as well as
establishment of a more expedited dispute resolution process to deal with future disputes
under the settlement agreement. Appellants sought removal of the trustee and recovery
of approximately $65,000 in distributions made by the trustee, and reimbursement to the
fund of legal fees and expenses appellants claimed were inappropriate. Soloway was
represented by William Green and Stephen and John were represented by Finta. Tonjia
and Clifford were not represented by counsel but agreed in writing to be bound by the
award.
6
In his final award, dated December 26, 2006, Quinby found that the settlement
agreement made arbitration the exclusive remedy for disagreements, the trustee made
expeditious and good faith efforts to have the disputes arbitrated and appellants
“unreasonably resisted” these efforts; and that the trustee’s determinations regarding
expenses, with the exception of insurance premiums for Tonjia’s personal property, did
not exceed his discretion. Accordingly, the trustee was entitled to recover $195,555.88
(an amount reflecting deduction of the cost of insurance premiums on Tonjia’s personal
property), plus interest, as well as $31,803.41 for attorney’s fees and costs of the
arbitration. Appellants’ request for removal of the trustee was denied, as was the request
to recover distributions (with the exception of the insurance premiums just mentioned).
Quinby directed the parties, consistent with the process specified in the settlement
agreement, to attempt in good faith at the beginning of each calendar year to agree on the
estimated budget for that year and, if agreement could not be reached within 30 days,
promptly submit the matter for resolution by arbitration.
Appellants assert that following the arbitrator’s decision, Soloway refused to
provide them with copies of any records of expenditures other than annual accountings;
unilaterally raised his hourly rate for services; unilaterally distributed money to Tonjia as
interest and charged the interest to appellants; unilaterally delegated many of his duties to
his daughter, Lisa Soloway, also a professional fiduciary; denied appellants access to
trust records; and never filed a fiduciary income tax return for the trust. Starting in 2007,
appellants state, the annual budget for the Sandringham fund has been approximately
$85,000.
Soloway died in March 2010, and the parties began to search for a successor
trustee. This led to what the parties refer to as the third arbitration. Appellants state that
Tonjia asked Quinby to select the successor trustee; Quinby established a protocol under
which the parties provided him with nominees in writing by June 28; but on June 30,
Quinby unilaterally altered the procedure at Tonjia’s request and solicited additional
nominations from the parties to be submitted by July 8. Quinby then conducted
7
interviews with the nominees outside the presence of the parties and selected Leo
Bautista.3
Appellants state that within days of appointing Bautista successor trustee, Quinby
requested that Bautista pay approximately $9,800 from the Sandringham fund as
Quinby’s fee for selecting the trustee, and Bautista did so. Quinby never provided the
parties with an invoice or statement itemizing the basis of the fee. Appellants believe that
Bautista used money from the fund to pay his personal attorney, and that neither this use
of the money nor the payment to Quinby were authorized by the terms of the settlement
agreement. After more than six months, Bautista presented a proposed budget for 2011,
which appellants claim adopted the “practices of Leonard Soloway without regard for the
intent of the parties as set forth in [the February 15, 2001] settlement agreement.”
Appellants state that they supplied Bautista with multiple qualified contractors to perform
services at a cost less than what Tonjia was paying, but Bautista did not contact any of
them. When appellants objected to Bautista’s budget (projected to exceed $100,000 for
2012), Bautista requested arbitration.
According to John’s declaration, on March 25, 2011, he discovered that Quinby
was a former member of Crosby, the same law firm as Tonjia’s attorney Epstein. No
professional relationship between Quinby and Epstein had previously been disclosed to
appellants. On April 11, John executed a disqualification of Quinby based on this
nondisclosure and served it upon all interested parties, and asked Quinby to resign
voluntarily. Quinby resigned by way of an April 13 email, stating that John’s position
was misplaced because counsel for the parties in the litigation that led to execution of the
settlement agreement in 2001 were aware of his professional relationship with Epstein,
which had ended in 1996; Epstein did not appear as counsel for any party in connection
with the prior arbitration hearings; and Finta, John’s counsel in the arbitrations, was
3
Tonjia asserts that Bautista was appellants’ choice while she suggested
alternative candidates. Appellants are silent on this point, stating only that the parties
were unable to agree upon a successor trustee.
8
aware of the relationship. Quinby explained that he was resigning solely because the
dispute resolution process established by the parties to resolve issues under the settlement
agreement was “too important to become bogged down in quibbling over tangential
issues” and the parties should not be wasting money on this issue when they were arguing
over important issues concerning the funding of the trust.
Counsel for Bautista, Susanne Cohen, asked Quinby not to resign, as she did not
believe there were grounds for disqualification and Quinby was familiar with the parties
and the issues. Cohen stated that Epstein had confirmed she was not counsel for Tonjia
in the currently pending arbitration and had not been in the two prior arbitrations either.
Cohen stated that even if Epstein had served as Tonjia’s counsel, based upon Code of
Civil Procedure4 section 1281.9 and its incorporation of the requirements of section
170.1, Quinby would be disqualified only if he had a professional association with a
lawyer in the proceeding within two years of the proceeding, and his association with
Crosby ended five years before his appointment as arbitrator. Quinby confirmed his
resignation because he believed resolving the issue would cost the parties more time and
money than selecting a new arbitrator.
In August 2011, Clifford filed a petition to vacate the three arbitration awards on
the ground that Quinby had not disclosed his previous professional relationship with
Epstein and, had he done so, Clifford would not have agreed to Quinby’s appointment.
The petition alleged that both Quinby and Epstein had been partners at Crosby, “working
in the estate planning section, which Mr. Quinby managed.” The petition claimed
Quinby was required to disclose the relationship under sections 170.1, subdivision (a)(6),
1281.9, subdivision (a)(1), and 1281.9, subdivision (a)(6), and that Quinby’s
nondisclosure required that the awards be vacated pursuant to section 1286.2, subdivision
(a)(6). The petition noted that Quinby was not an active member of the state bar between
4
All further statutory references will be to the Code of Civil Procedure unless
otherwise specified.
9
January 1, 2001, and January 10, 2006, and did not disclose this fact, but did not base any
of its argument for vacating the arbitration awards on this issue.
John and Stephen joined Clifford’s petition, stating that Quinby’s professional
relationship with Epstein was never disclosed to them prior to their entering the
settlement agreement; that if it had been disclosed, they would not have agreed to Quinby
as the arbitrator; and that the relationship was not disclosed in advance of any of the
arbitrations. The joinder further stated that at the time of the settlement agreement,
Quinby’s state bar membership was inactive, and that the state bar rules require that a
member be active in order to serve as an arbitrator.
Tonjia opposed the petition on the merits, arguing that Quinby was not required to
disclose his prior professional relationship with Epstein, that Stephen’s attorney was
aware Quinby had been a partner at Crosby, and that appellants were aware of Quinby’s
state bar status in 2006, when they challenged his qualifications to serve in the 2006
arbitration. Tonjia also argued that vacating the awards would be prejudicial in that
Soloway, a key witness, died in 2010, real properties had been sold and transferred, and
money had been expended that the trust could not repay.
In February 2012, Epstein deposed John Hartog, the attorney who had represented
Stephen in the litigation leading to the settlement agreement. Hartog testified that he
proposed Quinby to serve as the arbitrator, that he had known Quinby for many years,
and that he knew Quinby had been a partner at Crosby until the mid-1990’s. He
recommended Quinby because he had personal knowledge of his intellectual capabilities
and temperament and had spoken with others who had dealt with Quinby professionally
and were favorably disposed toward him. He knew Quinby was not a probate lawyer or
involved in Crosby’s estate planning practice but rather was a commercial litigator.
Hartog testified that he recalled telling John, during the 2001 settlement conference, of
his relationship with Quinby and, to the best of his recollection, told John that Quinby
had been a partner at Crosby, Epstein’s law firm and Stephen was present during these
conversations.
10
After the deposition, Tonjia filed a response to John and Stephen’s joinder in
which, among other things, she argued that appellants were aware of Quinby’s
professional relationship with Epstein because Hartog told John and Stephen about it in
2001 and, in any case, Hartog’s knowledge was imputed to his client as a matter of law.
Tonjia argued that John and Stephen’s knowledge was imputed to Clifford because the
brothers were acting as Clifford’s agent regarding the settlement agreement.
Stephen stated in a subsequent declarations that Hartog never discussed Quinby
with him and John “in any detail” until they were leaving court after entering into the
settlement agreement and never said anything about Quinby having been a partner at
Crosby. John also declared that Hartog never disclosed the prior professional
relationship between Quinby and Epstein and that the conversation Hartog described in
his deposition, in which John asked about how the arbitration process would work,
occurred as they were leaving court after the settlement agreement was complete.
The petition to vacate the arbitration awards was heard on April 26, 2012, and
decided on the parties’ pleadings and argument. On May 31, the court filed a lengthy
order denying the petition.
DISCUSSION
Appellants contend the trial court erred in finding that the arbitrator had no duty to
disclose his prior professional relationship with Epstein and that appellants waived any
failure to disclose.5 Where the material facts are undisputed, the trial court’s
determination whether an arbitrator failed to make required disclosures is reviewed de
novo. (Haworth v. Superior Court (2010) 50 Cal.4th 372, 383, 388.) Where the facts are
5
Arguing that the court’s order denying the petition is not an appealable order
and may be reviewed only on appeal from a judgment confirming the arbitration award,
respondent urges that we should hold the appeal in abeyance and order the probate court
to enter such a judgment. Respondent raised this issue in a motion filed shortly after her
respondent’s brief. We denied the motion, deeming the court’s order to be a final
judgment as explained in our July 11, 2013, order. No further discussion on this point is
necessary.
11
disputed, “ ‘[w]e must accept the trial court’s resolution of disputed facts when supported
by substantial evidence; we must presume the court found every fact and drew every
permissible inference necessary to support its judgment, and defer to its determination of
credibility of the witnesses and the weight of the evidence.’ (Betz v. Pankow (1993) 16
Cal.App.4th 919, 923.)” (Fininen v. Barlow (2006) 142 Cal.App.4th 185, 189-190
(Fininen).) This standard of appellate review is the same for a judgment based on
affidavits or declarations as it is for a judgment based on oral testimony. (Fininen, at p.
189; Betz, at p. 923; Haraguchi v. Superior Court (2008) 43 Cal.4th 706, 711, fn. 3.)
Section 1281.9, subdivision (a), provides that a proposed neutral arbitrator must
disclose “all matters that could cause a person aware of the facts to reasonably entertain a
doubt that the proposed neutral arbitrator would be able to be impartial” and sets forth a
list of nonexclusive matters required to be disclosed. (§ 1281.9, subd. (a).) The one upon
which appellants rely is section 1281.9, subdivision (a)(6), under which the proposed
arbitrator must disclose “[a]ny professional or significant personal relationship the
proposed neutral arbitrator or his or her spouse or minor child living in the household has
or has had with any party to the arbitration proceeding or lawyer for a party.” Also of
relevance here, the proposed arbitrator must disclose “[t]he existence of any ground
specified in Section 170.1 for disqualification of a judge” (§ 1281.9, subd. (a)(1)) and
“[a]ny matters required to be disclosed by the ethics standards for neutral arbitrators
adopted by the Judicial Council pursuant to this chapter” (§ 1281.9, subd. (a)(2)).
Section 1281.9 was originally enacted in 1994. (Stats. 1994, ch. 1202, § 1 (Sen.
Bill No. 1638).) The language requiring disclosure of “any professional or significant
personal relationship” has been part of the statute since a 1997 amendment, as has the
requirement for disclosure of any ground specified in section 170.1 for disqualification of
a judge. (Stats. 1997, ch. 445, § 2 (Assem. Bill No. 1093).) The requirement for
disclosure of any matters required to be disclosed by the ethics standards, as well as the
introductory language regarding “all matters that could cause a person aware of the facts
to reasonably entertain a doubt that the proposed neutral arbitrator would be able to be
12
impartial,” were added to the statute by amendment in 2001. (Stats. 2001, ch. 362, § 5
(Sen. Bill No. 475).) The same 2001 legislation added section 1281.85, directing the
Judicial Council to adopt ethical standards with which neutral arbitrators would be
required to comply beginning on July 1, 2002. (Stats. 2001, ch. 362, § 4.)6 Accordingly,
the California Judicial Council adopted the Ethics Standards for Neutral Arbitrators in
Contractual Arbitration,7 in order to “establish the minimum standards of conduct for
neutral arbitrators who are subject to these standards.”8 (Ethics Stds., std. 1(a).)
Appellants read section 1281.9, subdivision (a)(6), as requiring disclosure of any
professional relationship, no matter how attenuated, because the text of the statute refers
to “any” professional relationship while limiting the required disclosure of personal
relationships to “significant” personal relationships. The statute does not define
“professional relationship.” Case law, however, has viewed the “professional
relationship” triggering a duty of disclosure as involving some degree of significance and
substantiality. (Guseinov v. Burns (2006) 145 Cal.App.4th 944, 958-959 [arbitrator
having acted as uncompensated mediator in prior matter where lawyer for party to
6
Section 1281.85 provides: “Beginning July 1, 2002, a person serving as a
neutral arbitrator pursuant to an arbitration agreement shall comply with the ethics
standards for arbitrators adopted by the Judicial Council pursuant to this section. The
Judicial Council shall adopt ethical standards for all neutral arbitrators effective July 1,
2002. These standards shall be consistent with the standards established for arbitrators in
the judicial arbitration program and may expand but may not limit the disclosure and
disqualification requirements established by this chapter. The standards shall address the
disclosure of interests, relationships, or affiliations that may constitute conflicts of
interest, including prior service as an arbitrator or other dispute resolution neutral entity,
disqualifications, acceptance of gifts, and establishment of future professional
relationships.”
7
Subsequent references to “Ethics Standards” or “Standard” will refer to the
Ethics Standards for Neutral Arbitrators in Contractual Arbitration.
8
The Standards apply to “all persons who are appointed to serve as neutral
arbitrators on or after July 1, 2002, in any arbitration under an arbitration agreement,” if
the agreement is subject to the provisions of the California Arbitration Act (§ 1280 et
seq.) and the hearing is to be conducted in California. (Ethics Stds., std. 3(a).)
13
arbitration represented a party unrelated to current arbitration insufficient to constitute
professional relationship within meaning of § 1281.9, subd. (a)(6)].) “ ‘In general,
significant or substantial business relationships between the neutral arbitrator and a party
or his representative must be disclosed to the other party, to avoid the appearance of
impropriety, but ordinary and insubstantial business dealings do not necessarily require
disclosure. [Citation.] Because arbitrators are selected for their familiarity with the type
of business dispute involved, they are not expected to be entirely without business
contacts in the particular field, but they should disclose any repeated or significant
contacts which they may have with a party to the dispute, his attorney or his chosen
arbitrator.’ ” (Guseinov, at p. 959, quoting Figi v. New Hampshire Ins. Co. [(1980)] 108
Cal.App.3d [772,] 775-776; Nemecek & Cole v. Horn (2012) 208 Cal.App.4th 641, 646-
647 [disclosure not required under § 1281.9, subd. (a)(6) based on arbitrator being on
same bar association committee as member of law firm party to arbitration and expert
witness for that party in arbitration].) “ ‘[T]o create an impression of possible bias that
therefore requires disclosure, a business relationship must be substantial and involve
financial consideration.’ ” (Luce, Forward, Hamilton & Scripps, LLP v. Koch (2008) 162
Cal.App.4th 720, 732 [arbitrator having served on bar association boards of directors
with expert witness and with attorney for party to arbitration not professional relationship
requiring disclosure], quoting Michael v. Aetna Life & Cas. Ins. Co. (2001) 88
Cal.App.4th 925, 940.)
With respect to the specific question framed by appellants―the interpretation of
“any professional relationship” as used in section 1281.9, subdivision (a)(6), with
reference to an arbitrator’s past practice in the same law firm as a lawyer representing
one of the parties in the arbitration―the parties have not provided us with authority on
point and we have found none. It is clear, however, that where the Legislature
specifically considered this form of professional relationship, it limited the reach of the
relationship that would be viewed as potentially causing “a person aware of the facts to
reasonably entertain a doubt that the proposed neutral arbitrator would be able to be
14
impartial” (§ 1281.9, subd. (a), Ethics Stds., std. 7(d)) to one that existed within two years
of the arbitrator’s appointment. Standard 7(d) provides that “[a] person who is nominated
or appointed as an arbitrator must disclose all matters that could cause a person aware of
the facts to reasonably entertain a doubt that the proposed arbitrator would be able to be
impartial.” The list of required disclosures enumerated in this Standard includes, “[t]he
arbitrator was associated in the private practice of law with a lawyer in the arbitration
within the last two years.” (Ethics Stds., std. 7(d)(8)(A)). The two-year limitation is also
apparent in section 170.1, the disqualification standards of which are specifically
incorporated into section 1281.9. (§ 1281.9, subd. (a)(1).) Section 170.1 provides that a
judge “shall be disqualified” if the judge “served as a lawyer in the proceeding” (§ 170.1,
subd. (a)(2)(A)), and specifies that a judge “shall be deemed to have served as a lawyer in
the proceeding if within the past two years: [¶] . . . [¶] [a] lawyer in the proceeding was
associated in the private practice of law with the judge.” (§ 170.1, subd. (a)(2)(B)(ii),
italics added.) Applied to the present case, both Ethics Standard 7(d) and Code of Civil
Procedure section 170.1, subdivision (a)(2), put a specific temporal limit on the required
disclosure: Quinby would be required to disclose his past association as a member of the
same law firm as Epstein only if that association occurred within the two years preceding
Quinby’s appointment.
Appellants maintain that the provisions of section 1281.9, subdivision (a)(2)—
referring to the Ethics Standards—cannot supplant or override the separate disclosure
requirements of section 1281.9, subdivision (a)(6). Reading the latter, as we have said, as
requiring disclosure of any and all professional relationships, appellants point out that in
authorizing the Judicial Council to develop the Standards, the Legislature expressly stated
that the Standards “may expand but may not limit the disclosure and disqualification
requirements established by this chapter.” (§ 1281.85.) When section 1281.85 was
enacted in 2001, section 1281.9 already required disclosure of “any professional
relationship.” Further, the Standards did not become effective until July 1, 2002
15
(§ 1281.85), which was after Quinby was appointed arbitrator in the 2001 settlement
agreement, so appellants maintain they cannot be applied to Quinby.
These arguments beg the question, as they depend upon the initial assumption that
section 1281.9, subdivision (a)(6), was intended to and does refer to “any” professional
relationship without substantive or temporal limitation. As we have said, the cases
uniformly reject this interpretation.
We need not decide here whether the disclosure requirement of section 1281.9,
subdivision (a)(6), for professional relationships, as applied to membership in a law firm,
is specifically limited to two years, as under section 170.1, subdivision (a)(2)(B)(ii), and
Ethics Standard 7(d)(8). Here, Quinby left Epstein’s law firm in July 1996, more than
four and a half years before he was appointed in the settlement agreement (agreed to in
February 2001 and confirmed by the court in May 2001) to arbitrate potential future
disputes between the parties, five years before the first actual arbitration proceeding, a
full decade before the second arbitration hearing, and 14 years before the third and final
arbitration at issue here. Not only was any relationship between Quinby and Epstein
based on their practice at the same law firm attenuated in time, but there is nothing in the
record to suggest the two in fact worked together. (See Johnson v. Gruma Corp. (9th Cir.
2010) 614 F.3d 1062, 1068-1069 [disclosure not required under California law where
wife of arbitrator was partner at law firm of counsel for party to arbitration, and listed as
co-counsel on at least one case, eight years before arbitration].) Contrary to appellants’
characterization in the trial court, Quinby and Epstein were not part of the same practice
groups at Crosby: Quinby was a member of the Business Litigation and Alternative
Dispute Resolution Practice Groups and Epstein was in the Trust and Estate Practice
Group.
Additionally, while Epstein represented respondent in the proceedings that
resulted in the settlement agreement, she did not represent respondent in any of the actual
16
arbitration proceedings.9 Section 1281.9, subdivision (a)(6), requires disclosure of the
specified relationship between the arbitrator and “any party to the arbitration proceeding
or lawyer for a party.” Standard 2(m) specifies that “ ‘[l]awyer for a party’ means the
lawyer hired to represent a party in the arbitration and any lawyer or law firm currently
associated in the practice of law with the lawyer hired to represent a party in the
arbitration.” While Quinby was named in the settlement agreement as the arbitrator who
would preside if it became necessary to resolve disputes under the agreement in the
future, at the time he was contacted to conduct the actual arbitrations—triggering his duty
of disclosure—Epstein was not a “lawyer for a party” in the arbitration.
Appellants’ position is not assisted by Mt. Holyoke Homes, LP v. Jeffer Mangels
Butler & Mitchell, LLP (2013) 219 Cal.App.4th 1299 (Mt. Holyoke). In that legal
malpractice case, after an arbitration award in favor of the defendant law firm, the
plaintiff discovered on the internet a resume in which the arbitrator listed as a reference
one of the partners in the defendant law firm. (Id. at p. 1306.) The arbitrator had
disclosed certain contacts with counsel for the defendants and with one of the plaintiffs in
prior mediations or arbitrations, but had said he was not aware of any relationship with
any party or attorney in the present matter that would impair his ability to act fairly and
impartially. (Id. at pp. 1305-1306.) Accepting the arbitrator’s statements that he had no
personal or professional relationship with the partner listed as a reference, whom he said
he listed because the partner was a well-known and highly regarded litigator who was
familiar with the arbitrator’s abilities as a neutral, and that the resume was prepared 10
years earlier without discussion with the partner, the Mt. Holyoke court concluded that an
“objective observer reasonably could conclude that an arbitrator listing a prominent
litigator as a reference on his resume would be reluctant to rule against the law firm in
9
The record reflects that Tonjia, not Epstein, contacted Quinby to request
arbitration and that correspondence concerning the arbitration proceedings was between
Quinby and Tonjia, not Epstein. Epstein again represented Tonjia after appellants
initiated their challenge to the arbitrators awards.
17
which that attorney is a partner as a defendant in a legal malpractice action.” (Id. at
p. 1313.) Accordingly, the matter was required to be disclosed under the general
requirement of section 1281.9, subdivision (a), to disclose “any matter that reasonably
could cause a person aware of the facts to entertain a doubt that the proposed arbitrator
would be impartial.” (Mt. Holyoke, at p. 1311.)
Mt. Holyoke provides no guidance on the question of interpretation of “any
professional relationship” in section 1281.9, subdivision (a)(6), and appellants suggest no
other reason an objective observer would entertain a reasonable doubt as to Quinby’s
impartiality based upon the fact that he had been a member of the same law firm as
Epstein some five years before being named in the settlement agreement.
In any event, the trial court also based its denial of the petition to vacate on
appellants’ waiver of any failure to disclose, and we would affirm the probate court’s
decision on this ground as well.
Matters required to be disclosed under section 1281.9 must be disclosed in writing
within 10 calendar days of service of notice of the proposed nomination or appointment.
(§ 1281.9, subd. (b).) A party entitled to disclosure has 15 days from the time the
arbitrator complies or fails to comply with section 1281.9 within which to serve notice of
disqualification. (§ 1281.91, subd. (a) & (b)(1).) “The right of a party to disqualify a
proposed neutral arbitrator pursuant to this section shall be waived if the party fails to
serve the notice pursuant to the times set forth in this section, unless the proposed
nominee or appointee makes a material omission or material misrepresentation in his or
her disclosure.” (§ 1281.91, subd. (c).) Unless a ground specified in section 170.1 for
disqualification of a judge exists, “in no event may a notice of disqualification be given
after a hearing of any contested issue of fact relating to the merits of the claim or after
any ruling by the arbitrator regarding any contested matter.” (§ 1281.91, subds. (c) &
(d).) “Nothing in this subdivision shall limit the right of a party to vacate an award
pursuant to Section 1286.2, or to disqualify an arbitrator pursuant to any other law or
statute.” (§ 1281.91, subd. (c).)
18
Section 1286.2, subdivision (a)(6), provides that an arbitrator’s award “shall” be
vacated if the arbitrator “failed to disclose within the time required for disclosure a
ground for disqualification of which the arbitrator was then aware” or “was subject to
disqualification upon grounds specified in Section 1281.91 but failed upon receipt of
timely demand to disqualify himself or herself as required by that provision.”
As the trial court noted in its decision, despite the mandatory language of section
1286.2, subdivision (a)(6), courts have refused to vacate arbitration awards where the
party seeking to vacate was aware of the information he or she claims the arbitrator failed
to disclose, but did not timely assert his or her rights. In Fininen, supra, 142 Cal.App.4th
185, the arbitrator had previously mediated a case in which Barlow was a party. Upon
his appointment, the arbitrator disclosed that he had previously mediated several cases for
the attorneys on both sides of the present case. At the outset of the arbitration, Barlow
and the arbitrator recognized each other and Barlow suggested that the arbitrator had
presided in a mediation in which he was a party. The arbitrator advised the parties that he
had previously mediated a case in which Barlow was a party without specifying the
particular case, and all parties waived conflicts and agreed to proceed with the arbitration.
Months later, after an award in favor of the opposing parties, Barlow sought to have the
award vacated based on the arbitrator’s failure to disclose the specific prior mediation,
the details of which Barlow had found in his own project files. Recognizing that the
literal language of section 1286.2, subdivision (a)(6), could be seen as requiring vacation
of the award due to the arbitrator’s failure to disclose his participation in the prior
mediation involving Barlow, the Fininen court held that in the particular circumstances of
the case, including that Barlow recognized the arbitrator and had access to the
information in his own files, “the trial court reasonably could have concluded that it
would be absurd to construe section 1286.2, subdivision (a)(6) to require that the
arbitration award be vacated based on an incomplete or untimely disclosure” concerning
the prior mediation. (Fininen, at pp. 190-191.)
19
Dornbirer v. Kaiser Foundation Health Plan, Inc. (2008) 166 Cal.App.4th 831,
834 (Dornbirer), upheld the trial court’s refusal to vacate an arbitration award where the
arbitrator had not fully disclosed the number and specifics of his work in other
arbitrations in which Kaiser was a party, but had provided sufficient information to put
Dornbirer on notice of any potential for bias. In addition to relying upon Fininen’s
discussion of avoiding absurd results, Dornbirer observed that its decision gave “effect to
subdivision (c) of section 1281.9, which states that a party waives the right to disqualify a
proposed neutral arbitrator if that party fails to meet the time requirements set forth in
that section.” (Dornbirer, at pp. 845-846.) “Interpreting section 1286.2 to permit a party
to vacate an arbitration award at the conclusion of the arbitration based on an arbitrator’s
failure to disclose details such as the dates of prior arbitrations or the awards in prior
arbitrations when that party knew about those prior arbitrations and did not request
additional information or move to disqualify the arbitrator would undermine the purpose
of the time limitations imposed in subdivision (c) of section 1281.91. The waiver
provision would have no effect because a party could simply wait until the arbitration
was over and then move to vacate the award, despite having failed to move to disqualify
the proposed arbitrator before the arbitration commenced.” (Dornbirer, at p. 846.)
In the present case, substantial evidence supports the trial court’s conclusion that,
at the time the settlement agreement was reached, appellants were aware that Quinby had
previously been a partner at Crosby. Hartog, the attorney who represented Stephen in the
litigation leading to the settlement agreement, testified in his 2012 deposition that he
proposed Quinby to serve as the arbitrator, that he had known Quinby for many years,
and that he knew Quinby had been a partner at Crosby until the mid-1990’s. Hartog
recalled telling John, during the 2001 settlement conference, of his relationship with
Quinby; to the best of his recollection, he told John that Quinby had been a partner at
Crosby, Epstein’s law firm, and Stephen was present during these conversations. Asked
how good his recollection was, Hartog said that he remembered the conversation “more
clearly” because John was “very direct” in questioning him, “very focused” about the
20
effect of the settlement agreement and “very concerned” about how it would work, which
“made an impression” upon Hartog. Hartog particularly remembered discussing with
John whether Quinby could do the job properly and could “handle Tonjia Mapes.”
Hartog did not think Quinby’s prior relationship with Epstein was going to present any
problem. Although Stephen and John categorically denied Hartog having told them of
Quinby’s past practice at Crosby, the trial court accepted the truth of Hartog’s testimony.
Appellants attempt to undermine the probate court’s determination of credibility
by arguing that Hartog testified to having conversations with John in open court, but the
alleged conversations are not reflected in the transcript of the hearing at which the
settlement agreement was entered. The first conversation was about Quinby’s association
with Crosby, and the second was one of the two conversations Hartog testified was
“clearest” in his memory, which involved John’s question when the agreement would
become effective.
Concerning the first point, we do not read Hartog’s testimony as saying the
conversation about Quinby occurred in open court. The transcript of the deposition
reflects that Hartog was asked what contact he had with John and responded, that John
“attended several meetings I had with Mr. Stephen Mapes” and “was present at the
settlement conference in Judge Hodge’s chambers when the matter was ultimately
resolved and the settlement put on the record. And Mr. John Mapes was present in court
at that time because I do recall talking to him in open court at that time.” Hartog was
then asked, “[D]o you recall if you told John Mapes that Mr. Quinby had been a partner
at Crosby, Heafey, Roach & May?” Hartog replied, “Yes.” The next question was, “And
was Stephen Mapes present during the course of those conversations with John Mapes,
Jr.?” and Hartog replied, “To the best of my recollection.” The transcript thus reflects
that Hartog recalled more than one conversation with John, at least one of which occurred
in “open court,” but Hartog did not state that the conversation concerning Quinby
occurred in open court.
21
As to Hartog telling John the settlement agreement became effective “right now,”
the fact that this conversation took place during the recitation of the settlement
agreement, does not necessarily mean it would be reflected in the transcript. The
transcript is punctuated with “short discussion[s] off the record,” including one that
occurred during an on-the-record discussion about when the agreement would become
binding. Anything that was said between Hartog and John during these off-the-record
discussions would not have been captured by the court reporter. Indeed, toward the end
of the hearing the court suggested the parties consult with their lawyers about any
questions they might have, after which the transcript notes a “short discussion off the
record” followed by the court asking if there were any additional modifications and then
stating, “I observed that the lawyers were talking to their clients for at least 20 minutes.
So, I assume that any questions have been resolved; is that a fair statement?”
Appellants rely heavily on this court’s decision in International Alliance of
Theatrical Stage Employees, Etc. v. Laughon (2004) 118 Cal.App.4th 1380 (Laughon) to
argue that the trial court erred in finding appellants waived their nondisclosure argument.
The issue in Laughon was the failure of the arbitrator to disclose that he had previously
arbitrated a dispute in which one of the parties (a union) was represented by counsel for a
party (a different union) in the current arbitration. (Id. at p. 1383.) Toward the end of the
first day of the current arbitration, counsel for the union offered as an exhibit the decision
the arbitrator had rendered in the prior arbitration. (Ibid.) After an award largely in favor
of the union, the opposing party successfully petitioned to vacate the award based on the
arbitrator’s failure to make the required disclosure. (Id. at p. 1384.) The trial court
viewed the opposing party as having waived the issue by failing to object to the lack of
disclosure, or the arbitrator’s continued participation, after the prior case was
“ ‘mentioned.’ ” (Ibid.) This court reversed because there was no explicit disclosure:
The exhibit that could have alerted the opposing party that counsel for the union had
represented a party in the prior proceeding was offered merely as a prior decision by the
arbitrator supporting the union’s position; although “close scrutiny” of the proffered
22
exhibit would have revealed that counsel for the union had been counsel for the union in
the prior case, this was not called to the opposing party’s attention and there was no
evidence to support the trial court’s speculative conclusion that the opposing party was
aware of the nondisclosure and chose not to object. (Id. at pp. 1388 & fn. 4, 1390.)
Unlike the situation in Laughon, where the evidence did not support a conclusion
that the party seeking to vacate the arbitration award had actual knowledge of the facts at
issue, in the present case the evidence accepted by the trial court demonstrates that
appellants were affirmatively told the facts they claim the arbitrator should have
disclosed. We recognized in Laughon that an arbitration award need not be vacated
where the party claiming nondisclosure had timely knowledge of the matter the arbitrator
failed to disclose. (Laughon, supra, 118 Cal.App.4th at p. 1391.)
Substantial evidence supports the probate court’s conclusion that at the time the
settlement agreement was being finalized, Hartog told John, in Stephen’s presence, that
Quinby had previously been a partner at the law firm where Tonjia’s attorney practiced.
Although Hartog never spoke with Clifford, Judge Hodge expressly found, at the time of
the settlement agreement, that Clifford had made his brothers his agents and therefore
was fully bound by the settlement. An “agent’s knowledge is imputed to the principal
even where . . . the agent does not actually communicate with the principal, who thus
lacks actual knowledge of the imputed fact.” (Herman v. Los Angeles County
Metropolitan Transportation Authority (1999) 71 Cal.App.4th 819, 828 (Herman); Civ.
Code, § 2332.)
Appellants contend imputed knowledge is insufficient here because section
1281.9, subdivision (b), requires that the arbitrator make written disclosure to “all
parties,” thereby imposing a requirement of “actual knowledge” by all parties, not merely
constructive knowledge. They rely upon Herman, which held that the time period within
which judicial review of an agency’s decision may be sought under section 1094.6 is not
triggered by service upon a party’s attorney because the statute states the period begins
when the decision is mailed “to the party seeking the writ.” The court noted, among
23
other things, the contrast between section 1094.6 and section 1010, which provides
generally for service of notices and papers “ ‘upon the party or attorney.’ ” (Herman,
supra, 71 Cal.App.4th at p. 827.) The express language of section 1094.6, and its
legislative history, precluded reliance upon the general agency principle that an attorney’s
knowledge is imputed to the client. (Herman, at pp. 828, 830.)
The issue in the present case, however, is not whether a required disclosure made
to a party’s attorney can be imputed to the party. In the context of our present discussion,
the question is whether the actual knowledge of a party serving as agent for another party
may be imputed to that other party. Herman is inapposite on this point. The same is true
of California Ins. Guarantee Assn. v. Workers’ Comp. Appeals Bd. (2008) 163
Cal.App.4th 853, 856-857, upon which appellants also rely, which held that the statute of
limitations for filing a workers’ compensation claim was tolled where the employer did
not advise the employee of his rights as required by law and failed to prove that the
employee had actual notice of his rights.
Appellants suggest that Gray v. Chiu (2013) 212 Cal.App.4th 1355 (Gray) is
“consistent” with their view that section 1281.9’s requirement of disclosure to the
“parties” precludes imputing John’s and Stephen’s awareness of the facts to Clifford.
Gray involved the failure of an arbitrator to comply with the requirement of the Standards
that he disclose that the attorney for one of the defendants in a malpractice case worked
for the same dispute resolution provider organization (DRPO). (Gray, at p. 1358; Ethics
Stds., std. 8(b)(1)(A).) The nine-day arbitration took place at the DRPO office, where
hallways and meeting areas displayed posters with photographs and names of panel
members, including the attorney, brochures throughout the office included the attorney’s
name and biographical information and, according to the attorney’s declaration, he saw
the plaintiff’s counsel reviewing these brochures during the arbitration. (Gray, at p.
1360.) Appellants rely on the discussion in Gray of the requirement that the arbitrator
personally make the required disclosures, rejecting the argument that the plaintiff was
estopped from seeking to vacate the award because the information had been otherwise
24
disclosed. But Gray involved no issue of knowledge imputed on the basis of agency, and
therefore does not further appellants’ argument that the information Hartog provided to
John and Stephen cannot be imputed to Clifford in the circumstances of this case.
The Gray court went on to reject the “related” argument that the plaintiff “knew
or should have known” of the attorney’s membership in the DRPO because section
1281.85, subdivision (c), prohibits waiver of the Ethics Standards. (Gray, supra, 212
Cal.App.4th at p. 1366.) Subdivision (c) of section 1281.85 provides, “The ethics
requirements and standards of this chapter are nonnegotiable and shall not be waived.”
Appellants point out that to the extent the Standards apply to this case—which, in their
view, they do not, because Quinby was appointed before the Standards became effective
in 2002—section 1281.85, subdivision (c), precludes waiver of the Standards. If the
Standards directly apply to this case, of course, there could be no basis for appellants’
claim of nondisclosure because of the two-year limitation imposed by Ethics Standard
7(d)(8)(A). Moreover, subdivision (c) did not become a part of section 1281.85 until
2010, well after the time appellants were told of Quinby’s association with Crosby and
Quinby was named in the settlement agreement and began to serve as arbitrator. (Stats.
2009, ch. 133 § 1 (Assem. Bill No. 1090), eff. Jan. 1, 2010.) Further, the legislative
history of the amendment adding subdivision (c) to section 1281.85 reflects that it was
aimed at prohibiting contractual waivers of parties’ statutory right to disqualify an
arbitrator,10 not at the type of situation at issue in the present case. Nothing in Gray is at
10
The Assembly Committee on Judiciary Analysis of Assembly Bill No. 1090,
states, “Although it should be clear that [the ethics standards] were established primarily
for the purpose of public protection and therefore should not be subject to negotiation or
waiver, there have been reported instances of private judging companies imposing and
attempting to defend contractual waivers of these obligations, and there have no doubt
been unreported instances as well. (E.g., Azteca Construction, Inc. v. ADR Consulting,
Inc., 121 Cal.App.4th 1156 (2004); Jevne v. Superior Court, 35 Cal.4th 935 (2005).)
This bill would settle any doubt on the matter by declaring expressly that arbitrator ethics
rules are not subject to negotiation or waiver.” (Assem. Com. on Judiciary, Analysis of
Assem. Bill No. 1090 (2009-2010 Reg. Sess.), as introduced Feb. 27, 2009, p. 4.) After
25
odds with the conclusion that appellants are not entitled to have the arbitration awards
here vacated on the basis of Quinby’s failure to disclose his prior law firm membership
when they were aware of this membership in 2001 but only raised their objection in 2011,
after Quinby had rendered three awards over the intervening years. (See Fininen, supra,
142 Cal.App.4th 185; Dornbirer, supra, 166 Cal.App.4th 831.)
As recently summarized in Mt. Holyoke, supra, 219 Cal.App.4th at pages 1313
and 1314, after concluding that a party’s constructive knowledge of undisclosed facts—
based on the theory that the information was readily available on the internet—was
insufficient to avoid the consequence of the arbitrator’s failure to make a required
disclosure: “An arbitrator’s failure to make a required disclosure presumably would not
justify vacating the arbitrator’s award if the party challenging the award had actual
knowledge of the information yet failed to timely seek disqualification. (See Kaiser
Foundation Hospitals, Inc. v. Superior Court (1993) 19 Cal.App.4th 513, 517.) Courts
have also held that if the arbitrator disclosed information or a party had actual knowledge
of information putting the party on notice of a ground for disqualification, yet the party
failed to inquire further, the arbitrator’s failure to provide additional information
regarding the same matter does not justify vacating the award. (Dornbirer[, supra,] 166
Cal.App.4th [at p. 842]; Fininen[, supra,] 142 Cal.App.4th at pp. 190–191; [Britz, Inc. v.
Alfa-Laval Food & Dairy Co. (1995) 34 Cal.App.4th 1085, 1096–1097].)” (Ibid., fn.
omitted.)
discussing controversial aspects of private arbitration, the analysis states that the
proposed bill avoids the controversy “because it is limited only to involuntary waiver of
the arbitrator ethics rules.” (Id. at p. 7.) According to the Senate Judiciary Committee
analysis, “[i]n response to instances where an arbitrator has imposed contractual waivers
of these obligations, this bill would provide that existing ethical standards and
requirements for neutral arbitrators are not subject to negotiation and may not be
waived.” (Sen. Judiciary Com., Analysis of Assem. Bill No. 1090 (2009-2010 Reg.
Sess.), as amended May 12, 2009, p. 1.)
26
In sum, we find no basis for reversing the probate court’s denial of appellants’
petition to vacate the arbitration awards due to Quinby’s failure to disclose his past
affiliation with Epstein’s law firm.
At the conclusion of a brief entirely devoted to the argument that the trial court
should have vacated the arbitration award under section 1282.6, subdivision (a)(6), due to
Quinby’s professional relationship with Epstein, appellants devote a single paragraph to
the argument that Quinby failed to disclose his lack of qualification to serve as an
arbitrator due to his inactive bar membership status from 2001 until 2006. Under rule
2.30 of the Rules of the State Bar of California, “No member practicing law, or
occupying a position in the employ of or rendering any legal service for an active
member, or occupying a position wherein he or she is called upon in any capacity to give
legal advice or counsel or examine the law or pass upon the legal effect of any act,
document or law, shall be enrolled as an inactive member.”
Although they state that they would never have agreed to Quinby’s appointment if
they had known of this lack of qualification, appellants do not argue that it provides a
separate basis for vacating the awards. Nor did they do so in the trial court, where their
arguments addressed the “professional relationship” issue. The record makes clear that
appellants were aware of Quinby’s inactive bar status in 2005, at the latest, since they
raised this issue at that time in the petition by which they sought to avoid the arbitration
then being sought by the trustee.11 They took no action, however, to attempt to vacate the
11
Even then, appellants did not frame the issue as a challenge to Quinby’s ability
to serve, but only alleged that “an actual dispute exists between the parties and [the
trustee] concerning . . . whether or not William A. Quinby is willing to continue serving
as arbitrator as set forth in the Settlement Agreement. According to the online records of
the State Bar of California, Mr. Quinby has been an inactive member of the State Bar
since 2001. Pursuant to Article I, Section 2 of the Rules and Regulations of the State Bar
of California, a member must be active in order to serve as a private arbitrator. Further
Mr. Quinby has declined to hear at least two prior requests for arbitration, each time
indicating that he was unavailable to serve. As a result, the administration of this trust
has come to a virtual impasse.”
27
2001 award on this basis and it would be far too late to do so now. Quinby’s subsequent
awards were not subject to any challenge on this basis, as Quinby became an active bar
member again before the 2006 arbitration.12
DISPOSITION
The judgment is affirmed.
Costs to respondent.
_________________________
Kline, P.J.
We concur:
_________________________
Richman, J.
_________________________
Brick, J.*
* Judge of the Alameda County Superior Court, assigned by the Chief
Justice pursuant to article VI, section 6 of the California Constitution.
12
All this presumably explains why the trial court did not address Quinby’s bar
status in its lengthy decision, and why respondent did not reply to appellant’s short
discussion of the point in her brief in this court.
28