Filed 1/9/20 Lowry v. True Colors Internat. CA4/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

FOURTH APPELLATE DISTRICT

DIVISION THREE

DONALD LOWRY et al.,

Respondents and Appellants,

v.

TRUE COLORS INTL.,

Petitioner and Respondent.

G056075

(Super. Ct. No. 30-2017-00921482)

O P I N I O N

Appeal from a judgment of the Superior Court of Orange County, Robert J. Moss, Judge. Affirmed.

Law Offices of James G. LeBloch and James G. LeBloch for Respondents and Appellants.

Nelson Mullins Riley & Scarborough and Lauren A. Deeb for Petitioner and Respondent.

Appellants Donald and Erica Lowry (collectively, appellants) appeal from a judgment denying their petition to vacate an arbitration award and granting respondent True Colors INTL.’s (respondent or TCI Nevada) petition to confirm the same arbitration award. They contend respondent lacked standing to confirm the award because it was not party to the arbitration and did not otherwise have any interest in the award. Additionally, they argue the trial court erred because the evidence demonstrated the arbitrator acted in excess of his powers, which is grounds for vacating the arbitration award. We find no merit in these arguments and affirm the judgment.

FACTS

Decades ago, Donald Lowry founded a business to aid and assist individuals and corporations with personnel placement and human development. He and his wife, Erica Lowry, operated the business, commonly known as True Colors, which included a series of training programs, educational tools and entertainment products.

In 2004, appellants sold 100 percent of their shareholder ownership interest in one of their companies to LBC Global, Inc., which later changed its name to True Colors International, Inc. (TCI). The sale resulted in appellants’ company becoming a wholly owned subsidiary, with certain shared branding and intellectual property rights remaining with another of appellants’ companies.

A few years later, a dispute arose between appellants and TCI, concerning the parties’ rights under the 2004 purchase agreement. Appellants filed suit in federal court. Ultimately, the case was resolved by way of a court-approved stipulated judgment (2009 judgment). Matters not specified within the written judgment are supplemented by the transcript of a prior hearing at which details of the parties’ settlement was read into the court record. Among other things, the 2009 judgment and settlement specify that all future disputes relating to them, including those involving interpretation, shall be resolved through arbitration.

The parties operated for a number of years under the 2009 judgment, but they eventually encountered additional areas of disagreement, this time with the terms of the settlement and 2009 judgement. TCI filed an arbitration action against appellants alleging, inter alia, breach of contract, trademark infringement, unfair competition and copyright infringement. After four years, the arbitrator issued an arbitration award in TCI’s favor (the arbitration award). He subsequently denied appellants’ request for reconsideration.

Thereafter, respondent TCI Nevada filed a petition in the superior court to confirm the arbitration award. It claimed it was the assignee of TCI’s rights to and interest in the award. Appellants opposed the petition and filed their own petition to vacate the award.

The trial court received evidence, heard argument from the parties and took the matter under submission so it could review documents respondent provided at the hearing on the petitions. It later issued a minute order granting respondent’s petition to confirm the arbitration award and denying appellants’ petition to vacate it. Appellants unsuccessfully sought reconsideration of the matters and the trial court entered judgment.

DISCUSSION

“California law favors alternative dispute resolution as a viable means of resolving legal conflicts. ‘Because the decision to arbitrate grievances evinces the parties’ intent to bypass the judicial system and thus avoid potential delays at the trial and appellate levels, arbitral finality is a core component of the parties’ agreement to submit to arbitration.’ [Citation.] Generally, courts cannot review arbitration awards for errors of fact or law, even when those errors appear on the face of the award or cause substantial injustice to the parties. [Citation.]” (Richey v. AutoNation, Inc. (2015) 60 Cal.4th 909, 916.)

Consistent with these principles, a trial court faced with a petition to confirm an arbitration award must “confirm the award as made” unless a response to the petition is filed and the court determines the award must be corrected or vacated, or the proceeding must be dismissed. (Code Civ. Proc., §§ 1286, 1286.4.) Grounds for vacating an arbitration award are limited to the following: (1) “[t]he award was procured by corruption, fraud or other undue means”; (2) the arbitrator issuing the award was corrupt; (3) misconduct of the neutral arbitrator substantially prejudiced a party’s rights; (4) the arbitrator acted in excess of his or her powers; (5) the arbitrator refused a request to postpone the hearing on the petition or refused to hear evidence material to the controversy; or (6) the arbitrator failed to timely disclose grounds for his or her disqualification. (Code Civ. Proc., §§ 1286.2, subd. (a).)

Appellants challenge the trial court’s decision in two respects. First, they argue respondent TCI Nevada lacked standing to bring the petition to confirm the arbitration award because it had no right to, or interest in, the arbitration award. Second, they assert the arbitration award should have been vacated, not confirmed, because the arbitrator exceeded his powers. We disagree.

Regarding standing, appellants contend the trial court denied them due process by ignoring their evidence. To the contrary, the court considered all the parties’ evidence before issuing its final ruling, including evidence which appellants say demonstrates respondent did not have standing to bring the petition to confirm the arbitration award.

Respondent was not party to the arbitration and the arbitration award unequivocally granted relief in favor of TCI, an entity distinct from respondent. Nevertheless, respondent argued to the trial court it received all rights and interest in the award had by TCI, including enforcement powers, by way of an assignment agreement, a copy of which it presented to the court. Appellants disputed respondent’s enforcement authority and provided the court with two other documents at the time of the hearing on the petition. They argued the additional documents demonstrated TCI had nothing to assign when it purportedly executed the assignment agreement. The court took the matter under submission so it could review those additional documents prior to ruling.

Where, as here, the question of a party’s standing involves factual disputes, the trial court’s responsibility is to weigh the evidence and make factual findings. On appeal, we defer to those findings so long as they are supported by substantial evidence, and with those findings in mind we consider the issue of standing de novo. (See Stofer v. Shappell Industries, Inc. (2015) 233 Cal.App.4th 176, 189-190; Scott v. Thompson (2010) 184 Cal.App.4th 1506, 1510 [standing is a question of law reviewed de novo when relevant facts are undisputed].)

It appears undisputed that if TCI possessed the rights to, and the interest in, the arbitration award at the time the assignment agreement was executed, then TCI Nevada was the proper party to petition for confirmation of the award. Thus, the matter before us turns on whether substantial evidence supports the trial court’s factual finding that TCI had such rights and interest.

And there is such substantial evidence. The assignment agreement provides the following factual background: (1) in or about September 2013, TCI sold all of its assets and interest in “the True Colors business” to another entity, Millennium Media Holdings Limited (MMHL); (2) notwithstanding the sale, TCI “retained all liabilities associated with the True Colors business, including the obligation to prosecute and defend all claims brought in the [a]rbitration [with appellants] for the benefit of MMHL and its successors”; (3) MMHL later sold what it obtained from TCI to respondent; and (4) MMHL directed TCI to assign its rights, title and interest in the arbitration award to respondent. These recitals alone are sufficient to uphold the trial court’s factual finding.

Turning to the arbitration award itself, appellants assert it should have been vacated because the arbitrator exceeded his authority by changing the meaning of the 2009 judgment. Specifically, they claim the arbitrator “redefined the definition of the True Colors brand [in a manner] contrary to what was agreed to [at the time of the settlement].”

But appellants ignore the scope of the arbitrator’s authority expressly provided for in the settlement and the 2009 judgment. (See San Francisco Housing Authority v. Service Employees Internat. Union, Local 790 (2010) 182 Cal.App.4th 933, 943 [“‘“The powers of an arbitrator derive from, and are limited by, the agreement to arbitrate”’”].) The judgment states “any future interpretative disputes relating to the Settlement shall be resolved through arbitration . . . as provided for in the Settlement.” And the settlement echoes the same. Thus, although appellants may disagree with the arbitrator’s interpretation of the 2009 judgment, the record is clear he acted within his powers.

DISPOSITION

The judgment is affirmed. Respondent is entitled to costs on appeal.

THOMPSON, J.

WE CONCUR:

O’LEARY, P. J.

ARONSON, J.