Filed 10/8/19 Cardinal Collection Educational Foundation v. Knauss 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

CARDINAL COLLECTION EDUCATIONAL FOUNDATION et al.,

Plaintiffs and Respondents,

v.

WALTER W. KNAUSS,

Defendant and Appellant.

G056356

(Super. Ct. No. 30-2018-00977669)

O P I N I O N

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

Law Office of Kevin M. Sullivan, Kevin M. Sullivan; and Gonzalo Pineda for Defendant and Appellant.

WFBM, John A. Kaniewski and Anna Greenstin Kudla for Plaintiffs and Respondents.

Walter W. Knauss appeals from a judgment granting Cardinal Collection Educational Foundation (CCEF), Martin Logies, and John Skirtich’s (collectively referred to as Respondents unless the context requires otherwise) petition to confirm the arbitration award. Knauss contends the judgment was flawed because he attended arbitration without appointment of counsel. He also contends the arbitrator incorrectly found him liable for breach of contract and conversion. We find no error and affirm the judgment.

FACTS

CCEF is a charitable organization. Logies is the president of CCEF and Skirtich serves as a director and officer. Starting in 2009, Respondents invested millions of dollars in Super98 LLC (Super98). Knauss served as a managing board member and chief financial officer for Super98. Robert Hesselgesser served as Super98’s president and the other managing board member.

In 2016, Respondents instituted contractual arbitration against Super 98, Knauss, and Hesselgesser (collectively referred to as the Super98 group), seeking return of their investments in Super 98. Respondents claimed the Super98 group failed to act with the “utmost loyalty” towards Respondents and they improperly converted Respondents’ ownership interests in Super98 to themselves without consideration.

After a six-day arbitration hearing, the arbitrator issued a lengthy written award. The arbitrator determined: Hesselgesser liable for breach of contract; Hesselgesser, Super98, and Knauss jointly and severally liable for conversion; and punitive damages and attorney fees warranted.

Thereafter, Respondents filed a petition to confirm the arbitration award (petition). Knauss and Hesselgesser opposed the petition. The trial court noted its authority to vacate an arbitration award was very limited and stated most of the opposition’s arguments improperly discussed why the award was not supported by substantial evidence. It further opined: “One of the grounds upon which the court can vacate an arbitration award is when the arbitrator refuses to postpone the hearing upon sufficient cause being shown therefore. [Citation.] Here, [Knauss and Hesselgesser] do argue that the arbitrator refused to continue the hearing to give them time to retain counsel. However, the reply [to the petition] points out the lack of counsel at the hearing was due to [Knauss and Hesselgesser’s] own choice. [Respondents] state[] counsel was assisting [Knauss and Hesselgesser] by drafting moving papers and preparing oral arguments. Moreover, counsel for [Knauss and Hesselgesser] [was] present at all pre-arbitration hearings and at discovery motion disputes months prior to the proceedings. David Calderon, of Barth Calderon filed pre-arbitration motions and conducted written discovery. . . . Calderon withdrew as counsel in May, 2017 leaving [Knauss and Hesselgesser] with months to find new counsel. Respondents assured [the arbitrator] that they had no objections to . . . Calderon’s withdrawal, and confirmed they were aware of the further hearings that were scheduled. Despite those facts [Knauss and Hesselgesser] did not obtain new counsel for the hearing. They can’t complain now that their lack of counsel was a direct cause of the arbitration award issued against them.” The court granted the petition and entered judgment in favor of Respondents.

DISCUSSION

I. Standard of Review

“[I]t is the general rule that, with narrow exceptions, an arbitrator’s decision cannot be reviewed for errors of fact or law.” (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 11.) “More specifically, courts will not review the validity of the arbitrator’s reasoning. [Citations.]” (Ibid.) “Further, a court may not review the sufficiency of the evidence supporting an arbitrator’s award. [Citations.]” (Ibid.)

Code of Civil Procedure sections 1286.2 and 1286.6 provide exceptions to this general rule. Section 1286.2 lists the grounds for vacating an arbitral award: “the court shall vacate the award if the court determines any of the following: [¶] (1) The award was procured by corruption, fraud or other undue means. [¶] (2) There was corruption in any of the arbitrators. [¶] (3) The rights of the party were substantially prejudiced by misconduct of a neutral arbitrator. [¶] (4) The arbitrators exceeded their powers and the award cannot be corrected without affecting the merits of the decision upon the controversy submitted. [¶] (5) The rights of the party were substantially prejudiced by the refusal of the arbitrators to postpone the hearing upon sufficient cause being shown therefor or by the refusal of the arbitrators to hear evidence material to the controversy or by other conduct of the arbitrators contrary to the provisions of this title. [¶] (6) An arbitrator making the award either: (A) failed to disclose within the time required for disclosure a ground for disqualification of which the arbitrator was then aware; or (B) was subject to disqualification upon grounds specified in [s]ection 1281.91 but failed upon receipt of timely demand to disqualify himself or herself as required by that provision.” (§ 1286.2.)

Section 1286.6 allows a court to correct an award where “(a) There was an evident miscalculation of figures or an evident mistake in the description of any person, thing or property referred to in the award; [¶] (b) The arbitrators exceeded their powers but the award may be corrected without affecting the merits of the decision upon the controversy submitted; or [¶] (c) The award is imperfect in a matter of form, not affecting the merits of the controversy.” (§1286.6.)

Although not clearly stated, Knauss appears to contend there was misconduct on the part of the arbitrator. (§ 1286.2, subd. (a)(3), (4).) He asserts the arbitrator “required” Knauss to proceed without counsel during the arbitration hearing. He also claims the arbitrator incorrectly found on the merits that Knauss was liable under a contractual obligation and for conversion.

As to the issue of representation without counsel, Knauss fails to point to any reference in the record demonstrating he was required to proceed with the arbitration without counsel. The record is devoid of arbitration transcripts. The only evidence of the arbitration proceedings is the arbitration award itself. The award is silent on the issue of Knauss’s purported lack of representation. Furthermore, Knauss fails to present any authority requiring an arbitrator to appoint civil counsel to a self-represented litigant.

Knauss’s remaining issues contend the arbitrator somehow committed misconduct based upon his decision on the merits. However, none of the enumerated exceptions apply. Interpretation of the underlying contract was a question of law for the arbitrator, “It is the arbitrator’s construction which was bargained for; and so far as the arbitrator’s decision concerns construction of the contract, the courts have no business overruling him [or her] because their interpretation of the contract is different from his [or hers].” (United Steelworkers of America v. Enterprise Wheel & Car Corp. (1960) 363 U.S. 593, 599.) We will not substitute our judgment for that of the arbitrator. Accordingly, we have no discretion to review the award on its merits.

 

DISPOSITION

The judgment is affirmed. Respondents are entitled to costs on appeal.

O’LEARY, P. J.

WE CONCUR:

BEDSWORTH, J.

THOMPSON, J.