Krawetz v. Destiny Properties and Development

Filed 11/29/05 Krawetz v. Destiny Properties and Development CA2/8

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION EIGHT

ADRIENNE KRAWETZ, Plaintiff and Respondent, v. DESTINY PROPERTIES AND DEVELOPMENT, INC., Defendant and Appellant.

B181179 (Los Angeles County Super. Ct. No. BC 311479)

APPEAL from a judgment of the Superior Court for the County of Los Angeles. Aurelio N. Munoz, Judge. Affirmed.

Law Offices of Glenn Ward Calsada and Glenn Ward Calsada for Defendant and Appellant.

Goldfarb, Sturman & Averbach and Steven L. Feldman for Plaintiff and Respondent.

________________________________

SUMMARY

The trial court properly granted a petition to confirm an arbitration award.

FACTUAL AND PROCEDURAL BACKGROUND

Adrienne Krawetz and Destiny Properties and Development, Inc. (Destiny or seller) entered into a written contract in which Krawetz agreed to purchase and Destiny agreed to sell a single family residential property in Los Angeles. The agreement was executed on June 23, 2003 on a standard form for residential purchase agreements in California, and called for arbitration of any dispute or claim “arising between them out of this Agreement or any resulting transaction, which is not settled through mediation . . . .”

Krawetz and Destiny subsequently entered into two further agreements, the first on the following day, June 24, 2003, and another on September 9, 2003, entitled “Pre Purchase Agreement” and “Pre Purchase Agreement II,” respectively. Both agreements involved the same residential property. The first stated that the agreement was “entering the said parties into the escrow process,” and required the seller to complete certain improvements, including bringing “inside house construction” to building code specifications, prior to the purchase. The second agreement was similar, and stated it was “entering the said parties into an extended escrow process.” The second agreement required the seller to complete various items identified in the first agreement and several other items, and extended the time allowed to complete all items to October 20, 2003. Both agreements stated that if Destiny did not complete all of the items, Krawetz would “be entitled to the complete return of her deposit of $10,000 . . . .”

Destiny failed to complete the improvements to the property, refused to convey the property to Krawetz, and refused Krawetz’s demand for mediation. Krawetz filed a complaint for specific performance in superior court, in order to maintain her right to file a notice of lis pendens, and concurrently filed a petition to stay the action and a petition to compel arbitration.

Destiny did not oppose Krawetz’s petition to compel arbitration, and the trial court granted the petition. Krawetz applied to the court for appointment of an arbitrator. The parties subsequently agreed “to submit all disputes, claims or controversies, in or related to the above-referenced matter, to neutral, binding arbitration at JAMS . . . .” The parties further agreed that retired justice William Masterson would serve as the arbitrator, and notified the trial court accordingly, attaching a copy of their stipulation.

Destiny did not file a responsive statement in the arbitration or otherwise comply with the directions and deadlines set by the arbitrator. The arbitrator eventually issued a ruling that precluded Destiny from presenting any counterclaim to Krawetz’s claim, but permitted Destiny to “attempt to defend against that claim at the plenary hearing.” Destiny attended the hearing, and was allowed to cross-examine witnesses, offer direct testimony, and offer exhibits by way of defense.

The arbitrator concluded that Destiny had breached its agreement with Krawetz and that Krawetz was entitled to specific performance. The arbitrator found Destiny agreed to complete various improvements to the property in the two amendments to the purchase agreement; escrow was extended so that the improvements could be completed; and Destiny did not perform as promised and later refused to complete the contract. The arbitration award stated that Krawetz, at her option, was entitled to an order compelling specific performance, as an alternative to an award of monetary damages for breach of contract, along with a money judgment of $61,380 as additional compensation necessary to vindicate her contractual rights. Krawetz was also awarded her costs and attorney fees. The award was subsequently corrected, as to matters not affecting the merits of the controversy.

Krawetz filed a petition to confirm the award, and Destiny filed an opposition to the petition. Destiny argued, for the first time, that the arbitrator exceeded his powers, because the two “pre purchase agreements” did not contain arbitration clauses. According to Destiny, the arbitrator did not have the authority to decide issues related to those documents, which were “stand alone agreements and were not a ‘resulting transaction’ of the [purchase] Agreement . . . .” Destiny also argued that the arbitrator’s award was an unauthorized remedy, because Destiny’s breach of the pre purchase agreements entitled Krawetz only to the return of her deposit.

The trial court granted Krawetz’s petition to confirm the award, ruling that Destiny participated in the arbitration proceedings, did not object to the nature or scope of those proceedings, and could not now object to the arbitrator’s award. Judgment for specific performance, as well as monetary damages, costs and attorney fees, was entered in conformity with the award, and this appeal followed.

DISCUSSION

Destiny contends the arbitrator exceeded his authority on several grounds. All of Destiny’s contentions are meritless.

First, Destiny asserts it did not agree to submit the question of arbitrability to the arbitrator and did not waive its rights by participating in the arbitration. Destiny is mistaken. It did not raise, either in opposition to Krawetz’s petition to compel arbitration or before the arbitrator, the issue of arbitrability of the dispute. Indeed, Destiny expressly agreed “to submit all disputes, claims or controversies” to binding arbitration before Justice Masterson.[1] Destiny’s reliance on Malek v. Blue Cross of California (2004) 121 Cal.App.4th 44 is misplaced for several reasons, including the fact that the plaintiffs in Malek resisted arbitration at every juncture, and the arbitrator in Malek exceeded his authority by reexamining the arbitrability issue previously decided by the trial court. (Id. at pp. 52-53, 56.) The rule applicable here is that “[a] claimant may not voluntarily submit his claim to arbitration, await the outcome, and if the decision is unfavorable, challenge the authority of the arbitrator to act.” (University of San Francisco Faculty Assn. v. University of San Francisco (1983) 142 Cal.App.3d 942, 954.)

Second, Destiny contends the arbitrator exceeded his authority because the “pre purchase” agreements did not contain arbitration clauses, and did not incorporate or refer to the purchase agreement. Again, the argument is without merit. The arbitration clause in the purchase agreement expressly covered disputes arising out of the agreement or “any resulting transaction,” and the arbitrator found as fact that the two “pre purchase” agreements were amendments to the original purchase agreement. While this was an eminently reasonable finding, a court may not in any event vacate an award because of an arbitrator’s factual or legal error. (Moshonov v. Walsh (2000) 22 Cal.4th 771, 775.)

Finally, Destiny claims the arbitrator issued an unauthorized remedy, and that Krawetz’s remedy should have been limited to the return of her deposit. This argument is likewise baseless. Arbitrators have the authority to fashion relief that is just and fair, so long as the remedy “may be rationally derived from the contract and the breach.” (Advanced Micro Devices, Inc. v. Intel Corp. (1994) 9 Cal.4th 362, 383.) This standard was plainly met in this case.

DISPOSITION

The judgment is affirmed. Adrienne Krawetz is to recover her costs on appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

BOLAND, J.

We concur:

RUBIN, Acting P.J.

FLIER, J.

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[1] Destiny argued in its reply brief and at oral argument that only its lawyer agreed to submit all disputes to binding arbitration before Justice Masterson, and that a client is not bound by an attorney’s stipulation to binding arbitration. (Blanton v. Womancare, Inc. (1985) 38 Cal.3d 396, 407-408 [attorney has no apparent authority to bind his client to an agreement for arbitration; “[w]hen a client engages an attorney to litigate in a judicial forum, the client has a right to be consulted, and his consent obtained, before the dispute is shifted to another, and quite different, forum”]; Lazarus v. Titmus (1998) 64 Cal.App.4th 1242, 1249 [Blanton required a finding of actual consent or ratification by client because client’s substantive rights were potentially impacted by the decision to submit to binding arbitration].) Destiny’s contention avails it nothing in this case, because (1) at no time did Destiny present any evidence or make any argument, either to the trial court or to the arbitrator, that its consent was not obtained to the stipulation to submit all disputes to Justice Masterson; and (2) in any event, Destiny expressly agreed, in the purchase agreement that preceded the events in controversy, to arbitrate any dispute arising out of the purchase agreement “or any resulting transaction . . . .” (See text, post.)