Explaining That It Wants to Clarify the Law, Appeals Court Declares That Judge Can’t Vacate Referee’s Decision and Order New Trial Before the Court; Must Enter Decision as Judgment, Then Grant New Trial Before the Court
By a MetNews Staff Writer
The Court of Appeal for this district yesterday issued a writ of mandate directing the Los Angeles Superior Court to vacate an order the effect of which is that a referee’s decisions will not stand and a new trial will be held, with the new outcome being that a referee’s decisions will not stand and a new trial will be held presided over by the court.
Justice Halim Dhanidina of Div. Three wrote the 25-page opinion which says that Judge Randolph M. Hammock erred in vacating a referee’s decision and ordering a new trial, declaring:
“Let a peremptory writ of mandate issue ordering respondent trial court to (1) vacate its November 25, 2019 order granting real parties’ motions to set aside the decisions of the referee, (2) enter a new and different order denying the motions to set aside the referee’s decisions, and (3) enter judgment on the referee’s decisions. The trial court shall thereafter enter its order setting a new trial to be conducted before the trial court.”
He said the court decided to tackle the issue raised “to clarify what is a somewhat muddled area of the law.”
Trial Court’s Ruling
Retired Los Angeles Superior Court Judge Owen Kwong was appointed as a referee to conduct binding arbitration. In a 53-page decision, he found in favor of the plaintiffs, attorney Michael S. Yu and his law corporation, awarding more than $2 million in damages, granting equitable relief, and assessing punitive damages at $5 million.
The defendants, Bank of The West and others, moved for an order vacating Kwong’s decision. In granting the motion, Hammock said the statement of decision by the referee was “fundamentally unsound and unjust, as it is based upon several errors of laws.” He wrote:
“The bottom line is that even giving the appropriate and required deference to the Referee’s findings, as required by law, this Court will not compound these errors of law by adopting them, as requested by Plaintiff.
“It must be noted, though, that as a procedural issue, this Court is unsure as to whether it is a belter practice to simply enter a judgment in favor of the Plaintiff (which essentially adopts the Referee’s findings), and then subsequently entertain (and grant) a motion for new trial…, as opposed to simply granting the pending motions. In either approach, however, the same result will be reached.
“In either approach, and based upon the record at this time, it is the clear intent of this Court is to not adopt the Referee’s findings and awards in all respects, and to simply order a new trial on all issues. This does not mean that this Court is making any opposite finding on any of the issues. It means only that a new trial is to be held on all issues, including the claim for punitive damages. This new trial is to be conducted before this Court (either by bench or jury) as may be requested by the parties and allowed by law.”
The defendants sought a writ, and Div. Three stayed proceedings in the trial court. In an order dated March 20, it decreed that “the parties are specifically directed to address the discussion in Jackson v. Allen (1921)… regarding the nature of the reference at issue in Calderwood v. Pyser (1866)…, whether consensual or nonconsensual.”
The reference to Kwong was consensual.
In yesterday’s opinion, Dhanidina said:
“Our review of the statutory scheme compels the conclusion that the trial court had no authority to review the consensual referee’s decisions before entering judgment on them. We further conclude however, that the trial court was authorized to entertain the motions as postjudgment motions and, based on the parties’ reference agreement, properly ruled that the new trial would be heard by the court and not by the referee. Accordingly, we grant the writ petition.”
He said that Code of Civil Procedure §643(c) “tightly controls” nonconsensual references, authorizing courts to disregard a referee’s findings, and §644(b) provides that a “decision of the referee or commissioner is only advisory” where the reference is nonconsensual.
As to consensual references, the jurist pointed out, §643(c) says that a referee’s decision “must stand as the decision of the court.”
Under the statutory scheme after 2000, Dhanidina wrote, a trial court has “expansive power…to review and adjust advisory reports of nonconsensual referees before entering them as judgments” while decisions of a referee pursuant to a consensual reference is “final and binding on the court,” subject to being vacated in response to a postjudgment motion.
He noted that the defendants’ relied “primarily” on the proposition that Calderwood authorizes a court to set aside a referee’s erroneous conclusions of law. The opinion in that case says:
“We see no good reason why the County Court might not have set aside the conclusions of law reported by the referee....The referee had made his report, but no judgment had been entered upon it, and it was still under the control of the Court....Where a referee finds the facts upon all the issues, draws an erroneous conclusion of law from the facts found, and reports a judgment in accordance with such conclusion, before judgment [is] entered and while the report is still under the control of the Court, we can perceive no objection to the Court’s setting aside the erroneous conclusion, and directing the proper judgment to be entered.”
The appeal in Calderwood was from an order granting a new trial, Dhanidina noted, declaring:
“This Calderwood’s comments about what the trial court might have done prior to entering judgment are dicta.”
“More important, regardless of the nature of the reference there, Calderwood is not controlling given the changes to the reference statutes after enactment of the Code of Civil Procedure and the Legislature’s express purpose in adding sections 643, subdivision (c) and 644, subdivision (b).”
The case is Yu v. Superior Court (Bank of the West), 2020 S.O.S. 5057.
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