By a MetNews Staff Writer
The Court of Appeal for this district, in reversing a judgment against a company based on the confirmation of an arbitration award, has found that the trial judge erred in failing to address the company’s key contention in opposing confirmation: that it’s not the party that entered into a retainer agreement containing an arbitration clause with the plaintiff, a law office.
Justice Brian S. Currey of Div. Four authored the opinion, which was filed Tuesday and was not certified for publication.
Uncertainty as to the identity of the proper party stems from a drafting error. The body of the contract specifies one company as the client and the signature block names a different company with a similar name.
The opinion leaves it to the Los Angeles Superior Court to determine, on remand, whether the judgment against a corporation is the product of a mix-up.
Arbitrator Michael DiLiberto of ADR Services, Inc. made an award of $69,360.62 in favor of Hudock Employment Law Group, which sought unpaid legal fees, against David Bustan and Celebrity HomeHealth, Inc. DiLiberto set forth a finding that the recitation under Bustan’s signature as to the company he represented was a mistake.
The corporate entity argued in its Dec. 22, 2020 opposition to confirmation of the award that Hudock’s services were secured to act “on behalf of David Bustan and Celebrity Homecare, Inc.—not to be confused with Celebrity HomeHealth, Inc.”
Adding to the confusion is that Bustan has been connected to both entities. Although distancing himself from HomeHealth in the trial court, he apparently had been an incorporator and officer of that entity, and they share representation on appeal.
Los Angeles Superior Court Judge Mel Red Recana confirmed the award, finding that Bustan and Celebrity HomeHealth had not met the 100-day deadline for moving to vacate an award after it was served.
He said in his ruling that those parties “do not dispute that their opposition was filed and served after the November 22, 2019 deadline” and instead “assert that their request to vacate arbitration award is timely because the deadline does not apply to a party’s right to challenge the arbitrator’s power to make the award.” Recana noted that they cite the 1991 decision of this district’s Court of Appeal in United Firefighters of Los Angeles v. City of Los Angeles in support of their position, but commented:
“However, the express language of the Court of Appeal’s decision in United Firefighters states: ‘Failure to file a timely response prevents a party from vacating an award on any of the grounds provided in [Code of Civil Procedure] section 1286.2.’ ”
Celebrity Homecare put forth on appeal that what it contends is “not that the arbitration award should have been vacated” under any of the grounds specified in §1286.2 but, instead, is relying on §1287.2 which provides:
“The court shall dismiss the proceeding under this chapter as to any person named as a respondent if the court determines that such person was not bound by the arbitration award and was not a party to the arbitration.”
“Quite clearly, dismissal under 1287.2 is distinct from vacating under 1286.2.”
By proceeding under that section, it argued, the issue of timeliness does not arise, saying that Hudock timely sought an order confirming the award (within four years) and it filed opposition the requisite number of days before the hearing.
It pointed out that Hudock’s services were enlisted in connection with an employment dispute in Jones v. Celebrity Homecare, Inc., that bills for the firm’s fees were sent to Celebrity Homecare, and that payments—up to the point where the call for further payments was disputed—were made by Celebrity Homecare.
Law Firm’s Points
Hudock countered that the retainer agreement “was addressed to David Bustan and ‘Celebrity Home Health’.” The letter said it would “confirm that Celebrity Home Health, Inc. (‘the Company’ or ‘Celebrity’) and you, David Bustan, have asked the Hudock Employment Law Group (‘the firm’) to represent its and your interests in this matter.”
The retainer agreement, it said, “specifically identifies and defines Appellant Celebrity HomeHealth as…‘the Company’ or ‘Celebrity’, to be referenced throughout the agreement between the parties.”
Hudock asserted that while Bustan “declared under penalty of perjury that he allegedly had ‘no affiliation with Celebrity HomeHealth, Inc.’…in an attempt to substantiate Appellants’ assertion that Celebrity Home Health was allegedly not a party to the arbitration, such claim was blatantly false and a gross misrepresentation of the facts.”
The Court of Appeal declined to sort it all out. Currey’s opinion affirms the judgment as to Bustan but, in reversing as to Celebrity Homecare, remands the case to the Los Angeles Superior Court for a determination as to whether an award was properly made against that corporation.
“We conclude the trial court erred by confirming the arbitration award against Celebrity HomeHealth, Inc. without first finding Hudock and Celebrity HomeHealth, Inc. agreed in writing to arbitrate their dispute. Although the trial court correctly held defendants’ request to vacate the award was untimely, it is the petitioning party’s burden to prove the existence of a valid arbitration agreement before an award can be confirmed. We therefore remand the matter to the trial court for a new evidentiary hearing on Hudock’s petition to confirm the arbitration award, at which the court shall determine whether a valid arbitration agreement exists between Hudock and Celebrity HomeHealth, Inc.”
“[B]ecause it was Hudock’s—not defendants’—burden to prove by a preponderance of the evidence that a valid arbitration agreement existed, we conclude the trial court erred by confirming the arbitration award against Celebrity HomeHealth, Inc. without first finding the existence of an arbitration agreement between it and Hudock.”
The case is Hudock Employment Law Group v. Celebrity HomeHealth, B315387.
Los Angeles attorney Jerry Jen represented Hudock and James Decker of Orange County acted for Bustan and Celebrity HomeHealth.
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