208 Cal. App. 4th 790
Cal. Ct. App.2012Background
- This is an appeal from a judgment confirming three international commercial arbitration awards under California’s arbitration statute for international disputes (Code of Civil Procedure title 9.3, §1297.11 et seq.).
- Awards issued in 2010 (May 3, July 16, July 19) were in Comerica Bank’s favor against Howsam and various Greenlight/GFT entities and Charles Coate; the trial court denied vacatur and confirmed the awards.
- First amended complaint (Sept. 7, 2004) alleges Comerica lent $37 million to Howsam and seven Ontario corporations, secured by foreign distributors’ minimum license fees, with forged license agreements and assignment notices and extensive alter-ego allegations.
- The arbitration administered by the Independent Film & Television Alliance involved initial list of arbitrators, a long stay due to criminal indictments, discovery disputes, fee challenges, and ultimately a default award after defendants withdrew, followed by sanctions and cost awards.
- Defendants petitioned to vacate the awards in Aug. 2010; the trial court denied vacatur and confirmed the awards; notices of appeal were filed Apr. 26, 2011.
- The California Supreme Court later denied a petition for review, leaving the appellate decision in place.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether failure to timely disclose grounds for disqualification vacates an international arbitration award | Comerica argues the disclosure duty under 1297.121–1297.125 is not a postconfirmation vacatur ground. | Howsam/Greenlight contend nondisclosure warrants vacatur under 1286.2(a)(6). | Vacatur based on failure to disclose is not available under 1286.2(a)(6) for international arbitration. |
| Whether the award was procured by corruption, fraud, or other undue means | Comerica contends no corruption or undue influence occurred. | Defendants argue ex parte communications, billing, and other conduct show undue means. | No corruption or undue means; sanctions and costs upheld; no vacatur for fraud. |
| Whether the award was secured by a manifest disregard of the law | Comerica asserts the award complied with governing law. | Defendants claim manifest disregard due to misapplication of law. | Not a ground for vacatur under California law; no manifest disregard. |
| Whether the arbitrator exceeded his powers by deciding alter ego issues | Comerica argues arbitrator had power to decide alter ego under alliance rules. | Defendants contend alter ego issues should not have been decided by arbitrator. | Arbitrator did not exceed powers; alter ego issues properly within arbitration scope. |
Key Cases Cited
- Moncharsh v. Heily & Blase, 3 Cal.4th 1 (Cal. 1992) (vacatur limitations; standard of review for arbitration awards)
- Pearson Dental Supplies, Inc. v. Superior Court, 48 Cal.4th 665 (Cal. 2010) (manifest disregard not a basis for vacatur in domestic context; relevance to standards)
- Countrywide Financial Corp. v. Bundy, 187 Cal.App.4th 234 (Cal. App. 2010) (analysis of manifest disregard; vacatur grounds in CA law)
- Retail Clerks Union v. L. Bloom Sons Co., 173 Cal.App.2d 701 (Cal. App. 1959) (alter ego/arbitration scope distinction in some contexts)
- Hotels Nevada, LLC v. L.A. Pacific Center, Inc., 203 Cal.App.4th 336 (Cal. App. 2012) (arbitrator’s authority to decide alter ego; permissive scope under arbitration agreement)
- Lake v. Reed, 16 Cal.4th 448 (Cal. 1997) (specificity of more particular statute controls)
- Carpenters 46 Northern California Conference Bd. v. Zcon Builders, 96 F.3d 410 (9th Cir. 1996) (arbitrator authority on alter ego dependent on conduct and consent to arbitrate)
- Pacesetter Construction v. Carpenters 46 Northern California, 116 F.3d 436 (9th Cir. 1997) (distinguishes arbitrability authority in similar contexts)