Crowder v. Freeman, Freeman & Smiley CA2/1
B303397
| Cal. Ct. App. | Jul 1, 2021Background
- Crowder became an equity partner at Freeman in 2015 and executed a partnership agreement requiring 30 days written withdrawal notice, a cooperative transition plan, and conditioning redemption payments on timely notice and good‑faith compliance.
- The agreement required JAMS arbitration for disputes and allowed the arbitrator to award attorneys’ fees and costs.
- Crowder abruptly resigned (Aug. 16, 2012) without completing transition obligations; Freeman sought a declaratory ruling in JAMS that Crowder forfeited withdrawal payments and asserted a counterclaim for money owed.
- The arbitrator issued a tentative/interim ruling granting Freeman summary adjudication, finding Crowder breached the notice/transition conditions and therefore was owed nothing; a final prove‑up hearing was scheduled.
- A scheduling/fee payment issue briefly removed and then restored the final hearing; Crowder declined to attend the rescheduled hearing (saying he was unavailable and willing to pay the claimed balance), Freeman paid his portion, the hearing proceeded July 28, 2017, and the arbitrator issued a final award: Freeman owed Crowder nothing; Crowder owed Freeman ~$13,260 plus $78,936.99 in fees and costs.
- Crowder petitioned to vacate the award (arguing refusal to hear evidence, bias, improper hearing); the trial court denied vacatur, confirmed the award, and denied disqualification of the trial judge. This appeal followed and the Court of Appeal affirmed.
Issues
| Issue | Plaintiff's Argument (Crowder) | Defendant's Argument (Freeman) | Held |
|---|---|---|---|
| Whether arbitrator’s evidentiary rulings and summary adjudication justify vacatur under CCP §1286.2(a)(5) | Arbitrator sustained objections to essentially all his evidence and thus refused to hear material evidence, substantially prejudicing his rights | Sustaining objections is not a refusal to hear evidence; courts cannot vacate awards for evidentiary, factual, or legal errors absent substantial prejudice | Held for Freeman: exclusion of evidence as legally irrelevant is not a basis for vacatur; Crowder showed no substantial prejudice |
| Whether holding the final hearing in Crowder’s absence violated JAMS rules and required vacatur | Hearing was improper because Crowder received inadequate notice and was unavailable after JAMS rescheduling | JAMS rules permit proceeding in a party’s absence where proper notice is given; rule requiring 30‑day notice for nonparticipation does not apply here because Crowder actively participated earlier | Held for Freeman: arbitrator properly proceeded under JAMS rules and Crowder was not entitled to vacatur |
| Whether the trial judge should have been disqualified for bias | Judge rented office space from Freeman’s counsel and socialized with counsel, creating a reasonable doubt about impartiality | Disqualification challenge was procedurally defective and the trial court properly struck it; also the determination is not appealable | Held: trial court’s denial of disqualification is not appealable (must be reviewed by writ) |
| Whether trial court erred in confirming the arbitration award | Arbitration errors deprived Crowder of fair process and require vacatur | Judicial review is limited; trial court correctly applied law and denied vacatur; confirmed award should stand | Held for Freeman: affirmance of trial court — award confirmed and judgment affirmed |
Key Cases Cited
- Moncharsh v. Heily & Blase, 3 Cal.4th 1 (parties agree arbitration decision is final; courts cannot review merits or legal errors)
- Heimlich v. Shivji, 7 Cal.5th 350 (section 1286.2(a)(5) does not permit vacatur for exclusion of evidence deemed legally irrelevant)
- Lindenstadt v. Staff Builders, Inc., 55 Cal.App.4th 882 (standard of review for appeals from orders confirming arbitration awards)
- Blatt v. Farley, 226 Cal.App.3d 621 (petitioner must show substantial prejudice from arbitrator’s refusal to hear evidence)
- Schlessinger v. Rosenfeld, Meyer & Susman, 40 Cal.App.4th 1096 (practical limits on judicial second‑guessing of arbitrator evidentiary decisions to preserve arbitral finality)
- Toal v. Tardif, 178 Cal.App.4th 1208 (arbitration is intended to be speedy, inexpensive, and final; errors of law/fact are generally not grounds for vacatur)