72 Cal.App.5th 858
Cal. Ct. App.2021Background
- Goodwin sued Comerica for allegedly mishandling deposited disability benefits; parties arbitrated the dispute before retired Judge Read Ambler (JAMS panelist).
- The arbitrator’s initial §1281.9 disclosure listed an earlier arbitration involving Goodwin’s lawyers (Hernandez) as “Settled Prior to Final Award” but did not disclose he had issued an interim fee award in Hernandez.
- No party objected within 15 days to the initial disclosure. During post-merits briefing on Goodwin’s fees, Comerica’s counsel learned of the Hernandez interim fee award and other belated disclosures but did not serve a disqualification notice or raise the nondisclosure in briefing.
- The arbitrator issued an interim merits award for Goodwin and later a final award including roughly $900,000 in fees and costs; Goodwin petitioned to confirm the award.
- The trial court vacated the award under §1286.2 for the arbitrator’s alleged material omission in his §1281.9 disclosure; the Court of Appeal reversed, holding Comerica forfeited the right to seek disqualification by failing to serve a timely notice after discovering the omitted facts, and ordered confirmation of the award.
Issues
| Issue | Plaintiff's Argument (Goodwin) | Defendant's Argument (Comerica) | Held |
|---|---|---|---|
| Whether failure to disclose the interim Hernandez award was a material omission requiring vacation | The omission was not a basis to forfeit confirmation; Comerica was on inquiry notice or otherwise waived/forfeited if it did not timely object | The omission was a material misrepresentation under §1281.9 and §1286.2 that mandates vacatur | Court assumed the omission was material but did not decide that question; disposition turned on forfeiture (reversed vacatur) |
| Whether Comerica forfeited the right to seek disqualification by failing to serve a notice within 15 days after learning of the omission | Goodwin: Comerica discovered the omitted facts during the arbitration and failed to timely serve notice, so it forfeited any disqualification claim | Comerica: By the time it discovered the facts the hearing was underway/merits decided and §1281.91(c) barred a late notice | Held for Goodwin: Comerica forfeited the right; ethics standard 10 and §1281.91 require a notice within 15 days of discovery and before resolution of contested merits issues |
| Whether the initial disclosure of Hernandez put Comerica on inquiry notice (so objection was untimely) | Goodwin: initial disclosure was sufficient to put Comerica on inquiry notice and it cannot wait to raise the issue post-award | Comerica: The initial description did not reveal the interim award; it could not reasonably know and only discovered the omitted facts later | Court assumed the initial disclosure did not put Comerica on inquiry notice, but still held Comerica forfeited by not timely objecting after actual discovery |
Key Cases Cited
- Haworth v. Superior Court, 50 Cal.4th 372 (disclosure failures can mandate vacatur under §1286.2)
- Honeycutt v. JPMorgan Chase Bank, N.A., 25 Cal.App.5th 909 (standard of de novo review for vacatur where facts are undisputed; condemnation of ‘‘wait-and-see’’ tactic)
- Alper v. Rotella, 63 Cal.App.5th 1142 (party must object at earliest practicable opportunity after discovery of disqualifying facts)
- Jolie v. Superior Court, 66 Cal.App.5th 1025 (delay in seeking disqualification can constitute forfeiture; prompt challenge after discovery is required)
- Mt. Holyoke Homes v. Jeffer Mangels, 219 Cal.App.4th 1299 (actual knowledge of disqualifying information during arbitration precludes vacatur for nondisclosure)