Michael Demartini v. Thomas Johns, 693 F. App'x 534

Plaintiffs Michael and Renate DeMartini obtained an arbitration award against defendants Thomas Christopher Johns and his firm Johns & Allyn, A.P.C. on legal malpractice claims. The arbitrator awarded $158,000 plus prejudgment interest from June 30, 2011 through the award date and $19,100 for arbitration fees/costs.
Defendants moved in district court to vacate the arbitration award under the FAA, arguing the arbitrator exceeded her powers by ignoring California’s one-year statute of limitations for legal malpractice and that the award rested on perjured testimony (public policy ground).
Plaintiffs moved to confirm the arbitration award; defendants sought a stay of confirmation pending resolution of their vacatur motion. The district court denied vacatur and denied the stay, then confirmed the award.
The district court initially entered judgment awarding the arbitration amount with prejudgment interest from June 30, 2011, but later granted a Rule 59(e) motion by defendants to amend judgment so interest would run from July 30, 2014 (the arbitration award date), relying on California Civil Code § 3287.
On appeal, the Ninth Circuit reviewed denial of vacatur de novo, denial of stay for abuse of discretion, and Rule 59(e) relief for abuse of discretion; the panel affirmed denial of vacatur and denial of stay, but reversed the Rule 59(e) amendment and instructed entry of judgment consistent with the arbitration award (interest from June 30, 2011).

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the arbitrator manifestly disregarded law by applying malpractice SOL contrary to California law	Arbitrator correctly applied law and award should stand	Arbitrator recognized one-year SOL but ignored it; award should be vacated	Denied vacatur; no manifest disregard shown — panel found only possible error, not intentional disregard
Whether award should be vacated on public policy grounds (perjury)	Award should be enforced; arbitrator weighed credibility and rejected perjury claim	Award rests on perjured testimony and violates public policy against perjury	Denied vacatur on public policy grounds; court will not reweigh arbitrator’s factual findings
Whether district court abused discretion in refusing to stay confirmation pending vacatur proceedings	Confirm award; FAA §9 mandates confirmation unless vacated	Stay to avoid waste while vacatur considered	No abuse of discretion; §9 compels confirmation once vacatur denied and FAA timelines expired
Whether district court properly amended judgment under Rule 59(e) to change prejudgment interest start date	Judgment should match arbitration award (interest from June 30, 2011)	Rule 59(e) amendment corrected conflict with state law (interest from award date)	Reversed the Rule 59(e) amendment; FAA exclusivity and §12 time bar precluded using Rule 59(e) to alter the arbitration award; judgment must conform to arbitrator’s terms

Woods v. Saturn Distrib. Corp., 78 F.3d 424 (9th Cir.) (standard of review for vacatur)
Sheet Metal Workers’ Int’l Ass’n v. Madison Indus., Inc., 84 F.3d 1186 (9th Cir.) (arbitration review is limited and highly deferential)
Kyocera Corp. v. Prudential–Bache Trade Servs., Inc., 341 F.3d 987 (9th Cir.) (manifest disregard requires award to be completely irrational or show intentional law-ignoring)
Bosack v. Soward, 586 F.3d 1096 (9th Cir.) (vacatur for manifest disregard requires record evidence the arbitrators knew the law and intentionally ignored it)
Stead Motors v. Auto. Machinists Lodge No. 1173, 886 F.2d 1200 (9th Cir.) (narrow public-policy vacatur exception and its elements)
Hall Street Assocs., LLC v. Mattel, Inc., 552 U.S. 576 (U.S.) (FAA provides exclusive grounds for vacatur/modification)
Landis v. N. Am. Co., 299 U.S. 248 (U.S.) (standards for staying proceedings)
Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126 (9th Cir.) (party cannot use Rule 59(e) to evade FAA time limits)