Mt. Holyoke Homes, L.P. v. Jeffer Mangels Butler & Mitchell, LLP
219 Cal. App. 4th 1299
| Cal. Ct. App. | 2013Background
- Mt. Holyoke Homes and Jones sued JMBM and Bowman for legal malpractice arising from a coastal permitting dispute and subdivision litigation.
- Jones signed a 1997 legal services agreement with JMBM that contained a broad arbitration clause covering disputes including professional negligence.
- The trial court granted a petition to compel arbitration; initial arbitrator Collins was replaced after disclosure issues, and Chernow was selected as arbitrator.
- Chernow disclosed some relationships (including with a reference Mangels of JMBM) but did not timely disclose Mangels as a reference; firm sought to confirm the award and plaintiffs sought to vacate.
- Chernow issued an award in 2012 awarding JMBM unpaid fees and costs; after discovery of Mangels’s reference, plaintiffs petitioned to vacate.
- The trial court denied the petition to vacate and confirmed the arbitration award; the Court of Appeal reversed and directed vacatur of the award.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether arbitration clause is enforceable despite claimed lack of disclosure | Plaintiffs argue the clause was not adequately disclosed or explained. | Defendants argue no duty to disclose in this non-adhesive fee agreement. | Arbitration clause enforceable; no duty to disclose under these facts. |
| Whether arbitrator's failure to timely disclose Mangels creates grounds to vacate | Jones argues failure to disclose Mangels requires vacatur. | Defendants contend no timely disclosure requirement violated. | Yes; failure to timely disclose ground for disqualification requires vacating the award. |
| Whether listing Mangels as a resume reference could create an appearance of partiality | Impartial observer could doubt Chernow's impartiality because Mangels is a partner at JMBM. | Disclosures were not required to be tied to the arbitration subject matter; resume was public. | Yes; objective observer could entertain doubt; vacatur warranted. |
| Whether the trial court properly denied vacation and granted confirmation | Court failed to vacate despite improper disclosure. | Arbitration award should be confirmed unless vacated for disqualifying grounds. | Reversed; vacate the arbitration award and remand for further proceedings. |
Key Cases Cited
- Haworth v. Superior Court, 50 Cal.4th 372 (Cal. 2010) (appearance-of-partiality standard; neutral arbitrator disclosure—de novo review of legal standards)
- Desert Outdoor Advertising v. Superior Court, 196 Cal.App.4th 866 (Cal. App. 2011) (no duty to disclose in certain fee agreements; arbitration enforceability intact)
- Lawrence v. Walzer & Gabrielson, 207 Cal.App.3d 1501 (Cal. App. 1989) (arbitration provisions limited to specific matters; uncertainty resolved against attorney)
- Powers v. Dickson, Carlson & Campillo, 54 Cal.App.4th 1102 (Cal. App. 1997) (arbitration provisions in retainer agreements; ethical considerations; enforceability affirmed)
- Kaiser Foundation Hospitals v. Superior Court, 19 Cal.App.4th 513 (Cal. App. 1993) (arbitrator disclosure obligations; effect of actual knowledge on vacatur)
- Betz v. Pankow, 16 Cal.App.4th 931 (Cal. App. 1993) (arbitrator disclosure duties; post-disclosure inquiries not alwaysRequired)