Choosing DIY when you need to appeal

APPELLATE ZEALOTS

Do-it-yourself is very popular today, so much so that there is even a DIY television network. The Maker Movement is all the rage. Homemade beer and handknitted sweaters might surpass store-bought, but there are still some things you should not try to manufacture for yourself, and one of them is appealability. The 4th District Court of Appeal offered this advice pointedly in its recent decision Diaz v. Professional Community Management, Inc., 2017 DJDAR 10675 (Nov. 8, 2017).

Appealability is the usual key to review in the appellate courts, and it is not passed out freely. Generally, it goes to those who have been hit with final judgments, or with orders authorized for appeal by statute. Without appealability, you are consigned to seeking access to the appellate courts by knocking on the extraordinary writ door, where you will be required to show both irreparable harm and the inadequacy of legal remedies, and even then will be granted entry only if the court deems your case worthy. So, if you are desperate to get out of the trial court and into the Court of Appeal, there is an obvious temptation to find a way to handcraft appealability where none exists.

Diaz was a labor lawsuit filed by employee Francisco Diaz against his employer, Professional Community Management. PCM pleaded as an affirmative defense that Mr. Diaz had failed to exhaust the arbitration procedure under a collective bargaining agreement. PCM could have moved to compel arbitration; if its motion had been denied, the denial order would have been appealable, by statute. Code Civ. Proc. Section 1294. It chose not to go that route, though, and litigated the case in court through discovery, to the brink of trial. It then moved for summary judgment, arguing that arbitration was Mr. Diaz's exclusive remedy. The trial court denied that motion less than two weeks before the trial date. Orders denying summary judgment are not appealable, so the case was heading for trial, without appellate review of the arbitration issue.

At this point, PCM crafted what must have seemed at the time like a clever do-it-yourself scheme to create appealability. One day after the summary judgment order issued, it noticed a motion to compel arbitration, which in the ordinary course would not have been heard for several weeks, after trial. It also filed an ex parte application to shorten the time in which the arbitration motion would be heard, or to delay trial until after the hearing. The trial court denied the application and entered a minute order stating only that the application was denied.

But PCM was creative. It immediately submitted a proposed order that, according to its caption, denied only its ex parte application to shorten time. But buried in the order's text was an additional ruling denying the motion to compel, which the court had never heard. PCM carefully tracked the progress of its proposed order and learned that the court had signed it a week later. On the next day, the last court day before trial, PCM noticed an appeal of the order -- because an order denying a motion to compel arbitration is appealable. It then showed up on the day of trial to announce that the case was stayed, due to the appeal.

The Court of Appeal seems not to have been impressed with PCM's creativity and initiative. The Diaz decision begins by characterizing the appeal as one borne of sharp practices, which it defines as "dealing[s] in which advantage is taken or sought unscrupulously." This is not an auspicious introduction, and things go only downhill for PCM from there.

While detailing its low opinion of the tactics PCM employed, the court found multiple reasons to affirm the order denying the motion to compel arbitration. The first was the doctrine of invited error, under which a party that has induced error by its own conduct may not seek reversal on appeal. The appellate court concluded that PCM had submitted the proposed order to secure an appealable ruling that it and its counsel knew the court had not intended to issue on that date. Because PCM had tricked the trial court into entering the order, it was estopped from challenging the order on appeal.

Moreover, because it was "loath to conclude the court was actually tricked into signing an order it had not intended to issue," the appellate court also acknowledged the possibility that the court had made a conscious decision to deny the motion to compel. This made no difference to the outcome, because PCM had consented to that order, and was consequently not aggrieved by it.

To leave no loose ends hanging from PCM's unartfully crafted appeal, the appellate court also took up the merits of the motion to compel arbitration. Here the issue was whether PCM had waived the right to arbitration, and PCM insisted the appellate court could not address the issue because Mr. Diaz had not developed it factually before the trial court, and because it was not mentioned in the order that PCM had appealed. This, too, did not sit well with the Court of Appeal -- the waiver issue had not been litigated or resolved in the trial court precisely because that court had never actually heard the motion to compel. To deal with this problem, the Court of Appeal took a step that is highly unusual but authorized by statute (Code Civ. Proc. Section 909) -- it found the facts on its own. And what it found was not good for PCM: that PCM had sought arbitration in bad faith and with unreasonable delay. And so the court again concluded that PCM was stuck with the order denying arbitration that it had singlehandedly created just to have something to attack on appeal.

Not surprisingly, the Court of Appeal imposed monetary sanctions on PCM and its counsel for pursuing a frivolous appeal with an improper purpose. Which just goes to show that being a do-it-yourselfer is not a guaranteed path to saving money.