Emerald Aero LLC v. Kaplan

EMERALD AERO, LLC,

Plaintiffs and Respondents,

v.

STEPHEN KAPLAN,

Defendant and Appellant.

No.  D070579

(Super. Ct. No. 37-2012-00057479-CU-BC-NC)

California Courts of Appeal

Fourth Appellate District

Division One

Filed March 21, 2017

ORDER MODIFYING OPINION

AND DENYING PETITION FOR

REHEARING

NO CHANGE IN JUDGMENT

THE COURT:

     The petition for rehearing is DENIED.

     It is ordered that the opinion filed on February 28, 2017 be modified to add the following paragraphs beginning on page 25, immediately before the Conclusion:

     Lastly, we consider plaintiffs' contention that Kaplan waived his right to appeal the judgment confirming the arbitration award.  Plaintiffs rely on the portion of the parties' arbitration agreement stating the parties are "GIVING UP ANY RIGHTS [THEY] MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL.  BY EXECUTING THIS AGREEMENT, EACH PARTY HERETO IS GIVING UP ITS OR HIS JUDICIAL RIGHTS TO DISCOVERY AND APPEAL." 

     California courts enforce contractual provisions waiving a party's right to appeal a judgment on an arbitration award.  (See Guseinov v. Burns (2006) 145 Cal.App.4th 944, 952 (Guseinov); Pratt v. Gursey, Schneider & Co. (2000) 80 Cal.App.4th 1105, 1108-1109 (Pratt).)  But they do so only if this intent is "clear and explicit."  (Ruiz v. California State Automobile Assn. Inter-Insurance Bureau (2013) 222 Cal.App.4th 596, 604; accord, Guseinov, at p. 952 ["waiver should be clear and express"].) 

     Reasonably read, the cited language of the parties' arbitration agreement does not show Kaplan waived his right to appeal on the limited judicial review grounds provided in the arbitration statutes.  "[G]enerally, a contract provision stating that arbitration is 'non-appealable' signifies that the parties to the contract may not appeal the merits of the arbitration; not that the parties agree to waive a right to appeal the . . . judgment confirming or vacating the arbitration decision."  (Southco, Inc. v. Reell Precision Mfg. Corp. (3d Cir. 2009) 331 Fed. Appx. 925, 927, italics omitted.)  This principle applies here.  Although the parties unambiguously gave up their rights to litigate the matter in a judicial forum, including their judicial appellate rights, they did not explicitly waive their rights to the limited judicial review provided under the arbitration statutes, which encompass the right to appeal a final judgment on these matters.  (See § 1294.)  The waiver of "judicial rights to discovery and appeal" is not sufficiently specific to waive the right to challenge a judgment confirming an arbitration award.  (Capitalization omitted and italics added; see Guseinov, supra, 145 Cal.App.4th at pp. 952-955 [no explicit waiver of appellate rights to challenge judgment on arbitration award where parties agreed only to " 'waive any right to appeal the arbitral award' "]; Reisman v. Shahverdian (1984) 153 Cal.App.3d 1074, 1082, 1088-1089 (Reisman) [no waiver of appellate rights to challenge judgment confirming arbitration award under agreement that " 'once the arbitrators have rendered an award, no appeal or further proceeding will be possible' "].)

     In the arbitration clause, the parties expressly agreed to "have any dispute . . . decided by neutral arbitration as provided under applicable law."  (Capitalization omitted; italics added.)  Applicable law provides for limited judicial review of arbitration awards through the statutory confirmation/vacation procedures, and for the right to appeal the ensuing judgment.  (§§ 1285-1287.2, 1294.)  By agreeing to arbitrate their dispute under California law without explicitly waiving their rights under this law, the parties manifested their understanding that they had retained their appellate rights to challenge the final judgment.  (See Guseinov, supra, 145 Cal.App.4th at pp. 954-955.) 

     Plaintiffs' reliance on Pratt, supra, 80 Cal.App.4th 1105 is misplaced.  In Pratt, the parties stipulated "the right to appeal from the arbitrator's award or any judgment thereby entered or any order made is expressly waived."  (Id. at p. 1107, italics added.)  The Court of Appeal found this language "constituted an express waiver of the right to secure appellate review" (id. at p. 1108) because the contractual provisions "involve[d] specific waiver of the right to appeal 'any judgment' or 'any order' " (id. at p. 1111, italics added).  This type of explicit language was missing here.  As have other California courts, we decline to find a forfeiture without the parties' express manifestation of intent to waive their appellate rights to challenge a judgment on an arbitration award.  (See Guseinov, supra, 145 Cal.App.4th at pp. 952-955; Reisman, supra, 153 Cal.App.3d at pp. 1088-1089.)¹

There is no change in the judgment.

McCONNELL, P. J.

^[1]      Plaintiffs also rely on language in a Ninth Circuit decision, Aerojet-General Corp. v. American Arbitration Assn. (9th Cir. 1973) 478 F.2d 248.  However, the Ninth Circuit has since explicitly rejected Aerojet-General on the cited point and held that parties cannot contractually eliminate the limited judicial review or their appellate rights to challenge arbitration judgments under the Federal Arbitration Act.  (In re Wal-Mart Wage & Hour Empl. Practices Litig. (9th Cir. 2013) 737 F.3d 1262, 1265-1268 & fn. 8.)