Waiver, Invited Error, And Sharp Practices Doom The Appeal.
Justice Ikola grabs the reader by the lapels in the opening lines of Diaz v. Professional Community Management, Inc., G053909 (4/3 certified for pub. 11/8/17) (Ikola, O'Leary, Aronson): "A 'sharp practice' is defined as a 'dealing in which advantage is taken or sought unscrupulously. . . . This is an appeal borne of sharp practices." The unsettling feeling that one side is about to get slammed is thoroughly reenforced by the Justice's choice of words in the first four pages of a 32 page slip opinion: efforts by a party to "spin that ruling", "invited error", "bad faith", "specious", "deliberately designed to obscure," "machinations," "patently unfair manner", "frivolous appeal", "we were most disturbed." One need hardly read further, but I did, because the case involved arbitration.
So what so exercised the ire of the appellate justice? Defendant/appellant PCM "unilaterally orchestrated the issuance of an appealable order" 11 days before trial, by filing an ex parte application to shorten time to hear its motion to compel arbitration, knowing the trial judge would deny it -- the case had been pending for 1 1/2 years, defendant had pleaded it had a right to arbitrate as an affirmative defense, defendant had done nothing to perfect that right earlier, and there was no justification for a last moment application to shorten time. Denial of an ex parte application to shorten time, however, would not have generated an appealable order. So defendant immediately submitted an order to the trial judge, inconsistent with the ex parte application and the minute order, burying within the proposed order that the judge was also denying the motion to compel arbitration -- a motion that was never heard, and that was still on calendar. The judge signed the order, probably without realizing that he was being played, and the order denying a motion to compel arbitration became the springboard for an appeal and a stay.
Defendant lost its appeal because "PCM invited the trial court's alleged error when it proposed the court issue the very ruling it now challenges on appeal. By doing that, PCM won the battle -- it got the court to issue the appealable order it sought, prior to trial -- but it lost the war. A party that invites the court to commit error is estopped from challenging that error on appeal."
For good measure, the Court also concluded that the order denying PCM's motion to compel arbitration should have be affirmed on the merits, given that the litigation conduct and delay of defendant was inconsistent with a sincere desire to arbitrate.
One final twist involved the fact that a motion to compel arbitration was involved. Appellant argued that the Court of Appeal could not act as a factfinder in the first instance and decide the issue of waiver, when the issue of waiver had not been presented below. And in fact, the Court of Appeal could have sent the case back to the trial court, though given the "sharp practices" sussed out by the Court, such an outcome would seem pretty unfair. In order to make any factual ruling on its own, the Court of Appeal had to get around Cal. Code of Civ. Proc., section 909, which provides in part, "In all cases where trial by jury is not a matter of right or where trial by jury has been waived, the reviewing court may make factual determinations contrary to or in addition to those made by the trial court. " But as the Court of Appeal explained, the purpose of section 909 "is to preserve the parties' right to have a jury act as finder of fact in matters where that right applies." And a petition to compel arbitration "is in essence a suit in equity to compel specific performance of a contract." So no right to a jury to decide that limited issue, and problem solved.
COMMENT: One could conclude that if the goal of defendant was to delay, then defendant succeeded. The trial was scheduled to begin April 11, 2016. The unpublished appellate opinion was filed October 17, 2017. And there will be 40 days for the remittitur. And the trial judge will need to reset the trial. But at what cost? Appellant, its law firm and two of its attorneys are ordered, jointly and severally, to pay the court $8,5000, and to pay to Diaz an amount "equal to the reasonable value of services performed by his attorney in preparing for the trial . . . and in responding to this appeal, but not to include pretrial services which need not be repeated." And there is the additional reputational cost of being slammed for "sharp practices."
Comments