"... we compliment the arbitrator on providing a thorough and well-reasoned award and orders."
As you have surmised from our lede, it did not go well for the plaintiff and appellant JP-Richardson, LLC, because the trial court's judgment granting the petition to confirm the arbitration award against JP-Richardson was affirmed. JP-Richardson, LLC v. Pacific Oak SOR Richardson Portfolio JV, et al., G059479 (4/2 6/29/21) (O'Leary, Moore, Fybel).
The facts are unusual. JP-Richardson entered into a joint venture agreement with Pacific Oak to develop real estate in Texas. The JV agreement included an arbitration provision, as well as a provision authorizing the removal of JP-Richardson as a managing member for a "Just Cause Event." JP-Richardson's manager and principal executive was one Mark Jordan.
The "Just Cause Event" arose because Jordan developed "a personal and financial relationship" with Laura Maczka, the town mayor of Richardson, Texas, where Jordan was seeking permits, entitlements, and zoning changes. A federal indictment basically alleged corrupt conduct by Maczka and Jordan. Jordan apparently was less than transparent with the JV partner Pacific Oak that he was the target of a federal criminal investigation. When Pacific Oak learned about the investigation in 2017, JP-Richardson was removed as managing member.
JP-Richardson and Jordan initiated arbitration proceedings, seeking declaratory relief and claiming breach of contract, inviting counterclaims, of course, from Pacific Oak. The arbitrator ruled against JP-Richardson, after drawing adverse evidentiary inferences because Jordan invoked his Fifth Amendment right against self-incrimination, and did not satisfy discovery demands. The arbitrator noted, "Here, we have a unique case wherein it is the [c]laimant who has asserted his Fifth Amendment privilege against testifying whereas in most of the case law it is the defendant making the claim."
Jordan's right to remain silent and avoid discovery did not help him, because the arbitration was civil, not criminal, and furthermore, the arbitrator offered an opportunity to provide a privilege log and redact documents -- an opportunity that was not taken. Jordan argued that the arbitrator should never have relied upon his felony conviction, which was vacated after a jury member conversed with a court employee. But the arbitrator also relied on adverse inferences, and testimony presented at the trial, not simply on the conviction that was overturned.
The arbitrator awarded over $1 million in fees, and $88,000 in costs.
COMMENT: In an article about Laura Maczka, Wikipedia states that developer Mark Jordan is Maczka's current husband. One can only hope that all the tsuris was worth it for the sake of love.
Comments