Filed 11/18/21 Rough v. Berris CA2/1
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION ONE
SANDEE ROUGH, as Trustee, etc., B309228
Plaintiff and Respondent, (Los Angeles County
Super. Ct. No. 19STCP01095)
v.
NORMAN BERRIS et al.,
Defendants and Appellants.
APPEAL from a judgment of the Superior Court of Los
Angeles County, Stephanie Bowick, Judge. Affirmed.
Loeb & Loeb and William M. Brody for Defendants and
Appellants.
Baker & McKenzie, Perrie M. Weiner, Edward D. Totino
and Benjamin W. Turner for Plaintiff and Respondent.
_______________________
Respondent Sandee Rough initiated arbitration against
individual and corporate entities with whom she (and her late
husband) participated in a real estate venture. She alleged
accounting irregularities and claimed to have equitable interests
in the two Walgreens drug stores that were acquired following
the sale of two prior apartment buildings that were jointly
owned.1
The arbitration clauses in the operative written
agreements were signed by the individual appellants. After
nearly two years of arbitration, the arbitrator awarded Rough a
one-third equitable interest in the two drug stores, as well as her
legal fees, arbitration costs, and over $700,000 for accounting
irregularities by the individual appellants. Appellants paid
Rough her monetary award in full.
When Rough petitioned the trial court to confirm the
arbitration award, the individual appellants and their newly-
formed LLC appellants claimed, at various points, that they were
1 Rough and her R&S Rough Living Trust dated March 1,
1990 (the R&S Trust) are partners with the individually-named
appellants Norman Berris, Ruth Jeanette Veprin, and Sondra
Pomerantz (individual appellants) as well as the entities they
formed to purchase and manage two Walgreens drugstores,
Waterford 20 LLC and 496 Ritchie Highway LLC (LLC
appellants). The earlier partnership entities were denominated
as Magnolia Apartments, L.P. and Racquet Club Apartments,
L.P. (LP appellants). No specific award was made against the LP
appellants and they seek no relief in this appeal. The term
“appellants” refers to both the individual and LLC appellants
collectively, but does not include individual appellant Jeff Berris,
who was neither named as a respondent in the arbitration nor
represented by counsel while it took place.
2
not proper parties to the arbitration and also had not
participated in the arbitration so as to bind them to its results.
The trial court granted Rough’s petition in a 12-page order,
finding that appellants either had signed arbitration agreements
and/or impliedly consented to arbitration by fully participating in
the proceedings.
As they did in the trial court, appellants claim they are not
bound by the arbitration award under Code of Civil Procedure
section 1287.2 2 which requires trial courts to dismiss a
confirmation petition against any person that “the court
determines . . . [is] not bound by the arbitration award and was
not a party to the arbitration.” (§ 1287.2, italics added.)
Although appellants claim the benefit of a written
stipulation to limit the responsible parties, the record contains
scant evidence of its existence. Appellants participated in and
submitted to the arbitration, paying over $1 million in withheld
distributions, attorney’s fees and administrative costs, in
accordance with the arbitrator’s award. All appellants were
represented by sophisticated legal counsel who aggressively
contested the merits of the claims.
Section 1287.2 does not require or authorize dismissal of
appellants under these circumstances. Thus, we affirm the trial
court’s judgment confirming the arbitration award as to all
appellants, including individual appellant Jeff Berris.
2Subsequent undesignated statutory citations are to the
Code of Civil Procedure.
3
FACTUAL AND PROCEDURAL BACKGROUND3
A. The Parties’ Dispute
In the 1970s, Rough’s late husband and predecessor-in-
interest invested in two apartment buildings, the Magnolia
Apartments and the Racquet Club Apartments, with individual
appellants and others. Rough’s late husband constructed the
buildings with the individual appellants (or their predecessors)
providing financing. The parties agreed to equally share any
distributions from the projects.
This business arrangement was not memorialized until
1994, when the parties drafted a pair of ownership agreements
that gave the R&S Trust, to which Rough’s husband had
transferred his interest, an equitable interest in each apartment
building, entitling the trust to a share of any profits distributed
from the properties. These agreements contain identical
arbitration clauses, stating that “[a]ll disputes under this
[a]greement shall be resolved by arbitration under the then rules
of the American Arbitration Association.”
In 2014 and 2015, both of the apartments owned by the LP
appellants were sold, prompting some parties to terminate their
interests under the ownership agreements, whereas Rough and
the individual appellants elected to exchange their share of the
proceeds for an interest in two Walgreens drug stores (the
replacement properties which were held in the name of the LLC
appellants). This exchange tripled the value of the partners’
property interests.
3 This factual background is largely taken from the
arbitration award.
4
Later, there was disagreement about the percentage of the
R&S Trust’s equitable interests in the two new properties.
Rough also suspected that accounting irregularities had
attributed an increasing amount of debt to the R&S Trust over
time, effectively decreasing the amount of distributions owed to
the trust.
B. The Arbitration
On September 19, 2016, Rough demanded that the parties
arbitrate their disputed interests in the two Walgreens drug
stores, pursuant to the arbitration clauses within the ownership
agreements. She named the individual appellants as
respondents.
From the beginning, Rough and individual appellants
disagreed as to which persons and entities were subject to
arbitration. Appellants claimed that Rough had stipulated to
exclude them from arbitration and include the entities which
owned the two Walgreens drug stores. Rough claimed that she
had been prepared to stipulate along these lines, but that the
stipulation was stymied by individual appellants’ unwillingness
to disclose the names of the new ownership entities (LLC
appellants).
On May 27, 2017, the arbitration hearing took place.
Appellants were jointly represented by sophisticated counsel, who
filed a trial brief specifically on behalf of individual appellants,
arguing not only that the individual appellants were not proper
parties but also arguing the merits, i.e., that the R&S Trust was
not entitled to an increased percentage of distributions, that the
trust owed a significant amount of debt, and that it was not
entitled to prejudgment interest.
5
On April 9, 2018, the arbitrator issued a final award in
Rough’s favor, containing two forms of relief: (1) a monetary
judgment of over $1 million in wrongfully withheld
distributions,4 attorney’s fees, administrative costs, and pre-
judgment interest; and (2) declaratory relief providing that the
R&S Trust was entitled to increased equitable interests in the
two drugstore replacement properties.5
On December 27, 2017, appellants made payments totaling
$1,026,298.43 pursuant to the arbitration award.
C. The Petition to Confirm the Arbitration Award
On April 8, 2019, Rough filed a petition to confirm the
arbitration award against appellants, including Jeff Berris as
Pomerantz’s alleged successor-in-interest, pursuant to section
4As the arbitrator concluded, “[s]uffice it to say that such
accounting treatment was not remotely in accordance with
generally accepted accounting principles.”
5 Both leading up to the arbitration and afterwards there
was some confusion about the identities of the “current holders of
interests” in the two Walgreens drug stores. The parties
submitted numerous emails presenting argument on which
parties were properly subject to arbitration. When Rough
learned through independent research that the LLC appellants
owned the drugstore replacement properties, she communicated
this to appellants and the arbitrator. Although the arbitration
award begins by saying that the parties agreed (at the beginning)
that the proper parties were the R&S Trust and LP appellants, it
later discusses the role of the individual and LLC appellants and
enters significant monetary judgments and equitable relief
against them, with the declaratory relief also binding upon all
persons and entities who hold ownership interests in the
replacement drugstore properties.
6
1285. She filed a noticed motion for the court to hear the petition
on May 6, 2019. The parties then stipulated to continue the
hearing date until January 28, 2020.
On January 6, 2020, all appellants responded by requesting
that Rough’s petition be dismissed as to individual appellants,
LLC appellants, and Jeff Berris pursuant to section 1287.2. After
multiple rounds of briefing and oral argument on the
confirmation petition, the trial court concluded that none of these
appellants was eligible for dismissal under section 1287.2.
The trial court found that both groups of appellants (i.e.,
the individual appellants and LLC appellants) were parties to the
arbitration, achieving that status either by signing the
arbitration agreements, by their conduct during the arbitration
proceedings, and/or by the lawful decision of the arbitrator.6
Accordingly, the trial court granted the petition and confirmed
the arbitration award against all appellants.
All appellants timely appealed.
DISCUSSION
The individual and LLC appellants argue that the petition
should have been dismissed against them under section 1287.2
because neither was a party to the arbitration and because the
6 Among other things, the Code of Civil Procedure defines a
party to arbitration as “[a] party against whom such arbitration
is sought pursuant to [an arbitration] agreement,” or “[a] party
who is made a party to the arbitration by order of the neutral
arbitrator . . . upon the application of any other party to the
arbitration, or upon the neutral arbitrator’s own determination.”
(§ 1280, subd. (h)(2) & (3).)
7
arbitrator exceeded his authority in purporting to bind them to
the award.
We review the trial court’s decision to confirm the
arbitration award de novo. (EHM Productions, Inc. v. Starline
Tours of Hollywood, Inc. (2018) 21 Cal.App.5th 1058, 1063.) Any
questions of law, including questions of statutory interpretation,
are reviewed under the same standard. (Webster v. Superior
Court of San Bernardino County (2020) 51 Cal.App.5th 676, 679.)
Appellants’ sole argument is that the trial court should
have dismissed both the individual and LLC appellants under
section 1287.2, which requires the trial court to dismiss the
confirmation petition “as to any person . . . if the court
determines that such person was not bound by the arbitration
award and was not a party to the arbitration.”7 (§ 1287.2.) To
qualify for relief under section 1287.2, the court must determine
that a person is neither a party to arbitration nor bound by the
arbitration award. (See § 1285 [“The petition shall name as
respondents all parties to the arbitration and may name as
respondents any other persons bound by the arbitration award”];
see also § 1280, subd. (h)(2) & (3) [party to arbitration defined as
“[a] party against whom such arbitration is sought pursuant to
7 Appellants’ position as to appropriate parties is
ambiguous at best. They simultaneously argue that the LP
appellants are the only appropriate parties to arbitration and
that the stipulation substituted the LLC appellants for individual
appellants. Immediately after the completion of arbitration,
however, appellants argued that the LLC appellants were the
only appropriate parties. Their opening brief on appeal states
that “LLC [a]ppellants along with the LP [a]ppellants[ ] could
have been parties pursuant to the stipulation.” (Italics added.)
8
[an arbitration] agreement,” or “[a] party who is made a party to
the arbitration by order of the neutral arbitrator . . . upon the
application of any other party to the arbitration, or upon the
neutral arbitrator’s own determination”].)
Initially, appellants claim that they and Rough agreed to a
stipulation limiting the appropriate parties. However, they have
not met their burden of proving that the parties entered into any
sort of stipulation with respect to appropriate parties to the
arbitration. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th
826, 850 [the moving party bears the entire burden of persuasion
and the initial burden of producing evidence sufficient to sustain
a judgment in the movant’s favor].)
The record contains no evidence of any sort of stipulation,
save for a single reference by the arbitrator to a pre-arbitration
agreement, which appellants admit is inconsistent with the
award of declaratory relief he ultimately made. Nor do
appellants present a cogent explanation of the stipulation’s
terms, alternately claiming that the stipulation excludes only
individual appellants,8 that the stipulation excludes both
individual and LLC appellants, and that the stipulation replaced
LP appellants with LLC appellants.
Even were we to accept appellants’ argument that
individual appellants and LLC appellants did not specifically
8 The request for clarification that appellants submitted to
the arbitrator also suggests that individual appellants could
properly be held accountable for Rough’s attorney’s fees and pre-
award interest—which individual appellants appear to have
subsequently paid. This is inconsistent with appellants’
insistence that individual appellants cannot not be bound by the
arbitration award.
9
agree to arbitration, it would not alter the result. The totality of
the record supports the trial court’s finding that individual
appellants and LLC appellants should be considered parties to
the arbitration because of their submission to and participation
in the arbitral process. (See Douglass v. Serenivision, Inc. (2018)
20 Cal.App.5th 376, 387, 389 [“parties may enter into an implied
in fact agreement to arbitrate through their conduct (which may
additionally be deemed to estop them from denying such an
agreement)” the test for assessing whether a party, through his
conduct in litigating in an arbitral forum, has thereby waived his
right to litigate in a judicial forum is less onerous than waiver of
judicial litigation because of the strong public policy favoring
arbitration].) Appellants’ payment of over $1 million in withheld
distributions, attorney’s fees and administrative costs, which was
paid by the individual appellants well before Rough filed her
confirmation petition, belies the assertion that the individual
appellants and/or LLC appellants are not bound by the
arbitration.
Further, appellants do not dispute that they are specifically
named by the arbitrator as persons who are bound by the
arbitration award, and they cite no legal authority interpreting
section 1287.2 as requiring the trial court to dismiss the petition
against persons who are found to be bound by an arbitration
award. The reason for a dearth of authority is simple: section
1287.2 is rarely cited by appellate courts. Only three cases
analyze a person’s eligibility for relief under the specific terms of
section 1287.2, and none of them supports appellants’ position.9
9 Most of these cases either cite section 1287.2 only in
passing while describing the confirmation petition process (see,
e.g., Law Offices of David S. Karton v. Segreto (2009) 176
10
In N.A.M.E.S. v. Singer (1979) 90 Cal.App.3d 653, 656, our
colleagues in Division Four affirmed the trial court’s grant of a
confirmation petition over the appellant’s objections, concluding
that the appellant had assented to arbitration. In Southern Cal.
Pipe Trades Dist. Council No. 16 v. Merritt (1981) 126 Cal.App.3d
530, 539 (Southern Cal. Pipe), our colleagues in Division Five
reversed the grant of a confirmation petition against a corporate
officer who was not properly noticed as a party to arbitration, and
who thus had no reason to appear in the arbitral proceedings to
defend his interests. In Toal v. Tardif (2009) 178 Cal.App.4th
1208, 1223, the Fourth District Court of Appeal remanded the
question of whether a group of defendants consented to
arbitration after finding that the court did not make any findings
of fact on that central issue, relying instead on an insufficient
arbitration agreement which, although signed by the defendants’
attorney, may not have been ratified by the defendants.
Appellants assert that Southern Cal. Pipe stands for the
proposition that “an arbitration award against one party is not
binding upon another person who was not party to the
arbitration.” (Southern Cal. Pipe, supra, 126 Cal.App.3d at
p. 536.) This broad assertion is neither supported by the holding
of that court nor applicable where, as here, appellants had notice
of and fully participated in the arbitration.
In Southern Cal. Pipe, the corporate officer who was
designated to (and did in fact receive) service on behalf of his
corporation moved for dismissal under section 1287.2. Although
Cal.App.4th 1, 10), or discuss whether additional grounds could
justify dismissal of a confirmation petition (see, e.g., Maplebear,
Inc. v. Busick (2018) 26 Cal.App.5th 394, 401).
11
the officer had received notice of an arbitration proceeding, “there
[was] no indication that personal liability independent of [the
corporation] [was] sought.” (Southern Cal. Pipe, supra, 126
Cal.App.3d at p. 538.) Further, the officer did not attend or
participate in the arbitration because “[t]he record [did] not show
that [the officer] had any notice or reason to appear and defend
personally.” (Id. at p. 539.)
The situation in Southern Cal. Pipe is readily
distinguishable from the present case, where the individual
appellants: (1) were each given notice naming them as parties
and appeared; (2) were on notice that they might be held
personally liable; and (3) were represented throughout by
sophisticated legal counsel who filed trial and closing briefs on
their behalf that addressed the merits of the claims.
Further, neither the arbitrator nor the trial court erred in
concluding that the LLC appellants were bound by the results of
the arbitration. These entities appear to have been formed by the
individual appellants specifically for the purpose of holding title
to the two Walgreens drugstores after the sale of the prior
apartment buildings. They, too, were represented by counsel and
participated in the arbitration. At various points counsel argued
that the LLC appellants were appropriate parties to the
arbitration.10
10 Appellants also contend that the petition should be
dismissed as to Jeff Berris because Rough did not prove, and the
trial court did not find, that he was Pomerantz’s successor-in-
interest to the property interests at issue in the arbitration.
However, by confirming the arbitration award as to Jeff Berris,
the trial court impliedly found in favor of Rough’s assertion that
he was Pomerantz’s successor-in-interest. (In re Marriage of
12
Appellants were given appropriate notice, represented by
experienced counsel, and fully participated in the proceedings.
Their efforts to undermine the authority of the arbitrator,
recharacterize their participation in the proceedings, and second-
guess the trial court’s dismissal ruling are unavailing.
DISPOSITION
The judgment is affirmed. Respondent is entitled to costs
on appeal.
NOT TO BE PUBLISHED
CRANDALL, J.*
We concur:
CHANEY, J. BENDIX, Acting P. J.
Arceneaux (1990) 51 Cal.3d 1130, 1133 [“A judgment or order of a
lower court is presumed to be correct on appeal, and all
intendments and presumptions are indulged in favor of its
correctness”]; Fladeboe v. American Isuzu Motors Inc. (2007) 150
Cal.App.4th 42, 48 [“Under the doctrine of implied findings, the
reviewing court must infer, following a bench trial, that the trial
court impliedly made every factual finding necessary to support
its decision”].) The trial court’s implied finding is supported by
the record.
*Judge of the San Luis Obispo County Superior Court,
assigned by the Chief Justice pursuant to article VI, section 6 of
the California Constitution.
13