Chang Wook Roh v. Bank of Hope

1

CHANG WOOK ROH et al., Plaintiffs and Appellants, v. BANK OF HOPE, Defendant and Respondent.

B322021

California Court of Appeals, Second District, Eighth Division

May 1, 2024

NOT TO BE PUBLISHED

APPEAL from a judgment of the Superior Court of Los Angeles County No. BC628303 Lia Martin, Judge.

Balaban & Spielberger, Daniel K. Balaban, Andrew J Spielberger; Greene Broillet & Wheeler, Browne Green Bruce A. Broillet, Alan Van Gelder; J. Kim, Johnny Kim; Esner, Chang & Boyer, Stuart B. Esner, Kathleen J. Becket; Esner, Chang, Boyer & Murphy and Stuart B. Esner for Plaintiffs and Appellants.

Bird, Marella, Boxer, Wolpert, Nessim, Drooks, Lincenberg & Rhow, Ekwan E. Rhow, Thomas V. Reichert, and Kate S. Shin for Defendant and Respondent.

STRATTON, P. J.

Plaintiffs are 18 Korean citizens who lost money they had entrusted to California attorney Justin Lee as part of their application process for obtaining United States investor visas. They brought two actions against the Bank of Hope (Bank) only, alleging the Bank had failed to protect their funds, which were or should have been in escrow accounts at the Bank.^[1] While this action was pending in superior court, the parties in the two consolidated cases entered into an arbitration agreement and selected JAMS as their arbitration provider. The arbitrator ruled in favor of the Bank. Plaintiffs moved to vacate the award pursuant to Code of Civil Procedure section 1286.2,^[2] on the ground that the neutral arbitrator was required to, but did not, disclose that JAMS had entered into new, additional arbitration relationships with the Bank and its counsel in other matters during the pendency of the arbitration. The trial court denied the motion to vacate the arbitration award.

Plaintiffs appeal, contending the trial court erred because both California law and their arbitration agreement required such disclosure, and the failure to make a required disclosure mandates vacation of the arbitration award. We affirm the judgment.

Before we discuss the issues on appeal, we must address the Bank's motion to dismiss the appeal. The Bank contends plaintiffs waived their right to appeal the denial of the motion to vacate as part of the Binding Arbitration Agreement (Agreement). That Agreement provides: "The parties further agree that there will be no appeal from the court's ruling under section 1285 except for any ruling vacating the arbitration award."

" 'Waiver is the intentional relinquishment of a known right after full knowledge of the facts and depends upon the intention of one party only.'" (Old Republic Ins. Co. v. FSR Brokerage, Inc. (2000) 80 Cal.App.4th 666, 678; Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 31.)" '[T]he valid waiver of a right presupposes an actual and demonstrable knowledge of the very right being waived.'" (People v. Vargas (1993) 13 Cal.App.4th 1653, 1662.)

The Bank has not shown that plaintiffs were aware they were giving up a known right, that is, the right to appeal. A person's agreement not to take an action does not support an inference that the person was aware that he had a right to take that action. The reference to section 1285 does not show such an awareness; the section is not concerned with appellate matters. It simply provides: "Any party to an arbitration in which an award has been made may petition the court to confirm, correct or vacate the award." (§ 1285.) We deny the motion to dismiss the appeal.

BACKGROUND

"Seeking to provide' "minimum ethical standards and remedies for the arbitrator's failure to comply with existing disclosure requirements"' [citation], in 2001 the California Legislature enacted revisions to the statutory duties of disclosure imposed on arbitrators in contractual arbitration. [Citation.] As part of this revamping, the Legislature directed the California Judicial Council to 'adopt ethical standards for all neutral arbitrators' effective July 1, 2002. (§ 1281.85, subd. (a).)

Further, the Legislature amended section 1281.9, subdivision (a) to provide that '[i]n any arbitration pursuant to an arbitration agreement, when a person is to serve as a neutral arbitrator, the proposed neutral arbitrator shall disclose all matters that could cause a person aware of the facts to reasonably entertain a doubt that the proposed neutral arbitrator would be able to be impartial . . . .' Among the statutory list of required disclosures in section 1281.9 is for '[a]ny matters required to be disclosed by the ethics standards for neutral arbitrators adopted by the Judicial Council pursuant to this chapter.' (§ 1281.9, subd. (a)(2).)"^[3] (Ovitz v. Schulman (2005) 133 Cal.App.4th 830, 838 (Ovitz).)

"The Judicial Council responded to the Legislature's mandate by adopting the [Ethics] Standards effective July 1, 2002, later revised effective January 1, 2003. The [Ethics Standards] 'establish the minimum standards of conduct for neutral arbitrators' in contractual arbitration, and 'are intended to guide the conduct of arbitrators, to inform and protect participants in arbitration, and to promote public confidence in the arbitration process.' ([Ethics Standards, std.] 1(a).) They contain detailed disclosure requirements (see [id.,] stds. 7, 8, & 12), which supplement and expand the statutory listing of required disclosures contained in section 1281.9, subdivision (a). (§ 1281.85, subd. (a); [Ethics Standards,] std. 7(a); see also [Advisory] Com.[ com.], 23 pt. 4 West's Ann. Cal. Rules of Court[ (2005 ed.)], foll. std. 7, p. 577.)" (Ovitz, supra, 133 Cal.App.4th at p. 839.)

Both the neutral arbitrator and JAMS made prearbitration disclosures in this nonconsumer arbitration matter. It is undisputed that the arbitrator complied with his duty under the Ethics Standards concerning his own relationships with parties and attorneys; he disclosed his past and any current work with them and also disclosed that he would entertain offers of employment from them during the pendency of this matter. Although not expressly required to do so by the Ethics Standards in this nonconsumer arbitration, the arbitrator disclosed his ownership interest in JAMS and, in his declaration at the end of his disclosure form, the arbitrator stated, "because of the nature and size of JAMS, the parties should assume that one or more of the other neutrals who practice with JAMS has participated in an arbitration, mediation or other dispute resolution proceeding with the parties, counsel or insurers in this case and may do so in the future."

Although there is no specific requirement under California law that a provider organization itself disclose its relationships with the parties and their attorneys in a nonconsumer arbitration matter, JAMS disclosed all such relationships with the parties and their attorneys for all of its approximately 400 arbitrators for the five years preceding the start of this arbitration. This disclosure showed that plaintiffs' attorneys collectively had participated in about 84 matters with JAMS during that period while the Bank had about 6 and the Bank's attorneys collectively had about 152.

JAMS made the additional following disclosure in its cover letter: "JAMS administers approximately 15,000 cases per year.... JAMS has approximately 400 neutrals on its panel, and a little over one quarter of JAMS neutrals have an ownership share in the company. Each owner has one share. [¶] Owners are not privy to information regarding the number of cases or revenue related to cases assigned to other panelists. No shareholder's distribution has ever exceeded 0.1% of JAMS total revenue in a given year. Shareholders are not informed about how their profit distributions are impacted by any particular client, lawyer or law firm and shareholders do not receive credit for the creation or retention of client relationships. JAMS typically serves this report on the parties at the commencement of a JAMS matter. This report is not provided to JAMS[] neutrals and will not be provided to the neutral eventually selected for this matter. JAMS neutrals are not informed about matters handled by other neutrals and are not privy to the numbers of matters involving any particular company, lawyer or law firm other than matters in which they have previously served as a neutral."

It is undisputed that neither the arbitrator nor JAMS made any additional disclosures during the six months that the arbitration was pending. Whether the arbitrator or JAMS should have done so is the issue before us in this appeal.

After losing in arbitration, plaintiffs sent correspondence to JAMS and the Bank's law firm demanding disclosure of any new relationships which were formed between JAMS and the Bank or its attorneys. The law firm disclosed that attorneys at the firm had entered into eight new relationships with JAMS and the Bank had entered into two new relationships.

Plaintiffs then moved to vacate the arbitration award on the ground that the neutral arbitrator's ownership interest in JAMS required him to disclose these new relationships involving other arbitrators at JAMS. They based this argument primarily but not exclusively on paragraph 3 of the parties' Agreement, which provides: "All arbitrators shall be impartial, independent, and will make full disclosures to the parties regarding any actual or potential conflict of interest in adjudicating all issues submitted in this action for final determination."

The trial court denied the motion to vacate, granted the Bank's motion to affirm the arbitration award, and entered judgment in favor of the Bank. This appeal followed.

DISCUSSION

A court may vacate an arbitration award only on the grounds set forth in section 1286.2. (Moncharsh v. Heily &amp blasé (1992) 3 Cal.4th 1, 12-13.) The trial court found: "As an...