McCollam v. Royal All. Assocs.

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RICHARD McCOLLAM, Plaintiff and Appellant, v. ROYAL ALLIANCE ASSOCIATES, INC., Defendant and Respondent.

A169192

California Court of Appeals, First District, Third Division

September 12, 2024

NOT TO BE PUBLISHED

(City & County of San Francisco Super. Ct. No. CPF22517843).

TUCHER, P. J.

Richard McCollam has filed an appeal from an order denying his petition to vacate an arbitration award on the ground that it was procured by fraud. (Code Civ. Proc., § 1286.2; statutory references are to this code unless otherwise indicated.) The denial of a petition to vacate an arbitration award is not an appealable order. (§ 1294.) To avoid unnecessary delay, however, we will direct the superior court to enter judgment nunc pro tunc as of the date of the order denying McCollam's petition. Finding no valid basis for McCollam's claim of error, we affirm the judgment.

BACKGROUND

McCollam was employed by Royal Alliance Associates, Inc. (Royal Alliance) as a broker and registered representative with the Financial Industry Regulatory Authority (FINRA). Royal Alliance terminated McCollam's employment in August 2010. Ten years later, in February 2020, McCollam submitted a request to FINRA for arbitration of his claims against Royal Allegiance for violations of the Racketeer Influenced and Corrupt Organizations Act (18 U.S.C. § 1961 et seq. (RICO)) and FINRA Rule 2010, which requires members to observe high standards of commercial honor. McCollam alleged that during investigations FINRA conducted between 2010 and 2017, Royal Alliance attempted to avoid fines and sanctions by "fabricating" evidence to "frame[]" McCollam and make him the "scapegoat" for Royal Alliance's wrongdoing. Royal Alliance agreed to submit to FINRA arbitration and asserted a counterclaim for breach of an indemnification contract.

A panel of three independent arbitrators held prehearing conferences in 2020 and 2021 before conducting the arbitration hearing over multiple days in April 2022. On May 5, they issued a final award, which stated that after considering pleadings testimony, evidence, and posthearing submissions, the panel made the following "final" rulings: (1) McCollam's claims were "denied in their entirety"; (2) McCollam was liable to and required to pay Royal Alliance $30,636 in compensatory damages; and (3) all other claims, including requests for attorneys' fees were denied.

On August 11, 2022, McCollam filed a petition in the superior court to vacate the arbitration award on the ground that it "was obtained by corruption, fraud, or other unfair means." (§ 1286.2, subd. (a)(1) (§ 1286.2(a)(1)).) As support for his petition, McCollam alleged the following: Royal Alliance terminated McCollam's employment ostensibly because he failed to obtain approval for certain transactions, but in reality McCollam was a "scapegoat for Royal's illicit conduct," and the "fabricated and falsified" evidence that Royal used to justify terminating McCollam was also admitted into evidence at the arbitration, thus resulting in a fraudulent award. On August 16, McCollam filed a motion to vacate the award based on the same legal ground as his petition-that it was procured by fraud. In addition to his pleaded theory that Royal Alliance relied on fabricated evidence, McCollam argued the arbitration was infected by fraud because Royal Alliance elicited expert testimony from a witness named Leslie Ayers, who was not designated as an expert or disclosed prior to the hearing.

Royal Alliance opposed McCollam's petition and motion to vacate. It argued that only extrinsic fraud establishes a valid basis for vacating an arbitration award, and that, in any event, McCollam failed to offer any evidence of fraud. (Citing e.g. Comerica Bank v. Howsam (2012) 208 Cal.App.4th 790, 825 (Comerica).) Royal Alliance also disputed that witness testimony was improperly admitted. In its response to the petition and its opposition to the motion, Royal Alliance requested that the court confirm the arbitration award and "issue an order and judgment effectuating the same."

On September 27, 2023, the superior court held a hearing before signing Royal Alliance's proposed order denying McCollam's petition (the September 27 order). The appellate record does not contain a minute order or transcript from the hearing. The September 27 order states that McCollam's "petition to vacate arbitration award is denied," summarizes authority regarding the limited grounds for judicial review of an arbitration award, and concludes that "petitioner does not highlight a denial of due process or 'extrinsic fraud' that prevented a fair hearing."

DISCUSSION

I. Appealability

On November 27, 2023, McCollam filed a notice of appeal from the September 27 order. He contends, with no legal analysis, that the order denying his petition to vacate is an appealable order. Royal Alliance ignores this threshold jurisdictional issue, but we have an independent obligation to address it. (Jennings v. Marralle (1994) 8 Cal.4th 121, 126.)

"The right to appeal in California is 'entirely statutory and subject to complete legislative control.'" (Meinhardt v. City of Sunnyvale (2024) 16 Cal.5th 643, 651-652 (Meinhardt).) The jurisdiction of appellate courts "to review superior court orders in arbitration matters is defined by section 1294." (Kirk v. Ratner (2022) 74 Cal.App.5th 1052, 1059-1060.) That statute states that an appeal may be taken from "(a) An order dismissing or denying a petition to compel arbitration. . . . [¶] (b) An order dismissing a petition to confirm, correct or vacate an award. [¶] (c) An order vacating an award unless a rehearing in arbitration is ordered. [¶] (d) A judgment entered pursuant to this title. [¶] (e) A special order after final judgment." (§ 1294.)

No provision in section 1294 authorizes an appeal from an order denying a petition or motion to vacate an arbitration award. Accordingly, courts have held repeatedly that no appeal "will lie from an order denying vacation or correction of an arbitration award." (Mid-Wilshire Associates v. O'Leary (1992) 7 Cal.App.4th 1450, 1454 (Mid-Wilshire), italics omitted; see also Hyatt v. Eckel Valve Co. (1959) 169 Cal.App.2d 35, 39; National Marble Co. v. Bricklayers & Allied Craftsmen (1986) 184 Cal.App.3d 1057, 1060, fn. 1.) "Such an order may be reviewed upon an appeal from the judgment of confirmation." (Mid-Wilshire, at p. 1454.)

McCollam intimates that the September 27 order is appealable because the lower court never issued an order confirming the award. Denial of a petition to vacate an arbitration award may be construed as an order confirming the award when the record shows there was no separate confirmation proceeding or order. (Jordan v. Pacific Auto. Ins. Co. (1965) 232 Cal.App.2d 127, 129 [collecting cases].) This is because "once a petition to confirm, correct, or vacate is filed, the superior court has only four choices: It may (1) confirm the award, (2) correct the award and confirm it as corrected, (3) vacate the award, or (4) dismiss the proceedings." (Law Offices of David S. Karton v. Segreto (2009) 176 Cal.App.4th 1, 8 (Segreto).) Thus, unless a petition to vacate an award is dismissed, if the court does not vacate or correct the arbitral award, it must confirm the award. (Ibid.)

Here, we have no trouble construing the order denying McCollam's petition as an order confirming the award. Although Royal Alliance was not required to petition for confirmation (§§ 1287.6, 1288), after the court denied the motion to vacate, the court had a mandatory duty to confirm the award and enter judgment accordingly. (§§ 1286, 1287.4; Segreto, supra, 176 Cal.App.4th at pp. 8-9; Maplebear, Inc. v. Busick (2018) 26 Cal.App.5th 394, 400 [arbitration statute "does not contemplate the denial of a petition to vacate an award, except where the denial is a precursor to a judgment confirming the award"].) In the lower court, Royal Alliance appeared to understand this process, as it expressly requested an order confirming the award in its opposition to McCollam's petition. Inexplicably, Royal Alliance's proposed order, which the court signed, does not actually confirm the award.

But even when we construe the order as confirming the arbitration award, the fact remains that judgment was never entered in this case. Under section 1294, if an arbitration award is confirmed, the appeal lies from the judgment entered on the award not from the order confirming it. (§ 1294, subd. (d); Mid-Wilshire, supra, 7 Cal.App.4th at p. 1454 [dismissing premature appeal filed prior to entry of judgment]; Cooper v. Lavlely & Singer Professional Corp. (2014) 230 Cal.App.4th 1, 10, fn. 3 (Cooper) [treating premature notice of appeal as having been filed immediately after entry of judgment confirming arbitration award]; compare with Cinel v. Christopher (2012) 203 Cal.App.4th 759, 765 [if order can be construed as dismissal of petition to confirm an award it is directly appealable under section 1294].)

McCollam acknowledges the absence of a judgment, albeit indirectly, by requesting that we treat his appeal as a petition for writ of mandate. His one-sentence request provides no reason for granting such relief. (See Olson v. Cory (1983) 35 Cal.3d 390, 401 [purported appeal may be treated as petition for writ of mandate only in "unusual circumstances"].) As we have discussed, "an adequate remedy lies in the direct appeal from the judgment." (Mid-Wilshire, supra, 7 Cal.App.4th at p. 1455.) Although Royal Alliance may have confused matters in the lower court by proposing such a cryptic order, McCollam could have requested entry of judgment once the court denied his motion to vacate. "The interests of clients, counsel, and the courts are best served by maintaining, to the extent possible,...