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Bh Partnership et al v. Nancy Evans Zytko et al

December 13, 2010


APPEAL from a judgment of the Superior Court of San Diego County, Rafael A. Arreola, Judge. (Retired judge of the San Diego Sup. Ct. assigned by the Chief Justice pursuant to art. VI, § of the Cal. Const.) Affirmed. (Super. Ct. No. 37-2009-00090811- CU-PT-CTL)

The opinion of the court was delivered by: Mcconnell, P. J.

BH Partnership v. Zytko



California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

The issue in this case is whether a judgment confirming an arbitration award must be reversed because plaintiffs violated mediation confidentiality statutes (Evid. Code, § 1115 et seq.) by referring to the mediator's finding in a prior mediation, thereby ostensibly tainting the arbitration. The mediator found defendants' underlying petitions in probate court for trust accountings triggered an anti-litigation clause in various partnership agreements, which authorized a forced buy-out of defendants' interests in the partnerships. After an arbitration hearing, during which the arbitrator assured the parties he would not consider the mediator's finding, he made the same finding as the mediator, and he also awarded plaintiffs $952,451.51 in attorney fees and costs as the prevailing parties. Under well established law pertaining to the finality of arbitration, we conclude defendants have forfeited appellate review of the matter by not raising any objection based on mediation confidentiality at the arbitration. Rather, they fully participated in the arbitration, and, displeased with the result, raised the issue for the first time in their request that the court vacate the arbitration award. Moreover, even without forfeiture defendants' position lacks merit because of lack of prejudice. We affirm the judgment.


Nancy Evans Zytko, Margaret Evans Sullivan, Anne Evans Quinn, Grace Evans Cherashore, and William (Bill) L. Evans are the children of Anne L. Evans and the late William D. Evans.*fn1 William established hotels in San Diego's beach area, the Bahia Resort Hotel (Bahia) and The Catamaran Hotel and Spa (Catamaran). When William died in 1984, Anne assumed control over the hotels, with Grace assisting her.

In 1993, as part of her estate plan, Anne offered her children the opportunity to purchase partnership interests in the hotels at attractive prices. BH Partnership was formed to own the Bahia, and Braemar Partnership was formed to own the Catamaran. Each of the children agreed to sign partnership agreements except Nancy, based on her dissatisfaction with how the hotels were being managed. The agreements were restated, and all five children and Anne signed them, effective January 1, 1994. In June 1994 the Lodge at Torrey Pines Partnership was created to own the Lodge at Torrey Pines. In 1998, 9th & A Limited Partnership became a co-owner of the Catamaran. The children also have interests in these partnerships. Additionally, Grace's husband, David Cherashore, and Robert Gleason, have interests in the Lodge at Torrey Pines Partnership.

Each of the four partnership agreements contains the following anti-litigation clause (Section 17): "If (i) any Partner . . . institutes or threatens to institute litigation, mediation or arbitration proceedings against the Partnership or any of the other Partners . . . at any time with respect to matters arising, directly or indirectly, out of the Partnership business . . . then the Partnership and the other Partners shall have the right to purchase the Partnership Interest of such Partner. . . ." The genesis of Section 17 was Anne's intention that the partnerships not be disrupted by a disgruntled partner, particularly Nancy, since she had been dissatisfied with the operation of the hotels.

In 2006, defendants became dissatisfied with the manner in which Anne and Grace were handling the partnerships and certain trusts of which defendants are beneficiaries. They sought to withdraw the corpus of the trusts and requested accountings. They also sought disclosure of financial details concerning the four partnerships by requesting to inspect books and records. Anne notified defendants that if they did not agree to confidentiality pertaining to trust information and agree to the accountings, the trustees would seek court approval of the accountings.

In November 2007 defendants filed eight separate petitions against Anne and Grace in the San Diego County Superior Court's probate division. The petitions seek accountings for each trust, and four of the petitions seek redress for alleged breaches of trust by Anne and Grace. Two of the petitions allege breaches of trust for funds the trusts loaned to the partnerships and contain allegations that Anne and Grace improperly managed the partnerships.

In response, plaintiffs gave notice of their intent to exercise against defendants the forced buy-out option under Section 17. In February 2008 defendants sought to enjoin buy-outs on the ground the probate court petitions are unrelated to the partnerships and thus do not trigger Section 17. The probate court denied injunctive relief.

The partnership agreements include a three-step dispute resolution procedure. It requires the parties to informally meet and confer; if that is unsuccessful, they must mediate the matter before the Honorable J. Lawrence Irving, retired; if that is unsuccessful, they must submit the matter to binding arbitration before JAMS, The Resolution Experts, a private alternate dispute resolution provider (JAMS). The partnership agreements provided the parties were to ...

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