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Comerica Bank v. Gary Howsam et al

August 20, 2012

COMERICA BANK, PLAINTIFF AND RESPONDENT,
v.
GARY HOWSAM ET AL., DEFENDANTS AND APPELLANTS.



APPEAL from a judgment of the Superior Court of Los Angeles County, Amy D. Hogue, Judge. (Los Angeles County Super. Ct. No. BC316406)

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

CERTIFIED FOR PARTIAL PUBLICATION*fn1

Affirmed.

I. INTRODUCTION

This is an appeal involving an international commercial arbitration. It was conducted pursuant to title 9.3 of the Code of Civil Procedure*fn2 which is entitled, "Arbitration and Conciliation of International Commercial Disputes." (§ 1297.11 et seq.) At issue are the arbitration, not the conciliation, provisions. The arbitration provisions are found in sections 1297.11 through 1297.337.

This case involves appeals from a December 22, 2010 judgment following orders confirming three international commercial arbitration awards. The first arbitration award, issued May 3, 2010, was in favor of plaintiff, Comerica Bank, and against defendants: Greenlight Film & Television Inc.; Gary Howsam; GFT Circle Films, Inc.; Road Rage Films, Inc.; Janus Productions, Inc.; GFT Going Back Films, Inc.; GFT Heresy Films, Inc.; GFT/Redwood KOTN Films, Inc.; and GFT Redwood/Ignition Films, Inc. The second award, issued July 16, 2010, was in plaintiff's favor and against Mr. Howsam and Greenlight Film & Television Inc., and their lawyer, Charles Coate. The third award, issued July 19, 2010, and was in plaintiff's favor and against defendants and Mr. Coate. The trial court refused to vacate these three awards and confirmed them.

In the published portion of this opinion, we will discuss four issues. First, we will discuss at some length whether the arbitrator's failure to timely disclose an alleged disqualifying factor enumerated in section 1297.121 is a proper vacatur ground. Defendants assert the failure to timely disclose under sections 1297.121 and 1297.123 is a ground for vacating an international commercial arbitration award. Defendants rely on section 1286.2, subdivision (a)(6); a statutory vacatur ground which requires an award be vacated when an arbitrator fails to timely disclose a potentially disqualifying circumstance. Citing section 1297.135, plaintiff argues this issue cannot even be raised on direct appeal from an order denying a vacatur motion. We agree with defendants that the issue may be raised on direct appeal after a vacatur motion is denied. But we hold the failure to timely disclose potential disqualifying circumstances, as required by sections 1297.121 and 1297.123, is not a ground for vacatur under section 1286.2, subdivision (a)(6). Our ruling in this regard is limited to international commercial arbitrations conducted under section 1297.111 et seq.

Second, we discuss whether the award was secured by corruption, fraud or other undue means. (§ 1286.2, subd. (a)(1).) Among other things, we will analyze whether the arbitrator's billing errors resulted in an award secured by corruption, fraud or other undue means. They did not. Third, we will discuss whether the award resulted from a manifest disregard of the law. It did not. Fourth, we will discuss whether the arbitrator exceeded his power when he decided alter ego issues. He did not. We affirm the orders denying the vacatur motion and confirming the award and the judgment.

II. FIRST AMENDED COMPLAINT FILED SEPTEMBER 7, 2004

The original complaint was filed on June 1, 2004. According to the first amended complaint, on November 27, 1999, plaintiff made loans totaling $37 million to Mr. Howsam and seven Ontario, Canada corporations controlled by him. Mr. Howsam is alleged to be a Toronto, Ontario resident. The loans were to fund the production of seven different films. The loans were paid to all of the foregoing corporate defendants except Greenlight Film & Television Inc. The loans were secured by the proceeds of the seven films. The primary "collateral" were foreign distributers' minimum licensing fees. The collateral was in the form of guaranteed minimum license fees funded by foreign distributors. The first amended complaint alleges that certain documents that were necessary pursuant to the loan agreements were forged. The forged documents consisted of license agreements and notices and acknowledgments of assignments (assignment notices). The forged assignment notices required the foreign distributors to directly pay plaintiff rather than defendants. The forged documents induced plaintiff to make the loans. The first amended complaint contains extensive alter ego allegations.*fn3 Plaintiff never recovered the full amount of the loans and the security was worthless.

Plaintiff was owed in excess of $20 million. The causes of action were for: contract breach; fraud; conspiracy to defraud; fraudulent inducement; an accounting; money had and received; account stated; and open book account. Plaintiff sought: compensatory damages not less than $20 million; interest; punitive damages; an accounting; imposition of a constructive trust; injunctive relief; attorney fees; and costs.

III. PROCEDURAL HISTORY

A. Overview

This appeal from a judgment after confirmation of three international commercial arbitration awards involves an extraordinarily complex series of events. The defaulted loans described in the first amended complaint resulted in federal bank fraud indictments against Mr. Howsam and Harel Goldstein. Mr. Goldstein was arrested by Federal Bureau of Investigation special agents. Mr. Goldstein pled guilty and then participated in a federal bank fraud investigation which targeted Mr. Howsam. Mr. Howsam was then indicted. Later, the indictment was dismissed against Mr. Howsam. The indictment against Mr. Howsam was returned after the first amended complaint was filed and the arbitration had commenced. A lengthy stay in the arbitral proceedings ensued until the indictment was dismissed. Proceedings resumed but later defendants withdrew from the arbitration and the arbitrator entered their default. An uncontested award was entered.

The difficulty in reciting the procedural scenario after Mr. Howsam's indictment was dismissed is that proceedings were sometimes simultaneously pending in: the arbitral forum; before both the arbitrator and the arbitration administrator; the trial court; before us and the California Supreme Court; or in the federal courts. It is difficult to recite the somewhat confusing events simultaneously transpiring in different forums. But for purposes of clarity, we will set forth the events in strict chronological order. (Remarks of Sen. Ted Stevens on the death of Steven Ambrose, 107th Cong., 2d Sess. (2002) p. 20215 ["abandon chronology at your peril . . ."].)

B. Events Occurring After The First Amended Complaint Was Filed

And Before The Stay Was Entered.

On October 25, 2004, seven defendants, except for Mr. Howsam and Greenlight Film & Television Inc., made a written demand to arbitrate the claims alleged in the first amended complaint. The basis of the seven defendants' motion to compel arbitration were the agreements to arbitrate contained in the assignment notices. On October 27, 2004, defendants, other than Mr. Howsam and Greenlight Film & Television Inc., filed a motion to compel arbitration. On October 27, 2004, Mr. Howsam and Greenlight Film & Television Inc., filed a motion to quash on absence of jurisdiction grounds. On December 15, 2004, the motion to quash of Mr. Howsam and Greenlight Film & Television Inc. was denied. On December 28, 2004, the motion to compel arbitration filed by defendants, other than Mr. Howsam and Greenlight Film & Television Inc., was denied. The mandate and review petitions challenging the December 15, 2004 order denying the motion to quash filed by Mr. Howsam and Greenlight Film & Television Inc. were denied. (Greenlight Film & Television Inc. v. Superior Court (Jul. 13, 2005, S133354) [nonpub. order]; Greenlight Film & Television Inc. v. Superior Court (April 14, 2005, B180285) [nonpub. order].) On September 15, 2005, in an unpublished opinion, we reversed the December 28, 2004 order denying the motion to compel arbitration. (Comerica Bank v. GFT Circle Films, Inc. (Sep. 15, 2005, B180622) [nonpub. opn.].) Mr. Howsam and Greenlight Film & Television Inc. had filed a certiorari petition in the United States Supreme Court challenging the December 15, 2004 order denying their motion to quash. On November 7, 2005, the certiorari petition of Mr. Howsam and Greenlight Film & Television Inc. was denied by the United States Supreme Court. (Howsam v. Superior Court (2005) 546 U.S. 1003.)

After the jurisdictional issue and appellate litigation involving them concluded, on November 22, 2005, Mr. Howsam and Greenlight Film & Television Inc. moved to compel arbitration. Mr. Howsam and Greenlight Film & Television Inc. reasoned they were entitled to compel arbitration under the assignment notices. On February 7, 2006, defendants, other than Mr. Howsam and Greenlight Film & Television Inc., joined in the motion to compel arbitration. On February 14, 2006, the motion of Mr. Howsam and Greenlight Film & Television Inc. to compel arbitration and stay the action was granted. On April 10, 2006, the written order granting the motion to compel arbitration and completely staying the action was filed. Trial on plaintiff's first amended complaint was stayed pursuant to section 1297.82.*fn4

On May 9, 2006, Mr. Goldstein settled with plaintiff. In 2002, after being sued by plaintiff, Mr. Goldstein and his wife sought the protection of the bankruptcy courts. At the time of the settlement, there was pending adversary proceeding initiated by plaintiff in the bankruptcy court. The adversary proceeding sought a determination that Mr. Goldstein's debts owed to plaintiff, as a result of the transactions at issue here, were non-dischargeable. Under the terms of the settlement, plaintiff received $300,000. There was a qualified confidentiality clause in the settlement agreement. Plaintiff agreed to provide specified notice to Mr. Goldstein if it received a court order to turn over information concerning the settlement. The qualified confidentiality agreement states in part: "[Plaintiff] and its attorneys or agents further agree that should any party (other than any of the Excepted Parties) request from [plaintiff] information regarding the Settlement Agreement, any terms or conditions contained therein, or facts underlying the Settlement Agreement, [plaintiff] shall provide such information only upon: (a) H. Goldstein's prior written consent; or (b) if required by court order or subpoena (collectively, the 'Court Order'). Should [plaintiff] receive such a request or Court Order for such information related to this Settlement Agreement, [plaintiff] shall provide H. Goldstein and his counsel with written notice (together with a faxed version of the Court Order, if existent) no later than twenty-four (24) hours of receipt of such request or Court Order. [Plaintiff] is permitted to disclose the information as required by the Court Order only if: (a) H. Goldstein does not advise [plaintiff] within seventy-two (72) [hours] of receipt [plaintiff's] notice, that he intends to seek a protective order; (b) H. Goldstein does not file a motion, application or request for protective order within five (5) calendar days of his receipt of [plaintiff's] notice unless the Parties mutually agree to extend such time period; or (c) H. Goldstein's request for a protective order is denied. In no event shall [plaintiff] be obligated to obtain a protective order."

In September 2007, Mr. Goldstein was charged with a single count of bank fraud. Shortly thereafter, Mr. Goldstein pled guilty. On September 18, 2007, plaintiff served a demand the arbitration be conducted under the auspices of the Independent Film & Television Alliance (the alliance). The September 18, 2007 demand seeks damages in excess of $13 million and attached the first amended complaint. As noted, the first amended complaint alleges that plaintiff is owed in excess of $20 million.

The arbitration was conducted under the alliance's Rules for International Arbitration. Under its international commercial arbitration rules, the alliance acts as the administering agency. The alliance's president, acting as "The Arbitral Tribunal," designates a staff member as the "Arbitral Agent." Richonda Starkey was designated by the alliance's president as the arbitral agent. The alliance's arbitral agent administers much of the arbitration including assisting in the selection or removal of the arbitrator. A party has a right to challenge a sitting arbitrator. Under such circumstances, the arbitral agent determines whether to replace the arbitrator.*fn5

Rules 6.1 through 6.3 of the alliance's international commercial arbitration rules identify how the arbitrator is selected.*fn6 On October 30, 2007, Ms. Starkey, the alliance's arbitral agent, circulated a list of potential arbitrators. Pursuant to paragraph 6.3 of the alliance's arbitration rules, Steven Strick was listed as one of the potential arbitrators. Mr. Strick's resume cataloged: his undergraduate and graduate degrees; his employment by various law firms including Loeb & Loeb (1977-1980), Talmadge, Pritzger & Strick (1981-1989), Rubin, Bailin & Ortoli (2001-2007); his employment in the entertainment industry by United Artists Corporation (1975-1977), Home Box Office, Inc. (1980-1981), Dino DeLaurentis Corporation (1981-1989), Art & Commerce Entertainment, Inc. (1989-1994) and CST Entertainment Inc. (1994-2001); and his professional relationships including his membership in the Association of the Bar of the City of New York. Nothing in Mr Strick's resume stated he was a member of the State Bar of California. On November 2, 2007, defendants moved to quash service of the notice of arbitration. Also, on November 2, 2007, Mr. Howsam and Mr. Goldstein met in a local restaurant. Mr. Goldstein was cooperating with the Federal Bureau of Investigation and the meeting was video recorded.

On November 6, 2007, plaintiff listed Mr. Strick as its first preference as the arbitrator. On November 5, 2007, Mr. Howsam was arrested by the Federal Bureau of Investigation on bank fraud charges. The charges arose out of the loan transactions at issue in this case. On November 9, 2007, defendants, other than Mr. Howsam and Greenlight Film & Television Inc., listed Mr. Strick as their second choice to serve as the arbitrator. Plaintiff struck defendants' first choice to act as the arbitrator, Bruce Polichar. One of plaintiff's attorneys explained: "[Their] first choice, [Mr.] Polichar, stated that 'I have acted as a mediator in several superior court cases in which Mr. Coate represented one of the litigants.' On that basis, [plaintiff] elected to strike Mr. Polichar. Therefore Mr. Strick was [their] first eligible choice."

On November 12, 2007, Mr. Strick was designated as the arbitrator. The parties were each individually assessed an initial $1,500 charge. The arbitrator's rate was $300 per hour. Mr. Howsam was indicted on November 27, 2007, on federal bank fraud and making false statements in loan documents charges. As noted, the fraud and loan documents involve the unpaid debts in this case.

On December 5, 2007, a preliminary telephonic hearing was held and the arbitrator: scheduled a hearing on a motion to quash; scheduled another preliminary hearing; and noted that plaintiff had withdrawn its opposition to the arbitration tribunal's jurisdiction. On January 3, 2008, the arbitrator denied defendants' motion to quash service of the arbitration notice which had been filed November 2, 2007. The arbitrator ordered defendants to answer plaintiff's notice of arbitration and file any cross-claims within 30 days. The arbitrator selected January 10, 2008, as the date for a further preliminary hearing.

On January 9, 2008, Mr. Howsam and Greenlight Film & Television Inc. moved to stay the arbitration. The stay motion was based on the fact Mr. Howsam had been indicted. The remaining defendants joined in the stay motion. On January 21, 2008, the parties agreed to stay the arbitration for six months given Mr. Howsam's indictment. The parties later stipulated to extend the stay pending the outcome of Mr. Howsam's indictment. On April 27, 2009, Mr. Howsam's indictment was dismissed without prejudice.

C. Events Occurring After The Stay Was Terminated And Before

Defendants Withdrew From The Arbitration

On May 4, 2009, plaintiff indicated its desire to resume arbitral proceedings to the alliance. On May 21, 2009, Mr. Strick made the following disclosure: "I wish to disclose the following: [¶] Over the past years, I represented a client that maintained checking accounts at Comerica Bank ('CB'). While I had signatory authority on some of the accounts, I have never had any personal interest in the company, its subsidiaries, the CB accounts or the proceeds thereof. I no longer represent the client, do not retain signatory authority on any such account and have no ongoing business or other relationship with CB. I am not now nor have I ever been a customer of CB or had any personal relationship with any of its officers or employees. [¶] In my opinion the facts here disclosed do not constitute a conflict with regard to the present arbitration, nor have they or will they in any way affect my impartiality and neutrality as arbitrator and would not be grounds for disqualification given the attenuated nature of the relationship. Nevertheless I make this information available to the parties in what I believe to be an abundance of caution."

On June 9, 2009, defendants were ordered to file responsive pleadings by June 30, 2009. On June 30, 2009, Mr. Howsam and Greenlight Film & Television Inc. demurred to the first amended complaint and the notice of arbitration and filed a motion to strike. On July 21, 2009, the arbitrator scheduled a September 3, 2009 hearing on a variety of issues.

On September 3, 2009, the scheduled hearing was held. Also on September 3, 2009, plaintiff filed a first amended notice of arbitration. The first amended notice of arbitration alleges plaintiff has been damaged in a sum in excess of $13 million. The first amended notice of arbitration also refers to the first amended complaint which alleges plaintiff has been damaged in excess of $20 million. On September 9, 2009, the arbitrator issued a four-page single spaced ruling addressing various motions and issues raised at the September 3, 2009 hearing which: overruled defendants' demurrer to the first amended complaint; granted the motion to strike punitive damage allegations from the arbitration notice; ruled alter ego issues were properly part of the arbitration; and set a date for additional issues to be resolved.

On September 21, 2009, the arbitrator issued rulings concerning: the scheduling of hearings on discovery disputes; the approval of a deposition subpoena of Mr. Goldstein; the discovery cut-off date; the dates for exchanges of expert witness information; other hearing dates; and the setting of the final hearings commencing February 22, 2010. The arbitrator expressly ruled that the statute of limitations on plaintiff's claims was tolled upon the June 1, 2004 filing of the complaint. On November 19, 2009, Mr. Howsam and Greenlight Film & Television Inc. objected to orders providing for formal discovery: "Under the circumstances, a preliminary determination must be made if general [alliance] rules prohibiting formal discovery are to be deviated from in the first instance. If and only if, a determination that the interests of justice require procedures not regularly provided for will nevertheless be provided for here, then Respondents must obviously have the opportunity to propound their own formal discovery. It can hardly be disputed that such [alliance] discovery will be extremely costly and burdensome and antithetical to the policies underlying arbitration in the first instance. However, when the claimant is a bank employing a law firm with unlimited resources, the true need for all of this discovery from the standpoint of Respondents is to make the cost of the proceeding prohibitively expensive . . . ." On November 20, 2009, the arbitrator issued orders: limiting plaintiff's admission requests to five distinct areas; directing the parties confer concerning discovery issues; directing all parties to produce their core documents by December 11, 2009; compelling production of non-core documents by December 18, 2009; limiting each side to three depositions; concerning possible stipulated facts; permitting use of letters to raise discovery disputes; and requiring payment of all arbitrator fees by November 25, 2009.

As noted, there was a video recording of the November 2, 2007 restaurant meeting between Mr. Howsam and Mr. Goldstein. On November 23, 2009, United States District Court Judge Otis D. Wright ordered the video recording unsealed over Mr. Howsam's objection. In connection with the unsealing proceedings, Assistant United States Attorney Gregory A. Lesser wrote: "The government . . . notes, . . . based upon the evidence presently before it, the government does not intend to further prosecute . . . Howsam for the offenses alleged in the indictment and/or any related offenses involving similar loans obtained by Howsam from Comerica Bank."

On November 20, 2009, the arbitrator issued an extensive order concerning discovery issues. The November 20, 2009 order extended to: the scope of admissions requests; document production; allowing plaintiff to depose Mr. Howsam and two other witnesses; stipulated facts; and the manner in which discovery disputes were to be resolved. In addition, the arbitrator ordered, "Counsel for each of the parties shall contact [Ms. Starkey] on or before November 25, 2009 to make arrangements for the payment of all outstanding fees relating to these proceedings."

On November 30, 2009, defendants served admissions requests. On December 14, 2009, defendants served amended admissions requests. Defendants' motion to quash a subpoena duces tecum was denied on mootness grounds after Judge Wright ruled the video recording could be released. The video recording was of the meeting between Mr. Howsam and Mr. Goldstein.

On December 22, 2009, the arbitrator issued a further order concerning fees: "[Plaintiff] and [defendants] shall bear . . . arbitrator fees equally (i.e. fifty percent of such fees shall be borne by [plaintiff] and fifty percent by [defendants]) after the previously billed arbitrator deposits have been depleted. A final allocation of arbitration related costs and expenses among the parties will be made at the close of the proceeding." Defendants had previously been ordered to pay three-fourths of the arbitrator's fees. In addition, the arbitrator ordered plaintiff to respond to 10 supplemental admission requests.

On December 24, 2009, Mr. Howsam and Greenlight Film & Television Inc. filed a terminating sanctions and disqualification motion in the trial court. Defendants sought to disqualify plaintiff's counsel on misconduct grounds. On December 30, 2009, counsel for Mr. Howsam and Greenlight Film & Television Inc. requested a discovery stay or the opportunity to file a motion to that effect: "Under California law the continued prosecution of discovery by Claimant of this matter under the circumstances of this case raises constitutional issues and it is my understanding that you have now been served with a copy of a stay motion by associate counsel addressing the same. Further, continued prosecution of this discovery with a motion for terminating sanctions and a motion to disqualify for violation of the California Rules of Professional Conduct is contrary to law and compounds Claimant's violations. We object to such efforts while such motion is under consideration by the Superior Court. Under the circumstances, would request a stay of discovery, or alternatively, leave to file a motion for stay of such discovery while such substantive matters are pending." On December 31, 2009, Mr. Howsam and Greenlight Film & Television Inc. filed a motion in the trial court to stay the arbitration until April 14, 2011. April 14, 2011 is the date when the criminal statute of limitations would run on Mr. Howsam's dismissed federal bank fraud and related charges.

On January 6, 2010, the arbitrator denied the December 30, 2009 stay request: "I have Claimant's motion to compel production of documents and for monetary and evidentiary sanctions. Respondents may file their opposition by January 13, 2010; Claimant may reply by January 18, 2010. [¶] I also have Respondents' letter to me of December 30, 2009, requesting a stay of discovery, or leave to file a motion for leave to stay discovery. Motion for stay is DENIED. However, Respondents are granted leave file their motion by January 13, 2010; Claimant may file its opposition by January 20; if Respondents wish to reply they may do so by January 25, 2010. Unless and until a stay is granted, all discovery deadlines remain in effect. [¶] All documents ordered produced under this tribunal's order of November 20, 2009 shall be produced forthwith, but not later than January 13, 2010. [¶] I would like to hold a hearing next week to consider outstanding issues including current discovery issues, prehearing scheduling and procedural issues next week. Please let me know in advance if you have any agenda items to add. I will get back to you with a proposed date/time and location."

On January 8, 2010, Mr. Howsam and Greenlight Film & Television Inc. filed another stay motion before the arbitrator: "In absence of a current stay of this proceeding as previously requested, but further to the leave granted to move for a stay of this proceeding, without prejudice to Respondents' pending motions in the Superior Court, Respondents herein give notice of their motion and herein move for stay of this proceeding pursuant to [alliance] Rules 8.1, 9.1, 9.2 and 9.4, inter alia, at a hearing to be determined. Counsel for Respondents offers the use of the undersigned's conference room for such purpose. [¶] The foregoing rules provide you with the equitable discretion to stay this arbitral proceeding until such substantive motions are adjudicated and finally resolved. [¶] The basis of the request for a reasonable stay of this proceeding until such motions are adjudicated and finally resolved is correspondingly set forth in the pending substantive motions before the Superior Court . . . ."

On January 11, 2010, the other defendants filed a joinder in the December 24, 2009 sanctions and disqualification motions of Mr. Howsam and Greenlight Film & Television Inc. As noted, the sanctions and disqualification motions of Mr. Howsam and Greenlight Film & Television Inc. were filed in the trial court on December 24, 2009. On January 14, 2010, the arbitrator ordered that Mr. Howsam's deposition commence on February 9, 2010. On January 27, 2010, a hearing was held on: a stay request; document production and depositions; and scheduling of further proceedings relating to in limine motions and plaintiff's demurrer.

On February 2, 2010, the trial court denied defendants' terminating sanctions and disqualification motion. In addition, the trial court denied the motion filed December 31, 2009, of Mr. Howsam and Greenlight Film & Television Inc. to stay the arbitration proceedings. On February 8, 2010, the arbitrator granted plaintiff's motion to compel document and privilege log production: "On or before February 22, 2010 each of the parties shall produce and deliver to the Los Angeles office of opposing counsel, documents previously ordered produced by this tribunal pursuant to orders dated November 20, 2009 and January 14, 2010, which document production shall be organized in the six general categories identified by [plaintiffs'] counsel. Counsel shall concurrently with such production, produce and deliver privilege logs identifying and describing any documents for which privilege or a legally imposed restriction prohibiting disclosure is asserted together with the privilege or prohibition claimed and the reason for the claimed privilege or prohibition. Counsel shall promptly advise and petition this tribunal in connection with any challenge to any privilege or legal prohibition asserted by opposing counsel." (Fn. Omitted.) In addition, on February 8, 2010, the arbitrator: denied defendant's stay motion; ordered Mr. Howsam to be deposed in Toronto, Ontario, Canada on March 12, 15 and 16, 2010; scheduled hearings on in limine motions and plaintiff's demurrer to an amended cross-complaint; and scheduled the hearings on the merits of the parties' claims for April 12 through 27, 2010.

On February 11, 2010, defendants requested reconsideration of the arbitrator's February 8, 2010 revised ruling. A hearing on defendants' reconsideration request was held on February 12, 2010. On February 16, 2010, the arbitrator issued his ruling on defendants' reconsideration request. The arbitrator: denied defendants' stay request; reserved ruling on the surveillance evidence in limine motion; overruled plaintiff's demurrer; and issued orders concerning depositions.

On February 23, 2010, at 5:10 a.m. from New York City, the arbitrator raised the issue of unpaid fees in an e-mail to all counsel: "Thank you Mr. Bertrand. Receipt is acknowledged. We will take up the issues at tomorrow's scheduled hearing. [¶] In the meantime, I invite [defendants'] counsel to respond if they choose in advance of our scheduled teleconference tomorrow. [¶] Also, I have been informed by my office that despite several messages and [e-mails], long outstanding invoices for arbitrator fees have not been paid. I would like to remind counsel that under [the alliance's] Rules, failure to make deposits may be grounds for default. The relevant section is cited below. [¶] '14.3 At any time after the commencement of the arbitration process, the Arbitral Agent or the Arbitrator shall have the right to require each party to deposit with the Arbitral Agent or the Arbitrator an equal amount as an advance against the Arbitrator's fees. The Arbitrator shall give formal notice of any such failure to meet the deposit requirements and the consequences of such failure. The failure of any party to respond to such requests may be deemed by the Arbitrator to be a default under Rule 11 above. The Arbitral Agent shall transmit all deposits upon receipt to the Arbitrator.' [¶] Please make arrangements with my office for immediate payment of all outstanding invoices in advance of tomorrow's call."

Also on February 23, 2010, Mr. Coate, counsel for Mr. Howsam and Greenlight Film & Television Inc., wrote Ms. Starkey from Santa Monica and complained about the arbitrator's billings. Mr. Coate complained to Ms. Starkey about the alleged terseness of the description of the arbitrator's expenditure of time and the advance retainer of $15,000: "With regard to the arbitrator's most recent invoice #5, (a copy of which is attached) it is noted that Arbitrator Strick in response to an ordered request that was required to be briefed and heard, reallocated fees so that they are fairly split 50/50 between [plaintiff] on one side, and [defendants] on the other, but no credit has been provided to [defendants] for amounts that they previously paid in excess of such equal split on this invoice. We would ask for a proper recalculation so that prior amounts that were overpaid by [defendants] are properly allocated and that the invoice is accurately calculated to take such prior overpayments into account. [¶] Also, we note a terseness or lack of description for many of the billing entries, and unfortunately are forced to query the time represented to be expended in connection with numerous entries. It is noted that in relation to the documents reviewed, a number of time descriptions do not appear to correspond in a meaningful way. For example, on December 3, 2009, 2.75 hours are charged for simply 'Review file' and a half hour is expended reading a single letter on December 15, 2009. [¶] We also note that the lion's share of the invoice does not address time that has already earned, but rather seeks a large advance retainer of fifteen thousand dollars ($15,000.00) that does not appear to be in relation to any task, or hearing, which is set in April. No explanation as to what this advance is for or entails is provided. We would kindly ask for some guidance from [the alliance] in this regard, especially when Arbitrator Strick today has threatened with virtually no notice the possible imposition of default tomorrow for failure to pay such invoice, notwithstanding the above. We do not believe that such a serious matter can be addressed in such a summary fashion and trust that [the alliance] concurs with such concerns in light of the above."

On February 24, 2010, Mr. Howsam and Greenlight Film & Television Inc. filed a mandate petition in this court challenging the trial court's February 2, 2010 order denying their stay motion. On the same date, Mr. Howsam and Greenlight Film & Television Inc. filed a separate mandate petition in this court. The second petition challenged the trial ...


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