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Mt. Holyoke Homes, L.P., v. Jeffer Mangels Butler & Mitchell, LLP

California Court of Appeals, Second District, Third Division

September 24, 2013

MT. HOLYOKE HOMES, L.P., et al., Plaintiffs and Appellants,
v.
JEFFER MANGELS BUTLER & MITCHELL, LLP et al., Defendants and Respondents.

Ordered Filed Date 10/21/13

APPEAL from a judgment of the Superior Court of Los Angeles County No. BC430142, Zaven V. Sinanian and Michael P. Linfield, Judges.

Timothy D. McGonigle for Plaintiffs and Appellants.

Reuben Raucher & Blum, Timothy D. Reuben, Stephen L. Raucher and K. Cannon Brooks for Defendants and Respondents.

THE COURT:

ORDER (1) MODIFYING OPINION (2) DENYING PETITION FOR REHEARING

(1) On page 18, line 8, at the end of sentence ending with the words “… in a legal malpractice action.”, insert the following sentence: Our conclusion is the same even if we assume the truth of the facts stated in the Chernow declaration.

(2) Page 18, line 13, delete the entire paragraph beginning on line 13 with the words “We reject Defendants argument …” and ending on line 20 with the words “… make the required disclosure.”

(3) Page 18, line 13, insert new paragraph which reads as follows:

Defendants argue that Jones had constructive knowledge that Judge Chernow had listed Mangels as a reference on his resume because his resume was readily discoverable on the Internet. They argue that her constructive knowledge precludes vacating the award based on the nondisclosure of that information. We disagree. A party to an arbitration is not required to investigate a proposed neutral arbitrator in order to discover information, even public information, that the arbitrator is obligated to disclose. (Betz v. Pankow (1993) 16 Cal.App.4th 931, 937; cf. Urias v. Harris Farms, Inc. (1991) 234 Cal.App.3d 415, 425 [discussing judicial disqualification].) Instead, the obligation rests on the arbitrator to timely make the required disclosure. The fact that the information is readily discoverable neither relieves an arbitrator of the duty to disclose nor precludes vacating the award based on the nondisclosure.

(4) Page 21, line 5, at the end of the sentence ending with the words “… the Chernow declaration was admissible.”, please add the following footnote which reads as follows:

Absent a statement of decision, we must infer all factual findings necessary to support the judgment. (Fladeboe v. American Isuzu Motors Inc. (2007) 150 Cal.App.4th 42, 58.) But if the record clearly discloses the reasons for the trial court’s ruling, we will not presume that the court relied on a different reason. (Border Business Park, Inc. v. City of San Diego (2007) 142 Cal.App.4th 1538, 1550; Lafayette Morehouse, Inc. v. Chronicle Publishing Co. (1995) 39 Cal.App.4th 1379, 1384.) The order here makes it clear that the reason for the ruling was the court’s conclusion that the limited relationship between Judge Chernow and Mangels and the fact of the listing on the resume created no appearance of impropriety, and not that Judge Chernow was unaware of the listing on his resume at the time of the required disclosures. We therefore will not infer such a finding.

The petition for rehearing is denied.

[There is no change in the judgment.]

Mt. Holyoke Homes, L.P. (MHH), and Darla Jones (collectively Plaintiffs) challenge the granting of a motion to compel arbitration and the denial of their motion to vacate the arbitration award in a legal malpractice action against Jeffer Mangels Butler & Mitchell, LLP (JMBM) and John Bowman (Defendants). They contend (1) an arbitration provision in the parties’ legal services agreement is unenforceable because it was not adequately disclosed or explained to them; (2) the arbitrator failed to timely disclose his prior relationship with a partner in JMBM, so the award must be vacated; and (3) the trial court erred by overruling their objections to the arbitrator’s declaration filed in opposition to their petition to vacate the award.

CROSKEY, Acting P. J.

It is ordered that the opinion filed herein on September 24, 2013, be modified as follows:

We conclude that the arbitration agreement is enforceable and the trial court properly compelled arbitration. We also conclude that the fact that the arbitrator had listed a partner in JMBM as a reference on his resume reasonably could cause an objective observer to doubt his impartiality as an arbitrator, and his failure to timely disclose that fact compels the conclusion that the arbitration award must be vacated. We therefore will reverse the judgment with directions to vacate the arbitration award.

FACTUAL AND PROCEDURAL BACKGROUND

1. Factual Background

Jones and her late husband formed MHH for the purpose of developing real property in Pacific Palisades. They retained Reznik and Reznik in 1992 to represent them in connection with an application for subdivision of the property. Their legal services agreement contained no provision requiring the arbitration of disputes. John Bowman was the attorney primarily ...


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