Motion to Confirm Judgment or Award in PEGGY CONROY BURNHAM VS. MARINA GALLI| Trellis.Law

On May 11, 2020 a Motion-Secondary was filed involving a dispute between Burnham, Peggy Conroy, and Galli, Marina, for PETITION RE: ARBITRATION (PETITION TO CONFIRM ARBITRATION AWARD) in the District Court of San Francisco County.

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1 MARK JOSEPH KENNEY (State Bar No. 87345)
LASZLO LADI (State Bar No. 265564)
2 SEVERSON & WERSON ELECTRONICALLY
A Professional Corporation
3 One Embarcadero Center, Suite 2600 F I L E D
Superior Court of California,
San Francisco, California 94111 County of San Francisco
4 Telephone: (415) 398-3344
Facsimile: (415) 956-0439 07/16/2020
Clerk of the Court
5 BY: RONNIE OTERO
Attorneys for Respondent Deputy Clerk
6 MARINA GALLI
7

8 SUPERIOR COURT OF CALIFORNIA
9 COUNTY OF SAN FRANCISCO
10 PEGGY BURNHAM, Case No.: CPF20517091
11 Petitioner, MARINA GALLI’S OPPOSITION TO
PEGGY BURNHAM’S PETITION FOR
12 vs. ORDER CONFIRMING ARBITRATION
AWARD
13 MARINA GALLI,
Date: July 29, 2020
14 Respondent. Time: 9:30 a.m.
Crtrm.: 302
15

19
20

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MARINA GALLI’S OPPOSITION TO PEGGY BURNHAM’S PETITION FOR ORDER CONFIRMING
ARBITRATION AWARD
1 TABLE OF CONTENTS
Page
2

3 I. INTRODUCTION ..................................................................................................................5

4 II. FACTUAL BACKGROUND ................................................................................................6

5 A. Background Facts About the Arbitration. ..................................................................6

6 B. The Arbitrator Bifurcated the Arbitration and Indicated Neither Partial
Award Issued Would Be Immediately Enforceable. ..................................................7
7
C. The Arbitrator Issued the First Partial Award. ...........................................................7
8
D. The Arbitrator Issued an Attorney Fee Award in Favor of Ms. Burnham. ................8
9
E. The Arbitrator Issued the Second Partial Award and an Attorney Fee
10 Award, Both in Favor of Ms. Galli Against Pacific Union. .......................................8

11 F. The Arbitrator Ruled on Ms. Galli’s Motion to Clarify on May 7, 2020...................8

12 G. Ms. Galli Satisfied the First Partial Award and the Attorney Fee Award in
Favor of Ms. Burnham. ..............................................................................................8
13
H. The Arbitrator Issued a Final Award on July 7, 2020. ...............................................9
14
III. ARGUMENT .......................................................................................................................10
15
A. Ms. Burnham is Not Entitled to Pre-Judgment Interest. ..........................................10
16
B. Alternatively, the Interest Should Be Reduced. .......................................................13
17
1. The First Partial Award Set Forth an Interest Rate Lower than 10%
18 and on Only $2,145,000. ..............................................................................14

19 2. Any Prejudgment Interest Should Accrue Only From the Date an
“Award” Finally Fixed the Sum Ms. Galli Owes.........................................15
20
3. Ms. Galli Satisfied the First Partial Award on May 27, 2020, and
21 Ms. Burnham’s Fee Award on June 5, 2020, When She Deposited
Funds into Escrow. ......................................................................................16
22
C. Ms. Burnham is Not Entitled to Attorneys’ Fees for the Petition. ...........................17
23
D. Ms. Galli is Entitled to Her Fees and Costs for Opposing the Petition. ...................17
24
IV. CONCLUSION ....................................................................................................................18
25

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MARINA GALLI’S OPPOSITION TO PEGGY BURNHAM’S PETITION FOR ORDER CONFIRMING
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1 TABLE OF AUTHORITIES

2 Page(s)

3 Cases

4 FEDERAL CASES

5 Bosack v. Soward
(W.D. Wash. February 25, 2008) 2008 U.S. Dist. LEXIS 30532 [distinguishing Pierotti
6 v. Torian (2000) 81 Cal.App. 4th 17 ....................................................................................... 14

7 STATE CASES

8 Britz, Inc. v. Alfa-Laval Food & Dairy Co.
(1995) 34 Cal.App. 4th 1085 ................................................................................................... 10
9
County of Solano v. Lionsgate Corp.
10 (2005) 126 Cal.App.4th 741 .............................................................................................. 10, 15

11 Hightower v. Superior Court
(2001) 86 Cal. App.4th 1415 ............................................................................................. 10, 13
12
Horn v. Gurewitz
13 (1968) 261 Cal.App.2d 255 ..................................................................................................... 10

14 Hsu v. Abbara
(1995) 9 Cal.4th 863................................................................................................................ 17
15
Jones v. Kvistad
16 (1971) 19 Cal.App.3d 836 ....................................................................................................... 14

17 Kaiser Foundation Health Plan, Inc. v. Superior Court
(2017) 13 Cal.App.5th 1125 .................................................................................................... 10
18
Klinger v. Realty World Corp.
19 (1987) 196 Cal. App.3d 1549 .................................................................................................. 16
20 Lonky v. Patel
(2020) ___Cal.App.5th___ [2020 Cal. App. LEXIS 617] .................................... 11, 12, 13, 15
21
Marcus & Millichap Real Estate Investment Brokerage Co. v. Woodman Investment Group
22 (2005) 129 Cal.App.4th 508 .................................................................................................... 17

23 Pierotti v. Torian
(2000) 81 Cal.App. 4th 17 ................................................................................................. 10, 12
24
Rose v. Hecht
25 (1949) 94 Cal.App.2d 662 ....................................................................................................... 16

26 Sears v. Baccaglio
(1998) 60 Cal.App.4th 1136 .................................................................................................... 17
27

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MARINA GALLI’S OPPOSITION TO PEGGY BURNHAM’S PETITION FOR ORDER CONFIRMING
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1 STATUTES

2 Civil Code 1498 ............................................................................................................................ 16

3 Civil Code § 1504 ......................................................................................................................... 16

4 Civil Code § 3287(a) ..................................................................................................................... 14

5 Civil Code § 3287 subd. (a) .......................................................................................................... 10

6 Civil Code § 3289 ......................................................................................................................... 14

7 Civil Code § 3289 subd. (a) .......................................................................................................... 14

8 Civil Code § 3289 subd. (b) .......................................................................................................... 14

9 Code of Civil Procedure § 1283.4 ............................................................................... 10, 12, 13, 15

10 Code of Civil Procedure § 1287.6 ................................................................................................. 14

19
20

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MARINA GALLI’S OPPOSITION TO PEGGY BURNHAM’S PETITION FOR ORDER CONFIRMING
ARBITRATION AWARD
1 I. INTRODUCTION

2 This Petition was filed prematurely on May 11, 2020 – well before the Arbitrator issued a

3 Final Award on July 7, 2020, (the “Final Award”). This was in blatant disregard of the

4 Arbitrator’s clear and decisive direction that his first “Partial Final Award” (on which this Petition

5 was based) “will not be the sort of order that could be returned to Superior Court, reduced to

6 judgment or otherwise enforced. That sort of order will follow the second phase.” (Ladi

7 Decl., ¶ 6, Ex. C [emphasis supplied].)

8 Further, before the Final Award was entered, Ms. Galli had paid all of the principal

9 amounts awarded by the interim Partial Final Award and sought by this Petition.1 The only issues

10 remaining are Ms. Burnham’s claim to pre-judgment interest based on the date of the interim

11 rulings, and Ms. Burnham’s request for attorneys’ fees and costs incurred in the bringing this

12 petition. Both should be denied.

13 This arbitration was bifurcated for “trial” only — a single proceeding with multiple

14 hearings. The Final Award clearly awarded only the specific sums stated, thereby denying by

15 exclusion any “interest” Ms. Burnham might claim had accrued on the “Partial” interim award.

16 The Arbitrator had clearly stated that his “Partial” interim rulings might not even resolve all of the

17 issues between Ms. Burnham and Ms. Galli, and “will not be the sort of Order” that could be

18 enforced by a court. This makes even more clear his intent – fully within his discretion – to

19 preclude any finding that interest should have been running on the “Partial” awards until the Final
20 Award was filed.

21 Moreover, under controlling law interest on an arbitration award does not begin to run

22 until all controversies between the parties are resolved. In this case, this Court early on compelled

23 another party, Pacific Union, “to join in and participate” in the arbitration between Ms. Burnham

24 and Ms. Galli. Thus, the parties’ controversy in this arbitration necessarily and crucially included

25
1
In fact, Ms. Galli did so through an escrow that this Court previously approved in a stipulated
26 partial judgment on June 12. Ms. Galli did so in the interests of compromise, without waiving the
27 arguments she makes here, and because she was interested in getting back the property as quickly
as practical, particularly in light of the rapidly changing real estate market.
28
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MARINA GALLI’S OPPOSITION TO PEGGY BURNHAM’S PETITION FOR ORDER CONFIRMING
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1 Pacific Union, and those issues were not resolved by the “Partial Final Award” on which

2 Petitioner relies. That interim ruling did not resolve or determine all of the controversies between

3 the parties to the arbitration.

4 Ms. Galli had already satisfied the principal amounts of the interim ruling award in favor

5 of Ms. Burnham before the Final Award was issued. (These amounts included awards of

6 substantial prior interest and attorney fees.) So by the time of the Final Award, no amount

7 remained unpaid, and there is nothing on which post-award interest might accrue. And Ms.

8 Burnham is also not entitled to attorneys’ fees and costs incurred in bringing this petition, because

9 she cannot prevail.

10 Finally, in the alternative, Ms. Burnham’s demand for pre-judgment interest is excessive,

11 as she miscalculates the rate of interest and mis-states the beginning and ending dates for any

12 accrual of pre-judgment interest.

13 For the foregoing reasons, the Court should deny Ms. Burnham any further relief, rule that

14 the Final Award against Ms. Galli has been satisfied, and award Ms. Galli her reasonable

15 attorneys’ fees and costs of $13,172.50 incurred in opposing the petition.

16 II. FACTUAL BACKGROUND

17 A. Background Facts About the Arbitration.

18 The Arbitration concerned the sale of 2132 Washington Street, San Francisco (hereinafter

19 the “Property”) by Ms. Galli to Ms. Burnham in May 2016. (See, e.g., Ladi Decl., ¶ 2, Ex. A [the
20 Final Award].) Pacific Union acted as broker for both parties (in fact, Ms. Burnham worked for

21 Pacific Union as an agent and represented herself in the transaction). (Id.)

22 In May 2018, Ms. Burnham initiated the Arbitration against Ms. Galli, seeking among

23 other things, rescission of the May 2016 purchase agreement and various damages based on

24 alleged misrepresentations. (See, e.g., Ladi Decl., ¶ 2, Ex. A at p. 8 [generally describing Ms.

25 Burnham’s claims].) Ms. Galli denied the claims and attempted to resolve them, including, among

26 things, by seeking Pacific Union’s involvement as Pacific Union was in whole or in large part

27 responsible for Ms. Burnham’s claims against Ms. Galli. When Pacific Union refused, on

28 November 19, 2018, Ms. Galli was forced to file a petition to compel arbitration with this court in
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MARINA GALLI’S OPPOSITION TO PEGGY BURNHAM’S PETITION FOR ORDER CONFIRMING
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1 case number CPF18-516400. (Ladi Decl., ¶ 3, Ex. B.) The Court ordered Pacific Union to “join

2 and participate” in the arbitration between Ms. Burnham and Ms. Galli. (Id.)

3 B. The Arbitrator Bifurcated the Arbitration and Indicated Neither Partial Award
Issued Would Be Immediately Enforceable.
4

5 Thereafter, Pacific Union participated in the arbitration. At Pacific Union’s request and

6 over Ms. Galli’s objections, the arbitration hearing was bifurcated because of a scheduling conflict

7 by Pacific Union’s counsel. (Ladi Decl., ¶¶ 4, 5.) In fact, Ms. Burnham’s counsel was the first to

8 suggest the bifurcation because Ms. Burnham wanted the hearing against Ms. Galli to proceed as

9 scheduled, and then Pacific Union adopted this suggestion. (Id.)

10 However, before the Arbitrator issued a ruling between Ms. Burnham and Ms. Galli for the

11 first phase, and as the parties were scheduling the second phase of the Arbitration, the Arbitrator

12 sent a detailed email on December 22, 2019 that clarified that any interim award issued after the

13 first phase would not be immediately enforceable (as Ms. Burnham now suggests):

14 I say this because counsel made comments earlier in the case suggesting his
anticipation that an enforceable order might be forthcoming out of the first
15 phase hearing. Such, however, will not be the case. This is a single proceeding
with bifurcated hearings. As mentioned above, at the conclusion of the briefing
16 for the first phase, I will be issuing a Partial Final Award which will finally resolve
such issues as were presented in that first phase; it might not, however, address
17 all of the issues as between Ms. Burnham and Ms. Galli, and it certainly won’t
address issues between Ms. Galli and Pacific Union. More significantly, it will not
18 be the sort of order that could be returned to Superior Court, reduced to
judgment or otherwise enforced. That sort of order will follow the second
19 phase. Thus although Ms. Burnham has expressed no position on the scheduling of
the second phase, it remains in her interest that it be set as soon as reasonably
20 possible.

21 (Ladi Decl., ¶ 6, Ex. C [emphasis added].) No party objected to this structure. (Ladi Decl., ¶ 5–7.)

22 C. The Arbitrator Issued the First Partial Award.

23 As a result of the bifurcation, a hearing on Ms. Burnham’s claims against Ms. Galli

24 proceeded on November 5, 6, 7, and December 4, 2019, and the Arbitrator then issued a Partial

25 Final Award dated February 12, 2020 (“First Partial Award”) which ordered rescission. (Ladi

26 Decl., ¶ 2, Ex. A at pp. 3, 4, 36.) The First Partial Award ordered Ms. Burnham to return the

27 Property to Ms. Galli, and Ms. Galli to pay Ms. Burnham $2,525,104.93. (Id.)

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MARINA GALLI’S OPPOSITION TO PEGGY BURNHAM’S PETITION FOR ORDER CONFIRMING
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1 D. The Arbitrator Issued an Attorney Fee Award in Favor of Ms. Burnham.

2 On March 31, 2020, after a separate motion by Ms. Burnham, the Arbitrator issued an

3 Order on Request for Attorneys’ Fees and Costs (Phase I) (hereinafter, the “Ms. Burnham’s Fee

4 Award”) that ordered Ms. Galli to pay Ms. Burnham $330,413.25 in attorneys’ fees and

5 $58,437.47 in costs (a total of $388,850.72). (Ladi Decl., ¶ 2, Ex. A at pp. 3, 4, 49.)

6 E. The Arbitrator Issued the Second Partial Award and an Attorney Fee Award, Both in
Favor of Ms. Galli Against Pacific Union.
7

8 A hearing on Ms. Galli’s claims against Pacific Union went forward on February 25 and

9 26, 2020, and the Arbitrator then issued the Second Partial Final Award on March 30, 2020

10 (“Second Partial Award”) in the amount of $339,356.21 in favor of Ms. Galli against Pacific

11 Union based on Ms. Galli’s claims for indemnification. (Ladi Decl., ¶ 2, Ex. A at pp. 3, 4, 64.)

12 Thereafter, Ms. Galli filed a motion for attorneys’ fees and costs against Pacific Union and on

13 May 19, 2020 the arbitrator entered the Order on Motion for Attorneys’ Fees (Phase II) (“Ms.

14 Galli’s Fee Award”) in favor of Ms. Galli against Pacific Union in the amount of $204,215.70 in

15 fees and $18,195.31 in costs (a total of $222,411.01). (Ladi Decl., ¶ 2, Ex. A at pp. 3, 4, 74.)

16 F. The Arbitrator Ruled on Ms. Galli’s Motion to Clarify on May 7, 2020.

17 Following demands from Ms. Burnham and in light of the Arbitrator’s December 22, 2019

18 email, on April 20, 2020, Ms. Galli filed a motion to clarify the enforceability of the First Partial

19 Award, and to clarify the interrelationship between the two partial awards (seeking an order that
20 Pacific Union would pay Ms. Burnham directly rather than Ms. Galli). (Ladi Decl., ¶ 8, Ex. D.) In

21 a ruling issued on May 7, 2020 and served the following day, the Arbitrator denied Ms. Galli’s

22 motion on the grounds that it is up to the Court to decide whether or not First Partial Award can be

23 enforced, and any concerns about the timing were moot because the courts were then essentially

24 closed due to the global pandemic. (Id.) The Arbitrator also denied Ms. Galli’s request to have

25 Pacific Union pay Ms. Burnham directly. (Id.)

26 G. Ms. Galli Satisfied the First Partial Award and the Attorney Fee Award in Favor of
Ms. Burnham.
27

28 On May 11, 2020 (just three days after the Arbitrator’s May 8 ruling), Ms. Burnham filed
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MARINA GALLI’S OPPOSITION TO PEGGY BURNHAM’S PETITION FOR ORDER CONFIRMING
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1 this petition, seeking to confirm the First Partial Award and Ms. Burnham’s Fee Award. On

2 June 9, 2020, the parties finalized and signed a stipulation for partial judgment (the “Stipulation”)

3 with a proposed partial judgment attached and incorporated, which was submitted to the Court ex

4 parte on June 12, 2020 and granted by the Court. (Ladi Decl., ¶ 11, Ex. G.) The Stipulation

5 provided that Ms. Galli and Ms. Burnham would complete the rescission ordered in the First

6 Partial Award through an escrow paid by Ms. Galli, and that Ms. Galli would also satisfy Ms.

7 Burnham’s Fee Award through the escrow. (Id.) The Stipulation reserved the remaining issues,

8 including those raised herein, for a court ruling if necessary. (Id.)

9 However, even before the Stipulation, Ms. Galli indicated her willingness to complete the

10 rescission through an escrow. It was first proposed to Ms. Burnham’s counsel via telephone call

11 on May 11, 2020 (the same day the petition was filed and only three days after the Arbitrator’s

12 ruling on May 8 on Ms. Galli’s motion to clarify) and again by email on May 13, 2020. (Ladi

13 Decl., ¶ 9, Ex. E.) On May 27, 2020, Ms. Galli deposited $2,525,104.93 into the escrow to satisfy

14 the First Partial Award. (Ladi Decl., ¶ 10, Ex. F.) On June 5, 2020, Ms. Galli deposited

15 $388,850.72 into the escrow to satisfy Ms. Burnham’s Fee Award. (Id.) On June 22, 2020, the

16 escrow closed, and Ms. Burnham received the proceeds. (Id.)

17 Some of the delays in closing the escrow were attributed to Ms. Burnham’s counsel’s

18 insistence that the Court first enter a partial Judgment, which necessitated the Stipulation and ex

19 parte application on June 12, 2020, and other delays were due to changes in escrow closing
20 instructions, Ms. Burnham’s quitclaim deed to the Property, and other similar administrative

21 issues outside Ms. Galli’s control. (Ladi Decl., ¶ 11.)

22 H. The Arbitrator Issued a Final Award on July 7, 2020.

23 On July 7, 2020, the Arbitrator issued and served a Final Award, which included the First

24 Partial Award, Ms. Burnham’s Fee Award, the Second Final Award, and Ms. Galli’s Fee Award.

25 (Ladi Decl., ¶ 2, Ex. A.) As of July 7, the date of the Final Award, the Arbitrator ruled that Ms.

26 Galli owed Ms. Burnham $2,525,104.93 in exchange for return of the Property (rescission), and

27 $388,850.72 in attorneys’ fees and costs. (Id., at pp. 3, 4.) The Arbitrator did not award Ms.

28 Burnham any additional pre-judgment interest between the date of the First Partial Award on
12902.0001/15416912.4 9
MARINA GALLI’S OPPOSITION TO PEGGY BURNHAM’S PETITION FOR ORDER CONFIRMING
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1 February 12 and July 7 or on Ms. Burnham’s Fee Award on March 31, 2020 and July 7. (Id.)

2 III. ARGUMENT

3 A. Ms. Burnham is Not Entitled to Pre-Judgment Interest.

4 Relying on Pierotti v. Torian (2000) 81 Cal.App. 4th 17, 27, Ms. Burnham argues that she

5 is entitled to pre-judgment interest at 10% from the date of the First Partial Award until it is paid

6 on the entire $2,525,104.93 due, and pre-judgment interest at 10% from the date of Ms. Burn-

7 ham’s Fee Award until it is paid on the entire $388,850.72 due. (Mtn. P&As at 8:3–9:3.)

8 However, the Final Award was issued on July 7, 2020 and Ms. Burnham’s petition was

9 premature. (See Ladi Decl., ¶ 2, Ex. A.) The Court in County of Solano v. Lionsgate Corp., (2005)

10 126.Cal.App.4th 741, 753 made it clear that the award of pre-judgment interest as sought by Ms.

11 Burnham runs from the date of the Final Award. “[T]he [prevailing party] was entitled to an award

12 of interest under Civil Code section 3287, subdivision (a) as of the date of the final award.” (Id. at

13 753 (emphasis added).) The courts in Pierotti v. Torian (2000) 81 Cal.App. 4th 17 and Britz, Inc.

14 v. Alfa-Laval Food & Dairy Co. (1995) 34 Cal.App. 4th 1085 (which was relied upon and cited in

15 Pierotti v. Torian) say nothing about the award of pre-judgment interest based on an interim

16 rulings like the First Partial Award and Ms. Burnham’s Fee Award.

17 Code of Civil Procedure section 1283.4 provides that to be a final award: “[t]he award

18 shall be in writing and signed by the arbitrators concurring therein. It shall include a determination

19 of all the questions submitted to the arbitrators the decision of which is necessary in order to deter-
20 mine the controversy.” The name of the ruling does not control; instead, the ruling needs to meet

21 the requirements of section 1283.4. (See Horn v. Gurewitz (1968) 261 Cal.App.2d 255, 259.) It is

22 common for arbitrators to issue interim rulings. In Hightower v. Superior Court (2001) 86 Cal.

23 App.4th 1415, the arbitrator issued a partial final award, which the arbitrator expressly indicated

24 was enforceable (not the case here) while reserving the right to later issue a later final award, and

25 the court upheld this incremental award process. (Id. at 1419, 1420.) In Kaiser Foundation Health

26 Plan, Inc. v. Superior Court (2017) 13 Cal.App.5th 1125, the court held a partial final award did

27 not determination of all the questions submitted to the arbitrators and so it was not a final award

28 under section 1283.4 (Id. at 1131.)
12902.0001/15416912.4 10
MARINA GALLI’S OPPOSITION TO PEGGY BURNHAM’S PETITION FOR ORDER CONFIRMING
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1 Very recently, the court in Lonky v. Patel (2020) ___Cal.App.5th___ [2020 Cal. App.

2 LEXIS 617] examined the exact issue of when an arbitrator’s ruling is considered an “award.”

3 “The parties who have contractually agreed to arbitrate get to decide how to structure their arbitra-

4 tion proceeding (subject to the arbitration entity’s governing rules) and, thus, which questions are

5 to be submitted to the arbitrator.” (Id. at *16-17 [citations and quotation marks omitted].) “But this

6 leeway granted to the parties and their arbitrator does not relieve a trial court from its duty to

7 assess for itself whether the ruling of the arbitrator at issue meets the statutory definition of an

8 ‘award.’” (Id. at *17 [citations and quotation marks omitted].) “[A] particular ruling is an “award”

9 only if that ruling (1) ‘determine[s] all issues that are necessary to the resolution’ of ‘the contro-

10 versy’ being subjected to arbitration, and (2) leaves unresolved only those ‘issues’ that are ‘poten-

11 tial,’ ‘conditional’ or that otherwise ‘could not have been determined’ at the time of that ruling.

12 (Id. at *18-19 [citations omitted].)

13 Applying these rules, the court in Lonky v. Patel held an interim ruling was not an

14 “award,” even though it awarded compensatory damages, punitive damages, and determined the

15 plaintiff was the prevailing party; the interim ruling did not determine the attorneys’ fees and costs

16 and so it did not “determine all issues necessary to the resolution of the controversy between the

17 parties.” (Id. at * 21.) Furthermore, while the arbitrator could have determined everything at once,

18 the parties agreed to structure their arbitration with such interim rulings. (Id.) The Lonky court also

19 rejected the various arguments made by plaintiff resisting this conclusion, including the argument
20 that the interim award resolved “all issues submitted for decision.” What matters is whether or not

21 the ruling resolved the parties’ controversy, not just that it resolved a question that is part of the

22 controversy, and a contrary rule would turn every ruling into an award. (Id. at *23-24.)

23 Here too, the structure adopted by the Arbitrator and the parties involved interim rulings

24 followed by the Final Award. First, when the Court granted Ms. Galli’s petition to compel, the

25 Court made it clear that Pacific Union was ordered to join and participate in the arbitration

26 initiated by Ms. Burnham against Ms. Galli. (Ladi Decl., ¶ 3, Ex. B.) And Pacific Union did

27 participate in the same arbitration, though the arbitration was bifurcated into separate hearings

28 with interim rulings due to Pacific Union’s counsel’s scheduling conflict. Thus, the “controversy”
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MARINA GALLI’S OPPOSITION TO PEGGY BURNHAM’S PETITION FOR ORDER CONFIRMING
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1 that was submitted for the Arbitrator’s decision included not just Ms. Burnham’s claims against

2 Ms. Galli, but also Ms. Galli’s claims against Pacific Union. (See Lonky v. Patel, supra, 2020 Cal.

3 App. LEXIS 617 at *21.) The First Partial Award and Ms. Burnham’s Fee Award resolved only

4 issues raised by Ms. Burnhan’s claims against Ms. Galli, leaving unresolved Ms. Galli’s claims

5 against Pacific Union. Accordingly, those interim rulings did not determine all issues that were

6 necessary to the resolution of the entire controversy that was submitted to arbitration. And so

7 neither of those rulings was an “award” within the meaning of Code of Civil Procedure section

8 1283.4.

9 Second, the Arbitrator also made his intentions clear in the December 22 email that

10 specified the interim award that resulted after the first phase would not be a final award and not

11 immediately enforceable because the matter, although bifurcated, was a single proceeding with

12 multiple hearings. (Ladi Decl., ¶ 6, Ex. C.) The Arbitrator also wrote the interim award might not

13 even address all of the issues between Ms. Burnham and Ms. Galli. (Id.) No party, including Ms.

14 Burnham objected to this structure. (Ladi Decl., ¶ 7.) Ms. Burnham even accepted this structure, as

15 she requested her attorneys’ fees and costs in a separate motion after the First Partial Award. (Ladi

16 Decl., ¶ 2, Ex. A at pp. 3, 4, 49.) Similarly, the First Partial Award itself also expressly said that a

17 second phase of the arbitration would take place later. (Ladi Decl., ¶ 2, Ex. A at p. 8.)

18 Hence, as in Lonky v. Patel, it is clear that all of the parties and the Arbitrator agreed to

19 structure the arbitration with interim rulings followed by the Final Award.
20 Ms. Galli also relied upon and conducted herself according to this structure under which

21 the First Partial Award and Ms. Burnham’s Fee Award were not enforceable awards under section

22 1283.4. The rationale behind awarding post-award and pre-judgment interest is that a final award

23 sets forth specific damages, certain and capable of being calculated, and therefore the right to

24 recover interest begins from that day. (See Pierotti v. Torian, supra, 81 Cal.App.4th at 27.) Here,

25 the Court’s order compelling Pacific Union to arbitration, and the Arbitrator’s December 22, 2019

26 email made it clear to Ms. Galli that the First Partial Award and Ms. Burnham’s Fee Award were

27 not final and certain, and could be subject to change following the second phase of arbitration

28 (Ladi Decl., ¶ 2, Ex. A)—just as one of the interim rulings in Lonky v. Patel was, in fact, changed
12902.0001/15416912.4 12
MARINA GALLI’S OPPOSITION TO PEGGY BURNHAM’S PETITION FOR ORDER CONFIRMING
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1 at a later stage of the arbitration proceedings in that case (see 2020 Cal. App. LEXIS 617, a t *8,

2 21-22).

3 Though, in the end, the Final Award merely incorporated the first and second phase rulings

4 without change, that result was not fore-ordained. For example, because Ms. Galli’s claims against

5 Pacific Union were for, among other things, partial and total indemnification, the Arbitrator could

6 have fashioned a remedy in which Pacific Union was wholly or in part responsible for Ms.

7 Burnham’s damages and would have to pay Ms. Burnham directly (as requested by Ms. Galli in

8 her April 20, 2020 motion).

9 Arbitrators have broad discretion to fashion an appropriate remedy, and courts defer to the

10 arbitrator’s determination as to the scope of his or her authority and the choice of a remedy. “The

11 limitations placed on judicial review and oversight of an arbitration award have resulted in a sub-

12 stantial deference to the arbitrator’s own assessment of his or her authority to resolve an issue.”

13 (Hightower v. Superior Court, supra, 86 Cal.App.4th at 1434 [citations omitted].) “The same

14 deference extended to an arbitrator’s determination as to the scope of his or her authority also

15 applies to the arbitrator’s choice of a remedy.” (Id. [emphasis original] [citations omitted].) Here,

16 the Arbitrator and parties chose, as evidenced by the December 22, 2019 and the Final Award, to

17 resolve this dispute via interim rulings (because of the bifurcated hearings) which were not

18 enforceable until the Final Award was issued on July 7. (Ladi Decl., ¶ 2, 6, Exs. A, C.)

19 Ms. Burnham’s petition seeking pre-judgment interest runs contrary to the structure and
20 remedy agreed by the parties and Arbitrator to resolve this dispute. The only enforceable award

21 under section 1283.4 is the Final Award issued July 7, 2020 . (Ladi Decl., ¶ 2, Ex. A.) And, Ms.

22 Galli paid the amounts she owed Ms. Burnham before the July 7 Final Award on June 22, 2020.

23 (See Ladi Decl., ¶ 10, Ex. F.) Therefore, the Court should deny any pre-judgment interest.

24 B. Alternatively, the Interest Should Be Reduced.

25 In the alternative, if the arbitration is treated as involving two separate “controversies”—

26 one between Ms. Burnham and Ms. Galli, and the other between Ms. Galli and Pacific Union,

27 prejudgment interest may be awardable, but only at a lower rate of interest, from a later date than

28 Ms. Burnham requests, and ending on Ms. Galli’s tender of the sums awarded Ms. Burnham.
12902.0001/15416912.4 13
MARINA GALLI’S OPPOSITION TO PEGGY BURNHAM’S PETITION FOR ORDER CONFIRMING
ARBITRATION AWARD
1 1. The First Partial Award Set Forth an Interest Rate Lower than 10%
and on Only $2,145,000.
2

3 Any award of prejudgment interest must be fashioned consistent with the award of pre-

4 judgment interest in the First Partial Award. There, the Arbitrator specifically awarded pre-

5 judgment interest, in his discretion, at 7% and on $2,145,000 (which was the purchase price for

6 the Property back in 2016); he declined to award pre-judgment interest on Ms. Burnham’s remain-

7 ing consequential damages. (Ladi Decl., ¶ 2, Ex. A at pp. 32, 33.) Pre-judgment interest on the

8 First Partial Award should likewise be applied only against $2,145,000, not the full sum which

9 that ruling awards. And the Arbitrator also awarded Ms. Galli an offset for the fair market rental

10 value of the Property at $8,195.45 per month, because although Ms. Burnham’s funds were tied

11 up, she also had use of the Property. (Ladi Decl., ¶ 2, Ex. A at p. 33.) It would be grossly

12 inequitable and inconsistent with the arbitrator’s clear intent to allow Ms. Burnham to obtain

13 interest while still maintaining possession and control of the Property.

14 Ms. Burnham argues the interest rate should be 10% based on Civil Code section 3287(a)

15 and 3289. (Mtn. P&As at 9:1–3.) However, section 3289 provides 10% only where the contract

16 does not “stipulate” a rate of interest. (Civ. Code, § 3289 subd. (b).) Here, the “contract” that Ms.

17 Burnham seeks to enforce is the First Partial Award and Ms. Burnham’s Fee Award. (Jones v.

18 Kvistad (1971) 19 Cal.App.3d 836, 840 [“[A]n award that has not been confirmed or vacated has

19 the force and effect of a contract in writing between the parties to the arbitration.”]; Code Civ.
20 Proc., § 1287.6 (same).)

21 That “contract” does “stipulate” a rate of interest; specifically 7%, with an offset for rental

22 value while Ms. Burnham had possession of the Property. (Ladi Decl., ¶ 2, Ex. A at pp. 32, 33.)

23 Since the “contract” “stipulates” a rate of interest, section 3289(b) does not apply. (Civ. Code, §

24 3289 subd. (a).) Instead, any prejudgment interest accrues at the rate set by the Arbitrator, 7%, less

25 the rental value offset. (See Bosack v. Soward (W.D. Wash. February 25, 2008) 2008 U.S. Dist.

26 LEXIS 30532, *34 [distinguishing Pierotti v. Torian (2000) 81 Cal.App. 4th 17, the court denied a

27 request for pre-judgment interest on the punitive damages part of an arbitration final award

28 because, among other things, the final award carefully set forth the manner to which pre-judgment
12902.0001/15416912.4 14
MARINA GALLI’S OPPOSITION TO PEGGY BURNHAM’S PETITION FOR ORDER CONFIRMING
ARBITRATION AWARD
1 int

Case Info

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Charles F. Haines Track Judge’s New Case

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Document Filed Date

July 16, 2020

Case Filing Date

May 11, 2020

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Motion-Secondary: PEGGY CONROY BURNHAM VS. MARINA GALLI

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