Preview
1 GLYNN & FINLEY, LLP
CLEMENT L. GLYNN, Bar No. 57117
2 ADAM M. RAPP, Bar No. 280824
One Walnut Creek Center 5/6/2020
3 100 Pringle Avenue, Suite 500
Walnut Creek, CA 94596
4 Telephone: (925) 210-2800
Facsimile: (925) 945-1975
5 Email: cglynn@glynnfinley.com
Email: arapp@glynnfinley.com
6
Attorneys for Defendant
7 Stephen A. Vannucci, M.D., Inc.
8
9 SUPERIOR COURT OF THE STATE OF CALIFORNIA
10 FOR THE COUNTY OF BUTTE
11
) Case No. 19CV03856
12 OMAR JAY ON and BARBARA ON, )
) OPPOSITION OF STEPHEN A.
13 Petitioners/Plaintiffs, ) VANNUCCI, M.D., INC TO
) PETITIONERS’ MOTION
14 vs. ) TO AMEND JUDGMENT
)
15 STEPHEN A. VANNUCCI, M.D., INC and ) Date: May 20, 2020
NORTH VALLEY DERMATOLOGY ) Time: 9:00 a.m.
16 CENTER, ) Dept: 1
) Before: APJ, Tamara Mosbarger
17 Respondents/Defendants. )
)
18
19 This Memorandum is submitted by Stephen A. Vannucci, M.D., Inc. (“SAVI”) in
20 opposition to Petitioners’ Motion to Amend the Judgment. Among other relief, the motion asks
21 the Court to modify the final judgment entered in this action and make SAVI directly liable for a
22 portion of the On damages that the arbitrator declined to award against SAVI. Thus, in this
23 respect, the motion seeks to change the arbitrator’s Award, which as a matter of law this Court
24 may not do. As we explain below, this aspect of the motion should be denied.
25 ///
26 ///
27 ///
28 ///
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OPP. OF STEPHEN A. VANNUCCI, M.D., INC. TO PETITIONER’S MOTION TO AMEND JUDGMENT
1 The heated rhetoric permeating the motion obscures the factual background. In particular
2 we note that a cornerstone of Petitioners’ narrative is the assertion that “while [North Valley
3 Dermatology Center (“NVDC”)]1 and its insider partners have lined their pockets at the expense
4 of NVDC’s creditors, they have made no serious effort to resolve NVDC’s obligations to
5 Petitioners.” (Mem. 11:22-23, citing Banks Decl.; emphasis added). That assertion is
6 remarkable given that the parties engaged in mediation in December 2019 at which a very
7 substantial settlement offer was made. 2
8 I. FACTUAL BACKGROUND
9 A. The Parties
10 Petitioner Omar On’s dermatology practice flourished in connection with that of NVDC
11 and its predecessors in interest, including Dr. Richey, with whom he worked until 2007. (Pet’rs
12 RJN Ex. 1, sub-Ex. A [Arbitrator’s Final Award] (“Award”) at 3.) On was a dermatology
13 physician’s assistant or “PA” which means that, with a physician supervisor, he was able to
14 provide independently most of the services that a dermatologist could; certain matters (for
15 example, reading biopsy slides) required an M.D. (Id. at 5, 8 n.27.)
16 For years, On, together with SAVI and Dr. Richey, were parties to a Medical Office
17 Expense Sharing Agreement. (Id. at 4.) Under the agreement’s formula, On and the physicians
18 paid their share of expenses based on the number of patients each saw; because On saw a high
19 volume of patients in the office, he paid a significant percentage of the shared expenses. (Ibid.)
20 Although he was not a physician, or a partner, On was treated much like the partner physicians.
21 For example, he would attend weekly meetings of the partnership and had access to the financial
22 records of the practice; minutes reflect his regular attendance, participation, and voting on
23
24 1
As the Court is aware, NVDC is a California general partnership currently in bankruptcy
proceedings. In re North Valley Dermatology Ctr., No. 20-20457 (Bankr. E.D. Cal.). NVDC’s
25 partners include (or have at times included) the physician corporations, including SAVI, which
are the subject of the current Motion. NVDC and SAVI were joined by the Ons as Respondents
26 in the arbitration underlying this action, but at present only SAVI is a judgment debtor in this
court, judgment having been entered after NVDC’s bankruptcy filing.
27
2
Petitioners’ assertion characterizes the contents of the confidential mediation, but SAVI
28 will not reveal the settlement offer made unless Petitioners will stipulate that it can be disclosed.
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OPP. OF STEPHEN A. VANNUCCI, M.D., INC. TO PETITIONER’S MOTION TO AMEND JUDGMENT
1 matters as if he were an owner. (Declaration of Stephen A. Vannucci in Support of SAVI’s Opp.
2 ¶ 2.)
3 On operated as an independent contractor. He hired and fired his own staff, he
4 determined his work hours and the days he would work, and he operated in space that was
5 dedicated to his practice. (Award at 8, 10-11.) On’s supervising physician was Dr. Richey until
6 2007, when, desiring to expand his practice and hire additional PAs, Richey required another
7 physician to supervise On under California law and asked Vannucci to do so. (Id. at 5.) Dr.
8 Vannucci agreed and went to local lawyer Herb McGuire for advice on how this should be
9 formalized. Mr. McGuire drew up an “Employment Agreement,” between On and SAVI, even
10 though On would continue to function independently as he always had. (Id. at 5.) (Mr. McGuire
11 is deceased, so no one has been able to determine why he chose this form to document the
12 parties’ relationship.)
13 On continued to function with independence under SAVI. He would sometimes take full
14 days off, and then make up for it by working long days. (Id. at 8.) None of this was a problem
15 for the practice, which in 2010 formed the North Valley Dermatology Center general
16 partnership, consisting of Donald F. Richey, M.D., Inc., F. Paul Sajben, M.D., Inc., and SAVI.
17 (Id. at 9.) In 2012 a new physician, Dr. Kafele Hodari, joined the practice. (Id. at 9 n.31.)
18 Hodari told the other doctors that he did not think On should continue to attend NVDC’s weekly
19 partnership meetings, and objected to On having access to NVDC’s financial records. (Vannucci
20 Decl. ¶ 3.) In relatively short order, On—who had always been a strong producer—became
21 disaffected and left NVDC in 2013. (Award at 12.) (Dr. Richey retired in 2015. [Id. at 9
22 n.31.].)
23 On later filed suit claiming that he was an employee—not an independent contractor—
24 and that he was owed wages and other employment benefits (e.g., meal breaks, rest breaks, etc.).
25 NVDC tendered to its carrier, and was defended by the Angelo Kilday firm. (Vannucci Decl.
26 ¶¶ 3-4.) The carrier took the position that this was a mixed case, so that a defense would be
27 provided under a reservation of rights. (Ibid.) Notably and regrettably, the carrier ignored
28 obvious Cumis issues that would contribute to the disastrous arbitration award. The Ons made
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OPP. OF STEPHEN A. VANNUCCI, M.D., INC. TO PETITIONER’S MOTION TO AMEND JUDGMENT
1 detailed settlement demands that the carrier and the law firm it had retained considered grossly
2 excessive. Without Cumis counsel to advise them independently, the professional corporations
3 comprising NVDC believed that the risk posed by the On claims was minimal. (Id. ¶ 5.) As a
4 result, only two settlement offers (funded only partially by the carrier) were made: the first was
5 for $100,000 and the second, on the eve of arbitration, was for $170,000 (again, split with the
6 carrier). (Ibid.) Predictably, those offers went nowhere. Had Cumis counsel been appointed, the
7 professional corporations would have been able to understand risk and to advocate forcefully that
8 the carrier put up the $1 million policy limits.
9 B. The Arbitration
10 The arbitration proceedings are generally summarized in Petitioners’ brief. Not
11 surprisingly, NVDC and SAVI were floored by the arbitration result given what they had been
12 led to believe throughout. In the arbitrator’s 44-page award, she generally found NVDC and
13 SAVI jointly and severally liable for the damages she awarded, except that she held NVDC—
14 and not SAVI—was responsible for the $48,729.33 wage restitution portion of the award, and
15 $163,647 in fees and $54,377 in costs related to the wage restitution award. Thus, the arbitrator
16 held that SAVI was not jointly and severally liable with NVDC for $266,753.33 of the award.
17 This was not an error, but rather the result of the arbitrator’s reasoned decision. (See also Mem.
18 at 3.) Petitioners made no motion to correct the award, and instead petitioned this Court to
19 confirm it, which the Court did on February 13, 2020. As we show below, the Court may not
20 now change what the arbitrator ordered. Before doing so, we briefly address Petitioners’
21 accusations regarding the bankruptcy proceedings.
22 C. The Bankruptcy
23 As noted above, in December 2019, the parties mediated. Despite a serious offer to settle
24 by NVDC and SAVI—without any contribution by the carrier that had denied indemnity—the
25 case did not settle.
26 The On arbitration award destroyed the NVDC partnership. Dr. Hodari’s PC withdrew in
27 September (after the preliminary award). (Vannucci Decl. ¶ 6.) In the Fall, Dr. Sabjen decided
28 to simply retire from the practice of dermatology. (Ibid.) With Richey’s 2015 retirement, that
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OPP. OF STEPHEN A. VANNUCCI, M.D., INC. TO PETITIONER’S MOTION TO AMEND JUDGMENT
1 left only SAVI among the four NVDC partners. A partnership of one does not exist. See Corp.
2 Code § 16801(1) (general partnership at will dissolved upon express will of more than half the
3 partners); General Partnership Agreement of NVDC (Banks Decl. Ex. 1) § 6.22 (providing for
4 dissolution of NVDC upon dissolution of 3 or more partners).
5 Faced with the ruinous effect of the On arbitration award, NVDC had two choices:
6 (1) immediately dissolve as required under its governing agreement and California law, or
7 (2) file for Chapter 11 bankruptcy. The latter option ensured an orderly windup. NVDC’s
8 bankruptcy proceeding permits it to face its obligations in an orderly fashion, obtain top value for
9 its remaining assets, and, critically, ensure that NVDC’s patients would have time to seek proper
10 medical care. The bankruptcy process protected NVDC, its facilities, and its staff from a sudden
11 implosion that could have dramatically complicated patient care in the face of the Ons’
12 aggressive collection efforts. Any suggestion that NVDC’s bankruptcy was a device to “thwart”
13 or “cheat” Petitioners is neither accurate nor fair. With the protection of the bankruptcy court,
14 the medical practice was able to arrange for transition of patient care without the disruption of
15 attachment of bank accounts, seizure of critical infrastructure, or other interference by creditors. 3
16 II. ARGUMENT
17 A. The Court May Not Amend the Judgment to Change the Arbitrator’s
Award.
18
19 Petitioners ask the Court to change what the arbitrator already has decided. It is clear
20 under California law that arbitration awards are final and may not be modified except under
21 extremely limited conditions specified by statute, none of which are present here.
22 “Any party to an arbitration in which an award has been made may petition the court to
23 confirm, correct or vacate the award. The petition shall name as respondents all parties to the
24 arbitration and may name as respondents any other persons bound by the arbitration award.”
25
3
NVDC’s bankruptcy proceeding recently was converted from Chapter 11 to Chapter 7, as
26 is common, economical, and reasonable under the circumstances here, when the debtor’s assets
are liquidated and its liabilities determined. Order Converting Case, In re NVDC, Bankr.
27 E.D.Cal. No. 20-20457, Dkt. 148 (Apr. 21, 2020). Given the posture of NVDC’s estate upon
filing, such a conversion was inevitable, not nefarious or punitive.
28
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OPP. OF STEPHEN A. VANNUCCI, M.D., INC. TO PETITIONER’S MOTION TO AMEND JUDGMENT
1 Code Civ. Proc. § 1285. “If a petition . . . under this chapter is duly served and filed, the court
2 shall confirm the award as made, . . . unless in accordance with this chapter it corrects the award
3 and confirms it as corrected, vacates the award or dismisses the proceedings.” Code Civ. Proc.
4 § 1286.
5 Section 1286.6 specifies the limited grounds upon which an award can be corrected. A
6 court can correct the award only where
7 (a) There was an evident miscalculation of figures or an evident mistake in the
description of any person, thinking or property referred to in the award;
8
(b) The arbitrators exceeded their powers but the award may be corrected without
9 affecting the merits of the decisions upon which the controversy submitted; or
10 (c) The award is imperfect as a matter of form, not affecting the merits of the
controversy.
11
12 But Petitioners did not move to vacate or correct the award. Instead, they moved to confirm it,
13 which the Court did. The statutory limitations on a court’s authority respecting an arbitration
14 award reflect the fact that, apart from these grounds, arbitration awards are immune from judicial
15 review. Moncharsh v. Heily & Blase, 3 Cal.4th 1, 12-13 (1992). The rule applies to all
16 California arbitrations, regardless of form. Porter v. Golden Eagle Ins. Co., 43 Cal.App.4th
17 1282, 1288-89 (1996). “[A]n award reached by an arbitrator pursuant to a contractual agreement
18 to arbitrate is not subject to judicial review except on the grounds set forth in sections 1286.2 (to
19 vacate) and 1286.6 (for correction).” Moncharsh, 3 Cal.4th at 33.
20 None of the limited grounds set forth in the Code apply here, and Petitioners do not
21 contend otherwise. The arbitrator held that SAVI was not jointly and severally liable for the
22 wage restitution (and associated fees and costs) portion of the award. That was not a mistake,
23 nor was it alleged to be. It was the arbitrator’s reasoned conclusion. Absent a proper petition to
24 correct the arbitrator’s award, this Court lacks authority to modify its substance. Valsan
25 Partners Limited Partnership v. Calcor Space Facility, Inc., 25 Cal.App.4th 809, 819-20 (1994)
26 (after addressing procedural infirmities in failing to petition for correction and “[a]ssuming for
27 discussion’s sake only that the proper procedures were followed, [concluding that] the court
28 ///
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OPP. OF STEPHEN A. VANNUCCI, M.D., INC. TO PETITIONER’S MOTION TO AMEND JUDGMENT
1 could not and should not have amended the award to include a sum certain for damages which
2 was not included in the award as rendered”).
3 Notwithstanding Petitioners’ statements regarding the “broad inherent power” of
4 California courts under Sections 128 and 187 (Mot. at 7), this Court’s powers following the
5 conclusion of the 2019 arbitration proceedings comprise “merely a vestigial jurisdiction,” which
6 “consists solely of making the determination, upon conclusion of the arbitration proceedings, of
7 whether there was an award on the merits . . . or not.” Brock v. Kaiser Found. Hosps., 10
8 Cal.App.4th 1790, 1796 (1992) (citations omitted).
9 [U]nder its “vestigial” jurisdiction, a court may[] appoint arbitrators if the method
selected by the parties fails (§ 1281.6); grant a provisional remedy “but only upon
10 the ground that the award to which an applicant may be entitled may be rendered
ineffectual without provisional relief” (§ 1281.8, subd. (b)); and confirm, correct
11 or vacate the arbitration award (§ 1285). Absent an agreement to withdraw the
controversy from arbitration, however, no other judicial act is authorized.
12
13 Titan/Value Equities Grp., Inc. v. Superior Court, 29 Cal.App.4th 482, 487 (1994) (emphasis
14 added; citing Brock and Byerly v. Sale, 204 Cal.App.3d 1312, 1315 (1988)). Petitioners ask this
15 Court to alter the arbitrator’s reasoned conclusions as to NVDC’s and SAVI’s respective
16 liabilities. But “it would be wholly incompatible with established policies of the law to permit
17 the court thereafter to intervene in, and necessarily interfere with, the arbitration ordered. In
18 large measure, it would not only preclude the parties from obtaining an adjustment of their
19 differences by a tribunal of their choosing, but it would also recreate the very delays incident to a
20 civil action that the arbitration agreement was designed to avoid.” Id. at 488 (internal citations
21 and quotations omitted).
22 Petitioners have not cited a case in which Sections 128 and 187 have been invoked to
23 modify, after entry of judgment, the final, reasoned award of a duly appointed arbitrator. Nor
24 have they attempted to explain how such a procedure would be consistent with the extremely
25 limited power of a trial court (codified by statute and confirmed by binding authority) following
26 its issuance. Parties to an arbitration bargain for finality; thus this Court properly “confirm[ed]
27 the award as made” as was mandatory when the Ons brought their Petition. Code Civ. Proc. §
28 ///
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OPP. OF STEPHEN A. VANNUCCI, M.D., INC. TO PETITIONER’S MOTION TO AMEND JUDGMENT
1 1286. The Ons may not now avoid the express rules of the California Arbitration Act by
2 invoking Sections 128 and 187.
3 B. SAVI Does Not Address Petitioner’s Larger Point That the Judgment
Against the NVDC Partnership Should Be Modified to Include the Member
4 Partners.
5 SAVI does not here address Petitioners’ request that the Judgment be modified to include
6 NVDC’s other member partners. This is because, with the one notable exception discussed
7 above, SAVI is already named in the Judgment. SAVI defers to the other professional
8 corporations to address that argument.
9 III. CONCLUSION
10 Petitioners’ request that the Court amend the judgment to make SAVI jointly and
11 severally liable for the wage restitution portion of the award should be denied. The arbitrator
12 ruled otherwise, and the Court may not change her award.
13 Dated: May 6, 2020 GLYNN & FINLEY, LLP
CLEMENT L. GLYNN
14 ADAM M. RAPP
One Walnut Creek Center
15 100 Pringle Avenue, Suite 500
Walnut Creek, CA 94596
16
17
By
18 Attorneys for Respondent/Defendant
STEPHEN A. VANNUCCI, M.D.,
19 INC.
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OPP. OF STEPHEN A. VANNUCCI, M.D., INC. TO PETITIONER’S MOTION TO AMEND JUDGMENT
Preview
1 GLYNN & FINLEY, LLP CLEMENT L. GLYNN, Bar No. 57117 2 ADAM M. RAPP, Bar No. 280824 One Walnut Creek Center 5/6/2020 3 100 Pringle Avenue, Suite 500 Walnut Creek, CA 94596 4 Telephone: (925) 210-2800 Facsimile: (925) 945-1975 5 Email: cglynn@glynnfinley.com Email: arapp@glynnfinley.com 6 Attorneys for Defendant 7 Stephen A. Vannucci, M.D., Inc. 8 9 SUPERIOR COURT OF THE STATE OF CALIFORNIA 10 FOR THE COUNTY OF BUTTE 11 ) Case No. 19CV03856 12 OMAR JAY ON and BARBARA ON, ) ) OPPOSITION OF STEPHEN A. 13 Petitioners/Plaintiffs, ) VANNUCCI, M.D., INC TO ) PETITIONERS’ MOTION 14 vs. ) TO AMEND JUDGMENT ) 15 STEPHEN A. VANNUCCI, M.D., INC and ) Date: May 20, 2020 NORTH VALLEY DERMATOLOGY ) Time: 9:00 a.m. 16 CENTER, ) Dept: 1 ) Before: APJ, Tamara Mosbarger 17 Respondents/Defendants. ) ) 18 19 This Memorandum is submitted by Stephen A. Vannucci, M.D., Inc. (“SAVI”) in 20 opposition to Petitioners’ Motion to Amend the Judgment. Among other relief, the motion asks 21 the Court to modify the final judgment entered in this action and make SAVI directly liable for a 22 portion of the On damages that the arbitrator declined to award against SAVI. Thus, in this 23 respect, the motion seeks to change the arbitrator’s Award, which as a matter of law this Court 24 may not do. As we explain below, this aspect of the motion should be denied. 25 /// 26 /// 27 /// 28 /// -1- OPP. OF STEPHEN A. VANNUCCI, M.D., INC. TO PETITIONER’S MOTION TO AMEND JUDGMENT 1 The heated rhetoric permeating the motion obscures the factual background. In particular 2 we note that a cornerstone of Petitioners’ narrative is the assertion that “while [North Valley 3 Dermatology Center (“NVDC”)]1 and its insider partners have lined their pockets at the expense 4 of NVDC’s creditors, they have made no serious effort to resolve NVDC’s obligations to 5 Petitioners.” (Mem. 11:22-23, citing Banks Decl.; emphasis added). That assertion is 6 remarkable given that the parties engaged in mediation in December 2019 at which a very 7 substantial settlement offer was made. 2 8 I. FACTUAL BACKGROUND 9 A. The Parties 10 Petitioner Omar On’s dermatology practice flourished in connection with that of NVDC 11 and its predecessors in interest, including Dr. Richey, with whom he worked until 2007. (Pet’rs 12 RJN Ex. 1, sub-Ex. A [Arbitrator’s Final Award] (“Award”) at 3.) On was a dermatology 13 physician’s assistant or “PA” which means that, with a physician supervisor, he was able to 14 provide independently most of the services that a dermatologist could; certain matters (for 15 example, reading biopsy slides) required an M.D. (Id. at 5, 8 n.27.) 16 For years, On, together with SAVI and Dr. Richey, were parties to a Medical Office 17 Expense Sharing Agreement. (Id. at 4.) Under the agreement’s formula, On and the physicians 18 paid their share of expenses based on the number of patients each saw; because On saw a high 19 volume of patients in the office, he paid a significant percentage of the shared expenses. (Ibid.) 20 Although he was not a physician, or a partner, On was treated much like the partner physicians. 21 For example, he would attend weekly meetings of the partnership and had access to the financial 22 records of the practice; minutes reflect his regular attendance, participation, and voting on 23 24 1 As the Court is aware, NVDC is a California general partnership currently in bankruptcy proceedings. In re North Valley Dermatology Ctr., No. 20-20457 (Bankr. E.D. Cal.). NVDC’s 25 partners include (or have at times included) the physician corporations, including SAVI, which are the subject of the current Motion. NVDC and SAVI were joined by the Ons as Respondents 26 in the arbitration underlying this action, but at present only SAVI is a judgment debtor in this court, judgment having been entered after NVDC’s bankruptcy filing. 27 2 Petitioners’ assertion characterizes the contents of the confidential mediation, but SAVI 28 will not reveal the settlement offer made unless Petitioners will stipulate that it can be disclosed. -2- OPP. OF STEPHEN A. VANNUCCI, M.D., INC. TO PETITIONER’S MOTION TO AMEND JUDGMENT 1 matters as if he were an owner. (Declaration of Stephen A. Vannucci in Support of SAVI’s Opp. 2 ¶ 2.) 3 On operated as an independent contractor. He hired and fired his own staff, he 4 determined his work hours and the days he would work, and he operated in space that was 5 dedicated to his practice. (Award at 8, 10-11.) On’s supervising physician was Dr. Richey until 6 2007, when, desiring to expand his practice and hire additional PAs, Richey required another 7 physician to supervise On under California law and asked Vannucci to do so. (Id. at 5.) Dr. 8 Vannucci agreed and went to local lawyer Herb McGuire for advice on how this should be 9 formalized. Mr. McGuire drew up an “Employment Agreement,” between On and SAVI, even 10 though On would continue to function independently as he always had. (Id. at 5.) (Mr. McGuire 11 is deceased, so no one has been able to determine why he chose this form to document the 12 parties’ relationship.) 13 On continued to function with independence under SAVI. He would sometimes take full 14 days off, and then make up for it by working long days. (Id. at 8.) None of this was a problem 15 for the practice, which in 2010 formed the North Valley Dermatology Center general 16 partnership, consisting of Donald F. Richey, M.D., Inc., F. Paul Sajben, M.D., Inc., and SAVI. 17 (Id. at 9.) In 2012 a new physician, Dr. Kafele Hodari, joined the practice. (Id. at 9 n.31.) 18 Hodari told the other doctors that he did not think On should continue to attend NVDC’s weekly 19 partnership meetings, and objected to On having access to NVDC’s financial records. (Vannucci 20 Decl. ¶ 3.) In relatively short order, On—who had always been a strong producer—became 21 disaffected and left NVDC in 2013. (Award at 12.) (Dr. Richey retired in 2015. [Id. at 9 22 n.31.].) 23 On later filed suit claiming that he was an employee—not an independent contractor— 24 and that he was owed wages and other employment benefits (e.g., meal breaks, rest breaks, etc.). 25 NVDC tendered to its carrier, and was defended by the Angelo Kilday firm. (Vannucci Decl. 26 ¶¶ 3-4.) The carrier took the position that this was a mixed case, so that a defense would be 27 provided under a reservation of rights. (Ibid.) Notably and regrettably, the carrier ignored 28 obvious Cumis issues that would contribute to the disastrous arbitration award. The Ons made -3- OPP. OF STEPHEN A. VANNUCCI, M.D., INC. TO PETITIONER’S MOTION TO AMEND JUDGMENT 1 detailed settlement demands that the carrier and the law firm it had retained considered grossly 2 excessive. Without Cumis counsel to advise them independently, the professional corporations 3 comprising NVDC believed that the risk posed by the On claims was minimal. (Id. ¶ 5.) As a 4 result, only two settlement offers (funded only partially by the carrier) were made: the first was 5 for $100,000 and the second, on the eve of arbitration, was for $170,000 (again, split with the 6 carrier). (Ibid.) Predictably, those offers went nowhere. Had Cumis counsel been appointed, the 7 professional corporations would have been able to understand risk and to advocate forcefully that 8 the carrier put up the $1 million policy limits. 9 B. The Arbitration 10 The arbitration proceedings are generally summarized in Petitioners’ brief. Not 11 surprisingly, NVDC and SAVI were floored by the arbitration result given what they had been 12 led to believe throughout. In the arbitrator’s 44-page award, she generally found NVDC and 13 SAVI jointly and severally liable for the damages she awarded, except that she held NVDC— 14 and not SAVI—was responsible for the $48,729.33 wage restitution portion of the award, and 15 $163,647 in fees and $54,377 in costs related to the wage restitution award. Thus, the arbitrator 16 held that SAVI was not jointly and severally liable with NVDC for $266,753.33 of the award. 17 This was not an error, but rather the result of the arbitrator’s reasoned decision. (See also Mem. 18 at 3.) Petitioners made no motion to correct the award, and instead petitioned this Court to 19 confirm it, which the Court did on February 13, 2020. As we show below, the Court may not 20 now change what the arbitrator ordered. Before doing so, we briefly address Petitioners’ 21 accusations regarding the bankruptcy proceedings. 22 C. The Bankruptcy 23 As noted above, in December 2019, the parties mediated. Despite a serious offer to settle 24 by NVDC and SAVI—without any contribution by the carrier that had denied indemnity—the 25 case did not settle. 26 The On arbitration award destroyed the NVDC partnership. Dr. Hodari’s PC withdrew in 27 September (after the preliminary award). (Vannucci Decl. ¶ 6.) In the Fall, Dr. Sabjen decided 28 to simply retire from the practice of dermatology. (Ibid.) With Richey’s 2015 retirement, that -4- OPP. OF STEPHEN A. VANNUCCI, M.D., INC. TO PETITIONER’S MOTION TO AMEND JUDGMENT 1 left only SAVI among the four NVDC partners. A partnership of one does not exist. See Corp. 2 Code § 16801(1) (general partnership at will dissolved upon express will of more than half the 3 partners); General Partnership Agreement of NVDC (Banks Decl. Ex. 1) § 6.22 (providing for 4 dissolution of NVDC upon dissolution of 3 or more partners). 5 Faced with the ruinous effect of the On arbitration award, NVDC had two choices: 6 (1) immediately dissolve as required under its governing agreement and California law, or 7 (2) file for Chapter 11 bankruptcy. The latter option ensured an orderly windup. NVDC’s 8 bankruptcy proceeding permits it to face its obligations in an orderly fashion, obtain top value for 9 its remaining assets, and, critically, ensure that NVDC’s patients would have time to seek proper 10 medical care. The bankruptcy process protected NVDC, its facilities, and its staff from a sudden 11 implosion that could have dramatically complicated patient care in the face of the Ons’ 12 aggressive collection efforts. Any suggestion that NVDC’s bankruptcy was a device to “thwart” 13 or “cheat” Petitioners is neither accurate nor fair. With the protection of the bankruptcy court, 14 the medical practice was able to arrange for transition of patient care without the disruption of 15 attachment of bank accounts, seizure of critical infrastructure, or other interference by creditors. 3 16 II. ARGUMENT 17 A. The Court May Not Amend the Judgment to Change the Arbitrator’s Award. 18 19 Petitioners ask the Court to change what the arbitrator already has decided. It is clear 20 under California law that arbitration awards are final and may not be modified except under 21 extremely limited conditions specified by statute, none of which are present here. 22 “Any party to an arbitration in which an award has been made may petition the court to 23 confirm, correct or vacate the award. The petition shall name as respondents all parties to the 24 arbitration and may name as respondents any other persons bound by the arbitration award.” 25 3 NVDC’s bankruptcy proceeding recently was converted from Chapter 11 to Chapter 7, as 26 is common, economical, and reasonable under the circumstances here, when the debtor’s assets are liquidated and its liabilities determined. Order Converting Case, In re NVDC, Bankr. 27 E.D.Cal. No. 20-20457, Dkt. 148 (Apr. 21, 2020). Given the posture of NVDC’s estate upon filing, such a conversion was inevitable, not nefarious or punitive. 28 -5- OPP. OF STEPHEN A. VANNUCCI, M.D., INC. TO PETITIONER’S MOTION TO AMEND JUDGMENT 1 Code Civ. Proc. § 1285. “If a petition . . . under this chapter is duly served and filed, the court 2 shall confirm the award as made, . . . unless in accordance with this chapter it corrects the award 3 and confirms it as corrected, vacates the award or dismisses the proceedings.” Code Civ. Proc. 4 § 1286. 5 Section 1286.6 specifies the limited grounds upon which an award can be corrected. A 6 court can correct the award only where 7 (a) There was an evident miscalculation of figures or an evident mistake in the description of any person, thinking or property referred to in the award; 8 (b) The arbitrators exceeded their powers but the award may be corrected without 9 affecting the merits of the decisions upon which the controversy submitted; or 10 (c) The award is imperfect as a matter of form, not affecting the merits of the controversy. 11 12 But Petitioners did not move to vacate or correct the award. Instead, they moved to confirm it, 13 which the Court did. The statutory limitations on a court’s authority respecting an arbitration 14 award reflect the fact that, apart from these grounds, arbitration awards are immune from judicial 15 review. Moncharsh v. Heily & Blase, 3 Cal.4th 1, 12-13 (1992). The rule applies to all 16 California arbitrations, regardless of form. Porter v. Golden Eagle Ins. Co., 43 Cal.App.4th 17 1282, 1288-89 (1996). “[A]n award reached by an arbitrator pursuant to a contractual agreement 18 to arbitrate is not subject to judicial review except on the grounds set forth in sections 1286.2 (to 19 vacate) and 1286.6 (for correction).” Moncharsh, 3 Cal.4th at 33. 20 None of the limited grounds set forth in the Code apply here, and Petitioners do not 21 contend otherwise. The arbitrator held that SAVI was not jointly and severally liable for the 22 wage restitution (and associated fees and costs) portion of the award. That was not a mistake, 23 nor was it alleged to be. It was the arbitrator’s reasoned conclusion. Absent a proper petition to 24 correct the arbitrator’s award, this Court lacks authority to modify its substance. Valsan 25 Partners Limited Partnership v. Calcor Space Facility, Inc., 25 Cal.App.4th 809, 819-20 (1994) 26 (after addressing procedural infirmities in failing to petition for correction and “[a]ssuming for 27 discussion’s sake only that the proper procedures were followed, [concluding that] the court 28 /// -6- OPP. OF STEPHEN A. VANNUCCI, M.D., INC. TO PETITIONER’S MOTION TO AMEND JUDGMENT 1 could not and should not have amended the award to include a sum certain for damages which 2 was not included in the award as rendered”). 3 Notwithstanding Petitioners’ statements regarding the “broad inherent power” of 4 California courts under Sections 128 and 187 (Mot. at 7), this Court’s powers following the 5 conclusion of the 2019 arbitration proceedings comprise “merely a vestigial jurisdiction,” which 6 “consists solely of making the determination, upon conclusion of the arbitration proceedings, of 7 whether there was an award on the merits . . . or not.” Brock v. Kaiser Found. Hosps., 10 8 Cal.App.4th 1790, 1796 (1992) (citations omitted). 9 [U]nder its “vestigial” jurisdiction, a court may[] appoint arbitrators if the method selected by the parties fails (§ 1281.6); grant a provisional remedy “but only upon 10 the ground that the award to which an applicant may be entitled may be rendered ineffectual without provisional relief” (§ 1281.8, subd. (b)); and confirm, correct 11 or vacate the arbitration award (§ 1285). Absent an agreement to withdraw the controversy from arbitration, however, no other judicial act is authorized. 12 13 Titan/Value Equities Grp., Inc. v. Superior Court, 29 Cal.App.4th 482, 487 (1994) (emphasis 14 added; citing Brock and Byerly v. Sale, 204 Cal.App.3d 1312, 1315 (1988)). Petitioners ask this 15 Court to alter the arbitrator’s reasoned conclusions as to NVDC’s and SAVI’s respective 16 liabilities. But “it would be wholly incompatible with established policies of the law to permit 17 the court thereafter to intervene in, and necessarily interfere with, the arbitration ordered. In 18 large measure, it would not only preclude the parties from obtaining an adjustment of their 19 differences by a tribunal of their choosing, but it would also recreate the very delays incident to a 20 civil action that the arbitration agreement was designed to avoid.” Id. at 488 (internal citations 21 and quotations omitted). 22 Petitioners have not cited a case in which Sections 128 and 187 have been invoked to 23 modify, after entry of judgment, the final, reasoned award of a duly appointed arbitrator. Nor 24 have they attempted to explain how such a procedure would be consistent with the extremely 25 limited power of a trial court (codified by statute and confirmed by binding authority) following 26 its issuance. Parties to an arbitration bargain for finality; thus this Court properly “confirm[ed] 27 the award as made” as was mandatory when the Ons brought their Petition. Code Civ. Proc. § 28 /// -7- OPP. OF STEPHEN A. VANNUCCI, M.D., INC. TO PETITIONER’S MOTION TO AMEND JUDGMENT 1 1286. The Ons may not now avoid the express rules of the California Arbitration Act by 2 invoking Sections 128 and 187. 3 B. SAVI Does Not Address Petitioner’s Larger Point That the Judgment Against the NVDC Partnership Should Be Modified to Include the Member 4 Partners. 5 SAVI does not here address Petitioners’ request that the Judgment be modified to include 6 NVDC’s other member partners. This is because, with the one notable exception discussed 7 above, SAVI is already named in the Judgment. SAVI defers to the other professional 8 corporations to address that argument. 9 III. CONCLUSION 10 Petitioners’ request that the Court amend the judgment to make SAVI jointly and 11 severally liable for the wage restitution portion of the award should be denied. The arbitrator 12 ruled otherwise, and the Court may not change her award. 13 Dated: May 6, 2020 GLYNN & FINLEY, LLP CLEMENT L. GLYNN 14 ADAM M. RAPP One Walnut Creek Center 15 100 Pringle Avenue, Suite 500 Walnut Creek, CA 94596 16 17 By 18 Attorneys for Respondent/Defendant STEPHEN A. VANNUCCI, M.D., 19 INC. 20 21 22 23 24 25 26 27 28 -8- OPP. OF STEPHEN A. VANNUCCI, M.D., INC. TO PETITIONER’S MOTION TO AMEND JUDGMENT