Buchalter v. HR E&I Co. CA1/1

Filed 12/18/25 Buchalter v. HR E&I Co. CA1/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for

publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or

ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION ONE

BUCHALTER, A PROFESSIONAL

CORPORATION, A172779

Plaintiff and Respondent,

(San Francisco City and

v. County Super. Ct.

HR E&I CO., LTD., No. CGC-23-606831)

Defendant and Appellant.

Appellant HR E&I Co., Ltd., (HR E&I), appeals from a judgment

confirming an arbitration award in favor of its former attorney, respondent

Buchalter. We affirm.1

I.

FACTUAL AND PROCEDURAL

BACKGROUND

Buchalter represented HR E&I, formerly known as Horyong Co. Ltd.,

in successfully obtaining a judgment of about $2 million against Chang and

Young Ahn. The amount of fees HR E&I owed Buchalter for its services was

1 Even though we reject HR E&I’s arguments, we deny Buchalter’s

motion for sanctions. (See Avila v. Continental Airlines, Inc. (2008)

165 Cal.App.4th 1237, 1261 [appellate sanctions are used sparingly to deter

only the most egregious conduct]; In re Marriage of Flaherty (1982) 31 Cal.3d

637, 650 [“An appeal that is simply without merit is not by definition

frivolous and should not incur sanctions”].)

disputed, and after Buchalter filed a lien against the judgment, the Ahns

filed an interpleader for a portion of the disputed amount. The fee dispute

was arbitrated, and the arbitrator awarded Buchalter a little over $250,000

in fees and costs.

Buchalter moved to confirm the arbitration award in the trial court.

The court confirmed the award after rejecting HR E&I’s arguments, including

its arguments that the award was procured by fraud or undue means, and

that the arbitrator exceeded his powers.

II.

DISCUSSION

A. The Applicable Law.

It is axiomatic that judicial review of judgments confirming arbitration

awards is limited. “[A]rbitral finality is a core component of the parties’

agreement to submit to arbitration.” (Moncharsh v. Heily & Blasé (1992)

3 Cal.4th 1, 10 (Moncharsh.) Parties to an arbitration agreement must

accept the risk of arbitrator errors because arbitrators are not required to

make decisions according to the rule of law, and their decisions cannot be

judicially reviewed for errors of fact or law even if the error is apparent and

causes substantial injustice. (Id. at pp. 11–12). As a consequence, “an

arbitral award should ordinarily stand immune from judicial scrutiny.” (Id.

at p. 32; see also Shahinian v. Cedars-Sinai Medical Center (2011)

194 Cal.App.4th 987, 1006–1007 [when an arbitrator errs “ ‘ “in either

determining the appropriate law or applying it,” ’ the parties may obtain

court review of the merits ‘only if the arbitration agreement expressly

provided’ ” for such review], italics omitted.)

In considering an appeal from a judgment confirming an arbitration

award, a reviewing court may not “ ‘review the merits of the dispute, the

sufficiency of the evidence, or the arbitrator’s reasoning, nor may [it] correct

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or review an award because of an arbitrator’s legal or factual error, even if it

appears on the award’s face. Instead, [the reviewing court must] restrict [its]

review to whether the award should be vacated under the grounds listed in

[Code of Civil Procedure,] section 1286.2.’ ”2 (EHM Productions, Inc. v.

Starline Tours of Hollywood, Inc. (2018) 21 Cal.App.5th 1058, 1063–1064.)

One such ground relevant in this appeal allows a court to vacate an

arbitration award if it was procured by “fraud or other undue means.”

(§ 1286.2, subd. (a)(1).) Another ground allows a court to vacate an award

where “[t]he arbitrators exceeded their powers and the award cannot be

corrected without affecting the merits of the decision upon the controversy

submitted.” (§ 1286.2, subd. (a)(4).)

An arbitration award is subject to differing standards of review. To the

extent the trial court made findings of fact in confirming the award, we

affirm the findings if they are supported by substantial evidence. To the

extent the trial court resolved questions of law on undisputed facts, we

review the rulings de novo. (Cooper v. Lavely & Singer Professional Corp.

(2014) 230 Cal.App.4th 1, 11–12.)

B. The Trial Court Properly Confirmed the Arbitration Award

Because None of the Grounds Under Section 1286.2 Were Established.

HR E&I first argues that the trial court improperly confirmed the

arbitration award because the award was procured by fraud or undue

influence. We are not persuaded.

HR E&I maintains that the alleged fraud related to three acts. First, it

contends that Buchalter claimed to be owed different amounts of fees, with

“flimsy explanations” of the discrepancies. Second, it contends that

2 All further statutory citations are to the Code of Civil Procedure

unless otherwise specified.

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Buchalter tried to recover fees for work it did in connection with the

interpleader action, even though the work provided no benefit to the

company. Third, it contends that Buchalter tried to recover fees it paid

during the arbitration process.

None of these contentions involve fraud within the meaning of

section 1286.2, subdivision (a)(1). “Fraud” in this section means “extrinsic

fraud which denies a party a fair hearing.” (Comerica Bank v. Howsam

(2012) 208 Cal.App.4th 790, 825.) “The essence of extrinsic fraud is one

party’s preventing the other from having [their] day in court.” (City and

County of San Francisco v. Cartagena (1995) 35 Cal.App.4th 1061, 1067.)

Fraud in section 1286.2 does not refer to intrinsic fraud, which refers to

wrongdoing that the party alleging fraud could have, but failed, to discover.

(Id. at pp. 1067–1068.)

HR E&I’s contentions do not assert extrinsic fraud, because they do not

allege that Buchalter did anything to prevent HR E&I from having its day in

court or from litigating its objections with Buchalter’s demands for fees and

costs. In fact, HR E&I specifically raised its claims of fraud and undue

means during the arbitration proceedings. Thus, it not only could have

challenged—but in fact did challenge—Buchalter’s alleged billing

wrongdoing.

HR E&I claims it could not have discovered Buchalter’s alleged

fraudulent conduct, but the argument is unconvincing. The company asserts

it was prevented from discovering Buchalter’s alleged fraud because

Buchalter, in responding to the company’s request for the client file, failed to

provide receipts, invoices, and other documents that would have supported

the company’s claims of fraud. But even if we assume that Buchalter failed

to provide these documents to HR E&I, the reimbursement requests about

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which HR E&I objects could have been—and again were—raised during the

arbitration proceedings. HR E&I has simply not shown that it was prevented

from challenging Buchalter’s reimbursement demands in the arbitration

proceedings or otherwise having its contentions heard.

HR E&I separately argues that Buchalter procured the arbitration

award by undue means. According to the company, Buchalter did so by

seeking reimbursement for third-party vendor fees incurred in litigation-

related work without having first presented the vendors’ invoices to HR E&I.

HR E&I claims that submitting “these invoices during arbitration

constitute[d] improper post hoc billing, without proper notice or client

consent.” But again, even assuming the truth of the assertion that Buchalter

failed to first present its vendors’ invoices to HR E&I, the claim does not

constitute undue means within the meaning of section 1286.2,

subdivision (a)(1). “Undue means” connotes behavior that is “immoral if not

illegal.” (Pour Le Bebe, Inc. v. Guess? Inc. (2003) 112 Cal.App.4th 810, 831.)

And, as with a claim of fraud, a claim of undue means cannot be used to set

aside an arbitration award, giving the disappointed party “ ‘a second bite at

the apple,’ ” when the conduct upon which the claim is based was either

discoverable or discovered during the arbitration proceeding. (Id., at pp. 831–

832.) HR E&I’s claim about the vendors’ invoices hardly amounts to illegal or

immoral conduct, and HR E&I could have objected—and again did object—to

the reimbursement request during the arbitration proceeding.

HR E&I next argues that the arbitrator exceeded his powers because

the arbitration award contravenes public policy by validating Buchalter’s

billing practices, which allegedly violated Business and Professions Code

section 6148, subdivision (b), and various Rules of Professional Conduct.

Section 1286.2, subdivision (a)(4) allows awards to be vacated when “[t]he

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arbitrators exceeded their powers and the award cannot be corrected without

affecting the merits of the decision.” This “excess-of-authority exception

applies, and an arbitral award must be vacated, when a court determines

that the arbitration has been undertaken to enforce a contract that is ‘illegal

and against the public policy of the state.’ ” (Sheppard, Mullin, Richter &

Hampton, LLP v. J-M Manufacturing Co., Inc. (2018) 6 Cal.5th 59, 73.)

While we recognize that arbitrators may exceed their powers if their

award “violates a statutory right or otherwise violates a well-defined public

policy” (Department of Personnel Administration v. California Correctional

Peace Officers Assn. (2007) 152 Cal.App.4th 1193, 1195), such a violation

must relate to “rights and policies governing the conduct of the arbitration

itself,” not to rights and policies pertaining to the parties’ substantive or

procedural disagreements. (Sargon Enterprises, Inc. v. Browne George Ross

LLP (2017) 15 Cal.App.5th 749, 765.) So long as a disagreement is “ ‘within

the scope of the controversy submitted to the arbitrator[, t]the arbitrator’s

resolution of these issues is what the parties bargained for in the arbitration

agreement.’ ” (Alexander v. Blue Cross of California (2001) 88 Cal.App.4th

1082, 1089.) Arbitrators do not exceed their powers when they decide “an

issue [they were] clearly authorized to decide.” (Kahn v. Chetcuti (2002)

101 Cal.App.4th 61, 66.)

Furthermore, we must “pay substantial deference to an arbitrator’s

determination of his own authority.” (Delaney v. Dahl (2002) 99 Cal.App.4th

647, 655.) Any doubts about the arbitrator’s power to decide issues must be

resolved in the arbitrator’s favor. (Advanced Micro Devices, Inc. v. Intel Corp.

(1994) 9 Cal.4th 362, 372–373.) Applying these principles here, we simply

cannot conclude that the arbitrator exceeded his powers by disagreeing with

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HR E&I’s substantive arguments about Buchalter’s alleged improper billing

practices.

Lastly, HR E&I argues that the trial court erred in declining to vacate

the arbitration award under section 1286.2, subdivision (a)(5), because the

arbitrator refused to hear evidence material to the controversy. Again, the

argument is meritless.

To begin with, the arbitrator expressly stated he considered all the

evidence submitted by the parties. Furthermore, a review of the record

shows that what happened was not that the arbitrator refused to consider

evidence, but instead that the arbitrator simply disagreed with HR E&I’s

arguments about the evidence. On appeal, HR E&I contends that the

arbitrator “failed to reconcile” (1) its final award for attorney fees with

Buchalter’s “final billing,” and (2) “the inconsistencies in Buchalter’s claims

as to attorney’s fees owed.” This failure to reconcile, according to HR E&I,

resulted in it being responsible for more than $15,000 in additional fees with

no explanation.

But HR E&I candidly admits that the billing information was before

the arbitrator and that it raised its concerns to the arbitrator. Indeed, in its

reply brief in this court, it directly stated that it “did not fail to make the

proper arguments to the arbiter, the arbiter just refused to consider HR

E&I’s arguments.” At bottom HR E&I’s objection is not that the arbitrator

refused to hear evidence, but is instead that the arbitrator did not agree with

its preferred outcome. As we have said, the merits of the parties’ arbitration

disputes are not judicially reviewable. (Moncharsh, supra, 3 Cal.4th at

p. 11.)

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III.

DISPOSITION

The judgment confirming the arbitration award is affirmed.

Buchalter’s request for sanctions is denied. (See ante, fn. 1.)

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_________________________

Humes, P. J.

We concur:

_________________________

Banke, J.

_________________________

Langhorne Wilson, J.

HR E&I Co., LTD. v. Buchalter (A172779)

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