Case: Plantations at Haywood 1, LLC v. Plantations at Haywood, LLC - 4DCA affirms sanctions order arising from opposition to petition to confirm arbitration award

Decided: 2/10/2025

Docket

Case Overview:

Procedural posture: Appeal from the superior court’s order imposing monetary sanctions on objector-appellant

Plaintiffs: Plantations at Haywood 1, LLC, et al.

Defendant-respondent: Plantations at Haywood, LLC

Objector-appellant: Kenneth J. Catanzarite

Fourth District Court of Appeal, Division Three case no.: G062909

Appeal from: Orange County Superior Court (Sherman, J.)

Advocates: Kenneth J. Catanzarite and Tim James O’Keefe for Catanzarite; Henry Oh and Edward Morales for Plantations

Facts:

In the underlying real estate dispute between plaintiffs—represented by Catanzarite—and defendant Plantations, plaintiffs alleged that they were defrauded into exchanging their interests in an apartment complex for interests in an LLC. Plaintiffs requested arbitration. The dispute was ordered into arbitration.

The arbitrator ruled in favor of Plantations. Plantations petitioned the superior court to confirm the arbitration award under Code of Civil Procedure § 1285. Catanzarite opposed, arguing the award should be vacated under § 1286.2(a)(4) (arbitrator exceeded his powers) and (a)(5) (arbitrator refused to “hear” material evidence). “Catanzarite’s argument was that because his documents had ‘plainly show[ed]’ facts that were inconsistent with the arbitrator’s award, the arbitrator must have ignored plaintiffs’ documents. In other words, since Catanzarite disagreed with the award, the arbitrator must have willfully ignored his clients’ evidence.”

Catanzarite sought an order vacating the arbitration award. Plantations responded by filing a motion for sanctions against Catanzarite under § 128.7. Plantations “pointed out that Catanzarite did not submit any evidence to support his claim ‘that the arbitrator refused to hear any evidence.’” “Instead, Plantations noted that Catanzarite conceded ‘that the arbitrator admitted “all or nearly all” of Plaintiffs’ documents and testimony into evidence,’ and relied on Gonzales v. Interinsurance Exchange (1978) 84 Cal. App. 3d 58, 63 (Gonzales), for the proposition that ‘[l]egally speaking, the admission of evidence is to hear it’—thus establishing that Catanzarite’s own concession had fatally undermined his claim.”

The superior court granted Plantations’s petition to confirm the arbitration award. The superior court granted Plantations’s motion for sanctions, finding that “plaintiffs’ omnibus opposition to defendants’ Petitions to Confirm the Arbitration Award was without merit under well-established law, was not supported by existing law, or any nonfrivolous extension of existing law, and was not supported by evidence.”

Catanzarite appealed from the order imposing monetary sanctions against him. In response, Plantations moved for monetary sanctions on the ground that Catanzarite’s appeal was frivolous. The Fourth District Court of Appeal issued an order informing the parties that it was considering imposing sanctions and inviting Catanzarite to file an opposition to Plantations’s motion.

Questions:

(1)

Did the superior court err in imposing monetary sanctions against Catanzarite under § 128.7?

(2)

Was Plantations entitled to sanctions on appeal?

Answers:

(1)

No, the superior court did not err in imposing monetary sanctions against Catanzarite.

In Moncharsh v. Heily & Blase, 3 Cal. 4th 1, 27-28 (1992), the California Supreme Court “deemed it ‘well settled’ that an arbitrator’s error in the substance of an award—even when the error was patent—did not provide grounds to overturn the order in court.” The Fourth District Court of Appeal continued: “The [Moncharsh] court held that an arbitrator’s error of fact or law in deciding the issue submitted did not qualify as an act in excess of the arbitrator’s powers under section 1286.2.”

In Heimlich v. Shivji, 7 Cal. 5th 350 (2019), the California Supreme Court “held that ‘vacation of an award for “refusal . . . to hear evidence material to the controversy”’ cannot be grounded on a claim the court erred in the merits of its decision because ‘“if not properly limited, [section 1286.2, subdivision (a)(5),] could swallow the rule that arbitration awards are not generally reviewable on the merits.”’”

The Heimlich court examined Royal Alliance Associates, Inc. v. Liebhaber, 2 Cal. App. 5th 1092 (2016), a refusal-to-hear-evidence case in which the Court of Appeal vacated an arbitration award. In Royal Alliance, the “arbitration panel allowed a securities broker to ‘speak, unsworn and at length,’ but ‘denied the former client the opportunity to cross-examine the broker or to speak herself’ because the panel apparently ‘felt itself too busy to allow each side the opportunity to present evidence.’” “The panel then issued a decision that ‘relied on the former client’s failure to dispute the broker’s account or to offer evidence of financial losses.’” “In vacating the decision, the appellate court in Royal Alliance concluded the arbitration panel’s refusal to hear from the former client ‘“was not fair.”’”

Heimlich “contrasted the situation in Royal Alliance, with the situation where arbitrators ‘refuse to consider evidence they find legally irrelevant, even if the irrelevance determination rests upon an incorrect legal foundation.’” “In that situation, ‘[n]either that determination nor the resulting refusal to consider evidence’ is grounds to vacate the award.”

In Gonzales v. Interinsurance Exchange, 84 Cal. App. 3d 58 (1978), the Second District Court of Appeal held that “the admission of evidence is to hear it, and the weighing of it is to give it consideration.”

Turning to this case, the Fourth District Court of Appeal found that Catanzarite’s “assertion that the arbitrator exceeded his powers” under § 1286.2(a)(4) because the arbitrator purportedly “erred in evaluating the evidence” was “directly contrary to Moncharsh—a case Catanzarite ignores other than to claim it allows for judicial review of arbitration awards.”

Catanzarite’s “assertion that the arbitrator failed to ‘hear’ the evidence he admitted is directly contradicted by Gonzales, a case Catanzarite failed to cite or acknowledge in his briefing. And while that initial omission might have been an oversight, Catanzarite did not back down when Gonzales was cited by Plantations.” Catanzarite instead pivoted to another case that “had been disapproved by the Supreme Court in Heimlich” and that “citation proved his bad faith.”

(2)

Yes, the Fourth District Court of Appeal found that sanctions on appeal were appropriate. Catanzarite’s appellate briefing “largely repeats the arguments found sanctionable by the trial court.” The Court found that Catanzarite’s appeal “lacks any semblance of merit.”

Outcome:

The Fourth District Court of Appeal, Division Three affirmed the superior court’s order imposing sanctions and granted Plantations’s motion for monetary sanctions on appeal. The Court remanded to the superior court with directions to conduct a hearing to determine the appropriate amount of sanctions to be awarded.

Justice Goethals authored the opinion, joined by Justices Sanchez and Delaney.

Links:

Westlaw: 2025 WL 444857