Comerica Bank v. Howsam (208 Cal. App. 4th 790, 2012)

Opinion

TURNER, P. J.

I. INTRODUCTION

This is an appeal involving an international commercial arbitration. It was conducted pursuant to title 9.3 of the Code of Civil Procedure which is entitled, “Arbitration and Conciliation of International Commercial Disputes.” (§ 1297.11 et seq.) At issue are the arbitration, not the conciliation, provisions. The arbitration provisions are found in sections 1297.11 through 1297.337.

This case involves appeals from a December 22, 2010 judgment following orders confirming three international commercial arbitration awards. The first arbitration award, issued May 3, 2010, was in favor of plaintiff, Comerica Bank, and against defendants Greenlight Film & Television, Inc., Gary Howsam, GFT Circle Films, Inc., Road Rage Films, Inc., Janus Productions, Inc., GFT Going Back Films, Inc., GFT Heresy Films, Inc., GFT/Redwood KOTN Films, Inc., and GFT/Redwood Ignition Films, Inc. The second award, issued July 16, 2010, was in plaintiff’s favor and against Mr. Howsam and Greenlight Film & Television, Inc., and their lawyer, Charles Coate. The third award, issued July 19, 2010, was in plaintiff’s favor and against defendants and Mr. Coate. The trial court refused to vacate these three awards and confirmed them.

In the published portion of this opinion, we will discuss four issues. First, we will discuss at some length whether the arbitrator’s failure to timely disclose an alleged disqualifying factor enumerated in section 1297.121 is a proper vacatur ground. Defendants assert the failure to timely disclose under sections 1297.121 and 1297.123 is a ground for vacating an international commercial arbitration award. Defendants rely on section 1286.2, subdivision (a)(6), a statutory vacatur ground which requires an award be vacated when an arbitrator fails to timely disclose a potentially disqualifying circumstance. Citing section 1297.135, plaintiff argues this issue cannot even be raised on direct appeal from an order denying a vacatur motion. We agree with defendants that the issue may be raised on direct appeal after a vacatur motion is denied. But we hold the failure to timely disclose potential disqualifying circumstances, as required by sections 1297.121 and 1297.123, is not a ground for vacatur under section 1286.2, subdivision (a)(6). Our ruling in this regard is limited to international commercial arbitrations conducted under section 1297.111 et seq.

Second, we discuss whether the award was secured by corruption, fraud or other undue means. (§ 1286.2, subd. (a)(1).) Among other things, we will analyze whether the arbitrator’s billing errors resulted in an award secured by corruption, fraud or other undue means. They did not. Third, we will discuss whether the award resulted from a manifest disregard of the law. It did not. Fourth, we will discuss whether the arbitrator exceeded his power when he decided alter ego issues. He did not. We affirm the orders denying the vacatur motion and confirming the award and the judgment.

II. FIRST AMENDED COMPLAINT FILED SEPTEMBER 7, 2004

The original complaint was filed on June 1, 2004. According to the first amended complaint, on November 27, 1999, plaintiff made loans totaling $37 million to Mr. Howsam and seven Ontario, Canada, corporations controlled by him. Mr. Howsam is alleged to be a Toronto, Ontario, resident. The loans were to fund the production of seven different films. The loans were paid to all of the foregoing corporate defendants except Greenlight Film & Television, Inc. The loans were secured by the proceeds of the seven films. The primary “collateral” was foreign distributors’ minimum licensing fees. The collateral was in the form of guaranteed minimum license fees funded by foreign distributors. The first amended complaint alleges that certain documents that were necessary pursuant to the loan agreements were forged. The forged documents consisted of license agreements and notices and acknowledgments of assignments (assignment notices). The forged assignment notices required the foreign distributors to directly pay plaintiff rather than defendants. The forged documents induced plaintiff to make the loans. The first amended complaint contains extensive alter ego allegations. Plaintiff never recovered the full amount of the loans and the security was worthless.

Plaintiff was owed in excess of $20 million. The causes of action were for contract breach, fraud, conspiracy to defraud, fraudulent inducement, an accounting, money had and received, account stated, and open book account. Plaintiff sought compensatory damages of not less than $20 million, interest, punitive damages, an accounting, imposition of a constructive trust, injunctive relief, attorney fees, and costs.

III. PROCEDURAL HISTORY

A. Overview

This appeal from a judgment after confirmation of three international commercial arbitration awards involves an extraordinarily complex series of events. The defaulted loans described in the first amended complaint resulted in federal bank fraud indictments against Mr. Howsam and Harel Goldstein. Mr. Goldstein was arrested by Federal Bureau of Investigation special agents. Mr. Goldstein pled guilty and then participated in a federal bank fraud investigation which targeted Mr. Howsam. Mr. Howsam was then indicted. Later, the indictment was dismissed against Mr. Howsam. The indictment against Mr. Howsam was returned after the first amended complaint was filed and the arbitration had commenced. A lengthy stay in the arbitral proceedings ensued until the indictment was dismissed. Proceedings resumed but later defendants withdrew from the arbitration and the arbitrator entered their default. An uncontested award was entered.

The difficulty in reciting the procedural scenario after Mr. Howsam’s indictment was dismissed is that proceedings were sometimes simultaneously pending in the arbitral forum, before both the arbitrator and the arbitration administrator, the trial court, before us and the California Supreme Court, or in the federal courts. It is difficult to recite the somewhat confusing events simultaneously transpiring in different forums. But for purposes of clarity, we will set forth the events in strict chronological order. (Remarks of Sen. Ted Stevens on the death of Steven Ambrose, 107th Cong., 2d Sess., p. 20215 (2002) [“abandon chronology at your peril. . .”].)

B. Events Occurring After the First Amended Complaint Was Filed and Before the Stay Was Entered

On October 25, 2004, seven defendants, except for Mr. Howsam and Greenlight Film & Television, Inc., made a written demand to arbitrate the claims alleged in the first amended complaint. The bases of the seven defendants’ motion to compel arbitration were the agreements to arbitrate contained in the assignment notices. On October 27, 2004, defendants, other than Mr. Howsam and Greenlight Film & Television, Inc., filed a motion to compel arbitration. On October 27, 2004, Mr. Howsam and Greenlight Film & Television, Inc., filed a motion to quash on absence of jurisdiction grounds. On December 15, 2004, the motion to quash of Mr. Howsam and Greenlight Film & Television, Inc., was denied. On December 28, 2004, the motion to compel arbitration filed by defendants, other than Mr. Howsam and Greenlight Film & Television, Inc., was denied. The mandate and review petitions challenging the December 15, 2004 order denying the motion to quash filed by Mr. Howsam and Greenlight Film & Television, Inc., were denied. (Greenlight Film & Television, Inc. v. Superior Court (July 13, 2005, S133354) [order]; Greenlight Film & Television, Inc. v. Superior Court (Apr. 14, 2005, B180285) [order].) On September 15, 2005, in an unpublished opinion, we reversed the December 28, 2004 order denying the motion to compel arbitration. (Comerica Bank v. GFT Circle Films, Inc. (Sept. 15, 2005, B180622) [opn.].) Mr. Howsam and Greenlight Film & Television, Inc., had filed a certiorari petition in the United States Supreme Court challenging the December 15, 2004 order denying their motion to quash. On November 7, 2005, the certiorari petition of Mr. Howsam and Greenlight Film & Television, Inc., was denied by the United States Supreme Court. (Howsam v. Superior Court (2005) 546 U.S. 1003 [163 L.Ed.2d 505, 126 S.Ct. 623].)

After the jurisdictional issue and appellate litigation involving them concluded, on November 22, 2005, Mr. Howsam and Greenlight Film & Television, Inc., moved to compel arbitration. Mr. Howsam and Greenlight Film & Television, Inc., reasoned they were entitled to compel arbitration under the assignment notices. On February 7, 2006, defendants, other than Mr. Howsam and Greenlight Film & Television, Inc., joined in the motion to compel arbitration. On February 14, 2006, the motion of Mr. Howsam and Greenlight Film & Television, fine., to compel arbitration and stay the action was granted. On April 10, 2006, the written order granting the motion to compel arbitration and completely staying the action was filed. Trial on plaintiff’s first amended complaint was stayed pursuant to section 1297.82.

On May 9, 2006, Mr. Goldstein settled with plaintiff. In 2002, after being sued by plaintiff, Mr. Goldstein and his wife sought the protection of the bankruptcy courts. At the time of the settlement, there was a pending adversary proceeding initiated by plaintiff in the bankruptcy court. The adversary proceeding sought a determination that Mr. Goldstein’s debts owed to plaintiff, as a result of the transactions at issue here, were nondischargeable. Under the terms of the settlement, plaintiff received $300,000. There was a qualified confidentiality clause in the settlement agreement. Plaintiff agreed to provide specified notice to Mr. Goldstein if it received a court order to turn over information concerning the settlement. The qualified confidentiality agreement states in part; “[Plaintiff] and its attorneys or agents further agree that should any party (other than any of the Excepted Parties) request from [plaintiff] information regarding the Settlement Agreement, any terms or conditions contained therein, or facts underlying the Settlement Agreement, [plaintiff] shall provide such information only upon: (a) H. Goldstein’s prior written consent; or (b) if required by court order or subpoena (collectively, the ‘Court Order’). Should [plaintiff] receive such a request or Court Order for such information related to this Settlement Agreement, [plaintiff] shall provide H. Goldstein and his counsel with written notice (together with a faxed version of the Court Order, if existent) no later than twenty-four (24) hours of receipt of such request or Court Order. [Plaintiff] is permitted to disclose the information as required by the Court Order only if: (a) H. Goldstein does not advise [plaintiff] within seventy-two (72) [hours] of receipt of [plaintiff’s] notice, that he intends to seek a protective order; (b) H. Goldstein does not file a motion, application or request for protective order within five (5) calendar days of his receipt of [plaintiff’s] notice unless the Parties mutually agree to extend such time period; or (c) H. Goldstein’s request for a protective order is denied. In no event shall [plaintiff] be obligated to obtain a protective order.”

In September 2007, Mr. Goldstein was charged with a single count of bank fraud. Shortly thereafter, Mr. Goldstein pled guilty. On September 18, 2007, plaintiff served a demand that arbitration be conducted under the auspices of the Independent Film & Television Alliance (the alliance). The September 18, 2007 demand seeks damages in excess of $13 million and attached the first amended complaint. As noted, the first amended complaint alleges that plaintiff is owed in excess of $20 million.

The arbitration was conducted under the alliance’s “Rules for International Arbitration.” Under its international commercial arbitration rules, the alliance acts as the administering agency. The alliance’s president, acting as “The Arbitral Tribunal,” designates a staff member as the “Arbitral Agent.” Richonda Starkey was designated by the alliance’s president as the Arbitral Agent. The alliance’s Arbitral Agent administers much of the arbitration including assisting in the selection or removal of the arbitrator. A party has a right to challenge a sitting arbitrator. Under such circumstances, the Arbitral Agent determines whether to replace the arbitrator.

Rules 6.1 through 6.3 of the alliance’s international commercial arbitration rules identify how the arbitrator is selected. On October 30, 2007, Ms. Starkey, the alliance’s Arbitral Agent, circulated a list of potential arbitrators. Pursuant to paragraph 6.3 of the alliance’s arbitration rules, Steven Stick was listed as one of the potential arbitrators. Mr. Stick’s resume cataloged his undergraduate and graduate degrees; his employment by various law firms including Loeb & Loeb (1977-1980), Talmadge, Pritzger & Stick (1981-1989), and Rubin, Bailin & Ortoli (2001-2007); his employment in the entertainment industry by United Artists Corporation (1975-1977), Home Box Office, Inc. (1980-1981), Dino DeLaurentis Corporation (1981-1989), Art & Commerce Entertainment, Inc. (1989-1994) and CST Entertainment Inc. (1994-2001); and his professional relationships including his membership in the association of the bar of the City of New York. Nothing in Mr. Strick’s resume stated he was a member of the State Bar of California. On November 2, 2007, defendants moved to quash service of the notice of arbitration. Also, on November 2, 2007, Mr. Howsam and Mr. Goldstein met in a local restaurant. Mr. Goldstein was cooperating with the Federal Bureau of Investigation and the meeting was video recorded.

On November 6, 2007, plaintiff listed Mr. Strick as its first preference as the arbitrator. On November 5, 2007, Mr. Howsam was arrested by the Federal Bureau of Investigation on bank fraud charges. The charges arose out of the loan transactions at issue in this case. On November 9, 2007, defendants, other than Mr. Howsam and Greenlight Film & Television, Inc., listed Mr. Strick as their second choice to serve as the arbitrator. Plaintiff struck defendants’ first choice to act as the arbitrator, Bruce Polichar. One of plaintiff’s attorneys explained: “[Their] first choice, [Mr.] Polichar, stated that T have acted as a mediator in several superior court cases in which Mr. Coate represented one of the litigants.’ On that basis, [plaintiff] elected to strike Mr. Polichar. Therefore Mr. Strick was [their] first eligible choice.”

On November 12, 2007, Mr. Strick was designated as the arbitrator. The parties were each individually assessed an initial $1,500 charge. The arbitrator’s rate was $300 per hour. Mr. Howsam was indicted on November 27, 2007, on federal bank fraud and making false statements in loan documents charges. As noted, the fraud and loan documents involve the unpaid debts in this case.

On December 5, 2007, a preliminary telephonic hearing was held and the arbitrator scheduled a hearing on a motion to quash, scheduled another preliminary hearing, and noted that plaintiff had withdrawn its opposition to the arbitration tribunal’s jurisdiction. On January 3, 2008, the arbitrator denied defendants’ motion to quash service of the arbitration notice which had been filed November 2, 2007. The arbitrator ordered defendants to answer plaintiff’s notice of arbitration and file any cross-claims within 30 days. The arbitrator selected January 10, 2008, as the date for a further preliminary hearing.

On January 9, 2008, Mr. Howsam and Greenlight Film & Television, Inc., moved to stay the arbitration. The stay motion was based on the fact Mr. Howsam had been indicted. The remaining defendants joined in the stay motion. On January 21, 2008, the parties agreed to stay the arbitration for six months given Mr. Howsam’s indictment. The parties later stipulated to extend the stay pending the outcome of Mr. Howsam’s indictment. On April 27, 2009, Mr. Howsam’s indictment was dismissed without prejudice.

C. Events Occurring After the Stay Was Terminated and Before Defendants Withdrew from the Arbitration

On May 4, 2009, plaintiff indicated its desire to resume arbitral proceedings to the alliance. On May 21, 2009, Mr. Stick made the following disclosure: “I wish to disclose the following: [f] Over the past years, I represented a client that maintained checking accounts at Comerica Bank (‘CB’). While I had signatory authority on some of the accounts, I have never had any personal interest in the company, its subsidiaries, the CB accounts or the proceeds thereof. I no longer represent the client, do not retain signatory authority on any such account and have no ongoing business or other relationship with CB. I am not now nor have I ever been a customer of CB or had any personal relationship with any of its officers or employees. H] In my opinion the facts here disclosed do not constitute a conflict with regard to the present arbitration, nor have they or will they in any way affect my impartiality and neutrality as arbitrator and would not be grounds for disqualification given the attenuated nature of the relationship. Nevertheless I make this information available to the parties in what I believe to be an abundance of caution.”

On June 9, 2009, defendants were ordered to file responsive pleadings by June 30, 2009. On June 30, 2009, Mr. Howsam and Greenlight Film & Television, Inc., demurred to the first amended complaint and the notice of arbitration and filed a motion to strike. On July 21, 2009, the arbitrator scheduled a September 3, 2009 hearing on a variety of issues.

On September 3, 2009, the scheduled hearing was held. Also on September 3, 2009, plaintiff filed a first amended notice of arbitration. The first amended notice of arbitration alleges plaintiff has been damaged in a sum in excess of $13 million. The first amended notice of arbitration also refers to the first amended complaint which alleges plaintiff has been damaged in excess of $20 million. On September 9, 2009, the arbitrator issued a four-page single-spaced ruling addressing various motions and issues raised at the September 3, 2009 hearing which overruled defendants’ demurrer to the first amended complaint, granted the motion to strike punitive damage allegations from the arbitration notice, ruled alter ego issues were properly part of the arbitration, and set a date for additional issues to be resolved.

On September 21, 2009, the arbitrator issued rulings concerning the scheduling of hearings on discovery disputes, the approval of a deposition subpoena of Mr. Goldstein, the discovery cutoff date, the dates for exchanges of expert witness information, other hearing dates, and the setting of the final hearings commencing February 22, 2010. The arbitrator expressly ruled that the statute of limitations on plaintiff’s claims was tolled upon the June 1, 2004 filing of the complaint. On November 19, 2009, Mr. Howsam and Greenlight Film & Television, Inc., objected to orders providing for formal discovery: “Under the circumstances, a preliminary determination must be made if general [alliance] rules prohibiting formal discovery are to be deviated from in the first instance. If and only if, a determination that the interests of justice require procedures not regularly provided for will nevertheless be provided for here, then Respondents must obviously have the opportunity to propound their own formal discovery. It can hardly be disputed that such [alliance] discovery will be extremely costly and burdensome and antithetical to the policies underlying arbitration in the first instance. However, when the claimant is a bank employing a law firm with unlimited resources, the true need for all of this discovery from the standpoint of Respondents is to make the cost of the proceeding prohibitively expensive . . . .” On November 20, 2009, the arbitrator issued orders limiting plaintiff’s admission requests to five distinct areas, directing the parties confer concerning discovery issues, directing all parties to produce their core documents by December 11, 2009, compelling production of noncore documents by December 18, 2009, limiting each side to three depositions, concerning possible stipulated facts, permitting use of letters to raise discovery disputes, and requiring payment of all arbitrator fees by November 25, 2009.

As noted, there was a video recording of the November 2, 2007 restaurant meeting between Mr. Howsam and Mr. Goldstein. On November 23, 2009, United States District Court Judge Otis D. Wright ordered the video recording unsealed over Mr. Howsam’s objection. In connection with the unsealing proceedings, Assistant United States Attorney Gregory A. Lesser wrote: “The government . . . notes, . . . based upon the evidence presently before it, the government does not intend to further prosecute . . . Howsam for the offenses alleged in the indictment and/or any related offenses involving similar loans obtained by Howsam from Comerica Bank.”

On November 20, 2009, the arbitrator issued an extensive order concerning discovery issues. The November 20, 2009 order extended to the scope of admissions requests, document production, allowing plaintiff to depose Mr. Howsam and two other witnesses, stipulated facts, and the manner in which discovery disputes were to be resolved. In addition, the arbitrator ordered, “Counsel for each of the parties shall contact [Ms. Starkey] on or before November 25, 2009 to make arrangements for the payment of all outstanding fees relating to these proceedings.”

On November 30, 2009, defendants served admissions requests. On December 14, 2009, defendants served amended admissions requests. Defendants’ motion to quash a subpoena duces tecum was denied on mootness grounds after Judge Wright ruled the video recording could be released. The video recording was of the meeting between Mr. Howsam and Mr. Goldstein.

On December 22, 2009, the arbitrator issued a further order concerning fees: “[Plaintiff] and [defendants] shall bear . . . arbitrator fees equally (i.e.[,] fifty percent of such fees shall be borne by [plaintiff] and fifty percent by [defendants]) after the previously billed arbitrator deposits have been depleted. A final allocation of arbitration related costs and expenses among the parties will be made at the close of the proceeding.” Defendants had previously been ordered to pay three-fourths of the arbitrator’s fees. In addition, the arbitrator ordered plaintiff to respond to 10 supplemental admission requests.

On December 24, 2009, Mr. Howsam and Greenlight Film & Television, Inc., filed a terminating sanctions and disqualification motion in the trial court. Defendants sought to disqualify plaintiff’s counsel on misconduct grounds. On December 30, 2009, counsel for Mr. Howsam and Greenlight Film & Television, Inc., requested a discovery stay or the opportunity to file a motion to that effect: “Under California law the continued prosecution of discovery by Claimant of this matter under the circumstances of this case raises constitutional issues and it is my understanding that you have now been served with a copy of a stay motion by associate counsel addressing the same. Further, continued prosecution of this discovery with a motion for terminating sanctions and a motion to disqualify for violation of the California Rules of Professional Conduct is contrary to law and compounds Claimant’s violations. We object to such efforts while such motion is under consideration by the Superior Court. Under the circumstances, would request a stay of discovery, or alternatively, leave to file a motion for stay of such discovery while such substantive matters are pending.” On December 31, 2009, Mr. Howsam and Greenlight Film & Television, Inc., filed a motion in the trial court to stay the arbitration until April 14, 2011. April 14, 2011, is the date when the criminal statute of limitations would run on Mr. Howsam’s dismissed federal bank fraud and related charges.

On January 6, 2010, the arbitrator denied the December 30, 2009 stay request: “I have Claimant’s motion to compel production of documents and for monetary and evidentiary sanctions. Respondents may file their opposition by January 13, 2010; Claimant may reply by January 18, 2010. []Q I also have Respondents’ letter to me of December 30, 2009, requesting a stay of discovery, or leave to file a motion for leave to stay discovery. Motion for stay is DENIED. However, Respondents are granted leave to file their motion by January 13, 2010; Claimant may file its opposition by January 20; if Respondents wish to reply they may do so by January 25, 2010. Unless and until a stay is granted, all discovery deadlines remain in effect. [][] All documents ordered produced under this tribunal’s order of November 20, 2009 shall be produced forthwith, but not later than January 13, 2010. [f] I would like to hold a hearing next week to consider outstanding issues including current discovery issues, prehearing scheduling and procedural issues next week. Please let me know in advance if you have any agenda items to add. I will get back to you with a proposed date/time and location.”

On January 8, 2010, Mr. Howsam and Greenlight Film & Television, Inc., filed another stay motion before the arbitrator: “In absence of a current stay of this proceeding as previously requested, but further to the leave granted to move for a stay of this proceeding, without prejudice to Respondents’ pending motions in the Superior Court, Respondents herein give notice of their motion and herein move for stay of this proceeding pursuant to [alliance] Rules 8.1, 9.1, 9.2 and 9.4, inter alia, at a hearing to be determined. Counsel for Respondents offers the use of the undersigned’s conference room for such purpose. [f] The foregoing rules provide you with the equitable discretion to stay this arbitral proceeding until such substantive motions are adjudicated and finally resolved, [f] The basis of the request for a reasonable stay of this proceeding until such motions are adjudicated and finally resolved is correspondingly set forth in the pending substantive motions before the Superior Court. . . .”

On January 11, 2010, the other defendants filed a joinder in the December 24, 2009 sanctions and disqualification motions of Mr. Howsam and Greenlight Film & Television, Inc. As noted, the sanctions and disqualification motions of Mr. Howsam and Greenlight Film & Television, Inc., were filed in the trial court on December 24, 2009. On January 14, 2010, the arbitrator ordered that Mr. Howsam’s deposition commence on February 9, 2010. On January 27, 2010, a hearing was held on a stay request, document production and depositions, and scheduling of further proceedings relating to in limine motions and plaintiff’s demurrer.

On February 2, 2010, the trial court denied defendants’ terminating sanctions and disqualification motion. In addition, the trial court denied the motion filed December 31, 2009, of Mr. Howsam and Greenlight Film & Television, Inc., to stay the arbitration proceedings. On February 8, 2010, the arbitrator granted plaintiff’s motion to compel document and privilege log production: “On or before February 22, 2010 each of the parties shall produce and deliver to the Los Angeles office of opposing counsel, documents previously ordered produced by this tribunal pursuant to orders dated November 20, 2009 and January 14, 2010, which document production shall be organized in the six general categories identified by [plaintiff’s] counsel. Counsel shall concurrently with such production, produce and deliver privilege logs identifying and describing any documents for which privilege or a legally imposed restriction prohibiting disclosure is asserted together with the privilege or prohibition claimed and the reason for the claimed privilege or prohibition. Counsel shall promptly advise and petition this tribunal in connection with any challenge to any privilege or legal prohibition asserted by opposing counsel.” (Fn. omitted.) In addition, on February 8, 2010, the arbitrator denied defendants’ stay motion, ordered Mr. Howsam to be deposed in Toronto, Ontario, Canada, on March 12, 15 and 16, 2010, scheduled hearings on in limine motions and plaintiff’s demurrer to an amended cross-complaint, and scheduled the hearings on the merits of the parties’ claims for April 12 through 27, 2010.

On February 11, 2010, defendants requested reconsideration of the arbitrator’s February 8, 2010 revised ruling. A hearing on defendants’ reconsideration request was held on February 12, 2010. On February 16, 2010, the arbitrator issued his ruling on defendants’ reconsideration request. The arbitrator denied defendants’ stay request, reserved ruling on the surveillance evidence in limine motion, overruled plaintiff’s demurrer, and issued orders concerning depositions.

On February 23, 2010, at 5:10 a.m. from New York City, the arbitrator raised the issue of unpaid fees in an e-mail to all counsel: “Thank you Mr. Bertrand. Receipt is acknowledged. We will take up the issues at tomorrow’s scheduled hearing, [f] In the meantime, I invite [defendants’] counsel to respond if they choose in advance of our scheduled teleconference tomorrow, [f] Also, I have been informed by my office that despite several messages and [e-mails], long outstanding invoices for arbitrator fees have not been paid. I would like to remind counsel that under [the alliance’s] Rules, failure to make deposits may be grounds for default. The relevant section is cited below. [f] ‘14.3 At any time after the commencement of the arbitration process, the Arbitral Agent or the Arbitrator shall have the right to require each party to deposit with the Arbitral Agent or the Arbitrator an equal amount as an advance against the Arbitrator’s fees. The Arbitrator shall give formal notice of any such failure to meet the deposit requirements and the consequences of such failure. The failure of any party to respond to such requests may be deemed by the Arbitrator to be a default under Rule 11 above. The Arbitral Agent shall transmit all deposits upon receipt to the Arbitrator.’ ['ll] Please make arrangements with my office for immediate payment of all outstanding invoices in advance of tomorrow’s call.”

Also on February 23, 2010, Mr. Coate, counsel for Mr. Howsam and Greenlight Film & Television, Inc., wrote Ms. Starkey from Santa Monica and complained about the arbitrator’s billings. Mr. Coate complained to Ms. Starkey about the alleged terseness of the description of the arbitrator’s expenditure of time and the advance retainer of $15,000: “With regard to the arbitrator’s most recent invoice #5, (a copy of which is attached) it is noted that Arbitrator Stick in response to an ordered request that was required to be briefed and heard, reallocated fees so that they are fairly split 50/50 between [plaintiff] on one side, and [defendants] on the other, but no credit has been provided to [defendants] for amounts that they previously paid in excess of such equal split on this invoice. We would ask for a proper recalculation so that prior amounts that were overpaid by [defendants] are properly allocated and that the invoice is accurately calculated to take such prior overpayments into account. [][] Also, we note a terseness or lack of description for many of the billing entries, and unfortunately are forced to query the time represented to be expended in connection with numerous entries. It is noted that in relation to the documents reviewed, a number of time descriptions do not appear to correspond in a meaningful way. For example, on December 3, 2009, 2.75 hours are charged for simply ‘Review file’ and a half hour is expended reading a single letter on December 15, 2009. [f] We also note that the lion’s share of the invoice does not address time that has already earned, but rather seeks a large advance retainer of fifteen thousand dollars ($15,000.00) that does not appear to be in relation to any task, or hearing, which is set in April. No explanation as to what this advance is for or entails is provided. We would kindly ask for some guidance from [the alliance] in this regard, especially when Arbitrator Stick today has threatened with virtually no notice the possible imposition of default tomorrow for failure to pay such invoice, notwithstanding the above. We do not believe that such a serious matter can be addressed in such a summary fashion and trust that [the alliance] concurs with such concerns in light of the above.”

On February 24, 2010, Mr. Howsam and Greenlight Film & Television, Inc., filed a mandate petition in this court challenging the trial court’s February 2, 2010 order denying their stay motion. On the same date, Mr. Howsam and Greenlight Film & Television, Inc., filed a separate mandate petition in this court. The second petition challenged the trial court’s February 2, 2010 order denying their terminating sanctions and disqualification motions.

At a February 24, 2010 hearing before the arbitrator, defendants raised the issue of a stay pending our resolution of the two mandate petitions. Also, the parties litigated issues concerning document production, fee allocation, and deposition duration allocation. In his February 26, 2010 written order, the arbitrator ruled on the issues raised at the February 24, 2010 hearing: and denied defendants’ stay request, issued orders in connection with document production, and reserved ruling on questions concerning allocation of time at depositions. In addition the arbitrator addressed the issue of his fees: “The Tribunal notes [defendants’] comments with regard to a split of [alliance fees] and its petition for an accounting and a credit. It is further noted that [Ms. Starkey] determined at the beginning of this proceeding that under [alliance rules], arbitrator fees and expenses would be split 3/4 - 1/4 between [defendants and plaintiff], but that pursuant to paragraph 2 of the Order dated December 22, 2009, this Tribunal ordered an equal split between [defendants] and [plaintiff] on a prospective basis, and ruled that a final allocation of arbitration related costs and expenses would be made at the close of proceedings. [Defendants’] petition for an immediate accounting and credit of fees is DENIED. ... In the meantime, [defendants] are ordered to immediately pay their share of outstanding [alliance] arbitrator deposits in accordance with [alliance rule] 14.3.” (Fns. omitted.) One of the omitted footnotes states the arbitrator had previously requested payment of fees on January 13, 2010. On February 27, 2010, plaintiff noticed Mr. Howsam’s deposition.

On February 28, 2010, the arbitrator calculated his paid and unpaid fees. He had expended 53.25 hours at a billing rate of $300 per hour for a total due of $15,975. Plaintiff had deposited $12,000. Defendants had not deposited any moneys for arbitrator fees. The outstanding balance was $3,975. In addition, the arbitrator had ordered each side to post $15,000. Thus, on February 28, 2010, plaintiff, which had already deposited $12,000, was to pay an additional $16,987.50. Defendants, who had made no deposit, owed $28,987.50. On March 2, 2010, Mr. Coate, counsel for Mr. Howsam and Greenlight Film & Television, Inc., filed a stay request with the arbitrator. Mr. Coate requested a stay pending ruling on the unresolved mandate petitions and an expedited hearing on that subject.

On March 3, 2010, Kim Tommaselli, the alliance’s senior counsel, wrote in an e-mail that Mr. Coate’s February 23, 2010 arbitrator fee challenge would be processed. In her e-mail, Ms. Tommaselli requested a clarification as to what invoice was the subject of Mr. Coate’s challenge. In response, Mr. Coate clarified he was concerned about the arbitrator’s February 28, 2010 invoice which included the $15,000 advance payment order.

On March 4, 2010, Ms. Starkey wrote the arbitrator: “We have received your February 28, 2010 invoice which requires the parties in the above referenced matter to pay an additional fee deposit of $30,000. The amount requested far exceeds the customary deposits in [an alliance] arbitration. Given the exceptional amount requested, [the alliance] asks that you provide to all parties and to [the alliance] an explanation of the arbitrator’s fees that this deposit is intended to cover. Based on the extraordinary amount of time already spent on this matter to date (221.5 hours) and the further deposit requested, the parties should also be made aware of the time that you expect to spend through the conclusion of the matter, including the hearing and issuance of a final award. [][] If you have any questions, please let me know. Thank you in advance for your cooperation.” Also on March 4, 2010, we summarily denied the petition of Mr. Howsam and Greenlight Film & Television, Inc., directed at the trial court’s order refusing to stay the arbitration. (Greenlight Film & Television, Inc. v. Superior Court (Mar. 4, 2010, B222450) [order].)

On March 5, 2010, Mr. Howsam and Greenlight Film & Television, Inc., served by mail objections to a deposition notice. The deposition notice required Mr. Howsam to appear on his own behalf and Greenlight Film & Television, Inc. The objections stated sections 2025.210 and 2025.230 do not apply to international depositions; the depositions were conducted in violation of Canadian law; the dates were unilaterally selected and were inconvenient; neither Mr. Howsam nor Greenlight Film & Television, Inc., would appear for the deposition on the scheduled dates; and video recording the deposition would be burdensome and harassing. Further, Mr. Howsam and Greenlight Film & Television, Inc., objected to three document categories in the deposition notice on the grounds they did not describe with particularity the papers to be produced; the request was not calculated to lead to the discovery of admissible evidence; and one category was premised on a falsehood. At that point, Mr. Howsam’s deposition was scheduled for March 12 and 15, 2010, in Toronto.

On March 8, 2010, plaintiff’s counsel objected to any further delay of Mr. Howsam’s deposition: “[Plaintiff] wishes to remind the tribunal that its request for depositions was litigated and litigated again, and these depositions were ordered on November 20, 2009, originally scheduled for February 9-2 [sic\ by this tribunal’s January 14, 2010 order, and then rescheduled for the current March 12 and 15 dates by this tribunal’s February 5, 2010 order (amended on February 8, 2010). In other words, there should be no further argument or dispute over these depositions. The interests of finality and judicial economy dictate that, if Mr. Howsam fails to appear, terminating sanctions should issue.”

Also on March 8, 2010, the arbitrator reiterated his prior order concerning Mr. Howsam’s deposition: “Previous orders with respect to the ordered and agreed scheduling of two days of depositions on March 12 and 15, 2010 are affirmed. In the even[t] that Mr. Howsam fails to appear for depositions as previously ordered and noticed, this tribunal will favorably consider an award of default and/or sanctions against [Mr.] Howsam and . . . Greenlight [Film & Television, Inc.]” The arbitrator agreed to hear defendants’ objections to the proposed video recording of Mr. Howsam’s deposition. On March 10, 2010, the arbitrator denied defendants’ further stay motion which had been filed on March 2, 2010. On March 10, 2010, plaintiff’s counsel responded to the fee challenge and copied the letter to the arbitrator.

On March 11, 2010, Mr. Howsam’s counsel, Mr. Coate, wrote to the arbitrator: “[I]n view of the pending writ regarding terminating sanctions, or in the alternative, for disqualification against [plaintiff] as well as the companion pending Petition for Review regarding the issuance of a stay under consideration before the California Supreme Court, and pursuant to objections timely served in accordance with the California Discovery Act, to avoid severe and unavoidable prejudice, cost and unnecessary expense, my clients will not and cannot attend these improperly noticed international video depositions which were unilaterally set to commence tomorrow in Toronto, Ontario, Canada.” Also on March 11, 2010, our Supreme Court denied the review petition of Mr. Howsam and Greenlight Film & Television, Inc., which sought to stay the arbitration. (Greenlight Film & Television, Inc. v. Superior Court (Mar. 11, 2010, S180731) [order].)

On March 12, 2010, Mr. Howsam and Greenlight Film & Television, Inc., filed a disqualification request with the Arbitral Agent, Ms. Starkey. As noted, the Arbitral Agent was charged with the duty to decide disqualification issues. The challenge was based on the following allegations: the arbitrator’s May 21, 2009 disclosure was untimely; there had been depositions, extensive document production, and use of interrogatories; admissions requests had been propounded; depositions had been ordered; this was the first time Mr. Coate, counsel for Mr. Howsam and Greenlight Film & Television, Inc., had seen their use in an international arbitration; the hearings had exclusively been held at plaintiff’s counsel’s offices; and numerous unspecified motions had not yet been mled upon. Also, Mr. Coate raised an issue concerning allocation of fees. On March 12, 2010, we denied the mandate petition of Mr. Howsam and Greenlight Film & Television, Inc., challenging the trial court’s ruling denying their sanctions and disqualification motions. (Greenlight Film & Television, Inc. v. Superior Court (Mar. 12, 2010, B222454) [order].) On March 15, 2010 defendants, other than Mr. Howsam and Greenlight Film & Television, Inc., filed a joinder in the March 12, 2010 disqualification request.

On March 15 and 19, 2010, plaintiff filed a sanctions motion. On March 16, 2010, Mr. Coate objected to any consideration being given plaintiff’s sanctions motion while the disqualification issue remained unresolved. Mr. Coate wrote to Ms. Starkey and Ms. Tommaselli: “We are in receipt of recent pleadings accepted for filing by the arbitrator while there is a pending challenge before this tribunal regarding his ability to continue to serve as an arbitrator. We are also in receipt of a joinder to the challenge by other parties in this proceeding. We must object to continued participation in this proceeding by the arbitrator while the instant challenge is pending. For example, under [section] 170.4[, subdivision ](d) ‘a disqualified judge shall have no power to act in any proceeding after his or her disqualification or after the filing of a statement of his or her disqualification has been determined.’ Notwithstanding that this matter is an arbitration, Respondents cannot be required to waive their right to have this threshold matter first determined. [][]... Under the circumstances, please confirm that during this interim of the tribunal’s determination on the pending challenge, the arbitrator will refrain [from] improper consideration of matters before a threshold determination on the challenge is made.”

While the disqualification request was being processed, Ms. Starkey ruled on the fee dispute. On March 17, 2010, she wrote: “In response to your request for a retroactive reallocation of the arbitrator’s fees previously paid, Arbitrator Strick’s December 22, 2009 Order states that the arbitrator’s fees shall be borne equally by Claimant and Respondents so that Claimant is responsible for 50 [percent] and Respondents, collectively, are responsible for 50 [percent] of the arbitrator’s fees. The Order specifically states that such fee allocation become effective after all deposits have been depleted and that a final allocation of the fees will be done at the conclusion of the arbitration. [The alliance] does not have jurisdiction to overrule or supersede any Order of the Arbitrator. [The alliance’s] Rule 3.6 states, ‘[p]rior to the appointment of the Arbitrator, the Arbitral Agent shall make such decisions regarding procedural matters as may be required from time to time under these Rules. After the appointment of the Arbitrator, notices of all such matters shall be forwarded to the Arbitrator (with copy to the Arbitral Agent) for decision and the Arbitrator shall make such decision.’ ([E]mphasis added.) [][] Based on a review of the [alliance’s] file, several charges appear to be either duplicative or excessive based on the description of the work performed and the corresponding documents in the file for that time period. As such, the invoices dated January 13, 2010 and February 28, 2010 in the above-referenced arbitration shall collectively be reduced by 17.5 hours or Five Thousand Two Hundred Fifty Dollars ($5,250). Arbitrator Stick is directed to refund the parties their respective shares of such amount based upon the allocation of fees in effect at the time of the invoice. [Fn. omitted.] [][] With regard to the $30,000 advance deposit requested from the parties, Arbitrator Stick explained in his March 5 letter that such amount was expected to cover the 12 hearing days in April. [][]... The parties and the Arbitrator shall be bound by this decision with regard to this fee challenge pursuant to the [alliance’s] Rules.” The omitted footnote states, “The January 13 invoice is reduced by 11.25 hours ($3,375) and the February 28 invoice is reduced by 6.25 hours ($1,875).” Immediately thereafter, counsel for Mr. Howsam and Greenlight Film & Television, Inc., reiterated their objections to Mr. Strick remaining as the arbitrator.

On March 19, 2010, the arbitrator responded to Mr. Coate’s March 12, 2010 disqualification request. The arbitrator explained that the alliance had initially divided the fees at 75 percent to defendants and 25 percent to plaintiff. The arbitrator noted he had modified the alliance’s decision to require each side to pay 50 percent of the fees. The arbitrator agreed to immediately adjust the fee computation in compliance with Ms. Starkey’s March 17, 2010 determination. The arbitrator also stated he had fully considered the defendants’ stay motions. As to the disclosure issue, the arbitrator stated; “At the time of my appointment, it did not occur to me that a client’s bank account at [plaintiff], on which I was signatory was a proper subject of disclosure. After the lengthy stay of this arbitration following dismissal of Federal charges against Mr. Howsam were dismissed, I discussed disclosure on an anonymous basis with senior [alliance] advisors who confirmed their view that the matter was not subject to disclosure. Nevertheless in an abundance of caution, and even though I no longer represented the clients, I disclosed the matter to the parties on May 21, 2009. Neither side objected or otherwise raised concerns to the matters contained in the disclosure until the current Challenge, which did not occur within the period prescribed to assert a challenge under [alliance] Rule 6.6.1.” (Fn. omitted.) In terms of the depositions, the arbitrator stated they were ordered upon the parties’ agreement at a January 27, 2010 hearing. The parties filed further papers in response to the challenge and the arbitrator’s March 19, 2010 written analysis of the disqualification issue.

On March 24, 2010, Mr. Howsam and Greenlight Film & Television, Inc., filed a supplemental challenge to the arbitrator. Mr. Howsam and Greenlight Film & Television, Inc., cited to the aforementioned reference to “clients” in the arbitrator’s March 19, 2010 letter. On March 30 and April 5, 2010, Ms. Starkey denied defendants’ challenges to the arbitrator.

On March 30, 2010, Ms. Starkey, in her role as the Arbitral Agent, issued a three-page single-spaced decision refusing to disqualify Mr. Strick as the arbitrator. On April 1, 2010, the arbitrator declared defendants in default pursuant to the alliance’s arbitration rule 11.1 for failure to pay arbitral fees. On April 5, 2010, Ms. Starkey indicated the alliance’s decision on the billing challenge was final. The arbitration hearing was scheduled for April 12, 2010. Shortly before April 12, 2010, defendants announced they were withdrawing from the arbitral proceedings. When defendants withdrew, there was a pending terminating sanctions motion directed against them for their failure to obey the arbitrator’s discovery orders.

D. Events Occurring After Defendants Withdrew from the Arbitration

On April 12, 2010, plaintiff presented its evidence in a default hearing. On April 13, 2010, Mr. Howsam and Greenlight Film & Television, Inc., filed a motion in the trial court for an order disqualifying the arbitrator. Such a motion filed in the trial court is permitted in international commercial arbitrations by section 1297.134, a subject which shall be discussed later.

On May 3, 2010, the arbitrator entered an interim award and factual findings in plaintiff’s favor on all its contract claims. The arbitrator found plaintiff entered into loan and security agreements with defendants, except for Mr. Howsam and Greenlight Film & Television, Inc.; Mr. Howsam created the seven corporations as vehicles for production of an equal number of films; Mr. Howsam signed the loan agreements on behalf of the seven corporations; and the agreements were designed to provide production loans for the seven films. The collateral for the seven loans consisted of what the arbitrator termed “pre-sales” documents. The arbitrator described the presales documents and their purpose: “Pre-sales are used to demonstrate (1) the level of interest in a proposed film; (2) film industry confidence in the producer!;] and (3) distributors’ commitments to purchase rights to a film once it is distributed.” The pre-sales documents consisted of executed distribution agreements, “deal memos,” and assignment notices for the seven films. The security agreements in this case included provisions in which the borrowers represented the pre-sales for each film was accurate; the borrowers assigned their rights to distributor payments so as to satisfy the loan indebtedness; and the borrowers acknowledged the loans would not have been made without the representations contained in the pre-sales papers. The distribution agreements were forged. The forged distribution agreements were submitted to plaintiff prior to the funding of the loans by Mr. Howsam and Greenlight Film & Television, Inc. Plaintiff discovered the fraud when it later directly contacted the film distributors.

Also, on May 3, 2010, the arbitrator found in plaintiff’s favor on its fraud-based claims. The arbitrator found: the forged distribution agreements were given to plaintiff to induce funding of the loans; two foreign distributors testified they never entered into the distribution agreements; other declarations established the distribution agreement signatures were forged; plaintiff would not have funded the loans had its employees knew of any of the forgeries; the forged instruments were provided by Mr. Howsam; and Mr. Howsam knew the instruments were forged. According to the arbitrator, Mr. Howsam complimented Mr. Goldstein for one of the forgeries, referring to it as “ ‘creative thinking’ ”; directed Mr. Goldstein and an assistant to forge signatures on other distribution agreements; personally participated in one of the forgeries; during a video secured by the Federal Bureau of Investigation, admitted he knew of the forgeries; during the video told Mr. Goldstein to claim a subordinate forged the signatures and to lie about the scheme; destroyed evidence of the fraud as to one of the films and shredded his own files; paid Mr. Goldstein’s living expenses and attorney fees once plaintiff discovered the fraud; made the payments in an effort to “buy” Mr. Goldstein’s silence; also paid the attorney fees for a witness, Michelle Glockler; the video states Ms. Glockler’s fees were paid to “keep her quiet”; told Mr. Goldstein to “stay quiet and develop ‘amnesia[]’ told Mr. Goldstein to shred documents; and transferred his assets to his wife’s name after plaintiff discovered the fraudulent scheme.

Further, on May 3, 2010, the arbitrator found the seven corporations which received loan proceeds were the alter egos of Mr. Howsam and Greenlight Film & Television, Inc. The arbitrator found Mr. Howsam created and controlled CPC Communications, Inc.; Greenlight Film & Television, Inc., is a wholly owned subsidiary of CPC Communications, Inc.; Mr. Howsam is the sole director of Greenlight Film & Television, Inc.; CPC Communications, Inc., is the sole shareholder of Greenlight Film & Television, Inc.; all seven corporations used to fund the films are wholly owned subsidiaries of Greenlight Film & Television, Inc.; Mr. Howsam transferred assets of these corporations and created a new entity; the new entity received profitable assets from other defendants; money from defendants’ corporate accounts was paid to Mr. Goldstein’s spouse in order that he remain silent about the forgeries; Greenlight Film & Television, Inc., and the seven corporations which received the loans were never adequately capitalized; Mr. Howsam used the forged instruments to secure funding for films; the funds were used interchangeably by all of the subsidiaries; and Mr. Howsam used the loan proceeds for matters unrelated to film production. Finally, the arbitrator found defendants acted with malice, fraud and oppression. The arbitrator awarded compensatory damages in plaintiff’s favor against all defendants in the sum of $18,204,236 plus interest from April 7, 2010, awarded plaintiff costs and attorney fees, and denied defendants’ cross-claims.

On May 12, 2010, our Supreme Court denied the review petition of Mr. Howsam and Greenlight Film & Television, Inc. The review petition challenged the trial court’s order denying their terminating sanctions and disqualification motion. (Greenlight Film & Television, Inc. v. Superior Court (May 12, 2010, S181113) [order].) On May 25, 2010, the trial court denied the motion of Mr. Howsam and Greenlight Film & Television, Inc., to disqualify the arbitrator. As noted, the disqualification motion of Mr. Howsam and Greenlight Film & Television, Inc., had been filed on April 13, 2010, before the arbitrator began hearing testimony. No defendant filed a mandate petition challenging the trial court’s May 25, 2010 order refusing to disqualify the arbitrator.

On July 16, 2010, the arbitrator granted plaintiff’s sanctions motions which had been filed on March 15 and 19, 2010. The arbitrator found he had the authority to impose monetary sanctions. The arbitrator found that Mr. Coate had “engaged in abusive discovery practices” by belatedly notifying plaintiff’s attorneys that Mr. Howsam would refuse to attend his deposition; this caused plaintiff’s counsel to unnecessarily travel to Toronto; and by disingenuously objecting to the videotaping of the deposition which implied Mr. Howsam would be deposed. The arbitrator imposed $10,598.42 in monetary sanctions against Mr. Howsam and Greenlight Film & Television, Inc., and their counsel, Mr. Coate. Plaintiff had sought a monetary sanctions award against A. Raymond Hamrick, the attorney for the seven corporations used to secure the loan funding. The arbitrator found Mr. Hamrick had not engaged in any discovery abuses. On July 19, 2010, the arbitrator imposed $1,641,367.17 in costs against defendants as follows: fees and costs in the sum of $1,500,794.50; $34,587.50 in arbitrator fees; and $105,985.17 in sanctions. All awards were certified pursuant to article I of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of June 10, 1958. Commonly referred to as the “New York Convention,” it is codified in this country at title 9 United States Code sections 201 through 208.

E. Events Occurring After the Awards Are Returned

On August 20, 2010, defendants filed petitions to vacate the arbitration awards. The petitions are based on all the grounds specified in section 1286.2, subdivision (a). In addition, the petitions and points and authorities allege the arbitrator engaged in misconduct because he failed to make timely mandatory disclosures, rendered a duplicative billing, refused to rule on defendants’ motions and issued an inappropriate award; the award is executed by “Stephen J. Strick” who was unknown to defendants; the award was obtained through undue means; the arbitrator improperly refused to stay the arbitration; there were errors in connection with alter ego and discovery issues; the arbitrator failed to resolve all necessary issues; and the award was returned in manifest disregard of the law. Defendants did not request a new arbitration hearing. Plaintiffs filed an opposition.

On December 22, 2010, the trial court denied the petitions to vacate the awards. The awards were confirmed. Defendants’ motions for issuance of a statement of decision were denied. On January 5, 2011, notice of entry of the two orders confirming the awards and denying the motion to vacate them was served. Judgment was entered on March 2, 2011. Notice of entry of judgment was served on March 8, 2011. Notices of appeal were filed on behalf of defendants and Mr. Coate on April 26, 2011.

IV. DISCUSSION

A. Vacatur

Defendants argue the award should be vacated on various grounds. The case was litigated in the trial court on the assumption California’s vacatur provisions applied to this dispute. The briefs are all premised on the assumption that this state’s vacatur provisions are applicable. At oral argument, in response to an inquiry from the bench, every attorney stipulated the arbitration confirmation and vacatur provisions of the California Arbitration Act apply.

An award may be vacated on the grounds specified in section 1286.2, subdivision (a). (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 33 [10 Cal.Rptr.2d 183, 832 P.2d 899] [“[A]n award reached by an arbitrator pursuant to a contractual agreement to arbitrate is not subject to judicial review except on the grounds set forth in sections 1286.2 (to vacate) and 1286.6 (for correction).”]; Oaktree Capital Management, L.P. v. Bernard (2010) 182 Cal.App.4th 60, 68 [106 Cal.Rptr.3d 16] [“[G]rounds for vacating an arbitrator’s award are statutory and limited.”].) In addition, an award may be vacated where an arbitrator commits clear legal error which denies a litigant a hearing on an unwaivable important statutory right. (Pearson Dental Supplies, Inc. v. Superior Court (2010) 48 Cal.4th 665, 669-670, 675-680 [108 Cal.Rptr.3d 171, 229 P.3d 83]; see Shahinian v. Cedars-Sinai Medical Center (2011) 194 Cal.App.4th 987, 1004, fn. 14 [124 Cal.Rptr.3d 128].)

B. Failure to Disclose

1. Background

Defendants argue the awards must be vacated because the arbitrator failed to timely disclose a basis for disqualification. Defendants rely on the following facts: the arbitrator was assigned on November 12, 2007; on May 21, 2009, the arbitrator disclosed that he had represented a client who had an account with plaintiff; he had signatory authority over the account; and on March 19, 2010, while responding to their for-cause challenge, the arbitrator referred to “clients.” As noted, on March 12, 2010, Mr. Howsam and Greenlight Film & Television, Inc., filed a disqualification motion. The challenge was based in part on the arbitrator’s failure to disclose his signatory authority over a client’s account maintained with plaintiff. On March 15, 2010, the other defendants joined in the disqualification request of Mr. Howsam and Greenlight Film & Television, Inc.

In response to the March 12 and 15, 2010 challenges, the arbitrator referred to a discussion with alliance officials concerning his “clients” and the duty to disclose. The reference to clients was made in the arbitrator’s March 19, 2010 response to defendants’ challenges. On March 24, 2010, Mr. Howsam and Greenlight Fi