Citations
- 55 Cal. App. 2d 882
Full opinion text
Opinion
MASTERSON, J.
Staff Builders, Inc. (Staff Builders) appeals an order of the superior court confirming an arbitration award. Because the trial court did not apply the correct standard in reviewing the arbitration award, we reverse.
Background
Staff Builders acquires, franchises, and manages home health care businesses. Glen Lindenstadt (Lindenstadt), who does business as The Lindenstadt Company (TLC), assisted Staff Builders in its acquisition efforts. From 1991 until 1995, TLC and Staff Builders entered into 25 to 30 written agreements referencing the possible acquisition of over 100 businesses.
By way of example, an agreement dated March 25, 1993, listed 11 potential acquisition candidates, including Homelife Nursing, Inc., and Kay-lee Home Care. The agreement acknowledged that TLC “has brought th[ese] possible acquisition/franchise candidate(s) to [Staff Builders’] attention.” The agreement further provided that “[i]f [Staff Builders] consummates an acquisition . . . with respect to the[se] company(ies) and/or business(es) . . . and first called to [Staff Builders’] attention by TLC within 36 months from the date entered below, [Staff Builders] will pay TLC a Finder Fee [based on] the Present Value of the Gross Aggregate Consideration.” Staff Builders also agreed to “list TLC in all acquisition agreements and final closing documents as the Finder/Initiator . . . Finally, the parties agreed that any controversy relating to the agreement would be resolved through binding arbitration and that the prevailing party would be entitled to attorney fees.
In August 1995, TLC initiated arbitration proceedings against Staff Builders, seeking the payment of finder’s fees in connection with Staff Builders’ acquisition of four businesses: Homelife Nursing, Inc., Kaylee Home Care, Comprehensive Services, and Albert Gallatin Visiting Nurse Association, Inc. Staff Builders defended the claims on the ground that TLC had functioned as an unlicensed real estate broker and was therefore statutorily barred from seeking any compensation under certain sections of the Real Estate Law (Bus. & Prof. Code, § 10000 et seq.). (See id., §§ 10130, 10131, 10136.) TLC argued that it had served as a “finder,” not a broker. Lindenstadt admitted that he did not have a real estate broker’s license.
In early 1996, the arbitrator conducted two days of hearings. On April 21, 1996, she issued an award, concluding that TLC was entitled to finder’s fees on two of the transactions (Homelife Nursing, Inc., and Comprehensive Services) but not on the other two (Kaylee Home Care and Albert Gallatin Visiting Nurse Association, Inc.). The award required that Staff Builders pay TLC $125,000 in finder’s fees, $20,519 in interest, and $6,200 in attorney fees.
In her six-page award, the arbitrator described the evidence produced at the hearings and the basis for her decision. As to the transactions involving Kaylee Home Care and Albert Gallatin Visiting Nurse Association, Inc., the arbitrator found that Lindenstadt had acted as an unlicensed broker and that the Real Estate Law (Bus. & Prof. Code, § 10000 et seq.) precluded TLC from receiving any payment for those deals. With respect to the transactions involving Comprehensive Services and Homelife Nursing, Inc., the arbitrator concluded that Lindenstadt had not acted as a broker and that TLC was entitled to finder’s fees; as to these transactions, the award recited:
“Lindenstadt testified that he obtained Comprehensive’s financial reports to forward to Staff Builders and also ‘facilitated meetings, kept discussions on track.’ Lindenstadt’s testimony as to his activities was vague and conclusory and the Arbitrator gave it little credence .... Staff Builders’ [president] Steve Savitsky testified that Lindenstadt had no involvement in negotiating terms of the Comprehensive Services deal. The Arbitrator makes the factual finding that Mr. Lindenstadt’s activities were as testified by Mr. Savitsky and thus included no prohibited ‘broker’ activities precluding enforcement of the contract. Therefore the fee agreement relating to Comprehensive Services is enforceable.
“Mr. Lindenstadt testified that his initial contact with Homelife [Nursing, Inc.] was with a Mr. Gleason, from whom he got an expression of interest and a purchase price which he passed on to Staff Builders, along with information about the company.
“Mr. Lindenstadt testified that he spoke to Mr. Gleason at least 5-10 times over the course of 1993 to see how things were progressing and also discussed Homelife with Staff Builders several times asking whether they were pursuing the opportunity. . . . Mr. Lindenstadt testified that he did ‘follow up’ and had ‘numerous conversations’ (5-10) with Gleason re Homelife throughout 1993, but did not ‘negotiate’ for Staff Builders.
“Mr. Gleason contradicted Mr. Lindenstadt, stating that he had never spoken to Lindenstadt and would recall 5-10 conversations if they had occurred. Mr. Gleason also testified that such conversations could not have occurred as he would not discuss acquisition matters with anyone, had no authority to do so, and would forward such calls to Homelife CEO Ed Schrum. ['JO Ed Schrum testified that Gleason never reported any such conversations with Lindenstadt.[] [