The Context:  Arbitral Award Against LLC, Jury Trial Against Members Of LLC.

       Following a default prove-up, plaintiff listing broker CB Richard Ellis, Inc. obtained a substantial arbitral award from an LLC owing CBRE a commission for the sale of real property.  Because the LLC had no assets, CBRE then sued the individual members of the LLC.  Over the objections of the defendants, the trial judge admitted into evidence the arbitral award against the LLC.  CBRE obtained a judgment against the defendants, prompting an appeal.  CB Richard Ellis, Inc. v. Terra Nostra Consultants, No. G049803 (4/3 Oct. 7, 2014) (Ikola, O’Leary, Aronson) (partially certified for partial publication).

      In a part of the opinion not certified for publication, the Court of Appeal found the court erred by admitting the entire arbitral award, complete with the arbitrator’s factual findings and reasoning, because the arbitral award against the LLC could not collaterally estop the members of the LLC, who were the defendants.  As a result, the arbitral award was irrelevant (except to provide background and context), though it could prejudice the jury.  But the Court of Appeal concluded that the error was harmless, and did not make a difference to the outcome, because there was plenty of evidence to support the judgment.

     The Court of Appeal affirmed the judgment, and reversed a postjudgment order denying recovery of attorney fees.  For discussion of the attorney’s fees issue, see post on California Attorney’s Fees.

     PRACTICE TIP from the Court of Appeal:  “To the extent the jury needed background information concerning the arbitration to make sense of the case, the information could have been provided to the jury without revealing the arbitrator’s factual findings and legal reasoning.”