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C.A. Permits Appeal Despite Clause in Arbitration Agreement Barring It
Stratton Says Arbitrator in Nonconsumer Proceeding Need Not Disclose New Relationships With One of the Parties
By a MetNews Staff Writer
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JUSTIN MOONGYU LEE disbarred attorney |
The Court of Appeal for this district yesterday declined to dismiss an appeal from an order denying a motion to vacate an arbitrator’s award even though the agreement to enter into alternate dispute resolution prohibited a challenge to the trial judge’s ruling.
Presiding Justice Maria E. Stratton of Div. Eight authored the opinion which affirms the judgment by Los Angeles Superior Court Judge Lia Martin in favor of the defendant, the Bank of Hope, pursuant to the arbitrator’s award, but denies the bank’s motion to dump the appeal.
The plaintiffs, 18 Korean nationals, had sued the bank, in two consolidated actions, blaming it for their funds—amounting to more than $7 million—having been appropriated by their then-lawyer, Justin Moongyu Lee, rather than being safeguarded. During pendency of the lawsuit, the parties opted to settle the dispute through arbitration at JAMS, with a provision of their written agreement reciting:
“The parties further agree that there will be no appeal from the court’s ruling under section 1285 except for any ruling vacating the arbitration award.”
Nature of Waiver
Notwithstanding that provision, Stratton said the bank’s motion fails because the waiver of a right requires knowledge of what is being given up. She wrote:
“The Bank has not shown that plaintiffs were aware they were giving up a known right, that is, the right to appeal. A person’s agreement not to take an action does not support an inference that the person was aware that he had a right to take that action. The reference to section 1285 does not show such an awareness; the section is not concerned with appellate matters. It simply provides: ‘Any party to an arbitration in which an award has been made may petition the court to confirm, correct or vacate the award.’…We deny the motion to dismiss the appeal.”
The plaintiffs maintained that the arbitrator’s award should be cast aside based on a failure to divulge relationships between JAMS and the Bank of Hope that arose after the arbitration commenced. Stratton responded that there is no “express duty on the part of the neutral arbitrator (or the provider organization) to disclose the provider organization’s new business relationships.”
Extent of Requirement
She said that the relevant provision of the Ethics Standards promulgated by the Judicial Council, as it relates to nonconsumer arbitrations, “does require the arbitrator to disclose his own current or past relationships with the parties and their attorneys, but does not require an arbitrator to disclose even his own new relationships formed with the parties or their attorneys during the pendency of the arbitration, as long as he discloses prearbitration his intent to entertain such offers of employment.”
The neutral disclosed to the parties that he has a small ownership interest in JAMS. Stratton wrote:
“Plaintiffs contend that it is ‘clearly’ at least a potential conflict of interest for the arbitrator to be making money from the Bank while the owner is acting as a neutral arbitrator in an ongoing arbitration. We see nothing clear about this….[T]he Ethics Standards expressly require disclosure of an arbitrator’s ownership interest in a provider organization and the provider organization’s relationships only in consumer arbitrations and expressly exempt an arbitrator from such disclosures in a nonconsumer arbitration. We view this as a very strong indication that it is not ‘clearly’ a potential conflict of interest.”
The jurist commented:
“Over the six-month period that the arbitration was pending, plaintiffs received no disclosures, but never once made any inquiries about the lack of disclosure. This is certainly an indication that they did not expect any disclosures.”
The case is Roh v. Bank of Hope, B322021.
Attorneys on appeal for the plaintiffs were Stuart B. Esner of the Pasadena firm of Esner, Chang, Boyer & Murphy; Hancock Park attorney Johnny Kim; Alan Lawrence VanGelder, Browne Greene, and Bruce A. Broillet of the El Segundo/Santa Monica firm of Greene, Broillet & Wheeler, L.L.P.; and Andrew J. Spielberger and Daniel Keith Balaban of the West Los Angeles firm of Balaban & Spielberger, LLP. Acting for the bank were Ekwan Eric Rhow, Kate Sungeun Shin, and Thomas V. Reichert of the Century City firm of Bird Marella Boxer, Wolpert, Nessim, Drooks, Lincenberg & Rhow, P.C.
Proceedings Against Lee
Lee was disbarred on Aug. 20, 2021, based on his theft of client funds. His former law partner, Thomas Edward Kent, was disbarred on Aug. 30, 2014.
On Oct. 29, 2015, final judgment was entered against him in U.S. District Court for the Central District of California ordering payment to his victims of $7,210,000, plus interest of $1,052,403.73, adding up to $8,262,403.73, in addition to a civil penalty of $150,000. In the same case, on Sept. 22, 2015, final judgments were entered in lesser sums against Justin Lee’s wife, Rebecca Taewon Lee, and against Kent, pursuant to their consents.
In a footnote, Stratton advised:
“Attorney Justin Lee is not a defendant in this action. Plaintiffs allege that Lee was arrested, tried and convicted of criminal charges arising from their losses and is in prison in South Korea.”
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