FCM Inv., Inc. v. Grove Pham, LLC, No. RIC1902326 (Cal. Super. Ct. Oct. 17, 2023)[1]
Factual Background
In January 2019, Plaintiff FCM Investments, LLC (“FCM”), signed a purchase agreement to buy property in Riverside, California, from Defendant Grove Pham, LLC (“Grove”), a company owned by Phuong Pham. Grove operated a nursing home on this property. Disputes arose and were mediated during the due diligence process, but FCM pulled out of the amended deal before escrow closed.
Grove, Pham and Pham’s daughter, Trish Pham (collectively referred to as the “Phams”) moved to compel arbitration, which arbitration took place in June 2021. The arbitrator concluded that the Phams breached the contract and FCM was justified in terminating escrow and awarded a return of FCM’s $650,000 deposit with interest, $9.1 million in damages, plus interest, and attorneys’ fees and costs. The arbitrator based her decision largely on the witnesses’ credibility, finding that Phuong Pham’s use of an interpreter in testifying was a ploy to appear less sophisticated.
The Court Proceedings
FCM filed a petition to confirm the arbitration award while the Phams moved to vacate the award pursuant to the California Arbitration Act. The trial court denied the Phams’ motion and entered judgment for FCM. However, the Court of Appeal reversed the trial court’s decision, finding that, in making an adverse credibility finding against Ms. Pham for her use of an interpreter, the arbitrator’s decision created a reasonable impression of possible bias.
The court came to this decision despite the fact that the Phams did not raise their claim of bias before the trial court. Although FCM claimed that the Phams had thereby forfeited this argument, the court found that both exceptions to the forfeiture rule applied. The first exception applied because no additional facts were needed to review the question of bias, and the second applied because questions of linguistic and national origin bias implicate the public interest and due administration of justice.
The court next considered whether the record created a reasonable impression of possible bias. The court determined that Phuong’s decades of living in the United States, savvy business dealings, and unspecified past role as an interpreter did not permit a reasonable, non-speculative inference that her decision to use an interpreter in this high-stakes commercial arbitration proceedings was a deceptive ploy. In concluding otherwise, without any elucidation of supporting facts, the award raised an impression of possible bias. Indeed, denying access to judgment based on language proficiency, or burdening a litigant’s choice to use an interpreter with adverse inferences, each yield a less-than-level playing field for limited English-proficient individuals.
Conclusion
The court therefore had no difficulty concluding that the Phams’ rights were substantially prejudiced by possible arbitrator bias, compelling an order reversing the judgment and vacating the award.
This Article was originally published in the North America Newsletter.
