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Missing piece

Appellate Court Holds Respondent Forfeited Issues and Failed to Establish Implied Findings

Tim Kowal     March 23, 2021

In another cautionary tale for respondents on appeal, the Second District in this appeal of an order denying arbitration holds the trial court erred in finding an arbitration agreement unenforceable. The opinion in Alvarez v. Altamed Health Servs. (D2d8 Feb. 4, 2021) No. B305155 (published) suggests a couple ways respondents might try to shore up potential defects in their judgments before exposing them to the crucible of appeal.

In Alvarez, employee filed suit against her employer, who then moved to compel arbitration. The trial court denied the motion because, among other grounds, the arbitration agreement "incredibly difficult to read," and the arbitration language "was not highlighted in any way."

The Second District disagreed. The court noted the typeface of the arbitration provision was the same as the offer letter (which the employee did not complain about), and used the same line spacing as the trial court's ruling. Nor was it "sandwiched in between other topics," and it was otherwise "not difficult to find."

The court concluded it was "surprised by the trial court's inability to find the word 'jury' or the jury provision in the arbitration agreement."

Respondent shrewdly then reached for another ground supplied by the trial court's ruling: that employee "never knowingly waived" her right to a jury trial. But the Court of Appeal rejected this. The court took respondent to mean that "there is no proof she saw or read" the arbitration agreement. But, the court went on, "Respondent did not make this claim in the trial court." Accordingly, respondent "has forfeited this contention."

I found this forfeiture outcome surprising, as the doctrine of implied findings usually would carry the day for respondent. “The doctrine of implied findings requires the appellate court to infer the trial court made all factual findings necessary to support the judgment." (Fladeboe v. American Isuzu Motors Inc. (2007) 150 Cal.App.4th 42.)

The court did not directly address the doctrine of implied findings on this issue, but did raise it in its analysis on a different issue, stating:

"Preliminarily we note we do not agree with respondent that the doctrine of implied findings applies here. If a trial court's decision depends on disputed facts or extrinsic evidence, the doctrine of implied findings applies. If "the facts bearing on the trial court's decision derive solely from the language of plaintiff's complaint and from the terms of the [arbitration agreement], [and] neither [are] in dispute," the "doctrine of implied factual findings does into come into play." (Molecular Analytical Systems v. Ciphergen Biosystems, Inc. (2010) 186 Cal.App.4th 696, 708.) In such instances we independently review the questions of law raised by the decision."

So the reviewing court will not infer findings on pure questions of law like contractual interpretation. But "knowing waiver" is a fact question, which would not fall within that exception to the doctrine of implied findings.

Another possible explanation lies in still another part of the court's decision, noting that no party requested a statement of decision. As the court observed:

"A party's failure to request a statement of decision when one is available has two consequences. First, the party waives any objection to the trial court's failure to make all findings necessary to support its decision. Second, the appellate court applies the doctrine of implied findings and presumes the trial court made all necessary findings supported by substantial evidence." (Acquire II, Ltd. v. Colton Real Estate Group (2013) 213 Cal.App.4th 959, 970.)"

Unfortunately, the court does not explain the application of this rule to this case. But ordinarily one would expect that, given the appellant did not request a statement of decision, the implied findings doctrine would operate against appellant. Yet that didn't happen here. When the respondent sought to capitalize on the doctrine, the court was unmoved.

This ought to make the blood of any respondent run cold. What consolation may be offered?

Ordinarily, it is the appellant who requests a statement of decision. But a respondent may request one also. (In many cases, the trial court will instruct the respondent to prepare the proposed statement of decision.) Here, the respondent "acknowledge[d] the trial court was mistaken about the absence of a jury waiver provision," the principal thrust of the trial court's ruling. Recognizing this defect might be difficult to overcome on appeal, respondent might have considered shoring up its position on appeal by requesting some backup findings in a request for a statement of decision.

Upshot: Do not overlook the statement of decision process at the end of a critical hearing or bench trial. The statement of decision is often the single most important document the Court of Appeal will review. Either party may drastically alter the meaning and effect of that document by making a strategic request for findings under Code of Civil Procedure section 632 and Rules of Court rule 3.1590.

Tim Kowal helps trial attorneys and clients win their cases and avoid error on appeal. He co-hosts the Cal. Appellate Law Podcast at www.CALPodcast.com, and publishes a newsletter of appellate tips for trial attorneys at www.tvalaw.com/articles. Contact Tim at [email protected] or (714) 641-1232.

Tim Kowal is an appellate specialist certified by the California State Bar Board of Legal Specialization. Tim helps trial attorneys and clients win their cases and avoid error on appeal. He co-hosts the Cal. Appellate Law Podcast at CALpodcast.com, and publishes summaries of cases and appellate tips for trial attorneys. Contact Tim at [email protected] or (949) 676-9989.
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