Hogan Lovells obtains California appellate ruling upholding a $13 million arbitration award in construction dispute

Hogan Lovells obtains California appellate ruling upholding US$13M arbitration award in construction dispute

Press releases | 25 June 2020

New York, 25 June 2020 – Hogan Lovells obtained a significant victory in the Fourth Appellate District of California, which affirmed a judgment obtained by  client Drivetrain, Inc., Trustee of the Abeinsa Litigation Trust enforcing an arbitration award of more than US$13M including interest.

The arbitration award was issued in May 2018 by a three member AAA Panel against Desert Mechanical, Inc. (“DMI”) in a case arising from DMI’s subcontractor work at a solar power plant in San Bernardino County.  The arbitration panel unanimously found that DMI’s failure to maintain proper licensing under California state law precluded it from recovering any alleged outstanding invoices or claims against the trust, and also concluded that DMI was required to disgorge amounts it had been paid.

When Drivetrain sought to confirm the arbitration award in trial court, DMI filed a cross-petition to vacate the award, alleging that each of the AAA Panel members failed to disclose biases that could influence the outcome of the case. The trial court denied DMI’s cross-petition and granted Drivetrain’s petition.  

DMI appealed. Following oral argument, the Court of Appeal ruled on June 23 that DMI failed to establish any arbitrator’s violation of their disclosure obligations, and unanimously confirmed the judgment enforcing the award.  

The Hogan Lovells team was led by partner David Dunn in New York, who argued the case on appeal, and included senior associate Vassi Iliadis and associate Elizabeth Goncharov in Los Angeles. Varela, Lee, Metz & Guarino served as co-counsel on the brief.