MALLORY & NATSIS LLP
MICHAEL R. FARRELL (BAR NO. 173831)
SCOTT J. LEIPZIG (BAR NO. 192005)
TIM C. HSU (BAR NO. 279208)
865 South Figueroa Street, Suite 2800
Los Angeles, California 90017-2543
Phone: (213) 622-5555
Fax: (213) 620-8816
E-Mail: mfarrell@allenmatkins.com sleipzig@allenmatkins.com thsu@allenmatkins.com
COHEN LAW GROUP, APC
MARC COHEN (BAR NO. 262707) 541 S. SPRING STREET, SUITE 1208
LOS ANGELES, CA 90013
EMAIL: MARC@CLGAPC.COM
Attorneys for Defendants and Nominal Defendants MAHENDER MAKHIJANI; CONTINUUM ANALYTICS, INC.; MOM AS INVESTOR; GROUP, LLC; MOM BS INVESTOR; GROUP, LLC; MOM CA INVESTOR GROUP, LLC; MOM CA MANAGER, LLC; MOM BS MANAGER, LLC; MOM AS MANAGER, LLC; LAGUNA HW, LLC; LAGUNA HI, LLC; SUNSET COVE VILLAS, LLC; RETREAT AT LAGUNA VILLAS, LLC; DUPLEX AT SLEEPY HOLLOW, LLC; HOTEL LAGUNA, LLC MOM AS INVESTCO, LLC; MOM BS INVESTCO, LLC; and MOM CA INVESTCO, LLC
SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF ORANGE
MOHAMMAD HONARKAR and 4G WIRELESS, INC., individually and on behalf of MOM AS INVESTCO, LLC, MOM BS INVESTCO, LLC, and MOM CA INVESTCO, LLC,
Plaintiffs, vs.
MAHENDER MAKHIJANI; CONTINUUM ANALYTICS, INC.; MOM AS INVESTOR GROUP, LLC; MOM BS INVESTOR GROUP, LLC; MOM CA INVESTOR GROUP, LLC; MOM CA MANAGER, LLC; MOM BS MANAGER, LLC; MOM AS MANAGER, LLC; LAGUNA HW, LLC; LAGUNA HI, LLC; SUNSET COVE VILLAS, LLC; RETREAT AT LAGUNA VILLAS, LLC; DUPLEX AT SLEEPY
Case No. 30-2023-01323759-CU-OR-CJC
ASSIGNED FOR ALL PURPOSES TO Judge Bradley Erdosi, Dept. C-27
Related Case No. 30-2023-01322886-CU-OR-CJC
THE MOM PARTIES’ OPPOSITION TO THE HONARKAR PARTIES’ PETITION TO CONFIRM PARTIAL FINAL ARBITRATION AWARD AND ENTER JUDGMENT
Date: December 22, 2025 Time: 2:00 p.m. Dept: C27
Reservation No.: 74590414
Action Filed: May 3, 2023
Trial Date: None
HOLLOW, LLC; HOTEL LAGUNA, LLC; and DOES 1-100, inclusive, Defendants. and MOM AS INVESTCO, LLC, a Delaware limited liability company; MOM BS INVESTCO, LLC, a Delaware limited liability company; MOM CA INVESTCO, LLC, a Delaware limited liability company; and DOES 101-110, inclusive,
Nominal Defendants.
A. The Arbitrator’s Failure to Disclose a Prior Relationship with Honarkar’s Counsel
3. The Arbitrator Exceeded His Authority by Issuing Findings Against Mahender Makhijani Individually, Despite Lacking Jurisdiction
Mahender Makhijani (“Makhijani”); Continuum Analytics, Inc.; MOM AS Investor Group LLC;
and MOM CA Manager LLC (the “MOM Parties”) submit this Opposition to Mohammad Honarkar (“Honarkar”) and his operating entity, 4G Wireless, Inc.’s (the “Honarkar Parties”) Petition to Confirm Arbitration Award (“Petition to Confirm”).
I. INTRODUCTION
This disputearises from afinancialrescuethat saveda sinkingbusiness onlytoberepaid with bad faith efforts to unwind the very deal that kept the venture afloat. In 2021, Honarkar faced financial ruin. Deeply in debt and under immediate threat of foreclosure, he was unable to obtain $145 million needed to prevent the collapse of his real estate portfolio. Honarkar turned to Makhijani and other investors, proposing a joint venture in which he would contribute his assets in exchange for their assistance to refinance his defaulted loans. The investors did just that completing the refinance saving Honarkar from foreclosure and later infusing more than $100 million in funding to stabilize his overleveraged business operations.
Rather than honor the deal that saved his businesses, Honarkar attempted to re-trade terms once crisis was averted. When that failed, he resorted to litigation, asserting baseless claims of fraud and seeking to unwind the venture altogether after having reaped all the benefits. After a deeply irregular arbitration replete with arbitrator misconduct (including the nondisclosure of a key relationship), Honarkar obtained an abnormal award far in excess of the arbitrator’s authority
The Honarkar Parties now ask this Court to confirm a “Partial Final Award” (the “Award”) that is procedurally defective, and substantively flawed, and tainted by misconduct that compromised the proceedingsfromstarttofinish.ThePetitiontoConfirmmustbedeniedforseveralindependentreasons. First, the Award is neither final nor confirmable under California law. An arbitration award may only be confirmed if it resolves all issues necessary to determine the controversy submitted. (See Code Civ. Proc., §§ 1283.4, 1285; Kaiser Found. Health Plan, Inc. v. Sup. Ct. (Kaiser) (2017) 13 Cal.App.5th 1125.) The Award fails to meet this standard. It expressly defers resolution of fundamental issues includingtheexistenceandextentofharm pendingbothafutureaccountingandasubsequentselection of remedies. Because the Award is contingent and incomplete, it lacks the finality required for
Second, if the Court determines that the Award is confirmable (and it is not), the Petition to Confirm should nonetheless be denied and the Award vacated in its entirety, because: (i) the Arbitrator failed to disclose a preexisting relationship with counsel for the Honarkar Parties; (ii) the Arbitrator exceeded the scope his authority; and (iii) the MOM Parties were significantly prejudiced by the Arbitrator’smisconduct Importantly,themisconductdoesnotstopattheArbitrator’srefusaltoconsider critical evidence, disregard of ethical violations, palpable bias against the MOM Parties’ witnesses, or grant of an Award exceeding his authority. It extends beyond that. The MOM Parties have reason to believe that the Honarkar Parties andtheir counsel – whohave close ties with NanoBanc and who have represented Nano Banc numerous times – improperly colluded with unauthorized representatives of the bank and The Picerne Group(“TPG”) toimproperly obtain confidential information fromthe bank,and used such information in a coordinated effort to pursue rescission. These circumstances reflect serious procedural irregularities and misconduct that fundamentally undermine the fairness of the arbitration process and significantly prejudiced the MOM Parties.
Inlight of the serious issues detailedherein,whichwere discovered only througha combination of luck and diligence, the MOM Parties respectfully request leave to conduct limited discovery to determinethefullscopeofmisconductthathasoccurredbothbytheArbitratorandtheHonarkarParties’ and their counsel. Limited discovery is necessary to uncover the truth behind this misconduct and provide the Court with the evidentiary record required to fully, and fairly, resolve these issues As the Arbitrator himself noted, “… this is a search for the truth, and we are going to get to the truth.”
II. RELEVANT FACTUAL BACKGROUND
The grounds for the MOM Parties’ Opposition to the Petition to Confirm largely mirror those setforthintheirPetitiontoVacate,separatelyfiledinthisactiononJune18,2025anddocketedasROA No.422.Toavoidunnecessaryrepetition,theMOMPartiesdetailcertainfactshereinandrefertheCourt to the full factual background set forth in their Petition to Vacate.
III. THE PETITION TO CONFIRM SHOULD BE DENIED BECAUSE THE ARBITRATOR’S PARTIAL FINAL AWARD IS NOT CONFIRMABLE
A court may only confirm an arbitrator’s decision if that decision meets the statutory definition
of an “award.” (Code Civ.Proc., § 1285; Kaiser, supra, 13 Cal.App.5that p. 1143 [“If the ‘award’ does not qualify as an award under section 1283.4, then the court is deprived of jurisdiction to confirm or vacate it.”].) To qualify, an arbitrator’s decision must “include a determination of all the questions submitted to the arbitrators the decision of which is necessary in order to determine the controversy.” (Code Civ. Proc., § 1283.4, emphasis added.) Where an arbitrator’s ruling fails to meet this definition, the court lacks jurisdiction to take any action and must dismiss any petition to confirm. (Kaiser, supra, 13 Cal.App.5th at p. 1150.)
The Honarkar Parties contend that the Award is confirmable because it purportedly resolves all liability issues and reserves jurisdiction to conduct an accounting, allow for selection of remedies, and determine damages and costs. (Petition to Confirm, p. 14.) In support of their position, the Honarkar Parties rely exclusively on Hightower v. Sup. Court (2001) 86 Cal.App.4th 1415. However, their reliance is misplaced.
In Hightower, the Court of Appeal affirmed confirmation of a partial award only because the arbitratorhadresolvedallissuesnecessarytodeterminethecontroversy.There,thearbitratordetermined that the respondent was legally entitled to complete the purchase of the plaintiff’s shares in a software company,andretainedjurisdictionsolelytoaddresscontingentmattersthat might ariseiftherespondent later chose to exercise that purchase right. (Id. at p. 1419.) The court found that the Arbitrator “determined all issues that are necessary to the resolution of the essential dispute” and that “[n]othing remains to be resolved except those potential and conditional issues that necessarily could not have been determined on April 25, 2000, when the partial final award was issued. (Id. at p. 1439, emphasis added.) Thus, Hightower reaffirms the rule that an arbitration award is not confirmable unless it resolves all issues necessary to determine the controversy submitted. It also articulates a narrowly drawn exception, permitting confirmation of a partial award only where the unresolved issues could not have been determined at the time the award was issued.
Thisnarrowexceptiondoesnotapplyhere.Theissuesleftopenbythearbitrator mostnotably, the existence and extent of actual harm, which the Honarkar Parties bore the burden to prove are neither speculative nor incapable of determination based on the evidence presented at the arbitration hearing. More specifically, the Award fails to include a determination of requisite harm for each of the
awarded claims, as such a determination necessarily depends on the outcome of the accounting which hasyettobeperformed.ThispointisexemplifiedbyeachoftheHonarkarParties’coreclaimsincluding, perhaps most notably, fraudulent inducement, breach of contract, and conversion, which each require a demonstration that harm has been incurred as a result of the alleged conduct. (Manderville v. PCG&S Group, Inc. (2007)146Cal.App.4th1486,1498[affirmingharmasacoreelementofpromissoryfraud]; see also, CACI Nos. 303 and 2100 [essential factual elements of breach and conversion both require showing “That [plaintiff] was harmed”].)
There has been no such determination of harm based on evidence set forth in the Award. While the Award purports to state otherwise, the ostensible finding of harm rests entirely on vague references to “(1) the MOM Respondents’ misrepresentations… and (2) the MOM Respondents [] encumbered Claimants’ properties with the $20 million Nano Loan, along with hundreds of millions of dollars of additional encumbrances over the course of the JV.” (Declaration of Michael R. Farrell ISO Petition to Vacate [“Farrell Decl.”], Ex. 50, Award, p. 26.)
The Award further fails to address the Honarkar Parties’ claims for (i) conversion, (ii) Penal Code section 496, and (iii) unjust enrichment due to a prior bankruptcy stay. However, when addressed previously inthe Interim Partial Award (“InterimAward”),the Arbitrator concededthat “anaccounting wouldberequiredtoascertainthefullscopeofdamages,”suggestingtheArbitratorrecognizestherehas been no showing of actual harm sufficient to establish liability. (Declaration of Michael R. Farrell ISO OppositionPetitiontoConfirm[“Supp.Farrell Decl.”], Ex 1,p. 33.)Thisconcessionisframedinaway tosuggestthat some harmhasoccurred,butnothingintheInterim Award(ortheAward)indicateswhat that harm is. Rather, the Interim Award recognizes the substantial evidence of “infusions” made to the jointventureby Respondents,andfurtherindicatesthat“[t]heseinfusionswillbeaddressedasoffsetsin the accounting of the MOM JV Entities’ finances.” Thus, confirming that the Interim Award and the finding of liability therein, by itself, is dependent upon the contemplated accounting to actually support what has been prematurely “determined” as resulting harm to the Honarkar Parties.
In sum,the Awardcannot be said toleave open onlythose “potential and conditional issues that necessarily could not have been determined,” as is required per Hightower. To the contrary, the Arbitrator had every opportunity to determine on the critical issue of actual harm and failed to do so.
IV. IN THE ALTERNATIVE, THE COURT SHOULD DENY THE PETITION TO CONFIRM, VACATE THE AWARD, AND REMAND FOR REHEARING
The court shall vacate an award when (1) the arbitrator “exceeded” his powers and “the award cannotbecorrectedwithoutaffectingthemeritsofthedecisionuponthecontroversysubmitted”;(2)the rights of a party were “substantially prejudiced by the arbitrators’ refusal... to hear evidence material to the controversy....”; (3) the award was “procured by corruption, fraud or other undue means”; and (4) the rights of the party were “substantially prejudiced by misconduct of a neutral arbitrator.” (Code Civ. Proc., § 1286.2; 10 Del C. § 5714, subd. (a); 9 U.S.C. § 10(a).) Each is present here. Accordingly, the Award must be vacated. (Code Civ. Proc., § 1286.2, subd. (a)(2), (a)(6); accord Ovitz v. Schulman (2005) 133 Cal.App.4th 830, 844-845 [“On its face, the statute leaves no room for discretion. If a statutory ground for vacating the award exists, the trial court must vacate the award.”].)
A. TheArbitrator’sFailuretoDiscloseaPriorRelationshipwithHonarkar’sCounsel Violates Law and Established Ethical Standards, Warranting Vacatur.
In his Petition to Confirm, the Honarkar Parties incorrectly assert that there is “no evidence” to support the MOM Parties’ claim that bias tainted the arbitration proceedings. That assertion is flatly contradicted by the record and misstates the standard of law. Tellingly, Honarkar concedes as he must thatafindingofbiasiswarrantedwherethereexists“apreexistingbusinessorsocialrelationship with one of the parties which would color the arbitrator’s judgment.” (Petition to Confirm, p. 13.) Here, the undisputed evidence establishes exactly that: a preexisting relationship between the Arbitrator and Honarkar’s counsel mandating disclosure This relationship was never disclosed constituting a clear violation of both California law and the ethical duties governing neutral arbitrators. When viewed alongside the Arbitrator’s overtly hostile conduct toward the MOM Parties’ witnesses, his refusal to consider critical evidence, and an Award that is not only one-sided but also exceeds the scope of his authority, this undisclosed relationship clearly gives rise to an appearance of bias.
AssetforthinfullintheMOMParties’PetitiontoVacate,bothCalifornialawandtheapplicable arbitration rules impose strict disclosure requirements to safeguard the impartiality of arbitration proceedings. California Code of Civil Procedure section 1281.9 requires arbitrators to disclose not only prior or pending matters involving the parties or their counsel, but also any professional or significant
personalrelationshipswiththem.(CodeCiv.Proc.,§ 1281.9,subd. (a)(6).) JAMSRulesimposesimilar obligations, emphasizing that an arbitrator’s duty to disclose continues throughout the arbitration. (JAMSRule15(h).)Likewise,theCaliforniaEthicalStandardsforNeutralArbitratorsrequiredisclosure of any facts that might cause a reasonable person to doubt the arbitrator’s impartiality including undisclosed relationships with counsel. (Standard 7(d); see also, Code Civ. Proc., § 1281.9, subd. (a) [requiring disclosure of “all matters that could cause a person aware of the facts to reasonably entertain a doubt that the proposed neutral arbitrator would be able to be impartial….”]; see JAMS Arbitrator Guidelines [same].)
Here, the MOM Parties uncovered a concerning and previously undisclosed relationship between the Arbitrator and Honarkar’s counsel, Edward Susolik of Callahan & Blaine. Mr. Susolik represented Honarkar in his divorce proceedings and in a separate matter involving the “Newport Crossings” property a significant asset of the joint venture (and the underlying joint venture dispute) between Honarkar and the MOM Parties In that matter, Mr. Susolik and his firm jointly represented Honarkar and The Picerne Group (“TPG”) in connection with the acquisition of Newport Crossings. (Ibid.) Such property and interests are at issue in the underlying dispute, further underscoring the impropriety of the proceedings.
The Arbitrator’s priorrelationshipextends not only tothe Callahan& Blainefirm generally,but specifically to Mr. Susolik himself. Not only have the Arbitrator and Mr. Susolik appeared together as speakers at legal seminars, but their relationship was evidently close Mr. Susolik, along with other members of Callahan & Blaine, attended a private ceremony in 2012 celebrating the Arbitrator’s appointmenttotheCaliforniaCourtofAppeal,aneventalsoattendedbytheArbitrator’sfamily.Despite this clear “preexisting business or social relationship” and despite references to Mr. Susolik and his firm throughout the evidentiary record the Arbitrator did not disclose the relationship. It was omitted from his written disclosures and never acknowledged at any point during the proceedings.
The Arbitrator’s failure to disclose his relationship with Honarkar’s counsel undermines the integrity of the entire proceeding, regardless of whether actual bias existed which is often difficult to establish. For this reason, California law does not require proof of actual bias for disqualification; the mere appearance of bias and impropriety is sufficient. (Wechsler v. Sup. Ct. (2014) 224 Cal.App.4th
384,390[“ApartymovingfordisqualificationneednotshowactualbiasbecausetheLegislaturesought to guarantee not only fairness to individual litigants, but also to ensure public confidence in the judiciary…”]; Mt. Holyoke Homes, L.P. v. Jeffer Mangels Butler & Mitchell, LLP (2013) 219 Cal.App.4th 1299, 1310-1313, [the court held that it was error to deny a petition to vacate an arbitration award where “an objective observer aware of the facts could reasonably [] entertain such a doubt” regarding the arbitrator’s impartiality].)
This standard is clearly met here. The Arbitrator’s longstanding relationship of over ten years with Honarkar’s counsel would lead a reasonable person to question his impartiality in the underlying proceeding. Indeed, had this relationship been disclosed, the MOM Parties would have objected to the Arbitrator’s appointment. (Leipzig Decl., ¶ 18.)
The Arbitrator’s failure to disclose this relationship is not a minor oversight it is emblematic of the prejudicial bias the MOM Parties experienced throughout the arbitration andlikelycontributedto the issuance of a wholly one-sided Award. The Award must be vacated.
B. The Arbitrator Improperly Exceeded His Authority in Violation of Law and the Parties’ Arbitration Agreement, Warranting Vacatur.
Even setting aside the lack of disclosure, when an arbitrator exceeds his authority under the parties’ arbitration agreement, vacatur is mandatory: “the court shall vacate the award if the court determines...the arbitrator[] exceeded [his] powers and the award cannot be corrected without affecting the merits of the decision upon the controversy submitted.” (Code Civ. Proc., § 1286.2, subd. (a)(4), emphasis added.)
“The powers of an arbitrator derive from, and are limited by, the agreement to arbitrate.” (Advanced Micro Devices, Inc. v. Intel Corp. (1994) 9 Cal.4th 362, 375.) An arbitrator exceeds those powerswhentheawardreflectsadecisiononissues(i) notsubmittedbythepartiesor(ii) whenitgrants reliefnotauthorized bytheagreement.Insuchcases,thecourt has nodiscretiontoconfirmtheaward vacaturisrequiredbystatute.(Ajida Technologies, Inc. v. Roos Instruments, Inc. (2001)87Cal.App.4th 534, 541.) Here, the Arbitrator violated both limitations by: (i) rescinding the Term Sheet, despite the indisputable fact that such relief was not requested by Honarkar until his post-hearing briefing, and (ii) awarding punitive damages, notwithstanding the parties’ express and enforceable agreement that
such damages would not be recoverable by either party.
1. The Arbitrator Improperly Granted the Honarkar Parties Relief That They Did Not Timely Seek in the Arbitration
The Arbitrator exceeded the scope of his authority by awarding rescission of the Term Sheet a remedy that went beyond even what Honarkar initially requested. (See Farrell Decl., Ex. 48, § N(1).)
The Honarkar Parties fail to address this overreach in their Petition to Confirm, but it is a significant error that warrants vacatur.
It is beyond dispute that Honarkar’s arbitration demand only requested rescission of the MOM LLC Operating Agreements. (Farrell Decl., Ex. 40, ¶ 68, Prayer ¶ 2.) Further, Honarkar’s counsel explicitly confirmed on the record that the Term Sheet was not subject to rescission, stating: “I believe thetermsheetwouldbethebindingcontractthatwasinplace.”(Id. Ex. 42,HearingTr.1/2/24at28:14–22.)TheHonarkarParties’pre-hearingbriefsimilarlylimitedtheirrequesttorescissionoftheOperating Agreements for the MOM LLCs and the Asset Contribution Agreement, with no mention of the Term Sheet. (Id. Ex. 43, Pre-Hearing Tr. at 49.)
It was not until after the three-week arbitration hearing in their post-hearing brief that the Honarkar Parties first asserted that rescission applied to “the joint venture agreements (the Operating Agreements of the MOM Investco LLCs… Asset Contribution Agreement… and the May 24, 2021 Term Sheet between the parties).” (Farrell Decl., Ex. 44 at 61.) Accordingly, the MOM Parties did not receivethe“priornotice”ofsuchrescissionexpresslyrequiredunderJAMSRule9(a).(JAMSRule9(a) [“no claim, remedy, counterclaim or affirmative defense will be considered by the Arbitrator in the absence of such prior notice to the other Parties.”].)
This sudden shift in legal theory raised only after the close of evidence violated JAMS Rule 9(a) and deprived the MOM Parties of any meaningful opportunity to challenge or rebut the rescission of the Term Sheet at the arbitration hearing. As such, the Arbitrator’s decision to grant that relief exceeded his authority and requires vacatur under Code of Civil Procedure section 1286.2, subdivision (a)(4) (Pacific Crown Distributors v. Brotherhood of Teamsters (1986) 183 Cal.App.3d 1138, 1146 [“By asserting the [“right to work” provision] for the first time in its post-hearing brief, [employee] intentionally and fraudulently deprived [employer] of its opportunity to present evidence in arbitration
concerning,”theinapplicabilityofthatprovision.”].)Further,thisabruptchangeinpositionunderscores the improper conduct at issue. Not only did the Arbitrator grant relief that exceeded the scope of the arbitration,butthecircumstancesstronglysuggestthattheoutcomewastheresultofacoordinatedeffort among TPG, the Honarkar Parties, and their counsel who appear to have had insider access to nonpublic information from Nano Banc to improperly unwind the parties’ joint venture. The fact that the Arbitrator had a prior, undisclosed relationship with counsel for both TPG and the Honarkar Parties only adds to the impropriety of these relationships which all impact the legitimacy of the Award.
2. The Arbitration Agreement Prohibited Any Award of Punitive Damages.
InhisOpposition,Honarkarconcedesthat,whilerepresentedbysophisticatedcounsel,heagreed to the Operating Agreement’s clear prohibition on punitive damages. Yet he now contends that this waiver is unenforceable, citing California Civil Code section 1668. This argument is without merit and should be rejected.
It is well established in California that “[t]he scope of an arbitrator’s authority is not so broad as to include an award of remedies expressly forbidden by the arbitration agreement or submission.” (Gueyffier v. Ann Summers, Ltd. (2008) 43 Cal.4th 1179, 1185.) If a limitation on relief is set out “explicitly and unambiguously” in the parties’ agreement, and the arbitrator exceeds his authority in awarding relief beyond the limitation, then the court is empowered to vacate or correct the award. (See Advanced Micro Devices, Inc., supra, 9 Cal.4th at p. 383.)
Here, the Award improperly includes punitive damages despite the Operating Agreements’ express prohibition of such relief. (See Farrell Decl., Exs. 54-56, § 19.10 [“Provided that no party shall be liable for consequential, punitive, or special damages.”].) By awarding punitive damages in direct violation of this clearcontractuallanguage, the Arbitrator improperly disregardedthe parties’ bargained forterms.PertheNinthCircuitin Aspic Engineering & Construction Co. v. ECC Centcom Constructors, LLC (9th Cir. 2019) 913 F.3d 1162, 1168, “[s]uch an award is irrational.”
This remains true despite Civil Code section 1668. Contrary to the Honarkar Parties’ claims, punitive damages waivers in arbitration provisions are enforceable. (Mastrobuono v. Shearson Lehman Hutton, Inc. (1995) 514 U.S. 52, 56-57 [“[I]f the contract says ‘no punitive damages,’ that is the end of the matter, for courts are bound to interpret contracts in accordance with the expressed intentions of the
parties even if the effect of those intentions is to limit arbitration.”].) The punitive damages waiver here is a straightforward remedy limitation, not a clause that “exempt[s] [a defendant] from responsibility,” and therefore does not implicate Civil Code section 1668 (James River Holdings Corp. v. Anton & Chia LLP (C.D. Cal. Jan. 17, 2014) 2014 WL 12696367, at *7 [court rejecting Plaintiff’s argument that arbitration provision denying right to recover punitive damages violated Civil code section 1668 and finding that “Defendant, however, is not exempt from responsibility for its own fraud…recovery is merely limited to legal remedies exclusive of punitive damages. Such a remedy limitation is not, by itself, substantively unconscionable.”].)
Civil Codesection 1668doesnotapply here,andtheHonarkarPartiesfailtoanalyze letalone satisfy any of the Tunkl factors, which are necessary to show that the punitive damages waiver implicates the public interest. (Tunkl v. Regents of Univ. of Cal. (1963) 60 Cal.2d 92.) Moreover, the MOM Parties never expressly waived the right to the limitation of punitive damages, and none of their conduct amounts to such a waiver. (J. Alexander Secs., Inc. v. Mendez (1993) 17 Cal.App.4th 1083, 1093-1094 [waiver requires the “voluntary and intentional relinquishment of a known right”].)
In sum, the punitive damages limitation is valid and enforceable, and the Arbitrator’s award of such relief in direct contravention of the parties’ express agreement exceeded his authority and warrantsvacatur.(See Cal. Fac. Association v. Sup. Ct. (1998)63Cal.App.4th935,953[“[I]tisdifficult to see how the violation of an express and explicit restriction on the arbitrator’s powers could be considered ‘rationally related’ to a plausible interpretation of the agreement.”].)
3. The Arbitrator Exceeded His Authority by Issuing Findings Against Mahender Makhijani Individually, Despite Lacking Jurisdiction Over Him.
The Arbitrator again exceeded his authority by issuing findings against Mr. Makhijani, despite the absence of any express agreement by Mr. Makhijani to waive his constitutional right to a jury trial. The Honarkar Parties assert that Mr. Makhijani was bound by the arbitration clause in the Term Sheet solely because he was an alleged agent of Continuum Analytics. (Petition to Confirm, p. 12) This argument is unavailing.
The “right to trial by jury is a basic and fundamental part of our system of jurisprudence. As such, it should be zealously guarded by the courts. In case of doubt, therefore, the issue should be
resolvedinfavorofpreservingalitigant’srighttotrialbyjury.”(Byram v. Sup. Ct. (1977)74Cal.App.3d 648, 654, citations omitted; Benasra v. Marciano (2001) 92 Cal.App.4th 987, 990 [policy in favor of arbitration does not extend to those who did not sign the arbitration agreement].) The right to litigate in court is a “substantial right and one not likely to be deemed waived.” (Marsh v. Williams (1994) 23 Cal.App.4th 250, 254, cleaned up.) Rather, the parties must unequivocally agree to arbitrate. (Ibid., citations omitted.) That plainly did not occur here.
The sole case the Honarkar Parties cite in support of its position, Nguyen v. Tran (2007) 157 Cal.App.4th1032,isinapposite.In Nguyen,thecourt heldthatlistingbrokerscouldnotbecompelledto arbitration where they had not agreed to arbitrate, despite involvement in related transactions. This case innowaystandsforthepropositionthatanagencyrelationshipalonebindsanonsignatorytoarbitration. Rather, California law is clear that mere agency is insufficient to impose individual arbitration obligations. (See Benasra v. Mitchell Silberberg & Knupp LLP (2001) 92 Cal.App.4th 987, 990-993 [corporate representative signing agreement not bound individually]; see also Epitech, Inc. v. Kann (2012) 204 Cal.App.4th 1365, 1371-1372.)
Insum,therecordindisputablydemonstratesthatMr.Makhijanineverconsentedtoarbitratehis claims, and the Arbitrator’s usurpation of his fundamental right to a jury trial was improper. Thus, the findings against him should be vacated.
C. The Arbitrator’s Misconduct Tainted the Award and Warrants Vacatur.
1. The Arbitrator Refused to Hear Material Evidence.
TheAwardshouldbevacated,andnotconfirmed,becausethearbitratorrefusedtohearmaterial evidence, which substantially prejudiced the MOM Parties. (Code Civ. Proc., § 1286.2, subd. (a)(5); Burlage v. Sup. Ct. (2009) 178 Cal.App.4th 524, 529.) The MOM Parties need not prove that the arbitrator would have reached a different result had he heard the withheld evidence. (Hall v. Sup. Ct. (1993) 18 Cal.App.4th427, 438-439.) Rather,it is sufficient “that the arbitrator might well have made a different award had the evidence been allowed.” (Ibid.)
First, as set forth in full in the MOM Parties’ Petition to Vacate (see pp. 16-17), the Arbitrator rejected the MOM Parties’ request that the Honarkar Parties be ordered to produce 4G’s books and records which were directly relevant not only to the Honarkar Parties’ claims, but also to establishing
the MOM Parties’ claims that the Honarkar Parties were improperly siphoning off exorbitant amounts of funds. Indeed, the MOM Parties’ expert, Joe Pohlot, testified that approximately $5,972,882 was diverted, but without the benefit of 4G’s Quickbook files.(See Farrell Decl.,Ex. 46at p. 10; see also id. Ex. 8,HearingTr.,7/10/24at3346:13-3348:21,Ex. 47atp. 2.)However,withouttheseQuickbookfiles the MOM Parties were unable to fully investigate Honarkar’s knowledge of the Nano Banc loan at the heart of this case (the “Nano Loan”), or to fully establish the Honarkar Parties’ misdeeds. Without such documents, the MOM Parties’ rights were substantially prejudiced. The Arbitrator further improperly claimed that the MOM Parties, and not the Honarkar Parties, were responsible for providing this information even though the Honarkar Parties were the only ones with access to it.
Second, the Arbitrator ignored unethical conduct by the Honarkar Parties’ counsel. The Honarkar Parties’ main contention is that they were not informed that $20 million of the MOM Parties’ initial contribution would be sourced from the Nano Loan. Accordingly, Honarkar’s knowledge or lackthereof regardingtheloaniscentraltothedispute.Onthisissue,NanoBanc’sthen–ChiefInterim Officer, Anthony Gressak, was called to testify. However, his ability to provide critical testimony was compromised by the Honarkar Parties’ failure to disclose a prior attorney-client relationship between their counsel and Gressak.
While on the stand, Honarkar’s counsel, Aaron May, cross-examined Gressak for four hours. (Farrell Decl., Ex. 8, Hearing Tr., 7/10/24 at 3346:13-3348:21.) Two days later, Gressak’s counsel sent correspondence reporting: Gressak consulted May while this action was pending to retain May to represent him in a dispute regarding his departure from Nano Banc. (See ibid.) Gressak alleges that he disclosedconfidentialinformationabout NanoBanctoMayduringthatconsultation,whichhebelieved wasprivileged.(See ibid )Gressak’scounselassertsthatsuchinformationwasusedagainsthimbyMay during cross-examination. (See ibid ) Gressak cited examples. (See ibid ) Gressak did not know May represented Honarkar, did not waive the privilege, or otherwise consent to May using the confidential information against him or any other parties. (See ibid.)
May’s use of purportedly privileged information he learned from Gressak had an unmistakable prejudicial effect on Gressak’s testimony. For instance, May’s questioning led Gressak to assert that certain responses would impermissibly require him to disclose Confidential Supervisory Information
(“CSI”) under 12 CFR §261.20(b)(1). Gressak contends he was confused while testifying as he did not know how May knew of such confidential information. (See Farrell Decl., Ex. 8, Hearing Tr., 7/10/24 at 3346:13-3348:21.) Indeed, Gressak’s demeanor while testifying changed when ambushed by May’s use of confidential information. (Id. Ex. 8, Hearing Tr., 7/10/24 at 3364:18-3370:23; id. Ex. 9, Hearing Tr., 7/11/24 at 3433:1-3438:25; 3541:24-3557:19; id. Ex. 10, Hearing Tr., 7/12/24 at 3617:5-3634:21.)
Gressak believes the Arbitrator interpreted his confusion as evasiveness. (See id. Ex. 11 at p. 2.)
Knowing that this issue impugned Gressak’s credibility, Nano Banc and the MOM Parties immediately requested the appointment of an independent arbitrator to conduct discovery to assess the scope and impact of the disclosure of potentially privileged information. But this request was flatly denied by the Arbitrator This led to the Arbitrator ultimately determining that Gressak was “just not credible,” discrediting his testimony in its entirety. (Id. Ex. 50 at p. 18.) This impact on key testimony going to the very heart of the dispute is yet another example of the Arbitrator’s refusal to allow anyone other than the Honarkar Parties to have a fair and equal opportunity to present evidence. These irregularities require vacatur.
2. The Award Was Procured Through Undue Means.
The Award should not be confirmed, as vacatur is warranted under Code of Civil Procedure section 1286.2, subdivision (a), because it was procured by corruption, fraud, or undue means. (Code Civ. Proc., § 1286.2, subd. (a).) “Undue means” consists of conduct that is “immoral, if not illegal... something wrong, according to the standards of morals which the law enforces.” (Maaso v. Signer (2012) 203 Cal.App.4th 362, 372-375; see National Cas. Co. v. First State Ins. Grp. (1st Cir. 2005) 430 F.3d 492, 499.)
It is well established that witness tampering constitutes “undue means” under section 1286.2, subdivision (a), of the Code of Civil Procedure. (See NuVasive, Inc. v. Absolute Med., LLC (11th Cir. 2023) 71 F.4th 861, 866, 875-878.) The record here reflects precisely that concern. May’s use of confidential communications without authorization or disclosure raises serious ethical and procedural concerns. Although Gressak did not ultimately retain May, it is undisputed that May did not inform him of his concurrent representation of the Honarkar Parties or disclose this to the other participants in the arbitration, despite the obvious overlap in the subject matter.
This omission is particularly significant given the applicable ethical obligations. Under Californialaw,anattorneyisrequiredto“maintaininviolatetheconfidence,andateveryperiltohimself or herself to preserve the secrets, of his or her client.” (Bus. & Prof. Code, § 6068, subd. (e)(1); see also Cal. R. Prof. Conduct, Rule 1.8.1(b).) May’s conduct using information learned from Gressak to benefit an opposing party clearly violates these obligations. Even assuming no intent to misuse the information (which is a big assumption), the circumstances undeniably create an appearance of impropriety. Such a perception is itself prejudicial and calls into question the integrity of the arbitration process.Asthecourtin Kennedy v. Eldridge emphasized,“[t]heparamountconcernmustbetopreserve public trust in the scrupulous administration of justice and the integrity of the bar.” (201 Cal.App.4th 1197, 1204.)
Likewise, certain bank representatives at Nano Banc appear to have improperly shared strategic and confidential information with Honarkar’s counsel, Mr. Zfaty and Mr. Maralan, resulting in this abnormal award. Such representatives seem to have been motivated to do so in order to devalue bank and, thereby, secure profit while, concurrently, undermining the propriety of this arbitration. This includes, among others, Mr. Daniel Patrick, who appears to have provided untruthful testimony which was ultimately relied upon for critical aspects of the award. It also appears Honarkar coordinated with yet another financier, The Picerne Group, to achieve the purpose of rescission all so they can steal valuable property of the joint venture by way of a rescission. Indeed, the Arbitrator’s grant of recission beyond the scope of his authority may very well have been tied to such unlawful coordination, and discovery is necessary to determine if these acts occurred as part of a coordinated effort to secure rescission notwithstanding the means.
3. The MOM Parties Were Prejudiced by the Arbitrator’s Misconduct.
The Award also should not be confirmed because “[t]he rights of the [the MOM Parties] were substantiallyprejudicedbymisconductofaneutralarbitrator.”(CodeCiv.Proc.,§ 1286.2,subd. (a)(3).)
“Fortheclaimeddeparturefromtheusualproceduretoamounttomisconductofthearbitratorssufficient to vacate the award, it must be shown that it prejudiced the rights of one of the parties.” (Turner v. Cox (1961) 196 Cal.App.2d 596, 603; Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 13.) As reflected in the record submitted with the MOM Parties’ Petition to Vacate, the Arbitrator’s misconduct permeated
every aspect of the arbitration proceeding. (See, e.g., Petition to Vacate at pp. 18-20.) His behavior throughout the proceedings, taken in full, amounts to serious misconduct which requires vacatur.
4. Limited Discovery is Necessary.
As set forth herein, the MOM Parties discovered that the Arbitrator failed to disclose a prior relationshipwithEdwardSusolikofCallahan&Blaine,formercounselfortheHonarkarParties,despite his clear obligation to do so. This was not discovered until after the arbitration, and the MOM Parties still remain unaware of the full scope of these relationships and the impact of that relationship on the proceedings.AfterthearbitrationtheMOMPartiesalsodiscoveredthepotentialcollusionbetweenTPG, the Honarkar Parties and individuals at Nano Banc. Based on information discovered by the MOM Parties, including numerous and extensive communications between these parties at critical inflection points, which demonstrate the improper information flow.
During the arbitration, credible allegations of ethical misconduct by the Honarkar Parties’ counsel emerged specifically, that May had obtained and used potentially privileged information against a key witness while cross-examining him. Despite the seriousness of these allegations, the Arbitrator refused to take any action. When the MOM Parties and Nano Banc jointly requested the appointment of an independent arbitrator to investigate the matter, the Arbitrator summarily denied the request. Similarly, as noted above, the manner and means by which rescission was awarded, including potentiallythroughunlawfulcoordinationbyHonarkar,hiscounsel,andotherparties,requiresdiscovery to be conducted so as to avoid the confirmation of an award that should be vacated.
Accordingly,theMOMPartiesseeklimiteddiscoveryinto:(1)theArbitrator’srelationshipwith Mr. Susolik, Callahan & Blaine, and any other relationships that should have been disclosed under JAMSrulesandethicalstandards;(2)expartecommunicationsbetweentheArbitratorandtheHonarkar Parties’ and/or their counsel, (3) any improper communications between the Arbitrator and others (e.g., Mr. Susolik or others at Callahan & Blaine) regarding the arbitration, and (4) evidence regarding the Honarkar Parties’ connections with Nano Banc and TPG. The requested discovery is narrowly tailored, directly supported by newly discovered facts, and necessary to ensure the Court can fully and fairly evaluate the integrity of the arbitration process.
Theevidencerevealssignificantfinancialincentivesmotivatingallpartiestocolludeinpursuing this outcome through falsehoods and illegally obtained information. Although the conspirators nearly succeeded, their actions have caused extensive harm. The systemic nature of the misconduct in the underlying proceeding, and the potentially criminal conduct of certain participants, warrants vacating theAwardandallowingdiscoveryintotheunderlyingfraud Accordingly,theHonarkarParties’Petition to Confirm must be denied, and the Award must be vacated.
Dated: July 1, 2025
Dated: July 1, 2025
ALLEN MATKINS LECK GAMBLE MALLORY & NATSIS LLP
MICHAEL R. FARRELL
SCOTT J. LEIPZIG
TIM C. HSU
By: /s/ Tim C. Hsu
TIM C. HSU
Attorneys for Respondents and CrossClaimants
MOM AS INVESTOR GROUP, LLC; MOM BS INVESTOR GROUP, LLC; MOM CA INVESTOR GROUP, LLC; MOM AS MANAGER, LLC; MOM BS MANAGER, LLC; MOM CA MANAGER, LLC; MOM AS INVESTCO, LLC; MOM BS INVESTCO, LLC; AND MOM CA INVESTCO, LLC
COHEN LAW GROUP, APC
By: /s/ Marc Cohen
MARC COHEN
Attorneys for Respondents MAHENDER MAKHIJANI AND CONTINUUM ANALYTICS, INC.