Judge: Daniel S. Murphy, Case: 24STCP00343, Date: 2024-03-25 Tentative Ruling

Case Number: 24STCP00343    Hearing Date: March 25, 2024    Dept: 32

BACKGROUND

            On February 2, 2024, Petitioner Book and Vig, LLC initiated this proceeding by filing a petition to confirm the arbitration award issued in its case against Respondent 8029 Sunset, LLC. Respondent filed its response to the petition on February 27, 2024. Petitioner filed its reply on March 12, 2024.

LEGAL STANDARD

“Any party to an arbitration in which an award has been made may petition the court to confirm, correct or vacate the award.” (Code Civ. Proc., § 1285.) A petition shall set forth the substance of the agreement to arbitrate, the names of the arbitrators, and any written opinion of the arbitrators. (Id., § 1285.4.) If the petition is duly served and filed, “the court shall confirm the award as made, whether rendered in this state or another state, unless in accordance with this

chapter it corrects the award and confirms it as corrected, vacates the award or dismisses the proceeding.” (Id., § 1286.)

            The court shall correct the award if it determines that: (a) there was an evident miscalculation of figures or an evident mistake in the description of any person, thing or property referred to in the award; (b) the arbitrators exceeded their powers but the award may be corrected without affecting the merits of the decision upon the controversy submitted; or (c) the award is imperfect in a matter of form, not affecting the merits of the controversy. (Code Civ. Proc., § 1286.6.)

DISCUSSION

I. Correcting the Award

“[P]arties to a private arbitration impliedly agree that the arbitrator's decision will be both binding and final.” (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 9.) “[T]he essence of the arbitration process is that an arbitral award shall put the dispute to rest.” (Id. at p. 10.) “Expanding the availability of judicial review of such decisions ‘would tend to deprive the parties to the arbitration agreement of the very advantages the process is intended to produce.’” (Ibid.) “As a consequence, arbitration awards are generally immune from judicial review.” (Id. at p. 11.) This is so even if an arbitrator’s decision is mistaken, because the parties voluntarily assume that risk in exchange for the less formal, expedited procedure. (Id. at pp. 11-12.) Additionally, “an arbitrator is not ordinarily constrained to decide according to the rule of law.” (Id. at p. 11.) “An error of law is not one of the grounds” for vacating or correcting an arbitration award. (Id. at p. 14.)    

Here, the arbitrator’s award provided, in pertinent part, that “there is no prevailing party” because “neither party has proven that it suffered damages and none are payable by either party to the other.” (Attachment 8(c) to Petition.) Accordingly, the arbitrator ruled that “each side shall bear its own costs and expenses in connection with this Arbitration and equally share and pay the following . . . .” (Ibid.) Additionally, the arbitrator concluded that “CCP Section 998 is not applicable as Claimant is awarded no damages hereunder and therefore failed to obtain a more favorable award than contain in the Section 998 Settlement Offer proffered by Respondent.” (Ibid.)

            Respondent argues that the award should be corrected to award Respondent costs under Section 998 because it made a settlement offer for $50,000, and Petitioner failed to obtain a more favorable result in the arbitration, having recovered nothing. Respondent contends that the arbitrator erred because he acknowledged that Petitioner failed to obtain a more favorable result but then somehow concluded that Section 998 did not apply. Respondent had previously filed a request for modification of the award directly with the arbitrator on the same grounds, but the arbitrator denied the request, holding that “the Award as submitted remains final and will not be modified.” (Shackelford Decl., Ex. F, H.)           

            First, this is not a situation involving “an evident miscalculation of figures or an evident mistake in the description of any person,” or an “imperfect[ion] in a matter of form.” (See Code Civ. Proc., § 1286.6(a), (c).) The arbitrator clearly declined to award costs under Section 998 and clearly intended to do so, as confirmed by his second ruling that the award “will not be modified” despite considering the same arguments Respondent makes here. There was no miscalculation, typo, or formatting error.

            Nor did the arbitrator exceed his powers. (See Code Civ. Proc., § 1286.6(b).) “An arbitrator does not exceed his or her powers . . . merely by rendering an erroneous decision on a legal or factual issue, so long as the issue was within the scope of the controversy submitted to the arbitrator. The arbitrator's resolution of these issues is what the parties bargained for in the arbitration agreement.” (Moshonov v. Walsh (2000) 22 Cal.4th 771, 773.) “An arbitrator's powers ‘derive from, and are limited by, the agreement to arbitrate.’” (Kelly Sutherlin McLeod Architecture, Inc. v. Schneickert (2011) 194 Cal.App.4th 519, 528.)

Respondent does not contend that the arbitrator in this case went beyond the authority granted by the arbitration agreement or arbitration rules. Rather, the issue of costs under Section 998 was a matter properly brought before the arbitrator and subject to his jurisdiction. The parties voluntarily agreed that such matters would be finally decided by an arbitrator, and that is precisely what occurred. That the arbitrator legally erred in denying costs under Section 998 is not grounds for modifying the award. (See Moncharsh, supra, 3 Cal.4th at p. 14; Moshonov, supra, 22 Cal.4th at p. 773.)

Respondent relies on the federal standard that an arbitrator exceeds their powers when they express a “manifest disregard of law.” However, California courts are the governing authority with regards to the legal standards under the California Arbitration Act, including the standards applicable to correcting awards under Code of Civil Procedure section 1286.6. As established above, California courts have repeatedly held that legal error is not grounds for correcting an award, and an arbitrator is not confined to the law in the same way as a court is.

In sum, there are no grounds for correcting the arbitration award entered in this case. The award may be confirmed as requested.

II. Attorneys’ Fees

            Petitioner requests an award of attorneys’ fees for having to reply to Respondent’s opposition. Petitioner argues that under the AAA Commercial Rules, “[i]n any interim, interlocutory, or partial award, the arbitrator may assess and apportion the fees, expenses, and compensation related to such award as the arbitrator determines is appropriate,” including an award of attorneys’ fees. (R-47(b), (d)(ii).)

            However, this Court is not the arbitrator and cannot award costs and fees under the AAA Commercial Rules. Petitioner provides no authority allowing the Court to award attorneys’ fees on a petition to confirm arbitration award.

CONCLUSION

            Petitioner’s motion to confirm arbitration award is GRANTED. Petitioner’s request for attorneys’ fees is denied.