Judge: Mark H. Epstein, Case: 22SMCV02259, Date: 2023-03-07 Tentative Ruling

Case Number: 22SMCV02259    Hearing Date: March 7, 2023    Dept: R

Plaintiffs Robert and Janette Speyer (collectively “plaintiffs”) filed this bad faith claim against defendant Interinsurance Exchange of the Automobile Club (“defendant”).  Plaintiffs own a property in Calabasas that was insured under a homeowner policy issued by defendant.  (Calhoun Decl., ¶¶3-5.)  The policy contains an “Appraisal” clause that allows the parties to agree to use appraisers to determine the amount of the covered loss.  (Id. at ¶8.)  Around December 6, 2020 (when the policy was in force), plaintiffs suffered a water leak from their refrigerator water supply line and it damaged their property.  (Id. at ¶¶9-10.)  Plaintiffs submitted a water damage claim under the policy.  (Ibid.)  The parties had disputes and eventually, plaintiffs demanded an appraisal on August 21, 2021.  (Id. at ¶13.)  According to the policy, each party designated their respective appraiser (Mark James and Jeff Caulkins), and the two appraisers selected an umpire  (Kevin Hansen).  (Id. at ¶¶14-16.)  On July 29, 2022, defendant received an appraisal award signed by James and Caulkins only (but the award states that the signatures of any two members of the panel is sufficient).  (Id. at ¶17.)  Defendant determined an additional amount was owed to plaintiffs under the appraisal award, and on August 10, 2022, defendant informed plaintiffs’ attorney that an additional payment in the amount of $38,810.16 was being issued.  (Id. at ¶¶18-19.)  Defendant issued the check in that amount, “payable to Robert Speyer, Janette Speyer, Claims XP SoCal Division and Furtado Law PC.”  (Id. at ¶20.) It was deposited on August 18, 2022. (Ibid.)

Plaintiffs filed this bad faith action on November 8, 2022, alleging claims for breach of contract, breach of the implied covenant of good faith and fair dealing, and vacatur of the appraisal award.  Currently before the court is defendants’ petition to confirm the award.  Plaintiffs oppose, sort of.  By “sort of,” what the court means is that plaintiffs filed a “response” that attempts to address the argument that the petition must be granted because plaintiffs have not moved properly to vacate the award.  However, plaintiffs have made no challenge or argument as to why the petition to confirm ought not be granted on its merits, whether or not plaintiffs could move to vacate.  Parenthetically, the court believes that if the petition is granted, there will be nothing left of plaintiffs’ complaint.

Defendant requests judicial notice of plaintiffs’ complaint and the proof of service indicating when the summons and complaint was served on defendant. The request is GRANTED. (See Evid. Code, § 452, subd. (d).)

Judicial review of an arbitration award is limited.  (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 11.)  “Thus, it is the general rule that, with narrow exceptions, an arbitrator's decision cannot be reviewed for errors of fact or law.”  (Ibid.)  The court can only review the award to see if statutory grounds for vacating or correcting the award exist; otherwise, it must confirm the award.  (Corona v. Amherst Partners (2003) 107 Cal.App.4th 701, 706.)

The award here is not a typical arbitration award, but that does not mean the statutory scheme does not apply.  As defendant persuasively argues, this sort of agreement is considered an arbitration agreement.  “An agreement to conduct an appraisal contained in a policy of insurance constitutes an ‘agreement’ within the meaning of section 1280, subdivision (a), and therefore is considered to be an arbitration agreement subject to the statutory contractual arbitration law.  (Appalachian Insurance Co. v. Rivcom Corp. (1982) 130 Cal.App.3d 818, 824.)  Those statutory provisions represent a comprehensive statutory scheme for the arbitration of disputes.”  (Louise Gardens of Encino Homeowners' Assn., Inc. v. Truck Ins. Exchange, Inc. (2000) 82 Cal.App.4th 648, 658, internal footnote and parallel citations omitted.)

Defendant next contends that that, even construing the complaint as a petition to vacate the award (which is itself somewhat of a stretch), it is untimely and the court is therefore required to confirm the award.  The date of service of the award controls the time limit within which a petition to vacate must be filed and served.  “A petition to vacate an award or to correct an award shall be served and filed not later than 100 days after the date of the service of a signed copy of the award on the petitioner.”  (Code Civ. Proc., § 1288, emphasis added.)  That leads to one of plaintiffs’ arguments: that the award was not served properly.  Code of Civil Procedure section 1283.6 provides that “[t]he neutral arbitrator shall serve a signed copy of the award on each party to the arbitration personally or by registered or certified mail or as provided in the agreement.”  Here, the agreement does not specify a manner of service, so Hansen, as the neutral umpire, was required to serve the award.  As defendant concedes, Hansen did not.  Instead, Caulkins served the award.  Defendant insists that this issue was not prejudicial.  The court agrees.  While the service by Caulkins was irregular, the court cannot find that the irregularity means that service was not proper, especially where there is no evidence of prejudice (and arguments in a brief are not evidence).  Under those circumstances, the award was served when it was served; there is no extension of time because it was sent by Caulkins rather than Hansen.

Given that, the attempt to vacate it is untimely.  The award was served on July 27, 2022.  Plaintiffs had 100 days to attempt to vacate the award plus an additional 10 days for service outside California.  The means that the petition had to be filed and served by November 14, 2022 at the latest.  (Code Civ. Proc. § 1288.)  The complaint was timely filed on November 8, 2022, but it was not served until November 18, 2022, which it beyond the statutory period.  Plaintiffs contend that this slight period ought to be overlooked by the court, especially given that the complaint was filed in time.  Although the argument is not without equitable appeal, the court cannot do that.  The filing and service deadline is jurisdictional.  Missing it deprives the court of the power to vacate the award.  (Id., § 1286.4; Abers v. Rohrs (2013) 217 Cal.App.4th 1199.)  And while the court understands that plaintiffs had to verify that the award was proper because it was not served by the umpire, that is why plaintiffs had 100 days to petition to vacate rather than a shorter period.

Because the request to vacate the award is improper, the court is left with no alternative but to confirm the award.  (In other words, if the award cannot be vacated or corrected due to the passage of the jurisdictional time, then it must be confirmed even if it might have been subject to challenge had one been timely brought.)  But even beyond that, the court sees no infirmity in the award.  Indeed the opposition goes only to the technical arguments but it says nothing about why the award ought not be confirmed under the lenient Moncharsh standard.  Thus, even were the court to ignore the procedural issues, the court would grant the petition to confirm. 

Accordingly, the petition to confirm the award is GRANTED.  The court will set a status conference to discuss the remainder of the complaint.