California Court of Appeals, Fourth District, First Division
PETITION for writ of mandate from the Superior Court of San Diego County, No. 37-2013-0073712-CU-PA-CTL, Lisa C. Schall, Judge.
[Copyrighted Material Omitted]
Solomon Ward Seidenwurm & Smith, Edward J. McIntyre, Norman L. Smith, Tanya M. Schierling and Leah S. Strickland for Petitioner.
Seltzer Caplan McMahon Vitek, Michael A. Leone and Andrea N. Myers for Real Party in Interest.
No appearance for Respondent.
Petitioner Safari Associates (Safari) and real party in interest Alan Tarlov arbitrated a dispute pursuant to a written agreement. The arbitrator awarded Safari damages, attorney fees, and costs. Safari petitioned to confirm the arbitration award in the trial court. In response, Tarlov filed a motion to
modify or correct the award on the ground that the arbitrator acted in excess of his powers in awarding Safari attorney fees. Specifically, Tarlov contended that the arbitrator exceeded his powers by "void[ing]" the definition of prevailing party provided in the parties' agreement, and instead applying the definition of prevailing party specified in Civil Code section 1717, subdivision (b)(1).
In opposition, Safari argued that the arbitrator had not exceeded his powers under the agreement, and that the arbitrator's application of section 1717 was, at most, a nonreviewable legal error. In the alternative, Safari maintained that the arbitrator had correctly applied the definition of prevailing party contained in section 1717 in awarding attorney fees because the agreement provided that it would be governed by California law, and California law is clear that the statutory definition is " 'mandatory... and contractual provisions conflicting with it are void.' " (Quoting Wong v. Thrifty Corp. (2002) 97 Cal.App.4th 261, 264 [118 Cal.Rptr.2d 276].)
The trial court ruled that the arbitrator's decision to apply section 1717 was subject to judicial review, and concluded that the arbitrator had erred in failing to apply the definition of "prevailing party" contained in the parties' agreement. The trial court corrected the award by ruling that the definition of prevailing party contained in the parties' agreement applied and remanding the matter to the arbitrator for further proceedings to apply the agreement's definition of prevailing party in determining whether to award attorney fees.
Safari filed a petition for writ of mandate requesting that this court direct the trial court to vacate its order correcting the arbitrator's award. In its petition, Safari reiterates its argument that the arbitrator acted within the scope of his powers in awarding attorney fees, and that the trial court did not have the authority to review the propriety of the arbitrator's prevailing party determination.
California law is clear that "arbitrators do not 'exceed their 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 arbitrators." (Moshonov v. Walsh (2000) 22 Cal.4th 771, 775-776 [94 Cal.Rptr.2d 597, 996 P.2d 699] (Moshonov).) In this case, the potential applicability of the definition of prevailing party contained in section 1717, subdivision (b)(1) was plainly within the scope of the controversy submitted to the arbitrator. In fact, the record unambiguously demonstrates that Safari and Tarlov extensively briefed this very issue in the arbitration. In addition, there is no provision in the parties' arbitration agreement that "explicitly and unambiguously limited" the arbitrator's power to determine the applicability of section 1717 in awarding attorney fees. (Gueyffier v. Ann Summers, Ltd. (2008) 43 Cal.4th 1179, 1185 [77 Cal.Rptr.3d 613, 184 P.3d 739] (Gueyffier).) Under these circumstances, the arbitrator acted within the scope of his powers in applying the definition of prevailing party found in section 1717, subdivision (b)(1) in awarding Safari attorney fees. Further, any error that the arbitrator may have committed would constitute legal error, which is not subject to correction in the trial court.
Accordingly, we grant Safari's petition and direct the trial court to vacate its order correcting the arbitration award, and to conduct further proceedings, consistent with this opinion, on Safari's petition to confirm the award.
FACTUAL AND PROCEDURAL BACKGROUND
A. The release agreement containing the arbitration provision
Tarlov is the former managing general partner of Safari. Safari and Tarlov entered into a release agreement (Agreement) to resolve certain claims relating to Tarlov's management of Safari.
The Agreement specified that Safari's claims for "reimbursement of monies paid by [Safari] for the personal expenses of [Tarlov] or Tarlov's family" were not subject to the release, and that the parties would make a good faith effort to resolve these personal expense claims. The Agreement further provided that the parties would submit any unresolved disputes concerning the personal expenses to binding arbitration pursuant to the following arbitration provision: "5.4 Dispute: Arbitration by JAMS. Any dispute about personal expenses that are to be reimbursed to [Safari] shall be determined by binding ...