NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

CROSKEY, J.

First City Pacific (First City) and Home Depot U.S.A., Inc. (Home Depot) disputed the amount of rent due from Home Depot to First City under a lease. They submitted their dispute to binding arbitration, during which time Home Depot continued to pay rent to First City. The arbitrator resolved the dispute, declaring the proper amount of rent. The arbitrator also directed that any overpayments should be returned to Home Depot, or underpayments should be made to First City, as necessary. Finally, the arbitrator awarded prejudgment interest on the under- or overpayments. As it turned out, Home Depot had overpaid rent, and sought a substantial refund and prejudgment interest. First City then brought a petition to correct the arbitrator's award to eliminate the award of prejudgment interest, as outside the scope of the arbitrator's powers. The trial court denied First City's petition and, instead, entered a judgment confirming the arbitrator's award. First City appeals. We affirm, concluding that: (1) First City submitted the issue of prejudgment interest to the arbitrator for resolution, thus waiving any right to challenge the arbitrator's power to resolve it; and (2) in any event, the arbitrator possessed the power to award prejudgment interest.

PROCEDURAL AND FACTUAL BACKGROUND

1. The Underlying Dispute

First City was the lessee of seven acres of land. In July 1986, First City subleased the property to Home Depot, for 20 years. The sublease also granted Home Depot four five-year options to extend the term. Home Depot exercised its options.

The sublease provided a means for determining the rent during the option terms, based on the fair market rental value of the property. The parties were first required to negotiate the fair market rental value, and, if negotiations were unsuccessful, the sublease provided for an appraisal process to determine the fair market rental value. After Home Depot exercised its options, the parties were unable to agree as to the fair market rental value. Moreover, they disagreed as to the meaning of the term "fair market rental value" as it applied to the appraisal process — that is, they disagreed as to the date of valuation, and whether certain terms in the sublease governing the rental calculation were to be taken into account in determining fair market rental value.

2. The Arbitration Agreement

On January 5, 2010, the parties agreed to submit these issues to arbitration, in order to subsequently engage in the appraisal process. The arbitration agreement was memorialized in a five-page letter. Certain provisions of the arbitration agreement are relevant to our resolution of this appeal. We set them forth below:

3. The Stipulation

On January 15, 2010, the arbitrator, Richard Chernick, issued his first interim award, resolving the first issue. The second arbitration hearing was conducted on May 27, 2010. Before the second arbitration hearing, however, the parties stipulated that there would be a third arbitration hearing.1

The stipulation is on pleading paper, and the caption and case number refer to the then-ongoing arbitration between the parties. The stipulation provided, in pertinent part, as follows:

On May 28, 2010, the arbitrator issued his second interim award, resolving the six issues identified for resolution at the second hearing. In the second interim award itself, the arbitrator acknowledged that the parties had, by that time, stipulated that the arbitrator would make the determination of the proper rent amount, at a "Phase III hearing." The arbitrator stated that the parties'"Submission Agreement," (being the January 5, 2010 letter) "supplemented by a later Stipulation, establishes a three-step arbitration process, with Richard Chernick as the sole arbitrator, administered by JAMS pursuant to its Comprehensive Arbitration Rules and Procedures . . . and the California Arbitration Act."

4. The Phase III Hearing and Briefing

The Phase III hearing was conducted on August 4, 2010. Four witnesses testified, not all of whom were appraisers.2 The parties each submitted closing briefs on August 6, 2010, and were permitted to submit reply briefs. In its closing brief, Home Depot raised the issue of interest on underpayments or overpayments of rent.3 The brief provided: "Pursuant to the January 5, 2010 Arbitration Agreement . . ., the Parties agreed that the Arbitrator would have the authority to rule on all post-hearing matters. Accordingly, and as a result of the pending dispute, since February 1, 2009, Home Depot has been paying rent at the same rate payable at the end of the initial term of the Sublease. Once the Arbitrator determines fair market rental value and Home Depot's rent obligation for the beginning of the first Option Term can be calculated, Home Depot will in all likelihood be found to have either underpaid rent or overpaid it since this date. Home Depot requests that the Arbitrator include in his Final Award, pursuant to California Civil Code Section 3287(a), an award of interest at ten percent (10%) per annum on any such underpayment or overpayment."

First City replied to this argument in its reply brief. First City did not argue that the resolution of the issue of prejudgment interest was outside the scope of the arbitration. Instead, it argued that the arbitration did not raise a contract claim or other claim which would support an award of prejudgment interest. First City's brief on the issue, under the heading, "NO INTEREST IS DUE," read as follows:

5. The Final Award

On September 7, 2010, the arbitrator issued his final award. The arbitrator found both competing appraisals to be incorrect, and estimated the correct rent at $750,000, a number between the two values offered by the appraisers. The arbitrator concluded that there was no prevailing party, and declined to exercise his discretion to shift arbitration fees and costs. Finally, the arbitrator stated, "If the minimum rent paid since February, 2009 is greater than $750,000 per annum, Home Depot is entitled to a refund in the amount overpaid plus interest on each such excess rent payment at 10 percent simple interest per annum to the date of repayment. If the minimum rent paid since February, 2009 is less than $750,000 per annum, First City Pacific is entitled to be paid the amount underpaid plus interest on those amounts from the date due until paid at 10 percent simple interest per annum. See Civ. Code § 3287(a)." The arbitrator also indicated in a footnote, "The Arbitrator has discretion to make an award of interest."

Thereafter, Home Depot calculated its overpayment of rent as exceeding $1,000,000. It calculated the prejudgment interest owed as nearly $100,000.

6. First City's Petition to Correct the Award

On November 24, 2010, First City filed a petition to correct the arbitration award, on the basis that the arbitrator exceeded his authority by awarding prejudgment interest, which was not one of the itemized questions submitted to the arbitrator for resolution.

In its points and authorities, First City argued that the award of prejudgment interest was outside of the arbitrator's authority. First City would ultimately argue, on appeal, that the stipulation (for the arbitrator to resolve the issue of fair market value) did not incorporate the language of the arbitration agreement (which provided for a declaratory judgment, and granted the arbitrator the power to resolve "all post-hearing matters"), and was instead a limited agreement providing that the arbitrator would act in the narrow role of an appraisal umpire. First City did not make this argument before the trial court, and instead argued, repeatedly, that the arbitrator's authority was defined by both the arbitration agreement and the stipulation. That is, First City argued that the arbitrator had no authority "under the Arbitration Agreement or Stipulation, pursuant to statutory or case law, or otherwise to award [prejudgment] interest." Again, First City stated, "The scope of the arbitrator's powers were clearly established by the Arbitration Agreement and the Stipulation, which authorize the arbitrator to determine very specific issues and issue an award in the form of a declaratory judgment, and fair market rental value. Nothing else."

Home Depot opposed the petition and responded with a petition to confirm the award. Home Depot argued both: (1) that the award of prejudgment interest was within the scope of the arbitrator's authority; and (2) that First City waived the argument by not objecting to the arbitrator's authority to rule on prejudgment interest when Home Depot first raised the issue.

In First City's reply, First City again repeatedly argued that the scope of the arbitrator's authority was limited by both the arbitration agreement and the stipulation.4 First City stated, "As established by the Arbitration Agreement, the determination of the fair market value was to be issued in the form of a declaratory judgment." First City quoted from the language of the stipulation, and then stated, "Accordingly, when coupled with the directive of the Arbitration Agreement which provided for the issuance of a declaratory judgment, it is clear that the award of prejudgment interest improperly exceeded the scope of the Stipulation, and must be stricken."

7. The Trial Court's Ruling

The trial court denied the petition to vacate and granted the petition to confirm. The trial court indicated multiple grounds for its decision, including: (1) the arbitrator was granted authority to rule on post-hearing matters, and prejudgment interest was not expressly excluded from this authority; (2) the arbitrator expressly concluded that he had the power to award prejudgment interest, a determination which is entitled to deference; and (3) the arbitrator was authorized to interpret "other provisions of the Sublease," in addition to the itemized issues, and the issue of prejudgment interest was clearly briefed as a disputed issue.

Judgment was entered confirming the award. First City filed a timely notice of appeal.

CONTENTIONS OF THE PARTIES

On appeal, First City contends that the trial court erred in failing to correct the award, as the award of prejudgment interest was outside the scope of the issues presented to the arbitrator. First City argues that the issue presented to the arbitrator pursuant to the stipulation was solely a determination of the fair market rental value, akin to an appraisal. Home Depot responds that the issue of prejudgment interest was properly presented to the arbitrator as a post-hearing matter, pursuant to the initial arbitration agreement. Moreover, Home Depot argues that First City waived the issue, as it responded on the merits when Home Depot briefed the issue of prejudgment interest before the arbitrator. We agree with both of Home Depot's contentions.

DISCUSSION

1. Standard of Review

"[I]t is the general rule that, with narrow exceptions, an arbitrator's decision cannot be reviewed for errors of fact or law." (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 11.) Those exceptions are set forth in Code of Civil Procedure sections 1286.2 and 1286.6. The only exception at issue in this case is when "[t]he arbitrators exceeded their powers but the award may be corrected without affecting the merits of the decision upon the controversy submitted." (Code Civ. Proc., § 1286.6, subd. (b).) It is within the powers of an arbitrator to resolve all contested issues of fact and law submitted for decision. (Moncharsh v. Heily & Blase, supra, 3 Cal.4th at p. 28.)

"`An Arbitrator exceeds his powers when he acts without subject matter jurisdiction [citation], decides an issue that was not submitted to arbitration [citations], . . . upholds an illegal contract [citation], issues an award that violates a well-defined public policy [citation], [or] issues an award that violates a statutory right [citation] . . . .'" (O'Flaherty v. Belgum (2004) 115 Cal.App.4th 1044, 1055-1056.)

"`It is well settled that the scope of judicial review of arbitration awards is extremely narrow. [Citations.]' [Citations.] In determining whether private arbitrators have exceeded their powers, the courts must accord `substantial deference to the arbitrators' own assessments of their contractual authority . . . .' [Citation.] Nevertheless, except where `the parties "have conferred upon the arbiter the unusual power of determining his own jurisdiction" [citation], the courts retain the ultimate authority to overturn awards as beyond the arbitrator's powers, whether for an unauthorized remedy or decision on an unsubmitted issue.' [Citation.] `Guided by these standards, this court conducts a de novo review, independently of the trial court, of the question whether the arbitrator exceeded the authority granted him by the parties' agreement to arbitrate. [Citations.]' [Citations.] In undertaking our review, however, `we must draw every reasonable inference to support the award. [Citations.]' [Citation.] [¶] In short, we review the superior court's order de novo, while the arbitrator's award is entitled to deferential review. [Citation.]" (Ajida Technologies, Inc. v. Roos Instruments, Inc. (2001) 87 Cal.App.4th 534, 541.)

"To further the policy favoring arbitration, courts indulge every reasonable intendment giving effect to such proceedings. [Citation.] For the same reason, `ambiguities in the scope of arbitration are resolved in favor of coverage. [Citations.]' [Citation.] Moreover, `courts should generally defer to an arbitrator's finding that determination of a particular question is within the scope of his or her contractual authority.' [Citation.] The deference due an arbitrator thus `requires a court to refrain from substituting its judgment for the arbitrator's in determining the contractual scope of those powers.' [Citation.] In short, we apply `a rule of substantial deference to the arbitrators' jurisdictional determinations. [Citation.]' [Citation.]"5 (Ajida Technologies, Inc. v. Roos Instruments, Inc., supra, 87 Cal.App.4th at p. 542.)

2. First City Waived Any Right to Challenge the Arbitrator's Authority to Award Prejudgment Interest

"[T]he parties may submit for decision issues they were not contractually compelled to submit to arbitration. In such an event, courts look both to the contract and to the scope of the submissions to determine the arbitrator's authority." (J.C. Gury Co. v. Nippon Carbide Industries (USA) Inc. (2007) 152 Cal.App.4th 1300, 1305.) "[A] party may not fully argue the merits of an issue and present its desired outcome thereon, then claim on review that this was merely its way of telling the arbitrator he could not consider the issue." (Porter v. Golden Eagle Ins. Co. (1996) 43 Cal.App.4th 1282, 1291, fn. 7.) When both parties submitted an issue to the arbitrator for resolution, neither party may subsequently "complain that the arbitrator exceeded his authority." (J.C. Gury Co. v. Nippon Carbide Industries (USA) Inc., supra, 152 Cal.App.4th at p. 1306.)

In this case, Home Depot presented the issue of prejudgment interest to the arbitrator for resolution, by means of its closing brief. First City, in its reply brief, at no point suggested to the arbitrator that it had no authority to resolve the issue of prejudgment interest.6 Instead, it simply argued that no claim before the arbitrator justified an award of interest, so the request for interest should be denied. This briefing on the merits, without any concomitant argument that the issue was not within the arbitrator's authority,7 constitutes a submittal on the merits and a waiver of the right to argue that the arbitrator lacked authority to reach the issue.

3. The Issue of Prejudgment Interest was Within the Scope of the Arbitration Agreement and Stipulation

Even if First City had not waived the right to challenge the arbitrator's authority to resolve the issue of prejudgment interest, we conclude the arbitrator did, in fact, possess authority to resolve it.

As noted above, "our decisions teach that courts should generally defer to an arbitrator's finding that determination of a particular question is within the scope of his or her contractual authority." (Advanced Micro Devices, Inc. v. Intel Corp. (1994) 9 Cal.4th 362, 372 (Advanced Micro Devices).) Doubts as to the meaning or extent of an arbitration agreement are for the arbitrators and not the courts to resolve. (Ibid.) "[A]n appropriately deferential review starts not from the beginning, but from the arbitrator's own rational assessment of his or her contractual powers and is dependent on (that is, rests on acceptance of) this and any other factual or legal determination made by the arbitrator."8 (Id. at p. 376.) "An exception to the general rule assigning broad powers to the arbitrators arises when the parties have, in either the contract or an agreed submission to arbitration, explicitly and unambiguously limited those powers." (Gueyffier v. Ann Summers, Ltd. (2008) 43 Cal.4th 1179, 1185.)

In this case, the arbitrator concluded that he had discretion to make an award of prejudgment interest. There is nothing in the arbitration agreement and/or stipulation which explicitly and unambiguously precluded the arbitrator from making that award. Indeed, the language of those documents supports the arbitrator's conclusion. The arbitration agreement provided that the arbitrator was to "make a reasoned award and a decision in the nature of a declaratory judgment." The arbitrator was explicitly granted "the authority to rule on all post-hearing matters and . . . those determinations shall be binding upon the parties."

First City does not contest that prejudgment interest is generally a post-hearing matter. Nor does it contest the fact that prejudgment interest may be awarded in a declaratory relief action.9 It argues, however, that the stipulation presenting the issue of fair market rental value to the arbitrator "did not incorporate the initial arbitration agreement's language," and was instead a very narrow submission, in the nature of an appraisal, of the issue of fair market rental value to the arbitrator.

First City's characterization of the stipulation does not survive scrutiny for a number of reasons. First, the stipulation was not a separate submission of the fair market rental value issue to the arbitrator, but part of the same overall arbitration. Indeed, the stipulation itself was prepared on pleading paper and bore the caption of the arbitration.10 The arbitrator's second interim award characterized the stipulation as providing for a third phase of the continued arbitration, pursuant to JAMS rules, and there is no indication in the record that First City ever challenged that characterization. Second, the Phase III arbitration hearing was not in the nature of an appraisal; the arbitrator did not hear testimony solely from appraisers, but also heard from a witness to the negotiation of the sublease. Third, the arbitrator's final award was not in the nature of an appraisal. First City attempts to liken this case to those involving statutorily-mandated appraisals of fire losses in insurance disputes under Insurance Code section 2071. Yet an appraisal under Insurance Code section 2071 involves an appraiser for each side and an umpire choosing between the two appraisals. In this case, however, the arbitrator was granted authority to independently determine the fair market rental value, and not merely select one of the two appraisals. Fourth, First City's briefing before the trial court repeatedly argued that both the arbitration agreement and the stipulation governed the issues before the arbitrator in the fair market rental value appraisal.11 While First City argues that it may raise new legal arguments for the first time on appeal, the mere fact that First City repeatedly took the position that the arbitrator's authority at the third hearing was defined by both the arbitration agreement and the stipulation supports the conclusion that the arbitrator did not err by interpreting the agreements in the same manner. In short, there was no explicit, unambiguous limitation on the arbitrator's powers in the third hearing to reach solely the issue of fair market rental value without authority to resolve post-hearing matters including prejudgment interest. Thus, the arbitrator did not exceed his authority in awarding prejudgment interest.

DISPOSITION

The judgment confirming the arbitration award is affirmed. Home Depot shall recover its costs on appeal.

KLEIN, P. J. and KITCHING, J., concurs.