In the underlying arbitration proceeding, the arbitrator initially issued a "Final Award" denying a request for an award of attorney fees by respondent Lavely & Singer Professional Corporation (L & S). The arbitrator later modified the Final Award to include a fee award, and issued a "Revised Final Award." Appellant Jeffrey Cooper challenges the trial court's confirmation of the Revised Final Award. We conclude that the arbitrator exceeded his powers in modifying the Final Award and in issuing the Revised Final Award. We therefore reverse the judgment and remand the matter with instructions to the trial court to correct the Revised Final Award by striking the attorney fee award and confirm the award, as corrected.
In 2003, Cooper met Larry Solomon and Adam Linter, who described certain entertainment-related projects they were pursuing through a production company called "Hopeful Monster, Inc." (HMI). In September 2003, Cooper entered into a revenue sharing agreement with HMI, which obliged Cooper to invest $250,000 in HMI.
In 2009, after coming to suspect that HMI was a sham, Cooper retained L & S. Cooper's legal services contract with L & S obliged him to submit all claims arising under the contract, including malpractice claims, to "mandatory" arbitration pursuant to the rules of JAMS or other specified arbitrators. The contract also contained an attorney fee provision, which provided for a fee award to the prevailing party in any such arbitration.
On Cooper's behalf, L & S initiated a fraud action against HMI, Solomon, and the estate of Linter, who was then deceased. Solomon secured an order compelling arbitration of Cooper's claims pursuant to an arbitration clause in Cooper's agreement with HMI. In September 2010, the arbitrator (retired Judge Alan Haber) concluded that Cooper had not established his claims, and issued an award against Cooper and in favor of HMI.
In September 2011, Cooper commenced an arbitration against L & S by filing a demand for arbitration with JAMS. Cooper asserted claims for breach of contract, breach of fiduciary duty, and professional negligence arising out of L & S's representation in the proceedings against HMI, Solomon, and the estate of Linter. The matter was submitted to arbitration before retired Judge Terry Friedman. L & S represented itself in the arbitration.
On December 14, 2012, following an evidentiary hearing, the arbitrator issued his "Interim Award." The arbitrator concluded that Cooper had failed to establish his claims against L & S, and that L & S was the prevailing party. In view of those determinations, the arbitrator permitted L & S to file a
On December 21, 2012, L & S submitted a motion for an award of contractual attorney fees under Civil Code section 1717. L & S argued that although it had represented itself in the arbitration proceeding, it was entitled to the fee award because Lloyd's, London and Companies (Lloyd's), its professional malpractice insurer, had "specifically retained" L & S to represent its own interests in the proceeding. L & S sought fees totaling $225,677.
Supporting the motion was a declaration from Paul N. Sorrell, a partner in L & S. Sorrell stated: "Shortly after this proceeding was filed by [Cooper], the defense of this matter was tendered to [Lloyd's] pursuant to the terms of [L & S's] professional liability policy. Pursuant to [that] policy ..., [L & S] pays substantial premiums in order [to have] the ability (with Lloyd's consent) to self-represent in certain malpractice actions.... After this matter was tendered to Lloyd's, Lloyd's authorized and retained [L & S] to represent [L & S's] interests in this matter, and indicated that it would reimburse [L & S] (subject to the applicable deductible under the policy) for fees and costs incurred in defending this matter."
Cooper's opposition maintained that as a matter of law, L & S could not recover its fees because it had represented itself in the arbitration proceeding. In addition, Cooper contended that L & S had offered insufficient evidence of an agreement or attorney-client relationship between L & S and Lloyd's, arguing that when deposed, Sorrell had testified that he had no personal knowledge of the identity of L & S's professional malpractice insurer. Cooper also objected to Sorrell's declaration statements regarding the retention of L & S by Lloyd's on several grounds, including that the statements constituted hearsay.
On January 3, 2013, Sorrell e-mailed a request to the arbitrator for leave to submit additional evidence. Sorrell stated: "Certain matters were raised in Mr. Cooper's opposition to the [fee] motion that could not be anticipated, and to which [L & S] would like an opportunity to respond. Among other things, we would like to provide a copy of the insurance policy, ... and/or a declaration from the carrier, as well as my declaration addressing how and when I learned the specifics of the terms of coverage."
In an order dated January 4, 2013, the arbitrator granted Sorrell's request in part and denied it in part, ruling that L & S would be permitted to offer documentary evidence regarding its malpractice policy, but no "further
In response to Such's declaration, Cooper maintained that L & S's malpractice policy could not establish a basis for L & S's fee request, contending that "[n]o case holds that a lawyer can recover fees for self-representation if he has a malpractice policy, with or without a self-representation endorsement." Cooper also argued: "[Such] states that L & S tendered the claim in February 2011. Cooper did not file his claim with JAMS until September 13, 2011."
In a Final Award dated January 16, 2013, the arbitrator denied L & S's request for an award of attorney fees. The arbitrator stated: "L & S is the prevailing party in this arbitration.... However, L & S presented no admissible evidence that Lloyd's retained L & S. In addition, the admissible evidence L & S did present is inconclusive. According to Such, L & S tendered Cooper's claim in February 2011, yet Cooper did not file his [d]emand for [a]rbitration against L & S until September 13, 2011. Moreover, the date of tender preceded the March 31, 2011 [to] March 31, 2012 period of the policy L & S offered to establish coverage.... [¶] Had L & S offered evidence to establish that it tendered Cooper's claim to Lloyd's within the period of an operative malpractice policy and that Lloyd's specifically retained L & S, it would be entitled to its claimed attorney[] fees." On January 22, 2013, the arbitrator served the Final Award on the parties.
On January 28, 2013, L & S submitted a motion for "correction, modification and/or reconsideration" of the Final Award. The motion relied on JAMS Comprehensive Arbitration Rules & Procedures (JAMS rule), rule 22(d), directing the arbitrator to afford the parties the opportunity to present material and relevant evidence, and JAMS former rule 24(j), which provided that "[w]ithin seven calendar days after service of the [a]ward ..., any party may ... request that the [a]rbitrator correct" any "computational, typographical or other similar error in an [a]ward...." In addition, the motion relied on
L & S contended that Sorrell's declaration accompanying its fee motion constituted admissible evidence that L & S had tendered the defense of Cooper's claims to Lloyd's, and that Lloyd's had retained L & S to represent itself. In addition, L & S maintained that Such's declaration contained an obvious clerical error, arguing that her clear intent was to state that L & S tendered the defense of Cooper's claims to Lloyd's in February 2012, during the effective period of the policy that L & S submitted to the arbitrator. L & S further asserted that its failure to make an adequate showing was attributable to the arbitrator's ruling on Sorrell's January 3, 2013 request for leave to submit new evidence, stating: "Had [L & S] been given an opportunity to present additional evidence ..., there would have been no question regarding its entitlement to the requested fees." Accompanying the motion was a declaration from Such, who stated that the defense of Cooper's claims had been tendered to Lloyd's in February 2012, and a declaration from Lloyd's counsel, who stated that upon receipt of that tender, Lloyd's had retained L & S to represent itself.
Cooper opposed the motion, arguing: "[A]fter having been afforded an opportunity to present sufficient evidence, and having failed to do so, L & S [has] file[d] a shotgun motion for `correction, modification and/or reconsideration.' This description has been used to camouflage the fact that there is no authority for the motion, [no] matter what it's called. To be sure, no JAMS rule permits it. And neither does section 1008."
In an order dated February 5, 2013, the arbitrator granted L & S's motion. In so ruling, the arbitrator determined that L & S did not request "correction" of the final award under JAMS rule 24(j), but instead sought reconsideration under section 1008, as L & S argued that it "made a typographical error" and "was not permitted to submit certain evidence." The arbitrator concluded that relief was proper under section 1008, pointing to JAMS rule 24(c), which states, "The [a]rbitrator may grant any remedy or relief that is just and equitable and within the scope of the [p]arties' agreement." The arbitrator further found that L & S had made a timely tender of its defense to Lloyd's, which then retained L & S to represent itself in the arbitration proceeding.
On February 20, 2013, the arbitrator issued his Revised Final Award, which incorporated the Final Award, with the exception of the ruling denying L & S's
In March 2013, L & S filed a petition to confirm the Revised Final Award. Cooper opposed the petition, and filed a petition to vacate the Revised Final Award. Cooper argued, inter alia, that the Revised Final Award contravened section 1284, which authorizes arbitrators to correct a final award when it contains an "evident miscalculation of figures" or mistaken description of a person, thing, or property, or when it is "imperfect" in form (§ 1286.6, subds. (a), (c); see § 1284). Following a hearing, the trial court granted L & S's motion. Judgment in favor of L & S and against Cooper was entered on October 4, 2013.
Cooper contends the trial court improperly confirmed the award, arguing that the arbitrator had no power to (1) revise the Final Award to include an attorney fee award or (2) grant L & S's requested attorney fees. As explained below (see pt. C., post), because we agree that the arbitrator exceeded his powers in issuing the Revised Final Award, we do not address Cooper's challenges to the fee award itself, which rely on the fact that L & S represented itself in the arbitration proceeding.
The California Arbitration Act (CAA; § 1280 et seq.) "represents a comprehensive statutory scheme regulating private arbitration in this state." (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 9 [10 Cal.Rptr.2d 183, 832 P.2d 899] (Moncharsh).) "The statutes set forth procedures for the enforcement of agreements to arbitrate (... §§ 1281.2-1281.95), establish
Under the CAA, if an award that exceeds the arbitrator's powers cannot be corrected without "affecting the merits of the decision upon the controversy submitted," the trial court must vacate the award (§ 1286.2, subd. (a)(4)); in contrast, if the award exceeds the arbitrator's powers but is subject to suitable correction, the court must correct it, unless vacation is otherwise required (§ 1286.6, subd. (b)). Here, Cooper's petition to vacate asked the trial court to "vacate the [Revised Final A]ward in its entirety, or, in the alternative, ... vacate the award of attorney fees in its entirety." He contended, inter alia, that section 1284 prohibited the revision of the Final Award, and that neither law nor contract authorized the award of attorney fees. Because Cooper's petition asserted that the attorney fee award could be vacated without affecting the other determinations in the Revised Final Award, the petition effectively offered as a potential remedy the confirmation of the Final Award, as an alternative to the vacation of the Revised Final Award. (Severtson v. Williams Construction Co. (1985) 173 Cal.App.3d 86, 91-96 [220 Cal.Rptr. 400] (Severtson) [when arbitrator exceeded his powers in revising final award to include supplemental award of attorney fees, trial court properly confirmed original final award lacking supplemental award].)
We subject the trial court's rulings and the underlying award to different standards of review. To the extent the trial court made findings of fact in
Under this rule, courts will not review the arbitrator's reasoning or the sufficiency of the evidence supporting the award. (Moncharsh, supra, 3 Cal.4th at pp. 10-11.) Moreover, absent "narrow exceptions" discussed further below (see pt. C., post), "an arbitrator's decision cannot be reviewed for errors of fact or law." (Moncharsh, at p. 11.) These exceptions do not encompass all errors that are apparent on the face of the award and cause substantial injustice. (Id. at p. 32.) Circumstances justifying judicial review arise when the arbitrator imposes a remedy not authorized by the arbitration agreement. (Advanced Micro Devices, supra, 9 Cal.4th at p. 375; see Cotchett, Pitre & McCarthy v. Universal Paragon Corp. (2010) 187 Cal.App.4th 1405, 1416-1417 & fn. 1 [114 Cal.Rptr.3d 781].)
Following A.M. Classic Construction, other courts have recognized the existence of a nonstatutory amendment doctrine regarding omitted issues. (Century City Medical Plaza, supra, 86 Cal.App.4th at pp. 881-882 [when final award fails to address prejudgment interest, costs, and attorney fees due to arbitrator's mistake, inadvertence, or excusable neglect, arbitrator may amend award to include rulings on those issues]; Delaney v. Dahl (2002) 99 Cal.App.4th 647, 658-660 [121 Cal.Rptr.2d 663] [arbitrator properly amended award to include party's name in certain rulings].)
We turn to whether the arbitrator exceeded his powers by revising the Final Award denying attorney fees to include the attorney fee award. At the outset, we observe that the arbitrator's revisions fall outside the nonstatutory amendment doctrine and the grounds for correction in section 1284. As explained below, the Final Award was final for purposes of that provision. In denying an award of attorney fees in the Final Award, the arbitrator found that L & S had offered insufficient evidence to demonstrate either (1) that it made a timely tender of its defense to Lloyd's under an operative policy or (2) that Lloyd's retained L & S to represent itself. After issuing the Final Award, the arbitrator concluded that the JAMS rules permitted him to consider new evidence under section 1008, rework the findings in the original award, and issue a Revised Final Award granting the requested attorney fees. The Revised Final Award falls outside the nonstatutory amendment doctrine, as it did not address an omitted issue and, in large measure, reflected the arbitrator's response to a typographical error by L & S, rather than an error by the arbitrator. Furthermore, because the Revised Final Award purported to eliminate substantive errors in the Final Award, the arbitrator's revisions did not
Here, the JAMS rules contain a specific restriction precluding reconsideration and revision of a final award. JAMS rule 4 states in pertinent part: "If any of these Rules ... is determined to be in conflict with a provision of applicable law, the provision of law will govern over the Rule in conflict...." (Italics added.) Because JAMS rule 4 gives precedence to laws "applicable" to arbitration in cases of conflict, it manifests a clear intent to confine the operation of the JAMS rules within the limits set by the governing arbitration laws. In view of JAMS rule 4, we conclude the JAMS rules do not authorize arbitrators to make rulings that contravene section 1284. (See California Faculty Assn. v. Superior Court, supra, 63 Cal.App.4th at p. 953 [arbitrator exceeded his powers by disregarding specific restrictions on those powers in the parties' agreement].)
L & S further contends that the Final Award was not a final award for purposes of section 1284. JAMS rule 24(j) provides that "[w]ithin seven ... calendar days after service of [the] [a]ward ..., any [p]arty may ... request that the [a]rbitrator correct any computational, typographical or other similar error in an [a]ward...." JAMS rule 24(k) further provides that an award "is considered final[] ... for purposes of ... a judicial proceeding to enforce, modify or vacate the [a]ward ... fourteen ... calendar days after service is deemed effective if no request for a correction is made, or as of the effective date of service of a corrected [a]ward." In view of those rules, L & S argues that the Final Award "was not final under [the] JAMS rules prior to [the] request for reconsideration."
L & S also maintains that in accepting arbitration governed by the JAMS rules, Cooper waived his right to judicial review of the arbitrator's determination that the Final Award was subject to reconsideration and revision. L & S relies on JAMS Rule 11(a), which provides: "Once appointed, the [a]rbitrator shall resolve disputes about the interpretation and applicability of these [r]ules and [the] conduct of the [a]rbitration [h]earing. The resolution of the [dispute] by the [a]rbitrator shall be final." We disagree that Cooper's acceptance of the JAMS rules constituted such a waiver.
Greenspan, supra, 185 Cal.App.4th 1413, upon which L & S relies, is distinguishable, as that decision addressed an arbitrator's application of the JAMS rules implicating no provision of the CAA. There, the arbitrator determined that under the JAMS rules, he was permitted to issue a final award more than 30 days after issuing an Interim Award. (185 Cal.App.4th at pp. 1449-1456.) Pointing to JAMS rule 11(a), the appellate court concluded that the arbitrator's application of the JAMS rules was binding on the parties, and thus beyond judicial review. (185 Cal.App.4th at p. 1455.) The appellate court nonetheless recognized the limited reach of JAMS rule 11(a), as it afforded no such deference to another determination by the arbitrator under the JAMS rules that implicated a key provision of the CAA, namely, that he was not subject to disqualification for want of neutrality. (185 Cal.App.4th at pp. 1456-1461.)
Pointing to DiMarco v. Chaney (1995) 31 Cal.App.4th 1809 [37 Cal.Rptr.2d 558] (DiMarco), L & S suggests that even if the arbitrator lacked the authority to revise the Final Award to include an attorney fee award, the denial of the fee award in the Final Award itself exceeded the arbitrator's powers, and thus required correction by the trial court, as the arbitrator found that L & S was the prevailing party. As explained below, we disagree.
In DiMarco, an individual entered into an agreement to purchase real property from its owner. (DiMarco, supra, 31 Cal.App.4th at p. 1812.) The
Here, the arbitrator's denial of a fee award in the Final Award falls under Moshonov, not DiMarco, as it was predicated on substantive determinations of law and fact regarding issues submitted in the arbitration. The arbitrator determined (1) that even though L & S had represented itself in the arbitration, it was entitled to a fee award upon a demonstration of certain facts and (2) that L & S had failed to produce evidence to establish those facts. As explained in Moshonov, those determinations of law and fact, erroneous or not, do not exceed the arbitrator's powers. In sum, the trial court erred in denying Cooper's petition to vacate the fee award contained in the Revised Final Award.
The judgment is reversed, and the matter is remanded with directions to the trial court to vacate the judgment confirming the Revised Final Award, and enter a new judgment confirming the Final Award dated January 16, 2013. Cooper is awarded his costs on appeal.
Epstein, P. J., and Willhite, J., concurred.