Safari Associates v. Superior Court
182 Cal. Rptr. 3d 190
Cal. Ct. App.2014Background
- Safari Associates and former partner Alan Tarlov executed a Release Agreement calling for binding JAMS arbitration of disputes over personal expenses; the Agreement defined "prevailing party" as the party that "obtains substantially the relief sought." The Agreement was governed by California law.
- The arbitrator issued an interim award and then a final award in Safari's favor for damages, plus $211,620 in attorney fees and $37,224.05 in costs, concluding Civil Code § 1717(b)(1) applied and its prevailing-party definition controlled over the contract's definition.
- Safari petitioned to confirm the arbitration award in superior court; Tarlov moved to modify/correct the award under Code Civ. Proc. § 1286.6(b), arguing the arbitrator exceeded his powers by voiding the contract's prevailing-party definition.
- The trial court granted Tarlov's motion: it held the application of § 1717 was reviewable, ruled the arbitrator erred, ordered the contract definition applied, and remanded to the arbitrator to determine fee entitlement under the contract definition.
- Safari sought writ review. The Court of Appeal reviewed de novo whether the arbitrator exceeded his authority and concluded the arbitrator acted within his powers because the fees/prevailing-party issue was submitted to arbitration and not explicitly and unambiguously limited by the contract.
Issues
| Issue | Safari's Argument | Tarlov's Argument | Held |
|---|---|---|---|
| Whether the arbitrator exceeded his powers by applying Civil Code § 1717 instead of the Agreement's prevailing-party definition | Arbitrator acted within scope; even if wrong, legal error on an issue submitted to arbitration is not correctable by the court | Arbitrator exceeded powers by voiding and refusing to apply the contract's explicit prevailing-party definition | Held: Arbitrator did not exceed powers; trial court erred in correcting the award because the fees/prevailing-party question was within the arbitration scope and not subject to correction absent an explicit, unambiguous contractual limit on arbitrator power |
| Whether the trial court could judicially review and correct the arbitrator's prevailing-party/fees determination | Court lacks authority to re-decide or correct arbitrator's legal interpretation on issues submitted to arbitration | Court may correct award when arbitrator acts in excess of powers by disregarding contract terms | Held: Trial court could not correct the award here; judicial review cannot substitute for arbitral decision on an issue the parties submitted without an explicit contractual restriction on arbitrator authority |
Key Cases Cited
- Moshonov v. Walsh, 22 Cal.4th 771 (Sup. Ct. 2000) (arbitrators do not exceed powers merely by making erroneous legal or factual determinations on issues submitted to arbitration)
- Moore v. First Bank of San Luis Obispo, 22 Cal.4th 782 (Sup. Ct. 2000) (where fee entitlement is submitted to arbitration, arbitrators deciding fees—even if legally incorrect—does not exceed their powers)
- Gueyffier v. Ann Summers, Ltd., 43 Cal.4th 1179 (Sup. Ct. 2008) (arbitrator power is broad absent an explicit and unambiguous contractual limitation; such limits permit court correction)
- DiMarco v. Chaney, 31 Cal.App.4th 1809 (Ct. App. 1995) (discussed but distinguished; court in prior panel found arbitrator contradicted an express contractual fee command)