Opinion
Richard Christopher (Christopher) appeals from an order denying his petition to confirm an arbitration award. The matter went to arbitration pursuant to an underlying contract between plaintiff Washington Umberto Cinel (Cinel) and defendant Christopher and five other defendants, but several of the defendants refused to pay the arbitrator’s fee, and the arbitrator terminated the arbitration. The trial court refused to confirm the arbitrator’s decision, finding it was not an “award” and denied Christopher’s petition. Christopher contends the trial court’s refusal to confirm the arbitrator’s award constituted an impermissible interference with the arbitrator’s jurisdiction to decide all issues, and because no grounds existed to vacate the award, the only choice available to the trial court was to confirm the award and dismiss the proceeding. We affirm.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
1. Arbitration Proceedings and Termination of Arbitration.
In December 2006, Cinel, a Brazilian citizen, agreed to purchase 600,000 shares of preferred stock from Good News Holdings, LLC (GNH), for total consideration of $3 million, pursuant to a written “Supplemental Agreement.”
On June 30, 2008, Cinel commenced this action for securities fraud and related claims against defendants, and filed his operative first amended complaint (FAC) on November 13, 2008. On March 9, 2009, Bama filed a petition to compel arbitration pursuant to an arbitration clause in the PPM, and on April 3, 2009, the trial court granted the petition to compel arbitration. The parties commenced two separate arbitrations with the AAA (American Arbitration Association) because although defendant had commenced arbitration, Cinel felt he should be deemed the claimant in the arbitration. The parties later stipulated to consolidate the two arbitrations.
During the period June 2009 through December 2009, the parties selected three arbitrators. On January 11, 2010, the AAA requested payment from each of the parties for the initial deposit of the arbitrators’ fees. Of the six defendants, only Bama and Christopher paid their share of the fees. The AAA suggested that the paying parties could advance the fees of the nonpaying parties; some of the parties suggested that the panel be reduced to one arbitrator. However, on March 15, 2010, the AAA issued its order suspending the arbitration pending payment in full of the fee deposit.
Cinel submitted a motion to modify the order suspending the arbitration, requesting that the order be changed to provide that if the parties who compelled arbitration, Christopher and Bama, wished to continue, that they pay the fees of the nonpaying parties, and if they did not, that the panel issue an order terminating the arbitration and returning the matter to the superior court. In response, Christopher and Bama, joined by Kirkpatrick and Cotton, argued Cinel’s proposal was unfair because Cinel, as a billionaire, had more assets.
On June 7, 2010, the panel rejected Cinel’s proposal, and suggested the paying parties agree to pay a pro rata share of the deposits of the delinquent parties. On July 7, 2010, the panel terminated the arbitration due to the nonpayment of fee deposits. On July 16, 2010, Christopher submitted a proposed form of written order to be signed by the panel, but the panel refused to sign it on the grounds it no longer had jurisdiction.
On November 15, 2010, the trial court reasserted jurisdiction over the case. On January 11, 2011, Christopher moved in the trial court to confirm the award and dismiss Cinel’s complaint. He argued that pursuant to Code of Civil Procedure section 1286.2, the trial court’s power was limited to confirming, vacating or correcting the arbitrator’s decision: because an arbitrator’s decision was not subject to review for errors in fact or law, and there was no basis for the court to otherwise vacate or correct the award, it must be confirmed. In opposition, Cinel argued that the termination order was not an “award” or “decision” subject to confirmation by the court, and an administrative termination restarted the matter in the trial court.
The trial court denied the motion, stating, “Nothing happened [at the arbitration]. It should go back. And we’ll set it for trial here. If you don’t want to go to arbitration, then you’re going to have a trial here, [¶] . . . [¶] This happens all the time. People don’t want to pay fees. It comes back. . . . You have one person who doesn’t [pay], there’s no judgment, I won’t confirm an arbitration award where nothing really took place because someone didn’t want to pay the fees.”
DISCUSSION
I. The Order “Denying” the Petition to Confirm the Arbitrator’s Ruling Is Appealable
As a threshold issue, we must determine whether the trial court’s order denying Christopher’s petition is an appealable order. Code of Civil Procedure section 1294
As a result, Christopher contends under section 1294, the trial court had no authority to simply deny such a motion. Rather, he contends, when confronted with a petition to confirm, correct, or vacate an award, under section 1294 the court has four options: confirm the award; vacate the award; correct and affirm the award; or dismiss the petition, and courts construe an order purporting to deny a petition to confirm as an order vacating the award,
An arbitration award is not directly enforceable; until confirmed or vacated by court proceedings, the award is no more than a contract between the parties to the arbitration. (Loeb v. Record (2008) 162 Cal.App.4th 431, 449 [75 Cal.Rptr.3d 551].) The prevailing party in an arbitration therefore may petition the court to confirm an award; the losing party may petition to modify or vacate the award entirely. (§ 1285; see Luster v. Collins (1993) 15 Cal.App.4th 1338, 1344 [19 Cal.Rptr.2d 215].) In response to such a petition, the court must confirm, correct, or vacate the award, or dismiss the petition entirely. (§ 1286; see Karton, supra, 176 Cal.App.4th at p. 9.) Thus, the statutory scheme contemplates that an arbitration award may either be confirmed, vacated, or corrected in the trial court; in response, a party may request the court to dismiss the petition to confirm, correct, or vacate the award. (§ 1285.2.)
Consistent with this, section 1294 identifies the orders appealable after an arbitration. Section 1294 provides that an aggrieved party may appeal from an order dismissing a petition to confirm, correct or vacate an award. (§ 1294, subd. (b).) Section 1294 also provides that an aggrieved party may appeal an order “dismissing or denying a petition to compel arbitration.” (§ 1294, subd. (a), italics added.) Other orders appealable include “[a]n order vacating an award unless a rehearing in arbitration is ordered” (§ 1294, subd. (c)), a judgment entered after an arbitration (§ 1294, subd. (d)), or “[a] special order after [a] final judgment” (§ 1294, subd. (e)).
As explained in Karton, supra, 176 Cal.App.4th at page 9, “the failure of [section 1294] to provide for the appealability of an order denying a petition to confirm, correct or vacate an award is easily understood in the context of [section 1286]. If a trial court dismisses the petition, it results in an appealable order. ... If the trial court which does not dismiss the petition also does not correct or vacate an arbitration award, it must confirm the award. Entry of judgment in conformity therewith is required [pursuant to section 1287.4], resulting in an appealable judgment under [section 1294, subdivision (d)]. Similarly, if the nondismissing trial court does not confirm the award (or confirm [it] as corrected), the court must vacate it, resulting in an appealable order under [section 1294, subdivision (c)]. All possible outcomes
Thus, although section 1294 does not specifically refer to an order “denying” a petition to confirm an award, the statutory framework dictates that in such instance the court’s “denial” must be treated as a “dismissal,” thus rendering the order immediately appealable. This result makes sense in light of the other statutory options under sections 1285, 1285.2, and 1294. Under section 1294, if an award is confirmed, the appeal lies from the judgment entered on the award. (§ 1294, subd. (d).) Second, if an award is vacated, an appeals lies unless the matter is referred back to arbitration. (§ 1294, subd. (c).) Third, if a petition to vacate or correct is denied, the matter is not appealable, but is reviewable on appeal from the judgment of confirmation. (Mid-Wilshire Associates, supra, 7 Cal.App.4th at pp. 1453-1454.) The remaining option, where neither correction, vacation, or confirmation takes place on the petition, is dismissal. In all instances under section 1294, either the order itself is appealable, or an appeal lies from the subsequently entered judgment. However, if the court simply denies the petition to confirm, as the court did here, under Cinel’s construction of the statute, the parties are left in limbo. Without a confirmed award, or a vacated or corrected award, no judgment thereon can be entered. Therefore, the Legislature did not include the word “denial” in section 1294, subdivision (b) because such a situation would never occur. As a consequence, we must construe the “denial” of Christopher’s petition to confirm to constitute a “dismissal” of the petition, and hence it is immediately appealable under section 1294, subdivision (b).
Furthermore, case law does not hold otherwise. Unlike the situation here, in Mid-Wilshire Associates the issue was whether the denial of a petition to vacate or correct an award was an appealable order, not whether the denial of a petition to confirm was an appealable order. (Mid-Wilshire Associates, supra, 1 Cal.App.4th at pp. 1453-1454.) Mid-Wilshire Associates concluded the denial of a petition to vacate or correct was not appealable because such an order was appealable after the judgment of confirmation. In other words, the award would either be vacated or continued as corrected, in which case it would be appealable, either from the final judgment or the order vacating the award pursuant to section 1294, subdivision (c). (Mid-Wilshire Associates, supra, 7 Cal.App.4th at p. 1454; see National Marble Co. v. Bricklayers & Allied Craftsmen (1986) 184 Cal.App.3d 1057, 1060-1061, fn. 1 [229 Cal.Rptr. 653] [explaining procedural posture of appeals under § 1294].)
Christopher contends that we may not review the merits of the arbitrator’s order to determine that it did not constitute an award, that the trial court’s “denial” of the motion was tantamount to an unauthorized vacation of the award, and the court erred in lifting the stay and setting the matter for trial. We disagree.
A. The Arbitrator’s Termination of the Action Was Not an “Award”
Section 1283.4 provides that an arbitration award shall “include a determination of all the questions ... the decision of which is necessary in order to determine the controversy.” The arbitrator’s order here, which did not address any of the issues in controversy but instead refused to commence the proceedings for failure to pay fees, did not constitute an “award” within the meaning of section 1283.4 such that it was subject to confirmation pursuant to section 1285. Before confirming an award, the trial court has a duty, in order to follow the dictates of section 1283.4, to ensure that the arbitrator’s “award” is an “award” within the meaning of that statute. To do so, it may inquire into the substance of the award without violating the prohibition against judicial review of arbitration awards except in very limited circumstances.
For that reason, Young v. Ross-Loos Medical Group, Inc. (1982) 135 Cal.App.3d 669 [185 Cal.Rptr. 536] (Young), upon which Christopher relies, is distinguishable. In Young, the arbitrator terminated arbitration proceedings with an “order of dismissal” due to the parties’ failure to bring the action to
In addition, Lifescan Inc. v. Premier Diabetic Services (9th Cir. 2004) 363 F.3d 1010, upon which Christopher also relies, is distinguishable. There, the parties went to arbitration before the AAA and participated in the initial stages of arbitration. A few days before the final hearings, Premier announced it would be unable to pay its pro rata share of fees. The arbitrators gave Lifescan the option of advancing the fees so that the hearings could proceed, but suspended the proceedings when Lifescan refused to pay. Lifescan petitioned in the trial court to compel arbitration and to order Premier to pay its share of the fees pursuant to section 1284.2,
B. Trial Court Did Not Err in Lifting Stay
Lastly, the trial court correctly set the matter for trial after denying the petition to confirm. Section 1281.4 provides for a stay of pending litigation while a related arbitration is proceeding.
The order is affirmed. Respondent is to recover costs on appeal. Rothschild, Acting R J., and Chaney, J., concurred.
Only defendant Richard Christopher is a party to this appeal.
Cinel raised the issue of the appealability of the order denying Christopher’s petition to confirm in his respondent’s brief; we also requested the parties to separately address the issue in letter briefs.
All statutory references herein are to the Code of Civil Procedure unless otherwise noted.
In the alternative to a directly appealable order, a party may seek writ relief by way of a petition for writ of mandate. However, unlike appeals, which are heard as a matter of right, writ review is deemed extraordinary and is discretionary and rarely granted. (Omaha Indemnity Co. v. Superior Court (1989) 209 Cal.App.3d 1266, 1271 [258 Cal.Rptr. 66].)
Arbitration awards are subject to very limited judicial review. Except for the very limited grounds set forth in sections 1286.2 and 1286.6, awards are immune from judicial review. (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 12-13 [10 Cal.Rptr.2d 183, 832 P.2d 899].) As a result, the merits of the controversy are not reviewable on a petition to confirm, vacate or correct. (Id. at p. 11.) Under Moncharsh, we cannot review the arbitrator’s reasoning or the sufficiency of the evidence supporting the award. (Ibid.) Even “an error of law apparent on the face of the award that causes substantial injustice does not provide grounds for judicial review.” (Id. at p. 33.)
Christopher argues the 100-day statute of limitations period for a petition to vacate the award limits the court’s powers to rule on the petition to confirm. He asserts that because Cinel did not move to vacate the award in response to his petition to confirm within the 100-day period of section 1288, the court had no choice but to confirm the award to comply with section 1286. We reject this argument for the reason that the court had another option, namely, dismissing the groundless petition to confirm. (§ 1288.)
Young noted that former section 583 did not apply directly to a proceeding other than an action pending in superior court, and thus was not enforceable by anyone other than a judge of that court. However, Young noted the concept of diligence embodied in former section 583 had been imported “ ‘into the test of reasonable diligence in bringing a claim to resolution by arbitration . . . .’ [Citations.]” (Young v. Ross-Loos Medical Group, Inc., supra, 135 Cal.App.3d at p. 673.)
Section 1284.2 provides in relevant part that “[u]nless the arbitration agreement otherwise provides or the parties to the arbitration otherwise agree, each party to the arbitration shall pay his pro rata share of the expenses and fees of the neutral arbitrator . . . . ”
As we affirm for the substantive reason the arbitrator’s termination of the arbitration did not constitute an “award,” we need not discuss Cinel’s procedural arguments based on lack of signature or the fact the termination was not issued by the case manager.
Section 1281.4 provides in relevant part, “If a court of competent jurisdiction, whether in this State or not, has ordered arbitration of a controversy which is an issue involved in an action or proceeding pending before a court of this State, the court in which such action or proceeding is pending shall, upon motion of a party to such action or proceeding, stay the action or proceeding until an arbitration is had in accordance with the order to arbitrate or until such earlier time as the court specifies.”
Christopher cites MKJA, Inc. v. 123 Fit Franchising, LLC (2011) 191 Cal.App.4th 643 [119 Cal.Rptr.3d 634] (MKJA) for the proposition that the trial court improperly lifted the stay and set the matter for trial. MKJA is distinguishable. There, the trial court lifted the stay where arbitration was currently pending, although the arbitration had not proceeded due to one party’s inability to pay. (Id. at pp. 652-653.) MKJA found this impermissible because the arbitration was pending. (Id. at pp. 661-662.) MKJA noted that “ ‘The purpose of the statutory stay [required pursuant to section 1281.4] is to protect the jurisdiction of the arbitrator by