*1 Dist., B148291. Second Div. Two. Jan. [No. 2002.] CROWELL, RONALD Plaintiff and v. Appellant, FOUNDATION, DOWNEY Defendant COMMUNITY HOSPITAL Respondent.
Counsel Firm, The Ford Law H. Ford III and William Paul C. Cook for Plaintiff and Appellant. Ballantine, Witham,
Dewey R. Matthew M. Walsh and Karen H. Jeffrey *3 Shelton for Defendant and Respondent.
Opinion TODD, J. DOI of first This appealpresents important question impres- sion: Can to an arbitration that an arbitration agreement validly agree to to determine award review whether the award is subject law and substantial evidence? We hold that cannot supported of the court to review arbitration awards that expand jurisdiction beyond statute and affirm the provided by judgment. Background
Factual Procedural Crowell, M.D., Ronald from a professional corporation, appeals judg- ment of dismissal to an order defendant Commu- pursuant granting Downey (DCHF) Foundation’s demurrer nity without leave Hospital general amend his a declaration of as to the rights complaint. complaint sought of an arbitration which that enforceability explicitly required (1) the arbitrator make of fact and conclusions of the award findings evidence, law substantial merits supported by to court award review.
Crowell and DCHF entered into an to Provide “Agreement Hospital Services” effective Decem- Emergency January Department through ber arbitration of certain 1997. agreement required disputes (Act),1 accordance with the of the California Arbitration Act provisions that the arbitrator was written of fact and except required prepare findings conclusions of law which “shall be law and substantial evi- supported dence.” The that the decision of the arbitrator was to be final parties agreed to the binding any party except “upon petition of the arbitration court shall have authority transcript and the arbitrator’s and shall have the to vacate proceedings authority adopted seq. subsequent 1The Act been as Code of Procedure section 1280 et All has Civil unless indicated. references are to the Code of Civil Procedure otherwise award, the arbitrator’s in whole or in on the basis that award is part, or is based an error of . . . .”2 substantial evidence supported by upon In March DCHF notified Crowell to cease Crowell operations. demanded arbitration pursuant agreement. Although contending had DCHF nonetheless “to agreement writing expired, expressly arbitrate the identified in letters disputes demanding [Crowell’s arbitration] under the terms in the specified agreement.” expired Instead, initiated.
The arbitration was not after an unex- immediately of more than two Crowell filed a for declara- plained years, lapse complaint relief determination that the arbitration tory seeking forthwith, and enforceable” and that the “valid were “obligated, arbitrate in accordance their with agreement.”
DCHF demurred on the the arbitration complaint *4 was “void and agreement unenforceable as matter of law” and because relief was “not or declaratory under all the circumstances necessary proper 2The Any arbitration states: “7.11 . . . dispute Hospital between and Contractor concerning the practice any standards of medical qualifications Physician or of Contractor or of Contractor shall be referred to the Medical Staff Executive Committee for review and Committee, by determination that concerning dispute whose decision such shall be final and binding upon both the and Hospital Any dispute Hospital the Contractor. between and a Physician resulting any by Contractor from action taken Hospital concerning a Contractor Physician’s Medical membership privileges Staff and/or clinical at the Hospital shall be resolved as set forth in the Hospital’s Bylaws. Hospital agree Medical Staff and Contractor [¶] any dispute any that if other nature whatsoever arises and Hospital between Contractor concerning respective performance any their or observance of of the terms and conditions of Agreement and dispute by agreement, such cannot be resolved mutual such dispute shall by binding be submitted Contractor or Hospital by mutually agreed arbitration an arbitrator upon writing (45) Hospital forty-five days between Contractor and within Hospital’s of the be, or Contractor’s receipt, may as the case from the other of a written demand for such arbitration. proceed The arbitrations shall in accordance and with to the [¶] provision of Title 9 of Part of the (commencing III California Code of Civil Procedure statute, 1280) (the statute’), Section any ‘arbitration successor and in accordance with (1) following provision: additional proceedings arbitration shall be transcribed and the [¶] writing, arbitrator’s award shall be in shall include a findings statement of the arbitrator’s decided, fact and respect conclusions of law with to each claim and supported shall be evidence; (2) and substantial money the award of the arbitrator be for an [¶] final, specific performance binding and/or for upon shall be enforceable both statute, Hospital and provided except upon petition Contractor as in the arbitration that any party authority transcript court shall have the to review the proceedings authority and the arbitrator’s award shall have the to vacate the award, part, supported by arbitrator’s in whole or in on the basis that the award is not law; upon prevailing party substantial evidence or is based an error of shall be [¶] attorney any entitled to an award of reasonable costs and fees incurred in addition to other awarded; proceedings City relief the venue for the arbitration shall be the [¶] Downey, California.” It 1061.” that review of arbitra- argued
pursuant private [section] tion awards was limited to cases where existed to vacate or statutory grounds correct the award and that relief was “to enforce an declaratory unnecessary contract.” illegal amend,
The trial court the demurrer without sustained leave issuing to do minute order: “Defendant contends following parties agreed exist, conduct a Procedure does Code Civil Section something et arbitration with a review of the seq. guaranteed right merits, arbitration clause issue unenforceable. relief making Plaintiff is neither nor under Code of Civil ‘necessary requested proper’ Procedure 1061.” and a of dismissal of the entered
Judgment complaint subsequently notice of from that filed. timely judgment appeal
Contentions
contends that
arbitration is
matter of
binding
essentially
Appellant
contract between the
and that while sections 1286.2 and 1286.6
parties,
award,
on which a court
vacate or correct an arbitration
grounds
specify
default
control
do not
these are
which
when
merely
provisions
otherwise.
contends that the arbitration
is void
agree
Respondent
and unenforceable
a matter of
arbitra
law because
to review
jurisdiction
Act,
tion awards is conferred
which
the exclusive
provides
*5
award,
which courts are authorized to vacate or correct an
and
parties
cannot broaden review
Both
find
for their
by agreement.
support
& Blase
Heily
claims in
Court’s decision in Moncharsh v.
Supreme
183,
(1992)
(Moncharsh).
Discussion A. The Provided Court Review the Arbitration Award Agreement on the Merits. and is
Private arbitration is a matter of between agreement (Platt contract law. Inc. v. Andelson 6 Cal.4th Pacific, governed by to be 158].) 862 P.2d Arbitration are agreements to the intention of the construed like other contracts to effect give parties. (Straus v. Inc. Hollywood Hosp., North Cal.App.2d of arbitration 541].) P.2d “In cases involving scope private ‘[t]he (Moncharsh, is . . .a matter of between the agreement parties.’ [Citation.]” 3 Cal.4th supra,
Here, there is no that the to an arbitration dispute process of fact conclusions law required findings purported authorize review on merits.
B. The Parties Cannot the Trial to Review Court’s Jurisdiction Expand Arbitration Awards by Agreement. here,
Because the to the arbitration parties clearly agreed provision the issue we must decide ais narrow one: Can the parties expand scope of an judicial review arbitration award We have found no by agreement? issue, California case but in the this there is substantial Act deciding support and in cases the Act that cannot. interpreting
Moncharsh Court’s most discussion of the Supreme expansive scope review arbitration awards is contained in Moncharsh. it does not Although deal with an arbitration specifically review of the provision allowing judicial award, merits of an Moncharsh this issue. provides guidance resolving Moncharsh, Moncharsh, In an was hired law firm and attorney, for the signed agreement allocation of employment provided legal fees in the event he left the firm. The contained an arbitration clause that out “Any of this shall be provided: dispute arising Agreement arbitration under the rules of the American Arbitration Associa- alter, amend, tion. No arbitrator shall have any power modify change terms The decision of the arbitrator shall be final and agreement. Employee-attorney.” (Moncharsh, Firm binding Cal.4th firm, fn. Moncharsh left the and a subsequently arose as dispute to the allocation of fees he received from former firm clients who left the submitted firm with him. The invoked the arbitrator, favor, the matter to an who ruled in the firm’s his con- stating in the clusions award. award, Moncharsh court to and the vacate petitioned superior “
firm to confirm it. The ruled that arbitra- petitioned superior ‘[t]he tor’s of both and fact are A court findings law conclusive. questions ” cannot set aside an arbitrator’s error of no matter law how egregious.’ (Moncharsh, 8.) 3 at Cal.4th While the court an supra, p. acknowledged award, for error on the face of the no found such exception appearing (Ibid.) error. The Court of affirmed. Appeal
The Court that the Act a Supreme recognized “represents comprehensive scheme arbitration in this state. statutory regulating private [Citation.]” 736 “
(Moncharsh, 9.) 3 Cal.4th at ‘The of the law in supra, recognizing p. policy arbitration and in for their is to statute enforcement agreements providing by who wish to avoid incident to a civil action to encourage delays persons obtain an of their differences a tribunal of their own choos- adjustment (Ibid.) review of ing.’ “Expanding availability judicial [Citation.]” such decisions ‘would tend to of the arbitration agree- deprive ment of the is intended to very advantages process produce.’ [Citations.] in the arbitral thus intervention Ensuring finality requires judicial [¶] minimized.” (Id. 10.) at process p. in the The court concern that intervention strong judicial expressed minimized arbitral to ensure that the benefits of arbitration were process not lost. It 150 of the of arbitration in nearly years legal history surveyed con- California. It observed that “because an arbitrator is not ordinarily that, law, rule strained to decide to the rule of it is according general ‘The merits of the between the are not subject controversy More not review.’ courts will specifically, validity [Citations.] Further, the arbitrator’s a court not review the reasoning. [Citations.] an arbitrator’s evidence award. sufficiency supporting [Citations.]” (Moncharsh, 11.) 3 Cal.4th supra, p. statutes,
The court noted that at common in the absence early courts as courts of would set aside arbitration awards for sitting equity statute, mistakes of fact or law. After of the first in 1851 which did adoption review, the courts “concluded the for vacating permit grounds those set forth statute” a narrow were with exclusively exception “ ” “ errors the record’ and material ‘spread upon affecting ‘palpable ” (Moncharsh, 16-18.) 3 Cal.4th at point.’ supra, pp. amendments to the Act several additional 1927 provided (Moncharsh, an arbitrator’s award. 3 Cal.4th at vacating continued to hold that “The merits of the cases after the amendments are not review.” (Pacific between controversy T., Cal.2d P.2d Oil v. C. S. Ltd. Vegetable Corp. 441].) In v. Blair Holdings Corp. Cal.App.2d Crofoot 156], amendments to the P.2d the court concluded that after Act, to arbitrate were statute governed exclusively by written agreements (Ibid.) a common arbitration to and there was “no field for law operate.” common and statutory After differences between law noting statute, the concluded that of the 1927 “by Legislature adoption Crowfoot all-inclusive scheme applicable intended adopt comprehensive arbitrate, and that in such cases the doctrines to all written agreements (Id. a common arbitration were abolished.” applicable *7 Moncharsh concluded that the bases for vacating correcting arbitration awards are exclusive. review Permitting by expand the benefits of arbitration and the of the would undermine goals Act to reduce The Act delay resolving clearly expense disputes. arbitration awards to those cases in which judicial review private “limit[s] (Moncharsh, there exists vacate or correct award.” statutory ground 27-28.) 3 Cal.4th at pp. Arbitration Act California The Act also that limitation on intended suggests by Sections 1286.2 and 1286.6 set forth Legislature. grounds vacating awards. Former section 1286.2 correcting provided: “Subject 1286.4, Section shall vacate award if the court determines (a) of the The award was any following: fraud or procured by corruption, [¶] (b) other undue means. There was of the arbitrators. any corruption [¶] [¶] (c) The of the were rights misconduct of a party substantially prejudiced by (d) neutral arbitrator. The arbitrators exceeded their and the powers [¶] cannot award be corrected without the merits of the decision affecting upon (e) submitted. were controversy rights party substantially [¶] the refusal of the by arbitrators to prejudiced postpone hearing upon sufficient cause therefore or shown the refusal of the arbitrators to being by hear evidence to the material or other conduct of the arbitra- controversy (f) tors title. contrary An arbitrator provisions making [¶] award was in Section disqualification upon grounds specified but failed 1281.9 demand to himself or upon receipt timely disqualify (Stats. herself as ch. required provision.” § [amend- ments to 1286.2 enacted were in 2001 which do not bear on our discus- § sion].)
Section 1286.6 that the court shall correct an if award it deter- provides “(a) mines: There was an evident miscalculation of or an evident figures mistake in the or referred to in the description any person, thing property award; (b) The arbitrators exceeded their but the award powers [¶] corrected without the merits of the decision affecting upon controversy submitted; form, (c) or The award is in a matter of imperfect [¶] the merits of the affecting controversy.”
None of the an award that a vacating correcting suggests court can review the merits of an award for errors of law or lack of adequate evidence. supporting is further did not intend that an arbitration Legislature
There evidence merits, could be on its even agreement. reviewed parties’ *8 738 1296, 9.2,
Section under title headed “Public Construction Contract Arbitra- tion,” “The ato construction contract provides: parties with public agency in agree in arbitration to expressly writing any resolve a dispute contract, to the relating arbitrator’s award shall be law and supported by shall, substantial evidence. If the so a court provides, 1286.4, Section vacate the if after review of the award it determines either that the award is not by substantial evidence or that it is supported Here, based on an error of law.” Legislature authorized the specifically to a review of the merits agree of a construction contract arbitra- tion. No such review is authorized for other forms of arbitration in the Act. This intent that suggests legislative cannot to a review on agree the merits. If that were not the case section (See 1296 would be superfluous. Leeth v. Workers’ Bd. 186 Comp. Appeals Cal.App.3d ‘a statute should be Cal.Rptr. construed so that effect is given 468] [“ all its no provisions, leaving part void or superfluous inoperative, insig- ”].) nificant’
Furthermore, with respect arbitration and the scope proce- dures to the actual has applicable Legislature explicitly that the can for provided agree themselves on the of arbitra- powers (§ 1282), tors (§ 1282.2), the conduct of arbitration proceedings discovery 1283.1, (§ (b)), subd. and time (§ 1283.8). an award making to vacate a statutory grounds award under the private Act, California, Uniform Arbitration which has not been adopted are. similar to those contained in section 1286.2. Most states considering Uniform Arbitration Act have concluded that the specified grounds (Moncharsh, award are exclusive. vacating 3 Cal.4th at supra, invites us to consider v. Appellant Lapine Technology Corp. Kyocera Corp.
(9th 1997) Cir. F.3d Ninth Circuit Court of case he Appeals argues We decline to do so. decided directly point. Lapine was divided of the Ninth Circuit under the Federal Arbitration Act sharply panel (FAA), which allows broader review of arbitration awards than the FAA, Act. Under the a federal court vacate or an award if it is modify “ ” “ ” irrational,’ law,’ exhibits ‘manifest or other- ‘completely disregard wise fits within other set forth title 9 of the United States Code. Moreover, (Lapine, 130 F.3d there is disagreement among the federal circuits as to whether can to a of arbitration agree 884; awards on the merits. such review: 130 F.3d (Favoring Lapine, supra, (5th 1995) v. MCI Telecommunications Cir. Gateway Technologies Corp. 993, 996, 997; F.3d such disfavoring review: UHC Co. v. Management 992; (8th 1998) Sciences Cir. F.3d Computer Corp. Bowen v. Amoco (10th 2001) Co. Cir. 254 F.3d Pipeline 934 [“Although [Supreme] *9 Court has contract the rules under which emphasized parties ‘specify by conducted,’ [citation], . . . arbitration will be it has never said are parties free to interfere with the see also judicial process.”]; Chicago Typographical (7th Union v. Chicago 1991) Sun-Times Cir. F.2d 1505 [“[i]f want, can contract for they arbitration parties review appellate panel the arbitrator’s award. But cannot contract for review of that they judicial award; contract”].) federal cannot be created jurisdiction
Old Ins. Republic Co. v. St. Paul Fire & Marine Ins. Co. is instructive on the Cal.App.4th Cal.Rptr.2d question parties’ 50] of the ability trial court to expand jurisdiction review arbitration There, awards. two insurance to arbitrate a agreed companies controversy. The agreement the arbitrator to enter of fact and required findings conclu- sions of review of which was to be governed by of the provisions Act to review of awards. The relating vacating further agreement provided that the award would be treated aas judgment court for all superior and the whom the purposes party against was rendered could judgment seek words, review of the of fact and findings conclusions of law. In other trial court could review award on but the statutory grounds appellate court could review its merits. Moncharsh, the court in
Citing Old refused to Republic provide to which the had “Since one parties agreed. of the reasons for this rule is that ‘it [citation], vindicates the intentions of the parties’ issue arises whether herein, intention of the contrary in the parties, expressed stipulation (Old overrides rule.” general Ins. Co. v. St. Paul Fire & Marine Republic Co., Ins. The court commented that Cal.App.4th p. “[t]here is . . . nothing which to a precludes contractual arbitration from that the arbitration agreeing at (Id. rules governed by any see fit.” 637.) But it concluded that cannot their stipulation “[t]he confer this court jurisdiction (Id. where none exists.” upon
Because the set forth the Legislature clearly trial court’s jurisdiction review arbitration awards when specified grounds correct- vacating 1286.6, awards in sections ing 1286.2 we hold that the cannot contract to expand jurisdiction include a review on the merits. C. The Trial Court Acted Its Within Discretion Denying Appellant
Leave to Amend His Complaint. that the trial court argues refused to allow him
Appellant erroneously to amend the to sever the unenforceable of the arbitra- complaint provisions tion There is no indication in the record that a to amend agreement. request us, no error. The before we find
was ever made. If this issue is properly so of the arbitration award was review of merits To do so that it could not be severed. central to the agreement create an to which neither agreed. would be to new entirely party “ 1 entire or its language “Whether a contract is depends upon separable matter, of construction to be determined by and this is one question ’ ” (Armendariz v. Foun- the court to the intention of the according parties.” Services, 83, 122 Health Inc. 24 Cal.4th Psychcare dation here 669].) 6 P.3d to the contract and fact. Without that arbitration with review of errors contracts results. reform a different arbitration process provision, “[C]ourts *10 [citation], and not for the the have made a mistake pur- where only parties (Kolani (1998) 64 an contract.” v. Gluska saving illegal Cal.App.4th pose 402, 257].)
Disposition affirmed. The is judgment
Boren, J.,P. concurred.
NOTT, dissent. I respectfully J. determined that review following voluntary has majority judicial of Civil Procedure sections 1286.2
arbitration is limited Code strictly by 1286.6,1 the the of the I Under disagree. agreement parties. irrespective here, to have the it is that the consent facts my opinion parties presented and for sufficiency arbitration award for errors of law trial court review an evidence. free to clear I am not that the are
I wish to first make advocating parties the fundamental over jurisdiction subject consent to review where judicial the not exist. Nor can matter and the would otherwise Further, I court to immediate review. over the trial appellate “leapfrog” be had where the parties that review judicial am not arguing expanded is and the review are of unequal bargaining power in order to have meaningful basis. Lastly, nonnegotiable presented record, so able to an must be provide adequate judicial oversight, as a contest. swearing on review is not presented that hearing transac- here. Before us is arm’s-length of those exist None problems fact, In a doctor and a hospital. tion between two sophisticated parties, noted, to the Code of Civil Procedure. all references are 1Unless otherwise in the party presumably (Dr. Crowell) weaker bargaining one position Next, to enforce the attempting to have the provision. parties agreed recorded and hearing transcribed. The arbitrator was required prepare detailed fact findings and conclusions of The award law. was to be law and substantial evidence. Judicial supported to be trial court. That review was to be based on sufficiency evidence and/or errors standard often a trial court in on a ruling employed petition administrative mandamus. Finally, as the majority recognizes, California has personal over Dr. jurisdiction Crowell Commu- Downey (DCHF) Health Foundation and also nity has matter jurisdiction over fact, decision, In as a dispute. result of the majority the entire arbitration nullified, has been agreement and the will have to litigate in trial concluded, court. Ironically, after trial is Dr. Crowell and DCHF will then contracted, obtain on the same appeal review for which type i.e., a review based on errors of of the evidence. sufficiency main difference is that now trial will be in front of a judge jury arbitrator, public instead of before an expense, A second private expense. difference is the arbitration by abrogating in its entirety, has eliminated majority the provision wherein the parties agreed *11 prevailing would entitled to party attorney fees and costs.
The majority states that the arbitration the for parties bargained is unenforceable because it provides heightened judicial review that is not allowed by sections 1286.2 and 1286.6. The holds that majority judicial review under those sections is jurisdictional, and the are free not to the thereof. enlarge scope view, C.,
In my decision is majority incorrect. As I will explain part has majority confused the of lack concept jurisdiction of fundamental (which this case does not involve) with the acting in excess concept jurisdiction. Under (under the latter concept, parties may appropriate circumstances) to have trial court agree act its beyond statutory authority. If so are from agree, they later That is estopped exactly complaining. what occurred here. The consented to as a review heightened judicial consideration contract. Neither now executing performing challenge of the trial to its ability authority. court act beyond Further, the to decision will from majority discourage agreeing people arbitrate, Most which is the policy. exact California’s opposite public arbitration economically, expedi- are conducted proceedings fairly, However, one of the field. by arbitrators who are in their tiously experts arbitration binding worst an can be in is to recommend positions attorney (and client an unexplainable to to a angry) and then have bewildered explain an stories abound where that cannot be remedied. Anecdotal result adverse I or law.2 the facts Although has made an contrary arbitrator bet that there are I am willing no facts to back up, statistical because not into arbitration do annually go hundreds of cases literally is totally result that arbitrary are fearful of receiving attorneys final, net of review.3 safety without followed, not want arbitration with those who do
If were my position However, those have to for it. who not opt would expanded do so. unwilling arbitrate—may otherwise do wish it—and would
Discussion statutes A. The state court authority resolving no California
There is evidently published A consideration of applicable provisions issue on precise appeal. Section 1281 (the Act) is thus order. Arbitration Act California an existing to submit to arbitration that: “A written agreement provides valid, enforceable thereafter controversy arising or a controversy irrevocable, the revocation any as exist for save such upon the terms of such a written agreement 1281 does limit contract.” Section arbitration. and reflects policy supportive of an 1281.2, mandates compel which Section three to the agreement, provides on of a party arbitration agreement petition 1281.2, any of which (a), (b) (c)), suggest & none (§ subds. exceptions court review to substantive ability agree restriction parties’ *12 award. correcting vacating for 1286.2 and 1286.6 provide
Sections awards, “Subject Former section 1286.2 provided: respectively. 1286.4, if court determines the the the court shall vacate to Section or fraud (a) by corruption, The award was procured of the following: any [¶] the arbitrators. in of (b) any There was corruption [¶] other undue means. [¶] misconduct of of were (c) substantially prejudiced The the party rights 2Rosenthal, 2001) Law. (Aug. Cal. 40. Scammed? for one having parties pay select and the argue that review can obtained 3Some However, act, in squarely that flies solution appellate as an function. to in or more arbitrators wit, already economy. paid parties The will have the of to goals of one of the face hourly for or high to rate one require pay them arbitrator. To then the services the litigants. any the wealthiest of is solution for but more arbitrators no arbitrator, (d) neutral The arbitrators exceeded their and the powers [¶] award cannot corrected without the the affecting merits of decision upon submitted, the . controversy (e) (f) (Stats. . . . . . ch. [¶] [¶] 4.) Section 1286.6 is similar in format. Both § sections mandate that if one established, the statutory grounds court must set the award aside. Although neither section or specifically vacating provides correcting award because it is erroneous as matter of substan- unsupported by evidence, tial neither do that they state are statutory grounds exclusive or that cannot additional agree grounds. these statutes Nothing suggests that usual right to contract terms of an arbitration in which are willing has been participate abrogated.4
The California (the Law Revision Commission) Commission supports In interpretation. Commission studied whether the arbi- tration scheme should be revised. The Commission stated: “Nothing in the Statute the permissible scope courts. California defines have, however, Numerous court rulings basic developed following prin- which set the limits for ciples any review: ... Merits of an [¶] [¶] arbitration award either on fact or law not be questions reviewed except provided for in the statute in the absence some clause in limiting (Recommendation arbitration agreement.” to Arbi- Study Relating (Dec. 1960) tration G-53, 3 Cal. Law Revision Com. Rep. italics added.)5 The Commission thus concluded that Act nothing defined the review, of judicial scope that implicitly leaving question the parties.
B. Case law
1. Moncharsh California leading case of consensual arbitration is subject Moncharsh, 3 Cal.4th 1. While Moncharsh did not deal with expressly here, the issue involved that is not to that on that nothing bearing it said say below, As issue. discussed emphasized binding central importance arbitration in realized the benefit their seeing bargain. final, reason that the arbitration in and not Moncharsh was conclusive it be so.” judicial review was because “the *13 4Trial arbitration perform courts are well able to the review of function of substantive Legislature public awards. The do with specifically has authorized them to so connection 1296.) (§ construction contract arbitrations. Heily P.2d 5Moncharsh v. & Blase 899] 3 Cal.4th 24 [10 (Moncharsh), discussed, language quoted that is post, approvingly very will the which be used here. “ could be
(Id. 10.) ‘specifically at Moncharsh stated that arbitrators p. ” added) and (ibid., rules law’ italics conformity to act in with required “ ‘in to the indicated that review was limited directly statutory grounds only ” (Id. 25.) at in the arbitration agreement.’ p. absence of some clause limiting if with the arbitration that confronted These statements strongly suggest us, the ability would before the Court Supreme support parties’ agreement of the merits the award. trial court review contractually agree have been set forth in majority The facts Moncharsh underlying I them here. so will repeat opinion, California, of arbitration in history reviewing years legal
After decision is not generally held that “an arbitrator’s Court Supreme on or not error for errors of fact or whether such appears reviewable (Mon and causes substantial injustice parties.” face of the award noted, however, charsh, added.) at 3 Cal.4th italics The supra, p. (Ibid.) . . .” this rule . that there were “limited general exceptions tethered to the closely specific Court’s conclusion was Supreme the mutual enforcing and to its objective arbitration before it provision in the It arbitration clause included said: “The intentions parties. the arbitrator’s case states that agreement specifically employment to this action thus be both and final. binding decision would Even had there been the arbitrator’s decision would final. clearly intended intent, however, rule that general no such expression be both the arbitrator’s decision will arbitration that agree private impliedly (Moncharsh, 9.) “In cases involving 3 Cal.4th final.” binding p. is . . of arbitration . matter private scope ‘[t]he “Thus, an (Id. . . . .” between parties’ [citation] that it be because the so. decision is final conclusive is final and courts binding, simply that an arbitrator’s decision By ensuring (Id. at the benefit of their bargain.” assure that the receive an arbitration that provision specifi- Moncharsh therefore based on binding, was final that the arbitrator’s award cally provided is to enforce the agreement of arbitration fundamental that goal principle of the parties. like
Thus, deal an arbitration did not with Moncharsh purport award arbitrator’s one here in the parties expressly agreed which court could evidence and law and must supported fact, excluded be the case. In Moncharsh specifically to assure that to *14 consideration of such a from its provision analysis. As men- previously “ tioned, the Supreme Court stated: limiting absence some clause ‘[i]n of award, in the arbitration the merits of the on agreement, either of questions fact or of not be reviewed as in the statute.’ except provided (Moncharsh, 25, at supra, added.) Cal.4th italics p. [Citation.]” Moncharsh is not therefore determinative of issue before us.
2. Additional case law Several California cases have observed in that dictum can contrac- tually agree to of court of scope review an arbitration award. In Pacific
&Gas Electric Co. v. Court Superior Cal.App.4th 295], Devices, Cal.Rptr.2d on other disapproved in Advanced Micro 362, v. Inc. Intel Corp. 9 Cal.4th 885 P.2d 994], the Third District Court of writ Appeal granted petition mandate the trial court to commanding rescind its order an arbitra- vacating tion award. The arbitration in that case provision that the provided towas determined accordance with the contract involved and be binding It also parties. required arbitrator a statement of prepare decision. It did not address the question review scope arbitrator’s award. The Court of that stated to a Appeal “[t]he contract draft an arbitration so as to afford provision review of judicial Court, of law.” questions (Pacific Gas & Electric Co. v. at Superior supra, p. 588.) But it concluded that merely an arbitrator must state specifying reasons for the award did not create inference that the compelling purpose of the statement was to afford a basis for broadened review. range judicial (Id. at in this was the if Implicit analysis suggestion made clear that desired a different form of (from review 1286.2), that set forth section such would agreement Court, be valid and enforceable. (Pacific Gas & Electric Co. Superior v. at supra, Devices,
In her dissenting in Advanced Micro Inc. v. Intel opinion Corp., 9 Cal.4th “The footnote Justice Kennard observed that page can agreement the standard of court review an arbitrator’s vary award, same just thought can other of arbitration.”6 That vary aspects stated, in the the court expressed 376 where majority opinion page “arbitrators, the submission unless expressly restricted con- of their the scope substantial discretion to determine remedies, their tractual and . . to fashion . authority (Italics added.) must be and deferential.” awards narrow correspondingly majority opinion. in the or dealt with proposition 6This was not the basis her dissent *15 746 court cases that can agree
Numerous other imply expanded in v. Blair Holdings of an arbitration award. For example, review Crofoot 156], 186 P.2d cited with approval 119 Corp. Cal.App.2d [260 Moncharsh, stated that “it must be held in times in the court several in the merits of the agreement, clause the arbitration limiting absence some of award, as of fact or of not reviewed except either questions omitted; added, see also (Italics italics in statute.” provided original (1998) 67 1270 v. Prudential Ins. Co. Siegel Cal.App.4th 125].) 726]; 343 Hohn v. Hohn 229 Cal.Rptr. Cal.App.2d us, court the exact before several no state has decided issue Although Circuit, the Ninth have decided including federal circuit courts appeal, (FAA). (Lapine Technology the Federal Arbitration Act under question (9th 1997) v. Cir. 130 F.3d 888 Kyocera Corp. (Lapine) Corp. [validat- for court of fact findings an arbitration review provision ing providing law]; v. MCI Telecommunications Gateway Technologies conclusions 991.) 993, 996, (5th While of awards under 1995) Cir. 64 F.3d review Corp. 8Act, FAA broader than under the the logic supporting is somewhat under FAA is nonetheless to contract for wider review parties’ right instructive. court could an arbitration clause that the district involved
Lapine provided vacate, or correct an arbitration on the only grounds award modify FAA, but if the award based on erroneous conclu- in the also provided or of fact. The court characterized sions law unsupported findings as court of an arbitration agree- issue before it follows: “Is federal review limited in can the court ment to the set forth the FAA or necessarily (Lapine, supra, if the have so agreed?” apply greater scrutiny, 887.) held that it must honor F.3d at A divided p. panel appellate (Id. 888.) “Because these parties contractually parties. review, contractual their provision supplements expand de of issues of allows for novo review FAA’s default standard review and (Id. 889.) With award.” at p. respect law embodied the arbitration of arbitration that its conclusion undermined the purposes argument resolution, “And Lapine provide speedy inexpensive responded: dispute than the if of law seems less efficient substantial evidence error review, that not cause much normal of arbitration should pause scope because: ‘it reduces the burden on Court below nevertheless [¶] (See Lapine Management Computer v. UHC Co. things 7Not all federal circuits see does. 1998) Corp. (8th Sciences F.3d Cir. “ FAA, modify ‘completely if it is court vacate or 8Under federal ” “ ” irrational,’ law,’ grounds set disregard fits within other exhibits ‘manifest or otherwise (Lapine, supra, 130 F.3d at forth in United Code section 10 11. States which would exist in the absence of any for arbitration.’ [Cita- (Ibid.) held that the appellate agreement must parties’ tion.]” honored because “the of the FAA tois ensure enforcement primary purpose arbitrate, agreements accordance with the private agreements’ “ *16 (Id. 888.) consent, terms.” at ‘Arbitration under the Act a matter p. is of not coercion, are free to structure their generally arbitration agree- ” ments as see fit.’ they (Ibid., Volt v. citing Sciences Leland Jr. Info. Stanford 1255-1256, U. U.S. 478-479 S.Ct. 103 L.Ed.2d 488].)
The cites majority Old Ins. Co. St. Republic v. Paul Fire & Marine Ins. Co. (1996) 45 (Old Cal.App.4th as Republic) being 50] I pertinent. disagree.
In Old two Republic, insurance entered companies arbi- stipulation tration. The the arbitrator to stipulation required enter of fact and findings conclusions of review of which was to be governed the of provisions the Act relating to of the vacating awards. When court entered a the agreement judgment, provided would treated as a of judgment the court for superior all and the purposes against whom the party judgment was rendered could seek review of the of fact and of findings conclusions words, law. In other the trial court could review the grounds for the vacating but the court could review its merits. appellate Moncharsh, Citing Old stated of Republic the rule that merits general the continued, however, the were not to controversy It judicial review. that: “Since one of the reasons for this rule is that ‘it the vindicates [citation], intentions of the the a contrary issue arises whether parties’ herein, intention of the in the parties, the overrides expressed stipulation (Old general rule.” at While Republic, supra, Cal.App.4th p. is, course, contractual to a nothing which precludes parties “[t]here arbitration from that the rules by any arbitration agreeing governed (id. 637), see fit. . .” they at Old held that “the Court Republic Appeal p. accordance reviews Because the trial court entered in judgments. judgment . . . with the for us to review. there is stipulation parties, nothing [¶] cut out the ... to By terms of their attempted stipulation, considering middleman: the trial him from agreed to judge. They preclude error, whether was based on legal provided decision [the arbitrator’s] of their not The effect would ‘Go’ and head to this court. pass directly reference, general were we to it as a stipulation, interpret stipulation which, in a function would be to to this court duty perform place upon honored instance, feel we trial Although the first judge. assigned task we are more this than the parties’ capable performing assumption to in the first place, court constitutionally perform duty assigned share, to we we decline necessarily respectfully accept do assumption (Id. on us.” favor their seeks to stipulation impose Old was not that Republic in shortcoming the arbitrator’s award than provided review of parties agreed greater Act, but that agree jurisdiction appellate they sought that the the trial court. Old concluded only sidestep Republic none existed. not confer on Court where could jurisdiction Appeal 639.) That is therefore not (Old case Republic, supra, Cal.App.4th issue the present appeal. pertinent its C. the court act excess consent
statutory authority
noted,
a
often eludes
As Professor Witkin has
the word “jurisdiction”
“
However,
‘the
it is
defined as
hear
definition.
broadly
power
precise
”
Witkin,
(4th
(2
1996)
a
ed.
Juris-
determine’
matter.
Cal. Procedure
legal
diction,
1,
has
said mean “an entire
Lack of
been
jurisdiction
§
case,
to hear
determine the
an absence of
over
authority
absence of
or
power
(Abelleira
or the
v. District Court Appeal
matter
subject
parties.”
of
280,
942,
715].)
132 A.L.R.
(1941) 17 Cal.2d
288
P.2d
[109
over
In
it is
California has
undisputed
jurisdiction
the present appeal,
of
here there is “no absence
Ergo,
these
and the
matter.
consent to have
thus becomes whether
may
issue
authority.”
in
different from that prescribed
the trial court
standard
apply
so,
do
1286.2 and 1286.6.1 believe under
facts
sections
present
no
in both
from criminal
theory
as this situation is
different
practice
court
what would
where the
to have the
agree
impose
proceedings
(In
(1967)
re
In so holding, in Jones followed the rule set out appellate panel our “When, here, Court Supreme the court has jurisdiction Griffin subject, who party seeks consents to action the court’s beyond power as defined statute or decisional rule estopped complain action ensuing in excess of jurisdiction.” (Griffin, 67 Cal.2d at *18 347.)
The same rule in civil cases. applies Cole involved eminent domain A returned a proceedings. jury verdict on fair market value. Before any tried, issues were remaining before findings were made or a judgment entered, was the filed a plaintiff notice of intention to move for a trial. new The court the granted motion. The defendants and then dismissed appealed the appeal. plaintiff and defendants then entered a into stipulation the matter setting for retrial. On on an unfavorable receiving judgment retrial, the defendants One of that the retrial the was appealed. should be declared void because the trial court granted improperly motion for new trial. In the defendants’ premature criticizing argu- roundly “ ment, said, our cannot be Court ‘Jurisdiction of the matter Supreme subject conferred but to a court’s one who or consents estoppel; juris- invokes the court diction is to it other that than estopped question any ground (Cole, lacks 28 Cal.2d jurisdiction supra, matter.’ [Citations.]” 515.) at p. consent be
The lesson is that cannot bestowed fundamental jurisdiction circumstances, However, or consent estoppel or estoppel. appropriate 750 (Griffin, a act that is in excess of its statutory authority. court’s support has
supra, 67 Cal.2d at The rationale is that a who received p. party of his or her should not be to “trifle with courts.” bargain benefit allowed Cole, 348; 515; v. People Nguyen at 28 Cal.2d at (Griffin, supra, p. 490].) 122-123 Cal.App.4th
I to a court act in excess of that not all have recognize stipulations will be tolerated. Each must stipulation analyzed statutory authority on the but also on only terms of what the is impact parties, public policy considerations, (Ellis, supra, courts. and on the functioning Jones, 343-344; For supra, Cal.App.3d Cal.App.3d pp. it is a withstand scrutiny doubtful would public policy example, stipulation to to a if a defendant a were charged attempt guilty with crime plead the facts his remotely different crime that was not connected with supporting Also, (Soriano, 784-785.) arrest. at pp. her Cal.App.4th to banishment condition of probation defendant who consented since banishment forbidden allowed condition on challenge appeal, (People v. Blakeman (1959) 170 by public policy. Cal.App.2d 202].) P.2d would
Similarly, inappropriate stipulate a case normal standards of court act or decide in a manner inconsistent with i.e., conduct, a coin or case deciding “by studying flipping entrails of a dead fowl.”9 matter, are not We have
In the current those concerns present. sophisti- in arbitration that cated same procedures who to be in a trial: that were would be entitled proceedings fact; recorded; trier of and conclusions of law fact findings law; of the award for errors award based on facts of the evidence. sufficiency
I the entered into an arm’s-length agree- conclude that parties act excess of its statutory authority by ment to have the trial court in I for and of the evidence. sufficiency the award errors law reviewing the make it for no substantial that would argument inappropriate perceive to the the The would parties. trial court act in accord with wishes review, and the intelligent from which to make an have before a transcript in administrative mandamus is same used many standard the main burden of work The benefit from having would public proceedings. rather than using an arbitrator at expense, public by private performed Lapine, supra, page concurrence in F.3d 891. quote Judge 9A from Kozinski’s to court. The review be trial court for performed by errors law and of the evidence would sufficiency (and take undoubtedly less time thus if than the matter were public expense) tried the court. originally Therefore, Dr. Crowell executed and worked under the contract. DCHF has received a benefit. DCHF should thus be from estopped challenging trial to act stated, court’s in excess of ability its I As have authority. analysis case authorities relied on do majority persuade However, section, me otherwise. before I leave a comment relative section 1296 is in order.
Section deals with exclusively construction public contracts. At the time that section in was enacted numerous of the Act provisions were added and/or amended. Section 1296 states that the to a parties public construction contract may agree writing that an provide arbitrator’s evidence, award must substantial supported by that the trial court may review award determine whether that so. makes the if majority valid point wished the Legislature same
rule to it could apply private amended parties, simply sections 1286.2 in a 1286.6 similar fashion at the same time it enacted section However, true, 1296. even if that resolved, the issue is not necessarily First, several reasons. there is nothing sections 1286.2 and 1286.6 or the Act which prohibits from to an parties agreeing form expanded review.
Second, 1286.6, like sections 1286.2 and section 1296 do has nothing Thus, with fundamental jurisdiction. intent is irrelevant legislative of the same I application that have described principles estoppel above. consented to have trial court act in excess of its statutory and each received a benefit from that authority, Neither can now agreement. complain.
Third, the standard of review under section is the same into case. present Fourth, from a I at a to understand pure public standpoint, am loss policy logic why heightened review should allowed sophisti- cated in a contract and not allowed for sophisticated public setting ain contract private setting.
D. The consensual arbitration purpose of *20 decision,
I conclude of by majority will the impact re-emphasizing of this dissent. that I addressed at the something briefly beginning 752 California, its has a in lengthy history having arbitration
Contractual 1851, when the first arbitration statute was as early roots (Moncharsh, 3 has indi- Legislature Cal.4th adopted. in of arbitration as a speedy relatively a favor policy cated strong public (Madden resolution. v. Kaiser Foundation means of dispute inexpensive 882, 699, P.2d (1976) 17 706-707 552 Cal.Rptr. Cal.3d Hospitals [131 is to arbitration in 1178].) “The of the contractual promote purpose [Act] as a more and less means policy, expeditious expensive accordance with court.” v. (Hightower than in resolving by litigation Superior of disputes 1415, 209].) “The (2001) 1431 Cal.Rptr.2d Court 86 Cal.App.4th [104 and in agreements by arbitration recognizing providing of policy is to who wish to avoid encourage persons statute for their enforcement to a action to obtain an their differences adjustment incident civil delays (Utah Const. Co. v. Pac. Ry. tribunal their own Western choosing.” a by 156, 631].) Cal. 159 P. Arbitration has also been (1916) Co. 174 [162 (See its court dockets. Sígala because of curative crowded favored impact 661, (1993) 15 671 v. Anaheim School Dist. City Cal.App.4th Cal.Rptr.2d [19 arbitration].) [discussing judicial 38] is the freedom to contract for
At the core of binding parties’ rules their forum to pursuant choosing. resolution disputes arbitration cannot occur because it agreement, binding Absent the parties’ including the decision to waive fundamental constitutional rights, involves Womancare, 396, (1985) (Blanton to v. Inc. 38 Cal.3d trial right jury. 645, 151, 109].) A.L.R.4th Private arbi- 696 P.2d Cal.Rptr. [212 between the and is governed by is matter of agreement tration (Platt law. Inc. Andelson 6 Cal.4th Pacific, contract v. 158].) are to be construed agreements 862 P.2d Arbitration (Straus to to the intention of the v.
like other contracts effect give parties. P.2d Inc. Hollywood North Hosp., Cal.App.2d 541].) Act DCHF to arbitrate their pursuant
Crowell and disputes law and substantial that the award was evidence supported by except of the and reviewable ensure correctness award. Invalidat- behind the Act legislative policy frustrates ing leads of all beneficial of arbitration. It worst undermines the purposes and, than has been thwarted rather intent the parties worlds. express time-consuming most costly aspects litigation having arbitrator with the trial court merely providing oversight resolved function, and tried in court. Moncharsh litigated the case will now fully took pains paramount importance parties’ great emphasize *21 contractual intention arbitration. Yet here the regarding unambigu- parties’ ous intent tenet that and central arbitration is disregarded, contractual construct has been stifled. parties “ ‘[arbitrators,
Arbitration is not without risks unless its because specifi- act with their cally conformity rules of base decision required ” (Moncharsh, broad and 3 Cal.4th upon justice principles equity.’ In recent years, arbitration has become business. Arbitrators are big for their There if not the paid services. exists handsomely perception, risk, actual arbitrators become biased favor of and large law firms able to with an them volume of business. Given provide ongoing this risk and the fear arbitrator’s broad some arbitrat- authority, parties may to obtain the ing benefits of and reduced without some speed expense assurance that benefits not be obtained at the of a these will price capricious award, arbitrator’s law or That is evidence. what unsupported precisely here The sought accomplish by agreement. greater flexibility to structure given all of arbitration to meet their individu- aspects concerns, alized needs and likelihood that arbitration will be greater selected as the resolution mechanism of choice. dispute the arbitration here “the
Invalidating throwing amounts baby out with bathwater.” A review the merits the trial court does add some cost and It expense resolution. also consumes some dispute additional time the court and and method prevents cheapest quickest However, those are not arbitrating. sufficient reasons to reject process entirely. are forced court a far now into full more litigation, and expensive to by Crowell time-consuming process. procedure DCHF, while not the is far most expeditious inexpensive less time than costly having conservative of court matter quicker, court. fully litigated in above,
For all of the reasons I reverse the judgment would expressed trial remand matter overrule the with instructions to demurrer.