For nearly 20 years, California case law has formally embraced the
proposition that private arbitration awards entered in accordance with the
California Arbitration Act, see, Code of Civil Procedure section 1280, et seq. -
even ones which were improvidently ruled upon and inconsistent with
California law, will not be the subject of judicial review.
This rule arises from the California Supreme Court decision in Moncharsh
v. Heily & Blase (1992) 3Ca1.4th 1 ("Moncharsh"). In Moncharsh, a case
involving an arbitration award arising from an employment dispute between a
law firm and a former associate of that law firm, the California Supreme Court
reviewed the history of the California Arbitration Act and held:
"an arbitrator's decision is not generally reviewable for errors of
fact or law, whether or not such error appears on the face of the
award and causes substantial injustice to the parties."
The case law which has been created since Moncharsh has largely adhered to
that rule. See, Hall v. Superior Court (1993) 18 Cal.App.4th 427 and Cable
Connection, Inc. v. DIRECTV,Inc. (2008)44 Ca1.4th1334.
This has meant that arbitration awards, even ones with glaring errors on
their face, are not subject to judicial scrutiny unless one of the limited statutory
exceptions permitting judicial review' is found to apply. The exceptions
permitting judicial scrutiny, are generally set forth in Code of Civil Procedure
section 1286.2which provides as follows:
"(a) Subject to Section 1286.4,the court shall vacate the award if the
court determines any of the following:
(1) The award was procured by corruption, fraud or other undue
(2)There was corruption in any of the arbitrators.
(3) The rights of the party were substantially prejudiced by
misconduct of a neutral arbitrator.
(4) The arbitrators exceeded their powers and the award cannot be
corrected. without affecting the merits of the decision upon the
(5) The rights of the party were substantially prejudiced by the
refusal of the arbitrators to postpone the hearing upon sufficient
cause being shown therefor or by the refusal of the arbitrators to
hear evidence material to the controversy or by other conduct of
the arbitrators contrary to the provisions of this title.
(6) An arbitrator making the award either: (A) failed to disclose
'within the time required for disclosure a ground for
disqualification of which the arbitrator was then aware; or (B)was
subject to disqualification upon grounds specified in Section
1281.91 but failed upon receipt of timely demand to disqualify
himself or herself as required by that provision. However, this
subdivision does not apply to arbitration proceedings conducted
under a collective bargaining agreement between employers and
employees or between their respective representatives."
As set forth above, the. exceptions to the rule generally surround instances of
fraud, the arbitrator exceeding his or her powers or the refusal to consider
evidence and have been construed narrowly by the courts. However, in the
recent decision in Burlage v. Superior Court (2009)WL 3358169 ("Burlage"), the
California Court of Appeal, Second District, ruled that the exception found in
Code of Civil Procedure section 1286.2(5) applied where the arbitrator had
wrongfully granted a motion in limine to preclude the introduction of evidence.
In Burlage, a case involving the sale of a single family home in a gated
community adjacent to a country club, the purchasers sued the seller for fraud
arising from the fact that a portion of the lot (including a portion of a swimming
pool) encroached upon land owned by the country club. The matter went to
binding arbitration before JAMS. Two years after the purchase, and before the
arbitration, the title company paid the country club $10,950in exchange for a lot
line adjustment that gave the plaintiff purchasers clear title to the encroaching
land. Prior to the commencement of the arbitration, the plaintiff purchasers
moved to preclude admission of any evidence concerning the lot line adjustment
agreement arguing that damages must be measured from the date escrow closed.
The arbitrator granted the motion in limine.
About the Authors: Edward F. Morrison, Jr. is the founding partner and Brett C.
Drouet is a partner of The Morrison Law Group, a professional corporation.
Their biographies can be viewed at www.morrisonlawgroup.com.
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