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The Morrison Law Journal
October 2009
Volume IV, Edition 10

A Ray Of Hope Or Just A Specific Fact Pattern?
Court Of Appeal Overturns Arbitration Award On The BasisThat
The Arbitrator Refused To Consider Evidence Proffered By The Losing Party

By: Edward F. Morrison, Jr., Esq.
Brett C. Drouet, Esq.

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
controversy submitted.
(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.


At arbitration, the plaintiff purchasers put on evidence of the cost of
having to move the swimming pool (which had been resolved by way of the lot
line adjustment) and for diminution in fair market value due to the inaccurate
description of the lot (which, again, had been resolved by way of the lot line
adjustment). The arbitrator, which had ruled that the lot line adjustment could
not be considered, awarded over $552,750in compensatory damages, $250,000in
punitive damages and over $732,570in attorney's fees and costs for a total award
of in excess of $l,500,OOO-aflol r a lot line adjustment that cost less than $11,000.

After the plaintiff purchasers moved to confirm the award aI)d the seller
defendant moved to vacate the award, the trial court ruled that the arbitrator's
refusal to admit evidence of the lot line adjustment substantially prejudiced the
seller defendant's ability to dispute the amount of damages and vacated the

On appeal, the plaintiff purchasers argued that the trial court could not
review the arbitrator's award for errors of law, citing the Moncharsh case. In a 2
to 1 decision, the Court of Appeal ruled that the trial court could, indeed,
consider the arbitrator's refusal to consider the evidence of the lot line
adjustment and further held there was substantial prejudice to the seller

Burlage mayor may not be a turning point.

The decision was the subject of a stinging dissent. Also, its facts are
certainly egregious. Nevertheless, in the future, the party which has lost at
arbitration should certainly analyze all evidence that the arbitrator refused to
consider. Moreover, Burlage may be a pre,cursor to more willingness by the
courts to correct clearly error laden rulings. In that regard, it is noted that the
California Supreme Court in Cable Connection, Inc. v. DIRECTV,Inc. (2008)44
Cal.4th 1334 ruled that the parties could agree that the award of the arbitrator
can be the subject of judicial review under certain circumstances. Also, the Court
in D.C. v. Harvard-Westlake School (2009) 176 Cal.App.4th 836 ruled that the
arbitrqto,r exceeded his powers in awarding arbitral expenses and attorney fees
to a defendant in a hate crimes case brought under the Ralph Civil Rights Act
(Civil Code section 51.7)and the Tom Bane Civil Rights Act (Civil Code section
52.1) - because the statutes prohibited the losing plaintiffs from being
responsible for the very expenses and fees awarded by the arbitrator.

Therefore, there may indeed be a ray of hope.


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

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