TRABUCO HIGHLANDS COMMUNITY ASSOCIATION v. NANCY HEAD
COURT OF APPEAL OF THE STATE OF CALIFORNIA FOURTH APPELLATE DISTRICT
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
TRABUCO HIGHLANDS COMMUNITY
Plaintiff and Respondent,
NANCY HEAD et al.,
Defendants and Appellants.
G027697 (Super. Ct. No. 00CC03429)
O P I N I O N
Appeal from a judgment of the Superior Court of Orange County, F. Latimer Gould, Temporary Judge. (Pursuant to Cal. Const., art. VI, § 21.) Reversed.
Law Offices of Alexandria C. Phillips and Alexandria C. Phillips for Defendants and Appellants.
Law Offices of Richard A. Tinnelly and Terri A. Reilly for Plaintiff and Respondent.
Nancy Head and Michael D. Head appeal the
judgment confirming an arbitration award in favor of Trabuco Highlands
Community Association (the Association), an order denying the Heads’ motion
to vacate the award, and an order denying the Heads relief under Code of
Civil Procedure section 473.1 They contend:
In essence, the award compelled the Heads
to comply with the CC&R’s by remedying their
About two months later, Nancy attended
an association meeting and asserted the arbitrator had mistakenly characterized
the arbitration as binding. The Association took the position it had been
binding. The next month, the Association filed a petition to confirm the
Oddly enough, the award did not suggest
what the amount of the assessments owed might be. Michael Head’s recollection
was in accord.
At the hearing on the petition, the court
declined to hear any testimony, although both sides indicated they were
willing to offer it. The court responded, “It’s done by declaration. [The
Association has] a declaration by the arbitrator who indicates we have
. . . binding arbitration.”
The court’s judgment confirmed both the
original award and the supplemental award of attorney fees. For convenience’s
sake and because it makes no difference in our analysis, we refer to it
as one award.
The Heads contend the trial court erroneously found the arbitration was binding. In a related claim, they argue the court improperly found they did not timely file a request for a trial de novo. We conclude that although the trial court might properly have found the arbitration was binding, it reached its result by an impermissible means and the case must be reversed and remanded to properly determine whether the Heads agreed to binding arbitration.
“California has a well-established policy favoring arbitration as a speedy and inexpensive means of settling disputes. . . . The present contractual arbitration law. . . functions as a comprehensive scheme regulating contractual arbitration. ‘The purpose of this law is to promote contractual arbitration, in accordance with a “strong public policy” in favor thereof [citation] as a more expeditious and less expensive means of resolving disputes than litigation.’ [Citation.]  To support this policy and encourage parties to settle their disputes through arbitration, it is essential that arbitration judgments be both binding and final. Thus, as a general rule, courts will indulge every reasonable intendment to give effect to arbitration proceedings. [Citations.] To ensure that an arbitrator’s decision is the end of the dispute, arbitration awards are subject to very narrow judicial review.” (A.M. Classic Construction, Inc. v. Tri-Build Development Co. (1999) 70 Cal.App.4th 1470, 1474-1475.)
The Heads filed four motions. They treated the original award and the attorney fees award separately. As to each, they filed a motion for reconsideration. They also filed a motion to set aside the judgment as to the original award based on their own mistake, inadvertence, and excusable neglect and a motion based on their attorney’s mistake, inadvertence, and excusable neglect as to the supplemental award.
Section 1286.2 lists the exclusive grounds
for vacating an arbitration award which include in relevant part: “(1)
The award was procured by corruption, fraud or other undue means.  (2)
There was corruption in any of the arbitrators.  (3) The rights of the
party were substantially prejudiced by misconduct of a neutral arbitrator.
In Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 8-12, our Supreme Court examined this statutory limitation and the policies in favor of arbitration finality and concluded that except for narrow exceptions, an arbitrator’s decision may not be reviewed for factual or legal errors. Nevertheless, the courts do not abandon all scrutiny of awards. When the issue goes to the integrity of the arbitration process itself, appellate courts have mandated de novo review of an arbitrator’s ruling.
For example, in Britz, Inc. v. Alfa-Laval Food & Dairy Co. (1995) 34 Cal.App.4th 1085, 1102, the court held “a trial court considering a petition to confirm or vacate an arbitration award is required to determine, de novo, whether the circumstances disclose a reasonable impression of arbitrator bias, when that issue is properly raised by a party to the arbitration.” The court found it necessary “to remand [the]matter to the trial court for ‘an evidentiary hearing [at which] the full extent and nature of the relationships at issue may be ascertained.’ [Citation.]”
As noted above, the Heads challenged the award both on the grounds of fraud and that the arbitrator exceeded his powers. The arbitrator certainly exceeded his powers if he deemed a nonbinding arbitration to be binding. Whether it occurred as a result of fraud is irrelevant.
Likewise, in circumstances similar to those we consider, the court in Haumeder v. Lipsett (1949) 90 Cal.App.2d 167, 172, held “evidence” was required to explain whether the parties had agreed that the arbitrator’s report would be binding.
With these principles in mind, we consider how the trial court determined the arbitration was binding. “In this regard, the applicable standards of appellate review of a judgment based on affidavits or declarations are the same as for a judgment following oral testimony: We must accept the trial court’s resolution of disputed facts when supported by substantial evidence; we must presume the court found every fact and drew every permissible inference necessary to support its judgment, and defer to its determination of credibility of the witnesses and the weight of the evidence. [Citation.]”
(Betz v. Pankow (1993) 16 Cal.App.4th 919,
922-923.) This standard comports with the policies behind arbitration and
the legislative mandate that hearings on petitions to confirm arbitration
awards should be “heard in a summary way.” (§ 1290.2.) If the trial
court had simply decided whether the arbitration was binding based on the
declarations of the parties concerning what was said at the arbitration
hearing, we might simply affirm the ruling by concluding it was a matter
of credibility for the trial court to decide. But the trial court apparently
did not base the ruling on that.
Another ground for reversal exists. The Association suggested below that the Heads had waived the binding arbitration issue by failing to request a trial de novo. In confirming the award, the trial court said, “Your client sat on it. Did nothing. Let the time go by. If it were not binding, and she didn’t like the award, she still had her remedies. Didn’t do anything.” In its statement of decision the court found, “Neither party made a request for a trial de novo, a motion to correct the arbitration award, or any decision, or ruling, occurring at or in conjunction with the prior proceeding, except as to a statement or conduct that could (a) give rise to civil or criminal contempt, (b) constitute a crime, (c) be the subject of investigation by the State Bar or Commission on Judicial Performance, or (d) give rise to disqualification proceedings . . . .“
That section states in relevant part: “No
. . . arbitrator . . . shall be competent to testify, in any subsequent
civil proceeding, or other objection to the Binding Arbitration Award within
thirty (30) days of the award.”
As a result of the legal errors in the trial court’s ruling, the petitions to confirm the arbitration award and the request to vacate it must be considered anew. The court must not consider statements by the arbitrator, nor may it find the Heads waived the binding arbitration issue. It may, however, consider evidence offered by the parties on the issue.
Before the last hearing on the issue, the parties offered to produce testimony. The trial court refused to allow it. Given the summary nature of the confirmation procedure (§ 1290.2), we hesitate to hold the court must hear testimony. We suggest, however, that given the written agreement for nonbinding arbitration, the parties’ disagreement about whether that changed orally, and the stakes involved when one submits to binding arbitration, it would be the better practice here to hear testimony.
At oral argument, the Association argued
for the first time that the Heads were barred from raising the issue concerning
the binding nature of the arbitration because they had not raised it within
100 days of the award. (See §§ 1288, 1288.2) We decline to consider
that argument. In its brief, the Association only mentioned those sections
in conjunction with the Heads’ motions to reconsider and set aside the
judgment confirming the award. It did not rely on them as grounds for affirming
the award itself.
Even assuming that was sufficient to raise the issue on appeal, we would reject it. The Association never raised the sections before the trial court. The only sections mentioned were sections 1141.20, 1283.8 and 1284, and the Heads raised those.
The failure to raise the limitations period
under sections 1288 and 1288.2 in the trial court forfeits the issue on
Although the court may not find waiver, it may consider the Heads five-month delay in raising the binding arbitration issue before the Association’s board as it bears on whether they thought the arbitration was binding when it was heard.
(See Sanker v. Brown, supra, 167 Cal.App.3d
at pp. 1144-1147 [noting disputes about the
The judgment is reversed and remanded for
further proceedings consistent with this opinion. The Heads are entitled
to their costs and fees on appeal.
We appreciate the trial court probably refused to hear testimony because it was attempting to be faithful to the concept of summary proceedings and to expedite a heavy caseload. Given the history of this case, however, it would be better at this point to invest some extra time to ensure later finality.