Arbitration: Arbitration Award Of $125,795.50 In Attorney Fee and $36,423.02 In Costs Against Subcontractor Achieving A Damages Award Of Only $5,582.59 Out Of Requested $272,548.19 Affirmed On Appeal

Under Moncharsh, Merits Rulings Are Generally Beyond Appellate Review.

            We have often posted on arbitral finality and the limitations on judicial review over arbitration awards in the majority of cases based on Moncharsh v. Heily & Blase, 3 Cal.4^th 1 (1992).  Such is the situation with the next case.

            Volpe Co. v. Lyle Parks, Jr. Construction, Case No. C084295 (3d Dist., May 26, 2020) (unpublished), involved a dispute between a subcontractor and general contractor.  Subcontractor sued general contractor and its insurer seeking payment of an additional $272,548.19 for various materials and services provided for the development of a shopping center.  General contractor demanded arbitration per the parties’ agreement, and sought damages against subcontractor for breach of contract.  When all was said and done, the arbitrator – finding subcontractor lacked evidence and credibility for costs it claimed to have incurred – determined subcontractor should have been paid about $30,000 more, but reduced that amount to $5,582.59 after factoring in general contractor’s claims for damages.  Additionally, the arbitrator found general contractor to be the prevailing party, based on it defeating “substantially all of” subcontractor’s claims, and awarded general contractor $125,795.50 in attorney fees and $36,423.02 in costs.

            On appeal, subcontractor argued that the arbitrator made factual and legal errors in determining damages, the prevailing party, and in awarding costs based on the arbitration agreement between the parties.  Subcontractor further claimed the arbitrator exceeded his powers and allowed his prejudice and bias against the subcontractor to guide his damages award.

            The 3^rd District, citing Moncharsh, affirmed – finding subcontractor had provided no valid reason for vacating the arbitrator’s decision, and explaining that courts will not find an arbitrator exceeded his/her powers merely by reaching an erroneous decision.  Commenting on the finality of arbitration awards, the appellate panel stated, “First, those who agree to arbitrate their differences expect that an arbitrator’s decision would mark ‘the end, not the beginning, of the dispute.’  Second, courts are often ill-equipped to review arbitration decisions, as arbitrators may decide matters on different criteria than judges.”  (See Moncharsh, at p. 10; and Sapp v. Barenfeld, 34 Cal.2d 515,523 (1949).)