Arbitrator Exceeded Authority On Remand By Conducting Arbitration Inconsistent With Instructions From The 4/1 DCA
It may not happen often, but arbitration awards do occasionally get reversed. In this case, litigants are now returning for round three.
In the first round, plaintiffs received an arbitration award of $30,000,000 in compensatory and punitive damages. When defendant appealed, the 4/1 DCA reversed because plaintiffs had not provided adequate notice of their punitive damages claim. Because the $30 million award combined the compensatory and punitive damages without differentiation – thus making it impossible for the appellate court to correct the award by simply striking the punitive damages – the appellate court remanded with instructions to conduct a new arbitration hearing on damages only. Problem is that is not what happened.
On remand, the new arbitrator vacated the liability and damage findings and allowed the parties to relitigate all issues. After an evidentiary hearing, the arbitrator found plaintiffs did not prove their claims, and awarded defendant $258,181.03 in attorney fees plus interest – with the trial court confirming the award and entering judgment in defendant’s favor.
On appeal, in NCHF AMS II Houston v. Kaplan, Case No. D075842 (4th Dist., Div. 1 July 13, 2020) (unpublished), three of four plaintiffs appealed – contending the trial court erred in confirming the award because the new arbitrator exceeded his authority by allowing defendant to relitigate liability issues. The 4/1 DCA agreed and reversed with instructions for the trial court to vacate the judgment confirming the award and attorneys fees, to issue an order vacating the original arbitration award against defendant, and to remand for a new arbitration hearing solely on the issue of the amount of damages suffered by plaintiffs.
We guess you could say defendant is suffering a reversal of a dramatic reversal of fortune!
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