Opinion
NOT TO BE PUBLISHED
Superior Court of Santa Barbara County No. 1168044 Thomas P. Anderle, Judge.
McCarthy & Kroes, R. Chris Kroes for Plaintiff and Appellant.
Allen & Kimbell, LLP, John H. Parke, James M. Sweeney for Defendants and Appellants.
GILBERT, P.J.
Pitts & Bachmann Realtors (Pitts) and Lee Drummy appeal a judgment confirming an arbitration award in favor of Selim Anter. Anter cross-appeals orders denying him costs and attorney's fees. We affirm the judgment and the orders.
FACTS AND PROCEDURAL HISTORY
On June 29, 2005, Anter brought an action against John and Donna Steinmann, Pitts, and Drummy regarding real property located at 450 Calle Lippizana in Santa Barbara. Anter alleged that he purchased the property on September 1, 2004, from the Steinmanns. Drummy, a realtor and agent of Pitts, represented the Steinmanns in the transaction. Anter alleged that the defendants did not disclose that the property had been damaged by an earlier landslide and that it was unsafe and unsuitable for housing. Shortly after Anter purchased the property, another landslide occurred and substantially damaged the property. Anter alleged causes of action for fraud, negligent misrepresentation, and failure to disclose material facts affecting the value of the property pursuant to Civil Code section 1102 et seq. He later amended the complaint to allege a cause of action for negligence.
Paragraph 17(B)(1) of the California standard real property purchase agreement between Anter and the Steinmanns provides for binding arbitration regarding "any dispute or claim in Law or equity arising between them out of this Agreement." Paragraph 17(B)(3) of the agreement also provides that Anter and the Steinmanns "agree to mediate and arbitrate disputes or claims involving either or both Brokers... provided either or both Brokers shall have agreed to such mediation or arbitration...."
In August 2005, Anter and the Steinmanns agreed in writing to binding arbitration of Anter's claims. On October 24 and December 8, 2005, Anter, Pitts, and Drummy also agreed in writing to binding arbitration. The writing stated that "the right to trial by Judge or Jury is expressly waived, and that the award of the arbitrator shall constitute a final determination of the matter as to all parties and all claims." On January 4, 2006, all parties and their attorneys "stipulated [to] commit to binding arbitration on all issues of fact and law arising from the Complaint filed in this action."
In November 2007, the parties arbitrated the matter for 22 days. Following presentation of evidence and argument, the arbitrator decided that the Steinmanns and Drummy were negligent in not disclosing geological reports indicating that the property had previous landslides and unstable soil conditions. The arbitrator also determined that Drummy was negligent in not advising the Steinmanns regarding statutorily-required disclosures to prospective buyers of the geological reports and soil conditions. In making his determination, the arbitrator stated that he accepted defendants' invitation to apply "'broad principles of justice and equity.'"
The arbitrator determined that Anter's damages included the $2,775,000 purchase price plus interest, as well as $100,000 damages for emotional distress. He also decided that the property had $275,000 salvage value, and that Anter failed to mitigate his damages by refusing Pitts' $1,000,000 purchase offer. In total, the arbitrator awarded Anter $2,539,107.02 damages, reflecting an offset of 25 percent for the comparative negligence of Anter's real estate agent. The arbitrator decided that Pitts, Drummy, and the Steinmanns were jointly and severally liable to Anter. The arbitrator did not expressly determine the issue of prevailing party, however.
On August 21, 2008, Pitts and Drummy filed a motion in the trial court requesting a trial or, alternatively, that the court vacate or correct the arbitration award. (Code Civ. Proc., § 1286.2, subd. (a)(4).) They asserted that the arbitrator exceeded his powers by determining issues of liability between them and the Steinmanns. In written argument, Pitts pointed out that the real estate listing agreement obliged the Steinmanns to indemnify Pitts and that Pitts had not yet filed a cross-complaint against the Steinmanns. They also argued that the arbitrator miscalculated Anter's damages and interest thereon. (§ 1286.6, subd. (a).)
All further statutory references are to the Code of Civil Procedure.
In a thoughtful written ruling, the trial court denied the motion. The court looked to the arbitration clause in the real estate purchase agreement, the complaint, the stipulations to arbitrate, the parties' arguments at arbitration, and the arbitrator's interpretation of his powers. It then decided that liability between Drummy and the Steinmanns was an issue submitted to arbitration. (Hall v. Superior Court (1993) 18 Cal.App.4th 427, 436 [arbitrator decides which issues are necessary for ultimate decision].) The court also decided that Pitts and Drummy were challenging the arbitrator's measure of damages and not "an evident miscalculation of figures." (§ 1286.6, subd. (a); Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 11 ["[I]t is the general rule that, with narrow exceptions, an arbitrator's decision cannot be reviewed for errors of fact or law"]; Burlage v. Superior Court (2009) 178 Cal.App.4th 524, 529 [same].)
Attorney's Fees and Costs
Within two weeks of issuance of the arbitration award, Anter submitted a memorandum of costs to the arbitrator. Pitts objected because the memorandum was not timely. (§ 1284 ["Application for... correction [of an arbitration award] shall be made not later than 10 days after service of a signed copy of the award on the applicant"].) In response, the arbitrator stated that the stipulations to arbitrate were "ambiguous regarding my authority" and that he would not rule on costs or attorney's fees claims absent a stipulation or order from the trial court.
Following the trial court's denial of Pitts and Drummy's motion to vacate the arbitration award, Anter submitted a judgment for the court's confirmation. The court signed the judgment but noted on the second page that it would consider certain arguments "at such time as a cost bill is submitted and a request to tax such costs is filed."
On November 18, 2008, Anter filed a motion with the trial court seeking $102,373 in costs. Two months later, Anter filed a motion seeking approximately $600,000 in attorney's fees plus interest. For several stated reasons, the court denied each motion.
Pitts and Drummy appeal and contend that the trial court erred by denying their motion to vacate or correct the arbitration award because 1) the arbitrator exceeded his powers by determining liability between the defendants, and 2) the award reflects an "evident miscalculation" of damages. (§ 1286.6, subd. (a).) Anter cross-appeals and contends that the court erred by denying his costs and attorney's fees.
DISCUSSION
I.
Pitts and Drummy argue that the arbitrator exceeded his authority by determining that Drummy breached her fiduciary duty to the Steinmanns. (Advanced Micro Devices, Inc. v. Intel Corp. (1994) 9 Cal.4th 362, 375 [arbitrator's powers derive from agreement to arbitrate and court may vacate awards in excess of those powers].) They point out that they did not cross-complain against the Steinmanns for indemnity. (Patrick J. Ruane, Inc. v. Parker (1960) 185 Cal.App.2d 488, 500 [arbitration award is not res judicata regarding subject matter not submitted to arbitrator].) Pitts and Drummy argue that the award must be either vacated or corrected to delete the findings regarding Drummy's breach of fiduciary duty.
Section 1286.2. subdivision (a)(4) permits the trial court to vacate an arbitration award if the court determines that "[t]he arbitrators exceeded their powers and the award cannot be corrected without affecting the merits of the decision." Section 1286.6, subdivision (b) permits the trial court to correct an arbitration award if "[t]he arbitrators exceeded their powers." We independently review the court's ruling on a motion to vacate or correct an arbitration award. (Advanced Micro Devices, Inc. v. Intel Corp., supra, 9 Cal.4th 362, 376, fn. 9.)
The arbitrator did not exceed his authority in rendering the award based upon "broad principles of justice and equity." Pitts and Drummy stipulated to a "final determination of the matter as to all parties and all claims" and "binding arbitration on all issues of fact and law arising from the Complaint." Although Pitts and Drummy did not cross-complain against the Steinmanns, no defendant filed an answer in the action nor were there further pleadings beyond the complaint. In its arbitration brief, Pitts attempted to shift liability to the Steinmanns by arguing that it would be unjust to hold Pitts liable for the Steinmanns' fraudulent representations or concealments. Pitts urged the arbitrator to base his decision on "principles of equity and good conscience." Pitts and Drummy agreed to participate in arbitration pursuant to Paragraph 17 of the purchase agreement--i.e., to "arbitrate disputes or claims involving either or both Brokers." The arbitrator reasonably interpreted the complaint and the stipulations to include a determination of any breach of duty by Drummy toward the Steinmanns. (Hall v. Superior Court, supra, 18 Cal.App.4th 427, 436 [defendant realtor entitled to benefits of arbitration clause; once he participates, he may not renounce the arbitration because he finds it burdensome].)
II.
Pitts and Drummy contend that the arbitrator miscalculated damages and interest due to Anter's failure to accept Pitts' $1,000,000 purchase offer. They point out that section 1286.6, subdivision (a) requires the trial court to correct an arbitration award that reflects "an evident miscalculation of figures." Pitts and Drummy add that the arbitrator set forth his reasoning but failed to sufficiently account for Anter's failure to mitigate damages as well as the $275,000 salvage value of the property, resulting in excessive damages of approximately $600,000.
The trial court did not err by not correcting the awarded damages because Pitts and Drummy seek more than an arithmetic correction. Pitts and Drummy disagree with the method by which the arbitrator chose to award interest and the manner by which he applied the measure of damages. Neither is an "evident miscalculation" that the trial court must correct. (§ 1286.6, subd. (a).) Even assuming the arbitrator committed errors in awarding damages, the errors are not reviewable. (Moncharsh v. Heily & Blase, supra, 3 Cal.4th 1, 11 [generally, court will not review arbitrator's reasoning for errors of fact or law].)
III.
Cross-Appeal Regarding Costs and Attorney's Fees
Anter argues that the trial court erred by not correcting the arbitration award to allow his attorney's fees and costs as the prevailing party in the arbitration. He relies on DiMarco v. Chaney (1995) 31 Cal.App.4th 1809, 1815, concluding that an arbitrator exceeds his powers by denying attorney's fees to the prevailing party within the meaning of an agreement with an attorney's fees clause. Anter asserts that the arbitrator exceeded his powers by not awarding attorney's fees and costs pursuant to Paragraph 22 of the real property purchase agreement.
For several reasons, the trial court's rulings are correct.
Although the arbitrator was incorrect in concluding that he did not have jurisdiction to award attorney's fees and costs against the Steinmanns, Anter did not petition either the arbitrator or the trial court to correct or amend the award to include attorney's fees and costs. (Corona v. Amherst Partners (2003) 107 Cal.App.4th 701, 706 [arbitrator errs by not awarding attorney's fees to prevailing party where issue within scope of contractual arbitration provision].) Circumstances here differ from DiMarco v. Chaney, supra, 31 Cal.App.4th 1809, where the arbitrator exceeded his authority by denying attorney's fees to the prevailing party in an action on a real estate sales contract. Here the arbitrator mistakenly believed that he had no authority to award fees and costs in the absence of a further stipulation or court order. Anter did not petition the trial court to correct the award in this respect and the trial court later confirmed the award.
Moreover, Pitts and Drummy were not parties to the real estate purchase agreement. The arbitration provision of the agreement regarding their consent to arbitration states that "[a]ny election by either or both Brokers to participate in mediation or arbitration shall not result in Brokers being deemed parties to the Agreement." (Par. 17(B)(3).) Paragraph 22 of the agreement regarding attorney's fees expressly refers to the entitlement to attorney's fees by "Buyer or Seller." For this reason, section 1284.2, requiring each party to an arbitration to pay his pro rata share of expenses and arbitrator fees in the absence of an agreement otherwise, governs.
The judgment and orders are affirmed. Each party is to bear his or its own costs.
We concur: YEGAN, J., PERREN, J.