Opinion
D075809
05-19-2020
MILLENNIUM HOUSING CORPORATION, Plaintiff and Respondent, v. FARMERS AND MERCHANTS TRUST COMPANY OF LONG BEACH, as Trustee, etc., Defendant and Appellant.
Latham & Watkins, John T. Ryan, Shawn T. Cobb, Melissa Arbus Sherry; and Michael Short for Defendant and Appellant. Hart King, C. William Dahlin and Rhonda H. Mehlman for Plaintiff and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 37-2017-00005251-CU-MC-NC) APPEAL from a judgment of the Superior Court of San Diego County, Jacqueline M. Stern, Judge, confirming arbitration award by David B. Moon, Judge (ret). Affirmed. Latham & Watkins, John T. Ryan, Shawn T. Cobb, Melissa Arbus Sherry; and Michael Short for Defendant and Appellant. Hart King, C. William Dahlin and Rhonda H. Mehlman for Plaintiff and Respondent.
I
INTRODUCTION
Farmers and Merchants Trust Company of Long Beach, Trustee (Farmers) appeals a judgment based on an arbitration award concluding Farmers was not entitled to a rent increase under the terms of a long-term ground lease for a mobile home park leased and operated by Millennium Housing Corporation (Millennium). Farmers contends the trial court erred in confirming the award and in denying a motion to vacate the arbitration award because it contends the arbitrator exceeded his power by ordering an appraisal panel evaluating the highest and best use of the property to consider certain legal impediments to a change of use of the property, and costs associated with such a change, based upon the case of Humphries Investments, Inc. v. Walsh (1988) 202 Cal.App.3d 766 (Humphries). Farmers further contends the arbitrator exceeded his power and substantially prejudiced Farmers by determining Farmers failed to meet its burden of establishing a right to a rent adjustment because the appraisers' report was invalid and determining it would be futile to return the matter to the appraisal panel who had repeatedly disregarded the arbitrator's direction. Considering the deferential standard of review that we must apply to this arbitration matter, we conclude there are no grounds upon which to set aside the arbitrator's award. The arbitrator acted within the scope of his authority under the arbitration clause of the lease to interpret the lease and to fashion a remedy to settle a dispute between the parties. Therefore, we affirm the judgment.
II
BACKGROUND
A
Farmers agreed in 1977 to lease nearly 54 acres of land known as Palomar Estates East (Park) to the predecessor of Millennium for 60 years at a basic minimum rent of $5,000 per month with increases every five years for cost of living adjustments. The property was used as a mobile home park when the lease was executed and the lease anticipated the lessee would continue to operate a mobile home park on the premises for at least 10 years.
The lease provided that 40 years after the execution of the lease "the fair market value of the entire leased premises shall be determined, based upon its highest and best use, and the basic monthly rental commencing with such date shall be an amount equal to [7 percent] of such then value divided by 12." However, the lease also provided "[a]t no time shall rent be reduced pursuant to this paragraph to a level below the rent calculated" for the basic rent plus the regular cost of living increases previously calculated.
The ground lease provided that if the parties could not mutually agree upon the fair market value at the 40-year mark, each party would select and employ a qualified real estate appraiser and those two appraisers would then jointly select a third appraiser, with the parties each paying one half of the fees for the third appraiser. The lease instructed: "The three appraisers so selected shall analyze, review and appraise the property based upon its fair market value at its highest and best use at the appraisal date .... The fair market value of the land shall be determined by valuing the property as though it is free and clear of all liens and encumbrances, including the leasehold interest, and as though free and clear of all existing improvements."
Over the next twenty years, state laws and city ordinances were enacted restricting the ability of mobile home park owners to convert such parks to other uses. (Humphries, supra, 202 Cal.App.3d at p. 770 citing Civ. Code, § 798.55, subd. (a); San Marcos Mun. Code, §§ 16.12.030, 20.245.040, subds. (A) & (B).)
B
Millennium, a nonprofit entity whose purpose is to provide affordable housing for moderate, low, and very low income people, assumed the ground lease in March 2003 to operate the Park, which was being used as a 372-space mobile home park. To assist in maintaining affordable housing in the City of San Marcos (City), the City granted Millennium funds to acquire the Park, to issue bonds, and to assist in creating a rental assistance fund. Millennium agreed to maintain specified percentages of spaces for very low, low, and moderate income housing. The City and Millennium recorded a supplemental regulatory agreement and declaration of restrictive covenants, intended to run with the land.
Shortly after Millennium assumed the ground lease, on March 14, 2003, Farmers and Millennium amended the lease in two respects. First, they added an arbitration provision stating, "[a]ny controversy or dispute between lessor and lessee arising out of or relating to this ground lease shall be settled by arbitration" governed by the rules of the American Arbitration Association. (Capitalization omitted.) The parties agreed the decision of the arbitrator "shall be binding upon lessor and lessee and their successors and assigns whether a party to the arbitration or not." (Capitalization omitted.) The parties acknowledged they were giving up their judicial rights to appeal.
Second, the parties amended the lease to allow Millennium to receive rent subsidies or subsidies in lieu of a rent increase without those amounts counting as gross rents for purposes of calculating the base rent. The amended lease required Millennium to provide regular statements setting forth the amounts received from the City or other third parties and identifying the source of payment.
According to Millennium, the annual rent under the ground lease was approximately $250,000 per year by May 2017.
Over the years, the City supported the Park as a "valued residential manufactured home park" and "as [a] much needed and valuable source of affordable housing" and "a key piece of the City's affordable housing portfolio" required for its regional obligation to provide for all types of housing. The Housing Element of the City's General Plan identifies the Park as an "affordable option for seniors" and the General Plan requires 267 units be maintained for very low, low, and moderate income housing.
C
As the 40-year lease deadline approached to determine whether a rent increase was due, Farmers selected Stephen Roach as its party real estate appraiser and Millennium selected John Neet as its party real estate appraiser. Roach and Neet jointly selected Scott Delahooke as the third, neutral appraiser. Farmers commenced an arbitration proceeding before the American Arbitration Association when the parties could not reach an agreement regarding the process for an appraisal. Millennium filed an action in the superior court for declaratory and injunctive relief contending arbitration was not necessary.
Farmers petitioned to compel arbitration stating it did not agree with the appraisal by Neet and, specifically, his opinion that the case of Humphries, supra, 202 Cal.App.3d 766 required consideration of the impact of the City's ordinances on the feasibility of any alternative uses of the property. Farmers contended there was an arbitrable dispute about whether Humphries was applicable to the ground lease. Farmers asserted the arbitrator had the authority to rule on the scope of his own jurisdiction. Farmers' statement of claims for arbitration contended Millennium's arbitrator's appraisal applying the Humphries decisions was contrary to the language in the lease. Farmers sought declaratory relief "regarding the interpretation of the [g]round [l]ease and regarding the Humphries case."
The trial court granted Farmers' petition to compel arbitration and stayed the superior court action. The Honorable David B. Moon, Jr., (Retired), was selected to serve as the arbitrator in September 2017.
D
After considering briefing and argument from both parties regarding the lease and the applicability of the Humphries case, the arbitrator issued a ruling on October 11, 2017 concluding he had jurisdiction to resolve the dispute regarding the applicability of the Humphries case. He concluded "the Humphries case applies to this appraisal process" and ordered the appraisers "to consider, when valuing the subject property, the feasibility of any alternative use of the property which includes 1) the likelihood of a future change in that status, 2) including the likelihood of a change in zoning, 3) the impact of any legal impediments to a change of use of the property, and 4) the costs and feasibility of changing to another use and whether such use would in fact be the highest and best use."
The appraisers sought clarification of the arbitrator's order. Delahooke submitted a question on behalf of himself and Roach. Neet submitted a separate question expressing concern that the other two appraisers wanted to ignore the regulatory burdens flowing from the existence of a mobile home park on the site, which Neet believed was contrary to the Humphries decision. The arbitrator issued a second ruling in November 2017 "confirming the applicability of the Humphries decision" and instructing the appraisal panel to consider the terms of the lease as well as " 'the burdens and legal impediments, including conversion costs' at the time of the appraisal, 'together with the problems, costs and delays incident to converting the existing use of the property to a different use.' " The arbitrator reminded the appraisers "the Humphries [c]ourt 'was focused on an approach of what a knowledgeable buyer would take into consideration in evaluating the value of the subject property, both with current use and with feasible change in use. You may not ignore the burdens attendant to a change in use of the property.' "
Thereafter, Millennium objected to a consultant's report submitted by Farmers, which Millennium believed contained statements and conclusions in conflict with the arbitrator's rulings regarding the Humphries decision. The arbitrator issued a third ruling on March 12, 2018, instructing the appraisers that Farmers' consultant's opinion was incomplete and his assumption that closure of the mobile home park would be allowed by the City and, therefore, closure costs should not be considered "is incorrect and his conclusion about the effect of my rulings is at odds with the Humphries decision itself." The arbitrator confirmed for a third time that the appraisers were required to follow the Humphries decision and, accordingly, "must consider all of the potential risks and costs in obtaining a mobile home park closure permit, including any closure ordinance."
Delahooke and Roach then submitted a two-page document entitled Arbitration Award Letter in which they stated, "the award of [f]air [m]arket [v]alue in conformance with the instructions in the [g]round [l]ease and guidance by Judge Moon is $25,000,000." (Underscoring omitted.) Neet did not concur in the valuation. Millennium objected to the Arbitration Award Letter and the parties submitted additional briefing.
The arbitrator entered a fourth order on May 30, 2018 ruling, in pertinent part: (1) the arbitrator had jurisdiction to rule on the validity of the Arbitration Award Letter, (2) the appraisal panel did not have authority to issue an arbitration award under the terms of the ground lease, (3) treating the Arbitration Award Letter as an appraisal, it did not conform to the standards for a written real estate property appraisal under the Uniform Standards of Professional Appraisal Practice (USPAP), (4) a supplemental letter from Delahooke also did not satisfy the USPAP standards, and (5) the arbitrator was authorized to give the appraisers direction to aid with preparation of a proper appraisal. The arbitrator directed Delahooke to prepare an appraisal conforming to the USPAP standard including "a description of the way the appraiser arrived at his opinion of the highest and best use of the property (a lease requirement) and the manner in which he arrived at his opinion as to a fair market value of the property (a lease requirement)." The arbitrator further stated the report "should 1) summarize [Delahooke's] analyses and assumptions, 2) demonstrate the valuation incorporates the current zoning with a 4-6 unit cap per acre and the requirement that 267 units remain at affordable rents, and 3) if appraiser Delahooke is assuming anything other than an affordable mobile home park as the property's highest and best use, the appropriate costs of conversion."
Delahooke issued a final appraisal report in September 2018 valuing the land at $22,500,000 based on his assumption a new mobile home park open to all ages with 6.9 units per acre at market-rate rents could be constructed with no conversion costs required by the City's Conversion Ordinance. Delahooke considered a single family residential development as an alternative use, assuming a change in zoning was possible, with a gross value between $66,862,500 and $80,235,000, but assumed there would be closure costs of $55,900,000 resulting in a net fair market value in the range of $15,000,000 and $20,000,000. However, due to the divergence of opinions regarding the feasibility of this alternative, he did not opine this was the highest and best use. Roach, Farmer's appraiser, concurred in Delahooke's appraisal.
Neet, Millennium's appraiser, submitted a separate report stating he believed Delahooke's opinion failed to comply with the arbitrator's orders, failed to comply with USPAP, and used unsupported conclusions in the valuation analysis. In Neet's opinion, Delahooke's valuation relied on extraordinary assumptions contrary to existing law without adequate disclosure. Delahooke assumed a new market rate mobile home park with a higher density would not constitute a change in use, which was contrary to statements from City officials indicating such a change would trigger conversion costs under the pertinent City ordinance. Neet also opined Delahooke's valuation scenarios were not credible since he assumed the most positive result for the developer in every respect. Neet submitted his own appraisal report considering four scenarios for development of the property, but all had negative fair market values after considering costs to close the Park and associated development costs.
The arbitrator considered additional briefing and conducted a lengthy telephonic hearing regarding Delahooke's appraisal report. The arbitrator found Delahooke's appraisal was invalid because it made extraordinary assumptions without sufficient disclosures to allow a knowledgeable buyer to make an informed decision, as required by the Humphries decision. Specifically, the new mobile home park scenario was a change in use because it did not assume an affordable mobile home park as the highest and best use and did not consider appropriate conversion costs.
Since there was no valid appraisal, the arbitrator concluded the lessor did not meet its burden of establishing there should be a rent increase. Alternatively, the arbitrator concluded there was no arithmetic basis for a rent increase. The arbitrator noted there would be a negative net value for the property if one were to apply the $55 million conversion costs Delahooke assumed for converting to a single family residential development to the $22.5 million land value he assumed for a new mobile home park with no age or rent restrictions. The arbitrator concluded it would be expensive to start over with a new independent appraiser and neither counsel sought such a remedy.
The arbitrator declined to accept Neet's appraisal, stating this would be contrary to the terms of the lease.
In the written arbitration award issued in November 2018, the arbitrator set forth the findings he made orally at the hearing. The arbitrator found, based upon the evidence submitted, that there was no credible evidence to support a conclusion the City would amend its general plan and approve of any use of the land that did not include a set-aside for 267 affordable housing units or that it would approve a higher density for the land. He also found conversion of the Park into an all-age market rent mobile home park without a set-aside for affordable housing units would trigger application of the City's ordinance requiring conversion costs.
The arbitrator determined it would be futile to send the matter back to Delahooke for further work because he had "argued vociferously against the [a]bitrator's specific instructions on no less than three ... occasions." The arbitrator concluded "no rent adjustment can or should be implemented or made pursuant to ... the [g]round [l]ease."
E
Millennium filed a petition with the superior court to confirm the arbitration award. Farmers filed a response with a request to correct or vacate the arbitration award.
After considering briefing and argument by the parties, the trial court confirmed the arbitration award. The court was not persuaded the arbitrator exceeded his powers by determining the value of the property, noting nothing in the lease forbids or prohibits the arbitrator from valuing the property or from fashioning the award. The court concluded the award was "rationally related to the lease" based on prior rulings in the arbitration and reports submitted by the appraisers. Similarly, the court was not persuaded the arbitrator exceeded his powers in the methodology he used to value the property. The court noted the arbitrator was asked to determine if the Humphries framework applied to the property evaluation and, having concluded it did apply, ordered the appraisers to consider the feasibility of any alternative use of the property. The court stated an arbitrator's decision cannot be reviewed for errors of fact or law. Finally, the court was unpersuaded the arbitrator exceeded his powers by placing the burden of proof on Farmers to establish a rent increase was warranted because the lease was silent on this issue.
III
DISCUSSION
As it did in the proceedings before the trial court, Farmers contends the arbitrator's award should be vacated based upon two of the limited grounds Code of Civil Procedure section 1286.2 provides for vacating an arbitration award: (1) the "arbitrator[] exceeded [his] powers and the award cannot be corrected without affecting the merits of the decision upon the controversy submitted" and (2) the "rights of the party were substantially prejudiced ... by the refusal of the arbitrator[] to hear evidence material to the controversy. (§ 1286.2, subd. (a)(4) & (5).) We consider these contentions after setting forth general principles guiding our review.
Statutory references are to the Code of Civil Procedure unless otherwise stated.
A
" 'Typically, those who enter into arbitration agreements expect that their dispute will be resolved without necessity for any contact with the courts.' [Citation.] A court's power to correct or vacate an erroneous arbitration award is closely circumscribed. [¶] Most legal errors in arbitration are not reviewable. [Citations.] ... [Citations.] ... [Citations.] '[B]y voluntarily submitting to arbitration, the parties have agreed to bear the risk [of uncorrectable legal or factual error] in return for a quick, inexpensive, and conclusive resolution to their dispute.' " (Heimlich v. Shivji (2019) 7 Cal.5th 350, 366-367 (Heimlich), fn. omitted, citing Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 11-13, 33.)
"Although section 1286.2 permits the court to vacate an award that exceeds the arbitrator's powers, the deference due an arbitrator's decision on the merits of the controversy requires a court to refrain from substituting its judgment for the arbitrator's in determining the contractual scope of those powers." (Advanced Micro Devices, Inc. v. Intel Corp. (1994) 9 Cal.4th 362, 372 (Advanced Micro).) " 'Ensuring arbitral finality ... requires that judicial intervention in the arbitration process be minimized.' [Citation.] A rule of judicial review under which courts would independently redetermine the scope of an arbitration agreement already interpreted by the arbitrator would invite frequent and protracted judicial proceedings, contravening the parties' expectations of finality." (Id. at p. 373.) Thus, "[o]n issues concerning whether the arbitrator exceeded his powers, we review the trial court's decision de novo, but we must give substantial deference to the arbitrator's own assessment of his contractual authority." (Alexander v. Blue Cross of Cal. (2001) 88 Cal.App.4th 1082, 1087.)
Likewise, vacating an award for " 'refusal ... to hear evidence material to the controversy' (§ 1286.2, subd. (a)(5)) must rest on more than a simple error in applying the rules of evidence." (Heimlich, supra, 7 Cal.5th at p. 368.) Section 1286.2, subdivision (a)(5) "is not 'a back door to Moncharsh through which parties may routinely test the validity of legal theories of arbitrators.' [Citation.] Instead, it was designed as a 'safety valve in private arbitration that permits a court to intercede when an arbitrator has prevented a party from fairly presenting its case.' [Citation.] It comes into play, for example, when an arbitrator, without justification, permits only one side to present evidence on a disputed material issue." (Heimlich, at p. 368.)
B
Farmers contends the arbitrator exceeded his powers by ordering the appraisal panel to "ignore" the parties' contract. We disagree.
The lease in this case provided for a panel of appraisers to "analyze, review and appraise the property based upon its fair market value at its highest and best use at the appraisal date" to determine if a rent increase was due 40 years after commencement of the lease. The lease instructed the "fair market value of the land shall be determined by valuing the property as though it is free and clear of all liens and encumbrances, including the leasehold interest, and as though free and clear of all existing improvements."
In the Humphries case, the lease also provided for redetermination of a long-term rental rate for property used as a mobile home park and provided for the appointment of appraisers to determine the market value of the property. (Humphries, supra, 202 Cal.App.3d at p. 768.) As here, "certain city ordinances and state codes were enacted which seriously hindered the ability of mobilehome park owners to convert the parks to any other use." (Ibid.) The Humphries court noted that "[a]lthough the property may be adaptable for a certain use, there is a very real concern to a willing buyer of 'whether its use for such purposes [is] economically feasible [and] it is therefore a factor which has an important bearing on the market value of the property.' " (Id. at p. 773.) As a result, the Humphries court held "the impact of the ordinances and codes must be addressed in relation to the feasibility of any alternative use of the property and/or the likelihood of a future change in that status" and the appraisal must be made "in accordance with the highest and best use of the land without regard to the present lease 'but considering as appropriate the impact of any legal impediments to a change of use.' " (Ibid.)
Farmers compelled arbitration in this matter to settle a dispute between the parties regarding whether the Humphries analysis applied to the terms of the lease agreement. Almost immediately after his appointment, the arbitrator here carefully considered that question. The arbitrator reviewed extensive briefing and argument by the parties. He reviewed authorities provided by Farmers and "further studied the holding in Humphries and studied the subject lease" before hearing oral argument and taking the matter under submission. The arbitrator considered the similarities and the differences between this lease and the facts of Humphries case. He noted the lease requirement in this case to evaluate the property "without improvements or encumbrances" whereas the appraisers in the Humphries case were instructed to evaluate the property as vacant land. The arbitrator concluded the Humphries case applied. He instructed the appraisers to consider "the feasibility of any alternative use of the property" and to include the likelihood of any change in the use of the property, the likelihood of a change in zoning, "the impact of any legal impediments to a change of use of the property," and "the costs and feasibility of changing to another use and whether such use would in fact be the highest and best use."
The arbitrator revisited the issue at the request of the appraisers and the parties at least twice more before the final award. Each time, the arbitrator instructed the appraisers to consider the terms of the lease, which required them to "arrive at a fair market value by valuing the property as though it is free and clear of all liens and encumbrances, including the leasehold interest, and as though free and clear of all existing improvements," but also to consider "the burdens and legal impediments, including conversion costs" such as "a knowledgeable buyer would take into consideration in evaluating the value of the subject property, both with current use and with feasible change in use," as instructed by Humphries. In the third iteration of his ruling, the arbitrator likened the issue to "burdens on this property such as toxic spills, a petroleum Super-Fund site, a sink-hole, lateral support/slope erosion issues, even negative neighbor problems. These are factors a knowledgeable buyer would take into consideration in purchasing the property." The arbitrator noted these issues could relate to the highest and best use of the property, to the fair market value of the property, or a combination thereof.
The fact the appraisers and the attorneys disagreed about how to interpret the lease terms for valuation of the land is evidence of contractual ambiguity. (California Dept. of Human Resources v. Service Employees Internat. Union, Local 1000 (2012) 209 Cal.App.4th 1420, 1430 (Local 1000).)
The arbitrator considered and interpreted the terms of the lease agreement and harmonized those terms with what he believed to be applicable law. Under the arbitrator's interpretation, the appraisers were free to consider alternative uses "as though free and clear" of "encumbrances" and "existing improvements," but they had to consider the legal impediments such as the City ordinances and the general plan as part of the feasibility and/or cost analysis in reaching their valuations in accordance with Humphries.
The fact Farmers disagrees with the arbitrator's interpretation of the lease is of no moment and we may not reconsider the merits of its arguments on this point. We "may vacate an award interpreting a contract if and only if it 'rests on a "completely irrational" construction of the contract [citations] or ... amounts to an '"arbitrary remaking"' of the contract.' " (Local 1000, supra, 209 Cal.App.4th at p. 1430.) We conclude the arbitrator's interpretation was not irrational and did not arbitrarily remake the contract.
C
Farmers also contends the arbitrator exceeded his powers and substantially prejudiced Farmers by ordering no rent adjustment after "foisting" a burden of proof on Farmers and "performing the appraisal himself" without sending the matter back to the appraisers for yet another opportunity to complete an appropriate appraisal. Again, we disagree.
These contentions essentially challenge the arbitrator's choice of remedy under the contract. The Supreme Court has articulated a "meaningful, workable and properly deferential framework for reviewing an arbitrator's choice of remedies." (Advanced Micro, supra, 9 Cal.4th at p. 381.) "Arbitrators are not obliged to read contracts literally, and an award may not be vacated merely because the court is unable to find the relief granted was authorized by a specific term of the contract. [Citation.] The remedy awarded, however, must bear some rational relationship to the contract and the breach. The required link may be to the contractual terms as actually interpreted by the arbitrator (if the arbitrator has made that interpretation known), to an interpretation implied in the award itself, or to a plausible theory of the contract's general subject matter, framework or intent. [Citation.] The award must be related in a rational manner to the breach (as expressly or impliedly found by the arbitrator). Where the damage is difficult to determine or measure, the arbitrator enjoys correspondingly broader discretion to fashion a remedy. [Citation.] [¶] The award will be upheld so long as it was even arguably based on the contract; it may be vacated only if the reviewing court is compelled to infer the award was based on an extrinsic source. [Citations.] In close cases the arbitrator's decision must stand." (Ibid., fn. omitted.)
We believe the arbitrator did not err in his choice of remedy for three reasons.
First, although the terms of the lease agreement do not expressly state the lessor bears the burden of establishing entitlement to a rent increase, it was reasonable for the arbitrator to impose the burden of obtaining a legitimate appraisal on the lessor since a rent increase is only for the benefit of the lessor. Under the terms of the lease, the rent could never be reduced below the basic rent plus the regular cost of living increases previously calculated. Therefore, the arbitrator's imposition of the burden of proof on Farmers was rationally related to the terms of the lease and did not exceed his power.
Second, the arbitrator did not perform the appraisal himself. Rather, he applied the burden of proof and concluded Farmers did not meet its burden based upon Delahooke's invalid appraisal. The arbitrator concluded Delahooke's appraisal of the value of the property based upon a new mobile home park was invalid because a new mobile home park without age or income restrictions constituted a change in use and the appraisal concluded conversion costs would not be implicated by the City ordinance despite the arbitrator's repeated instructions to include such costs. The arbitrator also observed that if the conversion costs assumed by Delahooke for a single family residential development (which Delahooke admitted was not feasible) applied to a new all-age and market rate mobile home park, there would be a negative value for the appraisal and, thus, "arithmetically there is no basis for a rent increase." Because there was no valid appraisal, the arbitrator concluded there was no basis to award a rent increase. Such a remedy was squarely within the scope of the arbitrator's powers to resolve the dispute under the terms of the arbitration agreement.
Third, the arbitrator did not ignore the terms of the contract for sake of expedience or otherwise prejudice Farmers by preventing it from presenting its case. The arbitrator considered extensive briefing and arguments from both parties and all the appraisers regarding how to conduct the appraisal under the terms of the contract and the requirements of the law as articulated in the Humphries case. The arbitrator provided several rulings on this issue over the course of a year providing guidance to the appraisers. Farmers fully presented its arguments on the issue at each opportunity. The arbitrator did not exceed the scope of his power in determining it would be futile to send the appraisal back to the appraisal panel with two appraisers who repeatedly disregarded his instructions. Further, since counsel for both parties indicated a decision was needed, the arbitrator did not exceed his power or substantially prejudice Farmers by not ordering the appraisal process to start over with a different appraisal panel. Therefore, there is no basis to vacate the arbitrator's award.
IV
DISPOSITION
The judgment is affirmed. Millennium shall recover its costs on appeal.
McCONNELL, P. J. WE CONCUR: HALLER, J. AARON, J.