Opinion
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
APPEAL from a judgment of the Superior Court of Los Angeles County, Ralph W. Dau, Judge. Los Angeles County Super. Ct. No. BS098792
Sedgwick, Detert, Moran & Arnold, Elliott D. Olson, Steven D. DiSaia, Douglas J. Collodel and Daniel W. Bir for Plaintiff and Appellant.
Berger Kahn, Gene A. Weisberg and Melanie D. Long for Defendant and Appellant.
WOODS, J.
Plaintiff and appellant Solar Turbines (Solar) appeals from a judgment confirming an arbitration award and from the trial court’s denial of Solar’s petition to correct the arbitration award. Solar contends the arbitrators exceeded their powers by not awarding Solar attorney fees despite contractual language requiring the prevailing party to be indemnified for attorney fees. Defendant and appellant Brush HMA (Brush) also appeals the trial court order confirming the arbitration award and claims it is entitled to attorney fees as the prevailing party against Solar’s petition to correct the arbitration award. For the reasons set forth hereafter, we conclude the trial court acted correctly and we therefore affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
Solar and Brush entered into a written contract whereby Brush agreed to supply Solar with generators for installation and use at the University of Missouri. The purchase order between Solar and Brush provided, among other things, that “[a]ny controversy, dispute or claim arising out of or relating to the Order shall be finally settled by arbitration . . . in accordance with the then current Rules of the American Arbitration Association . . . .” Additionally, under the purchase order, the parties agreed “[t]he nonprevailing party shall indemnify the prevailing party for any costs, expense and attorneys’ fees incurred by the prevailing party in enforcing the Order.”
The generators proved to be unfit as a result of excessive vibration problems that caused the units to shut down. After attempts to resolve the problem failed, Solar instituted an action for breach of contract against Brush and made a demand for arbitration on February 7, 2003, to the American Arbitration Association.
After several preliminary hearings and extensive discovery before a panel of three arbitrators the parties commenced a five and one-half day hearing. On April 12, 2005, the panel issued its award finding Brush breached its responsibility under the contract and awarded Solar 12 of 13 items of claimed damages. Brush was ordered to pay Solar a sum in excess of $1.5 million. The arbitration panel also made a specific finding that the parties were to bear their own attorney fees and costs.
Solar submitted to the arbitration panel a motion for correction of the award addressing the failure of the award to provide for its attorney fees and costs as expressly mandated by the contract between the parties. On May 19, 2005, the panel after having read and fully considered the contentions of the parties denied the motion for correction of arbitration award.
Then on August 19, 2005, by way of petition to the trial court, Solar again sought correction of the award to provide for its attorney fees and costs as the prevailing party under the contract. Brush opposed the petition and filed its response to the petition with accompanying memorandum of points and authorities. The matter was heard by the trial court on October 26, 2005. At oral argument, the trial court requested each party submit supplemental briefing “[o]n the meaning within [Code of Civil Procedure section] 1286.6, subdivision (b) of the language ‘the arbitrators exceeded their power’ . . . and the matter will then stand submitted at that time [November 7th].”
Code of Civil Procedure section 1286.6, subdivision (b) states: “Subject to Section 1286.8, the court, unless it vacates the award pursuant to Section 1286.2, shall correct the award and confirm it as correct if the court determines that: . . . [¶] (b) The arbitrators exceeded their powers but the award may be corrected without affecting the merits of the decision upon the controversy submitted; . . .”
On November 8, 2005, the trial court denied the motion, confirmed the award, and entered judgment with no provision for attorney fees. The trial court ruled “The arbitrators did not exceed their powers. They could have rationally found that no evidence was presented concerning attorney’s fees and costs.”
The timely appeals of Solar and Brush followed.
DISCUSSION
1. Narrow standard of review of arbitration proceedings
Judicial review of decisions of arbitrators is very limited. The California Supreme Court has held that “[b]oth because it vindicates the intentions of the parties that the award be final, and because an arbitrator is not ordinarily constrained to decide according to the rule of law, it is the general rule that, ‘The merits of the controversy between the parties are not subject to judicial review.’ [Citations.] More specifically, courts will not review the validity of the arbitrator’s reasoning. [Citations.] Further, a court may not review the sufficiency of the evidence supporting an arbitrator’s award. [Citations.]
“Thus, it is the general rule that, with narrow exceptions, an arbitrator’s decision cannot be reviewed for errors of fact or law. In reaffirming this general rule, we recognize there is a risk that the arbitrator will make a mistake. That risk, however, is acceptable for two reasons. First, by voluntarily submitting to arbitration, the parties have agreed to bear that risk in return for a quick, inexpensive, and conclusive resolution to their dispute. [Citation.] As one commentator explains, ‘the parties to an arbitral agreement knowingly take the risks of error of fact or law committed by the arbitrators and that this is a worthy “trade-off” in order to obtain speedy decisions by experts in the field whose practical experience and worldly reasoning will be accepted as correct by other experts.’ [Citation.] ‘In other words, it is within the power of the arbitrator to make a mistake either legally or factually. When parties opt for the forum of arbitration they agree to be bound by the decision of that forum knowing that arbitrators, like judges, are fallible.’ [Citation.]” (Moncharsh v. Heily & Blasé (1992) 3 Cal.4th 1, 11.)
With these principles in mind we turn to the merits.
2. The arbitrators did not exceed their authority
Solar contends that the arbitrators exceeded their authority by refusing to award Solar its contractually-mandated fees and costs. We disagree.
We find the present case analogous to and controlled by Moore v. First Bank of San Luis Obispo (2000) 22 Cal.4th 782. In Moore, the trial court denied plaintiffs’ motion to correct the arbitration award as to the award of attorney fees. The trial court found that because the question of fees had been submitted to the arbitrator, that decision was not reviewable pursuant to Moncharsh v. Heily & Blasé, supra, 3 Cal.4th 1. The Supreme Court affirmed, concluding that although the plaintiffs were the prevailing parties for purposes of Civil Code section 1717, the arbitration panel’s refusal to award attorney fees was an error of law on an issue within the arbitrator’s power to decide and could not be corrected. (Moore v. First Bank of San Luis Obispo, supra, 22 Cal.4th at p. 786.)
In Moore, as in this case, plaintiffs asserted that because the arbitrators awarded plaintiffs all of their requested relief on the breach of contract cause of action, the arbitrators must, as a matter of law, have implicitly designated the plaintiffs as the prevailing parties on the contract cause of action. Thus, according to plaintiffs, “the arbitrators had no power to refuse an award of attorney fees, for the parties’ underlying agreement made such an award mandatory.” (Moore v. First Bank of San Luis Obispo, supra, 22 Cal.4th at p. 787.)
The Supreme Court rejected this argument and affirmed. The Court explained: “Plaintiffs’ analysis fails because the arbitrators did not designate a prevailing party for purposes of Civil Code section 1717, either explicitly or implicitly. Plaintiffs may be correct that, under the analysis in Hsu v. Abbara (1995) 9 Cal.4th 863, 876, they were the prevailing parties as a matter of law. Nonetheless the arbitrators were asked, but failed, to designate them as such. That failure amounted at most to an error of law on a submitted issue, which does not exceed the arbitrators’ powers under the holding of Moncharsh, supra, 3 Cal.4th at page 28.” (Moore v. First Bank of San Luis Obispo, supra, 22 Cal.4th at p. 788; original emphasis.)
In the present case, the issue of attorney fees was submitted to the arbitrators when Solar noted in its closing arbitration brief that it was “entitled to the award of this Panel, which includes all of its expenses, fees and costs.” (Italics added.) Brush likewise sought an award of attorney fees. The arbitrators, exercising their discretion, declined to expressly designate a prevailing party and make an award of attorney fees. Pursuant to Moore, even if legally erroneous, such arbitral decision on a submitted issue is “not reviewable under [Code of Civil Procedure] section 1286.2 or 1286.6.” (Moore v. First Bank of San Luis Obispo, supra, 22 Cal.4th at p. 788.)
Solar asserts that Moore is distinguishable and not controlling. Specifically, Solar asserts that because it was the prevailing party the mandatory language of the contract required the arbitrators to make an award of attorney fees to Solar irrespective of whether the arbitrators expressly designated a prevailing party and thus their powers were exceeded by failing to award attorney fees. We disagree. The presence of mandatory language in the contract does not show the arbitrators exceeded their authority. The issue of the award of attorney fees was submitted to the arbitrators and they expressly decided “[t]he parties shall bear their own attorneys’ fees and costs.” Under Moore, this decision is not reviewable even if legally erroneous.
3. Solar’s reliance on DiMarco is unavailing
Solar claims the case of DiMarco v. Chaney (1995) 31 Cal.App.4th 1809 falls directly on point and provides the best guidance. We disagree.
In DiMarco, the arbitrator issued an award denying plaintiffs’ claim and specifically finding defendant was the prevailing party but failed to grant defendant’s request for attorney fees and costs. Defendant asserted the arbitrator exceeded his power in failing to apply the attorney fee provision in the agreement. The trial court held the arbitrator did exceed his authority by refusing to make an award of attorney fees after designating a prevailing party; and the Court of Appeal affirmed.
DiMarco is distinguishable from the present case because here the arbitrator did not expressly designate Solar as the prevailing party. Significantly, the court in DiMarco recognized: “Had the arbitrator found neither DiMarco nor Chaney was the prevailing party, the arbitrator could have declined to make any award of attorney fees.” (DiMarco v. Chaney, supra, 31 Cal.App.4th at p. 1815.) Further, as noted by Brush, the award to Solar was actually less than what Solar demanded throughout the dispute and when the award was issued the arbitrators stated “Both parties were helpful and presented their cases in a forthright and affirmative manner. This was a complex and difficult case.” As a result, there was the possibility the arbitrators refused to expressly designate Solar as the prevailing party and instead ruled on specific claims and issues. The arbitrators did not, as the arbitrator had done in DiMarco, contend that they had the discretion to deny fees in derogation of the express terms of the contract and there was no flagrant disregard of the contract; rather just an attempt to construe the contract. In any event, Solar’s assent to binding arbitration precludes judicial review of the arbitrators’ decision.
Additionally, having presented the issue of attorney fees to the arbitrators for decision, it was the responsibility of Solar to present evidence that would support an award. Despite an opportunity to present the amount of those fees during its damages presentation and on its motion to correct, nothing in the record indicates Solar presented evidence of attorney fees and costs. As a result, there was no opportunity for Brush to cross-examine any witness on the issue and the trial court was correct in finding the arbitrators “could have rationally found that no evidence was presented concerning attorney’s fees and costs.”
We conclude the trial court did not err by denying Solar’s motion to correct the arbitration award.
4. Brush’s appeal -- the trial court did not err in striking as moot Brush’s claim for attorney fees
Following oral argument and additional briefing on the motion to correct the arbitration award, the trial court struck Brush’s claim for attorney fees and costs related to the proceeding and declared the claim moot. Brush appeals from that portion of the judgment and claims under Civil Code section 1717 it is entitled to attorney fees as the prevailing party on Solar’s motion to correct the arbitration award. We disagree.
Brush attempts to sever the findings in the underlying arbitration from the judicial proceedings to support its position. However, in doing so Brush fails to address the fact it was not the prevailing party in the litigation. Civil Code section 1717 requires the party seeking to recover attorney fees be the “prevailing party” on the contract as a whole -- the party who recovers a greater relief in the action on the contract.
Finally, Brush contends for the first time on appeal that this proceeding is covered by Code of Civil Procedure section 1293.2, which authorizes the court to award costs in post-arbitration proceedings as a separate judicial determination distinct from the arbitrators’ decision. Although Brush may be correct on the law, this argument comes too late. Nowhere below did Brush suggest attorney fees were appropriate under Code of Civil Procedure section 1293.2; nor did the trial court consider this argument or rule upon it. “It is axiomatic that arguments not asserted below are waived and will not be considered for the first time on appeal.” (Ochoa v. Pacific Gas & Electric Co. (1998) 61 Cal.App.4th 1480, 1488, fn. 3.) Accordingly, we affirm the trial court’s order denying Brush its attorney fees.
DISPOSITION
The judgment is affirmed. Each side to bear its own costs on appeal.
We concur:
PERLUSS, P.J., ZELON, J.