Opinion
NOT TO BE PUBLISHED
Super. Ct. No. SC20050089
RAYE, J.After resisting its contractual obligation to arbitrate, losing a motion for a change of venue, and attempting to vacate the arbitral award on grounds raised for the first time in a supplemental petition, defendants Trail Dust Estates (a limited partnership) and Shores Development Company appeal the $150,000 judgment confirming the award to plaintiffs Steve and Evelyn Yonker. Defendants urge us to reverse the judgment, claiming the arbitrator failed to decide the effect of a general release obtained in another lawsuit in which plaintiffs were not a party and the trial court failed to address the same issue in a statement of decision. Neither the law nor the facts supports defendants’ allegation that the arbitrator did not decide the issue. Nor was the trial court obligated to provide any greater explanation than it did. The judgment confirming the award is affirmed.
FACTS
In November 2000 plaintiffs purchased an undeveloped lot in Alpine County from defendants as well as the right of first refusal to purchase a second lot to protect their view from the first lot. Defendants admitted they knew the reason plaintiffs purchased the right of first refusal was to protect their viewscape. The purchase agreement contained a binding arbitration clause providing, in pertinent part: “ARBITRATION OF DISPUTES. Any dispute or claim in law or equity arising out of this Agreement will be decided by neutral binding arbitration in accordance with the California Arbitration Act (C.C.P. § 1280 et seq.), and not by court action except as provided by California law for judicial review of arbitration proceedings. Judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction.”
A year later defendants sought and obtained a boundary line adjustment for four lots including Lot 20, the lot for which plaintiffs had a right of first refusal. Defendants believed the right of first refusal was terminated once the lot lines were changed and did not inform plaintiffs of the adjustment.
In early 2002 defendants optioned the same lot to Ralph Herrmann without notice to plaintiffs. Plaintiffs learned of Herrmann’s option later that year from Herrmann’s lawyer, the same lawyer who is representing plaintiffs in this matter. Defendants, however, thereafter claimed that Herrmann lost his option rights by failing to construct homes upon the lots he purchased. Protracted litigation ensued between defendants and Herrmann. Plaintiff Steve Yonker was named as an expert witness in that case. But the case settled.
By then the value of the lot had increased from about $80,000 in 2002 to $200,000 in 2005. Plaintiffs convinced Herrmann to exercise his option to buy the lot for $88,000. Plaintiffs provided the $88,000 purchase price and paid Herrmann an additional $112,000 to compensate for the market value of the lot. Plaintiffs then filed a complaint against defendants for breach of contract to recover the $112,000, interest, attorney fees, and costs.
Defendants moved for a change of venue and refused to arbitrate. Plaintiffs brought a motion to compel arbitration. After a costly diversion to our court and back to the trial court, defendants eventually lost both motions and the case proceeded to arbitration. The arbitration clause provided that the “Tentative Award will explain the factual and legal basis for the arbitrator’s decision as to each of the principal controverted issues.” In a prehearing brief, defendants asserted that plaintiffs were bound by the settlement agreement defendants entered with Herrmann, including a general release of all known and unknown claims.
The arbitrator found that defendants unequivocally breached the contract when they sold the lot to Herrmann in 2005. It further found that the cost to plaintiffs “arising from an increase in market value was a consequential damage well within the contemplation of the parties to a right of first refusal contract.” The arbitrator awarded plaintiffs compensatory damages of $112,000, prejudgment interest, attorney fees, and costs for a total award of $150,120.16. Plaintiffs sought to confirm the award.
In their response to the motion to confirm, defendants requested the court to vacate the award, claiming it was untimely and the arbitrator was biased. They later conceded the timeliness issue and presented no evidence of bias. Four days before the hearing, defendants filed a supplemental response alleging for the first time that the award was invalid because the arbitrator failed to rule on whether the general release in defendants’ settlement agreement with Herrmann barred plaintiffs’ claim. Plaintiffs argued the supplemental brief was untimely and the arbitrator had decided the issue in favor of plaintiffs. The arbitrator submitted a declaration explaining he had considered the issue and decided the release could not apply to plaintiffs, who were not a party to the agreement or, for that matter, a party in that litigation.
The hearing on the motion to confirm the award took about 35 minutes. Defendants orally requested a statement of decision but did not identify any specific controverted issues of fact. The court adopted its tentative decision. It did not prepare a written statement of decision. Defendants appeal.
DISCUSSION
I
Defendants assert the arbitral award is void because on its face it does not dispose of the whole matter. (Elliott & Ten Eyck Partnership v. City of Long Beach (1997) 57 Cal.App.4th 495, 502-503.) In defendants’ view, they were contractually entitled to a factual and legal basis for the arbitrator’s decision as to each of the principal controverted issues. The arbitrator’s failure to decide the effect of the release contained in the settlement agreement with plaintiffs’ assignor violated not only the arbitration agreement, but the statutory duty to decide all issues as described in section 1283.4 of the California Arbitration Act. (Code Civ. Proc., § 1280 et seq.) Defendants distort the meaning of the requirement and ignore the strong public policy favoring arbitration and the finality it achieves. (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 11.)
We need not belabor what a legion of courts have already said about the merits of arbitration, how well insulated arbitral awards are from judicial review, and how we must indulge every reasonable intendment to uphold an award and assure it is both binding and final. (See, e.g., A.M. Classic Construction, Inc. v. Tri-Build Development Co. (1999) 70 Cal.App.4th 1470, 1474 (A.M. Classic).) Nevertheless, an arbitral award must include “a determination of all the questions submitted to the arbitrators the decision of which is necessary in order to determine the controversy.” (Code Civ. Proc., § 1283.4.) The question presented here, however, is not what is the consequence for failing to decide an issue, but what did the arbitrator decide in this case?
In Rodrigues v. Keller (1980) 113 Cal.App.3d 838 (Rodrigues), the court faced a similar dilemma in that the record did not demonstrate that the arbitrator totally failed to consider any issue that had been submitted to him. (Id. at p. 842.) The court enunciated four principles relevant to our review. “First, it is presumed that all issues submitted for decision have been passed on and resolved, and the burden of proving otherwise is upon the party challenging the award. [Citations.] [¶] Second, to discharge that burden, the party attacking the award must demonstrate that a particular claim was expressly raised at some time before the award [citation], and that the arbitrator failed to consider it [citation]. [¶] Third, the failure of an arbitrator to make a finding on even an express claim does not invalidate the award, so long as the award ‘serves to settle the entire controversy’ [citation]. This is a corollary of the proposition that arbitrators are not obliged to find facts or give reasons for their award . . . . Thus, ‘[a] decision simply that one of the parties should pay the other a sum of money is sufficiently determinative of all items embraced in the submission.’ [Citation.] [¶] Finally, there is the principle that the merits of the controversy are for the arbitrator, not for the courts.” (Id. at pp. 842-843.)
We begin, therefore, with the presumption that the arbitrator did resolve all the issues presented to him, including the impact of Herrmann’s release on plaintiffs. We reject defendants’ notion that the mere fact the arbitrator’s findings are not set forth on the face of the award invalidates it. Defendants have not sustained their burden of proof that the arbitrator failed to consider the issue. Moreover, the award did serve to settle the entire controversy. Plaintiffs prevailed and that finding subsumes the preliminary determination the arbitrator must have made that plaintiffs’ breach of contract claim was not encompassed by the general release. Here, as in Rodrigues, we will not undermine the finality of the award by second guessing the arbitrator on the merits.
Defendants seem to acknowledge that an arbitrator is at liberty to correct or amend an award to include reference to an entire issue inadvertently omitted after the decision is made and before the court affirms it. (Delaney v. Dahl (2002) 99 Cal.App.4th 647, 658.) But defendants complain that the arbitrator in this case did not correct or amend his award. Defendants further assert that the declaration filed by the arbitrator did not constitute an amendment and, in the absence of such an amendment, the award remains void on its face. Not so.
We agree that the purpose of the declaration was not to amend the award, albeit in this case there was no need to amend because all the controverted issues had already been resolved against defendants. The purpose of the declaration was to provide evidence in support of the presumption that the arbitrator had indeed considered the issue. “Although an arbitrator cannot impeach the award by testifying to his fraud or misconduct, his testimony is admissible to show what matters were submitted for decision and were considered by the arbitrators.” (Sapp v. Barenfeld (1949) 34 Cal.2d 515, 523.)
The arbitrator declared: “My decision in favor of Plaintiffs was, in part, based upon the necessarily included determination that the release of claims contained in the Alpine County Superior Court settlement between Defendants and Plaintiffs’ predecessors in interest, Mr. Herrmann.” [Sic.] The arbitrator went on to explain his rationale for determining that the release in that litigation did not bar plaintiffs’ recovery in this case. The arbitrator’s reasoning, of course, is off limits.
Relying on Century City Medical Plaza v. Sperling, Isaacs & Eisenberg (2001) 86 Cal.App.4th 865 (Century City), defendants contend they were contractually entitled to have the arbitrator explain the factual and legal basis for the award as to each of the principal controverted issues in the award. Defendants assert that by failing to address the effect of the general release in his tentative award, the arbitrator violated the terms of the arbitration clause and the award is void on its face. We find it odd that defendants would cite to Century City, a case that does not address the issue now before us and, in any event, upholds an arbitrator’s award although the arbitrator inadvertently failed to rule on a submitted issue. (Id. at pp. 868-869.)
In Century City, the arbitrator found for the commercial landlord but failed to rule on the expressly submitted issues of the landlord’s right to be awarded interest, costs, and attorney fees as the successful party in the arbitration. (Century City, supra, 86 Cal.App.4th at p. 870.) After the award was issued but before the court had confirmed it, the arbitrator made a supplemental award to the landlord for interest, costs, and attorney fees. (Id. at pp. 872-873.) The tenants insisted that an arbitrator deciding a contractual arbitration had no power to amend, modify, or supplement the award once it was published to the parties. The Court of Appeal disagreed.
The court concluded: “‘California’s contractual arbitration law permits arbitrators to issue an amended award to resolve an issue omitted from the original award through the mistake, inadvertence, or excusable neglect of the arbitrator if the amendment is made before judicial confirmation of the original award, is not inconsistent with other findings on the merits of the controversy, and does not cause demonstrable prejudice to the legitimate interests of any party.’” (Century City, supra, 86 Cal.App.4th at p. 880, quoting A.M. Classic, supra, 70 Cal.App.4th at p. 1478.) Defendants imply that Century City stands for the proposition that an award is void unless the arbitrator amends or modifies it to explain each issue. To accept defendants’ interpretation of Century City would be to misconstrue the holding and to expand its rationale to subvert the strong public policy favoring arbitration and restricting judicial review.
In Century City, no one disputed the arbitrator had failed to decide the controverted issue presented to him, i.e., the costs, interest, and attorney fees. Here that was not the case. Plaintiffs assert, and by way of declaration the arbitrator agreed, that the abitrator had in fact decided the issue presented to him. He rejected defendants’ argument that the general release issued in the Herrmann litigation somehow barred plaintiffs’ action even though plaintiffs’ right of first refusal preceded that litigation and plaintiffs were not a party to the litigation or to the settlement. Thus, we will not read Century City to void an award in which the arbitrator decided the issue but inadvertently failed to explain it. Certainly he could have amended the award and thereby clarified his rationale and debunked defendants’ claim entirely. But his failure to do so does not render the award void on its face.
Defendants are as dissatisfied with the trial court as they are with the arbitrator. They seem to acknowledge their obligation to identify the issue they wanted covered by the statement of decision. (Code Civ. Proc., § 632.) But counsel blames the court for cutting him off and thereby, in his view, precluding him from describing the controverted issue for which a statement was requested. We do not accept his excuse. If, as counsel asserts, he was attempting to specify an issue necessitating a statement of decision, he should have raised it following the court’s inquiry. We do not believe that a court discharges a party’s obligation to identify an issue by merely asking a question. Defendants had an obligation to describe the controverted issue and here simply failed to do so.
DISPOSITION
The judgment is affirmed.
We concur: SCOTLAND, P.J., HULL, J.