|
The California Court of Appeals upheld confirmation of an arbitration award where the losing party failed to challenge the award within the 100-day deadline imposed by the California Arbitration Act. As the Court pointed out, California practitioners have been advised to delay confirmation proceedings until after this deadline has passed in order to foreclose any challenge to the award.
In Eternity Investments, Inc. v. Brown, No. B190711, 2007 WL 1545698 (Cal. Ct. App. May 30, 2007), the Browns hired Eternity Investments (Eternity) to remodel their kitchen. The contract contained an arbitration clause, so when the Browns withheld payment, the parties submitted the dispute to arbitration.
Eternity prevailed at arbitration and subsequently filed a petition to confirm the award. In opposing confirmation, the Browns argued that the award should be vacated because the arbitrator exceeded his powers and refused to hear evidence. The trial court confirmed the award.
On appeal, the Court held that the trial court properly confirmed the award because the Browns' challenge to the award was untimely under the California Arbitration Act (CAA).
Under the CAA, a petition to vacate or correct an award must be filed no more than 100 days after service of the award. See Cal. Civ. Proc. Code § 1288. The same deadline applies if a party is challenging an award in response to a petition for confirmation. See Cal. Civ. Proc. Code § 1288.2. In this case, the Browns' response arguing for vacatur was untimely because Eternity filed its petition for confirmation 121 days after service of the award.
In holding that the Browns' response was untimely, the Court explained that the deadline for challenging an award serves the important goal of ensuring that awards are challenged "while the evidence is fresh and witnesses are available." The Court further explained that "confirmation [is] a simple process absent a prompt, timely challenge."
As the Court noted, a California practice guide offers the following advice for ADR practitioners: "If you represent the winning party in [an] arbitration, wait until after the 100-day period before petitioning to confirm the award. Unless the losing party files in the interim, the delay may cut off any challenge to the award!" H. Warren Knight et al., California Practice Guide: Alternative Dispute Resolution ¶ 5:5111 (2006).
Some jurisdictions have held that the deadline for challenging an award does not apply if the challenge is premised on the argument that there was no written agreement to arbitrate. See, e.g., Danner v. MBNA America Bank, N.A., No. 06-1429, 2007 WL 1219747 (Ark. Apr. 26, 2007). This exception guards against sham arbitration awards. See Bank of America, N.A. (USA) v. Dahlquist, 152 P.3d 718 (Mont. 2007).
Subscribe to a free weekly update on ADR case law and
legislation
|