SAPP v. BARENFELD

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District Court of Appeal, Second District, Division 3, California.

SAPP et al. v. BARENFELD et al.

Civ. 16581.

Decided: April 06, 1949

Laurence J. Rittenband and Leo Jay Ross, both of Beverly Hills, for appellants. Knight, Gitelson & Ashton, of Los Angeles, for respondents.

Appeal from an order denying appellants' application to confirm an award of arbitrators, granting respondents' application to vacate the award, and directing that a rehearing should not be had by the same arbitrators.

On December 31, 1946, appellants, as building contractors, and respondents entered into a written contract by which appellants agreed to reconstruct a loft building owned by respondents which had been damaged by fire. The contract provided for the submission of any disputes arising thereunder to arbitration. Disputes arose and the parties executed an agreement for arbitration. One of the claims submitted to the arbitrators by respondents was for damages which they claimed they had sustained by the alleged failure of appellants to complete the work within the time specified in the contract. The appellants denied the respondents' claim. The agreement for arbitration provided that the arbitrators “shall hold such hearings as may be necessary for the purpose of determining said controversy and dispute.” Arbitrators were appointed. They rendered a unanimous award specifying in detail the items included therein.

Appellants applied to the court below for an order confirming the award. Respondents applied for an order vacating the award. After a hearing upon affidavits the court found that (1) the “arbitrators were guilty of misconduct in that they based their award in a large part upon information procured ex parte from third persons, with no notice to the parties hereto that they intended to adopt such a procedure, and gave the parties hereto no opportunity to cross-examine such third persons”, (2) “said arbitrators so imperfectly executed their powers that a mutual, final and definite award, upon the subject matter submitted was not made, in that said arbitrators failed to pass upon respondents Barenfelds' claim for damages for delay in completing the building which was the subject of the controversy”, and (3) “the arbitrators Herman Charles Light and Herbert O. Alden have adopted such a partial attitude in this proceeding that they are no longer qualified to act as arbitrators herein, *” and made its order denying appellants' application to confirm the award, granting respondents' application to vacate the award, and ordering that there be no rehearing by the same arbitrators. From this order the contractors appeal.

Appellants contend: (1) that if it be assumed that the arbitrators based their award in large part on information received from third persons, the information was not prejudicial to respondents, and (2) that the court erroneously concluded that the arbitrators improperly executed their powers in failing to pass upon respondents' claim for damage for delay in completing the building for the reasons (1) that this conclusion was based on a statement of respondents' arbitrator impeaching his own award, and (2) the face of the award proves that all claims were passed upon by the arbitrators.

The weight to be given the evidence and the province of the reviewing court are the same in an arbitration proceeding as in any civil case. Manson v. Wilcox, 140 Cal. 206, 209, 73 P. 1004; In re Bewick, 49 Cal.App.2d 287, 291, 121 P.2d 815. Under this rule our power begins and ends with a determination as to whether there is any substantial evidence, contradicted or uncontradicted, which will support the conclusion reached by the trial court. Khoury v. Barham, 85 Cal.App.2d 202, 210, 192 P.2d 823. Our power is thus limited where the facts are presented by affidavits. Deyl v. Deyl, 88 Cal.App.2d 536, 199 P.2d 424.

Code of Civil Procedure, section 1288, declares that the court must vacate the award “(c) Where the arbitrators were guilty of misconduct, in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence, pertinent and material to the controversy; or of any other misbehaviors, by which the rights of any party have been prejudiced. (d) Where the arbitrators exceeded their powers, or so imperfectly executed them, that a mutual, final and definite award, upon the subject matter submitted, was not made.” If the trial court's conclusion with respect to either ground found by it as a basis for vacating the award is supported by substantial evidence, the order must be affirmed. We are of the opinion that the finding that the arbitrators so imperfectly executed their powers that a mutual, final and definite award upon the subject matter submitted was not made, is supported by substantial evidence.

The contract provided that the contractor should complete the work within 180 days after commencement thereof, subject to certain delays specified. The submission to arbitration specified each item in dispute submitted to the arbitrators. It included as an item for arbitration a claim of respondents that appellants did not comply with this provision of the contract. One of the arbitrators made an affidavit submitted on the hearing of the application to vacate that the arbitrators did not consider or determine “the question whether or not the Barenfelds were entitled to any allowance by reason of the failure on the part of the Sapp Construction Company to have completed the construction earlier, it being our opinion that we were only concerned with determining whether or not the Sapp Construction Company had done a good job and completed the job.” Contrary to the statement of appellants it appears on the face of the award that the arbitrators did not determine this claim of respondents. The award is specific and detailed and no mention of this claim is made. The foregoing facts are adequate to support the order vacating the award.

Appellants argue that the court should not have considered the affidavit of the arbitrator. They say that the effect of the affidavit is to impeach the award and that an arbitrator may not so do after the award is made. They also argue that the burden of establishing the claim for damages for delay was on respondents; that respondents failed to introduce any proof as to their damages and consequently they may not complain; and that in any event the failure of the arbitrators to pass on the claim was a mere error of judgment which is not a ground for vacating the award.

It is the duty of arbitrators to pass upon all items in controversy submitted to them and if it appears on the face of the award that they have not disposed of the whole matter but have left a part open it is invalid and will be set aside. If several matters are specified in the submission, as here, and the award does not disclose that each is determined, it is defective on its face and will be vacated on application. Porter v. Scott, 7 Cal. 312, 316; Boyd v. Bargagliotti, 12 Cal.App. 228, 238, 107 P. 150. In Muldrow v. Norris, 12 Cal. 331, at page 339, it was said: “Thus, in Randall v. Randall, 7 East 81, the submission embraced three subjects: one to determine all actions between the parties; another to fix the value to be put upon hop holes and potatoes in certain land; and the third, to ascertain the rent to be paid for other land. The arbitrators made their award upon the first two subjects, but omitted to notice the last, and the Court held that the whole award was vitiated by the omission. * Le Blanc, J., said: ‘The contract of the parties is in effect this—One says that he will submit to the arbitrators to ascertain what he is to pay for the hop poles, etc., upon condition that it shall also be referred to them to decide what rent is to be paid for certain land. And he may fairly have said that unless both those matters of difference were referred he would not refer either of them singly. If, then, the arbitrators omit to decide one of them, the condition fails on which the reference was agreed to.’ ” The award must be coextensive with the submission. In order to be final and conclusive it must embrace everything required by and must cover every point included in the submission. It must be such as to effectually end all controversies between the parties which have been submitted and prevent future litigation on the points involved. White v. Arthur, 59 Cal. 33, 34; Bierlein v. Johnson, 73 Cal.App.2d 728, 733, 166 P.2d 644; 3 Am.Jur., 944, sec. 122; 949, sec. 128; 6 C.J.S., Arbitration and Award, § 80, page 219, § 81, page 226; Annotation 18 L.R.A.,N.S., 1247; 47 L.R.A.,N.S., 444; Ann.Cas.1916A, 345. An award which leaves a controversy for future adjustment, otherwise than by mere mechanical computation or measurement, is not final and cannot be sustained. Bierlein v. Johnson, 73 Cal.App.2d 728, 733, 734, 166 P.2d 644; Annotation 11 L.R.A. 625, 626; Ann.Cas.1916A, 345; 104 A.L.R. 725.

The affidavit of the arbitrator to the effect that the arbitrators did not consider or pass upon one of the claims of respondents did not impeach the award. It did not affect the merits of the controversy, the weight of the evidence, or whether the controversies that were determined were wrongly decided. It did not purport to prove that the award made was unjust, inadequate or excessive as to the matters decided. If the award is within the submission, it may not be impeached by an arbitrator. 3 Am.Jur. 958, secs. 135, 136. The affidavit of the arbitrator, of which complaint is made, merely shows that the arbitrators did not function at all as to one of the controversies submitted; that they imperfectly executed their powers as prescribed in the submission. There is nothing in our statutory provisions with respect to the special proceeding of arbitration, Code Civ.Proc., secs. 1280–1293, inclusive, which says that an affidavit of an arbitrator may not be used to establish any one of the grounds for vacating an award specified in section 1288. “When there is a dispute as to what questions are concluded by the award, parol evidence may be introduced, not in any sense to vary the award, but to show what took place before the arbitrators, what was in controversy before them, and what matters entered into the decision. An arbitrator is a competent witness to establish these facts, and his testimony is admissible thereon either to sustain or to nullify the award, but not to impeach it for his own fraud or misconduct.” 3 Am.Jur. 980, sec. 166; see, also, 6 C.J.S. Arbitration and Award, § 131d, page 284. The implications of Loving & Evans v. Blick, 33 Cal.2d ––––, 191 P.2d 445 are that affidavits of the arbitrators may be considered on an application to vacate an award where the basis of the application is one of the grounds specified in section 1288 Code of Civil Procedure. The error in not determining all of the claims submitted was not an error of judgment. It was an error by which the arbitrators failed to exercise any judgment upon one of the claims submitted.

The contention that respondents waived the right to present evidence to the arbitrators with respect to their claim that appellants had unreasonably delayed the work to the damage of respondents cannot be sustained. The statute contemplates that the arbitrators shall give the parties notice of the time and place for hearing and that they be given a fair opportunity to present competent proof in support of their claims. Code Civ.Proc., sec. 1286; Stockwell v. Equitable Fire & Marine Ins. Co., 134 Cal.App. 534, 541–542, 25 P.2d 873; Cf. Christenson v. Cudahy Packing Co., 198 Cal. 685, 691, 247 P. 207. It appears to be conceded that the arbitrators did not at any time give any notice to the parties of a time or place for hearing. It is a fair inference from the record that the arbitrators did not hold any hearing in the true sense of the word and that the respondents were not given an opportunity to present any evidence.

In view of what has been said it is not necessary to consider appellants' contention that there is no evidence to support the court's finding that the arbitrators based their award in large part on information received from third persons.

Order affirmed.

VALLÉE, Justice.

SHINN, P.J., and WOOD, J., concur.

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