Opinion ID: 1368309
Heading Depth: 1
Heading Rank: 3

Heading: 3a Second. Did respondent court act properly in vacating the appraisal award because the appraisers based the award on a misconception of the law?

Text: Yes. Although arbitrators are frequently, by the terms of the agreement providing for arbitration, particularly in construction contracts, given broad powers (see, e.g., Olivera v. Modiano-Schneider, Inc., 205 Cal. App.2d 9, 11 [23 Cal. Rptr. 30], where the contract provided that any controversy or claims arising out of the contract were to be settled by arbitration), appraisers generally have more limited powers. (4) As stated in Hughes v. Potomac Ins. Co., supra, 199 Cal. App.2d 239, 253 [9]: The function of appraisers is to determine the amount of damage resulting to various items submitted for their consideration. It is certainly not their function to resolve questions of coverage and interpret provisions of the policy. (3b) Thus, in the present case the appraisers were authorized to determine only a question of fact, namely, the actual cash value of the insured building. (5) Since the evidence shows that the appraisers misinterpreted the meaning of actual cash value and therefore failed to decide the factual issue submitted to them, the insured properly invoked the jurisdiction of respondent court to vacate the award and order a rehearing. (Cf. Allen v. Interinsurance Exchange, 275 Cal. App.2d 636, 642, 644 [80 Cal. Rptr. 247].) As stated in Meat Cutters Local No. 439 v. Olson Bros., Inc., 186 Cal. App.2d 200, 204 [6] [8 Cal. Rptr. 789]: ... it is in the determination of whether a decided issue was properly before the arbitrator or an issue before him was not decided, that the agreement or order of submission falls under the scrutiny of the court. (Italics added.) (6) Where an appraisal award is based upon a misconception of the law, this fact may be proved to the court by extrinsic evidence, including a declaration of one of the appraisers. The declaration of an appraiser is properly received to show what the appraisers considered the issue to be, for the purpose of determining whether they exceeded their powers by making an error of law. (See Sapp. v. Barenfeld, 34 Cal.2d 515, 523 [212 P.2d 233]; Allen v. Interinsurance Exchange, supra, 275 Cal. App.2d 636, 642-643.) The alternative writ is discharged, and the petition for a peremptory writ is denied.