Court Opinion

ID: 9745961
Source: CourtListenerOpinion
Date Created: 2023-08-27 13:44:57.187667+00
Date Added: 2024-06-11T07:25:06.836535
License: Public Domain

MOSK, J., Concurring.
I concur in the result, but write separately to discuss the standards of review to be employed by the trial court and by this court when a party seeks to vacate an arbitration award on the ground that the arbitrators refused to postpone a hearing.
The grounds for vacating an arbitration award are set forth in Code of Civil Procedure section 1286.2, subdivision (a)* 1 (section 1286.2). (See Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1 [10 Cal.Rptr.2d 183, 832 P.2d *1203899] .)2 If the trial court determines that any of those grounds exists, it “shall vacate the award.” (§ 1286.2, subd. (a).)3 SWAB Financial, LLC (SWAB), has invoked one of those grounds: “The rights of the party were substantially prejudiced by the refusal of the arbitrators to postpone the hearing upon sufficient cause being shown therefor . . . .” (§ 1286.2, subd. (a)(5).)
SWAB’s grievance that the arbitrators did not allow it to amend its claim is not a ground for vacating an award unless the decision constituted prejudicial misconduct by the arbitrators (§ 1286.2, subd. (a)(3)) or a prejudicial “refusal of the arbitrators to hear evidence material to the controversy or . . , other conduct of the arbitrators contrary to the provisions of this title.” (§ 1286.2, subd. (a)(5).) SWAB did not invoke any of these provisions in connection with its protest that the arbitrators refused to allow the amendment.
In considering the standard of review by a trial court of whether an arbitrator’s remedy exceeded1 the arbitrator’s powers in violation of section 1286.2, subdivision (a)(4), the Supreme Court said that “unless expressly restricted by the agreement of the parties [arbitrators] enjoy the authority to fashion relief they consider just and fair under the circumstances existing at the time of arbitration, so long as the remedy may be rationally derived from the contract and the breach." (Advanced Micro Devices, Inc. v. Intel Corp. (1994) 9 Cal.4th 362, 383 [36 Cal.Rptr.2d 581, 885 P.2d 994] {Intel).) Thus, the court provided that there should be “substantial deference to the arbitrators’ own assessments of their contractual authority.” (Id. at p. 373.) The other section 1286.2, subdivision (a) grounds for vacating an award are distinguishable from the ground of arbitrators exceeding their powers discussed in Intel, because the other grounds concern conduct and decisions by the arbitrators not directly involving consideration of the substance of the award.
The trial court’s standard of review over whether “[t]he rights of a party were substantially prejudiced by the refusal of the arbitrators to postpone the hearing upon sufficient cause” (§ 1286.2, subd. (a)(5)) has two components: sufficient cause and substantial prejudice. “Sufficient cause” to postpone the hearing is analogous to determinations by trial courts of “good cause,” which *1204are generally matters of discretion/ (See Lerma v. County of Orange (2004) 120 Cal.App.4th 709, 716 [15 Cal.Rptr.3d 609] [“the court must determine whether the party requesting the continuance has nonetheless established good cause therefore. That determination is within the court’s discretion”]; see also Stroud v. Superior Court (2000) 23 Cal.4th 952, 956-957 [98 Cal.Rptr.2d 677, 4 P.3d 933]; Laraway v. Sutro & Co. (2002) 96 Cal.App.4th 266, 273 [116 Cal.Rptr.2d 823].) Yet, it is arguable that the standard of review by a trial court over an arbitrator’s decision• that there was not “sufficient cause” to postpone a hearing should not be an abuse of discretion standard because section 1286.2, subdivision (a)(5) mandates that the trial court vacate an award if the trial court “determines” that there was sufficient cause for postponing the hearing, as well as that the failure to postpone the hearing substantially prejudiced the party. Perhaps the admonition that courts should draw “ ‘every reasonable inference to support the award’ ” (Ajida Technologies, Inc. v. Roos Instruments, Inc. (2001) 87 Cal.App.4th 534, 541 [104 Cal.Rptr.2d 686]) and the language in Intel, supra, 9 Cal.4th at page 373 concerning “substantial deference” to the arbitrator’s' decision, suggest, in effect, a standard of review closer to abuse of discretion. In any event, the standard of review by a trial court of an arbitrator’s conclusion that there is not sufficient cause for postponing a hearing seems unclear.4*
The determination of whether an erroneous denial of a postponement by the arbitrator substantially prejudiced a party should, as other issues of prejudice, generally be treated as a legal issue. (See Cassim v. Allstate Ins. Co. (2004) 33 Cal.4th 780, 801-802 [16 Cal.Rptr.3d 374, 94 P.3d 513] [“Accordingly, errors in civil trials require that we examine ‘each individual case to determine whether prejudice actually occurred in light of the entire record’ ”]; Schlessinger v. Rosenfeld, Meyer & Susman (1995) 40 Cal.App.4th 1096, 1111 [47 Cal.Rptr.2d 650] [prejudicial refusal to hear material evidence].) Arbitrators may consider prejudice in connection with whether there was sufficient cause to deny the postponement. But the arbitrators here decided there was not sufficient cause to grant a postponement:—and not the discrete question of whether there was prejudice to the party erroneously denied the postponement—a question the trial court must determine de novo.
Because of the differences between the federal and California provisions governing vacating an árbitration award for the denial of a request for postponement of a hearing, federal authorities on the standard of review are not necessarily applicable. With respect to vacating an award for failure to grant a continuance, the provision in the United States Arbitration Act (FAA) (9 U.S.C. § 10(a)(3)) is different than the California arbitration provision *1205covering postponements. The federal provision states that “the United States Court in-and for the district wherein the award was made may make an order vacating the award ... (3) [w]here thé arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown ... or of any other misbehavior by which the rights of any party have been prejudiced.” (Ibid., italics added.) Thus, under the FAA, in order for a trial court to vacate an award, the failure to grant a continuance must amount to misconduct or misbehavior. And the trial court is not required to vacate the award even if there is such “misconduct.” The federal courts have stated that in order to vacate an award, the “misconduct” in refusing to postpone the hearing must amount to a denial of a fair hearing. (See Laws v. Morgan Stanley Dean Witter (5th Cir. 2006) 452 F.3d 398, 399-400.) The “substantial prejudice” requirement in section 1286.2, subdivision (a)(5) appears to be somewhat comparable to the federal “denial of a fair hearing” test.
An appellate court reviews a trial court’s ruling vacating an award de novo, giving deference to the award. (See Intel, supra, 9 Cal.4th at p. 376, fn. 9; O’Flaherty v. Belgum (2004) 115 Cal.App.4th 1044, 1056 [9 Cal.Rptr.3d 286].) If there are disputed issues of fact before the trial court—even if presented by declarations and affidavits—the appellate court accepts the trial court’s resolution of those disputed facts if supported by substantial evidence. (See Malek v. Blue Cross of California (2004) 121 Cal.App.4th 44, 55 [16 Cal.Rptr.3d 687]; Reed v. Mutual Service Corp. (2003) 106 Cal.App.4th 1359, 1359-1360 [131 Cal.Rptr.2d 524].) The appellate court also presumes the trial court found every fact and drew the permissible inferences to support the trial court’s determination. (Fininen v. Barlow, supra, 142 Cal.App.4th at pp. 189-190; Betz v. Pankow (1993) 16 Cal.App.4th 919, 923 [20 Cal.Rptr.2d 834].)
In the instant case, in view of the history of the matter, there is no basis to conclude under any standard of review that there was sufficient cause shown to postpone the hearing. Moreover, SWAB suffered no prejudice from the arbitrators’ denial of the request for a postponement of the hearing. The basis of the request for a postponement was to allow SWAB to add a new statutory claim to the arbitration. SWAB was free to pursue that claim in another arbitration. If a ruling in the existing arbitration would adversely affect its new statutory claim, that same effect would have occurred if that statutory claim had been joined in the existing arbitration. SWAB’s failure to attend the hearing following the denial of its request for a postponement was its own tactical decision, and did not constitute prejudice arising from the refusal of the arbitrators to postpone the hearing. Accordingly, SWAB did not establish *1206the substantial prejudice required- to have the arbitration award vacated even assuming there was sufficient cause to postpone the hearing. I concur in -the reversal of the order vacating the arbitration award.
Respondent’s petition for review by the Supreme Court was denied August 29, 2007, S153867.

 All further references to statutes are to the Code of Civil Procedure. Section 1286.2, subdivision (a) provides: “(a) Subject to Section 1286.4, the court shall vacate the award if the court determines any of the-following: [][] (1) The award was procured by corruption, fraud or other undue means. [ID (2) There was corruption in any of the arbitrators. HQ (3) .The rights of the party were substantially prejudiced by misconduct of a neutral arbitrator. H] (4) The arbitrators exceeded their powers and the award cannot be corrected without affecting the merits of the decision upon the controversy submitted. [® (5) The rights of the party were substantially prejudiced by the refusal of the arbitrators to postpone the hearing upon sufficient cause being shown therefore or by the refusal of the arbitrators to hear evidence material to the controversy or by other conduct of the arbitrators contrary to the provisions of this title. [f] (6) An arbitrator making the award either: (A) failed to disclose within the time required for disclosure a ground for disqualification of which the arbitrator was then aware; or (B) was subject to disqualification upon grounds specified in Section 1281.91 but failed upon receipt of timely demand to disqualify himself or herself as required by that provision. However, this *1203subdivision does not apply to arbitration proceedings conducted under a collective bargaining agreement between employers and employees or between their respective representatives.”

 In Moncharsh v. Heily & Blase, supra, 3 Cal.4th at page 32, the court said, “Absent a clear expression of illegality or public policy undermining this strong presumption in favor of private arbitration, an arbitral award should ordinarily stand immune from judicial scrutiny.” Any such nonstatutory ground for vacating an award seemingly would involve a legal issue subject to de novo review.

 But see Fininen v. Barlow (2006) 142 Cal.App.4th 185 [47 Cal.Rptr.3d 687] (under unique circumstances, arbitrator’s failure to disclose required information in violation of § 1286.2, subd. (a)(6) did not require vacation of award).

 In Shammas v. National Telefilm Associates (1970) 11 Cal.App.3d 1050, 1055-1056 [90 Cal.Rptr. 119], the court appeared to make its own determination that a postponement was not necessary; see also Moore v. Griffith (1942) 51 Cal.App.2d 386, 389 [124 P.2d 900].