An Arbitration Award Is Not Subject To Appellate Review Upon the Merits

Posted on March 3, 2009 by Daniel Reisman

Christenten v. Smith, Consol. Case Nos. G039923 & G040103, 2009 WL 499748 (Cal. Ct. App. Feb. 28, 2009), upheld the general rule that arbitration awards are not subject to appellate review based on legal error of the arbitrator.

The Court's decision hinged upon its construction of the rule set forth in the California Supreme Court's recent decision in Cable Connection, Inc. v. DIRECTV, Inc. 44 Cal.4th 1334 (2008). There, the supreme court held that parties to a contract may narrow the scope of the the powers of an arbitrator by expressly stating that the arbitrator shall not have the power to commit errors of law and legal reasoning and that such errors would be subject to judicial review.

Here, in Christensen, the plaintiff argues that the same rule should apply because the arbitration clause in the contract at issue states that the arbitrator “shall render an award in accordance with substantive California law” (emphasis in original). The Court disagrees, stating that the phrase “substantive California law” merely amounts to a forum selection clause. Since the arbitration agreement did not expressly limit the powers of the arbitrator, the arbitration award is not subject to appellate review.

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Contractual Provisions for Prejugdment Interest Are Enforceable

Posted on February 22, 2009 by Daniel Reisman

In Roodenberg v. Pavestone Company, L.P., 171 Cal. App. 4th 185 (2009), the California Court of Appeal held that section 3287(a) of the California Civil Code is inapplicable when prejudgment interest is expressly provided for in a contract. Thus, no showing of certainty regarding the amount of prejudgment interest due is required on the part of the defendant.

The general rule with respect to allowance of interest, when there is no contract to pay interest, is that the law awards interest upon money from the time it becomes due and payable if such time is certain and the sum is certain or can be made certain by calculation. Id. at 191 (citing Schmidt v. Waterford Winery, 177 Cal. App. 2d 28, 34 (1960)) (emphasis in original).

In this case, the contract clearly stated that when the sum became due, the defendant had 30 days to pay it. If unpaid after 30 days, interest accrued at the rate of one and a half percent per month. Therefore, the general rule regarding certainty is inapplicable.

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