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Arbitrator May Use Successive Awards to Finally Decide All Issues

Thank you to our friend Alicia Freundlich, a Straus LL.M candidate, for passing along this case summary copied verbatim from the Newsletter of the Business Law Section of the State Bar of California.  

(right)  More serious balloon popping by the ever popular Charles Fincher of LawComix.com, who every so graciously lets me use these fabulous lawyer cartoons for free.  Do support him by paying cold hard cash for a signed copy, or better yet, a custom-made print for your favorite partner, judge, client, administrator, legal assistant, or associate.


Roehl v. Ritchie

2007 DJDAR 1480, 2007 Cal App LEXIS 125  (Ct. App. 4TH Dist. 1/31/2007)

This case arose from a dispute between the sons of a decedent and his second wife over distribution of the estate. The dispute was arbitrated and the arbitrator issued an award on March 1, 2004 concerning most of the issues in controversy. Among other things, he ruled that the wife had a 75% interest in the decedent’s home and that the sons had a 25% interest, which should be distributed to them because the wife was still living in the home.. The arbitrator indicated that the home was valued at $575,000 based on a November 2003 appraisal which covered the home and some other assets. He ruled that the appraisal would be the basis for distribution “unless the trustee determines that changes will be needed…if…in light of new developments since [November 2003], a somewhat different distribution of assets would benefit the estate” and he offered to work with the trustee to ”review any questions he may have concerning the orders and findings made by the arbitrator”.

The wife died one week after the award was issued. The wife’s niece, her successor in interest, successfully moved to confirm the award and that decision was affirmed on appeal in an unpublished decision. While the appeal was pending, the trustee petitioned the arbitrator for instructions on several issues, including whether to value the home as of the time of the award or as of the time of the distribution of the estate assets. In October 2005, the arbitrator issued a second award in which he, inter alia, valued the home at $1,050,000. Because this would lead to a larger distribution to the sons, the wife’s niece opposed confirmation of the award on the ground that this was a correction or amendment of the original award and thus beyond the arbitrator’s power because it occurred long after the time allowed to correct or amend.

The trial court confirmed the award, the niece appealed, and the Court of Appeal affirmed. It ruled that the arbitrator, by allowing for an opportunity by the trustee to amend the valuation, plainly left the matter of the value of the home up for future consideration if the trustee determined that changes were needed.

Note: It can sometimes be difficult for a party to discern whether an arbitrator is correcting an award, amending it, or issuing an incremental or successive award and that is what happened in this case. Code of Civil Procedure 1284 provides that a party must apply to the arbitrator for correction of an award no later than ten days after service of a signed copy of the award on the applicant, other parties must object within ten days after the application is delivered or mailed to them, and the arbitrator must issue any corrected award not later than thirty days after service of a signed copy of the award on the applicant.

But, in Delaney v. Dahl, 99 Cal App 4th 647, 659 (2002), the Court of Appeal held that an arbitrator may amend the award at any time prior to confirmation of the award so long as the amendment is consistent with other findings on the merits of the controversy and does not cause demonstrable prejudice to the interests of a party. And in Hightower v Superior Court, 86 Cal App 4th 1415, 1431 (2001), the Court of Appeal affirmed an arbitrator’s ability to use “a multiple incremental or successive award process as a means, in an appropriate case, of finally deciding all submitted issues”.

(emphasis my own)

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