Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court No. S-1500-CV-251554 of Kern County. Arthur E. Wallace, Judge.
Law Office of Indra Lahiri and Frederick C. Kumpel, for Defendant and Appellant.
Law Office of Donald C. Duchow and Donald C. Duchow, for Plaintiff and Respondent.
OPINION
HILL, J.
Defendant appeals from the dismissal of his petition to vacate or correct an arbitration award. He contends the matter was not brought to trial or arbitration within five years of commencement of the court action, the arbitrator therefore had no power to do anything but dismiss the proceeding, and the trial court erred in dismissing defendant’s petition to vacate the award because the arbitrator exceeded his powers by issuing an award on the merits. We find no merit in defendant’s arguments and affirm.
FACTUAL AND PROCEDURAL BACKGROUND
On October 21, 2003, plaintiff filed a complaint alleging professional negligence against defendant, her former attorney. Defendant petitioned to compel binding arbitration pursuant to Code of Civil Procedure section 1281.2 , based on an arbitration clause included in the attorney retainer agreement. On June 3, 2004, the court granted the petition and ordered the case to be arbitrated. The parties then stipulated that the action be dismissed, and the court signed an order so providing.
All further statutory references are to the Code of Civil Procedure unless otherwise indicated.
On October 22, 2008, the matter was arbitrated. The arbitrator’s decision was served on the parties on February 4, 2009. Plaintiff petitioned to confirm the arbitration award. Defendant petitioned to vacate or correct the award and set the hearing for the same day as the hearing on plaintiff’s petition to confirm. Defendant based his request that the award be vacated on the fact that the arbitration occurred five years and one day after commencement of the action in the trial court. Defendant argued that the statute mandating dismissal of an action not brought to trial within five years after commencement applied, requiring the trial court to either dismiss the arbitration or order the arbitrator to do so. The trial court dismissed defendant’s petition to vacate, and granted plaintiff’s petition to confirm the arbitration award. It entered judgment in favor of plaintiff in accordance with the arbitration award.
DISCUSSION
I. Standard of Review
In reviewing the trial court’s ruling on a petition to vacate an arbitration award, questions of law, including the interpretation of statutes, are reviewed de novo; substantial evidence review applies to factual determinations. (SWAB Financial, LLC v. E*Trade Securities, LLC (2007) 150 Cal.App.4th 1181, 1196; Michael v. Aetna Life & Casualty Ins. Co. (2001) 88 Cal.App.4th 925, 933.)
II. Vacating Award and Dismissing Arbitration Proceeding
“An action shall be brought to trial within five years after the action is commenced against the defendant.” (§ 583.310.) If it is not brought to trial within this time, the action must be dismissed. (§ 583.360.) Excluded from the five-year period is any time during which “[p]rosecution or trial of the action was stayed” or “[b]ringing the action to trial, for any other reason, was impossible, impracticable, or futile.” (§ 583.340, subds. (b), (c).) An “action” is defined as “an ordinary proceeding in a court of justice by which one party prosecutes another for the declaration, enforcement, or protection of a right, the redress or prevention of a wrong, or the punishment of a public offense.” (§ 22.)
Section 583.360 provides, in its entirety: “(a) An action shall be dismissed by the court on its own motion or on motion of the defendant, after notice to the parties, if the action is not brought to trial within the time prescribed in this article. [¶] (b) The requirements of this article are mandatory and are not subject to extension, excuse, or exception except as expressly provided by statute.”
By their terms, these statutes authorize only dismissal of actions filed in court; they do not authorize dismissal of an arbitration proceeding. Thus, they do not mandate dismissal of a contractual arbitration proceeding that has not been brought to hearing within five years of commencement of the court action.
The court recognized the inapplicability of the five-year statute to arbitration proceedings in Young v. Ross-Loos Medical Group, Inc. (1982) 135 Cal.App.3d 669 (Young). In Young, the court ordered arbitration and stayed the court action. The arbitrator later dismissed the arbitration proceeding when it remained pending without resolution more than five years after the action was commenced. The trial court vacated the dismissal; the appellate court reversed, upholding the arbitrator’s dismissal.
The court stated:
“It is, of course, true that Code of Civil Procedure section 583 does not directly apply to a proceeding other than an action pending in the superior court. Consequently, its terms may not be there enforced by anyone other than a judge of that court. Nonetheless, it is equally settled that ‘the concept and limits of [that section have been imported] into the test of reasonable diligence in bringing a claim to resolution by arbitration.…’ [Citations.] We believe that the officer actually in charge of an arbitration proceeding is, at the very least, in as good a position to administer such test as is the judge of the superior court where proceedings have been stayed.” (Young, supra, 135 Cal.App.3d at p. 673, second bracketed insertion added.)
The court concluded:
“In sum, the superior court action had been stayed to determine by arbitration the extent of plaintiffs’ entitlement against defendants. It was the arbitrator’s decision that they take nothing on their claims by reason of their dilatory prosecution. Such an order, even if regarded as in the nature of a sanction, is as much an ‘award’ as any other final resolution of the arbitration proceeding. [Citation.] Absent some basis for vacating it and none was shown here, the superior court should have enforced it.” (Young, supra, 135 Cal.App.3d at pp. 673-674, fns. omitted.)
Later cases have also discussed the relationship between a court action filed by the plaintiff and a contractual arbitration proceeding to which the dispute is relegated when the court grants the defendant’s petition to compel arbitration; they have concluded it is for the arbitrator, not the court, to determine whether an arbitration proceeding should be dismissed due to plaintiff’s failure to diligently prosecute it. In Byerly v. Sale (1988) 204 Cal.App.3d 1312, the trial court dismissed the court action for failure to bring the matter to trial within five years, even though the action was then stayed pending completion of a contractual arbitration proceeding. The court reversed, concluding the time during which the action was stayed was excluded when calculating the five-year period; excluding that time, the action had been pending only five months. The court then noted that reversing the judgment was “close to an idle act” because “[m]ere dismissal of a previously stayed complaint under the present circumstances has absolutely no effect on the pending arbitration. This is so because the parties contractually agreed to arbitrate the dispute.… The court did not purport to dismiss the arbitration, nor are we aware of any authority to do so had it desired to accomplish that result.” (Id. at pp. 1314-1315, fn. omitted.)
The court noted that, after the plaintiff initiated the action by filing a complaint, and the court ordered the matter to contractual arbitration, “[b]arring a subsequent stipulation not to arbitrate, the judicial system’s future involvement should have been limited merely to confirming, correcting, or vacating any arbitration award. [Citations.] In other words, the court no longer had any reason to entertain the motion to dismiss the complaint here.” (Byerly, supra, 204 Cal.App.3d at p. 1315.) Agreeing with Young, the court concluded: “In our view, it is for the arbitrator, not the court, to resolve such questions while an arbitration which is the result of a contractual agreement between the parties is pending. Such an arbitration has a life of its own outside the judicial system, and only the arbitrator should determine whether there has been an unreasonable delay in prosecution which would justify dismissal. [Citation.]” (Byerly, at p. 1316, fn. omitted.)
In Brock v. Kaiser Foundation Hospitals (1992) 10 Cal.App.4th 1790 (Brock), the court discussed the relationship between a court action and an arbitration proceeding, in the context of a request to dismiss both on the ground the matter was not brought to trial or arbitration within five years. The plaintiffs filed a medical malpractice action against the defendants in May 1985. On the parties’ stipulation, the court ordered the dispute to binding contractual arbitration and stayed the action pending completion of arbitration. (Id. at pp. 1793-1794.) In May 1991, the defendants moved the court to dismiss both the court action and the arbitration proceeding, on the ground more than five years had elapsed since the complaint was filed and since the matter was ordered to arbitration. The trial court granted the defendants’ motion and dismissed both the court action and the arbitration proceeding. (Id. at p. 1794.)
The court described the relationship between the two proceedings:
“[C]ontractual arbitration is in no sense a ‘trial of a cause before a judicial tribunal,’ nor is it a usurpation or ouster of the judicial power vested in the trial court of this state by our Constitution. [Citation.] As a result, there is nothing to prevent one of the parties to a contractual arbitration provision from resorting initially to an action at law. [Citations.] The other party, if determined to pursue arbitration, must then take action to compel arbitration. [Citation.] …
“Once a court grants the petition to compel arbitration and stays the action at law, the action at law sits in the twilight zone of abatement with the trial court retaining merely a vestigial jurisdiction over matters submitted to arbitration. This vestigial jurisdiction over the action at law consists solely of making the determination, upon conclusion of the arbitration proceedings, of whether there was an award on the merits (in which case the action at law should be dismissed because of the res judicata effects of the arbitration award [citations]) or not (at which point the action at law may resume to determine the rights of the parties). [Citations.]” (Brock, supra, 10 Cal.App.4th at p. 1795-1796.)
The court first concluded the trial court action had been improperly dismissed. Because the time during which an action is stayed must be excluded from the five-year period pursuant to section 583.340, subdivision (b), and because the court action was stayed while the arbitration proceeding was pending, the five-year period had not run and the action could not be dismissed pursuant to the mandatory dismissal statute. (Brock, supra, 10 Cal.App.4th at pp. 1793, 1796-1801.)
The court then discussed cases in which the court upheld the trial court’s dismissal of an arbitration proceeding, and cases in which the court “reaffirmed the general principle that the contractual arbitration has a life of its own outside the judicial system,” supporting a conclusion that “the trial court has no power to dismiss a contractual arbitration proceeding.” (Brock, supra, 10 Cal.App.4th at p. 1805.) Finding the latter cases better reasoned, the court concluded a trial court has no jurisdiction to dismiss a contractual arbitration proceeding for delay in its prosecution. (Id. at p. 1807.) A party’s remedy for the other party’s failure to pursue the arbitration claim with reasonable diligence is to move the arbitrator for termination in the arbitration proceeding. (Id. at p. 1808.)
Similarly, Burgess v. Kaiser Foundation Hospitals (1993) 16 Cal.App.4th 1077, 1081, concluded that, while the mandatory dismissal provision of section 583.360 does not directly apply to arbitrations, if a matter is not brought to arbitration within five years, the arbitrator may dismiss the proceeding for failure to proceed with reasonable diligence.
We agree with Young and Burgess that section 583.360 does not mandate dismissal of an arbitration proceeding if it is not brought to hearing within five years of commencement of the court action. We also agree with Brock that a trial court lacks the authority to dismiss a contractual arbitration proceeding for delay in prosecution. The mandatory five-year dismissal statute applies only to “actions.” (Brock, supra, 10 Cal.App.4th at p. 1796.) Contractual arbitration is a separate proceeding in which the court’s role is limited. Nothing in the arbitration statutes authorizes the court to dismiss an arbitration proceeding for delay in prosecution. (See, §§ 1280-1294.2.) The power to determine whether a contractual arbitration proceeding should be dismissed due to lack of diligence in pursuing that remedy lies with the arbitrator. It is within the arbitrator’s authority to take evidence and determine whether any dilatory conduct is sufficient to justify dismissal of the proceeding.
Defendant did not request that the arbitrator dismiss the proceeding because of plaintiff’s delay. He did not raise the issue of lack of diligence in prosecution at any time during the arbitration proceeding. In fact, he did not raise the issue until after the arbitration hearing had been completed, the arbitrator had issued his decision, and plaintiff had petitioned for confirmation of the award.
Defendant raised the issue for the first time in a petition to the trial court to vacate the arbitration award. Defendant asked that the trial court take any of three actions: vacate the award and order dismissal pursuant to section 583.360, correct the award to state that the only authorized award was dismissal of the matter, or vacate the award so the arbitrator could order dismissal. The grounds on which an arbitration award may be vacated or corrected are limited. (§§ 1286.2, 1286.6; Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 33.) They do not include delay in prosecution of the arbitration proceeding. Defendant contended the arbitrator exceeded his authority by issuing an award on the merits, when dismissal of the arbitration was mandated by section 583.360. An arbitration award must be vacated if “[t]he arbitrators exceeded their powers and the award cannot be corrected without affecting the merits of the decision upon the controversy submitted.” (§ 1286.2, subd. (a)(4).) Section 583.360 did not mandate dismissal of the arbitration, and the arbitrator did not exceed his powers by hearing the matter on the merits and making an award, when no issue of dilatory conduct was raised. There was no error in the trial court’s denial of defendant’s petition to vacate or correct the arbitration award.
Section 1286.2, subdivision (a), lists the following grounds for vacating the award:
DISPOSITION
The judgment is affirmed. Plaintiff is awarded her costs on appeal.
WE CONCUR: VARTABEDIAN, Acting P.J.GOMES, J.
“(1) The award was procured by corruption, fraud or other undue means.
“(2) There was corruption in any of the arbitrators.
“(3) The rights of the party were substantially prejudiced by misconduct of a neutral arbitrator.
“(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 therefor 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.
“(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 subdivision does not apply to arbitration proceedings conducted under a collective bargaining agreement between employers and employees or between their respective representatives.”
Section 1286.6 lists the following grounds for correcting the award:
“(a) There was an evident miscalculation of figures or an evident mistake in the description of any person, thing or property referred to in the award;
“(b) The arbitrators exceeded their powers but the award may be corrected without affecting the merits of the decision upon the controversy submitted; or
“(c) The award is imperfect in a matter of form, not affecting the merits of the controversy.”