Southern California Arbitration Attorney
Los Angeles Construction Lawyer
Arbitration is a form of alternative dispute resolution. It is typically faster and can be a less expensive way to resolve a construction contract dispute. At the Law Office of Steven R. Lovett, our Los Angeles construction attorney has both the training and the experience needed to represent architects, engineers, contractors, subcontractors, or property owners when arbitration is required in contract terms or is preferable to construction litigation.
Arbitrating Disputes for Property Owners, Contractors and Design Professionals
Often, there is not a choice between arbitration and litigation; many construction contracts include an arbitration awards. There are two types of arbitration: judicial, in which a non-binding resolution can be turned into a judgment, and non-judicial, which is the most common type in a construction contract. Arbitration may also be required as a follow-up method when mediation has been unsuccessful.
What Can a Lawyer Do During Arbitration?
Because most arbitration hearings lead to a binding resolution (meaning that it is enforceable in a court of law and cannot be overturned without proving extraordinary circumstances) it is important to have an attorney there to represent you. Just as in a trial, your lawyer will present your case, can prepare you for possible cross-examination and can help you remain focused on the outcome without getting caught up in the emotions of the situation.
Most construction contracts and many real estate contracts contain an arbitration clause. The most common reasons for using arbitration (and the probable reason arbitration clauses are inserted in form AIA contracts) are that such procedures are traditionally less expensive, quicker, and avoid the risk of a jury trial.
However, there are many reasons why arbitration is not the most effective dispute resolution forum:
- A simple, undisputed case can often be resolved quicker and less expensively by obtaining a default or summary judgment in the court process.
- As arbitration administrative fees escalate, a client may wind up spending thousands of dollars to obtain a judgment in a situation where they could obtain the same judgment for roughly several hundred dollars in court costs by simply filing a lawsuit and obtaining a default judgment.
- Many arbitration tribunals have initiated pretrial conferences which can slow down and increase the expense of the arbitration process.
- Many people do not like the arbitration process because of the limited scope of review of an arbitration award. While a capricious judge or jury can be attacked by an appeal, a bad arbitration award can only be vacated based upon very limited grounds and for a very limited period of time.
Notwithstanding this, from an errors and omissions standpoint, arbitration will be preferred because it will tend to limit one's exposure since an arbitration award is generally going to be substantially less than a jury award.
If you are signing a construction or real estate contract or you are facing construction or real estate litigation, do not hesitate to Contact us by e-mail experienced California arbitration attorney Steven R. Lovett. At our law firm, we use almost 40 years of legal experience to offer cost-effective yet high-quality representation to clients throughout Southern California. Call today.
Res Judicata and Arbitration Awards
Thibodeau v. Crum (1992) 4 Cal.App.4th 749, provides that an arbitration award, confirmed or unconfirmed, has the same res judicata effect as a court judgment. Res judicata is simply a latin term that means "the law of the case" or binding precedent between the parties. In that case, after the owners arbitrated numerous construction deficiencies with the general contractor on their single-family home, plaintiffs asserted contract and tort claims against the subcontractor who constructed the driveway. Defendant subcontractor argued that the action was barred by application of the doctrine of res judicata, based upon the prior arbitration award. The trial court rejected the defense of res judicata, conducted a trial, and entered judgment for plaintiffs.
The court of appeal concluded that the action is indeed barred by res judicata and reversed.
The court held that the subcontractor, Crum, was a third party to the Thibodeau/Eller contract. As a subcontractor, Crum contracted with the general contractor, Eller. The subcontract was subject to the Thibodeau/Eller construction contract, which provided that disputes arising out of the project be resolved by arbitration. In fact, the Thibodeau/Eller arbitration concerned work done not only by Eller directly but also by subcontractors engaged by Eller. The parties in that case anticipated the involvement of third parties, i.e., subcontractors, at the time the construction contract was executed and the arbitration was intended to resolve disputes arising out of the work of such third parties.
But see Vandenburg v. Superior Court (Centennial Ins. Co.) (1999) 21 Cal.4th 815, in which the California Supreme Court refused to hold that the arbitration award had a preclusive effect on insurance carriers (while approving Thibodeau in fn. 2).
No Collateral Estoppel
Arbitration awards do not have a collateral estoppel effect on nonparties to the arbitration who did not consent to be bound by the arbitration award. Vandenberg v. Superior Court, 21 Cal.4th 615 (1999). This does not repeal the Thibodeau line of cases on the impact of the award on subsequent litigation involving parties to the arbitration.
Can Nonparties Enforce Arbitration Agreements?
Nonparties have been allowed to enforce arbitration agreements where there is sufficient identity of parties, where one has acted as an agent for a signatory, where one is estopped because he has voluntarily joined an arbitration proceeding, where an individual partner is bound by his partnership's agreement, where the person urging enforcement can show he is a third party beneficiary of the arbitration agreement, and where a construction contract or subcontract incorporates an arbitration procedure found in a related contract. Valley Casework, Inc. v. Comfort Construction, Inc.(1999) 76 Cal. App.4th 1013, 1021-1022; Benasra v. Marciano (2001) 92 Cal. App.4th 987, fn.1.
In Dryer v. Los Angeles Rams (1985) 40 Cal.3d 406, a player sued his football team and four individual agents, alleging that three of the four individuals were sued in their capacities as owners, operators, and managing agents of the team, and that all four of the individuals were parties to (and had breached) the player's contract with the team. The individual defendants, joined by the team, petitioned to compel arbitration, thereby affirmatively accepting the player's characterization of their status. In that context, the California Supreme Court said the agents were entitled to the benefit of the arbitration provisions.
What Are the Grounds to Vacate an Arbitration Award?
The grounds to vacate the award are very limited:
- That the award was procured by corruption, fraud, or other undue means;
- That there was corruption in any of the arbitrators;
- That the rights of the parties were substantially prejudiced by misconduct of a neutral arbitrator;
- That the arbitrators exceeded their powers; or
- That the rights of a party were substantially prejudiced by the refusal of the arbitrators to postpone the hearing, to hear evidence, or by other conduct of the arbitrators. Code of Civil Procedure Section 1286.2.
It is not clear that service to an improper address is the basis to vacate the award. Courts have held that a court cannot vacate an arbitration award for mistake or excusable neglect, but is limited to the statutory grounds stated above. Communications Workers of America (AFL-CIO) v. Gen. Tel. Co. of Calif (1981) 127 Cal. App.3d 87.
A petition to vacate an arbitration award must be filed within 100 days of service of the award.
Need Help With Arbitration? Contact A Los Angeles Real Estate Attorney
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