Trial Court Should Not Have Reviewed (or Reversed) Arbitrator’s Ruling

In SingerLewak LLP v. Gantman, the Court addressed a trial court order denying a petition to confirm an arbitration award.  In the underlying case, an arbitrator determined a non-compete agreement Andrew Gantman signed as a partner in SingerLewak was enforceable.  The trial court concluded judicial review of the arbitration award was required and vacated the award.  After a de novo review, the trial court found the non-compete agreement was unenforceable under California law.  The firm appealed.  The Court of Appeal held that the general rule prohibiting review of an arbitration award applied in the case and the trial court should have affirmed the arbitrator’s award.

The Court stated that it saw nothing in B&P § 16602 that suggested resolution by an arbitrator of the dispute between a partner and the partnership would improperly protect the public interest and thus require review.  It stated that he California Supreme Court explained in Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 6, “an arbitrator’s decision is not generally reviewable for errors of fact or law, whether or not such error appears on the face of the award and causes substantial injustice to the parties.” This is because parties who enter into arbitration agreements are presumed to know the arbitrator’s decision will be final and binding; “arbitral finality is a core component of the parties’ agreement to submit to arbitration.” (Id. at p. 10.)  This Court stated, as in Moncharsh, the validity and enforceability of the provision under California law were contested issues submitted to the arbitrator for decision. His resolution of those issues is what the parties bargained for in the arbitration agreement.  The arbitrator was within his powers in resolving the questions presented to him. And, “[i]t is well settled that ‘arbitrators do not exceed their powers merely because they assign an erroneous reason for their decision.” The arbitrator may have erred in interpreting or applying section 16602. However, he did not exceed his powers by acting in a manner “not authorized by the contract or by law.”

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