Ajida Technologies v. Roos Instruments

Decision Date01 March 2001
Docket NumberNo. H020311.,H020311.
Citation87 Cal.App.4th 534,104 Cal.Rptr.2d 686
CourtCalifornia Court of Appeals Court of Appeals
PartiesAJIDA TECHNOLOGIES, INC., Plaintiff and Respondent, v. ROOS INSTRUMENTS, INC., et al., Defendants and Appellants.

Michael A. Vacchio, Wendy K. Kilbride, Morgan Lewis & Bockius, for Defendants and Appellants.

Kara M. Andersen, Henry C. Bunsow, Daralyn J. Durie, Keker & Van Nest, San Francisco, for Plaintiff and Respondent.


This is an appeal from a judgment confirming an arbitration award. The appeal rests on a claim that the arbitrators exceeded their authority. At issue are two provisions of the award, both drawn from the parties' terminated agreement and both governing future controversies. The challenged provisions compel further arbitration and permit an award of attorneys' fees in the event of future disputes over the arbitration award. We conclude that the arbitrators acted within the scope of their powers in including the arbitration and fee provisions in the award. We therefore affirm the judgment.


The parties to this proceeding are Ajida Technologies, Inc. ("respondent") and Roos Instruments, Inc. and Mark Roos (collectively, "appellant"). This dispute arose out of the parties' 1991 Joint Marketing and Development Agreement ("JMDA" or "the agreement").

The agreement contemplated that appellant and respondent would work together to develop and market a microwave measurement system for testing integrated circuits. Under the terms of the agreement, each party bore equal responsibility for the venture. By the same token, the parties were to share equally in any benefits from the resulting technology, both during the term of the agreement and for five years after its termination. The agreement required the parties to submit disputes to binding arbitration and empowered the arbitrators to determine and award attorneys' fees and costs.

After signing the agreement, the parties began developing a high-speed circuit-testing device, the RI 7100A. The first unit was sold in 1992. As development efforts increased, appellant hired additional employees to work on the project, while respondent contributed the services of two of its employees.

Eventually, disputes arose. Among other things, the parties disagreed about control of the joint venture and about the value of their respective contributions to the project. By September 1997, the parties' relationship had irretrievably broken down. Appellant terminated the agreement and locked respondents' employees out of its facility. Respondent sought arbitration.

As contemplated by the agreement, the parties selected a panel of three arbitrators.1 The panel commenced a hearing on the parties' claims in March 1998. The following month, the panel issued an interim award, which resolved some issues while reserving others for further hearing. The arbitrators then conducted a second hearing in early July 1998. Later that month, the panel issued a tentative final award. Thereafter, the parties submitted argument in a prearranged telephone conference and by subsequent letter briefs.

The panel issued a "final award" in August 1998, which expressly recognized that the parties' agreement had been terminated in September 1997. The award directed appellant to pay respondent specified damages, attorneys' fees, royalties, inventory payments, pre-award interest, post-award interest, and costs. It also required appellant to diligently develop and market the RI 7100A, and to make royalty payments to respondent as specified for five years from termination. In light of the award's royalty and joint-ownership provisions, the arbitrators gave each party certain audit rights. Finally, as pertinent here, the arbitrators ruled that the provisions in the agreement for arbitration and attorneys' fees would apply to any future disputes arising out of the award.2

After receiving the final award, appellant requested the panel to clarify, correct, and modify it in several respects. First, appellant sought clarification of a royalty provision. More significantly, appellant asked the panel to strike the provisions of the award that carried forward the contractual arbitration and attorneys' fees clauses. In support of that request, appellant argued that there was no contractual basis for ordering either party to submit to any future arbitration or to pay attorneys' fees, in light of the panel's acknowledgment that the agreement had been terminated. In response to appellant's requests, the panel corrected the royalty provision but refused to delete the arbitration and fee clauses from the award. In September 1998, the arbitrators issued and served their final award, as corrected.3

Respondent immediately petitioned the trial court to confirm the award. In response, appellant requested the court to correct the award prior to confirmation by eliminating the arbitration and attorneys' fees clauses. In seeking correction of the award, appellant argued that inclusion of the challenged clauses exceeded the arbitrators' powers. The trial court disagreed and granted respondent's petition to confirm the award in its entirety, without correction. The court later entered its formal judgment confirming the award in May 1999.

This timely appeal followed.


Appellant's sole claim on appeal is that the trial court erred in refusing to correct the arbitration award. To resolve that claim, we must determine whether the arbitrators exceeded their authority in extending the arbitration and fee provisions from the parties' terminated contract to future controversies.

In addition to the issue raised by appellant, we are called upon to decide whether respondent is entitled to attorneys' fees on appeal.


After submission of the parties' briefs on appeal, we requested further briefing on the issue of whether appellant is an "aggrieved party" under Code of Civil Procedure, section 902.4 "One is considered `aggrieved' whose rights or interests are injuriously affected by the judgment. [Citations.] Appellant's interest `"must be immediate, pecuniary, and substantial and not nominal or a remote consequence of the judgment."'" (County of Alameda v. Carleson (1971) 5 Cal.3d 730, 737, 97 Cal.Rptr. 385, 488 P.2d 953; cf. Life v. County of Los Angeles (1990) 218 Cal.App.3d 1287, 1293-1294, 267 Cal.Rptr. 557; Radunich v. Basso (1965) 235 Cal. App.2d 826, 829-830, 45 Cal.Rptr. 824; compare Ely v. Frisbie (1861) 17 Cal. 250, 260.)

At the time of our request for additional briefing, the record did not disclose any current dispute between the parties that might result in an order to arbitrate or the imposition of attorneys' fees. For that reason, it appeared that any adverse consequence of the challenged judgment would be so remote or contingent as to render our opinion advisory. But in further briefing, the parties have informed us of a pending controversy, which respondent seeks to arbitrate, concerning the scope of the parties' audit rights under the award. Both parties assert that appellant is an aggrieved party within the meaning of section 902, and both parties request us to consider this appeal on its merits.

We are mindful of appellant's observation that section 902 is a remedial statute, which should be "liberally construed," with "any doubts resolved in favor of the right to appeal." (Aries Dev. Co. v. California Coastal Zone Conservation Com. (1975) 48 Cal.App.3d 534, 542, 122 Cal.Rptr. 315.) More to the point, we are persuaded that respondent's attempts to compel further arbitration result in an immediate adverse impact on appellant. We therefore agree that appellant is an aggrieved party within the meaning of the statute, with the right to seek review of the judgment at this time.

Having concluded that the judgment is appealable, we turn to a consideration of this appeal on its merits.


"It is well settled that the scope of judicial review of arbitration awards is extremely narrow. [Citations.]" (California Faculty Assn. v. Superior Court (1998) 63 Cal.App.4th 935, 943, 75 Cal. Rptr.2d 1; accord, Board of Education v. Round Valley Teachers Assn. (1996) 13 Cal.4th 269, 275, 52 Cal.Rptr.2d 115, 914 P.2d 193.) In determining whether private arbitrators have exceeded their powers, the courts must accord "substantial deference to the arbitrators' own assessments of their contractual authority...." (Advanced Micro Devices, Inc. v. Intel Corp. (1994) 9 Cal.4th 362, 373, 36 Cal. Rptr.2d 581, 885 P.2d 994.) Nevertheless, except where "the parties `have conferred upon the arbiter the unusual power of determining his own jurisdiction' [citation], the courts retain the ultimate authority to overturn awards as beyond the arbitrator's powers, whether for an unauthorized remedy or decision on an unsubmitted issue." (Id. at p. 375, 36 Cal.Rptr.2d 581, 885 P.2d 994.) "Guided by these standards, this court conducts a de novo review, independently of the trial court, of the question whether the arbitrator exceeded the authority granted him by the parties' agreement to arbitrate. [Citation.]" (California Faculty Assn. v. Superior Court, supra, 63 Cal.App.4th at p. 945, 75 Cal.Rptr.2d 1; compare, Pierotti v. Torian (2000) 81 Cal.App.4th 17, 24, 96 Cal.Rptr.2d 553.) In undertaking our review, however, "we must draw every reasonable inference to support the award. [Citations.]" (Pierotti v. Torian, supra, 81 Cal.App.4th at p. 24, 96 Cal.Rptr.2d 553.)

In short, we review the superior court's order de novo, while the arbitrator's award is entitled to deferential review. (Advanced Micro Devices, Inc. v. Intel Corp., supra, 9 Cal.4th at p. 376, fn. 9, 36 Cal. Rptr.2d 581, 885 P.2d 994.)

A Did the Arbitrators Exceed Their Authority by Compelling Future Arbitration?

As a starting point for our analysis, we accept appellant's basic premise that a party cannot be compelled...

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