Severtson v. Williams Construction Co.

• Decision Date: 10 October 1985
• Citation: 173 Cal.App.3d 86,220 Cal.Rptr. 400
• Court: California Court of Appeals Court of Appeals
• Parties: Richard SEVERTSON and Diane Severtson, Plaintiffs and Appellants, v. WILLIAMS CONSTRUCTION COMPANY, a California corporation, et al., Defendants and Respondents. Civ. B006950.

Page 400

220 Cal.Rptr. 400

173 Cal.App.3d 86

Richard SEVERTSON and Diane Severtson, Plaintiffs and Appellants, v. WILLIAMS CONSTRUCTION COMPANY, a California corporation, et al., Defendants and Respondents.

Civ. B006950.

Court of Appeal, Second District, Division 6, California.

Oct. 10, 1985.

Donald J. Parrish, Ventura, for plaintiffs and appellants

Robert D. Silver, Ventura, for defendants and respondents.

CANTER, Associate Justice. ^*

Here we are called upon to interpret Code of Civil Procedure section 1286.6, subdivision (a); more specifically, to determine the meaning of the words "evident miscalculation of figures" as they apply to the arbitrator's authority to correct an award previously made.

A dispute which had arisen between property owners and the contractor they hired to construct their residence was submitted to arbitration. After two days of hearings, the arbitrator made his award and the owners applied for a correction, claiming an error had been made. The arbitrator agreed and amended the award by increasing the amount of damages and also granted the owners' motion for additional attorneys fees and costs. The owners petitioned the superior court to have the amended award approved, and the contractor petitioned to have the original award approved. The superior court approved the original award and vacated the amended award, finding that the arbitrator had no authority to amend the original award. The owners appeal, contending the amended award should have been confirmed. Meanwhile, owners accepted payment of the original award and contractor asserts the appeal should be dismissed as moot. We affirm the confirmation of the original award and the vacation of the amended award.

FACTS

Richard and Diane Severtson entered into a contract with Bill Williams, doing business as Williams Construction Company, to construct a single-family dwelling. The Severtsons alleged defective workmanship and sued Williams in superior court. Williams cross-complained for monies due. By stipulation of the parties, it was agreed that the matter be arbitrated and that the arbitrator's decision would be binding. Oral and documentary evidence was presented to the arbitrator on two hearing dates. The matter was submitted; written arguments were prepared and filed. The arbitrator made his written award in favor of the Severtsons with a minor offset in favor of Williams and provided each party with a letter stating the reasons for the award. The major item of damages was found to be $15,000 to correct the exterior siding which included removal of the existing knotty pine siding found to be inappropriate for exterior use, repapering, fixing of flashing and installing tongue and groove cedar on all exterior walls. In addition, the arbitrator awarded the Severtsons attorneys fees and costs.

The Severtsons then filed an application to arbitrator to correct award and motion to recover attorneys fees and costs after decision. Both were granted. In an amended award, the arbitrator increased the damages by $6,408 and granted additional attorney fees and costs to include the period during the hearing and for preparation of the briefs and written arguments. In addition, the Severtsons were awarded expert witness fees. A letter of explanation of the amended award was provided. From the letters accompanying the awards and a declaration of the arbitrator accompanying the motion for confirmation of the amended award, the rationale for the amendment was presented.

ISSUES

The questions on appeal are (1) whether the arbitrator's action in amending the award was within his authority as a correction of an evident miscalculation of figures; (2) whether an arbitrator has authority to amend an award to increase attorneys fees and costs and provide for expert witness fees; and (3) whether the appeal is rendered moot by appellants' accepting the amount of the original award.

DISCUSSION

California has a comprehensive statutory arbitration scheme. (Code Civ.Proc., § 1280 et seq.) ¹ The parties to this litigation voluntarily agreed to submit their controversy to this process and thereby remove it from the procedures applicable to trial. They thereupon became bound by the rules of law pertaining to arbitration. (Lindholm v. Galvin (1979) 95 Cal.App.3d 443, 157 Cal.Rptr. 167.) The policy of the law is to encourage and foster arbitration, and the arbitrator's award is generally conclusive on matters of fact and law. (Lehto v. Underground Constr. Co. (1977) 69 Cal.App.3d 933, 138 Cal.Rptr. 419.)

The statutory scheme provides a process for correction of an arbitrator's award by the arbitrator under certain, limited conditions. ² The arbitrator purported herein to act pursuant to sections 1284 and 1286.6, subdivision (a), which provides for correction in the event of an "evident miscalculation of figures."

Evident Miscalculation of Figures

A review of the documentation surrounding the award provides the factual background for the trial court's action. The correction concerned what the arbitrator later characterized as a miscalculation of the costs of removing the knotty pine siding to replace it with cedar.

In the letter accompanying the original award, ³ the arbitrator indicated that he considered the bid of a Mr. Bartels which specified the amount of $11,634 "to remove and install one-half inch plywood" over the frame walls and $9,774 to then install tongue and groove cedar siding. The arbitrator decided, however, that the building plans had not called for the plywood, and it was not a bargained-for item; the award should only include the cost of removing the existing pine siding and replacing it with cedar and not the cost of the plywood. The arbitrator therefore awarded $15,000 for removal of and replacing the siding, a figure which excluded the plywood.

In his declaration accompanying the motion for confirmation of the amended award, the arbitrator asserted his reliance upon the Bartels proposal, but stated he believed the $11,634 figure to "[r]emove and install 1/2"' plywood over frame walls" meant to remove the existing pine exterior siding. The arbitrator stated that he did not believe that all of the exterior siding needed to be removed and chose instead to award the lesser sum of $5,226 for that task. The latter figure was then added to item 2 of the proposal which indicated a cost of $9,774 to install tongue and groove cedar on all exterior walls. When presented with the application to correct, the arbitrator states that in reviewing the testimony given at the hearing, it became clear to him that Bartels used the word "remove" in item 4 to refer to removing the windows which had to be done in any case. Thus, the total cost to repair the exterior walls was the sum of item 4 ($11,634) plus item 2 ($9,774), or a total of $21,408. The arbitrator thereupon corrected the award by adding the difference of $6,408.

The Severtsons characterize the original award as a miscalculation of figures; Williams urges that the correction was not a miscalculation, but a misinterpretation of the evidence. Both the original award and the amended award simply set forth the dollar amount entitlements, there being no statement of rationale contained therein.

The arbitrator's award must be in writing. ( § 1283.4.) The award need not, however, set forth findings of fact or a statement of reasons. The award is valid as long as it serves to settle the entire controversy and simply state that one party pay the other a sum of money. (Sapp v. Barenfeld (1949) 34 Cal.2d 515, 523, 212 P.2d 233.) When the arbitrator provides the basis for decision in the form of an opinion or letter, that document becomes part of the award for purposes of review. (Morris v. Zuckerman (1968) 69 Cal.2d 686, 691, fn. 4, 72 Cal.Rptr. 880, 446 P.2d 1000.) The letters accompanying the original and amended awards were properly before the trial court and form a basis for review here. Similarly, the arbitrator's declaration accompanying the motion for confirmation was properly received. While an arbitrator cannot impeach his award by testimony of his fraud or misconduct, he can testify to what matters were considered in making the decision. (Sapp v. Barenfeld, supra, 34 Cal.2d at p. 523, 212 P.2d 233.)

Review of arbitration awards is restricted. Only a limited form of judicial review is provided by statute. The arbitrator's findings on questions of both law and fact are conclusive. (Jones v. Kvistad (1971) 19 Cal.App.3d 836, 840-841, 97 Cal.Rptr. 100.) A court cannot set aside an arbitrator's error of law, no matter how egregious. (Lindholm v. Galvin, supra, 95 Cal.App.3d at p. 451, 157 Cal.Rptr. 167; State Farm Mut. Auto. Ins. Co. v. Guleserian (1972) 28 Cal.App.3d 397, 402, 104 Cal.Rptr. 683.) Nor can courts interfere with the award by examining "the merits of the controversy, the sufficiency of the evidence supporting the award, or the reasoning supporting the decision." (Santa Clara-San Benito Etc. Elec. Contractors' Assn. v. Local Union No. 332 (1974) 40 Cal.App.3d 431, 437, 114 Cal.Rptr. 909.) An error of fact by the arbitrator cannot form the basis of court review. (Ibid.)

Correction of an award is likewise restricted to the narrow statutory grounds, "and a dissatisfied litigant is limited thereto." (Durand v. Wilshire Ins. Co. (1969) 270 Cal.App.2d 58, 61, 75 Cal.Rptr. 415.) The arbitrator, like the court on review, is limited by statute in correcting an award. Here, the arbitrator purported to correct an "evident miscalculation of figures," a ground embraced by section 1286.6, subdivision (a). There are two elements to satisfy the condition for correction. There must be a miscalculation; and, the miscalculation must be "evident."

Webster's Third New International Dictionary (1981) page 789, defines "evident" as "capable of being perceived ... clear to the understanding: OBVIOUS, MANIFEST, APPARENT ... APPARENT, PATENT, MANIFEST, PLAIN, CLEAR, DISTINCT, OBVIOUS, PALPABLE,...