Procedural Posture

Plaintiff homeowners appealed a judgment of the Santa Clara County Superior Court, California, which granted defendant contractor's request to correct an arbitration award in favor of the homeowners, pursuant to Cal. Code Civ. Proc. § 1286.6, on the ground that the arbitrator had exceeded his powers in granting attorney fees.

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The homeowners contended that the trial court erred in reviewing the award and in correcting a legal error that did not exist. The instant court held that the deletion of the attorney fees was improper. The trial court concluded that attorney fees were not warranted because Darling v. Controlled Environments Construction precluded such fees when a bona fide dispute existed, and the arbitrator seemed to conclude that there was a bona fide dispute. However, the trial court's ruling was unauthorized. If the arbitrator overlooked or misread the Darling case - and even if he incorrectly interpreted or applied Cal. Civ. Code § 3260, the statute construed in Darling - it would have amounted to an error of law, not an act exceeding his powers. Therefore, the award was therefore not subject to judicial review, and the trial court's ruling could not be upheld. The instant court further concluded that the arbitrator correctly applied § 3260. Whoever was the prevailing party in any action to collect wrongfully withheld retention funds under § 3260(g) was entitled to attorney fees. The trial court erred in relying on the Darling case to reject the fee award to the prevailing homeowners.

Outcome

The trial court's order was reversed. The trial court was directed to enter a new judgment that reflected confirmation of the arbitration award in full.