Procedural Posture

Appellant disputants challenged the judgment of the Superior Court of Los Angeles County (California), which sustained the demurrers of respondents, arbitrator and sponsoring organization, and dismissed their complaints based upon arbitral immunity, in an action for breach of contract and negligence arising out of an arbitration contract.

California Business Lawyer & Corporate Lawyer, Inc. are California Corporate Attorneys

Overview

Appellant disputants entered into a contract with respondents, arbitrator and sponsoring organization, to conduct arbitration. The contract specified the arbitrator would lose his jurisdiction if a timely award was not made. Thirty days after final submission, respondent arbitrator requested and received an extension to make an award pursuant to Cal. Com. Arb. R. 40. Appellants filed a suit against respondents for breach of contract and negligence when respondent arbitrator failed to make an award seven months after submission and lost his jurisdiction under the contract to make an award. The trial court sustained respondents’ demurrers and granted dismissal based upon arbitral immunity. On appeal, the court reversed the judgment, remanded, and held arbitral immunity protected only quasi-judicial actions, not failure to render an arbitration award because an arbitrator was not a judge; arbitration was not a judicial proceeding but a contractual matter; respondent arbitrator failed to make an award within the time set under the contract; and arbitral immunity did not protect respondent sponsoring organization when respondent arbitrator was not immune from liability.

Outcome

The court reversed the order sustaining the demurrers and dismissal, remanded, and held the dismissal of appellant disputants’ suits were erroneous because respondents, arbitrator and sponsoring organization, were not entitled to arbitral immunity; arbitration was not a judicial but a contractual matter controlled by the arbitration agreement; and respondent breached the agreement by failing to render an award within the specified time.