Housing Auth City of Calexico v. Multi-Housing Tax Credit Partners

Filed 8/28/23
CERTIFIED FOR PUBLICATION
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
HOUSING AUTHORITY OF THE D079967
CITY OF CALEXICO et al.,
Plaintiffs and Appellants,
(Super. Ct. No. ECU000487)
v.
MULTI-HOUSING TAX CREDIT
PARTNERS XXIX, L.P. et al.,
Defendants and Appellants.
APPEAL from a judgment of the Superior Court of Imperial County,
L. Brooks Anderholt, Judge. Reversed and remanded with instructions.
Law Office of Julie A. Herzog and Julie A. Herzog for Plaintiffs and
Appellants.
Cox, Castle & Nicholson, Edward F. Quigley and Cathy T. Moses for
Defendants and Appellants.
Housing Authority of the City of Calexico (the Housing Authority) and
AMG & Associates, LLC (collectively, the plaintiffs) appeal from a judgment
of the superior court confirming an arbitration award, declining to undertake
a review of the award on the merits for errors of fact or law (review on the
merits) and declining to grant their petition to partially reverse or vacate the
award. They contend that the superior court should have undertaken a
review on the merits because the parties had agreed to such a review. They
further contend that, had the superior court undertaken such a review, it
would have concluded that no substantial evidence supports the award and
that the award is contrary to law. Additionally, the plaintiffs contend that, in
denying their motion to partially reverse or vacate the award, the superior
court left in place a finding by the arbitrator that not only exceeded the
arbitrator’s powers but works as a forfeiture against the Housing Authority.
Multi-Housing Tax Credit Partners XXIX, L.P., Multi-Housing
Investments, LLC, and Highridge Costa Investors, LLC (collectively, the
defendants) appeal from the same judgment, but only to the extent it upholds
a portion of the arbitration award declining to award them attorneys’ fees
and costs.
As discussed post, we conclude the superior court erred in declining to
undertake a review on the merits. In its opinion in Cable Connection, Inc.
v. DIRECTV, Inc. (2008) 44 Cal.4th 1334 (Cable Connection), the California
Supreme Court held that an agreement which permitted an arbitration
award to be subjected to judicial review on the merits is enforceable. But the
court expressed no view as to whether such review may be undertaken in the
first instance by the Court of Appeal in lieu of the superior court. We
conclude that, in instances in which the parties have agreed that an
arbitration award may be subjected to judicial review, it is the superior court
and not the Court of Appeal that has original jurisdiction to undertake that
review in the first instance, that the superior court is without power to yield
that original jurisdiction to the Court of Appeal, and that the superior court
should thus have performed the review. On this basis, we reverse the
judgment.
2
We further conclude that the appellate jurisdiction of the Court of
Appeal empowers the Court of Appeal to undertake a review on the merits in
the first instance when (as here) the superior court has failed to exercise its
original jurisdiction to undertake such a review. However, for reasons
expressed in the balance of this opinion, we deem it appropriate to refrain
from exercising our appellate jurisdiction beyond reversing the judgment.
Hence we remand to the superior court with instructions to undertake the
review on the merits that its original jurisdiction obligated it to undertake in
the first instance.
I.
FACTUAL AND PROCEDURAL BACKGROUND
This case involves a dispute among participants in a project to develop
affordable housing within the framework of a federal low-income housing tax-
credit program that has been described by some as “the most important
source of financing for affordable housing . . . across the nation.”
(Homeowner’s Rehab, Inc. v. Related Corporate V SLP, L.P. (Mass. 2018) 99
N.E.3d 744, 748 (Homeowner’s Rehab).) Although the tax-credit program has
been discussed at some length in the parties’ briefs, and in further depth in
opinions from a variety of courts outside of California (see, e.g., SunAmerica
Housing Fund 1050 v. Pathway of Pontiac (6th Cir. 2022) 33 F.4th 872;
Riseboro Community Partnership v. SunAmerica Housing Fund 682
(E.D.N.Y. 2020) 482 F.Supp.3d 31; and Homeowner’s Rehab, it will not be
discussed here. This is because resolution of the present appeal does not turn
on matters relating to the tax credit program. Instead, it turns on matters
pertaining to judicial review of arbitration awards.
At the heart of the parties’ dispute is a contract that includes an
arbitration clause (the Arbitration Agreement or Agreement). Relevant to
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the issues in this appeal are four statements in the Agreement. First, a
statement that: “The Arbitrator . . . shall endeavor to decide the controversy
as though the arbitrator were a judge in a California court of law.” Second, a
statement that: “The award . . . and the findings of the Arbitrator shall be
final, conclusive and binding upon the parties, and judgment upon the award
and enforcement of any other judgment, decree or order of relief granted by
the Arbitrator may be entered or obtained in any court of competent
jurisdiction upon the application of any party.” Third, a statement that:
“Notwithstanding the provisions herein, the parties hereto, by submitting the
controversy or dispute to arbitration, do not waive or relinquish their rights
of appeal and said Partners expressly agree that each Partner shall have the
right of appeal as specifically provided in accordance with the laws relating to
appeals then in effect in the State of California, as the same may be amended
or superseded from time to time; and for such purposes, it is hereby expressly
acknowledged and agreed that the parties desire to maintain their right of
appeal as an integral part of this Agreement.” Fourth, a statement that:
“Notwithstanding the applicable provisions of California law[,] . . . the
decision of the arbitrator and the [arbitrator’s] findings of fact and
conclusions of law shall be reviewable on appeal upon the same grounds and
standards of review as if said decision and supporting findings of fact and
conclusions of law were entered by a court with subject matter and present
jurisdiction.”
After the parties’ dispute arose, the plaintiffs initiated a lawsuit by
filing in the superior court a complaint asserting several claims against the
defendants. Thereafter, following some procedural wrangling, the plaintiffs
and defendants entered into a stipulation to submit the dispute to arbitration
“pursuant to and in accordance with” the Arbitration Agreement. Then,
4
pursuant to the terms of the stipulation, the proceedings in the superior court
were ordered stayed pending conclusion of the arbitration.
While the court proceedings were stayed, the parties participated in an
arbitration of the plaintiffs’ claims and of counterclaims asserted by the
defendants. The arbitration resulted in the issuance of an interim
arbitration award, followed by a final arbitration award (the Arbitration
Award or Award) denying all of the claims and counterclaims and declining
to award attorneys’ fees or costs. Thereafter, the plaintiffs returned to the
superior court to mount a challenge to the Award. The challenge was a two-
pronged challenge in which the plaintiffs filed, in the lawsuit that had been
stayed (1) a notice of appeal to the superior court and (2) a petition to
partially reverse and/or vacate the Award.
After briefing and oral argument on the notice of appeal and the
petition to partially reverse and/or vacate, the superior court issued an order
discussing and ruling on each of those two modes of challenge. Addressing
the notice of appeal first, the superior court commenced its discussion by
making two assertions of law. First, the court stated that “an arbitrator’s
award is not subject to judicial review for mistake of law or mistake of fact
unless the parties have limited the arbitrator’s powers not to make mistakes
of law or fact.” Second, the court stated that, in circumstances in which the
parties have imposed such limits on the arbitrator’s power, judicial review on
the merits “can only be obtained when the agreement between the parties
expressly provides for that review in language that is explicit and
unambiguous.”
The superior court then reviewed the Arbitration Agreement. So doing,
it concluded not only that the language of the Agreement satisfied the
“explicit and unambiguous” requirement, but that it did so in a manner that
5
“pointed[ed] to appellate review, not review in the trial court.” In the words
of the superior court:
“[T]he Arbitration Agreement states the arbitrator is to act
as a superior court trial judge and follow California
statutes, case law, and rules of evidence. It also states that
the award is binding. [The Agreement] is explicit and
unambiguous in stating that either party may appeal the
arbitrator’s decision ‘in accordance with the laws relating to
appeals then in effect in the State of California.’ [T]he
explicit language in this case points to appellate review, not
review in the trial court.”
On the basis of this analysis (and characterizing the notice of appeal as a
“petition” and a “request”), the superior court then concluded this portion of
its judgment by ruling (in keeping with arguments of the defendants) that,
“[inso]far as the petition requests an appeal to this court of the arbitration
award, it is denied.”
The court then turned its focus to the petition to partially reverse
and/or vacate the Award in part. With regard to this prong of the plaintiffs’
challenge, the superior court stated that:
“As the court does not have the explicit and unambiguous
authority under the Arbitration Agreement to preside over
an appeal of the arbitration award, the court is left with its
statutory authority to review under Code of Civil Procedure
§ 1286.2” (Italics added).
Noting that the scope of review under section 1286.2 is “statutorily limited,”
the superior court then proceeded to draw what it viewed as a distinction
between the scope of review applicable to it versus the scope of review
applicable to the Court of Appeal. In the words of the court:
“[N]umerous cases illustrate the fact that when exercising
its authority under [Code of Civil Procedure section]
1286.2, mistakes of law or fact are not in excess of the
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arbitrator’s power at this level of review. Using mistakes of
law or fact as a basis for an argument that this arbitrator
exceeded her power is only available to these parties under
the Arbitration Agreement at the appellate level.”
The court then went on to engage in some analysis of the arbitrator’s
findings, before (a) concluding its order by denying in its entirety the petition
to partially reverse and/or vacate and by confirming the Award and then (b)
issuing a judgment to the same effect.
In this fashion, the superior court in essence ruled that it was
powerless to review the Award on the merits, and it confined its review to the
statutory grounds set forth in section 1286.2 of the Code of Civil Procedure,
leaving unaddressed the plaintiffs’ claims that the Award was tainted by
errors of fact and law.
II.
DISCUSSION
Fundamental to this appeal are two issues: (1) whether a court should
review the Arbitration Award on the merits; and, if so, (2) in which court such
a review should occur in the first instance. In this case, the parties agree—
and, as discussed post, so do we—that, in the circumstances presented here,
it is appropriate for a court to review the Arbitration Award on the merits.
However, they do not agree on the court in which such a review should occur
in the first instance, and they proceed as though the determination as to
which court is to undertake the review in the first instance is a choice that
belongs to them. But is it?
A. The Enforceability of an Agreement to Subject an
Arbitration Award to Judicial Review on the Merits
In addressing the first of the two issues we have flagged (whether a
court should review the Arbitration Award on the merits), we begin with a
discussion of two opinions of the California Supreme Court and one opinion of
7
the United States Supreme Court: Moncharsh v. Heily & Blase (1992)
3 Cal.4th 1 (Moncharsh); Cable Connection, supra, 44 Cal.4th 1344; and Hall
Street Associates, L.L.C. v. Mattel, Inc. (2008) 552 U.S. 576 (Hall Street).
1. Moncharsh
As at least one Court of Appeal has opined, “[a]ny discussion of the
scope of a trial court’s review of a private arbitration award must begin with
Moncharsh v. Heily & Blase.” (Baize v. Eastridge Companies, LLC (2006)
142 Cal.App.4th 293, 300 (Baize).) In Moncharsh, the California Supreme
Court considered the “limited” but perennially vexing “issue of whether, and
under what conditions, a trial court may review an arbitrator’s decision.”
(Moncharsh, supra, 3 Cal.4th at p. 8.) In considering this issue the court
discussed, among other things, the importance of “vindicat[ing] the intentions
of the parties that the award be final” (id. at p. 11) and the importance of the
role that legislatively enacted guardrails play in moderating the risks
associated with arbitral error. (Moncharsh, at pp. 11-13.)
“[W]e recognize there is a risk that the arbitrator will make
a mistake. That risk, however, is acceptable for two
reasons. First, by voluntarily submitting to arbitration, the
parties have agreed to bear that risk in return for a quick,
inexpensive, and conclusive resolution to their dispute.”
(Moncharsh, supra, 3 Cal.4th at p. 11.)
“[S]econd[,] . . . the Legislature has reduced the risk to the
parties of such a decision by providing for judicial review in
circumstances involving serious problems with the award
itself, or with the fairness of the arbitration process.”
(Moncharsh, supra, 3 Cal.4th at p. 12.)
The judicial review to which the Supreme Court was referring in
Moncharsh was review pursuant to the terms of the California Arbitration
Act (CAA), codified at sections 1280 through 1294.2 of the Code of Civil
Procedure. (Moncharsh, supra, 3 Cal.4th at pp. 12-13, quoting and discussing
8
portions of Code Civ. Proc. §§ 1286.2 and 1286.6.) But the CAA is not a
panacea for arbitral error. This is because the act does not supply a remedy
for all forms of arbitral error. To the contrary, it and its federal
counterpart—the Federal Arbitration Act (FAA), codified at section 1 of title
9 of the United States Code et seq.—“provide only limited grounds for judicial
review of an arbitration award.” 1 (Cable Connection, supra, 44 Cal.4th at
p. 1344.)
Yet neither the CAA nor the FAA delineates whether those limited
grounds for judicial review comprise the universe of permissible bases on
which a court may vacate an arbitration award. Thus the California
Supreme Court focused its attention on this issue in Moncharsh. And, after
examining the CAA and the case law, it arrived at the conclusion that “the
California Legislature [had] adopted the position . . . that in the absence of
some limiting clause in the arbitration agreement, the merits of the award,
either on questions of fact or of law, may not be reviewed except as provided
in the statute [meaning, the CAA].” (Cable Connection, supra, 44 Cal.4th at
p. 1340; Moncharsh, supra, 3 Cal.4th at p. 25, italics added, quoting Crofoot
v. Blair Holdings Corp. (1953) 119 Cal.App.2d 156, 186.)
1 “Under both statutes [the CAA and the FAA], courts are authorized to
vacate an award if it was (1) procured by corruption, fraud, or undue means;
(2) issued by corrupt arbitrators; (3) affected by prejudicial misconduct on the
part of the arbitrators; or (4) in excess of the arbitrators’ powers.” (Cable
Connection, supra, 44 Cal.4th at p. 1344 [citing Code Civ. Proc. § 1286.2,
subd. (a) and 9 U.S.C. § 10(a)].)
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2. Hall Street and Cable Connection
Following publication of the Supreme Court’s 2 opinion in Moncharsh,
consensus among the courts of appeal regarding the meaning of the phrase
“in the absence of some limiting clause in the arbitration agreement” proved
elusive. (See Cable Connection, supra, 44 Cal.4th at pp. 1345-1347.) 3 Thus
courts throughout California and throughout the United States continued to
churn with debate over the circumstances under which a court, even with the
blessing of the parties, could review an arbitration award on the merits.
From one jurisdiction to the next, and even within the same jurisdiction,
judges clashed over the question: Under what circumstances may the scope of
judicial review for an arbitration award exceed the grounds set forth in the
2 All references in this opinion to “the Supreme Court” or to “our
Supreme Court” signify the California Supreme Court. Where the United
States Supreme Court is intended, it is referenced as such.
3 As the Supreme Court observed in its opinion in Cable Connection,
supra, 44 Cal.4th at page 1345:
“In the years following the Moncharsh decision, our
Courts of Appeal have rejected claims that review of the
merits was authorized inferentially, by contract clauses
stating that ‘ “[t]he award will be in the form of a statement
of decision” ’ [citation] or that California law ‘ “shall govern
[the] interpretation and effect” ’ of the contract [citation] or
that the arbitrator ‘ “shall apply California law” ’ and
‘ “shall be constrained by the rule of law” ’ [citation]. In
each of these cases, however, the courts noted that an
expanded scope of review would be available under a clause
specifically tailored for that purpose. [Citation.]
“Nevertheless, when the issue has been squarely
presented, no Court of Appeal has enforced a contract
clause calling for judicial review of an arbitration award on
its merits.”
10
CAA and the FAA? (Cf. Hall Street, supra, 552 U.S. at p. 583, fn. 5 and
accompanying text [citing “split” among circuits, “with some saying the
(grounds for review set forth in the FAA) are exclusive, and others regarding
them as mere threshold provisions open to expansion by agreement”]; see,
e.g., Kyocera Corp. v. Prudential–Bache Trade Services, Inc. (9th Cir. 2003)
341 F.3d 987, 1000 (en banc) (Kyocera) [overruling three-judge panel that had
held a federal court could review an arbitration award on grounds beyond
those set forth in the FAA].)
Then, in 2008, the United States Supreme Court and the California
Supreme Court each put these questions to rest—on opposite sides of the bed.
That year, “the United States Supreme Court . . . held that the Federal
Arbitration Act [citation] does not permit the parties to expand the scope of
review by agreement.” (Cable Connection, supra, 44 Cal.4th at p. 1339
(italics added), discussing Hall Street, supra, 552 U.S. at p. 578 [“We hold
that the statutory grounds are exclusive.”].) Conversely, the California
Supreme Court held that, under the CAA, “the parties may obtain judicial
review of the merits by express agreement.” (Cable Connection, at p. 1340
(italics added).) In the words of the Supreme Court:
“[I]n Moncharsh we declared that ‘ “in the absence of some
limiting clause in the arbitration agreement, the merits of
the award, either on questions of fact or of law, may not be
reviewed except as provided in the statute.” ’ ” (Cable
Connection, supra, 44 Cal.4th at p. 1345.)
11
“We adhere to our holding in Moncharsh, recognizing that
contractual limitations may alter the usual scope of review.
The California rule[ 4] is that the parties may obtain judicial
review of the merits by express agreement.” (Cable
Connection, supra, 44 Cal.4th at p. 1340.)
“[T]o take themselves out of the general rule that the
merits of the award are not subject to judicial review, the
parties must clearly agree that legal errors are an excess of
arbitral authority that is reviewable by the courts.” (Cable
Connection, supra, 44 Cal.4th at p. 1361.)
As a consequence of the developments just described, it now is settled
law that (1) the scope of judicial review for an arbitration award under the
Federal Arbitration Act is limited to the grounds set forth in that act and
(2) the scope of judicial review for an arbitration award under the California
Arbitration Act is not limited to the grounds set forth in that act, but instead
4 The discrepancy between the rule that the Cable Connection majority
articulated for judicial review of arbitration awards under California law and
the rule that the Hall Street majority had laid down earlier the same year for
judicial review of arbitration awards under federal law is in large measure
attributable to a divergence in priorities. Whereas the Hall Street majority
prioritized pragmatism and statutory construction in its analysis (see Cable
Connection, supra, 44 Cal.4th at pp. 1352-1353), the Cable Connection
majority, like the Moncharsh majority, prioritized parties’ expectations and
intent. (See Cable Connection, at pp. 1355, 1358.)
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may be supplemented via an explicit agreement of the parties. 5 Yet, as
discussed below, to say that the scope of judicial review under the CAA may
be supplemented by an agreement of the parties is not to say that there are
no limits or that courts are constrained to conform their conduct to whatever
methodologies for review the parties might mutually select.
B. The Problem with Permitting the Parties to Leapfrog the
Superior Court
As Justice Moreno observed in his opinion concurring, dissenting, and
(in the Justice’s words) merely “stating the obvious” in Cable Connection:
“Although arbitration is created by contract, and the terms
of the arbitration are dictated by contractual provisions,
courts are not parties to arbitration agreements, and they
are not bound by their terms. Parties can agree that a
legal dispute arising from their arbitration will be settled
by the California Supreme Court, but this court is not
bound by that agreement.”
(Cable Connection, supra, 44 Cal.4th at p. 1368 (conc. & dis. opn. of Moreno,
J.).) In keeping with the observation of Justice Moreno, it is of course beyond
dispute that “[t]he exercise of judicial power cannot be controlled or
compelled by private agreement or stipulation” (Moncharsh, supra, 3 Cal.4th
5 The holding of Hall Street does not have preemptive effect with respect
to the CAA or California case law interpreting that act. As the Cable
Connection majority stated: “Hall Street’s holding on the effect of the FAA is
a limited one.” (Cable Connection, supra, 44 Cal.4th at p. 1354.) Hall Street
“was a federal case governed by federal law,” in which “the court considered
no question of competing state law.” (Cable Connection, at pp. 1353-1354.)
“The court unanimously left open other avenues for judicial review, including
those provided by state statutory or common law.” (Cable Connection, at
p. 1354 [citing majority and dissenting opinions in Hall Street].) Hence “the
Hall Street holding is restricted to proceedings to review arbitration awards
under the FAA, and does not require state law to conform with its
limitations.” (Cable Connection, at p. 1354.)
13
at p. 35 (conc. & dis. opn. of Kennard, J.)), and that “the parties to any
contract are limited in the constraints they may place on judicial review.”
(Cable Connection, at p. 1362 (maj. opn.).) Thus, for example, “an arbitration
agreement providing that a ‘judge would review the award by flipping a coin
or studying the entrails of a dead fowl’ would be unenforceable.” (Ibid.,
quoting in part LaPine Technology Corp. v. Kyocera Corp. (9th Cir.1997) 130
F.3d 884, 891 (conc. opn. of Kozinski, J.). Equally unenforceable would be an
“agree[ment] that a court will have the power to review an arbitral award,
but that the review must be accomplished . . . by casting lots.” (Cole,
Managerial Litigants? The Overlooked Problem of Party Autonomy in
Dispute Resolution (2000) 51 Hastings L.J. 1199, 1203 [cited in Cable
Connection, at p. 1363].) “While the parties could certainly agree to resolve
their disputes privately by such means, co-opting a judge to employ such
procedures presents implications for the courts’ institutional integrity.”
(Cole, supra, at p. 1203.)
Thus we arrive at the question: When parties agree that judicial review
of an arbitration award on the merits is to be undertaken in the first instance
by the Court of Appeal, rather than by the superior court, 6 is the superior
court required—or permitted—to step aside? The superior court in this case
answered in the affirmative. In so doing, it erred.
6 Although we conclude that the Arbitration Agreement allows the
Award to be subjected to judicial review on the merits, we express no opinion
as to whether the parties here agreed that such a review would be
undertaken in the first instance by the Court of Appeal instead of the
superior court. Irrespective of what the parties may or may not have agreed
in this latter regard, we conclude that it is the superior court, and not the
Court of Appeal, that should undertake the review in the first instance. (See
post.)
14
As discussed ante, in answering in the affirmative, the superior court
concluded that it was powerless to review the Arbitration Award on the
merits. Its reasoning in this regard was that “the explicit language [of the
parties’ Arbitration Agreement] points to appellate review, not review in the
trial court,” 7 inasmuch as the Agreement not only “is explicit and
unambiguous in stating that either party may appeal the arbitrator’s decision
‘in accordance with the laws relating to appeals then in effect in the State of
California,’ ” but also “states [that] the arbitrator is to act as a superior court
7 We do not embrace the notion that the concepts of “appellate review”
and “review in the trial court” are mutually inconsistent. (See post.)
15
trial judge.” 8 On the basis of this reasoning, the superior court concluded
that it was “left [only] with its [limited] statutory authority to review [the
Award] under Code of Civil Procedure § 1286.2.” Hence the court confined its
review to the grounds set forth in the CAA, and it expressed an expectation
that a review on the merits would be taken up by the Court of Appeal.
8 The superior court’s statement is not an accurate paraphrase of the
Arbitration Agreement. The Agreement does not say the arbitrator is to act
as a superior court trial judge. Instead it says “[t]he Arbitrator . . . shall
endeavor to decide the controversy as though the arbitrator were a judge in a
California court of law” (italics added). This is not a distinction without a
difference. A neutral who serves as an arbitrator tasked with approaching
her work “as though [she] were a judge” leads to a jurisdictional path that
differs fundamentally from the jurisdictional path traveled when, for
example, the same neutral is appointed to act as a temporary judge.
Whereas the end result of the arbitrator’s work is an award that cannot
reach the Court of Appeal without having first passed through the superior
court, the end result of the temporary judge’s work is a judgment that, by
operation of the California Constitution, is directly appealable to the Court of
Appeal. (See Cal. Const. art. VI, § 21 [“On stipulation of the parties litigant
the court may order a cause to be tried by a temporary judge who is a
member of the State Bar, sworn and empowered to act until final
determination of the cause.”]; Union Pacific Railroad Road Co. v. Santa Fe
Pacific Pipelines, Inc. (2014) 231 Cal.App.4th 134, 197 [“A temporary judge’s
judgments are “ ‘ “appealable in the same manner as those rendered by a
constitutional judge.” ’ ”]; Kajima Engineering and Construction, Inc. v.
Pacific Bell (2002) 103 Cal.App.4th 1397, 1401 [“ ‘a temporary judge has the
power to render a judgment which is appealable in the same manner as one
rendered by a constitutional judge’ ”], quoting Old Republic Ins. Co. v. St.
Paul Fire & Marine Ins. Co. (1996) 45 Cal.App.4th 631, 635 (Old Republic),
disapproved on other grounds in Cable Connection, 44 Cal.4th at p. 1361);
City of Shasta Lake v. County of Shasta (1999) 75 Cal.App.4th 1, 11 [“A
judgment entered by a temporary judge is a judgment subject to appeal.”];
Old Republic, supra, at pp. 635-638 [distinguishing between role of arbitrator
and role of temporary judge].)
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But, in dwelling on the presence in the Agreement of language that it
interpreted as “explicit[ly]” and “unambiguous[ly]” calling for judicial review
on the merits to occur only in the Court of Appeal, the superior court read
into the Cable Connection opinion a meaning that isn’t there.
We note in this regard, that the Cable Connection opinion certainly
emphasizes the importance of clarity in arbitration agreements. By way of
example, the opinion states in one passage that:
“[A]n exception to the general rule assigning broad powers
to the arbitrators arises when the parties have, in either
the contract or an agreed submission to arbitration,
explicitly and unambiguously limited those powers.”
(Cable Connection, supra, 44 Cal.4th at p. 1356, quoting Advanced Micro
Devices, Inc. v. Intel Corp. (1994) 9 Cal.4th 362, 375-376.) The opinion states
in another passage that: “The California rule is that the parties may obtain
judicial review of the merits by express agreement” (Cable Connection, at
p. 1340), and it states in yet a third passage that:
“[P]arties seeking to allow judicial review of the merits, and
to avoid an additional dispute over the scope of review,
would be well advised to provide for that review explicitly
and unambiguously.”
(Id. at p. 1361; see generally Cable Connection, supra, 44 Cal.4th at pp. 1340,
1356-1358, 1360-1361, and 1363 [deploying the words “express,” “expressly,”
“explicitly,” and “unambiguously” in no less than 10 locations to emphasize
the importance of clarity].)
But as these selected passages reveal, the topic to which Cable
Connection’s emphasis on clarity was addressed was the circumstances under
which a court should recognize and implement an agreement to permit a
certain type of judicial review—not the circumstances under which a court
should implement an agreement designating in which court or courts that
17
review should occur. Whereas the Supreme Court has indeed indicated that
ambiguity will undermine a mutual intention to permit judicial review on the
merits, it has not empowered parties to choose their preferred appellate
forum, no matter how clearly their preference might be stated.
In its examination of the topic of contractually expanded judicial review
of arbitration awards, Cable Connection discussed two opinions from the
courts of appeal that are particularly instructive here: Old Republic Ins. Co.
v. St. Paul Fire & Marine Ins. Co., supra, 45 Cal.App.4th 631 and Crowell
v. Downey Community Hospital Foundation (2002) 95 Cal.App.4th 730(Crowell), each disapproved in part in Cable Connection, supra, 44 Cal.4th at
page 1361 (maj. opn.).
In Old Republic, the court was presented with an agreement that “the
trial court could review [an arbitration] award on statutory grounds [i.e., the
grounds set forth in the CAA] but the appellate court [bypassing the superior
court] could review its merits.” (Crowell, supra, 95 Cal.App.4th at p. 739,
discussing Old Republic, supra, 45 Cal.App.4th at pp. 634-635.) In other
words, the court was confronted with an agreement providing for precisely
the same sort of split review that the defendants have advocated, and the
superior court has embraced, in the present case. Despite the plain language
of the parties’ agreement, the court “refused to review the merits.” (Cable
Connection, supra, 44 Cal.4th at p. 1346.)
The principal ground on which the court in Old Republic refused to
review the award’s merits was a conclusion (subsequently disapproved by the
18
Supreme Court in Cable Connection 9) that contractual agreements to expand
judicial review of arbitration awards beyond the protections of the CAA were
unenforceable. But the Old Republic court observed that:
“Even if we were to [conclude that judicial review on the
merits was permissible], the limitations [that the parties]
placed upon the powers of the trial court would likewise
preclude appellate review. By the terms of their
stipulation, the parties attempted to cut out the
middleman: the trial judge. They agreed to preclude him
from considering whether [the arbitrator’s] decision was
based on legal error. The effect of their stipulation . . .
would be to place upon this court the duty to perform a
function which, in the first instance, is assigned to the trial
judge.”
(Old Republic, supra, 45 Cal.App.4th at p. 638.) The court then went on to
say:
“Although we feel honored by the parties’ assumption we
are more capable of performing this task than the court
constitutionally assigned to perform this duty in the first
9 As discussed above, in 2008, the United States Supreme Court and the
California Supreme Court issued opinions—Hall Street (from the United
States Supreme Court) and Cable Connection (from the California Supreme
Court)—that came out on opposite sides of the long-simmering debate over
whether there were circumstances in which a court, even with the parties’
blessing, could review an arbitration award on the merits. It was in essence
because and only to the extent that the side of the debate on which the Old
Republic court came down was the side on which the United States Supreme
Court later came down in Hall Street, rather than the side on which the
California Supreme Court came down in Cable Connection, that the
California Supreme Court in its Cable Connection decision disapproved the
opinion in Old Republic. (See Cable Connection, supra, 44 Cal.4th at p. 1361
[holding that “[t]hose Court of Appeal opinions refusing to enforce specific
provisions for judicial review of the merits are disapproved insofar as they
conflict with our analysis”] (citing Old Republic, supra, 45 Cal.App.4th at pp.
638-639 and Crowell, supra, 95 Cal.App.4th at p. 735 (maj. opn.)).)
19
place, an assumption we do not necessarily share, we
respectfully decline to accept the favor their stipulation
seeks to impose on us.”
Ibid.
Commenting on this observation, a justice of another Court of Appeal—
writing a dissent after having declared himself in favor of the view that
would later come to be embraced by the Supreme Court in Cable
Connection—opined in the Crowell case that:
“The shortcoming of the arbitration provision in Old
Republic was not that the parties agreed to greater review
of the arbitrator’s award than provided in the [California
Arbitration] Act, but that they sought to agree to
jurisdiction of the appellate court and sidestep the trial
court.”
(Crowell, supra, 95 Cal.App.4th at p. 748 (dis. opn. of Nott, J.).) 10 “[T]he
parties could not confer jurisdiction on the Court of Appeal where none
existed,” wrote the dissenting justice in Crowell (ibid., citing Old Republic,
supra, 45 Cal.App.4th at p. 639); “[n]or [could they] ‘leapfrog’ over the trial
court to have immediate appellate review.” (Crowell, at p. 740 (dis. opn. of
Nott, J.).)
The matter as to which the justices authoring the above-quoted
passages were expressing concern was not merely a trifling matter of judicial
etiquette; it was—and is—a constitutional matter of original versus appellate
jurisdiction in our state’s courts. In California, jurisdiction is a matter of
constitutional import. Indeed, it is “from the constitution of th[is] state” that
“[t]he courts of this state derive their . . . jurisdiction.” (Pacific Telephone etc.
10 The California Supreme Court, in its opinion in Cable Connection,
discussed the dissenting opinion in Crowell at some length before
disapproving the Crowell majority opinion. (See Cable Connection, supra,44 Cal.4th at pp. 1346-1347, 1361.)
20
Co. v. Eshleman (1913) 166 Cal. 640, 690 (Pacific Telephone) (conc. opn. of
Sloss, J.); accord In re Perris City News (2002) 96 Cal.App.4th 1194, 1197
(Perris City News).)
The state’s constitution delimits the jurisdiction of the state’s courts, in
part, by declaring that, whereas the courts of appeal have original
jurisdiction in habeas corpus proceedings and on writs for extraordinary
relief, “[t]he [s]uperior courts have original jurisdiction in all other causes.”
(Cal. Const. art. VI, § 10 (italics added).) Thus, inasmuch as the review of an
arbitration award on the merits (or otherwise) is neither a habeas corpus
proceeding nor a writ for extraordinary relief, it follows that the Court of
Appeal is without the original jurisdiction that is required in order for a court
to be empowered to undertake such a review in the first instance.
A Court of Appeal does have appellate jurisdiction with regard to
review of an arbitration award. This is because the state Constitution
provides that, “except where judgment of death has been pronounced, the
Court of Appeal has appellate jurisdiction when superior courts have original
jurisdiction.” (People v. Hawes (1982) 129 Cal.App.3d 930, 935, citing Cal.
Const. art. VI, § 11 (italics added).) But, as our Supreme Court has stated,
the “power [of the courts of appeal] may not be extended beyond the
jurisdiction conferred by the Constitution.” (Sanborn v. Pacific Mutual Life
Ins. Co. (1940) 42 Cal.App.2d 99, 105.) Hence the existence of the Court of
Appeal’s appellate jurisdiction does not render the superior court at liberty to
refrain from exercising its original jurisdiction on a theory that the parties
have agreed to proceed “as though” that original jurisdiction had been vested
21
in an arbitrator instead. 11 Rather, to the contrary, “when a certain
jurisdiction has been conferred on this or any court, it is the duty of the court
to exercise it.” (People v. Jordan (1884) 65 Cal. 644, 646 (italics added).)
So inviolable are these principles that our Supreme Court has stated
that “constitutional jurisdiction can neither be restricted nor enlarged by
legislative act.” (See Pacific Telephone, supra, 166 Cal. at p. 690 (conc. opn.
of Sloss, J.); accord Perris City News, supra, 96 Cal.App.4th at p. 1197.) Nor,
by the same token, may it be restricted or enlarged by an agreement or
11 It is one thing to say an arbitrator is to approach her task no differently
than she would if she were a superior court judge. It is another thing entirely
to say that the courts must treat the arbitrator’s award as though its
substance were a judgment of the superior court that could be directly
appealed to the Court of Appeal. Cf. ante, fn. 8.
22
stipulation of the parties. 12 (See Hill v. City of Clovis (1998) 63 Cal.App.4th
434, 446 [“parties . . . cannot create by stipulation appellate jurisdiction
where none otherwise exists”]; accord Hoveida v. Scripps Health (2005) 125
Cal.App.4th 1466, 1468 [same]; Don Jose’s Restaurant, Inc. v. Truck
12 In the passages of their briefs discussing in which court a review of the
Award on the merits should occur in the first instance, the parties frame the
issue primarily as a matter of interpreting the Arbitration Agreement, rather
than as a matter of examining the courts’ fundamental jurisdiction.
Addressing the issue through the lens of contractual interpretation, the
parties focus substantial attention on the interpretation that the Second
District Court of Appeal, in Harshad & Nasir Corp. v. Global Sign Systems,
Inc. (2017) 14 Cal.App.5th 523 (Harshad), gave to a contract in which the
parties had agreed to expand the scope of judicial review of an arbitration
award beyond the scope set forth in the CAA. But Harshad is not
particularly illuminating in the circumstances presented here inasmuch as
the agreement at issue in Harshad, unlike the agreement at issue here,
stated in terms that were express and unambiguous that the court that was
to take first crack at a review on the merits was the superior court. (See
Harshad, at pp. 530-531 [arbitration agreement stated: “ ‘the decision of the
[a]rbitrator and the findings of fact and conclusions of law shall be reviewed
on appeal to the trial court and thereafter to the appellate courts’ ”].) Hence
the interpretation given to the arbitration agreement in Harshad is of no
assistance to us in analyzing the jurisdictional and constitutional concerns
that impel the result we reach here.
Also of no assistance to us are two additional opinions the defendants
have cited: Oaktree Capital Management, L.P. v. Bernard (2010) 182
Cal.App.4th 60 and Baize, supra, 142 Cal.App.4th 293. The cases in which
those opinions issued are distinguishable from the situation that confronts us
here for the simple reason that the courts in those cases did not grapple with
the issue of which court, as between the superior court and the Court of
Appeal, should be the one to undertake an expanded review of an arbitration
award in the first instance. Rather, in each of those cases, the Court of
Appeal determined that the arbitration award at issue should not receive an
expanded scope of review at all because, those courts concluded, the parties’
arbitration agreements had failed to expressly provide for an expanded scope
of review. (See Oaktree, at p. 71; Baize, at p. 301.)
23
Insurance Exchange (1997) 53 Cal.App.4th 115, 118-19 [same]; cf. In re
Marriage of Lafkas (2007) 153 Cal.App.4th 1429, 1432 (Lafkas); People ex rel.
Sneddon v. Torch Energy Services, Inc. (2002) 102 Cal.App.4th 181, 188
[“[s]ubject matter jurisdiction can never be created by consent”], quoting
Norman I. Krug Real Estate Investments, Inc. v. Praszker (1990) 220
Cal.App.3d 35, 47].) As our Supreme Court has stated with respect to courts
on the whole, but in words that have application to each individual type of
court as well: “An attempt to take away from the courts judicial power
conferred upon them by the constitution, or to impose on them judicial
powers not granted or authorized to be granted by the constitution is void.”
Pacific Telephone, supra, at p. 690 (conc. opn. of Sloss, J.); accord Perris City
News, supra, at p. 1197.
Here, the superior court entered an order confirming and declining to
vacate the Arbitration Award, such that a judgment could be entered and
appealed. But it erred when it concluded the parties were at liberty to ordain
in which court the review on the merits should occur in the first instance, and
when it concluded it was constrained to yield in this regard to what it
understood to be the parties’ intent. As a consequence, the judgment entered
is not informed by the type of comprehensive review and assessment of the
record that the Arbitration Agreement (calling for a review on the merits)
24
contemplates, 13 and thus does not resolve the issues presented by the
parties. Hence the judgment is inherently incomplete and must be reversed.
13 Some might object that trial courts should not be burdened with a scope
of review that customarily is the province of the courts of appeal. Adherents
of such a view might point out that trial courts shoulder high caseloads with
limited resources or are otherwise not configured to hear appeals. Indeed, as
a justice of our own Supreme Court has opined: “Parties who agree to resolve
their disputes by arbitration should not . . . expect busy trial courts to comb
the records of arbitration proceedings to determine whether any error has
occurred and, if so, the effect of the error.” (Moncharsh, supra, 3 Cal.4th at
p. 35 (conc. & dis. opn. of Kennard, J.).)
But, to the contrary, existing precedents appear to suggest that parties
should expect precisely that. In this regard, a superior court undertaking an
appellate review on the merits for errors of fact or law is nothing out of the
ordinary in California. As the dissent in Crowell, supra, pointed out, trial-
level courts routinely function in an appellate capacity—as they do for,
example, in ruling on writs. (See Crowell, supra, 95 Cal.App.4th at p. 741
(dis. opn. of Nott, J.) [noting that “review . . . based on sufficiency of the
evidence and/or errors of law” is “a standard often employed by a trial court
in ruling on a petition for administrative mandamus”]; cf. Bixby v. Pierno
(1971) 4 Cal.3d 130, 144 [on review of agency decision by writ of mandamus,
“the trial court must . . . review the entire administrative record to determine
whether the findings are supported by substantial evidence and whether the
agency committed any errors of law”]; Stanford Vina Ranch Irrigation Co. v.
State of California (2020) 50 Cal.App.5th 976, 996; Malaga County Water
District v. State Water Resources Control Board (2020) 58 Cal.App.5th 447,
479 [the “trial court and this court are obligated to review the entire
administrative record to determine whether substantial evidence supports
the [agency]’s decision”]; accord Poncio v. Department of Resources Recycling
& Recovery (2019) 34 Cal.App.5th 663, 669 [scope of a trial court’s review of
an agency adjudication is no different than that of a Court of Appeal, citing
Bixby, at p. 149].)
25
C. Whether to Remand
Ordinarily our inquiry would not end with a conclusion that the
superior court had erred. Instead, we would proceed to undertake a more
comprehensive review to ascertain the effect of the superior court’s error, i.e.
to determine whether the result would have been different had the error not
occurred. And, if we were to determine from that review that the result
would not have been different, then we would affirm notwithstanding the
error. (See generally People v. Watson (1956) 46 Cal.2d 818, 834-835; see also
Code Civ. P. § 475 [judgment should not be reversed by reason of error unless
the record shows that the error was prejudicial, that the appellant suffered
substantial injury, and that a different result would have been probable in
the absence of the error)]; Cassim v. Allstate Ins. Co. (2004) 33 Cal.4th 780,
800 [“we must determine whether it is reasonably probable [that the
appellant] would have achieved a more favorable result in the absence of [the
superior court error]”].)
Here, however, we feel constrained to refrain from traveling the
ordinary path because the judgment is inherently incomplete. The superior
court having not exercised the original jurisdiction that obligated it to
undertake a review of the Award on the merits in the first instance, we deem
The holding of the Supreme Court in Cable Connection, moreover, is in
accord with this observation. In Cable Connection, the Supreme Court did
not take the superior court to task for reviewing an arbitration award on the
merits. To the contrary, it reversed the Court of Appeal for “holding that the
trial court exceeded its jurisdiction by reviewing the merits of the arbitrators’
decision.” (Cable Connection, supra 44 Cal.4th at p. 1343.)
26
it premature for us to further exercise our appellate jurisdiction by now
undertaking that review ourselves. 14
In deciding to travel this alternative path, we find the opinions of
several other courts (in addition to the opinion in Old Republic, discussed
ante instructive. One such opinion is that of the Supreme Court of Nevada in
Casey v. Wells Fargo Bank, N.A. (Nev. 2012) 290 P.3d 265 (Casey). In that
case, the Supreme Court of Nevada, in reversing a judgment confirming an
arbitration award, “decline[d the appellant’s] invitation to reach the merits”
because it concluded that “it is for the [trial] court on remand to decide the
merits . . . in the first instance.” (Id. at p. 266, fn. 1.)
To similar effect 15 is the opinion of the Ninth Circuit Court of Appeals
in Johnson v. Wells Fargo Home Mortgage, Inc. (9th Cir. 2011) 635 F.3d 40114 This is not to say we have undertaken no review at all. As can be seen,
we have reviewed the record for the limited purposes of acquainting ourselves
with the factual and procedural background of this case and, in particular,
examining the superior court’s procedural handling of the plaintiffs’ appeal.
But we have not reviewed the record for the broader purpose (which we have
determined is the province of the superior court) of ascertaining in the first
instance whether substantial evidence supports the Award or whether the
Award is contrary to law.
15 We note that, while the proceedings in Johnson and the proceedings in
the present case share important similarities, they nonetheless deviate from
one another in significant respects. As an example: Johnson proceeded
under the Federal Arbitration Act and the Federal Rules of Civil Procedure,
whereas the present case is governed by the California Arbitration Act and
California’s Code of Civil Procedure. As another example: The trial court in
Johnson did not review the arbitration award in that case at all, (see
Johnson, supra, 635 F.3d at p. 411 [characterizing the trial court as having
“abdicate[d] entirely its role in reviewing the arbitrator’s award”]), whereas
in the present case the trial court did review the award, but, in doing so,
employed an unduly narrow scope of review.
27
(Johnson). In Johnson, the parties had entered into an arbitration
agreement providing in pertinent part that the “parties shall participate in a
binding arbitration with appeal rights.” (Id. at p. 406, quoting arbitration
agreement.) The district court interpreted this language to mean:
“that ... following the arbitration the [district court] would
approve the arbitrator’s award, enter judgment, and
whichever party was unhappy at that point could [then]
appeal the record to the Ninth Circuit, and the issues
would not be raised with the district court, [but instead]
would be preserved for the Ninth Circuit.”
(Johnson, at p. 407.) On the basis of this interpretation, the district court
granted a motion to confirm the award, but “did not [otherwise] review [the]
. . . award when presented with motions” calling for it to do so, and “instead
passed initial review of the award onto th[e] appellate court.” (Id. at p. 404.)
The Ninth Circuit concluded, much as we do here, “that the District Court’s
decision not to review the arbitrator’s award was erroneous.” (Id. at p. 409.)
Having thus found fault in the order of the district court declining to
review the award, the Ninth Circuit then proceeded to pose the question:
“[S]hould we [now] review the arbitrator’s award and then reverse or affirm
the District Court’s confirmation of the award, considering on their merits
the grounds for vacating the award that the District Court did not address?”
(Johnson, supra, 635 F.3d at p. 409 (italics added).) The Ninth Circuit then
proceeded to answer the question it had posed in the negative:
“Such affirmance (or reversal) of the District Court on
the . . . ground that the arbitrator’s decision merited (or did
not merit) confirmation would, as a practical matter, work
a circumvention of the jurisdictional statutes that generally
limit this Court to deciding appeals of district court
decisions (or petitions for review of agency determinations).
For if we reviewed the arbitrator’s award to determine
whether there is an alternative basis for upholding the
District Court’s confirmation of the award, we would give
28
effect to precisely what the District Court improperly
intended: judicial review in the first instance in the Court
of Appeals.”
Ibid.
Having answered its question in this fashion, the Ninth Circuit decided
that, “[t]o avoid the circumvention just described, we will not now review the
award in the first instance, but [instead will] remand to the District Court for
it to do so.” Johnson, supra, 635 F.3d at p. 409.
Explaining why it was proceeding in this fashion, the Ninth Circuit
then stated “it [had been] procedurally improper for the District Court to
decline to review the arbitrator’s award” (Johnson, supra, 635 F.3d at p. 409)
because, even if the parties had agreed to such a procedure (the Ninth Circuit
concluded the parties had not agreed to such a procedure), “neither the
District Court nor the parties were empowered to authorize it.” Ibid. (italics
added). Having thus notably framed the issue as a matter of “power” (rather
than jurisdiction), the Ninth Circuit then stated that “[t]he District Court
was . . . without power to abdicate entirely its role in reviewing the
arbitrator’s award . . . because of the terms of the parties’ agreement”
(Johnson, supra, 635 F.3d at p. 411, italics added). And, as a consequence,
the Ninth Circuit decided:
“[W]e decline to review the arbitrator’s award ourselves
and then affirm or reverse the District Court’s order on
the . . . ground of the award’s substantive merits. Instead,
we exercise our power to remand the case to the District
Court with directions to rule on the motion to vacate, as it
should have done in the first instance.”
Id. at p. 408 (italics added). The Ninth Circuit further opined that:
“We should not, and will not, permit the Congressionally-
established structure of the federal courts to be so
circumvented. We therefore reverse and remand to allow
29
the lower court to review the arbitrator’s award before we
do so ourselves.”
(Id. at p. 404.) “[W]e will not permit a privately-selected arbitrator to act as a
private judge whose rulings are directly reviewed by this Court.” (Id. at
p. 408.)
Of course, as noted above (see ante, fn. 15), Johnson is a federal case
that was decided with reference to the FAA and principles of federal
statutory jurisdiction, rather than with reference to the CAA and principles
of California constitutional jurisdiction. Hence we round out our
consideration of the topic of whether or not to remand with reference to an
analogous situation described in an opinion from the California courts—
specifically, the opinion of the Third District Court of Appeal in a set of three
coordinated cases known as the Quantification Settlement Agreement Cases
(the “QSA Cases”).
In its opinion in the QSA Cases, the Court of Appeal examined a
situation in which “the trial court [had] dismissed . . . two . . . actions as
moot, without adjudicating any of the claims in those actions.” QSA Cases,
supra, 201 Cal.App.4th 758, 775. “[T]he proponents of those actions
contend[ed] the trial court erred in dismissing [the cases] as moot, and they
importune[d] [the Court of Appeal] to adjudicate their . . . claims in the first
instance, to avoid further delay, while [their] opponents contend[ed] those
matters must be addressed by the trial court on remand.” Ibid.Examining the situation, the Court of Appeal “conclude[d] that the trial
court [had] erred in finding the . . . actions moot.” QSA Cases, supra, 201
Cal.App.4th at 776. In that case, as in this case:
“[The parties advocating for adjudication by the Court of
Appeal in the first instance did not] offer[] any authority for
the proposition that [the Court of Appeal], in the exercise of
its appellate jurisdiction [citation], can or should decide in
30
the first instance an issue that . . . is within the original
jurisdiction of the superior court.”
QSA Cases, supra, 201 Cal.App.4th at p. 844.
In the absence of such authority, the Court of Appeal declined to reach
the merits:
“To the extent [the parties argue that] we should . . . take
the further step of adjudicating the merits . . . ourselves—
something the trial court itself never reached—[they] have
not proven to our satisfaction that we are authorized to do
so in the exercise of our appellate jurisdiction.”
QSA Cases, supra, 201 Cal.App.4th at p. 844. On the basis of these
observations, the Court of Appeal reversed the judgments in the two actions,
“but . . . decline[d] to adjudicate those actions in the first instance and
instead . . . remand[ed] those actions to the trial court for adjudication.” (Id.
at p. 776.) 16
16 We note that the Court of Appeal in the Harshad case, discussed ante,
at fn. 12, traveled a path that is different from the path that the appellate
courts in Old Republic, supra, 45 Cal.App.4th 631; Casey, supra, 290 P.3d
265; Johnson, supra, 635 F.3d 401; and QSA Cases, supra, 201 Cal.App.4th
758 traveled, and that we travel here. In Harshad, the Court of Appeal
examined an agreement that was like the Arbitration Agreement at issue
here in that it expanded the scope of judicial review of an arbitration award
beyond the scope set forth in the CAA. So doing, the Court of Appeal in
Harshad concluded, as we do here, that the superior court had erred in
failing to review the award on the merits. (Harshad, supra, 14 Cal.App.5th
at p. 534.) But, rather than reverse the judgment and remand the matter to
the superior court with instructions to undertake a review of the award on
the merits, the Court of Appeal instead proceeded to undertake such a review
itself. (See id., at pp. 537-550.) The Harshad opinion reveals no indication
that, in traveling this path, the Court of Appeal in that case considered
instructing the superior court to undertake such a review itself.
31
We do not go quite so far as the Third District went in its opinion in the
QSA Cases. That is to say, we do not conclude (as the Court of Appeal
concluded in the QSA Cases) that we may be without authority to undertake
a review on the merits in the first instance. As discussed ante, the California
Constitution does vest us with appellate jurisdiction in this matter. 17 (Cf.
Johnson, supra, 635 F.3d at p. 408 [concluding, albeit based on federal
statutory law rather than California constitutional law, that district court’s
“procedural error” in “declin[ing] to review the arbitrator’s award but
nonetheless enter[ing] an order confirming that award in the expectation that
review would begin in [the Ninth Circuit]” “d[id] not deprive [the Ninth
Circuit] of jurisdiction”].) And we conclude that, with that appellate
jurisdiction and the rule of People v. Watson, discussed ante, comes the
requisite authority to undertake a review on the merits in the first instance.
However, in deciding how and when to exercise our appellate jurisdiction and
authority with respect to the matters addressed in the judgment, we simply
deem it premature for us to exercise them now—other than for the purpose of
reversing the judgment, and remanding with instructions, for the reasons
stated herein.
17 Although the parties have not framed the issue at hand as a matter of
jurisdictional or constitutional dimension, we nonetheless must examine it as
such. (See Perris City News, supra, 96 Cal.App.4th at p. 1197 [“Whenever
there is doubt as to whether we have jurisdiction to hear an appeal, we must
raise that issue on our own initiative.”]; accord Lafkas, supra, 153
Cal.App.4th at p. 1432; Porter v. United Services Automobile Association
(2001) 90 Cal.App.4th 837, 838 [“We have the duty to raise issues concerning
our jurisdiction on our own motion.”]; Harris v. Moore (1929) 102 Cal.App.
413, 413 [“Inasmuch as the jurisdiction of this court in proceedings brought
before us is fundamental, we are required to determine the question of our
authority to review them, although it be not raised by the parties.”].)
32
This of course is not to say the parties will have no audience with this
court after (1) the superior court has completed a review of the Award on the
merits; (2) a new judgment has been entered; and (3) a further appeal has
been timely filed—in other words, when the time is ripe for us to engage in a
further exercise of our appellate jurisdiction. That time, however, is not now.
(Cf. Hill v. City of Clovis (1998) 63 Cal.App.4th 434, 446 [“appellants retain
the right of appellate review at the appropriate time, but not earlier”].)
III.
DISPOSITION
The judgment is reversed, and the case is remanded with instructions
to the superior court to review the Arbitration Award on the merits.
KELETY, J.
WE CONCUR:
MCCONNELL, P.J.
CASTILLO, J.
33