Baar v. Tigerman
41 A.L.R. 4th 1004, 211 Cal. Rptr. 426, 140 Cal. App. 3d 979 (1983)
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Rule of Law:
Arbitral immunity does not protect a private arbitrator from liability for breach of contract resulting from a failure to render a timely award, nor does it extend to a private arbitration association for its administrative actions, as these are distinct from quasi-judicial decision-making.
Facts:
- In 1975, Baar, Lustbader, and Edelman (appellants) engaged the American Arbitration Association (AAA) to administer arbitration proceedings pursuant to their limited partnership agreement.
- The AAA selected Bert Z. Tigerman to act as arbitrator, and appellants paid both Tigerman and the AAA for their services.
- Evidentiary hearings for the arbitration commenced on November 1, 1976, and concluded on March 11, 1980, followed by 10 days of closing arguments.
- Final briefs were submitted on July 17, 1980, and the AAA deemed the arbitration submitted on July 18, 1980.
- The AAA set Tigerman’s arbitration award deadline for August 17, 1980, 30 days after final submission, as required by AAA rules.
- On August 20, 1980, the AAA requested and received an extension for Tigerman to make an award until November 30, 1980.
- Tigerman failed to render an award by the extended November 30, 1980, deadline.
- Approximately seven months after the arbitration was submitted, appellants filed a written objection to Tigerman making any award.
Procedural Posture:
- Baar, Lustbader, Edelman, et al. (appellants) filed complaints against Bert Z. Tigerman and the American Arbitration Association (respondents) in the trial court, alleging causes of action including breach of contract and negligence.
- The trial court sustained demurrers filed by Tigerman and the AAA, finding that arbitral immunity protected them.
- The trial court subsequently issued orders dismissing appellants' complaints.
- Appellants filed timely appeals from the orders of dismissal.
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Issue:
Does arbitral immunity protect a private arbitrator from liability for failing to render a timely award, and does it extend to a private arbitration association for its administrative actions?
Opinions:
Majority - Klein, P.J.
No, arbitral immunity does not protect a private arbitrator from liability for failing to render a timely award, nor does it extend to a private arbitration association for its administrative actions. The court distinguished the role of a private arbitrator from that of a judge, noting that judicial immunity protects all judicial actions due to the constitutional power, public nature, and precedential impact of judicial proceedings. In contrast, arbitration is a private contractual arrangement, and arbitral immunity is intended to protect the arbitrator's quasi-judicial decision-making from disgruntled litigants, not to shield them from a failure to perform fundamental contractual duties like rendering a timely award. The policy goals of arbitration, namely speed and certainty, are undermined if an arbitrator is immune for failing to meet deadlines. The court further held that the American Arbitration Association (AAA) derives its immunity from the arbitrator. Since Tigerman was not immune for his inaction, the AAA could not be immune. Moreover, the AAA's alleged failures involved administrative functions, such as the selection of Tigerman and oversight of the proceedings, rather than quasi-judicial decision-making. Therefore, the complaints stating causes of action for breach of contract and negligence against both respondents should not have been dismissed.
Analysis:
This case significantly narrows the scope of arbitral immunity in California, distinguishing between immunity for quasi-judicial acts (deciding a case) and liability for contractual breaches (failing to deliver an award on time). It reinforces the contractual nature of private arbitration and emphasizes accountability for both arbitrators and sponsoring organizations to ensure the process aligns with its intended goals of speed and certainty. This ruling can encourage greater diligence by arbitrators and arbitration services in adhering to timelines and proper administration, offering recourse to parties harmed by such failures.
