Once arbitration has been initiated, is there a time limit that claimants must pursue their claim within?
If a matter is not brought to arbitration within five years, the arbitrator may, in their discretion, dismiss the matter for failure to proceed with reasonable diligence. (Burgess v. Kaiser Foundation Hospitals, Kachlon v. Gilchrest, Santangelo v. Allstate Ins. Co.)
Certain types of arbitration may have statutory requirements for the time period in which they must be completed. For instance, Cal. Ins. Code § 11580.2(i) specifically requires that uninsured motorist arbitration be completed within five years from the institution of arbitration. (Cal. Ins. Code § 11580.2, Santangelo v. Allstate Ins. Co.)
Absent an arbitration completion deadline established by agreement of the parties, a trial court may, on the petition of a party to the arbitration, set a date by which the arbitration proceeding must be completed and the award rendered. Any date chosen must be reasonable in light of the circumstances presented by the particular arbitration. (Bosworth v. Whitmore, Cal. Code Civ. Proc. § 1283.8)
In Burgess v. Kaiser Foundation Hospitals, 20 Cal.Rptr.2d 488, 16 Cal.App.4th 1077 (Cal. App. 1993), the California Court of Appeal for the First District explained that while the statute requiring mandatory dismissal of a superior court action not brought to trial within five years (Cal. Code Civ. Proc. § 583.310) does not directly apply to arbitration, if a matter is not brought to arbitration within five years, the arbitrator may dismiss the matter for failure to proceed with reasonable diligence (at 1081):
An arbitrator has discretion to dismiss a proceeding due to unreasonable delay by the claimant in bringing the matter to a hearing. The statute requiring mandatory dismissal of a superior court action not brought to trial within five years (Code Civ.Proc., § 583.310) does not directly apply to arbitration, but its concept and limits have been imported into the test of reasonable diligence in bringing a claim to arbitration. Thus, if a matter is not brought to arbitration within five years, the arbitrator may dismiss the matter for failure to proceed with reasonable diligence. (Brock v. Kaiser Foundation Hospitals (1992) 10 Cal.App.4th 1790, 1808, 13 Cal.Rptr.2d 678; Young v. Ross-Loos Medical Group, Inc. (1982) 135 Cal.App.3d 669, 673, 185 Cal.Rptr. 536.)
The Court also noted that because arbitration is intended to be more expeditious than litigation, if there is any delay by an arbitrator, the appropriate remedy is for a party to a petition to the court for an appropriate order expediting the arbitration proceeding, not tolling of the five-year due diligence period (at 1081-1082):
That is what occurred here. The Burgesses contend the arbitrator abused his discretion. Drawing an analogy to the rule that the five-year statute is tolled during a period when it is "impossible, impracticable, or futile" to bring an action to trial (Code Civ.Proc., § 583.340, subd. (c)), the Burgesses claim it was impossible to bring this arbitration to a timely hearing, and thus the five-year period was tolled, because of (1) the arbitrator's demand for the reservation fee, which the Burgesses contend was misconduct (Code Civ.Proc., § 1286.2, subds. (c) & (e)), (2) Kaiser's designation of experts, which the Burgesses contend was burdensome, and (3) the inability of the party arbitrators to reach timely agreement on designation of the neutral arbitrator.
We do not believe such matters should toll the five-year period. Arbitration is intended to be more expeditious than litigation. Accordingly, if there is any delay by an arbitrator, the appropriate remedy is not tolling of the five-year period, but rather a petition to the court for an appropriate order expediting the arbitration proceeding. (Boutwell v. Kaiser Foundation Health Plan (1988) 206 Cal.App.3d 1371, 1374, 254 Cal.Rptr. 173; see Code Civ.Proc., § 1281.6.) In the present context, this means the Burgesses should [16 Cal.App.4th 1082] have petitioned the superior court for relief from the arbitrator's reservation fee or the failure to designate the neutral arbitrator. 1
In Santangelo v. Allstate Ins. Co., 76 Cal.Rptr.2d 735, 65 Cal.App.4th 804 (Cal. App. 1998), the California Court of Appeal for the Third District explained that Cal. Ins. Code § 11580.2(i) specifically requires that uninsured motorist arbitration be completed within five years of the institution of arbitration. The petitioner claimed that the five-year period to complete arbitration did not apply because Cal. Ins. Code § 11580.2 did not become effective until after she had already initiated arbitration of her claim. The Court disagreed and explained that even before Cal. Ins. Code § 11580.2 was enacted, a party pursuing a claim in arbitration did not have an unlimited amount of time to complete arbitration. Contractual arbitrations have been held to be subject to dismissal for delay in proseuction under Cal. Code Civ. Proc. § 583.310. Thus, the Court found that even before the enactment of Cal. Ins. Code § 11580.2, the application of Cal. Code Civ. Proc. § 583.310 to allow for the dismissal of arbitration claims for delay in prosecution would apply in uninsured motorist arbitrations (at 810-814):
Section 11580.2(i), 4 which addresses uninsured motorist coverage, requires that uninsured motorist arbitration be (1) initiated within one year of [65 Cal.App.4th 811] the date of accident, and (2) completed within five years from the institution of arbitration. The five-year limitation was added to the statute in 1995, effective January 1, 1996 (Stats.1995, ch. 738, § 1), while this case was pending.
The next question is whether the five-year period for completion of arbitration applies to this case. Appellant argues the five-year limitation does not apply, because it was enacted in 1995 and did not become effective until January 1, 1996. She claims application of the provision to her case would constitute
retroactive application violative of her due process rights. We disagree.
" 'A retrospective law is one which affects rights, obligations, acts, transactions and conditions which are performed or exist prior to the adoption of the statute.' " (Aetna Cas. & Surety Co. v. Ind. Acc. Com. (1947) 30 Cal.2d 388, 391, 182 P.2d 159, citations omitted.)
[65 Cal.App.4th 813] Thus, appellant's argument presupposes that, before enactment of the five-year time constraint in section 11580.2, she had an unlimited amount of time in which to complete arbitration. However, that supposition is incorrect.
Thus, even without the statutory time constraint of section 11580.2, contractual arbitrations have been held subject to dismissal for delay in prosecution under Code of Civil Procedure section 583.110 et seq., and we see no reason why that result would not have applied to uninsured motorist arbitrations. For example, Burgess v. Kaiser Foundation Hospitals (1993) 16 Cal.App.4th 1077, 20 Cal.Rptr.2d 488, held that although the statutes requiring mandatory dismissal of superior court actions not brought to trial within five years (Code Civ. Proc., § 583.310 et seq.) 7 do not directly apply to arbitration, the concept does apply, and a contractual arbitration may be dismissed for delay in prosecution. (Id. at p. 1081, 20 Cal.Rptr.2d 488 [contractual arbitration in medical negligence case]; see also, Young v. Ross-Loos Medical Group, Inc. (1982) 135 Cal.App.3d 669, 673, 185 Cal.Rptr. 536 [Code of Civil Procedure statutes concerning mandatory dismissal for delay in prosecution applied to contractual arbitration in medical malpractice case]; 2 Clifford & Isler, Cal. Uninsured Motorist Law (5th ed.1998) 19.35 [expressing view that dismissal-for-delay statutes (Code Civ. Proc., §§ 583.110-583.430) would apply to uninsured motorist arbitration].)
Similarly, in Allstate Insurance Co. v. Gonzalez (1995) 38 Cal.App.4th 783, 45 Cal.Rptr.2d 491, the Second District held an insured's protracted and unexplained delay in initiating uninsured motorist arbitration under the Code of Civil Procedure was unreasonable as a matter of law, and he thereby waived his right to arbitration, even though his demand was filed within the four-year limitations period for petitioning to compel arbitration of an uninsured motorist claim (Code Civ. Proc., § 337). (Id. at pp. 789-793, 45 Cal.Rptr.2d 491.) The appellate court said that when an arbitration agreement does not specify the time within which arbitration must be demanded, a reasonable time is allowed, and a party who does not demand arbitration within a reasonable time is deemed to have waived the right to arbitration. (Id. at p. 790, 45 Cal.Rptr.2d 491.) We believe a similar principle applies to completion of arbitration once initiated.
Appellant claims cases such as Burgess are distinguishable, because they did not involve uninsured motorist arbitration. However, she fails to show [65 Cal.App.4th 814] why this should make a difference. She merely asserts uninsured motorist arbitration is governed by the Insurance Code and, since the Legislature saw fit to amend the Insurance Code to add a time limit, that must mean there was no time limit before the amendment. Yet appellant cites no authority that would preclude application of Code of Civil Procedure section 583.310 et seq. to uninsured motorist cases. Though not cited by the parties, we note section 11580.05 declares "this article expresses the total public policy of this state respecting the content of [motor vehicle insurance] policies...." However, the issue before us does not concern the content of the policy.
The purpose of Code of Civil Procedure section 583.310 et seq. is to implement the Legislature's policy to discourage stale claims. (Roman v. Usary Tire & Service Center (1994) 29 Cal.App.4th 1422, 1430, 35 Cal.Rptr.2d 329, internal quotations omitted.) "Arbitration is intended to be more expeditious than litigation." (Burgess v. Kaiser
Foundation Hospitals, supra, 16 Cal.App.4th at p. 1081, 20 Cal.Rptr.2d 488.)
Therefore, we believe that, even before enactment of section 11580.2's five-year period, appellant would have been subject to dismissal for delay in prosecution.
In Baxter v. Genworth N. Am. Corp., 16 Cal.App.5th 713, 224 Cal.Rptr.3d 556 (Cal. App. 2017), the California Court of Appeal for the First District reviewed the trial court's order denying the defendant's motion to compel arbitration after finding that the arbitration agreement was procedurally and substantively unconscionable. The Court ultimately agreed with the trial court that the arbitration agreement was procedurally and substantively unconscionable, but noted that there is nothing inherently unconscionable about setting a time limit by which an arbitration hearing must be held or limiting the length of such a hearing. Additionally, the arbitration agreement at issue gave the arbitrator the discretion to extend the timelines upon a showing of good cause. Thus, the Court found that the short default arbitration timelines in the agreement did not create more than a modest degree of unconscionability in light of the arbitrator's discretion to extend them (at 735-736):
There is nothing inherently unconscionable about setting a time limit by which an arbitration hearing must be held or limiting the length of such a hearing. Indeed, the very purpose of arbitration is to streamline the proceedings and obtain an expeditious resolution of disputes. (See Molecular Analytical Systems v. Ciphergen Biosystems, Inc. (2010) 186 Cal.App.4th 696, 704, 111 Cal.Rptr.3d 876.) The timelines set by the Resolve guidelines for concluding an arbitration, while short, are not per se unconscionable.
Nevertheless, we tend to agree with the trial court's assessment that the Resolve arbitration timelines would prove to be unreasonably short in a more complex employment dispute such as this one. But we part ways with the
[16 Cal.App.5th 736]
trial court on the question of whether the Resolve guidelines provide a sufficient safety valve to permit the arbitrator to extend the timelines as necessary. In addressing whether the arbitrator has sufficient discretion to extend timelines, both Baxter and the trial court rely upon Fitz, supra, 118 Cal.App.4th at page 717, 13 Cal.Rptr.3d 88, in which the arbitrator's discretion to depart from default discovery limits was limited unless there was a "compelling need" for additional discovery and a fair hearing was "impossible" without such relief. Here, however, the arbitrator has discretion to extend the timelines merely upon a showing of good cause. Presuming, as we must, that the arbitrator will act reasonably in conformity with the law (see Dotson v. Amgen, Inc., supra, 181 Cal.App.4th at p. 984, 104 Cal.Rptr.3d 341 ), we cannot say an arbitrator would feel compelled to deny a reasonable request to extend the Resolve arbitration timelines in a complex employment dispute. While the short default arbitration timelines give some cause for concern, we are not convinced they create more than a modest degree of unconscionability in light of the arbitrator's discretion to extend them.
In Bosworth v. Whitmore, 37 Cal.Rptr.3d 560, 135 Cal.App.4th 536 (Cal. App. 2006), the California Court of Appeal for the Second District held that absent an arbitration completion deadline established by agreement of the parties, Cal. Code Civ. Proc. § 1283.8 gives the trial court the power, on the petition of a party to the arbitration, to set a date by which the arbitration proceeding must be completed and the award rendered. The Court noted that while it is a better practice to establish the completion/award date when the case is first ordered to arbitration, a trial court has the discretion to entertain a petition and set a completion date even after the arbitration commences. Any date chosen must be reasonable in light of the circumstances presented by the particular arbitration (at 545-548, 550):
Section 1283.8 provides in relevant part: "The [arbitration] award shall be made within the time fixed therefor by the agreement or, if not so fixed, within such time as the court orders on petition of a party to the arbitration."8
The grant of authority to direct that "[t]he award shall be made ... within such time as the court orders" is reasonably susceptible to at least two interpretations. Perhaps, as McCoy argues, it means only that the trial court has the power to set a date after completion of the evidentiary hearing within which the arbitrator must render his award. If so, then the trial court has no "jurisdiction" to set a deadline by which the entire arbitration proceeding must be concluded.9 On the
[37 Cal.Rptr.3d 568]
other hand, perhaps the Bosworths' interpretation is correct: by referring to the time within which the award must be made, the statute gives the trial court the power to regulate the duration of the arbitration proceeding itself.
[135 Cal.App.4th 546]
To resolve the ambiguity, we examine the legislative history to ascertain the intent supporting the enactment of section 1283.8. (Granberry v. Islay Investments (1995) 9 Cal.4th 738, 744, 38 Cal.Rptr.2d 650, 889 P.2d 970.) Reviewing that history, we conclude that section 1283.8 was intended to authorize the trial court to fix a deadline within which the arbitration proceeding must be completed and the award rendered.
Section 1283.8 was adopted as part of a comprehensive revision of the 1927 statutory scheme governing arbitration (§ 1280 et seq.).10 The revision was recommended by the California Law Revision Commission's 1960 Recommendation and Study Relating to Arbitration. The Legislature unanimously enacted section 1283.8 without change, exactly as recommended by the Commission. (Feldman, Arbitration Modernized — The New California Arbitration Act (1961) 34 So.Cal. L.Rev. 413, fn. 1.) Consequently, the comments of the Law Revision Commission are persuasive evidence of the Legislature's intent. (Van Arsdale v. Hollinger (1968) 68 Cal.2d 245, 249-250, 66 Cal.Rptr. 20, 437 P.2d 508, overruled on another ground in Privette v. Superior Court (1993) 5 Cal.4th 689, 696, 702, fn. 4, 21 Cal.Rptr.2d 72, 854 P.2d 721.) "`Reports of commissions which have proposed statutes that are subsequently adopted are entitled to substantial weight in construing the statutes. [Citations.] This is particularly true where the statute proposed by the commission is adopted by the Legislature without any change whatsoever and where the commission's comment is brief, because in such a situation there is ordinarily strong reason to believe the legislators' votes were based in large measure upon the explanation of the commission proposing the bill.' [Citations.]" (Jevne v. Superior Court (2005) 35 Cal.4th 935, 947, 28 Cal.Rptr.3d 685, 111 P.3d 954.)
In the instant case, the Law Revision Commission expressed concern over the delay that may occur if the parties have not specified a completion date for the arbitration in their agreement. The study supporting the Law Revision Commission Report noted that "the present statute [does not] have a time limit within which an award must be rendered. The parties in their arbitration agreement often fix the time within which the arbitrator must make his award, and this time limit will be enforced by the court unless the parties have waived it." In support of this statement, the study cited Willis F. & C. Co. v. Porter (1928) 88 Cal.App. 523, 263 P. 842, a case in which the parties set a date by which the entire arbitration proceeding was to be concluded and the award rendered. (Id. at pp. 524-525, 263 P. 842.) The study further observed: "Arbitration
[135 Cal.App.4th 547]
is often used by the parties to achieve a speedy settlement of the dispute. This end may be defeated if the parties have failed to fix a time limit for the rendering of awards in their agreement. The present statute does not set a time limit and case law does not indicate that a court may set its own time limit. It is recommended that the statute include a provision giving the court power to fix the time within
[37 Cal.Rptr.3d 569]
which the award must be made on the motion of a party to the arbitration."
Consistent with the study, the Commission's report recommended the adoption of section 1283.8: "If the arbitration agreement does not provide a time limit within which the arbitrators must determine the dispute, the court should be able to fix a time within which the matter must be decided. The absence of such a provision in the present California law permits an arbitration proceeding to be delayed unnecessarily. A party may be prevented from obtaining any relief at all in such cases, for a court proceeding would be stayed until the arbitration is completed."
Thus, the Commission's study and report show that in the absence of an arbitration completion date set by agreement, section 1283.8 was intended to give the trial court power to prevent undue delay in completing the arbitration. By enacting section 1283.8 without amendment, the Legislature manifested its acceptance of the Commission's recommendation. Indeed, in a letter to the Governor sent with the bill that enacted the new statutory scheme (Assem. Bill No. 832), the author of the bill expressed the same policy reasons for enacting section 1283.8 as had the Law Revision Commission. Assemblyman Clark L. Bradley's letter to the Governor explained, in part: "This is a bill prepared and recommended by the California Law Revision Commission. [¶] ... [¶] The major changes made in the existing law by [the bill] are: [¶] ... [¶] 7. This bill grants the court power to set the time within which the arbitrators must decide the controversy if the parties themselves have not done so. No provision of the existing law gives the court this power, and, as a result, a party may be deprived of any relief because he cannot get the arbitrators to act and he cannot go to court as long as the arbitration is pending. A.B. No. 832 will prevent this from occurring."
The conclusion that the Legislature intended section 1283.8 to authorize the setting of an arbitration completion date is also supported by the Legislative Counsel's report. Legislative Counsel explained that the Law Revision Commission's proposals included making changes to, inter alia, the "conduct of [the] arbitration proceeding, including [the] time within which
[135 Cal.App.4th 548]
[the] dispute may be decided." (Legis. Counsel, Report on Assem. Bill No. 832 (May 12, 1961).) The report of the Legislative Counsel is entitled to great weight in construing the statute "since [the report is] prepared to assist the Legislature in its consideration of pending legislation." (California Assn. of Psychology Providers v. Rank (1990) 51 Cal.3d 1, 17, 270 Cal.Rptr. 796, 793 P.2d 2.)
As recognized by the Commission, sound pragmatic considerations support the policy implemented by section 1283.8. Unreasonable delay in the resolution of the arbitration proceeding could effectively deprive a party of the speedy determination arbitration is intended to provide. This concern has prompted several courts to observe, albeit in dicta and without mentioning section 1283.8, that the trial court does have the power to issue an order setting a deadline for the arbitration. (See, e.g., Burgess v. Kaiser Foundation Hospitals (1993) 16 Cal.App.4th 1077, 1081, 20 Cal.Rptr.2d 488["[I]f there is any delay by an arbitrator, the appropriate remedy is not tolling of the five-year period, but rather a petition to the court for an appropriate order expediting the arbitration proceeding."]; Boutwell v. Kaiser Foundation Health Plan (1988) 206 Cal.App.3d 1371, 1374, 254 Cal.Rptr. 173 ["In the arbitration context, a plaintiff may petition the superior court to assist her in expediting the proceedings by ... moving
[37 Cal.Rptr.3d 570]
to set an arbitration date[.]"]; and Preston v. Kaiser Foundation Hospitals (1981) 126 Cal.App.3d 402, 407, 178 Cal.Rptr. 882 [finding that a trial court "which has ordered a matter to be arbitrated, [has] the power ... to entertain a petition by the plaintiff for judicial assistance in moving the arbitration forward where the matter is foundering for reasons beyond plaintiffs' control."].) Citing these decisions, three leading treatises similarly conclude that a party can petition the trial court for relief if the arbitrator unreasonably delays the proceeding. (6 Witkin, Cal. Procedure (4th ed. 1997) Proceedings Without Trial, § 393, pp. 805, 807; 6 Cal.Jur.3d (2003) Arbitration and Award, § 74, pp. 150-151; and Knight et al., Cal. Practice Guide (The Rutter Group 2004) Alternative Dispute Resolution, ¶ 5:403.2, p. 5-208.)
We hold that absent an arbitration completion deadline established by agreement, section 1283.8 gives the trial court the power, on petition of a party to the arbitration, to set a date by which the arbitration proceeding must be completed and the award rendered.11 The better practice is to establish that date when the case is first ordered to arbitration. However, the court has discretion to entertain a petition and set a completion date even after the arbitration is in progress. Of course, any date chosen (whether before or after arbitration has commenced) must be reasonable in light of the circumstances presented by the particular arbitration. Thus, in the present case, the trial court had the authority to grant the Bosworths' request to set a March 31, 2002 deadline for completion of the arbitration.12
In the unpublished case of Kachlon v. Gilchrest, B271860 (Cal. App. 2018), the California Court of Appeal for the Second District emphasized that while an arbitrator has the discretion to dismiss a matter that is not brought to arbitration within five years for failure to proceed with reasonable diligence, the arbitrator is not required to do so (at 9):
Defendants contend the arbitrator exceeded her powers by denying their repeated requests to dismiss the arbitration pursuant to section 583.310. We disagree.
An arbitrator need not comply with section 583.310. (Burgess v. Kaiser Foundation Hospitals (1993) 16 Cal.App.4th 1077, 1081 [section 583.310 "does not directly apply to arbitration"]; Titan/Value Equities Group, Inc. v. Superior Court (1994) 29 Cal.App.4th 482, 488-489 [the arbitrator sets the time and place of the hearing and establishes procedures for resolution of claims].) If a matter is not brought to arbitration within five years, the arbitrator has discretion to dismiss the matter for failure to proceed with reasonable diligence (Brock, supra, 10 Cal.App.4th at p. 1808; Young v. Ross-Loos Medical Group, Inc., supra, 135 Cal.App.3d at p. 673), but is not required to do so (Burgess v. Kaiser Foundation Hospitals, supra, at p. 1081).