Result Is Dictated By Stipulation to Arbitrate, Weak Record, and Failure To Object Earlier

Wheel of Fortune.  Carol M. Highsmith, photographer.  Between 1980 – 2006.  Library of Congress.

     Plaintiff Jin Gang Zhao was on a bus headed to a casino, when a bus accident occurred, he fell to the floor, and injured his back.  In the ensuing arbitration, Mr. Zhao was awarded $15,000 in damages against a dissolved bus company located in China, and defendant was awarded $26,268.03 in costs.  The Arbitrator apparently rejected the plaintiff’s objection that injury in the bus accident drove plaintiff to drink “Red Sorghum,” a strong Chinese liquor, causing him to suffer liver damage.  Plaintiff appealed confirmation of the arbitration award on the grounds that the stipulation to arbitrate was invalid, and the Arbitrator exceeded the scope of his power by denying plaintiff’s motion for an uncontested arbitration.  Zhao v. Ming Du International Trade, Inc., Case No. B236813 (2nd Dist. Div. 5 January 7, 2013) (Turner, P.J., author) (unpublished).

     The wrinkle here is that the defendant was dissolved and absent from the US, did not sign the stipulation to arbitrate, and did not show up at the hearing.  Because the defendant did not sign the stipulation, plaintiff argued it was invalid.  And because defendant did not show up at the hearing, despite a notice to attend, plaintiff argued that the arbitration should have been tried as an uncontested matter.

     But the Court of Appeal did not agree with plaintiff.  The defendant didn’t sign the stipulation, but its carrier did, and no evidence was offered that plaintiff objected, or that the carrier lacked agency authority.  True, defendant failed to appear for the hearing, but the Court of Appeal explained, “it is clear that the very intention of the stipulation was to have the matter proceed to a contested binding arbitration, otherwise the stipulation itself makes no sense.”  The stipulation provided that the Arbitrator “[i]n his sole discretion” would control proceedings and regulate the order of proof, and determine all questions submitted to the Arbitrator.  Result:  “The arbitrator acted well within the scope of his powers.” 

     Thus, the plaintiff was stuck with the outcome, as the arbitration award was affirmed.

     Of course, the plaintiff and his counsel didn’t have to sign the stipulation to arbitrate, but absent 20/20 hindsight, plaintiff and his counsel could not know the result would be unfavorable.