(Arbitration) Arbitrator who allegedly failed to make conflict of interest disclosures enjoys absolute arbitral immunity

(Arbitration) Arbitrator who allegedly failed to make conflict of interest disclosures enjoys absolute arbitral immunity.  La Serena Properties v. Gerald Weisbach, (No. A126283 California Courts of Appeals, First Appellate District, Division Four June 1, 2010)

The parties to this dispute were required to arbitrate their dispute with the American Arbitration Association (AAA).  The dispute involved a construction contract and promissory note.  After being compelled to go to arbitration, the attorneys for the respondent conspired to persuade the petitioner to accept a certain individual as an arbitrator but they did not disclose this individual had a long standing family relationship with one of the respondent’s counsel and that the arbitrator was the boyfriend of the counsel’s sister.  The arbitrator denied more than 20 claims against the respondent and awarded a sum of money for two claims.  Subsequently, the petitioner successfully set aside the arbitration award.  Petitioner then filed a complaint against the arbitrator and AAA for fraud and related causes of action.  The trial court sustained the arbitrator and AAA’s demurrers based on absolute arbitral immunity for quasi-judicial acts.

The Appeals Court affirmed the trial court’s order.  The Appeals Court found the duty performed by a private arbitrator is a judicial act and absolutely immunity applies.  Further, arbitrators are mandated by law to make disclosures for precisely the same reason that judges must, to maintain impartiality.  The court found that processes of disclosure of potential conflicts of interest are virtually the same between  judges and arbitrators.  Due to the similarity, this court determined the arbitrator’s alleged failure to make adequate disclosures falls within the scope of the absolute immunity.  Thus, the trial court was correct to grant the arbitrator and AAA’s demurrer.

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