Horvitz & Levy LLP represented CalFarm on appeal from a judgment confirming an arbitration award for plaintiff GAM Holdings and awarding prejudgment interest. The parties’ attorneys negotiated a deal under which GAM’s breach of contract and bad faith claims would be submitted to binding arbitration but CalFarm would be liable for no more than $500,000 of any award. The stipulation filed in court, however, did not bear the parties’ signatures and did not mention the cap on CalFarm’s liability. The arbitrator found bad faith and awarded GAM $3,838,085. GAM then asked the arbitrator to award Brandt attorney fees. CalFarm protested that the damage award already exceeded the agreed cap, so CalFarm could not be liable for additional damages in the form of Brandt fees. The arbitrator rejected CalFarm’s argument because it failed to produce a writing signed by the parties capping CalFarm’s liability. The trial court confirmed the arbitration award and added prejudgment interest. It, too, cited CalFarm’s inability to produce a signed agreement capping liability.
The Court of Appeal reversed, holding that a party seeking to confirm an arbitration award bears the burden of proving that the parties themselves agreed to arbitrate and agreed that any resulting award would be binding. The court ruled that GAM’s proof that the attorneys stipulated to binding arbitration was insufficient to meet its burden as the petitioning party. The court remanded the case to the trial court for an evidentiary hearing to “determine whether a valid arbitration agreement exists between GAM and CalFarm, and, if so, whether it permits confirmation of the arbitration award in full or only subject to a $500,000 cap on CalFarm’s liability.”