This case concerns the importance of being earnest about arbitration.
Pinnamaneni’s corporation hired Smith’s corporation to build a home. The contract required AAA arbitration. When a dispute arose the builder demanded arbitration. The owner filed a complaint with the Registrar of Contractors and refused to arbitrate until it was resolved. The owner didn’t show up at the arbitration hearing; the builder presented evidence (these arbitration rules don’t allow default) and was given an award.
When it tried to have the award confirmed in court the owner opposed it. A week before the arbitration hearing the owner had discovered that the builder didn’t have a contractor’s license when it signed the contract. The builder argued that the owner had waived the defense by not appearing at arbitration.
The Court of Appeals agrees. “[A] contractor’s lack of licensure is an affirmative defense subject to waiver.” Its contracts are voidable, not void. Moreover, the court tells us, the only objections to confirmation of an arbitration award are those listed in 12-1512 (fraud, the arbitrators exceeded their power, etc.). So although the court uses the word, whether it’s an “affirmative” defense doesn’t seem to matter; the question is whether it’s a listed defense.
That takes sixteen pages. As usual, the court grinds on and on about the easy parts and gives the harder part – here, distinguishing California cases – a lick and a promise.
(Another issue was that the arbitrators had held Pinnamaneni personally liable even though he hadn’t signed the contract personally. That (lack of an arbitration agreement) is a listed defense. The trial court should therefore have ruled on that, it didn’t, and so on that issue the court remands. That takes seven endless pages.)
(link to opinion)