California Legislature—2013–14 Regular Session

Assembly Bill No. 993

Introduced by Assembly Member Linder

February 22, 2013

An act to amend Section 7085.5 of the Business and Professions Code, relating to contractors.

LEGISLATIVE COUNSEL’S DIGEST

AB 993, as introduced, Linder. Contractors: arbitration.

The Contractors’ State License Law provides for licensing and regulation of contractors by the Contractors’ State License Board. Existing law establishes an arbitration process administered by the board to resolve disputes between contractors and consumers. Existing law authorizes an arbitrator to grant any remedy or relief deemed just and equitable and within the scope of the board’s referral to the arbitrator and the requirements of the board, including costs and expenses.

This bill would prohibit the arbitrator from awarding specific performance of any project, and from making a determination relative to any remedy not expressly authorized under these provisions, including attorney’s fees, monetary damages for personal injury, and punitive damages.

Existing law requires the board or appointed arbitration association to provide the parties with a list of the times, dates, and locations of the hearing to be held, and requires the parties to notify the arbitrator of the convenient times and dates. A record is not required to be taken of the proceedings.

This bill would delete the requirement to notify the arbitrator of the convenient times and dates of the hearing. The bill would require a party making a recording of a hearing to supply the recording to the arbitrator at the party’s expense.

Existing law authorizes the hearing to be reopened on the arbitrator’s own motion, and provides that service of any papers or process in connection with these proceedings shall be by personal service or by regular mail on a party at the last known address.

This bill would authorize the hearing to be reopened on the arbitrator’s motion prior to the rendering of an award, and would provide that service by first class mail is complete upon deposit into specified mail receptacles.

Existing law requires the registrar of contractors to advise the parties that names of industry experts may be obtained by requesting this information from the registrar.

This bill would delete this requirement.

The bill would make other related changes.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 7085.5 of the Business and Professions
Code is amended to read:

7085.5.  

Arbitrations of disputes arising out of cases filed with
or by the board shall be conducted in accordance with the following
rules:

(a) All “agreements to arbitrate” shall include the names,
addresses, and telephone numbers of the parties to the dispute, the
issue in dispute, and the amount begin delete in dollars or any other remedy end delete begin insert of
monetary damages end insert sought. begin insert Except for the release of a mechanics
lien or the return of tools or materials, monetary damages are the
only remedy available pursuant to this article. The arbitrator shall
not order or provide for the specific performance of any project,
including, but not limited to, the completion of work, repairs, or
corrections. end insert The appropriate fee begin insert for arbitration services end insert shall be
paid begin insert to the appointed arbitration association end insert by the board from
the Contractors’ License Fund.

(b) (1) The board or appointed arbitration association shall
appoint an arbitrator in the following manner: immediately after
the filing of the agreement to arbitrate, the board or appointed
arbitration association shall submit simultaneously to each party
to the dispute, an identical list of names of persons chosen from
the panel. Each party to the dispute shall have seven days from
the mailing date in which to cross off any names to which it objects,
number the remaining names to indicate the order of preference,
and return the list to the board or appointed arbitration association.
If a party does not return the list within the time specified, all
persons named in the list are acceptable. From among the persons
who have been approved on both lists, and in accordance with the
designated order of mutual preference, the board or appointed
arbitration association shall appoint an arbitrator to serve. If the
parties fail to agree on any of the parties named, if acceptable
arbitrators are unable to act, or if, for any other reason, the
appointment cannot be made from the submitted lists, the board
or appointed arbitration association shall have the power to make
the appointment from among other members of the panel without
the submission of any additional lists. Each dispute shall be heard
and determined by one arbitrator unless the board or appointed
arbitration association, in its discretion, directs that a greater
number of arbitrators be appointed.

(2) In all cases in which a complaint has been referred to
arbitration pursuant to subdivision (b) of Section 7085, the board
or the appointed arbitration association shall have the power to
appoint an arbitrator to hear the matter.

(3) The board shall adopt regulations setting minimum
qualification standards for listed arbitrators based upon relevant
training, experience, and performance.

(c)  begin delete No end delete begin insert A end insert person shall begin insert not end insert serve as an arbitrator in any arbitration
in which that person has any financial or personal interest in the
result of the arbitration. Prior to accepting an appointment, the
prospective arbitrator shall disclose begin insert to the appointed arbitration
association end insert any circumstances likely to prevent a prompt hearing
or to create a presumption of bias. Upon receipt of that information,
the board or appointed arbitration association shall immediately
replace the arbitrator or communicate the information to the parties
for their comments. Thereafter, the board or appointed arbitration
association shall determine whether the arbitrator should be
disqualified and shall inform the parties of its decision, which shall
be conclusive.

(d) The board or appointed arbitration association may appoint
another arbitrator if a vacancy occurs, or if an appointed arbitrator
is unable to serve in a timely manner.

(e) (1) The board or appointed arbitration association shall
provide the parties with begin delete a list of end delete the times begin delete and end delete begin insert , end insert dates, and locations
of the hearing to be held. begin delete The parties shall notify the arbitrator,
within seven calendar days of the mailing of the list, of the times
and dates convenient to each party. If the parties fail to respond
to the arbitrator within the seven-day period, the arbitrator shall
fix the time, place, and location of the hearing. end delete An arbitrator may,
at the arbitrator’s sole discretion, make an inspection of the
construction site which is the subject of the arbitration. The
arbitrator shall notify the parties of the time and date set for the
inspection. Any party who so desires may be present at the
inspection.

(2) The board or appointed arbitration association shall fix the
time, begin delete place end delete begin insert date end insert , and location of the hearing for all cases referred
to arbitration pursuant to subdivision (b) of Section 7085. An
arbitrator may, at the arbitrator’s sole discretion, make an
inspection of the construction site begin delete which end delete begin insert that end insert is the subject of the
arbitration. The arbitrator shall notify the parties of the time and
date set for the inspection. Any party who desires may be present
at the inspection.

(f)  begin delete Any end delete begin insert A end insert person having a direct interest in the arbitration is
entitled to attend the hearing. The arbitrator shall otherwise have
the power to require the exclusion of any witness, other than a
party or other essential person, during the testimony of any other
witness. It begin delete shall be discretionary with end delete begin insert is in the discretion of end insert the
arbitrator to determine the propriety of the attendance of any other
person.

(g)  begin delete Hearings end delete begin insert A hearing end insert shall be adjourned by the arbitrator begin delete only end delete
for good cause.

(h) A record is not required to be taken of the proceedings.
However, any party to the proceeding may have a record made at
its own expense. begin insert A party making a recording of a hearing shall
supply the recording to the arbitrator at the party’s own expense. end insert
The parties may make appropriate notes of the proceedings.

(i) The hearing shall be conducted by the arbitrator in any
manner begin delete which end delete begin insert that end insert will permit full and expeditious presentation
of the case by both parties. Consistent with the expedited nature
of arbitration, the arbitrator shall establish the extent of, and
schedule for, the production of relevant documents and other
information, the identification of any witnesses to be called, and
a schedule for any hearings to elicit facts solely within the
knowledge of one party. The complaining party shall present its
claims, proofs, and witnesses, who shall submit to questions or
other examination. The defending party shall then present its
defenses, proofs, and witnesses, who shall submit to questions or
other examination. The arbitrator has discretion to vary this
procedure begin insert , end insert but shall afford full and equal opportunity to the parties
for the presentation of any material or relevant proofs.

(j) The arbitration may proceed in the absence of any party who,
after due notice, fails to be present. The arbitrator shall require the
attending party to submit supporting evidence in order to make an
award. An award for the attending party shall not be based solely
on the fact that the other party has failed to appear at the arbitration
hearing.

(k) The arbitrator shall be the sole judge of the relevancy and
materiality of the evidence offered begin insert , end insert and conformity to legal rules
of evidence shall not be required.

(l) The arbitrator may receive and consider documentary
evidence. Documents to be considered by the arbitrator may be
submitted prior to the hearing. However, a copy shall be
simultaneously transmitted to all other parties and to the board or
appointed arbitration association for transmittal to the arbitrator
or board appointed arbitrator.

(m) The arbitrator shall specifically inquire of the parties
whether they have any further proofs to offer or witnesses to be
heard. Upon receiving negative replies, the arbitrator shall declare
the hearing closed and minutes thereof shall be recorded. If briefs
are to be filed, the hearing shall be declared closed as of the final
date set by the arbitrator for the receipt of briefs. If documents are
to be filed as requested by the arbitrator and the date set for their
receipt is later than that set for the receipt of briefs, the later date
shall be the date of closing the begin delete hearings end delete begin insert hearing end insert . The time limit
within which the arbitrator is required to make the award shall
commence to run, in the absence of other agreements by the parties,
upon the closing of the begin delete hearings end delete begin insert hearing end insert .

(n) The hearing may be reopened on the arbitrator’s own motion
begin insert prior to the rendering of an award end insert .

(o)  begin delete Any end delete begin insert A end insert party who proceeds with the arbitration after
knowledge that any provision or requirement of these rules has
not been complied with, and who fails to state his or her objections
to the arbitrator in writing, within 10 calendar days of close of begin insert the end insert
hearing, shall be deemed to have waived his or her right to object.

(p) (1) Except as provided in paragraph (2), any papers or
process necessary or proper for the initiation or continuation of an
arbitration under these rules begin insert , end insert and for any court action in connection
therewith, or for the entry of judgment on an award made
thereunder, may be served upon begin delete any end delete begin delete party (A) by regular end delete begin insert a party
by first-class end insert mail addressed to that party or his or her attorney at
the party’s last known address, or begin delete (B) end delete by personal service. begin insert Service
by first-class mail is complete upon deposit in a post office,
mailbox, subpost office, substation, or mail chute, or other like
facility regularly maintained by the United States Postal Service
in a sealed addressed envelope, with postage paid. end insert

(2) Notwithstanding paragraph (1), in all cases referred to
arbitration pursuant to subdivision (b) of Section 7085 in which
the contractor fails or refuses to return an executed copy of the
notice to arbitrate within the time specified, any papers or process
specified in paragraph (1) to be sent to the contractor, including
the notice of hearing, shall be mailed by certified mail to the
contractor’s address of record.

(q) The award shall be made promptly by the arbitrator begin delete , and
unless end delete begin insert . Unless end insert otherwise agreed by the parties, begin insert the award shall be
made end insert no later than 30 calendar days from the date of closing the
hearing, begin insert from end insert closing a reopened hearing, or if oral hearing has
been waived, from the date of transmitting the final statements
and proofs to the arbitrator.

The arbitrator may for good cause extend any period of time
established by these rules, except the time for making the award.
The arbitrator shall notify the parties of any extension and the
reason therefor.

(r) (1) The arbitrator may grant any remedy or relief begin insert authorized
pursuant to this section end insert that the arbitrator deems just and equitable
begin delete and end delete begin insert , and that is end insert within the scope of the board’s referral and the
requirements of the board. The arbitrator, in his or her sole
discretion, may award costs or expenses begin insert , but shall not award
specific performance of any project or make a determination
relative to any remedy not expressly authorized under this article,
including, but not limited to, attorney’s fees, monetary damages
for personal injury, and punitive damages end insert .

(2)  begin delete The amendments made in paragraph (1) during the 2003-04
Regular Session shall not be interpreted to prevent an arbitrator
from awarding a complainant end delete begin insert An arbitrator may award end insert all direct
costs and expenses for the completion or repair of the project.

(s)  begin insert (1) end insert begin insert   end insert The award shall become final 30 calendar days from the
date the arbitration award is issued begin insert , notwithstanding the actual
date either party receives the award end insert . The arbitrator, upon written
application of a party to the arbitration, may correct the award
upon the following grounds:

begin delete

(1)

end delete

begin insert (A) end insert  There was an evident miscalculation of figures or an evident
mistake in the description of any person, things, or property
referred to in the award.

begin delete

(2)

end delete

begin insert (B) end insert  There is any other clerical error in the award, not affecting
the merits of the controversy.

begin delete

An

end delete

begin insert (2) end insert begin insert   end insert begin insert An end insert application for correction of the award shall be made
within 10 calendar days of the date of service of the award by
serving a copy of the application on the arbitrator, and all other
parties to the arbitration. begin delete Any end delete begin insert A end insert party to the arbitration may make
a written objection to the application for correction by serving a
copy of the written objection on the arbitrator, the board, and all
other parties to the arbitration, within 10 calendar days of the date
of service of the application for correction.

begin delete

The

end delete

begin insert (3) end insert begin insert   end insert begin insert The end insert arbitrator shall either deny the application or correct the
award within 30 calendar days of the date of service of the original
award by mailing a copy of the denial or correction to all parties
to the arbitration. Any appeal from the denial or correction shall
be filed with a court of competent jurisdiction and a true copy
thereof shall be filed with the begin delete arbitrator or end delete appointed arbitration
association within 30 calendar days after the award has become
final. The award shall be in writing, and shall be signed by the
arbitrator or a majority of them. If no begin delete appeal end delete begin insert request for correction end insert
is filed within the 30-calendar day period, it shall become a final
order of the registrar.

(t) Service of the award by certified mail shall be effective if a
certified letter containing the award, or a true copy thereof, is
mailed by the begin delete arbitrator or end delete arbitration association to each party or
to a party’s attorney of record at their last known address, address
of record, or by personally serving any party. begin delete Service may be
proved in the manner authorized in civil actions. end delete begin insert Service by
certified mail is complete upon deposit in a post office, mailbox,
subpost office, substation, or mail chute, or other like facility
regularly maintained by the United States Postal Service in a
sealed addressed envelope, with postage paid end insert begin insert . end insert

(u)  begin insert (1) end insert begin insert   end insert The board shall pay the expenses of one expert witness
appointed by the board begin delete when the end delete begin insert if both of the following apply: end insert

begin insert (A) end insert begin insert   end insert begin insert The end insert services of an expert witness are requested by either
party involved in arbitration pursuant to this begin delete article and the end delete begin insert article. end insert

begin insert (B) end insert begin insert   end insert begin insert The end insert case involves workmanship issues that are itemized in
the complaint and have not been repaired or replaced. begin delete Parties who
choose end delete

begin insert (2) end insert begin insert   end insert begin insert A party that chooses end insert to present the findings of another expert
witness as evidence shall pay for those services. Payment for expert
witnesses appointed by the board shall be limited to the expert
witness costs for inspection of the problem at the construction site,
preparation of the expert witness’ report, and expert witness fees
for appearing or testifying at a hearing. All requests for payment
to an expert witness shall be submitted on a form that has been
approved by the registrar. All requests for payment to an expert
witness shall be reviewed and approved by the board prior to
payment. begin delete The registrar shall advise the parties that names of
industry experts may be obtained by requesting this information
from the registrar. end delete

(v) The arbitrator shall interpret and apply these rules insofar
as they relate to his or her powers and duties.

(w) The following shall apply as to court procedure and
exclusion of liability:

(1) The board, the appointed arbitration association, or any
arbitrator in a proceeding under these rules is not a necessary party
in judicial proceedings relating to the arbitration.

(2) Parties to these rules shall be deemed to have consented that
judgment upon the arbitration award may be entered in any federal
or state court having jurisdiction thereof.

(3) The board, the appointed arbitration association, or any
arbitrator is not liable to any party for any act or omission in
connection with any arbitration conducted under these rules.