Issue of First Impression in California
Tenzera, Inc. v. Osterman, B228189 (2nd Dist. Div. 3 April 19, 2012) presents “what appears to be an issue of first impression in California.” That issue is whether prevailing parties in an arbitration “are entitled to prejudgment interest between the time the trial court vacated the arbitration award in their favor and our reinstatement of the award in the previous appeal in this case.”
Before an earlier appeal (Tenzera I), the trial court had vacated the arbitration award in favor of the Ostermans as to all parties, even though the company, Tenzera, Inc., did not seek to vacate the award. In Tenzera I, the Court of Appeal held the trial court should have modified the award to reflect that only the company was liable. On remand, the trial court did not award interest that would have accrued during the pendency of the appeal in Tenzera I, reasoning that during this appeal, the company was “prevented by law” from paying the arbitration award.
Not so said the Court of Appeal this time around. A prevailing party in arbitration is entitled to prejudgment interest as of the date of the final award to entry of judgment. Thoughout the appeal in Tenzera I, “damages were certain and there was no dispute between the parties concerning the basis of computing those damages.” Nor was the company “prevented by law” from paying – that exception is very narrowly construed, and did not apply under the facts here.
The opinion was authored by Justice Aldrich. It is certified for partial publication – the unpublished part pertains to attorney’s fees, and the published party pertains to the prejudgment interest “issue of first impression”.