Merits Cannot Be Reviewed, But Prevailing Counterclaimant Did Not Allocate—A Mistake!
We will say that Editions Limited West, Inc. v. Somerset Studios, Inc., Case No. A145320 (1st Dist., Div. 3 July 7, 2016) (unpublished) is another decision where an appellate court would not revisit the merits of an arbitrator’s refusal to grant fees to a prevailing arbitration counterclaimant. That much is not really much of a surprise under cases such as Moore v. First Bank of San Luis Obispo (2000) 22 Cal.4th 782 and Moshonov v. Walsh (2000) 22 Cal.4th 771, where arbitration awards in contravention of mandatory fee-shifting entitlements were affirmed based on the rule that the merits generally cannot be revisited with respect to arbitration awards. However, there is a lesson to be learned from the ultimate result.
In affirming the fee denial to the prevailing arbitration counterclaimant, the appellate court did observe that this party only presented an “all or nothing” approach to the arbitrator, namely, you give me everything because I refuse your invitation to apportion between different work in the arbitration as far as efforts on the claim (which I lost) and the counterclaim (which I won). That was a mistake, with both the arbitrator and appellate court agreeing that the prevailing party gambled big on the “all or nothing” approach. Unfortunately, counterclaimant gained nothing for the win and had to pay about $190,000 to the prevailing claimant for its loss on the arbitration claim side of the coin. I hope we do not have to blog on the message sent by this case—but, to make it clear, if the arbitrator or trial judge asks for an apportionment, we suggest you do it!
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