Arbitration/Section 998: Appellate Court Provides Guidance On How To Request 998 Fee/Costs Shifting From The Arbitrator Before Merits Determination

 

 

Basic Lesson Is That Request Can Be Made After Merits Determination, With No Pre-Merits “Notice Alert” To Arbitrator Being Necessary.

 

            Heimlich v. Shivji, Case No. H042641 (6^th Dist. May 31, 2017) (published) is a significant appellate decision specifying how a litigant in an arbitration proceeding preserves the ability to obtain recovery of CCP § 998 fees/costs before a merits determination is made by an arbitrator.

            Client prevailed on the merits in an arbitration compelled by former counsel to collect unpaid attorney’s fees.  Six days after the arbitration award, client asked arbitrator to award 998 costs based on a successful offer, but the arbitrator decided he no longer had jurisdiction to award costs.  Client renewed the request in post-arbitration confirmation proceedings, but the trial court ruled that client failed to make a timely 998 claim to the arbitrator and denied 998 costs to client.  Wisely so, client appealed and won a reversal and chance to garner 998 costs.

            In an extended discussion, the Sixth District concluded the section 998 request by winning client was not untimely, especially given that section 998 itself prevents the arbitrator from considering the 998 offer as evidence during the arbitration.  The Court of Appeal had to reconcile several statutory sections, but ultimately provided pragmatic directions to practicing attorneys, arbitrators, and courts on this issue:  (1) no arbitration “litigant” needs give a pre-merits “notice alert” to the arbitrator on the 998 issue; (2) the winning litigant needs to present the 998 issue to the arbitrator after the merits determination; and (3) the arbitrator can make a supplemental award on the 998 issue, no matter whether the merits determination is characterized as “interim, interlocutory, or partial.” 

            The remedy for an arbitrator refusing to consider a 998 fee/costs issue, at the post-confirmation trial court level, is to remand to the arbitrator for further determination; if the parties do not consent to a rehearing by the original arbitrator, then the trial court considers the 998 request.   

Comments

[Omair Farooqui]

Our office, Ellahie & Farooqui LLP represented the Appellant Shiraz Shivji. If you have any questions, please feel free to contact me. 408-294-0404.
Best,
Omair Farooqui