Rejected CCP § 998 Offer Did Not Change The Result, Because Claimant Did Not Ask Arbitrator To Cost Shift And Failed To Show Contractual Expenses Were Post-Offer In Nature.
In Lipton & Margolin, APC v. Ko, Case No. B288038 (2d Dist., Div. 2 February 7, 2019) (unpublished), former law firm sued client for $39,455.45 on an unpaid receivable, prompting client to cross-claim for legal malpractice. The whole matter was referred to contractual arbitration. Nothing was awarded by the arbitrator except for $435 in filing costs for the firm to answer the malpractice complaint, with each side ordered to bear other fees and costs. Earlier, plaintiff/claimant had made a CCP § 998 offer to drop the cross-complaint and pay $1,800 in satisfaction of the receivable, an offer expiring without acceptance by the law firm. In the superior court post-confirmation award proceeding, plaintiff/claimant requested $15,161.66 in costs (mostly contractual arbitration expenses). The lower court confirmed the arbitration award, but it denied plaintiff’s costs request except for the $60 motion to confirm arbitration award fee. Plaintiff appealed that denial.
The 2/2 DCA upheld the costs denial. With respect to arbitration costs, they were not warranted because CCP § 1284.2 is the “pay your own freight” default rule unless the arbitration clause provides otherwise, and it did not in this case. Next, regarding superior court post-confirmation expenses, the trial judge did properly allow the $60 fee to plaintiff but any pre-arbitration judicial work needed to be presented to the arbitrator (as it was by the law firm). Finally, plaintiff’s argument that post-998 offer costs were justified (CCP § 998(c)(1)) was rejected because these were never presented to the arbitration for adjudication and plaintiff failed to show that these claimed costs actually were incurred after the 998 offer was made/then expired. (The appellate panel did cite Heimlich, which is being considered by the California Supreme Court, for the proposition that the section 998 costs-shifting nuance needs to be presented before the arbitrator in some way, at least after the merits arbitration award and before superior court confirmation efforts are undertaken. We note that Heimlich has been scheduled for argument before the California Supreme Court on March 5, 2019.)
Comments