Arbitration: Arbitrator’s Decision To Reallocate Arbitration Attorney’s Fees And Costs Award In Payment Of Mortgage For Winning Tenants In Common Parties Was Proper

$304,894.15 Was The Reallocation Remedy.

            Ahn v. Sanger, Case Nos. A157260/157935 (1^st Dist., Div. 1 Jan. 15, 2021) (unpublished) demonstrates the breadth of arbitrators’ remedies as long as they rationally related to the contractual dispute being resolved.

            There, in an initial arbitration, the Sangers won a contractual dispute against Ahn involving a multi-residential building in San Francisco which they owed as tenants in common, with a contractual fees clause being in play.  In an earlier appeal, the 1/1 DCA confirmed the award and also reversed a lower court’s refusal to award the Sangers fees for confirming the award.  However, because these types of disputes can be bitter and contentious, a second arbitration occurred by which the arbitrator ordered Ahn to remove a lien on the property and pay prevailing party attorney’s fees and costs to the Sangers in the sum of $304,894.15.  Ahn did not remove the lien, so the arbitration devised a “reallocation remedy”:  the $304,894.15 in fees and costs in Sangers’ favor were to be credited against the amount of the joint mortgage amount still outstanding with respect to their share.  That prompted a second appeal, with the lower court confirming the award but rejecting the reallocation remedy.

            The 1/1 DCA unequivocally confirmed the arbitration award, deciding that the reallocation remedy was rationally related as a remedy with regard to Ahn’s breach of the tenant-in-common agreement.  Although penalties cannot be awarded under certain circumstances by an arbitrator, this remedy was not one and was equitable under the circumstances.