Broad Fee Clauses Were The Bases For The Affirmed Award.
In Currency Corp. v. Wertheim, LLC, Case No. B276506 (2d Dist., Div. 1 Mar. 2, 2021) (unpublished), Wertheim initiated legal proceedings spanning 15 years, culminating in an arbitration in which it achieved nothing (according to the DCA panel) because part of the award was found to be illegal and branched into other lawsuits and appeals. In the end, Currency and its affiliates sought fees for the arbitration portion of the dispute and related proceedings, with the trial court granting fees of $1,237,501 against Wertheim.
That award was affirmed on appeal. The principal reasons were the DCA’s perception that all of the proceedings were “bundled together” and sprang from the arbitration, as well as the broad nature of some contractual fees clauses. Given this ruling, it counsels practitioners and litigants to narrowly draft fees clauses, given that a broadly worded fees clause can give rise to fees incurred in an arbitration and related proceedings.
Also, be careful when you sue parties as alter egos. Even if the case is patently untenable, Civil Code section 1717 does allow for fee-shifting in these situations—something which did occur here even though the theory was that an individual was an alter ego of an individual (an impossible construct).
As far as reasonableness of the fees, Wertheim could not surmount the deferential abuse of discretion standard even though there was evidence in the record that the fee substantiation was incompetent in nature.
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