Consumer Arbitration Rules Concerning Prevailing Party Attorney Fees Do Apply In The Context Of An Attorney-Client Dispute.
In Milder v. Holley, Case No. B299122 (2d Dist., Div. 5 December 16, 2021) (unpublished), client plaintiff initiated arbitration proceedings pursuant to an arbitration clause after a dispute arose between him and his attorney/her law firm. After defeating plaintiff’s claims in arbitration, defendants attorney/law firm were awarded $59,892.50 in attorney fees plus $19,705.98 in costs – with the arbitrator determining defendants were the prevailing parties and entitled to fees/costs incurred in the arbitration pursuant to the arbitration clause in the retainer agreement. The trial court rejected plaintiff’s arguments that the retainer agreement’s fee-shifting provision was illegal – finding consumer arbitration rules do not apply to attorney fee disputes – and entered judgment confirming the arbitration award.
The 2/5 DCA disagreed and reversed the fees/costs portion of the arbitration award. The panel concluded that the arbitrator acted in excess of his authority by awarding fees/costs against plaintiff because law firm clients are not excluded as “consumers” (Schatz v. Allen Matkins Leck Gamble & Mallory LLP, 45 Cal.4th 557, 564 (2009); Aguilar v. Lerner, 32 Cal.4th 974, 981 (2004)) and are therefore entitled to the consumer protections provided under Code Civ. Proc. § 1284.3(a) [“No neutral arbitrator or private arbitration company shall administer a consumer arbitration under any agreement or rule requiring that a consumer who is a party to the arbitration pay the fees and costs incurred by an opposing party if the consumer does not prevail in the arbitration, including, but not limited to, the fees and costs of the arbitrator, provider organization, attorney, or witnesses”].
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