The Award Was Governed By The Statutory Fee Provisions Provided For By The Mandatory Fee Arbitration Act, Not The Parties’ Contract Fee Provision.
Under the MFAA (Bus. & Prof. Code, § 6200 et seq.), enacted to eliminate bargaining power disparity between attorneys and clients trying to resolve fee disputes, neither party to a fee arbitration may recover fees or costs incurred in the arbitration proceeding, with exception to the filing fee. However, under § 6203(c) a party bringing a meritorious petition and obtaining judgment confirming, correcting, or vacating an MFAA arbitration award is a prevailing party and may recover reasonable fees and costs, including fees and costs on appeal. Additionally, under § 6204(d), reasonable attorney fees and costs may be awarded to the prevailing party in a trial after arbitration. Under section 6204(d), the party seeking trial after arbitration is the prevailing party if successful in obtaining a judgment more favorable than that provided by the arbitration award. Otherwise, the other party is the prevailing party.
In Soni v. Cartograph, Inc., Case No. B316270 (2d Dist., Div. 5 April 5, 2023) (published), plaintiff attorney petitioned for MFAA fee arbitration after defendant client challenged about $3,720 of the fees charged by attorney as being incurred for unauthorized work. Ultimately, after client agreed not to dispute $380 of the fees, and after applying client’s credit balance from his previous overpayment and after the allocation of arbitration filing fees, attorney received an arbitration award in the net amount of $2.50.
Afterward, attorney filed an action seeking a trial, and client petitioned to have the arbitration award confirmed. The trial court denied client’s petition and entered judgment in favor of attorney in the amount of $2,890, plus prejudgment interest, costs, and $79,898 in attorney fees. This was reversed on appeal – with the appellate court concluding in a published opinion that the arbitration award was binding and should have been confirmed because attorney failed to file his action for trial within 30 days after service of the arbitration award. (§ 6204(a)-(c).)
On remand, both parties sought prevailing party attorney fees – with attorney seeking $543,365 under the fees provision of the parties’ contract based on his net monetary recovery under the arbitration award, and client seeking $339,603 under the fees provision of the parties’ contract and under § 6203(c). Following a hearing on the competing fees requests, the trial court determined that the MFAA fee provisions at §§ 6203(c) and 6204(d) governed – not the parties’ contract fee provision. After some deductions for duplicative work, the trial court awarded client $334,458.41 in attorney fees and costs.
Attorney appealed, but the 2/5 DCA affirmed – concluding that application of the parties’ contract fee provision was precluded by the policies underlying the MFAA fee provisions to promote the finality of arbitration awards and discourage frivolous additional litigation.
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