CALIFORNIA ATTORNEY'S FEES

Arbitration: Appellate Court Reverses Lower Court’s Denial Of Motion To Compel Arbitration Where Requesting Designer/Materialman Paid Arbitration Fees

Designer Did Not Have To Meet Payment Obligations By Contractor, So There Was No Waiver Or Forfeiture.

               Facts many times make the difference in the resolution of a dispute.  And that conclusion rang true in Mooradian v. Ingjaldsdottir, Case No. B331561 (2d Dist., Div. 7 Sept. 26, 2024) (unpublished).

               There, homeowners, designer, materialman, and contractor entered into separate contracts with arbitration clauses.  Once a dispute arose, all parties agreed to a consolidated arbitration to resolve pending disputes.  Homeowners, designer, and materialman paid their arbitration fees, but contractor did not, resulting in a termination of the arbitration.  Designer and materialman renewed a motion to compel arbitration, which was denied by the lower court because the two did not pay contractor’s arbitration expenses.  The 2/7 DCA, in an opinion authored by Justice Segal, reversed the arbitration denial.  Even though the parties agreed to a consolidated arbitration, designer and materialman did pay their fees under separate contracts with arbitration clauses such that they should not be held accountable to the separate breach by contractor, distinguishing Cintel v. Barna, 206 Cal.App.4^th 1383 (2012) in the process.

               BLOG OBSERVATION—Arbitration waiver principles have changed somewhat after the California Supreme Court’s Quach decision, with this unpublished opinion having a nice synopsis of the changes.

Arbitration, Family Law: MFAA Fee Process Is Not Required For Fees To Be Awarded To Attorney Representing Minor In A Custody Dispute

Family Code Section 3153 And CRC 5.241 Supported This Conclusion.

               In Marriage of Thompson, Case No. B332150 (2d Dist., Div. 2 Sept. 24, 2024) (unpublished), ex-spouses were embroiled in a “high conflict” custody dispute over their minor child, with the family court appointing a family law attorney to represent the minor child and with her costs to be split 50/50 (over no objection by either side).  All fine until disputes arose on minor child’s attorney’s fee requests, after ex-wife did not pay some fees but ex-husband did pay his share.  Ex-wife argued that she had a right to pursue a Mandatory Fee Arbitration Act (MFAA) arbitration before minor child’s attorney sought fees from the family court.  The family court did not agree, awarding fees to attorney as against ex-wife. 

               Ex-wife appealed, arguing the MFAA applied to her fee dispute with minor child’s attorney.  The 2/2 DCA disagreed, determining that Family Code section 3153 and CRC, Rule 5.241 address the payment of fees to a minor child’s attorney and with the family court to adjudge the determination of such fees.  Because minor child’s attorney’s fees were to be determined by statute, the MFAA did not apply.

Arbitration: Employer Did Not Blow 30-Day Payment Window Under CCP § 1281.98 Because Employee Did Not Properly Serve The Arbitration Demand, Allowing For Payment Later

Denial Of Motion To Compel Arbitration Is Reversed And Matter Ordered To Arbitration.

               CCP § 1281.98 is the 30-day window for an employer to pay arbitration expenses under penalty of going to court rather than arbitration under the contractual arbitration clause with employee.  This statute has produced much litigation; and, as we have indicated on past posts, the California Supreme Court is considering whether the statute is preempted by the Federal Arbitration Act (an issue generating a split among intermediate appellate courts).  However, some of the cases are fact specific, as is the one we discuss now.

               In Thompson v. SF Markets, LLC (dba Sprouts Farmers Market), Case No. A167659 (1^st Dist., Div. 5 Sept. 23, 2024) (unpublished), employee filed a putative class action which drew employer’s response to file a motion to compel arbitration under a contractual arbitration clause, which motion was unopposed and granted.  Eight months later, employee submitted an arbitration demand for his individual claims.  However, he did not serve the demand properly as required by the arbitration agreement.  Employer paid the arbitration invoice over 30 days after email receipt from JAMS.  The lower court determined (1) the employee had complied with the earlier order in the first court action to arbitrate through his service efforts; and (2) employer had not complied with § 1298.98, thereby denying a renewed order for arbitration after employee filed a second putative class action in superior court.

               The appellate court reversed and directed that the arbitration take place per the parties’ arbitration agreement.  The central issue was whether employer had paid late, with the 1/5 DCA determining that employee had failed to properly initiate arbitration through defective service on employer (CCP § 1281.97(a)(2)) such that employer’s late payment was appropriate given that the prior invoice was of no force and employee had not substantially complied with service requirements.  It also found no waiver by employer’s subsequent payment.

Arbitration: Anoke Decision Now Published

CCP § 1281.97 Deadlines Run From Second Invoice Where Payment Was Requested.

               On August 28, 2024, we posted on Anoke v. Twitter, Inc., Case No A168675 (1^st Dist., Div. 5 Aug. 27, 2024), unpublished at the time, and now published on September 18, 2024.  Now citable, this case holds that the CCP § 1281.97 deadlines run from when a definitive invoice was sent to the employer to pay arbitration expenses, not from a first invoice mistakenly paid by employee but later corrected. 

Arbitration: Where Employee Paid Employer’s Arbitration Fees And Then Obtained A Refund, Employer Timely Paid Arbitration Fees From Issuance Of Second Invoice Within 30 Days

CCP § 1281.97 Ties The 30-Day Deadline From The Date Of An Arbitrator Invoice.

               We have posted about the CCP § 1281.97 30-day deadline for an employer to pay arbitration fees, with most courts strictly construing the deadline (although whether the provision is preempted by the FAA is an issue recently taken up the California Supreme Court in Hohenshelt).  However, given how unique circumstances can drive results, the trial and appellate courts in Anoke v. Twitter, Inc., Case No. A168675 (1^st Dist., Div. 5 Aug. 27, 2024) (unpublished) took a practical approach to a unique situation.

               There, employee’s counsel mistakenly paid employer’s share of arbitration fees quickly after issuance of that invoice.  Employer checked and saw that the arbitration portal reflected the fees as being paid.  Later, employee’s counsel then demanded a refund (which was made with no apparent notice to employer).  The arbitrator issued a second invoice to employer, which paid within 30 days.

               Employee challenged the payment as untimely, but the appellate court disagreed after the lower court denied employee’s request for a motion to compel an arbitration in which employer was liable for her reasonable fees and costs (an untimely payment remedy available under § 1281.97(b)(2)).  Based on the statutory language having a “passive voice,” the 2/5 DCA determined that the statute ties the 30-day deadline to an invoice from the arbitrator, with employer timely paying the second invoice.  It further observed that any other result could result in some gamesmanship by employee, a “gotcha” the appellate court did not like.  “Here, a mistaken payment resulted in a second invoice, which is consistent with ordinary business billing practices.  We are not going to rewrite the statute to say that, in the event one invoice is mistakenly paid, a second invoice is improper.”

Appealability, Arbitration, Employment, Preemption: $176,687.96 Fees And Sanctions Award For Employer’s Failure To Advance Fees Affirmed On Appeal

Employers Not Paying Fees Upfront Can Be Exposed To Further Arbitration Expenses Before the Axe Comes Down; Appellate Court Found No FAA Preemption, With This Preemption Issue Now Being Reviewed By The California Supreme Court.

               Although unpublished, Costa-Fleeson v. Americor Funding, Inc., Case No. G062962 (4^th Dist., Div. 3 Aug. 1, 2024) (unpublished) is a stark reminder to employers that failure to timely pay arbitration fees can result in the forfeiture of the ability to arbitrate as well as imposition of attorney’s fees and costs under Code of Civil Procedure sections 1281.98(c)(1) [covering “all attorney’s fees and costs associated with the abandoned arbitration proceeding”] and 1281.99 [with this latter statute providing for a mandatory monetary sanction to pay reasonable attorney’s fees and costs incurred by the employee as a result of the material breach of the arbitration agreement].  The appellate court affirmed five of six categories of fees and costs awarded to employee by the lower court as a result of employer’s failure to timely pay arbitration dues, with the employer likely not happy with the $176,687.96 adverse award.  In doing so, it found the lower court’s order was appealable as a monetary sanction under CCP § 904.1(a)(12).  The 4/3 DCA also found unpersuasive that the statutes were preempted by the Federal Arbitration Act.

               BLOG UPDATE—The FAA preemption issue was recently taken up for review, on June 12, 2024, by the California Supreme Court in Hohenshelt v. Superior Court (2d Dist., Div. 8 2/27/24), where the majority found no preemption and where dissenting Justice Wiley found the arbitration payment statutes were preempted.

Arbitration: Arbitration Clause Requiring Employee To Pay Nonfrivolous Motion To Compel Arbitration And Subsequent Arbitration Fees/Costs Was Unconscionable

However, Severability Was To Be Considered On Remand.

               In Ramirez v. Charter Communications, Inc., Case No. S273802 (Cal. Supreme Ct. July 15, 2024) (published), an employer faced unconscionability rulings on components of its arbitration clause, with the state supreme court issuing rulings on unconscionability and then whether those infirm clauses should or could be severed—important topics for employment law practitioners.  As applicable here, the California Supreme Court determined that arbitration clauses requiring an employee to pay motion to compel arbitration and subsequent arbitration costs were unconscionable because they violated FEHA law requiring that fees and costs could only be awarded if employee’s opposition to the motion to compel and subsequent arbitration prosecution was frivolous and without substance.

Arbitration, Employment: Arbitrator’s Failure To Consider Unwaivable Fee Request Under Labor Code Section 226(e)(1) For Prevailing Employee Was Erroneous

Employee Won $4,000 For Employer’s Failure To Issue Accurate Itemized Wage Statements.

               In Sanzone v. DCH Korea Imports, LLC, Case No. G063483 (4^th Dist., Div. 3 July 3, 2024) (unpublished), an arbitrator awarded an employee $4,000 on a Labor Code failure to issue accurate itemized wage statements, after denying several other Labor Code claims, and ordering each side to bear their own fees (even though employer had to pay the costs of the arbitration).  Employee appealed, among other issues, the denial of attorney’s fees, claiming that he had an unwaivable statutory right to fees and costs under Labor Code section 226(e)(1), which is a plaintiff one-way favorable fee-shifting statute, such that the arbitrator exceeded his powers.

               The 4/3 DCA agreed, in an opinion authored by Justice Motoike.  Applying a de novo standard of review, it found an employee has unwaivable statutory rights under section 226(e)(1), a paramount concern ignored by the arbitrator and the lower court in confirming the award (and denying the employee’s vacatur request).  The panel understood that there were decisions under Civil Code section 1717 where arbitrators did not have to follow the 1717 mandate, but found that the reasoning in Pearson Dental Supplies, Inc. v. Superior Court, 48 Cal.4^th 665 (2010) apt because employee was denied the opportunity to be heard on the merits of the fee request.

               BLOG OBSERVATION—If we read this case correctly, the appellate court was concerned that the arbitrator did not even consider the request, not that a merits determination after considering it would be treated the same way.

Arbitration: Where Costs-Shifting Component Only In Employer-Employee Arbitration Agreement Was Unconscionable, It Should Be Severed

Denial Of Motion To Compel Arbitration Was Reversed.

               In Helfet v. Motive Energy, Inc., Case No. B331359 (2d Dist., Div. 1 July 1, 2024) (unpublished), the appellate court reversed the denial of a motion to compel arbitration under an employer-employee contractual provision because the only unconscionable provision, an improper cost-shifting provision, could be severed so the case could proceed to arbitration.

Arbitration: 1/1 DCA Agrees That 30-Day Employer Arbitration Payment Deadline Is Not Preempted By The FAA

Split Is Now Present Between The Intermediate Appellate Courts On This Issue. 

               In Keeton v. Tesla, Inc., Case No. A166690 (1^st Dist., Div. 1 June 26, 2024) (published), the 1/1 DCA considered whether CCP § 1281.98(a)(1), the 30-day window for employers to pay arbitration expenses, is preempted by the Federal Arbitration Act (FAA).  After determining that was no unmistakable delegation of the issue to the arbitrator, the appellate court found that section 1281.98 was not preempted by the FAA, agreeing with Gallo v. Wood Ranch USA, Inc., 81 Cal.App.5^th 621 and disagreeing with Hernandez v. Sohnen Enterprises, Inc., 102 Cal.App.5^th 222 (2024).  Given that there is now a clear split on this issue among the intermediate appellate courts, we would predict that this case or Hernandez might be a candidate for state supreme court review.  (A petition for rehearing in Hernandez was denied on June 3, 2024.)

Arbitration: CCP § 1281.97 Orders Are Appealable And FAA Preempts CCP Deadline Provision

Unpublished Solis Decision, From The 2/5 DCA, Follows Reasoning In Recently Published Hernandez Opinion Over A Dissent.

               On May 24, 2024, we posted on Hernandez v. Sohnen Enterprises, Inc., a May 22, 2024 2/5 DCA opinion which was published, deciding CCP § 1281.97 orders are appealable and § 1281.97 was preempted by the FAA where a contract said the FAA governed—over a dissenting justice’s contrary reasoning.  The same division came to the same result in the unpublished opinion of Solis v. Sohnen Enterprises, Inc., Case No. B323296 (2d Dist., Div. 5 May 23, 2024) (unpublished), also a 2-1 decision. 

Arbitration: 2/5 DCA Majority Decides That FAA Preempts 30 Day Payment Deadline For Employers Under CCP § 1281.97

Dissent Disagrees That FAA Is Offended By Section 1281.97.

               In Hernandez v. Sohnen Enterprises, Inc., Case No. B323303 (2d Dist., Div. 5 May 22, 2024) (published), a 2-1 panel decided that the FAA preempts the CCP § 1281.97 deadline requiring that an arbitration is forfeited unless the employer pays expenses within 30 days unless California arbitration rules are expressly incorporated into the parties’ contract, which coincides somewhat with Justice Wiley’s dissenting rationale in Hohenshelt v. Superior Court, 99 Cal.App.5^th 1319, 1328 (2024), pet’n for review filed, Case No. S284498 (Cal. Sup. Ct. Apr. 8, 2024) [discussed in our March 1, 2024 post].  The dissent did not believe section 1281.97 offended the FAA, siding with the logic of the Gallo decision.  The majority also decided that an order granting a motion to withdraw from arbitration under section 1281.97 was appealable; the dissent questioned whether that was the case, inviting legislative scrutiny, but assumed so for purposes of addressing the FAA preemption issue.  We would adventure a guess that this decision might be destined for California Supreme Court review.

Arbitration: Trial Court Has No Power To Dismiss Claims For Failure To Prosecute When Case Has Been Ordered To Arbitration

Arbitrator Need To Make Decisions; Party Opposing Arbitration For Lack Of Funds Needs To Make Showing Before Superior Court Or Arbitrator.

               In Lew-Williams v. Petrosian, Case No. B330387 (2d Dist., Div. 7 Apr. 2, 2024) (published), a trial court dismissed state law claims for failure to prosecute after the matter was ordered to arbitration upon defendant’s request and after plaintiff claimed to lack funds to arbitrate.   The 2/7 DCA reversed, determining that the lower court had vestigial jurisdiction only (losing the power to dismiss claims) and that the opposing party had to seek relief from the arbitrator, who could even terminate the arbitration if no funds were paid by plaintiff (in which the case returned to superior court). 

               The appellate court also observed that the party opposing arbitration based on the lack of funds needs to make a showing before the trial court at the outset, because that court could condition arbitration upon a reallocation of costs or having the party seeking arbitration to advance the costs for the opponent.

Arbitration, Requests For Admission: Arbitrator Award Of RFA Costs Of Proof Sanctions Reversed In Review Of Uninsured Motorist Arbitration Proceedings

Only A Trial Judge Can Order Discovery Sanctions Under Uninsured Motorist Arbitration.

               We did know that uninsured motorist arbitrations are a niche area for practitioners in the area.  That is confirmed by the result in Ourfali v. 21^st Century Ins. Co., Case No. B324150 (2d Dist., Div. 4 Mar. 27, 2024) (unpublished).  There, in an uninsured motorist arbitration, an arbitrator awarded CCP § 2033.420 costs of proof sanctions of $34,789.50 in connection with some RFA denials against defendant insurer, even though the insurance policy arbitration clause stated that all other issues but legal entitlement to damages and the damages amount had to be decided by a superior court.  The superior court vacated the costs of proof sanctions, a determination affirmed by the appellate court.  It found that only the superior court had jurisdiction to hear discovery matters arising under uninsured motorist arbitrations.  (Miranda v. 21^st Century Ins. Co., 117 Cal.App.4^th 913, 926 (2004); see also Storm v. Standard Fire Ins. Co., 52 Cal.App.5^th 636, 640, 648 (2020).)

Arbitration: Former Employer Could Not Revive Arbitration Demand Against Ex-Employee After Paying Late Following Expiration Of The CCP § 1287.97 30-Day Deadline

Deadline Is Strict; § 1287.97 Is Not Preempted By The FAA.

               In Jane Doe v. Lawyers for Employee and Consumers Rights, Case No. B330052 (2d Dist., Div. 6 Mar. 21, 2024) (unpublished), former employer sought to press arbitration against ex-employee although it paid late arbitration expenses in derogation of the 30-day deadline under CCP § 1287.97.  The trial court denied employer’s motion to compel and imposed sanctions under § 1287.97(d).  The appellate court affirmed.

               Section 1287.97’s payment deadline is strict and unforgiving.  Payment after the deadline could not resuscitate the situation.  Further, the lower court, not an arbitrator, gets to decide this issue.  (Espinoza v. Superior Court, 83 Cal.App.5^th 761, 787 (2002); Cvejic v. Skyview Capital, LLC, 92 Cal.App.5^th 1073, 1078-1079 (2023).)  Finally, section 1287.97 is not preempted by the Federal Arbitration Act.  (Espinoza, 83 Cal.App.5^th at 771.) 

Arbitration: 30-Day Deadline To Pay Arbitration Fees For Employee’s Arbitration Expenses Runs From Receipt Of Invoice

Fifth District Reversed An Order Withdrawing The Case From Arbitration Because Evidence Showed JAMS Invoice Not Received Until Later By Employer.

               Construing CCP § 1281.98 through plain dictionary meanings, the Fifth District in Lopez v. Landscape Development, Inc., Case No. F085676 (5^th Dist. Mar. 7, 2024) (unpublished) reversed an order withdrawing a case from arbitration and imposing sanctions on employer when the record showed employer did not receive a JAMS invoice until after its designated due date and then paid on time from date of receipt. The statute runs the 30-day payment deadline from receipt of the invoice, with prior JAMS emails and correspondence only talking about arbitral expenses and indicating an invoice would be sent later.

Arbitration: Employer’s Failure To Timely Pay Arbitration Fees To JAMS Under CCP § 1281.98 Meant Litigation For The Parties, With JAMS Having No Power To Extend The Deadline Unless All Parties Consent

Dissent Believed That The FAA Preempted Section 1281.98.

            In Hohenshelt v. Superior Court, Case No. B327524 (2d Dist., Div. 8 Feb. 27, 2024) (published), by a 2-1 margin, the majority determined that employer forfeited the ability to arbitrate by not paying arbitration fees and expenses as required under CCP § 1281.98, even though JAMS extended the payment deadline.  It had no power to do so unless all parties consented in writing (which did not happen), meaning the employee was entitled to litigate in court rather than required to arbitrate.  In dissent, Justice Wiley concluded that section 1281.98 was preempted by the FAA.

Arbitration: 4/1 DCA Follows Second District Decisions Holding Employer Wanting Arbitration Needs To Timely Pay Arbitration Expenses Under Penalty Of Litigating In Court

Facts Here Were That Employer Obtained Stay Of Court Case, But Did Not Timely Pay Arbitration Fees.

            Although the procedural context was a little different because employer obtained an arbitration stay and then failed to timely pay fees for a contractual arbitration against employee, the 4/1 DCA followed the lead of Second District cases such as Gallo v. Wood Ranch USA, Inc., 81 Cal.App.5^th 621, 629 (2022) and Espinoza v. Superior Court, 83 Cal.App.5^th 761, 778-779 (2022) in deciding that the employer’s failure to timely pay arbitration fees under CCP § 1281.97 required writ relief to dictate the conclusion that employer had waived its rights to arbitrate.  The 4/1 opinion so concluding is Suarez v. Superior Court, Case No. D082429 (4^th Dist., Div. 1 Jan. 24, 2024) (published).

Arbitration: Fees Incurred By Out-of-State Attorney and Pre-Arbitration Fees Were Correctly Allowed By Arbitrator

Attorney Did Not Represent Client So As To Practicing In Unauthorized Fashion And Pre-Arbitration Fees Fell Within Broad Arbitration Clause.

            Arbitration fee awards are hard to overturn, as 1600 Barberry Lane 8 v. Mikles, Case No. D081775 (4^th Dist., Div. 1 Jan. 17, 2024) (unpublished) establishes that well, in line with prior posts under our “Arbitration” Category.  There, the appellate court affirmed an arbitrator’s decision to compensate an out-of-state attorney’s work effort because he only provided legal research to counsel authorized to practice law in California and to allow pre-arbitration expenses as within the scope of a clause allowing for reimbursement of “other tribunal fees and expenses.”  Merits and factual determinations by an arbitrator are hard to overturn.

Arbitration: LASC Appellate Division Opinion Gives Guidance On MFAA Service Deadlines And Equitable Relief Theories

Technical Discussions Across The Board, But Deadlines For Practitioners To Keep In Mind.

            Folke v. Pulliam, Case No. BV033781 (L.A. Super. Ct. Oct. 6. 2023, posted for publication on Nov. 1, 2023) did consider the timeliness of serving a petition to vacate an arbitration award rendered under the Mandatory Fee Arbitration Act, Bus. & Prof. Code, § 6200 et seq. (“MFAA”).  Here are the takeaways from this opinion:  (1) if no judicial action is pending, service cannot be made via mail in the absence of serving by mail with a notice and an acknowledgment; (2) normally, a petition to confirm, correct, or vacate the award must be filed and served 100 days after service of the award; and (3) a lower court can grant equitable relief from the late service, per Law Finance Group, LLC v. Key, 14 Cal.5^th 932, 956-960 (2023) based on estoppel tolling and equitable estoppel if it meets a three-part test of timely notice to the opposing party, lack of prejudice to the opposing party, and reasonable and good faith conduct by the moving party.  Because there was no developed record on the equitable relief issues, the denial of the petition to vacate was reversed and remanded. 

Arbitration: $4.5 Million In Attorney Investigative Fees And $36,653 In Post-Arbitration Confirmation Costs To Prevailing Parties Affirmed On Appeal

Broad Contractual Dispute Resolution Clauses Supported The Appellate Results.

            As we have said many times in this category, arbitration awards—unless against public policy—are hard to overturn because the merits of the award are usually not subject to rescrutiny by trial or appellate courts.  Also, the emerging trend is that post-arbitration court proceedings fees are awardable as a continuation of that process.  8minutenergy US Manager v. MDS Capital, Case No. A165588 (1^st Dist., Div. 3 June 30, 2023) (unpublished) is a recent opinion fortifying those conclusions.

            There, defendants prevailed in an arbitration involving a failed solar energy development joint venture.  There were broad contractual clauses between the parties allowing for recovery of “fees and expenses of the arbitration” and further having language suggesting that the recovery extended to fees expended in obtaining any judgment reached in connection with the arbitration award.  To the prevailing parties, the arbitrator awarded over $4.5 million in fees based on attorney investigation into management breaches, and the trial court subsequently awarded $36,653 for successful efforts to confirm the arbitration award.

            The appellate court affirmed.  The contractual arbitration clause was broad enough to encompass the substantial attorney investigation costs.  With respect to the post-arbitration confirmation fees, they are generally part of the arbitration continuation process (Code Civ. Proc., § 1293.2; Marcus & Millichap Real Estate Investment Brokerage Co. v. Woodman Investment Group, 129 Cal.App.4^th 508, 513 (2005)), bolstered by the fact that the contractual alternative dispute resolution clause did have broad language including judgment efforts were within the scope of arbitration work.

Arbitration: $167,315.94 In Attorney’s Fees Under An Arbitration Award Affirmed Where The Arbitration Fees Clause Did Not Prohibit Such A Fees Award And Where The Parties Submitted Fee Issues For Arbitral Resolution

Acquiescence Was A Key Predicate For Appeal Affirmance.

            In Fidelity National Title Co. v. Mehta, Case No. B309988 (2d Dist., Div. 1 June 27, 2023) (unpublished), an arbitrator awarded about $440,000 in compensatory damages which were affirmed on appeal (even after reversal of a trial court deletion of consequential damages) and also awarded $167,315.94 in attorney’s fees to the prevailing party where an arbitration fees clause allowed fee recovery for a motion to compel arbitration result but did not preclude recovery of fees for other work.  The losing party was unsuccessful in challenging the fee award on appeal for two reasons:  1) the contractual fees clause did not prohibit recovery of fees for work other than a motion to compel arbitration; and (2) the parties requested fees from the arbitrator such that they acquiesced to submission of the issue at the arbitral stage (J.C. Gury Co. v. Nippon Carbide Industries (USA) Inc., 152 Cal.App.4^th 1300, 1303-1305 (2007)). 

Arbitration: Substantial Fee Awards Of Around $672,000 By An Arbitrator Under A Contractual Fees Clause Are Affirmed On Appeal

Arbitrator’s Fee Clause Interpretation Was Immune From A Merits Challenge.

            In Mikali v. Benyamini, Case No. B316525 (2d Dist., Div. 5 May 16, 2023) (unpublished), an arbitrator interpreted a fees clause under a contractual agreement with an arbitration and fees clause, awarding certain defendants, respectively, $639,119 in fees and $32,647 in fees.  The trial judge confirmed those fees awards, with a disgruntled plaintiff appealing.  All to no avail, because the merits of an arbitrator’s fees clause interpretation are immune to challenge because the parties’ contractual agreements allowed the arbitrator to do so even if the interpretation was in error.

Arbitration, Prevailing Party: Attorney Fees And Costs Award Of $334,458.41 Affirmed Against Plaintiff Attorney Who Achieved, Under A Confirmed Arbitration Award, A Monetary Recovery Of A Small Bit Of The $3,720 In Fees He Sought From Defendant Client

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.

Arbitration, Prevailing Party, Reasonableness Of Fees: Client Who Reversed Post-MFAA De Novo Trial Results And Who Confirmed The Prior Arbitration Award Was The Prevailing Party

Because Client Had To Hire Appellate Attorneys Reversing The De Novo Trial Results, Client Was Awarded $334,458.11 In Fees/Costs—Affirmed By The Appellate Court.

            Soni v. Cartograph, Inc., Case No. B316270 (2d Dist., Div. 5 Mar. 23, 2023) (unpublished) is quite a megillah of an arbitration/litigation odyssey about a client-attorney dispute over fees.  Looks like the odyssey has finally come to a close.

            Although the overall alleged fee delinquency was relatively small, client took attorney through a mandatory fee arbitration proceeding under the Mandatory Fee Arbitration Act (MFAA), resulting in a net award of $2.50 to attorney.  Thirty-three days after service of the arbitration award, attorney filed a civil action against client seeking about $27,500.  Attorney won that litigation, although only obtaining a $2,890 judgment, plus interest as well as fees and costs to be determined.  Attorney requested $281,191.65 in contractual fees, with the lower court awarding $79,898.  However, client appealed the judgment, and it was reversed on appeal because attorney failed to file its action within a 30-day deadline period, reversing a denial of client’s motion to confirm the award. 

            Upon remand, the lower court granted client’s petition to confirm the arbitration award.  Both sides claimed to be prevailing parties, filing dueling fee motions.  The trial judge found that client prevailed, awarding client $328,166.50 in fees under the MFAA, Business and Professions Code sections 6203 and 6204.

            Attorney was miffed, appealing but obtaining no change in result.  Client was the prevailing party under section 6203(c) because client successfully confirmed the arbitration award, notwithstanding the tortured history by which client finally got to this final reckoning.  The appellate panel also rejected the argument that the language of the contractual fees provision governed, because the MFAA controlled over the parties’ contract provision.  Finally, the amount of the award was no abuse of discretion, given appellate expertise was necessary and given client’s attorneys worked half as many hours as attorney’s attorneys.

Arbitration: Arbitration Fee Clause Saying That Both Sides Bear Their Own Fees, Subject To Reallocation By Arbitrator, Did Aid Substantive Unconscionability Determinations By Trial And Appellate Courts

CLRA Claims Require Bad Faith Prosecution To Award Prevailing Party Fees To Defendants, With The Clause Not Covering This Eventuality.

            Gostev v. Skillz Platform, Inc., Case No. A164407 (1^st Dist., Div. 2 Feb. 28, 2023) (published) is a must read for litigants and their attorneys on the enforceability of delegation and other arbitration damage/statute of limitation restrictions in an arbitration clause.  The conclusion in this opinion was that the arbitration clause was unconscionable, with transactional attorneys benefiting from the reasoning in Gostev.

            The arbitration clause had this fees provision: “Each party shall bear its own attorneys’ fees, costs and disbursements arising out of the arbitration, and shall pay an equal share of the fees and costs of the arbitrator and AAA; however, the arbitrator may award to the prevailing party reimbursement of its reasonable attorneys’ fees and costs (including, for example, expert witness fees and travel expenses), and/or the fees and costs of the arbitrator.”

            Among other aspects of the arbitration clause which rendered it substantively unconscionable, the fees clause was too generic (Newton v. American Debt Services, Inc., 854 F. Supp.2d 712, 725 (N.D. Cal. 2012)), not recognizing that fees under California’s Consumer Legal Remedies Act are not awardable to a prevailing defendant unless plaintiff’s case was found not to have been prosecuted in good faith.  This infirmity in the fees clause, along with other factors, cemented the conclusion that the arbitration clause was unconscionable. 

Arbitration, Employment: Where Defendant Employer Lost Small Merits Award And Fee Award After Reconsideration By Arbitrator, But Did Not Timely File Motions To Correct Or Vacate, Fee Award Had To Be Affirmed

Bright-Line Rules On Arbitration Procedures Adopted, With Plaintiff Employee Entitled To Fees On Appeal.

            This case may have more tips for practitioners and jurists when it comes to deadlines for parties seeking to correct and vacate arbitration awards, especially where a timely motion to confirm an arbitration award is made.  However, we briefly summarize what happened in Darby v. Sisyphian, LLC, Case No. B314968 (2d Dist., Div. 2 Jan. 26, 2023) (partially published), because an arbitration award was affirmed on appeal and the appellate court acknowledged that the winning plaintiff was entitled to fees on appeal, on remand, to the lower court.

            Plaintiff employee sued employer for various Labor Code violations.  The arbitrator found employee was owed $23,347.25 (only a partial win on the amounts she sought), and then initially found that no fees were awarded based on a prior motion to strike and plaintiff’s failure to apportion between successful/unsuccessful claims.  However, the arbitrator granted a motion for reconsideration by plaintiff, eventually awarding her $82,000 in attorney’s fees out of a requested $283,941.25 being sought.  Plaintiff timely filed a motion to confirm the arbitration award, with employer untimely filing a response to the confirmation petition and untimely filing a motion to vacate/correct the award.  The superior court judge found the employer’s papers were untimely filed, confirming the arbitration award—rulings which were appealed.   Those rulings were affirmed on review.

            Employer’s problem is that it did not timely file the response and vacate/correction papers.  The opinion has a good discussion of the time deadlines for post-arbitration award confirmation, correction, and vacatur papers at the superior court level—with a shorter 10-day deadline to respond or to vacate/correct applying to a petition to confirm awards filed fewer than 90 days after an award is served.  This deadline is jurisdictional, although there is some small amount of flexibility under the applicable statutes.  The import of the appellate decision is that these deadlines are strict in nature; and, if they are violated, the superior court must confirm the award and the appellate court is similarly bound. 

            In the end, the $82,000 in fees on a $23,347.25 award was affirmed, plus employer will be on the hook for plaintiff’s appellate fees (made clear in an unpublished portion of the opinion) as determined by the lower court on remand. 

Arbitration: Business Failing To Timely Pay Its Share Of Arbitration Fees Under Consumer Contract Can Be Headed To Court If The Other Side Balks

This Is The Third In A Recent Trio Of Cases To So Hold.

            In our November 25, 2022 post, we discussed DeLeon and Espinoza, two appellate cases holding that a business failing to timely pay its share of arbitration fees under a consumer contract eschews its right to arbitrate and can be forced to litigate in court.  We can now report that the same result was reached in Williams v. West Coast Hospitals, Case No. H049177 (6^th Dist. Dec. 22, 2022; posted Dec. 23, 2022) (published), finding an argument that the arbitrator had to first determine such a default was waived and further rejecting the argument that it only applies to mandatory (rather than voluntary) arbitration situations. 

Arbitration, Fee Clause Interpretation: $1,648,620.17 Contractual Fee Award By An Arbitration Award Against FeeDx Affirmed In A Ninth Circuit Opinion

Arbitration Tribunal’s Fee Award Was Not Completely Irrational In Nature Under The FAA.

            In HayDay Farms, Inc. v. FeeDx Holdings, Inc., Case Nos. 21-55650/21-55698 (9^th Cir. Dec. 19, 2022) (published), two parties (HayDay and FeeDx) entered into an exclusive distribution agreement with each other through Nippon, providing for arbitration and making Nippon liable for HayDay’s breaches.  Later, the three parties entered into a settlement agreement, which modified but did not replace the exclusive distribution agreement.  The settlement did not resolve the disputes, which went to arbitration resulting in substantial arbitration awards in favor of HayDay and Nippon as against FeeDx.  The arbitration award was over $26.2 million, augmented by a contractual fees and costs award of $1,648,620.17.  The district court vacated about $7 million of the merits award, but it left the remaining portion and fees/costs awards intact.

            The parties appealed.  This was a good move by HayDay and Nippon, because the Ninth Circuit reinstated the $7 million previously vacated portion of the award.  With respect to FeeDx’s challenges, they did not win on appeal.  The main problem is that the standard for vacatur under the FAA, 9 U.S.C. § 10(a)(4), is exceedingly high, meaning that the arbitration tribunal manifestly disregarded the law or the award was completely irrational.

            The main fee clause in the settlement agreement provided: “If FeeDx or Hayday brings legal action to enforce its rights under this Settlement Agreement, the prevailing party will be entitled to recover its expenses (including reasonable attorneys’ fees) incurred in connection with action and any appeal.” FeeDx argued that Nippon could not be awarded fees because it was not a party to the agreement.  The Court of Appeals disagreed, given that the “prevailing party” language was broad and given that Nippon was potentially liable for HayDay’s breaches—the tribunal’s interpretation of this clause as allowing fees to Nippon was not completely irrational under the circumstances. 

Arbitration: Employer’s Failure To Pay Its Share Of Required Arbitration Fees And Costs Within 30 Days Breached The Arbitration Agreement So That Employee Could Pursue Claims In Court

Issue Was Failure To Pay Fees/Costs For An Arbitration Continuance, But Arbitration Initiation Case Reasoning Was Analogous. 

            DeLeon v. Juanita’s Foods, Case No. B315394 (2d Dist., Div. 3 Nov. 23, 2022) (published) is the next progression from Espinoza v. Superior Court, 83 Cal.App.5^th 761, 775-776 (2022), which held that an employer’s failure to timely pay required arbitration initiation fees within 30 days was in material breach of the arbitration agreement so the employee could instead pursue claims in superior court.  DeLeon involved a similar arbitration payment statute applying to arbitration continuance fees under CCP § 1281.98, with the appellate court reaching the same result under this statute.  This should be a huge reminder for employers, demanding arbitration, to timely pay fees; if not, you might find yourself back in superior court!

Arbitration: Arbitration Claimant Failing To Raise Fee Entitlement Basis As A Ground For Fee Award Waived The Argument In Later Arbitration Confirmation Proceedings

This Was No Ground To Correct The Award.

            In Hollander v. Tennenbaum Capital Partners, LLC, Case No. B314018 (2d Dist., Div. 1 Nov. 21, 2022) (unpublished), the appellate court rejected an arbitration claimant’s argument that Labor Code fees were unwaivable when the claimant did not articulate that ground as a basis for the fee award before the arbitrator.  It was too late to raise in superior court confirmation proceedings. 

Arbitration: Arbitrator’s Revised Award Of Fees To Prevailing Defendant Reversed Where Initial Merits Award Expressly Denied Fees To Defendant

Revised Award Was Not A Mere Correction, But A Substantive Merits Reconsideration And Impermissible New Award.

            Taska v. TheRealReal, Inc., Case No. A164130 (1^st Dist., Div. 5 Nov. 4, 2022) (published) was a situation where an arbitrator found in employer’s favor on the merits and denied employer’s fee request after finding employee’s case was not frivolous in an initial award.  But that was hardly the end of the matter.  Employer took a “second bite” at a fees/costs request, with the arbitrator reversing course and awarding it $53,705.43 in a revised arbitration award after finding employee’s failure to testify truthfully did render her case frivolous in nature.  (Then, later, the arbitrator issued a corrected final award increasing the fees and costs award to $73,756.43.) When it came time to confirm and vacate the revised arbitration award, the lower court sustained the merits determination but struck the award of fees and costs because the arbitrator exceeded her authority by amending the initial award denying fees and costs.

            The 1/5 DCA affirmed.  The initial award did determine the merits and fees/costs entitlement, with the appellate court rejecting that this initial determination was just a “placeholder” for a further final fees/costs determination or correction.  Rather, the revised and corrected awards were not mere math corrections or inadvertent corrections, but substantive new determinations which were not allowed under the contractual arbitration statutory scheme.  (See Cooper v. Lavely & Singer Professional Corp., 230 Cal.App.4^th 1, 14, 18-19 (2014); Landis v. Pinkertons, Inc., 122 Cal.App.4^th 985, 992 (2004).) 

Arbitration: FAA Does Not Preempt State Court Provisions Requiring Business To Timely Pay Its Share Of Arbitration Expenses In An Arbitration Involving An Employee Or A Consumer

Order Compelling Arbitration Was Vacated And $2,310 In Monetary Sanctions Against Company Affirmed On Appeal.

            The California Legislature recently enacted Code of Civil Procedure sections 1281.97, 1281.98, and 1281.99 which obligate a company which drafts an arbitration agreement relating to an employee or a consumer to pay its share of arbitration fees no later than 30 days after the due date, with a failure to do so being a material breach of the arbitration agreement that gives the employee or consumer, in addition to a mandatory award of attorney’s fees and costs related to the breach as well as other discretionary sanctions, the options of either (1) continuing to arbitrate, with the company paying fees and costs related to the arbitration as a whole, or (2) withdrawing from arbitration and resuming the litigation in a judicial forum.

            In Gallo v. Wood Ranch USA, Inc., Case No. B311067 (2d Dist., Div. 2 July 25, 2022) (published), the lower court vacated an order compelling arbitration and awarded $2,310 in monetary sanctions against a company which paid late its arbitration expenses under the state statutory provisions.  The defense argued that the result was preempted by the Federal Arbitration Act (FAA), 9 U.S.C. § 1 et seq.  The appellate court agreed with the trial court’s conclusion that the result was not preempted by the FAA, in line with consonant federal court decisions. 

Arbitration: Where Arbitration Costs Are Only Allowed To Be Granted By An Arbitator, That Contractual Clause Is Binding

Subsequent Post-Trial Proceeding Costs Not Subsumed In Contractual Clause.

            In Crowder v. Freeman, Freeman & Smiley LLP, Case No. B309001 (2d Dist., Div. 1 Mar. 22, 2022) (unpublished), an appellate court reversed a superior court fee denial relating to arbitration proceedings, where only the arbitrator was allowed to award fees and costs.  The appellate court enforced the plain meaning of the arbitration fee provision, which only allowed for the arbitrator to award costs. 

Arbitration, Mediation: $38,000 Fee/Costs Award By Arbitrator To Prevailing Seller Was No Abuse Of Discretion

Arbitrator’s Ruling That Seller Did Not Unreasonably Refuse Mediation Was Upheld.

            Unless an arbitration agreement has language indicating that the arbitrator’s award is subject to review under a heightened standard for legal error, it will be close to impossible to reverse an arbitrator’s legal, much less factual, determinations.  Faro v. Garnero, Case No. C093870 (3d Dist. Mar. 21, 2022) (unpublished) demonstrates that in a fees/costs award context.

            There, seller in a real estate disclosure dispute prevailed, later awarded $38,000 in fees and costs after the arbitrator decided that seller did not unreasonably refuse to mediate (“it was open to interpretation”) under a contract which required mediation as a condition precedent to arbitration.  Buyer’s appeal did not change the result.  The main problem was that the arbitration agreement did not call for anything other than a deferential review of the arbitrator’s legal and factual determinations, which can be based on “justice and equity.”  There was no heightened requirement that the arbitrator’s decision could be reviewed for legal errors.  So, the arbitrator’s call that Seller did not refuse mediation was the “end game” call. 

Appealability, Arbitration: Trial Court’s Denial Of Motion For Costs And Attorney’s Fees Incurred In Opposing And Conducting Arbitration Proceedings Denied As Interlocutory Because Merits Of Action Was Not Yet Decided

Lots Of Arguments Raised, But Merits Had To Be Decided To Determine Who Prevailed.

            What occurred in Harris v. University Village Thousand Oaks CCRC LLC, Case No. B311972 (2d Dist., Div. 6 Mar. 21, 2022) (unpublished) is that a lower court’s confirmation of an arbitration award was reversed because the appellate court determined that the arbitration clauses were void.  Plaintiffs, thinking they prevailed, sought costs on appeal and in the arbitration, as well as attorney’s fees in the prior appeal and the arbitration.  The lower court denied the substantial fee and costs requests relating to appellate and arbitration expenses, without prejudice to renewing upon a merits-based adjudication in the lawsuit.

            The 2/6 DCA affirmed.  The fundamental reason for sustaining the lower court’s order was that the fees/costs denials were interlocutory because the merits of the underlying case had not been finally determined; this meant the orders were not appealable until future events occurred to establish a prevailing party.  However, for purists and appellate attorneys, this is nice reading on these issues: (1) split in thinking on when an appellate court ruling on costs is an independent judgment for appeal purposes—discussing Rostack Investments, Inc. v. Sabella, 32 Cal.App.5^th 70, 79, which talks about Barnes versus Krikorian; and (2) split in thinking on whether a trial court order granting attorney’s fees on appeal was appealable under the collateral order doctrine—discussing Apex LLC v. Korusfood.com, 222 Cal.App.4^th 1010, 1015 n. 1 (2013), which talks about Barnes and Krikorian split on the issue—but it did not have to get into the weeds because it was dealing with a fee denial, not an order to pay fees. 

Arbitration: Arbitration Claimants Creating No Distinct Fund And Only Obtaining $1 Nominal Damages Properly Denied Fees And Costs By Arbitrators Under Substantial Benefit Doctrine

Even If The Ruling Was Erroneous, The Fee Ruling Could Not Be Reviewed On The Merits.

            Arbitration can be a tough process, because the arbitrator’s rulings—even on attorney’s fees and costs—are seldom ones which can be reviewed on the merits.  Sirott v. East Bay Medical Oncology, Case Nos. A161353/A161555 (1^st Dist., Div. 2 Jan. 28, 2022) (unpublished) demonstrates that aptly.  There, arbitration claimants were successful on two claims, not creating a distinct fund benefitting a group of persons and only winning nominal compensatory damages of $1.00.  The arbitrators refused to award them attorney’s fees and costs.  The appellate court affirmed, determining that (1) the substantial benefit doctrine did not justify any such awards given the lack of a distinct fund and the nominal compensatory awards; and (2) a review of the fee decisions was foreclosed on the merits by the California Supreme Court’s decisions in Moshonov and Moore.

Arbitration: After Having An Arbitration Award Previously Vacated And Having A New Petition To Compel Arbitration Denied, $181,375 Fee And $42,828.88 Cost Awards Affirmed On Appeal

Appellate Court Found That Fee/Costs Awards Were Not Premature.

            In Borisoff v. The Pullman Group, LLC, Case No. B297162 et al. (2d Dist., Div. 1 Jan. 11, 2022) (unpublished), a substantial prior arbitration award was vacated, a lower court refused to grant a new motion to compel arbitration, and the lower court awarded the party fending off the arbitration award and motion $181,375 in fees and $42,828.88 in costs (many of which were arbitration costs).  The arbitration petitioning party challenged the awards as being premature and not within the scope of the contractual agreements between the parties.

            The 2/1 DCA affirmed.  Although acknowledging that there was no final judgment because the other side’s affirmative claims still existed, the appellate court found that the contractual clause between the parties was broad enough to allow for arbitration and post-arbitrations fees/costs because Borisoff forestalled arbitration.  In doing so, it relied on Marcus & Millichap Real Estate Inc. Brokerage Co v. Woodman Inv. Grp., 129 Cal.App.4^th 508, 514-515 to decide that Borisoff prevailed at the arbitration and post-arbitration stage. It also found that the arbitration expenses were recoverable based on the wording of the fees clause.

            BLOG OBSERVATION—The problem here is the appellate court’s resolution of the prematurity argument.  This same Division reached a contrary result in Roberts v. Packard, Packard & Johnson, 217 Cal.App.4^th 822 (2013), where there were remaining claims to be resolved.  Roberts was not even discussed in the opinion.

Arbitration: Arbitration Award Of Attorney Fees And Costs To Prevailing Defendant Attorney Reversed On Appeal

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”].

Arbitration, Retainer Agreements: $192,000 Arbitration Award To Ex-Attorney Affirmed On Appeal

After MFAA Arbitration, Ex-Attorney Rightly Went To Contractual Arbitration; Argument That Block Billing Violates B&P Section 6148 Is Rejected Although Retainer Said Attorney Could Block Bill.

            In Kling v. Horn, Case No. B305967 (2d Dist., Div. 7 Dec. 14, 2021) (unpublished), defendant ex-attorney, after engaging in a Mandatory Fee Arbitration Act (FAA) under which ex-client obtained partial relief from paying delinquent fee bills and after rejecting the award, won a contractual arbitration award of $192,000—with ex-client, in a bad move, not participating in the subsequent arbitration.  Among other arguments, ex-client argued that ex-attorney did not comply with the MFAA procedures and that a provision in the retainer agreement allowing ex-attorney the option to block bill violated B&P § 6148(b) [“Bills for the fee portion of the bill shall include the amount, rate, basis for calculation, or other method of determination of the attorney’s fees and costs.”].

            The trial court confirmed the award and denied a petition to vacate it, determinations affirmed on appeal.  Ex-attorney did comply with the MFAA by participating in the MFAA arbitration and then demanding contractual arbitration, as allowed under Rosenson v. Greenberg Glusker Fields Claman & Machtinger LLP, 203 Cal.App.4^th 688, 693-694 (2012).  With respect to block billing, the appellate court concluded that (a) ex-client did not cite authority indicating it violated section 6148 (which does not require disclosing the date of services or specifically describing the services rendered, although indicating that block billing can require a discount of a fee request), and (b) the block billing provision was severable even if was considered to be illegal in nature.