ADR Case Updates
Losing Parties in Arbitration Recover Attorney Fees in Post Arbitration Proceedings, 05/31/05
In case you have not seen it, attached is the recent and anomalous decision in Marcus & Millichap Real Estate Investment Brokerage Co. v. Woodman Investment Group, (Second Appellate District, Division Seven), filed May 17, 2005. Plaintiffs obtained a $300,000 arbitration award for a real estate broker commission, and petitioned the trial court to confirm the award. However, the trial court vacated the award because it included a party that had not agreed to arbitrate, and then awarded Defendants $33,500 in fees and costs. In affirming the award of fees and costs to Defendants, a split appellate panel pointed out that Plaintiffs had not requested the trial court to order a rehearing of the arbitration under CCP section 1287. Therefore, the judicial proceeding initiated by Plaintiffs was "final," with the Defendants as prevailing parties entitled to fees and costs, even though Defendants had lost on the merits at the arbitration, which remained unresolved and subject to a second arbitration proceeding. The lesson to be learned here is to take advantage of the rehearing procedure under section 1287 by requesting the court to order a rehearing after the original award is vacated due to a procedural irregularity. Instead, Plaintiffs failed to perfect their first award, and sought to cure the irregularity by commencing a second arbitration proceeding on their own that was not a rehearing ordered by the court.
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