ADR Case Updates
Client Not Bound By Arbitration Provision In Attorney Retainer Agreement; Court May Not Require Mediation In CD Cases, 01/17/07
Attached are two recent Court of Appeal decisions. In Schatz v. Allen Matkins Leck Gamble & Mallory, filed January 9, 2007 (2007 DJDAR 407), the Fourth District, Div. One, held that the nonbinding arbitration and trial de novo provisions of the Mandatory Fee Arbitration Act (MFAA) trump an arbitration clause in a retainer agreement. Therefore, a law firm may not compel arbitration in a fee dispute with a client when the client insists on nonbinding arbitration and then a trial de novo.
After the client signed a retainer agreement with an arbitration clause, a fee dispute arose. Pursuant to the MFAA, the client insisted upon nonbinding arbitration before the local Bar Association, and then sought a trial de novo after receiving an award in favor of the law firm. The attorneys petitioned to compel arbitration under the arbitration provision in the retainer agreement. Concluding that the MFAA superceded the retainer agreement, the trial court denied the petition.
Affirmed. In light of the public policy reasons underlying the MFAA, a client has a right to a trial de novo after nonbinding arbitration, even though the client signed a retainer agreement with a prospective waiver of trial. The MFAA trumps the retainer agreement. Under the MFAA, a client may commit to binding arbitration only after a fee dispute arises.
In Jeld-Wen, Inc. v. Superior Court (Marlborough Development Corp.) filed January 4, 2007 (2007 DJDAR 233), the Fourth District, Div. One, held that trial courts may not order parties in complex construction defect cases to attend and pay for private mediation. Jeld-Wen was a sub-contractor cross-defendant that objected to the Case Management Order requiring the parties to attend and pay for private mediation, and then refused to attend a mediation session. The trial court issued sanctions and ordered Jeld-Wen to pay for and attend the next mediation session. Jeld-Wen sought a writ of mandate.
Petition granted. Under CCP § 639, the trial court may appoint a referee to conduct an accounting, perform other functions, and hold a mandatory settlement conference in a complex case. However, there is no authority to appoint a person to conduct a mediation, nor to make parties pay for it.
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