ADR Case Updates
How Not To Seek Confirmation of Mandatory Fee Arbitration Act Award, 08/20/09
Two decisions regarding ADR have been rendered since my last update of July 19, 2009, holding:
- Trial court errs by failing to confirm a Mandatory Fee Arbitration Act award after denying a petition to correct its monetary amount; and
- Arbitral expenses may not be imposed against unsuccessful plaintiffs in arbitration of hate crimes claim.
A more detailed summary and analysis is below.
In Law Offices of David S. Karton v. Segreto, (July 30, 2009, Second District, Div. Three), __ Cal. Rptr. 3d __, 2009 WL 2520782, the trial court erred by failing to confirm a Mandatory Fee Arbitration Act award after denying a petition to correct its monetary amount. Plaintiff, David Karton, represented Defendant. After a fee dispute arose, the parties entered into non-binding arbitration under the Mandatory Fee Arbitration Act (Bus. & Prof. Code, � 6200 et seq.) The arbitrators awarded Plaintiff the �reasonable value of his services� without interest.
Since neither party sought a trial de novo within the requisite 30-day period, the award became binding. Plaintiff then petitioned the trial court to correct the award to add pre-judgment interest. Concluding the request exceeded its statutory authority to correct mathematical errors, the court denied the petition. Plaintiff went back to the arbitrators and obtained an amended award that included pre-judgment interest. Defendant sought a trial de novo and attorney fees, while Plaintiff petitioned the court to confirm the amended award. The court denied both Plaintiff�s petition to confirm and Defendant�s motion for fees. Both parties timely appealed.
Vacated and remanded. Under Code of Civil Procedure �1286,�once a petition to confirm, correct, or vacate [an arbitration award] is filed,� the court has only four options: (1) confirm the award; (2) correct the award and confirm as corrected; (3) vacate the award; or (4)dismiss the proceedings. Here, although Defendant failed to argue for confirmation of the original award (he had tried to pay the awarded amount to Plaintiff), the trial court was required to confirm the award after it declined to correct it. Had the court confirmed the original award, it would have precluded Plaintiff from seeking an amended award, since amendments are precluded after judicial confirmation. Moreover, the court was correct in declining to correct the award, since it may only correct a mathematical error, and not add the additional amount that Plaintiff sought. Finally, in light of this disposition, neither party is entitled to an award of attorney fees since neither party sought the correct result � an order confirming the initial award.
In D.C. v. Harvard-Westlake School, (August 14, 2009, Second District, Div. One), __ Cal. Rptr. 3d __, 2009 WL 2500343, the majority in a split Court of Appeal decision held that arbitral expenses may not be imposed against unsuccessful plaintiffs in the arbitration of a hate crimes claim. D.C., a minor attending Defendant�s school, maintained a website to promote his singing and acting career. Several students posted death threats and made derogatory comments regarding D.C.�s misperceived sexual preference. D.C. and his family moved to another part of the state.
After the school newspaper ran an article disclosing D.C.�s location that included derogatory comments about him, D.C. and his parents filed suit against the school and others. The school petitioned to compel arbitration based upon the �enrollment contract� signed by D.C.�s father. The contract also contained an attorney fee provision. Later, D.C. amended the complaint to include a hate crime allegation.
The trial court compelled arbitration. Finding against the Plaintiffs, the arbitrator entered an award in favor of the school and awarded it $508,753.53 in attorney fees and costs and $12,492.15 in arbitration fees and costs. The court confirmed the award. Plaintiffs timely appealed.
Reversed and remanded. When a plaintiff seeks to vindicate in arbitration an unwaivable statutory right, as in a hate crime claim (Civ. Code, �� 51.7, 52.1), he may not be required to bear arbitral expenses that he would not have to pay if the action went to trial. Therefore, Plaintiffs may not be compelled to pay such arbitral expenses in connection with prosecution of the hate crime claims. On remand, however, either side may raise allocation issues as to fees and costs related to the other, non-public interest claims, where fees and costs may be awarded to Defendant as the prevailing party.
The full opinions may be viewed at: http://www.courts.ca.gov/opinions.htm.
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