Deadline Argument Did Not Prevail Under the Circumstances.
Here is a real corker in our “Arbitration” category, especially for those of you who are procedurally oriented.
In Williams v. Joseph Phelps Vineyards LLC, Case No. A127708 (1st Dist., Div. 2 Apr. 19, 2011) (unpublished), vineyard and affiliated individuals were ordered by an arbitrator to pay about $26 million in damages, interest, attorney’s fees, and costs for dishonoring vineyard’s contract with former employees Williams and Shelton. The fee/costs proceedings, suffice it to say, were interesting. After the 90-day period within which the parties had contractually specified the arbitrator would render a final decision, the arbitrator entered a “supplemental” fee/costs award of almost $1.9 million. The Operating Agreement between the parties indeed had an attorney’s fees provision, so entitlement was not the issue. Timing of the award was everything here, with the defense claiming that the arbitrator was without jurisdiction to enter a fee award. (The actual fee award ballooned even further after time spent in the superior court confirmation battle.)
Not so, said the First District, Division 2 in a 38-page opinion discussing both the merits and fees award, authored on behalf of a 3-0 panel by Justice Richman.
The appellate court basically found that the 90-day period to render a decision is not set in stone, especially for the fee/costs award proceedings. It can be extended 30 days for an arbitrator to correct an award (Code Civ. Proc., § 1284) or 30 days up to the date of superior court confirmation for purposes of “amending” an award depending on what authority is followed in a “split of authority” (Delaney v. Dahl, 99 Cal.App.4th 647, 658-659 (2002)). The appellate court found that either of these theories would work, but also took a much more simple route for finding jurisdiction still remained on the fee issue: the arbitrator had reserved jurisdiction past the 90 days and the parties had acquiesced to this ruling by actually briefing the fee issue in line with this schedule. (Cf. Rosenquist v. Haralambides, 192 Cal.App.3d 62, 67-68 (1987); accord, Century City Medical Plaza v. Sperling, Isaacs & Eisenberg, 86 Cal.App.4th 865, 879 n. 22 (2001) [Rosenquist’s reasoning “amounts to no more than a recognition of the commonsense proposition that when an arbitrator has actually made an award as to a prevailing party’s right to fees, a supplemental hearing and award which determines the amount thereof is not improper”].) The appellate court liked the Rosenquist approach, observing: “The wisdom of this approach is patent. Any other approach would require both sides to prepare and submit costs and fee requests in advance of knowing which side prevailed. This is not only wasteful of time and expense for the party that is not found to be the prevailing one, it might entail the actual prevailing party being shortchanged because any anticipation or estimation of costs and attorneys’ fees that might reasonably be incurred thereafter would be entirely speculative and vulnerable to challenge for that reason.” (Slip Opn., p. 38.)