Dissenting Justice Saw Things Differently: Superior Court Had To Independently Determine MFAA Award Issue Or Remand To The Arbitrator To Decide.
Allan Law Group, P.C. v. Stewart, Case No. B333681 (2d Dist., Div. 7 Mar. 20, 2026) (unpublished) involves an interesting intersection between Mandatory Fee Arbitration Act (MFAA) and California Arbitration Act (CAA) principles where the parties agreed to do each, with the ultimate result drawing very different reactions in a 2-1 opinion between the majority and dissenting Justice Segal.
Law firm represented Sylvester Stewart, lead singer of Sly and the Family Stone, and an affiliated S corporation in various intellectual property, bankruptcy, and other matters under a retention agreement which had these features: (1) a 40% contingency award and a provision stating that fee/costs disputes would be arbitrated under the MFAA on those narrow disputes, with prevailing party fees allowable; and (2) other disputes involving contractual breach, professional negligence, or fiduciary duty breach would be subject to arbitration under the California Arbitration Act (CAA), with another provision saying that the arbitrator could award fees and costs to the prevailing party.
In a non-binding MFAA proceeding, law firm obtained a $187,500 award, but not royalties. However, in line with Shatz v. Allen Matkins etc., 45 Cal.4th 557, 572 (2009), the parties proceeded to a CAA arbitration on other issues, with Shatz establishing that a subsequent CAA arbitration award, similarly to a judgment after an MFAA award, could entitle the prevailing party to fees and costs. The matter did go to a CAA arbitration, with law firm obtaining royalty payment awards but with the arbitrator determining that no one prevailed for attorney’s fees—such that the parties should split the arbitration fees and costs.
At the superior court proceeding to confirm the award, law firm argued that it was the prevailing party for fees under Business & Professions Code section 6204 (part of the MFAA), with the other side objecting to the fee request. The superior court confirmed the arbitration award, but it denied the law firm’s fee request—finding it had discretion under section 6204; however, the superior court was going to follow the arbitrator’s fees determination on not awarding fees.
Law firm appealed, with the result below affirmed in a 2-1 opinion and a very detailed dissent by Justice Segal. Much of the reasoning focused on Shatz, and both sets of opinions have interesting discussions of the impact of that supreme court case when MFAA and ensuing CAA arbitrations take place.
The majority found that the CAA arbitrator’s determination of the fee award was binding based on Moncharsh-type opinions relating to fee awards, and that law firm’s failure to raise the section 6204 issue before the arbitrator constituted a waiver. However, going further on the merits, the majority did not accept the argument that the superior court had to find law firm was the prevailing MFAA party and found it could defer to the CAA arbitrator’s decision on the issue.
Justice Segal, in dissent, saw things differently. He found that the law firm did obtain a more favorable judgment under section 6204(d), and the superior court never exercised its discretion in deciding the issue rather than just deferring to the CAA arbitrator. He further believed that an arbitration award is different from a judgment as far as squaring what needed to be done given the intersection of the two statutory schemes. Justice Segal believed that the superior court needed to independently review the section 6204(d) issue or remand to the arbitrator to revisit it. Extremely interesting opinion.