Second District, Division Two Finds Arbitrator Did Not Exceed His Power In Awarding Substantial Fee Award In Favor of Law Firm and Against Former Client.
Former Client in 1999 signed a fee retainer agreement, both individually and on behalf of two affiliates, in which arbitration was the dispute resolution remedy. The clause provided that "any dispute concerning [Law Firm’s] representation, including disputes regarding the amount of fees or quality of [Law Firm’s] services .. shall be determined by binding arbitration" and that the arbitrator had "discretion to order that the costs of arbitration, including fees, other costs and reasonable attorneys’ fees, shall be borne by the losing party."
Client got way behind, but reached a catch-up arrangement in January 2004. However, the 1999 fee retainer agreement was never rescinded, and Law Firm continued to do more work. By the end of 2004, Client was delinquent to the tune of $3 million. Law Firm initiated arbitration, and Former Client never objected to the arbitrator’s jurisdiction. The arbitrator eventually awarded Law Firm $3,171,456.80, plus interest, based on the 1999 fee retainer agreement. Later, Law Firm sought a further award of attorney’s fees and costs, which was granted in mid 2007—swelling the final award to $5,044,762.80. The award was confirmed as a judgment, and Former Client appealed.
Law Firm’s fee judgment was affirmed in Howrey LLP v. Casden, Case No. B202839 (2d Dist., Div. 2 Sept. 22, 2008) (unpublished). Nothing demonstrated that the arbitrator exceeded the authority granted him under a plain construction of the fee retainer arbitration clause. The 1999 fee agreement was still in force, and the arbitrator was well within his rights to conclude that the catch-up arrangement did not extinguish the earlier fee retainer. Because Moncharsh v. Heily & Blase, 3 Cal.4th 1, 11 (1992) generally immunizes the merits of an arbitral award from judicial review, the appellate court did not even need to address Former Client’s redux of defenses he lost at the arbitration.