Court of Appeal Notes that Strict Limitations of CCP 1286 are Seldom Acknowledged in Case Law, But Does Acknowledge Those Limitations This Time.
On February 18, 2009, we did a post on Karton v. Dougherty, a case in which a $1,146,578.38 default judgment with interest of $159,679.92 in favor of Beverly Hills attorney David S. Karton was vacated for lack of notice to his client. Based on the proposition that no publicity is bad publicity, Mr. Karton is now the beneficiary of a second published Court of Appeal opinion in 2009, involving a fee dispute with a client, Karton v. Segreto, Case No. B211129 (2nd District, Div. 3, July 30, 2009) (certified for publication). This case is must reading for practitioners who want to understand the pitfalls in amending or correcting an arbitration award. The 3-0 opinion is authored by Justice Croskey.
The attorney and the client proceeded with non-binding arbitration under the Mandatory Fee Arbitration Act (MFAA). No one sought a trial de novo within 30 days of the arbitration award, so under the MFAA, the award became binding and final. However, although the client was willing to pay the amount of the award, the attorney, who was successful in arbitration, was not satisfied with the amount awarded by the arbitrators, and petitioned the trial court to “correct” the award to include additional sums, which petition the trial court denied. The attorney then sought to “amend” the award. When the client then moved for a trial de novo, the attorney petitioned the trial court to confirm the amended award, which petition the trial court denied. The client then requested attorney’s fees as prevailing party, which the court denied. The attorney appealed from the denial of the petition to confirm the amended award, and the client cross-appealed from the denial of his petition for attorney’s fees. (We considered adding a new category to our blog, “procedural mare’s nest”, but stuck with the more sedate existing categories of “arbitration” and “prevailing party”.).
Mr. Karton, the client, and the trial judge all found themselves boxed in by the strict limitations of CCP 1286, which deals with enforcement of an arbitration award, and governs the case: “If a petition or response under this chapter is duly served and filed, the court shall confirm the award as made, whether rendered in this state or another state, unless in accordance with this chapter it corrects the award and confirms it as corrected, vacates the award or dismisses the proceeding.” The use of the word “shall” renders this provision mandatory.
The trial court erred in its ruling on the initial petition to correct the award, because when it concluded that the award was not correctable, it should have confirmed the award. Because the correction sought by the attorney was not a mathematical error, but rather the inclusion of prejudgment interest and additional fees and costs not previously awarded, it was outside the scope of a statutorily permitted correction; therefore, the attorney should never have sought to correct the award..
This left the remaining issue of attorney’s fees:
“In this particular case, we believe it would be an abuse of discretion to award either party attorney’s fees for obtaining an order confirming the initial award. We reach this conclusion because neither party sought an order confirming the initial arbitration award, and did not call to the trial court’s attention its obligation to confirm the award under Code of Civil Procedure section 1286. The result was a waste of limited court resources, expenditures of thousands of dollars in attorney’s fees (and an equivalent amount of Attorney Karton’s time); and a second, unnecessary, arbitration award. Neither party should be rewarded for allowing this course of events to occur.”
Having passed on to the land of published opinions and hence immortality, so that future attorneys may understand post-arbitration enforcement procedures and enjoy happiness, at least Mr. Karton, like Sydney Carton in A Tale of Two Cities, can now say, .”It is a far, far better thing that I do, than I have ever done; it is a far, far better rest that I go to, than I have ever known.”
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