Arbitrator Finality Was “Trumped” By Clause Not Permitting Legal/Factual Errors.
In Cardiology Specialists Medical Group, Inc. v. Rangappa, Case No. D069092 (4th Dist., Div. 1 Mar. 30, 2016) (unpublished), doctor and his former employer arbitrated a dispute about who paid for return of a monetary advance, sign-on bonus, and start-up expenses in an agreement providing for arbitration after doctor breached a separate agreement as an independent contractor for a physician. The arbitrator decided doctor bore the responsibility to return the “advances,” also awarding attorney’s fees of $52,131 and costs of $3,765 to former employer.
The trial judge, however, decided to strike the fee award based on the absence of a fees clause in the agreement providing for arbitration between the two sides.
The appellate court agreed with the lower court’s decision. Unlike situations under Moncharsh where deference is given to the arbitrator’s decision on the merits unless public policy is offended, the arbitration agreement had a provision saying the arbitrator could not commit errors of law or fact, which allowed a lower court to vacate if this occurred. This important nuance led to the 4/1 DCA’s affirmance, because there was no fees clause in the operative agreement and the AAA Rule allowing for fee recovery did not prevail over the lack of a contractual fees clause. This lack of fee entitlement also led the appellate court to reject former employer’s request to recoup fees for successfully confirming the arbitration merits award (given the merits award was sustained entirely on appeal).