Denial of 998 Cost Enhancements Was Not Improper.
Maaso v Signer, Case No. B228314 (2d Dist., Div. 2 Feb. 7, 2012) (certified for publication) is one of those lessons for all of us practitioners who arbitrate to take to heart–make sure you check the arbitration submission agreement for breadth of issues, meaning that fees and costs must be sought from arbitrators, and not confirming trial courts after a win.
Succinctly put, plaintiff lost a first arbitration but won a second arbitration after the initial one was vacated based upon an ex parte contact between a party arbitrator and neutral arbitrator. Plaintiff won a significant monetary award in the second arbitration, exceeding a CCP § 998 offer made by plaintiff and rejected by defendant prior to the first arbitration. However, plaintiff sought 998 costs as the prevailing party at the trial court level after granting of the petition to confirm the arbitration award. The trial court denied all arbitration costs on the basis that they were within the sole purview of the arbitrators.
Plaintiff’s appeal of the cost denial was unsuccessful. The arbitration submission was broad such that the 998 cost enhancements should have been sought from the arbitrators. See Corona v. Amherst Partners, 107 Cal.App.4th 701, 706 (2003). (The appellate court did reject the defense argument that the 998 offer made during the first arbitration somehow had to be renewed to be effective.) The alternative language in section 998 that the costs enhancement could be made by “the court or arbitrator” did not mean that the court could override arbitral authority where the submission agreement was broad in nature; otherwise, arbitrator finality would be eroded if that ADR route is truly chosen.