Witness Fees Issue Should Have Been Presented to Arbitrators, Not to Trial Court in Post-Award Confirmation Stage.
Wells Fargo Advisors, LLC v. Fenandez, Case No. E055058 (4th Dist., Div. 2 Feb. 13, 2013) (unpublished) is a lesson for all winners in an arbitration seeking to recoup costs and expenses after prevailing: present the issue to the arbitrators, not the trial court later, given the wording of most contractual arbitration clauses which allow “all relief” to be awarded by the arbitrators.
In this one, claimant lost her brokerage account dispute in an arbitration against respondent Wells Fargo Advisors, with a contractual arbitration clause giving the arbitrators power to fashion all necessary relief. Wells Fargo, after it obtained confirmation of the award to judgment, filed a costs memorandum seeking $29,479 in costs against plaintiff, $18,995 of which comprised expert witness fees based upon claimant’s rejection of a CCP § 998 offer made before the arbitration hearing was conducted. However, the lower court agreed with claimant’s objection to strike the expert witness fees component, prompting an appeal by Wells Fargo.
Wells Fargo lost, with the appellate court giving de novo review to the precise issue of whether the valid 998 offer entitled the winner to costs in the court proceeding where the arbitration award was confirmed as a judgment.
Claimant won on his argument that the expert witness fee issue should have been presented to the arbitrators in the first instance, with the court finding persuasive the reasoning in Maaso v. Signer, 203 Cal.App.4th 362 (2012) [discussed in our Feb. 8, 2012 post]. The panel agreed that a 998 offer should be put in front of arbitrators in a way that would not compromise the settlement discussion privilege. It also bought claimant’s policy argument that Maaso was sound precedent because the arbitrators hearing the expert witnesses were in a better position than the trial court to rule on the reasonableness of the fee reimbursement requests.