California Supreme Court Adopts Justice Chin’s Concurring Analysis in Lerner v. Aguilar.
Today, the California Supreme Court resolved an interplay between the mandatory fee arbitration act (MFAA, Bus. & Prof. Code, § 6200 et seq.) and the California Arbitration Act (CAA, Code Civ. Proc., § 1280 et seq.). In Schatz v. Allen Matkins Leck Gamble & Mallory LLP, Case No. S150371 (Cal.Sup.Ct. Jan. 26, 2009), it answered a question left undecided in Aguilar v. Lerner, 32 Cal.4th 974 (2004): whether a client who chooses MFAA arbitration may request a trial de novo after that arbitration had concluded when this request would undermine an attorney’s motion to compel contractual arbitration under the CAA based normally on an arbitration clause in the retainer agreement.
The Supreme Court in Schatz tracked Justice Chin’s concurring opinion in Lerner, deciding that initial resort to MFFA arbitration does not limit the ability of attorneys to enforce a binding contractual arbitration clause in a retainer agreement. Although Business and Professions Code section 6204 is ambiguous in referring to a “trial” after MFAA arbitration, that ambiguity did not lead to the conclusion that this language was an implied repeal of the CAA. Furthermore, Schatz based its conclusion on the illogical consequences that would result from a contrary result: (1) a client would be permitted to evade its agreement to arbitrate by going through the charade of demanding and obtaining nonbinding arbitration under the MFAA before it could go to trial; and (2) an uneven “playing field” is presented if either side could avoid arbitration because the client sought MFAA arbitration, because the attorney could not unilaterally evade arbitration where no MFAA relief is sought by the client. ” … it is evident the MFAA did not impliedly repeal the CAA. The two statutory schemes do not even govern the same subject. The MFAA concerns nonbinding arbitration that the parties did not agree to in advance, while the CAA concerns binding arbitration agreed to in advance.” (Slip Opn., at p. 19.)