The Morrison Law Journal
September 2014
Volume IX, Edition 9

When It Is Really Final….Court Of Appeal Rules That Arbitrator
Exceeded His Powers In Issuing A “Revised” Final Award Which
Altered The Outcome Of A Disputed Issue Which Was Already Ruled
Upon In The Arbitrator’s “Initial” Final Award

By: Edward F. Morriso n, Jr., Esq.
Larry A. Schwartz, Esq.

1

of fiduciary duty and professional negligence arising out of Lavely & Singer’s representation of Cooper in the proceedings against HMI and its principals. Attorney’s fees were also apparently sought as the Lavely & Singer retainer agreement called for the prevailing party to recover fees. Retired Judge Terry Friedman was assigned by JAMS to act as arbitrator. Lavely & Singer represented itself in the arbitration.

In December 2012, following an evidentiary hearing, Judge Friedman issued his Interim Award. In doing so, Judge Friedman concluded that Cooper had failed to establish his claims against Lavely & Singer and that Lavely & Singer was the prevailing party. Thereafter, Lavely & Singer filed a Motion seeking attorney's fees totaling $225,677 based on a Declaration of Lavely & Singer attorney Paul Sorrel. Lavely & Singer acknowledged that it had represented itself but argued that it was hired by Lloyd’s of London, its legal malpractice insurer, and should be permitted to recover fees based on its retention by its insurer. Cooper opposed the Motion arguing that Lavely & Singer had offered insufficient evidence to demonstrate an agreement or attorney-client relationship between Lavely & Singer and Lloyd's of London (among other things, Cooper’s counsel pointed out that attorney Sorrel, in deposition, had testified that he had no personal knowledge of the identity of his law firm’s professional malpractice insurer). Lavely & Singer then sought the opportunity to submit additional evidence, which was granted as to documentary evidence, only. However, Lavely & Singer then submitted the Declaration of its office administrator, anyway, confirming the identity of the professional malpractice insurance policy but the Declaration also contained a typographical error concerning the date Lavely & Singer tendered the Cooper Case to Lloyd’s of London (the Declaration stated that tender had been made in February 2011 when it should have referred to February 2012).

In January 2013, Judge Friedman issued his Final Award and denied Lavely & Singer’s request for attorney’s fees. In doing so, however, Judge Friedman noted that had Lavely & Singer offered evidence to establish that it had tendered Cooper's claim to Lloyd's of London within the period of an operative malpractice policy and that Lloyd's of London specifically retained Lavely & Singer, it would have been entitled to its claimed for attorney’s fees.

Thereafter, Lavely & Singer submitted a Motion with a corrective Declaration wherein it sought “reconsideration” of the Final Award citing JAMS rule 22(d) (directing the Arbitrator to afford the parties the opportunity to present material and relevant evidence) and JAMS rule 24(j) (which provides that “[w]ithin seven calendar days after service of the [a]ward... any party may...request that the [a]rbitrator correct” any “computational, typographical or other similar error in an [a]ward....”). In addition, Lavely & Singer argued the

Motion should be granted based on “the interests of justice” as well as Code of Civil Procedure section 1008.

Judge Friedman granted Lavely & Singer’s Motion finding that Lavely & Singer had properly sought reconsideration under Code of Civil Procedure section 1008 and JAMS rule 24(c) (noting Lavely & Singer’s arguments that a previously filed Declaration contained a “typographical error” and that Lavely & Singer “was not permitted to submit certain evidence”) and issued a “Revised Final” Award granting Lavely & Singer’s request for $225,677 in fees as a prevailing party.

Lavely & Singer then petitioned the Superior Court to confirm the Revised Final Award as a Judgment. The trial court granted the Petition. Cooper then appealed arguing, among other things, that Judge Friedman had no power to revise the Final Award to include an attorney fee award as that was a decided issue.

The Court of Appeal agreed with Cooper and reversed the ruling of the trial court on the basis that Judge Friedman exceeded his powers in issuing the Revised Final Award. In that regard, the Court of Appeal ruled that, while it would not review an arbitrator's reasoning or the sufficiency of the evidence supporting an award, an arbitrator (unless the parties specially agree otherwise) may only correct a final award under the circumstances enumerated in Code of Civil Procedure section 1284 or to deal with an omitted issue. Stated differently, the Court of Appeal ruled that, for purposes of a final award, an arbitrator’s powers to correct the final award are essentially limited to “evident” miscalculation of figures, etc. or changes not involving an issue which had already been submitted and ruled upon. Specific to the Cooper Case, the Court of Appeal ruled that Judge Friedman had exceeded his powers in issuing the Revised Final Award because the Revised Final Award reflected the arbitrator's response to a typographical error by Lavely & Singer (rather than an error by the arbitrator) and did not address an omitted issue.1

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1 The Court of Appeal rejected Lavely & Singer’s argument that, by agreeing to be governed by JAMS rules, the parties had consented to an expansion of the scope of the arbitrator's ability to modify a final award beyond that granted by Code of Civil Procedure section 1284. The Court of Appeal also rejected arguments by Lavely & Singer that Cooper had, by virtue of his agreement to arbitrate before JAMS, waived judicial review as it found that the parties’ agreement to arbitrate before JAMS and pursuant to JAMS rules did not evidence a “clear and express waiver” of the right to appeal.