Arbitration has become a staple for resolving many business disputes in California. The process, while designed to be streamlined, has often become expensive and protracted. In that regard, one of the factors driving the substantial time and expense of arbitration deals with the issuance of the Award itself. Typically, in most cases, there will be a “Preliminary” or “Interim” Award. That Award is not final and is usually subject to post-trial hearings on motions regarding the award of attorneys fees and costs to the prevailing party. Also, even once there is a “Final” Award, the prevailing party will then typically be required to file a Petition with the Superior Court to confirm the Final Award as a Judgment.
But what happens if the arbitrator, after issuing the Final Award, considers additional evidence and decides to amend the Final Award? That circumstance has now been addressed in part in the California Court of Appeal, Second District (Division 4) recently published opinion in Jeffrey Cooper v. Lavely & Singer (2014) Westlaw 4793656 (“Cooper Case”).
The Cooper Case concerned a legal malpractice action against the Lavely & Singer firm, a well-known Century City based entertainment law firm. In that matter, Jeffrey Cooper invested significant sums in a production company called "Hopeful Monster, Inc." (“HMI”). In 2009, after suspecting that HMI was a sham, Cooper retained Lavely & Singer to pursue a fraud action against HMI and two principals of HMI (one of which was deceased). That matter went to arbitration before retired Judge Alan Haber who concluded that Cooper had not established his claims and issued an award in September 2010 against Cooper and in favor of HMI and its principals.
Thereafter, Cooper commenced an arbitration in September 2011 against Lavely & Singer by filing a demand for arbitration with JAMS (the Lavely & Singer attorney retainer agreement called for disputes to be referred to arbitration before JAMS). Cooper asserted claims for breach of contract, breach
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
The Cooper Case provides clear guidance that a Final Award is just that, final, and may not be disturbed by an arbitrator unless the change to the Final Award is more or less ministerial or clerical in nature or does not involve the substantive merits of the case.
About the Authors: Edward F. Morrison, Jr. is the founding partner and Larry A. Schwartz is Of Counsel to The Morrison Law Group, a professional corporation. Their biographies can be viewed at www.morrisonlawgroup.com.
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