Glaser, Weil, Fink, Jacobs & Shapiro, LLP v. Goff

• Decision Date: 27 July 2011
• Docket Number: No. B220639.,B220639.
• Citation: 2011 Daily Journal D.A.R. 5417,11 Cal. Daily Op. Serv. 4530,194 Cal.App.4th 423,125 Cal.Rptr.3d 26
• Court: California Court of Appeals Court of Appeals
• Parties: GLASER, WEIL, FINK, JACOBS & SHAPIRO, LLP, Plaintiff and Respondent, v. George GOFF et al., Defendants and Appellants.

194 Cal.App.4th 423

125 Cal.Rptr.3d 26

11 Cal. Daily Op. Serv. 4530

2011 Daily Journal D.A.R. 5417

GLASER, WEIL, FINK, JACOBS & SHAPIRO, LLP, Plaintiff and Respondent,

v.George GOFF et al., Defendants and Appellants.

No. B220639.

Court of Appeal, Second District, Division 1, California.

April 15, 2011.

As Modified on Denial of Rehearing May 6, 2011.

Review Denied July 27, 2011.

Terran T. Steinhart, Los Angeles, for Defendants and Appellants.

Nemecek & Cole, Jonathan B. Cole, Sherman Oaks, Mark Schaeffer and Vincent S. Green for Plaintiff and Respondent.

ROTHSCHILD, Acting P.J.

George and Esther Goff appeal from a judgment confirming an arbitration award in favor of the law firm Glaser, Weil, Fink, Jacobs & Shapiro ¹ (the Firm), which previously represented the Goffs. The parties submitted a fee dispute to arbitration. The arbitrators issued an award for the Firm in the amount of $654,658.28 plus interest. The Goffs contend that the trial court should have vacated the award because the arbitrators exceeded their powers by ruling that the arbitration was binding. We agree and therefore reverse.

BACKGROUND

I. Procedural Summary

On March 25, 2009, the Goffs and the Firm participated in a fee arbitration pursuant to the Mandatory Fee Arbitration Act (Bus. & Prof.Code, § 6200 et seq. (MFAA)) under the rules of the Los Angeles County Bar Association (LACBA) and its in-house arbitration services provider, Dispute Resolution Services, Inc. (DRS). On June 22, 2009, after concluding the parties had agreed to binding arbitration, the panel of three arbitrators issued an award in favor of the Firm in the amount of $654,658.28 in fees and costs, plus 10 percent simple interest from February 10, 2007, through the date of the award.

In July 2009, the Firm filed a petition and motion to confirm the award. The Goffs opposed the petition and motion, arguing that the arbitrators exceeded their powers by purporting to issue a binding award although the Goffs had not agreed to binding arbitration. They sought to have the award vacated and declared nonbinding, and they requested 30 days in which to file a rejection of the award and a request for trial de novo.

After conducting three hearings, the court granted the Firm's petition and enteredjudgment confirming the award in the amount of $838,068.98, including interest.

II. The Fee Arbitration

The Goffs operate an art gallery, and they retained the Firm to represent them in a dispute with an artist concerning royalties. On September 25, 2007, the Firm sent the Goffs a letter advising them that they owed the Firm $654,758.28 in unpaid fees and costs on account of invoices from the Firm dated October 4, 2005, through January 5, 2007. The Firm advised the Goffs it would be filing an action in the Los Angeles County Superior Court to collect the fees and costs owed, and that the Goffs had the right under the MFAA to submit the matter to arbitration through LACBA.

On January 8, 2008, the Goffs submitted a request for binding arbitration of the fee dispute to LACBA's arbitration services provider, DRS.

On April 3, 2008, the Firm advised DRS that it declined binding arbitration.

DRS then sent a letter to the parties, advising them that an arbitration panel was appointed consisting of Timothy D. Reuben, Verna L. Porter, and Bernard L. Krasnow, with Reuben as chairman. The letter indicated that the Firm had declined binding arbitration, and it advised the parties that if they agreed to binding arbitration before the start of the arbitration, then the arbitration would become binding.

On July 16, 2008, Reuben sent a letter to the parties proposing dates for the arbitration and asking whether the Firm would agree to binding arbitration.

On July 31, 2008, after having learned the identities of the arbitrators, the Firm advised Reuben it would agree to binding arbitration.

On August 8, 2008, Reuben again wrote to the parties, stating that “both sides have now agreed to have this matter heard as a binding arbitration.” Reuben nonetheless asked that the parties sign and return a “Stipulation for Binding Arbitration.” Counsel for the Firm signed the stipulation on the Firm's behalf on August 15, 2008, and one of the Firm's partners signed it on August 18, 2008.

On September 30, 2008, the Goffs advised Reuben that they would not agree to binding arbitration.

On December 5, 2008, the Firm asked the arbitrators to resolve the issue of whether the arbitration was binding as soon as possible, because the arbitration was scheduled to commence on January 9, 2009.

On December 11, 2008, Reuben ruled that the Goffs' original request for binding arbitration constituted an offer that was accepted by the Firm. Reuben reasoned that the Firm had not indicated a willingness to withdraw its request for binding arbitration, and the Goffs had requested binding arbitration in their initial papers.

The arbitrators heard the substance of the parties' fee dispute on March 25, 2009. There was no reporter present for the arbitration hearing.

On June 22, 2009, the arbitrators issued their award in favor of the Firm. The arbitrators found that the Firm generated a total bill of $1,187,362.43 in fees and costs in connection with the Goffs' dispute with the artist, and that the Goffs did not dispute that they owed the Firm fees, the amount of time billed, or the Firm's billing rates. The arbitrators found that under the several fee agreements between the Goffs and the Firm, the Firm was entitled to all fees sought and awarded $654,658.28 in fees plus 10 percent simple interest from February 10, 2007, through the date of the award.The award expressly reiterated the arbitrators' prior ruling that the award was binding because the parties had agreed in writing to be bound: “This matter is subject to binding arbitration. The Goffs agreed to binding arbitration in their initial submission to the [LACBA] Dispute Resolution Services. The Firm indicated non-binding arbitration in its initial submission, but then changed its position to elect binding arbitration in agreement with the Goffs. After the Goffs saw that the Firm had also agreed to elect binding arbitration, the Goffs requested that their binding arbitration election be withdrawn. The Firm objected. A determination was made on December 11, 2008, ruling that the original election by the Goffs of binding arbitration was an offer that was accepted by the Firm and could not be revoked once accepted.”

The award was accompanied by a form from LACBA entitled “Notice of Your Rights After Fee Arbitration,” advising the Goffs that after service of a nonbinding arbitration award they had 30 days to seek a new trial in court, and after service of a binding arbitration award they had 100 days to file a petition to vacate or correct the award.

III. The Petition to Confirm the Award

On July 13, 2009, the Firm filed a petition to confirm the arbitrators' award. The petition stated that the parties had agreed in writing prior to the arbitration that the award would be binding. On July 17, 2009, the Firm filed a motion to confirm the arbitration award pursuant to Code of Civil Procedure section 1285 and for entry of judgment thereon.

On August 18, 2009, the Goffs filed opposition to the Firm's petition and motion, contending that the arbitrators exceeded their powers by ruling that the arbitration was binding. The Goffs argued that the Firm's rejection of their offer of binding arbitration terminated the offer, which the Firm therefore could not accept later when it changed its position; accordingly, the parties never agreed to binding arbitration. In their opposition, the Goffs asked that the award be “vacated as a binding arbitration [a]ward” and also asked that, once the award was “declared to be non-binding,” they be granted 30 days in which to request trial de novo.

In reply, the Firm defended the arbitrators' ruling on bindingness and also argued that the Goffs had waived the issue as follows: According to the declaration of Vincent Green (an attorney who had appeared on behalf of the Firm at the arbitration hearing), at the start of the arbitration hearing the Firm sought a continuance because it had recently become aware that the Goffs were not only opposing the Firm's efforts to collect unpaid fees but also “seeking a refund of fees previously paid,” as well as “asserting a claim for legal malpractice.” According to Green, as a result of the Firm's request for a continuance, the arbitrators asked the Goffs if they would agree to a continuance in exchange for making the arbitration nonbinding, and the Goffs declined.

The Goffs filed evidentiary objections to Green's declaration and also filed a declaration by George Goff, stating that Green's declaration was incorrect on several points. In particular, George Goff's declaration states that at the arbitration hearing the arbitrators did not ask the Goffs if they would agree to a continuance in exchange for making the arbitration nonbinding, and that the Goffs “did not state” that they “were opposed to the arbitration proceeding as non-binding.”

At a hearing on September 3, 2009, the trial court stated that it was tentatively inclined to grant the Firm's petition to confirm the award, but the court wished to conduct an evidentiary hearing concerning the conflict between the Green and Goff declarations.

The court conducted that evidentiary hearing on September 22, 2009. Green testified that, at the start of the arbitration hearing, the arbitrators asked the Goffs if they would agree to a continuance in exchange for making the arbitration nonbinding (“sort of as a trade-off to this no delay versus is this going to be a binding proceeding”). According to Green, the Goffs left the hearing room, returned about five minutes later, and rejected the arbitrators' offer. George Goff testified that the arbitrators did not offer to make the arbitration nonbinding, that the Goffs never left the hearing room to consider the question of a...