Both Sides Wanted To Correct Cost Award That Couldn't Be Corrected
As with our immediately preceding post of May 19, 2013 on De Sena v. Richert, the issue here is whether cost issues should be presented to the trial judge or to the arbitrator.
At arbitration, Plaintiffs were awarded $1,092,797, plus "costs in accordance with the California Code of Civil Procedure." Plaintiffs, however, never briefed the cost issue to the arbitrator, and did not submit evidence of costs or of a CCP 998 settlement offer. The trial court confirmed the arbitrator's award, but "corrected" the costs award by removing it. Plaintiffs appealed in order to recover their costs. Watson v. Knorr, H036430 (6th Dist. May 13, 2013) (Rushing, P.J., author 3:0) (unpublished).
The unpublished opinion is 40 pages long – evidence that costs issues in arbitration can be very confusing. Both Plaintiffs and Defendant had wanted to correct the ruling on costs – Plaintiffs, by filling in a dollar amount, Defendant, by deleting the reference to entitlement to costs. The bottom line, however, was that it was within the power of the arbitrator to rule on costs, and that even if the ruling was erroneous in arbitration, that was no basis for "correcting". it. If the Plaintiffs wanted the arbitrator to award costs, they would have done well to brief the issue, and submit evidence to the arbitrator.
Costs incurred by Plaintiffs in the trial court were a different matter. "The case is remanded to the trial court for the sole purpose of determining Plaintiffs' entitlement to costs related to the proceedings in the trial court and the amount of such costs."
Practice Tip: The Court of Appeal helpfully suggests a two-step approach in arbitration where a 998 settlement offer is made, and costs cannot be assessed before a prevailing party is determined. The parties should advise the arbitrator that a 998 offer has been made, and ask the arbitrator to conduct a bifurcated hearing, reserving jurisdiction to address costs after the liability and damages phase is completed.