Arbitrators Can Make Mistakes And Here The Record Didn’t Even Show A Mistake Had Been Made.
A major attorney’s fees dispute between a law firm and its client hinged on when mediation ended, for the parties agreed that the law firm would receive a five percent contingency fee for a successful mediation, and a 20 percent fee if the mediation was unsuccessful. The increase would occur 10 days after “the mediation”, though “mediation” was not defined. You can probably guess what happened: the mediation was unsuccessful, the law firm ramped up for trial, and the lawsuit settled just before trial, with the involvement of the mediator in settlement negotiations. So when did the mediation end? The arbitrator concluded that “the mediation” meant the session that ended unsuccessfully, ten days elapsed, and thus the 20 percent contingency fee applied. This resulted in an award of roughly $2,440,000.
The inevitable appeal of the judgment confirming the award alleged that the arbitrator exceeded powers and acted unfairly by refusing to issue a subpoena for time records, and by limiting the arbitration to one day.
The Court of Appeal affirmed the judgment. Thorsnes Vatolotta McGuire, LLP v. Pointe San Diego Residential Community, LP, D064907 (4/1 Jan. 13, 2015) (Benke, Huffman, McDonald) (unpublished). The arbitrator had concluded that the time records were irrelevant, because the award was based on a contingency. And appellant had seemingly agreed to the one-day arbitration, or at least had failed to object.