247 Cal. App. 4th 775
Cal. Ct. App.2016Background
- Attorney Joseph Baxter and clients Michael & Lorie Bock submitted a fee dispute to Mandatory Fee Arbitration (MFAA) and stipulated the arbitrator’s award would be binding. Attorney James Schratz was appointed arbitrator.
- The arbitrator limited the hearing to four hours; the Bocks presented direct testimony and exhibits; Baxter testified and was allowed supplemental written evidence and additional live testimony.
- Arbitrator Schratz issued an award finding Baxter billed $99,373, services worth $68,148, and that the Bocks had paid $68,148, resulting in a $0 award to Baxter (plus splitting the arbitration filing fee). The paid-amount stated in the award was incorrect: the Bocks had actually paid $29,225.
- Baxter and the Bocks each sought correction/confirmation in the trial court; Baxter argued the award should be vacated for reliance on erroneous information, nondisclosure/bias by the arbitrator (who conducted billing audits and wrote about attorney overbilling), and evidentiary errors. The trial court confirmed the award and denied vacatur.
- After confirmation, the trial court awarded the Bocks $32,790 in attorney fees for the confirmation proceedings but assigned different hourly lodestar rates to the two attorneys without explanation; both sides appealed.
Issues
| Issue | Plaintiff's Argument (Baxter) | Defendant's Argument (Bocks) | Held |
|---|---|---|---|
| Whether award must be vacated because arbitrator relied on Baxter’s erroneous pre-hearing letter about amounts paid | Reliance on Baxter’s letter meant arbitrator based award on information not obtained at hearing and violated disclosure rules and due process | Arbitrator properly considered documents submitted in the arbitration record; MFAA procedures allow consideration of submitted materials and limited judicial review of merits | Denied. Court declined to vacate; merits errors and reliance on party-submitted material do not justify vacatur under MFAA and arbitration finality principles (merits review barred) |
| Whether arbitrator failed to disclose disqualifying facts or was biased (due to audit practice and writings) | Schratz’s background as a bill auditor and writings showing skepticism toward overbilling created appearance of bias and required disclosure/disqualification | Schratz disclosed his background sufficiently; his audit practice serves both sides and does not create economic incentive to rule against Baxter; writings show scrutiny of improper billing, not bias against proper fees | Denied. No reasonable basis to find disqualifying bias or required additional disclosure under MFAA; Kors and Haworth guide analysis and support neutrality finding |
| Whether arbitrator denied Baxter right to present evidence by admitting Bocks’ brief/exhibits but not Baxter’s | Arbitrator effectively refused to admit Baxter’s materials, prejudicing his ability to present a full case (due process/State Bar rules) | Arbitrator did not refuse evidence; Baxter had opportunity to submit supplemental written testimony; no substantial prejudice shown | Denied. No proof of refusal to hear material evidence or substantial prejudice; private arbitration not governed by constitutional due process standards |
| Whether trial court abused discretion in awarding Bocks attorney fees (different lodestar rates and reduced hours) | (Baxter appealed only as derivative of vacatur) | Bocks sought full fees; trial court reduced hours and rates, but assigned different rates to two similar attorneys without explanation | Affirmed in part and vacated in part. Court affirmed overall fee award deference to trial judge on hours but vacated the portion assigning different hourly rates to the two attorneys and remanded to articulate reasonable basis or set same rate |
Key Cases Cited
- Richey v. AutoNation, Inc., 60 Cal.4th 909 (California 2015) (arbitration awards generally insulated from judicial merits review)
- Haworth v. Superior Court, 50 Cal.4th 372 (California 2010) (disclosure requirement protects impartiality; arbitrator need not disclose all background matters not bearing on impartiality)
- Kors v. Benjamin, Weill & Mazer, 195 Cal.App.4th 40 (California Court of Appeal) (arbitrator with practice focused on claims against lawyers may need to disclose practice to avoid appearance of bias)
- Epic Medical Management, LLC v. Paquette, 244 Cal.App.4th 504 (California Court of Appeal) (vacatur under Code Civ. Proc. §1286.2(a)(5) requires showing arbitrator refused material evidence and that prejudice likely affected outcome)
- Mave Enterprises, Inc. v. Travelers Indemnity Co., 219 Cal.App.4th 1408 (California Court of Appeal) (private arbitration does not invoke constitutional due process protections)