Benjamin, Weill & Mazer v. Kors
195 Cal. App. 4th 40
| Cal. Ct. App. | 2011Background
- Kors hired BWM to represent her in a Temple-related fee dispute; Kors allegedly owed $68,986.38 and paid most fees totaling $227,537.75.
- BWM sought arbitration of the fee dispute under BASF/MFAA rules; Kors sought nonbinding arbitration under MFAA and CCCBA rules, arguing against BASF’s jurisdiction.
- Trial court ordered binding arbitration under BASF Rules (MFAA) despite the fee agreement’s broader CAA framework.
- Arbitration panel issued a substantial fee award in Kors’s favor to BWM; Kors moved to vacate the award for alleged 1281.9 disclosure failures by the chief arbitrator SeLegue.
- Kors later uncovered that SeLegue represented a large law firm in Schatz, and that he had other ties potentially affecting impartiality; Kors moved to vacate the award and the trial court vacated the related judgment for notice defects, leading to appellate review.
- The core issue is whether the CAA disclosure requirements apply in a BASF/MFAA arbitration and whether the MFAA provision can be severed to enforce the CAA-based arbitration.
- The court ultimately held the BASF arbitration was inappropriate under MFAA and that 1281.9 applied, warranting reversal of the award and related fees decision, with remand.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether 1281.9 disclosure applies to the BASF/MFAA arbitration | Kors argues CAA 1281.9 required disclosure of all potential impartiality concerns | BWM contends MFAA/BASF rules govern and 1281.9 does not apply | Yes; 1281.9 applies and disclosure was required, requiring reversal |
| Whether the MFAA/BASF arbitration provision is enforceable or should be severed | Arbitration provision is enforceable for binding arbitration | Provision to submit to BASF binding arbitration is unlawful and should be severed | The MFAA/BASF provision is unlawful as written; severing it and enforcing CAA-based binding arbitration is proper |
| Whether Kors is entitled to attorney fees for enforcing the arbitration agreement | Fees incurred enforcing the arbitration clause should be awarded | Fees should wait until final arbitral outcome or are not recoverable under the contract | Yes; Kors entitled to reasonable fees incurred enforcing the arbitration clause, on remand |
| Whether Kors waived rights by pursuing MFAA nonbinding arbitration | Kors’s MFAA pursuit did not waive her rights to CAA arbitration | Kors’s conduct constitutes waiver | Waiver did not occur; rights preserved and governed by CAA |
| Whether the award must be vacated for arbitrator impartiality issues | Disclosures under 1281.9 show possible impartiality issues | No statutory basis for vacatur; no disclosure under MFAA BASF | Arbitrator’s failure to disclose triggers vacatur; award reversed |
Key Cases Cited
- Schatz v. Allen Matkins Leek Gamble & Mallory LLP, 45 Cal.4th 557 (Cal. 2009) (discusses MFAA vs. CAA interplay and post-MFAA binding effect in some contexts)
- Aguilar v. Lerner, 32 Cal.4th 974 (Cal. 2004) (enforces binding arbitration under CAA after waiver of MFAA under certain conditions)
- Haworth v. Superior Court, 50 Cal.4th 372 (Cal. 2010) (appearance-of-partiality rule for arbitrators refined; broad disclosure not required beyond appearance of bias)
- Otay River Constructors v. San Diego Expressway, 158 Cal.App.4th 796 (Cal. Ct. App. 2008) (interim attorney fees awarded in petition-to-compel-arbitration contexts; action on the contract)
- Acosta v. Kerrigan, 150 Cal.App.4th 1124 (Cal. Ct. App. 2007) (interim fees for enforcing arbitration clause; relation to prevailing party on the contract)