114 Cal.App.5th 1077
Cal. Ct. App.2025Background
- Plaintiff Anthony Wilson, Jr. sued TAP Worldwide LLC; the court compelled arbitration under California law.
- Arbitration invoice for arbitrator compensation was due 30 days from June 7, 2023; TAP electronically authorized payment on July 7, 2023, but the provider did not receive it until July 10, 2023.
- Wilson moved to vacate the order compelling arbitration, arguing TAP breached the arbitration agreement by failing to pay within 30 days; the trial court agreed and imposed $1,750 in sanctions under CCP §1281.99.
- Wilson sought attorney’s fees under CCP §1281.98(c)(1) for all fees and costs associated with the abandoned arbitration; the trial court granted a fee award but reduced it to about $11,000.
- After the Supreme Court decided Hohenshelt v. Superior Court, the issue became whether §1281.98 is preempted by the FAA and whether TAP’s untimely payment was willful, grossly negligent, or fraudulent.
- The appellate court held TAP’s three-day untimely payment due to processing delay was not willful, grossly negligent, or fraudulent; nonetheless, the court concluded the FAA preempts the strict application of §1281.98, reversing the fee award.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether FAA preempts strict §1281.98 enforcement | Wilson argues Hohenshelt does not compel remand; argues entitlement to all fees under §1281.98(c)(1). | TAP argues strict application of §1281.98 is permissible and preemption may not apply. | FAA preempts strict forfeiture; remand not limited; fees must reflect excusable circumstances. |
| Whether untimely payment was willful, grossly negligent, or fraudulent | Untimely payment was willful or grossly negligent to delay proceedings. | Payment delay resulted from processing, not willful misconduct. | Untimely payment due to processing delay was not willful, grossly negligent, or fraudulent. |
| Whether plaintiff is entitled to all fees under §1281.98(c)(1) | Plaintiff is entitled to all attorney’s fees and costs incurred in the abandoned arbitration. | Only fees tied to utility in court proceedings should be recoverable. | Fee award premised on strict forfeiture is reversed; §1281.98(c)(1) not fully available under the circumstances. |
Key Cases Cited
- Hohenshelt v. Superior Court, 18 Cal.5th 310 (2025) (FAA not to preempt section 1281.98 when nonpayment is excusable; willful/gross negligence standard governs forfeiture)