Giorgianni v. CrowleyGiorgianni v. Crowley
Opinion
Under the Mandatory Fee Arbitration Act (Bus. & Prof. Code, § 6200 et seq.; MFAA), a client may resolve attorney fee disputes by a speedy and inexpensive nonbinding arbitration process.
We conclude that the trial court erred. The award was nonbinding and would have become binding only if neither side timely rejected it. Crowley filed a timely request for trial de novo in the small claims division of the superior court (small claims court; see Code Civ. Proc., § 116.210), alleging that the amount in controversy—i.е., the amount that he claimed owing from Giorgianni—was no more than $5,000. We reject Giorgianni’s contention that the de novo request should have been filed as an unlimited jurisdiction matter of the superior court because both her claim in the MFAA arbitration and the award exceeded the $5,000 ceiling for small claims court. We hold that Crowley’s request filed in small claims court effectively rejected the arbitration award and will therefore reverse judgment entered on the order confirming the award.
PROCEDURAL HISTORY
Crowley represented Giorgianni in a family law proceeding to enforce a judgment against her former husband. Giorgianni was billed in excess of
On September 21, 2009, Crowley filed a small claims court action against Giorgianni in which he sought an amount “not to exceed $5,000” for “[u]npaid fees for services and costs expended.” He alleged that the matter was an attorney-client fee dispute, checked the box indicating that the matter had already proceeded to arbitration, and attached the form (SC-101) specified for arbitrated attorney fee disputes. Crowley alleged in the form attached to the complaint that the amount of money in dispute was not more than $5,000; the arbitrator decided that the attorney was required to pay the other party an unspecified amоunt; and Crowley “want[ed] a trial in small claims court to decide the fee dispute.”
On November 6, 2009, Giorgianni filed a petition in the superior court to confirm the Award. She alleged that the action was an unlimited civil case with an amount in controversy of $29,713.96; more than 30 days had passed since the mailing of the Award; and no party had filed a timely rejection of the Award and request for trial. Crowley contended in his response that the petition to confirm should be denied because he had timely rejected the Award by filing the small claims action. His response was accompanied by a request for judicial notice of the small claims complaint. After a hearing, the court filed an order confirming the Award and entering judgment on it on January 25, 2010. Crowley filed a timely notice of appeal.
I. Appealability
Giorgianni raises a threshold issue concerning appealability. “The existence of an appealable judgment is a jurisdictional prerequisite to an appeal.” (Jennings v. Marralle (1994)
Under section 6203, subdivision (b), a party may petition to confirm an arbitration award in the same manner as arbitration awards may be confirmed under Code of Civil Procedure section 1285 of the California Arbitration Act. (Perez v. Grajales (2008)
Although Giorgianni concedes that an appeal from a judgment entered on an order confirming an arbitration award is proper (Code Civ. Proc., § 1294, subd. (d)), she argues that Crowley cannot maintain this appeal because he did not challenge the Award by moving to vacate or correct it or by requesting a trial de novo. She cites Knass v. Blue Cross of California (1991)
Knass is inapposite. The parties here did not stipulate to binding arbitration, and Crowley does not contend that the Award contained an error of law. Rather, he urges that it was nonbinding as provided under the MFAA and that he timely rejected it by filing the small claims action within 30 days after its service. And he presented these challenges in opposition to Giorgianni’s petition to confirm the Award. Under the circumstances, Crowley preserved his objection to entry of judgment on the Award, аnd Knass has no application here.
Moreover, Giorgianni’s claim that Crowley did not perfect the appeal because he purportedly did not request a trial de novo involves circular reasoning. Under this view, the court’s determination that Crowley’s filing of the small claims action was legally ineffective—which was the premise for its rejection of Crowley’s position and its confirmation of the Award—would be unassailable, because the assumed validity of the court’s conclusion would preclude an appeal. There is no justification for precluding a party’s right to appeal on this basis. (Cf. Kaatz v. City of Seaside (2006)
The judgment entered on the order confirming the Award is appealable (Cummings v. Future Nissan, supra, 128 Cal.App.4th at pp. 326-327), and Crowley is not barred from pursuing the appeal on any grounds claimed by Giorgianni.
II. Standard of Review
Our review is of the superior court’s judgment, not of the Award itself. Accordingly, we review de novo the court’s judgment on the order confirming the Award. (Advanced Micro Devices, Inc. v. Intel Corp. (1994)
III. Confirmation of Award Notwithstanding Timely Filing of Small Claims Action
A. Mandatory Fee Arbitration Act
The MFAA was enacted in 1978 to address the concern that fee disputes constituted the most serious problem between attorneys аnd their clients. (See Aguilar v. Lerner (2004)
Accordingly, the MFAA was enacted to require, at the option of the client, that the attorney arbitrate any fee dispute. Absent the client’s written agreement, arbitration of fee disputes “shall be voluntary for a client and shall be mandatory for an attorney if commenced by a client.” (§ 6200, subd. (c); see also Aguilar v. Lerner, supra,
It is presumed under the MFAA that the arbitration award will be nonbinding. “The arbitration will be binding . . . only if the attorney and client so agree in writing after the dispute has arisen. Otherwise, either party may request a trial de novo within 30 days after the arbitration has concluded.” (Schatz v. Allen Matkins Leck Gamble & Mallory LLP (2009)
B. Discussion of Claim of Error
1. Contentions
The parties agree that section 6204(c) is the statute governing Crowley’s rejection of the Award and request for trial de novo.
Crowley contends that the fee dispute that was the subject of his small claims action was his claim against Giorgianni for approximately $11,000 in attorney fees. He filed his claim, including a de novo request, in small сlaims court, seeking $5,000, waiving any fees in excess of that amount. He contends therefore that he complied with section 6204(c), because “the amount of money in controversy” was $5,000, which was within the jurisdictional limit of the small claims court.
2. Rules of statutory interpretation
Our resolution of this appeal is dependent on construing the phrase “amount of money in controversy” in section 6204(c). In cases of statutory interpretation, “where the language is clear, its plain meaning should be followed. [Citation.]” (Great Lakes Properties, Inc. v. City of El Segundo (1977)
The legislative intent of a statute may be revealed from a review of “[b]oth the legislative history of the statute and the wider historical circumstances of its enactment.” (Dyna-Med, Inc. v. Fair Employment & Housing Com. (1987)
In this instance, the MFAA does not define “amount of money in controversy” in section 6204(c). Similarly, the Code of Civil Procedure does not define the term “in controversy” for purposes of determining when a party may reject a nonbinding MFAA arbitration award by filing a limited civil case (Code Civ. Proc., § 86, subd. (a)(7)(B)), or an action in small claims court (Code Civ. Proc., § 116.220, subd. (a)(4)). The “in controversy” language relevant for rejecting an MFAA arbitration award is not so “clear and unambiguous [that] there is no need for construction, [or] ... to resort to indicia of the intent of the Legislature . . . .” (Lungren v. Deukmejian, supra,
We address Giorgianni’s assertion that Crowley filed in the wrong сourt because the “amount of money in controversy” under section 6204(c) is determined by the amount of the arbitration award, which, here, was well over the jurisdictional ceiling of the small claims court. We reject this contention.
The MFAA employs two distinct phrases with respect to postaward filings in instances in which no action is pending. Under section 6203, subdivision (b), a party seeking to confirm, correct, or vacate the award may do so by filing a petition in “the court having jurisdiction over the amount of the arbitration award.” Clearly, this fixes subject matter jurisdiction by the amount of the award. In contrast, under section 6204(c), a dissatisfied party seeking to reject the award must file within 30 days of service of the award “an action in the court having jurisdiction over the amount of money in controversy.” Similarly, The Small Claims Act (Code Civ. Proc., § 116.110 et seq.) makes a distinсtion as to the jurisdictional grounds a party may assert for filing an action in small claims court after MFAA arbitration. A party may file a petition to confirm, correct, or vacate an MFAA arbitration award in small claims court if the award is one that does “not exceedQ five thousand dollars” (Code Civ. Proc., § 116.220, subd. (a)(4)), while a party seeking to reject an award may do so in small claims court when the “fee dispute involve[es] no more than five thousand dollars ($5,000) in controversy” (ibid.). (See also Code Civ. Proc., § 86, subd. (a)(10)(B) [specifying limited civil case jurisdiction for petitions to confirm, correct, or vacate MFAA award “where the arbitration award is twenty-five thousand dollars ($25,000) or less”]; cf. Code Civ. Proc., § 86, subd. (a)(7)(B) [declaratory relief action as a limited civil case proper “[t]o conduct a trial after nonbinding [MFAA] fee arbitration . . . where the аmount in controversy is twenty-five thousand dollars ... or less”].)
Thus, when the Legislature wishes to define subject matter jurisdiction by reference to the amount of the MFAA arbitration award, it does so unambiguously. (See § 6203, subd. (b); Code Civ. Proc., §§ 86, subd. (a)(10)(B), 116.220, subd. (a)(4).) Plainly, the language “amount of money in controversy” in section 6204(c) cannot be reasonably construed as basing jurisdiction on the amount of the nonbinding MFAA arbitration award. (Cf. Dyna-Med, Inc., supra,
4. Arbitration claim does not define “amount... in controversy”
Giorgianni argues alternatively that the “amount of money in controversy” under section 6204(c) is determined by the amount claimed by her in the MFAA arbitration. Under this theory, Crowley filed his rejection of the Award in the wrong court because Giorgianni’s arbitration claim was for approximately $40,000. We reject this position as well.
There is nothing in the MFAA that suggests that a party, in rejecting a nonbinding arbitration award where no action is pending, must refer to the amount that had been claimed by any party in the arbitration itself in determining the court having jurisdiction over the de novo request. Indeed, there is no reference at all in the MFAA to the amounts claimed in the arbitration process. As noted, an award rendered after MFAA arbitration is nonbinding. (Schatz, supra,
Using the amount demanded in arbitration as the jurisdictional basis for a new action to reject an MFAA arbitration award would also promote uncertainty in cases where attorney and client have cross-demands for monetary relief. If section 6204(c)’s “amount of money in controversy” language were construed as the amount demanded in arbitration, where the cross-demands, such as is the case here, involved the jurisdiction of different courts—i.e., the amount of one demand would constitute an unlimited civil case, while the other demand a limited civil case—which demand would control? The possibilities would include the amount of the arbitrаtion demand (1) by the party rejecting the arbitration award, (2) by the party not rejecting the award, or (3) that was the larger. The preservation of the right to reject a nonbinding MFAA award should not be the subject of such guesswork.
We also consider two statutory schemes outside of the MFAA. (See People v. Woodhead (1987)
Further, reference to a demand made in MFAA arbitration to determine a court’s jurisdiction over subsequent proceedings after the award is rejected is inconsistent with the understanding of a trial de novo generally. “A hearing de novo literally means a new hearing, or a hearing the second time. [Citation.] Such a hearing contemplates an entire trial of the controversial matter in the same manner in which the same was originally heard. It is in no sense a review of the hearing previously held, but is a complete trial of the controversy, the same as if no previous hearing had ever been held. ... A hearing de novo therefore is nothing more nor less than a trial of the controverted matter by the court in which it is held. The decision therein is binding upon the parties thereto and takes the place of and completely nullifies the former determination of the matter. It is in a sense and is in fact a trial of the controversy in a court of law.” (Collier & Wallis, Ltd. v. Astor (1937)
Thus, use of a prior demand in the superseded arbitration as “the amount of money in controversy” to establish the court’s jurisdiction for a de novo request under the MFAA is not consonant with (1) the MFAA; (2) the notion that a proper rejection of an MFAA award results in a trial as if the nonbinding arbitration never happened; (3) common sense, because where there have been arbitration cross-demands, there is the potential for uncertainty as to which demand will control in the filing of the rejection оf the award; (4) the principle under other nonbinding arbitration statutes (e.g., judicial arbitration) that proper rejection of the award results in a trial as if the arbitration did not occur; or (5) the understanding of de novo trials generally. We therefore reject Giorgianni’s interpretation of “the amount of money in controversy” language in section 6204(c) as requiring that a de novo request by initiation of a new action be based upon the amount previously demanded in the arbitration.
5. “Amount... in controversy” determined by plaintiff’s claim
We have concluded that a party rejecting an MFAA arbitration award by filing a new action under section 6204(c) need not determine the court with proper jurisdiction to decide the controversy by reference to the amount of the award or the amount demanded in the arbitration. It remains for us to decide what does “amount of money in controversy” mean in this context.
The Legislature has intended that the small claims court be available “to resolve minor civil disputes expeditiously, inexpensively, and fairly . . . .” (Code Civ. Proc., § 116.120, subd. (b).) That phrase, “minor civil disputes,” “refers to the financial value of the claim to the individual plaintiff.” (City and County of San Francisco v. Small Claims Court (1983)
We note further that in part 1, title 1, chapter 5.1 of the Code of Civil Procedure (the chapter that precedes The Small Claims Act), the statute establishing jurisdiction for limited civil cases includes the condition that “[t]he amount in controversy . . . not exceed twenty-five thousand dollars ($25,000). As used in this section, ‘amount in controversy’ means the amount of the demand, or the recovery sought, or the value of the property, or the amount of the lien, that is in controversy in the action, exclusive of attorneys’ fees, interest, and costs.” (Code Civ. Proc., § 85, subd. (a).) Thus, the jurisdictional propriety of filing an action as a limited civil case is determined by reference to the plaintiff’s demand or the amount of recovery he or she seeks. (See Ytuarte v. Superior Court (2005)
For these reasons, in this case, we construe “amount of money in controversy” as provided in section 6204(c) to mean the amount of demand or recovery sought by the plaintiff filing the rejection of the MFAA arbitration award. This interpretation of section 6204(c) “give[s] effect to statutes ‘according to the usual, ordinary import of the language employed in framing them’ ” (Moyer, supra,
Our conclusion is consistent with the statutory purpose of providing a speedy and economical procedure for resolving attorney-client fee disputes (Aguilar v. Lerner, supra,
6. Conclusion
We apply our construction of section 6204(c) to the case before us. The amount claimed by Crowley in the small claims action was an amount “not to exceed $5,000” for “[u]npaid fees for services and costs expended.” He confirmed this amount in controversy in the form attached to the complaint. The “prayer [of the complaint] determines the amount in controversy [citation].” (Minor v. Municipal Court, supra,
Our conclusion here takes into consideration a key component of the MFAA, namely, that a party dissatisfied with the arbitration award must make a timely and unequivocal rejection of it by filing a de novo request in the pending action (§ 6204, subd. (b)), or if no action is pending, by initiating a new action (§ 6204(c)). Crowley made such a timely and unequivocаl rejection of the award here. (Cf. Shiver, McGrane & Martin v. Littell (1990)
Further, our conclusion is consistent with general principles of jurisdiction applicable as a result of the unification of our trial courts. As a result of a 1988 primary election, the California voters enacted Proposition 220 under which it became permissible for municipal and superior courts to become unified and which authorized a state Constitution amendment reflecting the modification of the jurisdiction of trial and appellate courts. (Cal. Const., art. VI, §§ 10, 11.) “ ‘On unification of the trial courts in a county, all causes will be within the original jurisdiction of the superior court. ... In a county in which the courts have unified, the superior court has original jurisdiction of limited civil cases, but these cases are governed by economic litigation procedures, local appeal, filing fees, and the other procedural distinctions that characterize these cases in a municipal court.’ [Citations.]” (Snukal v.
As a further point, Giorgianni argues in one sentence, without citation to authority or to the record, that Crowley’s de novo request was ineffective because he never served it on her. We observe that the only indication in the record on this issue appears in the unsworn reply memorandum filed by Giorgianni below, wherein her counsel asserted that “[Giorgianni] has never been served with the small claims action.” There is nothing in the record as to whether Giorgianni or her counsel, any lack of service notwithstanding, became aware of the filing of the small claims action in the month and one-half that elapsed between the filing of the small claims action and the filing of the petition to confirm. In any event, we summarily reject Giorgianni’s contention because she has failеd to develop it in any meaningful way. (Dabney v. Dabney (2002)
We find that Crowley made a timely and proper request for trial de novo under section 6204(c). Therefore, the trial court erred in confirming the Award rendered in favor of Giorgianni.
DISPOSITION
The judgment entered on the order confirming the arbitration award is reversed and the matter is remanded to the trial court with instructions to enter an order denying the petition to confirm the award. In the interests of justice, each party shall bear his and her respective costs on appeal.
Bamattre-Manoukian, Acting P. J., and Mihara, J., concurred.
Notes
All further statutory references are to the Business and Professions Code unless otherwise stated.
Some of the background matters stated here are derived from Giorgianni’s reply memorandum filed below. Although the matters were not submitted as competent evidence, they have been adopted by Crowley in his opening brief.
A copy of the Award—notwithstanding the allegation in Giorgianni’s petition to confirm that it was attached to the petition—was not included in the record. The parties dispute neither the substance of the award nor the fact that it was nonbinding.
Although the form contained blanks for the amount of the arbitration award and its date of mailing, Crowley did not fill in these blanks. Also, the record does not show that the Award was attached to thе small claims complaint, notwithstanding the fact that the form indicated it should be attached unless an explanation for not doing so was given. (No explanation for not attaching the Award was provided by Crowley.)
Section 6203, subdivision (b), reads in part: “If an action has previously been filed in any court, any petition to confirm, correct, or vacate the award shall be to the court in which the action is pending, and may be served by mail on any party who has appeared, as provided in Chapter 4 (commencing with Section 1003) of Title 14 of Part 2 of the Code of Civil Procedure; otherwise it shall be in the same manner as provided in Chapter 4 (commencing with Section 1285) of Title 9 of Part 3 of the Code of Civil Procedure. If no action is pending in any court, the award may be confirmed, corrected, or vacated by petition to thе court having jurisdiction over the amount of the arbitration award, but otherwise in the same manner as provided in Chapter 4 (commencing with Section 1285) of Title 9 of Part 3 of the Code of Civil Procedure.”
Section 6203, subdivision (b), reads in part: “Even if the parties to the arbitration have not agreed in writing to be bound, the arbitration award shall become binding upon the passage of 30 days after service of notice of the award, unless a party has, within the 30 days, sought a trial after arbitration pursuant to Section 6204. . . .”
Notwithstanding a seemingly contrary statement by Giorgianni’s counsel in oral argument, respondent’s brief contains the assertion that section 6204(c) “is relevant in this case.”
The flaw in Giorgianni’s analysis is the insertion of the phrase “. . . in the fee arbitration” in her argument as quoted above. As we discuss post, the MFAA provisions concerning rejection of an award dо not refer to the amount claimed or awarded in the fee arbitration; there is thus no support for the position that a dissatisfied party must file a new action rejecting an MFAA arbitration award in the court with jurisdiction over the award amount or the amount claimed in the superseded arbitration.
“The small claims court has jurisdiction in the following actions: [$]••• HI (4) To confirm, correct, or vacate a fee arbitration award not exceeding five thousand dollars ($5,000) between an attorney and client that is binding or has become binding, or to conduct a hearing de novo between an attorney and client after nonbinding arbitration of a fee dispute involving no more than five thousand dollars ($5,000) in controversy, pursuant to Article 13 (commencing with Section 6200) of Chapter 4 of Division 3 of the Business and Professions Code.” (Code Civ. Proc., § 116.220, subd. (a)(4).)
“If a defendаnt has a claim against a plaintiff that exceeds the jurisdictional limits stated in [Code of Civil Procedure] Sections 116.220, 116.221, and 116.231, and the claim relates to the contract, transaction, matter, or event which is the subject of the plaintiff’s claim, the defendant may commence an action against the plaintiff in a court of competent jurisdiction and request the small claims court to transfer the small claims action to that court.” (Code Civ. Proc., § 116.390, subd. (a).)
Crowley makes the additional arguments that the court erred because (1) the small claims court had jurisdiction in the first instance to decide whether it had jurisdiction over his de novo request, and (2) even if his rejection of the Award was filed in the wrong court, the proper approach would have been to transfer the case to the proper court rather than treat his de novo request as a legal nullity. We need not address these issues since we have concluded that Crowley’s de novo request was proper.