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Law Offices of Karton v. Segreto

July 30, 2009

LAW OFFICES OF DAVID S. KARTON, A LAW CORPORATION, PLAINTIFF AND APPELLANT,
v.
GIUSEPPE SEGRETO, DEFENDANT AND RESPONDENT.



APPEAL from orders of the Superior Court of Los Angeles County, Helen I. Bendix, Judge. Order denying the petition to confirm the amended arbitration award is vacated, and the matter is remanded with directions. Order denying motion for attorney's fees is affirmed. (Los Angeles County Super. Ct. No. BS112913)

The opinion of the court was delivered by: Croskey, J.

CERTIFIED FOR PUBLICATION

We are here concerned with a Mandatory Fee Arbitration Act (MFAA) (Bus. & Prof. Code, § 6200 et seq.) non-binding arbitration and the proceedings which followed when the attorney, who was successful at the arbitration, was not satisfied with the amount awarded by the arbitrators. Although the client had been willing to pay the attorney the amount of the award, the attorney petitioned the trial court to "correct" the award to include additional sums. The trial court denied the petition to correct, on the basis that the attorney sought modifications to the award beyond those which could be made by the trial court on a petition to correct (Code Civ. Proc., § 1286.6). The attorney then returned to the arbitrators and obtained an "amendment" to the award to include the additional amounts sought. Within 30 days of service of the amended award, the client filed a request for a trial de novo. The attorney, believing that the amended award did not give the client an additional 30 days within which to seek a trial de novo, petitioned the trial court to confirm the amended award. The trial court concluded the client's request for trial de novo was valid, and denied the petition. The client then sought its attorney's fees as the prevailing party with respect to the attorney's petitions to correct and confirm. The trial court denied the client's motion for fees. The attorney appeals from the denial of the petition to confirm. The client cross-appeals from the denial of its motion for attorney's fees.

We conclude the trial court erred in its ruling on the initial petition to correct the award. The trial court, upon concluding that the award was not correctable in the manner requested by the attorney, should have confirmed the award. (Code Civ. Proc., § 1286.) Judgment should have been entered in conformity therewith. (Code Civ. Proc., § 1287.4.) The attorney would therefore have been precluded from returning to the arbitrators and obtaining an amendment of the award, and would have had the sole remedy of appealing from the trial court's judgment confirming the award. As the trial court's denial of the attorney's petition to correct the award was undoubtedly correct, a judgment confirming the initial award is the only proper resolution of this case. We therefore direct the trial court to enter a judgment confirming the initial award, and vacating the amended award.

FACTUAL AND PROCEDURAL BACKGROUND

Attorney David S. Karton, and/or his professional corporation,*fn1 represented Guiseppe Segreto in an underlying action. A dispute arose regarding the fees owed by Segreto. Attorney Karton and Segreto proceeded to non-binding arbitration under the MFAA.

In Segreto's initial petition for arbitration, Segreto represented that the amount in dispute was $42,371.16. In an arbitration brief, Attorney Karton stated the amount owed was "$42,371.16 . . . plus accrued interest plus additional costs." Apparently, the $42,371.16 amount on which both parties relied was the total due on Attorney Karton's February 23, 2007 bill, and the bill had included in its total $352.06 attributable to "interest charges."

On October 3, 2007, an arbitration hearing was held at which both parties appeared. On December 3, 2007, the arbitrators issued their award. In their findings of fact, the arbitrators stated that the "unpaid balance on [Attorney] Karton's bills was $42,371." The arbitrators concluded that, in the absence of a binding fee agreement between Attorney Karton and Segreto, Attorney Karton was entitled to recover the reasonable value of his services. The arbitrators further concluded that the amount charged by Attorney Karton "was reasonable under the circumstances and does represent the reasonable value of the services rendered." The arbitrators did not make any specific findings or conclusions regarding prejudgment interest. The arbitrators ruled in favor of Attorney Karton, in the amount of $42,371.*fn2

The arbitrators' decision was served on the parties on December 14, 2007, with a notice indicating that if either party sought a trial de novo, that party must file a complaint within 30 days of the date of service of the arbitration award. (Bus. & Prof. Code, § 6204, subd. (a).) Neither party did so. Under the MFAA, the arbitration award thus became binding. (Bus. & Prof. Code, § 6203, subd. (b).)

On January 14, 2008, after the 30 days had passed and the award became binding, Segreto sent Attorney Karton a check for the full $42,371 awarded by the arbitrators. Attorney Karton rejected the check on the basis that "the amount tendered is not sufficient" because it did not include prejudgment interest.*fn3 Segreto responded, "[n]othing in the arbitrators' decision supports your demand for interest."

On January 17, 2008, Attorney Karton filed a petition to confirm the arbitration award. In his petition to confirm, he sought prejudgment interest from February 28, 2007. Attorney Karton, however, did not proceed on this petition, in the apparent realization that the arbitrators' award did not provide for the recovery of prejudgment interest.

On February 6, 2008, Attorney Karton filed his "First Amended Petition" to "Correct" the arbitrators' award. In summary, Attorney Karton had originally been awarded $42,371. He argued that he should instead be awarded $42,106.05 plus prejudgment interest. In order to accomplish this change, the trial court would have to:

(1) award prejudgment interest; (2) reallocate $352.06 of the $42,371 fee award to prejudgment interest; and (3) award additional fees and costs incurred in the amount of $86.95.*fn4

Segreto opposed the petition to correct the award. He did not, however, argue that the trial court should confirm the arbitrators' award. Instead, he simply requested ...


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