Thursday, August 16, 2012
Court of Appeal Rejects Bias Claim Against Ex-Judge Schiavelli
By KENNETH OFGANG, Staff Writer
An attorney ordered to pay nearly $300,000 in fees to the lawyer who represented him in a dispute with a former client failed to prove that the arbitrator who made the award was biased or failed to disclose potential conflicts, the Court of Appeal for this district has ruled.
Div. Eight yesterday ordered publication of its July 23 opinion affirming confirmation of former U.S. District Judge George Schiavelli’s award in favor of Frank Nemecek of Nemecek & Cole.
Nemecek was retained by Encino lawyer Steven J. Horn in a lawsuit against Henry and Janelle Hoffman.
Horn claimed that the Hoffmans failed to pay him for representing them in a landline dispute. The Hoffmans—who lost at trial with Horn as their lawyer, then won on appeal with different counsel—alleged in a counterclaim that Horn misrepresented his real estate experience and failed to timely tender a cross-complaint to their homeowner’s insurer.
The dispute between Horn and the Hoffmans went to trial, and the jury awarded Horn a little over $42,000 in fees and the Hoffmans an identical amount on the counterclaim. The trial court entered a “zero” judgment, but the Court of Appeal ruled that the Hoffmans were the prevailing party and were entitled to attorney fees.
On remand, the trial judge awarded the Hoffmans approximately $380,000. The claim was eventually settled for $250,000 to avoid appeal.
Horn then claimed that Nemecek was negligent, invoking the retainer agreement’s arbitration clause. Nemecek counterclaimed for attorney fees and costs, and Schiavelli—who served on the Los Angeles Superior Court from 1994 to 2000 and on the federal bench from 2004 to 2008—was chosen as arbitrator.
Petition to Vacate
After a five-day hearing, Schiavelli—who expressly found Horn to be lacking in credibility—awarded Nemecek $289,028.85.
Horn petitioned the Superior Court to vacate the award.
He cited the report of a private investigator he hired after the arbitration, who discovered that Schiavelli served on a County Bar committee with a member of the Nemecek firm; that he served on the board of the Association of Business Trial Lawyers with Edith Matthai, who testified as an expert witness on behalf of Nemecek; that Schiavelli’s firm represented lawyers in malpractice actions; and that lawyers from the Nemecek firm appeared before Schiavalli when he was a judge.
Judge Frank Johnson denied the petition to vacate, confirmed the award, and awarded Nemeck more than $42,000 in attorney fees and costs for the trial court proceedings.
Presiding Justice Tricia A. Bigelow, writing for the Court of Appeal, said Schiavelli made all of the ethical disclosures required by the California Arbitration Act and the Ethics Standards for Neutral Arbitrators in Contractual Arbitration.
Schiavelli was not required, the presiding justice said, to disclose that he and Mark Schaeffer—who heads Nemecek & Cole’s appellate practice and testified at the hearing—were among about 186 members of the Executive Committee of the Appellate Courts Section of the County Bar.
That “relationship,” Bigelow said, was too “slight or attenuated” to require disclosure. The same was true of what Horn called Schiavelli’s “prior long standing professional relationship” with Matthai, because “participation in the same panels or bar association committees does not provide a credible basis for inferring an impression of bias,” the jurist opined.
Law Firm Affiliation
Nor was Schiavelli required to disclose his employment at the firm of Brown, White & Newhouse, a firm that primarily handles criminal defense and civil litigation. No bias can be inferred from the fact that the firm represented three outside lawyers in attorney malpractice suits, and represented itself in two others, particularly since Schiavelli wasn’t involved in any of those cases, Bigelow wrote.
It was nearly frivolous, she went on to say, for Horn to argue that Schiavelli was required to disclose that Nemecek attorneys appeared before him in one case as a judge. The act only requires that an arbitrator disclose whether a party or attorney involved in the arbitration appeared before him in an arbitration, Bigelow said.
The appellate panel also upheld Johnson’s award of fees and costs incurred in the trial court, saying it was based on reasonable rates charged in the local community, and that the fact that Nemecek’s attorneys were being paid by an insurance company did not preclude him from recovering fees, or limit the fees to the rates the company was actually paying.
Nemecek represented himself on appeal, along with Schaeffer and James Murphy and Harlan Watkins of Murphy Pearson Bradley & Feeney. Miguel A. Muro represented Horn.
The case is Nemecek & Cole v. Horn, B233274.
Copyright 2012, Metropolitan News Company