Court of Appeal:
Lack of Such a Provision in the Arbitration Agreement Foreclosed Award by Judge to Prevailing Party on a Motion to Vacate the Arbitration Decision, Presiding Justice Arthur Gilbert Declares
By a MetNews Staff Writer
A judge was powerless to award attorney fees to the prevailing party on a motion to vacate an arbitration award where a promissory note, but not the arbitration agreement, called for fee-shifting, Div. Six of the Court of Appeal for this district held yesterday.
Presiding Justice Arthur Gilbert authored the opinion, which was not certified for publication. It reverses an order by Ventura Superior Court Judge Henry J. Walsh.
The prevailing party was Modern Mobile Homes, Inc. which sold a remodeled used mobile home to Raymond and Joanna Bilodeau for $99,415.
They paid $45,000 down, the balance to be paid in installments.
A note provided that any dispute or claim in law or equity arising between them out of this agreement, or any resulting transaction,...shall be decided by neutral binding arbitration,” adding:
“If any action is instituted on this Note, I/we promise to pay such sums as the Court may fix as attorney’s fees.”
The Bilodeaus brought suit against Modern, alleging structural defects and seeking rescission.
Modern disclaimed liability and contended that the buyers had undertaken such extensive modifications as to render the home what Gilbert termed “an empty husk.”
The arbitrator determined that Modern could keep the $45,000, declared the note canceled, and returned the home to Modern.
Walsh denied the Bilodeaus motion to vacate the arbitration award and ordered them to pay Modern $10,000 in attorney fees. In an opinion affirming the fee award, Gilbert pointed to Code of Civil Procedure §1284.2, which provides:
“Unless the arbitration agreement otherwise provides or the parties to the arbitration otherwise agree, each party to the arbitration shall pay his pro rata share of the expenses and fees of the neutral arbitrator, together with other expenses of the arbitration incurred or approved by the neutral arbitrator, not including counsel fees or witness fees or other expenses incurred by a party for his own benefit.”
Appeals Court’s Reasoning
The presiding justice wrote:
“Here the arbitration agreement does not provide for an award of attorney fees. In the absence of any agreement providing for an award of attorney fees in an arbitration proceeding, the express terms of section 1284.2 preclude such an award.
“The trial court based its award of fees on a provision in the note. The note provides for an award of fees in any action on the note. The arbitrator could have, but did not award attorney fees in the arbitration. A petition to vacate an arbitration award is not an action on a note. An attorney fee provision applicable to a substantive claim does not extend to a petition to vacate an arbitration award resolving that claim.”
The case is Bilodeau v. Modern Mobile Homes, B302791. Attorneys on appeal were Michael D. Kwasigroch of Simi Valley for the Bilodeau and Joseph R. Brown of Sherman Oaks for Modern.
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