Steven J. Horn appeals from the judgment, contending the trial court erred in confirming an arbitration award and awarding attorney fees. Horn primarily contends the arbitrator failed to disclose necessary information which would cause a reasonable person to doubt the arbitrator's neutrality. We affirm the judgment.
Horn was retained by Henry and Janelle Hoffman (the Hoffmans) to represent them in a lot line dispute with their neighbors. After a bench trial,
After trial, the jury returned a verdict of $42,282.56 to Horn on his fee claim against the Hoffmans and an identical amount to the Hoffmans on their fraud action against Horn. Because the award amounts offset each other, a judgment was entered awarding both parties "zero." The Hoffmans moved for a new trial solely on the issue of insufficiency of the damages award and filed a motion for attorney fees. When the motion for new trial and attorney fees was denied, the Hoffmans filed a motion for judgment notwithstanding the verdict. That too was denied. The Hoffmans appealed.
This division considered the Hoffmans' appeal and determined that they were entitled to attorney fees since they were the prevailing defendants on the complaint. The matter was remanded to the trial court to retry the issue of damages and attorney fees and costs. On remand, the trial court ordered Horn to pay approximately $380,000 in attorney fees to the Hoffmans. While that order was on appeal, Horn settled with the Hoffmans for $250,000.
Horn believed Nemecek's negligence was the cause of the "disastrous results" in his claim against the Hoffmans. He demanded Nemecek submit to arbitration with JAMS as specified in their retainer agreement. Nemecek filed a counterclaim against Horn for unpaid attorney fees and costs. The parties chose retired United States District Judge George Schiavelli as the arbitrator. The arbitrator presented his disclosure statement to the parties and Horn requested additional disclosure of all matters in which Nemecek appeared before the arbitrator. JAMS responded that no case was found.
The evidentiary hearing lasted five days, with each party submitting testimony and briefing. In an extensive opinion, the arbitrator noted that issues of credibility were very important and "found Horn's credibility lacking." The arbitrator ordered the parties to take nothing on their respective claims but allowed either party to claim attorney fees if they wished to do so. Both parties submitted claims for attorney fees. The arbitrator found Nemecek was entitled to $289,028.85 in attorney fees, explaining that this was a
"Shocked" by the arbitrator's order, Horn decided to hire a private investigator to determine whether there existed any undisclosed relationships between the arbitrator and Nemecek, its counsel or its witnesses. The private investigator discovered the following: the arbitrator and the head of Nemecek's appellate department, Mark Schaeffer, were both members of the Los Angeles County Bar Association's appellate court's section executive committee; the arbitrator and Edith Matthai, Nemecek's expert witness in the arbitration, appeared together as panelists for various seminars and were both members of the board of governors of the Association of Business Trial Lawyers; the arbitrator was employed as an attorney at the firm of Brown, White & Newhouse, which represents lawyers in malpractice actions; and Nemecek attorneys appeared before the arbitrator when he was a district court judge in 2006. These undisclosed relationships formed the basis for Horn's petition to vacate the arbitration award and oppose Nemecek's petition to confirm the award. The trial court entered judgment in favor of Nemecek on April 5, 2011. Horn timely appealed.
Horn challenges the trial court's order confirming the arbitration award on the ground that the arbitrator failed to disclose the facts which were discovered by the private investigator. According to Horn, the failure to disclose would cause a person to reasonably entertain a doubt that the arbitrator would be able to be impartial. Thus, Horn demands a new arbitration before a "truly neutral arbitrator." Horn also contends the order awarding Nemecek attorney fees incurred in connection with their petition to confirm the arbitration award was excessive and an abuse of discretion. We find no basis to reverse the arbitration award or the attorney fees award.
The disclosure requirements were intended to ensure the impartiality of the arbitrator, not to mandate disclosure of "all matters that a party might wish to consider in deciding whether to oppose or accept the selection of an arbitrator." (Haworth v. Superior Court (2010) 50 Cal.4th 372, 393 [112 Cal.Rptr.3d 853, 235 P.3d 152].) We are mindful that "`"ordinary and insubstantial business dealings"' arising from participation in the business or legal community do not necessarily require disclosure." (Luce, Forward, Hamilton & Scripps, LLP v. Koch (2008) 162 Cal.App.4th 720, 733 [75 Cal.Rptr.3d 869] (Koch), quoting Guseinov v. Burns (2006) 145 Cal.App.4th 944, 959 [51 Cal.Rptr.3d 903].) Indeed, arbitrators "cannot sever all their ties
Horn contends the arbitrator was required, but failed, to disclose four facts: (1) his professional relationship with Mark Schaeffer; (2) his professional relationship with Edith Matthai; (3) Nemecek's appearance before him while he was a district court judge; and (4) his work for Brown, White & Newhouse. We address each of these disclosures below. Because we are presented with a mixed question of fact and law, we review de novo the trial court's order confirming the arbitration award. (Haworth v. Superior Court, supra, 50 Cal.4th at pp. 383, 385.)
Schaeffer is the head of Nemecek's appellate department and testified at the arbitration. During his testimony, Schaeffer admitted he was a member of the appellate courts section executive committee of the Los Angeles County Bar Association. The appellate committee is comprised of 186 members (as of December 2010) and meets regularly to provide continuing legal education and networking opportunities. The private investigator discovered that the arbitrator was also a member of the appellate courts section executive committee. Horn contends the arbitrator should have disclosed his involvement with the appellate committee when Schaeffer testified he was a member. Horn contends it is particularly notable that the arbitrator had to weigh Schaeffer's credibility against Horn's with respect to appellate matters while they were both members of an appellate committee. We conclude the arbitrator's participation in a group comprised of 186 members, of which Schaeffer was one, does not require disclosure.
On appeal, the court held there was no requirement that those affiliations be disclosed, particularly where the contact was "slight or attenuated." There was no indication the arbitrator had a personal relationship, or close friendship, with either the witness or the attorney. There was also no indication of any business relationship between or among them. (Koch, supra, 162 Cal.App.4th at p. 734; see Michael v. Aetna Life & Casualty Ins. Co. (2001) 88 Cal.App.4th 925, 939-940 [106 Cal.Rptr.2d 240] ["Membership in a professional organization does not provide a credible basis for inferring an impression of bias."]; Ray Wilson Co. v. Anaheim Memorial Hospital Assn., supra, 166 Cal.App.3d at pp. 1087-1088 ["The fact that an arbitrator and a party to the arbitration are members of the same professional organization `is in itself hardly a credible basis for inferring even an impression of bias.'"]; San Luis Obispo Bay Properties, Inc. v. Pacific Gas & Elec. Co., (1972) 28 Cal.App.3d 556, 567 [104 Cal.Rptr. 733] [no disclosure required where arbitrator and party's appraiser belonged to the same professional organization].)
Horn also contends the arbitrator should have disclosed his "prior long standing professional relationship" with Edith Matthai, who served as an
We disagree. As explained in Koch and the cases cited above, the arbitrator's participation in the same panels or bar association committees does not provide a credible basis for inferring an impression of bias. From these facts, it is an unreasonable stretch of the imagination to assume that the arbitrator had a relationship with Matthai that required disclosure.
We similarly reject Horn's contention that the arbitrator should have disclosed his employment at a law firm. The arbitrator is of counsel at Brown, White & Newhouse (BWN), a private law firm that has represented clients in the area of legal malpractice defense. Relying on Benjamin, Weill & Mazer v. Kors (2011) 195 Cal.App.4th 40 [125 Cal.Rptr.3d 469] (Benjamin), Horn contends that the arbitrator's undisclosed defense of attorneys in legal malpractice actions is a basis for vacating the arbitration award in this case. In Benjamin, the court held that an objective person could reasonably question the impartiality of an arbitrator in a dispute over legal fees who, at the time of the arbitration, was engaged primarily in the defense of attorneys and law firms in cases involving professional responsibility and was actively representing a law firm in a case before the California Supreme Court involving a dispute over legal fees. (Id. at p. 72.)
This matter is nothing like the Benjamin case. Nemecek presented a declaration by BWN's founding partner and general counsel, who stated that BWN handles criminal defense and civil litigation. "Since its founding, BWN has represented plaintiffs in two legal malpractice cases and a defendant in
Horn also challenges the trial court's award of attorney fees incurred in connection with the petition to confirm the arbitration award. We review the trial court's determination of attorney fees for abuse of discretion. (PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1096 [95 Cal.Rptr.2d 198, 997 P.2d 511].) We find no such abuse here.
When Horn presented his claim, Nemecek referred it to Lawyers Mutual Insurance Company (Lawyers Mutual), its insurer, which contracted with Murphy, Pearson, Bradley & Feeney (Murphy) to provide the defense. In Nemecek's motion for attorney fees, it presented Murphy's billing statements and a declaration from Harlan Watkins, Nemecek's primary defense counsel in the arbitration. Watkins stated that he had been practicing in California since 1995 with a focus on malpractice litigation. Watkins presented a general schedule and pay table for attorneys put out by the Department of Justice,
Contending the amount awarded was more than double the amount actually incurred, Horn claims the trial court abused its discretion. In short, Horn urges us to cap the attorney fee award to that which was actually incurred. We decline to do so.
Cases have affirmed an award of attorney fees that were not "actually incurred." In PLCM Group, Inc. v. Drexler, supra, 22 Cal.4th at pages 1094-1095, for example, the Supreme Court held that attorney fees may be recovered under Civil Code section 1717 for the work of in-house counsel. The court expressly held the trial court was not required to use a "cost-plus approach," namely a calculation of the actual salary, costs and overhead of in-house counsel, and could instead use market value to determine reasonable attorney fees. (PLCM Group, Inc. v. Drexler, supra, at pp. 1096-1097; see Lolley v. Campbell (2002) 28 Cal.4th 367, 371 [121 Cal.Rptr.2d 571, 48 P.3d 1128] [rejecting contention that attorney fees "incurred," under a Labor Code provision, means only fees a litigant actually pays or becomes liable to pay
Given this authority, we are not persuaded by Horn's argument that the rate billed by Murphy represents the maximum reasonable hourly rate. Indeed, the case cited by Horn for this proposition, Vella v. Hudgins, supra, 151 Cal.App.3d at page 520, acknowledges that "the trend of the cases, however, is toward the conclusion that a trial court may consider the terms of the parties' contract, along with other factors, but that the terms of the contract do not compel any particular award." (Id. at p. 520.) Neither do we accept a rule that requires a trial court to limit its fee award to the amount incurred in all circumstances except under "unique factual circumstances" such as pro bono cases, contingency fee cases and representation by in-house counsel. None of the cases cited limit their holding to such "unique factual circumstances." Additionally, there is no support for Horn's argument that Nemecek cannot be reimbursed for attorney fees which were not actually paid. Indeed, this argument runs counter to the authority discussed above. Horn's reliance on Richards v. Sequoia Ins. Co. (2011) 195 Cal.App.4th 431 [124 Cal.Rptr.3d 637] for this argument is misplaced as that case involved an insurance bad faith claim. There, the trial court held the plaintiffs failed to show economic loss such as attorney fees incurred to secure the benefits due under an insurance policy. (Id. at p. 438.) That case did not involve a contractual attorney fee provision.
We also reject Horn's contention that the attorney fee request should have been denied because the fees were paid by Lawyers Mutual rather than Nemecek itself. (Staples v. Hoefke (1987) 189 Cal.App.3d 1397, 1410 [235 Cal.Rptr. 165] ["Plaintiffs were not entitled to avoid their contractual obligation to pay reasonable attorney fees based on the fortuitous circumstance that they sued a defendant who obtained insurance coverage providing a defense."].)
Finally, we do not accept Horn's argument that the lodestar amount calculated by the trial court was not reasonable and should be reversed. As stated above, the trial court used the reasonable rates in the local community as a basis for its award. It was also presented with Murphy's time records and billing statements to show the work done. That Murphy could have provided more detailed billing records and the precise amount it was paid for its services does not render the trial court's determination an abuse of discretion.
The judgment is affirmed. Respondent to recover its costs on appeal.
Rubin, J., and Sortino, J.,