Judge: Jon R. Takasugi, Case: 23STCP02976, Date: 2024-09-05 Tentative Ruling

Case Number: 23STCP02976    Hearing Date: September 5, 2024    Dept: 17

Superior Court of California

County of Los Angeles

DEPARTMENT 17

TENTATIVE RULING

Respondent’s petition to confirm the Final Award is GRANTED. Petitioner’s petition is DENIED.

Petitioner is denied fees and costs “related to the arbitration,” and is awarded reasonable expenses incurred, including attorney’s fees and costs, under CCP 1281.99(a) in the amount of $0.

On 8/16/2023, Edward A. Klein (Petitioner) petitioned this Court to confirm an arbitration award entered in favor of it against Wal-Mart.com USA, LLC (Respondent).

Then on 12/18/2023, Petitioner moved to confirm arbitration award and for attorney fees or vacate award and remand case.

Concurrently, Respondent petitioned the Court to confirm the arbitration award.

Legal Standard

An arbitration award is not directly enforceable until it is confirmed by a court and judgment is entered. (Code Civ. Proc. § 1287.6; Jones v. Kvistad (1971) 19 Cal.App.3d 836, 840.) A party who is satisfied with an arbitration award should move to confirm the award.

A petition to confirm an arbitration award must include the substance of the agreement to arbitrate, the names of the arbitrators, and the opinion of the arbitrator. (Code Civ. Proc., § 1285.4. The general rule is that a court will not review “the merits of the controversy, the validity of the arbitrator’s reasoning, or the sufficiency of the evidence.” (Jordan v. DMV (2002) 100 Cal.App.4th 43; see also Dept. of Personnel Admin. v. Cal. Correctional Peace Officers Ass'n (2007) 152 Cal.App.4th 1193, 1200 [“an arbitrator’s decision is not generally reviewable for errors of fact or law, whether or not such error appears on the face of the award and causes substantial injustice to the parties.”].) Confirmation of the award is mandatory unless a response or petition to correct or vacate the award has been timely filed. (See Code Civ. Proc. § 1286; Valsan Partners Limited Partnership v. Calcor Space Facility, Inc. (1994) 25 Cal.App.4th 809, 818)

Discussion

             On May 8, 2023, Judge Lucky issued a “Final Award” in the Arbitration (Initial Award). In the First Award, Judge Lucky summarized his decision as follows: “the Arbitrator finds that Walmart did not violate the UCL or FAL. However, because Walmart did not timely pay initial arbitration fees, Walmart has materially breached the [arbitration agreement] under Code of Civil Procedure (CCP) §1281.97.”

On May 15, 2023, Respondent requested that Judge Lucky correct the First Award. On June 9, 2023, Judge Lucky issued a corrected final arbitration award (Amended Award).

Now, Petitioner requests that Court confirm the Award for attorney’s fees and costs under CCP 1281.97—specifically section 1281.97(b)(2).

In opposition, Respondent argues that the Arbitrator awarded nothing to Klein under this provision. Rather, Respondent argues that the Arbitrator directed that Klein seek any “sanctions in court under CCP 1281.99,” and specifically “that the court must impose any remedy . . . under 1281.99(a).” (Id., §12, ¶4; § 11.)

CCP §1281.99(a) is much narrower than section 1281.97(b)(2) and, by its plain language, is limited to only those fees and costs which arise directly from the material breach (here, the alleged late JAMS payment). As such, the disagreement here concerns the scope of fees and costs which can be recovered by Petitioner as a result of Respondent’s late payment.

            Here, the Arbitrator’s ruling is clear: Wal-Mart was “in material breach” of CCP section 1281.97 and that “Klein must seek his sanctions in court under CCP 1281.99.” (See Complaint, p. 47, Exh. B., p. 15.)

            CCP section 1281.99 provides:

The court shall impose a monetary sanction against a drafting party that materially breaches an arbitration agreement pursuant to subdivision (a) of Section 1281.97 or subdivision (a) of Section 1281.98, by ordering the drafting party to pay the reasonable expenses, including attorney’s fees and costs, incurred by the employee or consumer as a result of the material breach.

            (emphasis added.)

            By its express terms, CCP section 1281.99 provides for the recovery of those fees incurred as a result of the breach, rather than provides for a recovery of all related attorney fees incurred in arbitration. As such, there must be a clear causal connection between the material breach and the fees or costs incurred, and other fees incurred in connection with the arbitration are not recoverable.

The case law reflects this. (See Costa v. Melikov, No. CV 2:20-09467-AB-ASx, 2022 U.S. Dist. LEXIS 198692, at *13 (C.D. Cal. Oct. 21, 2022) (finding that the costs arising “as a result of the material breach” do not include the initial arbitration-related litigation but rather the costs of responding to the defendant’s failure to pay the initial fee that resulted in closure of the arbitration); see also Stokes v. SBS Transp., LLC, No. 20-cv-02086-JSW, 2023 U.S. Dist. LEXIS 6022, at *4-6 (N.D. Cal. Jan. 12, 2023) (limiting allowable fees under section 1281.99(a) to those incurred in the motion to vacate an order compelling arbitration and the arbitration fee, and excluding the fees for responding to the initial motion to compel arbitration). Because the statutory language is unambiguous on its face, specifying a “material breach” and “as a result of the material breach”, the plain meaning of the statutory language governs. De Leon v. Juanita’s Foods, 85 Cal. App. 5th 740, 750 (2022) (citing People v. Lopez, 31 Cal. 4th 1051, 1056 (2003)).

Here, Respondent’s payment of arbitral fees was two days late. Klein has not presented any evidence of expenses, including attorney’s fees and costs, incurred between August 23, 2021 and August 25, 2021, as a result of Walmart’s purported delay in paying the initial fee. No such evidence is cited in the Award, it does not appear in the arbitral record, and it is not alleged in Klein’s Petition. Petitioner did not move to compel arbitration during that two-day delay nor did JAMS close the arbitration or assess any fees against Klein as a result of the payment’s timing.

As such, Petitioner has not shown any fees or costs incurred as a result of Respondent’s material breach.

Based on the foregoing, Respondent’s petition to confirm the Final Award is granted. Petitioner’s petition is denied. Petitioner is denied fees and costs “related to the arbitration,” and is awarded reasonable expenses, including attorney’s fees and costs, under CCP 1281.99(a) in the amount of $0.

It is so ordered.

Dated:  September    , 2024

   Hon. Jon R. Takasugi
   Judge of the Superior Court

Parties who intend to submit on this tentative must send an email to the court at smcdept17@lacourt.org by 4 p.m. the day prior as directed by the instructions provided on the court website at www.lacourt.org.  If a party submits on the tentative, the party’s email must include the case number and must identify the party submitting on the tentative.  If all parties to a motion submit, the court will adopt this tentative as the final order.  If the department does not receive an email indicating the parties are submitting on the tentative and there are no appearances at the hearing, the motion may be placed off calendar.  For more information, please contact the court clerk at (213) 633-0517.