Opinion
D050167 D050931
4-18-2008
DUCKOR SPRADLING, etc., Petitioner and Respondent, v. DAVID BLACKBURN, et al., Defendants and Appellants.
NOT TO BE PUBLISHED
Duckor Spradling Metzger & Wynne (Duckor Spradling), a law firm, instituted this proceeding to compel arbitration of an attorney fees dispute with its former clients, David Blackburn, 350 W.A., LLC, 350 West Ash Urban Homes, Inc., and B&H Property Systems, Inc. (collectively Appellants). We consider together two appeals filed by Appellants: (1) an appeal from a judgment entered after the trial court granted Duckor Spradlings petition to confirm an arbitration award, which Appellants contend was improper because they had properly rejected the award; and (2) an appeal from a postjudgment order awarding Duckor Spradling its attorney fees, which Appellants contend was improper because Duckor Spradling represented itself and incurred no fees and because Duckor Spradling generated the fees through an unethical conflict of interest.
We conclude that the trial court erred in confirming the arbitration award because Appellants timely and properly rejected it. Accordingly, the judgment and post-judgment order in Duckor Spradlings favor must be reversed.
FACTUAL AND PROCEDURAL BACKGROUND
Appellants signed fee agreements with Duckor Spradling wherein they agreed to binding arbitration to resolve any disputes regarding the agreements. In November 2005, Duckor Spradling sent Appellants a letter regarding the payment of outstanding fees and costs in five different matters and advised them of their right to elect non-binding arbitration under Business and Professions Code section 6200 et seq., commonly know as the mandatory fee arbitration act (the Act). (All statutory references are to the Business and Professions Code unless otherwise stated.) The following month, Duckor Spradling filed a petition to compel Appellants to submit all disputes arising under the agreements, including its claims for payment of legal services, to binding arbitration. Appellants opposed the petition on the ground they had already initiated non-binding arbitration of the fee dispute under the Act.
Duckor Spradling took its petition to compel arbitration off calendar and the parties proceeded to arbitrate the fee dispute under the Act. Via a letter dated June 27, 2006, the arbitration panel notified the parties of its decision to award Duckor Spradling a total amount of $391,890.09 on all five matters at issue. The panel noted that it had taken into consideration Appellants claim that Duckor Spradling had committed legal malpractice in one of the five matters at issue, the Tenant litigation, when valuing the attorney services Duckor Spradling had provided, but disclaimed any ability to decide the malpractice issue. Two days later, Appellants filed a legal malpractice action against Duckor Spradling, alleging that it had committed legal malpractice in the Tenant litigation. In the prayer for relief, Appellants stated that they were "the prevailing party after this rejection of [the] non-binding arbitration award; and . . . [did] not owe Defendants any attorneys fees or costs."
In September 2006, Duckor Spradling filed a petition to confirm the arbitration award, arguing that Appellants had not filed a rejection of the award and request for trial in accordance with the Act and that the time to do so had expired. (See § 6204.) Appellants opposed the petition, arguing they had timely rejected the arbitration award and sought trial de novo through the filing of the malpractice action against Duckor Spradling. The trial court rejected Appellants argument and granted the petition to confirm the arbitration award. The trial court concluded that a separate malpractice action was not a proper vehicle for challenging the arbitration award. The court entered judgment in Duckor Spradlings favor and later awarded Duckor Spradling attorney fees in the amount of $28,830.
Appellants timely filed separate appeals from the judgment confirming the arbitration award and the postjudgment order awarding Duckor Spradling its attorney fees. We consolidated the appeals by order dated February 22, 2008.
DISCUSSION
1. Judicial Notice
As a preliminary matter, Duckor Spradling seeks judicial notice of certain documents. The request is denied as the documents were not before the trial court or are not relevant to the resolution of this appeal; accordingly, we do not address Duckor Spradlings arguments relating to these documents.
2. Standard of Review
The parties concede that this appeal addresses the proper interpretation of section 6204, and that the trial courts ruling is subject to de novo review on appeal. Duckor Spradling asserts, however, that the appeal also presents a mixed question of law and fact and we should give deference to the trial courts finding that the contents of Appellants separate action for legal malpractice did not constitute an adequate rejection of the arbitration award. We reject Duckor Spradlings assertion because it has not identified any factual dispute resolved by the trial court. Where, as here, the facts are not disputed, the determination of how the facts are characterized in the context of section 6204 presents a legal question. (Crocker National Bank v. City and County of San Francisco (1989) 49 Cal.3d 881, 888.)
3. The Merits
The Act sets forth a statutory scheme for the arbitration of attorney fee disputes, but such arbitrations are not binding and either party may request a trial de novo if sought within 30 days after the arbitrator mails notice of the award. (§ 6204, subd. (a), (b) & (c).) If an "action" is pending, a party seeking such a trial de novo must file rejection of the arbitration award and a request for trial after arbitration in that action. (§ 6204, subd. (b).) If no "action" is pending, the party must commence an action in the court having jurisdiction over the amount of money in controversy. (§ 6204, subd. (c).) If no rejection of the arbitration award is timely filed in a pending action or no action is timely commenced, the arbitration award becomes binding on the parties and either party may file a petition to confirm the award. (§ 6203, subd. (b).)
Duckor Spradling contends that its petition to compel arbitration of the fee dispute with Appellants was an "action" within the meaning of section 6204, subdivision (b) and that Appellants were required to file a rejection of the arbitration award and a request for trial after arbitration in that action. Appellants contend that Duckor Spradlings petition to compel arbitration was a "special proceeding" that did not place the subject fees at issue and that it properly rejected the award by initiating the malpractice action per subdivision (c) of section 6204. We agree with Appellants.
Judicial remedies are divided into "actions" and "special proceedings" (Code Civ. Proc., § 21), with an "action" defined as "an ordinary proceeding in a court of justice by which one party prosecutes another for the declaration, enforcement, or protection of a right, the redress or prevention of a wrong, or the punishment of a public offense" (Code Civ. Proc., § 22) and a "special proceeding" defined as "[e]very other remedy." (Code Civ. Proc., § 23.) This distinction has existed since 1872 (People v. Yartz (2005) 37 Cal.4th 529, 536) and "is well established in California statutory and decisional law. [Citations.]" (Ching v. San Francisco Bd. of Permit Appeals (1998) 60 Cal.App.4th 888, 895.) An "action" is commenced by filing a complaint (Code Civ. Proc., § 350), but filing a petition to compel arbitration (Code Civ. Proc., § 1290) commences a "special proceeding," not an "action." (Otay River Constructors v. San Diego Expressway (2008) 158 Cal.App.4th 796, 802.)
The Act does not define the word "action" as including a special proceeding and we presume the Legislature was aware of the well-established distinction between an action and a special proceeding when it enacted the Act. (People v. Overstreet (1986) 42 Cal.3d 891, 897 [Legislature presumed to know existing statutes and caselaw].) Accordingly, we reject Duckor Spradlings suggestion that Appellants were required to file a rejection of the arbitration award and request for trial after arbitration in Duckor Spradlings special proceeding to compel arbitration. (§ 6204, subd. (b).)
Because no action was pending, Appellants properly initiated a trial after arbitration by commencing an action in the court having jurisdiction over the amount of money in controversy within 30 days after it received notice of the award. (§ 6204, subd. (c).) The remaining question is whether the action filed by Appellants adequately informed Duckor Spradling that they were initiating a trial after arbitration and thereby rejecting the arbitration award. We conclude that it did.
Appellants commenced their action against Duckor Spradling less than 30 days after the date of the arbitration award. The action contains a single cause of action for negligence relating to alleged legal malpractice in the Tenant litigation. In the prayer for relief, Appellants stated that they were the "prevailing party after this rejection of non-binding arbitration award" (italics added) and that they did not owe Duckor Spradling any attorney fees or costs.
Duckor Spradling cites to Shiver, McGrane & Martin v. Littell (1990) 217 Cal.App.3d 1041 (Shiver) to support its argument that Appellants malpractice action failed to satisfy the requirements of subdivision (c) of section 6204. In Shiver, two individuals arbitrated an attorney fee dispute against a law firm under the Act. After the arbitrator found in favor of the law firm, one of the individuals filed a complaint for malpractice against one attorney in the law firm and the body of the complaint did not mention the arbitration award. (Id. at p. 1045.) Under these facts, the appellate court concluded that the malpractice complaint was insufficient to constitute a request for a trial de novo following an arbitration award. (Ibid.)
We agree with Shiver that the mere filing of a malpractice action, without any mention of the arbitration award and where some of the parties to the arbitration were not named in the complaint, is insufficient to satisfy the requirements of subdivision (c) of section 6204. Here, however, all the parties to the arbitration were included in the malpractice action and the complaint stated that Appellants were rejecting the non-binding arbitration award. Notably, Duckor Spradling knew that Blackburn intended to reject the arbitration award because it referenced the complaint and the language of the prayer in its petition to confirm the award. Duckor Spradling presented no evidence that it had participated in multiple non-binding arbitration hearings with Appellants or was confused as to whether Blackburn intended to reject the arbitration award.
We reject Duckor Spradlings argument that, because the arbitration award addressed attorney fees for work Duckor Spradling performed in five discrete actions for Blackburn, that the malpractice action, challenging the work done in only one of those five matters, was insufficient to challenge the entire arbitration award. Although the arbitration award addressed five separate matters, it awarded Duckor Spradling one sum that encompassed all matters; accordingly, it is clear that Appellants intended to reject the entire arbitration award and that all issues raised in the arbitration were to be tried anew. Thus, the trial court erred in confirming the arbitration award and entering judgment in Duckor Spradlings favor. Since we are reversing the judgment, the attorney fee award must also be reversed.
DISPOSITION
In appeal number D050167, the judgment confirming the arbitration award is reversed. In appeal number D050931, the postjudgment order awarding attorney fees is reversed. Appellants are entitled to their costs in both appeals.
We concur:
McCONNELL, P. J.
HUFFMAN, J.