Opinion
D047665
12-12-2006
MARGARET A. HENDRICK, Plaintiff and Respondent, v. MARIE A. LASALA, Defendant and Appellant.
Defendant Marie LaSala appeals from a postjudgment order granting plaintiff Margaret Hendricks motion to tax costs following the superior courts confirmation and correction of an arbitration award resolving the parties dispute over their failed law partnership. The court denied LaSalas request for approximately $ 709 in costs LaSala claimed she incurred in filing a response to Hendricks complaint, compelling arbitration and enforcing the arbitration award. LaSala contends the court erred by refusing to award her the requested costs as a matter of right under Code of Civil Procedure sections 1032 and 1293.2. Hendrick has asked that we dismiss LaSalas appeal as frivolous. We deny that request, and affirm the order.
All statutory references are to the Code of Civil Procedure unless otherwise indicated.
FACTUAL AND PROCEDURAL BACKGROUND
In October 2004, LaSala and Hendrick entered into an agreement to form a limited liability partnership for the practice of law. The partnership agreement contained a clause requiring the parties to arbitrate controversies or claims arising out of or relating to the agreement or its breach. Disputes arose between the parties, and on May 31, 2004, LaSala filed a demand for arbitration with the American Arbitration Association. The next day, Hendrick filed a verified complaint against LaSala in San Diego Superior Court for breach of the partnership agreement and dissolution of the partnership, among other causes of action. LaSala thereafter successfully petitioned to compel the matter to arbitration and obtained a stay of the lawsuit pending the arbitration proceedings.
The arbitration resulted in an award in which the arbitrator, finding the partnership had been dissolved by operation of law, in part ordered distribution of approximately $62,000 in partnership cash, partnership receivables and profits, and other compensation to LaSala. The arbitrator expressly denied LaSalas claim for costs and attorney fees incurred in responding to Hendricks lawsuit: "LaSalas claim for damages for attorneys fees and costs incurred in the case entitled` `Margaret A. Hendrick v. Marie A. La Sala [sic] and now pending in the San Diego Superior Court as Case [N]o. GIC830741, and her claim for damages for personal time diverted, is denied." The arbitrator concluded: "This Award is in full settlement of all claims and counterclaims submitted to this arbitration."
In September 2005, after considering the parties competing requests to correct the award and their respective proposed judgments, the court confirmed the arbitration award with specified corrections (to the awards caption and to a provision pertaining to the partnerships reimbursement for partnership taxes, matters not pertinent to this appeal) and entered judgment. Thereafter, LaSala moved to correct an "inadvertent or clerical mistake in the judgment" to include an award of prejudgment interest. She also filed a memorandum of costs seeking reimbursement of $709.86, consisting of $515.50 in filing and motion fees; $ 95.96 in service of process fees; and $98.50 in models, blowups and photocopies of exhibits.
Hendrick moved to tax LaSalas sought-after costs and sought sanctions on grounds LaSalas cost memorandum was frivolous or intended to cause unnecessary delay. In her attorneys declaration accompanying the motion, Hendrick pointed out LaSala had submitted a proposed form of judgment to the court that would have awarded her statutory costs under section 1032, but the courts judgment (1) did not include that cost award and (2) confirmed the arbitration award denying LaSalas claim for costs incurred in Hendricks lawsuit. LaSala opposed the motion, likewise requesting sanctions. She argued she was entitled to costs incurred "in this litigation" as a matter of right under sections 1032 and 1293.2 and the arbitrators failure to award costs had no bearing on that statutory right; her cost memorandum was timely filed; and Hendricks motion to tax costs was frivolous for failing to acknowledge LaSalas statutory entitlement to those costs.
The court granted Hendricks motion to tax costs, but denied her request for sanctions. The courts order states: "The arbitrator did not award costs to defendant. The arbitration award in fact expressly denied defendants request for costs and stated it was complete and final with respect[] to the parties respective claims. The Courts judgment confirming that award does not include costs. The motion seeks to expand the relief rendered in the arbitration award and ordered in the judgment." The court denied LaSalas motion to correct the judgment to include prejudgment interest. LaSala filed the present appeal.
LaSalas notice of appeal states she is appealing from not only the courts order granting Hendricks motion to tax costs, but also from the order denying her motion to correct the judgment and the "Judgments Failure to Award Pre-Judgment Interest." LaSalas appellate arguments, however, pertain only to the courts failure to award her costs. We limit our discussion to that issue.
DISCUSSION
"Section 1293.2 provides: `The court shall award costs upon any judicial proceeding under this title [governing arbitration] as provided in Chapter 6 (commencing with [s]ection 1021) . . . of this code. . . . The judicial proceedings covered by this provision include petitions to confirm or vacate an arbitration award. [Citation.] [¶] The award of costs pursuant to section 1293.2 . . . is mandatory." (Marcus & Millichap Real Estate Investment Brokerage Co. v. Woodman (2005) 129 Cal.App.4th 508, 513 (Marcus & Millichap).)
LaSala contends that as the prevailing party with the net monetary recovery, she is entitled to an award of costs incurred "during litigation" as a matter of right under the above-referenced section, as well as section 1032. The core of her argument is simply that the language of sections 1293.2 and 1032 is mandatory, not discretionary.
Section 1032, subdivision (b) provides: "Except as otherwise expressly provided by statute, a prevailing party is entitled as a matter of right to recover costs in any action or proceeding."
Hendrick responds by pointing out that LaSala has not distinguished between costs she incurred before issuance of the arbitrators award and costs she incurred after it was rendered; that out of her total request LaSala seeks over $609 in costs that had already been incurred by the time the arbitrator rendered its decision denying Lasala costs she incurred in connection with Hendricks lawsuit. As to this portion of requested costs, Hendrick maintains LaSalas appeal is an improper collateral attack on the arbitrators award. Hendrick argues LaSalas appeal should be dismissed because LaSala does not meaningfully claim she is entitled to costs incurred in the postarbitration judicial proceedings, identify what costs were incurred in those postarbitration proceedings, or establish she was the prevailing party in the postarbitration judicial proceedings, thus waiving the issue. Hendrick asks us to find LaSalas appeal to be frivolous — totally and completely without merit — in view of LaSalas failure to inform this court of significant facts relating to the postarbitration judicial proceedings; the de minimis amount of post-arbitration costs involved; and what Hendrick characterizes as LaSalas refusal to allow the dispute to end.
We may reasonably characterize LaSalas recitation of this matters procedural history as a gloss. In her "Statement of Facts," LaSala does not at all mention that she unsuccessfully presented a claim in the arbitration for attorney fees and costs incurred in connection with Hendricks lawsuit. She does not tell us that Hendrick opposed her cost memorandum by pointing out the arbitrator had already denied LaSalas request for costs and the court had denied her costs as well when it rejected LaSalas proposed form of judgment. LaSala does not acknowledge the courts reasoning in its order granting Hendricks motion to tax costs or explain what appellate standard of review applies to its order. We agree LaSalas arguments do not meaningfully discuss the distinction between the prearbitration costs she expended in Hendricks litigation, which the arbitrator expressly addressed and denied, and those she incurred in postarbitration court proceedings to correct and enforce the award. The record shows that a small portion of costs LaSala sought in her cost memorandum ($102.89) related to postarbitration petitions to enforce or correct the arbitration award; the remaining $606.97 either related to prearbitration judicial proceedings or was not attributed to any particular proceeding.
Specifically, LaSala sought $515.50 in "Filing and motion fees," of which $442.90 was spent on fees for her first paper and demand for arbitration and petitions to compel arbitration and $72.60 was spent on postarbitration petitions to enforce and correct the arbitration award. LaSala also sought $95.96 in costs for registered "Service of process" and "Service by mail/Postage." Of that amount, we ascertain that $ 3.09 was spent on postarbitration matters; LaSala did not specify on what matters the remaining $92.87 was incurred. Finally, LaSala sought to recover $98.40 in "Models, blowups, and photocopies of exhibits." Of that amount, $71.20 was spent for prearbitration matters and $27.20 was incurred on postarbitration matters. Out of her total $709.86 cost request, LaSalas cost memorandum indicates that $102.89 was related to postarbitration judicial proceedings to enforce or correct the arbitration award. We see no need to resolve the slight discrepancies in our and Hendricks calculations.
This is not to say LaSala does not at all acknowledge the arbitrators award; as her third point she argues the arbitrators "failure" to award costs has no bearing on her right to recover the requested costs under the authority of Carole Ring v. Nicastro (2001) 87 Cal.App.4th 253 (Carole Ring), Marcus & Millichap, supra, 129 Cal.App.4th 508, and Corona v. Amherst Partners (2003) 107 Cal.App.4th 701, 707 (Corona).
There are several reasons why LaSalas argument, which misleadingly suggests the arbitrator did not address the issue of costs, is without merit. First, on this record, absent any showing to the contrary, we presume in favor of the trial courts order that LaSala presented a claim in arbitration for her then-incurred attorney fees and costs in connection with Hendricks lawsuit (i.e., those incurred in connection with her demand for arbitration and petitions to compel arbitration), and that her claim was within the scope of the arbitrators authority. (In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1133; see Kulko v. Superior Court (1977) 19 Cal.3d 514, 519, fn. 1, revd. on other grounds Kulko v. Superior Court of California in and for City and County of San Francisco (1978) 436 U.S. 84 [reviewing court presumes the trial court found every fact necessary to support its order justified by the evidence, and will not disturb implied findings of fact in support of its order].) LaSala did not move in the superior court to correct or vacate the arbitrators award as it pertained to costs (§§ 1285, 1286.2, 1286.6), and she has expressed no reasoning or authority for the awards correction or vacation on appeal.
Second, LaSala does not recognize or discuss the applicable standards for this courts review of that portion of the arbitrators award expressly refusing to grant her request for costs incurred in the prearbitration judicial proceedings. It is settled that the scope of judicial review of private, binding arbitration awards is extremely narrow. (Moshonov v. Walsh (2000) 22 Cal.4th 771, 775 (Moshonov); Advanced Micro Devices, Inc. v. Intel Corp. (1994) 9 Cal.4th 362, 372-373 (Intel ); Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 11 (Moncharsh).) We can neither review the merits of the controversy, the arbitrators reasoning, or the sufficiency of the evidence supporting the award, nor correct or vacate an award because of an arbitrators legal or factual error, even if it appears on the awards face. (Moshonov, at p. 775; Moncharsh, at p. 11; id. at p. 33 [even "an error of law apparent on the face of the award that causes substantial injustice does not provide grounds for judicial review"].) These judicial review rules confirm the parties intentions that the award be final. (Moncharsh, supra, at p. 9; California Faculty Assn. v. Superior Court (1998) 63 Cal.App.4th 935, 944.) The arbitrators refusal to award LaSala her attorney fees and costs thus expended in the litigation "`amounted at most to an error of law on a submitted issue, which does not exceed the arbitrators powers under the holding of Moncharsh[, at] page 28. " (Carole Ring, supra, 87 Cal.App.4th at p. 260, fn. 5, relying upon Moore v. First Bank of San Luis Obispo (2000) 22 Cal.4th 782, 784.) Under the above standards, we have no power to review or disturb the arbitrators decision denying LaSalas request for $606.97 in what we can determine are prearbitration costs.
The authorities on which LaSala relies persuade us that the trial court here correctly refused her request for costs, both prearbitration and postarbitration. Carole Ring involved a dispute between a real estate broker and property owner; the parties agreed to arbitrate their dispute under an arbitration provision in their contract and the arbitrator ruled in the property owners favor. (Carole Ring, supra, 87 Cal.App.4th at pp. 255-256.) Although the contract entitled the prevailing party to attorney fees and costs, the arbitrator ruled that each party would bear their own attorney fees and costs. (Id. at p. 256.) The broker successfully petitioned the superior court to vacate the arbitrators award, but that order was overturned on appeal and the case remanded to the superior court with instructions that it confirm the award. (Id. at pp. 256-257.) The property owner thereafter moved in the superior court for an award of attorney fees and costs incurred during the arbitration and in the postarbitration judicial proceedings, and petitioned to confirm the award. (Id. at p. 257.) The superior court confirmed the award but denied the owners request for attorney fees and costs. (Ibid.)
On appeal from the order denying attorney fees and costs, the property owner argued the arbitrator lacked discretion and exceeded his powers, and that the superior court should have remanded the matter to the arbitrator for a determination of those fees and costs incurred during the arbitration. (Carole Ring, supra, 87 Cal.App.4th at pp. 258-259.) Observing that the property owner had not appealed the judgment confirming the award, the court of appeal held that the judgment, which incorporated the arbitrators ruling requiring the parties to bear their own costs incurred during the arbitration, was final. (Id. at p. 259.) As to postarbitration fees and costs, however, the court of appeal concluded the superior court was not bound by the arbitrators ruling, emphasizing the arbitrator had not concluded there was no enforceable or valid attorney fees provision but instead simply exercised its prerogative to have the parties bear their own costs. (Id. at p. 260.) Importantly, the court held the property owner had prevailed in the postarbitration judicial proceedings having obtained a reversal of the order vacating the award, and thus was entitled to reasonable attorney fees and costs incurred in the postarbitration judicial proceedings as a matter of law. (Id. at p. 261.) The court reasoned: "The arbitrator obviously did not, and could not, make a determination with respect to which, if either party, would be the prevailing party in subsequent postarbitration proceedings. For these reasons, the arbitrators refusal to award attorney fees did not dictate a different result with respect to [the property owners] request for attorney fees in postarbitration judicial proceedings." (Ibid.)
In Corona, this court considered whether, in a case where the parties are required to resolve a dispute in arbitration, a superior court may later determine entitlement to attorney fees and costs incurred during the arbitration if the party prevailing in the arbitration (there, the plaintiff) fails to ask the arbitrator to award those attorney fees and costs. (Corona, supra, 107 Cal.App.4th at pp. 703-704.) Observing that the record showed the parties stipulation to arbitration did not limit the issues to be resolved, we held that in such a case, judicial intervention was limited to reviewing the award to determine if statutory grounds for vacating or correcting the award existed, and that the plaintiffs failure to ask the arbitrator to determine that issue was not a basis for either correction or vacation. (Id. at p. 706.) Thus, we concluded the trial court correctly denied the request for attorney fees and costs incurred during the arbitration, consistent with the policies favoring arbitration as a speedy and relatively inexpensive means of resolving disputes. (Id. at pp. 706-707.) However, because the plaintiff who requested attorney fees and costs had successfully obtained confirmation of the arbitration award and the defendant had conceded in the proceedings below that the plaintiff was entitled to recover his fees in connection with the judicial proceedings, we held, relying in part on Carole Ring, supra, 87 Cal.App.4th at p. 260, that the superior court erred in denying the plaintiffs request for fees and costs incurred in the judicial proceedings. (Corona, 107 Cal.App.4th at pp. 704, 707 [observing a court "must award costs in a judicial proceeding to confirm, correct or vacate an arbitration award"].) We remanded the matter for a determination of the amount of costs and attorney fees to be awarded. (Id. at p. 707.)
It is not clear in Corona whether the plaintiffs sought-after costs and fees were for judicial proceedings occurring before or after the arbitration, or both. However, the point is not important for purposes of this case because here, LaSala requested that the arbitrator award her costs for prearbitration judicial proceedings, and those costs were expressly referenced in its ruling. As we have explained, as to those costs, the arbitators award is final.
Applying Carole Ring and Corona to this case confirms the finality of the arbitrators decision to deny LaSalas claim for prearbitration fees and costs. Moreover, Carole Ring as well as Marcus & Millichap, supra, 129 Cal.App.4th 508 demonstrate that an award of costs incurred in postarbitration judicial proceedings requires an assessment of whether or not a party in fact prevailed in those proceedings. (Carole Ring, supra, 87 Cal.App.4th at p. 261; Marcus v. Millichap, at p. 514 [court of appeal concluded respondents, who had persuaded the trial court to vacate the arbitration award as to them and deny the appellants motion to confirm the award, were the prevailing parties in the postarbitration judicial proceedings as a matter of law under section 1032].) Here, LaSala may have largely prevailed in the arbitration, but that is a different question from whether she had prevailed in the postarbitration judicial proceedings. Indeed, while the court here entered an order confirming the arbitration award, it also denied LaSalas request to correct the arbitration award, refused to use LaSalas proposed form of judgment that included an award of costs in her favor under section 1032, and refused to award LaSala her requested costs in granting Hendricks motion to tax. LaSala did not argue to the trial court that she should be deemed the prevailing party in the postarbitration proceedings, but even if she had made that argument, the court could have appropriately ruled, and we may infer in favor of its order that it did so rule, that neither party prevailed in those proceedings for purposes of recovering costs under section 1293.2.
In challenging this appeal as frivolous, Hendrick has only asked that the appeal be dismissed; she has not requested sanctions. While we have the inherent power to dismiss frivolous appeals, that power should be used only in the "absolutely clearest cases." (People ex rel. Lockyer v. Brar (2004) 115 Cal.App.4th 1315, 1318.) "One of the reasons that the power to dismiss an appeal must be used with extreme rarity is that determination of whether an appeal is frivolous entails at least a peek at the merits — if not, as is usually the case, a thorough review of the record — and, having taken that look, the appellate court is in a position to affirm whatever was appealed rather than dismiss the appeal. As our Supreme Court said in People v. Wende (1979) 25 Cal.3d 436, 443 . . . `[W]e deem it appropriate to affirm the judgment rather than to dismiss the appeal as frivolous. Once the record has been reviewed thoroughly, little appears to be gained by dismissing the appeal rather than deciding it on its merits. " (People ex rel. Lockyer v. Brar, at p. 1319.)
We deny Hendricks request to dismiss the appeal, having reached the substance of LaSalas claims and found them without merit. (In re Marriage of Flaherty (1982) 31 Cal.3d 637, 650 [an appeal that is simply without merit is not by definition frivolous].) Regarding LaSalas motives in appealing the trial courts denial of costs, Hendrick asserts that the de minimis amount of postarbitration costs at issue, combined with LaSalas omissions of relevant procedural history and the weakness of her substantive arguments, permit an inference that LaSala "is pursuing the appeal to harass her former law partner." However, Hendrick relies predominantly on evidence that goes to the merits of LaSalas cost request rather than evidence showing that her motive in appealing the denial of costs motion was to harass her. Hendricks arguments on this point are not persuasive, and there is no evidence that demonstrates an intent to harass on LaSalas part.
DISPOSITION
The order is affirmed. Respondent shall recover costs on appeal.
We Concur:
McDONALD, Acting P. J.
IRION, J.