The Second District holds that a law firm’s arbitration demand effectively invoked a binding arbitration provision; the law firm was not required to file a court action to reject a non-binding Mandatory Fee Arbitration Act award.
Bernard Rosenson signed a retainer agreement with Glusker Fields Claman & Machtinger LLC (Greenberg Glusker) that included a provision for binding arbitration of fee disputes. When a fee dispute arose, Rosenson requested nonbinding arbitration pursuant to the Mandatory Fee Arbitration Act (“MFAA”). Greenberg Glusker demanded binding arbitration within thirty days of the MFAA award.
Rosenson filed a petition to confirm the MFAA award asserting that it became final because the arbitration demand did not constitute the filing of an action as required by the statute. Greenberg Glusker argued the demand was a proper exercise of its contractual right to binding arbitration. The trial court affirmed the MFAA award.
The Court of Appeal reversed holding a demand for arbitration pursuant to a binding arbitration provision within thirty days of a MFAA award precludes its finality. The California Supreme Court has held that binding contractual arbitration is an alternative, acceptable form of attorney-client fee dispute resolution. Requiring a superior court action to reject a MFFA award is inconsistent with that holding.
Moreover, Greenberg Glusker could not state a cause of action to compel arbitration at the time it filed its demand for arbitration. Rosenson had not yet refused to arbitrate and any action would be meritless.
Greenberg Glusker’s traditional invocation of its contractual right to arbitrate was sufficient, and Resenson’s motion to confirm the MFAA award should have been denied.
Comment: This case clarifies that a MFAA award may be rejected by demanding arbitration pursuant to the terms of a provision in a retainer agreement.