In the Second Appellate District case of Cohen v. TNP 2008 Participating Notes Program, LLC, Case No. B266702 (2d Dist., Div. 7 Jan. 29, 2019; posted Jan. 30, 2019) the Appellate Court was confronted with a superior court’s confirmation of an arbitrator’s decision to deny contractual fees to an arbitration prevailing party based on the unclean hands of the party’s founding member. The superior court also denied attorney’s fees to the prevailing party in post arbitration proceedings.
The appellate court affirmed the arbitrator’s fee denial but reversed the denial of post arbitration fees ruling.
The Appellate Court decided the arbitrator has the power to deny fees to a clearly prevailing party under the arbitrator’s inherent [ower] to “ex aequo et bono” (which essentially means to do what is just and good).
The Appellate Court appeared to concede that a precisely drafted arbitration agreement might compel the arbitrator to award fees to the prevailing party, irrespective of the arbitrator’s inherent power. Therefore, if you are considering a contract that contains an arbitration agreement you should have it reviewed by legal counsel and, if possible, negotiated and drafted to include the precise language necessary to assure the arbitrator must award attorneys’ fees to the prevailing party if such certainty is in your best interests.
The information presented is not intended to be, and does not constitute, “legal advice.” Because each situation varies, and only brief summary information is provided here, you should not use this information as a basis for action unless you have independently verified with your own counsel that it applies to your particular situation.
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