Standing On One’s Right May Not Always Be The Best Way To Protect One’s Rights

     The stake in the next case was a share of a $380,000 attorney’s fees award in a class action lawsuit.  The parties included the class, whose representative was McCall, and two law firms that had represented the class:  Morris Polich & Purdy (Morris) and The Quisenberry Law Firm (Mr. Quisenberry).   McCall, Plaintiff and Respondent, v. Morris Polich & Purdy et al., Defendants and Respondents; The Quisenberry Law Firm, Objector and Appellant, Case No. B239142 (2nd Dist. Div. 5 October 30, 2012) (Turner, J.) (not for publication). 

     Morris represented the clients first, substituting out in favor of Mr. Quisenberry, the attorney who actually negotiated the settlement on behalf of the class.  Morris, which had an arbitration provision in its fee agreement, arbitrated with the class, and based on quantum meruit, was awarded 65% of the award – $270,000.  The arbitrator also held that Mr. Quisenberry was entitled to 35% of the award, though Mr. Quisenberry was not a party to the arbitration provision, and had in fact successfully resisted efforts of Morris to compel Mr. Quisenberry to arbitrate.  The superior court confirmed the award in favor of Morris, but corrected the arbitrator’s award by deleting the 35% allocation in favor of Mr. Quisenberry, because the issue of Mr. Quisenberry’s rights to fees was not part of the “controversy submitted” to the arbitrator.  Mr. Quisenberry appealed from the judgment correcting and confirming the arbitration award.

     Affirmed. 

     Standing on his rights, Mr. Quisenberry asserted the arbitrator did not have the power to allocate the fee, as Mr. Quisenberry was not a party to the arbitration, and the Court of Appeal agreed:  the allocation to Mr. Quisenberrry was in excess of the arbitrator’s powers.  However, the Court of Appeal found no basis for overturning the quantum meruit award in favor of Morris.

     Mr. Quisenberry also argued that “the award as corrected interferes with and constitutes an involuntary forfeiture of his property rights.”  But the Court of Appeal was entirely unsympathetic to that claim.  The superior court judge had earlier ruled:  “If [Mr. Quisenberry] refuses to participate in the arbitration, [he] will have little practical opportunity to provide input to the arbitrator.”  The judge called that one correctly.  The Court of Appeal pointed out that Mr. Quisenberry could have protected his rights by participating in the arbitration, or filing suit to adjudicate his rights to the attorney’s fees fund, instituting litigation to bring in all interested parties (Cal. Code Civ. Proc. section 1281(c), and seeking to stay the arbitration to resolve the dispute in a judicial forum.

      But by standing on his right not to arbitrate, “Mr. Quisenberry’s [sic] declined to opt for any of these courses of action to protect his rights.”