Watson
v. Knorr

















Filed 5/13/13 Watson v. Knorr CA6





NOT
TO BE PUBLISHED IN OFFICIAL REPORTS







California
Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or
relying on opinions not certified for publication or ordered published, except
as specified by rule 8.1115(b). This
opinion has not been certified for publication or ordered published for
purposes of rule 8.1115.





SIXTH
APPELLATE DISTRICT




>

HIROKO M. WATSON et al., Plaintiffs and Appellants, v. ANDREW P. KNORR et al., Defendants and Respondents.

H036430 (Santa Clara County Super. Ct. No. CV173828)

Plaintiffs
Hiroko M. Watson, Mary Watson, and Madeline Watson, (hereafter jointly
Plaintiffs) are the widow and daughters of decedent David Watson. Plaintiffs filed a complaint against Dr.
Andrew Knorr and the Monterey Bay Urology Associates (jointly Defendants) for href="http://www.fearnotlaw.com/">medical malpractice and wrongful death
resulting from Dr. Knorr’s treatment of David Watson. The parties subsequently stipulated to
binding contractual arbitration in accordance with the arbitration agreement
David Watson signed prior to treatment.
At arbitration, Plaintiffs were awarded $1,092,797, plus “costs in
accordance with the California Code of Civil Procedure.” Plaintiffs petitioned the court to confirm
the award; in their response, Defendants challenged the award of costs, arguing
that the arbitration agreement required the parties to bear their own
costs. The trial court corrected the
award by removing the award of costs and confirmed the award as corrected. Plaintiff moved for reconsideration (Code
Civ. Proc., § 1008),href="#_ftn1"
name="_ftnref1" title="">[1]
arguing that they were entitled to costs pursuant to Code of Civil Procedure
section 998 and prejudgment interest (Civ. Code, § 3291) because the
Defendants rejected Plaintiffs’ offer to compromise. The court denied the motion for
reconsideration. Plaintiffs appeal.

We conclude
that since the parties submitted the question of costs to arbitration, it was
for the arbitrators to determine both the entitlement to and the amount of
costs to be awarded. Since this case
does not meet any of the statutory grounds for correcting the award, the trial
court could not correct the award, by either deleting the award of costs or
determining the amount of costs, rendering the costs award a legal
nullity. We hold that Plaintiffs should
have presented their section 998 costs claim to the arbitrators and that they
forfeited their Civil Code section 3291 prejudgment interest claim by failing
to raise it in their petition to confirm the arbitration award. We conclude, however, that the trial court
improperly denied Plaintiffs their costs related to the proceedings in the
trial court (§ 1293.2) and will reverse the judgment and remand for the
purpose of awarding those costs.

Facts

I.
Medical
Treatment of Plaintiffs’ Decedent & Allegations of Malpracticehref="#_ftn2" name="_ftnref2" title="">[2]

On January 26, 2007, David Watsonhref="#_ftn3" name="_ftnref3" title="">[3]
was scheduled for a surgical procedure at the offices of the Monterey Bay
Urology Associates in Freedom, California. While attempting to insert a catheter into
David’s bladder, Dr. Knorr’s medical assistant encountered a blockage and
summoned Dr. Knorr. While attempting to
dilate the blockage, Dr. Knorr perforated David’s urethra, creating a false
passage through the prostate. Dr. Knorr
placed the catheter into the false passage and injected lidocaine into the
catheter. Lidocaine entered David’s
bloodstream. Within seconds, David
experienced convulsions and lost his airway.
Dr. Knorr was unable to resuscitate David, who died as a result of the
procedure. Plaintiffs alleged Dr. Knorr
violated the standard of care by proceeding with the surgery after discovering
the blockage and by treating the complications of lidocaine toxicity without
the proper knowledge or equipment.

II.
Terms
of Arbitration Agreement

In October
2002, David signed a physician-patient arbitration agreement (Arbitration
Agreement). The Arbitration Agreement
provides in Article 1: “Agreement to
Arbitrate: It is understood that any
dispute as to medical malpractice, . . . , will be determined by
submission to arbitration as provided by California law, and not by a lawsuit
or resort to court process except as California law provides for judicial
review of arbitration proceedings.”

Article 2
of the agreement stated that the parties intended that the “agreement bind all
parties whose claims may arise out of or relate to treatment or services
provided by the physician including any spouse or heirs of the patient and any
children,” including claims for loss of
consortium and wrongful death.

Article 3
of the agreement provides in relevant part:
“Procedures and Applicable Law:
. . . Each party shall
select an arbitrator (party arbitrator) . . . and a third party
arbitrator (neutral arbitrator) shall be selected by the arbitrators appointed
by the parties . . . .
Each party to the arbitration shall pay such party’s pro rata share of
the expenses and fees of the neutral arbitrator, together with other expenses
of the arbitration incurred or approved by the neutral arbitrator, not
including counsel fees or witness fees, or other expenses incurred by a party
for such party’s own benefit.” We shall
hereafter refer to this portion of the Arbitration Agreement as the “costs
provision.”

Article 4
of the agreement provides in relevant part:
“With respect to any matter not herein expressly provided for, the
arbitrators shall be governed by the California Code of Civil Procedure
provisions relating to arbitration.”

Procedural History

I.
Complaint,
Stipulation to Binding Arbitration, and Arbitration Award

In January
2008, Plaintiffs filed a complaint for medical malpractice and wrongful death
against Monterey Bay Urology Associates, Dr. Knorr, and Dr. Knorr’s medical
assistant in Santa Cruz County Superior Court.href="#_ftn4" name="_ftnref4" title="">[4] The complaint included a prayer for
compensatory damages and “costs of suit.”

The parties
subsequently stipulated to dismiss the complaint without prejudice, “[e]ach
side to bear their own costs and attorney’s fees,” and to proceed by way of
binding arbitration pursuant to the Arbitration Agreement. Plaintiffs selected Attorney Gary Mitchell as
their “non neutral” arbitrator and Defendants selected Attorney Jesse Ruiz as
their “non neutral” arbitrator. The
arbitrators selected retired Judge Robert Yonts to serve as the neutral
arbitrator.

On or about
March 16, 2010, Plaintiffs served a section 998 offer to compromise
(hereafter “998 offer”) on all three named Defendants jointly for $975,000.href="#_ftn5" name="_ftnref5" title="">[5] Defendants did not accept the 998 offer.

The
arbitrators conducted a hearing from May 17 through May 21, 2010. On May 24, 2010, the arbitrators issued
a “Final Award” in favor of Plaintiffs that included “$832,502 for loss of
support and loss of household services, $10,205 in funeral expenses, and
$250,000 in general damages as limited by MICRA^{[href="#_ftn6" name="_ftnref6" title="">[6]]}
for a grand total of $1,092,707.”href="#_ftn7"
name="_ftnref7" title="">[7] The arbitrators also awarded Plaintiffs
“costs in accordance with the California Code of Civil Procedure.”href="#_ftn8" name="_ftnref8" title="">[8]


II.
Petition
to Confirm Arbitration Award

In June
2010, Plaintiffs filed a petition to confirm contractual arbitration award in
Santa Clara County Superior Court. The
petition stated that “$1,092,707 & costs” were in dispute. Plaintiffs asked the court to confirm the
arbitration award, to award them interest from March 16, 2010, and to award
them their costs of suit “according to proof.”
Although March 16, 2010 was the date of the 998 offer, the petition to
confirm did not mention the 998 offer.

Plaintiffs subsequently
filed a notice of hearing and a memorandum
of points and authorities in support of their petition to confirm the
arbitration award. Plaintiffs attached a
copy of the arbitration award, argued that the award was presumed valid, and
asked the court to enter judgment in accordance with the award. Plaintiffs also filed a proposed “Judgment
Confirming Arbitration Award,” suggesting the court award “$1,092,707.00” and
“costs in the amount of $_______,” thus indicating Plaintiffs expected the
trial court to determine the amount of any costs to be awarded. These papers did not mention the 998 offer,
Defendants’ rejection of the offer, or that the amount awarded at arbitration
exceeded the amount of the 998 offer; they were also silent regarding
pre-judgment interest.

Defendants
opposed the petition to confirm the arbitration award, arguing that any award
of costs must be denied because the parties had expressly agreed in the
Arbitration Agreement, which contained language that was virtually identical to
that of section 1284.2, to bear their own costs and to split the costs of
the neutral arbitrator and that the court lacked jurisdiction over Plaintiffs’
request for costs. Defendants argued the
arbitrators’ award of costs was “not consistent with” the terms of the
Arbitration Agreement and therefore a legal nullity. Defendants noted that Plaintiffs had
requested an unspecified amount in costs, had not filed a memorandum of costs,
and had not requested costs in their arbitration brief.

In reply,
Plaintiffs argued that arbitrators have the authority to fashion relief they
consider just and fair under the circumstances, including an award of
costs. They argued that the Arbitration
Agreement only specified how the neutral arbitrator was to be paid and that
nothing therein prohibited an award of costs.
Plaintiffs argued they were “[e]ntitled to their costs of suit pursuant
to the arbitration award,” but also
asserted that “all issues regarding entitlement to costs and the amount of
recoverable costs are to be determined by the arbitrator.” Plaintiffs’ reply did not mention the 998
offer or pre-judgment interest.

The day
before the hearing on the petition to confirm the arbitration award, the court
issued a tentative ruling, stating that the petition was “GRANTED, each side to
bear their own costs pursuant to the arbitration agreement.” In effect, the court corrected the award by
deleting the award of costs and confirmed the award as corrected. (§ 1286.6.) Neither side contested the tentative ruling
and it became the order of the court.

III.
Plaintiffs’
Memorandum of Costs & Motion for Reconsideration

The day
after the hearing on the petition to confirm the arbitration award, Plaintiffs
filed a memorandum of costs, claiming $66,120.46 in costs, which included $715
for filing and motions fees; $13,361.05 for deposition costs; $32,639.34 for
expert witness fees; $7,652 for Plaintiffs’ non neutral arbitrator; $10,884 for
the neutral arbitrator; and other costs.

Two days
later, Plaintiffs filed a “Motion to Determine Amount of Judgment, Costs and
Interest Thereon and Motion for Reconsideration of Court’s Order Re: Costs”
(§ 1008). In the motion,
Plaintiffs’ counsel stated that due to “inadvertence and excusable neglect and
because this matter was denominated a petition, the normal procedures regarding
law and motion matters were not followed,” that he “inadvertently neglected to
calendar the tentative ruling,” and that he therefore failed to call to contest
the tentative ruling. Plaintiffs argued
that they were entitled to costs pursuant to section 998, subdivision (d),
and pre-judgment interest pursuant to section 3291. Plaintiffs argued that since the Arbitration
Agreement was silent regarding 998 offers to compromise, the arbitrators had
the discretion to award costs under section 998, subdivision (d). Plaintiffs asserted that neither the
Arbitration Agreement nor section 1284.2 prohibited an award of costs and
that both case law and the rules of court recognize that such awards are within
the arbitrator’s jurisdictional authority.

While the
motion for reconsideration was pending, Defendants filed a motion to tax costs,
arguing that Plaintiffs were precluded from recovering costs by the court’s
prior order and by the Arbitration Agreement.
Defendants asked for an opportunity to present supplemental briefing
should the court grant reconsideration.

Defendants
also opposed the motion for reconsideration, arguing that it should be denied
because there were no new facts, circumstances, or law that justified
reconsideration. Defendants argued that
to prevail on a motion for reconsideration, the moving party must present some
fact or circumstance not previously considered and a valid reason for not
offering it earlier. Defendants argued
that the 998 offer, Defendants’ failure to accept the offer, and the rendition
of an arbitration award that exceeded the 998 offer were not new facts, since
Plaintiffs knew about them before filing their petition to confirm the arbitration
award, and that Plaintiffs had failed to provide a satisfactory explanation for
failing to present this information at the last hearing. Defendants argued that reconsideration could
not be granted based on counsel’s claim that he did not intend to waive oral
argument, since that was not a new matter.
They asserted that although parties to an arbitration may generally
recover costs under section 998, that rule does not apply here because the
parties contractually agreed to bear their own costs. Defendants argued that Plaintiffs were not
entitled to pre-judgment interest because the arbitrators did not award
interest and that Plaintiffs were trying to augment the award beyond the
amounts awarded by the arbitrators.

In reply,
Plaintiffs argued that the motion for reconsideration was based on facts and
legal authority the court had not considered before and that the court had the
power to reconsider its ruling any time prior to entry of judgment.

The court
denied the motion for reconsideration, reasoning that Plaintiffs had not shown
good cause.href="#_ftn9" name="_ftnref9"
title="">>[9] The court subsequently entered a “Judgment
Confirming Arbitration Award” for Plaintiffs for $1,092,707. The judgment stated: “The arbitrator’s award of costs to
[Plaintiffs] is disallowed pursuant to Article 3” of the Arbitration
Agreement. The record does not contain a
separate order on Defendants’ motion to tax costs. Plaintiffs appeal.



Discussion

I.
General
Principles Regarding Arbitration

California’s
Arbitration Act, sections 1280 through 1294.2, set forth a comprehensive
statutory scheme governing private arbitration in this state, including
contractual arbitrations. (>Corona v. Amherst Partners (2003) 107
Cal.App.4th 701, 704-705 (Corona),
citing Moncharsh v. Heily & Blase
(1992) 3 Cal.4th 1, 9 (Moncharsh).) These statutes reflect “ ‘a strong
public policy in favor of arbitration as a speedy and relatively inexpensive
means of dispute resolution.’ ” (Moncharsh,> supra, at p. 9.) Consequently, courts will “ ‘indulge
every intendment to give effect to such proceedings.’ ” ’ (Ibid.)

As the
court explained in Cable Connection, Inc.
v. DIRECTV, Inc. (2008) 44 Cal.4th 1334 (Cable Connection), “Moncharsh
began from the premise that ‘ “[t]he scope of arbitration is
. . . a matter of agreement between the parties” [citation], and
“ ‘[t]he powers of an arbitrator are limited and circumscribed by the
agreement or stipulation of submission.’ ”
[Citation.]’ [Citation.] ‘ “The policy of the law in recognizing
arbitration agreements and in providing by statute for their enforcement is to
encourage persons who wish to avoid delays incident to a civil action to obtain
an adjustment of their differences by a tribunal of their own choosing.” [Citation.]’
[Citation.] ‘Because the decision
to arbitrate grievances evinces the parties’ intent to bypass the judicial
system and thus avoid potential delays at the trial and appellate levels,
arbitral finality is a core component of the parties’ agreement to submit to
arbitration. Thus, an arbitration
decision is final and conclusive because
the parties have agreed that it be so.
By ensuring that an arbitrator’s decision is final and binding, courts
simply assure that the parties receive the benefit of their
bargain.’ ” (Id. at p. 1355, quoting Moncharsh,
supra, 3 Cal.4th at pp. 8-10.)

“ ‘Moreover,
“[a]rbitrators, unless specifically required to act in conformity with rules of
law, may base their decision upon broad principles of justice and equity, and
in doing so may expressly or impliedly reject a claim that a party might
successfully have asserted in a judicial action.” [Citations.]’
[Citation.] ‘Thus, both because
it vindicates the intentions of the parties that the award be final, and
because an arbitrator is not ordinarily constrained to decide according to the
rule of law, it is the general rule that, “The merits of the controversy
between the parties are not subject to judicial review.”
[Citations.]’ ” (>Cable Connection, supra, 44 Cal.4th at p. 1355, quoting Moncharsh supra, 3
Cal.4th at pp. 10-11.) The court’s
“reasoning in Moncharsh centered not
on statutory restriction of the parties’ contractual options, but on the
parties’ intent and the powers of the arbitrators as defined in the
agreement.” (Ibid.)

By
contracting for binding arbitration, the parties agreed to determine their
dispute “ ‘without necessity for any contact with the courts.’ ” (>Moncharsh, supra, 3 Cal.4th at p. 9.)
“Arbitrators do not exceed the scope of their authority because they
erroneously decide a contested issue of fact or law; the parties’ expectation
of finality from a binding arbitration requires that ‘judicial intervention in
the arbitration process be minimized.’ (>Moncharsh v. Heily & Blase, supra,
3 Cal. 4th at p. 10.) To avoid the extra
delay, uncertainty, and costs of judicial review, we refrain from substituting
our judgment for the arbitrator’s; in close cases, the award must stand.” (Caro
v. Smith (1997) 59 Cal.App.4th 725, 734-735 (Caro).)

In >Moncharsh, the California Supreme Court
“held judicial review of private, binding arbitration awards is generally
limited to the statutory grounds for vacating (§ 1286.2) or correcting (§
1286.6) an award” and “rejected the view that a court may vacate or correct the
award because of the arbitrator’s legal or factual error, even an error
appearing on the face of the award.” (>Moshonov v. Walsh (2000) 22 Cal.4th 771,
775 (Moshonov), citing >Moncharsh, supra, 3 Cal.4th at pp. 8-28.)


“Where
parties have agreed to submit their dispute to private arbitration, the scope
of the arbitration and the powers of the arbitrator are defined in accordance
with the agreement. (>Moncharsh, supra, 3 Cal.4th at pp. 8-9.)
However, this does not mean that the parties to a private arbitration
must specify every detail, characteristic and consequence of the proceeding
they contemplate. (Vandenberg v. Superior Court (1999) 21 Cal.4th 815, 831 (>Vandenberg).) Rather the statutory scheme sets forth the
basic parameters of such proceedings unless the parties specifically agree
otherwise; such parameters include limited judicial review of the arbitration
award. (Ibid., citing Code Civ. Proc., §§ 1286.2, 1286.6 and >Moncharsh, supra, 3 Cal.4th at pp. 8-33 [finding statutory grounds for
judicial review exclusive].)” (>Corona, supra, 107 Cal.App.4th at p. 705.)

II.
Standard
of Review

Our review
is from the superior court’s judgment on the order confirming the arbitration
award, not the arbitration award itself.
Accordingly, we review the court’s judgment de novo. (Advanced
Micro Devices, Inc. v. Intel Corp. (1994) 9 Cal.4th 362, 376, fn. 9 (>Advanced Micro Devices); see also >Toal v. Tardif (2009) 178 Cal.App.4th
1208, 1217.)

“It is well settled that the scope of judicial
review of arbitration awards is extremely narrow.” (California Faculty Assn. v. Superior Court
(1998) 63 Cal.App.4th 935, 943; accord, City of Palo Alto v. Service Employees
Internat. Union 1999) 77
Cal.App.4th 327, 333 (City of Palo Alto).) “Courts may not review the merits of the
controversy, the sufficiency of the evidence supporting the award, or the
validity of the arbitrator’s reasoning.”
(DPA v. CCPOA (2007) 152
Cal.App.4th 1193, 1200; Harris v.
Sandro (2002) 96 Cal.App.4th 1310, 1313.) Judicial review is
limited to “those cases in which there exists a statutory ground to vacate or
correct the award.” (>Moncharsh, supra, 3 Cal.4th at p. 28;
see §§ 1286.2 [grounds for vacating arbitration award], 1286.6 [grounds
for correcting arbitration award].) In
the absence of “a clear expression of illegality or public policy
undermining [the] strong presumption in favor of private arbitration, an
arbitral award should ordinarily stand immune from judicial scrutiny.” (Moncharsh, supra, at p. 32.) “The normal rule of limited
judicial review cannot be avoided except in those rare cases where ‘according
finality to the arbitrator’s decision would be incompatible with the protection
of a statutory right’ or where the award contravenes ‘an explicit legislative
expression of public policy.’ ” (City
of Palo Alto, supra, 77
Cal.App.4th at p. 334, quoting Moncharsh, supra, at pp. 32-33.)

We review the trial court’s
order on a motion for reconsideration under the abuse of discretion
standard. (Lucas v. Santa Maria Pub. Airport Dist. (1995) 39
Cal.App.4th 1017, 1027 (Lucas).)

With these
general principles and our standards of
review in mind, we examine the trial court’s orders (1) correcting and
confirming the arbitration award; and (2) on the motion for
reconsideration. We shall divide our
analysis into three sections, according to the claims at issue: (1) costs of the arbitration proceedings,
including costs recoverable as a penalty under section 998; (2) prejudgment
interest under Civil Code section 3291; and (3) costs of
arbitration-related proceedings in the trial court (§ 1293.2). We also address Defendants’ contention that
Plaintiffs have forfeited their claims on appeal and the propriety of the
court’s order on the motion for reconsideration.

III.
Costs
of the Arbitration Proceedings

Plaintiffs
attack the trial court’s order on their petition to confirm the arbitration
award on both procedural and substantive grounds. Procedurally, Plaintiffs contend that the
court “corrected the award without the proper procedures having been followed,”
arguing that Defendants never requested that the award be corrected as required
by section 1286.8. On the merits,
Plaintiffs contend that the Arbitration Agreement did not preclude the award of
costs. Defendants contend the court did
not have the authority to “correct” the award as requested by Plaintiffs and
thereby determine the amount of costs to be awarded. They also contend that under the terms of the
Arbitration Agreement, which are virtually identical to those of section 1284.2,
Plaintiffs were required to bear their own costs and share the costs of the
neutral arbitrator.

A.
Plaintiffs’ Procedural Challenge

“Any party
to an arbitration in which an award has been made may petition the court to
confirm, correct or vacate the award.”
(§ 1285.) A response to a
section 1285 petition may ask “the court to dismiss the petition or to confirm,
correct or vacate the award.”
(§ 1285.2) After a section
1285 petition is filed, the court has only four options: it may (1) confirm the award; (2) correct the
award and confirm it as corrected; (3) vacate the award; or (4) dismiss the
petition. (§§ 1285, 1285.2, 1286.)

Plaintiffs
asked the court to confirm the arbitration award, including the award of costs,
to award them interest from March 16, 2010, and to award them costs of suit
according to proof. As we have noted,
Plaintiffs contend the court “corrected the award without the proper procedures
having been followed” because Defendants never requested that the award be
corrected.

Section
1286.8 states the procedural prerequisites for correcting an arbitration
award. It provides: “The court may not correct an award
unless: [¶] (a) A petition or response requesting that the award be corrected has been duly
served and filed; or [¶] (b) A petition or response requesting
that the award be vacated has been duly served and filed and; [¶]
(1) All petitioners and respondents are before the court; or [¶]
(2) All petitioners and respondents have been given reasonable
notice that the court will be requested at the hearing to correct the award
. . . and all petitioners and respondents have been given an
opportunity to show why the award should not be corrected.” (Italics added.)

Although
neither side filed a paper denominated “petition to correct arbitration award,”
Defendants did file “opposition” to the petition to confirm. Defendants’ opposition argued that the
arbitrator’s award of costs was a legal nullity because it was contrary to the
terms of the Arbitration Agreement, and asked the court to strike the costs
award and to “deny” Plaintiffs’ petition to “confirm the award with the
ordinary costs augmentations.” Although
not labeled as such, Defendants’ opposition was a “response” within the meaning
of section 1286.8. And although
Defendants did not expressly ask the court to “correct” the award, their
request to strike the allegedly improper costs award was, in effect, a request
to correct the award. Plaintiffs do not
contend that any of the other procedural requirements of section 1286.8 were
not met and we perceive no error in that regard. For these reasons, we reject Plaintiffs’
contention that this case did not meet the procedural requirements of section
1286.8 for correcting the arbitration award.

B.
Were There Statutory Grounds for Correcting the
Award?

Section
1286.6 sets forth three statutory grounds for correcting an arbitration
award. It provides, subject to the
procedural requirements in section 1286.8, “the court, unless it vacates the
award pursuant to Section 1286.2, shall correct the award and confirm it as corrected
if the court determines that: [¶] (a) There was an evident miscalculation
of figures or an evident mistake in the description of any person, thing or
property referred to in the award;
[¶] (b) The arbitrators
exceeded their powers but the award may be corrected without affecting the
merits of the decision upon the controversy submitted; or [¶]
(c) The award is imperfect in a matter of form, not affecting the
merits of the controversy.”

Although
Defendants asked the trial court to correct the arbitration award by striking
the costs award, they did not cite or rely on section 1286.6 in their response
below. Defendants argued that both the
arbitrators and the court lacked jurisdiction to award costs because the
Arbitration Agreement specifically provided for a costs allocation. They argued that “the court [could] not do
what the arbitrators had attempted to do, make an award of costs not consistent
with the terms of the agreement” and that Plaintiffs’ proposed judgment sought
“substantive modifications of the final award.”
But rather than discuss the court’s authority to correct an award under
section 1286.6, Defendants cited section 436, subdivision (b),href="#_ftn10" name="_ftnref10" title="">[10]
and argued that the costs portion of the award should be stricken “on the
grounds that it was not filed in conformity with the law.” Defendants’ reliance on section 436 was
misplaced since that section states the grounds for a motion to strike a
pleading in a court action and has nothing to do with arbitration.

On appeal,
Defendants argue that although Plaintiffs “styled” their petition as a petition
to confirm the award, Plaintiffs essentially sought correction of the award by
asking the court to award ordinary costs and then on reconsideration “by asking
the court to add section 998 enhanced costs and section 3291 interest not
awarded by the panel.” Case law supports
this characterization of the petition. (>Maaso v. Signer (2012) 203
Cal.App.4th 362, 378 (Maaso).) Defendants assert the court “had no
authority” to make the correction Plaintiffs requested since none of the
grounds for correcting the award in section 1286.6 apply. But Defendants do not discuss whether or how
their request that the court correct the arbitration award by deleting the award
of costs fits the statutory grounds for correcting an award.

While the
arbitrators determined Plaintiffs’ entitlement to costs, they did not determine
the amount of costs to be awarded or the reasonableness of Plaintiffs’ costs
claim. And as we shall explain, although
the record supports the conclusion that the issue of costs was submitted to
arbitration, the record on appeal does not contain any information regarding
the evidence or argument presented at arbitration, other than a copy of
Plaintiffs’ arbitration brief, which is silent regarding costs. In addition both parties’ supplemental briefs
state that Plaintiffs never advised the arbitrators of the 998 offer. On this record, we conclude that both sides
asked the court to correct the arbitration award. Defendants asked the court to strike the
costs award in its entirety, arguing that it was not authorized by the
Arbitration Agreement; Plaintiffs asked the court to correct the award by
determining the amount of costs awarded.

We return
to the question whether this case fits any of the statutory grounds for
correcting the award. The parties’
briefs provide no guidance. Plaintiffs
do not discuss section 1286.6 at all and, as we have noted, Defendants argue that
none of the grounds in section 1286.6 apply.
The only ground that arguablyhref="#_ftn11" name="_ftnref11" title="">[11]
applies is in subdivision (b), which provides that the court may correct the
award if “[t]he arbitrators exceeded their powers but the award may be
corrected without affecting the merits of the decision upon the controversy
submitted.” (§ 1286.6, subd.
(b).) We, therefore, determine whether
the arbitrators have exceeded their powers.

“When
parties contract to resolve their disputes by private arbitration, their
agreement ordinarily contemplates that the arbitrator will have the power to
decide any question of contract interpretation, historical fact or general law
necessary, in the arbitrator’s understanding of the case, to reach a
decision. [Citations.] Inherent in that power is the possibility the
arbitrator may err in deciding some aspect of the case. Arbitrators do not
ordinarily exceed their contractually created powers simply by reaching an erroneous
conclusion on a contested issue of law or fact, and arbitral awards may not
ordinarily be vacated because of such error, for ‘ “[t]he arbitrator’s
resolution of these issues is what the parties bargained for in the arbitration
agreement.” ’ [Citations.]” (Gueyffier
v. Ann Summers, Ltd. (2008) 43 Cal.4th 1179, 1184 (Gueyffier).)

“[A]rbitrators
do not ‘exceed[] their powers’ within the meaning of section 1286.2,
subdivision (d) and section 1286.6, subdivision (b) merely by rendering an
erroneous decision on a legal or factual issue, so long as the issue was within
the scope of the controversy submitted to the arbitrators. ‘The arbitrator’s resolution of these issues
is what the parties bargained for in the arbitration agreement.’ ” (Moshonov,
supra, 22 Cal.4th at
pp. 775-776, quoting Moncharsh, >supra, 3 Cal.4th at p. 28.)

>Moshonov is instructive. The dispute in >Moshonov, which arose out of a real estate
purchase, was submitted to binding arbitration.
“The arbitrator found for [the] defendants, the sellers. Although the real estate purchase agreement
contained a clause providing for reasonable attorney fees to the prevailing
party in an ‘arbitration or suit . . . brought to enforce the terms
of this contract . . .’ and although the arbitrator found [the]
defendants were the prevailing parties . . . , the arbitrator
refused to award [the] defendants any fees, reasoning that the contractual
attorney fees clause was not broad enough to encompass the claims against [the]
defendants, claims the arbitrator found were noncontractual in nature. [¶]
The superior court denied [the] defendants’ motion to correct the award
(Code Civ. Proc., § 1286.6) to include an award of attorney fees; the Court of
Appeal affirmed.” (Moshonov, supra, 22
Cal.4th at p. 773, fn. omitted.)
The Supreme Court concluded that the lower courts were correct. The court explained that “where an
arbitrator’s denial of fees to a prevailing party rests on the arbitrator’s
interpretation of a contractual provision within the scope of the issues
submitted for binding arbitration, the arbitrator has not ‘exceeded [his or
her] powers’ ” within the meaning of sections 1286.6, subdivision (b) and
1286.2. (Ibid.) The court held that
“under the principle of arbitral finality as explained in Moncharsh, the arbitrator’s award . . . could not be
judicially corrected to award [the] defendants their attorney fees.” (Id.
at p. 776.) The court noted that
all parties had prayed for fees in their various pleadings and that the parties
had submitted “ ‘this matter’ ” to binding arbitration, “without any
pertinent limitation on the issues to be arbitrated.” (Ibid.,
fn. omitted.) Under the rules of arbitration
the parties agreed to, the arbitrator was empowered to “ ‘determine all
issues properly raised by the pleadings, including a determination of any
damages and an award of costs if appropriate,’ ” and “ ‘to award
costs, not to exceed the statutory costs of the suit.’ ” (Ibid.) The
court held, “[u]nder these circumstances, the arbitrator had the power to
decide the entire matter of recovery of attorney fees. The recovery or nonrecovery of fees being one
of the ‘contested issues of law and fact submitted to the arbitrator for
decision’ [citation], the arbitrator’s decision was final and could not be
judicially reviewed for error.” (>Ibid.)

C.
Was the Issue of Costs Submitted to Arbitration?

We
determine whether the issue of costs was within the scope of the controversy
submitted to the arbitrators by reviewing Plaintiffs’ complaint, the
stipulation to arbitration, the arbitration agreement, and any arbitration
rules the parties may have agreed to. (>Moshonov, supra, 22 Cal.4th at pp. 776-777.)

In their Judicial
Council form complaint, Plaintiffs prayed “for judgment, for costs of suit, for such relief as is fair, just, and
equitable.” (Italics added.) And in their stipulation to binding
arbitration, the parties identified the complaint by its title and number and
agreed to submit “this matter” to binding arbitration without any limitation on
the issues to be arbitrated. Thus, the
stipulation encompassed all matters placed at issue by the complaint, including
costs. (See Moshonov, supra, 22
Cal.4th at p. 776.) In addition,
nothing in the Arbitration Agreement preclude submitting the issue of costs to
arbitration.

We also
consider any rules the parties may have agreed to. For example, in Moshonov, the parties agreed to arbitrate their dispute in accordance
with the rules applicable to judicial
arbitration and the court relied on those rules in its analysis. (Moshonov,
supra, 22 Cal.4th at p. 776.) Other
cases have relied on the rules of the American Arbitration Association (AAA) or
other arbitral forums. (See e.g., >Advanced Micro Devices, >supra, 9 Cal.4th at pp. 368, 383
[parties agreed to their own rules for the arbitration, some of which were
based on AAA Commercial Arbitration rules]; Gravillis
v. Coldwell Banker Residential Brokerage Co. (2010) 182
Cal.App.4th 503, 510, 520 [ADR Service, Inc. rules]; Bosworth v. Whitmore (2006) 135 Cal.App.4th 536, 542 & fn. 4 (>Bosworth) [AAA Construction Industry
Arbitration rules]; Gutierrez v.
Autowest, Inc. (2003) 114 Cal.App.4th 77, 99 [AAA rules].)href="#_ftn12" name="_ftnref12" title="">[12]

Although
the record indicates the neutral arbitrator was a member of the Judicial
Arbitration and Mediation Services (JAMS), the record is silent regarding the
rules, if any, the parties may have agreed would govern their arbitration. On our own motion, we have taken judicial
notice of the JAMS rules in effect at the time of the arbitration. (Evid. Code, § 452, sub. (h); >Bosworth, supra, 135 Cal.App.4th at p. 542, fn. 4.) JAMS rule 24 governs awards; it provides in
relevant part: “(g) The Award of the
Arbitrator may allocate attorneys’ fees
and expenses and interest (at such rate and from such
date as the Arbitrator may deem appropriate) if provided by the Parties’ agreement or allowed by
applicable law.” (JAMS Rules Archive at

(as of May 1, 2013) (JAMS Rules).) As we
shall explain, applicable law allows for an award of costs in this case.

Based on
the complaint, the stipulation to arbitration, the Arbitration Agreement, and
the applicable arbitration rules, we conclude that the issue of costs was
submitted to the arbitrators for decision.


D.
Did the Arbitrators Exceed Their Powers?

“Absent an
express and unambiguous limitation in the contract or the submission to
arbitration, an arbitrator has the authority to find the facts, interpret the
contract, and award any relief rationally related to his or her factual
findings and contractual interpretation.”
(Gueyffier, supra, 43 Cal.4th
1179, 1182.) “An exception to the
general rule assigning broad powers to the arbitrators arises when the parties
have, in either the contract or an agreed submission to arbitration, explicitly
and unambiguously limited those powers.
(Advanced Micro Devices, >supra, 9 Cal.4th at pp. 375–376,
383.) ‘The powers of an arbitrator
derive from, and are limited by, the agreement to arbitrate. [Citation.]
Awards in excess of those powers may, under sections 1286.2 and 1286.6,
be corrected or vacated by the court.’ (>Id. at p. 375.)” (Id.
at p. 1185.)

To “take
themselves out of the general rule that the merits of the award are not subject
to judicial review, the parties must clearly agree that legal errors are an
excess of arbitral authority that is reviewable by the courts.” (Cable
Connection, supra, 44 Cal. 4th at
p. 1361.) For example, the arbitration
clause in Cable Connection provided
that “[t]he arbitrators shall not have the power to commit errors of law or
legal reasoning, and the award may be vacated or corrected on appeal to a court
of competent jurisdiction for any such error.”
(Id. at p. 1361, fn.
20.) The court held this clause both
deprived the arbitrators of the power to commit legal error and provided for
judicial review of such error. (>Id. at p. 1361.) The court did not decide whether one or the
other of these factors alone, or some different formulation, would be
sufficient to confer an expanded scope of review, but cautioned that “parties
seeking to allow judicial review of the merits, and to avoid an additional
dispute over the scope of review, would be well advised to provide for that
review explicitly and unambiguously.” (>Ibid.)


Unlike the
agreement in Cable Connection, the
Arbitration Agreement does not contain any provision that explicitly provides
that legal errors are in excess of the arbitrator’s authority and therefore
reviewable by the court. The parties
agreed instead that “any dispute as to medical malpractice . . . will
be determined by submission to arbitration as provided by California law, and
not by a lawsuit or resort to court process except as California law provides
for judicial review of arbitration proceedings.”

>Moshonov discussed DiMarco v. Chaney (1995) 31 Cal.App.4th 1809 (DiMarco), in which the Court of Appeal concluded that the arbitrator
exceeded his powers under section 1286.6 by denying attorney fees to the
prevailing party where the contract provided that “ ‘the prevailing party >shall be entitled to reasonable fees and
costs.’ ” (Moshonov, supra, 22
Cal.4th at pp. 778-779.) In
response to argument that DiMarco was
wrongly decided, Moshonov
distinguished DiMarco and explained
that the appellate court in DiMarco
“found no interpretation of the fees clause, express or implied in the
arbitrator’s decision, according to which the defendant would not have been
entitled to her fees; rather, the court concluded the arbitrator’s denial of
fees to the prevailing party . . . , based solely on the
arbitrator’s belief he had discretion to do so, conflicted with the explicit
and mandatory terms of the agreement, which provided that the prevailing party
in an action arising from the agreement ‘shall’ recover fees.” (Moshonov,
supra, at p. 779.) In contrast,
the arbitrator in Moshonov “expressly
based her decision on an interpretation of the contractual fees clause,
according to which the clause did not apply to the action at hand. Interpretation of the contract underlying
[the] dispute being within the matter submitted to arbitration, such an
interpretation could amount, at most, to an error of law on a submitted issue,
which . . . is not in excess of the arbitrator’s powers within the
meaning of sections 1286.2 and 1286.6.”
(Moshonov, >supra, at p. 779, citing >Moncharsh, supra, 3 Cal. 4th at p. 28.)
Because the disputed issue of contractual interpretation in >Moshonov “was committed to final
adjudication by the arbitrator, rather than the courts,” the court declined,
“to consider the issue’s merits,” reasoning that “[r]egardless of whether the
arbitrator’s contractual interpretation and related ruling denying fees was
legally correct, it was final and binding by agreement of the parties.” (Ibid.) As the court stated in Moore v. First Bank of San Luis Obispo (2000) 22 Cal.4th 782,
787, the companion case to Moshonov,
“Having submitted the fees issue to arbitration, plaintiffs cannot maintain the
arbitrators exceeded their powers, within the meaning of section 1286.6,
subdivision (b), by deciding it, even if they decided it incorrectly.”

The parties
do not discuss Moshonov and
Defendants cite DiMarco for another
proposition. Applying >Moshonov, we determine whether the
arbitrators’ award of costs “in accordance with the California Code of Civil
Procedure” “conflicted with the explicit and mandatory terms” of the costs
provision or whether the costs provision is subject to an interpretation,
“express or implied in the arbitrator’s decision” according to which Plaintiffs
would have been entitled to costs. (>Moshonov, at p. 779.) If the latter, then the arbitrators have not
exceeded their authority and the award of costs is not subject to correction by
the trial court.

The parties
dispute the meaning of the costs provision, which provides: “Each party to the arbitration shall pay such
party’s pro rata share of the expenses and fees of the neutral arbitrator,
together with other expenses of the arbitration incurred or approved by the
neutral arbitrator, not including counsel fees or witness fees, or other
expenses incurred by a party for such party’s own benefit.” Plaintiffs contend “the clause is simply a
directive as to how the neutral arbitrator gets paid, not a post-award
prohibition against cost allocation” and argue that it does not preclude an
award of costs. Defendants argue the
costs provision required the parties to share the costs of the neutral
arbitrator and otherwise bear their own costs and that it precluded both the
arbitrators and the court from awarding costs.

As the
parties observe, the costs provision is in harmony with section 1284.2 of our
state arbitration act, which provides:
“Unless the arbitration agreement otherwise provides or the parties to
the arbitration otherwise agree, each
party to the arbitration shall pay his pro rata share of the expenses and fees
of the neutral arbitrator, together with other expenses of the arbitration
incurred or approved by the neutral arbitrator, not including counsel fees or
witness fees or other expenses incurred by a party for his own benefit.” (Italics added.)href="#_ftn13" name="_ftnref13" title="">[13]


In
supplemental letter briefs, both sides discuss Maaso, supra, 203 Cal.App.4th 362, a medical malpractice action
that was submitted to arbitration pursuant to a written arbitration
agreement. The arbitration agreement in >Maaso contained the costs provision at
issue this case. (Id. at p. 367.) The >Maaso court did not interpret the costs
provision, except to note that the language therein is “nearly identical” to
section 1284.2 (Id. at p. 367, fn. 1.)

“As a
general rule, ‘ “all applicable laws in existence when an agreement is
made, which laws the parties are presumed to know and to have had in mind,
necessarily enter into the contract and form a part of it, without any
stipulation to that effect, as if they were expressly referred to and
incorporated.” ’ [Citation.] However, laws enacted subsequent to the
execution of an agreement are not ordinarily deemed to become part of the
agreement unless its language clearly indicates this to have been the intention
of the parties.” (Swenson v. File (1970) 3 Cal.3d 389, 393.) “As a general rule of construction, the
parties are presumed to know and to have had in mind all applicable laws extant
when an agreement
is made. These existing laws are
considered part of the contract just as if they were expressly referred to and
incorporated.” (Miracle Auto Center v. Superior Court (1998) 68 Cal.App.4th 818,
821.)

As we have
noted, the language of the costs provision tracks the wording of section
1284.2. When David Watson signed the
Arbitration Agreement in 2002, case law interpreted section 1284.2 as requiring
each side in a contractual arbitration to bear its own costs of the
arbitration, absent an agreement that provides otherwise. In Austin
v. Allstate Insurance Co. (1993) 16 Cal.App.4th 1812 (Austin), the court held that section 1284.2 “sets forth the
legislative policy of this state that arbitration costs are to be borne by the
party incurring them,” thus, “requiring parties to bear their own costs in
arbitration,” “unless the arbitration agreement provides otherwise.” (Id.
at pp. 1815, 1817; accord Turner v.
Superior Court (1998) 67 Cal.App.4th 1432, 1438 [citing § 1284.2
& Austin]; see also Woodard
v. Southern Cal. Permanente Medical Group (1985) 171 Cal.App.3d 656, 664 (>Woodard) [§ 1284.2 “excludes the
costs of suit available to the prevailing party in the superior court pursuant
to section 1032,^{[href="#_ftn14"
name="_ftnref14" title="">[14]]}
by expressly excluding counsel and witness fees and other expenses
incurred by a party for his/her own benefit]; Dickinson v. Kaiser Foundation Hospitals (1980) 112 Cal.App.3d 952,
954 [affirming trial court order that refused to correct arbitration award that
required each party to bear its own costs, reasoning that section 1284.2
required the appellant to bear his own costs and that section 1032 applied to
actions in the superior court, not arbitration].) In accordance with this authority, the
arbitrators could have interpreted the costs provision as requiring each side
to bear its own costs, except for costs related to or authorized by the neutral
arbitrator.

But was
that requirement mandatory? Or was the
costs provision, which was to be interpreted by the arbitrators, subject to
another interpretation, express or implied, according to which Plaintiffs would
have been entitled to costs? (>Moshonov, supra, 22 Cal.4th at p. 779.)
As we shall explain, the answer to the second question is “yes.”

The
arbitration award expressly allowed “costs in accordance with the California
Code of Civil Procedure.” Defendants
argue that this means section 1284.2 and since that code section provides that
each party will bear its own costs, the trial court did not have the power to
augment the award “with a host of costs that were inconsistent with the terms
of the agreement.” Plaintiffs argue that
costs are recoverable under a number of statutes, including section 998.

Section 998
provides in relevant part: “(a) The
costs allowed under Sections 1031 and 1032 shall be withheld or augmented as
provided in this section. [¶] (b) Not less than 10 days prior to
commencement of trial or arbitration (as
provided in Section 1281 or 1295)^{[href="#_ftn15" name="_ftnref15" title="">[15]]}> of a dispute to be resolved by arbitration,
any party may serve an offer in writing upon any other party to the action to
allow judgment to be taken or an award to be entered in accordance with the
terms and conditions stated at that time. . . . [¶]
(1) If the offer is accepted, the offer with proof of acceptance
shall be filed and the clerk or the judge shall enter judgment
accordingly. In the case of an arbitration, the offer with proof of acceptance shall
be filed with the arbitrator or arbitrators who shall promptly render an award
accordingly. [¶] (2) If the offer is not accepted prior
to trial or arbitration or within 30
days after it is made, whichever occurs first, it shall be deemed withdrawn,
and cannot be given in evidence upon the trial or arbitration. [¶] . . .
[¶] (d) If an offer made by a
plaintiff is not accepted and the defendant fails to obtain a more favorable
judgment or award in any action or
proceeding other than an eminent domain action, the court or arbitrator, in its discretion, may require the defendant to pay
a reasonable sum to cover postoffer costs of the services of expert witnesses,
who are not regular employees of any party, actually incurred and reasonably
necessary in either, or both, preparation for trial or arbitration, or during trial or
arbitration, of the case by the plaintiff, in addition to plaintiff’s
costs.” (Italics added.) The references to arbitration and arbitrators
were added to section 998 in 1997. (>Pilimai v. Farmers Ins. Exchange Co.
(2006) 39 Cal.4th 133, 139 (Pilimai),
citing Stats. 1997, ch. 892, § 1.)

Does the
costs provision, which uses the language of section 1284.2, preclude an award
of section 998 costs? The Supreme Court
addressed the interplay between sections 1284.2 and 998 in Pilimai, supra, 39
Cal.4th 133, 136, an appeal from an order confirming an arbitration award
in an uninsured motorist arbitration.
One of the issues in Pilimai
was whether the costs shifting provisions in section 998 apply to uninsured
motorist arbitrations. (>Ibid.)
Citing section 1284.2 and Austin,
supra, 16 Cal.App.4th 1812, the
respondent insurer in Pilimai argued
that such costs were not allowable under section 1284.2. (Pilimai,
supra, 39 Cal.4th at p. 148.)
The Supreme Court did not overrule Austin,
but concluded that it was “distinguishable from [Pilimai] inasmuch as [Austin]
concerned an award of costs pursuant to . . . section 1032” and >Pilimai concerned “costs awarded
pursuant to . . . section 998, which now authorizes the award of
costs after an arbitration.” (>Id. at p. 149.) The court held that “once the conditions of
Code of Civil Procedure section 998 are met, a defendant may be required to pay
expert witness fees incurred during arbitration,” as well as “those costs
available under . . . section 1032, as enumerated in
. . . section 1033.5” because the language of section 998,
subdivision (d) requires “ ‘the defendant to pay a reasonable sum to cover
[postoffer] costs of the services of expert witnesses, . . . ,
in addition to plaintiff’s costs.’ ”
(Id. at pp. 149-150.)

The court
stated, “Moreover, all that . . . section 1284.2 says about the kinds
of costs at issue here—‘expenses incurred by a party for his own benefit’—is
that such costs are not to be included in the costs that the parties are to
share. Thus, . . . section
1284.2 does not conflict with . . . section 998, subdivision (d)’s
authorization of arbitration plaintiffs under appropriate conditions to obtain
costs incurred for their own benefit.
And while it is true, as the Austin
court observed, that no provision of the [California Arbitration Act]
authorizes the award of arbitration costs absent agreement, . . .
section 998 itself provides the statutory authorization for such costs.” (Pilimai,
supra, 39 Cal.4th at
p. 150.) The court reasoned that
the language of section 998, subdivision (d) “puts the arbitration plaintiff on
the same footing as the plaintiff to a civil action vis-à-vis costs when the
plaintiff has made an offer that the defendant has refused and obtains a
judgment more favorable than the offer.
Furthermore, nothing in the . . . legislative history [of
section 998] indicates that the Legislature specifically intended costs to be
unavailable to arbitration plaintiffs.” (Id.
at pp. 150-151.) The court held
that such costs “may include expert witness fees, and [the] costs related to
deposition and exhibit preparation” that the plaintiff sought and remanded to
the trial court to determine the proper costs award. (Id.
at pp. 151-152.)

In summary,
under the authorities in effect when the parties entered into the arbitration
agreement, the costs provision provided that each side was to bear its own
costs of the arbitration, except for costs related to the neutral
arbitrator. On the other hand, although
the Supreme Court did not overrule Austin,
its analysis in Pilimai suggests a
different interpretation of section 1284.2 under which Plaintiffs would have
been entitled to costs. And, in any
event, Pilimai instructs that
Plaintiffs would have been entitled to their arbitration costs under section
998, subdivision (d). Since the costs
provision is subject to an interpretation, “implied in the arbitrator’s
decision,” according to which Plaintiffs would have been entitled to their
costs, the arbitrators did not exceed their powers and the award was not
subject to correction under section 1286.6, subdivision (b). (Moshonov,
supra, 22 Cal.4th at p. 779.) “The
recovery or nonrecovery of [costs] being one of the ‘contested issues of law
and fact submitted to the arbitrator[s] for decision’ [citation] the
arbitrator’s decision was final and could not be reviewed for error.” (Id. at
p. 776.) Defendants asked the court to
correct the award by deleting the award of costs. Since this case did not fall within any of
the statutory grounds for correcting the award, the court erred when it granted
Defendant’s request. We turn next to
Plaintiff’s request that the court correct the award by determining the amount
of costs.



E.
Plaintiffs’ Request that the Court Determine the
Amount of the Costs Award

Although
Plaintiffs may have been entitled to costs pursuant to section 998, case law
holds that they have forfeited that claim by failing to present it to the
arbitrators.

As we have
noted, both sides have filed supplemental letter briefs discussing >Maaso, supra, 203 Cal.App.4th 362, an appeal from an order confirming an
arbitration award in a medical malpractice case, which was decided after this
case was fully briefed. The arbitration
agreement in Maaso contained the same
costs provision as the Arbitration Agreement in this case. (Id.
at p. 367.) Similar to this case,
the arbitrators in Maaso awarded the
plaintiff costs and fees “ ‘in accordance with the arbitration agreement,’ ”
but did not determine the amount of costs.
(Id. at p. 369.) The plaintiff petitioned to confirm the award
and asked the court to award section 998 costs and prejudgment interest (Civ.
Code, § 3291). (>Ibid.)
The trial court confirmed the award, but denied the request for costs
and interest. The appellate court
affirmed and held that the plaintiff
could not obtain an award of section 998 costs or Civil Code section 3291
prejudgment interest from the trial court because those issues were within the
arbitrator’s purview and the plaintiff never requested those enhancements from
the arbitrators. (Id. at p. 377.)

Defendants
argue the analysis in Maaso is
correct and supports many of the points in their brief. Plaintiffs argue Maaso was wrongly decided and “interjects confusion into an area of
law where clarity once reigned.”

The
plaintiff in Maaso advised the
arbitrators that he had made a section 998 offer, without stating the amount of
the offer, but failed to ask the arbitrators to rule on section 998 costs or
seek to present evidence on the issue. (>Maaso, supra, 203 Cal.App.4th at pp. 368-369.) “With knowledge of the rejected offer and
that Maaso was the prevailing party, the arbitrators made no award of section
998 costs or section 3291 interest when issuing their final binding arbitration
award. Instead, the award was for
‘[c]osts and fees in accordance with the arbitration agreement.’ ” (Id.
at p. 377.) The appellate court observed
that, as in this case, the medical malpractice complaint sought “ ‘damages
according to proof, costs and all proper relief’ ” and that the parties
“stipulated that ‘the claims and controversies alleged in this action’ were
submitted to ‘binding, contractual arbitration.’ ” (Ibid.) The appellate court concluded that “[b]ecause
the submission was not limited, it included the issue of costs and interest
. . . .” (>Ibid.)


The >Maaso court relied on >Corona.
(Maaso, supra, 203 Cal.App.4th at pp. 377-378.) The plaintiff in Corona prevailed at arbitration and was awarded compensatory
damages. The plaintiff petitioned the
trial court to confirm the award and moved for an award of attorney fees and
costs. (Corona, supra, 107
Cal.App.4th at pp. 703-704.) The
trial court confirmed the award, but denied the request for fees and
costs. The issue on appeal, which the
court described as one of first impression, was “where a party is required by
contract to submit a dispute to binding arbitration, but does not request that
the arbitrator decide his entitlement to attorney fees even though that issue
was part of the submission, may a trial court nonetheless determine that issue
and make an award of fees and costs incurred in the arbitration?” (Id.
at pp. 703-704.) The court answered that
question in the negative and affirmed the trial court’s denial of fees and
costs. (Id. at p. 704.) The
court explained that “because the parties’ stipulation did not limit the issues
to be resolved through arbitration, the issue of [the plaintiff’s] entitlement
to attorney fees and costs, as requested in his complaint, was subject to
determination in arbitration proceedings.”
(Id. at p. 706.) The plaintiff had admitted that he did not
request that the arbitrator to decide the issue of his entitlement to attorney
fees and costs. He nonetheless argued
that, “although a court cannot review an arbitrator’s determination whether to
award attorney fees, the court is permitted to determine the prevailing party
and make an award of attorney fees and costs where the parties do not ask the
arbitrator to make such determinations in the first instance even though the
issue was within the scope of the contractual arbitration provision.” (Ibid.) The court rejected that contention and
explained that “where parties have agreed their dispute will be resolved by
binding arbitration, judicial intervention is li