Daily Blast - May 31, 2019 - Lewis Brisbois Bisgaard & Smith LLP

In Heimlich v. Shivji (2019) (May 30, 2019, S243029)__Cal.5th __, published today, the California Supreme Court held that in arbitration proceedings, a party’s request for costs under Code of Civil Procedure section 998 is timely if filed with the arbitrator within 15 days of a final award. (Slip. opn., p. 1.) An arbitrator has continuing authority after issuance of the final award to award costs to the offering party. (Ibid.) However, an arbitrator’s refusal to award costs based on his mistaken belief he lacked jurisdiction to do so was not grounds to correct the award because judicial review of arbitration awards are limited. (Ibid.)

The Supreme Court examined the scope of the arbitration agreement and emphasized that whether an arbitrator or court should allocate costs depends on the parties’ agreement. Because the agreement between the parties was broad, the decision to allocate costs was within the scope of the arbitrator’s power. (Id. at pp. 3-4.) The request for CCP 998 costs must be made first to the arbitrator. (Id. at pp. 4-5.)

The Supreme Court also determined evidence of a 998 offer may be presented before or after an arbitrator’s final award on the merits. (Id.at p. 6.) Section 998 itself is silent as to when a request for costs must be made. In court cases, that timing is governed by California Rules of Court, rule 3.1700, which requires a party seeking costs to file a memorandum within 15 days of notice of entry of judgment, or 180 days of entry of judgment in the absence of a notice. (Id. at pp. 7-8.) When the Legislature amended section 998 to extend its application to private arbitrations, it declined to specify a different timeline for seeking costs. (Ibid.) Thus, neither the statutory text nor any relevant legislative history reflects an intent to deviate from settled court practice regarding the timing for section 998 offers made during arbitration as opposed to at trial. (Ibid.)

The opinion also provides a useful analysis of the narrow grounds for judicial review of arbitration awards. (Slip. opn., pp. 18-24.)