Fee Arbitration With Teeth

The result of an attorney’s failure to comply with a fee arbitration award was involuntary enrollment on inactive status, according to a recent order of the California State Bar Court Review Department

The amended inactive enrollment motion and its supporting documents establish the following facts. On February 12, 2015, the Orange County Bar Association’s Mandatory Arbitration Program (Orange County Program) properly served, on Attomey Rossetti by mail, the statement of decision and award of arbitrators in its case number JN-014-5912, styled Daniel Melcher v. Patrick A. Rossetti. That statement and award, which is signed by three Orange County Program arbitrators, requires that Rossetti refund to Melcher $15,000 in unearned advanced fees that Melcher paid Rossetti. The award does not provide for post-award interest even though such interest should have been awarded.

Even though the award was initially nonbinding, it became binding and final on about Monday, March 16, 2015, because neither Rossetti nor Melcher sought a trial after arbitration within 30 days after service of the award. (§§ 6203, subd. (b), 6204, subd. (a); Code Civ. Proc., §§ 12, 12a [when last day to act is a Saturday, time to acts is extended to the next day that is not a holiday].) Even though the award is binding and final, Rossetti has not paid any portion of the award despite Melcher’s reminders and requests for payments. Therefore, on June 4, 2015, Melcher submitted, to the State Bar Program, a client’s request for enforcement of an arbitration award.

…in the present proceeding, Attorney Rossetti has not produced any evidence that demonstrates that he is not personally responsible for making or ensuring payment of the $15,000 refund of advanced legal fees or that he is lacks the ability to pay the $15,000 refund award. (§ 6203, subd. (d)(2).) In short, the court finds that the statutory requirements for involuntary inactive enrollment under section 6203, subdivision (d) are satisfied. Accordingly, the court will grant the Presiding Arbitrator’s amended inactive enrollment motion and order Attorney Rossetti’s involuntary inactive enrollment.

An earlier request for this relief was denied for lack of notice.

Ordinarily, the Presiding Arbitrator’s September 28, 2016, service of the motion on Attorney Rossetti at his membership-records address by certified mail, return receipt requested would have been deemed complete when mailed regardless of whether Rossetti received it.  [citations omitted] However, in the present case, the court could not deem the September 28, 2016, service complete when mailed because the State Bar’s Mandatory Fee Arbitration Program (State Bar Program) knew, no later than April 27, 2016, that Rossetti was no longer at his then membership-records address. (U.S. Const., 14th Amend.; Jones v. Flowers (2006) 547 U.S. 220, 230-231.) Accordingly, on November 15, 2016, the court filed an order dismissing the September 29, 2016, inactive enrollment motion without prejudice. In that same order, the court granted the Presiding Arbitrator 20 days’ leave to file and serve an amended inactive enrollment motion that was accompanied by a declaration of reasonable/due diligence showing that the Presiding Arbitrator or his agents had taken additional steps that a reasonable person would take under the circumstances in an attempt to provide Rossetti with actual notice of the amended inactive enrollment motion so as to comport with due process under the Fourteenth Amendment to the United States Constitution.

(Mike Frisch)