An Attorney Cannot Agree to a California Arbitration on Behalf of the Client, But the Client Can Game the System If He Does (and the client loses the Arbitration)

In a recent case a husband and wife sold property to plaintiffs, who sued for misrepresentation. (There was no indication in the court’s opinion whether they had used a C.A.R. contract and initialed the arbitration provision.) Both parties attorneys and the judge signed a stipulation and order for arbitration and appointment of a private arbitrator. No clients signed the stipulation.

Plaintiffs won, and brought the standard petition in court for confirmation of the arbitration award. Meanwhile, the defendant husband “Valere” fired his attorney and was representing himself; the wife was still represented by the attorney. Valere opposed the petition, claiming that he had never agreed to arbitrate the matter.

The trial court confirmed the award, and Valere appealed. The court of appeal reversed the judgment.

The court said that, first of all, an attorney cannot agree to a private arbitration on behalf of their client, unless the client ratifies the act even though the court recognized that parties can manipulate the system by allowing the arbitration to go forward.

Here, the trial court failed to consider and rule on whether the defendant consented to the arbitration, and there was no evidence presented by plaintiffs that he had, this the decision was reversed. Valere lost the arbitration, so he may get a chance at a trial.

This is a warning to both attorneys and parties. If the attorney does not have their client sign, they are in trouble. If you are a party sign, and the other party does not sign, you are at risk of having a judgment in your favor reversed. And if you are the party who does not sign, and lay low, you just might have an out if you lose the arbitration.

Toal v. Tardif (2009) 178 Cal.App. 4th 1208.

Law Office of James J. Falcone