Filed 12/2/19 Heimlich v. Shivji 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SIXTH APPELLATE DISTRICT

ALAN HEIMLICH,

Plaintiff and Appellant,

v.

SHIRAZ M. SHIVJI,

Defendant and Respondent.

H043082

(Santa Clara County

Super. Ct. No. CV231939)

Plaintiff Alan Heimlich’s civil action against defendant Shiraz M. Shivji was stayed after Shivji filed a motion to compel arbitration, and the parties were ordered to arbitrate their dispute. Shivji had previously filed an arbitration demand, so he was designated the claimant in the arbitration. Heimlich filed a counterclaim in the arbitration. Neither party recovered anything in the arbitration, and the arbitrator also ordered them to bear their own costs and attorney’s fees. After each party filed a costs memorandum in the superior court, the court confirmed the arbitration award and ordered the parties to bear their own costs.

Heimlich challenges the court’s order taxing his costs. He contends that he was a prevailing defendant who was entitled to his costs as a matter of law. Heimlich’s contention fails because the arbitrator rejected his request for costs, and the superior court had no basis for overturning the arbitrator’s decision on this point. We affirm the court’s order.

I. Background

In 2003, Shivji engaged Heimlich to represent him in a transactional intellectual property matter. Their fee agreement included an arbitration clause. In September 2012, Heimlich filed an action against Shivji in Santa Clara Superior Court (the court action) seeking to recover over $125,000 in unpaid legal fees and expenses. In September 2013, Shivji made a Code of Civil Procedure section 998 offer to Heimlich to settle the court action for $30,001. Heimlich did not accept the offer. After extensive litigation in court, Shivji submitted a November 2013 demand for arbitration to the American Arbitration Association (AAA). In his demand, Shivji sought more than $100,000 in damages and also sought costs.

In January 2014, Heimlich filed an amended complaint in the court action. Shivji then moved to compel arbitration, and in May 2014 the court stayed the court action and ordered the parties to arbitrate their dispute. In the arbitration, Shivji was designated the “Claimant,” and Heimlich was designated the “Respondent.” Heimlich filed a counterclaim in the arbitration action. He sought, among other things, the attorney’s fees and costs he had incurred in both the court action and the arbitration.

The arbitration hearing was held in September through November 2014. At the hearing, Heimlich offered an exhibit that detailed “the attorney’s fees and costs” he had incurred “for this lawsuit and arbitration.” His attorney told the arbitrator: “You mentioned, I think, previously that you didn’t need evidence about attorneys’ fees and costs at this stage, that that would be later, so would you prefer we not do that at this stage?” The arbitrator allowed the admission of the exhibit as to “fees in the lawsuit” but stated that “fees in the arbitration . . . are premature.” Heimlich testified at the arbitration hearing that he had incurred $63,393.82 in costs in the court action.

In March 2015, the arbitrator entered his ruling. The arbitrator rejected both Shivji’s and Heimlich’s claims against each other. He found that neither party was responsible for the other’s expenses in the court action because both were at fault due to Heimlich bringing the action in court and Shivji failing to seek arbitration in a timely fashion. The arbitrator ordered that the arbitration fees and expenses “shall be borne as incurred,” and “[e]ach side will bear their own attorneys’ fees and costs.” (Capitalization omitted.) The arbitration award explicitly provided: “This Award is intended to be a complete disposition of all claims and counterclaims submitted to this Arbitration. All claims not expressly granted herein are hereby, denied.” A week after the arbitration award, Shivji asked the arbitrator to award him costs under Code of Civil Procedure section 998. The arbitrator responded by stating that he lacked jurisdiction to do so after the award. (Heimlich v. Shivji (2019) 7 Cal.5th 350, 357 (Heimlich I).)

In April 2015, Shivji filed a memorandum of costs in the court action seeking to recover his costs. Heimlich filed a motion to strike or tax Shivji’s costs. On June 2, the court entered judgment confirming the arbitration award. On June 16, the court granted Heimlich’s motion, denied Shivji’s request for costs, ruled that “[n]either party is entitled to the recovery of costs,” and ordered that “[e]ach party shall bear their own costs and attorneys’ fees as set forth in the Arbitration Award.”

Heimlich subsequently filed a memorandum of costs in the court action seeking $78,849.34 in costs. His costs memorandum included over $22,000 in AAA fees and numerous other costs associated with the arbitration plus costs associated with the court action. Shivji filed a motion to strike or tax Heimlich’s costs. In October 2015, the court granted Shivji’s motion and taxed all of Heimlich’s costs. Heimlich timely filed a notice of appeal from this order.

II. Discussion

Our disposition of this appeal is controlled by the California Supreme Court’s decision in Heimlich I. That case concerned Shivji’s challenge to the superior court’s order denying him costs. The California Supreme Court observed that in their arbitration claims “[e]ach party also requested costs, placing that issue squarely before the arbitrator.” (Heimlich I, supra, 7 Cal.5th at p. 357.) The California Supreme Court held that the issue of costs was one for the arbitrator. (Heimlich I, at p. 358.) Though the arbitrator did not lack jurisdiction at the time Shivji sought to recover his costs, Shivji had “not shown a basis for correcting the arbitrator’s error.” (Heimlich I, at pp. 363, 367.) An arbitrator’s “error in failing to award costs . . . is not grounds for relief.” (Heimlich I, at p. 367.) The California Supreme Court directed this court “to affirm the trial court’s confirmation of the arbitration award and denial of costs.” (Heimlich I, at p. 371.)

Heimlich cannot succeed in this appeal because the issue of whether he should recover his costs in the court action and/or his costs in the arbitration was squarely before the arbitrator, and the arbitrator ruled that he should not. Even if the arbitrator erred in refusing to award Heimlich his costs, such “error is not grounds for relief.” (Heimlich I, supra, 7 Cal.5th at p. 367.) Heimlich insists that Heimlich I did not resolve whether he was entitled to his costs as the prevailing party in the arbitration. We disagree. Since the arbitrator rejected Heimlich’s request for costs incurred in the court action and in the arbitration, and, under Heimlich I, there was no basis for the superior court to disturb the arbitrator’s decision on this point, the superior court did not err in taxing Heimlich’s costs.

III. Disposition

The order is affirmed. 

_______________________________

Mihara, J.

WE CONCUR:

_____________________________

Elia, Acting P. J.

_____________________________

Grover, J.

Heimlich v. Shivji

H043082