Developments of Interest

New Cases of Interest - May 31, 2013

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Barsegian v. Kessler & Kessler (2013) 215 Cal.App.4 446.  This was an action by which an attorney and his law firm sought to compel arbitration of a dispute with a client.  The engagement agreement contained an arbitration clause.  The client thereafter filed suit against several parties who were involved in a real property transaction, including the attorney.  The client sought to avoid arbitration on the basis of the possibility of inconsistent results resulting from litigation with third parties under CCP §1281.2(c).  The complaint included an allegation of mutual agency of all of the defendants.  The Court of Appeal held that this was an appropriate basis to deny the arbitration.  The Court found the agency allegation in the complaint was not a judicial admission.  When a factual allegation is treated as a judicial admission, neither side can attempt to contradict it.  The agency allegation here could not be treated as a judicial admission for purposes of an argument that the other defendants were not third parties in the context of compelling arbitration.  The Court felt it unfair to allow a party to invoke agency principles when it was to that party's advantage to do so, but to disavow the same principles when it was not.

Sabey v. City of Pomona (2013) 215 Cal.App.4 49.  A municipal employee filed a writ petition in which he asserted a due process challenge to the City's rejection of an award made in an advisory arbitration.  The arbitrator had sustained some findings and had recommended that the employee be suspended rather than terminated.  The City consulted with a partner from the same law firm as the attorney who had represented the City in the arbitration and decided to reject the arbitrator's recommendation.  The Court of Appeal reversed the trial court's denial of the petition for writ of mandate, and sent the matter back to the City Council for further consideration with independent legal advice.  The Court found that the one partner's involvement in the hearing process violated the employee's federal constitution due process right to a fair tribunal when another partner in the same firm then purported to advise the City on whether to reject the arbitrator's determination.

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