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A New York Appellate Court held that “boilerplate” arbitration submissions requesting attorney fees are insufficient to constitute an “unmistakably clear” expression of intent to waive the American Rule that parties bear their own attorneys’ fees.
In Matza v. Oshman, Helfenstein & Matza, 823 N.Y.S.2d 47 (N.Y.A.D. 2006), Matza prevailed in an arbitration against his former law firm and was awarded damages as well as attorneys’ fees. Oshman argued that the attorneys’ fee portion of the award should be vacated.
Attorneys’ fees are unavailable in arbitration with few exceptions. Emery Roth & Sons v. M & B Oxford, 298 A.D.2d 320 (N.Y. A.D. 2002). They are not to be awarded unless authorized by statute or the arbitration agreement, or if requested during arbitration by the parties. A party’s intention to waive the American rule, that parties are responsible for their own attorney’s fees, must be expressed in an “unmistakably clear” manner. Hooper Assoc. v. AGS Computers, 548 N.E.2d 903 (N.Y. 1989).
The Court held that “it was purely speculative for the court…to rely on the fact that the arbitrator had addressed the issue of attorneys’ fees in concluding that all parties had requested them” merely because the arbitration submission contained boilerplate language requesting attorney’s fees. Thus, the Court held that the award of attorneys’ fees “was unauthorized.”
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