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A Florida appellate court has determined that courts, and not arbitrators, should determine the award of attorneys fees absent a very explicit indication to the contrary, even if a party has seemingly agreed in general terms to submit such questions to arbitration.
In O'Brien v. Precision Response Corp., 942 So.2d 1030 (Fla. App. 4 Dist. Dec. 20, 2006), O'Brien had successfully defended himself in an arbitration hearing against fraud claims made by Precision Response Corporation (PRC), a company for which he had served as chief operating officer. Because O'Brien's counter-claims against PRC also failed, the arbitration panel ruled that neither party had prevailed, and that O'Brien was therefore not entitled to an award of attorneys fees.
The Court noted that O'Brien had both an indemnification agreement with PRC (promising payment of all fees where he was successful "on the merits or otherwise"), and state statutory support for "indemnifi(cation) against expenses reasonably incurred." In such circumstances, "attorneys fees should be awarded by the court unless the officer has expressly waived that right."
PRC claimed that such a waiver did exist. Before the arbitration hearing, both parties signed an "Agreement and Order Regarding Hearing Procedures." In pertinent part, it reads: "(a)ll issues of attorneys' fees…shall be reserved for determination after the conclusion of these evidentiary hearings …(and) the parties consent to the continuing jurisdiction of the Panel for this purpose." The Court found this language to be "reasonably susceptible to differing interpretations," and that it therefore did not constitute a valid waiver.
Absent such a waiver, the Court held that an arbitrator's determination that there was "no prevailing party" had no effect on O'Brien's contractual and statutory right to be awarded attorneys fees. Because O'Brien had clearly prevailed in his defense against PRC, he was therefore entitled to a judicial award of legal fees.
Given the high level of specificity the Court seems to require in a waiver of the right to judicial determination of attorneys fee awards, parties intending to arbitrate the issue would be well advised to be extraordinarily explicit in declaring such an intent.
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