Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

McAlpine v. Priddle

Supreme Court of Alaska

February 21, 2014

KALINDI McALPINE, Appellant,
v.
STEVEN PRIDDLE, Appellee

Appeal from the Superior Court of the State of Alaska, Third Judicial District, Anchorage, Paul E. Olson, Judge. Superior Court No. 3AN-12-04798 CI.

Kalindi McAlpine, Appellant, Pro se, Alachua, Florida.

Steven J. Priddle, Appellee, Pro se, Anchorage.

Before: Fabe, Chief Justice, Winfree, Stowers, Maassen, and Bolger, Justices.

OPINION

Page 346

WINFREE, Justice.

I. INTRODUCTION

This appeal arises from an attorney's fee dispute arbitration conducted under Alaska's Revised Uniform Arbitration Act (Revised Arbitration Act).[1] The two primary issues relate to the appropriate standard of review when a party asserts an arbitration decision was procured by fraud and the possible application of non-statutory public policy grounds to vacate an arbitration award. We adopt the federal standard for reviewing a claim that an arbitration decision was procured by fraud, and we conclude the arbitration panel's decision that there was no fraud is not reviewable. We also conclude that on the facts found by the arbitration panel, there is no basis to vacate the arbitration decision on public policy grounds. We therefore affirm the superior court's decision to confirm the arbitration decision.

II. DISCUSSION

A. Background

The background facts underlying this attorney's fee dispute are fully set out in the arbitration panel's decision, attached as Appendix A, and the superior court's decision to confirm the arbitration decision, attached as Appendix B. A few basic facts are set out here for context.

Jierum Duarte was arrested on federal drug conspiracy charges in November 2008. Duarte asked his girlfriend, Kalindi McAlpine, to contact attorney Steven Priddle about representing Duarte in the federal criminal proceedings and in a concurrent state probation proceeding. Both Duarte and McAlpine later asserted that Priddle told them he would charge up to $25,000 if the case did not go to trial, up to $50,000 if the case went to trial, and up to $75,000 if the case went to trial and required hiring experts.

McAlpine and Priddle signed a written agreement for Priddle to represent Duarte. McAlpine and Duarte later claimed they were never provided a copy of the signed agreement. The day after the agreement was signed, McAlpine gave Priddle $75,000 cash wrapped in a plastic grocery bag.

Duarte's case was set for trial in February 2009, but he entered a guilty plea the morning of trial. Following Duarte's sentencing, McAlpine asked Priddle to refund " at least" $50,000 of the fee because the case did not go to trial. In October 2010 McAlpine petitioned for an attorney's fee arbitration with the Alaska Bar Association.[2] The arbitration panel issued a decision in June 2011, concluding

Page 347

that the $75,000 fee was reasonable under the facts and circumstances of the case.

During the arbitration hearing, Priddle offered into evidence the three-page written fee agreement that he asserted was the one McAlpine signed in November 2008. McAlpine disputed the document's authenticity. McAlpine testified that she recalled signing a one-page agreement -- not a three-page agreement -- and that the agreement Priddle presented did not reflect the parties' prior verbal agreement to a graduated fee. McAlpine also testified she could not confirm that her purported signature and initials on the agreement were authentic.

The fee agreement contained a provision specifying, " A flat fee of $75,000.00 will be charged. . . . This flat-rate is earned and owing upon execution of this fee agreement. . . . THIS FLAT-RATE FEE, OR ANY PART THEREOF, IS NON-REFUNDABLE AND WILL NOT BE REFUNDED/RETURNED UNDER ANY CIRCUMSTANCES." The panel noted that " [t]he written fee agreement on its face violates Ethics Opinion 2009-1, which concludes that it is misleading to describe a fee retainer in any way as 'non-refundable.'" [3] But the panel concluded that the agreement " accurately reflected the terms of the fee agreement entered into between the parties[,] satisfied the requirement of the Code of Professional Conduct that all fee agreements be in writing[, and] clearly contemplates a fixed fee and not a graduated fee."

The panel then analyzed whether the agreed-upon $75,000 fee was reasonable for the work performed.[4] The panel ultimately concluded that " $75,000 was a reasonable fee to charge in this case based upon all of the factors contained in Bar Rule 35(a)." But the panel referred the matter to bar counsel to investigate whether disciplinary proceedings were appropriate for Priddle's use of the " non-refundable" and " already earned" language in the fee agreement and his acceptance of a large sum of cash that may have come from illegal sources.

McAlpine filed a " motion to amend" the panel's decision in the superior court in January 2012. McAlpine advanced several arguments for overturning the arbitration decision: (1) the panel failed to analyze the reasonableness of the fee in relation to work actually performed; (2) the panel failed to weigh the fact that neither McAlpine nor Duarte was given a copy of the agreement; (3) Priddle misled Duarte on his experience with federal drug cases; (4) Priddle's fee was not reasonable; (5) Priddle did not provide an accounting of time spent on the case; (6) the panel could not assess the reasonableness of the fee without timekeeping records; (7) the panel should have held Priddle to a " higher standard" in assessing the reasonableness of the fee charged; (8) the panel should have given greater weight to the fact that the fee agreement contained provisions in violation of the rules of professional conduct; (9) Priddle coerced his client into entering the fee agreement and ultimately pleading guilty; and (10) the fee agreement considered by the panel was fraudulent.

The superior court reviewed McAlpine's petition under the narrow judicial review standards of the Revised Arbitration Act.[5] The court rejected most of McAlpine's arguments as falling outside the statutory judicial review provisions and therefore being unreviewable. The court acknowledged that McAlpine's fraudulent agreement argument fell within one of the statutory review provisions -- that " the award was procured by corruption, fraud, or other undue means." [6] The court concluded, however, that the panel's finding that the document was not fraudulent was not reviewable. Concluding that McAlpine " ha[d] not established any of the statutory grounds to vacate or modify an arbitration award as set forth in AS 09.43.500 or .510," the superior court affirmed the arbitration decision.

McAlpine, appearing pro se, appeals.

Page 348

B. Standard Of Review

We " review de novo the superior court's decision to confirm [an] arbitration award." [7]

C. McAlpine's Appeal

" [W]e consider pro se [papers] liberally in an effort to determine what legal claims have been raised." [8] McAlpine generally challenges the merits of the panel's decision; she also appears to claim that the arbitration decision was fraudulently obtained and that the panel violated public policy by giving effect to an " unconscionable" fee agreement.[9]

Judicial review of attorney's fee arbitration awards is governed by the Revised Arbitration Act; a court can review the award only on the grounds listed in the statute [10] Under the Revised Arbitration Act, a court shall vacate the award if:

(1) the award was procured by corruption, fraud, or other undue means;
(2) there was
(A) evident partiality by an arbitrator appointed as a neutral arbitrator;
(B) corruption by an arbitrator; or
(C) misconduct by an arbitrator prejudicing the rights of a party to the arbitration proceeding;
(3) an arbitrator refused to postpone the hearing on showing of sufficient cause for postponement, refused to consider evidence material to the controversy, or otherwise conducted the hearing contrary to AS 09.43.420, so as to prejudice substantially the rights of a party to the arbitration proceeding;
(4) an arbitrator exceeded the arbitrator's powers;
(5) there was not an agreement to arbitrate, unless the person participated in the arbitration proceeding without raising the objection under AS 09.43.420(c) not later than the beginning of the arbitration hearing; or
(6) the arbitration was conducted without proper notice of the initiation of an arbitration as required under AS 09.43.360 so as to prejudice substantially the rights of a party to the arbitration proceeding.[11]

A court shall modify an award if:

(1) there was an evident mathematical miscalculation or an evident mistake in the description of a person, thing, or property referred to in the award;
(2) the arbitrator has made an award on a claim not submitted to the arbitrator and the award may be corrected without affecting the merits of the decision on the claims submitted; or
(3) the award is imperfect in a matter of form not affecting the merits of the decision on the claims submitted.[12]

1. The merits of the arbitration panel's decision are unreviewable.

McAlpine asks us to review the merits of the arbitration panel's decision on many of the same grounds she raised before the superior court. Her merits challenge can be distilled into five main points. She argues that the panel: (1) erred in finding that the written fee agreement superseded the alleged verbal fee agreement; (2) erred in determining that the written fee agreement was not invalidated by Priddle's failure to give McAlpine a copy or explain the fee; (3) erred in determining the fee was reasonable

Page 349

because it failed to consider all the Bar Rule 35(a) factors; (4) gave Priddle's witnesses' testimony improper weight; and (5) could not have properly assessed the fee's reasonableness because Priddle did not account for the time he worked on the case. The superior court considered several variations of these arguments and concluded that all were unreviewable.

McAlpine asserts that the superior court erred in determining it lacked authority to review the panel's decision except under the statutory grounds. But we repeatedly have rejected requests for heightened review of attorney's fee arbitration awards.[13] Under our precedent, neither the panel's factual findings nor its legal conclusions are reviewable.[14] The superior court therefore applied the correct standard in concluding that McAlpine's challenges to the panel's decision's merits were not reviewable. For the same reason, we will not review the merits of the panel's decision on appeal.

2. The superior court properly determined it could not review the arbitration panel's conclusion that the fee agreement was not fraudulent.

McAlpine also asserts that the panel relied on a fraudulent copy of the fee agreement supplied by Priddle. Whether an award was procured by fraud is one of the statutory grounds for reviewing an arbitration award.[15] The superior court acknowledged that McAlpine had raised a statutory ground on which it could review the award, but it concluded that " the arbitration panel's finding of fact that the fee agreement document was not falsified, manufactured, or otherwise illegitimate ... is not reviewable by the court."

We have not articulated the proper standard of review under the Revised Arbitration Act for determining whether an arbitration award was procured by fraud. Federal courts applying a similar Federal Arbitration Act provision [16] require a party seeking an arbitration award's vacatur to " show that the fraud was (1) not discoverable upon the exercise of due diligence prior to the arbitration, (2) materially related to an issue in the arbitration, and (3) established by clear and convincing evidence." [17]

Under the federal standard's first prong, a court will not independently review an arbitration award for fraud when the arbitrators already considered and resolved the fraud claim [18] because fraud " necessarily

Page 350

raises issues of credibility which have already been before the arbitrators once." [19] It follows that a court should give deference to arbitrators' credibility determinations on fraud claims.

Fifteen states and the District of Columbia have adopted the Revised Uniform Arbitration Act.[20] Courts in these jurisdictions generally have followed the federal standard for determining whether an arbitration award was procured by fraud. Courts in Hawaii, Nevada, North Dakota, and Utah expressly adopted the federal standard in reviewing claims brought under those states' versions of the Revised Uniform Arbitration Act fraud provision.[21] Other courts have applied the federal standard to arbitration fraud claims under an identical vacatur provision in the original Uniform Arbitration Act.[22] Because Alaska's fraud provision is nearly identical to that of the Federal Arbitration Act, and most other states that have adopted the Revised Uniform Arbitration Act apply the federal standard, we conclude that Alaska courts should apply the federal standard in reviewing a claim that an arbitration award was procured by fraud.[23]

Under the federal standard the superior court correctly concluded that the arbitration panel's finding regarding the fee document's authenticity is not reviewable; the panel considered the fraud allegation and made credibility findings. We therefore affirm the superior court on this issue and likewise decline to review the panel's finding regarding fraud.

3. The arbitration panel's decision does not enforce a nonrefundable fee provision in violation of public policy.

In PSEA 2011, we adopted a non-statutory exception to enforcing arbitration awards when doing so would violate an " explicit, well defined, and dominant" public policy.[24] McAlpine appears to argue on appeal that the panel's award should be vacated because it enforces a contract that violates public policy.[25]

McAlpine generally complains that Priddle's putative $75,000 flat fee is " unconscionable" because it violates Alaska Bar Association Ethics Opinions and amounts to pay for work not done. But the panel did not give effect to the " nonrefundable" aspect of the fee agreement's flat fee provision. The panel interpreted the flat fee provision as allowing the $75,000 fee ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.