Title: Aguilar v. Lerner
Citation: N/A
Docket Number: S099667
State: California
Issuer: California Supreme Court
Date: April 22, 2004

1
Filed 4/22/04 
 
 
 
IN THE SUPREME COURT OF CALIFORNIA 
 
 
 
RAUL V. AGUILAR, 
) 
 
 
) 
 
Plaintiff and Appellant, 
) 
 
 
) 
S099667 
 
v. 
) 
 
 
) 
Ct.App. 1/5 A091884 
ESTHER R. LERNER, 
) 
 
) 
San Francisco 
 
Defendant and Respondent. 
) 
Super. Ct. No. 985351 
__________________________________ ) 
 
When plaintiff Raul V. Aguilar hired defendant Esther R. Lerner to represent 
him in a marital dissolution matter, he signed a written retainer agreement that 
included an agreement to arbitrate any dispute “concerning fees . . . or any other claim 
relating to [plaintiff’s] legal matter which arises out of [plaintiff’s] legal 
representation.”  Such an agreement normally would be enforceable under the 
California Arbitration Act (CAA).  (Code Civ. Proc., § 1280 et seq.)  A dispute arose, 
and plaintiff now contends this arbitration agreement is invalid, specifically as to 
defendant’s claim for attorney fees and costs, and possibly in its entirety, because the 
agreement contravenes his rights pursuant to the mandatory fee arbitration act set forth 
in Business and Professions Code section 6200 et seq. (hereafter the MFAA).  (All 
statutory references are to this code unless otherwise stated.)  Were the arbitration 
agreement found to be invalid in its entirety, he claims, he would be entitled to avoid 
arbitration altogether and litigate in a jury trial both his malpractice claims and 
defendant’s cross-claim for attorney fees and costs.  The Court of Appeal found 
 2
plaintiff was judicially estopped from raising these arguments; alternatively, defendant 
claims plaintiff waived them by filing a lawsuit against her for professional 
malpractice. 
We conclude plaintiff is not judicially estopped from attempting to rely on the 
MFAA to invalidate his arbitration agreement, but that in filing a malpractice suit 
against defendant he waived all rights he might have asserted under the statutory 
scheme.  In light of plaintiff’s waiver, we have no occasion to address how we might 
reconcile a client’s rights under the MFAA with a client’s preexisting agreement with 
counsel to arbitrate under the CAA.  Accordingly, we affirm the decision of the Court 
of Appeal. 
FACTS 
Plaintiff Aguilar, himself an attorney, hired defendant Lerner, a family law 
specialist, to represent him in his marital dissolution.  According to plaintiff’s 
declaration, he explained to Lerner that he desired the matter to be resolved quickly, as 
he had endured what he believed was unnecessary expense and frustration with his 
previous attorney.  Lerner agreed to represent him and produced a written retainer 
agreement for his signature.  Aguilar declares he signed the agreement and initialed 
certain paragraphs, including the arbitration provision, without reading them.  He 
declares that he “had no idea the retainer agreement contemplated the arbitration of 
legal malpractice claims and waiver of [his] right to a jury trial.  No one explained to 
me that it did.”  He claims he did not negotiate any of the terms in the retainer 
agreement.  The agreement is dated November 30, 1994. 
Lerner declares that after she agreed to represent Aguilar, she gave him her 
retainer agreement “and asked him to carefully review it before signing [it].”  She 
states it was her “custom and practice to encourage a potential client to carefully 
review the retainer agreement and ask any questions that they might have before 
signing.  Further, I encourage them to take the retainer agreement with them before 
 3
signing in order that they can take the time on their own to carefully review the terms 
of the agreement.”  She declares Aguilar did not sign the agreement in her presence 
but took it with him.  He thereafter returned a signed and initialed copy to Lerner by 
both facsimile and first class mail. 
The arbitration agreement is set forth as paragraph 7 in the retainer agreement.  
It provides:  “In the event that there is any disagreement between the CLIENT and 
ATTORNEY concerning fees, this Agreement or any other claim relating to 
CLIENT’S legal matter which arises out of CLIENT’S legal representation, CLIENT 
hereby agrees to submit such dispute to binding arbitration under the rules of the San 
Francisco Bar Association and the Code of Civil Procedure of the State of California.  
The prevailing party shall be entitled to reasonable attorney’s fees and costs incurred 
in enforcing any arbitration award or engaging in any court proceedings.” 
A dispute later arose, and Aguilar discharged Lerner.  On March 17, 1997, he 
filed a complaint for damages in San Francisco Superior Court, alleging Lerner had 
committed professional negligence and a breach of her fiduciary duty to him.  In 
response, Lerner petitioned to compel arbitration of these claims pursuant to Code of 
Civil Procedure section 1281;1 she also added her own claim for unpaid attorney fees 
and costs.  The superior court granted the petition to compel, stating that the results of 
the arbitration would be binding, and that “[p]laintiff’s claim for legal malpractice falls 
within the scope of [the] arbitration provision [he signed].” 
Lerner prevailed in arbitration, the arbitrator granting her judgment against 
Aguilar on his complaint for damages.  On Lerner’s claim for unpaid legal fees and 
                                             
 
1  
Code of Civil Procedure section 1281 provides:  “A written agreement to 
submit to arbitration an existing controversy or a controversy thereafter arising is 
valid, enforceable and irrevocable, save upon such grounds as exist for the revocation 
of any contract.” 
 4
costs, the arbitrator awarded her $32,709.64.  On Lerner’s motion for reasonable 
attorney fees and costs associated with the arbitration hearing, the arbitrator ruled she 
was entitled to $7,138 in attorney fees pursuant to Code of Civil Procedure section 
1033.5, subdivision (a)(10)(A), and $23,514.75 in costs pursuant to Code of Civil 
Procedure section 1032, subdivision (b).2 
The superior court denied Aguilar’s motion to vacate the arbitration award and 
granted Lerner’s motion to confirm the award.  Aguilar appealed; the Court of Appeal 
affirmed; we granted review. 
DISCUSSION 
Aguilar contends the parties’ agreement to arbitrate was invalid and 
unenforceable because it was contrary to the MFAA (§ 6200 et seq.), which makes 
arbitrating attorney fee disputes wholly voluntary for a client and gives a client who 
chooses to arbitrate the option of rejecting the arbitrator’s decision and proceeding to 
trial.  Moreover, he contends that although he filed a lawsuit against defendant for 
professional malpractice, he is entitled to rely on the procedural protections with 
respect to fee disputes the MFAA provides to consumers of legal services.  (See 
§ 6201, subd. (d).)  Because plaintiff seeks to invalidate an arbitrator’s award, we must 
determine, before addressing the merits of his claim, whether his case comes within an 
exception to the general rule of arbitral finality and limited appellate review. 
                                             
 
2  
Code of Civil Procedure section 1033.5, subdivision (a)(10)(A) permits a 
prevailing party to recover attorney fees as costs when authorized to do so by contract.  
Section 1032, subdivision (b) of the same code provides:  “Except as otherwise 
expressly provided by statute, a prevailing party is entitled as a matter of right to 
recover costs in any action or proceeding.” 
 5
A.  Judicial Review 
When parties choose to forgo the traditional court system and arbitrate their 
claims, it is assumed they wish to have a final and conclusive resolution of their 
dispute.  The Legislature has recognized this underlying assumption of finality and 
has, by statute, limited the grounds for judicial review of an arbitrator’s award.  (Code 
Civ. Proc, § 1286.2.)  Consistent with this legislative intent, we recognized the general 
rule that “an arbitrator’s decision cannot be reviewed for errors of fact or law.”  
(Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 11 (Moncharsh).)  We explained that 
because the Legislature has provided certain statutory grounds to overturn or modify 
an arbitrator’s decision, courts should not subject such decisions to standard judicial 
review.  (Id. at pp. 26, 27-28.)  In addition, however, to the statutory grounds for 
vacating an arbitrator’s award, we explained in Moncharsh “that there may be some 
limited and exceptional circumstances justifying judicial review of an arbitrator’s 
decision . . . .  Such cases would include those in which granting finality to an 
arbitrator’s decision would be inconsistent with the protection of a party’s statutory 
rights.”  (Id. at p. 32, italics added.)  It is this exception on which plaintiff relies in 
seeking judicial relief from the arbitrator’s award. 
We applied the statutory rights exception to the rule of arbitral finality in Board 
of Education v. Round Valley Teachers Assn. (1996) 13 Cal.4th 269 (Round Valley).  
In that case, a school district notified a probationary teacher it would not renew his 
teaching contract for the next year.  He sought arbitration as authorized pursuant to the 
applicable collective bargaining agreement, claiming the district had failed to provide 
him with notice of nonreelection as required in the agreement.  The teacher prevailed 
in arbitration, and the district thereafter petitioned to vacate the arbitration award, 
claiming the notice required by the collective bargaining agreement was contrary to 
the requirements set forth in Education Code section 44929.21 and certain provisions 
of the Government Code. 
 6
On the question of judicial review of the arbitrator’s decision, we explained:  
“Although we adhere to our holding in Moncharsh that arbitrator finality is the rule 
rather than the exception, we agree that—if District is correct concerning the scope of 
its statutory rights under the Education and Government Codes—this case presents the 
exceptional circumstance that allows for judicial review of the arbitrator’s decision.  
Should District’s interpretation of the law prevail, we would be faced with an ‘explicit 
legislative expression of public policy’ that issues involving the reelection of 
probationary teachers not be subject to arbitration.  [Citation.]  This expression of 
public policy would thus conflict with the expressed legislative intent to limit private 
arbitration awards to statutory grounds for judicial review.  Thus, rigidly insisting on 
arbitral finality here would be ‘inconsistent with the protection of a party’s [i.e., 
District’s] statutory rights.’ ”  (Round Valley, supra, 13 Cal.4th at p. 277.) 
Like the school district in Round Valley, plaintiff relies on statutory rights he 
claims will be infringed by limiting judicial review of the arbitrator’s decision in this 
case.  He contends the arbitrator exceeded his powers in resolving the parties’ dispute 
because the agreement to arbitrate contravened both plaintiff’s statutory rights as set 
forth in the MFAA and the public policy underlying the statute.  We agree that 
enforcement of an arbitration agreement that violates a plaintiff’s rights under the 
MFAA would exceed the arbitrator’s powers.  Consequently, judicial review of the 
arbitrator’s decision here is appropriate.  We thus turn to the merits of plaintiff’s 
claims. 
B.  The MFAA 
The parties in this case arbitrated their dispute pursuant to the CAA, set forth in 
part 3, title 9 of the Code of Civil Procedure, commencing with section 1280.  The 
CAA “represents a comprehensive statutory scheme regulating private arbitration in 
this state.  (§ 1280 et seq.)  Through this detailed statutory scheme, the Legislature has 
 7
expressed a ‘strong public policy in favor of arbitration as a speedy and relatively 
inexpensive means of dispute resolution.’ ”  (Moncharsh, supra, 3 Cal.4th at p. 9.)  
“The statutes set forth procedures for the enforcement of agreements to arbitrate 
([Code Civ. Proc.,] §§ 1281.2-1281.95), establish rules for the conduct of arbitration 
proceedings except as the parties otherwise agree (id., §§ 1282-1284.2), describe the 
circumstances in which arbitrators’ awards may be judicially vacated, corrected, 
confirmed, and enforced (id., §§ 1285-1288.8), and specify where, when, and how 
court proceedings relating to arbitration matters shall occur (id., §§ 1290-1294.2).”  
(Vandenberg v. Superior Court (1999) 21 Cal.4th 815, 830.)  Defendant invoked this 
statutory scheme in response to plaintiff’s malpractice lawsuit. 
By contrast, the MFAA constitutes a separate and distinct arbitration scheme.  
The MFAA was first proposed by the Board of Governors of the State Bar of 
California in 1976 when, finding that disputes concerning legal fees were the most 
serious problem between members of the bar and the public, the board sought to create 
a mechanism for arbitrating disputes over legal fees and costs.  Recognizing the 
“disparity in bargaining power in attorney fee matters which favors the attorney in 
dealings with infrequent consumers of legal services” (Hargarten & Ardisson, Fine 
Tuning California’s Mandatory Attorney Fee Arbitration Statute (1982) 16 U.S.F. 
L.Rev. 411, 415 (Hargarten & Ardisson)), that many clients could not afford hiring 
additional counsel to litigate fee disputes in the civil courts (ibid.), and that previous 
schemes that called for voluntary arbitration were ineffective (id. at pp. 413-414), the 
Legislature enacted the MFAA.  The original legislation provided in pertinent part:  
“The Board of Governors [of the State Bar of California] shall, by rule, establish, 
maintain, and administer a system and procedure for the arbitration of disputes 
concerning fees charged for professional services by members of the State Bar or by 
members of the Bar of other jurisdictions.”  (Stats. 1978, ch. 719, § 1, p. 2249.)  This 
 8
mandate has been expanded to include mediation, but is otherwise unchanged today.  
(§ 6200, subd. (a).) 
In contrast to the CAA, which is governed by the Code of Civil Procedure, the 
MFAA has its own rules and limitations, as set forth in the Business and Professions 
Code.  As one appellate court has described it, the MFAA “is a closed system and the 
binding arbitration agreed to . . . is the arbitration conducted by [a] local bar 
association under the MFAA, not some other private alternative dispute resolution 
provided by another forum.”  (Alternative Systems, Inc. v. Carey (1998) 67 
Cal.App.4th 1034, 1042-1043.)  The primary limitation of the MFAA is that it applies 
only to disputes concerning “[legal] fees, costs, or both” (§ 6200, subd. (a)) and is 
specifically inapplicable to “[c]laims for affirmative relief against the attorney for 
damages or otherwise based upon alleged malpractice or professional misconduct” 
(id., subd. (b)(2)).  By contrast, virtually any civil dispute, including claims of legal 
malpractice, can be the subject of arbitration under the CAA.  (See Code Civ. Proc., 
§ 1281 [“A written agreement to submit to arbitration an existing controversy or a 
controversy thereafter arising is valid, enforceable and irrevocable, save upon such 
grounds as exist for the revocation of any contract”]; see, e.g., Powers v. Dickson, 
Carlson & Campillo (1997) 54 Cal.App.4th 1102.)  Although the parties here 
arbitrated their dispute pursuant to the CAA, the MFAA is potentially relevant because 
defendant, in her petition to compel arbitration, included a claim for unpaid legal fees 
and costs. 
The nature of the obligation to arbitrate under the MFAA differs from that 
under standard arbitration in two important ways.  First, the obligation to arbitrate 
under the MFAA is based on a statutory directive and not the parties’ agreement.  
Thus, a client may invoke the MFAA and proceed to arbitration despite the absence of 
any prior agreement to do so.  By contrast, standard arbitration requires that both 
parties to a dispute agree to arbitrate.  (Benasra v. Marciano (2001) 92 Cal.App.4th 
 9
987, 990 [“a party cannot be compelled to arbitrate a dispute that he has not agreed to 
resolve by arbitration”].) 
Second, section 6200, subdivision (c) provides:  “[A]rbitration under this article 
shall be voluntary for a client and shall be mandatory for an attorney if commenced by 
a client.”  In other words, whereas a client cannot be forced under the MFAA to 
arbitrate a dispute concerning legal fees, at the client’s election an unwilling attorney 
can be forced to do so. 
The finality of an arbitration award under the MFAA also generally differs from 
an award rendered pursuant to standard arbitration under the CAA.  Although parties 
choosing to resolve their dispute in standard arbitration pursuant to the CAA “typically 
expect” that the arbitrator’s decision will be final (Advanced Micro Devices, Inc. v. 
Intel Corp. (1994) 9 Cal.4th 362, 373; Moncharsh, supra, 3 Cal.4th at p. 10), an award 
rendered pursuant to an arbitration under the MFAA is nonbinding, and either party 
may seek a trial de novo (§ 6204, subd. (a)).  The MFAA, however, also provides that 
the parties may agree in writing that the arbitrator’s award will be binding.  (Ibid.) 
Finally, the MFAA specifies the conditions under which the client can waive its 
protections.  “A client’s right to request or maintain arbitration under the provisions of 
this article is waived by the client commencing an action or filing any pleading 
seeking either of the following:  [¶] (1) Judicial resolution of a fee dispute to which 
this article applies.  [¶] (2) Affirmative relief against the attorney for damages or 
otherwise based upon alleged malpractice or professional misconduct.”  (§ 6201, subd. 
(d).)  The MFAA thus “provides the client with an alternative method of resolving a 
fee dispute with his attorney, not one in addition to traditional litigation.”  (Juodakis v. 
Wolfrum (1986) 177 Cal.App.3d 587, 593.) 
As indicated, the parties in this case arbitrated their dispute pursuant to the 
CAA, not the MFAA.  When plaintiff filed his complaint in superior court against 
defendant for professional negligence and breach of fiduciary duty, defendant 
 10
understandably petitioned to compel arbitration pursuant to the parties’ agreement.  
Had the parties simply arbitrated the malpractice-related claims, no question regarding 
application of the MFAA would have arisen.  But because defendant in her petition to 
compel arbitration added a claim for unpaid legal fees and costs, plaintiff asserts the 
MFAA applies.  Although plaintiff has never sought to arbitrate the fee dispute in an 
MFAA arbitration, he seeks to invoke the act’s client protections in order to invalidate 
the parties’ agreement. 
This case thus poses the question whether the parties’ agreement to arbitrate is 
enforceable or is superseded by the MFAA.3  The question is significant in light of the 
proliferation of arbitration clauses in attorney retainer agreements during the last two 
decades.  This proliferation is understandable, for we have presided over a recent 
period of rapid expansion of arbitration as a dispute resolution mechanism.  At the 
time the MFAA was enacted in 1978, arbitration under the CAA was still in its 
infancy.  Though the CAA was enacted in 1961, it was not until the early 1980’s that 
the use of arbitration as an alternative method to resolve legal disputes became 
prevalent and both this court and the United States Supreme Court began determining 
the outer limits of the procedure.  For example, we held in 1983 that when a party to 
an arbitration agreement in a contract contended the contract was induced by fraud, 
that claim was itself arbitrable.  (Ericksen, Arbuthnot, McCarthy, Kearney & Walsh, 
Inc. v. 100 Oak Street (1983) 35 Cal.3d 312.)  In 1992, we held an arbitrator’s decision 
was generally unreviewable for legal error, thereby enhancing the finality of an arbitral 
                                             
 
3  
Compare the arbitration clause in this case to the agreement at issue in Powers 
v. Dickson, Carlson & Campillo, supra, 54 Cal.App.4th at pages 1106-1107, which 
specified that fee disputes would be arbitrated pursuant to the MFAA and all other 
disputes will be arbitrated pursuant to the “Commercial Rules of the American 
Arbitration Association.” 
 11
decision.  (Moncharsh, supra, 3 Cal.4th 1.)  Meanwhile, in 1984, the high court began 
giving strong endorsements of arbitration under the Federal Arbitration Act.  
(Southland Corp. v. Keating (1984) 465 U.S. 1; see Broughton v. Cigna Healthplans 
(1999) 21 Cal.4th 1066, 1074-1075 [discussing the FAA].)  The many cases involving 
arbitration that have reached this court in the last 15 years testify to its increasing use 
as a dispute resolution method. 
Preliminary to deciding the merits of plaintiff’s claim, however, we must decide 
two questions:  (1) Is plaintiff judicially estopped from relying on the statute’s 
protections, as the appellate court held?  (2) If not, did he waive the statute’s 
protections by filing his suit for malpractice, as defendant contends? 
C.  Estoppel 
The Court of Appeal below found that, “[b]y never availing himself of his 
statutory right to arbitration under the [MFAA] scheme, and by filing a malpractice 
action, [plaintiff] expressly rejected the protections afforded by the [MFAA] scheme.  
In light of this conduct, he cannot now say the arbitrator’s decision conflicted with the 
protection of statutory rights he never sought.”  Further:  “[Plaintiff’s] position on 
appeal that the arbitrator’s award denied him the protection of his [MFAA] rights is 
incompatible with his position below that arbitration under the [MFAA] system was 
both inappropriate and, for him, unwanted.  Given these contrasting positions, he is 
now estopped from urging that the arbitration award exceeded the arbitrator’s powers 
because it conflicted [with] the protection of the [MFAA].”  (Italics added.) 
The appellate court thus invoked the doctrine of judicial estoppel.  “ ‘Judicial 
estoppel precludes a party from gaining an advantage by taking one position, and then 
seeking a second advantage by taking an incompatible position.  [Citations.]  The 
doctrine’s dual goals are to maintain the integrity of the judicial system and to protect 
parties from opponents’ unfair strategies.  [Citation.]  Application of the doctrine is 
 12
discretionary.’ ”  (Koo v. Rubio’s Restaurants, Inc. (2003) 109 Cal.App.4th 719, 735, 
fn. omitted.)  The doctrine applies when:  “(1) the same party has taken two positions; 
(2) the positions were taken in judicial or quasi-judicial administrative proceedings; 
(3) the party was successful in asserting the first position (i.e., the tribunal adopted the 
position or accepted it as true); (4) the two positions are totally inconsistent; and 
(5) the first position was not taken as a result of ignorance, fraud, or mistake.”  
(Jackson v. County of Los Angeles (1997) 60 Cal.App.4th 171, 183; Scripps Clinic v. 
Superior Court (2003) 108 Cal.App.4th 917, 943.) 
That the appellate court concluded plaintiff should be judicially estopped from 
relying on the protections of the MFAA is understandable given that he has 
consistently disclaimed his right under the statute to arbitrate defendant’s claim for 
unpaid legal fees and costs.  Admittedly, permitting plaintiff to escape application of 
the arbitration agreement he signed by claiming it violated his rights as a client under 
the MFAA seems incongruous, when he never sought to take advantage of the 
MFAA’s other provisions by arbitrating the fee issue under its terms.  Nevertheless, 
we cannot agree the doctrine of judicial estoppel applies in this case.  For plaintiff to 
rely on the MFAA in resisting his contractual agreement to arbitrate was not 
inconsistent, because one of the statute’s key provisions makes arbitration voluntary 
for the client.  (§ 6200, subd. (c).)  Thus, from plaintiff’s point of view, an order 
compelling him to arbitrate the issue of unpaid legal fees violated his rights under the 
statute.  Because plaintiff’s dual positions—one rejecting arbitration pursuant to the 
MFAA, the other relying on MFAA-based client protections—were not “totally 
inconsistent” (Jackson v. County of Los Angeles, supra, 60 Cal.App.4th at p. 183), we 
conclude the doctrine of judicial estoppel does not preclude him from relying on the 
MFAA in resisting arbitration. 
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D.  Waiver 
Defendant Lerner contends plaintiff Aguilar waived his statutory rights under 
the MFAA because he sued her for legal malpractice.  At the time the parties entered 
into their agreement to arbitrate, section 6201, subdivision (d) provided:  “A client’s 
right to request or maintain arbitration under the provisions of this article is waived by 
. . . (2) seeking affirmative relief against the attorney for damages or otherwise based 
upon alleged malpractice or professional misconduct.”  (Stats. 1993, ch. 1262, § 2, 
p. 7333, italics added.)4  That plaintiff filed a lawsuit against Lerner in San Francisco 
Superior Court alleging professional malpractice is undisputed.  Consequently, 
pursuant to the plain language of the statute, he waived his rights under the MFAA.   
(See Juodakis v. Wolfrum, supra, 177 Cal.App.3d 587 [client’s filing of negligence 
action against attorney during pendency of MFAA arbitration waived right to compel 
arbitration of fee dispute].) 
Plaintiff’s counterarguments are unavailing.  He first argues a consumer of legal 
services does not waive his or her rights under the MFAA by entering into a fee 
agreement before a fee dispute arises.  This argument apparently references the 1996 
amendment to section 6204, subdivision (a).  At the time plaintiff agreed to arbitrate 
disputes with defendant the section stated:  “The parties may agree in writing to be 
bound by the award of the arbitrators.”  (Stats. 1992, ch. 1265, § 6, p. 6021.)  As 
amended, the statute now reads:  “The parties may agree in writing to be bound by the 
award of the arbitrators at any time after the dispute over fees, costs, or both, has 
                                             
 
4  
This provision exists in substantially the same form today, although it has been 
slightly reworded.  The present version of section 6201, subdivision (d) provides:  “A 
client’s right to request or maintain arbitration under the provisions of this article is 
waived by the client commencing an action or filing any pleading seeking either of the 
following:  [¶] . . .  [¶] (2) Affirmative relief against the attorney for damages or 
otherwise based upon alleged malpractice or professional misconduct.”  (Stats. 1996, 
ch. 1104, § 13.) 
 14
arisen.”  (§ 6204, subd. (a), as amended by Stats. 1996, ch. 1104, § 16, italics 
indicating amendment.)  Because plaintiff and defendant entered into their agreement 
before their dispute arose, plaintiff claims the agreement did not “waive” the 
protections of the MFAA. 
Plaintiff misconceives the issue.  Our conclusion he waived his rights under the 
MFAA rests not on the arbitration agreement he executed when he retained Lerner, 
but, rather, on the malpractice lawsuit he filed against her.  Thus, whether he entered 
his arbitration agreement pre- or post-dispute is irrelevant, as is which version of the 
statute applies to the agreement. 
Plaintiff next contends that although he “may have” waived his right to an 
MFAA arbitration by filing a malpractice lawsuit against defendant, “he did not and 
could not waive his statutory right to not be forced into a binding arbitration of an 
attorney fee dispute under the terms of an arbitration clause calling for binding 
arbitration.”  Plaintiff’s unstated premise is that, although he waived his right to 
arbitration pursuant to the MFAA, he nevertheless retained some residual rights under 
the act in the form of the procedural protections the statutory scheme provides to 
clients.  Specifically, plaintiff invokes the MFAA provisions that arbitration is 
voluntary for the client (§ 6200, subd. (c)) and that the results of an MFAA arbitration 
are nonbinding (§ 6204, subd. (a)). 
That a client may legally rely on the MFAA’s protections once he has waived 
application of that statutory scheme is not obvious.  Plaintiff cites to no provision in 
the MFAA itself so providing, nor to any other legal authority holding or even 
suggesting the protections set forth in the statute are self-executing irrespective of a 
client’s waiver of his right to MFAA arbitration under section 6201, subdivision (d).  
Nor has our own research discovered any authority acknowledging the continued 
viability of the MFAA’s client protections after such a client waiver.  Indeed, a close 
reading of the statute suggests the opposite.  Section 6201, subdivision (a), which 
 15
concerns an attorney’s obligation to provide notice to a client that he or she may 
proceed pursuant to the MFAA, provides:  “The rules adopted by the board of 
governors shall provide that an attorney shall forward a written notice to the client 
prior to or at the time of service of summons or claim in an action against the client, or 
prior to or at the commencement of any other proceeding against the client under a 
contract between attorney and client which provides for an alternative to arbitration 
under this article, for recovery of fees, costs, or both.”  (Stats. 1996, ch. 1104, § 13, 
italics added.)5 
The clear implication of this notice provision is that the Legislature understood 
a lawyer and client may choose to resolve their fee dispute by proceeding under the 
CAA when the client chooses not to proceed under the MFAA;6 no other meaning can 
reasonably be gleaned from the reference to “any other proceeding against the client 
under a contract between attorney and client which provides for an alternative to 
arbitration under this article.”  If a client who receives such notice declines to proceed 
pursuant to the MFAA and chooses instead to go forward with a CAA arbitration 
(which typically is binding), to conclude the client nonetheless retains his MFAA right 
unilaterally to reject the arbitrator’s decision would be nonsensical. 
                                             
 
5  
As it existed at the time the parties entered into their 1994 agreement to 
arbitrate, this section provided:  “(a) The rules adopted by the board of governors shall 
provide that an attorney shall forward a written notice to the client prior to or at the 
time of service of summons or claim in an action against the client for recovery of 
fees, costs, or both, covered by the provisions of this article.  The written notice shall 
be in such form as the board of governors may prescribe, but shall include a statement 
of the client’s right to arbitration under this article.  Failure to give this notice shall be 
a ground for the dismissal of the action.”  (Stats. 1993, ch. 1262, § 2, p. 7332, italics 
added.) 
6  
Because plaintiff waived his MFAA rights, we have no occasion to address 
whether or to what extent an arbitration agreement is enforceable if a client properly 
invokes the right to arbitrate under the MFAA but subsequently exercises his statutory 
right to reject the arbitrator’s decision and have a trial de novo.  (§ 6204, subd. (a).)   
 16
We presume that in the typical MFAA case, the client receives the mandated 
statutory notice pursuant to section 6201, subdivision (a) and thereafter expressly 
chooses either to proceed under the MFAA or not.  If the client chooses to arbitrate 
“under this article” (i.e., pursuant to the MFAA), the client has the right to do so 
whether or not the parties had also executed an arbitration agreement.  If the client 
fails to invoke his or her rights under the MFAA, such rights are waived entirely and, 
as here, the preexisting arbitration agreement is enforceable against the client, with no 
residual MFAA protections standing as an obstacle.7 
In sum, we conclude that once a client files a malpractice lawsuit against his or 
her former attorney, the client waives any rights under the MFAA.  Because plaintiff 
Aguilar thus waived his MFAA rights, the trial court properly found his preexisting 
arbitration agreement with Lerner was enforceable against him.8 
CONCLUSION 
                                             
 
7  
Plaintiff alleged below that defendant failed to give him notice under section 
6201, subdivision (a), but we assume his waiver of his rights under the MFAA 
includes a waiver of his right to statutory notice. 
8  
We stress the limited nature of our holding today.  Because neither party has 
raised it, we decline to address any issue concerning the Federal Arbitration Act 
(9 U.S.C. § 1).  In addition, because plaintiff and defendant entered into their 
arbitration agreement in 1994, we have no occasion to address any issues concerning 
the 1996 amendments to the MFAA.  (Stats. 1996, ch. 1104, §§ 12-18.) 
 17
The judgment of the Court of Appeal is affirmed. 
 
 
 
 
 
 
 
WERDEGAR, J. 
 
WE CONCUR: 
GEORGE, C. J. 
KENNARD, J. 
BAXTER, J. 
CHIN, J.  
1 
 
 
 
 
 
 
 
 
CONCURRING OPINION BY CHIN, J. 
 
 
I agree with the majority that plaintiff Raul V. Aguilar waived his rights under 
the mandatory fee arbitration act (MFAA).  (Bus. & Prof. Code, § 6200 et seq.)1  
Accordingly, I have signed that opinion.  I also believe, however, that Aguilar’s 
agreement to arbitrate this dispute is enforceable for a far more fundamental reason:  
An agreement for binding arbitration between an attorney and a client is enforceable 
under the California Arbitration Act (Code Civ. Proc., § 1280 et seq.; hereafter the 
CAA) whether or not the client requests and receives nonbinding arbitration under the 
MFAA.  As the majority notes, this case “poses the question whether the parties’ 
agreement to arbitrate is enforceable or is superseded by the MFAA.”  (Maj. opn., 
ante, at p. 10.)  The answer, apparent from the statutes, is straightforward.  The MFAA 
complements, not supersedes, the parties’ agreement to arbitrate.  The CAA and the 
MFAA coexist; neither preempts or supersedes the other. 
Code of Civil Procedure section 1281, part of the CAA, provides:  “A written 
agreement to submit to arbitration an existing controversy or a controversy thereafter 
arising is valid, enforceable and irrevocable, save upon such grounds as exist for the 
revocation of any contract.”  This provision and the rest of the CAA represent a 
“ ‘strong public policy in favor of arbitration as a speedy and relatively inexpensive 
                                             
 
1  
Unless otherwise indicated, all further statutory citations are to the Business and 
Professions Code. 
2 
means of dispute resolution.’  [Citations.]  Consequently, courts will ‘ “indulge every 
intendment to give effect to such proceedings.” ’ ”  (Moncharsh v. Heily & Blase 
(1992) 3 Cal.4th 1, 9.) 
Nothing in the MFAA makes the arbitration agreement of this case 
unenforceable.  The MFAA and the CAA create two very different types of arbitration.  
As the majority explains, arbitration under the MFAA is nonbinding, but arbitration 
under the CAA is binding.  (Maj. opn., ante, at p. 9.)2  Both may be given effect.  
Clients may, if they wish, request and obtain nonbinding arbitration under the MFAA.  
That arbitration may, and often will, resolve the dispute.  But if the client does not 
request nonbinding arbitration, or if it is held but does not resolve the dispute, then the 
MFAA has played its role, and the matter would continue without it.  Either party may 
then pursue judicial action unless the parties had agreed to binding arbitration.  In that 
event, the CAA would apply, and the dispute would go to binding arbitration.  This 
conclusion is consistent with the statutory language of both the MFAA and the CAA 
and the strong public policy in favor of binding arbitration as a means of resolving 
disputes. 
Section 6201, subdivision (a), requires an attorney to inform the client of the 
client’s right to arbitration under the MFAA “prior to or at the time of service of 
summons or claim in an action against the client, or prior to or at the commencement 
of any other proceeding against the client under a contract between attorney and 
client which provides for an alternative to arbitration under this article . . . .”  (Italics 
added.)  The italicized language acknowledges that the parties may agree to some 
proceeding to resolve the controversy other than a judicial action, such as binding 
arbitration under the CAA.  The same section goes on to provide that if an attorney 
                                             
 
2  
For simplicity, I will sometimes just refer to arbitration under the MFAA as 
nonbinding arbitration and arbitration under the CAA as binding arbitration. 
3 
“commences an action in any court or any other proceeding . . ., the client may stay 
the action or other proceeding” by requesting arbitration under the MFAA, which 
must be done “prior to the filing of an answer in the action or equivalent response in 
the other proceeding . . . .”  (§  6201, subd. (b), italics added.)  If the client does 
request nonbinding arbitration, “the action or other proceeding shall be automatically 
stayed until the award of the arbitrators is issued or the arbitration is otherwise 
terminated.”  (§ 6201, subd. (c), italics added.)  This means that if the client requests 
nonbinding arbitration under the MFAA, the judicial action or other proceeding is 
stayed, but only until the nonbinding arbitration is finished.  The other proceeding is 
merely stayed pending the nonbinding arbitration, not dismissed permanently. 
In some respects, the MFAA statutory language is not entirely clear.  Section 
6201, subdivision (c), also states that a court may vacate the stay if it finds the matter 
not appropriate for nonbinding arbitration under the MFAA, and that “[t]he action or 
other proceeding may thereafter proceed subject to the provisions of Section 6204.”  
Section 6204, in turn, provides that the parties to the nonbinding arbitration may agree 
to be bound by the arbitrators’ award, but, as it reads today, only after the controversy 
has arisen.  It also states that if there is no such agreement, “either party shall be 
entitled to a trial after arbitration if sought within 30 days . . . .”  (§  6204, subd. (a), 
italics added.)  The statute goes on to provide how “the trial after arbitration shall be 
initiated” both when an action is already pending and when no action is pending.  
(§ 6204, subds. (b) & (c).)  In the latter situation, “the trial after arbitration shall be 
initiated by the commencement of an action in the court having jurisdiction over the 
amount of money in controversy . . . .”  (§  6204, subd. (c), italics added.) 
Aguilar argues, and the court in Alternative Systems, Inc. v. Carey (1998) 67 
Cal.App.4th 1034, 1042, footnote 5 (Alternative Systems), concluded, that the 
references in section 6204 to a “trial” and “an action in . . . court” mean that after 
nonbinding arbitration, the dispute can only be resolved in court, and may not be 
4 
resolved by binding arbitration even if the parties had agreed to such binding 
arbitration.  I disagree.  Although this reading of section 6204 is plausible if the 
section is viewed in isolation, the section does not exist in isolation but is part of the 
MFAA, which includes section 6201.  It is “a cardinal rule of statutory construction, 
that ‘every statute should be construed with reference to the whole system of law of 
which it is a part so that all may be harmonized and have effect.’ ”  (Landrum v. 
Superior Court (1981) 30 Cal.3d 1, 14.)  The references to a trial and court action in 
section 6204 do not negate section 6201.  In context, and in order to give effect to 
section 6201, section 6204 must be construed as merely providing the procedure to 
follow if the nonbinding arbitration is followed by a judicial action, not as prohibiting 
the parties from agreeing to some other proceeding.  The latter interpretation would 
make meaningless section 6201’s acknowledgment that the parties may agree to some 
form of dispute resolution other than judicial action and its repeated references to 
some proceeding other than a court action. 
Alternative Systems, supra, 67 Cal.App.4th 1034, held that if the client requests 
and obtains nonbinding arbitration under the MFAA, an agreement to binding 
arbitration cannot be given effect, and the dispute must proceed to a trial de novo.  It 
concluded that the MFAA “preempted” the binding arbitration agreement.  (Id. at p. 
1044.)  The majority cites Alternative Systems but expresses no opinion on whether it 
was correct.  (Maj. opn., ante, at pp. 8, 15, fn. 6.)  For the  
5 
reasons I have stated, I believe it was not correct.  By its very terms, the MFAA 
complements the CAA rather than preempts it. 
Alternative Systems, supra, 67 Cal.App.4th 1034, cannot survive today’s ruling.  
We are holding today that a client who does not request nonbinding arbitration has 
waived the MFAA’s protections, and the binding arbitration agreement is enforceable.  
If Alternative Systems were to remain valid, that would mean that a client who agreed 
to binding arbitration could evade that agreement simply by requesting nonbinding 
arbitration.  The lesson future clients who had agreed to binding arbitration would 
learn from this case is that if they want to evade their agreement, they must demand 
nonbinding arbitration whether or not they otherwise want it.  Future clients who wish 
to sue in court despite an arbitration agreement will be forced to go to nonbinding 
arbitration before they could do so.  This situation would be unfortunate for two 
reasons.  First, it would permit a client to evade an arbitration agreement by a simple 
procedural device, contrary to the letter and intent of the CAA.  Second, it would 
require, as a prerequisite to evading the arbitration agreement, that the client pursue 
nonbinding arbitration.  This would result in many sham nonbinding arbitrations that 
neither party wanted or intended to accept. 
We cannot reasonably conclude that the Legislature created a system whereby 
clients who agree to binding arbitration may evade that agreement, but only if they go 
through the charade of demanding and obtaining a nonbinding arbitration that they 
may not want.  Such a construction of the MFAA would not be “ ‘ “indulg[ing] every 
intendment to give effect” ’ ” to a binding arbitration agreement.  (Moncharsh v. Heily 
& Blase, supra, 3 Cal.4th at p. 9.)  I believe the  
6 
majority has effectively overruled Alternative Systems, supra, 67 Cal.App.4th 1034, 
and I would do so expressly. 
 
CHIN, J. 
 
WE CONCUR: 
 
BAXTER, J. 
BROWN, J. 
 
1 
 
 
 
 
 
 
 
CONCURRING OPINION BY MORENO, J. 
 
I concur in the judgment.  I agree with Justice Chin that the issue here is less 
one of waiver than of the relationship between the mandatory fee arbitration act, 
Business and Professions Code section 6200 et seq. (MFAA), and the California 
Arbitration Act (CAA).  (Code Civ. Proc., § 1280 et seq.)  I further agree with Justice 
Chin that there is no incompatibility between the two arbitration acts, at least not in 
this case.  But as the majority correctly points out, plaintiff and defendant entered into 
the arbitration agreement in 1994, and we have no occasion to consider the meaning of 
the 1996 amendments to the MFAA.  (Maj. opn., ante, at p. 16, fn. 8, citing Stats. 
1996, ch. 1104, §§ 12-18.)  One of those amendments changed Business and 
Professions Code section 6204, subdivision (a), to provide that an MFAA arbitration 
can only be made legally binding “after the dispute over fees, costs, or both, has 
arisen.”  (Stats. 1996, ch. 1104, § 16.)  At least one court has held that this amendment, 
among other things, evinces a legislative intent to preclude binding predispute 
agreements to arbitrate legal fees under the CAA.  (Alternative Systems, Inc. v. Carey 
(1998) 67 Cal.App.4th 1034, 1042-1044.) 
Unlike Justice Chin, I express no opinion about whether Alternative Systems 
was correctly decided vis-à-vis post-1996 arbitration agreements, which are not at 
issue in this case.  I agree with the majority that a client may waive the right to 
challenge a CAA arbitration if he or she declines to undergo an MFAA arbitration but 
instead elects, after being properly notified of his or her MFAA rights, to participate in 
a CAA arbitration.  (Maj. opn., ante, at p. 15.)  But I do not understand the majority 
 
2 
opinion to be deciding whether post-1996 predispute CAA agreements to arbitrate 
legal fees may be enforced, consistent with the MFAA, without the client’s consent.  I 
also express no opinion about whether a state statute that precludes binding predispute 
arbitration agreements of legal fees would be preempted by the Federal Arbitration 
Act.  (See maj. opn., ante, at p. 16, fn. 8.) 
 
 
 
 
 
 
MORENO, J. 
 
 
See next page for addresses and telephone numbers for counsel who argued in Supreme Court. 
 
Name of Opinion Aguilar v. Lerner 
__________________________________________________________________________________ 
 
Unpublished Opinion 
Original Appeal 
Original Proceeding 
Review Granted XXX 90 Cal.App.4th 177 
Rehearing Granted 
 
__________________________________________________________________________________ 
 
Opinion No. S099667 
Date Filed: April 22, 2004 
__________________________________________________________________________________ 
 
Court: Superior 
County: San Francisco 
Judge: Ronald Evans Quidachay 
 
__________________________________________________________________________________ 
 
Attorneys for Appellant: 
 
Aguilar & Sebastinelli and Allen J. Kent for Plaintiff and Appellant. 
 
 
 
 
 
__________________________________________________________________________________ 
 
Attorneys for Respondent: 
 
Howard R. Melamed for Defendant and Respondent. 
 
Conkle & Olesten, William C. Conkle and Eric S. Engel for as Amici Curiae on behalf of Defendant and 
Respondent. 
 
 
 
 
 
 
 
 
 
 
 
 
Counsel who argued in Supreme Court (not intended for publication with opinion): 
 
No appearance for Plaintiff and Appellant at oral argument 
 
Howard R. Melamed 
319 Lennon Lane 
Walnut Creek, CA  94598 
(925) 932-0417