Can arbitration panels award attorney fees for judicial proceedings that confirm their awards? Westgate v. Consumer Protection Group Explained

In a significant decision affecting arbitration practice in Utah, the Utah Supreme Court addressed the scope of arbitration panels’ authority to award attorney fees in Westgate v. Consumer Protection Group. The case arose from a decade-long litigation involving claims under the Utah Pattern of Unlawful Activity Act (UPUAA).

Background and Facts

After prevailing on UPUAA fraud claims in arbitration, Consumer Protection Group (CPG) requested attorney fees for three categories of work: pre-arbitration litigation, arbitration proceedings, and post-arbitration judicial proceedings confirming the arbitrators’ decision. The arbitration panel awarded $558,810.30 for arbitration work and $88,829.50 for post-arbitration proceedings. Westgate challenged both awards, arguing the panel lacked authority to award fees for judicial proceedings and that the fees exceeded amounts CPG was contractually obligated to pay its attorneys.

Key Legal Issues

The court addressed two primary issues: first, whether arbitration panels have authority under the Utah Uniform Arbitration Act (UUAA) to award attorney fees for judicial proceedings confirming their awards; and second, whether reasonable attorney fees under the UPUAA must be limited to amounts actually contracted to be paid to counsel.

Court’s Analysis and Holding

The court ruled that arbitration panels exceed their authority when awarding fees for post-arbitration judicial proceedings. The UUAA limits arbitrators to awarding “reasonable expenses of arbitration,” and the statute’s structure indicates that district courts have exclusive authority to award fees for confirmation proceedings under section 78B-11-126(3). However, the court affirmed the arbitration fee award, finding no manifest disregard of law in calculating reasonable fees without regard to contracted amounts, as the UPUAA does not expressly limit recovery to actually incurred expenses.

Practice Implications

This decision creates important boundaries for arbitration practice in Utah. Practitioners should understand that arbitrators cannot award fees for judicial confirmation proceedings, though parties may contractually grant this authority since UUAA section 122 is not among the statute’s nonwaivable provisions. The ruling also clarifies that reasonable attorney fees under fee-shifting statutes like the UPUAA are not automatically capped at contracted rates, providing flexibility in fee calculations for prevailing parties.