Facts

KAA Design Group Inc. (“KAA”) is an architectural firm that designs high-end homes.

In October 2004, claimant KAA and Steven and Lorraine Spira entered into a contract, wherein KAA agreed to provide architectural services in connection with the remodel and addition of a high-end home in Hancock Park.

In April 2005, the parties’ relationship was terminated. At the time that KAA and the Spiras parted ways, the Spiras owed KAA over $85,000 in connection with the architectural services provided by KAA. Despite numerous demands, the Spiras refused to pay KAA for the outstanding invoices owed. Instead, the Spiras insisted that KAA turn over its drawings so that they could continue on with the design and construction process. KAA refused to turn over its drawings because of the outstanding balance owed to KAA. Despite this, the Spiras erased KAA’s title block from the drawings and used KAA’s work product to advance the project, all the while refusing to pay KAA for the work already performed.

KAA sued the Spiras in Superior court seeking compensation for breach of contract because of the Spiras’ willful failure to pay the monies owed to KAA. The Spiras filed a motion to compel arbitration, which was granted. In arbitration, the Spiras filed a counterclaim seeking over $400,000 in delay claims arising out of KAA’s alleged design and failure to diligent to prosecute the project. The matter was adjudicated by way of binding arbitration. At arbitration, KAA sought all of the monies requested at the hearing, totaling over $115,000. The Spiras requested that the arbitrator award over $400,000 in damages for delays allegedly attributed to KAA. The arbitrator awarded everything KAA requested, i.e., its principal balance of $85,624 and $29,540 in interest. The arbitrator awarded nothing to the Spiras on their counter-claim.

Settlement Discussions

KAA demanded $65,000; the Spiras made no offer.

Result

Total award of $115,164 ($85,624 in principal; $29,540 in prejudgment interest)

Other Information

The contract between the parties contains a prevailing party’s clause. When the petition to compel arbitration was granted, the court retained jurisdiction to hear all motions for attorney’s fees based on the contract because the American Arbitration Association took the position that the AAA was not permitted to adjudicate claims that included attorney's fees in consumer cases. KAA will be filing its motion for attorney's fees and costs pursuant to the prevailing party’s clause in the contract between the parties.