Filed 8/14/26 Lippincott v. Hassibi CA6 NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SIXTH APPELLATE DISTRICT
HENRY LIPPINCOTT, H051829 (Santa Clara County
Plaintiff and Appellant, Super. Ct. No. 22CV393460)
v.
ARASH HASSIBI et al.,
Defendants and Appellants.
Plaintiff Henry Lippincott brought an arbitration proceeding against Arash Hassibi and Joinedapp, Inc. (collectively, defendants) but the proceeding was terminated after defendants did not timely pay arbitration fees. Lippincott sued defendants in state court, and the trial court awarded Lippincott $244,095.73 in attorney fees and costs associated with the abandoned arbitration proceeding and $12,000 in monetary sanctions for expenses incurred as a result of the nonpayment. (Code Civ. Proc., §§ 1281.98, subds. (a)–(c), 1281.99, subd. (a); undesignated statutory references are to this Code.) Both parties appealed. While the appeal was pending, the Supreme Court concluded a party may avoid forfeiture of its arbitral rights under section 1281.98 by showing its nonpayment was excusable. (Hohenshelt v. Superior Court (2025) 18 Cal.5th 310, 323 (Hohenshelt).) We will reverse the order and remand for the trial court to determine whether defendants’ nonpayment was excusable such that they had not abandoned the arbitration proceeding, preventing Lippincott from recovering associated attorney fees
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and costs (§ 1281.98, subd. (c)(1)), and to determine anew the amount of sanctions to award Lippincott due to defendants’ nonpayment. (§ 1281.99, subd. (a).)
I. FACTUAL AND PROCEDURAL BACKGROUND Joinedapp is a software company that aspires to enable ecommerce transactions within social messaging applications. Hassibi is Joinedapp’s CEO. Lippincott worked for Joinedapp as a co-founder focused on business development and fundraising. He signed multiple employment and stock option agreements containing arbitration clauses. The clauses stated that arbitration would be the only remedy for any claim against Joinedapp and its officers or agents. The employment agreement was governed by California law and the stock option agreement by Delaware law. The arbitration clauses stated that any arbitration proceeding would proceed under the American Arbitration Association (AAA) commercial arbitration rules and that the parties would be entitled to discovery in accordance with the Federal Rules of Civil Procedure.
Lippincott initiated an arbitration dispute against defendants with 18 separate causes of action, alleging defendants terminated him without cause or any compensation after he raised millions of dollars in capital for Joinedapp but just before his stock options would vest. Lippincott also asserted defendants fraudulently misrepresented Joinedapp’s compensation structure and success to Lippincott and outside investors and incorrectly classified him as an independent contractor. AAA determined the matter would be administered in accordance with the AAA commercial arbitration rules, the substantive law of the claims at issue would apply, and discovery would be completed in accordance with the Federal Rules of Civil Procedure.
AAA administratively closed the matter after defendants did not pay the arbitration filing fee despite multiple payment reminders. Hassibi represented that Joinedapp had obtained different counsel but did not pay the filing fees after asking for an extension. Lippincott elected to pay the filing fees to begin the arbitration. Defendants changed legal counsel two more times the following month.
The arbitration proceeded, but defendants’ counsel eventually withdrew due to defendants’ nonpayment of bills. The arbitrator suspended the matter because defendants
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did not pay the arbitration fees. Hassibi informed the arbitrator that he was working on securing new funds and asked for a six-week extension that was not granted by Lippincott. Due to defendants’ noncompliance with the payment request, the arbitrator terminated the arbitration proceeding.
Lippincott sued defendants in superior court after the labor commissioner declined to assert jurisdiction, alleging 21 causes of actions for securities law and labor law violations, fraud and misrepresentation, and breach and default of arbitration. Lippincott moved for attorney fees, costs, and interest associated with the abandoned arbitration proceeding and requested monetary sanctions in the form of ongoing attorney fees, costs, and interest incurred in the court case, both with a 2x lodestar multiplier. According to Lippincott, he incurred the court costs only as a result of defendants’ breach of nonpayment. (§§ 1281.98, subd. (c), 1281.99, subd. (a).) He pointed to Hassibi’s wealth to argue that defendants defaulted on the arbitration strategically and asked that the trial court enter default judgment against defendants, strike defendants’ pleadings and deny their discovery requests, and hold defendants in contempt if they refused to promptly pay the requested fees and sanctions. (§ 1281.99, subd. (b).)
Defendants argued that Lippincott lacked standing to bring the motion because he was not an employee. They also asserted that Lippincott was not entitled to fees and costs before sections 1281.98 and 1281.99 were enacted or before the breach of nonpayment, and that Lippincott could only recover fees and costs that were reasonably necessary to bring the sanctions motion. Defendants argued that Lippincott’s requested fees and costs were unreasonable and that defendants’ efforts to move the case forward rendered the request for discretionary sanctions inappropriate.
The trial court granted Lippincott’s motion for fees and costs associated with the abandoned arbitration proceeding (§ 1281.98, subd. (c)(1)) and his request for monetary sanctions consisting of expenses incurred as a result of defendants’ breach (§§ 1281.98, subd. (c)(2), 1281.99, subd. (a)). The trial court determined Lippincott had standing to bring the motion as an allegedly misclassified employee, defendants were liable for fees and expenses incurred before the enactment of sections 1281.98 and 1281.99, and
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Lippincott did not request any expenses incurred before the nonpayment under section 1281.99. According to the trial court, the fees and costs associated with the abandoned arbitration proceeding were generally expected to be awarded (§ 1281.98, subd. (c)(1)) and monetary sanctions consisting of reasonable attorney fees and costs incurred as a result of the material breach were mandatory (§ 1281.99, subd. (a)), but nonmonetary sanctions were discretionary depending on whether the drafting party acted with substantial justification or whether imposing nonmonetary sanctions would be unjust (§ 1281.99, subd. (b)).
The trial court determined Lippincott should be awarded attorney fees for preparatory work and work completed during the arbitration and that his counsel’s hours and hourly rate were reasonable. But it reduced the requested fees by refusing to apply a lodestar multiplier, and it awarded as sanctions only the fees and costs incurred as a result of changing course from arbitration to litigation. Ultimately, the court awarded Lippincott $244,095.73 in fees, costs, and interest related to the abandoned arbitration proceeding under section 1281.98, subdivision (c)(1), and $12,000 in sanctions for fees and costs incurred in bringing the current motion due to defendants’ material breach under section 1281.99, subdivision (a). The trial court refused to impose terminating sanctions under section 1281.99, subdivision (b), noting that defendants’ financial circumstances appeared to be the primary driver of their failure to pay arbitration fees.
Defendants moved to vacate the order granting fees and sanctions or, on the alternative, requested a rehearing. Defendants argued Lippincott’s motion was procedurally improper because he both moved for attorney fees and brought a separate cause of action to recover attorney fees, the trial court improperly adjudicated Lippincott’s employee misclassification status by ignoring the arbitrator’s findings in the underlying arbitration, Hassibi was not a drafting party to the arbitration agreement and could not be liable for sanctions, and the fee award was excessive and not supported by sufficient evidence. The trial court construed defendants’ motion to vacate as a motion for reconsideration and denied the motion as presenting no new law or facts that could not have been raised in the original briefing. (§ 1008, subd. (a).) (The court also
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removed defendants’ simultaneous motion for new trial from the calendar as the case had not yet gone to trial.) The trial court stated it had not yet made any rulings on the merits or entered a final judgment and denied Lippincott’s request for additional fees and sanctions for having to oppose the motion to vacate.
II. DISCUSSION
The California Arbitration Act (CAA) was enacted to safeguard the right of private parties to resolve their disputes through the streamlined procedures of arbitration. (Gallo v. Wood Ranch USA, Inc. (2022) 81 Cal.App.5th 621, 633 (Gallo), disapproved on other grounds in Hohenshelt, supra, 18 Cal.5th at p. 349.)
Section 1281.98 assists consumers and employees who are required to submit a dispute to arbitration and are stuck in “ ‘procedural limbo’ ” because the company requiring arbitration has not paid the arbitration fees required to proceed. (Gallo, supra, 81 Cal.App.5th at p. 634.) Section 1281.98, subdivision (a)(1) states that the party who drafts an employment agreement and does not pay arbitration fees within 30 days after the due date during the pendency of an arbitration is in material breach of the arbitration agreement, in default of the arbitration, and waives the right to compel the employee to proceed with arbitration. (§ 1281.98, subd. (a)(1).) If an employer materially breaches the agreement and is in default under that provision, the employee may unilaterally elect to withdraw the claim from arbitration and litigate in court following the material breach. (§ 1281.98, subd. (b)(1).) Alternatively, the employee may continue with the arbitration if the arbitration provider agrees to continue administering the proceeding notwithstanding the drafting party’s failure to pay fees or costs. (§ 1281.98, subd. (b)(2).) The employee may also petition the court for an order compelling the drafting party to pay all arbitration fees (§ 1281.98, subd. (b)(3)), or continue with arbitration by paying the drafting party’s fees and recover them as part of an arbitration award without regard to the ultimate decision on the merits. (§ 1281.98, subd. (b)(4).)
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If the employee proceeds to litigate in court, the employee may bring a motion or separate action to recover all attorney fees, costs, and interest “associated with the abandoned arbitration proceeding.” (§ 1281.98, subd. (c)(1).) The court must also impose sanctions upon the employer in accordance with section 1281.99. (§ 1281.98, subd. (c)(2).) Section 1281.99 mandates a monetary sanction against a drafting party that materially breaches an arbitration agreement by ordering the drafting party to pay “reasonable expenses,” including attorney fees and costs, incurred by the employee “as a result of the material breach” (§ 1281.99, subd. (a)), and allows the court to impose evidentiary, terminating, or contempt sanctions unless the court finds the drafting party acted with substantial justification or imposition of the nonmonetary sanctions would be unjust (§ 1281.99, subd. (b)).
A. THE TRIAL COURT MUST DETERMINE WHETHER DEFENDANTS’ NONPAYMENT MAY BE EXCUSED UNDER SECTION 1281.98 The CAA’s procedural rules apply by default to cases brought in California courts unless the parties expressly agree the Federal Arbitration Act’s (FAA) procedural rules apply or the CAA is preempted. (Quach v. California Commerce Club, Inc. (2024) 16 Cal.5th 562, 582.) Although the parties agree that sections 1281.98 and 1281.99 apply, defendants argue for the first time on appeal that they are not required to pay attorney fees and costs related to the abandoned arbitration proceeding because section 1281.98 is preempted by the FAA.1 We exercise our discretion to consider the
1 Defendants also argue for the first time on appeal that section 1281.97 is preempted by the FAA. Section 1281.97 is identical to section 1281.98 but applies when arbitration has not yet begun. (Compare § 1281.97, subd. (a)(1) with § 1281.98, subd. (a)(1)). As defendants concede, courts analyze and apply sections 1281.97 and 1281.98 similarly. (Williams v. West Coast Hospitals, Inc. (2022) 86 Cal.App.5th 1054, 1066, disapproved on other grounds in Hohenshelt, supra, 18 Cal.5th at p. 349.) We will not address defendants’ contention because Lippincott did not request nor did the trial court award fees or sanctions under section 1281.97.
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issue of preemption, which we review de novo. (People v. Venice Suites, LLC (2021) 71 Cal.App.5th 715, 724; Gallo, supra, 81 Cal.App.5th at p. 633.)
While the appeal was pending, the California Supreme Court held section 1281.98’s provision that drafting parties waive their right to arbitrate if they do not timely to pay arbitration fees is not preempted by the FAA because the provision only applies if nonpayment was willful. (Hohenshelt, supra, 18 Cal.5th at pp. 322–323.) In Hohenshelt, an employee sought to withdraw from arbitration after the employer did not timely pay arbitration fees; the employer argued that defense counsel was preparing to go out on paternity leave and was unaware of the invoices due to an earlier notice stating the arbitrator was unavailable. (Id. at pp. 324–325.) Construing section 1281.98 in the context of other statutes, the Court determined the Legislature was concerned about “willful, grossly negligent, or fraudulent” nonpayment of arbitration fees and intended to deter employers from engaging in strategic nonpayment of fees. (Hohenshelt, at pp. 323, 346.) The Legislature did not intend to strip companies and employers of their contractual right to arbitration where nonpayment of fees results from a good faith mistake, inadvertence, or other excusable neglect. (Id. at pp. 323, 337.)
The Supreme Court concluded that section 1281.98 is not preempted by the FAA because the provision renders arbitration agreements enforceable on the same grounds that apply to other contracts. (Hohenshelt, supra, 18 Cal.5th at pp. 327, 344, 346.) If a drafting party willfully withholds fees needed to proceed with arbitration, the other party’s duty to arbitrate is discharged, but if the drafting party acts in good faith, its arbitral rights are not automatically discharged and the situation is evaluated under usual contract principles governing relief from default, including whether the other party has been prejudiced. (Id. at pp. 344, 346.) The Supreme Court directed the Court of Appeal “to remand the matter to the trial court for consideration of whether [the employer] may be excused for its failure to timely pay arbitration fees, such that the stay of litigation
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should not be lifted and the parties should be returned to arbitration, and whether the delay resulted in compensable harm to [the employee].” (Id. at p. 349.)
While Hohenshelt considered whether a drafting party forfeited its arbitral rights under section 1281.98, subdivision (a), awarding attorney fees and costs associated with the arbitration proceeding under section 1281, subdivision (c)(1) “is premised on a finding that the drafting part[y] has ‘abandoned’ the arbitration, that is, has forfeited its arbitral rights.” (Wilson v. Tap Worldwide, LLC (2025) 114 Cal.App.5th 1077, 1088 (Wilson).) Here, the trial court followed pre-Hohenshelt case law and strictly applied section 1281.98. Similar to Hohenshelt, the trial court made no findings on whether defendants’ nonpayment was excusable such that they could avoid forfeiture of arbitration under section 1281.98. (Hohenshelt, supra, 18 Cal.5th at p. 349.) Lippincott included information below discussing the value of Hassibi’s property, defendants’ ability to pay their own counsel, Joindapp’s payroll, a PPP loan, and assurances on Joinedapp’s website that it was well funded, and argued nonpayment was a strategic choice. The trial court considered defendants’ financial situation only when finding that terminating sanctions under section 1281.99, subdivision (b) would be unjust and contrary to public policy that favors a decision on the merits. The court noted defendants’ “financial situation … appeared to be the primary driver of their failure to pay arbitration fees” and defendant Joinedapp displayed all indicators of a company in financial trouble when arbitration fees were due “in light of its multiple changes of counsel, lack of counsel for a period of time, and inability to pay the arbitration fees.” In a footnote, the court wrote that Lippincott presented “speculative evidence regarding defendant Hassibi’s financial circumstances (based on the alleged value of Hassibi’s home and the alleged value of his car). Without any more concrete information about Hassibi’s actual finances, including any debt information, the court finds this information to be of limited value, at best, and accords it zero weight.”
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Because the trial court did not have the benefit of Hohenshelt, we will remand to the trial court to determine in the first instance whether defendants’ nonpayment should be excused as an inadvertent mistake or excusable neglect. (Hohenshelt, supra, 18 Cal.5th at p. 323.) Lippincott contends on appeal that after he moved for sanctions below, he learned that defendant Joinedapp had hundreds of thousands of dollars in its bank account when refusing to pay the arbitration fees despite asserting lack of funds below.2 The trial court’s inquiry will require the trial court to scrutinize defendants’ reasons for nonpayment, which it may not be able to do on the present record without further discovery.
We granted defendants’ request that the parties be permitted to provide supplemental briefing on Wilson, supra, 114 Cal.App.5th 1077, a case that interpreted Hohenshelt. Defendants argue Wilson supports their arguments concerning the appropriate amount of attorney fees and costs under section 1281.98, subdivision (c)(1). In Wilson, the employer-initiated payment for an arbitration proceeding on the last day it was due, but the payment was not processed until the following Monday. (Wilson, at p. 1082.) The trial court strictly applied section 1281.98 and granted the employee’s motion to vacate arbitration and awarded the employee attorney fees and costs under section 1281.98, subdivision (c)(1) and sanctions under section 1281.99, subdivision (a). (Wilson, at p. 1083.) The Wilson court reversed the order awarding attorney fees and costs and concluded remand was not necessary because the uncontested factual findings
2 Lippincott requests in his reply brief that we admit Joinedapp’s bank records as evidence. We deny the request, which is not supported by a motion (Cal. Rules of Court, rule 8.252(a)), noting also that we may not take judicial notice of the truth of the records’ contents even if the records are judicially noticeable. (Heritage Pacific Financial, LLC v. Monroy (2013) 215 Cal.App.4th 972, 987–988.) As for defendants’ contention that Lippincott should be sanctioned for introducing confidential records, the issue is forfeited because it is not supported by argument. (Cal. Rules of Court, rule 8.204(a)(1)(B); Tellez v. Rich Voss Trucking, Inc. (2015) 240 Cal.App.4th 1052, 1066.)
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by the trial court established the employer’s untimely payment was not willful, grossly negligent, or fraudulent. (Id. at pp. 1088–1091.)
Unlike Wilson, defendants here did not initiate payment for arbitration fees at any point, and the trial court did not make factual findings regarding whether nonpayment was willful or fraudulent. We cannot make a finding concerning the nature of nonpayment on the record before us. The proper disposition is to allow the trial court to determine in the first instance whether defendants’ nonpayment should be excused under section 1281.98. (See Hohenshelt, supra, 18 Cal.5th at p. 349.)
B. THE TRIAL COURT MUST REDETERMINE THE APPROPRIATE AMOUNT OF MONETARY SANCTIONS UNDER SECTION 1281.99 The drafting party of an arbitration agreement is subject to mandatory monetary sanctions under section 1281.99 if it materially breaches the arbitration agreement through nonpayment of arbitration fees. (§ 1281.99, subd. (a).) The court must also impose sanctions on the drafting party in accordance with section 1281.99 if an employee withdraws from arbitration and proceeds in court after the drafting party’s material breach. (§ 1281.98, subd. (c)(2).) Section 1281.99’s mandatory sanction provision requires an employer to pay “reasonable expenses, including attorney’s fees and costs, incurred by the employee … as a result of the material breach.” (§ 1281.99, subd. (a).) Section 1281.99 permits compensatory damages resulting from material breach “[c]onsistent with general contract law” (Hohenshelt, supra, 18 Cal.5th at pp. 333, 339– 340), avoiding preemption by the FAA.
We invited supplemental briefing on the propriety and scope of sanctions under section 1281.98, subdivision (c)(2) and section 1281.99, subdivision (a). Defendants acknowledge that unlike fees and costs associated with the abandoned arbitration proceeding which may be awarded under section 1281.98, subdivision (c)(1) only if nonpayment was inexcusable, monetary sanctions under section 1281.99 are owed regardless of whether nonpayment was willful. (Hohenshelt, supra, 18 Cal.5th at
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pp. 339–340; Wilson, supra, 114 Cal.App.5th at p. 1090.) The parties fundamentally disagree on the scope of sanctions that must be awarded under section 1281.99, subdivision (a).
In the trial court, Lippincott sought as sanctions the fees and costs incurred in the trial court case, including attorney fees, costs, and interest, all with a 2x multiplier. He also sought ongoing payments of those expenses on monthly basis. The trial court found Lippincott’s interpretation of section 1281.99 overbroad and found that Lippincott was entitled to fees and costs that may have been incurred “as a result of having had to transition from arbitration to litigation, including any fees and costs associated with bringing this motion for sanctions.” The trial court ultimately limited the lodestar to 15 hours of attorney time associated with the sanctions motion and awarded Lippincott $12,000 in attorney fees as sanctions, leaving open the possibility of Lippincott bringing a separate motion making a more specific showing of fees and costs “clearly and unmistak[]ably … [incurred as] a direct result of Defendants’ failure to maintain the arbitration.” Lippincott argues the trial court interpreted the scope of section 1281.99, subdivision (a) too narrowly because the “as a result of” suggests but-for causation that entitles him to attorney fees and costs associated with the court case. Defendants contend Lippincott is entitled to only those fees and costs incurred due to the employer’s material breach of nonpayment, such as those incurred to investigate the breach and bring a sanctions motion.
The scope of expenses authorized under section 1281.99 is a question of statutory interpretation, which we review de novo. (People v. Gonzalez (2017) 2 Cal.5th 1138, 1141.) “As in any case involving statutory interpretation, our fundamental task here is to determine the Legislature’s intent so as to effectuate the law’s purpose.” (People v. Murphy (2001) 25 Cal.4th 136, 142.) We first examine the statute’s words and give them a plain and commonsense meaning. (Ibid.) We “consider the language of the entire scheme and related statutes, harmonizing the terms when possible.” (Riverside County
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Sheriff’s Dept. v. Stiglitz (2014) 60 Cal.4th 624, 632.) If statutory language is susceptible of more than one reasonable interpretation, we “ ‘look to a variety of extrinsic aids, including the ostensible objects to be achieved, the evils to be remedied, the legislative history, public policy, contemporaneous administrative construction, and the statutory scheme of which the statute is a part.’ ” (In re M.M. (2012) 54 Cal.4th 530, 536 (In re M.M.).)
Section 1281.99, subdivision (a) states that a court must impose monetary sanctions against an employer who materially breaches an arbitration agreement through nonpayment by ordering the employer to pay “reasonable expenses, including attorney’s fees and costs, incurred by the employee or consumer as a result of the material breach.” (§ 1281.99, subd. (a).) The “reasonable expenses” language of section 1281.99 is narrower than section 1281.98, subdivision (c)(1), which allows an employee to recover “all attorney’s fees and all costs” associated with an abandoned arbitration proceeding. (In re M.M., supra, 54 Cal.4th at p. 536.) Section 1281.99 does not define “as a result of the material breach.” (§ 1281.99, subd. (a).) The Supreme Court recently stated that section 1281.99 serves “to make the [nonbreaching] party whole” after nonpayment of arbitration fees. (Hohenshelt, supra, 18 Cal.5th at pp. 339–340.)
Because section 1281.99 functions as a mechanism to make a party whole due to an employer’s nonpayment of arbitration fees, the provision requires awarding more than merely the attorney fees and costs incurred to bring the sanctions motion. (Cf. Sino Century Development Limited v. Farley (2012) 211 Cal.App.4th 688, 698 [California Rule of Court, rule 2.30 was not intended to fully compensate an aggrieved party and authorizes a court to award as sanctions only reasonable attorney fees incurred in connection with a motion for sanctions and the order to show cause].) The awarded sanctions must consist of actual sustained expenses that would not have been incurred but-for the breach, placing Lippincott in the same position he would have been in if the breach did not occur. (Morgado v. City and County of San Francisco (2020)
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53 Cal.App.5th 1216, 1220.) Those expenses include the attorney fees and costs incurred directly due to the breach itself, such as fees and costs related to documenting and establishing the breach, preparing the motion triggered by the breach, and directing the matter to the trial court.
Limiting sanctions to expenses incurred from the breach as described ante aligns with the statutory scheme. An employer that does not pay arbitration fees is subject to various consequences. (Hohenshelt, supra, 18 Cal.5th at p. 339.) The employer waives its right to arbitration and the employee may proceed in court and recover attorney fees and costs associated with the abandoned arbitration under section 1281.98, subdivision (c)(1) only if the employer’s nonpayment was willful. (Hohenshelt, at pp. 344, 346.) The employee, however, is entitled to expenses incurred due to the nonpayment under section 1281.99, subdivision (a) regardless of the reason for nonpayment (Hohenshelt, at pp. 339–340) and regardless of whether the employee proceeds in court thereafter. (See § 1281.98, subd. (c)(2).) To make an employee whole yet avoid a windfall in either circumstance, sanctions under section 1281.99, subdivision (a) must be limited to expenses related to the breach of nonpayment, such as fees and costs for documenting and establishing the breach, preparing the sanctions motion and, where relevant, directing the matter to the trial court.
Lippincott argues he would be made whole only if he recovers all expenses associated with the court case because he would have avoided the court case altogether if the breach of nonpayment had not occurred. But Lippincott was not required to file in court after defendants’ nonpayment. He could have continued with the arbitration despite nonpayment if the arbitrator agreed under section 1281.98, subdivision (b)(2), or paid the fees himself and recovered them as part of the arbitration award under section 1281.98, subdivision (b)(4). Section 1281.99 does not function to incentivize plaintiffs to file in court. The trial court is better positioned to assess the value of services rendered in a particular action and has broad discretion to determine the amount of attorney fees to
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award. (Pasternack v. McCullough (2021) 65 Cal.App.5th 1050, 1057.) We will remand for the trial court to determine the amount of attorney fees and costs that will make Lippincott whole as a result of defendants’ nonpayment. (Cornerstone Realty Advisors, LLC v. Summit Healthcare REIT, Inc. (2020) 56 Cal.App.5th 771, 791.)
Given our reversal and remand to the trial court to determine whether defendants’
nonpayment may be excused and to determine the appropriate amount of sanctions under section 1281.99, we do not reach the parties’ challenges to the reasonableness of either award. On remand, the trial court must ensure any award for attorney fees and costs under section 1281.98 does not include the hours awarded as sanctions under section 1281.99 for the same legal services. (Jackson v. Yarbray (2009) 179 Cal.App.4th 75, 98.) As to defendants’ argument first raised in their motion for reconsideration concerning the propriety of the order against Hassibi, the trial court did not abuse its discretion by denying reconsideration based on a failure to explain why the issue could not have been raised earlier. (New York Times Co. v. Superior Court (2005) 135 Cal.App.4th 206, 212.)
III. DISPOSITION
The order awarding attorney fees and costs and ordering sanctions against defendants under sections 1281.98 and 1281.99 is reversed. The matter is remanded to the trial court to determine: (1) whether defendants’ nonpayment resulted from a good faith mistake, inadvertence, or other excusable neglect such that they have not abandoned the arbitration proceeding under section 1281.98, subdivision (c)(1); and (2) the reasonable amount of sanctions under section 1281.99, subdivision (a) for expenses Lippincott incurred as a result of the nonpayment. The amount of section 1281.99 sanctions may include attorney fees and costs related to documenting and establishing the breach, preparing the sanctions motion, and transitioning the matter to the trial court. Each party shall bear its own costs on appeal. (Cal. Rules of Court, rule 8.278(a)(5).)
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Grover, Acting P. J.
WE CONCUR:
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Lie, J.
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Wilson, J.
H051829 Lippincott v Hassibi et al.