But We Had An Agreement! When a Stipulation to Extend a Deadline Costs You Your Case

October 26, 2021 |

Parking Meter

Parties and their attorneys often believe courts will bless their stipulations, especially when an agreement is merely to extend a filing deadline. A recent appellate decision, Law Finance Group, LLC v. Key, serves as an important reminder that stipulations that exceed a statute’s jurisdictional deadline are invalid and may not be recognized by a trial court. In Key, relying on what the attorney believed to be an agreement to extend a filing deadline ended up being a very costly mistake.

Key received a loan for $2.4 million to finance her probate litigation. She paid the principal but refused to pay any interest. The case went to arbitration, and Law Finance Group prevailed. It subsequently filed a timely petition in superior court to confirm the arbitration award. The attorneys for Key and Law Finance Group then had discussions regarding the timing for filing Key’s petition to vacate the award and her response to Law Finance Group’s petition to confirm the award. Key thought the parties had an agreement whereby she could file the petition to vacate the award more than 100 days after the award was entered as required by statute (Code of Civil Procedure section 1288). Pursuant to the parties’ apparent stipulation, she filed the petition to vacate and her response 130 days after the award was entered. The trial court ruled in Key’s favor and Law Finance Group appealed.

The appellate court reversed, holding that the 100-day deadline to file both a petition to vacate and a response to a petition to confirm an arbitration award is jurisdictional. The parties could not agree to extend this deadline because the statute treats the deadline as firm. The court also rejected Key’s argument that she relied on Law Finance Group’s assurances allowing her to file her papers after the deadline because an attorney cannot reasonably rely upon an agreement that contradicts settled law. The rule is firmly established that parties may not confer subject matter jurisdiction by agreement. As a result of the appellate court’s decision, the arbitration award of over $1.5 million including attorneys’ fees and costs was confirmed against Key.

This case serves as an important reminder to closely review and follow statutes that govern arbitration, especially given that more parties are agreeing to arbitrate cases in light of court backlogs created by COVID-19.