That Was The Case Because Plaintiff And Defendants Were Still In Arbitration.
This next case had a little bit of everything: appealability, prevailing party, Civil Code section 1717, and prematurity issues.
In BRHE Group v. Bates, Case No. G065703 (4th Dist., Div. 3 Oct. 15, 2026) (unpublished), plaintiff sued defendants under a business purchase contract for fraud and breach of contract. Two individual defendants demurred to the complaint on the basis plaintiff failed to allege compliance with an ADR clause. The demurrer was sustained with leave, but plaintiff filed an amended complaint omitting all allegations against the originally named defendants (although two newly added defendants remained). Original defendants moved ex parte to request a judgment in their favor, with plaintiff filing a voluntary dismissal request without prejudice as to these defendants before the ex parte was heard—the clerk signing same and entering the dismissal. The lower court denied the ex parte application on the merits, although not necessarily determining the issue was moot. Original defendants moved for an order that they were the prevailing parties for fee recovery and for a judgment of dismissal, although they did not ask the lower court to vacate the voluntary dismissal and did not develop an argument as to why they were entitled to fees. Before the fee motion could be heard, the lower court, at a status conference on another issue, entered a dismissal of the original individual defendants. Ultimately, the lower court denied the fee motion because the defendants prevailed on a motion to compel arbitration under the ADR clause and the arbitration was not yet concluded.
The 4/3 DCA affirmed.
The first issue faced was whether the order denying defendants’ attorney’s fees motion was appealable or could be entertained by the appellate court. Although a clerk’s voluntary dismissal is generally not a judgment, the appellate panel found that reasoning in Mesa Shopping Center East, LLC v. O’Hill, 232 Cal.App.4th 890, 898-899 (2014) did allow for entertainment of the appeal, even as a petition for writ of mandate in discretionary fashion, because the dismissal was tantamount to a judgment which should not prevent review of an adverse ruling ending litigants’ right to seek fees.
Getting over that hurdle, the 4/3 DCA turned to the merits of the appeal. Although there was much wrangling on whether the voluntary dismissal was effective, the appellate panel determined that the fee determination was premature until the arbitration had concluded between the parties. The parties could not contract around Civil Code section 1717, requiring a non-interim prevailing party to be involved, such that the parties will have the opportunity to address who, if anyone, is truly entitled to recover fees after conclusion of the arbitration.