Third District Distinguishes Its Facts From Otay in Unpublished Decision.
In California, attorney’s fees are generally not recoverable for interim procedural victories. The “prevailing party,” for purposes of fee recovery, usually must await a final deposition on the merits. However, there are exceptions.
For example, Otay River Constructors v. San Diego Expressway, 158 Cal.App.4th 796, 801, 808 (2008) involved a sui generis fact pattern where the only proceeding being litigated in court at the time was a petition to compel arbitration. The trial court’s denial of the petition was a “discrete legal proceeding” giving rise to fees even if claims were pursued in another later action.
Otay was distinguished recently in Hall-Mark Services, Inc. v. Harris & Associates, Case No. C056691 (3d Dist. Feb. 17, 2009) (unpublished). In contrast to Otay, there was pending litigation filed in court in which a petition to compel arbitration was initially denied. In a prior appeal, the Third District reversed the denial and remanded so that the petition to compel arbitration would be granted instead. The trial court granted the winning party in this case an award of routine costs but denied $37,589 in requested attorney’s fees. The lower court decided no contractual fees under Civil Code section 1717 were warranted until final disposition of the case.
The trial court’s determination was sustained on appeal in a 3-0 decision authored by Acting Presiding Justice Raye, when the Third District dismissed the appeal based on the fact there was no appealable order.
Appealing party relied on Otay , but the Third District interpreted its holding as being much more narrow in nature. Because petitioning party was involved in ongoing litigation and the petition to compel was not a discrete, stand alone legal proceeding, Otay was inapt. Also, the order granting the petition to compel arbitration “cannot be considered the equivalent of a judgment in such a proceeding” but was “an interlocutory procedural ruling directing that some of the claims at issue be resolved through arbitration, not litigation.” (Slip Opn., at p. 9.) An order compelling arbitration does not terminate a proceeding in such a way as to be fairly characterized as a final judgment that can be appealed under Code of Civil Procedure section 1294(e). (Accord, Lachkar v. Lachkar, 182 Cal.App.3d 641, 646 (1986); La Pietra v. Freed, 87 Cal.App.3d 1025, 1030 (1978).)
The Third District did observe that the trial court can determine which party prevailed and which side was entitled to fees/costs once there was a final judgment in the case.