Second District, Division One Disagrees With Contrary Conclusion Reached by First District, Division Two in Kors.
After plaintiffs filed a lawsuit against their former attorneys, those attorneys successfully moved to compel arbitration in the pending lawsuit, with the lower court also awarding them $67,930.50 in attorney’s fees as the prevailing party in the proceeding under Civil Code section 1717.
Presiding Justice Mallano, in a unanimous, scholarly opinion, reversed the fee award as premature until completion of the arbitration in Roberts v. Packard, Packard & Johnson, Case No. B240452 (2d Dist., Div. 1 July 3, 2013) (published).
Based on the definition of “action” which should be used under section 1717, the appellate court determined that a motion to compel arbitration simply did not qualify as such–it was a discrete proceeding, not an “action.” Rather, the arbitration needed to be completed to determine who the “true” winner was for purposes of awarded 1717 fees. (However, keep in mind that there is an important caveat running through this opinion–it applied to a petition to compel arbitration made in a pending lawsuit.)
In reaching its decision, the appellate court seemed to side with the reasoning of Frog Creek Partners, LLC v. Vance Brown, Inc., 206 Cal.App.4th 515 (2012), which we knew early on would be a decision cited subsequently in many ensuing opinions. However, like Frog Creek (love the name, ribbet!), the Roberts court disagreed with the contrary reasoning of the First District, Division 2 in Benjamin, Weill & Mazer v. Kors, 195 Cal.App.4th 40, 73-80 (2011).