Second District So Holds Even Though Corporation Won Prior Small
Claims Action Brought By Same Opponents.
The next case teaches a valuable lesson to litigants
that are ordered to arbitrate a claim: in some situations, it might be
preferable to request a stay of the action pending completion of arbitration
rather than voluntarily dismissing the action so the arbitration can take
place.
In 4975 Sandyland
Rd. Ass’n, Inc. v. Gichon, Case No. B206943 (2d Dist., Div. 2 Oct. 8, 2008)
(unpublished), apartment lessees kicked off things by filing a small claims
action against corporation owner/lessor. Corporation filed a superior court
action on the date of the small claims trial, although both sides proceeded to
trial in the small claims venue. Corporation won the small claims case.
Lessees then moved to compel arbitration of the superior court action, a motion
that was granted. Corporation voluntarily dismissed the superior court action.
Lessees then filed a costs memorandum for $1,800 as the prevailing party under
Code of Civil Procedure section 1032(a)(4). Corporation’s motion to tax costs
was denied, which prompted an appeal by losing corporation.
The Second District, Division 2 affirmed, rejecting several arguments
advanced by corporation (the major ones which we discuss
below).
Corporation first argued that it won the small claims action such that
lessees could not be the prevailing party. No, said the appellate panel. The
parties treated each action as distinct in nature, with the corporation
proceeding to trial in the small claims action and not asking that the action be
transferred to superior court based on its superior court filing. If it wanted
to recover costs as the prevailing party, corporation should have addressed this
to the small claims judge.
Corporation next contended that there could be no prevailing party
because the matter had not been arbitrated to conclusion for purposes of
determining the ultimate victor. This, too, was unconvincing to the Court of
Appeal. Corporation voluntarily dismissed the superior court complaint, and a
defense dismissal is a mandatory cost entitlement trigger under section
1032(a)(4). (See Wakefield v. Bohlin, 145 Cal.App.4th 963, 975
(2006).) Corporation could have asked the superior court to stay the action
pending completion of the arbitration; however, it instead elected to dismiss,
which triggered costs entitlement to lessees.