First District, Division 4 Follow Acosta-Otay Line of Cases.
There has been quite a splash of jurisprudence lately on the question of when a prevailing party can be adjudged in mixed legal-arbitration proceedings. The next case is the latest addition to the case law on this subject.
In Turner v. Schultz, Case Nos. A121642, A121707 (1st Dist., Div. 4 July 13, 2009) (certified for publication), the First District, Division 4—in a “close” case on the issue—decided that a trial court correctly awarded $82,280.78 in attorney’s fees to defendants that successfully beat plaintiff’s declaratory and injunctive relief efforts in court to forestall arbitration of a dispute between the parties based on a contractual fees clause covering legal actions. Plaintiff’s legal action was designed to stay arbitration, unlike other disparate legal proceedings to compel arbitration. However, the Court of Appeal followed Acosta v. Kerrigan, 150 Cal.App.4th 1124, 1131-1132 (2007) and Otay River Constructors v. San Diego Expressway, 158 Cal.App.4th 796, 996-998 (2008) over other cases, finding that there was a discrete legal proceeding where fees were warranted—“an independent complaint for declaratory and injunctive relief.”
Even if plaintiff won future fees after prevailing in the arbitration, the legal action was separate and he lost his effort to forestall the arbitration. “It was [plaintiff] who initiated both actions [by first seeking arbitration and then commencing a court action claiming the entire agreement was void]; he must accept the consequences of forcing defendants to fight on two fronts.” (Slip Opn., p. 12.)