Warburton Decision is a Companion to our December 28 Post on Lake v. Griffin, But in Inverse Fashion.
In our December 28, 2009 post, we reviewed Lake v. Griffin, where the Fourth District, Division 1 held that a denial of a motion to compel arbitration in an ongoing case was not a "discrete proceeding" allowing an award of fees under Civil Code section 1717 to the interim winning party. Here is a companion case, albeit in a different matter, that reaches the same conclusion—but in the context of the winner gaining a grant of a motion to compel arbitration.
Much like Lake, defendants petitioned to compel arbitration in a lawsuit where the plaintiffs sued them primarily for fraudulent nondisclosure arising out of a residential home purchase. The trial court granted defendants’ motion to compel arbitration, later awarding them an interim award of attorney’s fees and costs for winning the motion to compel arbitration based on a fees clause in the purchase agreement. Plaintiffs appealed the fee award in Warburton v. Zinner, Case No. D054470 (4th Dist., Div. 1 Dec. 29, 2009) (unpublished).
The appeal was a good move.
In reversing, the Fourth District, Division 1 found that there was no final resolution of the parties’ contract claims. The parties were still engaged in arbitration, and the trial court stayed further proceedings pending the outcome of the arbitration. As with other litigants in this area, defendants heavily relied on Otay River Constructors v. San Diego Expressway, 158 Cal.App.4th 796 (2008), out of the same appellate court, in support of their position. However, Otay River was found inapt because nothing else was pending at the time, unlike the pending arbitration and stayed litigation in Warburton. Furthermore, there was no fees clause that allowed for fee recovery for successfully petitioning to compel arbitration rather than prevailing in the overall dispute. Fee award reversed, with the determination awaiting the course of further proceedings.