193 Cal. App. 4th 1275
Cal. Ct. App.2011Background
- Feb. 2006, Lee/Kwong agreement signed; arbitration clause entitled prevailing party to reasonable attorney fees and costs.
- July 11, 2007, complaint filed alleging specific performance, breach, tortious interference, lease issues against Kwongs, Gaos, Welch.
- Judicial arbitration conducted; arbitrator denied claims and awarded costs and attorney fees to respondents; fee provision invoked.
- March 17, 2009, dismissal without prejudice filed after request for trial de novo; clerk entered dismissal.
- Defendants moved to vacate dismissal and reinstate arbitration award and seek attorney fees; trial court reinstated arbitration award and reserved fees for later motions.
- Appellants appealed from judgment and fee order; appeals consolidated; trial court later awarded attorney fees to defendants; fees challenged on appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether dismissal vacating and reinstating the arbitration award was proper | Lee argues §581 rights allow voluntary dismissal without prejudice. | Kwong/Gao/Welch argue arbitration is a trial on merits; dismissal cannot undo an unfavorable award. | Yes; dismissal vacated and award reinstated consistent with law. |
| Whether attorney fees awarded post-arbitration are proper under Civil Code §1717 | Lee contends fee award after dismissal should not stand. | Respondents argue fee award valid where dismissal was vacated and arbitration reinstated. | Yes; fees upheld as proper under Kelley-style analysis when dismissal was vacated. |
| Whether Herbert Hawkins/Kelley control after vacatur of dismissal and reinstatement apply | Lee relies on broad right to voluntary dismissal under §581. | Respondents rely on Herbert Hawkins and Kelley barring dismissal after unfavorable award. | Correct; arbitration is a trial on the merits; noncompliant dismissal risks finalizing the award. |
Key Cases Cited
- Herbert Hawkins Realtors, Inc. v. Milheiser, 140 Cal.App.3d 334 (Cal. App. Dist. 4th Div. 1983) (arbitration treated as trial on the merits; dismissal timing affects award finalization)
- Kelley v. Bredelis, 45 Cal.App.4th 1819 (Cal. Dist. 4th Div. 1996) (arbitration viewed as trial on the merits; dismissal after de novo affects award; fee award discussed)
- Calderon v. Kane, 36 Cal.App.4th 1663 (Cal. Dist. 4th Div. 1995) (rejection of remedy to avoid unfavorable arbitration by improper dismissal)
- Santisas v. Goodin, 17 Cal.4th 599 (Cal. 1998) (limits on fee recovery in voluntary pretrial dismissals; distinct context)
- Gogri v. Jack in the Box Inc., 166 Cal.App.4th 255 (Cal. Dist. 4th Div. 2008) (timeliness of voluntary dismissal before tentative ruling; supports arbitration-as-trial concept)