Mesa Shopping Center-East v. O Hill
232 Cal. App. 4th 890
| Cal. Ct. App. | 2014Background
- Mesa Investors sued O Hill Investors for declaratory and injunctive relief under two nearly identical ownership/management agreements that included a broad arbitration clause and a prevailing-party attorney-fees provision.
- Mesa filed for a preliminary injunction in superior court, the court denied the motion, and the parties stipulated to stay the court action pending arbitration.
- Mesa filed a JAMS arbitration demand asserting breach of contract, breach of fiduciary duty, and conversion; O Hill filed counterclaims; a multi-day arbitration on the merits occurred in Oct–Nov 2012.
- The arbitrator issued an interim award (March 2013) rejecting Mesa’s claims and inviting O Hill to apply for fees; a final award (May 2013) largely confirmed the interim award and awarded arbitration fees to O Hill, but declined fees for the superior-court proceedings.
- Between the interim and final awards, Mesa voluntarily dismissed the superior-court action without prejudice; the trial court denied O Hill’s motion to vacate the dismissal and denied O Hill fees related to the court action.
- O Hill appealed; the Court of Appeal concluded the court erred, reversed the denial of the motion to vacate, and remanded for further proceedings (fees issue left unripe pending entry of judgment).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Appealability of post-dismissal rulings | Orders after clerk-entered voluntary dismissal are nonappealable ministerial acts; thus appeal is improper. | Post-dismissal rulings (denial to vacate dismissal and denial of fees) produce final adjudication and are appealable. | Court held the post-dismissal orders were appealable because they constituted final determination of the parties’ rights and practical end of the action. |
| Whether the arbitration and court action were separate | The court action sought injunctive/declaratory relief and was distinct from arbitration (which sought damages); arbitration rulings do not bar dismissal. | The court action was ancillary to arbitration (two-forum approach for provisional relief); both proceedings addressed the same causes of action and evidence. | Court held they were essentially one dispute split between provisional court relief and merits in arbitration; they were interdependent. |
| Whether Mesa could timely dismiss without prejudice under CCP §581 | Mesa had an absolute right to dismiss before the commencement of trial, and no trial had commenced in superior court. | Once arbitration on the merits commenced (presentation of evidence), dismissal in superior court was untimely because the ‘‘commencement of trial’’ cut off the right to unilateral dismissal. | Court held arbitration evidence presentation constituted commencement of trial for §581 purposes; Mesa’s dismissal without prejudice was improper. |
| Entitlement to attorney fees under Civ. Code §1717 | Because Mesa dismissed the court action, there is no prevailing party in the court action and fees cannot be awarded. | O Hill is the prevailing party on the contract (arbitrator decided the merits) and is entitled to fees; the dismissal cannot be used to avoid fees when dismissal is untimely. | Court reversed denial of vacatur and remanded; entitlement to fees left for further proceedings once judgment is entered (issue premature). |
Key Cases Cited
- Santisas v. Goodin, 17 Cal.4th 599 (Cal. 1998) (voluntary pretrial dismissal bars recovery of contractual attorney fees to avoid plaintiffs dismissing to escape fee liability)
- Kelley v. Bredelis, 45 Cal.App.4th 1819 (Cal. Ct. App. 1996) (arbitration is a trial on the merits for purposes of cutting off a plaintiff’s right to dismiss and supports fee awards to prevailing party)
- Gray v. Superior Court, 52 Cal.App.4th 165 (Cal. Ct. App. 1997) (parties may not dismiss without prejudice after evidence presented before a referee — commencement of trial occurs when evidence presented to a factfinder)
- Gogri v. Jack in the Box Inc., 166 Cal.App.4th 255 (Cal. Ct. App. 2008) (trial court retains jurisdiction to award fees and costs after voluntary dismissal)
- H. D. Arnaiz, Ltd. v. County of San Joaquin, 96 Cal.App.4th 1357 (Cal. Ct. App. 2002) (ruling that orders resolving motions to vacate voluntary dismissals are generally reviewable by writ rather than appeal)
- Mon Chong Loong Trading Corp. v. Superior Court, 218 Cal.App.4th 87 (Cal. Ct. App. 2013) (order taxing costs after a nonappealable voluntary dismissal was not appealable; discusses remedies by writ)
- Otay River Constructors v. San Diego Expressway, 158 Cal.App.4th 796 (Cal. Ct. App. 2008) (definition of finality: an order is final where no issue remains except compliance with its terms)