Abbey v.
Drive Assocs.
Filed 7/29/13 Abbey v. Fortune Drive Assocs. CA1/1
California
Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or
relying on opinions not certified for publication or ordered published, except
as specified by rule 8.1115(b). This
opinion has not been certified for publication or ordered published for
purposes of rule 8.1115.
IN
THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST
APPELLATE DISTRICT
DIVISION
ONE
BRANDON
ABBEY,
Plaintiff and Respondent,
v.
FORTUNE
DRIVE ASSOCIATES, LLC,
Defendant and Appellant.
A135062
(San Mateo
County
Super. Ct. Nos.
CIV 479539, CIV 480548)
Plaintiff
Brandon Abbey filed two lawsuits against defendant Fortune Drive Associates,
LLC (Fortune). The first lawsuit sought
damages in connection with Abbey’s business dealings with Fortune. The second sought to enjoin an arbitration
commenced by Fortune regarding similar issues.
The trial court granted the requested relief in the second lawsuit,
staying the arbitration. Following entry
of a declaratory judgment for Abbey in
the second lawsuit, and before the conclusion of the first lawsuit, Abbey was
awarded attorney fees under Civil Code section 1717 (section 1717). Fortune contends the trial court erred in
awarding attorney fees, arguing such an award is available only to the
prevailing party in the underlying contractual
dispute. We agree and reverse the
award.
BACKGROUND
In
August 2008, Abbey filed a lawsuit in
Francisco Superior Court (the merits lawsuit) against Fortune and others
(together, defendants) in connection with his involuntary termination from
involvement in the business activities of Fortune. Because of an upheaval in the law practice of
Abbey’s attorney, he did not immediately serve the complaint. In October 2008, the attorney finally
notified counsel for defendants of the filing of the merits lawsuit, but he
told counsel the complaint would not be served until his professional situation
improved. Rather than await service of
the merits lawsuit, Fortune promptly served a demand for arbitration of the
dispute and commenced proceedings with the American Arbitration Association
(AAA).
Fortune’s
claim of a right to arbitrate was based on an amendment to Fortune’s operating
agreement (the Third Amendment), which provided that all disputes regarding
Abbey’s termination from Fortune would be resolved by AAA arbitration. The same provision contained an attorney fees
clause stating: “The arbitrator may also
assess reasonable attorneys’ fees and expenses and the fees and expenses of
appraisers or other experts, in amounts the arbitrator determines are
equitable, as well as all other costs of arbitration or any ensuing litigation,
against a party to the action if the arbitrator determines that such party
acted arbitrarily, vexatiously, not in good faith and/or unreasonably.â€
As
Fortune pressed ahead with preparations for the arbitration, Abbey’s attorney
caused the merits lawsuit to be served on defendants in early December
2008. Defendants objected to the
lawsuit’s venue in San Francisco
and raised concerns about the manner of service, but they offered to accept
service if venue was changed to San Mateo
County. Around the same time, the arbitrator
scheduled commencement of the arbitration for April 2009.
Concerned
about the progress of the arbitration
proceedings, to which Abbey objected, and worried the merits lawsuit could
not be transferred to San Mateo County
in time to stop the arbitration,
Abbey’s attorney filed a lawsuit against Fortune in San
Mateo County on December 19, 2008 (the declaratory
relief lawsuit).
title="">[1] The declaratory relief lawsuit contained no
causes of action based on Abbey’s business dealings with Fortune, seeking only
a stay of the arbitration and a declaration that Abbey was not bound by the
arbitration provision of the Third Amendment.
In a February 2009 ruling in the declaratory relief lawsuit, the trial
court stayed the arbitration. We
affirmed that ruling, finding the arbitration clause in the Third Amendment to
be unenforceable against Abbey. (
In
the meantime, the merits lawsuit had been transferred to San
Mateo County,
arriving in January 2009. Following the
trial court’s entry of a stay of arbitration in the declaratory relief lawsuit,
defendants filed a petition to compel arbitration in the merits lawsuit. Consistent with its ruling in the declaratory
relief lawsuit, the trial court denied the petition to compel arbitration. Defendants also appealed this ruling, and our
decision in Abbey I disposed of both
appeals.
In
February 2011, judgment was entered in the declaratory relief lawsuit.
followed in April by a motion for attorney fees under section 1717. In an order of June 20, 2011, the law and
motion judge denied Abbey’s attorney fees motion without prejudice and directed
Abbey to file the motion before the complex case judge to whom the merits
lawsuit had been assigned. In the same
order, the law and motion judge consolidated the declaratory relief lawsuit and
the merits lawsuit “[o]n the court’s own motion.â€
Abbey
refiled the attorney fees motion as directed on October 20, 2011, seeking all
fees incurred in connection with his challenge to the arbitration, including
his response to the petition to compel arbitration in the merits lawsuit. In an order containing detailed findings of
fact and law, the trial court granted the motion as to the attorney fees
incurred in connection with proceedings in the declaratory relief lawsuit and
the Abbey I appeal, but it denied the
motion as to fees incurred in the merits lawsuit, which had not been
concluded. The court found unenforceable
the language in the Third Amendment permitting an award of fees only if the
opposing party’s conduct was found to be unreasonable, holding: “The operative basis for awarding attorneys’
fees herein is Section 1717, not the particular language of the unenforceable
arbitration clause.â€
DISCUSSION
Fortune
contends attorney fees could be awarded under the Third Amendment only to the
prevailing party in the merits lawsuit and could not be awarded without a
finding of unreasonable conduct. When,
as here, a party’s entitlement to attorney fees “ ‘amounts to statutory
construction and a question of law,’ †we review the trial court’s
decision de novo. (Connerly v. State Personnel Bd. (2006) 37 Cal.4th 1169, 1175.)
A. Single Prevailing Party
Section 1717 states,
in relevant part: “In any action on a
contract, where the contract specifically provides that attorney’s fees and
costs, which are incurred to enforce that contract, shall be awarded either to
one of the parties or to the prevailing party, then the party who is determined
to be the party prevailing on the contract, whether he or she is the party
specified in the contract or not, shall be entitled to reasonable attorney’s
fees in addition to other costs. [¶] . . . [¶] Reasonable attorney’s fees
shall be fixed by the court, and shall be an element of the costs of
suit.†(Id., subd. (a).)
A
primary purpose of section 1717 is to ensure mutuality of remedy under
contractual attorney fees provisions. (
599, 611 (Santisas).) As the Supreme Court explained in
applicable to Abbey’s motion: “The
second situation in which section 1717 makes an otherwise unilateral right
reciprocal, thereby ensuring mutuality of remedy, is when a person sued on a
contract containing a provision for attorney fees to the prevailing party
defends the litigation ‘by successfully arguing the inapplicability,
invalidity, unenforceability, or nonexistence of the same contract.’ [Citation.]
Because these arguments are inconsistent with a contractual claim for
attorney fees under the same agreement, a party prevailing on any of these
bases usually cannot claim attorney fees as a contractual right. If section 1717 did not apply in this
situation, the right to attorney fees would be effectively unilateral
. . . because only the party seeking to affirm and enforce the
agreement could invoke its attorney fee provision. To ensure mutuality of remedy in this
situation, it has been consistently held that when a party litigant prevails in
an action on a contract by establishing that the contract is invalid,
inapplicable, unenforceable, or nonexistent, section 1717 permits that party’s
recovery of attorney fees whenever the opposing parties would have been
entitled to attorney fees under the contract had they prevailed.†(Id.
at p. 611.) Accordingly, while
Abbey might have no contractual right
to recover attorney fees under the Third Amendment, since the arbitration
provision containing the attorney fees clause has been held unenforceable as to
him, he has a statutory right to
attorney fees under section 1717, which arises as a result of the
Although
Fortune does not contest Abbey’s right to invoke section 1717 despite the
invalidity of the arbitration clause containing the attorney fees provision, it
contends this case should be governed by the general rule that “there may be
only one prevailing party entitled to attorney fees on a given contract in a
given lawsuit.†(Frog Creek Partners, LLC v. Vance Brown, Inc. (2012) 206
Cal.App.4th 515, 535, fn. 14 (Frog
Creek).) Under this rule, Fortune
argues, the prevailing party entitled to attorney fees must be determined by
the outcome of the merits lawsuit. Abbey
argues he is entitled to attorney fees without regard to the merits lawsuit
because the validity of the arbitration clause was litigated and resolved in a
different, discrete lawsuit.
There
are three leading decisions in this area.
The earliest, Otay River
Constructors v. San Diego Expressway (2008) 158 Cal.App.4th 796 (
and three contracts, only two of which contained an arbitration clause. (Id.
at p. 800.) The plaintiff commenced
an arbitration proceeding, contending the dispute arose under one of the
contracts authorizing arbitration. When
the defendant declined to arbitrate, the plaintiff filed a petition to compel
arbitration in superior court. (
The trial court denied the petition, concluding the dispute arose under
the contract that did not require arbitration.
When the defendant sought attorney fees as the prevailing party in the
plaintiff’s unsuccessful petition to compel, the trial court denied the motion
on the ground the defendant had not prevailed in the “contemplated†litigation
on the merits of the contract claims. (
The
Court of Appeal reversed. It began with
the language of section 1717, which, the court noted, “governs awards of attorney fees based upon a contract and authorizes
an award of attorney fees to a prevailing party ‘[i]n
any action on a contract’ ‘to enforce that contract’ if the contract
provides for an award of attorney fees.†(Otay,
supra, 158 Cal.App.4th at p. 806.) The court reasoned that a petition to compel
arbitration is an “ ‘action on the contract’ †for purposes of
section 1717 and the defendant was the prevailing party in that action, thereby
entitling the defendant to an award of fees.
(Otay, at p. 807.) Rejecting the plaintiff’s characterization of
the result as merely “an interim procedural victory,†the court held that the
order denying arbitration was “an appealable order or judgment in a discrete
legal proceeding even though the underlying litigation on the merits was not
final.†(Ibid.) It distinguished the
cases on which the plaintiff relied as not “involv[ing] the final resolution of
a discrete legal proceeding†(ibid.),
concluding “the merits of the contract claims under the [contract] that [the
plaintiff] sought to send to arbitration were not at issue in the court
proceedings to compel arbitration and the fact that the parties will probably
pursue these claims in another action does not lessen [the defendant’s] victory
in this discrete legal proceeding.†(
The
second decision, Turner v. Schultz
(2009) 175 Cal.App.4th 974 (Turner),
applied the principle announced in Otay in
circumstances similar to those presented here.
Like Abbey, the plaintiff in Turner
was terminated from his employment with a company in which he was an
investor. When he expressed
dissatisfaction with the formula for repurchasing his investment, the company
and its officers demanded AAA arbitration of the dispute pursuant to a clause
in the pertinent contract. (
contending the agreement had been fraudulently induced, and filed a breach of
contract action in
County. When the AAA pressed ahead
with preparations for the arbitration, the plaintiff filed a separate action in
San Francisco Superior Court against the defendants and the AAA, seeking an
injunction against further proceedings and a declaration the arbitration could
not proceed without an order compelling arbitration. (Id.
at pp. 977–978.) The trial court
eventually refused the request for an injunction. In the meantime, the defendants had filed a
petition to compel arbitration in the plaintiff’s Contra Costa County action,
which was granted. They thereafter
successfully moved for judgment on the pleadings in the San Francisco action
and were granted attorney fees under section 1717. (Turner,
at pp. 978–979.)
The
Court of Appeal affirmed the fees order.
The court first rejected the plaintiff’s contention the San Francisco
action was not an action “ ‘on the contract’ †for purposes of
section 1717, reasoning a declaratory relief action to avoid enforcement of a
contract is an action on the contract. (
p. 980.) Relying on
rejected the argument the prevailing party could not be determined until
conclusion of the pending lawsuit over the merits of the plaintiff’s claims,
reasoning, “The fees at issue were incurred in connection with an independent
complaint for declaratory and injunctive relief. As in Otay, the only issue before the
court—whether the arbitration should be allowed to proceed—was resolved in
defendants’ favor in this discrete legal proceeding. . . .
Irrespective of who becomes the prevailing party in the subsequent arbitration,
there was a prevailing party for purposes of section 1717 in this discrete
proceeding on the contract, and the trial court could properly award attorney
fees.†(Turner, at pp. 983–984, fn. omitted.)
Finally
and more recently came Frog Creek, supra,
206 Cal.App.4th 515, a thorough examination of the relevant statutes and
case law in this area. The
compel arbitration in the plaintiff’s action for breach of contract. The trial court denied the petition when the
defendant was unable to produce a version of the contract with an arbitration
provision, a decision affirmed on appeal.
(Id. at pp. 521–522.) Following remand, the defendant renewed its
petition to compel, having located another contract. Although the petition was denied in the trial
court, the Court of Appeal reversed and ordered arbitration. (Id.
at p. 522.) When the defendant later
prevailed in the arbitration, the arbitrators declined to rule on the parties’
entitlement to attorney fees in connection with the legal skirmishing that
preceded the arbitration proceeding. (
cross-motions under section 1717 in the trial court, the defendant seeking all
of its pre-arbitration attorney fees and the plaintiff seeking the fees
incurred in connection with its defeat of the initial petition to compel. The trial court awarded the plaintiff the
fees it sought, reasoning it was the prevailing party on that petition and in
the first appeal. (Frog Creek, at p. 523.)
The
Court of Appeal reversed the award of attorney fees to the plaintiff, holding
after an extensive analysis that “the trial court erred in awarding [the
plaintiff] attorney fees under Civil Code section 1717 for prevailing on the
first petition to compel arbitration because [the defendant] prevailed on the
contract action overall; the Legislature did not intend to authorize multiple
attorney fees awards to multiple prevailing parties on a single contract in a
given lawsuit.†(Frog Creek, supra, 206 Cal.App.4th at p. 546.) In the course of its analysis,
both Otay and Turner, concluding that these decisions “confirm that attorney fees
should be awarded to the party who prevails on a petition to compel arbitration
only when the resolution of that petition terminates
the entire ‘action on the contract.’ †(Frog Creek, at p. 531.)
The court expressed no reservations about the result in
an independent petition to compel arbitration, the action is terminated and the
prevailing party on the petition is entitled to fees under Civil Code section
1717.†(Id. at p. 533.) The
court was more equivocal in its discussion of Turner, noting in a footnote:
“Turner is consistent with our
interpretation of Civil Code section 1717:
there may be only one prevailing party entitled to attorney fees on a
given contract in a given lawsuit.
However, in light of Turner’s
somewhat unusual procedural posture, in which a pending lawsuit addressed the
substantive contractual claims involved in the independent action, we express
no opinion on the court’s conclusion that a fee award was proper in the
circumstances of that case.†(
We
share Frog Creek’s concern with
permitting an award of fees independent of the outcome of the underlying
contractual litigation when, as here, the underlying contractual litigation was
pending at the time the independent action was filed. While we do not challenge the correctness of
the result in Turner, we conclude the
existence of two separate lawsuits is, standing alone, insufficient to justify
abandoning the generally applicable rule under section 1717 in the
circumstances presented here.
name="_ftnref4" title="">[4] When the availability of arbitration is
litigated in a discrete action only because the party seeking attorney fees
voluntarily elected to file a separate action, rather than raise the issue in a
pending contractual lawsuit, there is no basis for departing from the rule of
one prevailing party.
The
general rule that section 1717 permits only one prevailing party per dispute
was established at least as far back as La
Pietra v. Freed (1978) 87 Cal.App.3d 1025, in which the plaintiffs
filed an action for breach of a contract containing an arbitration clause. The defendant, who had already instituted an
arbitration proceeding, filed a successful motion to compel in the plaintiff’s
lawsuit and was awarded attorney fees in connection with that motion. (Id.
at p. 1028.) The Court of Appeal
reversed the award of attorney fees, holding that section 1717, which at that
time defined the prevailing party in an action on a written contract as the
“ ‘party in whose favor final judgment is rendered,’ †did not permit
a separate award of attorney fees to the prevailing party on a motion to compel
arbitration, since the order granting the motion did not constitute a final judgment. (La
Pietra, at pp. 1030–1031.)
Although the language in section 1717 has since been amended, the
careful analysis in Frog Creek demonstrates
that these changes were not intended to change the “one prevailing partyâ€
rule. (Frog Creek, supra, 206 Cal.App.4th at pp. 525–531.) Given the Legislature’s failure over the last
35 years to overturn the rule announced in La
Pietra, despite tinkering with section 1717 in the interim, we conclude the
principle of one prevailing party is legislatively favored.
This
conclusion is reinforced by Code of Civil Procedure section 1292.4, which
ensures that, once a lawsuit is filed with respect to a particular contractual
dispute, the availability of arbitration will generally be litigated within
that lawsuit. Section 1292.4 states: “If a controversy referable to arbitration
under an alleged agreement is involved in an action or proceeding pending in a
superior court, a petition for an order to arbitrate shall be filed in such
action or proceeding.†A party seeking
to compel arbitration therefore must
file its petition in the merits lawsuit, if one is already pending. (Phillips
v. Sprint PCS (2012) 209 Cal.App.4th 758, 772.) As a result of section 1292.4, the issue of
arbitration is often required to be resolved in the merits lawsuit, and the
“one prevailing party†rule necessarily precludes a separate award of attorney
fees with respect to the parties’ litigation over the issue of arbitration.
The
present circumstances exist only because, when a party is seeking to
statutory requirement that litigation over the availability of arbitration
occur in a pending merits lawsuit. While
there may be circumstances in which the absence of such a requirement justifies
a separate award of attorney fees to the prevailing party in a proceeding to
defeat arbitration, we find no such justification here.
By
the time Abbey filed the declaratory relief lawsuit, his merits lawsuit had
been pending for several months, and the merits lawsuit was served on Fortune
only days before the declaratory relief lawsuit was filed. Because the merits lawsuit concerned the
Third Amendment, which had been drafted by Fortune and contained the
arbitration clause, Abbey could readily have anticipated that Fortune would
assert a right to arbitrate the dispute.
Abbey’s causes of action to defeat arbitration therefore could have been
included in the original complaint of the merits lawsuit. Even if Abbey did not anticipate the
possibility of arbitration at the time the merits lawsuit was filed, his
challenge to the arbitration clause could have been asserted by way of an
amended complaint in the merits lawsuit, rather than by separate lawsuit. Finally, even if the exigencies of the moment
made a separate lawsuit convenient, as his attorney avers, the merits lawsuit
could have been consolidated with the declaratory relief lawsuit once the
merits lawsuit was transferred to San Mateo County, prior to resolution of the
arbitration issue. The two lawsuits were,
in fact, consolidated sua sponte, although not until after entry of judgment in
the declaratory relief lawsuit. In
short, Abbey was not required, whether by law or circumstances, to resolve the
issue of arbitration in a lawsuit separate from the merits lawsuit. He merely chose to do so.
We
find no basis for departing from the general rule of section 1717 merely
because Abbey chose to resolve the issue in that manner. When there is no legal necessity for
resolving the issue in a separate proceeding, the difference between one and
two proceedings is merely one of form and does not justify the imposition of a
different substantive rule regarding the availability of attorney fees. Further, to hold otherwise would encourage
parties to file unnecessary litigation merely to preserve the possibility of a
separate award of attorney fees on litigation of the issue of arbitration,
contrary to the “one prevailing party rule.â€
Accordingly, we hold that where a party elects to file a separate
lawsuit challenging the availability of arbitration at a time when a lawsuit
over the underlying contractual dispute is already pending, the filing party is
bound by the generally applicable “one prevailing party†rule, at least when
the filing of an independent lawsuit was not legally mandated.
This
holding does not conflict with the outcome of either Otay or Turner. In both, the party awarded attorney fees
was not the party responsible for instituting the separate proceedings. On the contrary, in Turner, the party awarded attorney fees had filed a petition to
compel arbitration in the plaintiff’s merits lawsuit. It litigated the issue of arbitration in the
separate lawsuit only because the plaintiff had elected to file an action
challenging the availability of arbitration.
The prevailing party’s litigation of the issue in a separate proceeding
was therefore involuntary. In
merits was commenced as an arbitration.
The filing of a separate lawsuit was therefore legally necessary to
permit judicial resolution of the issue of the availability of
arbitration. Again, the use of a
separate proceeding was not a voluntary decision of the party seeking
fees. Given these different
circumstances, our result is consistent with both decisions.
B. Unreasonable Conduct
As
noted above, the attorney fees provision in the Third Amendment permitted an
award of fees only if “the arbitrator determines that such party acted
arbitrarily, vexatiously, not in good faith and/or unreasonably.†The trial court made no finding of
unreasonable conduct, holding this aspect of the attorney fees clause to be
rendered unenforceable when the arbitration clause itself was found
unenforceable. Although our reversal of
the trial court’s award of attorney fees to Abbey makes it unnecessary for us
to address this issue, we elect to do so because the issue may arise again in
connection with a motion for attorney fees based on the outcome of the merits
lawsuit. We agree with Fortune this
language constitutes an enforceable
limitation on any award of attorney fees.
In
enacting the present version of section 1717, “the Legislature intended ‘to
establish uniform treatment of fee recoveries in actions on contracts
containing attorney fee provisions and to eliminate distinctions based on
whether recovery was authorized by statute or by contract.’ †(Walker,
supra, 204 Cal.App.4th 363, 372.) In
order to promote the Legislature’s objective of standardizing the award of
attorney fees under section 1717, the precise provisions of a contractual
attorney fees provision will not always be enforced. “[W]hile the availability
of an award of contractual attorney fees is created by the contract [citation],
the specific language of the contract does not necessarily govern the
award. In setting contractual attorney
fees, ‘ “[e]quitable considerations [under section 1717] must prevail over
. . . the technical rules of contractual construction.†’ [Citation.]
Parties to a contract cannot, for example, enforce a definition of
‘prevailing party’ different from that provided in Civil Code section
1717. [Citation.] In its most recent statement of the factors
to be considered in setting an award of contractual attorney fees, the Supreme
Court noted: ‘Although the terms of the
contract may be considered, they “do not compel any particular
award.†’ †(
The
borders of this principle, as it applies to our circumstances, are defined by
two decisions. In the first,
Cal.App.4th 261 (Wong), the terms of
a lease permitted an award of attorney fees in an action to enforce the lease
only if “ ‘it shall be determined that Lessee was in default.’ †(Id.
at p. 263.) The trial court denied
attorney fees to the landlord because he had accepted the lessee’s statutory
settlement offer, making it unnecessary for the court to render a determination
of default. (Ibid.) Wong held the “determination of default†restriction unenforceable
because it (1) altered the statutory definition of “prevailing party†in
actions in which no formal finding of default was made and (2) defeated the
mutuality of the attorney fees provision.
(Id. at pp. 264–265.)
In
the second decision, Leamon v. Krajkiewcz
(2003) 107 Cal.App.4th 424 (Leamon),
the court considered a real estate purchase contract that permitted an award of
attorney fees only if the party seeking fees had sought to mediate before
filing suit or had not refused mediation when requested. (Id.
at p. 432.) Leamon enforced this clause, finding it satisfied the mutuality
requirement and did not otherwise conflict with the public policy aims of
section 1717. (Leamon, at p. 433.)
requirement as a “condition precedent†to the award of attorney fees and
holding section 1717 does not forbid such conditions, so long as they do not
conflict with the public policy objectives of the statute.
at p. 436.)
We
conclude the requirement of a finding of unreasonable conduct is closer to the
limitation in Wong because a
restriction of the award to circumstances of unreasonable conduct does not
offend the policy objectives of section 1717.
As noted above, section 1717 was intended to introduce an element of
uniformity in the awarding of contractual attorney fees, particularly between
fees awarded under contracts and those authorized by statute. Upon examination, however, the desired uniformity
concerns a restricted range of issues.
First, and perhaps most important, section 1717 standardizes the
determination of the prevailing party for purposes of an award of attorney
fees. Accordingly, the statute itself
defines the prevailing party, and that definition supersedes any contrary
definition in the contractual clause. (
ensure attorney fees clauses are mutual, which means an award of attorney fees
is available on the same terms to all parties.
(Santisas, at
pp. 616–617.) Finally, section 1717
was intended to standardize the manner of determining the amount of a
reasonable fee. (See
Cal.4th 1084, 1096.)
Limiting
attorney fees to parties who have encountered unreasonable conduct does not
offend any of these policy objectives.
It does not alter the definition of a prevailing party. The party who has prevailed in the
litigation, and thus is eligible for an award of attorney fees, must be determined
according to section 1717. The
limitation does not change the nature of this determination; it means only that
the prevailing party, as so determined, will not necessarily recover attorney
fees. As Leamon implicitly recognized, section 1717 contains no requirement
that a prevailing party must recover
attorney fees under a contractual attorney fees provision. (Leamon,
supra, 107 Cal.App.4th at p. 436.)
Second, there is no violation of the principle of mutuality. Both Abbey and Fortune would be allowed fees
only if the opposite party is found to have acted unreasonably.
any way the calculation of the amount of fees awardable, once an award is found
appropriate. Because this limitation
does not contradict the public policy objectives of section 1717, it should
have been enforced by the trial court.
DISPOSITION
The
award of attorney fees to Abbey is reversed.
_________________________
Margulies,
Acting P.J.
We concur:
_________________________
Dondero, J.
_________________________
Banke, J.
name="_ftn1" title="">[1]
The declaratory relief lawsuit was filed only against Fortune, perhaps because
Fortune was the only listed claimant in the demand for arbitration.
name="_ftn2" title="">[2] We
have not located a copy of this judgment in the appellate record, but the
docket sheet from the declaratory relief lawsuit notes the entry of a judgment
on February 8, 2011, followed a week later by the filing of a “Notice of
Entry of Declaratory Judgment†by Abbey.
According to the trial court’s ruling on attorney fees, the parties
stipulated to entry of a judgment declaring there is no enforceable agreement
to arbitrate.
