Procedural Posture

Plaintiffs, former clients of defendant law firm, sought interlocutory review of orders from the Superior Court of Los Angeles County (California), which awarded interim attorney fees to the law firm under Civ. Code, § 1717, for filing a successful petition to compel arbitration.

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Overview

After the law firm negotiated settlements, the parties disputed the allocation of fees and expenses under the contingency fee agreement, which contained an arbitration provision. The clients brought suit alleging causes of action for breach of fiduciary duty, conversion, and declaratory relief. The law firm filed its petition to compel arbitration in the pending lawsuit. The court held that the attorney fee award was premature because the prevailing party determination had to await the resolution of the clients’ causes of action by an arbitrator. A petition to compel arbitration filed in a pending lawsuit under Code Civ. Proc., § 1292.4, was not a discrete proceeding and did not constitute a separate action under § 1717, as construed in light of the statutory definitions relating to actions and judgments in Code Civ. Proc., §§ 22, 30, and Cal. Rules of Court, rule 8.10(4). Section 1717 reflected the Legislature’s intent that a single lawsuit could not have multiple prevailing parties on distinct contractual claims involving the same contract. Thus, attorney fees could not be awarded for the proceedings on a petition to compel arbitration until the causes of action were resolved.

Outcome

The court reversed the orders.