Arbitration Denial: Discrete Proceeding Or Ruling In A Continuing Action That Awaits A More Definitive Nature?

Fourth District, Division 1 Reverses Fee Award in Case Involving Reggie Bush … And Clarifies Otay River Constructors in the Process.

     Here is one for all of you U.S.C. alumni or fans, involving civil litigation that impacts former collegiate football great Reggie Bush. The decision shows how the procedural context of a case can be critical to the ultimate disposition of attorney’s fees awards. The case is Lake v. Griffin, Case Nos. D053583/D054311 (4^th Dist., Div. 1 Dec. 28, 2009) (unpublished).

Reggie Bush

     Briefly told, sports agent Lloyd Lake brought a complaint against Mr. Bush and his parents contending they were obligated to him and an affiliated partnership for $291,000 in cash payments while Reggie was a college athlete. Defendants moved to compel arbitration based on an arbitration clause in a settlement agreement reached between defendants and third-party Michael Michaels (with the settlement containing arbitration and fee clauses). The trial court denied the motion to compel arbitration, a determination affirmed on appeal. However, the lower court also awarded Plaintiff Lake $24,570 (out of a requested $47,815) in attorney’s fees under Civil Code section 1717 for prevailing on the motion to compel arbitration.

     Defendants also appealed the fee award, and did much better—gaining a reversal and a postponement of any fee determination until there was a more definitive future decision on the merits.

     The basis for reversal? The Court of Appeal—the same one deciding Otay River Constructors v. San Diego Expressway, 158 Cal.App.4^th 796 (2008)—found that the procedural background in Lake was materially different in nature. Otay involved a situation where no action had been filed and the only proceeding was a motion to compel arbitration in which the victor won the only thing pending before the trial court. In Lake, however, there were contractual issues left for the trial court to resolve in a pending action after denial of the motion to compel arbitration. The appellate panel summarized its decision to reverse in these words: “The proceeding brought before us, and the trial court, was essentially only an interim procedural step in the interpretation of the settlement agreement and any binding effect it may have, with respect to Plaintiff. In this procedural context, under [the discussed authorities—Otay and In re Estate of Drummond, 149 Cal.App.4^th 46, 52-53 (2007)], we do not believe that the trial court had an adequate basis to make an award of contractual attorney fees.” (Slip Opn., p. 27.) However, the Court of Appeal was careful to observe that a fee award was not precluded later, after a future determination of a prevailing party at the correct juncture of the case.

                                                                                                                                      Lloyd Lake, San Francisco