Arbitration/Section 1717: Attorney’s Fees Incurred In Disqualification Motion And Other Associated Motions Before Arbitrator And Trial Court Properly Were Awarded To The Defense

Defense Did Prevail Because Arbitration Was Dismissed For Failure To Prosecute After Plaintiffs Failed To Pay Arbitration Fees.

            Fiscal Funding Co., Inc. v. Dones, Case No. A146377 (1^st Dist., Div. 3 Feb. 27, 2018) (unpublished) was quite an arbitration battle in which the Claimants lost a motion to disqualify their attorney as well as other motions, with the arbitration eventually dismissed for lack of prosecution due to plaintiff’s failure to pay AAA fees.  Along the way, the trial court granted substantial amounts of fees, inclusive of fees incurred by the other side in defending lower court rulings in two appeals.  (Probably about $500,000 in fees was the final tally, although we did not do the precise math.)

            Plaintiffs’ challenges to the fee awards were unsuccessful. 

            Plaintiffs claimed that the trial court lacked jurisdiction to award fees, but the appellate court said that was not true because adjudging fees is a collateral matter which is properly considered to prevent abuse of the judicial process, citing Barry v. State Bar of California, 2 Cal.5^th 318, 326=327 (2017) and Citizens for a Better Environment v. Steel Co., 230 F.3d 923, 926 (7^th Cir. 2000).

            Plaintiffs primarily argued that the other side did not prevail because the contractual dispute was ongoing and the defense had only achieved a mere procedural victory.  The Court of Appeal disagreed.  The state supreme court in DisputeSuite.com, LLC v. Scoreinc.com, 2 Cal.5^th 968 (2017) [our Leading Case No. 21] did not rule out that some procedural victories could give rise to prevailing party status, and that was the case here:  the arbitration had been dismissed for lack of prosecution such that the interim “wins” were indeed victories.