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Attorneys' Fees in Motions to Compel Arbitration
By Bruce Nye
California's appellate courts have issued many decisions in the past several years on binding arbitration provisions in consumer and employment contexts, which are typically non-negotiated contracts of adhesion. But here's a commercial arbitration case (involving negotiated contracts and equal and sophisticated parties) with implications for all disputes over contractual arbitration provisions. More after the jump.
More after the jump.
In Otay River Constructors v. San Diego Expressway (2008) ___ Cal.App.4th ___ (Fourth Appellate Dist., No. D049612),
the contract contained an arbitration provision which might or might
not have applied and a provision providing for attorneys' fees to be
awarded the prevailing party in a dispute. Otay moved to compel
arbitration. The court found that the provision did not apply, and
denied the motion. Expressway then moved for an order awarding it
fees. And the Court of Appeal held that (a) under the attorneys' fees
provision, fees were mandatory to the prevailing party and (b) by
defeating the attempt to circumvent the courts and force arbitration,
Expressway had prevailed, and fees were awardable at that point. This
apparently was the case regardless of the ultimate outcome in court of
the Otay v. Expressway dispute.
The case has two implications in the consumer and employment arenas: first, under the court's logic, if arbitration provisions do in fact apply, a company or employer who successfully moves to compel should likewise be entitled to fees, regardless of how the rest of the case comes out. Second, a company or employer should be careful that its claim to an arbitration right is meritorious, or it could be looking at a mandatory fee award against it before the case even gets off the ground. And can this logic apply to statutory fee situations, such as FEHA as well? Can a plaintiff who successfully resists arbitration immediately move for a fee award? Time will tell.
Thanks to Wage Law for catching this.
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