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Thursday, August 15, 2013

Roberts v. Packard, Packard & Johnson: Court Reverses Award of Interim Attorney Fees to Party Who Brings Successful Petition to Compel Arbitration

Roberts v. Packard, Packard & Johnson (7/3/13) --- Cal.App.4th --- addresses an interesting corollary issue in the Arbitration Wars: may a defendant who succeeds in compelling arbitration recover its attorney fees from the party who filed the action in court?The answer, according to the Second District Court of Appeal, is no.  

A few facts: The plaintiffs in the case sued their former attorneys for breach of fiduciary duty, conversion, and declaratory relief. The attorneys petitioned to compel arbitration, and the court granted the petition. The attorneys then moved to recover fees and costs incurred in bringing the petition to compel arbitration. The trial court granted the motion, the plaintiffs appealed, and the Court of Appeal reversed, explaining:  
We conclude that because only one side—plaintiffs or their former attorneys—can prevail in enforcing the contingency fee agreement, the determination of the prevailing parties must await the resolution of the underlying claims by an arbitrator. Attorney fees can be awarded only to the parties that prevail in the "action." (See Civ. Code, § 1717, subds. (a), (b)(1).) It follows that the trial court erred in awarding interim attorney fees to the former attorneys for filing a successful petition to compel arbitration.
Slip op. at 2.

The opinion is available here.  

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