Tentative Ruling

Judge Pauline Maxwell
Department 6 SB-Anacapa
1100 Anacapa Street P.O. Box 21107 Santa Barbara, CA 93121-1107

CIVIL LAW & MOTION
Woody Boyce Builders vs Mark Kidon
Case No: 19CV04794
Hearing Date: Wed Feb 05, 2020 9:30

Nature of Proceedings: Compel Mediation and Arbitration and to Stay Case; Case Management Conference

Tentative Ruling: The court grants, in part, defendants Mark and Darlene Kidon’s petition to compel mediation and arbitration and to stay case pending the outcome. The court orders the parties to arbitrate their dispute pursuant to their contract dated January 28, 2018. The court stays this proceeding pending the outcome of the arbitration. The court denies defendants’ request for attorney fees.

Background: On September 9, 2019, plaintiff Woody Boyce Builders filed its complaint for damages against defendants Mark Kidon and Darlene Kidon. Pursuant to a written contract dated January 28, 2018, plaintiff provided materials, equipment, and services for work on defendants’ property at 113 San Clemente in Santa Barbara. Plaintiff alleges it is owed $49,684.65. On August 15, 2019, plaintiff recorded a claim of mechanics lien in that amount. The causes of action in the complaint are 1) foreclosure of mechanics lien, 2) breach of contract, 3) account stated, 4) quantum meruit, 5) open book account, and 6) fraud.

Defendants filed a motion to compel mediation and arbitration pursuant to the written contract. Plaintiff’s counsel (Barton Merrill) filed a responsive declaration. He says that the motion was not filed in good faith as Merrill had proposed an arbitrator but defendants’ counsel (Martin Cohn) refused to provide any dates to arbitrate the claim.

1. Arbitration: CCP § 1281.2 provides that, upon petition of a party alleging the existence of a written agreement to arbitrate a controversy, and that a party thereto refuses to arbitrate the controversy, the court shall order the parties to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists. Arbitration is a matter of contract, and a party cannot be required to submit to arbitration any dispute which he has not agreed to submit. Metters, v. Ralphs Grocery Co., 161 Cal.App.4th 696, 701 (2008). CCP § 1281.4 provides that, upon motion of a party, the court shall stay a proceeding pending completion of the arbitration.

The dispute resolution of the contract provides:

2. Dispute Resolution. Resolution of any dispute arising under this Agreement between Owner and Woody Boyce Builders shall apply to any disputes arising hereunder, except disputes concerning payment obligations owed by Owner and questions regarding the licensure of Woody Boyce Builders or its agents.

(a) Mediation. Claims or disputes that arise shall first, before the initiation of arbitration as provided for in within this Agreement, by submitted for resolution to mediation. The mediation shall be conducted by a mediator mutually agreed to by the parties to the dispute, unless agreed to otherwise by the parties to the dispute. The mediator shall have at least 5 years of experience as a mediator in construction disputes. The mediation shall take place within ten (10) working days of either party’s submission of a written request for mediation.

(b) Arbitration. All disputes arising from the performance of the work performed by Woody Boyce Builders under this Agreement, shall be submitted to arbitration in accordance with the Construction Industry Rules of the American Arbitration Association and before an arbitrator or panel of three (3) arbitrators mutually agreed to by the parties. Both parties shall have all rights to conduct pre-arbitration discovery under the California Code of Civil Procedure, including the right to take depositions, submit written discovery and complete expert discovery. The arbitration award shall contain findings of facts and conclusions of law. An award rendered by an arbitrator(s) shall be final and judgment may be entered upon it in accordance with applicable law in any court having jurisdiction. The dispute shall be governed by the laws of the State of California.

The parties acknowledge that they are aware of and have had the advice of counsel of their choice with respect to their rights to trial by jury, and each party does hereby expressly and knowingly waive release all such rights to trial by jury in any action, proceeding or counterclaim brought by either party hereto against the other (and/or against its officers, directors, employees, agents, or subsidiary or affiliated entities), on any matters whatsoever arising out of or in any way connected with this Agreement. The parties have specifically chosen to resolve any such dispute through arbitration as set forth above.

Notwithstanding the language “except disputes concerning payment obligations owed by Owner,” in filings with the court both parties agree that the contract calls for arbitration of this dispute. The court notes that subparagraph (b) provides that “all disputes arising from the performance of the work performed by Woody Boyce Builders under this Agreement, shall be submitted to arbitration.” The language of the mediation subparagraph is not worded the same. Also, the waiver of jury trial applies to any action “on any matters whatsoever arising out of or in any way connected with this Agreement” and they acknowledge that they “have specifically chosen to resolve any such dispute through arbitration as set forth above.” The court agrees with the parties that the contract mandates arbitration of this dispute.

Prior to the motion being filed, the parties’ counsel corresponded regarding dispute resolution. Cohn proposed staying this proceeding pending mediation and arbitration. Merrill objected that the proposal was nebulous as to when mediation and/or arbitration would commence. Merrill proposed a stipulation providing for mediation within 30 days with a proposed mediator; and arbitration within 30 days of the last mediation session if the dispute is not resolved, again proposing an arbitrator. His proposed stipulation provided for waiver of arbitration if the stipulation was not signed by close of business on December 12. (How someone could be deemed to have waived a right pursuant to a stipulation the person did not sign is not clear.) Merrill asked Cohn for a stipulation with dates or he would file a request for default judgment the next day. Cohn responded with a stipulation staying this proceeding pending mediation and arbitration with the parties reporting to the court within 120 days. Merrill did not find that acceptable. Cohn filed the instant motion on December 10.

It appears than an order of the court is necessary as the parties cannot agree on the terms of going forward with arbitration. The dispute resolution clause says nothing about timing of the arbitration or mediation nor does it permit one party to select an arbitrator.

The court will order the parties to arbitration. The statutes do not contemplate compelling mediation and compelled mediation “is antithetical to the entire concept of mediation.” Jeld-Wen, Inc. v. Superior Court, 146 Cal.App.4th 536, 543 (2007). Pursuant to the agreement, the parties must agree on an arbitrator. If they fail to agree within 20 days of this order, either party may petition this court for appointment of an arbitrator pursuant to CCP 1281.6. The timing of any arbitration shall be up to the arbitrator pursuant to Rule R-13 of the Construction Industry Rules of the American Arbitration Association. The court will stay this proceeding pending the arbitration.

2. Attorney Fees: Defendants ask for attorney fees incurred in bringing the petition. The contract provides: “Should either party institute any action or proceeding to enforce or interpret any provision of this Agreement or for damages by reason of an alleged breach of any provision of this Agreement, the prevailing party shall be entitled to recover its costs, including expert witness fees and expenses and reasonable attorneys’ fees….”

There is some question as to whether a court has jurisdiction to award attorney fees on a motion to compel arbitration as opposed to waiting until the end of the proceeding to award fees to a prevailing party under Civil Code § 1717.

In Acosta v. Kerrigan, 150 Cal.App.4th 1124 (2007), the contract provided: “Should any party to this Agreement hereafter institute any legal action or administrative proceeding against the other by any method other than said arbitration, the responding party shall be entitled to recover from the initiating party all damages, costs, expenses, and attorneys fees incurred as a result of such action.” Id. at 1129. The court held that the contract provision authorized an interim award of fees after a successful petition to compel arbitration, reasoning that the successful petitioner “is not attempting to recover attorney fees under a provision permitting an award of fees to the party prevailing on the merits of a claim arising under the Occupancy Agreement.” Id. at 1132.

In Benjamin, Weill & Mazer v. Kors, 195 Cal.App.4th 40 (2011), the parties’ legal representation agreement provided that “[t]he prevailing party in any arbitration or litigation pertaining to [any fee] dispute may recover the full value of attorney’s fees incurred in any dispute over enforcement of this agreement.” Id. at 73. The trial court denied attorney fees for the petition to compel arbitration, distinguishing Acosta. The court of appeals differed, finding the language providing recovery of fees “in any dispute over enforcement of this agreement” authorized an award of fees upon granting a petition to compel arbitration. Id. at 75-80.

In Frog Creek Partners, LLC v. Vance Brown, Inc., 206 Cal.App.4th 515 (2012), the court found that “Acosta’s rationale appears to be contrary to the proposition that Civil Code section 1717 alone determines a party’s entitlement to attorney fees under a contractual fee provision.” Id. at 544, citing Santisas v. Goodin, 17 Cal.4th 599, 616 (1998). Similarly, the court criticized the Kors decision. “Kors demonstrates a second problem with Acosta: once the door is opened to creating a broader right to contractual fees than Civil Code section 1717 allows, it will be difficult to confine that right to the specific, narrow circumstances in Acosta. In Kors, there was only a general contractual attorney fee provision [applicable to any arbitration or litigation pertaining to any dispute over enforcement of the agreement].” Id. at 545.

The court concludes that a fee award here is not warranted at this time. There is a distinction between awarding attorney fees in connection with a petition to compel arbitration that is filed within an existing lawsuit and a petition that commences a distinct action. In the former, awards of attorney fees must await conclusion of the proceeding. In the latter, the order compelling arbitration concludes the proceeding and fees can be awarded immediately. Roberts v. Packard, Packard & Johnson, 217 Cal.App.4th 822, 834 (2013).

Applying the plain language of the parties’ contract, fees are available to the prevailing party when either party institutes an action. Since plaintiff’s complaint initiated this proceeding and not defendants’ petition, fees cannot be awarded at this time as there is no prevailing party in this proceeding. The court denies defendants’ request for attorney fees.

3. Order: The court grants, in part, defendants Mark and Darlene Kidon’s petition to compel mediation and arbitration to stay case pending the outcome. The court orders the parties to arbitrate their dispute pursuant to their contract dated January 28, 2018. The court stays this proceeding pending the outcome of the arbitration. The court denies defendants’ request for attorney fees.