2017-00222845-CU-UD

Madison Sac, LLC vs. Massoud Dehdashti

Nature of Proceeding: Petition to Compel Arbitration and Stay Action

Filed By: Premo, Gilbert J.

Defendants Massoud Dehdashti and Betsy Babson’s (“Defendants”) Motion to Compel Arbitration and Stay Action is granted.

Defendants’ request for reasonable attorneys fees and costs incurred in enforcing the right to arbitration is granted in the reasonable amount of $2,500 (ten hours) in attorneys fees. Defendants are also entitled to court costs in the amount of $870 for the two appearance fees, for a total of $3,370.

Defendants seek an order compelling plaintiff/respondent Madison SAC, LLC (“plaintiff”) and defendants to arbitrate the controversies between them alleged in the Complaint and stated in the Petition, to stay all proceedings in this action until completion of the arbitration, and ordering plaintiff to pay to defendants the reasonable attorneys fees and costs incurred by defendants in preparing, filing and pursuing their Petition to arbitrate in the sum of least $5,870.00. Defendants contend plaintiff’s prior counsel had agreed that a prior dispute involving similar issues would be arbitrated, but that plaintiff and current counsel, Mr. Rosenberg, have unnecessarily filed this second action and failed to respond to requests to arbitrate.

Plaintiff Madison SAC, LLC has sued defendants Massoud Dehdashti and Betsy Babson for unlawful detainer, alleging that they breached the lease between the parties (See Complaint, Exhibit 1). Defendants deny that they breached the Lease. The Lease provides, without exception, that: “All disputes arising under this Lease or in the interpretation thereof will be subject to arbitration conducted as provided in this section 15.12” (Lease, section 15.12)

CCP §1281.4 provides that if an application is made for an order to arbitrate a controversy which is an issue involved in an action or proceeding pending before the Court, the Court shall on motion of a party to the action, stay the action or proceeding until the application for an order to arbitrate is determined, “…and if arbitration of such controversy is ordered, until arbitration is had in accordance with the order to arbitrate.” Accordingly, Defendants request to stay this action until the arbitration becomes final is granted.

CCP §1281.2 provides that the Court shall order arbitration unless it determines that

(a) The right to arbitration has been waived by the petitioner; (b) Grounds exists for the revocation of the agreement; or (c) there is a pending court action with a third party that presents the possibility of conflicting rulings.

The party opposing arbitrate has the burden of producing evidence of, and proving, any fact necessary to defense. Rosenthal v. Great Western Fin. Securities Corp.(1996) 14 Cal 4th 394, 413.

Plaintiff, in opposition, concedes that there is a valid arbitration clause and that the court should grant the petition to arbitrate the action. Plaintiff, however argues that defendants should not be awarded their court costs and attorneys fees incurred in appearing in this action and filing their Petition, i.e. in enforcing their right to arbitration.

The parties’ lease contains two arbitration provisions, one to a prevailing party in a proceeding to enforce a right under the agreement, and one to a prevailing party in the underlying dispute as well as to enforce any right or remedy.

“12.10 ATTORNEYS’ FEES

“If either party brings any action or proceeding to enforce, protect, or establish any right or remedy, the prevailing party will be entitled to recover reasonable attorneys’ fees. Arbitration is an action or proceeding for the purposes of this provision.”

“15.8 ATTORNEY’S FEES

“Subject to the [arbitration] provisions of section 15.12 below, in the event either LANDLORD or TENANT shall bring any action or proceeding for damages (including an arbitration action) for an alleged breach of any provision of this Lease, to recover rents, or to enforce, protect, or establish any right or remedy of either part[sic], the prevailing party will be entitled to recover as a part of such action or proceedings reasonable attorney’s fees and court costs.”

There is a split of authority as to whether a prevailing party on a motion/petition to arbitrate is entitled to interim costs before the judgment is final. Several cases have held that, a defendant who successfully petitions to compel arbitration may be entitled to immediately recover in the trial court the attorney’s fees and expenses incurred in doing so, and need not await the outcome of the arbitration. Benjamin, Weill & Mazer v. Kors (2011) 195 Cal. App. 4th 40, 74-80 (“Benjamin”). Acosta v. Kerrigan (2006) 150 Cal. App. 4th 1124 (“Acosta”). As the Court stated in Benjamin: ‘”A party who prevails on a petition to compel arbitration has an immediate right to make a claim for the attorney fees [s]he incurred in getting the trial court to move the controversy to arbitration.’ (Acosta, supra, 150 Cal.App.4th at p. 1132.) [Defendant]s was forced to file a petition to compel arbitration in response to [plaintiffs] complaint because [plaintiff] refused to abide by the arbitration clause in the fee agreement it presented to [defendant] Like the Acosta court, we do not believe a person who incurred attorney fees in vindicating a contractual right should be forced to file a separate claim in arbitration in order to recover those expenses. (Id. at p. 1133.)”. 195 Cal.App.4th at 79.

Other reported cases have denied attorney’s fees to the party prevailing on the petition, finding that an award of fees must await determination of the

prevailing party in the arbitration. See, Roberts v. Packard, Packard & Johnson (2013) 217 Cal. App 4th 822. The attorney fee clause in Roberts provided that : “If any action arising out of this Agreement is instituted by any Party against another Party, the prevailing Party shall be entitled to recover from the non-prevailing Party reasonable attorneys’ fees and costs.” (emphasis added) The Roberts court concluded that there was only one action on the contract (contingency fee agreement) and that only one side-plaintiffs or their former attorneys-can prevail in enforcing the action concerning the contingency fee agreement, such that 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).) Roberts, supra, at 827.

In this case the attorneys fees clauses apply to more than “actions” seeking damages but to a proceeding to enforce, protect, or establish any right or remedy” arising from the contract. The right to Arbitration, which does not concern the merits of the underlying dispute, is a right arising from the contract.

Although the language in Section 12.10 in this case is broader and not as specific as that in Acosta, unlike in Roberts, there are two different attorneys fees clauses in this case. To interpret section 12.10 to allow fees only to a prevailing party on the underlying dispute would render section 12.10 redundant of section 15.8.

The Court finds that in this case, the language providing for fees in any “proceeding to enforce, protect, or establish any right or remedy” includes the proceeding (Petition) filed by defendants to enforce the arbitration clause, a right that they had under the lease. This language is much broader than the “action” language set forth in the Robert’s contract which then implicated Civil Code section 1717. Therefore, the court follows the reasoning of Acosta and Benjamin and awards interim fees to the prevailing party on this petition to compel arbitration. This right to fees and costs in enforcing the right to arbitration is independent of the right to attorney’s fees in to whoever prevails in the underlying dispute in the arbitration. Therefore, defendants need not await the results of the arbitration to determine that defendants are the prevailing parties in their petition to compel arbitration.

Having reviewed the papers presented, attorneys fees and costs are to be paid to defendants as prevailing parties on this petition to compel arbitration in the reasonable amount of $3,370. “The experienced trial judge is the best judge of the value of professional services rendered in his court.” See, e.g. Ketchum v. Moses (2001) 24 Cal.4th 1122, 1139.

The Complaint is ordered to arbitration.

This case is stayed pending the outcome of the arbitration.

The Court will sign the proposed order after inserting the amount of costs/fees being awarded. The Court overrules plaintiff’s objection to the “all proceedings” language in the portion of the order concerning the stay.