Kalai v. Gray

In Kalai v. Gray (2003) 109 Cal.App.4th 768, the trial court granted summary judgment in favor of the defendant on the ground the parties had agreed to arbitrate their dispute. The court included in the judgment that the plaintiff had waived his right to arbitrate his claims by filing a lawsuit in court. (Ibid.) In addition, the trial court awarded the defendant attorney fees pursuant to the prevailing party attorney fees provision in the parties' arbitration agreement. (Ibid.) A panel of this court held the trial court erred by including in the judgment the statement the plaintiff had waived his right to arbitrate by filing his lawsuit, concluding that "at most, such an effort might lead to a waiver of that party's right to thereafter enforce the arbitration agreement against an unwilling opposing party." (Ibid., italics omitted.) The Kalai court held the trial court erred by awarding prevailing party attorney fees to the defendant, based upon the prevailing party attorney fees provision contained in the arbitration agreement. (Ibid.) The court in Kalai, supra, 109 Cal.App.4th at page 777, stated: "The parties' agreement allows for an award of fees only in favor of the 'prevailing party to the arbitration.' Simply put, there has not yet been a prevailing party to the arbitration, because there has not been an arbitration. The clear intent of the parties' provision is that the one who ultimately prevails in a final resolution of their dispute shall be entitled to recover his fees. When there is such a resolution--and if the defendant prevails--he will be entitled to recover his fees. Moreover, that recovery could include the fees the defendant incurred in the court action, as the scope of recoverable fees is fairly broad, including all fees 'incurred by said prevailing party in connection with the Arbitration proceedings.'"