Acosta v. Kerrigan

In Acosta v. Kerrigan (2007) 150 Cal.App.4th 1124, an "Occupancy Agreement" between the plaintiff and one defendant, Kerrigan, provided that the exclusive remedy for any disputes regarding any aspect of the agreement was arbitration. The arbitration clause included the following language: " '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 p. 1126.) The plaintiff filed a complaint for writ of possession, and the defendants successfully petitioned to compel arbitration. (Ibid.) The trial court granted Kerrigan's motion for attorney fees incurred in connection with the successful petition. (Id. at p. 1127.) On appeal, the plaintiff raised two contentions: that Kerrigan's claim for attorney fees should be decided by the arbitrator rather than the trial court, and that an interim award of attorney fees--that is, one made before the arbitration takes place--is impermissible. (Id. at pp. 1128-1129.) In its majority opinion, the Court of Appeal first concluded it was proper for the trial court--not the arbitrator--to award fees arising from the petition to compel arbitration. Although acknowledging that it was a close question, the court stated: "Given the trial court is responsible for deciding a petition to compel arbitration, the trial court also should be responsible for resolving a claim for attorney fees made in connection with that petition to compel arbitration." (Acosta, supra, 150 Cal.App.4th at pp. 1129-1130.) The court reasoned that the contract itself contemplated litigation outside the context of arbitration might take place, that a determination of whether attorney fees should be awarded and the amount of the award was "part and parcel of the proceeding on the petition," and that "the ' " 'experienced trial judge is the best judge of the value of professional services rendered in his court.' " (Id. at p. 1130.) In Acosta v. Kerrigan (2007) 150 Cal.App.4th 1124, the defendant successfully petitioned to compel arbitration under an agreement containing a binding arbitration clause. The defendant then moved for an interim attorney fees award. (Id. at p. 1126.) The agreement contained two attorney fees clauses. One clause provided for an attorney fees award to the prevailing party in an arbitration arising under the agreement. (Id. at p. 1126, fn. 2.) The other clause provided that, if one party initiated an action or proceeding other than an arbitration, then the responding party was entitled to recover attorney fees from the initiating party. (Id. at p. 1126.) The appellate court concluded the defendant was entitled to an interim attorney fees award because the second attorney fees clause was an independent provision permitting a party who is forced to petition to compel arbitration to recover the attorney fees incurred in making the successful petition even if the party ends up losing on the merits in the arbitration. (Id. at p. 1132.) In Acosta v. Kerrigan, attorney fees were awarded to the defendant tenant in connection with his successful petition to compel arbitration of a dispute arising under a lease agreement between him and the plaintiff landlord. (Acosta, supra, at p. 1125.) The court found unpersuasive appellant landlord's argument that an interim award of attorney fees is impermissible. (Ibid.) It held that: "Given the trial court is responsible for deciding a petition to compel arbitration, the trial court also should be responsible for resolving a claim for attorney fees made in connection with that petition to compel arbitration. The contract expressly contemplates such a petition might be required and, if so, it necessarily would be heard by a judge not an arbitrator." (Id. at pp. 1129-1130.)