Mesa Shopping Center-East v. O Hill

“[T]he party prevailing on the contract” in a breach of contract action is entitled to recover reasonable attorney fees if the contract “specifically provides” for such recovery. (Civ. Code, § 1717, subd. (a); see Code Civ. Proc., § 1033.5, subd. (a)(10)(A).) But “there shall be no prevailing party” if “an action has been voluntarily dismissed” (Civ. Code, § 1717, subd. (b)(2)), something plaintiffs may do without prejudice before “the actual commencement of trial” (Code Civ. Proc., § 581, subds. (b)(1), (c)).

We are faced with applying these rules in a context not yet addressed in the case law. Plaintiffs sought declaratory and injunctive relief against defendants in this action. But the complaint explicitly acknowledged it was “ancillary to” contemplated private arbitration of disputes arising out of the parties’ contractual relationship. The court denied plaintiffs’ motion for a preliminary injunction and the parties stipulated to stay the action “pending arbitration.” Plaintiffs voluntarily dismissed this action (purportedly without prejudice) after the arbitral claims were submitted for final resolution and the arbitrator had issued an interim award favorable to…