Carter v. Spiegel
- Thomas Hixson
- 3:21-cv-03990
- U.S. District Court · Northern District of California
- 4
In Carter v. Spiegel, Judge Hixson denied defendants’ attorney-fee motion because arbitration was compelled but the underlying claims remained unresolved.
The ruling affected Jeffrey Spiegel and Ryan Spiegel’s request for attorneys’ fees from Jocelyn Carter. It denied that request because the underlying claims had not yet been adjudicated.
What happened
In Carter v. Spiegel, Jocelyn Carter sued Jeffrey and Ryan Spiegel for negligent misrepresentation, securities fraud, and unjust enrichment. The court had ordered Carter to arbitrate those claims, and the defendants then requested attorney’s fees under the Fortune Film Fund, Two, LLC operating agreement.
The agreement awarded fees to the prevailing party in disputes arising from the agreement. The court considered California law and noted a split over whether a party that wins an arbitration-compulsion motion in an existing lawsuit is already a prevailing party. The court concluded that, because the agreement contained a general fee provision and Carter’s claims had not yet been decided, it was not yet known who prevailed.
Judge Thomas S. Hixson denied the defendants’ motion for attorneys’ fees. The ruling addressed only the fee request; the opinion states that the underlying claims had not yet been adjudicated.
The detailed version
- Carter v. Spiegel · No. 3:21-cv-03990
- Thomas Hixson
- Mar. 11, 2022
Background
Jocelyn Carter sued Jeffrey Spiegel and Ryan Spiegel for negligent misrepresentation, securities fraud, and unjust enrichment. The court previously granted the defendants’ motion to compel arbitration of Carter’s claims. The defendants then moved for attorneys’ fees under paragraph 9.12 of the Operating Agreement for Fortune Film Fund, Two, LLC (FF2).
The provision stated that, in any litigation, arbitration, or other dispute arising from or because of the agreement, the prevailing party would receive reasonable attorneys’ fees and related costs. The defendants argued that their successful motion to compel arbitration made them prevailing parties under California Civil Code section 1717(a), which concerns fee awards in contract actions.
Court’s analysis
The court described a split in California authority. Some decisions treat a successful motion to compel arbitration filed in an existing lawsuit as an action on the contract and allow an immediate fee request. Other decisions conclude that the parties’ status as prevailing parties cannot be determined until the underlying claims are resolved.
The court found the latter reasoning more persuasive for this case. It distinguished cases involving an independent proceeding to compel arbitration or a lawsuit specifically seeking to prevent arbitration, where the court proceeding itself may have ended in one party’s favor. It also distinguished cases involving a fee provision specifically directed to enforcing an arbitration clause.
Here, the fee provision was general rather than specific to enforcing arbitration. Although the court had concluded that Carter’s claims arose from the FF2 Operating Agreement, those claims had not yet been adjudicated. The court therefore concluded that, apart from the outlier decision it discussed, California case law did not establish that either side was already the prevailing party under this provision.
Disposition
Judge Thomas S. Hixson denied the defendants’ motion for attorneys’ fees. The opinion does not decide the merits of Carter’s underlying claims or state who will ultimately prevail in arbitration.
Read the full 4-page opinion on CourtListener, the free public archive maintained by the Free Law Project.