Taranow v. Brokstein

Citations: 135 Cal. App. 3d 662; 185 Cal. Rptr. 532; 1982 Cal. App. LEXIS 1940Docket: Civ. 47764

Court: California Court of Appeal; September 13, 1982; California; State Appellate Court

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In 1975, Myron J. Taranow and Arnold H. Brokstein entered into a partnership agreement to practice dentistry, which included provisions for awarding costs and reasonable attorney's fees to the prevailing partner in any suit to enforce the agreement. The agreement also stipulated that disputes unresolved by the partners would be settled through arbitration under the American Arbitration Association's rules. Following a disagreement, Brokstein sought arbitration, claiming reimbursement for attorney's fees. The arbitrator awarded Brokstein $14,600, inclusive of attorney's fees, which Taranow later challenged in superior court under California Code of Civil Procedure sections 1285 and 1287, arguing that the arbitrator exceeded jurisdiction in awarding these fees.

The superior court upheld the arbitration award, confirming that the arbitrator had jurisdiction to award attorney's fees. Taranow appealed, focusing on whether the initiation of arbitration constituted the "bringing of a suit" as defined in the partnership agreement. The ruling noted that while "suit" typically refers to court actions, it can also encompass broader legal proceedings, including arbitration, which is considered a form of civil legal action. The legal interpretations cited support the notion that "suit" encompasses any legal claim or demand, thus affirming the arbitrator's authority in the matter.

An 'adversary proceeding' is defined as a legal process initiated by one party to compel another to achieve justice, as established in case law (City of Tulsa v. Board of Trustees of Police Pension; Shepherd v. Standard Motor Co.). The term 'lawsuit' encompasses various legal proceedings, including arbitration, as clarified by Webster's Dictionary and supported by case law (Medawick Contracting Co. v. Travelers Ins. Co.; Packard v. Hill). 

In a partnership dispute, two issues arose: Dr. Taranow's alleged debt to Dr. Brokstein, and the interpretation of their agreement regarding attorney's fees in arbitration. Dr. Brokstein prevailed in both matters. The absence of a record from the arbitration leads courts to presume the validity of the arbitrator's decision, placing the burden on the party contesting the award to demonstrate error. Courts will assume relevant evidence was presented during arbitration, and they cannot overturn the arbitrator's findings without a supporting record.

Dr. Taranow's participation in arbitration is also presumed to be voluntary. Even if the attorney's fees issue were not explicitly covered by the partnership agreement, he cannot contest it now. His arguments could undermine the contractual provision mandating arbitration for all claims, rendering the attorney's fees clause ineffective. Civil Code sections 1641 and 1643 emphasize that contracts must be interpreted as a whole to give effect to all parts, ensuring that the intent of the parties is honored.

A contract that allows for two interpretations must be construed in a way that renders it effective, provided it does not conflict with the parties' intentions. This principle is supported by various case law, including Rodriguez v. Barnett and Dix Box Co. v. Stone. The court determined that the conflicting provisions within the contract aimed to prevent litigation while permitting the prevailing party to recover attorney's fees when necessary to resolve disputes as per the partnership agreement. This interpretation is deemed more reasonable than suggesting the attorney's fee provision holds little significance. Consequently, the court found no merit in the appeal, modified the judgment to award reasonable attorney's fees to defendant Brokstein for the appeal, and affirmed the modified judgment. Judges Racanelli and Newsom concurred, with the modification dated October 6, 1982.