Court Opinion

ID: 9746195
Source: CourtListenerOpinion
Date Created: 2023-08-27 14:08:16.19492+00
Date Added: 2024-06-11T07:25:10.808070
License: Public Domain

McKINSTER, J.
I respectfully dissent.
I agree with my colleagues in the majority that, even though it arose out of an arbitration award, the judgment is reviewable on appeal. However, I respectfully dissent from that portion of the majority’s opinion which affirms that judgment.
Introduction
This litigation was terminated when, in response to the plaintiffs’ request, their entire action was dismissed with prejudice. Not content with that resolution, the trial court decided to reopen the litigation for the sole purpose of entering a judgment against the plaintiffs upon which to base an award of attorney fees to the defendant. In affirming the actions of the trial court, the majority concludes that the defendant is entitled to recover her attorney fees under Civil Code section 1717, and that the trial court was justified in vacating the plaintiffs’ dismissal with prejudice so that those fees could be awarded to her.
The decision to award fees in this procedural circumstance requires the balancing of competing public policy interests. On the one hand, public policy favors the voluntary resolution of disputes. On the other, it also favors the enforcement of attorney fee clauses in agreements.
Our Supreme Court has decided that when these policy interests conflict, the balance must be resolved in favor of voluntary dispute resolution and against the recovery of attorney fees. (International Industries, Inc. v. Olen (1978) 21 Cal.3d 218, 224-225 [145 Cal.Rptr. 691, 577 P.2d 1031].) As an intermediate court, we are not at liberty to strike a different balance. (Auto *1835Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 455 [20 Cal.Rptr. 321, 369 P.2d 937].) Nevertheless, by affirming the vacation of the plaintiffs’ dismissal, that is what the majority has done.
In my view, the defendant’s right to an award of attorney fees is limited by Civil Code section 1717. Since Civil Code section 1717 prohibits an award of fees in the event of a voluntary dismissal, no fees are recoverable by the defendant. While the vacation of a dismissal without prejudice might be justified, the policy in favor of the voluntary resolution of disputes prevents the vacation of a dismissal with prejudice.
The Recovery of Attorney Fees in This Action Is Governed by Civil Code Section 1717.
When, as here, an action is brought to enforce an agreement, and one term of that agreement provides for the recovery of attorney fees by the prevailing party in such an action, the degree to which the courts will honor that agreement is governed by Civil Code section 1717.1 That section provides in relevant part: “In any action on a contract, where the contract specifically provides that attorney’s fees and costs, which are incurred to enforce that contract, shall be awarded ... to the prevailing party, then the party who is determined to be the party prevailing on the contract. . . shall be entitled to reasonable attorney’s fees in addition to other costs.” (Civ. Code, § 1717, subd. (a).)
One court has held that, even if the action is brought to enforce the contract, Civil Code section 1717 does not necessarily apply. (Honey Baked Hams, Inc. v. Dickens (1995) 37 Cal.App.4th 421 [43 Cal.Rptr.2d 595].) It based that conclusion on two separate arguments. Both are incorrect.
First, the court in Honey Baked Hams asserted that the “ ‘only effect’ ” of Civil Code section 1717 “ ‘is to make an otherwise unilateral right to attorney fees reciprocally binding upon all parties to actions to enforce the contract.’ ” (Honey Baked Hams, Inc. v. Dickens, supra, 37 Cal.App.4th at p. 426, quoting from Xuereb v. Marcus & Millichap, Inc., supra, 3 Cal.App.4th at p. 1342.) Since the attorney fee provision there was bilateral rather than unilateral (i.e., because it authorized the recovery of fees by whichever party prevailed rather than attempting to limit that right to a specified party), the court reasoned that the section had no application. (Honey Baked Hams, Inc., at pp. 426-428.)
*1836That reasoning fails because the premise is incorrect. It is true that, as originally enacted in 1968, the scope of Civil Code section 1717 was limited to contracts which restricted the right of a prevailing party to collect attorney fees to only “one of the parties” to the contract. (Stats. 1968, ch. 266, § 1, p. 578.) However, when it was amended in 1981, the section’s scope was expanded to include contracts which provide that fees “shall be awarded either to one of the parties or to the prevailing party . . . .” (Stats. 1981, ch. 888, § 1, p. 3399, italics added.) That broader language has remained in the section ever since. Thus, it is no longer true that Civil Code section 1717 is limited to contracts with unilateral attorney fee clauses.
Second, Honey Baked Hams argues that the recovery of contractual attorney fees is no longer restricted to the procedures specified by Civil Code section 1717 because in 1990 section 1033.52 was amended to provide that attorney fees are costs. (Honey Baked Hams, Inc. v. Dickens,' supra, 37 Cal.App.4th at pp. 428-429, citing Stats. 1990, ch. 804, §§ 1-2, pp. 3550-3552.) I am not persuaded. As early as the 1981 amendment, subdivision (a) of Civil Code section 1717 has specifically defined attorney fees to be “costs of suit.” (Stats. 1981, ch. 888, § 1, p. 3399.) The 1990 amendment to section 1033.5, clarifying that attorney fees may be requested on a cost bill, evidences no intent to draw a distinction between attorney fees awarded pursuant to Civil Code section 1717 and those awarded in other cases.
Under Civil Code Section 1717, Attorney Fees Are Not Recoverable After a Voluntary Dismissal.
The application of Civil Code section 1717 is significant because the section provides that “[w]here an action has been voluntarily dismissed . . . , there shall be no prevailing party [on the contract] for purposes of this section.” (Id., subd. (b)(2).) That is a codification of the holding in International Industries, Inc. v. Olen, supra, 21 Cal.3d 218. (Hsu v. Abbara (1995) 9 Cal.4th 863, 873 [891 P.2d 804, 9 Cal 4th 863].)
In International Industries, the court held “that sound public policy and recognized equitable considerations require that we . . . refus[e] to permit recovery of attorney fees based on contract when the plaintiff voluntarily dismisses prior to trial.”3 (21 Cal.3d at p. 223.) It explained that “[t]he purpose of litigation is to resolve participants’ disputes, not compensate *1837participating attorneys.” (Id., at p. 224.) Permitting the recovery of fees after voluntary dismissals would tend to frustrate that purpose by “encourag[ing] plaintiffs to maintain pointless litigation in moot cases or against insolvent defendants to avoid liability for those fees.” (Ibid.) “Our courts are sufficiently burdened without combat kept alive solely for attorney fees.” (Ibid.) While acknowledging that the rule may be contrary to the language of the parties’ contract, the court concluded “that concern for the efficient and equitable administration of justice requires that the parties in pretrial dismissal cases be left to bear their own attorney fees, whether claim is asserted on the basis of the contract or section 1717’s reciprocal right.” (Id., at p. 225; Jue v. Patton (1995) 33 Cal.App.4th 456, 460 [39 Cal.Rptr.2d 364].)
The Plaintiffs’ Dismissal Was Voluntary.
Since the Supreme Court has determined that public policy requires that a plaintiff be allowed to voluntarily dismiss his or her contract action without incurring liability for contractual attorney fees, the next question is whether the plaintiffs’ dismissal here was voluntary.
Generally, an involuntary dismissal is one ordered by the court, while one entered at the request of the plaintiff is voluntary. (D & J, Inc. v. Ferro Corp., supra, 176 Cal.App.3d at p. 1194.) Even dismissals requested after the commencement of trial are considered to be voluntary. (Ibid.) “It is not the stage of the proceedings which distinguishes a voluntary dismissal from an involuntary one. Rather, the key is the plaintiff’s role, if any, in bringing it about.” (Ibid.)
Here, the dismissal was entered solely at the request of the plaintiffs. Since they consented to its entry, it is a voluntary dismissal. Thus, unless there is authority permitting the vacation of that dismissal, no attorney fees are recoverable. (Civ. Code, § 1717, subd. (b)(2).)
Neither Statutory Nor Decisional Law Currently Restricts the Right of a Plaintiff to Dismiss an Action With Prejudice Following an Adverse Arbitration Award.
The right of a plaintiff to dismiss his or her action is very broad. “A plaintiff may dismiss his or her complaint, or any cause of action asserted in it, in its entirety, or as to any defendant or defendants, with or without prejudice prior to the actual commencement of trial.” (§581, subd. (c), italics added; accord, id., subd. (b)(1).) A plaintiff may also dismiss with *1838prejudice after the commencement of trial by expressly requesting a dismissal (id., subd. (e)) or by otherwise indicating an unequivocal intent to abandon the action (id., subd. (d); Kaufman & Broad Bldg. Co. v. City & Suburban Mortg. Co. (1970) 10 Cal.App.3d 206, 213 [88 Cal.Rptr. 858]).
Though broad, the right to dismiss is not absolute. While there are no further statutory limitations, case law has defined procedural circumstances in which a dismissal will not be given effect.
For instance, if a general demurrer has been sustained without leave to amend, the plaintiff may not thereafter dismiss the action without prejudice, even if the trial court has not yet entered a judgment of dismissal on the sustained demurrer. (Goldtree v. Spreckels (1902) 135 Cal. 666, 672-673 [67 P. 1091].) The same is true when the demurrer is sustained with leave to amend but the plaintiff fails to amend within the time allowed. (Wells v. Marina City Properties, Inc. (1981) 29 Cal.3d 781, 789 [176 Cal.Rptr. 104, 632 P.2d 217].) “Permitting a plaintiff to exercise an absolute right to dismiss his action without prejudice to recommencing suit based upon the same allegations, even after the trial court has ruled definitively and adversely on the sufficiency of those allegations, makes neither good sense nor good law.” (Id., at p. 788.) If the plaintiff can offer no amendment of the complaint which would cure the defects found by the trial court to exist, the plaintiff “must proceed to a review of such legal determination by appeal, rather than seek another trial forum in which to reassert the same claims.”4 (Id., at p. 789.)
Similarly, “where a plaintiff served with a request for admission defaults and all the issues in the case are deemed admitted in compliance with the requirements of section 2033, plaintiff’s right to dismiss without prejudice pursuant to section 581, subdivision 1, is terminated.”5 (Miller v. Marina Mercy Hospital (1984) 157 Cal.App.3d 765, 770 [204 Cal.Rptr. 62], interpreting what is now § 581, subd. (b)(1).) “The most important objective of the request for admissions is to narrow the issues and save the time and expense of preparing unnecessary proof.” (Miller, supra, 157 Cal.App.3d at p. 769.) To allow a plaintiff to dismiss without prejudice would frustrate that purpose, because the plaintiff would be able to refile the identical lawsuit at a cost of time and resources to the judicial system and to the defendant that section 2033 is intended to prevent. (157 Cal.App.3d at p. 769.)
*1839In a procedural circumstance closer to that before us, the same concern with the threat of repetitious litigation of issues which have already been definitively decided has been relied upon to determine that plaintiffs may not dismiss their action without prejudice after requesting a trial de novo to vacate an adverse arbitration award. (Herbert Hawkins Realtors, Inc. v. Milheiser (1983) 140 Cal.App.3d 334, 340-341 [189 Cal.Rptr. 450].) There, the plaintiffs purposely failed to appear at the judicial arbitration hearing, with the result that an award was filed in favor of the defendants. (Id., at p. 337.) When the plaintiffs requested a trial de novo, the matter was restored to the civil active list and set for a mandatory settlement conference. Prior to the mandatory settlement conference, the plaintiffs dismissed their action without prejudice. The defendants appealed from the trial court’s denial of their motion for an order dismissing the action with prejudice. (Ibid.)
The appellate court reversed, holding that a plaintiff “is not entitled to a voluntary dismissal without prejudice within the judicial arbitration setting merely to avoid an unfavorable arbitration award.” (140 Cal.App.3d at p. 340, fn. omitted, italics added.) It reasoned that, instead of achieving a valid dismissal, the plaintiffs’ request for dismissal should be deemed to be a repudiation of their prior request for a trial de novo. (Ibid.) “This factually restores the repudiating parties to their legal positions before electing the trial de novo, and triggers award finalization under section 1141.20.” (Ibid., fn. omitted.) Accordingly, it ordered the vacation of the dismissal requested by the plaintiffs and the entry of a judgment conforming to the arbitration award. (Id., at p. 341.)
Until now, no case has held that a plaintiff may not dismiss an action with prejudice after receiving an unfavorable arbitration award.
The Right to Dismiss an Action With Prejudice Should Not Be Restricted
The specific issue before us is whether the rule of Herbert Hawkins Realtors, which refuses to give effect to dismissals without prejudice when entered after an adverse arbitration award, should also be applied to dismissals with prejudice. I submit that the rule should not be so extended, for three reasons. First, since the rule conflicts with several Supreme Court cases involving similar issues, I question whether Herbert Hawkins Realtors is correct even if limited to dismissals without prejudice. Second, assuming arguendo that the rule in Herbert Hawkins Realtors is correct as applied to its facts, the policies underlying that rule do not apply to dismissals with prejudice. Third, because an arbitration hearing is not equivalent to a trial, the right to dismiss after an arbitration should not be restricted in the same way as dismissals after a trial.
*1840A. The Rule Conflicts With Supreme Court Opinions Involving Similar Issues.
Even if limited to dismissals without prejudice, the holding of Herbert Hawkins Realtors appears to conflict with Supreme Court opinions in three respects.
1. Postdismissal Inquiries to Determine Entitlement to Attorney Fees Have Been Rejected by the Supreme Court as a Waste of Scarce Judicial Resources.
The holding of Herbert Hawkins Realtors is not that all postarbitration dismissals are ineffective, but only that dismissals which have been requested “merely to avoid an unfavorable arbitration award” are invalid. (140 Cal.App.3d at p. 340.) Thus, to implement that rule, a trial court must conduct a hearing to make a factual determination of the subjective intent of the dismissing plaintiff.6
However, such postdismissal proceedings to determine entitlement to attorney fees have previously been rejected by the Supreme Court. In International Industries, Inc. v. Olen, supra, the Supreme Court considered the suggestion “that in pretrial dismissal cases the court should determine whether, and to what extent, the complaint is meritorious and award attorney fees accordingly.” (21 Cal.3d at p. 224.) Noting that the purpose of litigation is to resolve the parties’ disputes rather than to determine how the parties’ attorneys should be compensated (ibid.), it decided against the adoption of such a test, declining to use “scarce judicial resources for trial of the merits of dismissed actions . . . .” (Id., at p. 225.)
The proposed inquiry here—i.e., the determination of a plaintiff’s subjective reason for requesting dismissal—would also involve a time-consuming *1841and wasteful expenditure of resources to inquire into issues which are not raised by any pending action. While an inquiry into the plaintiff’s intent might not be as extensive as that required to determine the degree of merit in the dismissed action, even a brief inquiry is wasteful when the underlying action has been terminated once and for all by a voluntary dismissal with prejudice.
2. The Supreme Court Has Held That the Proper Sanction for Abuse of the Judicial Arbitration System Is Sanctions Under Section 128.5.
Arguably, the court in Herbert Hawkins Realtors sought to justify its rule by the need to discourage “mischievous lawyering” by which the judicial arbitration system is abused. (140 Cal.App.3d at p. 339.) If so, the Supreme Court’s decision in Lyons v. Wickhorst (1986) 42 Cal.3d 911 [231 Cal.Rptr. 738, 727 P.2d 1019] indicates that the chosen sanction is too severe.
In Lyons, the trial court had dismissed a plaintiff’s action after the plaintiff had repeatedly failed to participate in judicial arbitration hearings and had requested a trial de novo after a default arbitration award was filed against him. (42 Cal.3d at p. 914.) However, after noting that there is no statutory authority for an involuntary dismissal under those circumstances (id., at pp. 914-915), the Supreme Court reversed the dismissal, concluding that it was “too drastic a remedy in light of the fact that arbitration was not intended to supplant traditional trial proceedings” (id., at p. 919). Instead, the appropriate remedy for the plaintiff’s behavior was that provided by section 128.5. (42 Cal.3d at p. 919; accord, Salowitz Organization, Inc. v. Traditional Industries, Inc. (1990) 219 Cal.App.3d 797, 802-806 [268 Cal.Rptr. 493].)
An award of sanctions under section 128.5 is a far more limited penalty than an award of attorney fees under Civil Code section 1717. Sanctions may not be levied under section 128.5 unless the trial court finds that the action or tactic in question was in bad faith and was frivolous or solely intended to cause unnecessary delay. (Summers v. City of Cathedral City (1990) 225 Cal.App.3d 1047, 1070 [275 Cal.Rptr. 594].) By contrast, liability for attorney fees under Civil Code section 1717 is not so circumscribed. A prevailing party in an action on a contract with an attorney fee clause is entitled to an award of attorney fees as a matter of right, regardless of the subjective intent of the opposing side.
3. The Supreme Court Has Declared That the Policy in Favor of Voluntary Dismissals Outweighs the Interest in Imposing Liability for Attorney Fees.
Most importantly, neither Herbert Hawkins Realtors nor the majority takes into account the policies which favor the right of a plaintiff to dismiss or *1842otherwise settle his or her action without becoming liable for attorney fees incurred by the other side. (Civ. Code, § 1717, subd. (b)(2).) As explained in International Industries, Inc. v. Olen, supra, and as quoted above, the Supreme Court has determined that the policy favoring the disposition of the parties’ claims outweighs the policy of enforcing the attorney fee provisions of contracts between those parties. Because the enforcement of the latter might discourage settlements and voluntary abandonments of actions, those provisions will not be enforced against plaintiffs who voluntarily dismiss.
Arguably, this policy may result in some hardship or injustice in a particular case. Were the policy to be enforced in the present case, for instance, the defendant would not be able to enforce her contractual right to be reimbursed for the $20,000 in attorney fees which she incurred defending against the plaintiffs’ suit. However, that is no reason to carve out an exception for judicial arbitration cases, as the majority has implicitly done. In a civil case which does not go to judicial arbitration, a defendant may incur many tens or even hundreds of thousands of dollars of attorney fees in the course of demurrers, depositions, discovery motions, and other trial preparation, only to have the plaintiff decide to dismiss with prejudice on the eve of, or even at the end of, trial. If the policy favoring voluntary dispositions justifies the denial of any right to enforce an attorney fee provision in that hypothetical case, then it justifies the same denial in the case before us.
B. The Policies Relied Upon to Justify the Rule as to Dismissals Without Prejudice Do Not Apply to Dismissals With Prejudice.
As noted above, Herbert Hawkins Realtors’ rule that dismissals without prejudice entered after adverse arbitration awards will not be given effect is based, not on statute or precedent, but on policy considerations. Thus, the strength of that rule depends on the force of that policy argument. As discussed above, in light of Lyons, International Industries, and Civil Code section 1717, I question the policy conclusions reached by the Herbert Hawkins Realtors court and adopted by the majority.
Here, however, the precise issue to be decided is not whether Herbert Hawkins Realtors is correct, but whether it should be applied beyond its facts to dismissals with prejudice. Since the rule is based on policy considerations, it may be extended to dismissals with prejudice only to the extent that the underlying policies also apply to those circumstances.
To justify the creation of its new rule regarding dismissals without prejudice following arbitration awards, Herbert Hawkins Realtors appears to rely primarily upon two interrelated policies: to promote the use of arbitration to resolve small civil claims and to discourage the waste of judicial *1843resources caused by repetitious litigation. While both policies tend to support the rule invalidating dismissals without prejudice, neither supports the extension of that rule to dismissals with prejudice.
The purpose of judicial arbitration is to provide prompt and equitable resolutions to small civil disputes. (§1141.10; Herbert Hawkins Realtors, Inc. v. Milheiser, supra, 140 Cal.App.3d at p. 338.) Because a dismissal without prejudice allows a plaintiff to file a new action on the same allegations (id., at p. 339), permitting voluntary dismissals without prejudice after adverse arbitration awards would defeat that legislative purpose (ibid.).
Similarly, Herbert Hawkins Realtors quotes from that portion of Wells v. Marina City Properties, Inc., supra, in which the Supreme Court refused to give effect to a dismissal without prejudice after a demurrer had been sustained, because the plaintiff would thereby be able to reassert the same claim in a second action despite that adverse ruling. “ ‘The obvious consequence . . . would be to prolong, rather than to terminate lawsuits.’ ” (Herbert Hawkins Realtors, Inc. v. Milheiser, supra, 140 Cal.App.3d at p. 340, quoting from Wells v. Marina City Property, Inc., supra, 29 Cal.3d at p. 789.)
The possibilities that the resolution of cases will be delayed and that judicial resources will be wasted both stem from the ability of a plaintiff who has dismissed his or her initial action without prejudice to file a second action on the same allegations. Those policy interests are not threatened when the first action is dismissed with prejudice, however, because no new action can thereafter be filed. Rather than present the risk of further litigation, a dismissal with prejudice terminates the litigation once and for all. Therefore, those policy interests do not justify the extension of the rule to dismissals with prejudice.
C. A Dismissal After Arbitration Should Not Be Treated as a Dismissal

After Trial.

The majority claims that the “plaintiffs had their day in court as a result of having participated in a judicial arbitration,” and that their request for a trial de novo was merely an attempt to obtain “a second day in court.” (Maj. opn., ante, at p. 1826.) Similarly, it views an arbitration “as a trial on the merits.” (Id., at p. 1827.) The majority appears to reason that, just as a plaintiff cannot dismiss an action after it has been submitted for decision following a trial (§581, subds. (d) & (e)), a plaintiff may be denied the right to dismiss his or her action after an arbitration hearing.
I cannot agree. As has been said in the context of dismissals for failure to prosecute, a judicial arbitration hearing is not a final disposition of law or *1844fact, and thus cannot be considered to be the equivalent of a trial. (Khoury v. Comprehensive Health Agency, Inc. (1983) 140 Cal.App.3d 714, 719 [189 Cal.Rptr. 653]; Brown v. Engstrom (1979) 89 Cal.App.3d 513, 520 [152 Cal.Rptr. 628].) Nor were arbitrations intended to supplant trials. (Lyons v. Wickhorst, supra, 42 Cal.3d at p. 919.) Although an adjunct to litigation (Parker v. Babcock (1995) 37 Cal.App.4th 1682, 1687 [44 Cal.Rptr.2d 602]), a judicial arbitration is not a “judicial” proceeding at all, because it is not conducted by a judge (id., at p. 1686). As with other arbitrations, it is likely to be conducted “in the nature of an informal conference rather than a judicial trial.” (Sapp v. Barenfeld (1949) 34 Cal.2d 515, 520 [212 P.2d 233]; and see § 1141.10, subd. (b)(2) [hearings to be as informal as possible].) “ ‘Extrajudicial mediation’ ” is an apt description. (Dodd v. Ford (1984) 153 Cal.App.3d 426, 432, fn. 7 [200 Cal.Rptr. 256].)
Although both arbitrations and trials can result in judgments, the two types of proceedings are not of equal dignity. A few hours of informal mediation by a volunteer arbitrator cannot be equated to a plenary trial before a judge or jury. While a trial cuts off the right to dismiss, an arbitration hearing should not.

Even if the Rule Should Be Applied to Dismissals With Prejudice, It Has No Application Here Because the Dismissal Was Not Solely to Avoid Liability for Attorney Fees.

Finally, even assuming that the rule of Herbert Hawkins Realtors is correct and should be applied to dismissals with prejudice which are requested “merely to avoid an unfavorable arbitration award,” it would have no application here. The trial court did not expressly find such a purpose. Nor does substantial evidence support an implied factual finding that the sole reason for the plaintiffs’ request for a trial de novo and subsequent dismissal was to avoid the arbitration award.
A comparison with the facts in Herbert Hawkins Realtors is illustrative. There, the plaintiffs had not participated in the arbitration hearing and had dismissed the action on the eve of the mandatory settlement conference, which appears to have been the first step toward trial following the request for a trial de novo. Thus, the facts there suggest that the plaintiffs never intended to pursue a court trial, but rather intended to dismiss the action as soon as the arbitration award had been vacated.
By contrast, after requesting the trial de novo, the plaintiffs here affirmatively requested a trial date by filing a new at-issue memorandum. Thereafter, they actively prepared for trial by drafting a trial brief and a pretrial *1845motion. While they later decided to dismiss, their counsel represented that their decision was motivated by reasons personal to the plaintiffs,7 unrelated to the merits of the action. That evidence indicates that the request for trial de novo was motivated by a genuine desire to pursue a court trial, and that the decision to abandon the claim prior to trial was prompted by a subsequent change of heart. This record does not support a finding that the request for trial de novo was a sham, intended solely to avoid the adverse arbitration award.
Conclusion
If the defendant can establish that the plaintiffs were acting in bad faith, she may have remedies under Code of Civil Procedure section 128.5 or in an action for malicious prosecution. However, for the reasons set forth above, I submit that she is not entitled to an award of attorney fees under Civil Code section 1717.1 would reverse the judgment entered on the arbitration award and direct the trial court to reinstate the dismissal with prejudice previously entered pursuant to the plaintiffs’ request.
A petition for a rehearing was denied June 4, 1996, and appellants’ petition for review by the Supreme Court was denied August 28, 1996.

By contrast, it has been held that Civil Code section 1717 does not apply to actions which arise out of a contract but which sound in tort rather than contract. (Xuereb v. Marcus & Millichap, Inc. (1992) 3 Cal.App.4th 1338, 1341-1342 [5 Cal.Rptr.2d 154].) That exception is unimportant here, because the plaintiffs’ sole claims were for breach of contract and specific performance.

As in the majority opinion, all section references are to the Code of Civil Procedure unless specified otherwise.

The holding of International Industries was limited to the dismissal of the action prior to the commencement of trial. However, when the Legislature codified that holding by adding subdivision (b)(2) to Civil Code section 1717, it did not retain that limitation. Thus, under the statutory formulation of the rule, even where the dismissal is not entered until after the *1837commencement of trial, there is no prevailing party. (D & J, Inc. v. Ferro Corp. (1986) 176 Cal.App.3d 1191, 1194-1195 [222 Cal.Rptr. 656].)

While the majority opinion quotes from Wells to the effect that a plaintiff may not dismiss an action to which a demurrer has been sustained (maj. opn., ante, at p. 1826), it fails to acknowledge that Wells was speaking of dismissals without prejudice (29 Cal.3d at pp. 784-785).

“The implication of a subdivision 1 dismissal is that it is generally ‘without prejudice’ to a plaintiff’s filing of a new action on the same allegations . . . .” (Wells v. Marina City Properties, Inc., supra, 29 Cal.3d at p. 784.)

The majority apparently interprets the holding of Herbert Hawkins Realtors to be far broader. Under its reading, any postarbitration request for dismissal is deemed to have been motivated by an improper attempt to avoid the prior arbitration award, and is thus invalid regardless of the plaintiff’s actual motivation. Accordingly, the majority disclaims the need to determine the subjective intent of the dismissing plaintiff. (Maj. opn., ante, at pp. 1829-1831.)
In my view, the holding of Herbert Hawkins Realtors cannot be so easily divorced from its facts, which clearly showed that the plaintiff’s request for trial de novo was a sham, intended for the sole purpose of escaping the adverse award rather than pursuing the claim at trial. The Herbert Hawkins Realtors court itself recited the existence of that improper intent when defining the extent of its holding: “Accordingly, we hold a party is not entitled to a voluntary dismissal without prejudice within the judicial arbitration setting merely to avoid an unfavorable arbitration award.” (140 Cal.App.3d at p. 340, fn. omitted.) Since the court relied upon the existence of that improper intent in fashioning its rule, the application of that rule in other circumstances depends upon a finding of a similar improper intent. If that factual prerequisite is ignored, then we are not merely applying an existing rule of law, but creating a new rule, requiring new justifications.

The plaintiffs are the daughter and son-in-law of the defendant.