Charlie Sheen's Day Isn't Win-Win

He may not get his day in court and his sons are moving back across town

Not everything can come up roses for Charlie Sheen every day.

In what could be a major blow to Sheen's wish to air his grievances in a court of law, the private-resolution company JAMS determined Wednesday that the actor's $100 million lawsuit against Warner Bros. Television and Two and a Half Men cocreator Chuck Lorre is a matter for third-party arbitration, rather than a judge and jury.

Lorre's camp seemed satisfied, but you can imagine how Sheen's side reacted.

"The subject matter of this dispute is not just Charlie and Chuck Lorre," Sheen's attorney, Martin Singer, told the Hollywood Reporter, calling JAMS' decision just "wrong."

"Our lawsuit involves claims over the entire cast and crew, and there is no right to arbitrate with them," Singer said. But, he added, whether they go to trial or to arbitration, "we still feel we will prevail because the facts and law are 100 percent in our favor. I can understand why Chuck Lorre wants to keep this in a secret tribunal. When the facts come out they will show that he and Warner Bros. had absolutely no basis to terminate my client."

Howard Weitzman, Lorre's attorney, says that arbitration was requested by his client and Warner Bros. because that's what their contracts called for.

"Despite Mr. Sheen's objections JAMS made the correct decision," he said in a statement to E! News.

The legal setback comes just as Sheen's ex Brooke Mueller is packing up their 2-year-old twins and moving back across town to Los Feliz, now that the idea of moving them closer to his Mulholland Heights estate is now off the table.

Mueller and sons Bob and Max were staying with Sheen before he started waging a media war against his then bosses, and then relocated to the Palazzo condo complex in Los Angeles. Mueller's mother, Moira Fiore, has been helping her care for the kids while she completes a sober-living program.

"They moved out because Charlie wanted to buy her a place and there was a buyer for the Los Feliz house," a source tells E! News. "But ultimately that is Brooke's home, and she really wanted to go back and live there once the deal with Charlie fell apart.

"It was all child-proofed and everything," the source adds. "Brooke and the boys are very happy in that home and have a lot of friends who live nearby."

Sheen, meanwhile, is planning on moving his new little makeshift family around the corner into a new six-bedroom, nine-bathroom playhouse.

—Reporting by Aly Weisman and Claudia Rosenbaum

WATCH: Brooke's mom talks to E!