CALIFORNIA ATTORNEY'S FEES

Attorney’s Fees In The News … Lenny Dykstra Bankruptcy Filings List Lawyer Debts And San Diego Attorney Wants Civil Rights Fee in Squaw Valley Furloughed Employee Benefits Brewing Dispute

Lenny Dykstra’s Legal Bills.

     Lenny “Nails” Dykstra filed for Chapter 11 bankruptcy protection in California last Tuesday, July 7, listing some pretty substantial fees owing to several law firms.

     The bankruptcy filings show he owes K&L Gates about $1.5 million in fees and owes a little over $342,000 to O’Melveny & Myers. (Mr. Dykstra told ESPN.com that he had already paid K&L Gates around $4 million in fees.)

     If you want more details on this bankruptcy filing, see Brian Baxter’s July 8, 2009 post, “The Bankruptcy Files: Up First, Lenny Dykstra’s Legal Bills,” at amlawdaily.com.

Nail.  Theodor Horydczak, photographer.   Library of Congress.

Civil Rights Claim Against Squaw Valley.

     San Diego attorney Alfred G. Rava has written a letter to Northern California’s Squaw Valley demanding that Squaw Valley discontinue discounts offered to furloughed state employees (those employees who have to take certain days off each month without pay because of the state budgetary crisis), pay each of his clients $4,049, and reimburse them $2,400 in attorney’s fees. Mr. Rava claims that the discounts violate state civil rights laws that carry fee-shifting provisions in favor of prevailing plaintiffs.

     Because many other business establishments throughout California have offered similar discounts, State Sen. Gloria Negrete McLeod (D-Chino) has authored a bill to legalize the discounts. The bill has been quickly endorsed by the Consumer Attorneys of California, a leading trial attorney trade group.

     For more on this one, see Patrick McGreevy’s July 8, 2009 article, “Lawyer targets resort that gave discounts to furloughed state workers,” available for reading at latimes.com.

Squaw Valley.  Dorothea Lange, photographer.  1939.  Library of Congress.

Trustees: You Can Rejoice …. Nonsanction Attorney’s Fees Should Be Awarded Against You In Representative (Not Personal) Capacities

 

Ninth Circuit So Holds In Arizona Case, But Relies on California Authorities.

     All of you trustees out there—whether in a probate or bankruptcy context—can breathe a little easier given the next holding from a recent Ninth Circuit case. Although involving Arizona substantive law, the Court of Appeals relied on analogous California authority so that it will have force in this state.

     In Biltmore Associates, LLC v. Twin City Fire Ins. Co., Case No. 06-16417 (9^th Cir. July 10, 2009) (for publication), a bankruptcy creditor’s committee hired Biltmore as its trustee, with bankruptcy court approval. In turn, Biltmore brought a nonbankruptcy civil action against certain insurance companies in Arizona. It lost, with a district court awarding $88,565.59 in favor of the insurers and against “Biltmore, as trustee” (based upon an Arizona fee-shifting statute similar to California Civil Code section 1717), albeit later denying a motion to bar execution against trustee’s own assets versus assets of the trust.

     Trustee appealed, and won an important clarification.

     The Ninth Circuit remanded to clarify that Biltmore was only liable as a representative of the trust, rather than being liable personally. It primarily relied on California Probate Code section 18001, which only makes a trustee personally liable with respect to ownership or control of trust property when the trustee did something by which he, she or it was personally at fault. The Court of Appeals also cited in support the California decision of Haskett v. Villas at Desert Falls, Inc., 108 Cal.Rptr.2d 888 (2001), which tracked the result reached by other decisions from outside California.

     Because the fee award was a “normal” cost award and not the product of any sanctionable conduct by trustee, Biltmore’s personal assets could not be touched for purposes of judgment satisfaction. Instead, insurers had to look for recovery from trust assets.

     So, trustees, rejoice! Rejoice!

Attorney's Fees In the News . . . . Lewis Brisbois Suffers $6 Million Malpractice Verdict When Trying To Collect $1 Million Receivable

Los Angeles County Jury Sides With Plaintiff.

     Lewis Brisbois Bisgaard & Smith was owed over $1 million by ReadyLink Healthcare, Inc., a nursing registry that provides hospital staffing, as a principal result of Lewis Brisbois' unsuccessful handling of a trade secret trial (as well as other matters) on ReadyLink's behalf. ReadyLink eventually sued for malpractice and breach of contract, claiming it was overbilled and that the trade secrets litigation was not handled well.

     Well, after a two month jury trial, the verdict is in. A Los Angeles County Superior Court jury awarded more than $6 million to ReadyLink.

     For more on the facts surrounding this verdict, see Amanda Becker's July 8, 2009 article "Lewis Brisbois Ordered to Pay $6 Million For Overbilling, Mishandling Four Cases" in The Los Angeles Daily Journal.

E-Discovery: Georgia Federal Court Orders Defendant To Reimburse Plaintiff $1,022,700 In Attorney's Fees And Costs As Discovery Sanction

District Court Opts for Sanctions Rather Than Entering Astronomical Default Judgment.

     This one certainly caught our eye and illustrates how e-discovery sanction can involve steep reimbursement of significant attorney's fees and costs.

     In Kipperman v. Onex Corp. (Kipperman II), 2009 U.S. Dist. LEXIS 44457 (N.D. Ga. May 26, 2009), a district judge found that defendants had engaged in a "textbook case of discovery abuse" by stonewalling its production of "hot" emails and leading the plaintiffs to believe that they were not relevant. Hardly the case, with the defense unilateral decisions being nixed by the district judge after finding that many of the emails "certainly are hot."

     The district judge then addressed the nature of the sanction to be imposed on the defense for discovery abuse. If he had struck the defendants' answer, it would have resulted in one of the largest default judgments in a case presenting novel issues. Instead of doing this, the district judge opted to order defendants to reimburse plaintiffs $1,022,700 in attorney's fees and costs as a discovery sanction. This lesser sanction was imposed because the defense did eventually produce the documents and supplemental discovery follow-up could cure any prejudice.

                              "Broadaxe".  From Wikipedia article.

Attorney’s Fees In the News . . . . Santa Barbara County Supervisor Doreen Farr Loses Bid For Attorney’s Fees Award From Superior Court

She Vows to Appeal the Fee Denial.

     Third District Santa Barbara County Supervisor Doreen Farr was declared the winner over Steve Pappas, her opponent in last year’s supervisorial race, by 806 votes. Mr. Pappas filed suit to unseat Ms. Farr, but the challenge failed to disqualify allegedly fraudulent votes cast in the November 4, 2008 runoff.

     Ms. Farr then sought to recoup $250,000 in attorney’s fees that she contended were spent by her in the unsuccessful challenge under California’s election law.

     On July 6, 2009, Santa Barbara County Superior Court Judge William McLafferty denied the fee request. In a July 7, 2009 article “Judge denies Farr’s motion” written by Samantha Yale Scroggin of The Santa Maria Times, Ms. Farr was quoted as saying, “We are planning to appeal, and we’ll see how that goes.”

     BLOG UNDERVIEW—Talk about appeals, co-contributor Mike had the opportunity yesterday to do his first appellate argument before the Second District, Division Six Court of Appeal, based in Ventura, CA. He found that the panel of jurists—Justices Gilbert, Yegan, Perren, and Coffee—to be well prepared and very interactive on the cases that were on calendar.

FOIA: No Fees Recoverable Where Documents Voluntarily Turned Over Before 2007 Amendments

Ninth Circuit Determines 2007 Catalyst Amendments Are Not Retroactive in Nature.

     Under the Freedom of Information Act, 5 U.S.C. § 552, a complainant in a FOIA action is deemed to be eligible for an award of attorney's fees if he has "substantially prevailed" on his claim. 5 U.S.C. § 552(a)(4)(E) (prior to 2007 amendments). However, under 2007 amendments, FOIA was modified to delineate that a complainant has "substantially prevailed" if the complainant has obtained relief through "either (i) a judicial order, or an enforceable written agreement or consent decree, or (ii) a voluntary or unilateral change in position by the agency, if the complainant's claim is not insubstantial." 5 U.S.C. § 552(a)(4)(E)(i) & (ii). (The (ii) prong is also known as the catalyst theory of recovery.)

     In Oregon Natural Desert Assn. v. Locke, Case No. 06-35851 (9^th Cir. July 8, 2009) (for publication), the Ninth Circuit decided that the FOIA 2007 amendments were not retroactive in nature and that the catalyst theory did not allow recovery for pre-2007 voluntary turnovers of documents by an agency in a FOIA case. As a result, an attorney's fees award of $46,889.02 to an FOIA complainant had to be reversed and remanded for purposes of striking portions of the award that represented catalyst theory recovery.

Civil Code Section 1717: Bankruptcy Related Actions Were Recoverable By Successful Lender

Fourth District, Division 1 Finds No Basis To Assess Fees Against Nonsignatory Individual Principal In the Absence of an Alter Ego Finding.

     In New Century Corporation v. Positive Investments, Inc., Case No. ECU03797 (4^th Dist., Div. 1 July 8, 2009) (unpublished), lender was awarded attorney's fees of $83,329 under an attorney's fees clause of a loan agreement (out of a requested $114,339.77 in fees) against a defaulting borrower who fraudulently quitclaimed to a new entity and then filed serial bankruptcies forcing lender to take bankruptcy actions that eventually resulted in dismissal of the bankruptcy cases. (The bankruptcy judge ordered sanctions against the fraudulent transferee, transferee's principal Mr. Lo, and transferee's bankruptcy counsel.) However, the trial court refused to award fees against Mr. Lo, who was not a signatory to the loan agreement (being only the principal of the borrower signatory). Borrower appealed, and lender cross-appealed.

FLSA: Expert Witness Fees Not Recoverable As Attorney's Fees Or Costs

Nontestimonial Expert Costs Cannot Be Recouped Under FLSA.

     A colleague that co-contributor Mike worked with at a past law firm called and asked if expert witness fees for nontestimonial work were recoverable by a plaintiff in an action brought under the Fair Labor Standards Act of 1938 (FLSA), given that 29 U.S.C. § 216(b) provides that a prevailing plaintiff may be reimbursed for "a reasonable attorney's fees … and costs of the action."

     The answer appears to be "no."

Discovery Sanctions: Fifth District Reverses $1,190 Sanctions Award Against Plaintiff When Trial Court Granted Reconsideration On Tardy Expert Witness Augmentation

Fifth District Found That Absence of Sanctions Request in Motion for Reconsideration Meant the Award Violated Due Process.

     Frequently, we have discussed sanctions awards that are vacated because they do not comply with due process. Here is another one, occurring in connection with a successful defense reconsideration motion regarding a tardy expert witness augmentation.

     In Vargas v. Bakersfield Ranch Market, Case No. F055788 (5^th Dist. July 6, 2009) (unpublished), plaintiff moved to augment her expert witness designation to name a new expert. Defendant opposed the motion and requested sanctions in its opposition, with the trial court granting the motion and denying the sanctions request. Because of scheduling issues that prevented the newly designated expert from being available for a deposition before the deadline set forth in the augmentation order, the defendant moved for reconsideration (but made no request for sanctions). The lower court granted the reconsideration motion, striking the augmented expert designation and imposed sanctions of $1,190 against plaintiff and her counsel. (The $1,190 apparently was an award of attorney's fees to defense counsel.) Plaintiff moved for reconsideration of the sanctions award, which was denied. Plaintiff appealed, claiming the award was made without notice, in violation of due process.

     The Fifth District, in a 3-0 opinion authored by Justice Hill, agreed.

                                  Lack of Due Process

Class Action: Settlement Order Vacated in Wage/Hour Class Action Settlement, Including Cost Award

Second District, Division 8 Finds That Class Notice Capping Costs Would Not Allow For Higher Settlement Costs Award.

     In Clark v. American Residential Services LLC, Case No. B203476 (2d Dist., Div. 8 July 6, 2009) (certified for publication), a trial court approved a wage/hour class action settlement for a total of $2 million, inclusive of attorney's fees and costs. The settlement provided for incentive awards of $25,000 to each of the two named putative class representative, with the other 2,360 class members receiving an average payment of $561.44. The settlement approved by the lower court also awarded $600,000 as attorney's fees as well as total litigation costs and claims administrator fees of $44,574.27. Earlier, a class notice had gone out to class members about the proposed settlement stating that plaintiffs' counsel would request reimbursements "of costs of up to $40,000." Some objectors appealed, arguing that the costs had been capped..

     Their appeal was successful.

[See below:  Hill's Genuine Magnetic Anti-Headache Cap - A Boon  to All Brain Workers.   c1880-1910.  Library of Congress.] 

Attorney's Fees In the News … Great Park Reversal May Mean $80,000 Fee Exposure And Nixon Author Loses Bid For Freedom Of Information Act Fees Under 2007 Revisions

Great Park Fee Exposure.

     In one of our July 1, 2009 posts, we reported on two minority director's reversal of a trial court decision denying them an award of attorney's fees under California's private attorney general statute with respect to a dispute involving the Great Park Corporation (tasked with coordinating development of the "Great Park" at the former El Toro air force base).

     Now, a recent article suggests that the Great Park Corporation may face fee exposure as high as $80,000 from this loss. Ben Pugh, who represented the victorious directors, claims the appellate decision vindicates the necessity and value of the litigation his clients pursued.

     For more details, see Sean Emery's story "Great Park will pay up to $80,000 in attorney's fees," in the June 30, 2009 edition of ocregister.com.

Nixon Author FOIA Loss.

     Author Anthony Summers lost an appeal of a decision denying him an award of attorney's fees under the federal Freedom of Information Act for seeking FBI records in connection with a book he is writing on former President Richard Nixon.

     The District of Columbia Circuit decided Mr. Summers did not "prevail" in his FOIA action. Mr. Summers argued that 2007 amendments to the FOIA, which states that a plaintiff "substantially prevails" if a federal agency changes its position on access, retroactively applied to his 2005 settlement by which the FBI offered up three names from a document in exchange for a voluntary dismissal of the suit and stipulation that the disclosure was not an admission of Mr. Summers' success. However, the federal court of appeals found that Congress did not intend the 2007 revisions to apply retroactively such that Mr. Summers could not expose the government to increased liability for past conduct.

Discovery: Governor Schwarzenegger Signs New E-Discovery Rules Into Law

Rules Go Into Effect Immediately.

     Because discovery disputes can carry monetary sanctions (including attorney’s fees), we alert readers to the fact that effective June 29, 2009, California has new statutory provisions relating to electronic discovery. Assembly Bill No. 5 adds Code of Civil Procedure sections 1985.8 and 2031.285 as well as amends sections 2016.020, 2031.010, 2031.020, 2031.030, 2031.040, 2031.050, 2031.060, 2031.210, 2031.220, 2031.230, 2031.240, 2031.250, 2031.260 2031.270, 2031.280, 2031.290, 2031.300, 2031.310, and 2031.320.

CCP 1021.5: RiverWatch Decision Is Published

Fourth District, Division 1 Decision Is Now Citable.

     In our June 15, 2009 post, we discussed RiverWatch v. County of San Diego Dept. of Environmental Health, where the Fourth District, Division 1 Court of Appeal affirmed a $239,620 attorney’s fees award under Code of Civil Procedure section 1021.5.

     On July 2, 2009, the appellate court certified the opinion for publication. It is now citable!

Costs: Cost Award Affirmed Against Unsuccessful Party Where Initial Judgment Not Properly Served, Meaning Winner Had 180 Days To File Costs Memorandum

First District, Division 4 So Rules Based on Inadequate Appellate Record

     Many times before, we have counseled that an adequate appellate record is vital when seeking review of a lower court order/judgment by any federal or state reviewing court. That counseling was ignored in the next case, which means the appealing party was doomed.

     In Tolbert v. Hines, Case No. 123221 (1^st Dist., Div. 4 July 2, 2009) (unpublished), plaintiff was defensed in a construction defect case. The trial court awarded prevailing defendant routine costs of $4,798.96.

     Plaintiff appealed the costs award, but was repulsed based mainly on an inadequate record.

We Wish our Readers a Happy and Safe 4th of July

"Boo To Billable Hours" Available On-Line

 

From Innovation to Albatross.

     Our readers will know from our posts (January 7, 2009, February 1, 2009) that the concept of the billable hour is under attack by some lawyers and clients.  Fellow blawger, attorney John Derrick, has written an interesting book entitled "Boo to Billable Hours."   He has traced the history of the billable hour from the early 20th century, when it was initiated by the legal reformer Reginald Heber Smith, to its presented contested status.  Along the way, John Derrick asks what is wrong with the billable hour, why there is so much inertia to change, and whether there are better alternatives -- and he has constructive suggestions.  The book can be purchased from Amazon, or viewed on-line for free.  Check it out.

Civil Code Section 1717: Court Of Appeal Sustains $15,000 Fee Award For $37,000 Rental Delinquency Case

Fourth District, Division 2 Rebuffs Request for Over $40,000 in Fees.

     Plaintiff landlord sued and ultimately recovered $37,420 in delinquent rent (plus $10,295.96 in interest) from former tenants who had abandoned commercial premises being rented in the past. Landlord won a prior judicial arbitration, being awarded $13,622 in fees and costs. However, when landlord sought to recoup almost $41,000 in fees for prevailing under a rental agreement fees clause after winning the superior court trial, the trial court only awarded $695 in costs and $15,000 in fees.

     Appealing landlord did not convince the Fourth District, Division 2 that the trial judge abused its discretion in awarding fees lower than it desired.

     In Rudh v. Baez, Case No. E046287 (4^th Dist., Div. 2 July 1, 2009) (unpublished), the Court of Appeal found no basis to overturn the trial court's decision.

Private Attorney General Statute: CEQA Winner Denied Fees Where Win Was On Technical Issues Of Relatively Narrow Scope

Third District Affirms Fee Denial Where Project Scope Went Ahead After Correction of Minor Blemishes.

     California's private attorney general statute (Code of Civil Procedure section 1021.5) requires a significant public benefit as an indispensable element for fee recovery. These requests are often brought by winners in California Environmental Quality Act (CEQA, Pub. Resources Code, § 21000 et seq.) disputes. Here is yet another one, with the CEQA winner not recovering fees based on prevailing on fairly technical points that were correctable and did not change the scope of the impacted project.

     In Service Employees International Union v. City of Sacramento, Case No. C054087 (3d Dist. July 1, 2009) (unpublished), plaintiff successfully challenged Sutter Health's expansion of its existing medical center in Sacramento's midtown area on three minor CEQA points. However, the EIR was recertified such that the trial court discharged the initial CEQA-based writ and denied plaintiff's motion to recoup $307,090.80 in attorney's fees under section 1021.5. The lower court essentially determined that the three CEQA issues were "minor blemishes" that could be repaired by the City in a way that did not change the scope of the expansion project. The lower court found that no broad-based precedent stemmed from its ruling.

Statutory Fees: Attorney's Fees Motion Preserves Fee Request, With Claimants Not Having To File Costs Memorandum Seeking Fees

Second District, Division 3 Rebuffs Contrary Technical Argument.

     In Brownstein v. Smith, Case No. B205864 (2d Dist., Div. 3 July 1, 2009), plaintiff lost a condominium dispute against other condo owners arising out of CC&Rs. Defendants were entitled to seek fees under Civil Code section 1354(a), a fee-shifting provision applying to parties seeking to successfully enforce CC&Rs. Defendants filed a motion seeking to recover $171,611.11 in fees and costs against plaintiff, with the bulk ($162,722.14) being for fees. The trial court eventually awarded defendants fees and costs of $161,223.74.

     The miffed plaintiff appealed, primarily arguing that defendants were precluded from recovering fees because they failed to file a costs memorandum in which fees were requested.

     This did not go very far. The appellate panel found that the proper method to recovery attorney's fees as an item of costs is to file a noticed motion. (Chinn v. KMR Property Management, 166 Cal.App.4^th 175, 194 (2008); Code Civ. Proc., § 1033.5(c)(5).) The trial court award of fees was affirmed, and the appellate court remanded so that defendants could seek recovery of appellate fees against the unsuccessful plaintiff.

CCP Section 128.7 Sanctions: Obey The Safe Harbor Provisions Or Be Precluded!

 

Second District, Division 7 Requires Compliance By the Numbers.

     Martorana v. Marlin & Saltzman, Case No. B209863 (2d Dist., Div. 7 July 1, 2009) (certified for publication) involved a plaintiff wage/hour class member that brought an independent action against defendant Allstate and class counsel alleging negligence in the claim filing process. Allstate's and class counsel's demurrers were sustained without leave to amend, with the trial court also awarding Code of Civil Procedure section 128.7 sanctions of $4,800 against plaintiff based on a request for sanctions contained in Allstate's demurrer papers.

     The 128.7 sanctions order was reversed.

     Allstate did not satisfy the requirement that the 128.7 sanctions request be made within 21 days before filing a separate motion to recover the sanctions. Instead, Allstate included it in the demurrer to the original complaint, which was not compliant with section 128.7's requirement that the motion be made separately from other motions and not filed with the court. Allstate's main counterargument was that it sent a prior attorney letter about sanctions, which sufficed to diffuse any prejudice. "Get outta here" said the Court of Appeal; a letter stating an intent to seek sanctions does not comply with section 128.7. (Slip Opn., at p. 15.)

Safe Harbor Electric Dam.  c.1920-1950.  Theodor Horydczak,    photographer.  Library of Congress.