California Supreme Court Decides Any Other Interpretation Would Gut SLAPP Policies.
The California Supreme Court, in Barry v. State Bar of California, Case No. S214058 (Cal. Supreme Court Jan. 5, 2017), confronted the issue of whether a prevailing defendant (the State Bar) was entitled to an award of attorney's fees and costs when the primary winning ground under the SLAPP motion was lack of subject matter jurisdiction, namely, the trial court had no jurisdiction but jurisdiction rested with the California Supreme Court because it was a State Bar issue.
The answer was "yes," affirming the trial court conclusion on the issue but reversing the appellate court's contrary perspective on the issue.
Our state supreme court decided that any other result would gut SLAPP early-on determinations and attendant fee recoveries, especially given that analogous sanctions decisions had expressed the view that lack of subject matter jurisdiction was a collateral, non-merits determination of importance which would allow for imposition of fees/costs.
$5 Million Fee Request Snubbed At Both Trial And Appellate Levels.
Credit/Debit Card Tying Cases, Case No. A145891 (1st Dist., Div. 4 Jan. 12, 2017) (unpublished) concerned an objector’s challenge to an award of fees and costs to class counsel in a main action, although objector was involved in a separate, more peripheral action. Objector sought to recover over $5 million in claimed fees based on the theory that he added benefit in a separate action, although class attorneys in the main class action obtained a $31 million settlement fund and were awarded about $9.3 million in fees/costs under a “clear sailing” class action settlement provision.
The trial court denied objector’s fees request as untimely and as lacking merit because objector did not add any substantial benefit to the ultimate class action settlement fund recovery.
Those determinations were affirmed on appeal.
First of all, objector blew the deadlines set by two judges during the course of protracted proceedings to file fee applications in the class action case. The appellate court found it would be unfair to allow objector to ignore the deadlines because (1) it would allow objector to bypass the mandatory review process for fees applicable to all attorneys in the class action case, and (2) it would deprive the class of the opportunity to object to objector’s fees in belated junctures of the case.
On the merits, the appellate court, as did the trial court, agreed that objector’s work did not contribute to the creation or augmentation of the settlement fund, such that the “substantial benefit” basis for fee entitlement was not satisfied.
Judge Believed Charging Standard Rates For Contract Attorneys Was Not Right.
Class counsel in the Bank of America class action litigation was dealing with an investor lawsuit where $51.6 million in fees were being sought in a case producing a $335 million settlement. Class counsel had 42 lawyers working on the case, including “temporary associates” hired in 2013 and 2014 who were billed out at a blended associate rate of $362 per hour. Also, the law firm prosecuting the class action devoted 11 partners to doing substantive work relating to motion practice and mediation, with four partners attending mediation sessions in the case.
U.S. District Judge William Pauley (S.D.N.Y.) awarded $41.3 million in fees, which were to be paid out when 75% of the settlement fund was distributed. He was critical of billing the temporary associates, who he deemed to be contract attorneys, at higher rates as well as overstaffing the substantive legal work with high-priced partners.
CCP § 367.6(c) Is The California Statutory Section.
Here is quick one under routine costs. Los Angeles County Superior Court Judge Kumar, sitting by assignment on the 2/5 DCA, confirmed in Shatford v. Knight, Case No. B269337 (2d Dist., Div. 5 Jan. 6, 2017) (unpublished), that telephonic court appearances are recoverable routine costs for a prevailing party under Code of Civil Procedure section 367.6(c). Nice practice tip and additional to the recoverable cost list.
Narrowing Charging Liens To Only Beneficial Services Would Improperly Rewrite Attorney Lien Contractual Arrangement In Hourly Cases.
Although we generally post on California cases, we stray to discuss a recent attorney’s lien decision from Delaware, which may have some persuasive impact in California cases considering attorney’s liens.
In Katten Muchin Rosenman LLP v. Sutherland, No. 151, 2016 (Del. Supreme Court Jan. 3, 2017), the Delaware Supreme Court reversed a chancery court’s decision that an attorney’s lien in an hourly case representation should be limited to unpaid fees that are directly connected to the recovery which attorneys obtain on their client’s behalf. The state high court determined that, in hourly matters, the attorney’s lien could be claimed on to the entire hourly fees left unpaid, not just those fees for services which were directly tethered to the benefits ultimately recovered by the client. The court determined that this might be a proper limitation in a contingency case, but not in an hourly representation matter. “When a party, such as Martha, agrees to pay hourly fees to prosecute a complex case, she is assuring her counsel that it will not suffer the commercial damage of uncompensated services if it presses her claims as aggressively as she demands and as the law permits. To permit a client who is a party to such an agreement to escape a charging lien as if she made a strict contingency fee agreement limiting fees to a percentage of recovery is to judicially rewrite the contract at the expense of the attorney and to undermine the traditional purpose of a charging lien.” (Slip Op. at p. 11.)
Here is a link to the Delaware Supreme Court’s decision in Sutherland.
Plaintiff Is Not Disqualified From Fee Recovery Given Only Injunctive Relief Requested Under CLRA Claim; Matter Remanded For District Court To Determine Prevailing Party Status.
Gonzales v. CarMax Auto Superstores, No. 14-56305 (9th Cir. Jan. 6, 2017) (published) involved a situation where a plaintiff won a summary judgment and sustained it on appeal in a California Consumer Legal Remedies Act (CLRA) action. The district court refused to award appellate fees on the theory that plaintiff rejected a defense correction notice which disqualified fee recovery in a damages action under CLRA.
That conclusion was reversed by the Ninth Circuit. Plaintiff only sought injunctive relief such that the CLRA damages restriction did not disqualify the litigant from seeking recovery of appellate fees as the successful party. However, the district judge needed to be the one to decide if plaintiff truly prevailed on a pragmatic level such that the matter was remanded to have this determination made in the first instance, although the Ninth Circuit did suggest that it looked like plaintiff did prevail. The Ninth Circuit also carefully observed that its decision did not encompass a situation where a plaintiff sought both injunctive and damages relief.
Fact That Needy Party Is Retired Can Be Considered In Needs-Based Analysis.
In Marriage of McLain, Case No. E062884 (4th Dist., Div. 2 Jan. 6, 2017) (published), $5,500 in needs-based Family Code section 2030/2032 attorney's fees were awarded in favor of a wife based on the fact she was 65 of age and had retired. The appellate court affirmed, determining this was an appropriate factor to consider.
Defense Ignoring Of Offer And Equitable Estoppel Defense Did Not Prevail.
Plaintiff's CCP § 998 offer was found to be invalid by both the lower and appellate courts in Bigler-Engler v. Breg, Inc.,Case No. D063556 (4th Dist., Div. 1 Jan. 6, 2017) (partially published; 998 discussion published) based on the failure to include a mandatory "acceptance" line for signature by the defense. Plaintiff argued that the defense ignoring of the offer (ultimately, rejecting it) and equitable estoppel principles dictated another result, but this was found not to alter the conclusion that the 998 offer was invalid in nature by failure to include an acceptance line for signature.
Also, Costs Memorandum Was Untimely Filed, With Sender Giving Notice Of Judgment Entry Not Getting Benefit Of 5-Day Mail Service Extension.
In Hernandez v. Town of Apple Valley, Case No. E063721 (4th Dist., Div. 2 Jan. 5, 2017) (partially published; fee and costs discussion not published), plaintiff won on a Brown Act violation, which allows for a recovery of attorney's fees to a prevailing party. The lower court awarded most of the fee request based on a $550 hourly rate for the lead attorney, which it found high for the San Bernardino venue but justified by the complexity of the case (given that a multiplier was appropriate for a $440 hourly rate found to be more reasonable). The appellate court found this was no abuse of discretion under the deferential abuse of discretion standard.
However, a different result came to pass on the lower court's award of costs to the prevailing party under the costs memorandum. The costs memo was filed one day too late, with the prevailing party showing no excuse for the late filing. Instead, plaintiff argued it was timely because of the 5-day mail extension from the date of plaintiff mailing notice of entry of judgment. The 4/2 DCA decided that the 5-day rule did not apply to a sending plaintiff such that the costs award was based on an untimely filing and had to be reversed as a matter of law.
Part 2 of 2—End of a Prolific Year For Fees/Costs Decisions.
As we have done in past years, wishing all readers the happiest of holidays, we now present our top 30 published decisions from California appellate courts, the United States Supreme Court (SCOTUS), and the Ninth Circuit for the 2016 year. For past years, we have done a “Top 20,” but this year was especially prolific for decisions involving attorney’s fees/costs issues. This list is not meant to slight other important decisions in certain areas, but these are the ones that “rose to the top” from our perspective. We posted on December 27, 2016 with the first 15 of selected decisions and now complete with the final 15. The number of ranking is not geared at all to the decision’s relative importance, and we do not mean to overlook other published decisions—not to mention the wealth of unpublished decisions on fees/costs issues. Here we go on the final 15:
15. SANCTIONS—San Diegans For Open Government v. City of San Diego, 247 Cal.App.4th 1306 (4th Dist., Div. 1 June 7, 2016)—authored by Justice McDonald; discussed in our June 9, 2016 post: Code of Civil Procedure section 128.5 applies to cases pending as of January 1, 2015 even though sanctioned conduct occurred before this date; section 128.5 does not require compliance with CCP § 128.7’s safe harbor requirements; section 128.5 claimant need only show objective unreasonableness, not subjective bad faith.
14. INSURANCE—Nickerson v. Stonebridge Life Ins. Co., 63 Cal.4th 363 (Cal. Supreme Court June 9, 2016)—authored by Justice Kruger; discussed in our June 9, 2016 post: Brandt attorney’s fees to a prevailing party in an insurance bad faith case must be considered in adjudging reasonableness of punitive/compensatory damages ratio.
13. CLASS ACTION—Lafitte v. Robert Half International, Inc., 1 Cal.5th 480 (Cal. Supreme Court Aug. 11, 2016)—authored by Justice Werdegar; discussed in our Aug. 15, 2016 post: Trial judges can use the percentage of recovery fee approach for purposes of awarding fess in a common fund class action case, with the trial judge not shackled to using only the lodestar approach in an appropriate case.
12. SECTION 998—Ignacio v. Caracciolo, 2 Cal.App.5th 81 (2d Dist., Div. 8 Aug. 3, 2016)—authored by Justice Rubin; discussed in our Aug. 3, 2016 post: Code of Civil Procedure section 998 offer was invalid where offer contained general (rather than lawsuit-specific) claim releases and where Civil Code section 1542 waivers were included, although broad party descriptions did make offer infirm in nature.
11. ALLOCATION/SUBSTANTIATION OF REASONABLENESS OF FEES—Marriage of Nassimi, 3 Cal.App.5th 667 (2d Dist., Div. 4 Sept. 26, 2016)—authored by Justice Manella; discussed in our Sept. 27, 2016 post: Requesting party properly denied attorney’s fees where party failed to prove reimbursable fees based on block billing-riddled fee submissions and failed to allocate fees between compensable/non-compensable claims.
10. BANKRUPTCY—Deocampo v. Potts, 2016 WL 4698299 (9th Cir. Sept. 8, 2016)—authored by Circuit Judge Wardlaw; discussed in our Sept. 8, 2016 post: City’s Chapter 9 bankruptcy plan did not discharge attorney’s fees award against individual officers in excessive force case, although officers may be entitled to indemnification under California Government Code section 825.
9. APPEALABILITY—Nellie Gail Ranch Owners v. McMullin, 4 Cal.App.5th 982 (4th Dist., Div. 3 Oct. 27, 2016 [certified for publication])—authored by Justice Aronson; discussed in our Oct. 3 and Oct. 30, 2016 posts: Losing homeowner’s failure to separately appeal fee order or amended judgment incorporating fee order meant that appellate court lacked jurisdiction to entertain fee challenge on appeal.
8. INDEMNITY—Alki Partners, L.P. v. DB Fund Services, LLC, 4 Cal.App.5th 574 (4th Dist., Div. 1 Oct. 25, 2016)—authored by Justice Nares; discussed in our Oct. 24, 2016 post: $3,027,237.96 fee award reversed because claimed fees clause was only a third-party indemnification provision not allowing for fees between contractual fee combatants.
7. INTELLECTUAL PROPERTY—SunEarth, Inc. v. Sun Earth Solar Power Co., 839 F.3d 1179 (9th Cir. Oct. 24, 2016)—per curiam opinion; discussed in our Oct. 24, 2016 post: Attorney’s fees under Lanham Act’s “exceptional” language guided by same factors articulated in SCOTUS patent Octane Fitness/Highmark duology.
6. DEADLINES—Robinson v. U-Haul Co. of CA, 4 Cal.App.5th 304 (lst Dist., Div. 4 Oct. 18, 2016)—authored by Justice Streeter; discussed in our Oct. 19, 2016 post: Trial court’s “good cause” for extending Cal. Rules of Court, rule 3.1702(d) deadlines governing the filing of post-trial/post-appeal fee motions is not constrained by California Code of Civil Procedure section 473 “mistake/inadvertence/surprise/neglect” standards.
5. FEE CLAUSE INTERPRETATION/SECTION 1717—GoTek Energy, Inc. v. SoCal IP Law Group, LLP, 3 Cal.App.5th 1240 (2d Dist., Div. 6 Oct. 12, 2016)—authored by Justice Yegan; discussed in our Oct. 14, 2016 post: Law firm’s fees for defensing malpractice action were recoverable based on broad contractual fees clause and pursuant to Civil Code section 1717 given that a malpractice actions sounds in both contract and tort.
4. SECTION 998—Markow v. Rosner, 3 Cal.App.5th 1027 (2d Dist., Div. 1 Oct. 4, 2016)—authored by Justice Lui; discussed in our Oct. 14, 2016 post: Joint Code of Civil Procedure section 998 offer to medical malpractice plaintiff husband and loss-of-consortium plaintiff wife was valid given that wife’s damages were capped as a matter of law; section 998 offer provision requiring verification of insurance limits was a proper requirement for a 998 offer.
3. INTERPLEADER/LIEN FOR ATTORNEY FEES—Southern California Gas Co. v. Flannery, 5 Cal.App.5th 476 (2d Dist., Div. 6 Nov. 14, 2016)—authored by Justice Kriegler; discussed in our Nov. 14, 2016 post: Interpleader fee-shifting statute (CCP § 386.6(a)) encompasses post-discharge work to sustain the discharge result (including appellate fees), and interpleader action was separate action for purposes of adjudicating an attorney’s lien dispute.
2. FAMILY LAW—Marriage of Sagonowsky & Kekoa, Case Nos. A142866/A143234 (lst Dist., Div. 5 Dec. 21, 2016)—authored by Presiding Justice Jones; discussed in our Dec. 22, 2016 post: Family Code section 271 sanctions are not properly awardable unless clearly tethered to “attorney’s fees and costs” as per the statutory language.
1. SUBSTANTIATION OF REASONABLENESS OF FEES—L.A. County Bd. of Supervisors v. Superior Court, Case No. S226645 (Cal. Supreme Court Dec. 29, 2016)—4-3 decision, majority opinion by Justice Cuellar and dissent by Justice Werdegar; discussed in our Dec. 29, 2016 post: Attorney-client privilege does not categorically shield from California Public Records Act disclosure billing invoices sent by clients in concluded, non-active cases because legal consultation was not the purpose of the invoices; however, the privilege did protect billing invoice entries in active, pending cases. Case may have implications as far as the type of information, redacted or not, filed in support of fee submissions in both state and California federal courts.
Defense Only Said Our Fees Are Only One Third Of The Request, With Trial Court Not Crediting That Retort.
In Crowdflower, Inc. v. Asher Insights, Inc., Case No. A143235 (1st Dist., Div. 2 Dec. 29, 2016) (unpublished), new office building owner served a CCP § 998 offer in a contentious lease/retaliation dispute with tenant. The 998 offer reserved the issue of prevailing party status and attorney's fees claims by each side for a postjudgment motion for fees determination before the assigned judge. Tenant accepted the offer, and dueling fees/costs motions ensued. Tenant prevailed and was awarded its full request of $103,680 in fees and $3,144 in costs under a contractual fees clause.
The defense appeal was unsuccessful.
Both sides agreed that the deferential abuse of discretion review standard was applicable to the prevailing party and "amount of fees" determinations. That concession, correct as it was, sank the defense chances on appeal.
On the "prevailing party" issue, the trial judge correctly concluded that plaintiff won on a lease addendum issue by which it retained tenancy in the premises and locked in rents for a 5 year period—these were pragmatically objective litigation achievements by tenant. With respect to the amount of fees, the defense made no specific objection other than "we spent only one third of what you did," with the trial judge confirming this was only counter-salvo in the defense arsenal—a salvo which was rejected. The appellate court had no basis to overturn the lower court granting full fees/costs requests to plaintiff under the record before it.
However, Prevailing Defense Was Entitled To Fees For Tort Claim Work Given Breadth Of Contractual Fees Clause.
A trial judge in Khan v. Shim, Case No. H041608 (6th Dist. Dec. 29, 2016) (published) granted the prevailing defense all fees for defensive work incurred in defending against a complaint containing both contractual and tort claims following plaintiff's voluntary dismissal of the complaint. The Sixth District reversed and remanded for an allocation of fees between compensable and non-compensable work.
The main basis for the reversal was that the trial court's ruling ran afoul of Santisas [one of Our Leading Cases] as far as allowing for recovery of work on the contract claims. However, the fees clause was broad—covering "any litigation [which was] commenced concerning the Contract of Sale's terms, interpretation, or enforcement or the rights and duties of any party in relation thereto." The breadth of the clause encompassed the tort claims, such that the lower court on remand needed to do an apportionment rather than awarding for fee work on non-tort claims.
California Supreme Court. Wikipedia. Public domain work.
In a case which may have some implications on billing substantiation submitted in support of fee motions, the California Supreme Court—in a California Public Records Act case—decided on a 4-3 vote that the attorney-client privilege does not categorically shield from PRA disclosure billing invoices sent by clients in concluded, nonactive cases because legal consultation was not the purpose of the invoices. However, our state high court did conclude that the privilege did protect billing invoice entries in active, pending cases. Justice Cuellar wrote the majority decision, but Justice Werdeger penned a dissent concluding the privilege covered billing invoices for both situations (a dissent joined in by two other sitting colleagues). The case is L.A. County Bd. of Supervisors v. Superior Court, Case No. S226645 (Cal. Supreme Court Dec. 29, 2016).
BLOG OBSERVATION—It will remain to be seen how this decision will be interpreted in the fee billing substantiation area for fee motions. We would suggest that an argument could be made that the merits have been terminated in some prevailing party's favor by the time the fee proceeding is commenced (so the privilege does not categorically apply), but the counterargument is that many times both the merits of a case and the subsequent fee decision are appealed as well as frequently consolidated for consideration (meaning the case is still active and the privilege does apply). Of course, this does not prevent the fee claimant from submitting detailed billings with prudent redactions of the billing statements.
Cap Only Applies To Claims Directly Resulting From Lease Termination, Not Collateral Issues.
The Ninth Circuit in In re Kupfer, No. 14-16697 (9th Cir. Dec. 29, 2016) (published) considered the extent to which attorney's fees for certain work were or were not subject to the statutory cap for prospective rent aiding a defaulting, bankrupt tenant, which cap is contained in 11 U.S.C. § 522(b)(6). The panel concluded that the cap applies to fee work for claims that result directly from lease termination, but did not apply to collateral claims. In this instance, the cap did apply to fees attributable to litigating creditors' claims for future rent, but did not apply to fees attributable to litigating claims for past rent or attributable to litigating against debtors' ordinary breach of lease counterclaims.
Relying Only On Final Settlement Offer, Rather Than Work Performed By Winner, Was Legal Error In Light Of Governing Principles.
TSE Worldwide Press, Inc. v. Dependable Highway Express, Inc., Case No. B269747 (2d Dist., Div. 4 Dec. 28, 2016) (unpublished) is a reminder that certain challenges by a non-prevailing party to the amount of fees awarded can gain traction if attention is focused upon a trial judge's fixation on a wrong adjudicative factor.
In this one, a prevailing cross-complainant, although only winning $3,096.94 on its cross-claim, was awarded $72,000 in attorney's fees under a contractual fees clause. The losing cross-defendant appealed, with that being a good move in hindsight.
The 2/4 DCA reversed and remanded. The problem here was that the trial judge "over fixated" on a pre-trial offer of $72,000 rather than really looking at the reasonableness of the lodestar request by the prevailing cross-complainant. It simply was unclear whether the lower court applied the correct legal principles given that some of the work looked to be unproductive and that some of the work was not inextricably intertwined with non-compensable work. The reliance on the final settlement offer, rather than the amount of work reasonable performed, required a "re-do" in this matter.
We have a year-end case for you insurance practitioners, especially coverage attorneys.
In Navigators Specialty Ins. Co. v. Moorefield Construction, Inc., Case No. G050759 (4th Dist., Div. 3 Dec. 27, 2016) (published), our local Santa Ana court of appeal decided that a pre-2007 CGL "supplementary payments" provisions in an insurance contract encompassed contractually-based attorney's fees which were allowable as "costs of suit" under the applicable insurance provision in the context of a settlement agreement. This decision, based on a footnote in it, only applies to pre-2007 CGL policies, given that post-2007 policies exclude these fees from the ambit of "supplementary payments" provisions. Justice Fybel authored the 3-0 published opinion.
Part 1 of 2—2016 Was A Prolific Year For Fees/Costs Decisions.
As we have done in past years, wishing all readers the happiest of Holidays, we now present our top 30 published decisions from California appellate courts, the United States Supreme Court (SCOTUS), and the Ninth Circuit for the 2016 year. For past years, we have done a “Top 20,” but this year was especially prolific for decisions involving attorney’s fees/costs issues. This list is not meant to slight other important decisions in certain areas, but these are the ones that “rose to the top” from our perspective. We will post 15 today and 15 in an ensuing post after we let the year run down. The number of ranking is not geared at all to the decision’s relative importance, and we do not mean to overlook other published decisions—not to mention the wealth of unpublished decisions on fees/costs issues. Here we go on the first 15, with some of them pending issuance of a decision, after a grant of review, by the California Supreme Court.
30. ARBITRATION/ETHICS--Sheppard, Mullin v. J-M Mfg. Co., 244 Cal.App.4th 590 (2d Dist., Div. 4 Jan. 29, 2016), rev. granted, S232946 (Cal. Supreme Ct. Apr. 27, 2016)—authored by Justice Collins; discussed in our Jan. 30, 2016 post: Attorneys having “simultaneous representation” conflict of interest presented a situation rendering an arbitration award to attorneys illegal in nature. The issues presented for review by the California Supreme Court are framed this way: “(1) May a court rely on non-legislative expressions of public policy to overturn an arbitration award on illegality grounds? (2) Can a sophisticated consumer of legal services, represented by counsel, give its informed consent to an advance waiver of conflicts of interest? (3) Does a conflict of interest that undisputedly caused no damage to the client and did not affect the value or quality of an attorney’s work automatically (i) require the attorney to disgorge all previously paid fees, and (ii) preclude the attorney from recovering the reasonable value of the unpaid work?”
29. EMPLOYMENT--USS-Posco Industries v. Case, 244 Cal.App.4th 197 (1st Dist., Div. 1 Jan. 26, 2016)—authored by Justice Banke; discussed in our Jan. 30, 2016 post: Amended Labor Code section 218.5, which only allows fees to prevailing employer showing a wage action was brought in bad faith, applied to subsequent, post-judgment fee motion against non-prevailing plaintiff even though a broader, more liberal fee shifting statute applied at the time of judgment.
28. PRIVATE ATTORNEY GENERAL-San Diego Municipal Employees Assn. v. City of San Diego, 244 Cal.App.4th 906 (4th Dist., Div. 1 Feb. 9, 2016)—authored by Judge Prager (sitting as a pro tem justice); discussed in our Feb. 10, 2016 post: Intervenors whose work was secondary to main work by other parties were not entitled to fee recovery under California Code of Civil Procedure section 1021.5’s (private attorney general statute’s) “necessity” element.
27. BANKRUPTCY--Bos v. Board of Trustees, 818 F.3d 486 (9th Cir. Mar. 24, 2016)—joint opinion by Circuit Judges O’Scannlain and Ikuta as well as District Judge Burns (sitting by assignment); discussed in our Mar. 28, 2016 post: Prevailing party in bankruptcy non-dischargeability action is not entitled to recover fees under either California Civil Code section 1717 or ERISA’s fee shifting provision.
26. APPEALABILITY/CLASS ACTION--Hernandez v. Muller (Restoration Hardware, Inc.), 245 Cal.App.4th 651 (4th Dist., Div. 1 Mar. 14, 2016), rev. granted, S233983 (Cal. Supreme Ct. June 22, 2016)—authored by Justice McDonald; discussed in our Mar. 19, 2016 post: Objecting class members have no standing to appeal an attorney’s fees award unless the unnamed class members intervene in the case. The issue presented for California Supreme Court review is: “Must an unnamed class member intervene in the litigation in order to have standing to appeal? (See Eggert v. Pac. States S. & L. Co. (1942) 20 Cal.2d 199.)”
25. COSTS/PREVAILING PARTY/SETTLEMENT--DeSaulles v. Community Hospital of the Monterey Peninsula, 62 Cal.4th 1140 (Cal. Supreme Ct. Mar. 10, 2016)—authored by Justice Liu; discussed in our Mar. 19, 2016 post: Voluntarily dismissing plaintiff who received settlement money from a defendant was the prevailing party for purposes of a Code of Civil Procedure section 1032(a)(4) routine costs award unless the parties provided otherwise in the settlement agreement.
24. SECTION 998--Toste v. CalPortland Construction, 245 Cal.App.4th 362 (2d Dist., Div. 6 Mar. 2, 2016)—authored by Justice Yegan; discussed in our Mar. 5, 2016 post: 2015 amendment to Code of Civil Procedure section 998, which specified that rejecting plaintiff is only exposed to post-offer expert witness costs, applied to cases pending on appeal which challenged a section 998 award, likely requiring remands.
23. REASONABLENESS OF FEES/STANDARD OF REVIEW--Mountjoy v. Bank of America, N.A., 245 Cal.App.4th 266 (3d Dist. Feb. 29, 2016)—authored by Acting Presiding Justice Robie; discussed in our Mar. 1, 2016 post: 70% across-the-board fee reduction by trial judge from fee request reversed because such a broad brush decrease required a more nuanced approach and more specific explanation of the reduction; trial judge allowed to “cross check” reasonableness of prevailing party’s fee request based on the fees expended by the opposing party in proper situations.
22. CLASS ACTION/SUBSTANTIATION OF REASONABLENESS OF FEES—Yamada v. Nobel Biocare Holding AG, 821 F.3d 1058 (9th Cir. Apr. 20, 2016)—authored by District Judge Marbley (sitting by assignment); discussed in our Apr. 21, 2016 post: Defense had the right to review time sheets submitted in camera to court in class action fee proceeding, even though privileged information could be redacted in the fee submission to the district judge by class counsel.
21. COSTS—Charton v. Harkey, 247 Cal.App.4th 730 (4th Dist., Div. 3 May 24, 2016)—authored by Justice Aronson; discussed in our May 24, 2016 post: “Unity in interest” exception allowing trial courts discretion to deny routine costs to prevailing defendant when several non-prevailing co-defendants are unified in interest was no longer viable after a legislative repeal of former Code of Civil Procedure section 1032; 75% mathematical reduction in routine costs request based on number of total defendants was improperly overbroad methodology to utilize in the matter.
20. PROBATE—Conservatorship of Bower, 247 Cal.App.4th 495 (4th Dist., Div. 3 cert. for publication May 16, 2016)—authored by Justice Bedsworth; discussed in our April 16, 2016 post prior to publication: Probate Code section 1089 did not allow probate judge to divide community property to pay for conservatorship fees, with any award guided instead by Probate Code sections 2640 and 2647.
19. EMPLOYMENT (PUBLIC)—Daza v. L.A. Community College, 247 Cal.App.4th 260 (2d Dist., Div. 8 May 6, 2016)—authored by Justice Flier; discussed in our May 8, 2016 post: Public employees seeking costs of defense under Government Code section 996.4 must be allowed to present proof outside the mere pleadings to rebut employer’s “outside the scope of employment” defense to reimbursing employee’s defensively-incurred attorney’s fees.
18. LANDLORD/TENANT and LIENS FOR ATTORNEYS FEES—Crasnick v. Marque & Diaz, 248 Cal.App.4th Supp. 1 (L.A. Superior Ct. Appellate Div. May 24, 2016)—authored by Judge Ricciardulli; discussed in our June 5 and June 24, 2016 posts: Tenants’ fee award subject to contractual attorney’s lien was properly not offset by landlord’s subsequent judgments against tenants in other matters.
17. PROBATE—Butler v. LeBouef, 248 Cal.App.4th 198 (2d Dist., Div. 6 June 20, 2016)—authored by Justice Yegan; discussed in our June 21, 2016 post: Attorney drafter of will/living trust is liable for attorney’s fees incurred by beneficiaries under Probate Code section 21380(d); beneficiaries won $1,256,971 in fees against drafter attorney.
16. INTELLECTUAL PROPERTY—Kirtsaeng dba Blue Christine99 v. John Wiley & Son, 579 U.S. __, 136 S. Ct. 1538, 2016 WL 3317564 (U.S. June 16, 2016)—authored by Justice Kegan; discussed in our June 16, 2016 post: SCOTUS clarifies factors to be weighed for purposes of awarding discretionary fees to prevailing party under Copyright Act’s fee shifting provision (17 U.S.C. § 505).
2/5 DCA Believes Lack Of RT Can Be Fatal In Many Fee Situations.
For both litigators and appellate practitioners, Patel v. Clocktower Inn, Inc., Case No. B266410 (2d Dist., Div. 5 Dec. 22, 2016) (unpublished) is a good warning sign that many California intermediate appellate panels, especially the 2/5 DCA, may find that the lack of a reporter's transcript may doom the appeal of an attorney's fees order, especially where evidence may have been challenged or weighed.
Patel involved a situation where plaintiff/appellant prevailed on the merits (in a prior unpublished decision) and then filed to recover attorney's fees under the shareholder derivative "substantial benefit" basis for fee recovery. The trial judge denied plaintiff's fee motion, triggering an appeal by the winning merits plaintiff/losing fee claimant plaintiff.
The 2/5 DCA, in an opinion authored by Judge Kumar (L.A. Superior Court judge sitting as a justice by assignment), decided that the lack of an RT made it impossible to gauge what was argued on some contested exhibits submitted in connection with the fee proceeding so that the reviewing court could not evaluate completely what was done without the RT. Fee denial affirmed.
BLOG OBSERVATION—The lack/failure to provide an RT is an issue which must be confronted by the California Supreme Court at some stage, given that court reporters are not automatic in light of the fiscal crisis facing California courts. Presiding Justice Turner, in Patel, issued a pre-argument order asking the parties to address the lack of an RT on the review of the fee order, something which is done by the 2/5 DCA in appropriate appellate causes. This is a nice discreet issue needing to be addressed given the state of affairs on court reporter presence in trial courtrooms.
When It Comes To Collecting Fees Under Civil Code Section 1717, A Prevailing Plaintiff Who Sues On A Contract Is Not The Same As A Prevailing Plaintiff Who Shows A Contract Does Not Exist.
Glovia International, Inc. v. Actuant Corporation, et al., B267175 (2/5 12/22/16) (Kumar, Turner, Kriegler) (unpublished) reinforces a theme oft repeated in our fee blawg: the first condition a prevailing party must establish to collect attorney's fees is a legal basis for fee entitlement. In Glovia International, the Court of Appeal reversed a substantial fee award because a basis for fee entitlement under Civil Code section 1717 did not exist.
Plaintiff and respondent Glovia sued defendants and appellants Maxima Technologies & Systems, LLC and its parent Actuant, alleging unauthorized use of Glovia's proprietary software. Glovia prevailed in the trial court by establishing that Maxima had not licensed Glovia's software, obtaining awards of compensatory damages, punitive damages, and attorney's fees. The Court of Appeal affirmed an award of compensatory damages, while reversing a $650,000 award in punitive damages, and a $1,474,151.75 award in attorney's fees pursuant to Civil Code section 1717.
The punitive damages award was reversed because Glovia did not present sufficient evidence of defendant Maxima's financial condition.
As to the fee award under section 1717, Glovia argued, "[W]here a dispute involves a contract that contains an attorney fee provision, section 1717 authorizes fees where a party prevails by proving the contract is invalid or unenforceable." Unfortunately for Glovia, that argument only holds true when a plaintiff sues on a contract containing a prevailing party fee provision, and the defendant prevails by arguing the contract is inapplicable, invalid, unenforceable, or nonexistent.
Glovia, however, did not bring an action on a contract (here, a license) to enforce the contract's terms. "Instead, it brought an action claiming Actuant and Maxima were not valid holders of a license, a claim upon which Glovia prevailed." As the Court explains, because Glovia succeeded in proving it was not a party to a contract with Actuant or Maxima that contained an attorney fees clause, "it was not entitled to its attorney fees."
So we return to our first point: there must be a legal basis for an award of attorney fees. Here, there was no basis for fee entitlement.
NOTE: Blawg co-contributors Mike and Marc are attorneys at AlvaradoSmith. AlvaradoSmith and its attorneys Theodore E. Bacon, David John Masutani, and William M. Hensley represented Defendants and Appellants Actuant Corporation and Maxima Technologies & Systems, LLC.
$10,245 Expert Fee Costs Award To One Defendant Reversed, With Appellate Court Noting Split In Intermediate Appellate Thinking But Following Persson and Kahn Over Winston Square Reasoning.
Ebert v. Press, Case No. D069615 (4th Dist., Div. 1 Dec. 21, 2016) (unpublished) is a situation where two defendants put forward a joint and several CCP § 998 offer for $20,001, an offer not accepted by the plaintiff. Later, plaintiff lost a dismissal brought by one defendant on the first day of trial but did obtain a jury verdict in her favor to the tune of $60,000 as against the remaining defendant. The dismissed defendant moved for expert witness fees, with the trial court awarding $10,245 in expert costs as against plaintiff, who nevertheless did prevail against the second defendant.
This one got reversed as a matter of law. However, the 4/1 acknowledged that there was a split in intermediate appellate thinking on whether the joint offer must beat a result with respect to all multiple defendants. Winston Square Homeowner's Assn. v. Centex West, Inc., 213 Cal.App.3d 282 (1989) did support dismissed defendant's position, while Persson v. Smart Inventions, Inc., 125 Cal.App.4th 1141 (2005) and Kahn v. The Dewey Corp., 240 Cal.App.4th 227 (2015) supported challenging plaintiff's position. The reviewing court in Ebert found Persson and Kahn more persuasive such that the $10,245 expert costs order was overturned because plaintiff did beat the 998 offer in gaining the $60,000 verdict against the second defendant.