Party Failed To Show He Participated In Upfront Good Faith Settlement Discussions Or Mediation After Entry Into The Settlement Agreement.
In Harris v. Bonander, Case No. F071886 (5th Dist. Jan. 19, 2017) (unpublished), a settlement agreement was reached between parties to a trust dispute except for one "carve out" claim, which was litigated and lost by one party, who then completely changed the tide by appealing and obtaining a reversal as a matter of law. That party felt he prevailed and moved for attorney's fees under a settlement agreement fees clause, but the trial court denied them based on the perception he did not prevail.
The appellate court affirmed, but on a different basis (in line with the rule that a decision is correct even if grounded in different reasoning).
In the settlement agreement, the fee clause had a contractual condition precedent: no fees unless a prevailing party "makes a satisfactory showing that they first initiated and participated in good faith in informal settlement discussions or mediation." Here, the fee claimant could not show this occurred, despite some creative arguments otherwise. It made no difference if the fee claimant did prevail because litigating the release issue instead without satisfying the ADR condition precedent was not compliant with the fee clause. Fee claimant then argued there were settlement negotiations before entry into the settlement agreement, the appellate court rejected that this satisfied the condition precedent to attempt settlement/mediation efforts after entry into the settlement agreement when a subsequent dispute arose. Finally, even though fee claimant tried to resolve the amount of fees under his fee motion through compromise discussions, this exercise did not satisfy the merits-oriented condition precedent that this should have done much earlier in time when the release issue was being litigated.
Result Might Have Been Different If Clause Said “Arising Out Of Agreement Or Tenancy.”
Ramos v. Bay Breeze #60 , Case No. D069175 (4th Dist., Div. 1 Jan. 17, 2017) (unpublished) is a good reminder about how the specific wording of a contractual fees clause may be dispositive on whether fee entitlement exists in the first place.
In this one, a fees clause applied to actions “arising out of this agreement,” and there were Community Guidelines acknowledging landlord could be liable for common law negligence but found amidst indemnification language in favor of landlord vis-à-vis tenant. The tenant won an $8,500 parking lot slip and fall verdict, later moving to recover attorney’s fees and costs. The lower court said “no,” and the appellate court agreed.
The reason was that the “arising out of this agreement” language did not encompass a personal injury action, unlike situations where fraud or unlawful detainer actions did arise out of the operative contract. With respect to the Community Guidelines indemnification language, it simply acknowledged landlord’s common law negligence and then specified that tenant would not have any indemnification obligation for such negligence—it did not create fee entitlement. However, the reviewing court did acknowledge that the result may have been different had the agreement included language indicating fee entitlement for “actions arising out of one’s tenancy.”
Case Transferred To Superior Court Appellate Division For Review.
Stauff v. Hartman, Case No. B266777 (2d Dist., Div. 7 Jan. 17, 2017) (unpublished) is a case starting out in small claims court and then reclassified to an unlimited case based on a cross-complaint and, then after a lot of “litigation dust settled,” reclassified to a limited civil case. However, along the way, two aligned parties obtained $95,000 in attorney’s fees based on prevailing through a SLAPP motion. The losing parties appealed to the Court of Appeal.
The Court of Appeal decided that it lacked jurisdiction to hear the appeal based on the final reclassification to a limited civil case. However, based on Government Code section and pertinent case law thereunder, the matter was transferred for consideration by the superior court’s appellate division.
Lower Court Erred In Denying Fees/Costs Because PRA Requires Agency To Seek Clarification Of Unclear Request And No Bad Faith Required As PRA Predicate.
In Camou v. Superior Court (City of Montclair), Case No. E066325 (4th Dist., Div. 2 Jan. 13, 2017) (unpublished), the Fourth District, Division 2 issued a Palma-based writ after finding that the lower court erred in determining that plaintiff did not prevail in a California Public Record Act proceeding. Plaintiff had sought a writ on the merits denial and appealed the fee/costs denial, with the appellate court consolidating both causes and issuing a peremptory writ in the first instance.
The main problems were that the lower court improperly found that plaintiff, rather than agency, had the burden of seeking clarification of an unclear request (the burden is on the agency) and that bad faith by the agency was a predicate for finding plaintiff prevailed in the PRA proceeding (it is not). That caused the issuance of a writ and a remand for the lower court to determine what fees/costs were owed to the plaintiff as the prevailing party, mooting her appeal on the fee/costs issue.
Published Decision Helps, But Not A Requirement In This Area With Respect To Significant Public Benefit Issue.
“Print shows a scene at the ‘Income Tax Office’ with a crowd clamoring at the door where a notice states ‘One at a Time’; inside, a wealthy man is standing by a desk, on the floor at his feet, in his hat, are papers labeled ‘Personal Property Tax Sworn Off’, ‘Tax on Capital Sworn Off’, and ‘Tax on Investments’, he kisses the Bible while a government official sits at the desk with his right hand raised.” Library of Congress. 1894. Charles Jay Taylor, artist.
In Ventura Office Suites v. California Unemployment Insurance Appeals Board (Board), Case No. B269664 (2d Dist., Div. 6 Jan. 17, 2017) (unpublished), Ventura Office Suites (VOS) had to fight to the appellate level to obtain a ruling (albeit unpublished) that it had the right to judicial review of the Board’s employee status determination for unemployment insurance benefit purposes without paying the tax/unemployment insurance contribution (“pay now, litigate later” rule). VOS then filed to recover $201,308,13 in attorney’s fees (inclusive of 1.5 multiplier request), but was eventually awarded $68,526.80. VOS was satisfied, but Board was not—it appealed.
The 2/6 DCA affirmed the fee award. It found that a significant public benefit was conferred by VOS’ fight along the way, even though it was vindicated through an unpublished appellate decision. No binding precedent is necessary under § 1021.5 in order to confer a significant benefit on the general public. With respect to the financial burden element, this was easily met: VOS would have saved only $1,120 per year versus incurring at least ten times the fees if this case was litigated on an hourly basis (presumably this was taken on a pro bono/contingency type of arrangement).
However, Fees Can Only Be Imposed Against Beneficiaries’ Trust Shares, Not Imposed Personally Against Them.
Driving nail in coffin. May, 1918. Library of Congress.
Pizarro v. Reynoso, Case No. C077594 (3d Dist. Jan. 18, 2017) (published) is a situation where a probate court imposed attorney’s fees against beneficiaries after finding the litigants in bad faith participated in an unfounded proceeding against the trust (the trustee, of course) even though the proceeding was not instituted by the beneficiaries. The court did so based on Rudnick v. Rudnick, 179 Cal.App.4th 1328, 13356 (2009). The probate court ordered the fees personally paid by the non-prevailing beneficiaries.
The Third District, based on the equitable powers of probate courts, affirmed the fee recovery, but with one modification. Beneficiaries argued that Rudnick literally only applied to a proceeding instigated by the beneficiaries, and they did not instigate it so that the probate court lacked authority to impose fees under Rudnick. Nope; “[n]othing in [the Rudnick] analysis, with which we agree, requires instigation of an action against the trust by the offending beneficiary as a prerequisite to charging attorney fees and costs against the offending beneficiary’s share of the trust estate.” (Slip Op., at 16.) However, there in was the rub—the beneficiaries could not be held personally liable under general probate equitable principles, so the award was modified to reflect that the fees and costs could only be imposed against beneficiaries up to the amount of their trust shares.
No Written Contract—No 1717 Fees; Banks And Assignees—No Go Under 1717(c).
In Professional Collection Consultants v. Brown, Case No. B270128 (2d Dist., Div. 6 Jan. 17, 2017) (unpublished), bank’s assignee (collection consultants) requested the trial judge to award it $148,792 in contractual attorney’s fees under Civil Code section 1717 or $800 in statutory fees under Civil Code section 1717.5 after it successfully obtained a compensatory award against a credit card account borrower to the tune of $16,153 (after winning a summary judgment and an appeal of that SJM win).
The appellate court affirmed based on a lack of fee entitlement. Bank’s assignee denied the existence of a written agreement, so the section 1717 fee basis went out. As far as much smaller statutory fees under section 1717.5(c), the 2/6 DCA concluded that bank’s assignee stood in the same position as the bank, which was precluded from obtaining fees under express language saying the statute “does not apply to any action in which a bank … is a party.” (§ 1717.5(c).)
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.