Rees-Levering Automobile And Sales Finance Act: First District Affirms Fee Recovery Lodestar Of $83,346 For Lead Attorney, But Rejects 1.5 Multiplier

 

Court of Appeal Also Rejects Asymmetrical Interpretation of Fee-Shifting Provision.

     The next case, Alarcon v. Fireside Bank, Case Nos. A117148 & A118566 (1^st Dist., Div. 3 Mar. 8, 2010) (unpublished), pitted two different statutes against each other, both contained in the Rees-Levering Automobile and Sales Finance Act (ASFA), Civil Code section 2981 et seq., a pro-consumer automobile sales financing statutory scheme. The first was section 2983.4, which provides for a mandatory award of reasonable attorney’s fees and costs to a prevailing party under ASFA. The second was section 2983.5(a), which provides that the “liability” of an automobile seller’s assignee “may not exceed the amount of the debt owing to the assignee at the time of the assignment.” Did the latter provision “cap” an assignee’s liability, even for attorney’s fees as the losing party, to the debt owing to assignee?

     No, said the First District, Division 3, in a 3-0 decision penned by Justice Jenkins.

     There, plaintiff automobile buyer (an individual consumer) won rescission, debt cancellation, and a small damage award under ASFA against the assignee. The lower court also awarded plaintiff $125,019 in attorney’s fees against assignee, based upon the lodestar for lead counsel enhanced by a 1.5 multiplier. Assignee appealed, raising two challenges based upon the statutory tension and another directed to the amount of fees awarded.

     The appellate court did not accept assignee’s position that the section 2983.5(a) “cap” applied to an attorney’s fees award. After all, assignee was arguing for an “asymmetry in fee awards” position, where a buyer’s award of fees was capped but no limitation was placed on fees available to a winning assignee of seller—a very uneven result that cut against the pro-consumer bent of the whole statutory scheme.

     However, that did not end the inquiry. The appellate court found that the 1.5 multiplier should not have been granted and reversed the amount of the enhancement. This was based on the fact that the experience of lead counsel (whose time formed the foundation for the lodestar) had been already factored into sustaining a higher $435 hourly rate; any fee enhancement was in effect an “unfair double counting” of factors already used in setting the lodestar. This meant that the fee award was cut down to the $83,346 lodestar awarded by the lower court.

     BLOG UNDERVIEW—Although recognizing that a de minimus violation of ASFA led to a sizeable fee award, the appellate court found this justified by the pro-consumer legislative purpose behind the statutory scheme. The Court of Appeal even went on to parrot the quote on our Mission Statement—“in some cases ‘attorney fees become the tail that wags the dog in litigation.’” (Slip Opn., p. 32.) Co-contributor Mike’s Labrador Riffle goes “woof” to this observation.

Comments

[Orlando Law Guy]

This quite an interesting case. As a client you have to factor in that your lawyer has to get paid. As a client, there are some situations where you can end up losing even more money than before if you decide to fight charges or fees.