Court Did Not Have To Resolve Split in Appellate Authority On Whether Financial Condition Is Considered For “Reasonable Fee” Purposes, Because No Financial Evidence Was Presented Before The Trial Court.
McNeil v. Symmetricom, Inc., Case No. H041067 (6th Dist. Apr. 12, 2016) (unpublished) involved a situation where plaintiffs dismissing a state court action were hit with an attorney’s fees award of $124,113 out of a requested $618,411.50 from the defense—about 20% of the requested fees. Based on a broad fees clause in a settlement agreement, the tort claims were compensable even after dismissal under Santisas. Both the trial and appellate courts agreed the fee award was justified on this basis to the defense.
The interesting aspect of this decision was plaintiffs’ playing of the “indigency card,” namely, the trial judge failed to consider the plaintiffs’ financial condition in setting the amount of the fee award—something which plaintiffs claimed had to be weighed in determining the “reasonableness” of any fee award. The appellate court did note there was a split of thinking on this issue. (Compare Walker v. Ticor Title Co. of California, 204 Cal.App.4th 363, 374 (1st Dist. 2012) [factor is irrelevant in setting an award] with Garcia v. Santana, 174 Cal.App.4th 464, 476-477 (2d Dist. 2009) [2-1 decision saying the trial court must consider the financial circumstances of the losing party].) The trial court in the case before it found Walker was more persuasive, not following a contrary Second District decision from its own venue. (NOTE—Under Auto Equity, a trial judge does not have to follow a decision from the judge’s own district, although he/she may act at peril in doing otherwise, such as adopting the reasoning from another appellate district over the “venue” district.) The appellate court in McNeil did not need to resolve the conflict because plaintiffs presented no evidence of financial condition to the trial court. Beyond that, the 20% of requested fees awarded to the defense was viewed as a nonprejudicial “number” in any event.
We guess, at some point, that this financial condition “split in thinking” will need to be addressed in the Civil Code section 1717 area on the “reasonable” fee element of recovery.
On the subject of indigency: “The law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread.” - Anatole France (1844 – 1924).