Trial Judge Failed To Honor Voluntary Dismissal By Plaintiffs In Awarding Fees To Defense, While Lower Court Failed To Utilize Lodestar Methodology In Awarding Reduced Fees To Plaintiffs Under Settlement Agreement.
Duncan v. Nathan, Case No. A147468 (1st Dist., Div. 5 Feb. 5, 2018) (unpublished) involved a landlord-tenant dispute involving claims for negligence, quiet enjoyment breach, San Francisco rent ordinance violations, constructive eviction, and intentional infliction of emotion distress by tenants against landlord/affiliates. On the eve of trial, plaintiffs settled with the real landlord for $12,500 each, with a reservation of the fees issue for the trial judge to decide later. Against defendant landlord manager, the jury awarded $2,153.03 against manager on the negligent claim, but found for her on the remaining claims which survived a nonsuit motion (with the jury finding for the defense on the statutory ordinance eviction claim asserted by plaintiffs). Subsequently, the lower court awarded the defense the entirety of her requested fees based on a fee-shifting provision in the San Francisco ordinance, and awarded plaintiffs $3,750 in fees each (much reduced from the almost $142,000 lodestar request plus a 1.35 positive multiplier) based on the settlement stipulation fee reservation clause.
Plaintiffs appealed both fee awards, prevailing on both challenges on appeal.
With respect to the fee award in favor of the defense, the appellate court determined that the trial judge erred in not granting plaintiffs’ request for a voluntary dismissal of the San Francisco ordinance eviction claim, although it did remand for a look at whether there was another ground for fee entitlement.
On plaintiffs’ appeal of the reduced fee awards (about 30% of the $12,000 settlement), the appellate court found that the lower court had failed to follow the lodestar methodology in determining the amounts of fees to be awarded, instead focusing on the financial condition of the nominal landlord (meager) and plaintiffs (who appeared to be well heeled). Given the failure to follow the correct methodology, the matter was reversed to use the correct test, factoring in the results obtained against landlord, any unnecessary or excessive litigation, and time spent litigating claims against the landlord manager.
BLOG OBSERVATION—The appellate court did not discuss whether financial condition was a relevant consideration under Civil Code section 1717. There is a split of thinking on this issue, as we discussed in our April 13, 2016 post of a Sixth District unpublished decision, McNeil v. Symmetricom, Inc.