CALIFORNIA ATTORNEY'S FEES

Civil Rights/POOF!: $494,714.40 Fee Award Against Roommate Web Sorting Service Vacated Upon Reversal of Summary Judgment/Permanent Injunction Against Litigant

 

No Place Like Home:  FHA/FEHA Restrictions Held Not Applicable to Roommate Selection for Sharing Inside of Living Units.

     Roomate.com, LLC, which maintains a website asking questions about sex, sexual orientation, and familial status for individuals seeking roommates, must have been shocked when a district judge granted a summary judgment/permanent injunction based on finding that this selection process violated the Fair Housing Act (FHA). Even worse, San Fernando’s Fair Housing Council was awarded $494,714.40 in attorney’s fees.

     Roommate appealed. Good move.

     In a 2-1 opinion, Chief Judge Kozinski authored a Ninth Circuit opinion vacating both the merits and fee orders in Fair Housing Council of San Fernando Valley v. Roommate.com, LLC, Case Nos. 09-55272 et al. (9th Cir. Feb. 2, 2012) (for publication). The majority found that FHA and FEHA did not apply to the roommate selection process for the sharing of living units. With that determination, the substantial fee award went POOF! also.

     BLOG UNDERVIEW--Here is the colorful beginning of this opinion: “There’s no place like home. In the privacy of your own home, you can take off your coat, kick off your shoes, let your guard down and be completely yourself. While we usually share our homes only with friends and family, sometimes we need to take in a stranger to help pay the rent. When that happens, can the government limit whom we choose?”

Employment/POOF!: Appellate Court’s Reversal Of Two Labor Claims With Fee Recovery And One Independent Sales Act Claim With Fee Recovery Means That Plaintiff’s $889,000 Fee Award Goes POOF!

Reversal of Fortune on Appeal to Plaintiff Winning Substantial Jury Verdict and Substantial Attorney’s Fees Below.

     Acting Presiding Justice Bedsworth, as author for a 3-0 panel in Gardner v. Baby Trend, Inc., Case No. G043451 (4th Dist., Div. 3 Jan. 13, 2012) (unpublished), shows how reversal on the merits--even of a large substantial jury verdict based on what the jury actually found or on legal statute of limitations issues--can have a deadly effect on the fees award. In this one, a $889,000 fee award went POOF!

     Harold Edgerton, photographer.  1933.

     Plaintiff won a combined $8.1 million from a jury based on various claims arising from his termination of a relationship with defendant (i.e., wrongful termination, wage/hour violations, Independent Sales Act violations, etc.). Defendant was successful in getting about $64,000 in costs taxed. When it came to attorney’s fees, there were two major fee entitlement anchors: (1) Labor Code sections awarding fees to a prevailing plaintiff in an action to recover unlawful deduction of expenses from commissions and awarding fees for an employer’s wrongful refusal to reimburse an employee for business-related expenses; and (2) a fee-shifting provision for violation of the Independent Sales Act (Civ. Code, § 1738.16). Plaintiff requested $1,873,932.50 in fees (a 2-times multiplier applied to the $936,966.25 lodestar). The lower court awarded plaintiff 95% of the lodestar request, or $889,000 total fees. Then, the trial court mooted its $64,000 tax cost order by determining that these should be allowed as additional costs to plaintiff under Labor Code section 2802, which allows costs to be awarded as indemnification expenses to an employee who was following employer directives.

     Defendant separately appealed the merits judgment and cost/fee awards.

     Aside from doing well on the merits, defendant hit a “grand slam” on the challenges to the cost/fee awards. The Labor Code provisions did not allow for entitlement because the jury made determinations that plaintiff was not an employee. The Independent Sales Act basis was inapt because it was barred by the applicable statute of limitations. Labor Code section 2802 was unavailing for the $64,000 in costs because it does not apply to direct actions between employers and employees (Freund v. Nycomed Amersham, 347 F.3d 732 (9th Cir. 2003)) and it was also doomed by the jury’s rejection of an employee status for plaintiff. POOF!

Prevailing Party POOF!: Reversal of Successful Cross-Complaint Demurrer Ruling Meant Prevailing Party Fee/Costs Awards Went POOF!

 

Substantial Awards Were Reversed.

     As Justice O’Leary of our local Santa Ana court reminds us, reversal of a successful cross-complaint demurrer ruling (including a ruling on contractual claims) also means that the subsequent prevailing party determination goes POOF! also. The reason is that the contracts are still being litigated, and the prevailing party determination will trail the actual merits adjudication. (Estate of Drummond, 149 Cal.App.4th 46, 51 (2007).)

     The case where this occurred was Bettingen v. Rubicon Financial, Case No. G044327 (4th Dist., Div. 3 Dec. 27, 2011) (unpublished), resulting in the reversal of a $334,634 fee award and $18,235 costs award.

     BLOG UNDERVIEW--We send congratulations to Justice O’Leary, who has been appointed as the new Presiding Justice of the Fourth District, Division 3 (the first female jurist with this honor) by Governor Brown, subject to confirmation by the Commission on Judicial Appointments.

POOF!: $260,000 PRIVATE ATTORNEY GENERAL FEES AWARD GOES AWAY WITH PARTIAL REVERSAL OF MANDATE PETITION

 

     The appellate court’s recent decision in Ross v. California Coastal Commission, Case No. B228624 (2d Dist., Div. 5 Oct. 20, 2011) (unpublished) demonstrates our POOF! principle in convincing fashion. There, the appellate court reversed a mandate petition in part which was favorable to plaintiffs. That reversal meant that the $260,000 fees award to plaintiffs under California’s private attorney general statute, too, went POOF! (Gillan v. City of San Marino, 147 Cal.App.4th 1033, 1053 (2007).)

SLAPP/POOF!: $38,784.50 Fee Award Goes POOF! Upon Reversal Of SLAPP Grant

 

     In Panakosta Partners, LP v. Hammer Lane Management, LLC, Case No. C065812 (3d Dist. Sept. 27, 2011) (certified for publication), minority limited partners were hit with an adverse fee award of $38,784.50 when majority partners SLAPPed them for bringing a petition for buyout (to avoid a judicial dissolution) under Corporations Code section 15908.02. The fee award went POOF! upon the appellate court's determination that the petition for buyout was not subject to being SLAPPed.

POOF!: Reversal Of Demurrer Sustaining Also Means $112,437.50 Fee Award Falls

 

     Here is one that demonstrates our POOF! principle for a substantial attorney's fees award.

     The appellate court in Goslins v. Taxe, Case Nos. B225795/B227711 (2d Dist., Div. 3 Sept. 27, 2011) (unpublished) reversed the sustaining of a demurrer to a complaint alleging invalidity of a trustee's sale, equitable subrogation re first priority lien, and quiet title. Although the lower court also awarded prevailing defendants below all of their requested $112,437.50 in fees under a promissory note fees clause, the merits reversal meant that the fee award, too, went POOF! "Our reversal of the judgment sets the matter at large as if there had been no judgment and automatically vacates an award of costs incidental to the judgment." Put another way, POOF!

SLAPP/POOF!: Reversal Of SLAPP Ruling Means Defendants’ Fee/Costs Award Went POOF!

 

$28,712.50 Fee/Costs Award Was the Victim in This One.

     Defendants probably felt pretty good after they SLAPPed plaintiff’s suit and won fees/cost of $28,712.50 under the SLAPP mandatory fee-shifting statute. The feeling was somewhat short lived, however.

     The appellate court in Gonzales v. Gonzales Foundation, Case Nos. A123857/124346 (1st Dist., Div. 3 Apr. 25, 2011) (unpublished) reversed the SLAPP grant, which also resulted in a reversal of the fee/costs award. The appellate court also noted that plaintiff could move for fees/costs if he could demonstrate the SLAPP motion was frivolous or dilatory in nature, although it gave no opinion on whether this was the case. Reversal of fortune, to say the least.

         

Wheel of Fortune.  Las Vegas.  1940  Arthur Rothstein, photographer.

Consumer Statutes/POOF!: Elder Abuse Fee Award Reversed Because 2008 Amendments Not Retroactive

 

$326,588 Award Went Bye-Bye.

     Plaintiffs in an elder abuse case where the crucial claims centered about defendants’ undue influence of an elder, causing an amendment to a testamentary trust, fared well in the trial court. The lower court invalidated the trust and awarded plaintiffs attorney’s fees of $326,588 under Welfare & Institutions Code section 15657(a) (an Elder Abuse Act fee-shifting provision).

     On appeal, in McIntosh v. Mathison, Case No. A127421 (1st Dist., Div. 3 Apr. 25, 2011) (unpublished), the fee award was reversed.

     The reason? The Elder Financial Abuse Act’s financial elder abuse sections were amended in 2008 to add undue influence as a violation such that the fee shifting provision applied only if retroactive in nature. Because the 2008 amendments were substantive and nothing indicated an intent that they were to apply to past conduct (the undue influence found here), the fee award had to be vacated -- or, in one of our pet terms, went POOF!

POOF! With A Twist: $18,810 Fee/Code Enforcement Costs Award Goes POOF! With Reversal Of Merits Judgment

Appellate Court Did State that Prevailing Party Could Renew Fee and/or Costs Request.

        Carrick v. County of Santa Cruz, Case No. H035841 (6th Dist. Apr. 18, 2011) (unpublished) is an interesting illustration of our POOF! principle.

     There, a homeowner embroiled with a County for maintaining unpermitted structures on his property was hit with an adverse fee award of $16,500 and adverse code enforcement costs award of $2,310. The only problem was that the appellate court reversed the prior merits judgment in favor of County, which meant the fees/costs award also fell with the reversal. (Gillian v. City of San Marino, 147 Cal.App.4th 1033, 1053 (2007).) However, now the twist--the appellate court did not rule out that someone might have prevailed and could present a renewed fee/costs request before the lower court under Code of Civil Procedure section 1032. Maybe more to blog on with respect to this one in the future!

Private Attorney General Statute: $258,800 Fee Award Goes Up In Smoke (POOF!) Based On Karuk Decision

First District, Division 2 Uses Hunting and Boxing Analogies in Reversing Fee Award.

     The next decision we survey involves a reversal driven by the same apppellate court’s earlier decision in Karuk Tribe of No. Calif. v. Calif. Regional Water Quality Control Bd., 183 Cal.App.4th 330, 364-369 (2010) [discussed in our March 30, 2010 post]. There, the First District, Division 2 reversed a $138,250 fee award under Code of Civil Procedure section 1021.5 (the private attorney general statute) where a remand to an administrative agency for reconsideration based upon a procedural defect did not make the plaintiff a 1021.5 “successful party.” (The procedural defect was to have the agency make further findings on the merits of a supremacy argument, a task that was completed and did not change the bottom line outcome.)

     About a year later, in Center for Biological Diversity v. Cal. Fish and Game Comm’n, Case No. A127555 (1st Dist., Div. 2 Apr. 8, 2011) (unpublished), the same appellate court reversed a 1021.5 fee award of almost $258,800 (out of a request of almost $283,000) in favor of a plaintiff non-profit group that sought mandate to have the American pika, a mammal related to rabbits and hares at risk due to global warming, included on a certain endangered species listing. A lower court granted mandate after the Commission made certain determinations, principally that the Center did not present sufficient evidence to justify the listing. The basis for mandate was the trial court’s perception that the agency may have used an incorrect standard of review in making its determination. On remand, the Commission reiterated its earlier decision after following the mandate directive, still producing the fee award at the lower court level appealed by the State Commission.

      The reversal of the $258,800 fee award was dictated by the reasoning in Karuk. Although the procedural error was different in Center for Biological Diversity, what actually occurred was not materially different in nature. The real thrust of Center’s mandate petition was that it had presented enough evidence to have the pika listed as endangered, but it never got this “bigger game” result. Rather, it only achieved a limited “do-over” that did not result in a listing of the pika. The merits of the petition were avoided by both the Commission and trial court in their rulings. The Center only obtained a procedural clarification of why it lost, much like the petitioner in Karuk.

     However, because this was only an interim battle, the appellate court did not rule out the possibility that Center might be entitled to fees at a later juncture. However, it colorfully did determine that “round one” did not result in substantial benefit to the people of California so as to countenance a 1021.5 fee award to Center at the moment.

POOF!/SLAPP: Reversal Of SLAPP Grant Meant $45,545.75 Fees/Costs Award Went POOF!

 

First District, Division 5 Finds Cross-Complaint Not Properly SLAPPed Because It Did Not Arise From Free Speech or Petitioning Activity.

     For those of you that follow our blog, you know we have the POOF! principle. This principle manifests itself when there is a merits reversal of a substantive order that gave rise to a subsequent fee award. POOF! happened in the next case.

     The lower court in NOP Mission LLC v. Murphy’s Deli Franchising, Case No. A126352 (1st Dist., Div. 5 Feb. 16, 2011) (unpublished) SLAPPed a landlord’s cross-complaint. Later, it awarded tenants $45,545.75 (out of a requested $79,800.75) in attorney’s fees and costs as the prevailing party under the SLAPP mandatory fee-shifting statute, Code Civ. Proc., § 425.16(c).

Above:  Whiskey display at Leon’s Delicatessen.  c1920.  Theodor Horydczak, photographer.  Library of Congress.

     Landlord appealed and won, with the appellate court finding no basis to SLAPP because (1) a litigant’s failure to speak does not fall within a protected activity, and (2) a landlord-tenant dispute was a private rather than constitutionally protected public matter.

     So, what happened to the fee/costs award? You guessed it--it went POOF! based on the reversal of the anti-SLAPP grant. (Ketchum v. Moses, 24 Cal.4th 1122, 1137 (2001).)

POOF! AND REVERSE POOF!: Appellate Court’s Reversal Of Plaintiff’s Judgment Meant Costs Award Went POOF! And Defendant City Could Seek Statutory Fee Recovery In A Reverse POOF!

Prompt Payment Statute Fee Shifting Was Now In Play For City.

     When a judgment is reversed as a matter of law by an appellate court in favor of the other side, that usually means good things for the other side--any fee and costs awards go POOF! and the prior losing party may prevail so that fees/costs can be sought by the new winner under a fee shifting statute.

     These types of situations are well captured by the result in P&D Consultants, Inc. v. City of Carlsbad, Case No. D055533 (4th Dist., Div. 1 Feb. 1, 2011) (unpublished), where an appellate court reversed a judgment in favor of plaintiff and found, as a matter of law, that the City should have been granted a motion for nonsuit. As a result of this reversal, two things happened: (1) an costs award of $33,657.62 for plaintiff’s expert witness fees fell; and (2) City was now the prevailing party such that it could seek recovery of attorney’s fees under the fee shifting provisions of the prompt payment statutes.

     Also, although the appellate court could fix the fees on appeal, it embraced the “better practice” of remanding so that the lower court could determine such fees. (Security Pacific National Bank v. Adamo, 142 Cal.App.3d 492, 498 (1983).)

Requests For Admissions: $341,295 Costs Of Proof Award Goes POOF!

Reasons: Issue Was Not Of Substantial Importance And Form Interrogatory Responses Effectively Explained Denial.

     In Wilson v. Lightner, Case No. D055083 (4th Dist., Div. 1 Jan. 31, 2011) (not for publication), parties in a bitter easement dispute reached a denouement when the trial court awarded successful defendants a postjudgment award of $341,295 as costs incurred in proving matters not admitted in responses to 12 requests for admissions under Code of Civil Procedure section 2033.420. Plaintiffs understandably appealed.

     They did get a reversal on this issue.

     The reasons? Twofold in nature, explained below.

     First, the issue involved in the RFAs in question--whether the easement was appurtenant (archane, but definitely involved in cases of these sorts)--was not of substantial importance. Not only was little time devoted to this issue, but the real issue was easement overburdening, implicated not at all in the germane RFAs.

     Second, the actual RFA denials were effectively negated by responses to the form interrogatory relating to RFA denials in which plaintiffs admitted the easement was appurtenant to the five parcels referenced in the grant deeds (albeit denied that it served seven parcels). The denial on the seven parcels was made in good faith, as the form rog response showed good faith on behalf of plaintiffs in the overall sense of things.

     Big reversal in favor of plaintiffs on this costs of proof issue.

No POOF!: Affirmance Of Merits Ruling Means Private Attorney General Fee Award Stands

Second District Illustrates the “No POOF!” Rule.

     If you have followed our blog, you know about our “POOF” rule. This is the principle by which a fee award will generally go POOF! (goes away) when there is a material reversal of a merits award that was the predicate for the fee award.

     Now, ta! da!, we introduce the “no POOF!” rule.

     The Second District, Division 6 is our victim on this one. The decision that happens to be the victim is Citizens Planning Assn. v. City of Santa Barbara, Case No. B216006 (2d Dist., Div. 6 Jan. 25, 2011) (certified for publication).

     There, the appellate court affirmed a merits judgment which also produced a private attorney general fee award of $175,888. The appellant did not challenge the fee award, except to argue that it would go POOF! if the merits judgment was reversed. Well, that did not happen. So, no POOF! The fee award stood based on the absence of any other arguments.

     We thank Justice Coffee and his colleagues for helping us set forth the no POOF! rule as a corollary to our POOF! category.

Section 1717: Attorney’s Fees Award Reversed Because Declarations Did Not Establish Whether “Of Counsel” Attorneys Got Past Trope Restriction

$20,147.50 Fee Award and $3,581.87 Costs Award Go POOF!

      We have many times explored the restriction in Trope v. Katz, 11 Cal.4th 274, 292 (1995) [one of our Leading Cases], where in propria persona attorneys cannot recover Civil Code section 1717 fees expended in litigating matters on their own behalf. The hallmark of situations falling outside of Trope is the existence of a truly independent attorney-client relationship, such as exists with in-house counsel or with firm attorneys representing an individual attorney’s personal interests.

      In Juknavorian v. Sands & Associates, Inc., Case No. B221207 (2d Dist., Div. 7 Dec. 29, 2010) (unpublished), a $20,147.50 fee award and $3,581.87 costs award were reversed because of ambiguity in declarations supporting the fee proceeding--reminding us all to be careful of how the proof is framed. Put simply, the attorneys seeking fees were listed as “of counsel” but one of the fee declarations indicated the declarant was “an attorney with Sands and Associates” (the fee claimant). This “loose language” in the declaration was insufficient to establish the existence of an independent attorney-client relationship between the declarant/her colleague and the winning firm. Reversed. . . . in the case of the fee proceeding with the “loose” declaration language.

POOF!: $310,000 Attorney’s Fees Award Gets Reconsideration Mandate By Appellate Court After Reversing $600,000 Lost Profits Award To Plaintiffs

Reconsideration Warranted Because This Was Bulk of Damages Award.

     Our POOF! principle--that the reversal of a merits judgment often times results in reversal of a fees award--resurrected itself in the next case.

     In Greenwich S.F., LLC v. Wong, Case Nos. A123670/A124882 (1st Dist., Div. 2 Dec. 2, 2010) (certified for publication), plaintiffs were awarded compensatory damages totaling $750,000 in a real estate sale agreement breach dispute. The lower court also awarded $391,000 in attorney’s fees to plaintiffs. [BLOG OBSERVATION--Notice the fee award compared to the compensatory damages award.] Defendant appealed.

     The Court of Appeal reversed the substantial $600,000 lost profits component of the jury verdict. Because this was the bulk of damages awarded, the original fees award went POOF! and the matter remanded for a redetermination of the fees to be awarded to plaintiff (because the judgment was corrected to show only one plaintiff was entitled to the fee award).

     BLOG UNDERVIEW--For you real estate practitioners, this case has a scholarly discussion of the damage measure codified in Civil Code section 3306 (for breach of a real estate agreement to sell or convey property). The appellate court decided that lost profits may be awarded as part of consequential damages under section 3306 upon a proper showing (such as demonstrating that the damages are reasonably certain and not speculative in nature).

Civil Rights: U.S. Supreme Court Reverses Ninth Circuit Fee Award Based On Monell.

 

$60,000 Fee Award Goes POOF! After High Court Decision.

     In Los Angeles County v. Humphries, Case No. 09-350 (U.S. Nov. 30, 2010), the United States Supreme Court decided that the Monell v. New York City Dept. of Social Servs., 436 U.S. 658, 694 (1978) “policy or custom” requirement applied to civil rights cases seeking both damages or prospective relief. The Ninth Circuit held otherwise, resulting in an attorney’s fees award in favor of plaintiffs to the tune of $60,000 against Los Angeles County. The U.S. Supreme Court decision meant the fee award went POOF! even though new law was made, because the fee award was based on the prospective relief granted to plaintiffs. However, the matter will go back to the district court, so we shall see ... we shall see ... given that a constitutional violation was found to exist.

     The Los Angeles Time has reported on the case.

Requests For Admissions: $177,030.76 Cost of Proof Sanctions Goes POOF! When Court Of Appeal Finds That Only One Out Of 7 RFAs Was Material

Matter Remanded To Decide Sanctions for One Germane RFA.

     Appellate courts do scrutinize costs of proof sanctions under Code of Civil Procedure section 2033.420 carefully, as the next case demonstrates.

     The trial court in Windward Capital Management Co. v. Christenson, Case No. B210898 (2d Dist., Div. 2 Oct. 13, 2010) (unpublished) imposed costs of proof sanctions under section 2033.420 against defendants for denying seven RFAs. The sanctions award amounted to $177,030.76, prettty heavy hitting when one considers that the total damages awarded only came to about $113,000. The Court of Appeal reversed, finding that the denial of only one RFA was material so that the sanctions had to be recalculated for this single transgression. The other six RFAs were found not to be that important.

     Also, a punitive damages award was reversed because alleged false promises made in connection with settlement negotiations were protected by the Civil Code section 47 privilege. That meant that another $37,500 damages component went POOF! too.

Civil Rights And Poof!: $329,208.35 Fee Award Evaporates Because Plaintiff Did Not Timely Plead A Section 1983 Claim

Second District, Division 2 Strikes Fee Award.

     Here is a reminder that fee entitlement is a key liminal concern for review of any attorney's fees award. The failure to plead a claim allowing for fee recovery can and often will be fatal to the ability to recoup substantial attorney's fees. The next case is a graphic illustration, costing a successful plaintiff in a police battery case a lot in fees when a substantial fee award went POOF! on appeal.

     In Mock v. County of Los Angeles, Case No. B217502 (2d Dist., Div. 2 Oct. 6, 2010), plaintiff brought a complaint against L.A. County and two L.A. County sheriffs for violation of the Bane Act, false arrest/imprisonment, assault, battery, and negligence. One of the sheriffs was let out on summary judgment, and the County's negligence claims were adjudicated out on a summary adjudication motion. No claim under the federal civil rights statute (42 U.S.C. § 1983) was pled, nor any prayer for recovery of fees under the civil rights fee shifting statute (§ 1988). Two years after filing of the complaint, plaintiff moved to amend to assert a section 1983 claim, a request denied by the lower court as being prejudicial to defendants.

     The jury found in favor of plaintiff only on the battery claim, awarding him $241,350 in damages. Plaintiff then requested an award of $516,232.50 in attorney's fees under section 1988, with the trial court granting fees to plaintiff of $329,208.35. Defendants appealed.

     The fee award was indeed reversed on appeal.

     The reason? Plaintiff did not prevail on a section 1983 claim, with the earlier request to amend having been denied by the trial judge. Not every battery results in a constitutional violation, with a section 1983 claim being harder to prove than a battery claim. Just as salient, there was a fundamental unfairness if plaintiff could recover fees from defendants—after all, the absence of the section 1983 claim impacted settlement options and denied defendants the opportunity to remove the case to federal court (and assert other defenses). Under the circumstances, reversal of the fee award was seen as the fair thing to do, decided Justice Ashmann-Gerst on behalf of a 3-0 panel.

BLAW BONUS:  Recipe for Mock Chopped Liver.

Civil Rights: Disabled Plaintiff In ADA Suit Gets Chance To Seek More Attorney’s Fees

 

Ninth Circuit Remands $136,537.83 Fee Award After Reversing and Granting Plaintiff More Relief.

     Here is a reverse POOF!

     Plaintiff in Antoninetti v. Chipotle Mexican Grill, Inc., Case Nos. 08-55867 et al. (9^th Cir. July 26, 2010, amended Sept. 22, 2010) (for publication) won one claim in an American with Disabilities Act (ADA) action, with the district judge awarding plaintiff $136,537.83 out of a requested $546,151.33 in attorney’s fees.

     However, on appeal, the Ninth Circuit Court of Appeals reversed, granting plaintiff more relief with respect to two restaurants (including a preliminary injunction, relief denied by the district judge). What impact did that have? Reverse POOF! The fee matter was remanded for the district judge to reconsider the request anew given what happened at the appellate level. More fees, we guess, would be the likely result.

Probate and POOF!: $13.364 Million Fee Award Against Trustee Under Probate Code Section 17211(b) Evaporates

 

Second District, Division 3 Finds Trustee Had Reasonable Cause to Contest Beneficiary Claims.

     In our category “Probate,” we previously have examined Probate Code section 17211(b), which allows attorney’s fees to be awarded to a beneficiary contesting a trustee’s account if the lower court determines that the trustee’s opposition was made without “reasonable cause” and in bad faith. Here is a dozzy of a POOF! under this section.

     Uzyel v. Kadisha, Case No. B196045 et al. (2d Dist., Div. 3 Sept. 22, 2010) (certified for publication) involved a $13,364,530 attorney’s fees award against trustee that was granted under section 17211(b). The Second District, Division 3, in a detailed analysis of the Probate Code provision, reversed the fee award.

     It found that “reasonable cause” under section 17211(b) was synonymous with the “probable cause” element of malicious prosecution claims—meaning an objective standard is used to determine if the actions were legally tenable. The appellate panel rejected the trial court’s test that “reasonable cause” required an objectively reasonable belief that the trustee would be completely exonerated by taking opposing actions. The correct test was expressed this way by the Court of Appeal: “We believe that reasonable cause to oppose a contest of an account requires an objectively reasonable belief, based on the facts then known to the trustee, either that the [adverse] claims are legally or factually unfounded or that petitioner is not entitled to the requested remedies.” (Slip Op., pp. 81-82.)

     Because trustee did successfully challenge several claims and the appellate court found other findings were suspect, absence of reasonable cause was not shown, resulting in (you guessed it) a POOF!—a reversal of the $13.364 million fee award.

POOF And How!: $14,150,000 In Fee Awards Go POOF! Based Upon Prior Reversal And Remand

 

Case Pitted Two Large Los Angeles County Law Firms Against Each Other.

     Holy Cow, Batman!

     Here is a wow POOF!—showing how substantial fee awards will evaporate upon a reversal of a judgment.

     The case of Cussler v. Crusader Entertainment, LLC, Case Nos. B215815/B220761 (2d Dist., Div. 3 Sept. 8, 2010) (unpublished) pitted two sides with titan Los Angeles County law firms (Greenberg Glusker representing Clive Cussler and O’Melveny & Myers for Crusader Entertainment, LLC). After each side sued each other, the actions proceeded to a 14-week jury trial where most of the causes of action were rejected except that Crusader was awarded damages of $5 million for Cussler’s breach of the implied covenant of good faith and fair dealing. While an appeal was pending of that judgment, the trial court awarded Crusader $13,949,131 in initial fees and another $150,000 in fees for its post-judgment enforcement efforts. However, the Second District, Division 3 reversed the judgment, remanding it to the trial court to determine whether there was a prevailing party and if so, which one.

     Appeals were taken of the two appeal orders, with Cussler filing a motion for summary reversal and request for restitution of $14,197,581 (an amount actually collected by Crusader pursuant to the initial fee order) while the appeals were pending. Crusader conceded that the fee orders should be vacated, but argued the appeals should be dismissed as moot rather than reversed.

     The Second District, Division 3 decided summary reversal was appropriate. Although agreeing that it could have chosen to dismiss the appeals as moot (Kreutzer v. City and County of San Francisco, 166 Cal.App.4^th 306, 312-313 n. 3 (2008)), the panel decided that a speedier determination through summary reversal was proper (Weinstat v. Dentsply Internat., Inc., 180 Cal.App.4^th 1213, 1224 (2010)). The panel also provided guidance to the trial court, pointing out it needed to decide (1) if any side prevailed, (2) the amount of any fees to be awarded to the prevailing party, and (3) the amount of any restitution to be awarded to Cussler.

     So, the fee awards went POOF!, leaving the titans to have more law and motion battles on the remand issues. There just might be another post on the ultimate decision given the hard fought nature of this litigation.

Federal POOF!: Ninth Circuit Determines Plaintiff Should Have Been Granted Summary Judgment, Reversing Substantial Fee Award To Defense

$2.4 Million Fee Award Goes Away.

     It is not often that we have a federal POOF! to share with you. However, here is a recent one.

     In F.B.T. Productions, LLC v. Aftermath Records, Case Nos. 09-55817/09-5069 (9^th Cir. Sept. 3, 2010) (for publication), plaintiff sued under contracts to recover a percentage of royalties due from defendant in connection with the rap artist Eminem. The district court denied plaintiff’s summary judgment motion, with the defendant obtaining a jury verdict in its favor and a later fee award of $2.4 million.

     That all went POOF! when the Ninth Circuit determined plaintiff was entitled to a summary judgment under its contracts with respect to royalties due for sales of Eminem’s recordings in the form of permanent downloads and mastertones. The contracts were unambiguous such that the matter was reversed as a matter of law and remanded for further proceedings.

     BLOG BONUS QUIZ—Do you know Eminem’s real name? A: Marshal B. Mathers, III.

Equity And POOF!: Appellate Court Reverses CCP § 473 Relief For Late Filing Of Attorney’s Fees Motion

Reversal Meant $94,072.50 Fee Award Evaporated.

    Here is one showing that appellate courts will try to do equity depending on the facts of a particular dispute. (And, by making this comment, we in no way mean they ignore the law—quite to the contrary, as we have seen in numerous posts.) Unfortunately, for plaintiff and her attorneys, the result meant that a $94,072.50 fee award went POOF! on appeal.

     Williams v. Ablakhad, Case No. B214364 (2d Dist., Div. 1 Aug. 27, 2010) (unpublished) involved a donnybrook of a dispute between defendant used car dealer and one of his customers (plaintiff Williams). By the time the opinion we discuss came down, the parties were already on their third appeal.

POOF!: Fee Awards On Both Sides Went Away With Reversal of Rescissionary Judgment

 

Fourth District, Division 2 So Rules in Unpublished Opinion.

     Reversal on appeal can have dire consequences, not to mention that fee awards can become moot. That is what happened in H & H Investments Co., Inc. v. Chang, Case Nos. E046900/E047471 (4^th Dist., Div. 2 Aug. 17, 2010) (unpublished).

    

                      Fortuna.  Albrecht Durer.  ca 1502.

     Briefly stated, plaintiff was allowed to rescind a loan transaction, but defendant appealed—including a lower court determination that defendant was liable for fees and costs of $48,962.65. Cross-defendant appealed a “tort of another” fee award of $40,000 in favor of plaintiff/cross-complainants. Because the crucial award of rescission against defendant was reversed, the fee awards were moot and fell as well. Or, put another way, they went POOF!

Special Fee-Shifting Statutes: Ninth Circuit Reverses Attorney’s Fees Awards in Echostar/NDS Case

Reversal is a $22 Million Swing for the Corporate Litigants.

     In our December 11, 2008 post, we reported on C.D. Cal. U.S. District Judge David O. Carter’s fee awards in EchoStar Satellite Corp. v. NDS Group PLC, Case No. 8:03-cv-00950-DOC-JTL. There, EchoStar was awarded $12,972,547.91 in fees and NDS was awarded $8,968,118.90 in fees in a detailed district court decision finding that both parties prevailed under some fee shifting statutes. (E.g., Cal. Pen. Code, § 593e(d); Communications Act [47 U.S.C. § 605(e)(3)(B)(iii)]; Digital Millennium Copyright Act [17 U.S.C. § 1203(b)(5)].) Both sides appealed, and the Ninth Circuit reversed and remanded—although handing NDS a major victory on appeal.

     The Ninth Circuit, in an unpublished memorandum decision from both appeals (Case Nos. 09-55005/09-55633 [9^th Cir. Aug. 4, 2010]), reversed the fee awards in a way to deny fees to EchoStar and grant NDS fees of $17,936,237.80 plus reasonable costs—a $22 million swing of fortune from NDS’ perspective (owing a net $4 million in fees to owed $18 million in fees). How did this occur? We now tell you.

     Both Judge Carter and the Ninth Circuit did not disagree on the standard governing which party prevailed in the litigation—the assessment was a practical one, but not allowing this status to be conferred on one who has a purely technical or de minimis success. (See Donner Mgmt. Co. v. Schaffer, 48 Cal. Rptr. 3d 534, 542-543 (2006) [state law]; Parents of Student W. v. Puyallup Sch. Dist. No. 3, 31 F.3d 1489, 1498 (9^th Cir. 1994) [federal law].) However, they had sharply different perceptions on who prevailed with regard to EchoStar. The Ninth Circuit ruled that EchoStar did not prevail on a practical level: the focus of its suit—a December 2000 Internet posting alleged to have compromised security—was rejected by the jury (with NDS prevailing on this primary claim). EchoStar, instead, only recovered $45.69 (which was trebled), $1,500 in statutory damages, $284.94 in restitution, and a permanent injunction against NDS for a technical violation of the Communications Act and the California Penal Code (conduct not really disputed by NDS)—hardly a significant victory to the reviewing court. NDS, in turning away the intercept claims alleged to be worth billions, was the prevailing party in the view of the appellate court. NDS requested total fees of $23,914,983.74, a figure that Judge Carter indicated should be reduced by 25% down to $17,936,237.80 no matter what the eventual award (a discretionary reduction found reasonable by the Ninth Circuit). So, in the end, NDS got about $18 million in fees and EchoStar got nada in a dramatic swing on appeal.

     For more information on this decision, see Alison Frankel’s August 12, 2010 post at Law.com, which also contains a link to the Ninth Circuit’s memorandum decision.

Poof! On Appeal, Employer Is No Longer the Prevailing Party, and Award of $23,532.50 in Fees and Costs is Vacated

Second District, Division One Holds that a Tameny Claim Exists When Subsequent Employer Honors Putatively Invalid Restraint on Competition Entered Into Between Employee and Previous Employer – and Reversal of Attorney’s Fee Award Follows.

     A Tameny claim is a claim for wrongful termination in violation of public policy, under Tameny v. Atlantic Richfield Co., 27 Cal.3d 167 (1980).  The interesting question presented in the next case is whether an employee has a viable Tameny claim against her subsequent employer when the former employer contacts the subsequent employer, informs it that the employee signed an agreement prohibiting the employee from sales activities for 18 months, and the subsequent employer respects that agreement, even though it believes that non-compete clauses are not legally enforceable in California.  Silguero v. Creteguard, Inc., Case No. B215179 (2nd Dist., Div. 1 July 30, 2010) (certified for partial publication).  The answer:  yes.  

     Creteguard argued it was the prevailing party under FEHA, and sought over $50,000 in attorney’s fees.  The trial court awarded Creteguard $23,532.50 in fees.  However, when the Court of Appeal directed the trial court to overrule Creteguard’s demurrer, the order awarding attorney’s fees and costs was also dismissed.   This part of the opinion, though relevant to the topic of our blawg, is admittedly less gripping than the Court’s holding that a Tameny claim existed.  In fact, the discussion of attorney’s fees is not certified for publication.

     Justice Mallano authored the 3-0 opinion.

     Note to our readers:  We have added another sidebar category to our blawg:  Cases:  Employment. 

POOF!: Strikes Again In A Reversal Of A Dispute Involving A Settlement Agreement With A Fees Clause

Second District, Division 1 Follows the General Reversal Rule.

     In Steinman v. Malamed, Case Nos. B216291/B218554 (2d Dist., Div. 1 June 28, 2010) (certified for publication), the appellate court reversed a dispute over prepayment under a settlement agreement with a fees clause. (The winning party reaped a $47,250 fee award.) So, that reversal meant that winner below was no longer the prevailing party such that the fee award had to fall also. (Giles v. Horn, 100 Cal.App.4^th 206, 241 (2002).) Or, to use our own verbiage on the issue, the fee award went POOF!

Probate: $263,025 Fee Award Under Probate Code Section 17211(b) Is Reversed On Appeal

 

Fourth District, Division 3 Finds Grandchildren’s Action Did Not Contest a Trustee’s Account, So That There Was No Fee Entitlement under Section 17211(b) –Soria Tale.

     An award of attorney’s fees under California law always depends on answering a crucial preliminary question—is there a fee entitlement basis based on contract or statute. The answer to this question, either way, is pivotal. Respondents who did win fees below were unable to sustain the fee entitlement basis on appeal so that—much like a reversal of a judgment with fees—their fee award went POOF!

     The case we are reviewing comes from our own local Fourth District, Division 3, in a 3-0 opinion authored by Justice Fybel. The decision came down in Soria v. Soria, Case No. G041661 (4^th Dist., Div. 3 June 14, 2010) (certified for publication).

Landlord/Tenant: Substantial Attorney Fee Award Of $506,056.95 Goes POOF!

 

Second District, Division 1 Reverses Unlawful Detainer Judgment and Fee Award Based on Finding Five U.D. Notices Insufficient in Nature.

     The POOF! principle is one that we coined for what generally happens when a merits judgment is reversed—that reversal usually means that a related attorney’s fees award also gets reversed.

     Aside from being an excellent primer for landlords on how to frame unlawful detainer notices to pay or quit/perform covenants, Kompany, LLC v. Israyelyan, Case Nos. B210632 & B213774 (2d Dist., Div. 1 Feb. 10, 2010) (unpublished) illustrates how POOF! operates in this area. There, landlord won past-due rent and damages of over $600,000, possession of the premises, and $506,056.95 in attorney’s fees as against tenant. On appeal, tenant successfully challenged all five unlawful detainer notices, which were found either defective in form or invalid because landlord had not given tenant an opportunity to cure. As a result, the merits judgment was reversed, and—you guessed it—the attorney’s fees award also went POOF! Tenant was also awarded costs on appeal.

 

SLAPP: $24,442.50 Fee Award To City Of Pico Rivera Goes POOF Upon Reversal of SLAPP Grant

Second District, Division 1 Rules Plaintiff’s Mandate Challenge to Compel City To Award a Contract Through Competitive Bidding Not Subject to anti-SLAPP Statute.

     City of Pico Rivera likely felt pretty good after SLAPPing a plaintiff business’s mandate challenge to City’s invalidation of a contract with plaintiff and reentry into a contract with one of plaintiff’s competitors. It probably even felt better after the trial court granted plaintiff a mandatory award of $24,442.50 in attorney’s fees under the SLAPP mandatory fee-shifting statute.

     Plaintiff’s appeal resulted in a POOF!—the SLAPP grant was reversed as well as the fee award in Graffiti Protective Coatings, Inc. v. City of Pico Rivera, Case No. B213322 (2d Dist., Div. 1 Feb. 5, 2010) (certified for publication).

     Presiding Justice Mallano, writing for a likeminded 3-0 panel, determined that plaintiff’s challenge—based on the lack of competitive bidding when it reawarded the contract to a competitor—was not subject to being SLAPPed. Plaintiff was not basing liability on protected communications, but only using them as evidence in establishing that City violated the law. Plaintiff’s challenge was to illegal conduct, and the SLAPP statute should not be construed to discourage attempts to compel public entities to comply with the law. With that decision, the fee award fell also.

Arbitration: Homeowner Association’s Failure to Show it Requested Homeowner to Arbitrate Under CC&R Provision and that Homeowner Refused to Arbitrate Results in Denial of Petition to Arbitrate and Overturning of Fees Award.

Code of Civil Procedure Section 1281.2 Is Interpreted to Require a Party Seeking to Compel Arbitration to Plead and Prove a Prior Demand for Arbitration Under the Parties’ Arbitration Agreement and a Refusal to Arbitrate Thereunder.

In the next case, Homeowner Association successfully petitioned to arbitrate a dispute with a homeowner, only to have the order granting the Association’s petition overturned on appeal because it did not carefully follow the provisions of the arbitration provision.  As a consequence, the Association’s award of fees ($8,283.50) for its expense in bringing the petition to compel arbitration went . . . . poof.  Zari Mansouri v. The Superior Court of Placer County, Case No. C062366 (3d Dist. filed 1/28/10) (certified for partial publication).

The Association claimed that Mansouri extended the coverage of her patio beyond what had been approved by the Association, and requested Mansouri to submit the dispute to binding arbitration before a single arbitrator, unilaterally pre-selected by the Association.  However, the arbitration provision contained in the CC&Rs provided for three arbitrators – the first chosen by the Association, the second chosen by the homeowner, and the third chosen by the first two arbitrators.  Mansouri refused the invitation to arbitrate, but the trial court granted the Association’s petition to compel arbitration.  The Association’s petition to compel arbitration also sought attorney fees pursuant to a provision in the CC&Rs, and pursuant to fee-shifting statute Civil Code section 1354, allowing for an award of fees to the prevailing party in Association disputes involving CC&Rs.  The trial court awarded fees.

Section 1281.2 requires a petition to compel arbitration to allege, “the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such controversy [.]”  In a 3-0 decision authored by Justice Cantil-Sakauye, the Court concluded that section 1281.2 required a party seeking to compel arbitration to plead and prove a prior demand for arb itration under the parties’ arbitration agreement and a refusal to arbitrate under the agreement.  The problem here was that the offer to arbitrate with a single arbitrator was not under the terms of the arbitration provision, and thus Mansouri’s refusal to arbitrate was not a refusal to arbitrate under the agreement.  Once the Court vacated the order granting the petition to compel, the fee award also disappeared.

Moral:  There are likely to be fee-shifting consequences in homeowner association disputes resulting from a provision in the CC&Rs, or resulting from Civil Code section 1354.  If you file a petition to compel arbitration, be prepared to plead and prove a prior demand for arbitration and a refusal to arbitrate under the agreement – or else be prepared to face the consequences, which may include the loss of attorney’s fees.

  Mike and Marc know attorney Benjamin G. Shatz, an appellate specialist, who represented the Petitioner.  We send him our regards, and congratulate him on the outcome.

SLAPP: Reversal Of Denial Of SLAPP Motions Means Plaintiff’s Fee Award Goes POOF! Too

First District, Division 3 Reverses Fee Award.

     As we have seen in cases reviewed in our category “SLAPP,” prevailing defendants on SLAPP motions are entitled to mandatory reasonable attorney’s fees. However, plaintiffs can get them if the court finds that the defendant’s SLAPP motion was frivolous or intended for dilatory purposes. Code Civ. Proc., § 425.16(c).

     Terrell v. Dillingham & Murphy Case No. A125307 (1^st Dist., Div. 3 Dec. 24, 2009) (unpublished) involved a situation where plaintiff defeated a SLAPP motion brought by defendants in a malicious prosecution action and was awarded fees under the second fee granting component of section 425.16(c). However, the appellate court reversed the SLAPP denial, contending the motion should have been granted. With the reversal of the merits, so, too, went POOF! the fees award. That award was reversed in a short decision in Case No. A125307.

Fee Clause Interpretation, 998 Offers, And Routine Costs: A Three-Fer In One Case—And A Resultant POOF! Upon Reversal Of The Fee Award

Substantial Fee Award Reversed Because Fees Provision Did Not Reach Noncontract Recovery, While Rest of Trial Court’s Fee/Costs Orders Affirmed on Appeal.

     In Gaggero v. First Federal Bank of California, Case No. B207273 (2d Dist., Div. 1 Nov. 30, 2009) (unpublished), Borrower voluntarily dismissed with prejudice his equitable, statutory and breach of contract claims, on the eve of a jury trial, after the trial court held a pretrial hearing on contractual interpretation issues and indicated that the defense would be entitled to a nonsuit or directed verdict. Lender filed a costs bill and moved for an award of attorney’s fees. After determining that Lender was not entitled to fees for Borrower’s dismissal of the contract claim, the trial court did award Lender $1.5 million in fees and $22,000 in costs (after disallowing some other routine costs to Lender) for prevailing on the noncontract (primarily tort and statutory) claims. The trial court also disallowed Lender’s expert witness fees on the ground that its Code of Civil Procedure section 998 offer was not made in good faith. Both sides appealed.

     On appeal, the substantial fee/costs award went POOF!, but the lower court’s other rulings were sustained.

Family Law, Judgment Enforcement, And POOF!: Wild Set Of Facts Convinces Appellate Court To Reverse $307,145.22 Fee Recovery By Husband Against Wife’s Lead Attorneys

Fourth District, Division 3 Finds No Predicate Basis Under CCP Section 724.080 to Award Fees For Failing To Record a Judgment Satisfaction.

     Here is a Thanksgiving gift to everyone in a wild family law dispute. We knew that this one would be good when it began this way: “Family law cases, as we said in In re Marriage of Schaffer (1999) 69 Cal.App.4^th 801, 808, can sometimes ‘resemble an unruly desert caravan strung out upon the sands.’ This case is an example.” Wow.

     In Le Plastrier v. Phillips, Case No. G038306 (4^th Dist., Div. 3 Nov. 25, 2009) (unpublished), our local Fourth District, Division 3—in an opinion penned in the distinctive style of authoring Presiding Justice Sills—dealt with convoluted family law marital dissolution agreements between a very wealthy couple splitting “nice” properties in New York City and Newport Coast. What eventually happened is that husband obtained some fairly substantial compensatory awards against wife’s dissolution lead attorney based upon slander of title and failing to timely record a satisfaction of judgment after demand by husband under Code of Civil Procedure section 724.050. The part that most interests us (although the whole opinion is an interesting novelette of its own) is that husband was awarded attorney’s fees of $307,145.22 (out of a requested $399,076.72), under Code of Civil Procedure section 724.080 [the attorney’s fees provision for violating the failure to record a satisfaction of judgment provision after demand], against wife’s lead dissolution attorney. The high fee award was based on the trial court’s perception that the win on the slander of title claim was “inextricably intertwined” with the section 724.050 win so as to justify the large fee recovery. Attorney was, to say the least, dismayed, appealing the substantial fee award.

     On appeal, the Fourth District, Division 3 reversed.

     Based on the record, the appellate court could not find substantial evidence that showed husband had actually paid the judgment (relying instead on offsets that were felt to be hokey in nature) and that judgment creditor wife’s attorney had acted without just cause in failing to record a judgment satisfaction (given correspondence indicating that there might be more that husband had to pay). These two elements were predicates for imposition of liability under section 724.050. So, actually, you can characterize this decision as a POOF!—once the liability anchor went away, so too did the fee award under section 724.080. (BLOG OBSERVATION—The appellate court potentially faced having to resolve whether section 724.080 fees can even be awarded against a judgment creditor’s attorney rather than just the creditor alone; however, it expressly did not have to decide the issue given the reversal based on the fee predicate failure.)

POOF!: Plaintiff’s $900,000 Fee Award, For Now, Goes Poof! Upon Reversal of Merits Judgment

Second District, Division 7 Gives Us Another Poof! Example.

     For those of you following this blog, you know that we have a category “POOF!” This is where we survey cases that show hefty fee awards usually get reversed when the supporting merits judgment is reversed, vacated or modified. Here is another one.

     In Bioquest Venture Leasing Co.-A, N.V. v. VivoRx Autoimmune Inc., Case No. B201454 (2d Dist., Div. 7 Nov. 5, 2009) (unpublished), plaintiff obtained a $2,575,448 merits judgment against defendants, followed by an award of attorney’s fees in the amount of $900,000 (out of a requested $1,280,114.50 in fees).

     You can guess what happened on appeal. The Court of Appeal reversed the merits judgment because the lower court erroneously applied a longer Massachusetts statute of limitations rather than the correct California statute of limitations with a shorter fuse. How did that impact the fee award? You are right again, readers; the fee award challenge was rendered moot because it, too, went POOF!

     BLOG UNDERVIEW—This case also supports our Mission Statement about how attorney’s fees can be the real battle in many civil litigation cases. The requested fees by plaintiff were almost half of the ultimate award. Although litigants unquestionably have a right to go to trial, this does seem to support the old axiom that a bad settlement is always better than a good trial. Or, as Samuel Butler put it, “[i]n law, nothing is certain but the expense.” If any of you readers know the origins of the settlement axiom, let us know and we will post a follow-up on your research.

Arbitration And Void Judgments: $6,250 Postarbitration Fees Reversed To Person Who Was The Recipient Of The Benefits Of A Void Judgment

 

Second District, Division 4 Finds No Basis To Award Fees To A True Nonparty.

     We do get email feedback from readers, for which we thank you. Sometimes we can be of help, sometimes we can’t, but we do usually respond one way or the other. One reader wanted some posts on void judgments. Voila! Here you go.

     In L.A. Arena Funding, LLC v. D.N. Concrete Pumping, Inc., Case No. B210649 (2d Dist., Div. 4 Oct. 28, 2009) (unpublished), president of a misnamed business in a license dispute with a licensor over some Staples Center seats was eventually absolved in “dicta” in an arbitration award based a sole proprietorship theory, even though he was never made a party to the complaint or the arbitration. Licensor did win, however, an award against president’s business. The trial court confirmed the arbitration award, although the judgment did not mention president. No alter ego theory was ever litigated so that president was effectively a nonparty. Nevertheless, the lower court eventually granted president’s petition to confirm an award against a nonparty based on the arbitrator’s “dicta” as well as awarded him $6,250 in postarbitration attorney’s fees. Licensor appealed both the confirmation award and the fee award. 

     Guess what?

                                        Cosmic Voids.

 

Reverse POOF!: Losing Homeowners, After Modification On Appeal, Are Entitled To Pursue Recovery Of Court Costs As Prevailing Parties

 

Fifth District Determines Unlicensed Contractors May Not Offset Reimbursement/Disgorgement Claims Under Unlicensed Contractors Law.

     Here is a spin on our category POOF!, where a reversal usually means a fee/costs award goes away for the time being. This next case is a reverse POOF!, where a denial of a costs award was reversed and the winning party on appeal gets to pursue recovery of costs for prevailing as a matter of law through an appellate modification of the judgment. In other words, reverse POOF!—costs award now in play on remand.

     White v. Cridlebaugh, Case No. F053843 (5^th Dist. Oct. 20, 2009) (certified for partial publication) is must reading for any litigants involved in cases with a reimbursement/disgorgement claim against unlicensed contractors under Business and Professions Code section 7031(b). It held that unlicensed contractors cannot obtain offsets for materials and services actually provided in reimbursement claim litigation.

     For our purposes, the trial court granted JNOV on homeowners’ reimbursement claim against an unlicensed contractor, a determination that was undone when the appellate court modified the judgment to allow the award to homeowners. It also ordered that homeowners were the prevailing parties for purposes of routine costs, which the trial court denied to either side. Based on claims in trial court proceedings, homeowners will now seek to recoup costs totaling $7,764.10 (in addition to their $84,621.45 disgorgement award). Reverse POOF!

Watching the Dice in Las Vegas.  Farm Security Administration - Office of War Information Photograph Collection.  March, 1940.  Arthur Rothstein, photographer.  Library of Congress.

Blog Update: Burlage Decision On Rehearing …

No Different Result.

     On our September 2, 2009 post, we reported on the Burlage decision, which reversed confirmation of a substantial arbitration decision (complete with the overturning of a large fee award). We can now report that, on October 20, 2009, the Second District, Division 6, issued an opinion on rehearing that came to the same result, although beefed up in some areas. This will be a good decision for litigants opposing arbitration awards to cite, for now, under the right factual circumstances.

CCP 1021. 5 And Mootness: Appellate Court Determines Mootness Doctrine Does Not Preclude Review Of $78,897.95 Fee Award Against Clerk And Registrar, Reversing Fee Award Based On Merits Reversal

 

Second District, Division 5 Also Reverses Fee Award Against Clerk, Even Though Only Registrar Appealed the Merits Judgment.

     Here is an interesting one for our appellate followers. It primarily deals with a mootness issue and its interplay with the fee award in the case.

     In Carson Citizens for Reform v. Kawagoe, Case No. B209424 (2d Dist., Div. 5 Oct. 13, 2009) (certified for publication), proponents of a petition to recall a local mayor disputed the validity of requests by voters to withdraw their signatures because the requests lacked a declaration of a circulator under specialized Election Code statutory sections. Recall proponents won below, and were awarded $78,897.95 in fees under Code of Civil Procedure section 1021.5 as against both the city clerk and county registrar. Clerk and registrar both appealed the fees award (albeit on different grounds), even though clerk apparently did not appeal the merits judgment.

     The Second District, Division 5 determined that voters were entitled to withdraw their signatures. However, the appeal as to the mandate writ was moot because the recall election had previously been held. That turned matters to the thorny question of the extent to which the doctrine of mootness impacted the fee award.

     Mootness did not prevent the appellate court from reviewing the declaratory relief portion of the judgment so as to determine if recall proponents were the successful party for purposes of the fee award. (Cf. Save Our Residential Environment v. City of West Hollywood, 9 Cal.App.4^th 1745, 1750-1751 (1992); Mapstead v. Anchundo, 63 Cal.App.4^th 246, 277-279 (1998).) Because the appellate panel reversed the declaratory relief judgment, the fee award also went POOF! as to registrar (who appealed the merits).

     This left a remaining issue about whether the fee award went POOF! as to the clerk. It did. Relying on its inherent power to do “that which justice requires,” the appellate panel determined that the aspects of the judgment that affected the fee award were so intertwined that it was proper to reverse the fees order as to both registrar and clerk “in the interests of justice.”