CALIFORNIA ATTORNEY'S FEES

Allocation/Civil Rights: $645,534 Attorney’s Fees Award To Successful FEHA Plaintiff Affirmed On Appeal

 

Compensatory Award Was $560,709; 1.5 Fee Multiplier Also Justified.

     In the FEHA civil rights area, the law is intentionally designed to confer reasonable attorney’s fees upon winning civil rights plaintiffs and only impose fees against them should the case be shown as frivolous/baseless in nature. The next case illustrates how substantial fee awards will be affirmed, rebuffing governmental entity arguments that mutlipliers are not justified or that the dismal state of the public fisc should somehow prevent fee recoveries to plaintiffs.

     Rodriguez v. California Dept. of Justice, Case No. C064756 (3d Dist. Jan. 31, 2012) (unpublished) was a case where a FEHA plaintiff won damages of $560,709 and was subsequently awarded attorney’s fees as the prevailing party to the tune of $645,534 (full request award, including a 1.5 multiplier). The State DOJ was not happy and appealed the fee award.

Allocation/Interpretation Of Fees Clause: CC&R Nuisance Provision Allowed For Recoupment Of Over $600,000 In Attorney’s Fees And Costs

 

Allocation Not Necessary Where Same Facts And Evidence Involved On All Claims.

     In Klein v. Nyamathi, Case No. B228157 (2d Dist., Div. 6 Jan. 25, 2012) (unpublished), defendants were found liable to the tune of just under $400,000 for flooding their plaintiff neighbors’ property under nuisance and breach of contract theories. The trial court also awarded plaintiffs attorney’s fees of $552,655.75 and costs of $63,595.83. Defendants appealed.

     They did not get any aid. Paragraph 11 of the governing CC&Rs did have an anti-nuisance clause allowing for fee entitlement. No allocation of fees was necessary between compensable and noncompensable claims because the same facts and evidence were interrelated to all theories of recovery.

Substantiation Of Reasonableness Of Fee Request: Defense Request For FEHA “Frivolousness” Fee Recovery Denied Because Of Block Billing

 

Block Billing Vitiated Certainty of Defense Request for Allocated Fee Recovery.

     We have many, many times before warned about the dangers of block billing. Under governing California law, block billing can result in draconian results when a trial court considers a fee request--it can disregard the billing in entirety or reduce the request in its discretion. Here is one where block billing alone justified the denial of a defense FEHA request.

     In Radford v. Vanderspek, Case Nos. A129524/A129762 (1st Dist., Div. 5 Jan. 9, 2012) (unpublished), the defense moved for attorney’s fees after prevailing on a FEHA retaliatory claim--arguing it was frivolous and allowed for allocated fees under Government Code section 12965(b) (a fee-shifting statute allowing the defense to recover for frivolous FEHA claims).

     The trial court denied fee recovery to the defense, which was affirmed on appeal. The reason was simple and one we have cautioned against many times in the past: block billing. The defense engaged in block billing, so that the lower court properly denied the request alone because the defense could not establish with certainty the allocated time spent defending against the frivolous claim.

Allocation/Appellate Sanctions/Special Fee Shifting Statute: Fourth District, Division 3 Sanctions Plaintiffs’ Attorneys For CRC Appeals Violations And Losing Derivative Plaintiffs Are Hit With Substantial Fee Awards Under Civil Code Section 1717

 

Case #1: Appellate Sanctions Are Imposed.

     In Alexandros v. Cole, Case No. G043715 (4th Dist., Div. 3 Dec. 30, 2011) (unpublished), plaintiffs lost a minority shareholder breach-of-fiduciary duty suit against various defendants and then lost their appeal. However, the appellate court also awarded $10,000 (out of a requested $30,000) in sanctions to defendants because plaintiffs’ attorneys admitted violating California Rules of Court relating to appellate practice--including irrelevant documents in the appellants’ appendices and making numerous unsupported factual statements without record citations. [BLOG OBSERVATION--Co-contributor Mike has litigated securities cases on the defense side against the attorneys who were sanctioned.]

Case #2: Brusso Allows for Defendants to Obtain Section 1717 Fees Against Nonsignatory Plaintiffs in Derivative Actions.

     In our January 29, 2009 post on West Hill Farms v. RCO Ag Credit (a nonpublished Fifth District decision), we learned that winning defendants in shareholder derivative lawsuits are usually limited to the amount of a posted Corporations Code section 800 bond (capped at $50,000). However, West Hill Farms did observe that there were other bases for an award that is not so capped--namely, Brusso v. Running Springs Country Club, Inc., 228 Cal.App.3d 92, 107-108 (1991), where a court determined that a successful defendant may collect fees from plaintiff shareholders under Civil Code section 1717 if derivative claims are based on a contract containing a fees clause. Well, Brusso was front and center in the companion case to the one we just discussed, with that case being Conrad v. KOR Electronics, Inc., Case Nos. G044457/G044682 (4th Dist., Div. 3 Dec. 30, 2011) (unpublished).

     Conrad involved nonsignatory plaintiff shareholders who lost a derivative suit against numerous defendants (KOR shareholders, KOR directors, and KOR), with the lower court awarding two adverse fees awards against one plaintiff broken down as $747,012 to KOR directors/KOR and $919,224 to two shareholders. Even though the losing plaintiff was a nonsignatory shareholder to repurchase/investor agreements with a fees clause, the lower court determined that Brusso allowed the recovery.

     On the whole, the fee awards were affirmed on appeal. Acting Presiding Justice Rylaarsdam, who wrote this and the prior companion opinion on behalf of 3-0 panels, found that the derivative action did seek to rescind the contracts and that Brusso was still good law. (Brusso is must reading in this area, based not only on section 1717 but on the inequity of allowing nonsignatory derivative plaintiffs to recover fees under the substantial benefit doctrine unless a similar substantial benefit through fee recovery was conferred upon the winning defendants under 1717 reciprocity principles.) However, the fee award in favor of Cole had to be reversed because he was not a party to the contract and was not an intervenor defending on KOR’s behalf. Plaintiff also correctly challenged the fees awarded to KOR, because derivative plaintiff cannot be assigned a corporation’s liability to pay to itself the corporation’s own attorney’s fees and any corporate indemnification duty to directors for their fees is separate from recovery of fees against a derivative litigant. Fortuitously, the trial court had apportioned fees between Cole, KOR and another director entitled to fees so that this formula allowed the appellate court the good fortune to reduce the fees to the other director down to $249,004 (down from $747,012). With that reduction, the remainder of the fee awards were sustained. [BLOG OBSERVATION--In many federal and state securities suits, plaintiffs do not face fee exposure absent frivolous conduct because there are no fee-shifting bases. However, if there is a fees clause involved in a derivative context, plaintiffs attorneys are well advised to advise their clients that there well might be exposure under Brusso in California derivative litigation.]

Allocation/Civil Rights: Successor For Elderly Patient Entitled to Mandatory Fee Award In Suit Brought Under California’s Patient Bill Of Rights

 

$305,000 Fee Award Sustained For Violation Even Though No Damages Awarded.

     Anderson v. AG Seal Beach, Case No. B228683 (2d Dist., Div. 7 Dec. 14, 2011) (unpublished) is a case where a successor won a $171,000 jury verdict for her mother’s alleged skilled nursing home injuries, even though the jury did not enter any specified damages but did determine that defendant violated California’s Patient Bill of Rights by apparently failing to provide mother with requisite personal hygiene and to prevent bedsores. Subsequently, the lower court granted mother’s successor attorney’s fees of $305,000 under the Patient Bill of Rights fee-shifting provision (Health & Safety Code section 1430(b)), even though the fee request was much more--about $600,000 in fees.

     Defendant appealed the fee award, but was rebuffed in its bid to overturn the award.

     Section 1430(b) is a mandatory fee-shifting statute, only requiring a violation. So, the failure of the jury to award a specific monetary amount was not fatal as long as a violation was found (as the jury did in a special verdict). Defendant argued that the work should have been apportioned between the section 1430 claim and other negligence, elder abuse, and wrongful death claims. However, there was a lot of factual overlap such that the claims were intertwined, not requiring any allocation. Finally, the $450 hourly rate for lead trial counsel and $275 hourly rate for an associate were reasonable for the L.A. venue where the trial occurred.

Allocation: Apportionment Was A Correct Call, But Awarding $1,050 Out Of $179,900 Request Was Erroneous

 

Lower Court Abused Discretion in How Fees Were Apportioned.

     Although apportionment of requested fees between compensable and non-compensable claims is a discretionary call that is hard to overturn on appeal, don’t give up. The manner in which the trial court does apportion can still lead to a reversal, as Hafen v. Nielsen, Case No. G044204 (4th Dist., Div. 3 Nov. 28, 2011) (unpublished) demonstrates.

     In this 3-0 decision authored by Justice Aronson, defendant appealed a fee award of $1,050 out of a $179,900 request in successfully defending against plaintiffs’ action to enforce two unrecorded view easements--with there being a fees clause in one of the agreements but not the other. The lower court apportioned fee recovery to the fee clause-bearing agreement. Defendant was not happy with the low apportionment.

     The appellate court reversed. Apportionment was a correct call to segregate fees incurred on work under the fee clause-bearing agreement from work on non-compensable claims (including those related to the agreement without the fees clause). However, the lower court abused its discretion in how it apportioned fees. There indeed were some common issues under both agreements that were not properly credited. Because plaintiffs sought a declaration to enforce the fee-bearing agreement, the action was “on the contract” under Civil Code section 1717 rather than just being equitable in nature. Reversed for a new apportionment determination.

     Blawg co-contributor Marc Alexander represented Mr. Meacher and Mr. Carlson in an earlier phase of this litigation among several neighbors.

Special Fee Shifting Statute/Section 1717/Section 998/Allocation: Fee Awards Do Not Have To Be Proportional To Damages Award

 

2d Dist., Division 6 So Holds In Two Unpublished Opinions, Besides Facing Other Issues.

Weiss v. Cope, Case No. B24970 (2d Dist., Div. 6 Nov. 22, 2010) (unpublished)

     In this one, plaintiff rejected defendant’s 998 offer. However, plaintiff’s total judgment--the sum of the jury award and $100,000 in attorney’s fees awarded by the trial court pursuant to Code of Civil Procedure section 1021.4 (a fee-shifting statute allowing the trial court to award fees to a prevailing party in an action against a defendant based upon defendant’s commission of a felony)--beat the 998 offer and made plaintiff the prevailing party, with the fee award putting plaintiff over the top. This meant that defendant was not entitled to recover post-offer costs. (Steele v. Jensen Instrument Co., 59 Cal.App.4th 326, 330 (1997).) The defense appeal of the fee award was unsuccessful, because (1) fees do not need to be proportionate to damages (here, $100,000 in fees versus $49,000 in damages); (2) the fee award was reasonable (the trial court substantially cut down the $242,000 fee request); and (3) the section 1021.4 fee entitlement statute was remedial and not punitive in nature (Marron v. Superior Court, 108 Cal.App.4th 1045, 1065 (2003)).

Asphalt Professionals, Inc. v. T.O. IX, LLC, Case No. B230927 (2d Dist., Div. 6 Nov. 22, 2011) (unpublished)

     This one began with a bang: “This case is before us once again. It teaches a lesson: A surfeit of litigation over a relatively modest damage claim can produce an abundance of attorney’s fees far in excess of that claimed and payable by the losing side.”

     Defendant appealed a $1.65 million fee award (out of a requested $1,682,195) in a breach of construction contract case where trial court found defendant had no legitimate defense for not paying and used six different law firms during the course of the case. The fee award was sustained, rejecting these arguments otherwise: (1) no apportionment was required because the contract, fraud, and alter ego claims were all interrelated; (2) it was appropriate for the trial court to award interim fees in the bifurcated first phase of the case (Sundance v. Municipal Court, 192 Cal.App.3d 268, 271 (1987)); (3) proportionality is not required between fees and the damages award (with plaintiff obtaining a $320,000 substantial damages award--see Harman v. City and County of San Francisco, 158 Cal.App.4th 407, 421 (2007)); (4) the hourly rate used in the lodestar analysis was commensurate with those rates cited in the National Law Journal annual surveys; and (5) the fees were not excessive because the case was vigorously contested, with the defense spending about the same as the plaintiff in litigating the case.

     Both 3-0 decisions were authored with panache by Presiding Justice Gilbert.

Allocation: $95,000 Fee Award To Prevailing Community Services District Affirmed On Appeal

 

Trial Court Did Reduce For Noncontract Work, But Award Justified Nonetheless.

     In JKB Homes Norcal, Inc. v. Denair Community Services District, Case No. F061922 (5th Dist. Nov. 10, 2011) (unpublished), District won an oral reimbursement dispute over sewer services involving an annexation agreement, with developer on the hook because there was a fees clause in the agreement. District sought to recoup $112,373.23 in fees, but was awarded $95,000 by the trial court.

     Developer was not persuasive in surmounting the abuse of discretion standard on appeal. Because all claims were interrelated, no discretionary apportionment between contract and noncontract claims had to be made. Nevertheless, the trial court did reduce the award for noncontract work, so in that case the award could hardly be deemed erroneous.

Employment/Special Fee Shifting Statute (Pen. Code, § 502)/Reasonableness Of Fees/Allocation/Substantiation Of Fees: $980,373.50 Fee Award To Ex-Employee Not Paid All His Promised Commissions And Subject To Personal Computer Tampering Affirmed On App

 

Appellate Court Found Lower Court Correct to View L.A. Attorneys As Within San Bernardino Venue and Necessary Given Earlier Misfortunes with Local Attorneys.

     Trealoff v. Forest River, Inc., Case No. E048818 (4th Dist., Div. 2 Oct. 6, 2011) (unpublished) was a case where an ex-employee won sizable jury verdicts, including punitive damages, for not being paid all of his promised commissions (which has fee-shifting recourse under the Labor Code) and for being the victim of employee computer tampering (which allows a discretionary award of fees under Penal Code section 502). On top of all that, he was awarded $980,373.50 (out of a requested $1,624,301) in attorney’s fees to some of prevailing party’s attorneys. Both sides appealed, with defendants contesting the award and plaintiff contending the punitive damages award should not have been reduced by the trial court (the latter contention failing on appeal).

Sanctions: Attorney’s Fees Requested Under CCP § 128.7 Denied Where Motion Not Clearly Targeted And Appeal Was Not Frivolous In Nature

 

Remittitur Cost Apportionment Issue Also Considered.

     The First District, Division 4, in a case it had seen before a couple of times (with the case eventually going to the state supreme court), had decided that an in pro per attorney could not collect an award of attorney’s fees in connection with CCP § 128.7 sanctions--a determination affirmed by the supreme court. A remittitur issued awarding costs to the successful appellant (who was a litigant’s attorney), but the winning attorney defending against the fee request wanted to recover fees as well under section 128.7.

     That request was denied by the lower court and affirmed in Musaelian v. Adams, Case No. A126240 (1st Dist., Div. 4 June 29, 2011) (unpublished).

     The first problem was that the moving party failed to describe the sanction being sought or name the parties to whom it was addressed. That was reason enough to deny the motion. Also, section 128.7 fees are only awarded to the prevailing party “if warranted.” Although finding no California case discussing this language, the appellate court located plenty of F.R.Civ.P. Rule 11 cases holding that fees incurred in defending a Rule 11 motion are infrequently granted unless the sanction was clearly frivolous. (See, e.g., E. Gluck Corp. v. Rothenhaus, 252 F.R.D. 175, 183 (S.D.N.Y. 2008); Richelson v. Yost, 738 F.Supp.2d 589, 602 (E.D.Pa. 2010); Haniotakis v. Nassan (In re Zion), 727 F.Supp.2d 388, 413 (W.D.Pa. 2010); G-I Holdings, Inc. v. Baron & Budd, 2002 U.S.Dist. LEXIS 15443 (S.D.N.Y. Aug. 21, 2002).)

     On the apportionment of costs on appeal between certain parties, the appellate court observed that this task generally resides only in the Court of Appeal. (Ramirez v. St. Paul Fire & Marine Ins. Co., 35 Cal.App.4th 473, 477-479 (1995).) However, the trial court did have authority to interpret the appellate remittitur, an apportionment interpretation upheld in this instance.

     Also, for you appellate practitioners out there, the ending discussion centered on whether the prior winning appellant seeking costs should recover interest on a loan used to fund a cash deposit for the appellate undertaking. It surveyed the tension in different cases (with a similar issue up for review in Rossa v. D.L. Falk Construction, S183523), but decided appellant had failed to meet his evidentiary burden to obtain entitlement to recovery of the claimed costs.

Allocation/Multiplier: Winning Overtime/Meal Break Plaintiff Reaps $210,625.75 In Fees

 

1.5 Multiplier Sustained by Appellate Court, Rejecting Application of Federal Perdue Analysis.

     Well, well. This next unpublished decision is interesting on a couple of fronts. First, it illustrates that courts will not hesitate to vindicate wage/hour violations through an award of fees enhanced by a multiplier. Second, it also demonstrates that state courts will not kowtow to federal decisions that are not seen as binding in areas where there is a strong state policy encouraging fee shifting in favors of a certain class of litigants (in this case, employees proving wage/hour violations).

Kowtowing in a court.  Source:  Wikipedia.

     Good Nite Inn Management, Inc. v. Ahmed, Case No. A129488 (1st Dist., Div 2 June 29, 2011) (unpublished) is the case.

     There, a plaintiff seeking regress under California wage/hour violation statutes prevailed (garnering damages of $26,590.66). She then sought substantial fees for both defending against employer claims and litigating her prosecuting her own wage/hour claims. The trial court granted her all but 71.5 hours of her attorney’s time that was allocated to different work, but applied a 1.5 multiplier--resulting in a grand total fee award of $210,625.75.

     Disgrunted employer appealed; disgruntled employer was not any less grumpy after it lost the appeal.

     Employer was swimming upstream on the allocation issue, which is discretionary anyway, because the lower court excised 71.5 hours of work on other tasks. Hard to get over? You bet, and so ruled the appellate court, given that the other work was “inextricably intertwined.” Employer’s citation to unique allocation issues applicable to insurance bad faith cases (Cassim/Brandt) and Cartwright cases (Carver v. Chevron, U.S.A., Inc., 119 Cal.App.4th 498 (2004)) did not strike a receptive chord with the court.

     The 1.5 multiplier issue brought us to an interesting point. Employer relied on the U.S. Supreme Court’s decision in Perdue v. Kenny A., 130 S.Ct. 1662 (2010) for the proposition that the lodestar usually gets it done so multiplier enhancements are taboo. Here is the response: “[Employer’s] reliance on federal authority, however, is misplaced. Our state courts have observed that ‘an upward or downward adjustment from the lodestar figure will be far more common under California law than under federal law.’” (Slip Opn., p. 17.) Yipee, we would guess, would be the response of a lot of state practitioners on this particular topic.

Specific Fee Shifting Statute/Allocation: Plaintiff Winning A Brown Act and Public Records Dispute Received $20,000 In Fees

Request For $571,495.60 in Fees Rebuffed; Fifth District Gives Great Review of Fee Standards For Both Trial and Appellate Levels.

     This next case is an interesting sequel to an on-going dispute by which a plaintiff prevailed against the Orosi Public Utility District for Brown Act and California Public Records Act violations, with the first scheme carrying a discretionary fee shifting provision and the latter scheme carrying a mandatory fee shifting provision. After dismissing a deadline to file appellate fees in connection with a prior appeal, plaintiff claimed entitlement to a “remarkable” (that is the appellate court’s word, not ours) $571,495.60 in attorney’s fees (and an increased 2.0-plus multiplier). The trial court, after denying appellate attorney’s fees due to the blown deadline, pared down the hourly rate request, eliminated time not related to the Brown Act/Public Records Act claims, and reduced some excessive time, then applied a 1.25 multiplier as an enhancement, and awarded a combined $20,000 fee award for both causes of action.

     Plaintiff’s appeal of this award in Galbiso v. Orosi Public Utility Dist., Case No. F059461 (5th Dist. June 15, 2011) (unpublished) was not successful.

Allocation: Trial Court Did Not Abuse Its Discretion By Not Apportioning Out Work on Interrelated Claims When Fashioning Fee Award

$239,649.87 Fee Award Sustained on Appeal in Civil Rights Case.

     Defendants were found by jurors to have inflicted emotional distress on plaintiff, and one defendant was found to have violated the Ralph Civil Rights Act of 1976 (Civ. Code, § 51.7) by committing/threatening violence based on plaintiff’s gender. Because the Ralph Civil Rights Act has a fee-shifting provision, plaintiff sought to recover fees of $251,136.84. The lower court awarded plaintiff fees of $239,649.84, excluding time on some abandoned and unsuccessful work on certain activities.

     In Hern v. McEllen, Case No. A125358 (1st Dist., Div. 5 May 27, 2011) (unpublished), losing defendant in the fee proceeding suggested that the award had to be reversed because the lower court failed to apportion out time on another unsuccessful claim.

     This one lost. Although apportionment of compensable versus noncompensable time can be done in the trial court’s discretion, it does not have to be done where the work is found to be interrelated on the two claims or the facts were “inextricably intertwined.” That was the case here between the two claims, such that the trial court did not abuse its discretion in failing to make any further allocation--its decision was not “clearly wrong.”

     Click on the image above to learn more about the world’s largest ball of twine.  For a video and the lyrics to “Biggest Ball of Twine in Minnesota,” click here.

Section 1717: Broadly Worded Fee Clause Meant Fees Had To Be Apportioned When Lease Only Signed By One Of The Defendants

 

Wild Landlord-Tenant Dispute Gives Rise to Reversal of $212,685 Fee Award Against Both Signing and Nonsigning Defendants.

     Robertson v. Sapir, Case No. B224458 (2d Dist., Div. 3 May 24, 2011) (unpublished) was a “wild” landlord-tenant dispute including reported accusations of landlord’s brother (a tenant in a boarding room type of arrangement) bothering a nearby female plaintiff tenant, calling her a “French bitch”, smearing feces on a car windshield of another tenant, and chasing another tenant’s boyfriend on a couple of occasions at least. This behavior did reap plaintiff tenants respective favorable jury verdicts ranging from $3,900-$8,000 against various of the defendants on divergent tort and inhabitability claims. However, to show you how fees are the tail that wag the litigation dog, the lower court awarded plaintiffs’ counsel postjudgment attorney’s fees of $212,685 (100% of the requests) as against a lease signatory defendant and signatory’s father, with father as agent signing the lease on behalf of the named signatory. Both appealed the fee award.

     The appellate court reversed on several grounds. First, the record showed that father signed the lease on behalf of the signatory, who was bound as a principal for fee exposure based on a broadly worded fees clause encompassing both tort and contract claims. However, the agent himself--even if his conduct was wrongful--could only be liable for tort rather than contractually-based exposure. That meant that father was off the hook for the fee award. Second, with respect to the principal signatory, fees needed to be apportioned because a lot of the work related to the brother’s actions rather than signatory’s conduct, making a substantial fee award for all work an unfair “hit” for the signatory alone. Also, there were 998 offers that needed to be reevaluated after the reversal. Finally, the award to counsel for plaintiffs was unwarranted because the attorneys were not parties to the lease, with the appellate court unaware of any authority for making such an award pursuant to Civil Code section 1717.

Indemnity/Allocation: $235,000 Fee Award On Implied Indemnity Claim Reversed And Remanded

Failure to Apportion Between Defense and Cross-Complaint Prosecution Work Was the Flaw in the Fee Award.

     Depending on the fee-entitlement statute, apportionment may be a mandatory exercise. Although it usually is discretionary and may not be needed where work was intertwined, these principles do not necessarily apply to all fee situations. Sheridan v. Fladeboe Volkswagen, Inc., Case Nos. G043375/G043706 (4th Dist., Div. 3 Apr. 29, 2011) (unpublished), a 3-0 opinion authored by Acting Presiding Justice Rylaarsdam, illustrates this point well.

     There, plaintiff won a Song-Beverly Consumer Warranty Act case against defendant Fladeboe. Co-defendant/cross-complaint VW won a summary judgment against plaintiff and was awarded fees of over $235,000 by the trial court as against Fladeboe under its indemnity cross-complaint. This fee award was reversed and remanded for recalculation.

     No one denied that VW’s implied indemnity cross-claim win qualified it to an award of fees under Code of Civil Procedure section 1021.6. However, this section only allows an award of fees “in connection with defending against plaintiff’s complaint,” not for time expended in prosecuting the cross-complaint. The basis for reversal and remand was that the fee request invoices commingled defense and cross-complaint prosecution work such that the fee matter had to be reconsidered after proper excising the cross-complaint prosecution work.

     BLOG UNDERVIEW--We recently learned that Presiding Justice David Sills has announced his retirement from our local Santa Ana appellate court, effective June 1 of this year if the report we read is correct. Presiding Justice Sills has served Orange County well for a number of years in a number of roles, namely, former mayor of Irvine, an Orange County Superior Court judge, and 4/3 appellate justice. We wish you the best as you spend time on other things after finishing your distinguished public service.

Civil Rights/Lodestar/Allocation: Appellate Court Affirms Decision To Award $1,000 Winning Plaintiffs Fees Of $60,400 Out Of A Requested $566,510

 

Trial Court Had Discretion to Reduce Lodestar, Parsing Out Unsuccessful Claim Fee Work.

     This next case describes the discretion allowed trial courts in calculating the lodestar as well as a nice job by the defense in mitigating fee exposure by providing the trial court with a basis for awarding fees only on successful claim work.

     In Lorenzen v. Vermont Restaurant, Case No. B219625 (2d Dist., Div. 5 Apr. 25, 2011) (unpublished), plaintiffs prevailed on some, but not all, FEHA claims against defendant former employers. Plaintiffs only garnered $1,000 in damages on their harassment claims, but sought to recover fees of $566,510 (lodestar of $283,255 augmented by a 2 multiplier). Defendants filed papers in opposition to the fee request showing that 75-80% of plaintiffs’ time was expended on unsuccessful claims, further arguing that plaintiffs should only be awarded $8,693.50 using a .15 negative multiplier. After two hearings, the trial court award plaintiffs $60,400 in fees, finding the reasonable fee for all work was $181,200 but that only one-third of that amount should be awarded as the lodestar given the time spent on unsuccessful claims (as shown by the pleadings and trial proof). Plaintiffs appealed, although unsuccessfully as you shall see.

Special Fee Shifting Statute: $74,402.35 Costs Award In Carrier Apportionment Battle Affirmed On Appeal

 

Carmack Act Apportionment Provision Was At Issue.

     Here is one that involves two carriers being sued and then battling it out for apportionment of responsibility and costs. The Carmack Act, 49 U.S.C. § 14706(b), has a specific provision allowing for apportionment of costs between carriers, including reasonable expenses incurred in defending an action against the property owner (or insurer of property owner), with a carrier held initially liable being able to recover from the carrier in control of the damaged/lost shipment. Section 14706(b) was squarely at issue in the next case we look at, Pacific Indemnity Co. v. Atlas Van Lines, Inc., et al., Case Nos. 09-17824/10-16260 (9th Cir. Apr. 20, 2011) (for publication).

Allocation/Appealability/Homeowner Associations/Reasonableness Of Fees: $190,065 Fee Award Affirmed in “Acrid Dispute Between Neighbors” Under CC&Rs

Trial Court’s Significant Reductions in Requested Fees Obviated Need to Apportion With Mathematical Precision.

     The next case illustrates a result we see often in appellate decisions when apportionment of fees is necessary as between compensable and noncompensable claims: a lower court’s reduction of fee requests obviates the need to perform a CPA-like audit of billings when undertaking apportionment activities.

     In our prior post of June 25, 2009, we explored Harm v. Hetman (Harm II), a case where the Fourth District, Division 3 reversed the denial of a $201,150 fee request by plaintiffs in “an acrid dispute between neighbors” in an HOA. The reversal occurred based upon an earlier appeal in which certain ruling reversals meant that plaintiffs were prevailing parties under the CC&Rs, Civil Code section 1717, and Civil Code section 1354. Now, this “acrid dispute” apparently has ended for now with the third appeal affirming the lower court’s award of fees to plaintiffs upon remand.

     Harm v. Hetman, Case No. G043206 (4th Dist., Div. 3 Mar. 16, 2011) (unpublished) (Harm III) involved an appeal from the lower court’s decision to award plaintiffs the total sum of $190,065 in attorney’s fees, broken down as $75,754 for trial work and $114,311 for appellate work. Defendant Hetman appealed.

Special Fee Shifting Statute: Chino Municipal Ordinance’s Fee Provision Supported Substantial Fee Award Against Verizon

 

$185,674.22 Fee Award and $12,829 Costs Award Sustained on Appeal.

     Chino Municipal Code section 12.02.030 provides that any applicant (usually a telecommunications company obtaining an encroachment permit) failing to restore city or private property to the like or better condition after any encroachment damages “shall be liable for all costs to restore same and for reasonable attorneys fees and expert witness fees in the event litigation and other legal action is required to collect such costs.” That provision came to haunt Verizon in the next case we discuss.

     Cosolo v. Verizon California, Inc., Case No. E049017 (4th Dist., Div. 2 Mar. 14, 2011) (unpublished) was a situation where a sub-subcontractor of Verizon punctured some lateral and city main sewer lines resulting in raw sewage flooding into plaintiff’s homes. After some discovery intensive litigation between plaintiffs, Verizon, Verizon’s subcontractors, and the city, the parties entered into a settlement agreement reserving the lower court’s jurisdiction to rule on the issue of attorney’s fees and costs. Rule it did, awarding plaintiffs $185,674.22 in fees and $12,829 in costs, prompting an appeal by Verizon.

    

Allocation: To Apportion Or Not To Apportion . . . . That Is The Question

If Trial Court Determines Common Facts Overlap Compensable and Noncompensable Claims for Fee Recovery, Usually Treated as Discretionary Exercise Upon Appellate Review.

     In Conservatorship of McQueen (Taye v. Drumgoole), Case No. A126825 (1st Dist., Div. 4 Mar. 14, 2011) (unpublished), family attorney and other defendants were found liable for financial elder abuse, concealment, conversion, breach of fiduciary duty, and negligence, with the “sticker shock” really setting in when the lower court awarded plaintiff conservator $320,748.25 in attorney’s fees after the $99,900 compensatory damages award. Family attorney appealed, but could not really attack the fee entitlement basis--after all, Welfare and Institutions Code section 15657.5(a) does allow recovery for reasonable attorney’s fees and costs as well as reasonable conservator fees to a prevailing plaintiff. So, she argued that the trial court should have apportioned fees between compensable claims and noncompensable claims.

Civil Rights/Allocation: Nonfrivolous Federal Civil Right Claim Fees Awarded As Part Of Anti-SLAPP Fee Recovery Would Not Withstand Appellate Scrutiny

Ninth Circuit Reverses and Remands To Craft Fee Recovery Only for anti-SLAPP Work.

     In Fox v. Vice, No. 10-114 (U.S. Sup. Ct., cert. granted, 131 S. Ct. 505 [Nov. 1, 2010]), the United States Supreme Court will consider whether attorney’s fees can be awarded for intertwined work when the civil rights claims are determined to be frivolous and fee-worthy in nature. The next case deals with a somewhat related, yet different, issue: can a defendant collect fees for nonfrivolous civil rights work under an anti-SLAPP motion successful on a different claim?

 

     The answer is no, according to the Ninth Circuit in Fabbrini v. City of Dunsmuir, Case No. 09-16292 (9th Cir. Feb. 11, 2011) (for publication).

     The problem with the district judge’s award was not in allowing recovery for the anti-SLAPP win on a defamation claim. However, the district judge also awarded fees to the defense even though plaintiff’s federal civil rights claim was never found to be nonfrivolous in nature. (Fees are only awardable to defendants in a civil rights suit if the § 1983 claim is found to be frivolous. See Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 421 (1978).) The fee time work on the civil rights claim could not be added to the anti-SLAPP recoery unless there was a proper finding the civil rights claim was frivolous in nature. Also, the district court erred in its award of time for “fees on fees,” especially given that some of the entries did not relate to fee motion preparation. Reversed and remanded.

Homeowners Association/Standard Of Review/Allocation/Substantiation of Fees: Substantial Cross-Fee Awards Affirmed Across The Board In Acrimonious Tree View Dispute

Second District, Division 1 Finds No Abuse of Discretion in Various Fee Awards.

     It is amazing how ocean views, privacy, and trees all seem to be in the mix of many neighbor/homeowner association disputes. The next one is no exception, producing substantial cross-fee awards under Civil Code section 1354 that probably only made the lawyers happy participants in the overall controversy.

     Murrell v. Rollings Hill Community Assn., Case Nos. B202019/204632 (2d Dist., Div. 1 Jan. 31, 2011) (unpublished) opens with this nice summarizing paragraph: “A contentious and costly feud over trees and a neighbor’s view has spawned multiple legal actions, cross-actions, five appeals and two cross-appeals. George and Anne-Merelie Murrell and Leonard and Linda Fuller are neighbors on adjacent residential lots overlooking the Pacific Ocean in the city of Rolling Hills. To obtain an unobstructed ocean view, the Fullers wanted certain trees on ‘the Murrell property’ trimmed or removed. The Murrells, who sought to preserve privacy, resisted. So began the decade-plus dispute now before this court [which also included the Rolling Hills Community Association and a volunteer HOA director].”

     Boy sitting on pine tree.  Maginel Wright Barney.  Library of Congress.

     Except for the director, the Murrells, Fullers, and HOA got mixed results, but results that a referee and trial court could parse out to make the following fee awards: (1) $399,930.88 (out of a requested $647,974.25) in fees to the Murrells and against HOA, but with HOA obtaining $159,148.84 (out of a requested $237,053) in fees against Murrells on a pine tree claim; and (2) $333,525 (out of a requested $488,906.69) in fees to the Fullers and against the Murrells. The Murrells and HOA appealed the various fee awards and various merits rulings.

     Presiding Justice Mallano, in a 63 page unpublished opinion on behalf of a 2-1 panel, affirmed across the board. (The dissenting justice did not agree with some merits adjudications and one particular fee award.)

     The $159,148.84 fee award to HOA did not surmount the deferential abuse of discretion review standard. (PLCM Group, Inc. v. Drexler, 22 Cal.4th 1084, 1095 (2000) [one of our Leading Cases].) Although a different judge decided a fee request than the judge presiding over germane matters, the Murrells failed to cite authority as to why de novo review was warranted under the circumstances The trial court even apportioned out noncompensable work from compensable work, with the Murrells failing to pinpoint what aspects of the apportionment were wrong. A moving declaration authenticating time records was competent substantiation of the work expended, and a $250 hourly rate for one associate was found to be proper. Other challenges to generalized charges were forfeited by the Murrells’ failure to provide citations to the specifics.

     The Murrells were not any more successful on their challenges to the $333,525 fee award to the Fullers and to the inadequacy of the $399,930.88 fee award to them. A referee was appointed and made proper calculations of what fees should be recovered by each side. Some hourly rates were pared down correctly by the referee because the moving party failed to present evidence of what attorneys were paid in the downtown L.A. market. The apportionment used by the referee and trial court, which is applicable to section 1354 fee awards, was no abuse of discretion given the overlapping nature of the various claims. Again, the generalized attacks of reasonableness by the Murrells did not meet their burden of challenging the fee award to the Fullers. (Farber v. Bay View Terrace Homeowners Assn., 141 Cal.App.4th 1007, 1015-1016 (2006).)

     Finally, on a costs issue, the appellate court majority ruled that Civil Code section 1354 does not allow recovery of costs not authorized under Code of Civil Procedure section 1032, such as phone charges, copying charges, and expert witness expenses.

     Putting into perspective the social utility of $400,000 in attorney’s fees spent on a neighbor tree view dispute, we note in passing that $400,000 will buy 26,667 doses of flu vaccine at $15/dose, 6,667 doses of malaria vaccine, at $60/dose, and 50,000 meals on wheels, at $8/meal; and, that in 2009, median household income in the United States was $49,777, an amount that has since declined.

Allocation: None Necessary In Financial Elder Abuse Case Where Issues Were Intertwined

First District, Division 4 Sustains $320,748.25 Fee Award to Plaintiff Conservator.

     Plaintiff conservator won a $99,900 compensatory jury verdict against certain defendants, but only one defendant was found liable under the elder abuse statute containing a mandatory fee shifting provision against unsuccessful defendants. (Welf. & Inst. Code, § 15657.5(a).) Later, the trial court ordered the same defendant liable for elder abuse to pay attorney’s fees of $320,748.25. Defendant appealed the fee award.

     It was affirmed in Conservatorship of the Estate of Ida McQueen, Case No A126825 (1st Dist., Div. 4 Jan. 14, 2011) (certified for partial publication on other issues, fee discussion not published).

     Entitlement was not an issue, once the appellate court rebuffed merit challenges to the elder abuse verdict. Appealing defendant argued that much of the time spent by the fee requesting attorneys was expended on other defendants and other causes of action.

     Allocation or apportionment, however, is a matter for a trial court’s discretion, especially where a common core of facts or legal theories are involved--as it was in the instant case. (Thompson Pacific Construction, Inc. v. City of Sunnyvale, 155 Cal.App.4th 525, 555 (2007); Drouin v. Fleetwood Enterprises, 163 Cal.App.3d 486, 493 (1985).) The lower court did not err in refusing to allocate given that the various claims were “factually intertwined,” making it impracticable to separate the conjoined activities into compensable or noncompensable time units. (Fed-Mart Corp. v. Pell Enterprises, Inc., 111 Cal.App.3d 215, 227 (1980).)

Fee Clause Interpretation: Broadly Worded Fee Clause Relating To Any Initiated Litigation In Connection With Obstruction Justified Substantial Fee Award Against Losing Party

 

Second District, Division 6 Affirms $210,697.50 Fee Award.

     Judges, as much as anyone, do try to be pragmatic in awarding fees, which are frequently based on equitable considerations. Here is one illustrating that principle, even though the breadth of the fees clause and intertwinement of issues well supported the result legally.

     In Zuiderweg v. Hoffman, Case No. B214083 (2d Dist., Div. 6 Dec. 8, 2010) (unpublished), property owner Hoffman, who was subject to several easements favoring dominant tenements owned by respondents, lost a jury trial to respondents, who were awarded $390,250 in compensatory damages. Also, the lower court later awarded one of the respondents $210,697.50 in attorney’s fees based on a fees clause in a stipulated prior judgment that bound the parties. Losing property owner appealed.

     The Second District, Division 6, in a 3-0 decision authored by Justice Perren, found that the fees clause in the stipulated judgment was broad in nature. Although only triggered by initiated litigation, it did allow the lower court to consider “all the circumstances” in awarding fees “result[ing] from the act of removing an obstruction of the access roadway . . . .” Not only did this clause allow consideration of broad equitable considerations, the lower court correctly determined that the obstruction issues were intertwined with the other issues in the litigation so apportionment was not required. The lower court’s full award of the requested fees was no abuse of discretion here.

Allocation And Costs: “Scorched Earth” Tactics Can Cost You In The Fee/Costs Battle

Second District, Division 6 Finds No Unreasonableness in Trial Court Awards.

     “Scorched earth” is a frequently bandied phrase in litigation. However, if a trial court believes that you as a litigant have engaged in it, this strategy may cost you big when it comes time for reckoning fee/cost recovery to the prevailing party after occurrence of such carnage.

     Glencoe v. AMA Construction & Real Estate, Case Nos. B204839 et al. (2d Dist., Div. 6 Dec. 6, 2010) (unpublished) well illustrates this result. There, putative buyers and sellers brought dueling specific performance/damages actions arising out of a failed real estate deal. Seller won and dismissed his cross-complaint. He then sought to recovery $943,543 in attorney’s fees (under a contractual fees clause in the real estate agreement) and $75,000 in costs. After requiring apportionment out of time spent on the cross-complaint, the trial court awarded prevailing seller $538,884 in fees and $16,876.69 in costs. Main reason for such a large award was buyer’s engagement in “scorched earth” litigation

     The Second District, Division 6, in a 3-0 opinion authored by Presiding Justice Gilbert, affirmed.

     Seller did prevail, with his cross-complaint being primarily defensive in nature. Apportionment was found reasonable as well as seller’s resort to multiple attorneys in the case (especially given the “scorched earth” tactics of his opponents). (See El Escorial Owners’ Assn. v. DLC Plastering, 154 Cal.App.4th 1337, 1365 (2007).)

     That brought the appellate court to the costs award. That, too, was proper because the trial court found that certain costs were reasonably necessary for trial and that the deposition travel costs of a Northern California attorney for seller were authorized by the Code. (Thon v. Thompson, 29 Cal.App.4th 1546, 1548 (1994).)

     HISTORY FUN--Looks to us that “scorched earth” military tactics originated with the Scythians, nomadic herders using the tactic to defeat King Darius the Great of Persia. The Scythians retreated into the depths of the Steppes, destroying food supplies and poisoning wells along the way. Closer to home and in time, General Sherman utilized this policy during the U.S. Civil War when he made his famous “March to the Sea” (as part of what many Southerners would describe as “the War of Northern Aggression”).

Section 1717, Allocation, Civil Rights Cost Recovery, Prevailing Party, And Section 998: Court Of Appeal Faces A Melange Of Fee/Costs Issues

Fourth District, Division One Affirms Trial Court’s “Wash” Decision on Issues.

     The next case involves a melange of fee and costs issues arising from a contract and civil rights case in which plaintiff recovered nothing on her claims but beat school district’s contract cross-claim. That gave rise to all sort of prevailing party claims for both fees and costs. The trial court basically found it all came to a close “wash,”  with plaintiff getting some fees and defendant getting some costs by which it was about $1,250 ahead when the ultimate math calculus is done.

     Both sides appealed in Manoogian v. San Diego Unified School Dist., Case No. D053953 (4th Dist., Div. 1 Dec. 2, 2010) (unpublished). Care to guess the result? Well, our post headings give it away--affirmance across the board.

Section 1717: Nonsignatory Cross-Complainant Not Liable For Fees Under Contractual Fee Clause

Second District, Division 2 Applies Classic Reciprocity Principles Under 1717.

     Baker v. Oleander Corp., Case No. B221193 (2d Dist., Div. 2 Nov. 8, 2010) (unpublished) is another reminder of how reciprocity principles under Civil Code section 1717 operate in cases involving contractual nonsignatory and signatory litigants. It also shows how trial courts will apportion out fees to be awarded to a prevailing party with respect to work expended in connection with litigating against the nonsignatory.

 

   

      In this one, a prevailing party at the trial court was found not to prevail on appeal because the defendant was an unlicensed contractor,

meaning that the opposite side (Baker) actually prevailed. Defendant’s shareholder/officer brought a cross-complaint against the ultimately winning plaintiff, but the trial judge did not adjudge the matter or award any fees to shareholder/officer. On remand after winning at the previous appellate level, Baker sought to recover $274,615 in attorney’s fees from both unlicensed contractor and its shareholder/officer. The lower court awarded Baker fees of $186,040 against unlicensed contractor under a contractual fees clause but awarded no fees against shareholder/officer, apportioning out fees incurred by Baker in litigating claims against shareholder/officer when fashioning the award against unlicensed contractor. Baker appealed because she wanted more fees and wanted them also assessed against shareholder/officer.

     The appellate court affirmed the lower’s court fee award.

     Even under Civil Code section 1717, shareholder/officer (the nonsignatory cross-complainant) could not claim attorney’s fees if he prevailed against Baker (signatory defendant) because the nonsignatory was not a party to the contract with the fees clause. Under 1717 reciprocity principles, if nonsignatory cross-complainant was not entitled to fees, then Baker was not entitled to fees either. (Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC, 162 Cal.App.4th 858, 897 (2008); Real Property Services Corp. v. City of Pasadena, 25 Cal.App.4th 375, 382 (1994); Sessions Payroll Management, Inc. v. Noble Construction Co., 84 Cal.App.4th 671, 679 (2000).) Merely because shareholder/officer prayed for fees in his complaint did not mean the estoppel theory applied, with the appellate panel lining up with the majority viewpoint on this issue. (Blickman, supra, 162 Cal.App.4th at 897-901.)

     Also, the appellate panel affirmed the trial court’s exclusion of $88,575 in fees, finding that this was equitable because work relating to shareholder/officer was not a factor in trial given that the lower court determined it was belatedly filed and not adjudged on the merits.

Civil Rights: $471,240 Fee Award Affirmed In Civil Rights Case

No Abuse of Discretion Found, Even though Award Was Substantial in Amount.

     To the victor goes the spoils, says the old adage. Well, that certainly held true in the next case, all the reason that we say that a fee award, one way or the other, can make or break any litigant--and also inspired why we blogged in this substantive area of the law.

     Plaintiff, an HIV positive homosexual man working at Costco’s, won a civil rights case. No wonder; some testimony indicated that a Costco manager said “[t]here’s nothing in Texas but steers and queers.” Plaintiff won a damages award of $422,359 for FEHA retaliation, plus another $ 471,240 in attorney’s fees and $39,578 in costs. Defendant Costco appealed both the merits and fee award. It lost both challenges.

     In Valera v. Costco Wholesale Corp., Case No. B215631 (2d Dist., Div. 2 Nov. 4, 2010) (unpublished), the fee award was affirmed, keeping in mind that the trial court did deny plaintiff’s request for a 2.5 multiplier (even though the full lodestar was awarded).

     The main challenge was that the trial court did not apportion plaintiff’s fees among successful and unsuccessful claims. The problem with this argument was that all of the claims were based on the same set of factual circumstances, so no apportionment was necessary.

     With respect to the contention that the trial court had to give a further explanation for its award, the appellate panel concluded that the lower court did independently assess the evidence such that no more detail was required.

Civil Code Section 1717: Broad Performance Bond Language Is Made Mutual So That Contractor Defeating Owner's Cross-Complaint Was Entitled To Fee Recovery

1717 Reciprocity Principles Save the Day Again, Sustaining $366,916.63 Fee Award.

     Many construction disputes involve tripartite affairs between owner, contractor, and surety on a performance bond. That was exactly the situation in the next case, with a performance bond having a fee provision that said this: "Contractor/Principal and Surety agree that if the DISTRICT [owner] is required to engage the services of an attorney in connection with the enforcement of this bond, each shall pay DISTRICT's reasonable attorneys' fees and costs incurred, with or without suit, in addition to the above amount [penal sum equal to the value of the Contract between DISTRICT and Contractor/Principal]."

     What happened is that contractor won litigation over a school modernization project brought by it to recover fees owed under a construction contract with school district, which in turn brought a cross-complaint on the performance bond against contractor—with the performance bond having the fees clause quoted above. Contractor won across the board, obtaining a compensatory award and interest of about $870,500, plus $366,916.63 in attorney's fees and $208,650.26 in costs. School district appealed both the merits and fee judgments.

     The Fourth District, Division 1, in a detailed 73-page slip opinion, affirmed in Mepco Services, Inc. v. Saddleback Valley Unified School District, Case No. D055018 (4^th Dist., Div. 1 Nov. 2, 2010) (certified for partial publication, fee discussion published).

     Although the construction contract did not contain a fees clause, the performance bond did, which was the subject to school district's cross-complaint under which it did not prevail. The fees clause was unilateral in nature, but Civil Code section 1717 operated to make it reciprocal in nature. Relying on Leatherby Ins. Co. v. City of Tustin, 76 Cal.App.3d 678, 690 (1977), the appellate court determined that section 1717 could transform a bond's unilateral fee provision into a provision that permitted the bond principal or surety to recover fees in an action on the bond. So, what about recovery for the contractor?

      The Court of Appeal determined that the focal issue was whether school district would have been entitled to fees had it performed on its bond cross-claim against contractor and surety. That is a hypothetical inquiry, one not dependent on whether actual factual findings were made. Because Saddleback did seek to enforce the bond under its own pleadings, it would have been entitled to fees had it won on its cross-complaint. That reality meant that section 1717 dictated a similar result in favor of contractor, especially given that the performance bond and contractual breach issues were intertwined. Beyond that, school district did not raise an apportionment argument in the lower court, so it was deemed forfeited on appeal.

     The substantial fee award was affirmed, an amount way over one-third of the compensatory award returned in the jury verdict.

Deadlines, Section 1717, Allocation, and Section 998: Fourth District, Division 3 Addresses Hodgepodge Of Fee/Costs Issues

 

Affirms $289,000 Costs Award and $1.6 Million Fee Award.

     In a long-running case that has produced several appellate opinions along the way, V3I v. Western Digital Corp., Case No. G041386 (4^th Dist., Div. 3 Sept. 29, 2010) (unpublished) finally ran its course, with the final appeal being from a $289,000 costs award and almost $1.6 million fee award in favor of defendants and against plaintiff. That, too, was affirmed in a 3-0 opinion by the Fourth District, Division 3, penned by Acting Presiding Justice Rylaarsdam.

     Issue #1—timeliness of attorney fee motion. It was timely, said the Court of Appeal, because the 60^th day cutoff fell on a weekend, so that it was extended to the next Monday on which date the motion was filed. (Cal. Rules of Court, rule 1.10(b).)

     Issue #2—fees in favor of defunct defendant not allowable under Civil Code section 1717. Nope. Section 1717 says nothing about the payment of fees, just they have been “incurred.” The fact defendant had no money to pay its lawyers does not bar the fee award. (Lolley v. Campbell, 28 Cal.4^th 367, 373 (2002).)

     Issue #3—pre-filing attorney services. These, too, were allowable because the defendant was added at the last minute so that the pre-filing work was necessary. (Stokus v. Marsh, 217 Cal.App.3d 647, 654-656 (1990).)

     Issue #4—fees should be apportioned. Not here, because the issues and legal theories were interrelated.

     Issue #5 --- $164,000 in expert witness costs should not have been awarded. Incorrect, because plaintiff rejected defendants’ CCP § 998 offer of $200,000—with section 998 allowing expert witness costs even if the expert never testified (covering expert costs for trial preparation or trial work). The fees also were reasonable, based on the supporting declarations and billing statements showing the work performed by the experts.

     The end result was that the defendants prevailed, obtaining substantial fees and costs for their efforts in an epoch long battle.

Requests for Admissions: Court Of Appeal Reverses $55,420 Costs-of-Proof Award Against Legal Malpractice Plaintiff

 

Second District, Division 3 Remands For Costs-of-Proof Award Recalculation.

     Under our sidebar category “Requests for Admissions,” we have looked at many decisions examining the costs-of-proof statute set forth in Code of Civil Procedure section 2033.420(a), which allows the court to order a party improperly denying a request for admission to reimburse another party for reasonable expenses (including attorney’s fees) incurred in proving the denied fact. Section 2033.420 is equally available to a party prevailing on summary judgment. (Barnett v. Penske Truck Leasing Co., 90 Cal.App.4^th 494, 495, 499 (2001).) However, we have found that appellate courts do give scrutiny to determining if the denying litigant had a reasonable basis to deny the requested fact, sometimes resulting in a reversal of a costs-of-proof award. That happened in the next case we look at.

     Plaintiff in Simon v. Coleman, Case Nos. B215813/B218219 (2d Dist., Div. 3 Aug. 31, 2010) (unpublished) suffered a summary judgment defeat in a legal malpractice action brought against defendant former attorney. Plaintiff was also hit with a $55,420 costs-of-proof award as well as $3,690 for defendant’s efforts in pursuing the costs-of-proof motion. Although not contesting the last component, plaintiff did appeal the $55,420 award.

     Plaintiff gained a reversal and remand, but it will only mean that some of the costs will need to be excluded. The appellate court, although indicating the review standard is abuse of discretion, found that plaintiff did have reasonable basis to deny some requested facts, so that section 2033.420’s legal requirements for assessments of costs were not met. The appellate panel remanded for recalculation of a proper costs-of-fee award, although it did delineate which denied RFAs would allow for a costs assessment on remand.

Insurance: In Which the Court of Appeal Rules Insurer “Must Lie In the Bed It Made”

Fifth District agrees the Case is “screwed up.”

     The story arc of this opinion begins at a low point, and plummets.  “What the heck?I?,” begins the Court of Appeal opinion.  “At one point, the trial court commented, ‘This is one of the most screwed up cases I’ve ever seen.’  We heartily agree.”  Essex Insurance Company v. Richard Heck, M.D., Case No. F058139 (Fifth Dist. July 29, 2010) (certified for publication).  Essex Insurance Company provided a defense in a personal injury action to a defendant who was not its named insured, but did not discover its mistake till after judgment was entered following a jury verdict in favor of one Mr. John Dompeling against one “Robert Abraham.”

     Mr. Dompeling, a diabetic, hired to move refrigeration units in a restaurant that was being refurbished, stepped on a nail, and sought treatment from his physician, the eponymously named Dr. Heck.  After a hospital discharge, the wound worsened, Mr. Dompeling was readmitted to the hospital, and an orthopedic surgeon amputated his leg below the knee.  Four months later, a second amputation was required, because an infection had developed on his stump.  In January 2004, a jury rendered a verdict in favor of Mr. Dompeling in the amount of $826,762.50, plus costs, against “Robert Abraham.”  “Abraham” and the restaurant were alleged to have hired Mr. Dompeling to remove a refrigerator on the premises. 

     Later in 2004 and 2005, Essex concluded that Robert Lincoln Abraham was the defendant in the personal injury action, but not the insured under its policy.  Instead, the insured was Robert Lee Abraham, against whom a default had been entered.  Oops.  Essex filed a declaratory relief action asserting it had no duty to indemnify Robert Lee Abraham or anyone else in connection with the personal injury action.

     After Essex refused to pay the judgment in the personal injury action, Mr. Dompeling sued Essex for bad faith, and the bad faith action was consolidated with the declaratory relief action.  Mr. Dompeling then amended his complaint to add a cause of action for fraud and misrepresentation against Essex and its law firm, essentially alleging that they knew the law firm was representing the wrong “Robert Abraham” in order to sandbag Mr. Dompeling, deny coverage, and avoid payment.

     In exchange for $700,000 from Essex, Mr. Dompeling released Essex, Robert Lee Abraham and Robert Lincoln Abraham.  Three separate lawsuits settled – a personal injury action, a declaratory relief action, and a bad faith action.

     In 2007, Essex pursued a subrogation claim against Dr. Heck, claiming that it stood in the shoes of that certain “Robert Abraham.” 

     Unfortunately for Essex, it settled three lawsuits for $700,000, without allocation.  Essex released its named insured, Robert Lee Abraham, but also the other Abraham.  “'[T]he settlement agreement did not specify which portion of the $700,000 was paid to settle which claim, what part constituted economic or non-economic damages, who the personal injury judgment was rendered against (either Robert Lee Abraham or Robert Lincoln Abraham), or whether that individual was an insured under the policy.  Without such specifications, the agreement left unsettled into whose shoes Essex was stepping, i.e. Robert Lee Abraham or Robert Lincoln Abraham, and what was being paid to compensate each claim.”  Not surprisingly, on a summary judgment motion brought by Dr. Heck, Essex lost its subrogation claim against Dr. Heck.

     Essex contended on appeal that it could have sorted out this mess by resort to extrinsic evidence of its intent in entering into the settlement agreement.  However, Dr. Heck would not have been able to present his own evidence of intent in entering into the settlement agreement, because that would have improperly required disclosing communications that occurred during mediation.  And unexpressed subjective intent with respect to the interpretation of a contract is irrelevant.  Foiled again.

     While acknowledging the absence of case law directly on point, the Court of Appeal also applied the “doctrine of implied waiver”:  “Essex’s act of entering into a settlement of the three lawsuits without identifying its insured or apportioning the payment is so inconsistent with an intent to enforce its right to subrogation so as to induce a reasonable belief it had relinquished that right.”

     Finally, Essex argued that Dr. Heck made a nominal settlement offer that was not “in good faith”, which Essex obviously did not accept.  But Dr. Heck had offered to waive expert fees, Essex did prevail on the summary judgment motion, and it was the burden of Essex to prove an abuse of discretion – which it did not do. 

       While the Court of Appeal may have agreed with the trial judge’s assessment that, “[t]his is one of the most screwed up cases I’ve ever seen,”  the case was not totally FUBARed.  Said the Court, “We agree with the trial court that Essex must lie in the bed it made and affirm.”

     Justice Gomes authored the 3-0 opinion.

Section 998: Lump Sum 998 Offer Made To Class Representative of Multiple Classes Found To Be Invalid

Fourth District, Division 1 So Rules, Assuming 998 Offers Are Valid in a Certified Class Situation.

     Nelson v. Pearson Ford Co., Case No. D054369 (4^th Dist., Div. 1 July 15, 2010) (certified for publication) is an interesting decision where significant fees were awarded in a class action involving a California consumer-shifting fee statute. However, because there were some partial reversals, that fee award had to be revisited. Nevertheless, the discussion of the Code of Civil Procedure section 998 issue deserves our attention.

     Following certification of the matter as a class action, defendant sent a 998 offer to the class representative for a sum certain, even though the representative represented two classes. After assuming (but not deciding) that 998 offers can be made in a certified class action, the appellate court agreed with the lower court that the defense pretrial settlement offer was invalid. The reason? The lump sum offer was made to a class representative of two classes. By analogy to cases invalidating lump sum offers to separate parties in normal actions, the Fourth District, Division 1 found no logical reason foreclosed extending this analogous jurisprudence to a 998 offer made to multiple but separate classes. That meant the class representative faced the same uncertainty confronting separate parties in conventional litigation. 998 offer found invalid.

     BLOG UNDERVIEW—We will note the absence of California case law on how 998 offers are to be treated in putative and certified class actions. Nelson assumed 998 offers are valid in class actions, but this premise needs to be fleshed out in future cases.

Homeowner Associations: Trial Court’s Denial Of Separate Fee Requests For Prevailing In Homeowner Dispute Was Erroneous

Lower Court Erred in Failing to Find Fee Entitlement, to Determine Prevailing Party Status, or to Make Any Apportionments in Summarily Denying Diverse Defense Fee Requests.

     Trial courts do have a duty to examine fee entitlement, to determine prevailing party status, and to make any apportionments when examining diverse fee requests by different defendants. Failure to do so may result in a reversal and remand, as it did in the next unpublished decision.

     Wesbey v. Toll CA IV, L.P., Case No. D054191 (4^th Dist., Div. 1 May 27, 2010) (unpublished) involved different developer, HOA, and homeowner defendants who prevailed in an access easement dispute with other plaintiff homeowners. Plaintiffs had brought an action alleging numerous theories, but among them were claims based on the CC&Rs—which usually carry fee entitlement under Civil Code section 1717 and/or Civil Code section 1354(c). However, the trial court was unconvinced that the case really involved CC&Rs, even though the defendants did have to defend against some claims that were based on them. It summarily denied the fee requests brought by the different defendants.

     The Fourth District, Division 1 reversed and remanded with directions to separately address the prevailing party status or need for apportionment as to each defendant. Fee entitlement was evident based on either section 1717 or 1354, with the appellate court providing the lower court some apportionment guidance on remand. (See Bell v. Vista Unified School Dist., 82 Cal.App.4^th 672, 686-687 (2000).)

Special Fee Shifting Statutes: Award Of Partial Fees To Winning Defendants In Statutory Action For Injunctive Relief Under CCP § 527.6(i)

Trial Court Appropriately Apportioned Out Fee Work Unrelated to Statutory Injunctive Relief Claim.

     Generally, no award of attorney’s fees is available in an invasion of privacy action. However, in a statutory action for injunctive relief under Code of Civil Procedure section 527.6(i) (a statutory harassment/violence statute), the prevailing party may be awarded court costs and attorney’s fees in the court’s discretion.

     The trial court in Kempton v. Harris, Case No. B210894 (2d Dist., Div. 3 May 24, 2010) (unpublished) awarded some winning defendants $57,407.29 in fees and costs under section 527.6(i), out of a requested $161,515. Defendants appealed from the lower court’s decision to apportion out significant fees for work not related to the statutory harassment/violence claim.

     On appeal, the fee award decision was affirmed. The conduct giving rise to a section 527.6 award differs from that which provides a basis for tort recovery for invasion of privacy. Because a considerable portion of the requested fees was incurred before the 527.6 claim was alleged, the lower court did not err in its apportionment decision. However, because the defendants beat back plaintiff’ challenges to the adverse merit judgment, they were entitled to fees on appeal.

Eminent Domain: Substantial Inverse Condemnation Fee Award Reversed Because Trial Court Did Not Explain Why It Chose Contingency Fee Amount Versus Hourly Fee Amount

 

Lower Court Failed to Analyze the Factors in Yuki.

     After plaintiffs won a bench award of over $3.4 million in a nuisance/inverse condemnation action, the Second District, Division Two, in Karim v. City of Pomona, Case No. B210049 (May 18, 2010) (unpublished), reversed a favorable attorney’s fees award in favor of plaintiff homeowners under Code of Civil Procedure section 1036 in the amount of $1,184,145.52, with section 1036 providing that the trial court must award prevailing plaintiffs in an inverse condemnation action their reasonable, actually incurred attorney’s fees. (This reversal apparently did not impact a hefty, additional cost award of $510,700.31.) The principal reason was the lower court’s failure to analyze the section 1036 “reasonable fee” factors listed in People ex el. Dept. of Transportation v. Yuki, 31 Cal.App.4^th 1754, 1771 (1995).

Apportionment Two-Fer: No Need To Fee Allocate Where Claims Or Proof Are Intertwined In Nature #

1: Legal Services Agreement Was Foundation For Both Contract/Tort Claims, Resulting in Substantial Fee Award.

     In Gaggero v. Knapp, Petersen & Clarke, Case No. B207567 (2d Dist., Div. 8 May 6, 2010) (unpublished), former client sued former law firm for breach of contract, breach of fiduciary duty and professional negligence (among others) in connection with 5 matters handled by the firm. All of the claims centered on a legal services agreement, with a fee clause. After defensing the claims, law firm moved for, and received, $1,202,994.50 in attorney’s fees as the prevailing party under Civil Code section 1717. Although former client argued that it was error to not apportion fees between contract and noncontract claims, the appellate panel disagreed and affirmed that apportionment was required. The trial court found the claims and proof were intertwined, so that “it would be impossible to divvy up this cause of action, because they are so intertwined” from both a claim and proof perspective. The appellate court found that this determination was no abuse of discretion.

#2: Issues Common to Swap Document (With No Fees Clause) and Credit Agreement (With Fees Clause) Meant No Apportionment Needed.

     Rossco Holdings Inc. v. Bank of America, N.T. & S.A., Case Nos. B209201 c/w B213607 (2d Dist., Div. 3 May 6, 2010) (unpublished) involved a case that went to arbitration, having two important documents—a swap document (without a fees clause) and a credit agreement (with a fees clause). Bank won and was awarded $721,456 in attorney’s fees and $203,254.46 in costs by the arbitrators. Supplemental fees of about $500,000 more were granted after a contentious arbitration confirmation battle. On appeal, losing party argued that the lower court erred in not apportioning fees between the covered credit agreement and noncovered swap agreement. Not so, said the appellate panel. All of the fees awarded related to Bank’s efforts to confirm the arbitration award, with all the claims being intertwined in nature.

     BLOG BONUS COVERAGE—Rossco Holdings also addressed a recurring argument that a prior appellate decision providing “each party is to bear its own on costs on appeal” precludes an award of attorney’s fees. The Court of Appeal rejected this argument, relying on the reasoning in Butler-Rupp v. Lourdeaux, 154 Cal.App.4^th 918, 924-928 (2007)—must reading for all attorneys confronted with this issue.

Section 1717: Although Legal Error Present In Not Finding Fee Entitlement, Fee Denial Affirmed Because Of Failure To Apportion

 

Fourth District, Division 3 Opinion Demonstrates Interplay Between De Novo and Abuse of Discretion Review Standards on Different Fee Award Issues.

     The next case shows how a litigant may convince an appellate court that legal error was committed (de novo review of a fee entitlement issue), but the battle for reversal is lost for failure to surmount an abuse of discretion issue (failure to apportion fees between covered and uncovered fee claims for relief).

     In Behnam v. Wilshire Central Escrow, Case No. G041807 (4^th Dist., Div. 3 Apr. 22, 2010) (unpublished), plaintiff in a fraud-laden real estate transaction did win damages against a defendant escrow company, but was denied recovery of requested attorney’s fees of $52,240.50. Plaintiff appealed the fee denial.

 

Section 1717 And Fees Clause Interpretation: Broad Fees Clause Meant Trial Court Erred In Denying Fee Recovery To Prevailing Mortuary

Second District, Division 6 Also Holds Fees Do Not Have To Be Apportioned.

     Broad contractual language allowing for fee recovery “in any lawsuit or other legal proceeding to which this Agreement gives” can even grant entitlement to fee recovery with respect to tort claims. (Xuereb v. Marcus & Millichap, Inc., 3 Cal.App.4^th 1338, 1342-1343 (1992); Allstate Ins. Co. v. Loo, 46 Cal.App.4^th 1794, 1796-1797 (1996).) This type of breadth in a mortuary cremation services agreement led to fee entitlement in the next case.

     Mortuary defendants prevailed in a mixed contract/tort/statutory case that involved a fees clause in a cremation authorization instrument stating “I . . . agree to protect and indemnify [crematory] or its assigns, against any claims of damages which may result on account of this authorization or my . . . failure to properly identify or pick up said cremated remains, including legal fees and costs and expenses of litigation.” The trial court denied awarding defendants fees under Civil Code section 1717.

     Applying a de novo standard of review, the Second District, Division 6, in a 3-0 decision by Justice Perren, reversed on this issue in Warden v. Dudley Hoffman Mortuary, Case No. B206840 (2d Dist., Div. 6 Apr. 19, 2010) (unpublished).

     The language of authorization was broad enough to encompass both contract and tort claims, with the work done on the noncontract claims so intertwined that it would be impracticable or impossible to separate attorney’s time into compensable and noncompensable units. (Abdallah v. United Savings Bank, 43 Cal.App.4^th 1101, 1111 (1996); Erickson v. R.E.M. Concepts, Inc., 126 Cal.App.4^th 1073, 1085-11086 (2005).)

     Result: reversed and remanded to the trial court to render a proper fees award.

 

Corpse beginning to burn on pyre, India, 1906.  Library of Congress.

FEHA: $619,000 Fee Award And $49,000 Costs Award Affirmed On Appeal

 

Fourth District, Division 3 Affirms Fee/Costs Award Based on Retaliation Jury Verdict Against City of Anaheim.

     In our category “Civil Rights,” we have surveyed many FEHA fee/costs awards because the statute is pro-plaintiff oriented. Here is one where there were both FEHA and non-FEHA claims, but no allocation was necessary because the claims were “intertwined.”

     Plaintiff sued City of Anaheim and its police chief for FEHA retaliation, breach of contract, and breach of the implied covenant, with a jury returning verdicts of $250,628 in economic damages on all counts and $25,000 in noneconomic damages on the retaliation count. The trial judge then granted plaintiff over $619,000 in attorney’s fees and nearly $49,000 in costs under the FEHA claim (even though plaintiff had asked for fees of over $1.2 million, based on a multiplier of 2 applied to the $619,000 claimed lodestar). Justice Rylaarsdam, on behalf of a 3-0 panel of the Fourth District, Division 3, affirmed the fee/costs award, even though reversing the retaliation judgment against police chief and the contract-based claims against both defendants. The case is Hedgpeth v. City of Anaheim, Case Nos. G040358/G040571 (4^th Dist., Div. 3 Mar. 23, 2010) (unpublished).

     Defendants primarily argued that apportionment of fees was necessary between the FEHA and non-FEHA claims. Not so, said the appellate court. It, like the trial court, found the claims to be intertwined, such that it was no abuse of discretion in not requiring an allocation. (Thompson Pacific Constr., Inc. v. City of Sunnyvale, 155 Cal.App.4^th 525, 555.)

     With respect to the costs award, defendants only contested them in their opposition to the fee motion. This was too late, with the failure to timely file a motion to strike/tax costs constituting a waiver of the right to object. (Douglas v. Willis, 27 Cal.App.4^th 287, 289-290.)

Birdseye of Anaheim.  1915.  Library of Congress.