CALIFORNIA ATTORNEY'S FEES

Prevailing Party/Section 1717: Parties Not Prevailing On Dueling Contractual Claims Also Not Entitled To Contractual Fee Recovery

 

No One Got A Clear Win, So Go Your Own Way, Says Appellate Court in Much More Eloquent Fashion.

     Under Civil Code section 1717, ya gotta prevail--and that is a pragmatic determination, which means ya gotta be a clear winner (not just a contender). In the next case, both plaintiff and cross-complainant did not win on their contract claims, although one got close (but did not get damages) and another won on a closely related negligence claim. The result: no clear winner, no fee recovery on the crucial contract-based claims that trigger 1717 fee entitlement.

     Krolop v. National Econ Corp., Case No. G045140 (4th Dist., Div. 3 Feb. 9, 2012) (unpublished) is a mixed bag case that neither litigant likely was real elated with as far as things go. After an 11-day jury trial (yep, that amount of time), plaintiff lost contractual and other claims to defendant, and defendant--on a cross-complaint--did not recover damages on a contractual cross-claim but was awarded damages on a negligence cross-claim (actually, about 9% of the amount sought on the negligence cause). The trial court denied fee recovery to either side, finding that no one prevailed on the contractual claims for 1717 recovery purposes.

     Result on appeal? Affirmed, in a 3-0 decision penned by Acting Presiding Justice Rylaarsdam.

     There was no complete victory on the contract claims, with defendant/cross-complainant coming close, but not getting the jury to find she proved damages--a necessary element of any contract claim. The contractual fee clauses were not broad enough to encompass tort claims, so the win on the negligence claim did not qualify for fee recovery. Beyond that, even from a pragmatic level, defendant/cross-complainant only won about 9% of her claimed damages--hardly the overwhelming victory needed to obtain fee recovery on even a “pragmatic” basis.

Prevailing Party: Trust Was Entitled To Fee Recovery Under Fees Clause, Even Though It May Not Have Been So Entitled Under Elder Abuse Fee-Shifting Statutes

 

Case Demonstrates Trial Court Decisions Will Be Sustained on Any Right Ground Existing in the Record.

     In Nesbitt v. Emmanuel, Case No. B224521 (2d Dist., Div. 4 Feb. 7, 2012) (unpublished), the trial court awarded both compensatory and punitive damages under the financial elder abuse statutes to a trust. It also awarded attorney’s fees to the trust under Welfare and Institutions Code section 15667.5(a). Even though this provision may well only apply to an elder or dependent adult (and not to a trust entity), the fee recovery was upheld because there was an alternate basis: a fees clause in the note running in favor of the trust. So, fee judgment affirmed in case of the duped elderly trustee.

Costs/Prevailing Party: Defendant Obtaining Dismissal After TRO Grant/Preliminary Injunction Denial Was Prevailing Party For Costs Award

 

Plaintiffs’ Dismissal Cemented Costs Entitlement.

     Although coming about in convoluted fashion, defendant was awarded certain costs in an adjacent neighbor tree dispute where plaintiffs won a temporary restraining order but defendant voluntarily made some construction changes so that a preliminary injunction was ultimately denied. Plaintiffs then dismissed their action without prejudice. The trial court awarded certain costs to defendant, sparking plaintiffs’ appeal in Tavangarian v. Florman, Case No. B227269 (2d Dist., Div. 3 Jan. 25, 2012) (unpublished).

     The costs award was affirmed.

     Although arguing that defendant was not the prevailing party, plaintiff’s argument was rejected because the dismissal established the defense’s status as the winner in spite of the earlier TRO win. (Code Civ. Proc., § 1032(a)(4); Adler v. Vaicius, 21 Cal.App.4th 1770, 1777 (1993).) Plaintiffs did not prevail by just winning the TRO, because this win was interlocutory in nature--trumped by the later preliminary injunction denial and subsequent dismissal. Defendant was expressly entitled to copying costs for exhibits, even though copying costs for other documents is not allowable. (El Dorado Meat Co. v. Yosemite Meat & Locker Service, Inc., 150 Cal.App.4th 612, 618 (2007).)

Prevailing Party: Party Obtaining Dismissal For Other Side’s Violation Of Five-Year-to-Trial Rule Does Prevail Under Civil Code Section 1717 For Fee Recovery Purposes

 

Decision Is Also a Cautionary Tale on Stipulations to Extend the Five Years To Another Date Certain.

     The Third District in City of Stockton v. Central San Joaquin Water Conservation Dist., Case No. C063824 (3d Dist. Jan. 11, 2012) (unpublished) is a situation where litigants stipulated to an extension of the five-year-to-trial limit (CCP § 583.310) from the limitation date to another date certain. However, that new date went by without a trial, although a lower court denied a defense dismissal motion that was subsequently reversed by the same appellate court through an alternative writ proceeding. The lower court then dismissed the case and awarded defendant $186,834 in attorney’s fees under Civil Code section 1717 (apparently based on a fees clauses in some underlying agreements).

     Above:  Water supply.  Migratory camp for cotton pickers.  San Joaquin Valley.  November 1936.  Dorothea Lange, photographer.  Library of Congress.

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.

Year in Review - 2011

Wrapping It Up:  M & M’s Top 25 Attorney’s Fees Decisions For 2011  Part 1 of 2

     It is that time of year, at year end, for us to list our top published attorney’s fees decisions from the U.S. Supreme Court, Ninth Circuit Court of Appeals, and California Courts of Appeal. Although we normally do the “Top 20” decisions, the 2011 year was prolific for many, many decisions of interest, so we expanded it to the top 25.

     We might note that 2012 looms as an important year for the California Supreme Court to decide the issues involved in Kirby v. Immoos Fire Protection, United Parcel Service Wage & Hour Cases (McGann), and related cases considering whether a prevailing defendant is entitled to recover Labor Code section 218.5 attorney’s fees for successfully defending against a plaintiff employee’s claims for meal/rest break violations even if those claims were joined with Labor Code section 1194 overtime compensation claims subject to a unilateral pro-plaintiff fee shifting provision. (See our posts of September 28, October 25, and November 25, 2011.)

     However, we can only report and score on the top 25, keeping in mind that appellate jurists did decide many other important cases. These are our favorites in a wide range of areas, so enjoy. This will be the first 13 cases, with 12 more to follow in a subsequent post--likely closer to year’s end.

     25. La Cuesta v. Benham, 193 Cal.App.4th 1287 (2011) [4th Dist., Div. 3]; author--Presiding Justice Sills (who, unfortunately, passed away earlier this year after a long and distinguished career):  Under Civil Code section 1717, a lopsided win by landlord in obtaining repossession and compensation from tenant made landlord the prevailing party, reversing denial of fees even under an abuse of discretion standard. [Discussed in our March 30, 2011 post.]

     24. Ferwerda v. Bordon, 193 Cal.App.4th 1178 (2011) [3d Dist.]; author--Justice Robie:  Attorney’s fees cannot be awarded to a homeowners’ association based on unrecorded CC&R enforcement documents and manuals.  [Discussed in our March 26, 2011 post.]

     23. Turner v. Assn. of American Medical Colleges, 193 Cal.App.4th 1047 (2011) [1st Dist., Div. 5]; author--Justice Simons:  Attorney’s fees are not awardable to defendant prevailing on Unruh Civil Rights Act, Civil Code sections 52 and 54.3 claims even though defendant did prevail (but did not claim entitlement to work) under a broader fee-shifting provision contained in section 55. [Discussed in our March 25, 2011 post.]

     22. In re Marriage of Fong, 193 Cal.App.4th 278 (2011) [2d Dist., Div. 3]; author-- Justice Croskey:  Wife not complying with her financial disclosure requirements in family law proceeding could not seek fee award from noncompliant husband under Family Code section 2107(c). [Discussed in our March 4, 2011 post.]

     21. Marriage of Fossum, 192 Cal.App.4th 336 (2011) [2d Dist., Div. 1]; author--Justice Johnson, writing for the majority; Justice Rothschild, dissenting:  Spouse/domestic partner’s breach of Family Code section 721(b) fiduciary duty gives rise to mandatory fee award under Family Code section 1101(g); dissenting justice spelled out anomalous results from this interpretation and suggested a legislative amendment to the statute to make it discretionary in nature. [Discussed in our January 29, 2011 post.]

     20. Harris v. Maricopa County Superior Court, 631 F.3d 963 (9th Cir. 2011); author--Circuit Judge Reinhardt for the majority; Circuit Judge Bybee, concurring and dissenting:  “But for” test, not pro-rata allocation of fees between frivolous and nonfrivolous claims, was proper standard for fee recovery under federal civil rights fee-shifting statute; dissenting judge argues that “but for” test will make it impossible for defense to argue fee apportionment in mixed-bag cases. [Discussed in our January 16, 2011 post.]

     19. Garcia v. Politis, 192 Cal.App.4th 1474 (2011) [2d Dist., Div. 4]; author--Justice Willhite: Plaintiff seeking fees in default judgment context cannot file a fee motion post-judgment, but must make a fees request in plaintiff’s default judgment packet paperwork. [Discussed in our February 26, 2011 post.]

     18. First National Mortgage Co. v. Federal Realty Investment Trust, 631 F.3d 1058 (9th Cir. 2011); author--Senior Circuit Judge Thompson: 28 U.S.C. § 1821(b) $40-per-day limitation on witness expenses “preempted” application of California Code of Civil Procedure section 998’s allowance of broader “reasonable” expert witness fees in diversity cases. [Discussed in our February 1, 2011 post.]   Justice Thompson died February 19, 2011.

     17. Simke, Chodos, Silberfeld & Anteau, Inc. v. Athans, 195 Cal.App.4th1275 (2011) [2d Dist., Div. 1]; author--Presiding Justice Mallano:  Unspecified attorney’s fees prayer in complaint did not void future default judgment based on terminating sanctions conduct. [Discussed in our May 26, 2011 post.]

      16. Puerta v. Torres, 195 Cal.App.4th 1267 (2011) [4th Dist., Div. 3]; author--Justice Moore: Failure to include some type of acceptance language in Code of Civil Procedure section 998 offer invalidates the offer. [Discussed in our May 25, 2011 post.]

      15. Martinez v. L.A. County Metropolitan Transp. Auth., 195 Cal.App.4th 1038 (2011) [2d Dist., Div. 1]; author--Justice Rothschild:  Code of Civil Procedure section 998 offer excluding “costs” from recovery also means that attorney’s fees are excluded from the ambit of the offer. [Discussed in our May 23, 2011 post.]

     14. Ilshin Investment Co., Ltd v. Buena Vista Home Entertainment, Inc., 195 Cal.App.4th 612 [2d Dist., Div. 1]; author—Justice Chaney:  Attorney’s fees are not allowable for prevailing party in post-judgment enforcement independent creditor’s suit. [Discussed in our May 15, 2011 post.]

      13. In re Marriage of Davenport, 194 Cal.App.4th 1507 (2011) [lst Dist., Div. 2]; author--Justice Richman:  Scorched earth litigation practices justified denial of family sanction fees to wife and allowed for substantial fees against her/in favor of husband; case distinguishes between zealous advocacy and “attack dog”/”scorched earth” litigation. [Discussed in our May 6, 2011 post.]

      BLOG UNDERVIEW--This last one is a good one to end on, because both co-contributors have dogs--Mike has Riffle, a Labrador, and Marc has Watson, a mixed-breed dog, but still a good dog! Watch for our ensuing post before the end of the year with the next 12 decisions rounding out our “Top 25.” Happy Holidays to all of our readers.

Earlier Year End Wrap-Ups:

     2010  Part I; Part II     2009 Part I; Part II     2008 Part I; Part II

 

Prevailing Party/Section 1717: Landlord Prevailing On Tenants’ Defense Cross-Complaint Involving Personal Property Retrieval Statutes Did Not Prevail “On A Contract” For Section 1717 Purposes

 

Landlord Lost $23,029.88 Fee Recovery When Fee Award Deleted From Judgment by Appellate Court.

     Although originally unpublished, the appellate court in Kumar v. Yu, Case No. B226335 (2d Dist., Div. 7 Nov. 17, 2011) certified its opinion for publication on December 16, 2011.

     Basically, landlord lost a contractual lease dispute with a fee-shifting clause after proper damages “credit” was given for subsequent mitigation efforts. Tenant brought a defensive cross-complaint alleging that landlord had failed to give him statutory notices to retrieve personal property by which he was impeded from reclaiming some valuable videotapes. The trial court awarded nothing to either side, but found that both had prevailed on their respective cross-actions--awarding tenant $55,390.48 and landlord $23,029.88 in attorney’s fees. In line with the “dueling” fee awards, “dueling” appeals were filed by both sides.

     The merits judgment and tenant’s fee award were affirmed on appeal. However, tenant did get the landlord’s fee award reversed on appeal, with the award being deleted from the original judgment.

     Basis for the reversal? Landlord did not prevail “on a contract” for purposes of Civil Code section 1717. Clearly, the appellate court reasoned, tenant did prevail under the lease by defeating landlord’s damages claims. Different matter as to landlord’s defeat of the cross-complaint: it was based on personal property retrieval/disposal Civil Code statutes that were unrelated to the performance of the lease (not “on a contract”) or alternatively it was purely defensive such that tenant was still the prevailing party. (Hsu v. Abbara, 9 Cal.4th 863, 875 n.10 (1995).) However, plaintiff did prevail on the cross-complaint for a costs award, so not all was lost.

     BLOG UNDERVIEW--For lawyers dealing with prospective rent cases, this case is must reading in this area, as it discusses how to credit subsequent mitigation efforts in these type of cases--discussing Willis v. Soda Shoppes of California, 134 Cal.App.3d 899 (1982) in the process.

HOA/Prevailing Party: Failure To Award HOA Fees When Plaintiff Dismissed 8 Of 10 Claims Based On Faulty Reasoning Was Abuse Of Discretion

 

HOA, on Remand, Will Get to Renew Request for $252,767 in Defense Fees.

     Here is an interesting one where an appellate court reversed the denial of a fee award as an abuse of discretion. The reason: HOA clearly prevailed when plaintiff dismissed 8 of 10 claims (some of them based on a fee-shifting statute) such that plaintiff cannot have claimed to prevail no matter what the ending on the two remaining claims.

     You know we were going to love this one when it began this way:

     “A party contemplating litigation to enforce the covenants, conditions, and restrictions (CC&Rs) of a condominium project should get the ‘ducks in a row.’ That is to say, such party should be ready to go forward procedurally and prove its case substantively. Failure to do subjects the losing party to an award of attorney fees.”

      In Salehi v. Surfside III Condominium Owners’ Assn., Case Nos. B224263/B226400 (2d Dist., Div. 6 Nov. 14, 2011) (certified for publication), plaintiff (an attorney herself, in pro per) sued HOA for failure to maintain/repair the condo project and failure to maintain an adequate replacement reserve fund. On the eve of the trial in this one, plaintiff received an adverse decision on behalf of a client in a similar suit against the HOA. Although her expert had a serious heart condition, plaintiff opted to dismiss 8 of 10 claims rather than seek a trial continuance. Only fraud/misrepresentation claims remained, and plaintiff successfully obtained a trial continuance of these claims. HOA moved to recoup $252,767 in fees for the eight counts voluntarily dismissed by plaintiff. The trial court denied the request, reasoning that the eight count dismissals were motivated by plaintiff’s inexperience and poor decisions rather than any implied concession to the merits of HOA’s case.

     HOA appealed, obtaining a reversal and chance to recoup fees on remand (aside from recouping costs on appeal as the winner).

     The appellate court, in a 3-0 decision written with panache by Justice Yegan, found the fee denial was an abuse of discretion. Simply put, plaintiff did not prevail--she was not ready to proceed and dismissed out of faulty reasoning that should not impede HOA from obtaining fees under a mandatory CC&R enforcement fee shifting statute (Civil Code section 1354). Plaintiff did not “practically” prevail and certainly did not achieve her litigation objectives.

     As an underview, Justice Yegan did observe that plaintiff never claimed that the fee award request was premature based on the pendency of the other two claims. However, the appellate court did point out “that prudence may dictate that the trial court postpone ruling on an attorney fees request until all causes of action have been resolved.”

Prevailing Party: Remittitur Affirming Merits Of Judgment Conclusively Established Plaintiff As Prevailing Party

 

$147,121.25 Fee Award and $5,722.63 Costs Award Affirmed.

     In Hawthorne Machinery Co. v. Theo H. Davies & Co., Ltd., Case No. D057331 (4th Dist., Div. 1 Nov. 4, 2011) (unpublished), plaintiff obtained a declaratory relief judgment in favor of defendants, a determination affirmed in a prior appeal with the conclusion that plaintiff prevailed on all accounts. Defendants challenged a fee award of $147,121.25 and costs award of $5,722.63 in a follow-up appeal. However, given the remittitur in the previous appeal, fee/costs entitlement was fully established. Defendants did not challenge the amount of the awards, so that these awards, too, were affirmed in the follow-up appeal.

Prevailing Party: Plaintiff Winning $1 Nominal Damages On One Claim, But Losing The Primary $320,805 Claim, Did Not Prevail Or Prevent Fee Recovery By Opponent

 

Opponent’s Fee Award of $40,588 Affirmed On Appeal.

     Here is a pragmatic opinion that shows the “prevailing party” determination under Civil Code section 1717 is meant also to be pragmatic as far as the adjudicatory process is concerned. The decision is Brighton Collectibles, Inc. v. S&J Shoes, Inc., Case Nos. B224310/B226866 (2d Dist., Div. 1 Oct. 28, 2011) (unpublished) and is authored by Presiding Justice Mallano.

     The case involved a plaintiff who lost a trademark license agreement dispute with defendants where it argued defendants had to keep a retail store open for the full term and breached the agreement by closing early, seeking damages at trial of $320,805. However, plaintiff was awarded nominal damages of $1 for defendants’ failure to turn over a customer list.

     Defendants moved for fees, but plaintiff claimed it prevailed (by winning $1) or that there was no prevailing party. The trial court awarded the defense $40,568 in fees and $2,807.67 in costs, prompting an appeal by plaintiff.

     Plaintiff lost. Here, the fee award was discretionary because neither party had an unqualified victory. But, pretty close, said the appellate panel. Plaintiff’s $1 award did not outweigh that the defense did achieve its primary litigation objectives of prevailing on the $320,805 trademark license contract claim. Under the circumstances, no abuse to give the fee recovery to the defense (the side that pragmatically won).

Prevailing Party/Section 1717: Landlord Prevailed Where It Recovered All Of Monetary Damages Sought And Despite Dismissing Action At Court’s Insistence Later

 

$83,153 Fee Award Sustained Against Losing Tenant.

     Landlord sued tenant for unpaid rent under a prior settlement agreement under which the lease was terminated, tenant would vacate the premises in “turn key” condition, and assign certain FF&E (furniture, fixtures, and equipment) as well as its liquor license. The agreement also specified that landlord could bring an action against tenant for the unpaid rent plus damages at a specified per diem rate. The settlement agreement importantly provided for an attorney’s fees award to the prevailing party in the event of litigation. Landlord sued after tenant failed to perform under the settlement agreement, with the parties agreeing to a stipulation that led to the release of significant writ of possession funds being held by the sheriff (which satisfied the unpaid rent claim) and specified that tenant would pay all claims for daily damages/interest.

      Landlord then moved to recover $94,653 pursuant to Civil Code section 1717 and Code of Civil Procedure section 1033.5, which was granted in the sum of $83,154--prompting an appeal by tenant. Later, landlord dismissed the action with lower court imprimatur after it determined that landlord had obtained all necessary relief so there was nothing left to do.

     Tenant was unsuccessful in Rose Garden Associates Danville, LLC v. ResMex Partners, LLC, Case No. A130562 (1st Dist., Div. 3 Oct. 7, 2011) (unpublished).

     The fact that there was no judgment was irrelevant, because section 1717 does allow for fee recovery “whether or not the suit proceeds to final judgment” so that the settlement agreement clause was a solid anchor for landlord’s entitlement. Also, even though there were some niggling issues left on the FF&E feature of the settlement, landlord certainly prevailed by getting all of its monetary relief such that the fee motion was ripe for determination given the overwhelming recovery achieved by landlord. The dismissal did not lead to a different result, because the court actually entered the dismissal and tenant had taken a 180 degree opposite position on its effect in the lower court.

Construction: Prevailing City Retaining Funds Does Not Divest Its Prevailing Party Status Because It Had To Eventually Turnover Retained Funds Over The Amount of the Merits Judgment

 

Section 1717 Still Allowed Recovery to the Prevailing Party.

     The Fifth District, in Greg Opinski Construction, Inc. v. City of Oakdale, Case Nos. F060219/F060727 (5^th Dist. Oct. 6, 2011) (certified for partial publication; fee discussion not published), affirmed a lower court decision finding that the city was entitled to recover from its general contractor $54,000 in liquidated damages for late completion, $3,266 for construction defect repairs, and $97,775 (out of a requested $104,478.67) in attorney's fees, with the fee award being based on a reciprocal contractual fees clause.

     On appeal, general contractor basically contended that city did not "prevail" because the amount it retained while the dispute was pending was more than enough to cover the merits judgment, meaning that city really received no net monetary recovery for purposes of a fee award.

     The Fifth District, in a 3-0 opinion authored by Acting Presiding Justice Wiseman, did not buy it. Rather, it found Sears v. Baccaglio, 60 Cal.App.4^th 1136 (1998) analogous, where a party did prevail by winning a positive monetary award even where he had been paid more than the award loss already from several other sources. City was still the "net" winner in this situation, with the appellate court refusing to apply routine costs principles when it came to determining the prevailing party in a fee context. Finally, policy reasons also prevailed: ". . . in our review it would make little sense to deem a contractor a prevailing party solely because the contractor obtained an order for release of retention funds. Public Contract Code section 7107, subdivision (c), makes it lawful for an owner to retain 150 percent of an amount in dispute. A determination at the end of the lawsuit that the owner must release some of the money does not mean the owner has acted wrongly. A court might find that the only breach of contract was a breach by the contractor. Retention money might still be owing to the contractor, since the damages the contractor caused might be less than 150 percent of the disputed amount. That would not show, however, that the owner had breached the contract or that the contractor had prevailed. That is the situation in this case. The city prevailed on its claim on the contract; [general contractor] failed in its claims on the contract; the amount of damages was less than the amount retained; and [general contractor] would have owed a portion of the retention funds if not for the attorneys' fees award. The court had discretion to find that the city, not [general contractor], was the prevailing party in this state of affairs." (Slip Opn., pp. 27-28.)

SLAPP: Sloppy Record Scotches Fees, But Appeal Court Synthesizes SLAPP Wisdom

Fourth District, Div. 2, Underscores That Compliance With Basic Appellate Procedure Is Necessary to Obtain Review of SLAPP Fees Issue.

     The next case, Dean Martin v. Inland Empire Utilities Agency, et al., Case No. E051217 (4th Dist. Div. 2, 8/18/11) (certified for publication), involves a complaint alleging causes of action deriving from purported racial and age discrimination and retaliation by Inland Empire Utilities Agency and its CEO, against plaintiff, “a self-described individual of ‘African-American Heritage,’” [that’s the Court’s language, not ours].  Defendants appealed from an order granting their anti-SLAPP motion with leave to amend.  Defendants contended the court erred in granting their anti-SLAPP motion as to only one cause of action, granting the motion with leave to amend, failing to rule timely and properly on 33 evidentiary objections, and failing to award them attorneys fees as the prevailing party.

     Aside from an excellent hint in the first paragraph of this 31 page opinion as to how it will end (“Affirmed”), footnote 5 also provides excellent clues:  “Defendants failed to designate for inclusion in the record on appeal their motion for attorney fees, the reporter’s transcript of the hearing on their motion for attorney fees, or the minute order for that hearing.  Moreover, the register of actions included in the clerk’s transcript reflects a hearing on the motion for attorney fees, but does not indicate how the court ruled on that motion.”  Take heed, fellow practitioners!

     We suspect that one of the reasons the case was published is that it provides a coherent statement regarding appellate jurisdiction and anti-SLAPP motions for attorney fees:

“While none of these cases is directly on point, the single coherent thread weaving through the tapestry of cases on anti-SLAPP motions for attorney fees, as well as any cursory review of basic appellate procedure, is that a party must, at minimum, file a notice of appeal from the order on the motion for attorney fees itself, or from a final appealable judgment entered thereafter.  Therefore, this court has no jurisdiction to hear an appeal from an order rendered after defendants filed a notice of appeal from an appealable appellate interlocutory judgment.”

     Here, plaintiffs failed to file a notice of appeal form the order denying their motion for attorney fees.  Instead, they appealed from an order granting, with leave to amend, their SLAPP motion – and their notice of appeal failed to mention an intent to appeal the court’s ruling on their motion for attorney fees.

     And what about the failure to timely rule on objections to evidence?  Yup, that was a mistake alright, but the error was harmless.

     Finally, the Court of Appeal concluded that defendants hadn’t even prevailed on their anti-SLAPP motion.  Why?  “[B]ecause the court’s order granting defendants’ anti-SLAPP motion with leave to amend was the functional equivalent of a denial . . . .”

     So the plaintiff was spared having to deal with attorney’s fees.  But he is not home free:  “If plaintiff cannot amend the complaint to allege specific, unprotected speech, then defendants’ remedy may well be a sustained demurrer without leave to amend or a subsequently granted anti-SLAPP motion.”  Who knows?  The attorney fees issue may come up yet again in this case.

Prevailing Party: “Epic Contract Dispute” Over San Francisco Property Comes To An End

 

Last Hurrah Is That No Side Was a Prevailing Party for Fee Recovery.

     In what the appellate court itself described as an “epic contract dispute” over San Francisco property ownership between two sides litigated since 1999, the conclusion is a poignant one and one for which this blog was first inspired. No one was awarded attorney’s fees as the prevailing party, a determination sustained on appeal.

     Shih v. Lien, Case No. A128525 (1st Dist., Div. 5 Aug. 11, 2011) (unpublished) involved a property dispute over certain San Francisco property in which Woo obtained property ownership but lot his bid to rescind the entire purchase agreement, while the other side beat the rescission attempt, retained an equitable share of the property, but lost a bid to strip Woo of control over the property. These “mixed results” led to the lower court denying each side’s request for fee recovery under a promissory note contractual clause, after undertaking both an “action-by-action” analysis and “litigation objective” scrutiny.

     The appellate court affirmed. It found that the rescission claim was “on the contract” for Civil Code section 1717 purposes, so that it could be factored into the analysis of who prevailed on what. (Reveles v. Toyota by the Bay, 57 Cal.App.4th 1139, 1152 n. 6 (1997).) The Court of Appeal also agreed that no one got a clear victory, such that the “no prevailing party” determination by the trial judge was entitled to deference upon review.

     BLAWG BONUS:  “Makes Ben Hur look like an epic.”  -- Tagline for Monty Python and the Holy Grail (1975).

Employment: Employer Denied An Award Of Routine Costs After Winning An Overtime Compensation Case Gets Vindication On Appeal

 

Prevailing Party Entitled to Routine Costs in Labor Code section 1194 Overtime Compensation Case.

     Employer in Plancich v. United Parcel Service, Inc., Case No. E050631 (4th Dist., Div. 2 Aug. 11, 2011) (certified for publication) defensed employee in an overtime compensation/meal and rest break/failure to maintain records case. However, the trial court denied an award of $38,387.20 in routine costs based on the conclusion that the Labor Code section 1194 overtime compensation statute would not allow costs to a winning employer (but would to a winning employee).

     The Fourth District, Division 1 overturned the ruling so that employer could receive routine costs.

     The appellate court determined that section 1194 had no express exception to the general rule that a prevailing party is entitled to costs. At best, any suggestion that a prevailing employer is prohibited from recovering its costs is implied by the section 1194 language. However, without an express exception to the general rule, routine costs were awardable. In reaching this conclusion, the appellate court also distinguished Earley v. Superior Court, 79 Cal.App.4th 1420 (2000), finding it dealt with attorney’s fees and did not discuss the applicable routine costs statutory provisions. Despite the policy argument that a routine costs award might have a chilling effect on employee lawsuits, the clearness of the statutory language left no room for judicial fiat.

Employment/Prevailing Party: Breach Of Partnership Agreement Claim Did Trigger Unpaid Wage Fee Shifting Statute

 

However, Lower Court Correctly Determined Plaintiff Was Not Prevailing Party.

     Labor Code section 218.5 is a prevailing party fee-shifting provision for claims involving unpaid wages. That section was central to the next case, specifically with the question funneling down to who prevailed.

     In Lutz v. Sortwell, Case No. D055792 (4th Dist., Div. 1 July 29, 2011) (unpublished), cross-complainant brought a breach of partnership agreement and unpaid wages claims against cross-defendants, eventually winning $13,800 in “sweat equity” damages on the breach claim and $90 in unpaid wages. The lower court denied both sides’ requests for fees, with cross-complainant seeking $46,000 in fees under Labor Code section 218.5 and the other side seeking $240,000 in fees based on Civil Code section 1717 due to a provision in a resident manager employment agreement (on a claim adjudged against cross-complainant). Importantly, from a procedural standpoint, plaintiff dismissed the Labor Code claim and was awarded damages on partnership agreement breach claim, not pressing Civil Code section 1717 as a basis for a fee award.

     The appellate court affirmed.

     The Labor Code 218.5 claim dismissal was not found dispositive, because the breach of partnership agreement claim did involve a claim for nonpayment of wages. However, that did not end the inquiry. The appellate court observed that a pragmatic test guides the “prevailing party” determination. Because cross-complainant sought $32,000 in the trial court and $83,000 under an unsuccessful new trial motion (but got much less--under $14,000), and the cross-defendants did not completely defense the case, the lower court was right to conclude no one prevailed. So, in the end, everyone ended bearing their own fees in this one.

Prevailing Party: Charter School, Not Successful In Revocation Proceeding On Appeal, Could Not Recover Attorney’s Fees

 

Neither Private Attorney General Statute Nor Government Code § 800 Warranted Fees.

     Today’s Fresh Start, Inc. v. L.A. County Office of Education, Case Nos. B212966/B214470 (2d Dist., Div. 1 July 12, 2011) (certified for publication) reversed a charter school’s revocation decision win below against L.A. County. As a result, the lower court’s denial of charter school’s fee request was affirmed, because it could not be deemed the “successful party” under California’s private attorney general statute (Code Civ. Proc., § 1021.5) and it did not show that the lower court proceeding was arbitrary or capricious so as to trigger a “prevailing party” determination under Government Code section 800(a).

Prevailing Party/Section 1717: Trope Restriction Applies To Non-Section 1717 Contexts

 

Bad News for Attorneys . . . Co-Counsel Cannot Try to Circumvent Limitation By Representing Each Other In De Novo Collection Matter Following Fee Arbitration.

     Here is a somewhat of a wild one, where two attorneys co-counseling for the same clients were denied fee recovery after a successful jury verdict, following on the heels of a fee arbitration award de novo request by attorneys’ former client. The restriction in Trope v. Katz, 11 Cal.4th 274 (1995) was found dispositive, a restriction that generally denies Civil Code section 1717 fees to a self-represented lawyer-litigant in a contractual action against a former client.

     In Law Office of Edward M. Higginbotham v. Horejsi, Case No. A128521 (1st Dist., Div. 2 June 24, 2011) (unpublished), two attorneys representing client eventually won a jury verdict against client after he rejected an adverse fee arbitration award and then requested a trial de novo, in a situation where each attorney represented the other. The two attorneys then sought recovery of attorney’s fees from client for their de novo win under Business and Professions Code section 6204(d), which allows for a discretionary award to a repeat fee arbitration prevailing party. However, the trial court denied fees by virtue of the Trope restriction, triggering an appeal by the disappointed attorneys.

Section 1717/Prevailing Party: Only Winning Fee Recovery Issue On Appeal Does Not Make One A Prevailing Party

 

Plaintiff Won Below, But Denied Fees Based on Trope, With Affirmance on Fee Recovery Not Making Defendant the Prevailing Party.

     The next case is an elegant, short unpublished decision that demonstrates Civil Code section 1717 “prevailing party” status must be based upon consideration of the whole lawsuit, not just an appellate win on a non-merits fee recovery issue.

     Law Offices of Nejadpour & Associates v. Gonzalez, Case No. B226082 (2d Dist., Div. 5 June 13, 2011) (unpublished) involved an attorney who successfully sued an ex-client and recovered a $23,029.60 judgment. However, attorney was denied the request for attorney’s fees based upon the Trope restriction--attorney used an employee with whom the firm did not have an attorney-client relationship, a determination precluding a fee award and one affirmed in a prior appellate decision. Ex-client did obtain appellate costs, but also moved to recoup fees--a request that was granted by the lower court.

     The fee award was reversed, in a 3-0 panel decision authored by Acting Presiding Justice Armstrong, because the matter was a legal issue reviewed on a de novo basis.

     Wood v. Santa Monica Escrow Co., 176 Cal.App.4th 802, 804, 808 (2009) was dispositive in this particular cause. Much like Gonzalez, Wood held that a party prevailing on appeal is not necessarily the prevailing party for purposes of a 1717 award. The winning of the appeal on the fee recovery issue did not negate that attorney did win and obtain a money judgment against client in the lower court proceedings. Although ex-client prevailed on appeal, attorney prevailed in the whole lawsuit, such that a fee award to ex-client was not sustainable.

Costs/Prevailing Party: Where Party Obtains Nonmonetary Relief In Mixed Claims Litigation, Costs Prevailing Party Determination Is A Discretionary Call

 

Attorney Winning Contractual Costs Assessment Dispute Collected Substantial Costs.

     Here is one demonstrating how prevailing party costs determinations are frequently discretionary in nature in multi-count litigation involving both monetary and nonmonetary claims.

     In Petrik v. Mahaffey, Case No. G042114 (4th Dist., Div. 3 June 9, 2011) (unpublished), plaintiff was represented by a law firm (attorney) who sent 13 separate CCP § 998 offers in a construction defect case, with the various offers exceeding the amount of the prior rejected global demand Plaintiff’s counsel later tried to withdraw these offers, arguing he did not have authority to extend them even though the offers had been accepted. Attorney’s argument for withdrawal was rejected by both the trial and appellate courts in earlier proceedings. Client then sued attorney on a number of legal and equitable theories, but the thrust was legal malpractice in failing to obtain 998 offer transmittal authorization as well as centering on the contractual interpretation of whether a costs assessment was triggered under the parties’ legal services engagement agreement.

     The matter was bifurcated for trial, with the court initially granting partial nonsuits in favor of attorney. The jury found some for and some against each side, but determined that the client owed lawyer about $28,000 in costs under the costs assessment provision. The court found this latter determination was “purely advisory” in nature and proceeded to change it so that attorney was owed $228,260 by client under the contract costs assessment claim. Then, the lower court determined that attorney was the prevailing party and assessed litigation costs of $274,594.27 against client, which obviously prompted an appeal.

Arbitration/Prevailing Party: Client’s Efforts In Compelling Contractual Arbitration Under Arbitration-Bearing Fee Clause Gives Rise To Fee Recovery

 

Appellate Court So Holds in Prior Case After a Rehearing.

     In a prior post on October 13, 2010, we reviewed the case of Benjamin, Weill & Mazer v. Kors, Case No. A125732 (1st Dist., Div. 2), which was published but then erased from the books after the appellate court granted a rehearing on its own motion on October 26, 2010. Now, the same case has been republished, following rehearing, on May 5, 2011. No change in result, but another section added on an attorney’s fees issue.

Prevailing Party: Party Not Prevailing On Contractual Claims Not Entitled To Fees

$57,834 Fee Request Properly Denied.

     Just to show you how “prevailing party” determinations for attorney’s fees and costs purposes diverge, stay with us and follow the next case.

     In Chu v. Madison, Case No. A127892 (1st Dist., Div. 1 Apr. 21, 2011) (unpublished), the trial court denied a fee request by plaintiffs for $57,834. The principal basis was that plaintiffs did not prevail on contractually-based fee claims, although they did recover on other claims.

     The appeal did not go well for plaintiffs.

     After all, they lost on the contract claims so they were not entitled to a contractual fee award as a matter of law. Costs, okay; fee award, no go.

“Now we’re up, now we’re down, we can see all over town.”  1906.  Library of Congress.

Prevailing Party/Special Fee Shifting Statute/Costs: Taxpayer Reaps $186,342.54 As Fee Recovery When Trial Court Remands Case Back For Assessment Board Base Tax Year Recalculation

 

Fees Justified Under Government Code Section 800 and Revenue and Taxation Code Section 1611.6; Costs Of $19,788.92 Justified Under CCP § 1032.

     Here are two companion cases from the Fifth District, Canandaigua Wine Co., Inc. v. County of Madera, Case Nos. F059256 and F059621 (Apr. 20, 2011) (unpublished), discussing fee-shifting statutes we do not frequently see.

     The fee shifting provisions are two in number. Government Code section 800 provides that a complainant prevailing in an appeal of an administrative proceeding award may be able to collect from the public entity reasonable attorney’s fees if the there was arbitrary or capricious action or conduct by the public entity. In turn, Revenue and Taxation Code section 1611.6 provides that a county board’s action is deemed to be arbitrary and capricious within the meaning of section 800 if the county board either fails to make findings of if the findings made are found to be so deficient by a reviewing court that a remand to the county board is ordered.

Prevailing Party: Plaintiff Prevailing On Common Count And Defendants Prevailing On Contract Count Justified “No Prevailing Party” Determination

Second District, Division 6 So Holds -- Using Pragmatic Standard for Fee Recovery.

     Here is one which teaches that the “prevailing party” determination is a fluid, pragmatically-based determination, as we have explored in many past posts.

     Rocketstar Robotics, Inc. v. California Motors, LLC, Case No. B226326 (2d Dist., Div. 6 Apr. 19, 2011) (unpublished) was a situation where a plaintiff recovered based on a common count (implied-in-fact contract) but was “defensed” on a contract count against defendants based on the determination that a certain written contract was just a template never entered into by the parties. Defendants moved to recover--gulp!--$171,013.95 in attorney’s fees on the theory that they prevailed on the express contract count. The trial court denied the fee request, triggering an appeal.

Arbitration/Prevailing Party/Construction: Dueling Prevailing Party Determinations May Sting One Party To Its Dismay

 

One Party Prevails, But Still Suffers Adverse Judgment of Over $2 Million When Opponent Also Prevailed.

     This next case is a sobering reminder that “prevailing party” determinations do not necessarily result in one winner in multi-claim litigation. Even though one party might prevail and obtain a substantial fee/costs award, the other party--if that party prevails too--might outstrip a fee/costs recovery depending on how the facts fall. Bear with us and see.

     In Erreca’s, Inc. v. Safeco Ins. Co of America, Case No. D056420 (4th Dist., Div. 1 Apr. 18, 2011) (unpublished), a construction defect case giving rise to prior appellate decisions, an arbitration panel and confirming superior court determined that plaintiff was the prevailing party on a wrongful construction retention claim but that certain defendants prevailed on a breach of contract claim subject to Civil Code section 1717 fee shifting. Plaintiff eventually recovered $1,220,785.01 on the wrongful retention claim (recovering the improperly retained amounts, interest, attorney’s fees and costs). That sounded good, didn’t it? However, that enthusiasm soon dissipated because defendants were awarded $3,228,939.70 in fees and costs for prevailing on a contract claim against plaintiff, meaning that defendants had a net recovery of $2,008,154.69.

     The miffed plaintiff appealed.

In the News: Judge Milton Shadur Shoots Down Fee Petition in High Stakes Gun-Rights Litigation

Blasted Legal Fees Unite Civil Rights Attorneys Across the Political Spectrum in Shotgun Marriage After Judge Drops the Hammer on Fee Request in 2nd Amendment Litigation.

      Mike Scarcella reports in The National Law Journal (April 4, 2011, online edition) that Alan Gura, the high-caliber lawyer behind the Supreme Court’s gun-rights precedent “may lose by winning.”  Far from a small bore, it’s all about the attorney’s fees.

     Step back to 2001:  In Buckhannon Board & Care Home Inc. v. West Virginia Dept. of Health and Human Resources v. Virginia Dept. of Health and Human Resources, 532 U.S. 598 (2001), the Supreme Court, in a 5-4 decision, targeted the “catalyst theory” of fee recovery in civil rights actions, and plugged it.  The catalyst theory (which we have posted about in California state law cases), allows public interest attorneys to claim “prevailing party” status for their clients, short of a final judgment, if their legal efforts lead to a beneficial change in the legal relations of the parties, even though this may be accomplished outside the courtroom.  At the time Justice Ginsburg, dissenting, wrote that the majority had missed the mark: "Congress prescribed fee-shifting provisions like those included in the FHAA and ADA to encourage private enforcement of laws designed to advance civil rights. Fidelity to that purpose calls for court-awarded fees when a private party's lawsuit, whether or not its settlement is registered in court, vindicates rights Congress sought to secure."  But Justice Ginsburg’s peashooter was outgunned by the majority’s rod.

     Forward to 2010.   In June, immediately after the Supreme Court struck down Chicago’s handgun ban as unconstitutional, the City changed its rule to allow residents to keep firearms in their houses.  The City did so before any final order, and even before the case was returned to the trial court for additional proceedings.  The 7th Circuit directed the trial judge to dismiss the litigation as moot – thereby raising the issue in the trial court whether the gun-toting plaintiff was the “prevailing party”, now that the catalyst theory has been zapped.

     Famed Chicago Federal District Court Judge Milton (“Magnum”) Shadur bagged the plaintiff’s fee petition – without an enforceable judgment, and without the catalyst theory, plaintiff was not the prevailing party.  Hoist with his own petard.

     Civil rights advocates across the legal spectrum, e.g., Arthur Spitzer, legal director of the ACLU, and lawyers for the NRA, seem to be in agreement that they are looking down the barrel of a gun (aimed at them), and do not like what they see.

     We can look forward to a shootout in the 7th Circuit Corral, as Mr. Gura has appealed the denial of the fee petition.  It remains to be seen whose “persuader” will be more persuasive.

     Will this be the Tombstone of civil rights litigation?  Stay tuned for future episodes.

Johnny Oro

Section 1717 and Prevailing Parties: Fourth District, Division One, Rules that Civil Code Section 1717’s Prevailing Party Standard, Mutuality Principle, and Reasonable Fees Standard Apply to an Attorney’s Fees Provision in a Consent Decree

Order Granting the People $707,882.50 in Attorney Fees and Costs of $32,673 Goes Up in Smoke, But Not to Worry, Parties Will Get to Light Up Again in Trial Court

     In this appeal, R.J. Reynolds Tobacco Company challenged an order awarding attorney fees to the People for enforcing a Consent Decree banning participating tobacco manufacturers from “using or causing to be used” any “cartoon” in the advertising, promoting, labeling or packaging of tobacco products.  The Consent Decree contained a unilateral provision:  “In any proceeding which results in a finding that a Participating Manufacturer violated this Consent Decree and Final Judgment, the Participating Manufacturer or Participating Manufacturers found to be in violation shall pay the State’s costs and attorneys’ fees incurred by the State of California in such a proceeding.” In re Tobacco Cases I, Case No. D056589  (4th Dist. Div. 1 4/5/11) (certified for publication).  But is a Consent Decree entered by the Court the same as a contract, and is a proceeding to enforce a fee provision in a Consent Decree an “action on a contract” triggering recovery of attorney’s fees under Civil Code section 1717 rules and standards?

Prevailing Party/Section 998: Fourth District, Division 3 Unpublished Opinion Explores Nuances In Scope of 998 Offers And Prevailing Party Status When No Monetary Relief Obtained After Factoring of Prior Credits

 

L.A. County Gets Nada Monetary Relief After Credits, And Is Stung By Affirmance of 998 Offers by Insurers Costing It $5.9 Million.

     The next one is the apparent conclusion of what our local Santa Ana appellate court analogized as being “easily the 14 Years War of civil litigation in Orange County” between Los Angeles County, seeking well over $100 million from certain insurers, and insurers who recovered $5.9 million from the County after their Code of Civil Procedure section 998 offers were rejected.

Above:  The miseries and misfortunes of war (1632).

     The decision capping this litigation war took the form of County of Los Angeles v. New York Marine and General Insurance Co., Case No. G038218 (4th Dist., Div. 3 Mar. 30, 2011) (unpublished), a 114-page unpublished opinion written with panache by Acting Presiding Justice Rylaarsdam on behalf of a 3-0 panel--must reading in the 998 area.

     In affirming the 998 cost awards, here are the highlights of the appellate court’s discussion:

     *998 offers do not have to deal with issues outside the pleadings, with underinclusive offers being better than overinclusive ones (Valentino v. Elliott Sav-On Gas, Inc., 201 Cal.App.3d 692 (1988) [condemning overinclusive offers]);

     *Insurers’ 998 offers were nice models of simplicity, offering terms if County dismissed its complaint and if the insurers dismissed their cross-complaints;

     *A 998 offer does not require a party to make a global settlement offer to all opponents or to resolve all aspects of a case (One Star, Inc. v. STAAR Surgical Co., 179 Cal.App.4th 1082, 1096 (2009));

     *a 998 offer does not need to clear up all uncertainties between the parties as long as it is specific in what it proposes, with the parties encouraged to meet and confer over uncertainties or make counteroffers (Berg v. Darden, 120 Cal.App.4th 721 (2004); Hartline v. Kaiser Foundation Hospitals, 132 Cal.App.4th 458 (2005));

     *998 offers are interpreted as contracts, with the insurers doing a good job in this case of making a specific statement containing clear terms and conditions in the offers.

     The last issue was debunking County’s argument that it actually prevailed. Although it did get credits from prior settlements with other defendants, plaintiff recovered no monetary judgment in the end. Goodman v. Lozano, 47 Cal.4th 1327 (2010) [one of our Leading Cases] put the nail in this argument, holding that a party recovering nothing monetarily by way of trial is not a prevailing party (even if prior credits got the matter down to this “zero result”).

Appealability/Costs/Prevailing Party: Fourth District, Division 2 Faces Wild Decision With A Wide Variety of Appeability, Costs, and Fee Issues

 

Published Part of Decision Holds That Order Taxing Costs Allowable After An Appeal Awards Costs Is Itself an Appealable Order.

     Krikorian Premier Theatres, LLC v. Westminster Central, LLC, Case Nos. E047523/E049537 (4th Dist., Div. 2 Mar. 24, 2011) (certified for partial publication) is a wild decision in that a prior appellate reversal completely changed the playing field as far as awards of fees and costs were concerned. Here is what happened before and afterwards.

Above:  The Barnum and Bailey greatest show on earth--L'Auto Bolide thrilling dip of death--M'lle Mauricia de Tiers, the fearless, young and fascinating Parisian, in a dreadful, headlong leap, loop and topsy turvy plunging somersault with an automobile.  c1905.  Library of Congress.

    

Prevailing Party/Section 998/Section 1717: Defendant Prevailed Under Section 1717 Because Earlier Appellate Court Decision Found Reversal And No Need For Retrial

 

Plaintiff’s Voluntary Dismissal Without Effect; Offset for Prior Settlements Meant No Change in Result Due to Her Prior 998 Offer.

     A trifecta of issues was considered by the appellate court in Goldstein v. Williams, Case No. D057826 (Mar. 24, 2011) (unpublished).

     In this one, plaintiff sued for breach of contract and in tort for claimed residential condominium nondisclosures. Eventually, she prevailed on a negligent misrepresentation theory, but the appellate court in an earlier opinion reversed her win on the contractual breach claim in a way that found no retrial was necessary given that no new evidence could be introduced to get around the absence of a contract claim as a matter of law. Defendant moved for fee recovery under Civil Code section 1717 (given the presence of a fees clause in the purchase agreement), with the lower court awarding her $34,375 in fees. Plaintiff appealed.

     None of her three arguments for reversal hit the persuasiveness target.

     Given that the prior reversal was one in which no retrial occurred, defendant did prevail on the merits. Plaintiff’s subsequent dismissal of the contract claim without prejudice, on remand, had no effect given that the appellate court had legally ruled on the merits of the case as a matter of law. Finally, when prior settlements with other defendants were considered, plaintiff had a zero verdict that did not exceed her prior CCP § 998 offer, which meant the lower court had discretion to determine she did not prevail under Goodman v. Lozano, 47 Cal.4th 1327, 1333 (2010). No discretion was abused in finding that plaintiff was not entitled to fees based on her 998 offer. Fee award to defendant affirmed.

Prevailing Party/Section 1717: Court’s OSC Dismissal of Entire Action, Both Complaint And Cross-Complaint, Meant No Contractual Fees Were Recoverable

. . . However, Remand For Fee Recovery Evaluation on Dismissed Tort Claim.

     For you folks entertaining voluntarily dismissals of actions, must reading in this area--if you are bothered about attorney’s fees exposure--is our state supreme court’s decision in Santisas v. Goodin, 17 Cal.4th 599, 602, 607-608 (1998) [one of our Leading Cases]. We don’t hide the ball on this blog, so it basically means that a voluntary dismissal cuts off fee exposure on contractual claims but that exposure might remain for non-contract claims depending on the breadth of the fees clause. (Yep, a lot to take in, but it is the law). Santisas principles were at play in the next case.

     G&B Development Co., LLC v. MKA Cabazon Partnership, LP, Case No. E049570 (4th Dist., Div. 2 Mar. 23, 2011) (unpublished) is a situation where a trial court denied postjudgment fees under Civil Code section 1717 after a court’s OSC hearing to dismiss for failure to prosecute where the parties agreed upon a dismissal of an entire action if the dismissal included both plaintiff’s complaint and defendant’s cross-complaint. Defendant was dismayed in not obtaining an award of fees, and appealed.

Homeowner Associations/Prevailing Party: HOA Was Not Liable For Fees And Costs When It Obtained Injunctive Relief Before Dismissing Its Complaint Voluntarily

 

Defendant Not Entitled to Fees Where Contractually-Based Complaint Voluntarily Dismissed And Not Entitled to Costs Under Discretionary Prevailing Party Provision.

     Homeowner association (HOA)/homeowner disputes have resulted in us doing a fair amount of posts under our category “Homeowner Associations.” Here is one more to add to the list, with a homeowner seeking $64,572.84 in fees and costs although he was both at the trial and appellate court levels.

     In Leadwell Homeowners Assn. v. Deppen, Case No. B224870 (2d Dist., Div. 1 Mar. 22, 2011) (unpublished), HOA sued defendant homeowner to obtain compliance under the CC&Rs, obtaining a TRO and preliminary injunction. After obtaining this relief, HOA dismissed the case voluntarily. Homeowner then moved to recoup $64,572.84 in fees/costs ($23,900 identifed as attorney’s fees). The lower court decided that the dispute was contract based and that the voluntarily dismissal meant no fee recovery was allowable under the Santisas rule [see our Leading Cases]. Homeowner was also denied recovery of routine costs. Homeowner appealed.

Costs/Prevailing Party: Trial Court’s Dismissal Of Case Based On Worker’s Compensation Exclusivity Defense Did Not Deprive It Of Jurisdiction To Award Costs To Prevailing Party

Fifth District So Decides, But Lays Down No Absolute Rule On Subject Matter Jurisdiction Issue.

     Brown v. Desert Christian Center, Case No. F060139 (5th Dist. Mar. 17, 2011) (certified for publication) involved a personal injury that was dismissed on the jurisdictional defense that the involved injuries were within the exclusive province of the worker’s compensation system. Prevailing defendant moved for costs of $7,909.88 (mainly deposition costs), but the lower court denied the request based on the thesis that it lacked jurisdiction to award costs--after all, it found a lack of jurisdiction when dismissing the case.

     The Fifth District reversed the fee denial.

     Although finding that an absolute lack of subject matter jurisdiction might preclude a costs award in the right circumstances (but not reaching the issue), the appellate court found that the trial court did have jurisdiction to determine the exclusivity defense such that costs were in order. The judgment of dismissal carried enough jurisdiction, so to speak, so that the award of costs was a proper incident to the trial court’s power to adjudge the jurisdictional defense in the first instance. Although distinguishing the older case of Gutting v. Globe Indemnity Co., 119 Cal.App. 288, 289 (1931), the Fifth District panel made clear it did not favor the reasoning in this decision.

     We bloggers predict that there will be evolving jurisprudence on this issue.

      Accident case - Union Hospital. Molla Mesuretta, 17 years. Weaver at Sagamore Mill. Worked two years. Laceration and partial evulsion of tip of finger and nail. Hurt September 1915 while cleaning loom in motion. "They all clean when the machine is going." She will always be handicapped. Not able to go back yet. Finger is tender. Nail split and finger tip cit to the quick. Wages $7.50; compensation $4.67. Finger that she needs most in weaving was hurt.  Location: Fall River, Massachusetts.  Library of Congress.

Prevailing Party: Sonoma Risk’s Contract Litigation Insurance Catching On

 

Increased Attention in the Legal Community; Co-Contributor Marc Quoted in California Lawyer; Co-Contributor Mike To Speak At July 8 Century City Panel.

     In our August 3 and 6, 2010 posts, we discussed contract litigation insurance (CLI), a product being offered by Sonoma Risk Insurance Agency. We described the coverage in depth in those prior posts -- it is a form of insurance coverage for an adversary attorney’s fee award subject to certain conditions, certain exclusions, and underwriting qualifying standards.

     We can now report that Sonoma Risk is getting more and more exposure in the legal community. Among other things, it is profiled in a November 1, 2010 article by Cynthia J. Larsen of the Orrick Law Firm and in a March 2011 article by Mike Rosen in the California Lawyer.

     In the California Lawyer article, Mr. Rosen reports that 95% of Sonoma Risk’s clients, including real estate and construction companies, are based in California and have collectively bought more than $9 million in policies to cover fee awards in specific contract cases, paying one-time premiums ranging from less than $1,500 to about $230,000. The article shows why our blog exists: of the roughly 4 million contract disputes filed annually in U.S. courts, as many as 70% involve contracts with fee-shifting provisions. Co-contributor Marc is quoted as saying, “Attorney’s fees are very significant in deciding whether to go to court. It’s possible for fee-shifting provisions to greatly add to the risks of litigation, and many lawyers and clients are risk adverse.” Interestingly enough, Sonoma Risk is apparently offering new coverage in this area as litigation heats up (because its standard CLI is usually obtained at an early juncture after a lawsuit is filed), although the premiums are obviously higher when coverage is bought when things are beginning to explode in a litigation matter.

     Ms. Larsen’s Orrick article concurs with co-contributor Marc’s perception that paying an adversary’s lawyers is one of the main risks worrying both plaintiffs and defendants in contract litigation. She also notes that parties will likely be asking for CLI coverage information in discovery as this form of insurance catches on, similar to the form interrogatory we have all seen relating to non-fee insurance. Mr. Larsen also makes the point that CLI coverage should be attractive to ERISA fiduciaries and bankruptcy trustees who want to protect corporate funds or the corpus of an estate from an adverse fee award, even though the fiduciaries and trustees are generally protected from personal liability by the business judgment rule.

     BLOG UPCOMING EVENT--Co-contributor Mike looks like he will be speaking at a July 8 Century City panel involving a Provisors Legal Affinity Group meeting. Mr. Ames of Sonoma Risk has put together a panel of various Southern California law partners and Southern California corporate counsel, which will explore such topics as effective attorney’s fees provisions, CLI, and drafting effective attorney’s fees motion. Mike will take good notes and report back on the highlights of this meeting.

Prevailing Party: $60,675.10 Fee Award Is Reversed For Failure To Apply Correct Legal Standard

Trial Court Found Prevailing Party Based On Costs Recovery Standard, One That Diverges From the Apt One for Fee Award.

     The next decision illustrates an important distinction often times glossed over or mistakenly ignored with respect to a determination of the prevailing party. The distinction is this: there is a difference between prevailing party for costs versus attorney’s fees awards.

     Lowdon v. Vaughn, Case No. F059470 (5th Dist. Feb. 9, 2011) (unpublished) reversed and remanded a $60,675.10 fee award despite the fact defendant prevailed for costs purposes. However, in making that determination, the trial court stated that its prevailing party determination even for fee purposes was made “pursuant to Code of Civil Procedure section 1032(a)(4)” (the costs statute saying that a simple net monetary recovery did the trick).

Prevailing Party: Attorney’s Fees Motion Properly Denied Where Moving Party Could Not Point To Contract For Fee Entitlement

Lack of Signatory Status in Moving Documents Was Dispositive.

     One of the ABC’s in moving for fee entitlement is to show a contract or statute forming a predicate basis for a fee motion. Without it, a litigant is generally left with the American Rule, which does not allow a party to recover for fees. That reality stung the next plaintiff moving for fees, even though it did receive moneys under an accepted CCP § 998 offer.

     The trial court in Classic Excalibur Holdings, L.L.P. v. Palm Springs Auctions, Inc., Case No. B218875 (2d Dist., Div. 5 Jan. 24, 2011) (unpublished) denied plaintiff’s motion for attorney’s fees after the defense accepted its 998 offer. The appellate court affirmed the fee denial under the abuse of discretion standard.

     Reason? Very simple. Plaintiff never produced a contract under which it was a signatory. Even if prevailing under a 998 offer, the prevailing party must demonstrate it had a substantive basis for fee entitlement. This was missing here. Plaintiff attached various car documents and a deposit receipt, some having fee clauses. However, none of the the documents showed plaintiff was a signatory to a contract with a fees clause. Under these circumstances, defendant could not be subject to fee exposure. (Canal-Randolph Anaheim, Inc. v. Wilkoski, 78 Cal.App.3d 477, 486, 496 (1978).)

Prevailing Party: $79,267.65 Winner Of Contract Dispute After Jury Trial Garners $261,176.50 Fee Award And $22,312.87 Costs Award

Fee Award Does Not Have to be Proportional to Damages Award for Civil Code Section 1717 “Prevailing Party” Purposes.

     Here is one which, yet again, reiterates that trial courts have tremendous discretion in determining the “prevailing party” under Civil Code section 1717 as well as the amount of damages to be awarded--which do not have to be proportionate to the damages award.

     Monarch Consulting, Inc. v. Karkehabadi, Case No. B214178 (2d Dist., Div. 2 Jan. 6, 2011) (unpublished) concerned a defendant who lost a contract dispute with plaintiff to the tune of $79,267.65 (about half of what plaintiff sought). The trial court then determined plaintiff had prevailed under a contractual fees clause, assessing against defendant a fee award of $261,176.50 plus $22,312.87 in costs.

     After losing a merits based appeal of certain issues, defendant challenged the “prevailing party” fee determination of the lower court. That was not persuasive, either.

     Hsu v. Abbara, 9 Cal.4th 863, 876 (1995) [one of our Leading Cases], which bases prevailing party status on a comparative analysis of the success or failure of litigation objectives by each side, “does not suggest that the trial court’s prevailing party determination need be inflexibly applied based on the monetary award,” preferring instead resort to an “equitable considerations” compass. (Slip Opn., p. 15.) Even though plaintiff did not get every penny that he requested, the lower court was well within its discretion in awarding the fees that it did--especially after a hard fought battle that went to a jury for eventual resolution.

Prevailing Party: Mixed Results Means Plaintiff Not Entitled To Fee Award Under Settlement Agreement

Despite County's Breach of Completion Date, Continued Negotiations Waived Any Breach and Mixed Results Sustained Fee Denial.

     Unless you have a clear win under a contractual fees clause, a trial judge has discretion to determine who the prevailing party is under Civil Code section 1717. We have blogged on many cases that underscore this truth, but the next case does it emphatically in the context of a settlement agreement with a clear fees clause.

     Maddock v. County of Sonoma, Case No. A128600 (1^st Dist., Div. 5 Dec. 30, 2010) (unpublished) is a case involving a settlement agreement (complete with a fees clause) between Healdsburg property owners and Sonoma County. County agreed to complete certain repairs with respect to a neighboring creek by a certain deadline of October 15, 2007, dubbed by the appellate court as "wildly optimistic." The parties continued to negotiate a resolution for two years later—yep, you heard right—with each side trading proposals but areas of disagreements remaining (including plaintiffs' insistence on a delay liquidated damages clause). After plaintiffs filed a summary motion to enforce the settlement under CCP § 664.6, the trial court decided that construction must be completed by August 31, 2010, but denied other demands by plaintiffs (such as the liquidated damages deal point). The lower court also refused their request for fees, despite the existence of a fees clause in the settlement agreement. (Hence, the reason that we post on this case.)

     Plaintiffs appealed --  and lost.

     Section 1717 gives the trial court discretion to award fees if no one got a clear victory. That was the case here. Neither side could agree on anything, with years of negotiations intervening such that the lower court could conclude that plaintiffs waived any breach by continuing negotiations and accepting performance by the County well past the October 2007 completion deadline. Because plaintiffs did not gain all of what they wanted, the substantial evidence rule accorded deference to the "no prevailing party" determination by the trial court—resulting in an affirmance of no fees in the case of the creek settlement agreement gone bad.

Prevailing Party: Goods News/Bad News Result Meant Party Not Entitled To Fee Recovery

Second District, Division 4 So Holds in Family Law Judgment Enforcement Case.

     Although deciding that a debt owed under an expired note and unenforceable trust deed still survives for enforcement under Family Code section 291, the litigants in each side of this case actually got both good news and bad news. Plaintiff succeeded in extinguishing the note and trust deed, but defendant retained the right to enforce her judgment in another way despite losing her security for the remaining balance on the family law judgment.

     In a cross-appeal, plaintiff challenged the lower court’s denial of fee recovery to him in Schelb v. Stein, Case No. B213929 (2d Dist., Div. 4 Dec. 17, 2010) (certified for partial publication, fee discussion unpublished). The appellate court found no error in the lower court’s conclusion. Because neither party prevailed, the contract clause containing that language was not triggered. (Topanga and Victory Partners v. Toghia, 103 Cal.App.4th 775, 780 (2002.) Also, even under other fee shifting bases, there was no prevailing party because the result was “good news and bad news as to each of the parties.” (Roden v. AmerisourceBergen Corp., 186 Cal.App.4th 620, 64 (2010).)

Construction: Plaintiff Awarded Quantum Meruit Recovery, But Suffering Defeat On 5 Out of 6 Other Claims, Was Not A Prevailing Party

Fee Denial Affirmed by Fourth District, Division 2.

     Cannan Construction v. Majewski, Case No. E048784 (4th Dist., Div. 2 Dec. 16, 2010) (unpublished) demonstrates that the trial court has substantial discretion in determining who is a “prevailing party” under fee shifting statutes.

     In this one, plaintiff won quantum meruit recovery from defendant, but also suffered some defeats--a directed verdict on 5 of 6 claims and an indemnification declaratory relief claim relating to unlicensed contractor disgorgements.

     Plaintiff cross-appealed from a trial court’s refusal to award it attorney’s fees. The appellate court agreed with the fee denial ruling. The reason was simple: the jury found there were no contracts between the parties (which gutted a Civil Code section 1717 fee claim), and plaintiff was not the “prevailing party” given the mixed results notwithstanding the quantum meruit recovery gained by plaintiff.