CALIFORNIA ATTORNEY'S FEES

California Disabled Persons Act: State Appellate Decision Finds That ADA Does Not Preempt, So Prevailing Defendant Entitled To Fee Award Without Showing Action Was Frivolous, Unreasonable, Or Groundless

First District, Division 4 Disagrees with Ninth Circuit’s Hubbard Decisions.

     In our July 3, 2008 and January 12, 2009 posts, we discussed the Ninth Circuit’s Hubbard decisions (Hubbard v. SoBreck, LLC, 531 F.2d 983 (9^th Cir. 2008) and Hubbard v. SoBreck, LLC, 554 F.3d 742 (9^th Cir. 2009)), which held that a mandatory award of fees to a prevailing under the California Disabled Persons Act (Civil Code § 55) was preempted by the American with Disabilities Act of 1990 (42 U.S.C. § 12101 et seq.) because Civil Code section 55 allowed a defense fee award without the ADA’s showing that plaintiff’s action was “frivolous, unreasonable, or groundless.”

     Now, a California intermediate decision—Jankey v. Lee, Case No. A123006 (1^st Dist., Div. 4 Feb. 5, 2010) (certified for partial publication)—has expressly disagreed with Hubbard II’s preemption finding, concluding that attorney’s fees are awardable to a prevailing defendant under section 55 without the more elevated ADA entitlement showing.

     In reaching this result, the state appellate court primarily found that (1) nothing in the ADA imposed uniform standards for complementary state law remedies (slip opn., p. 10), and (2) the California Legislature’s imposition of a two-way guaranteed fee provision in section 55 makes sense in light of the fact that the CDPA affords plaintiffs greater rights than the ADA (CDPA allows both monetary and injunctive relief, while ADA provides for only injunctive relief) (slip opn., p. 12.)

     That said and done, the $118,458 (out of a requested $129,264) fee award was affirmed. In an unpublished part of the decision, plaintiff challenged the reasonableness of the award. However, his challenges did not persuade the appellate court. Contrary to his argument, detailed billing records are not required to affirm a fee award, with attorney testimony on the number of hours expended being sufficient in the right circumstances. (Martino v. Denevi, 182 Cal.App.3d 553, 559 (1986).) Attorneys’ claimed hourly rates—with the lead attorney asking for $165—as well as distribution of work (lead attorney worked 76% of the claimed time)—were found reasonable given the low sought-after hourly rate for the San Francisco legal community and the relative complexity of the case.

President and Mrs. Coolidge with their military aides, greeting two veterans in wheelchairs.

Reasonableness Of Fees: Winning HOA Unit Owners Obtain $238,426 In Attorney’s Fees, But Fail At Obtaining $62,056 More

Court of Appeal Likes Reasoned Deductions Made by Trial Court.

     This next case might be put in the category “quit while you are ahead” as far as challenging the reasonableness of an attorney’s fees award, especially when you are asking for an increase to an already substantial award.

     Defendant unit owners in an owners’ association dispute won $238,426 in attorney’s fees under Civil Code section 1354(c), the Davis-Stirling Act fee-shifting provision allowing fees to be recovered by prevailing parties in an action to enforce governing documents (such as CC&Rs or LLC-analog provisions). However, they sought more, appealing because they were not awarded an additional $62,056. Losing plaintiff owners’ association also appealed, but later dismissed its appeal. That left the unit owners’ appeal.

     They lost in Showplace Square Loft Owners Assn. v. Mead, Case No. A122575 (1^st Dist., Div. 2 Jan. 19, 2010) (unpublished). After all, a party seeking attorney’s fees is not entitled to compensation according to that party’s notion of what should be paid.

     For anyone new to this area, you must read PLCM Group, Inc. v. Drexler, 22 Cal.4^th 1084 (2000), which discusses reasonableness of attorney’s fees in a Civil Code section 1717 context, but which has much broader application to many (if not most) fee-shifting statutory situations. [PLCM is one of our Leading Cases.]

     Defendants complained that they should have been awarded $18,476 in special assessments which were paid to fund the opponent HOA’s lawyers. The problem with this request was that defendants cited no authority demonstrating a basis to obtain this reimbursement under a fee rubric.

     Defendants then argued that they should have been paid an additional $23,821 for the work of their predecessor counsel. The flaw here was that prior counsel had agreed to a compromise by which the attorneys took only $4,000 for their work, a compromise not revealed to the trial court until the judge raised it at the fee hearing. Because this compromise was not disclosed by claimants in their opening papers, the lower court felt that the defendants were not playing “fair with the court,” a notion endorsed by the appellate court in affirming the failure to award these further fees.

     The trial court also properly disallowed $10,544 to successor counsel for “coming up to speed.” These duplicative fees can be discounted in the lower court’s discretion.

     Lastly, defendants challenged the lower court’s reduction of their counsel’s paralegal’s hourly rate from $170/hour to $100/hour. No abuse of discretion occurred, because HOA put in evidence that its paralegal only charged $80/hour and because defendants’ prior counsel’s paralegal only billed out at $100/hour (the latter being the eventual rate awarded by the lower court).

Reasonableness Of Fees: Fifth District Gives Us Some Insights Into Their Thinking On the Subject

Except for Complaint in Intervention Fees, Court of Appeal Sustains $1,764,222.50 Fee Award.

     For those of you practicing in California’s Central Valley (or, for that matter, attorneys wanting some more insight into how judges gauge the reasonableness of fees), stay tuned for the next one.

     The Fifth District, in Ennis Commercial Properties, LLC v. Paregian, Case No. F055151 (5^th Dist. Jan. 13, 2010) (unpublished), sustained in major part a $1,764,222.50 fee award to a prevailing defendant out of a requested $2,233,317. Multiple challenges were raised about the excessive nature of the hourly rates and overall request, but only one small concern required a remand.

     In the process, the Court of Appeal made these observations that will be helpful to us fee fanatics:

• The litigation did involve a property worth $ 20 million, with both sides running up multimillion fee awards (showing that what a litigation opponent spent may well have probative value);
• The trial court found these rates were reasonable for the Stanislaus County area: $300/hour for attorneys with 20 plus years of experience, $275/hr. for 11-19 years, $250/hour for 6-10 years, $225/hour for 1-5 years; $150/hour for law clerks/summer associates/interns, and $150/hour for paralegals;
• There is no categorical rule against reimbursement via fee award for administrative activities of lawyers and paralegals, with it being inevitable that these professionals will carry out some of these activities to appear in law firms’ hourly billings (although too much of this would antagonize the average client and probably lead a trial court to make appropriate reductions);
• California law did not track federal cases requiring more of an explanation as to why certain fees were awarded, reduced, or rejected (“ . . . and there is no California authority for the view that a trial court must explain why it finds the attorney hours submitted by a prevailing party to be reasonable even though the losing party says they are not reasonable,” rejecting adoption of McCown v. City of Fontana, 565 F.3d 1097, 1102 (9^th Cir. 2009) in the state arena);
• No authority precludes awarding time traveling or preparing to travel as attorney’s fees; and
• No rule indicates that a prevailing party otherwise entitled to attorney’s fees can never recover fees for unsuccessfully opposing a motion brought by the losing party.

     The one area requiring a remand was time spent on a complaint in intervention, which the trial court found noncompensable but apparently did not completely factor into the final award.

Finding that Plaintiff's Actions and Omissions Were "Exceptional" in Patent Lawsuit, USDC Judge Gary Feess Awards Substantial Fees to Defendant

 

Feess on Fees:  Award Equals $779,100.34 in Fees, $11,769.20 in Expenses, and $28,776.49 in Other Costs.

     We learned from an unpublished order in the next case that according to a recent American Intellectual Property Lawyers Association survey, "the average patent infringement suit with between $1 million and $25 million at stake costs $1.794 million to litigate through the end of discovery." Intamin, Ltd. v. Magnetar Technologies Corp., Case No. CV 04-0511 GAF (JWJx) (USDC, CA) (unpublished Order Re: Magnetar's Application for Reasonable Attorneys' Fees and Costs filed 12/28/2009).

     In patent infringement cases, 35 U.S.C. § 285 provides for the possibility of fee shifting when the Court finds "exceptional" circumstances. In Intamin, Ltd. v. Magnetar Technologies Corp., Judge Gary Feess, United States District Court Judge for the Central District of California, granted summary judgment in favor of Magnetar, the alleged patent infringer. The grant of summary judgment was in part the result of a finding that there was no infringement, and in part "an acknowledgment of Magnetar's 'unclean hands' affirmative defense." Finding that Intamin's actions and omissions were "exceptional", the Court awarded attorneys' fees under § 285.

     The opinion provides a nice summary of how to apply § 285 to determine reasonable attorney's fees and expenses. The Court reviewed survey data on hourly rates, the reasonableness of hours billed, and the application of the guideline factors cited in Kerr v. Screen Extras Guild, Inc., 526 F.2d 67 (9^th Cir. 1975). The Court awarded nearly the full amounts requested, except for prejudgment interest. While finding misconduct in the case, the Court did not believe that it was "highly egregious conduct" that would support an award of prejudgment interest in addition to what it awarded as fees and costs.

     The Court gave a nod to the experience and "high reputation" of Magnetar's patent counsel, Knobbe Martens. The Court's task was undoubtedly simplified by the fact that Intamin never submitted any opposition to the motion for attorney's fees.

     Marc knows Magnetar's counsel John B. Sganga, Jr., and one of the declarants in the case, Ed Pribonic, and sends them his regards and best wishes for 2010. For them, not a bad start to the New Year.

Reasonableness Of Fees: Trial Court’s Award of $85,537 Out Of Requested $246,406 Was No Abuse Of Discretion

Appellate Court Does Remand to Consider “Fees on Fees” Request.

     The next case is an interesting one with respect to using fee experts when moving for fee recovery. Where the expert has published a treatise, the Court of Appeal may use that treatise against the fee claimant’s position. That happened in the next decision we review.

     In Garcha v. Central Plaza-Union City, L.P., Case Nos. A122152, A123850 (1^st Dist., Div. 2 Dec. 23, 2009) (unpublished), tenants won a “use exclusivity” lease dispute against landlord, being awarded $37,725 for breach of lease and declaratory relief counts (after the trial court rejected fraud and misrepresentation claims) albeit seeking damages of over $110,000. (This merits determination was affirmed on appeal.) Tenants then sought to recover attorney’s fees of $246,406 (after discounting 15% off a $289,889 lodestar), plus the fees and costs of bringing the fee motion (which we refer to as “fees on fees”), based on a fees clause in the pertinent lease. The trial court awarded fees and costs of $85,537, although omitting any reference to awarding any amount of the requested “fees on fees” of $24,649. Tenants appealed, claiming the fee award was too low.

     For the most part, Justice Richman, on behalf of a 3-0 panel of the First District, Division 2, affirmed.

     In upholding most of the award, the appellate panel engaged in a nice discussion of fee reasonableness factors that can be considered by trial judges, who have large discretion in setting the amount of fees/costs to be awarded. The factors are nicely summarized in PCLM Group v. Drexler, 22 Cal.4^th 1084, 1095-1096 (2000) [one of our Leading Cases]. For example, the following factors were properly used to discount the fees requested by tenants: (1) duplicative attorney work was excluded; (2) tenants only had limited success, succeeding only on the contractual claims and only against one defendant for an amount that was only about a third of the requested damages; (3) the fees clause was “narrow,” only permitting recovery on the contract claims and permitting the trial court to apportion out non-covered tort claims; and (4) tenants only had limited success on several law and motion matters.

     However, the appellate panel did believe that the trial judge—who they commended for his thoughtful fees opinion—might have inadvertently omitted ruling on the “fees on fees” request, requiring a remand to see if this was so.

     BLOG UNDERVIEW—Among others, tenants used Richard Pearl as an expert in the fee proceeding. Mr. Pearl has written a CEB treatise on attorney’s fees. (Incidentally, co-contributor Mike deposed him a number of years ago in a lawsuit involving collection of allegedly delinquent fees.) In discussing the trial court’s ruling, the appellate panel did use some excerpts from Mr. Pearl’s treatise that ran contrary to the positions being asserted by tenants in the fee contest. So, if you are using an expert who has published widely, be prepared to “take as well as receive” with respect to the expert’s written commentary. Or, as an attorney was once heard to pray, “Oh Lord, may my opponent’s expert have published.”

Civil Code Section 1717: Mutuality Of Remedy Means Winner Gets Fees Even If Winner Proves There Was No Valid Contract

Recent Case Illustrates Operation of this Mutuality Principle.

     In Silva v. Tong, Case No. A124903 (1^st Dist., Div. 4 Dec. 11, 2009) (unpublished), plaintiff sought to enforce a purchase offer with an attorney’s fees clause as an enforceable contract even though it was never signed by defendants. Defendants were granted summary judgment, and then sought to recoup attorney’s fees and costs. They requested $80,581 in fees and $3,978 in costs, but the lower court awarded defendants $53,721 in fees and $3,978 in costs. Plaintiff appealed.

     Although her appeal of the summary judgment grant was dismissed based as being untimely in nature, the Court of Appeal decided the merits of the fee award despite ignoring some appellate transgressions (namely, failing to cite to the record and filing a noncompliant appellant’s appendix).

     The appellate panel noted an important policy permeating Civil Code section 1717: mutuality of remedy, that doctrine making a unilateral fees clause bilateral in effect. The mutuality principle at issue in this case was that a party prevailing under section 1717 (an action involving a written fees clause in a contract) is entitled to fees even when it wins on the grounds that the contract was inapplicable, invalid, unenforceable or nonexistent, if the party losing the action would have entitled to fees had it prevailed. (Rainier National Bank v. Bodily, 232 Cal.App.3d 83, 86 (1991).) That principle cemented the fee determination in favor of defendants.

     Plaintiff did challenge the amount of fees awarded, but that was easily dispatched as not being an abuse of discretion (the relevant standard on appeal). After all, the awarded fees were $26,860 less than what was requested by defendants.

     Plaintiff also made an interesting argument that the fee award was out of whack with other fee awards rendered in Alameda County Superior Court. This argument was swatted down with this observation: “ . . . fee awards made in other cases are irrelevant in any event, because they have no bearing on the consideration of the particular factors relevant to the determination of fees in this case.” (Slip Opn., p. 4.)

Reasonableness Of Fees: If You Are Gonna Challenge, Make Sure You Specify The Bases With Particularity, Whether Substantive Or As To Amount

 

Third District Rebuffs Generalized Challenges to Fee Award, Finding Many Arguments Waived Based on a Lack of Specificity.

     Defendant in Allen v. Fulton, Case No. C059088 (3d Dist. Dec. 9, 2009) (unpublished) got hammered with a $217,422 fees/costs award ($212,473 of which consisted of fees) after summary judgment motions and a bench trial, where defendant and his company were hit with a total damages award of $373,721.73. Defendant appealed the fee award, to no avail.

     The main problem was one of appellate practice: defendant either forfeited or lost arguments because he failed to make them with enough specificity.

     He argued that a statement of decision was necessary on a fee decision, which is downright contrary to existing California law. (Ketchum v. Moses, 24 Cal.4^th 1122, 1140 (2001).)

     Defendant then contended that there were inadequate contractual bases for the award, but the appellate court noted there was a plethora of transactional agreements with fees clauses that could justify the award.

     The next challenge was that the fee award was unreasonable in amount. The problem was that defendant failed to pinpoint the specific entries or amounts that were unreasonable, such that the challenge was waived. “It is not our job to comb the entire [supporting fee] declaration that contains hundreds of time entries to find the 15 that [defendant] claims are ‘readily identifiable’ [as error] . . . “ (Slip Opn., p. 8.)

     Defendant also claimed that the $200,000-plus fee award was disproportionate to the final award, but this was rejected because he ignored the true amount of the full judgment and also turned a blind eye to the contentiousness with which he litigated (and drove up costs).

     Finally, he argued that the trial court had to apportion between compensable and non-compensable fee claims. Wrong, because defendant’s defense intertwined facts in all the causes of action such that no allocation was mandatory.

Homeowner Associations: Ouch!—Condo Owner Stung With $238,000 Fees/Costs Award After Losing Contentious Battle Over Using Disputed Floor Tile In Unit

 

Fourth District, Division 1 Finds Award Disproportionate At First Glance, But Affirms Based Upon Total Review of the Litigation Below.

     Homeowner-homeowner association battles can be very, very contentious and expensive for the losing side—as the next homeowner learned, in a dispute over the floor covering in his condominium unit.

     McGuire v. 235 On Market Homeowners Assn., Case Nos. D053218/054131 (4^th Dist., Div. 1 Dec. 8, 2009) (unpublished) involved a condominium owner who got into an imbroglio with his homeowners association over whether disputed floor tile was an appropriate floor covering in light of noise and acoustical concerns as expressed in certain CC&Rs. Homeowner lost his action, and HOA won judgment on their cross-complaint.

     Then, catering to our existence in the blogsphere, the trial court awarded attorney’s fees of $225,200 and costs of $12,803.50 in favor of HOA and against homeowner.

     Decision on appeal: affirmed, much to the dismay of homeowner.

     Although observing “at first glance . . . this award seems disproportionate to the result in this case (the HOA is now able to enforce its order that McGuire remove three feet and nine inches of tile from the interior of his unit),” the appellate panel’s visceral reaction vanished upon closer review. The appellate record consisted of 16 volumes of records, with two sets of summary and cross-summary judgment motions by both sides. HOA used two different law firms, at different times, which submitted detailed billing statements to show what was done in the litigation. Both firms, together, requested $335,000 in fees, but the trial court only awarded $225,200—a 33% reduction for duplicative or unnecessary fees. Under the circumstances of this contentious litigation, the reviewing court could find no abuse of discretion in the lower court’s fees/costs award. (Children’s Hospital & Medical Center v. Bonta, 97 Cal.App.4^th 740, 782 (2002).)

Probate: Probate Courts Can Award Fees Against Losing Beneficiaries’ Future Trust Distributions When Their Actions Found To Be In Bad Faith

Fifth District, in Published Decision, Supports Broad Equitable Powers of Probate Courts.

     Probate contests are often donnybrooks between different beneficiaries or relatives. This next one was certainly that. However, the losing minority beneficiaries caused the trustee to expend lots of attorney’s fees, which were recouped when the probate court ruled they could be obtained from the losing beneficiaries’ future trust distributions. Unfair, cried the losers; neither equity nor statutory authority allows for such an award.

     Wrong, said the Fifth District Court of Appeal in Rudnick v. Rudnick, Case No. F056587 (5^th Dist. Dec. 3, 2009) (certified for partial publication).

     Boiling the facts down, minority beneficiaries did not want a trust’s principal asset, Onyx Ranch, sold under an arrangement approved by 60% of the germane trust beneficiaries. Minority members took a lot of actions to tank the sale, which did have a deadline for court approval. The lower court eventually approved the sale and ordered trustee to consummate it. However, the real upstroke is that the probate court granted trustee’s motion to recover $226,295.16 in attorney’s fees and costs, to be charged against losing beneficiaries’ future trust distributions. Losers, obviously unhappy, appealed.

     The result? A published decision that went against losers.

Reasonableness Of Fees: Hourly Rates Of Out-of-County Attorneys Sustained As Being Reasonable

 

L.A. Counsel Rates Found Reasonable in Complex Imperial County Lawsuit.

     One should keep in mind that, as an out-of-county attorney litigating in other venues, you should not assume your “native” hourly rates will not be honored in a subsequent fee motion after you have won. The next case solidifies that this may well happen in the right case, especially one that is complex in nature.

     In Imperial Assets Mgt. v. Matthews Land, Inc., Case No. D054440 (4^th Dist., Div. 1 Nov. 17, 2009) (unpublished), winning Los Angeles County-based counsel moved for an award of attorney’s fees based on his L.A. hourly rates in an Imperial County Superior Court action. The losing litigant opposing the fee request argued that the L.A. hourly rate was inappropriate for Imperial County. Not so, said the appellate panel. The Imperial County case was complex, justifying winner’s retention of out-of-town counsel, whose Los Angeles rates were to be used rather than the lower hourly rates earned in Imperial County. (Nichols v. City of Taft, 155 Cal.App.4^th 1233, 1242-1243 (2007).)

Fee Clause Interpretation: Landlord Awarded Substantial Attorney Fees For Prevailing In Three Actions Against Feisty Former Tenant

 

Court of Appeal Finds Fee Clause is Broad Enough to Encompass All Three Actions.

     Under Civil Code section 1717, the key to recovering fees in disputes involving contract and tort claims often devolves to a determination of whether the fee clause is sufficiently broad to encompass matters “arising out of” or “concerning” the agreement in question. That breadth did occur in the next case we review, which concomitantly led to an affirmance of a sizable attorney’s fees award in favor of a landlord as against former tenants.

     In Lippett v. Lembi, Case Nos. A115453, A116342, & A117583 (1^st Dist., Div. 5 Nov. 17, 2009) (unpublished), landlord basically won three actions against tenants arising out of a lease with a fees clause—an initial action by which the lease was declared to have been forfeited (awarding back rent and an attorney’s fees award of $80,000), a second action in the lease battle by which the parties entered into a settlement agreement (under which tenants were to pay certain principal sums and the $80,000 prior fee award over time on an installment basis), and a third action alleging primarily torts against landlord, in which tenants requested reinstatement of the lease (the lease previously determined to have forfeited by tenants). Landlord successfully obtained summary judgment in the third action, with the trial court awarding landlord $82,050.50 in further attorney’s fees against tenants. Unhappy, tenants appealed.

Reasonableness Of Fees And Costs: Recent Decision Is A Landmine For Review Of Mathematical Basis of Fees and For Obtaining Reversal Of Fee Award

 

Sixth District’s 71-Page Decision Explores a Plethora of Issues.

     We hardly know where to begin on the next one, a scholarly 71-page slip opinion from the Sixth District in Gorman v. Tassajara Development Corp., Case No. H031196 (6^th Dist. Oct. 6, 2009) (certified for publication). However, we will give the highlights, because it does show how our California Courts of Appeal do more than eyeball things—they seriously try to make sure that a trial court decision makes sense under penalty of reversing and remanding as was the case here.

     Briefly put, residential owners finally agreed to a settlement in a construction defect suit by which they reserved rights to seek fees and costs against settling former general contractor. (Maybe you see a Trope issue here—husband owner is the CEO, CFO, president, and secretary of the law firm primarily representing husband and wife owners of the residential property at issue.) All we can say is that a mess ensued. Owners requested fees of $1,350,538.83 (half of which were billed by husband owner/attorney personally) and costs in excess of $ 266,561.96, after discounting for blatant mathematical errors. After heavily contested fees/costs battles, the trial court—in a 27-word order—awarded owners $416,581.37 in fees and costs of $142,432.46. Not a bad day in the office, but owners appealed claiming they were entitled to more.

     They won, in a very thorough 3-0 opinion authored by Presiding Justice Rushing.

     Here are the nuggets from the reversal in this case:

• Although there is some fodder for reconsideration of the general rule, the appellate panel did follow the view that no statement of decision is required on a fees motion, although it did not have to decide the precise issue because no timely statement of decision was made;
• Routine costs are statutory, but the trial court does have discretion to award costs reasonably necessary to the overall litigation of the case;
• “Tort of another” fees do not apply to a joint tortfeasor situation;
• Stearman investigative costs are likely recoverable as costs if the parties agree to it;
• Trope was properly applied to substantially reduce costs because owner was still the client even though he billed as the CEO, CFO, and president of the professional law corporation representing himself as a plaintiff (and his wife, too);
• The attorney fee award had to be reversed where the end result did not make sense—the trial court made a dollar and cent award that the appellate court could not square with any mathematical reduction (hence, the award was arbitrary “after much [appellate] puzzlement and frustration”).

     BLOG OBSERVATION—You have to read this in entirety to appreciate it. It covers a lot of issues, which we have summarized. However, Gorman does show that appellate courts will indeed reverse where they cannot make “heads or tails” of calculations—as this appellate panel did after a very careful review.

     BLOG FAVORITE QUOTE FROM OPINION—“As will appear, one theme in this case is that attorneys are not mathematicians.” (Slip Opn., p. 2, fn. 1.) [O.K., time to give a personal glimpse into things in the past—co-contributor Mike did a trial in Monterey County Superior Court before then sitting Judge Wunderlich (who later became an appellate judge, and a good one at that). Judge Wunderlich found for Mike in the case, but observed that his math needed some work. There you go—point made!]

Photo:  Tossing coins concession.  Vale, Oregon.  July, 1941.  Photographer:  Russell Lee.  Library of Congress.

Broad Fees Clause And Failure To Challenge Excessiveness Of Fee To Winner Spells Trouble For Losing Country Club Members

 

Fourth District, Division 1 Affirms $779,955.97 Postjudgment Fees/Costs Award.

     The next case covers several cross-over issues: fees clause interpretation; apportionment between covered and noncovered claims; and reasonableness of fees.

     Here we go.

     In Urquhart v. Del Mar Country Club, Case No. D052711 (4^th Dist., Div. 1 Sept. 28, 2009) (unpublished), a couple who were members in the country club reached a settlement agreement with the Del Mar Country Club under which an easement dispute was resolved and country club allowed a membership to couple’s son under certain conditions. Couple initiated a lawsuit claiming, among other things, that country club was required to quitclaim some property to them under the settlement agreement and that country club terminated their memberships as retaliation for suing. Because the case involved primarily contractual interpretation, the trial court granted summary judgment to country club (a determination that was upheld on appeal). The lower court also ordered couple to pay country club postjudgment fees/costs totaling $779,955.97 (gulp!, broken down as $720,636.85 in fees and $59,319.12 in costs). Couple also appealed this award, naturally.

     The Fourth District, Division 1, unfortunately for couple, affirmed across the board.

     Based upon a very broad fees clause in the membership agreements between the parties, the appellate panel found that the parties can by contract agree that fees will be shifted in any litigation (whether sounding in contract or tort), although normally a more narrowly worded fees clause only encompasses contractual claims. (Xuereb v. Marcus & Millichap, Inc., 3 Cal.App.4^th 1338, 1341 (1992) [relying on Code of Civil Procedure section 1021].)

     Couple argued that the lower court erred in not apportioning country club attorney time between contract and tort claims. The problem here is that apportionment is a discretionary tool for the lower court, which does not have to do so where if it is impracticable to so divide when there are common legal and factual issues involved. (Bell v. Vista Unified School Dist., 82 Cal.App.4^th 672, 687 (2000).)

     Finally, in the one that may have hurt the most, couple challenged the fee award as outrageous in amount. Actually, the appellate court agreed that the “fees do appear rather astounding” for a dispute involving mainly contractual interpretation issues over a small amount of property subject to the easement controversy. However, couple waived the excessiveness challenge by failing to contest the attorney hourly rates or time expended at the lower court level. (City of Santa Paula v. Narula, 114 Cal.App.4^th 485, 494 (2003).)

     BLOG UNDERVIEW—The moral of this case is to make sure you make an excessiveness challenge, if contesting a fee recovery, with specific evidence or objections in the lower court. If not, you will likely be subject to a similar waiver argument or given “short shrift” attention by the appellate court. (Compare Christian Research v. Alnor, 165 Cal.App.4^th 1345 (2008), reviewed in our December 31, 2008 “Top Ten Decision” list, where Justice Aronson—in an oft-cited decision—sustained the ability of trial judges to make wholesale reductions in sought-after fees where specific challenges to excessiveness/unreasonableness were made.)

Correction On Past Post: October 9, 2008 Post On Lu v. Grewal Has An Error

Department of Corrections.    

      We do not claim to be infallible, and thank a reader who recently drew our attention to our October 9, 2008 post on Lu v. Grewal. In our synopsis, we erroneously said “Plaintiff was unhappy, appealed, and lost,” whereas it should have said “Defendants were unhappy, appealed, and lost.” We do apologize for the error and have corrected it so that anyone going to it now will pick up on the correct state of facts.

Photo:  Child wearing dunce cap in class. c1906.  Wikipedia.

 

P.S.  We are not the first to have reversed polarities:

"Ha, ha, my ship! thou mightest well be taken now for the sea-chariot of the sun. Ho, ho! all ye nations before my prow, I bring the sun to ye! Yoke on the further billows; hallo! a tandem, I drive the sea!"

But suddenly reined back by some counter thought, he hurried towards the helm, huskily demanding how the ship was heading.

"East-sou-east, sir," said the frightened steersman.

"Thou liest!" smiting him with his clenched fist. "Heading East at this hour in the morning, and the sun astern?"

Upon this every soul was confounded; for the phenomenon just then observed by Ahab had unaccountably escaped every one else; but its very blinding palpableness must have been the cause.

Thrusting his head half-way into the binnacle, Ahab caught one glimpse of the compasses; his uplifted arm slowly fell; for a moment he almost seemed to stagger. Standing behind him Starbuck looked, and lo! the two compasses pointed East, and the Pequod was as infallibly going West.

But ere the first wild alarm could get out abroad among the crew, the old man with a rigid laugh exclaimed, "I have it! It has happened before. Mr. Starbuck, last night's thunder turned our compasses- that's all. Thou hast before now heard of such a thing, I take it."

"Aye; but never before has it happened to me, sir," said the pale mate, gloomily."

 

-- From Moby Dick

 

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COPYRIGHT: Ninth Circuit Affirms $338,493.97 In Attorney's Fees Awarded To Copyright Plaintiff Obtaining But $34,875.97 In Compensatory Damages

Dissenting Circuit Judge Intimates No Fees Were Deserved Based on Scathing Comments of District Judge.

     Just to show you how attorney's fees make the world go round and affirm our Mission Statement that they are often a controversial (and determinative) factor in commercial litigation, we have decided to do a quick synopsis of an interesting federal copyright case. To say the least, plaintiffs prevailed (but not that much), asked for a lot of fees, received about 45% of what they asked for, and barely sustained the result on appeal—with a dissenting Ninth Circuit Judge suggesting that nothing should have been awarded in the fee award category. So, here we go with Milton H. Greene Archives, Inc. v. Julien's Auction House, LLC, Case No. CV 05-7686 AHM (FMOx) (C.D.Cal.) (12/20/07 fees decision), aff'd, Case No. 07-55614 (9^th Cir. Sept. 1, 2009) (unpublished).   

     In Greene Archives, plaintiff Milton H. Greene Archives, Inc.sued for federal copyright infringement, but only recovered $34,875.97 against defendant Julien's Auction House (even though suing another defendant Barclay Butera, Inc, seeking $2.9 million from both defendants). Because there is a fee-shifting statute under the federal copyright scheme, plaintiff sought to initially recover $611,597.33 from both defendants. The district judge directed plaintiff to recalculate that amount, because Barclay prevailed such that work allotted to that defendant had to be excluded. (As an aside, the district judge ultimately did award fees to Barclay as a prevailing party.) Plaintiff responded by increasing its fee request against Julien's to $752,208.83, an additional $140,611.50 from the previous request which needed discounting. In the end, the district judge, after applying the factors in Wall Data, Inc. v. Los Angeles County Sheriff's Dept., 447 F.3d 769, 787 (9^th Cir. 2006), only awarded 45% of the total request, or $338,493.97. The district judge did so in a written order that was far from complimentary of plaintiff's counsel, making such observations and findings as "flagrant greed," "systematically engag[ing] in conduct that caused the case to be blown out of proportion," "embarrassing sloppiness," "miscit[ing] the law," and incorrectly characterizing the district court's own order. He even noted that "[t]he outcome of this case and of the trial was a bust."

                  [Still from Erich von Stroheim's Greed, circa 1924]

     Although both sides appealed, the Ninth Circuit affirmed across the board. However, there was a split opinion on the award of fees to plaintiff and against Julien's.

     The majority acknowledged that plaintiff's limited success in receiving essentially nominal damages would have supported an award of no fees (or significantly lower fees). They also indicated that a fee award ten times more than the amount of the compensatory damage could seem "unreasonable under the circumstances." However, the majority affirmed based on the abuse of discretion standard, especially given the district judge's birds' eye view of the litigation and consideration of the correct factors under Wall Data.

     Circuit Judge Wardlaw dissented on the fee award. She found that plaintiff only "won" a judgment amounting to approximately 1% of his damage request (described by the district judge as "a bust") and that the award of almost $340,000 was inexplicable based on the totality of feedback about the performance of counsel in the district judge's order. "Under these circumstances, the attorneys should have received nothing at all, and certainly not an amount in fees that was worth ten times their client's recovery."

     BLOG UNDERVIEW—Quite a case. We note that Benjamin G. Shatz, who specializes in appellate law and is with Manatt, Phelps & Phillips, LLP, was one of the counsel representing Julien's (and almost got a fee reversal). We thank him for sending us District Judge Matz's fee decision and the subsequent unpublished Ninth Circuit opinion in Greene Archives.

Civil Code Section 1717: Court Of Appeal Sustains $15,000 Fee Award For $37,000 Rental Delinquency Case

Fourth District, Division 2 Rebuffs Request for Over $40,000 in Fees.

     Plaintiff landlord sued and ultimately recovered $37,420 in delinquent rent (plus $10,295.96 in interest) from former tenants who had abandoned commercial premises being rented in the past. Landlord won a prior judicial arbitration, being awarded $13,622 in fees and costs. However, when landlord sought to recoup almost $41,000 in fees for prevailing under a rental agreement fees clause after winning the superior court trial, the trial court only awarded $695 in costs and $15,000 in fees.

     Appealing landlord did not convince the Fourth District, Division 2 that the trial judge abused its discretion in awarding fees lower than it desired.

     In Rudh v. Baez, Case No. E046287 (4^th Dist., Div. 2 July 1, 2009) (unpublished), the Court of Appeal found no basis to overturn the trial court's decision.

SLAPP: $112,353.75 Fee Award To Cross-Defendant Affirmed Where Claims Of Overstaffing Not Properly Demonstrated

Fourth District, Division 3 Finds No Abuse of Discretion.

     In Raining Data Corp. v. Barrenechea, Case No. G040902 (4^th Dist., Div. 3 June 26, 2009) (unpublished), plaintiff lost a SLAPP motion against a cross-defendant arising from a trade secret misappropriation dispute, with the trial court awarding $112, 353.75 to cross-defendant under Code of Civil Procedure section 425.16(c) (a mandatory fee-shifting provision in favor of winning SLAPP defendants). Plaintiff appealed, claiming the fee award was unreasonable in amount and was riddled with overstaffing/duplicative efforts.

     The Fourth District, Division 3, in a 3-0 opinion authored by Justice Fybel, disagreed based on the deferential abuse of discretion standard. (Christian Research Institute v. Alnor, 165 Cal.App.4^th 1315, 1322 (2008).)

Family Law: Court Of Appeal Affirms $26,504.85 Fees/Costs Award In Domestic Violence Restraining Order Dispute

Fees/Costs Were Justified Under Family Code Section 6344(a).

     Under Family Code section 6344(a), a trial court may award attorney’s fees and costs to a prevailing party in a proceeding concerning a domestic violence restraining order after notice and a hearing on the issue. This provision was squarely at issue in the next case we examine.

     In Loeffler v. Medina, Case No. D053096 (4^th Dist., Div. 1 June 18, 2009) (certified for publication), ex-live-ins had their battles resulting in entry of a domestic violence restraining order against the gentleman in the relationship. The gentleman tried to terminate the restraining order, but was unsuccessful after a fairly contentious proceeding. The trial court awarded the prosecuting lady $25,000 in attorney’s fees and $1,504.85 in costs (out of a requested $45,842.50 in fees and $2,934.85 in costs).

     The gentleman appealed.

Contrasted Husbands.  July 1795.  Richard Newton, artist.  Library of Congress.

Arbitration Fee Award: Plaintiff Winning $4.1 Billion “Prove-Up” Arbitration Award Obtains $633,450 In Attorney’s Fees

Arbitrator Enhances Plaintiff’s Lodestar by 3.0 Multiplier.

     We give thanks to Cal Biz Lit, who in his June 16, 2009 post described a “prove-up” arbitration award of $4.1 billion stemming from a very unusual lost commission dispute. He notes that the award was confirmed as a judgment by the Los Angeles County Superior Court on May 28, 2009. See Chester v. iFreedom Communications Incorporated, et al., LASC Case No. BC353567 (with a copy of the judgment and arbitration award available from the Cal Biz Lit post).

     So, what attorney’s fees were awarded in this eye-popping award? Retired Orange County Superior Court Judge William F. McDonald, who is affiliated with JAMS, awarded lodestar amounts of $178,750 to one attorney and $32,400 to another attorney under various Labor Code fee-shifting provisions. Arbitrator McDonald then enhanced the lodestars by a 3.0 multiplier, which took the total fee award to $633,450.

     Interestingly enough, guess what the daily post-judgment interest is on the total judgment? Believe it or not, $1,125,159.97 per day!

     Although we co-contributors usually do not comment on the merits, it does appear that the fee award was well within the realm of reasonableness.

     BLOG UNDERVIEW—Although common lore among attorneys has it that arbitrators seldom award punitive damages, that folk wisdom did not hold up in this case. Arbitrator McDonald awarded $2,926,276,674.27 in punitive damages to plaintiff.

SLAPP: Law Firms Representing Individual Attorneys Entitled To SLAPP Fees

Second District, Division Eight Finds No Trope Prohibition on Fee Recovery.

     Witte v. Kaufman, 141 Cal.App.4^th 1201, 1211 (2006) establishes that the law firm representing itself, with no attorney-client relationship, is not entitled to attorney’s fees for winning a SLAPP motion. This rule is based upon the holding in Trope v. Katz, 11 Cal.4^th 274, 292 (1995), where the same principle was articulated in a breach of contract action and has been extended to other analogous areas. However, is the result different if the law firm represents individual attorneys in the firm in a SLAPP motion and wins on behalf of the individuals?

     The Second District, Division 8, in Cesaro v. Quinn Emanuel Urquhart Oliver & Hedges, Case No. B206865 (2d Dist., Div. 8 June 9, 2009) (unpublished), answered “yes” to this issue—fees were awardable in this situation.

Lemon Law: Appellate Court Affirms $344,600 Fee Award, Adds Another $57,587 For Discovery Referee Fees, And Remands For More Postjudgment Fees

Fourth District, Division 3 Affirms and Augments Fee Awards, After Also Determining that Defense Tactics Required Terminating Sanctions For Bad Faith Discovery Abuses.

     Here is another wild one, dictated by the unusual set of facts at play. It is also a modern day parable reminding all litigators that they need to avoid “hiding the ball” during discovery. The decision also reinforces that, by and large, trial court reductions for inefficiencies and padding will be affirmed under the deferential abuse of discretion review standard.

     Doppes v. Bentley Motors, Inc., Case No. G038734 (c/w other cases) (4^th Dist., Div. 3 June 8, 2009) (certified for publication) was a 3-0 decision emanating from our local Santa Ana Court of Appeal, authored by Justice Fybel. The opinion is not only interesting reading, but reinforces that litigation attorneys will be punished for discovery abuses—with appellate jurists determining that punishment should be increase over and above recommendations by discovery referees and trial judges. However, the case also happens to be instructive in the attorney’s fees area.

     Briefly summarized, plaintiff won a lemon law vehicle case against a defendant based on the car having an obnoxious odor in the interior. Defendant engaged in numerous discovery tactics that led to numerous terminating sanctions requests (including behavior relating to defendant’s failure to produce responsive e-mails), but the discovery referee recommended giving--and ultimately the trial court only gave—an adverse jury instruction. The jury awarded plaintiff $214,300 as vehicle reimbursement and additional prejudgment interest (with the prejudgment interest determination affirmed in a separate opinion). Plaintiff moved to recover $586,844.63 in attorney’s fees under Civil Code section 1794(d), a mandatory, plaintiff-oriented, fee-shifting provision. The trial court actually awarded plaintiff $344,600 in fees based on its own detailed spreadsheet analyzing the specific fee substantiation. The lower court denied all paralegal time billed; disallowed $53,213 as time spent against another nonliable party and on unsuccessful claims; reduced the billing rate of the lead attorney from $400 to $300 per hour; allowed recovery for only one attorney at trial; disallowed all time billed for sanctions motions before the discovery referee; and reduced the amount billed by one attorney’s office by 25% “for general excessive time billing for items.” Plaintiff later moved for further postjudgment attorney’s fees of $72,789.80, but the trial court only awarded $4,427. Plaintiff appealed.

Private Attorney General Statute: Trial Court Properly Awarded Plaintiffs $336,350 In Fees Rather Than Requested $1.49 Million (And Correctly Denied 2.0 Multiplier)

First District, Division 5 Determines Trial Court Properly Applied Serrano III Factors.

     Even under fee-shifting, public interest statutes, our California Supreme Court in Serrano v. Priest, 20 Cal.3d 255, 49 (1977) (Serrano III) mandated that multiple factors be used to increase or decrease a lodestar figure requested by victorious litigants. In the next case we discuss, the lodestar was decreased based on various factors. The disgruntled plaintiffs, who requested an award of $1.49 million plus a 2.0 multiplier after winning a publicized high school student editorial battle with a school district, were only awarded $336,350 in attorney’s fees under Code of Civil Procedure section 1021.5, with no one contesting student’s entitlement to fees. (Plaintiffs were represented by Pacific Legal Foundation, an entity receiving private support for purposes of bringing public interest lawsuits.) Plaintiffs appealed the trial court’s lodestar decreases under Serrano III. How did they do?

     Plaintiffs overall lost in Smith v. Novato Unified School District, Case No. A122105 (1^st Dist., Div. 5 May 28, 2009) (unpublished). The appellate panel found the lower court did not commit error in reducing the lodestar ($672,700) for (1) time spent on successful claims, (2) various Serrano III factors, and (3) substantial padding in the form of inefficient or duplicative efforts by multiple attorneys involved on plaintiffs’ behalf.

SLAPP Fees …. Double Up On Attorney Use And Expect Reduction By Reviewing Courts

Second District, Division 8 Remands for Reduction Due to “Doubling Up” And Augmentation For Prior Fees That May Have Avoided Repetitive Work.

     Two sets of successful defendant attorneys were awarded, respectively, $100,000 and $50,000 for their efforts in obtaining SLAPP wins for their clients. Each set of attorneys had two counsel involved (with Cumis counsel being the second set of attorneys for one defendant). Losing plaintiff appealed both orders, obtaining reversals and a remand with further directives by the Second District, Division 8 in Jarrow Industries, Inc. v. Kokozian & Nourmand, LLP, Case No. B199597 (2d Dist., Div. 8 May 11, 2009) (unpublished).

Class Actions: Plaintiff’s Amicus Curiae Work In Related Action Was Proper Basis For Additional Fee Award

Sixth District Also Finds No Abuse In Fee Award In Previous Action Under Private Attorney General Statute.

     The next case involves the extent to which successful attorneys in a plaintiff’s class action should be awarded fees for amicus curiae work in another action that dealt with the same issues and eventually led to a recovery in the particular class action at issue. The trial court denied awarding these fees, but the Sixth District reversed.

     In Ramon v. County of Santa Clara, Case No. H032542 (6^th Dist., May 4, 2009) (certified for partial publication), putative class action representative’s attorneys spent $81,539.10 for fees in opposing the County’s amicus efforts in a prior proceeding that resulted in a favorable plaintiffs’ ruling in a published appellate decision on the crucial issue in controversy. The trial court denied awarding the amicus fees to plaintiff’s attorney under Code of Civil Procedure section 1021.5 based on Connerly v. State Personnel Bd., 37 Cal.4^th 1169 (2006), where the state supreme court refused to penalize amicus advisory groups with 1021.5 fees because they were not the equivalent of opposing parties. Plaintiff appealed, and won.

Civil Code Section 1717: Litigants’ Failure To Be Adjudged General Partners, Although Winning A Small Quantum Meruit Award, Justified Non-prevailing Party Conclusion

Result Was An Adverse Fee/Cost Award of Over $275,000

     In Gupta v. Shue, Case No. B198449 (Apr. 30, 2009) (unpublished), both sides engaged in bitter, protracted litigation over whether each received, by assignment, a general partnership interest in a real estate limited partnership—with the limited partnership caught in the middle of the litigation. After a jury verdict and court judgment so found, the lower court ruled that the general partnership was the prevailing party and it was entitled to an award of fees and costs. Earlier, the Second District, Division 1 reversed one aspect of the judgment and remanded for a prevailing party determination and a fee award analysis, instructing the lower court to also specify the contractual bases for the fee award, to determine if any apportionment was necessary between contract and noncontract claim, and to ensure that any fee award was not excessive. On remand, the trial court determined the general partnership was again the prevailing party and assessed fees of $265,490 and costs of $9,616.60 jointly and severally against the individual litigants unsuccessfully claiming to be the general partners. The fee award on remand was appealed, with the next case being the decision on that award.

     The unsuccessful individual litigants did not win on appeal the second time around. In doing so, the appellate panel engaged in a systematic discussion of issues that crop up frequently in cases involving awards of fees under Civil Code section 1717. Here are the most salient issues discussed:

Mission Statement: Fees As The Tail Wagging The Litigation (Or Arbitration) Dog

Result in Recent Unpublished Decision Shows How Attorney’s Fees May Eclipse the Amount in Controversy.

     Our Mission Statement reflects that attorney’s fees are frequently the tail that wags the litigation dog, meaning that recovery of fees may be essential to a prevailing party trying to vindicate its interest in a case with an amount in controversy that could be eclipsed by the fees expended on attorneys. [See Wikpedia article on Dog Communication]. This principle also applies to contractual arbitration proceedings.

Pres. Johnson and Friend               Pres. Nixon and Friend

     An example comes from the result detailed in Thee Aguila, Inc. v. Tseheridis, Case No. G040066 (4^th Dist., Div. 3 Apr. 24, 2009) (unpublished), a 3-0 decision authored by Justice Fybel.

Civil Code Section 1717: Court Of Appeal Affirms Award Of One Half Of Requested Fees Based On Tardiness of Raising Compulsory Cross-claim Waiver Issue

Rationale Parallels Result by Different Division of Second District in Superior Property of Carson v. Regency Outdoor Advertising.

     In our April 17, 2009 post, we examined Superior Property of Carson LLC v. Regency Outdoor Advertising, Inc., a Second District, Division 3 unpublished decision that affirmed a substantial fee award under Civil Code section 1717, but only after the trial court reduced fees to the prevailing defendants based on their tardiness in relying on the proper lease (after taking a position that a different lease applied throughout earlier junctures of the litigation). Now, we have a Division 2 opinion affirming a similar fee award that was reduced because the winning litigant belatedly raised a preclusive issue late in overall proceedings.

     Pearl v. Deitch, Case No. B203762 (2d Dist., Div. 2 Apr. 20, 2009) (unpublished) involved a protracted battle, through several lawsuits, between plaintiff tenant and defendant landlord over a purchase option on a Santa Monica condominium unit. The parties eventually reached a settlement agreement with a fees clause under which plaintiff was paid some money, agreed to vacate by a certain date, and agreed to be responsible for damages to the unit after a specified date. Charges of waste and then malicious prosecution (in the wake of dismissal of the waste action) went back and forth in the court system. Defendant and her attorneys even won $13,435 on an anti-SLAPP motion by which the malicious prosecution claim was dismissed. Plaintiff then sued for breach of contract or (alternatively) rescission of the settlement agreement, but that was finally disposed of by a judgment on the pleadings—with the trial court determining that the claims should have been raised in one of the prior actions after unsuccessfully raising the preclusion issue before the appellate court in the prior appeal of the anti-SLAPP motion grant.

Nearly $900,000 In Attorney’s Fees Affirmed In Billboard Litigation

 

Second District, Division 3 Finds Defendant Lessors Prevailed Despite Claim of “Triplicative” Work By Three Law Firms.

     The next one is a wild one and illustrates that substantial attorney’s fees will be awarded under Civil Code section 1717 once the court determines which litigants “prevailed” by achieving their main objectives in the germane litigation.

     In Superior Property of Carson LLC v. Regency Outdoor Advertising, Inc., Case No. B203251 (2d Dist., Div. 3 Apr. 16, 2009) (unpublished), certain billboard lessors prevailed in a protracted lawsuit involving wild claims of what lease governed (an October 10 or 11 document) and whether lessors were judicially estopped after many of them had earlier banked on the October 11 lease—but then shifted course late in the litigation and stood on the October 10 lease, which was indeed found governing by the trial court following a bench trial. Because the plaintiff wanted removal of the billboard and defendants prevented this from happening, the trial court determined the defendants were the prevailing parties under Civil Code section 1717 (based on the existence of fee clauses in both leases) and awarded the three defendants collectively $892,944 in fees—after all, each defendant had its own counsel to defend its interests. Plaintiff appealed.

WOW Factor—Argument That Fees Were Shockingly Excessive—Is Coined By Court of Appeal In Unpublished Decision

 

Fourth District, Division 1 Rejects WOW Argument and Affirms Fee Award To Winner in Appeal of Summary Judgment Ruling.

     If you are a reader of our blog, you know that we have a POOF! category—our way of designating cases where fee awards vanish after there has been reversal of any underlying merits judgment on appeal. We now have another category—WOW! (A variant of Holy Cow, Batman!). This refers to litigants’ arguments that fees were shockingly excessive. The Fourth District, Division 1 gets credit for this one, which was coined in Parker v. Winslow, Case No. D053063 (4^th Dist., Div. 1 Mar. 26, 2009) (unpublished).

     Parker involved a situation where a trial court awarded successful defendant/respondent full requested attorney’s fees and costs of $40,636.35 after she successfully fended off plaintiffs/appellants’ appeal of a summary judgment in favor of respondent in a residential property nondisclosure/fraud case. (Earlier, respondent had won $34,798 in fees for trial work in winning the summary judgment.) Plaintiffs were not pleased, and filed over 80 pages of detailed appellants’ briefing as well as orally arguing the cause before the appellate court. Plaintiffs lost on appeal, the fee award followed, and plaintiffs appealed the fee award for defendant’s appellate work.

     The appellate panel had little difficulty affirming the appeal fee award, notwithstanding plaintiffs’ suggestion that $12-13,000 was the reasonable range for an award. The full amount of what was requested happened to be justified primarily by the tenacious litigation strategy pursued by plaintiffs both at the trial and appellate levels—which led to the appellate dismissal of plaintiffs’ “WOW” argument. (Ketchum v. Moses, 24 Cal.4^th 1122, 1141 (2001).) The trial court did not have to issue a statement of decision on the fee award and did not have to give explanations for denying plaintiffs’ objections to specific items in the billings. (Maria P. v. Riles, 43 Cal.3d 1281, 1294 (1987).) The award was affirmed, and defendant was awarded costs on appeal—which means another fee petition for this second appellate win will likely be pursued by the victorious defendant.

Real Estate Litigation: Aggressive Litigation Posture By Opponent Can Gain Civil Code Section 1717 Winner Almost All of Its Attorney’s Fees In Contentious Case.

Second District, Division 6 Affirms Substantial Fee Award Based on “Tenaciousness” Factor.

     For all attorneys winning contentious real estate litigation with a contractual fees clause, you may have a good chance of recouping most of your fees on behalf of clients under Civil Code section 1717, especially where your opponent was aggressive and tenacious throughout the litigation. Peak-Las Positas Partners v. Bollag, Case No. B205091 (2d Dist., Div. 6 Mar. 16, 2009) (certified for publication) is a classic embodiment of how this principle may play out in the real estate litigation context.

Pre-Suit Notice of Claims: Better Be Civil or Else Reasonable Fees May Be No Fees?

 

11th Circuit Upholds Denial of Attorney's Fees Where Attorney Failed to Provide Pre-Litigation Notice of Claim Before Suing Other Attorneys Under FLSA.

 

     Hat Tip  to Benjamin G. Shatz of Manatt, Phelps & Phillips, LLP, for bringing Sahyers v. Prugh, Holliday & Karatinos, L.P. (11th Cir. No. 08-10848, March 3, 2009) (published) to our attention.  We do not usually report on non-9th Circuit federal cases, but we think you will agree that this one was just too good to pass up.  The case reminded co-contributor Marc Alexander of his high school English teacher Ms. Betty Bivins who reprimanded students with the withering words, "you are rude, crude, and socially unattractive."

Anti-SLAPP Fee Awards: They Usually Will Not Be Subject to Reduction Based On Just Generalized Gripes

First District, Division 4 Rebuffs Challenge to $18,750 Fee Award.

     The next case trumpets a familiar refrain that we have seen from many appellate decisions: a contention asking for denial or reduction of fees in any award needs to be supported by specific argumentation and specific evidence. Otherwise, the contention may well be found nonpersuasive at even an elementary level of consideration.

     Appellant Dr. McRae, in McRae v. Richman, Case No. A121284 (1^st Dist., Div. 4 Jan. 16, 2009) (unpublished), filed a false light privacy invasion complaint against the Oakland Tribune arising out of an article

Discovery Sanctions: $6,000 In Discovery Sanctions Affirmed Against Alter Ego Defendant For Failing To Respond To Written Discovery

Second District, Division Two Discusses Aggregation Appealability Rule and Litigant’s Discovery Obligations.

     The next case we discuss has an interesting discussion of the aggregation appealability rule (sanctions order must exceed $5,000) and a litigant’s discovery obligations (even an alter ego defendant must provide discovery information of which he is aware, even if the defendant was not individually a party to the operative contracts).

     Uneeda Enterprises v. Dekar Industries (Karawia), Case No. B207614 (2d Dist., Div. 2 Dec. 30, 2008) (unpublished) involved an alter ego defendant stung with sanctions of

M&M's 2008 “Top Ten” Attorney’s Fees Cases

 

Part 2 of 2 – We Finish Off With The Last Five Cases And An  “Honorable Mention”

     Oh, the suspense … and the ball has not yet dropped from above Times Square. You have to go to our prior post to see the first part of this list. Here is the rest of our top ten 2008 attorney’s fees decisions.

5. Christian Research v. Alnor, 165 Cal.App.4^th 1345 (2008): Wholesale Fee Reductions In Order Where Fee Claimant Blockbills, Makes Vague Entries, And Overstaffs The Case.

     Decision contains a good discussion on awarding fees in an anti-SLAPP motion context. Decision suggests that winner should apportion out work related only to the anti-SLAPP motion, should avoid blockbilling, and should not bill for unnecessary duplication. Appellate court sustained wholesale reductions in fees on these grounds, indicating such wide-ranging reductions can be made by state trial judges.

     [Discussed in our August 13, 2008 post; Fourth District, Division 3; author: Justice Aronson]

4. Moreno v. City of Sacramento, 534 F.3d 1106 (9^th Cir. 2008): Fee “Haircuts” Above 10% Must Be Specifically Justified By District Judges.

     District judges must specifically explain “fee haircuts” of more than 10% when reducing fee requests. Contrast this rule with the broader discretion given to state trial judges in Alnor (case #5).

     [Discussed in our August 2, 2008 post; Ninth Circuit Court of Appeals; author: Chief Judge Kozinski]

3. EnPalm, LLC v. Teitler Family Trust, 162 Cal.App.4^th 770 (2008): Case Discusses Lodestar Reduction and Enhancement Factors For Fee Awards Under Civil Code Section 1717.

     Decision contains an extensive discussion of lodestar reductions factor in Civil Code section 1717 fee situations. A dissenting opinion by Presiding Justice Cooper has a useful discussion of factors used to increase or reduce the lodestar in both section 1717 and public attorney general cases.

     [Discussed in our May 12, 2008 post; Second District, Division 8; majority author: Justice Rubin; dissenting author: Presiding Justice Cooper]

2. Vasquez v. State of California, 45 Cal.4^th 243 (2008): Code of Civil Procedure Section 1021.5 Fee Award Does Not Require Reasonable Settlement Efforts As A Mandatory Prerequisite In “Noncatalyst” Cases.

     Reasonable settlement efforts are not a prerequisite for a fee award under Code of Civil Procedure section 1021.5 in “noncatalyst” cases, though it is one of the discretionary factors for trial courts to weigh in determining whether private enforcement was sufficiently necessary to justify awarding fees.

     [Discussed in our November 20, 2008 post; California Supreme Court; author: Justice Werdegar]

1. Olson v. Automobile Club of Southern California, 42 Cal.4^th 1142 (2008): Expert Witness Fees Not Recoverable As Code of Civil Procedure Section 1021.5 Costs.

     Expert witness fees are not recoverable under Code of Civil Procedure section 1021.5 (the private general statute) in addition to attorney’s fees authorized by the same statutory scheme, disapproving Beasley v. Wells Fargo Bank, 235 Cal.App.3d 1407 (1991).

     [California Supreme Court; author: Justice Moreno]

Honorable Mention: Ritter & Ritter, Inc. v. The Churchill Condominium Assn., 166 Cal.App.4^th 103 (2008): Condominium Owner Recovers Substantial Fee From HOA, With Dissent Lamenting Fees Spent On A Matter That Could Have Been Arbitrated In A Couple of Days.

     Decision involved a homeowners association (HOA)-homeowner dispute in which homeowners were awarded $531,159 in fees even though they won only $4,620 in damages from a jury and obtained a mandatory injunction from the trial court. The dissent is memorable for lamenting the amount of fees spent on a matter that should have been arbitrated in a couple of days.

     [Discussed in our July 24, 2008 post; Second District, Division8; majority author: Presiding Justice Cooper; dissenting author: Justice Rubin]

“No Wine Before Its Time”: Attorney’s Fees Awarded At San Francisco Counsel Rates For Napa Case Work; Photocopying Of Exhibits Not Used At Trial Can Still Be Awarded As Discretionary Costs

First District, Division Two Finds Relevant Geographic Market for Hourly Rate Determination Not Limited to Case Venue and Resolves Split in Decisional Authority on Costs in Favor of Trial Court Discretion.

     As the Thanksgiving Holidays have drawn close, our state appellate courts have issued a plethora of interesting opinions in the attorney’s fees/costs arena. Here is one that focuses upon the geographical market for hourly rates and upon whether unused trial exhibit photocopying can be awarded as a cost in the discretion of the trial court.

     Beckstoffer Vineyards II v. Deem, Case No. A119337 & A120210 (1^st Dist., Div. 2 Nov. 25, 2008) (unpublished) concerned sellers (certain vineyards) that won a $267,576 contractual breach damage award against certain purchasers of cabernet sauvignon wines, with the purchasers also being defensed on their counterclaim that the grapes were subpar for premium wines. (In case you have not already guessed it, the case was venued in Napa County, California.) Because there was a contractual fees clause in the purchase agreements, vineyards moved for an award of $718,402 in fees under Civil Code section 1717, based upon hourly rates for vineyards’ San Francisco attorneys/paralegals, and costs of $16,200 for “models, blowups, and photocopies of exhibits” (even though the total cost request was $41,437). The trial court awarded vineyards all of the requested fees of $718,402 and costs of $29,975.76, although denying purchasers’ requests to tax the costs for models, blowups, and exhibit photocopies. Both the fee and costs orders were appealed from and then consolidated for decision.

     Vineyards prevailed, with both awards being affirmed on appeal in a 3-0 decision authored by Justice Lambden for a First District, Division Two panel.

Attorney’s Fees Award

     No one disputed that vineyards prevailed for section 1717 purposes or that the lodestar methodology was the proper one for application by the appellate court. Because the “reasonable hourly rate is that prevailing in the community for similar work,” PLCM Group, Inc. v. Drexler, 22 Cal.4^th 1084, 1095 (2000) [one of our Leading Cases], purchasers argued that San Francisco attorney hourly rates should not be used for purposes of gauging reasonable rates for Napa (we affectionately call this the “invader argument”). The invader argument did not win out, because the trial court quite pragmatically felt that the entire Bay Area was the relevant community given that one-half of the attorneys litigating cases in Napa came from outside of Napa (with many “invading” from San Francisco). “Contrary to the purchasers’ contention, the relevant ‘community’ for purposes of a fee award is not necessarily limited to the place where the courthouse is located …. The purchasers point to no authority that holds the community for purposes of calculating a reasonable fee must be the one in which the court is located.” (Slip Opn., at p. 6.) In fact, PLCM did award fees to attorneys at the prevailing San Francisco market rate even though the case was venued in Los Angeles County.

     Purchasers also challenged vineyards’ presentation of attorney declarations attesting that their rates were market rates for the San Francisco area, even though the declarations cited a supporting study published by Citibank (which we assume was not government funded, before the recent financial crisis). The Court of Appeal decided that attorney declarations alone can carry the day, with attached paid invoices establishing prima facie evidence on the reasonableness of the requested hourly rate. (MBNA America Bank, N.A. v. Gorman, 147 Cal.App.4^th Supp. 1, 13 (2006).)

     Purchasers next argued that the fee award for 2,300 hours was excessive, because it does not take that much time to prosecute a breach of contract case. Recognizing the pragmatics of modern day, contentious litigation, the appellate panel in Beckstoffer Vineyards II found no error in full compensation, relying on these factors: (1) the case was originally set for a jury trial (where fees often exceed $1 million) before the parties agreed to a bench trial; (2) trial courts should not be required to meticulously dissect the litigation into micro-components for purposes of awarding fees; (3) there was substantial related work to be done on the fees motion so as to justify the $60,000 tab for this motion alone; (4) the prevailing party appropriately used associates, rather than partners, to do much of the early pretrial work; and (5) the case did involve counterclaims for defective grapes, which were fact intensive and presented expensive issues of proof to be rebutted by the vineyards in their role as the defense.

Costs for Photocopying of Unused Trial Exhibits

     Purchasers contended that the $16,200 award for the cost of photocopying trial exhibits was unjustified, because only 61 out of 202 copied exhibits were actually used at trial (with multiple sets being prepared—one for the court, one set for each witness, a set for counsel, and a backup set). They specifically argued that the trial court did not have the authority under Code of Civil Procedure section 1033.5 to award costs for photocopying exhibits not used at trial.

     What is interesting is that the Court of Appeal affirmed the award of these costs, but did acknowledge that there was a split in appellate thinking on the subject. See, e.g., Applegate v. St. Francis Lutheran Church, 23 Cal.App.4^th 361, 364 (1^st Dist., Div. 3 1994) [trial courts have discretion under section 1033.5(c)(2) to allow costs for trial photographs and blueprints if they were reasonably necessary for the conduct of the litigation, even if the matter had been dismissed]; Seever v. Copley Press, Inc., 141 Cal.App.4^th 1550, 1559-1560 (2d Dist., Div. 7 2006) [disagreeing with Applegate; statutory language of section 1033.5(a)(12) excludes ability to award costs for exhibits not used at trial]; Benach v. County of Los Angeles, 149 Cal.App.4^th 836, 855-857 (2d Dist., Div. 8 2007) [trial courts have discretion to award costs for unused trial exhibits under section 1033.5(c)(4)]. The Beckstoffer Vineyards II panel agreed with the reasoning of Applegate and Benach, finding that section 1033.5(a)(12) permits costs for exhibit photocopying “reasonably helpful to aid the trier of fact” and section 1033.5(c)(4) permits the court to consider items not mentioned in the statute at the court’s discretion. As further support, Justice Lambden observed that section 1033.5(b)(3) bars the costs of photocopying, “except for exhibits.” From this, he concluded: “Thus, the statute does not expressly disallow photocopying exhibits that are not used for trial; such costs, when reasonably necessary to the conduct of the litigation, may be awarded by the trial court under subdivision (c)(4) of section 1033.5 of the Code of Civil Procedure.” (Slip Opn., at pp. 14-15.)

     Under the circumstances, the lower court did not abuse its discretion in awarding costs for the photocopying of the unused trial exhibits. The parties exchanged all exhibits, and the lower court believed that prudent litigators fully preparing for trial would have all exhibits available for use. (BLOG OBSERVATION—Because Marc and Mike are litigators, we find this to be a pragmatic conclusion. It is always better to be overinclusive on exhibit lists; otherwise, a litigator faces preclusion of documents by failing to include them in the mutual exchange of exhibits. In Orange County Superior Court, the local rules for unlimited jurisdiction trials mandate that the parties meet and exchange, among other items, exhibits no less than 10 days before the scheduled trial date in a session known as an “issues conference.” See Local Rule 450. The parties must execute a statement of compliance indicating that all the mandated tasks were done at the issues conference.)

     Purchasers ended by challenging that the vineyards presented no substantiation for the $16,200 in claimed costs for the unused exhibit photocopying. Justice Lambden countered by stating that purchasers miscomprehended the nature of burdens in cost proceedings. The verified costs memorandum is prima facie evidence of the propriety of the claimed costs, with the burden on the taxing party to show the costs were not reasonable or necessary. (Jones v. Dumrichob, 63 Cal.App.4^th 128, 1266 (1998); see also the excellent discussion of these burdens in Erickson v. Fry’s Electronics, Inc., recently reviewed in our November 26, 2008 post.)

     BLOG UNDERVIEW—Seever was discussed in our June 27, 2008 post review of Roberts v. Ross (an unpublished Fourth District, Division One decision) in which the appellate court upheld allowing an unlisted plat map expense to be awarded as a cost. Seever apparently did not allow reimbursement of unused trial exhibit photocopying expenses based on its interpretation that section 1033.5(a)(12) did not allow for it—“Because the Legislature has expressly stated in subdivision (a)(12) what is allowable (exhibits used at trial that are reasonably helpful) and implicitly what is not, the discretion granted in section 1033.5, subdivision (c)(4), to award costs for items not mentioned in section 1033.5 is simply inapplicable.” Seever, supra, 141 Cal.App.4^th at 1559-1560. This conflict in thinking on the unused trial exhibit photocopying issue should be resolved so that litigators know what will and what will not be subject to recapture in subsequent cost proceedings.

Court of Appeal Reverses 88% “Haircut” In Fee Award to Landlord in ADA Indemnity Dispute With Tenant

 

Fourth District, Division One Rules That Lower Court May Have Not Used Proper Lodestar Determination Factors in Drastically Cutting Fee Request, Suggesting It Parts Company From Reasoning in The Second District’s EnPalm Decision.

     Notwithstanding the breadth of the abuse of discretion standard, the next case illustrates that appellate court will overturn fee awards where they decide lower courts did not base reductions on objective factors, but instead make awards on subjective beliefs on what is reasonable.

     Quin v. El Cajon Grand Cocktail Lounge, Case No. D052193 (4^th Dist., Div. 1 Nov. 6, 2008) (unpublished) concerned a landlord who ultimately prevailed against a tenant for indemnification arising out of an Americans with Disabilities Act suit with an outsider. The indemnification dispute was based on an attorney’s fees clause in the lease, triggering Civil Code section 1717’s fee-shifting policy. The ADA dispute settled for $6,000, and landlord made certain changes to the premises (having a total cash value of $11,463). Landlord later prevailed in the subsequent indemnification lawsuit against tenant, seeking to then recover attorney’s fees in the amount of $171,569.50 and costs of $7,377.34 based on 605.6 hours of legal services during twenty months of litigation at a blended $281.65 hourly rate. Tenant opposed the request as unreasonable, observing his attorneys had spent $70,000 in fees to litigate the case from start to finish and also noting that tenant has offered to settle the entire matter for a $45,000 lump sum settlement payment. Otherwise, tenant provided no rebuttal attorney declarations to buttress the unreasonableness challenge. The trial court awarded landlord all of her requested costs but only $21,123.75 in fees—about 12% of the requested fees. In essence, the lower court felt that the fee claim was excessive because both the ADA and indemnifications claims were fairly routiine in nature and the fees were exorbitant when compared to the ultimate ADA settlement figure. Landlord was unhappy and appealed, winning reversal and a remand from the Fourth District, Division One.

     Justice O’Rourke, writing for a 3-0 panel, acknowledged that the abuse of discretion standard was the governing one, but also observed that reversal may be had where the fee award record “is unclear whether the trial court’s award of attorney fees is consistent with the applicable legal principles.” (Slip Opn., at p. 10, citing Graciano v. Robinson Ford Sales, Inc., 144 Cal.App.4^th 140, 148-149 (2006); Nichols v. City of Taft, 155 Cal.App.4^th 1233, 1239-1240 (2007); Horsford v. Bd. of Trustees of Cal. State Univ., 132 Cal.App.4^th 359, 393 (2005).) With that standard in mind, the review began.

     The Court of Appeal overviewed its discussion by citing to Ketchum, Serrano III, and PLCM (see our Leading Cases) for the proposition that trial courts must carefully review attorney documentation of hours expended, reducing the hours for “padding “ in the form of inefficient or duplicative efforts. (The appellate panel also cited Christian Research Inst. v. Alnor, 165 Cal.App.4^th 1315, 1321 (2008), a decision by Justice Aronson from the Santa Ana Court of Appeal, reviewed in our August 13, 2008 post.) It further noted that lower courts should not mistakenly intertwine considerations relevant to the lodestar determinations with factors relevant to lodestar adjustment. (See Slip Opn., at p. 12, citing Northwest Energetic Services, LLC v. Cal. Franchise Tax Bd., 159 Cal.App.4^th 841, 879 (2008).)

     Appellant landlord argued that the trial court myopically focused on only one PCLM factor—the “nature of the litigation.” Respondent tenant countered that the Second District in EnPalm, LLC v. Teitler Family Trust, 162 Cal.App.4^th 770, 773, 775-778 (2008) [reviewed in our May 12, 2008 post] upheld a similar 90% fee reduction by use of equitable considerations including the unreasonableness of the requested fees.

     Because the Fourth District, Division One believed that Ketchum and PCLM mandated objective consideration of all hours expended, it believed the record was not clear that the lower court used a proper initial lodestar calculation before proceeding to apply the lodestar adjustment factors. It was especially disturbed by the fact that respondent tenant did not provide some particularized explanations—such as by attorney declarations—about why the efforts of counsel were inefficient or duplicative. (Slip Opn., at pp. 17-18, citing Premier Medical Mgt. Systems, Inc. v. CIGA, 163 Cal.App.4^th 550, 564 (2008) [generalized challenges to fee unreasonableness do not suffice].) The sole declaration offered by respondent’s counsel did not demonstrate specifically why landlord counsel’s time was inflated, duplicative, inefficient or unproductive. Once the fee proponent submits appropriate documents regarding the hours actually expended, the burden shifts to the fee opponent to prove otherwise: “Absent a particularized showing from respondents demonstrating how or why the documented hours spent by appellants’ counsel were inflated or duplicative, or counsel’s work on the matter inefficient or unproductive, we find little in the record to support an inference that the trial court analyzed these threshold reasonableness questions in calculating the initial lodestar figure.” (Slip Opn., at pp. 19-20.) Rather, two errors were made by the lower court: (1) it cut fees based on its subjective belief about the reasonable time which should have been spent by landlord; and (2) it may have used lodestar adjustment factors in initially determining the reasonable lodestar.

     Now, things really became interesting, because the Fourth District, Division One had to confront EnPalm, a 2-1 Second District decision affirming a 90% fee reduction. Justice O’Rourke determined that much of the EnPalm discussion was dicta, because the appellate challenges in that case were unsupported by the record. However, the 4/1 panel distinguished EnPalm “because the trial court there looked to the particular circumstances of the parties’ litigation conduct in that case and made an undisputed finding as to the necessity of counsel’s fees in the absence of supporting billing documentation.” (Slip Opn., at pp. 21-22.) Justice O’Rourke could not make a determination that the lower court in the case before it made such a clear finding that appellant’s conduct was unreasonable and, unlike EnPalm, the supporting fee documentation was adequate.

     BLOG OBSERVATIONS—Quin is an interesting case. One can certainly argue that it is in conflict with EnPalm, notwithstanding the dicta/distinguishing nuances taken by the Fourth District, Division One. However, the decision does highlight the importance of making very particularized challenges to “padding” with supporting evidence, because generalized objections may be superficially disregarded by reviewing courts—as Quin amply demonstrates.

Proofread Your Work: Submission of Subpar Written Papers Or Sloppy Work Product Can Lead To A Reduction In Fees

Transylvania Feral Court Slashes Attorney’s Fees Award Drastically For Spoor Work Product.

     Although we usually confine our posts to California-oriented cases, settlements, or fee issues, the following fee reduction ruling by a Philadelphia-based federal district judge was too good to pass up and also offers some sobering lessons to practitioners seeking fee awards when their written paperwork has not been proofread carefully enough.

     U.S. District Judge J. William Ditter Jr., in McKenna v. City of Philadelphia, had to rule on a fee request by a winning plaintiff in a civil rights case, which was governed by a mandatory fee shifting statute (42 U.S.C. sec. 1988).  Plaintiff won $150,000 in a jury trial, and plaintiff’s attorney sought more than $180,000 in attorney’s fees for the work of two attorneys. 

     Judge Ditter only awarded plaintiff $26,278.75 in fees for the work of the two attorneys.  Among other things, the district judge was flabbergasted by the typographical and other errors riddling the fee petition itself, with our personal favorite being the typo “mocong papers” (rather than “moving papers”).  He was equally unimpressed by the proposed order lodged by the winning attorneys, where they wrongly cut and pasted from a different document—forgetting to change the erroneous defendants’ names or the incorrect dollar figures from the prior template being used, leading the district judge to comment “[i]t is suggested that I sign an order which recites the wrong amount of McKenna’s judgment and orders thee strangers to this action to pay attorneys’ fees and costs.”

     The defense had asked Judge Ditter to reduce the fee award to about $19,500.  Ultimately, the district judge found the proper lodestar was about $105,000, but should be reduced by 75% for claims rejected by the jury and for the sloppy work product submitted to the court on prior occasions.  The reduction was justified, according to Judge Ditter, because of the questionable time records, lack of candor, slip-shod submissions, and failure to apportion out hours devoted to work for three other plaintiffs who had not been successful.  In a “postscript” paragraph worth quoting, Judge Ditter whimsically observed:  “A long time ago in a galaxy far, far away, each lawyer knew he and she could not nail any old slap-dash parchment to the church door and expect someone else to pay for it.  Most lawyers who practice in this court also know that.  They all should.”

     In an earlier case, a U.S. magistrate judge reduced the same lead attorney’s requested hourly rate in a civil rights fee award request from $300 per hour to $150 per hour based on his sloppy work. 

     Lead attorney did admit in an interview that he relied too heavily on spell-checking software and did not proofread enough.  These mistakes were costly, costly to the tune of almost $80,000 based on the lodestar that the district judge found to be reasonable in nature.  Hope u al had fun reding this blawg.  If you want some more information on the circumstances of the McKenna ruling, see the October 8, 2008 article by Shannon P. Duffy, “Typos and Errors Lead to Slashed Fees for Attorney,” available for reading on Law.Com. 

Here Is A Wild One: Prevailing Party Files Cost Memorandum (Not Motion) Seeking Fees, Gets Her Attorney’s Fees Request Cut In Half (But Still Awarded), and Has One of Her Attorneys Try To Enforce His Lien On Appeal (Despite No Trial Court Consideration

Second District Affirms Lower Court Determinations in the “Wild One.”

 

            Who says that unpublished decisions lack drama and all of emotions that go with litigation, even in posttrial attorney’s fees proceedings.  Not us, and the next case backs us up on this conclusion. 

 

            Lu v. Grewal, Case No B201355 (2d Dist., Div. 7 Oct. 8, 2008) (unpublished) involves a remanded case where plaintiff prevailed upon retrial, with a court awarding her $138,124.73 in damages and found she was the prevailing party for purposes of an attorney’s fees award.  That is where the fun really begins (and not just because this website focuses on these issues).

 

            Plaintiff submitted a costs memorandum seeking fees of $469,214.21 and costs of $20,317.40, but made no fee motion.  (BLOG OBSERVATION—There are no typos here.)  Losing defendants filed an opposition and objections to the costs memorandum, both as to the costs and fee requests.  At a subsequent hearing, the trial court requested further briefing, chastising both sides for procedural irregularities and lack of detailed information.  Plaintiff did file supplemental documentation, seeking a total of $528,910.72 in fees and costs.  (BLOG OBSERVATION—Still no typos.)  More objections, more papers, and finally a hearing.

 

            The trial court carefully analyzed the billings, allowing some in total, cutting some in half, disallowing some, and doing other reductions on other requests. 

 

            Eventually, the trial court awarded plaintiff a total of $259,120.81 in attorney’s fees and costs.  Defendants were unhappy, appealed, and lost.

 

            Notwithstanding plaintiff’s failure to file an attorney’s fees motion, the Court of Appeal found no prejudicial error.  The trial court had considerable discretion to request additional briefing and set a procedure to ensure proper decision making.  Because both sides were given added opportunities to correct deficiencies, no prejudice flowed from the trial court’s actions.

 

            The appellate panel found no abuse of discretion in the lower court’s fee award.  “The court eliminated amounts for duplicative work, eliminated amounts for inflated work hours, and struck ineligible cost items from the attorneys’ requests” (such as block billed entries), reducing by almost half the fees plaintiffs requested “upon such factors such as duplication, excessive hours expended, and lack of documentary support.”  (Slip Opn., at p. 8.)  The Court of Appeal did not find the reduced award excessive given that it encompassed work for two trials and an appeal.  (Akins v. Enterprise Rent-A-Car Co., 79 Cal.App.4^th 1127, 1134 (2000).) 

 

            Finally, in a curious twist of fate, plaintiff’s attorney filed an attorney’s lien against his client’s recovery from defendants subsequent to entry of judgment in the matter.  Both sides opened fire about the propriety of his attorney’s lien, but the appellate court refused to evaluate their contentions because they were never put before the trial court.  Absent intervention in the action by the attorney, the lien claim had to be decided in a completely independent action.  (Brown v. Superior Court, 116 Cal.App.4^th 320, 327, 330 (2004).) 

 

            Plaintiff had to be content with the trial court’s award of about half of her requested $529,000 in fees.  (BLOG OBSERVATION—The fees award was almost double the base compensatory damage recovery, confirming yet again that attorney’s fees are the tail that wags the litigation dog, as our Mission Statement is a testament to.) 

 

           

First District Court of Appeal Allows Attorney’s Fees Award For Preparing Pithy Complaint That Packed A Punch

Court of Appeal Affirms Award Of About $57,500 To Trial Attorney Suing Former Client For Successful Trial Efforts

Six-Plus Hours During Trial Not Deemed Unreasonable For Litigation Attorney's Efforts.

            Client retained a trial litigation Attorney less than two months before a trial in which she claimed ownership to an Oakland condominium even though her relatives paid significant mortgage expenses and loan interest costs on the condominium.  Attorney hit the ball out of the park during an 8-day jury trial, receiving a direct verdict by which Former Client gained possession of a $450,000 property and did not have to reimburse relatives during their years of occupancy.  Attorney submitted billings for what even Former Client conceded was a "good result."  Even though Former Client had previously paid $18,000, she balked at paying the remainder of $50,000 owed to Attorney for trial activities.  Attorney sued Former Client under the written retainer agreement between the two.  After a bench trial, Attorney recouped a fee judgment of $57,562.87 (the remainder plus prejudgment interest). 

            Appleton v. Tu, Case No. A118006 (1^st Dist., Div. 4 Sept. 26, 2008) (unpublished) dealt with Former Client's appeal of the fee judgment in favor of Attorney.  Former Client did not prevail, because the Court of Appeal affirmed. 

            The fees claimed by Attorney were not exorbitant.  Former Client was horrified that a trial litigator could bill more than six hours per day to the Client's case.  Get real, was the appellate panel's response.  Here are bullet points for litigators to savor:

·       "Six of the eight trial days exceed 12 hours, which is not surprising.  Contrary to [Former Client's] supposition, long hours are not unusual for an attorney, especially one trying a case."

·       Responding to Former Client's contention that Attorney could not have worked six hours out of a seven hour day—"The central flaw in this logic is that there are not seven hours in a work day for trial attorneys, who routinely work into the night on behalf of their clients."

            The bloggers, who are both trial litigators, would like to thank Justice Sepulveda (and the First District, Division Four panel endorsing Appleton) for its recognition that trial days well exceed 6-7 hours per day—in fact, we can attest that they sometimes double or treble these amounts depending on the nature of the case.  (However, 7 hour days during trial are not the norm, but the base minimum in our experience.)