CALIFORNIA ATTORNEY'S FEES

Private Attorney General/Reasonableness Of Fees: Attorneys Representing Public Interests Entitled To Same Compensation As Private Practicing Attorneys In Community

 

$313,000 Fee Award Affirmed on Appeal.

     Nonprofit interests won a mandate proceeding requiring the City of Redondo Beach to put a local coastal progress amendment to a public vote. Plaintiffs then requested an attorney’s fees award of $354,978.12 under California’s private attorney general statute (CCP § 1021.5), which included a .25 multiplier. City opposed, arguing that the total fees should not exceed $128,729.33. The trial court awarded fees of $313,000, discounting plaintiffs’ pre-court litigation expenses.

     City did not get any further reduction of the fee award on appeal in Building a Better Redondo v. City of Redondo Beach, Case No. B226499 (2d Dist., Div. 8 Jan. 25, 2012) (unpublished).

     After all, the substantiation of the fees was good--attorney declarations and national law journal billing surveys showing that $500-550 partner rates, $200-250 associate rates, and $125 paralegal rates were justified. However, the main premise rejected was that public interest attorneys should be compensated at a lower rate than that for private practitioners in the same community--no way under governing precedent. (Serrano v. Unruh, 32 Cal.3d 621, 642 (1982).)

     BLOG UNDERVIEW--We reported on this Measure G dispute in our November 9, 2010 post when the fee award originally came down. The City decided to appeal way back then. So, here is the result!

Costs/Reasonableness Of Fees: Fee Award To Prevailing Party Of $80,000 Sustained Even Though Request Was $560,236.47

 

Deposition Costs Disallowed Where No Detail Provided.

     The next case from our local Santa Ana appellate court teaches two lessons: (1) prevailing parties filing costs memoranda need to utilize the entire Judicial Council forms, including the worksheets which have more detail that just the initial summary page; and (2) Civil Code section 1717 fee awards have to be reasonable in nature, with unnecessary work or small outcomes justifying reductions (sometimes very severe) depending on the circumstances of the case.

     In Andersen v. Pacific Asian Enterprises, Inc., Case No. G043957 et al. (4th Dist., Div. 3 Jan. 13, 2012) (unpublished), plaintiff did prevail on a contract warranty/fraud lawsuit against defendant involving a cruising yacht. Plaintiff was awarded $25,770 for breach of contract/warranty and $18,000 for loss of use on the fraud claim (with plaintiff requesting $218,000 for loss of use), or a total judgment of $43,770. The trial court taxed $45,503.75 out of a requested $49,503.76 in deposition costs, and subsequently awarded $80,000 in contractual attorney’s fees (based on a fees clause in the purchase agreement) out of a requested $560,236.47. (That’s right, there is no typo here.)

     Defendant’s appeal of the merits, cost award, and fee award did not prevail.

With respect to the deposition costs reduction, plaintiff only attached the initial Judicial Council summary with an omnibus line item total, failing to utilize the worksheet (which asks for more detail, such as the deponent, date and other items) or failing to attach deposition invoices to the costs memo. That was fatal on appeal, given there was no explanation of how the costs were incurred. It was plaintiff’s burden to establish necessity and reasonableness of the costs, and that was not effectively done here.

     The lower court awarded lowered fees based upon the request being “wildly out of proportion to the recovery” and plaintiff not providing a methodology to award higher fees given the outcome far below what was demanded during the case. The appellate court sustained this result, bolstered by the trial court’s conclusion that the case was a fairly routine breach of warranty case (not highly complex). (Cf. EnPalm, LLC v. Teitler, 162 Cal.App.4th 770, 774-775 (2008) [reviewed in our May 12, 2008 post].)

     Justice Fybel was the author of Andersen on behalf of a 3-0 panel.

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

 

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

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

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

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

Reasonableness Of Fees/SLAPP: Appellate Court Scales Back $19,500 Fee Award To $10,700

 

Case Was Simple; Fees Were Excessive.

     Reasonableness of a fees request, we have found, is often an “I know it when I see it” judgment call by a jurist. This next case demonstrates that even appellate panels will scale back fee requests that are too high when compared to the nature of the case.

     Defendant won a SLAPP motion based on small claims activities, which we all know carries a mandatory fee-shifting provision in these circumstances. There was the rub: the $19,500 fee award -- out of a requested $35,442.25 -- was still too high in Bourke v. Castaneda, Case No. D057870 (4th Dist., Div. 1 Dec. 22, 2011) (unpublished).

    That meant the appellate court had to slash it down to $10,700. The overriding reason? The action was not complex such that a court does not have to sanction a high fee award. (1 Wilkin Cal. Procedure (5th ed. 2008) Attorneys, § 206, p. 276; see also Boquilon v. Beckwith, 49 Cal.App.4th 1697, 1722-1723 (1996) [only a 50% fee award justified where a lot of time spent in portraying defendant as a “bad actor’]; Consumer Defense Group v. Rental Housing Industry Members, 137 Cal.App.4th 1185, 1217 (2006) [Proposition 65 action so easily as to make $500,000 fee request “objectively unconscionable”].) “ . . . given the simplicity of the case, the hours incurred were simply too high.” (Slip Opn., p. 10, reducing fee award to $10,700.)

     HAT TIP--Ben Shatz, an appellate specialist with Manatt Phelps, sent a copy of the decision to us. Mr. Shatz is an avid follower of the blog and a fine lawyer in his own right; Happy Holidays to you, Ben, and all of our readers during this Holiday season.

Deadlines/Section 1717/Substantiation Of Reasonableness of Fees: Fourth District, Division 3 Talks About Timely Moving For Fee Recovery, Scope of Section 1717 Recovery, And Fee Billing Redactions

 

Reversal and Remand Was the Result in this One.

     Acting Presiding Justice O’Leary in Fuller v. Monogram Real Estate, Case No. G044808 (4th Dist., Div. 3 Dec. 19, 2011) (unpublished), on behalf of a 3-0 panel of our local appellate court, got to explore three issues of interest in the attorney’s fees area in reversing the denial of attorney’s fees under a fees clause to a defendant prevailing on a summary judgment motion.

     The first ground for reversal was the lower court’s determination that the fee request was untimely because it was not sought in the costs memorandum. In a contested matter, a fee request must be brought through a separate motion under current rules (Cal.Rules of Court, rule 3.1702(b)(1)), a change from different rules in effect before 1994 (where the fees should have been claimed in the costs memo).

     The second ground for reversal was the lower court’s conclusion that the fees clause did not apply because there was no contract. Not to worry, section 1717 allows for recovery even when the prevailing party demonstrates the contract is inapplicable, invalid, unenforceable, or nonexistent, assuming the opposite party could recover fees--which was the case here. Beyond that, the restriction of the fees clause to certain rental monies (a percentage of the unpaid rent) did not matter as far as recovery, because section 1717 was expanded to cover claims applying to the entire contract. (Harbor View Hills Community Assn. v. Torley, 5 Cal.App.4th 343, 348-349 (1992).)

     Finally, that brought the appellate court to the question of reasonableness--after all, losing party said he was charged fees of $28,250, while winning defendant asserted it was billed $163,000 for legal services. Because it was unclear whether the lower court actually exercised its discretion in ruling on reasonableness (given the other grounds for decision), its denial order had to be reversed and remanded. However, that is not quite the end of this matter. Defendant did submit redacted billing statements, with the appellate court dismissing that these statements could only be reviewed in camera without giving plaintiff an opportunity to review and contest such documentation.

     Two options were outlined by the appellate court: waive the privilege/produce the billing statements for everyone to review or present a much more detailed declaration of counsel summarizing the required information. (Wershba v. Apple Computer, Inc., 91 Cal.App.4th 224, 254-255 (2001).)

Reasonableness Of Fees: Appellate Attorney’s Fees Of $446,302.21 Found Reasonable To Winning Respondent

 

That Was On Top Of Prior Trial Level Fees of $1.25 Million, All in a Boundary Dispute Between Neighbors.

     Akin to HOA disputes, neighbor boundary disputes generate a lot of emotions as well as a lot of fees in any ensuing litigation. The next case demonstrates that the tab can even be as high as $1.7 million to the loser.

     One set of neighbors in a North Beverly Glen Boulevard boundary dispute lost at trial, being hit with $6 million in compensatory and punitive damages ($2 million compensatory and $4 million punitive) as well as $1.25 million in attorney’s fees based on breaching a prior settlement agreement with a fees clause. Winning neighbors, who successfully defended the trial level win and fee award, then moved to recover $446,302.21 in appellate fees.

     They got them all in Goldstein v. Beck, Case No. B226418 (2d Dist., Div. 7 Dec. 8, 2011) (unpublished), with the appellate court sustaining the award upon appeal by losing neighbors.

     The abuse of discretion review standard could not be hurdled by appellants. The $600-650 hourly rates being claimed were found to be reasonable for the L.A. area for appellate practitioners. Appellants then argued that respondent’s counsel had less tasks to do, so that the more hours and fees incurred (78 hours more) was excessive. However, the 78 hour discrepancy in the more than 2000 hours expended by all parties was not that great, clearly distinguishing it from the huge disparity in efforts involved in Donahue v. Donahue, 182 Cal.App.4th 259, 272 (2010) [comparison of two sides’ efforts may be a reasonable check on the reasonableness of any fee request].

     Also, there was no due process violations in the fee proceeding. After a supplemental declarations was presented in a reply, a sur-reply brief was allowed and an opportunity to be heard on the new matters.

Reasonableness Of Fees: $52,848 Fee Award Sustained

 

Proper Substantiation and Reduced Hourly Fee Clinched the Result.

     A trial court awarded $52,848 fee award to a defendant who non-suited a plaintiff in a legal malpractice action at trial. Plaintiff challenged the fee award as excessive.

     Not so, said Presiding Justice Mallano--in a 3-0 opinion--in Jackson v. Kim, Case Nos. B219116/B221686 (2d Dist., Div. 1 Nov. 17, 2011) (unpublished). Plaintiff’s counsel presented competent substantiation, reduced the hourly rate to $350, and did have to take depositions/gear up for trial, all justifying the lower court’s actual award.

Reasonableness Of Fees: Fees Clause Allowed Trial Court Authority To Award $204,637 In Fees Under Section 1717 For Two Successful Demurrers

 

Excessiveness Challenge Rejected By Appellate Court.

     A party who was successfully dismissed as a proposed complainant in intervention, after two demurrers, was hit with a $204,637 fee award under Civil Code section 1717 based on a fees clause. The party was obviously upset, appealing the award as excessive.

     Not so, said the appellate court in Pars Ice Cream California, Inc. v. Conopco, Inc., Case No. B2220686 (2d Dist., Div. 7 Nov. 16, 2011) (unpublished). The fee substantiation was extensive and spelled things out, providing a roadmap for the 220 hour fee request--including a fee declaration from expert Gerry Knapton as to the reasonableness of the requested hourly rates. Appellant only claimed that the case was simple and challenged a few selected tasks, which did not meet its burden on appeal.

Civil Rights/Reasonableness Of Fees: $677,025 Fee Award Affirmed On Appeal

 

60% Reduction by Trial Court Dispatched Inefficiency/Padding/Overcharge Challenges.

     In Fuentes v. Autozone, Inc., Case No. B224034 (2d Dist., Div. 4 Nov. 16, 2011) (certified for partial publication; fee discussion unpublished), plaintiff won a $160,000 FEHA damages award, with the lower court subsequently awarding attorney’s fees of $677,025 under the fee-shifting statute. In doing so, the lower court reduced by 60% the $963,330 requested lodestar and denied a 2.0 multiplier request. The trial court found that its award was substantial in an uncomplicated case. Although unhappy defendant challenged the award for inflated hourly rates, padding and overreaching, the appellate court sustained the fee award based on the 60% reduction and the lower court’s setting of the reasonable hourly rate at $425 (compared to requested rates ranging from $395-$675 per hour).

Reasonableness Of Fees: $168,508.75 Fee Award Was Not Reasonable In Amount, Where Time Records Showed No Apportionment Out Of Time Spent On Parallel, But Legally Unrelated, Action By Attorney Representing Winning Defendant

 

     Here is one demonstrating that appellate courts do not blindly rubber stamp trial court fee awards, simply because a side did prevail. Especially so, when there are multiple lawsuits being litigated and the winning attorney did not clearly apportion out work spent on a parallel, but legally unrelated, action involving the same clients.

     Grubb & Ellis v. nXa, LLC, Case No. B225096 (2d Dist., Div. 8 Oct. 28, 2011) (unpublished) is a situation where defendant won summary judgment against G&E for allegations that defendant breached a real estate listing agreement. (Defendant also lost some cross-claims against G&E.) The trial court awarded defendant $168,508.75 in attorney’s fees to defendant for defending against G&E’s action out of a requested $210,000 in fees.

     On appeal, the amount of the fee award was reversed as being unreasonable.

     The appellate court did not dispute fee entitlement because, after all, defendant did beat the contractual commissions claim having a fees clause in effect. Defendant prevailed, even though it lost the cross-claims and the lower court did retain discretion to decide which side prevailed.

     However, the fee award amount is what troubled the appellate court. The defense attorney failed to apportion fees between this case and a parallel fraud action involving claims that were not legally (but only historically) related. The time entries in the supporting fee motion papers were so vague that even the appellate court could not sort it out. The Second District found it was unfair for defendant, under the circumstances, to recover “each and every dollar it has paid to its attorneys, for whatever cases . . . .” The case was remanded for a more measured fee determination.

     BLOG UNDERVIEW--The result underscores what Justice Fybel of the Fourth District, Division 3 said at a fee seminar in Los Angeles last year--litigants need to provide a “roadmap” for the appellate court on attorney’s fees issues, something which may require apportionment of work on noncompensable claims or exclusion of work not really related to the case where fees were indeed awarded.

Reasonableness Of Fees: Work Of Second Attorney Affiliating Closer To Trial Properly Discounted From Fee Award

 

Trial Court Discretion Is Broad on this Issue.

     Viney v. Grupp, Case Nos. A120208/120993 (1st Dist., Div. 4 Oct. 19, 2011) (unpublished) is a convoluted real property easement interference case--involving landlocked property--where one $240,000 fee award went POOF! based on a partial reversal of a damages issue (and appellate instructions that there might be entitlement and no need to apportion with respect to the other side’s gripe about not getting any fees should they win below on remand) and where another fee of award of under $168,000 was affirmed based on a settlement agreement fee clause.

     The real lesson we took away from this case involved the prevailing party who won the $168,000 fee award. He appealed the trial court’s reductions of about $68,000 from the requested fees, primarily for the second attorney who affiliated into the case close to trial. The trial court found that second counsel was not needed and did not improve the client’s representation, with the appellate court finding that this was no abuse of discretion given the broad discretion imbued with the lower court to make such a determination.

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

 

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

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

Civil Rights/Special Fee Shifting Statute: Defendant/Cross-Complainant Losing Adverse Elder Abuse Claim and FEHA Cross-claim Properly Hit With $1.312 Million Fee Order

 

She Lost Elder Abuse Claim by Plaintiff and Did Not Prevail on Her Frivolous FEHA Sexual Harassment Cross-claim.

     Bad facts can result in large jury verdicts; they also tend to guide the dispositon of the trial judge when it comes to awarding attorney’s fees against the non-prevailing litigant. That is what happened in Flowers v. Hillyer, Case Nos. A120478/A121941 (1st Dist., Div. 5 Sept. 23, 2011) (unpublished).

     Here is a summary of the bad facts: Plaintiffs, including an elderly man with an ownership interest in another of one of the plaintiff companies, sued defendant, a former CFO, for making 72 unauthorized transactions and embezzling millions of dollars from Ramsell Corporation as well as elderly man’s personal accounts. Defendant cross-claimed for defamation and sexual harassment/retaliation under FEHA, based primarily on the claim that the elderly plaintiff harassed her even though the evidence showed that he only accompanied her to hotels for some physical intimacy during a vulnerable time of his life but not have sexual intercourse. The jury awarded plaintiffs over $11.7 million on the embezzlement-related claims (including elderly abuse claims for taking money from the elderly man’s personal bank accounts) and returned a defense verdict on defendant’s sexual harassment cross-claim (after dismissal of the defamation cross-claim). Later, the trial court awarded the elderly plaintiff $770,576 in fees on his elder abuse claims and awarded elderly plaintiff/Ramsell $542,056 in fees for successfully defending against defendant’s frivolous sexual harassment cross-claim.

     Defendant appealed. Although the appellate court reversed the $4.8 million punitive damages component of the jury award, the remainder of the merits judgment and fee awards were affirmed.

     One firm representing plaintiffs/cross-defendants sought a total of $1,983,721 in fees (from filing of complaint until some time before trial) and another firm sought $886,619.19 in fees for work on the sexual harassment claim (with the court denying plaintiffs’ request for fees generated by the second firm on the elder abuse claims because that firm did not represent elderly plaintiff until after trial).

     The lower court determined that 45.7% of first firm’s fees were attributable to the elder abuse claims, and reduced this amount by 15% due to “block billing” and redacted time entries. That came to the $770,576 in total fees awarded. Defendant argued that the lower court should have reduced fees by 20% or more, but the appellate court determined that the 15% reduction ($130,000) was well within the lower court’s discretion. (See, e.g., Nightingale v. Hyundai Motor America (1994) 31 Cal.App.4th 99, 103; Welch v. Metropolitan Life Ins. Co. (9th Cir. 2007) 480 F.3d 942, 948 [discretion to disregard or reduce appropriately in “block billing” cases].)

Reasonableness Of Fees/Section 1717: Partial Success Allows Trial Court To Award Less Than Fee Request To Winner

 

$50,000 Award Out of $176,406 Request Sustained.

     Partial success, in the next case we discuss being a plaintiff who obtained a $21,600 damages award after seeking around $170,000, can lead indeed to a reduced fee award.

     Winning plaintiff sought Civil Code section 1717 fees of $176,406 even though he only won under 15% of what he requested in damages. The trial court, in Ebrahimi v. Highrise Builders, Inc., Case No. B225636 (2d Dist., Div. 8 Sept. 14, 2011) (unpublished), awarded plaintiff $50,000 in fees out of the requested amount, which was more than a third of his request.

     Plaintiff appealed, seeking more. He didn’t get them.

     Simply put, plaintiff’s dismissal of certain claims and limited success on the remaining more than justified the lower court’s discretionary award of $50,000.

Reasonableness Of Fees: $247,480.05 Fee Award To Property Owner/Landlord In “Bat Bite” Case Affirmed On Appeal

 

Fifth District Finds Nothing Wrong in Substantial Fee Award.

     Hopper Properties v. Payless Shoesource, Inc., Case No. F060235 (5th Dist. July 7, 2011) (unpublished) involved interesting facts and a substantial fee award affirmed on appeal.

     Owner/landlord Hopper and tenant Payless settled with a six-year-old boy who was bitten by a bat inside a Payless store. Payless then sought to recoup its settlement contribution from Hopper based on a lease indemnification clause, with the lower court finding that it did not shift responsibility (apparently, because the bat incident was caused by Payless’ own sign and keeping the doors not shut tight enough during certain hours). Hopper requested a fee award of $262,882.05, and was granted an eventual award of $247,480.05, with the lower court reducing the award for fees not actually paid by the client to its lawyers.

     Payless appealed, and lost.

     In a 3-0 opinion authored by Justice Franson, the appellate court found no abuse of discretion. The hourly rates claimed were reasonable in nature, and the case was strenuously litigated by both sides--but Hopper’s attorney provided excellent representation. After all, what more is there to say? If you litigate tenaciously and ultimately lose, you might have to pay all the full monty (or close to it). Point made.

Townsend’s big-eared bat.  Wikipedia.

Lots Of Fee Decisions On Variant Issues Come Out On June 21, 2011

 

Choice of Law--California Law Applies Across the Board If It Is the Governing Choice of Law on Fee Issues.

     In our prior posts of June 11, 2008 and January 21, 2010, we discussed decisions indicating that Civil Code section 1717’s reciprocity principle is a fundamental California interest trumping unilateral fee clauses governed by other state laws that do not allow for reciprocity in California-venued actions. Aronson v. Advanced Cell Technology, Case No. A129336 (1st Dist., Div. 4 June 21, 2011) (certified for publication) contained another twist in this area: a trial court determined that a Massachusetts contractual fees clause that was unilateral had to be interpreted as reciprocal based on Civil Code section 1717 in a California lawsuit suing on the contract involving the Massachusetts fee provision. However, the lower court also determined that the plaintiff’s pre-trial dismissal prevented an award of fees under Santisas, which denies fees in a case where there is a voluntarily dismissal of a claim giving rise to fees under section 1717. On appeal, defendant tried to get an overturn of the fee denial (which involved a $645,542.40 request), but was rebuffed. Defendant discordantly argued that while California law governed the reciprocity impact of the clause, the pre-trial dismissal prevailing party analysis should be governed by Massachusetts law allowing for recovery despite the dismissal. Nope--the same law applies to the variant fee issues. “[O]nce a court concludes that it will apply a California statute to determine whether to award attorney fees, a determination of whether a party is a prevailing party as defined by that same statute is not a separate issue to be analyzed pursuant to Nedlloyd.”

Family Law--Trial Court’s Failure to Rule On Needs-Based Request Was An Abuse of Discretion Where No Complete Absence of Proof.

     A family law judge’s denial of needs-based fees to ex-wife was reversed as an abuse of discretion in In re Marriage of Kostandy, Case No. B225582 (2d Dist., Div. 1 June 21, 2011) (unpublished). The reason for the reversal is that ex-wife had introduced evidence on some of the needs-based factors, with the lower court erroneously indicating there was a complete absence of proof when there wasn’t. On remand, a decision had to be made on the fee request.

Private Attorney General Statute--Refusal to Grant Fee Award to Plaintiff Prevailing in Height Restriction Ordinance Win Overturned on Appeal.

     Plaintiff, in Save Arden-Oaks v. Sacramento County Bd. of Zoning Appeals, Case No. C059387 (3d Dist. June 21, 2011) (unpublished), successfully enforced local zoning ordinances limiting residential building heights for the Arden Oaks area. However, the trial court denied plaintiff any fees under Code of Civil Procedure section 1021.5. This fee denial was reversed by the Third District, ruling in the process that the lower court misanalyzed the public benefit and financial burden elements of California’s private attorney general statute. In short, the zoning height restriction interpretation from the lower court protected the Arden Oaks neighborhood into the future (impacting the entire neighborhood, both present and future residents)--a clear public benefit. Also, plaintiff’s nonpecuniary motives were irrelevant and it did not have to produce precise evidence about the financial burden incurred--meaning the third element was satisfied in this one.

Reasonableness of Fees--Defense Tenacity in Litigating Justified $106,000 Fee Award In $115,000 Promissory Note Collection Action.

     Finally, the Fifth District in Salwasser v. Salwasser, Case No. F060867 (5th Dist. June 21, 2011) (unpublished) reminded us that litigation tenacity is a factor that can be weighed as far as determining the reasonableness of a fee award under Civil Code section 1717. It affirmed a $106,480 fee award (out of a requested $116,445) in a promissory note collection case involving a principal amount of $115,000. The reason? The defense’s litigation tenaciously, driving up the costs, was a factor properly weighted in awarding fees that were almost as much as the amount at stake in the entire controversy. (Peak-Las Positas Partners v. Bollag, 172 Cal.App.4th 101, 114 (2009).)

Post-Memorial Day Unpublished Troika: Reduced Fee Award Reversed; Res Judicata Supports Another Fee Award; Implied Covenant’s Operation Justifies Finding Opt-In Defendants Not Liable For Fee In Proposition 65 Case

 

$23,600 Fee Award Out of Requested $223,615.50 Reversed in Civil Rights Case.

     In Williams v. Hei Long Beach, LLC, Case No. B224211 (2d Dist., Div. 2 May 31, 2011) (unpublished), the appellate court reversed a fee award of $23,600 out of attorneys’ requested $223,615.50 in an Unruh Civil Rights hotel accommodation case resulting in a permanent injunction by which hotel agreed to accommodate disabled patrons with service animals. Although agreeing that the lower court had discretion to apportion time out on other noncompensable claims, the appellate court found that the injunction was an important public win in the case justifying more fees even though plaintiff won rather small damages. Also, it could not fathom why compensation was denied to one attorney who tried the case and was lead counsel. Remanded to reconsider the fees to be awarded to plaintiff’s attorneys.

Prior Federal Court Judgment Given Res Judicata Impact, Sustaining Fees Awarded in Favor of Three Individual Defendants Having Qualified Immunity.

     The next case involved the application of res judicata to sustain a $36,501 fee award (out of a requested $45,773 in fees) based on a prior federal judgment finding that three individual defendants were protected under the qualified immunity defense in a civil rights action. Because res judicata barred plaintiff’s effort to relitigate in the later-filed action based on the qualified immunity federal ruling, the lower court correctly concluded that the result was obvious, triggering the meritless/groundless fee-shifting provision of 42 U.S.C. § 1988(b) in favor of winning defendants. The decision so applying res judicata principles is California County Superintendents Educational Services Assn. v. Marzion, Case No. A129527 (1st Dist., Div. 4 May 31, 2011) (unpublished).

Implied Covenant of Good Faith and Fair Dealing Justified Not Awarding Fees to Plaintiff in Proposition 65 Opt-In Defendant Case.

     This last one, Consumer Advocacy Group, Inc. v. Sanders Paving, Inc., Case No. A127125 (1st Dist., Div. 5 May 31, 2011) (unpublished), involved a Proposition 65 consent judgment with language allowing potential defendants who were not parties to the initial action to “opt-in” to the judgment by agreeing to its terms and making certain payments--including an “opt-in premium” of reimbursing the plaintiff for documented out-of-pocket costs and fees incurred in commencing suit following the initial opt-in period. The trial court entered a corollary order indicating it would resolve fee/costs disputes if the parties were unable to do so. The lower court did not like the opt-in premium provision, indicating that the fees had to be reasonably incurred and that potential defendants opting-in had to be given notice of the consent decree before fee exposure would be triggered. On this basis, the trial court denied awarding additional fees from three defendants not given the requisite notice. The appellate court affirmed based on the implied covenant of good faith and fair dealing, having a good discussion of how it applies in consent decree situations involving Proposition 65.

Lodestar/Reasonableness Of Fees: Two Drastic Haircut Fee Decisions--One Reversed And One Affirmed

Justice Bedsworth Gives Us Two Fee Case “Gems.”

     Justice Bedsworth, who sits on the Fourth District, Division 3 (the venue where co-contributors Marc and Mike are based practice-wise), has written two interesting decisions on lodestar/reasonableness of fees. Both involved trial court decisions dramatically cutting fee requests. On appeal, one got reversed and the other got affirmed in 3-0 unpublished decisions. So, here we go on what was at play in each.

More Beds (above) (below)

Haller v. Chiya, Case No. G043566 (4th Dist., Div. 3 May 19, 2011) (Unpublished).

     In a somewhat unusual personal injury case where passenger sued driver/owner of the car when driver fell asleep and struck a parked car off the road, plaintiff passenger--who was injured quite severely--served driver with a $250,000 998 offer after learning of insurance coverage limits. Defendant driver accepted, with plaintiff then seeking $100,000 in attorney’s fees under Code of Civil Procedure section 1021.4 (a fee shifting statute allowing recovery of fess against a defendant who has been convicted of a felony). However, the trial court only awarded $5,150 in attorney’s fees.

     The appellate court ruled that the lodestar adjustments must be explained by stating each reduction factor and dollar adjustment, something not done in this situation. Because the payment to plaintiff did not occur until deep into the case, the fee award should have been justifiably higher, constituting an abuse of discretion even under the deferential standard.

Worley v. Storage USA, Inc., Case No. G043613 (4th Dist., Div. 3 May 20, 2011) (Unpublished).

     This case was an appeal from a prior appellate remand where a $20,000 fee award in a class action (out of a requested $263,606 in fees) was reversed because the lower court was unclear on what method was used to determine the award--value of the case approach (not used in California), a contingency measure, a common fund approach, or lodestar method. The prior reversal was necessitated by the less than 10% fee request award needing to be recalculated through adherence with the proper lodestar method. (See our December 23, 2009 post for a synopsis of the prior appellate decision.) On remand, the trial court reexamined the evidence and determined $26,543.10 was a reasonable fees/costs award.

     On appeal the second time, the appellate court affirmed the fee award. Here, plaintiffs argued that the lower court did an improper “double dip”--namely, reducing the lodestar for various inefficiencies/duplications and then applying a .15 multiplier that resulted in a 85% lodestar discount. Justice Bedsworth, on behalf of the reviewing panel, found this approach was proper, because the cases cited by plaintiffs involved the inverse (increasing the lodestar figure and then using the same factors to add a positive multiplier, which impermissibly gave the fee claimant two separate multipliers). In this instance, the trial court’s power to do what it did was authorized under Chavez v. City of Los Angeles, 47 Cal.4th 970, 990 (2010) [one of our Leading Cases], allowing the lower court to deny completely an inflated request. The lower court decision in this situation “does not reflect ‘double-counting’ of the same factor, as the [plaintiffs] claim, but instead demonstrates the court’s express authority to go beyond simply fixing the inflated request, and take additional action designed to affirmatively discourage such conduct.” (Slip Opn., p. 11.)

Reasonableness of Fees: $175,361.02 Fee Award To Winning Plaintiff Stands Because Abuse of Discretion Deferential Standard Could Not Be Surmounted

 

Case Highlights How Fee Recoveries Can Be Substantial in Fairly Standard Real Estate Cases.

     Mehrabian v. Meruelo Maddux Properties-Ponte Vista, LLC, Case No. B219623 (2d Dist., Div. 1 May 19, 2011) (unpublished) is not so remarkable for its conclusion, but highlights the high costs of fairly standard real estate litigation and demonstrates the difficulty for a nonprevailing party to defeat the abuse of discretion standard when the only challenge is to the reasonableness of a fee award.

     In a purchase and lease dispute involving adjoining parcels of real estate, plaintiff/cross-defendant prevailed on both the complaint and cross-complaint. A fees clause then allowed the trial court to award plaintiff fees of $175,361.03 (out of a requested $222,943.02) on the complaint and $42,266.02 (out of a requested $169,064.08) on the cross-complaint. Defendant only appealed the fee award based on plaintiff’s win under the complaint.

     The Second District, Division 1 affirmed. Defendant simply could not beat the deferential abuse of discretion standard. The trial court did reduce the complaint fee request by the exact amount delineated by defendant, with it not having to do more and with the defense not clearly demonstrating why a further haircuit was necessary. The lower court’s decision to reduce fee requests by only 10% for general inefficiencies and allow $200 hourly rates for attorneys with less than five years’ experience was not erroneous given the fee petition submissions by plaintiff.

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

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

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

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

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

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

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

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

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

 

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

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

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

    

Private Attorney General Statute/Reasonableness Of Fees: 1985 California Attorney General Standards Provide Good Guidance Of Fee ReasonablenessUnder CCP § 1021.5

 

Also Contains Good Guidelines in All Fee Proceedings.

     We would like to thank reader James Wheaton, Esq., president of Environmental Law Foundation, for forwarding an August 23, 1985 memorandum circulated to all attorneys in the Office of the California Attorney General when that position was occupied by John K. Van de Kamp.

     The purpose of the memorandum was to provide some AG policies when it came to handling cases where attorney’s fees were claimed under the private attorney general statute (CCP § 1021.5). Actually, the memorandum has guidelines that are instructive in any fee proceeding. An advisory group to the present AG has recommended that these policies be updated and republished.

     Here are the highlights from the AG policy memorandum:

     *Contemporaneous documentation of hours expended on litigation is a mandatory prerequisite to a fee award, containing entries for each task that specificly identifies what was done (an identification other than block billing);

     *Submission of such contemporaneous records presumptively shows the reasonableness of quantity of hours claimed, unless the Deputy AG can articulate a reasonable factual basis for believing the hours are excessive;

     *A Deputy AG has discretion to engage in discovery and other means to gain a complete understanding in cases where excessive hours might be at play:

     *AG willl not, as a matter of course, require substantiation of the reasonableness of every action taken and every hour spent in a fee request;

     *AG will seek deletion of hours spent on issues where plaintiff did not prevail or the sought fees were completely out of proportion to the success achieved, although it will not challenge fees on “intertwined” issues;

     *The reasonable hourly rate in a fee claim depends on what is the prevailing charge in the community for similar work, with guidance on the standard and documenting the hourly work being obtained from the analysis in National Association of Concerned Veterans v. Secretary of Defense, 675 F.2d 1319, 1324-1327 (D.C.Cir. 1982) (good reading in the overall area of hourly rates, even though an older case);

     *AG will contend that the lodestar is normally a fully compensatory fee under section 1021.5, with multipliers being contested where the lodestar factors adequately provide for compensation;

     *AG will recognize that a multiplier, positive or negative, may be appropriate where authorized by Serrano v. Priest, 20 Cal.3d 25, 48-49 (1977);

     *Because section 1021.5 cases often involve situations where fee payment is delayed, AG will not oppose fee claims which include an interest component for the delay in payment, using the 10% per annum postjudgment interest rate;:

     *AG will oppose fee claims where plaintiff was dilatory in litigating the case, was unreasonable, demonstrated bad faith, or failed to timely submit the fee application;

     *Budgetary limitations on collection of fee awards, due to state fiscal concerns, may be enforced, although the AG will not seek to limit the actual award amount due to these concerns.

     These policies, by the way, seem to mirror the decision-making process we see followed by many trial and appellate courts during the time that we have been blogging.

     Thanks again, Mr. Wheaton.

Reasonableness Of Fees: Defendant Increasing Fees In Default Judgment Proceeding Did Not Get Any Break In Fee Award

Fourth District, Division 3 Reverses Paring of Fees from $62,400 to $20,000.

     Just to show you that a litigant’s failure to cooperate and the resultant expenses to a plaintiff will often come back to haunt that noncooperative litigant, we discuss Liu v. Wolfe, Case No. G043254 (4th Dist., Div. 3 Feb. 18, 2011) (unpublished) as a good illustration of the point.

Reasonableness Of Fees: Two Recent Incisive Legal Intelligence Studies Show Average Billing Rates For Small And Mid-Sized Firms And Internal Costs For In-House Counsel Departments

     Incisive Legal Intelligence has two fairly recent surveys that may be of interest to those of you who follow our blog with respect to national attorney hourly rates and in-house counsel costs. Here you go.

2009 Billings Rates and Practice Survey for Small and Mid-Sized Firms.

     In its 2009 study on billing rates and practices in small and mid-sized firms, Incisive Legal Intelligence has tallied some interesting findings from a sample size of 255 nationwide firms with the largest group having an average of 21-40 lawyers.     

     This is what they found:

          *The majority of firms bill by the hour, regardless of firm size.

          *The average billing rate, nationwide, is $284 per hour.

          *Firms with 2-8 lawyers have an average hourly billing rate of $262, firms with 76-150 lawyers increase to $295 per hour, and firms with over 150 lawyers have an average billable rate of $333.

          *The average billing rate also increases with a lawyer’s number of years in practice, with lawyers in or near major metropolitan areas commanding much higher fees than the averages.

           *By region, average hourly rates break out this way: Northeast -- $319; West -- $296; South -- $276; and Midwest -- $264.

           *The Pacific division (California, Oregon, Washington, Hawaii, and Arizona) has higher billing rates with an average hourly billing rate of $319.

           *The practice areas with the highest hourly billing rates are Plaintiffs’ Contingency Litigation ($413), followed by Labor/Employment ($302), General Law ($296), and Real Estate/Land Use ($294).

          *A client can be expect to be charged hourly rates for paralegals and other support staff.

2008 Study on In-House.

     In a 2008 Law Department Metrics Benchmarking Survey of 111 companies, Incisive Legal Intelligence reports that the median internal cost of operating an in-house law department at a large company grew to $381,618 per lawyer, a 10% increase over the previous survey year. Median external expenditures for large companies were up significantly, from $616,519 to $705,270 per lawyer. Corporate law departments participating in the study spent the highest percentage of outside counsel fees on litigation (37%), followed by intellectual property (15%) and then mergers and acquisitions (12%).

     What are the primary criteria for selecting outside counsel? Answers in order of priority: firm specialization; responsiveness; and cost. For those companies evaluating outside counsel, here the the three top evaluation criteria: results; knowledge/experience; cost.

Sections 1717/998: Substantial Fee Awards To One Defendant And To Plaintiff As Against Other Defendants Sustained By Second District, Division One

Mutuality Principles and Invalidity of 998 Offer Buttressed Correctness of Trial Court’s Fee Awards.

     Sargon Enterprises, Inc. v University of Southern California, Case Nos. B202789/B205034 (2d Dist., Div. 1 Feb. 9, 2011) (unpublished) was a hard fought case where plaintiff sued USC for breach of contract. Although lost profits evidence was found to have been erroneously excluded, the appellate court did sustain the trial court’s decisions on fee awards under a contractual fees clause. The fee awards went this way: (1) one individual defendant was awarded $440,000 (out of a requested $1,488,503.33) in fees for prevailing against plaintiff; and (2) plaintiff was awarded $4 million (out of a requested $5 million plus) in fees against USC, even though $1.2 million had previously been awarded. As we earlier indicated, the fee awards were affirmed in entirety.

     With respect to plaintiff’s appeal of the fee award against it, section 1717’s mutuality principles gave reciprocity to a fees clause. The trial court apportioned and did so with correct discretion, awarding individual defendant a little under 20% of the fees expended by USC. Fees for services rendered prior to filing a complaint were found properly compensable. (Stokus v. Marsh, 217 Cal.App.3d 647, 655 (1990).)

     That brought the appellate court to USC’s cross-appeal of the adverse fee award. Its main argument was that plaintiff was not entitled to fees because plaintiff did not beat a CCP § 998 offer. The problem here was that the 998 offer was invalid because it was tardy and did not contain a signature line for plaintiff’s acceptance as required under section 998. Because the potential lost profit damages of $220 million in the case were large, the substantial fee award of $6.2 million total was no abuse of discretion given the overall complexity and length of the litigation. Finally, USC argued that fees should have been reduced because plaintiff declined an informal settlement offer of an amount greater than that recovered at trial. In response, the appellate court noted that this very contention had been rejected in Greene v. Dillingham Construction N.A., Inc., 101 Cal.App.4th 418, 425-426 (2002) and also “[w]e decline to extend Meister [v. Regents of University of California, 67 Cal.App.4th 437, 452 (1998)] to circumstances where, as here, the section 998 offer failed to give the offeree proper notice that the punitive provisions of the statute would apply if the offer were declined.” (Slip Opn., at p. 37.)

     Because the matter was remanded for a new trial on lost profits, nothing indicated that the existing fee award against USC would be changed in anyway. “So we leave the award as it is.”

     The opinion was authored by Presiding Justice Mallano. It was 3-0 on the fee issue, but 2-1 on the lost profits issue--with interesting discussions by both the majority and dissent on lost profit damages.

     BLOG UNDERVIEW--Los Angeles County Superior Court Judge Terry A. Green was the trial judge whose fee awards were affirmed. He and co-contributor Mike have a common bond--they are both undergraduate alumni of USC.

 

Tommy Trojan covered in duct tape in preparation for UCLA football game.   Source:  Wikipedia.

Reasonableness Of Fees: $128,655 Fee Award Found To Be No Abuse of Discretion

Second District, Division 2 Sustains Substantial Award.

     In Chapman v. Sullivan Motor Cars, LLC, Case Nos. B222542/B224885 (2d Dist., Div. 2 Feb. 9, 2011) (unpublished), plaintiff had a demurrer sustained without leave to his first amended complaint, with the lower court also adopting a referee’s decision to award attorney’s fees against plaintiff to the tune of $128,655 (out of a requested $170,655). Plaintiff appealed, claiming the fees were so high that they were tantamount to a penalty.

     The problem was that plaintiff could not surmount the deferential abuse of discretion standard applicable to gauging reasonableness. (Serrano v. Priest, 20 Cal.3d 25, 49 (1977) [one of our Leading Cases].)

     The referee did use the lodestar methodology, and the award was not a penalty. Plaintiff understated what was at stake, because he had asked for $550,000 in an appraisal valuation of his interest in an LLC. Because the underlying substantive claims arose out of the operating agreement, prevailing defendants were entitled to fees. (Adam v. DeCharon, 31 Cal.App.4th 708, 712 (1995).)

Reasonableness Of Fees: Sixth District Affirms $374,913 Fee Award In Landlord-Tenant Dispute Netting $23,000 In Damages

 

Lower Court’s Double Multiplier For Defense Litigation Tactics Sustained on Appeal.

     Martin v. Taylor, Case No. H034649 (6th Dist. Feb. 8, 2011) (unpublished) goes to show you that there is no proportionality principle for awarding attorney’s fees under Civil Code section 1717. In fact, courts will often apply a multiplier if an opponent’s tactics have protracted the litigation.

     In this one, plaintiff was awarded damges of about $23,000 in a landlord-tenant dispute. Plaintiff then sought $187,456.50 in fees and costs, plus a two multiplier due to the extra effort defendant’s litigation tactics had required. The lower court agreed, awarding every bit of the $374,913 request for fees and costs.

     Plaintiff only challenged the merits judgment that the lease was enforceable. That prompted an affirmance by the Sixth District, which also sustained a fee award showing that proportionality is not a necessary guiding principle in the section 1717 area.

Allocation/Reasonableness Of Fees/Special Fee Shifting Statutes/Lodestar/Multiplier/Costs/Standard Of Review: Lower Court Did Abuse Discretion In Awarding Certain Expenses As Fees, In Failing To Allocate, And In Applying A Multiplier

Abuse of Discretion Standard Did Not Prevent Reversal When Record Showed Errors, According to Sixth District.

     In an interesting contrast to the way the abuse of discretion standard was deferentially applied in our contemporaneous post in Murrell v. Rolling Hills Community Association, the Sixth District found that the trial court abused its discretion in numerous ways in the amount of fees awarded in a financial elder abuse case (even though the issue of fee entitlement was not disputed).

     Defendant in Bell v. Bunch, Case No. H032980 (6th Dist. Jan. 31, 2011) (unpublished) was found to have committed financial elder abuse against plaintiff. Welfare and Institutions Code section 15657.5(a) has a fee shifting statute. In a postjudgment order which was separately appealed (something we have argued should be done in all cases), the trial court awarded plaintiff statutory fees and costs of $290,684.93 inclusive of a 1.2 multiplier on everything but “fees on fees” plus $5,824 in expert witness and investigation fees. Defendant appealed, challenging entitlement on some of the costs and the amount of fees awarded. (Plaintiff had sought a lodestar of $256,138.75, plus $5,824.43 in expert witness/investigation fees, or a total lodestar of $261,963.18 plus addition of a 1.5 multiplier for a total request of $392,944.77.) Defendant Bunch’s appeal was a good move.

Elderly man clasping cane.  c1900.  H.L. Bundy, photographer.  Library of Congress.

Reasonableness Of Fees: Appellate Court Affirms $611,544.75 Fee Award Where Compensatory Damages Were Only $271,682

No Proportionality Required Under Section 1717; Defense Expenditure Of More Proved Reasonableness.

     In Big Ring Holdings, LLC v. Van Ness Mgt., LLC, Case No. A126692 (1st Dist., Div. 2 Jan. 26, 2011) (unpublished), plaintiff tenant was awarded $271,682 in damages for a leaking ceiling in a dispute over a yet-to-be-opened laundromat where there was a lease with a fees clause. Later, the trial court awarded prevailing plaintiff attorney’s fees of $611,544.75 (out of a requested $635,445.25) for three years of litigation toil. The defense appealed.

     The defense did not succeed on appeal.

     The trial court properly calculated the lodestar and then determined its reasonableness (including any reductions) under the Ketchum v. Moses methodology. It also properly allowed recoupment of fees spent on a dismissed alter ego claim.

     The appellate court also rejected the notion that Civil Code section 1717 fees had to bear some set percentage to a compensatory damages award.

     Finally, the reasonableness argument of the defense was undermined when it implicitly conceded the issue by submitting some proof indicating that the defense expenditures exceeded those of the plaintiff.

 

  Leaking roof. 1827.  Library of Congress.

Retainer Agreements/Section 1717/Reasonableness of Fees: Client Winner Against Attorney After Voiding Retainer Agreement Was Entitled to 1717 Fee Recovery

Sixth District Rejected 1717 Mutuality Challenge, But Did Remand For Determination of Reasonable Fee After Proof Failure.

     Here is a very interesting one at the top of a new year in the retainer agreement/Civil Code section 1717/reasonableness of fees areas.

     Palmer v. Taylor, Case No. H033644 (6th Dist. Jan. 4, 2011) (unpublished) was a situation where client successfully voided a contingency agreement under Business and Professions Code section 6147 with an attorney, such that client prevailed on a contractual count brought by attorney seeking to recoup fees under a written retainer agreement. However, attorney eventually prevailed after a trial on the quantum meruit count against the client (the same one defeating attorney’s contractual claim), recovering $55,000 out of requested fees of $147,455. Now comes the fee rub. Client then recovered $239,825.50 in attorney’s fees and costs (all of the requested amount) under a fees provision in the contingency fee agreement pursuant to Civil Code section 1717. Attorney, although recovering something, was miffed, and appealed the substantial fee award in favor of client.

     The Sixth District reversed, but only with respect to the amount of the fee order.

     Clearly, client was the prevailing party on the contract claim, with there being no need to consider his success or failure on other non-contract claims adjudicated at later phases of the litigation.

     The most interesting argument by attorney was that client’s voiding of the contingency fee agreement somehow divested client of his ability to seek fees under the fees clause in the agreement. No go, said the appellate court. Because the Legislature was silent on the impact of voiding a contingency agreement with respect to Civil Code section 1717, the appellate court presumed section 1717 should govern. Attorney argued that 1717 mutuality would be subverted when Business and Professions Code section 6147 voiding occurs, but the Court of Appeal did not see it that way. If a client exercises the voiding option at the outset, then fees incurred on the contractual count will be minimal for everyone; however, if the client does not choose the voiding option and the contract count proceeds, the prevailing party on that count--”whoever that may be”--would be entitled to recover fees, whether that party be the attorney or client.

     Nonetheless, the matter was reversed based on client’s failure below to demonstrate the reasonableness of the fees being sought, a burden which never shifted to attorney as the opposing party. Client tried to recover all fees for everything, without any apportionment. This client could not do, so the cause was remanded with directions to determine the amount of fees reasonably expended by client in his defense against the breach of contract action.

Reasonableness Of Fees: $254,615.50 Fee Award For Plaintiff Affirmed After Her Acceptance Of $95,000 CCP § 998 Offer

$509,231 Scaled Back By Trial Court, But Sustained On Appeal.

     Here is an interesting substantial fee award. Half of what plaintiff requested, but way above the $95,000 Code of Civil Procedure section 998 offer eventually accepted in the case on the eve of trial. Goes to show that fees do not have to be proportionate to compensatory damages (not the same analysis employed in a punitive damages context), especially where the defense litigated vigorously so as to increase fees for everyone.

     In Gonzalez v. Buffalo Inn, Inc., Case No. E049393 (4^th Dist., Div. 2 Dec. 30, 2010) (unpublished), plaintiff accepted defendants' 998 offer of $95,000, plus attorney's fees and costs, one day into a jury trial on sexual harassment, discrimination, wrongful termination, and related claims, after defendants obtained a reversal of a default judgment at an earlier juncture. Plaintiff then moved for fees of $509,231 under fee-shifting statutes, but the court actually awarded fees of $254,615.50.

     Defendants appealed.

Year End Wrap-Up: Mike & Marc’s Top 20 Attorney’s Decision Fees Decisions--Part 2 of 2.

     Here is the second installment of our top 20 decisions.

     10. Jankey v. Lee, 181 Cal.App.4th 1173 (1st Dist., Div. 4 2010), review granted, No. S180890 (May 12, 2010) -- authored by Presiding Justice Ruvolo; discussed in our Feb. 6, 2010 post.

     Attorney’s fees are awardable to a prevailing defendant under Civil Code § 55 without the necessity of showing a plaintiff’s action was “frivolous, unreasonable, or groundless,” disagreeing with Ninth Circuit’s Hubbard decision. This has been accepted for review by the California Supreme Court and is not published anymore, but available for reading in the California Reporter or research databases.

     9. Plummer v. Day/Eisenberg, LLP, 184 Cal.App.4th 38 (4th Dist., Div. 3 2010) -- authored by Justice Ikola; discussed in our Apr. 30, 2010 post.

     Contingency fee agreement-driven case with an attorney charging lien is not subject to the disclosure/consent requirements of Fletcher v. Davis, 33 Cal.4th 61, 71-72 (2004).

     8. Conservatorship of Whitley, 50 Cal.4th 1206 (Cal. Sup. Cto. 2010) -- authored by Justice Moreno; discussed in our Dec. 22, 2010 post on Pappas v. Farr (2d Dist., Div. 6 2010) (unpublished).

     Litigant’s personal pecuniary interests may not be used to disqualify the litigant from obtaining fees under California’s private attorney general statute (CCP § 1021.5); rather, the deciding court must focus on the financial burdens and incentives involved in bringing the lawsuit.

     7. PNEC Corp. v. Meyer, 190 Cal.App.4th 66 (4th Dist., Div. 3 2010) -- authored by Justice Ikola; discussed in our Nov. 18, 2010 post.

     Defendant successfully obtaining dismissal of action based on forum non conveniens is a prevailing party under Civil Code section 1717, extending the reasoning from Profits Concepts Mgt., Inc. v. Griffith, 162 Cal.App.4th 950 (2008) (an earlier case determining that a defendant successfully moving to quash service for lack of personal jurisdiction is a prevailing party, authored by Justice Fybel of the 4th Dist., Div. 3).

     6. Lockton v. O’Rourke, 184 Cal.App.4th 1051 (2d Dist., Div. 4 2010) -- authored by Presiding Justice Epstein; discussed in our Apr. 24, 2010 post.

     Contractual clause in retainer agreement allows attorney parties to recover for their efforts in collecting fees against clients, avoiding application of the Trope bar.

     5. In re Mercury Interactive Corp., 618 F.3d 988 (9th Cir. 2010) -- authored by Circuit Judge Tashima (with a dissent by Circuit Judge Bybee); discussed in our Aug. 18, 2010 post.

     Although refusing to articulate a bright-line rule, F.R.Civ. P. 23(h) does not contemplate that class members’ objections to class counsel fee requests have to be filed before the fee motion itself is filed, which denies the class the full and fair opportunity to examine and oppose the motion.

     4. Estate of Manuel, 187 Cal.App.4th 400 (2d Dist., Div. 3 2010) -- authored by Acting Presiding Justice Croskey; discussed in our Aug. 11, 2010 post.

     Costs of proof sanctions for failure to admit requests for admissions under Code of Civil Procedure § 2033.420(a) can only be assessed against a party, not the party’s counsel.

     3. Thrifty Payless, Inc. v. Mariners Mile Gateway, LLC, 185 Cal.App.4th 1050 (4th Dist., Div. 3 2010) -- authored by Justice Moore; discussed in our June 23, 2010 post.

     Expert witness fees awardable under contract clause can be recovered under routine costs memorandum approach, disagreeing with Carwash’s approach that the fees must be pled and proven at trial.

     2. Donahue v. Donahue, 182 Cal.App.4th 259 (4th Dist., Div. 3 2010) -- authored by Justice Aronson; discussed in our Feb. 27, 2010 post.

     Extensive discussion of factors that are probative in gauging the reasonableness of fees requested in probate trust litigation involving multiple attorneys, billings with duplicative entries, litigation inefficiencies, and block billing time entries.

     1. Chavez v. City of Los Angeles, 47 Cal.4th 970 (Cal. Sup. Ct. 2010) -- authored by Justice Kennard; discussed in our Jan. 14, 2010 post.

     Trial courts have discretion to deny or reduce fee requests to winning plaintiffs in FEHA cases where a plaintiff’s success is minimal or there is a grossly inflated fee request.

Employment: $7,475 In Fees Awarded To Plaintiff Employee For Recovering $3,289.90 In Wage/Hour Dispute

 

Plaintiff’s Request for Over $58,500 In Fees Is Firmly Rejected.

     Labor Code section 218.5 holds that a prevailing party in an action for nonpayment of wages, fringe benefits, or health/welfare/pension fund contributions must be awarded reasonable attorney’s fees. It was that pesky word “reasonable” that resulted in a much diminished fee award than the winning plaintiff requested in a wage/hour lawsuit.

     In Cochran v. El Cajon Motors, Case No. D055390 (4^th Dist., Div. 1 Sept. 21, 2010) (unpublished), plaintiff sued for wage/hour waiting time penalties under Labor Code section 203. He sued in unlimited jurisdiction civil court (more than $25,000 at stake), even though his complaint only pled penalties and interest of a little over $13,000. After a two-hour bench trial, the trial court awarded plaintiff $3,289.00 in waiting time penalties.

     That is where the fun begins for us bloggers. Plaintiff then sought an eventual fee award under the mandatory fee-shifting statute of $58,590 plus costs (bringing the total amount sought to $61.427.25, factoring in costs). The trial court awarded plaintiff $7,475 in fees and set a hearing to determine what routine costs should be awarded, if any. Plaintiff appealed.

Consumer Statutes: Plaintiff Was Lucky To Get $20,400 In Lemon Law Fees After Rejecting Defense Settlement Offers

Fourth District, Division One Reinforces that Consumer Statutes Are Not a Blank Attorney’s Fees Check.

     This next one is a lemon law case, arising under the Song-Beverly Consumer Warranty Act with a mandatory fee-shifting provision. However, that fee-shifting statute only allows recovery of reasonable attorney’s fees to the prevailing party (Civ. Code, § 1794(d); Nightingale v. Hyundai Motor American, 31 Cal.App.4^th 99, 104 (1994).) The reasonableness language was the rub—and, ultimately, determining factor—in the appellate affirmance of fees to plaintiff’s counsel in a sum much less than the requested amount.

     Plaintiff was awarded $20,400 in fees under the lemon law, rather than the $81,225 she requested. To put things in context, defendant did pay her $9,513.18 in settlement, reserving the reasonableness of fees for determination by the trial court. Even earlier, defendant did make some settlement offers that the appellate court thought were fair in nature, albeit rejected (some informal and some under Code of Civil Procedure section 998).

     The appellate court affirmed the lower fee award, finding that plaintiff was unreasonable in rejecting a $5,100 offer after expending a lot more in fees to garner $9,513.18—even though the defendant offered to allow the trial court to award reasonable attorney’s fees in a post-offer acceptance proceeding. So, as we have seen in other cases, plaintiffs’ attorneys—even in mandatory fee-shifting cases—need to seriously evaluate settlement offers under penalty of getting much, much less fees for prevailing on behalf of their clients. The case is McCarthy v. Hyundai Motor America, Case No. D055817 (4^th Dist., Div. 1 July 14, 2010) (unpublished).

Special Fee Shifting Statutes: Losing Plaintiff In Unsuccessful Overtime/Meal Break Superior Court Action Required To Pay Attorney’s Fees Of $28,731.25 To Employer

First District, Division Two Finds Fee Motion Timely and Fee Award Reasonable in Amount.

     In Cun v. Café Tiramisu, Case No. A124985 (1^st Dist., Div. 2 July 7, 2010) (unpublished), plaintiff ex-employee lost a superior court FLSA action following a de novo Labor Commissioner hearing in which she claimed to have not been paid overtime and to have been denied meal breaks by her employer/alleged joint employer. Because fees incurred in the action were awardable to employer under Labor Code section 98.2(c), employer timely filed a motion for fee after entry of judgment but then sent an amended notice of motion confirming a new hearing date of the motion as ordered by the court, also submitting unredacted versions of invoices filed with the initial moving papers. The trial court granted employer’s motion for fees, awarding it $28,731.25.

     To say the least, ex-employee was grumpy about the result, and appealed. Her challenges were not found persuasive.     

     Although arguing the fee motion was untimely filed, this one did not come close to catching the favor of any appellate eyes. The original noticed motion was timely, with the amended motion merely confirming the court-set hearing date and containing only unredacted versions of information previously filed. Put another way, plaintiff had not demonstrated prejudice.

     Then, plaintiff’s attorney complained about the fact that defense counsel charged $370 per hour. However, the trial court properly used the lodestar approach and the disparity in hourly rates is one factor to consider, but was hardly determinative. The defense success could well be attributable in large measure to the high quality of trial work by employer’s counsel. Fee award affirmed.

     BONUS:  Recipe for Tiramisu.  Link to the Wikipedia article on Tiramisu.

     

                 Above:  From Wikipedia article on the FLSA.

Reasonableness Of Fees And Arbitration: Appeals About Reasonableness Of Fee Awards Are Rebuffed

Second District, Division 8, in Opinions by Justice Flier, Affirms Two Fee Awards, One For Appellate Work In a Civil Case and One in an Arbitration Context.

#1: Moore v. Pro Value Properties, Inc., Case No. B216061 (2d Dist., Div. 8 July 6, 2010) (unpublished)

     In pro per plaintiffs/appellants challenged a $120,360.75 fee award for work in a prior appeal (out of a requested $139,330.25) that resulted in a successful result for defendants, with plaintiffs not challenging the amount of fees awarded by the trial court for a long-cause trial of a specific performance action. The lower court reduced requested appellate fees by about $19,000, finding that some of the work could have been performed by an associate or paralegal with a lower billing rate but generally finding that partner hourly rates of $505 and $560 were justified for much of the appellate work. On appeal, Division 8 found no abuse of discretion, especially because the appellate panel itself was aware that the prior appeal required the expenditure of a substantial amount of lawyer’s time. The reduction by the lower court showed that its award was well reasoned. Affirmed.

#2: Christensen, Glaser, Fink, Jacobs, Weil & Shapiro v. Cove Management Partners, LLC, Case No. B217316 (2d Dist., Div. 8 July 6, 2010) (unpublished)

     The second case involved defendants’ appeal of an arbitrator’s award of $938,457 in fees and costs to a well-known law firm, as well as $327,792 in attorney’s fees and $152,105 in costs associated with the arbitration. Defendants appealed, but faced some very big obstacles. They never asked the arbitrator to correct the award. They also never filed a petition with the superior court to vacate the award within the 100-day requirement but instead filed an incorrect request that the superior court correct the award. (Louise Gardens of Encino Homeowners’ Assn., Inc. v. Truck Ins. Exchange, Inc. (2000) 82 Cal.App.4^th 648, 659 [appeal of confirmation award cannot be used to circumvent petition to vacate deadline].) This failure to use a crucial specified procedural resulted, yet again, in affirmance of the entire arbitration award, with costs on appeal also ordered to the winning plaintiffs.

Civil Code Section 1717: $281,058 Fee Award To Prevailing Party Affirmed Even Though Damage Award Only $60,500

 

Contentiousness of Opponent Was One Factor Justifying the Hefty Award.

     Defendant in a contract dispute with plaintiff won $60,500 in damages, beating a Code of Civil Procedure section 998 pretrial offer of $62,001 (after preoffer costs were added in) made by plaintiff. Then, due to a contractual fees clause in the operative agreement, the trial court awarded defendant $281,058 in attorney’s fees, inclusive of a 15% reduction of a large piece of the requested fees for inefficient work, block billing, and non-contract work that could be apportioned out. The trial court also observed, in making the award, that plaintiff never conceded any liability issues or took steps to streamline the litigation, which negated the argument that awarded fees were disproportionate to the amount of the damages award.

Above:  Cockfight.  Shigemasa Kitao (1739 - 1820).

     In McKinzie v. Roemer, Case No. A124787 (1st Dist., Div. 2 July 1, 2010) (unpublished), the appellate panel affirmed the fee award upon plaintiff’s appeal of same.

Private Attorney General Statute: Center For Biological Diversity Decision Now Certified For Publication In Entirety.

     In our May 28, 2010 post, we reported on the decision of Center For Biological Diversity v. County of San Bernardino, a decision that was partially published but was not certified for publication on the discussion of a fee award under California’s private attorney general statute. We can now report that the entire decision has been certified for publication through a publication order issued by the Court of Appeal on June 23, 2010. So, you can now visit our May 28 post and cite this case with some authority (although some trial courts will want the time for review to pass before they give decisions binding precedential authority). Your call, but late breaking news. 

        Photo:  Example of biodiversity from forest canopy on Barro Colorado Island, Panama.  Author:  Christian Ziegler.

Civil Rights: $137,502.46 Supplemental Fee Award Affirmed In Favor OF Monthly Prison Magazine Publisher

Ninth Circuit Disagrees with Seventh Circuit Over Fee Recovery for Compliance Activities and Also Reject That Laffey Matrix Had to Be Used in Determining Reasonable Hourly Rates.

     Prison Legal News v. Schwarzenegger, Case No. 09-15006 (9^th Cir. June 9, 2010) (for publication) is an interesting Ninth Circuit decision regarding what fees are awardable under a civil rights settlement reserving fee recovery for post-settlement monitoring activities and whether the Laffey matrix (Laffey v. Northwest Airlines, Inc., 572 F.Supp. 354 (D.D.C. 1983), aff’d & rev’d in part, 746 F.2d 4 (D.C. Cir. 1984) must be used to determine reasonable hourly rates with respect to amount of fees awarded.   

     Here are the facts: After suing for violations of the First and Fourteenth Amendments based on allegations that the California Department of Corrections and Rehabilitations (CDCR) and certain state officials unreasonably curtailed distributions of its monthly prison magazine, plaintiff publisher of the monthly news magazine entered into a settlement agreement with defendants by which certain attorney’s fees were stipulated to (not in dispute), a first post-settlement amount of fees were awarded (not in dispute), and a second post-settlement amount of fees/costs were awarded under 42 U.S.C. § 1988 (the federal civil rights statute) in the amount of $137,502.46 out of a requested $143,322.96 (the contested fee award). The settlement agreement did allow for post-settlement compliance fees and expressly reserved jurisdiction for fee determinations. State officials appealed the latest $137,502.46 fee award.