Fees Clause Was Broadly Worded, Former Attorneys Represented Client In Seven Suits, and Section 998 Rejection Gave Rise to Expert Witness Fee Award.
This next opinion, Calvo Fisher & Jacob LLP v. Lujan, Case No. A139863 (1st Dist., Div. 2 Feb. 19, 2015) (published), is must reading for both litigants and attorneys involved in fee petition and costs request law and motion battles at the California state court level.
Here, former attorneys represented a prominent Guam attorney (ex-client) in seven underlying cases which were vigorously litigated in Hawaii and California. Ex-client fell behind in payment, prompting a collection suit based on an engagement letter with this broadly worded fees clause: “In the unlikely event that we are required to institute legal proceedings to collect fees and costs [BLOG OBSERVATION—not so unlikely with passage of time], the prevailing party would be entitled to a reasonable attorney’s fee and other costs of collection.” This prompted ex-client to cross-complain based on numerous theories, including legal malpractice. Eventually, through demurrer and motion work, former attorneys’ claims got narrowed to contract-based claims and ex-client countersuit got constricted to a bad faith claim. Ex-attorneys nonsuited the bad faith counterclaim during trial, and the jury returned a $945,947.90 verdict in favor of the attorneys, with the lower court adding $331,545.51 in prejudgment interest.
Then we move to attorneys’ fees/costs proceedings, with both sides submitting a total of 1,500 pages of paperwork—seven inches—for the lower court’s consideration. Fee claimants did something very smart: they voluntarily agreed to reductions totaling $300,000 based primarily on recommendations by their malpractice insurance carrier and their fee expert. In opposition, although disputing the overall amount of fees being requested, ex-client could only come up with one double entry of $210, which everyone agreed even on appeal should be eliminated. The lower court found in former attorneys’ favor—after eliminating messenger fees, it awarded the full request of $1,532,674.81. As far as costs were concerned, it also awarded $123,277 in expert fees after ex-client rejected former attorneys’ CCP § 998 offer of $665,818, conditioned upon ex-client dismissing his cross-complaint and executing a general release relating to all claims between the parties in this action.
Ex-client appealed and, except for the $210 double entry elimination, did not gain anything else in a 3-0 panel opinion authored by Justice Richman.
The fee award was properly based on the broad fees clause in the engagement letter. Former attorneys’ work on their noncontract claims and work against ex-client’s cross-complaint were necessary to achieve their overall litigation objective in collecting a substantial fee. Apportionment was not required because the claims were closely intertwined, with apportionment being a discretionary call for the trial court to make.
Beyond that, ex-client litigated tenaciously, so he could hardly complain about having to pay $1.532 million for “fees on fees” for a base recovery of $945,947.90.
That brought the appellate court to the expert witness fees awarded as costs based on section 998. The offer was not made in bad faith by failing to mention how attorney’s fees and costs would be dealt with, because case law allows the offeror to be silent on the issue which means the fees and costs could be sought in the future on the particular claims involved. Given that the base award of $945,947.90 was greater than the $665,818 offer, this was prima facie evidence that the offer was reasonable. Finally, the offer was not ambiguous in requesting a general release (given it only related to claims between the parties relating to the action) and in requesting ex-client to dismiss his cross-complaint with prejudice.