CALIFORNIA ATTORNEY'S FEES

Special Fee Shifting Statute: Ninth Circuit Rules That “Utter Lack Of Proof” Win By Defense In Functionality Case Triggered Exceptional Fee Award Under Lanham Act

 

Except For $83,229.49 Component Sent For Remand Determinations, $836,899.99 Was the Fee Hit Against Losing Plaintiff.

     Plaintiff suing for trade dress protection under the Lanham Act lost a functionality-oriented case in Secalt S.A. v. Wuxi Shenxi Construction Machinery Co., Ltd., Case Nos. 10-17007 et al. (9th Cir. Feb. 7, 2012) (for publication). The district court also determined that this was an “exceptional” case giving rise to fee shifting under Lanham Act section 35(a). 15 U.S.C. § 1117(a). It awarded attorney’s fees and non-taxable costs of $836,899.99 to the winning defendant.

     Except for an $83,229.49 component remanded for a redetermination, the remainder of the fee/costs award was sustained. Even though the line for Lanham Act “exceptional” fee recovery is somewhat murky for the prevailing defendant, here the failure of proof was clear given the two years of discovery and further investigation by losing plaintiff, who lost pretty convincingly on a functionality issue. (Plaintiff’s own witnesses and third-party witnesses seemed to confirm the functionality of the claimed trade dress, with merely the “hope” of a third-party patent not saving the day for plaintiff.) Although the Lanham Act did allow the prevailing defendant to recover non-taxable costs, the remand component was questionable and had to be vacated so that the district court could determine if the sub-components were reasonably incurred. Also, a small amount of taxable routine costs had to be vacated because an attorney providing translation services was not the equivalent of an “interpreter” for purposes of a cost award.

Special Fee Shifting Statute: Ninth Circuit Rules That “Utter Lack Of Proof” Win By Defense In Functionality Case Triggered Exceptional Fee Award Under Lanham Act

 

Except For $83,229.49 Component Sent For Remand Determinations, $836,899.99 Was the Fee Hit Against Losing Plaintiff.

     Plaintiff suing for trade dress protection under the Lanham Act lost a functionality-oriented case in Secalt S.A. v. Wuxi Shenxi Construction Machinery Co., Ltd., Case Nos. 10-17007 et al. (9th Cir. Feb. 7, 2012) (for publication). The district court also determined that this was an “exceptional” case giving rise to fee shifting under Lanham Act section 35(a). 15 U.S.C. § 1117(a). It awarded attorney’s fees and non-taxable costs of $836,899.99 to the winning defendant.

     Except for an $83,229.49 component remanded for a redetermination, the remainder of the fee/costs award was sustained. Even though the line for Lanham Act “exceptional” fee recovery is somewhat murky for the prevailing defendant, here the failure of proof was clear given the two years of discovery and further investigation by losing plaintiff, who lost pretty convincingly on a functionality issue. (Plaintiff’s own witnesses and third-party witnesses seemed to confirm the functionality of the claimed trade dress, with merely the “hope” of a third-party patent not saving the day for plaintiff.) Although the Lanham Act did allow the prevailing defendant to recover non-taxable costs, the remand component was questionable and had to be vacated so that the district court could determine if the sub-components were reasonably incurred. Also, a small amount of taxable routine costs had to be vacated because an attorney providing translation services was not the equivalent of an “interpreter” for purposes of a cost award.

Employment/Special Fee Shifting Statute: State Labor Commissioner Entitled To Fee/Costs Under Labor Code Section 98.7 Against Employer Held Liable To Employee For Retaliation And Employee Gets Indemnification Fees/Costs Under Labor Code Section 2802 After

 

Respective Fee/Costs Awards of $232,435.50 and $101,078 Are Sustained.

     Just to show you that the losing cases can unleash a lot of fee/costs exposure based on Labor Code statutes, the next one is a case in point.

     In 1538 Cahuenga Partners, LLC v. Fabe, Case No. B222023 (consolidated) (2d Dist., Div. 8 Jan. 5, 2012) (unpublished), former in-house lawyer prevailed on wage/retaliatory claims against former employer in a Labor Commissioner proceeding (with the Commissioner suing employer for attorney’s defense costs with respect to prevailing in the underlying retaliatory proceeding), after employer and employer’s principal sued in-house attorney for malpractice. The Commissioner’s and the malpractice actions were consolidated, with in-house attorney and the Commissioner prevailing in these actions. The lower court then awarded Commissioner $232,435.50 in fees and costs under Labor Code section 98.7, which allows judicial relief to the Commissioner in the form of “any other compensation or equitable relief as is appropriate under the circumstances of the case.” It also awarded former in-house attorney $101,078 in fees and costs against employer’s principal for prevailing in the malpractice action, basing the award on Labor Code section 2802 (which requires an employer to indemnify an employee for any necessary expenditures or losses, including costs and reasonable fees, incurred by the employee in defending against third party claims arising during the course and scope of his/her employment).

     Employer and principal’s appeals were unsuccessful.

     Section 98.7 is broad in equitable breadth, and nothing in it indicates that Trope type restrictions prohibit fee recovery to the Commissioner for former in-house attorney’s own legal fees incurred in successfully prosecuting the retaliatory proceedings. Section 2802 did allow attorney entitlement to fees/costs for malpractice defense because it was against a third-party claim by the employer’s principal, not just the employer (hence, a true third-party claim). Employer’s argument that naming the principal was “a mistake” did not get very far.

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

 

Case #1: Appellate Sanctions Are Imposed.

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

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

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

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

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

Costs/Deadlines/Special Fee Shifting Statutes: Substantial Fee Awards Against Losing Subcontractor, After Contractor Paid Disputed Small Amount, Affimed On Appeal

 

Some of the Appeals Were Untimely; College District Award of Costs and Fee Justified in Nature.

     Subcontractor sued a general contractor and community college district on an approximate $100,000 extra work claim. Subcontractor lost many of the claims through pre-trial dispositive motions and dismissed the remaining claim after general contractor paid a disputed $5,230 amount to avoid further costs. The lower court then awarded substantial fees and costs against subcontractor and in favor of general contractor/college district. (The college district was awarded $121,190 in fees, and the general was awarded $150,712.75--although the final judgment “evened up” any duplications and gave credit for any necessary offsets.)

     The fee and costs awards were affirmed in Richards v. S.J. Amoroso Constr. Co., Inc., Case Nos. A129670/A130837 (1st Dist., Div. 5 Jan. 4, 2012) (unpublished).

     One of the primary issues was whether the appellate court even had authority to review the fee/costs awards given that subcontractor appealed the primary judgment but failed to appeal the subsequent postjudgment orders in the fee/costs area, which involved a consideration of Grant v. List & Lathrop, 2 Cal.App.4th 993, 996 (1992)--earlier authority holding that a later postjudgment order settling the amount of fees to be paid was indeed subsumed in an earlier appeal of the first judgment.

     Richards decided that DeZerega v. Meggs, 83 Cal.App.4th 28, 44 (2000) had correctly interpreted Grant as standing for the propositions that an earlier appeal of a fee entitlement judgment does subsume a later order setting the amount of the entitlement while it could not encompass a later postjudgment order where it was clear that the later order would decide everything. Judged by this interpretation, the appellate court could not review the general contractor awards because the first judgment was silent about fees and costs (which meant there needed to be a separate appeal from the later order), but could scrutinize the college district awards because there was an adjudication of fees and costs in the initial judgment which was initially appealed.

     The costs award in favor of college district was sustained because the $5,230 voluntary payment was unusual in nature, invoking trial court discretion to still award costs under Code of Civil Procedure section 1032(a)(4) and Kim v. Euromotors West/The Auto Gallery, 149 Cal.App.4th 170, 183 (2007).

     The college district’s favorable fee award was proper under Government Code section 1038, which allows a trial court the ability to award fees to a prevailing public entity where an action was brought without reasonable cause or a good faith belief that there was a justifiable controversy. Among other things, subcontractor’s admission during discovery that its stop notice was invalid established substantial evidence supporting the lower court’s award of fees under section 1038.

Celebrities/Special Fee Shifting Statute: Orthopedic Surgeon Did Prevail In Commercial Name Misappropriation Case So That $320,000 Fee Award Was Proper

 

Civil Code Section 3344(a) Does Not Require Fees to Bear a Percentage to Ultimate Recovery.

     Well, readers, we are winding to a New Year, but we will blog on a special-fee shifting statute applicable in commercial name misappropriation cases--Civil Code section 3344(a), which has a mandatory fee-shifting provision. The next case we discuss did have occasion to pass on the reasonableness of a $320,000 fee award to the winning plaintiff under this statute.

     Orthopedic Systems, Inc. v. Schlein, Case Nos. A126374/A126821 (1st Dist., Div. 4 Dec. 29, 2011) (certified for partial publication; fee discussion not published) involved an orthopedic surgeon who had his name associated with an orthopedic product and who had been paid royalties for a decade by plaintiff/cross-defendant orthopedic products company. Then, suddenly, company cut off the royalties, bringing a declaratory relief action on its ability to do so, prompting surgeon to file a cross-complaint alleging breach of contract, conversion, and commercial misappropriation of his name under Civil Code section 3344.

     The matter proceeded to a jury trial, where surgeon won damages of $616,043, lost profits of $1,220,000 (taken away by the trial judge but restored by the appellate court in this decision), and statutory section 3344 damages of $750. The lower court also awarded surgeon $320,000 in fees as the prevailing party under section 3344(a).

     Various cross-appeals were brought, with the company challenging the award of post-judgment fees to the surgeon.  The surgeon’s fee award was affirmed.

     Section 3344(a)’s fee-shifting provision is mandatory in nature. Surgeon did prevail because he recovered both $750 in statutory damages and $1,220,000 in lost profits. However, even if the lost profit award was disregarded, section 3344(a) does not require actual damages, so that the statutory damages award sufficed--especially given legislative history indicating that attorney’s fees under the provision did not have to bear a percentage to the ultimate recovery. (The cited legislative history expressed that fee recovery should be based on time expended rather than the amount of recovery.) Beyond that, no allocation was required between noncompensable claims, because these claims were inextricably intertwined with the fee-entitling misappropriation claim.

Probate/Special Fee Shifting Statute: Elder Abuse Fee Entitlement Unclear Based On Murky Statement Of Decision Denying Fee Award

 

Independent Tort versus Statutory Violation Didn’t Need to be Addressed Here.

     Estate of Hazewinkel, Case No. D058282 (4th Dist., Div. 1 Dec. 9, 2011) (unpublished) is interesting in its discussion of potential fee entitlement under California’s Elder Abuse Act statute, Welfare and Institutions Code section 15657.5(a).

     Although it reversed the denial of a fee award for an inadequate statement of decision in essence, it contains an interesting discussion of whether you need an independent tort or just a statutory elder abuse violation for fee entitlement purposes. Looks like there is a split, so look as these decisions when you grapple with this issue.

Special Fee Shifting Statute: Imports Performance Decision Now Certified For Partial Publication

 

Publication of Investigation Costs Award Is Now In the Citable Jurisprudence.

     In our November 11, 2011 post, we discussed Imports Performance v. Dept. of Consumer Affairs, Bureau of Automotive Repair, where the lower court awarded the Bureau $35,366.40 in investigation/enforcement costs and the award was affirmed on appeal.

     Although previously unpublished, we can now report that the Court of Appeal partially certified this decision for publication--including the part on the costs awarded to the Bureau. This was done on December 7, 2011.

Special Fee Shifting Statute: $6,500 In Referee Costs Appropriately Awarded To Winner In Harassment Injunction Proceeding

 

CCP § 527.6(i) Allowed It.

     In Sabol v. Green, Case No. B225059 (2d Dist., Div. 6 November 28, 2011) (unpublished), one partner in a boat dealership appealed an anti-harassment injunction entered in favor of another partner and that partner’s wife. The trial court also awarded the winning parties no fees but $6,500 in costs for a referee that made the recommendation eventually becoming the actual injunction. ($6,500 was the 1/2 share of the appointed referee making the recommendation.) The appellate court did not find the award excessive and fully justified under Code of Civil Procedure section 527.6(i), which does allow a lower court discretion to award reasonable fees and costs to the winner in these type of anti-harassment proceedings.

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

 

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

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

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

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

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

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

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

Construction/Prompt Payment Statutes/Section 1717: $528,410.24 In Fees/Costs Awarded To Winning Defendant/Cross-Complainant Under Contractual Fees Clause

 

Prompt Payment Statute Did Not Mean Fees Went to Plaintiff Winning Some Money.

     In Angotti & Reilly v. Alexander Group, Case Nos. A127917/A128743 (1st Dist., Div. 2 Nov. 21, 2011) (unpublished), plaintiff sued for unpaid contractor fees under a construction contract with a fees clause, and defendant/cross-complainant countersued for defective work. Plaintiff obtained a $99,000 verdict for services rendered (not breach of contract), and defendant was awarded $129,700 for plaintiff’s breach of contract under the cross-complaint. The trial court awarded defendant/cross-complainant $528,410.54 in fees and costs, because cross-complainant received more in damages.

     The appellate court affirmed, rebuffing plaintiff’s argument that it was mandatory that fees be awarded to plaintiff for its win under the construction prompt payment statutes. (We have blogged on this before; go to the home page search function and enter “prompt payment statutes” if you want to see our previous posts in this area.) The fee-shifting statute can be preempted if the contract of the parties expressly provides otherwise in writing, something that did occur here through the execution of certain change orders taking plaintiff’s dispute out of the prompt payment statutes. Fees/costs were properly denied as to plaintiff, with the adverse award against it being a big one.

Special Fee Shifting Statute: Employee Cannot Deduct Litigation Costs From Refund Owed To U.S. From Any FECA Benefits After Third Party Recovery

 

Ninth Circuit So Rules In Case of Statutory Construction.

     Under the Federal Employee Compensation Act (FECA), disability benefits are provided to federal employees who are injured on the job, subject to an employee bringing a civil case against a responsible third party and refunding to the U.S. any FECA benefits received by the employee.

     The Ninth Circuit, in Durand v. U.S. Dept. of Labor, Case No 10-36184 (9th Cir. Nov. 17, 2011) (for publication), decided that an employee involved in a helicopter crash cannot deduct litigation costs from that refund under 5 U.S.C. § 8132. Although the employee may deduct his litigation costs (including fees) from his gross recovery to determine any surplus amount credited to the U.S., the deduction cannot be made at the refund level.

Special Fee Shifting Statute: CCP § 1038 Did Not Allow For Fee Award Where School District Won Via Demurrer

 

$4,905.40 Fee Award Goes POOF!, However District Is Free to Try Again.

     School district won a demurrer against an employee applicant suing for gender discrimination. It then was awarded fees of $4,905.40 under Code of Civil Procedure section section 1038.

     The fee award got reversed in McCallum v. Escondido Union High School Dist., Case No. D058270 (4th Dist., Div. 1 Nov. 15, 2011) (unpublished). To its credit, school district conceded that section 1038 applies to a resolution reached after a summary judgment, section 631.8 judgment, directed verdict, or nonsuit, but not to sustaining a demurrer. (See also California Correctional Peace Officers Assn. v. Virga, 181 Cal.App.4th 30, 37 (2010).) However, the appellate court did not impede the District from renewing the request under other bases before the trial court (such as the FEHA bad faith fee-shifting statute, where plaintiff’s “pocketbook”--ability to pay--must be assessed).

Special Fee Shifting Statutes: Dzwonkowski Decision Now Partially Published

 

Trope “Of Counsel” Reasoning Now Available for Citation.

     In our October 28, 2011 post, we discussed Dzwonkowski v. Spinella, Case No. G044336, which was first issued as an unpublished decision. It had a discussion of the Trope issue in an “of counsel” context. We can now report that the Trope discussion in the case has been certified for partial publication on November 10, 2011, with the opinion being written by Justice Fybel on behalf of our local Santa Ana appellate court.

Special Fee Shifting Statute: Consumer Affairs Boards Can Recoup Costs Of Investigation And Enforcement Of Case

 

This Includes Attorney’s Fees; $35,366.40 Award to Bureau of Automotive Repair Affirmed.

     Here is a little known fee-shifting statute available to boards and bureaus within California’s department of consumer affairs. Business and Professions Code section 125.3(a) allows such an entity bringing a license or probation revocation proceeding to recover discretionary reasonable costs of investigation and prosecution of the case.

     The Bureau of Automotive Repairs, after an administrative proceeding in which smog check station license issues were determined adversely to an auto repair dealer after several “undercover operations,” ultimately obtained a ALJ award of $35,366.40 under section 125.3(a), with an overwhelming majority (90%) being for AG fees.

     Auto dealer appealed in Imports Performance v. Dept. of Consumer Affairs, Case No. B228544 (2d Dist., Div. 5 Nov. 10, 2011) (unpublished), but was not successful with the reviewing court. Dealer’s principal argument was that the prosecuting entity did not win all of the charges and issues in the proceeding. However, dealer did not cite any authority in support of its pro rata award theory, such that the costs/fee award was affirmed.

Two-Fer: Special Fee Shifting Statute/Section 1717 Unpublished Cases

 

Construction Lender Gets Fees For Successfully Defending Bonded Stop Notice Claim.

     In North County Acoustics, Inc. v. Bank of America, N.A., Case No. D057720 (4th Dist., Div. 1 Oct. 27, 2011) (unpublished), subcontractor was hit with an adverse attorney’s fees award of $42,455.05 after losing a stop notice contest with a construction lender after lender obtained summary adjudication on the ground that the stop notice was not adequately bonded. Civil Code section 3174 does allow attorney’s fees to a prevailing party in a bonded stop notice action. The appellate court affirmed the fee award, which was made after a 20% reduction in the request for fees by the trial court, because lender did win on the stop notice claim and lender’s settlement of a related mechanic’s lien claim did not impact the fee award.

“Of Counsel” Attorney Independently Obligated to Winning Probate Attorney Entitled to Fee Recovery

     Dzwonkowski v. Spinella, Case No. G044336 (4th Dist., Div. 3 Oct. 27, 2011) (unpublished) was a situation where a client in a probate matter was sued for nonpayment of probate attorney’s fees by an “of counsel” attorney who had an independent office near probate attorney’s practice. Probate attorney won after a fee arbitration where he was represented by “of counsel,” with the trial court also awarding post-arbitration fees of $16,344.41. Disgruntled client appealed, raising the Trope bar. However, because the probate attorney had an independent contractual obligation to pay “of counsel” for his work no matter what, the post-arbitration fees were fully collectible. “Of counsel” was independent of probate attorney who had a separate contractual obligation to “of counsel” to pay for his work, so that the holding in Farmers Ins. Exch. v. Law Offices of Conrado Sayas, 250 F.3d 1234 (9th Cir. 2001) was more appropriate in allowing fees based upon such a separate relationship (as opposed to Trope). Justice Fybel of our local appellate court penned the 3-0 panel decision in Spinella.

Special Fee Shifting Statute: Municipal Ordinance Fee Shifting Provision Resulted In $202,144.17 Fee Award To Winning Adjoining Neighbors In Tree Obstruction View Dispute

 

Oakland Municipal Ordinance Did Justify Fee Award to Winners.

     This one is a case that could have fallen under our category “Homeowners Association,” although it involved adjoining neighbors who got into a fight over trees obstructing a view corridor to the San Francisco Bay (as contrasted to homeowners versus a homeowners association controversy as to views). However, the losers--even after appeal--were liable to pay $202,144.17 in their opponents’ fees.

     Bishop v. Hanes, Case Nos. A129018/A130062 (1st Dist., Div. 1 Oct. 27, 2011) (unpublished) was a lengthy battle where adjoining neighbors, at first cooperative, got into acrimonious litigation over acacia trees    disrupting plaintiffs’ views to the San Francisco Bay. In a prior litigation, plaintiffs lost their bid to obtain relief based on a 1964 view agreement with different parties and under an Oakland View Ordinance which was more narrowly written. Not to be derailed, plaintiffs successfully lobbied to have the Oakland City Council clarify the scope of the View Ordinance in their favor. That led to suit number two, where plaintiffs did prevail against defendants neighbors (who actually moved and rented out the property to tenants) by obtaining court-ordered injunctive relief to remove view corridor obstructing vegetation and to replace the offensive plants with view nonintrusive vegetation. (Defendants apparently lost a creative argument that “birds might enjoy the trees at issue” when attempting to shore up their position.) However, relevant to our blog here, plaintiffs were awarded $202,144.17 in attorney’s fees as prevailing parties under an Oakland ordinance mandating fees to a party prevailing in a controverted view action which was “resolved after trial or judicial arbitration in municipal or Superior Court.”

     The fee award was affirmed. Defendants did not dispute entitlement under the Oakland ordinance or the reasonableness of the fees awarded. Result? Sustain, sustain.

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).

Special Fee Shifting Statute: $2,000 Attorney’s Fees Cap To Prevailing Parties On Motions To Expunge Stale Mechanic’s Liens Has Been Lifted Effective July 1, 2012

 

Senate Bill 189 Amendments Made This Happen.

     Every practitioner involved with mechanic’s liens should hopefully know, by now (or by reading this blog), that there are many changes made to the mechanic’s lien law by Senate Bill 189, some taking effect this year and some on July 1, 2012.

     One of July 1, 2012 effective changes involves Civil Code section 3154, which is a statutory provision allowing owners to petition the court to expunge a mechanic’s lien that has become stale because the claimant did not timely file a lien foreclosure suit. Prior to July 1, 2012, the most a prevailing party could recover in this expungement proceeding was $2,000. (Civ. Code, § 3154(g).) Now, this capped limitation has been lifted so that the attorney’s fees can be whatever amount the court determines to be reasonable in nature.

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].)

Special Fee Shifting Statute: Plaintiff Winning Harassment Protective Order Properly Denied Fees

 

Lower Court’s Discretionary Refusal Was Not Erroneous.

     Code of Civil Procedure section 527.6 does give a lower court discretionary authority to award attorney’s fees to a prevailing party in a harassment order proceeding.

     In Quiggle v. Franke, Case No. D057982 (4th Dist., Div. 1 Sept. 16, 2011) (unpublished), the lower court did issue a 3-year protective order to plaintiff due to harassing emails sent by a co-worker. However, the court refused to award fees to plaintiff.

     No abuse of discretion, said the appellate court. The lower court denied the request because it believed that plaintiff was really using the proceeding to obtain collateral benefit in a separate suit against the employer. No error in denying fees under the circumstances, ruled the Court of Appeal.

Special Fee Shifting Statute: Plaintiff's Counsel Obtains Reversal Of Fee Award In Favor Of L.A. Under CCP Section 1038

 

Only $6,000 At Issue, But Fee Award Overturned On Appeal.

     In Giradi & Keese v. City of Los Angeles, Case No. B229594 (2d Dist., Div. 5 Sept. 14, 2011) (unpublished), plaintiff's counsel got hit with an adverse $6,000 fee award in favor of City of Los Angeles under Code of Civil Procedure section 1038. That provision allows a trial court, in a civil proceeding under the California Tort Claims Act, to assess fees against a plaintiff if it is determined that a proceeding was not brought in good faith and with reasonable cause once a summary judgment is granted in favor of a defendant public entity.

     The appellate court reversed the award on appeal, after observing that the reasonable cause element is reviewed de novo and the good faith decision is reviewed for substantial evidence. (Austin B. v. Escondido Union School Dist., 149 Cal.App.4^th 860 (2007).)

     The problem here, after reviewing case law, was that one could not say that plaintiff's suit was brought without reasonable cause. City relied on narrow interpretations of certain cases, but they belied that a hard-and-fast rule had been adopted when it came to public entity liability for adjacent properties. Beyond that, a lack of good faith could not be inferred from plaintiff's dismissal of other public entity defendants or its willingness to settle through a dismissal without costs. Simply put, the elements for a section 1038 award did not exist in this particular cause.

Special Fee Shifting Statute: Frivolous Counterclaim By Franchisee Defending Against Franchisor Suit Opened Up Franchisee To Fee Exposure Under Petroleum Marketing Practices Act

 

Defense Alone Would Not Result in Fee Exposure, but Frivolous Counterclaim Did Open Up Exposure.

     Under the Petroleum Marketing Practices Act (PMPA), a franchisee can be subjected to an attorney’s fees award in favor of a franchisor if franchisee brought a frivolous PMPA action. (15 U.S.C. § 2805(d).) However, what happens if the franchisee is defending a declaratory relief action brought by franchisor under PMPA but also files a counterclaim found to be frivolous?

     Same result, the Ninth Circuit concluded in Chevron U.S.A. Inc. v. M&M Petroleum Services, Inc., Case Nos. 09-56427/09-56686 (9th Cir. Sept. 12, 2011) (for publication). If franchisee had simply unsuccessfully defended, no fee exposure would occur. (Merchants’ Heat & Light Co. v. James B. Clow & Sons, 204 U.S. 286, 289-90 (1907).) However, the filing of the frivolous counterclaim--which is tantamount to a new suit--did sustain a district court’s award of fees to franchisor under section 2805(d).

Chevron Design.  Library of Congress.

Special Fee Shifting Provision/Attorney General Statute: Apple’s Tax Refund Win Did Not Entitle It To Recovery Of $683,492.73

 

Court of Appeal Affirms Fee Denial Under Special Shifting Provision and Private Attorney General Statute.

     After winning a tax refund issue relating to California tax treatment of repatriated dividends paid by certain of its subsidiaries, Apple, Inc. moved to recover attorney’s fees of $683,492.73 from the State on two independent grounds. The trial court denied the request, a determination affirmed on appeal in Apple, Inc. v. Franchise Tax Bd., Case Nos. A128091/A129090 (1st Dist., Div. 5 Sept. 12, 2011) (certified for publication).

     Apple first grounded fee recovery upon Revenue and Taxation Code section 19717, which does allow a fee award to a “prevailing party” if the State of California’s position in the proceeding was determined to not be substantially justified. That high standard was not met in this one, because no binding authority supported Apple’s position despite the lower court’s eventual determination that it was entitled to a refund.

     The second ground for fee recovery was Code of Civil Procedure section 1021.5, California’s private attorney general statute. However, this provision did not require a different result because the benefit of the case vindicated primarily Apple’s personal economic interests and few tax refund cases will meet the private attorney general fee shifting standards. (Northwest Energetic Services, LLC v. Calif. Franchise Tax Bd., 159 Cal.App.4th 841, 875 (2008).)

Special Fee Shifting Statute And Tort Of Another: Settlement Confirmed As Good Faith Settlement Because Settling Party Had No Indemnity Fee Exposure Under Health and Safety Code Fee Provision Or Tort Of Another Doctrine

 

$1.5 Million Fee Exposure Was Nonexistent Such That Indemnity Rights Issue Did Not Impact Good Faith Settlement Analysis.

     In PacificCare of California v. Bright Medical Associates, Inc., Case No. G041507 (4th Dist., Div. 3 Sept. 2, 2011) (certified for publication), Acting Presiding Justice Aronson affirmed a good faith settlement determination after deciding on behalf of a 3-0 panel that there were no attorney’s fees indemnity considerations in light of the fact there was no fee exposure under a special fee-shifting provision or the “tort of another” doctrine.

     Plaintiffs sued PacificCare when their mother died while seeing out-of-network treatment for a cerebral aneurysm. PacificCare cross-complained against cross-defendant Bright Medical, the healthcare provider who contracted with PacificCare to deliver medical services to PacifiCare subscribers. Bright settled with plaintiffs for $300,000 subject to a good faith determination, which was granted along with a dismissal of the cross-complaint. PacifiCare challenged the good faith settlement determination as erroneous because Bright had indemnity liability to PacifiCare for $1.5 million in attorney’s fees incurred by PacifiCare in opposing plaintiffs’ claims, meaning the $300,000 settlement was disproportionately low.

     The good faith settlement determination was affirmed.

     The reason was the Court of Appeal’s determination that PacifiCare had no viable attorney’s fees claim against Bright. Although indemnity exposure to a nonsettling defendant is certainly a factor to be gauged in the good faith determination calculus, PacifiCare could not recover fees under Health and Safety Code section 1371.25 given that the statutory provision’s first sentence prevented plaintiffs from holding PacifiCare vicariously liable for Bright’s conduct or for recovering the attorney’s fees PacificCare incurred in its defense of plaintiffs’ claims. Also, even if PacifiCare did share joint liability for mother’s health care (which it did not), the fees claims under the “tort of another” doctrine failed because the doctrine only applies when the party seeking fees bears no fault, which could not occur under PacifiCare’s joint liability theory.

News About the News: LA Times Reports on Its Own Attorney’s Fees Legal Victory

Judge James C. Chalfant Orders Sheriff’s Department to Pay $173,000 in Fees in Public Records Act Lawsuit.

     In the August 31, 2011 online edition of the LA Times, Victoria Kim reports that Judge Chalfant has ordered the LA County Sheriff’s Department to pay nearly $173,000 in legal fees to the LA Times incurred in a Public Records Act lawsuit.

     The underlying lawsuit involved a Public Records Act request by the LA Times to obtain the names of deputies involved in three fatal shootings.  The Sheriff’s Department, supported by the deputies’ union, opposed release of the names.

     Judge Chalfant acknowledged that the intervention of the union drove up the legal costs.  But the union is not a public agency, and it is the agency that is on the hook for the fees.

Special Fee Shifting Statutes--Prompt Payment Statutes: Denial Of Fee Award Reversed Under Prompt Payment Statutes For Winning Subcontractor

 

Contract Having “Each Side Bear Fees” Provision Did Not Trump Statutory Fee Recovery.

     The appellate court in Cleveland Wrecking Co. v. West Bay Builders, Inc., Case Nos. A124033/A125811 (lst Dist., Div. 4 Aug. 9, 2011) (unpublished) dealt with a case where a winning subcontractor--entitled to fee recovery under the prompt payment statute codified in Public Contract Code section 7108.5 (the prompt progress payment fee shifting provision)--was denied fees by the lower court based on its perception that a specific subcontract clause trumped the statutory scheme by providing that each side should bear its own fees and costs.

     The appellate court reversed, in a very analytical decision by Justice Rivera.

     Initially, contractor defending the fee denial argued that the appeal was untimely because it was made 60 days after notice of entry of the fee denial order. However, there was a motion for reconsideration, with the order being appealed less than 30 days after notice of entry of the reconsideration denial decision. Although found to lack merit, the reconsideration motion was proper in form and content such that the appeal inside the 30 day period was timely. (Branner v. Regents of University of California, 175 Cal.App.4th 1043, 1048 (2009).)

     On the merits of the fee denial, the Court of Appeal found that the language of the fees clause was not so broad as to trump the prompt payment statutory violation and fee recovery allowed thereunder. The language talked about bearing fees and costs in a “dispute arising as a result of the Agreement,” with the statutory violation being found separate in nature. Also, the plain language of the prompt payment statute evidenced a clear legislative policy decision to give subcontractors additional, extracontractual remedies, a policy that would be “seriously undermined were we to conclude that the statutory attorneys’ fees remedy can be avoided simply by including in a construction contract a clause which does no more than restate the so-called American rule that each party bear its own attorneys’ fees.” (Slip Opn., p. 38.)

Special Fee Shifting Statute/Substantiation of Fees: $71,500 Attorney’s Fees Award Sustained Against Many Procedural Challenges

 

SLAPP Appeal Did Not Stay Fee Motion and Block Billing Challenge Rejected.

     In Mangine v. Steier, Case Nos. B219022/B222822 (2d Dist., Div. 7 Aug. 9, 2011) (unpublished), plaintiff was SLAPPed and lost a summary adjudication of a landlord-tenant dispute in which the lower court granted attorney’s fees of $71,500 to present landlord under Civil Code section 1942.4 (which allows fee recovery to the winner of a habitability breach claim). Disappointed tenant appealed.

     Disappointment continued when the fee award was affirmed despite several procedural challenges.

Tenant argued that the postjudgment fee order was stayed by the prior appeal of the anti-SLAPP ruling, but that argument was done in by Varian Medical Systems, Inc. v. Delfino, 35 Cal.4th 180, 196-200 (2005).

     She also protested over some fee substantiation billing material where block billing was present (Martino v. Denevi, 182 Cal.App.3d 553, 558-559 (1986)), but the appellate court found that an attorney’s declaration about number of hours worked in tandem with the lower court’s familiarity about lawyer work could surmount this type of challenge--which was in the appeal at hand.

Special Fee Shifting Statute: Denial Of Winning Plaintiff’s Lanham Act Fee Request Reversed

 

District Judge Used Wrong Legal Standards, Failing to Look at Defendant’s Conduct in Examining Request.

     Plaintiffs won a Lanham Act claim by obtaining an injunction (but no damages) against defendants, who run a DMV for-profit website that was found to have unlawfully fostered the belief that it was run or endorsed by the state DMV. However, plaintiffs were unhappy when the district judge denied their request for fees under Lanham Act section 35 (15 U.S.C. § 1117(a)), which permits an award of fees to a prevailing party in exceptional cases (generally focusing on whether defendants’ conduct was fraudulent, deliberate, or willful in nature).

     The district judge denied fees because plaintiffs did not win damages and he found that plaintiffs were guilty of unclean hands.

Above:  Unclean Hands.

     On appeal, given that the unclean hands determination could not stand according to the reviewing federal court, the Ninth Circuit proceeded to reverse the fee denial. The reason is that the district court only focused on the relief awarded to plaintiffs, ignoring the crucial inquiry into defendants’ conduct--application of the wrong legal standard in failing to consider the substantial benefits resulting from plaintiffs’ injunction or the impact from defendants’ bad acts when determining whether to award fees.

     The case is TrafficSchool.com, Inc. v. Edriver Inc., Case No. 08-56518 (9th Cir. July 28, 2011) (for publication) and was authored by Chief Circuit Judge Kozinski.

Special Fee Shifting Statute: Defendant Mobilehome Residents, Losers On Their Cross-Complaint, Still Win MRL Attorney’s Fees When Plaintiff Dismisses Suit

 

Appellate Court Finds Statutory Mandate is Clear.

     This one shows how appellate court will enforce statutes as written.

     The Mobilehome Residency Law has an attorney’s fees and costs provision in Civil Code section 798.85, which requires an award of fees and costs to a prevailing party--with prevailing party defined as one who obtains a favorable judgment or where the litigation favorably dismissed prior to or during trial.

     Above:  Elderly couple and their automobile “home.” c1911.

     What happened in Lee v. Carroll, Case No. C065364 (3d Dist. July 28, 2011) (unpublished) was this: plaintiffs brought an action to force some residents to de-amp their residential units, with defendant residents bring cross-claims. After the cross-claims were lost by two residents, plaintiff dismissed the primary complaint (feeling there was nothing left to litigate). Mistake.

     The trial court awarded the two residents fees of $16,583 (out of a requested $80,185) based on section 798.85.

     The appellate court affirmed. The dismissal did fall within the fee-shifting statute. Besides that, even in the routine costs context, a defendant is still the prevailing party even in a situation where plaintiff loses on the complaint and defendant loses on the cross-complaint.

Civil Rights/Special Fee Shifting Statute: Winner In Public Disclosure Bar False Claims Dispute Was Entitled To Fees Even Though There Was A Merits Dismissal And Did Prevail For Fee-Shifting Purposes

 

First District, Division 4 Adds to State False Claims Act Fee Shifting Jurisprudence.

     In our June 6, 2011 post, we explored the Second District, Division 6’s recent decision in County of Kern v. Jadwin, where Justice Yegan on behalf of a unanimous panel discussed the California False Claims Act (“CFCA”) (explained, along with the public disclosure bar, at the end of the post) fee shifting provision codified at former Government Code section 12652(g)(9) [a provision allowing fee recovery to a defendant where a false CFCA suit was brought solely for harassment purposes, with the present statutory version containing even broader primarily language].

     Now, the First District, Division 4 in State of California ex rel. Standard Elevator Co. v. West Bay Builders, Inc., Case Nos. A124892/A125340 (1st Dist., Div. 4 July 22, 2011) (certified for publication) also has considered issues arising under the former section 12652(g)(9) version with the “solely” language.

     In this most recent decision, an unlicensed subcontractor was found liable to contractor for fraud in a bid submission on a public works project. Contractor was awarded damages from using a replacement licensed sub when the work exceeded the unlicensed sub’s agreed-to costs. Subcontractor then sued the general contractor under the state CFCA, based on the theory that gen made illegal certifications based on improperly substituting the unlicensed sub. The trial court granted summary judgment to general contractor and awarded it $201,483.75 in attorney’s fees for defending against a frivolous/harassing lawsuit under former section 12652(g)(9).

     Appealing sub raised numerous challenges to the fee award.

Special Fee Shifting Statute/Equity: Conditioning Leave To File Cross-Complaint Upon Payment Of $80,000 In Fees To Other Side Was No Go

 

Condition Was Too Much of a Sanction, Because Fees Not Causally Related to Cross-Complaint Filing.

     In a convoluted fee dispute between former client and attorney, the trial court granted attorney leave to file a cross-complaint, but conditioned on attorney paying client some $80,000 to compensate her for attorney’s fees she incurred in preparing for an arbitration hearing aborted in part due to attorney’s actions.

     Attorney appealed this “sanctions” order in Mitzner v. Fox, Case No. C061263 (3d Dist. July 19, 2011) (unpublished).

     Care to hazard a guess on the result? If you said reversal, you won!

     Code of Civil Procedure section 426.50 does authorize the trial court to grant leave to file a cross-complaint upon “such terms as may be just to the parties” as long as the requesting party acted in good faith. However, nothing in the statute or legislative comments allowed the court the authority to impose a fee “sanction” for conduct unrelated to any injustice that arose from the filing of the cross-complaint, which is exactly what the lower court did here.

Special Fee Shifting Statute/Governmental Abatement Action: $23,910.30 Fee Award To Winning City In Abatement Action Sustained On Appeal

 

Consent Judgment Was Silent On Issue, Allowing For Fee Award.

     In City of Live Oak v. Oliveira, Case No. C063700 (3d Dist. July 15, 2011) (unpublished), City of Live Oak obtained civil penalties against three defendant trust properties in a nuisance abatement action. Even though the parties reached a consent judgment dealing with one specific costs issue, City moved for recovery of attorney’s fees of $23,910.30 under Health and Safety Code section 17980.7(d)(1), a specialized fee shifting provision in the nuisance abatement area. The lower court allowed the full request, prompting an appeal by defendant.

Special Fee Shifting Statutes/In The News . . . . Beach Cities Collective Medical-Marijuana Dispensary Assessed With Attorney’s Fees Award To Go To Dana Point

 

“Crack House” Costs Provision is the Fee Entitlement Basis; Amount of Fee Award is $138,067.10.

     Well, California is well known as surfer paradise and also well known for its marijuana smoking population (residents who have or have not inhaled). In this vein, enjoy this one with us.

     Beach Cities Collective, a medical-marijuana dispensary hit earlier with a $2.4 million damages award in its thus-far losing battle with the City of Dana Point, was recently faced with Dana Point’s motion to recoup attorney’s fees as the prevailing party in front of Orange County Superior Court Judge William Monroe. The basis for the award? A little known statute--Civil Code section 3496(c), which allows a governmental agency to be awarded fees, in the discretion of the court, where it seeks injunctive relief relating to a building that “gives away” any controlled substance. Interestingly enough, this statute is known as the “crack house costs” statute, allowing recovery of attorney’s fees as long as there is a causal connection between the fees and the abatement action.

     Although Dana Point is reported to have spent more than $400,000 in attorney’s fees on this issue to date, Judge Monroe did award fees of $138,067.10 to Dana Point and against Beach Cities Collective. He reasoned that the requested lodestar was not too high, given the $229/hourly rate claimed by requesting attorneys, the complexity of the case, and the public benefit from the public nuisance action. The numbers of hours spent were high, but justified based on the other factors. The ruling is being appealed by Beach Cities Collective, which is not seeking a stay against judgment enforcement actions (at least so far).

     More on this and other Orange County medical-marijuana dispensary litigation can be found by reading Brittany Levine’s July 12, 2011 article in The Orange County Register.

     Other well known individuals do not share Dana Point’s apparent view of marijuana. Here you go on an interesing quote: “It really puzzles me to see marijuana connected with narcotics dope and all of that stuff. It is a thousand times better than whiskey. It is an assistant and a friend.” -Louis Armstrong

Civil Rights/Specific Fee Shifting Statute: $50,820 Fee Award Against Plaintiff Bringing Frivolous False Claim Act Action Affirmed On Appeal

Second District, Division 6 Uses Analogous Federal Case Law in Reaching Result.

     Under the False Claim Act (Gov Code, § 12650 et seq.), former section 12652(g)(9) provided that a trial court may award the prevailing defendant attorney’s fees if “the claim was clearly frivolous, clearly vexatious, or brought for purposes of harassment.” (Now, the current section effective January 1, 2010 has liberalized the discretionary award to encompass actions “brought primarily for purposes of harassment.”) This former section was front and center in the next case we examine, which is County of Kern v. Jadwin, Case No. B227276 (2d Dist., Div. 6 July 5, 2011) (certified for publication).

     Plaintiff County of Kern was hit with a $50,820 fee award under FCA after the trial court found that its FCA claim had no support and was brought to retaliate against a former employee’s federal employment retaliation lawsuit in which he garnered a $505,457 judgment against County. A judicial arbitrator denied the FCA claim, and a trial court vacated County’s attempt to dismiss without prejudice and awarded $50.820 in fees to plaintiff after finding the FCA action was frivolous and brought to harass plaintiff.

     County’s appeals of the merits and fee determinations were sustained on appeal.

     Justice Yegan, writing on behalf of a unanimous panel of the 2/6 appellate court, used federal False Claims Act cases specifying that fee shifting will occur if the action has no reasonable chance of success from an objective standpoint. (Mikes v. Straus, 274 F.3d 687, 704 (2d Cir. 2001); U.S. ex rel. Vuyyuru v. Jadhav, 555 F.3d 337, 356 (4th Cir. 2009).) The total pattern of conduct showed that there was a “bad smell” to the FCA claim, with the appellate court seeing the same picture of harassment as did the trial court.

     BLOG UNDERVIEW--Justice Yegan began by stating that post hoc, ergo propter hoc is a Latin phrase used to describe the logical fallacy that the propinquity of two events necessarily establishes cause and effect. Although County argued at the appellate argument that plaintiff’s lawsuit and the FCA action had nothing to do with each other, both the trial and appellate courts rejected this proposition, finding the FCA complaint was caused by the plaintiff employee’s lawsuit against County.

Civil Rights Two-Fer: Fee Awards Reversed And Affirmed In Two Different Contexts

 

Disability Fee Reversal--Mundy v. RLA Properties, Case Nos. B224667/B225612 (2d Dist., Div. 1 June 23, 2011) (unpublished).

     In this one, plaintiff in a Disabled Persons Act case, which has a fee-shifting provision in favor of the “prevailing party” (Civ. Code, § 55), lost his attempt to obtain statutory damages in a bench trial, with the lower court ultimately awarding the defense $7,052 in attorney’s fees. The merits judgment was affirmed, but the fee award was reversed. Because plaintiff’s suit did cause a remediation of ADA violations, it was an abuse of discretion to find that the defense was the clear “prevailing party.”

Anti-Harassment Fee Affirmance--Rahmat v. Miller, Case No. B226053 (2d Dist., Div. 6 June 23, 2011) (unpublished).

     Here, the defendant was awarded $2,950 in total fees in an anti-harassment lawsuit, which also has a fee-shifting provision (Code Civ. Proc., § 527.6(i)). Even though a symmetrical injunction was entered into by both sides, “prevailing party” status does not turn on a rigid definition. The appellate court found there was no abuse of discretion because an appearance had to be made by the defense because plaintiff did not timely get settlement papers to the court containing the mutual stay-aways.

Special Fee Shifting Statute: Our Local Santa Ana Court Of Appeal Considers CCP § 1029.8 Relating To Fee Recovery Against Unlicensed Professionals

 

Maybe an Oxymoron, But Stay With Us To See What This Covers.

     Our local Santa Ana appellate court recently considered a writ proceeding that involved Code of Civil Procedure section 1029.8. That particular provision allows someone to sue an unlicensed person causing injury to recover treble damages not exceeding $10,000 as well as a discretionary grant of “all costs and attorney’s fees to the injured person if that person prevails in the action.”

     In a very complicated procedural and writ proceeding that authoring Justice Fybel described on a post-judgment basis “as the legal equivalent of Mr. Toad’s Wild Ride,” the appellate court issued writ relief so that the section 1029.8 fee motion had to be considered, especially given that it was timely filed from the date of an order stating that a certain party had violated section 1029.8. The “injured” parties sought $595,125 in fees, but the appellate court refused--in line with the majority view of courts of appeal--to weigh in on the issue, remanding back to the trial court to adjudge in the first instance.

     This “Wild Ride” case is Wilson v. Superior Court (Gladych), Case No. G043930 (4th Dist., Div. 3 June 23, 2011) (unpublished).

In The News . . . . Burbank City Council Will Pay Fees/Costs to Newspaper Obtaining Individual Bonus Payout Information

 

California Public Records Act Provides for Fee Shifting.

     Under our category “Specific Fee Shifting Statutes,” we have posted on the past about the California Public Records Act, which does allow litigants the opportunity to collect attorney’s fees and court costs if prevailing on a request to obtain a release of public documents.

     Now we can report that the Burbank City Council this week approved the payment of $39,218 in fees and costs to The Burbank Leader, a news organization that successfully obtained a Public Records Act directive to release public records on individual bonus payouts for Los Angeles city employees. The Public Records Act ruling was issued by Los Angeles County Superior Court Judge Ann I. Jones, with the City deciding to pay up rather than fight anymore.

     For more on this one, see Gretchen Meier’s June 17, 2011 post “Burbank to pay Leader’s court costs,” available for reading at www.burbankleader.com.

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

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

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

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

Special Fee Shifting Statutes--Environmental: District Court Erred By Not Awarding At Least Some Attorney’s Fees To Prevailing Plaintiff Under Clean Water Act Section 505(d)

 

Need for Permit and Small Civil Penalty Did Trigger Fee Recovery.

     Clean Water Act (CWA) section 505(d), 33 U.S.C. § 1365(d), allows a district court discretion to award attorney’s fees if two findings are made: (1) the free applicant was a prevailing or substantially prevailing party; and (2) a fee award is “appropriate.” Fees may not be appropriate where “special circumstances” are found. (Saint John’s Organic Farm v. Gem County Mosquito Abatement Dist., 574 F.3d 1054, 1058, 1063 (9th Cir. 2009).) The Ninth Circuit recently determined that a district judge misapplied the law regarding special circumstances to the facts of the particular case before it so that fee recovery should have been made to a prevailing plaintiff.

     In Resurrection Bay Conservation Alliance v. City of Seward, Case No. 10-35446 (9th Cir. May 19, 2011) (for publication), plaintiff nonprofit corporation prevailed against City of Seward when the district court found City was required to apply for a National Pollution Discharge Elimination System permit for certain discharges into Resurrection Bay and assessed a nominal civil penalty of $1 against City. However, the district court declined to permit briefing on recovery of fees and litigation costs. The Ninth Circuit, in a prior memorandum decision, remanded upon plaintiff’s appeal to have the district court decide whether an award of fees was proper under the CWA. On remand, the district judge found that plaintiff did prevail, but denied any fee award because it was not “appropriate”--plaintiff prevailed on only a small portion of the case because the EPA only decided one permit was necessary, there was a lack of evidence of actual pollution, and City did not change any preexisting behavior.

     The Ninth Circuit vacated the fee denial and remanded for some fees to be awarded to plaintiff.

     Because fee awards should be the rule rather than the exception and the special circumstances standard is interpreted quite strictly, Newman v. Piggie Park Enterprises, Inc., 390 U.S. 400, 402 (1968) (per curiam), the Ninth Circuit could not see that “special circumstances” warranted a fee denial under the circumstances. Pollution is forbidden such that the CWA does not require for pollution to occur before allowing fee vindication through a citizens’ enforcement suit. As a result of the suit, City did change its behavior by having to submit to the permitting process for one of two locations. The insignificance of the victory was overshadowed by the salutary objectives of the CWA to restore and maintain the integrity of U.S. waters.

     Plaintiff sought to recover a total of $124,357.30 in fees and costs ($119,566.50 of that being fees). The federal appeals court remanded to have the district court determine the fee amount in the first instance. Nice turnaround win for plaintiff.