Case Is A Stark Reminder On How To Competently Introduce Attorney’s Invoices In A Trial Where Fees Are Claimed As Damages.
Justice Fybel, a sitting justice on our local Santa Ana court (this year’s winner of the David G. Sills Award for Appellate Excellence Presentation by the Orange County Bar Association Appellate Law Section), has penned an unpublished opinion in Copenbarger v. Morris Cerullo World Evangelism, Inc., Case No. G054731 (Oct. 19, 2018) (unpublished), in which he shows how to properly introduce attorney’s fees in a case where there are damages that need to be presented before the trier of fact. The takeaway is that a client, most likely, cannot be the witness attempting to introduce them based on not knowing the extent of an attorney’s work (with only the attorney generally able to describe what was done and justify the reasonableness of the proffered fees).
What happened in Copenbarger is that one party to a settlement agreement sued the other side for failing to dismiss an unlawful detainer action and sought, as damages, related attorney’s fees in line with the settlement agreement’s fees clause. The lower court awarded the suing party $118,000 in fees as damages.
The losing party appealed, arguing that fees are costs of suit (not damages) and the suing party failed to present competent evidence sufficient to prove the amount of damages. Losing party lost the first argument, but it prevailed big time on the second.
The appellate panel concluded that, by analogy to fees sought in the insurance context for wrongful denial of insurance benefits under Brandt v. Superior Court, 37 Cal.3d 813, 819 (1985), fees for breach of a settlement agreement are fees sought qua damages rather than fees sought qua costs of suit. It questioned whether contrary results in Olson v. Arnett, 113 Cal.App.3d 59, 63, 67 (1980) and Navellier v. Sletten, 106 Cal.App.4th 763, 767-768 (2003) were correct, but did have to decide the issue based on the ruling on the second argument raised by appellant.
The winning argument was an evidentiary one. Only the client attempted to introduce his attorneys’ invoices over the objection of the other side that the testimony was hearsay and violated the secondary evidence rule. The trial court overruled the objections, but the Fourth District, Division 3 agreed that client testimony was insufficient for purposes of admitting the invoices. The problems were that the client did not really know about the services received from his attorneys, had no independent recollection of what work was performed/specific dollar amounts, and did not remember clearly what he had paid—meaning the hearsay and secondary evidence rule (a rule which holds oral testimony to prove the content of the writing is inadmissible unless the original or copy was lost/destroyed/not reasonably procurable by court process or other means) objections should have been sustained. Beyond that, a fee proponent must prove the reasonableness of the fees sought, something a client likely cannot do alone in the vast majority of situations. The client should have called the attorneys as witnesses. Given that there was insufficient evidence to support the judgment, reversal as a matter of law and judgment in favor of the appealing party were the proper end results.
BLOG CONGRATS—We congratulate Justice Fybel on a well-deserved award.