CALIFORNIA ATTORNEY'S FEES

Substantiation Of Fees: Incomprehensibly Redacted Billing Statements Led to Reversal/Remand Of Fee Award

 

10% Reduction for Improper Redaction Was Not Enough to Compensate for Deficient Fee Substantiation.

     This is an interesting decision on the substantiation of fees area, which again has us reminding practitioners to be careful to not over “redact” fee billings placed before the trial court. (For some helpful past insight, see our prior posts of June 30, 2008 on Gregg I and Gregg II.)

     City of Lake Forest v. Lake Forest BodyCentre, Case No. G043301 (4th Dist., Div. 3 Feb. 9, 2012) (unpublished) is a situation where City of Lake Forest was awarded substantial attorney’s fees of $456,962.11 for winning a nuisance abatement action under the Red Light Abatement Law--with Civil Code section 3496 allowing a lower court discretion to award fees and costs, as it did here, in such cases. However, the problem was that the public entity fee claimant submitted billing statements that were “redacted beyond comprehension,” and provided no other real detail in the supporting attorney declarations.

     The result can hardly be surprising, a reversal and remand. The lower court did try to save resources by simply reducing the lodestar by 10% for the over-redactions, but the appellate court felt that a remand was proper given that the other proof--the attorney declarations--provided no further enlightenment.

     As far as City’s costs memorandum, it almost lost its costs request because it failed to provide the worksheet back-up to the one-page summary Judicial Council forms, which we have cautioned our blog followers to not do. Provide some detail. Here, in opposition to the motion to strike/tax costs, the detail was provided so that the costs award was affirmed. (In fact, our January 15, 2012 post on Anderson v. Pacific Asian Enterprises presented a situation where Justice Fybel--see below--did uphold denial of deposition costs where only the Judicial Council one-page summary was used.)

     BLOG UNDERVIEW--Justice Fybel was the author of this 3-0 opinion. He indicated at a past L.A. County Bar section meeting that practitioners need to provide a “roadmap” to trial and appellate courts when presenting fee petitions, something that is not done when overly redacted billings are used. We would point out two other interesting unpublished decisions we posted on previously, which suggest some options in this area: either waive the privilege and don’t redact (or redact judiciously) or provide very detailed attorney declarations on tasks/hours/work effort so that an intelligent decision can be made on fee requests. (See our March 31, 2011 post on Johnson [unpublished Fifth District decision] and our December 20, 2011 post on Fullerton v. Monogram Real Estate [unpublished Fourth District, Division 3 decision authored by Justice O’Leary].)

Appealability/SLAPP/Substantiation Of Fees: First District Entertains Challenge Of SLAPP Fee Award Even Though Fee Award Not Specifically Appealed

 

Informative Discussion of SLAPP Fee Appealability Cases and Block Billing Implications.

     Though unpublished, the appellate decision in LegacyQuest v. Rosen, Case No. A129177 (1st Dist., Div. 1 Jan. 27, 2012) (unpublished) has a great discussion of SLAPP fee order appealability issues as well as trial court discretion relating to block billing time submissions by fee claimants.

     Defendant won a SLAPP motion on plaintiff’s libel claim and was then awarded $23,449 in attorney’s fees under the SLAPP mandatory fee-shifting statute. Plaintiff appealed the SLAPP grant, but did not specifically appeal the second subsequent fee order.

     That meant that the appellate court first had to determine if it had jurisdiction to entertain the merits of the fee challenge, with two issues having to be resolved in the process.

Costs/Substantiation Of Fees/Trespass: Fifth District Decision, With Its Reversal Requiring New Fee Reconsideration On Remand, Offers Some Clues . . .

 

. . . On Adequate Fee Substantiation, Cost Recovery Under Civil Code Section 3334(a), And Deadlines For Submitting Amended Fee Request Information

     This next case is a wild thing,

a second appeal involving litigants entangled in a subsurface trespass case where plaintiff was seeking to recover for defendant’s environmental contamination of its groundwater. In the earlier appeal, Starrh and Starrh Cotton Growers v. Aera Energy LLC, 153 Cal.App.4th 583, 606-608 (2007), the Fifth District concluded that a fee-shifting trespass statute applicable to “under cultivation” land (Code of Civil Procedure section 1021.9) would allow for fee recovery even if the trespass was subsurface in nature. Well, this case resulted in another jury verdict and claims of error, giving us more fodder to blog about. The case is Starrh and Starrh Cotton Growers v. Aera Energy LLC, Case Nos. F058778/F059660 (5th Dist. Jan. 25, 2012) (unpublished), authored by Acting Presiding Justice Wiseman on behalf of a 3-0 panel.

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: $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.

Family Law/Substantiation Of Fees: Wife’s Counsel’s Unsworn Statements During Argument About Fee Work Services Did Not Support Fee Award

 

$10,000 Fee Award to Wife Reversed by Fifth District.

     This next case demonstrates that unsworn statements about the nature of fee work will not support a fee award in the family law arena, much less other arenas.

     The Fifth District, in Marriage of Monroe, Case No. F061014 (5th Dist. Nov. 14, 2011) (unpublished), did not buy that a $10,000 attorney’s fees award to wife was supportable where it rested only on the unsworn statements of her counsel at oral argument that 38 hours of work at $350/hour were expended on the case.

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/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.

Billing Records Substantiation: State Bar Arbitration Advisory 03-01 Offers Tips On "Detecting Attorney Bill Padding"

 

Gives Tips On What to Look For.

     Although it dates back to January 29, 2003, the State Bar of California has an Arbitration Advisory aptly entitled "Detecting Attorney Bill Padding."

     To identify bill padding, the Advisory suggested arbitrators focus on three things when determining a reasonable fee:

     1. Evaluate the team/staffing used on the mater,

     2. Evaluate the work performed against the time billed, and

     3. Look for certain patterns in the form of the work descriptions.

     With respect to #1, overuse of associates or inexperienced attorneys as well as use of elastic phrases are both suspicious circumstances. On #2, watch lots of time being billed to document review. Finally, #3 drew lots of comments on invoice formatting that might suggest padding: (a) formula billing; (b) high minimum increments (.25 rather than .10) – this might increase time by 15-25%; (c) time estimates (such as entries always rounded to the hour); (d) block billing – noting this may increase time by 10-30%; (e) standardized work descriptions; (6) lack of detail; (7) wrong times or contradictions between different work entries (by the same timekeeper or other timekeepers at the same activity); (8) timeliness of invoices (lag between the event and invoice may be problematical); (9) lack of substantiation for use of experts and outside investigators; (10) charging for computer research at rates other than the pro-rated actual cost to the firm; and (11) including overhead items in a bill.

Substantiation Of Fee Requests: Attorney Declaration Sans Billing Records Still Suffices.

Fee Award for SLAPP Motion Defendant Sustained.

     In a SLAPP motion context, defendant won a fee award of $13,900 based predominantly on the declaration of their counsel calculating the fee for services but not attaching detailed time records.

     Did this prevail on appeal?

     You bet. The appellate court in Souza v. Farrer, Case No. A129544 (1st Dist., Div. 5 June 29, 2011) (unpublished), relying on Weber v. Langholz, 39 Cal.App.4th 1578, 1587 (1995), decided that an attorney declaration providing the names and hourly fees charged by the working attorneys was sufficient, coupled with the trial court’s independent review of the case file and internal notes of what occurred in the case. Enough said; sufficient substantiation in this one.

Substantiation Of Fee Requests: Plaintiff’s Counsel Shows Us How To Do It In A Case Where They Were Awarded 100% Of Requested Discretionary Fees And Expenses

 

Defense Did Not Oppose, But Plaintiffs Documented Things Well.

     Plaintiff’s counsel in Situation Management Systems, Inc. v. Lamoco Consulting, LLC, Civil Action No. 06-11557-RGS (D. Mass. June 6, 2011 Order) requested $718,015.53 in attorney’s fees and expenses for their winning client in a copyright infringement action where the governing statute allows fees to be awarded in the court’s discretion if the work was registered prior to infringement. (17 U.S.C. § 412.) Although the fee request was unopposed, U.S. District Judge Richard G. Stearns awarded the “whole tamale,” plus costs of $25,733.39 and a chance for plaintiffs to recoup fees for this successful fee application.

     District Judge Stearns gave us all a nice “roadmap” of factors that led to this award:

1. 1. Presenting good billing statements for judicial review;
2. 2. Documenting efforts by supervising attorneys to weed out duplicative/inefficient items from billing statements;
3. Demonstrating that the defense infringement was willful/predatory in nature;
4. Showing the seasoned experience of plaintiff’s attorneys working the areas ofthe case that required the greatest skill;
5. Using reasonable hourly rates for the Boston legal community; and,
6. Documenting well the comparable costs of similar intellectual property litigationmatters.

     U.S. District Court Judge David O. Carter is considering MGA’s request for fees under the same copyright fee entitlement statute in the Bratz litigation pending in the Central District of California, Santa Ana courthouse. A ruling is expected to come out soon.

Substantiation Of Reasonableness Of Fees: Second Circuit Court of Appeals Rules That Contemporaneous Time Records Need To Be Presented For Fee Recovery In All But Rarest Of Cases

Federal Decision Highlights Differences Between Federal Versus California State Approaches; Second Circuit Does Allow Attorney an Equitable “Fallback” Approach.

     At the California state law level, although it is a good idea to keep them, contemporaneous time records are not required substantiation in fee proceedings. (Chavez v. Netflix, Inc., 162 Cal.App.4th 43, 64 (2008).) Beyond that, the trial judges can base fee awards on their own independent determinations of the value of the legal services rendered. (PLCM Group, Inc. v. Drexler, 22 Cal.4th 1084, 1096 (2000).) However, a much different set of constructs governs fee awards at the federal level, as a recent federal appellate decision reveals.

     Scott v. City of New York, __ F.3d __, 2011 WL 1990806 (2d Cir. May 24, 2011) involved a district judge’s award of $515,179.28 in attorney’s fees to plaintiff’s attorney pursuant to the Fair Labor Standards Act’s fee shifting provision, 29 U.S.C. § 216(b). The problem was that attorney failed to keep contemporaneous time records, such that the district judge even on remand sustained the fee award based on her “personal observation” of the attorney’s work.

     The Second Circuit vacated and remanded for reconsideration.

     The reason was that New York State Ass’n for Retarded Children, Inc. v. Carey, 711 F.2d 1136 (2d Cir. 1983) essentially established a hard-and-fast rule that contemporaneous time records were needed as fee substantiation in all but the rarest of cases. The district court’s reliance on “personal observation” of attorney’s work did not suffice because “it is difficult if not impossible for courts of appeal to meaningfully review awards based entirely on a district court’s sense of fairness.” (Scott, supra, 2011 WL 1990806 at *2.)

     However, it did attempt to come up with an equitable compromise. Despite the absence of contemporaneous time records, the Second Circuit did allow the attorney to present his time by analysis of official court records (such as the docket, minute entries, and transcriptions of proceedings) as substitute reliance documentation of compensable hours. The onus was on the attorney, not the district court, to make this analysis, with this approach not running afoul of Carey and with “such a regime prevent[ing] a totally inequitable result in cases such as this . . . .”

     The appellate court also found that a $550 hourly rate was reasonable in nature.

Substantiation Of Fees: Fifth District Finds Fee Denial Altogether Was Erroneous For Overly Redacted Billing Records

 

Court Should Have Ordered Supplemental Useful Billing Records or Relied on Its Own Experience in Fixing Fees.

     In our June 30, 2008 post, we discussed the Gregg I and Gregg II duology out of the Fourth District, Division 1 about the level of detail that must be provided in fee substantiation and what can be done where overly redacted records are submitted in support of a fee motion. The Fifth District, in a recent unpublished decision, has now weighed in.

     Johnson v. Board of Education of the Bakersfield City School District, Case No. F059702 (5th Dist. Mar. 29, 2011) (unpublished) was a situation where defendants were denied requested attorney’s fees of $248,243.80 and other defense costs of $9,194.08 after a lower court granted summary judgment against plaintiff, also finding that her action was not brought in good faith and with reasonable cause under the California Tort Claims Act so as to invoke the fee-shifting provision of Code of Civil Procedure section 1038. (This fee shifting provision was crafted because public entities cannot sue for malicious prosecution, so section 1038 was enacted as an alternative remedy.) However, the lower court essentially denied the fee request outright after finding that the defendants’ fee substantiation billings were overly redacted so as to retard meaningful review.

In The News/Substantiation of Fees . . . . D.C. Federal District Judge Wants To Review Defense Billings For Purposes Of Gauging Reasonableness Of Plaintiffs’ Counsel’s Fee Requests In Handgun Ban Case

 

Plaintiff’s Attorneys Urged Using Updated Laffey Matrix on Hourly Rate Determination.

     Plaintiffs in Heller v. District of Columbia, Case No. 03-CV-1213-EGS (D.D.C.) have requested an award of attorney’s fees totaling $3.13 million in the handgun ban case   brought on behalf of Dick Heller and a group of D.C. residents. The request is being made under the federal civil rights fee-shifting statute, 42 U.S.C. § 1988. The fee request has drawn a lot of news and vigorous opposition by the District of Columbia.

     The fee motion filed by Plaintiffs, spearheaded by lead attorney Alan Gura of Alexandria, VA’s Gura & Possessky, PLLC, is worth reading because it has a good discussion of the differences between the Laffey Matrix and the Updated Laffey Matrix (the latter based on work by economist Michael Kavanaugh), matrices used in establishing a reasonable hourly rate for attorney work. Plaintiffs advocated using the Updated Matrix, while D.C. wanted to use the Laffey Matrix. Based on one news report, U.S. District Judge Emmett Sullivan, the judge deciding the fee request, had indicated that the Laffey Matrix was “bargain basement” and “only goes so far.” (BLOG COMMENTARY--If you would like to view our discussions on and judicial attitudes about these two matrices, see our posts of December 28 & 31, 2010.)

     D.C. had advocated awarding Plaintiffs’ counsel fees of only $722,000.

     In supporting their fee requests, Plaintiffs also used an hourly fee survey contained in the 2009 The National Law Journal and a declaration from a legal placement specialist.

     Now, after initially turning down a request by Mr. Gura that defense billings be inspected, District Judge Sullivan has decided that he would like to review the billings by D.C.’s attorneys to gauge the reasonableness of Plaintiffs’ requested fees. He said the records, while perhaps not dispositive, would aid his work on the fee request issue. (SECOND BLOG COMMENTARY--For a post discussing different judicial attitudes on discovery of an opponent’s billings on the fee reasonableness issue, see our posts of June 8, 2008 [general discussion] and September 6, 2008 [discussion of unpublished Horsford II decision dealing with same issue].)

Probate/Substantiation Of Fees: Fee Denial Based On Failure To Allow Further Submissions Of Detailed Fee Substantiation Deemed An Abuse of Discretion

$101,178.62 in Attorney Work Must Be Reconsidered For Beneficial Result.

     In the past, we have discussed many cases which hold that billing records must be presented to the court (as well as the trustee) when an attorney is seeking reimbursement for probate court litigation work. This stems from the trial court’s “special responsibility” to ensure that fee awards are reasonable and the trustee’s administration is prudent (because it is often times the trustee who hires attorneys to carry out routine or extraordinary work on behalf of the trust). (See Donahue v. Donahue, 182 Cal.App.4th 259, 269 (2010); Schwartz v. Labow, 164 Cal.App.4th 417, 427 (2008); Hollaway v. Edwards, 68 Cal.App.4th 94, 98 (1998).) Here is an interesting one where a lower court’s failure to award fees by failing to allow further submissions of detailed fee substantiation was deemed an abuse of discretion--a result which was dependent upon an unusual set of facts.

     Kennedy v. Lowthorp Richards McMillan Miller & Templeman, Case No. B220613 (2d Dist., Div. 6 Mar. 8, 2011) (unpublished) was a situation where a law firm supplied $101,178.62 in professional services enabling its elderly client to recover title to her home from her daughter and to place it in a trust to provide for her health, maintenance, and support through probate court litigation. The firm submitted its bills for fees and costs to the trustee for payment with the trustee who, in turn, petitioned the court for approval through a declaration that did not include the detailed billings.

Homeowners Association/Standard Of Review/Allocation/Substantiation of Fees: Substantial Cross-Fee Awards Affirmed Across The Board In Acrimonious Tree View Dispute

Second District, Division 1 Finds No Abuse of Discretion in Various Fee Awards.

     It is amazing how ocean views, privacy, and trees all seem to be in the mix of many neighbor/homeowner association disputes. The next one is no exception, producing substantial cross-fee awards under Civil Code section 1354 that probably only made the lawyers happy participants in the overall controversy.

     Murrell v. Rollings Hill Community Assn., Case Nos. B202019/204632 (2d Dist., Div. 1 Jan. 31, 2011) (unpublished) opens with this nice summarizing paragraph: “A contentious and costly feud over trees and a neighbor’s view has spawned multiple legal actions, cross-actions, five appeals and two cross-appeals. George and Anne-Merelie Murrell and Leonard and Linda Fuller are neighbors on adjacent residential lots overlooking the Pacific Ocean in the city of Rolling Hills. To obtain an unobstructed ocean view, the Fullers wanted certain trees on ‘the Murrell property’ trimmed or removed. The Murrells, who sought to preserve privacy, resisted. So began the decade-plus dispute now before this court [which also included the Rolling Hills Community Association and a volunteer HOA director].”

     Boy sitting on pine tree.  Maginel Wright Barney.  Library of Congress.

     Except for the director, the Murrells, Fullers, and HOA got mixed results, but results that a referee and trial court could parse out to make the following fee awards: (1) $399,930.88 (out of a requested $647,974.25) in fees to the Murrells and against HOA, but with HOA obtaining $159,148.84 (out of a requested $237,053) in fees against Murrells on a pine tree claim; and (2) $333,525 (out of a requested $488,906.69) in fees to the Fullers and against the Murrells. The Murrells and HOA appealed the various fee awards and various merits rulings.

     Presiding Justice Mallano, in a 63 page unpublished opinion on behalf of a 2-1 panel, affirmed across the board. (The dissenting justice did not agree with some merits adjudications and one particular fee award.)

     The $159,148.84 fee award to HOA did not surmount the deferential abuse of discretion review standard. (PLCM Group, Inc. v. Drexler, 22 Cal.4th 1084, 1095 (2000) [one of our Leading Cases].) Although a different judge decided a fee request than the judge presiding over germane matters, the Murrells failed to cite authority as to why de novo review was warranted under the circumstances The trial court even apportioned out noncompensable work from compensable work, with the Murrells failing to pinpoint what aspects of the apportionment were wrong. A moving declaration authenticating time records was competent substantiation of the work expended, and a $250 hourly rate for one associate was found to be proper. Other challenges to generalized charges were forfeited by the Murrells’ failure to provide citations to the specifics.

     The Murrells were not any more successful on their challenges to the $333,525 fee award to the Fullers and to the inadequacy of the $399,930.88 fee award to them. A referee was appointed and made proper calculations of what fees should be recovered by each side. Some hourly rates were pared down correctly by the referee because the moving party failed to present evidence of what attorneys were paid in the downtown L.A. market. The apportionment used by the referee and trial court, which is applicable to section 1354 fee awards, was no abuse of discretion given the overlapping nature of the various claims. Again, the generalized attacks of reasonableness by the Murrells did not meet their burden of challenging the fee award to the Fullers. (Farber v. Bay View Terrace Homeowners Assn., 141 Cal.App.4th 1007, 1015-1016 (2006).)

     Finally, on a costs issue, the appellate court majority ruled that Civil Code section 1354 does not allow recovery of costs not authorized under Code of Civil Procedure section 1032, such as phone charges, copying charges, and expert witness expenses.

     Putting into perspective the social utility of $400,000 in attorney’s fees spent on a neighbor tree view dispute, we note in passing that $400,000 will buy 26,667 doses of flu vaccine at $15/dose, 6,667 doses of malaria vaccine, at $60/dose, and 50,000 meals on wheels, at $8/meal; and, that in 2009, median household income in the United States was $49,777, an amount that has since declined.

Probate/Substantiation of Fees: $693,876.02 Extraordinary Fee Award To Estate Administrator’s Attorney Affirmed On Appeal

No Res Judicata Impact From Prior Fee Denial; Daily Substantiation Requirements Do Not Govern Probate Fee Awards.

     This post will definitely interest probate practitioners. Aside from the fact that it involves a fairly substantial “extraordinary fee” award, it also demonstrates that the appellate courts will be demanding on application of res judicata principles and will not require overly stringent substantiation requirements for extraordinary fee requests (at least as compared to other areas, such as lodestar oriented requests).

     Estate of Goldstein, Case No. A126507 (1st Dist., Div. 2 Jan. 12, 2011) (unpublished) is the case, where a lower court awarded Downey Brand an award of $693,876.02 for “extraordinary fees” in representing an attorney’s estate in litigation against former firm members for fee entitlement in several settled flood cases and in a separate interpleader--all involving about 3 years of work.

Substantiation Of Fees And Private Attorney General Statute: $1,007,067 Fee Award Gets Scaled Down To $669,525 On Appeal

 

Lack of Supporting Proof For Certain Time Frame Dictates Fee Reduction.

     Defendant won an unusual unreasonable restraint on alienation battle over a buffer zone, leading the trial court to award fees of $1,007,067 under California’s private attorney general statute (Code of Civil Procedure section 1021.5) in Greenlaw Grupe, Jr. Operating Co. v. Land Utilization Alliance, Case Nos. C060939/C063153 (3d Dist. Dec. 29, 2010) (unpublished). Defendant kept his award on appeal, although in a diminished amount. Here is why.

     Defendant’s attorney failed to submit competent fee records for work in 2003 through 2005, introducing instead only cursory invoices with aggregate fee totals rather than a description of the number of hours worked or the legal services performed. The total at issue was $112,514.04, which was awarded by the lower court after applying a triple multiplier (so that $337,542 was involved). Applying Martino v. Denevi, 182 Cal.App.3d 553, 559 (1986), the Third District found that the lack of crucial information about hours worked, billing rates, issues dealt with, and appearances on client’s behalf did not provide any competent basis for a fee award. So, this meant the award had to be reduced down to $669,525, in the case of fee claimant’s failure to provide fee substantiation for certain periods of attorney work.

Substantiation Of Fees: Laffey Matrix Versus Adjusted Laffey Matrix . . . Or Hybrid Of A Matrix--Part 1 of 2

 

Hourly Market Rate Analysis Frequently Involves Use Of the Laffey Matrix, Although Some Courts Do Not Like It.

     When one is petitioning for fees or contesting a petition for fees, it is usually incumbent to utilize the lodestar approach by determining the prevailing hourly market attorney rates in the relevant community (most often, the county or district of the litigation venue in question). Various methods are used by fee proponents or contestants, such as a matrix, billing surveys (such as those reported by the National Survey Center, the National Journal, and Legal Times), attorney declarations, and evidence of recent court awards of fees to attorneys with comparable qualifications handling similar cases. (Salazar v. District of Columbia, 123 F. Supp.2d 8, 14 (D.D.C. 2000).) Some of the common matrices used to establish reasonable hourly attorney rates are the Laffey Matrix or the Adjusted Laffey Matrix (or hybrids of one or the other). We now provide a discussion about how courts treat use of these matrices, whether accepting them, criticizing them, rejecting them outright, or adjusting them further.

     Laffey Matrix. The Laffey matrix is an inflation-adjusted grid of hourly rates for lawyers of varying levels of experience in Washington D.C. used for many years by the U.S. Attorney’s Office for determining fees in litigation claims (especially civil rights litigation). This matrix was approved originally in Laffey v. Northwest Airlines, Inc., 572 F. Supp. 354, 371-375 (D.D.C. 1983), aff’d in part, rev’d in part on other grounds, 746 F.2d 4 (D.C.Cir. 1984). The matrix starts with attorney’s fees rates previously adopted by the courts as reasonably reflecting the local market (1982 hourly rates for the Washington D.C. metropolitan areas approved by the D.C. Cir. in 1983) and then updates them by applying the change in the Metropolitan Washington area Consumer Price Index (CPI) to those 1982 rates. The U.S. Attorney in the DOJ continues to use a version of the Laffey matrix. It has been cited as good evidence of market hourly rates for attorneys practicing in the federal employment arbitration or gender discrimination areas of law. (See, e.g., Save Our Cumberland Mountains v. Hodel, 857 F.3d 1516, 1525 (D.C.Cir. 1988) (en banc) [federal employment arbitration]; Woodland v. Viacom, Inc., 255 F.R.D. 278, 280 (D.D.C. 2008) (approving Laffey matrix rates in gender discrimination action].)

     Circuit Courts Not Condoning Use of Laffey Matrix. The Fourth Circuit has expressly disapproved reliance on the Laffey matrix, requiring instead that fee awards be based on prevailing market rates established by other forms of evidence (such as the proof listed in paragraph 1 above). (Robinson v. Equifax Information Services, LLC, 560 F.3d 235, 245 (4th Cir. 2009).) The Ninth Circuit recently questioned the reliability of this matrix and sustained a district judge’s refusal to use it, because (1) acceptance of the matrix for the D.C. area did not mean it is a sound basis for determining rates elsewhere (especially a legal market 3,000 miles away), and (2) it was questionable whether the matrix was a reliable measure of rates even in Alexandria, Virginia, located just across the river from Washington, D.C. (See Prison Legal News v. Schwarzenegger, 608 F.3d 446, 454 (9th Cir. 2010).)

     In our Part 2 post in this area, we will explore criticisms of the Laffey Matrix, judicial sentiment on the Adjusted Laffey Matrix, and U.S. District Judge Walker’s own twist on using the Laffey Matrix.

     For our previous posts on the Laffey Matrix, see our June 10, 2010 post and our March 5, 2009 post on the subject. 

Substantiation Of Fees Under Special Fee-Shifting Statute: Court Of Appeal Overturns Trial Court's Reconsideration Of Fees Request Where No Supporting Evidence Presented In Initial Fee Request Papers

Third District Finds Reconsideration Was Erroneous and Finds No Basis for CCP § 473 Relief.

     Here is a case that segues well with what we have advocated in many prior posts: when you prepare fee requests, make sure your papers provide the lower court with a roadmap, and a roadmap supported by competent evidence of hourly rates, work, and any apportionment of time if that is appropriate.

     Corona v. Stull, Case No. C062281 (3d Dist. Sept. 28, 2010) (unpublished) involved a plaintiff who recovered over $6 million in a wrongful death/personal injury suit against a defendant who was convicted of drunk driving. Plaintiff moved to recoup attorney's fees under Code of Civil Procedure section 1021.4, a special fee-shifting statute that allows a plaintiff recovering damages against a defendant based upon defendant's commission of a felony offense to later seek fee recovery from defendant. Plaintiff sought 40% of the judgment as a fee recovery. Unfortunately, plaintiff's initial moving papers had no declarations upon which to base the fee award, so it was denied although the lower court did find a fee entitlement basis under section 1021.4. Plaintiff then moved for reconsideration supplemented with declarations and fee substantiation, a request that was granted and resulted in a 180 degree turnaround—plaintiff was awarded fees of $155,000 as against defendant. That prompted an appeal by defendant.

     The Third District, in a 3-0 opinion authored by Justice Cantil-Sakauye, reversed.

     The appellate panel found that the reconsideration request was flawed because the dilatory presentation of fee substantiation, something within the control of plaintiff's attorneys, was not "new evidence" under Code of Civil Procedure section 1008 (the reconsideration statute). The Court of Appeal concluded that section 1008 could not be used to accomplish a complete "do-over" of an earlier result when the stringent requirements of the reconsideration statute were not met.

     Code of Civil Procedure section 473, the relief escape valve, provided no solace to plaintiff, because that provision was never intended as a catchall for attorney mistakes.

     This decision should be paid attention to by litigators, since it was authored by Justice Cantil-Sakauye, who is going to succeed Justice Ronald George as Chief Justice of the California Supreme Court. Justice George, in our view, served well in this position, doing so with grace and collegiality.

Private Attorney General Statute: Fourth District, Division 1 Reverses Trial Judge’s Refusal To Allow Supplemental Trial Fees To Plaintiffs That Obtained Appellate Success For CEQA Claims

Appellate Panel Also Has Good Things to Say for Appellate Attorneys—Their Work is Specialized and May Command Higher Fee Awards Despite Some Duplication With Trial Work.

     Center for Biological Diversity v. County of San Bernardino, Case No. D056972 (4^th Dist., Div. 2 Sept. 17, 2010) (certified for publication) is an interesting case mainly for appellate attorneys but also for Bar members that win an appeal and then seek to obtain supplemental trial work fees based on the appellate win.

     Boiling down the procedural posture of the case, plaintiffs (environmental groups) brought three claims against County and developer relating to the Blue Ridge project at Lake Arrowhead. Initially, they won a claim but lost two CEQA claims, requesting $191,729.05 in fees but only receiving an initial award of $50,000. All sides appealed, eventually stipulating to dismiss with prejudice their appeals of the initial attorney’s fees order. The appellate court (4^th Dist., Div. 2), on the merits, held the lower court erred by denying the two CEQA claims. On remand after assignment to a new trial judge, plaintiffs moved for a second fee award, primarily trying to recoup (1) attorney’s fees for prevailing on appeal; and (2) supplemental trial work fees based on their greater success on appeal. Plaintiffs sought a total of $563,926.45, broken down this way: (1) $136,230.45 for trial work; (2) $180,324.65 for appellate work; (3) $256,967.10 based on a 2.0 multiplier for the contingent portion of the representation; and (4) $40,405.25 for “fees on fees” in bringing the fee motion (although offsetting $50,000 for the first fee award). The new trial judge awarded nothing more for trial work, determining it lacked jurisdiction in light of the dismissal of the first fee appeal, but did award $62,530 for appellate work—after determining there had been two much duplication of work by appellate attorneys and disallowing out-of-town counsel hourly rates exceeding Inland Empire $370 hourly rates—and $10,000 “fees on fees.” Plaintiffs appealed again, this time going before the Fourth District, Division 1 (a panel to which the appeal was transferred).

     Plaintiffs obtained another reversal and remand in a 27-page Slip Opinion authored by Presiding Justice McConnell on behalf of a 3-0 panel.

     The appellate panel first found that there was nothing wrong with plaintiffs’ efforts to obtain supplemental trial work fees based on the appeal success on two CEQA claims previously denied. Plaintiffs did not have to appeal the first fees award to get supplemental fees given the subsequent appellate win.

     Plaintiffs sought hourly rates between $370-625 for specialized Santa Monica environmental attorneys, but the trial court only allowed $370 Inland Empire attorney hourly rates. The appellate court found this was an abuse of discretion given the contrary proof of reasonableness presented by plaintiffs: (1) a National Law Journal annual survey showing L.A. rates that were in the requested range; (2) declarations showing that the requested rates were in the range of what other courts had awarded in other California venues; and (3) testimony showing qualified environmental representation in the local area was slim (if not nonexistent). The Court of Appeal noted that fee awards do not have to invariably be limited to local rates, depending upon whether there is a reservoir of attorneys in the local area that could prosecute the matter—something not established in this case. (See, e.g., Horsford v. Board of Trustees of Cal. State Univ., 132 Cal.App.4^th 359, 397, 399 (2005).) The appellate panel also rejected that a reduction in hourly rates was necessary just because the Santa Monica firm occasionally entered into fee arrangements with lower hourly rates. (Chacon v. Litke, 181 Cal.App.4^th 1234, 1260 (2010).)

     Then, in a discussion that should make appellate attorneys feel more appreciated, the Center for Biological Diversity court found that trial and appellate work is quite different—such that it was an abuse of discretion to reduce the claimed hours because the appellate attorneys had to duplicate some of the efforts of the trial attorneys. “ . . . trial court preparation and appellate work are not commensurate tasks. As [real party’s] counsel acknowledged at oral argument, preparation of an appellate brief and record is far more complicated than merely ‘repackaging’ the trial court brief.” (Slip Opn., p. 21; see also In re Marriage of Shaban, 88 Cal.App.4^th 398, 408-410 (2001).) Often times, the appellate court observed, duplication by appellate attorneys is necessary duplication, with it being an abuse of discretion to cut 56% of the hours claimed by plaintiffs for appellate work.

     Matter reversed and remanded, which will likely result in a much higher fee award for plaintiffs this time around. (The multiplier issue was left to be reconsidered on remand, but the appellate court did caution against double counting.)

Lodestar: Second Time Around, Fourth District, Division 2 Sustains Lodestar Analysis Of Trial Court In Awarding $959,925 In Fees

Trial Judge Also Correctly Awarded Interest on Fee Award and $193,800 In Appellate Attorney’s Fees.

     McCasland v. Beckman, Case No. E049166 (4^th Dist., Div. 2 Sept. 10, 2010) (unpublished) (McCasland II) is the second group of appeals addressing attorney’s fees awarded to winners of a contract dispute, after the appellate court affirmed the merits determination by the trial judge. However, in the prior appeal, the Fourth District, Division 2 reversed a $2,734,081 fee award to winners, determining that the lower court did not adequately explain the lodestar basis for its award—which effectively granted fees under a contingency fee agreement that translated to a lodestar plus a 2.8 multiplier. The case was remanded for a re-determination of the amount of fees to be awarded winners.

     On remand, the trial court—a different judge—awarded $959,925 in attorney’s fees based on finding that the case was not difficult, was not novel, and was really only a damages case. The trial court also awarded interest from the date of the original judgment on the attorney’s fees award and determined winners were entitled to $193,800 in appellate fees for prevailing on the prior appeal.

     The panel in McCasland II affirmed across the board.

     The trial judge did not abuse his discretion in applying the lodestar factors this time around and arriving at a much lower fee award.

     No error was committed in awarding interest from the date of the original entry of judgment date, even though losers argued that the trigger date would be the date that winners filed their post-appeal fees motion. The reason was that the prior reversal was for all practical purposes only a modification because fees of some amount were clearly deserving to the winners. Because the prior reversal was a modification, interest was to run from the date of the original judgment. (Munoz v. City of Union City, 173 Cal.App.4^th 199, 203-204 (2009).)

     The appellate fee award was no abuse of discretion because (1) it was adequately supported by detailed billing statements (Horsford v. Board of Trustees of California State University, 132 Cal.App.4^th 359, 396 (2005)), and (2) the appellate hourly fee rate of $300 was not excessive (Graciano v. Robinson Ford Sales, Inc., 144 Cal.App.4^th 140, 155 (2006) [attorneys based in inland San Diego County charged hourly rates of $350, $275 and $270]).

Substantiation Of Fee Requests: Seventh Circuit Opinion Contrasts Federal From California State Approach To Using Redacted Fee Substantiation

Federal Decision Eschews “Line by Line” Scrutiny and Does Not Mind Redacted Billings in Many Instances.

     In an earlier post when we first began blogging on California attorney’s fees, we reported on Gregg I & II out of the Fourth District, Division 1 Court of Appeal. (See our June 30, 2008 post.) These decisions suggested that redacted billings adequately support fee requests, although they should only be redacted so as to shield sensitive (really privileged) information so that the trial judge can truly gauge the services being claimed. [Contrast this, however, with cases that indicate attorney declarations can suffice as substantiation under the right circumstances, as detailed in our “Substantiation of Fee Requests” category on the home page.]

     However, for purposes of contrasting the differing approaches taken by California and federal courts with respect to fee substantiation adequacy, we briefly examine Metavante Corp. v. Emigrant Savings Bank, Case Nos. 09-3007/09-3996 (7^th Cir. Aug. 30, 2010).

     There, the prevailing party under a contractual fee-shifting provision petitioned for nearly $10 million in fees and costs, submitting redacted bills in support—showing the amounts of time, rates, and money spent, but with redactions of the descriptions of work performed. (Keep in mind, importantly, that sophisticated companies were involved, and fee petitioner had in-house counsel looking over the bills, which were incurred and paid.) The district judge awarded every bit of the fee request, prompting an appeal by the loser that raised the redacted fee substantiation as a major issue.

     The Seventh Circuit rejected the notion that unredacted bills had to be supplied in this particular situation, given an earlier decision where it held that the lower court should look at aggregate costs to gauge the reasonableness of the request in relation to the stakes of the case and overall litigation pragmatics—with the marketplace being a key determinant (after all, if the fees were incurred and paid, that tends to show they were reasonable when sophisticated parties are involved). “[Prior Seventh Circuit cases] hold that, as a matter of the efficient and fair administration of the federal courts, individual scrutiny of line-item entries is neither necessary nor appropriate in contractual fee-shifting cases.” (Slip Opn., p. 50.) Of course, this holding depended on the district judge aptly determining that market mechanisms showed the fees were reasonable in nature.

     As a corollary, the federal appeals court was swayed by the fact that the party opposing the fee request declined to reveal its own fees as a measure of a reasonable expenditure, using out-of-town counsel yet criticizing its opponent for also using nonlocal counsel. Nevertheless, the Seventh Circuit ultimately concluded that “ . . . in most situations, as here, [the district judge’s] responsibility [to show the fees are candid and reasonable] can be discharged without line-by-line scrutiny of submissions.” (Slip Opn., p. 53.)

A page of a British MP’s redacted expenses published by the Guardian, UK.

Homeowners Associations: $65,707.80 Fee Award To HOA Affirmed On Appeal.

 

Block Billing Per Se Will Not Tank a Fee Request.

     Under our category "Homeowner Associations," we have reviewed numerous decisions where homeowners or HOAs feel the sting of "victory or defeat," even if ABC's famous "World of Sports" mantra was not directly in play. Well, we have another one to share with you—where the homeowner got stung with bearing hefty fees.

      Another Mantra:  Allen Ginsberg chants Hare Krishna

     Lakeshore View Homeowners' Assn. v. Tu, Case No. A123298 (1^st Dist., Div. 1 Aug. 17, 2010) (unpublished) was a case where defendant homeowner lost a case against a HOA, even though a partial set-off was granted. The net judgment to HOA was $23,584.68, after the set-off of $4,000 in homeowner's favor. Later, HOA filed to recoup attorney's fees of $109,513, but the trial judge awarded fees of $65,707.80. Homeowner appealed, contesting only the amount of the fee award.

Fee Substantiation: Provide The Court of Appeal With A Roadmap!

Fourth District, Division 3 Affirms a Lower Fee Request Based Upon Lack of Clarity.

     This next case, from our local Fourth District, Division 3 appellate court, reinforces a lesson that should be clear from now—if you are a fee claimant, provide the court a roadmap on why you should get the best (and highest) award.

     In Santoyo v. Snyder, Case Nos. G041632/G041629 (4^th Dist., Div. 3 July 16, 2010) (unpublished), attorney appealed because he was not awarded enough attorney’s fees for representing a trustee and guardian of the estate of a couple’s three minor children. Attorney wanted more than $135,000 for his services, but only received a total of about $40,000 for the two matters if we are correctly reading the opinion.

     Our local appellate court, in a 3-0 decision penned by Justice Aronson, affirmed the reduced fee award.

     The reasons? Boiled down, failure to provide a roadmap. On appeal, attorney failed to provide “pinpoint” (specific) appellate record citations, a requirement that more and more appellate panels are enforcing to even entertain a challenge on appeal. The Court of Appeal was offended by block billing entries, especially enraged by one for $20,000 without specification. Attorney also tried to surcharge for time that was arguably not even spent for the benefit of his true clients. Summed up, this appeal was a mess—and a mess produces the end result, an affirmance of the trial court’s discretion in reducing the fee award. Don’t get trapped—provide a roadmap!

SLAPP: Court Of Appeal Affirms $6,840 SLAPP Fee Award To Defense

 

Fourth District, Division 3 Does Find That Fee “Estimates” For Future Work On Reply Papers/Appearance Adequately Underpins Ultimate Award.

     Although it has a great discussion of the Flatley exception and the circumstances where the litigation privilege is trumped by more specific statutes, our local Fourth District, Division 3 does have a nice discussion of an argument we bloggers have pondered in numerous fee contexts.

     G.R. v. Intelligator, Case No. G042006 (4^th Dist., Div. 3 June 10, 2010) (certified for publication) affirmed a $6,840 fee award to a SLAPP winning defendant attorney. On appeal, plaintiff argued that the lower court erred by basing part of the award on the defense attorney’s “estimates” of upcoming reply memorandum/appearance work (we call it “future work”) expected to be incurred in the SLAPP proceedings as a predicate for a fee award.

     Justice Moore, writing for the panel in this case, found nothing wrong with this practice. After all, the trial judge can determine if the “future work” was appropriate because he/she had the reply brief to consider and then entertained the argument at the appearance. We bloggers are thankful that someone has clarified that “estimates” will suffice to substantiate this type of future work for fee claimant purposes.

Sanctions: $247,397.28 Fee and $10,808.76 Cost Awards Affirmed Against Attorney As Sanctions Under 28 U.S.C. § 1927 In Copyright Infringement Case

Ninth Circuit Finds Sanctions Were Warranted and Were Not Excessive in Nature.

     28 U.S.C. § 1927 allows a district judge to sanction an attorney “who so multiplies the proceedings in any case unreasonably and vexatiously” for those excess costs, expenses, and attorney’s fees reasonably incurred as a result of attorney’s conduct. Recklessness suffices under § 1927, but the district court must find there was bad faith. (B.K.B. v. Maui Police Dept., 276 F.3d 1091, 1107-08 (9^th Cir. 2002).) An open issue in the Ninth Circuit is whether this bad faith finding must be supported by clear and convincing evidence. (In re Lehtinen, 564 F.3d 1052, 1061 n.4 (9^th Cir. 2009.) I bet you readers might think the next case we review resolved this issue. Actually, you would be wrong, because the Ninth Circuit found that a substantial sanctions award under § 1927 was supported by clear and convincing evidence—dodging the open issue.

     In Lahiri v. Universal Music and Video Distribution Corp., Case No. 09-55111 (9^th Cir. June 7, 2010) (for publication), the district judge awarded defendants $247,397.28 in fees and $10,808.76 in costs under § 1927 for conduct in a lengthy copyright infringement action. This award was affirmed by a 3-0 panel.

     The main problem for losing attorney was that Indian copyright law clearly established his client (a composer) has no copyright interest in a movie score composed for compensation for a film company; the film company had the rights. Attorney did himself no good by citing to an immaterial concurring Indian Supreme Court opinion. The Ninth Circuit found bad faith could be inferred when attorney attempted to retain the district judge’s former law firm to defend him in an attempt to gain a recusal and an assignment to a new judge unfamiliar with the protracted history of his conduct in the litigation.

     What about the amount of the sanctions award? Not so much of a problem, either. The district judge drastically reduced the $894,539.44 fee/costs request based on apportioning work only to attorney’s client, correctly reduced 80% of block billing personnel’s work by 30%, and properly made an additional 10% across-the-board reduction for excessive/redundant work. (In so doing, the Ninth Circuit cited to two authorities: (1) for block billing, a California State Bar’s Committee Mandatory Fee Arbitration’s report indicating that block billing may increase time by 10% to 30% (Welch v. Metro. Life Ins. Co., 480 F.3d 942, 948 (9^th Cir. 2007)); and (2) for excessive billing, adoption of the 10% permissible, unexplained “hair cut” approach adopted in Moreno v. City of Sacramento, 534 F.3d 1106, 1112 (9^th Cir. 2008).

Fee Substantiation: When Trial Court Bases Denial Of Fees On Independent Grounds, Address Both Grounds On Appeal Or Face Affirmance For Failure To Rebut Correctness Of Trial Court Ruling

Second District, Division 5 Sustains Fee Denial Based on Failure to Address Fee Substantiation Inadequacies.

     The next case we examine teaches a staple of appellate law: make sure you address all of the trial court’s reasons for a ruling on appeal. If you don’t, risk having the appellate court affirming based on the failure to show error—which did happen in Coastal Law Enforcement Action Network v. Cal. Coastal Comm’n, Case No. B219526 (2d Dist., Div. 5 May 13, 2010) (unpublished).

Class Actions: Lodestar/Multiplier Determinations Remanded In Private Attorney General Statute Fee Award

Court of Appeal Also Decides Prejudgment Interest Not Allowable on Fee Awards.

     Okay, so who says we don’t try to give you readers a synopsis of decisions (even though some might be a little wordy)? The next decision—Woosley v. State of California, Case No. B209890 (2d Dist., Div. 5 Apr. 16, 2010) (unpublished)—involves some interesting class action fee award issues. We have, in this post, summarized a 51-page decision, unless you desire to read it yourself.  What a deal!

Lemon Law: $170,000 Attorney Fee Recovery Sustained In Song-Beverly Act Case Involving Mobilehome

Fourth District, Division 1 Sustains Lower Court Determination Based on Its Experience With Hourly Rates.

     In Cauchon v. Forest River, Inc., Case Nos. D053864/D054433 (4^th Dist., Div. 1 Apr. 9, 2010) (unpublished), mobilehome purchasers did well in a Song-Beverly Act Warranty Act suit with a mandatory fee-shifting statute in favor of prevailing plaintiffs. Purchasers recovered compensatory damages of $205,700.86, $3,143.23 in incidental damages, and statutory penalties of $52,211.00. Then, the trial court awarded them $170,000 in attorney’s fees (out of a requested lodestar of $194,716.50, $10,000 for fees on fees, and a requested .6 multiplier [the multiplier being denied].) Defendant appealed.

Fee Substantiation: $199,607 Fee Award Affirmed Based On Lack Of Specificity In Framing Unreasonableness Challenge

 

Attorney Declaration as to Hourly Rates and Description of Work Adequately Substantiated Fee Petition Claims.

     Defendant contractor and its president, sole shareholder, sole director, and sole employee (found to be the alter ego of the contractor) were found liable for $670,923 in damages in a construction defect lawsuit to purchasers of the Livermore house constructed by defendants. Among other claims, home purchasers won on a breach of purchase contract count where the contract contained a fees clause. The trial court also awarded prevailing plaintiffs $199,607 in attorney’s fees.

     In Mathis v. Nahlik, Case No. A121490 (1^st Dist., Div. 5 Mar. 25, 2010) (unpublished), the appellate panel affirmed challenges to both the merits and fee judgments in favor of plaintiffs.

     Defendants’ challenges to fee reasonableness were basically forfeited by their failure to specify what work was unnecessary or how the hourly rates claimed were not justified. (Avikian v. WTC Financial Corp., 98 Cal.App.4^th 1108, 1109 (2002).) The declaration from plaintiffs’ attorney was sufficient to establish that the requested hourly rates were in line with those charged by comparable lawyers in the relevant legal community. (Davis v. City of San Diego, 106 Cal.App.4^th 893, 903 (2003).) Finally, the documentation submitted by plaintiffs’ attorneys in support of the fee petition was sufficient, with California law not requiring submission of exact time records. (Wershba v. Apple Computer, Inc., 91 Cal.App.4^th 224, 255 (2001).) Fee award affirmed.

Probate: Court Of Appeal Reverses $5.2 Million Fee Awards To Former Trustee And His Attorneys in Beneficiary Self-Dealing/Conflict Litigation

Fourth District, Division 3 Finds That Fee Recordkeeping and Trust Litigation Expenses Must Be Scrutinzed Closely to Determine if Fees Were Reasonable and Appropriate From a Trust Benefitting Perspective.

     Donahue v. Donahue, Case Nos. G040628/G041503 (4^th Dist., Div. 3 Feb. 24, 2010) (certified for publication), is sure to be a widely cited opinion when it comes to adjudging the reasonableness of attorney’s fees requested by a trustee in trust litigation. It is a recent 3-0 decision authored by Justice Aronson of our local Court of Appeal.

Homeowners Associations: Substantial Attorney’s Fees Awards In Favor Of Adjoining Neighbors and HOA Sustained On Appeal

Almost $500,000 in Total Fees Assessed Against Losing Homeowners.

     For all you Olympic watchers out there, this next case will resonate the famous “agony of defeat” line from ABC’s Wide World of Sports.

     In Sharp v. Anderson, Case No. B212528 (2d Dist., Div. 1 Feb. 18, 2010) (unpublished), plaintiff neighboring real property owners lost contentious litigation against their neighbors and the HOA/HOA directors. The lower court awarded neighbors $184,510 in attorney’s fees and $14,109 in costs and also awarded HOA $295,547 in fees under Civil Code section 1354(c), a fee-shifting provision under the Davis-Stirling Common Interest Development Act.

     Losers appealed.

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

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

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

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

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

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

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

Indemnity And Apportionment: $402,596.40 Fee Award Affirmed In Refusal To Defend Dispute

Sixth District Found Opposing Party Forfeited Challenge to Billing Record Objections When It Failed to Attack Omissions Through Discovery Motion.

     In the next case, the Sixth District—in UDC-Universal Development, L.P. v. CH2M Hill, Case No. H033862 (6^th Dist. Jan. 22, 2010) (unpublished)—affirmed a $402,596.40 fee award under a contractual provision when sustaining a trial court’s ruling that a cross-complainant obtained more relief by obtaining a judgment for breach of the contractual duty to defend even though cross-complainant lost on its indemnification claims.

     This decision does show the considerable discretion vested in lower courts to determine the “prevailing party” when neither side achieves a complete victory. It will not be disturbed in the absence of a clear abuse of discretion, something that did not happen in this particular case.(Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC, 162 Cal.App.4^th 858, 894 (2008).)

     However, there is also an important discovery lesson that can be derived from this unpublished decision. Appellant challenged the lower court’s failure to apportion the fees, but made a critical error in proceedings below: it failed to move to compel further responses when it did not receive certain requested billing records from the fee claimant. Both the lower and appellate courts found that this forfeited any challenges that were targeted against the billing records. So, make your discovery motions if you are the fee objector attacking any of the claimant’s billing records.

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

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

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

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

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

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

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

Costs Deadline, Fee Substantiation and Allocation: Fees/Costs Awarded In Anti-Speculation Liquidated Damages Clause Dispute Affirmed In Favor Of Developer

Liquidated Damages Clause Found Valid; Fees/Costs Award Sustained Also.

     This next decision should be of substantive interest to both developers and our readers interested in fee issues.

     Although unpublished, Beck Properties, Inc. v. Hameed, Case No. C058279 (Dec. 11, 2009) decided that an anti-speculation clause in a purchase agreement between a developer and residential buyers – a provision allowing for the developer to recover $50,000 in liquidated damages should purchasers sell or transfer the home in the one year period following close of escrow – was valid as far liquidated damages was concerned. The theory behind this type of clause is to encourage buyers to stabilize the neighborhood by living in the residence and keep speculators from bringing down property values based on lack of maintenance, competition with the developer trying to sell remaining units, and abandonment of the units to foreclosure by the speculators.

     Developer won a bench trial contesting the validity of the liquidated damages clause. The decision has a nice discussion of the proof needed to support such clauses and defeat buyers’ defense that they really did intend to live there (i.e., 1031 exchange information obtained during discovery and buyers’ use of option-ARM financing that provided for debt negative amortization/low, interest-only payments that is typically only used by investors).

     Later, the trial court awarded developer $88,485 in fees under an attorney’s fees clause in the purchase contract. Buyers’ appellate arguments were not persuasive for purposes of upsetting this award.

     Even though the costs memorandum was prematurely filed before entry of judgment, this is a mere irregularity not rising to the level of reversible error. (Parker v. City of Los Angeles, 44 Cal.App.3d 556, 566 (1974).)

     Buyers next challenged the fee substantiation by attacking the declaration of the lead counsel as to the performed legal work, arguing that it was inadequate because an associate did most of the work. Wrong, said the appellate panel. Lead attorney supervised the associate, and the time reflected came from the firm’s billing system in the normal course of business. The fee substantiation evidence sufficed.

     Last, buyers argued that the time spent on litigating the case against the buyer husband’s wife (who was dismissed) needed to be apportioned from the fee request. Not so, because “[n]o work was performed regarding [wife] that was not equally necessary for prosecuting the case against [husband].” (Slip Opn., p. 17.)

     BLOG UNDERVIEW—Co-contributor Marc has litigated the validity of anti-speculation clauses. He has done some prior matters where the clauses were challenged as unenforceable property restraints, beating demurrers and then settling the matters through mediation.

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

 

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

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

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

Prevailing Party: Defendants City And Landlord Win Summary Judgment and Gain $184,605 Fee Award As Prevailing Parties Under Civil Code Section 1717

Both Determinations Affirmed on Appeal.

     In Marinos v. City of Rocklin, Case Nos. C058958/C060844 (3d Dist. Nov. 4, 2009) (unpublished), defendants City and landlord prevailed on a summary judgment motion based on plaintiffs not complying with a notice provision in a settlement agreement with a fees clause. The trial court then awarded defendants $184,605 in attorney’s fees (a 30% reduction from the requested fees of $265,066.50) to defendants as prevailing parties under the fees clause.

     Plaintiffs appealed, and lost.

     They initially argued that the fee motion was untimely because it was filed after the costs memorandum deadline. Not so, said the appellate panel. Fee recovery is governed by CRC, rule 3.1702(b), which is tied to the time period for appealing the underlying merits judgment. Here, defendants timely filed within 30 days after denial of the new trial motion.

     Plaintiffs next argued that the two law firms representing the defendants unreasonably duplicated efforts. The problem with this contention is that the fee award is resolved under an abuse of discretion standard deferential to the lower court’s ruling. (Maughan v. Google Technology, Inc., 143 Cal.App.4^th 1242, 1249 (2006).) Although the notice issue was ultimately determinative, both sides vigorously litigated many issues and engaged in lots of discovery and law and motion practice. The fee claimants provided 112 pages of detailed invoices, such that more than adequate substantiation of work effort was presented before the lower court. Given that the trial judge did reduce the requested fees by 30%, plaintiffs did not do enough in simply posing unreasonableness rhetorical questions rather than “show” the appellate court that the award was patently unreasonable.

     They then argued that the fee motion was deficient because the defendants did not file copies of their fee agreements in connection with the motions. This one lost “ . . . as plaintiffs fail to offer any authority on that point.” (BLOG OBSERVATION—This argument was likely not going to prevail given that, under the Business and Professions Code, fee agreements are confidential attorney-client communications.)

     Because plaintiffs did not meet their burden in showing error, the fee award was sustained on appeal.

Fee Substantiation: Plaintiff’s Declaration About Hourly Rates And Small Law Firm Survey Deemed Sufficient Substantiation For Fee Request, Especially Given No Challenge By The Defense

Third District Also Addresses Clerical Time and Multiplier Issues.

     Plaintiff won a jury verdict of $16,536 on a failure to accommodate discrimination claim. Under the fee-shifting provisions of the Fair Employment and Housing Act (FEHA; Government Code section 12965(b)), the trial court awarded plaintiff $189,503.40 in fees, after lodestar deductions for clerical tasks, duplicative entries, and excessive travel time and then enhanced by a 1.5 multiplier (out of a requested $171,981 lodestar and requested 2.0 multiplier). Defendant Club Fresh was unhappy, appealing the fee award.

     The Third District affirmed in Maldonado v. Club Fresh, Case No. C055954 (3d Dist. Oct. 9, 2009) (unpublished).

     Club Fresh argued that plaintiff’s declaration about reasonableness of hourly rates was incompetent to prove reasonableness of the fees. Actually, this was wrong—a declaration of plaintiff’s counsel is sufficient evidence of the market rates charged in the legal community, especially where no evidence is presented to the contrary. (Davis v. City of San Diego, 106 Cal.App.4^th 893, 902-904 (2003); Graciano v. Robinson Ford Sales, Inc., 144 Cal.App.4^th 140, 154 (2006); MBNA America Bank, N.A. v. Gorman, 147 Cal.App.4^th Supp. 1, 13 (2006); but see Nichols v. City of Taft, 155 Cal.App.4^th 1233, 1237-1238 (2003) [different result where defense presented opposition declarations on local community legal rates].) Here, Club Fresh presented no contrary proof. Also, the appellate panel did note that there was corroboration from a CPA expert, who used information from Altman & Weil, Inc., The Small Law Firm Economic Survey (2006) and International Paralegal Management Association and Altman Weil, Inc., Annual Compensation Survey for Paralegals/Legal Assistants and Managers (2006).

     Defendant next attacked the allowance for clerical services. The appellate court found that discounts had been made for attorney clerical work, but that clerical services essential to legal representation and ordinarily billed in the legal marketplace may be included in a fee award. (Salton Bay Marina, Inc. v. Imperial Irrigation Dist., 172 Cal.App.3d 914, 951 (1985).)

     Club Fresh attacked the 1.5 multiplier granted by the trial court in the fee award. Although attacking the lower court’s failure to articulate a reason for the multiplier, the appellate panel observed that the trial court is not required to issue a statement of decision with regard to a fee award. The multiplier was justified based on the contingency risk to the case, the complexity of the issues, and the need to encourage private attorneys to litigate these types of cases.

     Club Fresh was shocked at the size of the award as compared to the modest jury verdict. However, the Court of Appeal countered that California does not impose a rule of proportionality on fee awards and has rejected federal rules that limit fee enhancements generally and exclude consideration of the contingent nature of the payment. (Ketchum v. Moses, 24 Cal.4^th 1122, 1140-1141 (2001) [one of our Leading Cases].)

     However, the appellate court denied plaintiff’s requests for an award of fees on appeal, finding it did not go the merits of her underlying claims but only the fee award itself.