CALIFORNIA ATTORNEY'S FEES

Employment: Reversal Of Information Practices Act Claim Meant That Fee/Costs Denial Had To Be Reversed—Published Decision On IPA Fee-Shifting Statute

However, On Remand, Court Had To Decide Who Prevailed On A Practical Level Anyway.

               Wentworth v. Regents of the University of California, Case Nos. A168296/A168861 (1^st Dist., Div. 4 Sept. 30, 2024) (published) shows how reversal of a claim bearing fee exposure will result in a reversal of a fee denial, as a general rule.  However, the appellate court also sent some indications that the lower court needed to take a practical view of what side prevailed depending on what happened on remand.

               In this one, plaintiff lost at the summary adjudication stage on FEHA and Information Practice Act, Civ. Code, § 1798 et al. (IPA), claims, with the lower court denying plaintiff’s request for fees and costs in entirety.

               On appeal, plaintiff obtained a reversal on only the IPA claim, which meant the fee and costs denial had to be reversed also.  Because there was no published decision on the fee-shifting provision in plaintiff’s favor under Civil Code section 1798.46(b), the appellate court did clarify that there are two ways to potentially get fees—a judicial resolution in plaintiff’s favor or a decision that plaintiff was a catalyst for change.  But the appellate court did give some further observations for the litigants, which also apply to most fee issues:  how significant was the IPA win if a favorable judicial resolution is obtained later or how important was it under a catalyst theory given only obtaining a personnel file seemed to be the victory.

Requests For Admission: Litigant’s Appeal Fees In Sustaining Costs-Of-Proof Sanctions Were Properly Denied

CCP § 2033.420’s Language Does Not Allow For Recovery Because The Appellate Fees Were Not Linked To Obviating The Need For Proof.

               In Duncombe v. Barfresh Food Group, Inc., Case No. B334220 (2d Dist., Div. 2 Oct. 1, 2024) (unpublished), a litigant incurred appellate fees of $29,722,77 when defending a costs-of-proof sanctions order under CCP § 2033.420 in the amount of $38,920.14.  The lower court denied the request for appellate fees, with the 2/2 DCA agreeing the denial was correct.  The reason was that the appellate fees were disconnected from the purpose of the statute, which is to obviate the need for proof—a causation issue justifying the fee denial. 

Appealability, Family Law: Where Family Law Judge Expressly Reserved Findings On Fee Reasonableness For A Later Date, Pendente Lite Fee Order Appeal Dismissed

Appellant Can Be Free To Appeal When A Final Order Is Issued.

               In Marriage of O’Hill, Case No. G062146 (4^th Dist., Div. 3 Oct. 1, 2024) (unpublished), a family law judge expressly stated in his order that pendente lite fee orders were subject to reasonableness findings and further revisions at a later date.  The appellate court dismissed the appeal because even though a temporary support order in tandem with fee awards are generally appealable, the specific orders here were appealable in the future, with ex-husband simply needing to appeal in the future.

Appealability, Private Attorney General: Petitioners Obtaining Annulment Of TROs On Indoor Gatherings During COVID Not Entitled To CCP § 1021.5 Fee Recovery

$433,905 Was The Ask, But Nothing Awarded At Trial Level, Affirmed On Appeal.

               Financial incentives and avoidances are always at play in private attorney general fee requests.  Unfortunately, petitioners drew the short end of the stick at both the trial and appellate levels in Calvary Chapel San Jose v. Superior Court (6^th Dist. Sept. 30, 2024) (unpublished).

               People of the State of California obtained TROS against Chapel and its pastors to have them comply with COVID-19 health orders.  The People then commenced contempt proceedings against Chapel for violations of court orders, being granted contempt orders and monetary sanctions.  The Sixth District, in a prior opinion, annulled the orders and the sanctions, finding the indoor gatherings restrictions were unconstitutional after a SCOTUS decision that the lower court did not have the benefit of.  Chapel and one of the pastors brought an attorney’s fees motion under the private attorney general statute, seeking $433,905 in fees.  The lower court denied the request.

               The Sixth District affirmed.  It first had to face whether the order denying private attorney general fees is appealable because it occurred in the context of contempt proceedings, which are not appealable.  The appellate court decided to treat the appeal as a petition for writ of mandate for purposes of reaching the merits.  On the merits, the Court of Appeal found that Chapel’s self-interest in avoiding contempt findings and significant monetary sanctions was enough of a financial “positive side” to justify denial of the fee request, finding persuasive the reasoning in In re Head, 42 Cal.3d 223, 228 (1986).

In The News: Governor Newsom Signs Into Law New Statute Preventing Political Candidates From Defending Themselves From Felony Public Or Election Fraud Charges, Having To Return The Money If They Are Convicted

Statute Was Enacted Per AB 2803, Directed At Campaign Funds Used To Pay Defense Attorney’s Fees.

               Last Wednesday, Governor Newsom signed into law AB 2803, which amended Government Code sections 89513 and 89514 to require a political candidate, if convicted, to reimburse campaign funds used to pay attorney’s fees for certain felony public and election fraud convictions (such as embezzlement of public money, theft of public money, and perjury).  This was enacted in the wake of the highly publicized use of $300,000 in campaign funds by former Anaheim Mayor Harry Sidhu to hire his defense counsel.

Private Attorney General: Where Litigants Dismissed Claims Against Each Other, After Denial Of A Class Certification Motion, Defendant/Cross-Complainant Receiving No Judicial Relief Or $14 Million Class Action Objective Not Entitled To CCP § 1021.5 Fees

Published Decision Only Decided Plaintiff Had To Be Registered With State Bar, But It Did Not Adjudicate A Key Unclean Hands Defense.

               In LegalMatch.com v. Jackson, Case No. A169115 (1^st Dist., Div. 4 Sept. 26, 2024) (unpublished), defendant defended a suit by plaintiff LegalMatch.com after defendant did not pay subscription fees for connecting clients to lawyers, also filing a putative class action cross-complaint against LegalMatch.com.  In a prior appeal, the appellate court concluded LegalMatch.com was a referral service which had to register with the State Bar under Business and Professions Code section 6155, but it remanded the case for the lower court to evaluate whether defendant was barred by unclean hands because defendants violated the same B&P provision by obtaining clients through LegalMatch’s service.  On remand, the lower court denied defendant/cross-complainant’s class certification motion, with the parties voluntarily dismissing their claims against each other.

               This was not the end of the matter.  Mr. Jackson claimed success for purposes of obtaining an entitlement to private attorney general fees against LegalMatch.com in the sum of $940,000.  The lower court denied the fee request, a determination affirmed on appeal.

               Here were the problems which justified denial of the fee request because Mr. Jackson was not a successful party: (1) Mr. Jackson never obtained any judicial relief with respect to a monetary recovery or an injunction; (2) the unclean hands defense had not been adjudicated and acknowledged as important in the prior appellate opinion; and (3) Mr. Jackson did not achieve his litigation objectives of obtaining $14 million in class damages or an injunction ceasing LegalMatch.com’s operations altogether (versus Mr. Jackson’s defeat of LegalMatch’s $3,000 claim for unpaid subscription fees). 

Quantum Meruit, Retainer Agreements: $100,000 True Retainer Was Not That Based On Additional Qualifying, But Law Firm Was Entitled To Quantum Meruit Fees Minus An Offset For The $100,000 Retainer

Case Has A Very Scholarly Discussion Of Requirements For True Retainers.

               Boyadzhyan v. Geragos & Geragos, APC, Case No. B324420 (2d Dist., Div. 3 Sept. 26, 2024) (unpublished) is an interesting case and, for practitioners and ethics experts, has an excellent discussion on the differences between a true retainer, fixed fee, or retainer with hybrid components.

               Plaintiff client hired firm to represent him in a multi-million-dollar business dispute, paying the firm a “true retainer,” although the true retainer language also had fixed fee language pertaining to rendition of future services plus a contingency fee arrangement.  Shortly after the representation, plaintiff terminated firm’s representation, eventually obtaining a $3 million settlement through other efforts.  Plaintiff sued for return of the true retainer, malpractice, and other claims, while firm sued to collect quantum meruit fees for their work on the case prior to the settlement.  The lower court found that the $100,000 retainer was a true retainer, found against plaintiff on the other claims, and awarded firm $109,183.33 in quantum meruit fees.

               The 2/3 DCA did not give either side a clear win.  In a scholarly discussion of interest to practitioners drafting true retainers and ethics experts, it determined that the “true retainer” language was not sufficient because it also had “fixed fee” language resulting to rendition of future services, while a true retainer only relates to locking in the availability of counsel for the case.  However, the appellate court did sustain the quantum meruit award in favor of the firm, which meant that the $100,000 retainer received by the firm had to be applied against the QM award such that the matter was concluded.

               BLOG OBSERVATION—The “true retainer” issue embroiled two ethics heavyweights, Stan Lamport and David Parker.  Co-contributor Mike was on the USC Trojan Debate Squad when Stan was a member.  If he reads the decision rightly as far as the bottom line, although the appellate court did not say so outright, it looks like his opinion was found to be correct in the end on appeal.

Arbitration: Appellate Court Reverses Lower Court’s Denial Of Motion To Compel Arbitration Where Requesting Designer/Materialman Paid Arbitration Fees

Designer Did Not Have To Meet Payment Obligations By Contractor, So There Was No Waiver Or Forfeiture.

               Facts many times make the difference in the resolution of a dispute.  And that conclusion rang true in Mooradian v. Ingjaldsdottir, Case No. B331561 (2d Dist., Div. 7 Sept. 26, 2024) (unpublished).

               There, homeowners, designer, materialman, and contractor entered into separate contracts with arbitration clauses.  Once a dispute arose, all parties agreed to a consolidated arbitration to resolve pending disputes.  Homeowners, designer, and materialman paid their arbitration fees, but contractor did not, resulting in a termination of the arbitration.  Designer and materialman renewed a motion to compel arbitration, which was denied by the lower court because the two did not pay contractor’s arbitration expenses.  The 2/7 DCA, in an opinion authored by Justice Segal, reversed the arbitration denial.  Even though the parties agreed to a consolidated arbitration, designer and materialman did pay their fees under separate contracts with arbitration clauses such that they should not be held accountable to the separate breach by contractor, distinguishing Cintel v. Barna, 206 Cal.App.4^th 1383 (2012) in the process.

               BLOG OBSERVATION—Arbitration waiver principles have changed somewhat after the California Supreme Court’s Quach decision, with this unpublished opinion having a nice synopsis of the changes.

Section 1717: Defendant Obtaining Reversal Of Interference Claim Because It Was Based Entirely On Contract Was Properly Awarded Section 1717 Fees

After The Successful Appeal, Defendant Awarded $604,700 In Fees.

               In the Civil Code section 1717 area, only contract-based claims are allowable for recovery purposes, with tort claims usually not qualifying.  However, that “usually” caveat has an important section:  where a tort is based on a duty created solely by a contract, enforcement of that contract does give rise to section 1717 exposure. 

               That is what happened in Drink Tank Ventures, LLC v. Real Soda in Real Bottles, Ltd., Case No. B328365 (2d Dist., Div. 2 Sept. 26, 2024) (unpublished).

               Plaintiff convinced a jury to award it $350,000 in compensatory damages on a prospective advantage interference claim premised entirely on a breach of contract, with the appellate court reversing it as a matter of law because there was no independent wrong other than just a breach of contract (which also vacated the lower court’s fee award of $280,700 to plaintiff).  Prevailing defendant sought section 1717 fees on remand, being awarded $604,700 (out of a $906,825 “ask”). 

               The 2/2 DCA affirmed.  Recognizing that tort actions generally are not compensable under section 1717, the gravamen of plaintiff’s contract instead was a tort claim resting on a duty created by contract such that fees were properly awarded to defendant.  (Artnz Contracting Co. v. St. Paul Fire & Marine Ins. Co., 47 Cal.App.4^th 464, 478-479.)

Arbitration, Family Law: MFAA Fee Process Is Not Required For Fees To Be Awarded To Attorney Representing Minor In A Custody Dispute

Family Code Section 3153 And CRC 5.241 Supported This Conclusion.

               In Marriage of Thompson, Case No. B332150 (2d Dist., Div. 2 Sept. 24, 2024) (unpublished), ex-spouses were embroiled in a “high conflict” custody dispute over their minor child, with the family court appointing a family law attorney to represent the minor child and with her costs to be split 50/50 (over no objection by either side).  All fine until disputes arose on minor child’s attorney’s fee requests, after ex-wife did not pay some fees but ex-husband did pay his share.  Ex-wife argued that she had a right to pursue a Mandatory Fee Arbitration Act (MFAA) arbitration before minor child’s attorney sought fees from the family court.  The family court did not agree, awarding fees to attorney as against ex-wife. 

               Ex-wife appealed, arguing the MFAA applied to her fee dispute with minor child’s attorney.  The 2/2 DCA disagreed, determining that Family Code section 3153 and CRC, Rule 5.241 address the payment of fees to a minor child’s attorney and with the family court to adjudge the determination of such fees.  Because minor child’s attorney’s fees were to be determined by statute, the MFAA did not apply.

Arbitration: Employer Did Not Blow 30-Day Payment Window Under CCP § 1281.98 Because Employee Did Not Properly Serve The Arbitration Demand, Allowing For Payment Later

Denial Of Motion To Compel Arbitration Is Reversed And Matter Ordered To Arbitration.

               CCP § 1281.98 is the 30-day window for an employer to pay arbitration expenses under penalty of going to court rather than arbitration under the contractual arbitration clause with employee.  This statute has produced much litigation; and, as we have indicated on past posts, the California Supreme Court is considering whether the statute is preempted by the Federal Arbitration Act (an issue generating a split among intermediate appellate courts).  However, some of the cases are fact specific, as is the one we discuss now.

               In Thompson v. SF Markets, LLC (dba Sprouts Farmers Market), Case No. A167659 (1^st Dist., Div. 5 Sept. 23, 2024) (unpublished), employee filed a putative class action which drew employer’s response to file a motion to compel arbitration under a contractual arbitration clause, which motion was unopposed and granted.  Eight months later, employee submitted an arbitration demand for his individual claims.  However, he did not serve the demand properly as required by the arbitration agreement.  Employer paid the arbitration invoice over 30 days after email receipt from JAMS.  The lower court determined (1) the employee had complied with the earlier order in the first court action to arbitrate through his service efforts; and (2) employer had not complied with § 1298.98, thereby denying a renewed order for arbitration after employee filed a second putative class action in superior court.

               The appellate court reversed and directed that the arbitration take place per the parties’ arbitration agreement.  The central issue was whether employer had paid late, with the 1/5 DCA determining that employee had failed to properly initiate arbitration through defective service on employer (CCP § 1281.97(a)(2)) such that employer’s late payment was appropriate given that the prior invoice was of no force and employee had not substantially complied with service requirements.  It also found no waiver by employer’s subsequent payment.

Ethics, Liens For Attorney Fees: Attorney’s Lien Had Superiority Over Surety’s Later Assignment Of Claims, Gaining Almost $1.39 Million From Settlement Proceeds

Lower Court Did Not Err In Adjudicating Lien Claim In The Underlying Action Because The Parties Stipulated To The Procedure.

               Plaintiff’s attorney in USS Cal Builders, Inc. v. San Francisco Bay Area Rapid Transit Dist., Case No. A168102 (1^st Dist., Div. 5 Sept. 20, 2024) (unpublished) had a lien on settlement proceeds which was way earlier in time than plaintiff’s assignment of claims to its surety, which intervened in the case.  Plaintiff and BART reached a $1.6 million settlement, with the parties stipulating that the lower court could adjudicate who had superiority to the settlement proceeds.  Plaintiff won that battle, being awarded almost $1.339 million. 

               Surety appealed, but it was unsuccessful.  Surety first argued that the lower court had no jurisdiction to adjudge the lien claim in the underlying action, which is the general rule but subject to an exception that the trial judge can if the parties allow him/her to—which happened based on the stipulation.  The attorney’s lien did have superiority over the general assignment, with surety even recognizing that in a pledge agreement indicating surety’s rights were subject to attorney lien claims.  An equitable subrogation argument was rejected because the attorney did no wrongdoing and was entitled to the settlement proceeds based on his lien/work on the case.  Surety argued that it had been a former client of the attorney so that there was a conflict of interest, but attorney had obtained a waiver from surety previously. 

Indemnity: Plaintiff Winning Its Contract Action Properly Denied Fee Recovery Because The Purported Fee Clause Was Actually A Third-Party Indemnity Clause Not Allowing For Such Recovery In A Direct Action Between The Contracting Parties

1/1 DCA Found Alki Opinion To Be Persuasive.

               Clauses providing for indemnification against third party claims are frequently determined not to give rise to attorney’s fees recovery in an action involving the two contracting parties.  In determining if an indemnity versus a true fees clause is involved, courts not only look at the contractual language but the overall structure of indemnification/insurance provisions.

               Plaintiff in HR E&I, Inc. v. Ahn, Case No. A168047 (1^st Dist., Div. 1 Sept. 20, 2024) (unpublished) won a direct contract case and defeated defendant’s cross-claims, awarded almost $1.78 million after a four-week bench trial.  However, the lower court denied attorney’s fees to plaintiff, finding two indemnification provisions were not true fee clauses. 

               The 1/1 DCA affirmed.  It found that the language in the two provisions, coupled with the overall structure of indemnification/insurance clauses, demonstrated that fees were only recoverable for actions involving third party claims—finding persuasive the reasoning in Alki Partners, L.P. v. DB Fund Services, LLC, 4 Cal.App.5^th 574 (2016), which involved an indemnity clause with similar wording. 

Costs: Fifth District Agrees That Unity Of Interest Principle Was Repealed In The Routine Costs Area

It Endorsed The Reasoning In The Charton Opinion.

               In Mosley v. Pacifica Bakersfield, L.P., Case No. F084699 (5^th Dist. Sept. 20, 2024) (unpublished), a co-defendant dismissed right before trial was awarded a little over $28,000 in routine costs against plaintiff, who won sizable damages.  The Fifth District affirmed, deciding that (1) CCP § 1032(a)(4) and (b) made the dismissed defendant a prevailing party, and (2) Charton, 247 Cal.App.4^th 730, 734 correctly reasoned the “unity of interest” principle was repealed from the costs statute such that a lower court has no mandatory duty to apportion where multiple defendants are represented by the same counsel.

Fee Clause Interpretation, Settlement: Settlement Agreement Language Only Allowed Enforcement Activities Associated With The Settlement

Other Non-Settlement Activities Were Improperly Awarded As Attorney’s Fees.

               Bodero & Associates, Inc. v. Gorman, Case No. A168856 (1^st Dist., Div. 5 Sept. 20, 2024) (unpublished) is a good example as to when four-corner contractual interpretation will govern a fee dispute, unfortunately requiring a limited remand.  Parties entered into a settlement agreement with standard terms, requiring payment of a monetary judgment if there was a breach of the settlement, requiring payment of potential fees and costs if there was a breach of the settlement, and otherwise requiring no fees and costs expended previously in the case being awarded to other side.  Plaintiff was not paid, obtained judgment for the specified amount and requested all attorney’s fees since the action was filed.  The lower court granted the fee request, but that led to a reversal.  The problem was that the fee award was not calibrated to the settlement language only relating to fees incurred to enforce the settlement agreement, not prior activities.  Reversed and remanded. 

Arbitration: Anoke Decision Now Published

CCP § 1281.97 Deadlines Run From Second Invoice Where Payment Was Requested.

               On August 28, 2024, we posted on Anoke v. Twitter, Inc., Case No A168675 (1^st Dist., Div. 5 Aug. 27, 2024), unpublished at the time, and now published on September 18, 2024.  Now citable, this case holds that the CCP § 1281.97 deadlines run from when a definitive invoice was sent to the employer to pay arbitration expenses, not from a first invoice mistakenly paid by employee but later corrected. 

Section 1717: Individual Suing As A “DBA” Or Suing On Behalf Of A Corporate Entity Property Saddled With Attorney’s Fee For Losing A Suit With Contractual Fee Exposure

Nonsignatories Stepping Into the Shoes Of Contractual Signatories Can Be Liable For Fees.

               In Del Rio v. Weis, Case No. A167335 (1^st Dist., Div. 1 Sept. 17, 2024) (unpublished), Mr. Del Rio sued Homeowners for breach of a home remodel construction contract between Mr. Del Rio’s business, JODT, and Homeowners.  Homeowners won and were granted attorney’s fees under a contractual fees clause.  On appeal, Mr. Del Rio argued he was not personally liable for fees because he was not, individually, a party to the contract.  His appeal was unsuccessful.  First, he sued as Mr. Del Rio dba JODR such that he alleged he was a party to the contract.  Second, he—as a nonsignatory—stood in the shoes of the contractual signatory because he sued on its behalf and was liable for fees accordingly.

Special Fee Shifting Statutes: The Limitation Of Liability Act For Shipowners Required A Reversal Of A Single Claimant’s Foray Into State Court Based On Third-Party Claims And Requests For Attorney’s Fees Under The Act

The Case Was A Multiple Claimants Matter, With All The Claimants Having To Reach Stipulations With Protections To the Vessel Owner Before The Matter Could Return To State Court.

              Well, we have a maritime proceeding to blog on.

               In In re Live Life Bella Vita, LLC, Case No. 23-55613 (9^th Cir. Sept. 12, 2024) (published), the Ninth Circuit considered the Limitation of Liability Act, 46 U.S.C. §§ 30501-30530, which caps liability so that a shipowner is not on the hook for more than value of the vessel and cargo and which sets up special procedures for a federal court to apportion this money among injured parties. 

               This published case involved a sole injured maintenance driver who argued the Limitation Act did not apply because he fell within the “single claimant” exception, even though the Act does limit liability and keeps injured parties from trying to circumvent the cap by going to state court unless protective stipulations are entered into by the parties.  The district court applied the exception, lifting the federal injunction and allowing the matter to proceed in state court—with adequate stipulations by vessel owner—despite claims by third parties and requests for attorney’s fees.  (Parties seeking attorney’s fees are considered separate claimants.)  In light of the third-party claims and specter of fee recovery, the Ninth Circuit reversed, finding that multiple claimants were involved and that all of those claimants had to sign protective stipulations before the matter could return to state court.

Lodestar, Multipliers: Lower Court’s Reducing Hours/Hourly Rate For Two Attorneys/One Paralegal And Not Applying A Positive Multiplier Was No Abuse Of Discretion In Routine FEHA Employment Case

Trial Judge Applied The Correct Lodestar And Multiplier Factors, Awarding Plaintiff’s Attorneys $1,054,494 In Fees Under FEHA.

               In Young v. Dept. of Public Social Services, Case No. B329748 (2d Dist., Div. 5 Sept. 6, 2024) (unpublished), plaintiff won $3.5 million in damages on a retaliation claim, but plaintiff’s attorneys sought a $1.498 million lodestar augmented by a 2.5 positive multiplier, for a total fee award of over $3.745 million.  After a contested fee motion, the lower court reduced the hourly rates of two attorneys (from $795 to $600 for a more senior attorney and $750 to $550 for a younger attorney) and the hourly rate of a paralegal (from $250 to $150), pared some hours, and denied the multiplier request.  The total fee award was $1,054,494.

               The 2/5 DCA affirmed under the deferential abuse of discretion standard.  The defense expert provided some context for reduced rates, such that the hourly rates awarded were not irrational.  Although the case was taken under a contingency arrangement, the lower court’s perception that the lodestar also captured the multiplier factors was not unreasonable given that the matter was a routine FEHA case with no novel issues—otherwise, all FEHA contingency cases would automatically result in a multiplier.

Requests For Admission: Defendant Summary Judgment Winner Properly Denied “Costs Of Proof” Sanctions For Plaintiff’s Denial Of Two RFAs

Defendant Failed To Prove True The Matters At Issue Under The RFAs.

               In Decuir v. West Coast Escrow, Case No. B325278 (2d Dist., Div. 4 Sept. 5, 2024) (unpublished), defendant won a summary judgment motion, later moving for $36,000 in “costs of proof” sanctions under CCP § 2033.420 for plaintiff’s denial of 2 RFAs—with “costs of proof” sanctions available to either a summary judgment grant winner or trial winner.  The lower court denied them on two grounds: (1) plaintiff had reasonable grounds upon which to deny the RFAs, and (2) insufficient evidence was presented to justify the amount of fees being sought.

               The 2/4 DCA affirmed, but for a different reason.  The RFAs were framed in the negative, with the defendant failing to prove true the matters sought to be admitted, given this is a difficult task for purposes of negating a negative and because the defense did not foreclose all facts which could support the allegations in the lawsuit.