CALIFORNIA ATTORNEY'S FEES

Equity: Losing Ex-Client Was Entitled To Have The Lower Court Gauge If Her Medical Disabilities Prevented Her From Contesting Post-Arbitration Trial Court Proceedings Where She Was Found Liable To Ex-Attorney For Unpaid Attorney’s Fees

Lower Court’s Failure To Consider The Extrinsic Mistake Motion To Vacate Judgment In Post-Arbitration Proceedings Was Error.

               In Mehr v. Korbin, Case No. B335052 (2d Dist., Div. 4 Apr. 25, 2025) (unpublished), ex-client and ex-attorney got into a dispute on the division of attorney’s fees from a third-party global settlement, agreeing to arbitrate the dispute.  Ex-attorney received most of what he wanted, prompting proceedings to vacate or to confirm the arbitration award.  Ex-client did not respond to the petition to confirm, nor appear at the hearing, with judgment entered on the arbitration award in ex-attorney’s favor.  Subsequently, ex-client filed a motion to vacate the judgment under CCP § 473.5 and the equitable doctrine of mistake, arguing that she was disabled because of domestic violence and resulting medical issues.  The lower court denied the motion, finding it was untimely under section 473.5 but apparently not considering the equitable mistake ground raised by ex-client.

               On appeal by ex-client (who relied solely on the equitable mistake argument), the 2/4 DCA reversed and remanded.  Equitable relief for extrinsic mistake is an available ground for a motion to vacate a judgment—with the litigant needing to show (1) a meritorious defense; (2) a satisfactory excuse for not presenting a defense; and (3) diligence in seeking to set aside the judgment once discovered.  (Rodriguez v. Cho, 236 Cal.App.4^th 742, 750 (2015).)  Although not intimating how the decision should go on remand, the reversal was grounded in the lower court abusing its discretion by not considering her equitable ground for relief.

Employment: Based On A Prior Reversal And Remand, Prevailing Employee On A Wage Statement/Personnel Record Turnover Violations Properly Awarded Fees Of $23,035.75

However, Employer Was Awarded $32,682.11 In Appeal Costs. 

               In Ortega v. Carson Wild Wings, LLC, Case No. B338378 (2d Dist., Div. 1 Apr. 24, 2025) (unpublished), employer and employee had a prior appeal by which a fairly sizable jury verdict and attorney’s fees award in employee’s favor was reversed, but remanded for a determination of appellate costs and the lower court’s determination of any fees for employee based on a partial victory.  The lower court awarded employee $23,035.75 for some minor employment violations, as well as appeal costs of $32,682.11 to employer. 

               Employer appealed the fee award to employee.  Employee did have fee entitlement under Labor Code section 1198.5 for employer’s failure to provide her wage statements and personnel records.  Nothing in the prior opinion negated her entitlement to fees, so the modest fee award was affirmed on appeal.

Section 998: Rejected Defense Offer Of $15,000, Where Plaintiff Recovered Nothing, Justified Award Of Defense Costs Request In An Unruh Act Case

Defense Was Awarded $67,313.97 Under § 998, Applicable To Unruh Act Claims.

               In Hughes v. Target Corp., Case No. H050996 et al. (6^th Dist. Apr. 22, 2025) (unpublished), plaintiff brought an Unruh Act claim against defendant based on an altercation with Target’s security guard.  She lost.  Earlier, she had rejected a $15,000 CCP § 998 pre-trial offer to settle after depositions were taken and an unsuccessful mediation took place.  The defense sought costs of $67,313.97 based on the section 998 rejection, with all of it awarded by the lower court.  Plaintiff’s appeal did not gain anything more on this costs-shifting issue: the 998 offer was done properly, it does apply in the Unruh Act context, and plaintiff had plenty of knowledge with respect to making an informed decision on accepting the offer.

Homeowner Associations, Prevailing Party: HOA Owner Properly Denied Attorney’s Fees Because HOA Dismissed Complaint Against Him After Defeating Cross-Claims, So No One Technically Prevailed

HOA Did Get Prior SLAPP Fees For SLAPPing HOA Owner’s Cross-Complaint.

               Loma Linda Homeowners Assn. v. Aquino, Case No. D085390 (4^th Dist., Div. 1 Apr. 22, 2025) (unpublished) is a study on how lower and appellate courts “do justice,” within the confines of legal principles, in HOA owner and HOA disputes.  They are ugly, coming to disparate results—HOA owner wins big, HOA wins big, both sides get mixed results, or both sides go home unvindicated.  In this one, HOA owner did not get the fees he wanted.

               HOA owner was sued for delinquent fees, cross-complaining against HOA, several others, and the HOA attorneys for assessing fraudulent, delinquent assessments.  HOA dismissed its complaint after winning a SLAPP motion against HOA owner’s cross-complaint.  As pertinent for the appeal, HOA owner moved for prevailing party attorney’s fees under the Davis-Stirling Act (Civ. Code, § 5975(c)) to the tune of nearly $100,000, arguing the HOA’s voluntary dismissal of its action meant that HOA owner prevailed.  The lower court denied HOA owner’s request for fees.

               Aside from a deficient record and untimely augmentation request (issues that appellate attorneys would be keen on), the appellate court found that neither side prevailed in this case, finding that Hsu v. Abarra “prevailing party” principles applied under the Davis-Stirling Act fee-shifting statute.  HOA dismissed its complaint, and HOA owner did not prevail on his cross-complaint, such that the denial of fees was proper.

Appeal Sanctions, Costs, Family Law: Although Prevailing Party On Appeal Entitled To Costs, There Was No Bases For Appeal Attorney’s Fees Or Appellate Sanctions

Sanctions Award Under Family Code Section 271 Was Defective Because Prevailing Party Failed To Give Notice Of Seeking This Relief.

               In Marriage of Terry, Case No. B334907 (2d Dist., Div. 6 Apr. 21, 2025) (unpublished), a prevailing party on appeal was awarded three components by the lower court:  (1) routine costs; (2) $23,587.20 in attorney’s fees on appeal (with no explanation); and (3) $2,340 in sanctions under Family Code section 271 for preparing and attending a hearing on these various issues.

               The 2/6 DCA affirmed the routine costs award, but it reversed the (2) and (3) components.

               Prevailing party timely filed a costs memorandum such that routine appellate costs were properly awarded.

               The problem with the appellate fees award was there was no contractual or statutory basis for a fee award, because prevailing party cites no substantive grounds to support a fee award in this marital dissolution case—a reversal as a matter of law. 

               With respect to sanctions, the appellate court concluded that prevailing party never raised section 271 as a basis for fees before the trial court—instead just claiming they fell within routine costs (although one needs an independent fee basis anyway).  So, the other side was given no opportunity to contest this issue, requiring another reversal as a matter of law.

Family Law: A Remand Is Required Where Family Law Judge Awarded Wife Needs-Based Fees Over The Requested Amount

Financial Need Analysis Needed To Be Fine Tuned.

               In Marriage of Hernandez, Case No. G062386 (4^th Dist., Div. 3 Apr. 17, 2025) (unpublished), Justice Delaney on behalf of a 3-0 panel reversed and remanded a $7,500 needs-based fee award to ex-wife when her attorney only said he charged her a flat $5,000.  The ultimate award could not be reconciled, although the matter was remanded to do a restudy of whether financial needs of the parties drove the result in some way. 

Costs: Appellate Court Rejects Argument That Confidentiality of Medical Information Act Precludes Award Of Costs To Prevailing Defendant

Appellate Panel Found No Prejudice For Premature Costs Memorandum Filing and Affirms Most Awarded Costs To The Defense.

               Doe v. Santa Cruz-Monterey-Merced Managed Medical Care, Case No. H051821 (6^th Dist. Apr. 17, 2025) (unpublished) is a situation where a defendant obtained summary judgment against plaintiff on a Confidentiality of Medical Information Act (Civ. Code, §56) claim.  Defendant filed a costs memorandum for recovery of routine costs, which the lower court granted after taxing certain costs such that the ultimate award was $19,065.72.

               Plaintiff appealed on three grounds, losing two and gaining some minor traction on the third.

               The initial argument that the premature filing of the cost memorandum was infirm was found unpersuasive, because it is a mere irregularity and there was no prejudice because the lower court did conduct a hearing on the cost issues.

               The second argument was that the CMIA does not allow recovery of costs to a prevailing defendant because the statute only mentions recovery of fees and costs to a prevailing plaintiff.  The appellate court rejected this argument because nothing in the CMIA disallows recovery of costs to the defense, relying on analogous reasoning from the California Supreme Court’s Murillo opinion in reaching that conclusion.

               Finally, the appellate court sustained the lower court awarding these costs: (1) videotaping depositions; (2) eCheck fee added to electronic filing charges; (3) remote appearance notice filing fees; (4) electronic filing fees charged by a third-party provider; (5) discovery motions; and (6) withdrawn motions.  However, it did reduce the costs award a little more by finding that a Portland attorney saying she had a San Francisco office should not have garnered deposition travel and meal expenses to the Bay Area office, as well as finding that electronic serving of document costs were merely convenient rather than necessary to the litigation.

Allocation, Civil Rights: Plaintiff Prevailing on a Bane Act Claim Awarded $829,702.50 In Attorney’s Fees

Although She Was Unsuccessful On Some Claims, The Work Was Interrelated Such That Neither Allocation Nor A Further Reduction Was Required.

               In Gonzalez v. County of Fresno, Case No. F086776 (5^th Dist. Apr. 16, 2025) (unpublished), plaintiff recovered on a Bane Act claim (which has a fee-shifting statute), even though she failed to recover on some theories and two other plaintiffs were unsuccessful on the civil rights claims.  The jury awarded her $500,000 against three defendants.  She then moved for attorney’s fees of a little over $1.659 million inclusive of a 2.0 multiplier.  The lower court awarded her $829,702.50,

               Defendants’ challenges on appeal—that her work in related federal litigation and her partial lack of success required a further reduction—were rejected by the appellate court.  Under the abuse of discretion standard, the federal work was related to the state court work, and plaintiff’s work on unsuccessful claims was related to work on successful ones, with no apportionment being required.  The Fifth District panel also rebuffed the defense suggestion that the lack of success by other plaintiffs should be used for purposes of gauging her success. 

Fees As Damages: Fees Properly Awarded As Damages To Prevailing Party In A Slander Of Title Action

Routine Costs Were Also Awarded, No “Double Dip.”

               In California State Grange v. San Louis Obispo Guild Hall, Case No. B326399 (2d Dist., Div. 6 Apr. 15, 2025) (unpublished), among other issues, the appellate court affirmed an award of fees as damages to a prevailing party on a slander of title claim.  Fees and costs necessary to clear title or remove a doubt cast on it by defendant’s falsehood are proper pecuniary damages for purposes of a slander of title cause of action.  (Summer Hills Homeowners’ Assn., Inc. v. Rio Mesa Holdings, LLC, 205 Cal.App.4^th 999, 1030 (2012).)  The panel rejected the argument that it had to be determined at a trial, because a noticed motion procedure is the equivalent of a trial on this issue.   Finally, an award of routine costs was no “double dip” because it was separate from the fees recovered as damages.

Arbitration, Special Fee Shifting Statutes: Plaintiff/Former Client Failed To Timely Reject The Award By Filing An Action After Service Of The Award And Failed To Timely Move To Vacate The Award

MFAA Deadlines Are Strict, Not Subject To CCP § 473 Relief.

               Plaintiff/former client in Rossi, Hamerslough, Reischl & Chuck v. Shah, Case No. H051614 (6^th Dist. Apr. 11, 2025) (unpublished) was unhappy that her former counsel sent an outstanding $200,000 receivable notice even though they were instrumental in working up a case resulting in a verdict through replacement counsel and in an award of $395,000 in prevailing party fees against the verdict losing party.  She initiated Mandatory Fee Arbitration Act (MFAA) proceedings, even though no lawsuit was pending, aside from initiating JAMS arbitration to adjudicate her malpractice claims (although she later dropped the JAMS demand).  The MFAA panel sided with her former counsel, ordering the entire receivable paid. 

               Plaintiff failed to reject or file a new action within 30 days service of the award, a deadline which is not subject to CCP § 473 relief, in a situation where there was no action pending by former counsel.  She also failed to request a vacatur of the award within 100 days of award service, with former counsel waiting for that deadline to pass before moving to confirm the MFAA award.

               Plaintiff’s appeal of the results was unsuccessful. The appellate court found that the missed deadlines where critical and dispositive of her challenges for a revisit of the results.  The panel also did look at the denial of a new trial request on the merits (because the lower court did entertain it on the merits), but it found no prejudice flowing from its denial.  The moral of this case is to follow the MFAA and California Arbitration Act deadlines for getting a second bite from an adverse MFAA award or for challenging an arbitration award if that is the only remedy remaining.

Private Attorney General: $5,265,265.20 CCP § 1021.5 Fee Award Affirmed On Appeal

Case Involved San Francisco Penalty Refunds Of $1.7 Million Which Were Affirmed In A Prior Published Opinion.

               Plaintiffs in Gajanan, Inc. v. City & County of San Francisco, Case No. A168328 (1^st Dist., Div. 2 Apr. 10, 2025) (unpublished) sued defendants to obtain tax penalty refunds in a case under San Francisco regulations, eventually winning tax refunds of $1.7 million which were affirmed in a prior published opinion.  San Francisco later passed regulation amendments which were beneficial after the adjudication of plaintiffs’ lawsuit.  Plaintiffs then moved to recover $7,051,644 ($4,684,931 lodestar with some upper adjustments and discounts, and an ask for a 1.4 multiplier based on the contingency risk taken on by plaintiffs’ attorneys).  City argued the fee award should be $2.1 million.  After some very contested hearings involving a lengthy, detailed fee submission, the lower court awarded plaintiffs $5,265,265.20 under the private attorney general statute, CCP § 1021.5.

               The 1/2 DCA affirmed the award.  It agreed that plaintiffs vindicated an important right for Bay Area taxpayers in obtaining a broader interpretation of the standard for tax penalty waivers, with publication of the prior appellate opinion being probative on the issue.  Also, the panel concurred with the lower court’s assessment that plaintiffs’ suit was a catalyst for the subsequent beneficial regulatory amendments.  Private enforcement was necessary given the narrower stance taken by defendants on the penalty issue, and the actual costs of the litigation showed that the costs/benefit analysis favored plaintiffs.  The interest of justice factor under section 1021.5 did not support paying fees out of plaintiffs’ recovery.

               The attacks on the amount of the award were rejected also.  Although out-of-state Denver attorneys did less than 5% of the work on an overflow basis, this was not a disqualifying factor for those hours because plaintiffs had a California lead attorney supervising the case and actively involved in the matter.  The defense’s complaint about deposition preparation and 3 attorneys being at a deposition was found unpersuasive under the circumstances of the case, where City took 21 depositions and plaintiffs took 6.

Finally, 812 hours for “fees on fees” work was found warranted given the detailed nature of the fee submissions and the need to reply/file supplemental papers in response to the City’s opposition.

               BLOG BONUS COVERAGE:  City asked that plaintiffs’ supplemental declarations be stricken, a request denied by the lower court.  The appellate court reminded practitioners that they should ask for a continuance and permission to respond to supplemental declarations rather than just ask that those declarations be stricken—otherwise, waiver may come into play.

Civil Rights, Costs: Failure To Consider Plaintiff’s Financial Position In FEHA Costs Award Led To A Reversal

Other Items Also Had To Be Revisited.

               In the FEHA area, if appropriately raised, lower courts must take into account plaintiff’s financial situation in making a costs award against a non-prevailing FEHA plaintiff even where plaintiff’s case was deemed frivolous.  The lower court did award costs against the plaintiff, finding indigency was irrelevant in a FEHA case.  The Court of Appeal reversed in Ross v. Trustees of Cal. State University, Case No. B318731 (2d Dist., Div. 8 Apr. 7, 2025) (unpublished) because indigency is a factor to be considered.  Once that was recognized, the appellate court also questioned certain other routine costs which were granted but appeared suspect on appeal.  But we would surmise the indigency ground for reversal led the parade on the revisit of other costs in this appellate opinion.

Civil Rights, Costs: Lower Court’s Award Of Costs Against Dismissing FEHA Plaintiff Reversed As A Matter Of Law.

No Indication Case Was Frivolous.

               We have posted on an emerging trend in FEHA cases, which is that routine costs cannot be assessed against a non-prevailing plaintiff unless the case is deemed frivolous. Vanrooy v. Jacobes-Downing-Hughes, Inc., Case No. C100312 (3d Dist. Apr. 7, 2025) (unpublished) is a continuation of that theme.  There, plaintiff’s claims were dismissed for failure to serve a complaint within the three-year mandatory service period, with the lower court awarding routine costs.  The costs award was reversed on appeal because nothing indicated that plaintiff’s case was frivolous or that costs could be apportioned between FEHA and non-FEHA claims. 

Class Actions: 2025 Carlton Fields Class Action Survey Recently Issued

Survey Shows Increases In Class Action Case Numbers, Corporate Litigation Budgets Spent On Class Actions, And In-House Counsel Time Spent On Them, With Labor/Employment And Consumer Fraud Actions Leading The Class Action Pack.

               The 2025 Carlton Fields Class Action Survey, which is publicly available, has just been issued.  It has interesting trends for class actions, especially enlightening for class action defense attorneys and their clients.  Here are the highlights:

• • • Defense spending and the expected number of class actions hit a new record, a tenth straight year of growth. Spending on class actions accounted for 12.5% of corporate litigation budgets, surpassing $4 billion—up from 12.3% last year.
    • In-house counsel added the equivalent of one additional workday per week to manage class actions, with class action filings forecast to increase 20%.
    • Two-thirds of corporate counsel participating in the survey expect new class actions to arise after the use of generative AI.
    • Labor/employment and consumer fraud class actions are expected to lead the next class action wave.
    • Fewer companies use insurance to combat exposure to these cases, although they are implementing risk aversion techniques and many times are using mandatory arbitration clauses/class action waivers.
    • Companies settling class actions are asking for reversion clauses with respect to unclaimed settlement amounts, and cy pres features in settlement have dropped to zero recently.

Private Attorney General: Plaintiffs Properly Awarded Over $1 Million In Fees Under A Private Attorney General Catalyst Theory

Prelitigation Demand, Causation, And Primary Relief Elements Were Satisfied.

               Plaintiffs in San Diego Tenant Union v. San Diego Housing Comm’n, Case No. D081773 (4^th Dist., Div. 1 Mar. 28, 2025) (unpublished) sued defendant to force it to increase housing-assisted payments in wealthier neighborhood, advancing a perpetual segregation theory under FEHA, the Unruh Act, contractual breach under a HUD contract, and discrimination with respect to state-funded program.  Several years into the litigation, defendant voluntary increased payments in line with a HUD program, triggering plaintiffs to dismiss their action.  Both sides moved for fees and costs.  Plaintiffs obtained an award of $1,050,308.45 in fees and $4,691.31 in costs under a private attorney general catalyst theory.  In contrast, defendant’s requests were denied.  Defendant appealed.

               The 4/1 DCA affirmed, determining that the CCP § 1021.5 fees and costs award was proper under an abuse of discretion standard given the factual determinations which were made by the lower court.  Three arguments were raised, and they were resolved this way:  (1) the prelitigation demand requirement under Graham was satisfied by a letter and statements made in public hearings so as to put defendant on notice; (2) the lawsuit was a motivating catalyst because defendant did increase the payments based on inferences drawn from the evidentiary record; and (3) plaintiffs did obtain their primary relief because defendant did make a policy change during the course of the litigation.

Prevailing Party, Section 1717: Alter Ego Defendants Obtaining Dismissal Of Declaratory Relief Action Were Entitled To Attorney’s Fees Under A Fees Clause Between Plaintiff And The Signatory Defendant

$58,223 Was The Fee Award, With A Credit For Smaller CCP § 128.7 Sanctions.

               In ATM Professional, Inc. v. Repiping.com, Inc., Case No. B331046 (2d Dist., Div. 3 Mar. 26, 2025) (unpublished), alter ego defendants obtained a dismissal (based on failure to name an indispensable party, the contract signatory) in a declaratory relief complaint when the underlying contract had a fees clause.  The court awarded prevailing party fees of $58,223 to the successful alter ego defendants under Civil Code section 1717, even though the defendants granted a credit for a smaller CCP § 128.7 fees sanctions award.  Plaintiff’s appeal was unsuccessful because:  (1) a declaratory relief action is “on the contract” under Civil Code section 1717; (2) defendants were prevailing parties because they achieved their litigation objectives in obtaining a dismissal of the action; (3) no mediation condition precedents were unsatisfied because the claims were not directed at alter ego defendants; and (4) the assertion that fees were awarded for duplicative work was unsupported by specific objections to the requested fees. 

Sanctions: $200,000 CCP § 128.5 Sanctions Award Reversed Because It Was Not Causally Tethered To the Criminal Kidnapping Conduct At Issue

A Remand Was Ordered On The Civil Component And A Possible Penalty Payable To The Court.

               Talk about interesting issues; well, there was one considered by the 4/1 DCA in Razuki v. Malan, Case No. D082560 (4^th Dist., Div. 1 Mar. 20, 2025) (unpublished).

               There, plaintiff was assessed with a $200,000 sanctions award under CCP § 128.5 for his conduct in trying to kidnap defendant several months after the civil lawsuit was filed.  Although determining that criminal conduct could be sanctionable under section 128.5, the appellate court reversed because the evidence did not show that the awarded amount was causally tethered to the criminal conduct at issue.  In the end, the matter was remanded to revisit the sanctions amount to be awarded to defendant plus a possible penalty payable to the court under the sanctions statute (with the court penalty not having to be causally related to the underlying conduct). 

Cases Under Review, Section 998: California Supreme Court Decides That CCP § 998 Costs-Shifting Applies To Pre-Trial Settlements

. . . Although The Parties Are Free To Allocate Costs Differently Under Their Settlement.

               The California Supreme Court in Madrigal v. Hyundai Motor America, Case No. S280598 (Cal. Sup. Ct. Mar. 20, 2025) (published) decided that CCP § 998 offers do apply to pretrial settlements, rather than just judgments or arbitration awards, for purposes of cost-shifting, although the parties can allocate things differently under their settlement.  Our state high court placed a lot of primacy on the section 998 underlying principles to encourage settlements. 

Reasonableness Of Fees: 2/3 DCA Reverses An 82% Reduction In A FEHA Fee Request, Primarily Based On Reconstructed Time, As An Abuse Of Discretion And As Not Adequately Explained

“Haircut” Was Too Much, Requiring A Remand Revisit.

               In the fee award area, the amount awarded is governed by an abuse of discretion standard.  However, large “haircuts” sometimes strike an appellate panel as too arbitrary, requiring a revisit.  That was the case in Guevara v. Interstate Meat Co., Inc., Case No. B332546 (2d Dist., Div. 3 Mar. 18, 2025) (unpublished).

               Plaintiff settled a FEHA case, 18 months into the matter, for $25,000.  Plaintiff sought over $153,000 in fees based on some reconstructed time and without detailed time substantiation in some respects.  The trial court was troubled by the reconstructed time, allowing for none of it, thought the claimed hourly rates were excessive, and believed the fee request was excessive.  It reduced the fee request by 82%, awarding $27,500 in fees.

               The 2/3 DCA reversed, reasoning this way: (1) it was an abuse of discretion to reject reconstructed time outright; (2) the justices were not convinced that the explanation of the reduction sufficed, relying on the Kerkles and Gorman opinions which also involved substantial fee request reductions; and (3) the trial judge’s order did not show why he reduced plaintiff’s counsel’s hourly rates when the plaintiff’s showing was uncontested.

So, the matter was remanded for a revisit and a better explanation for any fee “haircut.”

Fee Clause Interpretation: Where Pleadings And Testimony Showed That A Brochure With A Fees Clause Applied To Services Different Than The Ones In Dispute, Trial Judge’s Conclusions That The Two Transactions Were Not Integrated Supported A Denial Of Fees

The Pleadings And Trial Testimony Supported That Result.

               Plaintiff restoration company won a $452,422 jury verdict against defendant apartment owner for water restoration services, then moving to recover $260,215 in attorney’s fees based on a fees clause in a prior brochure involving different apartment turn services which were paid off by apartment owner.  The lower court found that the pleadings and trial testimony showed the transactions were not the same, so the integration principle contained in Civil Code section 1642 was not viable, denying fees to the restoration company.

               The appellate court affirmed in Prestige Construction and Renovation Services, Inc. v. Reliant Real Estate Management, Inc., Case No. D084506 (4^th Dist., Div. 1 Mar. 18, 2025) (unpublished).  The integration question was one of fact, with substantial evidence showing the brochure fees clause did not apply to the later water restoration services resulting in the jury verdict.  Because there was no agreement with a fees clause (R.W.L. Enterprises v. Oldcastle, Inc., 17 Cal.App.5^th 1019, 1022, 1028 (2017)), the fee denial was warranted.