CALIFORNIA ATTORNEY'S FEES

Section 998: Defense CCP § 998 Offer Was Too Uncertain Where It Referenced An Undisclosed Settlement Agreement With Releases To Plaintiff Offeror

Offeree, Although Might Prudently Ask For Clarification, Is Under No Legal Obligation To Ask For Clarification Of Section 998 Offer.

            The defense in an automobile personal injury accident case involving two plaintiffs made a CCP § 998 offer to the more severely injured plaintiff which was conditioned upon “the execution and transmittal of a Settlement Agreement and Release of All Claims by PLAINTIFF in favor of DEFENDANTS; that Settlement Agreement and Release of All Claims to be drafted by counsel for the DEFENDANTS.”  The trial judge, after the severely injured plaintiff obtained a favorable jury verdict, found the section 998 offer to be uncertain, awarding $29,000 in costs to plaintiff and denying the defense $160,000 in requested costs.

            The Fourth District, Division 2 affirmed the uncertainty determination in Soliz v. City of Big Bear Lake, Case No. E067555 (4^th Dist., Div. 2 July 16, 2019) (unpublished).

            Relying on Sanford v. Rasnick, 246 Cal.App.4^th 1121, 1131-1132 (2016), the appellate court concluded that the offer was invalid because it was conditioned on an undescribed and unrevealed settlement agreement, unlike the situation in Fasberg Construction Co. v. Housing Authority of City of Los Angeles, 152 Cal.App.4^th 720, 765 (2007) where the section 998 offer included the proposed settlement agreement so that the offeree could evaluate the full terms of the 998 offer.  The defense tried to argue that the offeree was obligated to seek clarification of the offer, but the 4/2 DCA panel found no such legal obligation to exist given that the offeror is responsible for ensuring that the 998 offer is valid.  In response to the argument that not requiring the offeree to ask for clarification would discourage settlement of lawsuits, the Court of Appeal answered that this was untrue because an offeree risks that a lower court might find an offer to be valid if the offeree does not ask for clarification—in a word, the offeree also has risks in not seeking clarification. 

Special Fee Shifting Statute: County’s Adherence To Privileges And Exemptions Until Last Moment Did Not Prevent California Public Records Act Petitioner From Receiving Prevailing Party Attorney’s Fees

Petitioner Was A Catalyst For Production Of Requested Documents.

            California Public Records Act has a fee-shifting statute in favor of a prevailing party petitioner under Government Code section 6259(d), one which is liberally construed in order to encourage governmental entities to produce documents to the public except for ones which fall under certain restrictions/exemptions.  In Saint-Fleur v. County of Fresno, Case No. F075060 (5^th Dist. July 15, 2019) (unpublished), plaintiff was declared the prevailing party and awarded fees against County, after the lower court ordered County to produce certain public records.  County claimed that it had produced documents in response to previous litigation, but the record showed that it had claimed privileges/exemptions and only at the eleventh hour confirmed that the documents ordered to be produced had indeed been produced in other litigation.  The Fifth District found the fee award appropriate given that petitioner could not have known this and was the catalyst for County’s confirmation about the nature of the responsive documents.

Special Fee Shifting Statute: Governmental District Properly Awarded $8,160 In Discretionary Attorney’s Fees Against Plaintiff Losing Brown Act Challenge

Plaintiff Wanted Agenda Detail Not Required Under The Brown Act.

            In Olson v. Hornbrook Community Services Dist., Case No. C086760 (3d Dist. July 15, 2019) (unpublished), plaintiff’s Brown Act challenge against the District was blown out when the lower court sustained a demurrer without leave to amend.  The Brown Act has a discretionary fee-shifting provision by which a trial judge can award court costs and reasonable attorney’s fees where a defendant prevailed in the action and the court finds that the action was “clearly frivolous and totally lacking in merit.”  (Gov. Code, §54960.5.)  The lower court must provide some written findings on what conduct was found “sanctionable” under this provision.  (Boyle v. City of Redondo Beach, 70 Cal.App.4^th 1109, 1120 (1999).)  The trial judge in Olson determined that the Brown Act did not require the agenda detail claimed by plaintiff, awarding $8,160 in discretionary fees to the District.  That determination was affirmed on appeal because it was based on the record and the trial court’s tentative was detailed in showing why the agenda specification advanced by plaintiff was not required.

Appealability: Plaintiff’s Filing Of A Cross-Appeal, Claiming Fee Award Was Too Low, Did Not Preserve Challenge To Fee Award

Proper Method Was To File A Separate Appeal, Although Fee Award Had To Be Reconsidered Due To Reversal Of Economic Damages Component Of Jury Verdict.

            Kealy v. Ford Motor Credit Co., LLC, Case No. B286410 (2d Dist., Div. 5 July 15, 2019) (unpublished) counsels to plaintiffs believing that a fee award is too low, where the defense has appealed from the underlying judgment, to preserve a challenge to the fee award by separately appealing it, not attempting to challenge it through simply filing a cross-appeal.

            In this one, plaintiff challenged an attorney’s fees award under the Consumer Credit Agencies Reporting Act in the amount of $325,709 because it was much lower than plaintiff’s requested $772,043.95, after winning a jury verdict with economic damages of $345,000, with non-economic damages of $25,000, and with punitive damages of $9,212.92.  The defense appealed the judgment and fee award, with plaintiff cross-appealing the fee award on the ground it was not enough.

            The appellate court reversed the economic damages award as a matter of law so that the fee award did have to be revisited, but affirmed the remainder of the judgment.  However, plaintiff’s challenge that the award was not enough could not be entertained because the proper vehicle to challenge was through a separate appeal, not a cross-appeal.  (Eisenberg et al., Cal. Practice Guide:  Appeals and Writs (The Rutter Group 2017) ¶ 3:175, p. 3-79.)

Appealability: Failure To Appeal From Separate Fee Award Required Dismissal Of Appeal

Appellate Court Had No Jurisdiction To Entertain Challenge To Fee Award.

            We have posted on this topic many times, but McKillop v. Wallace, Case No. B283783 (2d Dist., Div. 5 July 15, 2019) (unpublished) is yet another cruel reminder to litigants and counsel to separately appeal post-trial fee awards.  In this one, plaintiff was hit with adverse fee awards against two defendants totaling about $195,000 in an unsuccessful breach of contract suit.  However, plaintiff only appealed the underlying judgment, not the subsequent fee award.  Plaintiff’s appeal was dismissed because the appellate court had no jurisdiction to entertain the fee award absent a separate timely notice of appeal.  (Nellie Gail Ranch Owners Assn. v. McMullin, 4 Cal.App.5^th 982, 1007-1008 (2016).)

Intellectual Property: U.S. Court Of Federal Claims Senior Judge Lettow Awards Significant Attorney’s Fees, Expert Fees, And Costs In Favor Of Successful Patent Infringement Plaintiff And Against The USA

Senior Judge Found That Litigation Funding Did Not Divest Plaintiff From Fee Recovery And That AIPLA Survey Of Hourly Rates Was Most Relevant Starting Point For Gauging Rates.

           Because litigation funding is becoming an increasingly used tool to allow plaintiffs to prosecute complex civil cases, we post on FastShip LLC v. U.S., No. 12-484C (U.S. Court of Federal Claims June 27, 2019), authored by Senior Judge Charles F. Lettow.

            In this case, plaintiff FastShip sued the U.S. for patent infringement under 28 U.S.C. § 1498(a), which allows the patent owner to sue the U.S. under specified conditions for infringing a patent without a license.  Plaintiff eventually won almost $6.5 million in damages, which actually became larger after an appeal and other activities.  Plaintiff financed expenses partly through the use of a litigation funding entity (around $600,000).  Plaintiff then moved to recover almost $7 million in attorney’s fees, almost $1.75 million in expert fees, and $2.43 million in costs (mainly electronic discovery and specialized computer display expenses).

            The basis for fee entitlement was section 1498(a), which was amended in 1996, to allow recovery of an owner’s reasonable fees for attorneys and expert witnesses if the owner is an independent investor, a nonprofit organization, or an entity having less than 500 employees in a five-year period (which FastShip was), which costs are automatic if the action was pending for more than 10 years or if the court finds that the U.S.’s position was not substantially justified.  Under this fee-shifting provision, Senior Judge Lettow awarded FastShip $6,178,288.29 in attorney’s fees and related costs (mainly expert fees, with $5,713,339.60 being the attorney’s fees component) and $1,229,679.07 in costs.

            In doing so, he determined as follows:

• • FastShip was a real party allowed to recover fees and costs, with its utilization of litigation funding not making that entity the one who had to recover costs, reasoning that litigation funding in this instance allowed the plaintiff to take on the government in a daunting case fought hard on both sides;
  • Prelitigation administration activities do not count for calculating the 10-year automatic fee/costs time frame;
  • Based on pre-litigation positions and several mistaken litigation activities such as stubbornly relying on experts ultimately contradicting the U.S.’s positions, the government was not substantially justified in its defense of the case;
  • FastShip did not have to be successful on all subsidiary claims to be entitled to a fees and costs award;
  • The American Intellectual Property Law Association’s (AIPLA’s) hourly rate survey was found to be the most relevant and persuasive for patent attorney hourly rates; and
  • FastShip could not recover supplemental costs ad infinitum from each subsequent filing such that an omnibus supplemental request at the end was denied.

            In a footnote, Senior Judge Lettow did observe that the Third, Fourth, Fifth, Sixth, Tenth, and Eleventh Circuits have rules requiring the disclosure of litigation financing agreements with third parties that have a financial interest in the outcome, although nothing in these rules ban or disfavor litigation financing agreements.

Arbitration, Fee Clause Interpretation, Indemnity: Narrow Fee Clause, Allowing Recovery In Arbitration Only, Did Not Confer Fee Recovery For Fees Relating To Litigation

Indemnity Clause Gave No Basis For Fee Recovery, Because It Was Unilateral In Favor Of Unsuccessful Party, Not Allowing For Fee Entitlement--$628,587.50 In Fees Went Away!

            In Club Acacia Community Assn. v. Professional Community Management of California, Inc., Case No. G056313 (4^th Dist., Div. 3 July 11, 2019) (unpublished), a long-time dispute between an HOA, property manager, and contractor over the problematic installation of a fire alarm system at a condominium building resulted in property manager being found liable to HOA for $88,500 after allocation of comparative negligence against HOA and contractor in litigation, but no one pursuing claims in arbitration.  There were two potential fee entitlement provisions: (1) an arbitration clause, but fees to the prevailing party only applied to an arbitration; and (2) an indemnification clause between HOA and property manager, in favor of property manager, for claims arising out of performance of the HOA-property manager contract.  Eventually, the lower court awarded HOA fees in the amount of $628,587.50 against property manager based on the arbitration clause.  Property manager appealed the fee award, to its credit.

            First of all, the indemnity clause did not allow for fee entitlement.  An indemnity clause is not made mutual by operation of Civil Code section 1717, such that HOA could not get fees, because it only favored property manager.  (Building Maintenance Service Co. v. AIL Systems, Inc., 55 Cal.App.4^th 1014, 1029 (1997).)

            Most importantly, the arbitration clause only applied to arbitration activities, such that the litigation attorney’s fees award went POOF!  Respondent HOA offered numerous theories—conduct of the parties and drafting party adverse ambiguities (contra proferentem) arguments—but they were to no avail, based on the unambiguous language that only arbitration fees were to be awarded.  So, in the end, $628,587.50 in adverse fees went away on appeal, in a 3-0 unpublished decision authored by Justice Moore.

Appeal Sanctions, Arbitration: Broad Operating Agreement Fees Clause Justified $238,000 Fees/Costs Award To Arbitration Prevailing Party, Plus Fees For Winning On Appeal

Appealing Party Just Avoided Sanctions For Frivolous Appeal, But Fees On Appeal Found To Be The Appropriate Remedy.

            Walters v. Boustead Securities, LLC, Case No. G056250 (4^th Dist., Div. 3 July 11, 2019) (unpublished) is an interesting Fourth District, Division 3 opinion affirming a $238,000 fees/costs arbitration award in favor of a prevailing party where the compensatory award was $186,354.  The operative fees clause in an operating agreement between the parties was broad, fully supporting fees, costs, and expenses to the prevailing party in any litigation or arbitration.  The merits of the arbitration award, including the fees/costs components, were beyond review.

            That brought to the appellate court to a request for sanctions by the non-appealing party.  Admitting that silly arguments were advanced on appeal and that the matter was “a close call,” the 4/3 DCA panel, in a 3-0 opinion authored by Justice Moore, believed that the respondent was entitled to attorney’s fees on appeal (in remand proceedings before the lower court), because the other side made no argument why the operating agreement fees clause did not allow for this result.  So, in the end, a less restrictive alternative was adopted, even though we could say that sanctions were narrowly averted.

            HAT TIP—We give a hat tip to Richard A. Jones, who is a local attorney known by co-contributor Mike.  He is a locally-based Santa Ana attorney who successfully represented respondent on appeal.  Congrats!

Discovery, Family Law: $2,500 Discovery Sanctions Order Reversed In Favor Of Responding, Prevailing Party Because No Competent Declaration Of Incurred Expenses Was Presented

CCP § 2023.040 Was The Key Statutory Provision.

            Just to show you that technicalities can matter in the discovery area, the First District, Division 2 reversed a $2,500 discovery sanction against ex-wife in Marriage of Stupp v. Schilders, Case No. A154396 (1^st Dist., Div. 2 July 10, 2019) (unpublished).  What happened is that a party moving to compel discovery responses lost, and the lower court awarded the successful responding party with $2,500 in discovery sanctions.  This one had to be reversed because the trial judge, earlier, had stricken a declaration filed by the responding party because it was not signed by the actual declarant and that was the only proof of what was expended in responding to the motion to compel.  Given the lack of evidence on expenses incurred in responding to the discovery motion, the sanction award had no support at all.  (Code Civ. Proc., § 2023.040.) 

Appeal Sanctions: 2/4 DCA Imposes $21,366 Against Counsel Payable To Other Side And $8,500 Payable To Appellate Clerk For Frivolous Appeal

Appealing Nonappealable And Abuse Of Discretion Orders Led To The Result.

            In Turner v. The Rule Co., Case Nos. B248667 et al. (2d Dist., Div. 4 July 10, 2019) (unpublished), an appeal was taken from several nonappealable orders and discovery sanctions/routine costs orders where abuse of discretion was the governing review standard.  The appellate panel concluded that the appeal was frivolous, imposing $21,366 against appellate counsel payable to the other side as well as $8,500 payable to the appeals clerk.

Homeowner Associations: Homeowners Were Not Catalysts For Easement Agreement Assumption, Because They Wanted A More Expansive Amendment

HOA Was Prevailing Party Under Easement Agreement Fees Clause, Awarded Its Fully Requested $51,460 In Fees. 

            In Lemley v. Aliso Homeowners Assn., Inc., Case No. B288789 (2d Dist., Div. 3 July 3, 2019; posted July 5, 2019) (unpublished), HOA and homeowners got entangled in an easement agreement dispute in which homeowners wanted specific performance/declaratory relief to enforce an amendment to the agreement, while HOA defended on the principal grounds of mootness because it recorded an assumption of obligations in the original easement agreement.  HOA won, was declared the prevailing party, and was awarded $51,460 in attorney’s fees under the easement agreement fees clause.  Homeowners appealed, claiming they were actually the prevailing parties as the catalyst for the HOA’s easement agreement assumption.  The appellate court affirmed the result below, determining that homeowners wanted an amendment, not an assumption, and that HOA did prevail by obtaining dismissal of homeowners’ suit.  (In fact, homeowners’ failure to appeal the prior dismissal on the merits cemented that they were not the catalysts for the assumption by the HOA.)

Sanctions: $16,000 CCP § 128.7 Sanction Against Successor Counsel, Based On Motion Not Specifying The Improper Conduct Before He Formally Substituted In, Was Reversed

Simply Filing A Declaration Saying “Retained” Was Not Tantamount To Presentation Of Complaint Filed By Predecessor Counsel.

           Timing can be everything, and it was in the next case considering a CCP § 128.7 sanctions award in Primo Hospitality Group, Inc. v. Haney, Case No. B283030 (2d Dist., Div. 5 July 5, 2019) (published).

            Predecessor counsel had filed a legal malpractice action against certain attorneys relating to a commercial lease water intrusion matter in which there was a $2.5 million-plus award against the malpractice plaintiffs.  (About half of total award was attorney’s fees.)  After the prior attorney successfully withdrew, malpractice plaintiffs retained another attorney despite the existence of a slew of section 128.7 motions.  Successor counsel finally formally substituted into the case, but he did not file a new complaint and only filed a previous declaration saying he was “retained” with respect to the germane motion for sanctions.  Successor counsel filed opposition to two summary judgment motions, with one being dispositive on a causation defense.  Then, based on the last section 128.7 motion, the lower court sanctioned successor counsel to the tune of $16,000.

            Successor counsel’s appeal was successful.  Timing was everything here.  Successor counsel’s filing of a “retention only” declaration was not the equivalent presentation of a complaint to the court, which had been signed by earlier counsel.  Although the summary judgment opposition might have been sanctionable, the relevant sanctions motion did not specify that conduct as the basis for sanctions.  With respect to the time of filing the “retention only” declaration, it was not crystal-clear successor counsel was proceeding on the extant complaint, based on reasoning in the federal decision of Bakker v. Grutman, 942 F.2d 236, 240 (4^th Cir. 1991).  Sanctions award reversed.

Section 1717: Borrower’s California Homeowners Bill Of Rights Claims Were Not “On The Contract” For Civil Code Section 1717 Fee Recovery Purposes

Borrower Did Not Invoke Directly The Terms of Agreements With Fee Clauses.

            In Thomas v. Seterus, Inc., Case No. A155170 (1^st Dist., Div. 2 July 2, 2019) (unpublished), lenders moved for post-trial attorney’s fees based on note and trust deed fees clauses against a borrower bringing claims based on the California Homeowners Bill of Rights (HBOR).  Lenders sought to recoup $334,557.50 in fees, but the trial court concluded that borrower’s claims were not “on the contract” under Civil Code section 1717.  The appellate court agreed.  Even though the note and trust deed were in the background all along the way, borrower was careful only to invoke HBOR rather than invoking the fee clauses under the loan agreements. 

Fee Clause Interpretation: “Collection Costs” Fees Clause Of A Narrow Nature Was Interpreted Against Drafting Party And Did Not Include Fees For Defending Counterclaims

Fee Award Remanded For A Restudy, But A 50% Reduction For Overlitigation By Prevailing Party Likely Stands On Remand.

           To take us back to law school days, contra proferentem is Latin for interpreting a contract against the drafter.  That principle was at play in contractual interpretation of the scope of a lender fees clause in Cavalry SPV I, LLC v. Watkins, Case No. D072299 (4^th Dist., Di. 1 July 1, 2019) (published).

            Lender prevailed in a debt collection dispute, including turning back tort and other claims based on borrower’s cross-complaint (counterclaims).   The operative fees clause said this: “Collection Costs.  To the extent permitted by law you are liable to us for our legal costs if we refer collection of your account to a lawyer who is not our salaried employee.  These costs may include reasonable attorney’s fees.  They may also include costs and expenses of any legal action.”  Based on this clause, the lower court awarded lender its costs of prevailing on the debt and in defensing plaintiff’s cross-claims.  The fee award was $134,604.86, with reductions for overlitigation by the lender.

            The 4/1 DCA reversed and remanded based on the conclusion that fees clause did not allow for recovery of work relating to the defense of counterclaims.  The appellate court agreed that the provision was not broad enough to encompass this work, because the counterclaims were much more than a legal action “to collect on the account.”  Given the clause appeared in a one-sided adhesion contract, the terms had to be construed against lender.  However, because the matter had to be remanded anyway, the appellate court did not adopt the 50% reduction for overlitigation per se, although indicating that it could be considered again upon the “re-do.”

Consumer Statutes, Multipliers: $327,782.75 Lemon Law Fee Award, Inclusive Of A 1.5 Positive Multiplier, Affirmed On Appeal Where $109,357.05 Was Compensatory Award

Plaintiff’s Counsel Showed Why Defense Maneuvers And Jury Verdict Made The Case Beyond A Typical Lemon Law Case.

            We have said this frequently in the past on prior blogs, but for clients and practitioners defending Song-Beverly Consumer Warranty Act “lemon law” cases, you need to be attuned to fee exposure, including positive multipliers, when engaging in battle with an auto purchaser plaintiff.

            Fuller v. FCA US LLC, Case No. B286224 (2d Dist., Div. 4 July 2, 2019) (unpublished) involved a situation where an auto purchaser plaintiff in a “lemon law” case obtained a jury award of $109,357.05,  She then moved for attorney’s fees under a pro-plaintiff fee shifting statute, Civil Code section 1794(d) as well as a positive 1.5 multiplier.  After expressing doubt about whether a multiplier was justified, the trial court awarded the lodestar and requested multiplier to the tune of $327,782.75.

            The 2/4 DCA affirmed.  Plaintiff’s counsel did a good job of showing why this was not a typical lemon law case based on strategic decisions made by defense counsel and getting the trial judge to admit she was surprised at the verdict (which showed good trial skills).  The record at the fee hearing was crucial, getting the lower court to find this was not your typical lemon law case, resulting in a positive multiplier which the defense could not change on appeal. 

SLAPP: Mandatory Defense Award Of Only $1,875 In Fees For Five Hours Of Work Reversed

Appellate Court Had No Problem With $9,000 SLAPP Request For 24 Hours Of Work.

            Just to show you that abuse of discretion is not an unlimited deferential standard of review, we post on Kohanbash v. Specialty Baking, Inc., Case No. B283117 (2d Dist., Div. 1 July 1, 2019) (unpublished).  What happened in this case is that the lower court granted a successful SLAPP prevailing party only $1,875 in fees for five hours of work on the SLAPP motion, about an 80% reduction from the $9,000 in fees claimed for 24 hours of work.  This case was not only reversed, but it was remanded with appellate instructions to grant the entire $9,000 fee request.  The appellate court had real difficulty determining that five hours only in SLAPP work was all that should be compensated given that overall reasonableness of the fee request.

In The News . . . . Recent Corporate Counsel Global Benchmarking Reports Offers Clues For What Is Kept In-House And What Goes Outside

Hourly Billing Rate Still Prevails For Legal Work Referred By Corporations To Outside Counsel.

            The Association of Corporate Counsel and recruiting firm Major, Lindsey & Africa partnered up to release a 2019 Global Legal Department Benchmarking Report, which can be obtained freely through a Website search.  It involved interview responses from 508 corporate law departments, operating across 30 countries and 71 industries.  Here is a summary of the results which interested us:

• • Two-thirds of corporate departments hire outside firms using standard hourly or discounted hourly rates, followed by nearly 45% that use flat fees, and 31% that use “capped fees.”
  • Most in-house legal teams accounted for a small percent of their company’s total staff, about 0.3% of employees.
  • Contract management internal work stayed in-house, at 97%. This work generally was performed by lawyers, versus paralegals or other legal assistants, in more than 80% of the surveyed departments.
  • The median legal department used 10 firms, listing three as “significant” firm relationships.

Eminent Domain: Inverse Condemnation Plaintiffs, With Contingency Arrangement, Could Only Recoup Fees Actually Incurred Under Contingency Arrangement With Counsel

Sixth District Agreed With Third District’s Analysis On The Scope Of CCP § 1036.

            The Sixth District, in Herrera v. City of San Jose, Case No. H042211 (6th Dist. June 28, 2019) (unpublished) had to face an inverse condemnation fee issue which pops up frequently when the plaintiff “condemnee” is entitled to some amount of fees but then moves for what was “actually incurred” under Code of Civil Procedure section 1036.  Most of the time, plaintiffs moved for the lodestar amount billed by their attorneys, even if the contingency award of fees is much, much less.  We now explain how the Sixth District steered through these interesting judicial waters on what to award plaintiff.

            City’s main sewer main flooded most of the first floor of plaintiffs’ residence in San Jose, triggering an inverse condemnation action against the City.  A jury awarded her damages after some offsets by the trial court for insurer settlement amounts.  Plaintiff moved for attorney’s fees of $450,915 (later reduced to $395,940) as the prevailing party under section 1036, which provides that in inverse cases a lower court should reimburse “the plaintiff’s reasonable costs, disbursements, and expenses, including reasonable attorney, appraisal, and engineering fees, actually incurred because of that proceeding in the trial court or in any appellate proceeding in which the plaintiff prevails on any issue in that proceeding.”  The lower court only awarded main plaintiff $20,066.67, representing 40% of her recovery pursuant to the contingent fee agreement she had with her attorney.

            Plaintiffs appealed, but the Sixth District affirmed.  Although relying on Salton Bay Marina, Inc. v. Imperial Irrigation Dist., 172 Cal.App.3d 914, 954-955 (1985) [allowing fees incurred not tethered to the contingent fee agreement], the Sixth District found that the lower court got to the right conclusion by relying on contrary Third District decisions in Andre v. City of West Sacramento, 92 Cal.App.4th 532, 536-537 (2001) [remanding to consider what plaintiff actually incurred, with consideration of the contingency arrangement with counsel] and Pacific Shores Property Owners Assn. v. Department of Fish & Wildlife, 244 Cal.App.4th 12, 61-62 (2016) [contingency fee arrangement was a “cap” on what could be awarded to plaintiff under section 1036].  The Sixth District sided with the Third District, although being sympathetic to the regard for fairness and reasonableness expressed by plaintiffs.  However, the language of section 1036 was clear, limiting fee recovery to what was actually incurred under the terms of the contingency agreement with legal counsel. 

Prevailing Party, Section 1717: Only One True Prevailing Party Can Exist Under Civil Code Section 1717

One Litigant Cannot Partially Prevail At Trial, And Another On Appeal, For Purposes Of Ultimate Prevailing Party Determination Under Section 1717.

            The Sixth District in Gambord v. Galli Produce Co., Case No. H043872 (6^th Dist. June 28, 2019) (unpublished) faced an interesting issue based on a contractual fees clause under Civil Code section 1717:  Can there be more than one prevailing party based on partial success at trial and on success on a later appeal?  The answer:  No.

            What happened here is that landlord won on unpaid rent award of a little over $45,211 against tenant although it was much less than its claim of more than $200,000.  Landlord appealed the damages calculation, but the trial court award was affirmed.  Later, landlord moved for attorney’s fees of $78,931.75 under the lease agreement fees clause, for efforts pre-lawsuit through trial/posttrial.  Tenant opposed on the basis that it was the prevailing party at trial based on landlord only obtaining less than 20% of its unpaid rent claim.  The lower court ruled that landlord was the prevailing party, awarding it $67,161.75 (about a $10,000 reduction).  Tenant then brought a motion to recoup attorney’s fees of $27,481 for “winning” on appeal, because it believed the lease fees clause (talking about fees “on trial or appeal”) allowed for a dual prevailing party result.  The lower court did not buy it, and the appellate court agreed.

            First, Civil Code section 1717 does not authorize parties to agree to more than one prevailing party “on the contract,” with the final resolution dictating who is the true prevailing party.  (Dispute.Suite.com, LLC v. Scoreinc.com, 2 Cal.5^th 968, 977 (2017) [our Leading Case #21].)  Specifically, “section 1717 does not support an award to the prevailing party on appeal, but only the prevailing party in the lawsuit.”  (Wood v. Santa Monica Escrow Co., 176 Cal.App.4^th 802, 808 (2009).)  Second, in order to come to the 1717 prevailing party “end” determination, the lower court must engage in a comparative analysis, and its determination here that landlord obtained the greater relief justified denying appellate fees to tenant.  Third, tenant relied greatly on dicta in Snyder v. Marcus & Millichap, 46 Cal.App.4^th 1099, 1104 n. 1 (1996) suggesting that the parties could agree that a prevailing party could be based on fees clause language allowing that result for a successful partial appeal.  The Sixth District disagreed with this dicta in no uncertain terms, finding it would be inconsistent with contrary reasoning in DisputeSuite.com. 

Private Attorney General: Sweetwater Union High School Decision Now Published

$166,027.05 In CCP § 1021.5 Fees Awarded In Charter School Dispute.

            On June 9, 2019, we posted on Sweetwater Union High School Dist. v. Julian Union Elementary School Dist., Case No. D073878 (June 4, 2019) (unpublished), which was unpublished at the time.  It involved a $166,027.05 CCP § 1021.5 to a partially successful plaintiff in a charter school dispute where claimant showed that the net revenue gain from success was outstripped by litigation costs to vindicate public interests relating to charter school issues.  We can now report that the case was certified for publication on June 28, 2019.