CALIFORNIA ATTORNEY'S FEES

Section 998: Section 998 Offer Was Valid Because It Identified Accepting Party, Was Not Overbroad On Requested Releases, And Referenced An Attached Settlement Agreement

Case Shows How Litigants Should Structure 998 Offers So As To Escape Enforcement Challenges.

            We commend practitioners to read Auburn Woods I Homeowners Assn. v. State Farm Ins. Co., Case No. C085749 (3d Dist. Sept. 29, 2020) (unpublished) when it comes to structuring an effective CCP § 998 pretrial settlement offer in several respects.

            The settlement offer, as detailed in the appellate opinion, proceeded along the following lines: “Prior to the trial, State Farm and Lewis made a written settlement offer under section 998 to HOA. The offer explained how HOA may accept State Farm and Lewis’s offer: ‘If you accept this offer, please: [¶] a) Date and sign the Agreement attached hereto as Exhibit A; [¶] b) Have your legal counsel execute a Request for Dismissal in a form identical to that attached hereto as Exhibit B; [¶] c) Send the signed Agreement and signed Request for Dismissal to counsel for defendants, who will then file the Request for Dismissal with the Court; and [¶] d) Execute, by and through your counsel, the statement of acceptance of this offer that appears below and return the same to attorneys for defendants indicating that the Offer to Compromise is accepted pursuant to the terms and conditions outlined above.” The offer included a document which read, “STATEMENT OF ACCEPTANCE OF OFFER TO COMPROMISE [¶] In accordance with Code of Civil Procedure section 998, subdivision (b), plaintiff Auburn Woods I HOA hereby accepts Defendants’ Offer to Compromise pursuant to the terms and conditions set forth in that offer.’ The statement concluded with a signature block for counsel for HOA.”

            This section 998 offer survived numerous challenges.  First, contrary to what the challenger said, the offer did sufficiently identify the accepting party based on the signature line for accepting party to simply sign.  Second, there was no overbreadth or ambiguity with respect to the claims to be released, because they were limited to claims relating to the lawsuit (with section 1542 waivers not dictating a different result).  Third, the offeror did attach a proposed settlement agreement for acceptance such that there was no indefinite extraneous agreement to be guessed at when it came to deciding what to do with respect to the 998 offer—determined to be valid on appeal.

Allocation, Consumer Statutes, Lodestar, Multiplier: Although Fraudulent Concealment Compensatory And Punitive Damages Were Reversed, $510,637.87 Fee/Costs Award Under Song-Beverly Act Case Affirmed On Appeal

Failure To Apportion/Double Counting Lodestar And Enhancement Arguments Not Supported By The Record.

            In many cases, a fees-seeking litigant needs to apportion between fee entitlement and non-fee entitlement claims, unless the thrust of the case involved a fee entitlement case so that it was inextricably intertwined with a non-fee case.  If so, even a reversal of the non-fee case upholds the fee award on the intertwined fee entitlement basis of the case.

            That is what occurred in Santana v. FCA US, LLC, Case Nos. G057244/G058020 (4^th Dist., Div. 3 Sept. 29, 2020) (unpublished).

            In a defective vehicle case for Song-Beverly Act violations and fraudulent concealment, plaintiff was awarded $1,229,531.71 (of which $1 million was punitive damages under the fraud count) and then awarded Song-Beverly Act fees/costs of $510,637.87 inclusive of a positive 2.0 multiplier, but less than 2.5 multiplier requested by plaintiff. 

            The 4/3 DCA affirmed the fees/costs award in a 3-0 panel decision authored by Justice Ikola, although there was a large scale-back of the fraud damages, paring about $1.134 million from the overall award.

            The defense argued that there needed to be an apportionment, but that did not resonate based on the fraudulent concealment being intertwined and with the defense not offering a realistic apportionment proposal for the trial or appellate courts to consider.

            With respect to the “double dip” argument, the appellate court indicated that a plaintiff could not rely on a contingency risk argument if it was being used to justify the lodestar and an enhancement.  However, that did not occur here because the trial judge did not use the contingency risk to justify the hourly lodestar rate but only used it for true enhancement, also mentioning complexity and attorney skill which would have gotten to the same result.

Costs, SLAPP, Substantiation Of Reasonableness Of Fees: SLAPP Fees Of $63,970 And Costs Of $1,680.13 Affirmed On Appeal

Vague Objections Not Entertained, But Failure To Award Positive Multiplier Was Sustained.

            In Koerber v. Project Veritas, Case No. B291770 (2d Dist., Div. 3 Sept. 29, 2020) (unpublished), the Court of Appeal affirmed a mandatory SLAPP award of $63,970 in fees and $1,680.13 in costs.  The defense requested $109,545 in fees, inclusive of a 1.5 multiplier, but the trial court did not award a multiplier and reduced the lodestar request for time spent on a demurrer.  Appellant did not provide any specific arguments as to why the fee substantiation was deficient (spreadsheets and supplemental briefing were provided) or why the fee request was inflated.  Filing/motion fees, reporter fees, and attorney service/courier expenses were all fair game for routine costs, with a component-by-component analysis provided in the affirming opinion.

Deadlines: 2/3 DCA Affirms Costs/Contractual Attorney Fees Award To Prevailing Defendant That Filed Its Costs Memo And Fees Motion More Than 60 Days After The Superior Court Clerk Mailed A Conformed Copy Of The Judgment

The Clerk’s Mailing Did Not Trigger Deadlines For The Costs Memorandum Or Fees Motion Because The Judgment Was Not Accompanied By A Proof Of Service And Failed To Satisfy Requirements For Service Of Notice Of Entry Of Judgment.

            In MES Investments, LLC v. Dadson Washer Service, Inc., Case No. B297634 (2d Dist., Div. 3 September 25, 2020) (unpublished), defendant was awarded prevailing party costs and contractual attorney fees following a bench trial.  On appeal, plaintiff argued that defendant’s motions for fees and memorandum of costs were not timely filed.

            When the trial court entered judgment, the superior court clerk mailed a conformed copy of the judgment to the parties.  Plaintiff claimed the clerk’s mailing triggered a 15-day deadline for defendant to file and serve its memorandum of costs pursuant to California Rules of Court, rule 3.1700(a)(1), and a 60-day deadline for defendant’s fees motion pursuant to rule 3.1702(b).  Because defendant filed and served its costs memorandum more than 60 days after the clerk’s mailing, and its fees motion 60 additional days beyond that, plaintiff argued the fees/costs awards should be reversed.

            However, the 2/3 DCA affirmed – explaining service of notice of entry of judgment did not occur until defendant filed and served it on the same date it filed its memorandum of costs.  The clerk’s mailing of the judgment did not include a proof of service – meaning there was nothing in the record establishing the deadlines for defendant to file its costs memorandum and fees motion as the simple act of mailing a conformed copy of the judgment does not constitute service of notice of entry of judgment.  To constitute service and establish posttrial motion deadlines, “the clerk’s mailed notice must affirmatively state that it was given ‘upon order by the court’ or ‘under section 664.5’ and a certificate of mailing the notice must be executed and placed in the file.” (Van Beurden Ins. Services, Inc. v. Customized Worldwide Weather Ins. Agency, Inc., 15 Cal.4th 51, 64 (1997).)

Special Fee Shifting Statutes: Dueling Fee Motions By County And Supervisor Produced An Interesting Legal Discussion By The Sixth District On Municipal Fee/Indemnity Shifting Provisions

In The End, the Supervisor Might Get Some Litigation Reimbursement Fees Of A Somewhat Limited Nature.

            Municipality practitioners should be well advised to read County of San Benito v. Scagliotti, Case No H045887 (6^th Dist. Sept. 24, 2020) (unpublished) about fee shifting statutes under the Political Reform Act (PRA) and Government Claims Act (GCA), not to mention indemnification for settlement payments made by public employees.

            Boiling things down, County and former supervisor Richard Scagliotti were sued for violations of the Political Reform Act of 1974.  County agreed to indemnify and defend Mr. Scagliotti based on the ambiguous nature of some complaint allegations.  The lower court assessed some $12,500 in penalties against Mr. Scagliotti for some unintentional reporting omissions under the PRA and $220,000 under Government Code section 81700 for use of governmental position for financial gains in the plaintiff suit.   That determination provoked a firestorm by which the County withdrew its indemnification/defense decisions based on the premise that Mr. Scagliotti’s conduct might have been outside the course and scope of his employment, especially in connection with the $220,000 penalty.  Mr. Scagliotti substituted in another attorney, incurring about $27,000 in fees for beating back the plaintiff’s $800,000 fee motion.  He also eventually reached a settlement with plaintiff by which he paid $220,000 out of his own pocket, effectively having plaintiff waive the PRA penalties.  This set off secondary litigation where County sued to recoup $470,000 in fees spent in defending Mr. Scagliotti in the underlying case based on GCA and Labor Code section 2865 fee-shifting provisions.  Mr. Scagliotti cross-complained under Government Code section 825 and Government Claims Act section 995 for the $27,000 attorney’s fees he expended on the substituted attorney and for the $220,000 settlement payment he made to the plaintiff.  In the end, the trial judge denied each side’s requests for fee awards and indemnification.  Both sides moved for reimbursement of litigation fees expended in litigating the secondary action for fees/settlement payments under Code of Civil Procedure section 1038(a), motions which were denied.

            That gets us to the Sixth District appeal decision in the matter. 

            The Court of Appeal had no problem finding County was not entitled to underlying fees because nothing in a contractual letter with Mr. Scagliotti overrode the more inclusive fee-shifting reimbursement provisions in Government Code section 996, with Labor Code section 2805 not displacing the general reimbursement provision which is pro-public employee.  With respect to Mr. Scagliotti, he was not entitled to recovery of settlement payments because it did not fit GCA’s “injury” definition; however, he was entitled to reimbursement of his defense costs under Government Code section 996.4 for the failure to report violations, after a very detailed discussion of the interaction between GCA and PRA statutory schemes.  On the section 1038 dueling motions, County was properly denied fees based on Mr. Scagliotti’s reporting result, with Mr. Scagliotti’s fee denial being correct because the County’s defenses were not totally baseless in nature.  Each side had to bear their own appellate costs.  So, the former supervisor gets a shot at recovering some attorney’s fees of a limited nature—otherwise, everyone went home empty-handed!

Landlord/Tenant, Substantiation Of Reasonableness Of Fees: $1,586 Fees Award To Landlord Affirmed Based On Inadequate Lack Of Substantiating Evidence

$84,995.25 Was Requested; Only $1,586 In Fees Awarded.

            Although there was no explicit appellate discussion on this issue, Triplett v. Decron Properties Corp., Case No. B295126 (2d Dist., Div. 1 Sept. 24, 2020) (unpublished) is a reminder for parties seeking fee recovery to provide sufficient evidence in support of a substantial request.  The particulars are not reported, but the prevailing party sought $84,995.25 in attorney’s fees and was awarded only $1,586 based on lack of sufficient evidence.  The moral to this one is to make sure there is a competent proof support to your fee motion. 

Family Law: Ex-Husband’s Denial Of Fees Based On Lack Of Jurisdiction Was Correct Where Fee Request Not Made In Responsive Pleadings Or Requested In A Motion To Leave To Amend Pleadings At The Time Of Trial

Make A Motion To Amend Pleadings, Or Get The Result Here!

            Marriage of Fader, Case No. B296972 (2d Dist., Div. 5 Sept. 24, 2020) (unpublished) is a situation teaching that a litigant should make a motion to amend deficient pleadings in order to preserve an attorney’s fee request.    If not, the consequences are dire:  both the trial and appellate court will sustain a lower court’s conclusion it had no jurisdiction to award fees.

            What happened here was that ex-husband was denied a fees request where he did not ask them in responsive pleadings to a dissolution petition, but only asked for such a recovery at trial.  The fatal flaw was that husband did not ask for permission to amend pleadings to assert a fees request.  That failure was preclusive, because it supported the family judge’s reasoning that he had no jurisdiction to award fees absent a pleadings request or request to amend. 

Appealability, Family Law, Sanctions: $5,000 Sanctions Award Against Ex-Husband’s Attorney Found Not Appealable

Specific Appealability Provisions Governed The Result.

            In Marriage of Rattan & Prasad, Case No. A157880 (1^st Dist., Div. 3 Sept. 24, 2020) (unpublished), ex-husband’s attorney was disqualified and was assessed with a CCP §§ 128.5/128.7 sanctions motion of $5,000 for filing frivolous motions.  Attorney’s appeal of the sanctions order was unsuccessful because (1) CCP § 904.1(a)(12) only allows appeal of sanctions exceeding $5,000; and (2) CCP § 904.1(a)(12) did not rescue appeals of non-discovery sanctions below $5,000 because it only allowed a party to appeal from them.

SLAPP: SLAPP Fees Denied To Plaintiff Where Trial and Appellate Courts Determined The Motion Was Not Frivolous

Meritless Does Not Necessarily Translate To Frivolous.

            In Phelps v. McBratney, Case No. A156638 (1^st Dist., Div. 1 Sept. 23, 2020) (unpublished), defendants lost a SLAPP motion (appealing the merits determination and losing).  However, the lower court refused to award plaintiff attorney’s fees because it found the motion was not frivolous.  That determination was affirmed on appeal, with this case being interesting reading for practitioners on illegal eavesdropping recording (dealing with Canadian law, which allows, versus California law, which does not) and the boundaries of a public dispute (with the lower and appellate courts concluding the matter was really a private dispute).  Lack of merit does not automatically translate to frivolity is the message of this one in the SLAPP fee context.

Appealability: 2/3 DCA Affirmed Fee Awards Against Borrower Based On Failure To Provide Compliant Appellate Briefing

Appellate Courts Increasingly Are Not Forgiving Appealing Parties’ Mistakes.

            The next case, JPMorgan Chase Bank, N.A. v. Raskin, Case No. B292597 (2d Dist., Div. 3 Sept. 23, 2020) (unpublished), demonstrates an increasing trend we have seen in appellate decisions:  affirming an appeal where an appellant fails to comply with important “gateway” appellate briefing rules.

            Appellant borrower challenged two orders awarding fees to respondent banks.  Those orders were affirmed because of appellant’s:  (1) failure to provide citations to the appellate record; (2) failure to provide legal support in a discussion of each point of error; (3) failure to discuss the applicable legal standard of appellate review; (4) failure to discuss applicable statutes; and (5) making only conclusory arguments.  The appellate court also observed it was unfair for the intermediate courts to take on appellant’s burdens to the detriment of other appeals waiting their turn to be decided.  On appeal, it is best to hire an appellate specialist or at a minimum consult with one to avoid what happened here. 

Deadlines, Probate: Trustee Obtaining $285,363.10 Fee Award Against Beneficiary Who Brought Objections In Bad Faith Affirmed On Appeal

Probate Code Sections, Contractual Fee Provisions, And Equitable Powers Provided Fee Entitlement, With CRC 3.1702 Fee Motion Filing Deadlines Not Applicable To Probate Proceedings.

            In Rudnick v. Rudnick, Case No. F079105 (5^th Dist. Sept. 23, 2020) (unpublished), a beneficiary in a long-standing trust dispute withdrew objections to a final distribution/termination of the trust on the eve of a hearing.  The lower court determined the objections were in bad faith and, while an appeal was pending on that determination (ultimately affirmed), trustee brought a fee motion to recover $314,000 in fees under Probate Code section 17211(a) [a fee-shifting provision involving challenges to a trustee’s account activities which were made without reasonable cause and in bad faith], a contractual fees clause in a settlement agreement between the parties, and Probate Code section 1310(b) [equitable powers of the probate court to take actions to prevent loss or injury to property].  The probate court awarded $285,363.10 in fees and $5,167.52 in costs to trustee.  Aggrieved beneficiary appealed.

            The Fifth District, in a 3-0 opinion authored by Acting Justice Levy, affirmed.  All of the issues raised were legal in nature, and none of them bore fruit from beneficiary’s viewpoint.

            Appellant first argued that the lower court lacked jurisdiction to pass on fees because the prior appeal stayed any such determination, but caselaw was to the contrary.  (Bankes v. Lucas, 9 Cal.App.4^th 365, 368 (1992); Silver v. Gold, 211 Cal.App.3d 17, 26 (1989).)  There were three independent bases for fee entitlement:  section 17211(a), the settlement agreement fees clause, and the general equitable powers of the probate court.  Even though reasonable cause to object to a trustee’s account is a legal issue (Uzyel v. Kadisha, 188 Cal.App.4^th 866, 927 (2010)), the timing of the beneficiary’s withdrawal of objections in tandem with the meritless nature of them easily supported the lower court’s conclusion.  Appellant also contended that the fee motion was untimely based on failure to follow the CRC 3.1702 deadlines, but the problem there was that those deadlines do not apply to probate proceedings.  (Hollaway v. Edwards, 68 Cal.App.4^th 94, 97-99 (1998) [construing predecessor to rule 3.1702].)

Consumer Statutes: Reversal Of Substantial Punitive Damages Award Required Reversal Of $953,793.90 CLRA/Song-Beverly Act Fee Award

Compensatory Award Was $72,564.04, Song-Beverly Act Civil Penalties Were $141,973.30, and Punitive Damages Award Was $725,640.40 (After Plaintiff Accepted A Remitted Amount From A $1,451,973.30 Jury Punitive Award).

            Margeson v. Ford Motor Co., Case No. B287445 (2d Dist., Div. 5 Sept. 22, 2020) (unpublished) involved a substantial jury verdict and large attorney’s fees award under the Consumers Legal Remedies Act (CLRA) and Song-Beverly Consumer Warranty Act (Song-Beverly Act) based on a defective new Ford F-350 truck equipped with a 6.0-liter, 350 horsepower diesel engine.  The jury awarded plaintiff $72,564.04 in compensatory damages (a stipulated amount), $141,973.30 in civil penalties under the Song-Beverly Act, and $1,451,973.30 in punitive damages (20 times the compensatory damages, reduced to $725,640.40 by the trial judge—a reduction accepted by plaintiff in order to avoid a new trial on the punitive damages issue).  Subsequently, the lower court awarded plaintiff $953,793.90 under the CLRA and Song-Beverly Act fee-shifting provisions (with the lodestar amount augmented by a 1.8 multiplier in reaching this amount).

            The 2/5 DCA reversed the punitive damages award for a retrial because plaintiff’s expert impermissibly invaded the jury’s province in testifying on how punitive damages should be calculated.  Since resolution of the punitive damages question might figure in the determination of attorney’s fees, the partial reversal of the judgment compelled reversal of the fee award as well.  (California Grocers Assn., Inc. v. Bank of America, 22 Cal.App.4^th 205, 220 (1994).)  Goes to show you how substantial fee awards can occur under consumer fee-shifting statutes, even though we should guess the punitive damage and fee issues will be settled before there is a new trial or renewed fee proceeding.

Partition: No Abuse Of Discretion Where Trial Court Awarded Entirety Of Fees Incurred To Party In Partition Action When Other Party’s Litigation Conduct Unnecessarily Increased Fees For Both Sides

Code Civ. Proc. § 847.040 Allows For Equitable Considerations In Apportioning Costs, And § 847.010 Authorizes The Award Of Fees Incurred To Defend Meritless Claims.

            In Diepen v. Bollinger, Case No. B299696 (2d Dist. Div. 6 September 21, 2020) (unpublished), a trial court granted an elderly mother’s request to partition a house she co-owned with her daughter.  Afterward, pursuant to Code Civ. Proc. §§ 847.010 and 847.040, the trial court awarded mother the entirety of the more than $91,000 in fees she had incurred.  Daughter argued that not all fees incurred by her mother were recoverable as not all fees were incurred for the common benefit of the parties.  The trial court disagreed – finding daughter had raised meritless arguments and taken an unnecessary “hardball” approach during litigation that inflated the fees for both sides, and that a balancing of the equities justified the award to mother.

            Daughter fared no better with her argument on appeal.  The appellate panel explained that daughter’s argument was based on an outdated understanding of the law, and that § 874.040 – unlike former § 796 which it replaced in 1976 – includes a general equitable exception to the rule of apportioning costs in a partition action in proportion to the parties’ interests in the property.  Section 874.040 unambiguously provides the trial court with broad discretion to apportion fees based on equitable considerations, without limit.  (Lin v. Jeng, 203 Cal.App.4^th, 1008 (2012).) Additionally, § 847.010 authorizes a trial court to find that fees incurred for advocating a meritless position are not for the common benefit and should be borne by the party raising them. 

            The 2/6 DCA found that an inverse scenario occurred in this case – with mother incurring fees to defend each of daughter’s arguments which served to prolong what should have been a simple partition action.  Daughter was responsible for the fees she caused her mother to incur by pressing “spurious matters.” (Forrest v. Elam, 88 Cal.App.3d 164, 173-174 (1979).)

Partition, Undertaking: No Abuse Of Discretion In Trial Court’s Denial To Plaintiff Of Fees/Costs Not Incurred In Partition Action, And No Error In Granting Disbursement Of Funds To Defendants While Appeal Was Pending

Plaintiff Was Not Entitled To Recover Code Civ. Proc. §§ 874.010 and 847.040 Fees/Costs Incurred Prior To Defendants’ Assertion Of Partition Claim, Nor To Fees/Costs Incurred Strictly For Plaintiff’s Benefit, And Undertaking Was Required To Stay The Case As Judgment Did Not Consist Of Only Fees/Costs.

            Land Value Holdings, LLC v. Miller, Case No. A153992 (1^st Dist., Div. 3 September 18, 2020) (unpublished), involved a residential property a decedent left to his niece, Clara, for the term of her natural life.  Upon Clara’s death, the property was to be divided equally among six other nieces and nephews – or their surviving issues.  A later probate order confirmed Clara’s life estate and named the nieces and nephews as remaindermen, but failed to include the phrase “or to their surviving issues by right of representation.”

            Four years after Clara passed, the property was scheduled to be auctioned for unpaid property taxes.  Plaintiff, relying on the theory of adverse possession, voluntarily paid the past due taxes and moved for quiet title and ejectment against twenty living issues of the remaindermen – some of whom entered into settlement negotiations and provided plaintiff with assignments and executed quitclaim deeds.  

            In the end, the trial court found plaintiff had achieved only a 41.66% ownership interest in the property based on the assignments it obtained, and that defendants were entitled to an interest in the property based on decedent uncle’s will - approving sale of the property and ordering division of the proceeds.  Based on a partition claim asserted by defendants some three years into the litigation, the trial court granted in part each party’s Code Civ. Proc. §§ 874.010 and 847.040 fees request, to be paid by the other parties in proportion to their respective percentage interests.  As to plaintiff, it sought $206,185.73 in fees, but was awarded only $98,301 – with the trial court determining fees incurred by plaintiff prior to the partition claim were not recoverable.  Plaintiff also suffered a significant reduction to its $36,434.73 costs request – with defendants successfully moving to tax more than half because certain costs were found not reasonable, necessary, nor for the common benefit of the parties.  Plaintiff then unsuccessfully moved for additional fees incurred for post-judgment work – with the trial court finding the fees requested in the late-filed fees request were not incurred for the common benefit of the parties, but for plaintiff alone. 

            After plaintiff appealed, two defendants moved ex-parte for disbursement of certain funds pursuant to the judgment.  Plaintiff opposed – arguing the trial court did not have jurisdiction to rule because plaintiff’s appeal created an automatic stay.  The trial court disagreed, because plaintiff had not given an undertaking, and granted defendants’ ex-parte request.

            On appeal, plaintiff tried to overcome the trial court’s finding that plaintiff was entitled to recover fees/costs only from the date that defendants asserted a partition claim, and only for fees incurred for the common benefit – arguing it had worked for the common benefit from the get-go, and that its cause of action for declaratory relief was essentially a partition action.  The 1/3 DCA found no abuse of discretion.  Plaintiff’s declaratory relief cause of action sought a declaration as to which parties were responsible for the property taxes and upkeep of the property – not the equivalent of a partition action.

            As to plaintiff’s argument that the trial court lacked jurisdiction to grant defendants’ ex-parte motion for disbursement, the appellate panel disagreed.  There was no error in the trial court’s determination that the case was not automatically stayed, and that an undertaking was required to stay the case pending the appeal as the judgment did not only consist of costs/fees.  (Code Civ. Proc. § 917.1; Dowling v. Zimmerman 85 Cal.App.4^th 1400, 1432 (2001).)

SLAPP: Justice Richman, On Behalf Of A First District, Division 2 Panel, Makes A Plea For The Legislature Or California Supreme Court To Revisit SLAPP Denial Appeal Abuses

The Particular Issue Was The Impact Of The SLAPP Stay During An Appeal, But Fee Issues Are Implicated In The Mix—But Of Course.

            Although not directly involving a fees issue, Oakland Bulk and Oversized Terminal, LLC v. City of Oakland, Case No. A157330 (1^st Dist., Div. 2 Sept. 17, 2020) (published) is a very illuminating decision by an appeals court which has taken particular interest in the abuses it has seen by litigants appealing a SLAPP motion denial so as to automatically stay subsequent proceedings for many years.  Justice Richman was the author of this decision, and he is no novice in this substantive area.

            What happened procedurally was that plaintiff filed a 3 count contractual and 7 count tort complaint against the City of Oakland (City), which in turn filed a demurrer and filed a SLAPP motion directed to only parts of the complaint.  The lower court overruled most of the demurrer but sustained some of it in part with leave to amend.  The SLAPP motion was denied without prejudice to see what happened once the amended complaint was filed.  City appealed the SLAPP denial, which did stay the action although it was clear that a major portion of the overruled (and possibly amended) claims were going to proceed.

            On appeal, City requested that the appellate court rule on the merits of its SLAPP motion—and it obliged.  It found that the motion did not succeed on the merits.  However, that was hardly the end of the 1/2 DCA’s opinion; that is where the poignant part began, because Justice Richman earlier had talked about SLAPP appeal impacts in Grewal v. Jammu, 191 Cal.App.4^th 977 (2001).

            After discussing some of the general implications resulting from an automatic stay of a SLAPP motion denial, the panel zeroed in how it impacted the particular facts where the case was going to proceed anyway based on the demurrer ruling (and likely after complaint amendments)—pure and simple, delay and an expenditure of more fees on appeal by both sides. 

            Now we go to the parts of the opinion relating to fee issues. 

            At oral argument, the appellate court asked for the City’s motive in appealing a SLAPP denial which did not dispose of the entire case.  The answer:  it might get potential mandatory SLAPP fees if it succeeded on even limited claims/allegations.  That did not resonate, so we quote the response by Justice Richman and his colleagues:

“In other words, this appeal, with its attendant delay and the generation of thousands and thousands of dollars of attorney fees, was justified by the City’s possible claim to attorney fees.  We have two comments. First, we know of no law that says an amended complaint somehow causes a defendant to lose its right to attorney fees if a SLAPP motion is successful. To the contrary, there is law that holds fees can be awarded in such circumstance. (See Richmond Compassionate Care Collective v. 7 Stars Holistic Foundation (2019) 33 Cal.App.5th 38 [action allowed to proceed following third amended complaint; attorney fees for partially successful SLAPP motions affirmed].)  Second, assuming the City were to be successful, just how much does the City expect to be awarded for the successful striking of two lines in a 63-page complaint?  We said it in Grewal, supra, 191 Cal.App.4th 977, and we’ll say it again: ‘something is wrong with this picture.’  And we end with the observation that perhaps the time has come for the Supreme Court to revisit the issue of an automatic stay, at least in the situation where it is indisputable that the action will proceed.” (Slip Op., pp. 36-37.)

            But there is more.  The California Supreme Court’s Baral decision allows SLAPP striking of allegations within a particular claim.  The First District panel observed that there was some disagreement on the breadth of Baral in this respect, not to mention the panel’s puzzlement of the amount of mandatory fees which should be awarded where only some allegations of a claim were SLAPPed.  We bloggers will indicate that appellate courts have generally required some apportionment or remanded for reduced fees when there was only successful “allegation piercing,” a topic which will be subject of a future post by co-contributor Mike. 

            BLOG COMMENT—We noticed that Ben Shatz and his appellate crew at Manatt, Phelps represented the prevailing plaintiff/respondent side.  Congratulations, Ben (and others).

Family Law, Sanctions: Section 271 Sanctions Affirmed But CCP § 128.7 Sanctions For Reconsideration Motion Reversed Based On Lack Of Appropriate Procedural Compliance

Failure To Follow 128.7 Procedural Requirements Doomed Part Of Sanctions Award.

            CCP § 128.7 sanctions are procedural in nature and rule bound.  Do not follow the procedural rules, and you will lose a sanctions order in the lower court.  Marriage of Nott, Case No. B293055 (2d Dist., Div. 5 Sept. 16, 2020) (unpublished), is a good illustration of what will result in a reversal when due process requirements are not satisfied.

            What happened here was that ex-wife was hit with a Family Code section 271 sanction of $2,500, which was affirmed because the record showed she did not cooperate with a QDRO attorney to get closure on the issue.  However, because she was hit with a $4,500 sanctions for filing a frivolous reconsideration motion (one governed by CCP § 128.7), that one had to be reversed because ex-husband failed to file a separate 128.7 sanctions motion and failed to serve it at least 21 days before filing the motion with the court.  That required a reversal on this aspect of the appeal.  (Martorana v. Marlin & Saltzman, 175 Cal.App.4^th 685, 698-700 (2009).)

Family Law, Sanctions: $4,290 Sanctions Against Wife’s Attorney Under CCP § 128.7 Reversed On Two Grounds

First, A Section 2030 Earlier Denial Request Is Not Subject To Reconsideration Limitations, And Husband Did Not Give Proper Section 128.7 Notice Of The Bases For Sanctions—Double Whammy Reversal On Appeal.

            The Fourth District, Division Two, in Marriage of Hull, Case No. E072222 (4^th Dist., Div. 2 Sept. 15, 2020) (unpublished) was a 3-0 panel decision reversing a $4,290 CCP § 128.7 sanctions award against wife’s attorney for renewing a needs-based motion after an earlier denial of attorney’s fees.  [The concurring justice did not disagree with some footnotes which he believed disparaged appealing attorney.}

            The bases for reversal was two-fold in nature:  (1) a section 2030 renewed motion cannot be sanctioned because it is not subject to reconsideration request limitations; and (2) the section 128.7 motion did not contain the precise grounds upon which sanctions were ultimately granted, something which cannot happen based on the “safe harbor” and due process strictures codified under this statute. 

Discovery, Sanctions: $5,684 Discovery Sanction Against Plaintiffs Affirmed Where They Could Not Produce A Written Confirmation Of A Discovery Extension

Beyond That, The Defense Did Not Pull The Trigger Too Hastily On Motions To Compel, Trying To Work It Out.

            Discovery frequently is the bane of both practitioners and judges, not to mention studies that confirm it has led to an increase in the costs of civil litigation for many, many cases.  California has a scheme allowing parties to stipulate to discovery extensions, but they must be confirmed in writing (although emails certainly satisfy this requirement).  The next case shows the importance of creating an adequate record where sanctions are being fought on the basis that a discovery extension was obtained from the other side.

            In Cantu v. Equinox Holdings, Inc., Case No. B295973 (2d Dist., Div. 5 Sept. 15, 2020) (unpublished), Plaintiffs failed to answer some paper discovery requests and failed to obtain a firm written confirmation of a discovery extension, although the propounding defense attorneys tried to work it out.  Plaintiffs finally propounded boilerplate objections to the requests and tried to argue that a blanket-type extension had been granted without evidence of a written confirmation.  The defense waited a little while longer, filing motions to compel and seeking $9,440 in attorney’s fees as discovery sanctions.  The trial judge used a blended hourly rate and reduced the number of hours to impose a sanction of $5,684 against plaintiffs.

            Plaintiffs’ appeal was not successful.  As a stark reminder to which we have posted on before, the failure to provide a reporter’s transcript of the relevant law-and-motion hearings was fatal, especially where a discretionary ruling was involved as opposed to one on legal issues.  Further, there was no clear proof of a written discovery extension such that there was no substantial justification for the opposition to the motions to compel.  The appellate court also observed that the defense did not file the motions to compel too soon, only doing so after receiving boilerplate objections and no plan by the other side as to providing real answers.

Retainer Agreements, Trade Secrets: In The Absence Of An Express Retainer Agreement Otherwise, Fees Earned Under Uniform Trade Secrets Act Belong To The Attorney, Not The Client

Third District Applied Analogous Reasoning From Flannery Decision.

            Many times, “ownership” of an attorney’s fees award can be critical—does it belong to the attorney or the client, especially after disputes fester?  The Third District in Aerotek, Inc. v. Johnson Group Staffing Co., Inc., Case No. C078435 (3d Dist. Sept. 15, 2020) (published) decided where ownership should lie for a fee award under California’s Uniform Trade Secret Act, Civ. Code, § 3426.4, after a trial judge decided the attorneys were entitled to fees of $827,938.17 plus interest following representation of a client resulting in a zero award by the other side.

            The Third District, drawing from analogous reasoning in Flannery v. Prentice, 26 Cal.4^th 572 in the FEHA context, decided that a trade secret fee award belongs to the attorney, not the client, unless there was an express fee agreement dictating otherwise.  Here, the facts appeared to be solidly on the law firm’s side for purposes of reaching this conclusion:  its client defendant was behind in its receivable, the law firm agreed to substantially write down a receivable with the ability to collect the write-off through a fee award on a “modified pro bono” basis (except the client had to reimburse routine or expert costs), and nothing indicated in the written fee agreement where surplus fees over the write-off would go.  The parties’ fee agreement did not dictate otherwise, because it did not address the ownership issue on fees award over the written-off amount. 

            Client argued that its attorneys needed to provide a notice of right to arbitrate under the Mandatory Fee Arbitration Act, but that did not apply to fee disputes determined pursuant to statute as it was here.  Client also contended that the trial judge should have allowed a jury trial on the ownership issue, but the appellate court disagreed by finding that the gist of the dispute was equitable in nature. 

Deadlines, Homeowner Associations: Later Finding That HOA-Homeowner Settlement Agreement Was Invalid Presented Good Cause To File Fee Motion After 60-Day Deadline

Settlement Misconception By The Parties Allowed Dismissed Board Members To Seek Fees.

            In Gallian v. Gragnano, Case No. G057198 (4^th Dist., Div. 3 Sept. 15, 2020) (unpublished), HOA sued a homeowner for architectural violations under the CC&Rs, which prompted homeowner to crossclaim against the board members for indemnification, fault apportionment, and declaratory relief.  The board members were dismissed with prejudice, with HOA and homeowner reaching what they believed to be a binding settlement agreement which also bound board members (although not signed by them)—with the HOA attorney also representing the dismissed board members.  Later, when the HOA sought to enforce the settlement agreement, the trial judge found there was no meeting of the minds.  Well after the 60-day deadline for filing an attorney’s fees motion after the notice of dismissal was served, board members moved for fees as prevailing parties under Civil Code section 5975, the Davis-Stirling Act fee-shifting statute.  The lower court awarded board members $46,138 in fees, finding good cause to allow the fee motion filing based on the mutual misconception that the settlement agreement was binding.

            Homeowner’s appeal of the fee award did not alter the result in a 3-0 panel decision authored by Justice Ikola.

            Homeowner first argued that board members, after dismissal, could not file a fee motion.  This was dispatched easily because former parties after dismissal have collateral rights to seek fees and costs.  (Day v. Collingwood, 144 Cal.App.4^th 1116, 1124 (2006).)  Although the board members were not technical parties to the settlement agreement because they did not sign or expressly assent to its terms before the court, the circumstances at play—everyone’s belief the settlement agreement was valid such that no fees would be sought if it was—presented good cause to file the fee motion later.  “We would not expect a party attempting in good faith to negotiate a settlement to throw a wrench in the works by moving for an award of attorney fees during the negotiation.”  (Slip Op. at 6.)  Homeowner’s argument that the cross-complaint was not one to enforce the CC&Rs did not gain much traction, given that it was derivative of the HOA suit to enforce the governing common interest documents.