CALIFORNIA ATTORNEY'S FEES

Sanctions, SLAPP: Trial Court Appropriately Issued Sanctions Against Defendant, Who Was Involved In Pending Litigation With Plaintiff, For Violation Of Restraining Order Dictating Method And Nature Of Communications With Plaintiff

Defendant’s Claims Of Litigation Privilege And Anti-SLAPP Law Protections Were No Defense Of Her Violations Of Restraining Order.

            Self-represented husband and wife were involved in litigation through various lawsuits against self-represented ex-girlfriend of husband – claiming ex-girlfriend conspired with others to fraudulently obtain money, including substantial sums allegedly conned from husband.  Husband’s relationship with ex-girlfriend ended just prior to the beginning of his relationship with wife.

            Alleging harassing and intimidating conduct from wife, ex-girlfriend sought a restraining order in Wons v. Ferry, Case No. F073347 (5^th Dist., July 13, 2020) (unpublished).  The trial court, finding evidence of wife’s conduct justified issuance of a restraining order – but recognizing the parties remained embroiled in several pending litigations – issued a restraining order prohibiting contact between wife and ex-girlfriend except as necessary to participate in litigation, and ordering that such communication be conducted only in writing and to be not harassing in nature.

            When wife violated this order, the trial court imposed $500 in sanctions against her.  When wife continued to violate this order, the trial court imposed a second sanctions award against her in the amount of $1,000. 

            On appeal, wife argued that her communications with ex-girlfriend were not subject to restraint and sanctions because they were protected by the litigation privilege and anti-SLAPP laws.  The 5^th District didn’t buy it and affirmed.  The restraining order did not preclude wife from contacting ex-girlfriend about the ongoing litigation.  It simply limited the ways in which that contact could occur – in writing and without a harassing nature.

            Wife’s arguments of litigation privilege and anti-SLAPP law protections failed because she was not restrained from or sanctioned for pursuing litigation, but for violating a valid court order warranted by her own behavior.  Sanctions for violations of a restraining order are not precluded simply because the conduct occurs in the course of pending litigation.

Arbitration, POOF! Arbitrator’s Award To Defendant Of $258,181.03 In Attorney Fees Goes POOF! On Appeal

Arbitrator Exceeded Authority On Remand By Conducting Arbitration Inconsistent With Instructions From The 4/1 DCA

            It may not happen often, but arbitration awards do occasionally get reversed.  In this case, litigants are now returning for round three.

            In the first round, plaintiffs received an arbitration award of $30,000,000 in compensatory and punitive damages.  When defendant appealed, the 4/1 DCA reversed because plaintiffs had not provided adequate notice of their punitive damages claim.  Because the $30 million award combined the compensatory and punitive damages without differentiation – thus making it impossible for the appellate court to correct the award by simply striking the punitive damages – the appellate court remanded with instructions to conduct a new arbitration hearing on damages only.  Problem is that is not what happened.

            On remand, the new arbitrator vacated the liability and damage findings and allowed the parties to relitigate all issues. After an evidentiary hearing, the arbitrator found plaintiffs did not prove their claims, and awarded defendant $258,181.03 in attorney fees plus interest – with the trial court confirming the award and entering judgment in defendant’s favor.

            On appeal, in NCHF AMS II Houston v. Kaplan, Case No. D075842 (4^th Dist., Div. 1 July 13, 2020) (unpublished), three of four plaintiffs appealed – contending the trial court erred in confirming the award because the new arbitrator exceeded his authority by allowing defendant to relitigate liability issues.  The 4/1 DCA agreed and reversed with instructions for the trial court to vacate the judgment confirming the award and attorneys fees, to issue an order vacating the original arbitration award against defendant, and to remand for a new arbitration hearing solely on the issue of the amount of damages suffered by plaintiffs.

            We guess you could say defendant is suffering a reversal of a dramatic reversal of fortune!

Private Attorney General: No Abuse Of Discretion Where Trial Court Denied A $613,525 Code Of Civil Procedure § 1021.5 Fees Request By Plaintiff Achieving Limited Success

Plaintiff’s Action Did Not Result In A Significant Benefit To The General Public.

            Code Civ. Proc. section 1021.5 does not guarantee fee entitlement to a successful party in an action resulting in the enforcement of an important right affecting public interest.  Rather, section 1021.5 includes a three-prong prerequisite for an attorney fee award: (a) the action has resulted in a significant benefit to the general public or a large class of persons; (b) the necessity and financial burden of the private enforcement are such so as to make the fee award appropriate; and (c) such fees should not be paid out of the recovery, if any.  As such, a trial court adjudicating a section 1021.5 fees motion must determine the significance of the benefit the successful party has achieved and the size of the class receiving the benefit.

            In Golden State Environmental Justice Alliance v. City of Los Angeles, Case No. B295988 (2d Dist., Div. 3 July 10, 2020) (unpublished), plaintiff filed a petition for writ of mandate challenging the environmental impact report (EIR) prepared and certified by the City of Los Angeles in connection with the development of a 34-story residential building.  Plaintiff’s action resulted in very limited success – with the trial court decertifying the portion of the EIR associated with the project’s energy impact, and ordering City to prepare and recertify a revised energy impact analysis due to a calculation error.

            Plaintiff then moved, as the successful party, for $545,850 in section 1021.5 fees – later increasing the request to $613,525 due to time spent responding to discovery related to the fee motion – which included a 2.0 multiplier on merits-based work and a 1.5 multiplier on the fee motion on the $500 per hour rate.  The trial court denied plaintiff’s motion, concluding that although plaintiff’s action resulted in the correction of a calculation error in the EIR, it did not in any respect change the project’s environmental impact. 

            On appeal, the 2/3 DCA affirmed – finding no abuse of discretion given plaintiff’s action did not result in a significant benefit to the general public.

Civil Rights: Petitioner’s Neighborhood Association/Resident’s Trial Court Victory Under The California Voting Rights Act And California Constitution Was Reversed As A Matter Of Law

That Means That Petitioner’s Motion To Recover Fees Of $22 Million Under A One-Way Fee Shifting Statute Went Bye-Bye.

            Petitioner’s neighborhood association and a resident, in Pico Neighborhood Assn. v. City of Santa Monica, Case No. B295935 (2d Dist., Div. 8 July 9, 2020) (published), had successfully sued Santa Monica when a lower court ruled that the city’s at-large voting system to elect city council members discriminated against Latinos both under the California Voting Rights Act (CVA) and California Constitution.  In fact, the lower court ordered city to switch to a district-based voting system.  CVA, in Elections Code section 14030, has a one-way fee-shifting statute in favor only of prevailing plaintiffs, while routine costs are awardable to prevailing plaintiffs and to prevailing defendants, but to defendants only where the matter is deemed frivolous or the like.  After their win, Petitioner had a pending request for attorney’s fees and cost of about $22 million against City.

            Well, fee/cost exposure—for now—is no more worry for the City.  The 2/8 DCA reversed the lower court judgment as a matter of law and awarded costs to City.  Total reversal of fortune.

Costs: Where Both Plaintiff And Cross-Complainant Did Not Prevail, CCP § 1032 Required An Award Of Winning Costs To the Successful Defendant

However, Appellate Court Strongly Suggested That Attorney’s Fees Were Not Automatic, Given The Lower Court Can Find No One Prevailed—Fee Standard Is Different.

            In The Real Estate Store v. Michel, Case No. B301771 (2d Dist., Div. 3 July 8, 2020) (unpublished), defendant obtained a reversal of a “each side bears its own costs and fees” ruling, where routine costs had to be awarded to the defense.  However, the appellate panel strongly suggested that a fee award was not automatic because the lower court employs a discretionary standard when there are mixed results as far as determining who is the prevailing side.

            Here, a jury returned a verdict in favor of defendant on a complaint and in favor of the cross-defendant on defendant’s cross-complaint.  The lower court ruled that each side was to bear its own costs and fees, prompting an appeal by the defense.

            The 2/4 DCA reversed, determining routine costs were mandatory.  Numerous cases confirmed that CCP § 1032(a)(4) required an award of such costs to a defendant in a situation where neither the plaintiff nor the cross-complainant obtained any relief.  (McLarand, Vasquez & Partners, Inc. v. Downey Savings & Loan Assn., 231 Cal.App.3d 1450, 1453-1455 (1991); Zintel Holdings, LLC v. McLean, 209 Cal.App.4^th 431, 438-440 (2012); Cussler v. Crusader Entertainment, LLC, 212 Cal.App.4^th 356, 370-372 (2012); Schrader v. Neville, 34 Cal.2d 112, 113-115 (1949).)  However, on remand, a fee award was not automatic because the routine costs standard for a “prevailing party” is not determinative, because Civil Code section 1717 allows the trial judge to determine no side prevailed especially in a “mixed results” scenario. 

Intervenors, Prevailing Party, Private Attorney General, Special Fee Shifting Statutes: Intervenor Residential Group Were Not Successful For CCP § 1021.5 Fee Recovery Purposes Because They Lost Their Pragmatic Goal Of Stopping A Development Project

The Trial Judge’s Call On Which Side Achieved Its Litigation Objection Was Correct.

            On June 24, 2020, we posted on Redondo Beach Waterfront, LLC v. City of Redondo Beach, Case Nos. B291111/BS168564 (2d Dist., Div. 3 June 19, 2020), unpublished at the time.  We can now report that it was partially published on July 9, 2020, though the fee discussion portion remains unpublished.  You can read the partially published opinion here.

            In the published portion of the opinion, the 2/3 DCA agreed with a trial court ruling that a developer obtained vested rights, based on a vesting tentative tract map, for a Redondo Beach waterfront development before passage of a restrictive city development measure.  During the course of the matter, a residential interest group were allowed to intervene based on its belief the City could not adequately represent the city development measure’s proponents.  Intervenor moved for costs and private attorney general fees, but the lower court found that it was not a successful party—the first element necessary for CCP § 1021.5 fee recovery.

            The appellate court affirmed in an unpublished portion of its opinion.  The problem was that the developer did achieve its litigation goals, while the Intervenor seeking to halt the project did not.  The successful party analysis is pragmatically based, and Intervenor lost its attempt to stifle the project.  Intervenor’s partial success on some ancillary claims did not alter the conclusion.

Deadlines: Failure To Object To Magistrate’s Fee-Fixing Decision, Appealing To Circuit Court Rather Than Objecting In Front Of District Judge, Means The Deadline Was Blown And The Objections Waived.

Although Unsettled, District Found That The Ruling Involved a Dispositive Issue, Which Still Did Not Excuse The Failure To Object.

            In LCS Group, LLC v. Shire LLC, Case No. 18-cv-2688 (S.D.N.Y. June 22, 2020), U.S. District Judge Analisa Torres determined that plaintiff and its attorneys, who were sanctioned earlier in attorney’s fees in the amount of $133,803.75 in favor defendants, failed to timely object to a magistrate’s decision fixing the fees.  What the plaintiff side did was to move for reconsideration and then appeal the ruling to the Second Circuit Court of Appeals.  The federal appellate court much later decided that it lacked jurisdiction to hear the appeal because the ruling was either a report and recommendation by a magistrate on a dispositive issue or a ruling on a non-dispositive issue, neither of which could be appealed. Instead, District Judge Torres found that the proper course was for plaintiff/its attorneys to object to the magistrate’s ruling within 14 days under F.R.Civ.P. 72.  That deadline had long passed, so the fee award had to stand.  The district judge determined that the motion for fees did pose “dispositive questions” (even though the Second Circuit found the issue was unsettled), but that still did not excuse the failure to make timely objections under Rule 72. 

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Arbitration: “Award” For Arbitration Correction Purposes Depends On Whether Every Aspect Of A Dispute Is Resolved, With Post-Arbitration Judicial Proceeding Fees Allowable

Breadth Of Fees Clause Sustained The Post-Arbitration Judicial Fees.

            In Lonky v. Patel, Case No. B295314 (2d Dist., Div. 2 July 2, 2020) (published), the Second District had to consider two issues:  what is an arbitration final “award” for purposes of jurisdictional correction purposes and are post-arbitration judicial proceeding fees to the prevailing party awardable?  The answers will follow.

            In short, plaintiffs in Phase I won a $558,266 compensatory award, leaving punitive damages and fee/costs issues for a later phase.  Then, this interim award was later modified to decrease the compensatory award to $310,838.62.  In Phase II, the arbitrator reflected the compensatory damages correction and awarded $1 million in punitive damages, also containing blanks for fees and costs to be determined.  Then, the Phase II award was modified upward to $434,158,25.  Finally, in Phase III, there was a final award of $434,158.25 in compensatory damages, $1 million in punitive damages, and $791,826.26 in attorney’s fees/costs.  The trial court confirmed most of it, but the judge did slash the $434,158.25 compensatory award down to $310,138.62 based on the perception it could not be jurisdictionally corrected.  However, it did award $65,197 in post-arbitration judicial proceeding fees based on plaintiffs having prevailed.

            On appeal, the 2/2 DCA returned the compensatory award to $434,158.25 and affirmed everything else.  It found that “award,” for arbitration correction purposes, needed to be a pragmatic test of whether it resolved every part of the parties’ controversy.  When that test was used, the Phase III award was justified in toto.  With respect to the post-arbitration judicial proceeding fees, they were allowable.  So, that meant plaintiffs could now seek more fees and costs for winning on appeal.

Fee Clause Interpretation: Prevailing Plaintiff Freight Forwarder Improperly Denied Contractual Attorney’s Fees Because Lower Court Erroneously Interpreted The Breadth Of Clauses In One Of Two Contracts

Confusion Arose Because There Were Two Contracts, But The Earlier One Had Terms And Conditions Applying To the Subsequent Contract; Because Fee Reasonableness Not Questioned, 4/3 DCA Remanded With Directions To Enter The Requested Fee Amount.

            Plaintiff freight forwarder had 2013 and 2015 contracts with defendant rice importer requiring reimbursement of certain third-party expenses, with the 2013 contract having a contractual fees clause and with the 2015 contract having no fees clause.  Plaintiff sued for about $36,000 in unpaid third-party expenses, and the trial court awarded $18,213.93 plus interest after a bench trial.  In a prior merits appeal, the appellate court determined that the 2015 contract incorporated the terms and conditions of the 2013 contract—a crucial determination for the end result with respect to fee entitlement.  Plaintiff moved for contractual fees of $31,713.50, but the lower court denied them based on plaintiff’s failure to break the fees down between the 2013 and 2015 contracts. 

            There was a reversal and remand of the fee denial in Western Overseas Corp. v. KRBL, LLC, Case No. G057515 (4^th Dist., Div. 3 June 30, 2020) (unpublished).

            The reason for the reversal/remand was that the lower court failed to adhere to the prior appellate ruling that the 2013 contract terms, including the fee clauses, were part and parcel of the 2015 contract, such that no apportionment was needed.  There were two clear contractual fee clauses in the 2013 agreement which allowed for fee entitlement to plaintiff.  The 4/3 panel, authored by Acting Presiding Justice Aronson, remanded with directions that the lower court award plaintiff the requested fees, rather than determine reasonableness—after all, defendant never challenged the reasonableness of the requested fees.

Judgment Enforcement, SLAPP: Lower Court Did Not Err In Granting Only Minimal Postjudgment Fees/Costs Of $735 To Winning SLAPP Defendant Where Plaintiff Interpled $22,000 As An Undertaking To Secure Underlying Trial-Level SLAPP Fee Award

Requested Fees/Costs Of Almost $6,700 Were Not Reasonable Or Necessary Under CCP § 685.040.

            In Padilla III v. Jakubaitis, Case No. G057424 (4^th Dist., Div. 3 June 30, 2020) (unpublished), a SLAPP defendant successfully had stricken one cause of action, with the trial court awarding it about $14,300 in mandatory fees/costs.  While things were on appeal, plaintiff interpled $22,000 as the equivalent of an appellate undertaking.  However, defendant undertook some postjudgment enforcement efforts, then moving to recover almost $6,700 in fees and costs under CCP § 685.040, a postjudgment fee-shifting statute allowing recovery of reasonable and necessary as collectible costs after the SLAPP grant was affirmed. The trial judge found most of the fees/costs were not reasonable or not necessary, awarding only $735.  Defendant appealed, but the appellate court affirmed because the record showed plaintiff did try to “secure” the trial level fee/costs award, and the defense did not demonstrate its activities met the “reasonable/necessity” standard.  Justice Fybel penned the 3-0 decision for the court.

Appeal Sanctions, Appealability: 4/3 DCA Imposes $25,452 In Sanctions Against Counsel For Nonparty Group Of Church Congregation Members Who Appealed Trial Court’s Ruling On Their Motion For Protective Order

Nonparty Group’s Motion For Protective Order Was Actually A Nonappealable Motion For Reconsideration Of A Discovery Ruling, But 4/3 DCA Treated Appeal As A Writ Petition To Stop The Harm Caused By Delaying Litigation In This Case.

            In Roe 1 v. Doe 2, Case No. G057684 (4^th Dist., Div. 3 June 29, 2020) (unpublished), plaintiffs brought an action alleging they were molested as children during Bible study sessions in an Orange County congregation of the Jehovah’s Witness Church.  Through discovery, plaintiffs sought production of files related to child molestations by church members that had been compiled the highest level of Jehovah’s Witness’s governing body (Watchtower).  To resolve a dispute over the production of the molestation files, the trial court ordered they be produced with specific redactions and under a protective order regarding the use of the files.  In violation of the trial court’s order, Watchtower instead produced documents using a pseudonym procedure that redacted all victims and third party identifying information (including names of congregations, victims, elders, witnesses, and alleged perpetrators) and replaced it with pseudonyms composed of letters and numbers.  Plaintiffs’ counsel notified Watchtower of the noncompliant production, and moved for sanctions.  The day after plaintiffs’ counsel notified Watchtower of non-compliance, a nonparty group of congregation members, who feared information in the documents would harm their families, filed a federal complaint unsuccessfully seeking to enjoin the superior court from enforcing its discovery order.

            Meanwhile, the nonparty group also filed a motion for a protective order requesting that the trial court modify its discovery order “to exempt and recall from production documents mentioning [them] or their family members” or “to exempt all documents with clergy-penitent communications from production and permit complete redaction of all information that could lead to the identification” of the nonparty group.  The trial court denied the motion as untimely, and concluded the motion was actually a motion for reconsideration of the discovery ruling – one that failed to set forth new or different facts, circumstances, or law as required under Code Civ. Proc. section 1008(a).  The trial court then continued plaintiffs’ motion for sanctions – ordered plaintiffs’ counsel to file an updated supplemental declaration setting forth the fees and costs incurred in bringing the motion, and stating it was inclined to grant if Watchtower failed to comply with the discovery order by nine days before the continued hearing.  As this deadline approached, the nonparty group appealed and requested a stay enforcement of the discovery order – with the trial court imposing a partial stay and vacating the hearing on plaintiffs’ motion for sanctions.

            The 4/3 DCA agreed with the trial court’s assessment that nonparty group’s motion was one for reconsideration of a discovery order, and that it was nonappealable.  However, based on the circumstances of the case, the panel treated the appeal as a writ petition on a motion for protective order because it “perceive[d] the need to put an end to this matter so the case can get back on track in the lower court.”  To that end, the 4/3 DCA found no abuse of discretion – concluding the trial court had properly found the motion untimely.  However, the panel was not quit finished and – finding the appeal, taken from a nonappealable order, to be frivolous and supported with meritless arguments – imposed appeal sanctions of $25,452 against nonparty group’s counsel.  In a 3-0 decision authored by Justice O’Leary, the 4/3 DCA opined on the possible motivation behind this appeal.  “It is difficult to imagine how an attorney could be unaware of the large body of legal authority, including Supreme Court decisions, holding discovery orders are not appealable.  It appears counsel may have been aware the appeal could be dismissed, but by filing the appeal, he achieved a one year stay of the May 2018 discovery order, and postponed a sanctions hearing.”  

Requests For Admission, Sanctions: Costs Of Proof Sanctions Affirmed Against Contestants To Will Who Denied Critical RFA Without Reasonable Ground To Believe They Could Prevail On The Matter At Trial

The Only One Of Four Will Contestants Who Showed For Trial Provided No Evidence To Support The Request For Admission Denial.

            Estate of Moshier, Case No. G057076 (4^th Dist., Div. 3 June 29, 2020) (unpublished) involved a will contest brought by decedent’s adoptive brother and three adult nieces against decedent’s wife.  Decedent’s will named wife as the executor of his estate and left the entire estate to her – which included the house decedent had inherited from his late father where decedent and wife lived.  Decedent had no children. When wife petitioned to probate the will, brother and nieces contested – seeking an intestate share of the estate as, they argued, the will did not comply with Probate Code sections 6110 and 6111 because it was witnessed only by wife instead of two individuals, and was not signed by decedent because the signature omitted decedent’s middle initial.

            When wife propounded discovery, contestants denied a Request for Admission asking for admission that decedent’s intent was to leave his entire estate to wife.  Instead, contestants claimed the house decedent inherited was meant to stay in the family and decedent would not have left the house to anyone but decedent’s adoptive brothers.  At trial, decedent’s best friend and his biological half-sister testified that decedent’s intent was to leave his entire estate to his wife.  On the other side, only one person showed for trial – a niece who had not seen the decedent in over 25 years, had never spoken with decedent about his property, will or intentions as to his estate, and who had no documents or other witnesses to support the contention that the house was to stay in the family.  The trial court found evidence supporting decedent’s intent to leave everything to his wife to be clear and convincing, and denied the will contest.  Afterward, wife successfully moved for Code of Civil Procedure § 2033.420 costs of proof sanctions to recover the fees she incurred in proving the truth of the matter regarding decedent’s intent, and was awarded $23,675 in fees and $3,707 in costs.

            The 4/3 DCA affirmed.  Contestants’ argument that the trial judge, rather than a temporary judge, was required to hear the sanctions motion fell flat.  First, contestants had stipulated to having the temporary judge hear the motion and had failed to withdraw that stipulation.  Second, the motion for costs of proof sanctions involved sanctionable conduct during pretrial discovery, not sanctionable conduct during trial, and ruling on the motion did not require the trial judge’s knowledge of the parties’ trial conduct.  Beyond this, the 4/3 DCA concluded there was no abuse of discretion in awarding the costs of proof sanctions – wife proved the truth of decedent’s intent at trial, and contestants had no reasonable ground to believe they would prevail on the issue of decedent’s intent.

Private Attorney General: Doe v. Regents Of The University Of Cal. Decision Now Published

Narrowly Focusing On Plaintiff’s Personal Interest In Bringing Suit, Rather Than Significance Of Constitutional Due Process Rights Effectuated By Plaintiff’s Action, Was Error For Purposes Of Fee Determination Under Section 1021.5.

            In our June 10, 2020 post, we discussed the case of Doe v. Regents of the University of Cal., Case No. B293153 (2d Dist., Div. 6), which was unpublished at the time.   The case holds that determination of entitlement to Code Civ. Proc. § 1021.5 attorney fees requires looking at a broader scope of the effect of plaintiff’s actions – that fees cannot be denied merely because the primary effect of the litigation was to benefit the individual rather than the public.  Although Doe brought a suit based on his own personal interest, his action resulted in significant benefit to all students at UC Santa Barbara, thereby entitling him to attorney fees under section 1021.5.   Doe v. Regents of the University of Cal.was certified for publication on June 29, 2020.

Judgment Enforcement, Section 1717: In A Case Of First Impression, The 4/3 DCA Affirms Section 1717 Attorney Fees To Prevailing Alter Ego Defendant In An Enforcement Action For An Underlying Breach Of Contract Judgment

Prevailing Alter Ego Defendant Would Have Been Entitled To Section 1717 Fees For Defeating Plaintiffs’ Claims If Made In The Underlying Action Even Though He Was Not A Signatory On The Contract.

            In MSY Trading Inc. v. Saleen Automotive, Inc., Case No. G057093 (4^th Dist., Div. 3 June 26, 2020) (published), judgment creditor plaintiffs brought an enforcement action against three defendants seeking to hold them liable on the underlying breach of contract judgment as alter egos of the judgment debtors.  The trial court granted the motion as to only one of the defendants and denied as to the other two defendants.

            Afterward, one of the defendants moved for attorney fees – with the trial court holding that equitable considerations entitled prevailing defendant to fees pursuant to Civil Code § 1717.  Although the immediate action was for enforcement rather than breach of contract, the trial court reasoned that defendant would have become liable for the underlying judgment as well as the attorney fees if plaintiffs had succeeded in having him added as a judgment debtor.

            On appeal, plaintiffs argued that because the action was an enforcement action and not “on a contract,” there was no statutory basis for an award of fees to prevailing defendant.  The 4/3 DCA disagreed with this “facial[ly] appealing” argument and affirmed.

            In an opinion authored by Justice Ikola, the 4/3 DCA found the principles in Reynolds Metals Co. v. Alperson, 25 Cal.3d 124 (1979) persuasive.  Reynolds holds that the intent of section 1717 is to ensure mutuality in the availability of attorney fees, and that “[i]ts purposes require [Civil Code] section 1717 be interpreted to further provide a reciprocal remedy for a nonsignatory defendant, sued on a contract as if he were a party to it, when a plaintiff would clearly be entitled to attorney’s fees should he prevail in enforcing the contractual obligation against the defendant.” (Id. at p. 128.)  Observing that if plaintiffs had brought the same alter ego allegations against defendant in the underlying breach of contract action, and defendant had prevailed, he would have been entitled to attorney fees, the appellate panel found defendant’s argument on point – that the timing of the alter ego claim should not be the basis for determination of the right to fees. 

            After all, if the timing of the alter ego claim was the deciding factor in the right to fees, all alter ego claims would be made post-judgment.

SLAPP: No Abuse Of Discretion Where Trial Court Awarded Each Of Three Successful SLAPPing Defendants Separate Attorneys’ Fees.

Plaintiffs’ Claims of Duplicative Efforts, Excessive Hourly Rates, And Inefficiencies Were Not Supported By The Record.

            In Truong v. Philhower, Case Nos. GO55054 et al. (4^th Dist., Div. 3 June 26, 2020) (unpublished), two plaintiffs asserted separately up to ten claims against each of three defendants for malicious prosecution.  These nearly sixty claims stemmed from causes of action alleged in an underlying action against numerous defendants.  In the underlying action, the two plaintiffs in this case had prevailed against the causes of action through dismissals, demurrers or the jury’s verdict.  The three defendants in this case were the underlying action’s plaintiff/his company, plaintiff’s lead counsel, and co-counsel.

            After successfully SLAPPing plaintiffs’ malicious prosecution action, defendants were separately awarded a combined total of about $266,575 in mandatory attorney fees pursuant to Code Civ. Proc. § 425.16(c)(1).  Plaintiffs appealed the dismissal of their complaints and attorney fees awards.

            In an opinion authored by Justice Goethals, the 4/3 DCA affirmed.  Under the two-step analysis for the governing standard for granting an anti-SLAPP motion, as recently set out by the 4/3 DCA in Mobile Medical Services, etc. v. Rajaram, 241 Cal.App.4th 164, 170 (2015), the appellate panel concluded defendants’ pursuit of the underlying action was a protected activity and that plaintiffs failed to meet their burden of establishing a probability of prevailing on the claim. 

            As to the attorney fees awards, plaintiffs challenged the amount awarded to each defendant – claiming duplicative efforts between the defendants, excessive hourly rates, and that legal work performed by defendants could have been done more efficiently.  However, there was no support for these claims in the record.   Rather, the record established that defendants did not charge to draft papers where the template was created by another defendant’s counsel, billing rates were well within the range for comparable work in the area, and the trial court scrutinized the attorneys’ billing records, added a $25/hour multiplier for contingency work where appropriate, and made reductions where appropriate.

Sanctions: Section 128.5 Sanctions Reversed In Second Appeal On Sanctions Issue Because Subjective Bad Faith Determination On Remand Was Made By Judge Other Than Trial Judge

1/2 DCA Also Concludes That An Appellate Court Is Not Bound To The Rule Of Law Of The Case Where Adherence Would Result In An Unjust Decision.

            Armstrong v. Daly, Case No. A155656 (1^st Dist., Div. 2 June 26, 2020) (unpublished) represents the second appeal related to a Code Civ. Proc. § 128.5 motion for sanctions in this case which was filed by defendant against plaintiff’s attorney – alleging the petition for dissolution of marriage, where there was no valid marriage, was pursued for the sole purpose of causing unnecessary delay in defendant’s unlawful detainer action against plaintiff. 

            The first appeal was filed by defendant when the trial court denied his section 128.5 motion for failure to comply with the safe harbor provision found in Code Civ. Proc. § 128.7.  When the 1/2 DCA reversed and remanded, based on San Diegans for Open Government v. City of San Diego, 247 Cal.App. 4^th 1306 (2016), the motion was assigned to a new judge who imposed sanctions of $23,352.68 against plaintiff’s attorney without further briefing or argument.  This second appeal was filed by plaintiff who argued for reversal based on intervening case authority and legislative history establishing that section 128.5 contained a safe harbor provision, and on the grounds that the motion was not heard by the trial judge on remand.    

            The appellate panel reversed – concluding that ruling on the section 128.5 sanctions motion required a finding of subjective bad faith, and that the trial judge – who observed the trial as well as plaintiff’s counsel’s justification for bringing a dissolution proceeding where there was no valid marriage – was in the best position to make that determination.  (Orange County Dept. of Child Support Services v. Superior Court, 129 Cal.App.4^th 798, 805-806 (2005).)  To that end, the 1/2 DCA ordered that, on remand, the trial judge hear the motion if defendant continues to pursue sanctions.

            The panel also rejected defendant’s contention that it was precluded from revisiting its prior holding in this case under the doctrine of law of the case.  The 1/2 DCA recognized the doctrine of the law of the case, which generally precludes multiple appellate review of the same issue in a single case, as a rule of procedure that will be disregarded when adherence would result in an unjust decision.  Here, the 1/2 DCA found, the principal ground for exception to the doctrine of law of the case existed – an intervening or contemporaneous change in the law.  Since the panel’s first ruling in this case on the sanctions issue, the Legislature urgently reacted to San Diegans by amending section 128.5 to clarify its previous intent by importing section 128.7 conditions and procedures, including the 21-day safe harbor provision.  Also, since the panel’s first ruling in this case, appellate courts had uniformly held that section 128.5 (before amendment) required compliance with the safe harbor provision of section 128.7.  (See Nutrition Distribution, LLC v. Southern SARMS, Inc., 20 Cal.App.5^th 117, 130 (2018).) 

SLAPP: Combined Total Of $45,899.67 In Trial And Appellate Attorney Fees And Costs Against Successfully SLAPPed Plaintiff Affirmed On Appeal

Plaintiff Now Facing A Third Round Of Fees From Second Unsuccessful Appeal.

            After settling a case brought against his company by a former employee, plaintiff in Uziel v. Employment Lawyers Group, Case No. B299226 (2d Dist., Div. 4 June 26, 2020) (unpublished), filed a lawsuit claiming misconduct against defendant law firm that had represented former employee. Defendant successfully SLAPPed back, and plaintiff filed his first appeal in the case.  When the 2/4 DCA affirmed the lower court’s order – concluding plaintiff could not prevail on any of his claims against defendant’s protected activity in prosecution of the former employee’s action  – plaintiff unsuccessfully petitioned the appellate court for a rehearing, then filed an unsuccessful petition to the California Supreme Court for review.

            Meanwhile, defendant was awarded $14,120 in trial related attorney fees and costs.  A little over a year later, defendant also received an award of $31,779.67 in appellate attorney fees.  About a month later, the trial court entered judgment and incorporated its prior SLAPP and attorney fees/costs orders. 

            Once again, plaintiff unsuccessfully appealed – attempting to include in his appeal the trial court’s order on the anti-SLAPP motion and arguing it was warranted based on his former counsel’s declaration filed with the trial court and Amicus Curiae letter filed with the Supreme Court for review.  This argument went nowhere as both the trial court and appellate court were precluded from reopening plaintiff’s case.  The trial court’s order dismissing plaintiff’s case was final upon the 2/4 DCA’s issuance of the remittitur affirming the trial court’s order – which issuance followed plaintiff’s unsuccessful petition to the California Supreme Court. 

            As to the attorney fees, plaintiff had missed the deadline for appealing defendant’s trial related fees/costs award.  Incorporation of the trial related fees/costs award in the later entered judgment did not reinstate or extend plaintiff’s deadline.  As to the awarded appellate attorney fees, plaintiff failed to offer any argument or legal authority – thereby forfeiting the issue.

            Unfortunately for plaintiff, it looks like he is likely headed back to the trial court for another round on yet more attorney fees.  The 2/4 DCA ordered defendant is to recover its costs and attorney fees on this second appeal.

In The News: Top Law Firms Not Doing So Bad During The Pandemic

However, Next Few Months May Define What Actually Happens.

            We were somewhat surprised by the results of a Wells Fargo Private Bank’s legal specialty’s group survey of April-May 2020 data for 52 of the top grossing law firms and 20 midsized/regional law firms, which chartered some trends during the coronavirus pandemic.

            Overall, cash collections increased more than 3% in May 2020, with expenses basically flat as the surveyed firms decreased discretionary spending.  54% of reporting firms said client requests for discounts increased in May as compared to April 2020.  52% also said that there were more client requests for payment extensions in May of this year.  Number of associates dropped by just .9%, while nonlegal staff positions dropped by 4.1%.  Nonlegal staff layoffs occurred most often in jobs that did not lend themselves to remote work. 

            What practice areas have suffered?  Answer:  transactional, corporate and real estate.  What practice areas have remained robust?  Answers:  bankruptcy; banking; labor/employment (with a host of labor issues raised by the COVID-19 pandemic). 

            Liquidity was better than expected, with 90% of the surveyed firms having the ability to cover three months of monthly expenses, excluding partner draws.  More than 50% of the reporting firms cut of delayed partner contributions so there was more cash on hand.

            The real test may be future collections in the next 3-4 months.  That future may be testy, which may greatly influence how firms end up at the end of 2020. 

Family Law: Ex-Husband’s Adverse $31,500 Sanctions Award Under Family Code Section 271 Sustained On Appeal

Sanctions Do Not Need A Precise Correlation To Sanctioned Conduct And The Specific Fees.

            In Lebid-Jurtschyk v. Lebid-Jurtschyk, Case No. B300370 (2d Dist., Div. 4 June 25, 2020) (unpublished), ex-husband was hit with Family Code section 271 sanctions for insisting on too high of a listing price for a house, not signing documents to get the deal done, and not contributing to repairs on the house.  Ex-husband’s appeal was not successful, given the facts showed he was not cooperative in trying to settle the divorce issues.  With respect to the argument that some related time was not compensable, the appellate court indicated that section 271 does not require a precise correlation between the sanctioned conduct and the fee award, a determination affirmed on appeal.  (In re Marriage of Corona, 172 Cal.App.4^th 1205, 1226 (2009).)