CALIFORNIA ATTORNEY'S FEES

Books: Co-Contributor Marc Reviews "We the Corporations: How American Businesses Won Their Civil Rights"

Co-Contributor Marc Has Reviewed The Book For California Litigation.

        In the latest issue of California Litigation, Vol. 32, No. 1 (2019), p. 25, Marc reviewed Adam Winkler's We the Corporations: How American Businesses Won Their Civil Rights. You can read the review, which is republished with the permission of California Litigation, by clicking here.

Allocation: Intertwined Contract/Tort Work Justified Fee Award

Prevailing Party Was Entitled To Fee Recovery Of $67,830 Based On Fee Clauses In Notes.

            In R&J Construction, Inc. v. Abadir, Case Nos. A153301/A154101 (1^st Dist., Div. 5 May 10, 2019) (unpublished), prevailing party obtained a $67,830 fee recovery based on contractual fees provisions in several notes.  On appeal, the losing party argued that fees were improperly awarded for claims sounding in tort versus contract.  However, given that intertwined work on tort claims can support recovery of work on non-contractual claims, that was the case here, resulting in affirmance of the fee award. 

Section 998: Client’s “Waiver Of Costs” CCP § 998 Offer Was Enforceable Where Client Defenses To Law Firm Fee Collection Disputes Were Revealed And Where Firm Voluntarily Dismissed The Case Many Months After Not Accepting The Offer

Expert Fees Of $21,377.08 Were Assessed Against Law Firm Under 998 Cost-Shifting Feature.

            In Ellis Law Group, LLP v. Nevada City Sugar Loaf Properties, LLC, Case No. C080930 (3d Dist. May 8, 2019) (unpublished), client disputed a law firm’s contention it was owed for unpaid legal fees based upon a conflict of interest and nonreceipt of a billing statement (for work the client said it never authorized).  Well into the case, after client’s affirmative defenses were revealed to the law firm, client served a CCP § 998 offer by which client would waive costs if law firm dismissed the suit with prejudice, an offer not accepted by the law firm.  Fourteen months later, law firm dismissed the matter without prejudice.  Client moved for recovery of $21,377.08 in expert fees (mainly for professional ethics experts) based on section 998’s cost- shifting feature.

            The Third District affirmed the expert fee award against law firm.

            A voluntary dismissal without prejudice will trigger section 998 cost shifting.  (Mon Chong Loong Trading Corp. v. Superior Court, 218 Cal.App.4^th 87, 93-94 (2013).)  Given that client notified law firm about significant affirmative defenses and provided detailed discovery responses in support of the defenses, there was a probability that client would win such that a “waiver of costs” offer was not unreasonable under the circumstances.  Retaining professional experts based on a conflict of interest defense should not have been a surprise to the law firm, such that the waiver of the eventually-awarded expert fees did have “value” to the law firm.  There is no “reasonable rejection exception” to the operation of section 998, such that the lower court award of expert fees was no abuse of discretion.  (Arno v. Helinet Corp., 130 Cal.App.4^th 1019, 1027 (2005).)

Miscellaneous: NALFA Is Hosting An Attorney Fee CLE Program

National Association of Legal Fee Analysis Is Hosting A Program On May 30, 2019.

        NALFA hosts CLE programs on attorney fee and legal billing issues.  NALFA is hosting an upcoming CLE webinar, “View From the Bench: Awarding Attorney Fees in Federal Litigation” on May 30, 2019 from Noon-2pm (Central).  This CLE program features an all judicial panel of sitting federal judges.  Panelists include the Honorable Eduardo C. Robreno, Senior Judge, U.S. District Court for the Eastern District of Pennsylvania, the Honorable James G. Carr, Senior Judge, U.S. District Court for the Northern District of Ohio, and the Honorable Nanette K. Laughrey, Senior Judge, U.S. District Court for the Western District of Missouri.  This CLE program is approved for 2.00 credit hours in CA, FL, GA, IL, OH, PA & TX.  For more details or to register, visit http://www.thenalfa.org/CLE-Programs/.

In The News . . . . City Of San Juan Capistrano Seeking To Recoup $1.9 Million In Legal Fees From Insurer In Equestrian Center Contamination Settlement

Lawsuit Claims Insurer Only Paid 25% Of Total Fees.

            As reported in the May 8, 2019 edition of The Orange County Register, San Juan Capistrano has sued its insurer Tokio Marine Specialty Insurance Company to recoup $1.9 million in unpaid legal fees the City incurred in reaching a settlement respecting water contamination at the Rancho Mission Viejo Riding Park. The suit claims that the insurer only paid about 25% of the $2.3 million the City spent on reaching the equestrian center settlement.

Probate: $1.867 Million Probate Fee Award To A Prevailing Party Was No Abuse Of Discretion Based On Complexity Of The Case

Fee Entitlement Existed Under Probate Code Sections 21351 And 17211.

            In Estate of Ashlock, Case Nos. F076941 et al. (5^th Dist. May 3, 2019) (unpublished), a prevailing party in a complex probate case with high stakes was awarded $1.867 million out of a requested $2.885 million, which included a positive 1.5 multiplier. Losing party was aghast and appealed, but no different result followed.

            With respect to the argument that the appeal was not timely filed under CRC 3.1702(a), the Fifth District agreed with prevailing party that those deadlines did not apply to probate cases, but any error was harmless because the lower court had good cause to extend the deadline filing date anyway.

            Losing party argued a statement of decision was required on the fee issues, but that was dismissed because it is not the case under existing California law.

            Fee entitlement bases did exist for a fee award. Because losing party was a drafter of the germane trust and a putative beneficiary, Probate Code section 21351(d), (e)(1) did have a statutory fee provision applying to this same situation where there was fraud/undue influence by the trust drafter. Beyond that, Probate Code section 17211, a statutory fee provision relating to trustee challenges, was intertwined with other issues so as to provide a second basis for fee entitlement.

            The billing records provided adequate substantiation, with losing party failing to raise the proper hearsay objection that the records were not properly authenticated as business records.

            Finally, the lodestar and multiplier awards by the lower court was not erroneous, with this opinion having a good survey of multipliers in complex cases.

Partition: Trial Judge Did Not Abuse Her Discretion In Allocation of Fees In Partition Dispute

Fees Were Proportionally Allocated, Although Decreased For One Party A Little More For Vague Billings.

            The lower court in Orien v. Lutz, Case No. B289959 (2d Dist., Div. 8 April 30, 2019) (unpublished), apportioned attorney’s fees in a partition dispute for a common benefit proportionately between three parties under Code of Civil Procedure section 874.040. However, the trial judge also reduced one sibling’s fees by a quarter based on vague billings. That reduction from the proportionate amount was no abuse of discretion, because vague billings can justify such a further decrease from the one-third/one-third/one-third allocation made by the lower court. Affirmed.

Probate: Fees Of Probate Administrator Wrongfully Not Given Administrative Priority Over Other Estate Distributions

Probate Code Section 11420 Dictated, Although Appellate Court Was Disturbed By Administrator’s Counsel’s Potential Conflicts Of Interest.

            In Estate of Steinberg (Hooy & Hooy v. Steinberg), Case No. A150046 (1^st Dist., Div. 2 April 30, 2019) (unpublished), a law firm serving as counsel for an initial administrator of a probate estate had payment of its fees subordinated by the probate court to other payments from the estate’s assets. That result was reversed on appeal based on Probate Code section 11420, which allows ordinary and extraordinary expenses to have priority over other expense distributions from an estate. However, although the parties did not really raise the issue or the fee disgorgement implications, the appellate court was disturbed by potential conflicts of interest and ethical violations by the appealing counsel, such that the question did not have to be confronted—but observing in the process that “this probate matter is an issue-spotting exercise in professional ethics that could rival a law school exam.”

Fee Clause Interpretation, Section 1717: Post-Arbitration Fee Request Denied Because Contract For Which Entitlement Sought Was Never Submitted For Judicial Review

Myriads Of Other Bases For Fee Entitlement, First Introduced On Appeal, Rejected.

            If you are going to seek fee recovery, make sure you put forth all of your bases for fee entitlement at the trial court level. The fee claimant in Glass v. Veros Credit, LLC, Case No. G055257 (4^th Dist., Div. 3 April 30, 2019) (unpublished) learned this lesson the hard way.

           After winning an auto installment contract dispute in an arbitration and gaining a $170,294.50 fee recovery, the winning party sought post-arbitration fees of $17,204.50 for confirming the arbitration award. However, the winner only sought fees based on a contract, never providing it in lower court fee hearings. Both the trial and appellate courts rejected the fee request. Pure and simple, the failure to provide the contract was dispositive. Although winner had a lot of additional fee entitlement bases on appeal, the appellate court thought it unfair to resolve alternate theories never advanced below and to make the appellate court engage in “new” adjudications on appeal. Justice Goethals was the author of the 3-0 opinion.

Class Action: $41,732,889 Fee And $3,184,274.38 Expense Awards To Class Counsel In NCAA Grant-In-Aid Cap Antitrust Litigation Affirmed By Ninth Circuit

20% Settlement Fund Fee Award Was No Abuse Of Discretion, Cross-Checked By Lodestar.

           A class of college student athletes sued the NCAA over its capped maximum grant-in-aid prior policy which did not cover the full cost of school attendance. Both sides reached a settlement under which a mega-fund settlement of $208.664 million was reached, which would make payouts to 53,000 class members and, for students playing all four years in college, would produce a payout of $6,000 each. Class counsel moved for recovery of fees and expenses. The district judge supervising the case awarded $41,732,889 in fees and $3,184,274.38 in expenses. The fee award was 20% of the gross settlement fund and was the product of a 3.66 positive multiplier applied to a lodestar of about $11.4 million. One student objected in an appeal to the Ninth Circuit.

            On April 17, 2019, the Ninth Circuit affirmed in In re National Collegiate Athletic Assn. Athlete Grand-In-Aid Cap Antitrust Litig., No. 8-15054 (9^th Cir. April 17, 2019) (unpublished memorandum decision).

            Given that the Ninth Circuit follows a 25% percentage-of-recovery benchmark, the 20% award in this case was no abuse of discretion. It also was cross-checked by detailed billing records which justified an enhancement to the lodestar. Finally, with respect to expenses, the objector argued that those had to be subtracted from the gross settlement for purposes of the ultimate fee calculation. However, the Ninth Circuit rejected that argument because the district court had discretion to base the fee award on either the gross or net settlement funds figure.   (In re Online DVD-Rental Antitrust Litig., 779 F.3d 934, 953 (9^th Cir. 2015).)

Sanctions: Respondents Concede That $1,110 Sanctions Award Against Opponent Had To Be Reversed Under CCP § 128.5

2/2 DCA Follows Sister Division 7’s Reasoning In Nutrition Distribution.

            In Kleidman v. Hilton & Hyland Real Estate, Inc., Case No. B285692 (2d Dist., Div. 2 April 26, 2019) (unpublished), $1,100 in sanctions were awarded against appellant and in favor of respondents based on a request in a motion to strike costs. Commendably, respondents conceded that the sanctions were improper because they were not made separately from the motion to strike costs and did not follow the 21-day safe harbor provision in CCP § 128.7(c)(1). That was based on the reasoning in Nutrition Distribution, LLC v. Southern SARMs, Inc., 20 Cal.App.5^th 117 (2018), a 2/7 DCA decision holding that CCP § 128.5 motions must comply with the section 128.7 safe harbor requirements. The 2/2 DCA apparently sides with Nutrition Distribution on this issue in the sanctions area.  

Homeowner Associations, Private Attorney General, Section 1717: Defendant Homeowners Winning A Tree Dispute With Another Homeowner Neighbor Rightfully Denied Attorney’s Fees Under CC&Rs, Civil Code Section 1717, And Private Attorney General Statute

However, A Dissenting Justice Would Have Found Fee Entitlement Under CC&Rs And Section 1717.

           The next case, Shah v. Ross, Case No. B286783 (2d Dist., Div. 5 April 25, 2019) (unpublished), involved a situation where defendants/homeowner neighbors won a tree dispute initiated by fellow plaintiff homeowner. Defendants then sought fees under a CC&Rs fees clause, Civil Code section 1717 mutuality principles, and the private attorney general statute (CCP § 1021.5). The trial judge denied fees on all bases.

            A 2-1 majority of the 2/5 DCA affirmed, with a lengthy dissent by Presiding Justice Rubin.

            On a preliminary basis, the appellate court determined that the lack of a reporter’s transcript of the fee motion did not impede review because only legal construction of fee or statutory entitlement provisions was involved.

            The majority found that the CC&Rs fees clause did not apply to disputes between homeowners, but only a where the HOA was involved. They saw no reason to disturb reasoning to the same effect in Mount Olympus Property Owners Assn. v. Shpirt, 59 Cal.App.4^th 885, 893, 896 (1997). Section 1717 did not afford relief because mutuality only applied where there were putative persons who could be impacted by the fees clause, which was not the case. Finally, the private attorney general statute request properly was denied because the winning parties were vindicating their private interests in preventing a blocking of views by trees.

            Justice Rubin, in an 18-page dissent, believed that the CC&Rs were ambiguous such that fees were allowable in inter se homeowner disputes because certain provisions needed to be read together and other provisions where only the HOA was mentioned made no sense such that homeowner disputes had to be included within the ambit of the CC&Rs fees clause. He also did not like the analysis in Shpirt, which he felt was based on incomplete reasoning such that a “clean slate” approach was warranted. Lastly, Justice Rubin engaged in a section 1717 analysis by which he determined that it should be applied in this particular context based on amendments to the “parties” language in the statute some time ago.

Indemnity, Prevailing Party, Section 1717: Trial Court Erred In Denying Contractual Fees To Owner And General Contractor’s Surety Such That A Remand Was Required—There Was A Fees Clause, Not Just An Indemnity Provision

However, Appellate Court Acknowledged That Results Were Decidedly Mixed, But Any Prevailing Party Determination Was To Be Made By Lower Court

            Driving multiple trips to the appellate court were the parties’ claims for attorney’s fees, something we have seen often and one of the things which inspired this blog.

            In John Russo Industrial Sheetmetal, Inc. v. City of Los Angeles Dept. of Airports, Case Nos. A151597/A151682 (1^st Dist., Div. 5 April 23, 2019) (unpublished), owner won $1 against general contractor’s construction bond surety after a 6-week jury trial, while the general contractor actually won attorney’s fees under a frivolous False Claims Act count. However, both owner and surety moved for contractual attorney’s fees under a clause of the governing contract. The trial judge denied fees to both sides, determining that the clause was an indemnity clause rather than a real fees clause.

            The appellate court reversed. It determined that the clause was a fees clause based on these factors: (1) the section did not focus exclusively on third-party claims, but applied to a situation where owner was “made a party to any litigation commenced by” general contractor; (2) the section was labeled “Attorney’s Fees”; and (3) there was a separate indemnity provision separate and apart from the fees provision. Based on Civil Code section 1717 reciprocity principles, the bond surety was also entitled to the benefit of the fees clause. (First National Ins. Co. v. Cam Painting, Inc., 173 Cal.App.4^th 1355, 1367 (2009).)

            However, the 1/5 DCA did give some telling remand reasoning. Although leaving it to the trial court to determine if there was any prevailing party, it did observe that “the results were decidedly mixed”—owner won only one dollar (compared to the $3.4 million it was seeking as damages), while the surety was found jointly/severally liable to owner for the one dollar but owner lost its claim for enforcement of the performance bond. If we were to predict things, there is going to be no prevailing party in this situation after remand—just sayin’. . . ., and not meaning to be clairvoyant.

Section 1717: Rescission Of A Retail Installment Auto Sales Contract Did Trigger Appellate Fee Recovery Under Civil Code Section 1717 For Earlier Appeal Win By Plaintiff

Appellate Court Did Not Have To Address Fee Entitlement Under The Automobile Sales Finance Act.

           This next case demonstrates how appellate courts do not have to address all fee entitlement issues advanced by a prevailing party if one fee entitlement basis can support fee recovery.

            Plaintiff won an earlier appeal by which the superior court was directed to rescind an automobile retail installment sales contract based on the defendant car dealer’s failure to provide a copy of the sales contract in Spanish in violation of Civil Code section 1632. Plaintiff then moved to recover appellate fees as the prevailing party under both the Automobile Sales Finance Act and a contractual fees provision under Civil Code section 1717. The trial judge denied appellate fees to plaintiff.

            Plaintiff appealed and won in Esparza v. Joe MacPherson Ford, Case No. G055699 (4^th Dist., Div. 3 April 23, 2019) (unpublished). Because rescission is “on the contract” under section 1717 and a contract was indeed involved here, this required a reversal and determination of what appellate fees should be reasonably awarded to plaintiff. The 4/3 DCA, in a decision authored by Justice Thompson, did not have to reach fee entitlement under the Automobile Sales Finance Act.

Taxation: Plaintiffs Obtaining Narrow Remand Relief In Tax Refund Dispute Were Not Entitled To Fee Recovery Under Revenue And Taxation Code Sections 1611.6 And 5152

Material Points Behind Initial Decision Were Disclosed And No Recovery Of Taxes Occurred.

            In SSL Landlord, LLC v. County of San Mateo, Case No. A151318 (1^st Dist., Div. 3 April 23, 2019) (published), plaintiffs appealed a denial of attorney’s fees to them, as against County, under Revenue and Taxation Code sections 1611.6 and 5152. In essence, after a bench trial from an appeal of an adverse administrative decision, plaintiffs won a very narrow remand on some deductions even though the County’s income approach to tax valuation was generally sustained. Section 1611.6 allows fee recovery if the County’s findings were arbitrary and capricious by failing to give a reasoned bases for the findings; but, here, that did not occur—the County Board did disclose its material points in the decision below. Section 5152 allows fee recovery to a plaintiff where a tax assessor ignored the law (unless in good faith thinking the governing law was unconstitutional or invalid) and there was recovery of taxes by plaintiff. In this one, plaintiff had yet to recovery taxes, the assessor did not ignore the law, and the unconstitutional/invalidity prong was not at issue. Fee denial affirmed.

Probate: Beneficiary Winning Undue Influence Challenge To Adverse Trust Amendment Entitled To Appellate Fees Under Trust’s “No Contest” Expense Clause

Lower Court’s Denial of Winning Beneficiary’s Appellate Fees Reversed In This Appeal.

            One beneficiary in Key v. Tyler, Case No. B283979 (2d Dist., Div. 2 April 19, 2019) (published) successfully challenged a disinheriting, adverse trust amendment as being the product of undue influence by the trustee, who was also a trust beneficiary. Winning beneficiary also was successful in obtaining affirmance of this ruling in a prior appeal by trustee. However, when winner petitioned to enforce the trust’s “no contest” clause against trustee/beneficiary and to obtain attorney’s fees for prevailing on appeal, the probate court granted a SLAPP motion to the “no contest” enforcement petition and denied appellate fees to winning beneficiary in the prior proceedings.

            The 2/2 DCA reversed both orders. With respect to the denial of fees, the appellate court found a fee entitlement basis for an award of appellate fees to winning beneficiary based upon language in the “no contest” clause providing that “[e]xpenses to resist any contest or attack [of] any nature upon any provision of this Trust shall be paid from the Trust Estate as expenses of administration.”

Probate: Trustee Successfully Winning Baseless Accounting Challenge Not Entitled To Reimbursement Of Expert Witness Fees

Nothing In General Costs Statutes Or Probate Code Section 17211 So Allows.

           In Ramirez v. Rue, Case Nos. B283677/B286574 (2d Dist., Div. 4 April 18, 2019) (unpublished), a trustee prevailed in a battle by co-beneficiaries challenging certain accountings. Trustee won because the probate court determined the contested accounting dispute was brought/prosecuted in bad faith and without reasonable cause under Probate Code section 17211. The lower court awarded the expenses of a privately-retained expert to the trustee. That order was reversed on appeal, given that nothing in the general costs statute or section 17211 allows for recovery of such expenses.

Family Law, Sanctions: Husband Losing Hiding Marital Asset Appeal Was Going To Have To Pay Attorney’s Fees And Frivolous Appeal Sanctions On Remand, Likely, In Some Amount

Rub Here Was That Trial Judge Stayed Any Fee Ruling Pending Determination Of Merits Appeal.

           Although procedurally different in nature, Marriage of Haghighat, Case No. G054993 (4^th Dist., Div. 3 April 17, 2019) (unpublished) demonstrates how family law judges and appellate justices can impose attorney’s fees and frivolous appeal sanctions when a litigant hides marital assets.

            Briefly stated, husband eventually lost a merits appeal that he hid marital assets, which under Family Code section 1101 allows for recovery of interest, attorney’s fees and costs, as well as the invested assets. However, the trial judge stayed any ruling on fees until the appeal on the merits decision was made.

            The 4/3 DCA affirmed the merits decision as well as remanded to the family law judge to determine the initial fees requested under section 1101 as well as sanctions for the frivolous appeal. Although normally the appellate court would determine the frivolous appeal sanctions, this one went back to the lower court to set given that it had to determine the initial fees which had to be awarded also. Justice Goethals authored the 3-0 panel decision.

SLAPP: $352,736.14 SLAPP Fee Award In Favor Of Certain Defendants Affirmed On Appeal

SLAPP Fee Motion Entertainable During Appeal Of Merits SLAPP Grant.

           Plaintiff, a political cartoonist and blogger, sued certain defendants for certain tort claims (including defamation), with defendants successfully SLAPP-ing the case, which carries mandatory fee recovery. Although plaintiff appealed the merits in an earlier appeal, the appellate court concluded that the SLAPP grant was successful. After the initial SLAPP grant and during the pendency of the prior unsuccessful appeal, defendants moved for SLAPP fees. The lower court was persuaded, granting $352,736.14 against plaintiff.

            Plaintiff’s appeal in Rall v. Tribune 365 LLC, Case No. B287721 (2d Dist., Div. 8 April 17, 2019) (unpublished) was unavailing. The main argument was that the trial judge could not decide the fees motion while the merits SLAPP appeal was pending. Not so. (Carpenter v. Jack in the Box Corp., 151 Cal.App.4^th 454, 460-461 (2007).) Besides that, the appellate court was not impressed with plaintiff’s “disrespectful and baseless attacks upon the trial court and his rantings against the legal system.” (Slip Op., p. 6.) Plaintiff also was exposed to further costs and fees for losing the appeal. Lesson: even for First Amendment advocates, pick your spots carefully, especially where there is SLAPP exposure should you lose.

Civil Rights, Special Fee Shifting Statute: Ninth Circuit Reverses And Remands Close To $1 Million Attorney’s Fees Award Under EAJA Against the Government

Problem Was That District Judge Did Not Have Benefit Of Goodyear Tire Decision.

            In Lu v. United States of America, Case Nos. 17-55040/17-55087 (9^th Cir. April 17, 2019) (published), the federal court of appeals had to grapple with a long-running case involving tort claims involving a Chinese national and asylum officer where substantial compensatory damages were awarded to the Chinese national. Then, a long saga of proceedings took place about whether attorney’s fees were awardable against the government because it engaged in bad faith conduct. The statutory basis was Equal Access to Justice Act fee-shifting provisions relating to bad faith governmental conduct. The district judge ultimately awarded $993,758 in fees against the USA.

            USA appealed, and won a remand. What happened is that the U.S. Supreme Court decided Goodyear Tire & Rubber Co. v. Haeger, 137 S. Ct. 1178 (2017), which requires a “but for” causation analysis. The district judge in fashioning its award did not have the benefit of this SCOTUS decision such that its causation test needed to be applied in an EAJA context—so, a remand was in order.