CALIFORNIA ATTORNEY'S FEES

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            Land Value Holdings, LLC v. Miller, Case No. A153992 (1^st Dist., Div. 3 September 18, 2020) (unpublished), involved a residential property a decedent left to his niece, Clara, for the term of her natural life.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. 

Family Law, Sanctions: 4/2 DCA Affirms $29,993 In Family Code §§ 271 and 2030 Sanctions Issued Against Ex-Husband, Plus Another $3,892.50 In Code Civ. Proc., § 1987.2(a) Fees And Costs For Ex-Wife’s Successful Motion To Quash

Self-Represented Ex-Husband Learned The Hard Way That Uncooperative Conduct, Unduly Delaying Resolution, And Refusal To Participate In RFO Hearing Can Be Incredibly Costly – And This Was On Top Of $13,200 In Sanctions Already Issued Against Him Earlier In This Case.

            In Marriage of Ehirim, Case No. E072397 (4^th Dist., Div. 2 September 14, 2020) (unpublished), husband and wife with no minor children were involved in a post-judgment dispute related to some community investment account balances held in wife’s name, and community credit card debt paid after separation by wife with her separate property funds.  The investment accounts and credit card debt had not been adjudicated in the earlier judgment – with the trial court reserving jurisdiction to determine the balance of those investments, as well as community bank accounts and debts.

            Self-represented husband was uncooperative in resolving the investment/credit card issues with wife.  As a result, both parties filed requests for orders related to the investment/credit card issues.  Husband then subpoenaed credit card companies and other financial institutions, where wife held accounts, seeking overly broad and irrelevant information – including requests for items such as signature cards – for dates extending well beyond the parties’ date of separation.  Additionally, husband subpoenaed wife’s employer seeking overly broad and irrelevant information that extended well beyond the date of separation.  When husband refused to scale back the scope of his subpoenas, wife successfully moved to quash or limit the subpoenas to relevant time frames and to information relevant to the parties’ dispute.  Afterward, the trial court awarded wife $3,892.50 in fees and costs pursuant to Code Civ. Proc., § 1987.2(a).  Section 1987.2(a) provides the trial court with the discretion to award reasonably incurred expenses, including reasonable attorney fees, to a party prevailing in a motion to quash.

            When trial on the remaining investment accounts and credit card debt came about, husband refused to participate and walked out.  Only wife testified and provided documentation.  After determining community division of the investment accounts, offsets from the paid community credit card debt and other unpaid equalization payments from husband to wife, the trial court issued $10,000 in Family Code § 271 sanctions against husband for his conduct – conduct which frustrated the policy of the law promoting settlement and reducing the cost of litigation.  The trial court additionally ordered husband to pay $19,993 of wife’s attorney fees “as and for additional sanctions” pursuant to Family Code §§ 271 and 2030.  These awards were on top of $13,200 in unpaid sanctions previously issued against husband in this case.

            The 4/2 DCA found no abuse of discretion and affirmed – concluding the trial court’s factual findings and awards of fees/costs and issuance of sanctions were amply supported by the record.

Section 998: 998 Offer To Defendants, Conjunctively, Was Invalid Where It Did Not Have Separate Acceptance Lines In The Offer

Case Reminds Practitioners To Allow For Acceptance By Each Defendant.

            CCP § 998 is a “stick and carrot” statute designed to encourage settlements.  However, it does have some procedural requirements which are mandatory in nature.  Burchell v. Faculty Physicians & Surgeons of The Loma Linda University School of Medicine, Case No. E071146 (4^th Dist., Div. 2 Sept. 10, 2020) (published) explores one of the mandatory requirements:  the need to provide a separate acceptance line for each defendant when a multiple offer is made (especially where liability is joint and several in nature, not requiring apportionment).

            Burchell involved a professional negligence/medical battery case where plaintiff won a multi-million jury verdict.  Earlier, plaintiff had sent a section 998 offer, conjunctively, to multiple defendants with a signature line for the attorney of the “Defendants.”  The offer was not accepted, with plaintiff moving to recovery certain costs (including expert witness fees) under section 998 after the jury verdict “beat” the $1.5 million pretrial offer.  One of the defendants moved to tax these costs, but that motion was denied.  That denial was one of the issues raised on appeal.

            The 4/2 DCA reversed the 998 costs award.  The reason was that the offer was invalid because it was improperly conditioned on acceptance by both defendants, rather than made in a manner allowing individual offerees to accept it.  That violated very clear case law, such that the costs award was reversed on appeal, as well as a $1 million-plus prejudgment interest award.  (Menees v. Andrews, 122 Cal.App.4^th 1540, 1544 (2004); Wickware v. Tanner, 53 Cal.App.4^th 570, 576-577 (1997).)

Section 998: 998 Offer Extending To All Claims Was Too Uncertain To Shift Fees

Precise Language In 998 Offer Is Needed To Limit Its Scope—Otherwise, Beware Because You Will Not Get Fee Shifting.

            Appellate courts do not like broad, uncalibrated 998 offers.  Kennedy v. City of Fresno, Case Nos. F077029/F077585 (5^th Dist. Sept. 10, 2020) (unpublished) illustrates this principle well, as we discuss below.

            There, City of Fresno did prevail on a dangerous condition case after a jury trial, seeking to recover over $266,000 in expert witness costs based on a CCP §998 offer to settle the matter for $50,001.00.  The trial judge denied Fresno’s 998 fee-shifting motion, a determination affirmed on appeal by the Fifth District.

            The problem was that Fresno’s 998 offer was overbroad, asking for a full release of “all claims against defendant Fresno.”  Unlike cases cited by Fresno, there was no attempt to reign in the broad language, including potential claims, so that the trial and appellate defaults were easy to enlist:  the general language “strayed” from what was permissible.  No fee shifting here.

Prevailing Party: Aljabban Decision Now Published

Case Dealt With Reversal Of Fee Award On Security Deposit Withholding, Requiring A Restudy Of An Older Fee Award.

            On August 21, 2020, we posted on the decision of Aljabban v. Fontana Indoor Swap Meet, Inc., Case No. D076214 (4^th Dist., Div. 2), which was unpublished at the time.  That case reversed a $121,043 fees award against a swap meet licensee after it reversed a security deposit withholding loss, requiring a restudy of an “older” fees award to determine which side actually prevailed.  We can now report that this case was certified for publication on September 10, 2020. 

Private Attorney General, Special Fee Shifting Statutes: Unilateral Fee-Shifting Clause In DFEH’s Favor Preempted An Award Of Private Attorney General Fees To Prevailing Defendants

Specific Statute Prevailed Over More General One As Far As Fee Entitlement.

            When two fee-shifting statutes collide, they sometimes can be reconciled but sometimes cannot—the latter was the conclusion in Dept. of Fair Employment & Housing v. Cathy’s Creations, Inc., Case No. F077802 (5^th Dist. Sept. 9, 2020) (published).

            There, defendants prevailed in an action brought by the Department of Fair Employment and Housing (DFEH) in a sexual discrimination matter.  Defendants then sought an award of fees under California’s private attorney general statute, CCP § 1021.5.  The trial court denied the fee request, a determination affirmed by the Fifth District on appeal.

            After review of dueling fee entitlement statutes, the Court of Appeal concluded that Government Code 12974 was preemptive because it was a unilateral fee-shifting clause in DFEH’s favor.  It was more specific than the more generalized private attorney general statute such that section 12974 governed, meaning the fee denial was correct.

Private Attorney General: Unincorporated Association In Election Contest Challenge Was A De Facto Intervenor With Standing To Seek Section 1021.5 Fees As A Successful Party

Fifth District Enunciates Test For Unincorporated Associations.

            In Vosburg v. County of Fresno, Case No. F078081 (5^th Dist. Sept. 9, 2020) (partially published; fees standing issue published), an unincorporated association representing mental patients in a representative capacity sought to recover $44,218.13 in attorney’s fees under Code of Civil Procedure section 1021, California’s private attorney general fee-shifting statute.  The association was not granted formal intervention, but it was allowed to participate in an election contest challenge, providing evidence and legal arguments which were ultimately successful along with participation by other parties to the dispute.  The trial judge denied the fees motion, principally on standing grounds that association was not a “party” entitled to fees.

            The Fifth District reversed and remanded, in an opinion authored by Justice Franson.

            It found that the association was a de facto intervenor, not just an amicus curiae participant.  In doing so, it established this test for an unincorporated association being eligible for fees under section 1021.5:  “we conclude an unincorporated association has standing to appear in an election contest as a representative of its members if (1) its members live in the area affected by the outcome of the election, (2) its members would suffer injury from an adverse outcome in the election contest, and (3) the questions involved were of a public nature.”  That test was satisfied under the circumstances, although the fee denial was remanded to make sure association met other elements of the 1021.5 statute.

            Association also requested fees for prevailing on appeal.  Some of that depended on the remand conclusions, but the Fifth District did indicate there was an independent basis for granting appellate fees—association generated a published opinion such that this could be a separate basis for a fee award.  So, in the end, all was remanded, but de facto intervenor jurisprudence obtained another opinion in the evolving case law on this issue—which, like a river, depends on the decisions decided by courts on a daily basis.

Reasonableness Of Fees, SLAPP: The Previously Unpublished Fee Discussion In Marshall v. Webster Is Now Published

Higher Hourly Rate Awarded For Out-Of-County Attorney Affirmed Where Successful SLAPP Defendant Showed Good Faith Effort To Hire Local Counsel.

            We discussed Marshall v. Webster, Case No. C088240 (3d Dist. August 27, 2020) in our August 27, 2020 post – a partially published case, with the fee discussion unpublished.

            In Marshall, the Third District affirmed the trial court’s award to successful SLAPP defendant of attorney fees at a higher hourly rate than that of local counsel.  Typically, the amount of award is computed using the lodestar method – multiplying the number of hours reasonably expended by the reasonable prevailing hourly rate in the community for similar work.  However, in this case, defendant made the requisite good faith effort to hire local counsel before hiring counsel from an outside community where the local prevailing rates were higher.

            We can now report that the previously unpublished fee portion of the Marshall opinion was published on September 4, 2020.

Bankruptcy: The Ninth Circuit Denies 28 U.S.C. § 2412(d)(1)(A) Recovery Of Attorney Fees To Debtors Who Successfully Appealed Denials Of Their Chapter 13 Bankruptcy Plans

A Bankruptcy Court Does Not Fall Within The Definition Of “United States” Under The Equal Access to Justice Act, And An Uncontested Bankruptcy Case Does Not Constitute A Civil Action Brought By Or Against The United States.

            Four separate debtors, in four separate actions, successfully appealed to the 9^th Circuit after their unopposed Chapter 13 plans were denied by the lower bankruptcy court and Bankruptcy Appellate Panel (“BAP”) due to their estimated, rather than fixed, plan durations.  Afterward, each debtor moved against the bankruptcy court and BAP under the Equal Access to Justice Act (“EAJA”), 28 U.S. Code § 2412 – seeking to recover the attorney fees they incurred.

            The EAJA, under 28 U.S.C. § 2412(d)(1)(A), provides that “[A] court shall award to a prevailing party . . . fees and other expenses . . . incurred by that party in any civil action . . . including proceedings for judicial review of agency action, brought by or against the United States . . . unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust.”

            Due to the similar circumstances underlying the four fee requests, the 9^th Circuit considered them together in In re: Nanette Sisk, Case Nos. 18-17445 et al. (9^th Cir. September 1, 2020) (published).  While the 9^th Circuit acknowledged that Debtors’ counsel spent considerable time and resources pursuing the successful appeals, it nonetheless denied debtors’ applications for fees.

            Because the EAJA provides separate definitions for “court” and “United States,” a bankruptcy court does not fall within the EAJA’s definition of “United States,” and uncontested bankruptcy cases do not constitute “civil action[s] brought by or against the United States” within the meaning of the EAJA.  “[B]ecause the EAJA is a limited waiver of the government’s sovereign immunity, it must be strictly construed in favor of maintaining immunity not specifically and clearly waived.”  Kreines v. United States, 33 F.3d 1105, 1109 (9th Cir. 1994).

Consumer Statutes, Prevailing Party: Attorney Fees Of $144,200 Plus Costs Of $5,969.15 Awarded Under Section 1794 To Song-Beverly Plaintiff Affirmed On Appeal Despite Lack of Prevailing Party Ruling

The Trial Court Made An Implied Finding, Which Was Supported By Substantial Evidence, That Plaintiff Obtained His Litigation Objective And Was The Prevailing Party.

            Civ. Code § 1794(d) allows a prevailing buyer to recover reasonable attorney fees incurred in connection with the commencement and prosecution of an action under Civ. Code § 1790 et. seq. – the Song-Beverly Warranty Act (commonly known as California’s “lemon law”.

            In Giamela v. Jaguar Land Rover North America, Case No. B299729 (2d Dist., Div. 2 September 1, 2020) (unpublished), a Song-Beverly plaintiff, who settled with defendant for the repurchase of plaintiff’s vehicle, moved for section 1794 fees of $144,200 plus a 1.25 multiplier for a total of $180,250, and $5,969.15 in costs – with the trial court awarding the full request minus the requested 1.25 multiplier. 

            On appeal, defendant argued the fees/costs award had to be reversed because the trial court did not make an express finding that plaintiff was the prevailing party, substantial evidence did not support a finding that plaintiff achieved his litigation objective, and the trial court applied the wrong legal standard if it determined plaintiff was the prevailing party.

            The 2/2 DCA affirmed.  First, the absence of an express finding is no basis for reversal, and an implied finding – if reached by applying the correct legal standard – must be upheld if supported by substantial evidence.  Second, substantial evidence supported the trial court’s implied finding that plaintiff obtained his litigation objective.  Plaintiff’s acceptance of defendant’s repurchase settlement offer supported a logical and reasonable inference that obtaining repurchase was plaintiff’s litigation objective.  Finally, defendant failed to meet its obligation to affirmatively show that the trial court failed to apply the correct legal standard of achieving litigation objective in reaching its implied finding that plaintiff was the prevailing party in this action.

Retainer Agreements: Trial Court Erred In Narrow Interpretation Of Retainer Agreement That Did Not Hold Client Responsible For Unpaid Fees/Costs

Pursuant To Statutory Rules Of Contract Interpretation, Contracts Should Be Construed As A Whole So As To Interpret The Mutual Intention Of The Parties.

            In Lerner & Veit v. Power, Case No. A158322 (1^st Dist., Div. 5 August 31, 2020) (unpublished), plaintiff law firm and defendant client entered into a written retainer agreement  wherein defendant would be responsible for paying the firm’s fees, costs and expenses.  Because defendant’s cousin, who was not a party to the underlying action, verbally agreed to pay defendant’s fees, the retainer agreement contained a “Payment by Other Party” clause that allowed the firm to invoice and collect from cousin, and held defendant responsible for any fees/costs not paid by cousin.

            Cousin paid $30,000 to plaintiff law firm – leaving a balance of $84,047.25, which defendant client refused to pay.  Seeking payment of the unpaid fees/costs, plaintiff first filed an action against cousin.  When that case settled and was dismissed with prejudice, plaintiff filed an action against defendant for payment of the $84,047.25 in unpaid fees/costs.  Plaintiff demurred – claiming plaintiff’s action was barred under the doctrine of res judicata.   The trial court granted demurrer without leave to amend – concluding that the retainer agreement required defendant to pay only fees/costs owed by cousin but not paid, and that because the action against cousin was dismissed, cousin owed no fees and, therefore, defendant owed no fees.  Plaintiff appealed.

            The 1/5 DCA reversed – finding that the trial court erred in its narrow interpretation of the retainer agreement.  Rather, when interpreting contracts, the mutual intention of the parties at the time the contract is formed governs interpretation.  (Civ. Code § 1636.)  Therefore, the trial court should have construed the contract as a whole so as to interpret the mutual intention of the parties.  By focusing on only the one clause related to cousin’s payments, the trial court interpreted that defendant client was not responsible for plaintiff law firm’s unpaid fees/costs, when the mutual intention of the parties was that defendant would be responsible for the fees/costs and pay any fees/costs not paid by cousin. 

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Reasonableness Of Fees, SLAPP: Defense Fees Of $79,000 Were Warranted Where Out-Of-County Lawyer Efforts Were Needed To Oppose SLAPP Motion In Siskiyou County

Defense Showed Good Faith Efforts, Albeit Unsuccessful, To Hire Local Counsel, So Higher Hourly Rate Compensation Was In Order.

            So this case was venued in Siskiyou County, which is a northern California county abutting on the Oregon border near Mount Shasta and having a population of 44,000 – 45,000 depending on how you count things. We gotta think the lawyer census is much less than that in more populous California counties.  That is borne out by the end result in Marshall v. Webster, Case No. C088240 (3d Dist. Aug. 27, 2020) (partially published; fee discussion not published).

            There, the defense won a SLAPP motion and was awarded $79,000 in mandatory fees, although this was a reduction from the requested $121,815 in fees—with the defense using San Francisco rather than local attorneys. 

            The fee award was affirmed.  Plaintiffs’ principal contention was that it was err to award defense hourly rates based on San Francisco rates versus local venue rates.  Although generally a venue-based lodestar standard is the measure, that can bend when local attorneys are not available or the hiring of local counsel was impracticable.  In this case, the defense presented evidence that he could not obtain local counsel on a contingency basis for representation given defendant did not have the resources for traditional hourly representation.  The local attorney did tell defendant that $350 per hour was typical for Siskiyou County, even though he declined to take on a contingency matter.  The $450 and $500 hourly rates for the experienced defense counsel from San Francisco did not offend either the trial or appellate courts given the inability to obtain local counsel willing to take the matter on a contingency basis.  However, given the reduction in the requested amount by almost $43,000 (about a 35% reduction), this only cemented the fee award as being reasonable in amount. 

            UPDATE:  We can now report that the (previously unpublished) fee discussion was published on September 4, 2020.

Appeal Sanctions, SLAPP: In Pro Per Defendants’ SLAPP Motion Was Frivolous, Entitling Plaintiff To $9,900 In Attorney’s Fees

Frivolous Appeal Sanctions Denied, But Plaintiff Was Entitled To Appellate Fees For Prevailing On The SLAPP Denial.

            Sometimes, there is more than one way to “skin a cat” as the proverbial saying goes.  That is what happened in Martin v. Smith, Case No. A157129 (1^st Dist., Div. 5 Aug. 26, 2020) (unpublished).

            There, two in pro per defendants filed a SLAPP motion which was deemed frivolous by the lower court, resulting in an award of $9,900 in attorney’s fees to plaintiff.  Defendants, still in pro per, then appealed.  The appellate court agreed that the SLAPP motion was frivolous and the fee award justified.  Plaintiff moved for frivolous appeal sanctions, although she failed to file a motion for sanctions and supporting declaration as required under California Rules of Court, rule 8.276.  However, because she did prevail on appeal, plaintiff was entitled to further SLAPP fees, something remanded to the lower court to determine.  (The only difference is that SLAPP fees cannot be imposed against a party’s attorney, although frivolous sanctions can.)

Arbitration, Employment: Although Arbitration Clause Had Invalid Attorney’s Fees/Costs Provision Relating To FEHA Claims, It Was Severed Such That Motion Denying Arbitration Was Reversed

Severability Saved The Day!

            In Conyer v. Hula Media Services, LLC, Case No. B296738 (2d Dist., Div. 8 Aug. 26, 2020) (published), the appellate court reversed a trial judge’s decision denying arbitration to an employer even though employee acknowledged receiving a handbook with the arbitration clause but argued that there was an employer duty to highlight the clause.  However, the arbitration clause did have an infirm attorney’s fees/costs provision, requiring each party to pay a pro rata share of the arbitrator’s fees and costs.  For FEHA claims, the employee does not have to pay fees and costs greater than the amount to file a claim under Armendariz v. Foundation Health Psychcare Services, Inc., 24 Cal.4^th 83, 112 (2000).  The arbitration clause also provided that the arbitrator shall award fees to the prevailing party carte blanche, despite the fact that a prevailing defendant in a FEHA case can only recover fees if the plaintiff’s action was frivolous in nature.  (Chavez v. City of Los Angeles, 47 Cal.4^th 970, 985 (2010).)  However, the severability doctrine came to the rescue—the agreement was not so permeated with unconscionability such that the fees provisions could be severed out so as to leave an enforceable agreement.  That is how the appellate court ruled, reversing the denial of the motion to compel arbitration.