CALIFORNIA ATTORNEY'S FEES

Consumer Statutes, Section 998: Plaintiff Only Suing For Injunctive Relief And Not Proving Damage Liability Under CLRA, Where Accepted 998 Offer Was Silent On Liability, Fees, And Costs, Did Not Give Rise to Fee Recovery

Case Is A Real Attention Getter With Respect to Acceptance Of 998 Offers Which Are Carefully Drafted.

            We like this next case because if offers practitioners on both sides of the aisle an opportunity to carefully craft and accept CCP § 998 offer in certain consumer-oriented areas of the law.  Mikki v. Lifemark Group, Inc., Case No. D076885 (4^th Dist., Div. 1 Jan. 20, 2021) (unpublished) is the opinion we next discuss.

            What happened here is that the plaintiff sued defendant, in a dispute about a cemetery space, for injunctive relief primarily under the Consumers Legal Remedies Act (CLRA) and expressly disclaimed damages in the complaint.  Early on, the defense served, and plaintiff accepted, a CCP § 998 offer to pay her $5,000.01 “exclusive of attorneys’ fees and costs incurred as of the date of this offer,” although nothing in the offer stipulated to liability or acknowledged that plaintiff was the prevailing party.  Plaintiff moved for $67,000 in attorney’s fees under CLRA, but the lower court only ordered the defense to pay $38,000 in fees.  Defendant appealed.

            The defense won a reversal as a matter of law with respect to the fee award.

            Initially, the defense argued that no fee award was justified because plaintiff served no CLRA pre-lawsuit demand.  However, that argument was rejected because it only applies to damages claims, not an injunctive situation which was involved here.

            However, as all opinions must, that brought the appellate court to consider whether plaintiff was a prevailing party under the CLRA.  She was not.  The problem was that the section 998 offer only offered a payment, such that plaintiff did not establish she suffered some tangible damage given that the complaint only sought injunctive relief.  (Cf.  Meyer v. Sprint Spectrum L.P., 45 Cal.4^th 634, 644-645 (2009) [likely the holding; but, if dicta, should be followed here].)  There was no finding of damages liability, which is necessary under the CLRA, Unruh Act, and Disabled Persons Act, and no liability was not conceded under the 998 offer.  That silence was dispositive.  So, the attorney’s fees award went POOF! as a matter of law. 

Request For Admissions: Plaintiff Found 75% Negligent In Bike-Truck Accident Properly Not Awarded Costs-Of-Proof Sanctions Where Defense Had Good Faith Belief In Contesting Negligence And Causation Issues

Defense Did Better Than “Hope Or A Roll Of The Dice” in Denying Two Key RFAs.

            In Munoz v. County of Imperial, Case No. D075805 (4^th Dist., Div. 1 Jan. 20, 2021) (unpublished), a bike rider sued after a personal injury accident with a pickup truck.  The jury awarded plaintiff $120,000 after determining she was 75% at fault, later upped by another $36,875 for pain and suffering based on an additur.  Before trial, the defense denied two key requests for admissions on negligence and causation.  After she won, plaintiff moved for costs-of-proof sanctions under CCP § 2033.420, a request which was denied.

            The denial was affirmed on appeal.  The defense had a good faith belief to deny the RFAs based on the contested nature of the two issues at trial, confirmed by highly contested liability proof in the form of independent witnesses and accident reconstruction experts.  In a quote we like from another case, the appellate court said the defense denials were more than “hope or a roll of the dice” giving rise to costs-of-proof sanctions.  (Grace v. Mansourian, 240 Cal.App.4^th 523, 532 (2015).)

Appealability, Employment, Intervenors, Prevailing Party, Section 1717: Bevy Of Appealability Issues And Prevailing Party Issues Were Resolved By 4/1 DCA Dispute Between Former Employer And Employee Over Return And Use Of Documents On A Jump Drive

Employee Did Prevail On Employer’s Contract Claims, But Lower Court’s Reduced Fee Award For Prevailing On Labor Code Claims Was No Abuse Of Discretion—Given Attorney Intervenors Did Timely Appeal And Contest Merits Based On Their Attorney’s Lien Interest In Fees/Costs Awards.

            This next case, Premier Mechanical Group, Inc. v. Harvey (Edwards), Case No. D075663 (4^th Dist., Div. 1 Jan. 20, 2021) (unpublished), is procedurally complicated, but confronted numerous issues on appealability, prevailing party, and reduced Labor Code fee award issues.

            There, former employer and former employee got involved in a real ado centering on employee’s return and use of documents on a jump drive, inspiring various contract/tort claims by employer as plaintiff and primarily Labor Code claims by employee as cross-complainant.  Employee was represented by counsel during some phases of the litigation.  Eventually, a jury found against employer on its contract claim (finding a breach, but no damages), but awarding employer $95,000 on a non-contract unlawful audio/video recording claim against employee.  On the cross-complaint, the jury found employer had failed to pay employee for all work performed, awarding $1,940, although finding against employee on the remaining cross-claims.  Employee then moved to recover over $1 million in attorney’s fees and $57,039 in costs as the prevailing party under both the complaint and cross-complaint.  The lower court did not believe employee prevailed under the contract on the complaint and awarded $10,500 in reduced fees on the cross-complaint.  $57,039 in statutory and nonstatutory costs also were awarded to employee.  That provoked a lot of appeals, with employee’s attorney filing a notice of attorney’s lien against the client’s monetary recoveries and with employee then proceeding in pro per.  Employer then successfully moved to strike the costs award in entirety.  Employee’s substituted-out attorneys then moved to intervene for purposes of protecting their rights to recover attorney’s fees and costs in the litigation, which was eventually granted after employee in pro per and employer reached a settlement.  Attorneys filed appeals, as proposed intervenors, of various fee and costs rulings, with the lower court granting the motion to intervene to address claims for fees and costs against employer but not to seek any relief from employee.  However, the lower court did amend the fees order to direct the fees paid to the attorneys rather than employee.  Another appeal followed by employee’s attorneys. 

            Employer moved to dismiss the attorneys’ appeal, but that was denied.  As intervenors, the attorneys had an independent right to pursue fees and costs, no matter what settlement was reached between employee (former client) and employer.  Their notice of appeal was timely based on the prior entry of judgment not including the fees/costs order and based on the fact that the new order awarding them fees and costs as intervenors, later, was independently appealable.  The fact that the case, as pled, was unlimited civil in nature did not mean an appeal had to be made to the superior court appellate division; the DCA had appellate jurisdiction. 

            On the merits, the 4/1 DCA panel decided that prior orders on fees and costs could be revisited by attorneys because the later order directing fees/costs to them was a substantial modification which was independently appealable.  The lower court erred in not awarding fees and costs to employee (which would be for the benefit of her counsel filing the attorney’s lien) on employer’s complaint because employee beat contract claims, with the unlawful recording claim being a non-contractual claim.  Given that fact, the prior order vacating costs had to be considered in fairness to the intervenor attorneys.  With respect to the Labor Code attorney’s fees award, the reduction by the lower court was reasonable, compensating for 30 hours of work at the rate of $350 per hour.  Nothing demonstrated that the lower court’s apportionments and reductions were out of line under an abuse-of-discretion standard.  Remand ordered to the superior court on fees and costs to employee’s attorneys on employer’s contract-based complaint claim. 

Costs: Reversal Of Costs Awarded To Defendants Necessitated By Reversal Of Trial Court’s Granting Of Defendants’ Summary Adjudication Motion On Negligent Misrepresentation Claim

Plaintiff Adequately Alleged Negligent Misrepresentation, Submitted Evidence Demonstrating A Triable Issue Of Fact, And Defendants Did Not Establish That Plaintiff Could Not Prove The Elements Of Negligent Misrepresentation.

            For a nice discussion re the elements of intentional and negligent misrepresentation, we commend our readers read Borman v. Brown, Case Nos. D076239/D076748 (4^th Dist., Div. 1 January 15, 2021) (published). 

            In Borman, plaintiff sought treatment for a droopy eyelid and brow from eye center physician defendant who advised that a brow lift procedure would correct the issue, but would not be covered by plaintiff’s insurance, and that an eye lift could alternatively be performed and covered by plaintiff’s insurance.  Plaintiff could not afford a procedure not covered by insurance and agreed to have defendant perform the eye lift to resolve her issues.  Afterward, she continued to have difficulties with her eyelid and brow, so she consulted with another physician who informed her that the brow lift, not eye lift, was the procedure that should have been performed for her situation.  Additionally, plaintiff learned the brow lift would have been covered by her insurance had defendant done the appropriate documentation of the need for the procedure and submitted it to the insurance company for approval.

            Plaintiff sued defendant physician and the eye center – alleging causes of action for professional negligence, lack of informed consent, fraud and deceit, and medical battery.  The trial court granted defendants’ summary adjudication as to the fraud and deceit and battery causes of action.  The remaining causes of action went to trial – with the jury returning verdict in defendants’ favor – and the trial court also entered a postjudgment order awarding costs to defendants.  

            The 4/1 DCA reversed and remanded for further proceedings on plaintiff’s fraud and deceit cause of action insofar as it pled a claim for negligent misrepresentation.  In a 3-0 opinion, authored by Justice Aaron, the panel found the trial court erred in granting summary adjudication.  Plaintiff had adequately alleged the tort of deceit based on negligent misrepresentation, had submitted evidence to the trial court demonstrating a triable issue of fact with respect to the intent to induce reliance element, and defendants had not established that plaintiff could not prove the elements of negligent misrepresentation.  Reversal and remand for the negligent misrep claim necessitated reversal of the costs award order issued in defendants’ favor.

Arbitration: Arbitrator’s Decision To Reallocate Arbitration Attorney’s Fees And Costs Award In Payment Of Mortgage For Winning Tenants In Common Parties Was Proper

$304,894.15 Was The Reallocation Remedy.

            Ahn v. Sanger, Case Nos. A157260/157935 (1^st Dist., Div. 1 Jan. 15, 2021) (unpublished) demonstrates the breadth of arbitrators’ remedies as long as they rationally related to the contractual dispute being resolved.

            There, in an initial arbitration, the Sangers won a contractual dispute against Ahn involving a multi-residential building in San Francisco which they owed as tenants in common, with a contractual fees clause being in play.  In an earlier appeal, the 1/1 DCA confirmed the award and also reversed a lower court’s refusal to award the Sangers fees for confirming the award.  However, because these types of disputes can be bitter and contentious, a second arbitration occurred by which the arbitrator ordered Ahn to remove a lien on the property and pay prevailing party attorney’s fees and costs to the Sangers in the sum of $304,894.15.  Ahn did not remove the lien, so the arbitration devised a “reallocation remedy”:  the $304,894.15 in fees and costs in Sangers’ favor were to be credited against the amount of the joint mortgage amount still outstanding with respect to their share.  That prompted a second appeal, with the lower court confirming the award but rejecting the reallocation remedy.

            The 1/1 DCA unequivocally confirmed the arbitration award, deciding that the reallocation remedy was rationally related as a remedy with regard to Ahn’s breach of the tenant-in-common agreement.  Although penalties cannot be awarded under certain circumstances by an arbitrator, this remedy was not one and was equitable under the circumstances. 

SLAPP: $24,175 In Attorney’s Fees Award Was No Abuse Of Discretion For A Litigant Successfully Striking A Defamation Cross-Claim

No Meet And Confer Requirement Under SLAPP Statute, With Cross-Complainant Not Dismissing The Cross-Complaint Until After The SLAPP Motion Was Filed.

            In Trinity Risk Management, LLC v. Simplified Labor Staffing Solutions, Inc., Case No. B297176 (2d Dist., Div. 8 Jan. 11, 2021 unpublished; published on Jan. 14, 2021), a cross-complainant—although indicating an intent to dismiss an extant cross-complaint—did not do so until after the opposing side filed a SLAPP motion directed against a defamation cross-claim.  The motion was granted, with the lower court then awarding the fully requested fees of $24,175 to the successful SLAPPing litigant.

            The merits and fee decisions were upheld on appeal.  There is no meet and confer requirement under the SLAPP statute to discuss the merits or amount of fees being requested.  Given the particular sequence of events where the cross-complaint was dismissed after the SLAPP motion was filed, appellant’s reliance on Oakland Bulk and Oversized Terminal, LLC v. City of Oakland, 54 Cal.App.5^th 738 (2020) [reviewed in our Sept. 17, 2020 post] was inapposite because the filing of the SLAPP motion, under the circumstances, was no “sharp practice.”

Celebrities, News: Washington Post Reports That Donald Trump Has Instructed Aides Not To Pay Rudy Giuliani's Legal Fees

Of Course, We Are High-Minded And Therefore Only Interested In The Potential Legal Issues . . . 

        On January 13, 2021, journalists Philip Rucker, Josh Dawsey and Ashley Parker of the  Washington Post, reported that outgoing President Donald Trump has instructed his aides not to pay Rudy Giuliani's legal fees. Specifically, they write:

"Trump has instructed aides not to pay Giuliani’s legal fees, two officials said, and has demanded that he personally approve  reimbursements for the expenses Giuliani incurred while traveling on the president’s behalf to challenge election results in key states. They said Trump has privately expressed concern with some of Giuliani’s moves and did not appreciate a demand from Giuliani for $20,000 a day in fees for his work attempting to overturn the election."

Our beat is attorney's fees, and we do not enter into the political fray. Instead, we suggest a few serious questions:

1) When Giuliani undertook the assignment, did he and Trump enter into a written agreement? 

2) If Giuliani and Trump entered into a  written agreement, do disputes require arbitration?

3) Were both parties to the contract mentally competent?

4) What was the  scope of Giuliani's legal  assignment -- to undo the election?

5) Did Giuliani make promises about what he would accomplish, to wit, overturn the popular election results? 

6) Was Giuliani's reported fee of $20,000/day reasonable? (For a New York attorney, former Mayor of Gotham, former  US Attorney for the SDNY, with 50 years experience.)

7) Did Giuliani make proper time entries? Did he block bill?

8) Were Giuliani's fees reasonably and necessarily incurred?

9) Did Giuliani commit malpractice?

10) Does New York state law or other law govern the attorney-client contract?

11) Did Giuliani represent Trump pro bono, and if so, for what period of time?

13) Has Giuliani violated any New York Rules of Professional Conduct during his representation of his client?

14) Did Giuliani provide poor legal advice in connection with the rally on January 6, 2021 in Washington D.C., at which Giuliani and Trump spoke, following which a violent mob stormed the Capitol, resulting in Trump's impeachment?

15) Did Giuliani display absolute fidelity to Trump?

16) Did Giuliani unnecessarily incur legal costs when he booked Four Seasons Landscaping?

17) Did Giuliani display bad hair on camera?

18) Did Trump violate the law by failing to mention Mr. Giuliani or his unpaid labor for 20 months on the annual financial disclosure he filed in May, "which requires that the value and source of gifts — including free legal work — be publicly listed," as reported by the NYT?

19) Has Trump engaged in unfair business practices by following a modus operandi of stiffing business creditors?

20) Are the journalists' reports of a falling out between Trump and his loyal friend and personal attorney Giuliani simply Fake News?

 

 

Requests For Admission: $80,658.75 Costs-Of-Proof Sanctions Affirmed On Appeal

Initial Denial That Association Rules Were Violated, Conceded Later At Trial, Justified The Award.

            In Verotel Merchant Services B.V. v. Rizal Commercial Bank, Case Nos. B276120/B281869 (2d Dist., Div. 4 Jan. 13, 2021) (unpublished), some plaintiffs won $1.526 million in compensatory damages and $7.5 million in punitive damages against defendants.  During the case, the defense denied certain requests for admissions.  After the jury verdict, with the defense finally conceding certain Association rules were not complied with after denying otherwise in RFA responses, the trial judge found that $80,658.75 was the costs-of-proof sanctions price under CCP § 2033.420 for denying the two crucial RFAs.  The record showed no abuse of discretion in making that award.

Prevailing Party: Litigant Successfully Opposing Attorney’s Fees Request Involving Pet Cemetery Dispute Properly Was Not Entitled To Fees As Prevailing Party

No Authority Provided To Show A Litigant Prevailed On Opposing A Fee Motion Where That Litigant Did Not Prevail On The Merits.

            Allen v. MacIntosh, Case No. E073408 (4^th Dist., Div. 2 Jan. 13, 2021) (unpublished) involved a trespass dispute on land which had a portion dedicated for use as a pet cemetery.  In the end on the merits, a litigant lost but was able to beat back an amended motion for attorney’s fees because it was not based on a CCRs enforcement action and because there was no declaration from counsel to support the fees sought.  Then, creatively, that litigant sought to recover fees as the prevailing party in the action.  Get outta here, said the appellate court in a much more eloquent way.  Although the Davis-Stirling Act (Civ. Code, § 5975) does have a fee shifting provision, appellant lost in the underlying litigation and produced no authority for the proposition that opposing a motion relating to another party’s attorney’s fees request qualifies the litigant as a prevailing party. 

Substantiation Of Reasonableness Of Fees: No Abuse Of Discretion In Award Of $28,086 In Fees And $2,069.36 In Costs To Sellers Of Mobile Home Park Who Prevailed In Confirming Arbitration Award

Buyer Failed To Meet Its Burden Of Rebutting Seller’s Showing Of Entitlement And Reasonableness Of Fees With Supporting Rebuttal Evidence.

            In Kim v. PCP-Sundance, Case Nos. D076510/D076799 (4^th Dist., Div. 1 January 11, 2021) (unpublished), buyer of a mobile home park sued sellers for $1,754,428.50 for breach of the parties’ Special Indemnity Agreement (SIA) under which the sellers agreed to provide certain concessions to buyer in order to complete the sale.  Pursuant to the SIA, the parties agreed to arbitrate their dispute, and sellers conceded to owing buyer $3,396.25 for eviction-related expenses for three tenants who were in arrears at the close of escrow.  The arbitrator awarded buyer the $3,396.25, but found the remainder of buyer’s claims to be outside the scope of the SIA.  The Arbitrator also determined sellers were the prevailing parties as they had prevailed on all of the disputed issues – awarding sellers $78,236.43 in fees/costs, pursuant to the fees provision in the SIA, with an offset of the $3,396.25 sellers owed buyer for a net recovery to sellers of $74,840.18.

            After sellers successfully petitioned the trial court to confirm the arbitration award, and defeated buyer’s separate petition to vacate or correct the award, sellers moved for $32,918.50 in attorney fees and $2,120.51 in costs – with the trial court awarding seller $28,086 in fees and $2,069.36 in costs after a $4,832.50 reduction for some excessive work and for the attendance of two attorneys instead of one at the hearing on the petitions. 

            Buyer appealed, but its arguments – that trial court’s award of fees/costs was “grossly excessive,” and that most of the fees sellers sought were directly related to the arbitration case rather than the judicial proceedings to confirm, correct or vacate the arbitration award – were of no avail.  The 4/1 DCA found no abuse of discretion.  First, sellers met their burden by establishing their entitlement to the fees/costs, and supported their motions with attorney declarations establishing the work performed and billing rates, memoranda of costs, and copies of the relevant billing records.  Buyer, however, failed to meet its burden to rebut sellers’ showing with evidence – failing to support its arguments by addressing/objecting to any specific billing entries.

Family Law, Sanctions: Trial Court’s Award To Attorney Husband Of $800 In Attorney Fees In The Nature Of Sanctions Under Section 271 Reversed As A Matter Of Law

Self-Represented Attorney Husband Incurred No Fees To Which The Section 271 Sanctions Must Be Tethered.

            Family Code § 271, subdivision (a), provides that “the court may base an award of attorney’s fees and costs on the extent to which the conduct of each party or attorney furthers or frustrates the policy of the law to promote settlement of litigation and, where possible, to reduce the cost of litigation by encouraging cooperation between the parties and attorneys. An award of attorney’s fees and costs pursuant to this section is in the nature of a sanction.”  However, as the 1/3 DCA concluded in the next case, “section 271 mandates that sanctions be ‘tethered’ to attorney fees and costs.”

            In Marriage of Erndt & Terhorst, Case No. A157876 (1^st Dist., Div. 3 January 11, 2021) (partially published – fees as sanctions discussion published), the trial court directed husband to prepare a stipulated judgment based on the settlement entered into between husband and wife as recited in open court.  The settlement agreement included an equal division of the community portion of wife’s retirement plan.  However, wife had omitted her retirement plan’s survivor benefits – believing that if the survivor benefit were not mentioned, husband’s right to it would terminate upon entry of the judgment of dissolution.  When husband learned of the omission, he included it as an omitted asset under Family Code § 2556 – awarding each party survivor benefits in relation to their share of the awarded community interest.  Wife refused to sign, so husband, who was now self-represented, went back to the trial court seeking a survivor benefit award – with the trial court granting husband’s request and directing the stipulated judgment to include the award. 

            When wife continued to refuse to sign the stipulated judgment, husband returned to the trial court seeking to have the stipulated judgment signed by the trial court elisor, $6,102 in attorney fees, $180 in costs, and § 271 sanctions against wife for her repeated refusal to follow court orders and sign the stipulated judgment.  Wife finally complied with the court’s direction and signed the stipulated judgment in open court.  The trial court then awarded husband sanctions of $180 in costs and $800 in reasonable attorney fees for husband’s preparation for and attendance at that day’s hearing.

            Wife appealed, and the 1/3 DCA reversed the $800 portion of the awarded sanctions – concluding that § 271 sanctions must be tethered to attorney fees and costs.  (Menezes v. McDaniel, 44 Cal.App.5^th 340, 350 (2019) [discussed in our January 16, 2020 post]; Sagonowsky v. Kekoa, 6 Cal.App.5th 1142, 1153 (2016) [misconduct over and beyond fees/costs actually incurred not within reach of section 271].)  Because husband was self-represented by the time he sought sanction, he incurred no fees in preparing for and attending the hearing.  Additionally, California courts have interpreted “attorney fees” to mean exactly what it says in the context of sanctions under Code of Civil Procedure section 128.7 and in the context of contractual attorney fees awarded under Civil Code section 1717 – with sanctions in the form of attorney fees and reasonable attorney fees not available to self-represented litigants who have not incurred or become liable for such fees.

Damages: Attorneys Asserting Claim For A Client In Order To Collect Some Of Their Attorney’s Fees Does Not Constitute Improper Purpose To Sustain A Malicious Prosecution Claim

Kentucky Supreme Court So Holds In July 2020 Published Opinion.

            Malicious prosecution, in California and most jurisdictions, has an improper purpose element with respect to filing or prosecuting a claim—with Kentucky labeling malicious prosecution as a wrongful use of civil proceedings claim.  The Kentucky Supreme Court, in Seiller Waterman, LLC, et al. v. RLB Properties, Ltd., Nos. 2018-SC-0538-DG and 2018-SC-0558-DG (Ky. July 9, 2020), petn. for rhg. denied, September 24, 2020, faced the issue of whether improper purpose for purposes of a malicious prosecution claim could be based on allegations that a client’s attorneys filed claims against an adversary litigant in order to recoup its professional fees (“extort fees,” as colorfully used in the pleadings).  It concluded that this theory could not support a malicious prosecution claim.  “. . . an attorney seeking to collect an attorney fee in the usual course of representing a client is not acting for an improper purpose, a necessary element of the wrongful use of civil proceedings claim.  Even if the attorney acts without probable cause to believe the client’s claim will succeed, the improper purpose which may subject an attorney to liability to a nonclient must be something other than simply earning a fee.”  (Slip Op. at p. 15.)  For readers wanting to review this opinion, it is available over the Internet at justia.com.

Prevailing Party, Receivers, Special Fee Shifting Statutes: City Of Norco v. Mugar Is Now A Published Decision.

Trial Court’s Determination That Plaintiff City Was The Prevailing Party Was Proper Under Catalyst Theory, City’s Arrangement With Outside Counsel Did Not Violate Defendant’s Due Process Rights, And Fee Award Of $60,798.94 To City Was Not Meant To Penalize Defendant For Defending Property Rights.

            We discussed City of Norco v. Mugar, Case No. E072858 (4^th Dist., Div. 2) – which was then unpublished – in our December 15, 2020 post.  Plaintiff City had filed a receivership action through outside counsel when defendant failed to abate what City described as 19 “life-safety hazards” on defendant’s property.  Although defendant eventually abated the 19 conditions, and the appointed receiver took no abatement action, City was declared the prevailing party and awarded $60,798.94 in fees and costs under Health and Safety Code § 17980.7(c)(11) – results that were affirmed on appeal.

            Determination that City was the prevailing party was proper under the catalyst theory.  Defendant’s due process rights had not been violated by City’s arrangement with outside counsel as City’s contract demonstrated that each of its demands and responses were determined by the City Council – not by outside counsel which had no contingency fee basis nor direct financial interest in the litigation outcome. 

            Additionally, the fees award did not constitute a penalty against defendant for exercising his First Amendment right to access and petition the courts to defend his property rights.  Rather, the purpose of the fee award is to encourage litigation by the successful party by making such litigation financially feasible.  Incidental restriction on conduct protected by the First Amendment is sufficiently justified “[1] if it is within the constitutional power of the Government; [2] if it furthers an important or substantial governmental interest; [3] if the governmental interest is unrelated to the suppression of free expression; and [4] if the incidental restriction on alleged First Amendment freedoms is no greater than is essential to the furtherance of that interest.” (United States v. O’Brien, 391 U.S. 367, 377 (1968).)

            We can now report that City of Norco v. Mugar was certified for publication on January 8, 2021.

Fee Clause Interpretation, Section 1717: Attorney Fees Awarded To Prevailing Plaintiff On Its Tort Cause Of Action Reversed On Appeal

The Fees Clause In The Parties’ Contract Covered Only Contract Claims And Plaintiff’s Tort Claim Was Not Inextricably Intertwined With Its Dismissed Contract Claim.

            In WindAirWest v. Castle & Cooke, Case Nos. B295513 and B299043 (2d Dist., Div. 3 January 8, 2021) (unpublished), plaintiff, an operator of a private jet charter company, entered into a sublease agreement with defendant, a fixed-base operator that leases airport space and provides aircraft services to aviation companies that sublease parts of defendant’s space.  The parties’ agreement gave plaintiff access to defendant’s facilities at Van Nuys airport, including ramp and hangar space as well as an office.

            Less than a month into the sublease, one of defendant’s employees moved plaintiff’s Citation X aircraft in order to access another aircraft, but parked the Citation X on a downhill slope without putting wheel chocks in place to prevent accidental movement, and the Citation X rolled down the slope and crashed into another aircraft – causing serious damage to the Citation X.

            Plaintiff sued defendant asserting negligence and breach of contract causes of action, but dropped the breach of contract claim through its first amended complaint filed about a year-and-a-half into the litigation – leaving only the tort negligence claim for which it sought $4,235,935 in lost profits.  Defendant admitted liability – which left the only determination at trial to be whether defendant’s conduct caused plaintiff to lose profits and, if so, how much.  The jury returned a verdict in plaintiff’s favor, awarding it $2,464,560 in lost profits.  Additionally, the trial court awarded plaintiff its attorney fees as the prevailing party.

            Defendant raised several challenges on appeal, but we focus on the attorney fees award.  Plaintiff moved for fees, pursuant to Code Civ. Proc. §§ 1021, 1032, and 1033.5, based on the attorney fees provision in the parties’ agreement.  The trial court concluded the provision was broadly enough worded to encompass tort claims, but the 2/3 DCA disagreed and reversed as to the fees.  Although attorney fees are recoverable costs under §§ 1021 and 1032 if authorized by contract, the appellate panel – interpreting the parties’ fees clause under the ordinary rules of contract interpretation – found the mutual intent of the parties was clear that the prevailing party would be entitled to fees for a claim brought “to enforce any provision of this Sublease.”  Because plaintiff’s action did not enforce a provision of the sublease agreement, it was not entitled to fees under the fees provision.  Additionally, because plaintiff did not contend its tort claims were inextricably intertwined with its dismissed contract claim, its reliance on Lockton v. O’Rourke, 184 Cal.App.4th 1051 (2010) was misplaced and to no avail.

Appealability, Landlord-Tenant, POOF!: Reversal Of Unlawful Detainer Judgment Against Landlords Required Reversal Of Related Attorney’s Fees/Costs Award

In Separate Merits Appeal, Appeal Was Cognizable Although Possession Returned To Landlords During Appeal Because Review Would Determine Landlord Liability For Fees/Costs.

            In Lee v. Kotyluk, Case No. G058631 (4^th Dist., Div. 3 Jan. 7, 2021) (published), landlords sought to evict a commercial tenant for selling marijuana without a license.  The lower court found the 3-day notice to pay or quit was defective because the notice was sent by a predecessor in interest and the notice contained no precise directions to whom possession should be delivered (the “quit” component of the 3-day notice).  A defense motion for judgment on the pleadings was granted, and plaintiffs’ request to amend the complaint was denied, triggering the first appeal by landlords.  Later, the lower court granted $25,794 in attorney’s fees and $1,445 in costs against landlords, which prompted a separate appeal in Lee v. Kotyluk, Case No. G058768 (4^th Dist., Div. 3 Jan. 7, 2021) (unpublished).

            Landlords’ merits appeal resulted in a reversal of the judgment against landlords, because the motion for judgment was properly granted but landlords should have been given leave to file an amended pleading.  That appeal was not rendered moot because tenant surrendered possession of the premises.  The reason?  Landlords’ liability for the trial level fees and costs awards presented a live controversy not mooted by the surrender.  In the unpublished opinion, the merits reversal meant that the fees and costs awards went POOF!  Acting Presiding Justice Moore authored both 3-0 opinions.

Probate, Substantiation Of Reasonableness Of Fees: Attorney Fees By Three Firms Granted To Trustee In Long-Standing Dispute Were Affirmed On Appeal

Fees To Three Firms Representing Trustee In Multiple Venues Was Just Fine In This Context.

            A beneficiary under a trust, which engaged in a long-standing dispute against trustee in multiple venues (California superior court, California appellate court, U.S. bankruptcy court, and the Ninth Circuit Court of Appeals), was not happy when well-documented fees incurred by trustee through three law firms were ordered to be paid by the trust.  The appellate court in Kvassay v. Kvassay, Case No. B297461 (2d Dist., Div. 2 Jan. 1, 2021) (unpublished) affirmed the propriety of the fee award based on (1) painstaking substantiation showed the amounts were justified, and (2) the fact that the work of three law firms was warranted given the battle raging against trustee in various venues.

Appealability, Costs: Appeal Of Post-Judgment Order Striking Request For Costs Dismissed On Appeal Against Plaintiffs Who Did Obtain A Merits Reversal Of A Demurrer To A Brown Act Mandate Petition

Reason For The Dismissal Was Plaintiffs’ Failure To Adequate Raise Or Brief The Issue. 

            In New Livable California v. Assn of Bay Area Governments, Case No. A159235 (1^st Dist., Div. 3 Dec. 18, 2020 December 18, 2020, published on Jan. 6, 2021), plaintiffs lost a Brown Act writ of mandate petition on a demurrer, a ruling reversed on appeal.  The lower court, in a post-judgment motion, struck a request by plaintiffs for costs, which plaintiffs also appealed.  The appellate court dismissed the appeal based on the abandonment doctrine, because appellants failed to adequately raise or brief the issue.  This is a reminder to practitioners that California reviewing courts usually (in our experience) will not reach out to decide an issue which has been raised summarily without proper discussion of authority or without proper citation to record support cites. 

Homeowner Associations: $492,592 Fee Award To HOA And Neighboring Homeowners, Combined, Affirmed On Appeal After Homeowners Lost View Protection Dispute

HOA View Disputes Can Be Costly.

            Under this category, we have indicated that fee awards can be costly for homeowners and homeowner associations/directors/property managers/neighboring homeowners caught in the middle of “view protection” disputes.  The next case is yet another example of that.

            In Davis v. Irvine Terrace Community Assn., Case Nos. G057682/G058266 (4^th Dist., Div. 3 Jan. 5, 2021) (unpublished), one set of homeowners lost a “view protection” case against the HOA and neighboring homeowners.  The trial judge awarded $159,363 to HOA and $333,229 to the neighboring homeowners as prevailing parties in the dispute.

            The appeal by the plaintiff homeowners did not change things.  There was fee entitlement based on the CC&R nature of the dispute, notwithstanding whether a true common interest subdivision was involved.   (Tract 19051 Homeowner Assn. v. Kemp, 60 Cal.4^th 1135, 1143 (2015).)  With respect to the amount of the fee award, a one paragraph argument with string citations in opposition, with no real contest, did not justify why the result should be disturbed.  Ouch as to losing parties!   Justice Moore penned the 3-0 panel decision.

IN THE NEWS . . . . CALIFORNIA RANKS #3 ON “JUDICIAL HELLHOLES” 2020-2021 RANKINGS

Proposition 65; Lemon Law; PAGA; Privacy Act; ADA; and Public Nuisance Issues Abounded.

            The American Tort Reform Foundation published its 2020-2021 “Judicial Hellholes” report, traditionally reporting the jurisdictions where businesses should fear having to be subject to as far as venue from a plaintiff’s perspective.

            California actually slipped to #3, below Philadelphia/Pennsylvania and New York City.  However, it only fell due to the others being more egregious, according to its report.

            Here are the substantive areas which contributed to its #3 ranking:  Proposition 65; lemon law cases; PAGA; Privacy Act [no cases, but some future expected matters]; ADA [disability construction/website cases]; public nuisance [climate change, vaping, and opioid potential matters]; and employment matters [mainly independent contractor, ABC issues]. 

            ADA took some significance, given the minimum $4,000 per violence damages remedy.

            Lemon law was really highlighted, discussing a San Diego County Superior Court decision on August 7, 2020 where a plaintiff won $1.00 in damages but was awarded $684,250 in attorney’s fees (out of a requested $1 million in fees and costs). 

Taxation: Chinese Theatres Has Been Certified For Publication.

Revenue and Taxation Code § 1611.6 Fees Award Of $180,000 To Chinese Theatres Was Reversed On Appeal As A Matter Of Law

            In a December 9, 2020 post, we discussed Chinese Theatres, LLC v. County of Los Angeles, Case No. B302708 (2d Dist., Div. 3) which was unpublished at that time.

            In Chinese Theatres, which involved the historical Grauman’s Chinese Theatre in Hollywood, the 2/3 DCA reversed a Revenue and Taxation Code § 1611.6 fees award of $180,000 to Chinese Theatres.  The reversal was dictated by the narrow circumstances under which § 1611.6 fee entitlement arises in tax refund actions: (1) a county board fails to make requested findings, or (2) the lower court concludes the Board’s findings are so deficient that it remands the matter with directions for the Board to make findings that fairly disclose its determination on the point at issue.  Neither of the circumstances existed – with the Board making a finding, but simply failing to explain how it reached its finding, and with the superior court’s remand for a recalculation based on its finding – not a remand to correct deficient findings.

          We can now report that Chinese Theatres was certified for publication on January 4, 2021.