CALIFORNIA ATTORNEY'S FEES

Retainer Agreements: Retainer Agreement Provision Did Allow For An Attorney To Recover Fees Against A Client For Prevailing In A Fee Dispute

We Quote The Successful Language Below.

            In Leung v. Alivandivafa, Case No. B323416 (2d Dist., Div. 2 Sept. 26, 2023) (unpublished), attorney won a fee dispute with a client after a lower court determined that the governing contingency agreement was valid.  The lower court then awarded prevailing attorney $98,250 in fees, reducing the requested hourly rate from $600 to $500 based on experience and the nature of the dispute.  The appellate court affirmed.  Here is the fee clause in the retainer agreement which justified the fee award: “ATTORNEY has a lien for his fees and legal costs upon the CASE, any judgment obtained thereon, or the proceeds of any settlement or recovery.  ATTORNEY will also be eligible for fees and legal costs associated with recovery of any and all monies owed by CLIENT.”

Ethics, Retainer Agreement, Special Fee Shifting Provisions: Although Fee Award Against HOA Belongs To Attorney, Attorney Had To Offset For Contingency Fee Already Received

Attorney Was Liable For Substantial Elder Abuse Fees To Prevailing Elderly Client Based On Failing To Properly Offset And Return Money To Client.

            Koehler v. Prinz, Case No. C095229 (3d Dist. Sept. 25, 2023) (unpublished) is a case which shows that attorneys need to be careful when they receive a fee award which belongs to them, discussing the fee award with the client and then agreeing on an offset for contingency fees already received.

            In this one, attorney represented an elderly client and later her son in an HOA water intrusion case, receiving a compensatory settlement from HOA/property manager from which he took an agreed contingency fee of $109,374.  Attorney successfully defeated HOA’s cross-complaint which resulted in a Davis-Stirling Act fee/costs award of $412,075.94, which he retained and used to pay personal expenses.  That brought a dispute between attorney and clients on who owned the fee award and whether a credit should have been made for the $109,374 contingency fee previously received by attorney.  The lower court agreed that the fee award belonged to the attorney, but clients were entitled to an offset for the prior contingency received by attorney.  Elderly client won her financial elder abuse claim against attorney based on these facts, with the lower court awarding her about $167,500 in fees and costs under the financial elder abuse fee-shifting provision.

            The Third District affirmed.  Based on the retainer fee language and conduct of the parties, the appellate court concluded the HOA fee award did belong to the attorney, citing analogous cases in the FEHA, private attorney general, Labor Code, and trade secrets areas.  However, it also agreed that attorney had to make a reimbursement of the prior contingency fee award already paid—which was not done, constituting an ethical violation and financial elder abuse given work on the complaint and cross-complaint were inextricably intertwined.  The wrongful retention of the entire fee award supported the financial elder abuse fee award.

Requests For Admission, Section 998: Plaintiffs’ 998 Offer Was Invalid And Costs-Of-Proof Sanctions Properly Denied

Performance Components Of 998 Offer Were Too Ambiguous; RFAs Were Either Of No Substantial Importance Or Not Unreasonably Denied.

            In Jarecki v. Zitter, Case No. D078314 (4^th Dist., Div. 1 Sept. 26, 2023) (unpublished), a drainage dispute developed between property owners and downslope neighbors, resulting in plaintiffs losing a trespass claim but prevailing on a nuisance claim.  Plaintiffs sought expert witness costs under a rejected CCP § 998 offer, a request denied by the lower court.  That court also denied plaintiffs’ request for RFA costs-of-proof sanctions.

            The 4/1 DCA affirmed those determinations.  As to the § 998 offer, plaintiffs’ request had some performance-based terms which were too ambiguous in nature.  The reviewing court explained its conclusion this way: “Term A required them to ‘abate all conditions that cause . . . the nuisance,’ but it did not identify an adequate abatement or ‘all conditions’ at issue. The Jareckis contend they ‘wanted the wall down’ and ‘specifically informed’ the Zitters of the required actions to take or avoid. But term B separately required the Zitters to ‘remove the . . . wall’—implying term A could require something more—and the offer did not specify what term A required. As for term D’s injunction on ‘unreasonably interfering with the . . . discharge of water,’ this was general enough to potentially apply to any future effort by the Zitters to manage water flow from the Jarecki property.”  With respect to the RFAs, the ones on the trespass claim were of no “substantial importance” given this claim was rejected, and the ones on the nuisance claim were not unreasonably denied.

            BLOG BONUS COVERAGE—Also, in an interesting procedural issue, the appellate court agreed that no separate statement—as allowable in true discovery disputes—is allowable in a costs-of-proof proceeding because that would allow the moving party to exceed applicable moving brief page limitations.

Civil Rights, Section 998: Summary Judgment Winning Defendants Properly Denied FEHA Attorney’s Fees And Routine Costs Because Case Was Not Frivolous

Also, FEHA And Non-FEHA Claims Overlapped Such That Costs Recovery Was Foreclosed.

            In Liza v. CKE Restaurant Holdings, Case No. B313111 et al. (2d Dist., Div. 2 Sept. 25, 2023) (unpublished), defendant won a summary judgment against plaintiff’s FEHA and non-FEHA claims, although they did overlap.  The lower court later denied the defense request for attorney’s fees and routine costs.

            The 2/2 DCA affirmed.  The appellate court agreed with the lower court’s determination that the action was not frivolous, with a loss on a case not being the automatic equivalent of the matter being specious.  With respect to the interplay between FEHA claims, non-FEHA claims, and CCP § 998, the reviewing court found that Scott v. City of San Diego, 38 Cal.App.5^th 228, 242-243 (2019) was correct in reasoning that pre-998 versions did not change the rule that frivolity had to be found in the case, which prevented recovery of routine costs by the defense given the trial judge’s conclusion that there was overlap in the FEHA and non-FEHA issues.

            BLOG COMMENTARY—Where a defendant affirms an adverse FEHA determination, appellate costs also are governed by the frivolity standard.  (See Pollock v. Tri-Modal Distrib. Services, 11 Cal.5^th 918, 929 (2021).)

Section 998: Plaintiff Was Only Entitled To Smaller 998 Attorney’s Fees After Rejecting The Defense Offer

Plaintiff’s Later Accepted 998 Offer Did Not Make Things More Valuable, Because The Defense Rejected 998 Offer Did Allow For Reasonable Fee Recovery.

            In the CCP § 998 offer area, we see cases with interesting facts, and we have them in Elmi v. Related Management Company, L.P., Case No. G061379 (4^th Dist., Div. 3 Sept. 25, 2023) (unpublished), authored by Justice Goethals for a 3-0 panel.

            What happened here is that the defense submitted a 998 offer, rejected by plaintiff, offering to pay $10,001 plus statutory costs, including attorney’s fees on an Investigative Consumer Reporting Agencies Act claim.  Later, plaintiff submitted his own 998 offer, offering to settle for $9,999, plus defense requirement with certain investigative consumer reporting requirements, plus reasonable fees and costs as determined by the court.  Plaintiff’s offer was accepted by the defense.  Plaintiff then moved for $302,146 in fees as the prevailing party, with the defense principally arguing that plaintiff could not recover fees for the period after it served the defense offer because plaintiff did not obtain a more favorable result and the requested fees were excessive in nature.  The lower court agreed that plaintiff was not entitled to fees after the defense rejected 998 offer and further reduced fees for over-litigation, eventually awarding $19,440 in fees.

            Plaintiff’s appeal was unsuccessful.  The appellate court found that plaintiff’s 998 offer was not more successful, because the rejected defense offer fully allowed for reasonable fee recovery as the trial judge would determine.  Because plaintiff’s $9,999 offer was less than the defense rejected offer of $10,001, the lower court’s fee award was no abuse of discretion.

Private Attorney General: Where Petitioner Had Limited Success And Lost Its Primary Litigation Objectives In CEQA Action, Lower Court Did Not Err In Reducing Requested Fees By About 90% And Denying A Positive Multiplier Request For One Firm’s Work

$37,346.30 Was The Fee Award From The $225,683 Lodestar Request Plus 1.5 Multiplier For One Component Of The Fee Request.

            Limited success and excessive fee requests, even in a CEQA context, confer considerable discretion on a lower court to fashion an appropriate fee award under California’s private attorney general statute.  These factors led to about a 90% reduction of a partially prevailing petitioner’s fee request in Friends of Muir Woods Park v. The County of Marin, Case No. A166427 (1^st Dist., Div. 5 Sept. 20, 2022) (unpublished).

            There, Marin County approved real party in interest’s 3-lot subdivision plan by adopting a mitigated negative declaration, with petitioner challenging that action under CEQA and the Subdivision Map Act.  Petitioner mainly wanted an EIR to be conducted and wanted reassessment of the project for 12 homes that potentially could be built on the sites rather than the two new homes which were approved, as well as raised several other excavation/fill, environmental, human safety, local plan, and Subdivision Map Act violation issues.  The lower court granted and denied, in part, the petition, finding that the county had not violated the Map Act, that County’s initial study had failed to satisfy CEQA’s informational requirements with respect to three discrete issues, that the county was not required to conduct an EIR, that there was no substantial evidence of potential environmental impacts, and that the county was not obligated to analyze the impacts of a 12-house project.  The writ did not direct the county to exercise its discretion in any way and did not direct the preparation of an EIR.

            Petitioner moved to recover CCP § 1021.5 lodestar of fees of $225,683 plus a positive 1.5 multiplier on a $39,889 component of the request.  The lower court, based principally on petitioner’s limited success and excessive work, awarded $37,346.30, consisting of $16,420 for some “fees on fees” and $20,926.30 (10% of the remaining lodestar request after backing out the fees on fees).  Obviously unhappy, petitioner appealed.

            The 1/5 DCA affirmed.  Although the general rule is that fee awards should be fully compensatory, the appellate court agreed that the lower court properly reduced the fee request for limited success and uninflated billings.  Even where a plaintiff’s successful and unsuccessful CEQA claims are interrelated, a trial judge may reduce the fees if the plaintiff achieves only minimal success (Save Our Uniquely Rural Community Environment v. County of San Bernardino, 235 Cal.App.4^th 1179, 1185-1186 (2015)), which was appropriate here given that petitioner did not achieve its main objectives of getting an EIR mandated or getting the project analyzed under the 12-house scenario.  Further, the use of a substantial negative multiplier is warranted where the appellate record demonstrated the plaintiff attorneys inflated their billings in an uncomplicated CEQA case and succeeded on only one out of 10 arguments (SOURCE, 235 Cal.App.4^th at 1182-1187, 1189-1190), with time spent on administrative record, legal research, and other work in this case properly found excessive by the lower court under an abuse of discretion standard.  Denial of the positive multiplier request was not erroneous because the factors justifying a multiplier were built into the trial court’s lodestar calculation, such that a “double dip” was inappropriate.

Requests For Admission: Defense Request For Costs-Of-Proof Sanctions Denied Because Statute Of Limitation Issues Were Imprecisely Tied To The Merits And No Apportionment of Statute Of Limitation Tolling Issues Was Established

The Need For Precision In Allocating Fee Recovery Under CCP § 2033.420 Is Made Clear Here.

            In Flores v. Medical Holdings, Inc., Case No. B317695 (2d Dist., Div. 3 Sept. 20, 2023) (unpublished), the defense propounded denied RFAs on statute of limitation issues, ultimately prevailing on this issue at trial.  Feeling emboldened, the defense moved for costs-of-proof sanctions under CCP § 2033.420.  The lower court denied the motion, a determination affirmed on appeal.

            There were two main problems with why the lower court’s ruling was no abuse of discretion.  First, some of the “lateness” RFAs did not focus solely on the statute of limitations issue, but also merits determinations—with case law establishing that sanctions are only narrowly allowed with respect to costs incurred in making that proof (i.e., relating solely to the SOL defense).  (See, e.g., Garcia v. Hyster Co., 28 Cal.App.4^th 724, 737-738 (1994); Grace v. Mansourian, 240 Cal.App.4h 523, 529-530 (2015).)  Second, although the RFA denial relating to SOL tolling might have been a winner, the defense did not separately account for any such fees as the statute requires.  So, the outtake of this one is to request, with precision, costs of proof amounts tethered to specific issues in order to be successful.

Appealability, Family Law: Denial Of Fees To Ex-Wife Under Family Code Section 3121 Was No Abuse Of Discretion Because The Matters Before The Trial Judge Were Unrelated To Child Custody Issues

However, Ex-Wife’s Appeal From The Final Judgment Was Timely Because the Interim Order Denying Fees Was Not A Separately Appealable Order.

            The main lesson from Marriage of Davis, Case No. D080980 (4^th Dist., Div. 1 Sept. 18, 2023) (unpublished) is a simple one:  if you are seeking fees, make sure you have a fee entitlement basis which is tethered to the matter before the lower court; otherwise, you lose, as happened in the opinion upon which we now post.

            In a dissolution hearing, ex-wife orally requested her attorney’s fees to obtain counsel in a proceeding under Family Code section 3121, which allows need-based fees akin to those allowable under sections 2030/2032 where an action involves exclusive custody of children from the marriage.  The court denied the motion, prompting an appeal.

            The first issue was appealability.  Given that this matter involved the denial of a fee request, the appellate court agreed that the interim denial did not have to appealed until notice of a final judgment, with ex-wife timely appealing from that.  It did note a rift in appellate thinking, but followed the majority view that an appealable collateral order must direct the payment or money, not a denial of money.  (Eisenberg et al., Cal. Practice Guide:  Civil Appeals and Writs (The Rutter Group 2022) § 2.78, also discussing the minority view in Muller v. Fresno Community Hospital & Medical Center, 172 Cal.App.4^th 887, 901-902 (2009).)

            On the merits, the record showed that the hearing matter before the lower court involved requests for a domestic violence restraining orders (DVROs) and a residence request, not a child custody controversy.  It was not enough that the dispute was part of the overall dissolution case, but it had to be targeted at an exclusive child custody dispute.  (Compare with C.T. v. K.W., 71 Cal.App.5^th 679, 681-685 (2021), where the DVRO petition included a request for child custody and visitation orders justifying a fee grant under analogous fee provision under the Uniform Parentage Act).

Lodestar, Prevailing Party: Reversal Of Judgment For Cross-Complainant And Increased Recovery For Plaintiffs Made Plaintiffs The Prevailing Party So A Fee Order Remand Was Necessary

Given Some Reductions For The Cross-Complaint And Other Issues, Fee Award Had To Be Reassessed—Initial Award Was $388,541, A 50% Reduction From The Original Request.

            In Perera v. Moine, Case No. B319315 (2d Dist., Div. 7 Sept. 18, 2023) (unpublished), plaintiffs were the prevailing party in a breach of contract dispute (based on an initial $750,700.16 compensatory award to plaintiffs after some reductions, including a reduction for a $61,000 on the defendant’s cross-complaint), with the lower court awarding $388,541 in attorney’s fees under a contractual fees clause—a 50% reduction from the $788,072 “ask” for excessive hours for a one-week bench trial, unreasonable charges, and duplication by having too many attorneys working on the case.  In a contemporaneous decision, the 2/7 DCA determined that no recovery was allowable on the cross-complaint and more recovery was owed to plaintiffs, which resulted in a remand of the fee award as described below.

            Defendant argued that plaintiffs were not the prevailing parties, but that was not the case.  If anything, they were more so given the contemporaneous opinion which increased plaintiffs’ recovery by more than $300,000.

            Given the reversal, a remand was necessary on the fee recovery.  The appellate court did not express any opinion on whether the original trial judge’s (Judge Terry Green’s) reductions were or were not appropriate.  It did observe that he has retired from the bench such that the fee motion should be adjudicated before a new judge who was urged to make an order indicating the amount of the award under lodestar principles, recognizing that no statement of decision is mandatory in fee proceedings.

            BLOG OBSERVATION—Judge Green (Ret.) is now a neutral with Signature Resolution.

Civil Rights, Costs: Prevailing ADA Defendant Entitled To Costs Under F.R.Civ.P. 54(d)(1) Even If The Matter Was Not Frivolous

Majority Opinion Followed Marx Decision; Dissent Would Have Followed A Contrary Pre-Marx Decision Despite Indicating The Result Might Be The Same.

            In Garcia v. Gateway Hotel, L.P., Case No. 21-55926 (9^th Cir. Sept. 15, 2023) (published), the Ninth Circuit, in a 2-1 opinion, clarified that defendants prevailing in an American with Disabilities Act (ADA) suit are entitled to seek routine costs from the plaintiff under Federal Rule of Civil Procedure 54(d)(1), not having to prove the case was frivolous, based on Marx v. General Revenue Corp. 458 U.S. 371 (2013).  The dissent, we think, did not disagree, but believed the circuit was bound by a pre-Marx decision not embraced by the majority justices.

Allocation: Major Portion Of $950,000 Attorney’s Fees Award Affirmed In Interrelated Trade Secret/Contractual Matter

However, Some Portion of The Fee Recovery On An Unsuccessful, Non-Compensable Fraud Cross-Claim Had To Be Revisited Because Billings Showed Those Expenses Could Be Assessed.

            Elations Systems v. Fenn Bridge, LLC, Case No. A165762 (1^st Dist., Div. 3 Sept. 15, 2023) (unpublished) is an allocation/apportionment opinion which we commend litigators and others to read.

            Summarized quickly, plaintiff sued on trade secret and contractual claims (breach of a settlement agreement and an NDA agreement), obtaining a jury verdict which was reversed by the trial judge through post-trial motions.  The lower court initially awarded defendants $700,000 in contractual attorney’s fees.  However, in a prior appeal, the appellate court reversed and directed a remand to determine whether fees needed to be apportioned between compensable/non-compensable claims, mainly, trade secret/settlement agreement breach claims, NDA breach claims, and a fraud cross-claim.  On remand, the lower court determined that $700,000 was entitled to the defense as well as an additional $150,000 in appellate/post-judgment fees.

            Most of the fee recovery was affirmed on appeal.  Most of the $700,000 fee award was justified because the claims were interrelated, but with one exception.  On the fraud cross-claim which was unsuccessful, an apportionment was warranted because billings showed that the work on that cross-claim could be segregated.  The additional $150,000 fee work was upheld.

            So, the moral of this one is to ask for apportionment and not give up on appeal on this allocation issue—you may get some relief!  Fee challenges should focus on a request for apportionment, where appropriate.

Private Attorney General: $32,496.75 CCP § 1021.5 Fee Request Against County Clerk And Real Party In Interest (RIP) Properly Denied Because They Were Not “Opposing Parties” And No Private Enforcement Necessity Was Present

A Dissenting Justice Believed RIP Was An “Opposing Party,” And Would Have Remanded To The Lower Court To Assess If Other Elements Of Section 1021.5 Were Satisfied.

            In Holloway v. Wylie, Case No. H050376 (6^th Dist. Sept. 12, 2023) (unpublished), petitioner prevailed on an unopposed mandate petition to delete from a voter information guide the identification of a county supervisor as a proponent of a school district bond measure.  Petitioner moved to recover private attorney general fees against the respondent county clerk and RIP, with the lower court determining that the fee motion was untimely and that county clerk was an “an opposing party” under section 1021.5.  In a prior appeal, the Sixth District found the fee motion timely but also concluded county clerk was simply a ministerial actor required to be named under the Elections Code so that the clerk was not an “opposing party.”  On remand, petitioner renewed the fee motion against RIP, requesting $32,496.75 in fees.  The lower court again denied the request, including that RIP, too, was not “an opposing party.”

            The Sixth District in its newest opinion affirmed, but on a 2-1 basis due to a dissent.  The majority concluded that RIP was not an “opposing party” based on a litigation pragmatic test set forth in McGuigan v. City of San Diego, 183 Cal.App.4^th 610, 625 (2010).   RIP never opposed the mandate writ petition, and there was conflicting declaration testimony but with RIP’s testimony showing there was no prelitigation objection to the voter information deletion.  But the majority went further.  It also found that there was no necessity for private enforcement, as an alternative ground, based on tacit findings in the minute order. 

            Acting Presiding Justice Bamattre-Manoukian dissented.  She found RIP was an “opposing party” because he had too much skin in the game—a direct interest in the litigation.  However, because of her belief that only the “opposing party” ground was the basis for the lower court’s decision, she would have remanded to have the lower court consider other factors necessary to justify section 1021.5 fee recovery.   

Special Fee Shifting Statutes: $955,500 Fee Award And $83,246.52 Costs Award Affirmed In Elder Neglect Case

Total Compensatory Damages Were $696,833.97.

            As we have observed before in line with our Mission Statement, attorney’s fees can be the game winner where there is a fee-shifting basis—contractual, statutory, or equitable.  Newton v. Enloe Medical Center, Case No. C095324 (3d Dist. Sept. 12, 2023) (unpublished) illustrates that well.

            This was an elder neglect case, which does have statutory fee-shifting provisions in favor of the plaintiff.  Plaintiff won to the tune of $696,833.97 in compensatory damages (including $50,000 in loss of consortium damages to one plaintiff).  The lower court awarded plaintiffs $955,500 in fees and $83,246.52 in costs, determinations affirmed on appeal.  See how the fees/costs stripped the compensatory award by quite a delta, confirming our Mission Statement. 

Construction, Laffey Matrix, Lodestar, Reasonableness Of Fees: Los Angeles County Superior Court Awards A Little Over $1.3 Million In Fees And About $82,000 In Costs In Construction Dispute With Contractual Fees Clause Entitlement

Decision Provides Insights Into Judicial Resolution Of Contested Fee And Costs Issues.

            Because there has not been a lot of fee or costs decisions in the last couple of weeks, we report on a Los Angeles County Superior Court (Norwalk) final ruling on attorney’s fees and costs to a prevailing plaintiff in WnG Construction JV, Inc. v. AAA Solar Electric, Inc., et al., L.A. Superior Court Case No. VC065473 [Judge Porras]. 

            Plaintiff WnG won a construction dispute with a contractual fees clause against the defense, winning compensatory damages of about $3.116 million (inclusive of prejudgment interest) despite an offset and plaintiff not winning all that it wanted.  However, given that plaintiff did gain much of what it wanted, plaintiff was the prevailing party under the fees clause.  Plaintiff then moved for fees and costs, with various law firms submitting fee requests totaling around $2.1 million and with costs claimed of over $205,000.

            After some reductions on both counts, Judge Porras awarded fees of about $1.309 million and costs of around $82,000.

            Here are some interesting highlights to show his thinking on awarding reasonable fees and costs:

• • • An attorney disqualified based on ethical obligation violations is not entitled to any fees, an almost $223,000 reduction;
    • A law firm requesting over $653,000 in fees did not get them because they were involved in a discovery dispute which showed plaintiff deliberately spoliated evidence;
    • The principal law firm did get a majority of its requested fees, although J.D. law clerk/non-J.D. law clerk/secretarial work was not allowed and the main attorney charging $500 per hour for a breach of contract case was reasonable (but not an enhanced $750 hourly rate based on the Laffey Matrix, which the lower court found did not reflect L.A. County rates);
    • A law firm billing for potential post-trial/appellate consultation was not entitled to fees until those events materialized into situations allowing for fee recovery;
    • Although a CCP § 998 offer was rejected and could have potentially resulted in expert fee recoupment (although it is not clear from the record), the failure to identify pre-offer versus post-offer costs did not allow for an award of expert fees without a clearer allocation;
    • Charges for additional or duplicate copies of court reporter transcripts resulted in a reduction of expenses for these items.

            With that said, we give a “shout out” to Thomas F. Nowland, whose law firm and whose principal work led to him receiving a substantial portion of his fees on behalf of his client.  We thank him for providing the fee and costs ruling in this case so it could be shared with you.

Mediation: Prevailing Parties Properly Were Awarded Contractual Attorney’s Fees Because They Did Not Violate the Prelitigation, Mediation Provision

Fee Award Of $527,639.99 To Certain LLC Member Defendants Affirmed On Appeal.

            We do have a category entitled “Mediation” on our home page, surveying opinions which have discussed prelitigation, mediation contractual provisions requiring mediation before litigation as a qualification for prevailing party fee entitlement.  We have another case to add to this category.

            In Frealy v. Kanter, Case No. B316413 (2d Dist., Div. 8 Aug. 29, 2023) (unpublished), one group of LLC members got into a dispute with another group of members.  The LLC filed for Chapter 7 bankruptcy, with the sale of debtor’s assets resulting in a little over $1.9 million in surplus proceeds and with certain LLC members claiming other members were not entitled to share in the proceeds.  One group tried to reach a stipulation with the other group by which the proceeds would be placed in an escrow account (rather than force the Chapter 7 trustee to file an interpleader action) followed by a mediation of the dispute with a designated mediator.  The other group refused to sign the stipulation.  Chapter 7 trustee then initiated an interpleader action, and one group of LLC members (respondents) prevailed against another group (appellants) such that respondents were awarded 100% of the surplus proceeds.  There was a contractual mediation provision requiring potential litigants to mediate first or forfeit their ability to recoup prevailing party attorney’s fees.  The lower court, over appellants’ challenges, determined the mediation clause was not violated, awarding respondents $527,639.99 in attorney’s fees.

            The 2/8 DCA affirmed.  The panel agreed with the lower court that the Chapter 7 trustee, not respondents, commenced the interpleader action so there was no violation of the prelitigation, mediation provision.  Further, respondents had attempted to mediate with appellants before the interpleader was filed, but appellants balked at signing the mediation stipulation.

Sanctions: $5,676 In CCP §128.7 Sanctions Affirmed Where Employees Brought Their Own Withdrawn 128.7 Motion For An Improper Purpose

Defense Requested $8,000 In Fees As Sanctions, But Lower Court Awarded Less.

            Acting Presiding Justice Bedsworth, in Maldonado v. Aluminum Precision Products, Case No. G061415 (4^th Dist., Div. 3 Aug. 28, 2023) (unpublished), authored an opinion affirming a $5,676 attorney’s fees award from the defense having to oppose an improper CCP § 128.7 motion brought and then withdrawn by plaintiff employees who had parts of their Second Amended Complaint stricken.  The sanctions were warranted because employees brought their 128.7 motion in relation to a motion to strike which was reasonable given the new allegations of their SAC.  With respect to the amount of sanctions awarded, the lower court did reduce the $8,000 defense request given the overlap of work on its opposition to plaintiffs’ 128.7 motion and the defense’s own 128.7 motion.  Justice “Beds” found that the record did not show that plaintiffs were being “punished” through the sanctions award, because the Legislature enacted 128.7 to prevent what happened in this case.

Family Law: While Ex-Wife and Ex-Husband Were Litigating The Validity Of A Marital Settlement Agreement With An “Each Side Bears Own Fees” Clause, Lower Court Still Properly Awarded Family Code Section 2030 Need-Based Fees To Ex-Wife

MSA Was Not Preemptive In Nature.

            Ex-wife and ex-husband in Mathur v. Mathur, Case No. H050018 (6^th Dist. Aug. 25, 2023) (unpublished) were litigating the validity of a martial settlement agreement (MSA) with a provision stating that each side would bear her/his own attorney’s fees.  The lower court still awarded ex-wife $61,455 in need-based fees under Family Code section 2030 after factually finding a disparity in access to resources and ability to pay by ex-wife.  Ex-husband’s challenge on appeal was that the MSA was preemptive in nature as far as awarding further fees.

            The Sixth District disagreed, affirming the fee award to ex-wife.   It cited case law establishing a court can make a section 2030 fee award when a property agreement is challenged.  (Locke-Paddon v. Locke- Paddon, 194 Cal. 73, 79-81 (1924); Nacht v. Nacht, 167 Cal.App.2d 254, 268 (1959); Spreckels v. Spreckels, 111 Cal.App.2d 529, 532 (1952).)  Although the appellate panel acknowledged that ex-husband had some support for his position in reasoning found in In re Marriage of Guilardi, 200 Cal.App.4^th 770 (2011), it found that case distinguishable because ex-wife in Mathur had mental health issues at the time she signed the MSA such that needs-based equality was necessary to litigate whether than agreement was valid.

Appealability, Deadlines: Appeal Of Later Amended Judgment Including Fees And Costs Was Untimely With Respect To A Review Of The Merits Decision Reflected In the Original Judgment

The Later Amended Judgment Was No Substantial Modification To The Original Judgment.

            The next opinion, San Diego Innovation Center, LLC v. Skyriver Communications, Inc., Case No D080972 (4^th Dist., Div. 1 Aug. 25, 2023) (unpublished), supports a suggestion we have made in numerous past posts:  appeal an original judgment and amended judgments to make sure both merits and post-trial judgment issues can be reviewed.

            Appellant failed to timely appeal from an adverse, original judgment in which landlord recovered $486,489.55 damages in a breach of lease suit after appellant vacated early in the COVID-19 pandemic.  Later, landlord also obtained $1,479 in routine costs and $62,821 in contractual attorney’s fees, which was reflected in an amended judgment appealed from by appellant.

            Appellant’s challenges on appeal were to merits rulings under the original judgment; given that procedural posture, the appellate court dismissed the appeal.  The failure to timely appeal the original judgment was fatal, with the amended judgment adding costs and fees not constituting a substantial modification of the judgment to dictate otherwise.  (Torres v. City of San Diego, 154 Cal.App.4^th 214, 221-223 (2007).)

Homeowners Associations: 4/1 DCA Reverses As A Matter Of Law Adverse Fee Awards Against Homeowners Not Prevailing On Common Interest Development Open Meeting Act (OMA) Violations

Fees Are Not Awardable To Prevailing HOAs Under OMA Violations; Costs Were Not Proper Because Homeowners’ Action Was Not Frivolous, Unreasonable, Or Without Foundation.

            In LNSU #1, LLC v. Alta Del Mar Coastal Collection Community Assn., Case Nos. D080208/D081204 (4^th Dist., Div. 1 Aug. 25, 2023) (published), the 4/1 DCA had to decide, for an ordinary costs award, what “frivolous, unreasonable, and without foundation” meant with respect to a costs-shifting provision under the Common Interest Development Open Meeting Act (OMA), Civil Code § 4955(b), which allows costs shifting to a prevailing HOA if these prerequisites are met.

            Two homeowners sued HOA for violations of the OMA, with the merits resolved against homeowners in the lower court and with the appellate court affirming the merits determination.  However, the lower court granted HOA $8,874.61 in routine costs, denying homeowners’ motion to strike/tax costs.  The lower court also granted HOA $348,306 in attorney’s fees (out of a requested $405,282.50) under the Davis-Stirling Act, Civil Code § 5975(c)) rather than the OMA costs shifting provision.

            The appellate court reversed the costs and fees awards against homeowners. 

The problem with the fee award is that homeowners did not bring a Davis-Stirling Act claim based on governing HOA documents, but rather the OMA.  Under the OMA, only ordinary costs—not attorney’s fees—are awardable in favor of a prevailing HOA.

Then, attention shifted to the ordinary costs award.  The appellate court construed the “frivolous, unreasonable, and without foundation” requirements to award costs to a prevailing HOA to incorporate the “any reasonable attorney” standard adopted in such cases as Smith v. Selma Community Hospital, 188 Cal.App.4^th 1, 33 (2010).  With that in mind, the homeowners’ positions were debatable and never decided before, such that there was legal uncertainty which did not justify imposition of routine costs under the circumstances.  Even though homeowners rejected HOA’s CCP § 998 offer, the specific OMA costs-shifting provision prevailed over the 998 costs-shifting mechanism. 

Trade Secrets, Substantiation Of Reasonableness Of Fees: One Defendant Obtains Fee Award Of $254,147.40 Under Trade Secrets Fee Shifting Statute, While Another Defendant Denied Fees

Other Defendant Denied Fees For Not Providing Sufficient Substantiation Of Claimed Fees.

            In Environmental Logistics, Inc. v. Hayward, Case No. D080515, and Environmental Logistics, Inc. v. Tabush, Case No. D080516 (4^th Dist., Div. 1 Aug. 25, 2023) (unpublished), two companion cases, Plaintiffs sued multiple defendants, including three former employees, for interference and trade secret misappropriation, seeking $37.55 million in damages.  After weeks of trial, including an Evidence Code section 402 hearing, the lower court granted a nonsuit on all Plaintiffs’ claims after excluding the opinions of two experts, one because he did not make himself available for deposition until one week before trial and another because his opinions lacked causal foundational links.  Defendants Hayward and Tabush moved for attorney’s fees under Civil Code section 3426.4, which allows for fee awards in the lower court’s discretion in a trade secrets misappropriate case where both objective speciousness and bad faith in commencing/prosecuting a trade secrets case exists.  The lower court granted Hayward’s fee motion, awarding $254,147.40 against Plaintiffs, but it denied Tabush’s fee motion for lack of sufficient fee substantiation.  Defendant Tabush requested expert witness fees of $13,535.60 for a consulting forensic accountant’s expert witness fees given that Tabush successfully made a CCP § 998 offer to waive costs in exchange for a dismissal with prejudice (a 998 offer which he upheld through the non-suit order).  The lower court granted Tabush’s expert fees as costs, striking only $440 of the request because it represented work for a deposition which never went forward.  Plaintiffs appealed the Hayward fee and expert fee award in Case No. D080515, while Tabush appealed the fee denial in Case No. D080516.

            With respect to the appeal involving the Hayward attorney’s and expert’s fees awards, the 4/1 DCA affirmed.  Plaintiffs’ main challenge was that subjective bad faith was not shown, but this was dispatched based on opposing counsel showing deficiencies in Plaintiffs’ theories at an injunction hearing which persisted through the trial.  Although Tabush’s expert never testified at trial, it was reasonable for this defendant to consult with a forensics accountant given the substantial damages claim by Plaintiffs.

            On the fee denial appeal by Tabush, there was no abuse of discretion by the lower court in reaching its conclusion given that Tabush submitted a conclusory attorney declaration with ultimate conclusions and no supporting documents for a $188,168 fee request.  The appellate court endorsed the view that, in a complicated litigation matter, more detail is better and that a lead attorney declaration on reasonableness does not allow a lower court to make its own determination of the same without detailed substantiation.  Plaintiffs argued that the billing contained attorney-client information, but the defense at a motion hearing diffused this well by indicating that the information could be redacted, filed under seal, or remedied by more detail in the lead attorney declaration.