CALIFORNIA ATTORNEY'S FEES

Fees On Fees, SLAPP: SLAPP Fee Awards To Employee And His Counsel Totaling $136,285.50 Plus Another $33,007.50 In Fees On Fees Affirmed On Appeal

Plaintiff CEO Was Unable To Prove His Claim Against Employee And His Counsel For Their Efforts To Add Him As Judgment Debtor To Underlying Lawsuit Stemmed From Malicious Prosecution As Opposed To Protected Activity.

            Khanna v. Sonasoft Corp. – from our July 13, 2016 and October 15, 2019 posts – is the underlying case for this next one.

            In that case, an employee had sued his employer and its CEO for failure to promptly and fully pay his wages.  In the first appeal, employer was unsuccessful in challenging postjudgment awards of attorneys’ fees, costs and interest.  However, its CEO, Andy Khanna (unrelated to the employee Vince Khanna), was successful in that appeal in challenging an amendment that added him as a judgment debtor under an alter ego theory.  In the second appeal, CEO sought to reverse the trial court’s denial of his request for fees incurred on the first appeal.  There, the 6^th District affirmed – finding CEO was not entitled to fees as he had failed to demonstrate that employee had brought the action against him in bad faith as required by Labor Code section 218.5(a).

            Now, in Khanna v. Khanna, Case Nos. H044973 and H045555, (6^th Dist., April 3, 2020) (unpublished), CEO appeals the trial court’s order granting employee and his counsel’s anti-SLAPP motions brought in response to CEO’s lawsuit against them for malicious prosecution stemming from the alter-ego allegations and adding CEO as judgment debtor – alleging the trial court erred in finding that employee and his counsel made the required threshold showing that CEO’s single cause of action arose from a protected activity, and in finding that CEO failed to demonstrate the required probability of prevailing on the claim.  Additionally, CEO appeals the trial court’s orders granting employee and his counsel’s motions for attorneys’ fees and costs – alleging the trial court abused its discretion in awarding fees in their “entirety” and by not reducing the fees to reasonable amounts.

            However, CEO fared no better on appeal – with the 6^th District finding no error, nor abuse of discretion, in the trial court’s orders and affirming.

            First, as to the anti-SLAPP motions, the 6^th District found that CEO failed to provide sufficient evidence that employee and his counsel pursued the alter ego theory and had him added as judgment debtor through malice, fraud, or concealment.  Employee and his counsel pursued CEO as additional judgment debtor when employer failed to perform under the parties’ settlement agreement and demonstrated no intention of performing and paying the judgment.

            Second, as to the attorneys’ fees, the trial court – finding  employee and his counsel had each met their burden of establishing entitlement to fees, and of documenting the time spent/hourly rates charged – awarded to attorney defendants their requested $86,365.50 in fees, with no multiplier, and $1,267.90 in costs for defeating CEO in malicious prosecution claim.  Likewise, the trial court also awarded employee $49,920.00 in fees – with no multiplier – and $947.18 in costs.  Additionally, the trial court also awarded the attorney defendants with an additional fees-on-fees award of $33,007.50 in fees, without a multiplier, and $325.15 in costs for litigating their first motion for attorney fees and costs. 

            The 6^th District found no abuse of discretion as to any of the fee awards.  Rather, they found that employee and his counsel were entitled to fees under Code Civ. Proc. section 425.16(c)(1) for successfully defeating the malicious prosecution claim with their anti-SLAPP motions.  CEO failed to show that the Anti-SLAPP motions were simple or routine as he asserted, the requested hourly rates were supported by evidence, and CEO failed to support his claims of block-billing and unnecessary, redundant or excessive hours.

Discovery, Sanctions: Louisiana Federal District Judge Assesses Fees And Sanctions Against Defendant And/Or Its Attorney For Deposition Interruptions, Speaking Objections, Instructions To Not Answer, Witness Coaching, And Failure To Prepare The Deponent

Various Fees And Sanctions Ordered Under FRCP 37.

            We sometimes blog on cases outside of California.  This one caught our eye because it received press in a March 30, 2020 post by Debra Cassens Weiss in the ABA Journal.

            In REC Marine Logistics, LLC v. Richard, No. 19-11149 (E.D. La. Mar. 27, 2020) (Docket Doc. 93) [linked here], U.S. Magistrate Judge Dana M. Douglas confronted plaintiff’s request for attorney’s fees for bringing an earlier motion to compel and then fees/costs/sanctions under FRCP 37 for defense counsel’s dilatory discovery actions and his tactics during a noticed deposition in a maritime injury case.  Magistrate Judge Douglas initially awarded $3,675 in fees for an earlier motion to compel, which then turned the focus upon defense counsel’s conduct during the deposition.  He made 145 interruptions during questioning, 16 instructions to the witness not to answer, 106 objections (including 52 speaking objections), and 11 instances of interrupting to ask his own questions during the cross-examination of the witness, not to mention that the witness was coached and was unprepared for the deposition.  Defense counsel appeared on 170 pages of the 255-page deposition transcript.  Based on this conduct, the magistrate judge ordered the defendant and his attorney to pay the attorney’s fees and costs associated with the deposition and pay plaintiff’s fees associated with the sanctions motion, as well as defense counsel paying individual sanctions in the amount of $1,000.  Wisely, defendant did not oppose the fees/sanctions motion brought by plaintiff.

            BLOG OBSERVATION—The seminal federal case for deposition protocol is Hall v. Clifton Precision, 150 F.R.D. 525 (E.D. Pa. 1993).   A Southern District of California district judge in the past issued a Hall-type order.  (See Vestin Realty Mortgage II Inc. v. Klaas, No. 08-CV-2011 (S.D. Cal. Oct. 25, 2010).) However, some of the Hall protocols have been found to be too inflexible such that more moderate approaches are followed.  (See Chesbrough v. Life Care Centers, Inc., 2014 WL 861200 (Mass. Super. Feb. 14, 2014) at *2, 3, 5 [especially addressing attorney conferences with deponents during legitimate breaks, not deposition special interruptions].). District courts are generally not impressed with conferences in depositions where a question is pending unless a privilege/trade secret/privacy issue is involved, frequently sanctioning for such interruptions.  (See, e.g. New Age Imports, Inc. v. VD Importers, Inc., 2019 WL 1427468, at *3 (C.D. Cal. Feb. 21, 2019) [motion to compel second deposition of witness due to in-deposition conference was “substantially justified” so as to support an award of costs]; Horowitz v. Chen, 2018 WL 4560697, at *3-5 (C.D. Cal. Sept. 20, 2018) [attorney and client “repeatedly left the room together while a question was pending;” costs and redeposition ordered].)

Trespass: Kelly v. House Decision Now Partially Published

Published Part Discusses Scope of Agricultural Trespass Fee-Shifting Statute, CCP § 1021.9.

            CCP § 1021.9 provides: “In any action to recover damages to personal or real property resulting from trespassing on lands either under cultivation or intended or used for the raising of livestock, the prevailing plaintiff shall be entitled to reasonable attorney’s fees in addition to other costs, and in addition to any liability for damages imposed by law.”

            In our March 25, 2020 post, we discussed the unpublished opinion in Kelly v. House, Case Nos. A153735/A153184 (1^st Dist., Div. 1 Mar. 23, 2020).  It determined that the trial court erred in not awarding statutory damages to prevailing plaintiffs under section 1021.9 where they proved that defendants trespassed and caused tangible property damage by boarding their own animals on farmable land, painting corrals, disk-plowed fields, applying prohibited pesticides, and cutting down oak/buckeye trees cultivated by plaintiffs, resulting in plaintiffs losing their certified organic status.  We can now report that the statutory fee discussion section of the opinion was partially certified for publication on April 2, 2020. 

Consumer Statutes, Multiplier, Reasonableness Of Fees: Trial Judge In “Uncomplicated” Lemon Law Case Properly Awarded $94,864 In Song-Beverly Act Attorney’s Fees To Prevailing Plaintiff Winning A Jury Verdict Of $35,805.08

Plaintiff Had Sought $344,639 In Fees, Which Lower Court Found To Be Unreasonable Based On Overstaffing, Lack Of Efficiency, And Requesting Hourly Rates Too High For The Complexity Of The Case; Multiplier Request Properly Denied.

            We commend everyone to read the appellate court’s affirmance of a trial court’s reduction of an attorney’s fees request in Mikhaeilpoor v. BMW of North America, LLC, Case No. B293987 (2d Dist., Div. 1 Apr. 1, 2020) (unpublished), authored by Los Angeles County Superior Court Judge Elizabeth A. White who is sitting by assignment on the 2/1 DCA.  It has a superb summary of these topics:  lodestar; trial court discretion to reduce fees; multipliers; and Song-Beverly Act (lemon) law nuances relating to fee awards.

            In this matter, plaintiff won a jury verdict of $35,805.80 in a straightforward lemon law vehicle case.  The problem occurred when plaintiff’s attorneys sought $344,639 in fees (the lodestar plus a .5 multiplier plus some other minor expense requests).  The trial judge was aghast because the fee submissions showed that 10 attorneys worked the case; hourly rates ranging from $325 - $495 per hour were requested; many motions were “much ado about nothing”; and the case was straightforward/noncomplex in nature.  The defense objected to the hourly rates and argued that at least $83,206.05 should be slashed from the fee request based on block billing and inefficiencies.  After a detailed explanation of his reasoning for reducing the requested fees, the trial judge awarded $94,864 after a small offset for certain fees/costs owed to the defense, in the process denying the multiplier request. That prompted an appeal by plaintiff.

            The 2/1 DCA panel affirmed because it did not see an abuse of discretion under the circumstances.

            Again, we will not summarize all aspects of this unpublished decision, but it is a virtual lexicon for practitioners and others to use as far as lodestar, multiplier, and lemon law fee issues are concerned.

            First of all, the trial judge made detailed explanations at the fee hearing.  Plaintiff relied on federal cases requiring more detail when reducing fee awards, but these were inapt for California state court proceedings.  (In fact, no statements of decision are required in fees matters, although we bloggers observe that trial judges are becoming much more detailed in their tentative or final decisions in this area.)

            Second, the record belied that the lower court made an “across-the-board” percentage reduction without an adequate explanation—which distinguished other California cases (lemon law and in other areas) to the contrary.

            Third, the trial judge also did not make an impermissible fee award based on the jury award to plaintiff, given that proportionality per se is not the rule of law in lemon law cases.  He acknowledged that large fee awards are oft times justified in lemon law cases, but reduced for excessive hourly rates, overstaffing, and other inefficiencies. 

            Fourth, plaintiff argued that the defense had only asked for a smaller reduction such that the trial judge was restrained from making a larger reduction.  This contention was dismissed because the defense carefully asked for a reduction “of at least” a specified amount, not to mention the lower court has discretion to go beyond a defense reduction request.

            Last, but not least, the denial of a multiplier was no abuse of discretion given that the case was not complex (the novelty/difficulty factor to be assessed when positive enhancements are requested).

Allocation, Prevailing Party: Fee Award For All Incurred Fees To Prevailing Plaintiff Who Amended Complaint To Add Cause Of Action Providing Statutory Basis For Fee Recovery Just Before Trial Affirmed On Appeal

All Causes Of Action Related To The Same Common Issue And Were So Intertwined That Apportionment Was Impracticable.

            For an interesting discussion of The Independent Wholesale Sales Representatives Contractual Relations Act of 1990 (Civ. Code section 1738.11 et seq.), Newman v. Knit Creations, Inc., Case No. B292659 (2d Dist., Div. 1 March 30, 2020) (unpublished) is a good read.

            The Act sets out requirements for the contracts between manufacturers and the independent contractor salespeople who represent them.  The Act also provides the salesperson a right of action and ability to recover prevailing party attorney’s fees, along with treble damages for violations of the Act upon proof of intentional malfeasance.

            Here, Plaintiff salesperson sued Defendant manufacturer, after termination of her contract, for underpaying commissions and travel costs.  Defendant cross-complained claiming, among other things, Plaintiff had made misrepresentations to claim commissions.

            More than a year into the litigation, and just shortly before trial, Plaintiff successfully moved, unopposed, for leave to amend her complaint to add a claim against Defendant under the Act.  Along with this newly added claim, Plaintiff also prayed for statutory fees and treble damages.

            Following a bench trial, the trial court entered judgment in favor of Plaintiff on both the first amended complaint and cross-complaint – finding Plaintiff was entitled to $41,048.60 in damages for unpaid commissions, and that Defendant had violated the Act by failing to identify the commission rate for discounted sales.  However, the trial court did not award treble damages as it did not find that Defendant’s violation was intentional. 

            As prevailing party under the Act, Plaintiff moved post-trial for fees of $85,750 plus a lodestar multiplier of two – for a total of $171,500 – based on the complexity of the case and assumed risks Plaintiff’s counsel faced in representing her.  Defendant argued Plaintiff was entitled to less than $10,000 in fees as she: (1) was not entitled to fees incurred prior to amending her complaint to add a claim under the Act; (2) could not recover fees for responding to demurrers which were partially successful; (3) was only entitled to fees incurred in prosecuting her claim for violation of the Act; (4) was not able to recover fees related to defending against the cross-complaint; and (5) was inflexible and prevented the case from settling prior to trial. 

            The trial court bought none of Defendant’s arguments – finding her counsel’s efforts “so intertwined that it would be impracticable to separate the attorney’s time into compensable and noncompensable units as all of the claims related to the payment of the commission at issue under . . . section 1738.10.”  Plaintiff was awarded the entire amount of fees incurred – $85,750 – with no multiplier. 

            Defendant unsuccessfully appealed – with the 2/1 DCA finding no abuse of discretion in the trial court’s decision not to apportion the attorney fee award to segregate time based upon the common issue on which the fees were incurred and inextricably intertwined.

Partition, Prevailing Party, Section 1717: Denial Of Section 1717 Attorneys’ Fees To Partially Successful Defendant In Partition Action Affirmed

Defendant Moved Under Civil Code Section 1717 Claiming Entitlement To Fees Pursuant To A Settlement Agreement She Unsuccessfully Sought To Enforce.

            In Carmody v. Mayne, Case No. D076197 (4^th Dist., Div. 1 March 30, 2020) (unpublished) Plaintiff and Defendant entered into an oral agreement to jointly purchase a single family home as an investment property.  Plaintiff provided the majority of the down-payment funds, but the parties held title as joint tenants rather than as tenants in common. 

            When the parties later decided to end their relationship as investment partners, they entered into a “Conditional Settlement Agreement and Mutual General Release Upon Escrow Closing.”  Under this Settlement Agreement, Defendant was to purchase Plaintiff’s interest in the property subject to certain conditions which included a “Time is of the Essence and Liquidated Damages” provision. 

            Escrow was to close within a year of opening.  When that did not happen, the parties disagreed on how to proceed – with Plaintiff believing the Settlement Agreement had terminated by its own terms, thereby eliminating her obligation to transfer her interests in the property to Defendant, and Defendant claiming the Settlement Agreement was still in effect, with escrow just being “on hold.” 

            Plaintiff filed a partition action, and Defendant cross-complained to enforce the Settlement Agreement.

            Plaintiff successfully demurred to all causes of action in Defendant’s second amended cross-complaint, with the trial court sustaining without leave to amend based on its finding that the Settlement Agreement had expired by its own terms when escrow did not close by the specified deadline, and that Defendant could not amend her cross-complaint to survive demurrer based upon the evidence provided.

            A first trial was then held on the partition action, as stipulated to by the parties, to determine issues of lien amounts and each party’s equity in the property.  A second trial would later be held if necessary to determine fair market value of the property. 

            The trial court determined that the parties were novice real estate investors without an understanding of the legal ramifications of holding property as joint tenants or tenants in common, but agreed with Defendant that the property was held in joint tenancy.  However, based on stipulation by the parties that Plaintiff had contributed $119,485 and Defendant had contributed $64,485 toward the down-payment on the property, the trial court ordered that the stipulated down-payment funds be paid first, then the remaining proceeds divided in accordance with Joint Tenancy law. 

            Defendant then moved for section 1717 attorney fees and costs as the prevailing party pursuant to the Settlement Agreement.  Ultimately, the trial court denied Defendant’s motion for fees – finding she had improperly moved under section 1717 as the attorney fees and costs provision contained in the Settlement Agreement was not in play as Defendant had failed in her attempt to have the Settlement Agreement enforced.  Defendant unsuccessfully appealed the demurrer without leave to amend and the denial of fees, among other issues.

            Not only did the 4/1 DCA affirm, but added that Plaintiff could be entitled to attorney fees and costs under section 1717 because she was successful in getting the second amended cross-complaint dismissed with prejudice by arguing the Settlement Agreement had terminated.

Celebrities, SLAPP: Where Denied SLAPP Motion Was Not Frivolous, Plaintiffs Successfully Defending Against Motion Were Not Entitled To Fees

Determination Of Frivolousness Of SLAPP Motion Is Within Discretion Of Trial Court, But 2/1 DCA’s Partial Reversal Of Trial Court’s Denial Was Further Evidence That SLAPP Motion Was Not Frivolous.

            In Oldman v. Bates, Case No. B296539 (2d Dist., Div. 1 March 27, 2020) (unpublished), Kurt Oldman and Dieter Hartmann were hired by Tyler Bates and Tyler Bates Music, Inc. to assist in composing music for the movie Guardians of the Galaxy Vol. 2.  Disputes arose after the project was complete.

            Oldman and Hartmann sued – alleging six causes of action stemming from their claims that Bates had falsely promised to list them on the cue sheet such that they would receive 15 percent of the writer’s share of royalties in perpetuity, and that they would receive “Additional Music By” credit on the film.

            Bates SLAPPed back – arguing that all acts undertaken in relation to the creation of the film are protected activities because films are expressive works subject to First Amendment protections, and that Oldman and Hartmann could not establish the required probability they would prevail on their claims.  When the trial court denied Bates’ SLAPP motion – determining the conduct at issue was related to contractual fulfillment, not free speech - Oldman and Hartmann moved for fees claiming the SLAPP motion was frivolous and without merit.  However, the trial court denied the fee request – finding the motion was not entirely frivolous or solely intended to cause unnecessary delay.  All parties appealed.

            As to the SLAPP motion, the 2/1 DCA partially reversed – finding Bates’ failure to acknowledge Oldman’s and Hartmann’s creative contributions through an “Additional Music By” credit to be protected activity as the dispute arose out of artistic disputes about the level of contribution to the film score, not out of a contractual dispute.  Additionally, the 2/1 DCA found that Oldman and Hartmann had failed to meet their burden of showing a probability they would prevail on the “Additional Music By” claims as their opposition to the SLAPP motion focused on the cue sheet and did not address their “Additional Music By” claims.

            Finally, as to the attorney fees, the 2/1 DCA affirmed.  Code Civ. Proc. § 425.16(c)(1) requires an award of fees and costs to a prevailing plaintiff if the SLAPP motion is frivolous or made for the purpose of causing unnecessary delay – a determination made within the trial court’s discretion.  The 2/1 DCA found no abuse of discretion – especially given they partially reversed the trial court’s denial of the SLAPP motion.

Civil Rights: Plaintiff Losing Intertwined Labor Code § 1102.5/FEHA Claims Was Properly Not Assessed With Attorney’s Fees Under FEHA And Was Improperly Assessed With Routine Costs As Against Los Angeles County

Costs Award Reversed Because Intertwined Claims Were Not Frivolous In Nature.

            If a trial judge finds that a plaintiff’s FEHA case is not frivolous in nature, a defendant faces large odds to gain an award of attorney’s fees and costs.  Hays v. County of Los Angeles, Case No. B291542 (2d Dist., Div. 7 Mar. 26, 2020) (unpublished) illustrates well this commentary.

            Plaintiff suffered an adverse summary judgment motion in a mixed Labor Code § 1102.5 retaliation and FEHA suit against former employer County of Los Angeles.  The trial judge denied County’s bid for $303,857.94 in attorney’s fees/costs under FEHA, after finding the case was not frivolous in nature.  However, the lower court did award $15,644.44 out of $20,740.44 in routine costs.

            The fee denial was affirmed based on the trial court’s conclusion that the case was not frivolous in nature.  However, the costs award had to be reversed based on County’s concession that the Labor Code/FEHA claims were “indistinguishable” such that the non-frivolity finding translated into a conclusion that routine costs were not awardable under Williams v. Chino Valley Independent Fire Dist., 61 Cal.4^th 97, 114-115 (2015). 

Section 998: 998 Offer Requesting Release Of All Claims In Above-Captioned Civil Action And Release Of Affiliate Nonparties Did Not Render It Invalid

$35,240.80 Costs Shifting Award Affirmed On Appeal.

            In Kaplan v. Del Amo Hospital, Inc., Case Nos. B296107/B297898 (2d Dist., Div. 1 Mar. 26, 2020) (unpublished), defendant did serve a “successful” CCP § 998 offer to plaintiff, given a defense verdict.  The trial judge awarded costs of $35,240.80 against plaintiff, prompting an appeal on the grounds that the 998 offer was invalid.

            That challenge did not prevail on appeal because the 998 offer was valid.  Plaintiff argued that the 998 offer was conditioned on a release of omnibus claims, but the language of the offer showed it was limited to the claims in the above-captioned civil action, so the release request was not overbroad in nature.  Second, plaintiff contended that the offer’s release of nonparties was too broad, but case law firmly established that inclusion of affiliated non-parties in the 998 offer did not render it infirm.  (Ignacio v. Caracciolo, 2 Cal.App.5^th 81, 84, 88-90 (2016); Fassberg Construction Co. v. Housing Authority of City of Los Angeles, 152 Cal.App.4^th 720, 767 (2007).). Costs award affirmed.

Fee Clause Interpretation, Prevailing Party, Section 1717: Defendant Successfully Challenging Plaintiff’s Trial Court Fee Request, Where Plaintiff Declared Prevailing Party Under Contract, Was Not Entitled To Attorney’s Fees As The Prevailing Party

Defendant’s Limited Appellate Court Win Before Did Not Mean He Prevailed—There Can Only Be One!

            Defendant lost an arbitration to plaintiffs who were declared prevailing parties under a contract by the arbitrator.  Plaintiffs moved for recovery of contractual attorney’s fees under Civil Code section 1717, a request granted by the trial court but then reversed on defendant’s appeal based on an insufficient fee submission.  Defendant then moved for attorney’s fees based on the appellate win, a request denied by the trial court after finding he was not the prevailing party.

            The 1/1 DCA affirmed the fee denial in Achterkirchen v. Montiel, Case No. A153560 (1^st Dist., Div. 1 Mar. 24, 2020) (unpublished).

            The problem with defendant’s approach was that he did not prevail overall under the contract, as Civil Code section 1717 requires.  The arbitrator found that plaintiffs prevailed, with defendant simply winning a skirmish on a collateral fee order along the way.  Because there can only be one prevailing party on the contract (Carriere v. Greene, 39 Cal.App.5^th 270, 276-277 (2019) [discussed in our August 28, 2019 post]), defendant was not the one who prevailed.  He argued that the contractual fees clause cut the other way, but the Court of Appeal panel found that “proceeding” encompassed the entire controversy, not just one appeal in isolation.

Appeal Sanctions, Discovery: Discovery And Family Code Section 271 Sanctions Of $3,250 Against Father Affirmed On Appeal

Also, Father Ordered To Pay Mother $2,980 For Prosecuting A Frivolous Appeal.

            Father, in Rybolt v. Riley, Case No. C086056 (3d Dist. Mar. 24, 2020 (unpublished), appealed from a non-appealable vocational evaluation order and discovery/Family Code section 271 totaling $3,250 for bringing motions to compel which were denied/did not further legitimate purposes of the overall litigation.  Father’s appeal did not go well.  Although it is true sanctions were awarded under both section 271 and the discovery statutes, discovery sanctions do not require an ability to pay as a necessary predicate such that they were no abuse of discretion.  The vocational evaluation order was non-appealable and father’s other arguments were frivolous, prompting the appellate court to award mother $2,980 in attorney’s fees and costs expended in responding to father’s appeal. 

Special Fee Shifting Statute: Elder Abuse Fee-Shifting Provision For Financial Abuse Applies If Liability Found Even If No Damages Ultimately Awarded

Plaintiff Did Recover Damages For Elder Abuse Neglect, Such That Jury Likely Did Not Award “Double Damages” In Any Event On The Financial Abuse Claim.

            In Arace v. Medico Investments, LLC, Case No. E071194 (4^th Dist., Div. 2 Mar. 24, 2020) (unpublished), plaintiff, as personal representative for an elder, sued a senior residential care facility and an employee for elder financial and neglect abuse under the Elder Abuse Act.  The jury found in favor of plaintiff on her financial abuse claim but assessed no economic or noneconomic damages.  The jury also found in favor on the neglect claim, awarding $39,296.32 in economic damages and finding the elder home acted with recklessness, oppression, or fraud, likely not awarding damages on the financial abuse claim so as to not “double dip” on damages assessment.  The trial judge later awarded $89,410 in attorney’s fees and $20,995.36 in costs.

            Defendants appealed, claiming that the “no damages” award on the financial abuse claim undercut the fees/costs awards.   Not so, said the 4/2 DCA.  Welfare and Institutions Code section 15657.5(a) clearly state that a defendant found liable for financial abuse is mandatorily answerable to a plaintiff for reasonable attorney’s fees and costs “in addition to compensatory damages and all other remedies otherwise provided by law.”  Given the jury’s liability determinations of financial abuse, fees/costs recovery was mandatory even if no other form of relief was granted by the jury. 

Civil Rights: Younger-Based Dismissals Can Give Rise To Attorney’s Fees Exposure Against Civil Rights Plaintiffs And In Favor Of Defendant Counties

County Was Awarded $101,174.40 In Fees And $1,259.60 In Costs Under Section 1983 As Against Losing Plaintiff.

            The Ninth Circuit in Citizens for Free Speech, LLC v. County of Alameda, No. 18-16805 et seq. (9^th Cir. Mar. 24, 2020) (published), found that civil rights case dismissals under Younger v. Harris, 401 U.S. 37 (1971) abstention doctrine can lead to an award of attorney’s fees in favor of a prevailing governmental agency and against a losing civil rights plaintiff under section 1983, finding that its blanket prohibition otherwise in Elwood v. Drescher, 456 F.3d 943, 948 (9^th Cir. 2006) was no longer good law.  However, a Younger-based dismissal does not always lead to fee exposure, unless the dismissal materially altered the parties’ legal relationship as it did in this case.  The dismissal allowed the County to continue its abatement proceeding to enforce a billboard ordinance, such that the governmental parties clearly prevailed, resulting in affirmance of the $101,174.40 in fees and $1,259.60 awarded against plaintiff because the suit was frivolous/unreasonable in nature. 

Intellectual Property: Plaintiff’s Copyright Infringement Suit Was Found Without Merit At Both District/Appellate Levels, Such That Denial Of Attorney’s Fees Under 17 U.S.C. § 505 Was An Abuse Of Discretion

Defendants Won Across The Board, Plaintiff Made Objectively Unreasonable Arguments, And Plaintiff Appeared To Bully A Public Teacher, Booster Club, And Parent Volunteer Defendants.

            In Tresona Multimedia, LLC v. Burbank High School Vocational Music Assn., No. 17-56006 et al. (9^th Cir. Mar. 24, 2020) (published), the Ninth Circuit affirmed a summary judgment in favor of defendants (a public school teacher, a not-for-profit booster club, and parent volunteers) in a copyright infringement case brought by plaintiff.  It did so based on the fair use doctrine establishing that no infringement occurred.  However, the federal court of appeals reversed the district judge’s denial of defendants’ request for attorney’s fees under 17 U.S.C. § 505 (the federal copyright fee-shifting statute).

            The reason for the fee denial reversal was grounded in the circumstances of record:  defendants prevailed across the board, defendants won on a fair use defense on appeal (different than the ground relied on by the district judge), many of plaintiff’s arguments were objectively unreasonable, and a fee award would further the purposes of the Copyright Act because it appeared plaintiffs were attempting to bully a public teacher, a booster club, and parent volunteers in meritless litigation.

Quantum Meruit, Referral Agreements: Client Only Signing A Disclosure And Acknowledgment Understanding Letter Section Did Not Give Written Consent As Required Under Former Rule 2-200 Of State Bar Rules Of Professional Conduct For Referral Agreements

Result Was Reversal As A Matter Of Law Of Jury Verdict Based On Contractual Breach And Quantum Meruit, Because Contract Was Unenforceable And QM Claim Was Time Barred.

            Reeve v. Meleyco, Case No. C085867 (3d Dist. Mar. 24, 2020) (published) is an ethics reminder to all practitioners to get an express written consent from a client to a referral fee arrangement.  If not, the attorney has no contractual claim, being left to a quantum meruit claim which has a shorter two-year statute of limitations.

            What happened here is that plaintiff attorney sued defendant attorney after he refused to pay a referral fee, with a jury find in attorney’s favor on both a breach of contract and a quantum meruit theory relating to a $900,000 settlement (although finding that plaintiff had sued too late to get a referral fee for a $3.375 million settlement).  The jury awarded plaintiff $78,750 on both theories, with the trial judge adding another $49,364.35 in prejudgment interest.  Defendant prudently appealed, and it all went POOF! based upon a reversal as a matter of law.

            Justice Mauro, the authoring justice for a 3-0 panel of the Third District, decided that the facts did not show a compliant written consent required under former rule 2-200 of the State Bar Rules of Professional Conduct (now rule 1.5.1).  The writing was defendant’s letter informing client “that the twenty-five percent (25%) referral fee that I [the referred-to attorney] am paying to [plaintiff referring attorney] will come out of my fee and will not increase the fees to either you or your daughter.” Client signed the writing as well as signed a pretyped acknowledgement stating: “I, JAMES G. LUOMA, acknowledge receipt of this letter and understand the contents.” In signing the acknowledgment, client merely confirmed that he received the writing and that he understood what it said.   The Third District did not believe this was actual consent, finding consent way different from dictionary definitions for disclosures, receipt, or understanding.  That meant that the contract was unenforceable such that the contract claim verdict could not stand.

            That brought the appellate court to the quantum meruit verdict, with the claim having a two-year statute of limitations.  The problem here was that plaintiff sued over three years after the settlement money was distributed, way too late.  Plaintiff argued that the four-year limitations for written contracts applied, but this was swept away because quantum meruit is not based on a contract (especially one which is unenforceable).  The judgment was reversed as a matter of law, including the prejudgment interest award.

Allocation, Section 1717, Special Fee Shifting Statutes: Denial of Section 1717 Fees To Prevailing Defendants/Cross-Complainants Affirmed, But Reversed As To Denial Of Code Civ. Proc. Section 1021.9 Fees

Defendants/Cross-Complainants Were Entitled To Statutory Section 1021.9 Fees After Prevailing On Trespassing Claims.

            In Kelly v. Gregory House, Case Nos. A153735 and A153184 (1^st Dist., Div. 1 March 23, 2020) (unpublished), Defendants/Cross-Complainants own and operate a 40-acre organic farm, and had leased 35 additional acres from an adjacent neighbor in order to expand their Gala apples business.  They spent years cultivating/transitioning the leased land to certified organic status.

            Five years into the six-year lease – which included a six-year extension option – adjacent neighbor decided to sell his property.  Neighbor, however, failed to observe the right of first refusal provision contained in the lease.  Instead, he entered into a purchase agreement with his real estate agent without notifying Defendants that he had decided to sell.  When Defendants learned of the pending sale, they contacted the neighbor to remind him of the right of first refusal provision, notified real estate agent of the same, and began the process of acquiring the funds for the purchase.

            Ultimately, the right of first refusal provision was not honored, and the real estate agent moved onto the property, removed trees planted by Defendants, sprayed pesticides, and took other actions that caused Defendants to lose the organic certification on the leased land – all while the lease remained in effect.  Additionally, real estate agent sued Defendants seeking declaratory relief and quiet title, among other claims.  Defendants successfully cross-complained – alleging claims of interference, trespass to land, conversion and negligence – and were awarded $1,669,705 in compensatory damages and $1,000 in punitive damages.

            By the time Defendants’ hearing on their motion for attorney fees came around, the original trial judge had retired, and the successor trial judge denied their fees – determining they had not demonstrated any right to statutory or contractual attorney fees.

            Not so, said the 1/1 DCA.  Defendants were entitled to fees under Code Civ. Proc. § 1021.9 – designed to ensure farmers are able to protect their land from trespassers through civil litigation.  Defendants prevailed on each cause of action and had proven damages caused by the trespasses – thereby entitling them to reasonable attorney’s fees in addition to other costs.

            As to Defendants’ argument they were also entitled to contractual attorney fees under section 1717, the 1/1 DCA agreed with the trial court.  Defendants were not parties to the purchase agreement entered into between neighbor and real estate agent.  Had real estate agent prevailed, Defendant would not have been liable for fees under the contract.  There was no fee-shifting reciprocity in this case as is required under 1717.

            On remand, the appellate court instructed that the trial court is to determine the practicality of apportioning fees between Defendants’ trespass claim and other claims.

Costs, Prevailing Party, Section 998, Section 1717: Trial Court Order Denying All Attorney’s Fees And Costs To Defendants Reversed On Appeal

Defendants Will Be Entitled To Substantial Fees/Costs On Remand, Not To Mention An Attempt To Garner Even More Fees.

            This next case is a very substantial reverse of fortune on appeal.  So, that takes us to posting on Abregov v. Lawrence, Case No. G056866 (Abregov II) (4^th Dist., Div. 3 Mar. 19, 2020) (unpublished).

            Plaintiffs sued several defendants for alleged breaches of the parties’ shareholder agreements and fiduciary duties, contractual and tort in nature.  Defendants cross-claimed.  Eventually, after a two-phased bench trial, plaintiffs recovered nothing, and defendants obtained some relief on their cross-complaint in the form of a declaration that a company was not a statutory close corporation.

            Defendants then sought $626,341.65 in costs ($472,380.81 of which were expert witness/fees and costs) after plaintiffs rejected a CCP § 998 offer.  Because there was a prevailing party contractual clause in the shareholder agreement, defendant also moved for almost $8.3 million in attorney’s fees under Civil Code section 1717 and/or CCP § 998.  This, of course, prompted motions to tax or strike costs and vigorous opposition to the fee request.

            Although the judgment contained a provision that defendants prevailed, the trial judge believed he had been “snookered” into so finding, ultimately denying the defense postjudgment motions for costs and attorney’s fees and not addressing the defense request for 998 costs.

            Routine Costs.  The trial court erred on this issue.  Defendants did obtain relief on the cross-complaint such that they were prevailing parties entitled to litigation costs as a matter of right.  (CCP § 1032(b); Zintel Holdings, LLC v. McLean, 209 Cal.App.4^th 431, 438 (2012).). So, a remand was in order so that specific costs items could be reviewed under plaintiffs’ motion to tax costs.

            Section 998 Costs.  Given that section 998 allows for broader costs such postoffer attorney’s fees if based on a contract and expert witness fees, the appellate court next reviewed defendants’ offer to settle the complaint for $500,000 in exchange for a dismissal with prejudice “of all claims Plaintiff has asserted against the Offeror Defendants in the above-captioned action,” with all parties being their costs/fees.  In this area, section 998 allows fees, as long as there is a contractual basis (and there was here), even in the absence of a prevailing party determination as long as the judgment was more favorable than the statutory offer (which it was).  (Scott Co. v. Blount, Inc., 20 Cal.4^th 1103, 1114 (1999).).  The “all claims” language in the 998 offer did not invalidate it because only involved the claims in the complaint, not asking for broader releases or a release of non-alleged claims.  (One Star, Inc. v. STAAR Surgical Co., 179 Cal.App.4^th 1082, 1096 (2009).). Because plaintiffs failed to obtain a more favorable judgment, the defense was entitled to 998 postoffer costs and reasonable attorney’s fees.

            Section 1717 Fees.  Defendants did prevail under the shareholder agreement fees clause such that the fee denial on this basis was reversed.  The appellate court decided that a voluntary cancellation of shares did not tarnish this conclusion (although the trial judge believed otherwise) because the defense achieved a “lopsided” victory on all of plaintiffs’ claims.  However, the lower court on remand needed to determine if the fees clause was broad enough to cover fee recovery on noncontract causes of action.  (Brown Bark III, L.P. v. Haver, 219 Cal.App.4^th 809, 818 (2013).)

            Assigned Justice Dunning, a retired judge of the Orange County Superior Court, penned the 3-0 opinion.

Choice of Law, Estoppel, Intellectual Property: Attorney’s Fees Properly Denied In Entirety To Plaintiff Winning Only 7.89% Of Total Damages, After Apportionment, In Copyright Infringement Suit

Fee Recovery Barred By Judicial Estoppel—Plaintiff Classified Claims In Tort, Not Contract, Such That No Fee Recovery Allowable Under Either California Or Texas Laws.

            This next case does demonstrate the complexity that our state appellate courts have to wade through, even in unpublished opinions, to adjudicate appeals from fee awards where conflicting state laws may be at issue.  Brighton Collectibles, Inc. v. AIF Corp., Case No. B289327 (2d Dist., Div.8 Mar. 18, 2020) (unpublished) is just such a case.

            In this one, plaintiff asserted claims for breach of the warranty of infringement in copyright matters against defendant, winning a $1.267 million verdict which was reduced substantially through an apportionment of fault to multiplier suppliers making prior settlements.  In the end, plaintiff only garnered a positive damages recovery of a little under $100,000, 7.89% of the total recovery.

            Plaintiff moved for attorney’s fees (the amount was not specified in the opinion), but the trial judge denied them in entirety.  This prompted plaintiff to appeal both the merits and fee denial.  Both were unsuccessful.

            The fee denial was affirmed on judicial estoppel principles.  Although there was a conflict of law issue (did California or Texas law govern), it did not matter in the end.  Plaintiff had taken the position that the claims were in tort, not contract, winning a denial of a summary judgment motion on that basis.  Given that tort claims did not give rise to fee recovery under either California or Texas law, that cemented the correctness of the fee denial by the lower court.

Eminent Domain, POOF!: Reversal Of $328,000 Inverse Condemnation Merits Judgment Meant That $529,540.40 Fees/Costs Award Against City Of San Diego Went POOF!

Merits Reversal Hinged On City Not Bearing Responsibility For Private Pipeline Non-Maintenance Where City Refused A Public Dedication Offer.

            In Ruiz v. County of San Diego, Case No. D074654 (4th Dist., Div. 1 March 17, 2020) (unpublished), Plaintiff homeowners obtained a $328,000 inverse condemnation award against the County of San Diego when their privately-owned underground storm drain pipe rusted out over 50 years of use.  The trial judge, who entered the merits award, subsequently awarded plaintiffs $529,540.50 in attorney’s fees and costs under CCP § 1036, the inverse condemnation fee-shifting statute which can benefit plaintiffs.

            Well, everything went POOF! on appeal.  The 4/2 DCA decided that the merits judgment was infirm based on the city refusing a prior public dedication offer such that it had no maintenance or control over plaintiffs’ private pipeline.  Much to their chagrin, plaintiffs also lost their fee/costs recovery—a reversal of fortune on appeal. 

            BLOG OBSERVATION—We bloggers will note that appeals by governmental authorities do seem to result in a higher reversal rate than non-governmental appeals, sometimes involving a reversal as a matter of law or a modification, which obviously impacts the adverse fee/costs recovery greatly—they go away completely or are remanded for a redetermination based on the modification on appeal.

Private Attorney General: Save the Agoura Cornell Knoll Opinion Now Published.

Opinion Dealt with Private Attorney General Issues.

            On February 26, 2020, we posted on the February 24 unpublished decision in Save the Agoura Cornell Knoll v. City of Agoura Hills, Case No. B292246 (2d Dist., Div. 7).  We can now report that it was certified for publication on March 17, 2020.  The decision held that the failure to serve the Attorney General with a CCP § 1021.5 fee motion was not fatal to a fee award and that a litigant actively participating in the litigation could be held liable, akin to a real party for a 1021.5 fee recovery.