CALIFORNIA ATTORNEY'S FEES

Prevailing Party: $159,356.73 Fee Award/$1,729.87 Costs Award Affirmed In Photocopy “Implied-In-Fact”/Services Agreement Litigation In Favor Of Prevailing Defendant/Cross-Complainant

Appellant’s “Implied-In-Fact” Contract Analysis Was Too Crimped In Nature.

            We assume that the losing party in a dispute over provision of photocopying services was not happy when the trial judge awarded the prevailing defendant/cross-complainant $159,356.73 in attorney’s fees and $1,729.87 in costs.  That prompted an appeal, but the result did not change in Wholesome Choice Market, Inc. v. Digitech Business Solutions, Inc., Case No. G056667 (4^th Dist., Div. 3 Oct. 18, 2019) (unpublished).

            Losing party principally argued that there was no contractual basis for a fee award.  However, the record showed that there was a written services agreement with a fees clause and the parties’ conduct did show a continuing “implied-in-fact” agreement justifying a fee award.  The appellate court, in a 3-0 opinion authored by Justice Goethals, found that the distinction between express and implied contracts is not that great, both dependent either on a bargain memorialized in words or on a bargain based on conduct.  The evidence supported the notion that the parties entered into an implied contract that included the terms in the service agreements—including the fee clauses—to which the parties mutually consented.  That fully supported the fees/costs awards.

Trade Secrets: $1.1 Million Fee Award Against Two Defendants And Another $100,000 Against A Third Defendant Affirmed Under Trade Secrets Fee Shifting Statute, Civil Code § 3426.4

Even Though Third Defendant Only Found Liable For $2,287, $100,000 Fee Award Proper Because He Was A Chief Actor In Trade Secret Bad Faith Misappropriation.

            In Applied General Agency, Inc. v. Greenleaf Financial and Ins. Services, Inc., Case No. G055737 (4^th Dist., Div. 3 Oct. 17, 2019) (unpublished), plaintiff won a trade secrets misappropriation case against three defendants, obtaining unjust enrichment awards of $1,026,419 against two defendants and $2,287 against a third defendant (although this third defendant was a chief actor with respect to the trade secrets misappropriation).  The jury determined that the misappropriation was willful and malicious in nature with respect to all defendants.  Later, the trial judge awarded Civil Code section 3426.4 trade secrets statutory fees of $1.1 million against the two defendants and $100,000 against the third defendant—much less than the $3.6 million requested (inclusive of a 1.5 positive multiplier), with reductions made for plaintiff filing the fee motion late and excessiveness of the fee request.

            The 4/3 DCA, in a 3-0 opinion authored by Acting Presiding Justice Bedsworth, affirmed the fee awards.

            Because the first two defendants were found to have willfully and maliciously misappropriated, the $1.1 million fee award was justified as to them.

            That brought the appellate panel to the third defendant’s challenge, which boiled down to the contention that $100,000 was too much because he only was found liable for $2,287.  The problem with this argument is that section 3426.4 is not a prevailing party statute, but one which focuses on bad faith conduct.  Here, the third defendant was found to have willfully and maliciously misappropriated trade secrets given he was a chief actor in the overall conduct resulting in the adverse jury verdict.  The trial judge only awarded 10% of the total fees found reasonable, such that third defendant’s financial condition was considered in fashioning the award. 

Costs: Prevailing Defendant Did Not Have To Raise Winning Arguments Earlier In The Litigation, Through A Demurrer, In Order To Recoup Routine Costs

CCP § 1033.5 Has No Optimal Efficiency Requirement, Only That The Costs Were “Reasonably Necessary” To The Litigation.

            The losing plaintiff on a summary judgment motion contested an award of routine costs in Harris v. VII Pier Pointe Owner, LLC, Case No. B280729 (2d Dist., Div. 4 Oct. 14, 2019) (unpublished).  Plaintiff’s argument was that defendant did not have to wait until summary judgment to raise the winning argument, which could have been made instead through an earlier demurrer.  Plaintiff contended, on this basis, that routine costs were not “reasonably necessary” to the litigation based on the premise the winning argument could have been raised earlier.  The appellate court was not impressed, putting it this way: “[Plaintiff] cites no authority, however, for the proposition that to recover costs, a party must raise its ultimately winning argument at the earliest opportunity. Code of Civil Procedure section 1033.5 does not require absolute necessity or optimal efficiency -- the prevailing party’s costs need only be ‘reasonably necessary.’”  Not to mention, a defendant may have good reasons to not tip its hat on a meritorious argument too early in the litigation or raise it on demurrer only to have a favorable ruling reversed on appeal given the stricter review standards applicable to demurrer dismissals.

Indemnity: Escrow Holder Improperly Awarded Over $61,000 In Attorney’s Fees Under Escrow Instruction Indemnity Clause

Clause Encompassed Third-Party Claims, Not Akin To A True Attorney’s Fees Clause.

            We have a category “Indemnity” which has many cases on the subject matter resulting in a reversal of an attorney’s fees award to a prevailing escrow holder as against the sellers in a real transaction, as in the next case we review.

            What happened in Choi v. Prima Escrow, Inc., Case No. B288871 (2d Dist., Div. 7 Oct. 15, 2019) (unpublished) is that escrow holder was awarded nearly $65,000 in compensatory damages against sellers after a real estate transaction was cancelled, with the trial judge concluding that escrow fees were still owed even after cancellation of the transaction.  The lower court then awarded escrow company $61,692.50 in attorney’s fees under an escrow clause which provided “[w]e agree to save you harmless as Escrow Holder hereunder from all losses and expenses, including reasonable attorney’s fees and court costs sustained by reason of any claim, demand, or action filed, legal or otherwise, which may in any manner arise out of, or from the property which is the subject of this escrow, or out of or from this escrow, before or after closing, notwithstanding anything in these instructions to the contrary, and in addition hereto, we jointly and severally agree to pay reasonable escrow fees therefor.”

            The appellate court reversed the fee award.  Based on de novo contractual review, it determined that the provision was a third-party indemnity clause, not a true attorney’s fees clause applicable between principals (the sellers) and the escrow company.  (Cf. Campbell v. Scripps Bank, 78 Cal.App.4^th 1328, 1332, 1336 (2000).)

Liens For Attorney Fees, Prevailing Party: Assignee, Principal Of Client, Had Standing To Bring Declaratory Relief Action As To Contractual Attorney’s Lien Claimed By Prior Counsel

Given Reversal Of Judgment On The Pleadings On This Issue, There Was No Prevailing Party Yet Such That Law Firm Properly Denied Attorney’s Fees.

            In Roth v. Epps & Coulson, LLP, Case Nos. B285265 et al. (2d Dist., Div. 4 Oct. 15, 2019) (unpublished), prior counsel of record ran into a rift with their corporate client, which transferred the rights to the lawsuit to the client’s principal.  A settlement was reached through a different attorney, with the principal being a party to the settlement and with the settlement subject to prior counsel’s attorney’s lien which had been filed earlier.  A trial judge found that principal had no standing to file a declaratory relief claim relating to the attorney’s lien after malpractice claims were dismissed.  Prior counsel moved for attorney’s fees in defeating the principal’s action, a request which was denied.

            On appeal, the 2/4 DCA decided that principal, as assignee, did have standing to bring a declaratory relief action on the claimed attorney’s lien, a claim which was separate from the malpractice claims.  That resulted in a reversal of the judgment on the pleadings ruling.  Given that reversal, there was no prevailing party as between assignee principal and prior counsel such that the attorney’s fees request was properly denied. 

Special Fee Shifting Statute: Civil Code Section 3334, A Statute Allowing For Costs Recovery For Wrongful Occupation Of Real Property Does Not Encompass Attorney’s Fees

Companion Post To Our Post Describing A Reversal Of Fees Based On Civil Code Section 1717.

            We recently posted on McAlister Investments, Inc. v. Thomas, Case No. G056330 (4^th Dist., Div. 3 Sept. 30, 2019) (unpublished), where our Santa Ana local court reversed an attorney’s fees award after concluding a declaratory relief action did not trigger a fees clause encompassing contractual breach situations.  The appellate court also rebuffed that Civil Code section 3334 provided a fee entitlement basis.  That provision states that, except for eminent domain or unlawful detainer matters, “[t]he detriment caused by the wrongful occupation of real property . . . is deemed to include the value of the use of the property for the time of that wrongful occupation, not exceeding five years next preceding the commencement of the action or proceeding to enforce the right to damages, the reasonable cost of repair or restoration of the property to its original condition, and the costs, if any, of recovering the possession.” (Italics added.)  In rejecting the notion that attorney’s fees were recoverable under section 3334, the appellate panel concluded:

            “Under California law, ‘costs’ include attorney fees only if they are specifically allowed by contract, statute, or law. (Code Civ. Proc., § 1033.5, subd. (a)(10)(A)-(C); Department of Forestry & Fire Protection v. Lebrock (2002) 96 Cal.App.4th 1137, 1140 [“a prevailing party is entitled to attorneys fees only when specifically authorized by statute, contract or law” (italics added)].) Although defendants have not cited any cases holding that attorney fees are not recoverable as costs under section 3334 (and we have likewise found none), defendants have cited many cases holding as a matter of statutory construction that ‘costs’ awardable under other cost recovery statutes do not permit the award of attorney fees. (E.g., Department of Forestry & Fire Protection, at pp. 1139-1142 [interpreting Health & Saf. Code, § 13009]; People v. United States Fire Ins. Co. (2012) 210 Cal.App.4th 1423, 1426-1428 [interpreting Pen. Code, § 1305.3].) ‘Costs’ have been construed to mean those fees and charges that are required by law to be paid to the courts or some of their officers or an amount that is expressly fixed by law as recoverable as costs. [Citation.] In contrast, the term ‘attorney fees’ has been construed to mean the consideration that a litigant actually pays or becomes liable to pay in exchange for legal representation. [Citation.] Attorney fees and the expenses of litigation, whether termed costs, disbursements, outlays, or something else, are mutually exclusive. In other words, attorney fees do not include costs and costs do not include attorney fees.” (United States Fire Ins. Co., at pp. 1427-1428.)  Here, section 3334 only references ‘costs’ and does not specifically authorize attorney fees. Plaintiff accordingly could not recover attorney fees under section 3334.”

Assignment, POOF!, Section 1717: Plaintiff’s $169,534.60 Fees Award Goes POOF! On Appeal

Although The Dispute Concerned Contractual Rights, The Contractual Attorney Fees Provision Relied Upon In Issuing Award Did Not Apply Because There Was No Breach Of Contract.

            In McAlister Investments, Inc. v. Thomas, Case No. G056330 (4^th Dist., Div. 3 Sept. 30, 2019) (unpublished), neighboring land owners got into a dispute pertaining to a 99-year lease entered into in 1951 between prior owners of the two properties.  This lease allowed defendants, who operate a citrus orchard, to access a parcel of plaintiff’s property to drill for and develop water for irrigation purposes. 

            When plaintiff tried to sell its property in 2014, the buyer wanted an amendment to the 99-year lease precluding defendants from building structures on the leased parcel.  Defendants refused and plaintiff’s sale fell through.

            Plaintiff then filed suit to invalidate the lease. The trial court entered judgment in favor of plaintiff – finding the lease had not been assigned to defendants and that defendants were not successors to the lease merely because they had bought the land.  Based on Civ. Code section 1717’s statutory reciprocity of attorney fee agreements, its finding that plaintiff’s declaratory relief action was based on the lease, and because plaintiff would have been liable for defendants’ attorney fees had they prevailed, the trial court awarded plaintiff $169,534.60 in fees after some reduction.

            In an opinion authored by Justice Ikola, the 4/3 DCA reversed – finding the dispute between the parties involved contractual rights – not a breach of any covenant or agreement in the lease.  Therefore, the attorney fees provision contained in the lease – which entitled the prevailing party to fees “[i]n the event of the breach of any covenant and or agreement herein contained . . . presented to any Court . . .” – was never triggered.   And with that, plaintiff’s fee award went POOF!

Appeal Sanctions, Employment, Judgment Enforcement, Undertaking: Employer Fails In Multiple Attempts To Reduce Fee Award, CEO Is Properly Denied Fees Following Successful Alter Ego Challenge, And Attorney Sanctioned $7,765 For Meritless Challenge

The Fees Award Against Employer Had Been Affirmed By The Sixth District Three Years Prior, The CEO Could Not Prove Employee’s Alter Ego Claims Were Frivolous, But Employer’s Motion To Release Surety Bond So Frivolous It Warranted 6^th District’s Issuance Of Sanctions On Its Own Motion.

            We originally posted on Khanna v. Sonasoft Corp. on July 13, 2016.  Now, more than three years later, we post again on the same case.

            Our previous post pertained to the attorneys’ fees issue resolved on appeal – whether silence in the settlement agreement as to fees precluded postjudgment entitlement.  It did not where, as here, postjudgment fee recovery was allowable under a fee-shifting statute.  We now revisit that 2016 appeal as it impacts the current appeal in Khanna v. Sonafoft Corp., Case No. H044374 (6^th Dist., Sept. 27, 2019) (unpublished)

            An employee had sued his employer and its CEO for failure to promptly and fully pay his wages.  His complaint included alter ego allegations with respect to the employer and CEO.  Judgment was entered against employer pursuant to the parties’ judicially supervised confidential agreement providing a money judgment of $173,000 (adjusted from $227,000 after credit of some payments)., and later amended to include trial court awarded costs of $12,554.65, attorney fees of $153,840, and postjudgment interest of $26,794.54.  A second amended judgment was also entered to add CEO as additional judgment debtor based on the alter ego theory.

            In the 2016 appeal, employer challenged the postjudgment awards of attorney fees, costs and interest to no avail.  However, CEO successfully challenged the amendment adding him as judgment debtor. 

            Upon return to the trial court, CEO unsuccessfully moved for an award of attorney fees incurred on appeal, employer failed in its motion to have the judgment amended to reduce the fees/costs/interest awards by one-half because “equal efforts were directed to each defendant,” and employee’s motion to add surety bond issuer as judgment debtor was granted with the trial court’s finding that the requirements had been satisfied for adding the surety bond under Code Civ. Proc. section 996.440. 

            The 6^th District affirmed.

            CEO was not entitled to his fees as he failed to demonstrate that employee had brought the action against him in bad faith as required by Labor Code section 218.5(a). 

            Employer’s motion to reduce the fees/costs/interest effectively sought to relitigate issues that could no longer be raised.  It ignored the effect of the 6^th District’s affirmance of the awards in the 2016 appeal, and provided no authority empowering the trial court to amend the judgment after the 6^th District affirmed it without qualification.  

            Finally, employer’s motion to release the surety bond was filed with no supporting evidence as required by Rules of Court for motions based on matters outside the record on appeal.  Employer also failed to inform the 6^th District that it had unsuccessfully brought a similar motion in the trial court – to which it had also filed an unsuccessful motion for reconsideration.  Additionally – while acknowledging it still owed employee the awarded postjudgment interest – employer argued that it was “entitled to an automatic stay of proceedings without an undertaking” because Code Civ. Proc. section 917.1(d) provides that an undertaking is not required solely for awarded costs.  The 6^th District concluded the motion to be frivolous and completely without merit – imposing sanctions against employer’s appellate attorney on its own motion.

Miscellaneous: An Addition To Our Mission Statement Is Proposed

From Tail To Dog.

    Attorney Damian R. Castaneda has sent us a modest proposal: 

I wanted to make a contribution to your mission statement about "All too often attorney fees become the tail that wags the dog in litigation."  Deane Gardenhome Assn. v. Dentkas, 13 Cal.App.4th 1394, 1399 (1993). How about including Dorsey’s more extreme statement: “The attorneys' fees in this case have not simply become a case of the tail wagging the dog; the attorneys ' fees have become the dog.” Dorsey v. Superior Court, 241 Cal.App.4th 583, 589 (2015).

    HAT TIP TO DAMIAN CASTANEDA !

Civil Rights: Florida’s Federal District Courts Split On Whether Prevailing Flood Plaintiffs Can Recover Attorney’s Fees Against Write Your Own Insurance Carriers

Theory Is That Carriers Are An Extension Of FEMA In Remitting Payments So As To Trigger Fee Recovery Under EAJA.

            Back in 2009, the Fifth Circuit in Dwyer v. Fidelity National Prop. & Cas. Ins. Co., 565 F.3d 284, 289 (5^th Cir. 2019) foreclosed recovery of attorney’s fees in coverage litigation by flood plaintiffs against insurance companies arising out of floods arising under the National Flood Insurance Program (NFIP)—a private-public partnership with FEMA by which the carriers remit payments to flood insurance victims.

            However, relying on an Eleventh Circuit decision, three decisions from the Middle District of Florida recently have found attorney’s fees allowable under the Equal Access to Justice Act (EAJA) to prevailing flood victims in insurance coverage suits, founded on the theory that insurance payments were “functionally remitted” through FEMA (the U.S. agency requisite necessary under EAJA).  See, e.g. Lovers Lane LLC v. Wright National Flood Ins. Co., 2019 WL 130362 (M.D. Fla. Jan. 9, 2019); Collier v. Wright National Flood Ins. Co., 2019 WL 1531895 (M.D. Fla. Apr. 9, 2019); Arevalo v. American Bankers Ins. Co. v. Florida, 2019 WL 2476644, at *3 (M.D. Fla. June 13, 2019).  However, the Southern District of Florida has expressly disagreed with and has refused to follow Arevalo in a footnote in Hampson v. Wright National Flood Ins. Co., Case No. 4:19-cv-10093-KMM (S.D. Fla. Aug. 12, 2019).

            Looks like this split likely will have to be decided in future appeals brought before the Fifth and Eleventh Circuit Court of Appeals.

Arbitration: Based On Law Of The Case And Preclusion Doctrines, Prevailing Arbitration Law Firm Properly Denied Fees In Post-Arbitration Judicial Proceeding Relating To Arbitration Award

Prior Appellate Decision Basically Sealed The Result, With The Trope Prohibition Also Requiring Denial Of Fees Relating To Another Law Firm Attorney Whose Personal Interests Were Not Implicated.

            On May 25, 2019, we earlier posted on a prior decision which was implicated more recently in eGumball, Inc. v. Call & Jensen, Case No. G056650 (4^th Dist., Div. 3 Oct. 10, 2019) (unpublished).  In that earlier decision, our local Santa Ana appellate court ruled that an arbitrator’s denial of $1 million in fees to prevailing law firm was not legally reviewable given the arbitrator’s conclusions that the retainer fees clause did not encompass malpractice claims at issue in the arbitration and that the Trope prohibition against fee recovery for self-representation was triggered.

            However, while the first appeal was festering, law firm sought fees for post-arbitration judicial proceeding activities, which the trial judge denied.  That prompted another appeal by law firm.

            The fee denial was affirmed, in a 3-0 decision authored by Justice Fybel.

            The appellate panel had trouble discerning why law of the case or preclusion principles did not apply to judicial, postarbitration activities just as much as they applied to prior decisions by the arbitrator on related fee requests.  (After all, preclusion principles do apply to arbitration awards.  Thibodeau v. Crum, 4 Cal.App.4^th 749, 755 (1992).)  In fact, the panel found no meaningful distinction to upset application of prior rulings to the postarbitration fee request before it.  With respect to the argument that fees were allowed for the law firm’s representation of one attorney at the firm, that was dispatched because the Trope self-representation bar was intact given that nothing showed the one attorney’s personal interests were at issue in the dispute.  (Carpenter & Zuckerman, LLP v. Cohen, 195 Cal.App.4^th 373, 375-376, 387-388 (2011).) 

Consumer Statutes, Reasonableness Of Fees: Morris Lemon Law Fee Decision Now Certified For Publication

2 DCA Affirmed Trial Court’s Reduction Of Attorney’s Fees Request In Lemon Law Case For Unnecessary Duplication By Plaintiff’s Attorneys.

             On September 17, 2019, we posted on Morris v. Hyundai Motor America, Case No. B290693 (2d Dist., Div. 7 September 16, 2019), which was unpublished at the time.  In that case, a lemon law plaintiff recovering $85,000 in compensation only gained $73,864 out of a requested $191,688.75 in attorney’s fees based on the trial court’s reduction for duplication of efforts by plaintiff’s attorneys.  The Second District affirmed.  On October 11, 2019, it certified for publication this prior unpublished opinion.  The decision also has an interesting discussion of cases for which a more nuanced explanation for a “hair cut” must be made, limiting this more detailed explanation to the civil rights area. 

Allocation, Fee Clause Interpretation, Lodestar, Prevailing Party, Reasonableness Of Fees, Section 1717, Settlement: Reasonable Discretion Exercised In Awarding Defendant Only 20% Of Requested $177,712 In Fees

The Legal Principles Of Civil Code Section 1717 and Santisas Governed.

            Both parties appealed the fee results in Rusnak/South Bay v. Glukel Group, Case No. B286513 (2^nd Dist., Div. 3 Sept. 27, 2019) involving a dispute between landlord and tenant – with tenant plaintiff advancing contract and tort claims against landlord. 

            Tenant dismissed its lawsuit during the discovery phase, before depositions took place, and Landlord moved for an award of $177,712 in attorney fees under the lease’s attorney fee provision which entitled the prevailing party to fees.  Although the trial court granted the fee motion, it awarded Landlord with only 20% of the requested fees – apportioning between the contract and tort claims pursuant to Civ. Code section 1717(b)(2), and reducing for excessive and unreasonable fees.  

            On appeal, Landlord argued that it was entitled to all of the fees pursuant to the lease contract, and Tenant argued that Landlord was not the “prevailing party” on the tort causes of action.

            The 2/3 DCA affirmed.  The apportionment and 80% reduction were proper pursuant to the legal principles of Santisas v. Goodin (1998) 17 Cal.4^th 599 [our Leading Case No. 6] and Civ. Code section 1717(b)(2).  First, as to the contract claims, section 1717(b)(2) bars recovery of the fees incurred to defend plaintiff’s contract claims where an action has been voluntarily dismissed as it was here – with Santisas defining the extent of such preclusion to include cases involving a contract that on its own terms authorizes recovery of those fees. 

            As to Tenant’s argument that Landlord was not the prevailing party on the tort causes of action, the 2/3 DCA found the argument meritless – citing the holding in Santisas that the “prevailing party” of tort claims resolved by  voluntary dismissal is governed by the clear and unambiguous language of the contract for purposes of awarding attorney fees.  Here, the relevant fee provision defined “prevailing party” to include “without limitation” a party “who substantially obtains or defeats the relief sought, as the case may be, whether by compromise, settlement, judgment, or the abandonment by the other Party . . . of its claims.”  Tenant abandoned its noncontract claims, making Landlord the prevailing party under the unambiguous terms of the parties’ contract. 

POOF!, SLAPP: Fee Award Of $56,225 Goes POOF! On Appeal When Sixth District Reverses SLAPP Grant

Sixth District Determined Cause Of Action Was Not Properly SLAPPed Because It Was Triggered By A Dispute That Arose In The Aftermath Of Previous Litigation, Not The Conduct In The Prior Litigation.

            GBR Magic Sands MHP, LLC v. Pecoraro, Case No. H044936 (6^th Dist., Sept. 26, 2019) (unpublished) involves a dispute among family members over a 20-acre parcel of land – originally owned by two brothers (Cyril and Louis) who shared a 50% undivided interest, and their parents who owned a 50% undivided interest.

            In 1963, parents granted a 98-year lease of their interest to the two brothers.  Cyril used his and his brother’s interest + the 98-year lease of parents’ interest to develop a mobile home park.  When the parents died, their children (the 2 sons, and daughters Rita and Josephine) succeeded to fractional shares of the parents’ interest. Later, in 2007, the brothers’ interest was leased to GBR – an entity controlled by Cyril.  In 2008, the 1963 lease was assigned to GBR.  A 2010 partition action led to the entire 20-acre parcel’s fee interest becoming vested in Louis, Josephine, and Catherine (Rita’s daughter).

            During the partition action litigation, Louis, Catherine and a trustee learned that Cyril had obtained the 1963 lease through undue influence – and Catherine and the trustee successfully filed an action to cancel the 1963 lease and quiet title to their interest in the parcel.  The judgment in that case also provided that GBR had “no right, title or interest in the undivided fifty percent interest . . . previously subject to the 1963 Lease . . .”

            Later, in 2017, GBR filed a cross-complaint in an existing action against it brought by Louis’ company.  In its 4^th cause of action, GBR sought declaratory relief with respect to possession and rent in light of the 1963 lease cancellation.  GBR alleged that Catherine and the trustee were claiming a right to possess the 20-acre parcel and a right to a share of the rent paid to GBR by its mobile home tenants.  However, GBR claimed it had a right to continue in possession of the 20-acre parcel pursuant to the 2007 lease.  Catherine and the trustee successfully SLAPPed (Code Civ. Proc. section 425.16) GBR’s 4^th cause of action.  The parties then stipulated to $56,225 in attorney’s fees – which the trial court awarded to Catherine and the trustee.

            GBR appealed the SLAPP determination and the subsequent attorneys’ fees award – claiming its 4^th cause of action for declaratory relief did not stem from protected activity.  Rather, it arose from a dispute that arose in the aftermath of the protected activity.

            The Sixth District agreed – citing City of Cotati v. Cashman (2002) 29 Cal.4th 69.  They determined GBR’s 4^th cause of action stemmed from a dispute that arose from the outcome of the previous litigation and not the protected activity itself – concluding that Catherine and the trustee had failed to meet their burden of demonstrating that GBR’s 4^th cause of action arose from the prior litigation activity rather than the underlying real property dispute.

            With the Sixth District’s reversal of the SLAPP grant came reversal of the $56,225 attorneys’ fees award.  POOF!

Costs, Experts, Section 998: Sixth District Affirms Denial Of $26,950.50 In Expert Witness Fees To Prevailing Defendant Because Section 998 Offer Was Not Apportioned Among Plaintiffs

Defendant’s Treatment Of Mother And Son Plaintiffs As Spouses For Section 998 Purposes Did Not Fly.

            In Roe v. Hollister School Dist., Case No. H043658 (6^th Dist., Sept. 26, 2019) (unpublished), mother and son plaintiffs (Jane and Jonnie Roe) sued school district and others for an incident involving the five-year-old son and another six-year-old student.

            During the course of this litigation, the school district and co-defendants served plaintiffs with a joint section 998 offer to pay Plaintiffs and their attorney a single check for $200,000 as settlement for all claims, costs and attorney’s fees.  The offer did not allocate the $200,000 offer between mother and son.  Plaintiffs did not accept the offer, and the case proceeded to jury trial.

            After prevailing at trial, the school district sought to recover $26,950.50 in expert witness fees under Code Civ. Proc. section 998 because plaintiffs had rejected the 998 offer and had not achieved better results at trial.  Plaintiffs moved to tax the costs as to the expert witness fees on the ground that the failure to allocate the offer between mother and son rendered it “legally invalid.”  For its part, the school district argued that “[f]or all practical purposes John Roe is the second plaintiff in this case” because Jonnie was a minor and John was his father and guardian ad litem.  The trial court rejected this contention and denied school district’s request for expert witness fees.

            On appeal, school district relied on cases that recognize an exception to the rule that section 998 offers must be apportioned between individual offerees.  This exception is for joint offers made to spouses “because a cause of action is community property as is any recovery.”  Relying on this exception, school district claimed that that separate offers were not necessary “under community property rules because any financial recovery by Jonnie lessens the burden upon his parents to support him, AND lessens the burden upon his parents’ community property.” 

            The Sixth District disagreed and affirmed the trial court’s ruling – finding that mother and son do not share property rights, and that father’s role as guardian ad litem did not grant him a personal property interest in any recovery the child might obtain.  The Sixth District summed up its decision this way: “Try as it might, the [school] District cannot force Jane and Johnnie into the exception that applies where two plaintiffs are husband and wife.”   

Class Actions, Employment, POOF!: Class Action Win Of Labor Code Section 226 Penalties And Attorney Fees Against Employer Goes POOF! On Appeal

Employer’s Failure To Include Premium Pay On Wage Statements For “On Duty” Meal And Rest Periods Did Not Trigger Penalties Because Premium Pay Is A Statutory Remedy For An Employer’s Conduct – Not An Amount “Earned” By The Employee.

            A certified class of former and current non-exempt employees brought a lawsuit against their employer for meal break violations in Naranjo v. Spectrum Security Services, Inc., Case No. B256232 (2^nd Dist., Div. 4 September 26, 2019) (published).  They sought premium wages, Labor Code §§ 203 (waiting time penalties) and 226 (itemized wage statement penalties) derivative remedies, and attorney fees.  We focus on the attorney fees issues involved in this case.

            The employees were/are officers for a security company responsible for taking temporary custody of federal prisoners and ICE detainees for offsite travel for medical treatment, court appearances and other appointments.  Two such officers jointly provide continuous supervision until the prisoner/detainee is returned to his/her custodial location.  The officers are not permitted to leave the room or building where the prisoner/detainee is located, and are required to remain “on duty” during meal breaks. 

            With respect to one sub-class of the employee class members, employer had failed to: (1) provide an off-duty meal period; (2) obtain a mutually agreed-upon waiver if one hour or less would end the work shift; or (3) obtain written agreement to an on-duty meal period for shifts lasting longer than five hours.  This entitled these sub-class members to premium pay under Labor Code section 226.7 (an additional one hour of pay for each day an off-duty meal period is not provided without waiver or written agreement described above) – something the employer had failed to pay. 

            The parties stipulated that the sub-class was owed $1,393,314 in premium pay during a second trial phase in this action.  The third phase of trial, a bench trial, dealt with the employees’ requests for Labor Code §§ 203 and 226 penalties and attorney fees.  The section 203 requests were denied.  However, the trial court determined the sub-class was entitled to the section 226 penalties as the premium pay had not been reflected in the employees’ wage statements.  The parties stipulated to $399,950 for the section 226 penalties.  Based on the employees’ section 226 win, the trial court awarded attorney fees pursuant to section 226(e).  Employer appealed. 

            The 2/4 DCA reversed the trial court’s finding on the section 226 penalties because the penalties are triggered by an omission from the wage statement of “wages earned.”  Here, the premium pay served as a statutory remedy for an employer’s conduct.  The premium pay is not an amount the employee has “earned.”  Because the section 226 penalties were reversed, so too were the attorney fees awarded under section 226(e).  The award of attorney fees was contingent upon the award of section 226 penalties.

Family Law: Family Court’s Failure To Make Mandatory Findings Required Under Family Code Sections 2030 and 2032 Was Abuse Of Discretion

Family Court Did Not Award Fees Due To Wife’s Pro Per Status At The Time It Rendered Its Decision.

            In Marriage of Soares, Case No. F076532 (5^th Dist., Sept. 26, 2019) (unpublished), Wife challenged family court’s denial of her needs-based fees request, its spousal support determination, and the judge’s failure to recuse himself for conflict of interest.

            Although Wife gained no traction on the spousal support and disqualification issues, she achieved a remand on the attorneys’ fees issue.

            Throughout the course of this action, Wife was represented by three different attorneys before proceeding in pro per.  Her request for attorneys’ fees was filed during representation from her first attorney, but Wife was representing herself at the time the court rejected her request based on her self-representation.

            Citing In re Marriage of Cheriton (2001) 92 Cal.App.4^th 269 and In re Marriage of Tharp (2010) 188 Cal.App.4^th 1295, the 5^th District found the family court’s failure to make a mandatory determination pursuant to Fam. Code §§ 2030 and 2032 to be an abuse of discretion.  Wife’s eventual self-representation was of no consequence.  She had received legal services and had made a request for fees which may be awarded under Fam. Code § 2030 (b) “for legal services rendered or costs incurred before or after the commencement of the proceeding.”

Private Attorney General, Civil Rights: Hawkins Opinion Now Partially Published As To The Discussions On Sufficiency Of Evidence of Retaliation And Award Of Attorney’s Fees Under CCP § 1021.5

September 9, 2019 Unpublished Decision Now Partially Published.

            On September 9, 2019, we posted on then unpublished decision in Hawkins v. City of Los Angeles, which dealt with the Bane Act/Whistleblower Retaliation victories, and $1,054,286.88 attorney’s fees award, obtained by two fired Department of Transportation hearing examiners who had sued the City of Los Angeles.  We can now report that the unpublished decision was certified for partial publication – as to the discussions on sufficiency of evidence of retaliation, and the award of attorney’s fees under CCP section 1021.5 – on September 25, 2019.

Costs: Awarded Costs Of $199,464.98, Consisting Mostly Of Deposition Costs Incurred In Related Federal Proceeding, Upheld On Appeal Because Coordination Order Was At Play And Apportionment Among Actions Not Necessary

The Coordination Order Called For Extensive Discovery Coordination Among The Federal And State Court Actions Such That Costs Incurred For Depositions Noticed In The Federal Proceeding Were Incurred In The California Proceeding.

1921 Model T Ford

            In In re Automobile Antitrust Cases I and II, Case No. A152893 (1^st Dist., Div. 4 Sept. 25, 2019) (unpublished), a number of automobile manufacturers and dealer associations were sued under the Cartwright Act (Bus. & Prof. Code, §§ 16720-16728) and the unfair competition law (Bus. & Prof. Code, §§ 17200-17210).  Multiple lawsuits were filed in California and a similar lawsuit against many of the same defendants in federal court.  Parallel cases were also pending in a number of other state courts.

            The allegations were that defendants had conspired to keep new vehicle prices higher than they would have been in a properly competitive market by preventing new, virtually identical, lower priced cars from being exported to the U.S. from Canada.

            The California lawsuits were coordinated into one proceeding, and discovery was coordinated among the California, federal, and other state actions under a June 2004 discovery coordination order which provided detailed provisions governing the taking and use of discovery in the separate proceedings – with the federal proceeding being “the lead case for discovery and discovery-related pretrial scheduling.”

            After prevailing on summary judgment in federal court in July 2009, Ford Motor Company (Ford U.S.) and Ford Motor Company of Canada, Ltd. (Ford Canada), along with other defendants, were denied their requests for costs awards.  The denial was based on federal case law, under Fed. R. Civ. P.,  Rule 54, that allows a district to deny costs awards to a prevailing party if the case “ ‘presented a close question that required considered balancing[.]’ ”

            However, Ford U.S. and Ford Canada (the two remaining defendants) got another bite at the apple after each separately prevailed on summary judgment in the California proceeding in November 2011 – resulting in a 2012 costs award of $199,464.98 with only a $1,625 reduction for disallowed costs included in the joint request. 

            Plaintiffs appealed the judgments and separately appealed the costs award.  In July 2016, judgment was reversed and remanded as to Ford Canada.  Judgment in favor of Ford U.S. was affirmed on appeal.  Plaintiffs then moved to dismiss the cost order appeal as moot, and the 1/4 DCA granted the motion.

            On remand, Ford U.S. moved, once again, for a costs award as a prevailing party.  In addition to the previous jointly awarded $199,464.98, Ford U.S. sought to recover interest on that amount from the date of the 2012 costs order.  The trial court granted the costs award request (the 2017 cost order), but denied the request for interest.

            Plaintiffs appealed – contending the deposition costs were not recoverable because they were incurred in the federal proceeding, and that any costs award should be apportioned between Ford U.S. and Ford Canada.  They further argued that if any deposition costs were allowed, they should be apportioned among the seven separate cases that made use of the discovery taken.  Finally, Plaintiffs argued that some depositions taken were not reasonably necessary to Ford U.S.’s defense in the California proceeding.

            The 1/4 DCA disagreed and affirmed Ford U.S.’s costs award. 

            It found that in light of the coordination order in the related actions, the costs of conducting discovery could not be characterized as having been incurred in just one action and not in the others, and were therefore absolutely recoverable. Ford U.S. was entitled to recover these costs “as a matter of right” under Code Civ. Proc. section 1032. 

            As to apportionment, the 1/4 DCA found no abuse of discretion.  It found reasonable the trial court’s resolutions that there were not “seven separate cases of equal dignity and equal work,” and that there was only a “singular conspiracy” at the core of each of the actions – meaning what any plaintiff knew about that conspiracy was relevant and had impact in the other actions.  Likewise, the 1/4 DCA found no abuse in discretion as to lack of apportionment between Ford U.S. and Ford Canada – that the evidentiary showing was that Ford U.S. had reasonably incurred the costs awarded, and that the depositions taken were reasonably necessary to Ford U.S.’s defense.

Allocation, Homeowner Associations, Interest, Special Fee Shifting Statutes, Standard of Review: Plaintiff Owner/Developer’s Award Of $1,673,691 In Damages and Entire Fee Request Upheld On Appeal

Defendant HOA’s Breach Of Owner/Developer’s Valid Contractual Access Rights Was The Common Core Involved In The Causes Of Action, So Apportionment Of Fees Not Required.

            In Millennium-Diamond Road Partners v. Diamond Bar etc., Case No. B285539 (2^nd Dist., Div. 3 Sept. 24, 2019) (unpublished), Owner/Developer Millennium sued HOA when it revoked Millennium’s access to undeveloped parcels of land Millennium had purchased for the purpose of developing residential properties. 

            The undeveloped parcels of land were landlocked and adjacent to a guard-gated residential community known as Diamond Bar Country Estates.  From 1997 until October 2013, Millennium had easement access via Country Estates – access that was abruptly revoked when a new group of board members began to oppose Millennium’s development.

            Substantial evidence doomed HOA at trial – with the trial court finding that HOA breached Millennium’s valid contractual access rights pursuant to CC&Rs, a second contractual agreement providing Millennium an option for access rights for which Millennium had tendered the required fee, and a recorded annexation agreement under which the Millennium parcels became a part of the Country Estates development. 

            HOA argued that the CC&Rs were not at play as Millennium had not paid monthly assessments.  HOA also claimed Millennium had failed to pay fees owed under the annexation agreement.  The trial court rejected both claims.  The language of the CC&Rs contradicted HOA’s argument– providing the HOA “no power to cause a forfeiture or abridgement of an Owner’s right to full use and enjoyment of his Lot” absent a judicial/arbitral order or foreclosure.  The annexation agreement did include a schedule of payments to be made to the HOA.  However, the first payment under the schedule was triggered by an event that had not yet occurred, so no annexation fees were yet due.

            At trial, Millennium’s expert testified and explained his computations of Millennium’s damages of $1,673,691 in detail.  HOA did not challenge his methodology or calculation, nor did it call its own expert witness regarding damages, and the trial court awarded the entire amount Millennium claimed as damages.  Additionally, the trial court awarded Millennium prejudgment interest at 10% with a start date of January 2014.

            Millennium’s win triggered an award of attorneys’ fees pursuant to Civil Code section 5975(c) which mandates the award of attorneys’ fees in a successful action to enforce the governing documents of a common interest development.  The trial court awarded the full amount requested with no apportionment.

            HOA appealed, but fared almost no better – achieving only a small victory related to the start date for calculation of the prejudgment interest.  The 2/3 DCA found substantial evidence supported the trial court’s decision, but remanded for prejudgment interest calculations to begin on March 23, 2017 instead of January 2014.  It further determined that the HOA had fashioned its appeal largely “as an attack on the factual findings of the trial court.”  Citing Waller v. Brooks (1968) 267, Cal.App.2d 389, 393, the 2/3 DCA stated that the HOA “misconceiv[ed] the function of an appellate court which is to review errors of law, and not to pass on questions of fact.”

            As to apportionment of the attorney fees, the 2/3 DCA found no abuse of discretion as Millennium’s causes of action were so intertwined, and involved a common core of facts which were directly related to enforcement of the governing documents, such that apportionment was impracticable.