CALIFORNIA ATTORNEY'S FEES

Family Law: Husband Properly Assessed DVPA Mandatory Fees Because Of Wife’s Financial Disparity

Wife Prevailed In Obtaining Certain DVRO Orders Which Justified Mandatory Fees.

            In In re Marriage of Karen & Jason H., Case No. E068153 (4^th Dist., Div. 2 Aug. 21, 2019) (unpublished), among other things, wife was awarded some attorney’s fees (all in all, totaling $275,000) against husband.  However, some related to her winning domestic violence orders along the way, including personal-conduct and stay-away orders as well as a stipulated restraining order.  That was a sufficient basis under the Domestic Violence Prevention Act (DVPA), which has a mandatory fee-shifting clause in favor of a prevailing party like wife here who could not afford the fees based on the relative financial positions of the two sides.  (Fam. Code, § 6344(b).) 

Costs, Deadlines: Costs Memorandum Filed Outside Of 15-Day Entry Of Judgment Deadline By Clerk Was Properly Stricken By Trial Judge

Claiming Party’s Counsel Continued To Use East L.A. Address For Pleadings, Even Though Moving To Simi Valley, Such That Clerk’s Entry Notice To East L.A. Address Supported Striking Costs Memorandum, Which Was Filed Almost Five Months Later.

            I guess we can say that the moral of AV Sikh Center v. Antelope Valley Sikh Center, Case No. B289045 (2d Dist., Div. 8 Aug. 21, 2019) (unpublished) is if you move your law practice to a new address, make sure your pleadings are consistent with that move to make sure you do not blow deadlines.

            In this one, a prevailing party’s counsel moved from an east L.A. office address to Simi Valley, even filing a change of address with the court.  However, counsel continued to file pleadings listing the east L.A. address, with the superior court clerk sending a notice of entry of judgment to counsel at the same east L.A. address.  Almost five months after the clerk served notice of entry of judgment, counsel filed a costs memorandum on behalf of his client, although indicating that he checked the internet docket along the way.  The trial judge found the costs memorandum was untimely, striking it because it was way after the 15-day deadline under CRC 3.1700.  The appellate court affirmed the result based on counsel’s confusing conduct and testimony that he checked the docket—if counsel had, the entry of judgment would have popped up.

            Lesson here:  if you change offices and send a change of location, stick to that new change!

Fee Clause Interpretation, Landlord/Tenant: Guarantor Limitation Of Liability Provision Did Not Limit Fee Recovery

Guaranty Limitation Applied Only To Damages, Not To Attorney’s Fees Which Are Costs Instead.

            In Valencia Gateway Retail IV, LLC v. Woltman, Case No. B288726 (2d Dist., Div. 5 Aug. 20, 2019) (unpublished), two defendant guarantors of a breached lease argued that a guaranty liability limitation—“equal to six months’ charges due under the lease” after tenant successfully performed for three years—prevented an award of attorney’s fees against them as non-prevailing parties despite a fees clause in the guaranty stating “[i]f Landlord is required to enforce Guarantor’s obligations by legal proceedings, Guarantor shall pay to Landlord all costs incurred including, without limitation, reasonable attorney’s fees.”  The trial court did not buy the argument, awarding prevailing landlord $30,365.000 in fees under the guaranty fees clause.

            The 2/5 DCA affirmed the fee recovery.  It, too, did not believe that the guaranty limitation applied to fees because the guaranty fees clause was not so limiting, and the limitation only applied to damages rather than costs such as attorney’s fees.

Appealability, Discovery: Appeal From Final Judgment Does Preserve Challenges To Discovery Rulings.

2/4 DCA Finds Persuasive Reasoning From Prior 2/8 Decision On This Issue.

            We found Baiul-Farina v. Crown Media Holdings, Inc., Case No. B279653 (2d Dist., Div. 4 Aug. 21, 2019) (unpublished) interesting, not because it affirmed discovery sanctions rulings, but for its discussion on appealability.  Appellant argued that discovery sanctions rulings were not appealable under CCP § 906 because they were not on the merits.  The 2/4 DCA disagreed, finding persuasive the reasoning in In re A.L., 224 Cal.App.4^th 354, 362 n. 4 (2014), a Second District, Division 8 decision, which found that an appeal of a final judgment will encompass prior discovery rulings also. 

Costs, Deadlines: Premature Filing Of Costs Memorandum In 2010 Did Not Mean It Was A Nullity, Such That 2018 Motion To Tax Costs Was Way Too Late

Unpublished Opinion Does A Nice Job Of Discussing Modern View On Premature Costs Memo Filings.

            In Paland v. Brooktrails Township Services Dist. Bd. of Directors, Case No. A156229 (1^st Dist., Div. 5 Aug. 19, 2019) (unpublished), Defendant filed and served a memorandum of costs in February 2010 seeking $1,029.02 in costs incurred on appeal.  In November 2018, the other side filed a motion to tax costs, arguing that the costs memorandum was prematurely filed before the remittitur issued in the prior appeal way back in the day.  The trial court denied the motion to tax costs as untimely, a conclusion affirmed by the 1/5 DCA.

            The appealing party argued that the lower court lacked jurisdiction to award costs because the costs memorandum was prematurely filed.  There was some older authority which supported this argument.  (See, e.g., Johnson v. Schimpf, 91 Cal. App. 26, 36-37 (1928); Abney v. Belmont Country Club Properties, Inc., 100 Cal. App. 12, 17 (1929).)  However, jurisprudence does evolve, with the modern view being that premature filing of a costs memorandum is a mere irregularity which is waived unless the opponent files a motion to strike/tax costs.  (Haley v. Casa Del Rey Homeowners Assn., 153 Cal.App.4^th 863, 880 (2007); Brown v. West Covina Toyota, 26 Cal.App.4^th 555, 560 (1994), disapproved on other grounds in Murillo v. Fleetwood Enterprises, Inc., 17 Cal.4^th 985, 996 (1998).)  Because the appealing party did not file a motion to tax costs under the time deadlines of California Rules of Court, rules 2.278 and 3.1700(b), the costs memorandum became a judgment for costs.

            BLOG UNDERVIEW—Shanna Strader is a legal assistant for co-contributors Mike and Marc.  We find one of the leading “modern trend” cases fitting, because Shanna has a granddaughter named Haley.   

Family Law, Sanctions: Father Making Another Sanctions Motion After Trial Judge Already Ruled On Prior Request Was Properly Denied

“A Party Cannot Be Sanctioned Twice For the Same Misconduct.”

           Presiding Justice Gilbert, who has a unique writing style, summed up the “end result” in Marriage of Anka & Yeager, Case No. B289610 (2d Dist., Div. 6 Aug. 19, 2019) (unpublished) this way: “A party cannot be sanctioned twice for the same misconduct.”

            In this case, a trial judge earlier imposed sanctions against a mother and her attorney to the tune of $50,000, jointly and severally (payable to the superior court), for disclosing confidential information contained in a child custody evaluation report, which authorizes a lower court to impose monetary sanctions under Family Code section 3111(d).  Mother and her attorney appealed, with the 2/6 DCA affirming the sanctions award against the attorney, but not as to mother.  While the appeal was pending, father made a motion for attorney’s fees and costs for the appeal as additional sanctions, which was denied by the trial judge. 

            The 2/6 DCA affirmed the “further” sanctions denial.  The problem here was that the trial court had previously imposed sanctions for attorney’s conduct, such that “[i]t cannot now impose additional sanctions for the same misconduct.”  (Sabado v. Moraga, 189 Cal.App.3d 1, 10-11 (1987).)

Civil Rights: E.D. Pennsylvania District Judge Denies Title VII Fee Recovery To Plaintiff Only Winning Nominal Damages Of $1 Dollar On One Title VII Retaliation Claim

Plaintiff Sought To Recover $358,383 In Fees; Limited Success Was Key Reason For Denial.

            In Pierce v. City of Philadelphia, Civil Action No. 17-5539 (E.D. Pa. Aug. 2, 2019), a Native American plaintiff brought various civil rights, constitutional, Title VII, and state-related claims against City of Philadelphia for discrimination, harassment, retaliation, and hostile work environment.  Plaintiff withdrew some claims, and City obtained summary judgment on some claims relating to a 2017 failure-to-promote theory.  The case proceeded to trial on certain claims, with City beating discrimination claims but awarding plaintiff one dollar in nominal damages under a Title VII retaliation claim.  Plaintiff then moved to recover $358,383 in attorney’s fees and $29,436.56 in costs as the prevailing party on the retaliation claim. 

            District Judge Gerald J. Pappert of the Eastern District of Pennsylvania denied the attorney’s fees request altogether and remanded for the clerk to review a request for routine costs by plaintiff.

            The main reason for the fee denial was the limited success obtained by plaintiff in the overall scheme of things, even though it is not per se dispositive.  (Farrar v. Hobby, 506 U.S. 103, 112, 117 (1992); see also Carroll v. Clifford Twp., 2014 WL 2860994 at *3 (M.D. Pa. June 23, 2014), aff’d, 625 F. App’x 43, 36 (3d Cir. 2015).)  However, the circumstances showed that the limited success was crucial in this case, with no subsidiary factors cutting the other way. 

Section 998: Rejecting Offeree Which Rejects First And Second CCP § 998 Offers Is Entitled To Addition Of Pre-Offer Fees/Costs Up Through Date Of Second Offer To The Base Judgment

Any Other Conclusion Would Run Afoul Of Section 998’s Purpose To Encourage Settlement.

            Hersey v. Vopava, Case No. B287896 (2d Dist., Div. 8 Aug. 14, 2019) (published) involved a situation where a plaintiff tenant who vacated an apartment sued for inhabitability issues.  Defendant landlord made two CCP § 998 offers, one for $10,000 and one for $20,001, both of which were rejected.  Tenant was awarded $7,438 in damages, but the trial judge found landlord to prevail after refusing to add pre-offer costs to the damages for determining if tenant “beat” the 998 offers.  The lower court awarded landlord costs and fees totaling $30,483.55.

            The 2/8 DCA reversed.  It found that the trial court should have added plaintiff’s costs and attorney’s fees up to the time of the second 998 offer to determine the correct “net” judgment.  The appellate court found there was no reason to “freeze” plaintiff’s costs to those incurred only before the first offer.  “Accordingly, we hold that where an offeree achieves a judgment more favorable than a first offer, the determination of whether an offeree obtained a judgment more favorable than a second offer should include all costs reasonably incurred up to the date of the second offer.”  (Slip Op., at p. 12.)  The judgment was reversed and remanded to have the trial court recalculate plaintiff’s total judgment.  We would predict, once this is done, plaintiff is likely the one to prevail for fees/costs purposes—a total reversal of fortune!

Section 998: When Offeree Beats First Offer, Court Refuses To Freeze Offeree's Costs At Time Of First Offer When Offeror Makes Second Offer

Court Could Not Find Case On Point,  So It Was Guided By Statutory Purpose Of Section 998.

        In Hersey v. Vopava, B287896 (2nd Dist. Div. 8 Aug. 14, 2019) (Stratton, Grimes, Wiley), the Court holds, "where an offeree achieves a judgment more favorable than a first offer, the determination of whether an offeree obtained a judgment more favorable than a second offer should include all costs reasonably incurred up to the date of the second offer."

        The background was a landlord-tenant dispute between tenant Hersey and landlord Vopava. The landlord made a $10,000 section 998 offer, followed by a $20,001 offer right before trial. The tenant rejected both offers, went to trial, and recovered $7,438. Concluding that the landlord's offers were reasonable and in good faith, and that the landlord's offer was better than the tenant's recovery, the Court awarded post-initial offer costs, which included attorney's fees, and amounted to $30,483.55. The tenant appealed.

        The trial court erred by not taking tenant's pre-first offer costs into consideration, which when added to the damages award, added up to $12,369.75, beating the landlord's initial $10,000 offer. And because the trial court failed to take into account costs that the tenant incurred between the time of the initial offer, and the time of the second offer, a remand is necessary to determine if the second offer of $20,001 was reasonable and in good faith.

        COMMENT: The Court explained that, while it could not find the same fact pattern in another case, its decision was guided by the principle that "the appropriate analytic framework for all multiple offer scenarios is to determine which rule will effectuate the statutory purposes of section 998." And it concluded that, "[i]t would not further the purpose of section 998, or be consistent with its statutory implementation to punish an offeree who beats an offeror's first offer by freezing her costs at the date of that low first offer."

        So now the trial court needs to determine whether the tenant beat the second offer. However, even if the tenant does not beat the second offer, the landlord's recovery will be limited to fees and costs incurred after the second offer --a  recovery that would include the fees and costs incurred in trial.

Private Attorney General: $93,000 In Appeal Fees Under CCP § 1021.5 Affirmed For Work On Prior Appeal Where Partial Reversal Resulted In Three Other EIR Deficiencies Identified For Correction By Orange County

Trial Judge Reduced Fee Request By About 20%.

            In on-going CEQA litigation between nonprofit citizen groups and a residential developer over a Yorba Linda project, the lower court initially found merit only on a greenhouse emission issue out of a myriad of EIR challenges in a proceeding involving Orange County and the developer.  However, in a prior appeal, our local Santa Ana appellate court found that three other issues—project description, fire hazards, and water supply—needed to be better addressed by the EIR.  (Incidentally, the fire hazards ruling came right after some horrendous Southern California fires.)  For partially prevailing in the prior appeal (because developer won on some issues also), nonprofit citizen groups requested $116,217.50 in appellate fees.  The trial judge awarded about $93,000, a 20% reduction.  Developer appealed.

            The 4/3 DCA, in an opinion authored by Justice Thompson, affirmed in Protect Our Homes and Hills v. County of Orange, Case No. G056618 (4^th Dist., Div. 3 Aug. 12, 2019) (unpublished).

            Developer first argued that the appellate court ordered each side to bear their own costs in the appeal such that no fee recovery was justified.  However, that did not retard a fee award given that fees and costs are treated separately in this regard even if the appellate court believes justice is served by having each side bear their own costs.  (Butler-Rupp v. Lourdeaux, 154 Cal.App.4^th 918, 927 (2007).)

            Next up was the argument that no significant benefit to the public was accomplished through the partial reversal.  Wrong, because reanalysis of the three issues were important, given that a lot of EIR restudies further the objectives of CEQA.

            The third challenge was that the nonprofit citizen groups did not demonstrate that they could not bear the fee expense under the Whitley costs/benefits analysis.  The problem here is that the groups indicated they had no financial stake in the litigation, with the lack of rebuttal by developer ending the inquiry into this argument.

            Last up was that fees should have been reduced more for the nonprofit citizen group’s lack of success, parsing out work on unsuccessful claims.  The appellate court determined that this is a discretionary exercise altogether, with none or not all of the time on unsuccessful claims needing to be excluded.  After all, there was a 20% reduction off of the fee request.

            BLOG OBSERVATION—This last issue on partial success is something which needs to be visited by the Legislature.  Before he left office, Jerry Brown said CEQA reform was the “Lord’s work.”  Well, there is more to be done here.  Right now, trial judges have total discretion to do what they want when a partial success argument is raised, with a lot of decisions saying that unsuccessful claims sometimes are brought in CEQA cases and affirming full CEQA requested fees even though there was limited success.  This case involved around 30 issues, with the noncitizen groups only winning four—garnering substantial trial and appellate court fees when the partial success and other challenges were made but rejected for the most part.  Some reform is needed on allowing fees on unsuccessful CEQA claims, like this case where many claims were either abandoned or were feeble in nature.  Otherwise, “kitchen sink” CEQA cases will abound, with prospect of large attorney’s fees untethered to actual success. 

Intellectual Property: Second Circuit Joins Third, Fourth, Fifth, Sixth, Ninth, and Federal Circuits In Applying Patent Act’s “Exceptional Case” Factors To Determine If Fee Recovery Warranted In Lanham Act Case

Second Circuit Did So In 2018, Recently Remanding A District Judge’s Award of Fees Under Lanham Act For A New Scrutiny Using The Octane Fitness Factors.

            In Sleepy’s LLC v. Select Comfort Wholesale Corp., 909 F.3d 519, 530-531 (2d Cir. 2018), the Second Circuit joined the Third Fourth, Fifth, Sixth, Ninth, and Federal Circuits in determining that the Patent Act’s standards for determining whether a case was exceptional for purposes of awarding fees to a prevailing party (as articulated in Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545 (2014)), also applied with respect to fee recovery in a Lanham Act case.  Recently, in 4 Pillar Dynasty LLC v. New York & Co., Inc., Nos. 17-2398/17-2399 (2d Cir. Aug. 8, 2019), the Second Circuit remanded a pre-Sleepy’s LLC fee award to a prevailing trademark infringement plaintiff so it could be rescrutinized through the more flexible Octane Fitness test rather than the district court’s utilization of the fact that a willful infringement case was per se exceptional.  (The Second Circuit observed that Octane Fitness establishes no presumption that cases involving willful infringement are exceptional.) 

            BLOG BONUS—The Ninth Circuit decision on this issue is Sun Earth, Inc. v. Sun Earth Solar Power Co., 839 F.3d 1179, 1181 (9^th Cir. 2016). 

Construction, Section 998: Defendant Pipe Supplier In Condo Construction Defect Suit Properly Denied HOA Section 998 Offer Of $325,000 As Too Token Given $22.7 Million Costs Of Repair For Defendant’s Scope Of Work

HOA Sought To Recoup $298,178.69 In Costs, Including $176,870.54 In Expert Witness Fees.

            In Acqua Vista Homeowners Assn. v. MWI, Inc., Case No. D073666 (4th Dist., Div. 1 Aug. 9, 2019) (unpublished), plaintiff homeowners association sued developer defendants as well as pipe supplier defendant MWI in a construction defect suit under the Right to Repair Act (Civ. Code, § 895 et seq.).  MWI made a pre-trial CCP § 998 offer of $325,000, which HOA did not accept.  The jury rendered a verdict in favor of HOA as against all defendants for nearly $24 million, with 92% responsibility being assigned to MWI.  However, in a prior appeal, the 4/1 DCA reversed the trial court’s judgment as a matter of law because HOA had failed to carry its burden of proof under Civil Code section 936 given that it required HOA to prove that MWI’s negligence or breach of a contract caused a violation of the Right to Repair Act.  (See 7 Cal.App.5^th 1129, 1135, 1164.)  MWI then moved to recoup against HOA $298,178.69 in costs, including $176,870.54 in expert witness fees based on the unaccepted 998 offer.  The trial judge declined to award any of these costs against HOA.

            The appellate court affirmed.  Like the lower court, the 4/1 DCA panel found the offer was too token in nature.  The $325,000 offer paled in comparison to the HOA’s $22.7 million costs-of-repair exposure with respect to MWI (which actually was confirmed through the reversed jury verdict).  The offer bore little prospect of acceptance.

            BLOG HAT TIP—We noticed that Justice Gilbert Nares was one of the concurring justices in this 3-0 opinion.  The Fourth District website has announced that Justice Nares will be retiring as of August 30, 2019 after 31 years on the appellate bench.  We wish him well. 

Landlord/Tenant, Section 998, Special Fee Shifting Statute: In Two Related Opinions, 1/2 DCA Explores San Francisco Eviction Ordinance Fee-Shifting Provision, Determining Owners Were Properly Awarded Attorney’s Fees Against Two Tenants

In One Case, Section 998 Offer Was Not Beat Even Though Two Plaintiff Tenants Did Get Positive Damages Under The San Francisco Residential Rent Stabilization And Arbitration Ordinance.

            The 1/2 DCA in two opinions, Pitre v. Lam and Wong, Case No. A151061 (1^st Dist., Div. 2 Aug. 7, 2019) (unpublished) and Randt v. Lam, Case No. A151062 (1^st Dist., Div. 2 Aug. 7, 2019) (unpublished), faced an appeal from two tenants after the trial judge awarded apartment owners attorney’s fees under a specific provision of the San Francisco Residential Rent Stabilization and Arbitration Ordinance (Rent Ordinance).  The appellate court affirmed the fee awards.

            In Pitre, one of the plaintiff tenants rejected a CCP § 998 offer for $50,000, including waiver of unknown claims arising from the theories in his complaint, but only recovered $32,250 from apartment owners after a jury trial.  The complaint was predicated on the theory that owners interfered with tenant’s right to quiet use and enjoyment by unlawfully evicting him through an improper relative move-in.  The trial judge awarded tenant pre-offer fees of $5,857.19, as well as awarding owners $47,564 in post-offer attorney’s fees under a fee-shifting provision of the Rent Ordinance.  Tenant appealed, but the fee award remained intact.  First of all, the section 998 offer was valid because requesting waiver of derivative claims relating to the theories in the complaint was proper (Ignacio v. Caracciolo, 2 Cal.App.5^th 81, 84, 89-90 (2016)), and the offer was made deep enough in the case such that the tenant had enough information to reasonably evaluate it.  Second, tenant’s theory was grounded in a section of the Rent Ordinance having a bilateral fee provision allowing fee recovery by a prevailing defendant, such that it was distinct from fee recovery under another Rent Ordinance provision which was unilateral in favor of only a prevailing plaintiff.  This was not a situation where the defense prevailed on claims which were intertwined with unilateral attorney’s fees provisions, where fee recovery is not allowed.  (Compare with Turner v. Association of American Medical Colleges, 193 Cal.App.4^th 1047, 1071 (2011); Carver v. Chevron U.S.A., Inc., 119 Cal.App.4^th 498, 504 (2004); Wood v. Santa Monica Escrow Co., 151 Cal.App.4^th 1186, 1191 (2007).)

            Randt involved a suit against the same apartment owners by a tenant who was defensed (finding tenant was evicted in good faith), which prompted the lower court to award owners $51,318 in attorney’s fees under the Rent Ordinance provision at issue in Pitre and $19,279 in costs.  Those awards, too, stood on appeal.  The parties’ discussion of a CCP § 998 offer was puzzling to the appellate court, because owners outright prevailed so as to be entitled to fees and costs based on the Rent Stabilization provision given that tenant’s theory arose under a section where there was a bilateral fee-shifting provision. 

Settlement: 2/4 Cal Court Of Appeal Holds That Stipulated Judgment Is An Unenforceable Penalty

And The Court Explains How The Stipulated Judgment Could Have Been Structured So As To Be Enforceable.

        "The principal issue in this appeal is whether the stipulated judgment constitutes an unenforceable penalty." Red & White Distribution, LLC, et al. v. Osteroid Enterprises, LLC and cross-complaint, B291188 (2/4  8/9/19) (Currey, Manella, Willhite).  Here, "the parties entered into a settlement agreement providing that if R&W defaulted, the Osteroid Parties could file a stipulation for entry of judgment, with the amount of the judgment being $700,000 more than the settlement amount plus interest and attorneys' fees." The Court of Appeal concluded that the additional $700K was an unenforceable remedy under Civ. Code section 1671(b), pertaining to whether a liquidated damage clause is valid or unenforceable.

         And all this is well-established law under Ridgley v. Topa Thrift & Loan Assn., 17 Cal.4th 970 (1998) and Greentree Financial Group, Inc. v. Execute Sports, Inc., 163 Cal.App.4th 495 (2008). So why did the Court bother to publish?

        We believe it is because the trial judge declined to follow Ridgley and Greentree, believing that it could instead follow Jade Fashion & Co., Inc. v. Harkham Industires, Inc., 229 Cal.App.4th 635 (2014). And so the Court of Appeal performed its educational role by explaining that the cases are not inconsistent, and that the stipulation, had it been structured à la Jade Fashion, could have been enforceable. 

        What would an enforceable stipulation require? An agreement to discount for timely payment of an admitted debt. Thus, the outcome of Red & White Distribution could have been an enforceable stipulation if the parties had agreed or the appellate record had demonstrated that R&W admitted it owed $2.8M, and the parties had stipulated to discount the debt to $2.1M upon timely payment, absent which the full amount would have been due.

            But that is not how the parties structured the settlement. 

    COMMENT: Co-contributor Mike Hensley represented the successful party in the Greentree appeal.  

 

 

 

 

Prevailing Party, Sanctions, Special Fee Shifting Statute: Motel Owner And City Properly Found To Not Have Prevailed For Purposes Of Substandard Building Fee-Shifting Statute

Also, Motel Owner Properly Hit With Opposition Fees For Denied CCP § 128.5 Motion.

            In City of South Lake Tahoe v. Cobrae, Case No. C083568 (3d Dist. Aug. 5, 2019) (unpublished), City of South Lake Tahoe filed a petition seeking appointment of a receiver against a motel owner based on allegations that he had a substandard building in violation of several building violations.  Before the hearing on the petition, a property inspection demonstrated that nearly all the violations had been corrected, although there was conflicting evidence as to whether the corrections occurred before or after the filing of the petition.  City dismissed its petition with prejudice, with both parties filing dueling motions for attorney’s fees under Health and Safety Code section 17980.7(c)(11), which allows fees and costs to be awarded to a prevailing party under the Health and Safety Code building violation scheme.  The trial court denied fees to either party, although it did award City some fees for opposing a denied CCP § 128.5 motion brought by motel owner.

            All these determinations were affirmed by the Third District on appeal.

            It first dismissed an issue preclusion argument based on the petition dismissal, determining that this dismissal did not usurp the lower court’s ability to adjudge attorney’s fees and it was not established that the violations were corrected before the petition was filed.  The trial court determined that neither side prevailed on a pragmatic basis, because City did not obtain its receiver/obtain demolishment of the motel while motel owner did have to complete repairs and avoided the implied threat of demolition—good news and bad news for each.

            This pragmatic view of things was no abuse of discretion, according to the Third District.  With respect to the award of opposition fees to City, this was expressly authorized by CCP § 128.7(c)(1), and no safe harbor notice was required because City had no choice but to oppose such that giving notice to the other side would not mean anything (as well as not required under section 128.7(c)(1)). 

Class Action, Multipliers: Eleventh Circuit Court Of Appeals Affirms Most Of Class Counsel Award In Home Depot Data Breach Case, But Reverses 1.3 Positive Multiplier Enhancement

Federal Appellate Court Provides Scholarly Analysis Of Differences Between Common Fund, Constructive Common Fund, And Contractual Fee-Shifting Cases.

            In In re:  Home Depot Inc. Customer Data Security Litig., No. 17-14741 (11^th Cir. July 25, 2019) (published), the Eleventh Circuit faced review of a $15.3 million fee award to class counsel in a class action stemming from Home Depot’s 2014 data security breach which exposed the credit card information to improper use for tens of millions of customers.  It eventually agreed to settle by paying $25 million into a settlement fund, paying smaller banks an additional $2.25 million (after paying about $134.5 million--$120 million set by the banks under contractual agreements with Home Depot and a $14.5 million premium to other banks on top of that--under a card-brand recovery process), and agreeing to data breach security measures of an on-going nature.  The settlement agreement also confirmed class counsel was entitled to reasonable attorney’s fees, but it set no amount for fees in the agreement and allowed this determination to be made by the district judge.  The fees would be paid by Home Depot separate from the other settlement payments.  The district judge awarded class counsel $15.3 million in fees, calculated this way:  (1) a lodestar of $11.7 million enhanced by a positive 1.3 multiplier based on risk; and (2) cross-checked by the percentage method, based on an addition of the $27.25 million settlement payments, the $14.5 bank premium, and about $700,000 in expenses (about a $42.5 million total “percentage”), with the award being slightly higher than a third of the “percentage” (which was close to the 20-30% generally allowed in the Eleventh Circuit).  Class counsel had asked for $18 million, while Home Depot suggested only $5.6 million should be the fee award.

            The Eleventh Circuit affirmed most of the fee award, although reversing the grant of the 1.3 positive enhancement.

            The key threshold determination was to decide whether the case was a constructive common fund or contractual fee-shifting case, with the latter being the characterization adopted by the federal appeals court.  The reason for this was that the settlement agreement had a fees clause, no fees were specified or capped as under clear sailing provisions, and the fee determination was left to the district court’s decision-making authority.  This smacked of a contract fee-shifting situation, unlike a common fund where fees are actually taken out of the class recovery such that they are paid by the “client” (the class). 

            The multiplier was infirm because federal precedents (such as Perdue and Dague) are hostile to enhancements, because it is assumed that the lodestar factors subsume the multiplier considerations for further enhancement.  Given that risk is not a factor to consider for enhancement in statutory fee-shifting cases, the appeals court found no reason that the same logic should not apply to contract fee-shifting cases. 

            The Eleventh Circuit also found that compensating class counsel for the card-brand recovery work and time spent in vetting class representatives was appropriate.  Clearly, the class litigation was a catalyst which drove Home Depot to pay the banks and narrow the class exposure in the overall sense. 

            The district judge’s decision did provide sufficient detail, especially given that Home Depot failed to make specific objections.

            The class cross-appealed.  It argued that it was error for the district judge to not include the attorney’s fees in the “percentage” cross-check total.  The appeals court disagreed, concluding that it would be impractical to guess what fees might have been awarded in a contract fee-shifting context.  It also found some balance here:  fees on fees are not awardable in common fund cases, but they are awardable in contract fee-shifting cases. 

            BLOG COMMENT—Same result in California state courts?  Likely no.  Although novelty, complexity, and counsel special skill lodestar factors cannot be counted twice for multiplier analysis, risk is a factor which can be considered separately.  (Ramos v. Countrywide Home Loans, 82 Cal.App.4^th 615, 625 (2000).)  Beyond that, California does not take the dim view that Perdue/federal precedents do on enhancements in statutory fee-shifting cases.  (Khazan v. Braynin (Khazan III), Case No. A128536 (1^st Dist., Div. 4 June 12, 2012), rev. den. [reviewed in our September 15, 2012 post].) 

Special Fee Shifting Statute: $22,139.75 Fee Award To State Parks Under CCP § 1038 Reversed On Appeal Because Plaintiff’s Suit Did Not Lack Reasonable Cause

Case Law Was Not Clear Cut That A Stairway Was A Trail For Governmental Trail Immunity.

            This next case involved a plaintiff injuring herself on a state park stairway near the Bootjack Trial in Mt. Tamalpais State Park (which happens to be situated in Marin County, a Bay Area county).  She sued the State Parks for premises liability, but defendant won summary judgment based on trail immunity.  State Parks moved to recoup attorney’s fees and defense costs under Government Code section 1038, a special fee-shifting statute encouraged to discourage frivolous suits against governmental entities.  However, the government must prove a lack of reasonable cause as to plaintiff’s case, a determination which is judged objectively and is reviewed under the de novo standard on appeal.

            The lower court in Lee v. Dept. of Parks and Recreation, Case No. A154021 (1^st Dist., Div. 4 July 31, 2019/posted Aug. 1, 2019) (published) awarded State Parks around 50% of the requested amount in its section 1038 fees/defense costs motion, namely, $22,139.75.  Plaintiff appealed.  The appellate court affirmed the summary judgment ruling but reversed the fees/defense costs award.

            The reason was that there was no showing that plaintiff’s case lacked reasonable cause.  After all, the appellate court surveyed case law and then concluded the issue was not clear cut, with no prior case deciding whether stairways are trails.  With that being the case, a critical element of section 1038 fee/costs exposure was missing. 

Civil Rights, Section 998: 4/1 DCA Decides That Nonfrivolous FEHA Actions Cannot Give Rise To Routine Cost Recovery Even Though A CCP § 998 Offer Was Rejected

Legislature’s 2019 Amendment In Government Code Section 12965(b) Was To Be Retroactively Applied.

            Effective January 1, 2019, the California Legislature amended Government Code section 12965(b) to resolve a split between two decisions, Sviridov and Arave [both of which were discussed in posts under our categories “Civil Rights” and “Section 998”], about whether CCP § 998 could result in shifting of routine costs against a nonprevailing FEHA civil rights plaintiff even where the suit was found not to be frivolous in nature.  The California Legislature decided that CCP § 998 did not result in a different result; if the FEHA action is found to be nonfrivolous, no routine costs can be recovered against the unsuccessful plaintiff.

            Now, the 4/1 DCA (which decided Sviridov, deciding that section 998 did allow for routine costs recovery) honored the 2019 amendment by finding that it should be retroactively applied to pre-2019 case rulings in this area.  It placed particular significance on two circumstances:  (1) the Senate Judiciary Committee Reports indicated the intent was to clarify rather than change the law; and (2) the Legislature obviously recognized the issue was ambiguous and close given the previous split in appellate decisions, choosing to clarify the situation in this substantive area.

            The end result was that plaintiff’s rejection of a CCP § 998 offer, even though plaintiff lost at trial, did not result in plaintiff having to bear $51,946.96 in routine costs.  The opinion was issued in Scott v. City of San Diego, Case No. D074061 (4^th Dist., Div. 1 Aug. 1, 2019) (published). 

Private Attorney General: Extremely Destitute Plaintiff Winning Unemployment Benefits In Two Prior Appellate Decisions And Accompanying Litigation Was Improperly Cut Off From Fee Recovery For First Phase Of The Litigation

$365,660.94 Award For $1 Million In Requested Work Was Not Enough Given The Nature Of The Dispute.

            Equities do matter in decisions, and Robles v. Employment Development Dept., Case No. A148803 (1^st Dist., Div. 4 Aug. 1, 2019) (published) is no exception in the private attorney general fee area.

            Plaintiff earlier had won two appeals, generating published decisions, to gain unemployment benefits (actually, initial amount was $11,700) from EDD, which stubbornly refused to pay so to require a second phase of litigation and the second appeal.  EDD finally paid, with Plaintiff’s attorney seeking private attorney general fees of around $1 million for work going back to 2010.  The lower court found that the first phase work was not compensable, but it awarded $365,660.94 for the subsequent work.  Plaintiff appealed, which was a good thing—leading to the third published opinion in this odyssey. 

            The 1/4 DCA basically reversed and remanded, because it determined that the first phase litigation/appeal work was compensable.  The result otherwise was incompatible with Whitley [our Leading Case No. 14] because only $11,700 was initially at issue, plaintiff had to expend $200,000 to chase down the benefits of $66,000 (once interest and other things were included), and plaintiff was in extreme poverty (having to relocate to the Philippines at some point).

            On remand, the appellate court did indicate some justice needed to be done here given the lengthy delay in the overall proceedings, suggesting that the lower court use current hourly rates (rather than much lower hourly rates going to the 2010-plus time frame) or use lower hourly rates but augment them with some interest award on those lower hourly rates over time.

Family Law: Ex-Wife In Languishing Dissolution Matter Properly Denied Pendente Lite And Request For Appellate Fees To Process An Appeal

Languishing Nature Of Case And Ex-Wife’s Debt To Ex-Husband Figured In The Result.

            In Marriage of Charchian & Mahgereftech, Case No. B270201 (2d Dist., Div. 2 July 31, 2019) (unpublished), ex-wife let a dissolution case languish for five years, went through multiple attorneys, eventually had a judge conclude she was entitled to very little pendente lite attorney’s fees because she had availed herself of community property funds, owed a debt of $150,000 to ex-husband at the end of the day, was not ready for trial, and was denied a request for fees to appeal determinations in the case because of a lower court’s conclusion that the appeal could not be shown to have been brought in good faith.

            The 2/2 DCA affirmed in a very exhaustively reasoned decision.  On the request for attorney’s fees to process appeal, the appellate court discussed In re Marriage of Davis, 141 Cal.App.3d 71, 78 (1983), which set forth four factors which a party must satisfy to warrant an award of fees on appeal: “(1) the requesting spouse must show a need for the award; (2) the paying spouse must have the ability to pay the fees; (3) the appeal must be taken in good faith; and (4) there must be reasonable grounds for the appeal, although this does not imply that the requesting spouse must prevail on appeal. [Citation.]”  Appellant argued that Davis was no longer good law, but the appellate court rejected this argument because the Legislature had not acted to undermine it for over 30 years.  Beyond that, under these factors, the good-sized debt owed to husband and lower court’s conclusion of not seeing much merit to the appeal further supported affirmance of decision to not authorize fees for an appeal not seen as having much substance.