THE BUSSEY DEBATE IS NO LONGER DEBATABLE—EXPERT WITNESS FEES AND OVERHEAD COSTS CANNOT BE RECOVERED AS “ATTORNEY’S FEES”

Bussey Court Abrogates Its Own Decision in Line With Criticisms Of Sister Appellate Courts

            As alluded to in our June 4 post discussing the recent Richlin Security decision, there was a prior rift in opinion among the California appellate courts over whether expenses such as expert witness fees, investigator fees, long distance telephone call charges, photocopying, faxes, overnight deliveries, messenger services, and the like could be recouped through an attorney’s fees award.  Happily, this schism has been put to bed such that the answer to the issue is “no.”

            The prior uproar was triggered by the First District, Division Four’s decision in Bussey v. Affleck, 225 Cal.App.3d 1162, 1166 (1990), which held that “where a contract provides for payment of costs and attorney’s fees, the court may allow disbursements of counsel as attorney fees under [Code of Civil Procedure] section 1033.4, subdivision (a)(10), if they represent expenses ordinarily billed to a client and are not included in the overhead component of counsel’s hourly rate.” 

            The Third District rejected the result in Bussey, explaining “[i]n the absence of some specific provision of law otherwise, attorney fees and the expenses of litigation, whether termed costs, disbursements, outlays, or something else, are mutually exclusive, that it, attorney fees do not include such costs and costs do not include attorney fees.”  Ripley v. Pappadopoulos, 23 Cal.App.4^th 1616, 1625-1626 (1994). 

            On the heels of Ripley, an anti-Bussey tsunami followed in subsequent reported decisions, all of which followed Ripley.  (See Benson v. Kwikset Corp., 152 Cal.App.4^th 1254, 1280-1281 (2007) (4^th Dist., Div. 3 decision authored by Acting Presiding Justice Rylaarsdam) and cases cited therein.)  Even unpublished decisions rejected Bussey.  (See, e.g., Heron v. Kelley West Santa Clara Associates, Case No. H024719 (6^th Dist. Aug. 25, 2003) (unpublished decision authored by Justice Wunderlich). 

            Finally, even the Bussey division relented.  In Hsu v. Semiconductor Systems, Inc., 126 Cal.App.4^th 1330, 1342 (2005), the First District, Division Four announced that Bussey should no longer be followed and endorsed the majority approach. 

            If a litigant truly believes it might prevail under a contractual fees clause, the cases teach that the expenses described above must be pled and proven as damages at trial.  (See, e.g., First Nationwide Bank v. Mountain Cascade, Inc., 77 Cal.App.4^th 871, 878-879 (2000).)  This can create quite a conundrum for a party likely preferring to keep evidence of substantial disbursements away from the jury, making it an issue for a postjudgment motion that does not divert attention from liability and primary damage issues.