CALIFORNIA ATTORNEY'S FEES

Another POOF!: Court of Appeal’s Reversal Of Judgment In Lender’s Favor Also Vacates Its Substantial Fee Award

Fourth District, Division 3 Demonstrates, Yet Again, the POOF! Principle.

     The POOF! principle—that reversal of an underlying judgment generating attorney’s fees awards means the fee award will be reversed—is so commonly seen in decisions we discuss that it now has its own category on the left side of our Homepage.

     The next case is a recent illustration of this principle in real time.

Family Law: Fee Award To Prevailing Party In Restraining Order Action Affirmed

Family Code Section 6344 Authorizes the Award; Trial Court Did Not Err In Failing to Allocate the Award Between Costs and Fees.

     Stephens v. Lane, Case No. H032719 (6^th Dist. Feb. 26, 2009) (unpublished) involved a wife who obtained an award for $15,000 in attorney’s fees and costs associated with winning a restraining order action against her husband. (She had requested a total award of $16,207.85) He appealed and did not prevail.

     Family Code section 6344 authorizes an award of fees and costs to the prevailing party in an action for a restraining order. Nothing required that the family law judge allocate its award between cost and fee categories, as husband advocated on appeal. Beyond that, the lower court did consider income and expense declarations by both parties, deciding that husband did have the ability to pay the award. No abuse of discretion was shown.

Terminating Sanctions And Substantial Default Judgment Reversed Because Of Failure To Show Willfulness

Sixth District Vacates $730,466.10 Default Judgment and Reinstates Defendant’s Answer.

     The next case is a good example of the POOF! principle. Plaintiff obtained a $730,466.10 default judgment against defendant, set up by the trial court’s grant of terminating sanctions for failure to respond to discovery requests. The only problem is that the record did not show willfulness in failing to comply with discovery requests. You know what the result was—POOF!

Disgruntled Dental Partner Loses Challenge To Fee Award For Not Presenting Adequate Appellate Record

Second District, Division 7 Underscores Mainstay of Appellate Practice.

     In Pakravan v. Halajian, Case No. B201864 (2d Dist., Div. 7 Feb. 26, 2009) (unpublished), former dentists in a partnership got into a war over various aspects of running a Lancaster dental practice. Litigation eventually erupted, with plaintiffs winning the major part of the battle, but no compensatory damages awarded by jurors and with punitive damages stricken by the lower court based on the absence of any compensatory damages. The trial court did order dissolution of the partnership based on the jury verdicts, and awarded undisclosed (but likely substantial) attorney’s fees to plaintiffs as prevailing parties. Defendant appealed.

Reneging House Seller Hit With Adverse $226,577.74 For Losing Specific Performance and Unlawful Detainer Actions

Court of Appeal Affirms Substantial Fee Award, But Reverses CCP Section 128.7 Sanctions.

     As our Mission Statement warns, attorney’s fees can make or break a litigant given the high costs of taking a case to verdict or decision. The next litigant learned this message all too well, when a substantial fee award was affirmed on appeal after he refused to sell a house after lengthy negotiations with buyers who did not give up on obtaining the residence.

Sanctions: Court of Appeal Vacates Discovery Sanctions Against Defendant With Respect To Form Interrogatory Responses

Second District, Division 3 Calls Into Question Whether Defense Needs to Answer Some Personal Injury Questions in Many Cases.

     Discovery is the bane of most litigators’ existence. It is freely allowed (subject to certain limitations)—vacillating from tedious and time consuming (at one pole) to burdensome and extremely expensive (at the other side of the spectrum). In California state court cases, any litigant can propound form interrogatories that do not even count against the 35 interrogatory numerical limit (which can be exceeded in more complex cases upon counsel’s declaration). Two form interrogatories figured greatly in the next case we discuss.

     In Randell v. Superior Court, Case No. B213134 (2d Dist., Div. 3 Feb. 26, 2009) (unpublished), defendant in a personal injury was assessed $750 in discovery sanctions for objecting or not fully answering Form Interrogatory Nos. 10.2 and 16.9. Defendant sought a writ of mandate to overturn the discovery order and sanctions. He obtained mandate by which no answers were required and sanctions were vacated.

     Here is the reasoning behind the mandate issuance:

Civil Code Section 1717: Family Member Prevailing On Emotional Distress Claim Arising From Mistaken Interment Does Not Obtain Contractual Fees

Fourth District, Division 3 Splits On Liability Issue, But Decides No Fees.

     In a first impression decision, involving a matter of last impression, a Fourth District, Division 3 panel split on whether a cemetery’s temporary interment of a stranger in a family plot adjacent to one’s parents may give rise to an emotional distress claim for plaintiff son where at least one family member has been interred in the adjacent family plots. The majority, in a 2-1 opinion authored by Justice Aronson, answered “yes,” while dissenting Acting Presiding Justice Bedsworth, who had a bone to pick, responded “no.” The case is Binns v. Westminster Memorial Park, Case No. G038365 (4^th Dist., Div. 3 Feb. 26, 2009) (certified for publication). Given the split of opinion, someone was dead right, and someone was dead wrong.  [Presumably, the ghosts lacked standing to assert a claim.]

     However, the family plot thickened. Believe it or not, there was an attorney’s fees issue. The matter proceeded to trial, with a trial court awarding plaintiff $4,440 but denying his request for an attorney’s fees award. This determination was affirmed on appeal.

Family Law Awards: Two Husbands Paying Spouse’s Fees Are Unsuccessful On Appeal

Fourth District, Divisions Three and One Affirm Fee Awards Under Family Code sections 2030 and 2032.

     In our category “Family Law Awards,” we have frequently seen the courts awarding attorney’s fees to one spouse in family court proceedings based on Family Code sections 2030 and 2032. The purpose of these statutory provisions is to have the party with more financial resources equalize the fight for the opposing party so that fees can be paid to the opponent’s attorney. In making a decision to award fees under these provisions, the family law judge must consider all evidence concerning the parties’ current incomes, assets, and abilities (including investment and income-producing properties) in terms of assessing one party’s relative “need” and the other party’s ability to pay. (In re Marriage of Drake, 53 Cal.App.4^th 1139, 1167 (1997).) In the next two cases, different Divisions of the Fourth District affirmed fee awards against husbands under sections 2030 and 2032.

Civil Code Section 1717: Dismissal of Complaint Without Prejudice Based On Service Technicality Is Not A Final Resolution Triggering Fee Recovery

Fourth District, Division 1 Distinguishes Its Own Otay Decision.

     It is interesting that certain issues pop up and are discussed by different appellate courts around the same time frame.

     In our February 20, 2008 post, we explored Hall-Mark Services, Inc. v. Harris & Associates, an unpublished Third District decision that distinguished Otay River Constructors v. San Diego Expessway, 158 Cal.App.4^th 79, 807 (2008), a Fourth District, Division One opinion. Otay decided that a victory in a petition to compel arbitration (with no action appended to it) was a final resolution for purposes of recovering fees under Civil Code section 1717 to the prevailing party. In contrast, Hall-Mark Services held that a victory in a petition to compel action (obtained in a pending action) was only an interim win, with the final prevailing party determination having to await what happened down the line.

     Now, the Fourth District, Division One has distinguished Otay when confronted with a unique factual pattern in Center Associates v. Altman, Case No. D051583 (4^th Dist., Div. 1 Feb. 25, 2008) (unpublished).

Postscript to Ivers v. Allstate

Petition Pending in California Supreme Court

     One of the pleasures of blogging is that it is interactive, and we hear (if one can hear email) frequently from our readers.  Jeffrey I. Ehrlich, one of the appellate lawyers in Ivers v. Allstate, 2008, WL 5197119 (3d Dist. December 12, 2008) (unpublished), a case reported by us in a December 13, 2008 post, has written to us about the case.  With his permission, we share his comments with our readers:

Class Actions: Third District Publishes Sutter Health Uninsured Pricing Case

 

Decision Discussed in Our January 28, 2009 Post.

     In our January 28, 2009 post, we discussed Sutter Health Uninsured Pricing Case, where the Third District affirmed a $4 million class action fee award that represented 1.4% of the settlement fund recovery and a 2.52 multiplier enhancement on a $1.4 million lodestar.

     Yesterday, the Third District certified this decision for publication; it was originally issued as a unpublished opinion.

Undertaking For Costs: Trial Courts Must Use CRC 3.53(b) Factors In Exercising Discretion With Respect To Out-of-State Indigent Plaintiffs

 

Second District, Division 7 Provides Guidance On Discretionary Decision Making Under CCP Section 1030.

     Code of Civil Procedure section 1030 vests trial courts with discretion to require out-of-state plaintiffs to post an undertaking to pay costs to prevailing defendants where there is a reasonable possibility of a decision favorable to the defense. The Second District, Division 7 gave some guidance on the discretionary factors that must be weighted when lower courts are dealing with a financially indigent plaintiff residing out of state.

     In Alshafie v. Lallande, Case No. B198798 (2d Dist., Div. 7 Feb. 23, 2009) (certified for publication), a trial court granted a section 1030 motion by several defendants in legal malpractice actions to require an out-of-state plaintiff to post an undertaking of $159,312.50 in total. The cases were dismissed when plaintiff failed to file the undertaking. The lower court’s decision was reversed on appeal and remanded for further supplemental motion proceedings.

Civil Code Section 1717: Appellate Court Sustains Trial Court’s Refusal To Award Fees When Plaintiff Voluntarily Dismissed Contract-Based Claims

 

Local Santa Ana Appellate Court Follows Santisas.

     Santisas v. Goodin, 17 Cal.4^th 599 (1998) is one of our Leading Cases, where the California Supreme Court held that contractual fees are not available under Civil Code section 1717(b)(2) where a case has been voluntarily dismissed or dismissed pursuant to a settlement of the case (unless the settlement reserves the fees determination for a later time). Santisas and its progeny were followed recently by our local Fourth District, Division 3 appellate court in Kato v. Superior Court, Case No. G040272 (4^th Dist., Div. 3 Feb. 23, 2009) (unpublished).

City Of Anaheim/Angels Litigation: City Spends $4 Million For Trial And $150,000 On Appeal

 

Angels Spend $7.5 Million On Litigation, Failing to Win Fees Under Indemnity Clause.

     Given that spring training is not far away for baseball fans, we have a postscript from our December 20, 2008 post discussing the Fourth District, Division 3’s decision in City of Anaheim v. Angels Baseball, L.P. In that case, the appellate panel—in a 2-1 decision—affirmed the jury’s verdict in favor of the Angels and also determined that an indemnity clause did not allow the Angels to recoup substantial fees from the City of Anaheim.

     Now, we can report to you about the amount of fees spent by each side.

  Library of Congress

Probate Settlement: Heir Loses Matter Encompassed By Settlement Agreement Fee Clause, Suffering Adverse Award Of $51,205.36 In Costs and Attorney's Fees

 

Second District, Division 5 Sustains Award Based on Broad Fees Clause in Settlement Agreement and Confirms 60 Day Fee Deadline Does Not Apply in Probate Litigation Matters.

     Most of the time in probate matters, attorney's fees are awarded for services to an estate. (Estate of Trynin, 47 Cal.2d 265, 272-273; see also cases under our category "Probate.") However, fees can also be awarded under contractual fee clauses in probate settlement agreements, as the next case illustrates.

     Estate of Simon, Case No. B209553 (2d Dist., Div. 5 Feb. 23, 2009) (unpublished) involved a settlement agreement that was reached in a prior probate action brought by son against his father and his father's second wife.

Potpourri: FEHA Fee Award Against Costco And Recent Article Confirms Steep Decrease in Jury Trial At Both State and Federal Levels

Costco Hit With FEHA Fee Award of $471,240 Plus Costs.

     In our category “Civil Rights,” you will find cases discussing California’s Fair Employment and Housing Act (FEHA), a statutory scheme that has a mandatory fee-shifting provision in favor of winning plaintiffs. The next fee award demonstrates that, depending on the ultimate outcome, fee awards can be substantial in difficult cases vindicating civil rights.

     Juan Valera sued Costco under FEHA for hostile work environment and sexual orientation discrimination. Although rejecting the sexual orientation discrimination claim, a Los Angeles jury did award him $420,000 for enduring a hostile work environment.

    Mr. Valera also moved for attorney’s fees under FEHA. Los Angeles County Superior Court Judge Maureen Duffy-Lewis ordered Costco to pay his lawyer Leo J. Terrell $471,240 in fees, plus routine costs of $39,540.

     This result demonstrates that FEHA fees can sometimes outstrip a nice recovery where an attorney efficiently litigates a matter to a positive conclusion. On the opposite end, FEHA awards can be quite diminished where the outcome was not as positive, there were inefficiencies by the litigating attorneys, or where the matter was not that difficult to resolve.

     For more details on this case, see the Daily Breeze Blog of February 11, 2009. 

L.A. Daily Journal Article Highlights Slump in Jury Trials.

     In our past posts of December 19, 2008 and October 30-31, 2008, we respectively summarized state and federal reports showing that jury trials were on the decline. A recent article by Dhyana Levey, “For the Vanishing Civil Trial, Report Shows Another Down Year,” in The Los Angeles Daily Journal (Feb. 13, 2009 edition) gives added confirmation to the existence of this decline.

     In California, the number of jury trials dropped 28% in fiscal year 2006-07 as compared with the previous year. Dating back to the 2002-03 fiscal year, there was a 37% decreased in jury civil trials during the five-year period.

     Nationwide, the percentage of state civil cases that went to a jury trial dropped from 1.8% in 1976 to .6% in 2002. (From our previous post, California clocked in at 1.7% for civil unlimited jury trials during the 2006-07 fiscal year.)

     At the nationwide federal level, jury trials fell from 5.5% in 1962 to 1.2% in 2002, even though case filings increased fivefold during the same interval.

     The Daily Journal article quotes one San Francisco defense attorney as indicating that expense is the driving force behind this phenomenon, with clients not wanting to go to trial if the expenses exceed a settlement and with discovery being the major culprit behind escalating litigation costs (especially given the expense of electronic discovery). Based on the expense of litigation, at least one other attorney opined that this pushes matters into mediation “to get the spending stopped.”

California Supreme Court Refuses To Depublish Bernardi Decision

Decision Affirming $244,287.50 Fee Award Under the California Public Records Act Remains Citable.

     We would like to thank Ina Bendis, an attorney practicing in Santa Clara and one of our readers, for an update on Bernardi v. County of Monterey, a Sixth District decision sustaining a $244,287.50 fee award in favor of plaintiffs and against Monterey County under the California Public Records Act (first discussed in our October 1, 2008 post).

     Bernardi was subsequently certified for publication, even though County of Monterey opposed the publication request. County even requested the California Supreme Court to depublish the decision, but that request was denied on February 20, 2009. That means Bernardi is a good precedent for CPRA victors to cite in any battle over fees.

     Thanks to Ina for the update.

Retainer Agreements: Unhappy Lawyer Loses Potential $2 Million Contingency Fee Award Based On Noncompliance With Business and Professions Code Section 6147

Fourth District, Division 3 Affirms Trial Court’s Quantum Meruit Award of $364,110 to Attorney Instead.

     For attorneys entering into contingency fee arrangements with clients, it is essential to comply with Business and Professions Code section 6147, which requires that contingency fee agreements specify (1) the agreed-upon contingency fee rate, (2) the manner in which disbursements and costs will impact the contingency fee and the client’s recovery, (3) the manner in which the client would have to pay compensation for related matters not directly covered by the contingency arrangement, (4) the fee is not set by law but negotiable between attorney and client, and (5) the MICRA limits for health care provider cases. The penalty for noncompliance is that the client can void the contingency fee arrangement, which relegates the attorney to collecting a reasonable fee. (Bus. & Prof. Code, sec. 6147(b).) The next case illustrates how noncompliance can cause bitter resentment and financial setback for even a contingency attorney successfully representing the client in “long shot” litigation.

Construction Litigation: Fourth District, Division 1 Reverses Fee Awards Under Code of Civil Procedure Section 1038 and Reverses/Affirms Others Under Civil Code Section 1717

Court of Appeal Discusses Numerous Issues Under the Two Statutes.

     In a complicated construction dispute between window subcontractor and other construction professionals sued for equitable indemnity and contribution, the Fourth District, Division 1 reversed and affirmed some fee awards against window subcontractor after overturning a judgment on the pleadings, affirming a summary judgment as to one party, and giving effect to a prior appellate decision overturning judgments in favor of the parties sued by window subcontractor. The decision is Jeld-Wen, Inc. v. Action Iron Works, Inc., Case Nos. D051465 & D053094 (4^th Dist., Div. 1 Feb. 17, 2009) (Jeld-Wen II) (unpublished). We summarize the parts of it that are germane on attorney’s fees awards.

Arbitration Petition Denial: Fees Not In Order Where Denial Was Only An Interim Procedural Victory

Third District Distinguishes Its Facts From Otay in Unpublished Decision.

     In California, attorney’s fees are generally not recoverable for interim procedural victories.   The “prevailing party,” for purposes of fee recovery, usually must await a final deposition on the merits. However, there are exceptions.

     For example, Otay River Constructors v. San Diego Expressway, 158 Cal.App.4^th 796, 801, 808 (2008) involved a sui generis fact pattern where the only proceeding being litigated in court at the time was a petition to compel arbitration. The trial court’s denial of the petition was a “discrete legal proceeding” giving rise to fees even if claims were pursued in another later action.

     Otay was distinguished recently in Hall-Mark Services, Inc. v. Harris & Associates, Case No. C056691 (3d Dist. Feb. 17, 2009) (unpublished). In contrast to Otay, there was pending litigation filed in court in which a petition to compel arbitration was initially denied. In a prior appeal, the Third District reversed the denial and remanded so that the petition to compel arbitration would be granted instead. The trial court granted the winning party in this case an award of routine costs but denied $37,589 in requested attorney’s fees. The lower court decided no contractual fees under Civil Code section 1717 were warranted until final disposition of the case.

Tree Injury: Successful Plaintiff Not Awarded Attorney’s Fees In Light Of Plaintiff’s Recovery Of Doubling “Penalty”

 

Fourth District, Division 1 Affirms Trial Court’s Discretionary Refusal to Award Fees.

      Trees seem to be a popular subject of dispute between neighbors, either because they are destroyed as part of new construction or because they block scenic views of the ocean/nearby canyons. There are some special penalty and fee-shifting provisions relating to timber destruction, statutes that were considered in the next case.

Family Law Arbitration Award: Fee Sanctions Vacated Where Wife Had Argument That Contractual Arbitration Agreement Had Been Rescinded

Fifth District Vacates $6,000 in Sanctions Against Wife.

     The beginning sentences of In re Marriage of Grady and Britten, Case No. F054668 (5^th Dist. Feb. 17, 2009) (unpublished) are ominous in tone: “Arbitration typically is viewed as a relatively fast, inexpensive way to resolve disputes. This view assumes the existence of a clear and complete agreement to arbitrate, a diligent arbitrator, and some measure of cooperation between the parties. This appeal illustrates that when these conditions are absent, arbitration can be slow, inefficient and expensive.”

Civil Code Section 1717: No Apportionment Necessary Where Bank’s Demand On Completion Guaranty Made Everything Interrelated

Third District So Holds in Recent Unpublished Decision.

     Under our category “Allocation,” we have reviewed cases arising under Civil Code section 1717 in which courts do and do not require apportionment of work between contract/noncontract claims for purposes of awarding fees. The basic test is that apportionment is not required where claims are “so interrelated that it would have been impossible to separate them into claims for which attorney fees are properly awarded and claims for which they are not . . . .” (Akins v. Enterprise Rent-A-Car Co., 79 Cal.App.4^th 1127, 1133 (2000).) This last principle came into play in the next case.

     Bank demanded that a replacement contractor perform under a completion guaranty, which would have made contractor liable for all mechanic’s liens and costs of completing the project. Contractor won, and was awarded $250,000 out of his requested $300,063.18 fees under a contractual fees clause in the completion guaranty. Bank then appealed, arguing that the clause was much narrower and did not allow for this recovery.

     Wrong, said the Third District in Feather River State Bank v. Dudash, Case Nos. C048826 & C049809 (3^rd Dist. Feb. 17, 2009) (unpublished). What is good for the goose is good for the gander. (O.K., o.k., bad pun based on the name of the Bank.) Based on Bank’s initial demand, all of the legal claims were at play such that apportionment did not need to be made “[g]iven this Gordian knot of conflicting liabilities and interests.” The trial court acted appropriately in not allocating fees, with the $250,000 fees award affirmed on appeal.  

                          

 

                                                         Library of Congress c1900

Post-Judgment Enforcement: Supplemental Costs Memorandum Seeking Fees Must Be Served Upon Judgment Debtor

Second District, Division 1 Reverses Supplemental Fee Award Based Upon Lack of Notice.

     Under Code of Civil Procedure section 685.040, a judgment creditor is entitled to the reasonable and necessary costs of enforcing a judgment. Recoverable costs include attorney’s fees incurred in enforcing a judgment, where the original judgment includes a fee award pursuant to a contractual fees provision. The judgment creditor can seek recovery of those enforcement fees by filing either a costs memorandum under section 685.070(b) or a noticed motion under section 685.080(a). Judgment creditor (an attorney) doggedly pursued judgment debtor (ex-client) for supplemental fees on a default judgment for a 4-year enforcement period by filing an application for supplemental fees (deemed to be the equivalent of a costs memorandum) without notice to the judgment debtor. The simple question for the Court of Appeal: was the application valid without notice to the debtor?

Out-of-State Attorneys: Don’t Despair—Ninth Circuit Holds You Can Get Paid As A Consultant Even Though You Are Not California Licensed Or Not Admitted Pro Hac Vice

Holding Draws A Sharp Dissent; Opinion Also Discusses Lodestar and Sufficiency of Fee Substantiation.

     The next case should spur the interest of non-California lawyers wishing to do limited consultation or limited co-counseling with California lawyers in California federal courts. Even if you are not licensed in California or do not obtain pro hac vice rights (the latter being the preferable route), can you get attorney’s fees recovery once a case is favorably concluded and there is a basis for fee recoupment? Answer: Maybe, under the right circumstances. Read this post for the Ninth Circuit’s recent view—and, yes—far from being unanimous as to the right circumstances that may countenance this result.

Arbitration: Appellate Fees Awardable Upon Prior Reversal Without Awaiting the Final Result

Second District Panel Splits 2-1 on Whether Contractual Clause Allowed for Fee Recovery From Post-Arbitration Judicial Proceeding Win Before the “Dispute” Was Finally Resolved.

     The next case illustrates how even appellate jurists will come to different conclusions when construing a contractual fees clause where the matter is one for de novo review based on the absence of parol evidence. The key question was how to construe the breadth of the term “dispute.”

Family Law: Trial Court Discretion Is Broad In Awarding Fees

Unpublished Decision Makes the Point.

     A family law judge awarded husband $8,000 in attorney’s fees after a protracted battle with ex-wife on numerous property and child custody issues. Husband thought he deserved more, but lost. In re Murphy, Case No. D051927 (4th Dist., Div. 1 Feb. 11, 2009) (unpublished).

     Reason? You guessed it—husband could not overcome the deferential abuse of discretion standard. At the conclusion of the case, trial courts are authorized to make a fair award of fees and costs, reviewed under the abuse of discretion standard. (In re Marriage of Cheriton, 92 Cal.App.4^th 269, 315 (2001).) Husband showed no error in the award under the circumstances.

CCP Section 128.7 Sanctions: $118,584.95 Sanctions Levied For Jury Mistrial Based On Corporate Plaintiff’s Lack Of Capacity To Sue

Second District, Division 1 Sustains Substantial Sanctions Award on Appeal.

     Sanctions can sting. The next case shows it--and we bloggers are still smarting from having read the case.

     BCX International, Inc. v. York, Case No. B198375 (2d Dist., Div. 1 Feb. 10, 2009) (unpublished), briefly put, involved a Massachusetts corporate plaintiff that, during trial, was exposed as not having a California charter so as to maintain the action going forward. A lurid tale of fingerpointing devolved, but the trial court eventually granted the individual defendant’s motion for Code of Civil Procedure section 128.7 sanctions with respect to trial work expended by defendant in a case brought by an incapacitated plaintiff. (Mercifully, the trial court did grant plaintiff time to register in California, but still found a mistrial necessary so that the jury was not left hanging for months.) Plaintiff was assessed with 128.7 sanctions of $118,584.95 as a result of the mistrial.

     Plaintiff appealed, but lost.

Bankruptcy: Bankruptcy Judges Have Discretion In Awarding Fees Against Involuntary Petitioners Based On A “Totality of Circumstances” Test

Ninth Circuit Rejects Awarding Fees Based Upon Tort Concepts or Class Theories of Liability.

     Bankruptcy practitioners, we have one for you. Do not despair. If we find them or you point them out (a call for interactive discussion with us), we will report on attorney’s fees in the insolvency arena. The next case happens to be one of interest to you.

     Sofris v. Maple-Whitworth, Inc., Case No. 07-56537 (9^th Cir. Feb. 10, 2009) (for publication) primarily dealt with statutory interpretation of 11 U.S.C. sec. 303(i), which provides that a bankruptcy judge may grant a debtor reasonable attorney’s fees and costs upon dismissal of an involuntary bankruptcy petition. The bankruptcy court ordered that fees and costs must be awarded against all involuntary bankruptcy petitioners as a class, a determination affirmed by a divided BAP concluding that section 303(i) is governed by the common law tort doctrine of joint and several liability. The fees/costs award at issue was $42,257.

Routine Costs: Prevailing Cross-Defendant Denied Costs Where Defendant/Cross-Complainant Obtained Relief Under Plaintiff/Cross-Defendant’s Complaint

Fourth District, Division 2 Affirms Trial Court’s Award of No Costs to Cross-Defendant.

     Plaintiff Gonzales brought a complaint against defendant Falzone involving various investment/partnership disputes, with Falzone filing a cross-complaint against Gonzales. After a bench trial, Falzone obtained relief under Gonzales’ complaint but was granted no relief under his cross-complaint. The trial court also denied Gonzales’ request for costs as the prevailing cross-defendant. He appealed this determination.

Federal Class Actions: Fee Reversionary Settlement Clauses And Percentage Of Recovery Considered By Ninth Circuit In Unpublished Decision

Court of Appeals Sustains Validity of Fee Reversion Clause Based on Exceptional Results and Affirms Percentage of Recovery Fee Award.

     The Ninth Circuit Court of Appeals recently considered two attorney’s fees issues in the context of a class action, albeit in an unpublished memorandum decision. Glass v. UBS Financial Services, Inc., Case No. 07-15278 (9^th Cir. Feb. 9, 2009) (unpublished mem.) is a very interesting decision for practitioners on both sides of class actions. We thank Michael Rubin of San Francisco’s Altshuler Berzon LLP for a great “heads up” on class action pointers from this case.

Private Attorney General Statute: Northern California District Judge Awards CCP Section 1021.5 Fees Of $1,423,127 To Plaintiffs Recovering $153,150 Against Taser Manufacturer

Judge Refuses to Apply a Multiplier and Denies Costs to Successful City in Same Lawsuit.

     Robert C. Heston, Jr. died after Tasers were deployed against him by Salinas police officers, death resulting in the aftermath of cardiac arrest. His mother/father and estate executor sued Salinas, the individual police officers, and TASER International (the manufacturer of the Taser, claiming negligent failure to provide warnings that repeated applications of the electrical current in a Taser can cause cardiac arrest). The jury found for Salinas but against TASER, awarding estate executor $21,000 in compensatory damages and $200,000 in punitive damages and awarding parents $1,000,000 in compensatory damages and $5,000,000 as well as finding decedent was 85% at fault—which reduced the respective compensatory damages to $3,150 and $150,000. In post-trial motion proceedings, U.S. District Judge James Ware found that the punitive damages were inappropriate for both executor and parents, meaning that the remaining compensatory damage recovery totaled $153,150.

Sanctions: $8,836 In Various Sanctions Affirmed Against Plaintiff Losing Claims Through Demurrer Or Summary Judgment

Court of Appeal Reverses $15,611.50 in 128.7 Sanctions Because “Safe Harbor” Papers Were Not Identical to Filed 128.7 Motion Papers.

     In a lengthy but informative unpublished opinion, the Fourth District, Division One affirmed and reversed some sanctions components assessed against a plaintiff who was defensed through demurrer and summary judgment law-and-motion proceedings in his investment fraud lawsuit. The decision has some valuable pointers on the right way to set up Code of Civil Procedure section 128.7 motions with proper pre-motion “safe harbor” papers.

CCP 998 Offers: Later 998 Offers Extinguish Prior 998 Offers

Second District, Division 1 Follows Palmer's Bright-Line Rule.

     In a very interesting unpublished case, plaintiffs suffered a nonsuit after the trial court struck a medical expert's testimony based upon the expert not giving certain causation opinions during his deposition, even though plaintiffs' counsel had provided notice three months before trial that causation would be opined on at trial beyond anything said at the deposition. The defense did not try to redepose the expert, but relied on in limine and nonsuit motions to preclude the causation testimony. It worked, with nonsuit granted after the testimony was excised out. Defendants filed a costs memorandum seeking expert witness fees based on Code of Civil Procedure section 998. The trial court taxed the requested expert costs, and both sides appealed.

    

Private Attorney General Statute: Veterans Group Receives $20,000 Out Of Requested $112,875 In Fees

Veterans Group’s Failure to Provide Adequate Appellate Record Left Intact Lodestar Reduction by Trial Court.

     The opening sentence of the next case, involving a reduced fee award under Code of Civil Procedure section 1021.5, certainly caught our attention: “This is a skirmish over attorney fees after the parties settled the underlying case.”

    

Indemnity Clauses: True Indemnification Clauses Do Not Give A Basis For Attorney’s Fees Recovery

Fourth District, Division 1 Follows Other Precedents We Have Reviewed.

     In our category, “Cases: Indemnity,” we have seen that California appellate courts will not stretch a third-party indemnification clause into a first-party attorney’ fees clause for purposes of fees recovery. The leading cases of Myers Building Industries, Ltd. v. Interface Technology, 13 Cal.App.4^th 949. 968 (1993), Continental Heller Corp. v. Amtech Mechanical Services, Inc., 53 Cal.App.4^th 500, 508-509 (1997), and Baldwin Builders v. Coast Plastering Corp., 125 Cal.App.4^th 1339, 1345 (2005) illustrate the principle and have been discussed in prior posts under this category.

    

Appealability: Separately Appeal A Postjudgment Fee Award Or Suffer The Cruel Sword of Dismissal!

 

Second District, Division 2 Reinforces Message Sent in Prior Posts.

     In our category: “Cases: Appealability,” we have stressed an important message that emerges from California state court cases: notwithstanding some nuances in unusual situations, litigants wishing to challenge attorney’s fees awards should always appeal the postjudgment fees award in order to preserve appellate rights. The next case is a recent illustration of how failing to do so resulted in the loss of appellate jurisdiction over the challenged fees award.

   

SLAPP Awards: HOA President And Attorney Suffer Adverse Fee Award When Losing Anti-SLAPP Motion Brought By Adjoining Golf Course Manager

Los Angeles Superior Court Judge Does Require Better Fee Allocation through a Separate Motion.

     One of the nice things about blogging is that we do get interactive input from a variety of individuals. Bill Leys, The Deck Expert, who has a blog at Waterproofdeckcoatingadvice.com, liked one of our recent HOA blogs and, in turn, sent us a ruling on an anti-SLAPP motion in a Los Angeles County Superior Court action. Thanks, Bill, and here is a short summary of that case.

POOF! Principle: Top 6 Cases In Last Eight Months

     We are pleased that our fellow blawger, Greg May, presiding at The California Blog of Appeal, has recognized our inestimable contribution of the Poof Principle to California attorney's fees jurisprudence in his January 28, 2009 post.  The American Heritage Dictionary (online) defines "poof" thusly:  "Used to indicate a sudden vanishing: The magician waved a wand, and poof! The birds disappeared!"  

     We are impressed by the number of times our appellate courts make attorney's fees awards vanish.  We have coined the "poof principle" to describe this phenomenon.  Examples follow. 

Off Topic: School District Struggles To Pay Title IX Fees; Public Officials Use Campaign Funds To Fund Criminal Defense; Billable Hours Giving Ground

Melange of Interesting Off Topics in the News All Center on Attorney’s Fees.

     “In law, nothing is certain but the expense.”

     --Samuel Butler

     Samuel Butler put it well; here are three interesting vignettes for news stories that all center on attorney’s fees issues.

CA School District Struggles to Pay Adverse Title IX Fees Award

     The Ramona school district finds itself struggling to pay almost $325,000 in attorney’s fees awarded in a Title IX suit brought by high school softball parents suing because the girl softball facilities were inferior to those for the boys. A judge ordered the district to construct a new softball field for the girls, with the district complying through an expenditure of $200,000 to upgrade the girl softball facilities. Although the district’s fees spend in the defending the suit were covered by insurance, the insurance policy does not cover fees awarded to the Title IX winners. The school district is scrambling to come up with a payment plan in light of $7.2 million in cuts expected over the next 18 months because of the state budgetary crisis. (See Brent Schrotenboer, “Legal fees from losing Title IX suit prove costly,” January 28, 2009 San Diego Union-Tribune.)

Illinois Governor Blagojevich Uses Campaign Funds to Fund Defense

     Recent campaign disclosures for embattled Illinois Governor Rod Blagojevich show that he paid about $1,350,000 to two Chicago law firms for his defense of federal criminal corruption charges at various times in 2008. Looks like these expenditures are in a gray area, although New York and New Jersey have pending bills to stop public officials charged with crimes from using campaign contributions for legal defense purposes. There is, however, a dilemma to using campaign contributions—they may be taxed as income to the public official using them. (See Lynne Marek, “Can Blagojevich use campaign contributions for his legal defense?,” January 30, 2009 The National Law Journal.)

Billable Hour Arrangements May Be Caving To Other Alternatives

     It appears that the economy may be leading to a more sudden revamp of attorneys who are wed to the billable hour. (We explored this topic earlier in our January 7, 2009 post.) Big law firms are worried about budgets, especially given that transactional deals are drying up and with only bankruptcy/economy-driven litigation keeping firms afloat. Heller Ehrman and Thelen (two big law firms) are gone, and MoFo just laid off over 150 lawyers. Given this constriction, some anecdotal evidence suggests that there may be a shift away from purely billable hour billings—firms are beginning to implement flat fee billings for deals, “success fees” (enhancement arrangements) for positive or speedier outcomes, or benchmark payment arrangements. (See Jonathan D. Glater, “Billable Hours Giving Ground At Law Firms,” January 29, 2009 The New York Times.)