CALIFORNIA ATTORNEY'S FEES

Sanctions: Fourth District, Division One, Reverses Sanctions Imposed on Attorney Totaling $3,587.50 for Alleged Ex Parte Contact with Represented Party

A Violation of the Rules of Professional Conduct is Not the Same as a Violation of a Court Order.

     We suspect considerations of professional honor and shame played a more important part than did the amount of the monetary sanctions involved in the next case, Conservatorship of Bibiana Becerra, Case No. D053519 (4th Dist., Div. 1, July 28, 2009) (certified for publication). 

     Objector and appellant, attorney Linda Paquette, who represented a party in the action, appealed court orders requiring her to pay $1,000 sanctions to the clerk of the court, and pay $2,587.50 for attorney fees to the conservatee's court appointed attorney  ("CAA").  Ms. Paquette apparently went sideways with the trial court after she allegedly spoke ex parte with the brain injured conservatee, who was represented by counsel.  The CAA and the probate judge viewed the ex parte communication as a violation of the Rules of Professional Conduct, .

     Orders to show cause were duly (not!) issued by the probate court to put the appellant on notice that imposition of sanctions was being considered under Cal. Code of Civ. Proc. sections 177.5 and 575.2, and eventually attorneys fees and sanctions orders were confirmed by the probate court.  However, sections 177.5 and 575.2 each, "requires a knowing violation of a valid order of the court without good cause or substantial justification."   Winikow v. Superior Court, 82 Cal.App.4th 719, 726 (2000).  Here, however, the alleged violation was of the Rules of Professional Conduct -- and this published opinion reminds us that a Rule of Professional Conduct is not the same as a court order.  In short, a hook upon which to hang the sanctions award (and the sanctioned attorney) was missing.

     In addition, lack of clarity in the orders presented a problem with notice and due process.

     Conclusion:  "Due to the probate court's lack of compliance with the legal standards and purposes authorized by sections 177.5 and 575.2, the orders are legally erroneous, unsupported by the record, and a prejudicial abuse of discretion."   Justice Huffman authored the 3-0 opinion.  

Sanctions and Family Law: First District, Division Two Upholds Sanctions in the Amount of $15,030 Against Attorney Representing Mother in Custody Dispute

State Bar's Decision that Discipline Was Not Warranted Does Not Move Court to Overturn Sanctions Award.

     The genesis of the next case was a heart-rending child custody dispute that could be a made-for-television movie.  Unfortunately, it was real life rather than entertainment.  Robinson v. Charlton A., A104663 (1st Dist., Div. 2, July 27, 2009) (unpublished).

     Petitioner Robinson had been mother's attorney in the custody dispute.  Respondent Charlton A. was the father.  The parents fought over custody arrangements and the location of the school their daughter would attend.  A licensed psychologist reported to the court that both parents were excellent parents.  But the working relationship between the parents deteriorated badly when the mother stopped paying expenses on a condominium the father owned, the father moved to evict her, and eventually, the mother fled with her child, resulting in the mother's sentencing to 90 days in county jail after a nolo contendere plea to parental kidnapping.  What a mess.

Tort of Another and Equitable Indemnity Claims to Fees Founder

Second District, Division Seven Affirms Denial of Motions for Attorney's Fees and Sanctions

     We have written from time to time about tort of another and section 1021.6 as bases for attorney's fees.  Justice Perluss, author of a 3-0 opinion, has written a conveniently concise primer on the subjects.  State Farm Mutual Automobile Ins. Co. v. Martinez, Case No. B205248 (2nd Dist. Div. 7, July 27, 2009) (unpublished).

     Mr. Martinez, dba Manny's Transmissions, rebuilt a transmission for a truck used by Prime Building to haul construction materials.  The truck caught fire and was a total loss.  State Farm stepped into the shoes of Prime Building, its insured, and filed a subrogation claim against Mr. Martinez.

     Mr. Martinez did not believe he was responsible for the fire, and asked State Farm to preserve the evidence.  Eventually, State Farm did not wish to pay the storage costs, and the the truck was dismantled and the parts sold for salvage value.  Additionally, records relating to the claim were lost.  At this point, it did not look so good for State Farm, but be patient, dear reader, and read on.

Family Law: 1st District, Division 3, Upholds Refusal to Award Mother Full Amount of Fees Requested

 

Result Follows from Application of Abuse of Discretion Standard.

     In Marriage of Lilyquist and Dova, Case No. A121052, A121716 (1st Dist., Div. 3, July 24, 2009) (unpublished), the Court held (1) that a retroactive order reallocating child support obligations of the father was not an abuse of discretion; and (2) that failure to award the mother the full amount of fees requested was not an abuse of discretion.  Both rulings show that in child  support cases, the appellant who must carry the burden of overcoming an abuse of discretion standard can have a tough row to hoe.

Attorney's Fees in the News: Objectors' Attorneys Get Awards on Remand in BAR/BRI Class Action

 The Ninth Circuit Having Spoken, Trial Judge Awards Token. 

     In an April 26, 2009 post, we reported that class representative incentive agreements that created conflicting interests required new consideration of fee awards to objectors and class counsel.  The case was Rodriguez v. West Publishing, Case Nos. 07-56643 et al. (9^th Cir. Apr. 23, 2009) (for publication), involving the $49 million class action settlement between BAR/BRI class members and West Publishing/Kaplan Inc.  The trial judge was the Hon. Manny Real.

     In a July 22, 2009 on-line article appearing on law.com, Amanda Bronstad reports for The National Law Journal under the headline, "Federal Judge Grants Attorney Fees in BAR/BRI Case but Slashes Amount."

     Do the math:  Judge Real awarded $8,125 to one attorney, and $16,250 to the other attorney.  According to Ms. Bronstad's article, the first attorney had requested $42,655 in fees, and $884 in costs.  The second attorney had requested $108,000 in fees.

     Thus, the objectors' attorneys reaffirmed the principle that incentive awards should not be structured in a way that creates a conflict of interest between the class members and the incentive award plaintiffs.  The reversal of the incentive awards led to savings for the class as a whole.  The objectors' attorneys received fee awards in recognition of their contribution, but a tad less (actually, more than a tad less) than they had requested.  So everyone must be delighted with the outcome, right?   Right?   

SLAPP: Fourth District, Division 3 Publishes Raining Data Decision

Hefty SLAPP Fees Awarded to Victorious Cross-Defendant in Trade Secret Case.

     In our June 27, 2009 post, we reviewed the previously unpublished decision by the Fourth District, Division 3 in Raining Data Corp. v. Barrenechea. This decision was certified for publication on July 21, 2009.

     Raining Data affirmed a $112,353.35 attorney’s fees award to a successful cross-defendant in a SLAPP motion, rejecting the argument that fee claimants must submit detailed time records rather than provide a detailed attorney declaration as substantiation in support of a fee request in California state courts.

Federal Routine Costs: Ninth Circuit Affirms Cost Award Against Unsuccessful Civil Rights Plaintiff, Rejecting Untimely Cost Bill Argument

Court of Appeals Rules That Timeliness Measures From Date of Docket Entry.

     A U.S. District Court, N.D. California local rule requires that prevailing parties file their routine cost bill 14 days after entry of a judgment or an order. So, the question arises—does that means (A) when the decision is issued, or (B) the date it is docketed? If any of you readers answered “B,” you are right and get to go to the next round (only kidding).

     In Huppert v. City of Pittsburg, Case No. 06-17362 (9^th Cir. July 21, 2009) (for publication), the district judge awarded routine costs to the defense and against a plaintiff losing a summary judgment in a civil rights case. Plaintiff claimed that the defense violated the local rule by untimely filing the costs bill. Although Justice Fletcher dissented on the merits, the Ninth Circuit majority affirmed the award of costs to the defense.

     Initially, the federal circuit court observed that cost bill issues are reviewed for clear error under an abuse of discretion standard. (Idaho Potato Comm’n v. G & T Terminal Packaging, Inc., 425 F.3d 708, 723 (9^th Cir. 2005).) Applying this standard, the Ninth Circuit majority found that the cost bill was timely filed. Even though the summary judgment decision was issued outside the 14-day deadline, the final order was docketed within the timely filing deadline. Result: affirmed.

RFA Cost-Shifting: Court Of Appeal Affirms $165,724.65 Award For Plaintiff's Failure To Admit The Truth of RFAs Of Substantial Importance In Accounting Malpractice Case

Second District, Division 1 Finds Award Was No Abuse of Discretion.

     In our category "Requests for Admissions," we have discussed numerous cases where substantial fees and costs have been awarded or not awarded when a litigant (usually a defendant) challenged a plaintiff's refusal to admit the truth of certain requests for admissions. Code of Civil Procedure section 2033.420(a) imbues a trial court with discretion to shift costs unless it concludes that the other party had a reasonable ground to believe it would prevail on the matter not admitted (see subdivision (b) caveat). Here is another example of a case of where a substantial RFA cost-shifting award was sustained on appeal.

     Housing Authority of the City of Los Angeles v. KPMG LLP, Case No. B207313 (2d Dist., Div. 1 July 20, 2009) involved a situation where plaintiff lost an accounting malpractice case on summary judgment to KPMG based on the bar of applicable statutes of limitations. In addition, the trial court granted KPMG's motion for fees and costs of $165,724.65 because plaintiff denied RFAs of "substantial importance" tending to expose that plaintiff knew or should have known of the claims against the accounting firm more than two years before filing of the complaint.

     On appeal, the RFA costs award was affirmed. The record showed that subsequent declaration testimony by one of plaintiff's current higher-ups did confirm that he received and discussed a draft audit report, even though these facts were not admitted previously. Given the import of this draft audit report in the scheme of things, no abuse of discretion was committed in awarding the substantial fees and costs against plaintiff.

Attorney’s Fees In the News …. Orange County Register Lawsuit Fees Award Hearing Takes Place

Judge Velasquez Honors “Capped” Agreement Between the Parties.

     In past posts of December 1, 2008 and June 15 and June 27, 2009, we have been following the attorney’s fees hearing in the case where The Orange County Register settled with carriers in a wage-hour class suit.

     On July 16, 2009, Orange County Superior Court Judge David C. Velasquez sides with The Register, limiting fee recovery to no more than $12 million based on an agreement between each side that was vigorously disputed by plaintiffs’ lead counsel Daniel Callahan. Even though finding that a reasonable fee would have been $16 million, Judge Velasquez expressed his belief that he had to adhere to the “capped” arrangement. Plaintiffs had sought about $23.5 million in fees.

     This may not be the end of things, however. Mr. Callahan has said he may appeal the decision.

     For more on the results and aftermath of this hearing, see Peggy Lowe’s article “Attorney’s request for extra cash in Register case denied,” available for reading in the July 18, 2009 issue of The Orange County Register.

Civil Code Section 1717: Party Sued Last Minute Wins Attorney's Fees Of $142,690.75, But Loses Bid For More

Appellate Court Decides That More Fees Would Be Unfair Because Half of Fees Paid By Another.

     Courts do apply equitable principles in awarding fees to victorious litigants under Civil Code section 1717, even where the winner was a last minute add-on litigant. The next case is one illustration of how equities enter into the section 1717 equation.

     Add-on litigant was actually added as a plaintiff on the first day of trial, eventually declared the winner along with another plaintiff in a lease assignment dispute. The lease had a written contract clause, with the lower court awarding add-on plaintiff $142,690.75 (out of a requested $240,000 in fees by both plaintiffs). Both plaintiffs challenged the fees awarded to add-on plaintiff in an appeal of the postjudgment order.

     They lost in Sossikian v. Ennis, Case Nos. A119693 et al. (1^st Dist., Div. 3 July 16, 2009) (unpublished), mainly on equitable grounds. Defendant argued that the award was not "on a contract" under section 1717, but that argument did not resonate because the statutory "on a contract" element is construed liberally and the implied-in-fact theory was accepted such that add-on plaintiff was found to be a party to the written lease. However, the lower court was correct in halving some pieces of the fees in crafting its award to add-on plaintiff given that its fees were being paid by other plaintiff. If another result were to occur, add-on would have essentially been awarded fees for work that was done when it was not a party to the litigation. That would be unfair, ruled the trial court, with the Court of Appeal seeing nothing wrong with this equitable reasoning.

Special-Fee Shifting Statute: $83,545 Attorney's Fees Award Affirmed As Against Losing Employee And In Favor Of Palos Verdes Peninsula Unified School District

Summary Judgment Affirmed, and Fees Properly Awarded For Bringing Torts Claim Without Basis.

     Under Code of Civil Procedure section 1038, when a defendant in a case brought under the Torts Claim Act prevails on summary judgment, the defendant may obtain an award of attorney's fees if the trial court determines the action was not brought in good faith and with reasonable cause.

     That is exactly what happened in Bosetti v. The U.S. Life Ins. Co. in the City of N.Y., Case Nos. B206896/B208835 (2d Dist., Div. 3 July 17, 2009) (certified for publication). PVSD employee lost her disability claim by never opposing a summary judgment by the School District as to why it was named in the suit. The trial court awarded School District $83,545 in fees under section 1038. Employee did not overturn the summary judgment on appeal, such that the fee award was affirmed and the matter remanded so the lower court could consider awarding School District more fees for prevailing on appeal. Ouch! That can be the price of continued war.

Special Fee-Shifting Statute In Taxpayer Dispute: Appellate Court Reverses $220,000 Fee Award In Taxpayer's Favor As Against Franchise Tax Board

First District, Division 4 Determines FTB Was Substantially Justified in Defending Case.

     In a lawsuit against the State of California (including the Franchise Tax Board) for a tax refund, a prevailing taxpayer may be awarded attorney's fees unless the State of California "establishes that its position in the proceeding was substantially justified." (Rev. & Tax. Code, §§ 19717(a), (c)(2)(B)(i).) The next case is one where taxpayer garnered a substantial fees award of $220,000 against the Franchise Tax Board in a vigorously contested case in which there was divergent documentary evidence and oral testimony that needed to be sorted out. On appeal, the First District, Division 4 reversed the fee award in Garcia v. Franchise Tax Board, Case No. A122710 (1^st Dist., Div. 4 July 16, 2009) (unpublished).

     The main reason for the reversal was the appellate panel's belief that the fee award was done "in hindsight" rather than looking at whether FTB's position was tenable at the outset of trial. Under the specific facts, the documentary evidence was subject to conflicting interpretations and the evidence was far from conclusive. Due to these factors, reversal was dictated.

Appellate Reversal: Court of Appeal Publishes Costa Serena Decision

Case Holds that Reversal Moots Appeal of Attorney's Fees Denial Order.

     On July 17, 2009, the Fourth District, Division 1 certified for publication a previously unpublished decision, Costa Serena Owners Coalition v. Costa Serena Architectural Committee, Case No. D052903 (4^th Dist., Div. 1 filed June 24, 2009; published July 17, 2009). This case held that an order denying attorney's fees becomes moot when the appellate court issues the right type of reversal. We discussed this decision in our earlier June 24, 2009 post.

SLAPP: Partial SLAPP Grant And Reversal Of Another Claim On Appeal Means … Remand To See If Partial Winner Gets Fees

First District, Division 5 So Holds in City of Pleasanton Referendum Dispute.

     We have to say that defendant victors—even partial victors—are usually awarded some amount of fees for winning anti-SLAPP motions, which carry a mandatory fee-shifting bias for defendant winners. (If you don't believe this, see our category "SLAPP.") The next case is but another addition to the jurisprudence tending to prove this point. You usually get your fees as a defendant SLAPP victor, unless no practical benefit was gained from the granting of the motion.   

     In Lin v. City of Pleasanton, Case No. A121147 (1^st Dist., Div. 5 July 16, 2009) (certified for publication), former city councilperson and member of an unincorporated association "Save Pleasanton's Hill" partially won a SLAPP motion on one claim brought against her in a dispute to prevent the certification of a referendum petition that the councilperson was spearheading with respect to a proposed residential development. Landowner (and, indirectly, the City) did beat back the referendum certification, but councilperson was successful in reversing the result on appeal. The trial court refused councilperson her fees, and not surprisingly she appealed.

Update on 2008 Blog: Second District, Division 6 Affirms Judgment, Including $319,097.50 Fee Award In Citrus Farmer Litigation

 

Co-contributor Mike Was Co-Trial and Co-Appellate Counsel in Case.

     Co-contributor Mike did not want to do this post; co-contributor Marc told him to do it. Just to show you that Mike is not that cantankerous, Marc won on this one.

     In our May 19, 2008 post, we looked at a special fee-shifting statute that allows a prevailing party in a farming case to obtain attorney’s fees in a trespass case. Mike’s clients did just that, obtaining a jury verdict of $255,598.14 and $319,097.50 in attorney’s fees. The other side appealed. The Court of Appeal has spoken as of yesterday.

     The Second District, Division 6, in a 3-0 opinion authored by Justice Yegan, affirmed in Hobson v. Leavens, Case No. B206403 (2d Dist., Div. 6 July 15, 2009).

                  Charles Laughton in Hobson's Choice.

 

     Mike is not only thrilled for the clients, but had a great experience co-counseling at trial and on appeal with Greg Regier, a shareholder with the Westlake Village office of Jackson, DeMarco, Tidus & Peckenpaugh. He also compliments his opponents’ appellate counsel, Curt Cutting and Mary Christine Sungaila of Horvitz & Levy, who were professional throughout the process. (Mr. Cutting also has a superb blog on punitive damages for all of you who read us bloggers on the Internet.)

Mediation: Defendants Beware—Cooperate In Mediation Efforts Or Be Refused Attorney’s Fees Even if You Prevail Under Real Estate CAR Form Fee Clauses

 

Second District, Division 5 Reiterates Bitter Lesson for Defendants Losing Opportunity to Recoup Fees as the Prevailing Parties.

     Under our category “Mediation,” we have surveyed both published and unpublished decisions that hold contracting parties must strictly comply with the terms of CAR-form real estate purchase agreement fees clauses, which require a suing party to commence pre-litigation mediation and a sued party to cooperate in mediation efforts as condition precedents to obtaining recovery of attorney’s fees should either side prevail in an action or arbitration. Two of the leading cases on the mediation requirements are Frei v. Davey, 124 Cal.App.4^th 1506 (2004) and Lange v. Schilling, 163 Cal.App.4^th 1412 (2008). Below, we examine a recent unpublished decision on the subject, which buttresses our advice that you strictly comply with the mediation requirement when confronted with these types of fees clauses.

    In Byoun v. Padilla, Case No. B204850 (2d Dist., Div. 5 July 15, 2009) (unpublished), defendants eventually prevailed as a matter of law in a real estate dispute with plaintiffs where there was a purchase agreement with a mediation requirement in the attorney’s fees clause. Acting Presiding Justice Armstrong, on behalf of a 3-0 panel of the Second District, Division 5, affirmed a trial court’s refusal to award fees to defendants. The reason? The record showed that defendants did not cooperate in plaintiffs’ efforts to mediate the case—“although defendants agreed [to mediate], they did not take the steps necessary to ensure that the mediation actually took place. That is a refusal to mediate.” (Slip Opn., at p. 12.)

     Again, strictly comply with this provision or suffer the consequences!

Costs: If Not Allowed But If Not Prohibited, Trial Courts Can Discretionarily Award Costs If “Reasonably Necessary To The Conduct Of The Litigation”

Second District, Division 7 Clarifies Costs Discretionary “Safety Net.”

     Frequently, we have litigated cases where opponents or trial courts are disposed to fight award of routine costs unless they are expressly allowable under Code of Civil Procedure section 1033.5(a). Well, believe it or not, that is not quite right. The next case puts things in proper perspective.

     Philadelphia Indemnity Ins. v. Fire Ins. Exchange, Case No. B205732 (2d Dist., Div. 7 July 15, 2009) (unpublished) clarifies the scope of the routine cost statutory scheme. “When [CCP section 1033.5] subdivision (c) is read together with the rest of the statute, courts have concluded that if an expense is neither expressly allowable under subdivision (a) nor expressly prohibited under subdivision (b), it may nevertheless be recovered if, in the court’s discretion, it is ‘reasonably necessary to the conduct of the litigation rather than merely convenient or beneficial to its preparation.’ (Section 1033.5, subd. (c)(2); see also Science Applications International Corporation v. Superior Court (1995) 39 Cal.App.4^th 1095, 1103; Ladas v. California State Auto. Assn. (1993) 19 Cal.App.4^th 761, 774; Ripley v. Pappadopoulos (1994) 23 Cal.App.4^th 1616, 1622, 1623; Winston Square Homeowner’s Assn. v. Centex West, Inc. (1989) 213 Cal.App.3d 282, 293.)” (Slip Opn., at p. 25.)

     The Court of Appeal went on to affirm trial court determinations that ex parte application costs, counsel’s deposition travel time, and witness travel costs were justifiable costs to be awarded under the lower court’s discretionary subdivision (c) authority—which it labeled “a special statutory safety net.” (Slip Opn., at p. 29.)

Family Law Award: $50,000 Family Code Section 2030 Award Affirmed

Fourth District, Division 1 Discusses Broadness of 2030 Motion Procedure.

     The next case is not remarkable for affirming a “needs” award under Family Code section of $50,000 in wife’s favor. It is remarkable for showing the broad discretion and procedure that governs these awards by family law judges.

     In Marriage of Erwin-Rios and Rios, Case No. D052072 (4^th Dist., Div. 1 July 15, 2009) (unpublished), the appellate court observed:

• Section 2032 permits a trial court to award fees under section 2031 “without notice by an oral motion” at the time of a hearing of the cause on the merits (“[p]lainly, in light of the well-established power of a family law court to award attorney fees and the important role they play in assuring equal access to the parties, the Legislature has determined that parties have ample notice of their potential liability for reasonable attorney fees when they are given notice that a family law matter will be heard on the merits”);
• The court has power to impose additional fees than those requested if it determines that the adverse party failed to cooperate in family law proceedings (In re Marriage of Quay, 18 Cal.App.4^th 961, 970 (1993)); and
• The family law judge has discretion to create a “judicial lien” on community or separate property in order to secure payment of section 2030 fees (Family Code section 2032(c)).

Civil Code Section 1717 And Alter Ego Case: Litigant Beating Alter Ego Theory Entitled to Fee Award

Second District, Division 4 Affirms $20,000 Fees/Cost Award to Alter Ego Winner.

     In Legacy Construction and Development, Inc. v. De Francesca, Case No. B208851 (2d Dist., Div. 4 July 13, 2009) (unpublished), a defendant, following presentation of plaintiff’s declaratory relief case, obtained a ruling that he was not the alter ego of a separate corporation being sued in the case. Winning defendant was eventually awarded fees and costs of almost $20,000 under Civil Code section 1717 (based on a contract fees clause between Legacy and the separate defendant corporation).

     The Second District, Division 4 affirmed the award. Relying on Pueblo Radiology Medical Group, Inc. v. Gerlach, 163 Cal.App.4^th 826, 829 (2008) [reviewed in our June 5, 2008 post], the appellate panel found that defendant was a prevailing party notwithstanding that the plaintiff might obtain relief against other parties. The favorable alter ego finding did “end the case” against the one defendant who beat the alter ego exposure. Beyond that, the amount of the award was reasonable—winning defendant had asked for $42,130 in fees, but the trial court only awarded $19,150 (plus costs).

Requests For Admissions: Segregate Time And Apportion To RFA Denials … Or Bear The Consequences—No Fee Recovery

Fourth District, Division 1 Denies Fees Based on Lack of Apportionment.

     Here is a case with a pragmatic reminder for all litigators feeling they have a shot at recovering attorney’s fees under Code of Civil Procedure section 2033.420, the Discovery Act provision allowing a requesting party to recover attorney’s fees incurred in proving the truth of a matter denied by a responding party answering requests for admissions. The lesson is to heed the advice of the Rutter Group treatise writers in this area: segregate your time and expenses in order to prove the particular matters in dispute and your trial preparation time to recoup fees on those matters. (Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2007) para. 8:1415, p. 8G-41.)

     Failure to follow this practical advice cost defendant a chance for recoupment of substantial attorney’s fees after plaintiff lost her case through summary adjudication and a nonsuit. One defendant sought to recover $184,200 in attorney’s fees for plaintiff’s denial of certain RFAs. The trial court denied the request, finding defendant sought to recover for all work in the case rather than just time spent in proving the truth of the denied matters. The lower court concluded in part: “This motion is problematic because it is presented on an ‘all or nothing’ basis. The fees expended are not broken down as to the proof required for each asserted request for admission. Essentially, defendant argue[s] that the entire trial would have been unnecessary if plaintiffs would have responded to the requests for admissions in good faith. The sanction set forth in section 2033.420 was not intended to apply to an entire trial such that it acts as a pseudo sanction for malicious prosecution.”

     This determination was affirmed by the Fourth District, Division 1 in Kim v. Lee, Case No. D053890 (4^th Dist., Div. 1 July 13, 2009) (unpublished). Not only did plaintiff have reasonable grounds to believe they would prevail and thus had basis to deny some of the RFAs, the appellate court quoted the Rutter Group “segregation” advice and found that the failure to apportion time was fatal to the “all or nothing” request. “ . . . in light of the lack of specificity in [defendant’s] motion for attorney fees, the trial court had no way of determining which fees were recoverable and which were not recoverable Therefore, the trial court did not abuse its discretion in denying Lee’s motion in full.” (Slip Opn., pp. 15-16.)

Civil Code Section 1717 And Mediation Clause: Real Estate Buyer Losing Fraud Case Suffers $122,100 Adverse Fee Award

Second District, Division 6 Also Interprets Mediation Requirement in CAR Form Contract.

     Buyers sometimes get confused over their obligations under CAR real estate form contracts, especially the ones involving an award of attorney’s fees (which clauses have been held to reach fraud/nondisclosure claims). One of the most frequent causes of confusion is the mediation requirement. Buyer’s failure to satisfy her end of the mediation requirement, coupled with a loss of her suit based on the statute of limitations, was deadly as far as fee exposure was concerned.

     In Carradine v. Cowell, Case No. B210910 (2d Dist., Div. 6 July 13, 2009) (unpublished), residential real estate sellers prevailed after a court trial, with the judge determining that buyer’s fraud/nondisclosure suit was time barred. The trial court awarded sellers all of their attorney’s fees of $121,100 under a CAR fees clause with a mediation requirement. The award was affirmed by the Second District, Division 6, in a 3-0 opinion authored by Acting Presiding Justice Yegan.

     Buyer argued that sellers were ineligible for fee recovery under the CAR fees clause because they refused to mediate. However, buyer misread the clause—it required her to pursue mediation before resorting to court action, something she did not do. Buyer thereby waived enforcement of this provision. Beyond that, the award was hardly an abuse of discretion; after all, sellers incurred fees because buyer waited too long to file her lawsuit—“There is nothing arbitrary, capricious or irrational about requiring appellant to pay the full cost of her intransigence.”

Prevailing Party: Unsuccessful Injunctive Action Was Discrete Legal Proceeding Allowing For Award Of Civil Code Section 1717 Fees

First District, Division 4 Follow Acosta-Otay Line of Cases.

     There has been quite a splash of jurisprudence lately on the question of when a prevailing party can be adjudged in mixed legal-arbitration proceedings. The next case is the latest addition to the case law on this subject.

     In Turner v. Schultz, Case Nos. A121642, A121707 (1^st Dist., Div. 4 July 13, 2009) (certified for publication), the First District, Division 4—in a “close” case on the issue—decided that a trial court correctly awarded $82,280.78 in attorney’s fees to defendants that successfully beat plaintiff’s declaratory and injunctive relief efforts in court to forestall arbitration of a dispute between the parties based on a contractual fees clause covering legal actions. Plaintiff’s legal action was designed to stay arbitration, unlike other disparate legal proceedings to compel arbitration. However, the Court of Appeal followed Acosta v. Kerrigan, 150 Cal.App.4^th 1124, 1131-1132 (2007) and Otay River Constructors v. San Diego Expressway, 158 Cal.App.4^th 796, 996-998 (2008) over other cases, finding that there was a discrete legal proceeding where fees were warranted—“an independent complaint for declaratory and injunctive relief.”

     Even if plaintiff won future fees after prevailing in the arbitration, the legal action was separate and he lost his effort to forestall the arbitration. “It was [plaintiff] who initiated both actions [by first seeking arbitration and then commencing a court action claiming the entire agreement was void]; he must accept the consequences of forcing defendants to fight on two fronts.” (Slip Opn., p. 12.)

Attorney’s Fees In The News …. Bluetooth Settlement Update and Water Lawyer Fees For Some Orange County Water Districts

Bluetooth Settlement Approved, But More Information On Fees Requested From Plaintiffs’ Attorneys.

     In our June 7 , 2009 post, we described the pending class action settlement of a case that alleged Motorola, Plantronics, and GN Netcom failed to adequately warn Bluetooth owners about potential hearing losses from use of the devices.

     Earlier this month, U.S. Central California District Judge Dale S. Fischer approved a preliminary settlement in which Motorola and other defendants must pay $100,000 to four institutions related to hearing loss, defendants must post additional warnings on their websites and in their product manuals, and representative plaintiffs would be paid a $12,000 incentive award. However, plaintiffs’ attorneys—who sought to recover about $850,000 in fees and costs (out of a $1.6 million lodestar)—were ordered by District Judge Fischer to provide further information on their fee request. A further hearing will be heard either later in the summer or fall of this year. (Ted Frank of the AEI Legal Center for the Public Interest filed an objection to the settlement, including the fee request.)

     More information on this controversy can be found in Amanda Bronstad’s July 10, 2009 post at law.com.

What Some Orange County Water District Spend Annually in Attorney’s Fees.

     In a “Watchdog” article in the July 12, 2009 The Orange County Register, Teri Sforza does reveal what some Orange County water districts paid in attorney’s fees during 2008.

     Here is the tally: Moulton Niguel -- $300,000; Irvine Ranch -- $479,000; and Santa Margarita -- $82,000.

Attorney’s Fees In The News … Lenny Dykstra Bankruptcy Filings List Lawyer Debts And San Diego Attorney Wants Civil Rights Fee in Squaw Valley Furloughed Employee Benefits Brewing Dispute

Lenny Dykstra’s Legal Bills.

     Lenny “Nails” Dykstra filed for Chapter 11 bankruptcy protection in California last Tuesday, July 7, listing some pretty substantial fees owing to several law firms.

     The bankruptcy filings show he owes K&L Gates about $1.5 million in fees and owes a little over $342,000 to O’Melveny & Myers. (Mr. Dykstra told ESPN.com that he had already paid K&L Gates around $4 million in fees.)

     If you want more details on this bankruptcy filing, see Brian Baxter’s July 8, 2009 post, “The Bankruptcy Files: Up First, Lenny Dykstra’s Legal Bills,” at amlawdaily.com.

Nail.  Theodor Horydczak, photographer.   Library of Congress.

Civil Rights Claim Against Squaw Valley.

     San Diego attorney Alfred G. Rava has written a letter to Northern California’s Squaw Valley demanding that Squaw Valley discontinue discounts offered to furloughed state employees (those employees who have to take certain days off each month without pay because of the state budgetary crisis), pay each of his clients $4,049, and reimburse them $2,400 in attorney’s fees. Mr. Rava claims that the discounts violate state civil rights laws that carry fee-shifting provisions in favor of prevailing plaintiffs.

     Because many other business establishments throughout California have offered similar discounts, State Sen. Gloria Negrete McLeod (D-Chino) has authored a bill to legalize the discounts. The bill has been quickly endorsed by the Consumer Attorneys of California, a leading trial attorney trade group.

     For more on this one, see Patrick McGreevy’s July 8, 2009 article, “Lawyer targets resort that gave discounts to furloughed state workers,” available for reading at latimes.com.

Squaw Valley.  Dorothea Lange, photographer.  1939.  Library of Congress.

Trustees: You Can Rejoice …. Nonsanction Attorney’s Fees Should Be Awarded Against You In Representative (Not Personal) Capacities

 

Ninth Circuit So Holds In Arizona Case, But Relies on California Authorities.

     All of you trustees out there—whether in a probate or bankruptcy context—can breathe a little easier given the next holding from a recent Ninth Circuit case. Although involving Arizona substantive law, the Court of Appeals relied on analogous California authority so that it will have force in this state.

     In Biltmore Associates, LLC v. Twin City Fire Ins. Co., Case No. 06-16417 (9^th Cir. July 10, 2009) (for publication), a bankruptcy creditor’s committee hired Biltmore as its trustee, with bankruptcy court approval. In turn, Biltmore brought a nonbankruptcy civil action against certain insurance companies in Arizona. It lost, with a district court awarding $88,565.59 in favor of the insurers and against “Biltmore, as trustee” (based upon an Arizona fee-shifting statute similar to California Civil Code section 1717), albeit later denying a motion to bar execution against trustee’s own assets versus assets of the trust.

     Trustee appealed, and won an important clarification.

     The Ninth Circuit remanded to clarify that Biltmore was only liable as a representative of the trust, rather than being liable personally. It primarily relied on California Probate Code section 18001, which only makes a trustee personally liable with respect to ownership or control of trust property when the trustee did something by which he, she or it was personally at fault. The Court of Appeals also cited in support the California decision of Haskett v. Villas at Desert Falls, Inc., 108 Cal.Rptr.2d 888 (2001), which tracked the result reached by other decisions from outside California.

     Because the fee award was a “normal” cost award and not the product of any sanctionable conduct by trustee, Biltmore’s personal assets could not be touched for purposes of judgment satisfaction. Instead, insurers had to look for recovery from trust assets.

     So, trustees, rejoice! Rejoice!

Attorney's Fees In the News . . . . Lewis Brisbois Suffers $6 Million Malpractice Verdict When Trying To Collect $1 Million Receivable

Los Angeles County Jury Sides With Plaintiff.

     Lewis Brisbois Bisgaard & Smith was owed over $1 million by ReadyLink Healthcare, Inc., a nursing registry that provides hospital staffing, as a principal result of Lewis Brisbois' unsuccessful handling of a trade secret trial (as well as other matters) on ReadyLink's behalf. ReadyLink eventually sued for malpractice and breach of contract, claiming it was overbilled and that the trade secrets litigation was not handled well.

     Well, after a two month jury trial, the verdict is in. A Los Angeles County Superior Court jury awarded more than $6 million to ReadyLink.

     For more on the facts surrounding this verdict, see Amanda Becker's July 8, 2009 article "Lewis Brisbois Ordered to Pay $6 Million For Overbilling, Mishandling Four Cases" in The Los Angeles Daily Journal.

E-Discovery: Georgia Federal Court Orders Defendant To Reimburse Plaintiff $1,022,700 In Attorney's Fees And Costs As Discovery Sanction

District Court Opts for Sanctions Rather Than Entering Astronomical Default Judgment.

     This one certainly caught our eye and illustrates how e-discovery sanction can involve steep reimbursement of significant attorney's fees and costs.

     In Kipperman v. Onex Corp. (Kipperman II), 2009 U.S. Dist. LEXIS 44457 (N.D. Ga. May 26, 2009), a district judge found that defendants had engaged in a "textbook case of discovery abuse" by stonewalling its production of "hot" emails and leading the plaintiffs to believe that they were not relevant. Hardly the case, with the defense unilateral decisions being nixed by the district judge after finding that many of the emails "certainly are hot."

     The district judge then addressed the nature of the sanction to be imposed on the defense for discovery abuse. If he had struck the defendants' answer, it would have resulted in one of the largest default judgments in a case presenting novel issues. Instead of doing this, the district judge opted to order defendants to reimburse plaintiffs $1,022,700 in attorney's fees and costs as a discovery sanction. This lesser sanction was imposed because the defense did eventually produce the documents and supplemental discovery follow-up could cure any prejudice.

                              "Broadaxe".  From Wikipedia article.

Attorney’s Fees In the News . . . . Santa Barbara County Supervisor Doreen Farr Loses Bid For Attorney’s Fees Award From Superior Court

She Vows to Appeal the Fee Denial.

     Third District Santa Barbara County Supervisor Doreen Farr was declared the winner over Steve Pappas, her opponent in last year’s supervisorial race, by 806 votes. Mr. Pappas filed suit to unseat Ms. Farr, but the challenge failed to disqualify allegedly fraudulent votes cast in the November 4, 2008 runoff.

     Ms. Farr then sought to recoup $250,000 in attorney’s fees that she contended were spent by her in the unsuccessful challenge under California’s election law.

     On July 6, 2009, Santa Barbara County Superior Court Judge William McLafferty denied the fee request. In a July 7, 2009 article “Judge denies Farr’s motion” written by Samantha Yale Scroggin of The Santa Maria Times, Ms. Farr was quoted as saying, “We are planning to appeal, and we’ll see how that goes.”

     BLOG UNDERVIEW—Talk about appeals, co-contributor Mike had the opportunity yesterday to do his first appellate argument before the Second District, Division Six Court of Appeal, based in Ventura, CA. He found that the panel of jurists—Justices Gilbert, Yegan, Perren, and Coffee—to be well prepared and very interactive on the cases that were on calendar.

FOIA: No Fees Recoverable Where Documents Voluntarily Turned Over Before 2007 Amendments

Ninth Circuit Determines 2007 Catalyst Amendments Are Not Retroactive in Nature.

     Under the Freedom of Information Act, 5 U.S.C. § 552, a complainant in a FOIA action is deemed to be eligible for an award of attorney's fees if he has "substantially prevailed" on his claim. 5 U.S.C. § 552(a)(4)(E) (prior to 2007 amendments). However, under 2007 amendments, FOIA was modified to delineate that a complainant has "substantially prevailed" if the complainant has obtained relief through "either (i) a judicial order, or an enforceable written agreement or consent decree, or (ii) a voluntary or unilateral change in position by the agency, if the complainant's claim is not insubstantial." 5 U.S.C. § 552(a)(4)(E)(i) & (ii). (The (ii) prong is also known as the catalyst theory of recovery.)

     In Oregon Natural Desert Assn. v. Locke, Case No. 06-35851 (9^th Cir. July 8, 2009) (for publication), the Ninth Circuit decided that the FOIA 2007 amendments were not retroactive in nature and that the catalyst theory did not allow recovery for pre-2007 voluntary turnovers of documents by an agency in a FOIA case. As a result, an attorney's fees award of $46,889.02 to an FOIA complainant had to be reversed and remanded for purposes of striking portions of the award that represented catalyst theory recovery.

Civil Code Section 1717: Bankruptcy Related Actions Were Recoverable By Successful Lender

Fourth District, Division 1 Finds No Basis To Assess Fees Against Nonsignatory Individual Principal In the Absence of an Alter Ego Finding.

     In New Century Corporation v. Positive Investments, Inc., Case No. ECU03797 (4^th Dist., Div. 1 July 8, 2009) (unpublished), lender was awarded attorney's fees of $83,329 under an attorney's fees clause of a loan agreement (out of a requested $114,339.77 in fees) against a defaulting borrower who fraudulently quitclaimed to a new entity and then filed serial bankruptcies forcing lender to take bankruptcy actions that eventually resulted in dismissal of the bankruptcy cases. (The bankruptcy judge ordered sanctions against the fraudulent transferee, transferee's principal Mr. Lo, and transferee's bankruptcy counsel.) However, the trial court refused to award fees against Mr. Lo, who was not a signatory to the loan agreement (being only the principal of the borrower signatory). Borrower appealed, and lender cross-appealed.

FLSA: Expert Witness Fees Not Recoverable As Attorney's Fees Or Costs

Nontestimonial Expert Costs Cannot Be Recouped Under FLSA.

     A colleague that co-contributor Mike worked with at a past law firm called and asked if expert witness fees for nontestimonial work were recoverable by a plaintiff in an action brought under the Fair Labor Standards Act of 1938 (FLSA), given that 29 U.S.C. § 216(b) provides that a prevailing plaintiff may be reimbursed for "a reasonable attorney's fees … and costs of the action."

     The answer appears to be "no."

Discovery Sanctions: Fifth District Reverses $1,190 Sanctions Award Against Plaintiff When Trial Court Granted Reconsideration On Tardy Expert Witness Augmentation

Fifth District Found That Absence of Sanctions Request in Motion for Reconsideration Meant the Award Violated Due Process.

     Frequently, we have discussed sanctions awards that are vacated because they do not comply with due process. Here is another one, occurring in connection with a successful defense reconsideration motion regarding a tardy expert witness augmentation.

     In Vargas v. Bakersfield Ranch Market, Case No. F055788 (5^th Dist. July 6, 2009) (unpublished), plaintiff moved to augment her expert witness designation to name a new expert. Defendant opposed the motion and requested sanctions in its opposition, with the trial court granting the motion and denying the sanctions request. Because of scheduling issues that prevented the newly designated expert from being available for a deposition before the deadline set forth in the augmentation order, the defendant moved for reconsideration (but made no request for sanctions). The lower court granted the reconsideration motion, striking the augmented expert designation and imposed sanctions of $1,190 against plaintiff and her counsel. (The $1,190 apparently was an award of attorney's fees to defense counsel.) Plaintiff moved for reconsideration of the sanctions award, which was denied. Plaintiff appealed, claiming the award was made without notice, in violation of due process.

     The Fifth District, in a 3-0 opinion authored by Justice Hill, agreed.

                                  Lack of Due Process

Class Action: Settlement Order Vacated in Wage/Hour Class Action Settlement, Including Cost Award

Second District, Division 8 Finds That Class Notice Capping Costs Would Not Allow For Higher Settlement Costs Award.

     In Clark v. American Residential Services LLC, Case No. B203476 (2d Dist., Div. 8 July 6, 2009) (certified for publication), a trial court approved a wage/hour class action settlement for a total of $2 million, inclusive of attorney's fees and costs. The settlement provided for incentive awards of $25,000 to each of the two named putative class representative, with the other 2,360 class members receiving an average payment of $561.44. The settlement approved by the lower court also awarded $600,000 as attorney's fees as well as total litigation costs and claims administrator fees of $44,574.27. Earlier, a class notice had gone out to class members about the proposed settlement stating that plaintiffs' counsel would request reimbursements "of costs of up to $40,000." Some objectors appealed, arguing that the costs had been capped..

     Their appeal was successful.

[See below:  Hill's Genuine Magnetic Anti-Headache Cap - A Boon  to All Brain Workers.   c1880-1910.  Library of Congress.] 

Attorney's Fees In the News … Great Park Reversal May Mean $80,000 Fee Exposure And Nixon Author Loses Bid For Freedom Of Information Act Fees Under 2007 Revisions

Great Park Fee Exposure.

     In one of our July 1, 2009 posts, we reported on two minority director's reversal of a trial court decision denying them an award of attorney's fees under California's private attorney general statute with respect to a dispute involving the Great Park Corporation (tasked with coordinating development of the "Great Park" at the former El Toro air force base).

     Now, a recent article suggests that the Great Park Corporation may face fee exposure as high as $80,000 from this loss. Ben Pugh, who represented the victorious directors, claims the appellate decision vindicates the necessity and value of the litigation his clients pursued.

     For more details, see Sean Emery's story "Great Park will pay up to $80,000 in attorney's fees," in the June 30, 2009 edition of ocregister.com.

Nixon Author FOIA Loss.

     Author Anthony Summers lost an appeal of a decision denying him an award of attorney's fees under the federal Freedom of Information Act for seeking FBI records in connection with a book he is writing on former President Richard Nixon.

     The District of Columbia Circuit decided Mr. Summers did not "prevail" in his FOIA action. Mr. Summers argued that 2007 amendments to the FOIA, which states that a plaintiff "substantially prevails" if a federal agency changes its position on access, retroactively applied to his 2005 settlement by which the FBI offered up three names from a document in exchange for a voluntary dismissal of the suit and stipulation that the disclosure was not an admission of Mr. Summers' success. However, the federal court of appeals found that Congress did not intend the 2007 revisions to apply retroactively such that Mr. Summers could not expose the government to increased liability for past conduct.

Discovery: Governor Schwarzenegger Signs New E-Discovery Rules Into Law

Rules Go Into Effect Immediately.

     Because discovery disputes can carry monetary sanctions (including attorney’s fees), we alert readers to the fact that effective June 29, 2009, California has new statutory provisions relating to electronic discovery. Assembly Bill No. 5 adds Code of Civil Procedure sections 1985.8 and 2031.285 as well as amends sections 2016.020, 2031.010, 2031.020, 2031.030, 2031.040, 2031.050, 2031.060, 2031.210, 2031.220, 2031.230, 2031.240, 2031.250, 2031.260 2031.270, 2031.280, 2031.290, 2031.300, 2031.310, and 2031.320.

CCP 1021.5: RiverWatch Decision Is Published

Fourth District, Division 1 Decision Is Now Citable.

     In our June 15, 2009 post, we discussed RiverWatch v. County of San Diego Dept. of Environmental Health, where the Fourth District, Division 1 Court of Appeal affirmed a $239,620 attorney’s fees award under Code of Civil Procedure section 1021.5.

     On July 2, 2009, the appellate court certified the opinion for publication. It is now citable!

Costs: Cost Award Affirmed Against Unsuccessful Party Where Initial Judgment Not Properly Served, Meaning Winner Had 180 Days To File Costs Memorandum

First District, Division 4 So Rules Based on Inadequate Appellate Record

     Many times before, we have counseled that an adequate appellate record is vital when seeking review of a lower court order/judgment by any federal or state reviewing court. That counseling was ignored in the next case, which means the appealing party was doomed.

     In Tolbert v. Hines, Case No. 123221 (1^st Dist., Div. 4 July 2, 2009) (unpublished), plaintiff was defensed in a construction defect case. The trial court awarded prevailing defendant routine costs of $4,798.96.

     Plaintiff appealed the costs award, but was repulsed based mainly on an inadequate record.

We Wish our Readers a Happy and Safe 4th of July

"Boo To Billable Hours" Available On-Line

 

From Innovation to Albatross.

     Our readers will know from our posts (January 7, 2009, February 1, 2009) that the concept of the billable hour is under attack by some lawyers and clients.  Fellow blawger, attorney John Derrick, has written an interesting book entitled "Boo to Billable Hours."   He has traced the history of the billable hour from the early 20th century, when it was initiated by the legal reformer Reginald Heber Smith, to its presented contested status.  Along the way, John Derrick asks what is wrong with the billable hour, why there is so much inertia to change, and whether there are better alternatives -- and he has constructive suggestions.  The book can be purchased from Amazon, or viewed on-line for free.  Check it out.

Civil Code Section 1717: Court Of Appeal Sustains $15,000 Fee Award For $37,000 Rental Delinquency Case

Fourth District, Division 2 Rebuffs Request for Over $40,000 in Fees.

     Plaintiff landlord sued and ultimately recovered $37,420 in delinquent rent (plus $10,295.96 in interest) from former tenants who had abandoned commercial premises being rented in the past. Landlord won a prior judicial arbitration, being awarded $13,622 in fees and costs. However, when landlord sought to recoup almost $41,000 in fees for prevailing under a rental agreement fees clause after winning the superior court trial, the trial court only awarded $695 in costs and $15,000 in fees.

     Appealing landlord did not convince the Fourth District, Division 2 that the trial judge abused its discretion in awarding fees lower than it desired.

     In Rudh v. Baez, Case No. E046287 (4^th Dist., Div. 2 July 1, 2009) (unpublished), the Court of Appeal found no basis to overturn the trial court's decision.