CALIFORNIA ATTORNEY'S FEES

Off Topic: Judicial Council Of California Releases Statistics Report For 2007-2008 Fiscal Year

 

Fast Track is Working, Jury Trials are Few for 2007-2008 FY, and Class Actions Have Increased Between 2000-2006.

     The “2009 Court Statistics Report” is available for reading from the Judicial Council of California, containing interesting statistics for all levels of the California judiciary for the fiscal year 2007-2008 time frame. It is available for reading at www.courtinfo.ca.gov/reference/3_stats.htm.

     Here are the highlights, divided by court level.

     California Supreme Court:

• For civil appeal and civil writ matters, it granted 5% of petitions for review.
• It ordered 14 Court of Appeal decisions depublished (compared to a high of 141 in 1988-1989).

     Courts of Appeal:

• Of 11,191 dispositions of appeals by written opinions, 9,470 were affirmed, 1,099 were reversed, and 311 were dismissed.
• Statewide, 9% of Court of Appeal majority opinions were published.
• The statewide median time from appeal to filing of opinion for civil appeals was 448 days.
• With respect to civil appeals, 68% were affirmed, 11% were affirmed with modification(s), 18% were reversed, and 3% were dismissed.

     Superior Courts:

• For unlimited civil matter dispositions, 70% were disposed of within 12 months, 86% within 18 months, and 93% within 24 months.
• For limited civil matter dispositions, 94% were disposed of within 12 months, 97% within 18 months, and 98% within 24 months.
• With respect to trials for all civil matters, only .1% involved juries, while 14.8% involved court (bench) trials.

     In a separate study for the 2000-2006 time frame, the Judicial Council disclosed that class action filings increased 63.3% while total filings dropped 17.8%. Employment cases were the most frequently filed class actions, representing 29.3% of the total. They also were the matters most frequently certified as class actions.

Probate: Court Of Appeal Reverses $5.2 Million Fee Awards To Former Trustee And His Attorneys in Beneficiary Self-Dealing/Conflict Litigation

Fourth District, Division 3 Finds That Fee Recordkeeping and Trust Litigation Expenses Must Be Scrutinzed Closely to Determine if Fees Were Reasonable and Appropriate From a Trust Benefitting Perspective.

     Donahue v. Donahue, Case Nos. G040628/G041503 (4^th Dist., Div. 3 Feb. 24, 2010) (certified for publication), is sure to be a widely cited opinion when it comes to adjudging the reasonableness of attorney’s fees requested by a trustee in trust litigation. It is a recent 3-0 decision authored by Justice Aronson of our local Court of Appeal.

E-Discovery: U.S. District Judge Scheindlin Comes Out With New E-Discovery Decision

Decision Revisits State of E-Discovery Six Years After Zubulake.

     At both the federal and state levels of litigation, e-discovery is an expensive process fraught with onerous obligations by the responding litigants and their attorneys. Obviously, failure to preserve, collect and store documents can harm the integrity of the judicial process. As a result, the judiciary has indicated that a broad range of remedies, including orders granting further discovery, cost-shifting (usually awards of substantial attorney’s fees and forensic document expert costs), fines, special jury instructions, evidentiary preclusion, and the entry of a default judgment/dismissal, may be in order depending on the circumstances.

     Must reading for all litigators and in-house counsel is U.S. District Judge Shira A. Scheindlin’s recent decision in The Pension Comm. of the University of Montreal Pension Plan v. Banc of America Securities, LLC, Case No. 05 Civ. 9016 (SAS) (S.D.N.Y.), Opinion and Order filed January 11, 2010. District Judge Scheindlin is the author of prior groundbreaking e-discovery decisions in Zubulake. In her recent decision, District Judge Scheindlin revisits Zubulake and provides a detailed methodology for adjudication of culpability and imposing appropriate remedies for e-discovery transgressions.

     Although we cannot do justice to all aspects of this decision, here is a quick summary of nuggets distilled from reading this new opinion:

• Definitely after July 2004 (when the final relevant Zubulake opinion was issued), the failure to issue a written litigation hold constitutes gross negligence because that failure is likely to result in the destruction of relevant information;
• After July 2004, the failure to collect records—either paper or electronic—from key players constitutes gross negligence or willfulness as does the destruction of email or backup tapes after the duty to preserve has attached (which arises when a party reasonably anticipates litigation);
• The innocent party in an e-discovery dispute must prove the following three elements: that the spoliating party (1) had control over the evidence and an obligation to preserve it at the time of destruction or loss; (2) acted with a culpable state of mind upon destroying or losing the evidence; and that (3) the missing evidence is relevant to the innocent party’s claim or defense;
• When the spoliating party’s conduct is sufficiently egregious to justify a court’s imposition of a presumption of relevance and prejudice, or when the spoliating party’s conduct warrants permitting the jury to make such a presumption, the burden then shifts to the spoliating party to rebut that presumption;
• A court should always impose the least harsh sanction that can provide an adequate remedy, with the selection of an appropriate remedy constituting a delicate matter that requires a great deal of time and attention by a court;
• Monetary sanctions are appropriate for punishment and for deterrence; and
• Counsel must direct employees to preserve all relevant records—both paper and electronic—after a duty to preserve attaches, as well as help create a mechanism for collecting the preserved records so that they can be searched by someone other than the employee preserving all relevant records.

     Many of the defendants in this recent decision were found to have been grossly negligent with respect to e-discovery, justifying an adverse jury instruction and monetary sanctions in the form of reasonable costs, including attorney’s fees, associated with reviewing the spoliating parties’ compliance declarations, deposing the declarants, and bringing the e-discovery sanctions motions before the court.

Time lapse tea cup

                   Spoliation.                        

Special Fee Shifting Statute: City of East Palo Alto Dodges Second Hefty Fee Award

First District, Division 5 Reverses Fee Award Based on Woodland Park Decision.

     In our February 2, 2010 post on Woodland Park Management, LLC v. City of East Palo Alto Rent Stabilization Bd., 181 Cal.App.4^th 915 (2010), we reviewed a decision reversing a fee award against the City of East Palo Alto under the Rent Stabilization and Eviction for Good Cause Ordinance (RSO).

     The City apparently appealed another adverse fee award of $472,061.90 based upon certain provisions of the RSO. The First District, Division 5, in Page Mill Management, LLC v. City of East Palo Alto, Case No. A125659 (1^st Dist., Div. 5 Feb. 26, 2010) (unpublished), reversed in a memorandum opinion for the same reasons stated in Woodland Park.

    Bettie Page v. City of East Palo Alto.

Section 1717: No Error In Awarding Fees Jointly and Severally Against Two Companies Where Property Seller Remained In Unlawful Detainer Action

Fourth District, Division 3 Finds Nothing Wrong With “Joint and Several” Judgment.

     Plaintiff sold its property and assigned its rights under a lease with a particular tenant to another company becoming a co-plaintiff in an unlawful detainer action eventually won by defendant tenant. There was a fees clause, with the lower court awarding over $46,000 in attorney’s fees “jointly and severally” against both plaintiffs under Civil Code section 1717.

     Plaintiff property seller appealed, arguing that it had sold the property such that it was not a rightful party to the unlawful detainer proceeding.

     Wrong, said the Fourth District, Division 3 in Generation III Investments, LLC v. R&R Corp., Case No. G041988 (4^th Dist., Div. 3 Feb. 25, 2010) (unpublished), a 3-0 decision authored by Justice Rylaarsdam.

     The lower court’s “joint and several” award was proper because plaintiff seller initiated the U.D. suit, remained a plaintiff after conveying the property to buyer, and had judgment entered against it as well as buyer. Because plaintiff buyer stayed in the action, it was a losing plaintiff that was subject to an adverse award of costs and fees.

SLAPP: Individual Attorney, Claiming To Be In-House With Other Defendant Firms But Protecting His Interest in Other Firms, Not Entitled To Fee Recovery Under SLAPP Fee-Shifting Statute

Second District, Division 4 Agrees that Attorney Representing His Own Interests Cannot Recoup SLAPP Fees.

     Attorneys representing themselves in successful anti-SLAPP motions are not entitled to recover attorney’s fees because there are no attorney-client relationships that lead to the attorney paying or becoming liable to pay in consideration for the legal representation. (Taheri Law Group v. Evans, 160 Cal.App.4^th 482, 495 (2008); Ramona Unified School Dist. v. Tsiknas, 135 Cal.App.4^th 510, 524 (2005).) However, what happens when the winning attorney claims to have acted in an in-house capacity for two affiliated defendant firms in which he is a member?

     The Second District, Division 4, in Bergeron v. Dion-Kindem, Case No. B210384 (2d Dist., Div. 4 Feb. 25, 2010) (unpublished), did not accept this distinction as getting around the general rules discussed above.

     Although attorney’s fees can be awarded to in-house counsel under some situations, the individual attorney in the case before it was representing his own personal interests such that it was unclear that one of the affililated firm was liable to attorney for services actually rendered. Because another of the defendant affiliated firms had been sued and the individual attorney was a member of that affiliate, the general rule prevailed rather than a different rule that might apply if other attorneys having no stake in the firm rendered the services. (Witte v. Kaufman, 141 Cal.App.4^th 1201, 1207 (2006); Gilbert v. Master Washer & Stamping Co., 87 Cal.App.4^th 212 (2001).) The lower court correctly refused to even decide the fee requests by the winning attorney.

Judgment Enforcement: Judgment Debtor Entitled To Fees And Statutory Penalty Where Faxed Demand For Satisfaction Acknowledgment Was Received

Fourth District, Division 3 Found Fee Recovery Justified Even Though Satisfaction Demand Not Delivered Per Statute.

     Code of Civil Procedure section 724.050 provides the exclusive procedure for compelling an acknowledgment of satisfaction of judgment, requiring the party demanding the acknowledgment to deliver its demand with certain warnings either personally or by U.S. mail. A statutory penalty (section 724.050(e)) and mandatory attorney’s fees to the prevailing party (section 724.080) can be awarded in satisfaction demand disputes.

     So, what happens if the judgment debtor delivers the satisfaction demand by fax and it is actually received? Is the failure to strictly comply with statutory delivery requirements fatal to receiving the penalty and fees?

     No, said the Fourth District, Division 3 in Western Ethanol Co. v. Midwest Renewable Energy, Case No. G041841 (4^th Dist., Div. 3 Feb. 24, 2010) (unpublished), a 3-0 decision authored by Justice Bedsworth.

     The appellate court found that judgment creditor had actually received the satisfaction demand such that the fax delivery (versus personal or U.S. mail delivery) was not prejudicial in nature. There could be no confusion because section 724.050(c) provides that the 15-day deadline for satisfaction demand compliance runs from “actual receipt of the demand,” and judgment creditor did not deny that it received the demand. The Court of Appeal affirmed a lower court’s award of $7,400 in fees and $350 in penalties to the judgment debtor requesting the satisfaction acknowledgment (and all this over satisfaction of a principal judgment of $45,165.39).

     The decision also has a nice discussion of “accord and satisfaction” principles in the context of a potential future appeal and retention of an uncashed check by the judgment creditor for an unreasonable length of time.

     BLOG FAVORITE QUOTE—In discussing one of appellant’s technical arguments on appeal and an objection to the form (rather than substance) of respondent’s compliance, Justice Bedsworth summarized the challenge this way: “In effect, [appellant] is asserting [respondent] failed to say “Mother may I.’”

FEHA Award: Court Of Appeal Affirms $84,000 Fee Award Out Of Requested $686,290.50

Plaintiff Only Won $55,000 Jury Verdict Plus $18,000 in Costs.

     Although awards to winning plaintiffs under the California Fair Employment and Housing Act are encouraged, they must be reasonable in amount. Otherwise, the trial court has broad discretion to deny them in entirety or substantially chop them down from their higher requests. The next case is an excellent illustration of a situation where an appellate court affirmed a lower court’s determination that a large reduction was in order before awarding fees to a FEHA plaintiff’s attorneys.

     Jimenez v. Too Fast, Inc., Case No. B212231 (2d Dist., Div. 1 Feb. 26, 2010) (unpublished) involved a situation where plaintiff suing under FEHA obtained a jury verdict of $55,000 plus costs of $18,000 even though seeking damages in the $275,000-$775,000 range. Plaintiff’s two set of attorneys sought $686,290.50 in fees, based on a claimed 872.8 total hours spent by the two attorneys and a paralegal (factoring in a 1.75 multiplier, based on attorney hourly rates of $475/$500 and the paralegal’s hourly rate of $115). One of the attorneys requested $42,560 (based on 89.6 hours) for preparing the fee motion.

     The trial court, who felt that the jury could have defensed the matter, believed the fee request was unreasonable and inflated in nature, awarding plaintiff $84,000 in fees based on 240 hours multiplied by $350, rejecting a multiplier, and determining that both attorneys would have to divide up respective fees from the total amount awarded. The lower court found the trial did not take even 20 hours of jury time, there were no expert witnesses, and the case was not complicated.

     The Second District, Division 1 affirmed.

     Only hours reasonably spent are subject to compensation under the FEHA fee-shifting statute. (Horsford v. Board of Trustees of California State University, 132 Cal.App.4^th 359, 394 (2005).) The recent state supreme court case of Chavez v. City of Los Angeles, 47 Cal.4^th 970, 990-991 (2010) recognized that a trial court does not abuse its discretion in denying fees altogether in a FEHA case where the fee request is unreasonably inflated. In Jimenez, the trial court obviously felt the fee request was unreasonably inflated and indicated it was being generous in awarding what it did. Given that the fees could have been denied altogether, the substantial reduction was not an abuse of discretion under the circumstances.

Social Security: U.S. Supreme Court Appears To Be Leaning To The View That Fee Awards Are Clients’ Property Subject to Governmental Offsetting

High Court Recently Hears Arguments in Astrue v. Ratliff.

    In our October 1, 2009 post, we reported that the U.S. Supreme Court had accepted review of Astrue v. Ratliff, an Eighth Circuit decision. The issue for consideration was whether Social Security disability fee awards belong to clients, rather than their attorneys, so as to be subject to offsets for payment of debts owed to the government by clients.

     Marcia Coyle, in her February 23, 2010 article “High Justices May Favor Clients Over Lawyers in Fee Shift Dispute” posted on The National Law Journal website, suggests that the majority of justices seemed to lean in favor of the position that the fee awards belong to the client in recent oral arguments in Astrue v. Ratliff. For example, Justice Ruth Bader Ginsburg appeared skeptical that attorneys could reap the benefit of the fee awards because, unlike other federal statutes, the Equal Access to Justice Act does not exempt fee payments from being subject to offsets. Stay tuned, it is likely that a decision will be rendered before the end of this year.

Family Law Award: $35,000 Fee Award Challenge Waived By Only Supporting It In Appellate Reply Brief

Another Good Appellate Reminder from the Second District, Division 6.

     Husband wanted to challenge a $35,000 attorney’s fees award under Family Code section 2030 to wife on appeal. However, he failed to provide any supporting argument or citation to authority in his opening brief. He waited until the reply brief to do so. Too late, said Presiding Justice Gilbert in a 3-0 panel decision in Marriage of McClellan and Noe, Case No. B213787 (2d Dist., Div. 6 Feb. 24, 2010) (unpublished). Points raised for the first time in reply briefs were not considered by the appellate panel. (Scott v. CIBA Vision Corp., 38 Cal.App.4^th 307, 322 (1995).)

Private Attorney General Fee Award: $423,975 Award In First Impression Case Of Difficulty Affirmed

 

First District, Division 1 Rejects State’s Challenges to Amount of Fee Award.

     In an earlier appeal, certain plaintiffs successfully enjoined enforcement of certain legislation allowing for incarceration for drug-related probations violations because such a sanction was inconsistent with Proposition 36 (the Substance Abuse and Crime Prevention Act of 2000). Plaintiffs also successfully defended this result in a prior appellate proceeding. Subsequently, the lower court awarded them $423,975 in attorney’s fees (the full requested lodestar of $233,777.50 plus $14,868 for work on the fee motion, enhanced by a 1.75 multiplier) under California’s private attorney general statute (Code of Civil Procedure section 1021.5).

     State defendants appealed only the amount of the fee award in Gardner v. Schwarzenegger, Case No. A125000 (1^st Dist., Div. 1 Feb. 22, 2010) (unpublished). Defendants were not successful, with the full fee award being affirmed on appeal.

     With respect to the awarded lodestar, the Court of Appeal found that the hourly rates—ranging from $195 for paralegals to $640 for the lead attorney plus $590 per hour for the attorney working on the fee motion—were consistent with the market rate for San Francisco attorneys with comparable skill and experience. The opinion has a nice discussion of cases where other hourly rates were pegged in lodestar cases, but the appellate panel here found that the distinguishing factor was that the case before it involved first impression, difficult public interest issues justifying the higher rates.

     Plaintiffs had asked for a multiplier of 2.5, but the lower court found a 1.75 enhancement was appropriate. Defendants challenged that determination also. However, the lower court had carefully determined that the contingent risk factor justified the award, because society cannot expect skilled hourly attorneys to give up hourly work for risk-laden public interest work without some incentive for doing so. Nonetheless, some decrease in the requested multiplier was correct given the financial crisis facing California, with the lower court properly giving some weight to this factor. In fact, a multiplier may be based on a single relevant factor—in this case, risk. (Krumme v. Mercury Ins. Co., 123 Cal.App.4^th 924, 947 (2004).)

     Finally, even though some county officials were involved initially in the suit, no apportionment of fees was necessary between the state and county because the county officials did not really enter into the interpretative fray about the statute and Proposition 36.

Opium Den.  1909.  Library of Congress.

Family Law: Affirmance Of Fee Awards Offers Some Sound Reminders On Appellate Practice

Sixth District Especially Stresses Rules Relating to Appellate Appendices.

     Marriage of Thesing, Case No. H034272 (6^th Dist. Feb. 22, 2010) (unpublished) was an appellate decision affirming family law fee awards of $90,000 in favor of wife. Many of the grounds sustaining the fee awards have been reviewed before—failure to timely appeal, failure to specify the order being appealed, or failure to provide a full reporter’s transcript of oral hearings in order to demonstrate an abuse of discretion.

     Nothing new—hardly!

     The Sixth District presented a virtual dissertation on what appellate attorneys or litigants must remember to do in order to present an adequate appendix on appeal (rather than a clerk’s transcript). Here are the reminders from this decision:

• Include a copy of the register of actions (CRC rules 8.124(b)(1)(A); 8.122(b)(1)(F));
• Arrange the contents of the appendix in chronological order and include both chronological and alphabetical indices at the front of the appendix (CRC, rules 8.124(d)(1), 8.144(a)(1)(C), 8.144(b));
• Include only accurate copies of documents filed in the superior court (CRC, rule 8.124(g));
• Do not include documents unnecessary for proper consideration of issues raised on appeal, such as documents filed after the order being appealed from in the case (CRC, rule 8.124(b)(2)); and
• Include necessary documents, such as the appealable order, notices of entry of the appealable order, and any notices of reconsideration motions (CRC, rules 8.122(b)(1)(C), 8.124(b)(1)(A), 8.122(b)(1)(D), 8.124(b)(1)(A)).

     Although not imposing sanctions for these deficiencies in the particular cause before it, the Court did say this: “[W]e impress upon the parties and their counsel the importance of proper record preparation and admonish them to familiarize themselves with the rules governing record preparation prior to any future appeals.” (Slip Opn., p. 16.) This admonition should serve as warning for all of our readers who practice in front of California’s appellate courts! Beware!

“Sailors Beware.”  Fine Arts Building, San Diego.  May 1941.  Lee Russell, photographer.  Library of Congress.

SLAPP: Reversal of SLAPP Grant On Two Out Of Four Claims Required Reconsideration of Fee Award

First District, Division 1 Does Reject That Insurance Defense Counsel Cannot Seek Fee Recovery.

     In Roeder v. Gardner, Case No. A123864 (1^st Dist., Div. 1 Feb. 22, 2010) (unpublished), defendant—through insurance defense counsel—obtained an anti-SLAPP strike of four causes of action out of eight. The trial court awarded $9,325 in mandatory attorney’s fees and costs.

     Plaintiff appealed and obtained a reversal of the SLAPP grant on two of the four claims. This necessitated a reversal and reconsideration of the fee award given that SLAPP fee recovery is determined by the significance of the overall relief obtained by defendant—something that might change in light of the reversal of the result on two counts. (Mann v. Quality Old Time Service, Inc., 139 Cal.App.4^th 328, 344 (2006).)    

     However, the Court of Appeal did reject the argument that SLAPP fee recovery was improper because defendant was not liable for fees because his counsel was being covered by an insurance carrier. Relying primarily on Rosenaur v. Scherer, 88 Cal.App.4^th 260, 282-287 (1997), the appellate panel rejected this argument, finding that fees still “accrued” even in analogous situations where defendants were represented on a partial pro bono basis or by counsel looking to outside sources for fee payment.

In The News . . . . Class Action Attorneys For Black Farmers May Get A Substantial Fee Recovery

$1.25 Billion Settlement Yields Potential Fee Recovery of 4 to 7 %

     The U.S. Government announced a tentative $1.25 billion ($1,250,000,000) settlement to resolve a racial discrimination action by black farmers who were denied access to USDA loan programs and denied participation in an earlier class action settlement. Although still subject to congressional authorization by March 31, 2010, the attorney’s fees recovery in this suit—if authorized—is not bad at all: somewhere between 4-7% of the potential recovery, which translates to a range of $49-89 million for the class action attorneys.

     For more on this story, see the article entitled “Government Announces $1.25 Billion Settlement in Black Farmers Litigation,” posted February 18, 2010 at The Blog of Legal Times.

  Farmers at soil conservation meeting, Vernon, Oklahoma, February 1940.  Lee Russell, photographer.  Library of Congress.

Arbitration: $12.3 Million Compensatory Award And $6.7 Million in Fees, Costs, And Interest Additional Award Affirmed On Appeal

Second District, Division 8 Does Find Procedural Issue Might Deserve Supreme Court Review, But Affirms Merits Awards.

     In Oaktree Capital Management, L.P. v. Bernard, Case No. B207865 (2d Dist., Div. 8 Feb. 22, 2010) (certified for publication), arbitration awards of $12.3 million for lost management fees and $6.7 million in attorney’s fees, costs, and interest were sustained on appeal.

     The appellate court found that defendant’s response to a petition to confirm the award—with a short-fused 10-day deadline—was timely, although noting the muddled state of the law when squaring this short deadline with the 100 day deadline for filing a petition to vacate. “We believe the time may have come for our Supreme Court to provide definitive guidance on the time deadlines a party who seeks to vacate an arbitration award faces when the prevailing party in an arbitration has filed a petition to confirm the award.” (Slip Opn., p. 8.) However, the Court of Appeal did find that the response by defendant was timely.

     However, that was hardly the end of the analysis. Because neither legal error nor merits flaws are usually reviewable when it comes to arbitration awards, the appellate panel found Moncharsh’s rule applicable, especially since the parties did not provide that legal errors were reviewable in court and further specified that the arbitrator’s decision was binding in nature.

Civil Rights: EEOC Stung With $4,560,285.11 Fee/Costs Award In Title VII Section Suit Found To Be Groundless By Iowa U.S. District Judge

Court Discusses Substantive Fee Shifting Statute, Lodestar Factors, and Non-Cost Expense Reimbursement Issues in Recent Decision.

      EEOC v. Boot, Case No. 07-CV-95-LLR (N.D. Iowa Feb. 9, 2010 Order), is an unusual decision where a United States district judge awarded $4,560,285.11 in fees and costs (broken down as $4,004,371.65 in fees, $463,071.25 in “non-cost” out-of-pocket expenses also awardable as fees, and $92,842.21 in routine costs under 28 U.S.C. § 1920) against the EEOC and in favor of CRST Van Expedited, Inc. in a Title VII sexual discrimination suit brought on behalf of 270 female drivers. It contains some very nice discussions of the fee shifting statute allowing such an award, application of lodestar factors, and items that are awardable as fees even though they are out-of-pocket expenses not recoverable as § 1920 routinely taxable costs.

     Here are the highlights from this decision:

• Fee shifting statute. 42 U.S.C. 2000e-5(k) allows a district court, in its discretion, to assess attorney’s fees against the EEOC in this type of case if the prevailing defendant shows the action was frivolous, unreasonable, groundless or vexatious in nature. (Marquardt v. Lodge 837, 26 F.3d 842, 849 (8^th Cir. 1994).) This standard was met because the district judge was convinced that the EEOC did not investigate before filing the complaint on behalf of 67 drivers (having no reasonable basis for the claims).
• Taxing costs for both stenographic and videotaped depositions. Under the new version of 28 U.S.C. § 1920(2), the district judge decided that--based on use of disjunctive “or” language—costs should be awarded only for stenographic or videotaped depositions, but not for both. The district court did note that there were decisions the other way, but they did not consider the current version of § 1920(2).
• Lodestar/application of national rates to the Title VII dispute. The district judge found that the case did not involve a specialized area of the law so as to justify Jenner & Block’s hourly rates that were way higher than the rates charged by defendant’s local counsel. The court lowered J & B rates to the local rates in setting the lodestar.
• Reasonable “non-cost” expenses recoverable as attorney’s fees. The district judge found that reasonable out-of-pocket expenses not within the § 1920 costs ambit could be recoverable as attorney’s fees. (Pinkham v. Camex, Inc., 84 F.3d 292, 294-295 (8^th Cir. 1996).) So, for example, the court did allow recovery of such items as long distance phone expenses, messenger/overnight express expenses, investigator fees, expert witness fees, postage, travel expenses, and printing/copying costs under the fee rubric. However, the district judge did deny recovery of most mock jury fees as not being necessary for the litigation, although noting that they have been awarded in other instances. (See, e.g., Confederated Tribes of Siletz Indians of Or. v. Weyerhaeuser Co., 2003 WL 23715982 at *8 (D.Or. Oct. 27, 2003).) The court also denied computer legal research, finding that item should have been factored into the attorneys’ hourly rates. Demonstrative trial exhibit expenses were rejected based on faulty documentation.

     For more information on this decision as well as a PDF link to the decision itself, see Martha Neil’s article “EEOC Hit with $4.5M Legal Fee Award In Losing ‘Pattern & Practice’ Case, Plans Appeal,” posted February 17, 2010 on the American Bar Association website (an article written for the ABA Journal).

Family Law: Fee Award Against Maternal Grandparents Financing Daughter’s Custody Fight Was Not Proper When Grandparents Were Not Seeking Custody In California Proceeding

Fact that Grandparents Sought Custody in Mexico and Financed Daughter’s California Efforts Did Not Support Fee Award Against Them.

     This next case involved a child custody imbroglio that took place in both California and Mexico between a former husband and wife, with wife’s parents (maternal grandparents) helping finance many of her fights—even though custody was eventually awarded to husband rather than wife and with maternal grandparents not attempting to obtain custody of their grandchildren in the California proceeding.

     The family law judge in Marriage of Cisneros and Lujan, Case No. D054452 (4^th Dist., Div. 1 Feb. 19, 2010) (unpublished) awarded former husband $54,750 in attorney’s fees, jointly and severally payable by former wife and maternal grandparents. This was reversed in entirely by the Fourth District, Division 1 from grandparents’ challenge to the fee award.

     Although assuming that maternal grandparents did finance much of their daughter’s litigation fights in both California and Mexico, the appellate panel found no evidence to support a determination that maternal grandparents, both Mexican citizens, sought visitation or custody of the children in the California proceeding. They were joined in the proceedings for custody and visitation purposes based on their involvement in Mexico, but the grandparents were not claiming any rights in the pending California action. The lower court should not have penalized grandparents for financing daughter’s battles when they had no real “skin” in the California forum.

     Beyond this, the record did not show that the family law commissioner considered other Family Code section 2031 factors except everyone’s financial resources. Failure to consider the other statutory factors was an abuse of discretion.

     Even though daughter did not appeal the award, the reversal of the fee award as to grandparents also required reversal of the award against daughter “in the interests of justice.”

Grandparents with children on porch of sharecropper shack, Southeast Missouri Farms, May 1938.  Library of Congress.  Lee Russell, photographer.

998 Offers: No Apportionment Necessary Between Defendants Where Liability Is Joint And Several/Vicarious In Nature

First District, Division 2 Finds Admissions in Case Management Conference Statement Established Vicarious Liability For Gauging 998 Offer’s Validity.

     Here is one for you personal injury practitioners, whether representing plaintiffs or defendants.

     Although unapportioned Code of Civil Procedure section 998 offers are usually taboo, a prime exception occurs where the defendants are jointly and severally liable for the plaintiff’s damages under the doctrine of respondeat superior or other vicarious liability theories. (Bihun v. AT&T Information Systems, Inc., 13 Cal.App.4^th 976, 1000-1001 (1993), disapproved on other grounds in Lakin v. Watkins Associated Industries, 6 Cal.4^th 644, 664 (1993).) However, apportionment may be necessary in multiple defendant cases where liability of the defendants may vary due to the application of comparative negligence principles and Proposition 51, which provides that each defendant has only several liability for noneconomic damages in proportion to that defendant’s degree of wrongdoing. (Taing v. Johnson Scaffolding Co., 9 Cal.App.4^th 579, 584-586 (1992).)

     In Martin & Gillis & Lane, Case Nos. A125661/A125931 (1^st Dist., Div. 2 Feb. 18, 2010) (unpublished), plaintiff sued both an employee and employer for motor vehicle accident injuries, alleging employment/agency theories as well as independent liability based on permissive use/negligent entrustment. However, employer filed a case management conference statement in court conceding that employee was driving the truck for employer within the course and scope of his employment at the time of the accident. Plaintiff made an unaccepted 998 offer for $199,999.99 to both defendants (although unapportioned), and then beat the offer by 1 cent—obtaining a jury award of $200,000 against employer (because employee was dismissed prior to trial). The lower court awarded plaintiff expert fees and costs of $62,388.80 based on the 998 offer (striking or taxing $28,632 in requested fees and costs). Employer appealed.

Homeowners Associations: Substantial Attorney’s Fees Awards In Favor Of Adjoining Neighbors and HOA Sustained On Appeal

Almost $500,000 in Total Fees Assessed Against Losing Homeowners.

     For all you Olympic watchers out there, this next case will resonate the famous “agony of defeat” line from ABC’s Wide World of Sports.

     In Sharp v. Anderson, Case No. B212528 (2d Dist., Div. 1 Feb. 18, 2010) (unpublished), plaintiff neighboring real property owners lost contentious litigation against their neighbors and the HOA/HOA directors. The lower court awarded neighbors $184,510 in attorney’s fees and $14,109 in costs and also awarded HOA $295,547 in fees under Civil Code section 1354(c), a fee-shifting provision under the Davis-Stirling Common Interest Development Act.

     Losers appealed.

Section 1717: No Basis For Fee Recovery Where Operative Contract Had No Fees Clause, Even Though Later Contract Did Have Fees Clause

 

Analysis of Fee Recovery Under Multiple Agreements Must Focus On Contract With Fee Clause Predicate.

     Many decisions we have examined in the past under Civil Code section 1717 involve situations where multiple contracts (some with fees clauses and some without) are part of an integrated transaction or where apportionment between contract/noncontract claims was unnecessary because all the issues were “inextricably intertwined.” However, if there are multiple contracts with an intervening time gap, one must carefully examine the governing operative agreement to see if it has a fee recovery basis. If not, fee recovery may be denied or remanded for reconsideration.

     That is exactly what happened in Alford v. Constanza, Case No. B210315 (2d Dist., Div. 4 Feb. 16, 2010) (unpublished).

In The News . . . . Natomas Unified School District Has Spent $454,878.03, And Rising, Against Developers, Attorneys, Real Estate Broker, and Appraiser For Claimed Purchase of Price-Inflated Property

  

School District Would Hand the Property Back.

     To show you how expensive modern litigation happens to be, take the case of the Natomas Unified School District. (Natomas is one of the remaining undeveloped communities in the northwest Sacramento, CA area.)

     A grand jury report in May 2009 alleged that the District paid six times the value of a certain land purchase from two developers in 2007, land which was going to be used to build a bioscience magnet school on the site once the residential market began to rebound. In response, the District filed suit in Sacramento County Superior Court, naming the two developers and other participants in the sale (the law firm and lead attorney, the real estate broker, and the appraiser and his appraisal firm).
District has based its suit on the theory that appraisals for the property were inflated, with all the defendants apparently part of some scheme to profit by the sale. (District paid $13.3 million for the property, $10.4 million too much if its claims are favorably adjudicated.)

     So, what is the litigation tab for the District (inclusive of legal costs both before the after the property’s purchase in 2007)? According to Diana Lambert in her February 15, 2010 article “Natomas school district’s legal fees top $450,000 in land suit” (published in The Sacramento Bee), the bill so far is $454,878.03. District hopes to recover fees if they win, but the parties have apparently been participating in mediation that may or may not result in some reimbursement for the legal tab incurred thus far.

In The News . . . . Lawyers Having Conflicts With Class Representatives Over Incentive Payments Denied Fees In Entirety in BAR/BRI Settlement

 

Nonconflicted Attorneys Get Award of Fees; Conflicted Attorneys Do Receive Reimbursement of Over $1.2 Million in Expenses.

     In our April 26, 2009 post, we reported on Rodriguez v. West Publishing Co., 563 F.3d 948 (9^th Cir. 2009), where class representative incentive agreements creating conflicts of interests required reconsideration of fee awards to both objectors and class counsel in the BAR/BRI bar review class action case. (The incentive arrangement provided that five named plaintiffs would get payments on a sliding scale basis—the amount went up depending on the ultimate settlement, but incentive payments were capped if the settlement figure reached $10 million. This arrangement had never been disclosed to the class or the district judge during the class certification stage of the case.)

     Now, U.S. District Judge Manuel L. Real has reconsidered the fee issues and determined that the conflicted lead class counsel was entitled to no fees at all, although awarding lead conflicted counsel over $1.2 million in reimbursable expenses. District Judge Real found that this ethical violation was serious enough, despite the fairness of the overall settlement, to result in the forfeiture of attorney’s fees altogether on both contractual and quantum meruit claims. (Image Technical Service, Inc. v. Eastman Kodak, 136 F.3d 1354 (9^th Cir. 1998); Huskinson & Brown, LLP v. Wolfe, 32 Cal.4^th 453 (2004).)

     Judge Real did award substantial fees to nonconflicted attorneys representing the class, although reducing the lodestar by 10% in order to account for excessive fees and noncompensable work (and denying the multiplier requests). He also awarded $8,125 respective fees to two of objectors’ attorneys.

     It has been reported that McGuireWoods LLP (counsel awarded nothing) have asked Judge Real to reconsider his ruling.

     Judge Real’s order was filed February 3, 2010 in Rodriguez, and can be found on-line (as well with other background on the case) at The Wall Street Journal website. See the February 12, 2010 article entitled “The Class Gets $49 Million, But the Lawyers Get Nothing.”

Civil Rights: Appellate Court Affirms Slashed FEHA Prevailing Party Fee Award Where Plaintiff’s Success Limited After Prior Appeal and Attorney Fee Substantiation Was Unreliable

 

Plaintiff Appeals $500,000-Plus Fee Award, But Gets Nothing Better.

     Mnaskanian v. 21st Century Insurance, Case No. B211757 (2d Dist., Div. 1 Feb. 11, 2010) (unpublished) shows that both trial and appellate courts will apply lodestar analysis in FEHA fee award situations, discounting for limited success and unreliable attorney fee substantiation when awarding “bottom line” fees to a prevailing plaintiff.

Family Law: $24,000 Attorney’s Fees “Need Based” Award Affirmed In Wife’s Favor

 

No Abuse of Discretion Where Financial Disparity In Parties’ Income At Issue.

     In our category “Family Law,” we have reported on numerous cases awarding attorney’s fees to one side in a dissolution case. As with any other litigation, the circumstances are frequently the real difference in a decision one way or the other. However, “needs” based awards under Family Code section 2032 often come down to a financial analysis of which party can truly bear the price of the family law litigation.

     Wife in Marriage of Dobbs, Case No. A125894 (1^st Dist., Div. 3 Feb. 11, 2010) (unpublished) won the upper hand by being awarded both spousal support and $24,000 in attorney’s fees. Husband appealed, but lost. Husband earned $8,500 per months, versus wife’s earning of about $2,800 a month.

     The fee award was affirmed. Aside from the economic disparity, evidence showed wife carried a disproportionate share of credit card burden on behalf of the community. No abuse of discretion with respect to the fee order.

Law Of The Case: Prior Appellate Opinion, Never Challenged On Rehearing Or Supreme Court Review, Was Law Of The Case On Fee Determination

 

Mere Disagreement With Prior Appellate Opinion Does Not Impact Law of the Case Doctrine.

     In Tennen v. Finstad, Case No. B217765 (2d Dist., Div. 2 Feb. 10, 2010) (unpublished), losing litigants on an order denying an attorney’s fees motion brought a prior successful appeal in which the Court of Appeal reversed an order denying the request to award attorney’s fees. The loser on appeal failed to file a petition for rehearing or for review with the California Supreme Court. Loser (who was ordered to recover postoffer fees and costs by virtue of a CCP § 998 offer) appealed the prior reversal in favor of the parties held entitled to fees.

     Loser lost a bid for a reversal because he failed to challenge the prior appellate opinion correctly, invoking the application of the doctrine of law of the case. Because he simply disagreed with the prior appellate determination, this type of challenge does not demonstrate injustice so as to set aside application of law of the case. (Morohoshi v. Pacific Home, 34 Cal.4^th 482, 491-492 (2004).)

Landlord/Tenant: Substantial Attorney Fee Award Of $506,056.95 Goes POOF!

 

Second District, Division 1 Reverses Unlawful Detainer Judgment and Fee Award Based on Finding Five U.D. Notices Insufficient in Nature.

     The POOF! principle is one that we coined for what generally happens when a merits judgment is reversed—that reversal usually means that a related attorney’s fees award also gets reversed.

     Aside from being an excellent primer for landlords on how to frame unlawful detainer notices to pay or quit/perform covenants, Kompany, LLC v. Israyelyan, Case Nos. B210632 & B213774 (2d Dist., Div. 1 Feb. 10, 2010) (unpublished) illustrates how POOF! operates in this area. There, landlord won past-due rent and damages of over $600,000, possession of the premises, and $506,056.95 in attorney’s fees as against tenant. On appeal, tenant successfully challenged all five unlawful detainer notices, which were found either defective in form or invalid because landlord had not given tenant an opportunity to cure. As a result, the merits judgment was reversed, and—you guessed it—the attorney’s fees award also went POOF! Tenant was also awarded costs on appeal.

 

Sanctions: CCP Section 128.7(b)(3) Sanctions Not Justified Against Represented Party Having No Responsibility For Sanctionable Conduct

 

128.7 Sanctions Sustained Against Attorney Failing to Properly Appeal.

     The next sanctions case has a couple of valuable lessons. It is MJB Development Group v. Diamond Escrow, Case No. D053158 (4^th Dist., Div. 1 Feb. 10, 2010) (unpublished).

Lesson #1—a sanctioned attorney must appeal the sanctions award. Although attorney’s client also appealed, this did not confer jurisdiction on the Court of Appeal to consider attorney’s challenge to the $10,000 award under CCP § 128.7. (Laborde v. Aronson, 92 Cal.App.4^th 459, 465 (2001), disapproved on another ground in Musaelian v. Adams, 45 Cal.4^th 512 (2009).)

     Lesson #2—unless responsible for a violation, a represented party cannot be sanctioned for violations of section 128.7(b)(3) [making allegations or other factual contentions lacking evidentiary support]. (Laborde, supra, 92 Cal.App.4^th at 466.) Because the record was devoid of evidence showing the party was responsible for a 128.7(b)(3) violation, the sanctions order against client had to be reversed. Laborde also establishes that a represented party cannot be sanctioned under section 128.7(b)(2).

Homeowner Associations: Interveners In CC&R Interpretive Dispute Are Entitled To Fee Recovery As Prevailing Parties Under Civil Code Section 1354

 

Fourth District, Division 3 Finds No Contractual Basis For Award, But Does Find a Statutory Basis.

     In an interesting first impression issue, the Fourth District, Division 3—in Renezeder v. Emerald Bay Community Assn., Case Nos. G040657 & G041353 (4^th Dist., Div. 3 Feb. 8, 2010) (unpublished)—determined that winning interveners in a CC&R dispute are entitled to prevailing party fees under Civil Code section 1354.

     Plaintiff homeowners lost a CC&R interpretation dispute with both the HOA and interveners (adjacent or nearby homeowners) over a CC&R prohibiting the splitting of lots. Although attorney’s fees were awarded to HOA, the trial court denied fees to interveners. Result: reversal and remand on the interveners’ fee appeal.

     On appeal, Justice Ikola, on behalf of a 3-0 panel, found that the CC&Rs did not authorize a fee award based on language limiting fee recovery to the Association or prevailing homeowners. (Nothing allowed recovery in a member versus member dispute.) However, that took the appellate panel to Civil Code section 1354(c), a mandatory fee-shifting provision favoring “the prevailing party” in CC&R enforcement actions. This statutory hook was a proper anchor for fee awards to interveners. “Section 1354, subdivision (c), does not explicitly mention interveners as possible beneficiaries of the attorney fees rule. But by virtue of their intervention in the action, interveners became parties.” (Slip Opn., p. 20.) Given that interveners had a real stake (win or lose) in the litigation, they were entitled to fees upon remand—however, only fees for nonduplicative work of a reasonable nature.

Retainer Agreements: Diane Karpman Has Some Nice Reminders In February 2010 Edition of the California Bar Journal

 

     Diane Karpman, a legal ethics expert, has the following reminders for “tuning up” attorney-client retention agreements:

• Lawyers should consult the State Bar fee forms on the California State Bar website, because they represent the “gold standard”—tested, blessed and familiar to fee arbitrators.
• Include a disclaimer of any guarantee, result or successful outcome.
• Specifically delineate the scope of duties, especially in “limited scope” representations.
• List the services that are excluded from the scope of the retention (such as appellate work, post-trial motions and collections).
• Cooperation clauses are necessary additions to retention agreements.
• Consider clauses for file retention, document destruction, arbitration and methods of communications.

     Ms. Karpman’s article “Time for tuning up those fee agreements,” can be found in the February 2010 edition of the California Bar Journal.

Special Fee Shifting Statutes: Chacon Opinion – Involving San Francisco Rent Stabilization and Arbitration Ordinance – Is Published.

 

     In our January 19, 2010 post, we examined Chacon v. Litke, Case Nos. A122026 & A123889 (1^st Dist., Div. 2 published Feb. 8, 2010), which was unpublished at the time. This decision established that the lodestar analysis was the presumptive method for gauging special fee-shifting provisions, including those enacted under governmental ordinances. On February 8, 2010, the Court of Appeal certified it for publication so that it can now be cited. 

Family Law: Fees On Appeal Are A Matter For Trial Court’s Consideration First

 

Remand to Trial Court Under CRC 3.1702(c) and 8.278(c)(1).

     In Bardales v. Duarte, Case No. D048239 (4^th Dist., Div. 1 Feb. 8, 2010) (certified for publication), the Court of Appeal affirmed a trial court determination that it had the power to dismiss a petition seeking return of children under the Hague Convention on the Civil Aspects of International Child Abduction because of petitioner’s delay in prosecuting it and then proceeding to decide custody and related matters under state law.

     Respondent then sought fees on appeal for prevailing under Family Code section 271. However, in a good primer on how this type of request is generally treated, the appellate panel indicated it should be addressed to the trial court first, remanding for consideration of entitlement of appellate fees. That gives a good illustration of how most appellate courts deal with fee issues, given that they are not set up to address the many contested issues that may arise in this area of the law.

  Peace Palace, The Hague.

In The News . . . . Irvine Has Incurred About $1.3 Million In Irvine Business Complex “Vision Plan” Development Fights

     As reported by Sean Emery in “Irvine legal fees in development fight run $1.3 million” (available for reading in the February 6, 2010 edition of The Orange County Register), the City of Irvine has incurred about $1.3 million in various legal fights over the Irvine Business Complex “vision plan”—an urban revitalization project near the John Wayne Airport

made up of 43 million square feet of commercial space and 5,011 residential units. Although there have been some settlement with opponents, most of the battles involved City and Newport Beach, Tustin, and Allergan (although a total of 14 lawsuits have been filed in connection with this project). The fees are going to be roughly split between the City and the Irvine Business Complex developers based on provisions written into the developers’ original city approvals. (Actually, the developers will cover about $628,000, with the City picking up the remaining $674,000).

Class Action And Arbitration Crossover: Appellate Court Affirms Arbitrator Computational Error Correction In Class Action Attorney’s Fee Allocation Dispute

First District, Division 1 Addresses Claimed Conflict Between JAMS Rules and CCP Arbitration Correction Provision.

     Here is a decision that involves consideration of class action and arbitration crossover issues.

     Two attorneys deserving of attorney’s fees in a substantial class action settlement entered into an agreement among themselves on the allocation of fees, calling for binding JAMS arbitration to resolve any allocation dispute. A lot was at stake—over $9.4 million in fees were subject to division.

     The case—Thierman v. Kelson, Case No. A124367 (1^st Dist., Div. 1 Feb. 5, 2010) (unpublished)—is interesting in its discussion on the rules that govern JAMS arbitration proceedings. The JAMS arbitrator made a post-award computational error correction, and the aggrieved party argued over whether JAMS rule 24(j) or Code of Civil Procedure section 1284 applied. The appellate court found no conflict between the two rules, but has a nice discussion on what parties can contractually agree to in an arbitration agreement. Also, the appellate court reversed an approximate $10,000 fee award arising out of the allocation dispute, finding no fee clause that allowed such entitlement in the allocation agreement.

Costs: Court Of Appeal Affirms Determination On Some Gnarly Costs Issues

Trial Court Has Inherent Discretion to Strike Costs Memo on Due Process Grounds, Limited Reversal Does Not Necessarily Vacate Prior Costs Award, and Post-Remittitur Costs Are Allowed in Trial Court’s Discretion.

     Although it might put you to sleep to recount the unusual procedural setting of the next case, Apex Wholesale, Inc. v. Fry’s Electronics, Inc., Case No. D054780 (4^th Dist., Div. 1 Feb. 5, 2010) (unpublished) does have some interesting points to consider in challenging and defending costs memorandum filed by the prevailing party in litigation.

     They are:

• Courts at any time have inherent, equitable power to grant relief from a judgment or order based upon “extrinsic fraud or mistake,” terms interpreted broadly to not require fraud/mistake in the strictest sense and terms interpreted as allowing a grant of relief where “papers were lost, stolen, forwarded to the wrong person or eaten by the dog.” (Sporn v. Home Depot USA, Inc., 126 Cal.App.4^th 1294, 1301 (2005).) In this particular case, the lower court granted a motion to strike a costs memo almost a year after the memo had been filed, finding that the other party did not receive it. (BLOG OBSERVATION—Co-contributor Mike and his dog Riffle like the “eaten by the dog” reference, although Riffle likes biscuits rather than pleadings. However, co-contributor Marc does have a cat who likes to nibble on an occasional draft or pleading.)
• A limited reversal does not render a costs award automatically null and void, but rather requires a reconsideration by the trial court of the prevailing party issue. (Zagami, Inc. v. James A. Crone, Inc., 160 Cal.App.4^th 1083, 1097 (2008).) In Apex Wholesale, the party moving to strike the costs memo conceded that one prior ruling was still in effect such that the lower and appellate courts did not have to reconsider the validity of that prior ruling on costs.
• A properly verified costs memo is prima facie evidence that the costs were necessarily incurred, with the burden on the costs opponent to show otherwise (including they were unreasonable). A party’s mere statements in points and authorities are insufficient to rebut the prima facie showing. (Jones v. Dumrichob, 63 Cal.App.4^th 1258, 1266 (1998).)
• Messenger services can be recovered as reasonable post-remittitur costs, in the discretion of the trial court. (Ladas v. California State Auto. Assn., 19 Cal.App.4^th 761, 774 (1993).)

Civil Code Section 1717: You Gotta Have A Contract Predicate As A Condition Of 1717 Fee Recovery

Absence of Contract Between the Parties With a Fee Clause Precluded Recovery.

     The Fourth District, Division 1, in Cornelius v. Vogt, Case Nos. D053035, D053286 (4^th Dist., Div. 1 Feb. 5, 2010) (unpublished), reminds us all that there must be a governing contract between the parties to allow recovery of prevailing party fees under Civil Code section 1717.

     In the case itself, there was a Date Street agreement, but between the agreement itself, its revisions and oral modifications, no attorney’s fees clause was included. However, there was a separate deed of trust between one party and an outside bank that did have a fees clause. The prevailing party under the Date Street agreement attempted to recoup fees under the trust deed provision. No way, said the appellate panel in Cornelius. Using section 1717’s own language, plaintiff did not “bring his action on the contract” that involved the trust deed, meaning there was no contract predicate upon which to base a fee award. The lower court correctly denied fees to plaintiff.

California Disabled Persons Act: State Appellate Decision Finds That ADA Does Not Preempt, So Prevailing Defendant Entitled To Fee Award Without Showing Action Was Frivolous, Unreasonable, Or Groundless

First District, Division 4 Disagrees with Ninth Circuit’s Hubbard Decisions.

     In our July 3, 2008 and January 12, 2009 posts, we discussed the Ninth Circuit’s Hubbard decisions (Hubbard v. SoBreck, LLC, 531 F.2d 983 (9^th Cir. 2008) and Hubbard v. SoBreck, LLC, 554 F.3d 742 (9^th Cir. 2009)), which held that a mandatory award of fees to a prevailing under the California Disabled Persons Act (Civil Code § 55) was preempted by the American with Disabilities Act of 1990 (42 U.S.C. § 12101 et seq.) because Civil Code section 55 allowed a defense fee award without the ADA’s showing that plaintiff’s action was “frivolous, unreasonable, or groundless.”

     Now, a California intermediate decision—Jankey v. Lee, Case No. A123006 (1^st Dist., Div. 4 Feb. 5, 2010) (certified for partial publication)—has expressly disagreed with Hubbard II’s preemption finding, concluding that attorney’s fees are awardable to a prevailing defendant under section 55 without the more elevated ADA entitlement showing.

     In reaching this result, the state appellate court primarily found that (1) nothing in the ADA imposed uniform standards for complementary state law remedies (slip opn., p. 10), and (2) the California Legislature’s imposition of a two-way guaranteed fee provision in section 55 makes sense in light of the fact that the CDPA affords plaintiffs greater rights than the ADA (CDPA allows both monetary and injunctive relief, while ADA provides for only injunctive relief) (slip opn., p. 12.)

     That said and done, the $118,458 (out of a requested $129,264) fee award was affirmed. In an unpublished part of the decision, plaintiff challenged the reasonableness of the award. However, his challenges did not persuade the appellate court. Contrary to his argument, detailed billing records are not required to affirm a fee award, with attorney testimony on the number of hours expended being sufficient in the right circumstances. (Martino v. Denevi, 182 Cal.App.3d 553, 559 (1986).) Attorneys’ claimed hourly rates—with the lead attorney asking for $165—as well as distribution of work (lead attorney worked 76% of the claimed time)—were found reasonable given the low sought-after hourly rate for the San Francisco legal community and the relative complexity of the case.

President and Mrs. Coolidge with their military aides, greeting two veterans in wheelchairs.

SLAPP: $24,442.50 Fee Award To City Of Pico Rivera Goes POOF Upon Reversal of SLAPP Grant

Second District, Division 1 Rules Plaintiff’s Mandate Challenge to Compel City To Award a Contract Through Competitive Bidding Not Subject to anti-SLAPP Statute.

     City of Pico Rivera likely felt pretty good after SLAPPing a plaintiff business’s mandate challenge to City’s invalidation of a contract with plaintiff and reentry into a contract with one of plaintiff’s competitors. It probably even felt better after the trial court granted plaintiff a mandatory award of $24,442.50 in attorney’s fees under the SLAPP mandatory fee-shifting statute.

     Plaintiff’s appeal resulted in a POOF!—the SLAPP grant was reversed as well as the fee award in Graffiti Protective Coatings, Inc. v. City of Pico Rivera, Case No. B213322 (2d Dist., Div. 1 Feb. 5, 2010) (certified for publication).

     Presiding Justice Mallano, writing for a likeminded 3-0 panel, determined that plaintiff’s challenge—based on the lack of competitive bidding when it reawarded the contract to a competitor—was not subject to being SLAPPed. Plaintiff was not basing liability on protected communications, but only using them as evidence in establishing that City violated the law. Plaintiff’s challenge was to illegal conduct, and the SLAPP statute should not be construed to discourage attempts to compel public entities to comply with the law. With that decision, the fee award fell also.

Jurisdiction To Award Fees And Prevailing Party Status: Borrower Substantially Reducing Loan Exposure Through Usury Defense Awarded Fees Of $43,960

Trial Court Had Jurisdiction to Award Fees While Merits Appeal Pending and Borrower Was the Prevailing Party.

     Borrower on a loan, even after an initial appeal, reduced a loan balance to only $3,602.72 after an offset for usurious interest. The lower court refused to award costs to lender and also awarded $43,960 to borrower based on a fees clause in the promissory note.

     Lender appealed, but lost all fees/costs issues in Gilbert v. Wisdom, Case Nos. E047235, E048425 (4^th Dist., Div. 1 Feb. 4, 2010) (unpublished).

     Lender first argued that the appeal from the merits judgment, before the fee motion was filed, divested the trial court of jurisdiction to hear borrower’s fee motion. Wrong, because numerous courts of appeal have rejected similar arguments. (See, e.g., Robertson v. Rodriguez, 36 Cal.App.4^th 347, 360 (1995); Bankes v. Lucas, 9 Cal.App.4^th 365, 368 (1992).) Although relying on some isolated language in Butler-Rupp v. Lourdeaux, 154 Cal.App.4^th 918, 928 (2007), the Court of Appeal noted that Butler-Rupp, when viewed in context, did not dictate a different result.

     Lender next argued that the trial court did not explain the legal basis for the fee award. However, the appellate panel found no court rules or statutes that required such a statement of reasons for ruling on a motion for fees. (Slip Opn., p. 36; Laabs v. City of Victorville, 163 Cal.App.4^th 1242, 1272 (2008).)

     Lender also contended that borrower did not prevail for Civil Code section 1717 purposes. Wrong again. A lawsuit attacking a note as usurious is an action on the contract for purposes of fee recovery, and borrower reduced a loan balance to minimal proportions.

     Lender also challenged the striking of his costs memorandum request. However, this appellate challenge was dismissed because lender failed to appeal 60 days after the service of notice of the costs strike ruling.

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Routine Costs: Court Has Discretion To Award Where No Net Monetary Recovery Or Only Limited Success Achieved In Declaratory Relief Action

Lower Court Did Not Err in Refusing to Award Costs, Says Fourth District, Division 3.

     In Helmy v. Assaf, Case No. G041883 (4^th Dist., Div. 3 Feb. 4, 2010) (unpublished), plaintiffs achieved limited success in a declaratory relief action over the membership and control of the board of directors of a nonprofit named the Orange County Islamic Foundation. No monetary relief was awarded, and the lower court refused to award routine costs to the plaintiffs. Plaintiffs appealed, but did not obtain a reversal.

     The Fourth District, Division 3, in a 3-0 decision authored by Acting Presiding Justice Rylaarsdam, found that Code of Civil Procedure section 1032(a)(4) was dispositive, which provides that the lower court has discretion to determine the prevailing party where other than monetary relief is recovered. Because plaintiff only obtained limited success in its declaratory relief action, the lower court acted in its discretion in denying an award of costs under section 1032(a)(4). (Chinn v. KMR Property Management, 166 Cal.App.4^th 175, 188 (2008).)