CALIFORNIA ATTORNEY'S FEES

SLAPP: $20,728.12 Fee Award Sustained In Favor Of Defendants Hiring Lawyer On Contingency Basis

Contingency Fee Arrangement Did Lead to a Fee Multiplier in SLAPP Award.

     In Rapp v. Geagan, Case No. A126121 (1st Dist., Div. 4 Oct. 29, 2010) (unpublished), defendants prevailed on a SLAPP motion. The wrinkle is that they were represented by a defense attorney hired on a contingency fee basis, with the understanding he was only entitled to fees if defendants prevailed on the SLAPP motion (which happened). Defendants moved to recover fees, also asking for a multiplier given their attorney’s contingency representation arrangement. The lower court honored their request for a multiplier, awarding one of 1.75 such that the total fee award was $20,728.12. Plaintiff appealed.

     The fee award was affirmed.

     The primary argument, aside from reasonableness arguments that were easily dispatched, was that defense attorney failed to attach time records to his clients’ original moving papers and that the later curing of this defect at the reply memorandum stage deprived plaintiff of a fair opportunity to review the time records and respond in writing. Although such a due process argument has general appeal, the flaw here was that the trial court continued the hearing to allow for further briefing by plaintiff, who chose not to do anything.

                                                                                                                Sandbagged.

CCP Section 998, Costs, And Consumer Fee Shifting Statute: Fee Award To CLRA Settling Plaintiff Affirmed Upon Denial of Defense 473 Motion Relating To 998 Offer Containing No Language Dealing With Fees/Costs

Silent 998 Offer Came Back to Bite the Defense as Silence Proves Golden for Prevailing Party.

     Many of the decisions we examine have major object lessons for litigators to pay heed to. After all, we like to say that good case management skills are usually learned through mistakes. This next case illustrates this principle very aptly.

     Wilkinson v. South City Ford, Case Nos. A125299 et al. (1st Dist., Div. 1 Oct. 29, 2010) (unpublished) is a situation where a plaintiff sued on a variety of theories, including under a contract and the Consumers Legal Remedies Act--with there presumably being a fee shifting clause and with CLRA containing a fee shifting provision. After settlement negotiations produced nothing more than a huge gap in expectations, plaintiff accepted a $35,000.01 defense settlement offer under CCP § 998, one that was silent on fees and costs even though an insurance claims supervisor had told defense counsel that he wanted an offer under which both sides were to bear their own fees and costs. The gremlin in this saga is that a 998 offer silent on fees and costs means that the prevailing party is entitled to costs and allowable fees. (Engle v. Copenbarger & Copenbarger, LLP, 157 Cal.App.4th 165, 168 (2007).) 

The Tremeloes - Silence is Golden

Plaintiff moved for judgment based on the 998 offer, as well as fees and costs under Engle (predicated primarily on the CLRA fee shifting statutory provision of Civil Code section 1780(d)). Defendants moved under CCP § 473 for relief from default, arguing that his 998 offer had a “typographical” omission on the fee and costs issue and that drafting counsel had meant to say that both sides would bear their own costs/fees. The trial court denied the 473 motion, entered judgment in plaintiff’s favor to the tune of $35,000.01, and awarded plaintiff costs of $14,834.36 and attorney’s fees of $158,746.25. (Yep, that omission did result in quite a substantial costs/fees award.) Both sides appealed.

     The appellate court sent everyone home in line with what happened below.

Private Attorney General Statute: $60,000 Fee Award To Winning Union Member Successfully Compelling Union To Conduct An Election Affirmed On Appeal

Second District, Division 1 Finds Important Public Right Vindicated Beyond Member’s Own Interests.

     In Burke v. Ipsen, Case Nos. B218286/B221436 (2d Dist., Div. 1 Oct. 29, 2010) (certified for publication), union member successfully obtained mandate compelling a union to conduct an election of officers and directors and to set aside recently amended bylaws of a claimed illegal nature. (Defendant Ipsen was President of the Board of the Association of Deputy District Attorneys).  Union member won, also beating union’s failure to exhaust administrative remedies argument. The trial court awarded member $60,000 in attorney’s fees under the private attorney general statute allowing for fee recovery where an important public right is vindicated. (Code Civ. Proc., § 1021.5.) Union appealed both the merits and the fee award.

     Union lost on both fronts.

     Clearly, fair and reasonable election procedures for public or private bodies implicate an important public right. The relief was significant, directly affecting almost 1,000 actual or potential union members. Union member’s interest in the litigation was no greater than that of other union members who wanted union to comply with the law.

     Union tried to dodge the award by arguing that union member had publicly filed an exhibit with names that violated privacy rights of listed employees. The problem with this counterargument was that union member had been given this list and promptly cured the inadvertent disclosure by sealing the exhibit, with the union indicating that this procedure was acceptable. Fee award affirmed.

     Burke was authored by Presiding Justice Mallano on behalf of a 3-0 panel.

Eminent Domain: Trial Court’s Denial Of Litigation Expenses To Winning Condemnees Reversed

Third District Finds Condemnor’s Final Settlement Offer Was Not In Good Faith, Not Condoning Unyielding Settlement Stances by Condemnors.

     We do not get that many eminent domain cases to report on. However, in our October 26, 2009 post, we did examine People ex rel. Dept. of Transportation v. Acosta, 178 Cal.App.4th 762 (2009), where the Third District sustained a large litigation expense award in favor of condemnee on the basis that condemnor’s final settlement offer was unreasonable in nature. The Third District obviously is attuned to this litigation expense issue, because it published a recent decision where it reversed a trial court’s refusal to award Code of Civil Procedure section 1250.410 litigation expenses to winning condemnees.

     Tracy Joint Unified School District v. Pombo, Case No. C061239 (3d Dist. Oct. 29, 2010) (certified for publication) involved a classic battle of real estate appraisers. Condemnor’s expert valued the taking at about $3 million, with no severance damages, whereas condemnees’ expert fixed total compensation at around $12.4 million ($3.1 million of which represented severance damages). The jury split the difference, awarding condemnees $7,085,150 plus $900,000 in severance damages. The jury verdict virtually matched condemnees’ pretrial settlement demand of $7,995,000, but was miserably far off from condemnor’s final settlement offer of $3,181,500 (just a notch above its expert’s valuation). The trial court denied condemnees’ request to recover section 1250.410 litigation expenses of $574,000, prompting an appeal. Condemnees obtained a reversal and remand from the Third District.

     The focal issue was the reasonableness of condemnor’s offer, because condemnee’s offer was midway between the two experts’ appraisals and within 1% of the eventual jury verdict. Three factors are considered in assessing the reasonableness of a condemnor’s offer: (1) the amount of the difference between the offer and the compensation awarded; (2) the percentage of the difference between the offer and the award; and (3) the good faith, care and accuracy in how the amount of the offer and amount of demand, respectively, are determined. (Acosta, supra, 178 Cal.App.4th at 773.)

     The first two factors were not good for condemnor. The offer was a striking $4.8 million off of the verdict, translating to only 39.8% of the compensation awarded from a differential calculation standpoint.

     That brought the appellate court to the third factor, which the trial court found persuasive in denying a litigation expense award. The lower court reasoned that both experts had their problems and condemnor reasonably made an offer based on its expert’s valuation. The Third District disagreed with this assessment, finding this case fairly straightforward, not fraught with complex issues, and one where condemnor’s expert made some conspicuous mistakes in his valuation analysis. The real rub for the appellate court was condemnor’s unwillingness to compromise and back off of its lowball perspective, with condemnee showing a different willingness to make a “midway point” demand of a more reasonable nature. The Court of Appeal did send a message to condemnors: arrogant, unyielding, take-it-or-leave it offers will not be looked at kindly when determining whether litigation expenses should be awarded under section 1250.410.

In The News . . . . Building a Better Redondo Garners Substantial Fee Award and Whistleblower Lawyer’s Contingency Agreement Was Not Enforced in Federal Case

Building a Better Redondo Awarded $313,000 in Private Attorney General Fees.

     In our October 12, 2010 “In the News” post, we talked about Building a Better Redondo seeking a substantial fee award against the City of Redondo Beach for successfully getting Measure G on the upcoming November 2 ballot. Building a Better Redondo then sought to recoup nearly $355,000 in attorney’s fees under California’s private attorney general statute. On October 25, 2010, Los Angeles County Superior Court Judge Robert O’Brien awarded Building a Better Redondo $313,000 in fees. City had sought to hold the award to $128,729, arguing that Plaintiff’s lead attorney’s $550 hourly rate was excessive when compared to the City’s attorney’s $265 rate. For more information on this one, see Kristin S. Agostoni’s October 26, 2010 post on the dailybreeze.com.

First Circuit Court of Appeals Reduces Whistleblower Lawyers’ Fee From $292,000 to $50,000.

     An interesting whistleblower story has emerged out of U.S. v. Hawthorn, Case No. 09-2684 (1st Cir. Oct. 18, 2010), which can be found at a hyperlink in Daniel J. Popeo’s October 26, 2010 post. Basically, plaintiffs’ whistleblower attorney had a 33% contingency fee agreement under which attorney was owed $292,000 after plaintiffs won their whistleblowing claim and reward. However, the First Circuit, using the inherent supervisory power of the courts to supervise attorneys practicing before them, agreed with the district judge that the fee award needed to be reduced. Although the district judge reduced the award to $25,000, the appeals court found that $50,000 was the right number (another $25,000 in fees in connection with the second plaintiff). Given the limited effort and risk in the case, the 33% fee would have been excessive given that plaintiffs’ attorney “piggybacked” on the government’s efforts. What makes the case significant is that the court reduced the fee to uphold the intent of creating whistleblower incentives, meaning the money goes to the whistleblowers to incentivize their conduct.

You just put your lips together . . .

Request For Admissions: $106,121.32 Costs Of Proof Award Affirmed

Daughter Had No Objective Basis To Deny RFAs.

     Under our category “Requests for Admissions,” we have explored many, many cases on “costs of proof” sanctions under Code of Civil Procedure section 2033.420, allowing a sanctions of fees and costs for proving at trial a denial of RFAs unless certain exceptions are met. Daughter/appellant in a testamentary capacity case did deny certain RFAs, resulting in a costs of proof award in the hefty amount of $106,121.32 when the estate successfully contested her claims.

     She appealed in Estate of Chuang, Case No. A126945 (1st Dist., Div. 5 Oct. 28, 2010) (unpublished). Was she successful?

     She was not.

     We understand daughter was not happy. Her father had only left her with $1 and left the remainder of his estate to a Buddhist organization. Although contesting that father was of unsound mind, daughter really had no objective proof or medical evidence other than her subjective beliefs that he was incompetent in a testamentary capacity sense. Subjective beliefs alone in these type of cases will not support RFA denials, so that the costs of proof award was sustained on appeal. (Brooks v. American Broadcasting Co., 179 Cal.App.3d 500, 511-512 (1986).)

Family Law: $192,000 Fee Awards To Wife Affirmed, Because Husband Failed To Demonstrate That They Were Precluded From Prior Procedural Denials

Husband Failed to Meet His Burden on Appeal.

     Husband beat wife’s prior fee shifting, needs-based denial simply because she failed to file an updated income and expense statement under local rules. Unruffled, wife renewed the request later and added more fodder, seeking a total of $320,510.50 in fees for periods stretching back to Fall 2001 through September 2008. (Lots of fees; right, folks?) What did the trial court do and what did the appellate court do?

     The trial court awarded about $192,000 in fees to wife and denied husband’s dueling fee requests. Husband appealed, in Marriage of Nielsen and Olds, Case No. A126521 (1st Dist., Div. 4 Oct. 28, 2010) (unpublished).

     The appellate court affirmed.

     Husband mainly argued that res judicata made the interlocutory procedural denial dispositive in connection with the later ruling. This did not go very far, because res judicata does not apply to a prior adverse judgment that was rendered not on the merits but for procedural reasons. Result was affirmance of the fee award.

Special Fee Shifting Statute: Retained P.E. Teacher Had To Follow Normal Fee/Costs Procedures For Timely Claiming Costs Under Education Code Section 44944

First District, Division 2 Upheld Trial Court Decision to Award Some Fees and Costs to Teacher, But Not All of Them.

     Well, we report on all areas of the law. This one is a curious case, where a teacher untimely filed for fees and costs, but the trial court cut teacher a break and still awarded a little under one-fifth of requested fees and costs. Better than nothing, you might say. Teacher still appealed. Did he win or lose? Verdict to come.

     In San Ramon Valley Unified School Dist. v. Cahn, Case No. A126905 (1st Dist., Div. 2 Oct. 28, 2010) (unpublished), tenured physical education teacher beat an administrative “for cause” dismissal proceeding . Teacher then filed a costs memorandum and fee motion pursuant to Education Code section 44944(e)(2), which provides that the governing school board shall pay the expenses and reasonable attorney’s fees incurred by the employee at the hearing. However, the real rub is that the Education Code does not specify the procedure for recovering section 44944(e) fees. Under the normal CCP and CRC procedure, teacher untimely filed a fee/costs request aggregating about $233,000. The lower court, despite finding the requests untimely, awarded teacher fees and costs of a little over $44,000. Miffed, apparently, teacher appealed.

     Verdict: fee/costs award affirmed.

     The appellate court essentially determined that normal fee/costs procedures should be followed with respect to section 44944(e) requests, finding tacit support in reasoning from Fontana Unified School Dist. v. Burman, 45 Cal.3d 208, 225, 225-226 n. 18 (1988).) Given the procedural context of this case, other nuances did not apply. Also, there was no abuse of discretion in the lower award when one considers that teacher could have been out of luck completely.

Probate: Court Order Requiring Payment Of County Counsel and Public Defender’s Fees Out Of Conservatee’s Trust Reversed On Appeal

Second District, Division 2 Determines Trust Beneficial Interest Is Not Part of Conservatee’s Estate.

     In Conservatorship of the Person and Estate of George, Case No. B221327 (2d Dist., Div. 2 Oct. 27, 2010) (unpublished), the trial court ordered fees for a conservator, County Counsel (counsel for guardian), and Public Defender (counsel for conservatee) paid from the conservatee’s trust in connection with underlying conservatorship proceedings.

     That order was reversed by the appellate court upon appeal by the trustee ordered to pay.

     Reason? Compensation could only be paid from conservatee’s “estate,” which did not include conservatee’s beneficiary interest in the trust. That beneficial interest was not “personal property” because conservatee only possessed an inchoate right to enforce performance of the trust for purposes of compelling trustee to make support payments from trust property on his behalf.

Discovery Sanctions: Sanctions Against Attorney For Evasive RFA Response Affirmed On Appeal

Fourth District, Division 3 Reminds Us That Prior Motion to Compel Is No Precondition to Sanctions Request.

     This next case is not so much remarkable for the result, but for reminders on what should be done by litigators when responding to discovery requests.

     In Mallard v. Progressive Choice Ins. Co. (Kent), Case No. G042778 (4th Dist., Div. 3 Oct. 26, 2010) (unpublished), attorney was imposed with $1,090 in monetary sanctions for making an evasive RFA response on behalf of his client. Basically, attorney responded having no knowledge to respond to the request despite filing a verified complaint saying the request was indeed what happened. During the discovery hearing, attorney admitted he made a mistake, but the trial court was not persuaded because attorney did not try to correct the error during the meet and confer process. Attorney appealed the sanctions award.

     Justice Fybel, on behalf of a 3-0 panel of the Fourth District, Division 3, affirmed.

     Granting the motion to compel further responses was no abuse of discretion, much like the sanctions award. Trial judges have a range of penalties that they can impose for discovery abuses, especially making evasive responses to discovery under Code of Civil Procedure section 2023.030. In fact, an order upon a motion to compel further responses is not a necessary predicate to a sanctions motion under section 2023.030. (Tucker v. Pacific Bell Mobile Services, 186 Cal.App.4th 1548, 1561 (2010).) This case showed no misuse of sanctioning power, since the attorney did not even provide the factual basis for responding to the RFA as he did on behalf of the client.

SLAPP: Published Appellate Decision Finally Holds That Attorneys Cannot Be Hit With Adverse Fee Awards By SLAPP Victors

Second District, Division 1 So Holds, After Split in Opinion By Two Unpublished Cases.

     In our June 19, 2008 post, we discussed Foster v. Warner, 2008 WL 2445106 (Cal. Ct. App. 2008), which held that the anti-SLAPP mandatory fee shifting provision (CCP § 425.16(c)(1), mandatory as to a prevailing defendant) does not authorize an attorney’s fees award against plaintiff’s counsel. However, in a later post on May 9, 2010, we looked at Mory v. City of Chula Vista (S.D.Cal. May 7, 2010), where U.S. District Judge Janis Sammartino came to the opposite result based on the case authority indicating the statute should be broadly construed. Well, we finally have a published “tie breaker” on this issue.

     Moore v. Kaufman (Diaz), Case Nos. B206679 et al. (2d Dist., Div. 1 Oct. 22, 2010) (certified for publication) involved a wild set of facts in which a fee award was bizarrely entered against a plaintiff’s counsel and in favor of defendant after a SLAPP motion victory. The original award was about $41,506, but swelled to $170,000 based on a request to add post-judgment enforcement fees of over $131,000. Contempt proceedings were initiated when counsel refused to answer judgment debtor examination questions based on the notion that the fee award judgment was void. With an appeal pending, the attorney filed a petition with the appellate court for relief. The petition was found meritorious.

     The appellate court found nothing in the statute’s language suggests that the court can award SLAPP fees against a plaintiff’s attorney. That naturally followed from the corollary that fees are usually awarded as sanctions against an attorney in most situations. Although agreeing that the statute should be broadly construed, such a principle in and of itself could not justify interpreting the statute as authorizing either a mandatory or discretionary fee award against plaintiff’s counsel.

     Because the judgment against counsel was void, no valid contempt judgment could be based thereon. (People v. Gonzalez, 12 Cal.4th 804, 817 (1996).) The appellate court also found an earlier adverse ruling against counsel in an earlier appeal was not law of the case, invoking the exception that it does not have to be followed if it results in a manifestly unjust decision. The $170,000 judgment sought to be enforced against counsel, when there was not basis for it under the SLAPP statute, fell within that exception. Petition granted, directing the lower court to vacate the contempt judgment and delete counsel’s name from the fee judgment.

Consumer Statutes: Winning Plaintiff’s Request For More Attorney’s Fees Rebuffed In Lemon Law Car Case

$64,000 Attorney’s Fees Sustained on Appeal By Second District, Division 8.

     Plaintiff, in a Lemon Law car case, actually won $37,508.84 for breach of implied warranty and $560 for breach of express warranty as against Mercedes-Benz USA, LLC (MB). Because the Song-Beverly Consumer Warranty Act has a mandatory fee shifting provision for winning car buyers (Civ. Code, § 1794(e)(1)), plaintiff moved to recover fees totaling $512,266.18 (yes, you heard us right), consisting of a $186,000 lodestar plus a multiplier. The trial court awarded $64,000 in fees, which were the fees incurred by plaintiff before MB offered to settle the matter. Apparently not happy at all, plaintiff appealed.

     The fee award to plaintiff was affirmed in Nunan v. Mercedes-Benz USA, LLC, Case No. B215181 (2d Dist., Div. 8 Oct. 21, 2010) (unpublished).

     The abuse of discretion standard was determinative in this one. The amount of the fees awarded was more than the damages award, with the trial court determining the lodestar and then adjusting for any novelty/difficulty/skill displayed by plaintiff’s counsel through its reasoned comments on the record.

     As with fee awards under Civil Code section 1717, equitable considerations do come into play. Although the trial court did note the matter was well tried, it believed plaintiff was asking “way too much money [over $500,000} for this type of trial” (a six-day trial).

Civil Code Section 1717: No Prevailing Party Determination Affirmed In Bitterly Contested Real Estate Litigation

Defendant Wives Found Unified in Interest With Settling Defendant Husbands; Plaintiff’s Voluntary Dismissal of Wives Was Dispositive.

     You almost could tell what might happen in the next case. The case involved acrimonious litigation between sellers and buyers for mold and dry rot in a residential property. The parties were plaintiffs husband/wife, defendants husbands, and defendants wives. The “dueling parties” (that is the appellate court’s words, not ours) incurred an aggregate of $895,555.50 in attorney’s fees since the beginning of the litigation, with $440,642 incurred after defendants husbands satisfied a judgment plaintiffs obtained against them. After the final disposition of the claims against defendant wives, both plaintiffs and defendant wives moved for recovery of attorney’s fees. Want to guess the result? Well, we will tell you.

     Carmignani v. Paganini, Case Nos. A125993/A126123 (1st Dist., Div. 3 Oct. 21, 2010) (unpublished) was an appeal representing the culmination of an eight-year battle between the buyers and sellers of a piece of residential property. In a prior jury trial, the lower court granted a nonsuit against defendant wives on the contract claim, but jurors found that defendant husbands were liable to plaintiffs to the tune of $124,000. The jury also found defendant wives were not liable on any remaining cause of action. Plaintiffs filed post-trial motions on the judgment in favor defendant wives, which were granted. The trial court awarded $4,211.90 in costs and $203,271 in attorney’s fees against all defendants, but defendants husbands--the solvent parties--paid both the compensatory verdict and the initial costs/attorney’s fees. All defendants appealed, but defendant husbands dismissed their appeals and defendant wives challenged the post-trial motion grants. The appellate court affirmed the new trial motion grant against defendant wives based on vicarious liability. Defendant wives won a summary judgment on remand based on the satisfaction of judgment by defendant husbands. Plaintiffs appealed this judgment, but subsequently abandoned it. Defendant wives then moved to recoup attorney’s fees of $401,994.50, while plaintiffs opposed and filed a counter-fee motion asking for $188,000 in fees. The trial court denied both fee motions, but did award defendant wives $1,520.70 in costs that they incurred after the remand despite striking some costs based on wives’ “unity of interest” with their husbands which was an exception to a mandatory costs award.

     Both plaintiff and defendants wives appealed. We asked you to guess what happened? If you guessed that the appellate court affirmed all the fee denials and small costs award, you were correct.

     Plaintiffs were properly found not to be the prevailing parties because they dismissed their action against defendant wives by abandoning the appeal of the summary judgment grant.

     Defendant wives banked their appeal on the summary judgment win against plaintiffs, but the appellate court agreed with the lower court that wives were not prevailing parties because they shared a “unity of interest” with defendant husbands such that the the mandatory prevailing party definition does not apply--meaning the lower court retains discretion on determining who prevailed. (Wakefield v. Bohlin, 145 Cal.App.4th 963, 985 (2006), overturned on other grounds by Goodman v. Lozano, 47 Cal.4th 1327 (2010).) Then, the appellate court determined that the lower court did not abuse its discretion in denying fees because, pragmatically, wives only won on a technicality based on their husbands’ satisfaction of the prior judgments rather than the merits. In essence, the Court of Appeal determined that wives were not at risk of incurring additional liability, but took further actions to recoup fees--even though the same appellate court had ordered both sides to bear their own costs in the prior appeal. This same “unity of interest” reasoning supported the lower court’s costs award to wives.

     BLOG OBSERVATION--At the end of the day, no side really was found to prevail. We believe that this illustrates that appellate courts do “read between the lines” in affirming equitable determinations of the lower court on fee requests in acrimonious litigation. If anything, this decision demonstrates that litigants should pay close attention to prior appellate rulings in a matter--they usually contain the seeds of what both sides should do as far as pursuing further proceedings. If you do not heed these warnings, you may not like the result--and will incur more attorney’s fees in the process.

Civil Code Section 1717: Hyduke’s Valley Motors Decision Now Published

Fourth District, Division 3 Puts Decision “In the Books.”

     In our September 30, 2010 post, we discussed Hyduke’s Valley Motors v. Lobel Financial Corp., Case No. G042816 (4th Dist., Div. 3 Sept. 29, 2010), which found no Civil Code section fee recovery was allowable to a plaintiff used car dealer because it did not prevail “on the contract” and could present no viable third-party beneficiary theory for fee recovery.

     On October 21, 2010, the appellate court certified the decision for publication, which was a 3-0 decision authored by Acting Presiding Justice O’Leary.

     HAT TIP--We give a hat tip to Ronald J. Green, Jr. for pointing this out to us. Mr. Green and Gary Dean Lobel were the winning counsel – on the fees issue -- for Lobel Financial Corporation in the case. 

Estoppel: Law Of The Case Doctrine Justified $4,000 Attorney’s Fees Award

Prior Appellate Court Conclusion Was Binding On Fee Entitlement.

     Steele v. Spina, Case No. A127959 (1st Dist., Div. 3 Oct. 21, 2010) (unpublished) is a good illustration of where the “law of the case” doctrine will prevent a second bite challenge to a fee award. A prior appellate court opinion held that the trial court lacked jurisdiction to enforce a settlement but that it properly awarded attorney’s fees to the defendant as the prevailing party based on a fees clause in the settlement agreement. (Wilson v. Wilson, 54 Cal.2d 264, 272 (1960) [contractual fees clause generally allows for an award of attorney’s fees rendered on appeal as well as during trial ].) Because the attorney’s fees issue was squarely decided against appellants in the previous appeal, they were not entitled to a “second bite of the apple.” (Slip Opn, p. 3.)

Civil Rights: Plaintiff Civil Rights Organization Entitled To Seek Attorney’s Fees Under Judicially Enforceable Settlement Agreement

Ninth Circuit Reverses District Court’s Denial of Fees to Settling Plaintiff.

     In La Asociacion de Trabajadores de Lake Forest v. National Day Laborer Organizing Network, Case No. 08-56564 (9th Cir. Oct. 22, 2010) (for publication), plaintiff reached a settlement agreement with defendants over the enforcement of restrictions on day laborers soliciting work on public sidewalks. The settlement agreement required defendants to adhere to policies respecting day laborers and their First Amendment rights, relief plaintiff sought in its complaint on behalf of the day laborers. However, the district court denied plaintiff’s request for an award of attorney’s fees under 42 U.S.C. § 1988(b) (the federal civil rights statute). The Ninth Circuit reversed, determining that the judicially enforceable settlement agreement did materially alter the relationships between the parties such that plaintiff was a prevailing party entitled to an award of attorney’s fees.

SLAPP: Trope Limitation Did Not Preclude Award Of Fees To California Attorney General For Prevailing On SLAPP Motion Against Suing Doctor When Two Of The AG Attorneys (Also Sued) Aided Lead Counsel Work for AG And Other Co-Defendants

First District, Division 2 So Rules in Lengthy Unpublished Decision.

     Soderling v. Office of the California Attorney General, Case Nos. A124196/A124931 (1st Dist., Div. 2 Oct. 22, 2010) (unpublished) concerned an appeal by a doctor suing to overturn the trial court’s partial grant of an anti-SLAPP motion against the California Attorney General (AG) as well as overturn/reduce a $31,600 fee award to the AG for its partial SLAPP win.

     The judgment, including the fees award, was affirmed in a scholarly opinion by Presiding Justice Kline on behalf of a 3-0 panel of the First District, Division 2. (For those who like SLAPP issues, the merits concerned the illegality exception to the free speech protection components of the SLAPP scheme.)

     Now, we turn to our forte--the fees award.

     AG and affiliated persons sought $85,557 in fees for work including that done by two Deputy Attorneys General also sued in the case, but was awarded $31,600 after determining the reasonable hours that were allowable for two attorneys in representing the other defendants (other than themselves).

     Losing doctor’s primary challenge was that the Trope limitation--which precludes fee recovery by attorneys representing themselves--barred the fee award to AG/other nonattorney co-defendants because the two attorneys who were sued also represented the AG and two co-defendants that were also governmental medical investigators. Not so, said the appellate court. Public entities and agencies are eligible for fee awards under the anti-SLAPP statute. (Schroeder v. Irvine City Council, 97 Cal.App.4th 174, 194 (2002).) The lower court found that the two attorneys were representing AG and other medical investigators in the action, which was an attorney-client relationship divorced from actually representing themselves. (Cf. Ramona Unified School Dist. v. Tsiknas, 135 Cal.App.4th 510, 523-525 (2005).) The lower court properly awarded fees for the work performed by attorney co-defendants because they did in fact assist lead attorney in representing the AG and the medical investigators.

     Notice how the particular circumstances drove the award and affirmance in this case.

Class Actions: NY Court of Appeals Rules that Common Fund Doctrine Does not Allow Award of Counsel Fees and Expenses to an Objectant in a Class Action

Court Rules in 5 –2 Decision that 1975 Statutory Reforms to Class Actions in NY Allow Fees Only to Class Representative.

     This next one is a bit off our beat, since it involves NY law, but we think it will be of interest to class action attorneys.  New York’s highest court has ruled, in a divided decision, that a successful objectant to a fee award in a class action is not entitled to fees, because he was not a class representative, just the representative of a class member.  Flemming v. Barnwell Nursing Home & Health Facilities, Inc., 2010 NY Slip Op 07414 (October 21, 2010).

     Judge Pigott, writing for the majority, summarized:  “Simply put, although a class may at times benefit from an objectant's actions, the Legislature did not provide recompense for those efforts.”

     Not surprisingly, the dissent, in which Chief Judge Lippman concurred, considered policy.  The author of the dissent, Judge Smith, wrote:  “Whatever the faults and virtues of the class action device, no one disputes the need to control class counsel's fees — and nothing furnishes so effective a check on those fees as an objecting lawyer. . . . . Today's decision greatly lessens the likelihood that fee applications submitted by class counsel will ever be opposed. Opposition will be filed only where a lawyer or client is willing to act from philanthropic motives, or in the few cases where a member of the class has a large enough interest in the size of the fee to justify bearing the expense of objecting to it.”

     The lines are clearly drawn, and it looks like it will take further legislative action in NY, if the rule is to be changed in future class action cases brought in that state.

     Joel Stashenko has reported on the case in the October 22, 2010 NYLJ.

Probate And Family Law Doubleheader: Substantial Attorney's Fee Awards In Favor Of Beneficiaries and Ex-Wife Affirmed On Appeal

     As we read more and more cases on fee awards, we are struck about how both trial and appellate courts really like litigants to be reasonable and do not condone litigation that goes on and on in a fashion derided by Charles Dickens some time ago. These next two cases illustrate how the protracted nature of litigation, especially if chargeable to the non-prevailing or wealthier side in a dispute, may well play a part in a decision to affirm substantial fee awards.

Estate of Gridley, Case Nos. A123463/A124908 (1^st Dist., Div. 2 Oct. 19, 2010) (Unpublished).

     This one involved a contest between a daughter and two sons about how 40% of father's estate residue would be divided up, despite the fact they had all entered into a written beneficiary equalization agreement with a fees clause. Eventually, daughter lost, pretty much across the board, her challenges to the equalization agreement. Sons, as prevailing parties under the contractual fees clause, filed to recoup $655,336.75 in fees, with the lower court granting the request but awarding slightly less, but substantial nonetheless--$626,159.75. In doing so, the lower court noted that daughter's "unfocused, acrasial [intemperate; excessive] presentation of ever-expanding, cobbled-together theories" made the case more expensive and complex than it needed to be. The appellate court found no abuse of discretion, given that daughter drove up the acrimony and required sons to devote more resources than were likely necessary.

Marriage of Bohbot, Case No. B214035 (2d Dist., Div. 3 Oct. 20, 2010) (Unpublished).

     Here, you knew this one was not going to end up good for the loser when the appellate court early on observed: "This is our fourth and hopefully last opinion in this seemingly endless litigation."

     Wife was awarded $200,000 in attorney's fees and $150,000 for litigation costs advanced by another firm (not to mention $50,000 awarded to her experts). The bases were Family Code sections 2030-2032, the playing field leveler, and section 271, the sanctions provision against uncooperative/cantankerous litigants. Although finding some shared fault on both sides, the family court ultimately found that husband spent two and a half times more and that his income/expense declarations did not inspire as much confidence as ex-wife's. The lower court also found wife should be responsible for one-third of her claimed fees. Again, no abuse of discretion, especially since husband did not point out what work was being challenged—a classic situation to find a waiver or forfeiture, as the appellate court did. Fee award affirmed.

BLAWG BONUS:  Acrasia was the name of the racehorse that won the 1904 Melbourne Cup.

Arbitration: Arbitration Award Producing A Further Award of Over $43,000 In Attorney’s Fees Properly Awarded to Out Of State Attorney

 

Arbitrator’s Failure to File Certificate Approving Out of State Attorney Until After Filing of the Favorable Arbitration Award Was Deemed Harmless Error.

     For those practitioners that are involved in arbitrations (and most litigators are in this day and age), here is an interesting case about approval of out of state attorneys and their representations of clients in arbitrations.

     Code of Civil Procedure section 1282.4 enables out of state attorneys to represent clients in an arbitration if the arbitrator approves his appearance through a certificate that is signed and the certificate is then sent to the California State Bar. The purpose is to ensure that the out of state attorneys are subject to the jurisdiction of California courts, with the certificate also requiring that the client have associated in a California attorney in the process.

     In North By Northwest Productions, Inc. v. First Look Studios, Inc., Case No. B219503 (2d Dist., Div. 8 Oct. 18, 2010) (unpublished), out of state attorney did represent a client and reaped a successful arbitration award inclusive of over $9,000 in attorney’s fees (which increased to a little over $43,000 upon the lower court’s post-confirmation blessing of the award). The procedural hang-ups were that the arbitrator did not sign out of state attorney’s section 1282.4 certificate until after the arbitration award was filed and that the certificate was filed with the State Bar almost a month following the award.

     Losing party challenged the award as a nullity based on these mishaps.

     The appellate court disagreed, finding they were not prejudicial in nature. Usually, the prejudice would occur only to a party who lost an arbitration while being represented by an unlicensed person. Although not condoning what happened, any error was harmless.

     As to the amount of the fees award, the appellate court found the award to be proper given that out of state attorney had to travel back and forth for numerous defense-initiated proceedings and that the $225 hourly rate charged was quite reasonable in nature.

SLAPP: Post-Appeal Prevailing Party Adequately Preserved Fee Recovery By Filing A Costs Memorandum

 

Fourth District, Division 3 Disagrees that A Noticed Motion for Fees Was the Exclusive Method for Fee Recovery.

     Here is a SLAPP fee procedural issue that we believe is certain to reoccur in some future cases where SLAPP defendants prevail on a SLAPP motion.

     Hong v. Regents of the University of California, Case No. G043009 (4th Dist., Div. 3 Oct. 19, 2010) (unpublished) involved a prevailing SLAPP defendant which, after appeal, filed a costs memorandum seeking both attorney’s fees and costs as the prevailing SLAPP party. The lower court granted plaintiff’s motion to tax costs based on the view that a noticed motion for fee recovery was necessary. After defendant filed such a motion, the lower court denied it as untimely and denied a CCP § 473 relief for default motion. Defendant appealed, and was successful.

     Acting Presiding Justice Rylaarsdam, on behalf of a 3-0 panel of the Fourth District, Division 3, reversed because a costs memorandum was a satisfactory method of raising the issue of fee recovery. Nothing in the SLAPP statute provides otherwise, such that the fees could be claimed as costs under CCP § 1033.5(c)(5). The fact that other cases involved litigants seeking fees by noticed motion did not mean that this was the exclusive method for seeking recovery of fees.

     Plaintiff also argued the appeal was untimely, but that argument was rejected because no notice of entry was sent such that 180 days was the proper deadline, with defendant’s appeal being filed within that time frame.

     Plaintiff further contended that the costs memorandum verification did not strictly comply with CRC 3.1700(a)(1). The appellate court found that defendant used the Judicial Council form with slightly different language, something that is commonly done. It found nothing in CRC 3.1700(a)(1) requiring that the verification language must be quoted exactly.

     The matter was reversed and remanded for a determination of the amount of fee recovery due to defendant.

Texas Federal Judge Orders College to Pay $243K+ in Attorney’s Fees in Case Brought by Students Challenging Ban to Wearing Empty Gun Holsters

                         Above:  Final Duel in For a Few Dollars More.

     See David Lee’s article, “$243,000 Fee Award in Texas Holster Protest,” October 18, 2010, Courthouse News Service, for more on this Texas tale.

Retainer Agreements: Criminal Lawyer Did Earn $300,000 In Fees Properly

Trial and Appellate Court Rebuff Criminal Client’s Challenges to Retainers.

     In Faal v. Davis, Case No. B219520 (2d Dist., Div. 5 Oct. 14, 2010) (unpublished), a criminal lawyer represented a client later found guilty on major counts of the criminal case after having obtained a retainer of $250,000 for the criminal trial work and $50,000 for the criminal appeal. Lawyer even returned $30,000 to another client in order to expeditiously take on the appeal by the client who sued in this case, arguing that lawyer was not entitled to the $50,000 criminal appeal retainer and did not properly hold in trust certain expert witness fees from the $250,000 retainer.

Defenders Outtakes with E.G. Marshall

     Client appealed after the lower court issued a statement of decision in favor of lawyer.

     The appellate court sustained the lower court’s decision.

     Client argued the $50,000 retainer was not a true retainer, but an advance fee payment. The appellate court affirmed the use of this money, because equities compelled the fact it was used correctly no matter what its proper characterization. Lawyer actually passed up other work from a client by returning $30,000 for another opportunity such that the $50,000 retainer for emergency appellate work amply was deserved.

     That brought the appellate panel to the $250,000 retainer challenge based on failure to hold expert witness fees in trust. Despite the fact that the agreements with client indicated the expert fees were independently payable, lawyer did produce accounting evidence to show that the money was spent on experts such that no surplus existed to return to client.

     Much of this case turned on the substantial evidence test on appeal, which is a hard one to surmount when the record shows there was proof to support the trial court’s decision.

Fee Clause Interpretation: General Partner Properly Awarded Fees Under Broadly Worded Partnership Fees Clause

$15,286 Fee Award Affirmed Against Limited Partners Joining Unsuccessful Petition to Wind Up Partnership.

     When a contractual fees clause covers “any dispute,” such broad language usually gives rise to fee entitlement. It did in the next case we look at.

     In LaRocca v Briasco, Case No. B217071 (2d Dist., Div. 8 Oct. 14, 2010) (unpublished), general partner was awarded $7,702.50 fees in a probate proceeding and $15,286 fees in a subsequent civil proceeding when two limited partners lost a partnership wind-up petition under a partnership agreement with a fees clause broadly covering “any” dispute between partners under the agreement. Limited partners appealed the latter fee award.

     They likely were disappointed on appeal, because the fee award was affirmed.

     They first argued that only an oral partnership was involved because the partnership had expired under the express term of the partnership agreement. Both the trial and appellate courts disagreed, observing that the partnership had been actually operational for 7 years beyond the stated term so that the partnership continued by operation of Corporations Code section 16406. That also meant that fee exposure continued under the partnership agreement because the continuation also continued rights and obligations under the contract.

     The second argument was that the contractual fees clause did not cover the wind-up petition dispute, but the breadth of the fee provision submarined this argument.

SLAPP: SLAPP Fee Award Properly Reviewed Even Though Entire Case Not To Judgment

Fourth District, Division 3 Disagrees with Dicta in Doe v. Luster.

     You know that this one was going to be interesting when Justice Moore, on behalf of a 3-0 panel of the Fourth District, Division Three, wrote: “This is one of the weakest anti-SLAPP motions this court has reviewed in some time, which is not an inconsiderable achievement.”

You Lose! Good Day Sir!

     Baharian-Mehr v. Smith, Case No. G043068 (4th Dist., Div. 3 Oct. 15, 2010) (certified for publication) involved the appeal of the denial of an anti-SLAPP motion and the subsequent award of attorney’s fees against the moving defendant (a rare occurrence, because the motion has to be deemed frivolous in nature under CCP § 425.16(c)(1)). The fee award was only $1,500, but defendant appealed anyway.

     Justice Moore and her panel colleagues affirmed both rulings.

     With respect to the fee award, the big issue was whether it was premature to rule because there were claims still at large, based on dicta to this effect in Doe v. Luster, 145 Cal.App.4th 139 (2006). The 4/3 panel in Smith found the Doe v. Luster dicta to be unpersuasive and that it would be a waste of judicial resources to defer from addressing the fee issue until the tail end of the case months or years away.

In The News . . . . Lawyer Successfully Challenging MiraCosta College Settlement With Its President Seeking Over $420,000 In Attorney’s Fees

MiraCosta College Trustee Questions Basis for Fee Request Given Attorney’s Client’s Position in the Lawsuit.

     As reported by Paul Sisson in an October 13, 2010 post in The North County (San Diego) Times, an attorney who successfully challenged on behalf of Carlsbad resident Leon Page a $1.6 million settlement between MiraCosta College and its former president is now seeking $423,205 in attorney’s fees from the college (requesting a 30% multiplier to the $325,543 lodestar).

     The motion will be heard in January 2010 by San Diego County Superior Court Judge William S. Dato. Greg Post, a MiraCosta trustee up for re-election this November, questioned why plaintiff would ask for legal reimbursement given Mr. Page’s apparent statements that the lawsuit was meant to protect the college and taxpayers from a raid on public funds. Plaintiff’s attorney requesting reimbursement sees it differently, believing that the successful challenge will make 7,000 California public agencies think twice before granting golden parachutes to past presidents in excess of 18 months of salary and health benefits. Mr. Page also sees it differently, quoted as saying that it was naive for Mr. Post to believe that he should have to pay his lawyer to make the college follow the law.

Probate: Order Requiring Repayment Of Fees By Attorney To Trust Reversed On Appeal

Third District Finds Advance Payment of Fee by Trustee for Trust Administration Work Was Proper.

     Some judges, like the lower court, in the next case we discuss are under a misapprehension that trust administration attorney’s fees have to always be approved by the court and cannot be advanced by the trustee. That is simply not the law, according to the reversal of a lower court taking that very position in Bristol v. Clark, Case No. C062705 (3d Dist. Oct. 14, 2010) (unpublished).

     There, trustee had advanced payment of some attorney’s fees for trust administration work performed by an attorney. The lower court did not like that because the advanced fees exceeded the amount of fees awarded in a prior probate proceeding producing a court-approved order for fee payment. The trial judge ordered the attorney to return the advanced legal fees. Attorney appealed, obtaining a reversal of the disgorgement order.

     First, attorney did have standing because she would suffer a financial hit of an immediate, pecuniary, and substantial nature. (Marsh v. Mountain Zephyr, Inc., 43 Cal.App.4th 289, 293, 295 (1996).)

     On the merits, the appellate panel concluded that the trustee did have authority to pay trust administration-related fees to attorney without prior court approval. Probate Code sections 16243 and 16249 authorize just that. Although other rules require prior court approval for payment of services rendered to the trustee in a personal capacity, the fees in this case related to trust administration work.

Requests For Admissions: $177,030.76 Cost of Proof Sanctions Goes POOF! When Court Of Appeal Finds That Only One Out Of 7 RFAs Was Material

Matter Remanded To Decide Sanctions for One Germane RFA.

     Appellate courts do scrutinize costs of proof sanctions under Code of Civil Procedure section 2033.420 carefully, as the next case demonstrates.

     The trial court in Windward Capital Management Co. v. Christenson, Case No. B210898 (2d Dist., Div. 2 Oct. 13, 2010) (unpublished) imposed costs of proof sanctions under section 2033.420 against defendants for denying seven RFAs. The sanctions award amounted to $177,030.76, prettty heavy hitting when one considers that the total damages awarded only came to about $113,000. The Court of Appeal reversed, finding that the denial of only one RFA was material so that the sanctions had to be recalculated for this single transgression. The other six RFAs were found not to be that important.

     Also, a punitive damages award was reversed because alleged false promises made in connection with settlement negotiations were protected by the Civil Code section 47 privilege. That meant that another $37,500 damages component went POOF! too.

Trio Of Cases: Class Action Fee Distribution, Anti-SLAPP Fees To State Bar, And Reach Of Arbitrator Disclosures Highlighted California Appellate Court Thinking

Declaratory Relief Action Denial Reversed re Class Action Fee Distribution.

     In Carder v. Patten, Faith & Sandford, Case No. B221940 (2d Dist., Div. 5 Oct. 12, 2010) (certified for publication), the appellate court reversed judgment entered against a plaintiff class action lawyer in a declaratory relief action he brought against other class action co-counsel having differences over the distribution of awarded attorney’s fees in a successfully concluded class action. Declaratory relief under CCP § 1060 was found to be proper because there was a justiciable controversy over what proportion of fees were due to each set of attorneys and whether defendants were barred by accord and satisfaction after cashing a settlement check sent by plaintiff. The judge hearing the declaratory relief action also found exclusive jurisdiction was with a different superior court blessing the class action fee award, but the earlier ruling did not back that up and continuing jurisdiction rests with the court (rather than a particular superior court)--although the reviewing court noted “it generally makes sense for enforcement matters to return to the judge originally assigned the case” unless there are changed judicial assignments, retirement, or other unavailability.

California State Bar Entitled to Recovery of anti-SLAPP Fees.

     The second one, Henschel v. State Bar of California, Case No. B213595 (2d Dist., Div. 7 Oct. 12, 2010) (unpublished), involved an attorney’s challenge to an anti-SLAPP fee award of $7,751 against him and in favor of the State Bar. The primary challenge, outside of rebuffed challenges to the amount of the fee award, was that State Bar was barred under the Witte rule precluding fee recovery to self-represented attorneys. This argument did not prevail, according to the appellate court, because the attorney representing the State Bar is more analogous to an in-house counsel, who can be awarded anti-SLAPP fees. (Musaelian v. Adams, 45 Cal.4th 512, 520 (2009).) The result was that the fee award was affirmed.

Arbitrator Representing Law Firms In Fee Disputes Must Disclose His Practice Background to Client Being Chased for Fees by Law Firm in an Arbitration.

     Finally, Benjamin, Weill & Mazer v. Kors, Case No. A125732 (1st Dist., Div. 2 Oct. 12, 2010) (certified for publication) involved a disgruntled client’s challenge of a $102,287.39 contractual arbitration award for claimed delinquent fees owed to a law firm representing client in former expensive, acrimonious civil litigation. The main challenge was that the chief arbitrator failed to disclose that he had represented law firms in challenges by clients to fee awards and had an extensive practice base in this area. The appellate court agreed that this disclosure might be material under the ethical standards that are incorporated into the CCP arbitration disclosure requirements. For our readers who eschew arbitration, there is also an interesting discussion about why disclosure is heightened for arbitrators, given the deference accorded awards and the possible bias arising from an arbitrator’s economic self-interest in deferring to “repeat clients.”

In The News . . . . Zurich Class Action Settlement And Fee Request Against City of Redondo Beach Round Out Our Weekend News

Zurich Financial Agrees to Class Action Settlement—With $90 Million Going to the Attorneys, Potentially.

     As reported by Carolyn Bandel in an October 7, 2010 post at Bloomberg’s businessweek.com, Zurich Financial Services, AG, Switzerland’s largest insurer, has agreed to settle a class action pending in Los Angeles County Superior Court for $455 million, with a potential maximum of $90 million going in attorney’s fees to the class action attorneys if the settlement is approved.

     The case arose from Zurich inheriting Farmers Group Inc. and involved claims about the challenged management services paid by the Farmers Exchange to Farmers Group. In settling, it was reported that Zurich said it might have difficulty producing documents necessary to defend itself in the L.A. class action.

Attorneys for Building a Better Redondo Will Be Seeking $355K in Fees in Measure G Action.

     Building a Better Redondo successfully sued the City of Redondo Beach to force harbor zoning onto the upcoming November ballot as Measure G. BBR was represented by Angel Law, which had some support on the City Council.

     Now, Angel Law has filed a motion seeking to recover $355,000 in legal fees from the City of Redondo Beach, most likely under California’s private attorney general statute.

     That has prompted an uproar by other council members, but Angel Law defended its fees as necessary given the resources they had to devote to the case. More details can be gleaned from Mark McDermott’s October 6, 2010 post on easyreadernews.com.

In The News . . . . San Juan Capistranoʼs Attorneyʼs Fees Tab Hits $978,508.53 Through September 2010 For This Year

That Compares to $399,763.34 Spent in All of 2005

     As reported by Brittany Levine in an article in the October 12, 2010 online edition of The Orange County Register, San Juan Capistrano has paid the law firm of Woodruff, Spradlin & Smart a total of $978,508.53 for 2010 through September of this year. (If you are interested, the article reports that attorneys are compensated at $175 per hour, paralegals/law clerks at $95 per hour, and messengers at $35 per hour.) For a historical perspective, SJC paid the same law firm a total of $399,763.34 in 2005, $455,968.42 in 2006, $728,391.25 in 2007, $563,099.18 in 2008, and $948,873.73 in 2009.

In The News . . . . Chuck Yeager Hit With $275,596 In Attorney's Fees In Right Of Publicity Suit

Award is Mentioned in Recent California Lawyer Article.

     As reported by Matthew Heller in an article in the October 2010 edition of the California Lawyer, iconic test pilot Chuck Yeager has brought some right of publicity lawsuits, obtaining mixed results. However, Mr. Heller notes that retired Air Force Major General Yeager lost a suit against some memorabilia collectors, now owing them attorney's fees of $275,596 as a result of the loss. The judgment creditors apparently have filed a notice of lien in another case he has against AT&T which is steaming towards a projected trial later this year.

     The reason for the award, we surmise, is because California's right-of-publicity statute has a fee-shifting provision that mandates an award of fees to the prevailing party. (Civ. Code, § 3344(a).)

     Mr. Heller's article is aptly titled, "The Rights Stuff."

Consumer Statutes: CCP § 1032 "Prevailing Party" Standard Does Not Have To Govern Fee Recovery Under CLRA or ASFA

Fourth District, Division 3 Rejects Kim's Reliance on § 1032 Standard.

     In a very interesting case arising out of Orange County litigation, our local Santa Ana appellate court has parted company with another appellate court as far as the "prevailing party" standard to use for fee entitlement purposes under the Consumer Legal Remedies Act (CLFA) or Automobile Sales Finance Act (ASFA).

     Plaintiffs filed an action against Family Honda in Orange County Superior Court over the type of navigation system installed in a white 2007 Odyssey Touring vehicle. On the date set for trial, the case settled in a way by which plaintiffs transferred to Family Honda their 2007 vehicle plus $3,780 in exchange for a black 2009 Odyssey Touring vehicle with a factory installed navigation system. (At one point, plaintiffs had wanted much more in settlement discussions, including that Family Honda pay them $30,000.) After substantial give and take in a mandatory settlement conference, this settlement described above was reached, with the settlement judge retaining jurisdiction to decide if there was a prevailing party and if fees should be awarded.

     Plaintiffs filed a motion seeking fees of $158,872 and costs of $6,474, with Family Honda opposing and filing its dueling fee motion seeking a recovery in the amount of $60,093.15.

     Guess what happened? The trial court declined to award attorney's fees, finding there was no prevailing party, but awarding $6,474 in costs to plaintiffs. Plaintiffs then appealed.

     The Fourth District, Division 3, in a 3-0 unpublished decision authored by Justice Moore, affirmed. The case is Winer v. Family Investment Co., Inc., Case No. G042009 (4^th Dist., Div. 3 Oct. 7, 2010) (unpublished).

     The central issue in the appeal was aptly titled "Costs Gets You Fees?" by Justice Moore. The appellate panel, after noting that neither the CLFA nor ASFA defined "prevailing party" for fee purposes, parted company with the approach taken in Kim v. Euromotors West/The Auto Gallery, 149 Cal.App.4^th 170, 181 (1997), which applied the CCP § 1032 "prevailing party" approach by analogy—a liberal approach given that the plaintiffs need only show they obtained a "net monetary recovery" on their CLRA claim. The Court of Appeal found that Kim's underlying authority for such an approach was not compelling, preferring the "pragmatic approach" endorsed instead by Graciano v. Robinson Ford Sales, Inc., 144 Cal.App.4^th 140, 150 (2006) which focuses on who prevailed on a practical level.

     There is also an interesting discussion of what can and cannot be used from settlement discussions at the fee hearing, with the appellate court basically determining that information used by the fee motion judge was reflected in the public record.

     The lower court did not err in concluding that there was no prevailing party in light of the "give and take" in which both sides came down from their initial positions. Fee denial affirmed.

Civil Rights And Poof!: $329,208.35 Fee Award Evaporates Because Plaintiff Did Not Timely Plead A Section 1983 Claim

Second District, Division 2 Strikes Fee Award.

     Here is a reminder that fee entitlement is a key liminal concern for review of any attorney's fees award. The failure to plead a claim allowing for fee recovery can and often will be fatal to the ability to recoup substantial attorney's fees. The next case is a graphic illustration, costing a successful plaintiff in a police battery case a lot in fees when a substantial fee award went POOF! on appeal.

     In Mock v. County of Los Angeles, Case No. B217502 (2d Dist., Div. 2 Oct. 6, 2010), plaintiff brought a complaint against L.A. County and two L.A. County sheriffs for violation of the Bane Act, false arrest/imprisonment, assault, battery, and negligence. One of the sheriffs was let out on summary judgment, and the County's negligence claims were adjudicated out on a summary adjudication motion. No claim under the federal civil rights statute (42 U.S.C. § 1983) was pled, nor any prayer for recovery of fees under the civil rights fee shifting statute (§ 1988). Two years after filing of the complaint, plaintiff moved to amend to assert a section 1983 claim, a request denied by the lower court as being prejudicial to defendants.

     The jury found in favor of plaintiff only on the battery claim, awarding him $241,350 in damages. Plaintiff then requested an award of $516,232.50 in attorney's fees under section 1988, with the trial court granting fees to plaintiff of $329,208.35. Defendants appealed.

     The fee award was indeed reversed on appeal.

     The reason? Plaintiff did not prevail on a section 1983 claim, with the earlier request to amend having been denied by the trial judge. Not every battery results in a constitutional violation, with a section 1983 claim being harder to prove than a battery claim. Just as salient, there was a fundamental unfairness if plaintiff could recover fees from defendants—after all, the absence of the section 1983 claim impacted settlement options and denied defendants the opportunity to remove the case to federal court (and assert other defenses). Under the circumstances, reversal of the fee award was seen as the fair thing to do, decided Justice Ashmann-Gerst on behalf of a 3-0 panel.

BLAW BONUS:  Recipe for Mock Chopped Liver.

Mediation: Third District Decides That "Mediation Condition Precedent" Clause In Real Estate Contract Only Applies To Party Commencing An Action

It Does Not Apply to Someone Simply Defending An Action.

     In our category "Mediation," we have explored many decisions entertaining the issue of when attorney's fees are properly awarded under California real estate purchase agreements with attorney's fees clauses mandating mediation as a condition precedent to fee recovery. Here is another decision on the topic, with the "bottom line" message being that you need to pay attention to the wording of the clause (contractual interpretation 101) and then see what version of the CAR contract that is at issue for purposes of resolving a dispute (contractual interpretation advanced class—given that the CAR contract forms have changed over the years).

     Yelinek v. Lane, Case No. C061919 (3d Dist. Oct. 5, 2010) (unpublished) involved a defense verdict in favor of a residential house seller in a fraud/negligent misrepresentation action involving a CAR real estate agreement with a fees clause subject to a mediation condition precedent. The trial judge ultimately awarded defendant seller $49,575 in attorney's fees and $3,808.20 in costs after seller refused to mediate with buyers.

     Buyer's appeal, arguing that seller's failure to mediate prevented an award of attorney's fees, was unsuccessful.

     The mediation condition precedent clause prevented a fee award with respect "to any party commenc[ing] an action based on a dispute or claim to which this paragraph applies …."

     The Court of Appeal determined the fee award was proper, because defendant seller never commenced any action such that he did not have to agree to mediation before being entitled to fee recovery. (Accord, Johnson v. Siegel, 84 Cal.App.4^th 1087, 1101 (2000).) The Third District distinguished the leading case of Frei v. Davey, 124 Cal.App.4^th 1506 (2004) on the ground that the defendants barred from fee recovery there were also cross-complainants such that they needed to satisfy the mediation requirement. In contrast, the defendant in Yelinek was only defending so that he did not need to agree to mediation for fee recovery qualification purposes.

     BLOG OBSERVATION—In this area, litigants also need to be attuned to the fact that the mediation condition precedent in the CAR contract has evolved over the years. We believe that it also now applies to a defendant who refuses to accede to mediation after a plaintiff offers to do so before commencing an action. So, keep focused on the wording of the fee clause and its qualifications in order to determine if fee recovery is in "the ballpark" (aptly stated given that we are now in the midst of the Major League playoffs).     Below:  Babe Ruth.

Fees Clause Interpretation: Fourth District, Division 3 Adopts Contextual Interpretation of Fees Clause

Appellate Court Strikes Attorney's Fees Award of $9,350 in Favor of Plaintiff.

     In Legal Service Bureau, Inc. v. Mostafavi, Case No. G041804 (4^th Dist., Div. 3 Oct. 4, 2010) (unpublished), our local Santa Ana appellate court dealt with a lower court judgment awarding $9,350 to plaintiff under an attorney's fees clause of an agreement between each side. The basic dispute involved compensation entitlement to a company that agreed to represent a chiropractor in connection with pursuit of certain lien claims before the Workers' Compensation Appeals Board. After company did not obtain all the compensatory fees it desired for representing chiropractor, yet did obtain some fees primarily under an unjust enrichment theory, the trial court nevertheless did award attorney's fees to company and against chiropractor pursuant to a contractual fees clause. Everyone appealed.

     The underlying judgment in favor of plaintiff was affirmed, but the Court of Appeal did strike the fee award, in a 3-0 opinion authored by Acting Presiding Justice Bedsworth.

     What was the basis for the reversal? Simple answer: the wording of the fees clause, interpreted by a contextual construction of the entire contract between the parties, did not justify an attorney's fees award. The fees clause only applied to routine billing disputes under the contract, not unjust enrichment claims that were not covered by the fees clause. As aptly observed by the appellate panel, "In the absence of an applicable fee shifting provision, both parties must bear their own attorney fees." (Slip Opn., citing Trope v. Katz, 11 Cal.4^th 274, 278 (1995).)

In The News . . . . Joe Francis "SLAPPed" By Playboy Playmate Of The Year

Mr. Francis Ordered to Pay $36,000 in Fees as SLAPP Loser.

     Los Angeles County Superior Court Mark Mooney threw out Girls Gone Wild CEO Joe Francis' defamation suit against Playboy Playmate of the Year Jayde Nicole pursuant to an anti-SLAPP motion. The suit stemmed from a fight at a West Hollywood nightclub last year. Then, the judge ordered Mr. Francis to pay $36,000 in fees to Ms. Nicole under the SLAPP fee-shifting statute.

     However, that is not the end of the story. The two also have sued each other for assault and battery, claims that have not yet been decided according to an October 4, 2010 post by Lyla Katz of XBIZ.com.

Settlement Confidentiality And Fees: Texas State Court Judge Orders Hurricane Ike Fees Under Wraps

Fees Will Be Disclosed in a Future Hearing.

     Well, here is one with a twist, counterintuitive to courts being public and access friendly—whether settlements or attorney's fees requests are involved (which generally are not kept under wraps).

     Galveston County 212^th District Courty Judge Susan Criss has ordered that attorney's fees to be paid in a $189 million Hurricane Ike settlement are to remain under wraps for the time being, reports John Suayan in a September 30, 2010 post in the Galveston Bureau.

     The fees are to be disclosed at a future hearing, but a political storm has broken out because State Rep. Larry Taylor believes that the fees should not be confidential and opposes the fee requests based on his view that the money should go toward home repairs.

     I guess we learn later about the attorney's fees awarded as part of the ultimate settlement.

In The News . . . . San Juan Capistrano Stung With $2.3 Million In Litigation Expenses After It Lost Development-Related Lawsuit By Scalzo Family Trust

Expense Award Follows on the Heels of Nearly $7 Million Adverse Jury Verdict.

     As reported by Vik Jolly in a September 27, 2010 article in The Orange County Register, San Juan Capistrano must be reeling from a recent adverse jury verdict and subsequent litigation expenses award stemming from a lawsuit it lost against the Scalzo Family Trust about 121 developments conditions that City placed on the Belladonna Estates project, a 31-lot development on nearly 17 acres of land on property owned by the Trust along the west side of Del Obispo Street north of Paseo de la Paz and south of Calle Aspero.

Above:  c1900 – 1930.  Library of Congress.

   

     The Trust sued and won a nearly $7 million jury verdict in June 2010, a verdict that was not overturned by the trial judge, Orange County Superior Court Judge Gail Andler. Also, Judge Andler apparently awarded $2.3 million in litigation expenses against the City in the same suit sometime last week. City has avowed to appeal.

     Mr. Jolly reports that this may have a big impact on San Juan Capistrano, because this potential loss may not be insured. Since the last 1970s, most small to medium-sized cities do not insure through private carriers but pay liability insurance premiums to the California Joint Powers Insurance Authority (CJPIA), a governmental body representing some 119 entities such as cities and small governmental agencies. The CJPIA administers the insurance pool and calculates premiums based on a complex formula, self-insuring most liability claims up to $10 million and then using various excess insurers to cover larger risks up to $50 million. This insurance generally blunts the blow of large settlements or judgment for small to medium cities. However, here is the rub: the judgment amount in the Scalzo Family Trust case may not be covered by insurance because it stems from a land-use permit approval, according to reporter Mr. Jolly.

     This could be quite a fiscal predicament for San Juan Capistrano, which has roughly a $22 million general fund budget. City Attorney Omar Sandoval has told Mr. Jolly that if the large judgment is upheld on appeal, the city has options such as a standard loan or to pay the judgment in up to 10 annual installments pursuant to law. (BLOG OBSERVATION—This refers to some California Government Code provisions that allow a city to seek installment-based payments for some judgments, as well as specifying the mandate relief available to victorious litigants in some disputes.) However, until something else occurs (such as a reversal on appeal), this large judgment continues to accrue interest at a 7% per annum basis. Obviously, we will be reporting on developments in the future, be it a settlement or the opinion from the Fourth District, Division 3.

Landlord/Tenant: Vexatious Litigant Hit With $176,417 In Fees And Costs Under Retaliatory Eviction Fee-Shifting Provision

First District, Division 3 Grants Fees Under CC § 1942.5(g).

     Ouch—the sting of attorney’s fees can be harsh. Plaintiff, declared to be a vexatious litigant in a case involving a retaliatory eviction cross-claim, discovered that lesson the hard way. 

     King v. Nielsen, Case Nos. A124067/A124801 (1^st Dist., Div. 3 Sept. 29, 2010) (unpublished) was a situation where a litigant was declared a vexatious litigant, with the unpublished decision containing an interesting discussion of the law in this area. However, the winning litigant eventually recovered $176,417 in fees and costs for winning a retaliatory eviction cross-claim against vexatious litigant.

     Vexatious litigant was unable to overturn the substantial fee award on appeal. Civil Code section 1942.5(g) permits a fee award to a tenant who prevails in an action for retaliatory eviction. Winning litigant prevailed against vexatious litigant in the retaliatory eviction cross-claim, justifying the fee award.