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 A125993/A126123 (1st Dist., Div. 3 Oct. 21, 2010) (unpublished) was an appeal representing the culmination of an eight-year battle between the buyers and sellers of a piece of residential property.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.
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