CALIFORNIA ATTORNEY'S FEES

In The News . . . . San Diego Superior Court State Judge Denies Without Prejudice A $756,132 Fee Request To Winner In San Diego Fireworks Permitting Dispute

 

Fee Request Was Ruled To Be Premature In Nature.

     In a follow-up to our post of October 25, 2011, San Diego Superior Court Judge Linda Quinn denied a requested $756,132 in attorney’s fees under California’s private attorney statute by attorney Mario Gonzalez for winning a case challenging San Diego’s fireworks permitting process. She ruled that the request was premature because not all of the related litigation had been resolved. The La Jolla Community Fireworks Foundation called the request “grossly excessive.” Mr. Gonzalez liked the judge’s ruling, because she indicated the fee claim may increase over time and may have been inviting the parties to settle up the fee request.

     More information on this overall dispute and the recent fee request ruling can be found in Mike Lee’s November 18, 2011 post at signonsandiego.com.

Class Actions/In The News: Prof. Fitzpatrick, At A Recent Washington, D.C. Panel Seminar, Contends That Class Action Lawyers Get “A Bad Rap” On Fee Awards

 

He Has Empirical Evidence to Support His Position.

     In Washington, D.C., there was an interesting recent panel discussion at the National Lawyers Convention of the Federalist Society, discussing whether attorney’s fees in class actions are too low, too high, or just right. Some panelists cited class action abuses, but an unlikely panelist for some--Professor Brian T. Fitzpatrick of Vanderbilt University Law School--had a more empirical perspective that somewhat indicated class action attorneys may be getting a “bad rap” when it comes to fee awards.

     Professor Fitzpatrick was somewhat of a surprising spokesman with such a view, given his clerkships with such conservative leaning jurists as Ninth Circuit Judge Diarmuid O’Scannlain and U.S. Supreme Court Justice Antonin Scalia, as well as his status as a Federalist Society favorite. (The Federalist Society is an organization of conservatives seeking reform of the current American legal society according to a textualist and/or originalist interpretation of the U.S. Constitution, according to Wikipedia.)

     Based on his empirical study of the class action world in the past few years, Professor Fitzpatrick’s conclusion is that “class action lawyers get a bad rap.” Instances of misconduct should not be viewed as representative of the entire class action bar, Professor Fitzpatrick opined during the panel discussion.

     On the whole, class action lawyers do not receive excessive compensation, he concluded. Professor Fitzpatrick reviewed two years of class action settlements and found that the plaintiffs’ lawyers received fees equal to approximately 15 percent of the total settlement money — an amount that is “not that opulent” in quotes made to public sources reporting on the panel. Of the $33 billion in settlement value for this two-year period, only 4 percent was attributable to the value of injunctions, and well over 75 percent of the amount was distributed to class members (e.g., pro rata distribution in shareholder class action suits).

Employment: 2d Dist., Div. 5 Disallows Fees To Defendant Employer in Issue Before California Supreme Court In Kirby And UPS Wage & Hour Cases.

 

     The Second District, Division 5 in McGaha v. Mountain High Resort Assn., Case No. B2227086 (2d Dist., Div. 5 Nov. 22, 2011) (unpublished) affirmed a denial of $50,319.50 attorney’s fees to defendant employer after dismissal without prejudice of various work-related claims brought by plaintiff employee. The fee refusal was sustained based on an issue before the California Supreme Court in Kirby and UPS Wage & Hour Cases involving the interplay between Labor Code sections 218.5 and 1194 on overtime, meal break, and rest break claims. The appellate court found that employee should not face fee exposure based on the plain meaning of the statutes and legislative history indicating the Legislature so intended.

Special Fee Shifting Statute/Section 1717/Section 998/Allocation: Fee Awards Do Not Have To Be Proportional To Damages Award

 

2d Dist., Division 6 So Holds In Two Unpublished Opinions, Besides Facing Other Issues.

Weiss v. Cope, Case No. B24970 (2d Dist., Div. 6 Nov. 22, 2010) (unpublished)

     In this one, plaintiff rejected defendant’s 998 offer. However, plaintiff’s total judgment--the sum of the jury award and $100,000 in attorney’s fees awarded by the trial court pursuant to Code of Civil Procedure section 1021.4 (a fee-shifting statute allowing the trial court to award fees to a prevailing party in an action against a defendant based upon defendant’s commission of a felony)--beat the 998 offer and made plaintiff the prevailing party, with the fee award putting plaintiff over the top. This meant that defendant was not entitled to recover post-offer costs. (Steele v. Jensen Instrument Co., 59 Cal.App.4th 326, 330 (1997).) The defense appeal of the fee award was unsuccessful, because (1) fees do not need to be proportionate to damages (here, $100,000 in fees versus $49,000 in damages); (2) the fee award was reasonable (the trial court substantially cut down the $242,000 fee request); and (3) the section 1021.4 fee entitlement statute was remedial and not punitive in nature (Marron v. Superior Court, 108 Cal.App.4th 1045, 1065 (2003)).

Asphalt Professionals, Inc. v. T.O. IX, LLC, Case No. B230927 (2d Dist., Div. 6 Nov. 22, 2011) (unpublished)

     This one began with a bang: “This case is before us once again. It teaches a lesson: A surfeit of litigation over a relatively modest damage claim can produce an abundance of attorney’s fees far in excess of that claimed and payable by the losing side.”

     Defendant appealed a $1.65 million fee award (out of a requested $1,682,195) in a breach of construction contract case where trial court found defendant had no legitimate defense for not paying and used six different law firms during the course of the case. The fee award was sustained, rejecting these arguments otherwise: (1) no apportionment was required because the contract, fraud, and alter ego claims were all interrelated; (2) it was appropriate for the trial court to award interim fees in the bifurcated first phase of the case (Sundance v. Municipal Court, 192 Cal.App.3d 268, 271 (1987)); (3) proportionality is not required between fees and the damages award (with plaintiff obtaining a $320,000 substantial damages award--see Harman v. City and County of San Francisco, 158 Cal.App.4th 407, 421 (2007)); (4) the hourly rate used in the lodestar analysis was commensurate with those rates cited in the National Law Journal annual surveys; and (5) the fees were not excessive because the case was vigorously contested, with the defense spending about the same as the plaintiff in litigating the case.

     Both 3-0 decisions were authored with panache by Presiding Justice Gilbert.

Continuing Education: NALFA’s 2011 Attorney’s Fees Conference Panel No. 4

 

Discusses “Insurance Coverage Litigation: Who Pays The Legal Bills?”

Part 4 of 4

[Links to Parts 1, 2 and 3]

     The last panel of NALFA’s 2011 Attorney’s Fees Conference on November 17, 2011 discussed “Insurance Coverage Litigation: Who Pays the Legal Bills?” The panelists in Panel No. 4 were Andre E. Jardini (of KPC Legal Audit Services, Inc.), Susan P. White (of Manatt Phelps & Phillips, LLP), and Susan J. Field (of Musick Peeler & Garrett, LLP).

 

Continuing Education: NALFA Panel 3 Addresses “Attorneys’ Fees in Chapter 11”

 

Part 3 of 4

[Links to Parts 1, 2 and 4.]

     At the November 17, 2011 Attorney Fees Conference hosted by NALFA at Loyola Law School, the third panel examined “Attorneys’ Fees in Chapter 11.” That panel was composed of U.S. Bankruptcy Judge Deborah J. Saltzman (C.D.Cal.), Craig H. Averch (of White & Case LLP), Eric Winston (of Quinn Emanuel Urquhart & Sullivan, LLP), and David Paige (of Sterling Analytics).

Appealability: Tenant’s Appeal Of Merits Judgment Not Mooted By Lease Forfeiture Relief

 

Reason Is that Landlord Gained Fee Award Against Tenant as Prevailing Party.

     Mitchell Land & Improvement Co. v. Ristorante Ferrantelli, Inc., Case No. G043936 (4th Dist., Div. 3 Nov. 22, 2011) (unpublished), a 3-0 opinion authored by Justice Ikola, determined that a tenant appeal of an adverse unlawful detainer merits judgment was not moot. Landlord won the unlawful detainer, and tenant appealed--but subsequently was granted relief from forfeiture although landlord was awarded fees/costs of $68,000. Landlord initially argued that tenant’s appeal was moot based on the lease forfeiture relief. Nope, said the appellate court. The appeal was alive and well because landlord was the prevailing for a fee/costs award, such that a reversal of the merits judgment might impact on the prevailing party determination (something that did not happen anyway). However, the appeal was not moot as far as the merits were concerned.

     BLOG UNDERVIEW--Happy Thanksgiving to all of our readers and followers!

Happy Thanksgiving to All Our Readers

Mexican Wild Turkey.  Artist:  Louis Agassiz Fuertes.  c1912-1920.  Library of Congress.

Deadlines: Amended Judgment On Fees/Costs Award Was Substantial Change Restarting Appeals Clock And Time For Filing Fee Motion Following Prior Appellate Opinion Directives

 

Appellate Court Follows Erickson over Torres on Amended Judgment Procedural Issue.

     This next case is a sequel to an appellate opinion we discussed in our December 1, 2009 post, where the Second District, Division 4 decided that the first 998 offer is the proper measuring stick in a case where a second 998 offer is withdrawn by the offeror.

     One Star, Inc. v. Staar Surgical Co., Case No. B229034 (2d Dist., Div. 4 Nov. 22, 2011) (unpublished) is the appellate opinion after further court proceedings following in the wake of the prior opinion and may be the last opinion in the overall litigation between the parties.

     Because the prior opinion remanded so that defendant/cross-complainant could seek fees and costs as the 998 offer winner, the matter did see some further lower court activities. The trial court, on remand, awarded defendant/cross-complainant $557,946.15 in total fees and costs (including appellate fees relating to the prior opinion work by defendant/cross-complainant). Unhappy plaintiff/cross-defendant appealed.

Rembrandt’s The Anatomy Lesson (1630).

Retainer Agreements/Section 1717: Second District, Division 6 Finds Trope Fee Waiver Unenforceable

 

No Lock On Trope Waiver, But Court Finds Fees For Other Attorneys May Not Be Barred By Trope; Nonsignatory Entitled to Fees Based on Alter Ego Theory.

     Here is an interesting unpublished decision from the Second District, Division 6--interesting because it parts company with the holding in Lockton v. O’Rourke, 184 Cal.App.4th 1051 (2010), which validated a retainer agreement that allowed compensation of attorney litigating a fee dispute (a Trope waiver clause).

     Biggins v. Madison, Case No. B220202 (2d Dist., Div. 6 Nov. 22, 2011) (unpublished) involved a situation where plaintiff attorney was denied fees under an attorney-client retainer agreement even though he won damages in a dispute he litigated (along with other attorneys representing his interests) over the proper division of attorney’s fees between client and various attorneys after a settlement of a matter governed by a contingency agreement. Plaintiff was denied attorney’s fees for winning damages based on Trope--he represented himself. Plaintiff said “no way,” because my client retainer agreement had a Trope waiver clause (allowing compensation to the attorney representing himself in a fee dispute)--a waiver validated in Lockton. The Second District, Division 6 disagreed: “We decline to follow Lockton. As we have stated, section 1717 prohibits such one-sided attorney fee agreements.” However, the matter was remanded, because the lower court did not consider whether other attorneys representing winning attorney were worthy of compensation (falling outside the Trope preclusion).

     A nonsignatory party was awarded $66,875.45 in fees under Civil Code section 1717. This fee award was affirmed because plaintiff alleged a signatory defendant was the alter ego of the nonsignatory party and, had plaintiff prevailed on this theory, the nonsignatory would have been liable for fees under Reynolds Metals (one of our Leading Cases).

Section 1717/Deadlines: Prevailing Landlord Forfeited Fee Entitlement By Not Filing Noticed Motion For Fees

 

Merely Objecting to Preliminary View in Statement of Decision Not Enough.

     Landlord won modest damages in case, but was denied an award of attorney’s fees in a statement of decision giving a preliminary view on the prevailing party issue, a statement drawing objections by both sides and resulting in an eventual judgment stating both sides would bear their own fees/costs.

     Landlord appealed the fee denial in Pace v. Orozco, Case No. B225816 (2d Dist., Div. 4 Nov. 22, 2011) (unpublished). The denial stuck on appeal. Reason? Landlord never filed a noticed fee motion, which forfeited the fee entitlement claim on appeal. (Hydratec, Inc. v. Sun Valley 260 Orchard & Vineyard Co., 223 Cal.App.3d 924, 929 (1990).) In so reasoning, the appellate court distinguished Dorman v. DWLC Corp., 35 Cal.App.4th 1808 (1995) because the forfeiture issue was not raised in a case garnering a reversal of a fee denial under a similar factual pattern.

SLAPP: Before Fees Can Be Awarded, Merits Of SLAPP Motion Must Be Considered

 

Ruling So Held in Strange Peremptory Challenge of Deciding Trial Judge.

     The next case occurred in the context of a rather strange procedural framework.

     In Rolla v. Speidel, Case No. D05783 (4th Dist., Div. 1 Nov. 22, 2011) (unpublished), the original trial judge granted a peremptory challenge and the case was assigned to another judge. The second judge granted SLAPP motion on some causes of action, and plaintiff dismissed the remainder. Plaintiff filed a second action based on new causes of action, and it was assigned to the original judge who was “struck” via the peremptory challenge. But, wait, it gets better. Plaintiff did not file a normal peremptory challenge, opting instead to file a bias challenge that was rejected because different causes of action were involved. The defense filed a SLAPP motion to the second action, plaintiff dismissed the second before the motion could be heard, and the originally “stricken” trial court granted the defense $15,000 in attorney’s fees as the prevailing party on the SLAPP motion without really considering the merits.

     Plaintiff’s appeal had mixed results.

     Plaintiff didn’t win the argument that the first peremptory challenge was a continuation action which could “strike” the judge a second time around because the second action was not just a continuation of the first action. This meant the original “stricken” judge had jurisdiction to award fees.

     However, here came the rub. Reversal and remand was required because the judge did not consider the merits of the SLAPP motion before awarding fees, agreeing with the analysis of Liu v. Moore, 69 Cal.App.4th 745, 750-753 (1999) that this predicate step had to be undertaken.

Section 1717: Reciprocity Principles Did Justify Substantial Fee Awards

 

$8.6 Million and $3.1 Million Defense Fee Recoveries Affirmed on Appeal.

     For those of you wanting to justify substantial fee awards under Civil Code section 1717, Linear Technology Corp. v. Tokyo Electron, Ltd., Case No. H035713 (6th Dist. Nov. 22, 2011) (certified for publication) is must reading.

     There, in a breach of contract action claiming defendants did not back up patent infringement indemnities, plaintiff lost and one set of defendants was awarded $5,200,931.62 (out of a requested $8,616,419.37) in attorney’s fees while another set of defendants garnered $3,145,498 (out of a requested $3,258,757) in fees. Plaintiff appealed.

     However, the appellate court affirmed the fee awards under the reciprocity principles at play under contractual fees clauses and their complementary statutory authorization, section 1717. The purchase agreements did have a fees clause, and “[a] prevailing defendant should not be required to undergo a mini-trial to establish the merit of the losing plaintiff’s hypothetical fee claim under the contract on which the plaintiff sued.” (Slip Opn., p. 12.)

Construction/Prompt Payment Statutes/Section 1717: $528,410.24 In Fees/Costs Awarded To Winning Defendant/Cross-Complainant Under Contractual Fees Clause

 

Prompt Payment Statute Did Not Mean Fees Went to Plaintiff Winning Some Money.

     In Angotti & Reilly v. Alexander Group, Case Nos. A127917/A128743 (1st Dist., Div. 2 Nov. 21, 2011) (unpublished), plaintiff sued for unpaid contractor fees under a construction contract with a fees clause, and defendant/cross-complainant countersued for defective work. Plaintiff obtained a $99,000 verdict for services rendered (not breach of contract), and defendant was awarded $129,700 for plaintiff’s breach of contract under the cross-complaint. The trial court awarded defendant/cross-complainant $528,410.54 in fees and costs, because cross-complainant received more in damages.

     The appellate court affirmed, rebuffing plaintiff’s argument that it was mandatory that fees be awarded to plaintiff for its win under the construction prompt payment statutes. (We have blogged on this before; go to the home page search function and enter “prompt payment statutes” if you want to see our previous posts in this area.) The fee-shifting statute can be preempted if the contract of the parties expressly provides otherwise in writing, something that did occur here through the execution of certain change orders taking plaintiff’s dispute out of the prompt payment statutes. Fees/costs were properly denied as to plaintiff, with the adverse award against it being a big one.

Section 998: $10,000 Offer In Case Where Plaintiff Lost Due To Causation Held To Be Too Nominal In Nature

 

Plaintiff Did Not Have to Pay $21,000 in Expert Witness Fees.

     Plaintiff in Sanchez v. Molina, Case No. F059653 (5th Dist. Nov. 21, 2011) (unpublished), who sought $700,000 in damages and lost a jury trial based on lack of causation (although negligence was found), had rejected a defense $10,000 offer under CCP § 998 and the defense rejected plaintiff’s $124,999.99 998 offer. The defense sought to recovery $21,000 in expert witness fees because plaintiff did not beat the 998 offer.

     Didn’t happen. The Fifth District affirmed the lower court’s determination that the $10,000 offer was too nominal in nature. At the time of the defense offer, plaintiff had incurred over $80,000 in costs and had no money from other defendants (although another set of defendants later did settle for $250,000). Plaintiff’s injuries were not insignificant, and jury did find the nonsettling defendants were negligent even though not awarding damages on causation grounds. The 998 requirement of not enforcing token offers made in bad faith was fairly applied in this case, the appellate court found.

  Mid-century NYC Transit Authority Token.  Wikipedia.

Reasonableness Of Fees: $52,848 Fee Award Sustained

 

Proper Substantiation and Reduced Hourly Fee Clinched the Result.

     A trial court awarded $52,848 fee award to a defendant who non-suited a plaintiff in a legal malpractice action at trial. Plaintiff challenged the fee award as excessive.

     Not so, said Presiding Justice Mallano--in a 3-0 opinion--in Jackson v. Kim, Case Nos. B219116/B221686 (2d Dist., Div. 1 Nov. 17, 2011) (unpublished). Plaintiff’s counsel presented competent substantiation, reduced the hourly rate to $350, and did have to take depositions/gear up for trial, all justifying the lower court’s actual award.

Insurance: True Bad Faith Action Must Be Resolved By Trial Court, Defraying The Timing Of Future Cumis Arbitration Depending On Bad Faith Ruling

 

Timing of Arbitration is the Result Here.

     Janopaul+Blocks Cos., LLC v. Superior Court, Case No. D059282 (4th Dist., Div. 1 Nov. 17, 2011) (certified for publication) is an interesting Cumis situation where an insurer did not agree to defend until 2 years after tender and, before there was a ruling on a Civil Code section 2860 arbitration request by the insurer to gauge reasonableness of Cumis counsel’s rate (and possibly work), insured filed a bad faith lawsuit. The trial court granted an insurer’s 2860 arbitration request, prompting a mandate petition by insured.

     Insured won.

     Because the bad faith action went beyond the normal 2860 arbitration narrow issues, the trial court needed to make a preliminary ruling on the bad faith issues. If the insurer wins, then the 2860 arbitration request could be resurrected. In the end, a timing issue in a case dependent upon very unusual defense acceptance “lag” circumstances.

     BLOG UNDERVIEW--Co-contributor Mike spoke at and attended the National Association of Legal Fee Analysis (NALFA) Los Angeles conference yesterday on 2011 Attorney’s Fees. There were four panels, which will be the subject of future blogs on each one. However, Susan P. White of Manatt Phelps & Phillips, LLP did speak on this case, opining it was correctly decided under the circumstances, as a panel member with Andre E. Jardini (of KPC Legal Audit Services, Inc.) and Susan J. Field (of Musick Peeler & Garrett, LLP) on “Insurance Coverage Litigation” Who Pays the Legal Bills?” More to come on the NALFA conference in future posts.

Special Fee Shifting Statute: Employee Cannot Deduct Litigation Costs From Refund Owed To U.S. From Any FECA Benefits After Third Party Recovery

 

Ninth Circuit So Rules In Case of Statutory Construction.

     Under the Federal Employee Compensation Act (FECA), disability benefits are provided to federal employees who are injured on the job, subject to an employee bringing a civil case against a responsible third party and refunding to the U.S. any FECA benefits received by the employee.

     The Ninth Circuit, in Durand v. U.S. Dept. of Labor, Case No 10-36184 (9th Cir. Nov. 17, 2011) (for publication), decided that an employee involved in a helicopter crash cannot deduct litigation costs from that refund under 5 U.S.C. § 8132. Although the employee may deduct his litigation costs (including fees) from his gross recovery to determine any surplus amount credited to the U.S., the deduction cannot be made at the refund level.

SLAPP/Private Attorney General Statute: Government Municipality Winning SLAPP Motion Entitled To Fee Award

 

Noerr-Pennington Sham Exception Did Not Need to be Hurdled By City, Resulting in Affirmance of $226,928 Fee Award.

     The Sixth District in Vargas v. City of Salinas, Case No. H035207 (6th Dist. Nov. 18, 2011) (certified for publication), a case that had gone up to the California Supreme Court and back through the lower courts, affirmed a $226,928 attorney’s fees award and $2,495.84 costs award in favor of the City of Salinas after it won a SLAPP motion in plaintiffs’ suit for misuse of public funds in supporting a utility tax.

     Plaintiffs’ multiple challenges to the fee/costs award were rejected on appeal.

     Plaintiffs were not successful parties for purposes of a private attorney general statute. Although they did win some arguments in the supreme court case, plaintiffs lost the war and did not “catalyze” any change in governmental conduct. “This is not success,” said the appellate court, relying on Ebbetts Pass Forest Watch v. Dept. of Forestry & Fire Protection, 187 Cal.App.4th 376, 387-388 (2010).

     SLAPP law did apply to plaintiffs’ suit against the City, based on the supreme court’s reasoning in Vargas I (Vargas v. City of Salinas, 46 Cal.4th 1, 17 (2009).)

Continuing Education: NALFA 2011 Attorney Fees Conference Examines “Class Action Litigation and Attorney Fee Awards”

 

Part 2 of 4

[Links to Parts 1, 3 and 4]

     The second panel of the NALFA 2011 Attorney Fees Conference held on November 17, 2011 at Loyola Law School discussed “Class Action Litigation & Attorney Fee Awards,” consisting of panelists Los Angeles County Superior Court Judge Carl J. West, Aashish Y. Desai (of Mower Carreon & Desai, LLP), and Brian S. Kabateck (of Kabateck Brown Kellner, LLP). Here are the highlights from this panel discussion.

Continuing Education: NALFA 2011 Attorney’s Fees Conference

 

Part 1 of 4: “Attorney Fees in Prevailing Party Litigation”

[Links to Parts 2, 3 and 4]

     National Association of Legal Fee Analysis (NALFA), through the coordination of Executive Director Terry Jesse, held the 2011 Attorney Fees Conference at Loyola Law School on November 17, 2011. There were four panels, and we will blog on all of them.

     First up, the panel on “Attorney Fees in Prevailing Party Litigation,” conducted by panels Hon. Jay C. Gandhi (U.S. Magistrate Judge, U.S.D.C., C.D.Cal.), Mike Hensley (a co-contributor on this blog), and David H. Paige (of Sterling Analytics Group, Woodbury, N.Y.).

Indemnity/Section 1717: Indemnity Fee Award Affirmed; Section 1717 Award Reversed After Voluntarily Dismissal of Some Claims

 

Longstanding Case May Be Finally Resolved Except for Appeal Costs for Two Parties.

     In our February 20, 2009 post, we looked at a complicated, multi-party construction dispute that produced some interesting fee rulings. That case was Jeld-Wen, Inc. v. Pacific Coast Roofing Corp. Because the 2009 appellate opinion remanded for reconsideration of certain issues, the close-to-final chapter to the litigation saga looks like it has come down in Jeld-Wen, Inc. v. Pacific Coast Roofing Corp., Case No. D056204 (4th Dist., Div. 1 Nov. 17, 2011) (unpublished)--a 72-page opinion whose highlights we now summarize.

     Certain fee awards under the indemnity costs provisions of Code of Civil Procedure section 1038 were affirmed. Earlier, they were reversed because a summary adjudication (versus summary judgment) does not give rise to entitlement under section 1038. However, after remand, a development occurred in the form of a voluntarily dismissal of a remaining claim that effectively turned the summary adjudication into a summary judgment. So, the defense indemnity costs were appropriate. The dismissal did not deprive the trial court of the ability to adjudge fee requests, and the cost award was still recoverable even though an insurance carrier paid those costs (put another way, they were still “incurred” under Lolley v. Campbell, 28 Cal.4th 367, 373 (2002)). Also, attorney declarations on time expeded were sufficient, since contemporaneous time records are not a substantiation requirement in state court cases--unlike the counterpart rule in federal courts. (Martino v. Denevi, 182 Cal.App.3d 553, 559 (1986).)

     However, the section 1717 fee award had to be overturned, because the voluntary dismissal did preclude such an award under section 1717. (Kelley v. Bredelis, 45 Cal.App.4th 1819, 1837 (1996).)

    Although there are other tidbits on somewhat unique procedural issues, these are the highlights -- did we do good on summarizing a 72-page decision? However, two parties did get costs on appeal (which might include fees), so there may be one more appeal in the hopper for us to blog on in the future.

Reasonableness Of Fees: Fees Clause Allowed Trial Court Authority To Award $204,637 In Fees Under Section 1717 For Two Successful Demurrers

 

Excessiveness Challenge Rejected By Appellate Court.

     A party who was successfully dismissed as a proposed complainant in intervention, after two demurrers, was hit with a $204,637 fee award under Civil Code section 1717 based on a fees clause. The party was obviously upset, appealing the award as excessive.

     Not so, said the appellate court in Pars Ice Cream California, Inc. v. Conopco, Inc., Case No. B2220686 (2d Dist., Div. 7 Nov. 16, 2011) (unpublished). The fee substantiation was extensive and spelled things out, providing a roadmap for the 220 hour fee request--including a fee declaration from expert Gerry Knapton as to the reasonableness of the requested hourly rates. Appellant only claimed that the case was simple and challenged a few selected tasks, which did not meet its burden on appeal.

Civil Rights/Reasonableness Of Fees: $677,025 Fee Award Affirmed On Appeal

 

60% Reduction by Trial Court Dispatched Inefficiency/Padding/Overcharge Challenges.

     In Fuentes v. Autozone, Inc., Case No. B224034 (2d Dist., Div. 4 Nov. 16, 2011) (certified for partial publication; fee discussion unpublished), plaintiff won a $160,000 FEHA damages award, with the lower court subsequently awarding attorney’s fees of $677,025 under the fee-shifting statute. In doing so, the lower court reduced by 60% the $963,330 requested lodestar and denied a 2.0 multiplier request. The trial court found that its award was substantial in an uncomplicated case. Although unhappy defendant challenged the award for inflated hourly rates, padding and overreaching, the appellate court sustained the fee award based on the 60% reduction and the lower court’s setting of the reasonable hourly rate at $425 (compared to requested rates ranging from $395-$675 per hour).

Appeal Sanctions: Ouch! Appellant Sanctioned $2,000 For Appellate Court Processing Costs And Will Have To Pay More To Respondent On Remand

 

Appeal Labeled “Insulting” by Appellate Court.

     In Kempton v. Prudential California Realty, Case No. B2311633 (2d Dist., Div. 2 Nov. 16, 2011) (unpublished), appellant appealed a costs award but made a blatantly false argument to the court, namely, that the trial court did not have a costs memorandum before it in ruling on a motion to tax costs. The appellate court found the appeal “insulting” and, on its own motion, remanded for frivolous sanctions to be determined in favor of respondent. Also, the Court of Appeal imposed $2,000 in sanctions payable to its own clerk for the taxpayer burden of having to process the frivolous appeal. Ouch!

Probate: Temporary Conservator’s Attorney Entitled To Fees Even If No Permanent Conservator Ever Appointed

 

Crucial Inquiry Is Whether Temporary Conserator Acted In Good Faith and in Best Interest of Conservatee.

     Strange procedural cases actually produce new law, which is what happened in Conservatorship of Cornelius, Case No. A131495 (1st Dist., Div. 4 Nov. 15, 2011) (certified for publication).

     In this one, a 73-year old widower, who apparently associated with people who lived in his house rent-free, obtained money/credit cards from him, and operated a marijuana farm, was placed into temporary conservatorship even though due to some strange twists no permanent conservatorship ever matured. The trial court did award attorney’s fees and costs to the temporary conservator (a daughter) and her attorneys along the way--all totaling about $34,000, some of which were other conservatorship expenses by others. Conservatee appealed, principally arguing that the failure to obtain a permanent conservatorship precluded fees/costs resulting from the temporary conservatorship.

     Not so, said the appellate court. Probate Code sections 2641(a) and 2642(a) make no distinction between temporary and permanent conservators--”and we perceive no reason to draw one,” finding solace in the reasoning from Estate of Moore, 258 Cal.App.2d 458, 459-464 (1968). The relevant question was whether the temporary conservator acted in good faith, based on the best interest of her father, something that the Court of Appeal found because there was overwhelming support for this conclusion in the record below. Fee awards affirmed.

Special Fee Shifting Statute: CCP § 1038 Did Not Allow For Fee Award Where School District Won Via Demurrer

 

$4,905.40 Fee Award Goes POOF!, However District Is Free to Try Again.

     School district won a demurrer against an employee applicant suing for gender discrimination. It then was awarded fees of $4,905.40 under Code of Civil Procedure section section 1038.

     The fee award got reversed in McCallum v. Escondido Union High School Dist., Case No. D058270 (4th Dist., Div. 1 Nov. 15, 2011) (unpublished). To its credit, school district conceded that section 1038 applies to a resolution reached after a summary judgment, section 631.8 judgment, directed verdict, or nonsuit, but not to sustaining a demurrer. (See also California Correctional Peace Officers Assn. v. Virga, 181 Cal.App.4th 30, 37 (2010).) However, the appellate court did not impede the District from renewing the request under other bases before the trial court (such as the FEHA bad faith fee-shifting statute, where plaintiff’s “pocketbook”--ability to pay--must be assessed).

Family Law/Substantiation Of Fees: Wife’s Counsel’s Unsworn Statements During Argument About Fee Work Services Did Not Support Fee Award

 

$10,000 Fee Award to Wife Reversed by Fifth District.

     This next case demonstrates that unsworn statements about the nature of fee work will not support a fee award in the family law arena, much less other arenas.

     The Fifth District, in Marriage of Monroe, Case No. F061014 (5th Dist. Nov. 14, 2011) (unpublished), did not buy that a $10,000 attorney’s fees award to wife was supportable where it rested only on the unsworn statements of her counsel at oral argument that 38 hours of work at $350/hour were expended on the case.

HOA/Prevailing Party: Failure To Award HOA Fees When Plaintiff Dismissed 8 Of 10 Claims Based On Faulty Reasoning Was Abuse Of Discretion

 

HOA, on Remand, Will Get to Renew Request for $252,767 in Defense Fees.

     Here is an interesting one where an appellate court reversed the denial of a fee award as an abuse of discretion. The reason: HOA clearly prevailed when plaintiff dismissed 8 of 10 claims (some of them based on a fee-shifting statute) such that plaintiff cannot have claimed to prevail no matter what the ending on the two remaining claims.

     You know we were going to love this one when it began this way:

     “A party contemplating litigation to enforce the covenants, conditions, and restrictions (CC&Rs) of a condominium project should get the ‘ducks in a row.’ That is to say, such party should be ready to go forward procedurally and prove its case substantively. Failure to do subjects the losing party to an award of attorney fees.”

      In Salehi v. Surfside III Condominium Owners’ Assn., Case Nos. B224263/B226400 (2d Dist., Div. 6 Nov. 14, 2011) (certified for publication), plaintiff (an attorney herself, in pro per) sued HOA for failure to maintain/repair the condo project and failure to maintain an adequate replacement reserve fund. On the eve of the trial in this one, plaintiff received an adverse decision on behalf of a client in a similar suit against the HOA. Although her expert had a serious heart condition, plaintiff opted to dismiss 8 of 10 claims rather than seek a trial continuance. Only fraud/misrepresentation claims remained, and plaintiff successfully obtained a trial continuance of these claims. HOA moved to recoup $252,767 in fees for the eight counts voluntarily dismissed by plaintiff. The trial court denied the request, reasoning that the eight count dismissals were motivated by plaintiff’s inexperience and poor decisions rather than any implied concession to the merits of HOA’s case.

     HOA appealed, obtaining a reversal and chance to recoup fees on remand (aside from recouping costs on appeal as the winner).

     The appellate court, in a 3-0 decision written with panache by Justice Yegan, found the fee denial was an abuse of discretion. Simply put, plaintiff did not prevail--she was not ready to proceed and dismissed out of faulty reasoning that should not impede HOA from obtaining fees under a mandatory CC&R enforcement fee shifting statute (Civil Code section 1354). Plaintiff did not “practically” prevail and certainly did not achieve her litigation objectives.

     As an underview, Justice Yegan did observe that plaintiff never claimed that the fee award request was premature based on the pendency of the other two claims. However, the appellate court did point out “that prudence may dictate that the trial court postpone ruling on an attorney fees request until all causes of action have been resolved.”

In The News . . . . Eastern District of Pennsylvania Federal Court Awards $6.5 Million In Fees And Costs In Favor Of Defense In Exceptional Patent Infringement Litigation

 

Even Fees/Costs Spent On Lost Claims Were Recoverable.

     35 U.S.C. § 285 does allow district judges discretion to award attorney’s fees and costs in a patent infringement case that is “exceptional,” which usually means a determination that the litigation was brought and/or prosecuted in bad faith. This provision was used to award a hefty fees/costs award in Checkpoint v. All-Tag Security, E.D.Pa. Case No. 01-CV-2223 (Nov. 2, 2011 attorney’s fees order).

     Plaintiff lost a patent infringement action against defendants Sensormatic Electronics Corp. and All-Tag Security. U.S. District Judge Petrese B. Tucker decided the defense should be awarded a cumulative total of $6.5 million in attorney’s fees and costs under the patent “exceptional” fee-shifting provision. The district judge disallowed a litigation fee bonus owed by defendant Sensormatic to its attorneys. However, she did not exclude $1.1 million in fees and costs for claims that defendants lost, citing cases indicating that no allocation needed to be made where the fees were incurred under a statute like this shifting fees due to plaintiff’s inequitable conduct in pursuing the infringement litigation in the first place.

Special Fee Shifting Statutes: Dzwonkowski Decision Now Partially Published

 

Trope “Of Counsel” Reasoning Now Available for Citation.

     In our October 28, 2011 post, we discussed Dzwonkowski v. Spinella, Case No. G044336, which was first issued as an unpublished decision. It had a discussion of the Trope issue in an “of counsel” context. We can now report that the Trope discussion in the case has been certified for partial publication on November 10, 2011, with the opinion being written by Justice Fybel on behalf of our local Santa Ana appellate court.

Special Fee Shifting Statute: Consumer Affairs Boards Can Recoup Costs Of Investigation And Enforcement Of Case

 

This Includes Attorney’s Fees; $35,366.40 Award to Bureau of Automotive Repair Affirmed.

     Here is a little known fee-shifting statute available to boards and bureaus within California’s department of consumer affairs. Business and Professions Code section 125.3(a) allows such an entity bringing a license or probation revocation proceeding to recover discretionary reasonable costs of investigation and prosecution of the case.

     The Bureau of Automotive Repairs, after an administrative proceeding in which smog check station license issues were determined adversely to an auto repair dealer after several “undercover operations,” ultimately obtained a ALJ award of $35,366.40 under section 125.3(a), with an overwhelming majority (90%) being for AG fees.

     Auto dealer appealed in Imports Performance v. Dept. of Consumer Affairs, Case No. B228544 (2d Dist., Div. 5 Nov. 10, 2011) (unpublished), but was not successful with the reviewing court. Dealer’s principal argument was that the prosecuting entity did not win all of the charges and issues in the proceeding. However, dealer did not cite any authority in support of its pro rata award theory, such that the costs/fee award was affirmed.

Allocation: $95,000 Fee Award To Prevailing Community Services District Affirmed On Appeal

 

Trial Court Did Reduce For Noncontract Work, But Award Justified Nonetheless.

     In JKB Homes Norcal, Inc. v. Denair Community Services District, Case No. F061922 (5th Dist. Nov. 10, 2011) (unpublished), District won an oral reimbursement dispute over sewer services involving an annexation agreement, with developer on the hook because there was a fees clause in the agreement. District sought to recoup $112,373.23 in fees, but was awarded $95,000 by the trial court.

     Developer was not persuasive in surmounting the abuse of discretion standard on appeal. Because all claims were interrelated, no discretionary apportionment between contract and noncontract claims had to be made. Nevertheless, the trial court did reduce the award for noncontract work, so in that case the award could hardly be deemed erroneous.

Section 998/Reasonableness Of Fees: Three Appellate Cases Highlight Issues In These Areas

 

Cost or Fee Shifting Justified Under CCP § 998.

     Plaintiff seeking damages in a dental malpractice case rejected a 998 offer of $25,001 inclusive of each side bearing their own costs, but was defensed after a jury trial and ordered to pay $2,850 in expert witness fees based on rejecting the 998 offer. She argued that the 998 offer was illusory, but the appellate court said “no way” in Branner v. Leizerovich, Case No. B224548 (2d Dist., Div. 8 Nov. 8, 2011) (unpublished)--especially since settlement offers need not include attorney’s fees and the jury found defendant not negligent.

     Plaintiff lost a trespass/nuisance case against neighbors based on an adverse summary judgment ruling, even though plaintiff earlier rejected a zero dollar judgment 998 offer containing an express waiver of costs by the defendants. The trial court awarded routine costs to defendants. In Evans v. Wymore, Case No. B228340 (2d Dist., Div. 8 Nov. 9, 2011) (unpublished), the appellate court affirmed the costs award, determining (1) there is no exception in the costs award statute based on the health of a plaintiff who had to stop pursuing a suit so as to result in the adverse summary judgment; (2) the 998 offer was made in good faith, because it was made at a juncture where the defense could have avoided summary judgment expenses had the offer been accepted and it could have saved plaintiff from exposure for expert witness fees; and (3) government employees serving as experts can be paid more than the $35/day rate set forth in Government Code section 68093.

Fees Were Reasonable and 998 Offer Was Made In Good Faith.

      Burkett v. Caffaro, Case No. B226932 (2d Dist., Div. 2 Nov. 8, 2011) (unpublished) involved plaintiffs who lost a summary judgment in a real estate purchase fraud case, with the trial court awarding the defense $147,778.75 in fees (out of a requested $153,128.75) and $10,946.41 in costs (out of a requested $11,671.33). This all happened after plaintiffs rejected a 998 walkaway offer by which the defense would waive fees and costs. Although everyone agreed there was a computation error on the “fees on fees” issue resulting in a $9,707.50 judgment correction, the remainder of the trial court’s rulings were sustained on appeal. Adequate substantiation was presented to justify the fee award, and the lower court did consider the proper lodestar factors. The 998 offer was hardly token in nature, being made one year after the initial lawsuit was filed and after the defense argued that defendants made full disclosures of the property’s condition at the time of sale (which the trial court credited, given plaintiffs’ problems of proof in showing otherwise). Finally, fees of experts not ordered by the court--although not routine costs usually--are allowable as costs when a proper 998 offer is rejected.

Appeal Sanctions: Fourth District, Division 2 Says $8,000 Is Frivolous Sanctions Cost To Taxpayers For Processing An Appeal

Frivolous Appeal No Laughing Matter.

     Marriage of Shannahan, Case No. D058220 (4th Dist., Div. 2 Nov. 10, 2011) (unpublished) is not blog-worthy for its ultimate result of affirming a $20,000 Family Code section 271 sanctions award against husband. However, it is worthy for establishing the “going rate” for frivolous appeal sanctions to the clerk of the court when the winner on appeal fails to submit proof of its fees/costs on appeal. What is the going rate? $8,000, according to the 4/2 appellate court, which relied on (but reduced a little) the $8,500 figure derived from a 2008 study by the Second District. (See Huschke v. Slater, 168 Cal.App.4th 1153, 1163-1164 (2008).) It will be interesting to see if the Second District ups the ante in upcoming decisions.

 

Library of Congress.  c1896.

In The News . . . . Ventura County Must Pay $30,855 To Taxpayers Group In California Public Records Act Dispute

 

     As reported by Kathleen Wilson in a November 3, 2011 post at vcstar.com, Ventura County Superior Court Judge Henry Walsh granted the Ventura County Taxpayers Association’s request for fees, awarding it $30,855 (with a slight reduction of only about $2,500) for obtaining release of the names of six-figure county pensioners from the Board of Retirement. The California Public Records Act does have a fee-shifting provision. The fee award was assessed against the Board, which was found to not have made a commitment to release documents despite appellate rulings on the issue. The County spent $35,000 defending the suit and has no insurance to cover the fee award.

     BLOG UNDERVIEW--Co-contributor Mike and his former colleage Greg Regier at Jackson DeMarco Tidus & Peckenpaugh had the pleasure to try a lengthy case before Judge Walsh over a trespass/nuisance citrus flooding dispute.

SLAPP Two-Fer: Appellate Courts Consider Two Separate Fee Awards Against The Defense For Frivolous SLAPP Motions

 

One Remanded; The Other Affirmed.

     Here is a situation we do not blog on that much: fee awards against the defense for bringing frivolous SLAPP motions, fully allowable under CCP § 425.16(c)(1).

     In Mazzaferri v. Mazzaferro, Case No. A131076 (1st Dist., Div. 5 Nov. 9, 2011) (unpublished), defendants were sanctioned for filing frivolous SLAPP motions, with the trial court first awarding $11,150 in fees/costs with boilerplate sanctions language and then awarding $4,150 more at an ex parte proceeding brought to reduce the sanctions. The appellate court reversed. The defense first argued that the trial court erroneously sanctioned under CCP § 128.5 (which applied to pre-1995) actions rather than § 128.7, which has much different safe harbor protections. This one did not work, because 128.5 has been held to continue to apply to sanctions requests under section 425.16(c)(1). (See Olmstead v. Arthur J. Gallagher & Co., 32 Cal.4th 804, 817-818 (2004), agreeing with the analysis of Decker v. U.D. Registry, Inc., 105 Cal.App.4th 1382, 1392 (2003), superseded by statute on a different point as stated in Hall v. Time Warner, Inc., 153 Cal.App.4th 1337, 1349 (2007).) However, reversal was required because of two reasons: (1) the lower court did not follow 128.5 procedures by clearly articulating the reasons for the sanctions other than boilerplate recitation of the statute, a “no no” requiring remand; and (2) the $4,150 further award was made at an ex parte proceeding with no chance for the defense to have adequate notice and an opportunity to be heard.

     However, a frivolous SLAPP sanction was affirmed in Faro De Luz v. Morales, Case No. B223488 (2d Dist., Div. 3 Nov. 9, 2011) (unpublished), where the defense and their lawyer (with the lawyer not appealing) being hit with fees/costs of $19,291.60. The defense suggestion that its appeal of the SLAPP merits ruling somehow stayed a fee ruling was rejected. (Carpenter v. Jack in the Box Corp., 151 Cal.App.4th 454, 461 (2007).) Although the trial court relied on CCP § 128.6 (a replacement statute to § 128.5 given “sunset” issues with 128.5), there was no procedural error of a prejudicial nature because both statutes were identical in nature. In an interesting footnote, the attorney challenged the fee award (even though she only appealed on behalf of her clients) on the basis that SLAPP fee awards can only be directed against parties, not counsel. The appellate court agreed that this was the case with respect to SLAPP fee/costs awards against plaintiffs, but that section 425.16(c)(1) was a sanctions statute incorporating 128.5 parameters--meaning that a frivolous fee/costs award could be entered against parties and/or their counsel. (Slip Opn., p. 10, fn. 10.)

Private Attorney General Statute: $336,800 In Fees And $8,400 In Costs Appropriately Awarded Against Orange County In Jaramillo Case

 

Blockbilling Did Not Result in Punishment Based On Unique Case Circumstances.

     Jaramillo v. County of Orange, Case Nos. G043142/G043813 (4th Dist., Div. 3 Nov. 8, 2011) (certified for publication) is likely the last real publicity upshot from Orange County’s appeal of a $183,689 back pay award to former Orange County Assistant Sheriff George Jaramillo and its appeal of an injunction in the wake of the Mike Carona scandal. Aside from the merits relief, the trial court (Judge Andrew P. Banks) awarded Jaramillo’s lawyers $8,400 in costs and $336,800 in fees under California’s private attorney general statute (CCP § 1021.5).

     Orange County’s appeals of the merits/fee awards were unsuccessful, in a 3-0 opinion authored by Acting Presiding Justice Rylaarsdam.

Section 998: Plaintiff Failing To Beat 998 Offer Liable For $12,403 In Costs

 

Premature Filing of Costs Memorandum Was Not Fatal.

     In Tate v. Prendergast, Case No. G044621 (4th Dist., Div. 3 Nov. 7, 2011) (unpublished), personal injury plaintiff seeking $750,000 in damages rejected a CCP § 998 offer of $20,001 but only was awarded $300 for past medical expenses by a jury. This kicked in the costs-shifting feature of section 998, with defendant seeking $12,703 in costs. The only problem is that defendant prematurely filed the costs memo right after the jury verdict rather than waiting for entry of judgment and then following the time schedule. The trial court nevertheless awarded $12,403 in costs to defendant.

     Plaintiff appealed, but to no avail. Acting Presiding Justice Bedsworth, writing for a 3-0 panel, adhered to the the law indicating that costs memo time limitations are not jurisdictional and to case law where courts indeed had treated prematurely filed cost bills as timely. (See, e.g., Haley v. Casa Del Rey Homeowners Assn., 153 Cal.App.4th 863, 880 (2007).) Also, a premature filing does not constitute reversible error unless it prejudices the other party. (Pamela W. v. Millsom, 25 Cal.App.4th 950, 961 (1994).) Here, the lack of prejudice and failure to move to strike below were dispositive, resulting in an affirmance of the costs award to the defense.

Family Law: Marital Settlement Agreement Fees Clause Trumped Needs-Based Fee Request

 

Contractual Bargain Resulted in a Waiver and Enforced.

     Marriage of Guilardi, Case No. H035037 (6th Dist. Nov. 7, 2011) (certified for publication) pitted the fees clause in a marital settlement agreement (MSA) against the Family Code section 2030 needs-based statutory scheme. The contractual bargain in the MSA won out.

     The MSA addressed property division and child custody issues following a 16 year marriage, including two other significant features: (a) the prevailing party in any post-MSA dispute was entitled to reasonable attorney’s fees and costs; and (b) each party relinquished any and all past, present, and future claims against the property or estate of the other party.

     Wife unsuccessfully attempted to set aisde the MSA, then moving for $157,650 in fees for attorney’s prior work and her efforts to set aside the MSA. The trial court determined that the broad MSA language was an implicit waiver of any claims and that it would be unjust to award fees where she unsuccessfully litigated an action to set aside the MSA.

     On appeal, the Sixth District affirmed. After noting a divergence in judicial authority of whether statutory counsel fees are available to the party unsuccessfully challenging an MSA, the appellate court determined that the broad MSA language precluded a fee award to wife, with no exception being allowed in the waiver of claims clause. Wife knowingly signed the MSA containing the waiver of her right to statutory fees such that there was no conflict between Family Code section 2030 and the agreement between the parties.