CALIFORNIA ATTORNEY'S FEES

Family Law: Substantial Fee Award Justifiable Under Premarital Agreement, So No Needs Based Analysis Needed

 

Family Code Section 271 Sanctions Award Also Upheld on Appeal.

     Marriage of Pitto and Behrendt, Case No. A126802/A127429 (1st Dist., Div. 3 June 29, 2012) (unpublished), involving a relatively short marriage, does reinforce certain lessons for us, basically two in number.

     Number 1 is this. A substantial $354,542 fee award was sustained on appeal because it fell within a fees clause under a premarital settlement agreement, such that it was awardable under Civil Code section 1717--which did not have the more exacting “needs based” analysis of both sides under Family Code section 2030/2032. (In re Marriage of Sherman, 162 Cal.App.3d 1132, 1140 (1984).)

     Number 2 is a Family Code section 271 sanctions award of $40,000 to husband. This one was affirmed based on the abuse of discretion standard of review, based on wife’s conduct during the course of the litigation. Hard standard to surmount, often.

Homeowner Associations/POOF!: Reversal Of HOA Award Means Homeowner Survives To See What Happens On Remand

 

Appellate Court Tells Everyone That Some Claims May Not Be Compensable.

     Homeowner Association (HOA)/homeowner disputes seem to be very acrimonious. However, depending on who prevails, there may be fee exposure under Civil Code section 1354 (CC&R enforcement) or Civil Code section 1717 (contractual fee enforcement). But, each side may have to wait until the end of the day--including numerous appeals--to decide who prevails, so that may factor into the decision into how to resolve the dispute (although we leave it to you to decipher, given the specifics of a case).

     Cathedral Hill Tower Condominium Assn. v. Garbar, Case No. A124711 (1st Dist., Div. 3 June 29, 2012) (unpublished) is a third appeal between HOA and homeowners, apparently revolving about homeowners‘ installation of ceramic tile on balcony and unauthorized renovations to their condominium unit.

     Even after a 7-day bench trial, one can argue that HOA and homeowners got a mixed result after the appellate court’s scrutiny of events.

     Well, the appellate court reversed a dismissal of a third amended cross-complaint claims by homeowners, which meant that the lower court’s attorney fee award based on the dismissal went POOF! also. However, the apppellate court did give guidance by suggesting that certain claims may not be subject to fee recovery--so, scrutinze maybe, was the appellate admonition maybe.

     BLOG UNDERVIEW--Just to show you that us bloggers stay somewhat in tune, see Carly Rae Jepsen’s hit song, “Call Me Maybe,” perhaps an interesting way in which a lot of us interact in the new technology wave and also tells us that fee disputes should be resolved “if only maybe.”

Mediation: Cross-Complainant Commencing Cross-Complaint Without Attempting Mediation First Disqualified From Seeking Fees Under CAR Form Listing Agreement

 

Cross-Complaint Was A Separate, Simultaneous Action Subject to Mediation Condition Precedent.

     As it now stands, a litigant subject to a CAR form contract often faces an attorney’s fees clause requiring mediation first except for certain situations (lis pendens action, unlawful detainer, and a few others). Obviously, this restriction applies to a litigant commencing a complaint. What about a litigant commencing a cross-complaint?

     Our local appellate court, in a 3-0 opinion authored by Justice Rylaarsdam, answered this question “yes” in Castleton Real Estate & Development, Inc. v. Tai-Fu California Partnership, Case No. G044304 (June 28, 2012) (unpublished).

     A cross-complainant did not attempt to initiate before filing a cross-complaint in a existing suit and was denied a later attorney’s fees request. On appeal, cross-complainant argued that the mediation condition precedent was not at play because the cross-complaint was only part of an existing action.

     Wrong, said the appellate court. A cross-complaint is a separate, simultaneous action so the cross-complainant was subject to the mediation condition precedent because the litigant had indeed “commenced an action.” Also, the fees clause in the listing provision covered both contract and tort claims, so its fee recovery attempt ran out of luck when mediation was not pursued first.

Probate: Denial Of Fee Recovery To Attorney Having Assignment Of Heir’s Distributive Share In Retention Agreement Remanded For Reconsideration

 

Assignment of Interests in Probated Estates Focuses on Probate Code section 11604.

     Part of doing this blog is that we get to learn different substantive areas. Today, we learned something in the area of probate law.

     In Estate of Castrillo, Case No. A133446 (1st Dist., Div. 4 June 28, 2012) (unpublished), an heir entitled to a distributive share from a probate estate assigned to his attorney collection of fees through estate distributions in a fee retention agreement. However, the probate court failed to honor such assignment, although the transcript indicated that the lower court might have gotten rattled somewhat during the course of a heavy probate calendar. That caused a reversal so that a re-sort could be done.

     Probate Code section 11604 does allow an attorney to be secure in payment of fees and expenses from a client in a probate matter by way of an assignment from the distributive share of client heir, with there being lots of probate court supervision on the reasonableness of the assignment or reasonableness of the fee request. Interestingly enough, the provision was originally designed to protect beneficiaries from “heir hunters,” but has been applied to assignees (which would include attorneys). A lien assignment against a distributive share can be enforced under section 11604, and it is error for a probate court to refuse to honor a valid assignment.

     Given this state of the law, the matter had to be reconsidered to see if there was some legal impediment to honoring the assignment.

Prevailing Party: Frog Creek Partners Found Instructive By Fourth District, Division 3 In Finding Fee Award Premature To Party Defeating Petition To Compel Arbitration Where Merits Of Contract Claim Not Yet Resolved In Main Action

 

Defense Might Prevail In End, So Let’s Wait and See.

     We predicted in our May 27 and June 5, 2012 posts that Frog Creek Partners, LLC v. Vance Brown, Inc., 206 Cal.App.4th 515 (2012) would be an oft-cited decision when dealing with prevailing party status for fee purposes where there are interim successes in arbitration compel proceedings but the main action on the merits of the contract claims is still ongoing.

     Well, we can report that our local Fourth District, Division 3 found Frog Creek instructive in Wherry v. Award, Inc. (Wherry II), Case No. G045520 (4th Dist., Div. 3 June 28, 2012) (unpublished).

     There, a lower court granted a motion filed by plaintiffs for fees incurred in defeating a petition to compel arbitration filed by the defense after plaintiffs sustained the result in an earlier appeal (Wherry I). Acting Presiding Justice Rylaarsdam, writing for a 3-0 panel, found the reasoning in Frog Creek instructive is determining that the fee award was premature. After all, the main action in which the petition to arbitrate was filed has not been completed, meaning the defense might prevail in the overall action. Otay involved a discrete arbitration petition proceeding, not just one cog in an existing lawsuit that had more life to it. Like Frog Creek, the 4/3 appellate court disagreed with Kors and Acosta in some respects, especially finding erroneous the conclusion that independent contractual language could dictate enforcement of a definition of prevailing party different from that provided in Civil Code section 1717.

     Fee award reversed because it was premature.

SLAPP/Reasonableness Of Fees/Substantiation Of Fees: $49,500 Fee Award To SLAPP Victor Affirmed

 

Both Sides Appealed, Both Sides Did Not Gain Anything Upon Review.

     In County of San Bernardino v. San Bernardino County Public Attorneys Assn., Case Mp/ E051576 (4^th Dist., Div. 2 June 26, 2012) (unpublished), County lost a SLAPP motion and was assessed $49,500 through an adverse mandatory fee award (even though the defense had requested almost $67,500). Both sides appealed, but the award was sustained.

     County argued that the fee substantiation was inadequate because only a spreadsheet of activities rather than contemporaneous fee records was utilized. No, the attorney's declaration and summarization of services was sufficient because it showed the hours spent and for what purpose—although preferred, contemporaneous records are not required. (Best v. California Apprenticeship Council, 193 Cal.App.3d 1448, 1470 (1987).) Time entries did not need to be allocated between tasks (SLAPP versus non-SLAPP administrative jurisdiction issues) given the interrelationship of common issues involved in the SLAPP motion.

     The defense challenge to the reduction of fees did not go far, because the appellate court did not see anything clearly wrong with the award and inferred the court determined the request was inflated when making reductions.

In The News . . . . Courtney Love Sued For $466,029.41 In Unpaid Fees And Costco Receives $397,000 Fee Award In Copyright “Gray Market” Case

 

Gifts, Thank You Notes, Flowers, and Concert Tickets No Substitute For Ms. Love’s Monetary Payments.

     Recent posts at TMZ and Rolling Stone tell us that Courtney Love is being sued in Los Angeles by Keith A. Fink & Associates for $466,029.41 in unpaid legal fees for 10 months of intensive work in 2009. She did send the firm gifts, thank you notes, flowers, and concert tickets.   Looks like the firm wants more money, rather than the nonmonetary gratuities.

Costco Awarded $397,000 In Attorney’s Fees For Prevailing in 8 Year Copyright Infringement Battle.

      The National Law Journal reports that C.D. Cal. U.S. District Judge Hatter recently awarded Costco Wholesale Corp. $397,000 in attorney’s fees spent in battling watchmaker Omega during an 8-year “gray market” infringement suit brought against Costco, based on a ruling that Omega’s actions constituted copyright misuse. The fee award was apparently made under 17 U.S.C. § 505.

Trade Secrets: Plaintiff Losing Time-Barred Trade Secrets Misappropriation Claim Suffered Adverse Fee And Costs Awards Totaling Over $311,000

 

Defense Set Up Bad Faith By Sending Litigation Communicative Warnings to Loser Which Showed Claim Was Stale.

     We have discussed Civil Code section 3426.4 several times. This provision allows a court to discretionarily award reasonable attorney’s fees and costs to a prevailing party where a claim of trade secret misappropriation was made in bad faith. The winning defendants in General Nanotechnoogy LLC v. Lawrence Livermore National Security LLC, Case Nos. A129016 et al. (1st Dist., Div. 5 June 27, 2012) (unpublished) did a good job of sending communications to plaintiffs and gaining admissions during the course of litigation so as to demonstrate why their trade secret claims were time barred, and the defense proved it through a successful summary judgment motion. Although requesting over $2.371 million in fees and costs, the trial court presumably apportioned and awarded fees of $189,565.50 and costs of $121,706.49 under section 3426.4.

     Bad faith could be inferred from the fact plaintiffs pressed on with their misappropriation claims long after receiving warnings from the other side about the staleness of the claims. Also, deposition admissions about the timeliness of the claim also put the nail in the proverbial coffin from a sufficiency of evidence standpoint. Fee award affirmed.

Undertaking: Party Successfully Defending Judgment On Appeal Dissolving An Injunction Entitled To Statutorily-Mandated Fees Against Nonpaying Surety

 

CCP § 996.480(a)(2) So Mandates.

     In Jovanovic v. Abel, Case No. A131578 (1st Dist., Div. 4 June 27, 2012) (unpublished), plaintiffs successfully obtained a preliminary injunction to stop a foreclosure of a multi-unit condominium project by some hard money lenders/investors, but had to post a $90,000 injunction bond as a condition of the injunction. They eventually lost, with the injunction dissolved and the defense being granted a motion to enforce plaintiffs’ liability on the bond against the surety.

     Plaintiffs and nonpaying surety appealed, but lost. Based on CCP § 996.480(a)(2), successful hard money lenders were entitled to a mandatory award of attorney’s fees for their appellate fees as against nonpaying surety. However, even though the request for fees was made in the respondents’ brief, the appellate court remanded to have the trial court determine the amount of fees, although directing that the lenders were entitled to fees under the statute. (Cal. Rules of Court, rule 3.1702(c).)

Probate: Attorneys Seeking Payment Of Fees From Estate For Ordinary Services Under Probate Code Section 10810 Were Not Foreclosed By Lack Of Written Retention Agreement

 

Bus. & Prof. Code Section 6148 Did Not Compel Different Result.

     The First District, Division 2 in Estate of Wong, Case No. A132295 (1st Dist., Div. 2 June 27, 2012) (published) decided that attorneys were not foreclosed from obtaining a court award for fees from a probate estate for performing ordinary services under Probate Code section 10810. Nothing in the probate statutory scheme requires a written fee agreement between the executor and his/her attorney. However, executor challenging the award of ordinary service fees to attorneys without a retention agreement vigorously relied on Business and Professions Code section 6148, which usually does require a fee agreement between attorney and client. However, the fees were to be paid from the estate itself, not the client (the personal representative) so that a written agreement is not required even under section 6148(a) [written agreement required in cases in which the potential expense to a client is likely to exceed $1,000]. So, the award of $72,358.51 in statutory fees and $10,134.95 in costs was affirmed on appeal.

Special Fee Shifting Statute: Education Code Section 44944(e)(2) Justified Fee Award To Employee Not Dismissed But Where Governing Board Tried To Structure A Decision To Avoid Fee Award

 

Third District Would Not Elevate Form Over Substance.

     We don’t have that many times to do blogs on fee issues for school districts and tenured teachers. Well, here is one for you both.

     In Boliou v. Stockton Unified School Dist., Case No. C068266 (3d Dist. June 25, 2012) (published), the school district filed charges against a tenured teacher, specifying charges it claimed merited dismissal, and litigated for 18 months, only to attempt to dismiss the charges before the merits hearing. The trial court would not have any of it, issuing an administrative writ to say teacher would not be dismissed and should be paid reasonable attorney’s fees and costs--not insubstantial, $114,465 in fees and $9,976.41 in costs under Education Code section 44944(e)(2).

     School district’s appeal was not successful. When substance was elevated over form, tenured teacher was entitled to a ruling so he could recover fees and costs. This is an important “form over substance” opinion in this specific area, so we shall see what happens in the future in this substantive area.

Church and public school.  Stockton.  1866.  Library of Congress.

Appeal/Apportionment/Damages/Tort Of Another: $330,000 Fee Award To Winning Plaintiff Remanded To Apportion Work To Clearing Title Tasks

 

Slander of Title Work Needs to be Apportioned Out; No Fees For Appellate Work.

     Defendant in Johnson v. Grayson, Case No. G044975 (4th Dist., Div. 3 June 22, 2012) (unpublished) lost a quiet title case (also having a slander of title claim), but appealed a $330,000 adverse fee award grounded on the tort of another doctrine. The main argument on appeal was that the fee award failed to differentiate between fees incurred to actually quiet title (recoverable under tort of another or to remove title disparagement itself) versus fees to prosecute the slander of title damages claim (not recoverable according to the defendant).

     Our local appellate court, in a 3-0 unpublished decision penned by Acting Presiding Justice Rylaarsdam, agreed that the requested apportionment needed to be made.

     Based on Seeley v. Seymour, 190 Cal.App.3d 844, 866 (1987), defendant was right that fees were only recoverable to clear title/disparagement but not recoverable as far as seeking slander of title damages. Given that almost all the requested fees were awarded and nothing indicated apportionment was impossible, the fixing of fees had to be remanded for further recalculation.

     Plaintiff, however, argued that he was entitled to fees on appeal given that he did defeat the merit challenges to the underlying relief granted in his suit. No, because the reasoning in Burnaby v. Standard Fire Ins. Co., 90 Cal.App.4th 787, 795-796 (1995) was persuasive in showing that fees on appeal are not allowed even though they were an element of damages in a quiet title or slander of title action below.

Consumer Statutes/Special Fee Shifting Statutes: Consumer Winning Fraud Case Against Motor Vehicle Retailer Doesn’t Get Fees Under Vehicle Code Statute, Doesn’t Get Fees Under Contractual Provisions Based On Surety Law, But Does Get Them

 

Wow--Fee Entitlement Can Be Had, If You Are Tenacious And Can Get to the Right Independent Basis!

     The Fifth District’s decision in Pierce v. Western Surety Co., Case No. F062096 (5th Dist. June 22, 2012) (published) goes to show you that the fee entitlement race sometimes goes to the tenacious. All you need is one correct, separate basis for fee entitlement, even if you lose other grounds.

    Tenacious.  Charles Livingston Bull, artist.  Library of Congress.

     In this one, plaintiff consumer purchased a truck from a motor vehicle retailer that apparently failed to disclose material prior wreck damage. Retailer went out of business, but consumer made a claim on a bond posted by a surety under Vehicle Code setion 11710, which allows a consumer suffering a loss by reason of the dealer’s fraud to go against a bond in an amount to not exceed the value of the purchased vehicle. After surety accepted a CCP § 998 offer of $10,000, the parties went to the main battle--because attorney’s fees and costs were excluded from the accepted offer.

     The lower court did award attorney’s fees in favor of consumer and against surety, prompting surety’s appeal.

     Surety argued that Vehicle Code section 11710 was silent on fee recovery, so it could not sustain the award. You are right, Mr. Surety, on this ground.

     Surety next argued that the retail sales contract between consumer and dealer, although containing a fees clause, did not allow a fee recovery as a mattter of surety law because consumer was suing for fraud, something not covered by the bond. You are right again, Mr. Surety, fraud claims were not covered, only contract claims not involved here.

     However, here is the rub. Consumer did seek fees under various consumer statutes. Consumer sought breach of warranty recovery via the Song-Beverly Consumer Warranty Act, but this did not work given that the fee recovery here was based on fraud. No fee recovery could be based on the Automobile Sales Finance Act because the fee shifting provision is contractually-grounded, not fraud based as was the case here.

     But, but. Consumer sued for fraudulent representations under the Consumer Legal Remedies Act, which has a fee shifting provision. Lo and behold, this one was the correct fee entitlement ground. The CLRA fraud-based violation fell within the conduct secured by the section 1171 bond, so the surety was liable. Because fees was an item of costs, it was not capped by the section 11711 $50,000 cap on damages. Judgment affirmed. Tenacity paid off in this particular situation.

Indemnity: CCP § 1021.6 Fees Must Be Made By Post-Trial Motion, Not Sought As Damages At Trial

 

Litigation Expenses Cannot Be Claimed As Fees Under Section 1021.6.

     Zollars v. Kahan, Case No. A130332 (1st Dist., Div. 4 June 21, 2012) (unpublished) involved an owner who successfully sued a foreclosure sale trustee for failure to serve foreclosure documents on junior lienholders. Owner did recover attorney’s fees from foreclosure trustee under Code of Civil Procedure section 1021.6, an indemnity statute allowing recovery of fees under certain circumstances (mainly seen in construction defect disputes but also applicable to other indemnity situations). Owner was awarded $150,000 in fees, but appealed because he did not receive another $40,000 in requested fees not allowed and some additional litigation expenses.

     His appeal was unsuccessful.

     He first argued that the trial court erred in requiring him to bring his section 1021.6 fees request through the vehicle of a post-trial motion proceeding, but this was rejected because the governing language of the statute so required. (In a footnote, the appellate court indicated contrary prior law was superseded by enactment of the statute itself.)

     Owner then contended that he should have been awarded $14,626.28 in costs in addition to attorney’s fees. Wrong, also, because section 1021.6 makes no mention of costs and litigation expenses cannot be shoehorned into a fee rubric.

     Finally, the challenges to the amount of the award did not surmount the formidable abuse of discretion standard. In this one, the fee award was affirmed.

Sanctions: Sanctions Imposed Under CCP § 1987.2 Reversed On Due Process Grounds

 

Also, Appeal of 1987.2 Sanctions Is a Collateral Order Subject to Review.

     In the sanctions area, we have had several posts indicating that due process can result in a reversal of a sanctions award under the right circumstances. Those circumstances did exist in Scholz v. Boston Herald, Inc. (Miller, Kaplan, Arase & Co.), Case No. B231944 (2d Dist., Div. 1 June 21, 2012) (not for publication), a 3-0 opinion authored by Justice Chaney of the Second District, Division 1.

     Scholz involved an accountancy business which was sanctioned $4,500 under Code of Civil Procedure section 1987.2 in a dispute through which a Massachusetts court ordered California discovery for defamation litigation by a member of the rock band Boston against the Boston Herald. (Remember the song “More Than A Feeling” which was popular when these co-contributors were in law school? Dates us, we would guess.) Section 1987.2 does allow a court to make a discretionary award of the amount of reasonable expenses incurred in making a motion to compel production if the court finds that the motion was opposed in bad faith or without substantial justification.

     Accountancy firm won their appeal of the sanctions award.

     First, there was the matter of whether the section 1987.2 sanctions award was appealable. It was, given that it was a collateral matter order distinct and severable from the subject of the underlying litigation. Even though a ruling from the discovery Interstate and International Depositions and Discovery Act can only be reviewed by writ, this was inconsequential with respect to the appealability of the 1987.2 sanctions order.

     Second, due process required a reversal on the merits. The trial court gave no explanation for imposing sanctions, actually deleting reasons given in a tentative--that might have been sufficient--from the final order. Although other discovery motions to compel create a presumption of sanctions and put litigants on notice in this regard, section 1987.2 is so silent that the sanctioned party is left with no notice of the grounds for sanctions and no opportunity to mount an effective review. In such circumstances, the venerable due process protections come to save the day!

Sanctions: Attorney Multiplying Proceedings Unreasonably and Vexatiously Liable For Costs Under 28 U.S.C. § 1927

 

Ninth Circuit Would Not Award Fees As a Sanctions, But Does Hold Attorney Liable for Costs.

     The Ninth Circuit in The Save the Peaks Coalition v. U.S. Forest Service, Case No. 10-17896 (9th Cir. June 21, 2012) (published) found that plaintiffs’ counsel had multiplied the proceedings unreasonably and vexatiously under 28 U.S.C. § 1927. Although the panel found that an award of attorney’s fees to a requesting intervenor would be inequitable, it did find that an award of costs against the offending counsel was appropriate. They did so both under section 1927 and the inherent power to sanction a losing party/counsel acting in bad faith. (See Fink v. Gomez, 239 F.3d 989, 992 (9th Cir. 2001) [inherent power sanctions can extend to counsel who willfully abuses the judicial process].)

 

Multiply:  4 bags, 3 marbles.  Wikipedia Creative Commons-Share Alike 3.0 License.  

Private Attorney General: Corporate Entity Advancing The State Of The Law, But Trying To Avoid Liability For Past Actions, Did Not Serve Public Interest

 

Fee Recovery Not Allowable Under Adoption of Joshua S.

     Adoption of Joshua S., 42 Cal.4th 945, 949, 956 (2008) established an additional restriction on the scope of California’s private attorney general statute (Code of Civil Procedure section 1021.5): fees cannot be awarded against someone who has not adversely affected the rights of the public or a substantial class of people other than raise an issue in the course of private litigation that could establish legal precedent adverse to a portion of the public.

     Joshua was dispositive when it came to affirming the denial of a section 1021.5 fee request by appellant in Azure Limited v. I-Flow Corp., Case No. G046048 (4th Dist., Div. 3 June 21, 2012) (published), authored by Justice Ikola on behalf of a 3-0 panel.

     There, Azure sued I-Flow for breach of fiduciary duty when I-Flow transferred shares of its stock owned by Azure to the state as escheated property even though it knew Azure’s location, with the state selling the stock at a depressed price of $13 less per share than its market selling price at the time. I-Flow won a judgment on the pleading based on an unclaimed property law immunity section. The California Supreme Court reversed the judgment on the pleadings after vindicating Azure’s position that the cited immunity was not in play under the circumstances.

     Azure then settled the case for $350,000, but retained the right to seek section 1021.5 fees--which it did request, but which was denied by the lower court.

     Our local appellate court affirmed based on Joshua. Although Azure advanced the state of the law, section 1021.5 fees should not be imposed against I-Flow because it had no institutional interest in the litigation but only sought to avoid liability for Azure’s economic losses caused by I-Flow’s past actions. “This was a standard zero sum game, backward-looking case in which two private parties fought over who would be left holding the bag for losses that had already occurred. This is not a case in which Azure volunteered to take on a party who was adversely affecting the public interest.” (Slip Opn., p. 8.)

     Azure also argued that fees were justified based on the “scorched earth” litigation tactics by I-Flow, but this is not one of the section 1021.5 assessment factors, with such tactics being appropriately dealt with through discovery abuse and sanctions provisions.

Special Fee Shifting Statute: ERISA Attorneys Unite--Ninth Circuit Addresses “Appropriate Equitable Relief” Language Under Section 502(a)(3)

 

Attorneys Properly Dismissed From Controversy, But Matter Remanded to See If Employer/Fiduciary Had to Bear Proportionate Fees And Costs Incurred by Plaintiff Employee In Recovering Third Party Tortfeasor/Uninsured Motorist Proceeds.

     Well, we do not usually have a lot of ERISA issues to report on. Not today, we do.

     CGI Technologies and Solutions, Inc. v. Rose, Case Nos. 11-35127 et al. (9th Cir. June 20, 2012) (for publication) drew a three-judge split decision, a majority (authored by Circuit Judge Gould), a concurrence (authored by Circuit Judge Schroeder), and a dissent (authored by Chief District Judge Beistline, D. Alaska, sitting by designation).

    The issues were two-fold as far as fee recovery was concerned: (1) was plaintiff’s attorney properly dismissed as a party where it did not pay itself a fee and escrowed the amount pending proper resolution, and (2) did the district judge have to honor a make-whole contractual provision (giving deference to the benefit of the bargain) or should the court look at equitable defenses for purposes of construing the “appropriate equitable relief” language of section 502(a)(3) of ERISA (29 U.S.C. § 1132(a)(3)).

     The facts essentially focused upon an ERISA Plan’s subrogation/reimbursement clauses exempting the employer company from responsibility for fees in a subrogation action and expressly disclaimed application of the common fund doctrine. Plaintiff employee’s attorneys did get some nice recovery from a third-party tortfeasor and uninsured motorist insurer, with employer seeking first priority reimbursement from the recovery for some money it shelled out. Plaintiff’s attorneys carved out and escrowed the disputed reimbursement amount before paying itself for fees incurred in the process. The district judge dismissed the attorneys but did hold employer responsible for some proportional fees/costs incurred by plaintiff in the third-party/insurer matters.

     One can say that the Ninth Circuit did agree that the attorneys were properly dismissed. Although they were not signatories to the Plan, they could have been correct parties had they paid themselves fees from the proceeds. They didn’t, so no problem with failing to extend nonsignatory cases to this situation where some financial impact resulted from nonsignatory counsel’s actions.

     That brought the appellate court to issue 2, which did produce the differences in opinion. It was apparent that the Ninth Circuit was somewhat unclear on what the district court did, whether honoring equitable principles or whether honoring the contractual bargain. There was a split in federal appeals court thinking on the subject, but the Ninth Circuit (by a 2-1 vote) lined up with the Third Circuit’s reasoning in US Airways, Inc. v. McCutchen, 663 F.3d 671, 679 (3d Cir. 2011), which held that equitable principles did trump contractual plan provisions--keeping in mind that this simply meant that the contractual provisions were not controlling, not that they should not be given proper equitable weight. The dissenting judge thought the Plan governed, but the end result was a remand to make sure the district judge did properly weigh equitable factors in terms of gauging whether fees/costs should be reimbursed to plaintiff employee under section 502(a)(3)’s “appropriate equitable relief” language.

Civil Rights: Plaintiff Losing FEHA Case Against Individual Liable For $40,000 Fee Award Based Upon Prosecuting Frivolous Action

 

Plaintiff Placed On Notice of Fee Exposure; Ability to Pay Was Considered.

     Generally, plaintiffs losing FEHA cases do not face fee or costs exposure, except for an important BUT. BUT they will face fee exposure if the plaintiff’s action is found to be frivolous, unreasonable, or without foundation, even though not brought in subjective bad faith. (Cummings v. Benco Building Services, 11 Cal.App.4th 1383, 1387 (1992).)

     Well, plaintiff in Rickards v. United Parcel Service, Inc., Case No. B234192 (2d Dist., Div. 4 June 19, 2012) (partially published; fee discussion not published) fell within that important BUT exception, with the lower court awarding fees against him for a FEHA suit found frivolous with respect to an individual sued in a broader suit against UPS.

     The fee award in favor of the individual was sustained on appeal. The appellate court found that the disability-based harassment claims against the individual were groundless and maintained in an attempt to avoid removal to federal court--a tactical decision which can always get a losing plaintiff into trouble. Beyond that, defense counsel for the individual placed plaintiff on notice that continued prosecution of the case could be problematic, which it ultimately was found to be. The lower court did consider plaintiff’s claim of being impecunious, so that was not in play. The suggestion that the case had to be found frivolous against all defendants was rejected, because no authority was provided for such a broadbrush proposition. Finally, the appellate court would not extend the fee award liability against plaintiff’s counsel, because the issue was not raised in the trial court and no authority suggests this could be the case unless there was some independent basis such as bringing a frivolous appeal--something not raised in the case at all.

Arbitration: Nonprevailing Party In Arbitration Still Entitled To Postconfirmation Award Fees Of $591,818.18

 

Postarbitration Proceedings Distinct From Arbitration Proceedings For Purposes of Fee Award.

     Prime Associates Group, LLC v. NAMA Holdings, LLC, Case No. B226167 (2d Dist., Div. 4 June 19, 2012) (unpublished) is a case that upheld a substantial attorney’s fees award, drawing a distinction in the process between postarbitration and arbitration proceedings.

     NAMA was awarded postconfirmation arbitration fees of $591,818.18, even though it was found not to be a prevailing party in the earlier arbitration proceeding.

     Loser was unsuccessful in reversing the fee award. After all, the contractual fees clause was broad and encompassed court awards in a wide variety of proceedings. It did not matter that NAMA did not prevail in the arbitration for fee purposes; the petition to confirm the arbitration award fell within the fees clause and the postarbitration proceeding is a judicial function distinct from the arbitrator’s decision to award fees in the arbitral proceeding. (Corona v. Amherst Partners, 107 Cal.App.4th 701, 707 (2003).) Fee award in favor of NAMA affirmed.

     For more on arbitration issues in the case, see June 19, 2012 post on California Mediation and Arbitration.

Special Fee Shifting Statutes--Federal: Tips On Calculating The Amount Of The Fee Award

 

Part II: Tips From 2005 Federal Judicial Center “Awarding Attorneys’ Fees and Managing Fee Litigation.”

     Yesterday, we gave Part I on fee entitlement. Now, we provide the tips on calculating the amount of a fee award from the 2005 Federal Judicial Center paper.

     Here is the roadmap in this area:

     * What constitute fees?

     [Paralegal fees compensable]

     * What is the method of calculating the amount of fees?

     [Lodestar is the key test, devolving into an analysis of these factors:reasonable rate; hours reasonably expended; type of documentation required; lodestar adjustments -- (a) downward adjustments based on incomplete success; limited success; low or nominal damages; disproportionately low damages award; rejecting a FRCP 68 settlement offer; and plaintiff’s refusal to discuss mediation [however, improper to adjust downward based on factors used in reaching lodestar in the first place]; (b) upward adjustments based on novelty or complexity of issues; exceptional results or quality of representation; undesirability of the case (e.g., a case with a protracted history or longevity); delay in payment; riskiness; and nonmarket factors such as case preventing counsel from obtaining other clients; for defendants entitled to fees, special circumstances may give rise to downward adjustments based on plaintiff’s impecuniousness and defense failure to mitigate by trying to resolve through law and motion proceedings first.]

     * What documentation is required?

     * Should the lodestar be adjusted?

     * What are the procedural aspects of fee disputes?

     [No need for evidentiary hearing except in certain circumstances; many appellate courts have required district judge to provide an explanation for lowering a fee award, although the trend is to not require a precise accounting of deductions--a categorical approach will generally suffice; Rule 54(d)(2) provides procedural flexibility to district judges in hearing contested fee petitions.]

Part III of this series will explore “Issues on Appeal.”

Special Fee Shifting Statutes--Federal: 2005 Federal Judicial Center Study Provides A Roadmap For Fee Entitlement

 

Part I: Fee Entitlement.

     In 2005, Alan Hirsch and Diane Sheehey issued the second edition of “Awarding Attorneys’ Fees and Managing Fee Litigation” through the Federal Judicial Center.

     Here, we provide you will their analytical outline of determining whether a fee award is in order under federal fee shifting statutes:

     * Was a timely fee request made?

     * Is there a prevailing party?

     * Is there standing to bring a claim for fees?

     * Is there a liable party?

     * Are there special circumstances militating against an award?

     [On this one, they note that, with “one noted exception,” most federal appellate courts have rejected “special circumstance” factors raised by the defense to defeat a fee award, such factors as: defendant’s willingness to enter into an early settlement; the lawsuit’s conferring a private benefit on the plaintiff but no larger public benefit; the plaintiffs’ ability to pass their litigation costs on to consumers; the plaintiff’s proceeding in forma pauperis while benefiting from court-appointed counsel; the failure of a consent decree to mention fees; an award of injunctive relief only; a third party’s financing the plaintiffs’ suit; and the routine nature of the case. Okay, the “noted exception”? Farrar v. Hobby, 506 U.S. 103, 115 (1992) -- where the plaintiff had limited success by only being awarded nominal damages.

     * Is there a fee waiver? [Waiver of fees as an express part of a settlement agreement or consent decree].

     This is Part I. Part II will focus on Calculating the Amount of the Award--lodestar and procedural aspects of a fee petition. Stay with us, you will get Part II soon in an upcoming post.

In The News . . . . E.D. La. Federal Judge Caps Fee Recovery From BP Settlement To 25% For Each Claimant Plus “Reasonable Costs”

     Above:  Student nurses’ “capping”ceremony.  1943.  Library of Congress.  Photographer:  Ann Rosener (1914-2012).

     As reported by Reuters in a post on Friday, June 15, 2012, U.S. District Judge Carl Barbier of the Eastern District of Louisiana (in New Orleans) last month gave preliminary approval to a $7.8 billion settlement that BP reached to resolve 10,000 claims resulting from the 2010 Gulf of Mexico oil spill.

     This last Friday, District Judge Barbier ruled that attorneys for plaintiffs who settle claims through the settlement must cap their contingency fee arrangements at a ceiling of 25% of any recovery a plaintiff receives plus “reasonable costs,” although he did indicate that this did not keep attorneys from entering into lower percentage arrangements.

     *“I have just received yours of the 16th, with check on Flagg & Savage for twenty-five dollars. You must think I am a high-priced man. You are too liberal with your money. Fifteen dollars is enough for the job. I send you a receipt for fifteen dollars, and return to you a ten dollar bill.” --Abraham Lincoln, Letter to George P. Floyd, February 21, 1856.

Abraham Lincoln.  1858.  Library of Congress.

In The News . . . . Righthaven Suffers More Adverse Attorney’s Fees And Has Essentially Shut Down

Yet Again, No Haven for Righthaven

     Righthaven LLC, a Las Vegas copyright infringement lawsuit filer, looks like it has essentially shut down amid numerous legal setbacks, after several judges have found that it had faulty copyright assignments or its infringement suits against mainly website operators/media defendants were protected by the fair use doctrine.

     Well, it has suffered another hit--more attorney’s fees were ordered it, to the tune of $131,457 by U.S. District Judge Roger Hunt in Las Vegas in a Righthaven suit against Democratic Underground, a Washington, D.C.-based political website operator. That now brings the total attorney’s fees tally against Righthaven to $318,138, as ordered by various judges in Nevada and Colorado copyright cases.

     Apparently, the only assets sold so far for creditors have been a website domain name (for $3,300) and its trademark (for $1,025).

     You can read more about this award and the surrounding Righthaven saga in Steve Green’s June 14, 2012 post at vegasinc.com.

Homeowner Associations: HOA Cannot Gain Fee Recovery Even For Frivolous Recall Election Dispute Loss By Plaintiff Homeowner

 

Statutory Language Did Not Encompass Losing Homeowners, So Concluded in a “Reluctant” Decision By the Appellate Court.

     This next case demonstrates judicial restraint based on the appellate court’s construction of the governing statutory language. If they could have done otherwise, they would have -- we surmise -- but the panel left this “loophole” for the Legislature to address in the future.

     In That v. Alders Maintenance Assn., Case No. G044799 (4th Dist., Div. 3 June 15, 2012) (certified for partial publication; fee discussion published), plaintiff homeowner lost a recall election challenge that the lower court found to be frivolous in nature, a merits determination affirmed on appeal. However, the lower court also awarded defendant HOA approximately $15,000 in attorney’s fees based on the unsuccessful frivolous action under Civil Code section 1363.09(b), which allows a prevailing homeowner member to recover reasonable fees and costs but only allows a prevailing HOA to recover “costs” in the event the action is to be found frivolous, unreasonable, or without foundation.

     With reluctance, the appellate court reversed in a 3-0 opinion authored by Justice Moore.

     Even though fees are recoverable as “costs” under CCP § 1033.5(a)(10), that only is dictated if fees are statutorily authorized, which brought the court back to section 1363.09(b). The problem is that if the Legislature had intended fees to be recoverable for frivolous actions, it could have drafted the ending language to say “reasonable fees and costs” rather than just “costs.” Also, other sections of the Davis-Stirling Act had very clear fee entitlement provisions, unlike the language in section 1363.09(b). The appellate court did agree that the Legislature should plug this “loophole.”

     BLOG UNDERVIEW--There is also another lesson for all practitioners when seeking fees. State all the grounds for fee entitlement, and do it in the trial court or risk forfeiture on appeal. That happened here. HOA claimed on appeal that the CC&Rs (a contract) allowed for recovery of the fees, but the CC&Rs were never provided to the trial court such that the failure to raise/prove it meant this independent basis for fee recovery could not be considered.

Dr. Smith from “Lost in Space”: “Oh, the pain”

Arbitration: Cinel v. Barna Just Published

 

Arbitration Waiver Decision Goes From Unpublished to Published Ranks.

     On May 20, 2012, we did a post on Cinel v. Barna, an unpublished decision from the Second District, Division 1 sustaining an arbitration waiver decision because the parties could not reach an agreement on how to pay the arbitrator’s fees. We can now report that this opinion was certified for publication on June 15, 2012.

     (If you want another account on the Cinel litigation – Cinel v. Barna and Cinel v. Christopher -- see co-contributor’s Marc May 20 and February 29, 2012 posts at California Mediation and Arbitration.)

Appealability/Mediation: Because Promissory Note With Fees Clause Had No Contractual Mediation Condition Precedent, So No Mediation Had To Be Held Before Commencement Of Suit

 

Fees Not Based on Listing Agreement With Mediation Clause Affirmed on Appeal.

     Sometimes it all depends on the contractual agreement under which you are awarded attorney’s fees.

     We have done some recent posts on the mediation condition precedent which can disqualify fee recovery depending on whether it is not pursued before commencement of a suit or even during the course of a dispute. A losing party lost a promissory note and listing agreement dispute, with both agreements having a fees clause (but only the listing agreement having the mediation condition precedent). The price of a loss was quite hefty, with loser being hit with attorney’s fees of $219,171.18 and other costs of $19,205.34.

     Loser mainly hinged his appeal on the victor’s failure to allegedly mediate.

     Didn’t work under the facts at issue, said the appellate court in affirming the fee award in Keith v. Shuttleworth, Case No. D058881 (4th Dist., Div. 1 June 14, 2012) (unpublished). The complaint was upon a promissory note, which does not require mediation before commencement of litigation. Although suggesting the note arose from the listing agreement, this theory was never presented below and was not supported by an adequate record. Beyond that, the judgment on the complaint was never appealed, so it could not appeal the award of fees on the complaint.

     Because winner was entitled to fees for winning on appeal, the appellate court deemed it the “better practice” to allow the trial court to fix such fees once the dust settled from the appeal.

Reasonableness Of Fees: Fourth District, Division 3 Remands Nearly $740,000 Fee Award For Rescrutiny

 

Lower Court Did Not Properly Consider Plaintiff’s Degree of Success in Fixing Fees.

     Under the Truth in Lending Act, attorney’s fees must be awarded in any successful action to enforce its requirements. (15 U.S.C. § 1640(a)(3); Purtle v. Eldridge Auto Sales, 91 F.3d 797, 802 (6th Cir. 1996).) In the next case, our local appellate court remanded a substantial lower court fee award to TILA plaintiffs based on the trial court’s failure to properly consider the plaintiffs’ degree of success.

     LaLiberte v. Pacific Mercantile Bank, Case No. G045275 (4th Dist., Div. 3 June 13, 2012) (unpublished) involved a TILA case with both individual and class action claims which took two prior trips to the appellate court with some wins for both sides during the course of the case. Ultimately, the case was narrowed to a class claim for statutory damages based on bank’s failure to accurately disclose finance charges and an individual claims seeking loan rescission/statutory damages for the alleged failure to provide accurate disclosure statements and notices of right to cancel. Eventually, the class claim was certified based on directives of the appellate court, and then a settlement was reached by the parties through which plaintiffs were given a $22,500 incentive award and $202,500 was distributed to class members. The settlement preserved plaintiffs’ right to seek fees under TILA, and they were awarded $738,216.09 out of a requested nearly $759,000 in fees after some reductions were made based upon bank’s opposition to the fee request.

     On the appeal of the fee award, the order was reversed and remanded for a recalculation of fees.

     The overarching basis was the lower court’s failure to properly consider plaintiffs’ limited degree of success. The settlement only applied to plaintiffs’ class claim for statutory damages based on the alleged finance charge nondisclosure, with nothing paid out on the individual claims. Although the successful claim was related to the individual claims based on a common core of facts (the refinance transactions with bank), the lower court--in the reviewing court’s view--did not properly focus on the degree of success factor, which involves analyzing the objectives plaintiffs sought to achieve through the litigation and what they actually achieved. (Sokolow v. County of San Mateo, 213 Cal.App.3d 231, 248-250 (1989); Hensley v. Eckerhart, 461 U.S. 424, 436, 440 (1983).) In this particular instance, no loan rescissions were obtained, bank successfully opposed the class claims for rescission/actual damages, and plaintiffs failed to establish bank violated TILA in any way other than its failure to accurately disclose finance charges. The lower court improperly based the award on plaintiffs having “broken new legal ground” in the prior published opinion that held rescission claims were not subject to class treatment, given that this is not a degree of success factor and in any event was an unsuccessful development for plaintiffs.

     Although the lower court stated in its award that it considered the “result obtained,” this cursory statement was not elaborate enough to explain a decision awarding plaintiffs 97% of their attorney’s fees. On remand, the appellate court did offer some guidance, saying the trial court (1) should compare the relief/litigation objectives obtained with the relief/litigation objectives plaintiffs failed to obtain; (2) should prioritize the various forms of relief/litigation objectives to determine degree of success; and (3) should determine whether the various claims plaintiffs alleged were separate litigation objectives or merely alternative theories for obtaining the same litigation objective, but should not consider plaintiffs’ later success, if any, on individual claims because the fee motion only dealt with recovery on the single class claim.

     Justice Aronson wrote the 3-0 opinion on behalf of the panel hearing the case.

Appealability/SLAPP: Fourth District, Division 3 Finds Failure To Appeal SLAPP Fee Grant Order Meant No Jurisdiction To Consider Fee Order

 

Fee Award Also Correct on the Merits

     In Martin v. Inland Empire Utilities Agency, 198 Cal.App.4th 611, 632-633 (2011) [reviewed in our August 20, 2011 post], an appellate court found it had no jurisdiction to review the denial of a SLAPP fee request because no appeal had been separately taken from the fee order denial.

     Now, in Risk v. Jones, Case No. G0447775 (4th Dist., Div. 3 June 12, 2012) (unpublished), our local appellate court has applied Martin’s reasoning to an order granting a SLAPP fee request. Losing plaintiff did not separately appeal a subsequent order granting fees to a prevailing defendant attorney garnering $10,030 out of a requested $14,248.50 in fees but only appealed the prior order granting the SLAPP motion. That was fatal on jurisdictional grounds, but the appellate court also found that defendant had also prevailed so as to be entitled to fees on the merits.

     Justice Moore authored the opinion on behalf of a 3-0 panel.

In The News . . . . 10th Circuit Reverses Civil Rights Fee Award Of $8,000 Based On Terse Explanatory Opinion By District Judge And Occupy Fresno Gains $37,500 In Forma Pauperis Fees In Settling Constitutional Challenges to Fresno County Ordinance Rules A

 

First Amendment Prevailing Plaintiff Entitled to More Than $8,000, Although Jury Verdict Slight, But Not Requested $503,000 Given He Lost Several Claims.

     John Ingold, in a June 8, 2012 post on denverpost.com, tells about a recent Tenth Circuit decision of interest in the fee award area.

     In Zinna v. Congrove, No. 10-1482 (10th Cir. June 5, 2012) (published), the Tenth Circuit was reviewing a district judge’s award of $8,000 in attorney’s fees to First Amendment plaintiff Mike Zinna against Jefferson County commissioner Jim Congrove after Mr. Zinna won a civil rights verdict of $1,791 against Mr. Cosgrove (who we assume was indemnified by the County). The problem is that Mr. Zinna had requested fees of $503,000, although he certainly was entitled to some award under the civil rights fees shifting statute (42 U.S.C. §1988(b)).

     Alastair Sim as Scrooge (1951).

     Mr. Zinna’s appeal to the Tenth Circuit hit something of a receptive record, although the remand will determine how much of one.

     The problem was that the district court was too skimpy in detailing its analysis of why such a small award was made under the Farrar factors. Also, it was improper for the district judge to “eyeball a fee request and cut it down by an arbitrary percentage,” as was apparently done here. However, the federal appeals court did drop a footnote indicating that $503,000 was certainly not the fee award number, given that Mr. Zinna was unsuccessful on several claims--work that had be apportioned out on remand, if we are reading correctly between the lines.

Occupy Fresno, Winning a Preliminary Injunction on Courthouse Park Free Speech/Assembly Issues, Settles and Garners $37,500 In Pro Per Fees.

     Mike Rhodes, in a June 8, 2012 post on indybay.org/news, brings us an interesting fee recovery in a settlement reached in a dispute in co-contributor Mike’s home down of Fresno, CA.

     Occupy Fresno and several of its members, a non-profit First Amendment oriented group, filed a lawsuit in the U.S. District Court, Eastern District of California, challenging the constitutionality of certain Fresno County Ordinance Codes about circulation of flyers, carrying of signs, and holding small gatherings (aka vigils) in Fresno County Courthouse Park, especially after the arrests of several people affiliated or sympathetic to Occupy Fresno. The group successfully obtained a preliminary injunction from District Judge Breyer, sitting by designation, by which the constitutional challenges were acknowledged on a provisional basis.

     Most recently, Occupy Fresno has reached a settlement with Fresno County. Early on in the litigation, it obtained a ruling that it was in forma pauperis, meaning it did not have the funds to even meet the court filing costs and was allowed to file suit with a waiver of same. The settlement defines the circumstances under which free speech/assembly events can be held in the Courthouse Plaza, and--for our interest--resulted in an agreement to award $37,500 in fees and costs to Plaintiff.

First Fresno County Courthouse built in 1867.

Mediation: Defense Claiming Fee Recovery Under CAR Form Contractual Clause Cannot Refuse Mediation Based On Plaintiff’s Initiating Suit Without Previously Requesting Mediation or Based on Plaintiff’s Purported Need For Further Discovery

 

Defense Award of Fees Is Reversed, Because Alternative Phrasing of CAR Form Clause Means Defense Must Attempt to Mediate Or Be Disqualified From Fee Recovery After Plaintiff’s Request for Mediation.

     Okay, folks, in Frei v. Davey, 124 Cal.App.4th 1506 (2004), our local appellate court (authored by Justice Fybel) considered the CAR form contractual provision requiring mediation as a condition precedent to fee recovery in disputes involving sellers and buyers. Prior to Frei and based on the wording of the CAR form provision, a plaintiff ultimately prevailing is disqualified from fee recovery if initiating a suit that is not exempt from exceptions to the mediation requirement. The plaintiffs is Frei were exempt from requesting mediation before filing suit, because their suit for specific performance with a lis pendens in play was within an express exemption. So, the plaintiffs in Frei requested mediation even after suit commencement, but defendant refused. Frei concluded that the defense refusal to mediate was dispositive under the alternative wording of the mediation disqualification penalty--which penalizes a party “refus[ing] to mediate after [the making of] a request [by the opponent].” After all, plaintiffs, albeit exempt from having to make the request before commencing suit, did make a mediation request later, and the defense refused and could not be awarded fees as a prevailing party under the contractual clause. (Keep in mind, had plaintiffs prevailed in Frei, they could gave garnered fees, but their loss ended this dream.)

     Cullen v. Corwin, Case No. C067861 (3d Dist. June 7, 2012) (certified for partial publication; fee discussion published) confronted a different defensive situation not addressed by Frei--does the defense have any obligations to cooperate in mediation even where a plaintiff is disqualified from fee recovery because it went straight to litigation in a real estate nondisclosure case not falling within any contractual mediation exemption?

Appealability/Reasonableness Of Fee Double: Failure To Appear At OSC Waived Appellate Challenge To Fees And Trial Court Did Provide Reasonable Explanation For Fee Award

 

Marriage of Howard, Case No. H036510 (6th Dist. June 6, 2012) (Unpublished).

     In this one, ex-husband waived any challenge to a $16,162 fee award because he failed to appear at an OSC and oppose the request. This was found to be a forfeiture based on his failure to object to the an error at the lower court level. (In re Urayna L., 75 Cal.App.4th 883, 886 (1999).)

Citizens for Upholding Zoning Regulations v. City of Palo Alto, Case No. H036691 June 6, 2012) (Unpublished).

     The next opinion involves a CEQA winning plaintiff seeking to recover appellate fees and costs after sustaining an earlier trial court level fee award before the Sixth District in an earlier cause. Plaintiff moved to recoup $160,504.25 in appeal-related fees and costs, but the lower court awarded it $120,504.25 of the request based on the perception that the overall time expended was excessive--a 25% reduction. This fee award was affirmed on appeal because the trial court did offer a reasonable explanation for its discretionary call, distinguishing it from the lack of any reason requiring a remand in Gorman v. Tassajara Development Corp., 178 Cal.App.4th 44, 101 (2009) [discussed in our October 7, 2009 post].

POOF!/Family Law Two-Fer: Reversal Means $107,560 Fee Award Goes Away And $50,000 Needs/Sanction Award Against Husband Hiding Finances Sustained

 

Apex LLC v. Sharing World, Inc., Case No. G045321 (4th Dist., Div. 3 May 31, 2012; Posted June 5, 2012) (published).

     Justice Fybel, on behalf of a 3-0 panel of our local appellate court, reversed bench trial results in an opinion involving many UCC issues, such as gap fillers for contract formation, confirmation in writing, inconsistency under section 2202, reasonable resell efforts, and section 2706 damages. (Takes us back to law school, doesn’t it?) For our purposes, after initially denying winner fees, the trial court eventually granted $107,560 in fees. However, with the reversal of the underlying judgment, the fee award, too, went POOF!

Marriage of Johnson, Case No. B232819 (2d Dist., Div. 8 June 5, 2012) (unpublished).

     In this one, husband was hit with 2030 needs based fees of $40,000 and 271 sanctions of $50,000, but with the court order providing that husband’s payment of the $50,000 sanctions award would satisfy his obligation to pay the $40,000 fee-shifting award. Husband’s appeal was unsuccessful. After all, the lower court correctly drew an adverse inference against him given proof that he was untruthful about his income by understating the personal expenses his law firm paid for him. Also, he did have the financial wherewithal to pay the award, with the lower court merely finding he was living beyond his means rather than he lacked the ability to pay the sanctions award--a reduction in his lifestyle seemed to suggest he had the ability to pay off the award.

Fee Clause Interpretation/SLAPP/Sanctions: 25% Contractual Fee Recovery-Capped Clause For Prosecuting Activities Held Not To Apply To Defense Activities

 

Also, Sanctions Against Attorney Upheld Under CCP § 128.7, But Not SLAPP Statute.

     ASAP Copy and Print v. Ringgold, Case Nos. B224295/B225702 (2d Dist., Div. 7 June 4, 2012) (unpublished) was an incredible donnybrook over a fairly minor dispute involving a photocopier lease/maintenance agreement. The amount of time, trouble, and fees that is generated must have been enormous, with the losing party at least incurring liability for over $278,000 in defense fees.

     What caught our eye on this one was two things.

     First, sanctions imposed against counsel were affirmed under CCP § 128.7 (California’s equivalent of FRCP 11), but not the SLAPP statute based on precedent indicating that losing plaintiff’s counsel cannot be hit with SLAPP fee exposure. (Moore v. Kaufman, 189 Cal.App.4th 604, 614 (2010).)

     “’There are more ways than one to skin a cat,’ so are there more ways than one of digging for money.”  Seba Smith, The Money Diggers (1844).  “There are more ways of killing a cat than choking it with cream.”  Charles Kingsley, Westward Ho! (1855). 

     Second, the pertinent contractual fees clause had a 25% capped recovery with respect to a prosecuting prevailing party. Losing prosecutor sought to apply this against defense work based on Civil Code section 1717’s reciprocity principle. Not gonna work, said the appellate court. The cap may be reasonable for prosecution work, because that it within the attorney’s control--unlike defense actions often times dictated by the whim of the opposing side as far as responses and counter-measures. Besides that, it would be inequitable to apply the cap given that the defense activities are outside the control of what the prosecuting party does to drive up costs. Fee clause interpreted by its terms and in a way to prevent an inequitable application.

Private Attorney General/Reasonableness Of Fees: $382,189.73 Fee Award To CEQA Winners, Including Attorney Who Represented Herself, Was Proper Under CCP § 1021.5 Because Trope Prohibition Did Not Apply

 

$300/Hour Is Reasonable Rate for Sonoma Practitioners.

     Healdsburg Citizens For Sustainable Solutions v. City of Healdsburg, Case No. A130374 (1st Dist., Div. 4 June 4, 2012) (certified for partial publication; 1021.5 Trope fee discussion published and rest unpublished) involved the City’s appeal of $382,189.73 in fees awarded to CEQA winners, including an attorney who was a petitioner under Code of Civil Procedure section 1021.5, California’s private attorney general statute. (Petitioner attorney did provide services in the win.) The lower court reduced the fee claims by 40%, reflecting some limited success via losses on other claims and applying a 1.5 multiplier except no enhancement for petitioner attorney’s services.

     The fee award was affirmed in a partially published opinion.

     The published part of the opinion held that the Trope prohibition--disallowing fees to in pro per attorneys under certain circumstances--did not apply to this attorney/litigant in public interest litigation where fees were sought under section CCP § 1021.5.

     The unpublished portion sustained the fee award after, among other things, determining that $300/hour was a reasonable rate for Sonoma litigators and that fees for amicus briefing should be allowed.

      Bonus:  City of Healdsburg website.

Arbitration/Prevailing Party: $37,500 Interim Contract Fee Award Sustained Despite The Fact There Was No Final Judgment At Fee Award Time

 

Difference Between This and Frog Creek: Final Award Occurred After Interim Fee Award, So There Was Finality.

     On May 27, 2012, we reported on the First District, Division 5’s published opinion in Frog Creek Partners, LLC v. Vance Brown, Inc., 2012 Cal.App. LEXIS 625 (2012), where the appellate court concluded that the trial court erred in awarding Civil Code section 1717 fees to the party who filed a successful petition to compel arbitration in a pending lawsuit where no prevailing party ultimately had not been determined on the breach of contract claims.

     Well, we now have a closely following unpublished decision on the same subject.

     In Barfield v. Ecology Control Industries, Inc., Case No. A131883 (1st Dist., Div. 5 June 4, 2012) (unpublished), defendant won a petition to compel arbitration in a pending case, having to appeal to the intermediate appellate court to achieve this result. Then, the lower grant granted the defense $37,500 in section 1717 fees, but stayed the action until there was a judgment and settlement. Later then, the arbitrator issued a final award in favor of defendant, and judgment was entered on the arbitration award.

     Losing party argued that the successful petition to compel arbitration was only an interim victory not entitling the defense to a fee award. Technically correct, said the appellate court, but a much different procedural posture than Frog Creek. The Barfield appeal of the fee award did occur after a final judgment, such that the award could be sustained notwithstanding that the fee award was technically erroneous at the time. Subsequent events took care of things, so to speak.

Appealability/Family Law: $1,000 Sanctions Order Appeal Was Dismissed Because Correct Course Was Appeal From Final Judgment

 

Appeal Was Premature.

     In Marriage of Garcia, Case No. B231782 (2d Dist., Div. 3 June 1, 2012) (unpublished), ex-wife appealed from a $1,000 “sanctions” order under Family Code section 2107(c), which does allow for imposition of attorney’s fees for a family law litigant not complying with family law provisions. (Apparently, she failed to produce a preliminary declaration of disclosure and was “sanctioned”.)

     Wife’s appeal from the sanctions order was dismissed as premature. CCP § 904.1(b) does provide that sanctions under $5,000 can only be reviewed through an appeal of the final judgment (or, even less successfully, through an extraordinary writ, which was not done). Given the concession on appeal that no final judgment had been reached, the sanctions order appeal had to be dismissed.

Pending Cases: U.S. Supreme Court To Determine If Prevailing Defendant Can Be Awarded Costs Against Losing Plaintiff In FDCPA Case

 

FRCP 54(d) Was Basis For the Cost Award in Tenth Circuit Decision.

     On Tuesday, May 29, 2012, the United States Supreme Court granted certiorari from the Tenth Circuit’s decision in Marx v. General Revenue Corp., U.S. No. 11-1175, to determine whether a prevailing defendant can be awarded routine costs (not attorney’s fees) against a losing plaintiff in a Fair Debt Collection Practice Act (FDCPA) case where the plaintiff was found to have brought the suit in good faith. The basis for the costs award was FRCP 54(d) (costs and attorney’s fees), while the FDCPA only penalizes losing plaintiffs bringing the suit in bad faith or for harassment purposes.

Requests For Admissions: Appellate Remittitur Required Separate Consideration Of Post-Appeal Consideration Of Appellate Fees, Not Just Remand Fee Issues

 

Appellate Follow-up to Earlier Appeal Surveyed in Our September 2, 2010 Post.

     In our September 2, 2010 post, we surveyed Simon v. Coleman (Simon I), reversing and remanding for consideration attorney’s fees to be awarded for “costs of proof” sanctions under Code of Civil Procedure section 2033.420. Clearly, the defense was going to get something, and they did.

     On remand, the trial court recalculated the costs-of-proof award, quite faithfully, at $45,000 (a little lower than the $50,150) request, but also awarded additional attorney’s fees for filing the motion ($2,350) and for defending the prior appeal ($13,787).

     The latter aspect of the award got the lower court in trouble in Simon v. Coleman (Simon II), Case No. B231229 (2d Dist., Div. 3 May 31, 2012) (unpublished).

     The lower court’s $45,000 recalculation was sustained. However, the matter had to be remanded, yet again, because the prior appellate remittitur only related to the RFA calculation such that any other fees had to be considered in a separate proceeding--and they were not so considered. So, further proceedings will be spawned from this appeal, the case of the excessive remittitur fee award.

Requests For Admissions/Section 1717/Specific Fee Shifting Statutes: Property Owner Obtaining Cancellation Of Grant Deed For Fraud Not Entitled to Attorney’s Fees Recovery

 

Three Grounds for Recovery Did Not Support Request.

     Property owner in Marchi-Friel v. Rago, Case No. A130125 (1st Dist., Div. 4 May 31, 2012) (unpublished) did obtain cancellation of a fraudulent grant deed, with the trial court also cancelling related promissory notes out of an abundance of caution. She then sought recovery of attorney’s fees under three grounds, all of which were denied and sustained on appeal.

     The initial request was grounded in the good faith improver statute of Code of Civil Procedure section 871.5. The defect here was that a crucial prerequisite to fees under 871.5 was not met--the filing of a good faith improver action or cross-action, something not done by appellant.

     The second ground for fees was based on Civil Code section 1717 given the existence of attorney’s fees clauses in the note provisions. The problem here was that the cancellation of the promissory notes was only tangential to the grant deed cancellation, a theory of the case appellant herself espoused such that the fee recovery was not “on the contract” for 1717 purposes.

     The third basis was “costs of proof” sanctions for denying requests for admissions under Code of Civil Procedure section 2033.420. No abuse of discretion under the circumstances once the reasons for the denials were explored through the appellate record.