CALIFORNIA ATTORNEY'S FEES

Probate/Retainer Agreements: Deceased Attorney Entitled To Contingency Fee Recovery, After His Death, Where Retainer Agreement Specified Work Could Be Delegated To Other Attorneys

 

Because Contingency Related to Work for Beneficiaries Apart from Estate Benefits, No Compliance Necessary With Probate Code Court Approval Requirements.

     Okay, readers, here is an interesting cross-over case involving probate, retainer agreements, and contingency awards. The case is Sare v. Shad, Case No. C069573 (3d Dist. July 31, 2013) (unpublished).

     In this one, an attorney agreed to represent two beneficiary sisters in matters relating to the conservatorship and eventual probate of an estate belonging to their half brother. In essence, sisters and attorney agreed that attorney was entitled to a third of any amount recovered from half brother’s estate. Unfortunately, he died, but delegated the work to another attorney which eventually garnered almost $823,000 for the benefit of sisters, a benefit payable from half brother’s estate.

     The trial court found decedent attorney was entitled to his third contingency “cut” despite the fact he died.

     The appellate court agreed. The “saving grace”--and an important drafting retainer point for contingency attorneys in any context (but especially where conservatorship/probate issues are present)-- is to include a retainer clause that allowed the (prior) deceased attorney to delegate work to other attorneys. That clause was present in this controversy, justifying the fee award in the eyes of both the trial and appellate courts.

     Sisters also argued that the contingency fee was not recoverable because the contingency agreement had not been pre-approved by the probate court under Probate Code sections 2644 and 10811(c). This was not found persuasive because these provisions only applied to a fee agreement made for the advantage of half brother’s estate; here, the agreement was for the benefit of sisters so that they might become or remain as estate beneficiaries. No compliance was necessary with these Probate Code provisions.

Prevailing Party/Section 1717: Landlord And Tenant Denied Relief On Complaint And Cross-Complaint, With Neither Side Entitled To Attorney’s Fees As Section 1717 Prevailing Party

 

Neither One Obtained Sought-After Litigation Objectives.

     When a lower court has discretion to decide who the prevailing party is, unless the facts show otherwise, the abuse of discretion generally applies on appellate review and dictates the result. That is what happened here.

     In Barez v. Ni, Case No. H037572 (6th Dist. July 31, 2013) (unpublished), no one was found to be the prevailing party so as to obtain an attorney’s fees award under Ciivl Code section 1717. Landlord sued for prospective rent after tenant cancelled the lease, and tenant cross-complained for fraud (dismissing this prior to trial) and for recovery of an approximate $10,000 security deposit. The jury denied relief to both parties, finding neither had fulfilled their obligations under the contract so -- ta da! -- neither party obtained relief on their respective complaints.

     Then, the fee fun began. Tenant sought to recover $142,542 in fees, inspiring a dueling motion of $113,681 by landlord--both claiming to prevail under section 1717, a proposition rejected by the trial court in awarding no fees to either side. (One thing we all can agree upon is that each side spent a fair piece on fees, no?)

     Landlord rested on the decision, but tenant appealed. Tenant fared no better.

     The appellate court, although not requiring arm wrestling to break the dispute (because, after all, reviewing courts in California or the U.S. do not require this), did agree there was no clear winner such that the lower court’s discretionary call had to prevail. The lower court’s order is presumed correct, and nothing in the record suggested the court failed to understand what it had to do in the “prevailing party” analysis. (Cussler v. Crusader Entertainment, 212 Cal.App.4th 356, 367 (2012).)

     Beyond that, tenant’s cross-complaint did not have to be brought such that it was not purely defensive in nature. However, even where a cross-action is essentially defensive in nature, a lower court still has discretion in determining who prevailed in the overall scheme of things--something tenant failed to persuade the lower court happened. Not only that, but tenant did not succeed in even obtaining a return of the deposit, so that this was reason enough to find that tenant did not achieve its main litigation objective.

     Moral of the story: both sides go home, eat your fees, and wake up to another day of business/other activities.

Sanctions: FBI’s Previous Compliance With Document Existence/Search Information Through In Camera Previous Proceedings Meant Future Rule 11 Sanctions Were Inappropriate

 

Because District Judge Had Already Ruled on FBI’s Compliance, So No Rule 11 Sanctions Would Lie.

     Ya know, timing is everything; life in general, but especially in the law. The next case demonstrates the truth of this saying in real life time, all in the context of Rule 11 sanctions.

     Islamic Shura Council of Southern California v. FBI, Case No. 12-55305 (9th Cir. July 31, 2013) (for publication; per curiam) is a situation where a district court granted Shura’s Council’s Rule 11 sanctions motion against the FBI. However, the Ninth Circuit reversed the sanctions order because, even before the motion was filed, the district judge had determined that the FBI had complied by informing the court about the existence of documents/searches of documents through in camera proceedings. Because sanctions were sought long after the district court had ruled on the adequacy of the government’s eventual compliance with FOIA, there was nothing to sanction. Sanctions award reversed and vacated.

Off Topic . . . . Recent Survey of Law Firm Economics Show Per Lawyer Revenue Rose From Third Quarter Last Year For All Attorneys, Except For Small Decline For 1-9 Attorney Sized Offices

 

     According to Law.com, the Survey of Law Firm Economics showed firms with more than 150 attorneys had an 8.5% increase in revenues per attorney this year as compared with the same period through third quarter 2012. However, firms or offices with 1-9 attorneys saw revenue decrease 8% over the same time frame.

     To demonstrate that the economy is improving somewhat, for firms of all sizes, per-lawyer income increased by 1.1% in 2012, compared to a 4.2% decrease in 2011.

SLAPP Winners Denied Fee Recovery Because “Of Counsel” Attorneys Means Self-Representation Rule Applied And Other Attorney Did Not Represent Attorneys Having Exposure Outside Of Being Law Firm Constituents

 

Trope Rule Dictated the Result.

     In Legaspi v. Spivak, Case No. B240274 (2d Dist., Div. 4 July 30, 2013) (unpublished), a lower court denied attorney’s fees to winning SLAPP defendants (all attorneys or law firms) based on theTrope rule barring self-represented lawyers from recovering fees.

     The fee denial was affirmed on appeal.

     The reviewing panel found persuasive two prior cases: (1) Carpenter & Zuckerman, LLP v. Cohen, 195 Cal.App.4th 373, 386 (2011) [examined in our May 11, 2011 post]; and (2) Sands & Associates v. Juknavorian, 209 Cal.App.4th 1263, 1272-1273 (2012) [examined in our October 10, 2012 post]. In Carpenter & Zuckerman, fees were denied in a SLAPP context where the “representing” attorney was an associate and only defended attorneys who had no distinct exposure except as law firm constituents, which applied to at least one of the attorneys trying to recoup SLAPP fees. Juknavorian found, in a Civil Code section 1717 context where fees were sought contractually, that “of counsel” attorneys are not distinct from the law firm for Trope purposes, which also applied to two of the other attorneys seeking to get a SLAPP fee recovery by close analogy.

Costs: $6,067.94 Reduction In Order For Planning Commission Hearings Transcripts Held After County EIR Approval

 

Government Code Section 21167(f) Was Basis For Reduction.

     In San Diego Citizenry Group v. County of San Diego, Case No. D059962 (4th Dist., Div. 1 July 30, 2011) (unpublished), losing CEQA plaintiff did challenge the costs of preparing part of an administrative record and argued the County was not entitled to reimbursement of $6,067.94 for planning commission hearing transcripts not put before the County in the EIR approval process.

     Plaintiff won this reduction. Based on Government Code section 21167(f), this was properly taxed based on a “reasonableness” standard--the planning commission hearings transcripts were not part of the “history of the project” because they occurred after County obtained approval of the EIR. Properly reduced, held the appellate court.

POOF!/SLAPP: Reversal Of SLAPP Grant Means $30,000 Fee Award Went Away.

 

SLAPP Reversal Doomed Prior Fee Award Viability.

     Reversal on appeal can be cruel in any case, but especially in the SLAPP context.

     Renewable Resources Coalition, Inc. v. Pebble Mines Corp., Case Nos. B234347/B236218 (2d Dist., Div. 3 July 30, 2013) (published) is a good illustration. There, a SLAPP grant in favor of defendants was reversed. The consequence? The $30,000 attorney’s fees award to the defense also went POOF!

Private Attorney General: Marijuana Dispensary, Winning At Pleading Stage, Did Not Win Ultimate Litigation Objective To Prevent City From Closing Dispensary

 

Dispensary Was Not Successful Under CCP § 1021.5, Ultimately.

     In Qualified Patients Assn. v. City of Anaheim, Case No. G046875 (4th Dist., Div. 3 July 29, 2013) (unpublished), a former medical marijuana dispensary lost an attempt to recoup attorney’s fees under the private atttorney general statute. Although dispensary won at the pleading stage, it was not successful in preventing Anaheim from closing its medical marijuana dispensary.

     Dispensary appealed the fee denial, but did no better at the higher court stage.

     Although a pleading demurrer was reversed on appeal in an earlier case, this hardly meant that dispensary was “successful” under the private attorney general statute. It was not. Ultimately, the interim pleading success did not mean success for final purposes under section 1021.5; after all, dispensary failed to prevent the city from closing it down, meaning there was no abuse of discretion with respect to the fee denial.

     This decision was authored by a 3-0 panel by Justice Aronson.

Arbitration/Fee Clause Interpretation/Section 1717: Interesting Cross-Issue Case--Party Enjoining Arbitration Was Not Adverse Prevailing Party

 

Court Can Award 1717 Fees With Enforceable Limitations--Such As, Did Adverse Party Acted Arbitrarily, Vexatiously, In Bad Faith Or Unreasonably--You Bethca!

     We like Abbey v. Fortune Drive Associates, LLC, Case No. A135062 (1st Dist., Div. 1 July 29, 2013) (unpublished) for a lot, if not a couple of, reasons: (1) it talks about “prevailing party” for Civil Code section 1717 fees purposes in an arbitration context, and maybe more importantly, (2) it speaks to whether a contractual gloss to prevailing party status--whether the adverse party acted “arbitrarily, vexatiously, not in good faith and/or unreasonably”--were limitations which would preclude fee recovery under section 1717.

     The answers are for you readers to discover!

     On the first issue, the appellate court essentially sided with Frog Creek Partners, LLC v. Vance Brown, Inc., 206 Cal.App.4th 515 (2012), which held that there can only be “one prevailing party”--which means that a declaratory judgment staying an arbitration until conclusion of the first lawsuit does not mean the winner in the declaratory relief claim should get attorney’s fees.

     On the second issue, the focal concern was on whether a fees clause allowing fee recovery only if “the arbitrator determines that such party acted arbitrarily, , not in good faith and/or unreasonably” was a valid restriction under section 1717. The appellate court agreed that this language constituted an enforceable limitation on any fees award. (Leamon v. Krajkiewcz, 107 Cal.App.4th 424, 432-433, 436 (2003); compared to Wong v. Thrifty Corp., 97 Cal.App.4th 261, 263-265 (2002).) “Limiting attorney fees to parties who have encountered unreasonable conduct does not offend any of these policy objectives [under section 1717]. It does not alter the definition of a prevailing party. The party who has prevailed in the litigation, and thus is eligible for an award of attorney fees, must be determined according to section 1717. The limitation does not change the nature of this determination; it means only that the prevailing party, as so determined, will not necessarily recover attorney fees. As Leamon implicitly recognized, section 1717 contains no requirement that a prevailing party must recover attorney fees under a contractual attorney fees provision.” (Slip Opn., p. 14.) So, the contractual limitation on fees must be enforced, requiring a reversal and reconsideration on both grounds!

Off Topic: 25 Greatest Law Novels Ever; Judge Chastises Plaintiff Attorneys Suing For Internet Downloading; Wage/Hour Claims Increase In Federal Court Since 2008; Pre-Law Students Have Different Expectations For Using Law Degree

 

ABA List of 25 Greatest Law Novels.

     The August 2013 issue of The ABA Journal list these as the 25 greatest law novels ever (actually 26, because 25 drew a tie between two books):

25. (tie) Old Filth by Jane Gardam (2004)

25. (tie) The Ox-Bow Incident by Walter Van Tilburg Clark (1940)

24. The Fountainhead by Ayn Rand (1943)

23. Anatomy of a Murder by Robert Traver (1958)

22. The Handmaid’s Tale by Margaret Atwood (1985)

21. The Count of Monte Cristo by Alexander Dumas (1844)

20. The Firm by John Grisham (1991)

19. QB VII by Leon Uris (1970)

18. Their Eyes Were Watching God by Zora Neale Hurston (1937)

17. The Caine Mutiny by Herman Wouk (1951)

16. A Time to Kill by John Grisham (1989)

15. A Tale of Two Cities by Charles Dickens (1859)

14. The Stranger by Albert Camus (1942)

13. Native Son by Richard Wright (1940)

12. Bartleby the Scrivener: A Story of Wall Street by Herman Melville (1853)

11. The Paper Chase by John Jay Osborn Jr. (1971)

10. An American Tragedy by Theodore Dreiser (1925)

9. The Bonfire of the Vanities by Tom Wolfe (1987)

8. The Scarlet Letter by Nathaniel Hawthorne (1850)

7. Presumed Innocent by Scott Turow (1987)

6. Billy Budd by Herman Melville (1924; left unfinished at his death in 1891)

5. Les Miserables by Victor Hugo (1862)

4. The Trial by Franz Kafka (1925)

3. Bleak House by Charles Dickens (1852)

2. Crime and Punishment by Fyodor Dostoevsky (1866)

1. To Kill A Mockingbird by Harper Lee (1960)

     Grisham, Dickens, and Melville were authors having two books on the list.

U.S. District Judge Otis Wright Blasts Copyright Suing Attorneys.

     In Ingenuity 13 v. John Doe, U.S. District Judge Otis Wright (C.D. Cal.) had this to say in a 2013 decision: “Plaintiffs have outmaneuvered the legal system. They’ve discovered the nexus of antiquated copyright laws, paralyzing social stigma and unaffordable defense costs. And they exploit this anomaly by accusing individuals of illegally downloading a single pornographic video ... For these individuals, resistance is futile. ... So now, copyright laws originally designed to compensate starving artists allow starving attorneys in this electronic-media era to plunder the citizenry.”

Wage/Hour Claims Soar in Federal Courts Since 2008.

     Seyfarth Shaw’s Wage & Hour Litigation Blog, in a May 9, 2013 post, reports that since 2008, the number of wage/hour claims filed in federal court has steadily increased: 5,302 actions filed in 2008; 5,644 in 2009; 6,081 in 2010; 7,008 in 2012; and 7,764 so far in 2013.

Changing Expectations of Pre-Law Students.

     Kaplan Test Prep survey of April 11, 2013 informs us that 50% of pre-law students expect to use their law degree in a nontraditional legal job.

Estoppel/RFAs/Section 1717: Denial Of Fees To Nonsignatory Defendants And $45,000 Against Defendants For “Costs Of Proof” Sanctions Based On Three RFA Denials Upheld

 

This Case Cuts Across Several Issue Categories.

Two painted bronze “golfers” compare notes.  Carol M. Highsmith Collection.  Library of Congress.

     Masters v. Burton, Case Nos. B234555/B239447 (2d Dist., Div. 6 July 25, 2013) (unpublished) is a case about errant golf balls and litigation claiming concealment of the golf ball “hazard” in connection with a sale of a residential property fronting a golf course fairway. (I know, some of you readers may be saying “assumption of the risk,” but hold your horses to see what happened.)

     Property purchasers sued the former owners and former owners’ relocation company for concealment/nondisclosure of the errant golf ball hazard, losing in a lengthy bench trial. Former owners requested $1.35 million in attorney’s fees (wow!), which was denied by the lower court. Former owners also got hit with $45,000 in “costs of proof” sanctions under CCP § 2033.420 for denying three RFAs on requests that were ultimately proven at trial.

     Former owners appealed.

     They did not get any further relief.

     The fee denial was sustained because former owners (the Burtons) were not signatories to a purchase agreement with a fees clause--the reality was that the relocation company was the contracting party. Nothing alleged that Burtons were the alter egos of the relocation company so as to invoke Reynolds Metal type of exposure.

     Then, in an argument we see often, former owners argued estoppel--plaintiffs alleged the right of recover fees, so they were estopped from claiming that nonsignatory defendants were not similarly entitled. Wrong -- “the equitable estoppel doctrine is no longer followed by our courts and contradicts Reynolds,” citing Sessions Payroll Mgt., Inc. v. Noble Constr. Co., Inc., 84 Cal.App.4th 671, 681-682 (2000); Blickman Turkus, LP v. MF Downtown Sunnyvale, Inc., 162 Cal.App.4th 858, 897 (2008).

     The “costs of proof” sanctions award was affirmed. In response to three RFAs about errant golf balls causing damage to certain areas of the house, former sellers denied based on the fact they could not respond unless they actually saw the golf ball hit the house although their testimony is that they heard golf balls hit and knew house windows were broken by a golf ball. The trial court found that the former sellers were “word-smithing” to avoid liability, a perception endorsed by the reviewing court when sustaining the $45,000 adverse award.

Special Fee Shifting Statute: Fee Denial Remanded Because Trial Court Misunderstood The Law, Meaning Discretion Was Not Properly Exercised

 

Fee Denial Occurred in Domestic Violence Civil Case.

     Wife in Bolander v. Bolander, Case No. A134509 (1st Dist., Div. 2 July 25, 2013) (unpublished) recovered $405,000 is a civil domestic violence case arising from her claims of nonconsensual sexual conduct after her husband laced her wine with Ambien on two occasions. She then sought $455,600 in attorney’s fees and $155,622 in costs, with the lower court denying the fee request and awarding a fraction of requested costs to the tune of $17,280. Husband appealed the merits and lost, while wife challenged the fee/costs orders and won a reversal.

     Wife’s basis for fees was Civil Code section 1780.5, a discretionary fee-shifting provision in the civil domestic violence area--allowing the court to grant equitable relief, costs and other relief deemed proper by the trial judge, including reasonable attorney’s fees. Wife’s first argument was that this was akin to public interest litigation, where decisions like Serrano v. Unruh, 32 Cal.3d 621 (1982) held that fees should normally be awarded in discretionary situations unless special circumstances made an award unjust. The appellate court rejected application of this public interest wrinkle, finding the case was a private dispute between two parties.

     However, the main reason for the fee denial was the lower court’s erroneous belief that wife had presented a legally “thin” domestic violence case because other claims (like sexual battery) had been dismissed as time barred. The appellate court, in earlier discussing the merits, found that sexual battery fit into the statutory definition of “domestic violence.” Given that the lower court misunderstood the law, such an error falls outside the scope of its otherwise broad discretion. A remand was in order to reconsider the fee request using the proper legal compass.

     As far as costs were concerned, the appellate court remanded for a re-do because (1) the court taxed cost items never challenged by husband, and (1) it made some arithmetic errors in taxing costs. (Incidentally, it appears the lower court refused to award expert fees on the basis that they were not “routine costs” because the expert was not court ordered, apparently rejecting wife’s argument that they were separately allowable based on 1780.5’s “other relief” language.)

     BLOG OBSERVATION--The appellate court had a nice listing of cases which have extended Serrano’s pro-public interest discretion exercising to other areas. Here is what the court had to say: “Serrano v. Unruh (1982) 32 Cal.3d 621, a case involving an equal protection challenge and a claim for attorney’s fees under California’s private attorney general statute (Code Civ. Proc., § 1021.5). It has subsequently been extended to cases involving certain other statutory fees provisions, including claims under the Brown Act (Gov. Code, § 54950 et seq.) (Los Angeles Times Communications LLC v. Los Angeles County Board of Supervisors (2003) 112 Cal.App.4th 1313, 1327; Common Cause v. Stirling (1981) 119 Cal.App.3d 658); the Political Reform Act of 1974 (Gov. Code, § 81000 et seq.) (Thirteen Committee v. Weinreb (1985) 168 Cal.App.3d 528); and state and federal antidiscrimination laws (Christianburg Garment Co. v. EEOC (1978) 434 U.S. 412, 416 [action under Title VII of the Civil Rights Act of 1964, 42 U.S.C. 2000e et seq.]; Chavez v. City of Los Angeles (2010) 47 Cal.4th 970 [fee claim made pursuant to the Fair Employment and Housing Act (FEHA); Flannery v. Prentice (2001) 26 Cal.4th 572, 584 [same]; Young v. Exxon Mobil Corp. (2008) 168 Cal.App.4th 1467, 1474 [same]).”

Off Topic/Substantiation of Reasonableness Of Fees: But Not Really--Attorney Fee Billings In Non-Reasonableness of Fees Discovery Contexts Are Privileged

 

State Court Decision Differs from Federal Opinions on the Topic.

     Although this is maybe a little off topic, Walley v. Superior Court (Hoover), Case No. G048340 (4th Dist., Div. 3 July 24, 2013) (unpublished) is an interesting writ proceeding where an attorney challenged a lower court order to disclose invoices and accounting documents transmitted to him during his representation by another outside law firm in a case filed by a third party, putative “client” against the writ-seeking attorney.

     Attorney prevailed in the writ proceeding, in a by-the-court decision endorsed by Justices O’Leary, Fybel, and Thompson.

     Plaintiff suing for defendant attorney’s breach of fiduciary duty served a custodian deposition subpoena on a law firm that had represented defendant attorney earlier, seeking “[a]ll accounting records, including account receivable and billing system records, which are related to [the earlier arbitration action in which plaintiff recovered an award against attorney].” Attorney claimed this information was attorney-client privileged vis-a-vis the law firm representing him earlier. The lower court disagreed, denying a motion to squash and ordering production within 30 days

     The appellate court overturned the lower court ruling, after staying the production order while the writ proceeding wound through the system.

     The attorney-client privilege indeed prevailed. “The parties have not cited any California case, and we have found none, which specifically analyzes whether attorney accounting records transmitted to the client constitute attorney-client confidential communications within the meaning of Evidence Code section 952. While a few cases assume attorney billing statements are confidential communications in other contexts, no California case has examined the application of the privilege to such documentation and communications in the context of discovery,” citing cases approving submission of redacted billings in order to uphold the privilege in attorney fee proceedings. (Slip Opn., pp. 9-10.) The confidential nature of the billings were buttressed by the fact the Legislature, in Business and Professions Code section 6149, mandated that written fee contracts between clients and attorneys are confidential communications.

     Walley also did not find persuasive federal cases holding billings were not confidential in nature. Most importantly, in a footnote, the appellate court found that all of the cited cases predate the enactment of Business and Professions Code section 6149, with California law “trumping” federal law on the subject.

     BLOG OBSERVATION: This really is a first impression case. Its reasoning and cited cases on fee proceedings--Banning v. Newdow, 119 Cal.App.4th 438 (2004) and Smith v. Laguna Sur Villas Community Assn., 79 Cal.App.4th 639, 645-646 (2000)--would be useful in supporting submission of redacted fee billings in support of a fee petition, if the redactions are done selectively to safeguard confidential attorney-client communications. For published cases or previous posts on unpublished cases relating to redacted billing submissions, see Jaramillo v. County of Orange, 200 Cal.App.4th 811, 829-830 (2011) [4th Dist., Div. 3; Rylaarsdam, J.] [condoning use of more generalized billing entries if attorney-client privilege jeopardized]; Johnson v. Bd. of Education of Bakersfield City School Dist., Case No. F059702 (5th Dist. March 29, 2011) [unpublished, reviewed in our March 31, 2011 post] [error for lower court to discount fees altogether where heavily redacted billings were submitted]; City of Lake Forest v. Lake Forest BodyCentre, Case No. G043301 (4th Dist., Div. 3 Feb. 9, 2012) [unpublished; Fybel, J., reviewed in our Feb. 10, 2011 post] [remand where severely redacted billings used so no meaningful review was possible]; Fuller v. Monogram Real Estate, Case No. G044808 (4th Dist., Div. 3 Dec. 19, 2011) [unpublished; O’Leary, A.P.J., reviewed in our Dec. 20, 2011 post] [suggesting compromise where heavily redacted billings being used: either waive the privilege or present more detail in the attorney declaration submitted in support of the fee motion].

Family Law: $120,000 Sanctions Properly Entered Against Husband Based On Both Family Code Sections 2107(c) And 271

 

No Injury Required to Opposing Party Under Section 2107(c).

     A lower court in Marriage of Young, Case No. B234768 (2d Dist., Div. 6 July 23, 2013) (unpublished) decided that a husband, after four years of “active” litigation, should have to pay sanctions to wife of $120,000 under Family Code section 2107(c) [mandating candid asset disclosure in a dissolution proceeding] and section 271 [allowing sanctions for uncooperative, exacerbated litigation conduct].

    The appellate court affirmed.

    The record showed that husband had sought to conceal assets, withdrawn community debt allegations after costly litigation maneuvers, and attempted to engineer sham property transfers. Because wife did not have to show injury to herself as a prerequisite under 2107, the family law judge did not abuse any discretion in fashioning the sanctions award against husband.

Civil Rights/Costs: Routine Costs, Not Including Attorney’s Fees Or Expert Witness Fees, Can Be Awarded Without Showing Loser’s Case Was Frivolous, Unreasonableness, Or Groundless

 

Fourth District, Division 2 Disagrees With Cummings.

     In the civil rights area, Cummings v. Benco Building Services, 11 Cal.App.4th 1383, 1388 (1992) is a California decision oft-cited for the proposition that both fees and costs cannot be awarded against a losing civil rights plaintiff unless the action is deemed to be frivolous, unreasonable, or groundless in nature.

     The Fourth District, Division 2 in Williams v. Chino Valley Independent Fire District, Case No. E055755 (4th Dist., Div. 2 July 23, 2013) (published), in a scholary 3-0 panel decision authored by Justice Richli, surveyed Cummings and many other state/federal decisions, ultimately concluding that “routine costs” against a civil rights loser were appropriate without meeting the frivolous/unreasonable/groundless test--disagreeing with Cummings and substantially endorsing contrary reasoning in Perez v. County of Santa Clara, 111 Cal.App.4th 671 (2003).

     This means that routine costs do not have to meet the elevated standard, but the Williams court suggested that the elevated standard would have to be met for attorney’s fees and expert witness (“non-routine”) costs requested against the losing civil rights plaintiff.

     Given the conflicting law in this area, it is likely our state supreme court will have to decide this controversy when the time is right.

Section 998: Voluntary Dismissal Without Prejudice Confers Discretion On Trial Court To Shift Expert Witness Fee To Dismissing Party

 

“Judgment” Is Not A Necessary Predicate.

     This next decision makes CCP § 998 an even more powerful tool, and we believe will engender some interesting reaction from other appellate courts.

     Construing section 998, Mon Chong Loong Trading Corp. v. Superior Court, Case No. B240828 (2d Dist., Div. 3 July 23, 2013) (published) decided that a party dismissing an action without prejudice can, in the lower court’s discretion, have expert witness fees assessed against it following failure to accept a 998 offer. Both sides had somewhat assumed that a “judgment” was necessary to trigger 998 fees, but the appellate court disagreed because section 998 “does not describe the proper moment in the life-cycle of a lawsuit to assess expert witness fees.” Rather, “998’s ‘more favorable judgment or award’ language describes the necessary condition for relieving the refusing party of its obligation to pay, not the timing of the award. The appropriate moment for a court to assess whether a more favorable judgment or award has been obtained is at the conclusion of the lawsuit.” It then held that a voluntary dismissal without prejudice was just such a conclusion, conferring discretion on the lower court to award expert fees if it wants to or decide to defer if another action is filed shortly thereafter.

Social Security: Attorney’s Fees Award Under EAJA Erroneously Decided Because ALJ’s Decision Is “Position of the United States” For Determining If Government Was Substantially Justified In Its Position

 

Remand Was Ordered to Consider $15,000-Plus Fee Request.

     In Meier v. Colvin, Case No. 11-35736 (9th Cir. July 23, 2013) (for publication), a social security disability benefits claimant suffered defeats at the administrative law level and the district court level, until the the Ninth Circuit in an earlier unpublished memorandum opinion reversed and remanded for a benefits award after determining the ALJ failed to provide reasons for rejecting certain proof submitted by claimant. Claimant then moved to recover over $15,000 in fees and costs under the Equal Access to Justice Act (EAJA), which has a fee-shifting provision mandating fees to a prevailing party other than the U.S. in any civil action unless the court finds that the position of the U.S. was “substantially justified.” The district court denied the requests, determining that the losses at the ALJ level showed there was sufficient governmental justification.

     The Ninth Circuit reversed the fee denial, reasoning that the ALJ’s decision as adjudicator was a “position of the United States” just as the government’s litigation position in the action. It observed that the pertinent EAJA provisions (28 U.S.C. § 2412(d)(1)(A), (d)(2)(D)) make no distinction between an agency’s adjudicative and adversarial acts. Based on the earlier decision finding the ALJ’s decision was not supported by substantial evidence, this also established that the U.S. position was not “substantially justified.” Reversed and remanded to fix an award of fees and costs.

In The News . . . . 2012 Study Shown Partner Billings Rates For 12 U.S./Canadian Cities

 

     We would like to thank our friends at NALFA, which has an attorney blog reporting on a survey by the TyMetrix Legal Analytics and Corporate Executive Board on the average highest partner hourly rates in 12 cities, drawing on $9.5 billion worth of invoices submitted to 83 corporate clients from 2008 to 2012 and encompassing more than 4,800 law firms and 29.1 hours billed by partners, associates, and paralegals.

     Here are the top cities with the highest partner hourly rates (on average):

New York: $755.68

San Francisco: $651.33

Washington, DC: $649.24

San Jose: $634.98

Toronto: $634.24

Los Angeles: $620.34

Boston: $598.69

Chicago: $585.47

Calgary: $578.13

Houston: $549.25

Philadelphia: $516.56

Dallas: $510.32

In The News . . . . MGA Entertainment Settles Fee Dispute With Former Counsel Orrick In Bratz Doll Litigation

 

Settlement Came After Arbitration Panel Awarded Orrick a $23 Million Charging Lien.

     Recently, MGA Entertainment settled with its former counsel Orrick Herrington & Sutcliffe, LP for claimed unpaid fees arising out of Orrick’s representation in the Bratz doll case. Earlier, an arbitration panel had awarded Orrick a $23 million charging lien (out of a requested $30 million plus) on the proceeds in the Bratz doll case owed by loser Mattel. The amount of the fee dispute was not disclosed. Orrick was represented by attorneys at Shartsis Friese LLP. MGA previously settled a fee dispute with former counsel O’Melveny & Myers LLP.

In The News . . . . U.S. District Judge Selna Approves Settlement And Fee Award In Toyota Unintended Acceleration Class Action

 

$227 Million Is Fee Award to About 30 Firms.

     It is now official. U.S. District Judge James V. Selna (C.D. Cal.) has approved a $1.6  billion settlement in the Toyota unintended acceleration class action case, calling it “extraordinary” given the cash payments to Toya customers who sold or turned in leased vehicles between September 2009 and December 2010. The district court also approved $227 million in attorney’s fees and expenses to about 30 law firms. So far, about 500,000 Toyota customers have put in claims with an impending cut-off deadline of July 29, 2013.

In The News . . . . What Is The Value Of A Law Degree? A Recent Study Has Some Results For You.

 

     In a July 17, 2013 post by Debra Cassens Weiss in the on-line ABA Journal, she reports on the result of some research results by Seton Hall University law professor Michael Simkovic and Rutgers University economic/business professor Frank McIntyre. The subject is the value of a law graduate degree over an attorney’s lifetime.

Print shows Uncle Sam sitting in a hammock, holding a fan, beset upon by swarms of locust-like pests streaming from a "Law School", "Medical College", and a "Theological Institute", each carrying a diploma.  Louis Dalrymple, artist.  Puck 1897.  Library of Congress.

     They report that, over a lifetime, a law school graduate will make $1 million more, on average, than other college graduates. For those in the 25th percentile, the median value of a JD is $350,000 and goes up to $1.1 million for those in the 75th percentile.

     However, the results did not factor in tuition costs or adjust for the law school involved for a particular graduate.

Family Law: $2,500 271 Sanctions Award Based On Specified And Unspecified Conduct Reversed

 

Due Process Was the Reason for Reversal.

     Marriage of Kleytman and Pechonkina, Case No. A134740 (1st Dist., Div. 2 July 18, 2013) (unpublished) is a good illustration of how due process can prevail in a family law sanctions context.

     Here, husband was sanctioned under Family Code section 271 for $2,500 in fees both for conduct at a specified hearing and “unspecified” conduct “in connection with previous several motions.” The fee sanctions award was reversed, because the last component of unspecified conduct did not provide proper notice of the sanctions target. Reversed and remanded for a re-do.

Section 998: Plaintiff Losing Child Abduction Civil Trial Based On Suit And Adverse Jury Verdict Was Liable For Defense Expert Witness Fees

 

Demand in Complaint Did Not Determine Good Faith of 998 Offer.

     This next one involves “wild” facts but a fairly routine application of the law.

     In Kulkarni v. Upasani, Case No. G045914 (4th Dist., Div. 3 July 19, 2013) (unpublished), plaintiff husband sued several family members and acquaintances, accusing them of conspiring with his ex-wife to abduct their infant son from Orange County to wife’s parents’ home in India. You can imagine the emotions in this litigation, with husband obtaining a large default judgment against wife but losing to the allegedly conspiring defendants--he got zero via a nonsuit against certain defendants and nothing from a jury against other defendants. Defendants moved to recover costs (especially expert witness fees) because plaintiff rejected respective $2,000 and $20,000 998 offers.

     The lower court refused to tax any of these costs, which meant the 998 offers’ validity was sustained.

     That result upheld on appeal.

     Defendants beat the 998 offers such that plaintiff had to show the offers were made in bad faith. Plaintiff did not meet his burden, because the amount of claimed damages or a party’s subjective belief in the case’s value are not the proper measures of 998 “good faith.” Nothing demonstrated that the offers were made other than in good faith. (Essex Ins. Co. v. Heck, 186 Cal.App.4th 1513, 1530 (2010).)

     Justice Fybel, on behalf of a 3-0 panel, authored the opinion on appeal.

Fee Clause Interpretation/Section 1717: Nonsignatory Successor Correctly Exposed To Fee Exposure Where Complaint And Cross-Complaint Sought Interpretation Of Settlement Agreement With A Fees Clause

 

Primary Right Showed Contractual Dispute Involved.

     In CT Glendale, LLC v. Liu, Case No. B241445 (2d Dist., Div. 2 July 17, 2013) (unpublished), plaintiff obtained $37,612 in Civil Code section 1717 contractual fees in a litigation dispute interpreting which party owned cabinetry under a settlement agreement also containing a fees clause. Plaintiff won the overall dispute, and the defense was miffed with the fee award.

     The appellate court affirmed.

     On the merits, the defense--although a nonsignatory--was liable under the settlement agreement fee clause because it applied to “successors in interest” encompassing the defense. (Leach v. Home Sav. & Loan Assn., 185 Cal.App.3d 1295, 1306 (1986) [nonsignatory successor in interest bound by fees clause].) After examining the overall litigation, both the complaint and cross-complaint sought interpretation of the settlement agreement, triggering fee exposure under the fees clause. The lower court’s application of section 1717, reviewed de novo by the appellate court, was found to be correct in nature.

     The amount of fees awarded, the full amount requested by plaintiff, was reasonably substantiated. Plaintiff in its reply brief presented a detailed spreadsheet chart replete with billings, billing rates, and hours of work expended by plaintiff’s attorneys. That sufficed such that the award amount was no abuse of discretion.

Special Fee Shifting Statute: Although Burdensome, California Public Records Act Request Was Not “Clearly Frivolous” To Justify Fees Against Records Claimant

 

Flaherty Appellate Sanctions Standard Applied to Public Records Act Element.

     The Third District has finally spoken in Crews v. Willows Unified School Dist., Case No. C066633 (3d Dist. July 17, 2013) (published) on a California Public Records Act dispute . . . at least for the time being.

     This is a long-running dispute where Mr. Crews sought information from a school district, with the lower court eventually determining that $53,926 in fees (out of a requested $104,230) and $2,669.50 in costs should be awarded against Mr. Crews for a burdensome CPRA request complied with by the public agency. The fees/costs award was predicated on a determination that the CPRA request was “clearly frivolous.”

     The appellate court reversed. Based on certain e-discovery compliance, it was determined that the dispute with Mr. Crews was not clearly frivolous, with the reviewing court applying the appellate sanctions view of the phrase under In re Marriage of Flaherty, 31 Cal.3d 637 (1982) [one of our Leading Cases].

Retainer Agreements/Special Fee Shifting Statutes: Fee Agreement Directing Payment To Attorneys Given Deference In Civil Asset Forfeiture Reform Act Case

 

Retainer Agreement Trumped Everything.

     USA v. $186,416.00 in U.S. Currency, Case No. 07-56549 (9th Cir. July 17, 2013) (for publication) shows that fee agreements directing payment of fees to attorneys from a collective perspective can and do make a difference.

     In this one, a suspended California corporation had assigned collection of fees to attorney under a retainer agreement involving a Civil Asset Forfeiture Reform Act (CAFRA) case which allowed client/claimant as prevailing party to collect fees from the U.S. 28 U.S.C. § 2465(b)(1)(A). Claimant did win, with attorney intervening (intervention motion granted) to receive payment of the fee award actually granted in the case.

     Government fought, arguing that the fee award could not be made in favor of intervening attorney.

     The Ninth Circuit disagreed. Giving credence to U.S. Supreme Court Justice Thomas’s reasoning in certain cases, the appellate court found that the client’s assignment of rights to fees should govern in CAFRA cases, much like cases doing the same under the False Claim Act, federal civil rights statute, and Clayton Act (antitrust).

     The equities also favored the end result. Client dissolved and no other creditor came forward to contest the assignment to attorney. Because the client assigned the right to collect fees versus the right to seek/waive fees, the retainer provision was fully effective and conferred standing on attorney.

Reasonableness Of Fees: $439,645 Fee Award For $150,000 Winning FEHA Plaintiff Affirmed On Appeal

Keeping Things In Proportion . . .

     Just to stress that proportionality is not necessarily the key for winning FEHA plaintiffs, see the result in Young v. Mountain Empire Unified School Dist., Case No. D061228 (4th Dist., Div. 1 July 15, 2013) (unpublished).

     What is? Answer: probably justice, in the eyes of the lower and reviewing courts.

     In this one, former high school principal won an unlawful retaliation suit under FEHA against school district and other defendants based on allegations of sexual advances by a superintendent. In the end, plaintiff won $150,000 in noneconomic damages.

     The lower court awarded $439,645 in attorney’s fees under FEHA, based on a $475 hourly rate plus a 1.6 multiplier to the lodestar. No problem, sustained on appeal.

Costs/Assignment: Landlord Was Entitled To $167,407.55 Fee Award Against Lease Assignees

 

Also, Mediation and Other Routine Costs Were Justified.

     Landlord won damages, attorney’s fees, and routine costs against lease assignees in Town Square Properties v. Mansouri, Case No. B236871 (2d Dist., Div. 5 July 15, 2013) (unpublished). The fee award alone was $167,407.55 in favor of landlord, as well as routine costs for mediation fees, attorney service, and parking expenses of $3,256. Everything was affirmed on appeal.

     The $3,256 routine costs were no abuse of discretion because mediation efforts are compensable if they encourage parties to resolve lawsuits such that they a necessary part of the litigation. (Gibson v. Bobroff, 49 Cal.App.4th 1202, 1209 (1996).)

     Because a written lease necessarily included enforcement of assignment agreements (given that assignees are liable for rental obligations unless expressly released), the fees were “on the contract” under Civil Code section 1717.

In the News

Flonase Class Action Counsel Win $50 Million In Fees, District Judge Selna Puts Hold On Fee Award To Toyota Unintended Acceleration Class Action Attorneys, N.Y. Bankruptcy Judge Approves $17 Million In Fees to Dewey & Lebouef’s Chapter 11 Attorneys, DOJ Approves New Larger Chapter 11 Bankruptcy Fee Guidelines, N.Y. Federal Judge Awards $40.7 Million to Madoff Feeder Funds Class Action Attorneys, And D.C. Federal Judge Awards $90.8 Million In Fees To Black Farmer Class Action Lawyers

     We would like to thank our good friends at NALFA for providing blogs about the following topics of interest (to us, and hopefully you).

Flonase Class Action Fee Award.

     Plaintiffs’ counsel in the Flonase antitrust monopoly class action were awarded $50 million in fees and $2.1 million in expenses. The total settlement was for $150 million on behalf of 33 direct purchasers, compensating 41,000 hours of lawyer work at an average $407 hourly billing rate, replete with a 2.99 multiplier found routine by the judge in this type of case.

Toyota Unintended Acceleration Class Action Fee Proceeding.

     U.S. District Judge James V. Selna (C.D. Cal.) tentatively approved $200 million in fees and $27 million in expenses for plaintiffs’ attorneys in this class action against Toyota, determining that the 12.3% in fees based on settlement value was reasonable (with Toyota agreeing to pay it separately from the settlement fund) but should be put on hold while some underlying settlement allocation issues were worked out.

Dewey & LeBouef’s Chapter 11 Bankruptcy Case.

     A New York bankruptcy judge approved payment of $17 million for lawyers and advisers in the Chapter 11 Dewey/LeBouef bankruptcy case. He commented on how swiftly the case had proceeded, with the U.S. Trustee’s Office only proposing minor reductions in the fee applications.

New DOJ Guidelines For Bankruptcy Fees In Larger Chapter 11 Cases.

     Effective November 1, 2013, DOJ has adopted new fee guidelines for bankruptcy attorneys involved in larger Chapter 11 cases, defined as involving companies with $50 million in assets and $50 million in liabilities (but not include single asset real estate cases). Here are the highlights of the new guidelines: (1) lawyers must explain the methodology for their rates, with rates reflecting the overall market outside of bankruptcy matters and based on venue-driven rates; (2) lawyers must justify increases in hourly rates of more than 10%; (3) rough budgets must be provided; (4) billing records must be submitted in an open, searchable electronic format; (5) use of independent fees committees and fee examiners are encouraged; and (6) use of model forms and templates for fee applications is being encouraged.

Madoff Feeder Funds Litigation Fee Award.

     A New York judge approved a $40.7 million fee request by plaintiff securities attorneys negotiating a $217 million settlement in the Madoff feeder funds litigation.

     This was done after the judge ordered a decrease for time spent in document review, finding the overall award was below the standard contingency rate charged by lawyers in these particular cases.

Detroit Chapter 9 Bankruptcy Fee Prediction.

     One attorney has predicted that Chapter 9 bankruptcy fees in the Detroit bankruptcy could top $100 million. Jones Day won the bidding for bankruptcy counsel, filing a request to be compensated $1.4 million for 6 months on the job. For comparative purposes, Orange County, CA expended $86 million in its 18-month bankruptcy, while Jefferson County, Alabama has expended $20 million since August 2011 in a still open case.

Black Farmer Class Action.

     A D.C. federal judge has awarded $90.8 million to plaintiffs’ class action attorneys in the Black Farmer class action. DOJ had agreed that acceptable fees could be awarded in a 4.1-7.4% range based on the settlement common fund value of $1.25 billion. Over DOJ’s objection, the district judge awarded the maximum 7.4% amount, finding great skill was exhibited by plaintiffs’ attorneys in a case riddled with challenges and complicated issues.

Liens For Attorneys Fee/Retainer Agreement: Triable Issue Of Fact Required Reversal of Summary Judgment Where Evidence Demonstrated Existence Of Retainer Agreement Should Be Decided By Trier Of Fact

 

If Second Retainer Agreement Signed By Client, Attorneys Lien Did Exist.

     Majlessi v. Parman, Case No. B241063 (2d Dist., Div. 3 July 12, 2013) (unpublished) is a case where the lower court granted summary judgment across the board when a discharged personal injury attorney sued successor attorneys to honor an attorneys’ lien in a second retainer agreement that attorney claimed was signed by discharging client. The lower court credited client’s declaration that he never signed the retainer; without such a contractual relationship, no recovery could be allowed, reasoned the trial judge.

     On appeal, the summary judgment was reversed.

     The reason had to do with the very nature of SJMs, which cannot be used to fact decide rather than decide if a material issue for trial exists. Although client’s declaration did serve to shift the burden of production of contrary evidence to plaintiff attorney, plaintiff did submit proof in the form of another declaration from his former legal assistant where she testified about seing client sign a second retainer agreement in her presence. This certainly presented a contested issue which would need to be decided at trial. However, because client discharged former attorney, his recovery was limited to quantum meruit for pre-discharge services. (Fracasse v. Brent, 6 Cal.3d 784, 791 (1972); Weiss v. Marcus, 51 Cal.App.3d 590, 598 (1975).)

     The appellate court also had an interesting discussion about whether de novo or abuse of discretion was the correct standard of review when scrutinizing evidentiary rulings in connection with SJMs. It observed that our state supreme court expressly has left open which review standard applies in Reid v. Goggle, Inc., 50 Cal.4th 512, 535 (2010); see also the concurring decision of Justice Mosk in Howard Entertainment, Inc. v. Kudrow, 208 Cal.App.4th 1102 (2012) reasoning that the abuse of discretion standard should apply. However, the Majlessi panel also explained that prejudice must be shown from any erroneous evidentiary ruling. Using that standard, the only prejudice came from sustaining an objection to the former legal assistant’s declaration which created an issue of triable fact. Once that testimony was factored in, the summary judgment grant had to be overturned.

In The News . . . . Virginia Attorney Pays $544,000 Facebook Discovery Fee Sanction; Toronto Attorney Left Ferrari In Flood Path To Get To Court Hearing; Ex-Sidley Austin Partner Fesses Up To Bogus $69,000 Cab Reimbursement Expense; McGeorge Law School En

 

     We would like to thank Martha Neil and Molly McDonough for some interesting posts on The ABA Journal’s online publication during July 9-11, 2013.

Virginia Lawyer Fee Sanction Payment.

     A Virginia attorney, facing ethics violations, paid his $544,000 share of a $722,000 legal fee award for advice relating to deactivation of Facebook information and to electronic discovery production in a personal injury case, even though his client did eventually prevail after a jury trial.

Ferrari Left Abandoned So Attorney Could Get to Ottawa Court Hearing.

     A Toronto attorney left his $192,000 Ferrari stranded in a flood underpass in order to get to court on time in Ottawa. The Ferrari did sustain water damage from the incident.

Ferrari 166 MM Barchetta.  Author:  Writegeist.  Creative Commons Attribution 3.0 Unported License.

$69,000 Cab Reimbursement Expense.

     An ex-Sidley Austin partner, in an answer to an ethics complaint, admitted that a $69,000 cab-fare reimbursement claim was fabricated. Really?

NY Hanson driver standing in front of cab and horse.  c1896.  Library of Congress.

McGeorge Enrollment Down, Mandating Layoffs.

     University of Pacific’s McGeorge School of Law’s student enrollment count has gone down about 40% (from 1,036 in fall 2010 to an anticipated 600 students soon), which has resulted in nine layoffs. We have posted on news reports in the past indicating that U.S. law schools may be undergoing a lot of changes as a result of reduced enrollments.

Costs/Specific Fee Shifting Statutes: Plaintiff Winning Challenge To Property Assessment On Narrow Grounds Not Entitled to Fees Under Specific Revenue & Taxation Code Sections

 

Also, Plaintiff Cannot Receive Trial Expenses As Costs Based on Being Awarded Costs on Appeal from An Earlier Appeal.

     Plaintiff property owner, in a prior published decision, obtained a trial court judgment affirmed on appeal in connection with a determination that the Nevada County Assessment Appeals Board failed to apply the correct burden of proof. Feeling empowered, especially after awarded costs on appeal for the win, plaintiff then attempted to recoup some trial expenses as costs of appeal, the costs of a clerk’s transcript, and $13,500 in attorney’s fees under Revenue and Taxation Code sections 1611.6 and 5152. The lower court in Farr v. County of Nevada (Farr II), Case No. C068049 (3d Dist. July 10, 2013) (unpublished) denied the fee request and cut down the $4,202 costs request down to $655 only.

     Plaintiff did not succeed in obtaining a reversal this time around.

     The problem was that the request for “costs on appeal” was doomed on many items because plaintiff sought to recoup impermissible trial court costs. Additionally, plaintiff requested reimbursement for a clerk’s transcript on appeal, but the defense shifted the burden of justification back to plaintiff after noting that a superior court file had been used in lieu of a CT, with plaintiff failing to explain the discrepancy or how much in expense was actually incurred through this election.

     With respect to the fees request, neither R & T Code provisions were applicable. Section 1611.2 only applies if the county board’s findings are so deficient as to require a remand to enter the elements of findings required by 1661.5; the appellate court did not reach the deficiency issue in the prior appeal, but only reversed on a procedural point not addressing the legal adequacy of the Board’s findings. Section 5152, which allows for fee-shifting to a plaintiff where a court finds that the void assessment or void portion of the assessment was made in violation of a specific constitutional and regulatory provision, similarly was inapt. Here, there was no finding that the assessor failed to apply a particular provision that he or she believed to be unconstitutional or invalid, meaning the lack of this prerequisite finding did not entitle plaintiff to fees under 5152.

     Finally, although arguing for the first time on appeal that fees were justified under the private attorney general theory, the appellate court found this contention was forfeited by plaintiff because he did not raise the argument in the trial court.

Appealability/Prevailing Party: Failure To Include Answer To Complaint And Opposition To Fee Motion Presented Inadequate Appellate Record To Review Fee Challenges

 

Also, Plaintiff Only Obtained a “Mixed” Win Rather Than An “Unqualified” One.

     In Chan v. Lo, Case No. B239783 (2d Dist., Div. 5 July 9, 2013) (unpublished), plaintiff obtained some relief (with the court determining she owed less than the face amount of a promissory note), but still was found to owe note interest to the other side and also did not prevail on a trust deed cancellation claim. The lower court denied her motion for attorney’s fees based on the view she was not the “prevailing party.”

     This result was affirmed on appeal for two reasons. First, appellant’s failure to include the answer to the complaint and opposition papers to the fee motion prevented effective appellate review of the fee challenges. Second, on the merits, the trial court could conclude that plaintiff only obtained mixed results in the litigation, not the “simple, unqualified win” necessary for prevailing party status under Hsu v. Abbara, 9 Cal.4th 863, 876 (1995) [one of our Leading Cases].

Appealability/Deadlines: Appellant Failed To Preserve Costs Challenges By Failing to Timely File From Original Judgment

 

Subsequent Judgment Was Not Materially Substantial So As To Trigger New Appeal Time Commencement.

     Darden Painting, Inc. v. Glass Architects, Case No. A132846 (1st Dist., Div. 2 July 9, 2013) (unpublished) is a case where a litigant challenging certain costs ruling was pretty much shut out on procedural grounds--failure to timely appeal. What happened is that the aggrieved litigant only timely appealed from a modified judgment, but not the original judgment. That was a mistake, because a modified judgment begins a new appeal period only if it contains a substantial modification of the original judgment. (Torres v. City of San Diego, 154 Cal.App.4th 214, 222 (2007).) This situation did not occur here, such that litigant’s failure to appeal the original judgment was damning in nature.

Requests For Admissions: $25,000 Costs of Proof Sanctions Affirmed On Appeal

 

Improper Negligence Theory Warranted Sanctions For Denial Of One RFA.

     The appellate court in Sasser v. Allstate Ins. Co., Case Nos. A131906 et al. (1st Dist., Div. 2 July 8, 2013) (unpublished) affirmed a lower court’s decision to impose $25,000 in “costs of proof” sanctions for a plaintiff’s denial of one RFA after finding that a negligence claim was meritless. Although the defense had sought $131,000 in fees, the trial judge did not err in finding a lesser amount was necessary to compensate the defendant for plaintiff’s wrongful RFA denial under CCP § 2033.420. Plaintiff could not surmount the abuse of discretion review standard.

Section 998: Lack Of Acceptance Language Was Fatal To 998 Offer Validity

 

Second District, Division 5 Follows Puerta.

     Although not involving attorney’s fees, we report that the Second District, Division 5 in Boeken v. Philip Morris USA Inc., Case No. B236875 (2d Dist., Div. 5 July 9, 2013) (partially published) did follow Puerta v. Torres, 195 Cal.App.4th 1267, 1272 (2011), a Fourth District, Division 3 decision finding that the acceptance language provision of CCP § 998 was mandatory rather than directory in nature. The failure to include acceptance language rendered the 998 offer invalid.

Costs/Lodestar/Multiplier/Section 998: $989,258 Plaintiff Fee Award Affirmed Under Bane Act

 

Additional Costs Awards for Experts and Trial Technology Also Sustained.

     In Bender v. County of Los Angeles, Case No. B236294 (2d Dist., Div. 8 July 9, 2013) (published), plaintiff won an excessive police force Bane Act suit, with the Bane Act containing a fee-shifting clause. The lower court also awarded $989,258 to plaintiff (applying a 1.2 multiplier to the lodestar) as prevailing party attorney’s fees, $26,953.72 for expert witness costs after the defense rejected a CCP § 998 offer beat by plaintiff in the subsequent jury verdict, and $24,103.75 for a trial video computer/PowerPoint presentation/videotaped deposition synchronizing/costs of a trial technician for nine days of trial.

     The appellate court rebuffed defense challenges to the fee and costs awards.

     On the fee challenge, the appellate court liked what the trial court did: it gave a tentative decision “roadmap” on analyzing fee billings and applying a multiplier it deemed appropriate, inviting and receiving supplemental briefing to cement its final decision on fees. Given this expansive record, the reviewing court had no problem sustaining the fee award, especially given that plaintiff had initially requested $1.5 million in fees. (BLOG OBSERVATION--In the words of Justice Fybel (4th Dist., Div. 3), litigants need to provide a “roadmap” to the lower and reviewing courts on fees issues. In this one, the trial court actually crafted it for the litigants.)

     Early road map.  Tabula Peutingeriana, copy of scroll originally dating to about 350 AD, plots part of Roman road network running from Europe and North Africa to West Asia.  Wikipedia.

     The expert fee witness costs were proper because plaintiff did beat the 998 offer, with the defense having criminal testimony for a merits evaluation of the underlying case--notwithstanding that the 998 offer was made “early on” in the case.

      As far as the trial technology costs, the reviewing court found no abuse of discretion in the award. It actually intimated that a contrary denial of trial technology costs in Science Applications Internat. Corp. v. Superior Court, 39 Cal.App.4th 1095, 1103 (1995)--involving much higher costs--might be a dated determination given that use of courtroom technology has become commonplace and much less expensive in nature. So, this decision is one to use when confronting Science Applications in the future. (In Science Applications, $2 million in technology expenses were sought after, compared to the $24,000-plus here--demonstrating that courtroom technology expenses have indeed plummeted in amount.)

Bankruptcy/Fee Clause Interpretation: Broadly Worded Fees Clause Rescues The Day For Winning Creditor

CCP § 1021, Not Civil Code § 1717, Afforded Relief.

    In re Charalambous (Hamilton v. Charalambous), BAP No. CC-13-1042-PDKi (BAP 9th Cir. Mem. Decision July 3, 2013) (unpublished) is an illustration of how one needs to carefully pick the basis for fee entitlement. Although Civil Code section 1717 is an attractive first impulse ground, it may need to yield to other statutory bases, especially where noncontractual claims are at issue.

     Here, creditor prevailed in non-discharging a debt under 11 U.S.C. § 523(a)(4), which deals with a trust fiduciary relationship. Based on a broadly worded fees clause in the agreement with debtor, creditor moved to recover attorney’s fees of $254,291.25 for prevailing in the nondischargeability action. The bankruptcy judge said “no,” reasoning that the claim was not based “on the contract” under Civil Code section 1717 and no one prevailed given that creditor did not obtain relief based on other nondischargeability grounds.

     The Ninth Circuit BAP panel reversed.

     Unlike section 1717, CCP § 1021 applies to tort actions as well as contract disputes. Because the debtor-creditor dispute was essentially a tort dispute according to the reviewing court, the broadly worded fees clause gave rise to an independent basis for a fees award. To make things clear, the BAP panel dropped a footnote indicating that the “prevailing party” discretionary process under section 1021 is much more restricted than that under Civil Code section 1717 for purposes of guiding the bankruptcy judge on remand (hint! hint!).

     BLOG OBSERVATION AND HAT TIP--The key here is whether you buy that section 523(a)(4) nondischargeability relief is akin to defalcation, a tort. We “hat tip” blog follower Andrew L. Fagan, Esq. of Santa Rosa for alerting us to this opinion.

In the News . . . . 2013 Attorney Hourly rates Are On The Rise, But Clients Are Getting Discounts And Billing/Collection Differential Has Increased

 

     Co-contributors Marc and Mike thank Mike’s father-in-law Tom Basehart for sharing an interesting April 10, 2013 article from The Wall Street Journal (authored by Jennifer Smith) which provides some insights into rising attorney billing rates and client reactions to such a trend.

     Here are the highlights from this article:

     *”Star” partners billing out at $1,150-plus an hour have doubled between the first quarter 2012 to first quarter 2013 according to consulting firm Valeo Partners (320 lawyers versus 158 a year earlier);

     *The “gilded circle” billing at the rates described above includes tax, intellectual property, and M&A deal attorneys;

     *Corporate clients almost always negotiate attorney rates down from “rack rates”, averaging discounts anywhere from 10-30% off of standard rates;

     *The gap between law firms’ “sticker prices” (published rates/billed amounts) and collection rates (what is actually collected) has risen dramatically. According to data collected by Thomson Reuters Peer Monitor, big firms raised their average standard rate by about 9.3% over the past three years, but only increased collections by 6% over the same time frame. Firms that used to collect on average about 92 cents for every dollar of standard time their lawyers worked in 2007, before the economic downturn, now are getting less than 85 cents, a “historic low” according to a Georgetown Law Center for the Study of the Legal Profession senior fellow; and

     *In the first quarter 2013, the 50 top-grossing U.S. law firms boosted their partner rates by as much as 5.7%, billing an average between $879-882 per hour, according to Valeo Partners, increases continuing an upward trend in attorney hourly rates from 2012--when legal fees in general rose 4.8% and associate billing rates rose by 7.4% according to a TyMetrix Legal Analytics/CEB report surveying data from more than 17,000 law firms.

Allocation/Lodestar/Reasonableness Of Fees: Former Employee Losing Wage/Hour Claims Hit With $150,519.36 Adverse Fee Award

 

Hourly Rates by Defense Were Reasonable; No Apportionment Required.

     Plaintiff, a former employee, sued defendant former employer for unpaid commissions, vacation time, and unreimbursed expenses, requesting an award of attorney’s fees upon prevailing under Labor Code sections 218.5 and 218.6 (wage/hour fee-shifting provisions). Plaintiff brought four causes of action, one of which was expressly under the Labor Code but all involving unpaid wage allegations. Plaintiff was defensed, and the trial court awarded winning defendant $150,519.36 in attorney’s fees--the full defense request. This prompted an appeal by former employee.

     Losing plaintiff did not get any relief on appeal in Chamberlin v. Future Sound, LLC, Case No. A135408 (1st Dist., Div. 2 July 8, 2013) (unpublished).

     He argued that the defense hourly rates of $450 and later $625 (for a partner), $365 and $375 (for associates), $525 (for a senior associate), and $750 and $780 (for senior partners) were unreasonable for Bay Area attorneys, given that another one of the defense attorneys charged a discounted rate of $250 (down from $350) to defendant as a preferred client. The appellate court sustained the hourly rates submitted in billings, finding no support for the argument that one attorney’s lower hourly rate renders another attorney’s rate unreasonable.

     Plaintiff also posited that the fees should have been apportioned, meaning only fees charged for the Labor Code statutory claim were “fair game” for fee reimbursement purposes. Not so, because apportionment is discretionary and not required where all claims are so intertwined such that it would be impracticable to separate time into compensable and noncompensable units. (Bell v. Vista Unified School Dist., 82 Cal.App.4th 672, 686-687 (2000); Akins v. Enterprise Rent-A-Car Co., 79 Cal.App.4th 1127, 1133 (2000).) All of plaintiff’s claims involved the same underling claim of unpaid earnings, such that everything derived from the same common set of facts requiring no apportionment.