Allocation/Equity/Trade Secrets: Where Default Judgment Reversed For 3 Out Of 4 Defendants, Attorney’s Fees Had To Be Revisited Although Fourth Defendant Conceded Liability.

 

Complaint Prayer Gave Notice, But Fee Amount “Re-do” Necessary on Remand.

     In Lawson-Hawks Ins., Inc. v. McVey Ins. Broker, Inc., Case No. H038466 (6^th Dist. July 22, 2014) (unpublished), plaintiff sued four defendants (an insurance agency, an insurance brokerage company, and certain agents) for willful violation of trade secrets. Plaintiff obtained a default judgment of $25,000, plus $144,103 in attorney’s fees under Civil Code section 3426.4 (a fee shifting statutory provision applicable in trade secret cases), and $16,497 in costs.

     On appeal, three of the four defendants obtained a reversal because no claim was stated against them. However, the broker defendant conceded the $25,000 judgment was proper. So, what happened to the $144,103 fee award? Broker defendant argued it was invalid because inadequate notice was provided of it through the complaint prior to default, but the appellate court found the complaint prayer for “fees as authorized by statute” sufficed to provide the necessary due process notice. However, given that the fee award involved work for all four defendants, the amount of the fee award was remanded for a “re-fix” as to the broker defendant alone.