CALIFORNIA ATTORNEY'S FEES

Happy New Year To All Our Readers !

Mummers Day Parade on New Year’s day, Philadelphia, Pennsylvania.  Carol M. Highsmith, photographer.  Library of Congress.

Settlement/Poof!: Court Of Appeal Refuses To Enforce Settlement Because Email Failed Electronic Signature Test–And Attorney’s Fees Go Poof!

Dot I’s and Cross T’s When Relying On An Electronic Signature!

     In J.B.B. Investment Partners, Ltd. v. Fair, Case Nos. A140232, A141228 (1/2 Dec. 30, 2014) (Kline, Richman, Stewart), the Court of Appeal reversed a trial court’s enforcement of a settlement agreement under CCP section 664.6, because email and voicemail messages failed to satisfy the electronic signature requirements.  And because the settlement agreement could not be enforced by plaintiff, plaintiff could not recover attorney’s fees.  This case is must reading for attorneys and their clients conducting business by electronic transactions under the California Uniform Electronic Transactions Act (UETA).

     The parties briefed whether the email complied with the the UETA provision:  “If the law requires a signature, an electronic signature satisfies the law.”  Civ. Code, section 1633.7(d).  That was too simplistic for the Court of Appeal, which pointed out that the plaintiffs failed to demonstrate that the parties agreed to conduct transactions by electronic means or that defendant intended with his printed name at the end of his email to sign electronically plaintiff’s offer.  See Civ. Code, sections 1633.2 and 1633.5(b).  Under a separate common law contractual analysis, the Court also failed to find that the parties intended to form a contract, given that further settlement documents were not signed.

     A version of this post also appears today on the California Mediation and Arbitration blog.

Section 1717/Substantiation Of Reasonableness Of Fees: $340,567.55 Fees/Costs Award Under Civil Code Section 1717 Affirmed On Appeal

 

Multiple Challenges To Entitlement/Fee Amount Rejected Upon Review.

     In Palmer v. Patel, Case No. H039336 (6^th Dist. Dec. 30, 2014) (unpublished), parties got involved in a brouhaha over a vacation home even though a real estate purchase agreement and deed of trust had broad attorney’s fees clauses. Plaintiffs lost the case and were hit with fees by various defendants under Civil Code section 1717, all to the tune of $340,567.55 (inclusive of some costs also) even after some reductions by the lower court.

     This prompted an appeal by the plaintiffs, which raised multiple 1717 challenges.

     None of these challenges was successful on appeal.

     Among other things, plaintiffs had a declaratory relief claim which was enough for contractual entitlement under section 1717.

     Plaintiffs argued that the transaction was illegal, but this did not carry the day because the underlying residential sale was just fine, even if there were title problems and because the defense was not in pari delicto to boot.

     Even though certain nonsignatory defendants were sued, section 1717 was proper because those nonsignatories would have been liable had the result gone the other way, with the court citing successor liability, alter ego, and third-party beneficiary cases to the same effect.

     A Santa Clara attorney with 37 years experience charging $400 per hour was seen as charging a reasonable hourly rate by both the lower and appellate courts.

     With respect to block billing entries, they were not deemed objectionable per se, with the lower court having discretion to penalize accordingly (including to deny fees altogether), with the reduction in fees showing that some penalty was allotted in this one.

Private Attorney General: $119,313.50 CCP § 1021.5 Fee Award Goes POOF! On Appeal

 

Reason Was That Plaintiff Was Not Successful Party As A Matter Of Law Under Catalyst Theory.

     Plaintiff in Washoe Meadows Community v. Cal. Dept. of Recreation, Case No. A139197 (1^st Dist., Div. 5 Dec. 30, 2014) (unpublished) obtained an attorney’s fees award of $119,313.50 in a CEQA mandate proceeding involving a challenge to relocation of a golf course based upon erosion from the Upper Truckee River. Plaintiff’s goal was to stop or suspend the relocation project, but this did not happen after some on-going correction of EIR deficiencies. The lower court agreed with plaintiff that it was a catalyst entitled to 1021.5 fees.

     The appellate court disagreed as a matter of law, reversing the fee award. (By the way, as bloggers, we will indicate 1021.5 fee awards do get very strict scrutiny on appeal in our general experience.)

     The First District, Division 5 determined that plaintiff was not a “successful party” for 1021.5 purposes. In its opinion, the plaintiff did not obtain primary relief as far as stopping or disrupting location of the golf course. Rather, causation was missing because the minor EIR deficiencies were corrected in the course of an on-going process—a “limited do-over” (nice catch phrase, no?) found insufficient to allow recovery under the catalyst theory.

Requests for Admissions: Lower Court Denial Of “Costs of Proof” Sanctions For RFA Denials Reversed And Affirmed In Various Respects

 

Unless Truly Conflicting Proof Presented To Justify Denials, Then Costs Of Proof Sanctions In Play Where Nothing Supporting Certain Blanket Denials.

     Usually, the abuse of discretion standard is difficult to surmount. However, where the proof only admits of one reasonable conclusion, don’t be surprised by some reversals depending upon the circumstances, as Crowe v. Tweten, Case No. E058311 (4^th Dist., Div. 2 Dec. 29, 2014) (unpublished) demonstrates.

     This case involved testamentary capacity, forgery, and related activities in connection with the validity of an amendment to a trust executed by trustors (husband and wife)—although the dispute focused on the capacity and signature of wife. Four RFAs were propounded by husband trustor (and beneficiary) Leonard, drawing boilerplate objections from the objecting children and one further word--“Denied.” Leonard prevailed after a bench trial, with Leonard then filing a motion seeking $1.5 million in fees as “costs of proof” sanctions for the RFA denials he claimed were material and unjustified. The lower court denied the costs of proof motion in entirety.

     On appeal, the reviewing court found that the denials in three out of four instances constituted an abuse of discretion, while the forgery RFA costs of proof sanctions denial was proper.

     Without getting into excruciating detail, the appellate court reviewed the opposition costs of sanction proof and simply found it was not credible with respect to denying three of the four RFAs. For example, wife’s intent to pass her assets to Leonard for his death was consistent throughout the evidence, such that the denial was baseless.

     However, on the forgery RFA, the opposing children had a belief they might prevail because mother’s signature was not notarized and several handwriting experts expressed skepticism or an opinion that the signature was not mother’s.

     However, the matter had to be remanded for Leonard to detail with particularity the actual expenses incurred in proving the matters unreasonably denied in the three RFAs subject to the reversal, not just a blanket assertion of costs incurred with no specific delineation otherwise

Allocation/Reasonableness Of Fees: Vast Portion Of $2.1 Million Fee Award Under Unruh Act/Interrelated Tort Claims Affirmed On Appeal Where Total Recovery Was $1.654 Million

 

One Reversal Involved A Non-Class Action Percentage Of Recovery Methodology Found Flawed By The Appellate Court, So Apportionment Re-Do On One Issue Was Ordered.

     Paletz v. Adaya, Case No. B247184 (2d Dist., Div. 3 Dec. 29, 2014) (unpublished) involved bad facts, resulting in a substantial jury verdict and substantial fees, most of which were affirmed on appeal.

     Briefly told, this was an anti-Semitic case where a hotel owner was found to have excluded Jewish patrons at a Santa Monica hotel pool party specifically designed by an outside promoter to benefit fallen Israeli soldiers. The facts are not good, with the hotel owner allegedly barring the Jewish patrons from the event based on a fear that her parents would shut off funding had they known of the event. Needless to say, the jury was not impressed with this behavior, awarding various patron plaintiffs both compensatory and punitive damages in certain ranges as well as compensatory and punitive damages to the promoter of the event which did not receive full compensation from hotel owner. All told, patrons and promoter plaintiffs were awarded $1,654,250. Later, the lower court awarded the patron Plaintiffs $2,009,785.50 in fees on the Unruh Act claims after making some apportionments for work done on various tasks and work done on the recovery on behalf of the promoter, given that the same set of attorneys represented both the patron and promoter plaintiffs.

     Despite numerous challenges by the losing defense, the $2.1 million fee award got sustained on appeal, except for a remand on a narrow apportionment issue. (The merits challenges also were unsuccessful.)

     Initially, the $200-675 hourly rate fee range for the attorneys involved was found to be reasonable for a West Los Angeles-venued case.

     The lower court’s conclusion that work on the Unruh Act and tort claims were interrelated was found to be correct under the circumstances.

     Block billing was rampant in the fee petition, but was found not to present a problem given the interrelatedness of the work on various claims.

     That leads us to the one apportionment issue which the appellate court found to be troublesome. The lower court deducted out work relating to promoter, when it came to the overall fee recovery by patron plaintiffs, based on a “percentage of total recovery” proxy—namely, the percentage of recovery by promoter out of all plaintiffs’ recovery was apportioned out for promoter work for fee award purposes. Here is the appellate court’s criticism of this methodology: “The court’s reliance on the percentage of recovery attributable to Platinum’s claims is particularly arbitrary, as under this theory, a defense attorney could effectively cause their client to pay more in attorneys’ fees by successfully defeating causes of action that are separate and not intertwined with Unruh causes of action. This method of apportionment could effectively penalize Defendants for their successes in litigating Platinum’s causes of action. The unreasonableness of the court’s apportionment methodology becomes even more evident on appeal, when the percentage of recovery is subject to alteration: Plaintiffs’ attorney fees award could fluctuate based on Defendants’ success on appeal in obtaining reversal of damages awards. To prevent duplicative recovery, we reversed the intentional infliction of emotional distress punitive damages award in this opinion. This ruling reduces Plaintiffs’ total recovery by 24.5%. If we were to affirm this methodology, the trial court would have to recalculate apportionment of fees associated with Platinum based on the new total damages figure. This would effectively reduce Plaintiffs’ attorney fees for entirely arbitrary reasons, as the evidence supporting the fees award has not changed. There has been no new showing that Plaintiffs’ counsel worked any less on Unruh claims or any more on Platinum’s contract based causes of action.” (Slip Opn., pp. 38-39.)

Sanctions: Homeowner Eventually Losing Residential Foreclosure Challenge Also Correctly Denied Sanctions Under CCP Section 128.7

 

False Statement By Lender's Defense Counsel Occurred in Superseded Pleading.

     In Tyshkevich v. Countrywide Home Loans, Inc., Case No. C070764 (3d Dist. Dec. 26, 2014) (unpublished), homeowner lost both a challenge to a residential foreclosure and a request for sanctions against lender's defense counsel under Code of Civil Procedure section 128.7. The lender's counsel had made a false statement about the loan never having been sold on the secondary market in demurrer paperwork directed against a first amended complaint, a pleading which had been superseded via latter versions by the time the 128.7 request was made by homeowner.

     The appellate court found no abuse of discretion in the lower court's denial of the 128.7 request. Given that the offending statement was found in a superseded complaint, lender and its counsel had no opportunity to correct the error in a pleading which was no longer in force.

Cases Under Review: Tract 19051 HOA Set To Be Argued In February 2015

 

On Amended January 2015 California Supreme Court Calendar.

     An attorney's fees case has been scheduled for argument on the California Supreme Court's amended January 7, 2015 calendar, with a notation that it will be called and then continued for argument until the February 2015 calendar.

     Here is what the case is about:

     Tract 19051 Homeowners Association et al. v. Kemp (Maurice) et al., S211596. (B236015; nonpublished opinion; Superior Court of Los Angeles County; BC398978.) Petition for review after the Court of Appeal reversed an award of attorney's fees and otherwise affirmed the judgment in a civil action. The court limited review to the following issue: Is a prevailing homeowner entitled to attorney's fees under Civil Code section 1354 in an action by a homeowners association to enforce its governing documents as those of a common interest development when the homeowner prevailed because it was later determined that the subdivision was not such a development and its governing documents had not been properly reenacted?

In The News . . . . Large American U.S. Firm Bonuses On The Rise This Year

 

Year-End Bonuses See Some Dramatic Rises For 2014.

     As reported in the December 20, 2014 issue of The Economist, starting salaries for first year associates at large American law firms has been stuck at $160,000/year since 2007. However, in the waning months of 2014, year-end bonuses have dramatically risen for associate attorneys—despite being very flat over recent years. For example, first year associates at Simpson Thacher got $15,000 bonuses (up 50% from 2013) and seven-year associates got $100,000 bonuses (double last year’s sums). Several other big firms followed suit (forgive the pun, but that is what the article said too). Even with this surge in bonuses, they were only a third of the same bonuses paid out in 2007. Much of the bonuses appear to be attributable to increased mergers and acquisition work. The article also indicates that starting salaries have not been raised for first year associates by most large U.S. firms. Curiously enough, the article also indicates that the legal sector may be “an industry on the brink of disruption.”

Intellectual Property/Undertaking: District Courts Diverge On Whether To Order Bondings For Costs/Fees Under CCP § 1030 In Patent And Copyright Cases

 

Undertakings Ordered in Copyright Cases, But Denied in Patent Cases.

     Charlene M. Morrow and Brian E. Lahti of Fenwick & West LLP have written an interesting article in the October 31, 2014 issue of BNA’s Patent, Trademark & Copyright Journal, 88 PTCJ 1705.

     In this article, they explore how district courts in patent and copyright case have reacted to resolving defense motions pursuant to California Code of Civil Procedure section 1030, which allows a defendant to force the plaintiff to file a bond to secure an award of costs and attorney’s fees when (1) the plaintiff resides out of state or is a foreign corporation, and (2) there is a reasonable possibility that the defendant will prevail. (Obviously, in patent litigation, the plaintiff targets of many of these motions would be Patent Assertion Entities [PAEs, or also known as patent trolls].) Section 1030 may be applied in federal court according to Ms. Morrow and Mr. Lahti.

     The two patent cases surveyed resulted in denial of section 1030 defense motions, with the district judges seeming to say that 35 U.S.C. § 285 (the “exceptional” patent fee-shifting provision) was a sufficient remedy down the line—also observing the defense did not meet the “reasonable probability” element of section 1030. (See, e.g., IPVZX Patent Holdings, Inc. v. Voxernet, LLC, No. 5:13-cv-01708-HRL (N.D. Cal. Doc. No. 120); GeoTag, Inc. v. Zoosk, Inc., No. 13-cv-00217-EMC (N.D. Cal. Doc. No. 204.)

     However, a different result occurred in the copyright cases. Northern California district judges granted section 1030 motions in a trio of cases. (See AF Holdings LLC v. Trinh, No. C-12-02393 (N.D. Cal. Nov. 9, 2012); AF Holdings LLC v. Navasca, No. C-12-2396-EMC (N.D. Cal. Feb. 5, 2013, Doc. No. 22); AF Holdings LLC v. Magsumbol, 106 U.S.P.Q.2d 1586 (N.D. Cal. Mar. 18, 2013).)

     Of particular interest will be whether the U.S. Supreme Court’s rejection of a more rigid test for 35 U.S.C. § 285 fee-shifting in Octane Fitness/Hallmark will mean 1030 motions have a greater chance of success in the future.

Billing Record Substantiation: N.D. Cal. Federal District Judge Slashes Fee Request 20% Due To Block Billing

 

Further Reduction Made For Excessive Time/Inefficiencies, As Well As Bloated “Fees On Fees” Request.

     Although arising under Delaware law, U.S. District Judge William H. Orrick reduced an attorney’s fees request of $ 3.56 million where the prevailing party did so on a summary judgment motion and its attorneys utilized block billing in fee substantiation submitted to the court. Finding the fee request “eye-catching,” the federal court actually awarded about $2.59 in fees, specifically reducing the fee request 20% alone for submitting block billed time entries—containing a detailed footnote discussion of block billing reduction percentages adopted by various district judges. District Judge Orrick also reduced the request an additional 5% for excessive tasks/inefficiencies, as well as slashed about $50,000 from a $ 135,000 “fees on fees” request (time claimed to prosecute the fee motion itself).

     Here is a link to the decision in Banas v. Volcano Corp., Case No. 12-cv-01535-WHO (N.D. Cal. Dec. 12, 2014) for readers interested in reviewing the whole enchilada.

Appealability/Arbitration/Prevailing Party: Defendants/Winning Parties Entitled To Renew Court Action Fee Request After Voluntarily Dismissal Of Court Action Occurred Following Denial Of Provisional Relief And Submission Of Arbitration Hearing

 

Denial Of Fees Would Ignore Realities of “Dual Track” Arbitration/Court Realities Of Modern Litigation.

     Mesa Shopping Center-East, LLC v. O Hill, Case No. G049205 (4^th Dist., Div. 3 Dec. 23, 2014) (published) is an interesting case involving the propriety of Civil Code section 1717 court fees where there is a “dual track” case, one involving both arbitration and court issues.

     In a word, defendants winning an arbitration were denied court costs in a matter where court matters were ancillary to the arbitration proceedings. Specifically, defendants beat back injunctive relief in the trial court and moved to recoup fees even though plaintiffs voluntarily dismissed the court action, but only after losing injunctive relief and submitting the merits to arbitration—dismissing the case once the arbitration decision was ripe for adjudication.

     The appellate court reversed the court fee denial order to defendants, in a 3-0 opinion authored by Justice Ikola. The main reason was that commencement of trial for 1717 dismissal purposes should be deemed commencement of arbitration under the circumstances of this case, a tailored test for Santisas preclusion purposes. So, this one got reversed with a chance for the arbitration winner to get more fees for court costs on remand.

     Also, we note there was an independent appealability issue, with the appellate court determining a voluntary dismissal in tandem with provisional rulings on fee denial issues with respect to a motion to vacate qualified as an appealable order.

2014 Year In Review: NALFA Posts Its Top Fee Decisions From Around The U.S.

 

Four Make The Grade.

     Our friends at the National Association of Legal Fee Analysis (NALFA) have posted their top four significant decisions for 2014.

     Here they are:

     1. Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749 (2014) and Hallmark, Inc. v. Allcare Health Mgmt. Sys., Inc., 134 S. Ct. 1744 (2014) are two companion rulings by the U.S. Supreme Court regarding patent litigation fee-shifting. Section 285 of the Patent Act authorizes a district court to award attorney's fees in patent litigation in "exceptional cases" – that is, cases which stand out from the others with respect to the substantive strength of a party’s litigating position or the unreasonable manner in which the case was litigated. In Octane Fitness, the U.S. Supreme Court decided that district courts should determine whether a case is exceptional “in the case-by-case exercise of their discretion, considering the totality of the circumstances.” In line with this decision, Hallmark decided that Section 285 fee awards were to be reviewed under the abuse-of-discretion standard. [Discussed in our May 8, 2014 post.]

     2. ATP Tour Inc. v. Deutscher Tennis Bund, 91 A.3d 554 (Del. 2014) is a decision in which the Delaware Supreme Court held that a by-law shifting attorney fees and expenses to the losing party in an intra-corporate litigation can be valid and enforceable under Delaware law.  The Delaware Legislature has pushed off consideration of whether to abrogate or modify this result until sometime in 2015. [Discussed in our May 31, 2014 post.]

     3. Baker Botts LLP v. ASARCO LLC, 751 F.3d 291 (5^th Cir. 2014), cert. granted, No. 14-103, before the U.S. Supreme Court, centers upon the issue of whether Section 330(a) of the Bankruptcy Code grants bankruptcy judges discretion to award compensation for the defense of a fee application (i.e., fees for fees). The Fifth Circuit said “no,” even though other courts have said “yes.” [Discussed in our Oct. 2, 2014 post.]

     4. Holland v. Jachmann, 9 N.E.3d 340 (Mass.App. 2014) is a situation where a Massachusetts appellate court held that trial judges have discretion to award attorney fees for work performed by in-house counsel for claims brought under the state’s unfair trade practices law.  The court held that in-house fees were just as “incurred” as fees paid/owed by a company to outside counsel. [Discussed in our June 12, 2014 post, indicating California’s position on the subject.]

Year In Review 2014—Part 2.

 

Yearly Roundup: Mike & Marc’s Top 20 Fees/Costs Decisions In 2014.

     Here are the final 10 decisions to round out our top California fees/costs decisions for 2014.

     10. Settle v. State of California, 228 Cal.App.4^th 215 (July 23, 2014) [2d Dist., Div. 6; authored by Yegan, J.] and Suarez v. City of Corona, 229 Cal.App.4^th 325 (Aug. 29, 2014) [4^th Dist., Div. 1; authored by McIntyre, following the result/reasoning in Settle]: Mandatory award of attorney’s fees under Code of Civil Procedure section 1038 cannot be made against a party’s counsel, with Code of Civil Procedure section 128.7 being the proper mechanism to use in seeking sanctions against a party’s counsel. [Settle discussed in our July 24, 2014 post; Suarez discussed in our August 29, 2014 post.]

     9. Conservatorship of McQueen, 59 Cal.4^th 602 (July 7, 2014) [California Supreme Court; authored by Werdegar, J.]: Elder abuse appellate, post-judgment fee requests are not governed by Code of Civil Procedure section 685.080 judgment satisfaction deadline, but instead governed by normal California Rules of Court, while post-judgment fee requests on fraudulent transfer claim are governed by section 685.080 deadline. [Discussed in our July 11, 2014 post.]

     8. Kaufman v. Diskeeper Corp., 229 Cal.App.4^th 1 (Aug. 21, 2014) [2d Dist., Div. 4; authored by Manella, J.]: Party seeking recovery of Civil Code section 1717 fees does not need to file costs memorandum in addition to noticed motion for purposes of obtaining potential recovery. [Discussed in our Aug. 21, 2014 post.]

     7. In re Schwartz-Tallard, 765 F.3d 1096 (9^th Cir. Aug. 29, 2014, reissued opinion) [9^th Cir.; majority opinion authored by Huck, Circuit Judge and dissenting opinion authored by Wallace, Circuit Judge], order granting en banc hearing (9^th Cir. Dec. 19, 2014): Chapter 13 bankrupt debtor’s attorney’s fees incurred in the successful appellate defense of a bankruptcy court’s determination that a creditor violated the automatic stay were actual damages entitled to compensation under 11 U.S.C. § 362(k)(1); dissent found fees were not recoverable under past Sternberg v. Johnston, 596 F.3d 937 (9^th Cir. 2010) precedent. [Discussed in our April 17, 2014 and Aug. 29, 2014 posts.]

     6. Coalition for Adequate Review v. City and County of San Francisco, 229 Cal.App.4^th 1043 (Sept. 15, 2014) [1^st Dist., Div. 1; authored by Banke, J.]: Prevailing public agency can recover supplemental CEQA record preparation costs in administrative mandamus proceeding. [Discussed in our Sept. 17, 2014 post.]

     5. Indio Police Command Unit Assn. v. City of Indio, 230 Cal.App.4^th 521 (Sept. 15, 2014) [4^th Dist., Div. 3; authored by O’Leary, P.J.]: Code of Civil Procedure section 1021.5 private attorney general fee recovery can be obtained by a union under the right substantive showing, especially on the financial benefit element. [Discussed in our Sept. 17, 2014 post.]

     4. CB Richard Ellis, Inc. v. Terra Nostra Consultants, 230 Cal.App.4^th 405 (Oct. 7, 2014) [4^th Dist., Div. 3; authored by Ikola, J.]: Fee clause allowed prevailing party to recover fees from non-prevailing LLC members receiving wrongful distributions in de facto dissolution factual setting. [Discussed in our Oct. 9, 2014 post.]

     3. Mountain Air Enterprises, LLC v. Sundowner Towers, LLC, 2014 WL 6488418 (Nov. 20, 2014) [1^st Dist., Div. 2; majority opinion by Stewart, J. and dissenting opinion by Richman, J.]: “Action” language in fees clause was interpreted broadly to allow recovery of fees for successful novation defense, agreeing with Windsor and dissenting opinion in Gil. [Discussed in our Nov. 21, 2014 post.]

     2. David S. Karton, A Law Corporation v. Dougherty, 180 Cal.Rptr.3d 55 (Nov. 14, 2014) [2d Dist., Div. 1; authored by Rothschild, J.]: Client prevailing under routine costs statute entitled to mandatory award, disagreeing with Sears v. Baccaglio that costs decision is a discretionary one for lower court where mandatory entitlement basis exists. [Discussed in our Nov. 15, 2014 post.]

     1. Safari Associates v. Superior Court, 2014 WL 6778396 (Dec. 2, 2014) [4^th Dist., Div. 1; authored by Aaron, J.]: Arbitrator’s decision to apply Civil Code section 1717 “prevailing party” definition rather than narrower fees clause definition to fee entitlement issue during arbitration should not have been corrected by superior court in post-arbitration proceedings. [Discussed in our Dec. 2, 2014 post; also discussed in Dec. 2, 2014 post on Marc Alexander’s Cal. Mediation and Arbitration blog.]

Year In Review 2014—Part 1.

 

Yearly Roundup: Mike & Marc’s Top 20 Fees/Costs Decisions In 2014.

     It’s that time of year for our top 20 fees/costs decisions for 2014, focusing on published California appellate or Ninth Circuit decisions. We will note that some of these same have been accepted for state supreme court review/transferred back to a DCA or been ordered for en banc hearing in one Ninth Circuit case. The order of presentation should not be interpreted as ranking the importance of any decisions, and we made subjective decisions on those opinions that piqued our interest without regard to the substantive area of the law at issue. Also, in a couple of situations, we lump two decisions coming to the same conclusion on an issue. With that, here we go and Happy Holidays to all of our readers.

     20. Tourgeman v. Nelson & Kennard, 222 Cal.App.4^th 1447 (Jan. 16, 2014) [4^th Dist., Div. 1; authored by Aaron, J.]: No SLAPP fee recovery for the defense where action voluntarily dismissed because no mini-merits determination was made as to whether the defense would have actually prevailed, disagreeing with cases allowing fee recovery based on defense obtaining litigation objectives through the dismissal. [Discussed in our Jan. 18, 2014 post.]

     19. Robert v. Stanford University, 224 Cal.App.4^th 67 (Feb. 25, 2014) [6^th Dist.; authored by Mihara, J.]: Lack of Rosenman v. Christensen, Miller etc., 91 Cal.App.4^th 859 (2001) written findings about frivolousness of civil rights suit for fee recovery purposes by the defense does not automatically require reversal where oral findings provided sufficient record for fee recovery. [Discussed in our Feb. 26, 2014 post.]

     18. Soni v. Wellmike Enterprise Co. Ltd., 224 Cal.App.4^th 1477 (Mar. 26, 2014) [2d Dist., Div. 3; authored by Klein, P.J.]: Trope prohibition prevented law firm collecting “fees on fees” as winner in fee collection case where law firm used associates/employees in firm’s representation in the underlying fee collection trial. [Discussed in our Mar. 26, 2014 post.]

     17. Carter v. Caleb Brett LLC, 757 F.3d 866 (9^th Cir. Mar. 10, 2014) [9^th Cir.; authored by Alarcon, Cir. Judge]: District court must “show its math” in making substantial fee reductions, reversing 37% “haircut” in fee request where lack of specificity pervaded fee order. [Discussed in our Mar. 11, 2014 post.]

     16. DKN Holdings, LLC v. Faerler, 225 Cal.App.4^th 1115 (Apr. 9, 2014) [4^th Dist., Div. 2; authored by King, J.], rev. granted on other issues, and Syers Properties III, Inc. v. Rankin, 226 Cal.App.4^th 69 (May 5, 2014) [1^st Dist., Div. 2; authored by Kline, P.J.]: Lower court has discretion in determining whether to use U.S. Attorney’s Office’s Laffey Matrix when determining the lodestar hourly rate, regionally adjusted or otherwise. [DKN discussed in our Apr. 9, 2014 post; Syers Properties discussed in our May 6, 2014 post.]

     15. Gray1 CPB, LLC v. SCC Acquisitions, Inc., 225 Cal.App.4^th 410 (Apr. 9, 2014) [4^th Dist., Div. 3; authored by Moore, J.], rev. granted but matter later transferred back to DCA to consider matter in light of Conservatorship of McQueen, discussed in Part 2 of our 2014 Review: Judgment creditor’s acceptance/negotiation of cashier’s check constituted judgment satisfaction, cutting off claim for substantial post-judgment fee recovery. [Discussed in our Apr. 9, 2014 post; BLOG NOTE—supplemental briefing has been completed in the 4/3 DCA, with a submission order filed on Nov. 24, 2014 and with a Feb. 23, 2015 deadline to file a new opinion.]

     14. S.L. v. Upland Unified School Dist., 747 F.3d 1155 (9^th Cir. Apr. 2, 2014) [9^th Cir.; authored by Christen, Cir. Judge]: District court’s written order on a fee motion triggers 30-day appeals period, with no need for a separate judgment to trigger the running of the 30-day period. [Discussed in our Apr. 2, 2014 post.]

     13. deSaulles v. Community Hospital of the Monterey Peninsula, 225 Cal.App.4^th 1427 (May 2, 2014) [6^th Dist.; authored by Grover, J.], rev. granted – No. S219236: Positive settlement recovery can qualify as a “net monetary recovery” for purposes of routine cost recovery where the settlement agreement was silent in dealing with costs issues. [Discussed in our May 4, 2014 post; BLOG NOTE—Here is how the California Supreme Court has framed the issue: “When plaintiff dismissed her action in exchange for the defendant’s payment of a monetary settlement, was she the prevailing party for purposes of an award of costs under Code of Civil Procedure section 1032, subdivision (a)(4), because she was ‘the party with a net monetary recovery,’ or was defendant the prevailing party because it was ‘a defendant in whose favor a dismissal is entered’?”].

     12. Mega RV Corp. v. HWH Corp., 225 Cal.App.4^th 1318 (Apr. 30, 2014) [4^th Dist., Div. 3; authored by Ikola, J.]: No “tort of another” fee recovery allowable where case had no underlying tort, siding with Sooy and disagreeing with majority decision in Manning and containing a footnote indicating the “tort of another” doctrine not relevant in most physical injury or property damages cases. [Discussed in our May 1, 2014 and May 21, 2014 posts.]

     11. Naser v. Lakeridge Athletic Club, 227 Cal.App.4^th 571 (June 27, 2014) [1^st Dist., Div. 5; authored by Bruiniers, J.]: Service and processing costs for business records subpoena, even if no deposition taken pursuant to the subpoena, are recoverable routine costs. [Discussed in our June 29, 2014 post.]

Civil Right,Costs,Special Fee Shifting Statute: Lower Court Decision To Deny Prevailing Defendant Attorney’s Fees And CCP § 1038 Defense Costs Affirmed On Appeal

 

Order Taxing Costs By Over Half Was No Abuse of Discretion, Either.

     In Berro v. County of Los Angeles, Case No. B223515 (2d Dist., Div. 4 Dec. 22, 2014) (unpublished), plaintiff—an ex-Los Angeles fire department captain—lost a FEHA case (mainly through a summary judgment motion), but the lower court refused to award Fire Department $418,372.33 in attorney’s fees/$26,862.50 in expert witness fees and $209,186.17 in defense costs under CCP § 1038 (an interesting fee-shifting statute in favor of governmental entities if certain requirements are met). The lower court also taxed (decreased) requested routine costs of $68,732,50, awarding Fire Department $31,882.36 instead.

     Fire Department appealed, but nothing changed.

     The lower court correctly determined that the FEHA case was not frivolous/unreasonable, especially given the lower court had a tentative to actually deny summary adjudication on certain claims (before reversing its tentative). Fire Department’s § 1038 fee request was untimely because it was made not made before discharge of the jury or before entry of judgment—it was made 2 months after judgment entry, way too late. The costs reduction was no abuse of discretion, with the appellate court determining that (1) the fees paid by a prevailing party to a non-prevailing party’s expert are not usually recoverable unless there is CCP § 998 fee shifting (Gorman v. Tassajara Development Corp., 178 Cal.App.4^th 44, 74 (2009)), and (2) voluntarily mediation expenses were correctly called as not being compensable under the circumstances of the case.

Bankruptcy: Ninth Circuit Orders En Banc Hearing for Schwartz-Tallard 11 U.S.C. § 362(k)(1) Issue

 

En Banc Order Came Down on December 19, 2014.

     In our April 17 and August 29, 2014 posts, we discussed In re Schwartz-Tallard, 765 F.3d 1096 (9^th Cir. 2014), which determined in a 2-1 opinion that a Chapter 13 bankruptcy debtor could recover attorney’s fees on appeal for successfully defending an automatic stay violation determination as “damages” under 11 U.S.C. § 362(k)(1). Because the majority and dissent varied on the application of the Court’s own prior decision in Sternberg v. Johnston, 596 F.3d 937 (9^th Cir. 2010), the Ninth Circuit ordered an en banc hearing of the matter in a December 19, 2014 Order.

SLAPP: $70,345 Fee Award Against Defense And Their Attorneys For Bringing Frivolous SLAPP Motion Vacated

 

Reason Was Matter Remanded To Determine If Defense Met Burden To SLAPP For Several Causes of Action.

     The SLAPP statute certainly has generated a lot of jurisprudence since its enactment. The defense winning a SLAPP motion gets mandatory reasonable, causally-related fees, while a plaintiff subject to a frivolous SLAPP motion can get discretionary reasonable fees.

     In Coyote Springs Guest Ranch v. Castaldi, Case Nos. F065144/F065570 (5^th Dist. Dec. 19, 2014) (unpublished), a trial judge determined that a defense SLAPP motion was frivolous as to all causes of action, entering a $70,575 fee award in favor of plaintiffs and against defendants and their counsel, jointly and severally.

The fee award went POOF! because the appellate court determined that defense might have been correct on the SLAPP merits on some causes of action such that the “fee fixing” had to be redone after remand determinations by the trial judge.

     BLOG NOTE—Case law clearly establishes that a plaintiff’s counsel cannot be subject to mandatory SLAPP fee recovery, only plaintiff can be exposed. (Moore v. Kaufman, 189 Cal.App.4^th 604 (2010).) However, can a defense counsel as well as the defense be subject to fee exposure for bringing a frivolous SLAPP motion? We know of no published case so holding, but it is tethered to former CCP § 128.5 sanctions (allowable against a party and/or counsel) and one commentator has indicated that fee exposure would also extend to counsel. (See Denison, “SLAPP Happy,” L.A. LAWYER, June 2011.) However, for those of you wanting creative arguments to argue otherwise, see some reasoning in Foster v. Warner, a June 19, 2008 unpublished decision from the First District, discussed in our June 19, 2008 post.

Family Law: $349,381 271 Sanctions Award Affirmed On Appeal

 

Record Showed Husband Did Have Ability To Pay Adverse Sanctions Award.

     In Marriage of Lane, Case No. B29872 (2d Dist., Div. 6 Dec. 17, 2014) (unpublished), husband brought a fifth appeal, this time of a $349,381 sanctions award against him and in favor of wife under Family Code section 271 (the fee-shifting provision allowing fees to be awarded as a sanction for uncooperative litigants or litigants attempting to take actions not resolution oriented in nature).

     The appellate court reduced the award by $180, taking out one unrelated billing entry, but otherwise affirmed the $39,381 net award. Husband’s main argument was that he did not have the ability to pay, but this was belied by the $1.6 million in pension/IRA money and the $300,000 in real property which he owned despite filing 35 post-judgment motions, 4 prior appeals, and a Chapter 7 bankruptcy. (Whenever an appellate panel starts out by saying “fifth appeal,” you know things may not be going well for you.)

Interpleader/Reasonableness Of Fees: $81,053.44 In Fees To Neutral Stakeholder Affirmed In Interpleader Action

 

Absence of Opposition From Other Side Steered the Affirmance.

     In Southern Cal. Gas. Co. v. Flannery, Case No. B249616 (2d Dist., Div. 5 Dec. 16, 2014) (published), gas company brought an interpleader action to direct disposition of settlement proceeds in multiple fire cases, ultimately being granted an unopposed motion for discharge and then being granted $81,053.44 in attorney’s fees under the interpleader fee-shifting statute, CCP § 386.6.

     The appeal by an adverse litigant was unsuccessful. After all, the opponent offered no evidence to counter the gas company’s declaration in support of the fee request and offered no opposition to the fees actually requested. Given that gas company did have to engage a team of attorneys in light of the multiple cases involved, the fee award in this one was found appropriate.

Deadlines/Family Law: Appeal Of $5,000 Needs-Based Fee Award Untimely Because Brought Outside of The 180-Day Maximum Deadline

 

Fee Award Directed Payment Of Money, So It Was Final For Appealability Purposes Even Though Order Said Future Adjustments Could Be Made.

     In Marriage of Bustillo, Case No. G048816 (4^th Dist., Div. 3 Dec. 15, 2014) (unpublished), husband appealed a $5,000 needs-based fee award to wife, entered in May 2012, directing payment of money by a specified deadline. However, he waited until August 2013 to appeal based on a July 2013 later order reinstating the May 2012 fee order in an attachment to the 2013 order.

     Our local Santa Ana court, in a 3-0 decision authored by Justice Aronson, dismissed the appeal as untimely. The reason was that the May 2012 order was appealable at the time it was entered because it satisfied the collateral order doctrine by directing the payment of money. Even though the order said the court could “make adjustments,” this language simply recognized the family judge reserved authority to make further attorney’s fees orders. However, husband appealed way past the 180-day maximum appeal deadline (given no notice was given of the ruling by either side). Appeal dismissed, with the appellate court also denying wife’s request for appellate sanctions.

Arbitration/Fee Clause Interpretation: Superior Court Award Of Attorney’s Fees To Arbitration Party Successfully Defending Arbitrator Disqualification Order Affirmed On Appeal

 

$55,698 Fee Award Justified Based On Broad Fees Clause in Operating Agreement.

     Fiscal Funding Co., Inc. v. Dones, Case No. A135451 (1^st Dist., Div. 3 Dec. 15, 2014) (unpublished) involved a $55,698 fee award by the superior court to a party to an arbitration successfully defending an arbitrator’s disqualification order in superior court proceedings. (Ironically, after all the superior court proceedings were exhausted, the arbitration was suspended due to nonpayment of fees.) The losing party of both the superior court writ challenge to the arbitral disqualification order and fees award appealed, to no avail.

     The appellate court agreed that the superior court lacked jurisdiction to review the arbitrator’s disqualification order, because it is not the type of interlocutory order subject to superior court review. No due process was violated, because the disqualification simply meant the losing party had to proceed with different representation. As far as the fee award was concerned, the parties’ Operating Agreement was broad—in the event of litigation or arbitration among the operating entity’s members, the prevailing party in such dispute was entitled to recover from the other party all reasonable fees, costs and expenses, including, without limitation, reasonable fees and expenses. A very broad fees clause, and one with sufficient breadth justifying fee entitlement in this particular instance.

In The News . . . . SDNY Judge Lowers Fee Request In FLSA Class Action Settlement, Also Lamblasting Reliance On Attorney-Prepared Fee Orders And Sixth Circuit Reduces Fee Award By About Half To Social Security Claimant’s Attorney In Benefits Case

 

U.S. District Judge Pauley III Has Provided Some Guidance on FLSA Fee Awards.

    FLSA litigation has been proliferating, constituting 9% of the filings for the 2014 S.D.N.Y. federal civil docket and paralleling a 400% increase in nationwide filings since 2001. U.S. District Judge William Pauley III, in Fujiwara v. Sushi Yasuda, No. 12cv8742 (S.D.N.Y. Memorandum and Order Nov. 12, 2014), reduced a requested FLSA class action fee award, but also warned the bar and fellow judicial colleagues to not rely that much on plaintiff-crafted fee orders in FLSA cases later used to justify future fee awards.

     District Judge Pauley III had before him an initial fee request of $800,000 in a $2.4 FLSA class action settlement, which would have translated to $1,200 hourly rate and 2.8 multiplier (one-third of the settlement fund). Class counsel voluntarily dropped the request to $600,000, but the district judge reduced this to $480,000—20% of the settlement fund and 1.75 multiplier from counsel’s stated hourly rates.

     Here are cautionary remarks in his order, which we link to here: “[T]here is a reason to be wary of much of the caselaw awarding attorney’s fees in FLSA cases in [the Second] Circuit” because “many of the authorities cited by Plaintiffs’ counsel in support of their fee application are in fact proposed orders drafted by the class action plaintiffs’ bar and entered with minimal, if any, edits by judges.”  Under these circumstances, he said, it is “no wonder that caselaw is so generous to plaintiffs’ attorneys” — since “by submitting proposed orders masquerading as judicial opinions, and then citing to them in fee applications, the class action bar is in fact creating its own caselaw on the fees it is entitled to.” This judge further reasoned that “approval of class action settlements and fee applications [in FLSA cases] is precisely where judicial scrutiny, not judicial deference, is most needed.”

Sixth Circuit Affirms District Judge Reduction of Social Security Claimant’s Attorney’s Fee Request, Finding $733.80 Hourly Rate Way Out of Line.

     In Lasley v. Commissioner of Social Security, No. 14-3044 (6^th Cir. Nov. 4, 2014) (published), a district court (in line with a Commissioner’s thinking) reduced a Social Security claimant’s lawyer’s request to be awarded fees of $26,049.73 under a 25% contingency agreement for helping obtained past due benefits. (42 U.S.C. §406(b)(1)(A) does allow a prevailing claimant to recover fees not exceeding 25% of the total of past due benefit payments. Contingency fee arrangements are permissible, with hypothetical hourly rates less than twice the standard rate being deemed per se reasonable in the Sixth Circuit, and hypothetical hourly rates equal to or greater than the twice standard rate may be being reasonable in nature.)

     Both the district and appellate court agreed that the 25% contingency request was way too high, effectively resulting in a $733.80 hourly rate almost four times higher than the $165-180 rates endorsed in the S.D. Ohio. In affirming the $12,780 award to claimant’s attorney, the Sixth Circuit agreed with the district court that the case was relatively simple and attorney’s representation was relatively brief in nature (35.5 hours).

Appealability: Both Sides’ Appeal From Fee Denial Orders Nonappealable Because Trial Judge Granted New Trial Conditionally, With Additur Which Was Not Accepted

 

Result Was Original Judgment Was Vacated, So No Postjudgment Fee Orders Existed.

     In Pacific Corp. Group Holdings, LLC v. Keck, Case No. D062277 (4^th Dist., Div. 1 Dec. 12, 2014) (published), defendant/cross-complainant employee won a substantial $270,547.95 breach of contract verdict against cross-defendant employer. However, he moved for a new trial motion arguing the jury’s verdict was not high enough. The lower court granted the new trial with an additur, but the cross-defendant employer did not accept the additur such that the original judgment was vacated and the case ordered back to a new trial on damages. Both sides moved for attorney’s fees, and the trial judge denied both requests. Both sides appealed.

     With respect to the fee denial orders, the appellate court determined that it had no appellate jurisdiction to review these orders. The problem was that the original judgment was vacated such that there were no postjudgment fee orders. Also, the collateral order doctrine did not apply. So everyone will have to await what happens at the new trial before the fees issues can be addressed down the line (unless the parties decide to settle on some basis in the interim).

Bankruptcy/Cases Under Review: Federal Government And Several States Support Baker Botts’ SCOTUS Position On Whether Efforts Defending Core Application Fees Are Compensable

 

Fifth Circuit Decision Saying No Fees For These Efforts Under Scrutiny.

     On October 2, 2014, we posted on SCOTUS granting certiorari with respect to a Fifth Circuit decision denying Baker Botts substantial fees and costs in defending their core application fee efforts. According to Law 360, “[t]he federal government on Wednesday [December 10, 2014] joined state bar associations from California, Florida, New York, Texas and others urging the U.S. Supreme Court to reverse a Fifth Circuit decision that overturned fees associated with Baker Botts LLP's $117 million fee award for defending Asarco LLC in the mining company's bankruptcy.”

Appeal Sanctions: Attorney Ordered To Pay $19,945 In Appellate Defense Costs And $8,500 To Court Clerk For Frivolous Appeal

 

Dissenting Justice Did Not Think Sanctions Were Appropriate Based on Inadequate Appellate Record.

     In Hasso v. J&J Real Estate Holdings, Case No. E054774 (4^th Dist., Div. 2 Dec. 11, 2014) (unpublished), the majority of an appellate court panel imposed $19,945 in defense appellate fees against appellant’s attorney, payable to the defense, and $8,500 in costs payable to the court clerk for the time spent by the court in working up the matter after determining that the appeal was frivolous. (See Kleveland v. Siegel & Wolensky, LLP, 215 Cal.App.4^th 534, 560 (2013) [noting an increasing trend to assess frivolous appeal costs and have money paid to the court clerk to compensate taxpayers for having to pay for court time to work on the appeal found to be frivolous, with $8,500 an appropriate figure].)

     However, although concurring in the merits of the appeal ruling, Justice King wrote a dissent, reasoning that sanctions should be used sparingly and that the lack of an adequate appeals record—the main basis for the sanctions—did not mean there was a corresponding lack of merit to the appeal. Here is what he said at the end of his dissent: “Counsel’s failure to provide a complete record, while clearly inexcusable, does not rise to the level of sanctionable conduct. We often get appeals where the record is incomplete, there is a failure to cite authority, a failure to cite to the record, or the inclusion of extraneous matters having nothing to do with the appeal. It is simply part of a process which is intended to offer litigants their day in court and due process.” (Dissenting Slip Opn., p. 5.)

Class Action: $11 Million Class Counsel Fee Recovery Affirmed Where Total Claims Being Actually Made Exceeded $49 Million

 

“Clear Sailing” Settlement Provisions Not Per Se Invalid Under State Law.

     Computer Service Tax Cases, Case No. A139445 (1^st Dist., Div. 5 Dec. 10, 2014) (unpublished) is a class action settlement appeal where 200,000 claims were filed resulting in claims to recover tax refunds of around $49.1 million. The lower court granted class counsel $11 million in fees pursuant to a “clear sailing” provision in the settlement agreement (i.e., the defense would not oppose if no more than $11 million was sought in fees, with an important wrinkle that the corporate defendant agreed to pay the fees separately).

     The challenges to the fee award were not successful on appeal.

     The appellate court rejected the argument that any surplus between fees awarded and the fees agreed to be paid by the defense was not a class benefit. Reason: there was no surplus left over for the defense or class to claim.

     “Clear sailing” provisions are not per se invalid under California state law, notwithstanding what the Ninth Circuit might have implied otherwise in the Bluetooth decision (although nothing in the federal decision outlawed these provisions outright).

     “Kicker” provisions, saying that any unawarded fees revert back to the defense, are also not per se invalid unless some collusion can be shown, not at play given there was no surplus subject to reversion and given no showing of collusiveness.

     That meant the appeal actually devolved into a gripe about the reasonableness of fees, which is reviewed under a deferential abuse of discretion standard. The challenges were unsuccessful to the amount of fees because (1) declarations by counsel can adequately be a form of accepted fee substantiation under California state law; (2) fee sharing agreements were disclosed as required under CRC 3.769(b); (3) $650-825 hourly rates for 25-plus year experienced attorneys were reasonable in nature; and (4) the awarded fees were only about 22.5% of the settlement fund, so they were reasonable under the percentage of recovery methodology.

Civil Rights/Prevailing Party: Plaintiff Losing All Claims Based On Causation Jury Finding Cannot Be Prevailing Party Entitled to FEHA Fee Recovery

 

Lower Court Properly Denied Plaintiff’s Fee Request.

     If you lose all of your claims (even in the civil rights area), you likely are not the prevailing party. The appealing plaintiff found that out in Arevalo v. City of Long Beach, Case No. B250345 (2d Dist., Div. 7 Dec. 10, 2014) (unpublished).

     There, plaintiff lost unlawful employment discrimination/retaliation claims after the jury agreed age discrimination was a factor but found a lack of causation so as to result in a defense verdict. The lower court denied plaintiff’s request to be awarded fees under the FEHA fee-shifting statute.

     The appellate court found no error. After all, plaintiff lost all of his claims such that he was not a prevailing party.

Intellectual Property/Prevailing Party/Special Fee Shifting Statute: 4/3 DCA Determines That Penal Code Section 502’s Fee Entitlement Provision Applies to Both “Prevailing” Plaintiffs And Defendants

 

Appellate Court Agrees With Trial Court Analysis, Which Departed From Contrary S.D. Cal. Federal Decision.

     Plaintiff search engine optimization firm sued defendant marketing firm for breach of contract, prompting defendant to countersue plaintiff (as a cross-defendant) for breach of contract and for a violation of Penal Code section 502 (a computer hacking claim which is given civil claim status through the statute). A trial judge rejected all claims and awarded plaintiff (the prevailing cross-defendant) attorney’s fees under Penal Code section 502(e)’s fee entitlement provision allowing discretion to a court to award fees for claim involving an alleged violation “pursuant” to section 502.

     Defendant/cross-complainant appealed, relying on Swearington v. Haas Automation, Inc., 2010 U.S. Dist. LEXIS 36963 at *7 (S.D. Cal. 2010), which held that the section 502 fee provision only applies to prevailing plaintiffs (or counter- or cross-complainants). The lower court disagreed with this federal decision in awarding fees to the prevailing cross-defendant.

     The result was affirmed by a 3-0 panel decision in US Source LLC v. Chelliah, Case No. G049481 (4^th Dist., Div. 3 Dec. 10, 2014) (unpublished), authored by Justice Bedsworth.

     In essence, the appellate panel determined that the “pursuant” language in section 502(e) was broad, not being trumped by some unclear legislative history to the contrary. Judge Munoz, the lower court awarding fees (although he is now a retired neutral), got it right. This decision is must reading on the scope of section 502(e) as far as which side can be discretionarily awarded fees as a prevailing party.

Civil Rights/Reasonableness Of Fees: Title VII Sexual Harassment Plaintiff Winning $1 Nominal Compensatory Damages/$300,000 Punitive Damages Under Title VII Statutory Cap Appropriately Awarded Fees And Costs Of $350,902.75

 

Plaintiff Did Succeed, With Efforts On Other Claims Interrelated.

     In State of Arizona v. Asarco, No. 11-17484 (9^th Cir. Dec. 10, 2014) (en banc) (published), a Title VII plaintiff primarily alleging sexual harassment claims brought an action against an employer having more than 500 employees. The jury awarded plaintiff $1 in nominal compensatory damages and $868,750 in punitive damages. The district judge reduced the punitive award to $300,000 under a Title VII statutory cap for punitive damages applicable to this particular employer (with the cap getting even lower depending on number of employees). See 42 U.S.C. § 1981a(b)(3)(D). Earlier, in a majority panel decision, the Ninth Circuit found the 300,000 to 1 punitive ratio was too high. However, the matter was heard en banc, with a different result—affirmance of the entire judgment, including an attorney’s fees and costs award to plaintiff to the tune of $350,902.75.

     The fee award, a discretionary one, was found appropriate and was no abuse of discretion. The defense claimed that plaintiff had little success, but the Ninth Circuit found all of the work efforts were interwoven with the successful claim and that plaintiff did succeed—plaintiff obtained a close to $900,000 jury punitive award (reduced by law to $300,000), still very good.

Insurance: Cumis Counsel Hourly Rate Restrictions Do Not Apply Retroactively

 

Rate Restrictions Apply No Earlier Than When Insurer Agrees to Pay for Prospective Dates Onward.

     Although unpublished, insurance practitioners will want to read City Art, Inc. v. Superior Court (Travelers Property Cas. Co. of America), Case No. B256132 (2d Dist., Div. 3 Dec. 9, 2014) (unpublished).

     In granting an insured's writ petition, the appellate court determined that the Cumis counsel rate restrictions under Civil Code section 2860 only apply after the insurer actually commences paying for independent counsel, meaning the date upon which it agrees to pay but not for retroactive dates even if it purports to apply the rate restrictions retroactively. The retroactivity rule espoused by the insurer was soundly rebuffed, because "[i]f an insurer could retroactively rely on section 2860, an insurer that breached the duty of defend could reduce the damages it owed simply by establishing that it also breached the duty to provide independent counsel. This is nonsensical [given the general rule that an insurer who breaches the duty to defend is liable for the reasonable attorney fees incurred by the insured in obtaining a defense]." (Slip Opn., p. 17.)

Allocation/Reasonableness Of Fees: $362,000 In Fee Recovery To Contractor Stepping Into Developers Shoes And Guarantors For Winning Against Construction Lender Affirmed On Appeal

Bank's Failure to Contest Fee Entitlement Meant Only Amount of Fees At Issue—With Reasonableness And Apportionment Issues Left to Trial Court Discretion.

     California Bank & Trust v. Del Ponti, Case No. E053187 (4^th Dist., Div. 2 Dec. 9, 2014) (partially published; fee discussion unpublished) is a construction lender liability case with fairly draconian facts of where a lender tried to upstage a general contractor paying subcontractors to keep a failing project lien free and also tried to hold guarantors liable out of the same facts even though exoneration was written all over the facts.

     Draco and Ursa Minor.

     Ultimately, general contractor and guarantors prevailed on all or most claims against bank, with contractor winning $276,430 in fees and guarantors winning $85,515 in fees. Bank then appealed the merits and fee determinations against it.

     The merit and fee determinations were affirmed on appeal.

     Bank contested fee entitlement, but this challenge was waived by failure to raise it (with the appellate court providing several bases to show why entitlement could have been claimed). This narrowed the appeal to the dreaded amount of fees awarded, a deferential abuse of discretion review issue. The main argument was that the lower court should have apportionment contract versus noncontractual work efforts, but the trial judge found everything so interwoven (even on some dropped claims) such that no allocation was necessary. The reasonableness of the fee awards was also found to be supported by the record below.

In The News . . . . Polygamous Trust Seized By State Of Utah Spending $100,000 A Month Average On Attorney’s Fees

 

$8 Million Is Total Billing Tab To Date.

     As reported by a recent article in the Salt Lake Tribune, United Effort Plan (UEP), a polygamous trust now controlled by the State of Utah (owning property in Utah, Arizona, and British Columbia), has been spending about $100,000 a month in attorney’s fees for attorneys performing work on behalf of the trust. (At its peak, UEP was involved in 35 lawsuits.) The Attorney General having supervision over the seized trust has asked a judge to cut a recent fee request down from $925,628 to $833,074. Overall, the article indicates that the total fee billing tab since the state seized the trust comes to around $8 million.

Reasonableness Of Fees/SLAPP: Winning SLAPP Defendants’ $138,972 Combined Fee Award Affirmed As Reasonable On Appeal

 

Also, CCP § 177.5 $1,000 Sanctions Award Reviewable Only By Writ.

     In Shalant v. Mackston, Case No. B250208 (2d Dist., Div. 8 Dec. 8, 2014) (unpublished), defendants won a SLAPP motion—the merits of which were never appealed—and plaintiff suffered a combined adverse fee award of $138,972 under the mandatory SLAPP fee-shifting statute. One of the pro per plaintiffs also suffered a $1,000 sanctions award under CCP § 177.5, payable to the court, for filing an oversized brief after denial of an ex parte application for such relief. The fee and sanctions awards were the subjects of an appeal by the losing side.

     Nothing changed on appeal.

     Because the SLAPP motions disposed of all or most of the claims for the two sets of defendants, the motions were causally related enough such that all the time was compensable. (Vargas v. City of Salinas, 200 Cal.App.4^th 1331, 1351 (2011).) The hourly rates being sought, $150-450 per hour, were reasonable because the trial judge determined that $500 per hour was a good lodestar hourly rate for the Los Angeles-venued defense counsel in this particular case. Also, nothing in the law said that 100% of the defense requests could not be granted, the case here, especially given that plaintiff drove up the expenses through his litigation activities. Finally, time was compensable even though it did not have the magic language “SLAPP motion” in the time entries, with the defense attorneys needed to also analyze the underlying malicious prosecution complaint in order to prepare the SLAPP motions.

     The problem with the $1,000 sanctions appeal was that it was an interlocutory order which had to be reviewed by writ, not appeal. So, no go on the challenge to this one.

Probate: Daughter Trust Beneficiary Hit With $204,420.32 Attorney Fee Tab Aggregately Run Up By Sibling Beneficiaries In Defending Forfeiture/Surcharge Petition Found To Be In Bad Faith

 

Equitable Powers of Probate Court Provided the Fee Entitlement Ground.

     In Zankich v. Zuckerman, Case No. B247274 (2d Dist., Div. 8 Dec. 5, 2014) (unpublished), a petition seeking forfeiture and surcharge was filed by one daughter beneficiary against the trust distribution interests of her sibling beneficiaries, all involving deceased mother’s trust and alleging that the other siblings were guilty of elder abuse/breached fiduciary duties. The lower court found that mother’s care before she died had been appropriate and determined that the petition had been filed in bad faith. The probate court then awarded a total of $204,420.32 to the respective attorneys representing the prevailing sibling beneficiaries.

     Substantial evidence supported the bad faith ruling by the probate court. The fee entitlement was authorized based on the broad equitable powers of the probate court such that the fees award was affirmed on appeal. (Rudnick v. Rudnick, 179 Cal.App.4^th 1328, 1334 (2009); Estate of Ivey, 22 Cal.App.4^th 873, 878 (1994).)

Section 998: Personal Injury Plaintiff Entitled To 998 Costs When Verdict Against 998 Defendant Offeree Beat Plaintiff’s 998 Offer

 

Not Unreasonable to Make Offer to One Defendant, At Insurance Policy Limit, to Detriment of Co-Defendant.

     Plaintiff in Arias v. McDaris, Case No. B254163 (2d Dist., Div. 8 Dec. 5, 2014) (unpublished) was a personal injury claimant suing two defendants, a car driver and the one alleged to have negligently entrusted the car to the driver. Plaintiff offered to settle with the driver for $100,000 under a CCP § 998 offer (an insurance policy limit offer) but did not make an offer to the other defendant. After obtaining a jury verdict which was reduced a little on appeal to around $125,000, driver defendant challenged the lower court’s award of costs of $29,080.16 to plaintiff after plaintiff “beat” his own offer through the higher jury verdict.

     Driver’s appeal was not persuasive. Given that insurance is merely one factor to be considered, Arno v. Helinet Corp., 130 Cal.App.4^th 1019, 1026 (2005), the lower court did not err in finding the 998 reasonable given that plaintiff showed he got close to the verdict for both defendants, such that any prejudice to the defendant not subject to a 998 offer was harmless in nature.

Appealability: Stipulation Allowing For Further Litigation By Parties Meant Two Other Interveners Properly Denied Attorney’s Fees

 

No Appealable Order, Collateral Order Exception Did Not Apply, And Appellate Court Not Willing To Treat As Writ Petition.

     Sierra Club and Carmel River Steelhead Association obviously were upset when a lower court denied their private attorney general fee request to recoup $256,934 in fees under CCP § 1021.5.

     However, that denial stood up on appeal. The reason was that the lower court entered an agreed-upon stipulation and agreement to toll where the parties challenging the merits could do so again in the future such that interveners Sierra Club and Association might not be prevailing parties. Legally, the denial order was not appealable because no prior judgment had been entered in the case (meaning there was no postjudgment appealable order under CCP § 904.1(a)(2).) After noting an appellate split on whether the third element of the collateral order doctrine was required (namely, the order must direct payment of money by the appellant or performance of an act by or against the appellant), the Sixth District followed the majority view that this element was necessary. (Muller v. Fresno Community Hospital & Medical Center, 172 Cal.App.4^th 289, 298 (2009).) That being said, the denial order did not satisfy the third element of the collateral order doctrine. Finally, the appellate court refused to treat the appeal as a petition for writ of mandate—judicial economy was not served because the parties dismissing their petitions without prejudice might win in the future such that Sierra Club/Association would not be prevailing parties.

     The fee denial was affirmed in Monterey Peninsula Water Mgt. Dist. v. State Water Resources Control Board (Sierra Club), Case No. H039154 (6^th Dist. Dec. 5, 2014) (unpublished).

In The News . . . . Attorney’s Fees Not Awarded In Trademark And Patent Infringement Cases Under “Exceptional” Circumstance Statutes

 

Neurovision/NuVasive Trademark Infringement Action.  

    U.S. District Judge Dale Fischer (C.D. Cal.) recently denied Neutrovision Medical Products’ request for attorney’s fees against NuVasive, Inc. under the trademark “exceptional” circumstance Lanham Act fee-shifting statute. Neutrovision won a $300 million verdict infringement verdict, but District Judge Fischer believed NuVasive had potentially meritorious defenses and would not have been surprised had the verdict gone the other way.

Blackberry/Mformation Patent Infringement Action.

     Earlier this week, the Federal Circuit denied Blackberry, Ltd.’s bid to obtain an award of attorney’s fees against Mformation Software Technologies under the “exceptional” circumstance fee-shifting section of the Patent Act (section 285). Blackberry had obtained a $147 million verdict, but it was overturned by the district judge and then the Federal Circuit found no infringement in an earlier appeal. Mformation argued it was within its rights to appeal, with the Federal Circuit apparently agreeing.

Both these decisions certainly show that a lower court’s view of a case, even if different from the jury as far as ultimate result, does influence many fee petition requests where wide discretion is conferred by the lower court with respect to fee entitlement.

Appeal Sanctions/Attorney Lien/SLAPP: Defendants Trying To “SLAPP” In Fee Dispute Involving Attorney Lien Impact Were Correctly Not Allowed SLAPP Relief

 

However, Winning Plaintiff Attorney Negotiating Personal Injury Settlement Not Entitled to SLAPP Fee-Shifting Fees or Frivolous Appeal Sanctions.

     Well, we have an appellate court decision saying fees disputes do not rise to constitutional protected activity under the SLAPP statute. We are not offended, because these usually are more in the nature of private disputes in most situations.

     In Drell v. Cohen, Case No. B253688 (2d Dist., Div. 8 Dec. 5, 2014) (published), most of the litigation activity involved a fight between attorneys representing a personal injury claimant. After ex-attorneys for the claimant withdrew from representation albeit having an attorney’s lien, claimant’s second attorney negotiated a successful settlement with an insurer, who tendered a settlement check made payable to the second attorney and the ex-attorneys. That prompted second attorney to file a declaratory relief action relating to the impact of the ex-attorneys’ attorney lien. Ex-attorneys moved to SLAPP the declaratory relief complaint, but that was denied. The lower court also denied second attorney’s fee request predicated on the rejected theory that the SLAPP motion was frivolous.

     All results were affirmed on appeal.

     The appellate court found that the attorney lien dispute did not arise out of SLAPP “protected activity.” Here is how the panel put it: “None of the purposes of the anti-SLAPP statute would be served by elevating a fee dispute to the constitutional arena ….”

     Because second attorney never cross-appealed the lower court fee denial, his claim of error could not be considered. Finally, although indicating the appeal by ex-attorneys had “no merit whatsoever and [was] poorly conceived,” the panel believed there was not enough to impose appellate sanctions for a frivolous appeal.

Deadlines: Failure To File Noticed Motion Separate From Costs Memorandum Resulted In Denial Of Appellate Attorney’s Fees

 

Ignorance of the Law Was No CCP § 473 Excuse.

     Deadlines and procedural technicalities can be a real trap for all lawyers, and can especially be gnarly when requesting attorney’s fees. Van Loon v. Winchester-Wesselink, LLC, Case No. E058826 (4^th Dist., Div. 2 Dec. 3, 2014) (unpublished) illustrates this well. There, plaintiffs filed a timely costs memorandum, but no noticed motion, for purposes of seeking attorney’s fees as the prevailing party on appeal. The lower court denied the fee request based on the absence of a noticed motion, a determination affirmed on appeal. After all, the lower court did inform plaintiffs at an earlier hearing to tax routine costs that a noticed motion was needed. Plaintiffs did not follow up, with ignorance of the law being no legitimate excuse under Code of Civil Procedure section 473 so as to allow for discretionary relief under these circumstances. Ouch!