CALIFORNIA ATTORNEY'S FEES

Family Law: Appellant's Challenges To Fees/Costs Awarded To Respondent Rebuffed On Appeal

 

 

Timeliness And CRC 5.427 Noncompliance Arguments Rejected.

 

     In Schwarzinger v. Reuter, Case No. A140153 (1^st Dist., Div. 2 Jan. 29, 2015) (unpublished), an appellate court reluctantly reversed a custody order on due process grounds. However, it rejected challenges to a fees/cost order to respondent grounded in arguments that the fee petition was untimely or that it did not comply with California Rules of Court, rule 5.427.

     The reviewing court did not find either argument persuasive.

     First, respondent did timely file his fee petition, which is geared to the appeal time deadlines, as made clear recently in Kaufman v. Diskeeper Corp., 229 Cal.App.4^th 1, 10 (2014).

     Second, although respondent did not comply with rule 5.427 by failing to file a request under penalty of perjury, by failing to file any analog declaration at all, and failing to address other issues such as hourly rate/nature of the litigation/attorney's experience/frees and costs incurred or anticipated/why the costs are just, the lower court presumably followed the law (Evid. Code section 664) in finding an excuse for the procedural noncompliance, with the lack of a transcript of the fee hearing making it impossible for appellant to overcome that presumption.

Appealability: Defendant’s Appeal Of Substantial Fee Award Affirmed Based On Failure To Provide Adequate Record And Dismissal Of Merits Orders In Prior Appeal

 

No Fee Motion Papers Provided By Appellant.

     This case again reminds everyone to make sure an adequate record is prepared in a fee proceeding and to make sure prior merits appeals are preserved if the only grounds for reversal is that the merits ruling was erroneous.

     Defendant licensed contractor was found liable for professional negligence, misrepresentation, and breach of contract to a plaintiff, resulting in a net award against defendant in the amount of $388,325.47. The lower court denied the defense motions for new trial and judgment NOV, later awarding $1,458,101.25 in attorney’s fees to plaintiff and against defendant.

     Defendant lost his appeal of the fee order in Tessie Cleveland Community Services Corp. v. Loghmani, Case No. B251944 (2d Dist., Div. 2 Jan. 29, 2015) (unpublished).

     The first problem with the appeal was the failure to provide an adequate record: no motion papers were provided, retarding meaningful review.

     The second defect was that defendants’ prior appeal of the new trial/judgment NOV motion denials was dismissed because the appeal was untimely. That put the kibosh to any argument that the fee ruling was infirm because the merits ruling was subject to reversal.

     Ouch!

Fee Clause Interpretation, Judgment Enforcement, Section 1717: Judgment Debtor Properly Denied Fee Recovery Under CC 1717 Because He Didn’t Prevail On Motion To Vacate Renewed Judgment And 1717 Fees Clause Did Not Pertain To Motions Narrowly

 

Unusual Holding in Rainier Decision Did Not Compel Contrary Result.

     In Mir v. Iungerich & Spackman, Case No. B250393 (2d Dist., Div. 3 Jan. 29, 2015) (unpublished), judgment debtor obtained partial success on a motion to vacate a renewed judgment arising from a legal retainer agreement with a fees clause. Judgment debtor persuaded the trial court to reduce a $438,594.16 judgment by about $30,000. The lower court then denied judgment debtor’s motion to recover fees for this result based on Civil Code section 1717.

     The fee denial was affirmed.

     Because the Enforcement of Judgments Law only allows fee post-enforcement recovery by judgment creditors, that left judgment debtor having to rely on section 1717 for fee entitlement. First, the judgment acted as a merger and barred fees, because section 1717—although a statute (and statutory fees are not barred by a judgment)—does not create a right to fees but only transforms a unilateral fees clause into a bilateral one. Put another way, the fees clause was merged. Second, the unusual decision in Rainier National Bank v. Bodily, 232 Cal.App.3d 83, 85-86 (1991) did not compel a different result, because it involved a situation where section 1717 justified fee recovery where a judgment debtor successfully vacated an entire judgment sought to be domesticated from the State of Washington—not the partial success achieved by judgment debtor in this case in obtaining a small judgment “haircut” (actually being denied relief on another motion to vacate). Third, the fees clause only allowed recovery to a prevailing party “in any action or proceeding,” not recovery to a judgment debtor achieving partial success on a motion rather than the entire action.

Consumer Statutes, Costs, Prevailing Party: MacQuiddy Decision Now Published

 

Owner Was Not Prevailing Party in Lemon Law Case Because Owner Did Not Recoup Main Objective in the Form of Civil Penalty.

     On January 3, 2015, we posted on MacQuiddy v. Mercedes-Benz USA, LLC, Case No. B251752 (2d Dist., Div. 8), which held among other things that a car owner in a lemon law suit did not prevail for fee recovery because owner did not obtain a civil penalty—the main objective of his litigation. We can now report that MacQuiddy was certified for publication on January 29, 2015.

­­Family Law: $25,000 Needs Based Fee Award Sustained, But $20,000 271 Sanctions Award Reversed And Remanded

 

Appellate Court Reverses Partial Basis For 271 Award, Requiring A “Relook” Below.

     Husband was not happy in being denied part of a substantial tax refund and other rulings in his dissolution proceeding, prompting an appeal in Marriage of Becker, Case No. G048497 (4^th Dist., Div. 3 Jan. 28, 2015) (unpublished). He also challenged the lower court’s award of $25,000 in “needs based” fees to wife under Family Code sections 2030/2032 and award of $20,000 in sanctions for certain litigation conduct, including activities directed to obtaining the tax refund, under Family Code section 271.

     On appeal, a 3-0 panel of the Fourth District, Division 3, in an opinion authored by Justice Aronson, reversed on the tax refund issue, which then lead to a reversal of the 271 award for a “relook.” However, the “needs based” fee award in wife’s favor was affirmed.

     A 2030/2032 award is based on a consideration of many factors, with financial resources being just one factor to be considered. In this instance, the lower court based the fee award on the significant disparity in the ex-spouses’ relative access to funds and ability to pay for legal representation. (In re Marriage of Sorge, 202 Cal.App.4^th 626, 662-663 (2012) [discussed in our Jan. 7, 2012 post].) That sufficed as far as a predicate to justify the award.

     However, given the reversal on the tax refund issue, a different result occurred with respect to the 271 order. That award was based on husband seeking the tax refund as well as other litigation activities. The reversal on the refund issue—determining it was meritorious—required a reversal and remand for the trial judge to see if other conduct justified a 271 award (and, if so, an adjustment in the amount from the previous award, again if any).

In The News . . . . U.S. Magistrate Sanctions Himself For Tardy Appearance

 

$25 Was The Fine.

     U.S. Magistrate William V. Gallo (S.D. Cal.) was 10 minutes late in attending a session in a trademark infringement suit involving cheerleading clothes. He obviously was displeased, fining himself $25 for his tardiness in keeping the participants waiting.

     Dallas Cowboys Cheerleaders.  Carol M. Highsmith, photographer.  2014.  Library of Congress.

Allocation, Construction: Fee Award Under Public Contract Code Section 7107 Remanded For Redetermination

 

Appellate Court Ordered Apportionment to Limit Fee Award to Those Incurred Solely to the Section 7107 Claim, Meaning $3.85 Million Fee Recovery Went POOF!

For Now.

     In FTR International, Inc. v. Rio School Dist., Case No. B238618 (2d Dist., Div. 6 Jan. 27, 2015) (partially published; fee discussion published), school district and its general contractor engaged in a decade-long legal battle after the school was completed, with general contractor eventually obtaining a judgment exceeding $9 million against district. $3.85 million of this judgment was attorney’s fees to contractor under Public Contract Code section 7107, which allows a prevailing party to recover fees and costs in an action for wrongfully withheld retention payments.

     District appealed, with the Second District, Division 6, in a 3-0 opinion authored by Presiding Justice Gilbert, affirming most aspects of the merits ruling but remanding the fee recovery for redetermination.

     The fee recovery was reversed because the appellate court determined that work on an unclean hands defense did not apply as a legal matter of law such that the lower court erred in allowing recoupment of work on this defense with respect to the section 7107 claim. Instead, on remand, the reviewing court directed that fee recovery should be apportioned differently, limited to fees incurred solely in relation to contractor’s cause of action under section 7107.

Judgment Enforcement: Judgment Creditor Accepting Cashier’s Check Precluded From Obtaining More Post-Judgment Fees

 

Gray1CPB Case Result Does Not Change After Remand From Cal. Supreme Court.

     On April 9, 2014, we posted on Gray1 CPB, LLC v. SCC Acquisitions, Inc., Case No. G047429 (4^th Dist., Div. 3), which held that a judgment creditor was precluded from seeking post-judgment enforcement attorney’s fees based on accepting a cashier’s check for less than the putative post-judgment fee recovery from judgment debtor. The California Supreme Court subsequently granted review, but remanded for the Fourth District, Division 3 to reconsider in light of Conservatorship of McQueen, 59 Cal.4^th 602 (2014).

     The 4/3 DCA, in a 3-0 decision authored by Justice Moore, issued its remand decision on January 27, 2014 (published like the earlier one which became superseded)—and the result did not change.

     McQueen did not alter things because attorney’s fees incurred in an effort to enforce the judgment are subject to the time limit set forth in Code of Civil Procedure section 685.080, namely, before the judgment is satisfied in full. The problem here was that the judgment creditor did accept the cashier’s check rather than rejecting it and filing a motion or memorandum for enforcement costs and fees. So, the section 685.080 time bar applied.

Special Fee Shifting Statute: Ninth Circuit Considers Standard Of Review For Fee Award Decision Relating To Surface Mining Control And Reclamation Act’s Administrative Fee-Award Provision

 

Issue Was One Of First Impression for Ninth Circuit.

     In Black Mesa Water Coalition v. Jewell, No. 12-16980 (9^th Cir. Jan. 26, 2015) (published), the Ninth Circuit considered the “first impression” issue of the standard of review to be used for purposes of scrutinizing fee decisions made under the Surface Mining Control and Reclamation Act’s (SMCRA’s) administrative fee-award provision, 30 U.S.C. § 1275(e). Under this statute, the Secretary of Interior has issued regulatory guidance for when costs and expenses, including attorneys’ fees, may be awarded “to any person . . . who initiates or participates” in an agency proceeding under SMCRA. 43 C.F.R. § 4.1294(b). A person may receive a fee award from OSM if that person is eligible for, i.e., “prevails in whole or in part, achieving at least some degree of success on the merits,” and entitled to a fee award, i.e., “upon a finding that such person made a substantial contribution to a full and fair determination of the issues.” Id.

     After a plaintiff environmental group successfully participated in a challenge to the Office of Surface Mining Reclamation and Enforcement’s grant of a coal mining permit revision, an ALJ dismissed plaintiff’s fee petition on the ground plaintiff was neither “eligible” nor “entitled” under the statute/regulation. The district judge affirmed on the “entitlement” determination but did not reach the “eligibility” adjudication.

     The Ninth Circuit reversed/vacated in part and remanded for a redetermination on the “entitlement” element.

     On the standard of review issue, the federal appeals court determined that it was de novo on the “eligibility” element (siding with a Fourth Circuit decision) and substantial evidence on the “entitlement” element (one it deemed to be factual in nature).

     Applying this review standard, the Ninth Circuit found plaintiff was “eligible” for a fee award, having obtained some success on the merits. It remanded for a relook on the “entitlement” determination based on the panel’s perception that the erroneous eligibility determination might have impacted the ultimate entitlement call below.

Deeds Of Trust/Section 1717: Fee Denial Against Trustee Sale Third Party Purchaser Affirmed, But Fee Denial Against Purchaser Assuming Trustor Position On Senior Trust Deed With Fees Clause Reversed

 

Split Decision For Third Party Purchaser At Trustee’s Sale Involving Second Deed of Trust.

     Nonsignatory plaintiff purchased a property at a trustee’s sale of a junior lienholder, eventually bringing an action to sue certain defendants to determine amounts owed under the first (senior) deed of trust and set aside the trustee’s sale of the junior lien as being void. Plaintiff lost it suit, the two set of defendants were denied attorney’s fees requests aggregating over $497,000.

     Two sets of defendants appealed the fee denials in U.S. Financial, L.P. v. LnR Group, Inc., Case No. D065276 (4^th Dist., Div. 1 Jan. 23, 2015) (unpublished), with one set going home disappointed but with the second set happy given they were entitled to fees as the prevailing party under the fees clause in a senior trust deed pursuant to Civil Code section 1717.

     The first set of defendants known as the “Coast defendants”—seeking over $350,000 in fees--argued that plaintiff stepped into shoes of the trustor or was a third-party beneficiary of the junior deed of trust (complete with a fees clause). The appellate court did not buy the analogy, given plaintiff was a third party purchaser obtaining an interest free and clear of the trustor subject to the fees clause. No subrogation or third-party beneficiary theories applied.

     However, a second defendant, LnR, did much better. Its theory was that plaintiff stepped into the shoes of trustor with respect to the senior deed of trust so that fee recovery was possible. Yep, that was a winner given that plaintiff did assume the senior lien obligation after the trustee’s sale, so LnR got to get a second bite at fees after being denied them the first time around to the tune of $147,175.

Tort Of Another: About $270,000 In Fee Recovery Went Away Because Fees Not Authorized Under “Tort Of Another” Doctrine

 

Problem Was That Joint Tortfeasor Situation Will Not Justify Fees Under This Theory.

     Raicevic v. Lopez, Case No. D061253 (4^th Dist., Div. 1 Jan. 23, 2015) (unpublished) illustrates a principle that is important in this area of the law—“tort of another” fees will not be awarded in a multiple tortfeasor situation.

     What happened here is that plaintiffs won a total of $588,000 on intentional and negligent misrepresentation claims and then also obtained fee awards of about $270,000 against a couple of the tortfeasors. Well, that went away on appeal because the “tort of another” doctrine does not operate to confer fee recovery against some members in a multiple tortfeasor situation. (Gorman v. Tassajara Development Corp., 178 Cal.App.4^th 44, 80 (2009).)

Civil Rights: $10,000 Fee Award Against Losing FEHA Plaintiff Affirmed On Appeal

 

Use of Juror Declaration To Show “Close Case,” A Creative Approach, Was Not Accepted By Trial Court, But Appellate Court Did Not Rule It Out Under The Right Circumstances.

     This next case involved a creative attempt to use a juror affidavit to negate the proposition that a FEHA case was frivolous, unreasonable or without basis after plaintiff lost and defendant then sought attorney’s fees on the fee-shifting ground requiring a showing of meritlessness and/or bad faith.

     The appellate court in Stenehjem v. Akon, Inc., Case No. H039738 (6^th Dist. Jan. 22, 2015) (unpublished) sustained the lower court’s refusal to consider it, but did recognize that it was not inadmissible for the usual reason of trying to impeach the jury verdict. Instead, the reviewing court left open that it might be a way to negate the fee-shifting elements in the right case.

     The specific context was that plaintiff lost a FEHA case, and defendant moved for attorney’s fees on the ground that the case was frivolous, unreasonable, or unfounded under the FEHA fee-shifting standard for a prevailing defendant. The defense sought $71,760 in lodestar fees and $6,760 for “fees on fees,” although the lower court awarded only about one-fifth--$10,000.

     The appellate court affirmed from plaintiff’s appeal. Plaintiff barely got out of the gate, because an inadequate record was presented upon review—only selected trial testimony was submitted. As we have said before in many prior posts, make sure you prepare an adequate record, including reporter’s transcripts—making sure you bring your own reporter to hearings (especially important ones) in this age of tightening judicial resources.

     However, the appellate court also rejected plaintiff’s merits contentions.

     Plaintiff argued that he escaped a nonsuit, showing his FEHA case was not frivolous or unfounded in nature. The panel found this argument nonpersuasive given the low standard that must be hurdled to defeat a nonsuit, with cases in this area holding that denials of a nonsuit/summary judgment do not preclude a finding of frivolousness or unreasonableness.

     Plaintiff next argued this was a “close case,” presenting a juror declaration that at one point the internal polling was 7-5 in favor of plaintiff. The trial court found this declaration unreliable because it came from a dissenting juror. The appellate court found no abuse of discretion in this evidentiary ruling, but did not rule out that it could be probative in the right case—after all, it was not being presented to impeach the jury verdict or presented for the truth of the matter at issue.

     The appellate court believed the lower court did consider plaintiff’s ability to pay, which is a requirement in a FEHA defendant fee-shifting request, given the modest amount actually awarded in fees to the defense.

     Finally, in line with the recent decision of Robert v. Stanford University, 224 Cal.App.4^th 67, 72 (2014) [discussed in our February 26, 2014 post], the appellate court found that the requirement of written findings on the FEHA fee-shifting elements could be satisfied by incorporating the detailed reasons recited by the trial court at the fee motion hearing.

Equity, Section 1717: Plaintiff Losing Shareholder Derivative Claim Liable For Defense Attorney’s Fees

 

Reciprocity Required Under Section 1717, Given Unfairness of Other Result.

     In Trejo v. Arriaga, Case No. D064410 (4^th Dist., Div. 1 Jan. 21, 2015) (unpublished), plaintiff 50/50 shareholder in a closely-held corporation lost an amended shareholder derivative lawsuit against defendant 50/50 shareholder. Defendant nonsuited plaintiff based on a failure to prove damages. Defendant then sought to recover fees under a lease agreement with a fees clause, garnering $55,608 in attorney’s fees under Civil Code section 1717.

     The appellate court affirmed. Plaintiff contested that he could be individually liable for fees in a derivative action, but California decisions have allowed such recovery under the “substantial benefit doctrine” based on principles of equity. (Brusso v. Running Springs Country Club, Inc., 228 Cal.App.3d 92, 99-100, 111 (1991).) Given that plaintiff initiated the derivative lawsuit with presumed knowledge of the risk that he might be liable under the lease provisions if he lost, the reviewing court found it would be inequitable to prevent defendant for being able to recover attorney’s fees.

Section 1717: Subcontractor Failing To Provide Admissible Proof Of Contract In Fee Proceeding Properly Denied Recovery

 

Big Practice Tip—Make Sure Contractual Predicate Is Provided For Motion In An Evidentiary Sense.

     Century Quality Management, Inc. v. JMS Air Conditioning and Appliance Service, Inc., Case No. B255326 (2d Dist., Div. 7 Jan. 21, 2015) (unpublished) is a very good decision offering an important practice tip for a fee claimant—make sure that you provide an admissible evidentiary basis for showing the contract on which fee entitlement is based.

     In this one, a project manager sued a subcontractor on a variety of theories, including breach of warranty, with the subcontractor eventually prevailing. Subcontractor moved for $13,507.50 in fees under Civil Code section 1717, a motion which was denied.

     The appellate court affirmed. Although finding that the breach of warranty claim was certainly “on the contract” for fee recovery purposes, subcontractor never submitted admissible proof of the contract with the fees clauses such that the failure of proof was fatal.

In The News . . . . After Two Years Of Cuts, Orange County’s Largest Law Firms Increased Workforces By 3.2% Overall In 2014

 

Increases Followed From Prior Yearly 2% and 1% Cutbacks.

     As reported in the January 19-25, 2014 issue of the Orange County Business Journal, Orange County’s largest law firms increased their workforces by 3.2% overall in 2014, reversing prior yearly cutbacks in past years of 2% and 1%, respectively.

     Also, this edition has a ranking of the largest Orange County firms, by size. The top ten are: (1) Knobbe Martens; (2) Rutan & Tucker; (3) Stradling Yocca; (4) Gibson, Dunn; (5) Sheppard, Mullin; (6) Latham & Watkins; (7) O’Melveny & Myers; (8) Snell & Wilmer; (9) Newmeyer & Dillion; and (10) Lewis Brisbois.

Sanctions: $9,120 CCP § 128.7 Sanctions Order Against Husband And His Counsel In Civil Action Reversed Because Record Did Not Show Improper Motive

 

Civil Action Was Part of Bitter Dissolution Dispute.

     Husband, during the pendency of apparent bitter dissolution proceedings with his former wife, filed multiple civil lawsuits against wife, her parents, and her parents’ trust. Earlier, in one of the actions, the assigned civil judge refused to deem the matter related to the family law matter. Then, later on, the civil judge imposed both terminating and monetary sanctions of $9,120 against husband and his counsel under CCP § 128.7, prompting an appeal by both.

     They were successful in Scarlatelli v. Gamut Construction Co., Inc., Case No. B252435 (Jan. 20, 2015) (unpublished).

     Although the reversal is based on the peculiar facts of record, the appellate court found no bad faith simply from the fact a number of lawsuits had been filed or the procedural manner in which the lawsuits were filed, attorney strategic decisions which could not be necessarily “imputed” to client husband. Furthermore, the earlier decision to not transfer the case to family law court as a related matter could well lead counsel to decide the filing in civil court was the proper course of action. Finally, joinder of the trust and the trust representatives was not improper given that a transfer of title to property was being challenged and an inter vivos trust is recognized as a “probate avoidance” device.

     As far as success rate, we will note that 128.7 challenges appear to have a higher degree of success than appeal of discovery sanction orders. The terminating sanction was seen as too draconian in Scarlatelli, with that determination also making it necessary to overturn the monetary sanctions against husband and his attorneys.

Fee Clause Interpretation: Tort Claims Where Interpretation Of Transaction Agreement Not At Issue Were Not Subject To Fee Recovery

 

Fee Provision Only Encompassed Narrower Action “To Enforce Or Interpret the Agreement.”

     Plaintiff did well in a conversion, fraud, breach of fiduciary duty, and unfair competition action against defendants, eventually netting him $3.82 million in compensatory damages and $400,000 total punitive defendants against two defendants. He then sought to recover $2.1 million under an attorney’s fees clause in a transaction agreement allowing recovery in an action “to enforce or interpret” the agreement.

     The lower court denied fees.

     That determination was affirmed in Barton v. RPost International Limited, Case No. B255535 (2d Dist., Div. 5 Jan. 20, 2015) (unpublished), because no term of the transaction agreement was interpreted or enforced by the court. Rather, the case involved tort claims not within the scope of the fees clause.

Special Fee Shifting Statute: $44,630 Fee Award Against Public Records Act Petitioner/Her Attorney Reversed On Appeal

 

Appellate Court Disagreed With Lower Court, Because PRA Litigation Was Not "Clearly Frivolous" So As To Justify Fee Order.

     In Bertoli v. City of Sebastopol, Case No. A132916 (1^st Dist., Div. 4 Jan. 20, 2015) (published), a petitioner/her attorney were hit with an adverse $44,630 fee award (out of a requested $82,380) in favor of City based on a trial court finding that the California Public Records Act litigation was "clearly frivolous"—based on Government Code section 6259(d), which does allow for fee-shifting against a PRA petitioner if frivolousness is shown.

     The appellate court reversed, essentially using a de novo standard of review.

     Bertoli and her counsel were seeking records, including electronically stored information from City and numerous representatives, for purposes of Bertoli's personal injury accident in crossing a California owned highway running through the City, with Bertoli left permanently physically and mentally disabled. The reviewing court believed that there could be no personal ill will under the circumstances, and did not find the requests—although admitting they were unfocused, nonspecific, and unduly burdensome in nature—to be clearly without merit, especially given that the law on ESI is still evolving in the PRA arena. The appellate court also believed the lower court conflated discovery standards with PRA principles, with the latter being designed to allow open access to public documents unless specified exemptions are satisfied. The "clearly frivolous" standard was not met as a matter of law in this one.

Intellectual Property: Ninth Circuit Affirms $396,844.17 Fee Award To Costco Under Copyright Fee-Shifting Statute

 

Omega, Luxury Watch Purveyor, Had To Pay Fees.

     In Omega S.A. v. Costco Wholesale Corp., No. 11-57137 (9^th Cir. Jan. 20, 2015) (published), the Ninth Circuit considered an appeal of a summary judgment and attorney’s fees award in favor of Costco and against Omega in a copyright infringement suit. Both rulings were affirmed.

     Costco initially obtained a summary judgment based on the first sale doctrine, but this was reversed on appeal. Costco didn’t give up, obtaining a summary judgment a second time around based on a copyright misuse theory (trying to impermissibly extend a limited monopoly) and was also granted $396,844.17 in attorney’s fees under a federal copyright fee-shifting statute.

     Both decisions were affirmed. The majority found that the SCOTUS had revisited the first sale doctrine such that the copyright suit was precluded on this ground, although Circuit Judge Wardlaw concurred but would sustain the result on the copyright misuse theory. However, all circuit judges on the panel agreed that the fee award was justified, given the district judge found Omega was trying to exert unwarranted control over watches where copyright protection did not exist—a rationale allowing for fee shifting by the lower federal court.

Cases Under Review: California Supreme Court Will Hear Two Prevailing Defendant Fee/Costs Cases On February 4, 2015

 

Tract 19051 HOA And Williams Matters Set To Be Argued.

     On February 4, 2015, the California Supreme Court will hear arguments in two prevailing defendant cases, one involving fee recovery and the second involving routine costs recovery.

     In Tract 19051 Homeowners Association v. Kemp, No. S211596, the Court will consider whether a prevailing homeowner defendant is entitled to recover attorney’s fees under Civil Code section 1354 in an action to enforce governing documents when it is later determined that the HOA was not a common interest development and its governing documents were not properly enacted.

     The second case, Williams v. Chino Valley Independent Fire Dist., No. S213100, concerns whether a prevailing defendant in a FEHA action is required to show plaintiff’s action was frivolous, unreasonable, or groundless in order to recover routine litigation costs.

     Both cases were granted review previously by all seven of the state supreme court justices involved in the germane weekly conferences at the time. Argument is set in Sacramento, and likely will involve two recently appointed members—Justices Cuellar and Kruger.

Judgment Enforcement: Social Security Bank Account, Even If Not Direct Government Deposit, Exempt From Judgment Enforcement Re Fee/Costs Award

 

Judgment Debtor Must Show Social Security Funds Were Involved, But This Was Done.

    Machine signs 7,000 Social Security checks per hour with no writer’s cramp.  1939.  Library of Congress.

       Justice Fybel, on behalf of a 3-0 panel, in Kilker v. Stillman, Case No. G048473 (4^th Dist., Div. 3 Jan. 16, 2015) (published) decided that plaintiffs/judgment creditors could not levy on a judgment debtor’s bank account with Social Security funds. Although judgment creditors prevailed below on the argument that only government direct deposits qualified as Social Security “exempt,” our local appellate court disagreed, finding that even “indirect” deposits were exempt as long as the judgment debtor met his burden to show they were Social Security funds—something accomplished in this one.

Prevailing Party: Prior Appellate Reversal Of Prevailing Party Ruling Justified Entry Of Stipulated Request By Parties To Reverse Order Fee Award

 

No Public Trust Issues Involved, So Joint Request to Reverse Fee Order Granted.

     In Park Plaza II, Ltd. v. American Bankers Ins. Co., Case No. G049334 (4^th Dist., Div. 3 Jan. 15, 2015) (unpublished), the appellate court had earlier reversed a trial court's order dismissing a cross-complaint based on a forum selection clause after determining the clause did not apply. Based on that, the parties filed a stipulated request to reverse the trial court's fee order under Code of civil Procedure 128(a)(8). That request was granted because (1) only a private dispute was involved, (2) no erosion of public trust was involved, and (3) the stipulated reversal has no impact on settlement because the parties only agreed to an outcome already settled on appeal. (In re Rashad H., 78 Cal.App.4^th 376, 381 (2000).)

Section 998: 998 Offer Invalid Where Made To One Plaintiff Wearing “Two Hats” And Offer Not Clear What “Hats” Were Subject To The Offer

 

Gotta Make It Clear Where Plaintiff Wearing “Two Hats.”

     Defendants in an auto accident case moved for recovery of postoffer costs after plaintiffs rejected a Code of Civil Procedure section 998 offer of $5,001 to Jenna Lane in a case involving Jenna Lane, individually and as a guardian ad litem for Allison, and Allison Lane. After defendants admitted negligence, a jury awarded $1,933 to Jenna and $250 to Allison.

     However, the lower court denied the defense motion for 998 postoffer costs, a determination affirmed on appeal in Lane v. Manfred, Case No. G048809 (4^th Dist., Div. 3 Jan. 14, 2015) (unpublished), authored by Justice Rylaarsdam on behalf of a 3-0 panel.

     The reason for finding the 998 offer invalid was that the defense failed to make it clear with respect to Jenna acting in her individual capacity versus her guardian ad litem capacity. There was no unity of interest between these “two hats,” so the failure of the 998 offer to so delineate what Jenna was having to evaluate for 998 purposes was dispositive in both the lower and appellate courts.

Section 1717: Contractual Fees Awarded To Nonsignatory Escrow Holder Was Proper Under Civil Code Section 1717

 

$17,936.40 In Fees/$1,108.10 In Costs Was The Total “Score” By The Victor.

     The next case, Fidelity National Title Co. v. 1575 Adrian Road Associates, LLC, Case No. A140350 (1^st Dist., Div. 5 Jan. 15, 2015) (unpublished), is an illustration of how Civil Code section 1717 mutuality principles will allow a nonsignatory to recover contractual fees as a prevailing party where the other side would have been entitled to fees had it prevailed against nonsignatory—otherwise known as reciprocity or symmetry.

     Briefly told, escrow holder Fidelity, although not a signatory to a Real Estate Purchase Agreement with a fees clause, was sued as if it was by the property sellers in a dispute over return of a deposit in a transaction cancellation situation. Seller lost, and Fidelity prevailed. It then moved for and received $17,936.10 in fees under section 1717 and an additional $1,108.10 in costs, prompting an appeal by the seller.

     Fidelity kept its fees/costs award. The Purchase Agreement clause was broad, applying to a “prevailing party” and containing no language—like some situations—precluding fee recovery to nonsignatories (as in Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC, 162 Cal.App.4^th 858, 896-902 (2008)). In fact, the appellate court determined that section 1717 mutuality principles militated in favor of the award to Fidelity, heavily relying on the post-Reynolds reasoning of two cases from the Fourth District, Division 3, namely, Brown Bark III, L.P. v. Haver, 219 Cal.App.4^th 809, 821-827 (2013) [Aronson, J.] and CB Richard Ellis, Inc. v. Terra Nostra Consultants, 230 Cal.App.4^th 405, 410-411, 415-417 (2014) [Ikola, J.].

Civil Rights/Lodestar/Multiplier: $433,000 FEHA Recovery To Prevailing Plaintiff Affirmed On Appeal

 

Reduction In Requested Hourly Rate and Denial of Multiplier Were No Abuses of Discretion.

     In Shank v. CRST Van Expedited, Inc., Case No. G049844 (4^th Dist., Div. 3 Jan. 14, 2015) (unpublished), Plaintiff won a sexual harassment jury verdict against an employer and employer’s trainer, to the tune of $391,000 in compensatory damages and $1.17 million against employer/$3,500 against trainer in punitive damages, all occurring in San Bernardino County Superior Court. (The lower court threw out the punitive damages, but they were reinstated in plaintiff’s appeal of this aspect of the proceedings below.) The trial court then awarded plaintiff FEHA fees totaling close to $433,000, but lowered the requested $450 hourly rate to $350 and denied the request for a multiplier.

     The fee award was sustained on appeal.

     Justice Thompson, author for a 3-0 panel, determined the reduction in the hourly rate was no abuse of discretion. Many of the declarations supporting the higher rates were from out-of-venue attorneys, with only one being from a San Bernardino attorney, such that the court could use its own experience of Inland Empire hourly rates rather than credit declarations by attorneys practicing outside the county (or inside, from that matter). Plaintiff argued that a federal court had ruled that a judge cannot rely on personal knowledge/expertise alone if other evidence of hourly rates is in the record (Coleman v. Kay, 87 F.3d 1491, 1510 (3d Cir. 1996)), but the appellate court observed that California state law was to the contrary—a judge can rely on his personal experience as far as awarding an appropriate hourly rate. (Ketchum v. Moses, 24 Cal.4^th 1122, 1137 (2001) [one of our Leading Cases].) Judge Thompson also observed that “[w]ithout some analysis of why the instant case is comparable, the fee rate in another case is irrelevant.” (Slip Op., p. 31.)

     Although hinting that the reviewing panel might have come to a different conclusion on the multiplier question, the abuse of discretion standard required affirmance to the multiplier denial, given the lower court found the case was not that complex, FEHA sexual harassment cases were routinely seen (not that novel), and delay in payment based on the contingency nature of a matter is not a mandatory multiplier factor which must be credited. (Ketchum v. Moses, supra, 24 Cal.4^th at 1138.)

Trespass: Absence Of Tangible Injury To Real Property Resulted In Reversal Of Fee Recovery Where Boundary Dispute Resulted In Nominal Damages To Vineyard

 

$117,000 Fee Recovery Under CCP § 1021.9 Went Away On Appeal.

     Belle Terre Ranch, Inc. v. Wilson, Case No. A137217 (1^st Dist., Div. 4 Jan. 13, 2015) (partially published; fee discussion published) involved the legal interpretation of Code of Civil Procedure section 1021.9, which mandates an award of fees to a prevailing party in a livestock/cultivation case “resulting” from a violation of a trespass. The precise question was whether a symbolic, $1 nominal damages award qualified as a compensatory recovery justifying fees under section 1021.9 (involving a winery and adjacent property owner in the Alexander Valley region). The vineyard won a boundary dispute below, garnering a $1 nominal compensatory award and a big $117,000 fees award under 1021.9.

     The appellate court reversed the fee award, determining that nominal damages, without proof of injury to real or personal property, could not support a 1021.9 fee award. In this one, the reviewing court determined that you need real tangible harm to real or personal property as a necessary predicate to a 1021.9 fee award.

Costs/Deadlines: Clerk’s Failure To Satisfy CCP § 664.5 Dictates For Mailing Notice Of Entry Of Judgment Meant Cost Memorandum Was Timely Filed

 

180-Day Rule, Not 15-Day Rule, Applied.

     Notice of entry of judgment is a key concept for determining whether certain subsequent filings are timely in nature. Code of Civil Procedure section 664.5 provides that notice of entry of judgment mailed by the clerk must “affirmatively state it is given upon order by the court” or “under section 664.5.” (Van Beurden Ins. Services, Inc. v. Customized Worldwide Weather Ins. Agency, Inc., 15 Cal.4^th 51, 64 (1997).) Of course, a party can mail notice of entry of judgment to avoid any reliance on a clerk’s action—a practice tip that we endorse in order to get deadlines running.

     The question in Thrifty Payless, Inc. v. Mariners Mile Gateway, LLC, Case No. G049333 (4^th Dist., Div. 3 Jan. 12, 2015) (unpublished) was whether the 15-day or longer 180-day deadline governed a prevailing party’s time for filing of a costs memorandum. A trial court determined the longer period was in play, awarding Thrifty Payless $327,932.71 in costs, most of which comprised preliminary injunction bond premiums. The opposing side did not prevail, claiming the costs memorandum was untimely filed outside of the 15-day period (although it was timely under the longer time frame).

     Justice Moore, on behalf of a 3-0 panel, affirmed the costs award to Thrifty Payless.

     Section 664.5, as interpreted by Van Beurden and other cases, is clear in requiring the magic language in the clerk’s mailing, language that was missing in this case. Losing side argued that California Rules of Court, rule 3.1700 allowed any mailing by the clerk to be sufficient to trigger the 15-day deadline, but the appellate court found that “specific statute controls over the more general” such that the clerk had to comply with section 664.5, which the clerk did not as far as the wording in its notice.

     Of course, a notice from a party could have done the trick, but the only notice received in this one was from the clerk.

SLAPP: $10,800 Fee Award Out Of $65,000 Request No Abuse Of Discretion

 

Award Was Mandatory Under SLAPP Statute, Amount Was Fine.

     Under this category, we have blogged on many cases where mandatory fee awards are appropriate to prevailing defendants under the SLAPP fee-shifting statute.

     In Chapman v. City of Palmdale, Case Nos. B251913/B254125 (2d Dist., Div. 2 Jan. 13, 2015) (unpublished), the appellate court affirmed a mandatory SLAPP fee award to prevailing defendants to the tune of $10,800. No abuse of discretion occurred in light of the fact defendants requested $65,000, with the lower court entering a much lower sum.

POOF!/Sanctions: Appellate Reversal Of Without Leave Demurrer Ruling Meant Taxpayer’s Constitutionality Challenge Was Not Frivolous

 

Lower Court’s $5,000 Sanctions Order Reversed.

    Egyptian taxpayers seized for non-payment of taxes.  H.G. Wells, The Outline of History (1920).  From Wikipedia article on Tax Resistance.

      In Berjikian v. Franchise Tax Board, Case No. B252427 (2d Dist., Div. 7 Jan. 12, 2015) (unpublished), two taxpayers challenged the constitutionality of a Business and Professions Code section that automatically suspended their driver’s license and pharmacist’s license when their names appeared on the Franchise Tax Board’s list of the state’s 500 most delinquent taxpayers. The lower court sustained a demurrer without leave as to taxpayers’ complaint, a ruling reversed on appeal with respect to certain state and procedural due process rights arising out of enforcement of the statutory section. However, because it believed the action was frivolous, the lower court imposed $5,000 in sanctions under Revenue and Taxation Code section 19714, which allows a mandatory sanctions to be imposed where a taxpayer’s position is frivolous in nature.

     The sanctions award, too, was reversed. Given the merits reversal that certain due process violations were adequately pled, the sanctions had to go POOF! also.

Bankruptcy/In The News: Bankruptcy Court Retained Ancillary Jurisdiction To Resolve Attorneys’/Financial Advisor’s Entitlement To Fee Recovery Even Though Bankruptcy Case Dismissed

 

Seventh Circuit Disagrees That Bankruptcy Judge Lacked Jurisdiction To Decide Fee Entitlement Issue.

     In Sweports, Ltd. v. Much Shelist, Case No. 12-14254 (7^th Cir. Jan. 9, 2015), bankruptcy counsel and a financial advisor to the Official Committee of Unsecured Creditors (“claimants”) in a Chapter 11 proceeding filed to recover fees of at least $780,000 after the bankruptcy case was dismissed when the U.S. Trustee moved to convert it to a Chapter 7 proceeding. The bankruptcy judge denied fees based on the notion he did not have jurisdiction because the bankruptcy case had been dismissed.

     Claimants appealed, and Circuit Judge Posner on behalf of a Seventh Circuit panel reversed the fee denial.

     The Seventh Circuit decided, under ancillary jurisdiction principles, that the bankruptcy judge had the ability to determine fee entitlement in post-dismissal proceedings so that claimants could purse state court collection remedies against the debtor (given that the bankruptcy case dismissal revested assets in the debtor rather than the debtor’s estate). Claimants’ delay in not moving for fees pre-dismissal was reasonable because the counsel involved did not want to delay other unsecured creditors’ wish that the case be dismissed so they could post haste sue debtor in state court for collection of debts owed. (Obviously, fairness was also at play here—it was unfair for other creditors to pursue their debts, but then adjudge that claimants could not get similar speedy entitlement rulings post-dismissal so they could pursue state court collection remedies.)

     Circuit Judge Posner observed that there was no final judgment resolving the controversy between the parties. “The order dismissing the bankruptcy didn’t do that. There was a loose end, left dangling—[claimants’] claim for fees.” However, the Seventh Circuit was careful to distinguish post-dismissal fee entitlement (a ruling the bankruptcy judge could make) from an order to pay fees (something which couldn’t be done because there was nothing in the bankruptcy case from which to order payment, so the route to go was state court collection efforts against debtor).

Family Law: Absence Of Adequate Record Doomed Review Of Needs Based/271 Sanctions Awards On Appeal

 

However, The Underlying Fact Were Fun.

     Marriage of Raghuraman, Case No. G049489 (4^th Dist., Div. 3 Jan. 8, 2015) (unpublished), in a clinical way, reiterates that an appeal will not get very far unless an adequate record is presented on appeal. Without that, the appellate court cannot even send a brief back to another party and ask the offending party to correct an offense such as failure to provide adequate record cites—although specific citations are required in appellate briefs.

     In essence, husband challenged a “needs based” Family Code section 2030 award of $133,000 in fees to wife and a “sanctions” Family Code sections 271/1101 award of $50,000 to wife.

     However, husband failed to provide an adequate record on appeal. It was not that he did not provide specific record references, which he didn’t, but he didn’t have an adequate record—which doomed his challenges on appeal.

     Nonetheless, the unpublished opinion makes interesting reading because it was authored by Acting Presiding Justice Bedsworth for a 3-0 panel. For example, he observed that “[appellant’s] brief uses the literary device of an extended metaphor in which the dissolution litigation is likened to a raft trip that becomes a harrowing experience as the raft encounters increasingly more turbulent waters.”

     Udo Keppler, artist.  1913.  Library of Congress.

     The brief also summarized anecdotes from the course of the litigation (husband’s view, of course), including (1) wife’s attorney refusing to accommodate a last-minute business trip husband had to make to Poland, insisting a deposition go forward yet sending an associate to “tread water,” (2) an unexplained bomb scare, and (3) allusions to refusals by wife’s counsel to meet and confer. The bottom line was that the inadequate record was an insurmountable hurdle, with the appellate court presuming that a trial transcript (which was not provided) would present evidence supporting each of the trial court’s challenged decisions. However, because wife only filed a four-sentence respondent’s brief, each side was ordered to bear their own costs on appeal.

Family Law: Dueling 2030/271 Fee Awards, With Wife Netting $7,500, Affirmed On Appeal

 

Husband’s Appeal Rejected, Because Both Parties Engaged In Acrimonious Behavior According To Appellate Court.

     Nasty facts and nasty conduct, no matter what parties may believe, usually do not lead to a reversal and do not lead to a reversal where both parties are perceived to be at somewhat equal “fault.”

     In Marriage of Krog and Cobert, Case No. B246762 (2d Dist., Div. 1 Jan. 6, 2014) (unpublished), wife was awarded 2030/271 fees of $20,000 while husband was awarded 2030/271 fees of $12,500, leaving wife with a “net” award of $7,500.

     Husband appealed, but did not get any further relief based on an abuse of discretion standard. This involved a 6-day trial on fees and costs, involving 120 exhibits (mainly acrimonious correspondence between the parties) and resulting in a 37-page Statement of Decision on these issues. In essence, the appellate court said no change of result because both sides were acrimonious so that the fee awards were no abuse of discretion.

Allocation, Section 1717: James Fleming/Capistrano Unified School District Battle Comes To Roost--$123,233 Fees/$6,60.10 Costs Award Affirmed On Appeal

 

Contractual Basis Was There, And No Apportionment Required Under the Facts.

     The long-standing battle between Mr. Fleming and Capistrano Unified School District (CUSD) has finally ended, we think, in Fleming v. Capistrano Unified School Dist., Case No. G048523 et al. (4^th Dist., Div. 3 Jan. 7, 2015) (unpublished). This concerned Mr. Fleming’s involvement with compiling alleged “enemy lists” while he was at CUSD, resulting in criminal charges which ultimately got dismissed.

     However, despite the criminal resolution, Mr. Fleming sought to recoup his criminal defense expenses and 18 months of severance from CUSD. He did not get it, with a trial judge granting summary judgment against him and awarding $123,233 in fees and $6,660.10 in costs in favor of CUSD.

     The appeal on the SJM merits and fee award were affirmed in a 3-0 unpublished decision authored by Justice Fybel.

     On the fees award, the appellate court agreed that Mr. Fleming sued under Amendment No. 11 with a fees clause. Although Mr. Fleming claimed he sought compensation based on a resignation agreement, the reviewing court found the issues involving Amendment No. 11 and the resignation agreement were intertwined, so no apportionment was required. Fee award affirmed.

­­Homeowner Associations: HOA Properly Denied Fee Recovery Where Superseded Pleading Of Homeowners Based On Non-HOA CC&Rs

 

$164,474.50 Fee Recovery Denial Affirmed On Appeal.

     Patterson v. Sherwood Valley Homeowners Assn., Case No. B254446 (2d Dist., Div. 6 Jan. 6, 2014) (unpublished) demonstrates that the theory of the case may well determine whether fee entitlement for or against a party is in order.

     In this one, HOA won a tree maintenance dispute against a homeowner relating to trees in an adjoining park, governed by different Park CC&Rs versus the HOA CC&Rs of a different ilk. However, homeowner clarified its pleadings to specify the basis for recovery was on the Park CC&Rs. Although HOA prevailed in the dispute, it was disappointed it did not recoup $164,474.50 in attorney’s fees under former Civil Code section 1354(c), now section 5975(c) which allows recovery to HOAs if the suit involves enforcement of governing CC&Rs. The trial judge denied HOA’s request for fees against homeowner.

     The winning argument was that homeowner was seeking to enforce Park CC&Rs, not the HOA CC&Rs. Because the HOA CC&Rs were the “governing” CC&Rs under the fee-shifting statute, HOA was properly denied fees as prevailing under the non-implicated HOA CC&Rs. There you go, everyone, legal distinctions make a difference.

Class Action: Trial Court Did Not Abuse Discretion By Basing Class Counsel Fee Award On Work Effort/Hourly Work By Class Counsel In Prior Case

 

No Abuse of Discretion to Only Award $297,700 Out of Requested $584,055.46-$607,308 Fee Request.

     Nguyen v. Wells Fargo & Co., Case No. B256375 (2d Dist., Div. 4 Jan. 6, 2014) (unpublished) is an interesting class action fee case, given that it basically affirms a trial judge’s decision to base a fee award in a “copycat” class action based on the hours worked and hourly rates awarded in a prior class action resulting in a more “rich” result from a class action settlement perspective but involving very similar claims.

     What occurred here, boiling down all of the facts/circumstances, is that Class Counsel in a “copycat” follow-up wage/hour class action settled a class action case by which defendant would pay the class a $400,000 fund and would reserve up to $600,000 for class counsel fees and costs, with the trial judge to “fix” those fees/costs and with any non-awarded reversion going back to the defense. Twenty-five percent of the class participated in fund distributions, meaning each class member got about $368 for alleged wage/hour violation conduct.

     Class Counsel then moved to recoup between $584,055.46 - $607,308 in fees, with the trial judge awarding $297,700 instead, based principally on the hours and hourly rate awarded in the prior class action where an even larger settlement fund was garnered. No multiplier was awarded, although requested by Class Counsel.

     The Second District, Division 4 affirmed, in a 3-0 unpublished decision authored by Justice Collins.

     The interesting aspect of this decision was that the appellate court upheld the trial judge’s use of the work effort/hourly rates awarded in the prior class action (given that the class action before it was strikingly similar in other ways, the “copycat” terminology used by the defense). Just as opposing counsel time/work effort may be considered when determining the reasonableness of fees requests by plaintiff (Maughan, 143 Cal.App.4^th at pp. 1250-1251 [SLAPP motion case authored by former Presiding Justice Mallano, now retired], the Second District found is was proper for the trial judge to use fees awarded in a prior class action involving similar claims, especially where the prior case was more risky and complex.

     The trial judge also reduced the fee recovery for limited success, given that only the Subclass VI claims settled versus the other subclass claims. Beyond that, the decision to award no multiplier was proper given that the second class action was not unique, was not risky, and was not that complex.

     The lower court also cross-checked the lodestar amount against the percentage of recovery, determining that Class Counsel was receiving a 75% contingency well over the expected amount. Use of POR to cross-check, if not even used as the primary measure, is justified under recent Second District precedent depending on the nature of the class action case. (See Lafitte, 2014 WL 6613057 [discussed in our Nov. 7, 2014 post when unpublished, but later certified for publication].)

     Class Counsel challenged the trial judge’s failure to rule on evidentiary objections, but this was deemed waived because the failure to rule was an implied overruling of the objections.

     Finally, Class Counsel was not entitled to fees on appeal—after all, it was not successful in obtaining any different result.

Reasonableness Of Fees, Section 1717: Judicial Foreclosure And Equitable Claims Arising Out Of Note and Deed Of Trust With Fees Clause Allowed For Civil Code Section 1717 Recovery

 

Amount of Awarded Fees Was Reasonable, Given Trial Judge Only Granted 62% Of Requested Fees.

     In Afra v. Artech Properties, LLC, Case No. B250073 (2d Dist., Div. 7 Jan. 5, 2014) (unpublished), Artech Properties and another party defensed a fraud lawsuit, replete with related equitable claims, as against a party seeking to recover on a $1 million note found to be void for lack of consideration because it was never funded. The note and related deed of trust had fees clauses, with the lower court awarding $120,000 to Artech (out of a requested $193,565.50).

     The appeal of the fee ruling was unsuccessful.

     1717 entitlement was present because the “on the contract” statutory language is to be liberally construed. The claims involved judicial foreclosure of a security interest and equitable estoppel, all based on the theory that the loan documents were void. Section 1717 allows recovery of fees to the prevailing party even where the contract is found to be inapplicable, invalid, unenforceable or nonexistent. (Hsu v. Abbara, 9 Cal.4^th 863, 870 (1995) [one of our Leading Cases].)

     The amount of fees was no abuse of discretion; after all, the trial judge only granted roughly 62% of the fees actually billed to Artech, implicitly reducing the billed hours for duplicative/unnecessary work or work attributable to issues not entwined with contract issues.

In The News . . . . Larry Flynt, Through Hustler Cincinnati, Is Liable To His Brother For $170,652.75 For Fees Incurred In Defeating Forcible Entry/Detainer Lawsuit

 

Brother Prevailed on Key Issue—Continued Possession of Store Space in Downtown Cincinnati.

     Larry Flynt is back in the news. Through a company named Hustler Cincinnati, he brought a forcible entry and detainer action to evict his brother Jimmy Ray Flynt’s store (Cincinnati Hustler on Elm Street) from space in downtown Cincinnati. Larry lost, and the lower court granted Jimmy’s counsel’s request to recoup $170,652.75 in attorney’s fees based on a broadly worded fees clause in the lease.

     The appeal of the fee recovery to the Ohio First Appellate District did not disturb the award in Hustler Cincinnati v. Elm 411, LLC, 2014-Ohio-5648 (Appeal No. C-130754, 1st App. Dist., Ohio) (Dec. 24, 2014).

     Jimmy Flynt’s store did prevail on the key issue of possession, with fees incurred on interrelated claims being fair game for inclusion under the circumstances. The lodestar hourly rates--$250 for a partner and $175 for an associate—were deemed reasonable for commercial litigators in the Cincinnati legal community, with expert testimony supporting the ruling. Although the lower court did indicate the fees were somewhat high, they were reasonable given that the litigation occurred over the space of a few years. (By the way, Ohio law is not much different that California law as far as fee clause interpretation, discretionary apportionment one way or the other, and lodestar fee proof necessary to justify claimed hourly rates/work effort substantiation.)

     BLOG UNDERVIEW—Boy, how time passes by. Larry Flynt is now 72 years old. He was paralyzed as a result of a 1978 shooting by a sniper near a Georgia courthouse where an obscenity case was ongoing. Larry was also arrested for shouting obscenities at SCOTUS, but later discharged, in 1983. He also garnered lots of publicity for wearing the American flag as a diaper in a court proceeding during his colorful career.  Woody Harrelson played Larry Flynt in the eponymously named movie.

Consumer Statutes, Costs, Prevailing Party, Section 998: Car Plaintiff In Song-Beverly/Magnuson-Moss Dispute Properly Denied Fees But Entitled To Costs

 

Car Manufacturer Defendant Prevailed For Fees, But Might Be Liable For Some Routine Costs.

     Actually, we can say that counsel for Mercedes-Benz in this case made some good moves as far as mitigating fee/costs exposure. M-B was embroiled in a gripe from a car owner about excessive multiple repairs. Car owner sued, but defense counsel essentially admitted liability in its answer and also sent a CCP § 998 offer stipulating to a certain sum and offering to repurchase the car in “undamaged condition, save normal wear and tear.” (Car owner did not accept the § 998 offer.) Pursuant to certain trial stipulations, the lower court entered a restitution order in favor of car owner and against M-B to the tune of $68,948.07. Then, car owner sought certain routine costs and attorney’s fees, with the fee request being $74,530 under a fee-shifting provision of the Song-Beverly Consumer Warranty Act (Civ. Code, § 1794(d).) The lower court denied fee recovery and denied costs to car owner in part and awarded M-B some routine costs. Car owner appealed.

    Car owner did get some minor relief in MacQuiddy v. Mercedes-Benz USA, LLC, Case No. B251752 (2d Dist., Div. 8 Jan. 2, 2015) (unpublished).

     Although the Song-Beverly Act has no definition of “prevailing party,” the courts look to see who achieved his/her litigation objectives. Here, car owner did not obtain a civil penalty such that owner’s main litigation objective was not achieved. The fee denial was correct under the circumstances.

     Section 998 fee shifting was obviously in play, but the defense offer was ambiguous in using the term “undamaged condition”—there was no objective basis to permit the 998 offeree to meaningfully evaluate what this language meant.

     However, the routine costs issue is where the rubber met the road. M-B could not be considered the prevailing party in this one, but maybe plaintiff car owner could get some normal expenses (but not fees) because owner did prevail. This one got remanded, but on minor costs issues in one of our first 2015 decisions to review in this New Year.

Prevailing Party/Section 1717: $35,438 Fee Award Under Settlement Agreement Fees Clause Affirmed In Favor Of City Of La Verne

 

City Did Obtain Its Litigation Objectives As To Noncompliance With Garage Conversion Arrangement.

     In 2007, City of La Verne and defendants/owners of a residential property settled an ongoing lawsuit through a written settlement agreement by which the defendants agreed to convert an apartment on their property back into a garage within nine months and agreed that attorney’s fees could be awarded to the “prevailing party” suing to enforce the settlement. Four years went by with no conversion by defendants. City then sued to specifically perform the agreement, with the lower court granting specific performance, issuing an injunction, and awarding $35,438 in fees against defendants pursuant to the settlement agreement’s fees clause.

     Defendants’ appeal in City of La Verne v. Gonzalez, Case No. B254777 (2d Dist., Div. 2 Dec. 31, 2014) (unpublished) was unsuccessful.

     City did obtain its litigation objectives in obtaining the specific performance decree and injunction. Although defendants argued that City did not prevail because it did not obtain disgorgement in rents, the appellate court found that the equitable relief sought by the City was the “substance” of what it wanted. It got it, so it prevailed and was entitled to attorney’s fees as a result.

Costs/Deadlines: Appellate Court Reverses “Double Dip” Costs Award On Appeal

 

Aggrieved Party Timely Objected To Proposed Judgment, So Timely Challenge Made To Duplicative Costs Award.

     In Ecolite Concrete U.S.A., Inc. v. G.S. Levine Ins. Services, Inc., Case Nos. D064178 et al. (4^th Dist., Div. 1 Dec. 31, 2014) (unpublished), a cross-complainant was hit with a costs judgment in favor of party #1 even though party #1 subsequently filed a costs memorandum seeking those same expenses against another party. By the time cross-complainant discovered the “double dip” issue, the time to file a motion to tax costs had expired. However, the aggrieved cross-complainant did object to the proposed judgment and asked to strike the duplicative costs award from the proposed judgment. The lower court did not strike the costs for the proposed judgment.

     The appellate court reversed, finding the “double dip” in costs unacceptable. Cross-complainant did timely object to the proposed judgment containing the “double dip” feature, which preserved the issue for appeal. Because the costs award against another party was final as against another party, the duplicative costs award had to be stricken.

      For the Seinfeld episode on double dipping, click here.