CALIFORNIA ATTORNEY'S FEES

Attorney Lien/Probate: Attorney With Broad Contractual Attorney Lien Did Not Have To File Creditor’s Claim To Preserve Lien Against Trust “After Acquired” Assets

 

Matter Reversed and Remanded to Determine Value of Attorney’s Lien in Trust.

     Novak v. Kay, Case No. B256889 (2d Dist., Div. 5 Apr. 28, 2015) (published) involved an attorney with broad contractual attorney’s fees language in a retainer letter with a client who died but who was determined to be a pretermitted spouse having an interest with a separate trust with assets. The lower court denied the attorney’s effort to enforce the lien through a probate petition, based on the theory that attorney did not timely file a creditor’s claim against deceased client’s estate. The appellate court reversed, determining that an equitable lienholder like attorney did not have to file a creditor’s claim or initiate an independent action to foreclose the lien under Probate Code section 9391. It also remanded the matter so that the probate court could determine the value of lawyer’s interest in the trust.

     BLOG UNDERVIEW—This case is must reading for counsel inserting attorney lien provisions in retention agreements because it quotes the broad contractual charging lien language which was honored on appeal.

Trade Secret: $180,817.50 Fee Award Against Dismissing Trade Secret Misappropriation Plaintiff Affirmed On Appeal

 

Defendant Did Prevail, And Both Objective/Subjective Prongs Of Fee-Shifting Statute Were Satisfied.

     For a non-prevailing plaintiff in a trade secret misappropriation under the California Uniform Trade Secret Act (CUTSA), where objective speciousness and a subjective improper purpose is demonstrated, the prevailing defense can be awarded reasonable attorney’s fees and costs under Civil Code section 3426.4 in the trial court’s discretion. Both the objective and subjective prongs must be satisfied under the leading Gemini decision, discussed in many of our posts under the home page category “Trade Secrets.”

     A lower court awarded a defendant sued by a trade secret misappropriation plaintiff $180,817.50 in fees after plaintiff dismissed a suit hinged on the claim that the defense was improperly hiring away touchtone technology specialists from plaintiff. Plaintiff had dismissed the suit after losing a TRO, sensing it was going to lose on the merits.

     The appellate court affirmed in Cypress Semiconductor Corp. v. Maxim Integrated Products, Inc., Case No. H038555 (6^th Dist. Apr. 28, 2015) (published). Defendant did prevail on a practical level by abandoning an action that was designed to “cow” other competitors into not soliciting potential employee candidates from plaintiff, but only after it had a fear it would lose. Plaintiff’s case was objectively specious because the defense had a right to solicit and there was an absence of evidence of misappropriation, with the theory advanced by plaintiff akin to the inevitable disclosure theory rejected in other California appellate decisions. The subjective element was met even though there was no express finding of bad faith. The appellate court rejected the proposition that a subjective belief in the merits by plaintiff defeated the “improper purpose” shown by plaintiff’s efforts to muscle competitors only soliciting qualified employees as they were entitled to do. This subjective element was further confirmed by plaintiff’s vague specification of the trade secrets at issue (required under CUSTA) and its evasive discovery responses.

Settlement: Trial Judge Erred By Cutting Stipulated Attorney’s Fees Under Proposition 65 Settlement

 

Trial Judge Improperly Cut Stipulated Fees By Almost 50%.

     In Leeman v. Adams Extract & Spice, LLC, Case No. 142321 (1^st Dist., Div. 4 Apr. 28, 2015) (unpublished), the parties reached a settlement agreement in a case arising under Proposition 65, which does allow recovery for attorney’s fees by a successful party under CCP § 1021.5. The case involved allegations that defendant used a carcinogenic chemical in certain food extracts, flavorings, etc. without adequate Proposition 65 warnings. Although incurring fees around $102,000, the parties stipulated plaintiff’s attorneys would receive $72,500 under the settlement. However, the lower court reduced the stipulated fees by about half to $35,839.67.

     Plaintiff did successfully appeal the fee cut. The lower court could not add to or modify the consent judgment pursuant to the settlement unless it set aside the whole settlement—following dictates of CCP § 664.6 and Proposition 65 settlement statutory provisions. (7-Eleven Owners for Fair Franchising cv. Southland Corp., 85 Cal.App.4^th 1135, 1164 (2000); Health & Safety Code, § 25249.7(f)(4).) It could approve the settlement, but could not modify the fee award downward. So, the matter was remanded for an “all or nothing” approval or denial of the entire settlement.

Bankruptcy: Fifth Circuit Endorses Prospective, “Reasonably Likely To Benefit The Estate” Standard For Compensating Chapter 11 Debtor Counsel

 

Court of Appeals Overturns Its Prior Adoption Of Hindsight, “Material Benefit” Standard In Pro-Snax.

    In Barron & Newburger, P.C. v. Texas Skyline, Limited, No. 13-50075 (5th Cir. April 9, 2015) (published), a bankruptcy judge allowed only about $20,000 of a $130,000 fee compensation request by Chapter 11 bankruptcy counsel under 11 U.S.C. § 330, which allows compensation for “services necessary to the administration of, or beneficial at the time at which the service was rendered toward the completion of, a [Chapter 11] case.”  The bankruptcy judge followed a hindsight-based “material benefit” standard requiring a tangible, identifiable benefit set by the Fifth Circuit earlier in In re Pro-Snax Distributors, Inc., 157 F.3d 414 (5th Cir. 1998). 

    Texas Skyline overturned Pro-Snax, endorsing instead a prospectively-based “reasonably likely to benefit the estate” standard followed by other sister circuits (Second, Third, and Ninth Circuits).  It vacated and remanded the fee order for another “look see.”

    Here are the factors used under the “prospective” standard in a synopsis provided by the Texas Skyline en banc panel:

    “In assessing the likelihood that legal services would benefit the estate, courts adhering to a prospective standard ordinarily consider, among other factors, the probability of success at the time the services were rendered, the reasonable costs of pursuing the action, what services a reasonable lawyer or legal firm would have performed in the same circumstances, whether the attorney’s services could have been rendered by the Trustee and his or her staff, and any potential benefits to the estate (rather than to the individual debtor). See, e.g., In re Strand, 375 F.3d 854, 860–61 (9th Cir. 2004); In re Top Grade Sausage, Inc., 227 F.3d 123, 132 (3d Cir. 2000); In re Ames Dep’t Stores, Inc., 76 F.3d 66, 72 (2d Cir. 1996); In re Taxman Clothing Co., 49 F.3d 310, 313–15 (7th Cir. 1995).  Whether the services were ultimately successful is relevant to, but not dispositive of, attorney compensation.”

Fee Clause Interpretation: Parties Sued Individually Were Not Exposed To Attorney’s Fees Where LLC Operating Agreement Narrowly Applied To Members Only

 

Individual Parties Were Only Secondarily Linked To LLC Members.

     In Lintz v. Blue Goose Development, Case No. G048325 (4^th Dist., Div. 3 Apr. 24, 2015) (unpublished), a lower court denied an attorney’s fees request brought against two individually sued parties under an LLC operating agreement fees clause, which provided: “In the event that any action or proceeding is filed by any Member or by the Company as against the Company or any other Member to enforce any of the covenants or conditions hereof, the prevailing party shall be entitled to have and recover of [sic] and from the other reasonable attorneys’ fees.”

     That conclusion held up on appeal. The reason was that although one party was the trustee of a Trust LLC member and another party was the custodian of another LLC member, these parties were sued individually, not in representative capacities, which meant they were not LLC members subject to fee exposure.

Eminent Domain: Appellate Court Finds Flexibility Should Be Afforded To Trial Courts In Determining Which Statutory Demand/Offer Applies In Determining Whether Litigation Expenses Awarded To Property Owner

 

Demand/Offer Consideration Not Limited To First Exchange Battle And Amount Of Compensation Actually Fixed Can Be The Beacon For Litigation Expense Decision In Bifurcated Trial—Bottom Line Is That Exchanges On Continued Trial Date Geared To Final Compensation Fix Can Be Used For Litigation Expense Determination In Bifurcated Trial Context.

     People ex rel. CALTRANS v. Hansen’s Truck Stop, Inc., Case No. A133252 (1^st Dist., Div. 4 Apr. 24, 2015) (published) is a very important addition to the jurisprudence under the eminent domain CCP § 1250.410 litigation expense scheme by which property owners can obtain attorney’s fees and court costs for winning the battle in these generally hard-fought cases.

     First, the facts. This was a bifurcated “trial,” with phase one being whether property owner had a right to pursue damages for access impairment/goodwill loss and with phase two being what amount should be awarded in compensation for these components. As can be expected, various procedural things occurred in these complicated proceedings. Property owner initially demanded $5 million, with the State initially offering $784,000—with the trial judge determining that property owner had entitlement to pursue damages, but the amount of compensation to be fixed in phase two. Then, in phase two, property owner sent an amended demand for $2.99 million, but the State sticking to its original $784,000 offer. The jury came in at $2.5 million in favor of property owner, 85% of the amended $ 2.99 million demand. However, the trial court denied litigation expenses under the eminent domain scheme, based on the notion that they could not be justified via the initial $5 million demand by property owner.

     Second, the law. The appellate court reversed based on its interpretation that the trial judge should have some flexibility in gauging statutory exchanges, especially where these issues are bifurcated, trifurcated, or even subject to more procedurally based nuances. The demand/offer sequence can be calibrated to the continued trial dates, that was the initial ruling on appeal. However, the critical question focused on what happens in a bifurcated trial as far as demand/offer—particularly the statutory language of “trial on issues relating to compensation” for CCP § 1250.410 purposes—does it run from the damages entitlement phase (phase one) or the compensation fixing phase (phase two). Phase two won out, with the appellate court making an analogy to CCP § 998 multiple offers and with a note to the Legislature to maybe make the result more clear given less than clear language in section 1250.410.

     End result: Litigation expense denial reversed, with the trial judge given flexibility to gauge demand/offers, in bifurcated proceedings, at a much later point in time than when the first demands/offers were made.

In The News . . . . Losing Plaintiff Ms. Pao Has A Decision To Make In Gender Discrimination Case Against Kleiner Venture Capital Firm – Drop Any Further Proceedings Or Face Close To $1 Million Fee/Costs Exposure

 

Case Illustrates the Potency of CCP § 998 Offer.

     Lots of press coverage was had on Ms. Ellen Pao’s gender discrimination suit against venture capital firm Kleiner Perkins Caufield & Byers. She lost a jury verdict. However, that is hardly the end of the saga.

     Apparently, much earlier, the defense had sent a CCP § 998 offer to settle the case for $964,502, an amount based on the projected costs of the case. Ms. Pao did not accept the offer such that she faces potential liability for defense expert witness fees, attorney’s fees, and court costs.

     However, the defense—based on the leverage from the 998 offer—has offered to not ask for any fees, costs or expenses from Ms. Pao if she agrees to drop any further actions in the case (such as post-trial motions and an appeal) such that the litigation is entirely over. Quite an interesting offer, but one that is tethered to the powerful leverage resulting from a properly-structured 998 offer.

     Trivial Pursuit:  “One of the stranger points brought up in testimony was how Ms. Pao, before she was married, had dated a colleague for six months without ever realizing he was still living with his wife.”  NY Times, March 27, 2015.

SLAPP: Mandatory Fee-Shifting Statute In Favor Of Defense Does Not Require Consideration Of Financial Condition Of Losing Plaintiff

 

Also, Fee Award Was Fairly Modest.

     Plaintiff lost a SLAPP motion to the defense, which gave rise to the mandatory fee-shifting attorney’s fees statutory provision codified in Code of Civil Procedure section 425.16(c)(1). The trial court granted defendant $7,122.50 in fees and $806 in costs.

     Plaintiff’s appeal in Darling v. Pentecost, Case No. E059958 (4^th Dist., Div. 2 Apr. 22, 2015) (unpublished) was unsuccessful in obtaining any relief from this order.

     The main argument on appeal was that the lower court erred by not considering her financial resources in rendering the award. The appellate court disagreed for several reasons. First, nothing in the mandatory SLAPP statute provided for a consideration of this factor, in contrast to discretionary fee awards in the civil rights area where this is a relevant consideration. “Plaintiff has not cited, and we have not discovered, any authority requiring California courts to consider the unsuccessful plaintiff’s financial status in making an award of attorney fees and costs to a prevailing defendant under the anti-SLAPP statute.” (Slip Opn., p. 10.) Second, plaintiff never provided any evidence of her financial status at any level of the proceedings, with representations not satisfying what she needed to do even if this was a consideration. Third, the absence of a reporter’s transcript made it impossible to determine if the financial consideration was weighed, although the competing consideration to compensate the winning SLAPP litigant was an even more compelling concern.

Special Fee Shifting Statutes: A Reader Takes Us To Task For Our Post On Willow Bend v. City of Holtville

A Reader Comments On Our Post About Willow Bend v. City of Holtville.

     Above:  Neideffer Camp, Holtville, Imperial Valley.  Dorothea Lange, photographer.  Spring 1937.  Library of Congress.

     Attorney Larry M. Hoffman of Vancouver, Washington, the advocate for appellants in Willow Bend v. City of Holtville, has written to us to comment about our post about that case.  Willow Bend involved the Mobile Residency Law (MRL), Civ. Code sections 798 et seq., which law has special fee-shifting provisions.  We welcome comments from readers, and reproduce Mr. Hoffman’s comments in full:

 

     I've just come across your blog. I'm writing to thank you for your efforts.  The blog is as entertaining as it is useful.

     Also, as the lawyer for the appellants in the above-referenced case, I want to let you know I think your analysis of that case in your post dated August 23, 2014 missed the mark.   

     You say the question in that case was  "whether the lower court denial of fees was proper as to cross-defendants, some of whom only prevailed on some MRL-oriented claims and one of whom was dismissed from the entire cross-complaint."  The statement, that "some of [the cross-defendants] only prevailed on some MRL oriented claims" suggests the reason denial of fees was reversed as to only one of the three cross-defendants is that the other two did not prevail on at least one MRL-oriented claim.  But that's not true.  There were two MRL causes of action in the cross-complaint, and both were asserted against and dismissed as to all three cross-defendants.

     The appellate court affirmed denial of the motion as to two of the cross-defendants, not because they did not prevail on an MRL-oriented claim, but because they did not prevail on non-MRL claims, namely:  the causes of action they had asserted against the City which were dismissed when the trial court granted the City';s motion for summary judgment.  The court reversed denial of the fee motion as to cross-defendant Barton Properties, Inc. because it was not a plaintiff; it was a party only because the City named it as a cross-defendant.  According to the Court of Appeal, Barton was entitled to a fee award because it prevailed on every cause of action in which it was a party, and the other two cross-defendants were not entitled to a fee award because they were parties to causes of action in which they did not prevail.

     That brings into focus the holding of the case:  where a plaintiff joins an MRL cause of action with a non-MRL cause of action and dismisses the MRL cause of action prior to trial, whether the defendant qualifies as a prevailing party under the MRL fee statute depends on the outcome of the non-MRL cause of action.

     That holding makes no sense.  The MRL fee statute awards fees to the prevailing party, and it defines "prevailing party" to include the defendant where the plaintiff dismisses prior to trial.  I can think of very good reasons for such a rule.  For example, it helps weed out unmeritorious claims [a plaintiff has to think twice before asserting an MRL claim because if it finds out prior to trial that the claim lacks merit, dismissal will result in a fee award to the defendant].  But that purpose is impaired if the defendant's right to a fee award depends on the outcome of an unrelated claim with which the MRL causes of action happens to have been joined. 

     Moreover, this decision conflicts with two other cases.  In Aleman v. Air Touch Cellular  (2012) 209 Cal.App.4th 495, the court rejected an interpretation of a Labor Code fee provision under which the right to a fee award would depend on whether two unrelated claims were asserted in separate actions or in one action.  And, in  Graciano v. Robinson Ford Sales (2006) 144 Cal.App.4th 140 -- decided by the same court  [4th District, Div. 1 (albeit a different panel)] as Willow Bend -- the court reversed a trial court that awarded the prevailing party fees under the Consumer Legal Remedies Act and Auto Financing Sales Act but reduced the amount because the plaintiff did not prevail on other causes of action.  The court said, "The relevant inquiry ... was simply whether ... [plaintiff] was the prevailing party with respect to her causes of action under the CLRA and ASFA, under which she sought attorney's fees."  Here, the relevant inquiry should have been only whether the three cross-defendants prevailed on the MRL causes of action.

     [Incidentally, this case will probably produce another decision of interest to you and your readers.  Upon remand, the trial court made a fee award and the City has appealed from that ruling.  I believe one of the City's arguments will be that the trial court committed error of constitutional proportions by issuing its ruling, in accordance with the appellate court's instructions, without first giving the City an opportunity to be heard.  Based on my experience, and what I've been told by other lawyers and what I've read in the practice books, it seems that what the trial did in this case -- issue a ruling without first conducting any sort of hearing -- is highly unusual.  Whether required or not, the common practice -- even where the action to be taken is ministerial -- seems to be to wait for a party to make a motion bringing the matter before the court, or for the court to set a hearing, or status conference, on its own, before making any ruling.  If you are aware of cases or treatises discussing whether a hearing is required before the court can act, I'd appreciate hearing about them.]

     Again, thanks for your efforts.  It's a great contribution to the development of the law.

Special Fee Shifting Statute: Attorney’s Fees Award Associated With Domestic Violence Restraining Order Affirmed On Appeal

 

Various Technical and Due Process Argument Rejected.

     In Faton v. Ahmedo, Case No. D066119 (4^th Dist., Div. 1 Apr. 22, 2015) (unpublished), the man in a domestic violence restraining order battle with a lady he dated for a period of time eventually lost the DVRO proceeding and then was ordered to pay attorney’s fees of $5,000 out of a requested $12,655 under Family Code section 6344(a), which states: “After notice and a hearing the court may issue an order for payment of attorney’s fees and costs of the prevailing party.” The order was made after consideration of the lady’s request in a post-DVRO fee proceeding, even though the lady did not check a request for fees in the initial Judicial Council DVRO forms.

     Appellant’s numerous challenges to the fee award did not succeed on review.

     Appellant first argued fees were forfeited because a Judicial Council form requesting fees was not checked. This one did not resonate because statutory attorney’s fees do not need to be pled and proven as damages. (Mabee v. Nurseryland Garden Centers, Inc., 88 Cal.App.3d 420, 425 (1979).)

     Next up, appellant argued that section 6344 does not permit an attorney’s fees request to be made after the conclusion of the DVRO evidentiary hearing won by respondent. However, the appellate court could find nothing in the DVRO statutory scheme intended to deprive a lower court of jurisdiction to award fees even though the request was not made in the initial standard court forms.

     Given that appellant did have an opportunity to contest the fee request at a separate hearing, the due process argument did not gain traction on appeal.

     Finally, the reduction in requested fees by over $7,500 showed that the fee order was reasonable.

In The News . . . . New York U.S. District Court Judge Awards Winning Plaintiff In Faruqi & Faruqi Sexual Harassment Suit Only About 16% Of Her Requested Attorney’s Fees And Costs

 

All Faruqui'd Up? -- Her $1.4 Million Request Dubbed “Patently Unreasonable.”

     A lot of press was generated on the sexual harassment trial involving plaintiff Alexandra Marchuk against Faruqi & Faruqi, LLP, a securities boutique business. She eventually won a small verdict, and then moved to recover $1.4 million in attorney’s fees and costs. On April 20, 2015, the New York federal court district judge ruled that this request was “patently unreasonable,” awarding plaintiff instead slightly less than $223,000 in fees and costs stemming from the mixed verdict in the harassment case.

Intellectual Property: Federal Circuit Vacates And Remands Attorney’s Fees Denial To Vizio In Patent Infringement Case

 

District Judge’s Findings Of Certain Conduct Showed Case Likely Was Exceptional Under Patent Fee-Shifting Statute.

     In Oplus Technologies, Ltd. v. Vizio, Inc., No. 2014-1297 (Fed. Cir. Apr. 10, 2015), a district judge denied attorney’s fees and expert witness fees to defendant Vizio, Inc. in a patent infringement suit even though the federal judge found lots of improper litigation activities by plaintiff (with plaintiff “fessing” up to some of them even on appeal). Vizio appealed the fee denial to the Federal Circuit, arguing it was “exceptional” for purposes of shifting fees and expert witness expenses under 35 U.S.C. § 285.

     The Federal Circuit agreed. Although the district judge suggested both sides were at fault and the defense should have moved for summary judgment sooner, the appeals court determined that the discovery abuses, unprofessionalism, and changing litigation positions by plaintiffs did result in increased expenses and frustrations, requiring a reversal and remand in favor of Vizio.

Off Topic: The Perils Of Blogging

Daily Journal Publishes Co-Contributor Marc’s April 17, 2015 Article On The Perils Of Blogging

     Published by The Daily Journal on April 17, 2015, co-contributor Marc’s article on the legal perils of blogging will interest those of you who blog, or who are considering blogging. With the permission of the Daily Journal, we are making it available to our readers. Click here if you wish to read it. Note you may have to rotate the article in your viewer or enlarge the text to make it easier to read.

SLAPP: Trial Court’s Failure To Document Frivolous/Bad Faith Findings In Minute Order Lead To Reversal Of SLAPP Fee Award Against Moving Defendant

 

However, On Remand, Fee Claimant Can Try For Them Under Another Statute.

     If a defendant loses a SLAPP motion, fees can only be assessed against a defendant (and not defense counsel) if findings are made that the motion was frivolous/bad faith under CCP § 128.5 (which used to be dead, but has made a temporary reappearance). The trial court did assess $3,500 fees against a SLAPP losing defendant and defense counsel after determining defendant brought the motion rather than await a plaintiff’s consummation of her communicated intent to dismiss a harassment petition (which plaintiff did do). The lower court orally did make the necessary 128.5 findings.

     However, the appellate court in London v. Glasser, Case No. B257657 (2d Dist., Div. 5 Apr. 15, 2015) (unpublished) determined that the fee award under the SLAPP statute (CCP § 425.16(c)(1)) was not compliant because CCP § 128.5 required written findings, something missing from the minute order. Also, the SLAPP fee award could not be made against defense counsel under Moore v. Kaufman, 189 Cal.App.4^th 604, 615 (2010).

     Nonetheless, plaintiff had hope—on remand, she could seek fees as a sanction under a harassment fee-shifting statute, CCP § 527.6(r)—since she moved under it, but the trial judge only made the award under the SLAPP statute.

Civil Rights, Substantiation: Attorney Billings To County Client Are Privileged Communications Exempt From Disclosure Under California Public Records Act Exemption

 

Ruling May Have Implications On Substantiation Submitted In Support Of Fee Petitions In California.

     In County of Los Angeles Board of Supervisors v. Superior Court (ACLU), Case No. B257230 (2d Dist., Div. 3 Apr. 13, 2015) (published), the ACLU sought law firm billing records (mainly invoices) sent by counsel to Los Angeles County in several excessive force jail inmate cases. The trial court determined the billing records were not privileged so as to be exempt from the disclosure, but the appellate court disagreed by issuing a writ to the contrary. It held that the records were attorney-client privileged and exempt from disclosure under the Government Code section 6254(k) exemption.

     At the end of the opinion, the appellate court dealt with the argument that the application of the privilege to billing records would “wreak havoc” on the procedures for submitting substantiation in support of a fee request. The 2/3 DCA panel disagreed, because (1) detailed billing timesheets are not mandatory in seeking fees at the state court level, and (2) the attorney seeking fees on behalf of a client could obtain a waiver of the privilege by the client so that the substantiation can be submitted.

     BLOG OBSERVATION AND HAT TIP—Actually, this may have a more interesting impact on fee petition submissions in California federal court, given our experience that district judges demand more detailed submissions (usually preferring to see timesheets with daily entries). A “hat tip” to Carter White of UC Davis School of Law’s Civil Rights Clinic for bringing the case to our attention.

Indemnity: Rideau Decision By 4/2 DCA Now Published

 

Case Affirmed Denial Of Attorney’s Fees Because Fees Clause Was Really An Indemnity Clause.

     On April 2, 2015, we posted on Rideau v. Stewart Title of California, Case No. D065751 (4^th Dist., Div. 1 April 1, 2015), which was unpublished at the time. It affirmed the trial judge’s denial of a fee request after determining that the fees clause was really an indemnity clause not allowing reciprocal recovery under Civil Code section 1717. We can now report that the case was certified for publication on April 14, 2015 and reposted to correct a minor typographical error on April 15, 2015.

Quashing/Lack of Jurisdiction: 2/2 DCA Decides That Parties Quashing Service In California Case Based On Florida Forum Selection Clause Not Entitled To Contractual Fees

 

We Now Have A Firm Split—2/2 And 6^th DCAs Are At Odds With 4/3 DCA In This Area.

    Fault line.  Aerial view of the San Andreas Fault.  Carol M. Highsmith, photographer.  2013.  Library of Congress.

     DisputeSuite.com, LLC v. Scoreinc.com, Case No. B248694 (2d Dist., Div. 2 April 14, 2015) (published) may be destined for California Supreme Court review, because we read it as a concrete split of opinion by different intermediate courts of appeal.

     What happened here is that defendants obtained a dismissal of a California case pursuant to a Florida forum-selection clause based on a motion to quash service. They then moved for contractual attorney’s fees based on a fees clause (to the tune of $84,640), only to be rebuffed by the trial judge.

     The 2/2 DCA affirmed the fee denial order. The key issue for the appellate panel was whether a final resolution of the contractual claims was reached under Civil Code section 1717. Following the Sixth District decision in Estate of Drummond, 149 Cal.App.4^th 46, 51 (2007), the DisputeSuite.com panel agreed only an interim victory was obtained until the merits were resolved in Florida. Although not coming out and expressly saying, the court disagreed with the contrary analysis of the Fourth District, Division 3 in Profit Concepts Management, Inc. v. Griffith, 162 Cal.App.4^th 950, 956 (2008) [see our May 11, 2008 post] and PNEC Corp. v. Meyer, 190 Cal.App.4^th 66, 73 (2010) [see our November 18, 2010 post]—finding a relocation of an active contract dispute from one forum to another was not the equivalent of a final resolution of the contract claims such that a fee recovery was premature.

Lodestar, Multiplier, Reasonableness Of Fees: Save Our Uniquely Rural Decision Certified For Publication

 

Deals With Multiple Issues After Lower Court Awarded Only $19,176 Out Of Requested $231,000 In Fees.

     In our March 19, 2015 post, we discussed the unpublished decision of Save Our Uniquely Rural v. County of San Bernardino, Case No. E059521 (4^th Dist., Div. 2 Mar. 18, 2015). We now can update: the decision was certified for publication on April 13, 2015. The decision awarded only $19,176 out of a nearly $231,000 fee request under the private attorney general statute based on excessive hourly rates, limited success, excessive time on some tasks, and partners engaging in clerical tasks/performing undue legal research.

Class Actions: Empirical Study Of 2007-2012 Of Fee Recoveries In Settled Federal Securities Class Action Cases Yields Some Interesting Findings

 

Study Will Be Published In Upcoming 2015 Edition of Columbia Law Review.

     Law professors Lynn Baker, Charles Silver, and Michael Perino will soon be publishing an article, “Is The Price Right?: An Empirical Study Of Fee-Shifting In Securities Class Actions,” in an upcoming edition of the Columbia Law Review. The article is based on an empirical study of 424 federal securities class action settlements in district courts over the 2007-2012 time frame. Here is a summary of their findings:

     1. Awarded fees are lower and fee cuts more likely in district courts seeing a high volume of securities cases (however, smaller fee awards only occurred in 14.62% of cases, meaning class counsel’s requests were usually honored);

     2. Fee percentages actually awarded did decline more steeply for large settlements reached in cases filed in high volume districts;

     3. District courts cut fee requests based on predilections rather than the merits of the fee requests (for example, in 40.32% of “fee cut” cases, district courts did so only because the requests were “too large”);

     4. The lodestar “cross-check” on the percentage of recovery methodology accomplished little or nothing, with a pure percentage of fund approach dominating (with the authors suggesting the lodestar check may be a waste of time).

     The authors do propose a solution to the whole fee recovery process: class counsel should upfront negotiate a fee agreement that should be reviewed and then blessed or not blessed by the district court (an ex ante approach).

Judgment Enforcement: Judgment Creditor Entitled To Attorney's Fees For Obtaining Judgment Against Third Party Attorney In Creditor's Action

 

Creditor's Action Was Not Truly Independent Suit, But Continuation Of Postjudgment Enforcement Efforts Obstructed By Third Party Holding Judgment Debtor Funds.

     Inequitable circumstances often dictate results in appellate cases, although the decision in ABC Money Transactions, Inc., Case No. G048363 (4^th Dist., Div. 3 April 10, 2015) (unpublished) was hardly a stretch under the governing law.

     There, attorney third party held some settlement proceeds of a judgment debtor in his trust account. After judgment creditor was allowed to levy on that account, attorney appealed the postjudgment levy order, which was eventually affirmed in an earlier appeal. However, before the prior affirmance came down, judgment creditor filed a creditor's suit against attorney to obtain payment of the trust-held funds to judgment creditor. Following a bench trial, the lower court ordered the requested relief and also awarded attorney's fees pursuant to Code of Civil Procedure section 701.020(c).

     The appellate court affirmed in a 3-0 decision authored by Justice Fybel.

     Under section 701.020(c), a third party in a trial judge's discretion can be ordered to pay costs and reasonable attorney's fees to a judgment creditor in establishing liability for failure to deliver property to a levying officer. In this case, attorney filed a notice of appeal from the prior levy order such that judgment creditor was faced with a difficult decision to wait until the appeal was resolved or file a creditor's suit to preserve the trust funds before they were dissipated. The legal issue coalesced into a consideration of whether this was a true independent creditor's suit (no fees allowed, per Ilshin Investment Co., Ltd. v. Buena Vista Home Entertainment, Inc., 195 Cal.App.4^th 612, 629 (2011)) or a mere continuation of the earlier action in which a levy order was being pursued (fees allowed, per section 701.020(c)). In this one, fees were allowable, especially where the third party's conduct along the way showed evinced a inferable strategy to prevent the release of funds to judgment creditor. Affirmed.

Civil Rights: Ninth Circuit Amends But Denies Rehearing In C.W. v. Capistrano Unified School District Case

 

No Material Modifications in Amended Opinion.

     On March 6, 2015, we posted on C.W. v. Capistrano Unified School District, No. 12-57315 (9^th Cir. Mar. 2, 2015) (published), which dealt with an attorney’s fees award in favor of school district and against plaintiff under various civil rights-oriented schemes, namely, IDEA, ADA, Rehabilitation Act, and § 1983. Plaintiff did well to appeal in connection with the fee recovery, although there was a partial concurrence/partial dissent. We can now report that, on April 9, 2015, the Ninth Circuit issued an amended opinion (with no material changes) and denied a rehearing request.

In The News . . . . Boom For Big Law: 2014 Was A Better “Up” Year For A Sampling Of 179 U.S. Firms As Compared To 2013

 

Transactional and Top 15 Firms Did Even Better.

     The results of Citi Private Bank’s “Full Year 2014 Legal Industry Results,” based on a sampling of 179 U.S. firms (78 in the Am Law 100, 47 in the Am Law Second Hundred firms, and 54 in the niche/boutique firm category), show the following trends for 2014 versus 2013: revenue went up 4.5%, net income increased 6%, profits-per-equity partner rose 5.7%, and gross demand increased 1.9%. Actually, firms in the Am Law 50 saw profits-per-equity partner go up even more, by 7.2%. And there is even more: transactional firms (especially M&A based firms) did better; top 15 firms did better; and global firms beat national firms.

Intellectual Property: Sixth Circuit Court Of Appeals Remand District Judge’s Denial Of Attorney’s Fees Under Trademark Fee-Shifting Provision

 

Remanded To Consider Impact Of Octane Fitness’ Reasoning In Patent Area To Trademark Fee-Shifting Statute.

     The Sixth Circuit Court of Appeals, in Slep-Tone Entertainment Corp. v. Karoke Kandy Store, Inc., No. 14-3117 (6^th Cir. April 6, 2015) (published), dealt with a case where defendants won a trademark infringement case brought by plaintiff, which abandoned damages on the eve of trial and sought only equitable relief—with the jury sending back an interrogatory finding no infringement. The defense then sought recovery of attorney’s fees under a trademark fee-shifting provision, 15 U.S.C. § 1117(a), applicable to “exceptional” cases. Because this one had to be remanded based on an erroneous determination that the fee request was untimely, the Sixth Circuit also directed that the district judge consider whether the case was “exceptional” for trademark fee shifting based on the U.S. Supreme Court’s decision in Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S.Ct. 1749, 1756 n. 6 (2014), which announced standards relating to identical language in a patent fee shifting provision. Many commentators had wondered whether Octane Fitness applied to Lanham Act claims, and this case suggests this may be so.

Section 998: Defendants Employee And Employer Were Liable For Expert Witness Fee Expenses After Rejecting 998 Offer In Personal Injury Vehicle Case

 

Joint Offer by Plaintiffs, Unapportioned as to Three Defendants, Was Valid.

     In Montoya v. Mayfield, Case No. B255995 (2d Dist., Div. 4 April 6, 2015) (unpublished), plaintiffs were involved in a serious accident with a truck driven by defendant employee, who was doing so in the course and scope of his employment by defendant employer, who in turn leased the truck from defendant leasing company GSL. Plaintiffs sent a joint, unallocated CCP § 998 offer to all three defendants for $1 million, which was rejected. Eventually, one plaintiff won $1,082,200 and another $294,767.65 from a jury. The trial judge then denied the defense motion to strike plaintiffs’ request for recovery of expert witness fees based on section 998 cost shifting.

     Plaintiffs kept their expert witness fee award in the subsequent defense appeal.

     The defense first argued that the joint offer by plaintiffs was invalid. However, the section 998 offer fell within an exception where a joint offer can be valid if any one plaintiff—here, the one winning almost $1.1 million—obtained a greater amount than the unallocated $1 million offer.

     The defense next contended that the offer was infirm because it was unapportioned with respect to the three defendants (i.e., the employee, the employer, and the truck leasing company GSL)—even though GSL was not an appellant on appeal. Plaintiffs responded that an unapportioned offer is not invalid if defendants are jointly and severally liable. The linchpin of the contrary defense argument was Burch v. Children’s Hosp. of Orange County Thrift Stores, Inc., 109 Cal.App.4^th 537 (2003), which parsed through some Vehicle Code provisions and concluded that a truck owner like GSL was statutorily limited on exposure such that it was not jointly and severally liable. However, the 2/4 DCA panel concluded that Burch did not consider the impact of Vehicle Code section 17153 which made GSL only a guarantor such that the liability of the primary defendants was not truly different in nature. Furthermore, plaintiffs alleged only a single act of negligence against all defendants, such that there was not any varying exposure as contrasted to a situation where negligent supervision was alleged.

Landlord/Tenant: San Diego Trial Judge Awards $29,212 In Unlawful Detainer Case Even Though Only $13,883 In Rental Damages Awarded

 

Moving Attorney Did Some Smart Things Here.

     Because trial court experiences can provide some good tips, we report on the result of an attorney’s fees motion in a recent San Diego County Superior Court ruling in Five Star Synergy, Inc. v. Light Wireless Communications, LLC.

     This was a commercial unlawful detainer case filed on October 2, 2014 and tried on January 8, 2015 before Judge Richard S. Whitney. Landlord prevailed on the possession issue and was also awarded $13,883 in unpaid rent/rental damages as well as routine costs. Landlord then moved to recoup attorney’s fees of $29,212 based on a contractual fees clause in the lease. Landlord recently won them all. In the process, landlord’s attorney did some smart things: (1) they only billed for time through January 2015, not including post-trial work in attending and opposing a lockout stay ex parte appearance request; and (2) they “no charged” for an associate attending the trial with the primary attorney trying the case. These prudent decisions resulted in the entirety of the fee request being granted.

     HAT TIP—The successful attorneys were Tom Nowland and Dan Brodnax, with co-contributor Mike knowing and working with Tom. Congrats to you both and your client, and HAT TIP for providing us the information on the fee result.

Appealability, Sanctions: Dentist’s Failure To Provide Patient Records Results In Sanctions Of $935

 

Sanctions Order Was Appealable, With Substantial Evidence Supporting It.

     Pulling tooth from elephant.  Nov. 3, 1924.  Library of Congress.

     A patient has a statutory right to a copy of medical records on request, with this right enforceable by a special proceeding for an order to show cause allowing the court to impose monetary sanctions in the amount of the patient’s reasonable enforcement expenses, which include attorney’s fees, for a medical professional’s noncompliance. (Code Civ. Proc., § 1985.7; Evid. Code, § 1158.)

     In Weaver v. Do, Case No. B254248 (2d Dist., Div. 8 April 6, 2015) (unpublished), patient obtained $935 in sanctions (attorney’s fees) after a dentist apparently gave her the “run-around” on producing dental records, after admitting he had them and then suggesting they went elsewhere.

     That result was affirmed on appeal. The sanctions order was determined to be appealable given that CCP § 1985.7 has no limitation on appealability. Because the contested issue was custody, this question was factual in nature, with the trial court’s credibility calls against the losing dentist prevailing in patient’s favor on review.

Costs, Employment, Prevailing Party: LLC Defendant Obtaining Dismissal Entitled To Fee Recovery Under Former Labor Code Section 218.5 And Routine Costs In Employment Case Involving Meal Breaks

 

Current Section 218.5, Requiring Bad Faith By Employee, Not Retroactive Before January 1, 2014.

     In Quiles v. Koji’s Japan Inc., Case No. G049238 (4^th Dist., Div. 3   April 3, 2015) (unpublished), employee in an employment case, involving multiple claims including meal breaks, added LLC defendant on an alter ego theory. Eventually, LLC defendant demurred and obtained a dismissal with prejudice from the case. Defendant was then awarded $1,000 (out of a requested $10,176) in attorney’s fees and $3,257.10 in routine costs as against employee, triggering an appeal.

     Nothing changed on appeal, in a 3-0 panel decision authored by Justice Fybel.

     On the attorney’s fees issue, the principal issue was whether an amendment to former Labor Code section 218.5, with the amendment being effective January 1, 2014, changed the result of allowing recovery to employer for prevailing under the former statutory provision. The appellate court concluded “no,” based on an analysis of the legislative amendment, which going forward required bad faith but did not require this for the case in question. With respect to routine costs, plaintiff failed to rebut the presumptive prima facie validity of the costs memorandum submitted by the defense and did not provide an adequate record to establish an abuse of discretion.

Special Fee Shifting Provision: Wel. & Inst. Code Section 14124.76 Determines Cal Dep’t of Health Care Services’ Share Of Medi-Cal Injured Party’s Attorney’s Fees Allocable Dep’t As Far As Lien Reduction For Reimbursement

 

State Department’s Interpretation of Statutory Scheme Rejected.

     Although Aguilera v. Loma Linda University Medical Center, Case No. D066701 (4^th Dist., Div. 1 April 2, 2015) (published) is a very practice-bound, technical decision, we still report on all areas of attorney’s fees.

     Aguilera held that Welfare and Institutions Code section 14124.76’s formula, not other constructs, governed what the California Department of Health Care Services had to credit as far as a Medi-Cal injured party’s attorney’s fees and costs in reaching a settlement when it came to reducing the Department’s lien against the injured party’s settlement. Injured party only wanted the reduction allowed under section 14124.76, while Department wanted much more under other theories. The appellate court went with 14124.76.

Appealability, Family Law: Appealability Of Corrected Judgments On Fee Issues Depends On Whether Substantial Modification Involved

 

Court Rejects Simple “Clerical” Versus “Judicial” Correction Distinction.

     Ellis v. Ellis, Case No, B248860 (2d Dist., Div. 4 April 2, 2015) (published) is a decision of interest to appellate practitioners and family law practitioners as far as when to appeal from certain judgments (including ones involving attorney’s fees), especially when they are modified or corrected.

     In a word, Ellis determined that there must be a “substantial modification” of a prior judgment in order to restart the time for perfecting an appeal. It rejected the reasoning of other courts that simply labeling a change as “judicial” versus “clerical” would determine whether “substantial modification” was effectuated.

Fee Clause Interpretation: Broadly Worded Fees Clause Allowed Fee Recovery Against Unsuccessful Landlord On Tort Claims

 

Clause Was Broad, No Apportionment Necessary For Jointly Represented Co-Defendant, And Awarded Fees Were Reasonable.

     In Ocean View Resort Partnership v. Solanki, Case No. G048728 (4^th Dist., Div. 3 April 2, 2015) (unpublished), plaintiff landlord lost a conventional lawsuit (not unlawful detainer) against defendant tenant based on certain tort claims, with the trial judge later awarding $46,206 in attorney’s fees under a lease contractual fees clause and $2,185.88 in routine costs in favor of the defense and against plaintiff landlord, including defense costs for one of landlord’s employees. That prompted an appeal by landlord.

     The trial judge’s awards were affirmed on appeal, in a 3-0 decision authored by Justice Moore.

     The problem here was that the unsuccessful tort claims were “on the contract” under Civil Code section 1717, meaning the fees expended on these claims were also recoverable. Although complaining that fees expended for landlord’s employee were not allowable, the appellate court found no apportionment was needed because landlord’s theory was that liability between the two defendants was interrelated. (Hill v. Affirmed Housing Group, 226 Cal.App.4^th 1192, 1197 (2014).) With respect to amount of fees awarded, no real argument was presented to reverse what was awarded below.

Allocation, Construction: Rio School District Decision, On Rehearing, Reaches Same Result On Remanding A “Re-do” Of Attorney’s Fees On Public Contract Code Claim

 

Same Result From Decision Surveyed in Our January 28, 2015 Post.

     On January 28, 2015, we posted on Rio School District, a Second District, Division 6 decision where a substantial attorney’s fees award was remanded for redetermination after the appellate court determined that an unclean hands defense was legally not cognizable under Public Contract Code section 7107. However, the appellate court subsequently granted rehearing. However, on April 1, 2015, the same appellate court issued its decision on rehearing in East West Bank v. Rio School District, Case No. B238618 (2d Dist., Div. 6; author: Gilbert, P.J.), reaching the same result as before on the fee issue in a published portion of the opinion.

Have A Wonderful Weekend !

SO THAT'S WHERE EGGS COME FROM, AND HOWARD THURSTON, PROFESSIONAL MAGICIAN, PULLS AN EASTER EGG FROM THE MOUTH OF BUZZIE DALL AT THE WHITE HOUSE EGG ROLLING FESTIVALS. THE GROUP, FROM THE LEFT: JANE THURSTON, DAUGHTER OF THE MAGICIAN; SISTIE DALL AND BUZZIE, GRANDCHILDREN OF THE PRESIDENT; MR. THURSTON; AND MRS. ROOSEVELT.  1934.

Library of Congress.

Private Attorney General: Carian Decision Now Published

 

Prior Unpublished Decision Affirmed Denial Of 1021.5 Fees For Failure To Make Proper Informal Settlement Efforts.

     In our March 11, 2015 post, we discussed Carian v. Dept. of Fish & Wildlife, Case No. D066683 (4^th Dist., Div. 1), which originally issued as an unpublished decision on March 9, 2015. It affirmed a trial judge’s denial of a CCP § 1021.5 fee request based on the fact petitioner did not make informal settlement efforts with the right governmental agency. We can now report that, on April 2, 2015, this decision has been certified for publication.

­­­­Indemnity: Title Company Escrow Disbursement Clause Only Encompassed Fee For Third Party Disputes, Not First Party Recovery

 

Language Of Disbursement Clause Was Crucial In A De Novo Appellate Review Situation.

     At our home page sidebar under “Indemnity,” we have posted many times--and you can gather our posts--on whether language in contractual indemnification clauses gives rise to contractual attorney’s fees recovery. Rideau v. Stewart Title Co. of California, Inc., Case No. D06575 (4^th Dist., Div. 1 Apr. 1, 2015) (unpublished) contains a nice discussion of the cases on this subject, ultimately concluding that the language and structure of an escrow disbursement instruction applied to a third-party indemnity situation, not allowing recovery for a first party recovery (in this case, plaintiff putative condo owners in Mexico losing their $240,000 deposit, ultimately prevailing against the title company for failure to follow disbursement instructions, but losing the argument that fee recovery was allowable in a first party scenario). The result in this case was tethered to the specific syntax of the contractual disbursement clause at issue, but did follow the logic of Baldwin Builders v. Coast Plastering Corp., 125 Cal.App.4^th 1339 (2005) in significant respects. The appellate court particularly focused on parsing the language in one disbursement clause to show that there was a dichotomy between third party and first party claims—with the fees element only applicable to third party claims.