CALIFORNIA ATTORNEY'S FEES

Appealability/Costs: Although Appeal From Judgment Did Allow For Appellate Jurisdiction Of Postjudgment Costs Ruling, Trial Judge Did Not Err By Awarding Prevailing Defendant Costs Of Deposition Before Ruling On Demurrer

 

Deposition Costs Were Reasonable Under The Circumstances.

    In Estate of Gasper, Case No. A142068 (1st Dist., Div. 1 Apr. 28, 2016) (unpublished), an attorney handling the closing of a probate estate sued the title company for improperly closing escrow on a piece of real estate and causing him to incur fees/expenses in cleaning up the fallout.  Title company defendant successfully demurred to attorney’s complaint on standing/duty grounds.  The lower court also awarded defendant the costs of a deposition taken before the pleadings were settled. 

    Defendant first questioned the appellate court’s jurisdiction because the attorney did not expressly appeal the post-judgment motion to tax costs ruling.  (We have many times before suggested that all post-judgment costs and fees orders be appealed separately.)  However, because only a costs ruling was involved, this was subsumed by the previous judgment such that attorney’s appeal from the judgment sufficed.  (Green v. County of Riverside, 238 Cal.App.4th 1368, 1373 (2015).)  But, on the merits, the appellate court determined that it was reasonable to award the deposition costs to defendant even though the deposition took place before the demurrer ruling.

Class Action Two-Fer: Class Counsel Fee Recovery Affirmed In Face Cream Class Action And Plaintiff Class Action Representative Suffers Adverse Fee Award Under The Consumers Legal Remedies Act For Bad Faith Prosecution

 

#1: Choi v. Mario Badescu Skin Care, Case No. B257480 (2d Dist., Div. 3 Apr. 29, 2016) (Unpublished).

     Caption: “Testing cosmetics. Washington D.C. July 10, 1937. The department of Agriculture is making tests everyday in order to get cosmetics under the Pure Food and Drug Act, Mrs. C.W. West seated is helping Mrs. R. Goodman make a test on cold cream and other facial creams.”  Library of Congress.

     In this class action, defendants agreed to settle a nationwide class of face cream purchasers claiming that not all the ingredients were disclosed (which could lead to certain physical injuries). The settlement gave class members a $45 certificate discount, valued at around $2.4 million and excepted out from releases any personal injury claims. Class counsel requested $1.2 million based on a “clear sailing” clause (a clause saying the defense would not challenge such a request), and the lower court awarded $864,324 (which involved a 1.8 multiplier and was 72% of the requested amount). Nine objectors challenged the fee award to no avail on appeal. California has no prohibition on “clear sailing” agreements (Consumer Privacy Cases, 175 Cal.App.4^th 545, 553 (2009)), and no evidence of fraud/collusion was present in the settlement process. Given that there were 80,000 class members, the fee amount was reasonable also.

#2: Roehrig v. Area 55, Inc., Case No. D066790 (4^th Dist., Div. 1 Apr. 29, 2016) (Unpublished).

     This decision is a rare one, where a plaintiff class representative was hit with attorney’s fees for prosecuting a false labeling wine aerator class action—claiming the aerator was not made in the U.S.A.—in bad faith, which can give rise to fee exposure under Civil Code section 1780(e) of the Consumer Legal Remedies Act. The appellate court first delineated that the “not in good faith” language of section 1780(e) encompasses a subjective test, not an objective speciousness test. (Corbett v. Hayward Dodge, Inc., 119 Cal.App.4^th 915, 922-924 (2004).) Now, we recite the facts which sealed the deal for plaintiff class representative: (a) plaintiff owned and purchased numerous consumer goods made in whole or in part outside the U.S., with no problem in making such purchases; (b) plaintiff talked to a friend about the aerator before he purchased it, failing to look at other aerators for “where made” information and seemingly did so in an attempt to “buy” a lawsuit to help the friend; (c) plaintiff tried to change deposition testimony to hide the involvement of his friend; and (d) plaintiff abandoned his claim—leading to an involuntary dismissal—because he failed to list it in his bankruptcy filings before even seeking class certification. Ouch!

Section 998/Requests For Admission: 4/3 DCA Affirms Lower Court’s Refusal To Award Prevailing Defendant Expert Witness Fees Or Costs Of Proof Sanctions

 

Lots Of Monetary Awards Were Requested By The Defense, But Nixed.

Above:  East bound Union Pacific railroad freight train waiting in a siding, Alray, Calif. Coming up through Cajon Pass.  March, 1943.  Jack Delano, photographer.  Library of Congress.

     Ammari v. Union Pacific Railroad, Case No. G052290 (4^th Dist., Div. 3 Apr. 28, 2016) (unpublished), a 3-0 panel decision authored by Acting Presiding Justice Rylaarsdam, contains some good reminders that CCP § 998 offers may be in peril if made too early in litigation and that costs-of-proof sanctions for RFA denials must actually deal with matters proven at trial/calibrated to the fees and expenses actually incurred for specific denials (as opposed to requesting an award of all fees and expenses incurred in the defense of a case).

     What happened in this matter was that a railroad defendant defensed plaintiffs’ negligence claims in a freight train-SUV collision case. The jury simply answered a special verdict “no” on whether defendant was negligent—a verdict which was upheld on appeal. Later, the lower court refused to award defendant $123,000 in expert witness fees after plaintiffs rejected a $25,000 § 998 offer or to award $333,000 in attorney’s fees/$123,000 in expert witness fees for purported bad faith denials of requests for admissions (pursuant to the CCP § 2033.420’s costs-of-proof sanctions). Railroad’s cross-appeal was unsuccessful in changing these post-trial rulings.

     Section 998/Expert Witness Fees Ruling. The appellate court acknowledged that the 998 offer was presumptively reasonable based on the defense jury verdict, shifting the burden to plaintiffs to demonstrate the offer was unreasonable. However, plaintiffs met their burden of proof under the circumstances. Even though there was an early TIR video that possibly showed no liability by defendant, the video was subject to conflicting interpretations such that it did not show plaintiffs knew early on that this was a “no liability” case. Beyond that, the § 998 offer was made too early in the case—two months after defendant answered the complaint, when only one percipient deposition had been taken and when no experts had begun work on the case. All of these factors showed the trial court did not abuse its discretion in finding the 998 offer unreasonable given the stage of the proceedings when it was transmitted. (Elrod v. Oregon Cummins Diesel, Inc., 195 Cal.App.3d 692, 699 (1987).)

     Costs-of-Proof Sanctions Ruling. This ruling was correct for three reasons: (1) plaintiffs reasonably denied causation RFAs even though unreasonably denying blood alcohol contents RFAs; (2) defendant failed to demonstrate that it proved decedents were at fault during trial given the general “no negligence” conclusion by jurors; and (3) defendants never requested fees and expenses specifically pinpointed to the particular RFA denials, instead asking in overbroad fashion for all defense attorney’s fees and expert witness fees.

Cases Under Review: Sheppard, Mullin Conflict Case Accepted For Review By California Supreme Court

 

Case Involved Vacated Arbitration Award To Former Attorneys Based On Violation of CRC 3-310.

     On January 30, 2016, we posted on Sheppard, Mullin v. J-M Manufacturing, a Second District published decision (at the time) vacating a $1.3 million attorney’s fees award to former attorneys after an arbitration based on former attorneys’ conflict found to be violative of CRC 3-310. We can report that the California Supreme Court accepted review on April 27, 2016 (Case No. S232946).

Ethics: New Jersey Supreme Court Carves Out Another Exception To The American Rule On Fee Recovery

 

Attorney Intentionally Breaching A Fiduciary To Non-Client Can Be Held Liable For Fees As Consequential Damages.

     Although our focus is on California cases, we thought it would be instructive to report on the New Jersey Supreme Court’s recent decision in Innes v. Marzano-Lesnevich, No. 074291 (N.J. Supreme Ct. Apr. 26, 2016) (published).

     There, a divided 3-2 state high court decided that there is an exception to the “American Rule” (parties generally bear their own costs unless a contract or statute dictates otherwise, which was not in play) for attorneys who intentionally breach a fiduciary duty, even to a nonclient. In those situations, attorney’s fees may be awarded as consequential damages for intentional fiduciary relationship breaches. No out-of-state authorities were cited, with New Jersey precedents being cited on both the majority and dissenting justices.

         Justice LaVecchia dissented, joined  by Judge Cuff, temporarily assigned.  The dissent argues essentially that the theoretical underpinning to the majority opinion is incoherent (see footnote 2 of the dissent).  If the theoretical underpinning lies in the attorney-client/fiduciary relationship found in malpractice cases, there is no attorney-client relationship here with the plaintiff, meaning that the case extends existing law.  If the theoretical underpinning is that consequential damages result from a breach of fiduciary duty, then fees as damages are extended to a new frontier, and the American Rule is further diluted.

Probate/Sanctions: $76,598.32 In Attorney’s Fees For Filing Of Frivolous Probate Petition Under CCP § 128.7 Affirmed On Appeal

 

Plethora Of Procedural Issues Considered In 2/1 DCA Unpublished Opinion.

     Enlisted men going through obstacle course.  Daniel Field, Georgia.  July 1943.  Jack Delano, photographer.  Library of Congress.

     In Kerkorian v. Mandekie, Case No. B252861 (2d Dist., Div. 1 Apr. 26, 2016) (unpublished), an attorney’s fees award of $76,598.32 (the full request) was granted as a CCP § 128.7 sanction for the filing of a frivolous probate petition. Despite numerous procedural challenges, the 2/1 DCA rebuffed them in affirming the order as follows:

· Safe Harbor Period. Because the rescheduled hearing did allow for running of the 21-day safe harbor period, there was no infirmity on this ground.

· Failure to Indicate Hearing Date and Time In Original Motion Papers. This requisite only needs to be met if a motion date and time are ascertainable; they were not at first, but the rescheduled motion papers were compliant in indicating a location, date, and time.

· Failure to Serve Judicial Notice Request Contemporaneously With Motion Papers. Failure to do this does not render the motion defective (because a judicial notice request is technically not among the required motion “papers”), but the trial court can decide not to consider them at the hearing.

· Refusing to Read Opposition Memorandum After Page 15. For most civil law and motions, practitioners in California state court know that opposition memoranda are limited to 15 pages unless one is dealing with certain particular motions or the lower court allows for greater page limits. The trial judge here refused to read after page 15 of an excessive opposition brief. The appellate court found this was no abuse of discretion, determining that the 15-page limit did apply to probate proceedings. See CRC, rule 3.10.

· 128.7 Motions Contemplate a Hearing With Oral Argument. This principle was found applicable given the severity of a sanctions request.

Deadlines/Section 1717: 4/1 DCA Follows Kaufman v. Diskeeper Corp., Agreeing Only Fee Motion Necessary For Purposes Of Recovering Attorney’s Fees

 

 

Followed In Unpublished Opinion Issued On April 26, 2016.

 

     On August 21, 2014, we first posted on Kaufman v. Diskeeper Corp., 229 Cal.App.4^th 1, 8-9 (2014), which held that a costs memorandum did not have to be filed as a condition precedent for purposes of a litigant being able to seek recovery of attorney’s fees. Instead, CRC 3.1702 only requires the filing of a timely motion. We can now report that the Fourth District, Division 1 has followed Kaufman in an unpublished opinion, Campman v. Neborsky, Case No. D068357 (4^th Dist., Div. 1 Apr. 26, 2016) (unpublished), where a litigant won $4,000 in attorney’s fees after a motion for reconsideration brought Kaufman before the lower court’s consideration.

Fee Clause Interpretation/POOF!/Prevailing Party: Remand To Clarify Damages Awarded To Nonprevailing Plaintiff Real Estate Buyers Meant Substantial Fee Award To Prevailing Real Estate Seller Needed To Be Revisited On Remand

 

Award of Over $477,000 in Fees/Costs Went POOF!

     In Fong v. Sheridan, Case Nos. A144286/A14522 (1^st Dist., Div. 1 Apr. 21, 2016) (unpublished), buyers of seaside property sued seller and a dual broker agent for breach of contract, intentional misrepresentation, negligent misrepresentation, and rescission after dual agent told buyers at a pre-sale stage that foul odors in the house were attributable to “sea air,” when instead they emanated from a post-sale discovery of a buried oil and septic tank on the property.

     Dual agent settled for $275,000, which was confirmed as a good faith settlement. After a bench trial, seller prevailed on the contractual and intentional misrepresentation claims, but was found vicariously liable on the negligent misrepresentation claim for the misrepresentations of the dual agent. The trial court awarded $91,635 to buyers, but found nothing was owed after offsetting the $275,000 settlement with dual agent. The lower court then found that seller was the prevailing party and awarded him $456,032.50 in attorney’s fees and $21,057.35 in costs based on a fees clause in the real estate purchase agreement.

     Buyers appealed, and obtained a reversal/remand on appeal.

     The lower court’s statement of decision was deficient in not identifying why it awarded what it did in compensatory damages to buyers on the negligent misrepresentation claim. However, buyers also claimed they were the prevailing parties for fee award purposes. With respect to the contractual fee win by seller, the appellate court agreed that buyers could not be the prevailing parties. With respect to the negligent misrepresentation claim, buyers might be the prevailing parties based on a broad fees “arising out of” fees clause depending on what the trial court does on remand as far the damages recalculation. So, the damage “redo” also meant that the lower court had to do a revisit of which side prevailed after some remand work.

In The News . . . . More American Top Corporations With Large In-House Legal Departments Are Pursuing Alternative Fee Arrangements With Outside Counsel

 

AFAs Accounted For 35.6% Of Outside Counsel Spending For Top U.S. Corporations in 2015.

     Law360 reports that BTI Consulting Group has published a recent survey that shows out of $21.3 billion spent by chief legal officers inside top U.S. corporations, alternative fee arrangements to hourly rate arrangements accounted for 35.6% of total spending in 2015, up 20.5% from 2012. Also, outside counsel AFA spending for corporations increased at a steady 19.8% clip since 2012.

     Other recent reports and survey by consultant/polling companies further show that U.S. corporate counsel are paring down the number of outside counsel used and are consolidating their outside counsel into “hubs” which work together to provide services to the client corporation.

Civil Rights: Plaintiff Employer Denied Fees Against Labor Commissioner Under Civil Rights Statute Because Plaintiff’s Due Process Rights Were Not Violated

 

No Showing Of Bad Faith In Labor Commissioner’s Position on Employment Issue.

     In Happy Nails & Spa of Fashion Valley v. California Labor Commissioner, Case No. D067391 (4^th Dist., Div. 1 Apr. 25, 2016) (unpublished), a plaintiff ultimately prevailing on an employee/independent contractor classification issue sought to recover attorney’s fees from the Labor Commissioner, seeking recoupment under the federal civil rights statute for due process violations. Both the trial and appellate courts rebuffed this request. Although plaintiff ultimately prevailed in showing that independent contractor status was the “binding” end result, nothing showed the Commissioner pursued the classification action in bad faith—especially given that the ruling was based on the collateral estoppel impact of an administrative ruling, with collateral estoppel being a rather elastic doctrine depending on the circumstances of record.

Fee Clause Interpretation/Section 1717: Seller Prevailing Under Purchase/Sale Agreement Fee Clause Entitled To $95,707 Fee Recovery Plus Some Routine Costs

 

Multiple Challenges By Losing Buyer Rejected By 2/6 DCA.

     Real estate seller in Weinstock Porter Development, LLC v. Teixeira Farms, Inc., Case No. B253455 (2d Dist., Div. 6 Apr. 25, 2016) (unpublished) defeated buyer’s rescission claim based on environmental contamination where the record showed the parties entered into a release of claims because seller decreased the purchase price by $200,000 and buyer agreed to purchase environmental contamination insurance. After winning, seller received $95,707 in attorney’s fees and $1,406.50 in costs against losing buyer based on a fees clause in the Purchase and Sale Agreement.

     Buyer’s multiple challenges to the fees/cost award were rejected on appeal.

     First, buyer claimed that the lower court had no jurisdiction to award fees after the notice of appeal was filed. Wrong. (See Bankes v. Lucas, 9 Cal.App.4^th 365, 368-369 (1992).)

     Second, buyer argued that the fee clause in the release agreement did not encompass the rescission dispute, but the appellate court disagreed because the rescission claim was within the scope of the PSA fees clause. It also noted that there was no need to weigh in on the issue of whether raising a contract permutation as an affirmative defense gave rise to fees, noting this issue has divided different divisions of the Second District as far as the proper result.

     Third, the hourly rates claimed by defending counsel, after the insurance carrier withdrew its defense at lower hourly rates, did not offend the appellate court given the fact that negotiated counsel – carrier rates are much lower in nature than normal “market” rates.

     Finally, it did not matter if the fees were covered by an insurance carrier given the broad definition of “incurred” for fee shifting purposes under Civil Code section 1717.

     Fees/costs award affirmed.

Costs/Section 998: 998 Offer Was Invalid In Requiring Plaintiff To Sign An Unspecified Settlement Agreement, While Mediation Costs Were Improperly Taxed Where Court Believed They Had To Be Disallowed

 

Matter Remanded To Reconsider Routine Costs Awardable To Plaintiff.

     Sanford v. Rasnick, Case No. A145704 (1^st Dist., Div. 2 Apr. 25, 2016) (published) involved a situation where plaintiff motorcyclist sued defendants owner/driver of a car. Defendants made a joint, unapportioned pretrial CCP § 998 offer of $130,000, but plaintiff recovered less after various offsets and pre-offer costs were factored into the equation. However, the trial judge awarded certain expert witness fees and costs to the defense based on the conclusion the 998 offer was valid and also disallowed certain routine costs to plaintiff as the prevailing party.

     Both of the post-trial rulings were reversed on appeal.

     As far as the award of expert and other costs to the defense was concerned, that went away because the 998 offer was invalid. Although asking for narrow releases relating to the case was within the proper ambit of 998, the defense request for a settlement agreement—with undefined, unexplained terms—was too broad in nature, leaving the plaintiff at having to guess about what was being asked for. The lower court’s deletion of mediation fees/expenses from the costs award to plaintiff was error because these are costs that can be awarded in the discretion of the court. However, the lower court never exercised its discretion because of the belief that mediation fees/expenses were not compensable, meaning a remand was necessary so discretion actually could be exercised one way or the other.

Mediation/Section 1717: Defendants Improperly Denied Fees For Failing To Satisfy So-Called “Binding Mediation” Condition Precedent In Fee Clause

 

Also, Two Defendants Entitled To Fee Recovery Based On Alter Ego Allegations And Plaintiff’s Failure To Ever Dismiss/Abandon The Theory.

     In Kern Health Systems v. Allied Mgt. Group Special Investigation Unit, Inc., Case No. B258326 (2d Dist., Div. 7 Apr. 25, 2016) (unpublished), plaintiff lost contractual and tort claims after a jury trial against three defendants, but the lower court still awarded $1.38 million on a negligent misrepresentation claim against all defendants based on its perception that the jury intended to award recovery on this claim in its special verdict. The trial judge also denied all three defendants’ requests for an award of attorney’s fees for defeating plaintiff’s contractual claim where a fees clause was involved in an audit engagement agreement. (One defendant requested recovery of $2.385 million in fees, while two other defendants—alleged to be “alter egos” of the first defendant--asked for a total of $1.245 million in fees.)

     Defendants won a clean sweep on appeal, with the compensatory award going away and with a remand to allow them to seek fee recovery again.

     Defendant #1 was denied fees because the lower court did not believe that it satisfied a so-called contractual condition precedent for court fee recovery “if a legally binding mediation does not resolve legal disputes,” although indicating that it would have apportioned some fees and lowered the requested attorney hourly rates but for its ruling on the mediation language. The appellate court did not view this quoted contractual language as a binding condition precedent, because (1) it was not worded strongly enough to be one, (2) construing it as such made no sense given that a binding mediation result is equivalent to an arbitration award such that no litigation would ever be needed giving rise to fees (an oxymoronic result under the circumstances), and (3) plaintiff’s own pre-dispute conduct in praying for fees in the suit tended to bolster that mediation was not a precondition for recovery of court fees.

     As far as the other two defendants were concerned, plaintiff never voluntarily dismissed the alter ego allegations and actually beat back an oral nonsuit motion relating to these allegations. This gave rise to Civil Code section 1717 fee recovery under Reynolds [one of our Leading Cases, see home page on upper left hand side].

     However, in remanding, the reviewing court left it up to the trial judge to decide whether to apportion as it indicated it might do with respect to any of the defendants (especially defendant #1).

Costs: Trial Judge Properly Awarded Expert Deposition, Court Reporter, And Service Rush Charges After Plaintiff Failed To Beat CCP § 998 Offer

 

Plaintiff Did Not Shift Burden Of Correctness Accorded To Verified Costs Memorandum.

     Plaintiff, in a lobby slip and fall, failed to beat a CCP § 998 offer from defendant owner/manager of the building lobby. The lower court awarded certain routine costs to the defense, prompting an appeal in Alexander v. Wealth Properties, Case No. A139093 (1^st Dist., Div. 3 Apr. 25, 2016) (unpublished).

     The appeal was not successful on this point (or the merits for that matter). A verified costs memorandum is accorded an aura of correctness, with the opposing party needing to present competent opposition of a nature which would shift the burden back to the costs claimant. Here, costs in deposing plaintiff’s experts were expressly recoverable under section 998 as were court reporter costs under the routine costs shifting-statute. As far as costs for rush orders on service for certain items, plaintiff only presented assertions that these costs were not necessary or reasonable—far wide of the mark to get a court to deviate off presumption of correctness accorded to items contained in a verified costs memorandum.

Family Law: $14,000 Fee Award Against Ex-Husband Reversed Because His Changed Financial Situation Justified Spousal Support Modification

 

Although Not Directly Raised, Appellate Court Entertained Out Of Equity Based On Husband’s Financial Change.

     In In re Shepherd, Case No. H039876 (6^th Dist. Apr. 21, 2016) (unpublished), ex-husband and ex-wife in a highly contentious dissolution proceeding had spent about $700,000 between the both of them along the way. This appeal involved ex-husband successfully challenging a refusal to grant him spousal support modification when his financial situation had changed because he owed repayment of some hefty employer-brokerage company loans. The trial judge had essentially left husband destitute from the spousal support orders. The reversal of the spousal support order also necessitated overturning a $14,000 fee award to wife despite the fact that husband may not have challenged it directly. The appellate court believed this was the fair thing to do, review the fee award and reverse it based on husband’s change in financial situation.

Consumer Statutes/Deeds Of Trust: Where Borrower Was Granted Erroneous TRO Under Homeowner Bill Of Rights, $14,000 Fee Award Under Bill Of Rights Went POOF!

 

Predicate for Fee Entitlement Evaporated.

     In our June 14, 2015 post, we discussed the Third District’s decision in Monterossa v. Superior Court, 237 Cal.App.4^th 747, 754 (2015), which decided that attorney’s fees were properly awarded to a borrower obtaining a preliminary injunction against lender “dual tracking” under Civil Code section 2924.12(i) (the Homeowner Bill of Rights fee-shifting statute effective January 1, 2013). Monterossa’s reasoning recently was extended to allow a fee award to a borrower obtaining a temporary restraining order (TRO) under the Homeowner Bill of Rights. (See Lac v. Nationstar Mortgage LLC, 2016 U.S. Dist. LEXIS 40633 at *10 (E.D. Cal. March 28, 2016).)

     Borrower in Zadovsky v. Wells Fargo Bank, N.A., Case No. A140939 (1^st Dist., Div. 3 Apr. 20, 2016) (unpublished) won a TRO for lender “dual tracking,” but lost a preliminary injunction battle because the lower court determined that the property was not owner-occupied so as to be ineligible for Homeowner Bill of Rights protections. However, in the TRO order, borrower was awarded attorney’s fees of $14,219 for the TRO win under the Bills of Right fee-shifting statute.

     The fee award went POOF! on appeal because nothing in the TRO, either, established borrower’s relevant property was owner-occupied such that the TRO was issued in error. Based on this, the attorney’s fees award evaporated also. (Borrower argued the appeal was moot because the property had been sold such that the appeal was moot, with the appellate court agreeing with respect to the TRO merits but disagreeing with respect to the fee exposure still faced by lender under the fee component of the TRO—with this latter aspect allowing for scrutiny of the propriety of issuing a TRO in the first place.)

Class Action/Substantiation Of Reasonableness Of Fees: Class Counsel’s $2.3 Million Fee Award Reversed, With Class Counsel Ordered To Produce Redacted Timesheets To Defense For Review At District Court Level

 

District Judge Erred In Basing Fee Award Upon Only In Camera Review Of Timesheets Never Provided To The Defense.

    Although occurring in a class action setting, this next case may have broader due process implications for cases in other areas of the law.  Time will tell on this prediction.

    In Yamada v. Nobel Biocare Holding AG, No. 14-55263 (9th Cir. Apr. 20, 2016) (published), class counsel was awarded more than $2.3 million in attorney’s fees based on a settlement agreement provision, CCP § 1021’s “substantial benefit” doctrine, and CCP § 1021.5 (California’s private attorney general statute).  In awarding fees, the district judge engaged in in camera review of timesheet submissions after class counsel refused to turn them over to the defense for review in connection with the fee motion.   The district judge then reduced the requested fees by 20% for degree of success, since plaintiffs only prevailed on one out of 5 claims (their UCL claim).  The district judge also cross checked the requested lodestar with a percentage of recovery methodology.

    The defense challenged the award, mainly on the due process ground.

    That challenge was effective.  The Ninth Circuit determined that the defense had a right to review appropriate redacted timesheets (excising privileged information) for purposes of determining whether to object to the fairness and reasonableness of class counsel’s fee request.  The award was reversed so that this timesheet review could take place for purposes of defense scrutiny of the fees request.

    However, the fee award was properly reduced for degree of success, and the district court had discretion to cross check the lodestar even though such a cross-check was only discretionary in a case where class benefits could not be easily monetized.

Family Law: Ex-Husband’s Second Pendente Lite Fee Request For Appeal Work And For Civil Lawsuit Expenses In Ex-Wife’s Parent Suit Properly Denied

 

Husband Already Got Nice First Pendente Lite Award And Trial Court Did Not Abuse Its Discretion In Concluding Parent Lawsuit Was Not “Related” To Family Law Proceeding.

    Going to the well too often can have consequences, as the fourth appeal in Sweeney v. Evilsizor, Case No. A144781 (1st Dist., Div. 1 Apr. 19, 2016) (unpublished) demonstrates.

    There, ex-husband had gotten an initial pendente lite fee award of $125,000, which was affirmed in a third appeal.  Ex-husband then sought another $12,600 in fees for appeals work and another $28,589 in fees incurred to fight ex-wife’s parents’ civil lawsuit over a loan.  The lower court denied both requests, prompting the fourth appeal.

    The fee denial orders were affirmed.  Because ex-husband admitted that the trial judge got it right on the initial pendente lite award, it was hard to argue he got it wrong when denying fees the second time around as far as knowledge of the applicable needs-based fees principles under the Family Code.  With respect to fees for the parents’ suit which he claimed was one “related” to the dissolution matter (with fees being allowable for “related” matters under Family Code section 2030(c)), the lower court did not abuse its discretion in concluding the matter was not “related” at that juncture in the dissolution action although that determination could be revisited and changed in the future if the lower court found it was appropriate to do so.

     Note:  We posted on an earlier appellate case between Sweeney and Evilsizor on October 28, 2014, involving affirmance of a sanctions order.

Intervenors: CPUC Did Not Err In Determining Two Intervenors Were Eligible For Intervenor Compensation Eligibility, But Remanded To Make Sure Its Reasoning Was Proper

 

Public Utility Code Section 1803 Was Involved, With Appellate Court Determining Its Scope.

    In New Cingular Wireless PCS, LLC v. Public Utilities Comm. of California, Case No. A144005 (1st Dist., Div. 4 Apr. 19, 2016) (published), the Public Utilities Commission of California (CPUC) awarded fees and costs to two intervenors under Public Utility Code sections 1802-1803 for their work in a complex telecommunications merger review proceeding dismissed by the CPUC as moot for reasons unrelated to anything that happened in the proceeding itself.  One of the merger proponents group challenged the fee award under section 1803, which allowed the CPUC to award reasonable advocate’s fees, expert witness fees, and routine costs to any customer who makes a “substantial contribution of the adoption, in whole or in part, of the commission’s order or decision.”

    The appellate court denied the writ challenges because it believed that the intervenors were eligible for intervenor compensation because the CPUC did decide to adopt some position being advocated by the intervenors—construing the “order or decision” language despite the subsequent mootness developments.  However, based on the reasoning used by the CPUC to get to its award, the reviewing court remanded for a relook based on the guidance in reasoning it provided.  This one is must reading for intervenors or objectors to awards in this narrow area of the law.

Homeowner Association/Prevailing Party: $101,803.15 To Prevailing HOA Affirmed On Appeal Where Lower Court Found HOA Could Fine For Short-Term Vacation Rental Activities But Awarded Fairly Small Fines

 

Prevailing Party Under Davis-Stirling Act Is A Pragmatic Inquiry, With Fees Mandatory If Prevailing Status Is Properly Made.

    Almanor Lakeside Villas Owners Assn. v. Carson, Case No. H041030 (6th Dist. Apr. 19, 2016) (published) involves a $101,803.15 fees/costs award to a prevailing homeowner association against homeowners who were found to have violated short-term vacation rental CC&R provisions but were only fined $6,620 in fines out of a requested $19,979.97.  Homeowners were not happy, but got no solace from the Sixth District on appeal.

    The appellate court concluded that the Davis-Stirling Act fee shifting provision is mandatory in favor of a prevailing party, although a pragmatic consideration governs through a judicial determination of what side achieved its litigation objectives in the case.  The trial judge concluded that HOA did, by enforcing the CC&Rs and getting some fines.  The fractional damages award did not negate the broader impact of the ruling that the CC&Rs could be enforced and fines levied.  Nothing in the Act supported the proposition there had to be a reduction based on the degree of success, unlike in other areas (such as civil rights).  Homeowners creatively argued that the damages award was under the $25,000 superior court threshold allowing for discretion to not award any fees at all pursuant to Code of Civil Procedure section 1033(a), but the reviewing court found that section 1033 did not apply in the Stirling-Davis Act context (as opposed to being applicable to FEHA actions).  The appellate court did agree that the lower court could reduce the amount of fees for incomplete success, but was not mandated to do so.  Fee/costs award affirmed in this particular situation. 

Probate: Probate Order Dividing Community Property To Pay For Conservatorship Fees, Inclusive Of Attorney’s Fees, Was Legally Erroneous Under Probate Code Section 3089

 

Section 3089 Deals With Conservatee Support and Maintenance, While Sections 2640 and 2647 Concern Conservatorship Fee Compensation.

     In Conservatorship of Bower, Case No. G050468 (4^th Dist., Div. 3 Apr. 15, 2016) (unpublished), our local Fourth District, Division 3, courtesy of authoring Justice Bedsworth on behalf of a 3-0 panel, dealt with a probate court’s order dividing community property of a husband conservatee (who had serious dementia/associated problems) and his wife after wife failed to comply with the letter of an order of support and maintenance for conservatee by directly paying professional conservator fees and conservatorship attorney’s fees. The probate court was irked that wife had made direct payments in noncompliance with the Probate Code section 3089 support/maintenance order, acting “like Frank Sinatra, she gets to do it her way.”

    The appellate panel reversed because the probate court committed legal error of a prejudicial nature by ordering a community property division under section 3089, which focuses on the support and maintenance needs of the conservatee rather than compensation due to conservatorship professionals. In the latter situation, fee compensation is governed by Probate Code sections 2640 and 2647, which has very important and different safeguards/protections. Nothing in section 3089 indicates that community property divided sans divorce was intended as a way of paying professional fees attendant to conservatorships. Reversed and remanded to determine if wife’s actions in paying conservatorship fees was necessary for the support and maintenance of her husband conservatee.

In The News . . . . Robin Thicke And Pharrell Williams Officially Dodge Attorney’s Fees Exposure In Marvin Gaye Copyright Infringement Suit

 

However, They Were Ordered To Pay 65% Of Certain Litigation Expenses.

    On March 19, 2016, we posted on U.S. District Judge John A. Kronstadt’s tentative decision to deny fees to Marvin Gaye’s estate in a copyright infringement case in which Robin Thicke and Pharrell Williams were found to have infringed on one of Mr. Gaye’s iconic songs later in the popular “Blurred Lines” song.  Well, on April 12, 2016, the district judge finalized his decision that no fees were warranted, because the case presented novel issues and it was far from clear who would win—with merely prevailing not being enough to recover under the copyright fee-shifting statute.  However, District Judge Kronstadt did order resubmission of papers so that the winner could recoup 65% of expert witness fees, deposition transcript costs, and certain service of process expenses. 

Prevailing Party: Make Sure You Submit Fee Entitlement Document Before The Trial Court

. . . . If Not, You May Lose Where A Sole Missing Documentary Page Is The Basis For A Fee Recovery.

    This next case is a real ouch!  Not just a puncture wound, but a real wowie.
    In short, the plaintiff loaned money under a promissory note and obtained a $1 million compensatory award against the borrower defendant.  The note apparently had a fees clause, although a contemporaneous pledge agreement also had a fees provision.  Plaintiff moved to recoup $337,692.50 in attorney’s fees for the win under the note, but the trial judge denied the request.  The reason?  The note submitted to the lower court did not have a fees clause in it, because the second page was missing from the submission before the superior court. 
    The appellate court affirmed the fee denial in Segal v. Shovlin, Case No. E062581 (4th Dist., Div. 2 Apr. 12, 2016) (unpublished).  The submission of the note did not include a page with the fees clause, and plaintiff only prevailed on the note, not the pledge agreement which had a narrow fees clause which only applied if a litigant prevailed under the pledge agreement (which did not happen).  The Segal court found that the lower court did not have to consider the full version of the note introduced at trial (which presumably had the fees clause) when it came time to entertain the later fee motion.  Although plaintiff’s attorney did move for reconsideration under CCP section 1008 (a request denied by the trial court), the reviewing court determined that there was a lack of reasonable diligence and the lower court was not required to treat the motion as one for excusable neglect under CCP section 473.  Fee denial affirmed; and, again, we say, ouch!

 

     

Prevailing Party/Section 1717: Defendant Prevailing On Tort Claims After Voluntary State Court Dismissal Entitled To $124,113 In Attorney’s Fees From Dismissing Plaintiffs

 

Court Did Not Have To Resolve Split in Appellate Authority On Whether Financial Condition Is Considered For “Reasonable Fee” Purposes, Because No Financial Evidence Was Presented Before The Trial Court.

    McNeil v. Symmetricom, Inc., Case No. H041067 (6th Dist. Apr. 12, 2016) (unpublished) involved a situation where plaintiffs dismissing a state court action were hit with an attorney’s fees award of $124,113 out of a requested $618,411.50 from the defense—about 20% of the requested fees.  Based on a broad fees clause in a settlement agreement, the tort claims were compensable even after dismissal under Santisas.  Both the trial and appellate courts agreed the fee award was justified on this basis to the defense.
    The interesting aspect of this decision was plaintiffs’ playing of the “indigency card,” namely, the trial judge failed to consider the plaintiffs’ financial condition in setting the amount of the fee award—something which plaintiffs claimed had to be weighed in determining the “reasonableness” of any fee award.  The appellate court did note there was a split of thinking on this issue.  (Compare Walker v. Ticor Title Co. of California, 204 Cal.App.4th 363, 374 (1st Dist. 2012) [factor is irrelevant in setting an award] with Garcia v. Santana, 174 Cal.App.4th 464, 476-477 (2d Dist. 2009) [2-1 decision saying the trial court must consider the financial circumstances of the losing party].)  The trial court in the case before it found Walker was more persuasive, not following a contrary Second District decision from its own venue.  (NOTE—Under Auto Equity, a trial judge does not have to follow a decision from the judge’s own district, although he/she may act at peril in doing otherwise, such as adopting the reasoning from another appellate district over the “venue” district.)  The appellate court in McNeil did not need to resolve the conflict because plaintiffs presented no evidence of financial condition to the trial court.  Beyond that, the 20% of requested fees awarded to the defense was viewed as a nonprejudicial “number” in any event.
    We guess, at some point, that this financial condition “split in thinking” will need to be addressed in the Civil Code section 1717 area on the “reasonable” fee element of recovery. 

     On the subject of indigency:  “The law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread.”  - Anatole France (1844 – 1924).

In The News/Civil Rights . . . . Bikram Choudhury Ordered To Pay $1.1 Million Fees After Losing Sexual Harassment Suit Against Ex-Legal Advisor

 

Requested Amount By Plaintiff’s Attorney Was $2.9 Million.

    On April 8, 2016, Los Angeles County Superior Court Judge Mark Mooney determined that Bikram Choudhury, a well known yoga pioneer, owed $1.1 million in attorney’s fees after a jury found that he was liable for $7.4 million on claims he wrongfully terminated and sexually harassed his ex-legal advisor.  Plaintiff’s attorney had asked for recovery of $2.9 million in fees, inclusive of a positive multiplier request.  Judge Mooney acknowledged that the award might go away should Mr. Choudhury be granted a new trial based on pending post-trial motions.

Settlement: Ninth And Third Circuits Determine That Unaccepted Rule 68 Offers Do Not “Pick Off” Class Actions

 

Ninth Circuit Holds That Class Representative Must Have Opportunity To Show Certification Warranted.

    On January 29, 2016, we posted on the U.S. Supreme Court’s decision in Campbell-Ewald Co. v. Gomez, 136 S.Ct. 163 (2016), which held that F.R.Civ.P. 68 unaccepted offers do not moot either an individual or a class action matter (usually with both claims present in an individual/class hybrid case).  We can now report that there are some published post-SCOTUS decisions in the area.

    The Ninth Circuit, in Chen v. Allstate Ins. Co., Case No. 13-16816 (9th Cir. Apr. 12, 2016) (published), decided that the defense tender of $20,000 in settlement of individual claims under an unaccepted Rule 68 offer did not moot class or individual claims.  With respect to class claims, it determined that the putative class representative should have an opportunity under Campbell-Ewald to demonstrate that certification was warranted.  Also, the $20,000 monetary tender did not show that injunctive relief requested by the plaintiff individually had been obtained.

    About a week earlier, the Third Circuit in Weitzer v. Sanofi Pasteur, Inc., No. 14-3423 (3d Cir. Apr. 6, 2016) (precedential) also acknowledged that an unaccepted Rule 68 offer mooted neither individual nor class action claims based on Campbell-Ewald. 

Intellectual Property/In The News: N.D. Ill. District Judge Awards All Of Requested $6,069,266.81 In Fees To Defendant Winning Patent Infringement Case

 

Fee Justified Because Case Was Exceptional, And No “Granular” Analysis Required By District Judge.

    In Chicago Board Options Exchange, Inc. v. International Securities Exchange LLC, Case No. 07 C 623 (N.D. Ill. Docket No. 778 Mar. 31, 2016), U.S. District Judge Joan H. Lefkow awarded CBOE all of its requested $6,069,266.81 in attorney’s fees after it defensed a patent infringement claim by ISE.  The district judge previously found the case was “exceptional” under the patent fee-shifting statute.  ISE argued that the fee request should be slashed by 80% in order to not provide a windfall to CBOE for certain activities, but District Judge Lefkow rejected this contention.  The problem here was that ISE continued to pursue the patent infringement case even after a seriously adverse appellate ruling by the Federal Circuit.  Rather than fold up its tent, ISE caused CBOE to run up more fees.  The district judge did not have to use a granular approach, but look at the “totality of the circumstances”—an approach that justified fees when the facts showed continued prosecution of the infringement claim was exceptionally bad judgment.

Trade Secrets: $570,000 Fee Awards Under Civil Code Section 3426.4 Affirmed, While Refusal To Award Fees Against Another Defendant Dismissing Trade Secret Claim Reversed

 

Also, Prevailing Defendant Did Not Get Fee Recovery For Texas Counsel Work In California Litigation Where No Pro Hac Vice Admission Was Obtained.

     Dispatch & Tracking Solutions, LLC v. City of San Diego, Case Nos. D062426 et al. (4^th Dist., Div. 1 Apr. 8, 2016) (unpublished; over 100 pages long) is quite the megillah of a trade secret litigation battle between various parties arising out of San Diego’s award of a contract to San Francisco AutoReturn (AutoReturn) for purposes of providing computerized systems for the dispatch of tow trucks. AutoReturn, in turn, used communicative software provided by Dispatch & Tracking Solutions (DTS). However, ACT claimed an exclusive license to use the DTS system, which caused AutoReturn to shift to Orion and then to eventually design its own software. ACT, claiming exclusive software rights, sued City, AutoReturn and others for breach of contract, interference, unfair business practices, and trade secret misappropriation, prompting DTS to cross-claim against ACT, City, AutoReturn, and Orion, inclusive of a trade secret misappropriation cross-claim. Eventually, ACT’s case was “defensed” and DTS’ cross-claims were “defensed,” triggering all kinds of attorney’s fees motions under Civil Code section 3426.4, the California Uniform Trade Secret Act’s fee-shifting provision.

     Orion was awarded fees of $120,000 against DTS. AutoReturn and City moved for 3426.4 fees against both ACT and DTS, with the lower court (1) denying fees against ACT based upon its voluntary dismissal of its trade secret claim, and (2) granting fees against DTS in the aggregate sum of $450,000. The lower court also denied Orion some fees for work by its Texas counsel in the California litigation and disallowed some expert witness fees to AutoReturn.

     All kind of parties appealed, although the trade secret claims were the focus of the fee appeals.

     Fee awards against DTS. These were all affirmed because no admissible evidence of misappropriation was presented, satisfying both the objective and subjective prongs of the 3426.4 fee entitlement test. The fee claimants did a good job of presenting correspondence with opposing counsel asking for a resolution or dismissal based on the lack of proof of misappropriation. DTS argued that the settlement negotiations privilege precluded use of this course of conduct, but the appellate court disagreed—finding it was admissible to show bad faith on the fee entitlement prongs.

     Fee denial against ACT. AutoReturn and City got another “bite” at the fee apple in this one. The reviewing court determined that the lower court incorrectly determined it lacked jurisdiction to entertain fees after ACT voluntarily dismissed its trade secret claims, finding the dismissal did not usurp fee entitlement (citing the SASCO and Cypress cases in support of its conclusion).

     Denial of fees for Texas counsel work to Orion. The denied request for $45,536.82 in fees by Orion for work of its Texas counsel was sustained. The reason was that Texas counsel was not licensed to practice in California and did not seek pro hac vice admission in California, with the appellate court finding no reason why Orion (a non-California resident, but with California contacts) should not be subject to the same protective attorney licensing rules as applicable to all non-California attorneys providing litigation advice or litigating in California.

     Denial of expert witness fees to AutoReturn. This one was affirmed because AutoReturn did not prove that the claimed expert’s fees were reasonably necessary to the litigation once the opposing party shifted the burden in the course of a motion to tax costs proceeding.

Arbitration: Arbitration Panelist Having Lawyers Versus Lawyers Practice Did Not Have To Disclose Fact In Mandatory Fee Arbitration Proceeding

 

Justice Rubin, In A Long Dissent, Concludes Otherwise.

     Safarian Choi & Bolstad, LLP v. Minassian, Case No. B262526 (2d Dist., Div. 8 Apr. 7, 2016) (unpublished) involved an ex-client who lost a mandatory fee arbitration to his ex-attorneys. Among other challenges to the arbitration award, ex-client raised the argument that the arbitration panel chairman failed to reveal that 50% of his practice involved representing lawyers—a fact said to be reasonably relevant to a disqualification request. The appellate court disagreed in a 2-1 decision, reasoning that the panel chairman’s practice was lawyer versus lawyer rather than a lawyer versus client practice (with the latter maybe giving rise to a disclosure obligation by a putative arbitrator). Justice Rubin, in dissent, argued that the information should be been disclosed because it was “reasonably relevant” to the disqualification issue with respect to an ex-client involved in a fee arbitration.

Section 1717: Winning Homeowner Were Third Party Beneficiaries Of Contractor-Subcontractor Agreement, Justifying Recovery Of Over $566,000 In Contractual Fees Against Stucco Subcontractor

 

However, Subcontractor Not Entitled To Fee Recovery From Homeowners Dismissing Assigned Contractor Cross-Claims Based On Voluntary Dismissal Of Contractually-Based Claims After Presentation Of Trial Evidence.

     In Mulitz v. L.A. Stucco, Inc., Case Nos. B260314/B262387 (2d Dist., Div. 4 Apr. 7, 2016) (unpublished), homeowners sued both contractor and stucco subcontractor for a defective home renovation, with contractor cross-claiming against subcontractor based on contractual and indemnity/contribution noncontractual theories (with sub’s insurer eventually intervening to protects sub’s interests after it went out of business). Contractor settled with homeowners and assigned its cross-claims against the subcontractor to the homeowners. Sub’s counsel admitted at trial that sub had done a “bad” stucco job. The jury awarded homeowners $403,827 on the contract and negligence claims, which was reduced by the $110,000 contractor settlement. Then, homeowners sought Civil Code section 1717 fees based on the contractor-subcontractor contract with a fees clause, with the trial judge awarding over $566,000 in fees to homeowners. The lower court also denied subcontractor insurer’s request for attorney’s fees against homeowners after homeowners dismissed the cross-claims after presentation of evidence at trial.

     Subcontractor’s appeal of the two fee rulings was not successful.

     The fees to homeowners based on the contractor-subcontractor contract were justified because they were third party beneficiaries under the agreement entitled to enforce the fees clause. (Loduca v. Polyzos, 153 Cal.App.4^th 334, 343-344 (2007).)

     With respect to the denial of fees, the appellate court reasoned that the dismissal of the fees was voluntarily made by homeowners because they did not need to press the cross-claims in light of the earlier settlement with contractor. The Santisas rule barred recovery due to the dismissal of the contractual cross-claims, given that a voluntary dismissal even after commencement of trial will trigger the bar. (D & J, Inc. v. Ferro Corp., 176 Cal.App.3d 191, 1193-1194 (1986).) Subcontractor waived claiming any entitlement to noncontractual fees for the cross-claims dismissal, but the reviewing court also found that there was no argument presented that any fees were actually expended in litigating these claims. That meant that subcontractor’s insurer lost the bid to mitigate through a recovery of requested fees of $302,769.46 from homeowners.

SLAPP: Baughn Decision Now Published

 

It Held That Simply Because Plaintiff Prevailed On SLAPP Motion Did Not Establish Frivolity Requirement To Award Fees Against The Losing Defense.

    On March 19, 2016, we posted on Baughn v. Department of Forestry and Fire Protection, which was unpublished at the time.  It held that simply because a plaintiff prevails on a defense SLAPP motion does not mean that the defense motion was frivolous, with the latter requirement being necessary to show before fees are awarded to the successful plaintiff.  We can now report that the decision was certified for publication by the Third District on April 6, 2016.

Prevailing Party/Section 1717: Refusal To Award Attorney’s Fees Reversed Because 1717 Prevailing Party Determination Is Confined To Success On Contractual Causes Of Action

 

Considering Mixed Results On Noncontractual Claims Was Error.

    Justice Thompson, author of a 3-0 panel opinion in Sadr v. Sabet, Case No. G050493 (4th Dist., Div. 3 Apr. 5, 2016) (unpublished), provides us with an important nuance in cases where attorney’s fees awards are governed by Civil Code section 1717:  the prevailing party determination depends on an analysis which is confined to the success on the contractual causes of action.  In this matter, the trial judge denied fees to ex-clients of an attorney after ex-clients defeated the attorney’s contractual claims although attorney did recover on a quantum meruit basis.  The lower court decided that no one got an unqualified win after examining success on both the contract and non-contract claims.

    The appellate court decided this was error because success on the non-contract (quantum meruit) claim could not be factored into the determination of prevailing party under section 1717.  However, the panel did caution that apportionment might be necessary as far as compensable work, unless the issues were so interrelated such that they cannot be separated out or the issues were common to both contract/non-contract claims.  Reversed and remanded to decide fees to the contract prevailing ex-clients.

    BLOG OBSERVATION Obviously, the apportionment doctrine exists to make sure the prevailing party on contract claims under section 1717 is only awarded what is fair.  We would surmise that the result might be different where a fees clause is broad, allowing recovery for non-contract claims, or where a statutory fee-shifting statute was involved; in these instances, it would seem fair that overall success in the litigation or “dueling” success under fee entitlement bases would be considered in determining who prevailed.

Judgment Enforcement: Fee Awards And Interest Issues Discussed In April 2016 Orange County Lawyer Article

 

Article Is Written By David J. Cook, With Introductory Photo Of Winston Churchill As A Lead-In.

    For practitioners interested in post-judgment enforcement and fee/interest issues, we note that David J. Cook has written an article of interest in the April 2016 edition of the Orange County Lawyer, appropriately titled “Confirming The Name And Calculating the Amount Of The Judgment.”

    Among other things, this Article explores when interest runs on California state fee awards, when interest runs on fee awards for appellate fees, and when a judgment/fee award can be extinguished by a payment tender. 

    On the fee award interest issue, the Article cites Lucky United Properties Investment v. Lee, 213 Cal.App.4th 635, 650 (2013) [see our post on February 6, 2013] for the proposition that the interest for pre-judgment trial costs and fees runs from the date of judgment even if the awards are confirmed later in time.  (However, we would refer you to the unpublished decision in Khazan v. Brayin [previously published at 206 Cal.App.4th 796] to demonstrate there is not uniformity in thinking on this subject among intermediate appellate courts, even if this case was ultimately not published “on the books.”) 

    However, post-judgment trial costs and fees accrued on appeal run interest from the date of entry, not the date of judgment.  (Lucky, 213 Cal.App.4th at 655.)

    Finally, the Article suggests that a judgment creditor faced with a check (cashier’s or otherwise) in payment of a judgment may want to reject the tender and rush down to the courthouse to file the fee motion/cost bill.  (In re Conservatorship of McQueen, 59 Cal.4th 602, 615 (2014) [discussed in our July 11, 2014 post].)  Although not cited, this advice may be even more appropriate if one reads the Fourth District, Division Three’s post-McQueen decision in Gray1 CPB, LLC v. SCC Acquisition, Inc., 233 Cal.App.4th 832 (2015) [reviewed in our January 28, 2015 post, after case was remanded by the state supreme court after McQueen in an initial review petition grant but with the remand decision standing after a further petition for review was denied in the first quarter of 2015].

Civil Rights/Multiplier: $1,163,977.50 FEHA Fee Award Affirmed On Appeal

 

Case Tells Government Entities To Beware When They Aggressively Litigate And Lose In Pro-Civil Rights Fee Shifting Cases.

   The next case is one that litigators representing governmental entities need to pay attention to.  Often times, government will aggressively litigate until the end, only to tell the appellate court that fees to a successful party were excessive or multipliers unjustified despite the contingency risk absorbed by the winning party’s counsel showing great acumen to prevail in the matter.  Williams v. L.A. County Metropolitan Transportation Auth., Case No. B259327 (2d Dist., Div. 3 Apr. 5, 2016) (unpublished) shows that governmental entities faced with the right facts will not win a “Hail Mary” attempt on appeal.

    In this one, plaintiff prevailed on a disability discrimination-related FEHA case, requesting a lodestar plus a 2.0 multiplier in a case where Metro aggressively contested all along the way.  Plaintiff’s counsel requested $600 per hour for lead counsel (17 years of experience) and $325-425 for junior counsel (6 years of experience).  The trial judge granted the lodestar, augmented by a 1.5 positive multiplier based on the skill shown by plaintiff’s counsel in the case plus the contingency risk absorbed by the same counsel.  Once “fees on fees” were added, the total fee award to plaintiff was $1,163,977.50.

    This award was affirmed on appeal.  The lodestar component of the award was not challenged on appeal, just the multiplier.  However, the appellate court found it was appropriate in light of the demonstrated skill and contingency risk factors.  It found that the prior case of Weeks v. Baker & McKenzie, 63 Cal.App.4th 1128, 1175 (1998) was trumped by Ketchum v. Moses, 24 Cal.4th 1122, 1132-1133 (2001) [one of our Leading Cases], which does allow consideration of contingency risk in FEHA and other cases.  Finally, the “scorched earth” plea by Metro, which itself left no stone unturned, did not resonate in light of plaintiff having no choice but to respond in kind. 

Appealability/SLAPP: 1/3 DCA Determines That Order Granting SLAPP Fee After Merits SLAPP Grant Cannot Be Appealed Until Final Judgment Reached In Case

 

. . . . Although Fee Award Made At Same Time As Merits Ruling Can Be Appealed.

    The First District, Division 3 took the time to reconsider a motion to dismiss a SLAPP plaintiff’s appeal of fairly substantial fee awards after defense grants of a SLAPP motion.  (The fee awards totaled over $603,000 for three defendants – we kid you not.)  Plaintiff sought review of the fee orders, but the appellate concluded, as it did before, that the awards were not then appealable and dismissed the appeal.

    In re Ambac Bond Ins. Cases, Case No. A142632 (1st Dist., Div. 3 Apr. 4, 2016) (unpublished) decided that that the post-SLAPP merits ruling fee awards did not fall within any of the list of appealable orders, and were neither sanctions nor fell within the “collateral order” exception.  However, it did acknowledge that the post-merits timing of the fee awards was important, given that some cases have held that a fee order reviewed simultaneously with the ruling on the merits of the SLAPP motion could be reviewed in order to promote judicial economy.  That did not leave plaintiff without a remedy, though:  once there was a final judgment, the fee award could be appealed.  We also surmise that the interlocutory nature of the order also meant that the defense could not undertake collection efforts on the awards.  (However, once the matter was final and if an appeal is taken, the law in this area is that the fee award must be bonded in order to prevent collection efforts.) 

Arbitration: Trial Judge Properly Jettisoned Arbitrator Fee Award Because No Fee Clause In Operative Arbitration Agreement

 

Arbitrator Finality Was “Trumped” By Clause Not Permitting Legal/Factual Errors.

     In Cardiology Specialists Medical Group, Inc. v. Rangappa, Case No. D069092 (4^th Dist., Div. 1 Mar. 30, 2016) (unpublished), doctor and his former employer arbitrated a dispute about who paid for return of a monetary advance, sign-on bonus, and start-up expenses in an agreement providing for arbitration after doctor breached a separate agreement as an independent contractor for a physician. The arbitrator decided doctor bore the responsibility to return the “advances,” also awarding attorney’s fees of $52,131 and costs of $3,765 to former employer.

     The trial judge, however, decided to strike the fee award based on the absence of a fees clause in the agreement providing for arbitration between the two sides.

     The appellate court agreed with the lower court’s decision. Unlike situations under Moncharsh where deference is given to the arbitrator’s decision on the merits unless public policy is offended, the arbitration agreement had a provision saying the arbitrator could not commit errors of law or fact, which allowed a lower court to vacate if this occurred. This important nuance led to the 4/1 DCA’s affirmance, because there was no fees clause in the operative agreement and the AAA Rule allowing for fee recovery did not prevail over the lack of a contractual fees clause. This lack of fee entitlement also led the appellate court to reject former employer’s request to recoup fees for successfully confirming the arbitration merits award (given the merits award was sustained entirely on appeal).

Costs: Routine Costs Neither Expressly Listed Nor Prohibited Can Include Items Which Litigators Routinely Believe Are Justified

Read On … For the List!

     Ramos v. Romero, Case No. E062963 (4^th Dist., Div. 2 Mar. 30, 2016) (unpublished) hopefully will bring a smile to many California state litigators as far as routine costs which can be recouped when they are not expressly prohibited or not expressly listed, invoking trial court discretion to award them as reasonable and necessary under Code of Civil Procedure section 1033.5(c)(2)-(3).

     Here are the routine costs found to be awardable if reasonable and necessary in nature:

· Certified copies of documents (authenticity);

· CourtCall appearance fees;

· Recording fee for a lis pendens;

· Attorney service costs;

· Litigation guarantee from title insurance company;

· Court attendance parking fees (if reasonable—these were under $50).

Family Law Two-Fer: Two Section 271 Sanction Awards Affirmed On Appeal

 

City & County of San Francisco v. Price, Case No. A139024 (1^st Dist., Div. 2 Mar. 29, 2016) (Unpublished).

     Wife challenged a $1,200 sanctions award presumably made under Family Code section 271 after husband made the request orally at a hearing. She argued this was a due process violation, but the appellate court found no form of notice is specified under section 271 and that opportunity to be heard at a hearing suffices where the amount requested is small in amount. She was given an opportunity to be heard through counsel, which was enough. With respect to the contention the lower court did not consider her ability to pay, the record showed the judge did stretch payment of the sanctions over 6 months—showing consideration for her fixed income situation.

Marriage of Patel, Case No. B257700 (2d Dist., Div. 3 Mar. 29, 2016) (Unpublished).

     A section 271 sanctions award against husband for $20,000 was affirmed because there no minute orders being appealed from and the parties stipulated to orders resolving certain payment issues (inclusive of fees) such that the controversy was moot on appeal.

Bankruptcy: Two Delaware Bankruptcy Judges Nix Retention Fee Arrangements Structured To Get Around ASARCO Holding

 

Indemnification And Fee Premium Provisions Did Not Surmount ASARCO.

     In Baker Botts L.L.P. v. ASARCO, Inc., 135 S. Ct. 2158, 2169 (2015) [discussed in our June 19, 2015 post], SCOTUS held that bankruptcy estate counsel cannot obtain fee recovery for defending the propriety of their fee applications under 11 U.S.C. § 330. Although two firms recently took a stab at structuring around ASARCO, two Delaware bankruptcy judges rejected the attempts to do so.

     Counsel for the Committee of Unsecured Creditors (Committee Counsel) inserted a provision in its retention agreement with the Committee that it was entitled to indemnification from the bankruptcy estates in the event Committee Counsel incurred costs, expenses, and fees to defend its fee applications before the bankruptcy court. Although arguing that fee recovery was sought under 11 U.S.C. § 328(a) rather than § 330 and that the recovery fell within a contractual exception to the fee prohibitions, the bankruptcy judge in In re Boomerang Tube, Inc., Case No. 15-11247 (Bankr. D. Del. Jan. 29, 2016) did not buy that these distinctions surmounted ASARCO, given that § 328(a) has no express provision of fees in this context and that the contract was between Committee and Committee Counsel (with the bankruptcy estate being a nonsignatory to it).

     Baker Botts tried again, after ASARCO, to gain fee entitlement for “fees on fees” defense work by structuring a provision in its retention that allowed for a 10% Fee Premium with respect to aggregate fees, a Fee Premium which would be waived if BB did not incur material fees and expenses from defending its fee applications. The bankruptcy judge in In re New Gulf Resources LLC, Case No. 15-12566 (BLS) (Docket Nos. 228 & 334, Feb./Mar. 2016) found that this creative arrangement still ran afoul of ASARCO’s reasoning.