CALIFORNIA ATTORNEY'S FEES

In The News/Sanctions: Throwing A Cup Of Coffee At A “Heated” Deposition – What Does That Cup Cost You?

 

Answer: Roast Costs $250 In A Recent California Federal Magistrate's Ruling.

 

 

Pike Place Market, cup detail on sign. Seattle, Washington. Photographer: Carol M. Highsmith. Between 1980 and 2006. Library of Congress.

 

    As reported by Law360, an attorney who spilled — or perhaps threw — a cup of iced coffee on an opposing lawyer during a deposition must pay him $250 to cover his damages, according to U.S. Magistrate Judge Donna M. Ryu (N.D. Cal.) who apparently on January 26, 2017 scolded both attorneys for their behavior in a contentious trade secrets case. Hope the coffee was not a good latte!

Deeds Of Trust: Borrower’s Unsuccessful Complaint For Fraud, Wrongful Foreclosure, And Cancellation Of Trust Deed Fell Within Broadly Worded Deed Of Trust Provision

 

$37,632 In Fees To Lender Was Not Unreasonable.

     Eventually, after a prior appeal where borrower got some relief, the same borrower lost on claims that the lender had defrauded him and wrongfully foreclosed, justifying damages and a cancellation of the deed of trust, based on failure to timely file an amended complaint and showing no excuse for the mistake. Lender moved to recover attorney’s fees under a deed of trust fees provision, a motion granted against borrower to the tune of $37,632.

     Borrower’s appeal of the fee award was unsuccessful in Szumilas v. Wells Fargo Bank, N.A., Case No. B264438 (2d Dist., Div. 1 Jan. 27, 2017) (unpublished).

     The deed of trust fees clause did encompass borrower’s claims, all of which involved “a legal proceeding that may significantly affect Lenders’ rights in the Property.” The fact that the property was foreclosed had no consequential impact. (Jones v. Union Bank of California, 127 Cal.App.4^th 542, 547 (2005).) With respect to the amount of fees awarded, nothing showed the award was “manifestly excessive in the circumstances” (Children’s Hospital and Medical Center v. Bonta, 97 Cal.App.4^th 740, 782 (2002).)

Fee Clause Interpretation, Homeowner Associations, Section 1717: Large Fee Recovery To Prevailing Defendants In Common Interest Development Parking Space Dispute With Other Homeowners Reversed

 

Only Time Finite Fees On Trespass Claim Recoverable Under HOA Fee-Shifting Statute.

     In Hussein v. Driver, Case Nos. A144786/A145655 (1^st Dist., Div. 4 Jan. 27, 2017) (unpublished), plaintiffs and defendants, homeowners in a common interest development as well as the parents of defendants, were drawn into a parking space dispute where slander of title, interference with contract, and trespass claims were involved. Defendants eventually prevailed either on the merits or some dismissals along the way, with the trial judge eventually awarding over $370,000 in attorney’s fees to the defendants based on Civil Code sections 1717 (contractual fee basis) and 5975 (HOA CC&R/Declaration enforcement actions).

     The appellate court reversed in major portions, favorably to the non-prevailing plaintiffs.

     Section 1717 did not apply because the claims were torts, not contract-based claims allowing for recovery. With respect to section 5975, the result was driven by the narrowness of the HOA Declaration provision stating that “[t]he Association or any Owner, shall have the right to enforce by any proceeding at law or in equity, all restrictions, conditions, covenants, reservations, liens and charges now or hereafter imposed by the provisions of this Declaration, and in such action shall be entitled to recover reasonable attorneys’ fees as are ordered by Court.” The reviewing court found that only the trespass claim fell within the ambit of this provision so as to be recoverable under section 5975, although a dismissal limited the time during which fees could be sought on remand.

Liens For Attorneys Fees/Quantum Meruit: 2/5 DCA Sorts Through Various Standing And Statute Of Limitations Issues In Attorney’s Lien/Quantum Meruit Dispute

 

End Result Is Declaratory Relief Action Based On Attorney’s Lien Did Survive Based On Longer Four-Year SOL Relating To Written Contracts.

     In Younessi v. Munoz, Case No. B265750 (2d Dist., Div. 5 Jan. 25, 2017) (unpublished), prior discharged counsel, both the individual lead attorney and the law firm, in a contingency-based personal injury case sued both client and subsequent attorneys settling client’s case. Client successfully demurred out claims by the prior individual attorney and the prior law firm representing her based on standing and statute of limitations arguments.

     Those determinations were affirmed in part and reversed in part, with a remand on the reversed portions on appeal.

     The appellate court found no difficulty in concluding that the individual attorney had no standing to sue because he was not a party to the contingency fee agreement, as opposed to the law firm. However, a different result occurred with respect to the law firm which was a party to the contingency agreement. The firm brought a declaratory relief claim based on an attorney’s lien provision in the contingency agreement. That was subject to a longer four-year statute of limitations (based on the written contract SOL relating to the attorney’s lien) such that the lower court’s SOL ruling was erroneous in nature. (There is a nice discussion of quantum meruit and attorney’s lien issues relating to a firm’s rights after discharge from a contingency fee relationship.) So, the matter was remanded for a reconsideration of the attorney’s lien declaratory relief count.

Class Action: N.D. Cal. Adopts Standing Order Requirement That Class Counsel Disclose Third Party Litigation Funding In Class Actions

 

Rule Came Down On January 23, 2017.

     U.S. District Judge Susan Illston, in Gbarabe v. Chevron Corp. (a class action relating to a gas explosion off the coast of Nigeria), ordered plaintiff to produce a funding agreement in the class action in a late 2016 order in response to a motion by Chevron.

     The disclosure did not end in just that case. On January 23, 2017, the Northern District of California Civil Rules Committee adopted a revision to the district court’s standing order (Civil LR 3-15) which states “[i]n any proposed class, collective, or representative action, the required disclosure includes any person or entity that is funding the prosecution of any claim or counterclaim.” There is a lot of debate on the pros and cons of such a disclosure, but looks like it is here to stay and may spread based on the Northern District’s deep experience with class actions.

Family Law: Interesting Appellate Decision Involving Senior Husband And Wife Results In A Mixed Bag On Whether Attorney’s Fees And Sanctions Owed, And Against What Assets

 

Just Goes To Show You That Dissolutions Proceedings Have A Lot Of Legal And Equitable Issues, No Matter When You Get A Divorce At Any Stage Of Life.

     Greene County, Georgia.  Old couple who receive old-age pension assistance.  Fall, 1941.  Jack Delano, photographer.  Library of Congress.

     Murdock v. Murdock, Case No. B259694 (2d Dist., Div. 3 Jan. 26, 2017) (unpublished) is an interesting unpublished decision based on the span of germane dissolution issues, especially considering the case involved a divorce between a husband and wife who were California State University educators apparently parting ways in their 70’s. The case did involve a CalPERS retirement account issue given the parties’ ages. Maybe some of you readers are too young for this case, but some of us are not (other readers and blog contributors—blog contributors getting there).

     What happened here is that ex-husband was hit with $17,500 for breach of fiduciary duty that he impaired community property interests, leading to an award of expenses under Family Code section 1101(a). Ex-wife was also awarded “needs based” fees to the tune of $35,000. Finally, ex-husband suffered a Family Code section 271 sanctions award, payable even from his exempt retirement accounts.

     The appellate court reversed the community property impairment award, finding insufficient evidence supported it given that husband was dealing with separate property assets. The other two awards were affirmed, the needs-based award because the husband had superior cash resources but the 271 sanctions were improperly ordered to be paid out of husband’s exempt accounts.

Arbitration/Sanctions: $17,000 Trial Court Sanctions Order Against Defendant Failing To Pay Arbitration Fees Reversed And Remanded

 

Sanctions Order Did Not Have Adequate Specificity.

     Idewu v. Clark, Case No. B266573 (2d Dist., Div. 3 Jan. 24, 2017) (unpublished) is a situation where a trial judge likely was somewhat irked by the conduct of a defendant successfully moving to compel arbitration. After the matter was moved to arbitration, the arbitration proceeded for several days but was terminated when the defendant (who had moved to compel arbitration) failed to pay her share of arbitration fees. The matter returned to the trial court, who granted CCP § 128.5 sanctions against defendant to the tune of $17,000.

     This one was reversed on a procedural ground. The trial judge only issued a one-page minute order not detailing the conduct or circumstances justifying the sanctions order. The requirement that the offending conduct be specified in writing is existent in both the former and current versions of section 128.5. So, without passing on the merits at all, the appellate court remanded for the trial court either to enter a new sanctions order which details the offensive conduct or to vacate the imposition of sanctions absent a clarifying order.

Intellectual Property: $5,213,117.06 In Attorney’s Fees To Winning Defendants In Copyright Infringement Case Affirmed On Appeal

 

Defendants Beating Copyright Infringement Actions Also Vindicate Purposes Of The Copyright Act, But Supplemental Fee Request Found Untimely.

     In Perfect 10, Inc. v. Giganews, Inc., Case No. 15-55500 (9^th Cir. Jan. 23, 2017) (published), defendants won summary judgments in a copyright infringement action involving Usenet, an international collection of organizations and individuals whose computers connect to each other and exchange messages posted by Usenet users. The district judge awarded prevailing defendants attorney’s fees totaling $5,213,117.06, although denying the defense request for supplemental fees.

     Those determinations were affirmed on appeal.

     Just as plaintiffs who win copyright infringement actions, defendants who beat them also vindicate the purposes of the Copyright Act in the right situation—triggering entitlement of fees under 17 U.S.C. § 505. The district judge did not abuse her discretion by finding the fees spent by plaintiff not probative under the circumstances or in denying a requested 50% across the board reduction.

     However, another result occurred as to the defense request for supplemental fees. This request was made untimely, after the 14 days deadline specified in the FRCP following entry of judgment. The defense showed no good cause for the belated request, with an amorphous request failing to indicate the amount of involved supplemental fees not satisfying the requisite good cause standard.

Civil Rights: $626,821.22 Fee Recovery Against Non-Prevailing FEHA Plaintiffs Reversed As A Matter

 

Pocketbook, Pocketbook, Plus Lack Of Frivolity Were The Reversing Factors.

     If you do not think that judges and appellate justices are not attuned to financial disparity, Alvarez v. Bank of America, Case Nos. B238087/B242275 (2d Dist., Div. 4 Jan. 19, 2017) (unpublished) might change your mind or at least provide mollifying food for thought.

     11 plaintiffs brought various FEHA discrimination cases and lost them in a summary judgment proceeding, based primarily on a BofA independent investigation showing a true objective basis to discharge plaintiffs based upon fraudulent conduct. However, the racially-neutral basis for discharge was not revealed until some time after the onset of the litigation. Later, BofA moved to recoup about $760,000 in attorney’s fees under the theory the FEHA suit was frivolous in nature. The trial court ultimately agreed, awarding BofA $626,821.22 in fees.

     The summary judgment merit ruling was affirmed, but the fee award was reversed as a matter of law.

     First of all, the appellate court believed the trial judge likely ignored plaintiffs’ declarations that they could not pay for the requested fees, which is a relevant concern under FEHA. However, rather than remand, the 2/4 DCA decided that the fee awards could be reversed as a matter of law: BofA claimed the actions were frivolous at the outset, but the record showed that it was only during ongoing discovery stage that plaintiffs learned about the internal investigations showing fraudulent conduct which would show the actions were frivolous during the lawsuit “prosecution” stage. Given that the action was not frivolous at the outset, fee awards reversed.

Cases Under Review: California Supreme Court To Hear Argument Soon In DisputeSuit.com Matter

 

Argument Set For February 7, 2017; Case Considers Whether Forum Selection Procedural Dismissal Entitles Defense To Civil Code Section 1717 Fees.

 

    We can report that the California Supreme Court will be hearing oral arguments on an attorney's fees issue on February 7, 2017. The case pits the Second District against the Fourth District, Division Three as far as whether procedural dismissals in forum selection/venue contexts will allow the defense to recoup attorney's fees under Civil Code section 1717.

 

    Here is the California Supreme Court's description of the issue being considered:

 

    "DisputeSuite.com, LLC v. Scoreinc.com et al., S226652
#15-134 DisputeSuite.com, LLC v. Scoreinc.com et al., S226652. (B248694; 235 Cal.App.4th 1261; Superior Court of Los Angeles County; BC489083.) Petition for review after the Court of Appeal affirmed an order denying an award of attorney fees in a civil action. This case presents the following issue: Were defendants entitled to an award of attorney fees under Civil Code section 1717 as the prevailing parties in an action on a contract when they obtained the dismissal of the action on procedural grounds pursuant to a Florida forum selection clause?"

 

    We posted about Dispute Suite.com on April 15, 2015.

 

Equity: Trial Court Erred In Not Giving Effect To Plaintiff’s Voluntary Dismissal, But That Did Not Deprive It Of Jurisdiction To Award Discovery Sanctions And Attorney’s Fees

Somewhat Of A Pyrrhic Victory For Plaintiff.

    Wilson v. Nationstar Mortgage LLC, Case No. D070965 (4^th Dist., Div. 1 Jan. 20, 2017) (unpublished) was somewhat of a pyrrhic victor for plaintiff on appeal. What happened below was that a trial judge erroneously failed to honor plaintiff's dismissal of an action, striking it and then going forward to award discovery sanctions and attorney's fees against plaintiff and in favor of the defendant. The appellate court agreed with appellant Wilson that the trial judge lacked jurisdiction to strike and dishonor the dismissal, but critically found the lower court retained jurisdiction to enter discovery sanctions and attorney's fees (the latter, subject to any Santisas limitations) post-dismissal anyway. So, those sanctions and fees award stuck on appeal.

A Look Back In History To March 4, 1861

Mr. Lincoln’s Inauguration.

 

Photograph shows participants and crowd at the first inauguration of President Abraham Lincoln, at the U.S. Capitol, Washington, D.C. Lincoln is standing under the wood canopy, at the front, midway between the left and center posts. His face is in shadow but the white shirt front is visible. (Source: Ostendorf, p. 87) “A distant photograph from a special platform by an unknown photographer, in front of the Capitol, Washington, D.C., afternoon of March 4, 1861. 'A small camera was directly in front of Mr. Lincoln,' reported a newspaper, 'another at a distance of a hundred yards, and a third of huge dimensions on the right ... The three photographers present had plenty of time to take pictures, yet only the distant views have survived." (Source: Ostendorf, p. 86-87).” -- Library of Congress.

Mediation: Claimed Prevailing Party Under “Carve Out” Settlement Agreement Trust Dispute Failed To Satisfy Contractual Condition Precedent To Fee Recovery

 

Party Failed To Show He Participated In Upfront Good Faith Settlement Discussions Or Mediation After Entry Into The Settlement Agreement.

 

    In Harris v. Bonander, Case No. F071886 (5^th Dist. Jan. 19, 2017) (unpublished), a settlement agreement was reached between parties to a trust dispute except for one "carve out" claim, which was litigated and lost by one party, who then completely changed the tide by appealing and obtaining a reversal as a matter of law. That party felt he prevailed and moved for attorney's fees under a settlement agreement fees clause, but the trial court denied them based on the perception he did not prevail.

    

    The appellate court affirmed, but on a different basis (in line with the rule that a decision is correct even if grounded in different reasoning).

 

    In the settlement agreement, the fee clause had a contractual condition precedent: no fees unless a prevailing party "makes a satisfactory showing that they first initiated and participated in good faith in informal settlement discussions or mediation." Here, the fee claimant could not show this occurred, despite some creative arguments otherwise. It made no difference if the fee claimant did prevail because litigating the release issue instead without satisfying the ADR condition precedent was not compliant with the fee clause. Fee claimant then argued there were settlement negotiations before entry into the settlement agreement, the appellate court rejected that this satisfied the condition precedent to attempt settlement/mediation efforts after entry into the settlement agreement when a subsequent dispute arose. Finally, even though fee claimant tried to resolve the amount of fees under his fee motion through compromise discussions, this exercise did not satisfy the merits-oriented condition precedent that this should have done much earlier in time when the release issue was being litigated.

Fee Clause Interpretation: Tenant’s Personal Injury Win Did Not Qualify Her For Attorney’s Fees Recovery Under Rental Agreement Or Community Guidelines Addenda

 

Result Might Have Been Different If Clause Said “Arising Out Of Agreement Or Tenancy.”

     Ramos v. Bay Breeze #60 , Case No. D069175 (4^th Dist., Div. 1 Jan. 17, 2017) (unpublished) is a good reminder about how the specific wording of a contractual fees clause may be dispositive on whether fee entitlement exists in the first place.

     In this one, a fees clause applied to actions “arising out of this agreement,” and there were Community Guidelines acknowledging landlord could be liable for common law negligence but found amidst indemnification language in favor of landlord vis-à-vis tenant. The tenant won an $8,500 parking lot slip and fall verdict, later moving to recover attorney’s fees and costs. The lower court said “no,” and the appellate court agreed.

     The reason was that the “arising out of this agreement” language did not encompass a personal injury action, unlike situations where fraud or unlawful detainer actions did arise out of the operative contract. With respect to the Community Guidelines indemnification language, it simply acknowledged landlord’s common law negligence and then specified that tenant would not have any indemnification obligation for such negligence—it did not create fee entitlement. However, the reviewing court did acknowledge that the result may have been different had the agreement included language indicating fee entitlement for “actions arising out of one’s tenancy.”

Appealability: Even Though Case Was Unlimited At One Point, Final Reclassification To Limited Jurisdiction Meant Court Of Appeal Was Without Jurisdiction To Review Fee Award

 

Case Transferred To Superior Court Appellate Division For Review.

     Stauff v. Hartman, Case No. B266777 (2d Dist., Div. 7 Jan. 17, 2017) (unpublished) is a case starting out in small claims court and then reclassified to an unlimited case based on a cross-complaint and, then after a lot of “litigation dust settled,” reclassified to a limited civil case. However, along the way, two aligned parties obtained $95,000 in attorney’s fees based on prevailing through a SLAPP motion. The losing parties appealed to the Court of Appeal.

     The Court of Appeal decided that it lacked jurisdiction to hear the appeal based on the final reclassification to a limited civil case. However, based on Government Code section and pertinent case law thereunder, the matter was transferred for consideration by the superior court’s appellate division.

Prevailing Party/Special Fee Shifting Statute: Plaintiff Was Prevailing Party Under California Public Record Act Proceeding

 

Lower Court Erred In Denying Fees/Costs Because PRA Requires Agency To Seek Clarification Of Unclear Request And No Bad Faith Required As PRA Predicate.

     In Camou v. Superior Court (City of Montclair), Case No. E066325 (4^th Dist., Div. 2 Jan. 13, 2017) (unpublished), the Fourth District, Division 2 issued a Palma-based writ after finding that the lower court erred in determining that plaintiff did not prevail in a California Public Record Act proceeding. Plaintiff had sought a writ on the merits denial and appealed the fee/costs denial, with the appellate court consolidating both causes and issuing a peremptory writ in the first instance.

     The main problems were that the lower court improperly found that plaintiff, rather than agency, had the burden of seeking clarification of an unclear request (the burden is on the agency) and that bad faith by the agency was a predicate for finding plaintiff prevailed in the PRA proceeding (it is not). That caused the issuance of a writ and a remand for the lower court to determine what fees/costs were owed to the plaintiff as the prevailing party, mooting her appeal on the fee/costs issue.

Private Attorney General: Company Vindicating Its Right To Immediate Superior Court Relief On Unemployment Insurance Benefit Issue Was Entitled To § 1021.5 Fees Even Though Decision So Ruling Was Unpublished In Nature

 

Published Decision Helps, But Not A Requirement In This Area With Respect To Significant Public Benefit Issue.

“Print shows a scene at the ‘Income Tax Office’ with a crowd clamoring at the door where a notice states ‘One at a Time’; inside, a wealthy man is standing by a desk, on the floor at his feet, in his hat, are papers labeled ‘Personal Property Tax Sworn Off’, ‘Tax on Capital Sworn Off’, and ‘Tax on Investments’, he kisses the Bible while a government official sits at the desk with his right hand raised.”  Library of Congress.  1894.  Charles Jay Taylor, artist.

     In Ventura Office Suites v. California Unemployment Insurance Appeals Board (Board), Case No. B269664 (2d Dist., Div. 6 Jan. 17, 2017) (unpublished), Ventura Office Suites (VOS) had to fight to the appellate level to obtain a ruling (albeit unpublished) that it had the right to judicial review of the Board’s employee status determination for unemployment insurance benefit purposes without paying the tax/unemployment insurance contribution (“pay now, litigate later” rule). VOS then filed to recover $201,308,13 in attorney’s fees (inclusive of 1.5 multiplier request), but was eventually awarded $68,526.80. VOS was satisfied, but Board was not—it appealed.

     The 2/6 DCA affirmed the fee award. It found that a significant public benefit was conferred by VOS’ fight along the way, even though it was vindicated through an unpublished appellate decision. No binding precedent is necessary under § 1021.5 in order to confer a significant benefit on the general public. With respect to the financial burden element, this was easily met: VOS would have saved only $1,120 per year versus incurring at least ten times the fees if this case was litigated on an hourly basis (presumably this was taken on a pro bono/contingency type of arrangement).

Probate: Under Equitable Powers, Probate Court Could Impose Attorney’s Fees Against Beneficiaries In Trust Proceeding, Litigated In Bad Faith By Beneficiaries, Even If Beneficiaries Did Not Instigate It

 

However, Fees Can Only Be Imposed Against Beneficiaries’ Trust Shares, Not Imposed Personally Against Them.

     Driving nail in coffin.  May, 1918.  Library of Congress.

     Pizarro v. Reynoso, Case No. C077594 (3d Dist. Jan. 18, 2017) (published) is a situation where a probate court imposed attorney’s fees against beneficiaries after finding the litigants in bad faith participated in an unfounded proceeding against the trust (the trustee, of course) even though the proceeding was not instituted by the beneficiaries. The court did so based on Rudnick v. Rudnick, 179 Cal.App.4^th 1328, 13356 (2009). The probate court ordered the fees personally paid by the non-prevailing beneficiaries.

     The Third District, based on the equitable powers of probate courts, affirmed the fee recovery, but with one modification. Beneficiaries argued that Rudnick literally only applied to a proceeding instigated by the beneficiaries, and they did not instigate it so that the probate court lacked authority to impose fees under Rudnick. Nope; “[n]othing in [the Rudnick] analysis, with which we agree, requires instigation of an action against the trust by the offending beneficiary as a prerequisite to charging attorney fees and costs against the offending beneficiary’s share of the trust estate.” (Slip Op., at 16.) However, there in was the rub—the beneficiaries could not be held personally liable under general probate equitable principles, so the award was modified to reflect that the fees and costs could only be imposed against beneficiaries up to the amount of their trust shares.

Section 1717: Bank’s Assignee On Open Book Account Not Entitled To Attorney’s Fees Under Sections 1717 Or Section 1717.5(c)

 

No Written Contract—No 1717 Fees; Banks And Assignees—No Go Under 1717(c).

     In Professional Collection Consultants v. Brown, Case No. B270128 (2d Dist., Div. 6 Jan. 17, 2017) (unpublished), bank’s assignee (collection consultants) requested the trial judge to award it $148,792 in contractual attorney’s fees under Civil Code section 1717 or $800 in statutory fees under Civil Code section 1717.5 after it successfully obtained a compensatory award against a credit card account borrower to the tune of $16,153 (after winning a summary judgment and an appeal of that SJM win).

     The trial judge awarded zippo.

1968 Zippo.  David J. Fred, author.   Creative Commons Attribution-Share Alike 2.5 Generic license.  Wikipedia.

     The appellate court affirmed based on a lack of fee entitlement. Bank’s assignee denied the existence of a written agreement, so the section 1717 fee basis went out. As far as much smaller statutory fees under section 1717.5(c), the 2/6 DCA concluded that bank’s assignee stood in the same position as the bank, which was precluded from obtaining fees under express language saying the statute “does not apply to any action in which a bank … is a party.” (§ 1717.5(c).)

SLAPP: Attorneys Fees/Costs Awardable To Prevailing SLAPP Defendant When The Winning Grounds Were Lack Of Subject Matter Jurisdiction

 

California Supreme Court Decides Any Other Interpretation Would Gut SLAPP Policies.

 

    The California Supreme Court, in Barry v. State Bar of California, Case No. S214058 (Cal. Supreme Court Jan. 5, 2017), confronted the issue of whether a prevailing defendant (the State Bar) was entitled to an award of attorney's fees and costs when the primary winning ground under the SLAPP motion was lack of subject matter jurisdiction, namely, the trial court had no jurisdiction but jurisdiction rested with the California Supreme Court because it was a State Bar issue.

 

    The answer was "yes," affirming the trial court conclusion on the issue but reversing the appellate court's contrary perspective on the issue.

 

    Our state supreme court decided that any other result would gut SLAPP early-on determinations and attendant fee recoveries, especially given that analogous sanctions decisions had expressed the view that lack of subject matter jurisdiction was a collateral, non-merits determination of importance which would allow for imposition of fees/costs.

 

    This 7-0 decision was authored by Justice Kruger.

Class Action: Objector In Separate Action Claiming Substantial Benefit Entitlement To Fees Denied Fees Because Fee Request Was Untimely And Objector Did Not Substantially Add Value To Class Action Settlement

 

$5 Million Fee Request Snubbed At Both Trial And Appellate Levels.

     Credit/Debit Card Tying Cases, Case No. A145891 (1^st Dist., Div. 4 Jan. 12, 2017) (unpublished) concerned an objector’s challenge to an award of fees and costs to class counsel in a main action, although objector was involved in a separate, more peripheral action. Objector sought to recover over $5 million in claimed fees based on the theory that he added benefit in a separate action, although class attorneys in the main class action obtained a $31 million settlement fund and were awarded about $9.3 million in fees/costs under a “clear sailing” class action settlement provision.

     The trial court denied objector’s fees request as untimely and as lacking merit because objector did not add any substantial benefit to the ultimate class action settlement fund recovery.

     Those determinations were affirmed on appeal.

     First of all, objector blew the deadlines set by two judges during the course of protracted proceedings to file fee applications in the class action case. The appellate court found it would be unfair to allow objector to ignore the deadlines because (1) it would allow objector to bypass the mandatory review process for fees applicable to all attorneys in the class action case, and (2) it would deprive the class of the opportunity to object to objector’s fees in belated junctures of the case.

     On the merits, the appellate court, as did the trial court, agreed that objector’s work did not contribute to the creation or augmentation of the settlement fund, such that the “substantial benefit” basis for fee entitlement was not satisfied.

Class Action: S.D.N.Y. Federal Judge Chops Billing Rates For “Temporary Associates” And Partner-Heavy Billing Activities

Judge Believed Charging Standard Rates For Contract Attorneys Was Not Right.

     Class counsel in the Bank of America class action litigation was dealing with an investor lawsuit where $51.6 million in fees were being sought in a case producing a $335 million settlement. Class counsel had 42 lawyers working on the case, including “temporary associates” hired in 2013 and 2014 who were billed out at a blended associate rate of $362 per hour. Also, the law firm prosecuting the class action devoted 11 partners to doing substantive work relating to motion practice and mediation, with four partners attending mediation sessions in the case.

     U.S. District Judge William Pauley (S.D.N.Y.) awarded $41.3 million in fees, which were to be paid out when 75% of the settlement fund was distributed. He was critical of billing the temporary associates, who he deemed to be contract attorneys, at higher rates as well as overstaffing the substantive legal work with high-priced partners.

Costs: 2/5 DCA Confirms That Telephonic Appearance Are Recoverable Routine Costs

 

CCP § 367.6(c) Is The California Statutory Section.

            Here is quick one under routine costs.  Los Angeles County Superior Court Judge Kumar, sitting by assignment on the 2/5 DCA, confirmed in Shatford v. Knight, Case No. B269337 (2d Dist., Div. 5 Jan. 6, 2017) (unpublished), that telephonic court appearances are recoverable routine costs for a prevailing party under Code of Civil Procedure section 367.6(c).  Nice practice tip and additional to the recoverable cost list.

Lien For Attorney Fees: Delaware Supreme Court Determines Attorney Charging Lien, In Hourly Case Representation, Properly Claimed For Entire Hourly Amount, Not Just Amounts Tethered Directly To Obtaining Beneficial Litigation Results

Narrowing Charging Liens To Only Beneficial Services Would Improperly Rewrite Attorney Lien Contractual Arrangement In Hourly Cases.

            Although we generally post on California cases, we stray to discuss a recent attorney’s lien decision from Delaware, which may have some persuasive impact in California cases considering attorney’s liens.

            In Katten Muchin Rosenman LLP v. Sutherland, No. 151, 2016 (Del. Supreme Court Jan. 3, 2017), the Delaware Supreme Court reversed a chancery court’s decision that an attorney’s lien in an hourly case representation should be limited to unpaid fees that are directly connected to the recovery which attorneys obtain on their client’s behalf.  The state high court determined that, in hourly matters, the attorney’s lien could be claimed on to the entire hourly fees left unpaid, not just those fees for services which were directly tethered to the benefits ultimately recovered by the client.  The court determined that this might be a proper limitation in a contingency case, but not in an hourly representation matter.  “When a party, such as Martha, agrees to pay hourly fees to prosecute a complex case, she is assuring her counsel that it will not suffer the commercial damage of uncompensated services if it presses her claims as aggressively as she demands and as the law permits.  To permit a client who is a party to such an agreement to escape a charging lien as if she made a strict contingency fee agreement limiting fees to a percentage of recovery is to judicially rewrite the contract at the expense of the attorney and to undermine the traditional purpose of a charging lien.”  (Slip Op. at p. 11.)

            Here is a link to the Delaware Supreme Court’s decision in Sutherland.

Consumer Statutes: Potentially Prevailing Plaintiff On Appeal May Have Entitlement To Fee Recovery Under CLRA Where Only Sought Injunctive Relief Despite Rejecting Defense Correction Notice

Plaintiff Is Not Disqualified From Fee Recovery Given Only Injunctive Relief Requested Under CLRA Claim; Matter Remanded For District Court To Determine Prevailing Party Status.

    Gonzales v. CarMax Auto Superstores, No. 14-56305 (9^th Cir. Jan. 6, 2017) (published) involved a situation where a plaintiff won a summary judgment and sustained it on appeal in a California Consumer Legal Remedies Act (CLRA) action. The district court refused to award appellate fees on the theory that plaintiff rejected a defense correction notice which disqualified fee recovery in a damages action under CLRA.

 

    That conclusion was reversed by the Ninth Circuit. Plaintiff only sought injunctive relief such that the CLRA damages restriction did not disqualify the litigant from seeking recovery of appellate fees as the successful party. However, the district judge needed to be the one to decide if plaintiff truly prevailed on a pragmatic level such that the matter was remanded to have this determination made in the first instance, although the Ninth Circuit did suggest that it looked like plaintiff did prevail. The Ninth Circuit also carefully observed that its decision did not encompass a situation where a plaintiff sought both injunctive and damages relief.    

Family Law: Needs-Based Fee Award Can Be Based On Age Of Needy Party

 

Fact That Needy Party Is Retired Can Be Considered In Needs-Based Analysis.

 

    In Marriage of McLain, Case No. E062884 (4^th Dist., Div. 2 Jan. 6, 2017) (published), $5,500 in needs-based Family Code section 2030/2032 attorney's fees were awarded in favor of a wife based on the fact she was 65 of age and had retired. The appellate court affirmed, determining this was an appropriate factor to consider.

Section 998: Plaintiff’s Failure To Include Acceptance Line Invalidated 998 Offer

 

 

Defense Ignoring Of Offer And Equitable Estoppel Defense Did Not Prevail.

 

    Plaintiff's CCP § 998 offer was found to be invalid by both the lower and appellate courts in Bigler-Engler v. Breg, Inc., Case No. D063556 (4^th Dist., Div. 1 Jan. 6, 2017) (partially published; 998 discussion published) based on the failure to include a mandatory "acceptance" line for signature by the defense. Plaintiff argued that the defense ignoring of the offer (ultimately, rejecting it) and equitable estoppel principles dictated another result, but this was found not to alter the conclusion that the 998 offer was invalid in nature by failure to include an acceptance line for signature.

Costs/Deadlines/Reasonableness Of Fees: $550 Hourly Rate, Although High For San Bernardino Venue, Was Reasonable Given Complexity Of Case--$440 Per Hour More Like It

 

Also, Costs Memorandum Was Untimely Filed, With Sender Giving Notice Of Judgment Entry Not Getting Benefit Of 5-Day Mail Service Extension.

 

    In Hernandez v. Town of Apple Valley, Case No. E063721 (4^th Dist., Div. 2 Jan. 5, 2017) (partially published; fee and costs discussion not published), plaintiff won on a Brown Act violation, which allows for a recovery of attorney's fees to a prevailing party. The lower court awarded most of the fee request based on a $550 hourly rate for the lead attorney, which it found high for the San Bernardino venue but justified by the complexity of the case (given that a multiplier was appropriate for a $440 hourly rate found to be more reasonable). The appellate court found this was no abuse of discretion under the deferential abuse of discretion standard.

 

    However, a different result came to pass on the lower court's award of costs to the prevailing party under the costs memorandum. The costs memo was filed one day too late, with the prevailing party showing no excuse for the late filing. Instead, plaintiff argued it was timely because of the 5-day mail extension from the date of plaintiff mailing notice of entry of judgment. The 4/2 DCA decided that the 5-day rule did not apply to a sending plaintiff such that the costs award was based on an untimely filing and had to be reversed as a matter of law.

Year End Wrap-Up: Mike and Marc’s Top 30 Decisions in 2016

 

Part 2 of 2—End of a Prolific Year For Fees/Costs Decisions.

       As we have done in past years, wishing all readers the happiest of holidays, we now present our top 30 published decisions from California appellate courts, the United States Supreme Court (SCOTUS), and the Ninth Circuit for the 2016 year.  For past years, we have done a “Top 20,” but this year was especially prolific for decisions involving attorney’s fees/costs issues.  This list is not meant to slight other important decisions in certain areas, but these are the ones that “rose to the top” from our perspective. We posted on December 27, 2016 with the first 15 of selected decisions and now complete with the final 15.  The number of ranking is not geared at all to the decision’s relative importance, and we do not mean to overlook other published decisions—not to mention the wealth of unpublished decisions on fees/costs issues. Here we go on the final 15:

     15.  SANCTIONS—San Diegans For Open Government v. City of San Diego, 247 Cal.App.4^th 1306 (4^th Dist., Div. 1 June 7, 2016)—authored by Justice McDonald; discussed in our June 9, 2016 post: Code of Civil Procedure section 128.5 applies to cases pending as of January 1, 2015 even though sanctioned conduct occurred before this date; section 128.5 does not require compliance with CCP § 128.7’s safe harbor requirements; section 128.5 claimant need only show objective unreasonableness, not subjective bad faith.

     14. INSURANCE—Nickerson v. Stonebridge Life Ins. Co., 63 Cal.4^th 363 (Cal. Supreme Court June 9, 2016)—authored by Justice Kruger; discussed in our June 9, 2016 post: Brandt attorney’s fees to a prevailing party in an insurance bad faith case must be considered in adjudging reasonableness of punitive/compensatory damages ratio.

     13. CLASS ACTION—Lafitte v. Robert Half International, Inc., 1 Cal.5^th 480 (Cal. Supreme Court Aug. 11, 2016)—authored by Justice Werdegar; discussed in our Aug. 15, 2016 post: Trial judges can use the percentage of recovery fee approach for purposes of awarding fess in a common fund class action case, with the trial judge not shackled to using only the lodestar approach in an appropriate case.

     12. SECTION 998—Ignacio v. Caracciolo, 2 Cal.App.5^th 81 (2d Dist., Div. 8 Aug. 3, 2016)—authored by Justice Rubin; discussed in our Aug. 3, 2016 post: Code of Civil Procedure section 998 offer was invalid where offer contained general (rather than lawsuit-specific) claim releases and where Civil Code section 1542 waivers were included, although broad party descriptions did make offer infirm in nature.

     11. ALLOCATION/SUBSTANTIATION OF REASONABLENESS OF FEES—Marriage of Nassimi, 3 Cal.App.5^th 667 (2d Dist., Div. 4 Sept. 26, 2016)—authored by Justice Manella; discussed in our Sept. 27, 2016 post: Requesting party properly denied attorney’s fees where party failed to prove reimbursable fees based on block billing-riddled fee submissions and failed to allocate fees between compensable/non-compensable claims.

     10. BANKRUPTCY—Deocampo v. Potts, 2016 WL 4698299 (9^th Cir. Sept. 8, 2016)—authored by Circuit Judge Wardlaw; discussed in our Sept. 8, 2016 post: City’s Chapter 9 bankruptcy plan did not discharge attorney’s fees award against individual officers in excessive force case, although officers may be entitled to indemnification under California Government Code section 825.

     9. APPEALABILITY—Nellie Gail Ranch Owners v. McMullin, 4 Cal.App.5^th 982 (4^th Dist., Div. 3 Oct. 27, 2016 [certified for publication])—authored by Justice Aronson; discussed in our Oct. 3 and Oct. 30, 2016 posts: Losing homeowner’s failure to separately appeal fee order or amended judgment incorporating fee order meant that appellate court lacked jurisdiction to entertain fee challenge on appeal.

     8. INDEMNITY—Alki Partners, L.P. v. DB Fund Services, LLC, 4 Cal.App.5^th 574 (4^th Dist., Div. 1 Oct. 25, 2016)—authored by Justice Nares; discussed in our Oct. 24, 2016 post: $3,027,237.96 fee award reversed because claimed fees clause was only a third-party indemnification provision not allowing for fees between contractual fee combatants.

     7. INTELLECTUAL PROPERTY—SunEarth, Inc. v. Sun Earth Solar Power Co., 839 F.3d 1179 (9^th Cir. Oct. 24, 2016)—per curiam opinion; discussed in our Oct. 24, 2016 post: Attorney’s fees under Lanham Act’s “exceptional” language guided by same factors articulated in SCOTUS patent Octane Fitness/Highmark duology.

     6. DEADLINES—Robinson v. U-Haul Co. of CA, 4 Cal.App.5^th 304 (lst Dist., Div. 4 Oct. 18, 2016)—authored by Justice Streeter; discussed in our Oct. 19, 2016 post: Trial court’s “good cause” for extending Cal. Rules of Court, rule 3.1702(d) deadlines governing the filing of post-trial/post-appeal fee motions is not constrained by California Code of Civil Procedure section 473 “mistake/inadvertence/surprise/neglect” standards.

     5. FEE CLAUSE INTERPRETATION/SECTION 1717—GoTek Energy, Inc. v. SoCal IP Law Group, LLP, 3 Cal.App.5^th 1240 (2d Dist., Div. 6 Oct. 12, 2016)—authored by Justice Yegan; discussed in our Oct. 14, 2016 post: Law firm’s fees for defensing malpractice action were recoverable based on broad contractual fees clause and pursuant to Civil Code section 1717 given that a malpractice actions sounds in both contract and tort.

     4. SECTION 998—Markow v. Rosner, 3 Cal.App.5^th 1027 (2d Dist., Div. 1 Oct. 4, 2016)—authored by Justice Lui; discussed in our Oct. 14, 2016 post: Joint Code of Civil Procedure section 998 offer to medical malpractice plaintiff husband and loss-of-consortium plaintiff wife was valid given that wife’s damages were capped as a matter of law; section 998 offer provision requiring verification of insurance limits was a proper requirement for a 998 offer.

     3. INTERPLEADER/LIEN FOR ATTORNEY FEES—Southern California Gas Co. v. Flannery, 5 Cal.App.5^th 476 (2d Dist., Div. 6 Nov. 14, 2016)—authored by Justice Kriegler; discussed in our Nov. 14, 2016 post: Interpleader fee-shifting statute (CCP § 386.6(a)) encompasses post-discharge work to sustain the discharge result (including appellate fees), and interpleader action was separate action for purposes of adjudicating an attorney’s lien dispute.

     2. FAMILY LAW—Marriage of Sagonowsky & Kekoa, Case Nos. A142866/A143234 (lst Dist., Div. 5 Dec. 21, 2016)—authored by Presiding Justice Jones; discussed in our Dec. 22, 2016 post: Family Code section 271 sanctions are not properly awardable unless clearly tethered to “attorney’s fees and costs” as per the statutory language.

     1. SUBSTANTIATION OF REASONABLENESS OF FEES—L.A. County Bd. of Supervisors v. Superior Court, Case No. S226645 (Cal. Supreme Court Dec. 29, 2016)—4-3 decision, majority opinion by Justice Cuellar and dissent by Justice Werdegar; discussed in our Dec. 29, 2016 post: Attorney-client privilege does not categorically shield from California Public Records Act disclosure billing invoices sent by clients in concluded, non-active cases because legal consultation was not the purpose of the invoices; however, the privilege did protect billing invoice entries in active, pending cases. Case may have implications as far as the type of information, redacted or not, filed in support of fee submissions in both state and California federal courts.

Happy New Year To All Our Readers !

Golden Gate Bridge, 75th anniversary fireworks.  Carol M. Highsmith, photographer.  2012.  Library of Congress.