CALIFORNIA ATTORNEY'S FEES

In The News: Recent 2017 Legal Malpractice Claims Survey Finds Claims Leveled Off For Insurers But Costs To Defend Claims Continued To Rise

Ames & Gough Did The Survey.

            Ames & Gough, a specialty insurance broker, has issued the results of its 2017 survey on legal malpractice claims with nine leading lawyers’ professional insurers.  Here are the highlights:

• Insurers saw claims level off in 2016, but costs of defense continue to rise—eight insurers indicate the average costs to defend a typical malpractice claim exceed $50,000 with three seeing costs between $100,000 - $500,000 and two indicating average costs are more than $500,000, with claim complexity and e-discovery being two clear drivers of this trend;
• Insurers cite conflicts of interest as the most common alleged legal malpractice error, with half the insurers citing an uptick in claims from lateral hires;
• Five of the nine insurers saw more cyber-related malpractice claims this year than in prior years;
• Five of nine insurers polled pay hourly rates between $200 - $300, two others pay between $300 - $500 and two pay an average more than $550 per hour for defending malpractice attorneys.

            It appears that a copy of this survey may be obtained free of charge by emailing requests to info@amesgough.com, if requesting persons include their name, title, affiliation, and phone number and state “LPL Claims Survey 2017” in the subject line, all according to an Ames & Gough News Release dated June 28, 2017. 

Section 998: Where Acceptance Mode Language Was Not Precise Enough, Specified Delivery Methods Were Suggested Modes Only

After All, 998 Plaintiff Offeree Did Receive Acceptance By Mail From Defense.

Safeway Food & Drugs. Photographer: John Margolies. 2003. Library of  Congress.

 

        This next case, Lee v. Safeway Inc., Case No. A148301 (1^st Dist, Div. 2 June 26, 2017) (unpublished), is interesting in the way both the trial and appellate courts confronted a 998 “acceptance” issue.

            In short, plaintiff in a vehicle injury case (only to the car itself) offered to settle pursuant to a CCP § 998 offer for $2,669.69, an offer which defendant accepted by letter.  However, plaintiff’s 998 offer had this language:  “If defendants accept this C.C.P. section 998 offer, please have their attorney of record sign below without any changes and return this offer to [counsel’s address] via FAX and First-Class U.S. Mail at [a specified address].)  On the last day to do so, defendant’s counsel sent a letter signed by its attorney advising that defendant accepted the offer.  Because counsel apparently did not get along, there some post-acceptance activities, with plaintiff taking the position that the letter acceptance did not comply with specific acceptance modes of both FAX and mail return.

            The trial court enforced the defense 998 acceptance of the offer, a determination affirmed on appeal.

            The appellate court took a pragmatic view of the issue by endorsing the defense and trial court’s perspective that the 998 offer (with “please” language) was not entirely clear, such that FAX and mail was not an absolute mode of acceptance requirement but merely a “permissible method” of acceptance.  (Discussing, by analogy, Pacific Corporate Group Holdings, LLC v. Keck, 232 Cal.App.4^th 294, 312 (2014); Estate of Crossman, 231 Cal.App.2d 370, 372-373 (1964).) 

            BLOG OBSERVATION—This case counsels that mandatory modes of acceptance of 998 offers need to be made in a way such that they are requirements and conditions to the validity of 998 pre-trial settlement process.  We also believe the Court of Appeal was swayed by the fact that, while the defense 998 offer was outstanding, plaintiff advised defense lawyers that fax service was unacceptable—even though it likely only applied to post-activities in the case. 

Allocation/Section 998: Plaintiff Accepting $9,980 998 Offer After Aggressive Litigation By Defense Properly Granted $93,270 In Attorney’s Fees

Panoply Of Defense Arguments Rejected On Appeal.

            Plaintiff in Alexander v. Market Street Apartments, LLC, Case No. D070198 (4^th Dist., Div. 1 June 23, 2017) (unpublished) accepted a CCP § 998 offer for $9,980 expressly allowing her to file a fees motion in a wage/hour dispute subject to a one-way favorable Labor Code fee shifting provision and in a case aggressively litigated by the defense in superior court (with mucho, mucho discovery).  Plaintiff then removed to recoup $96,180 in fees after accepting the 998 offer, with the trial judge awarding her $93,270.  The defense appealed, raising a host of arguments for reversal, none of which resonated.  The appellate court determined:  (1) plaintiff was the prevailing party by receiving a net monetary recovery and expressly reserved her right to receive fees of a mandatory nature under Labor Code section 226(e)(1); (2) this case was litigated as a superior court case such that limited civil case limitations on recovery were inapt; (3) plaintiff did not have to apportion fees expended for her husband’s work because the activities were inextricably intertwined with her case; and (4) her awarded fees were not grossly unreasonable given the defense decision to aggressively litigate the matter.  The defense could not surmount the abuse of discretion standard of review on appeal. 

Prevailing Party/Reasonableness Of Fees: Only One Prevailing Party Can Be The Result In Contractual Dispute Involving Defensive Cross-Complaint

 

Defendant Defeating Plaintiff’s Contractual Claims Was Sole Prevailing Party, Reversing Fee Award To Cross-Defendant Prevailing On Usury Claim.

          In Kelly v. Mayer, Case No. D071080 (4th Dist., Div. 1 June 23, 2017) (unpublished), plaintiff sued on a note and defendant defensively cross-claimed primarily upon fraud and usury grounds. After a 25-day jury trial, neither party received anything on their claims. The trial judge then entertained dueling attorney’s fees motions from both sides under Civil Code section 1717 based on contractual fee clauses. Defendant won $275,000 (out of a requested $750,000) and plaintiff/cross-defendant won $86,000 for defeating the usury cross-claim.

          The 4/1 DCA affirmed the $275,000 fee award, but reversed the $86,000 fee award. The reason? Where a “defensive” cross-complaint is in play, there can only be one prevailing party in a contractual dispute, which in this case was the party prevailing on the contract (namely, the defendant/cross-complainant defeating plaintiff’s contract claim). (Hsu v. Abbara, 9 Cal.4th 863, 873-876 (1995) [one of our Leading Cases]; Frog Creek Partners, LLC v. Vance Brown, Inc., 206 Cal.App.4th 515, 539-540 (2012).) As far as reasonableness of the awarded fees sustained on appeal, the Court of Appeal affirmed the trial court’s conclusion that the requested blended rate of $450 was high for the San Diego venue so that a reduction to $275 per hour was no abuse of discretion.

Substantiation Of Reasonableness Of Fees: 2/3 DCA, On Remand Of Los Angeles County Supreme Court Decision, Remands To Consider Whether Fee Totals In Invoices And Billings Are Privileged Or Not

DCA Concludes That Billing Entries Likely Would Reveal Privileged Information And Do Not Have To Be Produced In Response to Public Records Act Demand.

            Earlier, we had posted on Los Angeles County Bd. of Supervisors v. Superior Court, 2 Cal.5^th 282, 300 (2016) [see our December 29, 2016 post], where the California Supreme Court reversed a trial judge’s denial of some fee information in invoices/billings requested by the ACLU under a Public Records Act request.  Now, on remand, the Second District, Division 5 has returned to the scope of what is producible in County of Los Angeles Board of Supervisors v. Superior Court (ACLU), Case No. B257230 (2d Dist., Div. 3 June 5, 2017, first issued as unpublished; certified for publication on June 22, 2017).

            The Court of Appeal decided that fee totals information in concluded litigation matters might be fair game for production, but concluded that individual billing entries would tend to disclose privileged matters and that fee totals in pending matters would invade the privilege.  The 2/3 DCA panel remanded to the trial judge to examine the fee totals issue in concluded matters, but otherwise did not allow for further production.  We would note that this decision likely has repercussions in fee substantiation provided in fee motions or in trials with respect to litigants preferring to make redactions for purposes of protecting privileged billing entries. 

Costs/Prevailing Party: After Remand From Supreme Court Decision, 4/3 DCA Decides Prevailing Party For Purposes Of Appellate Costs

 

Project Set-Aside Determination, Despite Wins And Losses, Showed Conservancy Was Prevailing Party.

            In Banning Ranch Conservancy v. City of Newport Beach, 2 Cal.5th 918 (2017), the California Supreme Court disagreed with the trial and appellate courts regarding CEQA compliance. The supreme court issued a remittitur, stating: “Costs, if any, must be awarded by the Court of Appeal.” So, the 4/3 DCA in Banning Ranch Conservancy v. City of Newport Beach, Case No. G049691 (4th Dist., Div. 3 June 21, 2017) (unpublished), decided the Conservancy prevailed for purposes of an appellate costs award after observing “despite the wins and losses scored by each side in this litigation, and the shifting of issues on which each side won or lost, in the end the Conservancy prevailed in its efforts to set aside Project approval.” Justice Ikola authored the opinion.

Section 1717: Fees As Damages Under Breach Of Contract Claim Must Be Decided By The Jury At Trial, Not The Trial Judge On Noticed Motion

Jury Right Implicated, With Brandt Being Persuasive On The Issue.

Jury.  1918-20.  Library of Congress.

            In Monster, LLC v. Superior Court (Beats Electronics, LLC), Case No. B278289 (2d Dist., Div. 7 June 21, 2017) (published), cross-complainant brought a breach of contract cross-claim, alleging that the cross-defendants had caused the company to incur attorney’s fees and other litigation costs.  After cross-complainant gained a summary judgment against cross-defendants’ own primary claims, it asserted that the trial judge, not the jury, had to determine its attorney’s fees as a form of contract damages based on a noticed motion under Civil Code section 1717.  The trial judge agreed, but was overturned on appeal in a writ proceeding.  The appellate court found that fee entitlement was based on fees being damages, implicating jury trial rights and not simply adjudging fees as costs so as to invoke a law and motion procedure for determination of fees.  Among other authorities, it placed reliance on analogous reasoning in insurance bad faith cases, particularly Brandt v. Superior Court, 37 Cal.3d 813 (1985). 

Liens For Attorneys Fees: Attorney’s Lien In Artwork Was Not A Fraudulent Transfer

Clients Can Prefer Attorneys Over Others, Following Reasoning In Wyzard.

            In Stoltenberg v. Sheppard, Mullin, Richter & Hampton LLP, Case No. B271524 (2d Dist., Div. 5 June 20, 2017) (unpublished), plaintiffs/judgment creditors challenged law firm’s attorney’s lien on specific client property (such as artwork) to secure payment of accrued, unpaid legal fees, based primarily on a fraudulent transfer theory.  The Court of Appeal, in a 3-0 opinion, affirmed the trial court’s conclusion that the lien was not preferential.  In doing so, it relied heavily (as did the trial judge) on the reasoning in Wyzard v. Goller, 23 Cal.App.4^th 1183, 1187 (1994), which held that a routine transfer via a bona fide attorney’s lien was not a fraudulent transfer and was not preferential in nature.  We note that the author of the opinion was Orange County Superior Court Judge Kim Dunning, who is sitting by assignment on the 2/5 DCA. 

Prevailing Party: Can You Contractually Define “Prevailing Party” In A Fees Clause?

Answer – Not Tested In California, But We Provide You Some Clauses Defining The “Prevailing Party” And A Guess On The Result.

            Generally, the language of a contractual attorney’s fees provision can be critical as far as the ambit of fee entitlement.  California Civil Code section 1717 allows the “prevailing party” in contractual actions to recover fees under a written fees clause but also voids any waiver of section 1717 protections. 

            In an Internet article entitled “Prevailing party attorneys’ fees:  Some challenges” authored by J. Kent Holland, he recommends that contracting parties objectively define “prevailing party” status in their fees clauses.  Examples:  prevailing parties are those that “net 51% of its affirmative claim, after any offsets for claims or counterclaims by the other party.”  Other examples up the recovery to 67% or 75% of recovery for prevailing party status, but Mr. Holland actually gives some specific contractual language in various contexts.

            So, are these types of prevailing party limitations clauses enforceable in California?  Answer:  There is no published decision specifically addressing this issue.  However, based on CCP § 1021 [measure and mode of compensation of attorneys left to the parties’ agreement] and 511 S. Park View, Inc. v. Tsantis, 240 Cal.App.4^th Supp. 44 (2015) [validating contractual cap in written fees clause], we would hazard a guess that a prevailing party contractual limitation might well be enforceable. 

In The News . . . . Structuring A Plaintiff’s Fee Recovery And Insurance Protection For Plaintiffs Subject To Fee Shifting

 

June 2017 Orange County Lawyer Article Explores Structuring of Attorney’s Fees Recovery.

          Patrick C. Farber (a structured settlements broker), in a June 2017 Orange County Lawyer article entitled “Financial Management Strategy: Structuring Attorney’s Fees,” discusses strategies and tax implications for plaintiff’s attorneys due to receive recovery of a substantial fee recovery. It suggests that an annuity structure, much like that used for plaintiffs recovering a large fee recovery under a settlement, might make sense depending on the attorney’s future needs.

Litigation Cost Insurance Covers Plaintiff’s Expenses Up To $250,000.

        In the June 2017 edition of the ABA Journal, the magazine discusses that Level Insurance offers litigation cost protection insurance to plaintiffs or plaintiffs’ counsel subject to certain adverse litigation expenses. The insurance is available to attorneys taking cases on a contingency basis as well as plaintiffs, with the insurer providing coverage starting at $3,500 and up to $250,000. The insurance can be purchased up to 90 days after a case initially is filed, subject to other conditions but covering a broad range of costs. The premiums are 7 percent of the coverage amount, exclusive of taxes and fees, regardless of the type of case. If plaintiffs themselves purchase coverage, the insurance will not reimburse fees but will cover routine expenses.

Section 998: Prevailing Defendant Reaps Large Successful 998 Offer Award To The Tune Of $514,005.66 Against Unsuccessful Personal Injury Plaintiffs

Case Teaches That 998 Offers Must Be Taken Seriously, With Appellate Court Rebuffing Multiple Technical Challenges To The Underlying Offers.

            Rempell v. Hofmann, Case No. A146257 (1^st Dist., Div. 4 June 14, 2017) (unpublished) involved a husband and wife suing for personal injuries/loss of consortium against a defendant making two pre-trial Code of Civil Procedure 998 offers which were rejected.  The first offer was for $175,000 and the second for $250,001.  Unfortunately, a jury awarded husband only $26,775 in damages and wife nothing.  The trial judge later awarded the defense $514,005.66 in 998 fee-shifting costs, a majority being expert witness expenses.  Plaintiffs’ multiple challenges to the two offers failed on appeal.  Specifically, this is what the appellate court ruled:  (1) a minor misspelling of a party name did not invalidate an offer; (2) the defense timely serving an offer on the plaintiffs, albeit not timely serving plaintiffs’ counsel, did not void the offer; (3) the second offer did not extinguish the calculation of shifted costs running from the date of the first offer based on the challenge that the first offer was void, because such a proposition was rejected in Martinez v. Brownco Constr. Co., 56 Cal.4^th 1014, 1017, 1025 (2013) with respect to multiple 998 offers; (4) the 998 offers did not have to consider the impact of any outstanding liens on an ultimate recovery (Culbertson v. R.D. Werner Co., Inc., 190 Cal.App.3d 704, 708 (1987)); and (5) the defense did not have to separate out offers to husband and wife given that the personal injury recovery was community property, reaching this result based upon reasoning in Farag v. ArvinMeritor, Inc., 205 Cal.App.4^th 372, 382 (2012). 

Fee Clause Interpretation/Section 1717: Prevailing Seller Co-Conspirator Defendant In Real Estate Listing Dispute Properly Awarded Fees Under Broadly Worded Fees Clause

Section 1717 Reciprocity Principles Applied.

Charlie Price Realtor donkey statue, Routes 62 & 82.  John Margolies, photographer.  1993.  Library of Congress.

        In Impact Realty, Inc. v. Ortega, Case No. B272040 (2d Dist., Div. 1 June 14, 2017) (unpublished), real estate brokers sued a seller for breach of contract as well as sued a seller and two alleged agents--a co-conspirator outside broker and escrow company--for fraud based on seller’s purportedly reneging on a listing agreement. In the listing agreement, there was a fees clause stating “in any action … between Seller and Broker regarding the obligation to pay compensation under this Agreement, the prevailing Seller or Broker shall be entitled to reasonable attorney fees and costs from the non-prevailing Seller or Broker ….” Co-conspirator outside broker prevailed in plaintiff brokers’ action and was awarded $25,073 in contractual attorney’s fees.

          The fee awarded was sustained on appeal. Losing plaintiff claimed that it sued winning co-conspirator outside broker for fraud, such that Civil Code section 1717 did not allow for fee recovery. The appellate court disagreed, relying primarily on Kahn v. Shim, 7 Cal.App.5th 49, 55-56 (2016), by finding that the wording of a particular provision may afford a defendant a contractual right to fees which was satisfied here—after all, the fraud claim did involve a dispute regarding “the obligation to pay compensation” under the listing agreement.

Indemnity: Attorney’s Fees Incurred By Indemnitee In Enforcing Indemnity Contract Are Not Recoverable

Although Fees Incurred In Defending Against Third Party Claim Were Recoverable, The Enforcement Fees Were Not.

          Language, language, language.

 

Free neighborhood classes (including language).  1937.  Library of Congress.

        The language of an indemnity clause, including fee entitlement, is critical in determining what types of fees are recoverable by an indemnitee.  The indemnitee in the next case won some fees but lost others in its bid to recoup indemnity enforcement fees.

        The trial court in GAP, Inc. v. Apex Xpress, Inc., Case No. A146176 (1^st Dist., Div. 5 June 14, 2017) (unpublished) awarded a contractual indemnitee both fees for defending against a third-party action brought against indemnitee under an indemnity clause and for suing an insurer for insurance coverage for purposes of enforcing the indemnity agreement.  The appellate court agreed the indemnity clause allowed indemintee to recover the third-party action fee expenses but did not allow for fees in suing the insurer to enforce the indemnity agreement.  Simply put, the enforcement dispute was not covered by the language of the indemnity clause only allowing for fee recovery in a more limited third-party action context.  (See Otis Elevator Co. v. Toda Construction, 27 Cal.App.4^th 559, 564, 566 (1994); Hillman v. Leland E. Burns, Inc., 209 Cal.App.3d 860, 865, 869-870 (1989).)  As such, the $25,914.76 award in enforcement fees was reversed on appeal.

Family Law: Section 271 Sanctions Not Awardable To Non-Parties To Family Law Litigation, Such As An Attorney For A Party

 

$88,000 Sanctions Award To A Party’s Former Attorney Reversed On Appeal.

     In Webb v. Webb, Case No. B269311 (2d Dist., Div. 8 June 13, 2017) (published), the Second District, Division 8 held that Family Code section 271 sanctions only applies to parties in a family law litigation case, not allowing for awards to non-parties—reversing an $88,000 sanctions award to a party’s former counsel (a non-party).

Sanctions: Ninth Circuit Remands To District Court The Sanctions Issue In Haeger v. Goodyear “Inherent Power Of The Court” SCOTUS Decision

 

 

Dissenting Circuit Judge Would Have Affirmed Based On Waiver.

 

            On April 23, 2017, we posted on the U.S. Supreme Court’s decision in Goodyear Tire & Rubber Co. v. Haeger, 137 S. Ct. 1178 (2017), which found that a $2.7 million “inherent power of the court” sanctions award needed a restudy based on the correct “but for” causation standard albeit indicating that a waiver issue needed upfront adjudication.

            The Ninth Circuit, in Haeger v. Goodyear Tire & Rubber Co., No. 12-17718 (9^th Cir. June 8, 2017) (published), ruled through a 2-0 majority decision that the district court should revisit the sanctions issue.  Circuit Judge Milan D. Smith, Jr., in dissent, found that Goodyear had admitted that only $722,406.52 of the sanctions award was tainted, such that the remaining $2 million award should simply be affirmed rather than involve any further scrutiny by the district court. 

Arbitration/Section 998: Appellate Court Provides Guidance On How To Request 998 Fee/Costs Shifting From The Arbitrator Before Merits Determination

 

 

Basic Lesson Is That Request Can Be Made After Merits Determination, With No Pre-Merits “Notice Alert” To Arbitrator Being Necessary.

 

            Heimlich v. Shivji, Case No. H042641 (6^th Dist. May 31, 2017) (published) is a significant appellate decision specifying how a litigant in an arbitration proceeding preserves the ability to obtain recovery of CCP § 998 fees/costs before a merits determination is made by an arbitrator.

            Client prevailed on the merits in an arbitration compelled by former counsel to collect unpaid attorney’s fees.  Six days after the arbitration award, client asked arbitrator to award 998 costs based on a successful offer, but the arbitrator decided he no longer had jurisdiction to award costs.  Client renewed the request in post-arbitration confirmation proceedings, but the trial court ruled that client failed to make a timely 998 claim to the arbitrator and denied 998 costs to client.  Wisely so, client appealed and won a reversal and chance to garner 998 costs.

            In an extended discussion, the Sixth District concluded the section 998 request by winning client was not untimely, especially given that section 998 itself prevents the arbitrator from considering the 998 offer as evidence during the arbitration.  The Court of Appeal had to reconcile several statutory sections, but ultimately provided pragmatic directions to practicing attorneys, arbitrators, and courts on this issue:  (1) no arbitration “litigant” needs give a pre-merits “notice alert” to the arbitrator on the 998 issue; (2) the winning litigant needs to present the 998 issue to the arbitrator after the merits determination; and (3) the arbitrator can make a supplemental award on the 998 issue, no matter whether the merits determination is characterized as “interim, interlocutory, or partial.” 

            The remedy for an arbitrator refusing to consider a 998 fee/costs issue, at the post-confirmation trial court level, is to remand to the arbitrator for further determination; if the parties do not consent to a rehearing by the original arbitrator, then the trial court considers the 998 request.   

Indemnity: Indemnity Clause Relating To Escrow Holder Was Not An The Equivalent Of A Prevailing Party Attorney’s Fees Clause

Merely Pleading Fee Recovery Does Not Create An Estoppel If No Entitlement Lies.

 

           Two Boots Pizza.  Downtown LA.  Carol M. Highsmith, photographer.  2012.  Library of Congress.

        Defendant won a dispute over an agreement to sell certain Papa Johns’ pizza restaurant locations, and then attempted to recoup attorney’s fees as a prevailing party based on a clause in escrow instructions.  Both the trial and appellate courts agreed that the clause did not confer a fee entitlement basis, because the provision only related to indemnification of a separate escrow holder earlier dismissed from the case.  It was an indemnity clause, not a fees clause, concluded the appellate court panel in Royal Capital Holdings, Inc. v. Chase Pizza, Inc., Case No. B278993 (2d Dist., Div. 2 May 24, 2017) (unpublished).  It also found that the losing plaintiff’s pleading of fee entitlement did not create an estoppel if there is no true substantive basis for fee recovery (and there wasn’t).

Arbitration/Prevailing Party: Parties Beating Back Arbitration Resolution Of Dispute, Which Was Transferred To Other Pending Court Cases, Correctly Denied Fees Based On Prematurity

 

DisputeSuite Recent California Supreme Court Decision Supported The Result.

     In Ahern v. Asset Management Consultants, Inc., Case No. B271851 (2d Dist., Div. 7 May 22, 2017) (unpublished), parties successfully challenging an adverse result on the basis it was not arbitrable later sought $465,000 in attorney’s fees even though the merits dispute was reinjected into several pending court cases between the parties which dispute has not yet been resolved. The trial judge denied the fee motion as premature. The 2/7 DCA affirmed based on the recent reasoning in DisputeSuite.com, LLC v. Scoreinc.com, 2 Cal.5th 968 (2017 [reviewed in our April 11, 2017 post], which decided in analogous fashion that fees were properly denied where a case had been transferred and re-filed in a different state given that no ultimate prevailing party status determination had yet been made. So it was here.

Probate: No Absolute Right To Evidentiary Hearing On “Extraordinary” Trust Attorney Fees Where No Specific Offer Of Proof Was Made As To Relevancy

 

 

Judge’s Familiarity With The Work Sealed The Deal.

 

            In Estate of Redlich, Case No. D069436 (4^th Dist., Div. 1 May 22, 2017) (unpublished), a probate judge awarded “extraordinary fees” for attorney trust work, with the losing party claiming that this was error because the judge did not allow an evidentiary hearing.  The 4/1 DCA affirmed.  Although generally agreeing that a judge normally holds an evidentiary hearing on probate extraordinary fees, that rule is not ironclad in every situation.  Here, the losing party failed to provide a specific offer of proof as to relevancy, allowing the probate judge to determine the matter without an evidentiary hearing.  Especially compelling was the fact the probate judge stated having great familiarity with the case so as to fairly adjudicate the extraordinary fee issue.

Homeowner Associations: HOA Fee Award Reversed Because HOA Elections Win Did Not Qualify For Award Under Frivolous Fee-Shifting Standard

 

 

HOA Argued For More General Prevailing Party CC&R Status—Did Not Get It.

 

            Thompson v. Lakewood Hills Homeowners’ Assn., Case Nos. A144674/A146081 (1^st Dist., Div. 5 May 19, 2017) (unpublished) highlights how the basis for fee entitlement can drive the result in a case.  In a word, HOA was awarded fees/costs by the trial judge after HOA prevailed in an HOA election dispute with homeowner.  That was reversed based on the gravamen of the action, which was crucial in this context.  In an election dispute, HOA can only gain fee recovery if the homeowner contested it frivolously, unreasonably, or without foundation.  (Civ. Code, § 5145(b).)  However, under the more general statute, an HOA can recover if it is the prevailing party under a CC&R governing document dispute without regard to whether the action was frivolous in nature.  (Civ. Code, § 5975(c).)  In this one, the election dispute was the gravamen, such that the fee award in favor of HOA was reversed as a matter of law. 

Reasonableness Of Fees: FEHA Prevailing Plaintiff, Through Settlement Garnering $75,000, Properly Awarded Only $76,900 In Fees

 

 

Plaintiff Sought Over $620,000—Deemed Too Exorbitant.

            Although we know that generally FEHA fees are mandatory to a prevailing party, the rub is always on the amount of fees to be awarded.  In Jain v. RJHT Compuquest, Inc., Case No. B271935 (2d Dist., Div. 4 May 19, 2017) (unpublished), a FEHA plaintiff settling at a mediation for $75,000 then sought total attorney’s fees of over $620,000 (inclusive of 1.6 multiplier).  The trial judge only awarded plaintiff $76,900 in fees, prompting an appeal.  No change in result.  The main problem was that the requested fees were deemed exorbitant, a position sustained on review.  The appellate court agreed that the trial court was not limited to reducing specific billings highlighted by the defense, but that more time could be reduced based upon a review of all relevant time records. 

Section 1717: Fee Recovery Under Stipulated Martial Settlement Agreement Governed By 1717 Principles, Not Family Law “Need” Precepts

 

 

$30,308 Fee Award Affirmed On Appeal, Less Than Ex-Wife’s Request For $80,000.

 

            In Marriage of Minkin, Case No. G052947 (4^th Dist., Div. 3 May 19, 2017 published; prior unpublished decision under date of April 24, 2017), the family law judge awarded $30,308 to ex-wife out of requested $80,000 in fees to enforce a stipulated martial settlement stipulation.  Ex-wife wanted more, but the appellate court found that there were bases to decrease the request based on over-litigation and rejecting prior settlement offers.  Ex-wife’s plea of having a shortage of funds did not carry the day when the issue was what was deserved based on a contractual fees clause.  Justice Aronson was the author of this decision. 

Equity/Section 998: Gillotti v. Stewart Now Published

 

 

Typo In 998 Offer Not Material; Pecuniary Interest Disqualified Attorney From Fees.

 

            On April 27, 2017, we posted on Gillotti v. Stewart, a then unpublished Third District decision which found immaterial typo in a CCP § 998 offer and also disqualified fees for an attorney with a pecuniary interest in the case.  We can now report that the decision was certified for publication on May 18, 2017. 

Lodestar/Private Attorney General: 1021.5 Fees Must Be Based On Lodestar Methodology, Not Percentage Of Recovery Test

 

 

Re-Do Was The Result In This One.

 

            In Seltzer v. R.W. Selby & Company, Inc., Case No. B270168 (2d Dist., Div. 2 May 3, 2017) (unpublished), a trial judge in a class action case awarded $29,409 in attorney’s fees to class counsel under the private attorney general statute based on the percentage-of-recovery method rather than the lodestar method.  Class counsel has requested a lodestar of almost $473,000 plus a multiplier based on risk.  The class recovery was $88,227, such that the actual fee award was a third of that.

            The 2/2 DCA reversed.  Notwithstanding the equities, the appellate court determined that the lodestar method had to govern as a matter of law based on Serrano v. Priest, 20 Cal.3d 25, 48, fn. 23 (1977) (Serrano III) when it came to a private attorney general recovery.  Even though the percentage-of-recovery method could be used as a cross check, the lodestar governed until Serrano III is abrogated for 1021.5 purposes, according to the appellate court.  A re-do was required, one based on the lodestar methodology. 

Appeal Sanctions/Employment/Indemnity: Intermediate Appellate Courts Confront Hodgepodge Of Issues

 

Employment—Nicolosi v. Cooper, Case No. B264459 (2d Dist., Div. 6 May 17 2017) (Unpublished)--$64,000 In Fees Just Fine In $80,933.75 Back Wages Case.

 

            This one is not hard to fathom.  Employee obtained $80,933.75 in back wages and $64,000 in attorney’s fees (out of a requested $130,000).  Employee appealed, arguing not enough was awarded as far as fees.  Naught.  The trial judge properly apportioned out time spent on trust/mortgage claims—no abuse of discretion here in not awarding more.

Indemnity—Montebello Unified School Dist. v. Fitness Profile, Inc., Case No. B267436 (2d Dist., Div. 1 May 17, 2017) (Unpublished)—Big Fee Grant Reversal Where Fees Clause Was A True Indemnity Clause And Nothing More.

 

            The second one was no problem for the appellate court, even though the trial judge granted $672,317.96 in attorney’s fees based on contractual fees clauses in operative contracts.  The reviewing court reversed the fee award after determining the fees clauses were true third-party indemnification provisions rather than true fee clauses, relying on the Building Maintenance-Myers line of cases in overturning fees on appeal.

Appeal Sanctions—Kinney v. Clark, Case No. B265267 (2d Dist., Div. 1 May 17, 2017) (Published)--$10,000 For Frivolous Appeal Levied Against Loser.

 

            The last one involved multi-year litigation by a losing party seeking to avoid payment of a modest, earlier attorney’s fees award, even though fees kept mounting once loser kept going on, and on, and on.  Loser unsuccessfully argued that the fee awards were void, such that loser was declared a vexatious litigant.  The appellate court could find no authority indicating that an appeal from a fee order prevented the lower court from entering further fees for “in the pipeline” activities giving rise to fees despite the fact that the appeal had not yet been decided.  The Court of Appeal ultimately decided that loser needed to pay $10,000 for a frivolous appeal in this matter.

Continuing Education: May 2017 Edition Of Orange County Lawyer Has Good Instruction Guide For State Court Attorney’s Fees Motions

Author Steven S. Streger Is Orange County Superior Court Senior Staff Attorney.

 

            Steven S. Streger, a senior staff attorney with the Orange County Superior Court, has authored an article in the May 2017 edition of the Orange County Lawyer, aptly entitled “Attorney Fee Motions:  Hunting for Fluff and the Avoidable Haircut.”  Given his position with the court, here is our summary of his pointers for practitioners filing attorney’s fees motions in state court (especially the OC venue):

Identify with precision the legal basis for the fee award. This means make sure you have fee entitlement—usually, a basis in contract, statute, or an equitable doctrine.

Explain in detail your client’s entitlement to fees. This means that the fee claimant needs to meet the “prevailing party” test under Civil Code section 1717 or other governing statutes.

Justify the amount of fees sought. This means satisfying the lodestar test, with Mr. Streger observing that surveys, matrices, declarations, or citation to cases awarding fees in like situations are probably necessary where high hourly rates are requested.  He also urges claimants to “prove your time investment” through detailed, partially-redacted billings, specific attorney declarations describing the work in detail, and substantiation which avoids block billing.

Avoiding the haircut. Streger presents five rules of thumb to keep in mind so as to avoid an unwanted fee “haircut”:  (1) the trial court has an independent obligation “to hunt for fluff”; (2) the “hunt for fluff” covers padding, over-conferencing, attorney stacking, over-staffing, duplication, marked inefficiency, and services righteously performed but seemingly pointless; (3) trial courts do not have to provide a detailed explanation of haircuts; (4) credibility counts, especially if apportionment is obvious for limited success or for work on non-compensable claims; and (5) the higher the hourly rate, the deeper the dig by trial judges, quoting Circuit Judge Weis:  “A Michelangelo should not charge Sistine Chapel rates for painting a farmer’s barn.”