CALIFORNIA ATTORNEY'S FEES

Partition: Appellate Court Reversed Lower Court’s Denial Of Request To Apportion Fees And Costs Based On Party’s Filing Only A Joinder Motion

1/3 DCA Believed Joinder Adequately Teed Up The Issue, Plus It Followed Lin Rather Than Finney On The Discretion Allowable When Making Partition Apportionment Adjudications.

            Joinders can pose tricky issues for litigants and practitioners, with lower courts having very different “local, local” rules/protocols (sometimes not even articulated) about how joinders are to be presented for consideration.  In the next case, the appellate court reversed the denial of a litigant’s request for apportionment of partition fees and costs under Code of Civil Procedure sections 874.101 and 874.040 based on the litigant’s joinder with a motion by another party.

            The 1/3 DCA in Pittman v. Vau, Case No. A148222 (1^st Dist., Div. 3 Apr. 27, 2018) (unpublished) believed that the joinder was an appropriate vehicle to raise the apportionment issue, especially given the lack of statutory authority for the practice of joinder in civil motions.  However, by analogy to marital dissolution cases, the appellate panel found joinder was the only reasonable alternative to raise the apportionment issue after one party moves and found nothing in the language of section 874.040 which required a noticed motion for recovering partition costs/fees. 

            Beyond that, however, the 1/3 DCA also followed Lin v. Jeng, 203 Cal.App.4^th 1008, 1025 (2012) [2d Dist., Div. 4] rather than Finney v. Gomez, 111 Cal.App.4^th 527, 547-548 (2003) [2d Dist., Div. 7] on the issue of whether section 874.040 places limitations on the equitable consideration which a lower court can rely upon in making an apportionment decision.  Both Lin and now Pittman agree that the discretion is quite broad, disagreeing with the Finney court’s limitations.  However, keep in mind that Pittman is unpublished, but does show a trend in how appellate panels are lining up on the issue.

Intellectual Property: Dropbox, Inc. Awarded Exceptional Attorney’s Fees When Counterclaimant’s Trade Infringement Claims Were Found Barred By Laches When Its Trademark Rights Were Found To Be Junior Because Dropbox, Inc. Had Senior Trademark Rights

Ninth Circuit Affirmed Fee Award Of More Than $1.7 Million, Plus $500,000 In Costs.

            In Dropbox, Inc. v. Thru, Inc., Nos. 17-15078/17-15526 (9th Cir. Apr. 25, 2018) (unpublished), defendant Thru had brought counterclaims of trademark infringement against Dropbox, but the claims were found to be barred by laches and Dropbox was found to have senior rights to the “Dropbox” trademark.  The district judge later awarded Dropbox more than $1.7 million in attorney’s fees and $500,000 costs based on finding that Thru’s litigation conduct transformed the case into “exceptional case” warranting such awards under 15 U.S.C. § 1117(a).

            The Ninth Circuit affirmed the merits judgment and fees/costs awards in an unpublished decision.  Among other things referenced its sustaining of the awards, the Ninth Circuit found that Thru filed a frivolous motion to dismiss, gave inaccurate responses to discovery requests, and prosecuted counterclaims wholly lacking in merit given that Thru tried to strategically “slow walk” the dispute to take advantage of Dropbox’s initial public offering. 

In The News . . . . Special Master Appointed By N.D. Cal. Federal Judge Recommends Reducing $37.95 Million In Requested Fees By About 25%--Around $9 Million—In Anthem Data Breach Class Action

District Judge Appointed Special Master Because She Was Not Impressed That 53 Law Firms Were Involved.

            Obviously, the Anthem data breach generated a lot of news as well as a class action filed in the Northern District of California federal court, assigned to U.S. District Judge Lucy Koh.  A tentative settlement for $115 million was reached, with the proceeds going to victims, credit-card monitoring services, customers suffering out-of-pocket losses, customers who have credit-card monitoring services, as well as class counsel and administrative costs.

            However, District Judge Koh was not impressed that 53 law firms were involved in the matter or that 55% of the settlement would go to attorneys/class action administrators.  Based on that she, appointed Retired Santa Clara County Superior Court Judge James P. Kleinberg (now at JAMS) as a special master to review the requested fees and report back to her.

            He has.  In an April 24, 2018 filed report, Retired Judge Kleinberg suggested that the requested fees be reduced from $37.95 million to $28.59, about a 25% reduction based on various grounds. 

Special Fee Shifting Statute: District Judge Can Award Fees And Costs Against Party If Its Decision To Remove Was Objectively Unreasonable

That Was So In This Case Because Fraudulent Joinder Argument Lacked Merit Under The Circumstances.

            Under 28 U.S.C. § 1447(c), a district judge has discretion to award costs and attorney’s fees against a party if the removing party lacked an objectively reasonable basis for seeking removal, in the absence of unusual circumstances.

            The district judge did just that in GranCare, LLC v. Thrower, No. 16-15533 (9^th Cir. Apr. 26, 2018) (published), a determination affirmed on appeal against the removing party.  The removing party probably thought it had cause to remove based on a fraudulent joinder ruling involving an identical party, but the circumstances of that case were so different such that reliance on that prior decision was unreasonable in nature.

Judgment Enforcement: Receipt Of Check And Erroneous Execution of Judgment Acknowledgment Meant There Was No Valid Satisfaction of Judgment

Case Just As Importantly Illustrates Importance Of Fees/Costs Exposure—Plaintiff Won Only $1,002, But Was Awarded $121,125 In Fees And $7,842.26 In Costs Under Davis-Stirling Act. 

             Rivera v. 4 Streets Co-Op of Rte. 2, Inc., Case No. B281866 (2d Dist., Div. 2 Apr. 26, 2018) (unpublished) has some post-judgment enforcement lessons, but just as equally illustrates how a statute with fees/costs-shifting features can present liability way beyond just a compensatory jury verdict.

            In this one, plaintiff won a jury verdict of $1,002 against defendant co-op over the co-op board’s election, but the trial judge then awarded plaintiff $121,125 in fees and $7,842.26 in costs under a Davis-Stirling Act statutory provision.  (Yikes!)  Even more interest and post-judgment enforcement fees were added on, and some were paid along the way.  Co-op thought that it had reached a satisfaction of judgment because plaintiff’s sister (who became his successor because plaintiff died after entry of judgment) accepted a check and signed an Acknowledgment of Satisfaction of Judgment.  However, both the trial and appellate courts determined that there had been no satisfaction because (1) nothing showed Natalie cashed versus merely accepting the check, and (2) Natalie’s testimony showed she was confused in signing the Acknowledgment of Satisfaction such that there was no intent to reach a satisfaction under the circumstances. 

Arbitration/Reasonableness Of Fees: Attorney Won Arbitration Award Against Former Client For $78,154.49 In Unpaid Fees, Plus $126,406.25 In Fees And $36,681.57 In Costs For Arbitration Success, Plus $133,362.50 For Having To File Motion To Compel Arbitr

Case Demonstrates How Fees/Costs Easily Can Outstrip Base Compensatory Award.

            Attorney had to sue a former client for unpaid bills, invoking an arbitration clause in the initial retainer agreement.  One of the key issues was whether that initial retainer agreement was orally modified by the parties’ conduct to encompass later matters, with the proof showing that it was.  Attorney had to move to compel the matter into arbitration, proceeded to arbitration where he won a base award of $78,154.49 in unpaid fees plus $126,406.25 in fees and $36,681.57 in costs by the arbitrator after attorney prevailed, and then had to move to confirm the arbitration award—with former client vehemently opposing all the way.

            The superior court awarded attorney another $133,362.50 in additional attorney’s fees for the motion to compel and motion to confirm efforts at the superior court level. 

            Former client’s appeal did not change anything in Caswell v. Jamgotchian, Case No. B271389 (2d Dist., Div. 3 Apr. 24, 2018) (unpublished).

            The appellate court agreed with the oral modification theory and also found that the fees for superior court activities were justified under Code of Civil Procedure section 1293.2 and Ajida Technologies, Inc. v. Roos Instruments, Inc., 87 Cal.App.4^th 534, 552 (2001).  With respect to the reasonableness of the fees, the appellate court found (1) California cases do not disallow an award of fees to an attorney billing in quarter-hour increments, (2) attorney’s counsel’s $450 per hour was not unreasonable in the L.A. market, (3) there was no block billing issue, (4) no clerical time was requested much less awarded, and (5) attorney was entitled to fees on appeal, to be determined by a fee petition before the superior court judge.  Ouch!

Costs/Section 998: On Remand, $244,376.75 In Expert Fees Based On Rejected 998 Offer Was Affirmed In Expert-Laden Civil Case

 

Didn’t Hurt That Plaintiff’s Expert Opined Defense Might Be Entitled To $172,951 In Expert Fees If The Trial Court So Ordered.

            Just to show you how Code of Civil Procedure section 998 can have a dramatic impact on cost-shifting in an expert-laden civil case, we now post on Nations Title Co. of California, Inc. v. Security Union Title Ins. Co., Case No. B279747 (2d Dist., Div. 3 Apr. 24, 2018) (unpublished).

            In this case, the appellate court had earlier remanded to calculate expert fees due to the defense based on a successful 998 offer.  Plaintiff’s own expert conceded, if the court was to order cost-shifting, that $172,951 might be awarded as expert fees to the defense.  The trial court actually awarded $244,376.75, with the appellate court concluding the award was no abuse of discretion. 

Retention Agreements: Riverside County Bar Association Fee Arbitrators Find Enforceable A Hybrid Retention Agreement Providing For A Contingency To Attorney If Successful, Plus A Feature That Attorney’s Fees And Costs Awarded For The Success Are Kept

$304,570.00 Was Fee Award To Attorney, Plus $35,000 More For Post-Trial Work On A Quantum Meruit Basis.

            _{We would like to thank Gregory M. Burke of CGA Ventures, Inc. for sharing with us the Findings and Award by the Riverside County Bar Association’s Fee Arbitration Program in a fee dispute with a former client.}

            _{Specifically, client (a small business owner) and attorney entered into a retention agreement by which attorney agreed to represent client based on a 40% contingency on any sums in a civil action against a lender, plus any attorney’s fees awarded by the court to the client on any contract in any action would be retained by attorney.  Attorney won a nice verdict in the civil case ($250,000 principal judgment) and attorney’s fees of $188,100.  Attorney also beat back post-trial motions and upheld the civil verdict/fee award on appeal.}

            _{However, client argued that the retainer agreement was unenforceable.  Three fee arbitrators disagreed and found that the arrangement was perfectly proper.  However, because there was no written agreement covering post-trial and appellate work, $35,000 was due attorney for that additional work based on a quantum meruit basis.}

            _{Again, we thank Mr. Burke for providing us this interesting decision in the hybrid retainer area.}

Section 1717: Plaintiff’s Voluntary Dismissal Of Action While One Claim Remained Intact Precluded Award Of Attorney’s Fees Under Civil Code Section 1717(b)(2)

Fee Award Of $13,985.80 To Defense Reversed As A Matter Of Law.

            Plaintiff contractor sued his contractor’s bond surety defendant for three claims after surety refused to issue him a new bond based on a prior payout to a homeowner for alleged faulty window installations.  The trial judge eventually sustained a demurrer on all three claims with prejudice, but the appellate court in an earlier decision reversed the dismissal on one claim but affirmed the dismissals on the two other claims.  Plaintiff voluntarily dismissed his complaint without prejudice upon remand.   Surety moved for Civil Code section 1717 attorney’s fees, with the trial judge awarding $13,985.80 in fees to surety.

            That award was reversed as a matter of law in Payne v. American Contractors Indemnity Co., Case No. C084201 (3d Dist. Apr. 24, 2018) (unpublished).

            Civil Code section 1717(b)(2) was the key statutory provision which specifies there is no prevailing party for 1717 purposes where an action has been voluntarily dismissed, whether with or without prejudice.  (Mesa Shopping Center-East, LLC v. O’Hill, 232 Cal.App.4^th 890, 903 (2014).)   It made no difference that surety successfully demurred to two causes of action, because prevailing on a majority of causes of action is not equivalent to prevailing on an action such that the dismissal of the entire action triggered section 1717(b)(2).  Although surety argued that CDF Firefighters v. Maldonado, 200 Cal.App.4^th 158 (2011) dictated a different result, that case involved fines which could have been filed as separate complaints, unlike surety’s claims which arose from the same nucleus of facts.  Fee award reversed. 

Homeowner Associations/POOF!: 2/4 DCA Reinstates Homeowner’s Breach Of Fiduciary/Quiet Title Claims And Allows Further Amendment Of Slander Of Title Claim, Which Causes Attorney’s Fees Award To HOA As Prevailing Party To Go POOF!

$249,861.50 Fee Award Goes Away For Now.

            In Colyear v. Rolling Hills Community Assn. of Rancho Palos Verdes, Case Nos. B278198/B279671 (2d Dist., Div. 4 Apr. 23, 2018) (unpublished), homeowner sued HOA for breach of fiduciary duty, slander of title, and quiet title arising from a tree trimming dispute between neighbors.  (Boy, oh boy, tree disputes are very common in HOA cases.)  The lower court eventually sustained demurrers without leave in homeowner’s action and then awarded HOA attorney’s fees to the tune of $249,861.50.  (Yes, that it no typo.)  All of that went POOF! on appeal because the 2/4 DCA reinstated the breach of fiduciary duty and quiet title claims, allowed homeowner a chance to amend the slander of title claim (if he could plead around a privilege), and found that pre-dispute ADR requirement did not apply to this particular case.  Reversal of fortune, yes indeed.

Bankruptcy/Sanctions: Contempt Sanctions Against Creditor For Knowingly Violating Discharge Injunction Could Not Stand Based On Creditor’s Subjective Good Faith Belief, Even If Unreasonable

Ninth Circuit Clarified Some Reasoning In Zilog Decision.

            In In re Taggart, Case No. 16-35402 (9^th Cir. Apr. 23, 2018) (published), the Ninth Circuit clarified some prior reasoning in In re Zilog, 450 F.3d 996, 1009 n.14 (9^th Cir. 2006) to reinforce that contempt sanctions cannot be assessed against a creditor for knowingly violating a discharge injunction based on creditor’s good faith belief, even if unreasonable in nature.  The bankruptcy judge found the creditor’s subjective intent was irrelevant, an erroneous determination resulting in the BAP’s prior decision to reverse the bankruptcy judge ruling—with the Ninth Circuit affirming the BAP’s reversal.

Sanctions: $34,000 In CCP § 128.5 Sanctions Affirmed Against Litigant Unsuccessfully Trying To Upset Earlier Adjudication Based Upon Extrinsic Fraud

Among Other Things, Damning Admissions In Debtor Exam Sealed The Deal.

            In Quadri v. Alkayali, Case No. G054914 (4th Dist., Div. 3 Apr. 19, 2018) (unpublished), the 4/3 DCA—in a panel decision authored by Justice Bedsworth—affirmed around a $ 34,000 sanction against a litigant losing an “extrinsic fraud” challenge to a prior verdict.  Among other things, the affirmance was justified because the appellant had made disavowals in earlier debtor examinations of having any ownership interest in a company which was contrary to the contention that he was indeed the controlling shareholder of the company years later. 

Class Action/Costs/Section 998: CSU Student Class Representatives Properly Assessed With Some Mandatory Costs After Class Action Loss Under CCP § 998, But Denial Of Expert Witness Fees To Defense Was Proper Given The Differences In Damages Among Subcla

End Result Was Four Class Representatives Were Hit With Routine Costs Of $123,134.94.

            Class action practitioners should read this next post on how CCP § 998 costs shifting can result in routine costs exposure to class representatives, especially where “pocketbook” financial evidence is not properly presented.

            In Keller v. Bd. of Trustees, Cal. State University (CSU), Case Nos. A147029/A147941 (1^st Dist., Div. 2 Apr. 19, 2018) (unpublished), plaintiff students, in an eventually certified subclass, lost an action where they sued for non-resident tuition fee increases by CSU.  CSU then sought $477,613.25 in routine costs, $329,981.44 of which happened to be expert witness fees after plaintiffs rejected a CCP § 998 offer by CSU.  The trial court refused to award the expert witness fees, reducing the costs request somewhat to eventually award $123,134.94 against four named class representatives.  Cross-appeals by both sides did not change the result on appeal.

            With respect to the $123,134.94 award against the class representatives, the appellate court found that the routine costs were mandatory in nature and the trial judge was not out of bounds to reject that there was unfairness to the representatives, especially given the lack of specific proof that they would be financially distressed by the award.  Here is what the appellate court said: “Plaintiffs have failed to provide authority that a court abuses its discretion in refusing to limit recoverable costs in a class action to either the named plaintiffs’ maximum potential recovery or to the amount of costs incurred defending against individual claims. In refusing to require absent class members to shoulder a proportionate share of costs, California authority has recognized that it may be appropriate to hold class representatives responsible for costs that may outstrip their personal potential recovery. “‘While imposition of the entire cost burden on the named plaintiffs may have a chilling effect on the willingness of plaintiffs to bring class action suits, this effect easily may be outweighed by the potential recovery. All potential litigants [i.e., the representative plaintiffs] must weigh costs of suit against likelihood of success and possible recovery before deciding to file suit. Those who choose to take the risks of litigation should be the ones who bear the cost when they are unsuccessful, not those who did not make the choice.’ (Van de Kamp v. Bank of America, [(1988)] 204 Cal.App.3d [819,] 869.)” (Earley v. Superior Court (2000) 79 Cal.App.4th 1420, 1433– 1434.) Plaintiffs’ arguments to the contrary are more properly addressed to the Legislature.”  [Keep in mind this award had no relationship to the rejected 998 offer.]

            Concern then shifted to CSU’s cross-appeal challenging the failure to award it expert witness fees based on the 998 offer.  The lower court did not err in declining expert witness fees because the plaintiff subclass members had different damages such that it was impossible to evaluate the defense offer on this specific issue—the offer was invalid based on the failure to apportion.

Private Attorney General, Requests For Admissions, Section 998: Former Employee Plaintiff Winning $50,000 In Damages Properly Denied Costs Of Proof Sanctions And Private Attorney General Fees

Trial Judge Also Properly Awarded Costs To Defense Under CCP § 998 Offer.

            One of the beauties of posting on unpublished decisions is to see the array of cross-over issues in fees/costs issues at the California state level.  Chamblee v. Inland Behavioral and Health Services, Inc., Case No. D073121 (4^th Dist., Div. 1 Apr. 19, 2018) (unpublished) illustrates such issues which must be routinely resolved by both trial and appellate judges.

            There, ex-employee sued employer for constructive termination based on illegal and improper conduct, with a jury verdict returning a $50,000 total damages verdict based on her belief the conduct was illegal/improper but with no jury finding to the effect that there was any illegal/improper conduct having been committed.  Earlier, the defense had made a CCP § 998 offer to settle for $75,000, along with terms indicating that an arbitrator would determine any pre-offer costs/fees as well as a general release of claims made in prosecuting the action—an offer rejected by plaintiff.  After the jury verdict, the trial court made three decisions: (1) denied plaintiff’s costs-of-proof sanctions for denying certain requests for admissions relating to illegal/improper practices; (2) denied plaintiff’s request for an award of attorney’s fees based on a private attorney general theory; and (3) awarded the defense certain costs based on plaintiff’s rejection of the 998 offer.  Plaintiff appealed, but all of the post-trial rulings were affirmed.

            Number one—costs of proof sanctions for denying certain requests for admissions—because the jury never determined the practices were illegal, RFA denials of admissions on this issue were made reasonably and in good faith.

            Number two—private attorney general fees—because plaintiff was pursuing her own financial interests and the jury never made a “public interest” finding that any practices were illegal/improper, no findings were made of a significant nature to the general public.

            Number three—section 998 costs-shifting—the offer to have the pre-offer costs determined by an arbitrator, rather than a court, did not make a whit of difference and the general release was limited to claims in the lawsuit.  The fact that the offer was made pre-suit, in this case, made no difference because plaintiff had ample opportunity to evaluate her claims, countering at $1 million a few days later so as to show she had made a risk assessment of the case.

Private Attorney General: Respondents Specially Appearing In Securities Fraud Action Brought By Commissioner Of Department Of Business Oversight Were Entitled To CCP § 1021.5 Fees

$149,500 Was The Amount Of The Fee Award Affirmed On Appeal.

            Although not formally intervening in a securities fraud action brought by the Commissioner of the Department of Business Oversight (DBO) against a real estate investment company and its promoters, respondents on appeal made a special appearance and obtained relief by which their individual civil actions were not stayed and they made challenges to a tentative settlement between DBO and company/promoters by which promoters were divested of management and a special master appointed instead.  The trial judge awarded respondents $149,500 in private attorney general fees, prompting an appeal by both DBO and the company/promoters.

            The fee award was affirmed in People v. Investco Mgt. & Development LLC, Case Nos. A143307/A143406 (1^st Dist., Div. 4 Apr. 18, 2018) (published).

            Respondents were successful, with there being no requirement that they formally intervene, with the special appearance in this situation being equivalent to intervention.  They won by beating back a stay of the civil action and getting promoters out of a management position.

            DBO argued that it was not an opposing party, but the appellate court disagreed based on the particular circumstances of record.  Although initially aligned with all investors, DBO did become adverse by joining defense efforts to stay respondents’ civil actions.

            With respect to the enforcement of important public right prong of section 1021.5, vindication of securities law’s goals to prevent/punish fraudulent investment schemes was indeed an important public right promoted by respondents’ actions.

            On the significant benefit to the general public/large class requirement, respondents’ efforts in getting promoters out of management positions benefited all investors, who/which were numerous.

            The necessity of private enforcement element was satisfied because respondents did not believe DBO was protecting all investors through the tentative settlement terms which were modified as a result of respondents’ special appearance in the action.

            The financial burden of private enforcement cost/benefit requirement (the Whitley analysis) was satisfied even though respondents obtained no monetary award and were indirectly protecting their interests in the civil lawsuits.  Simply taking efforts to protect a potential recovery and avoid delay in prosecuting the civil lawsuits was found too indirect and speculative of a financial interest as opposed to more direct efforts to avoid a loss in value of real estate/assets.

Family Law: $30,000 271 Sanctions Against Ex-Husband Not Reviewable For Lack Of Adequate Record Including Family Hearings Which Led To The Sanctions Order

Also, Disentitlement Doctrine Might Prevent Further Appeals By Ex-Husband.

            Ex-husband in Marriage of Volovik & Parchin, Case No. B280980 (2d Dist., Div. 5 Apr. 18, 2018) (unpublished) was disgruntled when the lower court imposed a Family Code section 271 sanction award of $30,000 against him, although the result could have been worse given the 271 request for $70,964.  The sanctions order was affirmed because ex-husband failed to provide an adequate record in the form of reporter’s transcripts of family law hearings which would have allowed the appellate court to see if there was a true abuse of discretion.

            The appellate court, in a footnote, also indicated that it might not entertain future appeals by ex-husband under the disentitlement doctrine.   It was alleged that ex-husband only paid $197 of the $30,000 sanctions award, such that the reviewing court can dismiss an appeal for a litigant’s failure to comply with trial court orders, in this case the $30,000 sanctions order which was sustained after this particular appeal.

Deadlines/Employment: Successful Plaintiff Employee Class Timely Filed Fee Motion

Fee Award Remanded For A Restudy After Some Damage Components Reversed Or Remanded For Recalculation.

            Most fee requests in California are done by noticed motion and follow California Rules of Court deadlines in most instances, which generally track the time within which to appeal the underlying judgment or appealable order.   Under CRC 3.1702(b)(1) and 8.104(a), one such deadline is 60 days after a party provides Notice of Entry of judgment or an appealable order.  However, even absent a stipulation procedure to be approved by the trial judge, the 60 days can get extended depending the date upon which the deadline falls.

            In Maldonado v. Epsilon Plastics, Inc., Case Nos. B278022/B281129 (2d Dist., Div. 8 Apr. 18, 2018) (unpublished), plaintiff class of employees won $935,897.40 in damages based on various wage/hour claims, with the trial judge later awarding statutory Labor Code attorney’s fees of $888,811.50, inclusive of a 1.5 multiplier on a reduced lodestar.  (This does illustrate how the fees in wage/hour cases can match if not eclipse the base compensatory damages award.)  Although the fee award was remanded for a restudy after the appellate court reversed a wage statement award and sent back for recalculation damages on the unpaid overtime claim, the defense argued that the fee motion was untimely filed after the 60-day deadline.  Nope, said the 2/8 DCA panel.  The 60^th day fell on a Sunday, which by law pushed the deadline to Monday, but that Monday was a Columbus Day holiday, which in turn pushed the deadline one more day out.  Plaintiff class filed on that last extended date, so the motion was timely. 

Section 1717: Plaintiff Attempting To Dismiss Case With Prejudice Before Submission Of Written Trial Closing Arguments Was Not Subject To Civil Code Section 1717 Contractual Fee Exposure

Dismissal With Prejudice Was Key, With Section 1717 Containing No Pre-Merits, Pre-Dispositive Adjudication Limitations.

            Shapira v. Lifetech Resources, Case No. B283445 (2d Dist., Div. 4 Apr. 17, 2018) (published) addresses the vexing question of when does a dismissal cut off attorney’s fees exposure under Civil Code section 1717 where there has been no prior pretrial dispositive motion indicating the case might be over.  The takeaway is that a plaintiff can dismiss, if done with prejudice, without 1717 exposure as long as it is done before a merits-based submission accomplished after a trial.

            Boiled down, this case involved a situation where the parties litigated a bench trial, agreed to submit closing arguments through written briefs, and plaintiffs attempted to dismiss the case with prejudice before briefs were submitted.  The trial court would not grant the dismissal and eventually ruled for the defense, later awarding the defense $137,000 in Civil Code section 1717 attorney’s fees. 

            The fee award was reversed as a matter of law.  The precise legal issue was whether plaintiff had the right to voluntarily dismiss his case after the parties rested but before closing arguments were completed after a bench trial through written submissions.  The answer was yes, he did have a right to dismiss under the circumstances that 1717 fee exposure was o-v-e-r.  It was inconsequential whether the situation resonated like sandbagging, to the appellate court, because there were no limitations in section 1717 precluding such a dismissal. 

            BLOG OBSERVATION—Although we cannot say it would have made a substantive difference, it certainly a pragmatic difference that plaintiff was dismissing with prejudice as far as the ultimate result in this case.

Section 998: 998 Offer Containing General Release Of Claims Outside Of Lawsuit Was Invalid

Result Was That Prevailing Party Lost $38,229 In Expert Costs If 998 Offer Had Been Valid.

            In the past, we have posted on tips to make sure that a Code of Civil Procedure section 998 offer is valid, given that there is a fair amount of California jurisprudence on this subject.  Specifically, we refer you to our post of July 7, 2015 synopsizing some great tips by practitioner Iris Weinmann on how to structure and avoid problems with 998 offers.

            Westreich v. Higa, Case No. B279492 (2d Dist., Div. 5 Apr. 16, 2018) (unpublished) well illustrates one of the pitfalls:  including a general release and Civil Code section 1542 waivers of an overbroad nature.

            In this one, defendants were prevailing parties in a boundary line dispute lawsuit.  They sought a total of $69,824 in routine costs, $38,229 of which constituted expert witness fees based on the other side’s rejection of a 998 offer.  The trial judge awarded them all, denying in entirety a motion to tax costs.  On appeal, the non-prevailing side first contested most of the awarded fees, but then wisely decided to narrow the focus to only the 998-shifted costs.  That was a good move.  The appellate court determined that the 998 offer was invalid because it did contain a provision for a general release beyond the claims at issue in the litigation.  That resulted in $38,229 being stricken from the costs award, with the remainder of other costs staying intact. 

Private Attorney General: Successful School District Did Not Garner CCP § 1021.5 Attorney’s Fees And Costs Where Its Partial Win Did Not Prevent Competing School District From Obtaining Charter By Sued Respondent

Successful Result Only Made Sure Proper Findings Made, Not Vindicating Important Public Right Or Impacting Others Beyond Successful Party’s Constituents.

            In Newhall School Dist. v. Acton-Agua Dulce Unified School Dist., Case No. B267856 (2d Dist., Div. 3 Apr. 16, 2018) (unpublished), Newhall obtained a partial grant of its writ petition vacating Acton-Agua’s approval of another charter school to be located within Newhall’s jurisdiction under the Charter Schools Act.  However, the trial judge did not void the charter, but remanded for more fact finding which, on remand, resulted in approval of the other charter school within Newhall’s jurisdiction.  Newhall moved for an award of private attorney general fees of $211,902 and costs of $14,001, a request denied by the trial judge.

            The 2/3 DCA affirmed.  Although Newhall was successful, it failed to show that it enforced an important public right and failed to show a significant benefit on a large class of persons, independent elements of the CCP § 1021.5 test for private attorney general fee/expense entitlement.

            With respect to the public right element, the trial judge was right to characterize the dispute as a parochial “turf battle” over who decides to charter a school, with Newhall only getting a limited win over a school to be chartered (and one which ultimately was chartered) within Newhall’s jurisdiction.  In essence, Newhall was vindicating its own interests and did not enforce any constitutional much less important statutory right (although statutory rights were tangentially involved).

            On the significant benefit factor, the only real benefit accrued to Newhall’s constituents, not all chartered schools’ constituents.  Although the result in the case may have had some impact in lawsuits involving two close-by school districts, it certainly did not affect those other districts’ constituents, but only had possible assistance in those lawsuits. 

Sanctions: Third District Decides That An Asserted Nonfrivolous Claim Cannot Be Found To Be Brought For An Improper Purpose Under CCP § 128.7

Plaintiffs Advanced A Plausible Interpretation Of A Phrase In Prior Settlement Stipulation Such That Sanctions Were Not Warranted.

            In Ponce v. Wells Fargo Bank, 21 Cal.App.5^th 253, Case No. C080680 (3d Dist. Mar. 13, 2018) (published), a trial judge sanctioned plaintiffs who brought lender liability claims in a residential property dispute with terminating sanctions and also imposed over $25,000 in monetary sanctions (as against plaintiffs and their attorneys) under Code of Civil Procedure section 128.7.  The basis for the sanctions was that plaintiffs advanced a frivolous interpretation of “predecessor in interest” language in a release under a prior settlement stipulation in other proceedings. 

            The Third District, on appeal, reversed.  It was swayed by the fact that sanctioned plaintiffs presented a plausible interpretation of “predecessors in interest” under the prior settlement stipulation given that the defendants interpreting otherwise were not involved in the prior proceedings.  Put another way, one could say that the reviewing court believed the trial judge erred by pulling the “sanctions trigger” without hearing more on the threshold contractual interpretation issue.  After reaching the conclusion that plaintiffs’ contractual interpretation position was not frivolous in nature, it was no far stretch to conclude the claim was not brought for an improper purpose under section 128.5.   This decision does establish that a failure to show frivolity means there was a failure to show an improper purpose, with the appellate court adjudicating this issue de novo (as opposed to the more deferential abuse of discretion standard which is generally hard to surmount on appeal).

Private Attorney General/Special Fee Shifting Statute: L.A. Times Improperly Denied Private Attorney General Fees Against Officers/Police Officer Union And Properly Granted Fees Under Public Record Act As Against City Of Pasadena

Trial Court’s Award Of $45,472 To Times Under PRA Affirmed On Appeal, With Times Now Getting To Seek Reasonable Fees Against Officers/Police Union Under CCP § 1021.5.

            Pasadena Police Officers Assn. v. City of Pasadena, Case No. B275566 (2d Dist., Div. 1 Apr. 12, 2018) (published) was a situation where the L.A. Times brought its own requests under the California Public Records Act (PRA) and also had to beat back a preemptive police officer reverse-PRA action arising from a public investigative report about an officer shooting in the Los Angeles County area where the Times was able to eventually obtain disclosure of the report and then a scale back of redactions made by the trial court in prior proceedings (both at the appellate and the trial court levels).   L.A. Times moved for attorney’s fees against City of Pasadena under the PRA, with the lower court awarding $45,472, reducing the fee request for work other than the prior appellate mandamus proceeding and trial time on scaling back redactions and for duplicative work.  However, the lower court denied any private attorney general fees to the L.A. Times, as against the officers/police union (PPOA), based on the private interest exception created by Adoption of Joshua S., 42 Cal.4^th 945 (2008). 

            On appeal, the PRA award stuck, but the denial of 1021.5 fees was reversed with a remand to have the lower court determine the reasonable fees to which the L.A. Times was entitled as against officers/PPOA.  This opinion, authored by Justice Johnson of the 2/1 DCA, is must reading in the PRA, private attorney general, and reverse-PRA action areas.

            As to the PRA award to the Times as against Pasadena, the appellate court could find no abuse of discretion with respect to the litigation-juncture work limitations found reasonable by the lower court.  After all, Times did spend substantial efforts in defending against the reverse-PRA suit (for which fees are not available) versus defending its PRA requests against City.  The trial judge’s allocation methodology was affirmed.

Homeowner Association: Trial Court Correctly Denied Plaintiff’s Negligence-Based Fee Recovery Against HOA Based On Gravamen Of The Claim—Negligence, Not CC&R Enforcement

Plaintiff’s Fee Request Of $145,212.67 Rebuffed By Trial and Appellate Courts.

            This next case should illustrate how both trial and appellate jurists try to get to the nub of a dispute—with the ultimate decision on the nature of the claim being very decisive on whether there is fee entitlement.

            Martini v. Bel Azure Homeowners Assn., Case No. D072288 (4^th Dist., Div. 1 Apr. 12, 2018) (unpublished) was a situation where a plaintiff sued a HOA after suffering a fall on HOA premises.  Plaintiff did win a negligence action for under $11,000 against HOA affiliates.  She then moved for $137,167.50 in attorney’s fees and $8,045.17 in costs against the HOA Defendants.  The trial court denied the fee request, and the appellate court agreed.

            The problem here was that the CC&Rs, although containing a fees clause, had one which was narrow in scope.  Specifically, the fees clause talked about fee entitlement to a prevailing party in “litigation to enforce or interpret” the CC&Rs.  Although some disputes might fall within the ambit of the fees clause, the negligence cause of action did not.  The Legislature, under the Davis-Stirling Act fee authorization, did not allow a prevailing party to recover fees more broadly than an action to actually enforce the CC&Rs.  Since the action was really a negligence/premises liability claim, no fees were recoverable, as the lower court found. 

            No different result occurred under Civil Code section 1717.  This was really a tort claim, with the CC&R fees clause being too narrow to encompass tort claims.  Second ground, also, did not provide relief to appellant on appeal. 

Tort Of Another: Trial Stipulation Did Not Adequately Preserve Tort Of Another Fee Recovery Request When It Only Talked About A Noticed Motion

Tort Of Another Is A Damages Phase Issue, Such That Any Renewal Was Too Prejudicial.

            Beeson v. Lion Connecticut Holdings Inc., Case Nos. A144542/A147993 (4^th Dist., Div. 1 mod. unpublished opinion Apr. 11, 2018; original unpublished opinion Mar. 14, 2018) dealt with a cross-appeal by a party cross-complainant challenging a lower court’s denial of its fees incurred in defending plaintiffs’ claims in the trial below based on a “tort of another” theory.  The real question relates to the language in this stipulation:  the parties stipulated that “Fireman’s Fund’s non-attendance of the testimony portion of the damages phase of trial w[ould] not prejudice Fireman’s Fund from seeking an award of attorneys’ fees and costs, which w[ould] be addressed by the Court upon properly noticed motion by Fireman’s Fund after the conclusion of the damages phase of trial.”

            Fireman’s Fund, in the cross-appeal, argued that this preserved its ability to recover “tort of another” fees against ING in the case.

            No way, said the 4/1 DCA.  The problem was that the stipulation only covered true attorney’s fees allowable by noticed motion, not fees awardable as damages on indemnity contracts (much like Brandt insurance fees).  If Fireman’s Fund truly wanted to obtain recovery of these fees, it likely had to participate in the damages phase but its election not to was dispositive.  Beyond that, it would be prejudicial to the other side to reopen this issue way past the truly “ripe” damages phase as far as obtaining a proper adjudication of the issue.

Family Law/Record: Ex-Wife’s 271 Sanctions Request Properly Denied

Failure to Include Reporter’s Transcript Of Fee Proceedings Was Fatal On Appeal.

            In a growing trend among California intermediate appellate courts, the 4/3 DCA in Marriage of Watts, Case No. G053304 (4^th Dist., Div. 3 Apr. 11, 2018) (unpublished), affirmed the denial of Family Code section 217 sanctions to the tune of $37,000 as requested by ex-wife based on a failure to provide a reporter’s transcript of a hearing on appeal.   Given that the lower court’s ruling was governed by an abuse of discretion standard, the appellate court found that the appellant’s failure to provide a reporter’s transcript of the fee proceeding cemented the presumption that adequate evidence and argument was presented to support the lower court’s decision to deny 271 sanctions.  Acting Presiding Justice Bedsworth authored this 3-0 panel decision.

Appeal Sanctions/Family Law: $25,000 Family Code Section 271 Sanction Affirmed On Appeal

Appeal By Ex-Wife Found Frivolous, Which Carried $10,000 More In Sanctions.

            Marriage of Wintermute and Soltan, Case No. G052397 (4^th Dist., Div. 3 Apr. 9, 2018) (unpublished) was a situation where ex-wife appealed a Family Code section 271 sanction of $25,000 after an earlier appellate opinion disagreed with a critical assertion of ex-wife that a settlement was not global in nature, a ruling which became law of the case.  The section 271 sanction was for ex-wife’s failure to do a tardy dismissal as was promised to be done.  (The lower court actually disallowed $4,000 of the original sanctions request because the other side failed to file acceptable declarations during a few prior go-arounds.)  The appellate court affirmed the sanctions award based on the abuse of discretion standard, finding that ex-wife “was lucky to get away with the modesty penalty of $25,000.”  The other side moved to recoup fees for a frivolous appeal, with the 4/3 DCA panel—in an opinion authored by Acting Presiding Justice Bedsworth—ordering ex-wife and her counsel to pay $5,000 to the other side and to pay $5,000 to the clerk of the court for some of the expenses for internal court time in working up the appeal. 

Appeal Sanctions/Deadlines: Ninth Circuit Decides That Appeal Sanctions For Frivolous Appeal Under FRAP 38 Must Be Filed Under Time Limits For Filing Request For Appellate Attorney’s Fees Under Ninth Circuit Rule 39-1.6(a)

With Respect To Double Costs For Frivolous Appeal, No Entitlement Unless Timely Costs Bill Filed.

            In In re Westwood Plaza North (Erde v. Bodnar, et al.), No. 17-55655 (9^th Cir. Apr. 9, 2018) (per curiam; published), the Ninth Circuit adopted a “bright line” rule for filing an appeal sanctions request for attorney’s fees under Federal Rule of Appellate Procedure 38, where a frivolous appeal is involved.  It decided that the time limit within which to file such a motion mirrored the deadlines for filing a request for attorney’s fees under Ninth Circuit Rule 39-1.6(a) after winning on appeal, running from possible rehearing triggers but generally 28 days after issuance of the appellate decision.  (Read this decision for the particular deadline triggers.)  That means the frivolous fees request goes to the Ninth Circuit Appellate Commissioner for decision-making, just like normal appellate fee requests after a win.

            However, the appellees also sought “double costs” (routine in nature) for the frivolous appeal.  The problem with this request is that appellees did not file a timely costs bill on appeal such that this request was denied.  (FRAP 39(d); 9^th Cir. R. 39-1.1.) 

Costs: California Agency Awarded Routine Costs As Prevailing Party Defended Most Of Them As Proper On Appeal

However, Trial and Appellate Rulings Offer Some Good Pointers On Agency Case Costs, Attempted Service Of Process On Two Addresses, Sheriff Travel Costs To Sign Depositions, And Ways To Have Deponents Sign Depositions Without Traveling To Court Reporter Office.

            We hope over the years that some of our posts have offered practice pointers, which we constantly learn from posting on California published and unpublished decisions.  Although it primarily affirmed an award of routine costs to the California Department of Food and Agriculture as a prevailing party in a discrimination case, Whitaker v. Cal. Dept. of Food and Agriculture, Case No. E064923 (4^th Dist., Div. 2 Apr. 6, 2018) (unpublished) did provide us some pointers which we share with our readers.

            First, the government claimed $40 for demurrer continuance fees.  But the appellate court found this was not reasonable and necessary to the litigation such that it had to be stricken.  The reason?  Government agencies are exempt from bearing such fees; simply because they paid it did not detract from the fact it was not necessary given the agency’s exempt status.

            Second, the appellate court affirmed that the trial court did not err by finding a process server going to two addresses for service of process was reasonable under the circumstances.

            Third, the daily witness fee for a subpoenaed sheriff’s deputy is $275, but can be allocated to a party or reimbursed depending on if the actual cost to the sheriff’s department is higher or lower.  (Gov. Code, § 68096.1.)  Generally, unless the parties stipulate otherwise, a deponent has to return to the court reporter’s office to proofread or sign a deposition transcript.  (In Southern California, attorneys routinely stipulate to relieve the court reporter of custody duties so that the deposition transcript is sent to attorneys and a proofreading/signing schedule is settled upon.  However, we have talked to California attorneys who indicate that many attorneys in Northern and Central California will not stipulate in line with what Southern California attorneys routinely do.)  However, there is an alternative procedure:  the deponent may approve or refuse to approve the transcript via a certified or registered letter sent to the reporter within 30 days.  (CCP § 2025.520(c), (f))—so, that is something to keep in mind if the Southern California stipulation procedure is not agreed to by attorneys from other areas of the state.  However, here the state agency requested costs for sheriff deputies to go down to the local court reporter and sign their deposition transcript.  Was this compensable?  You betcha, said both the trial and appellate courts.  In this instance, the deputies needed to travel down to expedite a transcript to be used by the agency in a summary judgment proceeding, such that it was reasonable and necessary.  Arguably, it was an expressly allowable cost as part of the transcription process.  However, beyond that, it certainly was within the lower court’s discretion to rule that it was reasonable and necessary under the routine costs discretionary provision. 

Consumer Statutes: Manufacturer Confidential Settlement Where Dealer Add-On Compensation Was Main Form Of Relief Justified Denial Of Song-Beverly Act Fees

However, Plaintiff Was Entitled To Routine Costs As “Net Monetary Judgment” Prevailing Party.

            For all consumer attorneys, the next case should be of interest as far as what attorney’s fees can be awarded under the Song-Beverly Act where confidential settlements are involved and what standard governs the award of fees to the statutory “prevailing party.”

            Garcia v. Mercedes-Benz USA, LLC, Case No. B279897 (2d Dist., Div. 2 Apr. 5, 2018) (published) is an interesting situation under the Song-Beverly Act involving a confidential settlement between a car manufacturer and plaintiff consumer even though the dealer was not involved, even the settlement did involve compensation for dealer add-ons.  What basically happened was that manufacturer agreed, before a complaint was filed, to car purchaser’s primary relief to “repurchase” the car, compensate for dealer add-ons, and some attorney’s fees.  This was rejected, but the manufacturer and consumer—who did not sue the dealer—did reach a confidential settlement (important as we shall explain later), the terms of which was were not disclosed before the trial judge—but with consumer filing to recover $8,430 in fees and $750 in costs under the Song-Beverly Act, which is pro-consumer in nature.  The trial judge denied both the fee and costs request.

            The 2/2 DCA affirmed the denial of the fee request, but reversed the refusal to award routine costs to consumer.  The focus of the appeal, of course, was on the fee denial.

            On the fee request, the appellate court acknowledged there was a split of thinking on how to define “prevailing party” under the Song-Beverly Act fee-shifting provision.  Some had said it should follow the CCP § 1032 routine costs definition of “net monetary recovery” for a prevailing party, while other had said there was a more nuanced “pragmatic” analysis focusing on what side truly achieved litigation objectives.  The Garcia court sided with the more pragmatic approach, then proceeded to determine if the lower court abused its discretion in deciding that consumer did not “prevail.”  Given that the manufacturer was not liable for dealer add-ons, that led the appellate court to agree that consumer did not meet her primary litigation objectives given she got a settlement (presumably for add-ons), no civil penalty, and only reserved attorney’s fees for a later date.  

            Different result on costs.  The trial judge erroneously denied costs of $750 to consumer because he did not believe a costs memorandum was filed.  However, it was filed, so costs should have been awarded to plaintiff.   By the way, the appellate court decided each side should bear their own costs on appeal.

            BLOG OBSERVATION—Although confidential settlements are allowed under the Song-Beverly Act, there is reasoning in this case suggesting that without disclosure of the settlement terms, a trial judge could conclude that the “prevailing party” forfeited a right to fees.  Beware!

Off Topic: Our Blog Just Surpassed 2 Million Lifetime Page Views

Wow – Thanks To Your Viewers.

            Marc and Mike are close to our tenth anniversary on this blog.  Hopefully, and very respectfully, it has provided some use to our readers – we will say nothing more.

            However, we have just passed 2 million lifetime page views. 

            We are humbled and hopefully can only continue on our Mission Statement to report on California fee issues (a little more).  Thanks for your readership over the years. 

Lodestar/Substantiation Of Reasonableness Of Fees: Prevailing Party’s Attorney’s Declaration And Billing Statements Constituted Adequate Substantiation

Full Fee Request Properly Awarded By The Trial Court, Which Did Not Need To Expressly Discuss Lodestar Factor Consideration In Her Ruling

            As we have observed before, federal courts generally require more detailed substantiation in support of fee requests and require district judges to explain their fees awards with some specificity.  (See posts under our Home Page category, “Substantiation of Reasonableness of Fees.”)    By way of contrast, Aliu v. Elavon Inc., Case No. B269451 (2d Dist., Div. 3 Apr. 4, 2018) (unpublished) shows key differences in what is required for fee petitions or rulings on them in the California state court system.

            Aliu was a situation where the trial judge awarded full requested fees to a prevailing party to the tune of $91,828.75 in a contract-based lawsuit.  Attorney for the prevailing party submitted a declaration describing the work and a copy of his firm’s time sheets.  That sufficed, because California does not require detailed time records, with lower courts having discretion to award fees based on declarations of counsel describing the work done and the court’s own view of the number of hours reasonably spent.  (Raining Data Corp. v. Barrenechea, 175 Cal.App.4^th 1363, 1375 (2009).)  Also, a California trial judge is not obligated to discuss the lodestar factors in issuing a ruling on a fee request, although the record in Aliu demonstrated that she did.  (Ketchum v. Moses, 24 Cal.4^th 1122, 1140 (2001) [our Leading Case No. 8].)  Finally, the trial judge can back up his/her ruling through his/her own judgment of the value of the work based on direct observation of the attorney’s services and his/her own legal expertise based on prior hearings/being a practitioner in the past, as again was done in Aliu.  (PLCM Group, Inc. v. Drexler, 22 Cal.4^th 1084, 1095-1096 (2000) [our Leading Case No. 1].) 

Partition: Trial Judge Has Considerable Discretion To Apportion Partition Fees And Costs

This Decision Demonstrates Apportionment Can Be A Substantial Percentage To Side Running Up The Costs Of Litigation

            Code of Civil Procedure section 874.040 allows the court in a partition action to apportion costs in proportion to parties’ interests or “as may be equitable,” with costs defined broadly in section 874.010 to include reasonable attorney’s fees incurred/paid for the common benefit, referee’s costs and expenses, and compensation for other professionals employed by the referee in the action.

            Pippins v. Jah, Case No. A150218 (1^st Dist., Div. 5 Apr. 4, 2018) (unpublished) shows how that discretion can be exercised when an apportionment motion is brought and one side has made the litigation more lengthy/expensive through obstructionist activities.  The trial court in this case did apportion over 96% to 100% of certain categories of costs to the obstructionist side, an equitable discretionary ruling affirmed on appeal under the abuse of discretion standard.

Request For Admissions: Heavily Contested Case On Liability, Causation, And Damages Justified Denial Of Successful Plaintiff’s Cost Of Proof Sanctions Under CCP § 2033.420

4/1 DCA Actually Provided A Circumstance-Prone “Rule Of Thumb” To Use.

            In Markel Ins. Co. v. Controlled Environment HVAC, Inc., Case No. D073125 (4^th Dist., Div. 1 Apr. 4, 2018) (unpublished), plaintiff brought a res ipsa loquitur negligence case, one which was heavily contested on liability, causation, and damages—especially given the defense took the position that someone might be liable, but not our defendants.  Plaintiff ultimately prevailed and sought costs of proof sanctions under the RFA denial statute, CCP § 2033.420, based on the defense denial of actually proof-ending RFAs.  The trial judge refused to award such costs (which include attorney’s fees), finding the defense had reasonable grounds to believe defendants would prevail at trial—an exception which will prevent the award of costs of proof sanctions.

            The 4/1 DCA affirmed, based on the deferential abuse of discretion standard showing that the defense presented much proof, which if believed, could have led to a different result.  However, Justice Dato on behalf of the appellate panel did provide us all with somewhat of a pragmatic “rule of thumb” to keep in mind in this area:  costs of proof sanctions are usually imposed where the losing party offers no evidence or insignificant evidence to buttress an earlier denial, which did not happen in this case.  Instead, the defense offered their own witness, three experts, and surveillance video to challenge core issues of liability, causation, and damages covered by the RFAs—hardly the circumstances which would nod in favor of section 2033.420 “sanctions” (which are not penalties and not awarded simply because one party prevailed in the wake of a sturdy defense from the adverse parties).   

Employment: Plaintiff Not Obtaining Money Or Injunctive Relief In FEHA Case Properly Denied Fees, And Trial Judge Properly Awarded Partial Claimed Costs Under CCP § 998 To Defense

4/1 DCA Adhered To Its Prior Sviridov Opinion, Despite Arave’s Criticism Of Svirdov.

            In Broten v. Target Corp., Case No. D070712 (4^th Dist., Div. 1 Apr. 4, 2018) (unpublished), plaintiff sued Target for various retaliation/wrongful termination claims under FEHA.   Although jurors found that harassment was a substantial motivating factor in Target’s discharge of plaintiff, it answered negatively on causation and awarded no damages.  The trial judge refused to grant injunctive relief.  The trial judge denied plaintiff’s request for FEHA attorney’s fees in the amount of nearly $1.68 million.  Because plaintiff rejected a CCP § 998 offer for $51,000 and all reasonably incurred fees/costs, the defense moved for certain costs, with the trial judge giving credit to plaintiff’s meager financial condition but deciding that section 998 was an independent basis for cost-shifting, awarding $66,075.10 to the defense ($30,261.92 representing electronic data processing and hosting fees) out of a requested close to $100,000 in claimed costs.

            The 4/1 DCA affirmed the fees and costs determinations on appeal.

            With respect to the fee denial, the ultimate facts were that plaintiff did not prevail and obtain any relief, with FEHA not requiring a fee award under these circumstances.

            The costs award drew a more detailed discussion, given that plaintiff claimed FEHA’s pro-plaintiff bent (including consideration of financial condition) precluded costs-shifting.  However, the 4/1 DCA adhered to its reasoning in Sviridov v. City of San Diego, 14 Cal.App.4^th 514, 519-221 (2017) [discussed in our June 28 and Aug. 16, 2017 posts] that 998 allows the cost-shifting and is not effectively “preempted” by FEHA or its policies.  In this regard, Broten did not agree with the criticism that the 4/2 DCA Arave v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 19 Cal.App.5^th 525, 554-555 (2018) [discussed in our Jan. 2, 2018 post] leveled at Sviridov.  Instead, the 4/1 DCA believed that FEHA does not carve out an exception for section 998 offers, such that plaintiffs should be incentivized to carefully weigh them even in FEHA contexts.

            BLOG OBSERVATION—There appears to be a conflict on intermediate appellate thinking on this FEHA/998 issues.  We note that no one sought review of Arave, such that it became final on March 27, 2018, although review was sought and denied in Sviridov.  Looks like this issue is ripe for review given the split in thinking at some point in time.