Allocation, Reasonableness Of Fees: Trial Judge’s Apportionment Of Fees In Multi-Defendant Representation And Award Of Appellate Fees Was No Abuse Of Discretion

4/1 DCA Rejected Arguments By Winning Fee Claimant And Losing Party In Contentious Fee Battle On Remand From Prior Appellate Opinion.

           Bank of Southern California, N.A. v. D&D Goryoka, Inc., Case No. D072231 (4^th Dist., Div. 1 June 13, 2018) (unpublished) was an appeal from an attorney’s fees award from a prior appellate decision remand where a fee claimant was entitled to some apportioned fees for trial work (given the trial attorney represented one of five successful defendants, with the other four defendants losing) and for appellate work in winning the remand. The trial judge—who was a replacement judge after the fee claimant made a CCP § 170.6 challenge to the judge originally denying the fee request entirely--reduced the hourly rate of fee claimant’s lead counsel for lack of success/inefficiencies/doing work left to a more junior attorney/clerical work, further reduced the request by apportioning 20% of the work to the successful defendant, and denied a multiplier. The end result was a $203,667.75 fee award for trial work and a $161,775 fee for appellate work, totaling $365,442.75. Neither side liked the result, with appeals from both with respect to the fee award ultimately rendered.

            The 4/1 DCA, in a detailed 37-page unpublished opinion, affirmed across the board.

            The appeals were governed by the abuse of discretion standard. Fee claimant, wanting more fees, argued less latitude is granted to a replacement judge, but the appellate court rejected that argument because fee claimant caused the replacement through the 170.6 challenge. Also, much of the appellate adjudication rested on the fact that California state court judges can fashion fee awards based largely on their own experience and own determination of the value of the services rendered, with much discretion being conferred on apportionment of work between compensable and non-compensable claims or work done on behalf of successful versus unsuccessful co-defendants. (In this case, an attorney had represented all five defendants under a contingency arrangement, but only one defendant won on a sham guaranty defense—which gave rise to the lower court’s apportionment.)

            There were all kinds of issues to sort through, but here is a summary of the big ones and how they were resolved:

• The 20% apportionment decision was fair and discounted for the lack of success by four other co-defendants, with the trial judge careful to exclude some time entries which did not need to be within the ambit of his allocation;
• Although $525 per hour was reasonable for fee claimant’s lead counsel, the trial judge did not err in discounting the rate down to $450 per hour based on the complexity of the matter and some inefficiencies in his work;
• The trial judge did reduce work for the fact that fee claimant dissolved which would have rendered superfluous some of the claimed work;
• The trial judge did give reasons for his reductions, such that the federal requirements of explaining “haircuts” in detail did not apply (569 East County Boulevard LLC v. Backcountry Against the Dump, Inc., 6 Cal.App.5^th 426, 440, n. 17 (2016), distinguishing Kerkeles v. City of San Jose, 243 Cal.App.4^th 88, 104 (2015) as using federal criterion not usually apt in California state court cases);
• Fee opponent did not have standing to assert most challenges to fee claimant’s attorney’s retention agreement because those challenges could only be asserted by client, not the fee opponent; and
• Other of the challenges to fee claimant’s retention agreement were precluded on causation grounds because it was fee claimant’s success at trial level, not retention agreement infirmities, which led to fee opponent’s resultant fee exposure.