Sixth District Agreed With Third District’s Analysis On The Scope Of CCP § 1036.
The Sixth District, in Herrera v. City of San Jose, Case No. H042211 (6th Dist. June 28, 2019) (unpublished) had to face an inverse condemnation fee issue which pops up frequently when the plaintiff “condemnee” is entitled to some amount of fees but then moves for what was “actually incurred” under Code of Civil Procedure section 1036. Most of the time, plaintiffs moved for the lodestar amount billed by their attorneys, even if the contingency award of fees is much, much less. We now explain how the Sixth District steered through these interesting judicial waters on what to award plaintiff.
City’s main sewer main flooded most of the first floor of plaintiffs’ residence in San Jose, triggering an inverse condemnation action against the City. A jury awarded her damages after some offsets by the trial court for insurer settlement amounts. Plaintiff moved for attorney’s fees of $450,915 (later reduced to $395,940) as the prevailing party under section 1036, which provides that in inverse cases a lower court should reimburse “the plaintiff’s reasonable costs, disbursements, and expenses, including reasonable attorney, appraisal, and engineering fees, actually incurred because of that proceeding in the trial court or in any appellate proceeding in which the plaintiff prevails on any issue in that proceeding.” The lower court only awarded main plaintiff $20,066.67, representing 40% of her recovery pursuant to the contingent fee agreement she had with her attorney.
Plaintiffs appealed, but the Sixth District affirmed. Although relying on Salton Bay Marina, Inc. v. Imperial Irrigation Dist., 172 Cal.App.3d 914, 954-955 (1985) [allowing fees incurred not tethered to the contingent fee agreement], the Sixth District found that the lower court got to the right conclusion by relying on contrary Third District decisions in Andre v. City of West Sacramento, 92 Cal.App.4th 532, 536-537 (2001) [remanding to consider what plaintiff actually incurred, with consideration of the contingency arrangement with counsel] and Pacific Shores Property Owners Assn. v. Department of Fish & Wildlife, 244 Cal.App.4th 12, 61-62 (2016) [contingency fee arrangement was a “cap” on what could be awarded to plaintiff under section 1036]. The Sixth District sided with the Third District, although being sympathetic to the regard for fairness and reasonableness expressed by plaintiffs. However, the language of section 1036 was clear, limiting fee recovery to what was actually incurred under the terms of the contingency agreement with legal counsel.
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