CALIFORNIA ATTORNEY'S FEES

Deeds Of Trust, Requests For Admission, Section 1717: Civil Code § 1717 And Code Civ. Proc. § 2033.420 Award Of $191,619.47 In Attorney Fees And $29,345.97 In Costs To Defendants Prevailing Against Negligence And Fraud Claims At Trial Affirmed

Civil Code § 1717 Fees Are Awardable In An Action To Enforce Or, As In This Case, Avoid Enforcement Of A Contract, And Plaintiff Failed To Prove He Met Any Of The Four Exceptions To The Code Civ. Proc. § 2033.420 Mandated Fee Award For His Failures To Make Admissions.

            In Yoon v. Cam IX Trust et al., Case No. B301191 (2d Dist., Div. 8 January 29, 2021) (published), plaintiff sued alleging claims for negligence and fraud, statutory claims, and causes of action to set aside the trustee’s sale and quiet title in connection with a trustee’s sale of his home.  By the time the case went to a jury, only the negligence and fraud claims remained – which defendants successfully defeated.  Afterward, defendants – the assignee of the deed of trust securing repayment of a $640,000 promissory note, and assignee’s loan servicer – moved for Civil Code § 1717 fees pursuant to fee provisions in the promissory note and deed of trust, and under Code Civ. Proc. § 2033.420 for expenses incurred in proving the truth of matters plaintiff denied in responses to requests for admission.  The trial court, after making some reductions, found reasonable and awarded $191,619.47 in attorney fees and $29,345.97 in costs.  Plaintiff appealed.

            The 2/8 DCA affirmed.  Contrary to plaintiff’s argument that § 1717 did not apply because his negligence and fraud claims were not based on the contract, the gravamen of plaintiff’s lawsuit sought to avoid his obligations under the note by making claims defendant acted negligently and fraudulently during the foreclosure process – even arguing at trial that defendants’ failed to comply with the terms in the promissory note and deed of trust by improperly sending a foreclosure option notice to the wrong address.  “[F]ees should be awarded to the extent that the action in fact is an action to enforce – or avoid enforcement of – the specific contract.” (Shadoan v. World Savings & Loan Assn., 219 Cal.App.3d 97, 108 (1990).)

            As to the requests for admission, plaintiff argued that the trial court abused its discretion in making the § 2033.420 award because plaintiff had reasonable ground to believe that he would prevail on the matters – thus entitling him to an exception, under Code Civ. Proc. § 2033.420(b)(3), to the mandated fee award.  However, plaintiff failed to support his claim that he had reasonable ground with either evidence or circumstance both at trial and on appeal.  Finally, while the panel agreed with plaintiff’s argument that fees can be awarded only for the period after he denied the requests for admission, it found no adjustment in the fee award was necessary as fees were also properly awarded under § 1717.

Consumer Statutes: $11,425 Song-Beverly Act Fee Recovery, Out Of Requested $49,835 (Plus Multiplier), Reversed Where Plaintiff’s Rejection Of Prior Offer Resulted In Added Value And Where Court Improperly Focused On Contingency Retention Amount

Re-Do Required Based On These Two Errors.

            California’s lemon law statute can result in substantial fee awards under the Song-Beverly Act statutory fee-shifting provision.  However, the lodestar standard must be applied, which means an inquiry into the reasonable work even though prior CCP § 998 offers were rejected and irrespective of any inquiry into the contingency award to be paid to plaintiff’s counsel.

            In Chapman v. Hyundai Motor America, Case No. A158279 (1^st Dist., Div. 5 Jan. 28, 2021) (unpublished), plaintiff’s Hyundai Sonata had electrical problems which were not solved, leading to a Song-Beverly Act suit which sought damages, rescission, civil penalties, and attorney’s fees.  Plaintiff rejected three CCP § 998 offers: (1) $12,415.77; (2) $34,000 plus recovery of attorney’s fees to date; and (3) $50,000 plus recovery of fees.  However, plaintiff finally accepted a fourth 998 offer for $120,372 plus the ability to seek fees and costs by motion if no agreement could be reached on the amounts.  No agreement was reached, with plaintiff moving to recover $45,835 in lodestar fees, plus a 0.5 enhancement (total of $74,752.50), along with costs and expenses of $8,396.38.  Eventually, the lower court awarded $11,425 in fees, reducing the request based on the perceptions that the $34,000 second 998 offer should have been accepted (so that no work after that was reasonable) and that it could not gauge the reasonableness of the fee request without an inquiry into the contingency fee arrangement between plaintiff and its counsel.

            Plaintiff appealed, getting a reversal and remand win. 

            The main problems with the lower court’s reasoning was that plaintiff was seeking civil penalties such that the rejection of the $34,000 was reasonable, not to mention that the defense gave plaintiff 3.5 times the rejected second offer to resolve the case through the fourth 998 offer—tough to argue that the efforts after the second offer did not bear fruit.  On the contingency arrangement issue, the appellate panel agreed that the lodestar standard was the proper guidepost, agreeing with Reynolds v. Ford Motor Co., 47 Cal.App.5^th 1105, 1113-1114 (2020) [discussed in our April 23, 2020 post] that contingency arrangement was irrelevant to the fee inquiry.   “To the extent counsel ends up with a potential double recovery (or unconscionable fees) from the combination of the statutory fee award and amounts to be paid from the settlement proceeds under a contingency fee agreement, it is a matter between the attorney and client.”  (Slip Opn., p. 17.)

Probate: Where Attorney Only Delayed Distribution But Did Not Conceal Or Remove Funds, Attorney’s Fees Recovery Under Probate Code Section 859 Was Improper

Only Three Forms Of Specified Misconduct Give Rise To Fee Entitlement, With None Present Here.

             Probate Code section 859 provides that “If a court finds that a person has in bad faith wrongfully taken, concealed, or disposed of [estate] property[,] . . . the person may, in the court’s discretion, be liable for reasonable attorney’s fees and costs.”

            In Khatirine v. Marquez, Case No. A159348 (1^st Dist., Div. 4 Jan. 26, 2021) (unpublished), an attorney appealed an order compelling him to pay about $104,000 (twice the value of about $52,000 in funds) and $7,504.46 in a section 859 penalty to an estate’s personal representative.  The 1/4 DCA reversed, finding that the representative was only entitled to routine costs as the prevailing party but no section 859 penalty or attorney’s fees.  The reason was that attorney did not conceal or remove property, but only delayed distributing the $52,000 until ordered to do so by the probate court.  Section 859 is not a general “misconduct” statute, but only allows for fee recovery if three specified forms of misconduct occurred—and none of them did under the circumstances of the case. 

Costs: No Costs Awarded To Prevailing Party Winning $2,000 And Limited Equitable Relief In Unlimited Case Involving Feuding Neighbors

Trial Judge Did Not Abuse Discretion In Not Awarding Litigation Costs Where Ultimate Win Was Minor In Nature In Unlimited Civil Case.

            All litigation practitioners should be attuned to the next case, Van Taylor v. Ivie, Case No. B281545 (2d Dist., Div. 3 Jan. 26, 2021) (unpublished), where litigation costs are claimed in an unlimited case where your client won much less than the $25,000 jurisdictional amount.

            In this one, neighbors had a 20-year dispute over a narrow strip of land and block wall between their homes.  After 3 trials (some before a jury and some before a court) and seven appeals, one side received a jury award of $2,000 in damages on trespass/nuisance claims, with the trial judge also awarding some permanent injunctive relief where one side had to remove certain items on a wall between the two properties.  We can only imagine the attorney’s fees spent on this fiasco, but the winning side was denied normal litigation costs (much less than fees), prompting an appeal on the narrow costs issue.

            The 2/3 DCA affirmed the costs denial.  When a monetary award is below the $25,000 unlimited case threshold, the lower court has discretion to deny costs under CCP §1033(a).  Where a party obtains equitable relief, the lower court has the same discretion as far as awarding or denying costs under CCP §1032(a)(4).  Because the trial judge did weigh which side actually achieved their litigation objectives as compared to the contested claims (deciding no one clearly prevailed), it was no abuse of discretion for the trial judge to deny costs to the “winning” side.    

Family Law: $5,000 Sanctions Award Under Family Code Section 271 Affirmed On Appeal

No Abuse Of Discretion Based On Limited Record.

            In Rybolt v. Riley, Case No. C087877 (3d Dist. Jan. 26, 2021) (unpublished), ex-husband appealed a Family Code section 271 award of $5,000, payable in monthly $300 installments.  Because this was a limited judgment roll appeal, nothing showed that the lower court failed to review relative financial resources.  End of the matter, affirmed, based on the limited record presented upon review.

Allocation, Private Attorney General: Trial Court’s Application Of The Wrong Standard And Inappropriate Basis For Denying Prevailing Plaintiff’s Postappeal Section 1021.5 Motion For Fees Necessitated Remand

Trial Court Focused On The “Punishment” The Fees Award Would Impose On Defendant For Unsuccessful Appeal Of Judgment Rather Than Examining Determination Factors For Award Under § 1021.5 And Also Erred In Denying Based On Plaintiff’s Failure To Apportion Fees Between His Private Interests And The Public Interest.

            In Doe v. Westmont College, Case No. B303208 (2d Dist., Div. 6 January 25, 2021) (unpublished), plaintiff challenged the defendant college’s determination that he committed sexual assault in a petition for writ of administrative mandate – arguing that Westmont did not give him a fair hearing and that substantial evidence did not support its decision.  The trial court granted plaintiff’s petition, but denied his motion for $58,466 in fees under Code Civ. Proc. § 1021.5.  Plaintiff did not appeal the fees denial, but defendant unsuccessfully appealed the judgment.  After the 2/6 DCA affirmed in a published opinion, plaintiff sought to recover $85,652, under § 1021.5, for fees incurred on appeal.  The trial court denied – finding the published opinion’s significant benefit conferred on a large group of people arose from defendant’s decision to appeal, not plaintiff’s, and that a fee award to plaintiff would “punish [defendant] for appealing rather than vindicate the purposes behind . . . section 1021.5.”  The trial court also denied on the basis that plaintiff provided no apportionment between fees that pertained solely to plaintiff’s private interests and those that advanced the public interest.

            On appeal, plaintiff argued that the trial court erred when it denied his postappeal motion for attorney fees because: (1) his action resulted in the enforcement of an important right affecting the public interest, (2) his action conferred significant benefits on a large group of people, and (3) the necessity and burden of private enforcement made a fee award appropriate. The panel agreed with plaintiff’s first two contentions, and concluded that the trial court had abused its discretion by failing to examine two factors in making its determination re § 1021.5 fees – whether private enforcement was necessary, and whether the financial burden of private enforcement warranted a fees award.  Instead the trial court focused on the “punishment” defendant would suffer for exercising its right to appeal – thereby applying the wrong standard in determining the merits of plaintiff’s motion for fees.

            Additionally, the panel found that plaintiff’s failure to apportion fees between those that advanced his private interests and those that advanced the public interest was not an appropriate basis for denial – with the award of attorney fees being an obligation if the party seeking fees has met the criteria for the award, and the trial court having the broad discretion to apportion such fees if the seeking party is not able to do so.

BLOG UPDATE:  We can now report that Doe v. Westmont College was certified for publication on February 8, 2021.

Sanctions: Ninth Circuit Reverses Six Sanctions Imposed By District Court Under Inherent Authority, Rather Than Pursuant To Statute Or Rule, Against Prevailing Plaintiff For Disobeying A Discovery Order

The District Court Did Not Have The Benefit Of The Goodyear Tire Decision At The Time It Issued The Sanctions Order So A Remand Was In Order.

            America Unites For Kids v. Rousseau, Case No. 16-56390 (9^th Cir. January 22, 2021) (published), has a nice discussion on the procedural requirements and substantive limitations that apply when a district court imposes sanctions under its inherent authority, rather than pursuant to any statute or rule.

            In this case, two nonprofit environmental organizations sued Santa Monica Malibu Unified School District administrators and board members to enforce the Toxic Substances Control Act (TSCA), 15 U.S.C. §§ 2601-2629.  Specifically, they sought remediation of several school buildings containing dangerous levels of polychlorinated biphenyls (PCBs).  PCBs, which the EPA concluded to be hazardous in concentrations of 50 parts per million or more, were used prior to 1978 to enhance pliability in products such as caulk, adhesives, and paint.

            To resolve a discovery issue between the parties, the district court limited plaintiffs’ testing for PCBs to air and wipe sampling – only allowing testing of caulk or more invasive testing if the air/wipe sampling revealed the necessity.  After the first nonprofit disobeyed the orders and conducted unauthorized testing, the district court, under its inherent authority, issued six separate sanctions against first nonprofit and five separate sanctions against second nonprofit for its attempt to profit from the unauthorized testing.  One of the imposed sanctions struck both nonprofits’ prayer for attorneys’ fees, expert witness fees, and costs, which otherwise likely would have been allowed under 15 U.S.C. § 2619(c).

            After conducting trial, the district court entered judgment in favor of first nonprofit, issued a permanent injunction against the district from using offices/classrooms built before 1979 unless they were remediated, dismissed second nonprofit for lack of standing, and ordered each party to bear its own costs and attorneys’ fees.

            The Ninth Circuit, through a 2-0 majority decision by District Judge Simon (District Judge for the District of Oregon, sitting by designation), vacated and remanded the district court’s sanctions order in its entirety and reversed the district court’s dismissal of second nonprofit for lack of standing. 

            As to the sanctions, the Ninth Circuit – recognizing that the district court did not have the benefit of Goodyear Tire & Rubber Co. v. Haeger, 137 S. Ct. 1178 (2017) [discussed in our April 23, 2017 post] when it issued its sanctions ruling under its inherent authority – found that the district court failed to apply the “but for” standard directed in Goodyear Tire for any sanctions it imposed as compensatory rather than punitive, failed to provide plaintiffs with the required criminal procedural safeguards for the punitive sanctions imposed, and failed to make explicit findings of either: (1) a willful violation of a court order; or (2) bad faith. 

            As to the district court’s dismissal of second nonprofit, the Ninth Circuit concluded that although second nonprofit did not have members per se, it had associational standing in the lawsuit.  A close connection exists between second nonprofit’s mission and the interests of its non-member teachers – enough to give the nonprofit a personal stake in the outcome of this lawsuit.

            Circuit Judge O’Scannlain dissented on the sanctions and lack of standing issues – finding that the Goodyear Tires framework did not apply to the district court’s denial of attorneys’ fees, that the denial was a proper exercise of the district court’s discretion under TSCA, and that other sanctions were not properly challenged by plaintiffs on appeal.  As to the lack of standing issue, Judge O’Scannlain found that second nonprofit failed to provide evidence it was an association or that teacher who supported the organization was the functional equivalent of a member.

Ethics, POOF!, SLAPP!: Attorney Fees And Costs Awarded To Successfully SLAPPing Defendants Goes POOF! With Reversal Of Trial Court’s Partial Grant Of Defendants’ SLAPP Motion

Defendants’ Internet And Twitter Statements Against Plaintiffs Consisted Mainly Of "Vulgar And/Or Adolescent Personal Insults, Misogynistic, Racist, And Xenophobic Comments, And Other Slurs Having Nothing To Do With Any Reasoned Discussion Of Trustworthiness, Competence, Or Any Other 'Public Issue Or An Issue Of Public Interest.'”

            In Block v. Bramzon, Case Nos. B292129/B297198 (2d Dist., Div. 4 January 22, 2021) (unpublished), plaintiffs (an attorney handling landlord-tenant matters and representing landlords in unlawful detainers, two associate attorneys from his law firm, and the firm’s office manager) sued for libel and other related claims after defendants (a law firm that defends tenants against eviction, its founding attorney, and a former client of defending firm/founding attorney who also apparently worked for firm/founding attorney) embarked on a malicious and defamatory campaign that targeted plaintiff attorney’s business, practice and employees.  Plaintiffs claimed the campaign involved the creation of a website, named after and impersonating plaintiff attorney, that directed potential clients to contact a landlord-tenant law firm other than plaintiff’s firm.  Additionally, the campaign involved a Twitter account that used plaintiff attorney’s name and was allegedly used to make statements that suggested (1) plaintiff attorney is a greedy thief and criminal, unethical and immoral, racist, sexist, misogynistic, incompetent, an abuser of drugs, and is unfaithful and promiscuous; (2) one of the plaintiff associate attorneys is promiscuous, immoral, and incompetent; and (3) the other plaintiff associate attorney engages in unlawful acts of animal cruelty.  The Twitter account also posted plaintiff attorney’s personal cell phone number, home address, and photos of plaintiffs and some of their family members.

            Defendant law firm and its founding attorney SLAPPed back – claiming plaintiff attorney had made himself a public issue and the Twitter account was intended to warn consumers about plaintiff attorney’s trustworthiness.  The trial court, finding defendants’ speech and conduct was a protected activity involving “a consumer watchdog type of situation,” struck plaintiff’s negligent infliction of emotional distress and intentional interference with prospective economic advantage causes of action, concluding plaintiffs did not establish a reasonable probability of prevailing on those claims.  The trial court also granted defendant law firm and defendant attorney’s motion for fees for partially prevailing on their SLAPP motion.  Plaintiffs then voluntarily dismissed the same two causes of action against third defendant, and he unsuccessfully filed his own SLAPP motion on the remaining claims. 

            Everyone appealed.  Plaintiffs challenged the trial court’s SLAPP ruling on the two stricken causes of action.  Defendant law firm and defendant attorney challenged the order on their SLAPP motion to the extent it denied the motion, and third defendant appealed the order denying his SLAPP motion in its entirety.

            The 2/4 DCA, in a 3-0 opinion authored by Justice Currey, reversed the portion of the SLAPP order that struck two of plaintiff’s causes of action along with the fees and costs awarded to defendant law firm and defendant attorney, and affirmed the remainder of the trial court’s orders.  The appellate panel found defendants’ speech and conduct did not involve a public issue or issue of public interest pursuant to the principles held in FilmOn.com Inc. v. DoubleVerify Inc., 7 Cal.5th 133 (2019).  In fact, in contrast to defendants’ claims that their speech and conduct were protected activities because plaintiff attorney was a public figure and his trustworthiness was an issue of public interest, the majority of defendants’ statements consisted "of vulgar and/or adolescent personal insults, misogynistic, racist, and xenophobic comments, and other slurs having nothing to do with any reasoned discussion of trustworthiness, competence, or any other 'public issue or an issue of public interest.'” (§ 425.16(e)(4).)

            Finally, the appellate panel asked the parties to file supplemental briefs addressing whether the alleged participation of defendant attorney in the alleged conduct would violate any State Bar disciplinary rule(s) and whether the appellate or superior court had authority to take remedial action or impose sanctions.  Ultimately, because the facts of the case and defendant attorney’s participation were undetermined at that stage of the litigation, the panel directed the trial court “on remand to make such inquiries, order, and/or referrals to the State Bar as it deems appropriate.”

Fees On Fees, SLAPP: Trial Court’s Additional Award To Successfully SLAPPing Defendant Of $15,660 In Fees And $368.44 In Costs After Initial Fees Award Of $10,910 And $60 In Costs Was No Abuse Of Discretion

Defendant Was Entitled To Recover Fees And Costs Incurred In Responding To Plaintiff’s Numerous Attempts To Overturn The Trial Court’s Grant Of The SLAPP Motion, Not Just The Fees/Costs She Incurred In Bringing The Anti-SLAPP Motion.

            After successfully SLAPPing plaintiff’s complaint and being awarded $10,910 in attorney fees and $60 in costs under Code Civ. Proc. § 425.16(c), defendant found herself fighting a series of at least nine unsuccessful attempts by plaintiff to reverse the trial court’s anti-SLAPP ruling. Following entry of judgment, defendant moved under § 425.16 for an additional $13,746 in fees and $400.52 in costs she had incurred in responding to plaintiff’s numerous filings.  Additionally, defendant sought fees on fees (fees incurred in bringing the fee motion) – estimating $2,001 in fees (which was adjusted to $2,749.50 in her reply) and $98.52 in costs.  The trial court found defendant was entitled to recover additional fees and costs she incurred that were necessary in litigating her fees award and were related to plaintiff’s numerous attempts to overturn the trial court’s SLAPP ruling – awarding defendant $15,660 in fees and $368.44 in costs after some reductions to fees/costs the trial court determined were not sufficiently related to defendant’s enforcement of the trial court’s SLAPP ruling.

            The result was affirmed on appeal in Pierce v. Heiple, Case No. B300825 (2d Dist., Div. 1 January 22, 2021) (unpublished).   Despite plaintiff’s argument to the contrary, the award of fees/costs under § 425.16(c) is not limited to fees/costs incurred in bringing the SLAPP motion.  California Courts also allow fees/costs for responding to an appeal from the grant of a SLAPP motion and for bringing the fees/costs motion itself.  Here, although plaintiff abandoned his appeal of the trial court’s order granting the SLAPP motion, he challenged the order by bringing other motions – such as moving for a new trial and twice seeking to set aside the order – in the trial court.  Defendant was forced to respond to plaintiff’s filings to preserve the trial court’s SLAPP order.  Plaintiff’s other arguments – that defendant’s attorney’s declaration in support of the additional fees motion contained vague, block-billed time entries and that various line items were improper – were to no avail.  The 2/1 DCA found nothing vague about the entries in attorney’s declaration which provided a summary of hours spent responding to each of plaintiff’s filings followed by a detailed breakdown of each task performed.  Plaintiff’s challenge to particular line items was forfeited on appeal as they were not raised in the trial court.

Discovery, Sanctions: $6,954.95 Deposition Discovery Sanctions Award Was Appealable Even Though It Was Payable To Two Different Recipients, While $1,750 Sanctions Award Was Not Appealable

However, The Merits Appeal Of The $6,954.95 Sanctions Award Did Not Succeed Based On Failure To Appreciate The Nature Of The Deposition Process.

            Burke v. Newport-Mesa Unified School Dist., Case No. G058732 (4^th Dist., Div. 3 Jan. 21, 2021) (unpublished), authored by Justice Goethals of our local Santa Ana appellate court, has some interesting discussion points on discovery sanctions appealability thresholds and on the nature of the deposition process in civil litigation.

            In this one, plaintiff was sanctioned two times in relation to deposition conduct or non-conduct: (1) $6,954.95 in discovery sanctions for refusal to answer questions at a court-ordered deposition, although they were made payable to two different sets of recipients (one motion based on the same conduct); and (2) $1,750 in discovery sanctions for failing to sit for a subsequent deposition, payable to just one party.  Plaintiff, obviously upset, appealed.

            The $1,750 order was not appealable because it was one for sanctions below $5,000.

            However, the $6,954.95 order was appealable, because CCP § 904.1(a)(12) focuses on the amount to be paid, not the amount split between any diverse recipients.  All the more so because it was a single motion arising from the same deposition conduct.  Respondents argued that a removal of the matter to federal court somehow divested jurisdiction away from the state courts, but this did not resonate with the appellate court.  However, although getting past the crucial appealability and procedural hurdles, plaintiff could not prevail on the merits.   After all, he refused to answer 223 questions at his deposition and responded “I don’t know” to an additional 234 questions.  Plaintiff argued that he “cured” any transgressions by providing supplemental responses after the deposition in writing to many of the unanswered questions, but the appellate court indicated this misapprehended the difference between on-the-spot deposition cross-examination and an after-the-fact interrogatory type of answering process—no effective cure at all and a misunderstanding of the deposition process.  In the end, the larger sanctions order was affirmed, and the appeal from the lower sanctions order was dismissed.

Fee Clause Interpretation, Section 1717: In San Diego Real Estate Investment Dispute, One Fee Award Of $227,734.32 Reversed While Another Fee Award Of $75,262.50 Affirmed

Whether Fee Clause Was “On The Contract” Or Fell Within The Fee Clause Language Determined The Results In This Case.

            In the attorney’s fees area in California state courts where contractual fee clauses are at issue, key issues are whether a prevailing party actually prevailed “on a contract” for fee entitlement under Civil Code section 1717 or whether a particular successful result on a contract claim fell within the governing language of the fees clause.  Chhatrala Investments, LLC v. Elajou Investment Group, L.P., Case No. D074840 (4^th Dist., Div. 1 Jan. 21, 2021) (unpublished) confronted such issues, which were key in reaching the end results.

            There, plaintiff real estate investors sued to recoup $1.79 million in funds for the sale of a San Diego commercial parcel properly known as the Waterfall Property.  They brought various contractual, tort, common count, and equitable claims against various defendants.  The defendants obtained wins through an eventual demurrer of a third amended complaint which was sustained without leave, a merits ruling affirmed on appeal.  Later, defendant Zephyr obtained $227,734.32 in contractual attorney’s fees, and remaining defendants were awarded $75,262.50 in fees as against the losing plaintiffs.

            The $75,262.50 fee award held up on appeal.  Plaintiffs’ claims were based on breach of a promissory note (based on a fees clause) and foreclosure of the underlying security; as such, the “enforce this Note” language was broad enough to provide fee entitlement.  It did not matter that plaintiff was a nonsignatory on the note because plaintiff claimed entitlement to enforce the note—seeking the benefits of the note gave rise to fee exposure.

            A different result occurred with respect to the $227,734.32 fee award obtained by Zephyr.  That one was reversed because Zephyr only prevailed on tort-based and common count claims, ones which were not “on the contract” under section 1717 (an essential component of recovery under this statute).  Zephyr’s main fallback was that it prevailed on affirmative defenses involving the contract so as to provide entitlement, but this argument was dispatched by the Mountain Air decision to the contrary [our Leading Case #22] and by the wording of the fees clause which only applied to “commenced” litigation rather than affirmative defenses. 

Probate: $74,970 Attorney’s Fees Award To Law Firm Providing Services To Trust Affirmed On Appeal

Although No True Successor Trustee Was Appointed, Legal Services To The Person Administering The Trust Were Proper Because The Services Benefited The Trust And Because Person’s Services Were Ratified Through A Settlement Agreement.

            In Orsinger v. Kemp & Associates, Inc., Case No. B303111 (2d Dist., Div. 6 Jan. 20, 2021) (unpublished), son of a couple who set up a family trust was the acting successor trustee and the sole trust beneficiary.  Son hired Orsinger to help repair a house (the main asset) and remove squatters, also asking Orsinger to be the executor of his estate and the successor trustee of the family trust.  However, son unexpectedly died with no will, no spouse, and no children.  Orsinger hired a law firm to assist with trust administration, with the trust taking a lot of time to liquidate before the house was sold.  Kemp & Associates, a company specializing in heir location services, notified Orsinger that son’s six intestate heirs assigned a percentage of their inheritance to K&A.  K&A objected to a final accounting, contending Orsinger was never appointed successor trustee—an authority issue that initially troubled the probate judge.  Eventually, K&A and Orsinger entered into a settlement agreement ratifying his actions as well as indicating he would be paid and non-attorney professional fees would be paid.  Orsinger requested approval of $74,970 in fees incurred by the law firm assisting in trust administration, a request honored by the probate judge. 

            K&A appealed, raising several arguments against the fee award.  All of them were dispatched on appeal.  First, the fact that Orsinger was never appointed successor trustee was a “form-over-substance argument” which failed because the settlement agreement ratified his actions and the lower court had authority to make a quantum meruit award for the reasonable value of the legal services provided (Prob. Code, §§ 16247, 16243).  The probate judge had jurisdiction to award fees given that the settlement agreement stated the parties consented to continuing jurisdiction of the superior court.  K&A argued that the trust assets became part of son’s estate upon his death such that title to the assets immediately vested in the son’s intestate heirs.  The 2/6 DCA rejected this argument, finding it hyper-technical and waived through the settlement agreement. The probate court had the power to apply equitable principles to determine the entire controversy before it, including the ability to approve payments to counsel aiding administration of the family trust. 

Appealability, Discovery, Sanctions: Appeal Of Terminating Sanctions Does Not Necessarily Also Encompass Challenge To Discovery Monetary Sanctions

2/7 DCA Implicitly Suggests Disagreement With Other Decisions, But Finds Two Sanctions Orders Were Not Intertwined.

            OK, for you folks who love technical appealability issues, Taylor v. Forde, Case No. B298957 (2d Dist., Div. 7 Jan. 20, 2021) (unpublished), may be your forte, especially when it comes to appealability of discovery terminating sanctions orders and discovery monetary sanctions.  Be careful when you appeal a terminating sanctions order.

            What happened here is that both discovery terminating sanctions and monetary sanctions orders were entered, but no judgment was ever entered on the complaint or stricken cross-complaint—no default prove-up proceedings resulted in a final judgment.  Appellants appealed the terminating sanctions order, but they did not contest the monetary sanctions order.  The lack of a final judgment on the merits sealed the deal with respect to appealing the terminating sanctions order, except for appellant’s argument that the appeal of the monetary sanctions preserved the appeal of the terminating sanctions.  Appellant argued that the terminating sanctions order was “inextricably intertwined” with the monetary sanctions order over the $5,000 limit such that everything was good. 

            The 2/7 DCA disagreed, dismissing the appeal.  It questioned whether the “inextricably intertwined” exception in Nickell v. Matlock, 206 Cal.App.4^th 934 (2012) and Mileikowsky v. Tenet Healthsystem, 128 Cal.App.4^th 262 (2005) was valid.  However, the terminating sanctions and monetary sanctions orders were not intertwined given no suggestion the sanctions order was erroneous, all the more so because they serve different purposes.  Because the terminating sanctions order was nonappealable and not intertwined, the appeal was dismissed.    

Consumer Statutes, Section 998: Plaintiff Only Suing For Injunctive Relief And Not Proving Damage Liability Under CLRA, Where Accepted 998 Offer Was Silent On Liability, Fees, And Costs, Did Not Give Rise to Fee Recovery

Case Is A Real Attention Getter With Respect to Acceptance Of 998 Offers Which Are Carefully Drafted.

            We like this next case because if offers practitioners on both sides of the aisle an opportunity to carefully craft and accept CCP § 998 offer in certain consumer-oriented areas of the law.  Mikki v. Lifemark Group, Inc., Case No. D076885 (4^th Dist., Div. 1 Jan. 20, 2021) (unpublished) is the opinion we next discuss.

            What happened here is that the plaintiff sued defendant, in a dispute about a cemetery space, for injunctive relief primarily under the Consumers Legal Remedies Act (CLRA) and expressly disclaimed damages in the complaint.  Early on, the defense served, and plaintiff accepted, a CCP § 998 offer to pay her $5,000.01 “exclusive of attorneys’ fees and costs incurred as of the date of this offer,” although nothing in the offer stipulated to liability or acknowledged that plaintiff was the prevailing party.  Plaintiff moved for $67,000 in attorney’s fees under CLRA, but the lower court only ordered the defense to pay $38,000 in fees.  Defendant appealed.

            The defense won a reversal as a matter of law with respect to the fee award.

            Initially, the defense argued that no fee award was justified because plaintiff served no CLRA pre-lawsuit demand.  However, that argument was rejected because it only applies to damages claims, not an injunctive situation which was involved here.

            However, as all opinions must, that brought the appellate court to consider whether plaintiff was a prevailing party under the CLRA.  She was not.  The problem was that the section 998 offer only offered a payment, such that plaintiff did not establish she suffered some tangible damage given that the complaint only sought injunctive relief.  (Cf.  Meyer v. Sprint Spectrum L.P., 45 Cal.4^th 634, 644-645 (2009) [likely the holding; but, if dicta, should be followed here].)  There was no finding of damages liability, which is necessary under the CLRA, Unruh Act, and Disabled Persons Act, and no liability was not conceded under the 998 offer.  That silence was dispositive.  So, the attorney’s fees award went POOF! as a matter of law. 

Request For Admissions: Plaintiff Found 75% Negligent In Bike-Truck Accident Properly Not Awarded Costs-Of-Proof Sanctions Where Defense Had Good Faith Belief In Contesting Negligence And Causation Issues

Defense Did Better Than “Hope Or A Roll Of The Dice” in Denying Two Key RFAs.

            In Munoz v. County of Imperial, Case No. D075805 (4^th Dist., Div. 1 Jan. 20, 2021) (unpublished), a bike rider sued after a personal injury accident with a pickup truck.  The jury awarded plaintiff $120,000 after determining she was 75% at fault, later upped by another $36,875 for pain and suffering based on an additur.  Before trial, the defense denied two key requests for admissions on negligence and causation.  After she won, plaintiff moved for costs-of-proof sanctions under CCP § 2033.420, a request which was denied.

            The denial was affirmed on appeal.  The defense had a good faith belief to deny the RFAs based on the contested nature of the two issues at trial, confirmed by highly contested liability proof in the form of independent witnesses and accident reconstruction experts.  In a quote we like from another case, the appellate court said the defense denials were more than “hope or a roll of the dice” giving rise to costs-of-proof sanctions.  (Grace v. Mansourian, 240 Cal.App.4^th 523, 532 (2015).)

Appealability, Employment, Intervenors, Prevailing Party, Section 1717: Bevy Of Appealability Issues And Prevailing Party Issues Were Resolved By 4/1 DCA Dispute Between Former Employer And Employee Over Return And Use Of Documents On A Jump Drive

Employee Did Prevail On Employer’s Contract Claims, But Lower Court’s Reduced Fee Award For Prevailing On Labor Code Claims Was No Abuse Of Discretion—Given Attorney Intervenors Did Timely Appeal And Contest Merits Based On Their Attorney’s Lien Interest In Fees/Costs Awards.

            This next case, Premier Mechanical Group, Inc. v. Harvey (Edwards), Case No. D075663 (4^th Dist., Div. 1 Jan. 20, 2021) (unpublished), is procedurally complicated, but confronted numerous issues on appealability, prevailing party, and reduced Labor Code fee award issues.

            There, former employer and former employee got involved in a real ado centering on employee’s return and use of documents on a jump drive, inspiring various contract/tort claims by employer as plaintiff and primarily Labor Code claims by employee as cross-complainant.  Employee was represented by counsel during some phases of the litigation.  Eventually, a jury found against employer on its contract claim (finding a breach, but no damages), but awarding employer $95,000 on a non-contract unlawful audio/video recording claim against employee.  On the cross-complaint, the jury found employer had failed to pay employee for all work performed, awarding $1,940, although finding against employee on the remaining cross-claims.  Employee then moved to recover over $1 million in attorney’s fees and $57,039 in costs as the prevailing party under both the complaint and cross-complaint.  The lower court did not believe employee prevailed under the contract on the complaint and awarded $10,500 in reduced fees on the cross-complaint.  $57,039 in statutory and nonstatutory costs also were awarded to employee.  That provoked a lot of appeals, with employee’s attorney filing a notice of attorney’s lien against the client’s monetary recoveries and with employee then proceeding in pro per.  Employer then successfully moved to strike the costs award in entirety.  Employee’s substituted-out attorneys then moved to intervene for purposes of protecting their rights to recover attorney’s fees and costs in the litigation, which was eventually granted after employee in pro per and employer reached a settlement.  Attorneys filed appeals, as proposed intervenors, of various fee and costs rulings, with the lower court granting the motion to intervene to address claims for fees and costs against employer but not to seek any relief from employee.  However, the lower court did amend the fees order to direct the fees paid to the attorneys rather than employee.  Another appeal followed by employee’s attorneys. 

            Employer moved to dismiss the attorneys’ appeal, but that was denied.  As intervenors, the attorneys had an independent right to pursue fees and costs, no matter what settlement was reached between employee (former client) and employer.  Their notice of appeal was timely based on the prior entry of judgment not including the fees/costs order and based on the fact that the new order awarding them fees and costs as intervenors, later, was independently appealable.  The fact that the case, as pled, was unlimited civil in nature did not mean an appeal had to be made to the superior court appellate division; the DCA had appellate jurisdiction. 

            On the merits, the 4/1 DCA panel decided that prior orders on fees and costs could be revisited by attorneys because the later order directing fees/costs to them was a substantial modification which was independently appealable.  The lower court erred in not awarding fees and costs to employee (which would be for the benefit of her counsel filing the attorney’s lien) on employer’s complaint because employee beat contract claims, with the unlawful recording claim being a non-contractual claim.  Given that fact, the prior order vacating costs had to be considered in fairness to the intervenor attorneys.  With respect to the Labor Code attorney’s fees award, the reduction by the lower court was reasonable, compensating for 30 hours of work at the rate of $350 per hour.  Nothing demonstrated that the lower court’s apportionments and reductions were out of line under an abuse-of-discretion standard.  Remand ordered to the superior court on fees and costs to employee’s attorneys on employer’s contract-based complaint claim. 

Costs: Reversal Of Costs Awarded To Defendants Necessitated By Reversal Of Trial Court’s Granting Of Defendants’ Summary Adjudication Motion On Negligent Misrepresentation Claim

Plaintiff Adequately Alleged Negligent Misrepresentation, Submitted Evidence Demonstrating A Triable Issue Of Fact, And Defendants Did Not Establish That Plaintiff Could Not Prove The Elements Of Negligent Misrepresentation.

            For a nice discussion re the elements of intentional and negligent misrepresentation, we commend our readers read Borman v. Brown, Case Nos. D076239/D076748 (4^th Dist., Div. 1 January 15, 2021) (published). 

            In Borman, plaintiff sought treatment for a droopy eyelid and brow from eye center physician defendant who advised that a brow lift procedure would correct the issue, but would not be covered by plaintiff’s insurance, and that an eye lift could alternatively be performed and covered by plaintiff’s insurance.  Plaintiff could not afford a procedure not covered by insurance and agreed to have defendant perform the eye lift to resolve her issues.  Afterward, she continued to have difficulties with her eyelid and brow, so she consulted with another physician who informed her that the brow lift, not eye lift, was the procedure that should have been performed for her situation.  Additionally, plaintiff learned the brow lift would have been covered by her insurance had defendant done the appropriate documentation of the need for the procedure and submitted it to the insurance company for approval.

            Plaintiff sued defendant physician and the eye center – alleging causes of action for professional negligence, lack of informed consent, fraud and deceit, and medical battery.  The trial court granted defendants’ summary adjudication as to the fraud and deceit and battery causes of action.  The remaining causes of action went to trial – with the jury returning verdict in defendants’ favor – and the trial court also entered a postjudgment order awarding costs to defendants.  

            The 4/1 DCA reversed and remanded for further proceedings on plaintiff’s fraud and deceit cause of action insofar as it pled a claim for negligent misrepresentation.  In a 3-0 opinion, authored by Justice Aaron, the panel found the trial court erred in granting summary adjudication.  Plaintiff had adequately alleged the tort of deceit based on negligent misrepresentation, had submitted evidence to the trial court demonstrating a triable issue of fact with respect to the intent to induce reliance element, and defendants had not established that plaintiff could not prove the elements of negligent misrepresentation.  Reversal and remand for the negligent misrep claim necessitated reversal of the costs award order issued in defendants’ favor.

Arbitration: Arbitrator’s Decision To Reallocate Arbitration Attorney’s Fees And Costs Award In Payment Of Mortgage For Winning Tenants In Common Parties Was Proper

$304,894.15 Was The Reallocation Remedy.

            Ahn v. Sanger, Case Nos. A157260/157935 (1^st Dist., Div. 1 Jan. 15, 2021) (unpublished) demonstrates the breadth of arbitrators’ remedies as long as they rationally related to the contractual dispute being resolved.

            There, in an initial arbitration, the Sangers won a contractual dispute against Ahn involving a multi-residential building in San Francisco which they owed as tenants in common, with a contractual fees clause being in play.  In an earlier appeal, the 1/1 DCA confirmed the award and also reversed a lower court’s refusal to award the Sangers fees for confirming the award.  However, because these types of disputes can be bitter and contentious, a second arbitration occurred by which the arbitrator ordered Ahn to remove a lien on the property and pay prevailing party attorney’s fees and costs to the Sangers in the sum of $304,894.15.  Ahn did not remove the lien, so the arbitration devised a “reallocation remedy”:  the $304,894.15 in fees and costs in Sangers’ favor were to be credited against the amount of the joint mortgage amount still outstanding with respect to their share.  That prompted a second appeal, with the lower court confirming the award but rejecting the reallocation remedy.

            The 1/1 DCA unequivocally confirmed the arbitration award, deciding that the reallocation remedy was rationally related as a remedy with regard to Ahn’s breach of the tenant-in-common agreement.  Although penalties cannot be awarded under certain circumstances by an arbitrator, this remedy was not one and was equitable under the circumstances. 

SLAPP: $24,175 In Attorney’s Fees Award Was No Abuse Of Discretion For A Litigant Successfully Striking A Defamation Cross-Claim

No Meet And Confer Requirement Under SLAPP Statute, With Cross-Complainant Not Dismissing The Cross-Complaint Until After The SLAPP Motion Was Filed.

            In Trinity Risk Management, LLC v. Simplified Labor Staffing Solutions, Inc., Case No. B297176 (2d Dist., Div. 8 Jan. 11, 2021 unpublished; published on Jan. 14, 2021), a cross-complainant—although indicating an intent to dismiss an extant cross-complaint—did not do so until after the opposing side filed a SLAPP motion directed against a defamation cross-claim.  The motion was granted, with the lower court then awarding the fully requested fees of $24,175 to the successful SLAPPing litigant.

            The merits and fee decisions were upheld on appeal.  There is no meet and confer requirement under the SLAPP statute to discuss the merits or amount of fees being requested.  Given the particular sequence of events where the cross-complaint was dismissed after the SLAPP motion was filed, appellant’s reliance on Oakland Bulk and Oversized Terminal, LLC v. City of Oakland, 54 Cal.App.5^th 738 (2020) [reviewed in our Sept. 17, 2020 post] was inapposite because the filing of the SLAPP motion, under the circumstances, was no “sharp practice.”

Celebrities, News: Washington Post Reports That Donald Trump Has Instructed Aides Not To Pay Rudy Giuliani's Legal Fees

Of Course, We Are High-Minded And Therefore Only Interested In The Potential Legal Issues . . . 

        On January 13, 2021, journalists Philip Rucker, Josh Dawsey and Ashley Parker of the  Washington Post, reported that outgoing President Donald Trump has instructed his aides not to pay Rudy Giuliani's legal fees. Specifically, they write:

"Trump has instructed aides not to pay Giuliani’s legal fees, two officials said, and has demanded that he personally approve  reimbursements for the expenses Giuliani incurred while traveling on the president’s behalf to challenge election results in key states. They said Trump has privately expressed concern with some of Giuliani’s moves and did not appreciate a demand from Giuliani for $20,000 a day in fees for his work attempting to overturn the election."

Our beat is attorney's fees, and we do not enter into the political fray. Instead, we suggest a few serious questions:

1) When Giuliani undertook the assignment, did he and Trump enter into a written agreement? 

2) If Giuliani and Trump entered into a  written agreement, do disputes require arbitration?

3) Were both parties to the contract mentally competent?

4) What was the  scope of Giuliani's legal  assignment -- to undo the election?

5) Did Giuliani make promises about what he would accomplish, to wit, overturn the popular election results? 

6) Was Giuliani's reported fee of $20,000/day reasonable? (For a New York attorney, former Mayor of Gotham, former  US Attorney for the SDNY, with 50 years experience.)

7) Did Giuliani make proper time entries? Did he block bill?

8) Were Giuliani's fees reasonably and necessarily incurred?

9) Did Giuliani commit malpractice?

10) Does New York state law or other law govern the attorney-client contract?

11) Did Giuliani represent Trump pro bono, and if so, for what period of time?

13) Has Giuliani violated any New York Rules of Professional Conduct during his representation of his client?

14) Did Giuliani provide poor legal advice in connection with the rally on January 6, 2021 in Washington D.C., at which Giuliani and Trump spoke, following which a violent mob stormed the Capitol, resulting in Trump's impeachment?

15) Did Giuliani display absolute fidelity to Trump?

16) Did Giuliani unnecessarily incur legal costs when he booked Four Seasons Landscaping?

17) Did Giuliani display bad hair on camera?

18) Did Trump violate the law by failing to mention Mr. Giuliani or his unpaid labor for 20 months on the annual financial disclosure he filed in May, "which requires that the value and source of gifts — including free legal work — be publicly listed," as reported by the NYT?

19) Has Trump engaged in unfair business practices by following a modus operandi of stiffing business creditors?

20) Are the journalists' reports of a falling out between Trump and his loyal friend and personal attorney Giuliani simply Fake News?

 

 

Requests For Admission: $80,658.75 Costs-Of-Proof Sanctions Affirmed On Appeal

Initial Denial That Association Rules Were Violated, Conceded Later At Trial, Justified The Award.

            In Verotel Merchant Services B.V. v. Rizal Commercial Bank, Case Nos. B276120/B281869 (2d Dist., Div. 4 Jan. 13, 2021) (unpublished), some plaintiffs won $1.526 million in compensatory damages and $7.5 million in punitive damages against defendants.  During the case, the defense denied certain requests for admissions.  After the jury verdict, with the defense finally conceding certain Association rules were not complied with after denying otherwise in RFA responses, the trial judge found that $80,658.75 was the costs-of-proof sanctions price under CCP § 2033.420 for denying the two crucial RFAs.  The record showed no abuse of discretion in making that award.

Prevailing Party: Litigant Successfully Opposing Attorney’s Fees Request Involving Pet Cemetery Dispute Properly Was Not Entitled To Fees As Prevailing Party

No Authority Provided To Show A Litigant Prevailed On Opposing A Fee Motion Where That Litigant Did Not Prevail On The Merits.

            Allen v. MacIntosh, Case No. E073408 (4^th Dist., Div. 2 Jan. 13, 2021) (unpublished) involved a trespass dispute on land which had a portion dedicated for use as a pet cemetery.  In the end on the merits, a litigant lost but was able to beat back an amended motion for attorney’s fees because it was not based on a CCRs enforcement action and because there was no declaration from counsel to support the fees sought.  Then, creatively, that litigant sought to recover fees as the prevailing party in the action.  Get outta here, said the appellate court in a much more eloquent way.  Although the Davis-Stirling Act (Civ. Code, § 5975) does have a fee shifting provision, appellant lost in the underlying litigation and produced no authority for the proposition that opposing a motion relating to another party’s attorney’s fees request qualifies the litigant as a prevailing party. 

Substantiation Of Reasonableness Of Fees: No Abuse Of Discretion In Award Of $28,086 In Fees And $2,069.36 In Costs To Sellers Of Mobile Home Park Who Prevailed In Confirming Arbitration Award

Buyer Failed To Meet Its Burden Of Rebutting Seller’s Showing Of Entitlement And Reasonableness Of Fees With Supporting Rebuttal Evidence.

            In Kim v. PCP-Sundance, Case Nos. D076510/D076799 (4^th Dist., Div. 1 January 11, 2021) (unpublished), buyer of a mobile home park sued sellers for $1,754,428.50 for breach of the parties’ Special Indemnity Agreement (SIA) under which the sellers agreed to provide certain concessions to buyer in order to complete the sale.  Pursuant to the SIA, the parties agreed to arbitrate their dispute, and sellers conceded to owing buyer $3,396.25 for eviction-related expenses for three tenants who were in arrears at the close of escrow.  The arbitrator awarded buyer the $3,396.25, but found the remainder of buyer’s claims to be outside the scope of the SIA.  The Arbitrator also determined sellers were the prevailing parties as they had prevailed on all of the disputed issues – awarding sellers $78,236.43 in fees/costs, pursuant to the fees provision in the SIA, with an offset of the $3,396.25 sellers owed buyer for a net recovery to sellers of $74,840.18.

            After sellers successfully petitioned the trial court to confirm the arbitration award, and defeated buyer’s separate petition to vacate or correct the award, sellers moved for $32,918.50 in attorney fees and $2,120.51 in costs – with the trial court awarding seller $28,086 in fees and $2,069.36 in costs after a $4,832.50 reduction for some excessive work and for the attendance of two attorneys instead of one at the hearing on the petitions. 

            Buyer appealed, but its arguments – that trial court’s award of fees/costs was “grossly excessive,” and that most of the fees sellers sought were directly related to the arbitration case rather than the judicial proceedings to confirm, correct or vacate the arbitration award – were of no avail.  The 4/1 DCA found no abuse of discretion.  First, sellers met their burden by establishing their entitlement to the fees/costs, and supported their motions with attorney declarations establishing the work performed and billing rates, memoranda of costs, and copies of the relevant billing records.  Buyer, however, failed to meet its burden to rebut sellers’ showing with evidence – failing to support its arguments by addressing/objecting to any specific billing entries.

Family Law, Sanctions: Trial Court’s Award To Attorney Husband Of $800 In Attorney Fees In The Nature Of Sanctions Under Section 271 Reversed As A Matter Of Law

Self-Represented Attorney Husband Incurred No Fees To Which The Section 271 Sanctions Must Be Tethered.

            Family Code § 271, subdivision (a), provides that “the court may base an award of attorney’s fees and costs on the extent to which the conduct of each party or attorney furthers or frustrates the policy of the law to promote settlement of litigation and, where possible, to reduce the cost of litigation by encouraging cooperation between the parties and attorneys. An award of attorney’s fees and costs pursuant to this section is in the nature of a sanction.”  However, as the 1/3 DCA concluded in the next case, “section 271 mandates that sanctions be ‘tethered’ to attorney fees and costs.”

            In Marriage of Erndt & Terhorst, Case No. A157876 (1^st Dist., Div. 3 January 11, 2021) (partially published – fees as sanctions discussion published), the trial court directed husband to prepare a stipulated judgment based on the settlement entered into between husband and wife as recited in open court.  The settlement agreement included an equal division of the community portion of wife’s retirement plan.  However, wife had omitted her retirement plan’s survivor benefits – believing that if the survivor benefit were not mentioned, husband’s right to it would terminate upon entry of the judgment of dissolution.  When husband learned of the omission, he included it as an omitted asset under Family Code § 2556 – awarding each party survivor benefits in relation to their share of the awarded community interest.  Wife refused to sign, so husband, who was now self-represented, went back to the trial court seeking a survivor benefit award – with the trial court granting husband’s request and directing the stipulated judgment to include the award. 

            When wife continued to refuse to sign the stipulated judgment, husband returned to the trial court seeking to have the stipulated judgment signed by the trial court elisor, $6,102 in attorney fees, $180 in costs, and § 271 sanctions against wife for her repeated refusal to follow court orders and sign the stipulated judgment.  Wife finally complied with the court’s direction and signed the stipulated judgment in open court.  The trial court then awarded husband sanctions of $180 in costs and $800 in reasonable attorney fees for husband’s preparation for and attendance at that day’s hearing.

            Wife appealed, and the 1/3 DCA reversed the $800 portion of the awarded sanctions – concluding that § 271 sanctions must be tethered to attorney fees and costs.  (Menezes v. McDaniel, 44 Cal.App.5^th 340, 350 (2019) [discussed in our January 16, 2020 post]; Sagonowsky v. Kekoa, 6 Cal.App.5th 1142, 1153 (2016) [misconduct over and beyond fees/costs actually incurred not within reach of section 271].)  Because husband was self-represented by the time he sought sanction, he incurred no fees in preparing for and attending the hearing.  Additionally, California courts have interpreted “attorney fees” to mean exactly what it says in the context of sanctions under Code of Civil Procedure section 128.7 and in the context of contractual attorney fees awarded under Civil Code section 1717 – with sanctions in the form of attorney fees and reasonable attorney fees not available to self-represented litigants who have not incurred or become liable for such fees.

Damages: Attorneys Asserting Claim For A Client In Order To Collect Some Of Their Attorney’s Fees Does Not Constitute Improper Purpose To Sustain A Malicious Prosecution Claim

Kentucky Supreme Court So Holds In July 2020 Published Opinion.

            Malicious prosecution, in California and most jurisdictions, has an improper purpose element with respect to filing or prosecuting a claim—with Kentucky labeling malicious prosecution as a wrongful use of civil proceedings claim.  The Kentucky Supreme Court, in Seiller Waterman, LLC, et al. v. RLB Properties, Ltd., Nos. 2018-SC-0538-DG and 2018-SC-0558-DG (Ky. July 9, 2020), petn. for rhg. denied, September 24, 2020, faced the issue of whether improper purpose for purposes of a malicious prosecution claim could be based on allegations that a client’s attorneys filed claims against an adversary litigant in order to recoup its professional fees (“extort fees,” as colorfully used in the pleadings).  It concluded that this theory could not support a malicious prosecution claim.  “. . . an attorney seeking to collect an attorney fee in the usual course of representing a client is not acting for an improper purpose, a necessary element of the wrongful use of civil proceedings claim.  Even if the attorney acts without probable cause to believe the client’s claim will succeed, the improper purpose which may subject an attorney to liability to a nonclient must be something other than simply earning a fee.”  (Slip Op. at p. 15.)  For readers wanting to review this opinion, it is available over the Internet at justia.com.

Prevailing Party, Receivers, Special Fee Shifting Statutes: City Of Norco v. Mugar Is Now A Published Decision.

Trial Court’s Determination That Plaintiff City Was The Prevailing Party Was Proper Under Catalyst Theory, City’s Arrangement With Outside Counsel Did Not Violate Defendant’s Due Process Rights, And Fee Award Of $60,798.94 To City Was Not Meant To Penalize Defendant For Defending Property Rights.

            We discussed City of Norco v. Mugar, Case No. E072858 (4^th Dist., Div. 2) – which was then unpublished – in our December 15, 2020 post.  Plaintiff City had filed a receivership action through outside counsel when defendant failed to abate what City described as 19 “life-safety hazards” on defendant’s property.  Although defendant eventually abated the 19 conditions, and the appointed receiver took no abatement action, City was declared the prevailing party and awarded $60,798.94 in fees and costs under Health and Safety Code § 17980.7(c)(11) – results that were affirmed on appeal.

            Determination that City was the prevailing party was proper under the catalyst theory.  Defendant’s due process rights had not been violated by City’s arrangement with outside counsel as City’s contract demonstrated that each of its demands and responses were determined by the City Council – not by outside counsel which had no contingency fee basis nor direct financial interest in the litigation outcome. 

            Additionally, the fees award did not constitute a penalty against defendant for exercising his First Amendment right to access and petition the courts to defend his property rights.  Rather, the purpose of the fee award is to encourage litigation by the successful party by making such litigation financially feasible.  Incidental restriction on conduct protected by the First Amendment is sufficiently justified “[1] if it is within the constitutional power of the Government; [2] if it furthers an important or substantial governmental interest; [3] if the governmental interest is unrelated to the suppression of free expression; and [4] if the incidental restriction on alleged First Amendment freedoms is no greater than is essential to the furtherance of that interest.” (United States v. O’Brien, 391 U.S. 367, 377 (1968).)

            We can now report that City of Norco v. Mugar was certified for publication on January 8, 2021.

Fee Clause Interpretation, Section 1717: Attorney Fees Awarded To Prevailing Plaintiff On Its Tort Cause Of Action Reversed On Appeal

The Fees Clause In The Parties’ Contract Covered Only Contract Claims And Plaintiff’s Tort Claim Was Not Inextricably Intertwined With Its Dismissed Contract Claim.

            In WindAirWest v. Castle & Cooke, Case Nos. B295513 and B299043 (2d Dist., Div. 3 January 8, 2021) (unpublished), plaintiff, an operator of a private jet charter company, entered into a sublease agreement with defendant, a fixed-base operator that leases airport space and provides aircraft services to aviation companies that sublease parts of defendant’s space.  The parties’ agreement gave plaintiff access to defendant’s facilities at Van Nuys airport, including ramp and hangar space as well as an office.

            Less than a month into the sublease, one of defendant’s employees moved plaintiff’s Citation X aircraft in order to access another aircraft, but parked the Citation X on a downhill slope without putting wheel chocks in place to prevent accidental movement, and the Citation X rolled down the slope and crashed into another aircraft – causing serious damage to the Citation X.

            Plaintiff sued defendant asserting negligence and breach of contract causes of action, but dropped the breach of contract claim through its first amended complaint filed about a year-and-a-half into the litigation – leaving only the tort negligence claim for which it sought $4,235,935 in lost profits.  Defendant admitted liability – which left the only determination at trial to be whether defendant’s conduct caused plaintiff to lose profits and, if so, how much.  The jury returned a verdict in plaintiff’s favor, awarding it $2,464,560 in lost profits.  Additionally, the trial court awarded plaintiff its attorney fees as the prevailing party.

            Defendant raised several challenges on appeal, but we focus on the attorney fees award.  Plaintiff moved for fees, pursuant to Code Civ. Proc. §§ 1021, 1032, and 1033.5, based on the attorney fees provision in the parties’ agreement.  The trial court concluded the provision was broadly enough worded to encompass tort claims, but the 2/3 DCA disagreed and reversed as to the fees.  Although attorney fees are recoverable costs under §§ 1021 and 1032 if authorized by contract, the appellate panel – interpreting the parties’ fees clause under the ordinary rules of contract interpretation – found the mutual intent of the parties was clear that the prevailing party would be entitled to fees for a claim brought “to enforce any provision of this Sublease.”  Because plaintiff’s action did not enforce a provision of the sublease agreement, it was not entitled to fees under the fees provision.  Additionally, because plaintiff did not contend its tort claims were inextricably intertwined with its dismissed contract claim, its reliance on Lockton v. O’Rourke, 184 Cal.App.4th 1051 (2010) was misplaced and to no avail.

Appealability, Landlord-Tenant, POOF!: Reversal Of Unlawful Detainer Judgment Against Landlords Required Reversal Of Related Attorney’s Fees/Costs Award

In Separate Merits Appeal, Appeal Was Cognizable Although Possession Returned To Landlords During Appeal Because Review Would Determine Landlord Liability For Fees/Costs.

            In Lee v. Kotyluk, Case No. G058631 (4^th Dist., Div. 3 Jan. 7, 2021) (published), landlords sought to evict a commercial tenant for selling marijuana without a license.  The lower court found the 3-day notice to pay or quit was defective because the notice was sent by a predecessor in interest and the notice contained no precise directions to whom possession should be delivered (the “quit” component of the 3-day notice).  A defense motion for judgment on the pleadings was granted, and plaintiffs’ request to amend the complaint was denied, triggering the first appeal by landlords.  Later, the lower court granted $25,794 in attorney’s fees and $1,445 in costs against landlords, which prompted a separate appeal in Lee v. Kotyluk, Case No. G058768 (4^th Dist., Div. 3 Jan. 7, 2021) (unpublished).

            Landlords’ merits appeal resulted in a reversal of the judgment against landlords, because the motion for judgment was properly granted but landlords should have been given leave to file an amended pleading.  That appeal was not rendered moot because tenant surrendered possession of the premises.  The reason?  Landlords’ liability for the trial level fees and costs awards presented a live controversy not mooted by the surrender.  In the unpublished opinion, the merits reversal meant that the fees and costs awards went POOF!  Acting Presiding Justice Moore authored both 3-0 opinions.

Probate, Substantiation Of Reasonableness Of Fees: Attorney Fees By Three Firms Granted To Trustee In Long-Standing Dispute Were Affirmed On Appeal

Fees To Three Firms Representing Trustee In Multiple Venues Was Just Fine In This Context.

            A beneficiary under a trust, which engaged in a long-standing dispute against trustee in multiple venues (California superior court, California appellate court, U.S. bankruptcy court, and the Ninth Circuit Court of Appeals), was not happy when well-documented fees incurred by trustee through three law firms were ordered to be paid by the trust.  The appellate court in Kvassay v. Kvassay, Case No. B297461 (2d Dist., Div. 2 Jan. 1, 2021) (unpublished) affirmed the propriety of the fee award based on (1) painstaking substantiation showed the amounts were justified, and (2) the fact that the work of three law firms was warranted given the battle raging against trustee in various venues.

Appealability, Costs: Appeal Of Post-Judgment Order Striking Request For Costs Dismissed On Appeal Against Plaintiffs Who Did Obtain A Merits Reversal Of A Demurrer To A Brown Act Mandate Petition

Reason For The Dismissal Was Plaintiffs’ Failure To Adequate Raise Or Brief The Issue. 

            In New Livable California v. Assn of Bay Area Governments, Case No. A159235 (1^st Dist., Div. 3 Dec. 18, 2020 December 18, 2020, published on Jan. 6, 2021), plaintiffs lost a Brown Act writ of mandate petition on a demurrer, a ruling reversed on appeal.  The lower court, in a post-judgment motion, struck a request by plaintiffs for costs, which plaintiffs also appealed.  The appellate court dismissed the appeal based on the abandonment doctrine, because appellants failed to adequately raise or brief the issue.  This is a reminder to practitioners that California reviewing courts usually (in our experience) will not reach out to decide an issue which has been raised summarily without proper discussion of authority or without proper citation to record support cites. 

Homeowner Associations: $492,592 Fee Award To HOA And Neighboring Homeowners, Combined, Affirmed On Appeal After Homeowners Lost View Protection Dispute

HOA View Disputes Can Be Costly.

            Under this category, we have indicated that fee awards can be costly for homeowners and homeowner associations/directors/property managers/neighboring homeowners caught in the middle of “view protection” disputes.  The next case is yet another example of that.

            In Davis v. Irvine Terrace Community Assn., Case Nos. G057682/G058266 (4^th Dist., Div. 3 Jan. 5, 2021) (unpublished), one set of homeowners lost a “view protection” case against the HOA and neighboring homeowners.  The trial judge awarded $159,363 to HOA and $333,229 to the neighboring homeowners as prevailing parties in the dispute.

            The appeal by the plaintiff homeowners did not change things.  There was fee entitlement based on the CC&R nature of the dispute, notwithstanding whether a true common interest subdivision was involved.   (Tract 19051 Homeowner Assn. v. Kemp, 60 Cal.4^th 1135, 1143 (2015).)  With respect to the amount of the fee award, a one paragraph argument with string citations in opposition, with no real contest, did not justify why the result should be disturbed.  Ouch as to losing parties!   Justice Moore penned the 3-0 panel decision.

IN THE NEWS . . . . CALIFORNIA RANKS #3 ON “JUDICIAL HELLHOLES” 2020-2021 RANKINGS

Proposition 65; Lemon Law; PAGA; Privacy Act; ADA; and Public Nuisance Issues Abounded.

            The American Tort Reform Foundation published its 2020-2021 “Judicial Hellholes” report, traditionally reporting the jurisdictions where businesses should fear having to be subject to as far as venue from a plaintiff’s perspective.

            California actually slipped to #3, below Philadelphia/Pennsylvania and New York City.  However, it only fell due to the others being more egregious, according to its report.

            Here are the substantive areas which contributed to its #3 ranking:  Proposition 65; lemon law cases; PAGA; Privacy Act [no cases, but some future expected matters]; ADA [disability construction/website cases]; public nuisance [climate change, vaping, and opioid potential matters]; and employment matters [mainly independent contractor, ABC issues]. 

            ADA took some significance, given the minimum $4,000 per violence damages remedy.

            Lemon law was really highlighted, discussing a San Diego County Superior Court decision on August 7, 2020 where a plaintiff won $1.00 in damages but was awarded $684,250 in attorney’s fees (out of a requested $1 million in fees and costs). 

Taxation: Chinese Theatres Has Been Certified For Publication.

Revenue and Taxation Code § 1611.6 Fees Award Of $180,000 To Chinese Theatres Was Reversed On Appeal As A Matter Of Law

            In a December 9, 2020 post, we discussed Chinese Theatres, LLC v. County of Los Angeles, Case No. B302708 (2d Dist., Div. 3) which was unpublished at that time.

            In Chinese Theatres, which involved the historical Grauman’s Chinese Theatre in Hollywood, the 2/3 DCA reversed a Revenue and Taxation Code § 1611.6 fees award of $180,000 to Chinese Theatres.  The reversal was dictated by the narrow circumstances under which § 1611.6 fee entitlement arises in tax refund actions: (1) a county board fails to make requested findings, or (2) the lower court concludes the Board’s findings are so deficient that it remands the matter with directions for the Board to make findings that fairly disclose its determination on the point at issue.  Neither of the circumstances existed – with the Board making a finding, but simply failing to explain how it reached its finding, and with the superior court’s remand for a recalculation based on its finding – not a remand to correct deficient findings.

          We can now report that Chinese Theatres was certified for publication on January 4, 2021.

Landlord/Tenant, Section 1717: Fees Award Of $80,411.50 To Prevailing Plaintiff In Commercial Lease Dispute Affirmed On Appeal

Defendant Failed To Support Its Sole Argument, Raised For The First Time On Appeal, With Evidence, Analysis Or Authority – Thus Waiving Its Only Argument On Appeal – And Its Sole Argument Asked The Appellate Court To Second-Guess The Trial Court’s Evaluation Of The Evidence.

            In KJ Investment Group v. American Heritage College, Case No. G058647 (4^th Dist., Div. 3 January 4, 2021) (unpublished), prevailing plaintiff in a commercial lease action – based on the attorney fees clause in the parties’ lease agreement – moved for almost $145,000 in attorney fees, inclusive of a 1.5 multiplier, plus almost $11,000 in costs pursuant to Civ. Code § 1717 and Code Civ. Proc. Civ. § 1033.5.  Defendant opposed – arguing only that attorney fees must be reasonable and that plaintiff over-litigated the case.  After reductions for time spent by anyone other than plaintiff’s two lead attorneys and rejection of the 1.5 multiplier, the trial court awarded plaintiff $80,411.50 in fees based on its calculation of reasonable time spent by the two attorneys.

            On appeal, defendant argued for the first time that no fees or costs should be awarded to plaintiff because its principal provided inaccurate testimony at trial that was attributable to it counsel – thereby violating Business and Professions Code § 6068 requiring attorneys ‘“never to seek to mislead the court or any judicial officer by an artifice or false statement of fact or law.”’ (§ 6068(d).)

            In a 3-0 opinion, authored by Justice Goethals, the 4/3 DCA affirmed.  Plaintiff’s sole contention was not supported with evidence, analysis or authority – constituting a waiver of plaintiff’s argument on appeal.  The 4/3 DCA also noted that plaintiff’s argument would fail even if it had not been waived because it asked the panel to presume the trial court was misled by false evidence, and that it could not second-guess the trial court’s evaluation of the evidence.  (People v. Hovarter, 44 Cal. 4^th 983, 996 (2008); In re Marriage of Arceneaux, 51 Cal.3d 1130, 1133 (1990).)