CALIFORNIA ATTORNEY'S FEES

Discovery, Sanctions: No Abuse Of Discretion In Trial Court’s Denial Of Plaintiffs’ Motion For $17,074 In Monetary Sanctions Against NonParty For Failure To Comply With Trial Court’s Discovery Order And For Order Requiring Further Production

The Trial Court’s Finding That Nonparty’s Amended Responses And Production Were Adequate And In Compliance With Its Discovery Order In Ruling On Plaintiffs’ Request For A Contempt Sanction Against Nonparty Sealed The Results.

            Husband and wife plaintiffs – suing over two loans, one for $11,327 and one for $427,000, they had made to defendants – filed a motion to compel against nonparty Wells Fargo when they were dissatisfied with Wells’ responses to a deposition subpoena for personal appearance and production of documents.  The trial court issued an order directing Wells to provide supplemental responses within 30 days, and Wells served an amended response to plaintiffs’ subpoena, along with additional responsive documents and a privilege log indicating that specified documents were withheld as attorney-client communications.  Still dissatisfied, plaintiffs filed another motion – seeking monetary sanctions of $17,074 against both Wells and its attorney for discovery misuse, a contempt sanction, and an order requiring Wells to produce unredacted documents responsive to the subpoena – alleging Wells had not complied with the trial court’s order as the order did not permit Wells to make objections or redactions.  The trial court found that Wells had complied with its order, which did not explicitly prevent Wells from producing redacted documents or a privilege log, by producing supplemental responses that appeared to be adequate, and denied plaintiffs’ motion.

            The 2/3 DCA affirmed these results in Dutton v. Marinescu, Case No. B305851 (2d Dist., Div. 3 June 22, 2021) (unpublished) – concluding there was no abuse of discretion with regard to the trial court’s order refusing plaintiffs’ requests for monetary sanctions and for an order requiring further production given the trial court’s finding that Wells had complied with its order.  As to the trial court’s order refusing to hold Wells in contempt, the panel dismissed given that such an order is not appealable as the only method of obtaining review is a petition for extraordinary writ.  (Wanke, Industrial, Commercial, Residential, Inc. v. Keck, 209 Cal.App.4th 1151, 1162, fn. 11 (2012).)

Sanctions, Section 1717, Special Fee Shifting Statutes: 2/7 DCA Reverses Sanctions Imposed Against Builder Defendants For Violation Of Stay Order Regarding A Development Project Of Four Homes In The Coastal Zone Of Venice.

Stay Order Was Vague And Did Not Provide Builder With Information As To How It Was Supposed To Act Or What Conduct Would Violate The Stay.

            In Rudisill v. California Coastal Commission, Case No. B299331 (2d Dist., Div. 7 June 22, 2021) (unpublished), two residents who opposed a development project consisting of four homes being constructed in the coastal zone of Venice – and which had been permitted by the City of Los Angeles and the California Coastal Commission – filed a petition for writ of mandate.  The trial court granted the petition, directed the Commission to set aside the permit, and stayed the project – a judgment reversed on appeal.  However, while the appeal was pending, builder performed certain work and obtained certificates of occupancy from the City of Los Angeles in its steps to enable residents to occupy the homes, which prompted plaintiffs to move for sanctions under Code Civ. Proc. § 177.5 for violation of the stay order.

            The trial court granted plaintiffs’ request and sanctioned builder defendants $1,500 each, and ordered City to revoke the certificates of occupancy – although City was no longer a party to the case as plaintiff had voluntarily dismissed City prior to the trial court’s judgment on the petition.  Additionally, the trial court denied plaintiffs’ motion seeking over $141,000 in attorneys’ fees under Code Civ. Proc. § 575.2 (statute governing failure to comply with local rules) and Code Civ. Proc. §1021.5 (California’s Private Attorney General Doctrine) – finding plaintiffs were not entitled under § 575.2 because builder had not violated a local rule, nor under §1021.5 because builder’s violations were “minor” and not “serious in nature” and the sanctions request did not concern an important right affecting public interest or confer a significant public benefit.  Everyone appealed.

            As to the trial court’s order that City revoke the occupancy certificates, the 2/7 DCA reversed – agreeing with City that the trial court lacked jurisdiction to issue the order because City was not a party to the case and not a representative of builder.  The panel also reversed the imposed sanctions under an abuse of discretion standard.  It found that builder’s conduct was excusable, and builder had not violated the stay by applying for permits or performing other minor corrective work at the already completed project, because the scope of the stay in the trial court’s original order was vague – not providing builder with how it was supposed to act or what conduct would violate the stay.  Finally, because the appellate panel concluded plaintiffs had failed to prove builder violated the stay order, and in light of the reversal of sanctions imposed against builder defendants, denial of plaintiffs’ fees request was affirmed.

Homeowners Association, Prevailing Party: No Abuse Of Discretion In Trial Court’s Determination That Plaintiffs Were Prevailing Party, Resulting In Fees Award Of $112,340, After Plaintiffs Dismissed Action.

Plaintiffs Dismissed Their Action Only After Achieving Their Main Litigation Objective.

            In Champir v. Fairbanks Ranch Assn., Case No. D077384 (4^th Dist., Div. 1 June 22, 2021) (unpublished), plaintiffs sued homeowners’ association for breach of the CCR’s stemming from association’s decision to install traffic lights at a location not approved by a majority of its voting members.  Plaintiffs also asserted causes of action for trespass, nuisance, declaratory relief and injunctive relief.  Following the trial court’s issuance of a preliminary injunction enjoining the association from construction of the traffic signal, association obtained written consent from a majority of its members to proceed, and the trial court granted association’s request to dissolve the preliminary injunction due to a material change in the facts.  Afterward, plaintiffs dismissed their remaining causes of action, and plaintiffs and association filed respective fee motions, each claiming to be the prevailing party under § 5975(c) of the Davis-Stirling Act (Civil Code §§ 4000-6150).  The trial court determined plaintiffs were the prevailing party and awarded them $112,340 in attorney fees. 

            Association appealed – asserting the trial court should have found it to be the prevailing party.  The 4/1 DCA found no abuse of discretion and affirmed – concluding substantial evidence supported the trial court’s determination that plaintiffs prevailed on a practical level.

            The Davis-Stirling Act mandates the award of reasonable attorney fees and costs to the prevailing party in an action to enforce the governing documents of a common interest agreement, but does not define prevailing party.  However, it is well established that “[t]he analysis of who is a prevailing party under the fee-shifting provisions of the Act focuses on who prevailed ‘on a practical level’ by achieving its main litigation objectives.”  (Rancho Mirage Country Club Homeowners Assn. v. Hazelbaker, 2 Cal.App.5th 252, 260 (2016), citing Heather Farms Homeowners Assn. v. Robinson, 21 Cal.App.4th 1568, 1574 (1994); Villa De Las Palmas Homeowners Assn. v. Terifaj, 33 Cal.4th 73, 94 (2004).)  In this case, plaintiff’s main litigation objective was to compel the association to comply with the CC&Rs and obtain majority approval from its members before installing the traffic light – and that is exactly what the association did following issuance of the preliminary injunction.  The fact that plaintiffs ultimately dismissed their action, only after achieving their litigation objective, did not deprive them of prevailing party status.

Celebrities, SLAPP: Jeff Bezos’ Girlfriend’s Brother Ordered To Pay $254,404 In SLAPP Fees To Mr. Bezos After Losing Defamation Suit

$1.7 Million In Fees Had Been Requested.

            Michael Sanchez, a Hollywood talent agent and the brother of Lauren Sanchez (Lauren is Amazon’s Jeff Bezos’s girlfriend), sued Mr. Bezos for defamation arising from allegations that he leaked nude photos of Mr. Bezos to the press.  A Los Angeles County Superior Court judge dismissed the case based on a SLAPP motion.  Mr. Bezos requested fees of around $1.7 million, but the trial judge awarded $254,404.  From appellate court dockets, it looks like both sides have appealed to the Second District Court of Appeal.

Family Law: Increase Of Monthly Child Support From $989 To $10,658 And $20,000 Attorney Fees Award To Wife Reversed On Appeal

Trial Court Adopted Wife’s DissoMaster Report To Calculate Awards, But It Reflected Wife’s Income At A Level Contradicted By Attachments To Her Incomplete Income And Expense Declaration And Lacked Supporting Documentation.

            In Marriage of Behrend, Case No. B305380 (2d Dist., Div. 3 June 22, 2021) (unpublished), the trial court granted wife’s request for a modification to monthly child support payments – increasing them from $989 to $10,658 – and ordered $20,000 of wife’s attorney fees to be paid by husband.  Husband appealed.

            The 2/4 DCA reversed without prejudice – finding no substantial evidence to support the DissoMaster’s input data that wife’s monthly income was only $2,625 where evidence showed her income at a minimum to be an average of $9,500 per month.  On remand, the panel instructed that the trial court could not proceed on wife’s instant Request for Order, but that wife was free to file a new RFO for child support modification based upon current data, with an accurate and complete Income and Expense Declaration and supporting documentation.

            Because an award of attorney fees, pursuant to Family Code § 2030, is related to the parties’ respective financial circumstances, the fees award was also reversed.  However, the panel also noted that the trial court failed to make express findings as required by § 2030(a)(2) – providing a separate basis for reversal of the fees award.  The panel instructed that the trial court may reconsider the fees issue on remand – after redetermining the child support issue based on a new RFO being filed by wife.

Deadlines, Discovery, Sanctions: Class Action Debt Collector Defendant Unsuccessfully Argues On Appeal That Renewed Discovery Motion Was Untimely And 1/3 DCA Affirms Monetary Sanctions Of $8,400

The Trial Court Declared The Discovery Motion Moot When It Granted Summary Judgment To Plaintiff, But Motion Was Renewed After Remand, And Parties Were Returned To Same Positions They Would Have Been In If Plaintiff Had Defeated Summary Judgment In The First Instance.

            In Timlick v. National Enterprise Systems, Case No. A160110 (1^st Dist., Div. 3 June 22, 2021) (unpublished), class action defendant, being sued for violating the minimum type-size requirements in its consumer collection letters, obtained summary judgment in its favor for having cured the violation as to plaintiff.  At the time, plaintiff’s pending motion to compel further responses and for sanctions was declared moot in light of the summary judgment.  After successfully appealing the summary judgment on behalf of the class (but not on behalf of herself), plaintiff renewed her discovery motion, which the trial court granted in substantial part in addition to awarding $8,400 of the requested $11,115 in requested monetary sanctions against defendant. 

            Defendant appealed – arguing that the discovery motion was untimely as the 45-day deadline to compel further responses had passed by the time plaintiff renewed her discovery motion.  Not so, said the 1/3 DCA.  Plaintiff’s discovery motion was timely filed prior to the trial court’s grant of the summary judgment, and the trial court had not denied the discovery motion when it declared the motion to be moot and “dropped without prejudice.”  Rather, the trial court’s grant of the summary judgment created a loss of ability for the trial court to grant the relief plaintiff sought.  However, reversal of the summary judgment left the parties “in a position no different from that they would have occupied if they had simply defeated the defendants’ motion . . . in the trial court.” (Urbaniak v. Newton, 19 Cal.App.4^th 1837, 1844 (1993).)  As such, the trial court’s jurisdiction to rule on plaintiff’s motion was restored and it had the discretion to order precertification discovery – notwithstanding any adverse rulings as to plaintiff individually.  Additionally, the panel found no abuse of discretion in the award of sanctions – especially given the trial court reduced the amount requested to reflect defendant’s partial success. 

Judgment Enforcement, Section 1717, Undertaking: Denial Of § 1717 Attorney Fees To Third Party Entities Defeating Postjudgment Alter Ego Claims Reversed, But Denial Of Release Of Undertaking To Successful Member/Partner Affirmed

The Third District Followed The Reciprocity Principle Of § 1717 Set Forth In Reynolds Metals, MSY Trading, And 347 Group In Reversing The Fees Denial, But Affirmed Trial Court’s Denial Of Release Of Undertaking Based On Member/Partner’s Failure To Provide Notice.

            In Westwood Homes, Inc. v. AGCPII Villa Salerno Member, LLC, Case No. C089127 (3d Dist., June 21, 2021) (published), two third party entities were denied the $34,212 in prevailing party attorney fees they sought under Civ. Code § 1717 after defeating judgment creditors’ postjudgment attempt to add them as alter ego judgment debtors.  Additionally, a member/partner of the entities unsuccessfully moved, under Code Civ. Proc. § 720.160, to have a $10,000 undertaking posted by one of the judgment creditors released to her to partially cover the $43,450 in fees she incurred in establishing a third party claim of superior right of possession to real property on which that judgment creditor had obtained a writ of execution. Third party entities and member/partner appealed.

            Based on the reciprocity principle of § 1717, the Third District reversed and remanded as to the fees denial – finding that “[s]o far as the substance of the alter ego allegations is concerned, it is as though [third party entities] were parties to the original action, and prevailed.”  Had third party entities defeated the alter ego claims in the underlying action, they would have been prevailing parties under § 1717 and entitled to fees under the CC&R’s supporting judgment creditors’ entitlement to fees in the underlying action.  (Reynolds Metals Co. v. Alperson, 25 Cal.3d 124 (1979) [our Leading Case No. 5]; MSY Trading Inc. v. Saleen Automotive, Inc., 51 Cal.App.5^th 395 (2020) [discussed in our June 30, 2020 post]; and 347 Group, Inc. v. Philip Hawkins Architect, Inc., 58 Cal.App.5^th 209 (2020) [discussed in our December 8, 2020 post].)

            As to member/partner’s request for release of a $10,000 undertaking posted by one of the judgment creditors, the panel found no error in the trial court’s denial.  Member/partner’s noticed motion for fees, under Code Civ. Proc. § 720.160, made no mention of releasing the undertaking as a partial fee award.  Instead, member/partner orally requested release of the undertaking at the hearing on her motion – thus denying judgment creditors with a proper opportunity to address her request.  However, as the panel pointed out, member/partner’s request was denied without prejudice leaving her free to move, on a properly noticed motion, for an order releasing the undertaking.

Prevailing Party: Past Minor Reversal On Repayment Issue Did Not Change The Conclusion That Prior Prevailing Party Still Prevailed For Purposes Of An Attorney’s Fees Award

Minor Reversal And Remand Did Not Disturb Prior Fee Result.

            We have to say that we love the language of Justice Bedsworth from our local 4/3 DCA, especially in this case which has gone up and down in the trial and appellate courts, namely, Voit v. Malliet, Case Nos. G058435 et al. (4^th Dist., Div. 3 June 15, 2021) (unpublished).

            What happened in this one was that the appellate court, in a prior appeal, remanded on specific instructions to look at a repayment issue but determining quite clearly that one side was the prevailing party.  On remand, the lower court determined no repayments were made but modified one aspect of an unjust enrichment claim (but awarding no damages on it).  Appellant argued that he was the prevailing party based on the modified judgment.  Naught, said the 4/3 DCA, indicating that some of the arguments for this were based on “tunnel vision” and were “binary” in nature.  The minor part of the modified judgment in no way changed the earlier prevailing party determination; in fact, a different conclusion would have been a lower court abuse of discretion.

            BLOG COMMENT—This case has nice citations, to the benefit of litigators, for the proposition that unjust enrichment is not a cause of action. 

Appeal Sanctions, Special Fee Shifting Statutes: Plaintiff Obtaining Restraining Order Against Neighbor And Successfully Defeating Neighbor’s Appeals Was Denied Her §527.6(s) Request For Trial And Appellate Fees, And For Appeal Sanctions

Plaintiff Did Not Appeal Trial Court’s Fees Denial, Failed To Provide Appellate Panel With Support Or Argument For §527.6(s) Award For Fees Incurred On Appeal, And Neighbor’s Meritless Appeals Did Not Rise To The Level Of Frivolity So As To Warrant Sanctions.

            After granting plaintiff’s request for a temporary and later permanent restraining order against her neighbor, the trial court denied plaintiff’s request for $9,556.58 in Code Civ. Proc. §527.6(s) attorney fees by leaving blank the portion of the restraining order form where fees are awarded.  When neighbor unsuccessfully appealed issuance of both restraining orders, plaintiff requested an order that neighbor pay the more than $30,000 in attorney’s fees she had incurred in the trial court and on appeal, pursuant to §527.6(s), and for costs, damages, and sanctions.

            With exception only as to her prevailing party appellate costs, the 1/1 DCA denied plaintiff’s requests in Anello v. Schmid, Case Nos. A160440/A160540 (1^st Dist., Div. 1 June 11, 2021) (unpublished).  Plaintiff had not appealed the trial court’s fees denial, so those fees were not up for consideration, and plaintiff failed to provide the panel with support or argument for awarding her with the fees she incurred on appeal.  Finally, the panel denied plaintiff’s request for sanctions because, although finding neighbor’s appeals to have been poorly conceived and lacking merit, it did not find them to be frivolous or filed for purpose of delay.

Costs, Deadlines, Fee Clause Interpretation: Lender Defending Against Borrower’s Attempts To Enjoin Eventual Nonjudicial Foreclosure Properly Awarded $9.235 Million In Fees

However, Costs Award Of $332,704.20 Reversed For Failure To Timely File A Costs Memorandum, Although The Appellate Court Did Indicate Lower Court Could Entertain CCP § 473 Default Motion Based On Surprise If Lender Wanted To Renew Costs Issue.

            This next case, Rincon EV Realty LLC v. CP III Rincon Towers, Inc., Case Nos. A155104/A155284 (1^st Dist., Div. 4 June 10, 2021) (unpublished), is an interesting borrower/lender case which has yo-yoed between lower and appellate courts for several years after the lender eventually nonjudicially foreclosed on Rincon Towers (a San Francisco apartment complex).  However, lender did prevail in an action initiated by borrower to forestall foreclosure, with lender then seeking substantial attorney’s fees and costs under a Loan Agreement clause.  After an initial reversal and remand, lender sought $12.2 million in fees and costs, with the lower court awarding $9,235,712.93 in fees, but with it deferring a cost ruling until a new cost memorandum was filed.  Lender did that, claiming $909,548.03 in costs, $357,603.06 in statutory fees and $551,944.97 in costs awardable under the Loan Agreement.  The lower court only awarded statutory costs, reducing the request down to $332,704.30 as far as a court order.  Borrower appealed.

            Borrower argued that lender could not obtain contractual fees because the loan was non-recourse; however, the problem here was that the Loan Agreement contractual fees clause did apply to situations where the lender had to defend against a borrower’s action, rather than commence a lender action or suit against borrower seeking a monetary judgment.  Beyond that, the contractual “proceeding” language did not preclude lender from bringing a fees motion, because a “proceeding” was more akin to an “action” that lender did not commence.  Borrower next argued that the fee award was precluded by anti-deficiency California borrower protections, but that contention was not successful because borrower brought an unmeritorious suit to which lender had to respond—an action which did not implicate a lender attempting to renege on a non-recourse loan.  (See Jones v. Union Bank of California, 127 Cal.App.4^th 542, 547-548 (2005); Passanisi v. Merit-McBride Realtors, Inc., 190 Cal.App.3d 1496, 1509 (1987).)  So, the substantial fee award was affirmed on appeal.

            That brought the appellate court to the costs award, which was a little tricker to resolve.  The 1/4 DCA agreed that the costs memorandum was untimely filed, past the 15-day notice of entry filing deadline even though there were some issues still pending in the appellate court—the best measure was to protectively file it, something lender did not do by quite a bit of time.  However, that did not end the matter.   The appellate court was sympathetic to the fact that the complex procedural context of the case might have been a surprise to the lender such that a CCP § 473 discretionary motion to allow the filing of the belated costs memorandum might be successful.  But it did not want to do that, reversing the smaller component of the costs award (the larger component were damages, and rejected because they were not pled and were not subject to damages proof below) and remanding to the lower court to decide if discretionary default relief should be granted.  So, there might be hope on the cost component for lender.

Special Fee Shifting Statutes: Additional Fees Sought By Prevailing Party In Government Property Code Enforcement Proceeding Not Allowed Under Government Code Or Municipal Code

Form Of The Action Was Important—Absence Of An Abatement Order Was Crucial To Determination That No Further Fees Were Required.

            Fratus v. County of Contra Costa, Case No. A157397 (1^st Dist., Div. 1 June 10, 2021) (unpublished) is one of those cases were prevailing parties, in the overall sense, should have been entitled to additional fees, but they simply did not satisfy the legal requirements for the same. Without proper legal entitlement, additional fees were not warranted.

            This was a decades-old battle between real estate owners on Dutch Slough Road in Oakley and Contra Costa County relating to County wanting corrections to certain building and zoning code violations, mainly relating to the propriety of permitting residence occupancy for two separate properties.  We will say that property owners did prevail in earlier rounds such that they obtained $7,500 in fees against County under Government Code section 800 (a capped fee statute).  But owners wanted more, arguing they should recover fees under Government Code section 25845 [a prevailing party, under a particular ordinance, shall obtain attorney’s fees “in any action, administrative proceeding, or special proceeding to abate a nuisance”] and Contra Costa Ordinance section 114-6.426(a) [attorney’s fees may be recovered by a prevailing party under abatement proceedings where county, at the initiation of the proceeding, seeks to recover its own fees].  Property owners’ request for additional fees was denied, an order affirmed by the 1/1 DCA.

            Owners’ primary problem was that no abatement order was ever issued so as to trigger fee entitlement under the Government Code or Contra Costa Ordinance.  County’s pursuit of administrative fines did not depend on commencement or resolution of an abatement proceeding—note the distinction, administrative fees versus abatement remedies.  Because no ultimate order arose under the abatement ordinance, no further fees were justified.  In this area, form did prevail over substance!

Costs: SCOTUS Determines That Circuit Courts, Not District Judges Absent A Reference, Determine Whether To Deny Or Reduce Taxation Of Appellate Costs

Brightline Rule Adopted By SCOTUS On This Issue.

            In City of San Antonio v. Hotels.com, L.P., 593 U.S. __, Case No. 20-334 (U.S. May 27, 2021), the U.S. Supreme Court interpreted Federal Rule of Appellate Procedure 39 to vest in the circuit courts whether certain appellate costs would be denied or reduced.  San Antonio argued that the district court had discretion to do that, but SCOTUS rejected this approach by adopting a “bright-line” approach that the appellate court determines what is to be awarded, unless it refers it to the district judge for determination.  The case involved a supersedeas bond determination of $2.2 million, with the appellate court’s determination being dispositive and with the district court not being able to alter that determination. 

Family Law, Probate, Sanctions: Lower Court Properly Sanctioned Putative Spouse’s Attorney $3,617.50 Under CCP § 128.7 For Filing A Frivolous Putative Spouse Petition

Putative Spouse Failed To Show She Had A Legal Marriage With The Respondent Under Indian Law, Based On A Res Judicata Finding In A Prior Conservatorship Petition Proceeding.

            The problem for putative spouse and her attorney in Nijjar v. Nijjar, Case No. F078265 (5^th Dist. June 10, 2021) (unpublished) is that they earlier lost a conservatorship position by which she claimed to be the lawful spouse of the proposed conservatee under Indian law.  In the earlier proceeding, there were various inconsistencies in her and other witnesses’ testimony such that the trial judge found no competent evidence that a legal marriage took place between the two.  Losing putative conservator then filed a putative spouse petition, which triggered respondent (the winning putative conservatee in the previous proceeding) to send a Code of Civil Procedure section 128.7 motion.  The safe harbor period expired such that respondent filed the 128.7 motion, including a request for sanctions against petitioner’s attorney, and a request for dismissal of the putative spouse petition.  The lower court granted the 128.7 motion, dismissed the petition, and imposed monetary sanctions on petitioner’s attorney in the amount of $3,617.50.

            Even though no appeal was taken from the judgment of dismissal (given that the sanctions were below the $5,000 appealability threshold of CCP § 904(a)(11), (12)), the Fifth District went ahead as treating the appeal from the judgment of dismissal given that everyone briefed the merits and respondent did not move to dismiss the appeal.  Also, even though better practice was for the aggrieved attorney to appeal, notices of appeal are to be liberally construed to include the attorney who filed the appeal on behalf of a party.

            That brought the appellate court to the merits of the 128.7 sanctions order.  The principal problem was that the “no legal marriage” finding in the conservatorship proceeding had res judicata effect in the putative spouse petition proceeding.  But there was more.  Petitioner’s good faith belief in the validity of the marriage was not supported and, even under the “good faith” test of Family Code section 377.60(b), the evidence was not there, especially given the findings in the conservatorship proceeding.  With respect to showing improper purpose prong of section 128.7, documents showed that petitioner had a history of filing repetitive pleadings to reargue positions she had lost earlier.  The sanctions order was affirmed.

BLOG OBSERVATION—This unpublished opinion also had some instructive points on what should and should not be included in an appellant’s appendix, not to mention some formatting requirements.  (We would remind readers that e-filing is now mandatory in the DCAs, and you have to benchmark items in the appendix—which requires extra work and attention.)

Employment: Employee Winning Only $32.00 On Unpaid Wages/Penalties Was Entitled To A Remand To Seek Additional Attorney’s Fees And Routine Costs

Lower Court Awarded Just $3.20 In Fees Under CCP § 1031; Only Costs Solely Incurred On Losing FEHA Claims Had To Be Excluded So As To Require A Remand.

            FEHA is a statute which has very liberal fee- and costs-shifting provisions, as interpreted by a very robust California jurisprudence under the governing statute.  Moreno v. Bassi, Case No. F078400 (5^th Dist. June 8, 2021 partially published; fee and costs issues published) is yet another case law addition to this jurisprudence.

            In this one, plaintiff was awarded $32.00 in unpaid wages/penalties under Labor Code claim, losing on all FEHA claims, losing on some non-FEHA claims, and prevailing on some non-FEHA claims.  The lower court did this: (1) awarded her $19,523 in costs; and (2) $3.20 in attorney’s fees based on a CCP § 1031 formula multiplying the wages recovered by 20%. 

            The costs award got reversed because the only costs which were barred were those due solely (and solely is an important caveat) to inclusion of the FEHA claims because plaintiff did not prevail on them and the defense did not prevail on them given that the lower court found they were not frivolous in nature. However, plaintiff was entitled to costs on the non-FEHA claims, including costs related to non-FEHA claims intertwined with the FEHA claims, the Fifth District agreeing with the analysis in Roman v. BRE Properties, Inc., 237 Cal.App.4^th 1040, 1059 (2015) to the same effect.

            On the fee issue, the lower court needed to exercise its discretion under Labor Code section 1194 to award reasonable attorney’s fees for the unpaid wage victory given that section 1194 was specific and overrode the more restricted formula under CCP § 1031. 

Probate: Trustee Removal Petition Fee Request Properly Denied And Beneficiary’s Fee Request Correctly Denied Given Accounting Was Rejected For Future Determination

Trustee Removal Petition Fees Are Discretionary In Nature.

            In Albrecht v. Albrecht, Case No. B306601 (2d Dist., Div. 4 June 7, 2021; posted June 8, 2021) (unpublished), successor trustee appealed a probate court’s order declining to award fees for an opposing side’s demurrer to a petition to remove the trustee.  Beneficiary moved for fees and costs incurred during the administration of the trust despite an order that an accounting had been rejected for not meeting formalities, a further fees request also denied.  The appellate court affirmed.  On the petition to remove a trustee, fees are discretionary under Probate Code section 15642(d), which requires determinations that the removal petition was filed in bad faith and contrary to settlor’s intent.  Here, the lower court determined that the other side’s failure to comply with a settlement agreement contributed to confusion such that the discretionary fee request should be denied—no abuse of discretion.  On the second request, the denial of accounting without prejudice meant that any fee award to beneficiary was premature until further events developed. 

Lodestar, SLAPP, Special Fee Shifting Statutes: 2/8 DCA Affirms Fee Award To Prevailing SLAPPing Defendant That Was Greater Than The Fees Paid For Defense By His Insurer

An Attorney Accepting A Reduced Rate From A Client Is Not Precluded From Seeking A Reasonable Hourly Rate Pursuant To The Lodestar Method.

            In Pasternack v. McCullough, Case No. B302137 (2d Dist., Div. 8 June 7, 2021) (unpublished), prevailing defendant on a special motion to strike was awarded $146,010 out of his requested $330,420 in attorney fees. (Code Civ. Proc. §425.16(c)(1).) Plaintiff appealed – arguing that there was no need for the trial court to set a reasonable hourly fee in this case because the fee award should have been limited to the significantly lower amount defendant’s insurer paid for his defense. 

            The 2/8 DCA disagreed – finding the prevailing lodestar adjustment method to be the proper method for determining fees in this case as the SLAPP fee provisions do not provide for restrictions on how the fees are to be calculated.  (Ketchum v. Moses, 24 Cal.4th 1122, 1136 (2001) [our Leading Case No. 8].)  Additionally, the panel found that California law is well-established in allowing an attorney who accepts a reduced rate from a client to seek a reasonable hourly rate pursuant to the lodestar method.  (Chacon v. Litke, 181 Cal.App.4th 1234, 1260 (2010) [discussed in our January 19, 2010 post]; PLCM Group, Inc. v. Drexler, 22 Cal.4th 1084 (2000) [our Leading Case No. 1].)

            In this case, the trial court properly determined the market rate for defendant’s attorneys based on their experience and complexity of the case instead of narrowly focusing on the “package rate” defendant’s attorneys accepted from defendant’s insurer in this matter.  Additionally, the trial court thoroughly examined the record and reduced both the time and hourly rate claimed by one of defendant’s attorneys, which significantly reduced the award from the original request, and clearly demonstrated that the trial court exercised its discretion.

BLOG UPDATE: We can now report that Pasternack was certified for publication on June 25, 2021.

Tort Of Another: $250,000 Tort Of Another Fee Award, As Damages, Affirmed Because Substantial Benefit “Defense” Involves Consideration Of The Equities

Positive Gains Were Outweighed By Harm To Bank’s Reputation And Its Years Of Struggles With Regulators/Federal Criminal Prosecutors.

            The “tort of another doctrine” is a nuanced one allowing attorney’s fees to be awarded as damages in certain situations.  Fees under this doctrine may be mitigated by consideration of special benefits that the alleged tortfeasor brought to the positive side of the suing plaintiff.  Gateway Bank, F.S.B. v. Metaxas, Case No. A158793 (1^st Dist., Div. 2 June 3, 2021) (published) establishes that the special benefits “defense” is driven by equities, such that simply an arithmetic consideration of positive benefits must be balanced against negative benefits which can consist of both monetary and nonmonetary factors.

            What happened in this case is that defendant/appellant, the president and CEO of plaintiff Gateway Bank, was sued by the bank based on certain transactions with a third party (with that third party using Bank as a warehouse lender) after the bank ran into trouble in the Great Recession.  Appellant pled guilty to criminal bank fraud charges, with the Bank battling numerous regulator and federal criminal prosecutor efforts.  Eventually, some positive monetary gain came from the third-party transaction.  The Bank sued for fraud, fraudulent omission, and breach of fiduciary duty, winning these claims against appellant.  Then, on the capital loan transaction, an appointed referee found damages of $382,154, $250,000 being “tort of another” damages.  Appellant argued that the positive “special benefits” required a finding that tort of another fees should not be allowed.

            The First District, Division 2 rejected the challenge.  It found that the “special benefits” defense in the tort of another area was equitable based such that both monetary and non-monetary considerations should be evaluated, as they were by the referee.  Here, the positive side was outweighed by the harm to bank’s reputation, as well as expenditure of financial resources to battle regulators, federal criminal prosecutors, and indemnify appellant in certain actions. 

Appealability: $75,105 In Labor Code Fees Award To Plaintiff Was Affirmed

Defendants Failed To Properly Appeal Postjudgment Fees Award, As Well As Not Presenting Adequate Appellate Record.

            In Hernandez v. Princess Windows, LLC, Case No. B302750 (2d Dist., Div. 2 June 1, 2021) (unpublished), plaintiff employee won wage/hour and rest break claims/penalties against defendant, totaling $58,861.  Based on fee-shifting statutes, another $75,105 in attorney’s fees were awarded to plaintiff.  Defendant never appealed the subsequent fee award.  That was bad, given the court had no jurisdiction to entertain a review of this order.  Beyond that, defendant never provided the fee award as part of the appellate record and a prior motion to augment the record was denied.  In sum, the fee award was affirmed.

Class Action: Ninth Circuit Reverses And Remands Class Counsel Fee Award Where There Were “Red Flags” Of Collusion About Distribution Of Funds Between Class And Its Counsel

Inordinate Fee Distributions, Clear Sailing Provisions, And Reverter Of Reduced Fees Award To Defendant Were Storm Warnings In This Particular Case.

            Briseno v. Henderson (ConAgra Foods, Inc.), Case No. 19-56297 (9^th Cir. June 1, 2021) (published) is a must review for any clients and practitioners in the class action area.  It certainly shows the Ninth Circuit will use In re Bluetooth Headset Products Liab. Litig., 654 F.3d 535 (9^th Cir. 2011) [discussed in our August 25, 2011 post] to judge class action settlement fee terms at the post-certification stage (even though Bluetooth was at the pre-certification stage).  Numerous “red flags” led to a reversal and remand of the fee award in this case, with the Ninth Circuit indicating that the presence of these factors, singularly or in the aggregate, would not lead to a reversal unless the circumstances dictate otherwise—as they did in this case.

            The class action case involved a challenge to a natural labeling of Wesson Oil which was alleged to be deceptive.  The parties reached a small per unit of oil bottle settlement with the class, with the parties valuing the settlement at around $95 million, $67 million for cash payouts and $27 million for injunctive relief—with the Ninth Circuit determining that the injunctive relief valuation was virtually worthless later on in the published opinion.  However, the actual “redemption” results showed only $8 million was shelled out, with $7 million going to class counsel for fees and costs (net result:  $1 million to the class).  There were other areas of the settlement which showed a hefty settlement was reached with the defense at the largesse for class counsel, such that the result had to be overturned for a restudy.

            The Ninth Circuit, in strong terms, reversed and remanded.  Three factors primarily led to this result:  (1) plaintiffs’ counsel was going to receive a disproportionate distribution of the settlement, roughly 90%, despite the small “redemption rates” and the worthless injunction evaluation; (2) the parties agreed to a “clear sailing clause,” which could be neutral, but was not here given ConAgra’s settlement negotiations indicating they would not pay anywhere near the set upward “optics” established in the overall compromise (put another way, it was banking on a low “redemption” rate); and (3) the settlement contained a “reverter” where any reduced fees to class counsel went back to ConAgra, another indication of collusion. 

Family Law: $4,500 Attorney’s Fees Award Reversed, Without Prejudice For Renewal, Based On Claiming On A Different Section Than Section 271

Litigant Will Get Another Shot At It.

            In In re Marriage of Orr and Traina, Case No. H046090 (6^th Dist. June 1, 2021) (unpublished), a litigant won a $4,500 attorney’s fees award as a sanction under Family Code section 271 against the other side.  That was reversed and remanded, without prejudice, because litigant only claimed the fees under CCP § 128.7.  Litigant got another shot at it upon remand.