Common Fund, Costs, Special Fee Shifting Statutes: 4/3 DCA Affirms Large Part Of Trial Judge’s Fee And Costs Rulings In Financial Elder Abuse/Derivative Litigation

Hornet Nest Of Fees And Costs Issues Resolved By Appellate Court.

            We knew right away that Acting Presiding Justice Bedsworth penned Horowitz v. Brown, Case No. G057412 (4^th Dist., Div. 3 Aug. 30, 2021) (unpublished) based on his distinctive writing style.  The appellate court faced a virtual hornet nest of fees and costs issues, with us distilling the ones that we saw of most importance.

            What happened here is that plaintiff was found to be a victim of financial elder abuse and gained some derivative recovery for an entity, but only against some defendants.  Plaintiff was 81 years old and got involved in making investments with her ex-husband’s real estate joint venture partner, which you can likely see led to the litigation which spawned over 5 years and 51 days of a trial.  In the end, plaintiff prevailed on financial elder abuse claims against some defendants and obtained some derivative benefit for an entity, with many of them being in the millions of dollars.  The case resulted in multiple motions for fees and costs, with plaintiff being awarded about $1.411 million in fees against four defendants, nothing in fees for gaining a derivative liability award (because she was advancing her personal interest over that of an entity), and all kinds of split decisions on routine costs. 

            The 4/3 DCA affirmed in major respects, but it reversed and remanded on some issues—the major ones which we highlight now.

            The appellate court agreed that plaintiff primarily recovered against many defendants on a financial elder abuse claim, which carries a prevailing party plaintiff fee entitlement.  Despite some overlap on contractual claims under a partnership agreement, the 4/3 DCA panel found that the financial elder abuse fee-shifting provision had primacy even though there was just a liability finding given that some of the defendants paid the damages earlier—with the 4/3 DCA agreeing with the consistent analysis in Arace v. Medico Investments, LLC, 48 Cal.App.5^th 977, 983 (2020) [a 4/2 DCA opinion].

            Next, some prevailing defendants were entitled to routine prevailing party costs under CCP § 1032, with the financial elder abuse shifting provision not dictating otherwise.  After all, plaintiff only recovered money for an entity derivatively, not herself personally.  (Murillo v. Fleetwood Enterprises, Inc., 17 Cal.4^th 985, 990-991 (1998).)

            However, the reviewing court did remand on whether plaintiff could obtain recovery of denied fees on the derivative claim based on a common fund/substantial benefit doctrine.  After all, in the end, she did bear the fees to obtain the derivative award, with it being unfair to say that she should bear the costs when she did not entirely benefit with most of the advantage going to the entity upon whose behalf she was suing.

            Finally, because various defendants were involved, the costs awards had to be remanded to make sure there was an apportionment as to separate defendants with respect to jointly incurred defense costs.  (Charton v. Harkey, 247 Cal.App.4^th 730, 743-744 (2016).)