CALIFORNIA ATTORNEY'S FEES

Costs, Section 998, Special Fee Shifting Statutes: No Abuse Of Discretion In Attorney Fees And Costs Award Of $1,454,938.70 Against One Of Three Defendants, Without Apportionment, In Wrongful Death Case

Apportionment Of Attorney Fees Was Not Feasible As Plaintiffs’ Efforts Against The Defendants Were Inextricably Intertwined,  And The Case Could Not Have Been Presented Without Significant Expert Testimony To Determine Who Was Legally Responsible.

            In Hatcher v. Powell, Case No. B302730 (2d Dist., Div. 6 September 27, 2021) (unpublished), four defendants were sued in a consolidated wrongful death action following a single-car accident in Ventura County.  One of the defendants was the driver of the car, who lost control while attempting a left curve on a country road at almost twice the posted speed limit, in the dark of night, and with a blood alcohol level of .19 percent according to his blood test.  The other three defendants were a communications company, the construction company it had hired, and Ventura County.  Driver had hit construction equipment stored off the shoulder of the road when he lost control – killing two of his three passengers and injuring the third.   County settled out of the case, but the remaining defendants proceeded to trial where the jury returned a unanimous special verdict finding driver’s negligence was a substantial factor, but the negligence of communications and construction companies was not a substantial factor, in causing harm to the plaintiffs.  All told, according to our calculations, the jury awarded non-economic damages against driver of roughly $7.75 million and $455,000 in economic damages.  $1.9 million of that was awarded to the parents of one of the deceased passengers – parents who had made driver an unaccepted Code Civ. Proc. § 998 offer to settle for $500,000 each.

            Those parents then moved post-judgment for costs of $1,458,588.72, which included $544,493.80 in prejudgment interest, pursuant to Civ. Code § 3291 and Code Civ. Proc. § 998 (prejudgment interest running from the date of § 998 offer not accepted by defendant), and $760,000 in attorney’s fees pursuant to Code Civ. Proc. § 1021.4 (a fee-shifting statute allowing trial courts to award reasonable attorney fees to a prevailing plaintiff where the action for damages is based upon defendant’s commission of a felony offense for which that defendant has been convicted).  After minor deductions to the jury fees and for expert fees incurred prior to the § 998 offer, the trial court awarded $1,454,938.70 in fees and costs against driver.

            Although not denying liability, driver appealed – claiming the trial court abused its discretion in the amount of its award of attorney’s fees and costs – and argued communications and construction companies bore some responsibility.  However, the 2/6 DCA agreed with the trial court’s conclusions.  It was not feasible to apportion fees amongst the defendants because plaintiffs’ efforts against the defendants were inextricably intertwined, and the case could not have been presented without significant expert testimony to determine who was legally responsible.  The trial court had properly considered the time spent, reasonable hourly rates, complexity of the issues, success achieved, and skill of the attorneys in awarding fees and costs that were proportionate to the judgment obtained. (Serrano v. Priest, 20 Cal.3d 25, 48- 49 (1977); Harman v. City and County of San Francisco, 158 Cal.App.4th 407, 419 (2007).)

Discovery, Sanctions: No Abuse Of Discretion In Trial Court’s Imposition Of $12,250 In Sanctions Against Plaintiff For Abuse Of The Discovery Process.

Plaintiff Was Not Substantially Justified In Initially Providing Objection-Only Responses And Failed To Meet His Burden In Showing An Abuse Of Discretion In The Trial Court’s Finding That Defendants’ Sufficiently Engaged In Meet And Confer Efforts.

            In Kramer v. Dale, Case No. D077610 (4^th Dist., Div. 1 September 24, 2021) (unpublished), the 4/1 DCA found no abuse of discretion and affirmed a trial court’s order imposing $12,250 in sanctions against a plaintiff who abused the discovery process by initially providing objection-only responses to all discovery requests propounded by defendants . 

            The panel found plaintiff’s argument that he was substantially justified in initially providing objection-only responses because he feared that providing substantive responses and producing documents would constitute a waiver of his claim for disqualification of defendants’ counsel to be unsupported by authority.  Additionally, plaintiff’s objections to the discovery requests made no mention of this fear concerning waiver of his claim – which claim was not made until the day plaintiff served his objection-only responses.  Next, the panel concluded that plaintiff failed to meet his burden to show that the trial court abused its discretion in determining that defendants adequately engaged in meet and confer efforts before filing their motion to compel.  Plaintiff’s argument that the factors identified in Obergon v. Superior Court, 67 Cal.App.4^th 424 (1998) , were mandatory elements for the trial court to consider in making such a determination went nowhere – with the panel finding that plaintiff “gloss[ed] over the deferential abuse of discretion standard of review [it] must apply here.”  Rather the panel found that Obergon made clear that “[t]he level of effort at informal resolution which satisfies the ‘reasonable and good faith attempt’ standard depends upon the circumstances,” and that the trial court was to use its “broad powers and responsibilities to determine what measures and procedures are appropriate” in the circumstances presented. (Id. at 430.)

Appealability, Deadlines, Family Law: Ex-Husband’s Appeals Of Postjudgment Fee Orders Doomed By Untimeliness Of Appeal On One Order And Lack of Merit On The Other Two.

Pay Attention to Appellate Deadlines, If You Want To Preserve Challenges.

            In Marriage of Mhanna and Hage, Case Nos. H045078 et al. (6^th Dist. Sept. 24, 2021) (unpublished), ex-husband challenged three attorney fees orders: (1) a first order awarding fees to ex-wife under Family Code section 271 and 2030 to the tune of $80,000; (2) a second order denying his motion to set aside the fee order; and (3) an order to enforce the fee order through a QDRO procedure.  He did not win any of his challenges.  With respect to the first order, the 271 sanctions order was appealable, and he blew the longest 180-day deadline in which to appeal. He argued that the appeal was extended based on the denied set aside motion, but no authorities were provided to support that motion and, even if it was proper, he blew the 90-day deadline after that motion was denied.  On the second order, husband provided no adequate record for review, and he was given enough time to prosecute for due process purposes.  On the third order, the QDRO request was ultimately denied such that he was not aggrieved from what happened before.

Common Fund, Costs: Trope Limitation Prevents Self-Represented Attorney From Obtaining Fees Under Common Fund Theory, But Routine Costs Are Awardable

The 2/6 DCA, in a scholarly opinion written by Justice Yegan, faced the questions of whether a self-represented attorney, who was also the winning party, could seek recovery of attorney’s fees and costs under the nonstatutory common fund theory.  Different answers were the conclusions on the two issues.

            In Leiper v. Gallegos, Case No. B309986 (2d Dist., Div. 6 Sept. 23, 2021) (published), the appellate court agreed with the trial court that the self-represented attorney, under the Trope limitation (although it was an open issue), could not recover almost $96,000 in requested fees in a common fund case.  The reviewing court followed the holding of Bruno v. Bell, 91 Cal.App.3d 776, 783 (1990) to reach the result on fees with respect to pro se attorneys.    However, with respect to costs of around $3,000 (excluding attorney’s fees), the 2/6 DCA panel found no convincing reason why they could not be awarded given a pro se attorney could obtain costs under the routine costs CCP provisions. 

Private Attorney General: $2.2 Million Fee Award To Various Parties Reversed

Reason Was Pretty Simple—The Claiming “Successful” Party Was Not Upon Reversal.

            City of Gardena v. State Water Resources Control Board, Case No. G059466 (4^th Dist., Div. 3 Sept. 22, 2021) (unpublished) is a situation where certain litigants won CCP § 1021.5 fees after prevailing on a regional water board dispute.  The total fees came close to $2.2 million, assuming our math is correct in this opinion.  However, on appeal, the merits judgment was reversed for the parties which were awarded fees.  Based on the merits reversal, the fee awards fell also.  Former “successful” parties made a run at it on appeal, but the 4/3 DCA—in an opinion authored by Justice Fybel—had to overturn the fee award because they were not successful in the end. 

Costs: No Oral Hearing Required On Appellate Costs Motion

Nice Dissection Of Appellate Routine Costs, Which Were Allowed.

            No reason for us to discuss in detail the case of Pacheco v. Tuttle, Case No. B302508 (2d Dist., Div. 3 Sept. 22, 2021) (unpublished), unless trial and appellate practitioners want to dive in the weeds, given that an appellate costs award of $1,627 was at issue—we kid you not!

            The post-worthy takeaways are these:  (1) no hearing is required on a motion to tax costs (different with respect to a pretrial attachment or summary judgment motion); (2) defendant bears the burden of showing a costs item was unreasonable after plaintiff provided a verified costs memorandum which is prima facie evidence on the issue; and (3) nothing showed that a governmental entity was limited to a 15 cent per page charge for printing/copying appellate briefs. 

Reasonableness Of Fees: $178,190.50 Fee Award To Residential Tenant Under Contractual Lease Clause Affirmed On Appeal

Trial Court’s Award Was No Abuse Of Discretion.

            In Javaheripour v. Sigal, Case No. B304911 (2d Dist., Div. 4 Sept. 22, 2021) (unpublished), residential tenant won an inhabitability case against landlord, winning an unlawful detainer trial and then moving for lots of fees.  And tenant got a lot of them--$178,190.50 to be exact.  That award was affirmed on appeal under the deferential abuse of discretion standard because entitlement was really not at issue.  Because landlord tenaciously litigated, the fees were warranted.  Just goes to show how a small case can produce lots of fees!

Deadlines: Where Reverse Validation Action Had A 30-Day Appeal Deadline, That Deadline Governed Fee Motion Filing Despite More General Lengthier Deadlines

CCP § 1021.5’s Fee Claimant Motion Was Untimely.

            Sometimes, the context of a suit determines when a fee motion needs to be filed.  Central Delta Water Agency v. Dept. of Water Resources, Case Nos. C078249 et al. (3d Dist. Sept. 22, 2021) (published) reminds practitioners in a reverse validation case—even where more claims are at issue, but the gist is a reverse validation matter—that a potential fee claimant has 30 days, not other lengthier deadlines, to file a fee motion given the short reverse validation 30 day appeal period. 

Costs, Prevailing Party: Where Neither A Plaintiff Nor A Cross-Complainant Obtains Any Relief, Defendant Is The Prevailing Party For Costs, Absent A Costs Waiver

May Sound Quirky, But It Is The Law!

            In Bernstein v. Sebring, Case No. C088375 (3d Dist. Sept. 21, 2021) (unpublished), plaintiff/cross-defendant and defendant/cross-complainant partially settled some claims (where costs were waived) but proceeded to trial on some remaining claims.  The trial judge ultimately dismissed plaintiff’s complaint, and defendant voluntarily dismissed his remaining cross-claim.  The trial judge decided plaintiff, as a cross-defendant, was the prevailing party entitled to routine costs.  The Third District reversed.  Because neither party obtained any relief, the defendant was the prevailing party, with plaintiff as a cross-defendant not counting in the prevailing party analysis.  (McLarand, Vasequez & Partners, Inc. v. Downey Savings & Loan Assn., 231 Cal.App.3d 1450, 1454-1455 (1991).)  So, in a reversal of fortune, defendant was the prevailing party entitled to costs.  (Building Maintenance Service Co. v. AIL Systems, Inc., 55 Cal.App.4^th 1014, 1025 (1997).) 

Section 998: $12,000 Pre-Litigation Offer, Iterated As A 998 Offer Four Months Later After Filing Of A Lawsuit, Was Reasonable And Supported Cost-Shifting In Low-Level Vehicular Personal Injury Case

Section 998 Test Focuses On Objective Reasonableness, Not Plaintiff’s Subjective Perception Of The Offer’s Fairness.

            In Mkhitarian v. Jackson, Case No. B306198 (2d Dist., Div. 5 Sept. 20, 2021) (unpublished), plaintiff in a low level, soft issue vehicular injury case rejected both a pre-trial informal offer and subsequent CCP § 998 offer for $12,000 (together with a waiver of costs) coming after her case was filed.  That was a bad judgment call, because the jury rendered a defense verdict on negligence causation grounds.  The lower court denied plaintiff’s request to tax costs because the 998 offer was unreasonable, resulting in defendant obtaining costs (including $25,440 in expert witness fees). 

            The 2/5 DCA affirmed.  Objective reasonableness of the offer, not plaintiff’s perception of its fairness, is the guiding test.  The defense offer met this standard because the subsequent formal offer four months later did not show that any more information was needed to evaluate the offer.  Here is the conclusion reached by the appellate panel: “Finally, we know of no rule that disqualifies a section 998 offer simply because it is the same as an offer made prior to litigation. A defendant’s willingness to make a pre-litigation offer should not foreclose automatically a reinstatement of the offer made four months later under the benefits of section 998. Instead that factor, like the others we have mentioned, becomes part of the mix to be considered by the trial court in exercising its discretion.”  (Slip Op., p. 9.)

Deadlines, Substantiation Of Reasonableness Of Fees: Party Winning Usurious Note Dispute Was Properly Awarded $318,400.50 In Contractual Attorney’s Fees

Filing An Appeal Did Not Stay Fee Motion Determination Absent A Stipulation, With Petitioning Attorneys Doing A Commendable Job Of Supporting The Fee Request.

            This next case, Korchemny v. Piterman, Case Nos. A155483 et al. (1^st Dist., Div. 2 Aug. 27, 2021 [unpublished]; certified for publication on September 17, 2021), demonstrates how a winning party did an exemplary job of supporting their fee petition before the lower tribunal.

            Winning party won a usurious note dispute where there was a contractual “prevailing party” fess clause.  That party moved for attorney’s fees of $318,730.50, with the judge awarding $318,400.50 after minor deductions.  The losing party appealed, to no avail. 

            First, loser argued that the appeal stayed a determination of any fee motion.  Wrong, wrong, as we have posted on before – this is embracing a collateral issue which is not forestalled by a merits appeal.  (Bankes v. Lucas, 9 Cal.App.4^th 365, 368-369 (1992).)

            Then, on the merits of the fee award, this decision shows how a good fee petition should be structured, with the lower and appellate courts digging it: (1) submitting detailed billing records; (2) submitting a detailed declaration by the lead attorney; (3) allocating work between certain issues; and (4) detailing why work with another party was compensable under a joint strategy rubric.  Not to mention that the loser’s tenacious litigation was a factor to justify awarding the close-to-total-request ask by the winner.

Private Attorney General: Petitioner Winning First Round Of San Francisco Bay Mineral Extraction Lease Dispute, Getting Paid Under A Settlement, Did Not Get Any Further CCP § 1021.5 Fees By Failing To Succeed In The Second Phase

Future Losses Can Change The Private Attorney General Analysis.

            Petitioner in San Francisco Baykeeper, Inc. v. Cal. State Lands Commission (Hanson Marine Operations, Inc.), Case No. A159693 (1^st Dist., Div. 4 Sept. 17, 2021) (unpublished) did initially prevail in a dispute with the Commission over approval of several 10-year mineral extraction leases that authorized real party in interest Hanson to dredge mine sand from under the San Francisco Bay.  The trial judge earlier denied the challenge, but the First District reversed in a published decision, with petitioner obtaining fees under a settlement agreement with other parties.  However, Commission basically won in another go-around when a different panel of the First District found no public trust was implicated.  Petitioner moved again for fees, but the lower court denied them.  This denial was affirmed on appeal, given that success at early stages does not mean private attorney general entitlement for a party not ultimately succeeding in subsequent stages of a case.  (See National Parks & Conservation Assn. v. County of Riverside, 81 Cal.App.4^th 234, 240 (2000) [“it is not true that a previously successful party is entitled to fees for postjudgment litigation regardless of the outcome of that litigation”]; see also Ebbettts Pass Forest Watch v. Dept. of Forestry & Fire Protection, 187 Cal.App.4^th 376, 387 (2010).)

Appealability, Probate, Reasonableness Of Fees: Trustee’s Failure to Appeal Prior Separately Appealable Order On Fees Was Dispositive On Most Issues

As Far As Amount Of Fees, Failure To Include A Reporter’s Transcript Was Equally Damning.

            In Padlan v. Graves, Case No. A159576 (1^st Dist., Div. 3 Sept. 17, 2021) (unpublished), a trustee was ordered to pay certain attorney’s fees to a beneficiary based on reneging on a mediation settlement agreement.  That order was made in March 2019 and served by the trial court within 60 days.  Trustee did not appeal it.  Later, in a December 2019, the lower court refused to revisit the March 2019 fee orders, although this December 2019 order was appealed by trustee.  The 1/3 DCA decided that much of the fee challenges could not be entertained because trustee did not mention the March 2019 in her appeal of the December 2019 order and, also, the March 2019 order was separately appealable under Probate Code section 1300(g) relating to fixing of fees as it relates to a fiduciary.  With respect to the amount of the fees, that too failed because trustee failed to provide a reporter’s transcript as part of the record so as to show whether there was any abuse of discretion as far as amounts awarded. 

Requests For Admission: $211,032.50 In Costs-Of-Proof Sanctions Affirmed On Appeal

Trial Judge Did Not Err In Granting Sanctions For Central RFA Denials In The Case.

            In Nilson v. White, Case No. D077046 (4^th Dist., Div. 1 Sept. 16, 2021) (unpublished), plaintiffs lost a case where they sought to hold their attorneys responsible for a loss of a farming business through a nonjudicial foreclosure.  The trial judge also granted the winners $211,032.50 in RFA costs-of-proof sanctions.  The court of appeal affirmed because these were central RFAS which were not correctly denied and were apportioned out as far as awarding costs to the winning parties.

Section 998: Only Mentioning CCP § 998 Or Allowing Judgment To Be Entered, Without More Precise Instructions For Accepting 998 Offer, Does Not Render A 998 Offer Valid

4/1 DCA Provides Further Guidance On Drafting Effective 998 Offers.

            Drafting effective CCP § 998 offers can be tricky, as the 4/1 DCA recognized in Finlan v. Chase, Case No. D078410 (4^th Dist., Div. 1 Sept. 15, 2021) (published).  A plaintiff lost some hefty costs and expert witness fees by not providing specific acceptance instructions in the 998 offer.  The published decision adds two nuances to the jurisprudence in this area: (1) simply incorporating by a reference to section 998, without further acceptance instructions, will not suffice; and (2) a reference to “allow judgment to be entered” is not the equivalent of specific acceptance instructions. 

Consumer Statutes, Settlement: Attorney’s Fees Award In Lemon Law Case Affirmed As To Settling Party’s Responsibility, With Other Party Not Agreeing To Pay Fees Not Responsible

Given Merits Judgment Was Paid, Other Party Was Not Responsible For Fees.

            The next case we post on, Carter v. Mike Thompson Recreational Vehicles, Case No. G058205 (4^th Dist., Div. 3 Sept. 14, 2021) (unpublished), shows how care needs to be given to drafting settlement agreements as far as preserving attorney’s fees exposure to different defendants.  Justice Bedsworth authored the 3-0 panel decision.

            What occurred here is that manufacturer EHGNA and dealer Thompson entered into a settlement agreement for a lemon law dispute.  Although both defendants were liable to fund the merits settlement, only ENGNA was liable for fees.  That settlement was dispositive on appeal.  EHGNA went into Canada receivership, such that plaintiff car owner shifted sites to Thompson as far as fee recovery.  That did not work.  Both the lower and appellate courts honored the settlement agreement entered into between the parties.  Only EHGNA, not Thompson, was responsible for fees, with plaintiff agreeing to this allocation such that there was no unenforceable waiver of lemon law fees given the bargain between the parties. 

Prevailing Party, Special Fee-Shifting Statutes: No Abuse Of Discretion In Trial Court’s Award Of $23,162.50 To Prevailing Civil Harassment Plaintiff

Awarded Fees, Which Were Reduced From The $70,000 Requested, Were Not Excessive Considering The Complexities Of The Case And The Increased Attorney’s Fees Plaintiff Incurred As A Result Of Defendant’s Conduct.

            In Rowan v. Kirkpatrick, Case No. A161436 (1^st Dist., Div. 3 September 13, 2021) (unpublished), defendant appealed the trial court’s award, under Code Civ. Proc., § 527.6(s), of $23,162.50 in attorney fees to prevailing civil harassment plaintiff – arguing the trial court abused its discretion by awarding excessive fees.

            The 1/3 DCA disagreed and affirmed.  Defendant failed to meet her burden to demonstrate the trial court abused its discretion.  Plaintiff, who sought and obtained a restraining order against defendant, was clearly the prevailing party.  Additionally, after considering the complexity of the case and the increased attorney’s fees plaintiff incurred due to defendant’s conduct, the trial court acted well within its discretion in awarding plaintiff $23,162.50 of the approximate $70,000.00 she sought in fees.

Costs, Deadlines, Experts, Section 998: 4/2 DCA Dismisses Defendants’ Cross-Appeal Of Trial Court’s Order Granting Plaintiff’s Motion To Tax Majority Of $139,951.97 In Costs And Fees Sought By Defendants Under § 998

Defendants’ Cross-Appeal Was Untimely, And A Separate Appeal, Not A Cross-Appeal, Was Required For Challenging Trial Court’s Order As It Related To Defendants’ Request For Expert Witness Fees.

            In Ramirez v. Barajas, Case No. E071558 (4^th Dist., Div. 2 September 13, 2021) (unpublished), personal injury plaintiff, suing defendants for $1.4 million in damages, rejected defendants’ Code Civ. Proc., § 998 settlement offer of $350,000.  After plaintiff failed to beat that offer at trial (being awarded only $58,311.77, a result plaintiff appealed), defendants moved, under § 998, for costs and fees of $139,951.97 – which included $111,74.88 in expert witness fees.  However, because the trial court found defendants’ request to be deficient in that it failed to identify the date costs were incurred – whether pre or post-offer – it granted in its entirety plaintiff’s motion to tax and awarded defendants only $9,284.39 in ordinary litigation costs. 

            Defendants cross-appealed, but the 4/2 DCA dismissed their cross-appeal due to lack of jurisdiction. 

            First, defendants’ cross-appeal was untimely.  Under California Rules of Court, Rule 8.108(g), the deadline for the filing of defendants’ cross-appeal was within 20 days of the superior court serving them with notice of plaintiff’s appeal.  Defendants filed their notice of cross-appeal 21 days too late.

            Second, plaintiff’s notice of appeal from the judgment did not create appellate jurisdiction over the trial court’s ruling on defendants’ request for expert witness fees under § 998 – which accounted for the majority of fees sought by defendants.  A cross-appeal may challenge only the same judgment challenged by the underlying appeal, and “[a]n award of expert witness fees [under] section 998 is not incidental to the judgment but is instead a separately litigated issue” requiring a separate notice of appeal. (Fish v. Guevara, 12 Cal.App.4th 142, 148 (1993).)

Requests For Admission: $189,532.50 Costs-Of-Proof Sanctions Generally Affirmed With Minor Adjustments

No Motion To Compel Is Necessary Except Under Certain Circumstances And Costs-Of-Proof Sanctions Not Limited To Trial Evidentiary Stages.

            In DeJong v. Beach, Case Nos. C085462/C086526 (3d Dist. Sept. 13, 2021) (unpublished), the Third District affirmed major parts of a trial court’s grant of RFA costs-of-proof sanctions in the amount of $189,532.50.  Here are the takeaways from this case: (1) no motion to compel is necessary to claim costs-of-proof sanctions where the motion would be idle; (2) a motion to compel for certain incomplete answers may be a predicate for costs-of-proof sanctions depending on the facts; and (3) costs-of-proof sanctions are available for post-trial matters beyond evidentiary phases, even for post-trial briefing and attorney’s fees issues.

Indemnity: Apple’s Request For Substantial Attorney’s Fees On Contractual Counterclaims In Epic Lawsuit Denied Because Indemnification Clause Not Broad Enough To Encompass Non-Third Party Claims

Drafting Issues Abound Here—Make It Explicit!

            We thank our AlvaradoSmith colleague Monisha Coelho for bringing the recent ruling in Epic Games, Inc. v. Apple Inc., Case No. 4:20-cv-05640-YGR (N.D. Cal. Sept. 10, 2021) (Doc. 812) to our attention.  It highlights how indemnification clauses must be drafted with extremely clear language to make true attorney’s fees shifting clauses between the parties.

            In this case, the district court judge concluded that Epic did not prove Apple was a monopolist in the digital mobile gaming transactions market, but Apple did engage in anticompetitive conduct under California’s unfair competition laws, warranting specified nationwide relief.  However, Apple also moved to recover substantial fees for defeating contractual counterclaims under a written contractual clause in an Epic agreement.

            The district judge denied fee entitlement to Apple.  She found that the contractual fees clause was too narrow, only encompassing third-party liability given the words “indemnify” and “hold harmless” rather than claims between Apple and Epic.  The federal judge found that there needed to be express language indicating fee recoveries regarding the issue of an action between the parties on a contract was covered, language not present in the germane contract.  (Alki Partners, LP v. DB Fund Services, 4 Cal.App.5^th 574, 600-602 (2016).) 

Appealability, Trade Secrets: Denial Of Attorney’s Fees Under Trade Secret Statute, Before Resolution Of Entire Case, Was Not Appealable For Now

Order Dismissing Appeal Was Recently Published.

            In Dr. V Productions, Inc. v. Rey, Case No. B312605 (2d Dist., Div. 5 Sept. 10, 2021) (published), the appellate court confronted whether the denial of a $273,484.56 attorney’s fees request under the trade secret fee-shifting statute (Civil Code section 3426.4) was appealable where the trade secret claim was dismissed even though other claims were outstanding.

            The appellate court dismissed the appeal because the interlocutory order was not appealable.  In this case, the collateral order doctrine did not apply because this was not a grant of fees ordering payment of money.  The expansive interpretation of the collateral order doctrine was not prudent, especially given that other claims were pending (which did involve trade secrets issues, only under the rubric of other claims).   Put another way, the review of the denial of trade secret fees had to await a further resolution of all claims. 

Interpleader: Interpleading Cross-Complainant, Likely Not A Neutral Stakeholder Given Competing Claims, Properly Denied $450,000 In Attorney’s Fees Where Cross-Complainant Had Use Of $5.5 Million In Fund For Four Years

Interpleading Party Held And Managed The Bond Portfolio Under An Unusual Loan Agreement.

            CCP § 386.6(a) allows a court discretion to award costs and reasonable attorney’s fees to an interpleading party obtaining a discharge.  Because this is an equity-driven decision-making process (Hood v. Gonzales, 43 Cal.App.5^th 57, 71 (2019)), the abuse of discretion standard guides in most situations whether a grant or denial of fees is proper.

            Attorney’s fees were denied to an interpleading cross-complainant in a unique bond portfolio management case, BNY Mellon Bank v. First Foundation Bank, Case No. G059083 (4^th Dist., Div. 3 Sept. 9, 2021) (unpublished) [a 3-0 decision authored by Acting Presiding Justice Bedsworth].  In this sui generis factual setting, the interpleading cross-complainant had use of $5.5 million in funds for four years, with the lower court unwilling to find cross-complainant was a neutral stakeholder giving competing claims against that party by others.  The lower court refused to discharge cross-complainant, preferring to dismiss the cross-complaint and deny a fee request for $450,000.  The 4/3 DCA panel affirmed both determinations.  With respect to fees, two reasons sustained the denial:  (1) there was no discharge of cross-complainant, so the statutory condition for fees was not met; and (2) there was no abuse of discretion given that cross-complainant had the use of the $5.5 million for four years even though trying to use the interpleader action as a chip to obtain a dismissal of a voidable transfer complaint against another party (with the specter of fee exposure under section 386.6(a)). 

Interest: Trial Court Properly Rejected Interest Accruing From An Earlier 2015 Merits Judgment When Fees Were Only Awarded In Early 2019 After A Prior Appellate Reversal Of A Fee Denial

End Result Was That 3 ½ Years Of Interest Did Not Accrue, About A $100,000 Savings.

            In AAWestwood, LLC v. Liberal Arts 677 Benevolent Foundation, Inc., Case No. B302363 (2d Dist., Div. 5 Sept. 8, 2021) (unpublished), the interest accrual for a subsequent fees order was the question facing the appellate court.

            The facts were that Appellant Liberal Arts had obtained a prior money judgment against Respondent AAWestwood in Fall 2015, but the lower court denied Civil Code section 1717 contractual fees.  That prompted an appeal and a reversal; and, on remand, the lower court awarded $280,000 in lower court/appellate court fees to Appellant in early 2019.  However, the lower court denied a request to have interest accrue on the fee award going back to Fall 2015, a 3 ½ years savings of around $100,000.  The 2/5 DCA panel agreed with the lower court.  Because there was a prior reversal of a fee denial and entry of a subsequent fee award, that subsequent award was a separate money judgment from which interest accrued as of the later Early 2019 date.  (Felczer v. Apple, Inc., 63 Cal.App.5^th 406, 415 (2021).)  Respondent was awarded costs on appeal, but no attorney’s fees. 

Civil Rights, Lodestar, Reasonableness Of Fees: $1,113,750 In FEHA Attorney’s Fees In Racial Discrimination/Retaliation Case Garnering $450,001 Compensatory Award To Successful Plaintiff Was No Abuse Of Discretion

Hourly Rate, Lodestar, And Multiplier Conclusions Were Not Beyond Reason.

            Plaintiff in Sterling v. County of Sacramento, Case No. C089616 (3d Dist. Sept. 7, 2021) (unpublished) won $450,001 in compensatory damages under FEHA racial discrimination/retaliation claims.  Plaintiff then moved for over $1.515 million in fees (lodestar plus a positive 2 multiplier enhancement).  The lower court basically sustained the lodestar request, but it instead awarded a 1.5 positive multiplier such that the FEHA fee award was $1,113,750.

            The Third District affirmed the merit and fee results.  The lower court did a proper lodestar analysis, not having to accept “padding” challenges or the defense suggestion that no more than $580,635 should be awarded as fees.  The trial judge awarded an hourly rate of $550 for the lead attorney, which was no abuse of discretion given expert testimony indicating that $650-695 per hour would be justified and given past awards to the attorney above $550.

Arbitration: Superior Court Judge Properly Vacated An Arbitrator’s Correction Of A Fee/Costs Award From The Amount Contained In The Original Final Award

The Miscalculation Was Not Evident From The Face Of The Prior Award.

            Crooymans v. Givner, Case No. B305916 (2d Dist., Div. 3 Sept. 7, 2021) (unpublished) demonstrates how narrow the power of an arbitrator is to correct an arbitration award under CCP § 1286.6(a).  There, children, the executors/trustees of their late father’s estate/trust, filed an arbitration claim against father’s tax planning attorneys.  The attorneys were found liable to the tune of $654,800.  Children then asked for prevailing party attorney’s fees and costs of about $3.2 million, with the arbitrator filing an original final fees/costs award of around $1.738 million.  However, upon a request by children to correct a miscalculation under section 1286.6(a), the arbitrator indicated he failed to factor in a supplemental fee declaration and upped the fees/costs award to about $2.025 million.  However, a superior court judge vacated the correction after finding that there was no miscalculation evident from the face of the final award.

            The 2/3 DCA affirmed the undoing of the arbitrator’s correction.  At the outset, it found that the requirement of a “reasoned award” in an arbitration contract or ADR neutral rules likely does not apply to a fees/costs award, but just to a merit adjudication of claims.  Then, it sustained the lower court’s conclusion because there was no evident miscalculation under case law construing section 1286.6(a).  (Severtson v. Williams Construction Co., 173 Cal.App.3d 86, 95 (1985).) 

Deadlines: Service Of Notice Of Ruling On Post-Trial Motions Did Not Trigger Shorter Post-Trial Motion Appeal Period For Purposes Of Shortening The 180-Day Longest Period To File An Attorney’s Fees Motion

Numerous CRC Provisions And Cases Established The Proper Conclusion.

            We thank the 2/2 DCA panel in Gallop v. Duval, Case No. B308531 (2d Dist., Div. 2 Sept. 2, 2021) (unpublished) for clarifying the deadlines which apply to timely filing of an attorney’s fees motion when posttrial motions have been denied.  Prevailing party filed an attorney’s fees motion which was denied as untimely because it was not made 30 days after notice of the ruling denying a posttrial motion was served.  However,  the fee motion was timely if the longer 180-day period was used assuming that the service of the notice of ruling was not a proper service of “an order denying the [posttrial] motion or a notice of entry of that order” for purposes of CRC, Rule 8.108.  The problem is that the other side only served a notice of ruling on the posttrial motions, not a service of a copy of the actual order or a notice of entry of that order, with the notice of entry stating “Notice of Entry” and attaching a file-stamped copy of the order.  The fee denial on untimeliness was reversed for a merits determination based on the failure to trigger a shorter appeal period within which to file the fees motion. 

Family Law, Fee Clause Interpretation: Wife Properly Allowed Section 217 Sanctions Against Husband For Divorce Decree Enforcement Purposes

However, Lower Court Properly Denied Her Fees On Husband’s Prior Efforts To Set Aside The Martial Settlement Agreement.

            In Marriage of Mirza, Case Nos. G057613 et seq. (4^th Dist., Div. 3 Sept. 1, 2021) (unpublished), husband and wife entered into a marital settlement agreement and divorce decree based upon the agreement.  Husband then attempted to set aside the MSA and decree, but he was ultimately unsuccessful.  The lower court denied wife’s fees relating to husband’s efforts to set aside the divorce decree, but the court did grant wife sanctions of $100,000 under Family Code section 271 to enforce the divorce decree after the set aside effort did not resonate.  The 4/3 DCA, in an opinion authored by Justice Goethals, affirmed.  A nice “line” was drawn by the family law judge, with the set aside efforts not clearly falling within the MSA and with husband’s set aside attempt to rescind being a discretionary call on how to adjust the equities.  However, wife’s subsequent efforts relating to the divorce decree were justified such that the $100,000 award was sustained on appeal.

Employment, Section 998: Section 998 Offer Is Invalid If Employer Did Not Attempt To Pay Undisputed Wage Amounts Before Sending Section 998 Offer

Timing Is Everything—Pay Undisputed Amount Before The 998 Offer Or Pay Later/Issue A New 998 Offer.

            Wasito v. Kazali, Case No. B308826 (2d Dist., Div. 6 Aug. 31, 2021) (published) is must reading for employers wishing to resolve unpaid wage claims through a CCP § 998 offer where undisputed wages are due.

            In essence, employees filed a complaint seeking unpaid wages, including bonuses.  Employers made a $300,000 section 998 offer.  After that 998 offer expired, employer sent a substantial check for unpaid bonuses, interest, and penalties, a check accepted by employees.  A jury found only small amounts still owed to employees, with employer arguing that the 998 offer beat the small amounts awarded by the jury.  The lower court disagreed and awarded employees $66,700 in attorney’s fees for prevailing in small amounts under Labor Code section 218.5, a one-way fee shifting statute. 

            The 2/6 DCA affirmed.  Relying on Reid v. Overland Machined Products, 55 Cal.2d 203, 206-207 (1961), which held that undisputed wages must be paid without condition, the reviewing justices found that the section 998 offer was invalid under the Labor Code provisions requiring payment of undisputed wages.  Although employer did pay the undisputed wages after the 998 offer was not accepted, that was too late as to retroactively validate it.  The employer had two choices, neither of which were met:  pay the undisputed wages before making the 998 offer or make a new 998 offer after paying the undisputed wages.