CALIFORNIA ATTORNEY'S FEES

Damages, Section 1717: In Malpractice Case For Missed Appeal, Borrowers Recovered Only A Portion Of Fees Paid To Trustee Because Trustee Was Entitled To Recovery Under § 1717 Such That The Additional Fees Were Not Chargeable Against Malpractice Defendant

Case-Within-Case Malpractice Principles Drove The Result.

            As our last post for 2021, we discuss fee recovery as damages in an interesting legal malpractice case, Thompson v. Flynn Riley Bailey & Pasek, LLP, Case No. A161238 (1^st Dist., Div. 4 Dec. 30, 2021) (unpublished).

            What happened in this one was that borrowers received some recovery against their attorneys for failing to timely appeal a merits judgment in favor of a deed of trust trustee, which resulted in the recovery of some compensatory damages and $105,320 out of $600,000 in attorney’s fees paid to the prevailing trustee in prior litigation.  However, borrowers claimed that they should be entitled to about $500,000 more in fees which they paid to the trustee in a settlement, a request denied by the trial judge.  The parties on appeal agreed that the answer to this question rested on whether trustee could have recovered Civil Code section 1717 prevailing party fees—if so, the $500,000 in fees as additional damages were not proper.

            The 1/4 DCA affirmed the denial of awarding more fees as damages.  Based on borrowers contending that loan documents were an integrated contractual transaction, there were contractual fee clauses which allowed fee recovery to the trustee if it had prevailed.  It did not matter what the merits of the theory were, because a hypothetical recovery under section 1717 is all that is needed.

Year In Review – 2021

Year End-Wrap Up By Mike, Marc, And Shanna For Our Top 20 Decisions In 2021

Ronald Reagan Federal Courthouse, Santa Ana, California. Carol M. Highsmith, photographer.  Between 1980 and 2006. Library of Congress.

Part 2 of 2 – Third-Party Beneficiary Fee Clause Interpretation, Class Actions/Cy Pres Awards, Post-Judgment Fee Amounts, And Civil Rights/Employment Costs Dominated Our Second List Of Decisions.

            Here is the second part of our Top 2021 list.  With that, we look forward to posting on cases in 2022, although we will do periodic reports for any ending 2021 decisions.

10.     INTERPRETATION OF FEE CLAUSES. Hom v. Petrou, 67 Cal.App.5^th 459 (Cal. App. 1^st Dist., Div. 4 Aug. 3, 2021)—authored by Justice Brown, discussed in our Aug. 6, 2021 post—Where non-signatory lenders obtained a dismissal of a cross-complaint involving tort claims, they were entitled to attorney’s fees under a broad fee clause in a lease where they were third-party beneficiaries under the clause (based on the specific wording of the fees provision). 

9.     CIVIL RIGHTS/COSTS. Pollock v. Tri-Modal Distrib. Services, Inc., 11 Cal.5^th 918 (Cal. Supreme Court July 26, 2021)—authored by Justice Liu, discussed in our Aug. 2, 2021 post:  Routine appellate costs cannot be awarded to a prevailing FEHA defendant, even on appeal, where the plaintiff brought a potentially meritorious suit that ultimately did not succeed. 

8.     CLASS ACTIONS. McKinney-Drobins v. Massage Envy Franchising, LLC, 16 F.4^th 594 (9^th Cir. Oct. 20, 2021)—authored by Circuit Judge Gould, with a concurrence by Circuit Judge Miller, discussed in our Oct. 21, 2021 post:  Determination of whether vouchers are “coupons” under CAFA is reviewed under a de novo standard, reversing a district judge’s analysis under this review standard.  Class counsel fee award, reached at a pre-certification settlement stage, was reversed and remanded based on the presence of non-cash relief, a “clear sailing” provision, and a “reverter” to the defendant, as well as a need to examine actual redemption rates given that this was a coupon settlement case.

7.     COSTS/EMPLOYMENT. Patterson v. Superior Court, 2021 Cal.App. LEXIS 863 (Cal. App. 2d Dist., Div. 7 Oct. 18, 2021)—authored by Presiding Justice Perluss, discussed in our Oct. 20, 2021 post:  Employer successfully moving to compel arbitration in FEHA case not entitled to recover attorney’s fees unless employee’s opposition to the motion was groundless.

6.     SECTION 998/WORKERS’ COMPENSATION. Oakes v. Progressive Transp. Services, DJDAR 11710 (Cal. App. 2d Dist., Div. 2 Nov. 10, 2021)—authored by Justice Chavez, discussed in our Nov. 11, 2021 post:  Reconciling CCP § 998 and Labor Code § 3856, plaintiff’s attorney’s contingency fee amount is not to be reduced from gross judgment to determine if the section 998 offeror was entitled to prevailing party post-offer costs; CCP § 998 took precedence over Labor Code § 3856.

5.     REQUESTS FOR ADMISSION. Spahn v. Richards, Case No. A159495 (Cal. App. 1^st Dist., Div. 3 Nov. 30, 2021)—authored by Justice Rodriguez, discussed in our Dec. 5, 2021 post:   CCP § 2033.420 “costs-of-proof” sanctions are not per se barred by previous denials of a summary judgment motion and a directed verdict motion, with the circumstances of a particular case determining if a denying plaintiff’s conduct fell within section 2033.420’s exceptions.

4.     JUDGMENT ENFORCEMENT/REASONABLENESS OF FEES. Wertheim, LLC v. Currency Corp., 2021 Cal.App. LEXIS 854 (Cal. App. 2d Dist., Div. 1 Oct. 14, 2021, mod. Nov. 21, 2021, pet’n for review pending, Case No. S271933)—authored by Justice Chaney, reviewed in our Oct. 17, 2021 post:  Judgment creditor was denied a substantial portion of post-judgment collection attorney’s fees based on proportionality and equitable principles by comparing fees sought to amount of judgment at issue. 

3.     ATTORNEY GENERAL/PREVAILING PARTY. Doe v. Westmont, 60 Cal.App.5^th 753 (Cal. App. 2d Dist., Div. 6 Jan. 25, 2021, mod./published Feb. 8, 2021)—authored by Justice Tangeman, discussed in our Feb. 9, 2021 post:  Subsequent appellate decision can justify later CCP § 1021.5 fee award although pre-appeal fees were initially denied because success element was later satisfied.

2.     DAMAGES. Mai v. HKT CAL, Inc., 66 Cal.App.5^th 504 (Cal. App. 4^th Dist., Div. 1 July 12, 2021), rev. den.—authored by Justice Dato, discussed in our July 19, 2021 post:  Disagreeing with, or claiming some of its reasoning was dicta in, Copenbarger v. Cerullo World Evangelism, Inc., 29 Cal.App.5^th 1 (2018).  4/1 DCA holds a prima facie case that costs were incurred and that they were reasonable can be established by plaintiff client’s testimony that the bills were paid when fees are claimed as damages during a trial.  [BLOG OBSERVATION:  This split in thinking may need to be resolved by the California Supreme Court at some point.]

1.     CLASS ACTIONS/CY PRES AWARDS. In re Google Inc. Street View Electronic Communications Litig., Case No. 20-15616 (9^thCir. Dec. 27, 2021) (published)—majority and concurring opinions authored by Circuit Judge Bade, discussed in our Dec. 28, 2021 post:  Cy pres awards could be considered for purposes of valuing a class action for purposes of setting an attorney’s fees benchmark even though direct monetary payments went to class members in a case where member identification was difficult, with the concurrence indicating that the Ninth Circuit should reexamine cy pres awards with respect to indirect benefit and inherent conflicts of interest.

Equity, Retainer Agreements: Attorney Security Agreements For Fees Can Take Precedence Over Charging Orders

Matter Remanded To Determine Scope Of Security Agreement.

            We commend that all attorneys, with respect to collection of fees, read Rice v. Downs, Case No. B307780 (2d Dist., Div. 1 Dec. 27, 2021) (partially published) where the Court of Appeal, with some remand limited instructions, did seem to validate a security agreement/ UCC-1 filing for fee compensation as against a later charging order.  Lien priorities did govern here, but the opinion is good reading on how to perfect and obtain priority for purposes of fee recovery against competing creditors.

Probate: Award Of Fees To Trustee’s Attorneys Was No Abuse Of Discretion Where They Were California Bar Members, But Their Law Firm Was Not California Registered

Disqualification Based On Law Firm Registration Would Be Too Harsh.

            In Johnson v. Johnson, Case Nos. C090195/ C090522 (3d Dist. Dec. 27, 2021) (unpublished), trustee’s attorneys were awarded fees for beneficiaries making a bad faith contest of accountings.  On appeal, the aggrieved parties argued that the fee award was improper because the law firm for the winning attorneys was not registered in California.  That was true, but the individual attorneys were California state bar members, good enough to make an award justifiable.  (See Frye v. Tenderloin Housing Clinic, Inc., 38 Cal.4th 23, 48-50 (2006) [concluding that requiring disgorgement of fees by non-profit defendant because of failure to register is disproportionate to the wrong and “would constitute a totally unwarranted windfall” to plaintiff]; Olson v. Cohen, 106 Cal.App.4th 1205, 1215 (2003) [“To require disgorgement of fees because of a failure to register the corporation . . . is disproportionate to the wrong”].)

Class Actions: Ninth Circuit Affirms 25% Class Action Fee Award Based On Cy Pres Payments/Injunctive Relief Settlements

Majority Author Affirms The Settlement, But—In A Concurrence—Writes It Is Time To Reconsider The Practice Of Cy Pres Awards.

            In In re Google Inc. Street View Electronic Communications Litig., Case No. 20-15616 (9^th Cir. Dec. 27, 2021) (published), the Ninth Circuit affirmed a district judge’s approval of a settlement in a 60-million member class action alleging that Google illegally collected members’ Wi-Fi data through its Street View program.  The parties reached a settlement involving injunctive relief, cy pres payments totaling $13 million to 9 Internet privacy advocacy groups, attorney’s fees to class counsel amounting to 25% of the settlement fund, and class representative service awards—but no direct monetary payments to class members based on the difficulty in determining distribution of funds to such a large class and the technical challenges to verifying class members’ claims.  The district judge approved the settlement, which was affirmed by the Ninth Circuit in a majority opinion authored by Circuit Judge Bade, who also penned a concurring opinion.

            The Court of Appeals rejected the argument that the district judge “blindly applied” a 25% benchmark for the fee award, determining cy pres payments could be considered a tangible settlement value and augmented by the tangible benefit from the injunctive relief.  However, Judge Bade in a concurrence did indicate that the Ninth Circuit should revisit the propriety of cy pres awards based on commentary indicating that it does not provide an indirect benefit to class members and that it is rife with conflicts between class members, class counsel, and the third party beneficiaries of the actual monetary distributions. 

Year In Review - 2021

Year End-Wrap Up By Mike, Marc, And Shanna For Our Top 20 Decisions In 2021

Courtroom One Marble, James R. Browning U.S. Court of Appeals Building, San Francisco, California. Carol M. Highsmith, photographer. 2009. Library of Congress.

Part 1 of 2 – Section 998, Class Action, Prevailing Party/Fee Reasonableness, And Civil Rights/Employment Costs Dominated Our First List Of Decisions.

            It is the Holiday season, and we continue our tradition to present our personal favorite decisions from our blog postings during 2021, keeping in mind they are simply a distillation of what we selectively picked as important.  2021, although a challenging year due to the continuation of the COVID-19 pandemic, produced a good amount of California state court and Ninth Circuit decisions on fee issues, like 2020, such that we wrap up with our Top 20 Decisions list.  We wish our readers Happy Holidays, hoping you all stay safe.

20.     SECTION 998/SETTLEMENT. Varney Entertainment Group, Inc. v. Avon Plastics, Inc., 61 Cal.App.5^th 222 (Cal. App. 4^th Dist., Div. 3 Feb. 23, 2021)—authored by Justice Goethals, discussed in our Feb. 27, 2021 post:  A second narrower non-998 settlement offer, which was accepted by plaintiff, extinguished a broader initial section 998 offer made by plaintiff such that defendant could not recover prevailing party fees and costs under the extinguished prior 998 offer.

19.     ETHICS/INTEREST/RETAINER AGREEMENTS. Pech v. Morgan, 61 Cal.App.5^th 841 (Cal. App. 2d Dist., Div. 3 March 11, 2021)—authored by Justice Egerton, discussed in our March 13, 2021 post:  For valid non-contingency retainer agreements, unconscionability guides fee entitlement, and reasonability guides attorney performance issues.  Attorneys cannot obtain interest on delinquent fees unless their retainer agreements have provisions stating interest will be charged.

18.     REASONABLENESS OF FEES. Karton v. Ari Design & Construction, Inc., 61 Cal.App.5^th 734 (Cal. App. 2d Dist., Div. 8 March 9, 2021)—authored by Justice Wiley, discussed in our March 10, 2021 post:  Overlitigation of a case by an attorney and incivility during the course of a case can justify a trial court’s reduction of a prevailing party fee request.

17.     SECTION 998. Mostafavi Law Group, APC v. Larry Rabineau, APC, 61 Cal.App.5^th 614 (Cal. App. 2d Dist., Div. 4 March 3, 2021)—authored by Justice Currey, discussed in our March 5, 2021 post:  Section 998 offeror’s failure to provide acceptance line in an actually accepted 998 offer still invalidated the offer.

16.     CIVIL RIGHTS/COSTS. Rodney Green, Sr. v. Mercy Housing, Inc., 991 F.3d 1056 (9^th Cir. March 19, 2021)—authored by Circuit Judge Berzon, discussed in our March 19, 2021 post:  Losing plaintiff under a Fair Housing Act (FHA) case is not exposed to routine costs unless plaintiff’s claims were frivolous, unreasonable, or groundless under the Christiansburg Garment Co. v. EEOC, 434 U.S. 412 (1978) standard.

15.     CLASS ACTIONS. Briseno v. Henderson (ConAgra Foods, Inc.), 998 F.3d 1019 (9^th Cir. June 1, 2021)—authored by Circuit Judge Lee, discussed in our June 1, 2021 post:  Ninth Circuit will use the factors in In re Bluetooth Headset Products Liab. Litig., 654 F.3d 535 (9^th Cir. 2011) to judge the fairness of class action settlement fee recovery terms at the post-certification stage, reversing a $7 million fee/costs award to class counsel because (a) class counsel was going to receive about 90% of the total non-cash redemption distributions; (b) the defense banked on a low redemption rate such that the “clear sailing clause” indicated some collusion; and (c) the settlement contained a “reverter” where any reduced fees to class counsel went back to defendant.

14.     PREVAILING PARTY. Harris v. Rojas, 66 Cal.App.5^th 817 (Cal. App. 2d Dist., Div. 8 June 20, 2021)—authored by Justice Wiley, discussed in our July 22, 2021 post:  Tenant, requesting $200,000 from a jury and receiving only $6,450 on his contract claim (3% of the request), was not the prevailing party so as to recover $296,744.68 in fees from landlord.  A trial judge has discretion to decide that the “victory” was pyrrhic and nobody won.

13.     CLASS ACTION. Kim v. Allison, 8 F.4^th 1170 (9^th Cir. Aug. 17, 2021)—authored by District Judge Rakoff sitting by designation for the majority over a dissent by Circuit Judge Callahan, discussed in our Aug. 17, 2021 post—Bluetooth factors are used to judge the fairness of a pre-certification fee award to class counsel.  The majority reversed a $1.2 million fee award, where the injunction value and coupon claim rate predicates for the fee award were inflated and where there was a suspicious “clear sailing clause,” with the dissenting judge finding the fee award was justified under a lodestar analysis such that there was no abuse of discretion.

12.     FAMILY LAW. Marriage of Erndt v. Terhorst, 59 Cal.App.5^th 898 (Cal. App. 1^st Dist., Div. 3 Jan. 11, 2021)—authored by Justice Petrou, discussed in our Jan. 13, 2021 post:  Family Code section 271 sanctions must be tethered to actual attorney’s fees incurred, so they cannot be awarded for an in pro per litigant’s efforts.

11.     SLAPP. Trinity Risk Management, LLC v. Simplified Labor Staffing Solutions, Inc., 59 Cal.App.5^th 995 (Cal. App. 2d Dist., Div. 8 Jan. 11, 2021 issued as unpublished, Jan. 14 published)—authored by Justice Stratton, discussed in our Jan. 15, 2021 post:  There is no meet and confer requirement to discuss the merits of a SLAPP motion or an attorney’s fees request under the anti-SLAPP statute.

Arbitration: Arbitration Award Of Attorney Fees And Costs To Prevailing Defendant Attorney Reversed On Appeal

Consumer Arbitration Rules Concerning Prevailing Party Attorney Fees Do Apply In The Context Of An Attorney-Client Dispute.

            In Milder v. Holley, Case No. B299122 (2d Dist., Div. 5 December 16, 2021) (unpublished), client plaintiff initiated arbitration proceedings pursuant to an arbitration clause after a dispute arose between him and his attorney/her law firm. After defeating plaintiff’s claims in arbitration, defendants attorney/law firm were awarded $59,892.50 in attorney fees plus $19,705.98 in costs – with the arbitrator determining defendants were the prevailing parties and entitled to  fees/costs incurred in the arbitration pursuant to the arbitration clause in the retainer agreement.  The trial court rejected plaintiff’s arguments that the retainer agreement’s fee-shifting provision was illegal – finding consumer arbitration rules do not apply to attorney fee disputes – and entered judgment confirming the arbitration award.

            The 2/5 DCA disagreed and reversed the fees/costs portion of the arbitration award. The panel concluded that the arbitrator acted in excess of his authority by awarding fees/costs against plaintiff because law firm clients are not excluded as “consumers” (Schatz v. Allen Matkins Leck Gamble & Mallory LLP, 45 Cal.4th 557, 564 (2009); Aguilar v. Lerner, 32 Cal.4th 974, 981 (2004)) and are therefore entitled to the consumer protections provided under Code Civ. Proc. § 1284.3(a) [“No neutral arbitrator or private arbitration company shall administer a consumer arbitration under any agreement or rule requiring that a consumer who is a party to the arbitration pay the fees and costs incurred by an opposing party if the consumer does not prevail in the arbitration, including, but not limited to, the fees and costs of the arbitrator, provider organization, attorney, or witnesses”].

Probate: Denial Of Attorneys’ Fees To Temporary De Facto Trustee Who Successfully Defeated Breach Of Fiduciary Claims Affirmed On Appeal

No Authority Entitling De Facto Trustees To Same Reimbursement Remedies As Designated Trustees.   

            In Sonntag v. Franz, Case No. A161466 (1^st Dist., Div. 1 December 16, 2021) (unpublished), defendant who temporarily acted as a de facto trustee sought attorneys’ fees and costs after successfully defeating breach of fiduciary duty claims brought by two of her siblings/trust beneficiaries.  Defendant claimed entitlement based on the trial court’s finding that she was the de facto trustee for six months. Although the trial court awarded defendant costs as the prevailing party, it denied her motion for fees.  The 1/1 DCA affirmed.

            Defendant argued on appeal that public policy supports the mutuality of remedies as it pertains to a de facto trustee – thereby entitling her to reimbursement for successful defense costs just as an appointed trustee would be – but provided no authority to support her contention.  In fact, the appellate panel was able to find only one case awarding fees against a trust to the de facto trustees – an Indiana case where the de facto trustees had been appointed by the U.S. District Court and had acted and been recognized as such for seven years before the 7^th Circuit Court of Appeals concluded the District Court had no jurisdiction to appoint trustees or administer the trust. (Gray v. Union Trust Co. (1938) 213 Ind. 675, 678; 14 N.E.2d 532.) However, that was a very different situation.  Here, as the panel observed, defendant was under no obligation to incur expenses on behalf of the trust. Rather, she should have looked to the designated trustee, who had requested she temporarily perform trustee duties on his behalf, to defend the trust against the siblings’ claims.

Family Law: Stipulated Judgment Not Mentioning Pending Sanctions Issues Did Not Deprive Family Law Judge Of Ability To Issue Family Code Section 271 Sanctions

Sanctions and Vexatious Litigant Issues Not Foreclosed By A Settlement Or Dismissal Via Settlement/Judgment.

            In Marriage of Patel and Bhatia, Case No. B307926 (2d Dist., Div. 3 Dec. 14, 2021) (unpublished), an ex-husband was sanctioned for $5,000 under Family Code section 271 [designed to penalize litigants not trying to settle or multiplying proceedings in a dissolution case] and declared to be a vexatious litigant.  Ex-husband had reached a stipulated judgment with ex-wife, with nothing mentioning the pending sanctions/vexatious litigant motions.  He appealed, arguing that the stipulated judgment/settlement deprived the lower court of ability to rule on the other pending requests, including the 271 sanctions motion.  The 2/3 DCA disagreed.  Adopting analogous reasoning from Pittman v. Beck Park Apartments Ltd., 20 Cal.App.5^th 1009 (2d Dist., Div. 7 2018), the appellate court determined that these post-dismissal issues could be entertained by the lower court, including the sanctions order.

            BLOB OBSERVATION—We now observe that a different division of the Second District has now endorsed the reasoning in Pittman.  We will note that the First District, Division 3, did so, earlier this year, in a published decision.  (Manhan v. Gallagher, 62 Cal.App.5^th 504, 510 (2021) [reviewed in our March 29, 2021 post].)

Section 998: Prevailing Defendant’s §998 Offer For 1.6% Of The Damages Request By Plaintiff Was Unreasonable

Denial of Defense Summary Judgment Motion And Trial Judge’s Remarks That Colorable Arguments Were Made For Interpretation Of An Easement Cemented The Result.

            The defendant in 18131 Ventura Blvd., LLC v. 5223 Linley, LLC, Case No. B307958 (2d Dist., Div. 7 Dec. 14, 2021) (unpublished) won an easement interpretation dispute but only after the trial judge denied summary judgment and remarked that plaintiffs made colorable arguments about the interpretation of the scope of the easement.  Two weeks after denial of the summary judgment motion and before a 9-day bench trial, defendant served a CCP § 998 offer for $10,000, about 1.6% of the damages claimed by plaintiff.  After winning at trial, defendant sought to recover $84,126.95 in costs ($28,250.22 of which was expert fees), with the trial judge finding the 998 to be unreasonable so as to preclude any expert fee award and ultimately awarding defendant $45,492.97 in routine costs.

            Defendant appealed, but the lower court’s ruling on the invalidity of the 998 offer was affirmed.  Given what occurred at the denial of the summary judgment ruling, the offer of only $10,000 was not reasonable, and the lower court was in the best position to so determine. 

Family Law: Celebrity Chef Cat Cora Had To Pay Attorney’s Fees Of $444,000 To Her Ex-Wife

Lower Court Did Not Abuse Its Discretion In Appointing A Receiver To Help Enforce Spousal And Child Support Issues.

            Any fans of HGTV likely know of Catherine (Cat) Cora, a well-known celebrity chef.  In 2017, her marriage to Jennifer Cora was dissolved, with the lower court ordering Cat to pay $8,118 in monthly child support for four children, $9,500 in spousal support to Jennifer (who stayed at home with the children while Cat worked outside the house), and $440,000 to Jennifer’s divorce attorney.  Cat eventually paid the $444k fee award, but she claimed not being able to afford the support in light of the pandemic.  The lower court appointed a receiver in order to assist in the collection of the support awards, results all affirmed on appeal in Cora v. Cora, Case No. B308834 (2d Dist., Div. 6 Dec. 14, 2021) (unpublished). 

Arbitration, Retainer Agreements: $192,000 Arbitration Award To Ex-Attorney Affirmed On Appeal

After MFAA Arbitration, Ex-Attorney Rightly Went To Contractual Arbitration; Argument That Block Billing Violates B&P Section 6148 Is Rejected Although Retainer Said Attorney Could Block Bill.

            In Kling v. Horn, Case No. B305967 (2d Dist., Div. 7 Dec. 14, 2021) (unpublished), defendant ex-attorney, after engaging in a Mandatory Fee Arbitration Act (FAA) under which ex-client obtained partial relief from paying delinquent fee bills and after rejecting the award, won a contractual arbitration award of $192,000—with ex-client, in a bad move, not participating in the subsequent arbitration.  Among other arguments, ex-client argued that ex-attorney did not comply with the MFAA procedures and that a provision in the retainer agreement allowing ex-attorney the option to block bill violated B&P § 6148(b) [“Bills for the fee portion of the bill shall include the amount, rate, basis for calculation, or other method of determination of the attorney’s fees and costs.”].

            The trial court confirmed the award and denied a petition to vacate it, determinations affirmed on appeal.  Ex-attorney did comply with the MFAA by participating in the MFAA arbitration and then demanding contractual arbitration, as allowed under Rosenson v. Greenberg Glusker Fields Claman & Machtinger LLP, 203 Cal.App.4^th 688, 693-694 (2012).  With respect to block billing, the appellate court concluded that (a) ex-client did not cite authority indicating it violated section 6148 (which does not require disclosing the date of services or specifically describing the services rendered, although indicating that block billing can require a discount of a fee request), and (b) the block billing provision was severable even if was considered to be illegal in nature.

Employment: Plaintiff Prevailing On 10% Of Primarily FEHA-Based Claims Properly Awarded $320,000 In Attorney’s Fees Out Of A Requested $2.1 Million Based On Overlitigation Of The Case, Limited Success, And Unexceptional Nature Of The Case

However, Denial Of Expert Fees Remanded Because Trial Judge May Have Believed He Had No Discretion To Award.

            Herron v. County of Los Angeles, Case No. B295184 (2d Dist., Div. 7 Dec. 8, 2021) (unpublished) is an interesting case which shows how trial judges have wide discretion in awarding attorney’s fees of a reasonable amount with respect to hourly rates, activities in the litigation, degree of success in the litigation, and comparison to other attorney efforts in other like kind cases.

            In Herron, a plaintiff sought to recover $2 million from County, but only won 10% of his claims to the tune of a jury verdict of $200,000.  Under FEHA, plaintiff’s counsel moved for a fee award of over $2.1 million (inclusive of a 2.0 positive multiplier) and for costs of $121,000 (including expert witness expenses).  The trial judge awarded counsel $320,000 in fees and $28,472.58 in costs (awarding no expert witness fees).  The 2/7 DCA affirmed the fee award, but it reversed and remanded on the expert witness fee denial.

            The lower court reduced lead counsel’s requested $600 hourly rate to $500 based on that attorney being a solo practitioner and previously never being awarded $600 as an hourly rate.       The appellate court found no flaw with this analysis.  The trial judge also reduced by quite a bit the hours being requested because of overlitigation, limited success, and comparison of hours the presiding jurist had seen in a more complicated employment case by another experienced lawyer in that other matter.  The Court of Appeal found that consideration of these factors was proper, especially the comparative analysis to the activities spent by an employment lawyer in a different FEHA case.  (See, e.g., Stratton v. Beck (2017) 9 Cal.App.5th 483, 496 [finding no abuse of discretion in court setting attorney’s hourly rate based on comparison of rates from similarly experienced attorneys in same field and area]; Children’s Hospital & Medical Center v. Bonta (2002) 97 Cal.App.4th 740, 783 [affirming award where “the hourly rates allowed by the trial court are within the range of reasonable rates charged by and judicially awarded comparable attorneys for comparable work”].)   Finally, given an express finding that the case was not exceptional in nature, awarding no multiplier was within the trial judge’s discretion.

            However, the refusal to award expert fees was reversed because FEHA, unlike the routine costs statute, does allow a lower court discretion to award them, with no limitation that the experts had to be ones appointed under court order.  A further examination was in order.

Costs: Fifth District Discusses A Myriad Of Costs Issues, Agreeing That Some Were Improperly Awarded But Others Were Properly Awarded

Costs Necessary And Reasonable To The Litigation Are Discretionary Award Calls By The Trial Judge.

            In O’Neal v. Stanislaus County Employees’ Retirement Assn., Case No. F079887 (5^th Dist. Dec. 8, 2021) (unpublished), non-prevailing plaintiffs appealed certain costs awarded to The Retirement Association and Stanislaus County.  The Fifth District concluded that some costs were improperly awarded but others were properly ordered, with the major takeaways being these:  (1) summary judgment exhibit costs and costs of a person never deposed were not properly awarded; (2) copies of trial exhibits is a discretionary costs award such that there was no abuse of discretion in so awarding; (3) messenger fees for filings by outside, non-local counsel are a discretionary costs item which can be awarded by the trial judge; (4) UPS shipping costs are not allowable under the costs statutes; (5) CourtCall telephonic appearance expenses can be awarded in the trial judge’s discretion; (6) unused trial exhibit expenses are properly awardable discretionary costs, although noting that the issue is pending before the California Supreme Court in Segal v. ASICS America Corp., No. S263569; and (7) transcript costs for transcripts not ordered by the court are not a proper costs item.

            BLOG UPDATE:  Segal was argued and submitted on November 3, 2021, so a decision should be upcoming in the near future.

SLAPP: 4/3 DCA Agrees With 4/2 DCA Analysis On SLAPP Frivolous Fee Plaintiffs’ Requests

About $83,000 In Frivolous SLAPP Fees Affirmed On Appeal.

            In Ibbetson v. Grant, Case Nos. G059067/G059352 (4^th Dist., Div. 3 Dec. 7, 2021) (unpublished), the appellate court affirmed about an $83,000 attorney’s fees award in favor of plaintiffs for a frivolous SLAPP motion.  [So, defendants, beware, you can get mandatory SLAPP fees if a trial judge determines the motion was frivolous.]  However, for blogging purposes, we picked up on the defense argument that plaintiffs had not meet the CCP § 128.7 safe harbor provisions as far as making the fee request.   The 4/3 DCA rejected this argument, agreeing with the 4/2 DCA analysis of this issue in Changsha Metro Group Co., Ltd. v. Xufeng, 57 Cal.App.5^th 1, 19 (2020). 

Deadlines: Plaintiff’s Failure To Timely Request Fees/Costs After CCP § 998 Acceptance Means The Request Was Waived

Lack of Diligence Was the End Conclusion Of This Matter.

            In Frye v. The Legends Golf Club, LLC, Case No. E075191 (4^th Dist., Div. 2 Dec. 6, 2021) (unpublished), the appellate court colorfully led off this way: “A trial court’s award of contractual attorney fees and costs is not like a stock dividend—you must request it in a timely and appropriate manner.”  Well, the plaintiff here never managed to do that.  After accepting a section 998 offer which preserved the ability to move for fees, and after rolling OSC re dismissal requests on numerous occasions, the trial judge finally dismissed the case before any fee motion could be resolved.  That result was affirmed on appeal.  Plaintiff could not show any diligence in moving for fees, getting extension after extension but not properly filing the fee request.  This type of conduct led to the conclusion that no fee request was still in play for plaintiff. 

POOF! Earlier Reversal of Judgment On Less Than All Causes of Action Required Reversal Of Subsequent Fees/Costs Award

4/1 DCA So Rules In Unpublished Opinion.

            In Cui v. Secured Capital Ltd. Partnership, Case No. D078538 (4^th Dist., Div. 1 Dec. 2, 2021) (unpublished), a trial judge entered a $97,000 fees/costs award against a commercial tenant based on tort and premises liability claims against landlord and its real estate broker about the suitability of the leased premises for tenant’s intended uses.  The lower court earlier had granted summary judgment on all claims based upon an unlawful detainer possession stipulation, with the appellate court reversing the summary judgment on all claims but the premises liability count.  That meant the fees/costs award when POOF! also.  That held true even when, as here, the judgment was reversed as to fewer than all causes of action. (See Harris v. Wachovia Mortgage, FSB, 185 Cal.App.4th 1018, 1021 [reversal of postjudgment fee and cost order required where judgment was reversed as to only one of three causes of action]; Ventas Finance I, LLC v. Franchise Tax Bd. (2008) 165 Cal.App.4th 1207, 1212 [reversing fee award following partial reversal of judgment].)

Employment: Even Though Wage Statement Penalty Award Is Reversed, $944,860 Fee Award To Prevailing Flight Attendants Sustained Upon Review

Penalties Will Be Recalculated And Likely Still Result In A Sizeable Penalty Award Despite Reversal, So Fee Award Was Not Disturbed.

            In Gunther v. Alaska Airlines, Inc., Case No. D077313 (4^th Dist., Div. 1 Dec. 1, 2021) (partially published; fee discussion published), Alaska Airlines was found to be in noncompliance with California state wage statement requirements, resulting in a substantial PAGA penalty award of $25 million under Labor Code section 226.3.  The lower court, substantially adopting a lodestar request but only granting a 1.25 positive multiplier rather than the 4.3 requested multiplier, awarded plaintiffs postjudgment fees of $944,860 under Labor Code sections 226(h) and 2699(g)(1)—with the defense not contesting fee entitlement.  However, the appellate court reversed the PAGA penalty award, finding it should be calculated under the less heavy-handed penalty of PAGA section 2699(f)(2).

            Alaska Airlines argued that this reversal meant the fee award should fall also, along with other challenges.  The 4/1 DCA upheld the fee award.  It found that the error in adoption of an incorrect penalty would not disturb the overall success of plaintiff, given penalties were still going to be recalculated and likely would be substantial in nature.  Put another way, plaintiffs still succeeded.  The trial court’s refusal to reduce for time spent on dismissed claims was sustained because jettisoning those claims resulted in a more efficient trial such that plaintiffs would be awarded for their counsel’s good judgment.  The appellate court also rejected the defense’s limited success challenge, finding that the unsuccessful claims were related to the successful claims, drawing upon civil rights and CEQA cases for its analysis.  Fee award affirmed even though the penalty award was sent for a remand calculation. 

Request for Admissions: $239,170.86 Costs Of Proof Sanctions Order Affirmed On Appeal

Appellate Court Rejects Per Se Rule That Denials of Summary Judgment Motion Or Directed Verdict Presents Imposition Of These Type Of Sanctions.

            Hi, everyone.  We are back from the Thanksgiving break and hope you are all well.  The fee decisions were very sparse from mid-November to now, but they are ramping back up as we close in on the December Holidays.

            Code of Civil Procedure section 2033.420 allows a lower court to award “costs-of-proof” sanctions, typically attorney’s fees, unless it falls within one of these exceptions:  (1) an objection was sustained to the request or a response was waived; (2) the admission sought was of no substantial importance; (3) there was reasonable ground to believe the party refusing to admit the matter would prevail on the matter; or (4) there was other good reason for the failure to admit.” (Doe v. L.A. County Dept. of Children and Family Services, 37 Cal.App.5^th 675, 690 (2019).)  Usually, (2) or (3) are involved in most cases we have posted on since early May 2008.  However, the reasonable belief exception, as colorfully described in one case, involves showing more than a “hope or roll of the dice.”  (Doe, 37 Cal.App.5^th at 690.)

            Plaintiff learned that all too well, after being hit with a costs-of-proof sanctions order of $239,170.86 after an unsuccessful bench trial in Spahn v. Richards, Case No. A159495 (1^st Dist., Div. 3 Nov. 30, 2021) (published).

            The problem was that Plaintiff had no trial proof that defendant contractor had orally agreed to build a home at a specified fix price.  Based on the abuse of discretion review standard, the lower court did not err in awarding the “sanctions.”  Plaintiff tried to avoid that by advocating a per se rule that the previous denials of a summary judgment motion and a directed verdict motion at trial conclusively established a good faith belief that plaintiff would prevail at trial.  Given that summary judgment and directed verdict motions do not involve weighing of evidence, the appellate court refused to adopt the per se approach suggested by plaintiff given that the evidence presented at trial drives the section 2033.420 analysis.

Sanctions: $28,882.29 CCP § 128.7 Sanctions Award Reversed On Appeal

Plaintiff Made A Plausible, Nonfrivolous Argument That The Statute Of Limitations Did Not Bar An Action.

            In Kumar v. Ramsey, Case No. C092610 (3d Dist. Nov. 29, 2021) (published), plaintiff was socked with CCP § 128.7 sanctions of $28,882.29 because the lower court believed that the action clearly was time barred under the applicable statute of limitations (SOL).  The appellate court saw things differently, believing a plausible, nonfrivolous argument was made as to why the SOL did not bar the action.  Given that determination, it was an abuse of discretion to dispense sanctions against plaintiff. 

Equity, Retainer Agreements: Voiding A Contingency Agreement Under Business & Professions Code Section 6147(b) Does Not Extend To Reasonable Litigation Costs

Contingency Agreement Provided Client Would Pay For All Costs, With Quantum Meruit Equitable Principles Bolstering The Conclusion.

            Henry M. Lee Law Corp. v. Chang, Case No. B288895 (2d Dist., Div. 3 Nov. 29, 2021) (unpublished) was quite an odyssey.  Law firm agreed to represent client in a wage/hour case under a 50% contingency agreement under which client agreed to reimburse all costs advanced by the firm.  There also was a severability clause in the retainer agreement.  Unfortunately, the retainer agreement did not have “negotiability” language required under Business and Professions Code section 6147(c).  Plaintiff client received a jury verdict of $62,000 plus an award of attorney’s fees in the amount of $300,000 under Labor Code sections 226(e) and 1194(a), with the fees ultimately held to go to the law firm rather than the client.  [BLOG NOTE—This shows how many wage/hour cases can result in substantial fees where the compensatory recovery is much less.]  But there was more bad news to come—the appellate court reversed the jury compensatory verdict and fee award in a subsequent opinion. 

            So, the battle turned to litigation costs advanced by law firm in representing the ex-client who terminated the firm along the way.  Client properly voided the fee agreement under section 6147(c), such that quantum meruit was the basis for fee recovery, which was a moot issue given the earlier appellate reversal.  A jury awarded law firm $28,250 in a collection suit against ex-client to collect the advanced litigation costs.  The issue presented in the appeal was whether section 6147(c) invalidated attorney’s attempt to recoup advanced litigation costs from client.

            The appellate court found that the section only applied to fee recovery and did not impact recovery of litigation costs which were to be borne by the client ultimately.  Nothing in the statutory provision applied to litigation costs, and quantum meruit equitable principles demonstrated it would be unfair to deny those expenses to client’s law firm. 

Prevailing Party, Section 1717: Where Result Was Mixed, Trial Court Did Not Err In Determining That Prevailing Party Borrowers Prevailed More Than Lender

$107,605.20 Fee Award Was The Borrowers’ Gain; Some Tort Claims, If Related To Enforcement Of A Note, Are Recoverable Under Civil Code Section 1717.

            In Bays v. Ashcraft, Case No. D079056 (4^th Dist., Div. 1 Nov. 18, 2021) (unpublished), borrowers and lender got into a tussle, with there being mixed results but with the lower court concluding the loan was “clearly usurious” such that all note interest had to be forfeited.  To put the mixed result in context, lender claimed about $233,000 was owed, and the trial court concluded only $24,868.32 in principal/interest was owed by borrowers—as well as cancelling the NOD and quieting title to the property in borrowers’ favor.  Then, after finding that the litigation results were mixed, the lower court determined borrowers obtained the greater relief and awarded them, as prevailing parties, $107,605.20 in attorney’s fees under Civil Code section 1717 (predicated on promissory note and deed of trust fee clauses). 

            The 4/1 DCA affirmed the fees award.  Based on the ultimate result combined with the voiding of the NOA and quieting of title in borrowers’ favor, the lower court did not err in finding borrowers to be the prevailing parties.  However, lender claimed that there could be no fees awarded on a breach of fiduciary duty and B&P § 17200 claim.  Section 1717’s “on the contract” language is liberally construed, with the pleadings showing that these two claims did relate to the loan such that they were allowable under the statutory provision.  (Cf. Yoon v. Cam IX Trust, 60 Cal.App.5^th 388, 393 (2021), discussed in our Jan. 31, 2021 post [claims against lender for negligence and fraud arose from enforcement of the note, so they were covered under section 1717].)  The fees for the tort/section 17200 claims were correctly awarded. 

Special Fee Shifting Statute: Attorney Knowing That A Torts Claim Had An Invalid Proof Of Service, Leading To A County Directed Verdict, Exposed Plaintiff To A Substantial Fees Award

Losing Plaintiff Ordered To Pay $121,837.50 In Attorney’s Fees And $11,637.85 In Costs

            Government Code section 1038 penalizes a plaintiff who files and pursues an action subject to a tort claims presentation to defense costs against the governmental entity, when a directed verdict is granted, where plaintiff proceeded in bad faith and without reasonable cause.  Plaintiff in Harrington v. County of El Dorado, Case No. C092559 (3d Dist. Nov. 18, 2021) (unpublished) learned the pain of that penalty all too well. 

            There, a directed verdict was granted on all causes of action in a water drainage damage case which required proper presentation of a torts claim.  The problem is that plaintiff’s attorney knew that there was no valid proof of service on the claim letter—the service was purportedly made in 2016 on a 2017 Judicial Council form, with no explanation how such a later date form could be used.  Unfortunately for plaintiff, the attorney’s knowledge of this defect was imputed to his/her client.  (Hall v. Regents of University of California, 43 Cal.App.4^th 1580 1586 (1996).)  Given that reality, the appellate court affirmed the lower court’s award of defense fees of $121,837.50 and costs of $11,637.50 against plaintiff.