CALIFORNIA ATTORNEY'S FEES

Block Billing, Special Fee Shifting Statute: Nike Is Awarded About $260,000 In Attorney’s Fees Against Michael Avenatti Under The Mandatory Victims Restitution Act

Block Billing Hampered Apportionment Of Fees, With District Judge Only Awarding About A Third Of The Ask.

            It is not often that we post on a criminal case, but the publicity generated and interesting fee-shifting statute involved in USA v. Avenatti, Case No. (SI) 19 Cr. 373 (PGG) (S.D.N.Y. Doc. 34, Mem. and Order Feb. 14, 2022) invited a post on this decision.

            Under the Mandatory Victims Restitution Act (MVRA), 18 U.S.C. § 3663A(b)(4), attorney’s fees can be paid to a criminal victim where that victim’s attorneys render assistance at the request or inducement of a governmental criminal case.  However, only governmentally-related work can be awarded, with the need to apportion out private investigation by the victim such as analyzing court pleadings or attending motion hearings.  (Lagos v. U.S., 132 S.Ct. 1684, 1690 (2018).) 

            Nike was found to be a victim in the criminal extortion case brought by the U.S. against attorney Michael Avenatti.  Nike’s attorneys Boies Schiller sought $856,162 in attorney’s fees for helping federal prosecutors bring charges against Mr. Avenatti.

            U.S. District Judge Paul G. Gardephe agreed Nike was entitled to fees under MVRA, but he found the need to segregate out compensable and noncompensable work efforts.  The problem which handicapped apportionment was block billing by Boies Schiller.  So, District Judge Gardephe disregarded entirely all block billed entries which contained one or more noncompensable entries.  When that was done, $259,800.50 was the fee award, around a third of the request.

Discovery, Judgment Enforcement: Peripheral Objector’s Unsuccessful Opposition to Motions To Compel Compliance To Judgment Enforcement Third Party Subpoenas Affirmed On Appeal

Sanctions Order Was Only $6,750, Although Losing Objector Is Now Liable For Substantially More In Appellate Fees.

            This next case, Vision en Analisis y Estrategia v. Erwin Legal, Case No. G059669 (4^th Dist., Div. 3 Feb. 17, 2022) (unpublished), demonstrates that sometimes a losing party/objector should take minor bumps rather than pursue an appeal which affirms the result and will result in imposition of likely more substantial appellate fees against the loser.

            The case involved plaintiffs’ efforts to obtain postjudgment asset information against losing defendants through third-party subpoenas, with appellant/objector being the secretary/CFO of one of the defendants.  Objector retained counsel who objected and then unsuccessfully opposed plaintiffs’ motion to compel after meet and confer efforts.  The lower court saw no reason not to compel the production, awarding sanctions of $6,750 (out of a requested $44,000) and objector and objector’s counsel under CCP §1987.2, relating to third-party discovery.

            The 4/3 DCA, in an opinion authored by Justice Goethals, affirmed.   Objector failed to show what privacy interest she had which was being infringed.  However, the potential bleeding did not stop at $6,750.  Plaintiffs were entitled to appellate fees and costs for winning the appeal, an amount us bloggers anticipate would be much more than the $6,750 at issue.  (Roe v. Halbig, 29 Cal.App.5^th 286, 313 (2018).)

Deeds of Trust, Fee Clause Interpretation: Borrower Prevailing On Quiet Title And Equitable Lien Claims Based On Deeds Of Trust Properly Denied Prevailing Party Fees Based On The Wording Of The So-Called “Fee Clauses”

Look At the Wording, Folks!

            In determining whether there is attorney’s fees entitlement, one must carefully look at the wording of the clauses under which fees are sought as well as the documents which are being sued upon.  Although the borrower technically prevailed on some claims against the lender, the absence of fee entitlement properly led to a conclusion that borrower was not entitled to fees.

            What happened in HSBC Bank USA v. Malekan, Case No. B299157 (2d Dist., Div. 4 Feb. 15, 2022) (unpublished) is that a borrower did prevail, even upon reversal (which might have made a difference, but did not), on some quiet title/equitable lien claims brought by lender under a deed of trust.  After getting some victories, borrower moved for attorney’s fees under clauses in the deed of trust and promissory note.  The lower court denied fees in entirety, so an appeal was brought by borrower.

            The denial of fees was affirmed.  The main problem for borrower was that the deeds of trust clause advocating for fees was not a fees clause, because it only allowed fees to be added to the secured debt, reasoning supporting a rejection of fees under Chacker v. JPMorgan Chase Bank, 27 Cal.App.5^th 351 (2018) [reviewed in our September 20, 2018 post] and Hart v. Clear Recon Corp., 27 Cal.App.5^th 322 (2018) [reviewed in our September 19, 2018 post].  With respect to the argument that fees were required to be awarded under the promissory note, lender did not sue under that instrument, so no go!

Deadlines, Equity: Blowing Attorney’s Fees Deadline Was Affirmed Under CCP § 473 Prong

Mandatory Prong Was Not Available, But Lower Court Could Discretionarily Entertain.

            In Byron v. McCray, Case No. B306599 (2d Dist., Div. 7 Feb. 14, 2022) (unpublished), an attorney for a prevailing party fell on the sword and brought a CCP § 473 motion to recover fees based on not filing for fees in timely manner, which was eventually granted in excess of $85,000.  The adverse party appealed, but to no avail.  Although agreeing that the section 473 mandatory provision did not apply, the lower court’s discretionary award under section 473 was in play.  Miscounting or inadvertence by counsel is a basis to grant relief under section 473 or the fee motion extension deadline default under CRC 3.1702(d).  Given the lack of prejudice to the opposing party, the granting of relief and fee award was no abuse of discretion.

Estoppel, Section 1717: After Reversal of Prior Judgment Finding No Easement, Defendant HOA Was Properly Awarded $731,682.08 In Section 1717 Fees And $111,540.01 In Costs

Judicial Estoppel Did Apply Against Plaintiffs Where They Litigated The Position That The Easement Maintenance Agreements Had Fee Clauses, And Were Awarded Fees Before Prior Reversal.

            Ranch at the Falls LLC v. Indian Springs Homeowners Assn., Inc., Case No. B311278 (2d Dist., Div. 8 Feb. 10, 2022) (unpublished) demonstrates how a change of fortune through a reversed judgment and application of judicial estoppel can certainly alter the results in a case.

            In this one, plaintiffs had won a judgment in an easement dispute and were awarded $199,459 in attorney’s fees based on fee clauses in easement maintenance agreements.  Plaintiffs clearly litigated and took the position that fee exposure was present under the fee clauses and Civil Code section 1717.  Then, a huge change in fortune occurred when the appellate court in an earlier opinion reversed the judgment after finding plaintiffs had no enforceable easement over certain private streets in Indian Springs.  That meant plaintiffs’ fee award went POOF!  The lower court then applied judicial estoppel against plaintiffs, awarding defendant $731,682.08 in attorney’s fees and $111,540.01 in costs.  Plaintiffs, clearly dismayed, appealed.

            The 2/8 DCA, in an opinion authored by Acting Presiding Justice Grimes, affirmed.  The judicial estoppel doctrine was properly applied against plaintiffs based on their prior fee position when their fortunes were much different.  Plaintiffs then argued that the fee award would result in their financial ruin, a discretionary factor which may be considered even though there is a split in appellate thinking on the issue.  (Compare Garcia v. Santana, 174 Cal.App.4^th 464, 477 (2009) [may be considered discretionarily] with Walker v. Ticor Title Co. of Cal., 204 Cal.App.4^th 363, 372 (2012) [inappropriate to consider losing party’s financial status as an equitable factor in assessing contractual attorney’s fees].)  However, under Garcia, this is still a discretionary call by the lower court, which found that the financial evidence did not present a clear enough picture that the award would be ruinous.  Finally, plaintiffs complained about excessive hours, but the trial judge had reduced defendant’s fee request by 25% in addressing this concern previously.

Family Law, Fee Clause Interpretation: Fee Clauses In Dissolution Proceeding Did Not Preclude Ex-Wife’s Recovery Of Fees In Subsequent Domestic Violence Prevention Act Proceeding

Case Remanded On Ex-Wife’s Request For $337,236 In Fees For DVPA Proceeding.

            Where a litigant is involved with classic contractual interpretation of a fees clause without any conflicting extrinsic evidence, the result can be a de novo review shocker as revealed in Marriage of Fischer, Case No. A160179 (1^st Dist., Div. 2 February 8, 2022) (unpublished). 

            In this one, ex-wife prevailed in a DVPA proceeding against ex-husband despite the existence of an earlier dissolution agreement with allocation of how attorney’s fees were to be resolved.  However, nothing in the agreement or hearings specified that the dissolution agreement applied to the subsequent DVPA proceeding where wife prevailed and sought $337,236 in attorney’s fees.  The lower court denied fees, but the appellate court reversed after scouring the record and determining that the distinct DVPA proceeding was not encompassed within the dissolution agreement provisions with respect to fees.  So, the matter was remanded with a potential bright upside for ex-wife given the lack of conflicting extrinsic parol evidence.

Consumer Statutes: $643,615 Lemon Law Fee Recovery Stands Even Though $227,715.60 Compensatory/Civil Penalty/Punitive Damages Award Was At Issue

Goes To Show How Recoverable Fees Can Eclipse The Merits Award.

            Anderson v. Ford Motor Co., Case No. C089603 (3d Dist. Feb. 8, 2022) (partially published; fee discussion not published) illustrates how statutory fee-shifting provisions, in this case, a lemon law Song-Beverly Act statute can be more oppressive than the merits judgment with respect to amounts awarded in a case.  Here, plaintiff obtained a $227,715.60 award consisting of $47,715.60 in compensatory damages, $30,000 in civil penalties, and $150,000 in punitive damages.  Those merit damages were affirmed on appeal.  Once that was done, the lower court’s award of $643.615 in Song-Beverly Act fees was also sustained.  Who says that fees do not drive the result in many cases?  We do not, because we have seen it too often in our posts over the years.

Prevailing Party, Section 1717: Attorneys’ Fees Award To Prevailing Plaintiff Upheld On Appeal Despite Invalidation Of Contract Between The Parties Due To Defendants’ Fraud.

Plaintiff’s Action Was “On The Contract” For Purposes Of Civ. Code § 1717, And Fees Provision In Parties’ Contract Was So Broad That It Allowed Award Of Fees To Prevailing Party Whether Action Was Based In Tort Or In Contract.

            In Song v. Creative Global Investment, Case Nos. B299422/B301697/B304884 (2d Dist., Div. 2 February 4, 2022) (unpublished), a breach of contract dispute between co-investors in two Coffee Bean and Tea Leaf franchises proceeded to a de novo bench trial after the trial court ordered the arbitration award vacated based on clarification/completeness issues.  The bench trial resulted in a $900,000 damages award to plaintiff, plus $3 million in punitive damages.  Additionally, the trial court determined plaintiff was the prevailing party and awarded him $86,583 in attorneys’ fees based on the attorney fees provision in the parties’ operating agreements.

            As to the fee award, Defendants argued on appeal that it was improper because the trial court’s findings of defendants’ fraud rendered the operating agreements invalid and therefore incapable of being breached. According to defendants, plaintiff could not be the prevailing party since the operating agreements could not be breached.  The 2/2 DCA rejected this argument – finding the fees award was supported.  First, the panel concluded plaintiff’s action was “on the contract” for purposes of Civ. Code § 1717.  Second, the panel found that the fees provision in the parties’ operating agreements was so broadly worded that it allowed for the award of attorney fees to the prevailing party in “any dispute” between the parties that resulted in arbitration or litigation – whether that arbitration or litigation was based in tort or in contract. (See Gil v. Mansano, 121 Cal.App.4th 739, 743 (2004).)

Prevailing Party, SLAPP: 4/3 DCA Affirms Trial Court’s Determination That Cross-Defendants Achieving Partial Success On SLAPP Motion Were Prevailing Parties And Entitled To Attorney Fees.

Determination Of Prevailing Party Status In SLAPP Motion Lies Within The Broad Discretion Of The Trial Court, And Will Not Be Overturned Absent A Showing Of Abuse Of That Discretion.

            In Harris v. Powerdrive Oil and Gas Company, Case No. G059623 (4^th Dist., Div. 3 February 4, 2022) (unpublished), the trial court partially granted cross-defendants’ special motion to strike (Code Civ. Proc., § 425.16, the anti-SLAPP statute), then awarded cross-defendants $2,335 in attorney fees and costs.

            Cross-complainants appealed – arguing that cross-defendants’ partial SLAPP victory did not warrant the award of attorney fees because cross-defendants were not the prevailing party as the results of their SLAPP motion was insignificant and did not result in a practical benefit.  This, cross-defendants claimed, was an exception to the mandatory fee recovery in a SLAPP motion.  To support their argument, cross-complainants’ cited Richmond Compassionate Care Collective v. 7 Stars Holistic Foundation, 33 Cal.App.5th 38, 45 (2019) [discussed in our March 18, 2019 post], and Mann v. Quality Old Time Serv., Inc., 139 Cal.App.4th 328 (2006). However, as the 4/3 DCA explained – in a 3-0 opinion authored by Acting Presiding Justice Moore – when quoting from the two cases, cross-complainants failed to include the language about the trial court’s discretion.  Determination as to prevailing party in a SLAPP motion lies within the “‘broad discretion’” of the trial court, and a decision based on the trial court’s broad discretion will not be overturned absent a showing by the challenging party that the trial court abused its discretion. (Mann v. Quality Old Time Serv., Inc., 139 Cal.App.4th  at pp. 340-341.)  Cross-complainants provided no evidence of abuse of discretion, and the panel affirmed.

Class Actions: Except For Initial Common Fund Award To Main Class Action Attorneys, Additional Fees Are Going To Be Capped At 25% Of Settlement Amount

Flint, Michigan Class Action Case Fee Issues Are Resolved At the District Court Level.

            District Judge Judith Levy of the USDC, E.D. Michigan, has issued her decision on how attorney’s fees should be allocated in the Flint, Michigan water class action.  The total settlement was for $626 million.  She decided that the main attorneys for the class should be awarded 6.33% out of the common fund, or $39.6 million.  However, depending on what is distributed to the class, additional attorney’s fees are going to be capped at 25%, which is less than the 27% requested by plaintiffs’ counsel.

Private Attorney General: Fees Properly Denied Where Trial and Appellate Court Had Skepticism That Lawsuit Inspired Changes On Water Rates

City Looked Like It Made Changes Regardless of Lawsuit.

            Under CCP § 1021.5, public interest litigants—if satisfying multiple levels of necessary elements—can be awarded attorney’s fees for vindicating public interests under a catalyst theory.  This usually means that the litigants inspired change by a government entity such that a bounty should be awarded.  However, the catalyst theory is often factually intensive, as Plata v. City of San Jose, Case No. G060382 (4^th Dist., Div. 3 Jan. 3, 2022) (unpublished) illustrates. 

            In this one, a lower court denied fees for a Proposition 218 and related claims because it was skeptical the City made changes to the water tiered-rate system based on a lawsuit based on a much publicized, much regaled Capistrano decision.  The appellate court agreed.  The timeline of events showed that Capistrano inspired a review (as it did for many municipalities), with the litigation only having some influence.  But, in these situations, whether the lawsuit was a substantial factor in the change was a factual call by the lower court, as Acting Presiding Justice Bedsworth observed as the author of the opinion, when sustaining the denial of fees.

Section 1717: Void Indemnity Provision Potentially Allowing Fee Recovery Against Public Agency Did Not Allow Fee Entitlement

Substantial Fees Against Public Agency Went Away For Now.

            San Luis Obispo Local Agency Formation Com’m v. Central Coast Development Co., Case No. B304144 (2d Dist., Div. 6 Jan. 3, 2022) (published) establishes that where an indemnity provision in a public agency contract, even though potentially allowing for fee recovery, is void; there is no recovery of fees against the public agency. 

            What happened here is that earlier proceedings had determined that the indemnity agreement was not supported by consideration and the governmental agency had no statutory standing to impose the indemnity agreement at all.  However, the trial judge awarded substantial fees of $172,850 to the City and $428,864 to the developer.  But all of that went away on appeal.  The reason was that voidability of a contract as to a public agency meant that it could neither enforce nor be liable on the contract, including fee recovery.  Even more so, here, because the developer brought a meritless action against the governmental entity such that there was equity in not allowing the entity to be saddled with fees.

Lodestar, Reasonableness Of Fees: Where Matter Was Not Complex, Administrative Time Billed, and Severely Redacted Time Submissions Provided, Trial Court Was Within Its Discretion To Award $15,000 In Fees Rather Than The Requested $83,631.95

Fee Amount Is Usually A Discretionary Call.

            Bouquet Plaza SDS, LLC v. Kimmel, Case No. B306042 (2d Dist., Div. 2 Feb. 1, 2022) (unpublished) demonstrates how attorney’s fee motions should be attuned to lodestar factors, sometimes even offering voluntary reductions to maximize a favorable decision.  Otherwise, requesting inflated or improper fees could result in a substantially reduced award.

            Plaintiff did prevail against defendant lease guarantor after accepting a CCP § 998 offer of $89,000.  Plaintiff then moved to recover $83,631.95 in contractual attorney’s fees.  The lower court only granted fees of $15,000 after making observations that (1) the case was not that complex; (2) billing of secretarial and some paralegal time was improper; (3) plaintiff’s work activity demonstrated “churning”; and (4) severe redactions to itemized time entries made it difficult to determine exactly what services had been provided.  The appellate court affirmed, given that the award was no abuse of discretion.  The trial judge properly reduced the request based on lodestar factors justifying a downward adjustment.

            The lesson here is to be reasonable when requesting fees.  Attorney credibility is a key underlying construct which must be persuasively presented in fee proceedings.

Special Fee Shifting Statutes: Third District Affirms Attorney Fee Awards Totaling $897,349.85 To Prevailing Defendants In Action Seeking To Determine And Enforce Rights Under CC&Rs

CC&R Attorney Fee Clause Did Not Supersede Mandatory Davis-Stirling Fee Shifting Provision, And Apportionment Was Unnecessary Where Each Of Plaintiff’s Causes Of Action Involved Defendants’ Alleged Violations Of The CC&Rs And Plaintiff’s Rights Thereunder.

            In Westwood Montserrat v. AGK Sierra de Montserrat, Case Nos. C088859/C090081 (3d Dist., January 31, 2022) (unpublished), plaintiff – owner and developer of a common interest residential development – lost title to much of its property when it was transferred to defendant following foreclosure on a deed of trust and a trustee’s sale.  Plaintiff later sued defendant and its general partner seeking a determination of and to enforce its right – as declared in the CC&Rs recorded prior to foreclosure – to repurchase lots that remained vacant three years after transfer of title.  However, the trial court concluded that the foreclosure had extinguished plaintiff’s repurchase right.  The trial court then found both defendant and its general partner to be prevailing parties – awarding $740,471.75 in attorney fees to defendant and $156,878.10 to its general partner under the Davis-Stirling Act (Civ. Code, §  5975(c)) and a CC&R attorney fee clause. 

            Plaintiff appealed – arguing that the trial court erred in its application of section 5975 and the CC&R fee clause because the fee clause was discretionary and prevailed over section 5975. Additionally, plaintiff argued that because only one out of eight of its causes of action involved enforcement of the CC&Rs, the trial court should have made a determination of the extent of section 5975’s applicability to each cause of action and apportioned accordingly rather than applying section 5975 to the entire action.

            The Third District affirmed on the basis that the fee awards were proper under section 5975, and did not have to reach plaintiff’s argument on the CC&R fee clause.  Section 5975 is a mandatory remedy independent of any contractual fee clause, (Hsu v. Abbara, 9 Cal.4th 863, 872 (1995); and Salehi v. Surfside III Condominium Owners Assn., 200 Cal.App.4th 1146, 1152 (2011)) and nothing in the fee clause indicated that the parties intended it to supersede section 5975. Further, the trial court is awarded no discretion in granting or denying fees under section 5975 except as to the reasonableness of the fees. (Chapala Management Corp. v. Stanton, 186 Cal.App.4th 1532, 1546 (2010) [discussed in our August 01, 2010 post].) As to plaintiff’s apportionment argument, the panel concluded the trial court had not abused its discretion as the gist of each of plaintiff’s causes of action was that defendants had violated the CC&Rs as well as plaintiff’s rights thereunder.

Discovery, Sanctions: No Abuse Of Discretion In Trial Court’s Order Issuing $6,150 In Sanctions Against Defendant For Failure To Timely Respond To Two Sets Of Discovery Requests Served By Email.

Defendant Did Not Claim Email Service Was Improper Or That Discovery Requests Had Not Been Received, And Did Not Demonstrate That It Acted With Substantial Justification Or That The Sanctions Were Unjust Or Unreasonable.

            Personal injury defendant appealed the trial court’s order issuing $6,150 in sanctions against it – $3,075 each for defendant’s failure to timely respond to two sets of discovery requests – based on the method plaintiff used to serve the requests in Adams v. STN Builders, Case No. G059926 (4^th Dist., Div. 3 January 31, 2022) (unpublished).  The discovery requests had been served only by email, apparently due to COVID-19 protocols, but defendant argued they should have also been served by U.S. Mail.

            In a 3-0 opinion, authored by Justice O’Leary, the 4/3 DCA found defendant’s argument to be without merit. For starters, defendant did not claim that the email service was improper or that the requests had not been received.  Rather, defendant had failed to open the email and its attachment.  Additionally, a previous set of discovery requests had also been served only by email. Finally, plaintiff attempted to resolve the discovery issues through meet and confer efforts even after filing the motions to compel, but defendants failed to comply with plaintiff’s terms for resolution – that full responses be delivered by a specific date/time, and that defendant provide available deposition dates and a compromise on the monetary sanctions.

            Based on defendant’s failure to demonstrate that it acted with substantial justification, or that the sanctions were unjust or unreasonable, the panel affirmed. (Code Civ. Proc., §§ 2030.290(c) and 2031.300(c).)

SLAPP: 2/1 DCA Affirms $279,197.80 In SLAPP Fees Awarded To Defendant Who Ultimately Lost Lawsuit With A Jury Verdict Against Him In The Amount Of $3.5 Million

Practical Benefit Test Unnecessary Where Defendant Wholly Prevailed On Anti-SLAPP Motion And Was Entitled To Mandatory Fees.

            In Baral v. Schnitt, Case No. B298050 (2d Dist., Div. 1 January 28, 2022) (unpublished), plaintiff – who had won a jury verdict against business partner defendant of $2.5 million in compensatory damages and $1 million in punitive damages – appealed the trial court’s award of $279,197.80 in attorney fees to defendant for having successfully SLAPPed back against certain portions of the complaint and subsequent Second Amended Complaint. (Code Civ. Proc., § 425.16.)

            Plaintiff argued that the trial court abused its discretion in awarding the fees because defendant was not the prevailing party as his SLAPP victories ultimately provided no practical benefit. The 2/1 DCA disagreed.  Defendant wholly prevailed on his SLAPP motions.  As a result, he was entitled to mandatory fees, was the prevailing party for the purposes of anti-SLAPP attorney fees, and the practical benefit test was rendered unnecessary. (Ketchum v. Moses, 24 Cal.4th 1122, 1131 (2001) [No. 8 in our list of Leading Cases]; Bel Air Internet, LLC v. Morales, 20 Cal.App.5th 924, 946 (2018).) Additionally, even if the practical benefit test were employed, defendant’s SLAPP victories achieved the practical benefit of “narrow[ing] the scope of the lawsuit, limiting discovery, reducing potential recoverable damages, and altering the settlement posture.” (Mann v. Quality Old Time Service, Inc., 139 Cal.App.4th 328, 340 (2006).)

Consumer Statutes, Costs: Recovery Of $133,239.75 In Attorney Fees, Pre-Judgment Interest And Costs Affirmed For Song-Beverly Plaintiff Who Had Paid Only $6,204.68 Under A Consumer Credit Contract.

2/8 DCA Agreed With Pulliam That The Holder Rule Cap Does Not Preclude Recovery Of Attorney Fees And Further Determines That The Cap Does Not Preclude Recovery Of Costs, Nonstatutory Costs, Or Prejudgment Interest.

            In Melendez v. Westlake Services, LLC, Case No. B306976 (2d Dist., Div. 8 January 28, 2022) (published), plaintiff who purchased a car through a retail installment contract sued the seller and holder of the contract for violations of CLRA, the Song-Beverly Consumer Warranty Act (California’s lemon law, Civ. Code, § 1790 et seq.), Civil Code § 1632 (requiring translation of contracts negotiated primarily in Spanish), and the unfair competition law (Bus. & Prof. Code, § 17200 et seq.), along with fraud and negligent misrepresentation claims. Through a settlement agreement, plaintiff ultimately recovered the $6,204.68 he had paid under the retail installment contract, with the remaining contract balance waived.  Additionally, pursuant to the terms of the agreement, plaintiff moved for and was awarded recovery of $115,987.50 in attorney fees, $2,956.62 in prejudgment interest, and $14,295.63 in costs.

            Defendant appealed and argued that the Federal Trade Commission’s Holder Rule – promulgated in 1975 as a consumer protection measure by which the holder of a consumer credit contract is subject to all claims the debtor could assert against the seller of goods/services obtained under the contract – limits the debtor’s recovery from the holder to the amount paid by the debtor under the contract. The 2/8 DCA disagreed.

            In affirming the trial court’s fees award, the panel followed the conclusions set forth in Pulliam v. HNL Automotive Inc., 60 Cal.App.5^th 396 (2021) [discussed in our February 02, 2021 post] – that the Holder-Rule limitation on recovery does not apply to attorney fees, and that the FTC’s contrary interpretation is not entitled to deference.  The panel also affirmed the trial court’s prejudgment interest and costs award to plaintiff – applying Pulliam’s fee recovery rationale, along with the conclusions set forth in Lafferty v. Wells Fargo Bank, N.A., 25 Cal.App.5^th 398 (2018) [discussed in our July 20, 2018 and June 11, 2020 posts] as to prejudgment interest and costs – though disagreeing with Lafferty’s conclusion on fee recovery.