CALIFORNIA ATTORNEY'S FEES

Consumer Statutes, Preemption: FTC’s Holder Rule Does Not Limit Recovery Against Lender Where State Prevailing Party Fee Statute Allows For Recovery Of Fees By Installment Credit Sale Debtor

California Supreme Court Resolves Split In DCA Thinking, Disapproving Lafferty And Spikener Decisions.

            In Pulliam v. HNL Automotive Inc., Case No. S267576 (Cal. Supreme Ct. May 26, 2022) (published), our state supreme court confronted the FTC’s Holder Rule which requires consumer credit contracts to contain warnings that (1) all defenses against the seller of a good/service can also be asserted against a third-party creditor, and (2) any recovery by the debtor shall not exceed the amounts paid by debtors thereunder.  Plaintiff purchased a used car from a dealership defendant and took out paper from a third-party creditor under an installment credit contract with the Holder Rule warnings.  Plaintiff sued both defendants under the Song-Beverly Consumer Warranty Act (California’s lemon law), recovering $21,957.25 in damages and then requesting $169,602 in attorney’s fees based on the lemon law’s fee shifting provision.  Creditor defendant argued that the Holder Rule limited the ability to recoup fees, a contention rejected by the trial court in awarding fees against both defendants.  The DCA affirmed, with the California Supreme Court granting review of the case to resolve an intermediate split in appellate thinking on the issue.

            The state high court decided that the Holder Rule limitation did not bar plaintiff’s recovery of fees against the creditors where the plaintiff seeks fees from a holder under a state prevailing party statute such as the lemon law fee shifting provision.  In doing so, it disapproved the two appellate decisions determining that the Holder Rule did so limit fee recovery, namely, Lafferty v. Wells Fargo Bank, N.A., 25 Cal.App.5^th 398, 418-419 (2018) [discussed in our post of July 20, 2018] and Spikener v. Ally Financial, Inc., 50 Cal.App.5^th 151, 159-163 (2020) [reviewed in our June 11, 2020 post].

Celebrities: Trial Litigation Expert For Newsweek Estimates That Johnny Depp Has Spent $5.5 Million And Amber Heard Has Spent $3 Million In Fairfax County, Virginia Litigation Where The Case Is Going To The Jury In Short Order

Mr. Depp May Have Spent $300,000 On Experts, And Ms. Heard Possibly Expended $200,000 On Experts.

            In a May 26, 2022 on-line post in Newsweek, Manny Arora of Arora Law Trial Attorneys has estimated that Johnny Depp has expended $5.5 million in prosecuting his defamation action (requesting $50 million in damages) and in defending against Ms. Heard’s cross-claims (requesting $100 million in damages), while also ballparking that Ms. Heard has spent $3 million in the action where a jury trial is winding down in Fairfax County, Virginia.  Experts were hired by both sides in the case, with Newsweek indicating that Mr. Depp may have expended $300,000 on them and Ms. Heard spending $200,000 on them.  As one person commented in response to the Newsweek post, the only winners were the lawyers!

Costs, Employment: $17,274.23 Costs To Prevailing Defendant In FEHA Case Affirmed Because Plaintiff’s Case Was Frivolous

Rosenman Written Finding Requirement Did Not Apply To Statutory Costs Award, With 2/1 DCA Articulating A Split In Thinking On The Written Requirement Dictate of Rosenman.

            In Schoensiegel v. Abbott Laboratories, Inc., Case Nos. B312628/B314633 (2d Dist., Div. 1 May 24, 2022) (unpublished), plaintiff lost her FEHA action based on a successful summary judgment motion, with the trial court awarding the defense $17,274.23 in statutory costs based on the perception that plaintiff’s case was frivolous.  (If a case is deemed frivolous, this is a ground upon which to award costs to a prevailing FEHA defendant.)

            On appeal, plaintiff principally argued that the lower court failed to issue written predicate findings before awarding costs as required by Rosenman v. Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, 91 Cal.App.4^th 859, 868 (2001).  The 2/1 DCA held that the Rosenman requirement only applied to attorney’s fees, not statutory costs.  Further, it did note that Rosenman was disagreed with by Robert v. Stanford University, 224 Cal.App.4^th 67, 72 (2014), which found that the failure to issue findings should not give rise to an automatic reversal in the absence of prejudice.  The 2/1 DCA panel did not take a position on this difference in appellate thinking, but its overall reasoning seems to suggest it liked the conclusion reached in Robert. 

Fee Clause Interpretation: $196,231.50 Attorney Fee Award To Prevailing Party Seller Of Real Property Affirmed On Appeal Despite Seller’s Failure To Attempt Mediation Pursuant To Form Purchase Agreement’s Fee Provision

Fee Provision Without Mediation Requirement In Later Jointly Drafted Cooperation Agreement Governed.

            In Emery v. Marchick, Case No. B307999 (2d Dist., Div. 1 May 23, 2022) (unpublished), defendant used a California Association of Realtors’ Residential Purchase Agreement form in her offer to purchase a residential property from plaintiff.  The form purchase agreement contained an attorney fee provision requiring that before filing a lawsuit, the parties attempt to resolve through mediation disputes arising out of the agreement or resulting transactions. Pursuant to an accepted requirement in plaintiff’s counter offer, the parties entered into a jointly drafted Cooperation Agreement regarding a lot line adjustment.  The Cooperation Agreement also contained an attorney fee provision, but it did not require mediation of disputes. Well, a dispute arose and plaintiff filed a complaint claiming defendant breached the Cooperation Agreement – with judgment entered in plaintiff’s favor in the amount of $285,000 plus another $196,231.50, out of the $204,386.50 requested, in prevailing party attorney fees. 

            On appeal, defendant argued that plaintiff was not entitled to an award of attorney fees because she failed to attempt to mediate before filing her complaint.  The 2/1 DCA disagreed with defendant’s contention and affirmed.  For starters, the attorney fee provision in the Cooperation Agreement governed because the parties entered into it after the form purchase agreement and the fee provision the parties included in the Cooperation Agreement superseded.  (Civ. Code, § 1585; Frangipani v. Boecker, 64 Cal.App.4th 860, 863 (1998).)  Additionally, pursuant to Civ. Code, § 1651, where there is inconsistency in terms, those negotiated by the parties prevail over form terms which are not separately negotiated.  Finally, pursuant to Civ. Code, § 1641, courts interpret contracts to give effect to every part and avoid interpretations that render part of a contract as surplusage. (Rice v. Downs, 248 Cal.App.4th 175, 186 (2016).)  Interpreting that the form purchase agreement’s fee provision controlled would reduce the latter Cooperation Agreement’s fee provision to surplusage – something the appellate panel declined to do.

Discovery: Defendant And Its Chicago Law Firm Ordered To Split Special Master Discovery Expenses For Failure To Preserve Text Messages And Misconduct Of Counsel During The Discovery Process

“This was a large, important case for both parties.  The parties were entitled to zealous activity from their outside counsel and from their inside corporate attorneys.  However, zealous advocacy does not justify abusive conduct or hiding the ball.”

            That was the conclusion of Senior U.S. District Judge R. Brooke Jackson in ORP Surgical, LLP v. Howmedia Osteonics Corp., Civil Action No. 1-20-cv-01450-RBJ (D. Colo 5/10/22 Findings of Fact, Conclusions of Law, and Order of Judgment) where he found that the defendant had failed to preserve text messages (although scaling back an appointed special discovery master’s suggestion of a “negative inference” spoilation sanctions) and that defendant’s Chicago counsel had improperly coached insufficiently prepared Rule 30(b)(6) witnesses during depositions/failed to timely produce relevant documents in connection with those depositions (again scaling back from the special master’s suggestion of an issue preclusion sanction).  However, given that these violations did occur and were willful/grossly negligent in nature, District Judge Jackson determined that the defendant should pay the special master’s costs/ expenses on the text message issue and that defendant’s counsel should pay the master’s costs/expenses on the discovery misconduct issue. 

            We do not know what those special master costs/expenses are, but we would guess they are substantial.  The recurring lesson is to not engage in gamesmanship during the litigation process; if you do, it will cost both the client and their attorneys if an opponent tees up the issues right, as the plaintiff did in this case.

Section 1717: On Rehearing, 2/6 DCA Decides That Void Indemnity Agreement With Fees Clause In A Public Agency Contract Does Not Allow For Fees Recovery By Other Litigants

Illegal Contract Was No Different Than Public Contract Void Due To Lack Of Authority.

            On February 6, 2022, we posted on a case for which rehearing was granted. The case is San Luis Obispo Local Agency Formation Comm’n v. Central Coast Development Co., Case No. B304144 (2d Dist., Div. 6 May 5, 2022) (published).  We can report there was no change in result.

            There, earlier proceedings had determined that an indemnity agreement in a public agency contract was not supported by consideration and the governmental agency had no statutory standing to impose the indemnity agreement at all.  In a word, it was an illegal contract.  However, the trial judge awarded substantial fees of $172,850 to the City and $428,864 to the developer under that contract.  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.  The illegality of the contract was akin to an authorized public agency contract, so that no fees could be assessed against the public agency based on overriding public policies relating to unauthorized or illegal contracts.  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.

Prevailing Party, Section 1717: 2/4 DCA Affirms Trial Court’s Denial Of $216,610 In Section 1717 Attorneys’ Fees To Prevailing Defendant Who Entered Into A Contract With Plaintiff That Contained An Attorneys’ Fees Clause

There Was No Basis For Section 1717 Attorneys’ Fees Because Plaintiff’s Action Was Not On The Contract, And Defendant Failed To Apportion Fees For Its Successful Cross-Complaint On The Contract.

            Plaintiff retained defendant law firm to defend him in a legal malpractice lawsuit, and the parties entered into a retainer agreement which contained an attorneys’ fees clause. Plaintiff subsequently sued defendant for professional negligence, breach of contract, and breach of fiduciary duty, and defendant counter-sued for breach of contract.  Following a bench trial, judgment was entered in favor of defendant, but the trial court denied defendant’s motion for $216,610 in attorneys’ fees it sought pursuant to Civ. Code section 1717 for fees it incurred in defending against plaintiff’s claims.  Defendant appealed in Rosen v. Century Law Group, Case No. B309991 (2d Dist., Div. 4 May 16, 2022) (unpublished).

            Agreeing with the trial court’s conclusion that the “gravamen of the case was the underlying legal malpractice claim,” and citing Loube v. Loube, 64 Cal.App.4^th 421 (1998), the 2/4 DCA affirmed. The fees clause in the parties’ retainer agreement was narrowly drawn and mirrored the language of section 1717, but plaintiff’s action was not on the contract.  In fact, plaintiff’s breach of contract claim was entirely premised on the malpractice claim – alleging that the breach of contract was defendant’s failure to provide plaintiff with competent legal services.  Defendant’s contention that it was entitled to prevailing party fees on its successful cross-complaint for breach of contract also failed because defendant did not provide the trial court with evidence allowing it to apportion fees for defendant’s cross-complaint.

Experts, Prevailing Party, Section 998: Attorneys’ Fees Totaling Over $3.7 Million Plus Costs Totaling $367,192.84 Awarded To Two Prevailing Party Defendants Affirmed On Appeal.

Costs Award To One Defendant Included $209,886.89 In Expert Witness Fees Because Plaintiff Had Rejected And Failed To Beat That Defendant’s Section 998 Offer Of $50,000 Plus Waiver Of Fees And Costs.

            This next case provides a cautionary tale about the importance of giving careful consideration to reasonable section 998 offers – especially when they include a waiver of fees and costs. In SwiftAir v. Row, Case No. B306166 (2d Dist., Div. 7 May 12, 2022) (unpublished), Southwest Airlines and Row 44, the company that operated Southwest’s inflight WiFi service, defeated plaintiff’s lawsuit against them over Southwest’s decision not to license plaintiff’s software platform. Afterward, defendants each sought prevailing party attorneys’ fees and costs pursuant to the fees provisions in their contracts with plaintiff.  Southwest also claimed entitlement to fees and costs under Code Civ. Proc., § 998 because plaintiff had rejected and failed to beat Southwest’s section 998 offer of $50,000 and a waiver of fees and costs. The trial court concluded defendants were the prevailing parties and granted their motions – awarding Southwest $1,501,988.80 in attorneys’ fees and $309,362.40 in costs, which included $209,886.89 in expert fees that plaintiff unsuccessfully moved to strike, and awarded Row $2,216,117.50 in attorneys’ fees and $57,830.44 in costs.

            Plaintiff appealed – arguing that the trial court erred in its prevailing party determination because the trial court’s orders on defendants’ motion for summary adjudication and on plaintiff’s motions for judgment notwithstanding the verdict and for new trial were made in error.  This argument went nowhere because the 2/7 DCA concluded that the trial court did not err in its MSA, JNOV and new trial orders – leaving only plaintiff’s argument that the trial court erred by awarding Southwest $209,886.89 in expert witness fees because Southwest’s section 998 offer was unreasonable, and the experts were not ordered by the trial court. The 2/7 DCA found no merit to this argument.  First, section 998 (c)(1) provides an exception to the general rule that fees for experts not ordered by the trial court are not recoverable as costs. Second, although only settlement offers made in good faith – those that are reasonable under the circumstances of the case and sufficiently specific – are effective under section 998, the judgment of no liability against Southwest and its entitlement to prevailing party fees and costs was prima facie evidence that the offer, which was not a token or nominal offer, was reasonable.  (See Covert v. FCA USA, LLC, 73 Cal.App.5th 821, 832-833 (2022).) 

Private Attorney General: Third District Affirms Trial Court’s Denial Of Section 1021.5 Attorney Fees Of Almost $130,000 To Plaintiff Who Dismissed Action After Entering Into Stipulation With Defendant

Plaintiff Failed To Meet Its Burden Of Proving Prevailing Party Status, Especially In Light Of Defendant’s Evidence That The Relief Plaintiff Sought Was Already Being Implemented Before Plaintiff Filed Its Action.

            Pursuant to a stipulation between the parties, plaintiff dismissed its action, regarding an unlawful stream obstruction that impaired fish passage, against defendant two months into litigation.  Afterward, plaintiff moved for almost $130,000 in attorneys’ fees pursuant to California’s Private Attorney General Act. (Code Civ. Proc., § 1021.5.)  The trial court denied the motion – finding that defendant was already in the process of implementing the relief plaintiff sought at the time plaintiff filed its action.  Plaintiff appealed in Water Audit Cal. v. Nevada Irrigation Dist., Case No. C092877 (3d Dist., May 12, 2022) (unpublished), arguing that the trial court erred in concluding it was not a successful party because the stipulation was “a formal change in legal status.” 

            Under section 1021.5, a “successful party” means a “prevailing” party succeeding on any significant issue in litigation which achieves some of the benefit sought in bringing the action. (Sweetwater Union High School Dist. v. Julian Union Elementary School Dist., 36 Cal.App.5th 970, 982 (2019) [discussed in our June 9, 2019 post].)  However, plaintiff failed on appeal to meet its burden of proving it was the prevailing party – citing to nothing in the stipulation or its complaint to support its prevailing party claim. Additionally, plaintiff failed to address defendant’s evidence of its ongoing efforts to remediate the impaired fish path – evidence that demonstrated there was no causal connection between plaintiff’s lawsuit and the relief obtained.  The Third District affirmed.

Private Attorney General: Trial Court’s Denial Of Attorney Fees Sought Under The Catalyst Theory By Plaintiffs Who Ultimately Obtained The Relief They Sought Reversed And Remanded For Rehearing

Trial Court Failed To Consider Whether Plaintiffs' Lawsuits Were The Catalyst For The Relief Obtained.

            In Dept. of Water Resources Environmental Impact Cases, Case NO. C091771 (3d Dist., May 11, 2022) (unpublished), lawsuits filed against Dept. of Water Resources regarding a project meant to improve the State’s water supply infrastructure were coordinated for trial, but voluntarily dismissed after DWR provided the primary relief sought by plaintiffs.  After dismissal, plaintiffs moved for attorney fees under Code Civ. Proc., § 1021.5 based on the catalyst theory – claiming that their litigation ultimately caused DWR to take the action it did.  The trial court denied the motion – finding that DWR was motivated by a directive from the Governor, not by plaintiffs’ lawsuits. 

            On appeal, plaintiffs argued that the trial court applied an incorrect standard in determining whether there was a causal link between plaintiffs’ lawsuits and the relief obtained, and that substantial evidence did not support the trial court’s finding that there was no causal link.  The Third District agreed – finding abuse of discretion in the trial court’s failure to apply the correct legal standard as the trial court erroneously treated the Governor’s directive as the superseding cause of the relief obtained without considering whether plaintiffs’ lawsuits were a substantial factor in the Governor’s decision to issue the directive.

BLOG UPDATE: We can now report that this opinion was certified for publication on June 3, 2022.

Prevailing Party: Sixth District Affirms $320,100 In Attorneys’ Fee Awarded Pursuant To Contractual Attorney Fee Provisions To Successors In Interest Defendants Prevailing Against Action Sounding In Tort And Contract

As They Were Entitled, Under Code Of Civil Procedure Section 1021, Original Parties To The Contract Entered Into A Fee Arrangement Obligating Payment Of Fees To The Prevailing Party Whether The Underlying Litigation Sounded In Tort Or Contract.

            In Cook v. Trebino, Case Nos. H047830/H048498 (6^th Dist., May 10, 2022) (unpublished), two sisters each received a 50 percent ownership in a property that had been in their family since the late 1800’s.  Over the years, for her alleged share of property expenses, one sister signed various promissory notes and a deed of trust to the other sister and her husband.  Eventually, sister signed a grant deed conveying her interest to the other sister’s and her husband’s living trust in exchange for $70,000 plus cancelation of her debt to them.  After sister and husband passed, the successors to their interest in the property notified other sister’s children that they now owned the property.  Sister’s children sued – alleging numerous causes of action, including quiet title, undue influence, and fraud.  Following a bench trial, the trial court found in favor of defendants on their statute of limitations affirmative defense.  Following entry of judgment, defendants successfully moved for an award of various costs and attorney fees pursuant to provisions in the promissory notes and deed of trust. The award included $320,100 in attorneys’ fees which plaintiffs appealed.

            On appeal, plaintiffs raised numerous challenges to the fees award, but each failed – with the Sixth District determining that the sisters were entitled, under Code of Civ. Proc. section 1021, to enter into a fee arrangement that obligated payment of fees to the prevailing party – whether the underlying litigation sounded in tort or contract.  Here, defendants were the prevailing party and had two contractual bases for the fees award.  First, defendants’ defense fell within the terms of the promissory notes’ fee provision as plaintiffs sought to rescind the grant deed and unwind the transaction by challenging the validity of the promissory notes.  Second, the broad fee provision of the deed of trust was also applicable because the underlying dispute required defendants to appear and enforce their rights under the deed of trust.  Contrary to plaintiffs’ argument, defendants’ entitlement to fees under the contractual fees provisions did not depend on whether the notes and deed were litigated on the merits.  Rather, entitlement was based on the prevailing party determination. (Mepco Services, Inc. v. Saddleback Valley Unified School Dist., 189 Cal.App.4th 1027, 1047 (2010); and Maynard v. BTI Group, Inc., 216 Cal.App.4th 984, 990 (2013).) 

            As for plaintiffs’ argument that defendants were excluded from collecting fees under the fees provisions because they were not parties to the notes or deed, the Sixth District found there was no meaningful dispute.  The fees provisions did not contain language that indicated an intent to exclude successors in interest from the scope of the fees provisions.   Finally, substantial evidence supported the trial court’s finding that sister’s estate and living trust were responsible parties under the fees provisions as sister had transferred her interest in the property into her revocable living trust, had then transferred in her capacity as trustee of her living trust that interest to her sister and sister’s husband , and because two of the plaintiffs had initiated the action as trustees of the sister’s trust and remained parties to the conclusion of the action. 

Prevailing Party, Reasonableness of Fees, Section 1717: Section 1717 Fees Award Of About $40,000 Affirmed For Plaintiff Who Had Fraud Claim Dismissed By Trial Court And Received Only A Portion Of Requested Damages After Bench Trial

A One-Sided Fees Provision Entitled Plaintiff To Reciprocal Prevailing Party Fees Under Section 1717, And A Trial Court’s Determination As To Reasonableness Of Fees Will Not Be Disturbed Absent A Showing That The Trial Court Is Clearly Wrong.

            In Hernandez v. Thottam, Case No. B306547 (2d Dist., Div. 4 May 10, 2022) (unpublished), plaintiff leased a unit that was without power due to a recent fire, but vacated the unit several months into the lease and sued her commercial landlord for fraud and breach of contract based on his failure to restore power to the unit.  Plaintiff was awarded $13,200 in damages following a one-day bench trial.  Additionally, the trial court concluded plaintiff was the prevailing party and awarded her about $40,000 in attorney fees– out of her request for approximately $55,000 – under Civil Code § 1717 after construing the lease against the landlord (who was an inactive attorney) as the drafting party, and concluding that the lease would have entitled landlord to attorney fees.

            Landlord appealed – claiming that the lease precluded attorney fees, that plaintiff could not be deemed a prevailing party because the trial court had denied her motion for summary judgment and had dismissed her claim for fraud, and alternatively, that the amount awarded was excessive. 

            The 2/4 DCA affirmed – finding the attorney fees award “well within the court’s discretion.”  First, the lease contained conflicting fees provisions – one stating each side was responsible for its own attorney fees, and the other requiring that plaintiff pay landlord “costs, damages, and expenses (including any and all reasonable attorney fees and expenses incurred by the [landlord]) suffered by [landlord] by reason of [plaintiff’s] defaults.”  These conflicting provisions were properly construed against the drafting party, and the one-sided fees provision provided plaintiff with a reciprocal right to fees under Civil Code § 1717.  Second, a party’s failure to obtain summary judgment is irrelevant to prevailing party status, as is a party’s success or failure on non-contract claims – with prevailing party status based on comparison of the relief awarded on the contract claims.  Finally, as to the reasonableness of the fees, each of landlord’s challenges failed because there is no requirement that each motion or opposition has to be successful to be compensable, trial courts have discretion to award fees based on declarations of counsel without the inclusion of contemporaneous invoices, and the trial court exercised its discretion to reduce the hours worked by plaintiff’s attorneys and nothing in the record suggested it made the reductions arbitrarily or without examination of the time billed.  The trial judge is in the best position to determine the reasonableness of the fees requested for services provided in his/her court, and unless an appellate court is convinced that the trial court is clearly wrong in determining the reasonableness of the claimed fees, for which the trial court has broad discretion, the trial court’s determination will not be disturbed.  (Building a Better Redondo, Inc. v. City of Redondo Beach, 203 Cal.App.4th 852, 870-873 (2012).)

Family Law: Sixth District Finds No Abuse Of Discretion In Trial Court’s Imposition Of $10,000 In Family Code Section 271 Sanctions Against Wife For Failure To Comply With Court Orders

The Record “Unerringly” Demonstrated That Wife’s Refusal To Obey Court Orders Over A More Than Seven-Year Period Was Unreasonable And Unnecessarily Prolonged And Increased The Cost Of The Litigation.

            In Marriage of Butler, Case No. H049004 (6^th Dist., May 9, 2022) (unpublished), husband and wife entered into a stipulation which was entered as a court order in 2012 while their dissolution action was pending.  Pursuant to the stipulation, husband quitclaimed the parties’ residence to wife, but if wife failed to remove husband’s name from the loan on the residence, she was to quitclaim it back to the community for the sale of the residence.  Wife failed to comply with this stipulation and order, and failed to comply with new orders issued in 2016 that required her to deed the property back to the community and required that the residence be sold.  Finally, in 2021, after additional litigation, the trial court sanctioned wife $10,000 under Family Code section 271 for her “willful failure to comply” with orders, appointed the clerk of the court to sign the deed back to the community, and ordered the property sold. 

            With regard to the sanctions, wife argued on appeal that the trial court failed to consider the parties’ income, assets, and liabilities in imposing the sanctions against her, that her due process rights had been violated, and that the sanctions were not supported by evidence that she had unreasonably failed to comply with the trial court’s orders.  The Sixth District found no abuse of discretion and affirmed.  Family Code section 271 allows the trial court to impose sanctions as long as the award does not impose an unreasonable financial burden.  Here, the trial court ordered that the sanctions be paid out of the proceeds from the sale of the residence – which it reasonably could have concluded would not impose an unreasonable financial burden on wife.  The panel further found no basis to wife’s claim of due process violations as she had received adequate notice of husband’s sanctions request and had an opportunity to be heard on the issue.  Finally, as to wife’s claim that the sanctions were not supported by evidence, the Sixth District found the record “unerringly” demonstrated that wife’s refusal to obey court orders over a more than seven-year period was unreasonable and unnecessarily prolonged and increased the cost of the litigation.

Deadlines, SLAPP: Successful SLAPPing Defendants’ Award Of $33,120 In Attorney Fees And $91.85 In Costs Reversed On Appeal Due To Trial Court’s Flawed Legal Analysis In Determining Deadline For Fees/Costs Motion

Holidays Did Not Stop The Clock On Defendants’ Deadline And Code Civ. Proc., § 664.5 Does Not Govern When The Clock Begins Under Rule 8.104.

            In Tye v. Papp, Case No. E076523 (4^th Dist., Div. 2 May 9, 2022) (unpublished), defendants were awarded $33,120 in attorney fees and $91.85 in costs under Code Civ. Proc. section 425.16 after the trial court dismissed the entire action based on Defendants' successful anti-SLAPP motion.  On appeal, Plaintiff argued that the trial court lacked jurisdiction to rule on the fees motion, that defendants’ fees/costs motion was untimely, and that the amount awarded constituted an abuse of discretion.

            Plaintiff's jurisdictional argument failed because there are exceptions to the general rule that a trial court lacks jurisdiction to conduct further proceedings as to a party it has dismissed from an action. In this case, the exception was the requirement that the trial court determine and enforce defendants’ collateral statutory rights (e.g. motions for fees/costs). (Shisler v. Sanfer Sports Cars, Inc. 167 Cal.App.4^th 1, 7 (2008); Pittman v. Beck Park Apartments Ltd., 20 Cal.App.5^th 1009, 1022 (2018).) 

            As to the timeliness issue, however, the 4/2 DCA determined that the trial court’s legal analysis concerning the deadline for defendants’ fees/costs motion was erroneous.  Plaintiff provided a proof of service indicating defendants were served with a notice of entry of judgment by mail.  This service started the clock on defendants’ 60-day deadline for filing their fees/costs motion, plus five additional days for service by mail. (California Rules of Court, Rules 3.1702(b) and 8.104(a)(1)(B).) However, defendants – who claimed to have not been served with the notice of entry of judgment – exceeded this 65-day window by more than two weeks. Nonetheless, the trial court determined defendants’ motion was timely under rule 8.104(a)(1)(B) based on its findings that none of the days from March 17, 2020 to May 31, 2020 counted toward the 60-day window because they had been declared holidays due to the COVID-19 pandemic, and on its holding that the notice of entry of judgment was invalid because plaintiff did not comply with Code Civ. Proc., § 664.5(a) requirement that he file with the trial court the original notice of entry of judgment together with the proof of service.  First, the appellate panel found, holidays do not stop the clock on filing deadlines and generally only affect a filing deadline when the deadline falls on a holiday. (Code Civ. Proc., §§ 12, 12a(a).) Second, the panel found that § 664.5 does not govern when the 60-day window begins, and rule 8.104 does not incorporate § 664.5’s requirements.  As a result, the 4/2 DCA reversed and remanded for additional proceedings to determine whether defendants were served with the notice of entry of judgment, and, if so, whether their motion was timely.

            Finally, because the panel reversed the award and remanded for additional proceedings on the timeliness issue, it found plaintiff’s abuse of discretion claim not ripe for review.

Section 1717: Trial Court’s Order Awarding Prevailing Plaintiff $159,792.98 In Attorneys’ Fees And Costs Affirmed On Appeal Even Though Note Providing Basis For Fees Award Was Not Formally Admitted Into Evidence

The Trial Court Had Effectively Admitted The Note Into Evidence As The Note Had Been Marked As Evidence, The Parties Had Elicited Testimony About It At Trial, And Neither Party Disputed Its Authenticity Or Objected To Its Admissibility.

            In Amirnezhad v. Ghayam, Case No. B306361 (2d Dist., Div. 8 May 4, 2022) (unpublished), defendant appealed the judgment entered against him in an action involving his restaurant partnership with plaintiff.  Included in the judgment was an order that defendant pay plaintiff $159,792.98 in attorneys’ fees and costs.  Defendant argued that the trial court had no basis for the award of attorneys’ fees because the Note giving rise to a fees award was introduced, but not admitted, at trial.  Although Defendant forfeited this argument by failing to support it with any authority, the 2/8 DCA explained that the trial court had effectively admitted the Note into evidence, and that there was no error in relying on the Note under the circumstances.  The Note had been marked as evidence and counsel for both parties elicited testimony about it – with neither party disputing the Note’s authenticity or objecting to its admissibility. (Dodson v. Greuner, 28 Cal.App.2d 418 (1938) [note that had never been formally admitted into evidence deemed admitted where the court and the parties had each treated the note as being in evidence].)

Family Law: 4/3 DCA Affirms Trial Court’s Denial Of Husband’s Needs-Based Section 2030 Fees For $50,000 In Fees Incurred And $30,000 For Appellate Fees From Third-Parties Husband Claimed Owed A Community Asset Of $4 Million

Husband Incurred Attorney Fees Over And Above The Trial Court’s Previous Awards To Him Totaling $150,000 By Overlitigating The Case, And Failed To Provide The Trial Court With Reasonable Grounds For Appeal.

            Husband litigated a claim that his siblings and family-owned business entities owed him $4 million through the proceeding for dissolution of his marriage.  According to a transmutation agreement signed by husband on the couple’s wedding day, the $4 million was a community asset. On the final day of trial, husband and wife each moved for Family Code section 2030 needs-based attorney fees to be paid by siblings/entities.  The trial court had previously awarded husband a total of $150,000 in fees, but he sought another $50,000 for fees incurred over and above the $150,000.  Likewise, wife had previously been awarded a total of $125,000 in fees, but sought another $293,934.80 for incurred fees.  Additionally, husband and wife each sought fees to pursue appeals of the trial court’s ruling - $30,000 and $100,000 respectively.  The trial court denied their requests – finding each had failed to show their requests for recovery of incurred fees was reasonable.  Rather, the trial court found that the fees it had already awarded them were sufficient to fairly litigate the claim for the $4 million, but that husband and wife had overlitigated the case. As to the appellate fees, the trial court found each spouse had failed to show reasonable grounds for appeal.  Alternatively, the trial court also found that the indemnity provision in husband’s contract with siblings/entities, wherein husband’s agreement to indemnify siblings/entities included “all costs incurred and/or related to this action,” barred husband/wife from seeking the requested fees.  Husband appealed in Marriage of Nakamoto and Hsu, Case No. G059108 (4^th Dist., Div. 3 May 4, 2022) (unpublished).  Wife did not.

            The 4/3 DCA affirmed. In discussing section 2030 and its purpose, the panel cited Alan S. v. Superior Court, 172 Cal.App.4th 238, 251-252 (2009). “[T]he purpose of section 2030 is not the redistribution of money from the greater income party to the lesser income party. Its purpose is parity: a fair hearing with two sides equally represented. The idea is that both sides should have the opportunity to retain counsel, not just . . . the party with greater financial strength.”  Here, substantial evidence supported the trial court’s finding that husband had been awarded fees sufficient to fairly litigate the case, and had incurred additional fees by overlitigating the case. As such, the trial court’s denial of husband’s request to recover $50,000 in incurred fees was not arbitrary or capricious.  As to the trial court’s denial of appellate fees, the 4/3DCA found no abuse of discretion.  Husband’s grounds for appeal were conclusory and ignored evidence not favorable to his claims.  Finally, it was unnecessary for the panel to address the trial court’s alternative indemnity ruling based on its analysis of the trial court’s fee ruling.

BLOG UPDATE: We can now report that this opinion was certified for publication on June 2, 2022.

Family Law: No Abuse Of Discretion In Trial Court’s Denial Of Fees And Costs For Appeal Of Companion Case To Mother In Parentage Action Who Earned Significantly Less Than Father, But Remand Was In Order For Denial Of Needs-Based Fees For DVPA Action

Family Code Section 7605 Allows For Needs-Based Fee And Costs Awards In Parentage Proceedings, But Can Apply To Separate Domestic Violence Prevention Act Proceedings Where They Involve The Same Or Similar Subject Matter.

            The mother of a 12-year-old boy, who has been involved in a contested parentage action with the boy’s father for roughly the last 12 years, sought an award from father of $60,000 in attorney fees and $5,000 in costs.  Specifically, Mother sought $50,000 to retain counsel to appeal a companion case, $10,000 to retain counsel to prosecute Father for her claims under the Domestic Violence Prevention Act (“DVPA”) relating to his alleged hacking of her laptop, and $5,000 in costs for computer forensics work and subpoenas to support Mother’s accusations regarding her laptop.  When the trial court denied her requests – under Family Code §§ 2030, 7605, and 6344 – she appealed.

            The 4/3 DCA agreed with the trial court and affirmed with regard to Family Code §§ 2030 and 6344 in Douglas S. v. Jennifer E., Case No. G059942 (4^th Dist., Div. 3 April 29, 2022) (unpublished).  Although the trial court had previously determined Father made significantly more money than Mother, section 2030 was inapplicable as it allows for needs-based fee awards in actions for dissolution of marriage or legal separation, and neither the companion appellate case nor the DVPA case involved divorce or separation.  As to section 6344, which allows prevailing party fees and costs in domestic violence restraining order and protective order actions, Mother provided no proof that she had prevailed in a domestic violence restraining or protective order action except for the one addressed in the companion case for which she had already been awarded attorney fees.  Additionally, as to the $50,000 sought by Mother for the companion appeal, the trial court – in its broad discretion – determined that Father did not have the ability to pay that amount to Mother, and in such cases, appellate courts will not reverse absent a showing that no judge could reasonably have made the order. (In re Marriage of Falcone & Fyke, 203 Cal.App.4th 964, 975 (2012); In re Marriage of Winternitz, 235 Cal.App.4th 644, 657 (2015).)

            However, the 4/3 DCA reversed and remanded for further proceedings as to the fees and costs Mother sought in the DVPA proceeding as the panel found the trial court’s interpretation of section 7605 too restrictive.  The trial court had denied the DVPA proceeding fees and costs under section 7605 because the statute allows for a needs-based award of attorney fees and costs in a parentage proceeding, and a DVPA proceeding is not a parentage proceeding.  However, as set forth in C.T. v. K.W., 71 Cal.App.5th 679, 685 (2021) and N.S. v. D.M., 21 Cal.App.5th 1040, 1055 (2018), section 7605 can apply to separate DVPA proceedings that, as here, are “related” to the parentage action, where they “involve the same or similar subject matter.”