CALIFORNIA ATTORNEY'S FEES

Private Attorney General, Section 998: Plaintiff Properly Denied CCP 1021.5 Fees And $700,000 Section 998 Fees In Favor Of Some Defendants Reversed

No Public Benefit Conferred By Misleading Proposition 65 Temporary Warnings, And 998 Offer Releases Were Overbroad.

     In Council for Education and Research on Toxics v. Starbucks Corporation, Case Nos. B309227 et al. (2d Dist., Div. 4 Oct. 26, 2022) (published), defendants properly won a summary judgment in a Proposition 65 case when new regulations debunked the idea that coffee roasting presented health risks which had to be disclosed.  The trial court denied plaintiff’s request for private attorney fees because any temporary warnings did not confer a public benefit given that the warnings were misleading and unnecessarily. The lower court also granted some of the defendants about $700,000 in attorney’s fees based on unaccepted CCP 998 offers.  The appellate court affirmed the fee denial, but reversed the 998 fees awards because the requested releases were overbroad in seeking release of claims over and beyond those which were the subject of the lawsuit (relying on the Ignacio and Chen decisions in so doing).

Section 998: Oral Summary Judgment Grant Cuts Off Ability To Accept A 998 Offer

Mischief Would Result If This Was Not The Consequence.

            In Trujillo v. City of Los Angeles, Case No. B314042 (2d Dist., Div. 2 Oct. 27, 2022) (published), a defendant moved for summary judgment and made a CCP 998 offer days before the hearing.  The trial court orally granted the summary judgment motion, with plaintiff then accepting the 998 offer.  The appellate court agreed with the trial court’s conclusion that the 998 offer expired upon the oral grant of the summary judgment motion against the plaintiff.

Section 998: If You Want A Settlement Agreement And Release As Part Of A 998 Offer, Make Sure To Attach One And Make Releases Narrow So As To Validate The Offer

Otherwise, Unspecified Settlement Terms Are Too Uncertain In Nature.

            K.M. v. Grossmont Union High School Dist., Case Nos. D0759571/D076833 (4th Dist., Div. 1 Oct. 25, 2022) (published) holds that if you, as a CCP offeror, want a settlement agreement or Civil Code section 1542 release as part of the 998 offer, you better attach the settlement agreement and release to the offer so the lower court can determine if the offer is valid.

            The opinion also suggests that detailing the terms of the settlement agreement/release in the offer might work, but our takeaway is it would be best to attach the entire settlement agreement/release to the 998 offer.

Judgment Enforcement: Trial Court’s Denial On Remand Of Code Of Civil Procedure section 685.040 Fees For Bringing An Unreasonable And Unnecessary Motion To Compel Affirmed On Appeal

Defendants Were Attempting To Comply With The Judgment, But Plaintiffs’ Were Intentionally Thwarting Their Attempts.

            In our November 26, 2020 post, we discussed the unpublished decision in Buechler v. Butker, Case No. G058054 (4^th Dist. Div. 3 November 23, 2020), wherein the trial court had denied the $37,052.50  in fees sought by plaintiff pursuant to Code Civ. Proc. § 685.040 for enforcement of judgment regarding a dispute over the use of a lateral sewer line – determining that defendant’s failure to comply was not willful and was in part due to plaintiff’s interference.  Ultimately, the 4/3 DCA reversed and remanded for a determination as to whether the fees incurred were “reasonable and necessary” as they are required to be in order to be recoverable.

            Back to the trial court they went – the parties in Buechler v. Butker, Case No. G060470 (4^th Dist., Div. 3 October 25, 2022) (unpublished).  This time, plaintiff sought over $60,000 after adding in $15,127 for fees incurred in the first appeal, $7,215 for the second fee motion, and another $1,000 in fees for preparing for and appearing at the hearing on the fee motion.  Again, the trial court denied plaintiff’s motion – concluding the requested fees were not reasonable and necessary because plaintiffs’ contempt motion was not the catalyst for defendants’ compliance because defendants were attempting to comply with the judgment prior to the contempt motion, but “Buechler’s actions were intended to impede Defendants’ efforts to comply with the Judgment and to make it as difficult and costly as possible for Defendants to construct a new sewage disposal system for their property.”  In what the 4/3 DCA described, in a 3-0 opinion authored by Acting Presiding Justice Bedsworth, as “an admirable ‘extra mile,’” the trial court took the time to explain what it would have awarded if it had concluded that the contempt motion was the catalyst for defendants’ compliance – $6,750 for the contempt motion itself, $7,100 for the appeal, and $5,200 for the attorney fee motions, for a total of $19,050.

            Affirming the trial court’s fee denial, the panel first explained that Code Civ. Proc., section 685.040 does not authorize an award of fees for an appeal from an order denying fees not incurred in connection with an enforcement proceeding, which left only the fees incurred in bringing the contempt motion at issue.  Although section 685.040 does not require a moving party for judgment enforcement to prevail, it does require that the proceeding be necessary in order to recover fees – something that did not exist here where plaintiffs “threw a monkey wrench into [defendants’] efforts to comply with the Judgment.”

Civil Rights, Multipliers, Reasonableness Of Fees: Ninth Circuit Confirms Significant Haircut To Serial ADA Plaintiff’s Attorney’s Fees And Costs Award

No Abuse Of Discretion In District’s Reduction Of Fees And Costs Award To $9,851 From The Requested $34,899 Where Work Was Routine And Boilerplate, There Was A Lack Of Opposition, And Much Of The Motion Practice Was Unnecessary.

            In Shayler v. 1310 PCH, LLC, Case No. 21-56130 (9^th Cir. October 24, 2022) (published), serial Americans with Disabilities Act plaintiff sued defendant  for failure to comply with regulatory requirements for accessible parking spaces.  Eight months later, plaintiff moved for summary judgment, to which defendant filed a notice of non-opposition.  Plaintiff nonetheless filed a reply brief, and – after being granted summary judgment – moved for $31,714 in attorneys’ fees and $3,185 in costs.

            Explaining that it found the hourly rates and time spent by plaintiff’s attorneys unreasonable – where two partner-level attorneys performed tasks that could have been performed by low level associates or paralegals, given the straightforward boilerplate filings in the case that did not involve complex legal issues or difficult factual discovery, and spent 17 hours on an unopposed motion for summary judgment, including 7 hours on the reply brief, the district court adopted a blended hourly rate of $300 used in similar cases and applied a 65% downward multiplier – resulting in a fees award of $7,896.  Additionally, the district court awarded reduced costs of $1,955 after taxing plaintiff’s request for reimbursement for a site inspector for which plaintiff provided no invoice and no reasonable explanation as to the inspector’s importance to the case.

            On appeal, plaintiff argued that the district court failed to provide an adequate explanation for the blended billing rate and downward multiplier.  Although the Ninth Circuit found the argument reasonable given case law on this issue (Chaudhry v. City of Los Angeles, 751 F.3d 1096, 1111 (9^th Cir. 2014) [fee award vacated for district court’s failure to explain its use of a blended billing rate]; Van Gerwen v. Guarantee Mut. Life Co., 214 F.3d 1041, 1045 (9th Cir. 2000) [upward and downward multipliers must be justified]), it found that the district court provided a “concise but clear explanation” of the grounds for its decision – with a “concise but clear” explanation requiring only enough reasoning to enable meaningful appellate review. (Hensley v. Eckerhart, 461 U.S. 424, 437 (1983); Jankey v. Poop Deck, 537 F.3d 1122, 1133 (9th Cir. 2008) [discussed in our August 13, 2008 post]; Gates v. Deukmejian, 987 F.2d 1392, 1398 (9th Cir. 1992).)  Concluding that the district court’s explanations for the blended billing rate and downward multiplier sufficiently supported its reduced fee award, the Ninth Circuit found no abuse of discretion and affirmed.

Prevailing Party, Special Fee Shifting Statutes: Trial Court’s Determination That There Was No Prevailing Party Under Civ. Code Section 8800 In Prompt Payment Action Affirmed, But Reversal For Same Determination Under Code Civ. Proc., Section 1032

Determination Of Prevailing Party Under Section 8800 Is Left To The Trial Court’s Broad Discretion, But The Trial Court Abused Its Discretion In Determining There Was No Prevailing Party Under Section 1032 Where Plaintiff Was The Only Party With A Net Monetary Recovery.

            Civil Code section 8800 is a prompt payment statute governing progress payments that an owner shall pay the direct contractor.  Section 8800(c) entitles the prevailing party in an action for collection of the amount wrongfully withheld to costs and reasonable attorney’s fees. 

            In Vought Construction Inc. v. Stock, Case No. A164823 (1^st Dist., Div. 4 October 24, 2022) (published), plaintiff sought the balance due for renovations it performed on defendant’s home, an additional amount for a change order, and penalties for Civil Code section 8800 violations (prompt payment statute).  Defendant agreed with the balance due, but disputed the additional amount sought by contractor, and also claimed a liquidated damages offset for delay.  The parties’ contract did not contain an attorney’s fees provision, so the parties relied on the fees/costs recovery allowed pursuant to section 8800.

            Following a four-day bench trial, the trial court found that each party had acted in good faith, and that contractor failed to prove homeowner had violated section 8800.  Additionally, the trial court found that contractor was entitled to roughly half of the additional amount it sought for a change order, and homeowner was entitled to roughly half of the liquidated damages offset he sought.  Based on the trial court’s findings, it also determined that neither party achieved prevailing party status for recovery of fees and costs under either section 8800 or costs under Code Civ. Proc., section 1032.

            Contractor argued on appeal that based on a practical evaluation of the litigation as a whole, the trial court abused its discretion by not finding it to be the prevailing party under section 8800.  The appellate panel disagreed.  Section 8800 does not define prevailing party and, contrary to contractor’s argument, section 1032 does not govern as to the definition of prevailing party.  Rather, determination as to whether a party has achieved prevailing party status under section 8800 is left to the trial court’s broad discretion which is made on a practical level.  Given the outcome in the case – with the trial court’s determination that section 8800 had not been violated as each party had acted in good faith, and with each party achieving roughly one-half of what they sought – the 1/4 DCA found no abuse of discretion with the trial court’s ruling on prevailing party as to section 8800.

            However, the appellate panel disagreed with the trial court’s ruling under section 1032.  Section 1032’s definition of prevailing party includes “the party with a net monetary recovery.”  In this case, contractor was the only party with a net monetary recovery, and was therefore entitled to recover its costs.  The trial court erred in considering homeowner’s setoff claim in determining the prevailing party under section 1032 as the homeowner had no net monetary recovery.   

Discovery, Sanctions: 2/5 DCA Concludes $2.5 Million In Monetary Sanctions Awarded For Egregious Discovery Abuse, Under Code Civ. Proc. §§ 2023.010 and 2023.030, Was Not Statutorily Authorized And Reverses

Citing Legal Precedent, Dissenting Justice Would Have Affirmed – Seeing No Basis For “The Majority’s Unprecedented Statutory Analysis.”

            Nine months after plaintiff dismissed with prejudice its case in City of Los Angeles v. PricewaterhouseCoopers, LLC, Case No. B310118 (2d Dist., Div. 5 October 20, 2022) (published), PricewaterhouseCoopers (“PWC”) moved for monetary sanctions pursuant to Code Civ. Proc. §§ 2023.010 and 2023.030 for the ongoing discovery abuses committed by City of Los Angeles.  The trial court awarded PWC $2.5 million of the $8,356,852 it sought as a baseline amount – apparently declining PWC’s suggestion that an increase of $1 million or more over the baseline amount would be an appropriate exercise of the trial court’s discretion based on the egregious nature of City’s discovery abuse.  City appealed.

            The appellate panel concurred in its disagreement as to two of City’s contentions – that the trial court had no jurisdiction to rule on the sanctions motion after the case was dismissed with prejudice, and that the sanctions motion was untimely.  First, when the trial court is authorized to impose monetary sanctions, it retains jurisdiction after the lawsuit is dismissed to rule on the issue as a collateral matter.  Second, City showed no abuse of discretion as to the trial court’s implicit finding that PWC’s sanctions motion was timely.

            However, it was with City’s third contention that there was a split in the panel’s conclusion.  The majority agreed with City – that §§ 2023.010 and 2023.030 are definitional statutes that, standing alone or read together, do not authorize the trial court to impose sanctions.  Finding that the trial court abused its discretion by awarding monetary sanctions outside its statutory authority, the majority reversed and remanded for the trial court to enter a new order on the monetary sanctions under provisions of the Discovery Act other than sections 2023.010 and 2023.030.  Specifically, the majority concluded that section 2023.010 merely describes general categories of discovery abuse, but does not authorize the trial court to impose sanctions for discovery abuse, and that section 2023.030 describes the type of sanctions available under the Discovery Act when another provision authorizes a sanction, but does not independently authorize the trial court to impose monetary sanctions for discovery abuse. 

            Justice Grimes (Division 8 justice sitting by assignment) dissented from Presiding Justice Rubin’s and Justice Moor’s conclusion on this issue – finding no basis “in statutory law, case law, or common sense” for “the majority’s unprecedented statutory analysis.”  Citing legal precedent, Justice Grimes concluded that the “[t]o the extent authorized” language of section 2023.030 relates to type of sanction – giving authority to impose the type of sanction in question, and that legal precedent supports the imposition of various types of sanctions under section 2023.030 for discovery abuse without regard to the requirements of other Discovery Act provisions.  (Kwan Software Engineering, Inc. v. Hennings, 58 Cal.App.5th 57 (2020) [discussed in our December 3, 2020 post]; London v. Dri-Honing Corp., 117 Cal.App.4th 999 (2004).) Additionally, Justice Grimes found no principle of appellate review to require a trial court to recite the specific statutes it found were violated – so long as the trial court adequately explains its analysis and findings in support of an order.  Given that the trial court described at length the discovery abuses for which sanctions were imposed – which Justice Grimes described as being “egregious discovery abuse that is unmatched in my experience” – remanding the case back to the trial court for the purpose of fleshing out the separate discovery statute for each particular discovery violation was adverse to the Legislative intent.

Private Attorney General: Proposition 65 Plaintiff Gets A Redo On Fee Request After Trial Court Reduces Fee Award Based On Its Erroneous Conclusion That Her Litigation Achieved Limited Success.

Plaintiff Was Completely Successful On Her Proposition 65 Claims And Objectives, But Trial Court Improperly Valued Significance Of Plaintiff’s Success As Secondary To Litigating The Fee Award Because More Time Was Devoted To The Fee Award.

            In Davia v. Be Wicked, Case No. A163076 (1^st Dist., Div. 3 October 20, 2022) (unpublished), plaintiff and defendant entered into a consent judgment related to Proposition 65 violations – the Safe Drinking Water and Toxic Enforcement Act of 1986 (Health & Saf. Code, § 25249.5 et seq.).  Plaintiff then moved for Code Civ. Proc., § 1021.5 fees.  Although finding plaintiff was entitled to fees under Section 1021.5, the trial court reduced her request by 60 percent and denied altogether the fees incurred for litigating the fee award – awarding her only $47,293.75 of the $120,764.96 in fees and $2,334.66 in costs she sought.  The trial court reasoned that the parties had reached an agreement regarding the Prop 65 issues early on, but litigation over the attorney fees caused plaintiff to incur fees that were out of line for the action, and additionally found hours claimed by plaintiff’s counsel to be unreasonably high. 

            The 1/3 DCA reversed and remanded – agreeing with one of plaintiff’s arguments – that the trial court erred in concluding that her fee award should be reduced because her litigation achieved limited success.  Analyzing plaintiff’s litigation objectives with the objectives she actually achieved, the panel found that plaintiff was completely successful on her claims and objectives, and achieved excellent results.  It was improper to value the significance of plaintiff's success as secondary due to the amount of time spent litigating the attorney fees, and reduce her fee award on that basis.

Interpleader, Prevailing Party: 2/7 DCA Affirms Trial Court’s Denial Of Attorney Fees And Costs Sought Against Interpleading Plaintiff By Defendant Who Obtained Summary Judgment

Defendant In An Interpleader Action Cannot Be The Prevailing Party As To The Interpleader Because There Are No True Adverse Interests, And Claims Of Collusion Between Between Interpleader And Other Defendant Must Be Made During Initial Phase Of Proceeding.

            In Grupo Deco California v. Downs, Case Nos. B305748/B308965 (2d Dist., Div. 7 October 17, 2022) (unpublished), commercial tenant filed a complaint in interpleader against the two separate parties claiming entitlement to the rent payments – the trustee of a revocable trust, and an LLC.  After the trial court ruled in favor of the Trustee, granting her motion for summary judgment, she moved pursuant to the lease agreement and Code Civ. Proc. §§ 1032 and 1033.5 as the prevailing party for attorney fees and costs jointly and severally against the LLC and the interpleader plaintiff/stakeholder. The trial court awarded some fees/costs against the LLC, but ruled that fees/costs were not recoverable against the interpleader – finding that a defendant in an interpleader action cannot be the prevailing party “because there are no true adverse interests”; and because there was no net monetary recovery against interpleader.  Trustee appealed.

            The 2/7 DCA agreed with the trial court’s finding and affirmed – citing its holding in Cantu v. Resolution Trust Corp., 4 Cal.App.4^th 857, 881 (1992) [“An interpleader action is not adversarial as between a claimant and the stakeholder and, hence, Cantu [the claimant] could not prevail against Lincoln [the stakeholder], or vice versa.”]. 

            The panel also found, just as the trial court had, that Trustee was not entitled to fees based on her argument that interpleader had colluded with the LLC.  “[A]n interpleader action may not be maintained ‘“upon the mere pretext or suspicion of double vexation.”’’’ (Placer Foreclosure, Inc. v. Aflalo, 23 Cal.App.5th 1109, 1113(2018); accord, Westamerica Bank v. City of Berkeley, 201 Cal.App.4th 598, 608 (2011) [the interpleader plaintiff “‘must allege facts showing a reasonable probability of double vexation’ [citation] or a ‘valid threat of double vexation’”].)  However, such a challenge or objection is forfeited if it is not made during the initial phase of the proceeding.  Nothing in the record indicated that Trustee ever demurred to the complaint in interpleader or formally challenged interpleader’s right to interplead the rent funds. 

Prevailing Party, Special Fee Shifting Statutes: Denial Of Attorney’s Fees To Requester Who Received Information Under CPRA After Petitioning For Writ Of Mandate Affirmed On Appeal

Requester’s Litigation Was Not The Catalyst For The Disclosure Of The Information Requester Sought Under The CPRA.

            Under the California Public Records Act (CPRA), a trial court “shall award court costs and reasonable attorney’s fees to the requester should the requester prevail in litigation filed pursuant to this section.” (Gov. Code § 6259(d).)  However, determination as to whether the requester prevailed is left to the trial court’s discretion.

            In Austin v. Trustees of the Cal. State University, Case No. D078950 (4^th Dist., Div. 1 October 11, 2022) (unpublished), requester received the crime victim’s name he sought from California State University (San Marcos) after filing a petition for writ of mandate alleging denial of the CPRA request.  However, the trial court denied requester’s motion for attorney’s fees – finding requester’s litigation was not the catalyst for the disclosure of the victim’s name, and that the denial of his CPRA request was the result of requester’s failure to follow the publicly posted process for his request and submitting the request to the wrong department.  Once requester’s CPRA request made its way to the correct department, the information was provided – a result that could have been achieved without litigation.  As a result, the trial court found that requester had not prevailed within the meaning of the CPRA, and was not entitled to recover fees.  The 4/1 DCA found the trial court’s fee order was supported by substantial evidence, which showed that the litigation was not the motivating factor behind the disclosure of the information requester sought, and affirmed.

Family Law, Substantiation Of Reasonableness Of Fees: Attorney Fee Award To Husband Prevailing In Restraining Order Matter Reversed Due To Lack Of Information Necessary For Trial Court To Perform A Lodestar Calculation

An Unsworn Statement Made By Husband’s Counsel, As To His Hourly Rate And Time Spent Working On The Case, Did Not Support The Trial Court’s Lodestar Calculation.

            In Marriage of Halamandaris, Case No. E076933 (4^th Dist., Div. 2 October 10, 2022) (unpublished), husband defeated wife’s attempt to obtain a restraining order under the Domestic Violence Prevention Act (Fam. Code, § 6200 et seq.), then successfully moved for $38,395 in prevailing party attorney fees under Fam. Code, § 6344 – which allows for an award of fees and costs to the prevailing party in any domestic violence restraining order matter.

            Wife’s argument against husband’s fee request fared much better on appeal than it did in the trial court – namely that husband had failed to carry his burden of proof regarding the $38,395 in fees by failing to provide a basis for the fees requested.  Agreeing with wife’s contention that the fee award was not supported by substantial evidence, the 4/2 DCA reversed and remanded for a redetermination of the fee award. 

            The only evidence provided by husband’s counsel in support of the fee request was a list of tasks performed by him and his staff, and a statement that husband had incurred a total of $38,395 in fees.  Husband’s counsel submitted nothing to evidence the number of hours spent on the case, by whom the hours were spent, and at what rate – thereby failing to provide the information necessary for the trial court to complete the lodestar calculation, which involves the trial court first determining the actual hours spent by counsel on the case, then subtracting any hours it finds inefficient or unreasonable, and finally, it multiplies that amount by the applicable billing rate (if it finds the rate reasonable).  An unsworn statement made during the fees hearing by husband’s counsel, as to his hourly rate and time spent working on the case, were insufficient to support a lodestar calculation.  “[A] fee request ordinarily should be documented in great detail.” (Weber v. Langholz, 39 Cal.App.4th 1578, 1587 (1995).)

In The News . . . Bloomberg Law’s Most Recent Workload & Hours Survey Suggests That Practitioners 45 Years And Older Have More Non-Billable Hours Than Younger Lawyers

Reasons For This Are Not Clear.

            Based on Bloomberg Law’s Workload and Hours survey, conducted from July 27, 2022 – August 19,2022, survey respondents in the 25-34, 35-44, 45-54, 55,64, and 65+ age groups reported on the number of yearly non-billable hours they worked.  Here are the totals, and no real reason emerged for the results:  149 hours for the 25-34 year group; 195 hours for the 35-44 age group; 278 hours for the 45-54 years old group; 240 hours for the 55-64 category; and 193 hours for 65+ years attorneys. 

Costs, Employment: Costs Award, Mainly, Affirmed On Appeal In Case Where Plaintiff Employee Suffered A Summary Judgment Loss On Whistleblower, Retaliation, And Breach Of Contract Claims

Breach Of Contract Costs Were Distinct, So That They Were Warranted Versus Costs On FEHA-Related Claims Never Determined To Be Frivolous.

            In Hussain v. Peralta Community College District, Case No. A164189 et al. (2d Dist., Div. 4 Oct. 5, 2022) (unpublished), plaintiff employee lost his retaliation, whistleblower, and contract claims against defendant through summary judgment, with the trial court awarding apportioned routine costs against him in the amount of $6,974.29.  The appellate court affirmed, although reducing the costs down to $6,812.55.  The lower court’s determination that the breach of contract claim was distinct (which would allow an award of costs unless the contract claim was inextricably intertwined with non-frivolous FEHA claims, not the case here) was sustained on appeal.  The lower court did not abuse its discretion by allocating deposition costs at 33 1/3% based upon the claims at issue.  Finally, because mainly expert witness fees related to a FEHA claim (with no determination that it was frivolous), that cost item had to be reduced from the total awarded by the trial judge. 

Section 1717: Defendant Nonsignatories To Settlement Agreement Defeating Contract Claims Entitled To Section 1717 Fees

After All, Defendants Did Show The Contract Was Inapplicable To Them, Such That The Hsu Decision Governed.

            One of our leading cases is Hsu v. Abbara, 9 Cal.4^th 863, 870 [Leading Case #2] holds that a party is entitled to Civil Code section 1717 attorney’s fees when the party prevails on grounds the contract is inapplicable, invalid, unenforceable, or nonexistent, if the opposing party would have entitled to fees had it prevailed.  The 2/8 DCA, in McLean v. Rosman, Case No. B308260 (2d Dist., Div. 8 Oct. 5, 2022) (unpublished), found Hsu dispositive, affirming a lower court award of fees to defendants where they showed that a settlement agreement, with a fees clause, was inapplicable to them because they never signed it and the plaintiffs had failed to perfect a lien by recording the settlement.  The panel also observed that Canal-Randolph Anaheim, Inc. v. Wilkoski, 78 Cal.App.3d 477, 486 (1978), which held that section 1717 does not apply to a person not a party to the contract, was impliedly overruled by Hsu. 

Employment: $54,780 Fee Award To Two Ex-Employees Affirmed On Appeal Under Labor Code Section 98.2

Result Reminds Employers To Carefully Request A De Novo Review Of An Adverse Labor Commissioner Ruling In Favor Of Ex-Employees.

            Chilpa v. American Concrete Polishing Co., Case No. B294648 et al. (2d Dist., Div. 4 Oct. 4, 2022) (unpublished) is another opinion with a cautionary warning for employers suffering an adverse wage/hour Labor Commissioner decision:  if you appeal against the ex-employees and lose again in a de novo superior court trial, you will be liable for attorney’s fees which likely will be substantially more than the Labor Commissioner awards made in the first instance.

            Two ex-employees won $15,400 aggregate against ex-employer in a Labor Commissioner hearing.  Employer “appealed” and lost again in a de novo superior court trial where ex-employees won about $31,554 in the aggregate.  But here is the kicker:  ex-employees moved for attorney’s fees under Labor Code section 98.2 (which allows the prevailing party in the de novo trial to obtain fees), and they were awarded $36,520 plus a positive 1.5 multiplier for a total fee award of $54,780.  Employer only challenged the 1.5 multiplier, but there was no indication it opposed the fee request, and the moving papers showed the ex-employees’ attorneys took the matter on contingency (a factor which can justify a positive multiplier).  So, the multiplier challenge was rejected by the appellate court.

            Again, not to beat a drum we have beaten many times before, wouldn’t employer been better off to pay the $15,400 Labor Commissioner award rather than now paying ex-employees $86,334 (inclusive of fees) as well as having to pay its attorneys for the various administrative, superior court, and appellate proceedings? 

Equity, Judgment Enforcement, Tort Of Another: Law Corporation’s Attempts To Setoff Adverse Judgment For Tort Of Another Fees Were Rebuffed By Court Of Appeal

Nothing Demonstrated Setoff For Tort Of Another Fee Damages Could Be Obtained In A Postjudgment Phase.

            The result in David S. Karton, A Law Corporation v. Musick, Peeler, Garrett LLP, Case No. B305837 (2d Dist., Div. 1 Oct. 3, 2022) (published), was driven by a prior appellate opinion where a default in favor of the law corporation was found to be void, such that an assignor of adverse judgments impacting the law corporation to Musick, Peeler became the prevailing party.  (Substantial fees were spent on both sides for a claimed law corporation receivable of $65,246.23.)  The lower court denied law corporation’s motion to set off from the adverse judgment certain claimed “tort of another” fees incurred in actions alleging that judgment assignor had attempted to hinder the collection of the vacated default judgment.

            The appellate court determined that set off was procedurally and substantively not available.  On the procedural front, CCP § 431.70 does not allow for postjudgment set off versus simply pleading it as an affirmative defense in an answer, and law corporation failed to meet the judgment satisfaction acknowledgment requirements in trying to obtain a set off.  On the merits, the “tort of another” doctrine was not available because no third-party litigation was involved in the hinderance lawsuits in other states, which substantively meant there could be no set off on this basis.

Miscellaneous Recommended Reading: Attorney Fees -- A Potential Malpractice Minefield

Co-Contributor Marc Authored An Article About Attorney Fees And The Risk Of Malpractice Exposure In The October 2022 Issue Of Orange County Lawyer.

        "Attorney Fees: A Potential Malpractice Minefield," authored by Marc Alexander and appearing in the October 2022 issue of Orange County Lawyer, discusses the "unhappy case" of Shahrokh Mireskandari v. Edwards Wildman Palmer, 77 Cal.App.5th 247 (2022), and its implications for legal malpractice when the risks of attorney fee shifting are (allegedly) not carefully analyzed and disclosed to the client.

        Proving legal malpractice typically follows "the familiar case-within-a case method for establishing causation in litigation malpractice cases." The plaintiff-client needs to establish not only the negligence of the attorney, but also that the client would have won the underlying case but for attorney negligence. Mireskandari, however, is not a typical case, for Mireskandari's malpractice claim did not depend on prevailing in the underlying action. Instead, his malpractice claim depended on being able to prove that the "outcome" would have been better had he received different legal advice, never filed a lawsuit, and never been exposed to the risk of anti-SLAPP attorney fees. 

        The "case-within-a case" method of establishing a malpractice claim is simply an example of a more general principal, namely, that but for attorney negligence, the outcome of a case would have been better for the client. This is not exactly a bright line.

        Perhaps the most important lesson is that a careful attorney will analyze attorney fee issues early in the litigation process, and inform the client of those risks. While this may be easy in a simple case where a contract contains a "prevailing party attorney fees clause," there are numerous situations in which the risk of fee shifting is less obvious. The article describes some attorney fee situations that create a potential malpractice minefield.