CALIFORNIA ATTORNEY'S FEES

Consumer Statutes: Plaintiff In Lemon Law Case Did Not Beat 998 Offer Such That Most Post-Offer Fees And Costs Were Properly Disallowed

$53,509.51 In Pre-Offer Fees Were Allowed, Not Plaintiff’s Almost $470,000 Fees/Costs Request.

            Under recent posts, we have shown how a good defense offer under CCP § 998 will not pay dividends for a plaintiff who does not properly assess it and does not accept the offer.  That lesson again resonated in Chen v. BMW of North America, Case Nos. H048257/H048444 (6^th Dist. Dec. 29, 2022) (unpublished).

            A year into the case, BMW made a 998 offer for $160,000, exclusive of pre-offer costs and fees to be determined by the court, plus any other fees and costs to be determined by the court through a noticed motion.  Plaintiff did not accept the 998 offer, but two years later he settled on just about the same terms as the prior 998 offer.  Plaintiff moved for $436,071.82 in fees and costs under the lemon law statute, but the trial court awarded just $53,509.51 (mainly pre-offer fees/costs, augmented by 45 days of post-offer fees/costs).

            Plaintiff’s appeal was unsuccessful.  The appellate court decided that the 998 offer was specific enough and was made in good faith—plaintiff could evaluate the worth of the offer.  With respect to lemon law expenses recoverable separate from attorney’s fees and costs, nothing in the offer prevented plaintiff from moving for them.  Even though the court awarded 45 days of post-offer expenses (which technically was improper), BMW did not cross-appeal such that plaintiff got a little bit of a boondoggle. 

Section 1717: $74,930.80 Fee Award And $18,339.56 Costs Award Against Prevailing Party Neighbors In Equitable Servitude Dispute Affirmed On Appeal

Equitable Servitude in an Amended Declaration if a Contract Under Civil Code Section 1717.

         In DeBevoise v. Robinson, Case Nos. D078207/D078679 (4^th Dist., Div. 1 Dec. 29, 2022) (unpublished), neighbors got involved in an equitable easement dispute, with plaintiffs/cross-defendants getting equitable easement relief and also obtaining a prevailing party contractual fees award under an Amended Declaration running with the land to the tune of $74,930.80 in attorney’s fees and $18,339.56 in costs.  (This was a drastic reduction from the requested $433,814 in fees and $33,837.73 in costs after the trial judge commented that this was one of the worst fee applications he had been presented with.)  The non-prevailing parties appealed, arguing there was no fee entitlement.  But there was, according to the appellate court.  The Amended Declaration was an equitable servitude which is an enforceable contract giving rise to fee exposure, such that entitlement did lie.  (Mackinder v. OSCA Development Co., 151 Cal.App.3d 728, 738 (1984).)

Year in Review – 2022

Year End-Wrap Up By Mike, Marc, And Shanna For Our Top 20 Decisions In 2022—Part 2 of 2

First Floor Corridor, James R. Browning U.S. Court of Appeals Building, San Francisco, California.  Carol M. Highsmith, photographer.  2009.  Library of Congress.

            As we have done over the years, this blog provides its top 20 attorney’s fees/costs decisions for 2022, again emphasizing that there were many other decisions of consequence over the year.  However, these were our favorites and with the order of the opinions not indicating their importance.  Co-contributors Mike and Marc would like to again thank Shanna Strader for her contributions over the last year, because she did great posts and was invaluable in keeping the calattorneysfees.com blog up to date.  With that said, here is Part 2 of 2 of our Top 20 Decisions for 2022.

10.    SECTION 998. K.M. v. Grossmont Union High School Dist., 84 Cal.App.5^th 717 (Cal. App. 4^th Dist., Div. 1 Oct. 25, 2022), pet’n for review filed, Dec. 1, 2022—authored by Acting Presiding Justice Huffman, discussed in our October 29, 2022 post:  To be valid, a Code of Civil Procedure section 998 offer conditioned on a settlement agreement and Civil Code section 1542 waivers likely needs to have the settlement agreement attached so the offeree can evaluate the settlement agreement language.

9.    SECTION 998.  Council for Education and Research on Toxics v. Starbucks Corporation, 2022 WL 15136462 (Cal. App. 2d Dist., Div. 4 Oct. 26, 2022), pet’n for review filed, Dec. 2, 2022—authored by Presiding Justice Manella, discussed in our October 31, 2022 post:  $700,000 fee award to prevailing defendants reversed in a Proposition 65 case because the 998 offers desired releases which were overbroad in nature.

8.    SECTION 998. Trujillo v. City of Los Angeles, 84 Cal.App.5^th 908 (Cal. App. 2d Dist., Div. 2 Oct. 27, 2022)—authored by Justice Hoffstadt, discussed in our October 29, 2022 post:  Acceptance of a CCP § 998 offer after the oral grant of a defense summary judgment motion was ineffective.

7.    ARBITRATION. Taska v. TheRealReal, Inc., 2022 Cal.App. LEXIS 916 (Cal. App. 1^st Dist., Div. 5 Nov. 4, 2022)—authored by Presiding Justice Jackson, discussed in our November 6, 2022 post:  A lower court correct correctly struck an arbitrator’s award of fees and costs under a revised arbitration award where the arbitrator had initially denied fees and costs in an initial award.

6.    CLASS ACTIONS. McKnight v. Hinojosa (Uber Technologies, Inc.), 2022 WL 17333822 (9^th Cir. Nov. 30, 2022)—authored by Circuit Judge Thomas, discussed in our November 30, 2022 post:  A class action settlement approval was affirmed because the settlement was not a “coupon” settlement because two of the three factors demonstrated it was not that type of settlement.

5.    FAMILY LAW. In re Marriage of Blake & Langer, Case No. B311966 (Cal. App. 2d Dist., Div. 4 Nov. 10, 2022 published)—authored by Los Angeles County Superior Court Judge Stone, sitting by assignment, discussed in our November 15, 2022 post:  Husband’s dismissal of joinder complaint did not divest the lower court of jurisdiction to impose Family Code section 271 sanctions against husband.

4.    DISCOVERY/SANCTIONS. City of Los Angeles v. PricewaterhouseCoopers, LLC, Case No. B310118 (Cal. App. 2d Dist., Div. 5 Oct. 20, 2022 published), depublication request and pet’n for review filed, 11/22/22 & 11/23/22—authored by Justice Moor, with a dissenting opinion by Justice Grimes, discussed in our October 27, 2022 post:  $2.5 million in discovery abuse monetary sanctions reversed where no specific section authorized such sanctions, with general discovery abuse statutes not being sufficient as a sanctions predicate; Justice Grimes, in dissent, concludes otherwise.

3.    CONSTRUCTION. Cell-Crete Corp. v. Federal Ins. Co., 2022 WL 4103354 (Cal. App. 4^th Dist., Div. 2 Sept. 8, 2022)—authored by Justice Slough, discussed in our September 9, 2022 post:  Defendant prevailing in a payment bond dispute can be entitled to fees and costs under Civil Code § 9564(c) even though a third-party paid them, because the statutory section has no “incurred” requirement.

2.    EQUITY/UNDERTAKING. Sarkany v. West, Case No. A162441 (Cal. App. 1^st Dist., Div. 2 Aug. 30, 2022 published)—authored by Justice Miller, discussed in our September 2, 2022 post:  A trial court, under CCP § 917.1(a), does have discretionary authority to stay enforcement of a monetary judgment on appeal if the principal litigant is indigent and cannot obtain sufficient sureties for purposes of an appellate undertaking.

1.    SLAPP. Frym v. 601 Main Street, LLC, 82 Cal.App.5^th 613 (1^st Dist., Div. 5 Aug. 24, 2022)—authored by Retired Justice Wiseman, sitting by assignment, discussed in our August 25, 2022 post:  Mandatory SLAPP fees to three prevailing defendants were improperly denied even though defendants filed a joint motion and even though some of the defendants had different counsel/differing interests. 

In The News . . . . 2022-2023 Judicial Hellholes Report Has California Ranked Number 3, Behind Georgia And The Pennsylvania Supreme Court/Philadelphia Court Of Common Pleas

Proposition 65, No-Injury Food and Beverage Class Actions, PAGA, ADA, Lemon Law, Climate Change Litigation, and COVID-19 Liability Issues Were the Illustrative Matters Leading To California’s Ranking.

            The American Tort Reform Foundation’s 2022-2023 Judicial Hellholes Report is out, in which it ranks California #3, preceded by #1 Georgia and #2 Pennsylvania Supreme Court/Philadelphia Court of Common Pleas as “judicial hellholes.”  Here are the types of litigation which led to the #3 ranking:

• • Proposition 65 Litigation – the report noted a 251% rise in these cases between 2012-2021.
  • No-injury food and beverage consumer class actions – the report observes, based on a survey by Jones Day, that in 2019 and 2020, class counsel in these cases, on average, received 10% more than the class members they represented.
  • PAGA – the interesting development here is that in November 2024, California voters have a ballot initiative to consider by which PAGA would be replaced by a Labor Commissioner complaint process.
  • ADA accessibility lawsuits – California is home to more than 50% of the total accessibility cases nationwide, with website accessibility filings jumping more than 3,000% since 2018.
  • Lemon Law cases—the report says that between 2018-2021, 34,397 suits of this sort were filed in California state courts.
  • Climate change litigation – the report suggests the results are mixed in this area.
  • COVID-19 liability cases – the California Supreme Court will consider at least one liability situation where a wife of a husband who caught COVID-19 at a construction site is bringing a liability claim.

            The full report is publicly available on the Internet, containing specific cases and rulings by jurists in these areas, plus plaintiffs/law firms involved in these matters and even more statistics.

SLAPP: SLAPP Fee And Costs Award Totaling $40,942 Is Sustained On Appeal

Lower Court’s Reduction Of Request For Excessive “Fees On Fees” Upheld In The Process.

            It is hard to overturn the amount of a mandatory fee award unless it shocks the conscience of the judge or justices reviewing the request for fees.  That burden could not be overcome in Koerber v. Project Veritas, Case No. B298540 (2d Dist., Div. 3 Dec.23, 2022) (unpublished).  The lower court granted the defense $40,942 in fees and costs for prevailing on a SLAPP motion, reducing the requested amount of $44,422—principally for excessive “fees on fees.”  The reviewing court found no abuse of discretion. 

Arbitration: Business Failing To Timely Pay Its Share Of Arbitration Fees Under Consumer Contract Can Be Headed To Court If The Other Side Balks

This Is The Third In A Recent Trio Of Cases To So Hold.

            In our November 25, 2022 post, we discussed DeLeon and Espinoza, two appellate cases holding that a business failing to timely pay its share of arbitration fees under a consumer contract eschews its right to arbitrate and can be forced to litigate in court.  We can now report that the same result was reached in Williams v. West Coast Hospitals, Case No. H049177 (6^th Dist. Dec. 22, 2022; posted Dec. 23, 2022) (published), finding an argument that the arbitrator had to first determine such a default was waived and further rejecting the argument that it only applies to mandatory (rather than voluntary) arbitration situations. 

SLAPP: $49,000 Prevailing Defendant Attorney’s Fees Award Affirmed On Appeal

Plaintiffs Appealed, To No Avail, Even Though The Lower Court Reduced A Larger Request Of $221,510.50 And A Smaller Alternative Request Of $127,498.69.

            This next case, Elliott v. Tyerman, Case No. B316104 (2d Dist., Div. 5 Dec. 22, 2022) (unpublished), illustrates that a litigant who has been hit with a substantially reduced SLAPP fee award than requested needs to carefully assess whether an appeal is prudent.

            What happened here is that defendants won a SLAPP motion on four causes of action, but had the motion denied on the first three causes of action.  Defendants moved for mandatory fees—in a reasonable amount—under CCP § 425.16(c)(1), making a request for $221,510.50 in fees based on hourly rates from $595-$1,600) or, alternatively, for four-sevenths of that amount ($127,498.69) for only prevailing on four of plaintiffs’ claims.  The lower court found that $500 was the reasonable hourly rate for all work and found the number of hours billed were excessive, the success on the SLAPP motion was limited, and other services rendered on the motions were duplicative/redundant.  The lower court awarded $49,000 to the defense, prompting an appeal by plaintiffs.

            The 2/5 DCA affirmed the SLAPP fee award.  Defendants’ victory on the four claims was far from trivial, given that the dismissed claims carried more liability exposure than the three claims remaining for adjudication.  As far as the amount of the fee award, the lower court did substantially reduce the requests, with no abuse of discretion being shown by awarding a lower hourly rate and discounting the request for the factors it did (especially limited success).  After all, plaintiff was the beneficiary of these reductions, such that an appeal seemed to be (and was) a longshot. 

Section 1717: Plaintiff’s Failure To Raise Fee Entitlement Challenge And Failure To Oppose A Fee Motion Was A Waiver On Appeal

No Vital Public Policy Argument Presented To Prevent The Waiver Conclusion.

            One of the most fundamental rules of appellate advocacy is waiver.  Generally, if an argument or objection is not presented at the trial court level, the appellate court will not review it.   The appellate court does have discretion to review a question of law, but it needs to be of vital public policy importance or necessary to a consideration based on the equities of the case.

            Appellant in Patacsil v. Perez, Case No. C095195 (3d Dist. Dec. 21, 2022) (unpublished) found his appellate fee entitlement issues to be forfeited.  The reason was simple:  appellant did not oppose the fee motion and no compelling need was shown to justify consideration of the entitlement issue on appeal.  Be careful of waiver arguments; make a careful record of challenges at the superior court level.

Family Law: Family Law Judge’s $20,000 Cumulative 271 Sua Sponte Sanctions Award Was An Abuse Of Discretion

Award Could Not Lie Against Litigant’s Attorney, And Simply Challenging Judge For Bias Does Not Justify 271 Sanctions.

            In Featherstone v. Martinez, Case No. B316280 (2d Dist., Div. 5 Dec. 21, 2022) (published), mother and her attorney were ordered to pay $10,000 each in Family Code section 271 sua sponte sanctions ordered by a family law judge for principally challenging that he was or appeared to be biased.  Those awards were reversed on appeal.

            As to mother’s attorney, case law established that 271 sanctions can only be imposed against the litigant, not the litigant’s attorney.  That brought the court to the sanctions award against mother.  Aside from expressing skepticism of whether a 271 sanctions award could be awarded sua sponte, the appellate court determined that the sanctions statute was not broad enough to reach bias challenges to a family law judge. 

Section 1717: $360,965.50 Contractual Fee Award Sustained In Real Estate Case

Award Was The Defense “Full Ask.”

            After plaintiff lost a real estate case at the trial court level, the judge awarded the defense $360,965.50 in contractual attorney’s fees, the full ask of the defense in Tri-west Homes II, LP v. Ostayan, Case No. B307708 (2d Dist., Div. 2 Dec. 21, 2022) (unpublished).  The merits determination was affirmed on appeal, which also meant the fees award was affirmed.

SLAPP: Third District Affirms A Lower Court’s Award Of Attorney’s Fees And Costs To Plaintiff After Finding That The Defendants’ SLAPP Motion Was Frivolous

$72,798.65 In Fees And $1,053.50 In Costs Were The Sustained Awards, Plus The Appellate Court Directed The Lower Court To Award Plaintiff Appellate Fees On Remand.

            City of Rocklin v. Legacy Family-Adventures-Rocklin, LLC, Case No. C091172 (3d Dist. Dec. 21, 2022) (published) shows how the narrower SLAPP fee-shifting provision can take a bite, allowing fees to a plaintiff who/which shows that the SLAPP motion was frivolous.  In this case, some nice fees and costs were awarded at the trial court level (could have been greater, because this was a Sacramento/El Dorado County case where rates are lower), but the winning plaintiff also will get appellate fees as the winner on the defense appeal upon remand to the trial court.

            In this one, defendants’ SLAPP motion was denied, with the lower court determining that it was frivolous and awarding plaintiff City $72,798.65 in fees (a little lower than the request of $72,854.41) and $1,053.50 in costs. 

            Defendants’ appeal was not successful on the merits or on the fees/cost awards.  The appellate court agreed that the defense SLAPP motion was frivolous.  The defense argument that no 21-day safe harbor notice was given did not resonate because it was forfeited, based on defendants failing to present the argument before the trial judge.  With that said, City asked for appellate fees for winning on appeal, with the Third District agreeing appellate fees should be awarded and remanding to the lower court to determine the reasonable amount of fees to be awarded to City.  For the defense, OUCH!

Arbitration, Fee Clause Interpretation: $1,648,620.17 Contractual Fee Award By An Arbitration Award Against FeeDx Affirmed In A Ninth Circuit Opinion

Arbitration Tribunal’s Fee Award Was Not Completely Irrational In Nature Under The FAA.

            In HayDay Farms, Inc. v. FeeDx Holdings, Inc., Case Nos. 21-55650/21-55698 (9^th Cir. Dec. 19, 2022) (published), two parties (HayDay and FeeDx) entered into an exclusive distribution agreement with each other through Nippon, providing for arbitration and making Nippon liable for HayDay’s breaches.  Later, the three parties entered into a settlement agreement, which modified but did not replace the exclusive distribution agreement.  The settlement did not resolve the disputes, which went to arbitration resulting in substantial arbitration awards in favor of HayDay and Nippon as against FeeDx.  The arbitration award was over $26.2 million, augmented by a contractual fees and costs award of $1,648,620.17.  The district court vacated about $7 million of the merits award, but it left the remaining portion and fees/costs awards intact.

            The parties appealed.  This was a good move by HayDay and Nippon, because the Ninth Circuit reinstated the $7 million previously vacated portion of the award.  With respect to FeeDx’s challenges, they did not win on appeal.  The main problem is that the standard for vacatur under the FAA, 9 U.S.C. § 10(a)(4), is exceedingly high, meaning that the arbitration tribunal manifestly disregarded the law or the award was completely irrational.

            The main fee clause in the settlement agreement provided: “If FeeDx or Hayday brings legal action to enforce its rights under this Settlement Agreement, the prevailing party will be entitled to recover its expenses (including reasonable attorneys’ fees) incurred in connection with action and any appeal.” FeeDx argued that Nippon could not be awarded fees because it was not a party to the agreement.  The Court of Appeals disagreed, given that the “prevailing party” language was broad and given that Nippon was potentially liable for HayDay’s breaches—the tribunal’s interpretation of this clause as allowing fees to Nippon was not completely irrational under the circumstances. 

Allocation, Trade Secrets: $299,647.50 Fee Award Against Plaintiff For Bringing A Frivolous Trade Secret Misappropriate Case Affirmed On Appeal

Lower Court Did Reduce The Fee Request About $121,000 In Fashioning Its Award.

            We have a category “Trade Secrets” describing some fairly hefty fee “sanctions” awards under Civil Code section 3426.4, part of the California’s Uniform Trade Secrets Act.  To this list can be added the award in SASCO v. CSI Electrical Contractors, Inc., Case No. B322686 (2d Dist., Div. 4 Dec. 19, 2022) (unpublished).

            There, a lower court awarded the defense $299,647.50 in attorney’s fees under section 3426.4 after plaintiff lost a trade secrets misappropriation case which the trial judge found to be frivolous, although the fee request was reduced by about $121,000.  On appeal, plaintiff did not contest that the action was objectively specious, but it argued that there was no required subjective bad faith.  The appellate court disagreed based on plaintiff losing other cases against former employees and refusing to comply with discovery orders.  No allocation was required between trade secrets and other claims, because they were inter-related. 

Special Fee Shifting Provisions: Denial Of Fees To Corporate Shareholder Under Corporations Code Section 1604 Was Proper

Court Of Appeal Applied Civil Discovery Act Definition Of “Substantial Justification” In Construing Section 1604.

            In Farnum v. Iris Biotechnologies, Inc., Case No. H047850 (6^th Dist. Dec. 19, 2022) (published), the appellate court confronted the issue of how to construe “without justification” in Corporations Code section 1604, which has a discretionary fee-shifting provision in favor of a shareholder of a California corporation where a corporation has withheld from shareholder inspection documents “without justification.”  There were no published cases interpreting this section, so the Sixth District borrowed the “substantial justification” test under the Civil Discovery Act—whether the corporation’s denial was “well grounded in both law and fact.”  Through earlier proceedings, it was established that the corporation’s denial was proper on 23 out of 31 document categories and the remaining 8 categories were narrowed to one year.  It was no abuse of discretion for the lower court to deny fees to the shareholder under these circumstances. 

Year In Review - 2022

Year End-Wrap Up By Mike, Marc, And Shanna For Our Top 20 Decisions In 2022—Part 1 of 2.

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

            As we have done over the years, this blog provides its top 20 attorney’s fees/costs decisions for 2022, again emphasizing that there were many other decisions of consequence over the year.  However, these were our favorites and with the order of the opinions not indicating their importance.  Co-contributors Mike and Marc would like to thank Shanna Strader for her contributions over the last year, because she did great posts and was invaluable to keeping the calattorneysfees.com blog up to date.  With that said, here is Part 1 of 2 of our Top 20 Decisions for 2022.

20.    PREVAILING PARTY/SECTION 1717/TRADE SECRETS. Blue Mountain Enterprises, LLC v. Owen, 74 Cal.App.5^th 537 (Cal. App. 1^st Dist., Div. 1 Jan. 28, 2022 published)—authored by Justice Sanchez, discussed in our Jan. 29, 2022 post--$596,114 under a contractual fee recovery order sustained in invalid non-solicitation case where contractual fees clause involved, because plaintiff obtained injunctive relief so as to be the prevailing party given this was a prime objective of the litigation from plaintiff’s side.

19.    CIVIL RIGHTS. Vines v. O’Reilly Auto Enterprises, 75 Cal.App.5^th 174 (Cal. App. 2d Dist., Div. 7 Jan. 21, 2022)—authored by Presiding Justice Perluss, discussed in our Jan. 21, 2022 post—FEHA fee recovery to plaintiff was reversed because the limited success analysis of the lower court was too jaded on the value of unsuccessful work to the detriment of the claiming plaintiff.

18.    COSTS. Segal v. ASICS American Corp., 12 Cal.5^th 651 (Cal. Supreme Court Jan. 13, 2022)—authored by Chief Justice Cantil-Sakauye, discussed in our Jan. 13, 2022 post—Unused exhibit copies and unused demonstrative aids during a trial can be awarded in the discretion of the trial judge if found to be reasonably necessary to the litigation. 

17.    SLAPP. Catlin Ins. Co., Inc. v. Danko Meredith Law Firm, Inc., 73 Cal.App.5^th 764 (Cal. App. 1^st Dist., Div. 4 Jan. 11, 2022)—authored by Presiding Justice Streeter, discussed in our Jan. 12, 2022 post—After a voluntary dismissal of an action by plaintiff, the SLAPP defendant must file a costs memorandum or fee motion to preserve defendant’s entitlement to fee recoverability.

16.    LAW OF THE CASE/SANCTIONS. Broadcast Music, Inc. v. Structured Asset Sales, LLC, 75 Cal.App.5^th 596 (Cal. App. 2d Dist., Div. 2 Feb. 24, 2022)—authored by Justice Ashmann-Gerst, discussed in our Mar. 12, 2022 post—Law of the case doctrine precluded an appellate fee request, renewed before the trial judge, where the appellate court had opined adversely in an earlier opinion; CCP § 128.5 requires that an opposing party must have the full benefit of the 21-day “safe harbor” period rather than a fractional party of the 21^st day, articulating a “bright line” approach.  The 21-day rule in BMI was later followed by Transcon Financial, Inc. v. Reid & Hellyer, APC, 81 Cal.App.5^th 549, 550-551 (Cal. App. 4^th Dist., Div. 2 July 22, 2022)—authored by Justice Menetrez and discussed in our July 24, 2022 post—as well as adopted by lower courts in subsequent law and motion proceedings.

15.    SECTION 1717. Chen v. Valstock Ventures, LLC, 81 Cal.App.5^th 197 (Cal. App. 1^st Dist., Div. 4 July 29, 2022)—authored by Justice Brown, discussed in our July 29, 2022 post—No interim award of fees are allowable under Civil Code section 1717 where not all of the claims have been resolved, such as where only a summary adjudication grant is made of certain contract claims.

14.    PRIVATE ATTORNEY GENERAL. Broad Beach Geologic Hazard Abatement Dist. v. 31506 Victoria Point LLC, 81 Cal.App.5^th 1068 (Cal. App. 2d Dist., Div. 4 Aug. 2, 2022)—authored by Presiding Justice Manella, discussed in our Aug. 4, 2022 post—Under the Whitley cost/benefit analysis, the trial court properly denied prevailing Malibu homeowners over $2.4 million in requested fees under CCP § 1021.5 because the 10-year discounted benefits to homeowners exceeded their litigation costs.

13.    EMPLOYMENT. Naranjo v. Spectrum Security Services, Inc., 13 Cal.5^th 93, 102 (Cal. Supreme Court May 23, 2022)—authored by Justice Kruger, discussed in our Aug. 26, 2022 post of the Betancourt decision on remand—Extra pay for missed meal and rest breaks constitutes “wages” that must be reported on statutorily required employment wage statements, such that this triggers fee recovery under Labor Code § 218.5(a).  (Accord, Betancourt v. OS Restaurant Services, LLC, 83 Cal.App.5^th 132 (Cal. App. 2d Dist., Div. 8 Sept. 12, 2022 published)—authored by Justice Grimes, discussed in our Aug. 26, 2022 post when the opinion was unpublished—following Naranjo on remand from the California Supreme Court, reversing a fee denial.)

12.    FAMILY LAW. Marriage of Knox, 83 Cal.App.5^th 15 (Cal. App. 5^th Dist. Sept. 9, 2022)—authored by Justice Franson, discussed in our Sept. 9, 2022 post—Where a family law judge failed to promptly rule on a pendente lite Family Code § 2030 request which prejudiced a self-represented litigant, a judgment on key impacted issues had to be reversed and remanded for a determination of whether section 2030 fees should be ordered.

11.    CIVIL RIGHTS/REASONABLENESS OF FEES. Shayler v. 1310 PCH, LLC, 51 F.4^th 1015 (9^th Cir. Oct. 24, 2022)—authored by Circuit Judge Milan D. Smith, Jr., discussed in our Oct. 28, 2022 post—Ninth Circuit affirmed a fee award to a prevailing ADA plaintiff where the district court reduced the $31,714 fee request down to $7,896 based on an inflated hourly rate request and inefficiencies (especially staffing inefficiencies), meaningfully articulating the reason for the reductions.

 

 

           

Deeds Of Trust: $112,390 In Contractual Fees And $4,812.46 In Costs Affirmed Against Borrower Losing Challenges To Validity Of Note And Deed Of Trust

Once Forgery Challenges Were Lost, The Fees And Costs Orders Were Just Fine.

            In Ameris Bank v. Jean-Baptiste, Case Nos. D079378/D079944 (4^th Dist., Div. 1 Dec. 15, 2022) (unpublished), borrower lost forgery challenges to a note and deed of trust.  Once the validity of the loan documents was sustained in favor of bank by the lower court, fees of $112,390 and costs of $4,812.46 under the note/deed of trust were awarded against the unsuccessful borrower.   Borrower lost the merits challenges on appeal and presented no basis to show the fees/costs orders were an abuse of discretion.

            BLOG OBSERVATION—Mark A. Kompa was co-appellate counsel in this case and was co-contributor Mike’s debate partner in his senior year on the USC debate squad, so congratulations are in order!

Family Law: Substantial Gift Infusions By Parents To Ex-Husband Properly Credited Into Positive Analysis Of Awarding Ex-Wife Family Code Section 2030 Fees

$73,000 Was The 2030 Fees Award.

            As we wind down on another year (can you believe it), we have to say that family law is a nuanced area of the law and seems to be driven by factual circumstances and the equities in a lot of cases we have posted on over the years.  Marriage of Longinotti and Karpala, Case No. H049986 (6^th Dist. Dec. 14, 2022) (unpublished) is no exception.

            The trial court ultimately awarded ex-wife $53,000 in past fees incurred and $20,000 in anticipated fees to fight a child custody order, under Family Code section 2030, by which the child relocated from the U.S. to Germany with ex-wife.  It did so based on a disparity in income because ex-husband had parents making financial contributions of $226,000 which she characterized as a gift and which he characterized as a loan.  The appellate court affirmed based on parents’ substantial infusions which can significantly influence section 2030 and other Family Code awards.  (In re Marriage of Smith, 242 Cal.App.4^th 529, 533-534 (2015); In re Marriage of Alter, 171 Cal.App.4^th 718, 736-737 (2009).) 

            With respect to the equities, the appellate panel expressed skepticism that parents’ financial help should not be imputed to husband because they offered to pay $250,000 to ex-wife to keep their child in the U.S.

Appealability, Civil Rights: Disabled Plaintiff Suing Defendant For Website Violations Under The Unruh Act Was Properly Assessed With Defense Attorney’s Fees Of $45,419.50 After Voluntarily Dismissing His Action

Plaintiff’s Injunctive Relief Allegations Triggered Civil Code Section 55, Which Allowed Fees To The Defense—Allegations Matter In These Cases.

            Sandoval v. Nippon Life Ins. Co. of America, Case No. E077245 (4^th Dist., Div. 2 Dec. 12, 2022) (unpublished) is an interesting disabled person website case which was voluntarily dismissed without prejudice after some discovery.  Plaintiff had alleged violations under the Unruh Act (although mentioning the ADA, which is incorporated into the Unruh Act), although he did not specifically plead a claim under the Disabled Persons Act (DPA).  Plaintiff voluntarily dismissed his Complaint without prejudice, and the lower court granted defendant $45,419.50 in attorney’s fees under Civil Code section 55.  Plaintiff appealed.

            But first, the panel had to face a jurisdictional issue.  Defendant argued that the fee order was not appealable because it was a costs award following on the heels of a non-appealable voluntary dismissal.  The appellate court found that the fee order was the equivalent of a costs award and, even though there was a split of opinion on the issue, it was appealable.  (Gassner v. Stasa, 30 Cal.App.5^th 346, 355 (2018).)

            On the merits, plaintiff argued there was no fee exposure because (a) under the ADA, a prevailing defendant can recover fees only if the ADA claim is found frivolous, something not found here (true—Jankey v. Lee, 55 Cal.4^th 1038, 1048 (2012)); and (b) under the Unruh Act, only a prevailing plaintiff can recover fees (true—Molski v. Arcero Wine Group, 164 Cal.App.4^th 786, 791 (2008)).   Although the DPA has a bilateral fee provision (Civ. Code, § 55), plaintiff argued there was no fee exposure because he did not plead a DPA claim.  The appellate court agreed with all of these conclusions, but it found that a broad prayer for injunctive relief under Plaintiff’s Complaint for potentially aggrieved persons triggered section 55 fee exposure because that injunctive relief is cumulative to injunctive relief under the Unruh Act and DPA.  So, section 55 fee exposure was triggered—with the moral being for plaintiffs in these type of cases, be careful of how you plead website cases if you want to avoid fee exposure.

Section 998: Subaru’s 998 Offer Was Reasonable And Made In Good Faith, Such That Plaintiff Properly Only Awarded Pre-offer Costs And Subaru Was Properly Awarded Post-offer Costs

Plaintiff’s Appeal Of Order Staying Fee Motion To Determine 998 Offer Validity Was Non-appealable, But Validity Of The Offer Means That No Post-Offer Fees Are Due to Plaintiff On Remand (Likely).

            Smalley v. Subaru of America, Inc., Case Nos. G059904/G060441 (4^th Dist., Div. 3 December 13, 2022) (unpublished) is complementary of our July 5, 2022 post on Shakouri v. Tesla Motors, where defendant car manufacturers made nicely-crafted CCP § 998 offers in Song-Beverly Act cases so as to cut off post-offer costs and fees to the plaintiffs who did not accept the offers.

            In Smalley, Subaru made a CCP § 998 offer to plaintiff for $35,001, plus plaintiff’s election to accept $10,000 for his pre-offer costs/fees, or for plaintiff’s costs/fees to be determined by the Court, in return for a dismissal of the action and return of the vehicle to Subaru.  Plaintiff did not accept the offer, and he did not beat the offer at trial—only awarded a total recovery of $27,555.74 by the jury. The lower court found the 998 offer to be valid, awarding plaintiff $1,351.17 in pre-offer costs and Subaru $16,684.92 in post-offer costs.  The trial judge stayed plaintiff’s motion for fees based on plaintiff’s appeal of the costs/fees orders which put the validity of the 998 offer at issue, with plaintiff also appealing the stay order.

            The 4/3 DCA, in an opinion authored by Justice Motoike, affirmed the costs/fees order and dismissed the appeal of the stay order.

            The appellate court determined that the offer was certain enough to allow evaluation of the offer’s worth by plaintiff.  There was no requirement that the 998 offer have language saying that plaintiff was the prevailing party.  The 998 offer was reasonable even under plaintiff’s argument that it did not allow for his pre-offer fees of $11,508.17—rather, plaintiff could have accepted $45,000 or $35,001 plus fees and costs to be awarded by the court, the total of the jury award plus the post-offer fees still falling short of the 998 offer terms. 

            The appeal of the stay order was a non-appealable order, such that it was dismissed even though the matter will go back for a determination of plaintiff’s fees—we assume post-offer fees, which will likely be denied.

Fee Clause Interpretation, Lodestar: $547,465.10 Fee Award And $23,589.25 Costs Award To Prevailing Defendant Sellers Affirmed On Appeal

Liability Cap Did Not Apply To Fees, Out-Of-County Attorneys Showed Good Cause To Represent Defendants In Tuolumne County, And Trial Judge Reduced Fee Request By 20%.

            In Apartment Rental Assistance II, Inc. v. 80 Oak Hills, L.P., Case No. F083238 (5^th Dist. Dec. 13, 2022) (unpublished), buyer plaintiffs lost a summary judgment to seller defendants where three purchase agreements had separate fee clauses.  Defendants moved for fees of $677,465.10 and for $23,589.25 in costs, with the lower court awarding them $547,465.10 in fees and the entire “ask” in costs.  Plaintiffs appealed.

            They lost.  Their main argument on entitlement was that there was a “fee cap” in one of the agreements, but a close look at it showed that it only applied to liability determinations—reinforced by no similar cap in the actual fee provisions.  With respect to the amount of lodestar fees awarded, the Fifth District found no abuse of discretion.  Not only did the lower court reduce the fees request by about 20% for excessive associate compensation and assembly of binders, but the out-of-town lead counsel representing defendants showed there was good reason for his firm to be litigating in Tuolumne County because he had years of experience with the clients on real estate matters such that they were justified in not using local counsel without his “experience curve.”

Sanctions: Discovery Sanctions Ordered After Removal To Federal Court Reversed For Lack Of Jurisdiction

$6,900 Was The Sanctions Order Amount.

            In Kitami v. Sabrah, Case No. A164399 (1^st Dist., Div. 2 Dec. 13, 2022) (unpublished), plaintiff was hit with an adverse $6,900 discovery sanctions order.  But that order was after the case had been removed to federal court.  As a result, it had to be reversed for lack of jurisdiction.  (28 U.S.C. § 1446(d); Roman Catholic Archdiocese of San Juan, Puerto Rico v. Acevedo Feliciano, 140 S.Ct. 696, 700 (2020).)

In The News . . . . Wells Fargo’s Legal Specialty Group Predicts That U.S. Firms Will Increase Pre-Discounted Hourly Rates By 7-8% Next Year

2022 Rates Were Lower Because Of Discounts And Increased Write-Offs.

            U.S. law firm leaders informed Wells Fargo Legal Specialty Group that their firms will increase hourly rates by an average of 7-8% in 2023, before discounting.  For 2022, rates were lower because of bigger discounts and increased write-offs.

Appealability, Family Law: Failure To Independently Appeal Family Code Section 271 Sanctions Motion Meant The Merits Could Not Be Reviewed

$25,000 Sanctions Order Was Not Subject To Review.

            In Marriage of Freeman, Case No. B311411 (2d Dist., Div. 6 Dec. 6, 2022) (unpublished; opinion after rehearing), ex-wife was peeved she was assessed with Family Code section 2071 sanctions to the tune of $25,000.  However, her challenges could not be entertained because she did not appeal from the postjudgment sanctions order. 

Requests For Admission: $1,000,981.50 In Costs Of Proof Sanctions Awarded To Defendants Who Defeated Plaintiffs’ Claims At Trial Are Reversed On Appeal

Plaintiffs’ Lack Of Success At Trial Does Not Demonstrate That They Acted Unreasonably Or In Bad Faith In Denying Requests For Admissions Propounded By Defendants.

            In Walter v. Estate Strategies, Case No. B280172 (2d Dist., Div. 6 December 5, 2022) (unpublished), defendants moved for and were awarded $1,000,981.50 in costs of proof sanctions, under Code Civ. Proc., section 2033.420, after defeating plaintiffs’ claims at trial.  Plaintiffs appealed – arguing that their denials to Requests for Admission were reasonable because the requests improperly sought conclusions of law or conclusions based on facts they were not requested to admit.

            The 2/6 DCA agreed – finding there was good reason for plaintiffs’ failure to admit and that plaintiffs had reasonable ground to believe they would prevail. (See § 2033.420(b)(3)-(4); Grace v. Mansourian, 240 Cal.App.4th 523, 529 (2015).)  Plaintiffs had the same reason for denying the requests for admission, for successfully opposing defendants’ motions for summary judgment, and for going to trial – they believed they would prevail on their claims, which were supported by evidentiary bases and qualified expert witnesses.  (Universal Home Improvement, Inc. v. Robertson, 51 Cal.App.5th 116, 130-132 (2020) [reasonable basis to deny RFAs shown 40 where responding party later defeated propounding party’s motion for summary judgment and presented evidence at trial to contest each RFA]; Orange County Water Dist. v. The Arnold Engineering Co., 31 Cal.App.5th 96, 116 (2018) [“expert opinion evidence may provide a party with a reasonable ground to believe it will prevail on a matter covered by an RFA”].)

Allocation: 4/3 DCA Affirms Trial Court’s Apportionment Of Plaintiffs’ Fee Award Between Both Contractor And Subcontractor Where Subcontractor’s Contract With Plaintiffs Did Not Provide For Fee Recovery

Statutory Basis Supported Plaintiff’s Recovery of Attorney Fees Directly From Subcontractor.

            In Nassif v. Mission Pools of Escondido, Case No. G060433 (4^th Dist., Div. 3 December 5, 2022) (unpublished), swimming pool contractor and subcontractor were sued for substandard work relating to the design and construction of a swimming pool.  Pursuant to the global settlement agreement entered into with plaintiffs, contractor and subcontractor agreed to an apportionment amongst themselves of the settlement payment to plaintiffs.  However, when the trial court apportioned plaintiffs’ attorney’s fees and costs award against contractor and subcontractor, based on its determination regarding contractor’s indemnity cross-claims against subcontractor, and applying the same apportionment the parties used in the settlement agreement, subcontractor appealed.

            In a 3-0 opinion, authored by Orange County Superior Court Judge Linda S. Marks, sitting by assignment, the 4/3 DCA affirmed.  

            The panel first addressed subcontractor’s arguments that the settlement agreement did not authorize the trial court to apportion fees, and that the trial court’s order deprived it of its rights to a trial and due process as they relate to contractor’s indemnity claims.  Pursuant to the terms of the settlement agreement, the parties had waived their right to a trial on the indemnity issues, and had agreed instead to allow the trial court to determine the indemnity issues in its determination of plaintiffs’ fee motion.  Further, the 4/3 DCA found subcontractor did not suffer a violation of its due process rights as the trial court had made a determination as to the indemnity claims which resulted in the apportionment of the fee award. 

            Finally, although subcontractor’s contract with plaintiffs did not provide for the recovery of fees, and the trial court had erroneously concluded that the equitable indemnity claim provided a sufficient legal basis for apportioning the fees, the trial court’s apportionment order was statutorily supported.  Business and Professions Code § 7168 provides for the recovery of reasonable attorney’s fees by the prevailing party in any action arising out of a contract for swimming pool construction between a swimming pool contractor and a person contracting for the construction – with sections 7026 and 7150.1 providing that a “subcontractor” is included in the definition of a “home improvement contractor, including a swimming pool contractor.”

Probate: $170,095 Attorney’s Fees Award Against Decedent’s Son Under Probate Code Section 859 And Attorney’s Fees Surcharged Against The Trust Under Section 15684 Affirmed On Appeal

Son Wrongfully Obtained Decedent’s Personal Property And Sought A Greek House Which Was Found To Belong To The Overall Estate.

            The Probate Code has many fee-shifting provisions, most of which are discretionary.  They provide great leeway to the probate court in fashioning an award, given that the probate court is one of equity to safeguard estates and trusts.

            Appellant in Sehremelis v. Sehremelis, Case Nos. G059941 et al. (4^th Dist., Div. 3 Dec. 2, 2022) (unpublished) learned the sting of one of the fee-shifting provisions.  He was found to have in bad faith wrongfully taken some personal property of his deceased father under the Probate Code section 859 when the co-executors/successor co-trustee’s of father’s will/trust petitioned to get damages for these actions, with section 859 having a discretionary fee-shifting provision for the benefit of the prevailing party.  The probate court awarded $170,095 in section 859 fees to co-executors and against decedent’s son.  Also, they petitioned to offset son’s inheritance share for his interest in a Greek house, a petition which was denied but with the fees incurred to bring it surcharged against the trust. 

            Son appealed both fee rulings, but they were affirmed by the 4/3 DCA.  Section 859 certainly allowed for imposition of fees, and Greek litigation resulting in a judicial escrow for the personal property did not alter the result.  With respect to the Greek house petition, trustees were attempting to offset son’s interest in the house against his inheritance, which would have benefitted the trust.   Although unsuccessful, those fees can be charged against the trust in the lower court’s discretion under Probate Code section 15684, subdivision (b).

Retainer Agreements: Whether Credit Card Processing Charges In California Can Be Passed On To Client Through Retainer Agreement Is An Open Question

Most Prudent Course Is To Treat It As a Non-reimbursable “Overhead” Expense.

            We commend practitioners to read Nicole Nuzzo’s article “The Credit Card Conundrum:  Passing Credit Card Processing Fees On To Client,” published in the December 2022 issue of Orange County Lawyer at pages 56-59.  In this article, she concludes it is an open issue in California whether credit card processing fees for client payments can be passed on to the client under a retainer agreement.  Citing to ABA Formal Opinion 93-375, she suggests that the critical distinction may be whether the charges are “overhead costs” or “direct costs”—the former generally not reimbursable and the latter usually reimbursable.  Other states come to conflict conclusions on the issue.  However, we believe she suggests that the less riskiest approach is to not seek reimbursement of such charges, especially with respect to unsophisticated clients.  In any event, the client needs to agree in advance to reimburse these credit card processing fees to client’s attorneys to make these charges potentially subject to recapture.

In The News: Retired Justice Richard D. Fybel Recently Passed Away

He Had A Distinguished Legal And Judicial Career, Along With Writing On Important Subjects.

            It is with sadness that we report that Retired Justice Richard D. Fybel recently passed away.  He had a distinguished career at Morrison & Foerster LLP, was on the Orange County Superior Court bench for around 2 years, and then had a 20-year tenure with the California Court of Appeal, Fourth District, Division 3 as an Associate Justice.  He was president of University Synagogue in Irvine for two years, writing prolifically on judicial ethics and the Holocaust.  Co-contributors Mike and Marc argued before him on several cases while he sat on the 4/3 DCA.  Our condolences go out to his family and friends; he was a superb jurist and gentleman.