CALIFORNIA ATTORNEY'S FEES

Civil Rights: California Supreme Court Finds Political Reform Act’s Prevailing Party Fees/Costs Provision Is Asymmetrical In Favor Of Plaintiffs

Defendants Only Obtain Fees If Plaintiff’s Suit Is Objectively Unreasonable From The Start Or Becomes So During Its Prosecution.

            The California Supreme Court, in Travis v. Broad, Case No. S268480 (Cal. Supreme Court Jan. 30, 2023) (published), faced the situation where prevailing defendants in a Political Reform Act case were awarded discretionary attorney’s fees and costs of $896,896.60, with the lower court determining plaintiffs’ case was frivolous in nature.  The fee-shifting provision, Government Code section 91003(a), grants trial courts discretion to award attorney’s fees and costs “to a plaintiff or a defendant who prevails.” 

            The state supreme court, in a unanimous opinion authored by Chief Justice Guerrero, reversed and remanded.  It decided that an asymmetrical standard applies, such that the statutory provision is pro-plaintiff, and a defendant only can be awarded fees if the suit was objectively without foundation when brought or became so during its prosecution (borrowing from case law limitations in other civil rights and public interest contexts).  A remand was ordered so the lower court could determine if section 91003(a) fees and costs were warranted under the new standard and also could address defendants’ request for CCP §1021.5 fees (the latter request not considered by the trial judge given the 91003(a) ruling). 

Arbitration, Employment: Where Defendant Employer Lost Small Merits Award And Fee Award After Reconsideration By Arbitrator, But Did Not Timely File Motions To Correct Or Vacate, Fee Award Had To Be Affirmed

Bright-Line Rules On Arbitration Procedures Adopted, With Plaintiff Employee Entitled To Fees On Appeal.

            This case may have more tips for practitioners and jurists when it comes to deadlines for parties seeking to correct and vacate arbitration awards, especially where a timely motion to confirm an arbitration award is made.  However, we briefly summarize what happened in Darby v. Sisyphian, LLC, Case No. B314968 (2d Dist., Div. 2 Jan. 26, 2023) (partially published), because an arbitration award was affirmed on appeal and the appellate court acknowledged that the winning plaintiff was entitled to fees on appeal, on remand, to the lower court.

            Plaintiff employee sued employer for various Labor Code violations.  The arbitrator found employee was owed $23,347.25 (only a partial win on the amounts she sought), and then initially found that no fees were awarded based on a prior motion to strike and plaintiff’s failure to apportion between successful/unsuccessful claims.  However, the arbitrator granted a motion for reconsideration by plaintiff, eventually awarding her $82,000 in attorney’s fees out of a requested $283,941.25 being sought.  Plaintiff timely filed a motion to confirm the arbitration award, with employer untimely filing a response to the confirmation petition and untimely filing a motion to vacate/correct the award.  The superior court judge found the employer’s papers were untimely filed, confirming the arbitration award—rulings which were appealed.   Those rulings were affirmed on review.

            Employer’s problem is that it did not timely file the response and vacate/correction papers.  The opinion has a good discussion of the time deadlines for post-arbitration award confirmation, correction, and vacatur papers at the superior court level—with a shorter 10-day deadline to respond or to vacate/correct applying to a petition to confirm awards filed fewer than 90 days after an award is served.  This deadline is jurisdictional, although there is some small amount of flexibility under the applicable statutes.  The import of the appellate decision is that these deadlines are strict in nature; and, if they are violated, the superior court must confirm the award and the appellate court is similarly bound. 

            In the end, the $82,000 in fees on a $23,347.25 award was affirmed, plus employer will be on the hook for plaintiff’s appellate fees (made clear in an unpublished portion of the opinion) as determined by the lower court on remand. 

Civil Rights, Special Fee Shifting Statutes: $40,295 Civil Harassment Fee Award To Prevailing Party Affirmed, Although Amended Fee Order To Add Another Party Was Void Based On The Prior Fee Award Appeal

Trial Judge Rejected Fee Request For Half Based On The Party-Client Agreement.

            In Aaronoff v. Olson, Case No. B295388 (2d Dist., Div. 2 Jan. 24, 2023) (unpublished), prevailing party in a civil harassment proceeding (where the trial judge has discretion to award prevailing party fees per CCP § 527.6(a)) awarded $40,295 to the prevailing party, even though that party only requested half subject to an agreement with the client.  The trial judge awarded the full $40,295 after finding that the half cut was too arbitrary.  The appellate court agreed that the trial judge was not constrained by the parties’ internal agreement as far as awarding fee-shifting fees under section 527.6.  With respect to an amended fee order adding a different party, that award was void because it was stayed due to the pre-order appeal before the amended order was issued.

Landlord/Tenant, Reasonableness Of Fees: $358,133.56 In Fees Against Tenant Operating Two Illegal Marijuana Dispensaries Affirmed On Appeal

Two Law Firms’ Requests Were Largely Sustained By Reviewing Court.

            City of Santa Ana v. Yuh, Case No. G060889 (4^th Dist., Div. 3 Jan. 24, 2023) (unpublished) was a situation where a tenant lost an abatement action against the City of Santa Ana for operating two illegal marijuana dispensaries.  Two firms representing the City moved for attorneys’ fees, with the trial judge—after some reductions—awarding $358,133.56 against tenant.  In an opinion authored by Justice Sanchez, the fee awards were confirmed because the tenant did not specify objections to the fee requests.  After all, the trial judge did make some reductions.  This is yet another opinion showing the potential “bite” of fee exposure to tenants in these types of disputes. 

Consumer Statutes, Section 998: Chen v. BMW Case Now Published

Lemon Law Plaintiff Obtained Significantly Less Fees Based On Rejected Section 998 Defense Offer.

            On December 30, 2022, we posted on Chen v. BMW of North America, a Sixth District unpublished opinion in which a significantly reduced lemon law fees award to a plaintiff, who rejected a defense CCP § 998 offer, was found to be valid and reasonable.  Plaintiff was only awarded a little over $53,000 out of a requested $436,000.  We can now report that Chen was certified for publication on January 23, 2023, posted on January 24, 2023.

Partition: Attorney’s Fees Denied To Defendant In Partition Action Where Plaintiffs Suit Was Dismissed For Failure To Appear For Trial

The Claimed Fees Did Not Demonstrate That They Were For A “Common Benefit.”

            In partition actions, Code of Civil Procedure section 874.010 provides that the lower court in a partition action shall award attorney’s fees incurred or paid by a party if there was a common benefit to all the parties—it is not a prevailing party statute, but it only spreads fees and costs associated with the partition among those who benefit from it.  Even then, under section 874.040, the lower court apportions fees of partition among the parties in proportion to their interests or as determined to be equitable. 

            “Common benefit” fees were denied by the lower court to a defendant in a partition action brought by plaintiffs, Nguyen v. Le, Case No. G061299 (4^th Dist., Div. 3 Jan. 23, 2023) (unpublished), even though the case was dismissed for plaintiffs’ failure to appear at trial and despite the fact the defendant claiming fees had become a Buddhist nun taking a vow of poverty.  That result did not change on appeal.

            The major problems lurking for the defendant was that the matter was dismissed and that the property was never partitioned, such that every party was left in the same position.  Even then, the record showed defendant was seeking dissolution payments from her ex-husband/defendant during the partition action, payments which did not benefit any of the other parties to the partition action—only her separate interests.  Beyond that, defendant’s son would only benefit from the action given her vow of poverty.  Finally, there was no real attempt to apportion fees such that any “common benefit” allocation was difficult to determine at best.  Fee denial affirmed, in an opinion authored by Justice Bedsworth.

Fee Clause Interpretation, Homeowner Associations, Reasonableness Of Fees: $132,070.40 Fee Award To Defendant Homeowners Was Affirmed On Appeal As Against Plaintiff Homeowners In Tree Obstruction Dispute

Plaintiffs Pled CC&Rs As A Basis For Nuisance Claim, So There Was Fee Entitlement Under Civil Code Section 1717, CCP Section 1021, And Civil Code Section 5975, With The Fee Award Being Reasonable After A Minor Haircut By The Trial Judge.

            Plaintiff homeowners sued neighboring homeowners in a tree obstruction action based on nuisance and defendants’ alleged violation of certain specified CC&Rs.  After everyone attended an unsuccessful mediation, the matter proceeded to trial and was decided in defendants’ favor.  The trial judge later awarded defendants, as against plaintiffs, attorney’s fees of $132,070.40 (reduced from the $143,381.76 “ask”). 

            Plaintiffs’ appeal in Mascaro v. Brown, Case No. B319419 (2d Dist., Div. 6 Jan. 19, 2023) (unpublished) was unsuccessful.  Although challenging fee entitlement, plaintiffs’ nuisance action was also based on CC&Rs, such that fee entitlement existed under Civil Code section 1717 (based on the CC&Rs fees provision), CCP section 1021 (same; broad CC&Rs fee provision), and Civil Code section 5975 (Davis-Stirling Act fee-shifting provision applicable where governing HOA documents are being enforced).  The fees for mediation work were allowable under section 5975(c) regardless of the CC&Rs’ specific language.  With respect to the amount of the fees awarded, the trial judge did not abuse his discretion given that there was competent fee substantiation in the form of invoices and the lower court did reduce some duplicative, unnecessary work.  Finally, the appellate court agreed that the defendants were also entitled to reasonable appellate fees for their win in the appeal.

Probate: Feuding Co-Trustees Properly Awarded Fees Based On Not Providing Complete Accounting Disclosures

Awards Of Probate Fees And Costs, Which Are Equitable In Nature, Are Hard To Overturn.

             In Healy v. Donnelly, Case Nos. G060968 et al. (4^th Dist., Div. 3 Jan. 17, 2023) (unpublished), co-trustees got into various trust accounting disputes, eventually settling on the eve of trial and agreeing that the probate judge could entertain motions for attorney’s fees and costs.  Co-trustee Healy sought $116,097.90 in fees and $6,697.89 in costs, but the probate court only awarded $49,492.50 in fees.  Co-trustee Donnelly sought $211,471.25 in fees and $9,256.90 in costs, all of which were awarded.  Both sides appealed, claiming they did not get enough in fees or fees should not have been awarded at all.

            The 4/3 DCA, in an opinion authored by Acting Presiding Justice Moore, affirmed all the orders.  Both co-trustees had accounting disclosure issues, although co-trustee Healy had more given how he exacerbated the litigation and was even more at blame for not providing a complete accounting as to Trust B.  The lesson here is that probate fee/costs awards are equitable in nature, with it being hard to overturn how a probate judge viewed things as far as ultimately awarding fees and costs when acrimonious proceedings are involved.

Fee Clause Interpretation: “Arising Out Of” Contractual Fee Clause Language Was Broad Enough To Allow A Prevailing Party On A Related Statutory Claim To Obtain Fee Recovery

Trial Court Denied Fee Motion, So It Was Remanded For A Rehearing To Fix Reasonable Fees.

            “Arising out of” language in a contractual fees clause can indeed give rise to fee exposure even where a prevailing party succeeded on a related statutory claim rather than a contract qua contract claim.  Varney Entertainment Group, Inc. v. Avon Plastics, Inc., Case No. G060870 (4^th Dist., Div. 3 Jan. 17, 2023) (unpublished), authored by Justice Goethals, came to that conclusion in reversing a fee denial and remanding for a rehearing to fix reasonable fees.

            There, the contract clause stated: “In the event of any arbitration or litigation, including breach, enforcement or interpretation, arising out of this Agreement, the prevailing party of such litigation shall be entitled to recover reasonable attorneys’ fees, costs, and expenses, including pre-litigation and appellate attorneys’ fees and costs.”  The issue on appeal was whether Avon’s previous unsuccessful appeal arose out of the endorsement agreement by which Avon used Mr. Varney’s name and likeness without his permission.  In the prior appeal, Avon unsuccessfully appealed a trial court’s denial to it of attorney’s fees under Civil Code section 3344’s likeness misappropriate statute.  However, after doing a survey of cases recognizing that “arising out of” contractual language is broad in scope, the panel concluded that the prior appeal did arise out of the Avon-Varney endorsement contract such that fees should not have been denied outright.

Cases Under Review: Ramirez Case On An Arbitration Unconscionability Issue Is The Only Case Under California Supreme Court Review Re: Fee Issues

Only One That We Could See.

            To keep readers posted on what is pending in the California Supreme Court as far as fee issues, we only found this pending matter as of year end 2022:

Ramirez v. Charter Communications, Inc., S273802. (B309408; 75 Cal.App.5th 365; Los Angeles County Superior Court; 20STCV25987.) Petition for review after the Court of Appeal affirmed an order denying a petition to compel arbitration in a civil action. This case includes the following issues: Did the Court of Appeal err in holding that a provision of an arbitration agreement allowing for recovery of interim attorney’s fees after a successful motion to compel arbitration, was so substantively unconscionable that it rendered the arbitration agreement unenforceable?

Prevailing Party: Lower Court Can Look At Success On Phases Of Litigation To Determine If Party Prevailed On Junctures Of The Litigation For Purposes Of Prevailing Party Determination

Prevailing Party Obtained No Fees For Property Rescission Work, But Did Obtain Partial Fees For Compensatory Damages/Offset Phase Of The Case.

            This case, Nosrati v. Gonzalez, Case No. B317588 (2d Dist., Div. 7 Jan. 13, 2023) (unpublished) shows how a trial judge can award a prevailing party in some phases of the litigation “prevailing party” fees even though that party did not prevail in an earlier phase.

            Residential buyers sued sellers for failure to disclose defects in a home they sold to buyers.  Shortly before trial, sellers accepted buyers’ demand for rescission, and buyers won compensatory damages, minus offsets, and prejudgment interest against seller.  Buyers moved for attorney’s fees based on a purchase agreement contractual clause to the tune of $260,412.87.  The lower court awarded them only $88,297.26, with sellers appealing on the basis that buyers should not have been declared the prevailing parties.

            The 2/7 DCA affirmed.  Based on admissions in a legal malpractice action, the lower court properly credited that buyers did not want rescission such that they should not obtain fees for this relief which totaled $178,619.  However, buyers did prevail in the compensatory damages phase, with nothing in the law not allowing the lower court to award reasonable attorney’s fees for prevailing in the second phase of the litigation.  The phased-nature of the case did not prevent “prevailing party” fees in the phase where buyers did accomplish their litigation objectives. 

Private Attorney General: Plaintiff Winning Short-Term Rental Ban Dispute In California Coastal Properties Was Properly Denied CCP § 1021.5 Fees

The Reason Was The Failure To Satisfy Whitley Financial Stake Aspect Of 1021.5.

            If you know our website, go to Leading Cases, and look under Whitley (No. 14).  This is a key case for analyzing financial costs/benefits to satisfy one prong under California’s private attorney general statute (CCP § 1021.5).  Although a plaintiff won in Kracke v. City of Santa Barbara, Case No. B316993 (2d Dist., Div. 6 Jan. 12, 2023) (unpublished), he thought his victory would get fees.  He was wrong because his proof of financial stake in the litigation was deficient.

            Plaintiff did prevail on a short-term vacation rental ban dispute in California’s coastal zone, primarily Santa Barbara.  He initially was denied 1021.5 fees for failure to demonstrate his personal stake in the litigation, but he then made a renewed motion showing he incurred $600,000 in fees and only “netted” $41,693 from the coastal properties in question.  The lower court considered the renewed request but again denied fees to plaintiff.

            The lower court denied because it was expecting to see some historical earnings for plaintiff in properties both before and after the ban.  That evidence was not proffered, such that it no abuse of discretion in denying fees altogether. 

            This case does tell plaintiffs seeking 1021.5 fees to be attuned to making some very specific showings of financial stake under Whitley—skimpy showings can end up in the result here, much to the chagrin of the prevailing plaintiff.

Section 998: Smalley Opinion Is Now Published

Shows How A Nicely Crafted 998 Offer Can Benefit A Defendant In A Lemon Law Case.

            In a December 13, 2022 post, we reviewed Smalley v. Subaru of America, Inc., a 4/3 DCA unpublished case at the time which showed how a defendant in a lemon law case crafted a nice CCP § 998 offer which limited exposure to potential fees and costs because plaintiff did not beat the 998 offer.  We can now report that the case was certified for partial publication on January 11, 2023 (although not posted until January 12). 

Civil Rights: Under The California Voting Rights Act, “Cost Of Work Product” Includes Costs Incurred On Behalf Of Future Named Plaintiffs And A Contingency Attorney Advancing Costs On Behalf Of Client(s)

Other Interpretations Would Subvert The Remedial Purpose Of The Reimbursement Provisions.

            The California Voting Rights Act was passed by the state Legislature to address at-large elections tending to dilute the ability of minority groups to elect candidates (racial block voting), including provisions which allows a prospective plaintiff who gets an ordinance establishing district-based elections to be paid “cost of the work product” up to a $30,000 cap.  This reimbursement provision was at issue in Law Office of Carlos R. Perez v. Whittier Union High School Dist., Case No. B315375 (2d Dist., Div. 8 Jan. 11, 2023, but posted on Jan. 12) (published).

            Here is what the appellate court ruled in reversing denial of costs and attorney’s fees:  (1) a “prospective plaintiff” did not have to be the identification of a specific person formally retaining a law firm, but also encompasses a law firm working on behalf of one or more persons the law firm avers it can name as a plaintiff if the demand for correction is unsuccessful (although an ordinance was adopted in this matter); (2) a prospective plaintiff does not have to pay the actual “costs of work product,” with it being sufficient if the contingency law firm representing the plaintiff makes the outlay (which in this case was largely for an expert demographer and legal research by the law firm on the claim); and (3) the lower court would have to pass on any fee/costs requests under the private attorney general statute on remand.

Reasonableness Of Fees: 45% Reduction In Mainly Appellate Fees Was Affirmed On Appeal

Aggrieved Party, Despite Significant Reduction, Appealed To No Avail.

            We understand that no one likes to be hit with a significant fee award.  However, when you get a significant reduction, think carefully about whether you want to appeal.  That was the moral of CDC San Francisco LLC v. Webcor Construction, L.P., Case No. A163751 (1^st Dist., Div. 1 Jan. 11, 2023) (unpublished).

            What happened here was that plaintiff/appellant was hit with an adverse fee award of $855,438 after an unsuccessful appeal in a case where there was a contractual fees clause even though the prevailing parties sought $1,555,342 in fees.  The award was a lower court reduction of 45% from the requested fees, after finding that appellate counsel’s hourly rates were excessive, and the hours claimed were grossly inflated in an appeal which was not a “bet-the-company” case.  Plaintiff thought more should be reduced, but that did not occur on appeal.

            Plaintiff wanted heightened scrutiny of the trial court’s reasoning under Kerkeles v. City of San Jose, 243 Cal.App.4^th 88 (2015), but that was a federal civil rights case that was not congruent with California state law.  Plaintiff then argued that the award was over ten times the amount awarded to trial counsel for fee work, but the appellate court rejected this argument because appellate work is more specialized, and plaintiff did not provide the amount of time/rates that its counsel charged for appellate work on a comparative level.  The significant lower court reduction took the sting out of the argument that the fee award was too shocking in nature. 

Lodestar, Reasonableness Of Fees: Fee Award Of $700,000 To HOA In Uncomplicated Homeowner Dispute Was Reversed And Remanded

Record Was Unclear Whether The Lower Court Utilized The Proper Lodestar Reduction Factors For Over-Conferencing, Duplication, Over-Staffing, And Results Obtained.

            Ladera Ranch Maintenance Corp. v. Tinsley, Case No. G060730 (4^th Dist., Div. 3 Jan. 9, 2023) (unpublished) is must reading for practitioners and jurists on salient factors that a party opposing a fee request and a trial judge assessing the same should focus in on for purposes of examining a substantial fee request in a relatively uncomplicated case.

            In this one, homeowners did lose an HOA dispute involving community standards for a large tarp they erected adjacent to their home, failure to replace two trees they removed from their yard, and removal of an entryway chain, as well as lost a cross-complaint against the HOA for trash can, noise/parking, and prank-playing child issues.  HOA then moved to recover attorney’s fees for “a breathtaking number approaching $700,000 ($699,598.72).”  The lower court made some minor haircuts for over-conferencing, pre-litigation activities, unconnected matters, and insurance appointed counsel coordination, awarding HOA a total of $585,067.30.  The trial judge also did note the submitted billings showed duplication, unnecessary work, nonchronological entries, billing for tasks which could have been performed by paralegals, and excessive conferencing with HOA’s corporate counsel. 

            The 4/3 DCA, in an opinion authored by Justice Goethals, reversed and remanded for a re-do.  The appellate court was concerned that the lower court abused its discretion by not looking at the bigger picture which showed significant amounts of over-conferencing by six lawyers over uncomplicated issues—well over one-half of a billable year on just the HOA’s complaint, not to mention significant time which could have done by a paralegal and significant over-staffing.  Nothing indicated that the court looked for task padding, attorney stacking, or inflated billing in other areas but over-conferencing.  Beyond that, the fee award must be reasonable in relation to the results obtained.  The record showed that the lower court failed to assess the fee request with factors which would be used when a request is “manifestly excessive.”  A remand was necessary so that the trial judge could restudy the fee request and amplify on his reasoning as for as the ultimate fee awarded.

SLAPP: $19,900 Defense Fee Award Affirmed On Appeal, Despite Hefty “Fees On Fees” Motion Request

However, Certain Costs Were Not Allowed, Incorporating CCP § 1033.5 Restrictions Into SLAPP Costs Recovery.

            In Jones v. Reekes, Case No. F082866 (5^th Dist. Jan. 9, 2023) (unpublished), plaintiffs losing a SLAPP motion challenged the trial court’s award to the defense of $19,900 in fees (including $3,000 for “fees on fees” efforts) and $414.86 in costs even though $379.84 in costs encompassed expert consultation, transcripts, copier charges, and postage.  The appellate court affirmed the fee award because the trial judge has a large amount of discretion to determine if the amount, including “fees on fees,” was reasonable, especially given that the hourly rate claimed was $300 for attorney work and $50 for secretarial work.  (The 1.5 requested positive multiplier was denied.)  However, the $379.84 in costs was reversed because the CCP § 1033.5 restrictions on costs were equally applicable in the SLAPP context.  (Lucky United Properties Investment Inc. v. Lee, 185 Cal.App.4^th 125, 137 (2010); Dowling v. Zimmerman. 85 Cal.App.4^th 1400, 1433 (2001).)

Fee Clause Interpretation, Section 1717: Second District Reverses Fee Awards Totaling $680,104.12 As A Matter Of Law

One Award Reversed Because It Only Covered An Arbitration/Ensuing Litigation Even Though No Arbitration Occurred, And Other Award Overturned Because It Was Unclear That Fiduciary Breach Claim Was Not Barred By Santisas.

            San Jose Nihonmachi, LLC v. Miraido Corp., Case No. B323093 (2d Dist., Div. 1 Jan. 4, 2023) (unpublished) shows how the absence of fee entitlement can lead to a reversal of substantial fee awards: in this case fee awards totaling $680,104.12, awards in favor of two different defendant groups.

            The first reversed award of $287,380.75 evaporated based on the narrowness of the fees clause, which covered only prevailing parties in “such arbitration and ensuing legal action.”  Given the parties bypassed litigation and only used the court process, the absence of arbitration occurring was dispositive.  (Kalai v. Gray, 109 Cal.App.4^th 768, 777 (2003).)

            The second overturned award of $392,723.37 involved a voluntary dismissal without prejudice by plaintiff/appellant of an action, invoking a fees clause that was not limited to just arbitration/post-arbitration activities.  Plaintiff did dismiss certain contract claims before they were adjudicated, which did not give rise to fee exposure under Santisas v. Goodin, 17 Cal.4^th 599, 622 (1998).)  The issue on appeal concerned whether a dismissed breach of fiduciary duty claims was based on contract or in tort (because Santisas will not bar fee exposure where a tort is within the ambit of a broadly-worded fees clause).  The appellate court determined that it was “unclear” whether the fiduciary duty claim was not based on contract rather than tort, with any uncertainty meaning that it was “on the contract” and barred by Santisas.  (Kangarlou v. Progressive Title Ins. Co., Inc., 128 Cal.App.4^th 1174, 1178-1179 (2005).)  This last holding provides some discovery tips for the defense to smoke out whether plaintiff’s claims are based in contract or just tort, or both.