CALIFORNIA ATTORNEY'S FEES

Civil Rights: Class Action Counsel Awarded Over $400,000 In Attorney’s Fees After Settling Constitutional Challenges To Mississippi’s Sodomy Law

Fifth Circuit Decision Demonstrates A Smart Move By Class Counsel And How District Judges Will Reduce Lodestar Requests For Clerical Work, Partial Success, And Work On Unsuccessful Motions.

            In Doe v. Fitch, No. 22-60481 (5^th Cir. Apr. 11, 2023) (per curiam; unpublished), the Fifth Circuit Court of Appeals was reviewing a district court’s award of attorney’s fees to class counsel under the federal civil rights statute, 42 U.S.C. § 1988, after the parties settled a class action requiring Mississippi to remove 28 individuals from its sex offender registry.  (Although Mississippi’s sodomy law was declared unconstitutional in 2003, the state continues to the enforce the statute through its sex offender registry laws.)  The district judge reduced plaintiffs’ lodestar request by 15%, awarding more than $400,000 to plaintiffs after their counsel smartly made a 10% voluntary reduction in fees.  (The Fifth Circuit opinion does not state the amount of the fee award, but it was reported in a July 28, 2023 post on “Mississippi Today.”)

            The Fifth Circuit sustained the fee award under the deferential abuse of discretion standard.  The 15% across-the-board reduction was justified due to clerical work by class counsel, plaintiffs’ failure to invalidate the sex registry statute, partial success (not prevailing on an unsuccessful due process claim), and work on an unsuccessful summary judgment motion.  However, the district court also was correct to not make further reductions for other work on the due process/equal protection claims because they were intertwined and for using out-of-state counsel. 

Private Attorney General: $38,733.75 Fee Award Under CCP § 1021.5 To Mobile Home Park HOA And Against Mobile Home Park Owner Was Affirmed On Appeal

HOA Was Dismissed On County’s Demurrer Such That It Was Successful, Vindicating A Broader Interest Of Mobile Home Park Residents Throughout The County Because They Needed To Be Part Of The Mobile Park Owner’s Judicial Writ Proceeding Case.

            In Pinto Lake M.H.P., LLC v. County of Santa Cruz, Case No. H050374 (6^th Dist. July 28, 2023) (unpublished), mobile park owner Pinto Lake tried to increase rents for mobile park residents, with an administrative hearing officer denying the requested 47% increase.  Pinto Lake filed a combined administrative mandamus/declaratory and injunctive relief suit naming the County and hearing officer as respondents.  County demurred on the basis that the mobile park residents were necessary parties to the judicial proceeding, but in an earlier opinion the Sixth District remanded to the lower court to determine if they were indispensable parties such that the matter could not proceed.   Pinto Lake, after conceding that a 90-day statute of limitations had lapsed to preclude making residents parties to the lawsuit, Pinto Lake tried to amend its pleading to name the Mobile Home Park Homeowners’ Association (HOA) as a defendant.  HOA demurred and, at a further hearing on County’s original demurrer, the lower court determined the residents were indispensable parties and the HOA could not be added as a party because it exceeded the scope of the Sixth District’s limited remand.

            HOA moved for attorney’s fees of $38,733.55 against Pinto Lake, with the lower court granting them under the private attorney general statute (with no multiplier).

            The Sixth District affirmed the fee award to HOA.  HOA was a successful party because it participated in the litigation to extricate itself as a party, no matter how it procedurally ensued.  It enforced an important public right for a large group of persons, namely, mobile home park residents throughout Santa Cruz, given the lower court ruling that those residents were indispensable parties to the subsequent judicial proceeding and had a right to participate in the proceeding.  The financial burden on the HOA was present because the HOA’s attorneys took the matter on with no prospect of gaining a financial recovery and because most mobile park residents had none or little resources to spare to fund litigation by the HOA. 

Civil Rights: $13,943.84 In Costs Was A Negative Award Against A Plaintiff Whose FEHA Case Was Found To Be Frivolous In Nature

Appellate Court Also Chided Plaintiffs’ Counsel For A Lack Of Civility.

            In Gonzalez v. County of Los Angeles, Case No. B317794 (2d Dist., Div. 2 July 28, 2023) (unpublished), plaintiff lost a FEHA case after demurrer and summary judgment grants.  The lower court found the FEHA claims to be frivolous, unreasonable, and groundless, awarding $13,943.84 in costs to the defense.  (Bond v. Pulsar Video Productions, 50 Cal.App.4^th 918, 921-922 (1996).)  The appellate court affirmed because plaintiff really did not contest the lower court’s findings to that effect.  But, as we have increasingly seen, it also ended with a civility reminder: “Additionally, we are troubled by the conduct of plaintiff’s counsel toward both the County’s counsel and particularly the court. We appreciate the vigorous advocacy of attorneys in representing their clients, but sarcasm, personal attacks, and an obvious lack of respect are not acceptable in the courtroom. Such behavior undermines the attorneys’ credibility and hurts the clients.”

Costs: Plaintiff’s Failure To Renew A Tax Costs Motion Taken Off Calendar Resulted In A Modified Judgment Years Later With The Costs Added

Plaintiff Did Not Subsequently Renew His Objections At The Trial Level, Meaning The Addition Of Costs Was A Ministerial Act Rather Than A Substantial Amendment to the Judgment.

            Max v. Shih, Case No. B322716 (2d Dist., Div. 1 July 27, 2023) (unpublished) is a situation which reminds counsel to renew motions to strike costs, after they are taken off calendar, to avoid arguments that the costs memoranda are beyond challenge when it comes to being included in a subsequent amended judgment.  What happened in this one is that plaintiff moved to tax costs filed by the defense, with the motion taken off calendar by the trial judge for insufficiency, but never renewed.  Years later, the defense requested an amended judgment to include the costs not challenged earlier, a request which was granted.  Plaintiff’s challenges on appeal to the amended judgment were unsuccessful.  The main problem was that addition of costs, absent a motion to tax, is a ministerial clerk act, not a significant amendment to a judgment (at best, a clerical correction to a judgment).  On the merits, a joint memorandum of costs by joint respondents was proper because all of them prevailed so that sharing trial counsel and costs did not require an allocation of a different, more diminished, nature.

Civil Rights: Defendant Not Entitled To Recover Statutory Fees Where Plaintiff’s ADA Claim Was Dismissed For Lack Of Standing

Fees Are Not Allowable Under ADA Fee Statute, But Rule 11 Was Available to Recoup Fees If The Defense Can Prove The Action Was Frivolous.

            The Ninth Circuit, in Fernandez v. 23676-23726 Malibu Road, LLC, No. 22-55626 (9^th Cir. July 26, 2023) (published), held that an American with Disabilities Act (ADA) plaintiff whose case is dismissed for lack of standing cannot be exposed to attorney’s fees claimed by the defense under the ADA’s fee provision, 42 U.S.C. § 12205.  However, that is not to say that plaintiff may be exposed to fees as sanctions under F.R.C.P., Rule 11, if it can be shown that plaintiff’s action was frivolous in nature. 

Employment: Plaintiff’s Labor Code § 98.2(a) Fee Award Of Around $48,565 Was Not Miscalculated

Reduction Of Lodestar In Half Was An Abuse Of Discretion Based Principally On Limited Success Analysis By Lower Court.

            In Iloff v. LaPaille, Case No. A164651 (1^st Dist., Div. 1 July 26, 2023) (unpublished), plaintiff obtained an award of $19,341—about a third of his ask and less than the amount awarded by the Labor Commissioner—in a trial de novo from a Labor Commissioner award, which led to a fee entitlement under Labor Code section 98.2(a).  The lower court applied a .5 negative multiplier based on numerous factors (including lack of success based on only recovering one-third of his compensatory “ask”), awarding plaintiff about $48,565 and prompting an appeal by plaintiff.

            The fee award was remanded based on the lack of success reduction by the lower court.  The 6.9% reduction for tasks that were clerical or inappropriate for a top-level attorney was no abuse of discretion.  However, on remand, the lower court cannot compare plaintiff’s success with that achieved before the Labor Commissioner as far as a fee reduction   But, because only a reasonable fee is allowable under section 98.2(a), there can be a reduction for successful/unsuccessful claims on remand.  The fact that plaintiff was represented by a salaried government employee should not be considered as a fee reduction given other cases saying that attorneys should not be penalized for their retention arrangements on a pro bono or reduced arrangement.  Finally, a lack of bad faith by the employer should not be factored into a fee reduction under section 98.2(a). 

Consumer Statutes: Plaintiff Not Recovering On A Majority Of Her Swimming Pool/Spa Claims Was Not Entitled To Attorney’s Fees Under Business & Professions Code Section 7168

Plaintiff Did Obtain Compensatory Damages On Other Claims, But No Need To Award Other Fees Where Plaintiff Did Not Prevail On The Swimming Pool Claims.

            In Lee v. Cardiff, Case No. A163817 (1^st Dist., Div. 1 July 13, 2023) (unpublished), plaintiff brought claims relating to a swimming pool/spa and other constructions claims.  Plaintiff did prevail on many of the claims, but the lower court rejected most of her swimming pool/spa claims.  Plaintiff moved for attorney’s fees under Business & Professions Code section 7168, which is only limited to swimming pool issues.  The lower court denied fees under this provision because plaintiff did not prevail on the swimming pool issues even though she did under more expansive home improvement issues.

            The First District affirmed.  Section 7168 is limited to swimming pool issues, not other home improvement issues, such that a plaintiff not prevailing on the swimming pool issues was dispositive based on the limited swimming pool “prevailing party” status.  The appellate court determined that the statute could not be expanded to cover other home improvement issues.

BLOG COMMENTARY—This case takes co-contributor Mike back away.  He started out as a law clerk on the Fifth District Court of Appeal.  He helped contribute to the swimming pool opinion in King v. Hinderstein, 122 Cal.App.3d 430 (1981) when he clerked for Justice Zenovich.  That opinion of the legislative history behind the remedial purposes of section 7168.

Off Topics: Co-Contributor Marc's Article On Mediator Settlement Proposals Is Now Published In Advocate

The Article Is Entitled Mediator Settlement Proposals: A Perspective.

        Co-contributor Marc has written an article on an "off topic." The article, published in the July 2023 issue of Advocate, can also be read here: Download Alexander-July23-article

        Marc serves as a mediator and is affiliated with ARC/Alternative Resolution Centers. He can be contacted at [email protected].

Special Fee Shifting Statutes: County Properly Awarded $26,065.41 In Attorney’s Fees And Costs In Nuisance Abatement Proceeding

Cannabis Cultivation On Residential Property Was The Factual Backdrop.

            Governmental authorities may receive an award of attorney’s fees and costs for abating property nuisances under both state statutes and municipal ordinances, in this case Government Code section 25845(b), (c) and Riverside County Ordinance No. 725.  The County obtained summary judgment against a property owner based on cannabis cultivation on a residential property, stemming from a nuisance abating claim.  The lower court then awarded County $26,065.41 in attorney’s fees and costs under the Government Code and Riverside County Ordinance.  That determination was affirmed on appeal in County of Riverside v. Hucana Trust, Case No. E078588 (4^th Dist., Div. 2 July 11, 2023) (unpublished).  The main challenge was to the $295 hourly rate charged by County attorneys, which varied from a lower rate internally charged to the governmental entity, but this disparity was no reason to overturn the fee award because the hourly rate was reasonable under a lodestar analysis. 

Prevailing Party: Cross-Complainant Winning More Than Plaintiff Was The Prevailing Party For Fee Recovery Purposes

Cross-Complainant Obtained An $88,130.06 Net Recovery, Such That A Subsequent $90,013 Prevailing Party Fee Determination Was No Abuse Of Discretion.

            In VanLaw Food Products, Inc. v. New England Counry Foods, LLC, Case No. G061375 (4^th Dist., Div. 3 July 6, 2023) (unpublished), plaintiff received $27,441.25 under its complaint, and cross-complaint received $115,571.31 on its cross-complaint, with the lower court determining that the $88,130.06 edge for cross-complainant meant it was the prevailing party under a contractual fees clause.  That resulted in a fee award of $90,013 in cross-complainant’s favor.

            This determination was affirmed in a 3-0 decision by Acting Presiding Justice Bedsworth.  The prevailing party determination was no abuse of discretion under the circumstances.  But we will quote some ending comments from Justice “Beds” which are worthy of consideration by litigants and their attorneys: 

            “There are two questions every litigant must answer before suing or choosing to maintain a lawsuit. The first is whether he or she has a meritorious claim, and the second is whether it is worthwhile to pursue it. That second question will always involve consideration of whether the opponent’s claims are meritorious, and the decision whether to go forward with litigation will require a weighing of the risk such claims might succeed. The answers to those questions may change as the litigation proceeds, and they may very well be impacted by the claims and defenses presented by the other side.

            “Such is the nature of litigation – each side goes to trial believing it has the better claim, and the outcome is left to the trier of fact. Each side takes a risk. Here, NECF’s cross-complaint may have been brought late, and it may have been worth more money. But if the trial court had ruled against NECF on the cross-complaint, and for [Plaintiff] VanLaw on the complaint, NECF would owe VanLaw money. The so-called ‘chilling effect’ VanLaw forecasts is merely the wager each litigant must make. An adversary system will always include such wagers.”

Section 1717: Dismissal Of Complaint Alleging Breach Of Contract, Whether Based On Contract Or Breach Of A Contractual Duty, Did Not Result In Fee Exposure Under Section 1717

Santisas (Our Leading Case #6) Dictated The Result.

            In Rubin v. Cho, Case No. A165667 (1^st Dist., Div. 5 July 6, 2023) (unpublished), close to trial, plaintiff dismissed a breach of contract complaint alleging the seller of a house failed to disclose all known material facts and defects affecting the property and make other disclosures required by law under the purchase agreement.  Seller moved for attorney’s fees under a contractual fees clause.  Both the trial and appellate court found that the gravamen of the complaint was “on the contract” such that the dismissal of the complaint did not lead to fee exposure based on Santisas v. Goodin, 17 Cal.4^th 599, 602 (1998).  Plaintiff’s efforts to recast the complaint as being based on torts or arguing the contract was being disavowed did not resonate with the appellate court. 

Arbitration: $4.5 Million In Attorney Investigative Fees And $36,653 In Post-Arbitration Confirmation Costs To Prevailing Parties Affirmed On Appeal

Broad Contractual Dispute Resolution Clauses Supported The Appellate Results.

            As we have said many times in this category, arbitration awards—unless against public policy—are hard to overturn because the merits of the award are usually not subject to rescrutiny by trial or appellate courts.  Also, the emerging trend is that post-arbitration court proceedings fees are awardable as a continuation of that process.  8minutenergy US Manager v. MDS Capital, Case No. A165588 (1^st Dist., Div. 3 June 30, 2023) (unpublished) is a recent opinion fortifying those conclusions.

            There, defendants prevailed in an arbitration involving a failed solar energy development joint venture.  There were broad contractual clauses between the parties allowing for recovery of “fees and expenses of the arbitration” and further having language suggesting that the recovery extended to fees expended in obtaining any judgment reached in connection with the arbitration award.  To the prevailing parties, the arbitrator awarded over $4.5 million in fees based on attorney investigation into management breaches, and the trial court subsequently awarded $36,653 for successful efforts to confirm the arbitration award.

            The appellate court affirmed.  The contractual arbitration clause was broad enough to encompass the substantial attorney investigation costs.  With respect to the post-arbitration confirmation fees, they are generally part of the arbitration continuation process (Code Civ. Proc., § 1293.2; Marcus & Millichap Real Estate Investment Brokerage Co. v. Woodman Investment Group, 129 Cal.App.4^th 508, 513 (2005)), bolstered by the fact that the contractual alternative dispute resolution clause did have broad language including judgment efforts were within the scope of arbitration work.

Reasonableness Of Fees: Over $1.2 Million In Fees To Prevailing Party Was No Abuse Of Discretion

Lower Court Already Reduced Fee Request; This Initial Reduction Did Not Lead To The Conclusions That A Denial In Entirety Of Fees Or Further Reductions Were Required.

            Plaintiff prevailed in a contractual breach claim against a municipality in Air Combat USA v. City of Fullerton, Case Nos. G059914 et al. (4^th Dist., Div. 3 June 29,2023) (unpublished), being awarded $1.2 million in compensatory damages although that was pared down significantly by the lower court through post-trial motions.  However, the lower court granted plaintiff $1,229,520 in attorney’s fees.  City did not alter that result on appeal.  The trial judge did make reductions from plaintiff’s request, with the argument that such a reduction supported a complete denial or further reductions ignoring the abuse of discretion standard relating to the amount of fee awards.  Justice Goethals authored the 3-0 opinion.

Costs, Private Attorney General: In Case Involving Extension Of 241 Toll Road Near San Clemente, 4/2 DCA Affirms Denial Of 1021.5 Fees To HOA, Reverses And Remands Denial Of Fees To Environmental Parties, And Affirms Award Of Costs Against HOA

Lots Of Moving Parts Here, But The Remand For Environmental Parties Is Not An Automatic Endorsement Of Receiving 1021.5 Fees.

            City of San Clemente v. Department of Transportation et al., Case No. E077153 (4^th Dist., Div. 2 June 29, 2023) (published) arose out of the Corridor Agency’s approved extension of State Route 241 (known as the “toll road” to Orange County residents) near San Clemente, which resulted in lawsuits by Environmental Parties and an HOA, respectively, to protect environmental interests and homeowners’ interest in not having the extension too close.  Environmental Parties were able to get the Corridor Agency to agree to a settlement agreement by which an environmental “avoidance area” was created.  HOA’s suit challenged the settlement agreement as being ultra vires, but it dismissed its case after suffering some key losses. Eventually, Corridor Agency proceeded with an option which steered clear of the “avoidance area” and HOA.

            This is where the attorney’s fees/costs motion frenzy began, with fee requests brought under the private attorney general statute (CCP § 1021.5) and costs presented under the routine cost statute.  HOA moved for about $1.85 million in fees on a catalyst theory against Corridor Agency; Environmental Parties moved for about $1.139 million in fees against HOA; and Corridor Agency and Environmental Parties moved for costs totaling about $190,000 against HOA.

            The lower court denied the fee requests, but it awarded reduced costs of about $102,000 against the HOA.  Environmental Parties appealed the fee denial, and HOA cross appealed in relation to the fee denial and cost awards.  The 4/2 DCA, in a lengthy opinion, affirmed the HOA fees denial and costs awards, but reversed and remanded with respect to the fee denial involving the Environmental Parties.

            Denial of HOA’s fee request focused on whether it was successful for 1021.5 catalyst purposes.  The problem for HOA was that the Corridor Agency’s decision to “steer clear” was motivated by factors other than HOA’s litigation.  Beyond that, HOA’s primary litigation objective was to invalidate the settlement agreement, and they were not successful given the dismissal of its suit.

            Costs against the HOA were proper because its dismissal made costs recovery a “matter of right” as to Corridor Agency and the Environmental Parties.

            That left the Environmental Parties’ appeal of the denial of their fee request.  The 4/2 DCA decided that a narrow 1021.5 exception articulated in its Joshua S. case did not apply because Environmental Parties did vindicate public interests through the “avoidance area” settlement such that HOA’s challenge to that settlement would have been detrimental to broader public environmental interests—finding persuasive the reasoning in Wal-Mart Real Estate Business Trust v. City Council of San Marcos, 132 Cal.App.4^th 614 (2005) to the contrary.  However, the reversal and remand were not all good news for Environmental Parties.   The appellate court expressly instructed the lower court to explore if those parties’ prior enforcement actions were necessary (another 1021.5 element).  I guess we shall see if there are follow-up decisions on this remaining fee issue.