Costs, Default Judgments, Multipliers, Paralegal Time: $709,620 In Attorney’s Fees Entered As Part Of A Default Judgment After Entry of Terminating Sanctions Was Affirmed On Appeal

Complaint Did Not Have To Plead An Exact Amount Of Fees; 3.0 Positive Multiplier Appropriate; PAGA Settlement Administration Expenses/Paralegal and Legal Assistant Expenses Properly Allowed As Routine Costs.

            Haaverson v. Tavistock Freebirds, LLC, Case No. A164043 (1^st Dist., Div. 5 Aug. 18, 2023) (unpublished) is an interesting opinion which explores whether a complaint needs to plead a specific amount of attorney’s fees to sustain a subsequent default judgment based on a request for substantial fees.  The holding in the decision is “no,” in most situations.

            What happened here is that a lower court granted terminating sanctions against defendant such that a default judgment was eventually entered for $25,000 in PAGA penalties, $48,793.90 in costs, and $709,620 in attorney’s fees inclusive of a 3.0 multiplier.  Defendant’s main argument on appeal was that the complaint’s prayer for “reasonable attorney’s fees and costs” was an insufficient allegation on which to base a default judgment because it was “relief” within the meaning of CCP § 580(a) requiring a more exact numerical specification.  The appellate court concluded attorney’s fees did not constitute the necessary “relief,” especially where a default judgment was based on terminating sanctions—adopting the reasoning in Simke, Chodos, Silberfeld & Anteau, Inc. v. Athans, 195 Cal.App.4^th 1275, 1286-1288 (2011).)  However, it examined other cases and reasoned that the result was likely the same in routine default judgment cases.  The appellate panel stated it this way: “Requiring that a plaintiff include an estimate of attorney fees that may be incurred up to the point of trial in the complaint would not meaningfully assist a defendant in making any informed choice. Unlike damages which are more or less fixed in their amount and do not depend on the manner of default, attorney fees will vary greatly depending on whether a default is taken following a defendant’s failure to answer or, like here, following lengthy discovery, motion practice, and terminating sanctions. Because of the speculative nature of any attorney fee estimate at the outset of litigation, a plaintiff is in no better position than a defendant to make that estimate. Indeed, a defendant is arguably in a better position than the plaintiff to estimate the amount of fees to be incurred by the plaintiff because that amount depends, in large part, on how the defendant chooses to proceed in litigation. Therefore, a complaint’s request for “reasonable attorney fees” provides sufficient notice to a defendant that fees are sought while recognizing the near impossibility for the plaintiff to predict what the actual fees will be.”

            Plaintiff was the prevailing party for fees under PAGA.  With respect to the 3.0 multiplier, the degree of skill and difficulty of the case justified an enhancement.

            PAGA administrative expenses to distribute the penalty to 408 employees correctly were awarded by the lower court as routine costs to plaintiff.   Finally, paralegal and legal assistant expenses were awardable as “reasonably necessary to the conduct of the litigation” under the discretionary costs provision, CCP § 1033.5(c))2). 

            BLOG OBSERVATION—We would indicate that if attorney’s fees are awardable as damages, this case might have turned out differently or would need a different analytical path for adjudication of the issue.