Fee Shifting Centered On Business & Professions Code Section 809.9.
One of the interesting aspects of posting on California fee decisions is we get to explore some special fee shifting statutes. Business and Professions Code section 809.9 is a specialized one allowing for substantially prevailing party fees to the winner in a peer review hospital privilege suspension case. That section states: “In any suit brought to challenge an action taken or a restriction imposed which is required to be reported pursuant to Section 805, the court shall, at the conclusion of the action, award to a substantially prevailing party the cost of the suit, including a reasonable attorney’s fee, if the other party’s conduct in bringing, defending, or litigating the suit was frivolous, unreasonable, without foundation, or in bad faith. For the purposes of this section, a defendant shall not be considered to have substantially prevailed when the plaintiff obtains an award for damages or permanent injunctive or declaratory relief. For the purpose of this section, a plaintiff shall not be considered to have substantially prevailed when the plaintiff does not obtain an award of damages or permanent injunctive or declaratory relief.”
Plaintiff doctor lost such a proceeding, leading to a fee award in favor of the hospital and medical staff defendants. In Asiryan v. Medical Staff of Glendale Adventist Medical Center, Case No. B316313 et al. (2d Dist., Div. 1 Feb. 29, 2024) (unpublished), the appellate court affirmed fees to the hospital but reversed fees to the medical staff under section 809.9.
Here is its discussion of section 809.9: [Plaintiff] contends the court erred in concluding fees were appropriate under section 809.9, because her “conduct in bringing, defending, or litigating the suit” was not, as the statute requires, “frivolous, unreasonable, without foundation, or in bad faith.” (§ 809.9.) Whether an action is “frivolous,” “unreasonable,” or “without foundation” under a statute authorizing an award of
costs or attorney fees presents a question of law we review de novo where, as here, the pertinent facts are not in dispute. (Smith v. Selma Community Hospital (2010) 188 Cal.App.4th 1, 7 & 30–33 (Smith).) In analyzing this issue, courts employ the objective standard applicable to sanctions statutes, which looks to what a hypothetical reasonable attorney would do under the circumstances. (Id. at pp. 32–33 [in reviewing an award of attorney fees under section 809.9, the court “conduct[ed] an independent review . . . appl[ying] the any-reasonable-attorney standard as a matter of law” and “[i]f the conduct in question meets this standard, then the record also would contain substantial evidence supporting a finding of fact that the conduct was reasonable”]; see Mir v. Charter Suburban Hospital (1994) 27 Cal.App.4th 1471, 1485 [“[b]ecause section 809.9 contains the same type of language as these other [sanctions] statutes, it is more appropriately construed as a sanctions measure specifically applicable to suits challenging medical peer review decisions”].) “[A] matter is frivolous if any reasonable attorney would agree it is completely without merit in the sense that it lacks legal grounds, lacks an evidentiary showing, or involves an unreasonable delay.” (Smith, supra, at p. 33.) “A claim is factually frivolous if it is ‘not well grounded in fact’ and it is legally frivolous if it is ‘not warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law.’ [Citation.]” (Peake v. Underwood (2014) 227 Cal.App.4th 428, 440 (Peake); Smith, supra, at p. 40 [approving of section 809.9 analysis applying this definition].) An action is “without foundation” if there is no direct or circumstantial evidence supporting the plaintiff ’s factual assertions, or if there is no statute, regulation, case law, or other legal authority supporting the plaintiff’s legal contentions. (Smith, supra, at pp. 30–31.) The terms “frivolous,” “unreasonable,” and “without foundation” partially overlap. To determine whether an action may be described by any one of them, a court must assess the grounds underlying the plaintiff ’s factual or legal positions and the reasoning process linking those grounds to the ultimate conclusions advocated by the plaintiff. (See id. at p. 33.)
Applying these principles, the Asiryan panel found that plaintiff’s argument as to the hospital had no foundation, but that the lower court’s denial of summary judgment and nonsuit motions as to medical staff meant that a reasonable attorney could conclude there was a basis to go to trial even though plaintiff eventually lost.
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