CALIFORNIA ATTORNEY'S FEES

Sanctions: No Legal Entitlement Allows Fee Recovery For Unjust Enrichment Under A Settlement Agreement

No Independent Bad Faith Shown, So Not Another Basis For Fee Recovery.

               As we have posted before, you must have a legal entitlement for fee recovery.  Professional Tax Appeal v. Beverly Gemini Investments Corp., Case No. B321119 (2d Dist., Div. 2 Apr. 26, 2024) (unpublished) demonstrates that very well.

               The essence of the case is that plaintiff settled an unjust enrichment lawsuit before trial, with the defendants paying the settlement amount but not admitting liability.  Plaintiff then sought attorney’s fees, a request which was denied.  The appellate court affirmed.  There was no contractual basis for fees, so that was a bad fact for plaintiff.  But plaintiff, being resourceful, argued there was a “bad faith” exception to the American attorney’s fees rule (each side bears their owns fees, in the absence of a contract or statute) based on general language in D’Amico v. Bd. of Medical Examiners, 11 Cal.3d 1, 27 (1974).  Although the panel implicated that the bad faith exception could only be brought under CCP § 128.5 it did not have to go there because the lower court found no evidence of bad faith—even if the defendants did not settle “fast enough for [plaintiff’s] taste,” that was not sanctionable.

Family Law: Modification Of Section 2030 Needs-Based Award Is Left To The Broad Discretion Of The Family Law Judge

Ex-Husband Could Not Show An Abuse Of Discretion, Especially With No Reporter’s Transcript.

               In Marriage of Longinotti and Karpala, Case No. H051393 (6^th Dist. Apr. 25, 2024) (unpublished), ex-husband requested the family law judge to modify a Family Code section 2030 need-based fees/costs award to ex-wife after he paid a substantial part of it (requesting forgiveness of the $17,000 remaining amount).  Under section 2030(c), a lower court shall augment or modify an original fees award “as may be reasonably necessary for the prosecution or defense of the proceeding, or any proceeding related thereto, including after any appeal has been concluded.”  The lower court refused the request, and the appellate court affirmed.  Ex-husband could not show any abuse of discretion, especially given the lack of a reporter’s transcript to show the lower court’s reasoning at the hearing below. 

Interest: 2/7 DCA Decides That Its Prior Directive Was A Reversal, Not A Modification, So That Interest Ran From The Second Fee Award

Reversal/Modification Delineation Can Be Fuzzy, But It Was A Reversal In This Case.

               Acting Presiding Justice Segal, in Vines v. O’Reilly Auto Enterprises, LLC, Case No. B327821 (2d Dist., Div. 7 Apr. 25, 2024) (published), quite correctly in our view noted that the issue for when interest runs on an earlier versus corrected attorney’s fees award can be thorny.  The key distinction focuses on whether the appellate court reversed or simply modified the prior order.  In the end, based on what was done in the prior appellate opinion, it was a reversal so that interest did not run until the later attorney’s fees order was entered—the dispute centered upon a $138,454.44 interest issue.  The opinion has a good discussion of the California Supreme Court’s Stockton Theatres opinion and other case law in this area. 

Cases Under Review, Civil Rights: SCOTUS Will Review Whether Attorney’s Fees Are Available To A Civil Rights Plaintiff Obtaining A Preliminary Injunction Of Significance Before A Conclusive Merits Ruling Was Reached

Cert Was Granted On April 22, 2024 In A Fourth Circuit Case.

               In Lackey v. Stinnie, 77 F.4^th 200 (4^th Cir. 2023), the Fourth Circuit Court of Appeal in an en banc opinion held that a civil rights plaintiff winning a preliminary injunction, but not securing a final judgment, might be a prevailing party entitled to attorney’s fees under 42 U.S.C. § 1988(b).  We can now report that the U.S. Supreme Court granted certiorari on April 22, 2024 to consider these two issues:  (1) Whether a party must obtain a ruling that conclusively decides the merits in its favor, as opposed to merely predicting a likelihood of later success, to prevail on the permits under 42 U.S.C. § 1988; and (2) whether a party must obtain an enduring change in the parties’ legal relationship from a judicial act, as opposed to a non-judicial event that moots the case, to prevail under Section 1988. 

Tort Of Another: Former Client Not Entitled To Tort Of Another Fees In Case By Former Counsel Which Client Incurred Against Lawyer’s Attempt To Collect/Retain An Unreasonable Fee

Case Has A Nice Discussion Of The Law, Showing You Need Some Third Party Litigation Rather Than Just Fees Incurred In Litigating The Action Itself.

               In Parrish v. Stoll, Nussbaum & Polakov, Case No. G062005 (4^th Dist., Div. 3 Apr. 24, 2024) (unpublished), our local Santa Ana appellate court faced an appeal from a denial of attorney’s fees under the tort of another doctrine by a former client claiming entitlement to fees incurred in defending an action by former counsel which client incurred against the former lawyer’s attempt to collect or retain an unreasonable fee.  After extensively surveying tort of another law, the appellate court concluded that there was no third-party litigation such that fees simply incurred in defending the action by former attorney did not qualify under this exception to the American Rule that each sides bears its own fees.  Besides that, the panel concluded that former client had shown no damages on the legal malpractice claim given that client got a hefty settlement recovery.  Acting Presiding Justice Bedsworth authored the 3-0 opinion.

Appealability, SLAPP: Much Diminished Fee Recovery By Three Defendants Prevailing On SLAPP Motions Affirmed On Appeal

Plaintiff’s Appeal Of The Later Judgment Incorporating Fees Was Appealable, But Lower Court’s $62,500 Fee Award Was No Abuse Of Discretion.

               In Norman v. Ross, Case Nos. B316971 et al. (2d Dist., Div. 4 Apr. 23, 2024) (partially published; fee discussion not published), three defendants won a SLAPP motion on plaintiff’s claims, while two other defendants had their SLAPP motions denied in part on certain of plaintiff’s claims although the appellate reversed the SLAPP denial.  Defendants moved for SLAPP attorney’s fees, requesting $436,192.88 in total.  The lower court found that the case was not that novel, that plaintiff did drive up the litigation expenses in some regards, and that the defense took a “maximalist approach” to litigating the matter.  The trial judge awarded $125,000 in total to defendants, allowing them to apportion among themselves but entering a final judgment in favor of three defendants awarding them half or $62,500 in fees.  Plaintiff appealed, arguing the fee awards for the three defendants were still excessive.

               The 2/4 DCA, in an unpublished portion of the opinion, affirmed.  The panel had to confront the defendants’ argument that the appeal was premature because the fee order was just an interlocutory order not yet appealable.  The appellate court disagreed, finding that it had enough finality even though case law was in conflict (following the lead of the City of Colton, Baharian-Mehr, and Apex opinions over contrary reasoning in Doe v. Luster and cases aligned with Doe).  On the merits, however, the lower court did not abuse its discretion in the fees awarded to the three defendants because it did substantially discount the requests by the defense and there was no need to apportion because the lower court indicated that the defense was in the better position to apportion among the respective clients.  It also chided plaintiff’s counsel for bombastic appellate briefing on the fee issue, stressing the need for civility and professionalism.

Eminent Domain, Reasonableness of Fees, Substantiation Of Reasonableness Of Fees: Unreasonable Demands And Lack Of Substantiation Caused A Substantial Fee Request Haircut

Plaintiff Wanted $1.942 Million; However, Trial Court Properly Awarded Only $360,438.45 In Fees.

[U.S. Army induction center, ca. 1942]. Getting haircuts. CA 1942. Library of Congress

               This next case illustrates how fee requests need to be reasonable and supported by proper substantiation.  If not, the litigant will get a sizable “haircut,” which is exactly what happened in Medical Acquisition Co., Inc. v. Tri-City Healthcare Dist., Case Nos. D079471 et al. (4^th Dist., Div. 1 Apr. 17, 2024) (unpublished). 

               Plaintiff entity sought reasonable litigation expenses, which include attorney’s fees, under CCP § 1268.610 in an eminent domain action, even though other distinct claims were involved.  Plaintiff requested recovery of about $1.942 million in fees, broken down as $1.225 million for the main firm based on a contingency agreement and with the remainder being requests by in-house counsel and three other law practices for their contribution to the case.  However, the lower court only awarded $360,438.45 in fees because it found the lodestar calculation to be fair for primary counsel and finding that there was improper substantiation for the remaining attorneys because hourly rates and hours worked were not shown, not to mention there was duplication in the services they provided.  On appeal, the 4/1 DCA discerned no abuse of discretion, reminding us all that fee requests need to be reasonable in nature even at the moving paper stages of a fee proceeding under penalty of getting nothing or substantial fee reductions.

Section 998: $24,100.79 Fees And Costs Award Reversed Because 998 Offer Was Invalid And Not Made In Good Faith

Offer Was Nothing More Than A Bare Promise To Pay In The Future, With A Dismissal Rather Than A Judgment Required, So It Was An Infirm Offer—It Could Not Be Valued Monetarily.

               In Gavola v. CSJ Services, Inc., Case No. G062457 (4^th Dist., Div. 3 Apr. 16, 2024) (unpublished), defendant transferee in a fraudulent conveyance suit made a CCP § 998 offer to plaintiffs stating, that in exchange for a dismissal, defendant would pay plaintiffs $75,000 under an installment schedule, with the first not due until after the scheduled trial date and the last not due until 210 days after acceptance.  Then, the same defendant made another 998 offer that in exchange for a with prejudice dismissal and general release, defendant and another individual defendant would waive any fees and costs recoverable under section 998—although this offer was made too late.  Plaintiff did not accept either offer, with the jury subsequently awarding Plaintiffs $45,000 in total damages against defendant transferee.  Defendant moved for expert fees and postoffer costs totaling $24,100.79, a request granted under section 998 based on the first offer.

               The 4/3 DCA, in an opinion authored by Justice Sanchez, reversed.  The initial offer was invalid because it was a “no-risk offer” that made only a bare “promise to pay,” because the risks of nonpayment could not be valued given that the offeree had no monetary judgment to enforce because defendant required a dismissal instead.  Independently, the offer was not made in good faith because the offeree did not know if the offeror was going to pay the installments.  Put another way, the appellate panel believed the offer was illusory.

Private Attorney General: Public Agency Prevailing Against Private Company Not Entitled To CCP § 1021.5 Fees For Succeeding In Groundwater Contamination Case

Plain Meaning Of Section 1021.5 Supported The District Court’s Denial Of Fees To Plaintiff Agency.

               In Santa Clarita Valley Water Agency v. Whittaker Corp., Case No. 22-55727 (9^th Cir. Apr. 15, 2024) (published), plaintiff water agency certainly prevailed against defendant company upon various torts and CERCLA based on alleged groundwater contamination.  Agency moved for private attorney general fees against defendant, a request denied by the district court.  The Ninth Circuit affirmed this determination, because the plain meaning of section 1021.5 only allows a public agency to obtain fees if it succeeds against another public agency—not against a private company like defendant. 

Family Law: Family Code 2030 Obligations By Lower Court Not Triggered Unless A Fees Request Is Made

. . . Either By Written Motion Or By Oral Motion At A Hearing.

               In Marriage of Hinker, Case Nos. G061718 et al. (4^th Dist., Div. 3 Apr. 12, 2024) (unpublished), Justice Delaney on behalf of a 3-0 panel confirmed that a court’s obligations under Family Code section 2030 [the provision allowing provisional fee shifting so a dissolution party can obtain representation when the financial circumstances so require] only arise after there is a request for attorney’s fees made through a written motion or an oral motion at a merits hearing.  (In re Marriage of Knox, 85 Cal.App.5^th 15, 29-30 (2022).)  No request was made, so no obligation to consider a 2030 request was triggered.

Appealability: Plaintiff’s Challenges To Fee Award Were Forfeited Based On Inadequate Record Presentation And Failure To Raise Challenges At Trial Court Level

Two Fundamental Appellate Principles Supported Affirmance Of The Fee Award.

               Inadequate record and waiver arguments can really undermine an appellant’s arguments on appeal.  That is what happened in Milks v. Affirmed Technologies, LLC, Case No. B330311 (2d Dist., Div. 3 Apr. 8, 2024) (unpublished).  There, plaintiff challenged a contractual fee award after his case was dismissed following the sustaining of a demurrer without leave.  His arguments on appeal were rejected, because (1) appellant presented an inadequate record by failing to include the fee papers and the trial court’s order granting the fee motion, and (2) appellant waived new challenges made on appeal (mainly that he was not a signatory bound by the fees clause) given he only argued that the motion was untimely before the trial court. 

Construction, Fee Clause Interpretation: Because Surety’s 2010 Contract Had A Fees Clause, It Was Erroneous To Deny Fees Based On A 2015 Contract Having No Such Clause

2015 Contract Necessarily Referenced The 2010 Contract, So Remand Was Necessary To Determine If Fee Allocation Was Necessary And The Reasonableness Of Surety’s Request.

               In FEI Enterprises, Inc. v. Massachusetts Bay Ins. Co., Case No. B329502 (2d Dist., Div. 2 Apr. 4, 2024) (unpublished), surety won a summary judgment against its general contractor for surety’s declining to contribute to a settlement in a lawsuit related to the surety bond.  Surety moved for $413,556.51 in attorney’s fees, but the lower court denied it on the belief the request was founded on a 2015 contract having no fees clause.  The 2/2 DCA reversed as a matter of law because the 2015 contract did refer to the 2010 contract with the fees clause, necessarily meaning the fees clause was in operation.  On remand, the fee hearing would focus on whether to allocate fees for the surety enforcing the 2010 contract on its implied-in-fact contract claim and on how to fix the amount of reasonable fees to be awarded.  The appellate court itself refused to fix fees because “these are tasks best presented to the trial court in the first instance.” (Slip Op. at p. 17.)

Arbitration: Trial Court Has No Power To Dismiss Claims For Failure To Prosecute When Case Has Been Ordered To Arbitration

Arbitrator Need To Make Decisions; Party Opposing Arbitration For Lack Of Funds Needs To Make Showing Before Superior Court Or Arbitrator.

               In Lew-Williams v. Petrosian, Case No. B330387 (2d Dist., Div. 7 Apr. 2, 2024) (published), a trial court dismissed state law claims for failure to prosecute after the matter was ordered to arbitration upon defendant’s request and after plaintiff claimed to lack funds to arbitrate.   The 2/7 DCA reversed, determining that the lower court had vestigial jurisdiction only (losing the power to dismiss claims) and that the opposing party had to seek relief from the arbitrator, who could even terminate the arbitration if no funds were paid by plaintiff (in which the case returned to superior court). 

               The appellate court also observed that the party opposing arbitration based on the lack of funds needs to make a showing before the trial court at the outset, because that court could condition arbitration upon a reallocation of costs or having the party seeking arbitration to advance the costs for the opponent.