CALIFORNIA ATTORNEY'S FEES

In The News . . . . California Lemon Law Cases Are On The Rise At The State Trial Court Level

Orange County Register OpEd Piece Thinks Attorney’s Fees For Plaintiffs Is The Motivating Cause.

               Although we are not endorsing OpEd views in this blog, we will report on ones which have their own take on issues which the writers believe implicate attorney’s fees issues.

               The Sunday, July 28, 2024 edition of The Orange County Register has an OpEd piece authored by Kyla Christoffersen Powell, who reported that California “lemon law” cases in 2023 surged to a total of 22,655 cases filed statewide, a 52% increase from the previous year.  She reports that the situation is acute in Los Angeles County, where lemon law cases spiked 1,400% in branch courts between 2021 and 2023—with two Los Angeles County Superior Court judges reporting that they had total dockets in excess of 760 cases.  She also reports that, in 2023, just seven law firms filed 54% of all lemon law cases in the state, with the most prolific firms increasing their filings almost 75% between 2022 and 2023.  Ms. Powell believes the dramatic increase is due to the pro-plaintiff fee shifting provisions of the Song-Beverly Act.  She makes some suggestions for reforms, such as a pre-lawsuit notice, capping of fees, and wider use of an arbitration protocol potentially available in these types of disputes.

               She ends by quoting Judge Timothy Taylor of the San Diego County Superior Court, who noted that certain attorneys are “emboldened to over-litigate cases the manufacturers regularly seek to settle, with no benefit to the injured consumer.”

Civil Rights, Sanctions: 4/3 DCA Reverses $98,852 Sanctions Award Under CCP § 128.7 After Concluding That Plaintiff Successfully Defeated Summary Judgment Motion On ADA And Related Claims

For ADA/Disability Practitioners, A Disabled’s Successor May Have Standing To Pursue ADA And Related Claims For Injunctive Relief.

               In Saurman v. Peter’s Landing Property Owner, LLC, Case No. G061561 (4^th Dist., Div. 3 July 26, 2024) (published), the Court of Appeal reversed a summary judgment grant and $98,852 CCP § 128.7 sanctions award against husband, a successor to a deceased wife claiming ADA, Unruh Act, and Disabled Persons Act violations.  For practitioners in this area, this opinion is “must” reading for purposes of establishing whether a successor may have standing to pursue injunctive relief for the deceased person, for that person “as well as the public general” in state court (but not necessarily federal court).  That reversal of the grant of summary judgment pretty much meant that the section 128.7 sanctions order also fell because of the standing determination.  Acting Presiding Justice Moore penned the 3-0 opinion.

Indemnity: Because California State Precedent Does Not Allow For Recovery Of First-Party Attorney’s Fees Under A Standard Third-Party Indemnity Clause, Ninth Circuit’s Earlier Dewitt Decision Was Incorrectly Decided

Concurring Justice Explains That A More Flexible Standard Of Intra-Circuit Stare Decisis Is Applicable To State Law Questions.

               In AGK Sierra De Monteserrat, L.P. v. Comerica Bank, No. 23-15290 (9^th Cir. July 19, 2024) (published), the Ninth Circuit reversed a district judge’s grant of attorney’s fees as damages under an indemnity provision despite California state court precedents holding that first-party attorney’s fees are not recoverable under a standard, third-party indemnity provision absent clear language allowing for such fee recovery.  The Ninth Circuit held that its earlier interpretation in Dewitt v. Western Pacific Railroad Corp., 719 F.2d 1448 (9^th Cir. 1983) was incorrect, which led to the reversal.  However, it did remand to see if fees were recoverable under an indemnity provision in a different document.  The concurring circuit judge explained why a more flexible standard of intra-circuit stare decisis applies to state law questions versus federal law questions. 

Retainer Agreements: Client Funds With Law Firm Not Immune From Judgment Creditor Third-Party Level Where Law Firm Did Not Perform Any Services To Earn Compensation Under A Flat Fee Agreement

Good Discussion Of Professional Responsibility Rule Requirements For Flat Fee Agreement Arrangements.

               In Dickson v. Mann, Case No. D081851 (4^th Dist., Div. 1 July 16, 2024) (published), an appellate court has a discussion on who owns and how to handle client funds under a flat fee agreement.  There, it agreed with a lower court’s assessment that a judgment debtor client’s deposit of fees with a law firm were not immune from third-party levy because law firm had yet to earn any compensations for services under the flat fee agreement.  The opinion has a good discussion on using law firm operating accounts versus trust account with respect to a deposit of client funds under a flat fee agreement.

Section 998: Where Respondent Made A Counteroffer to A Section 998 Offer, Lower Court Erred In Entering Judgment Under This Scenario

Judgment Was Void On Its Face.

               A judgment based on acceptance of a CCP § 998 offer was found void because the accepting party made a counteroffer in Endrawes v. Mitchell, Case No. B330916 (2d Dist., Div. 6 July 16, 2024) (unpublished).  There, a defendant accepted a 998 offer but added language indicating appellant was releasing “any and all other persons, whatsoever, from any and all claims . . . .”  This language rendered a judgment entered on the “acceptance” void because plaintiff did not accept the counteroffer, because plaintiff’s offer became void after 30 days.  (Bias v. Wright, 103 Cal.App.4^th 811, 814, 817 (2022).)

Costs: With Respect Trial Transcription Costs, Court Reporter Fee Are Awardable But Transcript Preparation Is Not Unless Transcripts Ordered By The Court

Also, Messenger And E-Filing Charges Are Allowable In The Court’s Discretion.

               McCluskey v. Hendricks, Case No. B331457 (2d Dist., Div. 2 July 16, 2024) (unpublished) reinforced these principles for recovery of routine costs: (1) court reporter fees for trial transcription are recoverable (CCP § 1033.5(a)(11); Gov. Code, § 68086(d)(2)); (2) actual trial transcript preparation costs are not recoverable unless ordered by the court (CCP § 1033.5(b)(5)); and (3) messenger and e-filing charges are allowable in the discretion of the lower court if reasonably necessary for the litigation. 

Arbitration: Arbitration Clause Requiring Employee To Pay Nonfrivolous Motion To Compel Arbitration And Subsequent Arbitration Fees/Costs Was Unconscionable

However, Severability Was To Be Considered On Remand.

               In Ramirez v. Charter Communications, Inc., Case No. S273802 (Cal. Supreme Ct. July 15, 2024) (published), an employer faced unconscionability rulings on components of its arbitration clause, with the state supreme court issuing rulings on unconscionability and then whether those infirm clauses should or could be severed—important topics for employment law practitioners.  As applicable here, the California Supreme Court determined that arbitration clauses requiring an employee to pay motion to compel arbitration and subsequent arbitration costs were unconscionable because they violated FEHA law requiring that fees and costs could only be awarded if employee’s opposition to the motion to compel and subsequent arbitration prosecution was frivolous and without substance.

Civil Rights, Prevailing Party: Plaintiff Entitled to Prevailing Party Fees Under The California Voting Rights Act Of 2001

Although Unintentional, School District Continued To Defend The Legality Of Its At-Large Elections Even Though Plaintiff Was Able To Show A Violation Of The Act, Obtain An Injunction, And Force Trustee-Area Election Based On Plaintiff’s Proposed Map.

               Although the amount of the fee award is not mentioned, the 4/1 DCA affirmed the award in favor of Plaintiff and against School District in Southwest Voter Registration Education Project v. Ramona Unified School Dist., Case No. D081500 (4^th Dist., Div. 1 July 11, 2024) (unpublished).  There, Plaintiff proved a violation of California’s Voting Rights Act of 2001, which statutory scheme has a prevailing party fee-shifting provision under Elections Code section 14030.  In line with the lower court’s determinations, the appellate court agreed Plaintiff had obtained its primary litigation objectives by obtaining an injunction against District’s at-large elections and forcing trustee-area elections based on plaintiff’s proposed map.  We would speculate that the fee award was somewhat substantial in nature.

Arbitration, Employment: Arbitrator’s Failure To Consider Unwaivable Fee Request Under Labor Code Section 226(e)(1) For Prevailing Employee Was Erroneous

Employee Won $4,000 For Employer’s Failure To Issue Accurate Itemized Wage Statements.

               In Sanzone v. DCH Korea Imports, LLC, Case No. G063483 (4^th Dist., Div. 3 July 3, 2024) (unpublished), an arbitrator awarded an employee $4,000 on a Labor Code failure to issue accurate itemized wage statements, after denying several other Labor Code claims, and ordering each side to bear their own fees (even though employer had to pay the costs of the arbitration).  Employee appealed, among other issues, the denial of attorney’s fees, claiming that he had an unwaivable statutory right to fees and costs under Labor Code section 226(e)(1), which is a plaintiff one-way favorable fee-shifting statute, such that the arbitrator exceeded his powers.

               The 4/3 DCA agreed, in an opinion authored by Justice Motoike.  Applying a de novo standard of review, it found an employee has unwaivable statutory rights under section 226(e)(1), a paramount concern ignored by the arbitrator and the lower court in confirming the award (and denying the employee’s vacatur request).  The panel understood that there were decisions under Civil Code section 1717 where arbitrators did not have to follow the 1717 mandate, but found that the reasoning in Pearson Dental Supplies, Inc. v. Superior Court, 48 Cal.4^th 665 (2010) apt because employee was denied the opportunity to be heard on the merits of the fee request.

               BLOG OBSERVATION—If we read this case correctly, the appellate court was concerned that the arbitrator did not even consider the request, not that a merits determination after considering it would be treated the same way.

Allocation, Deadlines, Family Law: $72,776.25 Appellate Fee Award To Ex-Husband For Ex-Wife’s Breach Of Fiduciary Duties Affirmed On Appeal, Although Husband Lost Section 271 Sanction Request

Lower Court Impliedly Extended The Fee Filing Deadline, With The Failure To File An Income/Expense Statement Found Nonprejudicial In Nature.

               Bryan v. Bryan, Case No. E080311 (4^th Dist., Div. 2 July 1, 2024) (unpublished) is a case where ex-husband was awarded $72,776.25 in appellate fees (out of a requested $90,000) for winning an appeal involving ex-wife’s claimed breach of fiduciary duty under Family Code section 1101(g), although ex-husband was denied Family Code section 271 sanctions.  Both parties appealed, but all determinations were affirmed.

               The appellate court found that the lower court impliedly allowed ex-husband to exceed the 40-day post-remittitur time deadline to file a fee motion.  It also found that his failure to file a FL-150 income/expense statement was nonprejudicial in nature.  However, ex-husband lost the 271 denial challenge because he failed to allocate fees for this request versus throwing them into “one pot.”

Special Fee Shifting Statutes: Denial Of DVRO Resulted In Adverse Fee/Cost Award Of $24,777.38 Against Unsuccessful Petitioning Party

Failure To Oppose The Fee Motion Was Fatal.

               A party prevailing in a domestic violence restraining order (DVRO) can obtain attorney’s fees and costs.  Ex-girlfriend lost a DVRO petition, with the lower court awarding ex-boyfriend $24,777.38 in attorney’s fees and costs.  The appellate court affirmed the awards in Gikkas v. Stern, Case No. A168298 (1^st Dist., Div. 1 July 1, 2024) (unpublished), finding especially dispositive ex-girlfriend’s failure to oppose the fee/cost request below.

Employment: Partially Dismissed/Frivolous Claims For Unpaid Commissions Under Labor Code Resulted In Substantial Adverse Fee And Cost Awards Against Plaintiff

$245,531 Was The Fee Award And $8,489.76 Was The Cost Award.

               In Doustkam v. Sage, Case No. B321390 et al. (2d Dist., Div. 2 July 1, 2024) (unpublished), plaintiff claimed $747,000 in unpaid commissions under the Labor Code, dismissing some claims and losing other claims because of a lack of evidentiary support.  The trial court found plaintiff’s claims to be frivolous such that defendants prevailed.  The lower court then awarded $245,531 in attorney’s fees and $8,439.76 in costs to defendants under Labor Code section 218.5, determinations affirmed on appeal.  This shows how unsuccessful, frivolous cases can result in substantial expense exposure to a losing plaintiff under section 218.5.

Arbitration: Where Costs-Shifting Component Only In Employer-Employee Arbitration Agreement Was Unconscionable, It Should Be Severed

Denial Of Motion To Compel Arbitration Was Reversed.

               In Helfet v. Motive Energy, Inc., Case No. B331359 (2d Dist., Div. 1 July 1, 2024) (unpublished), the appellate court reversed the denial of a motion to compel arbitration under an employer-employee contractual provision because the only unconscionable provision, an improper cost-shifting provision, could be severed so the case could proceed to arbitration.

Intellectual Property: District Judge Properly Denied Fees To Prevailing Party In Trademark Infringement Action

Trademark Did Not Arise Under The Contract Or Involve Exceptional Circumstances Under The Lanham Act.

               Plaintiff lost a trademark infringement suit against a defendant alleging use of a different mark than defendant’s trademark use.  There was a contractual fees clause under a partnership agreement involving uses of marks different than the one involved in the infringement action.  Defendant moved for contractual and Lanham Act fees for prevailing, claiming under the Lanham Act that the case was exceptional in nature.  The district judge denied the defense motion for fees.

               The Ninth Circuit affirmed in BillFloat Inc. v. Collins Cash Inc., Case No. 23-15405 et al. (9^th Cir. July 1, 2024) (published).  The partnership agreement only concerned use of a different mark; and, in any event, a trademark infringement claim was found to be totally independent of the parties’ partnership agreement because it arose four years earlier before the partnership agreement was signed.   With respect to the Lanham Act fee claim, the appellate court agreed that the claim was not meritless based on dismissal of a single contract claim and based upon the facts that the prelitigation activities by plaintiff were not egregious enough to warrant an award of fees (just normal exercises which may have not been productive).