CALIFORNIA ATTORNEY'S FEES

Arbitration: Where Employee Paid Employer’s Arbitration Fees And Then Obtained A Refund, Employer Timely Paid Arbitration Fees From Issuance Of Second Invoice Within 30 Days

CCP § 1281.97 Ties The 30-Day Deadline From The Date Of An Arbitrator Invoice.

               We have posted about the CCP § 1281.97 30-day deadline for an employer to pay arbitration fees, with most courts strictly construing the deadline (although whether the provision is preempted by the FAA is an issue recently taken up the California Supreme Court in Hohenshelt).  However, given how unique circumstances can drive results, the trial and appellate courts in Anoke v. Twitter, Inc., Case No. A168675 (1^st Dist., Div. 5 Aug. 27, 2024) (unpublished) took a practical approach to a unique situation.

               There, employee’s counsel mistakenly paid employer’s share of arbitration fees quickly after issuance of that invoice.  Employer checked and saw that the arbitration portal reflected the fees as being paid.  Later, employee’s counsel then demanded a refund (which was made with no apparent notice to employer).  The arbitrator issued a second invoice to employer, which paid within 30 days.

               Employee challenged the payment as untimely, but the appellate court disagreed after the lower court denied employee’s request for a motion to compel an arbitration in which employer was liable for her reasonable fees and costs (an untimely payment remedy available under § 1281.97(b)(2)).  Based on the statutory language having a “passive voice,” the 2/5 DCA determined that the statute ties the 30-day deadline to an invoice from the arbitrator, with employer timely paying the second invoice.  It further observed that any other result could result in some gamesmanship by employee, a “gotcha” the appellate court did not like.  “Here, a mistaken payment resulted in a second invoice, which is consistent with ordinary business billing practices.  We are not going to rewrite the statute to say that, in the event one invoice is mistakenly paid, a second invoice is improper.”

Family Law, Retainer Agreements, Sanctions: CCP § 128.7 Sanctions Award Reversed Because Litigant Not Given Safe Harbor Notice/OSC Notice That The Sanctions Response Was Sanctionable

Also, We Learn New Things All The Time—Contingency Agreements In Family Law Proceedings Are Against Public Policy.

               Wright v. Wright, Case No. B330901 (2d Dist., Div. 1 Aug. 23, 2024) (unpublished) is interesting on two points:  (1) it reversed a CCP § 128.7 sanctions order against a litigant based on litigant’s response to a sanctions motion because no separate safe harbor or OSC notice targeted that response; and (2) Rules of Professional Conduct, rule 1.5(c)(1) provides that contingency agreements in family law proceedings are void against public policy because they incentivize attorneys to discourage reconciliation between the family law litigants, although the panel did not have to apply this provision because the subject retainer arrangement was not a contingency arrangement.

Discovery: California Supreme Court Decides That General Discovery Statutes Allow A Trial Judge, Where Specific Discovery Sanctions Statutes Do Not Cover Egregious Discovery Abuses, To Inherently Impose Monetary Sanctions For Abuses

However, Notice/Causation/Reasonableness Principles Are Still In Play, Just Under Specific Discovery Abuse Statutes.

               In City of Los Angeles v. Pricewaterhousecoopers, LLP, Case No. S277211 (Cal. Supreme Ct. Aug. 22, 2024) (published), the California Supreme Court decided that the general sections of the Civil Discovery Act, CCP § 2023.010 and § 2023.030, allow a trial judge to impose monetary sanctions for egregious discovery abuses, rather than being relegated to imposition of discovery violations under specific sections of the Discovery Act where the egregious conduct falls outside of the specific discovery sections.  That meant that the $2.5 million in discovery sanctions was being reinstated.  However, our state supreme court was careful to observe that notice/causation/reasonableness principles, as applicable in specific discovery abuse provisions, would also be in play under more general “inherent” power of the court situations. 

Civil Rights: $55,414.84 Attorney’s Fees Award Under ADA Against Plaintiff’s Attorneys Reversed On Appeal, Although Plaintiff Dismissed A Website Action After Not Opposing A Summary Judgment Motion

Appellate Court Concluded That ADA Statute’s Silence On Fee Award Against Plaintiff’s Attorneys Was Dispositive.

               Statistically speaking, California state and federal courts (especially federal courts) are inundated with ADA disability lawsuits, many based on Website disabilities for disabled persons.  The next case establishes, as far as ADA claims are concerned, dismissals or judgments against an ADA plaintiff, even where the case is deemed frivolous, does not impose an attorney’s fees award against plaintiff’s counsel (as opposed to the plaintiff).

               Morgan v. Zarco Hotels Incorporated, Case No. B332319 (2d Dist., Div. 2 Aug. 21, 2024) (unpublished) was a situation where a plaintiff brought an American with Disabilities Act (ADA) lawsuit against hotel for certain alleged website accessibility issues.  The defense filed a summary judgment motion complete with a declaration from a hotel accessibility expert showing that the defendant was compliant with respect to a plaintiff using screen reader software (SRS) to navigate the Internet.  Plaintiff never opposed the summary judgment motion, choosing to dismiss the case.  Among other things, the defense filed a motion to recover attorney’s fees against plaintiff and her attorneys under the ADA fee-shifting statute, which does allow fees to a prevailing defendant if plaintiff’s case is deemed to be frivolous.  The lower court denied fees against plaintiff, but it ordered plaintiff’s counsel to pay $55,414.84 in fees to the defendant.

               The 2/2 DCA reversed, finding that the ADA fee-shifting provision (42 U.S.C. § 12205) was silent with respect to a fee award against a litigant’s counsel, such that it should not be construed to allow for such recovery, citing to similar cases under the federal civil rights statute, ERISA, Title VII, and the anti-SLAPP statute among others. 

Reasonableness Of Fees, SLAPP, Substantiation Of Reasonableness Of Fees: Successful SLAPPing Defendant Entitled To An Award Of $48,790 In Fees And $1,574.60 In Costs

Winning Defendant Did Something Smart:  After SLAPP Motion Granted, Offered To Stipulate To A Much Lower Fees And Costs Award, Rejected By Plaintiff.

               When it comes to the reasonableness of a fee award, we have posted on situations where the prevailing party offered to stipulate to a lower fees/costs award and then obtained a higher fees/costs award after that offer was rejected.  Proof of this was made in Aminpour v. Verdi, Case No. B327213 (2d Dist., Div. 5 Aug. 21, 2024) (unpublished), with the lower and appellate courts persuaded that the defense higher fee request was justified in part by an attempt to resolve the controversy by the winning side.

               In this one, the defense prevailed on a SLAPP motion, including having to reply to a 150-page opposition by plaintiff.   Before any fees/costs motion was filed by the prevailing defendant, his counsel sent an email willing to stipulate to a definite fees/costs award in order to avoid further expenses to file an actual attorney’s fees motion, an offer which was not responded to apparently.  Later, the trial judge ordered a higher fees award of $48,790 and higher costs award of $1,574.60 to defendant.  Plaintiff appealed, but the appellate court determined the awards were no abuse of discretion because (1) plaintiff had argued that he should be awarded $56,225 in fees in an earlier pleading, such that the work by plaintiff demonstrated the defense request was not outrageous, citing In re Tobacco Cases I. 216 Cal.App.4^th 570, 584 (2013); (2) the “fees on fees” to bring the fee motion were allowable; and (3) sufficient declaration testimony was presented to support the award given no billing records/invoices were required (although as bloggers, we would say they are highly advisable).

Homeowner Associations: One Homeowner And HOA Properly Awarded A Grand Total Of $460,573.95 In Condo Noise Dispute Where Neither Party Won Their Arbitration Claims

However, Arbitrator Determined One Homeowner And HOA Prevailed, Hence The Awards.

               In this category, we have posted on many homeowner disputes where one side prevailed and obtained substantial fee awards under CC&Rs and the Davis-Stirling Act’s fee-shifting statute.  We also have posted on where both sides went away empty on fees because an arbitrator or trial judge found no one prevailed.  Well, here is another one that falls within category number one.

               Zokaei v. Mansoir, Case No. A167365 et al. (1^st Dist., Div. 3 Aug. 20, 2024) (unpublished) involved noise disputes between downstairs and upstairs condominium owners where there was a CC&R initial provision allowing for fee recovery in a civil action and later amended through a CC&R provision providing for mandatory arbitration of these disputes.  The parties, including HOA which was added to the dispute, had dueling demands and cross-demands on noise issues, with all parties praying for recovery of fees in their arbitration pleadings.  The arbitrator denied all parties’ arbitration claims, but the arbitrator determined one of the homeowners and the HOA prevailed.  After confirmation of the arbitration awards by the superior court, judgments were entered, in total, for the one homeowner/HOA and against the losing homeowner for $460,573.95.

               The fee awards were affirmed, after a scholarly discussion of fee principles relating to arbitrator fee awards.  First, all parties prayed for fees such that this issue was “teed up” for arbitrator determination.  Second, AAA arbitration rules allow for fee recovery where all parties requested it and the law allows, the case here.  Third, the CC&R arbitration amendment allowed for recovery of fees—such that even if this interpretation of the contractual provision was erroneous, it was not reviewable under Moshonov.  Fourth, the term “civil action” in the original CC&R provision might be rationally interpreted to include arbitration, especially where other amendments referred to arbitration. 

Class Actions, Employment, POOF!: Reversal Of Class Action Summary Adjudication On Class Meal/Rest Breaks Claim Meant Substantial Fee Award Reversed Also

Plaintiffs’ Reasons To Not Reverse The Award Were Unpersuasive.

               Acting Presiding Justice Segal, author on behalf of the 2/7 DCA in Benton v. Telecom Network Specialists, Inc., Case No. B318867 (2d Dist., Div. 7 Aug. 19, 2024), confronted a very spirited opposition by plaintiffs/class winning substantial fees for why the reviewing court should not deviate from the general rule that “reversal of the judgment usually also reverses a fee award.”  Well, that general rule won out at the end, as it usually does.

               What happened was that the lower court granted class plaintiffs’ motion for summary adjudication on some wage/hour claims, resulting in entry of a judgment.  However, the appellate court reversed on the summary adjudication grant on causes of action for failure to provide meal/rest breaks.  While that appeal was pending, the lower court awarded over $17 million in attorney’s fees and $700,000 in costs for fees incurred before the summary adjudication grant.  The problem was that the appellate court was not necessarily buying into plaintiffs’ argument that the earlier appellate result was a narrowly limited reversal (likely more than plaintiffs thought) such that a “renew” look was warranted.  Besides, even the defense agreed that some further statutory fees might be authorized by Naranjo, yet another reason to send it for a further review because possible fee work after the summary adjudication grant was in play for plaintiffs.  A “replay” here.

Section 1717, Section 998: Because Plaintiff Voluntarily Dismissed Its Unlawful Detainer Action Without Prejudice, Santisas Prevented Recovery Of Contractual Attorney’s Fees By The Other Side Despite The Winning 998 Offer

However, Plaintiff Did Pay The Other Side $118,372.65 In Routine Costs.

               In Riverside Mining Limited v. Quality Aggregates, Case No. E081228 (4^th Dist., Div. 2 Aug. 19, 2024) (published), Quality leased 73 acres from Riverside Mining, operating a quarry on the land.  Quality brought a civil lawsuit against Riverside Mining for infringing its leasehold, while Riverside Mining countered by filing an unlawful detainer action against Quality.  Quality offered to compromise under a CCP § 998 offer by having Riverside Mining dismiss the UD action with prejudice, each side to bear their own fees and costs.  Riverside Mining did not accept the offer and, after substantial discovery but before trial, it voluntarily dismissed its UD action without prejudice.  Riverside Mining paid $118,372.65 in routine costs to Quality (inclusive of expert witness expenses) based on the winning 998 offer, but successfully resisted Quality’s motion for an attorney’s fees award of $199,514.38 (inclusive of a 1.25 multiplier).

               The 4/2 DCA affirmed the fee denial, agreeing that the lower court properly applied the reasoning of Ford Motor Credit Co. v. Hunsberger, 163 Cal.App.4^th 1526, 1533 (2008).  Because the unlawful detainer action was contractual in nature, Ford found that Civil Code section 1717(b)(2) blocked recovery of fees because CCP § 998 does not expressly authorize a fees award and section 1717(b)(2) effectively “trumped” section 998 in disallowing fees based on the voluntary dismissal. 

               BLOG HAT TIP—We note that Susan Allison of Jeffer Mangels Butler & Mitchell was one of the winning appellate attorneys.  Co-contributor Mike worked with her and other Jeffer attorneys during a Pomona Superior Court trial.  Congratulations, Susan.

Section 998: Plaintiff University Student Owed Judgments Against Two Defendants As A Result Of A Successful Section 998 Offer

Costs Shifting Frequently Can Be The Result With A Well-Crafted 998 Offer.

               Plaintiff student sued Loyola Marymount University and Los Angeles Television Access Corporation (Access) for premises liability and negligence after Access’ photography light fell on student.  After a bench trial, University was held blameless, and student won $22,834 in damages against Access.  However, in Adger v. Loyola Marymount University, Case No. B322707 (2d Dist., Div. 8 Aug. 13, 2024), judgments were entered in favor of University ($30,319.03) and Access ($61,720.98--$88,814.52 in costs minus the judgment against it) because student rejected a CCP § 998 offer which beat the results as to University and Access.  The appellate court affirmed, demonstrating how the judgment calculus can shift when a 998 offer is successful and when there are expert-intensive personal injury cases that do not go as plaintiff had hoped.

Fee Clause Interpretation: Based On A Broad Fee Clause, The Lower Court Correctly Construed An Option Agreement And Awarded Over $1.371 Million In Fees

Shows How Fee Motions Can Be Mini-Trials On Interpretation Of Fee Clauses.

               In Preservation, Finance, Rehabilitation & Development, LP v. Associated Financial Corp., Case No. B325694 (2d Dist., Div. 4 Aug. 13, 2024) (unpublished), defendant won a bench trial in a complex loan transaction case, with the lower court awarding defendant prevailing party fees of $1,371,017 (out of a requested $1,414,748) under a fee clause contained in an options agreement.  The 2/4 DCA affirmed, agreeing with the trial judge that it was necessary to engage in contractual interpretation to see if the option agreement was in play.  It was, and operative broad fees clause was inclusive to cover the option dispute.

Private Attorney General: Defendant Who Provided Appellate Amicus In A Proposition 65 Case Finding No Violations Properly Was Denied CCP § 1021.5 Fee Against A Plaintiff Dismissing The Case After Issuance Of The Earlier Appellate Opinion

Reason Was That Defendant’s Avoidance Of Civil Penalties And The Costs Of Warnings Outweighed Any Important Right, Which Was Coincidental To Its Economic Interests.

               In Environmental Health Advocates, Inc. v. Bio Hazard, Inc., Case No. A168332 (1^st Dist., Div. 1 Aug. 12, 2024) (unpublished), a plaintiff dismissed a Proposition 65 case against defendant after an earlier appellate ruling in a different case (Sream)—where defendant filed an amicus brief—put the kibosh on plaintiff’s position such that it dismissed the pending lawsuit.  Defendant moved for section 1021.5 fees totaling $73,931, a request which was denied.  The 1/1 DCA affirmed.  Although it was successful, defendant did not vindicate an important right, because that was coincidental to its own economic interests of avoiding substantial civil penalties and of avoiding the costs of product warnings—finding “on fours” the reasoning in an earlier First District opinion on private attorney general fees, DiPirro v. Bondo Corp., 153 Cal.App.4^th 150, 196 (2007).  As to the argument about vindicating an important right through the amicus briefing, the Court of Appeal concluded that (1) the brief was only 8 pages long, mainly pointing the panel to the Lee opinion (with two of the justices on Lee also on the Sream panel), and (2) it was inferable that the justices on Sream where well aware of Lee anyway.

Discovery: $4,508 In Attorney’s Fees Awarded Against MyPillow Mogul Mike Lindell In November 2020 Election Case Resulting In An Earlier $5 Million Adverse Judgment

Fee Request Reduced For Excessive Hourly Rates And For Overbroad Discovery Requests.

               In an August 8, 2024 post by some writers for the Business Insider, they report that MyPillow mogul Mike Lindell—who supposedly offered to pay $5 million to any person who could disprove his cyber data and other data relating to the November 2020 election—lost a challenge to Robert Zeidman, with an arbitration panel awarding Mr. Zeidman $5 million and with a Minnesota district judge confirming the award (although an appeal has been filed).  Then, in In re Lindell Management LLC Litigation, Case No. 23-cv-1433 (JRT/DJF) Doc. No. 98 (fee award order filed 8/8/24), U.S. Magistrate Judge Dulce J. Foster confronted Mr. Zeidman’s request for reimbursement of attorney’s fees incurred in bringing a motion to compel where deficient discovery responses were apparently submitted by the respondent LLC.  We post to show you how the thinking of one federal magistrate on how to handle such a request, with fee entitlement not at issue because it arose under FRCP 37.

               Magistrate Judge Foster observed that respondent basically admitted some discovery sanctions were in order, but not the $12,800 claimed by Mr. Zeidman’s attorneys for 16.1 hours at $800/hour (especially given the venue was the Twin Cities legal community).  The magistrate agreed in part, reducing the hourly rate to $400/hour and applying a 30% reduction for some overbroad, scaled-back discovery requests, such that the final fee award was $4,508.

Employment, Settlement: $226,000 Stipulated Amount For Attorney’s Fees To Plaintiffs Under PAGA Settlement Validated On Appeal

The Defense Could Not Retract From Its Agreed-Upon Settlement Amount.

               In Loudon v. DHSE, Inc., Case No. E081497 (4^th Dist., Div. 2 Aug. 8, 2024) (unpublished), defendants agreed to settle a PAGA action through a written settlement agreement providing plaintiffs were entitled to attorney’s fees of $226,000, or one-third of the PAGA settlement amount.  The defense tried to deviate from this amount down the line on appeal after approval of the fee sum, but the lower court approved the fee amount and so, too, did the appellate court.  The reviewing court believed the agreed-upon amount should prevail, but also observed that (1) plaintiffs’ counsel billed more than the agreed-upon amount before approval of the fees, and (2) individual plaintiffs’ fees would have been a lot more had the case gone to trial. 

Settlement: CCP § 664.6 Settlement Validated Where Lemon Law Plaintiff Agreed To Settle For $100,000 Inclusive Of Attorney’s Fees

Effective 1/1/2021, Section 664.6 Allows A Litigant’s Attorney To Orally Stipulate To A Settlement On The Record.

               Lemon law plaintiff was not happy with a lower court’s ruling that found a binding oral, on-the-record settlement which was reached with defendants by her attorneys to settle the case for $100,000 inclusive of attorney’s fees through an MSC ZOOM session which was recorded in stenographic and audio formats.   She argued before the lower court that the settlement was “exclusive” of fees; after a 4-day evidentiary hearing, the lower court agreed with the defense that the settlement was enforceable and that it was “inclusive” of fees.  Plaintiff appealed in Greisman v. FCA US, LLC, Case No. A166919 (1^st Dist., Div. 2 Aug. 5, 2024) (partially published), but the appellate court affirmed the settlement decision by the lower court.

               The legal issue resulting in publication was that, effective January 1, 2021, CCP § 664.6 allows a litigant’s attorney to sign a binding settlement stipulation or orally stipulate on the record that a settlement was reached, abrogating the former rule that litigants had to endorse the settlement under the Levy decision which was superseded.  With respect to whether substantial evidence supported the lower court’s conclusion, it did:  the lower court credited the court reporter’s stenographic and audio evidence that “inclusive” was the word used.  Not to mention that the lower credited the MSC judge’s statement on the record that the settlement for $100,000 was reached despite whatever terms plaintiff reached with her attorneys between themselves.

Prevailing Party, Section 1717: Defendants Winning A Demurrer Dismissal Without Leave Was Contractually Prevailing Party Under Section 1717

Conspiracy And Unjust Enrichment Claims Fell Within An Operating Agreement Contractual Dispute Ambit.

               Many contractual fee disputes depend on whether the claims were “on the contract” under Civil Code section 1717; and if so, who prevailed.  In Zhou v. Hotel Winters, LLC, Case No. C099278 (3d Dist. Aug. 2, 2024) (unpublished), defendants won a demurrer without leave resulting in a dismissal, a merits determination affirmed on appeal, in a case involving conspiracy and unjust enrichment claims under a broad fee dispute contractual clause.  Defendants obtained a $45,000 attorney’s fees award (out of a requested $134,396.25 fee claim), although $625 hourly rates were reduced to $450 for principal attorneys.  The Third District affirmed:  defendants won by showing that the operating agreement was inapplicable, invalid, unenforceable, or nonexistent given that the conspiracy and unjust enrichment claims were “on the contract” under section 1717.  Also, the dismissal based on the demurrer being sustained without leave was a merits determination rather than just a premature or interim victory. 

Reasonableness Of Fees: Despite Challengers Prevailing In Private Attorney General Dispute, They Appealed, Arguing The Fee Award Should Be More

No, The Actual, Roughly $105,800 Fee Award Out Of A Requested $330.363.75, Inclusive Of A 1.5 Multiplier, Was Affirmed—No More Awarded.

               In a recent post, we blogged on the affirmance of a $105,800 fee award (roughly) to challengers in a private attorney general award, and they got there barely under an abuse of discretion standard.  Interestingly, the challengers argued that their fee request of $330,382.75 (inclusive of a 1.5 positive multiplier) should have been granted by the lower court rather than the lower award. The Fifth District disagreed in Westlands Water Dist. v. North Coast Rivers Alliance, Case No. F085567 (5^th Dist. Aug. 5, 2024) (unpublished).

               The lower and appellate courts’ reasoning in this matter is a fee auditor affirmation on why reductions should be done for these activities:  the hourly rates were excessive (Northern California versus Central California rates); there was no showing that Bay Area counsel representation had to be obtained on a case of this nature because no evidence was provided to show why local counsel could not be obtained; fee applicants’ expert witness only offered generalized opinions, not geared to the specifics of the case; and excessive time on many tasks, especially processing Case Management Statements, drafting stock Answers to a Complaint, appellate work involving “cutting and pasting” with not much more originality, and more mundane tasks. The trial court reductions for specific tasks were no abuse of discretion based on its ruling and the appellate record, where reductions were considered.

Private Attorney General: $105,797.40 Fee Award To Some Validation Action Challengers Affirmed On Appeal

Fifth District Affirmed After Independent Review Of Significant Benefit Prong Because Remand Would Be Futile Under An Abuse Of Discretion Standard.

               In Westlands Water District v. All Persons Interested etc., Case No. F085374 (5^th Dist. Aug. 2, 2024) (unpublished), the Fifth District reviewed an attorney’s fees award against Water District and in favor of four challengers to a validation action filed by District, which was dismissed earlier because District’s proposed extended contract with the federal government had key missing terms.  The validation action was dismissed, with that determination affirmed in an earlier Fifth District decision which was published because it involved first impression issues.  Later, the lower court awarded the challengers $105,797.40 in attorney’s fees under CCP § 1021.5, California’s private attorney general statute.  District appealed this award, claiming the respondents were not successful, no enforcement of an important right affecting the public interest was involved, and respondents did not confer a significant benefit on the public in general.

               The Fifth District affirmed the fee award.  It had no problem finding that respondents were successful, because they obtained dismissal of the validation action—their primary litigation objective.  On the important public interest right prong of § 1021.5, it agreed that the result did vindicate the objectives of opposing validation actions and promoted transparency/accountability with respect to public contracts.  The troubling element for the appellate court was the substantial benefit element of § 1021.5.  It agreed that a Brown Act argument did not support an award under this prong, because no Brown Act violation was alleged and there were cure issues which would have been operative.  The Water Code issue was secondary to the ultimate outcome, so that did not help.  However, the publication of the prior appeal on novel issues did satisfy the substantial benefit element, such that there was no need for a remand because this rationale showed that the lower court’s ruling was no abuse of discretion, relying on its own earlier appellate opinion in Robinson v. City of Chowchilla in reaching this result.

Section 998: Lower Court Properly Entered Judgment On An Accepted 998 Offer

The Defense Did Not Timely Withdraw Its Offer Before Acceptance, And The 998 Offer Did Contemplate Entry Of A Judgment Based On The Parties’ Conduct.

               Courts encourage settlements and acceptance of CCP § 998 offers, if structured correctly.  They generally do not honor untimely attempted withdrawals of those offers after acceptance.  That is what occurred in Yehoshua v. American Roofing and Gutters, Inc., Case No. B333020 (2d Dist., Div. 1 Aug. 2, 2024) (unpublished).

               What happened in this case was that plaintiff accepted defendants’ section 998 offer.  Defendants tried to withdraw it after acceptance.  Then, after eight rounds of submitting proposed judgments by plaintiff, the lower court entered judgment by which money was accepted by plaintiff (plus reasonable attorney’s fees and costs to be determined by motion), one defendant’s cross-complaint was dismissed, defendants waived claims against plaintiff and his counsel, and plaintiff had judgment entered on his complaint.  (Defendants did not raise the argument that no entry of judgment was contemplated under the section 998 until their objection to the fifth proposed judgment.)

               Defendants’ appeal of the judgment based on the section 998 acceptance was unsuccessful.  Defendants argued that the section 998 offer was not accepted until the notice of acceptance was filed with the lower court.  That argument was rejected because section 998 only provides that the notice of acceptance is filed after the offer is accepted, an act not required for acceptance to occur prior to filing of the notice.  Although the offer was ambiguous as to whether entry of judgment was contemplated, the parties’ subsequent conduct demonstrated that this was the case given that defendants waited more than a year to raise this objection after five rounds of proposed judgments were submitted. 

Appealability, Arbitration, Employment, Preemption: $176,687.96 Fees And Sanctions Award For Employer’s Failure To Advance Fees Affirmed On Appeal

Employers Not Paying Fees Upfront Can Be Exposed To Further Arbitration Expenses Before the Axe Comes Down; Appellate Court Found No FAA Preemption, With This Preemption Issue Now Being Reviewed By The California Supreme Court.

               Although unpublished, Costa-Fleeson v. Americor Funding, Inc., Case No. G062962 (4^th Dist., Div. 3 Aug. 1, 2024) (unpublished) is a stark reminder to employers that failure to timely pay arbitration fees can result in the forfeiture of the ability to arbitrate as well as imposition of attorney’s fees and costs under Code of Civil Procedure sections 1281.98(c)(1) [covering “all attorney’s fees and costs associated with the abandoned arbitration proceeding”] and 1281.99 [with this latter statute providing for a mandatory monetary sanction to pay reasonable attorney’s fees and costs incurred by the employee as a result of the material breach of the arbitration agreement].  The appellate court affirmed five of six categories of fees and costs awarded to employee by the lower court as a result of employer’s failure to timely pay arbitration dues, with the employer likely not happy with the $176,687.96 adverse award.  In doing so, it found the lower court’s order was appealable as a monetary sanction under CCP § 904.1(a)(12).  The 4/3 DCA also found unpersuasive that the statutes were preempted by the Federal Arbitration Act.

               BLOG UPDATE—The FAA preemption issue was recently taken up for review, on June 12, 2024, by the California Supreme Court in Hohenshelt v. Superior Court (2d Dist., Div. 8 2/27/24), where the majority found no preemption and where dissenting Justice Wiley found the arbitration payment statutes were preempted.

Eminent Domain, Reasonableness Of Fees: City Losing Summary Judgment Motion In Eminent Domain Proceeding Was Properly Saddled With $246,744.50 In Fees

Summary Judgment Grant Was A Predicate For CCP § 1268.610 Fees, And Lower Court Made Reductions For Duplicative Work.

               In City of Ontario v. We Buy Homes Any Condition, LLC, Case No. D083080 (4^th Dist., Div. 1 July 19, 2024 filed) (published on July 31, 2024), City lost an eminent domain case at the summary judgment stage, a determination affirmed on appeal.  The lower court also awarded the defense $246,744.50 in CCP § 1268.610 attorney’s fees for prevailing, reducing the “ask” request of $331,161.50 downward.  City’s appeal of the fee award was unsuccessful.  The appellate court determined that a SJM grant was a dismissal which qualified the defense for fees under section 1268.610.  With respect to the amount of fees awarded, there was no abuse of discretion—the lower court reduced a second firm’s fees by 70% and also reduced lead partners’ time on the SJM by 50%, showing a reasonable exercise of discretion. 

Fee Clause Interpretation, Section 1717: Prevailing Defendant’s Dismissal Of Cross-Complaint After Winning Did Not Give Rise To Fee Exposure

Santisas Rule Applied, With Dismissed Cross-Complaint Only Raising Contractual Claims.

               In Colaco v. Marcum LLP, Case No. B326252 (2d Dist., Div. 2 July 30, 2024) (unpublished), plaintiff sued his accounting firm for misrepresentation after losing money in some investments, with the defendant obtaining summary judgment and then voluntarily dismissing a cross-complaint containing indemnity and declaratory relief cross-claims.  Although the accounting firm’s engagement letters had broad fee clauses, the lower court denied plaintiff’s request to be awarded attorney’s fees under Civil Code section 1717.  The 2/2 DCA affirmed under the Santisas v. Goodin, 17 Cal.4^th 599, 602 (1998) rule applicable to voluntarily dismissed contract claims.  Plaintiff could not distance himself from admissions that he was suing “on the contract,” and he could not articulate persuasively how the dismissed cross-claims were tort claims falling outside of Santisas. 

Civil Rights: The Price Of A Frivolous ADA Hotel Accessibility Action In Terms Of Attorney’s Fees—Plaintiff Was Hit With A $57,604.90 Adverse Fee/Costs Award

Voluntary Dismissal Before Opposition To Summary Judgment Motion Did Not Do The Trick.

               In Garcia v. Zarco Hotels Incorporated, Case No. B332298 (2d Dist., Div. 1 July 29, 2024) (unpublished), plaintiff brought an ADA suit challenging a hotel’s accessibility policies to enable disabled persons to determine whether the hotel’s common areas and room were accessible to them.  Hotel moved for summary judgment, challenging the accessibility assumptions, with plaintiff dismissing the case before any SJM opposition was due.  (In moving for SJM, hotel relied on about 50 federal district court decisions dismissing similar claims about hotel reservations websites, most filed by plaintiff’s counsel and including many where plaintiff was the plaintiff.)  The lower court found that plaintiff’s case was frivolous under the ADA’s fee-shifting provision in 42 U.S.C. § 12205 which permits a court, in its discretion, to award reasonable attorney’s fees and costs against a plaintiff and in favor of a prevailing defendant where “the plaintiff’s action was frivolous, unreasonable, or without foundation.”  (Summers v. A. Teichert & Son, Inc., 127 F.3d 1150, 1151 (9^th Cir. 1997).)  The lower court awarded $57,604.90 in fees and costs to hotel as the prevailing party.

               The 2/1 DCA affirmed, based on an abuse of discretion review standard.  Plaintiff’s own evidence did not bear out his case, and the federal decisions otherwise did not blunt that the hotel’s website was ADA compliant based on the SJM evidence never refuted by Plaintiff.