CALIFORNIA ATTORNEY'S FEES

Appealability, SLAPP: Defense Appeal Of Fee Award After SLAPP Merits Decided, Claiming More Fees Should Have Been Awarded, Was From A Non-appealable, Interlocutory Order

Appeal Was Dismissed.

               The defense in Ali v. Dignity Health, Case No. B331058 (2d Dist., Div. 5 Dec. 31, 2024) (unpublished) won some aspects of a SLAPP motion and was granted some mandatory fees, but the defense appealed and claimed that the SLAPP motion should have been granted in entirety and more fees awarded.  The fee motion and subsequent order ensued after the SLAPP merits were decided.  The DCA dismissed the appeal, determining that an order awarding or denying SLAPP fees made after determination of the SLAPP merits was a non-appealable, interlocutory order.  (Doe v. Luster, 145 Cal.App.4^th 139, 156 (2005).)

Costs: Expert Witness Fees, Unsuccessful/Withdrawn Motions, Unused Witnesses/Experts/Exhibits, Subpoened Documents Not Used At Trial, And Investigative Expenses Considered On Appeal

Most Were Discretionary By The Lower Court, Except For Investigative Fees Which Are Not Allowed.

               In Slutske v. Gratton, Case No. B325068 (2d Dist., Div. 1 Dec. 31, 2024) (unpublished), the appellate court largely affirmed a lower court’s determination that the following costs were allowable in its discretion based on CCP § 998 or “reasonable/necessary” catchall leeway allowed under the costs statute:  (1) expert witness fees allowable after non-acceptance of a 998 offer; (2) unsuccessful or withdrawn motions allowable if reasonable/necessary; and (3) costs of witnesses/experts not testifying at trial or exhibits not used at trial allowable if reasonable/necessary.  However, investigative expenses were stricken as allowable costs, with neither side arguing because they are expressly not allowable (CCP § 1033.5(b)(2)).  The DCA also determined that costs for subpoenaed documents not used at trial were expressly allowable because they are “deposition costs.”

Year In Review—2024

Part 2 of 2—Mike, Marc, and Shanna’s Top 25 Decisions For 2024.

3rd Floor Corridor, James R. Browning U.S. Court of Appeals Building, San Francisco, California. Carol M. Highsmith, photographer. 2009. Library of Congress.

               As we have done in the past, we post our top 25 decisions—in two parts—for 2024, which brought an influx of fee/costs opinions from the ten we posted on for year-end 2023.  We subjectively picked those that were noteworthy in their areas, although there were others which are significant and can be reviewed by a category search on the home page of our website.  We would caution that some of the decisions have been accepted for review by the California Supreme Court, which means the review grants must be checked to see if these opinions are citable before the state supreme court issues its opinions on the cases taken up for review.  With that said, we now go Part 2 of 2 of our Top 25 decisions for 2024, wishing readers Happy and Safe Holidays.

12. Arbitration.  Hohenshelt v. Superior Court (2024) 99 Cal.App.5^th 1319, review granted.  Majority justices concluded that employer’s failure to satisfy the 30-day payment deadline of paying arbitration fees and expenses under Code of Civil Procedure section 1281.98 returned the matter to the trial court level, with Justice Wiley, in dissent, finding that section 1281.98 was preempted by the Federal Arbitration Act.  There were other appellate opinions, which included dissents, going various ways on the preemption issue.  The California Supreme Court granted review on the preemption issue on June 12, 2024 in this case (Case No. S284498).

11. Section 998.  Ayers v. FCA US, LLC (2024) 99 Cal.App.5^th 1280, review granted.  This was a split decision, with the majority concluding that Code of Civil Procedure section 998’s cost-shifting provisions do apply in a settlement context, with Justice Viramontes dissenting and concluding otherwise.  The California Supreme Court granted review and deferred briefing on May 15, 2024 based on the fact that the same issue was pending in an earlier opinion which was taken up on review, Madrigal v. Hyundai Motor America, Case No. S280598.  The specific issue is this:  Do CCP § 998 cost-shifting provisions apply if parties ultimately negotiate a pretrial settlement?  The state supreme court has scheduled oral argument in Madrigal on January 7, 2025.

10. Discovery Sanctions.  Masimo Corp. v. The Vanderpool Law Firm, Inc. (2024) 101 Cal.App.5^th 902.  Discovery sanctions are not limited to an award against a current counsel of record, with predecessor counsel responsible for discovery abuse sanctions based on that counsel’s conduct.  This is one of the last published decisions by Justice Bedsworth, who recently retired.

9. Judgment Enforcement, Retainer Agreements.  Dickson v. Mann (2024) 103 Cal.App.5^th 536.  Judgment debtor’s deposit of amounts representing putative attorney’s fees with judgment debtor’s law firm did not immunize the deposit from a third-party judgment enforcement levy where the law firm had yet to earn the fees under a flat fee agreement.

8. Section 998. Gorobets v. Jaguar Land Rover North America, LLC (2024) 105 Cal.App.5^th 913:  (1) simultaneous 998 offers to the same party are not effective because they do not allow the trial court to determine which party was successful; and (2) an offer to pay amounts to which an offeree is “statutorily entitled “ without further delineation and to submit any disputes over entitlement to a third-party arbiter is too uncertain in nature.  However, in a split opinion, the majority and dissent disagreed on whether a valid offer in simultaneous offers could survive for purposes of allowing fee/cost-shifting; majority said yes; dissent said no.  However, we can report that there is now a split on the issue of whether simultaneous 998 offers are invalid, with the San Diego appellate court finding that this language in Gorobets is at odds with its thinking, but also finding a trial judge can evaluate independent 998 offers and decide if one allows for costs/fee-shifting under section 998—the latter determination not seeming to be antithetical with Gorobets.  (See Zavala v. Hyundai Motor America (4^th Dist., Div. 1) Case Nos. D082747/D082940 [published].)

7. Section 1717.  Riverside Mining Ltd. v. Quality Aggregates (2024) 104 Cal.App.5^th 269.  Voluntary dismissal of unlawful detainer action precluded a recovery of attorney’s fees based on Civil Code section 1717(b)(2), with a CCP § 998 rejected offer not independently authorizing recovery of fees.

6. Default Judgment, Reasonableness of Fees.  LCPFV, LLC v. Somatdary (2d Dist., Div. 8 Nov. 13, 2024) Case No. B325599 [published].  Trial court is the default judgment gatekeeper; it did not err in denying an inflated $308,000 fee request, by awarding just $4,498.46 in fees in a no-show case by defendant, in a simple case, and in a case where there was an inflated fee submission, where only $120,319.22 was obtained as damages in the default proceeding.

5. Prevailing Party, Settlement.  Robles v. City of Ontario (4^th Dist., Div. 3 Nov. 6, 2024) Case No. G064119 [published].  Where a stipulated judgment contained carve-out language allowing plaintiffs to enforce the settlement under CCP § 664.6, the appellate court deemed this language sufficient to allow for the further attorney’s fees being requested by the party attempting to enforce the settlement at a post-judgment stage.  However, the lower court would have to determine, on remand, if plaintiffs were prevailing parties with respect to achieving their litigation objectives in obtaining Voting Rights Act map relief under the stipulated judgment; and, if so, the amount of further fees to be awarded to plaintiffs.

4. Section 1717, Unlicensed Contractor.  American Building Innovation LP v. Balfour Beatty Construction (2024) 104 Cal.App.5^th 954.  Defendant contractor winning attorney’s fees against plaintiff subcontractor was properly awarded significant attorney’s fees under a subcontract fees clause, with a contractor licensure issue being an affirmative part of losing plaintiff’s case and not triggering a Mountain Air affirmative defense argument otherwise.

3. Allocation, Homeowner Associations, Prevailing Party.  Haidet v. Del Mar Woods Homeowners Assn. (4^th Dist., Div. 1 Nov. 5, 2024) Case No. D082923 [published after first issuance].  Award of Davis-Stirling Act attorney’s fees under Civil Code section 5975(c) was properly granted to HOA as prevailing party where it achieved its litigation objectives through a successful demurrer and a subsequent dismissal with prejudice of all claims against it, with no allocation required on the fees awarded for its defense work.  The appellate court indicated that a pragmatic litigation objective test was the one to use under section 5975(c).

2. Special Fee Shifting Statute.  Nerio Mejia v. O’Malley (9^th Cir. Nov. 4, 2024) No. 23-3162 [published].  Under the Equal Access to Justice Act fee-shifting statute, plaintiff prevailing in a Social Security disability proceeding was entitled to a full attorney’s fee request where the district court did not need to address alternative arguments even though the work on those arguments was compensable because plaintiff showed the government’s positions were not substantially justified overall.

1. Employment, Section 998. Chavez v. California Collision, LLC (1^st, Div. 3 Dec. 10, 2024) [partially published].  Specific Labor Code costs-shifting provisions are pro-employee—costs allowable to a winning employee, but with costs not awardable to the employer unless employee’s case was found frivolous/meritless in nature.  The appellate court determined these specific Labor Code provisions had priority over the more general § 998 costs-shifting mechanism, affirmatively citing and agreeing with Cruz v. Fusion Buffet, Inc., 57 Cal.App.5^th 221, 242 (2020), as well as reversing as a matter of law a defense costs award against a prevailing employee not beating a § 998 offer.

**BONUS COVERAGE.  Winston v. County of Los Angeles, Case No. B323392 (2d Dist., Div. 8 Dec. 13, 2024) [published].  California’s whistleblower fee shifting statute, Labor Code section 1102.5(j), is retroactive to cases pending as of a January 1, 2021 amendment allowing a lower court to award discretionary costs to a prevailing whistleblower worker.

Section 998: Although Finding “The Defendant” Language Ambiguous And No Relevant Legislative History, 2/1 DCA Finds Unaccepted 998 Cost-Shifting Penalties Are Applicable Against A Personal Representative When Defendant Died After Rejecting 998 Offer

Policy of Encouraging Settlements Cemented This Conclusion.

               In an interesting unpublished opinion, Calleja v. Udewitz, Case No. B319906 (2d Dist., Div. 1 Dec. 30, 2024) (unpublished), the 2/1 DCA decided that CCP § 998’s cost-shifting penalties applied to a subsequent personal representative of a deceased defendant not accepting a 998 offer before his death in a personal injury case where plaintiff eventually obtained a more favorable result.  Although “the defendant” language of section 998 was ambiguous and no relevant legislative history could be found on the issue, the panel determined that the encouragement of early settlement in a personal injury case led to its conclusion that the personal representative, in a personal representative capacity on behalf of the estate, should be bound by the consequences of deceased’s prior decision, bolstered by the fact that this would incentivize the personal representative to carry on settlement discussions with plaintiff.  Otherwise, in a different situation where there was still time to negotiate an informal resolution, personal representative could make his/her own section 998 offer without any repercussions from the earlier nonacceptance.

               In a footnote, the DCA did observe that no one argued the applicability of Probate Code section 1002, which provides: “Unless it is otherwise provided by this code or by rules adopted by the Judicial Council, either the superior court or the court on appeal may, in its discretion, order costs to be paid by any party to the proceedings, or out of the assets of the estate, as justice may require.”

Employment, Requests For Admission: Defendant Employer Not Entitled To Attorney’s Fees For Defeating Wage/Hour Claims Because Nothing Showed The Action Was Brought In Bad Faith

Costs-Of-Proof Sanctions Also Not Available Because That Would Thwart The Pro-Employee Cost-Shifting Statutory Provisions.

               In Cruz v. Calop Business Systems, Inc., Case No. B337749 (2d Dist., Div. 2 Dec. 26, 2024) (unpublished), employee lost wage/hour and unfair competition claims after not opposing a defense summary judgment motion.  However, no finding was ever made that employee’s case was brought in bad faith.  Defendant moved to obtain attorney’s fees of $348,830 under two statutes: (1) Labor Code section 218.5, which requires a bad faith finding against an employee as a prerequisite to a defense fee award; and (2) Code of Civil Procedure section 2033.420 costs-of-proof sanctions for denying defense RFAs across the board.  The lower court denied the fee requests, with the appellate court affirming those results.  Given the lack of a finding of bad faith, no 218.5 fees were allowable to the defense.  With respect to the costs-of-proof sanctions, the parties agreed that the wage claims were intertwined with the nonwage claims, so section 2033.420 could not be used to subvert the 218.5 fee restrictions. 

Year In Review—2024

Part 1 of 2—Mike, Marc, and Shanna’s Top 25 Decisions For 2024.

Architectural details of the U.S. Courthouse in Los Angeles, California. Carol M. Highsmith, photographer. Between 1980 and 2006. Library of Congress.

               As we have done in the past, we post our top 25 decisions—in two parts—for 2024, which brought an influx of fee/costs opinions from the ten we posted on for year-end 2023.  We subjectively picked those that were noteworthy in their areas, although there were others which are significant and can be reviewed by a category search on the home page of our website.  We would caution that some of the decisions have been accepted for review by the California Supreme Court, which means the review grants must be checked to see if these opinions are citable before the state supreme court issues its opinions on the cases taken up for review.  With that said, we now go Part 1 of 2 of our Top 25 decisions for 2024.

25. Contractual Expenses, Reasonableness of Fees, Trade Secret Misappropriation.  Applied Medical Distrib. Corp. v. Jarrells (2024) 100 Cal.App.5^th 556 [4^th Dist., Div. 3]:  Appellate court reversed lower court’s 75% reduction in fees because plaintiff only prevailed on one out of four claims because that mechanical approach failed to appreciate that work might have been intertwined and further decided that litigation expenses (non-cost) under a contractual “fees, costs, and expenses” provision had to be pled and proven as damages at trial rather than just sought via a costs memorandum.

24. Judgment Enforcement. G.F. Galaxy Corp. v. Johnson (2024) 100 Cal.App.5^th 542 [4^th Dist., Div. 1]: Judgment creditor seeking judgment collection fees under CCP § 685.040 for work in a second fraudulent transfer action did not have to be a “prevailing party” in the second action before seeking post-judgment collection fees in the first action resulting in the underlying judgment.

23. Employment.  Gramajo v. Joe’s Pizza on Sunset, Inc. (2024) 100 Cal.App.5^th 1094 [2d Dist., Div. 8]:  Labor Code § 1194(a)’s mandatory fee shifting statute in favor of employees prevails over general CCP § 1033(a) discretionary standard to deny fees/costs to employee where there is limited success.  However, reasonableness of fees would be a critical issue on remand, given that plaintiff only recovered $7,659.93 in compensatory damages in an unlimited case (7-week jury trial) and then sought $296,920 in statutory fees which were denied entirely before reversal on appeal. 

22. Appealability.  Williams v. Doctors Medical Center of Modesto, Inc. (2024) 100 Cal.App.5^th 1117 [5^th Dist.]: There is a split in California intermediate appellate authority on treatment of fee awards dependent on a potential future merits reversal.  Some hold the appellate court can reverse the fee award without a separate appeal if the merits judgment is reversed, while others hold a fee reversal is dependent on a combined appeal or separate appeals, with the preferred practice to appeal each.  After surveying the conflicting decisions, the Fifth District found nothing wrong with a separate fee appeal despite this conflict. 

21. Insurance, Brandt Substantiation.  Byers v. Superior Court (2024) 101 Cal.App.5^th 1003 [1st Dist., Div. 5] posed this issue and answered it:  When a party seeking attorney’s fees as damages under Brandt v. Superior Court (1985) 37 Cal.3d 813, 819, does that party impliedly waive the attorney-client privilege with respect to producing fee agreements, invoices, billings, and payment information where the fees are claimed as damages?  Answer:  generally, yes.  However, the opinion needs to be read carefully on this issue, given it is also circumspect in some nuances of the subject matter under consideration.  It decided that there is no automatic right of bifurcation of a right of liability versus reasonableness of fees on Brandt issues.  Just as important, the appellate court did not disagree that redactions could be made when producing privileged information to the extent non-Brandt fees were at issue.

20. Employment. FEHA Fees For Second Trial Which Was Nullified Partially for Attorney Misconduct.  Simers v. Los Angeles Times Communications LLC (2024) 104 Cal.App.5^th 940 [2d Dist., Div. 8]:  Reduction of FEHA fee request where a second trial nullified partially based on attorney misconduct, granted through a new trial motion, is a discretionary lower court call and is not “unrelated” to a third trial on identical issues where there was eventual success in the new trial.  Lower court properly did reduce the offending attorney’s hourly rate in the fee motion proceeding.

19. Judgment Enforcement.  Ofek Rachel, Ltd. v. Cohen (2024) Case No. B333959 [2d Dist., Div. 2]:  Code of Civil Procedure section 1218(a) allows a person who was a litigant in an underlying lawsuit to be liable for contempt and then ordered to pay judgment creditor’s attorney’s fees and costs incurred in the separate post-judgment proceeding.

18. Family Law, Judgment Enforcement. Marriage of Shayan (2024) Case No. B323455 [2d Dist., Div. 8]:  An attorney’s fees judgment under Family Code section 2030 was not governed by the normal 10-year enforcement period for most monetary judgments, based on Family Code section 291(b), the section’s legislative history, and common sense.  12-year fee judgment could be enforced.

17. Family Law, Special Fee Shifting Statutes—DVRO Proceedings.  Dragones v. Calkins (2024) 98 Cal.App.5^th 1075 [2d Dist., Div. 7]:  New Family Code section 6344, effective January 1, 2023, retroactively applied to domestic violence restraining order (DVRO) proceedings to prevailing petitioners who do not need to show ability to pay for purposes of obtaining a prevailing party fees award assuming the respondent has the ability to pay.

16. Costs.  Garcia Tempur-Pedic North America, LLC (2024) 98 Cal.App.5^th 1075 [4^th Dist., Div. 2]:  Award of routine costs to defense for noticed, untaken depositions, for obtaining a certificate of nonappearance, for last minute cancellation of a deposition by plaintiff’s attorney, for notice to depose a fact witness who subsequently died, and for service costs associated with depositions is subject to a lower court’s discretionary call on whether they were reasonably necessity to the litigation when incurred, observing that hindsight is not the proper test.

15. Discovery Sanctions.  City of Los Angeles v. Pricewaterhousecoopers, LLP (2024) 17 Cal.5^th 460 [Cal. Supreme Court]:  General sections of the Discovery Act allow trial judges to impose sanctions for egregious discovery violations, although notice to be heard/oppose, causation, and reasonableness principles were to be considered as under more specific Discovery Act statutory provisions.

14. Section 1717.  Andrade v. Western Riverside Council of Governments (2024) 99 Cal.App.5^th 1020 [4^th Dist., Div. 1]:  Narrow attorney’s fees clause applying to judicial foreclosure action only was expanded under Civil Code section 1717 to encompass the entire contract because there was no qualifying language that the agreement was negotiated and signed by parties represented by counsel pursuant to a specific section 1717 provision.

13. Civil Rights, Costs, Employment.  Neeble-Diamond v. Hotel California by the Sea, LLC (2024) 99 Cal.App.5^th 551 [4^th Dist., Div. 3]:  Prevailing FEHA defendant cannot solely recover costs through a cost memorandum, with a noticed motion necessary to determine if plaintiff’s case was objectively frivolous for costs entitlement purposes.

Prevailing Party, Section 1717: Tenant Prevailed Under Civil Code Section 1717 Based On A Contractual Fees Clause By Defeating Landlord’s Unlawful Detainer Action

Tenant Proved There Was A Defective 3 Day Notice For Nonpayment, Because Tenant Did Not Contest It Was Claiming Occupancy Of Unleased Areas--$122,855 Was The Fee Award.

                Big Washington LLC v. Superdudes, LLC, Case No. F086483 (5^th Dist. Dec. 20, 2024) (unpublished) shows how highly contested unlawful detainer actions can produce a substantial award to a prevailing party (in this case, the tenant) to the tune of $122,855.

               Plaintiff landlord filed an unlawful detainer action against defendant tenant for nonpayment of rent, based on the claim tenant was not paying for areas not encompassed within a lease (with tenant not claiming any rights in those areas).  Tenant eventually was granted a summary judgment based on a defective 3-day notice to pay or quit, with tenant later awarded $122,855 in fees for 473.5 hours applying the local market rate.

               Landlord appealed, but did not obtain a change in the fee award.  Landlord argued that CCP § 1032 (the routine costs provision) applied, but the appellate court properly observed that specific fee statutes govern the interpretation of what litigant prevails.  Given that tenant beat the unlawful detainer action and retained possession of the commercial premises, tenant was the prevailing party by achieving its primary litigation objectives. 

Appealability, Insurance: Lower Court Did Not Error By Awarding $2,718 In Brandt Attorney’s Fees In A Contingency Case Based On The Cassim Formula

Lodestar Analysis Does Not Apply In A Brandt Contingency Case Situation.

               Under Brandt v. Superior Court, 37 Cal.3d 813 (1985), a jury or lower court (via a posttrial stipulation for the court) can award attorney’s fees to a prevailing plaintiff as damages in an insurance case limited to the time spent to recover the benefits of the insurance contract.  Later, Cassim v. Allstate Ins. Co., 33 Cal.4^th 780 (2004) established how Brandt fees are to be determined in a contingency fee case where there are mixed claims:  the percentage of fees paid to the contingency attorney based on the work attributable exclusively to the contract recovery, with any work spent on other issues (usually tort claims) allocated out of the calculation.  The lodestar analysis does not apply to Brandt fee “damages.”

               Unfortunately for prevailing plaintiffs in an insurance case, the Cassim methodology resulted in just a $2,718 Brandt damages award after plaintiffs recovered $25,787,50.  That triggered an unsuccessful appeal in Saydman v. Aegis Security Ins. Co., Case No. G063209 (4^th Dist., Div. 3 Dec. 20, 2024) (unpublished).

               The appellate court first had to consider whether plaintiffs had timely appealed because they did not appeal the initial judgment before an amended judgment was entered after a separate posttrial proceeding on the Brandt issue.  Normally, plaintiffs would have been untimely, in their appeal, but because Brandt fees are damages, it was timely to appeal the amended judgment based on the bifurcated nature of the proceedings.

               But plaintiffs lost the merits challenge to the fee award.  The lower court did follow the Cassim methodology given the substantive award was small and following allocating out time spent on other claims.  It concluded this way: “Cassim dictates how Brandt fees are calculated in the context of a contingent fee—which was not the lodestar method—and we are bound to apply it.”  (Slip Op., p. 14.)

               Justice Motoike authored the 3-0 opinion.

In The News . . . . UC Hematologist Awarded Over $3.9 Million In Attorney’s Fees After Winning Gender Discrimination Lawsuit

In A Prior Jury Retrial, She Was Awarded $14 Million.

               As reported recently by The Orange County Register, a UC hematologist, Dr. Lauren Pinter-Brown, was awarded over $3.9 million in attorney’s fees, as against the UC Regents on December 19, 2024, by a Los Angeles County Superior Court judge after she won a $14 million jury verdict after 8 years of litigation, including an earlier appellate reversal and a jury retrial.  She sued for being forced out from her job based on gender discrimination.  We presume the fee award was based on FEHA’s fee-shifting statute.

Costs, Special Fee Shifting Statute: More Than $73,000 In City Attorney Time Needed To Complete CEQA Administrative Record Affirmed On Appeal

Yes, Attorney, Paralegal, And Engineering Time Can Be Available As Allowable Costs And Fees To A Prevailing City In A CEQA Case.

               Public Resources Code section 21167.6(b)(1) authorizes an award of allowable fees or costs in a CEQA case to a prevailing party, which may include reasonable attorney, paralegal, and engineering fees in completing an administrative record which is required in a CEQA case. 

               In Russian Riverkeeper v. City of Ukiah, Case Nos. A168090/A169390 (1^st Dist., Div. 3 Dec. 20, 2024) (unpublished), City closed a landfill with a cover system, certified an environmental report, and approved the landfill closure, decisions challenged unsuccessfully by plaintiffs in a CEQA case.  The merits determination was affirmed on appeal.  However, the lower court also awarded more than $73,000 to City for its attorney’s help in preparing the administrative record essential in CEQA cases.  That ruling also was affirmed because when private litigants cede the record preparation to the City, attorney’s fees can be awarded in the lower court’s discretion under the right circumstances.  (See The Otay Ranch, L.P. v. County of San Diego, 230 Cal.App.4^th 60, 70-71 (2014); No Toxic Air, Inc. v. Lehigh Southwest Cement Co., 1 Cal.App.5^th 1136, 1142 (2016).)

Private Attorney General, Section 1717: Attorney Representing Himself, And Showing No Separate Retainer With Wife, Was Denied Attorney’s Fees For Prevailing Against Lender On Default Interest Penalty Dispute

Trope Generally Barred Fees, Plus Husband Could Not Show His Financial Interest Allowing For CCP § 1021.5 Fees.

               In Honchariw v. FJM Private Mortgage Fund, LLC, Case No. A169447 (1^st Dist., Div. 3 Dec. 20, 2024) (unpublished), husband represented himself and his wife, although he had no evidence of an attorney-client relationship with his wife, against a lender, winning an appellate reversal of a post-arbitration award confirming an arbitration result involving default interest which was ultimately determined to be a penalty in a prior appellate court decision.  Husband then moved for nearly $600,000 in attorney’s fees based on lender document contractual clauses and the private attorney general statute (CCP § 1021.5).

                The lower court denied the request, a conclusion affirmed by the 1/3 DCA.

               On the contractual fee front, the problem was that husband could not surmount the obstacle that his efforts and those for his wife were barred because he represented himself in pro per, falling within the Trope v. Katz prohibition.  Although an attorney-client relationship could exist between spouses, he failed to establish one and did not show that any extra time was spent in representing his wife.  On the § 1021.5 argument, husband did not show that he and his wife did not have a large financial incentive to justify broader fees:  they would have been liable for $30,000 in default interest, they would have been liable for fees and costs to lender had it won, and they sought $5 million in punitive damages in the overall lawsuit.  Although the fees and costs “incurred” were significant (if allowable, but they were not), no burden by them was shown as far as financial costs given that husband represented both and had no separate indicia that he represented wife in a true attorney-client relationship—another way of saying that they could not prove any allowable financial burden based on the self-representation. 

Section 998: Prevailing Insurance Carrier Defendant Properly Awarded $7,500 In Expert Witness Fees And Other Routine Costs After Plaintiffs Rejected Separate CCP § 998 Offers

Plaintiffs Obtained Zero Damages, So $14,242.56 Offers To Each Unsuccessful Plaintiff Allowed For 998 Costs Shifting.

               In Chang v. Fire Ins. Exchange, Case No. B334217 (2d Dist., Div. 7 Dec. 19, 2024) (unpublished), two plaintiffs lost insurance and related tort claims against insurance carrier, after the plaintiffs rebuffed separate $14,242.56 offers under CCP § 998.  Plaintiffs lost after demurrers and terminating discovery sanctions were sustained/granted as to their claims.  Defendant carrier was awarded $7,500 in expert witness fees and other routine costs, with the total costs award being $14,849.75.  The appellate court affirmed the 998 cost shifting awards.  The defense did something nice in their 998 offers, attaching a forensic examiner’s analysis of repair costs supporting the 998 offers—specificity was there!  Beyond that, plaintiffs did not argue the 998 offers were invalid such that the burden shifted to plaintiffs to show the offers were made in bad faith.  They were not (with plaintiffs not satisfying the burden shifting otherwise), because a zero damages award is prima facie evidence that the defense offers were reasonable in nature. 

Eminent Domain: City Properly Assessed With Litigation Expenses Of $312,920 In Attorney’s Fees, $11,300 In Costs, And $48,346 In Appraisal Expenses

City’s Final Offer Was Unreasonable, While Condemnees’ Revised Final Demand Was Reasonable Because Its Demand Was The Exact Damages Award By The Lower Court.

               Code of Civil Procedure section 1250.410 allows a lower court to an eminent domain case to award defendant's costs and fees where the mandated exchange of a final demand and final offer produces a reasonable demand, but an offer which the court finds to be unreasonable and not in good faith.  City of Pacifica v. Tong, Case Nos. A168115 et al. (1^st Dist., Div. 1 Dec. 18, 2024) (unpublished) involved the appeal of a litigation expenses award in favor of condemnees and against the City.

               As with many eminent domain cases, the pivotal issue was valuation of Pacific Coast panoramic bluff side property which was subject to erosion.  The City made final offers of $76,500 (never increasing the offer), even though condemnees made a first demand of $4.75 million, lowered later to $2.2 million, and lowered still to $2 million after the lower court ruled that valuation could not be based on Transferable Development Rights.  City stuck to $76,500.  The lower court found City’s valuation faulty, awarding $2 million to condemnees based on their appraisal expert.  Then, the lower court did award most of the litigation expenses requested by condemnees to the tune of $312,920 in attorney’s fees, $11,300 in routine costs, and $48,346 in appraisal expenses.  City appealed the merits and litigation expenses rulings.

               The appellate court affirmed both rulings.  On the $2 million merits award, although concluding that the lower court erred in its project influence factor analysis, it still found the ultimate award was supported by substantial evidence.  With the respect to the litigation expenses award, the condemnees’ final demand was reasonable because it matched the lower court’s valuation award.  By contrast, City’s final offer was not reasonable, because it was less than 4% of the amount awarded—with one appellate decision indicating that a final offer which is 60% or less of a jury verdict being unreasonable and that a final offer of over 85% of the award being reasonable per se, also detailing other factors to be considered for offers in the middle range.  (People ex rel. Dept. of Transp. v. Yuki, 31 Cal.App.4^th 1754, 1764 (1995).)  City’s offer was not in good faith because (1) it was based on valuation non-comparables; (2) its offer would provide no benefit to condemnees, which owed $200,000 in back real estate taxes; and (1) it ignored that there would be value to a land banker.  

Section 998: 4/1 DCA Decides That Separate CCP § 998 Offers Must Be Evaluated By Offerees, Even If One Of Them Is Invalid

This Likely Is A Split In Intermediate Appellate Reasoning, Especially From Reasoning in the Second District’s Gorobets Recent Opinion—But Maybe Not On The End Result When Evaluating Alternative Offer Scenarios. 

               Well, we have a split in intermediate appellate thinking on how simultaneous, alternative CCP § 998 offers should be treated under California law. On October 18, 2024 we posted on Gorobets v. Jaguar Land Rover North America, LLC, 105 Cal.App.5^th 913 (2d Dist., 2024), a splintered opinion on simultaneous offers but not askew with respect to the Second District’s conclusion that simultaneous offers were invalid.  However, a closer look shows that the ultimate results in Gorobets and the 4/1 DCA’s decision in Zavala v. Hyundai Motor America, Case Nos. D082747/D082940 (4^th Dist., Div. 1 Dec. 17, 2024) (published) may not be at odds, except for the disagreement on the “simultaneous offers” principle.

               In Zavala, plaintiff won a Song-Beverly Act case, but the real controversy focused on whether the defense “alternative” 998 scenarios, made in one offer, was effective to shift fees and costs.  One was a straightforward money offer, and the other was an offer dependent on future valuation of even core damages concerns.  The lower court concluded the defense offer was not valid, but the appellate court disagreed and remanded for a reconsideration on shifting based on the valid defense offer.

               The 4/1 DCA did provide a “bright-line” rule:  when faced with two simultaneous offers, the trial court can look at each offer separately to determine whether either of them exceeded the amount of the verdict for costs/fee shifting purposes under section 998.  The San Diego appellate court simply disagreed with the Gorobets’ broader conclusion that two simultaneous 998 offers are invalid, although a close examination of Gorobets shows the majority did allow shifting based on one of the valid offers.  So, there is a split of opinion on a broader conclusion, but maybe not so much on the ultimate result.  Interesting to see how this pans out for state supreme court review purposes. 

In The News . . . . Walt Disney Co. Settles Class Action Wage/Hour By Anaheim Theme Park Employees

$35 Million In Fees Is The Preliminary Settlement Amount, According To The Orange County Register.

               In a December 17, 2024 article in The Orange County Register, Walt Disney Co. has agreed to settle a wage/hour class action by Anaheim theme park employees to the tune of $179.6 million for back pay and retirement contributions and $175 million in penalties paid to the California Labor and Workforce Development Agency (PAGA claims).  What were the attorney’s fees to be paid to class counsel?  Answer:  $35 million.

Equity, Section 998: Lower Court’s Discretionary Decision To Vacate A Dismissal Of An Action Based On A Mistaken Defense CCP § 998 Offer Was No Abuse Of Discretion

Defense Offer Of $100,000, Rather Than $10,000, Was A Typographical Mistake Worthy Of Correction Where Defense Counsel Notified Plaintiff Of Error Within Three Minutes.

               For litigators, we all know we are not perfect, with mistakes being made based on the volume of cases we process.  The next case, Avila v. John N. Kitta and Associates, Case No. A170579 (1^st Dist., Div. 1 Dec. 16, 2024) (unpublished), is a breath of fresh air because a lower court vacated a result for a plaintiff accepting a mistaken defense CCP § 998 offer where the defense was diligent in trying to correct the mistake—with the reviewing court agreeing that the equities buttressed the result.

               The circumstances were important as far as the result reached in this case.  Plaintiff had made a CCP § 998 offer for $40,000.  Defense counsel’s paralegal called plaintiff and asked if $5,000 would do it, receiving a “no” response.  Defense then sent an unsigned 998 offer for $100,000, which was a mistake—only $10,000 was the real offer.  Plaintiff accepted the $100k offer but asked defense counsel to sign it.  Three minutes later, defense counsel called plaintiff and alerted him of the error--$10k, but plaintiff went ahead and processed the offer with the court and dismissed the action.  The defense brought a CCP § 473 discretionary motion to vacate the judgment and dismissal based on the 998 typographical error, a request granted by the lower court. 

               Plaintiff appealed, but the appellate court affirmed the section 473 decision.  It decided that the defense acted diligently, with plaintiff having some idea there was mistake.  After all, why would the defense offer $100k when plaintiff had offered a much less $40k offer?  The equities supported the result below, which shows that courts will aid practitioners making typographical errors of a transparent nature. 

Deadlines: Plaintiff Dismissing Certain Defendants Without Prejudice Triggered 60 Day Rule To Bring Attorney’s Fees Motion

Plaintiff Failed To Timely File A Fee Motion 60 Days After Dismissal Was Entered.

               With no need to go through the details, Animal Protection and Rescue League, Inc. v. Marengo, Case No. D082607 (4^th Dist., Div. 1 Dec. 16, 2024) (unpublished) should remind practitioners filing a dismissal without prejudice on behalf of a plaintiff that they must file their fee motion within 60 days after service of a notice of entry of the dismissal.  (Sanabria v. Embrey, 92 Cal.App.4^th 422, 427 (2001).)  In this case, failure to do so sustained a lower court’s conclusion that the fee motion was untimely filed.

Appealability: Failure To Appeal Order Denying Motion To Tax Expert Witness Fees Under CCP § 998 And Granting 128.5 Sanctions Over $5,000 Against Multiple Parties Means The Appeal Of Those Orders Had To Be Dismissed

Another Lesson We Have Preached:  Appeal Separate Costs And Sanctions Orders.

               In Abelar v. Providence Health System-Southern California, Case No. B321885 (2d Dist., Div. 3 Dec. 13, 2024) (unpublished), plaintiffs lost a medical malpractice case against numerous defendants, with the lower court imposing CCP § 128.5 sanctions of $11,425 against plaintiff’s counsel as to different defendants and denying plaintiff’s motion to tax costs, including expert witness fees based on CCP § 998 offers.  The appellate court dismissed plaintiff’s appeals from the sanctions and expert witness fee costs orders.

               The sanctions order appeal was dismissed because it was not separately appealed, and it exceeded $5,000; it did not matter that the award was in favor of different defendants—the aggregate amount of the award controlled.  The motion to tax costs denial order was affirmed because it was not separately appealed, and this is not an incidental award swept into the ultimate judgment—998 expert witness fees are different (Fish v. Guevara, 12 Cal.App.4^th 142, 148 (1993)).

Employment: Lower Court’s Denial Of Whistleblower Fees, Under Amended Fee Shifting Provision, Was Erroneous Because Newer Legislative Statute Was Retroactive In Nature Absent A Clear Direction Otherwise

$1.854 Million Fee Request Had To Be Reconsidered—Appellate Court Had No Opinion On Amount To Be Awarded.

               Winston v. County of Los Angeles, Case No. B323392 (2d Dist., Div. 8 Dec. 13, 2024) (published) is a case where a plaintiff whistleblower eventually prevailed during a jury trial, awarded $257,000 in damages against employer.  Employee moved for attorney’s fees of about $1.854 million which were denied on a procedural ground:  the amended Labor Code whistleblower fee shifting statute (Lab. Code, § 1102.5(j), which allows for discretionary costs to a worker, was not applicable to the pending litigation which pre-dated the January 1, 2021 effective date where there was no authorization for fees—put another way, the amendment was not retroactive.  The trial court denied fees entirely based on the retroactivity argument.

               The 2/8 DCA reversed and remanded, although making no opinion on the propriety of any fee recovery with respect to amount.  The reason was that the general rule dictated that fees/costs amendments were prospectively applicable, such that section 1102.5(j) applied to matters pending on January 1, 2021 even if filed earlier. 

Appealability, Costs, Fee Clause Interpretation: Lower Court’s Grant Of Expert Fee Costs To Defendant And Denial Of Attorney’s Fees To Defendant Affirmed On Appeal

Lack Of Adequate Record Doomed Both Appeals, But They Also Failed On The Merits.

               In Paige v. Nolan, Case No. B322162 (2d Dist., Div. 5 Dec. 13, 2024) (unpublished), plaintiff refused a CCP § 998 offer in a legal malpractice case, with defendant attorney winning.  The lower court did award attorney some expert witness fees based on the 998 offer, but it denied attorney’s request for fees based on a narrow retainer agreement clause.  Both sides appealed, but the results held up on appeal. 

               Both sides had problems because they had no reporter’s transcripts to show what occurred at the costs/fees hearings.  That alone justified a denial of respective appeals.

               But, even if the merits were considered, there was enough evidence of record to support the expert witness fee award.  With respect to the fee denial request by attorney, the retainer agreement was narrowly focused on fee collection issues, not professional malpractice claims, such that the fee denial was proper. 

Family Law, Sanctions: $222,952 Fee Award To Ex-Husband Under Family Code Section 271 For Prevailing In A Vigorously Contested DVRO Proceeding Was Proper

Lower Court Did Consider Ex-Wife’s Ability To Pay, Ordering It Be Paid $5,000/Month.

               Family law litigants and practitioners should pay attention to how Family Code section 271 sanctions for failing to settle family law matters can be painful and a game changer as far as a litigant’s financial well-being.  Marriage of Detrick, Case No. A166304 (1^st Dist., Div. 4 Dec. 12, 2024) (unpublished) is a casebook example of just that.

               In this case, there were dueling DVRO petitions for child abuse and domestic violence.  Ex-husband ultimately prevailed after a very vigorously contested proceeding where the trial judge found him credible and did not find ex-wife credible.  The lower court then awarded ex-husband $222,952 in attorney’s fees under Family Code section 271, a sanctions provision allowing considerable discretion where a litigant prolonged and did not try to resolve a dissolution case.  However, ex-wife was ordered to pay off the amount over time, $5,000 a month until the amount was satisfied pending further orders on asset and ability to pay situations.

               That result was affirmed on appeal.  Although substantial, the fee award was justified based on the positions of the litigants and the contested nature of the proceeding.  With respect to ability to pay, ex-wife was an interior designer and had her current expenses paid by a boyfriend; that, combined with the $5,000 per month extended payment schedule, showed there was consideration given to her ability to pay, justifying the award.

Discovery, Sanctions: Discovery Sanctions Reversed Where Moving Party Failed To Comply With Late Discovery Motion Dictates After The Discovery Cut-Off Date And Before Trial

CCP §§ 2024.020, 2024.050 Were Not Complied With, And That Was Prejudicial.

               In Cooke v. Tayac, Case No. A170044 (1^st Dist., Div. 4 Dec. 12, 2024) (unpublished), defendants moved for discovery sanctions after the discovery cut-off and formal close of discovery.  The lower court granted the defense motion for sanctions in the amount of $6,075.  The aggrieved party appealed, obtaining a reversal.  The request for sanctions was untimely and was prejudicial.  Defendants failed to comply with CCP §§ 2024.020 and 2024.050, which required them to seek leave of court to file the motion for sanctions and to meet/confer and file a corresponding declaration.  The motion was untimely and likely prejudicial given that the lower court had to determine whether factors such as lack of diligence were in play, unless equitable estoppel or other principles were at play—with nothing demonstrating those exceptions applied.  (Pelton-Shepherd Industries, Inc. v. Delta Packaging Products, Inc., 165 Cal.App.4^th 1568, 1585-1588 (2008).)

Costs, Prevailing Party: Plaintiff Dismissing Case After Obtaining Nonmonetary Relief Requested During The Litigation May Be The Prevailing Party

Lower Court Erred In Not Granting Routine Costs Under Mandatory Prevailing Party Costs Provisions; But, On Remand, It Needed To Determine If Plaintiff Prevailed Under The Discretionary Prevailing Party Costs Provision.

               Our title and subtitle above capture what happened in Fillerup v. Franchise Tax Board, Case No. C099158 (3d Dist. Dec. 11, 2024) (unpublished), but we provide a little more flavor.  However, here are the general rules for recovering routine costs:  (1) there are certain mandatory categories for cost recovery, including parties who get a net monetary recovery and a defendant in whose favor a dismissal was entered; and (2) other categories, including a party obtaining non-monetary relief outside of the mandatory situations, can be awarded costs in the discretion of the lower court.

               Fillerup involved a situation where a plaintiff taxpayer sued the FTB claiming that the Board misapplied an estimated tax payment; and, after much wrangling and with the litigation pending, the Board ultimately gave taxpayer the relief he wanted.  Taxpayer then dismissed his lawsuit without prejudice based on getting what he desired.  Taxpayer moved for $565 in routine costs, with the FTB winning a motion to strike plaintiff’s costs memo.  (We leave it to readers to determine if this amount was worth contesting.). Plaintiff appealed the lower court’s denial of costs based on plaintiff not winning in mandatory prevailing party cost categories.

               The Third District reversed.  The lower court erred in failing to determine if plaintiff fell within the discretionary prevailing party costs category because he obtained the non-monetary relief he wanted as far as reallocation of his tax payments.  The matter was remanded so the lower court could determine if discretionary costs were appropriate.

Allocation, Employment, Reasonableness Of Fees, Section 998: Costs-Shifting Under CCP § 998 Displaced By More Specific Labor Code Provisions Relating To Costs For Or Against A Prevailing Employee

However, In Unpublished Part Of Decision, Appellate Court Affirmed A Small Fee Award Where Counsel Failed To Follow Lower Court’s Supplemental Briefing/Proof Instructions.

               Chavez v. California Collision, LLC, Case No. A167658 (1^st Dist., Div. 3 Dec. 10, 2024) (partially published; fee discussion unpublished) is part of a continuing trend for appellate courts to honor the Legislature’s directives that prevailing employees usually get costs while it is difficult for prevailing employers to obtain costs unless the employees’ cases are frivolous, notwithstanding employees that fail to beat CCP § 998 offers.  The unpublished portion of the opinion demonstrates the discretion accorded to lower courts in adjudicating fee motions.

               Two plaintiff employees accepted CCP § 998 offers, while a third plaintiff employee did not.  The third employee rejecting a § 998 offer failed to obtain a more favorable judgment at trial.  After extensive law and motion proceedings, the trial judge awarded routine costs against the third plaintiff and in favor of defendant employer (with the plaintiff also receiving some routine costs which were offset against other aspects of the judgment), but he also awarded attorney’s fees to all plaintiffs in a much reduced amount. 

               The 1/3 DCA affirmed all aspects, except the costs awards against the third plaintiff employee—reinstating the total costs award in favor of plaintiff without any offset for the reversed costs award in favor of employer.  (The defense costs award was reversed as a matter of law.)

               The reason for the reversal is that specific Labor Code costs-shifting provisions are pro-employee—costs allowable to a winning employee, but with costs not awardable to the employer unless employee’s case was found frivolous/meritless in nature.  The appellate court determined these specific Labor Code provisions had priority over the more general § 998 costs-shifting mechanism, affirmatively citing and agreeing with Cruz v. Fusion Buffet, Inc., 57 Cal.App.5^th 221, 242 (2020). 

               In the unpublished portion relating to the plaintiffs’ challenge of the fee request, they were focused on upending the lower court’s awarding $200 per hour to their counsel having no employment experience and awarding them only $13,635 out of a total request of approximately $550,000.  The problem for plaintiffs is that their counsel lacked employment experience to justify a higher rate and they failed to comply with the lower court’s order for supplemental proof to allocate out time and justify the request.  Given this disobedience and the trial judge’s finding that the billing submissions had credibility problems, the reduced fee award was affirmed under the deferential abuse of discretion standard.  The moral from this last aspect is to make sure you, as a fee claimant, follow a lower court’s order on supplemental proof or face a draconian result you will not like.

Fee Clause Interpretation, Poof!, Trade Secrets: Defendant Defeating Contractual Damages Claims Not Entitled To Fee Recovery Where Fees Clause Only Applied To Equitable/injunctive Relief Wins

Results Is That $533,086.19 Fee Award Went POOF! On Appeal.

                The next case is a continuation of a case we earlier posted on, Applied Medical Distribution Corp. v. Jarrells (2024) 100 Cal.App.5^th 556, discussed in our March 11, 2024 post.  There, plaintiff obtained preliminary and then later permanent injunctions against defendant in a trade secret misappropriation case, although losing damages recovery, under an agreement allowing fee recovery to a party obtaining equitable relief.  That exposed defendant to around $554,000 in fees and costs, although the appellate court did reverse some fee determinations so that a remand was available to the defendant—although the remand likely would not reduce the previous fees/costs award to plaintiff.  Before that appeal was decided, defendant went on the offensive and filed his own fee motion for recovering on the damage end of the claims.  The lower court agreed, awarding defendant $533,086.10 in fees under the contractual fees clause such that defendant likely perceived that the fee exposure was a wash.

               That perception can and was negated by an appellate court’s scrutiny of the breadth of the fees clause, which did occur to defendant’s chagrin in Applied Medical Distribution Corp. v. Jarrells, Case No. G062699 (4^th Dist., Div. 3 Nov. 22, 2024) (unpublished), also authored by Justice Gooding as she did with respect to the earlier published opinion.

               The substantive problem was the breadth of the contractual fees and the nature of defendant’s prevailing result in the case.  Plaintiff was the party which prevailed on the equitable, injunctive relief aspect of the case, not defendant.  The fees clause did not encompass recovery by a party defeating a damage claim such that the lower court’s attempt to do equity could not surmount the legal interpretation relating to the limited scope of the fees clause.  Defendant’s fee award was reversed as a matter of law because, even under Civil Code section 1717, plaintiff would not have been entitled to fees against defendant had it prevailed by just winning damages.

Section 1717: Nonsignatories, When Sued As If They Were Parties, Were Entitled To Prevailing Party Fees Under Contractual Fees Clause Pursuant To Civil Code Section 1717

Case Counsels Against Suing Brokers And Agents Under Boilerplate “Agent/Employee” Pleading Allegations As If They Are Parties.

               The result in Dow v. Burrell, Case No. B330855 (2d Dist., Div. 8 Nov. 22, 2024) (unpublished) is a case where a disgruntled residential buyer plaintiff sued seller (who was defaulted) and his brokers, agents, and their affiliates (who did successfully contest) various charges associated with the purchase and sales agreement.  Plaintiff sued the brokers, agents, and their affiliates as if they were parties and further included boilerplate allegations that they were seller’s agents and employees.  The lower court granted these defendants’ motions for attorney’s fees under the contractual fees clause because they prevailed by defensing plaintiff buyer’s contract claims. 

               The 2/8 DCA affirmed.  Because these defendants were sued as if they were true parties, even though they were non-signatories, they were entitled to fees under Reynolds Metals (our Leading Case No. 5). 

Discovery, Sanctions: Appellate Court Determines That Litigant Not Filing A Written Opposition To A Discovery Sanctions Motion Is Not Guaranteed A Right To Oral Argument

Nothing In The Discovery Sanctions Or Other Law Mandates That Result.

               A cross-complainant in Bogota Corp. v. Seiden, Case No. B332296 (2d Dist., Div. 1 Nov. 22, 2024) (unpublished) had discovery sanctions imposed for deficient special interrogatory responses after filing no written opposition to the discovery sanctions motion.  On appeal, he argued that he had constitutional and statutory rights to an oral argument.  The appellate court disagreed.  Although CCP § 2030.030 does allow for “an opportunity to be heard” on discovery abuse issues, this does not guarantee a right to argument where a party fails to file a written opposition to the noticed sanctions motion; otherwise, a litigant could sandbag the moving party by not timely opposing.  Furthermore, although a failure to file an opposition is not dispositive when a hearing is held, it does not mean that oral argument had to be heard where no opposition was filed.