CALIFORNIA ATTORNEY'S FEES

Sanctions: $200,000 CCP § 128.5 Sanctions Award Reversed Because It Was Not Causally Tethered To the Criminal Kidnapping Conduct At Issue

A Remand Was Ordered On The Civil Component And A Possible Penalty Payable To The Court.

               Talk about interesting issues; well, there was one considered by the 4/1 DCA in Razuki v. Malan, Case No. D082560 (4^th Dist., Div. 1 Mar. 20, 2025) (unpublished).

               There, plaintiff was assessed with a $200,000 sanctions award under CCP § 128.5 for his conduct in trying to kidnap defendant several months after the civil lawsuit was filed.  Although determining that criminal conduct could be sanctionable under section 128.5, the appellate court reversed because the evidence did not show that the awarded amount was causally tethered to the criminal conduct at issue.  In the end, the matter was remanded to revisit the sanctions amount to be awarded to defendant plus a possible penalty payable to the court under the sanctions statute (with the court penalty not having to be causally related to the underlying conduct). 

Cases Under Review, Section 998: California Supreme Court Decides That CCP § 998 Costs-Shifting Applies To Pre-Trial Settlements

. . . Although The Parties Are Free To Allocate Costs Differently Under Their Settlement.

               The California Supreme Court in Madrigal v. Hyundai Motor America, Case No. S280598 (Cal. Sup. Ct. Mar. 20, 2025) (published) decided that CCP § 998 offers do apply to pretrial settlements, rather than just judgments or arbitration awards, for purposes of cost-shifting, although the parties can allocate things differently under their settlement.  Our state high court placed a lot of primacy on the section 998 underlying principles to encourage settlements. 

Reasonableness Of Fees: 2/3 DCA Reverses An 82% Reduction In A FEHA Fee Request, Primarily Based On Reconstructed Time, As An Abuse Of Discretion And As Not Adequately Explained

“Haircut” Was Too Much, Requiring A Remand Revisit.

               In the fee award area, the amount awarded is governed by an abuse of discretion standard.  However, large “haircuts” sometimes strike an appellate panel as too arbitrary, requiring a revisit.  That was the case in Guevara v. Interstate Meat Co., Inc., Case No. B332546 (2d Dist., Div. 3 Mar. 18, 2025) (unpublished).

               Plaintiff settled a FEHA case, 18 months into the matter, for $25,000.  Plaintiff sought over $153,000 in fees based on some reconstructed time and without detailed time substantiation in some respects.  The trial court was troubled by the reconstructed time, allowing for none of it, thought the claimed hourly rates were excessive, and believed the fee request was excessive.  It reduced the fee request by 82%, awarding $27,500 in fees.

               The 2/3 DCA reversed, reasoning this way: (1) it was an abuse of discretion to reject reconstructed time outright; (2) the justices were not convinced that the explanation of the reduction sufficed, relying on the Kerkles and Gorman opinions which also involved substantial fee request reductions; and (3) the trial judge’s order did not show why he reduced plaintiff’s counsel’s hourly rates when the plaintiff’s showing was uncontested.

So, the matter was remanded for a revisit and a better explanation for any fee “haircut.”

Fee Clause Interpretation: Where Pleadings And Testimony Showed That A Brochure With A Fees Clause Applied To Services Different Than The Ones In Dispute, Trial Judge’s Conclusions That The Two Transactions Were Not Integrated Supported A Denial Of Fees

The Pleadings And Trial Testimony Supported That Result.

               Plaintiff restoration company won a $452,422 jury verdict against defendant apartment owner for water restoration services, then moving to recover $260,215 in attorney’s fees based on a fees clause in a prior brochure involving different apartment turn services which were paid off by apartment owner.  The lower court found that the pleadings and trial testimony showed the transactions were not the same, so the integration principle contained in Civil Code section 1642 was not viable, denying fees to the restoration company.

               The appellate court affirmed in Prestige Construction and Renovation Services, Inc. v. Reliant Real Estate Management, Inc., Case No. D084506 (4^th Dist., Div. 1 Mar. 18, 2025) (unpublished).  The integration question was one of fact, with substantial evidence showing the brochure fees clause did not apply to the later water restoration services resulting in the jury verdict.  Because there was no agreement with a fees clause (R.W.L. Enterprises v. Oldcastle, Inc., 17 Cal.App.5^th 1019, 1022, 1028 (2017)), the fee denial was warranted. 

Mediation: Lis Pendens Exception To Seeking Mediation Before Filing Suit Resulted In Reversal Of A Denial Of Attorney’s Fees As To A Prevailing Party Trust In A Real Estate Purchase Agreement Dispute

Another Individual Plaintiff Who Prevailed Properly Denied Fees Because He Brought No Fee Motion.

               In Trapp v. Maham Group, Case No. E081888 (4^th Dist., Div. 2 Mar. 17, 2025) (unpublished), individual plaintiff and a trust plaintiff affiliated with the individual won specific performance suits against defendants for breaching lease and purchase agreements giving plaintiffs a right of first refusal to buy the property being leased.  The purchase agreement had an attorney’s fees clause with mediation condition precedent language, but with an exception for a suit filed to enable recordation of a lis pendens.  The parties unsuccessfully went to a court-mediation after the suits were filed.  Trust filed a fee motion as prevailing party for $116,961.25.  The trial judge denied the fee request because he did not believe the court-ordered mediation was compliant with the condition precedent language in the fees clause.

               The 4/2 DCA reversed the fee denial as to the trust.  It found that trust had filed a lis pendens concurrently with its complaint, so the lis pendens exception did apply.  (Blackburn v. Charnley, 117 Cal.App.4^th 758, 768 (2000).)  The matter was remanded to have the fee motion granted and have the trial judge determine the appropriate amount of fees to be awarded to trust.    

               Individual plaintiff claimed he was entitled to fees also, but his failure to file a motion to recover attorney’s fees was fatal to his argument on appeal.

Ethics, SLAPP: Fees Award, After Previous SLAPP Grant Reversal, Had To Be Reversed

… But Plaintiff’s Uncivil Remarks In Appellate Briefing Led The Court Of Appeal To Deny It Costs On Appeal.

               Incivility is a recurring theme by trial and appellate courts.  This opinion is one that, yet again, reinforces that attorneys should refrain from making attacks against opposing counsel and the trial judge.

               In WasteXperts, Inc. v. Arakelian Enterprises, Inc., Case No. B327712 (2d Dist., Div. 4 Mar. 14, 2025) (unpublished), plaintiff obtained a reversal of a SLAPP grant, although the prior opinion did chastise plaintiff for making distracting and unsupported attacks on opposing counsel and the trial court.  Plaintiff appealed to obtain a reversal of a $175,000 fees and $767.65 costs award in favor of defendant.  The defense did not contest the reversal of that cumulative award based on the SLAPP merits reversal.  However, it did contest that costs on appeal should be awarded to plaintiff based on renewed uncivil remarks against opposing counsel and the trial judge.

               The appellate court agreed, denying costs of appeal to plaintiff.  Incivility permeated their appellate briefing such that it was appropriate to not award appellate costs to plaintiff, as the defense suggested. 

SLAPP, Sanctions: $73,405 Fees And $1,351 Costs Awards Affirmed In Favor Of Plaintiff Where Defendant Made A Frivolous SLAPP Motion

Appellate Court Agreed That Plaintiff Did Not Have An Opportunity To Comply With CCP § 128.5 Safe Harbor Sanctions Provision, But Indicated It Should Be Followed Absent Exceptional Circumstances.

               In Chang v. Brooks, Case Nos. B320278 et al. (2d Dist., Div. 3 Mar. 14, 2025) (unpublished), defendant’s SLAPP motion was determined to be properly denied by the lower court, and the lower court's $73,405 fees and $1,351 costs awards to plaintiff, based on the perception that the defense SLAPP motion was frivolous in nature, were affirmed on appeal.

               The defense’s primary argument was that plaintiff failed to comply with the CCP § 128.5 21-day safe harbor provision, because the court in Zarate v. McDaniel, 97 Cal.App.5^th 484 said this was the general rule given its disagreement with broader language in Changsha Metro Group Co., Ltd. v. Xufeng, 57 Cal.App.5^th 1, 19-23 (2020) with respect to a SLAPP motion arguing fees should be awarded because the defense motion was frivolous.  However, based on the circumstances notwithstanding the general rule, the Chang court agreed that plaintiff had no real opportunity to provide the safe-harbor notice such that the fees and costs award was appropriate under the circumstances—Xufeng was good law for this one.

SLAPP: Seven Defendants Properly Awarded $683,417.50 In SLAPP Fees And Costs

However, They Did Not Get Their Request of $1.9 Million In Fees.

               In Six4Three, LLC v. Facebook, Inc., Case Nos. A166007/A167416 (1^st Dist., Div. 4 Mar. 12, 2025) (published), seven defendants prosecuted a prior appeal which resulted in the lower court’s granting of SLAPP motions and the later awarding of $683,417.50 in fees and costs to the prevailing defendants.  The fees/costs awards were affirmed, even though defendants had requested $1.9 million and plaintiff had argued only $357,000 was warranted as a cumulative award.

               The principal issue on appeal was whether fees were allowable for prior appellate work and a motion to seal proprietary information.  Because these activities did lead to the granting of the SLAPP motions, that work was “incurred in connection with” the SLAPP motions such that the time was recoverable under the fee shifting statute. 

Civil Rights, Prevailing Party: SCOTUS Decides That A Preliminary Injunction Mooted By Subsequent Events Does Not Make One A Prevailing Party Under The Civil Rights Fee Shifting Statute

However, A Footnote In the Opinion Shows That This Is A Nuanced Issue Depending On Objectives Of Plaintiff Or Defendant.

               We now report on a recent SCOTUS decision under the civil rights statute, 42 U.S.C. § 1988(b), which provides when a “prevailing party” can recover fees.  This case is interesting and may have repercussions for California, whether under the federal or analog state statutes.

               In Lackey v. Stinnie, 604 U.S. __, Case No. 23-621 (U.S. Feb. 25, 2025), a plaintiff obtained a preliminary injunction for certain actions which, before the case could go to judgment, were mooted because the Virginia General Assembly repealed the challenged statute.  The district court found that plaintiff was not a “prevailing party” under the federal civil rights statute, 42 U.S.C. § 1988(b).  The Fourth Circuit reversed, with the U.S. Supreme Court granting certiorari and reversing the Fourth Circuit’s reinstatement of the fees motion.

               SCOTUS’ majority opinion determined that a litigant obtaining a preliminary injunction is not a civil rights “prevailing party” because the preliminary injunction did not provide an enduring judicially sanctioned change in the legal relationship of the parties.  External events that render a dispute moot did not convert the temporary order into a conclusive adjudication, because a preliminary injunction is not a dispositive ruling and district judges sometimes arrive at a different result after deciding a case on the full merits. 

               However, there is an interesting footnote with important clarifying language.  The footnote observes that who is a prevailing party is different for defendants versus plaintiffs because both sides come to court with different objectives.  It further noted that its decision in Lackey should not be read to affect the Court’s previous holding that a defendant need not obtain a favorable judgment on the merits to prevail, nor to address the question SCOTUS left open of whether a defendant must obtain a preclusive judgment to prevail, citing Van Expedited, Inc. v. EEOC, 578 U.S 419, 431-434 (2016).

               BLOG HAT TIP—We thank Griffin Klema, a Florida intellectual property litigator, for bringing this decision to our attention.  We would note that Mr. Klema did raise the “different objectives” distinction in his certiorari petition in Abdelsayed v. Affordable Appeal Photograph, which involved a split in circuit court opinions on whether a voluntary dismissal without prejudice can render a defendant a prevailing party under the copyright fee shifting statute.  SCOTUS did ask for a response to his cert petition, but ultimately denied it on November 24, 2024 and further denied a petition for rehearing earlier this month.  However, it does appear that the Court picked up on his “different objectives” point and used it for clarification in Lackey.

Partition: 34.29% Property Owner Was Properly Saddled With Close To $86,000 In Attorney’s Fees And Costs At The End Of The Day

Losing Party, To The Appellate Court, Refused To List A Property For Sale And Refused To Reimburse Another Party For Paid Taxes—Leading To The Result With Respect To Fees And Costs.

               In this category, we have made many posts which involve partition proceedings, keeping in mind that CCP § 874.040, subdivisions (a) and (e), provide that the lower court has broad discretion to make apportionments which are equitable and just.  These provisions were front and center in affirming a lower court’s apportionment order in Sarad v. Lorenz, Case No. B322452 (2d Dist., Div. 6 Feb. 18, 2025) (unpublished).

               34.29% property owner failed to list a property for sale or pay real estate taxes along the way with respect to other owners, some of which did pay taxes and expenses.   When partition proceeding wound down, the 34.29% property owner had to eat, among other things, close to $86,000 in fees and costs based on his conduct in the proceeding.  He appealed, but to no avail.  Based on the abuse of discretion standard of review applicable to the statutory partition provisions, the appellant was properly saddled with expenses due to bad faith conduct increasing the cost of litigation—in this case, refusing to list the property for sale and to reimburse another party for property taxes paid on appellant’s behalf. 

Appealability, Sanctions: Defendant Unsuccessfully Appeals Trial Court’s Order Adopting Discovery Referee’s Recommendation On Apportionment Of Fees Claiming Apportionment Equated To Monetary Sanctions Exceeding $5,000

4/3 DCA Dismissed The Appeal As The Trial Court’s Interlocutory Order On The Discovery Referee Fees Was Not A Sanctions Order, Did Not Use The Word Sanctions, And Did Not Cite Authority To Impose Sanctions.

            The parties in Glickman v. Krolikowski, Case No. G064853 (4^th Dist., Div. 3 March 7, 2025) (published), stipulated to the appointment of a discovery referee.  The stipulation did not specify what portion of the referee’s fees would be paid by each party, but referenced Code Civ. Proc. § 645.1, with section 645.1(b) allowing for an apportionment of the fees among the parties.  When the trial court issued its reference order to implement the stipulation, it stated that the referee’s initial retainer would be paid 50 percent by each side, and that the referee’s report was to include the referee’s recommended allocation of payment.

Based on the parties’ conduct, the referee granted plaintiff’s apportionment motion and recommended that all of the recently incurred discovery fees of $22,750, plus the $1,750 in fees for the apportionment motion, be allocated to defendant.  Defendant unsuccessfully objected to this allocation, then filed an appeal claiming that one-half of the amount allocated to defendant was the equivalent of a monetary sanction in excess of $5,000 – making it subject to an interlocutory appeal.  Code Civ. Proc. section 904.1(a)(12).

The 4/3 DCA disagreed with defendant’s contention and dismissed the appeal.  The appellate panel found that the trial court’s order allocating discovery referee fees was not a sanctions order as the referee’s recommendation did not use the word sanctions, did not cite authority to impose sanctions, and relied on the discretion allowed for in the trial court’s reference order to apportion fees.  As a result, the trial court’s order was not a monetary sanction subject to appealability.  The trial court’s order was not a final judgment against defendant as reallocation of the payment of discovery referee costs could be made at the end of the lawsuit.  As such, defendant would have had to file a writ petition in order to immediately challenge this order.