CALIFORNIA ATTORNEY'S FEES

Arbitration, Employment: 30-Day Arbitration Payment Deadline Under CCP § 1281.98 Runs From Invoice Issuance Date By ADR Provider

. . . And It Is Extended By CCP § 12 Extensions If Deadline Falls on a Holiday or Weekend.

               We have seen an uptick on decisions considering CCP § 1281.98, the section requiring employers to timely pay arbitration expenses invoiced by an ADR provider within 30 days under penalty of returning the case to superior court (or, as indicated in a recent post, bearing all arbitration fees and costs if the employee agrees to proceed to arbitration).

               In Bautista v. Los Angeles Apparel, Inc., Case No. B337940 (2d Dist., Div. 5 May 20, 2025) (unpublished), the issue was whether an employer failed to timely pay arbitration expenses under section 1281.98 where it paid them timely based on an invoiced date of an ADR provider, but assuming that the due date was extended because the payment date fell on a holiday or weekend.  The appellate court reviewed the statutory provisions, deciding that CCP § 12 extension dates should apply in this context, such that the 30^th day deadline was extended when it fell on a holiday or weekend. 

Default Judgments: $9,000 Attorney’s Fees Component Of Default Judgment Reduced To Zero On Appeal

Lease Contractual Clause Not Implicated In The Default Judgment.

               In Hernandez v. Nunez, Case No. E083404 (4^th Dist., Div. 2 May 19, 2025) (unpublished), defendants suffered an adverse default judgment inclusive of attorney’s fees of $9,000.  Defendants did appeal, which resulted in the attorney’s fees amount being reduced to zero.  A lease contractual fees clause was not implicated against defendants, so there was no fee entitlement.  Other components of the default judgment were largely sustained on appeal. 

Arbitration, Employment: Where Employer Did Not Timely Pay Arbitration Expenses Within 30 Days And Employee Opted To Stay In Arbitration, Employee Can Get Recovery Of All Arbitration Expenses, Including Fees Through The End Of The Arbitration

Although Unpublished, This Is An Important Reminder To Employers On Timely Paying Arbitration Fees, Under Penalties Even If Employee Opts For Arbitration.

               Although unpublished, Lehman v. MediaLab.AI, Inc., Case No. B336814 (2d Dist., Div. 5 May 19, 2025) (unpublished), is an opinion that employers need to pay attention to in case they are delinquent in paying arbitration expenses—because employee has an option to compel arbitration or return the case to a California superior court.  Employee adopted the first option, which maybe resulted in surprise exposure for employer.

               Employer failed to pay for arbitration as required under CCP § 1281.97.  Employee then petitioned the lower court for an order compelling arbitration and payment of all employee’s attorney’s fees and costs “related to the arbitration.”  Alternatively, employee only asked for payment of fees to compel arbitration.  After a contested hearing, the lower court awarded fees of $4,240.20 in fees and costs for employee’s expenses in filing the petition to compel arbitration.

               On appeal, employee obtained a reversal.  The appellate court viewed the “related to arbitration” language as allowing an employee to recover more than just motion to compel arbitration costs, which it decided were allowable more than just these limited fees.  It indicated that this was the penalty for noncompliance where an employee opted to still pursue arbitration—so, an employee might be able to get fees and costs for the entire arbitration, if we are reading this decision correctly.   Quite a result and an exposure for noncompliant employers.

Costs, Employment: On Remand From California Supreme Court, Third District Reverses Appellate Costs Award To Prevailing Defendant In A FEHA Action

Pollock Analysis Dictated The Overturn.

               In York v. City of Sacramento, Case No. C097761 (3d Dist. May 14, 2025) (unpublished), the Third District in an earlier opinion affirmed a summary adjudication order against plaintiff in a FEHA case and awarded appellate costs to the prevailing employer.  The California Supreme Court granted review and remanded for the DCA to perform the analysis set forth in Pollock v. Tri-Modal Distribution Services, Inc. (2021) 11 Cal.5^th 918, 947-951 to determine if plaintiff’s case was frivolous, groundless, or without foundation before awarding appellate costs.  On remand, the Third District determined plaintiff’s case was not groundless, overturning the costs award in the defense’s favor.

Fee Clause Interpretation: Losing Party To An Oral Agreement To Foreclose On A Property Was Not Liable For Fees Under A Promissory Note

Losing Party Was Not A Signatory To The Note, And The Foreclosure Oral Agreement Was Separate From The Note.

               Kim v. Kim, Case No. B336809 (2d Dist., Div. 1 May 14, 2025) (unpublished) involved a fight between plaintiffs and defendants over an oral agreement to foreclose property, with plaintiffs paying $25,000 under that agreement but defendants claiming $420,000 was owed.  Plaintiffs lost the case, and defendants sought $280,700 under a contractual fees clause in a note between defendants and the note borrower.  The lower court denied the fee request.  The 2/1 DCA affirmed, determining that (1) plaintiffs were not signatories to the note, and (2) the foreclosure arrangement was separate from the note and not “related”/”connected” to the note. 

Costs, Employment: Prevailing Defendant Employer Improperly Awarded Costs In PAGA Action Against LWDA Where It Did Not Participate In The Underlying Litigation

$124,585.24 Costs Award Vacated As A Matter Of Law On Appeal.

               In Rose v. Hobby Lobby Stores, Inc., Case No. A169640 (1^st Dist., Div. 2 May 14, 2025) (published), defendant employer prevailed in a PAGA action brought by plaintiff employee, with the California Labor and Workforce Development Agency (LWDA) not participating in the litigation although having notice of it because a PAGA action is a type of qui tam action.  Eventually, after LWDA intervened on a post-judgment costs motion against employee, the trial court awarded $124,585.24 in costs to be paid by LWDA.

               On appeal, the appellate court reversed.  Nothing in the Labor Code or general costs statute allowed for an award of costs against LWDA unless it participated in the litigation, which it did not.  That is the holding in this opinion, with the Court of Appeal not having to decide whether a prevailing defendant in a PAGA action is entitled to recover its litigation costs under the general costs statute, CCP § 1032(b).

POOF!: Prevailing Plaintiff’s Appeal Of A Fee Denial Stayed Its Second Successful Effort To Have The Court Reconsider And Award Fees Of $4.479 Million, Which Meant The Second Fee Award Was Void

CCP § 916 Appellate Stay Was The Key, Meaning the Large, Subsequent Fee Award Went POOF!

               Although this may sound technical, the result in CDC San Francisco, LLC v. Critchfield Mechanical, Inc., Case No. A169224 (1^st Dist., Div. 2 May 6, 2025) (unpublished) shows how taking an appeal will stay subsequent efforts to obtain a subsequent, “turn-around” fee award where the lower court has initially denied the request.

               In this one, plaintiff hotel owner obtained an $18 million award against defendant HVAC contractor.  Plaintiff then moved for fees of over $6.718 million, a request denied by the lower court based on its interpretation of contractual fee clauses put before it.  Plaintiff then appealed the fee denial.  However, plaintiff then filed a reconsideration fee motion based on a different contractual basis, with the lower court deciding its prior determination was erroneous and entering a favorable fee award of $4.479 million to plaintiff.  Plaintiff, feeling emboldened, then dismissed its appeal of the fee denial.

               Defendant, very unhappy with the turn of events, appealed.  Smart move.

               The appellate court determined that the CCP § 916 appellate stay prevented the lower court from granting the subsequent fee reconsideration request given the pendency of the appeal of the fee denial—the fee grant order was void, citing Varian and Elsea.  It found unpersuasive plaintiff’s argument that section 916 was based on a separate contract, labeling it “a distinction without a difference” given that a section 1008 reconsideration motion is a subsequent application for the same order.  With that said, the “end result” was that the $4.479 million fee order went POOF! on appeal.

Costs: Prevailing Defendant Was Entitled To Most Routine Costs . . .

However, Because Statute Allowing CourtCall Costs As Being Mandatory Was Repealed, Matter Had To Be Remanded To Determine If It Was A Correct Discretionary Costs Matter Under The General Routine Costs Statute.

               Prevailing defendant, winning on a summary judgment motion, was granted certain costs for deposition transcripts and record subpoenas given that co-counsel needed the deposition transcripts, and the subpoenaed records were relevant on damages before defendant obtained summary judgment.  The 4/3 DCA, in Safavi v. Ritzau, Case No. G062901 (4^th Dist., Div. 3 May 6, 2025) (unpublished), affirmed those determinations.

               However, it did reverse and remand a minimal costs award of CourtCall expenses because it was granted under CCP § 367.6(c), which was repealed on January 1, 2023 before the costs award was issued [that provision made it mandatory to award CourtCall expenses] such that it was not good authority for a costs award.  However, the appellate panel did remand to allow the lower court to grant the requested fees under the discretionary provision of CCP § 1033.5(c)(4), where cases have allowed CourtCall expenses to be awarded.  The amount was around $376, so we can only assume this matter will be settled before a remand is necessary—but who knows!  Justice Scott authored the 3-0 opinion.

Arbitration: 2/7 DCA Decides That Employer Deadline To Pay Arbitration Expenses Is Not Preempted By The FAA

Also, Whether The Employer Is In Default Is An Arbitrator Decision.

               In Sanders v. Superior Court, Case No. B340707 (2d Dist., Div. 7 May 6, 2025) (published), the appellate court decided that the FAA did not preempt CCP § 1281.98(a)(1), which gives employers a strict 30-day deadline to pay arbitration expenses under penalty of losing arbitration rights.  It disagreed with Hernandez’s contrary reasoning on this point, after noting that various cases—Keeton, Hohenshelt, and Hernandez—were under California Supreme Court review on the preemption issue.  Sanders also decided that the arbitrator is the decision maker to decide if there was a default under section 1281.98. 

Homeowner Associations: HOA/Affiliated Defendants Properly Awarded $81,083 In Fees Under The Davis-Stirling Act After Plaintiff Voluntarily Dismissed Her Suit

Defense SLAPP Fees, Although SLAPP Grant Was Reversed, Were A Proper Element In The End, Because Litigation Sometimes Involves Unsuccessful Efforts—Giving Trial Judges Discretion On Whether to Award Fees For Those Efforts.

               In Mondragon v. Bergmann, Case No. B335486 (2d Dist., Div. 3 Apr. 30, 2025) (unpublished), plaintiff suing a homeowner’s association and related defendants did win an anti-SLAPP grant and adverse fee order, but later voluntarily dismissed her suit without obtaining a settlement or any judgment.  HOA then requested $81,083 in attorney’s fees under the Davis-Stirling Act’s fee shifting provision (which also included the anti-SLAPP fees reversed in the prior appeal).  The lower court determined the HOA side achieved their litigation objective in obtaining a dismissal of the suit, awarding the full amount requested.

               The 2/3 DCA affirmed the fee award against the plaintiff.   The HOA side did obtain their litigation objectives such that it affords the lower court discretion to determine that it prevailed notwithstanding the voluntary dismissal, citing Santisas, Saleh, and Haidet.  With respect to the anti-SLAPP fees also being included, that ruling was no abuse of discretion, because litigation sometimes involves unsuccessful work such that the lower court has discretion to determine if it should be awarded or not—with the appellate court citing City of Sacramento v. Drew and Simers for this proposition.

Judgment Enforcement: Enforcement Of Canadian Judgment In California State Courts Reminds Us That Attorney’s Fees Awarded In A Foreign Court Are Compensatory In Nature

They Are Not Penal, So Recognition Of The Award In California Is Proper.

               Racicot v. Wiseau Studio, LLC, Case No. B334219 (2d Dist., Dif. 3 Apr. 30, 2025) (unpublished) is a situation where a Los Angeles County Superior Court judge domesticated a $1,089,010.16 Canadian judgment under the Uniform Foreign-County Money Judgments Recognition Act, Civ. Code, § 1713 et seq.  In doing so, the opinion reminded everyone that foreign orders requiring a party to pay attorney’s fees are compensatory, not penal in nature, so that they are generally recognized under the Act.  (See Java Oil, Ltd. v. Sullivan, 168 Cal.App.4^th 1178, 1188-1189 (2008).)

Prevailing Party: Ninth Circuit Denies Civil Rights Attorney’s Fees To Plaintiff Whose Case Was Mooted By Hawaii Legislative Amendments

However, Some Concurring Justices Were Concerned That Plaintiffs Will Never Get Fees Under Cases Where They Had Earlier Prevailed, Only To Have Technicalities Render The Matter Moot.

               On March 17, 2025, we posted on Lackey v. Stinnie, 145 S.Ct. 659 (2025), where SCOTUS held that a plaintiff winning a preliminary injunction, with plaintiff’s case subsequently mooted by legislative action, was not a prevailing party under the federal civil rights statute, 42 U.S.C. § 1988(b). 

               We can now report that Lackey was applied to deny appellate attorney’s fees to a plaintiff whose prior win as obliterated by Hawaii’s legislative actions in Teter v. Lopez, Case No. 20-15948 (9^th Cir. Apr. 30, 2025) (published).  However, this recent en banc opinion did stir some concurrences by circuit judges who felt that the fee denial was required based on the prior en banc opinion where the legislative action mooted a district judge’s summary judgment for Hawaii in a Second Amendment challenge to a Hawaiian statute prohibiting butterfly knives and based on the reasoning in Lackey.  Another of the concurring judges expressed concern that Hawaii had “gamed” the case such that plaintiff lawyers could rarely get fees against a governmental defendant based on subsequent legislative amendments—he would have vacated the ministerial order vacating the prior decision undone by the previous en banc decision.