CALIFORNIA ATTORNEY'S FEES

Costs, Default Judgments, Multipliers, Paralegal Time: $709,620 In Attorney’s Fees Entered As Part Of A Default Judgment After Entry of Terminating Sanctions Was Affirmed On Appeal

Complaint Did Not Have To Plead An Exact Amount Of Fees; 3.0 Positive Multiplier Appropriate; PAGA Settlement Administration Expenses/Paralegal and Legal Assistant Expenses Properly Allowed As Routine Costs.

            Haaverson v. Tavistock Freebirds, LLC, Case No. A164043 (1^st Dist., Div. 5 Aug. 18, 2023) (unpublished) is an interesting opinion which explores whether a complaint needs to plead a specific amount of attorney’s fees to sustain a subsequent default judgment based on a request for substantial fees.  The holding in the decision is “no,” in most situations.

            What happened here is that a lower court granted terminating sanctions against defendant such that a default judgment was eventually entered for $25,000 in PAGA penalties, $48,793.90 in costs, and $709,620 in attorney’s fees inclusive of a 3.0 multiplier.  Defendant’s main argument on appeal was that the complaint’s prayer for “reasonable attorney’s fees and costs” was an insufficient allegation on which to base a default judgment because it was “relief” within the meaning of CCP § 580(a) requiring a more exact numerical specification.  The appellate court concluded attorney’s fees did not constitute the necessary “relief,” especially where a default judgment was based on terminating sanctions—adopting the reasoning in Simke, Chodos, Silberfeld & Anteau, Inc. v. Athans, 195 Cal.App.4^th 1275, 1286-1288 (2011).)  However, it examined other cases and reasoned that the result was likely the same in routine default judgment cases.  The appellate panel stated it this way: “Requiring that a plaintiff include an estimate of attorney fees that may be incurred up to the point of trial in the complaint would not meaningfully assist a defendant in making any informed choice. Unlike damages which are more or less fixed in their amount and do not depend on the manner of default, attorney fees will vary greatly depending on whether a default is taken following a defendant’s failure to answer or, like here, following lengthy discovery, motion practice, and terminating sanctions. Because of the speculative nature of any attorney fee estimate at the outset of litigation, a plaintiff is in no better position than a defendant to make that estimate. Indeed, a defendant is arguably in a better position than the plaintiff to estimate the amount of fees to be incurred by the plaintiff because that amount depends, in large part, on how the defendant chooses to proceed in litigation. Therefore, a complaint’s request for “reasonable attorney fees” provides sufficient notice to a defendant that fees are sought while recognizing the near impossibility for the plaintiff to predict what the actual fees will be.”

            Plaintiff was the prevailing party for fees under PAGA.  With respect to the 3.0 multiplier, the degree of skill and difficulty of the case justified an enhancement.

            PAGA administrative expenses to distribute the penalty to 408 employees correctly were awarded by the lower court as routine costs to plaintiff.   Finally, paralegal and legal assistant expenses were awardable as “reasonably necessary to the conduct of the litigation” under the discretionary costs provision, CCP § 1033.5(c))2). 

            BLOG OBSERVATION—We would indicate that if attorney’s fees are awardable as damages, this case might have turned out differently or would need a different analytical path for adjudication of the issue. 

Civil Rights, Default Judgments: Ninth Circuit Reverses District Judge’s Entry Of ADA Fees Pursuant To Local Schedule For Default Judgments Rather Than Entertain Fee Motion Requesting Lodestar Fees Where Plaintiff Opted For The Non-Fee Schedule Option

This Was A 2-1 Decision, With The Dissent Indicating Plaintiff Did Not Properly Tee This Issue Up Before The District Judge.

            The Ninth Circuit, in the 2-1 decision of Machowski v. 333 N. Placentia Property, LLC, No. 21-55673 (9^th Cir. July 1, 2022) (published), decided that where an ADA plaintiff indicates that the litigant will file an attorney’s fees motion, such an indication signals that the litigant is opting out of having default judgment attorney’s fees determined by a local C.D. California district court schedule and wants to request additional fees through a noticed motion.  The district judge sua sponte only entered the scheduled fees of $1,000 in connection with the default judgment, with the Ninth Circuit vacating the fee award and remanding so that plaintiff’s increased fee request could be entertained.  The dissent believed that plaintiff’s indication was not clear enough to override what the district judge did in the absence of having actual proof of what increased fees were being sought.  The majority opinion also found that the local rule allowing fee motions to be filed 14 days after entry of a judgment took precedence over the default judgment local rule stating that the increased fee request had to be filed immediately upon entry of the default judgment.

            There actually are some open issues left undecided by both the majority and dissenting opinions.  The first issue is whether the local rule applies at all where only nonmonetary (injunctive) relief is awarded under a default judgment.  The second is whether an attorney’s fees award under the Central District fee schedule is a reasonable fee under the ADA.  The third issue is whether the ADA mandates the use of a lodestar method in awarding fees.  Stay tuned for some more jurisprudence down the line!

Default Judgments: Where A Defendant Contests A Default Judgment, Successful Post-Judgment Efforts To Defeat Motion To Vacate Give Rise To Recoverable Attorney’s Fees

However, No Pre-Judgment Fees Allowed Because Plaintiff Did Not Include A Request For Fees At The Time The Default Judgment Was Entered.

            In Vincent v. Sonkey, Case No. B293251 (2d Dist., Div. 6 Dec. 29, 2020) (published), plaintiff obtained a default judgment against defendants (one of whom was alleged to be an alter ego of the corporate defendant) under a lease with a contractual fees clause.  Plaintiff did not ask for fees at the time she obtained entry of the default judgment.  She then successfully resisted defense efforts to set the aside the default judgment, prompting her to move for recovery of at least $40,000 in fees under Civil Code section 1717.  The lower court denied the motion. 

            Plaintiff appealed.  The 2/6 DCA, in a 3-0 published opinion, reversed and remanded.  Plaintiff was not entitled to pre-default judgment fees, but it was legal error to deny the postjudgment efforts to uphold the default judgment where defendants made the proceeding adversarial in nature and she prevailed.  In doing so, it refused to extend Garcia v. Politis, 192 Cal.App.4^th 1474, 1479 (2011), which involved a fee forfeiture in the context of a default proceeding, to fee recovery in a fully contested post-judgment case. 

Miscellaneous, Default Judgments: 4/3 DCA Vacates Default Judgment And Remands To Determine If CCP § 425.11 Notice Of Damages Was Filed

If Not, Default Judgment Is Void; If So, Then Inefficiency/Lodestar Factors Must Be Considered On Remand.

            Although unpublished, Alshamlan v. Arabian Restaurants, Inc., Case No. G057543 (4^th Dist., Div. 3 May 12, 2020) (unpublished) is must reading for disabled rights plaintiffs’ attorneys seeking a default judgment against a target defendant.

            There, a balance-challenged plaintiff, after being refused lunch service at a restaurant which would not allow him to have his service dog Geo with him, filed a single-incident complaint under the Unruh Civil Rights Act, Disabled Persons Act, American with Disabilities Act, and Business and Professions Code section 17200.  The complaint did not specify any amount of damages, with plaintiff making a prayer for an injunction and “general, compensatory, and statutory damages” under the California disability statutes, trebled according to statute.  Plaintiff also prayed for an award of statutory attorney’s fees.  Plaintiff then filed for entry of a default judgment, requesting issuance of a permanent injunction and $40,311.33 in monetary damages--$25,000 in damages, $14,680 in fees, and $631.33 in costs.  The injunction request was based on the ADA and the damages/fees/costs based on the California disability statutes and ADA (fees and costs under the ADA, because only an injunction could be issued under that statute).  At the prove-up hearing, the trial court refused to award the requested $25,000 damages because no specific amount was alleged in the complaint.  However, it did award $5,000 in statutory minimum damages.  The trial judge further declined to issue the proposed injunction on the basis it was overbroad.  It rejected plaintiff’s request for over $14,000 in fees, finding $1,800 to be the reasonable fee award—expressing worry that the requested amount was way over the local rule default judgment guidelines.

            The 4/3 DCA, in a 3-0 decision authored by Justice Goethals, reversed and remanded.  The principal basis for the reversal/remand was the fact that plaintiff may not have served a notice/statement of damages under CCP § 425.11 to impart actual notice of the amounts of special and general damages being sought.  If one had not been filed, the default judgment was directed to be vacated on the basis it was void.  If the statement had been filed, the appellate court provided some additional guidance to the trial judge on the fees issue, given plaintiff had appealed on the ground that the fee award was too low.  The lower court should consider plaintiff’s limited success and other lodestar/reduction factors in fashioning a fee award if the statement of damages had been filed.

            BLOG COMMENT—Justice Goethals also discussed how the damages calculations under the state disability statute are confusing in the default judgment context, providing a good roadmap on how they are to be calculated.  A good primer for plaintiff disability attorneys seeking default judgments.