CALIFORNIA ATTORNEY'S FEES

Landlord/Tenant and Section 1717: Lack Of Written Contract Fees Clause Doomed Attorney’s Fees Request

Tenant’s Probability Theory Did Not Do Well At Either Trial Or Appellate Levels.

Ida B. Wells Housing Project.  Meeting of the tenants.  Chicago, Illinois.  April 1942.  Jack Delano, photographer.  Library of Congress.

            In Doll v. Ghaffari, Case No. B272384 (2d Dist., Div. 4 Oct. 25, 2017) (unpublished), tenant did prevail against landlord on certain subletting disputes (two unlawful detainer actions and a subsequent tenant civil action), with tenant gaining some substantial compensatory damages after some appeals.   Although clearly a prevailing party, tenant moved for attorney’s fees of $308,649 under the contractual claims which survived all of the prior trial/appellate court proceedings.  The trial judge awarded nothing.

            Tenant did no better on appeal.  The main flaw was tenant’s failure to produce a contract with a fees clause.  Instead, tenant relied on subsidiary “custom and practice” proof asserting that it was standard practice for residential areas in the venue to contain fees clauses, further bolstered by probability theory that 90% of the leases overall in the lease venue contained these clauses.  Neither the trial nor appellate court bought this somewhat mathematically-oriented argument.  Given that there was no evidence of the “data base” of leases involved, the probability argument was viewed as sheer speculation.  Tenant argued that landlord’s check of a box for fees in an unsuccessful eviction action estopped landlord from denying fees were recovered, but this did not work because (1) landlord did not prevail so as to invoke judicial estoppel, and (2) the trial court credited that landlord had mistakenly checked a box claiming fees when there was no entitlement to them.

            BLOG FAVORITE PART OF DECISION—Tenant’s attorney “argued there are four rules in every residential lease:  ‘You can’t have a dog; you can’t have a cat; you are not getting your deposit back; and if you get in a fight with your landlord, you’re paying its attorney fees.’  The [lower] court replied that for ‘every one of those statements, I’ve seen the opposite.’”

Landlord/Tenant, Prevailing Party, Section 998: $324,533.50 Fee Award To Landlord Affirmed In Second Coercive Declaratory Relief Lawsuit Against Tenant

Dispute Focused On Tenant’s Ability To Use Common Areas Behind Lease Premises.

            Landlord/tenant disputes can be expensive from fee expense and fee award perspectives, as Muzzi v. Bel Air Mart, Case No. C073684 (3d Dist. July 3, 2017) (unpublished) demonstrates.

           In this one, landlord had to bring a “coercive” declaratory relief action against a commercial tenant based on winning a prior action in which tenant was only allowed to use common areas behind its store for loading/unloading purposes only. Tenant perceived it could stage storage of equipment for many hours, with landlord then pursuing the second action. The jury found a trespass but found no harm, with the parties stipulating to a later $1.00 in nominal damages, and the trial judge subsequently entered a permanent injunction to enjoin tenant conduct other than loading/unloading activities. Landlord had turned down a small $1,500 CCP § 998 offer. Later, the trial judge awarded landlord $324,533.50 in attorney’s fees as the prevailing party under Civil Code section 1717 (based on a broadly-worded contractual fees clause).

            The Third District affirmed.

        Landlord was the prevailing party given the trespass and permanent injunction wins (especially the permanent injunction win to enforce the earlier victory), especially in light of the fact that the lease clause allowed for recovery relating to any “remedy in connection with” the lease.

        With respect to tenant’s suggestion it was the winner based on the 998 offer, the appellate court agreed with the landlord and trial court: it was invalid based on ambiguity. The offer contained language about “storage,” but that was too amorphous given that tenant really wanted “staging” of operational equipment for hours on end.

Landlord/Tenant; Reasonableness Of Fees: Tenant Recovering $78,753 In Damages Under Statutory Landlord-Tenant Provisions Properly Awarded Attorney’s Fees Of $91,344.50 As Prevailing Party

 

 

Facts Were Interesting, But Fee Award Was Not Shocking In Nature.

 

 

Landlord (Mr. Timothy Rack Rent) telling tenant leasehold (a country attorney) that rent is being raised. Circa 1750-1795. John Spilsbury, engraver. Library of Congress.

 

    We will have to say that after blogging for close to nine years, the attorney's fees decisions frequently mirror the angst parties have in litigating the merits. Put another way, the fee dispute is a "carryover" of the angst from the merits decision, although in many occasions the merits victor recovers a substantial portion of requested attorney's fees and costs. The next decision well illustrates our general observation over the years.

 

    In Carlson v. Corona, Case Nos. B264709/B267343 (2d Dist., Div. 4 Feb. 24, 2017) (unpublished), a girlfriend—who was the executor of her deceased boyfriend's estate—sold an apartment building of which she was a tenant and agreed to move from one apartment unit to a smaller unit as part of the overall sale. However, the new owner/new landlord did not allow her time to fetch all of her possessions from the former apartment unit given that the sale escrow was short in nature. Given this possession issue, girlfriend, as plaintiff, sued new owner/landlord, as defendant, under various landlord-tenant statutory provisions relating to the personal possession issues. Plaintiff won, recovering $78,753 in damages. The trial court then awarded her $91,344.50 (the full request) in attorney's fees under fee-shifting provisions contained in Civil Code sections 789.3 [fees for removing residential tenant's personal property without permission or without following statutory procedures] and 1965 [failure to return residential tenant's personal property upon written request].

 

    Landlord's principal challenge was that the fee award was excessive, eight times more than the damages award. The problem here was that the correct damages award was $78,753, with the eventual $91,344.50 fee award not shocking when the proper compensatory number was used. Fee recovery affirmed.

Landlord/Tenant: Prevailing Tenant Seeking Fees Under CCP § 1174.21 Relating To Substandard Conditions In Residential Tenancy Can Litigate Fee Entitlement Through Posttrial Motion

 

Fee Entitlement Does Not Have To Be Shown At Trial.

    In Active Properties, LLC v. Cabrera, Case No. BV031320 (L.A. Superior Court, Appellate Division Dec. 9, 2016) (published), the appellate division faced an interplay between Code of Civil Procedure section 1174.21, a provision allowing a tenant to recover reasonable attorney’s fees and costs from an unlawful detainer-prosecuting landlord found liable for a violation of Civil Code section 1942.4, which allows a tenant to recover damages and beat a UD action by proving specified substandard inhabitability conditions.

    What happened was that residential tenant won a jury trial against a suing landlord based on inhabitable premises under Civil Code section 1942.1, determining that back rent obtained by landlord had to be disgorged to tenant.  After the jury win, tenant moved to recoup fees and costs under section 1942.2, but the lower court denied this request on the basis that 1942.2 liability had not been litigated at trial so that 1174.21 fee entitlement was lacking.

    The Appellate Division reversed.  It resolved the interplay between the two statutes in favor of section 1174.21, determining it was pro-tenant and did not require that the 1942.2 liability determination be made just at trial.  Rather, tenant could prove the liability in a posttrial noticed motion as long as the papers did show landlord was liable under 1942.2—even after the 1942.1 win before the jury.

Landlord/Tenant; Section 1717: Hjelm “Bedbug” Inhabitability Attorney’s Fees Decision Now Published

 

Certified For Publication On October 5, 2016.

    In our post of September 13, 2016, we discussed Hjelm v. Prometheus Real Estate Group, a 1/1 DCA unpublished decision which affirmed a $326,475 attorney’s fees award under Civil Code section 1717 to tenants in a “bedbug” inhabitability case based on a lease fees clause.  We can now report that this case was certified for publication on October 5, 2016. 

Section 1717, Landlord/Tenant: Prevailing Tenants In Bedbug Inhabitability Suit Against Landlord Properly Awarded $326,475 In Attorney’s Fees Under Civil Code Section 1717

 

Inhabitability Suit Indeed Was “On The Contract” For 1717 Purposes.

    SUMMER AMUSEMENT.  BUG HUNTING.  1782.  Isaac Cruikshank, artist.  Library of Congress. 

     Plaintiffs/tenants sued landlord after having to vacate an apartment because of a bedbug infestation.  They won a jury verdict, and then moved to recoup $326,475 in attorney’s fees under Civil Code section 1717.  The trial court awarded all of the request, a result affirmed by the appellate court in Hjelm v. Prometheus Real Estate Group, Inc., Case No. A142723 (1st Dist., Div. 2 Sept. 9, 2016) (unpublished).

    The lease had fees clauses encompassing a holdover tenancy provision/broad violations of use and broad indemnification costs clause all unilaterally in favor of landlord—but which are made reciprocal under section 1717.  Landlord’s principal argument was that no contract claim was asserted by tenants.  However, the breach of inhabitability claim is “on the contract” for purposes of section 1717.  (Erlach v. Sierra Asset Servicing, LLC, 226 Cal.App.4th 1281, 1299 (2014).)  Also, the constructive eviction claim was “on the contract.”  (Beeman v. Burling, 216 Cal.App.3d 1586, 1608 (1990).)  Nothing showed that tenants elected only tort remedies over the contract-based claims.  Fee award affirmed.

Landlord/Tenant And Reasonableness Of Fees: Several Tenants Winning Harassment Suit Against Landlord Get Sizable $845,351.25 In Fee Recovery

 

 

L.A. Municipal Code And Statutory Inhabitability Breach Fee-Shifting Statute Were The Bases.

                                                       

 

     Above:  Library of Congress.  Snodgrass common household roaches.  Public domain.

     In Vaughn v. Darwish, Case No. B252762 (2d Dist., Div. 2 July 6, 2016) (unpublished), tenants won a harassment case against landlord, among other things involving the use of cockroach foggers in tenants’ units. Plaintiff tenants won compensatory awards ranging from $36,600-43,400, plus punitive damages for each plaintiff to the tune of $916,666.07 (although the punitive damages were remitted downwards quite a lot for each plaintiff). However, based on fee-shifting provisions in the L.A. Municipal Code and Civil Code section 1942.4(b)(2), a statutory inhabitability breach provision, tenants also garnered a total $845,351.25 attorney’s fees recovery.

     The fee recovery stood on appeal by landlord. The $500 hourly rate charged was found reasonable, a 1.5 multiplier to the lodestar was justified based on the contingent risk to the case, and the amount of fees was reasonable given that the defense “fought tooth and nail” throughout the case.

Library of Congress.  c1870 – 1890.

Landlord/Tenant; Prevailing Party: Defendant Voluntarily Dismissed From Civil Harassment Proceeding Properly Denied Fee Recovery

 

No Fee Entitlement Under CCP § 1032(b) Or CC § 1717, And Trial Court Did Not Abuse Its Discretion In Determining Defendant Did Not Prevail Under Rental Lease Clause Or Civil Harassment Discretionary Fee-Shifting Statute.

     Plaintiff landlord and defendant tenant obviously got at odds with each other, prompting landlord to initiate both an unlawful detainer action and civil harassment proceeding. After defendant moved out of plaintiff’s house, plaintiff dismissed the civil harassment proceeding. Defendant then moved for recovery of $7,218.75 in attorney’s fees on four bases, claiming to be the prevailing party: (1) as of right under CCP § 1032(b); (2) Civil Code section 1717; (3) a broad rental agreement fees clause; and (4) the discretionary fee-shifting statute in the civil harassment proceeding scheme (CCP § 527.6(s)). The trial court denied fees, a result upheld by the appellate court in Guerra v. Bailey-Holden, Case No. E064548 (4^th Dist., Div. 2 July 8, 2016) (unpublished).

     Defendant was not entitled to fees as a matter of right under CCP § 1032(b) based on the prefatory language “except as provided otherwise by statute,” since the civil harassment statutory fee-shifting provision made fee recovery discretionary rather than mandatory in nature.

     Civil Code section 1717 did not apply because this was not an action “on the contract,” because a civil harassment proceeding is in the nature of a tort proceeding.

     Although the rental fees clause was broad enough to cover tort claims, the trial judge did not err in adopting a pragmatic approach to a “prevailing party” determination, with plaintiff getting what she wanted—defendant’s departure from the house.

     Finally, no abuse of discretion occurred from denying fees based on the civil harassment proceeding given that defendant moved out of the house such that the proceeding was pretty much moot.

Landlord-Tenant, Requests For Admissions: Successful Defendant In Residential Unlawful Detainer Action Properly Awarded Only $10,000 Out Of Requested $70,000

 

Also, Failure To Itemize Expenses Incurred For RFA Denials Prevented Imposition Of Costs-Of-Proof Sanctions.

     The standard of review is critical in appellate matters as well as the development of the record below. Appellant, the successful defendant in a residential unlawful detainer case, found that out in Kennedy v. Morin, Case No. B254871 (2d Dist., Div. 3 June 22, 2015) (unpublished).

     There, defendant won a jury trial based on the inhabitability of premises as against an eviction suit by the losing landlord, with the jury determining all of the alleged past due rent/damages should not be awarded but reduced entirely for the rental conditions. No one argued there was an absence of fee entitlement, based on a lease fees clause and inhabitability fee shifting statute. However, defendant was apparently shocked when the lower court awarded only $10,000 out of a requested $70,000 in attorney’s fees.

     That determination was affirmed on appeal because the amount of fees award is reviewed under the deferential abuse of discretion standard. Below, the parties presented conflicting declarations on the worth of the defense work efforts, with the lower court crediting the plaintiff’s counsel’s declaration that the worth of the unlawful detainer work by the defense was between $5,000-10,000—especially with the plaintiff’s attorney testifying he did U.D. trial work on a flat per-daily fee basis. The appellate court determined the trial judge was entitled to credit plaintiff’s declarations over those of the defense on this issue.

     Defendant also asked for a flat additional amount for RFA costs-of-proof sanctions under CCP § 2033.420. However, the defense had failed to develop an adequate showing below by inadequately correlating the specific expenses incurred in proving contrary facts at trial to the particularized RFA denials. The RFA sanctions denial held up on appeal, too.

Landlord/Tenant, Postjudgment Enforcement, Section 998: Two Landlords Do Not Do Well In Fee Proceedings

 

Postjudgment Enforcement—Harris v. Otttovich, Case Nos. A139146 et al. (1^st Dist., Div. 5 June 2, 2015) (unpublished).

     In this one, former landlords lost a wrongful eviction suit and the lower court awarded tenant $48,000 in postjudgment collection/enforcement fees under CCP § 685.040. Landlords argued that, because there was no contract with a fees clause, no postjudgment fees were recoverable under section 685.040, but this was wrong as a matter of law—685.040 does not have this limitation. (Conservatorship of McQueen, 59 Cal.4^th 602, 614 (2014).)

Section 998 – Swan v. Tesconi, Case No. A138119 (1^st Dist., Div. 3 June 2, 2015) (unpublished).

     Tenant sued for inhabitability conditions in rented premises, with the landlord (defense) sending out a 998 offer for $32,000 excluding reasonable attorney’s fees but requiring a request for dismissal with prejudice. Tenant refused because the 998 offer was deemed to be ambiguous, after consulting with some attorneys specializing in fees matters. Eventually, the parties stipulated to a $32,000 judgment with each side reserving the right to seek fees and costs. Tenant won $273,071.25 in fees and $15,751.26 in costs as the prevailing party under both contractual fee clauses and CCP § 1032, with the lower court denying the defense motion for recovery of fees/costs under the 998 offer. Defendant, on appeal, argued that he won based on the 998 offer, but both the trial and appellate courts found that the 998 offer was ambiguous. The main reason was that the requirement for plaintiff to voluntarily dismiss the case with prejudice did not allow plaintiff to divine the defense costs which tenant might be exposed to. (Chinn v. KMR Prop. Mgt., 166 Cal.App.4^th 175, 190 (2008).) What the defense could have done to be clearer was to specify each side would bear their own costs, to specify the defense was waiving costs, or to provide for a judgment entry mechanism rather than a dismissal. Also, the offer was unclear as to whether plaintiff could recoup fees under Santisas, based on the impact of the voluntarily dismissal.

Landlord/Tenant: Landlord Liable For $106,925 In Attorney’s Fees For Utility Interruption As To Elderly Tenant

 

Civil Code Section 789.3(c)(2) Allows For Such An Award.

     Successor landlord in this one got “stung” for interrupting the utilities in premises and then failing to pay relocation expenses with respect to a 77-year elderly tenant, who had a good 12 year relationship with a prior landlord. Then, things got shaky with the new landlord, who was hit with a jury verdict of $154,500 for constructive eviction and was further hit with adverse attorney’s fees of $106,924, all in tenant’s favor.

     Landlord’s appeal was unsuccessful in Phelps v. Bishop, Case Nos. B252583/254891 (2d Dist., Div. 4 May 28, 2015) (unpublished).

     A landlord is subject to attorney’s fees exposure where it is proven that utility interruption was caused with the intent to terminate the tenant’s occupancy. (Civ. Code, § 789.3(c)(2).) The challenge to the amount of the award was doomed because landlord never opposed tenant’s fees motion and never made any specific objections to the supporting fee submissions. Beyond that, detailed fee records were submitted and the generalized “unconscionability” argument – the fees were facially shocking – simply did not establish the trial court abused its discretion.

Landlord/Tenant: San Diego Trial Judge Awards $29,212 In Unlawful Detainer Case Even Though Only $13,883 In Rental Damages Awarded

 

Moving Attorney Did Some Smart Things Here.

     Because trial court experiences can provide some good tips, we report on the result of an attorney’s fees motion in a recent San Diego County Superior Court ruling in Five Star Synergy, Inc. v. Light Wireless Communications, LLC.

     This was a commercial unlawful detainer case filed on October 2, 2014 and tried on January 8, 2015 before Judge Richard S. Whitney. Landlord prevailed on the possession issue and was also awarded $13,883 in unpaid rent/rental damages as well as routine costs. Landlord then moved to recoup attorney’s fees of $29,212 based on a contractual fees clause in the lease. Landlord recently won them all. In the process, landlord’s attorney did some smart things: (1) they only billed for time through January 2015, not including post-trial work in attending and opposing a lockout stay ex parte appearance request; and (2) they “no charged” for an associate attending the trial with the primary attorney trying the case. These prudent decisions resulted in the entirety of the fee request being granted.

     HAT TIP—The successful attorneys were Tom Nowland and Dan Brodnax, with co-contributor Mike knowing and working with Tom. Congrats to you both and your client, and HAT TIP for providing us the information on the fee result.

Section 1717: Defendant Tenant Prevailing On Rent Control Ordinance/Rent Rate Declaratory Relief Claim Entitled To Fee Recovery

 

Lower Court Erred In Refusing To Award Fees Under Fees Clause Which Encompassed Landlord’s Declaratory Relief Claim.

     Earlier, tenant had won both trial and appellate court victories on the theory that landlord’s substantial rent increase violated local L.A. rent control ordinances, with landlord instigating things primarily through a declaratory relief-oriented action which landlord lost. Then, the prevailing tenant moved to recover $16,594 based on an attorney’s fees clause in the lease, which provided unilateral recovery to landlord for failure to pay rent (keeping in mind Civil Code section 1717 makes unilateral provisions reciprocal in nature). The trial court denied fee recovery to tenant, based on its perception that the fee clause was not applicable to the dispute.

     That fee denial got reversed in Burien, LLC v. Wiley, Case No. B253555 (2d Dist., Div. 5 Mar. 23, 2015) (unpublished)—with the appellate court determining the fees clause was applicable.

     Landlord argued that tenant could not obtain fees because the lease was not attached to the complaint or introduced at trial. No, because the lease fees clause was put at issue in the answer and can be introduced in the fee petition—no due process violation occurred at all. But that brought the appellate panel to the key issue, which was landlord’s declaratory relief action “on a contract” under Civil Code section 1717? Answer: You betcha. Beyond that, the secondary key question was whether the fees clause was broad enough to include the declaratory relief claim? Second answer: You betcha again. Reversed, with tenant being able to seek fees at the trial level and at the appellate level as prevailing party.

Fee Clause Interpretation: Broadly Worded Provision Allowed Fee Recovery To Home Park Tenant Prevailing In Landlord Premises Liability Case

 

 

Trial Court’s Denial of Fees Reversed.

 

     Plaintiff was a tenant in a manufactured home park, falling while walking across a common area lawn. Plaintiff brought a premises liability suit against landlord, garnering a $311,899.67 damages award. However, the trial court denied plaintiff’s fee request.

     That was reversed on appeal in Hemphill v. Wright Family, LLC, Case No. D065462 (4^th Dist., Div. 1 Feb. 25, 2015) (published). There was a broadly worded fees clause in the lease encompassing “an action arising out of homeowner’s tenancy.” It was found in landlord’s preprinted form, such that the failure to define “homeowner’s tenancy” was construed against landlord. The premises liability suit did arise out of plaintiff’s tenancy so as to justify a fee award.

Allocation/Employment/Landlord-Tenant/Section 1717: Wild Landlord/Tenant And Minimum Wage Earner Battle Means All Fee Awards Had To Be Reversed

 

Rental Inhabitability Battles Are Contractual, Giving Rise to 1717 Fee Exposure, While Limited Success On Minimum Wage Mandatory Fee-Shifting Claims Requires Apportionment and Possible Reduction.

      This next case is hard to pigeonhole, because it involves cross-over issues in the Landlord/Tenant and Employment post sites. However, Staley v. Carlson, Case No. A133115 (1st Dist., Div. 1 Dec. 23, 2013) (unpublished) is worthy of discussion in the lease inhabitability and minimum wage areas, where contractual and statutory fee entitlement issues are at stake.

     This wild battle pitted a couple hired to be caretakers of a dog kennel property (tenants/employees) who were provided with mobile home rental housing by their employers (landlords), which rental was guaranteed by one of the tenant’s father.

     White House kennel keeper and woman with three airedales of Warren G. Harding.  Library of Congress.

     Eventually, tenants were evicted, losing an inhabitability defense and with guarantor father getting hit with some damages/fee exposure, though the latter is not relevant to our post. After the dust settled in quite a litigation between the parties, tenants/employees prevailed on minimum wage/hour claims, netting about $40,000 out of a requested $400,000 in a suit with lots of claims, and with landlords obviously prevailing in the eviction action. Both sides asked for fees, but only one side won: landlords did not get any fees for defeating the inhabitability claims, while tenants, in their status as employees, won $288,893.20 in fees for prevailing on the wage/hour Labor Code claims.

     On appeal, the fee orders were reversed, in an eloquent opinion which still had to comb through wild facts and disparate legal claims.

     Landlords were entitled to contractual Civil Code section 1717 fees under the lease against tenants. After all, even though both parties admitted that statutory inhabitability claims were not at issue, the inhabitability claims were nonetheless common law contractual--not just common law tort--claims entitled to 1717 fee entitlement. Erroneous to deny fees to landlords.

     Tenants/employees’ fee award was overturned, too. Because they were only entitled to mandatory fees under Labor Code section 1194(a), the minimum wage violations, employees could not garner fees for section 218.5 violations. Employees only had limited success, a factor which had to weighed when it came to apportioning fees and determining the amount that was right on the minimum wage/hour “successful” claims--notwithstanding the strong public policy in favor of 1194(a) fee awards.

     All was reversed and remanded for another potential free-for-all, although we can only hope this matter gets resolved. If not, we may be reporting on the sequel in the future, God (or spirits) willing.

Prevailing Party/Section 1717: Landlord And Tenant Denied Relief On Complaint And Cross-Complaint, With Neither Side Entitled To Attorney’s Fees As Section 1717 Prevailing Party

 

Neither One Obtained Sought-After Litigation Objectives.

     When a lower court has discretion to decide who the prevailing party is, unless the facts show otherwise, the abuse of discretion generally applies on appellate review and dictates the result. That is what happened here.

     In Barez v. Ni, Case No. H037572 (6th Dist. July 31, 2013) (unpublished), no one was found to be the prevailing party so as to obtain an attorney’s fees award under Ciivl Code section 1717. Landlord sued for prospective rent after tenant cancelled the lease, and tenant cross-complained for fraud (dismissing this prior to trial) and for recovery of an approximate $10,000 security deposit. The jury denied relief to both parties, finding neither had fulfilled their obligations under the contract so -- ta da! -- neither party obtained relief on their respective complaints.

     Then, the fee fun began. Tenant sought to recover $142,542 in fees, inspiring a dueling motion of $113,681 by landlord--both claiming to prevail under section 1717, a proposition rejected by the trial court in awarding no fees to either side. (One thing we all can agree upon is that each side spent a fair piece on fees, no?)

     Landlord rested on the decision, but tenant appealed. Tenant fared no better.

     The appellate court, although not requiring arm wrestling to break the dispute (because, after all, reviewing courts in California or the U.S. do not require this), did agree there was no clear winner such that the lower court’s discretionary call had to prevail. The lower court’s order is presumed correct, and nothing in the record suggested the court failed to understand what it had to do in the “prevailing party” analysis. (Cussler v. Crusader Entertainment, 212 Cal.App.4th 356, 367 (2012).)

     Beyond that, tenant’s cross-complaint did not have to be brought such that it was not purely defensive in nature. However, even where a cross-action is essentially defensive in nature, a lower court still has discretion in determining who prevailed in the overall scheme of things--something tenant failed to persuade the lower court happened. Not only that, but tenant did not succeed in even obtaining a return of the deposit, so that this was reason enough to find that tenant did not achieve its main litigation objective.

     Moral of the story: both sides go home, eat your fees, and wake up to another day of business/other activities.

Costs/Landlord-Tenant/Prevailing Party: Tenants In Dismissed Rescission Action Did Win Routine Costs, But Correctly Denied Attorney’s Fees

 

     Ron Sheng, Inc. v. Li, Case No. B239682 (2d Dist., Div. 7 Feb. 19, 2013) (unpublished) is a wild landlord-tenant dispute where landlord settled with tenants and tenants won a $200,760 fee award pursuant to an arbitration which was eventually sustained on appeal. However, landlord brought a rescission action claiming that the settlement agreement contained an illegal provision, but eventually dismissed the rescission action after the appellate court affirmed the prior win by tenants. Tenants then moved to recovery fees/costs of $17,365 as prevailing party in the rescission action, $1,265 of which were costs. The trial court found no fee entitlement, and denied tenants’ request altogether.

     The denial of fees was affirmed, but the judgment was modified to allow appealing tenants to recover the relatively small amount of costs.

     Landlord defended against another fee award because the rescission lawsuit did not arise under a residential hotel eviction statute (Civ. Code, §1940.1(b)) and did not arise under the inhabitablility statute (Civ. Code, §1942.4)--rather, it was a common law rescission action not arising under either fee entitlement statute. The appellate court agreed with this construction of the statutes. (Cf. SC Manufactured Homes, Inc. v. Canyon View Estates, Inc., 148 Cal.App.4th 663, 675, 677 (2007).)

     However, tenants were entitled to routine costs. After all, the rescission case was dismissed with prejudice such that tenants were the prevailing party under CCP § 1032(a)(4).

     So, tenants got another $1,265, but each party bore their own costs on appeal. Somewhat of a small victory for appealing tenants, we should observe.

Allocation/Landlord-Tenant/Section 1717: No Allocation Of Fees Required Between Contract And Tort Claims Where Claims Are Interrelated

 

$1.3 Million Fee Award Affirmed; Cassim Did Not Require Allocation in Civil Code Section 1717 Context

     Landlord and tenant got involved in a lease dispute resulting in a suit where both dueling contract and tort claims were pitted against each side, with tenant ultimately prevailing by winning $116,859 in lease damages and a specific performance decree against landlord. The trial court then awarded tenant $107,964.37 in costs and $1,130,042.75 (out of a requested $1,219,177.80) in fees under a lease contractual clause. Landlord appealed, primarily arguing that the trial court failed to allocate fees between contract and tort claims.

     The fee recovery was affirmed in Stump’s Market, Inc. v. Plaza De Santa Fe Ltd., LLC, Case No. D059537 (4th Dist., Div. 1 Jan. 14, 2013) (unpublished).

     The appellate court rejected that Cassim v. Allstate Ins. Co., 33 Cal.4th 780 (2004) required allocation in a Civil Code section 1717 context: Cassim only required apportionment in a Brandt setting and nothing in the majority or Justice Baxter’s opinions in Cassim suggested an overruling of Reynolds Metals Co. v. Alperson, 25 Cal.3d 124, 129 (1979) where no allocation is required if contract/non-contract claims have interrelated issues. That was the case in the cause before the appellate court, because the torts were recast contractual claims alleging breaches of the lease. No abuse of discretion under the circumstances.

Landlord/Tenant; Mediation: Winning Tenant In Post-U.D. Action’s Fee Recovery Reversed On Appeal

 

$73,125 Fee Award Went POOF!, But Not Because of a Merits Reversal.

     Tenant must have been feeling good at the trial court level, even though the dispute involved of all things a to-do about a $16,990 security deposit. After landlord commenced an unlawful detainer, the parties stipulated to a judgment (without a fees clause) which talked about future handling of the security deposit in line with California requirements for an inspection and substantiation of deposit use. Tenant did move out, but landlord gave tenant an unsatisfactory deposit use itemization. Tenant moved to vacate the unlawful detainer judgment based on the mistaken notion that landlord would comply with the security deposit procedures, but the lower court instructed tenant to file a new action on the issue, which tenant did. Eventually, the trial judge based on jury findings found in favor of tenant in the second action, awarding over $37,000 in damages for not abiding by security deposit dictates. Then, tenant was granted $73,125 in attorney’s fees under a lease fees clause (out of a requested $107,217).

     Landlord appealed both the merits and fee awards in De Carlo v. Kosser, Case No. B237278 (2d Dist., Div. 5 Jan. 7, 2013) (unpublished).

     Landlord lost on the merits, but probably felt much better by obtaining a reversal of the fees award. (And, not surprisingly, the fee award eclipsed the merits award by almost double.)

     Tenant did not justify the fee award for two reasons. First, there was a mediation condition precedent clause in the lease, and tenant never demonstrated it proffered mediation before filing the separate action. However, the trial judge apparently reasoned that the separate security deposit action was a continuation of the unlawful detainer proceeding, which was expressly exempted from the mediation requirement. That brought the appellate court to the second reason for its reversal: the post-U.D. action was indeed a separate lawsuit on the lease subject to the mediation requirement and, furthermore, under the lower court’s logic, no fees should have been awarded in any event because the suit was on the settlement agreement rather than the lease--and the settlement agreement contained no fees clause. Fee award reversed as a matter of law, no matter how you sliced the ham.

Lewis Wiggins cutting off a slice of his homecured  ham in his smokehouse.  La Delta Project, Thomastown, Louisiana.  Marion Post Wolcott, photographer.  June 1940.  Library of Congress.

Section 1717: Fee Award To Contract Nonsignatory Reversed Because Nonsignatory Cannot Recover Fees On Noncontract Claims

 

$49,500 Fee Award Reversed.

     Tenant must have felt pretty good after winning $49,500 in attorney’s fees under Civil Code section 1717 after Landlords voluntarily dismissed with prejudice a mixed contract/tort case after Tenant filed a summary judgment claiming that he was not a party to a leasing agreement and that his signature was forged on the document.

     That exhilaration, on appeal, quickly went away when the appellate court reversed the fee award in Behshid v. Petros, Case No. B236530 (2d Dist., Div. 7 Nov. 13, 2012) (unpublished).

     Everyone agreed that, under Santisas (17 Cal.4th 599--one of our Leading Cases), the voluntary dismissal meant no fees based on the contract claims were warranted against Landlords. They also agreed, based on Reynolds Metal (24 Cal.3d 124--another of our Leading Cases), that a prevailing nonsignatory can collect fees on contractually-based claims.

     However, here the issue was whether a nonsignatory could collect fees on noncontract claims. The answer was “no,” based on Super 7 Motel Associates v. Wang, 16 Cal.App.4th 541, 549 (1993) and Topanga and Victory Partners v. Toghia, 103 Cal.App.4th 775, 786 (2012). Code of Civil Procedure section 1033.5(a)(1)(A), the general costs/fee recovery statute, did not dictate otherwise, because a contract was still needed between the parties to trigger its applicability (as observed in Toghia).

Landlord/Tenant; Section 1717: Landlord Substantially Winning Unpaid Rent Suit Garners Fees Of $313,424.45 Even Though Damages Won Only Totaled About $202,411

 

Landlord’s Rejection of Equipment Transfer Settlement Offer Did Not Impact Fee Recovery, Because Equipment Transfer Worth Less Than Rental Damages.

     In Via Montana, LLC v. Pearson Realty, Inc., Case No. F061975 (5th Dist. Nov. 6, 2012) (unpublished), landlord won a little over $202,411 for unpaid rent and restaurant tenants won $3,550 for a conversion claim. Based on a fees clause in the lease between the parties, prevailing party landlord requested fees of $314,456.50 (smartly reducing its total requested expenditures by 25%), and the trial court awarded most of them--$313,424.45. Tenants then appealed the fee award.

     The Fifth District affirmed in a comprehensive opinion authored by Presiding Justice Hill.

     Tenant first (and primarily) argued that landlord’s fees could have been avoided had it accepted a settlement offer to transfer equipment, based on a case where fees were limited where a party provided a reasonable settlement offer that was rejected by the other side. (See Mesiter v. Regents of University of California, 67 Cal.App.4th 437 (1998).) The problem here was that landlord had unpaid rent of over $200,000, and the equipment transfer offer was worth somewhere between $87,000-$150,000, so the settlement offer was not more favorable than the unpaid rental damages.

     Tenant next complained about unsuccessful, meritless, or repetitive motions, but the appellate court observed that compensation is ordinarily warranted even for unsuccessful forays by an overall prevailing party. (City of Sacramento v. Drew, 207 Cal.App.3d 1287, 1303 (1989).)

     The excessive fees argument did not persuade because, after all, landlord did voluntarily reduce its request by 25% at the outset, and the experienced trial judge is the best referee as to amount of fees awardable.

Landlord/Tenant And SLAPP: Plaintiffs’ Failure To Separately Appeal SLAPP Order Precluded Appellate Review And Defense Entitled To Fee Recovery Under the Mobilehome Residency Law Because Plaintiffs’ Dismissed Complaint Was Based On MRL Violati

 

Collateral Order Doctrine and MRL “Arising From” Principles Explored.

     In Hall v. West, Case No. D060402 (4th Dist., Div. 2 Oct. 10, 2012) (unpublished), defendants moved to SLAPP plaintiff’s extant complaint, prompting plaintiffs to obtain leave to file a second amended complaint and then dismissing the action without prejudice. The trial court proceeded to award SLAPP fees to the defense in the amount of $4,200. Later on, the lower court awarded attorney’s fees of $19,133.75 to the defense for the entire action based upon fee clauses in the mobilehome rental agreements between tenants and landlord. Plaintiffs appealed.

     Unfortunately, the appeal of the SLAPP fee award was dismissed. Reason? Plaintiffs failed to timely appeal the separate fee order within 60 days of its service. The appellate court agreed with City of Colton v. Singletary, 206 Cal.App.4th 751, 781-782 (2012) [discussed in our June 1, 2012 post] that a collateral order was involved having to be separately appealed. It found Doe v. Luster, 145 Cal.App.4th 139 (2006) distinguishable (applying only to an order denying SLAPP fees) and would not follow the decision where the appeal was from an order granting SLAPP fees to the defense.

     However, the notice of appeal was sufficiently broad to encompass review of the $19,133.75 fee order. The lower court certainly had post-dismissal jurisdiction to award fees and costs, although the voluntary dismissal without prejudice barred a contractual fee award under Civil Code section 1717. That brought the appellate court to consider whether fees could be awarded under plaintiffs’ tort claims because they arose out of the Mobilehome Residency Law (MRL) which has a fee-shifting provision in Civil Code section 798.85. After surveying the law on what type of claims “arise from the MRL,” the appellate court decided that plaintiffs’ claims were based on MRL violations even though no direct statutory claims were alleged. (Del Cerro Mobile States v. Proffer, 87 Cal.App.4th 943, 945-948 (2001), but also discussing SC Manufactured Homes and MHC Financing.) Second fee order affirmed.

Mr. Timothy Rack Rent, an old miserable landlord, & his neighbour Lease-hold, a country attorney.  Jonathan Spilsbury, engraver?  18th century.

Section 1717: Tenant Losing Post-Unlawful Detainer Proceeding Against Landlords Suffers Adverse Fee Award Based On Broad Contractual Fees Clause

 

Unlawful Detainer Judgment Was Res Judicata, and Fees Clause Was Broad.

     Howard v. Champion, Case No. B234337 (2d Dist., Div. 4 Aug. 15, 2012) (unpublished) is a situation where landlords won a prior unlawful detainer judgment for possession and back rent against tenant, winning a summary judgment where the U.D. judge indicated there was insufficient proof to justify a decrease in rent or relief from tenant’s rental obligations.

     Not quite content, tenant filed a new action against landlord alleging various contractual, tort, and unfair business practices claims. Several of these claims were jettisoned on demurrer, and a jury decided against tenant on a fraud and an unfair business practices claim. The lower court then awarded attorney’s fees to winning landlords in the second action.

     Merits and fee judgment affirmed.

     The unlawful detainer judgment was res judicata on the unfair business practices claim, the only one appealed on the merits by tenant.

     As far as the fee award was concerned, Civil Code section 1717 is reciprocal and entitlement depends on the breadth of the fees clause. Here, the clause covered “any action in court,” sufficiently broad to encompass landlords’ fees for defeating the tort/unfair business practices claims. (Gil v. Mansano, 121 Cal.App.4th 739, 743 (2004).)

Landlord/Tenant & Civil Rights: Plaintiff Not Entitled To Fee Recovery Under Retaliatory Eviction Or FEHA Fee Shifting Provisions

 

Published Decision Affirms Lower Court Denial of Fees.

     In Morrison v. Vineyard Creek, Case No. A127476 (1st Dist., Div. 5 Mar. 29, 2011) (certified for publication), plaintiff resolved a retaliatory eviction/FEHA dispute via settlement with defendants by which no wrongdoing was admitted but agreed that plaintiff could operate a family child care home without fear of retaliation and also paid her some damages for their delay in acknowledging her right to operate the home. Plaintiff then filed to recover a whopping total of $318,212.80 in attorney’s fees from defendants, a request denied by the lower court.

Landlord/Tenant: First District, Division One Invalidates Rent Ordinance Fee Shifting Provision Where It Would Add Fee Recovery In Derogation of Narrow Statute Statutory Fee Shifting

 

Municipal Ordinances Cannot Add Another Procedural Constraints on State Statutes.

     Proposition M, a San Francisco rent ordinance, added an attorney’s fees provision to the San Francisco Rent Ordinance mandating an award of fees to a prevailing tenant in an unlawful detainer case brought under state law except for one narrow exception. The First District, Division 1, in Larson v. City and County of San Francisco, Case No. A125887 (1st Dist., Div. 1 Feb. 23, 2011) (certified for publication), invalidated the fees provision.

     It found that the Legislature, in existing statutes, only provided for fee shifting in unlawful detainer cases in the context of habitability defenses (Code Civ. Proc., § 1174.2(b); Civ. Code, § 1942.4(b)(2)) and where tenants prevail on a retaliatory eviction claim (Code Civ. Proc., § 1174.2). It found that municipalities do not have authority to add procedural constraints--like the fees provision here--in derogation of state statutes that allow fee recovery in more narrow circumstances. (See also People ex re. City of Santa Monica v. Gabriel, 186 Cal.App.4th 882, 890-891 (2010).) The appellate court also distinguished the recent upholding of an ordinance’s fee shifting provision in Rental Housing Association of North Alameda County v. City of Oakland, 171 Cal.App.4th 741, 750, 760-761 (2009), finding fee recovery solely under a local ordinance is way different than a municipality overriding the state statute’s restrictions for unlawful detainer actions.

Landlord/Tenant: Vexatious Litigant Hit With $176,417 In Fees And Costs Under Retaliatory Eviction Fee-Shifting Provision

First District, Division 3 Grants Fees Under CC § 1942.5(g).

     Ouch—the sting of attorney’s fees can be harsh. Plaintiff, declared to be a vexatious litigant in a case involving a retaliatory eviction cross-claim, discovered that lesson the hard way. 

     King v. Nielsen, Case Nos. A124067/A124801 (1^st Dist., Div. 3 Sept. 29, 2010) (unpublished) was a situation where a litigant was declared a vexatious litigant, with the unpublished decision containing an interesting discussion of the law in this area. However, the winning litigant eventually recovered $176,417 in fees and costs for winning a retaliatory eviction cross-claim against vexatious litigant.

     Vexatious litigant was unable to overturn the substantial fee award on appeal. Civil Code section 1942.5(g) permits a fee award to a tenant who prevails in an action for retaliatory eviction. Winning litigant prevailed against vexatious litigant in the retaliatory eviction cross-claim, justifying the fee award.

Landlord/Tenant: Substantial Attorney Fee Award Of $506,056.95 Goes POOF!

 

Second District, Division 1 Reverses Unlawful Detainer Judgment and Fee Award Based on Finding Five U.D. Notices Insufficient in Nature.

     The POOF! principle is one that we coined for what generally happens when a merits judgment is reversed—that reversal usually means that a related attorney’s fees award also gets reversed.

     Aside from being an excellent primer for landlords on how to frame unlawful detainer notices to pay or quit/perform covenants, Kompany, LLC v. Israyelyan, Case Nos. B210632 & B213774 (2d Dist., Div. 1 Feb. 10, 2010) (unpublished) illustrates how POOF! operates in this area. There, landlord won past-due rent and damages of over $600,000, possession of the premises, and $506,056.95 in attorney’s fees as against tenant. On appeal, tenant successfully challenged all five unlawful detainer notices, which were found either defective in form or invalid because landlord had not given tenant an opportunity to cure. As a result, the merits judgment was reversed, and—you guessed it—the attorney’s fees award also went POOF! Tenant was also awarded costs on appeal.