CALIFORNIA ATTORNEY'S FEES

Class Actions, Employment, POOF!: Reversal Of Class Action Summary Adjudication On Class Meal/Rest Breaks Claim Meant Substantial Fee Award Reversed Also

Plaintiffs’ Reasons To Not Reverse The Award Were Unpersuasive.

               Acting Presiding Justice Segal, author on behalf of the 2/7 DCA in Benton v. Telecom Network Specialists, Inc., Case No. B318867 (2d Dist., Div. 7 Aug. 19, 2024), confronted a very spirited opposition by plaintiffs/class winning substantial fees for why the reviewing court should not deviate from the general rule that “reversal of the judgment usually also reverses a fee award.”  Well, that general rule won out at the end, as it usually does.

               What happened was that the lower court granted class plaintiffs’ motion for summary adjudication on some wage/hour claims, resulting in entry of a judgment.  However, the appellate court reversed on the summary adjudication grant on causes of action for failure to provide meal/rest breaks.  While that appeal was pending, the lower court awarded over $17 million in attorney’s fees and $700,000 in costs for fees incurred before the summary adjudication grant.  The problem was that the appellate court was not necessarily buying into plaintiffs’ argument that the earlier appellate result was a narrowly limited reversal (likely more than plaintiffs thought) such that a “renew” look was warranted.  Besides, even the defense agreed that some further statutory fees might be authorized by Naranjo, yet another reason to send it for a further review because possible fee work after the summary adjudication grant was in play for plaintiffs.  A “replay” here.

POOF!: $737,932.84 Private Attorney General Fee Award Goes Away When Appellate Court Reverses As A Matter Of Law Favorable Determinations In Contentious Public Treatment Wastewater Permits Dispute

Goes To Show You How Fortunes Can Change.

            Los Angeles Waterkeeper v. State Water Resources Control Board, Case No. B309151 (2d Dist., Div. 1 Feb. 27, 2023) (published) is a situation where plaintiff was awarded CCP § 1021.5 fees of $737,932.84 in a contentious public treatment wastewater permit dispute where plaintiff won on a general theory that the State Water Board had a general duty to prevent the unreasonable use of water.   The appellate court disagreed as a matter of law, reversing on the merits so that the fee award went POOF! also. 

Employment, POOF!: $55,480.60 Plaintiff Wage/Hour Award And $150,505 Gets Reversed On Appeal

Reason Is That Plaintiff Was Not Allowed A Jury Trial.

            A jury trial is a fundamental right; if that right is abridged, a reversal of a merits judgment and post-judgment fees award may well occur, as it did in Miralda v. Wu, Case Nos. B306324/B313954 (2d Dist., Div. 1 Nov. 2, 2022) (unpublished).

            What happened here is that plaintiff obtained a $55,480.60 judgment in a wage/hour bench trial, followed later by a $150,505 fee award.  All of that went away on appeal, since plaintiff was improperly denied her request for a jury trial (which was made by another defendant, but which also inured to the benefit of the other defendant not being allowed a jury trial and suffering an adverse court decision). 

Class Actions, Poof!: Ninth Circuit Vacates $310 – 500 Million Class Settlement Based On Objectors’ Arguments To Settlement Fairness

That Meant $80.6 Million Class Counsel Fee Award Went POOF!, And Whether Fees For Parallel State Litigation Was Appropriate Had To Be Considered Based On Its Impact On Lodestar Multiplier.

            In Named Plaintiffs, et al. v. Apple, Inc., Case Nos. 21-15758 et al. (9^th Cir. Sept. 28, 2022) (published), the Ninth Circuit, based on some objectors’ arguments, vacated a $300 – 500 million class action settlement and $80.6 class action fee award (out of a requested $87.73 million) in a case alleging that Apple secretly throttled system performance of certain iPhones to mask battery defects.  The district judge on remand needed to use the correct legal standard to gauge the fairness of the settlement.  The panel did address a specific fee issue:  the district judge, on remand, needed to consider $4 million in fees expended in parallel coordinated state litigation as far as appropriateness because it impacted the lodestar multiplier awarded (which would have gone up, even though the district judge thought the lower multiplier was pretty high).  The appellate court did observe that district judges can pick either the lodestar or percentage method, choosing to cross-check with the other method depending on what method is chosen. 

POOF!, Prevailing Party: Court Of Appeal Determines That Defendant Did Not Prevail Such That $454,071.50 Fee And Additional Costs Award To County Went POOF!

This Was A 2-1 Decision; Dissenting Justice Would Have Given Deference To Trial Court’s Reversed Prevailing Party Determination.

            Just to show how prevailing party determinations can be to subject to different interpretations, we now post on Youssef v. County of Los Angeles, Case Nos. B302773/B306187 (2d Dist., Div. 1 July 15, 2022) (unpublished).  The equities clearly figured into the result on appeal.

            What happened here is that plaintiff filed suit against L.A. County for failure to live up to the terms of a wrongful termination settlement agreement, failing to classify his termination as a voluntary resignation in its computer systems.  Along the way, County stipulated that it had not complied and agreed to provide a direct human resource contact to divulge no more than basic information about his former employment with the County.  However, a jury found that plaintiff suffered no damages and County did not breach the settlement agreement by providing information to prospective employers.  The lower court granted $454.071.50 in attorney’s fees to County as the prevailing party and against plaintiff under a settlement agreement fees clause, as well awarding routine costs to County.

            The 2/1 DCA reversed the fees and costs awards as a matter of law, in a 2-1 opinion.  The majority decided that the County’s stipulation effectively granted plaintiff injunctive relief and that County had admitted that it breached the settlement agreement, which occurred years into the litigation.  Although plaintiff failed to obtain damages, he achieved his main goal to require the County to comply with the settlement agreement.  That meant that no party prevailed such that the huge fee award against plaintiff was unjust.  The dissenting justice saw things differently:  plaintiff did not garner damages and the County was vindicated as to prospective employer liability—such results vindicated the lower court’s prevailing party determination even though the majority came to the opposite result.

            BLOG OBSERVATION—The result in this case reminds me of what Retired Judge Tevrizian (now an independent neutral) used to sometimes say about cases where an attorney’s fees award was a matter of discretion, “pocketbook” may mean that fees are not awarded under the right circumstances.  That seemed to be the case here. 

POOF!, Special Fee Shifting Statute: CCP § 1038 Fees/Costs Assessed Against Plaintiff And In Favor Of City In Dangerous Property Case Reversed As A Matter Of Law

Plaintiff’s Claim Was Colorable Such That “Reasonable Cause” Element Was Missing So As To Not Justify The Award.

            Cities gaining pre-trial victories in certain cases frequently move to recover some attorney’s fees and costs against a losing defendant under Code of Civil Procedure section 1038.  However, the governmental entity must prove that the plaintiff’s claim lacked reasonable cause (measured by an objective standard) or was not brought/prosecuted in good faith (with the good faith element not at issue in the case we next post on).  Also of salience, the reasonable cause component is reviewed de novo on appeal.  (Lee v. Dept. of Parks & Recreation, 38 Cal.App.5^th 206, 215 (2019).)

            The “reasonable cause” standard was not met by the governmental entity in Sheks Construction Co. v. City of South San Francisco, Case No. A163204 (1^st Dist., Div. 5 June 29, 2022) (unpublished).  Although plaintiff lost a dangerous condition of public property case before trial, nothing demonstrated that its claim was other than colorable (meaning it had potential merit).  Even though the lower court awarded fees and costs under section 1038, that award went POOF! on appeal upon a de novo review by the appellate court of 1038’s “reasonable cause” prong.

Appealability, POOF!: Where Party Appealed A Judgment Which Was Later Amended To Allow One Side Fees And Costs, The Judgment Could Not Be Amended While The Appeal Was Pending

A $119,010 Fee Award Under An Amended Judgment Went POOF!

            Just to show you how the sequence of events can play a big part on appeal, we explain what happened in Kling v. Horn, Case No. B310164 (2d Dist., Div. 7 June 8, 2022) (unpublished).

            An original judgment in a matter stated that each side was to bear its own fees and costs.  Defendant filed a motion to amend the judgment to remove that provision in preparation for filing a motion for attorney’s fees.  Before any rulings on these motions, plaintiff filed a notice of appeal from the judgment.  The lower court eventually did amend the judgment to delete the “bear own fees/costs” language and issued an award of attorney’s fees in favor of defendant and against plaintiff/plaintiff entities to the tune of $119,010.  (In a prior appeal, the panel decided that the appeal stayed any attempt to add plaintiff entities as judgment debtors under CCP § 187.)

            The 2/7 DCA reversed.  It determined that the appeal of the original judgment did stay the attempts to amend the judgment such that the subsequent fees order was not collateral to the original judgment.  Although there are some exceptions, defendant failed to show any of them applied. 

POOF!, Unlicensed Contractors: $155,008.50 Fee Award Against Unlicensed Contractor Under CCP § 1029.8(a) Reversed As A Matter Of Law

Absence Of True Injury To Owners Did Not Justify An Award Even Though Substantial Payments To Unlicensed Contractor Disgorged Under B&P § 7031(b).

            When you are dealing with fee entitlement, frequently, statutory interpretation is involved.  If that is the case, you get de novo review—which can lead to a reversal of a fee award not meeting the statutory requirements as a matter of law.  That is what happened in Kivel v. McInerney, Case No. D074173 (4^th Dist., Div. 1 Mar. 17, 2021) (unpublished).

            CCP § 1029.8(a) provides in relevant part: “Any unlicensed person who causes injury or damage to another person as a result of providing goods or performing services for which a license is required under . . . Division 3 (commencing with Section 5000) . . . of the Business and Professions Code . . . shall be liable to the injured person for treble the amount of damages assessed in a civil action in any court having proper jurisdiction. The court may, in its discretion, award all costs and attorney’s fees to the injured person if that person prevails in the action.”  (Emphasis added.)  

            Kivel involved a situation where an unlicensed contractor on an upscale residential construction was ordered to disgorge $2.732 million in payments by the owner, despite no evidence there was defective construction.  Then, to add insult to “injury” (sorry about the pun), the lower court determined owner was entitled to attorney’s fees of $155,008.50 and to costs of $52,689.13 under section 1029.8.  Contractor appealed the fee award, a good move.

            The 4/1 DCA reversed the fee award as a matter of law.  The defect in the fee award was the statutory requirement of injury.  Section 7031(b) is a statutory penalty which requires disgorgement from the unlicensed contractor for being unlicensed, untethered to whether there was any injury separate and apart such as defective construction.  In this case, there was no showing of added “injury” such that the section 1029.8 fee award went POOF!  However, contractor did get penalized—he had to disgorge $2.732 million, probably enough of a sanction if we read what the appellate court likely saw in deciding the case!

Ethics, POOF!, SLAPP!: Attorney Fees And Costs Awarded To Successfully SLAPPing Defendants Goes POOF! With Reversal Of Trial Court’s Partial Grant Of Defendants’ SLAPP Motion

Defendants’ Internet And Twitter Statements Against Plaintiffs Consisted Mainly Of "Vulgar And/Or Adolescent Personal Insults, Misogynistic, Racist, And Xenophobic Comments, And Other Slurs Having Nothing To Do With Any Reasoned Discussion Of Trustworthiness, Competence, Or Any Other 'Public Issue Or An Issue Of Public Interest.'”

            In Block v. Bramzon, Case Nos. B292129/B297198 (2d Dist., Div. 4 January 22, 2021) (unpublished), plaintiffs (an attorney handling landlord-tenant matters and representing landlords in unlawful detainers, two associate attorneys from his law firm, and the firm’s office manager) sued for libel and other related claims after defendants (a law firm that defends tenants against eviction, its founding attorney, and a former client of defending firm/founding attorney who also apparently worked for firm/founding attorney) embarked on a malicious and defamatory campaign that targeted plaintiff attorney’s business, practice and employees.  Plaintiffs claimed the campaign involved the creation of a website, named after and impersonating plaintiff attorney, that directed potential clients to contact a landlord-tenant law firm other than plaintiff’s firm.  Additionally, the campaign involved a Twitter account that used plaintiff attorney’s name and was allegedly used to make statements that suggested (1) plaintiff attorney is a greedy thief and criminal, unethical and immoral, racist, sexist, misogynistic, incompetent, an abuser of drugs, and is unfaithful and promiscuous; (2) one of the plaintiff associate attorneys is promiscuous, immoral, and incompetent; and (3) the other plaintiff associate attorney engages in unlawful acts of animal cruelty.  The Twitter account also posted plaintiff attorney’s personal cell phone number, home address, and photos of plaintiffs and some of their family members.

            Defendant law firm and its founding attorney SLAPPed back – claiming plaintiff attorney had made himself a public issue and the Twitter account was intended to warn consumers about plaintiff attorney’s trustworthiness.  The trial court, finding defendants’ speech and conduct was a protected activity involving “a consumer watchdog type of situation,” struck plaintiff’s negligent infliction of emotional distress and intentional interference with prospective economic advantage causes of action, concluding plaintiffs did not establish a reasonable probability of prevailing on those claims.  The trial court also granted defendant law firm and defendant attorney’s motion for fees for partially prevailing on their SLAPP motion.  Plaintiffs then voluntarily dismissed the same two causes of action against third defendant, and he unsuccessfully filed his own SLAPP motion on the remaining claims. 

            Everyone appealed.  Plaintiffs challenged the trial court’s SLAPP ruling on the two stricken causes of action.  Defendant law firm and defendant attorney challenged the order on their SLAPP motion to the extent it denied the motion, and third defendant appealed the order denying his SLAPP motion in its entirety.

            The 2/4 DCA, in a 3-0 opinion authored by Justice Currey, reversed the portion of the SLAPP order that struck two of plaintiff’s causes of action along with the fees and costs awarded to defendant law firm and defendant attorney, and affirmed the remainder of the trial court’s orders.  The appellate panel found defendants’ speech and conduct did not involve a public issue or issue of public interest pursuant to the principles held in FilmOn.com Inc. v. DoubleVerify Inc., 7 Cal.5th 133 (2019).  In fact, in contrast to defendants’ claims that their speech and conduct were protected activities because plaintiff attorney was a public figure and his trustworthiness was an issue of public interest, the majority of defendants’ statements consisted "of vulgar and/or adolescent personal insults, misogynistic, racist, and xenophobic comments, and other slurs having nothing to do with any reasoned discussion of trustworthiness, competence, or any other 'public issue or an issue of public interest.'” (§ 425.16(e)(4).)

            Finally, the appellate panel asked the parties to file supplemental briefs addressing whether the alleged participation of defendant attorney in the alleged conduct would violate any State Bar disciplinary rule(s) and whether the appellate or superior court had authority to take remedial action or impose sanctions.  Ultimately, because the facts of the case and defendant attorney’s participation were undetermined at that stage of the litigation, the panel directed the trial court “on remand to make such inquiries, order, and/or referrals to the State Bar as it deems appropriate.”

Appealability, Landlord-Tenant, POOF!: Reversal Of Unlawful Detainer Judgment Against Landlords Required Reversal Of Related Attorney’s Fees/Costs Award

In Separate Merits Appeal, Appeal Was Cognizable Although Possession Returned To Landlords During Appeal Because Review Would Determine Landlord Liability For Fees/Costs.

            In Lee v. Kotyluk, Case No. G058631 (4^th Dist., Div. 3 Jan. 7, 2021) (published), landlords sought to evict a commercial tenant for selling marijuana without a license.  The lower court found the 3-day notice to pay or quit was defective because the notice was sent by a predecessor in interest and the notice contained no precise directions to whom possession should be delivered (the “quit” component of the 3-day notice).  A defense motion for judgment on the pleadings was granted, and plaintiffs’ request to amend the complaint was denied, triggering the first appeal by landlords.  Later, the lower court granted $25,794 in attorney’s fees and $1,445 in costs against landlords, which prompted a separate appeal in Lee v. Kotyluk, Case No. G058768 (4^th Dist., Div. 3 Jan. 7, 2021) (unpublished).

            Landlords’ merits appeal resulted in a reversal of the judgment against landlords, because the motion for judgment was properly granted but landlords should have been given leave to file an amended pleading.  That appeal was not rendered moot because tenant surrendered possession of the premises.  The reason?  Landlords’ liability for the trial level fees and costs awards presented a live controversy not mooted by the surrender.  In the unpublished opinion, the merits reversal meant that the fees and costs awards went POOF!  Acting Presiding Justice Moore authored both 3-0 opinions.

Homeowner Associations, POOF!: $109,760 Fees Award Went Away Based Upon Merits Reversal

$154,744 In Fees Was Requested.

            One Ford Road Homeowners Assn. v. Johnson, Case No. G058269 (4^th Dist., Div. 3 Dec. 17, 2020) (unpublished), is just a reminder about how expensive HOA/homeowners disputes can be.  Here, HOA won a CC&R dispute which was reversed on appeal as a matter of law.  That resulted in an attorney's fees award to the HOA of $109,760 (out of a requested $154,744) going POOF!  Winning homeowners may get appellate fees later unless a settlement is reached.  But it does show how expensive these cases can be, as Justice Fybel—the author of a 3-0 opinion—so found.

Poof!, SLAPP: Trial Court’s Award Of $11,075 In Attorney Fees And Costs To Successfully SLAPPing Defendant Goes Poof! When 4/3 DCA Reverses SLAPP Grant

Plaintiff’s Attempt To Initiate A Review Hearing With Private Swim Club On Coach’s Conduct Did Not Qualify As A Code Civ. Proc. § 425.16(e)(1) Official Proceeding Authorized By Law, And Swim Club’s Responding Accusation Against Plaintiff’s Son Did Not Qualify As An Issue Of Public Interest Pursuant To Anti-SLAPP Law.

            In Burke v. Newport-Mesa Unified School Dist., Case No. G058492 (4^th Dist., Div. 3 November 23, 2020) (unpublished), plaintiff father’s teenage son was a competitive swimmer at his high school and a swim club.  Father alleged the swim club and high school had an arrangement whereby the swim club hired and paid for the aquatic coaches’ salaries for both the swim club and high school in exchange for exclusive use of the high school pool, and that the swim club dictated who coached for the high school.  When father emailed the swim club requesting, pursuant to the swim club’s written Code of Conduct, a review hearing of the harassment his son was subjected to by the swim club’s head coach (who was also head coach at the high school), the swim club responded with an email terminating his son’s membership – citing a false accusation against the son.  Father initially sued the swim club – alleging emotional distress and breach of contract.  Later, he filed an amended complaint to identify Newport-Mesa Unified School District and two of its employees as Does 8-10. 

            The District successfully SLAPPed back with arguments that the emotional distress claim stemmed from the email terminating son’s membership in the swim club, and that the email qualified for protection because it addressed an issue of “public interest” and was made before or in connection with an “official proceeding.”  The District was also awarded $11,075 in attorney fees and costs, in a subsequent hearing, for its successful anti-SLAPP motion.

            Father appealed, and the 4/3 DCA reversed the SLAPP grant and subsequent fees/costs award.  In a 3-0 opinion authored by Justice Goethals, the appellate panel concluded the content of the email did not qualify as an issue of public interest under Code Civ. Proc., § 425.16(e)(4) – which is sometimes referred to as a “catchall provision” of the anti-SLAPP law.  Additionally, father’s attempt to initiate a review under the private swim club’s code of conduct did not qualify as an “official proceeding authorized by law” pursuant to § 425.16(e)(1).  More significantly, pursuant to § 425.16(e)(2), the proceeding father attempted to initiate never happened and the issue of harassment by the swim coach was never under consideration.

Arbitration, POOF!: By Invalidating Portions Of An Arbitration Award And Remanding On Other Issues, Substantial Attorney’s Fees And Costs Award Against Arbitration Claimant/Counter-Respondent Also Sent Back For A Revisit

Principal Reasons For Reversal Were That Certain Aspects Of The Employment Agreement Violated Business And Professions Code Section 16600.

            Claimant/counter-claim respondent, former employee, was hammered pretty hard in an employment arbitration when the arbitrator rejected his claim for a $300,000 deferred bonus, found for employer on a counterclaim to the tune of $652,243 for an earlier bonus, dismissed a Business and Professions Code section 16600 challenge, and awarded employer $2.46 million in fees and $172,682 in costs under a discretionary fees/costs clause allowing such shifting if any party acts in bad faith.  The trial judge confirmed the award and denied a motion to vacate it.

            The 4/3 DCA reversed in Brown v. TGS Management Co., Case No. G058323 (4^th Dist., Div. 3 Oct. 13, 2020) (unpublished), a 3-0 panel authored by Justice Aronson.  It found that portions of the award violated section 16600 and other aspects had to be revisited on remand.  That also meant the fees/costs award, for now, went POOF! because it could be revisited by the arbitrator after the remand issues were considered and in light of the appellate reversal. Employee has renewed life!

POOF!: Trial Court’s Granting Of Defendant’s Motion For Relief From Default Judgment Of $1,402,124, Which Included $103,728 In Attorney Fees And $1,997 In Costs, Affirmed On Appeal

Plaintiff Failed To Comply With The Statutory Requirements For Substitute Service Of Process.

            Code Civ. Proc. section 415.20(b) provides the process by which substitute service of a summons and complaint may be made upon a party: “If a copy of the summons and complaint cannot with reasonable diligence be personally delivered to the person to be served ..., a summons may be served by leaving a copy of the summons and complaint at the person’s dwelling house, usual place of abode, usual place of business, or usual mailing address other than a United States Postal Service post office box, in the presence of a competent member of the household ..., at least 18 years of age, who shall be informed of the contents thereof, and by thereafter mailing a copy of the summons and of the complaint by first-class mail, postage prepaid to the person to be served at the place where a copy of the summons and complaint were left.”

            In Centex Homes v. D.L. Walton, Case No. F077446 (5^th Dist., August 10, 2020) (unpublished), plaintiff, declaring it had delivered a copy of the summons and complaint through substitute service, obtained a $1,402,124 default judgment against defendant.  The judgment included $103,728 In Attorney Fees And $1,997 In Costs.

            Approximately nine months later, defendant successfully filed a motion for Code Civ. Proc. section 473 relief from the default and default judgment – asserting plaintiff failed to comply with the statutory requirements for substitute service of process – because plaintiff had served defendant’s adult daughter at a residence wholly unrelated to defendant’s business and residential address, and had additionally failed to thereafter mail a copy of the summons and complaint.  With that, plaintiff’s $1.4 Million default judgment went POOF!

            Plaintiff fared no better on appeal – with the 5^th District affirming defendant’s relief from the default and default judgment due to the improper substitute service.

Arbitration, POOF! Arbitrator’s Award To Defendant Of $258,181.03 In Attorney Fees Goes POOF! On Appeal

Arbitrator Exceeded Authority On Remand By Conducting Arbitration Inconsistent With Instructions From The 4/1 DCA

            It may not happen often, but arbitration awards do occasionally get reversed.  In this case, litigants are now returning for round three.

            In the first round, plaintiffs received an arbitration award of $30,000,000 in compensatory and punitive damages.  When defendant appealed, the 4/1 DCA reversed because plaintiffs had not provided adequate notice of their punitive damages claim.  Because the $30 million award combined the compensatory and punitive damages without differentiation – thus making it impossible for the appellate court to correct the award by simply striking the punitive damages – the appellate court remanded with instructions to conduct a new arbitration hearing on damages only.  Problem is that is not what happened.

            On remand, the new arbitrator vacated the liability and damage findings and allowed the parties to relitigate all issues. After an evidentiary hearing, the arbitrator found plaintiffs did not prove their claims, and awarded defendant $258,181.03 in attorney fees plus interest – with the trial court confirming the award and entering judgment in defendant’s favor.

            On appeal, in NCHF AMS II Houston v. Kaplan, Case No. D075842 (4^th Dist., Div. 1 July 13, 2020) (unpublished), three of four plaintiffs appealed – contending the trial court erred in confirming the award because the new arbitrator exceeded his authority by allowing defendant to relitigate liability issues.  The 4/1 DCA agreed and reversed with instructions for the trial court to vacate the judgment confirming the award and attorneys fees, to issue an order vacating the original arbitration award against defendant, and to remand for a new arbitration hearing solely on the issue of the amount of damages suffered by plaintiffs.

            We guess you could say defendant is suffering a reversal of a dramatic reversal of fortune!

Intellectual Property, POOF!: Federal Circuit Court Of Appeals Reverses $1.1 Million “Exceptional Case” Fee Award In Patent/Trademark/Trademark Litigation

The Problem Was That The Claims Were Dismissed Before Fully Adjudicated, With The Fee Claimant Failing to Show In Detail Why They Were Wholly Lacking In Merit.

            In Munchkin, Inc. v. Luv N’ Care, Ltd., No. 2019-1454 (Fed. Cir. June 9, 2020) (precedential), spillproof cup rivals engaged in federal intellectual property litigation, with Plaintiff suing Defendant for patent, trademark, and trade dress infringement.  Eventually, Plaintiff voluntarily dismissed the non-patent claims and later dismissed the patent claims after an adverse IPR unpatentability finding.  Defendant then moved for attorney’s fee recovery on the ground that the case was “exceptional” so as to justify fees under the patent and trademark statutes, 35 U.S.C. § 285 and 15 U.S.C. § 1117(a).  [In this area, the “exceptional” determination is made by utilizing the factors set forth in SCOTUS’ seminal Octane Fitness opinion, see 572 U.S. 545 (2014)].  The Federal Circuit Court of Appeals reversed the fee award.  The flaw in the award was that the intellectual property issues had not been fully adjudicated, with the Defendant not making a detailed enough showing that the case was wholly lacking in merit.  This reversal in fortune meant that a $1.1 million fee award went POOF!

Eminent Domain, POOF!: Ruiz Inverse Condemnation Opinion Now Published

Inverse Condemnation Award Reversed As A Matter of Law, Such That $529,540.50 Fee/Costs Award Went POOF! Also.

            On March 19, 2020, we posted on Ruiz v. County of San Diego, Case No. D074654, a Fourth District, Division 1 opinion which was unpublished at the time.  In that decision, the appellate court reversed an inverse condemnation award of $328,000 award to plaintiff as a matter of law, which also had the effect of eviscerating the subsequent fees/costs award under CCP § 1036—one for the substantial sum of $529,540.50.  We can now report the opinion was certified for publication on April 7, 2020.

Eminent Domain, POOF!: Reversal Of $328,000 Inverse Condemnation Merits Judgment Meant That $529,540.40 Fees/Costs Award Against City Of San Diego Went POOF!

Merits Reversal Hinged On City Not Bearing Responsibility For Private Pipeline Non-Maintenance Where City Refused A Public Dedication Offer.

            In Ruiz v. County of San Diego, Case No. D074654 (4th Dist., Div. 1 March 17, 2020) (unpublished), Plaintiff homeowners obtained a $328,000 inverse condemnation award against the County of San Diego when their privately-owned underground storm drain pipe rusted out over 50 years of use.  The trial judge, who entered the merits award, subsequently awarded plaintiffs $529,540.50 in attorney’s fees and costs under CCP § 1036, the inverse condemnation fee-shifting statute which can benefit plaintiffs.

            Well, everything went POOF! on appeal.  The 4/2 DCA decided that the merits judgment was infirm based on the city refusing a prior public dedication offer such that it had no maintenance or control over plaintiffs’ private pipeline.  Much to their chagrin, plaintiffs also lost their fee/costs recovery—a reversal of fortune on appeal. 

            BLOG OBSERVATION—We bloggers will note that appeals by governmental authorities do seem to result in a higher reversal rate than non-governmental appeals, sometimes involving a reversal as a matter of law or a modification, which obviously impacts the adverse fee/costs recovery greatly—they go away completely or are remanded for a redetermination based on the modification on appeal.

Eminent Domain, POOF!: Appellate Court’s Reversal Of Substantial Inverse Condemnation Judgment Also Meant Substantial Fee Award Fell

$818,544 In CCP § 1036 Fees And $182,627 In Costs Went POOF!

            Code of Civil Procedure section 1036 provides:  “In any inverse condemnation proceeding, the court rendering judgment for the plaintiff by awarding compensation, or the attorney representing the public entity who effects a settlement of that proceeding, shall determine and award or allow to the plaintiff, as a part of that judgment or settlement, a sum that will, in the opinion of the court, reimburse the plaintiff’s reasonable costs, disbursements, and expenses, including reasonable attorney, appraisal, and engineering fees, actually incurred because of that proceeding in the trial court or in any appellate proceeding in which the plaintiff prevails on any issue in that proceeding.”

            A plaintiff winning a $1.2 million jury verdict (as well as $484,500 in prejudgment interest) in an inverse condemnation action against CalTrans later moved for a fee/costs recovery under CCP § 1036.  The trial judge accommodated that by awarding $818,544 in fees and $183,627 in costs.

           Alas, all of that went POOF! on appeal.  The 2/1 DCA in McChesney v. People ex rel. Dept. of Transportation, Case No. B295879 (2d Dist., Div. 1 Mar. 4, 2020) (unpublished) reversed the inverse condemnation merits judgment; and with that, the prejudgment interest, fee award, and costs award also fell. 

POOF!: $687,000 FEHA Fee Award Evaporates When FEHA Retaliation Verdict Reversed On Appeal For Lack Of Substantial Evidence

Compensatory Award Was Only $62.127.20; Reversal Was Based On A 2-1 Opinion On The Substantial Evidence Issue.

            Just to show you how reversal on appeal for insubstantial evidence can result in havoc, we point you to the result in Flores v. County of Los Angeles Probation Dept., Case No. B287382 (2d Dist., Div. 2 Dec. 13, 2019) (unpublished).  There, a plaintiff won a $62,127.20 FEHA retaliation jury verdict against defendant and also an attorney’s fees award of $687,000.  On appeal, the jury verdict was reversed as a matter of law based on a lack of substantial evidence (in a 2-1 opinion).  However, the reversal meant that the $687,000 fee award went POOF! also, much to the chagrin of plaintiff and much to the relief of Los Angeles County.

POOF!, Probate: Four Successor Trustees’ Attorney’s Fees Of $74,824.50 Went POOF! Based Upon Failure To Show One Beneficiary Petition Was Prosecuted In Bad Faith And With No Differentiation Of Fees Between Two Petitions

Trustees Failure To File A Respondents’ Brief Sealed The Result!

            A beneficiary filing two petitions concerning two qualified personal residence trusts likely was shocked when a probate court granted $74,824.50 in attorney’s fees to four successor trustees after beneficiary voluntarily dismissed petitions after obtaining some desired results.  Beneficiary did well to appeal in Sterne v. Sterne, Case Nos. B289907/B290099 (2d Dist., Div. 2 Nov. 26, 2019) (unpublished).

            The appellate court reversed the fees award as a matter of law.  Beneficiary was successful in obtaining results via his first petition.  Trustees failed to apportion their fees between the two petitions, such that the success on the first petition meant the whole fees award had to fall.  Beyond that, the probate court imposed fees against beneficiary personally, not out of his share of the trust estates--an order beyond the equitable power of the probate court.  (Pizarro v. Reynoso, 10 Cal.App.5^th 172, 189 (2017).) 

            It also bears noting that trustees filed no Respondents’ Brief—bad idea, where the other side raises cognizable arguments for reversal on appeal. 

Assignment, POOF!, Section 1717: Plaintiff’s $169,534.60 Fees Award Goes POOF! On Appeal

Although The Dispute Concerned Contractual Rights, The Contractual Attorney Fees Provision Relied Upon In Issuing Award Did Not Apply Because There Was No Breach Of Contract.

            In McAlister Investments, Inc. v. Thomas, Case No. G056330 (4^th Dist., Div. 3 Sept. 30, 2019) (unpublished), neighboring land owners got into a dispute pertaining to a 99-year lease entered into in 1951 between prior owners of the two properties.  This lease allowed defendants, who operate a citrus orchard, to access a parcel of plaintiff’s property to drill for and develop water for irrigation purposes. 

            When plaintiff tried to sell its property in 2014, the buyer wanted an amendment to the 99-year lease precluding defendants from building structures on the leased parcel.  Defendants refused and plaintiff’s sale fell through.

            Plaintiff then filed suit to invalidate the lease. The trial court entered judgment in favor of plaintiff – finding the lease had not been assigned to defendants and that defendants were not successors to the lease merely because they had bought the land.  Based on Civ. Code section 1717’s statutory reciprocity of attorney fee agreements, its finding that plaintiff’s declaratory relief action was based on the lease, and because plaintiff would have been liable for defendants’ attorney fees had they prevailed, the trial court awarded plaintiff $169,534.60 in fees after some reduction.

            In an opinion authored by Justice Ikola, the 4/3 DCA reversed – finding the dispute between the parties involved contractual rights – not a breach of any covenant or agreement in the lease.  Therefore, the attorney fees provision contained in the lease – which entitled the prevailing party to fees “[i]n the event of the breach of any covenant and or agreement herein contained . . . presented to any Court . . .” – was never triggered.   And with that, plaintiff’s fee award went POOF!

POOF!, SLAPP: Fee Award Of $56,225 Goes POOF! On Appeal When Sixth District Reverses SLAPP Grant

Sixth District Determined Cause Of Action Was Not Properly SLAPPed Because It Was Triggered By A Dispute That Arose In The Aftermath Of Previous Litigation, Not The Conduct In The Prior Litigation.

            GBR Magic Sands MHP, LLC v. Pecoraro, Case No. H044936 (6^th Dist., Sept. 26, 2019) (unpublished) involves a dispute among family members over a 20-acre parcel of land – originally owned by two brothers (Cyril and Louis) who shared a 50% undivided interest, and their parents who owned a 50% undivided interest.

            In 1963, parents granted a 98-year lease of their interest to the two brothers.  Cyril used his and his brother’s interest + the 98-year lease of parents’ interest to develop a mobile home park.  When the parents died, their children (the 2 sons, and daughters Rita and Josephine) succeeded to fractional shares of the parents’ interest. Later, in 2007, the brothers’ interest was leased to GBR – an entity controlled by Cyril.  In 2008, the 1963 lease was assigned to GBR.  A 2010 partition action led to the entire 20-acre parcel’s fee interest becoming vested in Louis, Josephine, and Catherine (Rita’s daughter).

            During the partition action litigation, Louis, Catherine and a trustee learned that Cyril had obtained the 1963 lease through undue influence – and Catherine and the trustee successfully filed an action to cancel the 1963 lease and quiet title to their interest in the parcel.  The judgment in that case also provided that GBR had “no right, title or interest in the undivided fifty percent interest . . . previously subject to the 1963 Lease . . .”

            Later, in 2017, GBR filed a cross-complaint in an existing action against it brought by Louis’ company.  In its 4^th cause of action, GBR sought declaratory relief with respect to possession and rent in light of the 1963 lease cancellation.  GBR alleged that Catherine and the trustee were claiming a right to possess the 20-acre parcel and a right to a share of the rent paid to GBR by its mobile home tenants.  However, GBR claimed it had a right to continue in possession of the 20-acre parcel pursuant to the 2007 lease.  Catherine and the trustee successfully SLAPPed (Code Civ. Proc. section 425.16) GBR’s 4^th cause of action.  The parties then stipulated to $56,225 in attorney’s fees – which the trial court awarded to Catherine and the trustee.

            GBR appealed the SLAPP determination and the subsequent attorneys’ fees award – claiming its 4^th cause of action for declaratory relief did not stem from protected activity.  Rather, it arose from a dispute that arose in the aftermath of the protected activity.

            The Sixth District agreed – citing City of Cotati v. Cashman (2002) 29 Cal.4th 69.  They determined GBR’s 4^th cause of action stemmed from a dispute that arose from the outcome of the previous litigation and not the protected activity itself – concluding that Catherine and the trustee had failed to meet their burden of demonstrating that GBR’s 4^th cause of action arose from the prior litigation activity rather than the underlying real property dispute.

            With the Sixth District’s reversal of the SLAPP grant came reversal of the $56,225 attorneys’ fees award.  POOF!

POOF!, Sanctions: $70,548.95 CCP § 128.5 Order Against Most Plaintiffs Reversed Based On Erroneous Denial Of Relief From Jury Trial Waiver

Also, Another Plaintiff Was Not Give Safe Harbor Notice In Time To Do Anything—So, A Reversal.

            The importance of the jury trial right was front and center in Mackovksa v. Viewcrest Road Properties, Case No. B288778 (2d Dist., Div. 7 Sept. 18, 2019) (published), although the ultimate merits reversal also made a reversal of CCP § 128.5 sanctions against certain plaintiffs an ensuing result on appeal.

            What happened here was that a lower court would not grant relief from a jury trial waiver where the plaintiff side did not post jury fees at the case management conference.  The case was then transferred to a different trial judge, who conducted a bench trial, ruled in favor of the defense, and then imposed $70,540.95 in CCP § 128.5 sanctions against plaintiffs for prosecuting a frivolous action, overruling objections that no safe harbor period compliance took place and that the sanctions motion was untimely filed. 

            Plaintiffs wisely appealed.

            The 2/7 DCA, given that the appeal focused on the inviolate constitutional right to a jury trial, reversed the merits judgment and the sanctions award. 

            Plaintiffs did not challenge the jury waiver by writ, opting for an appeal.  There appears to be a split in authority on whether a party has to show actual prejudice rather than presumed prejudice when that party appeals versus pursing a writ.  The Court of Appeal found that actual prejudice did not have to be shown when the normal appeals route was chosen.  Plaintiffs were entitled to a jury trial they did not obtain.

            With respect to sanctions against most of the plaintiffs, a reversal was required because it was founded on a bench trial which should not have occurred.  As to another plaintiff, no safe harbor period was given such that the sanctions award went POOF! on that basis.

Civil Rights, POOF!: $185,000 Jury Verdict And $308,582 FEHA Fee Award Went POOF! On Appeal

Reason Was That Gender Discrimination Was Not Proven As A Matter Of Law At Trial.

            Hughes v. County of Humboldt, Case Nos. A148940/A150526 (1^st Dist., Div. 4 May 28, 2019) (unpublished) shows how an appellate court can affirm but also take away where a jury verdict is not supported by legally sustainable evidence.  Here, plaintiff obtained a $185,000 jury verdict and then $308,582 in FEHA fees after winning a gender discrimination claim.  However, on appeal, the reviewing court determined that plaintiff failed to present a prima facie case of sexual discrimination such that the merits judgment and fee award went POOF! as a matter of law. 

Costs, POOF!, Private Attorney General: Plaintiff’s CCP §1021.5 Fee Award Of $827,035 Went POOF! On Appeal

Plaintiff Did Not Obtain Its Primary Litigation Objective Such That Fee Award Was Abuse Of Discretion; Prevailing Defendant’s Costs Request Was Improperly Stricken Because It Prevailed.

           San Diegans For Open Government v. City of San Diego & San Diego Tourism Marketing Dist. Corp., Case No. D072181 (4^th Dist., Div. 1 April 4, 2019) (unpublished) shows how fee entitlement cases can involve “wild swings” in fortune where an appellate court looks at the record and decides entitlement was not there. Beyond that, it independently reviews whether a prevailing defendant for a routine costs award should have it taken away based on “equitable” grounds—naught!

           In this one, plaintiff sued defendants alleging that an assessment was an illegal tax requiring voter approval. Although City did modify the assessment to a small degree, plaintiff lost the bid to put the assessment to voter approval—the primary litigation objective. However, the lower court decided that plaintiff was a “catalyst” for the assessment modification, awarding it private attorney general fees of $827,035, including a .25 negative multiplier out of plaintiff’s request for $2.6 million. It also denied District’s routine costs, rejecting the notion that it was the prevailing party under CCP § 1032.

            On appeal, City and District did very well to challenge the fee grant and the costs denial.

            After an independent review of the record, the 4/1 DCA determined that plaintiff did not obtain its primary relief vis-à-vis the illegal tax/voter relief. Instead, the circumstances showed that the City’s modification of the assessment was not causally related to plaintiff’s lawsuit. That required reversing the fee award as a matter of law – POOF!

            District successfully challenged the routine costs denial. District did fall into the categories of being a prevailing party under section 1032 after plaintiff dismissed its lawsuit voluntarily. Given that this was a matter of right, the trial judge’s determination to deny on “equitable grounds” could not thwart District’s statutory entitlement to costs.

POOF!, Probate: Plaintiffs’ Award Of $500,000 In Attorney Fees Necessarily Falls With Reversal And Remand Of Trial Court’s Judgment On Appeal

The Trial Court’s Inconsistencies In Its Findings And A Lack of Substantial Evidence Means A New Trial Is Required To Re-Evaluate The Claims And Defenses.

            Miranda v. Alford, Case No. G054897 (consolidated with G055167) (4^th Dist., Div. 3 March 8, 2019) (unpublished) is a case involving a man’s wife of eight years, and his two adult daughters, who have been embroiled in litigation over his estate since his passing in 2014 from an aggressive form of brain cancer.

            Daughters filed a petition challenging the validity of a restated trust and will executed by their father in 2014 that left Wife with 1/3^rd of his estate – claiming Wife had exerted undue influence and father lacked the mental capacity to understand the documents he signed in early 2014, after being moved to an assisted living facility due to diminished mental capacity stemming from the brain cancer.

            The case was tried over 15 days in May and June of 2016. After the daughters presented their case-in-chief, Wife moved for judgment in her favor on the lack of capacity and undue influence claims – pursuant to Code Civ. Proc. section 631.8. The trial court granted the motion as to the lack of capacity claim, but denied it as to the undue influence claim. Trial then continued with Wife’s defense to the undue influence claim. At the conclusion of trial, the trial court accepted closing briefs and took the matter under submission. In its tentative ruling, the trial court found the restated trust and will were invalid – based on both the lack of capacity and undue influence claims.

            In its ruling, the trial court found “[t]here was a rush by [Wife] to get estate documents in order before [Daughters] came back to town in March,” that it was “not credible that James initiated the topic of a new trust and will or transfers of his real property in March 2014,” and that [Wife] acted on her influence over her now mentally and physically weak husband over whom she had physical control over his residential care and finances in order to persuade him to provide for her on his death . . .” On the flipside, the trial court also observed that “[t]here is no credible evidence that [Wife’s] actions were primarily motivated by malice. She was his wife and the day to day responsibility was hers and she appears to have acted as a caring wife throughout this final illness,” and that “[he] may well have said he wanted to take care of [Wife] and probably did.”

            In a later hearing, Wife’s counsel pointed out the trial court’s inconsistencies between its mid-trial section 631.8 ruling in Wife’s favor on the lack of capacity claim and its tentative ruling, but the court explained it was reconsidering the 631.8 ruling. Wife’s counsel then pointed out the prejudice to Wife who did not defend against the lack of capacity claim based on the 631.8 ruling – requesting a vacate of the trial court’s findings and a new trial. The trial court denied the request, and entered a final decision changing the “lacked the necessary capacity” language from the tentative ruling to “had diminished capacity” in the final statement of decision, and further awarded daughters $500,000 in attorney fees. Wife appealed.

            In an opinion authored by Justice Goethals, the 4/3 DCA observed the following about the parties and this case: “Our record suggests they may have collectively incurred as much as $1 million in attorney fees through the end of the May 2016 trial. The intensity of the litigation does not seem to have abated in the wake of trial and, unfortunately, our resolution of the issues before use will not bring it to a close.”

            Ultimately, based on inconsistencies in the trial court’s rulings, and the lack of substantial evidence for the undue influence ruling, the 4/3 DCA reversed the final statement of decision, and remanded the matter back to the trial court for a new trial on the undue influence and lack of capacity claims. Because the judgment was reversed, Wife’s appeal of attorney fees awarded to daughters became moot as the award fell with the judgment.

Fees as Damages, Landlord/Tenant, Poof!: After Punitive Damages Reduction Of Almost $56 Million, Plaintiffs Walk Away With Judgment Of More Than $5 Million, But Watch It All Go POOF! On Appeal

No Segregation Between Properly And Erroneously Awarded Amounts Meant Plaintiffs Lost The Full Amounts Of Their Awards For Compensatory Damages Of $1,289,000, Punitive Damages Of $1,289,000, Attorney Fees Of $2,385,773.70 and Costs Of $56,417.72

        In Bevis v. Terrace View Partners, LP, Case No. D071849, (4^th Dist., Div. 1 February 28, 2019) (unpublished), sixty-nine current and former residents of a mobile home park sued the park’s owners on allegations that they had failed to maintain the park in “good working order and condition” which created a nuisance that – along with high space rent increases – made it difficult or impossible for park residents to sell their mobile homes. The trial court denied Plaintiffs’ motion for class certification, but the parties agreed to try the case in phases, with the first phase involving 16 residents living in 10 of the spaces.

        The jury in the first phase found the park owners liable and awarded plaintiffs $1,289,000 in compensatory damages ($759,000 in economic and $530,000 in noneconomic damages), plus $57 million in punitive damages. After the jury’s discharge, the trial court ruled on Plaintiffs’ cause of action for violation of Business and Professions Code section 17200 et seq. (unfair competition law (UCL)) - that a “catch-up” provision in Defendants’ long-term leases was in violation of the UCL in that the provision allowed for significant increases in rent at the end of a lease term. Finally, the trial court reduced the punitive damages award to match the compensatory damages - $1,289,000, and awarded attorney fees (with an enhancement to the lodestar) and costs of $2,385,773.70 and $56,417.72, respectively.

        Plaintiffs were not happy about the almost $56 million reduction to their punitive damages award. Defendants disagreed with the judgment and post-judgment orders – contending that the judgment was not supported by the evidence or on a statutory basis, and that the court had abused its discretion in its findings. Defendants further claimed that the court had abused its discretion by awarding Plaintiffs’ full recovery of attorney fees despite their failure to prevail on some of their claims, by not reducing Plaintiffs’ fee award by amounts billed for unadjudicated claims and the unsuccessful class certification motion, and the unavailability of attorney fees award for the UCL cause of action – that the court had also erred in awarding an enhancement to the lodestar amount. Plaintiffs and Defendants appealed. 

        The 4/1 DCA reversed in part, and remanded certain viable claims for new trial. However, here’s the sticky wicket – the 4/1 DCA found that the majority of the awarded compensatory damages were for Plaintiffs’ claims based on unreasonably high rent, but that absent a rent-control ordinance (which did not exist here), Defendants could not be limited to charging a lower rent than their rental agreements allowed. In reversing judgment as to these claims, the 4/1 DCA also sought to reverse the related compensatory damages. Unfortunately for Plaintiffs, the jury verdict forms did not segregate the economic damages by category – leaving the 4/1 DCA unable to resolve the ambiguity between the properly and erroneously awarded amounts. Based on the ambiguity and the 4/1 DCA’s finding that the majority of the economic damages were based on the claims related to the high rent – and, therefore, erroneously awarded – the entire award went POOF!. This reversal also necessitated reversal of the punitive damages and attorney fees award.

Poof!, Private Attorney General: Plaintiff’s Trial Court Win Of $289,908 In Attorney’s Fees And $1,963 In Costs Goes POOF! On Appeal As Plaintiff Failed To Exhaust Administrative Remedies Under The California Environmental Quality Act

Plaintiff’s Failure To Object To The Project Before The City Council Approved It Meant Plaintiff Lacked Standing To Challenge The City’s Project Approval In Court

        In Turn Down the Lights v. City of Monterey, Case Nos. H044656/H045556 (6^th Dist., February 28, 2019) (unpublished), Plaintiff petitioned for a writ of mandate on City’s determination that its project to replace high-pressure sodium lightbulbs with LED fixtures was exempt from environmental review under CEQA Guidelines section 15302 (CEQA Guidelines are found at Code of Regulations, title 14, section 15000, et seq.).

        Before beginning the project, a City Council meeting was held to discuss the project. City did not reference CEQA in the agenda for the meeting, but did reference CEQA in the supporting three-page staff report. No member of the public commented on or objected to the project when it was opened for public comment.

        After beginning the project, City received both positive and negative feedback. Some felt the lights were too bright, while police found the bright lights helpful.

        After briefing and a hearing on the matter, the trial court granted Plaintiff’s petition – finding that (1) the project was not exempt, reasoning that “new LED bulbs and light fixtures are neither a structure nor a facility, by any reasonable definition of these terms;” and (2) Plaintiff was excused from the duty to exhaust administrative remedies “because City did not provide the ‘notice required by law’” in reference to City’s lack of reference to CEQA in the City Council meeting agenda. The trial court also granted Plaintiff’s request for attorney’s fees, under Code Civ. Proc. section 1021.5, of $289,908 and $1,963 in costs. City appealed both of the trial court’s findings and – if those findings were reversed on appeal - its award of attorney’s fees and costs.

        The 6^th District, in a unanimous decision, reversed. It made no determination as to whether City’s project was exempt from environmental review as that issue became moot upon determination that Plaintiff did not have standing to bring this action. Citing Tomlinson v. County of Alameda (2012) 54 Cal.4^th 281, it found that notice of a CEQA determination was not required to be given on the meeting agenda as opposed to the accompanying staff report in this particular case (noting that this should not be interpreted as a broad conclusion that CEQA never needs to be mentioned on a meeting agenda), and that the notice in the accompanying staff report triggered Plaintiff’s requirement to exhaust administrative remedies before petitioning for writ of mandate.

Landlord/Tenant, Section 998, POOF!: Landlord And Tenant, In Lengthy Litigation Over Personal Property In A Westlake Village Luxury Home, Lose Both Their Attorney’s Fees Awards On Appeal

After Ten Years Of Litigation, Tenant Only Received A $56,000 Net Recovery—Not Exactly A Win When All Of The Attorney Efforts Are Considered!

            Christie v. Ridge, Case No. B259189 (2d Dist., Div. 6 February 6, 2019) (unpublished), although unpublished, is a nice reminder of how costly litigation is and how both litigants winning attorney’s fees can see it go away where there is no fee entitlement or a CCP § 998 offer is deemed invalid by the reviewing court.

            The underlying dispute was a brouhaha about the disposition of personal property left by a tenant after a landlord evicted tenant from a luxury home in Westlake Village. (The personal property was valued at $4 million, nice by our standards—we don’t have personal property of this nature.) After 7-10 years of litigation, tenant prevailed on negligence/conversions claims, and landlord prevailed on a breach of contract cross-claim. That resulted in dueling fee requests, producing fee awards in favor of each. The trial judge awarded $220,000 in fees to tenant and $533,225 in fees to landlord (with the fees to landlord stemming from rejection of certain CCP § 998 offers). Everything was appealed.

            Even after procedural dismissals, this appeal was “sour grapes” for both sides. The fee awards went POOF! and tenant only had a meager $56,000 net recovery after 10 years of litigation even though the trial judge originally found differently on net recovery. But, since we are a fee blog, we focus on the fee reversals.

            So, for tenant, the $220,00 fee award went away because no attorney’s fees are recoverable on a conversion claim. (Haines v. Parra, 193 Cal.App.3d 1553, 1559 (1987).) Although tenant argued that it was seeking fees under a claim brought under Civil Code section 1965(e)(3) (which does allow discretionary fees to a prevailing party in a case where a landlord wrongfully retains personal property), the problem here is that the judgment was not entered on this claim, but only on the conversion claim carrying no fee exposure. So, reversed.

            For landlord, the problem was that the landlord group’s section 998 offer was invalid. It conditioned the offer on a release of claims which were not part of the lawsuit, because the parties had 10 other litigations at issue elsewhere—an overbroad release which cannot be sustained under section 998.   So, reversed also. (BLOG OBSERVATION—The 2/6 DCA did suggest that Civil Code section 1542 waivers of known and unknown claims, even just related to the claims in the lawsuit, could be problematical language if not drafted with precision—so, beware when fashioning 998 offers!)

Appealability, POOF!: Dismissed Defendants’ Later $155,182.50 Fee Award Went POOF! On Appeal Because Defendants Did Not Attempt To Correct Earlier Judgment Indicating No Fees Were To Be Awarded

Lower Court Had No Power To Change Prior Judgment And Then Award Fees.

            The result in this case may sound harsh, but it appears to be legally sound.

            In Schermer v. Upland Cascade, L.P., Case No. D072997 (4^th Dist., Div. 1 Jan. 11, 2019) (unpublished), a first superior court judge “struck” class allegations against defendants, such that the case became a direction against numerous defendants. The first judge denied a defense motion for attorney’s fees without prejudice, finding it premature until the conclusion of the case on the merits in the direct action. Dismissed defendants then won a judgment on the pleadings dismissing the action, with the minute order saying zero fees to defendants and with defendants to prepare a judgment (which they did) with the same language. This judgment of dismissal was never appealed. However, later, a second superior court judge granted defendants $155,182.50 in fees against plaintiffs, prompting an appeal.

            Plaintiffs won. Although not raised by any of the parties, the appellate court gleaned and asked for supplemental briefing about the earlier judgment, never appealed, containing a zero fees award. The 4/1 DCA decided that the language in the earlier judgment was binding, because the court had no ability to correct the earlier judgment through a subsequent fee award which was contrary to the previous judgment. (Ramon v. Aerospace Corp., 50 Cal.App.4^th 1233, 1236, 1238 (1996).) Just like that, the fee award went POOF! on appeal.

Private Attorney General: $1.2 Million Fee Recovery Under CCP § 1021.5 Goes POOF! When Court Of Appeal Determines That Plaintiff’s Lawsuit Was Not Catalyst For Defense Withdrawal From Overall Project

Rather, A Non-Party’s Withdrawal Motivated The Project’s Demise, Not Plaintiff’s CEQA Action.

            We many times have posted on the fact that there are very distinct elements to be satisfied under California’s private attorney general statute, CCP § 1021.5, including other requirements where a “catalyst theory” is being pursued. The next case, AG Land Trust v. Marina Coast Water District, Case No. H043902 (6^th Dist. Oct. 15, 2018) (unpublished), illustrates how causation principles do indeed dominate analysis under the “catalyst theory.”

            There, the trial judge awarded plaintiff more than $1.2 million in CCP § 1021.5 fee recovery based on the defense abandonment of a desalination project in a CEQA action. The reversal happened because the real cause of the defense abandonment was the withdrawal of a non-party to the project, so that the plaintiff’s lawsuit did not motivate what really occurred here. That was hard to digest by plaintiff, but meant that the more than $1.2 million fee recovery went POOF! on appeal.

Homeowner Associations/POOF!: 2/4 DCA Reinstates Homeowner’s Breach Of Fiduciary/Quiet Title Claims And Allows Further Amendment Of Slander Of Title Claim, Which Causes Attorney’s Fees Award To HOA As Prevailing Party To Go POOF!

$249,861.50 Fee Award Goes Away For Now.

            In Colyear v. Rolling Hills Community Assn. of Rancho Palos Verdes, Case Nos. B278198/B279671 (2d Dist., Div. 4 Apr. 23, 2018) (unpublished), homeowner sued HOA for breach of fiduciary duty, slander of title, and quiet title arising from a tree trimming dispute between neighbors.  (Boy, oh boy, tree disputes are very common in HOA cases.)  The lower court eventually sustained demurrers without leave in homeowner’s action and then awarded HOA attorney’s fees to the tune of $249,861.50.  (Yes, that it no typo.)  All of that went POOF! on appeal because the 2/4 DCA reinstated the breach of fiduciary duty and quiet title claims, allowed homeowner a chance to amend the slander of title claim (if he could plead around a privilege), and found that pre-dispute ADR requirement did not apply to this particular case.  Reversal of fortune, yes indeed.

Fee Clause Interpretation: Trial Judge’s Award Of Fees Based On Promissory Note Fees Clause Was Erroneous

$53,637 Contractual Fees Award Went POOF! On Appeal.

            In Clark v. Delay, Case No. D072856 (4^th Dist., Div. 1 Jan. 19, 2018) (unpublished), plaintiff filed suit over a partnership dissolution dispute mainly involving the claim that plaintiff did not get insurance proceeds under a buy-sell type of alleged oral arrangement.  Among other documents, there was Note carried back by defendant so that plaintiff could purchase defendant/her husband’s partnership interest.  The Note had the following fee provision:  “Should suit be commenced or an attorney employed to enforce the payment of this note, I agree to pay such additional sum as the court may adjudge reasonable as attorney’s fees in said suit.”  Defendant ultimately defensed plaintiff’s claims hinged on the lower court’s determination that he failed to present sufficient evidence about an oral modification to dissolution documents relating to the insurance issue.  The trial judge then awarded Defendant $53,637 in attorney’s fees under the note fees clause.

            The fee award got reversed as a matter of law and stricken from the judgment on appeal.

            Although assuming that the note was incorporated by reference into the main dissolution agreement, the problem for the defense was that the dispute did not involve enforcement of payment obligations under the note but ancillary claims under which plaintiff would not have been able to recover fees even had he won.  The narrowness of the clause steered the determination in this appellate opinion. 

Civil Rights/POOF!: Appellate Court Reversal Of FEHA Judgment As A Matter Of Law Meant Fee Award Reversed Also

 

$1.282 Million Fee Award Went POOF!

           The Flareback.  1911.  Library of Congress.

     Just to show you how the appellate court can giveth and taketh away (Job 1:21), in this case a taketh away, Hessler v. County of Los Angeles, Case No. B263088 (2d Dist., Div. 1 Oct. 27, 2016) (unpublished) is a situation where a FEHA plaintiff prevailed by winning $153,290 in damages and then being awarded prevailing party attorney’s fees to the tune of $1,282,810. However, the appellate court found that the action was barred by FEHA’s statute of limitations, requiring reversal of the damages judgment as a matter of law and—as an attendant consequence—reversal of the substantial fee award.

Section 1717 And Poof!: Plaintiff Timely Dismissed Contract-Based Claims To Avoid 1717 Exposure Before Terminating Sanctions Hearing Was Decided

 

Terminating Sanctions Motion Was Not On The Merits, So Voluntarily Dismissal Was Timely For Fee Avoidance Purposes.

Skating on ice.  Irving Brokaw, c1908-1916.  Library of Congress.

    Timing can be everything, as the next case demonstrates.

    In Liu v. Trask, Case No. B258112 (2d Dist., Div. 7 Sept. 15, 2016) (unpublished), plaintiff eventually suffered terminating sanctions for prelitigation conduct in furtively reviewing certain attorney-client communications between defendant and its attorneys.  However, before the terminating sanctions motion was formally ruled on, plaintiff voluntarily dismissed without prejudice his contract-based claims under an employment agreement with an attorney’s fees clause.  However, the lower court vacated the dismissal and determined it was untimely because trial had already “commenced” under the voluntary dismissal statute.  It later awarded defendant $250,695.50 in fees and $12,349.25 in costs.  Plaintiff appealed the dismissal and fee rulings.

    Nice move by plaintiff.

    The appellate court determined that trial had not “commenced” for dismissal purposes because the terminating sanctions motion was not on the merits.  Once that was determined, the rest was easy:  a voluntary dismissal of contract claims, if timely, prevents Civil Code section 1717 fee exposure under the Santisas case.  Over $250,000 in fees went away on appeal!

Eminent Domain/POOF!: Postjudgment Fee Awards Against Condemnor In Eminent Domain Action Reversed Because Owner’s Demand Was Not Reasonable And Agency’s Demand Was Not Unreasonable

 

$122.650 In Awarded Attorney’s Fees And $61,007.34 In Expert Fees Went Away On Appeal – POOF!

     In San Diego Assn. of Governments (SANDAG) v. Vanta, Case Nos. D065476 & D066560 (4^th Dist., Div. 1 July 20, 2016) (unpublished), Vanta obtained a $1,441,095.20 compensatory award in an eminent domain case after Vanta offered to settle for $3,250,000 exclusive of fees and SANDAG offered to settle for $805,800 inclusive of fees. The lower court later awarded Vanta attorney’s fees of $122,650 and $61,007.34 in expert witness fees under the eminent domain fee-shifting statute, Code of Civil Procedure section 1250.410.

     The appellate court reversed the fees awards as a matter of law. SANDAG’s offer was much closer to the jury verdict than Vanta’s offer, which latter offer was unreasonable based on the evidence upon which it was basing the $3.25 million offer. Because both the owner’s demand must be reasonable and an agency’s offer must be unreasonable (Inglewood Redevelopment Agency v. Aklilu, 153 Cal.App.4^th 1095, 1117 (2007)), this simply was not the case as a matter of law such that the awards had to be reversed.

Homeowner Associations/POOF!: $159,269.61 In Attorney’s Fees And Costs To HOA Evaporated On Appeal In Landscaping Plan Submission Dispute

 

Sobering Case for HOAs, Good One for Homeowners.

     Winchester Community Assn. v. Perrotta, Case No. C075562 (3d Dist. July 21, 2016) (unpublished) involved a situation where homeowners and an HOA got into a dispute over the review of submission of landscaping plans. Association won at the trial level and was awarded attorney’s fees and costs of $159,269.61.

     Those awards went away on appeal. The reason? HOA prevented performance of a settlement agreement between the parties allowing for review of landscaping plans by refusing to review the submissions. The appellate court reversed the fees/costs award, but ordered the HOA to either approve/disapprove the plans and allowed homeowners a specified amount of time to get Placer County final inspections/permitting. This result should remind HOAs that they need to be reasonable in their review process of submitted landscaping or architectural plans by homeowners; if not, the courts may well be the arbiter of what is right—even at the appellate level.

Intellectual Property, POOF!, Celebrities: Ninth Circuit Affirms Summary Judgment In Favor Of Madonna, Producer Of The Song “Vogue,” And Others Based on De Minimis Copyright “Copying”

 

However, Attorney’s Fees Award For The Material Girl And Other Defendants Reversed Because Plaintiff’s Theory Was Not Objectively Unreasonable.

  Source:  Wikipedia, Article “Madonna.”  Author: Olavtenbroek.   Creative Commons Attribution-Share Alike 3.0 Unported license.

    Well, VMG Salsoul, LLC v. Madonna Ciccone, Nos. 13-57104/14-55837 (9th Cir. June 2, 2016) (published) does involve the “Material Girl” Madonna, the producer of her song “Vogue,” and others who were accused of copyright infringement in the form of using a .23-second horn segment from a previous song known as “Love Break.”  The district court granted summary judgment to the defendants based on the conclusion that the copying was de minimis such that it did not constitute copyright infringement based on treatise commentary and district court decisions—even though the Sixth Circuit had come to an opposite conclusion (namely, there is no such this as de minimis copying for infringement purposes).   The district court also awarded attorney’s fees to the defense under the copyright fee-shifting statute, 17 U.S.C. § 505.  [For purposes of section 505,  “[A]ttorney’s fees are to be awarded to prevailing parties only as a matter of the court’s discretion.” Fogerty v. Fantasy, Inc., 510 U.S. 517, 534 (1994). “In deciding whether to award fees under the Copyright Act, the district court should consider, among other things: the degree of success obtained on the claim; frivolousness; motivation; objective reasonableness of factual and legal arguments; and need for compensation and deterrence.” Maljack Prods., Inc. v. GoodTimes Home Video Corp., 81 F.3d 881, 889 (9th Cir. 1996).]

    The Ninth Circuit, in a 2-1 opinion, affirmed the summary judgment, but all judges agreed the fee award had to be vacated.  Given that the Sixth Circuit was the only circuit court decision on the issue and that this circuit had endorsed plaintiff’s theory of infringement, the suit could not be held to be objectively unreasonable in nature—even if the Ninth Circuit departed from its sister appellate court’s conclusion.  So, the fee award went POOF! on appeal.

Deed Of Trust, Fee Clause Interpretation, POOF!: One Action Rule Barred Award Of Attorney’s Fees To Lender Based On Wording In Trust Deed Fees Clause

 

Result Was That Trial Court’s Award Of $175,000 In Fees Went POOF!

     The lender in HSBC Bank, USA v. Wells Fargo Bank, N.A., Case No. B266405 (2d Dist., Div. 6 May 16, 2016) (unpublished) likely was surprised by the result in this case, but it also shows you how powerful the one action rule can be as a defense in the area of secured real estate law.

    In this one, residential borrower obtained a loan secured by a deed of trust, but got into a scuffle amidst loan modification discussions.   Lender apparently conditioned loan modification on borrower providing documentation to reform the trust deed’s incomplete legal description, something borrower refused to do until the modification occurred.  The lender terminated the modification program, with the lender bringing an action to reform the trust deed’s legal description and borrower cross-complaining based on lender refusal to modify the loan.  The lower court found for lender on both actions.  Lender then brought suit upon a trust deed attorney’s fees clause, containing the language that any amounts disbursed by Lender shall become additional debt secured by the trust deed.

     Borrower argued that the one action rule prohibited a direct action against him for fees and costs, with the lender having to add them to the secured debt and enforce its rights through foreclosure.  The lower court rejected the one action defense and awarded lender $175,000 in fees plus costs.

    Surprise!  The 2/6 DCA reversed. 

    The appellate court found that the one action rule did apply to the award of attorney’s fees.  Because of the wording of the fees clause, the reviewing court believed that the lender really only had an option to add the fees clause to the secured debt and then foreclosure under the trust deed.  What it could not do is argue that the fees were unsecured and could be pursued independently of the security.  In doing so, the 2/6 panel disagreed with the reasoning of Passanisi v. Merit-McBride Realtors, Inc., 190 Cal.App.3d 1496, 1506-1507 (1987); however, the fees clause did make this additional secured debt, so the wording of the fees clause is what gored lender on appeal.

    BLOG OBSERVATION—Lenders likely will not like this decision, but it does indicate the power of the one action rule defense.  Will lenders now think about rewording trust deed standard language as far as how attorney’s fees are treated under deeds of trust to potentially lead to a different result?