CALIFORNIA ATTORNEY'S FEES

Allocation, Requests For Admission, Special Fee Shifting Provision: 4/1 DCA Affirms Denial Of Fees To Prevailing Defendant Under Consumer Data Access And Fraud Act, But Remands For Determination Of RFA Costs-Of-Proof Sanctions For Request Denials

Failure To Allocate Fatal On The CDAFA Claim, But Lack Of Any Evidence During A Jury Trial Meant Some Costs-of-Proof Sanctions Were in Order on Remand.

            In Yeng Midas Touch, Inc. v. Phanichkul, Case No. D080981 (4^th Dist., Div. 1 Nov. 29, 2023) (unpublished), plaintiff lost various tort and a claim under the Computer Data Access and Fraud Act, CDAFA (the latter having a prevailing party statutory provision), after plaintiff basically denied or objected to 68 RFAs, many of which involved specifying computer/internet accounts for which no evidence was introduced during a jury trial.  After plaintiff’s loss, the lower court denied the defense motions for attorney’s fees under the CDAFA and costs-of-proof sanctions for denial of the RFAs.  Plaintiff appealed, losing on the CDAFA issue but obtaining a remand on the RFA issue.

            CDAFA Fee Denial.  Although the appellate court did not affirm on this ground, the lower court denied fees on the grounds that prevailing defendants are not entitled to fees under Penal Code section 502(e)(2), citing Physician’s Surrogacy, Inc. v. German, 311 F. Supp.3d 1190, 1195 (S.D. Cal. 2018), so everyone keep this case in mind.  However, the fee denial was affirmed because defendant failed to allocate fees between CDAFA work and non-CDAFA work.

            Costs-of-Proof Sanctions Issue.  This issue resulted in a reversal and remand.  Many of the RFAs sought admissions relating to specified accounts which plaintiff could not prove at trial.  The appellate court did not believe the defense had a reasonable basis to deny the RFAs given they failed to produce any evidence at trial to back up the denials, with the RFAS having substantial importance in the case.  So, a remand was warranted for purposes of awarding some sanctions to plaintiff.

Allocation: Major Portion Of $950,000 Attorney’s Fees Award Affirmed In Interrelated Trade Secret/Contractual Matter

However, Some Portion of The Fee Recovery On An Unsuccessful, Non-Compensable Fraud Cross-Claim Had To Be Revisited Because Billings Showed Those Expenses Could Be Assessed.

            Elations Systems v. Fenn Bridge, LLC, Case No. A165762 (1^st Dist., Div. 3 Sept. 15, 2023) (unpublished) is an allocation/apportionment opinion which we commend litigators and others to read.

            Summarized quickly, plaintiff sued on trade secret and contractual claims (breach of a settlement agreement and an NDA agreement), obtaining a jury verdict which was reversed by the trial judge through post-trial motions.  The lower court initially awarded defendants $700,000 in contractual attorney’s fees.  However, in a prior appeal, the appellate court reversed and directed a remand to determine whether fees needed to be apportioned between compensable/non-compensable claims, mainly, trade secret/settlement agreement breach claims, NDA breach claims, and a fraud cross-claim.  On remand, the lower court determined that $700,000 was entitled to the defense as well as an additional $150,000 in appellate/post-judgment fees.

            Most of the fee recovery was affirmed on appeal.  Most of the $700,000 fee award was justified because the claims were interrelated, but with one exception.  On the fraud cross-claim which was unsuccessful, an apportionment was warranted because billings showed that the work on that cross-claim could be segregated.  The additional $150,000 fee work was upheld.

            So, the moral of this one is to ask for apportionment and not give up on appeal on this allocation issue—you may get some relief!  Fee challenges should focus on a request for apportionment, where appropriate.

Allocation: In CFRA/Other Claims Case, Plaintiff’s Winning Only 2 Of 7 Claims On Appeal Required A Remand To Recalculate Fee Recovery

Apportionment Principles Are To Be Considered On Remand.

            In Buckman v. City of Los Angeles, Case No. B305192 (2d Dist., Div. 2 Aug. 2, 2023) (unpublished), plaintiff obtained a compensatory verdict of $288,306.23 on 4 out of 7 claims, including a California Family Rights Act (CFRA) claim giving rise to fee entitlement.  Plaintiff requested fees of $1,065,358.75 plus a 2.0 positive multiplier for a total fee award of about $2.121 million under the CRFA fee shifting allowed under FEHA and the private attorney general statute.  The trial judge awarded $958,808.75 under FEHA, reducing some claimed hours and awarding no multiplier.  On an appeal by City and cross-appeal by Plaintiff, the appellate court reversed two more claims, such that Plaintiff only prevailed on 2 of 7 claims.  Given this scenario, the appellate court ordered a reconsideration of the entire fee award on remand, but it did indicate that the lower court should follow apportionment principles, expressly citing Reynolds Metals (our Leading Case No. 5), Thompson, Graciano, and Wysinger (with Wysinger discussing the intertwined exception to apportionment). 

Allocation, Probate: $441,295.63 Fee Award Under Probate Code Section 859, Which Incorporates Mandatory Elder Abuse Fee Shifting, Affirmed Against Removed Trustee On Appeal

No Apportionment Required Because Elder Abuse and Fiduciary Duty Breach Claims Were Intertwined.

            In Keading v. Keading, Case No. A153628 (1^st Dist., Div. 3 Apr. 28, 2023) (unpublished), a beneficiary successfully obtained an elder abuse finding and successfully removed a trustee under Probate Code section 850, which allows a probate judge under related Probate Code section 859 to award reasonable attorney’s fees to the prevailing party (mandatory under the elder abuse fee shifting statute but discretionary on other claims).  The prevailing beneficiary moved for $598,158.93 in fees under the elder abuse statute, arguing no apportionment was necessary because elder abuse and fiduciary breach claims were intertwined, and asking for a 1.75 multiplier.  The lower court, after making downward adjustments for duplication (two attorneys at trial) and excessive hourly rates, awarded $441,295.63 in fees under the elder abuse fee shifting statute, inclusive of a 1.25 multiplier.

            Removed trustee was miffed, appealing the fee order.  The order was affirmed on appeal.

            No apportionment was necessary because there was a common nucleus of facts between the elder abuse and fiduciary breach claims.  Appellant argued that an evidentiary hearing on the fee request should have been held, but the appellate court agreed that the facial request was reasonable, everyone got to support their respective positions on the fee request, and the probate judge did reduce the fee request.  Fee award affirmed.

Allocation, Trade Secrets: $299,647.50 Fee Award Against Plaintiff For Bringing A Frivolous Trade Secret Misappropriate Case Affirmed On Appeal

Lower Court Did Reduce The Fee Request About $121,000 In Fashioning Its Award.

            We have a category “Trade Secrets” describing some fairly hefty fee “sanctions” awards under Civil Code section 3426.4, part of the California’s Uniform Trade Secrets Act.  To this list can be added the award in SASCO v. CSI Electrical Contractors, Inc., Case No. B322686 (2d Dist., Div. 4 Dec. 19, 2022) (unpublished).

            There, a lower court awarded the defense $299,647.50 in attorney’s fees under section 3426.4 after plaintiff lost a trade secrets misappropriation case which the trial judge found to be frivolous, although the fee request was reduced by about $121,000.  On appeal, plaintiff did not contest that the action was objectively specious, but it argued that there was no required subjective bad faith.  The appellate court disagreed based on plaintiff losing other cases against former employees and refusing to comply with discovery orders.  No allocation was required between trade secrets and other claims, because they were inter-related. 

Allocation: 4/3 DCA Affirms Trial Court’s Apportionment Of Plaintiffs’ Fee Award Between Both Contractor And Subcontractor Where Subcontractor’s Contract With Plaintiffs Did Not Provide For Fee Recovery

Statutory Basis Supported Plaintiff’s Recovery of Attorney Fees Directly From Subcontractor.

            In Nassif v. Mission Pools of Escondido, Case No. G060433 (4^th Dist., Div. 3 December 5, 2022) (unpublished), swimming pool contractor and subcontractor were sued for substandard work relating to the design and construction of a swimming pool.  Pursuant to the global settlement agreement entered into with plaintiffs, contractor and subcontractor agreed to an apportionment amongst themselves of the settlement payment to plaintiffs.  However, when the trial court apportioned plaintiffs’ attorney’s fees and costs award against contractor and subcontractor, based on its determination regarding contractor’s indemnity cross-claims against subcontractor, and applying the same apportionment the parties used in the settlement agreement, subcontractor appealed.

            In a 3-0 opinion, authored by Orange County Superior Court Judge Linda S. Marks, sitting by assignment, the 4/3 DCA affirmed.  

            The panel first addressed subcontractor’s arguments that the settlement agreement did not authorize the trial court to apportion fees, and that the trial court’s order deprived it of its rights to a trial and due process as they relate to contractor’s indemnity claims.  Pursuant to the terms of the settlement agreement, the parties had waived their right to a trial on the indemnity issues, and had agreed instead to allow the trial court to determine the indemnity issues in its determination of plaintiffs’ fee motion.  Further, the 4/3 DCA found subcontractor did not suffer a violation of its due process rights as the trial court had made a determination as to the indemnity claims which resulted in the apportionment of the fee award. 

            Finally, although subcontractor’s contract with plaintiffs did not provide for the recovery of fees, and the trial court had erroneously concluded that the equitable indemnity claim provided a sufficient legal basis for apportioning the fees, the trial court’s apportionment order was statutorily supported.  Business and Professions Code § 7168 provides for the recovery of reasonable attorney’s fees by the prevailing party in any action arising out of a contract for swimming pool construction between a swimming pool contractor and a person contracting for the construction – with sections 7026 and 7150.1 providing that a “subcontractor” is included in the definition of a “home improvement contractor, including a swimming pool contractor.”

Allocation, Section 1717: $125,000 Fee Award To A Defendant Winning At The Pleading Stage Affirmed On Appeal

This Decision Has A Nice Discussion Of The Policies Underlying Civil Code Section 1717.

            There is a nice discussion of the policies underlying Civil Code section 1717 and the claims which trigger fee exposure under this statute in Engage BDR, LLC v. Amobee, Inc., Case No. B309263 (2d Dist., Div. 8 July 7, 2022) (unpublished).

            There, a Master Agreement formed the backdrop for plaintiff’s contract, usury, and declaratory relief claims, with that Agreement containing a fees clause which had no recitation that each party to the contract was represented by counsel.  The trial judge sustained demurrers and entered judgment in favor of defendant, later awarding about $125,000 in attorney’s fees and declining to apportion the fees.

            The 2/8 DCA, in an opinion authored by Justice Wiley, affirmed. 

            Initially, the panel explored how Civil Code section 1717 expands a contractual attorney’s fees clause: (1) the first way is reciprocity, with a unilateral fees clause deemed to apply to both parties; and (2) the second way is “broadened scope,” which means a narrow fees clause applies to the entire contract unless the contract specifies that counsel represented the parties; and, if not, section 1717 broadens the fees provision absent the recitation.

            It then examined whether plaintiff’s claims were “on the contract,” determining that the contract breach claims obviously were, the usury/restitution claims were (Del Mar v. Caspe, 222 Cal.App.3d 1316, 1335 (1990)), the economic duress claim relating to entry into the contract were, and the declaratory relief claims related to the contracts (City and County of San Francisco v. Union Pacific Railroad Co., 50 Cal.App.4^th 987, 999-1000 (1996)). 

            The fees clause was broadened because there was no specific recitation that the parties were represented by counsel.  Although there were some other more amorphous references, section 1717 requires that parties of roughly equal power need to make this recitation to demonstrate legal sophistication so that the fees clause is narrowed in scope.  The “broadened scope” rationale applied.

            No apportionment was required because all of plaintiff’s claims involved shared common issues.  Also, because plaintiff did not specifically identify what attorney billings were duplicative until a supplemental brief which was filed too late and not entertained, plaintiff waived its challenges to the reasonableness of the fees requested by defendant.

            BLOG OBSERVATION—Although appellate jurists are good writers, we will note that Justice Wiley has a distinctive writing style.  We would put him in company, on that front, with his contemporaries such as Justices Manella, Ashmann-Gerst, Perluss, Gilbert, Yegan, and Bedsworth.

Allocation, Appealability, Partition: $790,967 Postjudgment Fees And Environmental Remediation Award Against Some Partitioning Parties Affirmed On Appeal

Lower Court Retains Lots Of Discretion To Apportion Fees in Partition Action.

            DeMartini v. DeMartini, Case No. A160849 (1^st Dist., Div. 1 June 7, 2022) (unpublished) is a reminder that the partition statutes allow a trial judge broad authority to award and apportion fees to parties in a partition action.  In this one, the lower court did award fees and environmental remediation costs totaling $790,967 against some parties in a partition action.  That stood up on appeal.  As to the threshold appealability issue, merits partition adjudications and post-award fee recovery orders are appealable.   On the merits, the trial judge has great discretion to apportion fees under CCP §§ 874.040 and 874.110(a), such that the fee recovery award was no abuse of discretion.

Allocation, Fee Clause Interpretation: Plaintiff Owner Losing A Variety Of Intertwined Claims Arising From A Home Improvement Contract Was Properly Assessed With Contractual Party Fees As Against The Home Improvement Installer

Installer Was Awarded $1,223 In Costs And $95,531.68 In Attorney’s Fees.

            Plaintiff owner sued a home installer on various contractual, tort, and statutory theories for a job of under $4,000, with there being a home improvement contract with a fees clause covering performance issues under the contract.  Owner lost across the board, with the lower court awarding installer $1,223 in costs and $95,531.68 in attorney’s fees.  The 2/6 DCA affirmed in Plyley v. Renovating Specialist, Inc., Case No. B309457 (2d Dist., Div. 6 May 31, 2022) (unpublished).  The contractual fees clause was broad enough to encompass contractual and interrelated tort/statutory claims, such that no apportionment was required.  The appellate panel also indicated that installer was entitled to appellate fees and costs as the victor, remanding to the trial court with directions to do so upon a properly filed motion. 

Allocation, Landlord/Tenant, Retainer Agreements: $910,752.50 Fee Award Under San Francisco Rent Ordinance Fee-Shifting Clause Affirmed On Appeal

Trial Judge Did Reduce Requested Lodestar By More Than $70,000—About 60% Of The Request, Although Refusing To Award A Positive 1.5 Multiplier.

            Landlords in Duncan v. Kihagi, Case No. A154678 (1^st Dist., Div. 1 Oct. 6, 2021) (unpublished), were not pleased when a trial judge awarded $910,752.50 in fees in favor of the winning tenants where there was a fee-shifting provision in a San Francisco Rent Ordinance (a common feature of many municipal rent ordinances), although reducing the lodestar request by over $70,000 and declining to award a 1.5 positive multiplier.  The appellate court affirmed.  The fee claimants did not have to apportion a lot of the work because it was interrelated to the success under the Rent Ordinance, even though some claims were abandoned in order to streamline the trial.  Streamlining was not deserving of punishment.  Isolated challenges to some billing entries did not change things, given the lodestar reduction by the lower court.  The hourly rates for a 20+ year attorney ($425) and for a more senior founding partner ($525) were not excessive for Bay Area practitioners in such a case.  The contingency retainer agreement did not have to be introduced into evidence because the contractual terms do not compel any particular fee award.  (Vella v. Hudgins, 151 Cal.App.3d 515, 520-521 (1984).)  Finally, the financial impact of the fee award on landlords was not a mandatory factor to consider.  (Garcia v. Santana, 174 Cal.App.4^th 464, 467 (2009).) 

Allocation: Where Prevailing Litigant Failed To Apportion Compensable And Non-Compensable Fees Where Governing Documents Required A Causal Connection To The Contracts, The Lower Court Did Not Abuse Its Discretion In Denying Fees Altogether

Practice Tip—Think About Apportioning To Avoid The Result Here!

            Stifano v. Slaga, Case No. D077865 (4^th Dist., Div. 1 Aug. 17, 2021) (unpublished) is an example of a case which we do not see often:  a trial judge denying attorney’s fees altogether when a party did not apportion them between compensable and non-compensable claims.

            The start to this case was great and should guide all litigants: “This case underscores the old maxim that it is best not to mix friendship and business.”  What happened here is that two partners opened an Ocean Beach bar and music venue, with one of the partners “fronting” a loan to the other when he could raise his contribution under penalty that the loaning partner obtained the entire business.  Litigation ensued, and the loaning partner substantively prevailed, a result affirmed on appeal.  Here, however, is the rub in this matter:  loaning partner moved for attorney’s fees, but he failed to apportion compensable fees owed by the defaulting partners from non-compensable fees expended in litigating against a third party.  After loaning partner had to admit in fee proceedings that allocation was a legitimate adjustment exercise, the trial judge denied in entirety the fee request.

            That conclusion was affirmed on appeal.  Appellant argued that the contract documents were broad enough to allow for the extraneous fees, but a closer examination showed they had to have a causal connection with the contract dispute between the partners rather than outside parties.  Fee denial affirmed where the other side did no apportionment of fees.

Allocation, Indemnity, Section 1717, Seriously: 4/1 DCA Affirms $6,000 Damages Award And $143,183.55 Out Of Requested $572,730.11 § 1717 Fees To Prevailing Breach Of Contract Plaintiff Who Proved $1,463,745 In Damages At Trial

Plaintiff’s Failure To Conduct Due Diligence Prior To Entering Into Commercial Lease And Failure To Mitigate Damages Once Problems Arose Left Him Upside-Down By More Than A Million Dollars When All Was Said And Done

            Sherwood v. Vogele, Case No. D076776 (4^th Dist., Div. 1 May 7, 2021) (unpublished) highlights the importance of conducting due diligence before entering into a commercial property lease (or purchase), and of working to mitigate damages when problems arise.

            Plaintiff leased a commercial building for the purpose of building and operating a coffee house with an added rooftop deck – accepting the zero lot line property “as is,” and signing a lease with a hold harmless clause indemnifying landlords in the event he caused a claim to be filed against them.  Afterward, plaintiff became aware that a neighboring property had roof eaves that overhung onto his leased property and hindered his ability to build his project.  When neighboring property owner failed to begin removing those eaves on the date specified in a written agreement with plaintiff, plaintiff instructed landlords to cut off communications with neighbor – claiming he did not believe neighbor intended to remove the eaves, that he would have to proceed as if the eaves would not be removed, and that he intended to sue neighbor for a million dollars because he would have to spend considerable more on a build-out to accommodate the encroaching eaves.  Plaintiff then received landlords’ permission for a complete tear down, rather than a remodel, of their building based on their belief plaintiff’s construction of a new building included a “workaround” to the problem.  This was not the case, however, with plaintiff obtaining permits, and going forward with the demolition, based on plans that did not take the encroaching eaves into account. 

            After filing his lawsuit against neighbor, plaintiff terminated his lease and left landlords with a vacant lot.  Neighbor cross-claimed against plaintiff and landlords for damage to his property caused by the demolition, landlords cross-claimed against plaintiff for breach of lease and indemnity, and plaintiff cross-claimed against landlords alleging fraud and breach of the covenant of quiet enjoyment.  The jury found neighbor breached its binding contract with plaintiff, negligently trespassed and maintained a private nuisance – causing plaintiff $1,463,745 in past and future economic damages.  However, judgment was entered with plaintiff being awarded only $6,000 in damages against neighbor as the jury found plaintiff could have mitigated all but $30,000 of his damages, and that plaintiff was 75% responsible for his losses, while neighbor was only 20% responsible.  Additionally, neighbor was awarded $50,000 in property damage, plus $29,027.50 in costs, against plaintiff, while landlords were awarded $620,492 in damages against plaintiff.  Finally, in a postjudgment order, plaintiff received an award of $143,183.55 in § 1717 attorney fees – only 25% of the $572,730.11 he sought based on the trial court’s allocation for plaintiff’s breach of contract cause of action.  Plaintiff appealed.

            The 4/1 DCA affirmed – finding substantial evidence concerning plaintiff’s failure to mitigate damages supported the judgment.  “One has an obligation to avoid an unwarranted enhancement of damages ‘through passive indifference or stubborn insistence upon a conceived legal right . . . .’ ” (Valle de Oro Bank v. Gamboa, 26 Cal.App.4^th 1686, 1691 (1994).)  As to the fees, the panel found no abuse of discretion in the trial court’s 75% reduction given allocation among plaintiff’s contract and tort claims was proper, and plaintiff did not assert that his claims were so intertwined to make allocation impracticable.   

Allocation, Multipliers, Section 1717, Substantiation Of Reasonableness Of Fees: Reversal And Remand Were In Order Where Trial Court Believed It Did Not Have Authority To Apply A Negative Multiplier In An Award Of Attorney Fees

Invoices Submitted In Support Of Plaintiff’s § 1717 Fees Motion Were Extensively Redacted And Contained Vague Block-Billing, Which Offered The Trial Court No Way To Meaningfully Apportion Time Between Causes Of Action.

            After defeating defendant’s cross-claim breach of contract cause of action, plaintiff moved for Civ. Code § 1717 attorney fees of $939,600.50, which represented all of plaintiff’s incurred fees from the time defendant amended their cross-complaint to add the breach of contract cause of action.  In opposition, defendant argued that a negative multiplier should be applied based on the extensive redactions and block-billing of the invoices submitted by plaintiff in support of its fee motion, which offered the trial court no way to meaningfully apportion time between causes of action.  Defendant argued that no more than $47,980.20 should be awarded to plaintiff.  The trial court rejected defendant’s negative multiplier argument and awarded plaintiff $369,811.50 after reductions to one attorney’s hours, hourly rate reductions, and further reductions for apportionment and excessiveness.

            Defendant appealed, and the 2/1 DCA reversed in Southern Cal. School of Theology v. Claremont Graduate University, Case No. B302452 (2d Dist., Div. 1 May 3, 2021) (unpublished). 

            The trial court appeared to have rejected defendant’s proposed negative multiplier based on its belief it had no authority to apply defendant’s requested negative multiplier.  However, a trial court has considerable discretion in determining fee awards, including its authority to ““assig[n] a reasonable percentage to [time] entries, or simply cast them aside.” (Bell v. Vista Unified Sch. Dist., 82 Cal.App.4th 672, 689 (2000).)  The court may reduce compensation on account of any failure to maintain appropriate time records as the party moving for fees bears the burden of establishing entitlement and documenting the appropriate hourly rate and hours expended. (ComputerXpress, Inc. v. Jackson, 93 Cal.App.4th 993, 1020 (2001).)

            On remand, the panel instructed the trial court to reconsider its order based on its full authority to fashion a fees award under § 1717 – reminding the trial court it has the authority to apply a negative multiplier as a basis to apportion fees.

Allocation, Deadlines: $172,000 In Trial/Appellate Fees To One Prevailing Defendant And $36,890 In Appellate Fees To Other Prevailing Defendants Affirmed On Appeal

Parties Orally Stipulated To A Postponement Of Appellate Fee Deadlines And Work Was Inextricably Intertwined.

            In Ebrahimpour v. Pasco, Case No. B303983 (2d Dist., Div. 2 Apr. 7, 2021) (unpublished), plaintiffs lost a corporate opportunity dispute where there was a memorandum of agreement with a contractual fees clause against multiple defendants.  On remand after a prior appeal, plaintiffs were hit with a $172,000 trial/appellate fees award against one defendant and another $36,890 appellate fees award against other defendants.  Plaintiffs’ appeal of the fee awards did not alter anything.  As far as timeliness in bringing appellate fee motions, the trial court’s conclusion that there was an oral agreement to extend the time deadline was affirmed on appeal.  (Obviously, it would be good to confirm these arrangements in writing, unfortunately, given modern litigation tendencies; however, the lower court did credit a declaration by one side as to what was stipulated to.)  There was no need to apportion time between the various defendants because it was impossible to do so given the overlap in facts and legal theories. 

Allocation, Employment, Reasonableness Of Fees: Employee’s Limited Success On Some Compensable Wage/Hour Claims Led To Affirmance Of $17,234 Fee Award

Employee Had Requested Fees Of $168,749.47 After Garnering Compensatory Award Of $6,958.36.

            This case is another example of how non-compensable claim allocation and limited success can lead to a substantial reduction of a fee request even where there is some fee entitlement basis.

            In Caballero v. Bill Muncey Industries, Inc., Case No. D076628 (4^th Dist., Div. 1 Mar. 17, 2021) (unpublished), an employee cook at Galley at the Marina restaurant sued an individual and company who he believed were employers under wage/hour laws (including meal and rest break statutes) as well as the Unfair Competition Law.  It looks like employee sued on behalf of a class, but certification was denied, and no recovery was had on the UCL claim.  Eventually, the individual was not found liable, but the company was found to have violated unpaid overtime and wage statement violations to the tune of $6,958.36.  Employee moved to recover $168,749.47 in fees (the full value of services—with some entitlement existing, but not for losing meal/rest break claims which are not compensable under wage/hour laws), but the lower court only awarded $17,234, apportioning out non-compensable fees on some claims and also reducing for employee’s limited success in the litigation overall.

            That determination was affirmed by the 4/1 DCA.  After all, employee only prevailed against one defendant and only prevailed on two minor wage/hour claims, with the records showing that an apportionment was possible but one which was eschewed by employee’s counsel wanting the whole thing (not a good strategy, based on many, many prior blog posts).  The problem for employee is that non-compensable claims which are apportionable and limited success are prime candidates for reduction of a large fee request where there are modest returns.  That was the “end result” conclusion by the trial court, with the Court of Appeal finding no abuse of discretion in what was decided in the superior court fee proceedings. 

Allocation, Employment, Mulitpliers, Private Attorney General: 1/1 DCA Reverses $2,905,200 In PAGA Penalties Against Defendant, But Affirms $7,793,030 In Attorney Fees Inclusive Of A 2.0 Multiplier

The Fees Award Was Supported By PAGA, Section 1021.5, And The Catalyst Theory, And Apportionment Of Fees Among The Retaliation And PAGA Claims Was Neither Necessary Nor Possible, While Complexity Of Issues And Skill Of Attorneys Supported Multiplier In This Intensely Litigated Case.

            In Sargeant v. Board of Trustees of The California State University, Case Nos. A153072/A154926 (1^st Dist., Div. 1 March 5, 2021) (published) (fees discussion unpublished), a health-and-safety technician employed at Sonoma State University sued Cal State University and his supervisor alleging five retaliation causes of action for the way he was treated after raising environmental concerns related to lead paint and asbestos.  Specifically, plaintiff's causes of action fell under the Whistleblower Protection Act (Lab. Code §§ 1102.5, 6310, 6399.7, 232.5), the California Fair Employment and Housing Act (FEHA, Gov. Code, § 12900 et seq.), and one cause of action for civil penalties under the Labor Code Private Attorneys General Act of 2004 (Labor Code, § 2698 et seq.,) (“PAGA”) premised on allegations that CSU had violated various provisions of Cal-OSHA.

            The jury returned special verdicts against defendants – finding in plaintiff’s favor on three retaliation claims and on the PAGA claim, and awarding plaintiff $271,895 in past and future economic damages, plus $116,000 in noneconomic damages.  Because plaintiff elected the equitable remedy of reinstatement in lieu of the past and future economic damages, only the noneconomic damages were included in the judgment.  Additionally, the trial court ordered CSU to pay civil penalties of $2,905,200 for its various violations.

            Plaintiff then moved for more than $11.5 million in fees which included a 3.0 multiplier for three of the five attorneys representing him.  The trial court awarded $7,793,030 in fees – finding that three legal bases supported the award: (1) PAGA itself, which authorizes a fee award to a prevailing employee (§ 2699, subd. (g)(1)), (2) Code of Civil Procedure section 1021.5, which authorizes a fees award when an action results in the enforcement of an important right affecting the public interest; and (3) the “catalyst doctrine.”  Additionally, the trial court found that it was neither necessary nor possible to apportion the fees among the retaliation and PAGA causes of action.  Finally, the trial court concluded that a multiplier was appropriate given the complexity of the case, the skill of plaintiff’s attorneys, the extent to which the litigation precluded other employment, the contingent nature of the fee award, and the fact an award against the state would ultimately fall on the taxpayers, but reduced plaintiff’s requested 3.0 multiplier to 2.0.

            Defendants raised a number of challenges on appeal, but in the published portion of its decision, the appellate panel affirmed – with exception to the PAGA penalties.  The panel reversed the entire $2,905,200 in PAGA penalties – finding that although plaintiff brought viable PAGA claims, some of the PAGA claims did not themselves provide for penalties, and plaintiff did not suffer personally on those claims premised on the Cal-OSHA violations.

            In the unpublished portion of its opinion, the 1/1 DCA affirmed the attorney fees award – agreeing with the trial court’s conclusions and reasoning, and finding no abuse of discretion.

Allocation, Civil Rights, Costs, Employment: Former Employer Properly Was Denied Attorney’s Fees Where FEHA Case Had Some Substance

However, 2/3 DCA Follows Roman Opinion On When To Award Costs On Non-FEHA Claims.

            In Chevreaux v. Long Beach Memorial Medical Center, Case Nos. B291268/B292937 (2d Dist., Div. 3 Feb. 24, 2021) (unpublished), a jury returned a defense verdict in favor of a former employer on a non-FEHA, Tameny retaliation claim after she dismissed two FEHA claims (age discrimination and a CFCA violation) on the eve of trial.   The lower court subsequently denied attorney’s fees to defendant after finding the dismissed FEHA claims were not baseless.  The trial judge also granted plaintiff’s motion to tax costs finding he could not award any costs to the defense because it did not apportion the costs expended to defend non-FEHA claims from those attributable to its defense of her FEHA claims, as required by the 2/7 DCA’s decision in Roman v. BRE Properties, Inc., 237 Cal.App.4^th 1040, 1059 (2015). 

            The 2/3 DCA mainly affirmed, but it reversed and remanded to see if the defense might be awarded some routine costs for jury fees, court reporter fees, and trial exhibits.  It agreed that there was enough evidence to show an inference of age discrimination because plaintiff, aged 62, was replaced with women who were 50 and 44 even though the claims were dismissed before trial.  This Division also agreed with the reasoning in Roman, which allows a lower court discretion to see if non-FEHA claims did not overlap so as to be able to apportion out costs not related to the nonfrivolous FEHA claims.  Because the jury only considered one non-FEHA claim, it was fair game for the trial judge make factual determinations as far as awarding jury fees, court reporter fees, and trial exhibit costs in favor of the defense (considering whether the costs were reasonable, necessary, and whether there was an agreement to split court reporter fees). 

Allocation, Construction, Section 1717: Contractor Defeating Worker’s Compensation Insurance Claims Not Entitled To Contractual Fees, Which Needed To Be Apportioned On Remand

No Contractual Fee Provisions Covered The Worker’s Compensation Issues.

            Although apportionment is sometimes a discretionary exercise, it can be mandatory where there are non-fee entitlement issues which are likely disparate in nature. 

            Fernandez v. Escutia, Case Nos. H046529/H047015 (6^th Dist. Feb. 24, 2021) (unpublished) is a situation where a contractor won a construction dispute against homeowners, including a claim that he failed to maintain worker’s compensation insurance.  The trial judge subsequently awarded contractor $103,717.50 out of a requested $157,659.66 in Civil Code section 1717 based on a contractual fees clause.

            The Sixth District reversed and remanded.  The problem was that the win on the worker’s compensation insurance issue did not arise out of the construction contract, given no provision indicating it was a necessity (beware, because such a provision is common in many construction contracts).  That being the case, and given the absence of an indication that the other contract issues overlapped with the worker’s compensation claim, a remand was necessary to apportion fees, if needed, unless there was a common overlap with other issues.

Allocation, Private Attorney General: Doe v. Westmont College Is Now A Published Decision

Prevailing Section 1021.5 Parties Successfully Defending The Case On Appeal Are Allowed To Move For Attorney Fees Post-Appeal Even If The Trial Court Denied Their Pre-Appeal Fees Motion.

            We discussed Doe v. Westmont College, Case No. B303208 (2d Dist, Div. 6) in our January 26, 2021 post.  The case was unpublished at the time, but was certified for publication on February 8, 2021.

            In Doe v. Westmont College, plaintiff appealed after the trial court denied his motion for $85,652, under Code Civ. Proc. § 1021.5, for fees incurred on a prior appeal successfully defending the trial court’s judgment issued in his favor – which resulted in a published decision wherein the 2/6 DCA reversed and remanded for a redo.  The trial court had abused its discretion by failing to examine whether private enforcement was necessary and whether the financial burden of private enforcement warranted a fees award.  The panel also found that plaintiff’s failure to apportion fees between those that advanced his private interests and those that advanced the public interest was not an appropriate basis for denial – with the trial court having broad discretion to apportion fees if seeking party has failed to do so. 

          As to defendant’s contention that plaintiff was not entitled to § 1021.5 fees post-appeal because he had not appealed the trial court’s denial of his pre-appeal request for § 1021.5 fees, the panel disagreed.  It found plaintiff’s pre-appeal and post-appeal motions for fees were separate, independent motions.  Plaintiff’s post-appeal motion for fees was not a repeat of the original fees motion that was denied and not appealed, and the resulting published opinion from plaintiff’s defense of the trial court’s judgment in the first appeal conveyed a significant benefit on a large group of people.  In certifying the opinion for publication, the 2/6 DCA modified the opinion to add the following statement: “In some cases, although parties succeed at trial, the full breadth of their success is not realized until they defend the case on appeal. May such a party move for attorney fees post appeal if the trial court denied their preappeal attorney fee motion? We conclude that they may do so.”

Allocation, Consumer Statutes, Multipliers, Preemption: Prevailing Lemon Law Plaintiff Winning Only $21,957.25 In Damages At Jury Trial Properly Awarded $169,602 In Attorney Fees, Inclusive Of .2 Multiplier, Against Dealership And Finance Company

Apportionment Was Not Necessary Due To Intertwined Claims, Multiplier Was Appropriate Given Plaintiff’s Counsel’s Contingency Risk, And – Contrary To Lafferty And Spikener – 2/5 DCA Determined That The Holder Rule Does Not Limit The Attorney Fees A Plaintiff May Recover From A Creditor-Assignee.

            For a great discussion on the Holder Rule cap and its applicability to attorney fees, we commend Pulliam v. HNL Automotive Inc. et al., Case No. B293435 (2d Dist., Div. 5 January 29, 2021) (published) to our readers.

            In Pulliam, a Song-Beverly Act (California’s lemon law) plaintiff was awarded $169,602 in attorney fees, consisting of a $141,335 lodestar plus a .2 multiplier, after prevailing at jury trial and being awarded $21,957.25 in damages against dealership and the finance company that accepted assignment of the retail installment sales contract for her purchase of a “Certified Pre-Owned” 2015 Nissan Altima. 

            Defendants appealed – arguing: (1) plaintiff’s counsel failed to provide evidence of their hourly rates, (2) the trial court erred in refusing to apportion attorney’s fees between plaintiff’s successful and unsuccessful causes of action, (3) the trial court erred in applying a lodestar multiplier because the lawsuit was not exceptionally difficult and plaintiff’s counsel was not exceptionally skilled, and (4) finance company was not liable for attorney’s fees under title 16, section 433.2 of the Code of Federal Regulations (2020) (the Holder Rule) because its liability could not exceed the amount plaintiff paid to it. 

            The 2/5 DCA, in a 3-0 opinion authored by Justice Rubin, affirmed – finding no abuse of discretion, and concluding the Holder Rule does not limit the attorney fees a plaintiff may recover from a creditor-assignee.  First, plaintiff’s counsel attached a declaration – which included a copy of the firm’s invoice identifying the timekeepers, the work performed, and the timekeepers’ hourly rates – to plaintiff’s fee motion.  Additionally, plaintiff’s counsel’s declaration described the firm’s rates and the qualifications of each timekeeper, along with a national survey of prevailing rates among consumer protection attorneys – including California attorneys.  Second, the record supported the trial court’s view that apportionment of the fees was not possible because the successful and unsuccessful claims involved a common core of facts and intertwined theories.  Third, the panel found the multiplier was modest and accounted for the risk plaintiff’s counsel took in litigating the case against defendants whom the court found made the case challenging and protracted.

            Finally, as to the Holder Rule – promulgated by the Federal Trade Commission in 1975 as a consumer protection measure to abrogate the holder in due course rule for consumer installment sales contracts funded by a commercial lender – the panel found its cap does not apply to attorney fees.  The final sentence of the Holder Rule states that recovery by the debtor shall not exceed the amounts paid by the debtor under the installment sales contract. Finance company asserted that this cap limited plaintiff’s recovery of both damages and attorney fees from it to the amount she paid under the installment contract – relying on Lafferty v. Wells Fargo Bank, N.A., 25 Cal.App.5th 398 (2018) [discussed in our July 20, 2018 post] and Spikener v. Ally Financial, Inc., 50 Cal.App.5th 151 (2020) [discussed in our June 11, 2020 post].  However, as the panel pointed out, many opinions on this issue have been contradictory, and it concluded that to include attorney’s fees in the Holder Rule’s limitation on recovery would be out of sync with its objective of reallocating the costs of the seller’s misconduct from the consumer back to the seller and creditor.  Additionally, the California Legislature had taken a similar view in enacting Civil Code § 1459.5 – intending to repeal Lafferty and allow recovery of fees in excess of the Holder Rule’s cap.  As to financial company’s argument that, as held in Spikener, the FTC’s Rule Confirmation (holding fees are included in the cap) is entitled to deference and preempts § 1459.5, the panel disagreed – finding the FTC’s Confirmation did not meet the four-marker test set forth in Kisor v. Wilkie, 139 S. Ct. 2400 (2019) for determining when regulatory deference is appropriate.  “[I]n considering deference, ‘a court must make an independent inquiry into whether the character and context of the agency interpretation entitles it to controlling weight. [Citations.]’” (Id. at p. 2416.)

Allocation, Private Attorney General: Trial Court’s Application Of The Wrong Standard And Inappropriate Basis For Denying Prevailing Plaintiff’s Postappeal Section 1021.5 Motion For Fees Necessitated Remand

Trial Court Focused On The “Punishment” The Fees Award Would Impose On Defendant For Unsuccessful Appeal Of Judgment Rather Than Examining Determination Factors For Award Under § 1021.5 And Also Erred In Denying Based On Plaintiff’s Failure To Apportion Fees Between His Private Interests And The Public Interest.

            In Doe v. Westmont College, Case No. B303208 (2d Dist., Div. 6 January 25, 2021) (unpublished), plaintiff challenged the defendant college’s determination that he committed sexual assault in a petition for writ of administrative mandate – arguing that Westmont did not give him a fair hearing and that substantial evidence did not support its decision.  The trial court granted plaintiff’s petition, but denied his motion for $58,466 in fees under Code Civ. Proc. § 1021.5.  Plaintiff did not appeal the fees denial, but defendant unsuccessfully appealed the judgment.  After the 2/6 DCA affirmed in a published opinion, plaintiff sought to recover $85,652, under § 1021.5, for fees incurred on appeal.  The trial court denied – finding the published opinion’s significant benefit conferred on a large group of people arose from defendant’s decision to appeal, not plaintiff’s, and that a fee award to plaintiff would “punish [defendant] for appealing rather than vindicate the purposes behind . . . section 1021.5.”  The trial court also denied on the basis that plaintiff provided no apportionment between fees that pertained solely to plaintiff’s private interests and those that advanced the public interest.

            On appeal, plaintiff argued that the trial court erred when it denied his postappeal motion for attorney fees because: (1) his action resulted in the enforcement of an important right affecting the public interest, (2) his action conferred significant benefits on a large group of people, and (3) the necessity and burden of private enforcement made a fee award appropriate. The panel agreed with plaintiff’s first two contentions, and concluded that the trial court had abused its discretion by failing to examine two factors in making its determination re § 1021.5 fees – whether private enforcement was necessary, and whether the financial burden of private enforcement warranted a fees award.  Instead the trial court focused on the “punishment” defendant would suffer for exercising its right to appeal – thereby applying the wrong standard in determining the merits of plaintiff’s motion for fees.

            Additionally, the panel found that plaintiff’s failure to apportion fees between those that advanced his private interests and those that advanced the public interest was not an appropriate basis for denial – with the award of attorney fees being an obligation if the party seeking fees has met the criteria for the award, and the trial court having the broad discretion to apportion such fees if the seeking party is not able to do so.

BLOG UPDATE:  We can now report that Doe v. Westmont College was certified for publication on February 8, 2021.

Allocation, Section 1717: No Abuse Of Discretion In Trial Court’s Allocation Which Reduced Plaintiff’s Fee Award To $143,257.92 From Requested $800,165.00, Nor In Its Award Of $105,000 In Fees And $4,609.77 In Costs To Prevailing Defendants

Plaintiff Did Not Support Its Arguments With An Adequate Record On Appeal, Citations To The Record And Legal Authority.

            Newstart Real Estate Investment v. Huang, Case No. B289513 (2d Dist., Div. 8 December 18, 2020) (unpublished) is a breach of contract, fraud, and conspiracy action involving the sale of a Las Vegas Ramada Inn.  Plaintiff purchaser claimed its principal did not speak or read English, that defendants had conspired together to take advantage and sell the property at an inflated price and had failed to disclose the requirements to transfer of the Ramada franchise license to plaintiff – with the transfer of the franchise being the primary consideration for the purchase, but something plaintiff was unable to obtain.  Plaintiff sued seller and its members as alter egos, the escrow company and its principal, and the real estate brokerage and its principal who brokered the transaction.  The jury trial resulted in awards against broker and broker’s principal in $1.62 million in damages, over $1.2 million against seller, and another $280,000 in punitive damages against broker’s principal.  However, the trial court entered judgment omitting broker as a joint tortfeasor following post-trial hearings regarding some ambiguities as to the broker and its principal in the jury’s special verdict, and granted broker principal’s post-trial motion for a new trial on the punitive damages based on broker principal’s inability to pay .  The escrow defendants received judgment in their favor, and seller’s members were found not to be alter egos of seller in a bifurcated trial. 

            Plaintiff moved for $800,165 in attorney fees against seller based on the fees provision in the purchase agreement – with the trial court awarding $143,257.92 after reducing the fee to 1/6^th the amount requested based on the number of defendant groups and including fees for bringing the fee motion.  Individual seller defendants sought $596,598 in fees, pursuant to Civ. Code § 1717, but were awarded $105,000 as the trial court observed they had failed to demonstrate the reasonableness of their requested fees and could not recover fees incurred by seller in its defense.  Finally, broker sought prevailing party costs of $23,000, and the trial court – in partially granting plaintiff’s motion to tax – awarded broker $4,609.77 in costs.

            Plaintiff appealed, raising a number of challenges against the trial court’s final judgment.  Unfortunately for plaintiff, it failed to support its arguments with an adequate record on appeal, citations to the record and legal authority – thereby demonstrating no abuse of discretion and sealing its fate.  In a 3-0 opinion, the 2/8 DCA affirmed.

Allocation, Costs: No Abuse Of Discretion Where Trial Court Refused To Tax Costs Among Multiple Defendants Who Settled Out Of The Case Before Trial

Costs Incurred By Plaintiffs In Relation To Other Defendants Were Directly Relevant To Case Against Appealing Defendant And Reasonably Necessary To The Litigation.

            In Booker v. Imerys Talc America, Case No. A153995 (1^st Dist., Div. 3 December 11, 2020) (unpublished), wife and heirs of decedent continued mesothelioma-related litigation against seven defendants after his death.  Most defendants settled with plaintiffs prior to the jury trial – with the remaining two defendants found liable for increasing decedent’s risk of mesothelioma.  When plaintiffs moved post-judgment for prevailing party costs in the amount of $319,549.54, one of the two defendants filed a motion to tax costs.  Specifically, defendant sought to reduce plaintiffs’ recovery of costs by $80,890.28 for costs related to other defendants.  The trial court partially granted in the amount of $44,948.58 for the costs of expert witness services incurred prior to plaintiffs’ § 998 offers, photocopying and enlarged exhibits, but declined to tax costs related to other defendants. 

            The 1/3 DCA affirmed – finding no abuse of discretion.  First, all cases cited by defendant, to support its contention that trial courts have discretionary authority in all cases to reduce costs against a defendant by amounts apportionable to other defendants no longer in the case, were distinguishable in that they involved cases where some of the parties prevailed against the party seeking costs. Additionally, none of the cases involved a dispute concerning the trial court’s discretion to allocate costs among multiple defendants to reduce plaintiffs’ recovery of costs.  Second, the costs that the trial court refused to tax were directly relevant to plaintiff’s case against defendant and reasonably necessary to the litigation.  Plaintiffs incurred filing, motion, service of process and deposition costs – related to other defendants – in order to determine the amount of asbestos that caused decedent’s mesothelioma, determine the merit of defendant’s affirmative defenses that other defendants were responsible for decedent’s mesothelioma, and ascertain defendant’s share of fault for liability and settlement purposes.

Allocation, Employment, Section 998: Cruz v. Fusion Buffet, Inc. Is Now A Published Decision

Labor Code Cost-Shifting Provisions Trumped Code of Civil Procedure Section 998’s Cost-Shifting And Meant No Fees/Costs Recovery For Successful Section 998 Defendants.

            We discussed Cruz v. Fusion Buffet, Inc., Case No. D075479 (4^th Dist., Div. 1), in our October 17, 2020 post, which was unpublished at the time.

            In Cruz, defendants unsuccessfully appealed the fees/costs awarded to plaintiff who had prevailed in various wage/hour violations against her former employer but not against certain alter ego individual defendants.  Defendants argued that the fees/costs should have been apportioned between compensable and non-compensable claims, that the trial court was required to deny plaintiff’s motion for fees/costs because she had obtained a less than $25,000 compensatory award in a civil unlimited case, but the alter ego defendants also argued that the trial court abused its discretion in failing to award their requested Code Civ. Proc. § 998 fees/costs for beating their respective § 998 offers of one dollar.

            Although the 4/2 DCA panel acknowledged that Plancich v. United Parcel Service, Inc., 198 Cal.App.4^th 308, 310-312 (2011) might dictate a different result under Labor Code section 1194, the panel disagreed with Plancich’s analysis and sided with the view that the one-sided, pro-plaintiff statute prevailed over section 998 (which dealt only with section 1032 costs).

            Cruz was certified for publication on November 9, 2020.

Allocation; Landlord/Tenant: $29,490 In Contractual Fees To Married Residential Tenants Prevailing In Unlawful Detainer Action Was No Abuse of Discretion

Lack Of Hearing Reporter’s Transcript Hampered Review, But Attorney Efforts Benefitting Joint Tenants, Even If Attorney Only Formally Retained By One Tenant, Was Appropriate.

            In Ahdoot v. Chernyavskiy, Case No. B303359 (2d Dist., Div. 2 Nov. 4, 2020) (unpublished), landlord lost an unlawful detainer on summary judgment to two married residents based on a defective notice to quit the premises.  One tenant was in default at the time the eventually successful summary judgment motion was filed, but that default was vacated due to improper service.  An attorney represented one of the tenants although counsel jointly filed a summary judgment to the benefit of both.  Tenants moved for $32,140 in joint contractual attorney’s fees, with the lower court awarding $29,490 after a hearing.  Landlord appealed, although providing no reporter’s transcript of the fee hearing.

            The 2/2 DCA affirmed, rejecting both technical and reasonableness of fees challenges.

            Landlord argued that one tenant’s “defaulted” status inflected the fee award based on the earlier summary grant when the tenant was in default, but the appellate court found that this did not void things and ultimately that tenant righted the situation by getting the default vacated.  Besides, the right course was to attack the summary judgment grant, and landlord never appealed that judgment.  Landlord next contended that it was improper to award fees to tenants jointly when only one tenant was really represented, but that argument was nixed because no legal authority was cited to support the position that a lower court had to parse out legal fees for tenants jointly sued in an unlawful detainer where the attorney’s efforts essentially benefited both of them.  Also, landlord’s failure to provide a hearing transcript made it impossible to show what the lower court did constituted an abuse of discretion.  Finally, it was not unfair to allow fee recovery for the joint tenants given that they were married and beat back an attempt to dispossess them from their residential unit.  As such, no fee substantiation had to parse out efforts as between the two tenants. 

Allocation, Consumer Statutes, Lodestar, Multipliers: Santana Decision Now Published

Apportionment Between Song-Beverly Act Fees/Costs And Other Causes Of Action, Where Fees Are Not Permitted, Not Necessary Where Claims Are Inextricably Intertwined.  

            In our September 29, 2020 post, we discussed Santana v. FCA US, LLC, Case Nos. G057244/G058020 (4^th Dist., Div. 3), which was unpublished at the time.

            In Santana, the trial court awarded Song-Beverly Act fees/costs of $510,637.87, including a 2.0 multiplier, after a jury found defendant liable for breach of the express and implied warranty, and fraudulent concealment for plaintiff’s claims arising from the defective vehicle he purchased.

            On appeal, the 4/3 DCA vacated a significant portion of damages awarded to plaintiff when it reversed on the fraudulent concealment claim.  However, the appellate panel affirmed the entirety of the fees/costs awarded by the trial court – finding no abuse of discretion because apportionment between the Song-Beverly claims and non-fee claims was not needed given that plaintiff’s causes of action stemmed from an issue common to all of his claims.  As such, plaintiff’s claims were inextricably intertwined such that apportionment would be impracticable, if not impossible.

            Santana was certified for publication on October 23, 2020.

Allocation, Employment, Section 998: Plaintiff Employee, In Unlimited Civil Case, Winning Limited Jurisdiction Damages Properly Awarded Wage/Hour And Break Claim Intertwined Fees

Section 998 Cost-Shifting Did Not Preempt Labor Code Cost-Shifting Provisions So As To Allow Fee and Costs Recovery To Certain Defendants.

            Cruz v. Fusion Buffet, Inc., Case No. D075479 (4^th Dist., Div. 1 Oct. 15, 2020) (unpublished) is an interesting unpublished decision discussing the intersection of Labor Code costs shifting and CCP § 998 costs shifting.  In the end, which scheme prevailed—stay tuned, but the employment provisions did.

            Plaintiff ex-employee sued for various wage/hour violations, including meal and rest breaks, eventually winning a compensatory bench trial award under $25,000 against employer but not against certain putative alter ego individual defendants, even though the matter was filed as an unlimited jurisdiction matter.   Plaintiff moved for fees under various Labor Code provisions against employer to the tune of $107,118.75 in fees (inclusive of a 1.25 multiplier) and to the tune of $4,583.35 in costs.  The alter ego defendants moved for fees and costs against plaintiff in the sum of $22,735.  Defendants moved to strike/tax costs claimed by plaintiff, and plaintiff moved to strike/tax costs asserted by the alter ego defendants.  In the end, the lower court granted plaintiff’s fees motion for the much lesser amount of $47,132.50, denied the defense motions to strike/tax costs, denied the alter ego defendant’s fees motion, and granted plaintiff’s motion to strike/tax costs as to the alter ego defendants. 

            Defendants timely appealed, but all of the post-judgment orders were affirmed.

            Plaintiff’s fee/costs award was proper because the lower court was not required to deny a fee/costs request where the compensatory award in an unlimited matter was one which could have been awarded by a limited jurisdiction court—it was a discretionary decision, and there was no abuse of discretion under the circumstances.  The defense argued that the lower court should have apportioned fees between compensable wage/hour claims and non-compensable meal/rest break claims, but the trial judge’s determination that the fees were inextricably intertwined ended the challenge based on the interrelated nature of proof relating to all of these claims.  Finally, the fees were not grossly inflated and unreasonable given there was fairly detailed fee substantiation and the trial court observed the conduct of counsel in a fee request which was not hugely substantial in nature—bolstered by a more than half reduction in requested fees.

            The interesting part of this opinion is whether the alter ego defendants, who sent a CCP § 998 offer which was successful, were properly refused costs requested against plaintiff.  The problem here was that the Labor Code costs-shifting provisions were inapt for these defendants, such that section 998 was the only avenue--but it could not prevail over the more specific employment costs-shifting provisions.  The 4/2 DCA panel acknowledged that Plancich v. United Parcel Service, Inc., 198 Cal.App.4^th 308, 310-312 (2011) might dictate a different result under Labor Code section 1194, but the panel disagreed with Plancich’s analysis and sided with the view that the one-sided, pro-plaintiff statute prevailed over section 998 (which dealt only with section 1032 costs).  On the alter ego defendants’ argument that fees and costs were justified under Labor Code section 218.5, no fees/costs-shifting was warranted based on the lower court’s finding that plaintiff did not bring the alter ego case in bad faith; she presented proof of same, but simply lost.  All post-judgment orders affirmed.

BLOG UPDATE: Cruz was certified for publication on November 9, 2020.

Allocation, Consumer Statutes, Lodestar, Multiplier: Although Fraudulent Concealment Compensatory And Punitive Damages Were Reversed, $510,637.87 Fee/Costs Award Under Song-Beverly Act Case Affirmed On Appeal

Failure To Apportion/Double Counting Lodestar And Enhancement Arguments Not Supported By The Record.

            In many cases, a fees-seeking litigant needs to apportion between fee entitlement and non-fee entitlement claims, unless the thrust of the case involved a fee entitlement case so that it was inextricably intertwined with a non-fee case.  If so, even a reversal of the non-fee case upholds the fee award on the intertwined fee entitlement basis of the case.

            That is what occurred in Santana v. FCA US, LLC, Case Nos. G057244/G058020 (4^th Dist., Div. 3 Sept. 29, 2020) (unpublished).

            In a defective vehicle case for Song-Beverly Act violations and fraudulent concealment, plaintiff was awarded $1,229,531.71 (of which $1 million was punitive damages under the fraud count) and then awarded Song-Beverly Act fees/costs of $510,637.87 inclusive of a positive 2.0 multiplier, but less than 2.5 multiplier requested by plaintiff. 

            The 4/3 DCA affirmed the fees/costs award in a 3-0 panel decision authored by Justice Ikola, although there was a large scale-back of the fraud damages, paring about $1.134 million from the overall award.

            The defense argued that there needed to be an apportionment, but that did not resonate based on the fraudulent concealment being intertwined and with the defense not offering a realistic apportionment proposal for the trial or appellate courts to consider.

            With respect to the “double dip” argument, the appellate court indicated that a plaintiff could not rely on a contingency risk argument if it was being used to justify the lodestar and an enhancement.  However, that did not occur here because the trial judge did not use the contingency risk to justify the hourly lodestar rate but only used it for true enhancement, also mentioning complexity and attorney skill which would have gotten to the same result.

UPDATE: Santana was certified for publication on October 23, 2020.

Allocation, Partition: Code Civ. Proc. § 874.010 Attorney’s Fee Award Of $105,147.50 For Partition Claim Affirmed Notwithstanding The Inclusion Of Fees Incurred For Other Causes Of Action

All Of The Claims And Defenses In The Action Were Inextricable Intertwined.

            In partition actions, Code Civ. Proc. § 874.010(a) authorizes an award of “[r]easonable attorney’s fees incurred or paid by a party for thee common benefit,” and Code Civ. Proc. § 874.040 requires the trial court to “apportion the costs of partition among the parties in proportion to their interests or make such other apportionment as may be equitable.”

            In Flannery v. Murray, Case No. B287284 (2d Dist., Div. 3 August 24, 2020) (unpublished), plaintiff and defendant purchased a 13-acre horse boarding ranch.  They agreed to be 50/50 owners, and each contributed toward the down payment and improvements, but defendant had a low credit score, so her name was not on the loan nor the title.  The parties’ 20-year relationship ended 7 years later, and litigation ensued over ownership of the parties’ boarding ranch – as well an insurance payout for a fire at the ranch.  Among the many causes of action alleged, both claimed a cause of action for partition.

            In the end, the trial court determined defendant was a half-owner of the ranch along with plaintiff, and was entitled to one-half of the insurance proceeds.  Defendant then moved for a post-judgment fees award pursuant to § 874.010 – seeking from plaintiff one-half of the $371,076.66 in fees she incurred.  Plaintiff opposed – arguing the fees were excessive and that defendant was entitled to recover only the reasonable fees she incurred in prosecuting her partition claim. 

            The trial court disagreed with plaintiff's contention, and awarded defendant $105,147.50 – reduced from the requested $185,538.33 for some excessiveness in time claimed to have been spent by plaintiff’s counsel, for excessive hourly rates, and for time entries for unrelated litigation. 

            Plaintiff appealed – arguing the trial erred because defendant was entitled to fees for no more than 26.5 hours of time spent on her partition claim, not for fees defendant incurred in connection with her other claims or in defense of plaintiff’s claims.

            The 2/3 DCA affirmed – finding no abuse in discretion in the trial court’s determination that all of the claims and defenses in the case related to the partition claims, and finding the trial court properly determined all the attorney fees incurred in the action were inextricably intertwined.  As a result, all the expenses incurred qualified for an award.   (Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124, 129-130.)

Allocation, Construction, Insurance: Lower Court’s Denial Of Any Fee Recovery To General Contractor’s Insurer For Defending The GC, Based On Equitable Subrogation, Was Error

GC’s Insurer Was Entitled To Equitable Reimbursement Of Defense Costs Relating To Subcontractor Work As Well As A Reasonable Allegation Relating To Reasonable “Mixed” Defense Efforts.

            In Pulte Home Corp. v. CBR Electric, Inc. (St. Paul Mercury Ins. Co.), Case No. E068353 (4^th Dist., Div. 2 June 10, 2010) (published), a trial judge denied in entirety a general contractor’s insurer’s request for reimbursement of attorney’s fees expended in defending the GC  under an equitable subrogation claim even though GC-subcontractors’ contracts required some subs to defend the GC for their work which was alleged to have been defective in a construction defect suit.  The insurer had requested not only reimbursement of direct fees expended for defending on the work done by the subs, but also mixed, other defense work which it claimed was related to the overall defense of the case benefitting the subs—right around $189,000 out of $209,000 expended by the insurer in GC’s defense.  On appeal, the 4/2 DCA reversed and remanded.  It determined that insurer’s equitable subrogation action allowed an insurer to recoup from subs that portion of defense costs each sub owed as a result of its duty to defend the GC, but not entire defense fees attributable to other work (the overall defense of the case).  Based on Interstate Fire & Cas. Ins. Co. v. Cleveland Wrecking Co., 182 Cal.App.4^th 23 (2010) and Valley Crest Landscape Development Inc. v. Mission Pools of Escondido, Inc., 238 Cal.App.4^th 468 (2015), insurer was entitled to reimbursement of reasonably allocated fees from the subs.  If only the direct fees for sub defense had been involved, the appellate court would not have remanded; however, the claim for “mixed” defense fees of a related nature required an allocation—a division left for the trial judge to make in a remand proceeding.

Allocation, Construction, Reasonableness Of Fees: $222,202.75 Contractual Fee Award In Favor Of Property Owners And Against General Contractor, After Offsets, Was Not Erroneous Except For One Minor Deduction In Gnarly Construction Defect Dispute.

$557,441.75 Was The Fee Request, But Owners’ Apportionment Not Credited Below Or On Appeal, So Reduced Award Was The Result.

            In Stolp v. Murphy-True, Inc., Case Nos. A154770/A155426 (1^st Dist., Div. 1 June 4, 2020) (unpublished), a litigation snafu resulted over a $3 million-plus remodel job at plaintiffs’ home, with plaintiffs suing for water intrusion damages against the general contractor and stucco manufacturer.  As is not uncommon, the general cross-complained against seven other subcontractors.  Plaintiffs ultimately settled with everyone other than the general, even though three of the settlement agreements had general contractor releases and allocation of attorney’s fees expended.  General contractor was hit with $690,000 in damages, with the trial court rejecting any releases under prior subcontractor settlements. 

            So, as we are really surprised, the attorney’s fees contest began.

            Initially, because there was fees “amount” dispute under a contractual fee clause (no entitlement at issue) in the owners-general contractor agreement, plaintiff owners requested $518,926 against general contractor based on some apportionment of fees arising from subcontractor settlements.  However, the trial judge did not like the apportionment and ordered supplemental briefing, with plaintiffs still not being able to justify the allocation—unfortunately, plaintiffs requested $557,441.75, even more than the initial request.  Plaintiffs also requested that the general contractor pay $4,017.25 from a general-subcontractor settlement, although nothing in the settlement required a “pass through” to plaintiffs.  In the end, the lower court did its own apportionment, finding $222,202.75--based on the express settlement allocation--was justified, although ordering general contractor to divert the $4,107.25 from the other subcontractor settlement.

            The appellate court affirmed everything, except for the $4,017.25 “diversion.”  The trial judge did a proper apportionment under the subcontractor settlement agreements, which plaintiffs were aware of, and nothing in the “diversion” settlement indicated that this amount had to be passed through to plaintiffs.  So, in essence, the reviewing court enforced all of the settlement agreements and bargains between the various parties in a gnarly CD dispute!

Allocation, Lodestar, Reasonableness Of Fees, Substantiation Of Reasonableness Of Fees: Prevailing Plaintiff Correctly Awarded $182,000 Under Contractual Fees Clause After Winning $455,000 In Damages After A Lengthy Court Trial

Fees Award Should Not Get Offset Against Damages, And Trial Judge Awarded Contingency Arrangement Percentage As Fees—Dispensing With The Need For Review Of Detailed Bills.

            Prevailing plaintiff in Pham v. Nguyen, Case No. H044958 (6^th Dist. Apr. 15, 2020) (unpublished), on the heels of winning $455,000 in damages, moved for contractual attorney’s fees.  The trial judge awarded $182,000, which was 40%--the amount of the contingent arrangement between plaintiff and his attorney.  Defendant’s numerous challenges on appeal did not result in any disturbance of the award.

            Plaintiff initially claimed that the fees awarded had to be offset against the damages award.  No way, said the appellate court—that would nugatory the impact of a fees clause and would actually punish an attorney for taking the case on a contingency basis.  No apportionment was required because the compensable and non-compensable units of work were intertwined such that it would have been impractical or impossible to separate out.  With respect to the claim that plaintiff failed to provide evidentiary support for the fee request, the lower court did not err by awarding the contingency fee amount so that billings did not have to be reviewed.

            BLOG COMMENT:  The appellate court also chastised appellant’s attorney for filing noncompliant appellate briefs and recycling arguments from lower court papers.  (See In re Marriage of Shaban (2001) 88 Cal.App.4^th 398, 408 [“Appellate work is most assuredly not the recycling of trial level points and authorities.”].)

Allocation, Landlord/Tenant, Prevailing Party, Reasonableness Of Fees: Prevailing Tenant Was Entitled To Prevailing Party Fees Under Oakland’s Tenant Protection Ordinance Fee-Shifting Provision As Against Defendant Landlord

However, Prevailing Party Properly Awarded Apportioned Fees Of $49,875 Rather Than Requested $318,214 In Fees Against Defendant Landlord; Prevailing Defendant Property Manager Improperly Granted Routine Costs Because Motion Did Not Mention That Defendant And Nothing Showed The Costs Were Incurred.

            In Goins v. Williams, Case Nos. A152828/A153632 (1^st Dist., Div. 3 Apr. 14, 2020) (unpublished), plaintiff tenant won an inhabitability/violation of the Oakland Tenant Protection Ordinance action against defendant landlord (but did not win against defendant property manager), while defeating landlord’s cross-complaint focusing on negligent upkeep of the premises, all happening after a 5-day bench trial.  Plaintiff tenant moved to recoup $318,214 in fees under the Ordinance, which has a unilateral fee-shifting provision in favor of tenants.  Defendant landlord’s attorney moved for $11,615.65 in routine costs but failed to specify whether the motion was filed on behalf of property manager, landlord, or both.  The trial judge denied tenant’s motion to strike costs and awarded property manager $5,810.32.  Everyone appealed, with tenant claiming in a cross-appeal that the fee award was too low.

            The 1/3 DCA affirmed the fee award but vacated the costs award.

            The fee denial was proper because the lower court was within its discretion to do its own apportionment of time based on limited success by tenant on some of her claims after reducing lead attorney’s hourly rate a bit.  However, the lower court erred by awarding costs to property manager because (1) no application for costs was filed by property manager, and (2) nothing showed that any costs were actually incurred by property manager given that two defendants were represented by the same defense counsel (Charton v. Harkey, 247 Cal.App.4^th 730, 744 (2016)) [discussed in our May 24, 2016 post].

Allocation, Prevailing Party: Fee Award For All Incurred Fees To Prevailing Plaintiff Who Amended Complaint To Add Cause Of Action Providing Statutory Basis For Fee Recovery Just Before Trial Affirmed On Appeal

All Causes Of Action Related To The Same Common Issue And Were So Intertwined That Apportionment Was Impracticable.

            For an interesting discussion of The Independent Wholesale Sales Representatives Contractual Relations Act of 1990 (Civ. Code section 1738.11 et seq.), Newman v. Knit Creations, Inc., Case No. B292659 (2d Dist., Div. 1 March 30, 2020) (unpublished) is a good read.

            The Act sets out requirements for the contracts between manufacturers and the independent contractor salespeople who represent them.  The Act also provides the salesperson a right of action and ability to recover prevailing party attorney’s fees, along with treble damages for violations of the Act upon proof of intentional malfeasance.

            Here, Plaintiff salesperson sued Defendant manufacturer, after termination of her contract, for underpaying commissions and travel costs.  Defendant cross-complained claiming, among other things, Plaintiff had made misrepresentations to claim commissions.

            More than a year into the litigation, and just shortly before trial, Plaintiff successfully moved, unopposed, for leave to amend her complaint to add a claim against Defendant under the Act.  Along with this newly added claim, Plaintiff also prayed for statutory fees and treble damages.

            Following a bench trial, the trial court entered judgment in favor of Plaintiff on both the first amended complaint and cross-complaint – finding Plaintiff was entitled to $41,048.60 in damages for unpaid commissions, and that Defendant had violated the Act by failing to identify the commission rate for discounted sales.  However, the trial court did not award treble damages as it did not find that Defendant’s violation was intentional. 

            As prevailing party under the Act, Plaintiff moved post-trial for fees of $85,750 plus a lodestar multiplier of two – for a total of $171,500 – based on the complexity of the case and assumed risks Plaintiff’s counsel faced in representing her.  Defendant argued Plaintiff was entitled to less than $10,000 in fees as she: (1) was not entitled to fees incurred prior to amending her complaint to add a claim under the Act; (2) could not recover fees for responding to demurrers which were partially successful; (3) was only entitled to fees incurred in prosecuting her claim for violation of the Act; (4) was not able to recover fees related to defending against the cross-complaint; and (5) was inflexible and prevented the case from settling prior to trial. 

            The trial court bought none of Defendant’s arguments – finding her counsel’s efforts “so intertwined that it would be impracticable to separate the attorney’s time into compensable and noncompensable units as all of the claims related to the payment of the commission at issue under . . . section 1738.10.”  Plaintiff was awarded the entire amount of fees incurred – $85,750 – with no multiplier. 

            Defendant unsuccessfully appealed – with the 2/1 DCA finding no abuse of discretion in the trial court’s decision not to apportion the attorney fee award to segregate time based upon the common issue on which the fees were incurred and inextricably intertwined.

Allocation, Section 1717, Special Fee Shifting Statutes: Denial of Section 1717 Fees To Prevailing Defendants/Cross-Complainants Affirmed, But Reversed As To Denial Of Code Civ. Proc. Section 1021.9 Fees

Defendants/Cross-Complainants Were Entitled To Statutory Section 1021.9 Fees After Prevailing On Trespassing Claims.

            In Kelly v. Gregory House, Case Nos. A153735 and A153184 (1^st Dist., Div. 1 March 23, 2020) (unpublished), Defendants/Cross-Complainants own and operate a 40-acre organic farm, and had leased 35 additional acres from an adjacent neighbor in order to expand their Gala apples business.  They spent years cultivating/transitioning the leased land to certified organic status.

            Five years into the six-year lease – which included a six-year extension option – adjacent neighbor decided to sell his property.  Neighbor, however, failed to observe the right of first refusal provision contained in the lease.  Instead, he entered into a purchase agreement with his real estate agent without notifying Defendants that he had decided to sell.  When Defendants learned of the pending sale, they contacted the neighbor to remind him of the right of first refusal provision, notified real estate agent of the same, and began the process of acquiring the funds for the purchase.

            Ultimately, the right of first refusal provision was not honored, and the real estate agent moved onto the property, removed trees planted by Defendants, sprayed pesticides, and took other actions that caused Defendants to lose the organic certification on the leased land – all while the lease remained in effect.  Additionally, real estate agent sued Defendants seeking declaratory relief and quiet title, among other claims.  Defendants successfully cross-complained – alleging claims of interference, trespass to land, conversion and negligence – and were awarded $1,669,705 in compensatory damages and $1,000 in punitive damages.

            By the time Defendants’ hearing on their motion for attorney fees came around, the original trial judge had retired, and the successor trial judge denied their fees – determining they had not demonstrated any right to statutory or contractual attorney fees.

            Not so, said the 1/1 DCA.  Defendants were entitled to fees under Code Civ. Proc. § 1021.9 – designed to ensure farmers are able to protect their land from trespassers through civil litigation.  Defendants prevailed on each cause of action and had proven damages caused by the trespasses – thereby entitling them to reasonable attorney’s fees in addition to other costs.

            As to Defendants’ argument they were also entitled to contractual attorney fees under section 1717, the 1/1 DCA agreed with the trial court.  Defendants were not parties to the purchase agreement entered into between neighbor and real estate agent.  Had real estate agent prevailed, Defendant would not have been liable for fees under the contract.  There was no fee-shifting reciprocity in this case as is required under 1717.

            On remand, the appellate court instructed that the trial court is to determine the practicality of apportioning fees between Defendants’ trespass claim and other claims.

Allocation, Reasonableness Of Fees: $272,637.50 Fee Award Was Reasonable For Plaintiff Defeating Cross-Claims And Ultimately Winning $59,005.50 Overall

Contract And Tort Cross-Claims Were Intertwined—So No Need For Apportionment.

            In Newport Beach Center for Surgery, LLC v. Acclaim Recovery Mgt., LLC, Case No. B290636 (2d Dist., Div. 5 March 2, 2020) (unpublished), plaintiff won a $59,005.50 compensatory verdict in a case with a contractual fees clause, also defeating contract and tort cross-claims.  Plaintiff sought to recover $317,637.50 in fees, with the trial judge discounting by 25% to arrive at a $272,637.50 fee award.  The 2/5 DCA affirmed the fee award, finding that there was no requirement to allocate between work on the contract and tort cross-claims because they were interrelated to claims won by the plaintiff in the litigation, when considered as a whole. 

Allocation, Fee Clause Interpretation, Reasonableness Of Fees: Reducing Requested $1.36 Million Fee Award, By 25% To $943,028, Was No Abuse Of Discretion Based On $1.2 Million-Plus Recovery And Rejection Of Low Ball Defense Settlement Offer

Tort Claim Defense Fees On An Unsuccessful Cross-Complaint Were Interrelated, Thus No Allocation Required; Prevailing Party Clause In Lease Applied So As To Allow Fee Recovery In Broker’s Favor.

            Water Court, LLC v. Adams Wine Group, LLC, Case No. B290799 (2d Dist., Div. 6 Feb. 25, 2020) (lead appeal; unpublished) is an example of where significant attorney’s fees will be awarded and trial judge reductions affirmed where the defendant, a would-be tenant, breached a $1 million “build to suit” office lease and accompanying guaranty.  Landlord eventually was awarded $1,208,032.42 after a jury verdict which was reduced a little over $500,000 through a new trial remittitur.  Landlord was then awarded $943,028 in attorney’s fees under a lease fees clause, out of a requested $1,359,122.50—a 25% reduction (and a little more than the defense expert conceding that $872,441.31 was a reasonable fee award).  The broker was awarded $360,520.50 in fees under a contractual paragraph in the lease. 

          The 2/6 DCA affirmed the fee awards after a small compensatory damage modification for “twice counted” demolition costs.

            Landlord’s $943,028 fee award was proper given (1) a 25% reduction by the trial judge; (2) the guarantor making a low-ball offer to settle for $100,000 six weeks before trial, forcing Landlord to incur another $552,714 in fees/costs, and (3) the trial judge’s reduction such that the hourly rates claimed were “evened out” by the 25% haircut.   The fees incurred by Landlord to successfully fight the defense counter-claims did not have to be apportioned, because they related to common core facts and related legal theories involved in the overall litigation.

            Finally, the Brokers were entitled to $360,520.50 because the lease fees clause included brokers among the “prevailing party” definition, creating a tripartite contract between the lessor, lessee, and broker. 

Allocation, Prevailing Party, Substantiation Of Reasonableness Of Fees: Prevailing Plaintiff Under Civil Code § 3344 Properly Awarded $137,595.20 In Attorneys’ Fees And $9,523.55 In Costs While Prevailing Defendant Under § 3344 Properly Denied Fees

Plaintiff – Although Seeking Six-Figures In Damages – Had Achieved His Litigation Purposes Through Damages Verdict of $10,000, But Dismissed Defendant Failed To Meet His Burden As To The Reasonableness Of His Fees Request.

            In Dice v. X17, Inc., Case No. B2282448 (2d Dist., Div. 3 September 27, 2019) (unpublished), a celebrity news website published images of sobriety coach Peter Dice showing a bag containing healing crystals to celebrity Lindsay Lohan, and depicted the interaction as a drug deal.  Mr. Dice sued the media company and its president/sole shareholder seeking damages and injunctive relief. 

            Before trial, plaintiff presented defendant media company with a rejected Code Civ. Proc. § 998 offer for $250,000.  During a later mandatory settlement conference, defendant media company offered $45,000 to settle the case.  Plaintiff rejected the offer, and the case proceeded to jury trial.  At the close of evidence, plaintiff dismissed president/sole shareholder from the action.

            The jury returned its special verdict finding the media company liable to plaintiff for defamation, and common law and Civ. Code section 3344 misappropriation of likeness for its knowing, unauthorized use of plaintiff’s likeness on its website – awarding plaintiff $10,000 in damages. 

            The lower court entered judgment – finding the prevailing parties under section 3344 to be plaintiff against media company, and dismissed president/sole shareholder defendant against plaintiff.  This triggered cross-motions for attorneys’ fees and costs pursuant to section 3344(a) which provides the prevailing party entitlement to fees and costs. 

            As to plaintiff, the lower court found no requirement to apportion fees between the section 3344 and common law claims, concluding that proving plaintiff’s successful section 3344 and common law causes of action “required virtually identical testimony and evidence” (although it did reduce for fees not incurred to prevail on section 3344) and awarded fees of $137,595.20 and $9,523.55 in costs.

            President/shareholder, however, was awarded only costs of $4,934.91 against plaintiff – with denial of his $226,456.50 fees request altogether for failure to meet his burden of proof that the requested fees were reasonable.  He made his request jointly with media company – although media company was not a prevailing party – and provided no apportionment between the two defendants, and did not categorize the fees nor apportion for the section 3344 work, even after the trial court had issued its tentative ruling.  Additionally, the lower court was unable to find that president/shareholder had incurred any fees – with only the media company being invoiced. 

            Media company and president/shareholder jointly appealed – arguing the trial court erred in determining plaintiff a prevailing party because in doing so it had improperly considered his success on other causes of action, and also because plaintiff failed to achieve his monetary litigation goal, with the nonmonetary goals being irrelevant under section 3344.  Additionally, they argued the lower court erred by basing the denial of their fees on president/shareholder sharing of counsel with media company and in the fact he did not personally incur fees.

            The 2/3 DCA found no error or abuse of discretion and affirmed.  Plaintiff had realized his litigation objectives, which included the award of monetary damages and “to right a wrong and clear his reputation.”  Section 3344 does not limit recovery to economic damages, but includes “any damages sustained” – thus including damage to reputation and providing remedy for the associated mental harm.  The jury’s verdict, regardless of the amount awarded, had provided plaintiff public vindication. 

            While the 2/3 DCA agreed that president/shareholder could not be denied fees based on sharing counsel and not personally incurring fees, it found that the trial court had properly denied fees.  Due to defendants’ failure to apportion fees, the lower court was unable to determine what fees were incurred to defend president/shareholder against the section 3344 cause of action, and president/shareholder did not demonstrate that the facts in his defense were inextricably intertwined with those of media company.  As a result, president/shareholder had failed to meet his burden as to reasonableness.

            BLOG COMMENT:  Congratulations go out to James R. Balesh of the Los Angeles-based Balesh Law Group for your successful representation at the trial and appellate court levels!  Great results on plaintiff’s fee request and his opposition to defendants’ joint fee request.

Allocation, Civil Rights, Employment: No Abuse Of Discretion Where Trial Court Held Employer And VP Jointly And Severally Liable For Attorney Fees With No Apportionment Nor Statutory Fees Cap For CMIA Claim

Former Employee Achieved Her Litigation Objectives With Set Of Facts Common To All Causes Of Action.

            In Gwin v. Natvan, Case No. B292990 (2d Dist., Div. 1 October 1, 2019) (unpublished), former employee sued employer and its vice-president (husband of employer’s owner) asserting 13 separate causes of action – several of which allowed her to recover reasonable attorneys’ fees if she prevailed. 

            After phase 1 of a bifurcated bench trial, the trial issued tentative rulings finding in former employee’s favor on 9 of 10 causes of action against employer, and 2 of 11 claims against VP.  The parties then settled before the remaining issues were tried.  The settlement agreement included $170,000 payable by employer and VP, employer’s and VP’s guarantee of the settlement payment, and it preserved attorney fees claim for later resolution through motion practice.

            Former employee then moved for an attorneys’ fee award of $1,214,340, which included $821,940 in lodestar fees and multiplier fees of $392,400.  The trial court awarded the lodestar with no multiplier, “as reasonable and warranted” without further explanation, against employer and VP jointly and severally. Employer and VP appealed. 

            VP argued it was error to hold him jointly liable for the full fee award because the tentative ruling exonerated him on most claims – with the only claim for which he was found liable, that provided for an attorneys’ fees award, being the Confidentiality of Medical Information Act (CMIA) claim which puts a $1,000 cap on recovery of attorney fees (Civ. Code § 56.35).   The 2/1 DCA disagreed and, in paraphrasing Yogi Berra, put it this way, “[A] trial ain’t over till it’s over.”  VP was focused on the tentative ruling, but that was not the end of the case, the tentative was never finalized, another phase had yet to be tried, and the parties entered into a settlement agreement wherein employer and VP agreed to payment of settlement proceeds – without allocation or severance of their liabilities – on multiple causes of action in addition to the CMIA claim. Because VP had agreed to be jointly responsible for payment on claims other than the CMIA claim, there was no abuse in discretion holding VP jointly and severally liable for the fees award.

            Both employer and VP argued that the trial court erred by failing to apportion fees between claims for which fees were statutorily authorized and those for which fees were not, and by failing to enforce the statutory fees cap on the CMIA claim.  The 2/1 DCA, again, disagreed – finding former employee’s causes of action to be so intertwined, with her causes of action based on a common set of facts, that apportionment was not required.  As to the $1,000 cap for the CMIA claim, the 2/1 DCA found that section 56.35 did not require apportionment, that employer and VP failed to show that the ultimate fee award would have differed if the CMIA claim were apportioned and capped, and that “[a]pplying the CMIA to limit fees on work inextricably intertwined with other claims on which [former employee] prevailed and would otherwise be entitled to recover attorney’s fees would burden, not encourage, the enforcement of statutory rights.” 

Allocation, Fee Clause Interpretation, Lodestar, Prevailing Party, Reasonableness Of Fees, Section 1717, Settlement: Reasonable Discretion Exercised In Awarding Defendant Only 20% Of Requested $177,712 In Fees

The Legal Principles Of Civil Code Section 1717 and Santisas Governed.

            Both parties appealed the fee results in Rusnak/South Bay v. Glukel Group, Case No. B286513 (2^nd Dist., Div. 3 Sept. 27, 2019) involving a dispute between landlord and tenant – with tenant plaintiff advancing contract and tort claims against landlord. 

            Tenant dismissed its lawsuit during the discovery phase, before depositions took place, and Landlord moved for an award of $177,712 in attorney fees under the lease’s attorney fee provision which entitled the prevailing party to fees.  Although the trial court granted the fee motion, it awarded Landlord with only 20% of the requested fees – apportioning between the contract and tort claims pursuant to Civ. Code section 1717(b)(2), and reducing for excessive and unreasonable fees.  

            On appeal, Landlord argued that it was entitled to all of the fees pursuant to the lease contract, and Tenant argued that Landlord was not the “prevailing party” on the tort causes of action.

            The 2/3 DCA affirmed.  The apportionment and 80% reduction were proper pursuant to the legal principles of Santisas v. Goodin (1998) 17 Cal.4^th 599 [our Leading Case No. 6] and Civ. Code section 1717(b)(2).  First, as to the contract claims, section 1717(b)(2) bars recovery of the fees incurred to defend plaintiff’s contract claims where an action has been voluntarily dismissed as it was here – with Santisas defining the extent of such preclusion to include cases involving a contract that on its own terms authorizes recovery of those fees. 

            As to Tenant’s argument that Landlord was not the prevailing party on the tort causes of action, the 2/3 DCA found the argument meritless – citing the holding in Santisas that the “prevailing party” of tort claims resolved by  voluntary dismissal is governed by the clear and unambiguous language of the contract for purposes of awarding attorney fees.  Here, the relevant fee provision defined “prevailing party” to include “without limitation” a party “who substantially obtains or defeats the relief sought, as the case may be, whether by compromise, settlement, judgment, or the abandonment by the other Party . . . of its claims.”  Tenant abandoned its noncontract claims, making Landlord the prevailing party under the unambiguous terms of the parties’ contract.