CALIFORNIA ATTORNEY'S FEES

Allocation/Section 998: Plaintiff Accepting $9,980 998 Offer After Aggressive Litigation By Defense Properly Granted $93,270 In Attorney’s Fees

Panoply Of Defense Arguments Rejected On Appeal.

            Plaintiff in Alexander v. Market Street Apartments, LLC, Case No. D070198 (4^th Dist., Div. 1 June 23, 2017) (unpublished) accepted a CCP § 998 offer for $9,980 expressly allowing her to file a fees motion in a wage/hour dispute subject to a one-way favorable Labor Code fee shifting provision and in a case aggressively litigated by the defense in superior court (with mucho, mucho discovery).  Plaintiff then removed to recoup $96,180 in fees after accepting the 998 offer, with the trial judge awarding her $93,270.  The defense appealed, raising a host of arguments for reversal, none of which resonated.  The appellate court determined:  (1) plaintiff was the prevailing party by receiving a net monetary recovery and expressly reserved her right to receive fees of a mandatory nature under Labor Code section 226(e)(1); (2) this case was litigated as a superior court case such that limited civil case limitations on recovery were inapt; (3) plaintiff did not have to apportion fees expended for her husband’s work because the activities were inextricably intertwined with her case; and (4) her awarded fees were not grossly unreasonable given the defense decision to aggressively litigate the matter.  The defense could not surmount the abuse of discretion standard of review on appeal. 

Equity, Sanctions, Section 998, Special Fee Shifting Statute, Allocation: Unpublished Decisions In Last Few Days Address Multiple Fee Issues

 

 

Equity—Gilotti v. Stewart, Case No. C075611 (3d Dist. April 26, 2017) (Unpublished):  Section 998 Offer, Typo Notwithstanding Valid, and Attorney’s Self Interest Disqualified Fee Recovery.

 

                In this construction defect lawsuit, plaintiff was ordered to pay a prevailing grading contractor expert fees under CCP § 998, even though the offer said $49,999 in the written part but a typo for $39,999 in the numerical (  ) explanatory part. The trial judge granted 998 fee-shifting expert witness expenses, but plaintiff argued the offer was vague – naught!, said the court, the written numerical part made it clear $49,999 was at issue typo notwithstanding.   Plaintiff challenged a denial of fee recovery to plaintiff’s husband/attorney, but this was affirmed because he had a pecuniary interest as a co-trustor of the trust owning the property subject to the action.  (Gorman v. Tassajara Development Corp., 178 Cal.App.4^th 44, 90, 95 (2009).)

Sanctions—Maxwell v. Deutsche Bank National Trust Co., Case No. A142562 (1^st Dist., Div. 2 April 27, 2017) (Unpublished):  128.7 Sanctions Against Represented Parties Were Appropriate.

 

            Represented parties appealed $17,685 in CCP § 128.7 sanctions based on the argument that they only followed the advice of their counsel.  The appellate court affirmed the trial judge award because 128.7 sanctions are authorized against represented parties, especially given that a judge warned the represented parties about what they were doing in the action.

Special Fee Shifting Statutes—Casas v. City of Baldwin Park, Case No. B275535 (2d Dist., Div. 5 April 27, 2017) (Unpublished):  Denial of Further CPRA Fees Was Correct.

 

            Here, plaintiff’s counsel in a California Public Records Act (CPRA) case already received about $40,000 in fees, but moved to get more.  Both the trial and appellate courts said no way, given that counsel did not properly authenticate billing records to show there was a connection with the CPRA compliance litigation work which was the subject of the additional fee request.

Allocation—IV Solutions, Inc. v. Health Net of California, Case No. B268816 (2d Dist., Div. 2 April 27, 2017) (Unpublished):  No Allocation Necessary Where Work Inextricably Intertwined.

 

            Defendants won a demurrer and judgment on the pleadings based on the statute of limitations, determinations affirmed on appeal on the merits.  The defense was awarded contractual attorney’s fees of $78,768, with plaintiff arguing that at least an allocation was needed between contract and other claims.  Nope, all of the claims were intertwined.

Allocation/Appealability/Prevailing Party: Litigant Winning Demurrer Without Leave Entitled To Contractual Fee Recovery For Unqualified Win

 

 

Apportionment Would Have To Be Made, Because Litigant Shared Counsel With Remaining Party In Litigation.

 

            Hyatt v. Aurora Western Pacific Advisors, Inc., Case No. G052981 (4^th Dist., Div. 3 April 20, 2017) (unpublished) illustrates that difficulties in apportioning fees does not allow a trial judge to deny a fee request by an unqualified prevailing party.  In this one, Aurora prevailed on a demurrer against a party suing on a reverse alter ego theory.  The trial judge refused to award fees under a contractual fees clause between the signatory remaining party and the losing party, mainly based on problems with apportioning fees given that remaining signatory party and non-signatory prevailing party (not an alter ego) were represented by the same counsel.  The 4/3 DCA reversed, in an opinion authored by Justice Aronson.  First of all, the fee denial was appealable given the decision was final as to pertinent parties.  Second, given that the losing party would have been entitled to fees if prevailing on the alter ego theory, Aurora was also entitled to fees in light of its unqualified win.  Last but not least, the trial judge’s fears of apportionment did not prevent a fee denial to an unqualified winner, with equitable considerations and discretion at play to discount for shared counsel work efforts and other factors.

Allocation/Costs/Section 1717: Plaintiff Attempting To Dismiss Lawsuit Against Lenders Without Prejudice Subjected To Substantial 1717 Fee Exposure To The Tune Of $526,393 In Fees

 

Plaintiff Also Hit With Some Costs, But Some Non-Statutory And Discretionary Costs Were Stricken.

     Plaintiff borrowers brought a multi-count contractual/tort/statutory claim-based suit against construction loan participants, ultimately attempting to dismiss the action without prejudice during trial. The trial judge determined the dismissal was not authorized and set it aside as void, further granting the defense motion for $526,393 in attorney’s fees, $20,978 in statutory costs, and about $63,000 in non-statutory/discretion costs, in the aggregate, as to two defendants.

     Plaintiff achieved about a $53,000 reduction on the costs award, but the substantial fee award was affirmed entirely in Emma Court LP v. United American Bank, Case No. A144462 (1^st Dist., Div. 2 Mar. 3, 2017) (unpublished).

     The appellate court agreed that the plaintiff could not invoke the benefit of the Santisas restriction by attempting to dismiss without prejudice during trial. Although section 1717 does not apply to non-contractual claims, the problem for plaintiff was that the contract/tort/statutory claims were all intertwined such that full fee recovery was proper—despite the fact that the construction loan fees clause was narrow and did not encompass noncontractual causes of action. Fee recovery was also correctly allowed to another loan participant which was joined in interest with the recovering lead bank which was a fees clause signatory.

     The statutory costs of $20,978.80 were not even contested by plaintiff on appeal. However, plaintiff did challenge expert witness fees, copies, computer research, FedEx charges, postage, and telephone charges totaling $22,655.19 because they were not expressly authorized under the routine costs statute and based on Ripley v. Pappadopoulos, 23 Cal.App.4^th 616 (1994) finding that non-statutory costs are not awardable unless pled and proven at trial versus being requested in a costs memorandum. (The 1/2 DCA found Ripley had been followed by numerous other intermediary appellate courts, notwithstanding Ripley disagreed with the contrary, earlier Bussey decision on the same issue.) However, the reviewing court had to then deal with Thrifty Payless, Inc. v. Mariners Mile Gateway, LLC, 185 Cal.App.4^th 1050, 1065-1067 (2010), a 4/3 DCA decision holding that non-statutory costs recoverable under the wording of a fees clause could be claimed via a costs memo rather than being pled/proven at trial. The 1/2 DCA believed that non-statutory costs could not be claimed under vague “legal expenses” fees clause language, but had to be pled and then proven at trial. (Although not directly stated, this DCA panel seems to disagree with Thrifty Payless.) So, the costs of $22,655.19 were stricken. As far as delivery service expenses, court filing service fees, outside mediation fees, parking, and travel expenses, the appellate court found a vast majority of these were not specifically prohibited under the routine costs statute, and properly awarded where found necessary and reasonable to the litigation in the trial judge’s discretion (which happened to be the case). But, there were two exceptions: (1) only defense costs related to local travel and parking for deposition or non-local travel were justified, requiring a further reduction; and (2) $29,979 for PLM Lender fees were not properly claimed based on their vagueness. Otherwise, the fee award was affirmed in full and some portions of the costs award were sustained on appeal.

Fee Clause Interpretation, Prevailing Party, Section 1717, Allocation: Trial Court Erred In Awarding All Defense Fees Against Voluntarily Dismissing Plaintiff Under Santisas, Requiring Remand And Allocation

However, Prevailing Defense Was Entitled To Fees For Tort Claim Work Given Breadth Of Contractual Fees Clause.

    A trial judge in Khan v. Shim, Case No. H041608 (6^th Dist. Dec. 29, 2016) (published) granted the prevailing defense all fees for defensive work incurred in defending against a complaint containing both contractual and tort claims following plaintiff's voluntary dismissal of the complaint. The Sixth District reversed and remanded for an allocation of fees between compensable and non-compensable work.

    

    The main basis for the reversal was that the trial court's ruling ran afoul of Santisas [one of Our Leading Cases] as far as allowing for recovery of work on the contract claims. However, the fees clause was broad—covering "any litigation [which was] commenced concerning the Contract of Sale's terms, interpretation, or enforcement or the rights and duties of any party in relation thereto." The breadth of the clause encompassed the tort claims, such that the lower court on remand needed to do an apportionment rather than awarding for fee work on non-tort claims.

Allocation/Section 1717: Lower Court Erred In Denying Fees To Prevailing Defendant Under Section 1717 Based On “Unity Of Interest” Principle Applicable To Other Unsuccessful Defendants

 

However, Apportionment Was Required On Remand—Consideration Of Many Factors.

    In Bank of Southern California, N.A. v. D&D Goryoka, Inc., Case No. D069767 (4th Dist., Div. 1 Nov. 29, 2016) (unpublished), defendant/cross-complainant was denied a prevailing party fee request as against plaintiff/cross-defendant Bank to the tune of a $908,171.25 request (later reduced to $795,753).  Defendant “defensed” Bank’s complaint, although Bank did win a judgment against some co-defendants represented by the same counsel who represented prevailing defendant.  The lower court denied prevailing defendant’s fee request under the “unity of interest” principle.  The appellate court reversed and remanded for an apportionment of work, if possible, between successful versus unsuccessful defendants.

    The 4/1 DCA agreed that the “unity of interest” principle was no longer valid based on legislative amendments, as confirmed by the 4/3 DCA’s analysis in Charton v. Harkey, 247 Cal.App.4th 730, 741-742 (2016) [discussed in our May 24, 2016 post].  The fee requesting defendant did prevail pursuant to contractual fee clauses, and it was an abuse of discretion for the trial court to not apportion fees between the work for successful versus unsuccessful defendants.  However, the appellate court made it clear it was not shackling the trial judge in making apportionment decisions, including the fact that the successful defendant had dissolved and was in the process of winding up such that it was not an active entity for entity purposes.  Finally, the reviewing court determined that the fee award belonged to the client, not the attorney—refusing to extend FEHA principles to the civil context of the fee award in this instance.

Allocation/Consumer Statutes: Prevailing Dealer In BMW Dispute Properly Awarded 30% Of Requested Fees Based On Dealer’s Own Allocation

 

Dealer Did A Smart Thing Here In Apportioning Fees Between Claims.

   Tun v. Wells Fargo Dealer Services, Case No. D070447 (4th Dist., Div. 1 Nov. 7, 2016) (published) is a nice illustration of a smart move that a prevailing party undertook under a fee-shifting statute in its fee petition papers.  That move was to allocate fees between claims so that both the trial and appellate courts could make an easy allocation of fees to the winning party.

    Dealer prevailed against a car purchaser bringing a multi-count complaint alleging that car dealer did not reveal the extent of prior collision damage to a BMW.

 

   Library of Congress.  February, 1942.¹

     Jury found for dealer, who then sought to recoup $245,600 in fees.  However, recognizing that different claims were involved, dealer smartly allocated fees between contractual/Automobile Sales Financing Act (ASFA) claims and other claims.  Dealer allocated 30% to the ASFA claims.  In granting fees, the lower court found that dealer did not prevail for fee-shifting purposes on the other claims but did prevail under ASFA, awarding the fully-apportioned 30%, namely, $80,359.

    The appellate court affirmed.  Plaintiff challenged that no allocation was made, but the reviewing court observed that dealer had done it in the trial court and was awarded the apportioned 30%--an amount found fully justified by the appellate court too in affirming the lower court’s fee order in favor of dealer.

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1_{”Conservation. Scrap iron and steel. As part of their campaign to collect goods for the Victory Campaign, Boy Scouts of Troop 121 of the United Church of Van Nest, Bronx, New York are shown pushing in one of their collection items, an old Ford jalopy, into the Westchester Auto Wrecking Company yard at 1400 Blondell Avenue in the Bronx. Shown in the photo pushing the car are Scouts of Troop #121 while Edward G. Bellmaire, Scoutmaster, David Lanoff of the wrecking company, and Frank O. March, Vice Chairman of the Bronx Salvage Campaign Committee look on.”  Edward Gruber, photographer.  Office of War Information.}

Allocation, Civil Rights, Paralegals, Reasonableness Of Fees: Substantial Fee Recovery Remanded Based On Merits Reversal

 

However, Appellate Court Provides Remand Guidance On Allocation, Paralegal Compensation, And Reasonableness Issues.

     In Samuelson v. Dept. of State Hospitals, Case No. A143149 (1^st Dist., Div. 2 Oct. 28, 2016) (unpublished), plaintiff was awarded $1 million in damages against defendants Dept. of State Hospitals and three psychologists hired by Napa State Hospital based upon employer retaliation and whistleblower protection claims. She was then awarded attorney’s fees totaling $1,231,188.70 based on fee entitlement statutes, namely, the whistleblower fee-shifting provision allowing recovery against individual defendants, but not the employer (Gov’t Code, § 8547.8(c)), and the private attorney general statute as against Dept. of State Hospitals (CCP § 1021.5). Defendants appealed the fee award.

     In a prior appeal, the appellate court reduced the $1 million judgment down to $695,000. Based on this reversal, the appellate court then reversed and remanded the fee award based on the merits reduction. However, it did offer some guidance to the trial judge having to adjudge fees upon remand.

     First, the trial judge did not apportion fees as between the two substantive claims based upon confusing conduct by the State which suggested no apportionment was necessary under the whistleblower fee-shifting provision (given the whistleblower fees were only assessable against the individual defendants and the private attorney general fees only against the State defendant). Although no “prejudging” was done by the reviewing court, it did remand for the trial judge to look at the allocation decision again, but stressing that State’s prior positions about no need for an allocation and unified defense of the case might lead to the same result.

     Second, the work for pre-litigation administrative work that was intertwined with the subsequent court proceeding happened to be compensable, in line with what the trial judge did previously.

     Third, the trial judge’s award of fees to plaintiff’s “household partner” or “boyfriend” (a patent lawyer not licensed to practice law in California) for volunteered paralegal work was no abuse of discretion, especially given the lower court reduced the requested work amount 25% for non-paralegal work. “Defendants point to no legal authority or good reason to support the position that volunteered paralegal services may only be compensable in a public interest lawsuit” and nothing in CCP § 1021.5 cases “restricts its application” on the paralegal issue. (Slip Opn., pp. 9-10.)

Allocation, Family Law, Substantiation Of Fees: Ex-Husband Failing To Allocate Between Recoverable And Non-Recoverable Claims During Trial Properly Denied Any Fees

 

Ex-Husband’s Failure To Allocate And Use Of Block Billing Resulted In Real Problems At Trial And Ultimate Denial Of Any Fees Incurred By Husband.

Adding prize winner. Washington D.C. “In a speed and accuracy contest for adding machine operators last night, William A. Offutt of the Washington Loan and Trust Company, was declared winner over a field of 30 contestants. The contest was sponsored by the Washington Chapter, American Institute of Banking.”  January 29, 1937.  Library of Congress.

     Marriage of Nassimi, Case Nos. B259704/B260574 (2d Dist., Div. 4 Sept. 26, 2016) (published) is a case where a prior settlement agreement did not cover the situation of how husband and wife were to pay expenses in a rescission lawsuit involving husband’s community property business, although the settlement did provide that certain expenses relating to earn-out features of the compromise would not be the responsibility of ex-wife.  The appellate court determined that wife should reimburse husband for one-half of the settlement which husband reached with the party suing for rescission, but denied husband any recovery for the fees and costs expended in the rescission lawsuit (affirming the fee denial by the lower court below).

    Reason for the fee denial?  The fundamental flaw was the ex-husband’s failure to meet his burden of establishing the amount of reimbursable fees and costs.  The fee submissions were riddled with block billings and failure to allocate fees to the reimbursable rescissionary efforts versus the non-reimbursable earn-out payment issues and some unsuccessful counterclaims.  This opinion is must reading when it comes to submission of fees during a trial or heavily contested evidentiary hearing, with the takeaways being to not block bill and to allocate fees between tasks—attorneys need to recognize when billing entries need to be broken down specifically between reimbursable and non-reimbursable tasks for purposes of having the lower court be able to award fees to litigants on reimbursable work.

Allocation/Section 1717: Broadly-Worded Fees Clause Allowed Defrauded Residential Purchasers To Garner $345,539.19 In Costs/Attorney’s Fees Against Losing Defendant/Sellers

 

Damages Were A Little Over $180,000.

    Just to illustrate that attorney’s fees under Civil Code section 1717 do not have to be proportional to the awarded compensatory damages, we now post on Pec v. Brackenbury, Case No. A142104 (1st Dist., Div. 1 Sept. 20, 2016) (unpublished).

    There, residential property purchasers/plaintiff prevailed on tort claims, but not a contract-based claim, in a case alleging that sellers/defendants failed to make disclosures which resulted in plaintiffs overpaying for the property.  The lower court in a bench trial awarded compensatory damages of a little over $180,000 to plaintiffs on tort claims, but rejected the contract claim against defendants.  Then, the trial judge awarded plaintiffs $345,539.19 (out of a requested $371,000) in costs and attorney’s fees based on a broadly-worded fees clause in the land sale contract (applying to “any action … arising out of this Agreement” in favor of the prevailing party). 

    The appellate court affirmed the fee award in plaintiffs’ favor.

    The “bottom line” was that the fees clause was broad enough to authorize an award of fees and costs to the plaintiffs prevailing on a claim related to the contract, whether sounding in contract or in tort.  Although losing the contract claim, plaintiffs won the “contract-related” tort claims such that fee recovery was justified.  (Maynard v. BTI Group, Inc., 216 Cal.App.4th 984, 992, 994-995 (2013).)  No apportionment was necessary because the fee claim was inextricably linked to non-fee claims.   (Id. at 992.)

Allocation/Arbitration: Party Prevailing On Arbitration Counterclaim Correctly Denied Fees Upon Review Of Arbitrator “Zilch” Award To Counterclaimant

 

Merits Cannot Be Reviewed, But Prevailing Counterclaimant Did Not Allocate—A Mistake!

     We will say that Editions Limited West, Inc. v. Somerset Studios, Inc., Case No. A145320 (1^st Dist., Div. 3 July 7, 2016) (unpublished) is another decision where an appellate court would not revisit the merits of an arbitrator’s refusal to grant fees to a prevailing arbitration counterclaimant. That much is not really much of a surprise under cases such as Moore v. First Bank of San Luis Obispo (2000) 22 Cal.4th 782 and Moshonov v. Walsh (2000) 22 Cal.4th 771, where arbitration awards in contravention of mandatory fee-shifting entitlements were affirmed based on the rule that the merits generally cannot be revisited with respect to arbitration awards. However, there is a lesson to be learned from the ultimate result.

     In affirming the fee denial to the prevailing arbitration counterclaimant, the appellate court did observe that this party only presented an “all or nothing” approach to the arbitrator, namely, you give me everything because I refuse your invitation to apportion between different work in the arbitration as far as efforts on the claim (which I lost) and the counterclaim (which I won). That was a mistake, with both the arbitrator and appellate court agreeing that the prevailing party gambled big on the “all or nothing” approach. Unfortunately, counterclaimant gained nothing for the win and had to pay about $190,000 to the prevailing claimant for its loss on the arbitration claim side of the coin. I hope we do not have to blog on the message sent by this case—but, to make it clear, if the arbitrator or trial judge asks for an apportionment, we suggest you do it!

Deadlines/Allocation: Work On Contract/Negligence Claims Were Intertwined, Justifying Recovery Of $91,819.58 In Fees In $39,335 Compensatory Award Case To Contractor As Against Property Owner

 

Appeal Was Timely, Given That Judgment Appeal Swept In Later Order Fixing Fees.

    In Ducoing Enterprises, Inc. v. Patriot Paving, Inc., Case No. G051582 (4th Dist., Div. 3 June 15, 2016) (unpublished), a 3-0 decision authored by Justice Fybel, contractor won a $39,335 compensatory award against property owner in a complaint and a cross-claim involving both contractual and negligence claims.  The original judgment stated that contractor shall also recovery its attorney’s fees “$ per motion.”  Later, the lower court awarded $91,819.58 in fees.  (BLOG HINT TO THE WISE—A $39,000 dispute also carried with it close to a $92,000 fee award; litigation practitioners need to take heed that fee awards can eclipse the damages amount at issue and should prepare clients that they pay both if the clients do not prevail.  Also, we have pled with everyone to separately appeal postjudgment fee awards fixing the fees, whether they are or are not “subsumed” under the original judgment.)

    Property owner’s appeals of the merits and fee award were not successful.

    Contractor first challenged the timeliness of property owner’s appeal, because owner did not appeal the amended judgment which set forth the “fixed” award but only appealed the original judgment.  The 4/3 DCA panel determined that the appeal from the original judgment, where a fixing occurred later, “subsumed” the later order setting the award amount—given the judgment had the language “$ per motion.”  (Grant v. List & Lathrop, 2 Cal.App.4th 993, 998 (1992).)  However, if the judgment simply says, “as shall be determined,” then a separate appeal was necessary from the later “fixing” fee award.  (Colony Hill v. Ghamaty, 143 Cal.App.4th 1156, 1171-1172 (2006).)

    On the merits, the appellate court agreed that the contractual and non-contractual claims were inextricably intertwined such that apportionment was not needed.  No abuse of discretion occurred in failing to apportion between the various claims.

Allocation/Fee Clause Interpretation: Losing Plaintiff In Integrated Contractual Relationship With Broad Fees Clause Rightly Hit With Contractual Fee Exposure

 

Allocation Between Defendants Was Not Necessary Where The Work Was Intertwined.

     In Fleming v. Peloquin, Case No. E063069 (4^th Dist., Div. 2 May 6, 2016) (unpublished), plaintiff investor in an LLC venture gone bad sued other parties who were either members or parties with involvement pursuant to both an Operating Agreement (where there was no fee clause), but also importantly an Admissions Agreement (which incorporated the Operating Agreement and did have a fees clause). The lower court awarded the four defendants $127,764.32 in attorney’s fees under the Admissions Agreement fees clause.

     The result was sustained on appeal. The Admissions Agreement did have a broad fees clause such that it was inferable that this was part of an integrated contractual arrangement justifying enforcement of the fees clause. Also, losing plaintiff had also made some pleading admissions that his claims were based on the Admissions Agreement. The last main challenge was that the fee recovery should have been reduced by 50% because only two defendants were signatories to the Admissions Agreement. Although the appellate court agreed that two other defendants were nonsignatories, it did not see any prejudice given that plaintiff failed to show that any of the work related solely to the nonsignatories rather than being interrelated in nature to work done on behalf of the signatory defendants.

Allocation/Fee Clause Interpretation: $340,000 Fee Award To Former Attorney Who Became Operating Agreement LLC Member Affirmed On Appeal

 

Operating Agreement Fees Clause Was Broad, And No Allocation Needed With Respect To Time Spent On A Nominal Defendant.

     This next case is very factually interesting in nature. In essence, the underlying dispute involved an attorney and clients having some claim to $12 million in California State Lottery winnings by a decedent. Attorney took the case on contingency and was able to obtain his clients over one half of what was dispute, both in connection with the lottery winnings and some unrelated real property interests. Attorney and clients then formed an LLC with an operating agreement by which all were members in connection with the real property recovery which was “monetized” through an LLC. The operating agreement had an attorney’s fees clause. Clients then filed various tort/accounting claims against attorney, but clients lost their case after a jury trial against attorney.

     Attorney moved for attorney’s fees based on the operating agreement’s fee clause encompassing resolution of “any disputes between members or against any member” of the LLC. The trial judge awarded $340,000 out of a requested $450,216 in fees, refusing to allocate out any time as to a nominal defendant.

     The appellate court in Haslerig v. Dyson, Case No. D067387 (4^th Dist., Div. 1 Mar. 2, 2016) (unpublished) affirmed.

     The fees clause in the operating agreement was broad enough to encompass tort/accounting claims between the parties, given that all were members of the LLC. No apportionment was required for two reasons: first, no apportionment was requested such that the request was waived; and, second, on the merits, no time for a nominal defendant had to be apportioned out based upon the circumstances of the matter.

Allocation, Prevailing Party, Substantiation Of Reasonableness Of Fees: $390,000 Fee Award To Prevailing Defendants, Some Of Whom Were Alleged To Unsuccessfully Be Alter Egos, Is Affirmed On Appeal

 

Fee Substantiation Issues Do Not Preclude An Award Of Fees To Prevailing Parties.

    In Asphalt Professionals, Inc. v. Emaron Homes, LLC, Case No. B261674 (2d Dist., Div. 6 Jan. 20, 2016) (unpublished), plaintiff lost a case against certain defendants (some of whom were sued as alter egos) under a construction contract with a fees clause.  After the appellate court earlier reversed a determination that defendants’ fee petition was untimely, three defendants moved to recover fees of $613,767.43 against plaintiff.  The trial court awarded fees of $390,000 to all three defendants, but stayed the order as to one corporate defendant whose corporate status was suspended.

    Plaintiff’s appeal was unsuccessful. 

    The main challenge was to the fee substantiation, because declarations were not separately provided by attorneys working the matter.  Although recognizing that “[a] better practice would have been for each attorney to file a separate declaration attached to their own time and billing records,” the appellate court did observe that flaws in the supporting evidence did not deprive the trial court of its discretion to determine a reasonable fee award.  The size of the award was no abuse of discretion because the trial judge made a substantial reduction in the requested amount.  Plaintiff then argued that fees had to be apportioned because counsel represented up to 16 defendants at one time, the “unity of interest” reduction rule.  Here, however, petitioning counsel made a smart move in voluntarily reducing fees to take the multiple representation of other parties into account, an approach found attractive by both the trial and appellate courts.  Finally, it was no abuse of discretion to stay fee recovery as to the disenfranchised corporate entity given that a suspected corporation cannot pursue litigation for failure to pay taxes.

Allocation: Two Unpublished Decisions Address “To Apportion, Or To Not Apportion,” With Divergent Results Based On The Particular Facts

 

     The next two cases indicate that decisions to apportion fees for “fee eligible” versus “non-fee eligible” work almost always depend on the facts and circumstances of the case, especially where there are clear avenues to make an apportionment. However, if everything is truly intertwined, trial judges have broad discretion to decide not to make apportionments.

Dromy v. Assil, Case No. B259489 (2d Dist., Div. 1 Dec. 22, 2015) (Unpublished)—No Apportionment Needed Because Claims And Cross-Claims All Intertwined.

      Here, plaintiff sued to recoup on $3 million in loans under two notes with fee clauses, although defendant had paid them off in full in line with apparently inflated payoff requests by plaintiff. Defendant cross-claimed on various theories, such as usury and “I paid you off/you inflated the payoff demand” claims. Despite the payoff, plaintiff filed an amended complaint on various torts. Plaintiff decisively was defensed in a jury trial, while cross-complainant/defendant got “mixed results”—losing a usury claim but winning that the excessive fees/interest was included in plaintiff’s payoff demands, winning a bench trial compensatory award of $86,890.64. Both sides requested fees, but defendant/cross-complainant was found to have prevailed, with the lower court awarding $371,814 in contractual attorney’s fees (out of a requested $434,304).

     Plaintiff/cross-defendant appealed, claiming he should have been the prevailing party and arguing that the lower court had to apportion between “fee eligible” and “non-fee eligible” claims.

     Plaintiff lost at the appellate level, with a further award of appellate costs and a remand to determine fees to the victor on appeal. Defendant/cross-complainant did prevail—he did not have to pay anything and obtained positive money from plaintiff/cross-defendant, even if only 10% of the requested amount. However, this was enough to be the prevailing party. As far as apportionment was concerned, the appellate court determined that all of the claims and cross-claims were intertwined, with no “clear avenue” to require apportionment of time on the usury argument—unlike clear avenues in other published appellate decisions. Finally, the amount of fees awarded were not excessive, especially given that losing plaintiff had requested within 3% of defendant/cross-complainant’s fee request (i.e., $424,687).

Berger v. Varum, Case No. A141112 (1^st Dist., Div. 1 Dec. 22, 2015) (Unpublished)—Abuse of Discretion To Not Apportion Given Circumstances Showing Different Parties And Pre-Joinder Work.

     In contrast, this decision found it was an abuse of discretion not to gauge whether apportionment was appropriate between compensable and non-compensable work related to contract claims under Civil Code section 1717.

     Residential property owners won cross-claims against a construction designer even though there was prior complaint involving 12 parties and separate defect claims against subcontractors, plus pre-joinder work not relating strictly to the construction designer. The trial judge awarded owners $2.1 million on a breach of contract claim, a little over $1.6 million on a negligence claim, and nothing on a fraud claim. This win also netted owners a contractual fee award of $532,434 from the lower court.

     Construction designer did well to appeal under the circumstances. Observing that only contractually-related claims are compensable (Brown Bark III, L.P. v. Haver, 219 Cal.App.4^th 809, 829-830 (2013)), the appellate court believed that the trial judge needed to exercise discretion on whether apportionment was required, looking at whether work could be segregated out or whether it was truly intertwined. Reversed for a “re-look.”

December 17, 2015 Unpublished Fee Decisions—Three Reversals, Two Affirmances On Variety Of Issues

 

Allocation—Artefex LP v. Bushman, Case No. B260737 (2d Dist., Div. 6 Dec. 17, 2015) (Unpublished).

    In this one, plaintiffs won $15,000 on a contract breach claim after voluntarily dismissing tort claims, with the trial judge then awarding $191,256 in fees and $11,778.37 in costs based on a fees clause.  The 2/6 DCA reversed based on its perception that the trial judge should have apportioned costs between the compensable contract and noncompensable tort claims under the circumstances.  It was convinced that the contract and tort claims did not share a common nucleus of facts.

Consumer Statutes—Calande v. Surf and Sand, LLC, Case No. H038679 (6th Dist. Nov. 19, 2015, mod. Dec. 17, 2015) (Unpublished).

    Defendants mobile owner/operator appealed a denial of fees requests, claiming they were entitled to them based on Civil Code section 1942.5(g), a retaliatory eviction fee-shifting provision, and Civil Code section 798.85, a Mobile Residency Law fee-shifting provision.  The appellate court agreed and reversed, determining that a general prayer for fees satisfied the section 1942.5(g) requirement of requesting them upon initiation of the action and further deciding that the fifth cause of action triggered MRL fee recovery.

Settlement—Ratner v. Wilson, Case No. G051264 (4th Dist., Div. 3 Dec. 17, 2015) (Unpublished).

    Here, a second judge denied a fee motion under a settlement agreement construed to be valid by a first judge ordering consideration of the fee request.  Second judge refused to grant fees, construing the validity of the settlement agreement in contravention of what was done with the first judge.  Presiding Justice O’Leary, on behalf of a 3-0 panel, said “no go,” can’t revisit the determination by the prior judge so look at the fee request again.

Costs—Grabowiec v. Schopmeyer, Case No. G050978 (4th Dist., Div. 3 Dec. 17, 2015) (Unpublished).

    The decision, again by Presiding Justice O’Leary, reminds us that the routine costs winner is not necessarily a fee winner under a fee-shifting statute—a common argument we see often, but which is usually a loser.  There is a distinction between prevailing for routine costs and prevailing for an award of attorney’s fees.   Affirmance in this one.

Family Law—In re Marriage of Mejia, Case No. B261401 (2d Dist., Div. 7 Dec. 17, 2015) (Unpublished). 

        Last on the list, a fee order under Family Code sections 2030/2032 (needs based) and 271 (sanctions) was affirmed under the abuse of discretion standard based on the failure of appellant to provide an adequate record—no reporter’s transcripts of oral hearings were provided so as to retard review under the circumstances.

Allocation, Civil Rights, Costs: Apportionment Not Necessary If Claims Inextricably Intertwined And Routine Costs Against Losing Civil Rights Plaintiff Remanded For A Re-Do

 

Painter v. Francis Realty, Inc., Case No. C078106 (3d Dist. Oct. 6, 2015) (Unpublished)—Allocation.

     After reversing the fee award and remanding to see if apportionment was required between tort and contract claims under Civil Code section 1717 (with only contract claims compensable under section 1717), the trial judge determined the tort and contract claims were “inextricably intertwined” such that apportionment was not required in the case, a determination affirmed on appeal. Success on the contractual declaratory relief claim depended on defeating the tort fraud and improper foreclosure claims, which the defense did with the result it won $41,350 fees against losing plaintiff for work on both contract and tort claims.

Williams v. Chino Valley Independent Fire Dist., Case No. E055755 (4^th Dist., Div. 2 Oct. 6, 2015) (Unpublished)—Civil Rights; Costs.

     In this one, the appellate court remanded to the trial court to make findings on whether the losing civil rights plaintiff was subject to routine costs because plaintiff’s suit was frivolous/unreasonable/without basis as required by the state supreme court decision to this effect in Williams, 61 Cal.4^th 97 (2015) [discussed in our May 4, 2015 post] and in light of the remand directive in Roman v. BRE Properties, Inc., 237 Cal.App.4^th 1040 (2015) [discussed in our June 27, 2015 post]. So, this one went back for a re-do given the wrong standard was used by the trial judge in assessing costs against the non-victorious plaintiff.

Allocation/Deadlines/Reasonableness Of Fees/SLAPP: $19,012.29 Fee Recovery Upheld In Fee Proceeding Against Voluntarily Dismissing Plaintiffs

 

Lots of Procedural, Allocation, and Reasonableness Challenges Rejected.

    In Save Westwood Village v. Luskin, Case No. B257354 (2d Dist., Div. 2 Aug. 18, 2015 posting) (unpublished), defendants brought a SLAPP motion, triggering plaintiffs to voluntarily dismiss them from the case.  However, the trial court determined the merits of the SLAPP motion, granted it, and ordered the parties to meet and confer over the amount of fees awardable to defendants under the mandatory SLAPP fee-shifting statute.  The parties reached an impasse, with defendants indicating an intention to file a costs memorandum.  The trial judge asked if there was a deadline to do so, but plaintiffs’ counsel indicated he was not going to “sandbag” on the issue.  After some billings were exchanged and no agreement on fees could be obtained, the defense filed a costs memorandum seeking $29,246.75 in fees.  Plaintiffs raised a host of arguments, some of them contrary to the “sandbag” representation:  procedural noncompliance; untimeliness; failure to allocate; reasonableness.  The trial judge did not buy the first three, but did reduce the amount of the fee request to an actual award of $19,012.29 (a one-third reduction) after finding some of the time had been spent on a SLAPP motion in a separate case. 

    The appellate court upheld the result.  First of all, it found that the proper way to claim SLAPP fees was through a determination on the merits motion, through the filing of a noticed fee motion, or through the filing of a costs memorandum—the last option being the one properly utilized by plaintiffs.  Second, although the trial judge found the costs memorandum was technically untimely, good cause existed to extend the time under CRC 3.1702(d) and deem it to be a noticed motion, especially given the “sandbagging” comment by plaintiffs’ counsel.  Third, there was no need to apportion because all of the work was inextricably intertwined.  Finally, the reduction by the trial judge was fair and did not need to be anything any deeper as advanced by plaintiffs. 

Allocation, Prevailing Party: Plaintiffs In Anti-Semitic Hotel Exclusion Case Get More Attorney’s Fees On Remand And For Appellate Win

 

This Is An Update For Our December 20, 2014 Post On An Unpublished Appellate Decision.

    On December 30, 2014, we posted on Paletz v. Adaya, a Second District, Division 3 unpublished decision affirming most of a substantial attorney’s fees award of $2.1 million in favor of plaintiffs, except for a minor reallocation issue remanded to the trial court.   In this case, a hotel owner was found to have excluded Jewish patrons at a Santa Monica hotel pool party specifically designed by an outside promoter to benefit fallen Israeli soldiers.

    We can now report, based on a recent post by the on-line Jewish Journal, that the lower court, on remand, ruled that plaintiffs’ other causes of action were “inextricably intertwined” with the fee-bearing civil rights causes of actions, awarding plaintiffs more than $70,000 in further fees.  Beyond this, the trial judge awarded plaintiffs an additional $340,000 in fees for winning on appeal in the December 2014 decision.

Allocation/Special Fee Shifting Statute: Plaintiff Winning Breach Of Lease And Fraudulent Transfer Claims Only Allowed Fees For Lease Breach Claim

 

Award Of $101,154 Out Of Requested $337,180 In Fees Affirmed On Appeal.

    Plaintiff prevailed on both breach of lease and fraudulent transfer claims against the defense, with the lease having a fees clause allowing for recovery of fees geared to “enforce” the contract.  When it came time to move for attorney’s fees, plaintiff sought $337,180 for all efforts—both breach of lease and fraudulent conveyance work effort.  However, the lower court only awarded $101,154 based on its perception that 30% of the time was spent on the lease claim versus the fraudulent transfer claim that it believed was non-compensable from a fee recovery standpoint.

    That allocation held up against plaintiff’s challenges on appeal in 330 South Fair Oaks Ave., LLC v. De La Flor, Case No. B253991 (2d Dist., Div. 5 Aug. 3, 2015) (unpublished).

    Although arguing that the lease and fraudulent transfer work were intertwined in nature, the appellate court did not buy the argument, given that the fees clause only allowed for “on the contract” work which would exclude a tort claim like that brought under the Uniform Fraudulent Transfer Act (UFTA).  Because no other statutory basis was cited, the lower court did not err by failing to award more fees for fraudulent transfer claim work.

    BLOG UNDERVIEW—This result is actually consistent with two other unpublished decisions we surveyed in the past, finding that the UFTA does not have language allowing for recovery of attorney’s fees.  For those of you wanting to see those prior decisions, see Justice Ikola’s unpublished 4/3 DCA decision in Palacio Del Mar HOA v. McMahon (our December 2, 2008 post) and the 4/1 DCA’s unpublished decision in Levine v. McAvoy (our August 3, 2012 post).

Allocation, Employment, Section 998: Plaintiff Accepting 998 Offer Entitled To Labor Code Fees For Inextricably Intertwined Wage-Hour/Overtime/Failure To Maintain Records Claims

 

Although Meal And Rest Break Claims Would Not Trigger Fee Recovery, Other Claims Did The Trick.

     Barnes v. Cedars-Sinai Medical Center, Inc., Case No. B255034 (2d Dist., Div. 1 July 29, 2015) (unpublished) is an interesting 998/apportionment case which has some lessons for both plaintiffs and the defense in the Labor Code violations arena.

     In this one, plaintiff alleged wage/hour, overtime, meal break, rest break, failure to maintain overtime/meal break/rest break records, and unfair business practices claims. Plaintiff also requested attorney’s fees under Labor Code sections 218.5 and 1194 on her claims for failure to pay wages, failure to pay overtime compensation, and failure to maintain records, although having an omnibus prayer on meal/rest break claims. Defendant lost a summary judgment in entirety, but defendant shortly thereafter sent a CCP § 998 offer by which it would pay plaintiff $25,000, but with statutory costs and attorney’s fees up to the date of the offer being later determined “in an amount determined by the court, according to proof.” Plaintiff accepted the 998 offer and predictably moved to recoup fees of $65,465 with a 1.5 multiplier, for a total of $98,197—with fees being based on Labor Code sections 218.5 and 1194.

     The defense mainly opposed on the theory that no fees were allowed, pursuant to Kirby v. Immoos Fire Protection, Inc., 53 Cal.4^th 1244 (2012) for meal/rest break claims, which it argued was the exclusive thrust of the suit. Plaintiff disagreed, arguing that she had pled wage/hour, overtime, and failure to maintain records claims which were inextricably intertwined with the other claims such that fee recovery was justified. The trial judge agreed, awarding full the full lodestar request of $65,465 but nixing the multiplier request.

     The appellate court affirmed. It suggested that the 998 offer language was broad enough to allow recovery for fees on any of the claims which had fee predicates. However, given that apportionment is a discretionary function, the reviewing court had no difficulty accepting that the claims were intertwined so as to justify the decision to award fees on the non-meal/non-rest break causes of action.

Allocation, Prevailing Party, Substantiation Of Fees: Looks Like Prevailing General Contractor Garnered Over $403,000 In Attorney’s Fees/Expenses For Obtaining Compensatory Damages Of Around $141,467.21

 

Trial Court Did Not Abuse Discretion In Fee Award On Remand From Prior Appeal.

    Barham Construction, Inc. v. City of Riverbank, Case Nos. F068373/F068914 (5th Dist. July 21, 2015) (unpublished) involved a situation where a general contractor for a skate project in Riverbank won a prior trial, with City being held responsible for three main delays in the critical path for a construction project.  However, in a prior appeal, City pared it down because general contractor was found responsible for one delay—resulting in the whole megillah going back to the trial court to make some specific determinations mandated by the appellate court.

    On remand, the trial court awarded general contractor $209,064 as fees on its complaint for construction contract moneys due, and $194,384 as fees on City’s cross-complaint for defective construction.  Keep in mind that general contractor prevailed, after offset for the one delay, to the tune of $141,467.21 under the construction contract.

    City again appealed, but to no avail.  The trial judge did abide by the appellate court’s prior directives.  City complained about the lack of detailed billing substantiation, but attorney declarations can satisfy the substantiation requirement.  The defective construction cross-claims and breach of warranty claims were intertwined such that no apportionment was necessary. 

    Finally, the fee motion was timely because it was filed after all portions of the case were resolved.

Employment, Allocation: Recent Fee Motion Result Counsels That Asking For Apportioned Smaller Amount Might Be The Way To Go

 

Employer Asking For $1.6 Million In Fees For All Work Only Got $150,000 For Apportioned Time On One Labor Claim.

     The fee order in Salhi v. PNY Technologies, Case No. CIV 514059 (San Mateo County Superior Court) is interesting and may well present some nice strategies call for employers who obtain a determination that selective labor claims are pursued in bad faith by plaintiff employees.

     In this one, plaintiff—a Silicon Valley CEO fired after his company was acquired—lost labor code violations at trial, with one of the seven claims being determined to have been prosecuted in “bad faith” so as to give rise to fee exposure under California wage/hour statutes. (Plaintiff had sought $1.5 million under various theories, but got nothing.)

     However, prevailing defendant PNY went for the whole tamale  -- $1.6 million for the work of two large firms for the entire case. San Mateo County Superior Court Judge Richard DuBois saw it much differently. Although employer could have been more conservative and apportioned the fee request for work on the one claim found to have been brought in bad faith, Judge DuBois believed that $150,000 was the proper fee recovery under the circumstances. “The court further considers that the ‘bad faith’ portion of the prosecution of the labor code cause of action did not begin until shortly before the trial began and little defense effort was required defending that cause of action from that time on,” Judge DuBois wrote in a recent order. “Based upon these considerations, the court finds that $150,000 was a reasonable amount of attorneys’ fees for defending against the labor code allegations.”

    Some reported interviews with defense counsel were interesting to say the least. They admitted they could have gone for only apportioned time, but why not go for it all. Judge DuBois liked the more conservative approach, obviously.

Allocation, Settlement: $40,349.50 Fee Recovery In Enforcing Settlement Agreement Affirmed On Appeal

 

Plaintiffs’ Did Not Represent Himself, But Clients; However, No Allocation Required Based On Intertwined Exception.

     Defendants were not happy when a trial judge not only enforced a settlement agreement under CCP § 664.6 but also awarded attorney’s fees of $40,349.50 based on a settlement fees clause. Their appeal of both rulings was unsuccessful in Federici v. Goff, Case Nos. A141088/141415 (1^st Dist., Div. 2 Apr. 30, 2015) (unpublished).

     Although arguing that some of the work benefitted plaintiffs’ attorney personally so as to fall within the Trope prohibition, the appellate court found the attorney claimed time for representing the prevailing plaintiffs such that the prohibition was not in play, and no allocation was necessary even if the work did benefit counsel under the “inextricably intertwined” exception to apportionment principles. The trial judge reduced the requested fees downward by about 15% to take into account duplication, inefficiencies, etc. such that the amount of the award was reasonable.

Allocation, Construction: Rio School District Decision, On Rehearing, Reaches Same Result On Remanding A “Re-do” Of Attorney’s Fees On Public Contract Code Claim

 

Same Result From Decision Surveyed in Our January 28, 2015 Post.

     On January 28, 2015, we posted on Rio School District, a Second District, Division 6 decision where a substantial attorney’s fees award was remanded for redetermination after the appellate court determined that an unclean hands defense was legally not cognizable under Public Contract Code section 7107. However, the appellate court subsequently granted rehearing. However, on April 1, 2015, the same appellate court issued its decision on rehearing in East West Bank v. Rio School District, Case No. B238618 (2d Dist., Div. 6; author: Gilbert, P.J.), reaching the same result as before on the fee issue in a published portion of the opinion.

Allocation, Fee Clause Interpretation: $291,355.62 Fee Recovery Affirmed On Appeal Because Broadly Worded Fees Clause Encompassed Quiet Title Claim

 

No Apportionment Required Where Lower Court Could Conclude Efforts Intertwined With Covered Quiet Title Work.

     In Hamilton Court, LLC v. East Olympic, L.P., Case No. B253511 (2d Dist., Div. 5 Mar. 12, 2015) (unpublished), defendants won $291,355.62 in attorney’s fees for trial and appellate work arising from a quiet title easement dispute. The losing parties appealed, but to no avail. The purchase agreement fees clause, alone, justified fee recovery, given that it related to an action involving the property “whether founded in tort, contract, or equity”—with the quiet title claim founded in equity. No apportionment was necessary given that fee work on other claims was intertwined with work on the quiet title claim.

Allocation, Section 1717: $1,047,250 Fee Recovery To Plaintiff Landlord Affirmed On Appeal

 

Appellate Court Rejected Various Arguments that Fees Should Have Been Apportioned.

     Plaintiff landlord won prevailing party fees under Civil Code section 1717, pursuant to a lease fees clause, against tenant Bank after plaintiff won compensatory damages of $1,016,812.50 after a two-phased trial (with the compensatory damages component subsequently settled out). Although initially requesting $2,051,555.67, plaintiff lowered its fee request to $1,069,302.96. The trial court liked this better, awarding plaintiff $1,047,250 in fees and costs ($994,795.10 fees/$52,455.39), after cutting certain trial work by plaintiff’s attorneys and eliminating virtually all of their travel time during the 7-year litigation.

     Bank’s appeal of the fee award was affirmed in Ramos-Lovato v. Community Bank, Case No. E055920 (4^th Dist., Div. 2 Feb. 26, 2015) (unpublished).

     Bank primarily argued that the trial judge failed to apportion fees between certain noncompensable (negligence) versus compensable (breach of lease) claims. The appellate court disagreed, after determining that the trial judge’s use of “arose out of” and “but for” language in the statement of decision meant he found the fees were inextricably intertwined so that apportionment was not called for under the circumstances—no abuse of discretion here.

     BLOG UNDERVIEW—We will note that the Bank prevailed on a conversion claim brought by plaintiff, with plaintiff’s appeal unsuccessful in getting this result reversed. Our friend Ben Shatz of Manatt Phelps was one of the attorneys representing Bank on appeal.

Allocation, Fee Clause Interpretation, Section 998: Defendant Prevailing Under Fees Clause Entitled To Unapportioned Fee Recovery, Another Plaintiff Not Entitled To Fees Given Failure To Show Fees Clause Was Part Of Contract, And Defendant Properly Denied

 

Olio Of Fees/Costs Issues Confronted By 4/1 DCA In Unpublished Decision.

About olio:

Is there that o're his French ragout
Or olio that wad staw a sow,
Or fricassee wad mak her spew
Wi' perfect scunner,
Looks down wi' sneering, scornfu' view
On sic a dinner?

     -- Robert Burns

     Cosco Fire Protection, Inc. v. Siry Investments, Case No. D062427 (4^th Dist., Div. 1 Feb. 20, 2015) (unpublished) was a 40-page unpublished decision dealing with fees or costs requests by three separate parties. The Fourth District, Division 1 affirmed the trial court’s determinations across the board.

     One defendant obtained a victory against plaintiffs for a contractual/negligence suit, recovering $51,324.64 in damages out of a dispute over structural engineering services provided to a certain real estate project. Prevailing defendant moved for $347,820 in fees under a fees clause relating to “interpretation or enforcement” of provisions in the agreement between the parties. The trial judge granted all of the requested fees, a determination affirmed on appeal. Even though the fees clause was narrower than “arising out of” language, the lower court could conclude the contract and tort claims were intertwined such that no apportionment was necessary for all of the work. Plaintiffs tried to argue there was no evidentiary foundation for the requested fees, because the lead trial attorney died of cancer such that his fee submissions were not authenticated as business records by his partner who picked up the case after he died. The appellate court found that the dead partner had made detailed time entries, and the picking-up partner could authenticate his billing practices based on their 12 year partnership so as to show reliability for purposes of the hearsay exception.

     Another plaintiff was bummed that the trial court denied fees to plaintiff, as a prevailing party, based on the conclusion no contract, containing a fees clause, was established. The appellate court affirmed because there was a conflict whether General, Terms and Conditions containing the fees clause was ever “incorporated” into the eventual conflict, with the proof needing to be clear and unequivocal—which it was not. (Williams Constr. Co. v. Standard-Pacific Corp., 254 Cal.App.2d 442, 454 (1967).)

     Lastly, a disgruntled defendant wanting certain costs under a rejected CCP § 998 offer was rebuffed because the joint offer to plaintiff was not apportioned. Given there was no unity of interest between the two plaintiffs, the offer was too uncertain as a matter of law.

Allocation, Fee Clause Interpretation, Lodestar, Reasonableness Of Fees, Section 998: Prevailing Attorneys In Collection Suit Against Ex-Client Sustain $1.532M Fee Award And $123K Expert Witness Fee Award On Appeal When Attorneys Recovered Base Collection

 

Fees Clause Was Broadly Worded, Former Attorneys Represented Client In Seven Suits, and Section 998 Rejection Gave Rise to Expert Witness Fee Award.

     This next opinion, Calvo Fisher & Jacob LLP v. Lujan, Case No. A139863 (1^st Dist., Div. 2 Feb. 19, 2015) (published), is must reading for both litigants and attorneys involved in fee petition and costs request law and motion battles at the California state court level.

     Here, former attorneys represented a prominent Guam attorney (ex-client) in seven underlying cases which were vigorously litigated in Hawaii and California. Ex-client fell behind in payment, prompting a collection suit based on an engagement letter with this broadly worded fees clause: “In the unlikely event that we are required to institute legal proceedings to collect fees and costs [BLOG OBSERVATION—not so unlikely with passage of time], the prevailing party would be entitled to a reasonable attorney’s fee and other costs of collection.” This prompted ex-client to cross-complain based on numerous theories, including legal malpractice. Eventually, through demurrer and motion work, former attorneys’ claims got narrowed to contract-based claims and ex-client countersuit got constricted to a bad faith claim. Ex-attorneys nonsuited the bad faith counterclaim during trial, and the jury returned a $945,947.90 verdict in favor of the attorneys, with the lower court adding $331,545.51 in prejudgment interest.

     Then we move to attorneys’ fees/costs proceedings, with both sides submitting a total of 1,500 pages of paperwork—seven inches—for the lower court’s consideration. Fee claimants did something very smart: they voluntarily agreed to reductions totaling $300,000 based primarily on recommendations by their malpractice insurance carrier and their fee expert. In opposition, although disputing the overall amount of fees being requested, ex-client could only come up with one double entry of $210, which everyone agreed even on appeal should be eliminated. The lower court found in former attorneys’ favor—after eliminating messenger fees, it awarded the full request of $1,532,674.81. As far as costs were concerned, it also awarded $123,277 in expert fees after ex-client rejected former attorneys’ CCP § 998 offer of $665,818, conditioned upon ex-client dismissing his cross-complaint and executing a general release relating to all claims between the parties in this action.

     Ex-client appealed and, except for the $210 double entry elimination, did not gain anything else in a 3-0 panel opinion authored by Justice Richman.

     The fee award was properly based on the broad fees clause in the engagement letter. Former attorneys’ work on their noncontract claims and work against ex-client’s cross-complaint were necessary to achieve their overall litigation objective in collecting a substantial fee. Apportionment was not required because the claims were closely intertwined, with apportionment being a discretionary call for the trial court to make.

     Beyond that, ex-client litigated tenaciously, so he could hardly complain about having to pay $1.532 million for “fees on fees” for a base recovery of $945,947.90.

     That brought the appellate court to the expert witness fees awarded as costs based on section 998. The offer was not made in bad faith by failing to mention how attorney’s fees and costs would be dealt with, because case law allows the offeror to be silent on the issue which means the fees and costs could be sought in the future on the particular claims involved. Given that the base award of $945,947.90 was greater than the $665,818 offer, this was prima facie evidence that the offer was reasonable. Finally, the offer was not ambiguous in requesting a general release (given it only related to claims between the parties relating to the action) and in requesting ex-client to dismiss his cross-complaint with prejudice.

Allocation/Section 1717: $740,257.50 1717 Fee Award Reversed Because Appellate Court Could Not Determine If Lower Court Actually Exercised Discretion To Apportion Award Between Compensable And Noncompensable Claims

 

Discretion Was Abused When There Was No Hearing And Only One Sentence Fee Award.

     NICO Alloys v. American Metal Group, Case Nos. B251688/B253987 (2d Dist., Div. 2 Feb. 5, 2015) (unpublished) is an example of where a lower court and fee claimant need to do a little more to sustain a fee award on appeal, especially where apportionment was a vigorously contested issue.

     In this one, two scrap metal dealers got into a real battle. NICO sued AMG for scrap metal conversion, and AMG cross-claimed for breach of a stock and inventory sales contract after the sales deal fell through and some scrap metal went missing from would-be seller’s inventory. NICO won on all counts, obtaining $322,923.31 plus prejudgment interest (affirmed on appeal, with a small modification due to an offset) and also obtaining $740,257.50 in attorney’s fees based on a fees clause in the contract. (Because the offset issue was distinct from contractual breach, NICO did prevail after winning the breach issue put at controversy under the unsuccessful cross-complaint.) The parties did vigorously argue, in the fee proceeding, about the propriety of apportionment of requested fees.

     The fee award was reversed, based on the lower court’s failure to demonstrate that it actually demonstrated an exercise of discretion in apportioning fees between compensable and noncompensable claims. The reversal was driven by the fact that there was no hearing on the fee motion and the lower court simply issue a single sentence order saying “granted” as to all fees requested. Not enough to show discretion was exercised, so back to the lower court once again!

Allocation, Construction: Fee Award Under Public Contract Code Section 7107 Remanded For Redetermination

 

Appellate Court Ordered Apportionment to Limit Fee Award to Those Incurred Solely to the Section 7107 Claim, Meaning $3.85 Million Fee Recovery Went POOF!

For Now.

     In FTR International, Inc. v. Rio School Dist., Case No. B238618 (2d Dist., Div. 6 Jan. 27, 2015) (partially published; fee discussion published), school district and its general contractor engaged in a decade-long legal battle after the school was completed, with general contractor eventually obtaining a judgment exceeding $9 million against district. $3.85 million of this judgment was attorney’s fees to contractor under Public Contract Code section 7107, which allows a prevailing party to recover fees and costs in an action for wrongfully withheld retention payments.

     District appealed, with the Second District, Division 6, in a 3-0 opinion authored by Presiding Justice Gilbert, affirming most aspects of the merits ruling but remanding the fee recovery for redetermination.

     The fee recovery was reversed because the appellate court determined that work on an unclean hands defense did not apply as a legal matter of law such that the lower court erred in allowing recoupment of work on this defense with respect to the section 7107 claim. Instead, on remand, the reviewing court directed that fee recovery should be apportioned differently, limited to fees incurred solely in relation to contractor’s cause of action under section 7107.

Allocation, Section 1717: James Fleming/Capistrano Unified School District Battle Comes To Roost--$123,233 Fees/$6,60.10 Costs Award Affirmed On Appeal

 

Contractual Basis Was There, And No Apportionment Required Under the Facts.

     The long-standing battle between Mr. Fleming and Capistrano Unified School District (CUSD) has finally ended, we think, in Fleming v. Capistrano Unified School Dist., Case No. G048523 et al. (4^th Dist., Div. 3 Jan. 7, 2015) (unpublished). This concerned Mr. Fleming’s involvement with compiling alleged “enemy lists” while he was at CUSD, resulting in criminal charges which ultimately got dismissed.

     However, despite the criminal resolution, Mr. Fleming sought to recoup his criminal defense expenses and 18 months of severance from CUSD. He did not get it, with a trial judge granting summary judgment against him and awarding $123,233 in fees and $6,660.10 in costs in favor of CUSD.

     The appeal on the SJM merits and fee award were affirmed in a 3-0 unpublished decision authored by Justice Fybel.

     On the fees award, the appellate court agreed that Mr. Fleming sued under Amendment No. 11 with a fees clause. Although Mr. Fleming claimed he sought compensation based on a resignation agreement, the reviewing court found the issues involving Amendment No. 11 and the resignation agreement were intertwined, so no apportionment was required. Fee award affirmed.

Allocation/Reasonableness Of Fees: Vast Portion Of $2.1 Million Fee Award Under Unruh Act/Interrelated Tort Claims Affirmed On Appeal Where Total Recovery Was $1.654 Million

 

One Reversal Involved A Non-Class Action Percentage Of Recovery Methodology Found Flawed By The Appellate Court, So Apportionment Re-Do On One Issue Was Ordered.

     Paletz v. Adaya, Case No. B247184 (2d Dist., Div. 3 Dec. 29, 2014) (unpublished) involved bad facts, resulting in a substantial jury verdict and substantial fees, most of which were affirmed on appeal.

     Briefly told, this was an anti-Semitic case where a hotel owner was found to have excluded Jewish patrons at a Santa Monica hotel pool party specifically designed by an outside promoter to benefit fallen Israeli soldiers. The facts are not good, with the hotel owner allegedly barring the Jewish patrons from the event based on a fear that her parents would shut off funding had they known of the event. Needless to say, the jury was not impressed with this behavior, awarding various patron plaintiffs both compensatory and punitive damages in certain ranges as well as compensatory and punitive damages to the promoter of the event which did not receive full compensation from hotel owner. All told, patrons and promoter plaintiffs were awarded $1,654,250. Later, the lower court awarded the patron Plaintiffs $2,009,785.50 in fees on the Unruh Act claims after making some apportionments for work done on various tasks and work done on the recovery on behalf of the promoter, given that the same set of attorneys represented both the patron and promoter plaintiffs.

     Despite numerous challenges by the losing defense, the $2.1 million fee award got sustained on appeal, except for a remand on a narrow apportionment issue. (The merits challenges also were unsuccessful.)

     Initially, the $200-675 hourly rate fee range for the attorneys involved was found to be reasonable for a West Los Angeles-venued case.

     The lower court’s conclusion that work on the Unruh Act and tort claims were interrelated was found to be correct under the circumstances.

     Block billing was rampant in the fee petition, but was found not to present a problem given the interrelatedness of the work on various claims.

     That leads us to the one apportionment issue which the appellate court found to be troublesome. The lower court deducted out work relating to promoter, when it came to the overall fee recovery by patron plaintiffs, based on a “percentage of total recovery” proxy—namely, the percentage of recovery by promoter out of all plaintiffs’ recovery was apportioned out for promoter work for fee award purposes. Here is the appellate court’s criticism of this methodology: “The court’s reliance on the percentage of recovery attributable to Platinum’s claims is particularly arbitrary, as under this theory, a defense attorney could effectively cause their client to pay more in attorneys’ fees by successfully defeating causes of action that are separate and not intertwined with Unruh causes of action. This method of apportionment could effectively penalize Defendants for their successes in litigating Platinum’s causes of action. The unreasonableness of the court’s apportionment methodology becomes even more evident on appeal, when the percentage of recovery is subject to alteration: Plaintiffs’ attorney fees award could fluctuate based on Defendants’ success on appeal in obtaining reversal of damages awards. To prevent duplicative recovery, we reversed the intentional infliction of emotional distress punitive damages award in this opinion. This ruling reduces Plaintiffs’ total recovery by 24.5%. If we were to affirm this methodology, the trial court would have to recalculate apportionment of fees associated with Platinum based on the new total damages figure. This would effectively reduce Plaintiffs’ attorney fees for entirely arbitrary reasons, as the evidence supporting the fees award has not changed. There has been no new showing that Plaintiffs’ counsel worked any less on Unruh claims or any more on Platinum’s contract based causes of action.” (Slip Opn., pp. 38-39.)

Allocation/Reasonableness Of Fees: $362,000 In Fee Recovery To Contractor Stepping Into Developers Shoes And Guarantors For Winning Against Construction Lender Affirmed On Appeal

Bank's Failure to Contest Fee Entitlement Meant Only Amount of Fees At Issue—With Reasonableness And Apportionment Issues Left to Trial Court Discretion.

     California Bank & Trust v. Del Ponti, Case No. E053187 (4^th Dist., Div. 2 Dec. 9, 2014) (partially published; fee discussion unpublished) is a construction lender liability case with fairly draconian facts of where a lender tried to upstage a general contractor paying subcontractors to keep a failing project lien free and also tried to hold guarantors liable out of the same facts even though exoneration was written all over the facts.

     Draco and Ursa Minor.

     Ultimately, general contractor and guarantors prevailed on all or most claims against bank, with contractor winning $276,430 in fees and guarantors winning $85,515 in fees. Bank then appealed the merits and fee determinations against it.

     The merit and fee determinations were affirmed on appeal.

     Bank contested fee entitlement, but this challenge was waived by failure to raise it (with the appellate court providing several bases to show why entitlement could have been claimed). This narrowed the appeal to the dreaded amount of fees awarded, a deferential abuse of discretion review issue. The main argument was that the lower court should have apportionment contract versus noncontractual work efforts, but the trial judge found everything so interwoven (even on some dropped claims) such that no allocation was necessary. The reasonableness of the fee awards was also found to be supported by the record below.

Allocation/Multiplier/Prevailing Party/Reasonableness Of Fees/Section 1717: $180,648 Contractual Fee Recovery Affirmed In Case Where Plaintiffs Recovered Total Contract/Tort Underlying Award Of $109,000

 

$425,000 Fee Request Plus 1.5 Multiplier Nixed on Appeal.

     In Holquin v. Dish Network LLC, Case No. D059983 (4^th Dist., Div. 1 Sept. 22, 2014) (published), plaintiffs won a combined economic/noneconomic verdict against DISH Network and others in a satellite T.V. dispute. However, the rub was an attorney’s fees clause in the Residential Customer Agreement, to which the lower court was attuned throughout the proceedings. Plaintiffs, on mixed contract/tort claims, won a jury verdict of $109,000. They then moved for attorney’s fees based on Civil Code section 1717 for $425,000 plus a 1.5 positive enhancement. The lower court awarded plaintiffs fees of $180,648 (rejecting any positive multiplier), prompting an appeal on the merits decision by DISH (a merits appeal which was unsuccessful) and Plaintiffs’ appeal claiming the fee award was too low (no different result, as we explain).

     The appellate court had no problem determining Plaintiffs were entitled to fees under Civil Code section 1717 or determining Plaintiff was the prevailing party. The amount of fees being claimed was the real issue.

     So, was the $180,648 fee award an abuse of discretion? Hardly. The first reduction involved a prior attorney’s fees even though he had to step out of the case—the reductions were just fine. The next set of reductions involved apportionment between contractual and tort claims. The lower court basically adopted this formula based on the peculiar circumstances of the case: full fees for 20% of the work on liability issues (which spanned everything) and 80% of the damages apportioned to reduce for work on noneconomic damages relating to tort claims (which tried to reach a reasonable estimation of the contractual fee work). The reviewing court sustained this formula, especially reminding all fee claimants that contingency fee agreements will not be ignored in this context--$180,648 was a lot more than the possible contingency awards of $16,200 or $38,200, so the award was reasonable and no multiplier was justified.

     There is a good case to show how California state reviewing courts will use a contingency agreement to “cross-check” the reasonableness of a fee award. (See Vella v. Hudgins, 151 Cal.App.3d 515, 520 (1984).)

Allocation/Reasonableness Of Fees/Section 1717: $1.6 Million Fee Award Against Nonsignatory Losing Plaintiffs Based On Lease Fee Clause Affirmed On Appeal

 

Allocation, Nonsignatory, and Unsuccessful Work Arguments Rejected.

     In Cal-Murphy, LLC v. Hines Interests Limited Partnership, Case Nos. A137609/A139772 (1^st Dist., Div. 5 Aug. 1, 2014) (unpublished), non-prevailing parties appealed some adverse fee rulings, which aggregated about $1.6 million. With a very slight modification, the orders were sustained on appeal.

     Non-prevailing plaintiffs were parties assuming lease provisions from an original tenant, and parties who may have “illegally” subleased to another downstream party which failed to assume the lease provisions or obtain necessary consents of prior parties.

     The non-prevailing plaintiffs argued that they were nonsignatories not liable for fees under Civil Code section 1717, but the problem was that they did plead assumption of lease obligations and never conclusively disavowed the right to recover under the lease, reason enough to find 1717 exposure based on reciprocity principles.

     They then argued that apportionment was in order, but that one failed because they were multiple plaintiffs represented by the same attorney and litigated the same basic theory against the defense—under that situation, no allocation was required. (Acosta v. SI Corp., 129 Cal.App.4^th 1370, 1376.)

     Finally, even though the defense was unsuccessful on some forays, the unsuccessful attacks did not mean 1717 fees were not justified where they were but some of the tactics necessary to get to a successful end result. (Acree v. Gen. Motors Acceptance Corp., 92 Cal.App.4^th 385, 405 (2001).)

Allocation/Civil Rights/Reasonableness Of Fees: $73,160 Fee And $3,029.40 Costs Award Against Losing Civil Rights Plaintiff In Favor Of L.A. County Affirmed On Appeal

 

30% Reduction of Fee and Costs Request Deemed Reasonable.

     In Villafana v. County of Los Angeles, Case No. B246866 (2d Dist., Div. 4 July 30, 2014) (unpublished), civil rights plaintiff bringing FEHA/federal civil rights/California Family Rights Act/public policy violation claims lost a summary judgment to L.A. County based on the statute of limitations and other bases. L.A. County then brought a motion to recover fees of $97,741.50 and $4,165 in costs under FEHA on the ground that plaintiff's claims were without foundation, unreasonable, and completely baseless, a fee-shifting entitlement basis under Government Code section 12965(b).

     The lower court eventually awarded County $73,160 in fees and $3,029.40 in costs, determinations affirmed on appeal.

     Plaintiff primarily argued that the statute of limitations argument was not baseless, relying on Moses v. Phelps Dodge Corp., 826 F. Supp. 1234 (D. Ariz. 1993) for its position in arguing fees should not have been awarded. The problem here is that the summary judgment was not based solely on SOL grounds, but also merits grounds as well. Plaintiff presented no evidence other than subjective belief to show that he was unable to perform his essential job duties. Attorney's fees were also justified under the federal civil rights statute, 42 U.S.C. section 1988(b).

     No allocation was necessary because the issues all overlapped.

     However, the lower court showed good judgment by reducing the fee and costs request by 30%, although rejecting the argument that $155 per hour was an unreasonable rate for L.A. attorneys (and expressing the view it was too low, but not adjusting it anyway). The 30% reduction by the lower court for padded time seemed to influence the appellate court as far as reasonableness of the ultimate award, buttressed by plaintiff's failure to make any particularized objections to the fee submissions.

     Last, plaintiff's general plea of inability to pay did not go very far given the failure to provide an evidentiary basis for the argument. (Villanueva v. City of Colton, 160 Cal.App.4^th 1188, 1204 (2008).)

Allocation/Equity/Trade Secrets: Where Default Judgment Reversed For 3 Out Of 4 Defendants, Attorney’s Fees Had To Be Revisited Although Fourth Defendant Conceded Liability.

 

Complaint Prayer Gave Notice, But Fee Amount “Re-do” Necessary on Remand.

     In Lawson-Hawks Ins., Inc. v. McVey Ins. Broker, Inc., Case No. H038466 (6^th Dist. July 22, 2014) (unpublished), plaintiff sued four defendants (an insurance agency, an insurance brokerage company, and certain agents) for willful violation of trade secrets. Plaintiff obtained a default judgment of $25,000, plus $144,103 in attorney’s fees under Civil Code section 3426.4 (a fee shifting statutory provision applicable in trade secret cases), and $16,497 in costs.

     On appeal, three of the four defendants obtained a reversal because no claim was stated against them. However, the broker defendant conceded the $25,000 judgment was proper. So, what happened to the $144,103 fee award? Broker defendant argued it was invalid because inadequate notice was provided of it through the complaint prior to default, but the appellate court found the complaint prayer for “fees as authorized by statute” sufficed to provide the necessary due process notice. However, given that the fee award involved work for all four defendants, the amount of the fee award was remanded for a “re-fix” as to the broker defendant alone.

Allocation/Section 1717: $41,350 Fee Award Reversed Because Only One Claim Was “On The Contract” Under 1717 And No Apportionment Decisions Made By Lower Court

 

Silence in the Record as to Apportionment Required Remand.

     The Third District in Painter v. Francis Realty, Inc. Profit Sharing Plan, Case No. C073864 (3d Dist. June 23, 2014) (unpublished) considered a situation where a borrower under a promissory note/deed of trust brought multiple causes of action against creditor. The problem was that most claims were based on a deed of trust not having a fees clause or were based on tort claims. However, the trial court awarded the defense a full fee request of $41,350 against plaintiffs based on a promissory note fees clause under Civil Code section 1717.

     That determination got reversed on appeal.

     The main reason was that most of the claims, except one declaratory relief count, were not “on the contract” under section 1717—they involved claims relating to instruments without fees clauses or tort claims. The real problem was that the lower court did no apportionment analysis so as to determine if the one compensable claim (hinged to the promissory note fees clause) was so interrelated with noncompensable claims to justify 1717 fee recovery. The record was silent on this apportionment point, requiring a remand to the trial judge to exercise its discretion in allocating the fees sought by the defense.