CALIFORNIA ATTORNEY'S FEES

Allocation, Prevailing Party, Reasonableness Of Fees, Section 1717: $371,135 Fee Award To Prevailing Tenant Affirmed Where Breach Of Contract Jury Verdict Was Only $84,595

Tenant Also Entitled To Costs And Appellate Fees For Winning On Appeal.

            Strength Farm, LLC v. The Heron Family Trust, Case No. B285264 (2d Dist., Div. 8 July 25, 2018) (unpublished) illustrates that contractual fee recoveries do not have to proportionate to the compensatory breach of contract award (may even be more if tort claims are intertwined) under Civil Code section 1717 contractual fee principles.

            In this one, tenant won a tenant improvement allowance dispute against landlord in a commercial gym lease situation. A jury awarded tenant $84,595 based on a breach of contract claim under a lease with a fees clause (although abandoning or losing some noncontractual claims). Then, tenant moved to recover $434,528 in fees, with the trial judge ultimately awarding $371,135.   That award was affirmed on appeal.

            Fundamentally, the fees clause was broad, encompassing actions involving the premises, “whether founded in tort, contract or equity to declare rights thereunder.” Given the breadth of this clause, that might have been the end of this appeal, but the reviewing panel did give an extended discussion. The breach of contract claim was the focus, such that all of the other noncontractual claims were interrelated, not requiring an apportionment of fees. However, the lower court did make some reductions for lack of success on some claims such that prevailing tenant was entitled to fees and the amount awarded was no abuse of discretion.

            As the clear winner, the appellate court also determined tenant was entitled to appellate costs and appeal fees as the prevailing party, awards which the lower court would scrutinize after tenant’s win on appeal.

           

Allocation/Civil Rights/Costs/Reasonableness Of Fees: $158,880.50 Fee Award To Unruh Act Plntf Remanded For Review To Exclude Fees For A Co-Defendant’s Work, Limited Success In Light Of injunctive Modification, And Elimination Of Clerical Work Billing

Costs Award Affirmed, But Fee Award Remanded For A Further Re-Do.

             In Hernandez v. Starbucks Coffee Co., Case Nos. H042848/H043393 (6^th Dist. June 20, 2018) (unpublished), plaintiff successfully sued Starbucks for Unruh Act accessibility barrier discrimination at a San Jose store. Plaintiff was awarded statutory damages of $4,000 (although not winning all accessibility claims) and $158,880.50 in attorney’s fees (out of a requested $170,880.50) and a majority of its $8,260.39 in costs. Starbucks appealed.

            It raised a litany of challenges to both awards. A few resonated so as to require a remand.

            The appellate court found that costs associated with an unsuccessful summary judgment motion and oversized copies/scans of exhibits were properly found to be necessary to the litigation or useful to the trier of fact.

         With respect to fees, here is how things panned out:

• Given that the appellate court modified a permanent injunction, the matter had to be remanded to see if the “limited success” factor made a difference in the amount of the fee award;
• The fee award had to be reduced by $12,210 for work attributable to another settling defendant (with Starbucks doing a good job of identifying the work precisely, so that the appellate court itself could order this reduction);
• No apportionment was required because overlapping facts and legal theories were involved against Starbucks and the other defendant sued on a joint and several basis;
• No reduction was necessary for block billing because the legal descriptions were sufficient to identify the nature of the work;
• No reduction was required for interoffice conferencing, rejecting the notion that anything over 4% of total billings is per se unreasonable; and
• Reductions on remand did need to be made for purely clerical tasks.

Allocation, Reasonableness Of Fees: Trial Judge’s Apportionment Of Fees In Multi-Defendant Representation And Award Of Appellate Fees Was No Abuse Of Discretion

4/1 DCA Rejected Arguments By Winning Fee Claimant And Losing Party In Contentious Fee Battle On Remand From Prior Appellate Opinion.

           Bank of Southern California, N.A. v. D&D Goryoka, Inc., Case No. D072231 (4^th Dist., Div. 1 June 13, 2018) (unpublished) was an appeal from an attorney’s fees award from a prior appellate decision remand where a fee claimant was entitled to some apportioned fees for trial work (given the trial attorney represented one of five successful defendants, with the other four defendants losing) and for appellate work in winning the remand. The trial judge—who was a replacement judge after the fee claimant made a CCP § 170.6 challenge to the judge originally denying the fee request entirely--reduced the hourly rate of fee claimant’s lead counsel for lack of success/inefficiencies/doing work left to a more junior attorney/clerical work, further reduced the request by apportioning 20% of the work to the successful defendant, and denied a multiplier. The end result was a $203,667.75 fee award for trial work and a $161,775 fee for appellate work, totaling $365,442.75. Neither side liked the result, with appeals from both with respect to the fee award ultimately rendered.

            The 4/1 DCA, in a detailed 37-page unpublished opinion, affirmed across the board.

            The appeals were governed by the abuse of discretion standard. Fee claimant, wanting more fees, argued less latitude is granted to a replacement judge, but the appellate court rejected that argument because fee claimant caused the replacement through the 170.6 challenge. Also, much of the appellate adjudication rested on the fact that California state court judges can fashion fee awards based largely on their own experience and own determination of the value of the services rendered, with much discretion being conferred on apportionment of work between compensable and non-compensable claims or work done on behalf of successful versus unsuccessful co-defendants. (In this case, an attorney had represented all five defendants under a contingency arrangement, but only one defendant won on a sham guaranty defense—which gave rise to the lower court’s apportionment.)

            There were all kinds of issues to sort through, but here is a summary of the big ones and how they were resolved:

• The 20% apportionment decision was fair and discounted for the lack of success by four other co-defendants, with the trial judge careful to exclude some time entries which did not need to be within the ambit of his allocation;
• Although $525 per hour was reasonable for fee claimant’s lead counsel, the trial judge did not err in discounting the rate down to $450 per hour based on the complexity of the matter and some inefficiencies in his work;
• The trial judge did reduce work for the fact that fee claimant dissolved which would have rendered superfluous some of the claimed work;
• The trial judge did give reasons for his reductions, such that the federal requirements of explaining “haircuts” in detail did not apply (569 East County Boulevard LLC v. Backcountry Against the Dump, Inc., 6 Cal.App.5^th 426, 440, n. 17 (2016), distinguishing Kerkeles v. City of San Jose, 243 Cal.App.4^th 88, 104 (2015) as using federal criterion not usually apt in California state court cases);
• Fee opponent did not have standing to assert most challenges to fee claimant’s attorney’s retention agreement because those challenges could only be asserted by client, not the fee opponent; and
• Other of the challenges to fee claimant’s retention agreement were precluded on causation grounds because it was fee claimant’s success at trial level, not retention agreement infirmities, which led to fee opponent’s resultant fee exposure.

 

Allocation, Homeowner Associations: Neighbor Winning $784,208 In Damages Against Another Neighbor Based On CC&R/Nuisance/Prospective Economic Advantage Damages Properly Awarded CC&R Fees Of $363,571.56

Lack Of Fee Hearing Transcript Meant No Adequate Record On Appeal; However, Claims Looked To Be Interrelated Such That No Apportionment Was Required.  

             We have noticed an increasing trend among appellate courts to affirm fee awards or fee denials where the appealing litigant failed to provide a reporter’s transcript, especially where abuse of discretion or non-legal issues are involved. The Second District, Division 5 has been especially vigilant on this issue, and we have seen an uptick in denying fee appeals by our local Santa Ana Court of Appeal based on the lack of an adequate record. Kinsman v. Rodarte, Case No. G048812 (4^th Dist., Div. 3 June 7, 2018) (unpublished) illustrates this well.

            There, a jury found in favor of a plaintiff neighbor governed by CC&Rs as against a nearby defendant neighbor. It awarded $784,208 in damages based on nuisance, prospective economic advantage interference, civil harassment, and CC&R claims, also rejecting defendant’s cross-claims. No one disputed that plaintiff was other than a prevailing party based on a CC&R fees clause which was broadly worded. Plaintiff sought fees of $438,571.56 in contractual fees, with the court awarding $363,571.56.

            Plaintiff’s appeal of the fee award did not result in any change. Plaintiff argued that the fee awarded should have only been awarded for work on the CC&R claims. However, no fee hearing transcript was submitted such that the appellate court did not know the reason(s) why the trial court lowered the requested award, perhaps even restricting the award to work only on the CC&R claim. Beyond that, on the merits, there was no perceived abuse of discretion because the CC&Rs declared that any violation of the Declaration was a nuisance, such that the work on the tort causes of action were inextricably intertwined with the contractual CC&R violations—meaning apportionment would have been unnecessary in any event.

           Acting Presiding Justice Moore authored the 3-0 panel opinion.

Allocation, Employment, Section 998: Trial Judge Correctly Awarded Substantial Fees And Costs On Labor Code Vacation Pay Claim, In 2-1 Appellate Decision

Vacation Pay Award Totaled $28,500, With Prevailing Plaintiff Winning Subsequent Fees Of $495,549.75 And Costs Of $84,035.40.

            Curran v. Schools of the Sacred Heart-San Francisco, Case Nos. A142615/A143646 (1^st Dist., Div. 2 June 5, 2018) (unpublished) was a case where plaintiff, dean of students at defendant, did not have her contract extended after 37 years with the school. She then sued based on FEHA (age/gender discrimination and retaliation) and wrongful termination, later adding a Labor Code unpaid accrued vacation pay claim. Before the Labor Code claim was added (although it was disclosed in an answer to an earlier interrogatory by plaintiff), defendant served a CCP § 998 offer for $65,000 plus a costs waiver before the Labor Code claim was formally in the lawsuit. Plaintiff lost all the claims except the Labor Code vacation pay claim which resulted in a jury verdict/trial court penalty add-on totaling about $28,500. Later, the trial judge awarded plaintiff $495,549.75 in attorney’s fees and $84,035.40 in costs to plaintiff as prevailing party on the Labor Code claim.   The trial judge also denied Schools’ requests for costs based on the theory that plaintiff did “beat” the defense 998 offer.

            In a 2-1 decision, the appellate court affirmed the fee and costs rulings, but overturned the summary judgment on plaintiff’s retaliation claim. Justice Stewart, in dissent, would have affirmed the retaliation summary judgment but reversed the vacation pay award, as well as the fees and costs awarded to plaintiff based on the Labor Code claim.

            The defense argued that the fees award to plaintiff included non-compensable work on claims other than the Labor Code claim. However, that did not prevail because plaintiff’s counsel did a smart thing—they carefully apportioned out unsuccessful FEHA work and only included interrelated non-Labor Code work in their fee submissions. The appellate majority justices liked this showing, as did the trial court, observing that Labor Code fees do not have to proportional at all to the $28,500 “compensatory” award and that the allocation was proper.

            Schools then argued that plaintiff did not “beat” the 998 offer because, at the time of the offer, there was no Labor Code claim and the defense got a zero award on all of the other claims. The majority disagreed. Aside from the fact that the defense was put on notice of the Labor Code claim through earlier interrogatory answers, section 998 looks at the entire result in a case, not just on a claim-by-claim basis. Success is gauged in relation to the ultimate judgment, with the majority finding it would be unworkable to determine success on each claim as far assessing whether a party prevailed for section 998 purposes. The majority found that an offeror faced with new claims has two choices: make a new 998 offer or proceed to trial with the hopes that the new claim (as well as others) can be defensed below the 998 offer.

            Justice Stewart would have reversed the vacation pay award as well as the fees/costs award in favor of plaintiff. She colorfully put it this way: “I would reverse the judgment on this vacation-pay tail and the half million dollar-fee dog that goes with it.”

            BLOG OBSERVATION—So what is Justice Stewart referring to? She is referring to an oft-cited quotation by Retired Justice Wallin: "All too often attorney fees become the tail that wags the dog in litigation."  Deane Gardenhome Assn. v. Dentkas, 13 Cal.App.4th 1394, 1399 (1993). So Justice Stewart may have creatively decided to flip the tail/dog analogy, but that is the derivation of the reasoning in her dissent.

Allocation, Homeowner Associations: Judge Presiding Trial Did Not Abuse His Discretion By Failing To Apportion Fee Work Between Contract and Noncontract Claims Where Work On These Claims Was Inextricably Intertwined

Plus . . . Lower Court Did Significantly Reduce Fee Request In Awarding $507,000 In Fees And $33,699 In Costs To HOA.

            We repeatedly have demonstrated in posts how homeowner association disputes can be a pricey proposition, depending on which side prevailed (or, for that matter, where no side has been found to prevail). Over the years in posting in the HOA areas, we see substantial six-figure and even seven-figure awards of fees/costs. That happened in Majestic Asset Mgt., LLC v. The Colony at Calif. Oaks Homeowners Assn., Case Nos. D972627/D072628 (4^th Dist., Div. 1 May 10, 2018) (unpublished).

            There, HOA won a suit by plaintiffs/alter egos who bought a golf course and agreed to certain use and maintenance obligations. They sued under both contractual and many tort theories, with the defendants also filing a cross-complaint. HOA won a $41,024.20 damages judgment and a permanent injunction. Because there were contractual fees clauses in purchase sale agreements and a trust deed, and plaintiffs also sued for breach of CC&Rs (voluntarily dismissed with prejudice), Civil Code section 1717 and 5975(c) did provide fee entitlement to HOA as the prevailing party. HOA requested fees of $1,166,377 and costs of $35,389 (a total of $1,201,766). In opposition, the non-prevailing parties (the defense) claimed that the fee request was unreasonable and should be reduced by 50% to 75%, such that a reasonable range was $439,349.25 - $579,990.75 based on the analysis of a retained fee expert. The trial judge credited the expert analysis and awarded $507,000 in fees and $33,699 in costs over the defense objection that fees further had to be apportioned between contractual (compensable) and tort (non-compensable) work such that $250,000 - $300,000 was more like it. The trial court found the contract and tort work to be melded together and did not do any apportionment beyond his reductions for reasonableness of the request.

            The appellate court affirmed the fees/costs award. The record showed that the lower court, which presided over the trial, did not abuse its discretion in failing to apportion given the overlap between the various issues. The lower court was in a unique position to make this call given its involvement in the case and the eventual trial producing the judgment and fees/costs award.

Allocation/Fee Clause Interpretation: $66,103 Fee Award Against Losing Plaintiff/Cross-Defendant Affirmed Based On Broad Fees Clause And Common Intersection of Complaint And Cross-Complaint Claims

Underlying Dispute Related To A Grading Of Dr. J’s 1972 Trading Card.

            This next case illustrates an interesting application of attorney’s fees principles we have seen in many cases to a dispute over grading of a Dr. J trading card.  Let’s get to it.

            In Knafo v. Collectors Universe, Inc., Case No. G055112 (4^th Dist., Div. 3 Apr. 30, 2018) (unpublished), plaintiff submitted a 1972 Julius Erving (Dr. J) trading card to defendant for grading in line with the terms of a written submission agreement, also referencing a guarantee by defendant.  The submission agreement contained a broad fees clause encompassing “any action to enforce the terms and condition of [the agreement] or otherwise arising under or with respect to [it].”  After defendant asked plaintiff to return the card based on an incorrect “Gem Mint 10” rating, plaintiff refused to return it, provoking a complaint by plaintiff to seek the full value of the incorrect grading and defendant filed a cross-complaint seeking to obtain a return of the card for the correct rating.  Defendant won on both counts, with the judgment requiring a return of the Dr. J card for correction of the Gem Mint 10 grading.  Then, defendant moved for fees under the broad contractual clause, with the trial judge granting $66,103 in fees.

            Plaintiff lost appeals of the merits judgment and the subsequent fee award.

         The problem here was that the defense pled the submission agreement, which encompassed the guarantee, as an affirmative defense to the complaint such that fees for both defending against the complaint and prosecuting the cross-complaint were covered and were interrelated in nature. 

            BLOG WELCOME—We note that this case was decided by Justice Goethals, who was recently appointed to the 4/3 DCA and is among some of first decisions on the appellate bench. 

Allocation/Reasonableness Of Fees: Guarantors Obtaining Assignment Of Lender Rights Correctly Hit With About $400,000 In Attorney’s Fees Under Operative Fee Clause

 

Apportionment And Excessive Fee Challenges Did Not Prevail On Appeal.

            In Thompson v. T.D. Service Co., Case No. A148281 (1^st Dist., Div. 5 Jan. 31, 2018) (unpublished), a trustee under a deed of trust made a mistaken full credit bid at an initial nonjudicial foreclosure sale even though the mistake was corrected in a second trustee’s sale.  Guarantors for borrower and lender reached a settlement, and lender assigned its claims against trustee relating to the mistaken sale to guarantors.  Guarantors lost in litigation having both a complaint and cross-complaint, such that the trial judge awarded trustee attorney’s fees of $400,002.50 based on a fee clause in one of the assigned operative documents.

            Guarantors appealed, but could not hurdle discretionary apportionment and reasonableness adjudications with respect to requested fees (with just about all of the claimed fees awarded to two different sets of firms after four years of litigation).

            The problem on guarantors’ allocation argument was that all activities related to the “mistaken” first trustee sale in the operative proceedings such that the trial judge had to threshold determine whether issues were so intertwined that allocation would be impossible.  The lower court decided the issues were interrelated, such that no abuse of discretion was shown.

            The main challenge on reasonableness was that a larger firm associated into the case one month before a scheduled trial date and billed as many hours in one year as the prior firm did in five years.  That contention did not resonate given the belief that new trial counsel associated in a later stage of the game would be expected to bill a lot of hours to get up to speed.  Beyond that, guarantors failed to identify specific billing entries that they claimed to be unreasonable in nature—a particularity standard often enforced by reviewing courts, as here.

 

           

Allocation/Deed Of Trust/Section 1717: Lender Appropriately Awarded $60,000 In Borrower Dispute Under Section 1717

Trial Judge Allocated Compensable Fees Lower From The $128,187.50 Attorney’s Fee Request.

            In Rufini v. CitiMortgage, Inc., Case Nos. A148049/A149410 (1^st Dist., Div. 3 Jan. 30, 2018) (unpublished), borrower lost a loan dispute against lender.  Lender then sought $128,187.0 in attorney’s fees under a deed of trust fees clause, with the trial judge eventually awarding $60,000 after finding some causes of action involved the trust deed.  This conclusion was sustained on appeal.  The breach of implied covenant claims regarding acceleration of the trust deed did arise “on the contract” under Civil Code section 1717 so as to support fee entitlement.  The trial judge did apportion, such that there was no abuse of discretion as to the amounts of fees awarded. 

Allocation, Equity, Special Fee Shifting Statute: Prevailing School District Properly Awarded $113,216 In Attorney’s Fees Under Public Contract Code Section 7107

Public Prompt Payment Statute Allows For Recovery Of Fees By Prevailing Party.

            Public Contract Code section 7107 allows the prevailing party to recover attorney’s fees and costs in a suit alleging that a public entity or contractor wrongfully withheld retention payments required to be distributed in a timely manner.  This fee statute is bilateral in nature.

            In Waters Contracting, Inc. v. Point Arena Joint Union High School Dist., Case Nos. A138573/A139717 (1^st Dist., Div. 3 Jan. 29, 2018) (unpublished), contractor sued school district for damages, among other things including a section 7107 cause of action.  School District was granted summary adjudication based on the argument that the underlying construction contract was void based on the parties’ failure to comply with competitive bidding requirements.  Later, the trial court awarded school district $113,216 in attorney’s fees under section 7107, prompting an appeal by contractor.

            Contractor lost both its merits and fee award challenges.

            First, contractor argued that school district had to apportion between the fee and non-fee causes of action, but the problem was that this general rule ignored the applicable exception that the section 7107 and breach of contract claims were interrelated.  Next, contractor argued that school district was estopped from obtaining a fee award because it was an active participant in the “illegal” conduct, but estoppel is not a defense to a fees award under the statute.  (East West Bank v. Rio School Dist. (2015) 235 Cal.App.4^th 742, 752.)  Finally, with regard to the contention that the fee award was excessive, the trial judge did reduce for some post-summary adjudication work and the school district did face penalties beyond the withheld retention amount such that it was not unfair to have a fee award which was close in range to the amount of the withheld funds. 

Allocation, Prevailing Party, Reasonableness Of Fees: $32,133.50 Fee Award Arising Out Of Plaintiff’s $5,159.77 Easement Dispute Victory Affirmed On Appeal

Fees Were Reasonable, Plaintiffs Were Successful, And No Apportionment Required.

            Neighbors, which happens more frequently than one might suppose, got into a dispute over a negative easement involving an excavation ban within 10 feet of the base of certain trees along their shared property, with the dispute based upon a settlement agreement in Biggs v. Tekin, Case No. E066224 (4th Dist., Div. 2 Jan. 19, 2018) (unpublished).  That agreement had the following fees clause: “Each Party hereto agrees that in the event of any dispute concerning this Agreement or claims, demands, liabilities or causes of action included within its scope the Prevailing Party shall be entitled to recover its attorneys[’] fees and costs. The Prevailing Party shall be the Party entitled to recover his/her costs of suit, whether or not the suit proceeds to final judgment. No sum for attorneys’ fees shall be counted in calculating the amount of a judgment for purposes of determining whether a Party is entitled to recover his/her costs or attorneys’ fees.”

          Plaintiffs sued defendants for breach of the settlement agreement, nuisance, and injunctive relief, with plaintiffs eventually obtaining $5,159.77, no permanent injunction, costs of suit, and a declaration that they were entitled to reasonable attorney’s fees following a one-day bench trial.   Plaintiffs sought to recovery $32,133.50 for about 168 hours of attorney and paralegal work, and the trial judge awarded every penny of the request—prompting an appeal by defendants.

          The defense arguments did not change the result.

          Defendants first argued that the plaintiffs should have proceeded via a CCP § 664.6 motion rather than taking the case to trial.  However, the appellate court believed that the expenses to prosecute the dispute through section 664.6 might have been around the same given declarations, discovery, motion drafting, and court appearances.

          They next contended that plaintiffs did not really prevail because they had obtained a compensatory award much less than damages requested earlier in the litigation.  However, because the trial court could conclude plaintiffs’ counsel was successful, there was no abuse of discretion in finding fee entitlement based on the fees clause.

          The final salvo was that the trial court erred in not apportioning fees between contract and non-contract claims.  The problem here was that the fees clause mentioned “any dispute,” which has been interpreted to include contract and non-contract causes of action such that no apportionment was necessary.  (Maynard v. BTI Group, Inc., 216 Cal.App.4th 984, 993 (2013); Silver v. Boatwright Home Inspection, Inc., 97 Cal.App.^h4th 443, 449 (2002).)

Allocation/Consumer Statutes: Joint And Several Liability Fees And Costs Award Under Consumer Statutes Reversed Because Apportionment Was Required Between Car Dealership and Financing Company

FTC Holder Rule Under Consumer Legal Remedies Act And Car Dealership’s Tender Under the Automobile Sales Finance Act Were At Issue.

            There are many California consumer statutes which allow fee shifting, mainly to the prevailing party—so that a fair amount of them are bilateral in nature (unlike in the employment context, favoring the employee).  Two of them, applicable to the next decision we post on, are the Consumer Legal Remedies Act (Civ. Code, § 1780(e)) and the Automobile Sales Finance Act (Civ. Code, § 2983.4).  These consumer fee-shifting statutes were at play in Duran v. Quantum Auto Sales, Inc., Case No. G053712 (4^th Dist., Div. 3 Dec. 12, 2017) (unpublished), authored on behalf of a 3-0 panel by Presiding Justice O’Leary.

            What happened here is that a car purchaser prevailed in her lawsuit against car dealership and financing company by which she obtained $41,800 in punitive damages, rescission, and restitution, not to mention an injunction against car dealership prohibiting it from misrepresenting a vehicle’s history of accidents and collision damage.  That subsequently led the trial judge to award costs $23,264.91 in costs and $203,287 in attorney’s fees under the consumer fee-shifting statutes mentioned above, the award being made jointly and severally against the car dealership and financing company.

            The joint and several nature of the costs/fees award triggered a reversal and remand on appeal.

            With respect to the CLRA issue, there was an FTC Holder Rule restricting the liability upon a holder in due course like the financing company.  However, the 4/3 DCA panel decided, after surveying out-of-state authority in Ohio and Texas (given the lack of California authority), that the best approach was to limit the financing company’s fee exposure, but determining it could be above the amount actually paid to the company but could not include joint and several liability to the extent that the costs/fee recovery was only attributable to car dealership—the Texas approach. 

            On the Automobile Sales Finance Act (ASFA) claim, the appellate court found there had not been a full tender by car dealership of amounts claimed to be owed by plaintiff, such that there was still need for an apportionment of the costs/fee recovery between the two defendants.  However, the amounts of the total award were not disturbed, just the allocation to be determined on remand.

Allocation/Prevailing Party: Trial Judge Erred By Awarding “Full Boat” Requested Fees To Plaintiff/Cross-Defendant Where Record Did Not Show That It Necessarily Prevailed

On Remand, Prevailing Party Determination Needs To Be Revisited As Well As Apportionment Issues.

Sequoia Lake, 1920s.  Online Archive of California.

            Central Valley Young Men’s Christian Association, Inc. v. The Sequoia Lake Conference of Young Men’s Christian Associations, Case No. F072379 (5^th Dist. Oct. 3, 2017) (unpublished) was an interesting YMCA inter-organizational battle about ownership and fees owed as it related to a Sequoia Lake real property.  What happened was that plaintiff/cross-defendant Central Valley brought various contractual and tort claims against defendant/cross-complainant Sequoia Lake Conference (SLC), alleging that it had an equitable possessory interest in the Sequoia Lake property and that it had offsets to camp usage fees SLC claims were owed.  SLC cross-complained against Central Valley for operational expenses claimed to be unpaid.  After some of Central Valley’s tort claims fell by the way side, Central Valley got mixed results on its claims, while SLC was awarded a total of $102,780 plus prejudgment interest on its cross-claims.  But now the postjudgment fun begins!  Both sides moved for attorney’s fees as the prevailing party, with the trial judge determining Central Valley prevailed and awarding its total request of $293,487.50 in fees.  No fees were awarded to SLC.

            SLC did well to appeal the fee determinations, because it obtained a reversal and remand for a redetermination of the prevailing party and possible apportionment of fees as part of that determination.

            As the appellate court saw things, SLC did prevail on contractual cross-claims for payment of conference fees and a propane bill, especially given that the jury found SLC was not unjustly enriched such that no contractual offsets were owed in Central Valley’s favor.   However, the trial judge believed that Central Valley never contested these claims such that SLC could not be the prevailing party, relying upon National Computer Rental, Ltd. v. Bergen Brunswig Corp., 59 Cal.App.3d 58 (1976) in reaching this result.  The problem here, for the 5 DCA panel, was that the record belied this—Central Valley did contest these claims and never acknowledged owing the amounts claimed by SLC, factors critically distinguishing National.  With respect to Central Valley, it defeated SLC’s claim for camper deposits, but was unsuccessful on all of its offset claims.  Given that Central Valley was largely unsuccessful on its contractual offset claims, the trial judge needed to revisit the entire “prevailing party” issue in light of the erroneous conclusion that Central Valley did not contest the contractual cross-claims leading to recovery by SLC. 

            On the apportionment issue, the appellate court did believe that apportionment was likely possible between contract and non-contract claims, such that the remand proceeding should focus on the prevailing party status issue and on whether apportionment on only the contract claims could be achieved after it indicated some noncontractual issues which should not be considered.  So, $293,487.50 in fees, for now, went POOF! pending further proceedings.

Allocation: 2/1 DCA Confirms That Apportionment Is A Highly Discretionary Call For The Trial Court On How And When To Apportion

Winning Alter Ego Targets’ Fee Award Of $82,500 Sustained On Appeal.

            In Califco, LLC v. Kientz, Case No. B28004 (2d Dist., Div. 1 Sept. 28, 2017) (unpublished), two alter ego targets were found personally not liable with respect to contract and tort claims brought out of a failed restaurant situation involving a lease.  The trial judge awarded the winning individuals $82,500 out of a requested $111,567.50 in attorney’s fees.

            On appeal, the fee award adverse parties/appellants argued that the trial judge failed to apportion attorney’s fees among defendants.  Although agreeing that apportionment of a fee award is mandatory, the lower court retains a wide degree of discretion on how to apportion the award.  (Charton v. Harkey, 247 Cal.App.4^th 730, 744 (2016) [discussed in our May 24, 2016 post].)  The trial judge in Kientz decided that the work was “inextricably intertwined” and it was “impracticable/impossible to separate activities into compensable or noncompensable units.”  Appellant challenged this by citing to cases where losing litigants obtained a reversal where the record clearly showed only a small portion of the work related to compensable time.  However, those cases were distinguishable according to the appellate court, demonstrating that the factual circumstances of the case drive whether the lower court abused its discretion.  It did not in this one, with the fee award affirmed. 

Allocation/Fee Clause Interpretation: One Prevailing Defendant Entitled To Some Fee Recovery Under Promissory Note Fees Clause

However, That Defendant’s Assertion Of A Contract As An Affirmative Defense Required Some Paring Back of Fees Under Recent Mountain Air Decisio

            On August 1, 2017, we posted on Mountain Air Enterprises, LLC v. Sundowner Towers, LLC, 2017 WL 3222520 (Cal. Supreme Court 2017).  A panel of the 2/4 DCA delayed submission of a matter based on the pendency of Mountain Air and has now applied it in Morrison v. Morrison, Case No. B269435 (2d Dist., Div. 4 Aug. 23, 2017) (unpublished).

            The case involved a fairly nasty dispute between two children, a grandson, and companies associated with them relating to adult bookstore companies left behind by the father of the children and grandfather of grandson, complete with one of the children apparently entering into transactions to avoid tax evasion repercussions.  After a fairly complex bench trial, plaintiff Michael and a one of the companies basically lost all claims, but the appellate court reversed on certain claims and remanded to see that they be decided on the merits.  They were, with plaintiff Michael and the company still losing except for one claim relating to a defendant entity.  Defendant Mindey, who prevailed on all claims, moved to recover $96,273.83 in attorney’s fees under Civil Code section 1717 based on fees clauses in a promissory note and a stock repurchase agreement (SRA), although the SRA was raised as an affirmative defense to Michael’s claims.  The trial judge awarded Mindey $54,402 for promissory note work (not apportioning any due to the overlapping nature of the issues with other claims) and $14,897 for work relating to the SRA defense work (for a total award of $69,299). 

            The appellate court affirmed the first component, but reversed the $14,897 component. 

            The first component was justified based on the promissory note fees clause, with no apportionment necessary because the issues in all causes of action overlapped.  However, the fee recovery based upon enforcement of contract in defense was foreclosed by Mountain Air given that the SRA fees clause only encompassed fee recovery “in any legal action or other proceeding brought by either party to enforce or interpret the terms of the Agreement”—which did not cover affirmative defense work.  That being said, the partial affirmance and reversal did put to rest the fee battle between some of the parties.

Allocation, Fee Clause Interpretation, Prevailing Party, Section 1717: Lease Rescission Claim Did Give Rise To Successful Fee Recovery To The Tune Of $418,730.75 In Fees And $16,260.79 In Costs In Tenant’s Favor

“Any Remedy Hereunder” Lease Language Salted Away The Result.

            In The Redbean House Corp. v. Colonnade Wilshire Corp., Case No. B276837 (2d Dist., Div. 2 Aug. 16, 2017) (unpublished), tenant successfully obtained rescission of a commercial lease based on a substantial seismic retrofit issue, although landlord obtained $49,647 in damages for waste after a lot of claims were dismissed by both sides, including landlord’s dismissal of a breach of lease claim.  Then, in post-judgment activities, the trial judge awarding tenant $418,730.75 in attorney’s fees based on a lease fees clause and $16,260.79 in routine costs.

            Landlord appealed the fees/costs orders; landlord lost.

            The first issue was whether rescission of the lease was compensable under Civil Code section 1717.  It was; the lease clause had broad language including “any remedy hereunder” which happened to encompass a rescission remedy.  Given that lease rescission was tenant’s primary litigation objective, the lower court did not abuse its discretion in finding tenant was the prevailing party despite dismissing and not winning every claim.  Landlord’s voluntary dismissal of its breach of contract claim did not alter the result, given that tenant still prevailed on an actually adjudicated claim of import.  (CDF Firefighters v. Maldonado, 200 Cal.App.4^th 158, 161, 167 (2011).)  Finally, no apportionment of fees was required because the trial judge determined that enforceability of the lease was a common issue across the board.  Fees/costs orders affirmed. 

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.

________________

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.