CALIFORNIA ATTORNEY'S FEES

Equity: Appellate Court Summarily Reverses Fee Grant Order After Referee’s Merits Decision Reversed

Court Of Appeal Decided It Had Independent Authority To Summarily Reverse Despite Clear Statutory Authority To Do So.

               In Hot Rods, LLC v. Northrop Grumman Systems Corp., Case No. G062524 (4^th Dist., Div. 3 May 8, 2024) (unpublished by-the-court opinion), a referee’s prior merits decision was reversed and remanded, with the aggrieved party also appealing from a subsequent postjudgment fees award.  Although it was unclear whether the stipulated reversal procedure in CCP § 128(a)(8) applied to appeals or whether the presumption against stipulated reversals applies to a postjudgment fees order, the appellate court found it had inherent authority to issue a summary reversal where, as here, the reversal of the fee order was clear and public trust issues were not implicated.

Equity, Prevailing Party: $54,914.25 Fee Award For Replacement Referee Interim Victory Was Premature

Based On Unique Circumstances Of The Litigation, Fee Request Was Premature Until The Overall Merits Were Decided.

            Equity does factor in attorney’s fees awards, as Hot Rods, LLC v. Northrop Grumman Systems Corp., Case No. G061449 (4^th Dist., Div. 3 Jan. 25, 2024) (unpublished) makes clear.

            This contentious litigation between the parties involved multiple proceedings and appeals over parties’ responsibilities for environmental contamination of an Anaheim property, which produced some wins and losses for both sides.  The current appeal focused on a $54,914.25 fee award for one party prevailing on an interim victory of obtaining a replacement referee.  However, given that the merits of the motions were not addressed, the 4/3 DCA, in an opinion authored by Justice Moore, reversed because it was premature, with a remand to see what happened at later junctures of the litigation to determine who prevails.

Deeds Of Trust, Equity: Lender Electing Judicial Foreclosure Which Did Not Fix Amount Of Additional Attorney’s Fees And Costs, But Forcing A Borrower Pay Off To Lender Due To Nonjudicial Foreclosure Activities, Had To Return Fees And Costs To Borrower

Lender Elected Its Judicial Foreclosure Remedy, With Borrower Not Being Assessed With Fees And Costs.

            Lender must not be pleased with the result in Transition Financial Services, LLC v. Wintrust Bank, Case Nos. A162930 et al. (1^st Dist., Div. 5 Sept. 29, 2023) (unpublished).  Lender obtained a judicial foreclosure judgment for the amount of the secured debt, but never pursued adding additional attorney’s fees and costs of a claimed additional $500,000 to the judgment or moving for same in that action.  However, lender threatened nonjudicial foreclosure such that the borrower paid the claimed additional fees and costs to avoid the trustee’s sale and loss of property.  Eventually, a trial judge held that lender had elected its judicial foreclosure remedy and had to return the fees and costs to borrower because they were not part of the judicial foreclosure judgment.  The appellate court affirmed, finding that lender had elected its remedy—it could have gone judicial or nonjudicial foreclosure, but obtained a judgment under the former path.  As such, borrower did not owe the additional fees and costs; and, also, was properly found to be the prevailing party entitled to fees and costs ordered by the lower court after determining borrower prevailed on the election of remedies issue.

Equity, Fee Clause Interpretation: Prevailing Party Awarded Substantial Fees Despite A Bad Typo In The Contractual Fees Provision

Prevailing Party Did Obtain $538,961 In Fees After Reformation By Trial Judge, Affirmed On Appeal.

            We bloggers have seen this situation before.  A litigant, like the one in California Décor, Inc. v. Medrano, Case No. B313743 (2d Dist., Div. 2 Mar. 15, 2023) (unpublished), prevailed on its own case and defeated a cross-complaint.  So, that naturally took everyone to attorney’s fees recovery, given there was a contractual fees clause allowing fee shifting.  However, here is the language in the clause: “In the event of a dispute between Landlord and Tenant, any and all attorney fees shall be paid by [sic] the prevailing party.”  Losing party argued that prevailing party could not recover fees based on the “by” language, but the trial and appellate courts did not buy it after the lower court used equitable powers to reform the clause to change the language to “to”—fees shall be paid to the prevailing party.  After all, most contractual fees clauses do not penalize a prevailing party by having to pay the fees of an unsuccessful party.

THERE IS A LESSON HERE FOR CONTRACT DRAFTERS—PROOF YOUR DOCUMENTS TO MAKE SURE THEY MAKE SENSE.

Equity: Specific Performance Judgment Could Not Condition Transfer Of LLC Interests Upon Payment Of Attorney’s Fees Order

Fees Were Not A True Incident Of the Specific Performance Judgment.

            Youshei v. Yoshaei, Case No. B313770 (2d Dist., Div. 1 Jan. 30, 2023) (unpublished) was a case where the appellate court reversed the portion of a specific performance judgment conditioning a transfer of LLC interests upon the payment of attorney’s fees, because fees were not a true incident of the specific performance judgment so as to operate as a condition for transfer.  Costs and prejudgment interest were, however.

Equity, Judgment Enforcement, Tort Of Another: Law Corporation’s Attempts To Setoff Adverse Judgment For Tort Of Another Fees Were Rebuffed By Court Of Appeal

Nothing Demonstrated Setoff For Tort Of Another Fee Damages Could Be Obtained In A Postjudgment Phase.

            The result in David S. Karton, A Law Corporation v. Musick, Peeler, Garrett LLP, Case No. B305837 (2d Dist., Div. 1 Oct. 3, 2022) (published), was driven by a prior appellate opinion where a default in favor of the law corporation was found to be void, such that an assignor of adverse judgments impacting the law corporation to Musick, Peeler became the prevailing party.  (Substantial fees were spent on both sides for a claimed law corporation receivable of $65,246.23.)  The lower court denied law corporation’s motion to set off from the adverse judgment certain claimed “tort of another” fees incurred in actions alleging that judgment assignor had attempted to hinder the collection of the vacated default judgment.

            The appellate court determined that set off was procedurally and substantively not available.  On the procedural front, CCP § 431.70 does not allow for postjudgment set off versus simply pleading it as an affirmative defense in an answer, and law corporation failed to meet the judgment satisfaction acknowledgment requirements in trying to obtain a set off.  On the merits, the “tort of another” doctrine was not available because no third-party litigation was involved in the hinderance lawsuits in other states, which substantively meant there could be no set off on this basis.

Equity: Appellate Court Agrees To Stipulated Reversal Of Postjudgment Fee Award Given Merits Reversal

However, It Does Raise The Issue Of Whether Stipulated Reversals Specifically Apply To Postjudgment Fee Orders.

            This next post is likely of interest to appellate practitioners, because sometimes appellate issues are very technical if not arcane in nature. 

            In Mid-Wilshire Property, L.P. v. Dr. Leevil, LLC, Case No. G059899 (4^th Dist., Div. 3 July 20, 2022) (unpublished), a merits judgment against plaintiffs was reversed.  That left plaintiffs’ appeal of an adverse $476,353.55 in attorney’s fees to the former prevailing party.  The parties stipulated to a summary reversal of the postjudgment attorney’s fees award based on the merits reversal.

            The appellate court granted it, but only after drawing attention to an interesting postjudmgent, appellate issue.  Specifically, stipulated reversals under Code of Civil Procedure section 128(a)(8) only relate to judgments, not to other appealable orders such as a postjudgment orders awarding attorney’s fees.  However, given that the reversal of the fee order was inevitable based on the merits judgment reversal, there was no reason to not grant the stipulated reversal request—even if it was unclear whether the presumption against stipulated reversals applies to a postjudgment fee order. 

Equity, Judgment Enforcement: Lower Court’s Denial Of Fees To Judgment Debtor In State Case Based On ERISA Fee Shifting Statute and Denial Of Judgment Debtor’s Motion To Tax Costs Were Both Sustained On Appeal

ERISA Fee Entitlement Not Shown And The Winning ERISA Argument Was Not Raised Until Judgment Creditor’s Assignee Racked Up More Judgment Enforcement Expenses.

            Everyone does need to keep in mind, within certain legal strictures, that attorney’s fees awards are frequently driven by the equities of a case.  Coastline JX Holdings LLC v. Bennett, Case No. G059552 (4^th Dist., Div. 3 July 7, 2022) (published) demonstrates that perfectly.

            This case involved very protracted, tenacious litigation between a judgment creditor’s assignee and judgment debtor, with a lower court eventually concluding that certain assets of the debtor were exempt from levy based on ERISA protections even though those winning arguments were raised deep into the proceedings such that the trial judge had to exercise inherent authority to redetermine the dispositive issue.  Judgment creditor was granted some additional post-judgment enforcement costs under CCP §§ 685.040 and 685.070 (with judgment debtor’s motion to tax costs being denied).  The lower court also denied judgment debtor’s request for attorney’s fees as the “prevailing” party.

            The 4/3 DCA affirmed, in an opinion authored by Orange County Superior Court Judge Linda Marks, sitting by assignment.  With respect to the fee denial, it was correct because (1) judgment debtor brought it with no invitation to do so by the lower court, and (2) judgment debtor provided no authority that this was a true ERISA action which allows prevailing party fees as opposed to raising an ERISA argument in a civil state court action.  Furthermore, granting fees to judgment debtor would be inequitable given his stalwart resistance to the other side’s collection efforts.  On the post-judgment costs awarded to judgment creditor’s assignee, that ruling was no abuse of discretion given that the ERISA argument was raised late in the game and the issues were complex, justifying the costs claimed by the other side. 

Deadlines, Equity: Blowing Attorney’s Fees Deadline Was Affirmed Under CCP § 473 Prong

Mandatory Prong Was Not Available, But Lower Court Could Discretionarily Entertain.

            In Byron v. McCray, Case No. B306599 (2d Dist., Div. 7 Feb. 14, 2022) (unpublished), an attorney for a prevailing party fell on the sword and brought a CCP § 473 motion to recover fees based on not filing for fees in timely manner, which was eventually granted in excess of $85,000.  The adverse party appealed, but to no avail.  Although agreeing that the section 473 mandatory provision did not apply, the lower court’s discretionary award under section 473 was in play.  Miscounting or inadvertence by counsel is a basis to grant relief under section 473 or the fee motion extension deadline default under CRC 3.1702(d).  Given the lack of prejudice to the opposing party, the granting of relief and fee award was no abuse of discretion.

Equity, Retainer Agreements: Attorney Security Agreements For Fees Can Take Precedence Over Charging Orders

Matter Remanded To Determine Scope Of Security Agreement.

            We commend that all attorneys, with respect to collection of fees, read Rice v. Downs, Case No. B307780 (2d Dist., Div. 1 Dec. 27, 2021) (partially published) where the Court of Appeal, with some remand limited instructions, did seem to validate a security agreement/ UCC-1 filing for fee compensation as against a later charging order.  Lien priorities did govern here, but the opinion is good reading on how to perfect and obtain priority for purposes of fee recovery against competing creditors.

Equity, Retainer Agreements: Voiding A Contingency Agreement Under Business & Professions Code Section 6147(b) Does Not Extend To Reasonable Litigation Costs

Contingency Agreement Provided Client Would Pay For All Costs, With Quantum Meruit Equitable Principles Bolstering The Conclusion.

            Henry M. Lee Law Corp. v. Chang, Case No. B288895 (2d Dist., Div. 3 Nov. 29, 2021) (unpublished) was quite an odyssey.  Law firm agreed to represent client in a wage/hour case under a 50% contingency agreement under which client agreed to reimburse all costs advanced by the firm.  There also was a severability clause in the retainer agreement.  Unfortunately, the retainer agreement did not have “negotiability” language required under Business and Professions Code section 6147(c).  Plaintiff client received a jury verdict of $62,000 plus an award of attorney’s fees in the amount of $300,000 under Labor Code sections 226(e) and 1194(a), with the fees ultimately held to go to the law firm rather than the client.  [BLOG NOTE—This shows how many wage/hour cases can result in substantial fees where the compensatory recovery is much less.]  But there was more bad news to come—the appellate court reversed the jury compensatory verdict and fee award in a subsequent opinion. 

            So, the battle turned to litigation costs advanced by law firm in representing the ex-client who terminated the firm along the way.  Client properly voided the fee agreement under section 6147(c), such that quantum meruit was the basis for fee recovery, which was a moot issue given the earlier appellate reversal.  A jury awarded law firm $28,250 in a collection suit against ex-client to collect the advanced litigation costs.  The issue presented in the appeal was whether section 6147(c) invalidated attorney’s attempt to recoup advanced litigation costs from client.

            The appellate court found that the section only applied to fee recovery and did not impact recovery of litigation costs which were to be borne by the client ultimately.  Nothing in the statutory provision applied to litigation costs, and quantum meruit equitable principles demonstrated it would be unfair to deny those expenses to client’s law firm. 

Equity: Economic Duress Doctrine Supports No Award Of Post-Judgment Collection Fees In Dissolution Action Involving, Yes, A $20,000 Marital Settlement Agreement Sum

Husband Was Forced To Pay Off Exorbitant Fee Judgment Lien Amounts, With Equity Coming To The Rescue!

            We wish all of our readers Happy Holidays as we come to the close of an interesting year.

            Although involving convoluted facts and procedural history, Marriage of White & Hunter, Case No. A157398 (1^st Dist., Div. 2 Dec. 23, 2020) (unpublished) goes to show you how the equities do play a part in attorney’s fees disputes, ironically involving substantial post-judgment fee collection requests relating to a $20,000 marital settlement debt.  In the end, the economic duress doctrine rescued ex-husband, because the record supported the lower court’s conclusion that he had to pay off an exorbitant judgment lien, mainly attorney’s fees, in order to close a property escrow where he faced liability no matter which way he turned.  Given this lack of choice, duress came to rescue the day and relieve him from paying attorney’s fees which grew in number over a substantial number of years.  (Hester v. Public Storage, 49 Cal.App.5^th 666, 679 (2020); Rich & Whillock, Inc. v. Ashton Development, Inc., 157 Cal.App.3d 1154, 1159 (1984).)

Appealability, Equity: Losing Party’s Failure To Appeal Earlier Fee Order Forfeited Challenges

However, Amending Fee Order Nunc Pro Tunc To Correct Clerical Error Was No Abuse Of Discretion.

            Trans World Sourcing, Inc. v. Prend, Case No. E071712 (4^th Dist., Div. 2 Oct. 14, 2020) (unpublished) is a situation where two dismissed defendants moved for attorney’s fees of $27,263.63, each, and for costs of $3,859.49, each, against plaintiff.  Plaintiff did not oppose the motion, which was granted although the order mistakenly stated it was for fees and costs of $3,859.46 rather than including the separate, higher fees amount.  The defendants quickly moved to correct the error, with the lower court requiring a CCP § 473 clerical error motion.  Defendants obliged, and the lower court corrected the fees/costs award nunc pro tunc to reflect the true fees amount in granting the section 473 motion.  Plaintiff appealed, but to no avail.  It had forfeited challenges to the earlier fee ruling on the merits based on no opposition and on Plaintiff’s failure to appeal the ruling.  Although Plaintiff could contest the section 473 order, it was no abuse of discretion for the trial judge to correct a transparent clerical error. 

Equity: Failure To Grant A Trial Court Reporter Fee Waiver To An Eventually Losing Plaintiff Required A New Trial, With Harmless Error Analysis Having To Go With The Plaintiff Needing A Transcript To Show Error

However, Jury Trial Fee Waiver Argument Lacked Merit Given A Jury Waiver A Long Time Back.

            There are some famous quotes about justice under the American system.  Two come to mind with respect to our next post.  The first is: “It’s every man’s business to see justice done,” attributed to Sir Arthur Conan Doyle.  The second is a partial quote from Seimon v. So. Pac. Transp. Co., 67 Cal.App.3d 600, 606 (1977): “Justice is to be accorded to rich and poor alike.”

            In Padron v. City of Parlier, Case No. F077052 (5^th Dist. June 25, 2020) (unpublished), plaintiff suffered a nonsuit at trial, after asking for a court reporter fee waiver on the first day of trial and after having been granted an initial fee waiver when the complaint was filed.  The trial proceeded without a court reporter such that plaintiff really had no way to prove error without a transcript.  Based on two recent decisions, Jameson v. Desta, 5 Cal.5^th 594, 599, 607-608 (2018) and Dogan v. Comanche Hills Apartments, Inc., 31 Cal.App.5^th 566, 568, 570 (2019), the appellate court found the failure to provide a court reporter fee waiver was not harmless error, although a “firm conclusion” was difficult to draw.  However, the absence of the actual testimony did establish prejudice so that a new trial was the result.  The Fifth District panel did indicate there were merits problems with plaintiff’s case, so some cautionary remarks were provided to plaintiff in deciding to seek a new trial on remand.  With respect to the claim of error in waiving a jury trial, the defense won this one given that jury fees were not posted at the case management conference long before—even though they were required under CCP § 631(b), (c), (f)(5), augmented by the fact that no jury waiver relief motion was brought. 

Deadlines, Equity: Plaintiff’s CCP § 473(b) Mandatory Relief Motion Did Not Excuse Attorney’s Failure To File A Timely Fees Motion Based On Lower Court Order

Result Was A Causation Issue—Failure To File Fee Motion Did Not Cause The Dismissal, But Only Resulted In A Lost Fee Request Opportunity.

            Co-contributor Mike was a collegiate debater, with causation being a very important argument.  That was just at issue and dispositive in the case in Hernandez v. FCA US LLC, Case No. B296516 (2d Dist., Div. 8 June 11, 2020) (published).

            There, parties advised a trial judge that they had settled on the first day of a scheduled trial, with plaintiff under a lemon law case agreeing to file a “with prejudice” dismissal upon the payment of the settlement and upon payment of any attorney’s fees and costs by agreement or noticed motion.  The trial judge was fine with the settlement, but he wanted to set a deadline for filing of the fees motion on an Order to Show Cause re Dismissal deadline of 90 days out, with any fees motion needing to be set for hearing by that OSC date.  Well, you can guess what happened.  Plaintiff’s counsel did not file the fees motion by the OSC deadline, but the trial judge continued things for about a month.  Plaintiff’s counsel did not do anything for a month, except to file an ex parte request to file the motion later—a request made at the last moment on the continued OSC date.  The trial judge was unsympathetic, denying the fee continuance request and finding no basis for a mandatory CCP §473(b) motion relief.   The action was dismissed.

            Well, flummoxed, plaintiff appealed for not being given the chance to present an attorney’s fees motion, arguing section 473 came to the rescue.   

            Didn’t work on appeal. 

            Much of this appeal, in our view, hinges on the fact that § 473 mandatory relief only was sought.  Although many elements for mandatory relief were satisfied, plaintiff failed to satisfy the causation element—the dismissal was not caused by the attorney’s mistake, inadvertence, surprise, or neglect.  The problem here was that the actual dismissal resulted because the parties reached a settlement and plaintiff had been paid in full, not anything hinged to the fee denial.  The lost opportunity to bring the fee motion was not causally linked to the dismissal, such that the mandatory relief provision did not act to save plaintiff’s attorney’s error.  Much of this was based on the trial judge’s case management order, so litigants and attorneys need to make sure they abide by these deadlines.  If not, even safety valves for missing deadlines may not be available.

Equity, Prevailing Party: $2.41 Million Trial Court Fee Award Affirmed But $125,473.60 Appellate Fee Award Reversed

Trial Court Fee Withstood Because Good Faith Settlement With One Defendant Did Not Offset Jury Award Against Another Defendant.

            In Campos v. Kennedy, Case No. B293745 (2d Dist., Div. 2 Mar. 17, 2020) (unpublished), a sexual assault case with very bad facts, the appellate court considered a $2.41 million fees award to the prevailing party on remand and a $125,473.60 by plaintiff for fees incurred in a prior appeal.  The 2/2 DCA decided trial court fees stood up, but it reversed the appellate fee award.

            Defendant argued that plaintiff did not prevail because there was a settlement with a co-defendant which was an offset from the jury verdict against defendant, such that plaintiff did not prevail.  Nope.  There were separate and distinct wrongs committed by the two sets of defendants.  Once that was recognized, no offset was justified, plaintiff prevailed, and the $2.4 million-plus trial court fee award was sustained.

            Different matter as to the appellate fee award.  The appellate court, construing its earlier opinion, found that plaintiff did not prevail on the prior appeal—meaning the $125,473.60 appellate fee award went POOF!

Equity: United Grand Corp. v. Malibu Hillbillies Decision Is Now Certified For Publication

Case Dealt With Striking Landlord’s Fee Prayer Based On Misconduct.

            In our May 25, 2019 post, we discussed United Grand Corp. v. Malibu Hillbillies, LLC, Case No. B283833 (2d Dist., Div. 8 May 22, 2019), which was unpublished at the time.  The case dealt with a situation where the 2/8 DCA affirmed a lower court’s striking of a fee prayer by a landlord based on litigation misconduct.  We can now provide an update:  the opinion was certified for publication on June 12, 2019. 

Equity: Trial Court Did Not Abuse Its Discretion By Striking Substantial Fee Prayer Where Requesting Party Engaged In Misconduct During The Course Of The Litigation

Appellants Did Not Help Themselves By Calling Lower Court Rulings “Gibberish” and “Legal Nonsense.”

            In United Grand Corp. v. Malibu Hillbillies, Case No. B283833 (2d Dist., Div. 8 May 22, 2019) (unpublished), landlord sought unpaid rent of less than $50,000, but then sought $2 million in fees for post-judgment work over the course of three years.  The problem was that this garden variety commercial rent dispute was one in which landlord actually accepted interpleaded funds after engaging in some misconduct during the course of the litigation.   The trial judge, especially learning about the acceptance of funds after continued activities, decided to strike the fee prayer in the complaint.  The appellate court affirmed, finding that evidence of misconduct was of record and that the lower court retained jurisdiction to pass on post-judgment fee proceedings while merits determinations were pending for appellate determination.  Appellants did not help their cause by labeling the trial judge’s findings as “gibberish” and “legal nonsense.”

            BLOG COMMENT—Are there any hillbillies in Malibu?  That one is tough to believe.  However, we do commend our readers to read “Hillbilly Elegy” by J.D. Vance for a poignant memoir of Rust Belt hillbillies.  References to Mamaw and Papaw are especially poignant.

Equity: Appellate Court, Although Sympathetic To Fee Losing Party, Could Not Reverse Because No Extrinsic Fraud Or Total Attorney Abandonment

Result Was A $190,499 Fee Exposure.

           The appellate court in Stubblefield Properties v. Jacinto, Case No. D074718 (4^th Dist., Div. 1 March 18, 2019) (unpublished) was not unsympathetic to a $190,499 fee recovery socked on a litigant where attorney malpractice was potentially involved. However, there was no basis to reverse, where the request was made 2 years down the line. The problem was that there was no extrinsic fraud or total attorney abandonment under Daley which might have led to relief. The ultimate problem was the fee recovery had entitlement under the Mobilehome Residency Law and FEHA, such that nothing more could be done.  

Equity: No Jury Trial Entitlement On Fees Motion Under The Confidentiality Of Medical Information Act

Post-Trial Motion Is The Way To Go!

West courtroom, Jury box, Howard M. Metzenbaum U.S. Courthouse, Cleveland, Ohio

            In Brown v. Mortensen, Case No. B281704 (2d Dist., Div. 1 Jan. 3, 2019) (published), the 2/1 DCA decided that no jury trial is available for attorney’s fee requests under the Confidentiality of Medical Information Act (CMIA), Civil Code section 56.35. Rather, a post-trial motion is the way to seek recovery of such fees.

Indemnity, Equity: Trial Judge Properly Denied Substantial Fees To Prevailing Party Where Contractual Clause Was Indemnity Clause And New Fee Entitlement Arguments Were Presented In Supplemental Briefing Beyond What Was Granted By Lower Court

Supplemental Evidence Was Properly Not Considered In The Trial Judge’s Discretion.

            If the lower court grants you supplemental briefing, make sure you do so in line within the scope of the supplemental briefing allowed by the trial judge. MetLife Securities, Inc. v. Brandt, Case No. B282949 (2d Dist., Div. 3 Dec. 18, 2018) (unpublished) demonstrates that a motion will be denied where supplemental briefing exceeds what was authorized.

            In this particular situation, cross-complainants did prevail, filing a motion to recover attorney’s fees based on a contractual clause which was an indemnity rather than a fees clause and offering no support as to the reasonableness of the lodestar request/counsel’s hourly rates. The lower court’s tentative was to deny on this basis, but it did allow them supplemental briefing to support the amount of the fee request. Cross-complainants fired their counsel and replaced with new counsel which filed large supplemental papers containing new fee entitlement bases and proof to support a $2.3 million fee request. The lower court denied fees altogether, finding the supplemental papers were outside of what it authorized.

            The appellate court affirmed. The supplemental papers effectively abandoned reliance on the indemnity provision as a fee predicate, and the lower court did not abuse its discretion in refusing to consider supplemental entitlement arguments not raised earlier and which exceeded the scope of what was discretionarily allowed to be filed in the first place.

Consumer Statutes, Equity: Fifth Circuit Court Of Appeals Affirms Denial Of Fees In Fair Debt Collection Practices Act Case Where Plaintiff Only Recovered $1,000 Statutory Damages But Sought Recovery Of $130,410 In Fees

Fifth Circuit Sided With Two Other Circuits That Fees Can Be Denied In Unusual Circumstances, With Shocking Nature Of The Request Plus Conspiracy To Manufacture The Claim Solidifying The Fee Denial.

            Davis v. Credit Bureau of the South, No. 17-41136 (5^th Cir. Nov. 16, 2018) (per curiam) demonstrates how federal courts, even under a statutory scheme where fee recovery is mandatory, can affirm a fee denial where unusual circumstances show it would be unjust to award anything to plaintiff’s attorneys.

            What happened in this one was that plaintiff sued defendant on the theory that defendant misrepresented itself as a credit bureau in its attempt to collect on a $107.29 water bill via a collection letter and a subsequent phone call, suing under the Fair Debt Collection Practices Act (FDCPA).   The district judge, based on a magistrate recommendation, found a violation and awarded $1,000 statutory damages, but nothing more.

Plaintiff then sought to recover $130,410, an amount which shocked the district court and resulted in a denial of any fees.

            The Fifth Circuit affirmed.

            There is a fee-shifting provision under the FDCPA which is codified at 15 U.S.C. § 1692k(a)(3) in favor of prevailing plaintiffs. But there is a split in thinking on whether it is mandatory in nature, although worded that way. The Third and Fourth Circuits determined, contrary to other circuits, that a district judge can deny fees in “unusual circumstances,” such as bad faith. The Fifth Circuit followed suit under the facts of this particular case.

            Here is what cemented why “unusual circumstances” were present: (1) the case was easily resolved through one Fifth Circuit opinion, such that not a lot of work was justified to get to the ultimate merits result; (2) the request was shockingly excessive in nature, with duplicative and inefficient work being contained in the supporting substantiation; and (3) there was some evidence that plaintiff “conspired” with attorneys to create a claim in order to generate a high fee request. Fee denial affirmed.

Equity: Court Of Appeal Reverses $42,542.50 Attorney’s Fees Award To One Neighbor In Non-HOA Tree Trimming Dispute Based On Unclean Hands

Appellate Court Found Unclean Hands Even Though That Ground Was Not Entertained By Lower Court.

            Trees, trees, trees! Boy, do they generate disputes between neighbors when views are impacted. The next case is extraordinary because the reviewing court reversed an attorney’s fees award, on its own, based on the equities—too many fees spent on a tree trimming dispute which should have been resolved had the two parties been true neighbors.

            Katz v. Puda, Case No. D071644 (4^th Dist., Div. 1 Aug. 24, 2018) (unpublished) was a dispute between neighbors, where there was no homeowner association, about obstruction of view by untrimmed trees. There was a recorded Declaration of Restrictions (DOR) requiring the trimming of trees, but the neighbors could not reach a resolution and submitted the dispute to a three-day bench trial, where the lower court found the DOR unenforceable and awarded the prevailing neighbor $42,542.50 in attorney’s fees.

            The Fourth District, Division 1, on appeal, affirmed the lower court’s denial of tree trimming relief, but on a different ground because it did believe that the DOR was sufficiently clear as to be enforceable. However, it found that the whole dispute was such that both sides were guilty of unclean hands. The dispute should not have escalated to the point of consuming three days of a trial court’s time and attorney’s fees of over $40,000 by one side, with the potential for ongoing enforcement litigation in the courts. That resulted in the wholesale reversal of the fee award—with the appellate court obviously peeved by both parties’ failure to act in a neighborly manner.

            BLOG OBSERVATION—The “winning” appellate attorney as far as obtaining a reversal of the fee award was Barry A. Ross, an Orange County-based attorney who does a lot of HOA work and who is an acquaintance of co-contributor Marc. Congratulations, Barry.

Equity: Trial Judge Deciding In Earlier Statement Of Decision There Was A Factual Basis For Attorney’s Fees Improperly Revisited Factual Determination Through Motion To Vacate Judgment Under CCP § 663a

This Was Tantamount To Making Improper Additional Findings Of Fact To Earlier Decision.

            In a tutorial on the proper use of a motion to vacate judgment under CCP § 663a, Master Plumbing and Sewer, Inc. v. Fountaine West Condominium Owners Assn., Case No. A143711 (1^st Dist., Div. 2 May 3, 2018) (unpublished) shows what can and cannot be done.  In this case, the trial judge issued a detailed Statement of Decision indicating there was a factual basis for a fee award to the prevailing party based upon clauses in some invoices.  However, in response to an opposition crafted through the vehicle of a motion to vacate judgment later, the trial judge changed his mind and excised the attorney’s fees entitlement ruling.  The 1/2 DCA found that this was reversal error, reinstating the original judgment (complete with the fee entitlement decision).  The reason?  A section 663a motion does not allow a trial judge to change any finding of fact.  A trial judge can find that an incorrect legal conclusion or erroneous judgment was reached, but can only do so based on the facts already found to exist.  The lower court effectively made additional findings of fact, something which cannot be done under section 663a. 

Equity: Ninth Circuit Certifies Accounting/Clawback Issues Between Law Partners On Post-Departure Legal Matters Taken By Departing Partner

Three Questions Are Certified To The D.C. Court Of Appeals.

            In our July 30, 2016 and September 15, 2016 posts, we informed our readers that the Ninth Circuit had certified certain accounting/clawback issues relating to what happens to post-depature legal work continued by departing partners after a law firm has dissolved, issues occurring in Heller Ehrman LLP v. Davis Wright Tremaine LLP.  These concerns were certified to the California Supreme Court, which agreed to consider them in Case No. S236208.  (We can report that oral argument occurred on December 7, 2017.)

            Now, the Ninth Circuit has certified similar questions to the D.C. Court of Appeals, but wanting guidance on what happens under D.C. law.  That just happened in Diamond v. Hogan Lovells US LLP, Case Nos. 15-16326 et al. (9^th Cir. Feb. 27, 2018) (published).

Civil Rights/Equity/Multiplier: Although Total Judgment Offset Denied, Fee Award Based On 2.0 Positive Multiplier Reversed On Appeal

Multiplier Is Not Automatic, So Reversed To Consider Proper Factors On Appeal.

            In Campos v. Kennedy, Case Nos. B266663/B268812 (2d Dist., Div. 2 Feb. 13, 2018) (unpublished), plaintiff won a $225,000 compensatory verdict under civil rights fee shifting provisions for sexual battery.  Later, the trial court awarded plaintiff $ 2,924,830 in statutory fees, but augmented by a 2.0 multiplier to a reduced lodestar request.

            The fee award got reversed and remanded on appeal. 

            The defense first tried to argue no fee award was in order because the compensatory award got offset by a good faith settlement offer by another defendant.  The problem with this argument was one of timing, with the defense never making moves to challenge a substantively amended judgment which would take the amount to zero.  The failure to challenge the amended judgment dispatched this argument.

            With respect to the fee award, the appellate court had serious reservations about the 2.0 multiplier awarded by the trial judge.  The main flaw was that the trial judge thought a multiplier was automatic and normally should be awarded, but this is not the law given the lower court must exercise certain factors under Ketchum v. Moses, 24 Cal.4^th 1122, 1138 (2001) [our Leading Case No. 8] to reach such a favorable multiplier result.  However, the appellate court did go on to address multiplier factors, suggesting maybe the trial judge seriously should reconsider his decision on granting a multiplier on remand.

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. 

Equity: $346,993.39 Fee Recovery Under Illegal Contract Affirmed On Appeal

In Pari Delicto Exception Sustained the Fee Recovery.

            What happened in Assadian v. Parsi, Case No. G054037 (4^th Dist., Div. 3 Dec. 14, 2017) (unpublished) is that a business consultant, who apparently practiced law in an unauthorized manner, did not prevail on contract and other claims against his clients.  Just to make the suffering more severe, consultant plaintiff was socked with $346,993.39 in attorney’s fees based on a fees clause in the consultant agreement based on losing the contract claims against his former clients.  

           Knockout punch.  Sugar Ray Robinson v. Bobo Olson.  1956.  Library of Congress.

        On appeal, plaintiff basically said “unfair,” because you cannot award fees where the underlying contract is illegal, which happens to be the general rule under California law.  However, as with most things in life, there are exceptions.  One is the “in pari delicto” exception, which does allow recovery where both parties are not equally blameworthy.  Well, that one showed why fee recovery was not inequitable against consultant plaintiff, because here his activities resulted in the contract being found illegal.

            As far as the reasonableness of fees, plaintiff’s failure to make anything other than general objections did not carry the day under the abuse of discretion standard applicable to the amounts of fees awarded and the need to make specific objections to awarded fees.   (Lunada Biomedical v. Nunez, 230 Cal.App.4^th 459, 488 (2014).) 

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

Appealability, Equity, Fee Clause Interpretation: Four California Intermediate Appellate Courts Address Diverse Attorney’s Fees Issues

Galindo v. Polakoff, Case No. D071555 (4^th Dist., Div. 1 Nov. 29, 2017) (Unpublished)—Equity/Offsets.

            In this one, the Court of Appeal affirmed an offset determination by the trial judge where it did grant fees to one party prevailing but even after an offset conclusion was reached.  Must reading for practitioners facing offset issues under Code of Civil Procedure section 431.70, showing that a merits offset may still not determine who ultimately prevailed—“There is nothing in section 431.70 that supports [appellant’s] interpretation to equate a subsequent prevailing party attorney fees award with the relief on the underlying dispute, through allowing a setoff amount claimed pursuant to cross-demands.”  (Slip Op., at p. 25.)

R.W.L. Enterprises v. Oldcastle, Inc., Case No. D070189 (4^th Dist., Div. 1 Nov. 29, 2017) —Equity/Contractual Integration.

            This second case really came down to whether a subsequent credit application, entered into about nine years later (with a potential attorney’s fees clause), should be interpreted as integrated (or, in essence, incorporated by reference) into an earlier contract.  The trial judge bought into the integration argument, awarding $180,120 to a party successfully defending a breach of contract claim.  This result got reversed as a matter of law.  There was too much of a temporal gap to allow for an integration analysis, whether under Civil Code section 1717 or the UCC.  There is a great discussion for practitioners on the “battle of the forms” issue and the extent to which Boyd v. Oscar Fisher Co., 210 Cal.App.3d 368 (1989) should apply under the circumstances (or is still good law on certain aspects of its reasoning).

Throckmorton v. Soria, Case No. A144748 (1^st Dist., Div. 2 Nov. 29, 2017) (Unpublished)—Appealability.

            The third decision is a case where—alas!—the appellant failed to appeal from a separately appealable fee order and failed to provide motion papers/fee hearing reporter’s transcript.  The appeal was doomed for two independent reasons—failure to appeal a separate appealable order and failure to provide an adequate record.

2437 Piedmont Avenue, LLC v. Schwartz, Case No. A150274 (1^st Dist., Div. 2 Nov. 29, 2017) (Unpublished)—Fee Clause Interpretation.

            This last one is where an owner/landlord sued for fraud, but dismissed its action, with tenant then moving for attorney’s fees under a lease fees clause.  The trial court denied the fee request, which was sustained on review.  The problem was that the tort claims were not brought to “enforce” the lease such that the narrow fees clause language did not provide a basis for fee entitlement.  

Equity/Judgment Enforcement/Liens For Attorney Fees: Assignment Of Judgment To Attorney Subject To Offsets As A Matter of Equity

Result No Different Even If Classic Attorney’s Fees Lien Involved.

            Although the facts are too convoluted to discuss in detail, Lalanne v. Armanino, Case No. A147227 (1^st Dist., Div. 5 Aug. 31, 2017) (unpublished) involved a situation where an attorney obtained an assignment of judgment which was held subject to claimed offsets in the form of amounts owed under a prior judgment.  That result stood up on appeal, given that an assignment of judgment takes subject to offsets against the judgment.  However, the appellate court went further, acknowledging that even if a classic attorney’s lien was involved, relative priority of an offset and attorney’s lien is an equitable issue committed to the trial judge’s discretion.  (Crasnick v. Marquez, 248 Cal.App.4^th Supp. 1, 607 (2016).) 

Equity/Section 998: Gillotti v. Stewart Now Published

 

 

Typo In 998 Offer Not Material; Pecuniary Interest Disqualified Attorney From Fees.

 

            On April 27, 2017, we posted on Gillotti v. Stewart, a then unpublished Third District decision which found immaterial typo in a CCP § 998 offer and also disqualified fees for an attorney with a pecuniary interest in the case.  We can now report that the decision was certified for publication on May 18, 2017. 

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.

Deadlines/Equity/Retainer Agreements: Invalid Attorney-Client Retention Agreement Meant Attorney Collection Suit Was Subject To 2-Year Quantum Meruit Statute Of Limitations

Attorney Sued Too Late, With Account Stated Count Not Lengthening The 2-Year SOL.

 

    Leighton v. Forster, Case No. A145601 (1^st Dist., Div. 4 Feb. 9, 2017) (published), is an interesting case to show how a noncompliant engagement letter leaves the attorney to seek recovery of fees in quantum meruit, which is governed by a shorter two-year statute of limitations—and a limitations period which cannot be circumvented by using common counts with a longer SOL.

 

    In this one, attorney sued ex-client to recoup $114,000 in unpaid fees. The lower court found for client on a summary judgment motion, determining that the engagement letter was not signed as required under Business and Professions Code section 6148(a) such that attorney's recovery was limited to quantum meruit. However, attorney did not sue within the quantum meruit 2-year statute of limitations (CCP § 338(1)) and could not use the account stated claim to get around the failure to sue within 2 years.

 

    The appellate court affirmed, agreeing with the lower court's conclusions. Attorney argued that client did not formally void the engagement letter so as to force attorney to bringing suit based on quantum meruit, but the 1/4 DCA found that an answer to complaint can be such an election under the right circumstances. The 2-year statute of limitations runs from the last day of payment by the client for fees or on the last day that attorney performed services, with attorney failing to sue timely within 2 years from either of these triggers. Attorney then argued that a four-year SOL was apt given the pleading of an account stated claim. Like the lower court, the appellate court rejected this argument for two reasons: (1) attorney could not use a common count to get around the real quantum meruit claim which was at issue, and (2) the account stated count could not qualify as a writing given the invalidity of the overall retainer agreement from the outset.

Equity/Sanctions: Attorney’s Fees Award Remanded To Recalculate To Account For Previously Awarded Discovery Sanctions

"Double Dipping" Was The Rationale.

    Earl & Reimer APC v. Klimek, Case No. H041638 (6^th Dist. Feb. 1, 2017) (unpublished) is a case where an attorney's fees award was reversed and remanded in order to prevent "double dipping": the trial judge previously awarded discovery sanctions, and those sanctions were not properly taken into account with respect to the fee recovery calculations. Reversed and remanded for a "re-do."

    Click here to see the famous "double dip" episode in Seinfeld.

Equity: Trial Court Erred In Not Giving Effect To Plaintiff’s Voluntary Dismissal, But That Did Not Deprive It Of Jurisdiction To Award Discovery Sanctions And Attorney’s Fees

Somewhat Of A Pyrrhic Victory For Plaintiff.

    Wilson v. Nationstar Mortgage LLC, Case No. D070965 (4^th Dist., Div. 1 Jan. 20, 2017) (unpublished) was somewhat of a pyrrhic victor for plaintiff on appeal. What happened below was that a trial judge erroneously failed to honor plaintiff's dismissal of an action, striking it and then going forward to award discovery sanctions and attorney's fees against plaintiff and in favor of the defendant. The appellate court agreed with appellant Wilson that the trial judge lacked jurisdiction to strike and dishonor the dismissal, but critically found the lower court retained jurisdiction to enter discovery sanctions and attorney's fees (the latter, subject to any Santisas limitations) post-dismissal anyway. So, those sanctions and fees award stuck on appeal.

Equity: Defendant Corporation Winning Summary Judgment Properly Obtained Attorney’s Fees Although Suspended But Later Obtaining Certificate Of Revivor To Be In Good Corporate Standing

 

All Intervening Procedural Steps Were Validated, But Appellate Court Did Not Award Defendant Costs On Appeal.

    In Morschauser v. Continental Capital, LLC, Case No. E062278 (4th Dist., Div. 2 Dec. 12, 2016) (unpublished), a defendant corporation successfully obtained summary judgment against plaintiff and then moved to recover $133,644.50 in attorney’s fees and costs from losing plaintiff.  Plaintiff did not oppose, but filed a request for continuance by noting that defendant was a suspended corporation and could not proceed.  The trial judge granted the attorney’s fee request in full, triggering an appeal by plaintiff.

    The fee order was affirmed.  On its own motion, the appellate court addressed this incapacity by offering respondent/defendant one of three options:  (1) present proof it was not suspended; (2) present proof a certificate of revivor had been filed; or (3) file a declaration detailing when a certificate of revivor was going to be filed and why it had not been filed already.  Defendant winning the fee award chose option 3 and, a little over three months later, submitted a copy of the certificate showing defendant was no longer suspended/was in good standing.  Obtaining the certificate of revivor had the legal effect of validating the prior procedural steps along the way as far as the defense fee award and appeal efforts were concerned. 

    However, because defendant only took revival steps after plaintiff’s briefing on appeal was completed and in response to the appellate court’s inquiry on incapacity options, the 4/2 DCA panel refused to award routine costs of appeal to defendant, although observing this did not impact its ability to seek appellate fees on other fee entitlement bases.

Equity/Special Fee Shifting Statute: Dissenting Brother, Who Lost Partition Sale Dispute, Not Erroneously Saddled With Fees And Costs Incurred By Other Prevailing Siblings

 

Oh, Brother! -- Case Illustrates Equitable Principles Are Front And Center In Partition Disputes.

    Partition disputes are equitable, with a broad fee-shifting statute in the form of Code of Civil Procedure section 874.040 allowing a trial court broad discretion to equitably apportion fees and costs among the parties to the partition action.

    In Cummings v. Cummings, Case Nos. H040710 and H041308 (6th Dist. Nov. 23, 2016) (unpublished) (separate decisions), four siblings were involved in a family trust partition action involving a Los Altos Hills property.  One brother out of the four siblings opposed a partition for sale of the property and apparently was not amenable to seek viable options to avoid conflict.  Eventually, brother lost in the partition actions, prompting the other siblings to seek recoupment of fees and costs after the trial court ordered a partition by sale. 

    Case No. H040710 involved the trial judge’s award of $115,000 in fees and costs to the prevailing siblings, almost the entire request with some minor cost disallowances.  The Sixth District affirmed, determining that brother was unsuccessful in opposing the partition by sale and refused to arrive at a solution short of an acrimonious conflict.  (Lin v. Jeng, 203 Cal.App.4th 1008, 1023-1025 (2012) [discussed in our Feb. 24, 2012 post; court’s discretion to apportion in partition actions is equitable, not constrained or tied to the number of parties necessarily involved in such a dispute].) 

    Brother did not fare any better in Case No. H041308, where his sisters obtained a further fee award of $51,323.56 for other work after the partition by sale order occurred.

Equity: CCP § 473 Allows For Dismissal Relief If Plaintiff Fails To Pay Venue Transfer Fees Due To Attorney Neglect

 

Equity Prevailed!

    Greyhound Bus sign, S. Carolina.  Oct. 29, 2007.  Carol M. Highsmith, photographer.  Library of Congress.

     In Gee v. Greyhound Lines, Inc., Case No. C077077 (3d Dist. Nov. 21, 2016) (published), plaintiff had her case dismissed after she failed to pay venue transfer fees based on her attorney’s error.  The trial court granted relief to plaintiff under section 473.  The Third District affirmed.  “Section 473, subdivision (b), can provide relief when an action is dismissed due to a plaintiff’s counsel’s mistake or inexcusable neglect related to the failure to pay change of venue fees.”

    BLOG HAT TIP—The winning attorney was Stuart R. Chandler, aka “Mr. Fresno”.  Co-contributor Mike knows Mr. Chandler well, he graduated from the same high school class (Bullard High, Fresno) and he/Mike studied for the bar together in Fresno during the summer of 1979.  Congratulations, Stuart!

Equity: Accounting Incidental To Partition Action Does Allow For Recovery Of Fees Under CCP § 874.040

 

Common Benefit Analysis Led To Recovery Of Fees By One Tenant In Common.

     Although the facts are quite interesting from a partition perspective, Villicana v. Lindsay, Case No. G052709 (4^th Dist., Div. 3 Oct. 13, 2016) (unpublished) stands for the proposition that a trial judge has authority to award attorney’s fees to one tenant in common in a partition case where an incidental accounting led to a “common benefit” resolution of the partition action in the overall sense. This is allowable under CCP § 874.040 and Regalado v. Regalado, 198 Cal.App.2d 549, 551 (1961), with one tenant in common getting allocable “common benefit” fees in a 3-0 opinion authored by Presiding Justice O’Leary.

Liens For Attorney’s Fees/Equity: Los Angeles County Superior Court Appellate Division Decides That Rights Of Needy Tenants To Obtain Legal Representation In Unlawful Detainer Actions Prevented Offset Of Fee Award Against Subsequent Judgments Obtain

 

Equities Were Weighted, Favoring No Offset Of Fee Award.

     Crasnick v. Marquez and Diaz, Case No. BV 031459 (L.A. Superior Court Appellate Div. May 24, 2016 (published) (3-0 decision authored by Judge Ricciardulli), transmitted to 2d Dist. for consideration of transfer, No. B272469 involved an interesting judgment offset situation. There, a tenant in an unlawful detainer action in one court obtained a summary judgment and later attorney’s fees of $6,245 against a non-prevailing landlord where the lease had a fees clause. Tenant had earlier in the representation granted tenant’s attorney (from Public Counsel because tenant was indigent) a contractual lien on any fee recovery. Down the line, landlord obtained two separate judgments against prior winning tenant and another tenant in a subsequent unlawful detainer action and a small claims action, totaling $6,377.42. Landlord moved to offset the fee award against the judgments he later obtained, a motion denied by the superior court and affirmed on appeal by the Appellate Division.

     Whether to offset judgments, especially one involving a contractual attorney fee lien, involves weighing the equities under a multi-factored test set forth in Brienza v. Tepper, 35 Cal.App.4^th 1839 (1995). Although some factors weighed for and against landlord, the public policy factor tipped heavily against him: indigent tenants would not obtain needed legal representation if an attorney could not count on obtaining a potential future fee recovery based upon a contractual lien. The offset denial was affirmed.

     BLOG UPDATE AND HAT TIP—We checked the Second District website and have seen no disposition on the transmittal by the Appellate Division for transfer consideration. We give a HAT TIP to Kevin Hermansen of BASTA, Inc., a non-profit organization which represented the tenants in the superior court proceedings leading to the Appellate Division decision, for sharing this opinion with us.