CALIFORNIA ATTORNEY'S FEES

Experts, Prevailing Party, Section 998: Attorneys’ Fees Totaling Over $3.7 Million Plus Costs Totaling $367,192.84 Awarded To Two Prevailing Party Defendants Affirmed On Appeal.

Costs Award To One Defendant Included $209,886.89 In Expert Witness Fees Because Plaintiff Had Rejected And Failed To Beat That Defendant’s Section 998 Offer Of $50,000 Plus Waiver Of Fees And Costs.

            This next case provides a cautionary tale about the importance of giving careful consideration to reasonable section 998 offers – especially when they include a waiver of fees and costs. In SwiftAir v. Row, Case No. B306166 (2d Dist., Div. 7 May 12, 2022) (unpublished), Southwest Airlines and Row 44, the company that operated Southwest’s inflight WiFi service, defeated plaintiff’s lawsuit against them over Southwest’s decision not to license plaintiff’s software platform. Afterward, defendants each sought prevailing party attorneys’ fees and costs pursuant to the fees provisions in their contracts with plaintiff.  Southwest also claimed entitlement to fees and costs under Code Civ. Proc., § 998 because plaintiff had rejected and failed to beat Southwest’s section 998 offer of $50,000 and a waiver of fees and costs. The trial court concluded defendants were the prevailing parties and granted their motions – awarding Southwest $1,501,988.80 in attorneys’ fees and $309,362.40 in costs, which included $209,886.89 in expert fees that plaintiff unsuccessfully moved to strike, and awarded Row $2,216,117.50 in attorneys’ fees and $57,830.44 in costs.

            Plaintiff appealed – arguing that the trial court erred in its prevailing party determination because the trial court’s orders on defendants’ motion for summary adjudication and on plaintiff’s motions for judgment notwithstanding the verdict and for new trial were made in error.  This argument went nowhere because the 2/7 DCA concluded that the trial court did not err in its MSA, JNOV and new trial orders – leaving only plaintiff’s argument that the trial court erred by awarding Southwest $209,886.89 in expert witness fees because Southwest’s section 998 offer was unreasonable, and the experts were not ordered by the trial court. The 2/7 DCA found no merit to this argument.  First, section 998 (c)(1) provides an exception to the general rule that fees for experts not ordered by the trial court are not recoverable as costs. Second, although only settlement offers made in good faith – those that are reasonable under the circumstances of the case and sufficiently specific – are effective under section 998, the judgment of no liability against Southwest and its entitlement to prevailing party fees and costs was prima facie evidence that the offer, which was not a token or nominal offer, was reasonable.  (See Covert v. FCA USA, LLC, 73 Cal.App.5th 821, 832-833 (2022).) 

Costs, Experts, Section 998: Trial Court’s Costs Award To Prevailing Plaintiffs, Which Accounted For Costs From Two Trials Where First Trial Resulted In Mistrial Due To Plaintiffs’ Counsel, Affirmed On Appeal

Trial Court’s Order Awarding Costs Did Not Operate As An Improper Reconsideration Of A Previous Order, And Defendants Failed To Support With Any Authority Their Contention That Plaintiffs Could Not Recover Fees Where Their Attorney Caused Mistrial.

            In Esparza v. Win Distribution, Case No. E072880 (4^th Dist., Div. 2 October 25, 2021) (unpublished), the 4/2 DCA analyzed whether a party whose counsel’s conduct resulted in a mistrial but prevailed at a second trial can recover costs from both trials.

            A family of four personal injury plaintiffs prevailed in a second jury trial following a mistrial of the first.  Afterward, the trial court awarded plaintiffs $188,057.53 in ordinary costs which accounted for both trials after partially granting defendants’ motion to tax.  Because plaintiff husband’s portion of the award exceeded the $10 million Code Civ. Proc., § 998 offer of compromise he made to defendants, the trial court also awarded him $366,976.42 in expert witness fees plus prejudgment and postjudgment interest exceeding $2 million.

            Defendants, a commercial truck driver and his employer, appealed the judgment and argued, alternatively, that their motion to tax costs from the first trial had been improperly denied and resulted in an improper award of expert fees and prejudgment interest to plaintiffs. Relying on Mullin v. Rousseau, 112 Cal.App. 719 (1931), argued that plaintiffs could not be awarded costs for both the first and second trial when their own attorney’s closing argument prompted the mistrial. 

            The 4/2 DCA disagreed and affirmed the judgment, including the costs award.  Although Mullin also involved the plaintiff prevailing at a second trial after plaintiff’s counsel caused a mistrial in the first trial, costs for both trials being awarded to plaintiff, and defendant’s motion to tax costs from the first trial being denied – Mullin is inapposite. In Mullin, the trial court charged the costs of the first trial to plaintiff as a penalty for the attorney’s misconduct. When the trial court subsequently awarded plaintiff with those same costs from the first trial, that award operated as an order reconsidering the prior costs award – which was improper.  Here, the trial court denied defendants’ request for the attorney fees and costs of the first trial as Code Civ. Proc., § 128.5 sanctions – finding plaintiff’s counsel’s made an honest mistake during closing arguments which did not warrant the imposition of sanctions. Therefore, the trial court’s order was not improper as it did not operate as a reconsideration of a previous order.  Additionally, defendants failed to support their contention with any authority.

Costs, Deadlines, Experts, Section 998: 4/2 DCA Dismisses Defendants’ Cross-Appeal Of Trial Court’s Order Granting Plaintiff’s Motion To Tax Majority Of $139,951.97 In Costs And Fees Sought By Defendants Under § 998

Defendants’ Cross-Appeal Was Untimely, And A Separate Appeal, Not A Cross-Appeal, Was Required For Challenging Trial Court’s Order As It Related To Defendants’ Request For Expert Witness Fees.

            In Ramirez v. Barajas, Case No. E071558 (4^th Dist., Div. 2 September 13, 2021) (unpublished), personal injury plaintiff, suing defendants for $1.4 million in damages, rejected defendants’ Code Civ. Proc., § 998 settlement offer of $350,000.  After plaintiff failed to beat that offer at trial (being awarded only $58,311.77, a result plaintiff appealed), defendants moved, under § 998, for costs and fees of $139,951.97 – which included $111,74.88 in expert witness fees.  However, because the trial court found defendants’ request to be deficient in that it failed to identify the date costs were incurred – whether pre or post-offer – it granted in its entirety plaintiff’s motion to tax and awarded defendants only $9,284.39 in ordinary litigation costs. 

            Defendants cross-appealed, but the 4/2 DCA dismissed their cross-appeal due to lack of jurisdiction. 

            First, defendants’ cross-appeal was untimely.  Under California Rules of Court, Rule 8.108(g), the deadline for the filing of defendants’ cross-appeal was within 20 days of the superior court serving them with notice of plaintiff’s appeal.  Defendants filed their notice of cross-appeal 21 days too late.

            Second, plaintiff’s notice of appeal from the judgment did not create appellate jurisdiction over the trial court’s ruling on defendants’ request for expert witness fees under § 998 – which accounted for the majority of fees sought by defendants.  A cross-appeal may challenge only the same judgment challenged by the underlying appeal, and “[a]n award of expert witness fees [under] section 998 is not incidental to the judgment but is instead a separately litigated issue” requiring a separate notice of appeal. (Fish v. Guevara, 12 Cal.App.4th 142, 148 (1993).)

Experts, Section 998: Trial Court’s Denial Of Plaintiffs’ Motion To Tax $27,926.41 In Defendant’s § 998 Expert Witness Fees Affirmed On Appeal.

The Party Moving To Tax § 998 Expert Fees Has The Burden Of Showing That The Fees Are Either Not Properly Chargeable Or Unreasonable, Which Plaintiffs Failed To Do, And Substantial Evidence Supported The Trial Court’s Finding That It Was Not Inequitable To Award Expert Costs Against Plaintiffs.

            In Mass v. City of San Diego, Case No. D077680 (4^th Dist., Div. 1 June 24, 2021) (unpublished), neighbor plaintiffs appealed the trial court’s denial of their postjudgment motion to tax costs as to City’s expert witness fees of $27,926.41 pursuant to City’s Code Civ. Proc. § 998 offers that were rejected by plaintiffs.     

            The 4/1 DCA affirmed.

            Plaintiffs’ first argument – that City had the burden of establishing that its § 998 offers were not conditional on all parties accepting, and that the offers were reasonable considering the evidence available at the time the offers were made – failed because the burden was on the party moving to tax the costs.  City had the burden only to the extent plaintiffs argued that the § 998 costs claimed by City were not properly authorized.  Plaintiffs made no such argument.

            Plaintiffs’ second argument – that the trial court failed to properly consider whether the imposition on middle class homeowners of such a large cost bill would improperly discourage other homeowners from filing legitimate claims against City – was not supported with evidence justifying a finding of lack of economic resources.  In fact, the trial court had expressly found that “awarding expert costs [against Plaintiffs] is not inequitable,” and substantial evidence regarding the employment status and real estate holdings of the plaintiffs supported the trial court’s finding.

Experts, Section 998, Special Fee Shifting Statutes: 1/5 DCA Affirms Denial Of Attorney Fees To Elder Abuse Act Plaintiff And Denial Of § 998 Expert Witness Fees To Prevailing Defendants

Plaintiff Failed To Prove Harm As Required Under Welf. & Inst. Code § 15657.5(a) Because The Approximate $400,000 In Annuities Upon Which He Based Harm Had Been Returned Pursuant To A Probate Court Order More Than A Year Before Trial, But Defendants’ § 998 Offer Was Not Reasonable Nor Made In Good Faith Given The Circumstances Of The Case.

            In Lerdahl v. Milber, Case Nos. A159167/A160788 (1^st Dist., Div. 5 June 22, 2021) (unpublished), plaintiff, through the conservator of his estate, sued Diane Milber (a certified public accountant and insurance agent) and members of her family for multiple causes of action, including financial elder abuse, after Milber transferred the approximate $400,000 worth of annuities she had sold him into a trust she created that named her husband as trustee, one of their sons as successor trustee, and their other son as sole beneficiary.  Additionally, plaintiff alleged that Milber changed his beneficiary designations on the annuities to make her sons the beneficiaries.  While the action was pending, a probate court voided the trust and ordered that all assets held in the trust be turned over to the conservator of plaintiff’s estate.  About two years after plaintiff filed suit, defendants served plaintiff with a Code Civ. Proc. § 998 offer to settle for $75,000.  Plaintiff refused and the case proceeded to trial.

            The jury returned an unclear verdict – awarding plaintiff $0 in damages and $0 in punitive damages – although finding Milber obtained or retained plaintiff’s property for a wrongful use, or with the intent to defraud, or by undue influence, that plaintiff was 65 years of age or older at the time of the conduct, and that Milber was liable for damages to plaintiff and for punitive damages (but making no findings as to Milber’s husband except that he also obtained or retained plaintiff’s property, and no findings as to whether Milber and her husband acted with fraud, oppression, or malice).  Ultimately, the trial court ordered the verdict recorded and entered judgment reflecting the jury’s special verdict – concluding the jury found plaintiff had suffered no damages because the annuities had previously been returned and no other item of damages had been requested.  Additionally, the trial court denied plaintiff’s postjudgment motion for an award of attorney and conservator costs, from which plaintiff appealed, and granted plaintiff’s motion to strike or tax defendants’ memorandum of costs as to defendants’ request for $125,257.90 in expert witness fees, from which defendants appealed.

            The 1/5 DCA affirmed.  Plaintiff’s failure to establish liability for financial elder abuse precluded an award of attorney fees under the Elder Abuse and Dependent Adult Civil Protection Act (Elder Abuse Act; Welfare & Institutions Code § 15600 et seq.).  Pursuant to § 15657.5(a), to recover fees and costs, plaintiff had to allege and prove not only the existence of a duty and its breach, but also injury and causation in order to establish the defendants’ liability.  Plaintiff was unable to prove harm at trial as the only harm alleged in his complaint concerned the obtaining or retaining of his property, and the only damages sought were measured by the value of the annuities which had been returned more than a year before trial.  As the panel pointed out, plaintiff could have alleged and potentially proven harm based on something other than the value of the annuities – such as pain and suffering – and the outcome of his fees request would likely have been different.

            As to the denial of defendants’ expert witness fees, the appellate panel agreed with the trial court’s finding that defendants’ § 998 offer was not reasonable nor made in good faith given the circumstances of the case.  The § 998 offer was made almost two years into the litigation, giving rise to a reasonable inference that plaintiff had incurred “substantial costs.” Based on plaintiff’s prospect of recovering enhanced remedies under the Elder Abuse Act, including attorney fees and punitive damages, there was no abuse of discretion in the trial court’s finding.

Appealability, Experts, Section 998: 2/8 DCA Declines To Consider Plaintiff’s Arguments Against Trial Court’s PostJudgment Award To Prevailing Defendants Of Section 998 Expert Witness Fees

Plaintiff’s Failure To File A Notice Of Appeal On The PostJudgment Award Deprived Appellate Court Of Jurisdiction.

            In Nash v. Romano, Case No. B303765 (2d Dist., Div. 8 April 12, 2021) (unpublished), plaintiff tenant sued her landlords after she broke her ankle while stepping on an allegedly unstable backyard paver.  The jury returned verdict in favor of landlords and the trial court entered a defense judgment – prompting an appeal by plaintiff.  Meanwhile, landlords move postjudgment for costs, which included roughly $33,000 in expert witness fees.  After the trial court denied plaintiff’s motion to tax costs, she included arguments in her appellate briefs that the trial court erred in awarding landlords with expert fees pursuant to Code Civ. Proc. § 998.

            The 2/8 DCA considered plaintiff’s appeal of the judgment and affirmed.  However, the panel declined to consider plaintiff’s arguments concerning the expert fees due to lack of jurisdiction.  Plaintiff did not include the expert fees in her notice of appeal, which indicated only that she was appealing a judgment after jury trial, and did not separately appeal the postjudgment order or award.  (Pfeifer v. John Crane, Inc., 220 Cal.App.4th 1270, 1316 (2013) [discussed in our November 4, 2013 post].)

            Plaintiff’s argument that she could not file a notice of appeal challenging the award of expert fees because the trial court never filed an order awarding the fees was of no avail as there is nothing to challenge on appeal until such an order has been entered. 

Costs, Experts, Insurance, Section 998: Denial Of All But $11,753.94 Of Prevailing Personal Injury Plaintiff’s $83,048.06 Costs Request Affirmed On Appeal

An Invalid Section 998 Offer And A Failure To Reserve The Right To Seek Prevailing Party Fees In Agreements To Split Costs Sealed Plaintiff’s Fate.

            In Anthony v. Li, Case No. A156640 (1^st Dist., Div. 3 April 13, 2020) (published), a prevailing personal injury plaintiff, to whom a jury awarded $650,235.00 in damages which exceeded a $500,000 section 998 rejected by defendant, moved post-trial for recovery of $83,048.06 in costs.  However, the trial court granted only a small portion of the requested costs – denying the requested $62,082.50 for section 998 post-offer expert fees, $2,650 for mediation fees, and another $6,561.62 for court reporter fees.

            Plaintiff appealed, but the 1/3 DCA affirmed – finding the trial court had properly taxed the costs. 

            First, as to the expert witness fees, the simple explanation for the denial is that plaintiff had made an invalid section 998 offer.  However, as the saying goes – the devil is in the details.   

            Defendant Li resided outside of the United States.  He was driving a rental car at the time of the accident – for which he had purchased a $1 million liability insurance policy.  Plaintiff originally sued both Li and the holding corporation doing business as the rental car company, which held the insurance policy, but later dismissed Holding Corp. with prejudice.  Afterward, plaintiff tendered a joint section 998 offer that was not apportioned and required acceptance by, and entry of judgment against, both Defendant Li and Holding Corp.   Plaintiff argued his joint 998 offer was proper because: (1) Li and Holding Corp. were “one and the same” as plaintiff had included Holding Corp. in 998 offer as an insurer; (2) the law allowed plaintiff to make a section 998 offer to an insurer pursuant to Meleski v. Estate of Albert Hotlen (2018) 29 Cal.App.5^th 616 [discussed in our December 6, 2018 post]; (3) Defendant Li was not a participating in the action which was being litigated by Holding Corp., as the insurer; (4) Defendant Li was a named defendant solely for the purpose of reaching insurance under Civ. Code section 1939.33; and (5) Defendant Li was a foreign national who was unaware of the lawsuit, and plaintiff was not allowed to collect against Li because he had agreed to limit his recovery to insurance. 

            The 1/3 DCA disagreed.  First, plaintiff’s 998 offer did not advise defendants that the offer was directed at Holding Corp. as the insurer responsible for any judgment entered against Li.   Rather, it was presented as a section 998 offer to more than one defendant - as opposed to a defendant and insurer - and requiring acceptance by both defendants making it invalid. As such, Meleski was of no help to plaintiff.  Additionally, the 1/3 DCA determined that if plaintiff had made the 998 offer solely to Defendant Li, and Li had rejected it, then plaintiff – after judgment exceeding the 998 offer was entered against Li – would have had recourse by bringing a second direct action against Holding Corp., as the insurer, to recover any judgment and statutory cost award entered against Li.

            Next, as to the mediation and court reporter fees, the parties had entered into agreements for a voluntary mediation and for court reporter fees that stated that the fees were being equally divided and paid by plaintiff and defendant[s].  No language reserving the right to later seek the fees as prevailing party costs was added to either of the agreements.  The language in the agreements was unambiguous, and the trial court properly enforced those agreements as written.  (Carr Business Enterprises, Inc. v. City of Chowchilla (2008) 166 Cal.App.4^th 25, 30 and Howard v. American National Fire Ins. Co. (2010) 187 Cal.App.4^th 498, 539-540.)

Costs, Experts, Insurance, Section 998: Trial Court Properly Awarded Costs, Including Almost $70,000 In Expert Witness Fees, To Successful Defendant After Plaintiff’s Rejection Of Defendant’s Section 998 Offer

Plaintiff May Have Been Overreaching When He Followed Defendant’s $15,001 Offer With His Own $299,995 Offer Given Jury’s Return Of Defense Verdict.

            Grayfer v. Wawanesa General Ins. Co., Case No. B285554 (2d Dist., Div. 7 November 18, 2019) (unpublished) provides a cautionary tale about the risk involved in overreaching and rejecting reasonable section 998 offers.

            Plaintiff sued his insurance company after his car was stolen – valuing his car at $31,263.43 in his complaint.  Insurance company made a Code Civ. Proc. § 998 offer to settle plaintiff’s claims for $15,001, but plaintiff rejected the offer and served his own offer in the amount of $299,995.  The insurance company rejected plaintiff’s offer and the matter proceeded to trial.  Following the defense verdict returned by the jury and entry of judgment in its favor, the insurance company filed its memorandum of costs which included almost $70,000 in expert witness fees.  Plaintiff moved to tax costs – especially the expert witness fees – arguing insurance company was not entitled to recover fees because its 998 offer was unreasonable and made in bad faith, the experts were not court ordered, and the amounts incurred were unreasonable and unnecessary.  The trial court rejected plaintiff’s arguments – finding the 998 offer reasonable in light of Plaintiff’s claimed emotional distress, the value plaintiff placed on his stolen car, insurance company’s denial of liability for plaintiff’s loss, and the ultimate jury verdict confirming insurance company’s stance on liability.

            After entry of the order awarding its costs/expert witness fees, the insurance company levied plaintiff’s bank accounts, to which plaintiff filed a claim of exemption asserting social security and disability payments were deposited into the levied accounts.  After a hearing on plaintiff’s exemption claim, the trial court found one single account was exempt as it received social security benefits, but found no exemptions for plaintiff’s other accounts.

            Plaintiff appealed the rulings on both his motion to tax costs and his claimed exemption motion, and the 2/7 DCA affirmed – finding no abuse of discretion in the costs ruling and no error in the claim of exemption ruling.

Costs, Experts, Section 998: Sixth District Affirms Denial Of $26,950.50 In Expert Witness Fees To Prevailing Defendant Because Section 998 Offer Was Not Apportioned Among Plaintiffs

Defendant’s Treatment Of Mother And Son Plaintiffs As Spouses For Section 998 Purposes Did Not Fly.

            In Roe v. Hollister School Dist., Case No. H043658 (6^th Dist., Sept. 26, 2019) (unpublished), mother and son plaintiffs (Jane and Jonnie Roe) sued school district and others for an incident involving the five-year-old son and another six-year-old student.

            During the course of this litigation, the school district and co-defendants served plaintiffs with a joint section 998 offer to pay Plaintiffs and their attorney a single check for $200,000 as settlement for all claims, costs and attorney’s fees.  The offer did not allocate the $200,000 offer between mother and son.  Plaintiffs did not accept the offer, and the case proceeded to jury trial.

            After prevailing at trial, the school district sought to recover $26,950.50 in expert witness fees under Code Civ. Proc. section 998 because plaintiffs had rejected the 998 offer and had not achieved better results at trial.  Plaintiffs moved to tax the costs as to the expert witness fees on the ground that the failure to allocate the offer between mother and son rendered it “legally invalid.”  For its part, the school district argued that “[f]or all practical purposes John Roe is the second plaintiff in this case” because Jonnie was a minor and John was his father and guardian ad litem.  The trial court rejected this contention and denied school district’s request for expert witness fees.

            On appeal, school district relied on cases that recognize an exception to the rule that section 998 offers must be apportioned between individual offerees.  This exception is for joint offers made to spouses “because a cause of action is community property as is any recovery.”  Relying on this exception, school district claimed that that separate offers were not necessary “under community property rules because any financial recovery by Jonnie lessens the burden upon his parents to support him, AND lessens the burden upon his parents’ community property.” 

            The Sixth District disagreed and affirmed the trial court’s ruling – finding that mother and son do not share property rights, and that father’s role as guardian ad litem did not grant him a personal property interest in any recovery the child might obtain.  The Sixth District summed up its decision this way: “Try as it might, the [school] District cannot force Jane and Johnnie into the exception that applies where two plaintiffs are husband and wife.”   

Section 998: Defendant Winning Workers’ Compensation Exclusivity Defense In Asbestos Case Properly Awarded $80,719 In Expert Witness Fees

 

Section 998 Offer Was Reasonable And Expert Fees Did Not Have To Be Tied To Issue Eventually Won.

    In Melendrez v. Ameron International Corp., Case Nos. B256928/B259423 (2d Dist., Div. 4 Sept. 17, 2015) (published), defendant won an asbestos suit against plaintiffs in a wrongful death suit based on the workers’ compensation exclusivity rule even though the deceased worker claimed he was exposed to asbestos while working on pipes at home instead.  The defense moved for recovery of expert witness fees based on plaintiffs’ rejection of a CCP § 998 offer for a defense waiver of costs/fees in return for a case dismissal.  The lower court awarded $80,719 out of a requested $130,334 in expert witness fees.
   
    The expert witness fee award against plaintiffs and in favor of the defense was affirmed on appeal.

    Despite argument that the 998 offer was unreasonable given the millions in damages sought in an asbestos exposure case, the 2/4 DCA determined that plaintiffs did not meet their burden of showing the offer was unreasonable given that a judgment more favorable than the result is presumptively reasonable.  The lower court evaluates not only the offer to the amount of damages sought, but also critically focuses on the plaintiff’s likelihood of prevailing.  The reviewing court rejected the notion that the plaintiff had to have advance notice of the amount of expert fees involved, citing Regency Outdoor Advertising, Inc. v. City of Los Angeles, 39 Cal.4th 507, 532 (2006) in support of its reasoning.  The zero dollar 998 offer was reasonable given the workers’ compensation exclusivity defense of an all-or-nothing nature.

    The second challenge was that the award was not for expert witness fees but for abatement expenses unrelated to the workers’ compensation exclusivity ruling.  The appellate court disagreed.  The fees were incurred to advance the defense theory that decedent/worker’s exposure to asbestos at home was minimal in nature with respect to the causation defense.  The appellate court also rejected the proposition that expert witness fees were not properly awardable under section 998 even though incurred on an issue not ultimately won by the defense.

   

Section 998: Losing Plaintiffs Had To Pay Expert Witness Fees Of About $80,000 To Successful Defendants In Medical Malpractice Case

 

     Plaintiffs lost their medical malpractice/loss of consortium case against several defendants, and were then hit with about $80,000 in expert witness fees as costs because they did not beat defendants’ CCP § 998 offers. They argued principally on appeal, in Petrou v. Trites, Case No. B226747 (2d Dist., Div. 4 Dec. 13, 2012) (unpublished), that the offers were made in bad faith.

     That contention did not resonate with the reviewing court because plaintiffs had plenty of evidence available for purposes of evaluating the 998 offers. After all, the settlement offers were made after the defense brought summary judgment motions and after plaintiffs had time to develop/files their opposition to the dispositive motions. Given that posture, there was no bad faith attendant to the defense offers--they were made at a juncture of the case where plaintiffs had ample assessment opportunities. (Bates v. Presbyterian Intercommunity Hospital, Inc., 204 Cal.App.4th 210, 220 (2012) [discussed in our March 12, 2012 post].)

Civil Rights/Expert Witness Costs: Losing FEHA Plaintiff Only Exposed To Expert Witness Fee Costs If Lawsuit Was Unreasonable, Frivolous Or Vexatious

 

Second District Panel Reverses $2,350 Cost Award to SJM Winning Defendant.

     In Baker v. Mulholland Security and Patrol, Inc., Case Nos. B232172/B234487 (2d Dist. Div. 8 Mar. 28, 2012) (certified for partial publication), the appellate court reversed a $2,350 expert witness fee cost award against a losing FEHA plaintiff, after defendant won summary judgment, because the lower court made the award despite failing to find the lawsuit was unreasonable, frivolous or vexatious in nature. Although noting a split among appellate courts as to whether the frivolousness standard of Christiansburg Garment Co. v. EEOC, 434 U.S. 412 (1978) applies to an award of ordinary litigation costs to a prevailing defendant, the Court of Appeal nevertheless determined that “[e]xpert fees, just like attorney’s fees, are not ordinary litigation costs which are routinely shifted under Code of Civil Procedure sections 1032 and 1033.5. Like attorney’s fees, expert fees should be treated differently than ordinary litigation costs because they can be expensive and unpredictable, and could chill plaintiffs from bringing meritorious actions.” (Slip Opn., p. 13, extending Christiansburg standard to award of expert witness fees in favor of a prevailing FEHA defendant.)

Section 998/Expert Fee Reasonableness: Court Of Appeal Publishes Adams v. Ford Motor Co.

 

     In our September 30, 2011 post, we discussed Adams v. Ford Motor Co., Case No. B225791, which involved whether a small monetary CCP § 998 offer was reasonable and in good faith in a difficult causation case, where the offer did contain an important “waiver of costs” feature. Also, there was a nice discussion on how to show reasonableness of substantial expert witness expenses in a costs memorandum battle.

     We can now report that the Second District, Division 1 certified Adams for publication on October 19, 2011.

Year End Wrap-Up: Mike & Marc’s Top 20 Attorney’s Decision Fees Decisions--Part 2 of 2.

     Here is the second installment of our top 20 decisions.

     10. Jankey v. Lee, 181 Cal.App.4th 1173 (1st Dist., Div. 4 2010), review granted, No. S180890 (May 12, 2010) -- authored by Presiding Justice Ruvolo; discussed in our Feb. 6, 2010 post.

     Attorney’s fees are awardable to a prevailing defendant under Civil Code § 55 without the necessity of showing a plaintiff’s action was “frivolous, unreasonable, or groundless,” disagreeing with Ninth Circuit’s Hubbard decision. This has been accepted for review by the California Supreme Court and is not published anymore, but available for reading in the California Reporter or research databases.

     9. Plummer v. Day/Eisenberg, LLP, 184 Cal.App.4th 38 (4th Dist., Div. 3 2010) -- authored by Justice Ikola; discussed in our Apr. 30, 2010 post.

     Contingency fee agreement-driven case with an attorney charging lien is not subject to the disclosure/consent requirements of Fletcher v. Davis, 33 Cal.4th 61, 71-72 (2004).

     8. Conservatorship of Whitley, 50 Cal.4th 1206 (Cal. Sup. Cto. 2010) -- authored by Justice Moreno; discussed in our Dec. 22, 2010 post on Pappas v. Farr (2d Dist., Div. 6 2010) (unpublished).

     Litigant’s personal pecuniary interests may not be used to disqualify the litigant from obtaining fees under California’s private attorney general statute (CCP § 1021.5); rather, the deciding court must focus on the financial burdens and incentives involved in bringing the lawsuit.

     7. PNEC Corp. v. Meyer, 190 Cal.App.4th 66 (4th Dist., Div. 3 2010) -- authored by Justice Ikola; discussed in our Nov. 18, 2010 post.

     Defendant successfully obtaining dismissal of action based on forum non conveniens is a prevailing party under Civil Code section 1717, extending the reasoning from Profits Concepts Mgt., Inc. v. Griffith, 162 Cal.App.4th 950 (2008) (an earlier case determining that a defendant successfully moving to quash service for lack of personal jurisdiction is a prevailing party, authored by Justice Fybel of the 4th Dist., Div. 3).

     6. Lockton v. O’Rourke, 184 Cal.App.4th 1051 (2d Dist., Div. 4 2010) -- authored by Presiding Justice Epstein; discussed in our Apr. 24, 2010 post.

     Contractual clause in retainer agreement allows attorney parties to recover for their efforts in collecting fees against clients, avoiding application of the Trope bar.

     5. In re Mercury Interactive Corp., 618 F.3d 988 (9th Cir. 2010) -- authored by Circuit Judge Tashima (with a dissent by Circuit Judge Bybee); discussed in our Aug. 18, 2010 post.

     Although refusing to articulate a bright-line rule, F.R.Civ. P. 23(h) does not contemplate that class members’ objections to class counsel fee requests have to be filed before the fee motion itself is filed, which denies the class the full and fair opportunity to examine and oppose the motion.

     4. Estate of Manuel, 187 Cal.App.4th 400 (2d Dist., Div. 3 2010) -- authored by Acting Presiding Justice Croskey; discussed in our Aug. 11, 2010 post.

     Costs of proof sanctions for failure to admit requests for admissions under Code of Civil Procedure § 2033.420(a) can only be assessed against a party, not the party’s counsel.

     3. Thrifty Payless, Inc. v. Mariners Mile Gateway, LLC, 185 Cal.App.4th 1050 (4th Dist., Div. 3 2010) -- authored by Justice Moore; discussed in our June 23, 2010 post.

     Expert witness fees awardable under contract clause can be recovered under routine costs memorandum approach, disagreeing with Carwash’s approach that the fees must be pled and proven at trial.

     2. Donahue v. Donahue, 182 Cal.App.4th 259 (4th Dist., Div. 3 2010) -- authored by Justice Aronson; discussed in our Feb. 27, 2010 post.

     Extensive discussion of factors that are probative in gauging the reasonableness of fees requested in probate trust litigation involving multiple attorneys, billings with duplicative entries, litigation inefficiencies, and block billing time entries.

     1. Chavez v. City of Los Angeles, 47 Cal.4th 970 (Cal. Sup. Ct. 2010) -- authored by Justice Kennard; discussed in our Jan. 14, 2010 post.

     Trial courts have discretion to deny or reduce fee requests to winning plaintiffs in FEHA cases where a plaintiff’s success is minimal or there is a grossly inflated fee request.

Costs and 998 Expert Witness Fees: Court Of Appeal Affirms Most Of Trial Court Decision Awarding Routine Costs, Denying Expert Witness Fees, and Denying Attorney’s Fees

First District, Division 5, Except for a $49 Adjustment, Tells Everyone to Go Home But For a Minor $1,000 Appellate Sanctions.

     Salvio Street, LLC v. Lee, Case Nos. A122408/A123080 (1^st Dist., Div. 5 July 29, 2010) (unpublished) is an interesting case, not just for the legal issues, but because it demonstrates how pragmatic appellate courts are when reviewing costs/fees issues after years and years of litigation. Yep, you guessed it—they affirm (with minor adjustments), reminding litigants that enough is enough. Or, as our post suggests, time for everyone to go home (if any house is remaining after the expenditure of costs and fees)!

     In this “long-running saga” over the ownership of certain real property in the Bernal Heights neighborhood of San Francisco (the appellate court’s words, not ours), Salvio Street sought to quiet title to the property, but an attorney representing two parties claiming an ownership in the property (Lien and Yen) actually claimed his own separate interest in the property based on a fee agreement with his two clients. Salvio Street won, with attorney found to have no interest in the property. Salvio Street was awarded $8,190.05 in costs (out of a requested $13,183.97), but was denied any award of attorney’s fees (out of a requested $176,470.75). [Salvio Street relied on the fees clause in the Woo-Lien-Yen Purchase Agreement, which was involved in a prior appeal in the long-running saga.] Salvio Street and attorney Lee both appealed.

 

                                                                                                       Sources:  Yahoo Maps – Satellite view (left); Wikipedia (right)

Arbitration and Expert Fees: Even if Award of Expert Fees Was an Act in Excess of Arbitrator's Jurisdiction, It Did Not Provide Basis to Vacate Award

Second District, Division Three, Reminds Us Simple Mistake of Law or Fact is Not Necessarily in Excess of an Arbitrator's Powers.

     Frederick Lax, former President and CEO of Tekelec, brought an arbitration proceeding against Tekelec, seeking compensation for options that were lost when Tekelec did not issue necessary financial statements until after the options expired.  The arbitrator issued an award in favor of Lax, awarding Lax expert witness fees, in addition to damages, attorney's fees, and costs.  The trial Court confirmed the award.  One of the issues appealed - the only issue that concerns us -- is whether the arbitrator awarded expert fees improperly.  Tekelec v. Lax, Case No. B212759 c/w B213669 (2nd Dist., Div. 3, July 30, 2009) (not to be published).

     The reason there was a problem at all was that there were two fee clauses in Lax's separation agreement, and Tekelec sought to drive a wedge between the two clauses, arguing one expressly applied to arbitration, whereas the other did not.  Paragraph 16.10 of the separation agreement, relating to arbitration, provided that "the prevailing party shall recover costs and attorneys' fees incurred in arbitration."  Paragraph 16.12, relating to lawsuits, provided, "the prevailing party in such lawsuit shall be entitled to recover from the losing party all reasonable attorneys' fees, costs of suit and expenses (including the reasonable fees, costs and expenses of appeals)."  The arbitrator's decision referred to the language in the provision applying to lawsuits as a basis for awarding expert fees.  Tekelec, however, argued that expert witness fees are "expenses", awardable only in a lawsuit, but not in arbitration.   

     A mistake, perhaps, but not a fatal one.

UNSUPPORTED CHALLENGE OF “EXCESSIVENESS” OR “DUPLICATIVE WORK” BY APPELLANT CHALLENGING FEE AWARDS REJECTED BY COURT OF APPEAL

Second District Affirms Award of Anti-SLAPP Fees to Defendant Where Fee Attacks Were Not Supported by Competent Evidence.

            

            When opposing a fee motion, a litigant should support challenges with competent evidence.  Such evidence can take the form of an expert witness or a particularized challenge to specific line entries (example of the second type of evidence—showing fees were spent on noncompensable claims and should be apportioned because there was no overlap with compensable claims).  A recent decision from the Second District, Premier Medical Mgt. Sys., Inc. v. Cal. Ins. Guar. Assn., Case No. B195889 (2d Dist., Div. 4 May 30, 2008) (fee award discussion not published), fully supports what we have just recommended.

            There, a trial judge awarded substantial attorney’s fees to three defendants on remand from a prior appellate opinion where the Second District reversed a trial court order denying an anti-SLAPP motion.  Both in the trial court and on appeal, plaintiffs argued that the fees were excessive, duplicative, and improperly included compensation for matter unrelated to the anti-SLAPP motion.  The Court of Appeal found no abuse of discretion in the fee awards “on the record presented.”  (Slip Opn., at p. 2.)

            Fairly early on in the decision, Presiding Justice Epstein—writing for the 3-0 unanimous panel—observed that the appellants failed to file any declaration in their fee opposition papers, provided no evidence to contradict the attorney declarations of the moving parties, and provided no evidentiary challenge to the fees claimed.  (Slip Opn., at p. 10.)  This was a bad omen of things to come.

            Initially, appellant tried to convince the panel to adopt a 50-hour figure used by another division of the same court in Maughan v. Google Technology, Inc., 143 Cal.App.4^th 1242, 1249 (2006), a figure adopted in that case as the reasonable limit for hours allowed on an anti-SLAPP motion.  No way, Justice Epstein wrote, reasoning:

“A broad rule adopting a 50-hour limit would be contrary to [the] case-by-case approach [mandated by Ketchum v. Moses, 24 Cal.4^th 1122 (2001), discussed in our post of U.S. Western Falun Dafa Assn.].  It also would conflict with application of the deferential abuse of discretion standard we apply on appeal.  A limitation such as that suggested by appellants would deprive the trial court of the full range of discretion envisioned by the Ketchum court.”  (Slip Opn., at p. 12.)

            Then, the appellate court turned to the fee reasonableness challenges, finding appellants presented no evidence to refute the attorney declaration about division of labor, time spent on activities, and reasonableness of overall hours.  The Second District found that unsubstantiated argument could not carry the day for the challenging parties on appeal:  “Appellants had two options to oppose [the attorney fee moving submissions]:  attack the itemized billings with evidence that the fees claimed were not appropriate, or obtain the declaration of an attorney with expertise in the procedural and substantive law to demonstrate that the fees claimed were unreasonable.  They did neither … General arguments that fees claimed are excessive, duplicative, or unrelated do not suffice.”  (Slip Opn., at pp. 15-16; accord, Tuchscher Development Enterprises, Inc. v. San Diego Unified Port Dist., 106 Cal.App.4^th 1219, 1248 (2003); Braun v. Chronicle Publishing Co., 52 Cal.App.4^th 1036, 1052-1053 (1997).)

            The end result in this opinion buttresses what we suggest in the introductory paragraph—provide evidentiary support to your fee oppositions to stand any meaningful chance of gaining acceptance at either the trial or appellate stage of the proceedings.

DISCRETION, DISCRETION, DISCRETION: TRIAL JUDGES DO NOT HAVE TO CREDIT EXPERT TESTIMONY ON THE VALUE OF ATTORNEY SERVICES IN FEE CONTESTS.

Second District Unpublished Decision Affirms Trial Judge’s Rejection of Expert Testimony on the Value of Services in Deciding an Attorney’s Fees Motion.

            Even unpublished decisions can contain instructive lessons for practitioners in opposing requests for attorney’s fees, reminding us all that the trial judge is the one ultimately vested with discretion in determining the proper amount of fee recovery.

            Auto Auction Group, Inc. v. Ritz Leasing, Inc., Case No. B193602 (2d Dist., Div. 3, May 20, 2008) (unpublished) well illustrates this point.

            There, defendants prevailed and moved to recover substantial fees and costs.  The trial judge did award $377,917 in fees and $30,482 in costs to the prevailing party.

            On appeal, the Second District affirmed in an unpublished decision. 

            Losing party’s main attack was to argue that the trial judge erred in sustaining an objection to an expert that analyzed the defense’s attorney bills and independently placed a much lower value on the amount of reasonable fees that should have been claimed.  In rejecting the expert’s analysis, the trial court had indicated that expert testimony was inappropriate in connection with a motion for attorney’s fees.  (PRACTICE POINTER—Expert testimony is frequently encountered in fee battles, such that its submission is not per se improper.  See, e.g., City of Oakland v. Oakland Raiders, 203 Cal.App.3d 78 (1988); Excelsior Union High School v. Lautrup, 269 Cal.App.2d 434 (1969).   

            The appellate court found that the trial judge’s refusal to consider the expert declaration was not an abuse of discretion. It primarily noted that a trial court can make its own independent determination of the value of legal services, even if it is “contrary to, or without the necessity for, expert testimony,” citing PLCM Group, Inc. v. Drexler, 22 Cal.4^th 1084, 1096 (2000).  The Court of Appeal also noted that the court had discounted clerical tasks of $12,000 from the fee request as well as $650 for a tangentially related matter.  Because the contract and tort claims were inextricably intertwined, there was no necessity for apportionment of pretrial work. 

            This case shows the wide discretion given to trial judges in determining fees, with the winner obtaining over $400,000 in fees/costs from the losing side.  As far as describing the breadth of discretion, the trial judge in this case may have said it best when quoting from a prior appellate decision: “Each courtroom comes equipped with a ‘legal expert,’ called the judge ….”  Summers v. A.L. Gilbert Co., 69 Cal.App.4^th 1155, 1181 (1999).  In this case, the trial judge was the final decision maker of what fees and costs were proper in amount.