CALIFORNIA ATTORNEY'S FEES

Pleading: Default Judgment Containing Fee Recovery Modified To Reduce The Recovery Where No Entitlement For Fees Shown

Improper To Enter Default Judgment Where Fees Were Not Authorized By Statute or Contract.

            In Luginbill v. Salva, Case No. E068549 (4^th Dist., Div. 2 Aug. 15, 2018) (unpublished), plaintiff only demanded $11,500 base damages, plus interest, plus $2,500 in attorney’s fees, in plaintiff’s complaint. No Statement of Damages was sent indicating any punitive damages were being sought. The trial court, in a default prove-up, entered a judgment for the base damages, interest, costs, $50,000 in punitive damages, and $19,900 in attorney’s fees. The appellate court reversed the punitive damages award because no Statement of Damages was provided. It also reversed the $19,900 fee award because no basis for fee entitlement was provided by plaintiff. Plaintiff, on appeal, smartly did agree to a modification of the judgment for improper amounts, such that these two items—inclusive of the fee award—were excluded from the judgment, as modified.

Bankruptcy Efforts, Pleading, Reasonableness Of Fees: 4/1 DCA Reverses Fee Award Based On Failure To Consider Previously Filed Papers On Prior Motion

Additionally, Remand Made To Include Bankruptcy Efforts And Provide A Better Explanation Of 50% Fee "Haircut".

            Roth v. Plikaytis, Case No. D070484 (4^th Dist., Div. 1 Sept. 13, 2017) (partially published) is a situation where defendant prevailed on a breach of contract action allowing fee entitlement (after a jury trial), but where the trial court only awarded $139,750 out of a requested $442,622.78 in contractual attorney’s fees and reduced the claimed lodestar hours by 50% after eliminating recovery for bankruptcy efforts.  During the fees proceedings, the trial judge refused to credit hourly rates contained in defense declarations filed in support of a prior motion for defense fees in the case which was denied without prejudice.

            The 4/1 DCA reversed and remanded for reconsideration of the fee award.

            In the published portion of the decision, the appellate court—in a holding instructive in all law and motion hearings—determined that the prior motion declarations should have been considered in the subsequent fee hearing.  After reconciling various California Rules of Court and principles relating to summary judgment/adjudication motions, the 4/1 DCA concluded that there was no reason to justify the trial judge in failing to consider previously filed materials in a law-and-motion fee proceeding.

            Going to the unpublished portion of the opinion, the appellate court determined there were two errors in the trial judge’s fee decision.  The first was failure to allow compensation for bankruptcy court efforts relating to the breach of contract claim brought by losing plaintiff.  (Circle Star Center Associates, L.P. v. Liberate Technologies, 147 Cal.App.4^th 1203, 1208 (2007); Chinese Yellow Pages Co. v. Chinese Overseas Marketing Service Corp., 170 Cal.App.4^th 868, 882, 884-885 (2008).)  In doing so, the appellate court disagreed with a contrary Ninth Circuit decision, finding it distinguishable and not adopting its reasoning in any event.  The second reason for a remand was the dearth of explanation for the significant 50% “haircut” in lodestar hours, carefully explaining that the explanation was not adequate under the circumstances of the case.

Pleading: Attorney’s Fees Amount And Proof Only Needs To Be Submitted In Default Judgment Packet, Not Claimed In Entry of Default Paperwork

 

Fees Can Be Claimed Later On In Default Judgment Packet, With Many Local Ordinances Allowing For Fee Recovery For Nuisance Abatement Actions.

    The next case, although unpublished, is one that California state court litigators should love because it answers some of those vexing nitty-gritty procedural questions that we sometimes encounter when filling out entry of default and entry of default judgment/default judgment packets.

    City of Fontana v. Bani, LLC, Case Nos. E062018/E063549 (4th Dist., Div. 2 May 12, 2016) (unpublished) involved a default judgment obtained by the City of Fontana against defendants in a nuisance abatement action.  Defendants made many challenges, with only a couple resulting in a reduction of a little under $4,500 from a monetary default judgment of close to $85,000.  (There were prohibitory injunctions and receivership relief which also were challenged, to no avail.)  However, in the process, some nice guidance was given on what type of challenges to attorney’s fees and certain routine costs survived procedural challenges on appeal in a default judgment context.

    First, the defense argued that the failure to claim requested fees in the entry of default, even though made in the request for entry of default judgment, was error.  Naught!  The request only needs to be made in the request for entry of default judgment, which it was.  That is satisfactory.  (Nice discussion of Garcia v. Politis, 192 Cal.App.4th 1474, 1478-1479 (2011).)

    Second, the defense contended that City’s failure to specify the amount of attorney’s fees in its complaint was another legal error invalidating the award of fees in the default judgment proceeding.  Another naught!  A default judgment can properly include fees recoverable as costs even if the complaint did not specify a dollar amount—however, it would be good idea to include a fee request in a pleader’s omnibus prayer for costs and fees, as applicable, in the complaint.  (Simke, Chodos, Silberfeld & Anteau, Inc. v. Athans, 195 Cal.App.4th 1275, 1285, 1290-1291, 1293 (2011); Horton v. Horton, 18 Cal.2d 579, 583 (1941).)

    Third, the appellate court affirmed that attorney’s fees and costs, including even administrative expenses, may indeed be recoverable under pertinent local municipal fee entitlement statutes, in this case Fontana Municipal Code provisions.  (Note:  administrative fees were not recoverable one municipal provision, but another did so authorize—so read them carefully.)

    However, certain copying and other clerical expenses were not compensable.

Pleading: Former Client’s Malpractice Action Was A Compulsory Cross-Claim In Unpaid Fees Action, But Language In Parties’ Settlement Agreement Meant Action Could Be Amended To Show Exception to Mandatory Cross-Claim Rule

 

Attaching Settlement Agreement to Demurrer Saved Former Client on Appeal.

     In DeGenarro v. Geiger & Merritt, LLP, Case No. G047461 (4th Dist., Div. 3 Sept. 13, 2013) (unpublished), fired, former law firm sued client for unpaid fees. Client and old firm signed a settlement agreement, with client serving old law firm with an independently-filed malpractice action before execution of the settlement agreement. Old law firm obtained a demurrer-sustaining dismissal without leave based on the argument the malpractice action was a mandatory cross-claim which needed to be filed in the fee collection case.

     On appeal, the judgment was reversed.

     The appellate court, in a 3-0 panel decision authored by Justice Fybel, agreed that the malpractice action fell within the compulsory cross-claim rule. However, client saved the bacon by attaching the settlement agreement with old firm to the demurrer opposition. The language of the agreement had some malpractice action carve-out language of sufficient import to show an amendment to the complaint might be made to beat the compulsory cross-claim rule. The Court of Appeal found that neither it nor the lower court could take judicial notice of the settlement agreement, but the language in it sufficed to give client another crack at a second pleading.

Civil Rights/Pleading: Owners Winning Illegal “Spot Zoning” Was Entitled To Award Of Fees Under 42 U.S.C. § 1988

 

It Was Irrelevant Winner Did Not Plead or Cite Civil Rights Statutes as Fee Entitlement Basis.

     Here is an interesting one for land use practitioners out there.

     In Ocean Avenue Associates, LLC v. City of Indio, Case No. E052522 (4th Dist., Div. 2 Mar. 19, 2012) (unpublished), property owners invalidated city ordinances based on illegal “spot zoning” challenges. However, during the course of the litigation, owners never cited any civil rights statutes in support of their theories, except -- and it is an important except, when it filed a motion for attorney’s fees under the pro-plaintiff civil rights statute (42 U.S.C. § 1988). Owners sought to recoup $196,359.58 in fees. The trial court denied the motion, citing unfair surprise and prejudice to the City of Indio.

     Lo and behold --

Year in Review - 2011

Wrapping It Up:  M & M’s Top 25 Attorney’s Fees Decisions For 2011  Part 1 of 2

     It is that time of year, at year end, for us to list our top published attorney’s fees decisions from the U.S. Supreme Court, Ninth Circuit Court of Appeals, and California Courts of Appeal. Although we normally do the “Top 20” decisions, the 2011 year was prolific for many, many decisions of interest, so we expanded it to the top 25.

     We might note that 2012 looms as an important year for the California Supreme Court to decide the issues involved in Kirby v. Immoos Fire Protection, United Parcel Service Wage & Hour Cases (McGann), and related cases considering whether a prevailing defendant is entitled to recover Labor Code section 218.5 attorney’s fees for successfully defending against a plaintiff employee’s claims for meal/rest break violations even if those claims were joined with Labor Code section 1194 overtime compensation claims subject to a unilateral pro-plaintiff fee shifting provision. (See our posts of September 28, October 25, and November 25, 2011.)

     However, we can only report and score on the top 25, keeping in mind that appellate jurists did decide many other important cases. These are our favorites in a wide range of areas, so enjoy. This will be the first 13 cases, with 12 more to follow in a subsequent post--likely closer to year’s end.

     25. La Cuesta v. Benham, 193 Cal.App.4th 1287 (2011) [4th Dist., Div. 3]; author--Presiding Justice Sills (who, unfortunately, passed away earlier this year after a long and distinguished career):  Under Civil Code section 1717, a lopsided win by landlord in obtaining repossession and compensation from tenant made landlord the prevailing party, reversing denial of fees even under an abuse of discretion standard. [Discussed in our March 30, 2011 post.]

     24. Ferwerda v. Bordon, 193 Cal.App.4th 1178 (2011) [3d Dist.]; author--Justice Robie:  Attorney’s fees cannot be awarded to a homeowners’ association based on unrecorded CC&R enforcement documents and manuals.  [Discussed in our March 26, 2011 post.]

     23. Turner v. Assn. of American Medical Colleges, 193 Cal.App.4th 1047 (2011) [1st Dist., Div. 5]; author--Justice Simons:  Attorney’s fees are not awardable to defendant prevailing on Unruh Civil Rights Act, Civil Code sections 52 and 54.3 claims even though defendant did prevail (but did not claim entitlement to work) under a broader fee-shifting provision contained in section 55. [Discussed in our March 25, 2011 post.]

     22. In re Marriage of Fong, 193 Cal.App.4th 278 (2011) [2d Dist., Div. 3]; author-- Justice Croskey:  Wife not complying with her financial disclosure requirements in family law proceeding could not seek fee award from noncompliant husband under Family Code section 2107(c). [Discussed in our March 4, 2011 post.]

     21. Marriage of Fossum, 192 Cal.App.4th 336 (2011) [2d Dist., Div. 1]; author--Justice Johnson, writing for the majority; Justice Rothschild, dissenting:  Spouse/domestic partner’s breach of Family Code section 721(b) fiduciary duty gives rise to mandatory fee award under Family Code section 1101(g); dissenting justice spelled out anomalous results from this interpretation and suggested a legislative amendment to the statute to make it discretionary in nature. [Discussed in our January 29, 2011 post.]

     20. Harris v. Maricopa County Superior Court, 631 F.3d 963 (9th Cir. 2011); author--Circuit Judge Reinhardt for the majority; Circuit Judge Bybee, concurring and dissenting:  “But for” test, not pro-rata allocation of fees between frivolous and nonfrivolous claims, was proper standard for fee recovery under federal civil rights fee-shifting statute; dissenting judge argues that “but for” test will make it impossible for defense to argue fee apportionment in mixed-bag cases. [Discussed in our January 16, 2011 post.]

     19. Garcia v. Politis, 192 Cal.App.4th 1474 (2011) [2d Dist., Div. 4]; author--Justice Willhite: Plaintiff seeking fees in default judgment context cannot file a fee motion post-judgment, but must make a fees request in plaintiff’s default judgment packet paperwork. [Discussed in our February 26, 2011 post.]

     18. First National Mortgage Co. v. Federal Realty Investment Trust, 631 F.3d 1058 (9th Cir. 2011); author--Senior Circuit Judge Thompson: 28 U.S.C. § 1821(b) $40-per-day limitation on witness expenses “preempted” application of California Code of Civil Procedure section 998’s allowance of broader “reasonable” expert witness fees in diversity cases. [Discussed in our February 1, 2011 post.]   Justice Thompson died February 19, 2011.

     17. Simke, Chodos, Silberfeld & Anteau, Inc. v. Athans, 195 Cal.App.4th1275 (2011) [2d Dist., Div. 1]; author--Presiding Justice Mallano:  Unspecified attorney’s fees prayer in complaint did not void future default judgment based on terminating sanctions conduct. [Discussed in our May 26, 2011 post.]

      16. Puerta v. Torres, 195 Cal.App.4th 1267 (2011) [4th Dist., Div. 3]; author--Justice Moore: Failure to include some type of acceptance language in Code of Civil Procedure section 998 offer invalidates the offer. [Discussed in our May 25, 2011 post.]

      15. Martinez v. L.A. County Metropolitan Transp. Auth., 195 Cal.App.4th 1038 (2011) [2d Dist., Div. 1]; author--Justice Rothschild:  Code of Civil Procedure section 998 offer excluding “costs” from recovery also means that attorney’s fees are excluded from the ambit of the offer. [Discussed in our May 23, 2011 post.]

     14. Ilshin Investment Co., Ltd v. Buena Vista Home Entertainment, Inc., 195 Cal.App.4th 612 [2d Dist., Div. 1]; author—Justice Chaney:  Attorney’s fees are not allowable for prevailing party in post-judgment enforcement independent creditor’s suit. [Discussed in our May 15, 2011 post.]

      13. In re Marriage of Davenport, 194 Cal.App.4th 1507 (2011) [lst Dist., Div. 2]; author--Justice Richman:  Scorched earth litigation practices justified denial of family sanction fees to wife and allowed for substantial fees against her/in favor of husband; case distinguishes between zealous advocacy and “attack dog”/”scorched earth” litigation. [Discussed in our May 6, 2011 post.]

      BLOG UNDERVIEW--This last one is a good one to end on, because both co-contributors have dogs--Mike has Riffle, a Labrador, and Marc has Watson, a mixed-breed dog, but still a good dog! Watch for our ensuing post before the end of the year with the next 12 decisions rounding out our “Top 25.” Happy Holidays to all of our readers.

Earlier Year End Wrap-Ups:

     2010  Part I; Part II     2009 Part I; Part II     2008 Part I; Part II

 

Pleading: Complaint Does Not Have To Specify The Dollar Amount Of Attorney’s Fees To Justify Default Judgment Based On Future Terminating Sanction Conduct

 

Extensive Opinion Shows Why Due Process and Policy Reasons Justify End Result:  Lex non cogit ad impossibilia.

     In an extensive opinion, the Second District, Division 1 has decided that unspecified attorney’s fees in a complaint can justify a later default judgment entered as a terminating sanction, without offending due process rules applicable to other type of relief (usually, various components of more traditional damages for which some notice has to be given).

     The case that so holds is Simke, Chodos, Silberfeld & Anteau, Inc. v. Athans, Case No. B222175 (2d Dist., Div. 1 May 26, 2011) (certified for publication), authored by Presiding Justice Mallano on behalf of a 3-0 panel.

     Attorney’s fees were deemed not to be the type of “relief” required for articulation under Code of Civil Procedure section 580, in contrast to other types of recovery. Beyond that, common sense prevailed as far as due process analysis was concerned--after all, how could a litigant ever know the amount of fees to be incurred for future discovery violations so as to notify an opposing litigant in advance? As expressed by the appellate court in a paraphrase of a well-known maxim: “The law[, including due process,] never requires impossibilities.”  Cal. Civ. Code section 3531.

Pleading: Simply Pleading Fee Recovery For Negligent Misrepresentation Does Not Do The Trick!

No Entitlement, No Fees.

     In SMDM Properties, Inc. v. Developers Diversified Realty Corp., Case No A126643 (1st Dist., Div. 2 Jan. 10, 2011) (unpublished), the appellate court reminded us of a pivotal lesson in the attorney’s fees area: you need a proper predicate for fee entitlement. If not, no fee recovery. There, plaintiffs took issue with a lower court striking an attorney’s fees prayer alleged as an adjunct to a standard negligent misrepresentation claim. No error, said the appellate court. No authorities demonstrated that plaintiffs should get fees as consequential damages if they win a negligent misrepresentation claim. The alleged fee clause was not broad enough and no “tort of another” exception was pled. Result: no harm in striking a fee prayer.

Pleading: If You Want To Recover Fees In Default Judgment, Make Sure Basis and Prayer For Fees Are Included In Complaint

 

Fourth District, Division 1 Strikes Fees From Default Judgment For Failure to Plead Fees in Complaint.

     Here is one of those nuts and bolts decisions that reminds all litigators to plead fee entitlement and include a prayer for fees in their complaints if they want to recoup fees at the default judgment stage of litigation.

     In Law Office of Don Detisch v. Woolley, Case No. D055281 (4^th Dist., Div. 1 Aug. 23, 2010) (unpublished), plaintiff was granted a default judgment, including $3,110 in attorney’s fees as part of collection efforts. The problem was that plaintiff never expressly requested an attorney’s fees award in its complaint. On appeal, the Fourth District, Division 1 found that the default judgment only could encompass the relief sought in the complaint, requiring that the fee award had to be stricken. (Wiley v. Rhodes, 223 Cal.App.3d 1470, 1474-1475 (1990) [no default attorney fee award where fee entitlement not pled in the complaint and no fee demand included in the prayer]; Becker v. S.P.V. Construction Co., 27 Cal.3d 489, 495 (1980) [default judgment fee award reversed became complaint did not pray for attorney’s fees].)

     So, the lesson here is to plead fee entitlement and include a fee prayer in the complaint—at the outset—in the event a named defendant fails to appear and is subject to judgment under the default judgment procedure.

Trial Court Improperly Struck Attorney’s Fees Prayer Where Complaint Demonstrated That Plaintiff Was The Catalyst For A Municipal Change In Position.

Complaint Resulting In Governmental Changes Suggested Basis for Fee Award Under CCP section 1021.5.

            In our May 21, 2008 post, we explored Camenisch v. Superior Court, 44 Cal.App.4^th 1689, 1698 (1996), which cautions against striking attorney’s fees prayer requests at the pleading stage unless a full opportunity for discovery has occurred.  A recent First District, Division Two unpublished decision also follows this logic in reversing a trial court’s striking of a request where a plaintiff’s tax refund lawsuit had already resulted in a change of position by the City of Rohnert Park.

            Stutrud v. City of Rohnert Park, Case No. A118408 (1^st Dist., Div. 2 Sept. 25, 2008) (unpublished) involved a tax refund lawsuit where the trial court struck a prayer for attorney’s fees without any explanation.  The Court of Appeal reversed that determination as involving an issue that may not be resolved at the pleading stage.  Rather, plaintiff’s lawsuit forced the City to accept that the sewer fees were subject to Proposition 218 and to reenact the fees following the procedures established by Proposition 218.  City even admitted that the need for passage of a new ordinance was due to plaintiff’s victory in a prior appeal.  Citing Tipton-Whittingham v. City of Los Angeles, 34 Cal.4^th 604 (2004) and Graham v. DaimlerChrysler Corp., 34 Cal.4^th 553 (2004), the appellate panel reasoned:  “Compelling a recalcitrant municipality to comply with a constitutional provision cannot be dismissed as a negligible benefit to the citizens of Rohnert Park.  Thus, it is hardly an outlandish notion to believe that [plaintiff’s] lawsuit was the catalyst for the City’s change of position and that he may be entitled to fees for his past efforts.”  The predicate, of course, would be Code of Civil Procedure section 1021.5, the private attorney general statute authorizing an award of fees to a successful party enforcing “an important right affecting the public interest.”

            This case cautions that attorney’s fees prayer “strikes” should not be done lightly, especially where the record shows a very plausible basis for fee entitlement. 

TRIAL JUDGES DO NOT HAVE TO STRIKE ATTORNEY’S FEES PRAYERS IN COMPLAINT UNTIL PLAINTIFF HAS FULL OPPORTUNITY TO DETERMINE BASIS FOR RECOVERY.

Los Angeles County Superior Court Judge Rita Miller Denies Motion to Strike But Grants Leave to Plead Fee Basis Based Upon Existence of Written Contract.

            I happened to be at a hearing on a motion to quash based on lack of personal jurisdiction, on May 19, 2008, before Judge Rita Miller, who sits in Los Angeles County Superior Court. 

            Judge Miller had another law and motion matter set for hearing that dealt with an attorney’s fees pleading issue.  Plaintiff filed a complaint pleading entitlement to attorneys fees based on a written contract, but pled no other specifics.  The defense moved to strike the prayer based on failure to allege the contract predicate for fee recovery.

            In her tentative, Judge Miller was declined to deny the motion to strike based on Camenisch v. Superior Court, 44 Cal.App.4^th 1689, 1698 (1996), which held:

            “[Defendant attorney in a legal malpractice action] also argues that

              the court erred in refusing to strike [plaintiff client’s] prayer for

              attorney fees.  [Defendant] asserts that the prayer must be stricken

              because the complaint did not allege a contract allowing recovery of

              attorney fees by the prevailing party.  [Plaintiff] replies, correctly,

              that the court was not required to strike the prayer before he has had

              a full opportunity to determine, through discovery, whether a basis for

              recovery exists.”

            Interestingly enough, however, the plaintiff in the matter before Judge Miller agreed to amend to plead the existence of the written contract.  Going with the flow, Judge Miller denied the motion to strike but set a date for the plaintiff to actually plead the written contractual basis for the fee award—a result which appears to have met the concerns of both sides.