CALIFORNIA ATTORNEY'S FEES

Block Billing, Special Fee Shifting Statute: Nike Is Awarded About $260,000 In Attorney’s Fees Against Michael Avenatti Under The Mandatory Victims Restitution Act

Block Billing Hampered Apportionment Of Fees, With District Judge Only Awarding About A Third Of The Ask.

            It is not often that we post on a criminal case, but the publicity generated and interesting fee-shifting statute involved in USA v. Avenatti, Case No. (SI) 19 Cr. 373 (PGG) (S.D.N.Y. Doc. 34, Mem. and Order Feb. 14, 2022) invited a post on this decision.

            Under the Mandatory Victims Restitution Act (MVRA), 18 U.S.C. § 3663A(b)(4), attorney’s fees can be paid to a criminal victim where that victim’s attorneys render assistance at the request or inducement of a governmental criminal case.  However, only governmentally-related work can be awarded, with the need to apportion out private investigation by the victim such as analyzing court pleadings or attending motion hearings.  (Lagos v. U.S., 132 S.Ct. 1684, 1690 (2018).) 

            Nike was found to be a victim in the criminal extortion case brought by the U.S. against attorney Michael Avenatti.  Nike’s attorneys Boies Schiller sought $856,162 in attorney’s fees for helping federal prosecutors bring charges against Mr. Avenatti.

            U.S. District Judge Paul G. Gardephe agreed Nike was entitled to fees under MVRA, but he found the need to segregate out compensable and noncompensable work efforts.  The problem which handicapped apportionment was block billing by Boies Schiller.  So, District Judge Gardephe disregarded entirely all block billed entries which contained one or more noncompensable entries.  When that was done, $259,800.50 was the fee award, around a third of the request.

Special Fee Shifting Statute: Plaintiff DUI Accused Was Properly Granted Attorney’s Fees Of $3,640 Because DMV’s Determination Was Arbitrary And Capricious After Suspension Order Was Stayed And Then Vacated, In A 2-1 Opinion By The Fifth District

Plaintiff Additionally Entitled To Fees On Appeal, Subject To The Applicable $7,500 Cap.

            Isenberg v. Dept. of Motor Vehicles, Case No. F082435 (5^th Dist. July 22, 2022) (unpublished) is an interesting 2-1 opinion by the Fifth District on the propriety of a $3,640 attorney’s fees award to a prevailing plaintiff in a DUI suspension matter before the DMV.  It also is a must read for DUI criminal/administrative practitioners on the topics of the “rising blood-level defense” and rebuttal to the three-hour presumption under the Vehicle Code.

            What happened here is that a plaintiff whose driver’s license was suspended for an alleged DUI incident happened to get the suspension stayed and eventually vacated through a civil writ proceeding before the superior court, with the vacatur of the order occurring because plaintiff was criminally acquitted of charges.  Government Code section 800 is a fee-shifting provision which allows a prevailing party to obtain fees at the rate of $100 per hour and capped at $7,500 for an arbitrary and capricious administrative proceeding decision.  The superior court awarded $3,640 after determining plaintiff prevailed and the DMV’s decision was arbitrary and capricious given its ultimate concession that plaintiff had rebutted the three-hour presumption under the Vehicle Code.

            The Fifth District was divided in affirming, by a 2-1 vote.  It determined plaintiff did achieve her litigation result in getting the driver’s license suspension revoked.  The real issue devolved into whether the DMV’s determination was arbitrary and capricious.  The majority determined it was given that the .08 BAC presumption was rebutted by plaintiff’s expert based on a “rising blood-level defense.”  However, the dissent viewed the DMV hearing officer determination differently, meaning that plaintiff did not rebut evidence still showing alcohol level above the limit even if the presumption disappeared because it was rebutted.  In the end, the fee award was affirmed, with the majority indicating that plaintiff could seek appellate fees for winning yet again subject to the $7,500 cap of Government Code section 800. 

Special Fee Shifting Statute: Fifth District Confronts A Similar Causation Issue Under The California Public Records Act On The Same Day

Result Was The Same:  Attorney’s Fees Request Were Properly Denied Based On Lack Of Causation.

            The Fifth District, in Austin v. City of Taft, confronted a causation situation under the California Public Records Act (CPRA).  We posted on this case.  The same day, it also decided a similar situation with the same result in J.A. v. County of Madera, Case No. F083546 (5^th Dist. July 14, 2022) (unpublished).

            There, a CPRA petitioner wanted information about a police shooting of a relative, with the County responding that it would produce the responsive materials after the district attorney had completed its investigation into the shooting.  Petitioner’s counsel and the County had many exchanges in which County reiterated it would produce the information as soon as the investigation was complete.  Petitioner filed a petition to compel disclosure; however, before the matter could be heard, County honored its promise and produced the information after the investigation had been concluded.  The lower court found the petition to be moot and denied a request for attorney’s fees by petitioner.

            The Fifth District affirmed, relying on much of the reasoning and case analysis which supported the result in Austin.  There was a lack of causation because the CPRA litigation did not motivate the delayed production, because County all the time indicated it would produce responsive information to the CPRA request.  That being said, the fee request was properly denied.

POOF!, Special Fee Shifting Statute: CCP § 1038 Fees/Costs Assessed Against Plaintiff And In Favor Of City In Dangerous Property Case Reversed As A Matter Of Law

Plaintiff’s Claim Was Colorable Such That “Reasonable Cause” Element Was Missing So As To Not Justify The Award.

            Cities gaining pre-trial victories in certain cases frequently move to recover some attorney’s fees and costs against a losing defendant under Code of Civil Procedure section 1038.  However, the governmental entity must prove that the plaintiff’s claim lacked reasonable cause (measured by an objective standard) or was not brought/prosecuted in good faith (with the good faith element not at issue in the case we next post on).  Also of salience, the reasonable cause component is reviewed de novo on appeal.  (Lee v. Dept. of Parks & Recreation, 38 Cal.App.5^th 206, 215 (2019).)

            The “reasonable cause” standard was not met by the governmental entity in Sheks Construction Co. v. City of South San Francisco, Case No. A163204 (1^st Dist., Div. 5 June 29, 2022) (unpublished).  Although plaintiff lost a dangerous condition of public property case before trial, nothing demonstrated that its claim was other than colorable (meaning it had potential merit).  Even though the lower court awarded fees and costs under section 1038, that award went POOF! on appeal upon a de novo review by the appellate court of 1038’s “reasonable cause” prong.

Special Fee Shifting Statute: Plaintiff Losing A Contested Civil Harassment Restraining Order Proceeding Properly Saddled With $37,139.01 In Attorney’s Fees And Costs

Ability To Pay Was Acknowledged And Was A Minor Consideration.

            Litigants in civil harassment restraining order proceedings need to be aware that there is a discretionary prevailing party fee-shifting statute under Code of Civil Procedure section 527.6(s).   In Nicolino v. Rey, Case No. B307752 (2d Dist., Div. 5 Apr. 27, 2022) (unpublished), plaintiff lost a heavily contested civil harassment restraining order request against defendant, making acerbic remarks before the lower court.  That court awarded defendant $37,139.01 in attorney’s fees and costs as against plaintiff.  Her appeal did not result in any change.  She argued ability to pay (which is a factor) was not considered, but the lower court acknowledged she did have an ability to pay but it was a minor consideration based on the totality of circumstances, a conclusion agreed with by the reviewing court.  She also argued that work relating to a motion to seal records was noncompensable, but it was because the work did occur in the context of the restraining order proceeding.

Special Fee Shifting Statutes: $71,075.075 Grant Of Attorney’s Fees To California Public Records Act Petitioner Reversed Because Minimal/Insignificant Results In Document Disclosure May Allow For Denial Of Fees Altogether

Minimal/Insignificant Standard Is Applicable to CPRA Fees, Even Though the Statute Has Mandatory Prevailing Party Fee Language.

            Riskin v. Downtown L.A. Property Owners Assn., Case No. B309814 (2d Dist., Div. 3 Mar. 17, 2022) (published) dealt with a situation where a petitioner under the California Public Records Act (CPRA) obtained a $71,075.75 attorney’s fees award based on mandatory prevailing party fee language, even though petitioner only obtained one document.  The opposing party had argued that the “success” was minimal or insignificant such that the trial judge had discretion to deny fees altogether. The lower court felt constrained by the mandatory language in awarding what it did.

            The 2/3 DCA reversed, in an opinion authored by Orange County Superior Court Judge Kimberly A. Knill, sitting by designation as an appellate justice.  The panel determined that a minimal/insignificant standard did exist under CPRA, in line with “dicta” in Los Angeles Times v. Alameda Corridor Transportation Authority, 88 Cal.App.4^th1381, 1391-1392 (2001) and with other appellate cases not denouncing that standard.  So, where a requestor only obtains partial relief under the CPRA, the minimal or insignificant standard applies so as to allow fee denial altogether if the circumstances show this should be the fair result.

Special Fee Shifting Statutes: Civil Harassment Fee Award Reversed Where No Noticed Motion Was Filed To Claim Fees

Issuance Of Fee Order At The Actual Harassment Hearing Was Improper.

            Due process does matter, and reasonableness of fees are usually determined through a noticed motion, as Bullock v. Anderson, Case No. B309230 (2d Dist., Div. 4 Mar. 15, 2022) (unpublished) makes clear.  What happened here is that a lower court dismissed a civil harassment restraining order petition without prejudice and awarded fees to the other side.  The fees order was reversed based on the failure of the prevailing party to file a noticed motion, usually required to determine one is a prevailing party and to determine the reasonableness of fees.  The oral request at the end of the merits hearing did not satisfy due process requirements. 

Special Fee Shifting Statutes: Trial Court’s Attorney Fees Award Of $10,295 To Prevailing Defendant In Civil Harassment Action Affirmed On Appeal

Plaintiff Voluntarily Dismissed The Civil Harassment Action, And Failed To Show That The Trial Court Acted Arbitrarily Or Unreasonably Under Highly Deferential Discretion Standard.

            Code of Civil Procedure section 527.6(s) allows a trial court to award attorney fees to the prevailing party in a civil harassment proceeding.  In Firsov v. Zhukovsky, Case No. H047913 (6^th Dist., March 8, 2022) (unpublished), self-represented plaintiff – who voluntarily dismissed a civil harassment action on the day of the hearing on the matter – appealed the trial court’s award of $10,295 in section 527.6(s) attorney fees to prevailing defendant.  In addition to unsupported arguments regarding attorney defendants’ ability to have legal representation in in civil harassment actions and unsubstantiated claims regarding defendant’s alleged false statements, plaintiff argued that the fee award should be reversed because the trial court failed to consider his financial circumstances in determining what, if any, amount of fees were reasonable.

            The Sixth District was not persuaded and affirmed.  The trial court’s determinations as to prevailing party and amount of fees award are discretionary, and plaintiff failed to show that the trial court acted arbitrarily or unreasonably in reaching its decision.  (PLCM Group, Inc. v. Drexler, 22 Cal.4th 1084, 1095 (2000) [No. 1 in our list of Leading Cases].)  Additionally, a trial court is permitted to consider a party’s financial condition in determining a reasonable fees amount, but is not necessarily required to do so. Because the record in this action was silent as to the trial court’s consideration of plaintiff’s financial condition, the panel had to presume the trial court considered all required factors in determining the amount of the fee award. 

Special Fee Shifting Statutes: Third District Affirms Attorney Fee Awards Totaling $897,349.85 To Prevailing Defendants In Action Seeking To Determine And Enforce Rights Under CC&Rs

CC&R Attorney Fee Clause Did Not Supersede Mandatory Davis-Stirling Fee Shifting Provision, And Apportionment Was Unnecessary Where Each Of Plaintiff’s Causes Of Action Involved Defendants’ Alleged Violations Of The CC&Rs And Plaintiff’s Rights Thereunder.

            In Westwood Montserrat v. AGK Sierra de Montserrat, Case Nos. C088859/C090081 (3d Dist., January 31, 2022) (unpublished), plaintiff – owner and developer of a common interest residential development – lost title to much of its property when it was transferred to defendant following foreclosure on a deed of trust and a trustee’s sale.  Plaintiff later sued defendant and its general partner seeking a determination of and to enforce its right – as declared in the CC&Rs recorded prior to foreclosure – to repurchase lots that remained vacant three years after transfer of title.  However, the trial court concluded that the foreclosure had extinguished plaintiff’s repurchase right.  The trial court then found both defendant and its general partner to be prevailing parties – awarding $740,471.75 in attorney fees to defendant and $156,878.10 to its general partner under the Davis-Stirling Act (Civ. Code, §  5975(c)) and a CC&R attorney fee clause. 

            Plaintiff appealed – arguing that the trial court erred in its application of section 5975 and the CC&R fee clause because the fee clause was discretionary and prevailed over section 5975. Additionally, plaintiff argued that because only one out of eight of its causes of action involved enforcement of the CC&Rs, the trial court should have made a determination of the extent of section 5975’s applicability to each cause of action and apportioned accordingly rather than applying section 5975 to the entire action.

            The Third District affirmed on the basis that the fee awards were proper under section 5975, and did not have to reach plaintiff’s argument on the CC&R fee clause.  Section 5975 is a mandatory remedy independent of any contractual fee clause, (Hsu v. Abbara, 9 Cal.4th 863, 872 (1995); and Salehi v. Surfside III Condominium Owners Assn., 200 Cal.App.4th 1146, 1152 (2011)) and nothing in the fee clause indicated that the parties intended it to supersede section 5975. Further, the trial court is awarded no discretion in granting or denying fees under section 5975 except as to the reasonableness of the fees. (Chapala Management Corp. v. Stanton, 186 Cal.App.4th 1532, 1546 (2010) [discussed in our August 01, 2010 post].) As to plaintiff’s apportionment argument, the panel concluded the trial court had not abused its discretion as the gist of each of plaintiff’s causes of action was that defendants had violated the CC&Rs as well as plaintiff’s rights thereunder.

Consumer Statutes, Special Fee Shifting Statutes: Trial Court’s Significant Reduction To Prevailing CLRA Plaintiffs’ Attorneys Fees Request And Denial Of Costs Award Was Abuse Of Discretion

The Trial Court Improperly Based Its Fee/Costs Awards Entirely On Defendant’s Counsel’s Arguments Which Were Made Without Any Supporting Evidence.

            In Solis v. MVP Cars, Case No. E075101 (4^th Dist., Div. 2 January 24, 2022) (unpublished), defendant was sued under the Consumer Legal Remedies Act (Civ. Code, §§ 1750 et seq.) for its failures to perform a smog check on, and register with the DMV, a vehicle it had sold – despite buyer having paid the smog check and registration fees. Six to seven months into the litigation, and after defendant filed a motion to have buyer’s wife added as a plaintiff and the parties had conducted discovery, defendant finally smogged the vehicle and registered it with the DMV.  As a result, plaintiffs then dismissed the lawsuit, but sought $1,045 in costs and $21,360 in attorney fees ($17,800 lodestar with 1.2 multiplier).  The trial court, however – adopting defendant’s opposition claims that the fees/costs request was unjustified because the issues with the vehicle could have been resolved with a phone call and litigation was unnecessary – denied plaintiffs’ request for costs and awarded them only $1,925 in pre-litigation attorney fees. Plaintiffs appealed.

            In a 3-0 opinion, authored by Justice Codrington, the 4/2 DCA reversed – finding the trial court had abused its discretion by improperly resting its significantly reduced fee award entirely on defendant’s counsel’s arguments which were made with no supporting evidence whatsoever.  (Gdowski v. Gdowski, 175 Cal.App.4th 128, 139 (2009) [“Statements and arguments by counsel are not evidence”]; Villacorta v. Cemex Cement, Inc., 221 Cal.App.4th 1425, 1433 (2013) [appellate court will “not consider counsel’s argument in determining whether there is substantial evidence to support the verdict” because “[a]rgument by counsel is not evidence”].)  Additionally, the panel concluded that the trial court’s finding that the matter could have been resolved without litigation lacked evidentiary support given that defendant litigated the matter for at least six months before finally smogging and registering the vehicle. 

Deadlines, Judgment Enforcement, SLAPP, Special Fee Shifting Statutes: Where Trial Court Correctly Determined Reimbursement Of Fees/Costs Sought By Prevailing SLAPP Defendant Were For Judgment Enforcement, Not Appellate Fees, Motion Was Timely Filed

Distinction Between Enforcement Fees And Appellate Fees Set Forth In McQueen Governed.

            In Laue v. Ortiz, Case No. H047475 (6^th Dist., January 7, 2022) (unpublished), defendant successfully SLAPPed plaintiff’s complaint and was awarded fees and costs as mandated under Code Civ. Proc. § 425.16(c)(1) – the anti-SLAPP fee shifting provision.  After unsuccessfully appealing the order granting defendant’s anti-SLAPP motion and having his appeal of the fees/costs award dismissed as a nonappealable order, plaintiff filed an unsuccessful motion in the trial court to set aside the order granting defendant’s anti-SLAPP motion and awarding defendant fees/costs.  In its order denying the set aside motion, the trial court awarded further attorney fees and costs to defendant. Plaintiff appealed the order and defendant moved to dismiss the appeal – a motion denied as moot when plaintiff filed an abandonment of his appeal.

            More than 60 days later, defendant moved in the trial court, under Code Civ. Proc. §§ 425.16(c)(1) (anti-SLAPP) and 685.040 (judgment enforcement) for reimbursement of the attorney fees she incurred in connection with plaintiff’s abandoned appeal. Plaintiff opposed – claiming defendant was mischaracterizing the fees as being incurred in judgment enforcement, which provides for a two-year deadline from the date costs were incurred, because she had missed the deadlines under California Rules of Court for seeking fees/costs properly categorized as appellate fees/costs. The trial court disagreed – determining the fees to be properly categorized as judgment enforcement – and granted defendant’s motion. 

            Plaintiff appealed – arguing that defendant’s fee motion was for appellate fees/costs and therefore not timely.  However, the Sixth District concluded that the trial court was correct in its determination and affirmed. As set forth in Conservatorship of McQueen, 59 Cal.4th 602 (2014) [discussed in our July 11, 2014 post], when a fee-shifting statute authorizes the award of attorney fees, fees incurred in enforcement of the judgment – such as defending the judgment from attack – are recoverable under section 685.040.  Further, appellate fees are those incurred on direct appeal from the judgment at issue. (McQueen, 59 Cal.4^th at p. 610.) Here, although the fees/costs were incurred on appeal, they were not incurred on direct appeal from the judgment.

Special Fee Shifting Statute: Attorney Knowing That A Torts Claim Had An Invalid Proof Of Service, Leading To A County Directed Verdict, Exposed Plaintiff To A Substantial Fees Award

Losing Plaintiff Ordered To Pay $121,837.50 In Attorney’s Fees And $11,637.85 In Costs

            Government Code section 1038 penalizes a plaintiff who files and pursues an action subject to a tort claims presentation to defense costs against the governmental entity, when a directed verdict is granted, where plaintiff proceeded in bad faith and without reasonable cause.  Plaintiff in Harrington v. County of El Dorado, Case No. C092559 (3d Dist. Nov. 18, 2021) (unpublished) learned the pain of that penalty all too well. 

            There, a directed verdict was granted on all causes of action in a water drainage damage case which required proper presentation of a torts claim.  The problem is that plaintiff’s attorney knew that there was no valid proof of service on the claim letter—the service was purportedly made in 2016 on a 2017 Judicial Council form, with no explanation how such a later date form could be used.  Unfortunately for plaintiff, the attorney’s knowledge of this defect was imputed to his/her client.  (Hall v. Regents of University of California, 43 Cal.App.4^th 1580 1586 (1996).)  Given that reality, the appellate court affirmed the lower court’s award of defense fees of $121,837.50 and costs of $11,637.50 against plaintiff.

Employment, Multipliers, Reasonableness of Fees: No Abuse Of Discretion In Trial Court’s Award Of Attorney Fees To Prevailing Plaintiffs In DJOA Action

Amount Of Fee Award Was Justified Given Trial Court’s Analysis Of The Complexity Of The Case, Results Achieved By Plaintiffs, And Plaintiffs’ Showing To Support The Fee Request.

            The Displaced Janitors Opportunity Act (Lab. Code, §§ 1060–1065) “requires contractors who are awarded contracts for janitorial or building maintenance services at a particular site to retain certain employees working for the terminated contractor for a 60-day transition employment period, and to offer those workers continued employment if their performance during the 60-day period is satisfactory.” (§ 1061, subds. (b)(1) & (f).) Under the DJOA, an employee of the terminated contractor who was not offered employment by the successor contractor may sue the successor for back pay, including the value of any lost employment benefits. (§ 1062, subd. (a).) An employee prevailing in such an action “shall” be awarded “reasonable attorney’s fees and costs as part of the costs recoverable.” (§ 1062, subd. (c).) (Jones v. Quality Coast, Inc. (2021), 62 Cal.App.5th 372, 379–380 (2021) [discussed in our February 27, 2021 post].) The Displaced Worker Protection Act (S.F. Police Code, §§ 3300C.1–3300C.6) provides for a similar 90-day transition period. (§§ 3300C.1(c) & (f), 3300C.2(b).)

            In SEIU-USWW v. Preferred Building Services, Inc., Case No. A159790 (1^st Dist., Div. 5 October 15, 2021) (partially published – fees discussion not published), a successor janitorial contractor appealed after a class of displaced janitors and their union – suing for violations of the DJOA and DWPA – successfully moved for summary judgment and were subsequently awarded attorneys’ fees.

            On appeal, Defendant challenged the amount of fees awarded – arguing the trial court should have adjusted the lodestar downward due to overstaffing with eight attorneys, double counted the attorneys’ skill by applying a multiplier when the skill level was already factored into the lodestar, and that the 1.4 multiplier (reduced from Plaintiffs’ requested 2.0) was not supported by the factors involved in the case.  The 1/5 DCA affirmed.  The trial court properly considered and analyzed the complexity of the case, results achieved by Plaintiffs, and Plaintiffs’ showing to support the fee request.  Ninety percent of Plaintiffs’ billed hours came from lead counsel and four associates, time for attorneys billing less than 10 hours was excluded, and Plaintiffs had applied an across-the-board lodestar reduction of ten percent.  As to its other contentions, Defendant did not demonstrate that the trial court improperly double counted counsel’s skill nor abused its discretion in applying the multiplier. The trial court identified four factors warranting the multiplier – where “any one of those factors may be responsible for enhancing or reducing the lodestar.” (Krumme v. Mercury Ins. Co., 123 Cal.App.4th 924, 947 (2004).)

Costs, Section 998, Special Fee Shifting Statutes: No Abuse Of Discretion In Attorney Fees And Costs Award Of $1,454,938.70 Against One Of Three Defendants, Without Apportionment, In Wrongful Death Case

Apportionment Of Attorney Fees Was Not Feasible As Plaintiffs’ Efforts Against The Defendants Were Inextricably Intertwined,  And The Case Could Not Have Been Presented Without Significant Expert Testimony To Determine Who Was Legally Responsible.

            In Hatcher v. Powell, Case No. B302730 (2d Dist., Div. 6 September 27, 2021) (unpublished), four defendants were sued in a consolidated wrongful death action following a single-car accident in Ventura County.  One of the defendants was the driver of the car, who lost control while attempting a left curve on a country road at almost twice the posted speed limit, in the dark of night, and with a blood alcohol level of .19 percent according to his blood test.  The other three defendants were a communications company, the construction company it had hired, and Ventura County.  Driver had hit construction equipment stored off the shoulder of the road when he lost control – killing two of his three passengers and injuring the third.   County settled out of the case, but the remaining defendants proceeded to trial where the jury returned a unanimous special verdict finding driver’s negligence was a substantial factor, but the negligence of communications and construction companies was not a substantial factor, in causing harm to the plaintiffs.  All told, according to our calculations, the jury awarded non-economic damages against driver of roughly $7.75 million and $455,000 in economic damages.  $1.9 million of that was awarded to the parents of one of the deceased passengers – parents who had made driver an unaccepted Code Civ. Proc. § 998 offer to settle for $500,000 each.

            Those parents then moved post-judgment for costs of $1,458,588.72, which included $544,493.80 in prejudgment interest, pursuant to Civ. Code § 3291 and Code Civ. Proc. § 998 (prejudgment interest running from the date of § 998 offer not accepted by defendant), and $760,000 in attorney’s fees pursuant to Code Civ. Proc. § 1021.4 (a fee-shifting statute allowing trial courts to award reasonable attorney fees to a prevailing plaintiff where the action for damages is based upon defendant’s commission of a felony offense for which that defendant has been convicted).  After minor deductions to the jury fees and for expert fees incurred prior to the § 998 offer, the trial court awarded $1,454,938.70 in fees and costs against driver.

            Although not denying liability, driver appealed – claiming the trial court abused its discretion in the amount of its award of attorney’s fees and costs – and argued communications and construction companies bore some responsibility.  However, the 2/6 DCA agreed with the trial court’s conclusions.  It was not feasible to apportion fees amongst the defendants because plaintiffs’ efforts against the defendants were inextricably intertwined, and the case could not have been presented without significant expert testimony to determine who was legally responsible.  The trial court had properly considered the time spent, reasonable hourly rates, complexity of the issues, success achieved, and skill of the attorneys in awarding fees and costs that were proportionate to the judgment obtained. (Serrano v. Priest, 20 Cal.3d 25, 48- 49 (1977); Harman v. City and County of San Francisco, 158 Cal.App.4th 407, 419 (2007).)

Prevailing Party, Special Fee-Shifting Statutes: No Abuse Of Discretion In Trial Court’s Award Of $23,162.50 To Prevailing Civil Harassment Plaintiff

Awarded Fees, Which Were Reduced From The $70,000 Requested, Were Not Excessive Considering The Complexities Of The Case And The Increased Attorney’s Fees Plaintiff Incurred As A Result Of Defendant’s Conduct.

            In Rowan v. Kirkpatrick, Case No. A161436 (1^st Dist., Div. 3 September 13, 2021) (unpublished), defendant appealed the trial court’s award, under Code Civ. Proc., § 527.6(s), of $23,162.50 in attorney fees to prevailing civil harassment plaintiff – arguing the trial court abused its discretion by awarding excessive fees.

            The 1/3 DCA disagreed and affirmed.  Defendant failed to meet her burden to demonstrate the trial court abused its discretion.  Plaintiff, who sought and obtained a restraining order against defendant, was clearly the prevailing party.  Additionally, after considering the complexity of the case and the increased attorney’s fees plaintiff incurred due to defendant’s conduct, the trial court acted well within its discretion in awarding plaintiff $23,162.50 of the approximate $70,000.00 she sought in fees.

Common Fund, Costs, Special Fee Shifting Statutes: 4/3 DCA Affirms Large Part Of Trial Judge’s Fee And Costs Rulings In Financial Elder Abuse/Derivative Litigation

Hornet Nest Of Fees And Costs Issues Resolved By Appellate Court.

            We knew right away that Acting Presiding Justice Bedsworth penned Horowitz v. Brown, Case No. G057412 (4^th Dist., Div. 3 Aug. 30, 2021) (unpublished) based on his distinctive writing style.  The appellate court faced a virtual hornet nest of fees and costs issues, with us distilling the ones that we saw of most importance.

            What happened here is that plaintiff was found to be a victim of financial elder abuse and gained some derivative recovery for an entity, but only against some defendants.  Plaintiff was 81 years old and got involved in making investments with her ex-husband’s real estate joint venture partner, which you can likely see led to the litigation which spawned over 5 years and 51 days of a trial.  In the end, plaintiff prevailed on financial elder abuse claims against some defendants and obtained some derivative benefit for an entity, with many of them being in the millions of dollars.  The case resulted in multiple motions for fees and costs, with plaintiff being awarded about $1.411 million in fees against four defendants, nothing in fees for gaining a derivative liability award (because she was advancing her personal interest over that of an entity), and all kinds of split decisions on routine costs. 

            The 4/3 DCA affirmed in major respects, but it reversed and remanded on some issues—the major ones which we highlight now.

            The appellate court agreed that plaintiff primarily recovered against many defendants on a financial elder abuse claim, which carries a prevailing party plaintiff fee entitlement.  Despite some overlap on contractual claims under a partnership agreement, the 4/3 DCA panel found that the financial elder abuse fee-shifting provision had primacy even though there was just a liability finding given that some of the defendants paid the damages earlier—with the 4/3 DCA agreeing with the consistent analysis in Arace v. Medico Investments, LLC, 48 Cal.App.5^th 977, 983 (2020) [a 4/2 DCA opinion].

            Next, some prevailing defendants were entitled to routine prevailing party costs under CCP § 1032, with the financial elder abuse shifting provision not dictating otherwise.  After all, plaintiff only recovered money for an entity derivatively, not herself personally.  (Murillo v. Fleetwood Enterprises, Inc., 17 Cal.4^th 985, 990-991 (1998).)

            However, the reviewing court did remand on whether plaintiff could obtain recovery of denied fees on the derivative claim based on a common fund/substantial benefit doctrine.  After all, in the end, she did bear the fees to obtain the derivative award, with it being unfair to say that she should bear the costs when she did not entirely benefit with most of the advantage going to the entity upon whose behalf she was suing.

            Finally, because various defendants were involved, the costs awards had to be remanded to make sure there was an apportionment as to separate defendants with respect to jointly incurred defense costs.  (Charton v. Harkey, 247 Cal.App.4^th 730, 743-744 (2016).)

Special Fee Shifting Statutes: Partner Winning Dispute Against Other Partner Over Existence Of A Partnership Not Entitled To Fee Recovery Under Corporations Code Section 16041(c)

Intra-Partner Dispute Not Covered By The Statute.

            In SCSA Group, Inc. v. Worden, Case No. G058859 (4th Dist., Div. 3 June 28, 2021) (unpublished), one partner prevailing in an intra-partner dispute about the existence of a partnership sought attorney’s fees from the losing partner under Corporations Code section 16041(c).  The trial judge denied the fee request because only the partnership pays, with the partnership not being a party to the particular dispute at issue.  The 4/3 DCA affirmed, determining section 16041(c) does not apply to this type of intra-partner dispute and finding an unpublished Ninth Circuit decision factually distinguishable as well as unpersuasive.  Justice Goethals authored the 3-0 decision.

Lodestar, SLAPP, Special Fee Shifting Statutes: Pasternack Decision Now Published

Acceptance Of A Reduced Rate From Client Does Not Preclude Attorney From Seeking A Reasonable Hourly Rate Pursuant To The Lodestar Method.

            In our June 10, 2021 post, we discussed Pasternack v. McCullough, Case No. B302137 (2d Dist., Div. 8 June 7, 2021) which was unpublished at the time.  Pasternack follows other California decisions in holding that an attorney is not precluded from seeking a reasonable hourly rate pursuant to the lodestar method – even where the attorney has accepted a reduced rate from a client.  (Chacon v. Litke, 181 Cal.App.4th 1234, 1260 (2010) [discussed in our January 19, 2010 post]; PLCM Group, Inc. v. Drexler, 22 Cal.4th 1084 (2000) [our Leading Case No. 1].)

            We can now report that Pasternack was certified for publication on June 25, 2021.

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.

Sanctions, Section 1717, Special Fee Shifting Statutes: 2/7 DCA Reverses Sanctions Imposed Against Builder Defendants For Violation Of Stay Order Regarding A Development Project Of Four Homes In The Coastal Zone Of Venice.

Stay Order Was Vague And Did Not Provide Builder With Information As To How It Was Supposed To Act Or What Conduct Would Violate The Stay.

            In Rudisill v. California Coastal Commission, Case No. B299331 (2d Dist., Div. 7 June 22, 2021) (unpublished), two residents who opposed a development project consisting of four homes being constructed in the coastal zone of Venice – and which had been permitted by the City of Los Angeles and the California Coastal Commission – filed a petition for writ of mandate.  The trial court granted the petition, directed the Commission to set aside the permit, and stayed the project – a judgment reversed on appeal.  However, while the appeal was pending, builder performed certain work and obtained certificates of occupancy from the City of Los Angeles in its steps to enable residents to occupy the homes, which prompted plaintiffs to move for sanctions under Code Civ. Proc. § 177.5 for violation of the stay order.

            The trial court granted plaintiffs’ request and sanctioned builder defendants $1,500 each, and ordered City to revoke the certificates of occupancy – although City was no longer a party to the case as plaintiff had voluntarily dismissed City prior to the trial court’s judgment on the petition.  Additionally, the trial court denied plaintiffs’ motion seeking over $141,000 in attorneys’ fees under Code Civ. Proc. § 575.2 (statute governing failure to comply with local rules) and Code Civ. Proc. §1021.5 (California’s Private Attorney General Doctrine) – finding plaintiffs were not entitled under § 575.2 because builder had not violated a local rule, nor under §1021.5 because builder’s violations were “minor” and not “serious in nature” and the sanctions request did not concern an important right affecting public interest or confer a significant public benefit.  Everyone appealed.

            As to the trial court’s order that City revoke the occupancy certificates, the 2/7 DCA reversed – agreeing with City that the trial court lacked jurisdiction to issue the order because City was not a party to the case and not a representative of builder.  The panel also reversed the imposed sanctions under an abuse of discretion standard.  It found that builder’s conduct was excusable, and builder had not violated the stay by applying for permits or performing other minor corrective work at the already completed project, because the scope of the stay in the trial court’s original order was vague – not providing builder with how it was supposed to act or what conduct would violate the stay.  Finally, because the appellate panel concluded plaintiffs had failed to prove builder violated the stay order, and in light of the reversal of sanctions imposed against builder defendants, denial of plaintiffs’ fees request was affirmed.

Appeal Sanctions, Special Fee Shifting Statutes: Plaintiff Obtaining Restraining Order Against Neighbor And Successfully Defeating Neighbor’s Appeals Was Denied Her §527.6(s) Request For Trial And Appellate Fees, And For Appeal Sanctions

Plaintiff Did Not Appeal Trial Court’s Fees Denial, Failed To Provide Appellate Panel With Support Or Argument For §527.6(s) Award For Fees Incurred On Appeal, And Neighbor’s Meritless Appeals Did Not Rise To The Level Of Frivolity So As To Warrant Sanctions.

            After granting plaintiff’s request for a temporary and later permanent restraining order against her neighbor, the trial court denied plaintiff’s request for $9,556.58 in Code Civ. Proc. §527.6(s) attorney fees by leaving blank the portion of the restraining order form where fees are awarded.  When neighbor unsuccessfully appealed issuance of both restraining orders, plaintiff requested an order that neighbor pay the more than $30,000 in attorney’s fees she had incurred in the trial court and on appeal, pursuant to §527.6(s), and for costs, damages, and sanctions.

            With exception only as to her prevailing party appellate costs, the 1/1 DCA denied plaintiff’s requests in Anello v. Schmid, Case Nos. A160440/A160540 (1^st Dist., Div. 1 June 11, 2021) (unpublished).  Plaintiff had not appealed the trial court’s fees denial, so those fees were not up for consideration, and plaintiff failed to provide the panel with support or argument for awarding her with the fees she incurred on appeal.  Finally, the panel denied plaintiff’s request for sanctions because, although finding neighbor’s appeals to have been poorly conceived and lacking merit, it did not find them to be frivolous or filed for purpose of delay.

Special Fee Shifting Statutes: Additional Fees Sought By Prevailing Party In Government Property Code Enforcement Proceeding Not Allowed Under Government Code Or Municipal Code

Form Of The Action Was Important—Absence Of An Abatement Order Was Crucial To Determination That No Further Fees Were Required.

            Fratus v. County of Contra Costa, Case No. A157397 (1^st Dist., Div. 1 June 10, 2021) (unpublished) is one of those cases were prevailing parties, in the overall sense, should have been entitled to additional fees, but they simply did not satisfy the legal requirements for the same. Without proper legal entitlement, additional fees were not warranted.

            This was a decades-old battle between real estate owners on Dutch Slough Road in Oakley and Contra Costa County relating to County wanting corrections to certain building and zoning code violations, mainly relating to the propriety of permitting residence occupancy for two separate properties.  We will say that property owners did prevail in earlier rounds such that they obtained $7,500 in fees against County under Government Code section 800 (a capped fee statute).  But owners wanted more, arguing they should recover fees under Government Code section 25845 [a prevailing party, under a particular ordinance, shall obtain attorney’s fees “in any action, administrative proceeding, or special proceeding to abate a nuisance”] and Contra Costa Ordinance section 114-6.426(a) [attorney’s fees may be recovered by a prevailing party under abatement proceedings where county, at the initiation of the proceeding, seeks to recover its own fees].  Property owners’ request for additional fees was denied, an order affirmed by the 1/1 DCA.

            Owners’ primary problem was that no abatement order was ever issued so as to trigger fee entitlement under the Government Code or Contra Costa Ordinance.  County’s pursuit of administrative fines did not depend on commencement or resolution of an abatement proceeding—note the distinction, administrative fees versus abatement remedies.  Because no ultimate order arose under the abatement ordinance, no further fees were justified.  In this area, form did prevail over substance!

Lodestar, SLAPP, Special Fee Shifting Statutes: 2/8 DCA Affirms Fee Award To Prevailing SLAPPing Defendant That Was Greater Than The Fees Paid For Defense By His Insurer

An Attorney Accepting A Reduced Rate From A Client Is Not Precluded From Seeking A Reasonable Hourly Rate Pursuant To The Lodestar Method.

            In Pasternack v. McCullough, Case No. B302137 (2d Dist., Div. 8 June 7, 2021) (unpublished), prevailing defendant on a special motion to strike was awarded $146,010 out of his requested $330,420 in attorney fees. (Code Civ. Proc. §425.16(c)(1).) Plaintiff appealed – arguing that there was no need for the trial court to set a reasonable hourly fee in this case because the fee award should have been limited to the significantly lower amount defendant’s insurer paid for his defense. 

            The 2/8 DCA disagreed – finding the prevailing lodestar adjustment method to be the proper method for determining fees in this case as the SLAPP fee provisions do not provide for restrictions on how the fees are to be calculated.  (Ketchum v. Moses, 24 Cal.4th 1122, 1136 (2001) [our Leading Case No. 8].)  Additionally, the panel found that California law is well-established in allowing an attorney who accepts a reduced rate from a client to seek a reasonable hourly rate pursuant to the lodestar method.  (Chacon v. Litke, 181 Cal.App.4th 1234, 1260 (2010) [discussed in our January 19, 2010 post]; PLCM Group, Inc. v. Drexler, 22 Cal.4th 1084 (2000) [our Leading Case No. 1].)

            In this case, the trial court properly determined the market rate for defendant’s attorneys based on their experience and complexity of the case instead of narrowly focusing on the “package rate” defendant’s attorneys accepted from defendant’s insurer in this matter.  Additionally, the trial court thoroughly examined the record and reduced both the time and hourly rate claimed by one of defendant’s attorneys, which significantly reduced the award from the original request, and clearly demonstrated that the trial court exercised its discretion.

BLOG UPDATE: We can now report that Pasternack was certified for publication on June 25, 2021.

Consumer Statutes, Section 998, Special Fee Shifting Statutes: Abuse Of Discretion Where Trial Court Reduced Song-Beverly Attorney Fees By Almost $100,000 Because Plaintiffs Rejected § 998 Offer That Was Only $8,500 Less Than Ultimate Settlement

The Trial Court Improperly Cut Off Fees Incurred After Plaintiffs’ Rejection Of The § 998 Offer Instead Of Engaging In A Lodestar Analysis Of The Entire Case Pursuant to Civil Code § 1794(d).

            In Reck v. FCA US LLC, Case No. A157966 (1^st Dist., Div. 1 May 24, 2021) (published), the trial court awarded attorney fees of only $30,237 ($20,158 lodestar with a .5 multiplier) out of a requested $187,247 ($124,831 lodestar with a .5 multiplier) to Song-Beverly plaintiffs.  The trial court determined the reduction was appropriate because plaintiffs beat defendant’s pretrial Code of Civil Procedure § 998 offer by only $8,500 during a mandatory settlement conference two days after trial began, and had incurred almost $100,000 in fees between the time they rejected the § 998 offer and ultimately settled.  The trial court also excluded fees incurred by plaintiffs for two unsuccessful motions.  Plaintiffs appealed.

            The 1/1 DCA reversed and remanded – finding the trial court abused its discretion by failing to base its award – pursuant to the Song-Beverly Act (California’s Lemon Law) – on “actual time expended” for hours that were “reasonably incurred.” (Civil Code § 1794(d).)   The trial court improperly cut off all attorney fees incurred after plaintiffs’ rejection of the § 998 offer instead of properly engaging in a lodestar analysis of the entire case – one where the final settlement represented more than a 10% increase over the § 998 offer and also resulted in a .5 multiplier being added to plaintiffs’ recovery. 

Special Fee Shifting Statute: $15,753 Discretionary Fee Award Against Unsuccessful Civil Harassment Plaintiff Affirmed On Appeal

82% Reduction Request Was Unreasonable Under The Circumstances.

            In Huard v. Eldridge, Case No. B301903 (2d Dist., Div. 6 May 19, 2021) (unpublished), the parties’ jointly owned investment property led to two series of civil harassment restraining order proceedings.  The first round went to petitioner, who was awarded $4,500 out of a requested $22,543 in discretionary fees under CCP § 527.6(s).  The second round went to respondent, who beat a harassment request after a two-day trial and with the lower court concluding petitioner’s claim lacked merit.  Respondent was awarded his full request of $15,753 in fees, despite petitioner arguing the fee request would be reduced by 82% (inclusive of lower rates than those requested, although the requested rates were much lower than the rates claimed by petitioner’s attorneys when petitioner won reduced fees earlier).

            The 2/6 DCA affirmed.  The lower court, the same one deciding the merits, was the best judge about the amount of attorney’s services, with nothing about the size of the award shocking the conscience or appearing to be the product of passion.  The appellate court remanded for consideration respondent’s request for appellate fees to the trial judge, even though this will be a discretionary call also.

Multipliers, Private Attorney General, Special Fee Shifting Statutes: The 1/5 DCA Affirms $2,961,264.29 Fees And Costs Award, Inclusive Of A 1.4 Multiplier, To Prevailing Plaintiff In Action For Violations Of A Conservation Easement

Plaintiff’s Attorneys, Who Bore The Risk Of Taking On A Partially Contingent Case With Important Public Interests At Stake, Displayed Exceptional Expertise and Skill In A Case Involving Nearly Five Years Of Contentious Litigation And A 19-Day Trial.

            Following a 19-day bench trial in The Sonoma Land Trust v. Thompson, Case No. A159139 (1^st Dist., Div. 5 April 30, 2021) (published), defendant property owners and their non-party corporation were found jointly and severally liable for violations of a conservation easement – with plaintiff nonprofit easement holder being awarded $575,899 in monetary damages, which included $318,870 for the costs of restoring the property, and injunctive relief (results affirmed in a previous appeal).  Additionally, the trial court awarded plaintiff with attorney fees and costs of $2,961,264.29, inclusive of a 1.4 multiplier, under Civ. Code § 815.7(d), Code Civ. Proc. § 1021.5, and the conservation easement itself.  

            Defendants appealed, but the 1/5 DCA affirmed.

            Contrary to defendants’ contention, the trial court was not required to deduct the initial $500,000 in fees paid by plaintiff’s insurance policy as trial courts may award fees regardless of who paid the fees, and plaintiff did not receive a double recovery as, pursuant to its insurance policy, it had to reimburse its insurer from any damage award.  Additionally, pursuant to the easement, plaintiff was entitled to its fees as the prevailing party – whether or not it actually paid the fees.

            The panel also was not persuaded by defendants’ vague arguments that plaintiff’s attorneys were inefficient and over-litigated an easy case – especially given that the litigation was contentious, dragged on for nearly five years, involved a 19-day trial, and plaintiff’s counsel had reduced its request by more than 10 percent to account for duplications and inefficiencies. 

            As to the multiplier, there was no abuse of discretion.  The contingent risk plaintiff’s attorneys faced was not eliminated by the initial insurance payment – it was merely mitigated.  The trial court reduced plaintiff’s requested multiplier from 1.6 to 1.4 after properly considering that plaintiff’s attorneys received some fees upfront, then proceeded on a “fully contingent basis . . . due to the important public interests at stake.” 

            Finally, defendants argued that the trial court improperly used the skill level of plaintiff’s attorneys and the novelty and difficulty of the case to justify the lodestar and the multiplier – resulting in double counting.  Not so, said the panel.  Based on the exceptionally high levels of skill and expertise displayed by plaintiff’s counsel – that was not fully factored in to the lodestar – the trial court could have reasonably set a higher hourly lodestar rate.  However, the lower lodestar allowed the trial court more room for a multiplier to provide fair compensation for plaintiff’s attorneys – with the panel noting that the contingent risk factor alone justified the multiplier.

Special Fee Shifting Statute: Defendant Winning Dismissal Of Civil Harassment Restraining Proceeding Only Obtains $5,000 Out Of Requested $11,500 In Fees

Fee Request Was Excessive, But Trope Argument Against Defendant Was Unavailing.

            A plaintiff dismissing a civil harassment restraining order proceeding, without informing defendant or the lower court of the dismissal, was subject to defendant’s fee motion under Code of Civil Procedure section 527.6(s), a discretionary fee-shifting statute.  The lower court in Khalili v. Hoag, Case No. B302744 (2d Dist., Div. 8 Apr. 28, 2021) (unpublished) awarded $5,000 out of a requested $11,500, because the trial judge found the request to be excessive.  The lower court properly extended the time to file the fee motion based on defendant’s family health situation, which dispatched the untimely filing argument.  Plaintiff then argued that defendant, an in pro per, could not obtain attorney’s fees under Trope, but that argument was rejected because there was testimony by an attorney that he had been retained to appear at the scheduled hearing.  The dismissal of the restraining order proceeding did make defendant the prevailing party.  (Adler v. Vaicius, 21 Cal.App.4^th 1770, 1777 (1993).)  Lowered fee award affirmed.

Special Fee-Shifting Statutes: In A 2-1 Decision, Ninth Circuit Reverses District Court’s Determination That FOIA Plaintiff Who “Substantially Prevailed” By Obtaining Relief Through A Judicial Order Was Ineligible For Fees Award

Dissent Was Based On Plaintiff’s Failure To Show That His Lawsuit, Rather Than A Change In Circumstances, Was A Substantial Cause Of The Relief He Obtained.

            The Freedom of Information Act (FOIA) allows district courts to assess reasonable attorney fees and costs against the United States in any FOIA case in which the complainant has substantially prevailed.  (5 U.S.C. § 552(a)(4)(E)(i).)  However, a FOIA plaintiff must show both eligibility and entitlement.  To demonstrate eligibility, a plaintiff must show that he/she “substantially prevailed” by “obtain[ing] relief through either” (1) “a judicial order, or an enforceable written agreement or consent decree,” (5 U.S.C. § 552(a)(4)(E)(ii)(I)), or (2) “a voluntary or unilateral change in position by the agency, if the complainant’s claim is not insubstantial,” (5 U.S.C. § 552(a)(4)(E)(ii)(II)).  After the plaintiff has demonstrated eligibility, the district court has discretion on determining entitlement. 

            In Kevin Poulsen v. Department of Defense, Case No. 19-16430 (Ninth Circuit, April 16, 2021) (published), journalist Kevin Poulsen sued the Department of Justice and other agencies after receiving a Glomar response – which neither confirms nor denies the existence of responsive documents – to his FOIA request.  After defendant agencies moved for summary judgment to confirm the adequacy of their responses, a declassified memo and subsequently published memo publicly revealed the existence of documents responsive to Poulsen’s records request.  This prompted defendant agencies to successfully seek withdrawal of their motion and reevaluate what information “must now be disclosed under the FOIA.”  Ultimately, the DOJ produced 412 pages of responsive documents pursuant to a minute order issued by the district court which adopted defendant agencies’ proposed disclosure schedule and directed the DOJ to “complete processing and production of responsive, non-exempt documents subject to FOIA.” Defendant agencies then successfully moved for summary judgment to confirm the accuracy of its Glomar responses to Poulsen’s remaining FOIA requests.

            Poulsen – arguing he was both “eligible” and “entitled” – then moved for attorney fees, pursuant to 5 U.S.C. § 552(a)(4)(E).  As to eligibility, Poulsen contended he substantially prevailed because he obtained relief through the district court’s minute order.  However, the district court found that the DOJ’s change in position resulted from the declassified memo and subsequently published memo – not Poulsen’s lawsuit.  On the basis of its conclusion that Poulsen was not “eligible” because he “did not secure a change in the legal relationship between the parties nor [did he] prevail on the merits of his arguments,” the district court denied the fees and made no determination as to whether Poulsen was “entitled.” 

            Poulsen appealed – obtaining a reversal and remand from the Ninth Circuit.  In a 2-1 decision, Judge Kim McLane Wardlow and Judge Daniel P. Collins concurred that Poulsen had “substantially prevailed” by obtaining relief through a judicial order and was “eligible” for a fee award under 5 U.S.C. § 552(a)(4)(E)(ii)(I), and found nothing in the statutory text required an inquiry into what caused the district court to grant relief through a judicial order.  It was enough that Poulsen obtained relief through a judicial order to show eligibility. On remand, the district court was instructed to weigh all factors relevant to the entitlement analysis.

            U.S. Court of International Trade Judge Richard K. Eaton, sitting by designation, dissented.  Citing Brayton v. Office of the U.S. Trade Representative, 641 F.3d 521 (D.C. Cir. 2011) and Davis v. DOJ, 610 F.3d 750 (D.C. Cir. 2010), Judge Eaton concluded that both categories of prevailing parties – those obtaining relief under a judicial order, and those obtaining relief due to a voluntary change in position – required a showing by plaintiff that his/her lawsuit was reasonably necessary to obtain the information, and that the filing of the lawsuit had a substantial causative effect on the delivery of the information.  Because Poulsen had not shown that his lawsuit was a substantial cause of the relief he obtained, Judge Eaton would find him ineligible for attorney fees under either of the two categories.

Civil Rights, Costs, Special Fee-Shifting Statutes: Ninth Circuit Vacates And Remands $5,962.11 Costs Award To Defendant Landlord Prevailing On Summary Judgment Against Plaintiff Tenant Claiming Race And Disability Discrimination

In So Doing, The Ninth Circuit Joins The First, Second, Fourth, and Fifth Circuits In Holding That The Christiansburg Standard Applies To The Award Of Attorney’s Fees And Costs Under The Fair Housing Act.

            The U.S. Supreme Court, in Christiansburg Garment Co. v. EEOC, 434 U.S. 412 (1978), held that, under the fee-shifting provision of Title VII of the Civil Rights Act (42 U.S.C. § 2000e-5(k)), attorney’s fees should be awarded to a prevailing defendant only if the plaintiff’s claim was frivolous, unreasonable or without foundation.

            In Rodney Green, Sr. v. Mercy Housing, Inc., Case Nos. 20-15134/20-15358 (9^th Cir. March 19, 2021) (published), plaintiff tenant appealed the district court’s granting of summary judgment to defendant landlord and subsequent award of $5,962.11 in costs.  The Ninth Circuit reversed and remanded in part the grant of summary judgment in a separate memorandum opinion.

            As to the costs award, plaintiff  - with claims of racial and disability discrimination in violation of the Fair Housing Act and the California Fair Employment and Housing Act – argued that the district court abused its discretion in awarding costs to defendant without applying the Christiansburg standard and making a determination as to whether plaintiff’s claims were frivolous, unreasonable or groundless.  The Ninth Circuit agreed – joining the First, Second, Fourth, and Fifth Circuits – in holding that the Christiansburg standard applies to the FHA, where the danger of chilling civil rights enforcement based on the risk of incurring costs even in the strongest of claims is as equally present in a tenant’s Fair Housing case as it is in an employee’s Title VII case.

            Contrary to defendant’s claim that the fee-shifting provisions of the FHA and ADA are distinguishable, the Ninth Circuit found that costs are treated as parallel to – rather than as a subset of – attorney’s fees under both the FHA and ADA. (Brown v. Lucky Stores, Inc., 246 F.3d 1182, 1190 (9th Cir. 2001).) 

Indemnity, Special Fee Shifting Provision: Indemnity Agreement In Annexation Application Did Not Justify Attorney’s Fees Award In Favor Of Local Agency Formation Commissions And Against City/Developer

Government Code Sections 56383 And 66016 Dictated The Result.

            San Luis Obispo Local Agency Formation Commission v. City of Pismo Beach, Case No. B296968 (2d Dist., Div. 6 Mar. 3, 2021) (published) is an indemnity agreement fee clause dispute between a local agency formation commission and a city/developer as to the responsibility for fees after an annexation application was denied and the local agency formation commission eventually prevailed, with the commission seeking over $400,000 in fees and costs against the city and developer.  The trial court granted a judgment on the pleadings in favor of city and developer in a suit seeking fees/costs by the local agency formation commission based on the indemnity provision in an annexation application which mentioned fees and costs.

            The 2/6 DCA affirmed the judgment which did not award fees and costs under the indemnity provision.  The problem here was that Government Code sections 56383 and 66016 did not allow recovery of such and fees costs for post-administrative decision court proceedings; as such, the indemnity provision had no consideration such that the lower court got it right in denying fees and costs in a very unique annexation application context.

Prevailing Party, Receivers, Special Fee Shifting Statutes: City Of Norco v. Mugar Is Now A Published Decision.

Trial Court’s Determination That Plaintiff City Was The Prevailing Party Was Proper Under Catalyst Theory, City’s Arrangement With Outside Counsel Did Not Violate Defendant’s Due Process Rights, And Fee Award Of $60,798.94 To City Was Not Meant To Penalize Defendant For Defending Property Rights.

            We discussed City of Norco v. Mugar, Case No. E072858 (4^th Dist., Div. 2) – which was then unpublished – in our December 15, 2020 post.  Plaintiff City had filed a receivership action through outside counsel when defendant failed to abate what City described as 19 “life-safety hazards” on defendant’s property.  Although defendant eventually abated the 19 conditions, and the appointed receiver took no abatement action, City was declared the prevailing party and awarded $60,798.94 in fees and costs under Health and Safety Code § 17980.7(c)(11) – results that were affirmed on appeal.

            Determination that City was the prevailing party was proper under the catalyst theory.  Defendant’s due process rights had not been violated by City’s arrangement with outside counsel as City’s contract demonstrated that each of its demands and responses were determined by the City Council – not by outside counsel which had no contingency fee basis nor direct financial interest in the litigation outcome. 

            Additionally, the fees award did not constitute a penalty against defendant for exercising his First Amendment right to access and petition the courts to defend his property rights.  Rather, the purpose of the fee award is to encourage litigation by the successful party by making such litigation financially feasible.  Incidental restriction on conduct protected by the First Amendment is sufficiently justified “[1] if it is within the constitutional power of the Government; [2] if it furthers an important or substantial governmental interest; [3] if the governmental interest is unrelated to the suppression of free expression; and [4] if the incidental restriction on alleged First Amendment freedoms is no greater than is essential to the furtherance of that interest.” (United States v. O’Brien, 391 U.S. 367, 377 (1968).)

            We can now report that City of Norco v. Mugar was certified for publication on January 8, 2021.

SLAPP, Special Fee Shifting Statutes: Founding Partner Of Software Company Did Get Hit With Some Fee/Costs Exposure From Shareholder Derivative Case And Malicious Prosecution Case Which Was SLAPPed

Not Huge Amounts, But Some Challenges Were Untimely And Some Were Not Meritorious.

            To end the year, we post on Storix, Inc. v. Johnson, Case Nos. D075308/D077096 (4^th Dist., Div. 1 Dec. 31, 2020) (unpublished), which was a very contested dispute between software company Storix and founder Mr. Johnson, which dragged in various directors of Storix.  The disputes involved separate fiduciary duty, shareholder derivative, and malicious prosecution actions relating to the overall business dispute.  Johnson lost the shareholder derivative dispute based on a lack of standing after he had voluntarily posted the Corporations Code section 800 bond.  His malicious prosecution suit was SLAPPed.  Subsequently, the lower court decided that Johnson’s bond should not be released and was liable for up to $50,000 in fees/costs in the shareholder derivative action.  On the SLAPP win, Individual Defendants were awarded $12,237.50 in fees and $2,364.45 in costs, with some of the fees amount being “fees on fees.”

            Johnson’s challenges to the fees/costs award were not successful on appeal, some of which were forfeited because there was no separate timely appeal of the fee/costs orders (something we have posted on many times before—in doubt, separately appeal!).  Johnson’s main argument that he lacked standing in the shareholder derivative suit such that he was never a plaintiff and his bond exonerated was not bought by the appellate court.  Even a lack of standing allows the adverse party on a section 800 litigation expense bond dispute to recover fees and costs.  With respect to the SLAPP fee/costs award, the orders were affirmed because (1) in the SLAPP context, it does not matter if fees were actually incurred versus being indemnified by another (i.e., Individual Directors were indemnified by Storix); and (2) the trial judge did reduce for limited success on some SLAPP issues, but the overall award was justified based on the reduction because additional “fees on fees” were warranted. 

Homeowner Associations, Special Fee Shifting Statutes: Trial Court’s Denial Of Civil Code Section 5975(c) Fees To Prevailing HOA Was Error

The Davis-Stirling Act Fee-Shifting Provision, Section 5975(c), Mandates The Award Of Fees To The Prevailing Party With The Trial Court's Only Discretion Being To Determine The Reasonable Amount Of Fees.

            Hope Ranch Park Homes Assoc. v. Rubin, Case No. B299932 (2d Dist., Div. 6 December 14, 2020) (unpublished) involved a $30,600 penalty assessed against a homeowner for failure to complete a home remodeling project by the deadline extended by the HOA and pursuant to the HOA's CC&Rs.  The trial court determined that the penalties were properly imposed by the HOA and that homeowner owed HOA $26,600 after having paid $4,000 of the penalty by the time of trial.  Additionally, the trial court awarded HOA $1,358.92 in costs, but denied HOA’s motion for attorney fees under Civil Code § 5975(c) – the Davis-Stirling Act fee-shifting provision.

            The 2/6 DCA reversed – finding the trial court erred in denying the HOA’s motion for fees because § 5975(c) mandates the award of attorney fees to the prevailing party.  “Attorney fees under section 5975 ‘are awarded as a matter of right, and there is no discretion afforded to the trial court in granting or denying such fees, other than as to their reasonableness and amount.’” (Chapala Management Corp. v. Stanton, 186 Cal.App.4th 1532, 1546 (2010); see also Rancho Mirage Country Club Homeowners Assn. v. Hazelbaker, 2 Cal.App.5th 252, 260-261 (2016) [trial court has no discretion to deny attorney fees to a prevailing HOA]; Salehi v. Surfside III Condominium Owners Assn., 200 Cal.App.4th 1146, 1152 (2011).)

            On remand, the panel instructed the trial court to exercise its discretion to determine the amount of reasonable attorney’s fees to which the HOA is entitled.

Prevailing Party, Receivers, Special Fee Shifting Statutes: $60,798.94 Awarded To Prevailing City In Abatement Nuisance Action Affirmed On Appeal

City’s Arrangement With Outside Counsel Did Not Violate Defendant Property Owner’s Due Process Rights, Fee Award Was Not Meant To Penalize Defendant For Defending Property Rights, And Trial Court Properly Determined City The Prevailing Party Under Catalyst Theory.

            Plaintiff City and defendant property owner had a long history of conflict regarding substandard conditions on defendant’s property – going all the way back to 2007 – and resulting in criminal charges against defendant at one point in City of Norco v. Mugar, Case No. E072858 (4^th Dist., Div. 2 December 11, 2020) (unpublished).  In 2017, defendant’s property was red tagged and declared a substandard building, a public nuisance, and unsafe to occupy.  When defendant failed to abate the 19 cited conditions, even after an extension of time, City filed a receivership action through its outside counsel, to abate what it described as “life-safety hazards.”  Although a receiver was appointed and filed his oath, he took no abatement action as City and defendant had reached an agreement that allowed defendant another opportunity to abate the conditions himself, obtain any necessary permits, and schedule, undergo and pass a final inspection.  In the parties’ stipulation, City reserved its “right to file a motion to be declared the prevailing party in this matter and/or a motion for attorneys’ fees and costs.”  After some continuances and deadline extensions, defendant finally abated the 19 conditions, and City requested termination of the receivership.  City then successfully sought to be declared the prevailing party and for an award of $60,798.94 in attorney fees and costs under Health and Safety Code § 17980.7(c)(11) .

            The 4/2 DCA affirmed.  Defendant’s arguments that his due process rights were violated by the arrangement between City and its outside counsel were not supported by the record.  Rather, City’s contract with outside counsel showed that each of City’s demands and responses were determined by the City Council – not City’s outside counsel.  Additionally, outside counsel was not hired on a contingency basis and had no direct financial interest in the outcome of the litigation. 

            The panel also was not persuaded by defendant’s argument that the fees/costs award was an unconstitutional burden on his First Amendment right to access and petition the courts as it penalized him for defending his property rights.  While the purpose of the fee award is not to penalize petitioning activity, but to encourage litigation by the successful party by making it financially feasible, the panel acknowledged that a prevailing party fee statute may cause incidental restriction on conduct protected by the First Amendment.  However, as is the case here, under United States v. O’Brien, 391 U.S. 367, 377 (1968), such incidental restriction is sufficiently justified “[1] if it is within the constitutional power of the Government; [2] if it furthers an important or substantial governmental interest; [3] if the governmental interest is unrelated to the suppression of free expression; and [4] if the incidental restriction on alleged First Amendment freedoms is no greater than is essential to the furtherance of that interest.” 

            Finally, the 4/2 DCA found no abuse of discretion in the trial court’s finding that City was the prevailing party using the catalyst theory – with City achieving its litigation objective to abate a public nuisance .  The trial court reasonably determined defendant would not have complied with City’s abatement demands without the appointment of a receiver.

BLOG UPDATE: We can now report that City of Norco v. Mugar was certified for publication on January 8, 2021.

Special Fee Shifting Statutes: $2,000 In Code Civ. Proc., § 527.6(s) Attorney Fees Awarded To Prevailing Civil Harassment Respondent Affirmed On Appeal

Petitioner Failed To Cite Any Legal Authority To Support Her Contention That The Trial Court Abused Its Discretion By Awarding Fees And Provided No Reporter’s Transcript Of The Evidentiary Hearing.

            We have posted many times before on the importance of providing an adequate record on appeal and supporting arguments with legal authority and citations to the record.  Failure to do so will almost certainly doom an appeal.

            In Reed v. Edison, Case No. B297816 (2d Dist., Div. 3 December 11, 2020) (unpublished), petitioner sought a civil harassment restraining order, under Code Civ. Proc., § 527.6, against respondent with claims that respondent was a friend of a neighbor tenant and had locked her out of her Los Angeles apartment and threatened to kill her if she tried to reenter.  Respondent opposed and sought $2,000 in attorney fees – claiming he was a licensed real estate broker retained by Fannie Mae to market the property, had never met petitioner, and was not on the property on the date she claimed the incident occurred.  Further, respondent’s attorney declared, petitioner was “a serial pro per litigant” who appeared to actually live in Joshua Tree.  The trial court held an evidentiary hearing, then denied the petition with prejudice and dismissed the case – finding no basis for the issuance of a permanent restraining order – and awarded respondent the $2,000 he sought in attorney fees.

            Petitioner appealed, but the 2/3 DCA affirmed.  Petitioner failed to provide an adequate record on appeal – proceeding only with a clerk’s transcript and failing to include a reporter’s transcript, or suitable substitute, of the evidentiary hearing.  Additionally, petitioner forfeited her arguments that she was not given sufficient time to address respondent’s claims and that the court abused its discretion by awarding fees because she failed to cite any supporting legal authority.

Special Fee Shifting Statutes: Partnership Buyout Fee Shifting Provision Is Discretionary, Involves Disjunctive Elements, And Requires Objective Lack Of Merit/Subjective Bad Faith Pursuit, Or Both

Defendants Properly Denied Fees Under Corporations Code Section 16701.

            Corporations Code section 16701, which applies to partnership buyout disputes involving a disassociated partner, authorizes an equitable award of attorney and expert fees “against a party that the court finds acted arbitrarily, vexatiously, or not in good faith.” (§ 16701, subd. (i).) The trial court in Jones v. Goodman, Case No. D075907 (4^th Dist., Div. 1 Nov. 17, 2020) (published) denied the fee request by prevailing defendants based on a determination that the suit was not brought in bad faith and based on it being untimely (although the lower court went ahead and decided it on the merits anyway).  The 4/1 DCA affirmed, clarifying that section 16701 fee-shifting provision is (1) discretionary, (2) disjunctive as far as the components which can trigger fee exposure, and (3) invoked only when a plaintiff’s claims objectively lack merit or were subjectively pursued in bad faith (or both). 

Special Fee Shifting Statutes: $368.755 In Fees For Nursing Home Patient Recovery Of $195,000 Had To Be Revisited Based On California Supreme Court Reduction Of Statutory Damages

However, Punitive Damages Are Still In Play.

            Jarman v. HCR Manorcare, Inc., Case No. G051086 (4^th Dist., Div. 3 Nov. 17, 2020) (unpublished) is a nursing home patient case with a $368,755 fee award under a Health and Safety Code fee-shifting provision which has quite a procedural history.  At the initial trial court level, plaintiff won a $195,000 compensatory award ($95,000 based on a “per violation” Health and Safety Code statutory damage provision) and then was awarded fees of $368,755, even though a punitive damages allegation was stricken.  The 4/3 DCA, in an earlier decision, affirmed everything, except it reinstated the attempt to obtain punitive damages.  The California Supreme Court accepted review, finding that the statutory damages were capped “per action,” not “per violation.”  On remand, the 4/3 DCA decided that punitive damages were still in play but did find a revisit of the fee award was necessary given the Supreme Court’s different directives on the statutory damages issue.  Justice Moore authored this opinion.

Special Fee Shifting Statute: $1,435 Fee/Cost Award Against Losing Plaintiff In Civil Anti-Harassment Action Was Properly Granted

No Costs Memorandum Required To Be Filed Because Fees/Costs Awarded Made Before Notices Of Dismissal/Entry Of Judgment Served By Plaintiff, Who Had Notice Of The Requests.

            Plaintiff, a hair stylist at Chaddick’s beauty salon, was terminated and filed an anti-harassment petition against Ms. Chaddick, which action was dismissed after the trial court declined to issue a TRO and continued the trial.  Chaddick filed a fee motion about a month after the dismissal for $1,000 in fees and a subsequent declaration for $435 in costs.  The trial court found that Chaddick had prevailed, overruling plaintiff’s objections that there was no proper notice in moving papers for costs or no filed costs memorandum.  Plaintiff provided notices of dismissal and entry of judgment well after the fee/costs order was issued. 

            The 2/6 DCA affirmed in Tietz v. Chaddick, Case No. B303694 (2d Dist., Div. 6 Oct. 20, 2020) (unpublished), a 3-0 opinion authored by Justice Yegan.

            The $1,000 fee award was correct because Ms. Chaddick was the prevailing party given the dismissal of the anti-harassment action.  (Code Civ. Proc., § 527.6(s).)  The failure to file a costs memorandum was no obstacle under the circumstances, given that plaintiff filed the notices after the fee/costs award was made and that plaintiff also knew about/contested the costs request.  Besides, CRC 3.1170’s requirement of a costs memorandum could not trump CCP § 1032 allowing recovery of costs as a matter of right where fees/costs are awarded before the dismissal is served or before the entry of judgment is filed/served. 

            BLOG QUOTE—Justice Yegan is an appellate jurist who shows many literary flourishes in his opinions.  In this one he explains the origins of the phrase “too clever by half.”  It was coined in George J. Whyte-Melville’s 1985 book, “The Interpreters,” and means “too smart for one’s own good,” a discussion about the derivation of the phrase he found in the recent bankruptcy decision in In re Jet ICU Leasing, 614 B.R. 385, 388 n. 3 (Bankr. M.D. Fla. 2020).

Receivers, Special Fee Shifting Statutes: County’s Enforcement Fees And Costs In Obtaining Receivership Appointment And Remediating Hazardous Property Conditions Are Not Entitled To Super-Priority Status Along With Receivership Expenses

Claims Of Competing Lienholders Had To Be Considered With Respect To Division Of Property Sale Proceeds.

            In County of Sonoma v. U.S. Bank N.A., Case Nos. A155837/A157245 (1^st Dist., Div. 1 Oct. 8, 2020) (published), the appellate court affirmed a lower court’s order conferring super-priority status to property sale proceeds on a receiver’s financial lien and enforcement costs in a case where the County obtained appointment of the receiver to remediate hazardous/substandard conditions on real property.  The lower court also gave super-priority treatment to County’s enforcement costs under Health & Safety Code section 17980.6, which encompassed costs and attorney’s fees.  That latter determination was reversed on appeal, because the claims of competing lienholders needed to be considered along with County’s claims before divvying up property sale proceeds to these claimants. 

Special Fee Shifting Statutes: Dueling Fee Motions By County And Supervisor Produced An Interesting Legal Discussion By The Sixth District On Municipal Fee/Indemnity Shifting Provisions

In The End, the Supervisor Might Get Some Litigation Reimbursement Fees Of A Somewhat Limited Nature.

            Municipality practitioners should be well advised to read County of San Benito v. Scagliotti, Case No H045887 (6^th Dist. Sept. 24, 2020) (unpublished) about fee shifting statutes under the Political Reform Act (PRA) and Government Claims Act (GCA), not to mention indemnification for settlement payments made by public employees.

            Boiling things down, County and former supervisor Richard Scagliotti were sued for violations of the Political Reform Act of 1974.  County agreed to indemnify and defend Mr. Scagliotti based on the ambiguous nature of some complaint allegations.  The lower court assessed some $12,500 in penalties against Mr. Scagliotti for some unintentional reporting omissions under the PRA and $220,000 under Government Code section 81700 for use of governmental position for financial gains in the plaintiff suit.   That determination provoked a firestorm by which the County withdrew its indemnification/defense decisions based on the premise that Mr. Scagliotti’s conduct might have been outside the course and scope of his employment, especially in connection with the $220,000 penalty.  Mr. Scagliotti substituted in another attorney, incurring about $27,000 in fees for beating back the plaintiff’s $800,000 fee motion.  He also eventually reached a settlement with plaintiff by which he paid $220,000 out of his own pocket, effectively having plaintiff waive the PRA penalties.  This set off secondary litigation where County sued to recoup $470,000 in fees spent in defending Mr. Scagliotti in the underlying case based on GCA and Labor Code section 2865 fee-shifting provisions.  Mr. Scagliotti cross-complained under Government Code section 825 and Government Claims Act section 995 for the $27,000 attorney’s fees he expended on the substituted attorney and for the $220,000 settlement payment he made to the plaintiff.  In the end, the trial judge denied each side’s requests for fee awards and indemnification.  Both sides moved for reimbursement of litigation fees expended in litigating the secondary action for fees/settlement payments under Code of Civil Procedure section 1038(a), motions which were denied.

            That gets us to the Sixth District appeal decision in the matter. 

            The Court of Appeal had no problem finding County was not entitled to underlying fees because nothing in a contractual letter with Mr. Scagliotti overrode the more inclusive fee-shifting reimbursement provisions in Government Code section 996, with Labor Code section 2805 not displacing the general reimbursement provision which is pro-public employee.  With respect to Mr. Scagliotti, he was not entitled to recovery of settlement payments because it did not fit GCA’s “injury” definition; however, he was entitled to reimbursement of his defense costs under Government Code section 996.4 for the failure to report violations, after a very detailed discussion of the interaction between GCA and PRA statutory schemes.  On the section 1038 dueling motions, County was properly denied fees based on Mr. Scagliotti’s reporting result, with Mr. Scagliotti’s fee denial being correct because the County’s defenses were not totally baseless in nature.  Each side had to bear their own appellate costs.  So, the former supervisor gets a shot at recovering some attorney’s fees of a limited nature—otherwise, everyone went home empty-handed!

Private Attorney General, Special Fee Shifting Statutes: Unilateral Fee-Shifting Clause In DFEH’s Favor Preempted An Award Of Private Attorney General Fees To Prevailing Defendants

Specific Statute Prevailed Over More General One As Far As Fee Entitlement.

            When two fee-shifting statutes collide, they sometimes can be reconciled but sometimes cannot—the latter was the conclusion in Dept. of Fair Employment & Housing v. Cathy’s Creations, Inc., Case No. F077802 (5^th Dist. Sept. 9, 2020) (published).

            There, defendants prevailed in an action brought by the Department of Fair Employment and Housing (DFEH) in a sexual discrimination matter.  Defendants then sought an award of fees under California’s private attorney general statute, CCP § 1021.5.  The trial court denied the fee request, a determination affirmed by the Fifth District on appeal.

            After review of dueling fee entitlement statutes, the Court of Appeal concluded that Government Code 12974 was preemptive because it was a unilateral fee-shifting clause in DFEH’s favor.  It was more specific than the more generalized private attorney general statute such that section 12974 governed, meaning the fee denial was correct.