CALIFORNIA ATTORNEY'S FEES

Allocation, Homeowner Associations, Interest, Special Fee Shifting Statutes, Standard of Review: Plaintiff Owner/Developer’s Award Of $1,673,691 In Damages and Entire Fee Request Upheld On Appeal

Defendant HOA’s Breach Of Owner/Developer’s Valid Contractual Access Rights Was The Common Core Involved In The Causes Of Action, So Apportionment Of Fees Not Required.

            In Millennium-Diamond Road Partners v. Diamond Bar etc., Case No. B285539 (2^nd Dist., Div. 3 Sept. 24, 2019) (unpublished), Owner/Developer Millennium sued HOA when it revoked Millennium’s access to undeveloped parcels of land Millennium had purchased for the purpose of developing residential properties. 

            The undeveloped parcels of land were landlocked and adjacent to a guard-gated residential community known as Diamond Bar Country Estates.  From 1997 until October 2013, Millennium had easement access via Country Estates – access that was abruptly revoked when a new group of board members began to oppose Millennium’s development.

            Substantial evidence doomed HOA at trial – with the trial court finding that HOA breached Millennium’s valid contractual access rights pursuant to CC&Rs, a second contractual agreement providing Millennium an option for access rights for which Millennium had tendered the required fee, and a recorded annexation agreement under which the Millennium parcels became a part of the Country Estates development. 

            HOA argued that the CC&Rs were not at play as Millennium had not paid monthly assessments.  HOA also claimed Millennium had failed to pay fees owed under the annexation agreement.  The trial court rejected both claims.  The language of the CC&Rs contradicted HOA’s argument– providing the HOA “no power to cause a forfeiture or abridgement of an Owner’s right to full use and enjoyment of his Lot” absent a judicial/arbitral order or foreclosure.  The annexation agreement did include a schedule of payments to be made to the HOA.  However, the first payment under the schedule was triggered by an event that had not yet occurred, so no annexation fees were yet due.

            At trial, Millennium’s expert testified and explained his computations of Millennium’s damages of $1,673,691 in detail.  HOA did not challenge his methodology or calculation, nor did it call its own expert witness regarding damages, and the trial court awarded the entire amount Millennium claimed as damages.  Additionally, the trial court awarded Millennium prejudgment interest at 10% with a start date of January 2014.

            Millennium’s win triggered an award of attorneys’ fees pursuant to Civil Code section 5975(c) which mandates the award of attorneys’ fees in a successful action to enforce the governing documents of a common interest development.  The trial court awarded the full amount requested with no apportionment.

            HOA appealed, but fared almost no better – achieving only a small victory related to the start date for calculation of the prejudgment interest.  The 2/3 DCA found substantial evidence supported the trial court’s decision, but remanded for prejudgment interest calculations to begin on March 23, 2017 instead of January 2014.  It further determined that the HOA had fashioned its appeal largely “as an attack on the factual findings of the trial court.”  Citing Waller v. Brooks (1968) 267, Cal.App.2d 389, 393, the 2/3 DCA stated that the HOA “misconceiv[ed] the function of an appellate court which is to review errors of law, and not to pass on questions of fact.”

            As to apportionment of the attorney fees, the 2/3 DCA found no abuse of discretion as Millennium’s causes of action were so intertwined, and involved a common core of facts which were directly related to enforcement of the governing documents, such that apportionment was impracticable.

Reasonableness Of Fees 3-Fer: Fee Recovery Sustained In Landlord-Tenant, Family Law, And Appeal/Class Action Cases Based On Waiver, Failure To Provide Adequate Record, And Failure To Beat Abuse Of Discretion Standard On Amounts Awarded

 

Landlord/Tenant:  Sevier v. Ghannoura, Case No. B259542 (2d Dist., Div. 4 Mar. 22, 2016) (Unpublished).

    Tenant won compensatory damages of $21,865 against landlords for illegal entry into common areas of a rental apartment without proper notice.  There was a fees clause, requiring mediation as a condition precedent, but tenant satisfied that by requesting it four times and having landlord never agreeing to participate in mediation.  Tenant then requested $69,875 in fees based on a lease fees clause, with the trial judge awarding $56,875.  Landlords only argued the amount was “unfair,” far short of what was needed to surmount the abuse of discretion review standard applicable to the amount of a fee award.

Family Law:  Evilsizor v. Sweeney, Case No. A143054 (1st Dist., Div. 2 Mar. 22, 2016) (Unpublished).

     Ex-wife and her parents were hit with an adverse “needs-based” fees award to ex-husband of $125,000, $25,000 payable by parents and $100,000 by ex-wife.  The record showed that ex-wife, an attorney, was paid substantial legal fees for work performed on behalf of her parents and that there largesse had helped fund her dissolution fight in some ways.  The fee awards were found to be no abuse of discretion, especially given that parents’ funds counted on the “needs-based” analysis.  (Marriage of Smith, 242 Cal.App.4th 529, 535 (2015).)

Appeal/Class Action:  Ocegueda v. American Brother Corp., Inc., Case No. H041380 (6th Dist. Mar. 22, 2016) (Unpublished).

    Plaintiffs challenged the amount of appellate fees claimed by three sets of defense attorneys on an unsuccessful appeal of a sanctions order, with the appellate court earlier granting a motion to dismiss the appeal and ordering payment of sanctions.  The defense sought $31,435.50 in fees, challenged as excessive by plaintiffs and with the trial judge initially agreeing unless time records were submitted for in camera review.  After submission of more detail, the trial judge granted the request after observing that the defense excluded an additional 48 hours of work.  The problem here for plaintiffs was the failure to object and provide an adequate record.  No objections to the in camera review or tentative rulings were made at the trial level, magnified by the lack of a reporter’s transcript to show what happened at oral hearings on the fee requests.  This made it easy to deem the due process argument—plaintiffs did not have an opportunity to review the in camera time records—as being waived and not reviewable based on an inadequate record.   

Section 1717/Standard of Review: Elements Of Contractual Fee Recovery Nicely Set Forth In Unpublished Decision

 

4/3 DCA Does It Succinctly And Well.

    Presiding Justice O’Leary, in a 3-0 unpublished decision by the Fourth District, Division 3, affirmed a $76,890 contractual fee award against a plaintiff unsuccessfully attempting to unwind a foreclosure sale in Melgar v. Deutsche Bank National Trust, Case No. G051225 (4th Dist., Div. 3 Jan. 4, 2016) (unpublished). 

    In doing so, she provided a succinct, accurate roadmap to a contractual fee recovery under Civil Code section 1717:  (1) whether the contract permitted fee recovery; (2) whether the winning side was a prevailing party for purposes of section 1717; and (3) whether the requested fees were reasonable.  Nicely done.  Justice O’Leary also indicated that (1) is a de novo appellate review issue, while (2) may be de novo or abuse of discretion under the circumstances, and (3) is scrutinized for abuse of discretion.  
 

Private Attorney General Fees: Award Of Fees To Patient Is Overturned Because He Did Not Show Enforcement Of Public Right Was Necessary

Fee Award Of $126,974.13 Goes Poof !

    The Sixth District has overturned a fee award to an unfortunate dental patient for injuries arising from negligently performed dental work because private enforcement of the public right vindicated was unnecessary – a predicate for recovery of fees under California Code of Civil Procedure, section 1021.5.  Bui v. Nguyen, Case No. H039310 (6th Dist. Oct 28, 2014).

     The patient received significant relief:  $150,000 against Hi-Tech Dental, Inc., and $50,000 against Hi-Tech’s owner and dental assistant.  Additionally, the patient obtained an injunction requiring the dental assistant to identify herself as a dental assistant, not a dentist, in advertising, and to refrain from wearing a white dental lab coat. 

     Notably, the trial court “found that a significant public benefit resulted from enjoining further violations of Business and Professions Code sections 17200 and 17500.”  Also, the trial court found that private enforcement was necessary, and that in the interest of justice, attorneys’ fees should not be paid out of the recovery.  Declarations submitted by plaintiff pointed to the unlikelihood of public enforcement.

     So why was the fee award reversed?

      The Court of Appeal rejected the declarations that pointed to the unlikelihood of public enforcement as conclusory and lacking in specificity.

     According to the Court of Appeal, “[t]here was no substantial evidence presented from which the court could have reasonably concluded that the third criterion – necessity of private enforcement – had been met.”

     Taking issue with a statement in Professor Richard Pearl’s treatise on California attorney’s fees that “the private enforcement requirement limits fees only when private enforcement is demonstrably unnecessary,” the Court states:

“The applicant bears the burden of establishing each criterion required for an attorney fee award under section 1021.5, including the necessity of private enforcement [citation], and the court must ‘consider[] all circumstances bearing on the question of whether private enforcement was necessary.’ [citation].”  (footnote 9).

Standard Of Review/Record: Failure to Provide RT Doomed Appeal Where Loser In Fee Battle Argued Objections Were Not Honored Or Fee Discovery Not Allowed

 

No Adequate Record Was Presented for Review Purposes.

     Yet again, Next Seafood Co., Inc. v. Port of San Francisco, Case No. A137487 (1^st Dist., Div. 5 Aug. 27, 2014) (unpublished), is a situation where a party losing a fee award—to the tune of $77,881.25—appealed, arguing that the fee award was not supported by admissible evidence and that the lower court improperly denied discovery in connection with the fee motion. These arguments did not go very far because loser did not submit a reporter’s transcript of the fee hearing to show whether or how the lower court addressed these issues. No adequate record doomed this appeal. (Maria P. v. Riles, 43 Cal.3d 1281, 1295-1296 (1987).)

     BLOG UNDERVIEW—Even in the appeals involving fee hearings, we are not sure that they are all that helpful as far as determining some issues. However, they certainly help reinforce whether de novo review is appropriate and may clarify discretionary rulings, so appellate courts use the absence of an RT as a “non-starter” in many situations.

Fleet of Whalers in the Port of San Francisco.  1864.  Library of Congress.

Private Attorney General: Lower Court Did Not Abuse Its Discretion In Denying Attorney’s Fees Where Plaintiff Obtained Technical EIR Correction Of A Transparent Nature Benefitting Only A Small Zone of Neighbors

 

Deferential Standard/Implied Findings Supported Ruling Below.

     The standard of review adopted by an appellate court is frequently one of the most important compasses guiding the ultimate result reached in a case up on appeal. Lynbrook-Monta Vista United v. Fremont Union High School Dist., Case No. H038553 (6^th Dist. Mar. 12, 2014) (unpublished) illustrates this aptly in connection with review of a lower court decision denying a partially successful CEQA plaintiff’s request for a fee award under California’s private attorney general statute (CCP § 1021.5).

     In this one, a plaintiff nonprofit organization of neighbors near a couple of high schools challenged an EIR which had a transparent error about the noise to be generated from the proposed construction of a new high school football field so teams could play on a “home field.” Later, after a revised EIR was circulated, the District still approved the project through a statement of overriding considerations, a decision having no linkage to the plaintiff’s earlier actions. The lower court denied plaintiff’s fee request on the ground its actions did not convey a significant benefit on a large number of persons.

     The appellate court affirmed, mainly based on its conclusion that a deferential standard of review (rather than de novo review) was appropriate with respect to the lower court’s ruling, which was justified under the implied factual finding doctrine (a doctrine giving similar deference to a trial court’s decision). The lower court could readily conclude that there was a transparent error corrected by the District anyway, which still decided to approve the project afterwards.

 

 

           Transparent Error

Standard Of Review: Lower Court’s Decision Denying Dueling Fee Requests In 16-Plus Year Litigation Was No Abuse Of Discretion

 

Even Though Fee Request Considered By Subsequent Judge, No Abuse.

     Here is how Banyan Ltd. Partnership v. Baer, Case No. G046428 (4th Dist., Div. 3 Aug. 12, 2013) (unpublished) began: “This is the last of the three appeals that follow the final judgment in this 16-plus year, multi-phase litigation.” This appeal involved a lower court’s decision to deny dueling attorney’s fees requests from each side, under a Nevada fee-shifting statute that is different from California statute and more akin to CCP § 128.7/older § 128.5 sanctions provisions.

     Postjudgment orders affirmed, in a 3-0 decision authored by Presiding Justice O’Leary.

     With respect to California law, the appellate court confronted one side’s suggestion that a “heightened” abuse of discretion standard had to be applied to the fee order against it because a subsequent judge after the retirement of the unavailable merits-trying judge had to make the decision. The appellate court agreed that it had “somewhat more latitude”--the “somewhat” seemed to be certainly at play--in determining whether there was an abuse of discretion when a fee order was rendered by a judge other than the trial judge. (Center For Biological Diversity v. County of San Bernardino, 188 Cal.App.4th 603, 616 (2010).) However, the standard of review still was abuse of discretion, and there was none even under the heightened standard given the circumstances at play in this long-running litigation saga.

Prevailing Party: Trial Court Did Not Err In Finding Neither Party Prevailed In HOA Driveway Characterization/Slander Of Title Dispute

 

     In Mankowski v La Cumbre Owners Assn., Inc., Case No. B236025 (2d Dist., Div. 6 Nov. 13, 2012) (unpublished), plaintiff townhouse owner was apparently really mad that the trial court found no one prevailed in her slander of title/declaratory relief action over the characterization of a driveway after her sister contributed to her incurring attorney’s fees of $17,726.45 after sister lost a prior towing dispute.

     The procedural history of the case showed that plaintiff was summary adjudicated out of her slander of title claim, and that the lower court really decided the driveway characterization issue under the declaratory relief claim in a manner that neither party really advocated. Under these circumstances, no one was found to prevail.

     Fee denial affirmed in this one. After all, plaintiff lost the slander of title claim and the remaining declaratory relief claim was decided somewhat in plaintiff’s favor, but not on the theory really advanced by either side. Because the “prevailing party” determination in an unclear winner situation is reviewed for abuse of discretion, plaintiff did not hurdle this formidible review standard based on the facts of this particular cause.

Family Law: Second District, Division Two Upholds Fee Award in Family Court Involving TV Costar of Two and a Half Men

 

Who “Won” is Irrelevant Here.

     Often, the Court’s retelling of the facts gives us more than an inkling of the ending.

     Here, the statement of facts begins:

”Jon and Sarah have both had acting careers, though their career paths diverged widely.  As a costar in the TV show Two and a Half Men, Jon’s career soared.  In contrast, Sarah’s career stalled; it appears her last acting job was in 2005.” 

     If after reading this poignant beginning, you guessed that the Court of Appeal would uphold the award of attorney’s fees in favor of Sarah, you guessed right. In re Marriage of Jon and Sarah Trigger Cryer, Case No. B222906 (Second District, Div. 2 August 29, 2011) (certified for publication).

     On appeal, the Court reviewed whether the family court abused its discretion by declining to order a more severe reduction of child support and whether it erred by denying a request for accounting or trust for child support funds (it did not).  Because the Court also found that the ordered attorney’s fees awards were proper, we post.

     The outcome regarding attorney’s fees was largely ordained by the standard of review:  “[a]n award of fees and costs in a dissolution or related family law proceeding is a matter left to the trial court’s sound discretion, and absent ‘a clear showing of abuse, its determination will not be disturbed on appeal.’” 

     Two points (well, maybe one) are worth comment. 

     First, Jon Cryer actually won a motion below – but the trial court awarded fees against him in that proceeding.  The Court of Appeal reminds us that, for some purposes,  “the issue of who ‘won’ the motion is irrelevant.  Although an order modifying a support order may include an award of attorney fees to the prevailing party (see section 3652), such an award is proper only if a section 2030 needs-based award is not warranted.”  Thus, for some purposes – to wit, whether a needs-based award is warranted – being the prevailing party is irrelevant.

     The second point, which may not be worth reporting on (but which caught our eye), is that Sarah Trigger Cryer argued that the child support obligation of $10,000 per month only constituted around 3 percent of her ex’s income at the time.  Jon also submitted an income and expense declaration listing average monthly income of $474,861, based on a three-year average cash flow, but Sarah claimed that Jon’s monthly income as of 2009 was actually $791,666.

     BLAWG BONUS:  Jon Cryer is a graduate of The Bronx High School of Science.

Trade Secrets: Defendant Winning Trade Secret Case Properly Denied Fee Recovery

 

Trial Court’s Finding of “No Bad Faith” Was Deferred to on Appeal.

     For appellate practitioners and litigators contemplating an appeal, you by now should know that most factual findings--even those than can be implied--usually will uphold a judgment or trial court determination. This substantial evidence rule and its close cousin, the abuse of discretion standard, are beacons of appellate practice, and those beacons were dispositive in the next case we discuss.

     The lower court, although granting summary adjudication for the defense on a trade secrets misappropriation count, nonetheless did not find it was brought or prosecuted in bad faith, denying the defense request for an award of attorney’s fees under Civil Code section 3426.4.

     The defense lost its appeal of this fee denial in Westside Athletic Club, LLC v. Farmer, Case No. D057023 (4th Dist., Div. 1 July 28, 2011) (unpublished).

     The reason was that there was conflicting evidence from which the lower court could deduce that no bad faith was associated with the trade secrets misappropriation claim. Continuances requested by plaintiff related to discovery problems, and plaintiff even requested mediation--with the latter showing plaintiff’s willingness to avoid costly, prolonged litigation.

     Defendant asked the appellate court to adopt a rule by which an adverse ruling (objective specious prong) and an inference of plaintiff’s subjective bad faith would shift the burden to plaintiff to rebut the inference. The appellate court declined the invitation to do so, finding that the two-prong (objective/subjective) test in Gemini Aluminum Corp. v. California Custom Shapes, Inc., 95 Cal.App.4th 1249, 1262 (2002) was workable and “that courts routinely evaluate bad faith in different contexts” such that it could be done in a fees motion under section 3426.4.

Family Law: Fourth District, Division Three Reverses Spousal Support Order While Affirming Award of Attorney’s Fees

The Court of Appeals Finds Trial Court’s Order “Puzzling”

     Husband and wife’s marriage dissolved in 1992.  In 2009, the now ex-husband filed an OSC to modify or terminate his spousal support obligation, because he planned to retire.  The trial court denied the OSC, while ordering the 66-year old ex-wife to make efforts to become self-supporting, and also ordering spousal support to be reduced after a period of one year.  The trial court also ordered ex-husband to pay $13,000 towards ex-wife’s attorney’s fees.  Ex-husband appealed, maintaining that the court’s order was an abuse of discretion, and that spousal support should have been terminated altogether.  In re Marriage of Horowitz, Case No. G043127  (4th Dist. Div. 3  4/4/11) (unpublished.)

Section 1717: 70% Lopsided Landlord Win In Lawsuit Meant Trial Court Abused Discretion In Not Awarding Contractual Attorney’s Fees

 

Discretion Only Goes So Far, Says Our Local Appellate Court

     Presiding Justice Sills, on behalf of a 3-0 panel of our local appellate court, determined in La Cuesta v. Benham, Case No. G043788 (4th Dist., Div. 3 Mar. 29, 2011) (certified for publication) that discretion can only go so far when a litigant wins a lopsided victory. With that, contractual fees should have been awarded under Civil Code section 1717 based on a contractual fees clause in a lease.

     Landlord recovered possession and 70% of his claimed damages, even though tenant claimed nothing was owed. The lower court rebuffed landlord’s attempt to recoup $42,000 in fees by finding he was not the “prevailing party” under section 1717.

     Reversed and remanded to award fees to landlord.

     Although only a simple unqualified win allows entitlement to fees under section 1717, the trial court abused its discretion because the landlord’s win was lopsided so that “greater” relief was indeed obtained against tenant. (Silver Creek, LLC v. BlackRock Realty Advisors, Inc., 173 Cal.App.4th 1533, 1541 (2009).) “We note: Essentially, the Silver Creek court was thus condemning the simple ‘good news bad news’ approach to section 1717 when it is done without reflection on the relative litigation success of the respective parties.” (Slip Opn., p. 13.) Since landlord obtained repossession and compensation for the tenant’s occupation, “[i]t [was] not enough to hide the difference under the cover of an abuse-of-discretion standard.” (Id.)

Insurance: Insurer’s Petition To Compel Cumis Fee Arbitration Properly Denied

 

Substantial Evidence Showed That Insurer Did Not Agree to Defend, So No Trigger Of Fee Arbitration Rights.

     In The Housing Group v. PMA Capital Ins. Co., Case No. A127581 (1st Dist., Div. 3 Mar. 25, 2011) (certified for publication), insurer defendant was sued by plaintiffs for alleged failures and refusals to defend plaintiffs in certain third-party actions arising out of The Views subdivision in Castro Valley, California (probably construction defect actions). Insurer petitioned to compel arbitration of an alleged Cumis fee dispute pursuant to Civil Code section 2860(c), arguing that plaintiffs disputed the fees that insurer was willing to pay Cumis counsel. In response, plaintiffs opposed primarily on the bases that (1) insurer did not offer any evidence showing it ever agreed to defend plaintiffs in the underlying litigation (making only one minor payment to reimburse plaintiffs’ damages arising out of fees after the case settled), (2) the two “reservation of rights” letters did not demonstrate any acceptance of defense tenders, and (3) Cumis counsel had not been actually retained in the underlying litigation in the first instance. The trial court agreed with plaintiffs, denying the petition to compel arbitration and finding that the insurer had not provided a defense.  Insurer appealed this adverse decision.

SLAPP: Attorney’s Fees Award Reversed And Remanded When Trial Court Reversed Itself On Two Items

Abuse of Discretion of Standard Will Yield Where Record Shows What Lower Court Really Did.

     Although we doubt that it will make that much difference on remand, Kaye v. Van Putten, Case Nos. F058513/F059269 (5th Dist. Mar. 21, 2011) (unpublished) demonstrates that a fee award stands to be reversed and remanded where a lower court reverses itself on a tentative but does not make adjustments in the final order in favor of the defense.

     In this one, the defense won an anti-SLAPP motion on grounds that were affirmed on appeal. However, that left consideration of the matter of the fee award ordered in defendants’ favor to the tune of $64,000 (out of a requested $97,244.50)--not an insubstantial award, as co-contributor Mike can attest (after all, he was born in and clerked for an appellate court in Fresno). Plaintiff appealed on the basis this was too much (not a good appeal based on the deferential abuse of discretion standard), while the defense claimed not enough was awarded.

Reasonableness Of Fees: $128,655 Fee Award Found To Be No Abuse of Discretion

Second District, Division 2 Sustains Substantial Award.

     In Chapman v. Sullivan Motor Cars, LLC, Case Nos. B222542/B224885 (2d Dist., Div. 2 Feb. 9, 2011) (unpublished), plaintiff had a demurrer sustained without leave to his first amended complaint, with the lower court also adopting a referee’s decision to award attorney’s fees against plaintiff to the tune of $128,655 (out of a requested $170,655). Plaintiff appealed, claiming the fees were so high that they were tantamount to a penalty.

     The problem was that plaintiff could not surmount the deferential abuse of discretion standard applicable to gauging reasonableness. (Serrano v. Priest, 20 Cal.3d 25, 49 (1977) [one of our Leading Cases].)

     The referee did use the lodestar methodology, and the award was not a penalty. Plaintiff understated what was at stake, because he had asked for $550,000 in an appraisal valuation of his interest in an LLC. Because the underlying substantive claims arose out of the operating agreement, prevailing defendants were entitled to fees. (Adam v. DeCharon, 31 Cal.App.4th 708, 712 (1995).)

Allocation/Reasonableness Of Fees/Special Fee Shifting Statutes/Lodestar/Multiplier/Costs/Standard Of Review: Lower Court Did Abuse Discretion In Awarding Certain Expenses As Fees, In Failing To Allocate, And In Applying A Multiplier

Abuse of Discretion Standard Did Not Prevent Reversal When Record Showed Errors, According to Sixth District.

     In an interesting contrast to the way the abuse of discretion standard was deferentially applied in our contemporaneous post in Murrell v. Rolling Hills Community Association, the Sixth District found that the trial court abused its discretion in numerous ways in the amount of fees awarded in a financial elder abuse case (even though the issue of fee entitlement was not disputed).

     Defendant in Bell v. Bunch, Case No. H032980 (6th Dist. Jan. 31, 2011) (unpublished) was found to have committed financial elder abuse against plaintiff. Welfare and Institutions Code section 15657.5(a) has a fee shifting statute. In a postjudgment order which was separately appealed (something we have argued should be done in all cases), the trial court awarded plaintiff statutory fees and costs of $290,684.93 inclusive of a 1.2 multiplier on everything but “fees on fees” plus $5,824 in expert witness and investigation fees. Defendant appealed, challenging entitlement on some of the costs and the amount of fees awarded. (Plaintiff had sought a lodestar of $256,138.75, plus $5,824.43 in expert witness/investigation fees, or a total lodestar of $261,963.18 plus addition of a 1.5 multiplier for a total request of $392,944.77.) Defendant Bunch’s appeal was a good move.

Elderly man clasping cane.  c1900.  H.L. Bundy, photographer.  Library of Congress.

Homeowners Association/Standard Of Review/Allocation/Substantiation of Fees: Substantial Cross-Fee Awards Affirmed Across The Board In Acrimonious Tree View Dispute

Second District, Division 1 Finds No Abuse of Discretion in Various Fee Awards.

     It is amazing how ocean views, privacy, and trees all seem to be in the mix of many neighbor/homeowner association disputes. The next one is no exception, producing substantial cross-fee awards under Civil Code section 1354 that probably only made the lawyers happy participants in the overall controversy.

     Murrell v. Rollings Hill Community Assn., Case Nos. B202019/204632 (2d Dist., Div. 1 Jan. 31, 2011) (unpublished) opens with this nice summarizing paragraph: “A contentious and costly feud over trees and a neighbor’s view has spawned multiple legal actions, cross-actions, five appeals and two cross-appeals. George and Anne-Merelie Murrell and Leonard and Linda Fuller are neighbors on adjacent residential lots overlooking the Pacific Ocean in the city of Rolling Hills. To obtain an unobstructed ocean view, the Fullers wanted certain trees on ‘the Murrell property’ trimmed or removed. The Murrells, who sought to preserve privacy, resisted. So began the decade-plus dispute now before this court [which also included the Rolling Hills Community Association and a volunteer HOA director].”

     Boy sitting on pine tree.  Maginel Wright Barney.  Library of Congress.

     Except for the director, the Murrells, Fullers, and HOA got mixed results, but results that a referee and trial court could parse out to make the following fee awards: (1) $399,930.88 (out of a requested $647,974.25) in fees to the Murrells and against HOA, but with HOA obtaining $159,148.84 (out of a requested $237,053) in fees against Murrells on a pine tree claim; and (2) $333,525 (out of a requested $488,906.69) in fees to the Fullers and against the Murrells. The Murrells and HOA appealed the various fee awards and various merits rulings.

     Presiding Justice Mallano, in a 63 page unpublished opinion on behalf of a 2-1 panel, affirmed across the board. (The dissenting justice did not agree with some merits adjudications and one particular fee award.)

     The $159,148.84 fee award to HOA did not surmount the deferential abuse of discretion review standard. (PLCM Group, Inc. v. Drexler, 22 Cal.4th 1084, 1095 (2000) [one of our Leading Cases].) Although a different judge decided a fee request than the judge presiding over germane matters, the Murrells failed to cite authority as to why de novo review was warranted under the circumstances The trial court even apportioned out noncompensable work from compensable work, with the Murrells failing to pinpoint what aspects of the apportionment were wrong. A moving declaration authenticating time records was competent substantiation of the work expended, and a $250 hourly rate for one associate was found to be proper. Other challenges to generalized charges were forfeited by the Murrells’ failure to provide citations to the specifics.

     The Murrells were not any more successful on their challenges to the $333,525 fee award to the Fullers and to the inadequacy of the $399,930.88 fee award to them. A referee was appointed and made proper calculations of what fees should be recovered by each side. Some hourly rates were pared down correctly by the referee because the moving party failed to present evidence of what attorneys were paid in the downtown L.A. market. The apportionment used by the referee and trial court, which is applicable to section 1354 fee awards, was no abuse of discretion given the overlapping nature of the various claims. Again, the generalized attacks of reasonableness by the Murrells did not meet their burden of challenging the fee award to the Fullers. (Farber v. Bay View Terrace Homeowners Assn., 141 Cal.App.4th 1007, 1015-1016 (2006).)

     Finally, on a costs issue, the appellate court majority ruled that Civil Code section 1354 does not allow recovery of costs not authorized under Code of Civil Procedure section 1032, such as phone charges, copying charges, and expert witness expenses.

     Putting into perspective the social utility of $400,000 in attorney’s fees spent on a neighbor tree view dispute, we note in passing that $400,000 will buy 26,667 doses of flu vaccine at $15/dose, 6,667 doses of malaria vaccine, at $60/dose, and 50,000 meals on wheels, at $8/meal; and, that in 2009, median household income in the United States was $49,777, an amount that has since declined.

Reasonableness Of Fees: $254,615.50 Fee Award For Plaintiff Affirmed After Her Acceptance Of $95,000 CCP § 998 Offer

$509,231 Scaled Back By Trial Court, But Sustained On Appeal.

     Here is an interesting substantial fee award. Half of what plaintiff requested, but way above the $95,000 Code of Civil Procedure section 998 offer eventually accepted in the case on the eve of trial. Goes to show that fees do not have to be proportionate to compensatory damages (not the same analysis employed in a punitive damages context), especially where the defense litigated vigorously so as to increase fees for everyone.

     In Gonzalez v. Buffalo Inn, Inc., Case No. E049393 (4^th Dist., Div. 2 Dec. 30, 2010) (unpublished), plaintiff accepted defendants' 998 offer of $95,000, plus attorney's fees and costs, one day into a jury trial on sexual harassment, discrimination, wrongful termination, and related claims, after defendants obtained a reversal of a default judgment at an earlier juncture. Plaintiff then moved for fees of $509,231 under fee-shifting statutes, but the court actually awarded fees of $254,615.50.

     Defendants appealed.

Probate: Difference Between “Ordinary” And “Extraordinary” Compensation Highlighted In Recent Unpublished Decision

Fourth District, Division 3 Affirms Sizable Extraordinary Fee Award Under Abuse of Discretion Standard.

     Acting Presiding Justice O’Leary, in the 3-0 unpublished decision in Estate of Fernandez, Case No. G041272 (4th Dist., Div. 3 Dec. 7, 2010) (unpublished), has a nice discussion of the difference between “ordinary” and “extraordinary” compensation in the probate area as well as a good discussion of the abuse of discretion review standard generally applicable to review of the amount of fees awarded.

     Extraordinary fees of $101,000 were awarded to special estate administrator, along with $312,666.75 and $257,945 to his two attorneys. The fees were challenged on appeal, but were not overturned.

     Justice O’Leary noted the probate arena differences between “ordinary” compensation, based on a sliding scale of the value percentages of the estate accounted for, versus “extraordinary” compensation for which there are no set rates except for the lower court’s gauge of reasonableness. In determining extraordinary compensation, the lower court takes into account the value of the estate, the nature/difficulty of the tasks performed and time spent, the results achieved, whether those results benefited the estate as a whole, and whether the amount of ordinary compensation payable would be reasonable alone. (Ross, Cal. Practice Guide: Probate (The Rutter Group 2009) ¶ 16:327.4 at p. 16-99, ¶ 16:330 at pp. 100-101.)

     The problem here was that the litigation was abundant (the trial court’s register of action was 146 pages long) and the fee battle was extensively litigated to boot. Appellants could not surmount the abuse of discretion standard accorded to the lower court fee determinations, with Justice O’Leary colorfully borrowing from the “uphill battle” language in Estate of Gilkison, 65 Cal.App.4th 1443, 1448 [“This is an uphill battle which, absent unusual circumstances, may be equated with confederate General John Bell Hood’s attempt to capture ‘Little Round Top’ at the battle of Gettysburg in the Civil War. General Hood did not succeed.”].

             Dead at Little Round Top – position of Berdan’s Sharpshooters – Gettysburg.  Stereograph.  July 1863.

Standard Of Review: Post-Judgment Fees Award Affirmed Based On Lack Of Adequate Appellate Record

Fourth District, Division 3 Affirmance Based on Lack of Record on Challenges.

     Justice Ikola, in a 3-0 panel decision in Aziz v. Mason-Arnold, Case No. G042470 (4th Dist., Div. 3 Nov. 29, 2010) (unpublished), affirmed a $2,600 attorney’s fees award and costs to defendant in a post-judgment harassment TRO dispute. Plaintiff challenged the post-judgment fee award.

     Affirmed, based on presentation of an inadequate record.

     The problem here was that plaintiff did not present any record to challenge the fee award. “Plaintiff leaves us in the dark.” Although having some real questions about the bases for the post-judgment fee award, the appellate court only had the fee award, with nothing showing that it was wrong. Because nothing overcame the correctness of the fee award below, you readers can predict the result--judgment affirmed.

Family Law: $2,500 Section 271 Sanctions Affirmed On Appeal

Ex-Wife Cannot Surmount Abuse of Discretion Review Standard.

     Family Code section 271, which we have explored many times before, is a statutory provision that allows family judges to sanction parties or litigants in family law proceedings where they fail to promote settlement or fail to cooperate so as to drive up costs. No actual injury is required, although the judge must determine that the party to be sanctioned has an ability to pay. Most importantly on appeal, lower courts’ 271 decisions are reviewed under an abuse of discretion standard, focusing on whether substantial evidence supports a particular decision. (Marriage of Feldman, 153 Cal.App.4th 1470, 1478-1479 (2007).)

     Ex-wife in Marriage of Korn, Case No. A128506 (1st Dist., Div. 1 Nov. 24, 2010) (unpublished) appealed a $2,500 sanctions award that was imposed pursuant to section 271. Not a good idea under the facts.

     The parties had agreed to use an attorney to determine the community interest in ex-wife’s Roth IRA fund, which the attorney did. However, ex-wife did not contact the analyzing attorney with any concerns, failed to cooperate to meet a court-set deadline for valuation of the fund, and forced ex-husband to essentially confirm the attorney’s analysis and divide up the fund. Given these facts, the appellate court found no basis to overturn the award under the deferential review standard.

SLAPP: $13,756.64 In SLAPP Fees To Winning Litigant Was No Abuse

Fourth District, Division 3 Finds Fee Motion Was Timely and Awarded Fees Were Not Too High.

     In Mallard v. Progressive Choice Ins. Co., Case Nos. G042527/G042710 (4^th Dist., Div. 3 Sept. 15, 2010) (certified for publication), defendant (an insurance company’s litigation attorney) won a SLAPP motion and was awarded fees of $13,756.64 under the mandatory fee-shifting provision (Code Civ. Proc., § 425.16(c)). Losing plaintiff appealed.

     She lost not only the merits appeal, but also the appeal relating to the fee award.

     Plaintiff’s argument that the fee motion was not filed timely happened to be mistaken, because there was no “notice of entry of judgment” document for the merits SLAPP order. Given that this did not apparently exist, defendant attorney did timely file his fee application within 180 days from the date of the underlying SLAPP order. (Cal. Rules of Ct., rules 3.1702(b), 8.104(a), (f).)

     As far as excessiveness was concerned, losing litigant did not explain which fees were excessive and why they were too high. This meant the fee order passed muster under the deferential abuse of discretion standard. (Christian Research Institute v. Alnor, 165 Cal.App.4^th 1315, 1322 (2008).)

     Mallard was a 3-0 opinion authored by Justice Fybel on behalf of the Fourth District, Division 3.

Undertaking: Court Of Appeal Holds That A Judgment Solely for Costs and Attorney’s Fees In HOA Dispute Is Automatically Stayed By Appeal, Without The Need For A Bond

Fourth District, Div. 1 Concludes That Not All Attorney’s Fee Awards Are Equal For Purposes Of Automatic Stay On Appeal.

     In the next case, the Court of Appeal has gifted us with a 47 page opinion arising from the fact that homeowners in a condominium association installed two sandstone-colored windows, rather than two dark-brown windows, without receiving architectural approval.  Chapala Management Corporation v. Stanton, D055532 (4th Dist., Div. 1 July 29, 2010) (certified for partial publication) (Chapala).  The trial judge in San Diego, Steven R. Denton, granted a judgment for injunctive and declaratory relief declaring the homeowners in violation of the CC&Rs, requiring them to modify or replace their windows, and awarding attorney’s fees and costs.  The judge ordered the homeowners to post a bond to stay collection of the attorney’s fees.  The judge awarded the HOA $59,122.50 in attorney’s fees and $4,298.72 in costs. 

     The homeowners appealed from the judgment, without filing an undertaking, instead seeking a writ of supersedeas to stay the order requiring that they post an undertaking.  (Note:  “’Supersedeas’ is the appropriate remedy for a refusal to acknowledge the applicability of statutory provisions automatically staying the judgment while an appeal is pursued.”  Chapala, n.8.)

      In Chapala, the Court concluded that the trial judge acted within his discretion by awarding the HOA injunctive relief under the circumstances.  The Court noted, however, “that were we to consider the matter de novo, we would question the Board’s business judgment in resorting to expensive and time-consuming litigation generating many thousands of dollars in legal fees, rather than electing to notify the Stantons of their violation and issue a directive that they paint or replace their windows with windows of an approved color . . . . If the Stantons did not comply, Association would have been reasonably within its authority to remedy the Stantons’ noncompliance by painting the two windows, charging the Stantons its expenses incurred in doing so, and recovering the minimal cost in an action at law.”  But reasonable minds may differ under an abuse of discretion standard. 

     The Court decided to address on the merits whether attorney’s fees are nonroutine costs requiring an undertaking “for the guidance of trial courts”.  The Court decided to address the issue, even though the HOA elected to concede the issue at oral argument (demonstrating that Courts of Appeal have rules that allow them to address issues when they want to, and other rules that allow them to not address issues when they don’t want to).              

     The general rule is that routine costs are stayed by appeal, without the need for an undertaking, whereas attorney’s fees, which are not routine, require an undertaking to stay enforcement.  See our July 11, 2008 post, “Are Defense Fee Awards Encompassed Within the Appellate Automatic Stay or Must They Be Bonded?”  If litigants had to file an undertaking to stay a routine cost award, then the filing of undertakings would become routine.  But are some attorney’s fees awards routine, and some non-routine?  Yes, according to the logic of Chapala.

     Under Code of Civ. Proc. section 1033.5(10)(B), attorney’s fees are authorized as a cost item under section 1032 under any California statute that refers to the award of “costs and attorney’s fees”.  Under Civil Code section 1354(c), pertaining to enforcement of CC&Rs, “the prevailing party shall be awarded reasonable attorney’s fee’s and costs.”  Section 1354 is interpreted in Chapala to mean that attorney’s fees awarded under it “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.”  Put another way, section 1354 fee awards look routine, and thus are encompassed by the stay.  So all attorney’s fees awards are not equal when it comes to the undertaking requirement, at least according to Chapala.

     Chapala declines to read Bank of San Pedro v. Superior Court, 3 Cal.4th 797 (1992) and Behniwal v. Mix, 147 Cal.App.4th 621 (2007) as equating all attorney’s fees awards with expert witness fees, which fees are non-routine, not encompassed by the automatic appeal stay, and therefore require an undertaking to stay enforcement.  “We do not follow Behniwal to the extent its holding can be read to encompass a judgment solely for costs and attorney fees awarded to the prevailing party under Civil Code section 1354.”

     The 3-0 opinion is authored by Justice O’Rourke.

    

      

    

      

Insurance: In Which the Court of Appeal Rules Insurer “Must Lie In the Bed It Made”

Fifth District agrees the Case is “screwed up.”

     The story arc of this opinion begins at a low point, and plummets.  “What the heck?I?,” begins the Court of Appeal opinion.  “At one point, the trial court commented, ‘This is one of the most screwed up cases I’ve ever seen.’  We heartily agree.”  Essex Insurance Company v. Richard Heck, M.D., Case No. F058139 (Fifth Dist. July 29, 2010) (certified for publication).  Essex Insurance Company provided a defense in a personal injury action to a defendant who was not its named insured, but did not discover its mistake till after judgment was entered following a jury verdict in favor of one Mr. John Dompeling against one “Robert Abraham.”

     Mr. Dompeling, a diabetic, hired to move refrigeration units in a restaurant that was being refurbished, stepped on a nail, and sought treatment from his physician, the eponymously named Dr. Heck.  After a hospital discharge, the wound worsened, Mr. Dompeling was readmitted to the hospital, and an orthopedic surgeon amputated his leg below the knee.  Four months later, a second amputation was required, because an infection had developed on his stump.  In January 2004, a jury rendered a verdict in favor of Mr. Dompeling in the amount of $826,762.50, plus costs, against “Robert Abraham.”  “Abraham” and the restaurant were alleged to have hired Mr. Dompeling to remove a refrigerator on the premises. 

     Later in 2004 and 2005, Essex concluded that Robert Lincoln Abraham was the defendant in the personal injury action, but not the insured under its policy.  Instead, the insured was Robert Lee Abraham, against whom a default had been entered.  Oops.  Essex filed a declaratory relief action asserting it had no duty to indemnify Robert Lee Abraham or anyone else in connection with the personal injury action.

     After Essex refused to pay the judgment in the personal injury action, Mr. Dompeling sued Essex for bad faith, and the bad faith action was consolidated with the declaratory relief action.  Mr. Dompeling then amended his complaint to add a cause of action for fraud and misrepresentation against Essex and its law firm, essentially alleging that they knew the law firm was representing the wrong “Robert Abraham” in order to sandbag Mr. Dompeling, deny coverage, and avoid payment.

     In exchange for $700,000 from Essex, Mr. Dompeling released Essex, Robert Lee Abraham and Robert Lincoln Abraham.  Three separate lawsuits settled – a personal injury action, a declaratory relief action, and a bad faith action.

     In 2007, Essex pursued a subrogation claim against Dr. Heck, claiming that it stood in the shoes of that certain “Robert Abraham.” 

     Unfortunately for Essex, it settled three lawsuits for $700,000, without allocation.  Essex released its named insured, Robert Lee Abraham, but also the other Abraham.  “'[T]he settlement agreement did not specify which portion of the $700,000 was paid to settle which claim, what part constituted economic or non-economic damages, who the personal injury judgment was rendered against (either Robert Lee Abraham or Robert Lincoln Abraham), or whether that individual was an insured under the policy.  Without such specifications, the agreement left unsettled into whose shoes Essex was stepping, i.e. Robert Lee Abraham or Robert Lincoln Abraham, and what was being paid to compensate each claim.”  Not surprisingly, on a summary judgment motion brought by Dr. Heck, Essex lost its subrogation claim against Dr. Heck.

     Essex contended on appeal that it could have sorted out this mess by resort to extrinsic evidence of its intent in entering into the settlement agreement.  However, Dr. Heck would not have been able to present his own evidence of intent in entering into the settlement agreement, because that would have improperly required disclosing communications that occurred during mediation.  And unexpressed subjective intent with respect to the interpretation of a contract is irrelevant.  Foiled again.

     While acknowledging the absence of case law directly on point, the Court of Appeal also applied the “doctrine of implied waiver”:  “Essex’s act of entering into a settlement of the three lawsuits without identifying its insured or apportioning the payment is so inconsistent with an intent to enforce its right to subrogation so as to induce a reasonable belief it had relinquished that right.”

     Finally, Essex argued that Dr. Heck made a nominal settlement offer that was not “in good faith”, which Essex obviously did not accept.  But Dr. Heck had offered to waive expert fees, Essex did prevail on the summary judgment motion, and it was the burden of Essex to prove an abuse of discretion – which it did not do. 

       While the Court of Appeal may have agreed with the trial judge’s assessment that, “[t]his is one of the most screwed up cases I’ve ever seen,”  the case was not totally FUBARed.  Said the Court, “We agree with the trial court that Essex must lie in the bed it made and affirm.”

     Justice Gomes authored the 3-0 opinion.

Family Law: No Abuse of Discretion to Award $5,000 Attorney’s Fees to Spouse, Given Parties’ Respective Incomes, Needs, and Ability to Pay

Fourth District, Div. Two, Upholds $5,000 Award in Attorney’s Fees to Wife, Where Husband Failed to Cite Evidence Supporting a Denial of the Request for Fees.

     Mr. Parga sought to terminate his spousal support obligations to his former wife.  The court denied the husband’s request and awarded the wife $5,000 in attorney’s fees.  An appeal followed.  Parga v. Parga, Case No. D055296 (4th Dist., Div. 1 July 22, 2010) (unpublished).

      Not an abuse of discretion, says the Court, in a 3-0 opinion authored by Justice Nares.  Ms. Parga was a stay-at-home mother for 13 years of the marriage, had limited marketable skills, was 65, and her husband had been the primary breadwinner.  The trial court relied on section 2032, found $5,000 was an amount reasonably necessary for Ms. Parga to defend the action, and took into account the parties’ respective incomes.  “[T]he primary factor in determining whether to award fees, and the amount of any such award, is the relative circumstances of the parties.”  (relying on In re Marriage of O’Connor, 59 Cal.App.4th 877, 882-883 (1997).

      Below:  Young housewife.  1840s.  Oil on canvas.  Artist:  Tyranov. The Russian Museum, St. Petersburg.

Fee Award Amount: Appellate Court Would Not Presume Error In The Absence Of A “Proper Roadmap”

Second District, Division 2 Does Reverse Section 1717 Award To Nonsuing Partnership.

     Here is an interesting case litigated on appeal by a former Second District jurist that shows how the absence of the requirement of a statement of decision can impede an appeal, in tandem with a failure to specifically document the error. The “bottom line” in the fee award area is that many (if not most) appellate courts will not presume error. Ring v. Marasco, Case No. B213965 (2d Dist., Div. 2 Apr. 28, 2010 (unpublished) is the opinion illustrating the interplay of these interesting appellate principles.

Section 1717: Although Legal Error Present In Not Finding Fee Entitlement, Fee Denial Affirmed Because Of Failure To Apportion

 

Fourth District, Division 3 Opinion Demonstrates Interplay Between De Novo and Abuse of Discretion Review Standards on Different Fee Award Issues.

     The next case shows how a litigant may convince an appellate court that legal error was committed (de novo review of a fee entitlement issue), but the battle for reversal is lost for failure to surmount an abuse of discretion issue (failure to apportion fees between covered and uncovered fee claims for relief).

     In Behnam v. Wilshire Central Escrow, Case No. G041807 (4^th Dist., Div. 3 Apr. 22, 2010) (unpublished), plaintiff in a fraud-laden real estate transaction did win damages against a defendant escrow company, but was denied recovery of requested attorney’s fees of $52,240.50. Plaintiff appealed the fee denial.

 

FEHA: $445,000 Fee Recovery Out Of Requested $1.5 Million Fee Request Affirmed On Appeal

Plaintiff Does Not Convince Appellate Court to Award More, With Fourth District, Division Commenting on Some “Cutting Edge” Substantive Questions.

     Although the next case could be viewed as just a simple abuse of discretion case, it actually discusses some interesting tensions between federal and state cases on the specificity of reasoning that must be given by a trial judge when ruling on an attorney’s fees request. Beyond that, it is fun reading, because the opinion is written by Presiding Justice Sills of the Fourth District, Division 3, who has a very distinctive writing style.

     Magana v. Charlie’s Foods, Inc., Case No. G041153 (4^th Dist., Div. 3 Apr. 8, 2010) (unpublished) involved a FEHA sexual harassment plaintiff who won an award of $1,800 in economic damages, $110,000 in pain and suffering, and $500,000 in punitive damages (with the punitive damages award reversed in a prior appeal). Before that previous appeal was decided, plaintiff’s counsel made a fee motion in which the attorneys requested $1.5 million in fees based on the work of 7 attorneys and 1,901.4 hours of total work (which factored in a requested multiplier of 2). The lower court actually awarded fees of $445,000 (still allowing every hour of work at a lower $234 hourly rate), reducing the lodestar request for the unreasonable fee request, the noncomplexity of the case, the fact only 4 depositions were taken in the case, no experts were utilized, duplication/overlap from using 7 attorneys, and the fact it was unnecessary to have 3 attorneys at trial. Plaintiff appealed, claiming the fee award was too low.

Homeowners Associations: Substantial Attorney’s Fees Awards In Favor Of Adjoining Neighbors and HOA Sustained On Appeal

Almost $500,000 in Total Fees Assessed Against Losing Homeowners.

     For all you Olympic watchers out there, this next case will resonate the famous “agony of defeat” line from ABC’s Wide World of Sports.

     In Sharp v. Anderson, Case No. B212528 (2d Dist., Div. 1 Feb. 18, 2010) (unpublished), plaintiff neighboring real property owners lost contentious litigation against their neighbors and the HOA/HOA directors. The lower court awarded neighbors $184,510 in attorney’s fees and $14,109 in costs and also awarded HOA $295,547 in fees under Civil Code section 1354(c), a fee-shifting provision under the Davis-Stirling Common Interest Development Act.

     Losers appealed.

Prevailing Party: Defendants City And Landlord Win Summary Judgment and Gain $184,605 Fee Award As Prevailing Parties Under Civil Code Section 1717

Both Determinations Affirmed on Appeal.

     In Marinos v. City of Rocklin, Case Nos. C058958/C060844 (3d Dist. Nov. 4, 2009) (unpublished), defendants City and landlord prevailed on a summary judgment motion based on plaintiffs not complying with a notice provision in a settlement agreement with a fees clause. The trial court then awarded defendants $184,605 in attorney’s fees (a 30% reduction from the requested fees of $265,066.50) to defendants as prevailing parties under the fees clause.

     Plaintiffs appealed, and lost.

     They initially argued that the fee motion was untimely because it was filed after the costs memorandum deadline. Not so, said the appellate panel. Fee recovery is governed by CRC, rule 3.1702(b), which is tied to the time period for appealing the underlying merits judgment. Here, defendants timely filed within 30 days after denial of the new trial motion.

     Plaintiffs next argued that the two law firms representing the defendants unreasonably duplicated efforts. The problem with this contention is that the fee award is resolved under an abuse of discretion standard deferential to the lower court’s ruling. (Maughan v. Google Technology, Inc., 143 Cal.App.4^th 1242, 1249 (2006).) Although the notice issue was ultimately determinative, both sides vigorously litigated many issues and engaged in lots of discovery and law and motion practice. The fee claimants provided 112 pages of detailed invoices, such that more than adequate substantiation of work effort was presented before the lower court. Given that the trial judge did reduce the requested fees by 30%, plaintiffs did not do enough in simply posing unreasonableness rhetorical questions rather than “show” the appellate court that the award was patently unreasonable.

     They then argued that the fee motion was deficient because the defendants did not file copies of their fee agreements in connection with the motions. This one lost “ . . . as plaintiffs fail to offer any authority on that point.” (BLOG OBSERVATION—This argument was likely not going to prevail given that, under the Business and Professions Code, fee agreements are confidential attorney-client communications.)

     Because plaintiffs did not meet their burden in showing error, the fee award was sustained on appeal.

Consumer Statutes: Court Of Appeal Reverses Refusal To Award Reasonable Attorney’s Fees To Plaintiff Under Settlement Arrangement With Car Manufacturer

Fourth District, Division 3 Utilizes De Novo Review to Determine Plaintiff’s Entitlement to Fee Award.

     The next case demonstrates how the standard of review can be appeal determinative. The appellate panel utilized the de novo standard, which led to the conclusion that the trial court erred in denying plaintiff entitlement to fees under car lemon laws where the settlement agreement with car manufacturer called for them—even though the key issue on remand will be the amount of fees given that plaintiff’s settlement was very modest indeed.

     The Fourth District, Division 3, in Vazquez v. Hyundai Motor America, Case No. G041152 (4^th Dist., Div. 2 Oct. 13, 2009) (unpublished), confronted a situation where a plaintiff with car lemon law gripes actually settled twice with a car manufacturer given some ambiguities in the initial settlement agreement. Plaintiff apparently obtained an initial compromise by which the car dealership paid $6,000 in cash and the car manufacturer agreed to defend the fee application to be subsequently brought by plaintiff.

     (This settlement was much less than the almost $81,000 plaintiff asked for in an MSC statement, broken down as $54,000 to plaintiff and almost $27,000 in fees and costs to her attorneys.) In the second agreement, car manufacturer also agreed to reimburse plaintiff, less mileage and other offsets, the amount of $3,171.77 and also pay off her loan in return for a lawsuit dismissal and return of the car. The second agreement provided that the trial court, in binding fashion, could determine the proper amount of fees, but that if the fee award was between zero and $2,999.00, plaintiff would get a “guaranteed” minimum of $3,000 in any event. Plaintiff filed a fee motion seeking $51,012 in fees and costs, plus a multiplier enhancement of 1.5. The trial court denied fees outright, and plaintiff appealed.

     She won on appeal.

[Photo:  July 1942.  Even the oldest jalopies were out to have their tanks filled on the day before stricter gasoline rationing went into effect.  Photographer:  Marjorie Collins.  Library of Congress]

CCP 998 Offers: Court Of Appeal Sustains $163,760 Cost Award Based On Rejected 998 Offer By Plaintiff

 

Second District, Division 5 Finds Offer Was Made In Good Faith Under Abuse of Discretion Standard.

     Code of Civil Procedure section 998 offers can be tough and can completely shift the leverage in a particular case. Although the offers must be made in good faith, they must be evaluated carefully. The next one was low but found to be in good faith, much to the chagrin of the losing plaintiff who did not accept the offer.

     In Javaheri v. Aum, L.P., Case No. B206898 (2d Dist., Div. 5 Sept. 15, 2009) (unpublished), plaintiff sued defendant neighbors for claimed damage to plaintiff’s building during defendants’ excavation of a nearby condominium project. Plaintiff lost after a jury trial, with the trial court awarding defendants $163,760 in costs (all of the requested amount, including substantial expert witness fees). The costs award was based on plaintiff’s rejection of a 998 offer by defendants to end the case in return for a $1,001 payment to plaintiff.

     On appeal, the costs order was affirmed. The standard of review was determinative, because a “good faith” determination in this context is a discretionary call for the lower court and reviewed under the abuse of discretion standard. (Arno v. Helinet Corp., 130 Cal.App.4^th 1019, 1025 (2005).) Nothing in the record “jumped out” at the appellate panel to lead it to disturb the exercise of discretion below, even though the 998 offer was small and made early in the litigation (before expert depositions were taken). The defendant had apparently evaluated the case properly, determining no damages were appropriate (an evaluation shared by the jury). The Court of Appeal was not about to use “hindsight” to find the offer other than in good faith.

Family Law: Trial Court Tosses Responsibility for Attorney's Fee Award to Court of Appeal, and Court of Appeal Tosses It Right Back

     Appellant Joan Drelinger (Mother) registered in 2004 a 1973 order for child support issued in the State of Nevada, and sought to enforce the order. The trial court confirmed the order’s registration but found respondent Jay Drelinger (Father) had satisfied his child support obligation. The court deferred ruling on the parties’ competing motions for attorney fees, and mother appealed both orders.  Marriage of Drelinger, Case No. C055458 (3rd Dist., July 29, 2009) (not for publication).   

      Among other things, the trial court had ruled, "The parties left the matter according to the terms of the agreement until the breakup of their extramarital affair in 2004. At which time, [Mother,] spurned, decided to pursue to [sic] old [child support] order . . . Both parties were harmed by the passage of time, the dimming of memories, the lack of documentary evidence."  Neither party requested a statement of decision. However, the trial judge decided to defer any ruling on fees, explaining, "I do believe that the Court of Appeal gets first shot at deciding this issue.”

Family Law: 1st District, Division 3, Upholds Refusal to Award Mother Full Amount of Fees Requested

 

Result Follows from Application of Abuse of Discretion Standard.

     In Marriage of Lilyquist and Dova, Case No. A121052, A121716 (1st Dist., Div. 3, July 24, 2009) (unpublished), the Court held (1) that a retroactive order reallocating child support obligations of the father was not an abuse of discretion; and (2) that failure to award the mother the full amount of fees requested was not an abuse of discretion.  Both rulings show that in child  support cases, the appellant who must carry the burden of overcoming an abuse of discretion standard can have a tough row to hoe.

Family Law Awards: Needs-Based Fee Award To Unemployed Wife Sustained On Appeal

Second District, Division 6 Finds No Abuse of Discretion in $5,000 Fee Award.

     Everyone knows that times are tough. However, this does not mean that every discretionary fee award should be appealed. The next case is a good example of why this is so, especially where a deferential standard of review is in play and economic disparities are not that close.

     In Marriage of Nast, Case No. B209620 (2d Dist., Div. 6 June 29, 2009), husband was ordered to pay wife $5,000 of her attorney's fees under Family Code sections 2030 and 2032 (needs-based statutes, designed to allow a litigant to hire an attorney to level the playing field in a dissolution case). Husband had a gross monthly income of $6,074 ($4,088 monthly disposable income), while wife had been unemployed for several months and had primary custodial responsibilities for the two minor children. Although wife and an adult son operated a Laundromat, it never made a profit. Husband appealed.

     Family law claimant:  old lady living in shoe with numerous offspring.

SLAPP: $112,353.75 Fee Award To Cross-Defendant Affirmed Where Claims Of Overstaffing Not Properly Demonstrated

Fourth District, Division 3 Finds No Abuse of Discretion.

     In Raining Data Corp. v. Barrenechea, Case No. G040902 (4^th Dist., Div. 3 June 26, 2009) (unpublished), plaintiff lost a SLAPP motion against a cross-defendant arising from a trade secret misappropriation dispute, with the trial court awarding $112, 353.75 to cross-defendant under Code of Civil Procedure section 425.16(c) (a mandatory fee-shifting provision in favor of winning SLAPP defendants). Plaintiff appealed, claiming the fee award was unreasonable in amount and was riddled with overstaffing/duplicative efforts.

     The Fourth District, Division 3, in a 3-0 opinion authored by Justice Fybel, disagreed based on the deferential abuse of discretion standard. (Christian Research Institute v. Alnor, 165 Cal.App.4^th 1315, 1322 (2008).)

Family Law: Court Of Appeal Affirms $26,504.85 Fees/Costs Award In Domestic Violence Restraining Order Dispute

Fees/Costs Were Justified Under Family Code Section 6344(a).

     Under Family Code section 6344(a), a trial court may award attorney’s fees and costs to a prevailing party in a proceeding concerning a domestic violence restraining order after notice and a hearing on the issue. This provision was squarely at issue in the next case we examine.

     In Loeffler v. Medina, Case No. D053096 (4^th Dist., Div. 1 June 18, 2009) (certified for publication), ex-live-ins had their battles resulting in entry of a domestic violence restraining order against the gentleman in the relationship. The gentleman tried to terminate the restraining order, but was unsuccessful after a fairly contentious proceeding. The trial court awarded the prosecuting lady $25,000 in attorney’s fees and $1,504.85 in costs (out of a requested $45,842.50 in fees and $2,934.85 in costs).

     The gentleman appealed.

Contrasted Husbands.  July 1795.  Richard Newton, artist.  Library of Congress.

Routine Costs: Trial Court’s Misreading Of Judgment And Failure To Exercise Discretion In Determining Prevailing Party For Costs Purposes Required Remand

Second District, Division 2 Stresses That Record Must Show Discretion Was Actually Exercised.

     Although an order denying routine costs is reviewed under the deferential abuse of discretion standard, there is an important qualifier to application of this rule—there must be an indication that the trial court actually did exercise discretion. If a judge misreads a judgment so that arguments were not considered, a remand may be necessary so that discretion is actually exercised under the proper statutes. (Fassberg Construction Co. v. Housing Authority of City of Los Angeles, 152 Cal.App.4^th 720, 767-768 (2007).) The next case is one where the Fassberg qualifier was triggered, requiring remand for reconsideration of a costs award denial.

     In Tracy v. Tracy, Case No. B203084 (c/w B205335) (2d Dist., Div. 2 June 9, 2009) (unpublished), plaintiff won a jury verdict of $2 against his sister out of a $400,000 transfer/personal property retention battle. The trial court declined to award plaintiff his costs of $13,999.45, granting sister’s motion to tax costs on two grounds: (1) plaintiff recovered less than the jurisdictional limit of $25,000 in superior court, and (2) plaintiff’s $2 verdict was less than sister’s Code of Civil Procedure section 998 offer of $1,000. (The judgment, although awarding $2 to plaintiff and costs to be determined, also awarded sister her postoffer costs in an undetermined amount. However, sister was denied postoffer costs because she failed to delineate between pre and postoffer costs in her costs memorandum.) The lower court also determined that the judgment, as framed, excluded any costs to plaintiff. Only plaintiff appealed the costs denial order.

Family Law Awards: Court Of Appeal Affirms $30,000 "Needs" Fee Award In Divorce Proceeding Which Could Have Come Out of "The OC"

Fourth District, Division 3 Sustains Award In a Wild Dissolution Case.

     For you television fans of "The OC," we next discuss a case that could have served as an episode on the show—only with even more startling facts than the episodes that actually aired. It also demonstrates the limits of appellate review for fee awards—the deferential abuse of discretion standard is a tough one to hurdle, especially where there were loads of financial documentation and oral testimony on the financial condition of husband and wife.

     Marriage of Jordan, Case No. G040340 (4^th Dist., Div. 3 June 3, 2009) (unpublished) involved a dissolution of the 8-year marriage of the Jordans, who had three children. They lived a luxurious lifestyle while married, with wife primarily staying home with the children and husband working for a drywall business which he solely owned (although wife occasionally worked as a waitress during the marriage). They acquired numerous cars, boats, and jet skis; they lived rent free in a large Huntington Beach house owned by husband's former employer; they employed a housekeeper, took numerous vacations, and dined our frequently. Husband apparently still lives in the house, while wife lives in an 800 square foot apartment. (Husband also admitted at a deposition that he threw bleach on wife's clothes, a $3,000 hissy fit expense.) After husband submitted financial documentation which the family law judge found to be incredible, the lower court did find that husband had the ability to make and draw from the drywall business $40,000 per month through 2006 versus Amanda's ability to earn $900 per month. Husband claimed that he had negative income, but the family law judge found that many of the deductions were improperly mischaracterized as business items (and more properly were reflected as either assets of the company or personal income to husband). Husband had managed to pay $50,000 of his attorney's fees, while wife had only been able to pay $6,728 of hers. (Wife had incurred $43,776 in fees, but still owed a $35,547.76 balance.) In the end (after awarding both child and spousal support and equalizing property payments), husband was ordered to reimburse Amanda $3,000 for the destroyed clothing and pay Amanda $30,000 for attorney's fees.

     Husband appealed, but lost.

     The attorney's fees award was reviewed under the abuse of discretion standard. (In re Marriage of Cheriton, 92 Cal.App.4^th 269, 282-283, 314 (2001).) Although the statement of decision was not crystal clear (but critically not objected to), the appellate panel—in a 3-0 opinion authored by Justice O'Leary—found that the award was "needs" based under Family Code section 2032. "Although the findings were articulated in the context of fashioning the spousal support award, we see no reason for the court to have reiterated those same findings in regards to attorney fees." (Slip Opn., at p. 18.) Because the record showed that wife was clearly much more financially strapped than husband by a far stretch, there was no abuse in the award—compounded by husband's failure to comply with discovery requests for which he was sanctioned $1,500.

Family Law Awards: Court Of Appeal Reverses Family Code Section 2030 Award Against Husband Based On Consideration Of Erroneous Factors

Fourth District, Division 2 Finds Family Law Judge Relied on Inappropriate Factors.

     Here is one, even in this category, that we do not see often. A family law judge is reversed for considering inappropriate factors in awarding attorney’s fees to a wife under Family Code section 2030, the “needs” oriented fee-shifting statute. The lesson seems to be that where both spouses are equiposed in income and there is an error in factoring in expenses or other factors, a reversal may follow.

     In Marriage of Rue-Las, Case No. E045425 (4^th Dist., Div. 2 May 28, 2009) (unpublished), husband was ordered to pay wife $21,361.50 as his share of wife’s attorney’s fees under Family Code section 2030. Although reviewed under an abuse of discretion standard (In re Marriage of Cheriton, 92 Cal.App.4^th 269, 314 (2001)), the appellate panel reversed the fee award for two reasons.