CALIFORNIA ATTORNEY'S FEES

In The News: Vice Media Decides To Settle Female Gender Pay Class Action For About $1.875 Million In Los Angeles County Superior Court

$665,000 Is Fees/Costs Allocation To Class Counsel

Allis Manufacture Company, October 1942, Female Employees Line Up To Punch Their Timecards

            As reported on March 27, 2019 in the on-line version of The Hollywood Reporter, Vice Media has agreed to settle a female gender pay gap class action for about $1.875 million in a Los Angeles County Superior Court case. The class involved around 675 members, with attorneys to receive $665,000 in costs/fees and with most of the remaining amount to go to class members where it is projected each member will receive a pre-tax distribution of $1,600.

Costs, Damages: $298,843 Attorney’s Fees Recovery To Prevailing Cross-Defendant Subcontractor In Personal Injury Case Affirmed On Appeal

Attorney’s Fees Could Be Claimed As Costs Based On Contractual Fees Clause, Not Having To Be Plead As Damages And Not Subject To Any Reduction Because Insurance Carrier Covered Fees For Cross-Defendant.

            In Strouse v. Webcor Construction, L.P., Case No. A148863 (1^st Dist., Div. 3 March 27, 2019) (unpublished), plaintiff, employee of subcontractor ACCO, suffered a workplace injury at Cal Berkeley’s Memorial Football, ensuing him to sue general contractor Webcor for negligence. Webcor, in turn, sued subcontractor ACCO for indemnity (under an agreement with a contractual fees clause). A jury found Webcor 100% liable, and the cross-complaint was adjudicated in favor of ACCO. The trial judge later awarded ACCO $298,843 in attorney’s fees for prevailing on the cross-complaint as against Webcor.

            Webcor lost both the merits appeal and the appeal of the fee recovery.

            The appellate court determined that the fees could be claimed as costs, not having to be pled as damages so as to justify entitlement. It did not matter that ACCO had insurance coverage so that fees were paid by someone else did not mean fees were not “incurred.” (Staples v. Hoefke, 189 Cal.App.3d 1397, 1410 (1987).) The fee recovery was no “double recovery” in addition to the jury verdict because fees are costs, not damages.

            BLOG OBSERVATION—Keith Amelee and Lou Klein at Foley & Mansfield were the successful trial attorneys for ACCO. Co-contributor Mike was a fee expert in the lower court fee proceeding, where the trial judge issued an award with a minor discount from the fee request. On appeal, Margaret Johnson and Lou at Foley were the successful appellate attorneys before the First District. Congrats to the attorneys at Foley & Mansfield.

Fee Clause Interpretation: Operating Agreement Fees Clause Only Applied To Arbitration Proceedings, Not Court Work

$207,350 Fee Recovery Went POOF! On Appeal.

            In Pasco v. MGK Consulting, Case No. B281144 et al. (2d Dist., Div. 2 March 27, 2019) (unpublished), defendants won a motion for judgment at the close of plaintiffs’ case based on lack of standing for two claims and eventually obtained judgment in their favor as to plaintiffs’ remaining claims. The trial judge awarded fees under Civil Code section 1717 to defendants based on an operating agreement fees clause. The total award was $207,350.

            That all went POOF! on appeal. The reason was simple: the fees clause only encompassed arbitration proceedings, not court litigation. Given that the defense prevailed in court (not arbitration), no fee recovery was contractually allowable.

Allocation, Reasonableness Of Fees: Trial Court Properly Awarded 20% Of Fees Requested By Two Prevailing Plaintiffs In Wage Hour Dispute Where They Had Limited Success

Plaintiffs Recovered $8,500; Sought Fees Of $171,000; Were Awarded Fees Of $37,250.

            Lack of success in a case can certainly impact fee recovery to prevailing parties, as Almaguer v. Newland Entities, Inc., Case No. C075662 (3d Dist. March 27, 2019) (unpublished), demonstrates.

            There, two plaintiffs partially prevailed on certain labor/wrongful termination claims, but lost certain tort, labor, and unfair competition claims. In the end, they recovered $8,500 in compensatory damages. They then moved to recoup over $171,000 in fees under Labor Code section 218, which is a pro-plaintiff mandatory fee-shifting statute. The defense opposed on the grounds that plaintiffs had limited success and need to apportion fees between successful/unsuccessful claims.   The trial judge agreed, eventually awarding about 20% of the request--$37,250.

            Plaintiffs’ appeal of the fee award was unavailing.

            Under Chavez v. City of Los Angeles, 47 Cal.4^th 970, 989 (2010) [our Leading Case No. 13] and other cases, lack of success is a factor to be considered under a fee petition. The Third District saw no reason that this should not apply under Labor Code section 218. Beyond that, the trial judge did not err in apportioning fees between successful/unsuccessful claims and also deciding that having two attorneys at trial was “overkill.” Fee award affirmed on appeal.

Special Fee Shifting Statute: California’s Brown Act Attorney’s Costs/Award To Prevailing Party Reversed Because It Was Based On Void Order

Unlike Other Fee Areas, Brown Act Fee Award Must Specifically Set Forth Predicate Findings.

            We learn something just about every day by blogging. California’s Brown Act—designed to promote governmental transparency through opening meeting protections—does have a fee-shifting clause in Government Code section 549605.5, which allows an award of fees and costs where defendant has prevailed in a final determination and the court finds the action was clearly frivolous and totally lacking in merit. Interestingly enough, case law has established because such an award is akin to a sanction, it is necessary for the trial judge to specify the factors which led to a conclusion that the action was frivolous/lacking in merit. (Boyle v. City of Redondo Beach, 70 Cal.App.4^th 1109, 1121 (1999).) Most times, a fee award does not have to be supported by a statement of decision, although there are exceptions.

            In Olson v. Hornbook Community Services Dist., Case No. C084494 et al. (3d Dist. March 25, 2019) (partially published; fee discussion not published), plaintiffs did suffer judgments of dismissal in favor of District in several Brown Act cases, with the trial judge awarding it fees and costs under section 549605.5. However, because the ultimate order doing so was void (it was a subsequent, impermissible correction of judicial error) and failed to specify the bases for a costs/fee award, it had to be reversed.

In The News . . . . North Carolina Couple And City Spent $627,187.40 In Five-Year Inverse Condemnation Fight Where Damage To Their Property Was Only $2,070.35

City Could Have Settled Early On For $32,500 Or $30,000.

            Our next post explores an incredible case in North Carolina involving a North Carolina couple, the Wilkes, who sued the City of Boiling Spring Lakes in inverse condemnation for raising the level of a lake and taking away about 1,200 square feet of the couple’s property. (This case actually went to the North Carolina Supreme Court, which sided with the couple.) The amount of the property loss was pegged somewhere in the five-year litigation for $2,070.35 in damages (no typo here).

            Now, the couple is seeking substantial attorney’s fees as the prevailing party.

            Here is some more factual context. City offered to settle for $4,000, but the Wilkes wanted $32,500. Wilkes later offered to settle for $30,000, but City stuck to $4,000. Meanwhile, the litigation kept going such that the couple and City apparently have spent $627,187.90 (actually, if another couple is counted with similar claims, $699,257.75). City taxpayers have footed at least $378,878.90 to date over five years, a pretty hefty sum for a municipality with an annual $400,000 budget.

            But there is more—you guessed it, attorney’s fees shifting by the couple. They have filed a request to recoup $318,308.50 in fees from City—a request pending before Brunswick County Superior Court Judge Tripp Watson.

            Those $30-32,500 prior settlement offers should look pretty good, in retrospect, to the City. Yikes!

Section 1717: Prevailing Defendant, Not A Party To A Fees Clause But Beating Alter Ego Allegations, Not Entitled To Fee Recovery Because He Was Sued For Fraud

Section 1717 Allows For Recovery “On A Contract,” Not For Fraud.

            An individual defendant in High Sierra Properties, Inc. v. Mitchell, Case No. B280201 (2d Dist., Div. 7 March 25, 2019) (unpublished) was feeling pretty good after winning a nonsuit in which he was sued for fraud, both individually and as an alter ego of a corporate defendant. Plaintiff and corporate defendant were parties to a contract with a fees clause, but the individual defendant was not. However, he argued that, under Reynolds Metals [our Leading Case No. 5], he was entitled to prevailing party fees based on defeating the alter ego fraud allegations. The trial court disagreed, denying his fee request. The 2/7 DCA affirmed for a simple reason: individual defendant’s win on the fraud claim was not “on a contract” so as to allow for reciprocal fee recovery under Civil Code section 1717.

Costs, Deadlines: Where Matter Is Reversed On Appeal And Remanded, Clock Reset For Trial Court Costs Motion Depending On What Happens On Remand

40-Day Post-Remittitur Period Did Not Govern.

            In Mangine v. Ball, Case Nos. B285059/B286055 (2d Dist., Div. 7 March 25, 2019) (unpublished), tenant lost a case for failure to maintain her rental unit in line with building codes. The prevailing party filed for routine costs, with the trial court rejecting the tenant’s motion to tax costs and awarding $2,215 to the other side. Tenant prevailed, arguing that the costs memorandum was filed beyond the 40-day time limit from a remittitur to file for costs after there was a reversal on a prior appeal. Not so, said the 2/7 DCA panel. The reversal and remand reset a new clock to file for routine costs, which was dependent on what happened on remand. Guided by that deadline, the costs memorandum was timely filed.

Family Law: Lower Court’s Failure To Make Certain Needs-Based Findings Under Family Code Section 2030(a)(2) Required A Reversal And Remand

However, Appealing Ex-Wife Not Awarded Costs On Appeal For Failure To Direct Trial Court’s Attention To This Omission.

            Since 2010, needs-based requests for attorney’s fees by family law litigants require family law judges to make findings on whether there is a disparity in access to funds by one party and whether the responding party has the financial resources for representation by both sides. In two published decisions since then, appellate courts have stressed the mandatory nature of this legislative pronouncement. (See In re Marriage of Shimkus, 244 Cal.App.4^th 1266, 1279-1280 (2016) [4/3 DCA]; In re Marriage of Morton, 27 Cal.App.5^th 1025, 1030 (2018) [5^th Dist.].)

            What happened in Marriage of Aldridge, Case No. G055666 (4^th Dist., Div. 3 March 22, 2019) (unpublished) is that a family law judge, commendably trying to end a case, denied a section 271 sanction request (a determination which was affirmed) and awarded a small amount of needs-based fees to ex-wife under section 2030 without making any of the required findings (a determination which was reversed). The appellate court could not find this error to be harmless in nature given that wife did submit financial data showing she was unemployed. Although that required a reversal and remand, the appellate panel—in an opinion penned by Acting Presiding Justice Bedsworth—did not award appellate costs to ex-wife because she could have brought this omission to the lower court’s attention.

Prevailing Party: Where Parties Admitted That Two Contracts Had Fees Clauses, Trial Court’s Denial Of Fees Entirely On One Contract Was Error Even Though The Fees Provision Was Missing From A Document Attached To A First Amended Complaint

Lower Court Should Have Credited Parties’ Admissions, With No Invited Error Based On Record Before The Lower Court.

            If you, as a litigant, make an admission as to fee entitlement, but then try to change course based on a trial court’s different path, you may be bound by the admission in an appeal and get a reversal if the trial court fails to honor your admission.

            Arkius, Inc. v. Yeh, Case No. B278568 (2d Dist., Div. 1 March 21, 2019) (unpublished) is a case in which this happened.

            After prevailing on the merits, plaintiff moved for contractual attorney’s fees recovery under two contracts. The lower court awarded fees under one ($65,336.83 out of a requested $104,393.53), but it denied requested fees altogether on the second contract. In the paperwork underlying the fee motion, defendants admitted that there was fee entitlement under both contracts. However, at the hearing, the trial judge denied the fees on the second contract because the complaint attachment of the contract did not contain the fee provision.

            Plaintiff appealed, and the 2/1 DCA reversed. The reason was that the parties’ admission in the fee proceeding really conceded fee entitlement. This meant that there was no invited error despite the missing page because of the parties’ admission of entitlement. Aside from a remand to calculate fees owed on contract two, the amount of fees for contract one had to be relooked at because the future recovery on contract two could impact the prevailing party analysis on the whole gestalt.

Requests For Admissions, Sanctions: Defendants Properly Denied RFA Costs Of Proof Sanctions And Plaintiff Properly Denied CCP § 128.7 Request For Defense Bringing Frivolous Proof Of Costs/128.5 Sanctions Motion

Defendant Failed To Meet RFA Costs Of Proof Burden Or Segregate Out Costs For Actually Proving Truths Of Matters In A Demurrer Proceeding, While Plaintiff’s Request For 128.7 Sanctions In An Opposition Was Procedurally Infirm.

            I guess we can say that the results in Eng v. Brown, Case No. D072980 (4^th Dist., Div. 1 March 21, 2019) (unpublished) shows how meeting procedural requirements or burden of proof elements are keys in winning RFA costs-of-proof sanctions or CCP § 128.7 sanctions requests.

            In this one, the defendants prevailed after a jury trial against plaintiff, moving for costs of proof sanctions for request for admissions denials under CCP § 2033.420 and for CCP § 128.5 sanctions. In response, plaintiff asked for CCP § 128.7 sanctions against the defense for bringing frivolous motions, but only doing so through an opposition to the defense motions. The lower court denied the defense motions and never really ruled on plaintiff’s 128.7 request.

            The 4/1 DCA affirmed the defense appeal of the costs of proof sanctions denial and plaintiff’s cross-appeal of the 128.7 request denial.

            Defense Appeal. The problem with some of the costs of proof requests was that defendants failed to prove to the trial judge what they had to prove in the truth of certain facts with respect to RFA denials. They never submitted trial transcripts before the lower court so it could make the determination; simply supplying them on appeal did not help as far as showing how the lower court abused its discretion. However, the defense did win a demurrer with respect to a conversion cause of action for which certain RFA denials were made. Although expressing skepticism that CCP § 2033.420 could be used at a demurrer stage of proceedings, the appellate court assumed it could but found that the defense failed to isolate expenses relating to the denials at issue—instead, the defense sought all fees applicable in the demurrer proceeding, which did not meet its burden to segregate under section 2033.420.

            Plaintiff’s Cross-Appeal. The flaw in this cross-appeal was that Plaintiff never made a separate motion for 128.7 sanctions. Rather, plaintiff simply made a request for them in the opposition to the 2033.420/128.5 motions by the defense—a procedurally improper method of requesting 128.7 sanctions.

Costs, Requests For Admissions: In Trip And Fall Case Resolved Against Plaintiff On Summary Judgment, Trial Court Correctly Denied “Proof of Costs” Sanctions For RFA Denials And Properly Taxed Costs To Defense To Some Degree

Mathematical Error In Costs Award Corrected, But Nonparty Could Not Be Added As Joint Obligor On Costs Award.

            Sailors v. City of Fresno, Case No. F075577 (5^th Dist. March 20, 2019) (unpublished) (there are two other unpublished consolidated cases, but the results are the same) involved a plaintiff suffering severe injuries in a trip and fall at the Fresno Convention and Entertainment Center, resulting in a suit against the City of Fresno for a dangerous property condition and against the owner/property manager for general negligence. All defendants prevailed on summary judgment motions based on the theory that the premises condition was trivial in nature, with defendants seeking significant “costs of proof” sanctions under CCP § 2033.420 based on RFA denials and also seeking routine costs. They all sought a total of $305,833.56, with close to $251,000 being on the RFA costs of proof request. The lower court denied the RFA costs of proof request, but it did award $50,314.95 in routine costs against plaintiffs and in favor of defendants.

            Plaintiff lost the merits appeal, the defense lost the appeal of the RFA costs of proof denial, and plaintiff won a small mathematical reduction in the routine costs award.

            The RFA costs of proof sanctions request was correctly denied because plaintiff did prove some requests or had a reasonable basis for denying them. Although summary judgment was granted against plaintiff, this did not mean there was a total absence of evidence but simply there was no sufficient evidence to raise a triable issue of fact. That distinction was critical in affirming that the RFA costs of proof request denial was no abuse of discretion.

            On the costs award, plaintiff argued that a nonparty was a joint obligor which should be responsible for the costs award. However, the Fifth District found no authority that a nonparty to the case or appeal could be held so responsible for the costs award. With that said, there was a small mathematical error such that the costs award was reduced to $48,065.41—with appellate courts frequently making such a change so as to end the case and not lead to an unnecessary remand.

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

Result Was A $190,499 Fee Exposure.

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

Legislation: Effective January 1, 2019, California Public Records Act Amendments Clarify That Only Requesters Are Entitled To Prevailing Party Fees Unless A Request Is Frivolous

Amendments Were In Response To The Result Being Sought By Public Entity In The Brazil Case In The Bay Area.

            Before the legislative amendments which we will soon discuss, a public entity District in Newark Unified School Dist. v. Brazil, Alameda County Superior Court Case No. RG14738281 sought to recover prevailing party fees from a taxpayer requester of certain records under the California Public Records Act (PRA). District was a plaintiff obtaining a return of inadvertently produced documents. Based on the former wording of Government Code section 6259(d), District claimed it was a successful “plaintiff” and sought $449,317.60 in fees from requester Ms. Brazil.

            That apparently inspired the introduction of SB 1244 (Wieckowski) to amend the fee-shifting provision of the PRA. Governor Brown did sign the changes into law, effective January 1, 2019.

            This new law changes the term “plaintiff” in PRA’s mandatory fee-shifting provision to “requester.” The new law also declares that nothing in the fee-shifting provision shall be construed to limit a requester’s right to obtain fees and costs pursuant to section 6259(d) or pursuant to any other law. Together, these changes to the PRA protect requesters who defend the public’s right to know, regardless of the requester’s technical title in litigation, but does not retard a public entity from suing to obtain a return of inadvertently produced documents.

            Incidentally, Alameda County Superior Court Judge Jeffrey Brand did deny District’s fee motion without the benefit of the amendments, relying on the public policy of the PRA to encourage rather than chill requesters from seeking disclosure of public records. We also share that Ms. Brazil did not obtain fees based on the lower court’s determination she had only obtained interim success at the time she sought fee recovery.

Private Attorney General: City Partially Prevailing On Solar Project Against Defendant, Especially On CEQA Claim, Properly Awarded Full Fee Request Of $543,731 Under CCP § 1021.5

No Abuse Of Discretion Shown, With No Binding Requirement To Allocate Or Reduce For Some Lack Of Success.

            City of Walnut v. Mt. San Antonio Community College Dist., Case No. B287619 (2d Dist., Div. 5 March 15, 2019) (unpublished) is a situation where City petitioned to stop work on a solar energy general facility being constructed by District, receiving partial relief in the form of a “construction halt” based on the need for CEQA compliance and the need for a local grading/haul route approvals. (However, City did not win other arguments, namely, that the project violated its general plan and that other local permits were required.) City requested $543,731 in attorney’s fees as the prevailing party, with the lower court awarding it the full request. District appealed.

            The full fee award was affirmed by the 2/5 DCA. The lower court had determined that City achieved its full litigation objective, although not winning every challenge—with the CEQA victory being the overriding success. On appeal, District mainly argued that some reduction or allocation was in order based on lack of success on some challenges. The appellate court determined that CCP § 1021.5 does allow for fee compensation relating to unsuccessful efforts, citing the Sundance and Sokolow decisions. The lower court’s unwillingness to adopt District’s suggested 50% reduction was no abuse of discretion, either.

            BLOG OBSERVATION—Co-contributor Mike has been involved on some fee appeals involving this issue. He believes that some legislative tweaking of these rules is in order. Many times, CEQA petitioners bring twenty or more challenges, but prevail on only one or two. There are some federal cases holding that the fees for unsuccessful challenges should not all be borne by the governmental entity or developer who actually did win on such challenges. Although a strict mathematical test is likely not the solution, there should be a way to fashion some proportionality rules which will make CEQA petitioners more “choosey” in the way they approach their challenges at an upfront prosecution stage of the proceeding. Ex-Governor Jerry Brown said CEQA reform was part of the “Lord’s work”; if so, this is an area in need of reform.

Preemption, SLAPP: Cartwright Act’s Unilateral Fee-Shifting Provision In Favor Of Prevailing Plaintiffs Did Not Override SLAPP Fee-Shifting In Favor Of Partially Prevailing Defendants

No Implied Override Was Found Appropriate By Appellate Court.

            Plaintiff brought a Cartwright Act lawsuit against 11 defendants, some of whom were partially successful on anti-SLAPP motions—with the SLAPP statute allowing for mandatory fee awards to prevailing defendants. The rub here was that the Cartwright Act only has a unilateral fee-shifting provision in favor of prevailing plaintiffs. The trial judge decided that the Cartwright Act did not override the SLAPP fee-shifting statute, granting one defendant $23,120 in SLAPP fees which was the subject to an appeal.

            The First District, in Richmond Compassionate Care Collective v. 7 Stars Holistic Foundation, Case No. A154581 (1^st Dist., Div. 2 March 15, 2019) (published), found no basis to disturb the fee recovery given that the Cartwright Act case principally relied on by appealing plaintiff was not a SLAPP action. It could find nothing to suggest the Legislature intended an implied repeal of SLAPP fee recovery even though the underlying substantive claim arose under the Cartwright Act.

            BLOG OBSERVATION—The merits of the case involved a medical marijuana collective permit which was lost by plaintiff; we assume with the legalization of pot that more cases of this nature will arise in the future.

Lodestar, Multiplier, Private Attorney General, Special Fee Shifting Statute: Plaintiff Taxpayer Properly Awarded Fee Of $116,647.47 For Prevailing In Political Reform Act Action

60% Total Positive Multiplier And Lodestar Awards Were No Abuse Of Discretion.

            California’s Political Reform Act, codified at Government Code sections 81000 et seq., prohibits a public employee from influencing a governmental decision in which he/she has a financial interest.  There are liability provisions which allow a prosecutor or taxpayer to challenge the particular activity, with the trial judge given the discretion to award attorney’s fees to either the prevailing plaintiff or prevailing defendant. (Gov. Code, §91003(a), 91005.)

            In Holloway v. Vierra, Case No. H044505 (6^th Dist. March 14, 2019) (unpublished), a plaintiff taxpayer challenged a defendant water district director’s receipt of real estate commission benefit in a District real estate purchase under the Political Reform Act. Plaintiff earlier suffered a demurrer without leave, but later revived the action through a successful appeal generating a published opinion. Plaintiff eventually prevailed after a trial, moving for fee recovery under both Government Code section 91003(a) and California’s private attorney general statute. The trial judge awarded him $116,647.47, inclusive of a 60% positive multiplier to bring his attorney’s discounted fees to Bay Area market prices and 10% of the total being a reward for championing a difficult case.

            The Sixth District affirmed the fee award against defendant. There was fee entitlement under both statutory bases. The amount of the fees granted by the lower court was no abuse of discretion. The multiplier properly compensated plaintiff’s attorneys for discounted rates in getting to the proper lodestar amount, with the difficulty and uncertainty of the case also supporting a positive enhancement.

Fee Clause Interpretation, Section 1717: $40,642 Contractual Fee Recovery Affirmed On Appeal

Storage Facilities Had A Clear Fee Entitlement Provision, With Another Provision Not Capping Them At All—With Reasonable Fees Being The Only Limitation.

            In Enjati v. Big Bear Moving, Inc., Case No. E068332 (4^th Dist., Div. 2 Mar. 13, 2019) (unpublished), defendants were awarded contractual attorney’s fees after prevailing at trial on a storage facility dispute. Defendants sought $47,292 in fees, but they were awarded $40,642 instead. Losing plaintiff appealed, to no avail. Plaintiff could not beat the fact that there was a fee entitlement contractual provision, which was not capped by another provision which only put a “reasonable fee” limitation generally applicable under Civil Code section 1717 anyway on fee recovery. Fee award affirmed.

Civil Rights, Costs: Some 998 Fee-Shifting Costs Stricken By Court Of Appeal In Nonfrivolous FEHA Case

2/8 DCA Agreed With Arave and Huerta In Reducing Costs Award.

            In Butts v. Bd. of Trustees of Cal. State Univ., Case No. B282452 (2d Dist., Div. 8 Mar. 13, 2019) (unpublished), FEHA plaintiff lost against defendant Cal. State Universities on FEHA claims, even after a reversal and remand where the loss occurred again. The lower court awarded costs of $64,063.81 in favor of the defense, some of which were shifted when plaintiff rejected defense CCP § 998 offers. On appeal, the 2/8 DCA affirmed some of the costs, but struck $38,276.22 in costs. Reason for striking costs: they were not allowable, even under section 998, because the FEHA claims were not determined to be frivolous in nature. The trial judge relied on Holman v. Altana Pharma US, Inc., 186 Cal.App.4^th 262, 281 (2010), but the Court of Appeal found Arave v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 19 Cal.App.5th 525 (2018) and Huerta v. Kava Holdings, Inc., 29 Cal.App.5th 74, 84 (2018) more persuasive in determining that costs were not recoverable in this specific context.

POOF!, Probate: Plaintiffs’ Award Of $500,000 In Attorney Fees Necessarily Falls With Reversal And Remand Of Trial Court’s Judgment On Appeal

The Trial Court’s Inconsistencies In Its Findings And A Lack of Substantial Evidence Means A New Trial Is Required To Re-Evaluate The Claims And Defenses.

            Miranda v. Alford, Case No. G054897 (consolidated with G055167) (4^th Dist., Div. 3 March 8, 2019) (unpublished) is a case involving a man’s wife of eight years, and his two adult daughters, who have been embroiled in litigation over his estate since his passing in 2014 from an aggressive form of brain cancer.

            Daughters filed a petition challenging the validity of a restated trust and will executed by their father in 2014 that left Wife with 1/3^rd of his estate – claiming Wife had exerted undue influence and father lacked the mental capacity to understand the documents he signed in early 2014, after being moved to an assisted living facility due to diminished mental capacity stemming from the brain cancer.

            The case was tried over 15 days in May and June of 2016. After the daughters presented their case-in-chief, Wife moved for judgment in her favor on the lack of capacity and undue influence claims – pursuant to Code Civ. Proc. section 631.8. The trial court granted the motion as to the lack of capacity claim, but denied it as to the undue influence claim. Trial then continued with Wife’s defense to the undue influence claim. At the conclusion of trial, the trial court accepted closing briefs and took the matter under submission. In its tentative ruling, the trial court found the restated trust and will were invalid – based on both the lack of capacity and undue influence claims.

            In its ruling, the trial court found “[t]here was a rush by [Wife] to get estate documents in order before [Daughters] came back to town in March,” that it was “not credible that James initiated the topic of a new trust and will or transfers of his real property in March 2014,” and that [Wife] acted on her influence over her now mentally and physically weak husband over whom she had physical control over his residential care and finances in order to persuade him to provide for her on his death . . .” On the flipside, the trial court also observed that “[t]here is no credible evidence that [Wife’s] actions were primarily motivated by malice. She was his wife and the day to day responsibility was hers and she appears to have acted as a caring wife throughout this final illness,” and that “[he] may well have said he wanted to take care of [Wife] and probably did.”

            In a later hearing, Wife’s counsel pointed out the trial court’s inconsistencies between its mid-trial section 631.8 ruling in Wife’s favor on the lack of capacity claim and its tentative ruling, but the court explained it was reconsidering the 631.8 ruling. Wife’s counsel then pointed out the prejudice to Wife who did not defend against the lack of capacity claim based on the 631.8 ruling – requesting a vacate of the trial court’s findings and a new trial. The trial court denied the request, and entered a final decision changing the “lacked the necessary capacity” language from the tentative ruling to “had diminished capacity” in the final statement of decision, and further awarded daughters $500,000 in attorney fees. Wife appealed.

            In an opinion authored by Justice Goethals, the 4/3 DCA observed the following about the parties and this case: “Our record suggests they may have collectively incurred as much as $1 million in attorney fees through the end of the May 2016 trial. The intensity of the litigation does not seem to have abated in the wake of trial and, unfortunately, our resolution of the issues before use will not bring it to a close.”

            Ultimately, based on inconsistencies in the trial court’s rulings, and the lack of substantial evidence for the undue influence ruling, the 4/3 DCA reversed the final statement of decision, and remanded the matter back to the trial court for a new trial on the undue influence and lack of capacity claims. Because the judgment was reversed, Wife’s appeal of attorney fees awarded to daughters became moot as the award fell with the judgment.

Homeowner Associations, Prevailing Party, SLAPP, Substantiation Of Reasonableness Of Fees: No Abuse of Discretion In Awarding Prevailing Plaintiff $114,990.75 In Lawsuit Against Homeowners Association

Condominium Owner Plaintiff Wisely Sought Fees Only For The Claims On Which She Prevailed Against Association

            The Broadway Hollywood is a 10-story historical building on the corner of Hollywood and Vine. It was constructed in 1927 and originally used as a store. However, the building was abandoned in 1987 and remained vacant for 18 years – until it was revitalized and converted from an obsolete building to modern use. Today the Broadway Hollywood is a common interest development managed by a homeowners association – with the Davis-Stirling Act (Civ. Code section 4000) governing such developments.

            In Yu v. Broadway Hollywood Homeowners Assn., Case No. B280977 (2d Dist., Div. 1 March 7, 2019) (unpublished) Plaintiff, who owns a condominium in The Broadway Hollywood, sued the homeowners association, alleging it violated its governing documents by failing to offer valet parking (development was deficient in meeting current parking code requirements, and was granted a variance to allow for off-site parking) in her first cause of action; for interfering with homeowners’ 2013 and 2014 board elections, in which she sought election, respectively in her second and third causes of action; and for breach of fiduciary duty in her unsuccessful fourth cause of action.

            Association SLAPPed back against Plaintiff’s claims regarding interference with the election – stating it was simply exercising its protected activity of right of petition. The trial court, while finding the “thrust” of the claim arose from unprotected activities, found that Plaintiff was not likely to prevail on this issue. On appeal, the matter was remanded for further proceedings – with the trial court ultimately denying Association’s anti-SLAPP motion. While the SLAPP appeal was pending, a bench trial was held on the parking violation issue, with the trial court finding in favor of Plaintiff. Post-trial, the trial court also awarded Plaintiff attorney fees, pursuant to Civ. Code section 5975, subd. (c), of $114,990.75 (which included Plaintiff’s requested $112,549.75 after her detailed reduction for time spent on claims in which she did not prevail, plus $2,440 for time and costs incurred by Plaintiff’s attorney in connection with the fee motion). Association appealed the judgment, the order denying its anti-SLAPP motion, and the attorney fees award to Plaintiff – claiming the trial court had abused its discretion in awarding these fees.

            The 2/1 DCA disagreed with Association at every turn, and affirmed on appeal. As to the fees, they found that Plaintiff was the prevailing party as she had achieved her main litigation objectives. To that end, citing PLCM Group, Inc. v. Drexler (2000) 22 Cal.4^th 1084 [our Leading Case No. 1] and Serrano v. Priest (1977) 20 Cal.3d 25 [our Leading Case No. 3], the 2/1 DCA found that the trial court’s order took into consideration the claims on which Plaintiff did not prevail, and that nothing in the record suggested the award was arbitrary or exorbitant.

Multipliers, Private Attorney General, Special Fee Shifting Statutes: 1/3 DCA Affirms Aggregate CCP Section 1021.5 Fee Award Of $368,959 To Successful Plaintiff And Remands For Determination Of Additional Fees For Appellate Win

Plaintiff’s Work In First Action – Dismissed On The Grounds Of Mootness – Was Necessary To Establish Fee Claim At Trial And On Appeal After Win Of Essentially Identical Second Action

            In Point San Pedro Road Coalition v. County of Marin, Case No. A152144 (1^st Dist., Div. 3 March 6, 2019), Defendant County and Real Party in Interest (a rock Quarry) jointly appealed a lower court’s order awarding Plaintiff with $368,959 in attorney fees.

            Plaintiff had filed two, separate petitions against County to challenge an amendment County approved to Quarry’s mining permit – allowing Quarry to import asphalt grindings onto its site for use in the production of asphaltic concrete – and County’s later extension of the amendment. Plaintiff’s contention was that the amendment (and extension thereof) allowed for an impermissible expansion of Quarry’s nonconforming use in violation of the County zoning ordinance.

            With regard to its first petition to challenge the initial amendment, Plaintiff had participated in administrative proceedings, but had not filed an appeal with the California State Mining and Geology Board. Defendant moved for judgment on the pleadings on this basis, alleging that Plaintiff failed to exhaust its administrative remedies before seeking judicial relief. The trial court agreed and dismissed the petition. Plaintiff appealed.

            During appeal of Plaintiff’s first action, County granted Quarry an extension of the amendment. In opposition, Plaintiff pursued its administrative remedies – including an appeal with the California State Mining and Geology Board – before seeking judicial relief in its successful second petition. About two months after the trial court granted Plaintiff’s second petition and directed County to vacate the amendment extension, the 1/3 DCA reversed the trial court’s order on Plaintiff’s first action – remanding the matter to the trial court with instructions to dismiss on the grounds of mootness.

            Plaintiff then sought an aggregate award of $658,805 in attorney fees, for the work performed in both actions ($335,260 for the first action, and $191,784 for the second, plus multipliers for each), under Code Civ. Proc. section 1021.5 (which allows award of attorney fees to successful party in action which results in the enforcement of an important right affecting public interest). The trial court awarded attorney fees in the aggregate sum of $368,959 ($115,151.50 for the first action, $192,314 for the second (which included an additional $530 for one hour of oral argument), and a multiplier of 1.2 applied to both sums) – explaining that the legal work associated in the first action “was closely related to the second action and was useful to the resolution of the second action.” Defendant and Quarry appealed.

            The 1/3 DCA affirmed – relying on Serrano v. Unruh (1982) 32 Cal.3d 621 – concluding that fees were recoverable under section 1021.5 for the first action as necessary in establishing Plaintiff’s claim in the second action.

Homeowner Associations, Section 1717, Special Fee Shifting Statutes: Homeowner Plaintiffs In A Common Interest Development Dispute Over Assessment Liens Must Pay Prevailing Party Defendants $125,796.50 In Attorney Fees

Summary Judgment Hinged On Voting Rights Language In The Covenants Of The Development

            The Davis-Stirling Act (Civ. Code section 4000 et seq.) governs the creation and operation of common interest developments, and requires such developments to be managed by a homeowners association, which homeowners are generally mandated to join.

            In Bertoli v. Dennis, Case No. A150924 (1^st Dist., Div. 5 March 5, 2019) (unpublished), a Board of Governors had been elected for the homeowners association managing a common interest development consisting of improved and unimproved lots in Mendocino County. This Board of Governors had been elected by former owners of the improved lots and their daughter (who collectively owned 10 unimproved lots). Upon election of the Board, certain assessments were levied against 12 homeowners of the 6 improved lots within the development. The assessments went unpaid, and the association employed a debt collection agency that recorded assessment liens against the homeowners.  

            In contesting the validity of the assessment liens, Homeowner Plaintiffs filed an unsuccessful declaratory relief action against the debt collection agency and original owners of the development (who had elected the homeowners association board).  

            The debt collection agency based its successful motion for summary judgment on the fact it had released the liens, no longer worked for the homeowners association (because the association failed to defend or indemnify it), and were no longer parties in interest – therefore, no actual controversy existed as to them.

            Plaintiffs also lost in dueling summary judgment motions with the former owner Defendants. Each sought judicial construction of the key language in the Covenants concerning voting rights – with Plaintiffs believing the language to mean that only owners of improved lots have voting rights. The trial court, however, agreed with the former owner Defendant’s interpretation that the owners of all lots (improved or unimproved) have voting rights, and entered judgment in their favor. Additionally, the trial court granted the former owner Defendants’ opposed request for prevailing party attorney fees – awarding $125,796.50 in fees under Civil Code sections 1717 and 5975.

            Plaintiffs unsuccessfully appealed the summary judgment rulings and attorney fees award – with the 1/5 DCA affirming on appeal, finding no trial court error in granting summary judgment to Former Owner Defendants with regard to voting rights, nor to debt collection agency due to the lack of an actual controversy. The 1/5 DCA further determined that the attorney fees award to former owner Defendants was proper as the Davis-Stirling Act provided the statutory basis for fee shifting in this action.

Construction, Indemnity, Insurance: Subcontrator’s Insurer On The Hook To Indemnify It To The Tune Of $1,532,973.87 In Damages And Fees, Plus Prejudgment Interest, Following Entry Of Default Judgment Against Subcontractor

Homebuilder’s Insurer Sued Subcontractor’s Insurer After Fully Indemnifying Homebuilder In Underlying Action For Construction Defect Damages and Attorney Fees

        The Insurance Company of The State of Pennsylvania v. American Safety Indemnity Company, Case No. B283684 (2d Dist., Div. 8 March 1, 2019) (published) involves a dispute between insurers resulting from an underlying case. The underlying case involved a Homeowner Couple who sued a Homebuilder General Contractor for defective construction. Their home had been constructed on a lot that had been improperly compacted by a Grading Subcontractor under a contract with Homebuilder. The resulting settling damage to Homeowner’s home was so significant that a construction engineer concluded the entire structure was compromised and should be demolished and rebuilt at a cost of almost $1.9 million. The case went to arbitration, with Homeowner alleging “at least $2,347,592” in damages against Homebuilder. The arbitrator found in favor of Homeowner, and awarded damages of $1,026,750, attorney fees of $1,122,625, costs of $8,840.38, plus prejudgment interest of $28,417.84 – for a total recovery of $1,176,633.22.  

        Homebuilder initiated a lawsuit against Subcontractor pending the outcome of arbitration – obtaining a default judgment against Subcontractor for $1,532,973.87 (Homeowner’s arbitration award of $1,176,633.22 as damages, plus attorney fees of $356,340.65) pursuant to indemnity provisions in a contract between the parties (which also provided for attorney fees).

        Because Homebuilder’s Insurer fully indemnified it for the arbitration award to Homeowner, it then sued Subcontractor’s Insurer for recovery of the default judgment under Insurance Code section 11580 (a contractual action on the policy to satisfy a judgment up to policy limits), along with causes of action for declaratory relief, subrogation, and breach of contract – alleging Subcontractor Insurer had: (1) a duty to indemnify Subcontractor for the amount of the default judgment; and (2) policies that provided coverage for the entire amount of the default judgment. Homebuilder Insurer further alleged it was subrogated to Homebuilder’s rights to recover by virtue of having indemnified Homebuilder for the arbitration award.

        Both Insurers moved for summary judgment, with the trial court denying Subcontractor Insurer’s motion, granting Homebuilder Insurer’s motion, and entering judgment in favor of Homebuilder Insurer in the amount of $1,532,973.87 plus prejudgment interest. Subcontractor Insurer then filed a motion for a new trial, which was denied, so it filed an appeal.

        On appeal, Subcontractor Insurer made the same summary judgment arguments it had made in the lower court, but added a few additional arguments for the first time on appeal. The new arguments were not considered by the 2/8 DCA, and the remaining arguments proved to be of no avail to Subcontractor Insurer.

        In affirming the trial court’s summary judgment rulings, the 2/8 DCA determined that the underlying default judgment was valid under Code Civ. Proc. section 580 (default judgment cannot exceed amount requested in complaint) as Homebuilder clearly stated that it sought indemnity for the underlying arbitration in an amount of at least $2,347,592 – an amount significantly higher than the default judgment award. It further determined that the default judgment was indeed based upon property damage – not economic loss as argued by Subcontractor Insurer.

Homeowner Associations, Section 1717: One Homeowner Prevailing Over Another In Dispute Over Location Of A Fence Was Entitled To Fee Recovery Under Civil Code Section 1717

Dispute Was Covered Under CC&R’s Fee Provision.

            In Hunkel v. Gerhardt, Case No. H044753 (6^th Dist. March 12, 2019) (unpublished), two neighboring homeowners squared off in a dispute over the placement of a fence by one homeowner group. The defendant homeowners claimed that there was no proper board of directors making a decision on the fence dispute, a position ultimately embraced by the trial court. The lower court then awarded prevailing defendants $111,215.50 against losing plaintiffs under both Civil Code section 1717 (the former based on a CC&R fee clause) and Civil Code section 5975 (the latter being a Davis-Stirling Act fee-shifting provision).

            The Sixth District affirmed, based on the Civil Code section 1717 rationale alone.

            Plaintiff neighbors, the losing parties, did sue for declaratory relief, a classic contractual claim covered by a broadly-worded CC&R provision providing for fee entitlement even by individual homeowners.   Defendant neighbors did prevail on a liminal board authority issue, an issue which allowed fee recovery even though they obtained no affirmative relief.

Probate: Brother Properly Denied Fees In Failing To Obtain Conservatorship Over Mother

His Anger Over Another Probate Dispute Was The Driving Cause So That Claimed Conservatorship Fees Were Unreasonable.

            Probate is one of those areas where attorney’s fees recoveries are guided, overwhelming, by equitable principles. Reaume v. Reaume, Case No. G054759/G054864 (4^th Dist., Div. 3 March 12, 2019) (unpublished) well demonstrates this reality.

            There, one brother of a mother’s estate petitioned to invalidate a quitclaim deed executed by his mother to another brother, prior to her death, based on her incapacity and undue influence. The trial court rejected both theories, as well as denying one brother’s attorney’s fees incurred in unsuccessfully petitioning for a conservatorship in relation to his mother.

            Everything was affirmed on appeal, in an opinion authored by Justice Goethals. With respect to the fees award, the lower court rationally determined that the conservatorship request was an angry reaction by one brother to an estate sale by the other brother such that the fees were not tethered to any need for protection of the mother. The record showed mother’s needs were being met such that fees were not warranted for the unsuccessful conservatorship efforts.

Intellectual Property: Ninth Circuit Affirms District Judge’s Failure To Award Attorney’s Fees To Prevailing Party In Vodka Trade Dress Infringement Case

Case Was Not Exceptional As To Allow For $4 Million-Plus Fee Recovery Under Lanham Act.

            In Globefill Incorporated v. Elements Spirits, Inc., No. 17-56574 (9^th Cir. March 8, 2019) (unpublished memorandum opinion), the Ninth Circuit was involved with the appeal by a prevailing plaintiff in a vodka bottle trade dress infringement suit. Plaintiff, a company affiliated with well-known comedy actor Dan Aykroyd, won a Lanham Act jury verdict in the trade dress infringement case, although the district judge denied plaintiff’s requests for over $4 million in attorney’s fees under the Lanham Act. The Lanham Act does allow for such a discretionary fee award if the case is determined to be “exceptional” in nature under 15 U.S.C. § 1117(a). On appeal, the Ninth Circuit found the district court did not abuse its discretion in denying fees, giving substantial weight to reasonable litigation positions by the defense and considering the totality of circumstances. (Kirtsaeng v. John Wiley & Sons, Inc., 136 S. Ct. 1979, 1989 (2016) [our Leading Case No. 20].)

Fee Clause Interpretation, Settlement: No Abuse of Discretion And No Error By Trial Court In Finding The Parties’ Settlement Agreement Valid And In Awarding Attorney Fees Of $83,340.22 To Defendants For Enforcement Of Settlement Agreement

Plaintiff Hit With Attorney Fees Provision In Valid Settlement Agreement After Unsuccessfully Attempting To Back Out

        In Martello v. Buck, Case No. B285001 (2d Dist., Div. 1 March 1, 2019) (unpublished), Plaintiff Doctor sued Defendants Patient husband and his wife for defamation, assault, and intentional infliction of emotional distress after Defendants expressed dissatisfaction with Plaintiff’s billing practices on the internet. Defendants filed a cross-complaint for malicious prosecution, claiming Plaintiff had pursued litigation to collect on medical “balance billing” that Plaintiff knew to be illegal as they alleged she had been ordered by the Dept. of Managed Health Care to cease and desist from balance billing her patients. Balance billing is the practice of charging patients for the amount of the bill not covered after the insurance company pays its obligation, and patient has paid his/her deductible, copays, etc. It is illegal in California.

        In the underlying case, Plaintiff Doctor had obtained a default judgment against Defendants for the unpaid balance of the medical bill, and had attempted to collect by forcing a sale of Defendants’ home. Defendants were able to obtain relief from the default judgment and avoid sale of their home.

        The parties settled their claims against each other after months of negotiations. However, Plaintiff changed later changed her mind and refused to enter the settlement agreement in court. Afterward, following a bifurcated trial, the trial court found the settlement agreement to be a valid contract and dismissed the case pursuant to the agreement. The trial court also awarded Defendants $83,340.22 in attorney fees, pursuant to the terms of the settlement agreement, for their efforts in enforcing the agreement. Plaintiff appealed.

        In considering Plaintiff’s arguments on appeal, the 2/1 DCA concluded that the trial court had properly held a trial to determine if a valid settlement agreement existed between the parties, and had not abused its discretion by admitting the parties’ confidential settlement communications into evidence to determine whether a binding agreement existed. The 2/1 DCA then turned to Plaintiff’s argument that the trial court erred in awarding attorney fees to Defendants because the settlement agreement provided attorney fees for the enforcement of the agreement – not to establish whether there was a settlement agreement. It found the purpose of determining whether the settlement agreement was valid was to determine whether it could be enforced against Plaintiff, and that the immediate consequence of the trial was enforcement of the agreement and dismissal of the case – therefore no error. The trial court had properly awarded attorney fees to Defendants for enforcement of the settlement agreement.

Assignment, Prevailing Party, Reasonableness of Fees: No Abuse Of Discretion In Awarding Prevailing Defendant $92,155 After Reasonableness Reduction.

It Was Not Necessary For Court To Apportion Fees Between Contract-Based Causes Of Action, Claims Dismissed Before Trial, Defense of Defendant Corporation, and Defense of Corporation’s CEO Because Plaintiff’s Causes Of Action All Stemmed From A Common Factual Core, And All Claims Against CEO Were Also Alleged Against Entity.

        In Grant v. AssistMed, Inc., Case No. B289996 (2d Dist., Div. 1 March 1, 2019) (unpublished), Plaintiff filed his original complaint against former employer and its CEO alleging 5 causes of action related to his employment agreement. The trial court sustained Defendants’ joint demurrer, and Plaintiff filed a first amended complaint alleging 5 causes of action with some changes to the causes of action from the original complaint. Defendants again filed a joint demurrer which was sustained. Finally, Plaintiff filed his second amended complaint alleging 2 causes of action – breach of contract and fraud in the inducement. The trial court partially sustained Defendants’ joint demurrer to this second amended complaint – leaving Plaintiff with only the breach of contract cause of action.

        The case proceeded to bench trial against only the Corporation as the CEO died and was dismissed as a party shortly before trial. At trial, the court granted Corporation’s Code Civ. Proc. section 631.8 request for Motion for Judgment (based on evidence – or lack thereof – presented by Plaintiff). A month later, Plaintiff requested the trial court take judicial notice of the fact that Corporation had ceased business operations several months earlier, and made “an Assignment for the Benefit of Creditors to BOT Financial.” Corporation acknowledged this fact, and neither party provided any other documents related to the assignment.

        In a postjudgment motion, Corporation requested attorney fees incurred in defending against the three different iterations of Plaintiff’s complaint – basing the request on a prevailing party attorney fees provision in the employment agreement. Plaintiff argued that Corporation did not have standing to seek attorney fees in light of the Assignment, and should not recover fees incurred defending non-contract claims or fees incurred defending CEO. The trial court disagreed – noting that Plaintiff had waived arguments regarding the Assignment by waiting several months after learning of it to raise it with the court – and awarded Corporation $92,155 in attorney fees after a reasonableness reduction. Plaintiff appealed.

        The 2/1 DCA concluded that the trial court did not err in concluding Corporation had standing to collect an attorney fee award as the record was unclear as to what assets were included in the Assignment. It further concluded that Plaintiff had the opportunity to bring the assignee into the case below, but made no effort to do so after learning of the Assignment. Finally, citing Bell v. Vista Unified School Dist. (2000) 82 Cal.App.4^th 672, the 2/1 DCA concluded that all causes of action alleged by Plaintiff shared a “primary economic focus” such that the litigation did not involve “separate and distinct claims, one entitled to statutory fees and the other not.” The appellate court also concluded that the trial court did not err in determining apportionment was not required for the fees attributable to defending Corporation as opposed to its CEO as the claims at issue were made against both Defendants, and were so factually interrelated that it would have been impossible to separate the activities.

SLAPP: Partial Reversal Of Trial Court’s Denial SLAPPing Defendants’ Motion Means Defendants Will Be Entitled To Mandatory Fees On Remand

Because They Did Not Achieve A Total Win On Their SLAPP Motion, Defendants Will Be Entitled Only To Fees That Relate To The Successful Portions Of Their Motion

        A professor in California State University’s Department of Counselor Education received a report from one of his students that the then-Chair of the Department had sexually and racially harassed her. Professor was aware of such complaints regarding this then-Chair. The Professor assisted the student in bringing a formal complaint against the then-Chair under the University’s policies and procedures, and the investigator ultimately concluded that the then-Chair had sexually harassed the student. The then-Chair was allowed to remain chair of the Department for 4-5 months after conclusion of the investigation, and was later placed on paid leave.

        During the investigation, the student e-mailed the Associate Vice President of Human Resources and other University administrators regarding concern that the “very long and drawn out” investigation “has been going on for almost 8 months,” and that she was experiencing stress and anxiety from continuing to see the then-Chair at the school. The student also noted that the investigation’s report indicated that at least two professors were aware of the then-Chair’s behaviors, and that at least one had expressed these concerns to the University. The University responded by e-mail, in part stating that “it is concerning that other faculty members . . . appear to have received information regarding troubling behavior with other student(s) . . . [and that] they should have notified appropriate administrators, but they did not.”

        During the following couple of months, the University initiated three investigations against Professor, including a complaint from the then-Chair that Professor had harmed him by “inspiring students to come forward to report sexual and racial harassment by [the then-Chair].” The two other investigations involved complaints from two other faculty members that Professor had failed to make breast-feeding accommodations and had made intimidating statements.

        After exhausting administrative remedies, Professor filed this lawsuit – Laker v. Bd. of Trustees of the Cal. State Univ., Case No. H044836 (6^th District, February 28, 2019) (published) – against University and a University official for defamation and retaliation. The defamation claim stemmed from the e-mail claiming that he “knew of sexual harassment and failed to report it,” and that University officials called him a “liar” when he said that other students had complained of sexual harassment by then-Chair. Defendants SLAPPed back, but the trial court denied their motion finding that they had not met their initial burden of showing that the defamation and retaliation causes of action “arise from protected activity.” Defendants appealed.

        In an opinion authored by Justice Danner, the 6^th District affirmed in part, and reversed in part.  Defendants argued that the trial court erred in its conclusion – asserting that Professor’s defamation claim arose from the protected activity of statements made by University official and others during the investigation into then-Chair, and that Professor’s retaliation claim arose from protected activity of the investigation of the three complaints against Professor. Professor countered that the anti-SLAPP statute does not protect these activities because University acted illegally by conducting “sham” investigations, and that University’s pursuit of three investigations against him does not meet the test for claims arising from protected activity.

        With regard to Professor’s defamation cause of action, the 6^th District – under Civil Code section 47(b)(3) – concluded that Defendants met their initial burden of showing the statements/conduct underlying the allegation arose from protected activity because the they were made in “official proceedings,” were absolutely privileged and protected, and were therefore inadmissible. Because the evidence on which Professor relied to support his defamation cause of action were inadmissible, he could not demonstrate a probability of success on the merits of his defamation claim.

        Turning to the retaliation claim, the 6^th District determined the alleged retaliation arose from both protected and unprotected activity. First, it rejected Professor’s argument that the University’s activities were illegal and, therefore, not protected. In doing so, the 6^th District cited Hansen v. California Dept. of Corrections and Rehabilitation (2008) 171 Cal.App.4^th 1537, which observed that, “conduct that would otherwise be protected by the anti-SLAPP statute does not lose its coverage simply because it is alleged to have been unlawful. They then considered whether the actions underlying the retaliation claim – the three investigations – was protected activity. The 6^th District looked to Area 51 Productions, Inc. v. City of Alameda (2018) 20 Cal.App.5^th 581, which discussed the Supreme Court case of City of Montebello v. Vasquez (2016) 1 Cal.5^th 409, and noted “[t]he Vasquez opinion draws a distinction between, on the one hand, claims seeking to impose liability against a governmental entity, and, on the other, claims seeking to impose liability for the expressive activity of officials through whom a government entity must act.” The resulting conclusion was that while the activity of the 3 investigations against Professor was protected activity as to the University official, it was not as to University.

        Finally, the 6^th District determined that Defendants were entitled to attorney’s fees and costs as prevailing parties on their anti-SLAPP motion under Code Civ. Proc. section 425.16(c)(1) – remanding the issue back to the trial court to determine the amount of attorney’s fees and costs incurred in successfully striking the defamation cause of action, and the retaliation cause of action as to the University official.

Family Law: No Abuse Of Discretion For Trial Court To Issue Parentage Judgment Against Father And Award Of $3,000 In Attorney Fees To Mother, But No Substantial Evidence Supported Amount Of Income Imputed To Father

Attorney Father, Whose Wife Had Passed, Claimed He Entered Into A Strictly No Strings Attached Arrangement With College Student Mother In Exchange For Money. She Claims Otherwise.

        A child with special needs, who suffers from cerebral palsy and chronic lung problems, is at the center of this He Said/She Said in Monterey County Dept. of Child Support Services v. P.H., Case No. H043351 (6^th District, February 28, 2019) (unpublished). Petitioner Mother and Respondent Father had met online. Father claims they entered into an approximate 4-month long, no-strings-attached arrangement in exchange for his monthly payments to her of $600 per month. He claims Mother was responsible for, and confirmed she was taking, birth control, and that he was responsible for providing her with evidence that he did not have a sexually transmitted disease. She claims they had a 6-7 month long dating relationship, that she had made it clear she was looking for long-term commitment, and that he provided her $800-$900 per month to assist with her expenses. Father claims the arrangement ended over a dispute as to whether he was getting what he paid for. She claims the relationship ended and he stopped giving her money when she became pregnant.

        Nonetheless, after the child was born, Mother petitioned the court to establish paternity, for child support, and attorney fees of $5,000. Father did not object to, and repeatedly failed to comply with, the trial court’s order for genetic testing. The court then made its own paternity finding, concluding him to be the father of the child, pursuant to Family Code section 7551 (based on Father’s refusal to participate in the court-ordered genetic testing).

        With regard to child support, Father claimed he had been a stay-at-home dad while his now-deceased attorney wife worked full-time, had last received a paycheck in 1988, had since been a self-employed civil appellate attorney taking only the odd job here and there, and had only earned a gross average of $500 per month every year since 2008. Ultimately, the trial court determined it to be in the child’s best interest to consider Father’s earning capacity in lieu of actual income for determining child support. To that end, the court imputed $4,583 per month to Father based on employment ads and general salary amounts/evidence for new attorneys in the area that were presented at the hearing.

        Finally, the trial court ordered Father to pay Mother $3,000 (in monthly installments of $1,000) of the $5,000 in attorney fees she had requested pursuant to Family Code sections 2030 (needs-based) and 271 (sanctions-based for misconduct), without designating any portion of the award to either section.

        On appeal, Father challenged the Parentage Judgment – claiming the trial court did not consider the “rights of others” in determining parentage, and erred in considering only the child’s rights rather than his. The 6^th District disagreed – viewing section 7551 as a discovery sanction, and concluding that the trial court correctly considered the “rights of others,” meaning the rights of those persons who are entitled to the “probative value of the blood test evidence,” not the rights of the party or “wrongdoer” who refuses to submit to the genetic test as ordered – that the rights of the child supported entry of the Parentage Judgment based on Father’s failure to undertake the court-ordered genetic testing. The 6^th District also did not agree with Father’s argument that substantial evidence did not support the trial court’s determination that imputing income was in the child’s best interest, but agreed that substantial evidence did not support the amount of income imputed to Father. On that issue, the 6^th District found the trial court had abused its discretion, and remanded back to the trial court for further proceedings.

        As for the award of attorney’s fees, the 6^th District affirmed the trial court’s order. Although they agreed with Father, that section 2030 does not apply to actions for determination of parentage, they determined that there are similar needs-based statutes found throughout the Family Code that do apply – citing section 7605 – with the principle that the best interests of the child governs. Further, they found substantial evidence that Father had notice that Mother would seek attorney fees based on the parties’ relative financial circumstances, and that substantial evidence concerning the parties’ circumstances also supported the award.  Based on the 6th District's findings on the needs-based award, it did not address Father's arguments concerning section 271 for sanctions-based fees.

Fee Clause Interpretation: “Arising Out Of This Transaction” Language In Attorney-Client Engagement Letter Is Broad Enough To Allow Fee Recovery For Legal Malpractice And Contract Win By Former Law Firm Against Suing Former Client

Failure To Specify To Whom Fees Were Paid Was Not Fatal Either.

            In Juarez v. Law Firm of Higbee & Associates, Case No. G054016 (4^th Dist., Div. 3 Feb. 28, 2019) (unpublished), former law firm won a summary judgment against a former client who sued for legal malpractice and breach of the engagement contract after law firm represented client in a marital dissolution action. Law firm then moved for fees based upon a provision in the engagement agreement, which read as follows: ““VENUE & COSTS. Disputes arising out of this transaction shall be adjudicated in Orange County Superior Court in the State of California. Losing party to pay attorney’s fees and court costs.” The lower court awarded law firm $32,645.50 in fees, prompting an appeal by the former client.

            The Fourth District, Division 3 affirmed in an opinion authored by Justice Fybel.

            Client argued that the failure to define “transaction” meant that the fee clause did not apply and that the failure to specify to whom fees paid made the clause hopelessly ambiguous. Because contracts are to be construed as a whole and in order to not render language surplusage in nature, the 4/3 DCA determined that it was contextually clear that the losing party would pay fees to the prevailing party and that “transaction” encompassed the contractually agreed-upon services rendered under the engagement letter when wording throughout was considered.

Damages, Landlord/Tenant, Poof!: After Punitive Damages Reduction Of Almost $56 Million, Plaintiffs Walk Away With Judgment Of More Than $5 Million, But Watch It All Go POOF! On Appeal

No Segregation Between Properly And Erroneously Awarded Amounts Meant Plaintiffs Lost The Full Amounts Of Their Awards For Compensatory Damages Of $1,289,000, Punitive Damages Of $1,289,000, Attorney Fees Of $2,385,773.70 and Costs Of $56,417.72

        In Bevis v. Terrace View Partners, LP, Case No. D071849, (4^th Dist., Div. 1 February 28, 2019) (unpublished), sixty-nine current and former residents of a mobile home park sued the park’s owners on allegations that they had failed to maintain the park in “good working order and condition” which created a nuisance that – along with high space rent increases – made it difficult or impossible for park residents to sell their mobile homes. The trial court denied Plaintiffs’ motion for class certification, but the parties agreed to try the case in phases, with the first phase involving 16 residents living in 10 of the spaces.

        The jury in the first phase found the park owners liable and awarded plaintiffs $1,289,000 in compensatory damages ($759,000 in economic and $530,000 in noneconomic damages), plus $57 million in punitive damages. After the jury’s discharge, the trial court ruled on Plaintiffs’ cause of action for violation of Business and Professions Code section 17200 et seq. (unfair competition law (UCL)) - that a “catch-up” provision in Defendants’ long-term leases was in violation of the UCL in that the provision allowed for significant increases in rent at the end of a lease term. Finally, the trial court reduced the punitive damages award to match the compensatory damages - $1,289,000, and awarded attorney fees (with an enhancement to the lodestar) and costs of $2,385,773.70 and $56,417.72, respectively.

        Plaintiffs were not happy about the almost $56 million reduction to their punitive damages award. Defendants disagreed with the judgment and post-judgment orders – contending that the judgment was not supported by the evidence or on a statutory basis, and that the court had abused its discretion in its findings. Defendants further claimed that the court had abused its discretion by awarding Plaintiffs’ full recovery of attorney fees despite their failure to prevail on some of their claims, by not reducing Plaintiffs’ fee award by amounts billed for unadjudicated claims and the unsuccessful class certification motion, and the unavailability of attorney fees award for the UCL cause of action – that the court had also erred in awarding an enhancement to the lodestar amount. Plaintiffs and Defendants appealed. 

        The 4/1 DCA reversed in part, and remanded certain viable claims for new trial. However, here’s the sticky wicket – the 4/1 DCA found that the majority of the awarded compensatory damages were for Plaintiffs’ claims based on unreasonably high rent, but that absent a rent-control ordinance (which did not exist here), Defendants could not be limited to charging a lower rent than their rental agreements allowed. In reversing judgment as to these claims, the 4/1 DCA also sought to reverse the related compensatory damages. Unfortunately for Plaintiffs, the jury verdict forms did not segregate the economic damages by category – leaving the 4/1 DCA unable to resolve the ambiguity between the properly and erroneously awarded amounts. Based on the ambiguity and the 4/1 DCA’s finding that the majority of the economic damages were based on the claims related to the high rent – and, therefore, erroneously awarded – the entire award went POOF!. This reversal also necessitated reversal of the punitive damages and attorney fees award.

Poof!, Private Attorney General: Plaintiff’s Trial Court Win Of $289,908 In Attorney’s Fees And $1,963 In Costs Goes POOF! On Appeal As Plaintiff Failed To Exhaust Administrative Remedies Under The California Environmental Quality Act

Plaintiff’s Failure To Object To The Project Before The City Council Approved It Meant Plaintiff Lacked Standing To Challenge The City’s Project Approval In Court

        In Turn Down the Lights v. City of Monterey, Case Nos. H044656/H045556 (6^th Dist., February 28, 2019) (unpublished), Plaintiff petitioned for a writ of mandate on City’s determination that its project to replace high-pressure sodium lightbulbs with LED fixtures was exempt from environmental review under CEQA Guidelines section 15302 (CEQA Guidelines are found at Code of Regulations, title 14, section 15000, et seq.).

        Before beginning the project, a City Council meeting was held to discuss the project. City did not reference CEQA in the agenda for the meeting, but did reference CEQA in the supporting three-page staff report. No member of the public commented on or objected to the project when it was opened for public comment.

        After beginning the project, City received both positive and negative feedback. Some felt the lights were too bright, while police found the bright lights helpful.

        After briefing and a hearing on the matter, the trial court granted Plaintiff’s petition – finding that (1) the project was not exempt, reasoning that “new LED bulbs and light fixtures are neither a structure nor a facility, by any reasonable definition of these terms;” and (2) Plaintiff was excused from the duty to exhaust administrative remedies “because City did not provide the ‘notice required by law’” in reference to City’s lack of reference to CEQA in the City Council meeting agenda. The trial court also granted Plaintiff’s request for attorney’s fees, under Code Civ. Proc. section 1021.5, of $289,908 and $1,963 in costs. City appealed both of the trial court’s findings and – if those findings were reversed on appeal - its award of attorney’s fees and costs.

        The 6^th District, in a unanimous decision, reversed. It made no determination as to whether City’s project was exempt from environmental review as that issue became moot upon determination that Plaintiff did not have standing to bring this action. Citing Tomlinson v. County of Alameda (2012) 54 Cal.4^th 281, it found that notice of a CEQA determination was not required to be given on the meeting agenda as opposed to the accompanying staff report in this particular case (noting that this should not be interpreted as a broad conclusion that CEQA never needs to be mentioned on a meeting agenda), and that the notice in the accompanying staff report triggered Plaintiff’s requirement to exhaust administrative remedies before petitioning for writ of mandate.

Cases Under Review: SCOTUS Will Decide If USPTO Can Charge Its Internal Attorneys’ Expenses Against A Rejected Patent Applicant In 35 U.S.C. Section 145 District Court Proceeding

Case Centers Upon The Meaning Of “All The Expenses Of The Proceeding.”

    On March 4, 2019, the U.S. Supreme Court granted certiorari with respect to a Federal Circuit opinion in order to wrestle with this issue:  “Whether the phrase “[a]ll the expenses of the proceedings” in 35 U.S.C. Section 145 encompasses the personnel expenses the U.S. Patent and Trademark Office incurs when its employees, including attorneys, defend the agency in Section 145 litigation.”  (Section 145 allows for recovery of expenses—the scope of which will be decided by the Court—by the USPTO in a district court action brought by a disgruntled patent applicant after its patent application has been rejected by an examiner, regardless of the outcome.)

    The case is Iancu v. NantKwest Inc., No. 18-801 (U.S., cert. granted 3/4/19).  A divided Federal Circuit, en banc, found USPTO attorney expenses were not recoverable, as discussed in our prior July 27, 2018 post.

COSTS, INTELLECTUAL PROPERTY: SCOTUS Decides That Litigation Expenses Are Not Recoverable By Prevailing Copyright Infringement Plaintiff Unless Covered By General Federal Costs Statutes

$12.8 Million Litigation Expense Award Remanded For A Re-Do.

       In Rimini Street, Inc. v. Oracle USA, Inc., No. 17-1625 (U.S. March 4, 2019), the U.S. Supreme Court considered whether a $12.8 million litigation expense award—inclusive of expert witness, e-discovery, and jury consulting expenses—was properly found by a district court to be a justifiable award of “full costs” under 17 U.S.C. Section 505 in favor of a prevailing plaintiff in a copyright infringement suit.  The Ninth Circuit had affirmed the expense award, but SCOTUS disagreed in the unanimous opinion authored by Justice Kavanaugh. The litigation expenses had to fall within one of six narrower categories specified in 28 U.S.C. Sections 1821 and 1920 given that the Copyright Act did not expressly allow for recovery of other expenses. Since many of the “big ticket” items likely fell outside the narrower categories, a remand was in order for the district judge to scale back the award in line with SCOTUS’ opinion.

Assignment, Interpleader: Law Firm Loses Its First Priority Position For Failing To Perfect Security Interest In Assignment, And Gets The Privilege Of Paying Interpleader Plaintiff’s Attorney’s Fees To Boot

Code of Civil Procedure Section 697.590 governed this one.

        MDQ, LLC v. Gilbert, Kelly, Crowley & Jennett LLP, Case No. B283025 (2d Dist., Div. 8 February 27, 2019) (published) provides a valuable lesson in the importance of perfecting assigned security interests through the filing of a financing statement pursuant to Division 9 of the Commercial Code.

        Floyd Mutrux was one of the authors of a Tony-award winning Broadway musical, “Million Dollar Quartet.” Four limited liability companies (LLCs) held production rights or were producers of the musical. Mr. Mutrux and/or his corporation (Mutrux) was a member, manager, shareholder or owner of each of the LLCs, and held certain economic rights to be allocated profits, and receive distributions and payments from the LLCs.

        In 2012, a record company filed a lawsuit against Mutrux. A proposed statement of decision was filed by the trial court, on April 14, 2015, in favor of the record company to the tune of over $1 million. Eight days later, Mutrux and the law firm representing him in the record company litigation executed a “Notice of Assignment and Irrevocable Letter of Direction” assigning a portion of Mutrux’s economic interests in the LLCs to the law firm for the payment of legal fees until payments totaling $175,000 had been made. A few months later, on August 5, 2015, the trial court entered judgment in favor of the record company in the amount of $965,851.47. Then, on August 21, 2015, the record company received a charging order – pursuant to Corporations Code section 17705.03 – directing the LLCs “to pay any and all profits, distributions, disbursements or other payments otherwise due to [Mutrux] . . . directly to counsel for Judgment Creditor [record company], until the August 5, 2015 judgment was fully satisfied.

        You can guess what came next. The LLCs filed a complaint in interpleader alleging conflicting claims by the record company and law firm to the applicable distributions owed to Mutrux. The LLCs then deposited the distributions at issue to interpleader funds. Before trial in this matter, the trial judge released the LLCs from any and all liability to the interpleader defendants, ordered them to continue to deposit any additional distributions with the court, and ordered $11,500 payed to the LLCs from the interpleader funds for their attorney fees and costs.

        At trial, the record company argued that, pursuant to Code Civ. Proc. section 697.590, it had first priority to the distributions as the law firm had failed to perfect its security interest by filing a financing statement (UCC-1). The record company further argued that the $11,500 payment to the LLCs for attorney fees should be paid by the law firm rather than out of the interpleader funds. The trial court agreed – finding the assignment to the law firm inferior to the judgment lien recorded by the record company, and ordering the law firm to pay the LLCs attorney fees.

        The law firm appealed to no avail. The 2/8 DCA affirmed the trial court’s judgment – finding the priority of a perfected judgment lien over an unperfected security interest to be clearly established by section 697.590, and finding no abuse of discretion regarding the trial court’s order for payment of the LLCs attorney fees – to which it was entitled under Code Civ. Proc. section 386.6.

Prevailing Party, Section 1717: Plaintiff Prevails On Breach Of Contract Claims, But Is Denied Entire Attorney’s Fees Request Of $1.38 Million Due To Lack Of Attorney’s Fees Provision In Contract Under Which It Sued

Plaintiff Was Unable To Demonstrate That Later Contract With Fees Provisions Was Applicable To Earlier Contract Under Which It Sued.

        Applied General Agency, Inc. v. Chinese Community Health Plan, Case No. G055669 (4^th Dist., Div. 3 February 27, 2019) (unpublished) involved a Plaintiff insurance agency and a Defendant/Cross-Complainant insurance provider who each sued each other for breach of contract claims arising out of two separate contracts between the parties – a single-page 2002 contract which did not provide for attorney’s fees, and a 13-page 2013 contract which allowed for recovery of attorney’s fees in certain circumstances.

        Plaintiff sued for breach of contract under the 2002 contract for failure to pay commissions required under the contract. It prevailed at trial, with the jury awarding $265,168.00 of Plaintiff’s $1.3 million requested damages.

        Defendant/Cross-Complainant sued under the 2013 contract asserting causes of action against Plaintiff and its broker for quasi-contract and breach of contract for accepting commission payments without first meeting certain commission payment prerequisites contained in the 2013 contract. On the claim for quasi-contract and restitution, the jury found in favor of Plaintiff and its broker. On the claim for breach of contract, the jury found against Plaintiff but in favor of Plaintiff’s broker. Although prevailing in its breach of contract claim against Plaintiff, Defendant/Cross-Complainant was awarded nothing by the jury.

        Following trial, Plaintiff and its broker filed a motion for attorney fees of about $1.38 million. They relied on certain indemnification and arbitration provisions in the 2013 contract to support their request. Disagreeing with their position, the trial court denied their request – explaining that the indemnity provisions on which they relied applied only to third party claims, and that Plaintiff was not the prevailing party on the cross-complaint as the jury had found in favor of Defendant/Cross-Complainant even though awarding no damages.

        On appeal, the 4/3 DCA disagreed with the trial court’s assessment of the indemnity provisions – finding them broadly worded enough to encompass the direct litigation between the parties. This finding, however, did not assist Plaintiff and its broker because the 4/3 DCA also found the indemnity provisions in the 2013 contract did not apply to the 2002 contract under which Plaintiff sued. The two contracts had been executed nearly 12 years apart, the 2013 contract covered topics not addressed in the 2002 contract, and the 2013 contract made no reference to the 2002 contract – meaning there was no clear and unequivocal reference that the parties meant for the 2002 contract to be incorporated into the 2013 contract. Therefore, no basis was provided for applying Civil Code section 1717 in this matter, or for reversing the trial court’s order.

Prevailing Party, Section 1717: Lopsided Results Entitled Plaintiff Who Obtained Greater Relief To Fees As The Prevailing Party Under Civil Code Section 1717 Based On A Contractual Fees Clause In Written Construction Agreement

Trial Court’s Discretionary Decision Of No Prevailing Party Reversed On Appeal

        In Advent Companies, Inc. v. SJC II/Fourth and Haven, LLC, Case No. G055609 (4^th Dist., Div. 3 February 27, 2019) (unpublished), a general contractor Plaintiff and property owner/developer Defendant/Cross-Complainant entered into a written construction agreement for Plaintiff to build a 298-unit apartment complex in the city of Ontario. The contract contained an attorney fees provision for the prevailing party of any dispute arising out of the contract.

        Although the project started out ahead of schedule by several months, it eventually began to experience significant delays – resulting in a dispute between the parties that led to this lawsuit – with each party suing for delay-related damages under the contract.

       Pursuant to their written agreement, the parties tried their case before a referee at JAMS, which provides mediation, arbitration, and other alternative dispute resolution services. Following a five-day trial, the referee awarded Plaintiff $265,499.24 of the $370,000 it sought in damages (approximately 72%), and awarded Defendant/Cross-Complainant $18,500 of its requested $1,145,000 liquidated damages (only about 1.6%). The referee then found there to be no prevailing party – concluding that “neither party prevailed in the entirety of its claims and both Parties prevailed to some extent,” and denying award of attorney fees to either party – though amending the statement of decision to award Plaintiff its costs as the prevailing party, but still denying it attorney fees. The trial court entered the referee’s amended statement of decision, denying attorney fees to Plaintiff, as the judgment. Plaintiff appealed.

        In a decision from our local appellate court, and authored by Justice Goethals, the 4/3 DCA reversed – citing its previous ruling in de la Cuesta v. Benham (2011) 193 Cal.App.4^th 1287 [discussed in our March 30, 2011 post], and applying Silver Creek, LLC v. BlackRock Realty Advisors, Inc. (2009) 173 Cal.App.4^th 1533 [discussed in our May 21, 2009 post], as well as the practical prevailing party test under Civil Code section 1717 as articulated in Hsu v. Abbara (1995) 9 Cal.4^th 863 [our Leading Case No. 2] – and remanded for further proceedings to determine Plaintiff’s attorney fees as the prevailing party on its contract claims.

Consumer Statutes, Prevailing Party: Reversal Of Fees Awarded To Borrowers Who Obtained Temporary Restraining Order Enjoining A Non-Judicial Foreclosure Sale But Submitted Procedurally Defective Fee Request

Remand For Further Proceedings Gives Borrowers A Second Chance At Fees Allowed Under Civ. Code § 2924.12 (h) If They Choose To Bring Properly Noticed Motion

        Section 2924.12 was enacted in 2012, and is commonly known as the Homeowner Bill of Rights. It was intended to address California’s foreclosure crisis and prohibit against “dual tracking” where a lender pursues foreclosure at the same time a borrower seeks a loan modification.

        Here, Plaintiff Borrowers in Hardie v. Nationstar Mortgage LLC, Case No. F075858 (5^th Dist., February 27, 2019) (published) brought an action under section 2924.12 and prevailed in obtaining a temporary restraining order enjoining a non-judicial foreclosure sale on residential property. A few days after filing their complaint, Borrowers filed an ex parte application for a TRO along with an accompanying memorandum of points and authorities that contained a request for attorney’s fees and costs of $3,500.00. In granting the TRO, the trial court stated that it believed the requested attorney’s fees and costs under Civ. Code section 2924.12 was premature – permitted only to a party who obtains a preliminary injunction, not a TRO. However, the form order submitted by Borrowers and signed by the court ordered Defendants to pay attorney’s fees in the amount of $3,500.00.

        In a conflict between a trial court’s oral pronouncement and its written order, the written order is controlling (Brown, Winfield & Canzoneri, Inc. v. Superior Court (2010) 47 Cal.4^th 1233). So, one of three Defendants in this matter appealed the order – arguing that section 2924.12 does not permit an award of attorney’s fees to a borrower who prevails in obtaining a TRO.

        Not true, said the Fifth District – citing the reasoning provided in Monterossa v. Superior Court (2015) 237 Cal.App.4^th 747 (discussed in our June 14, 2015 post). Section 2924.12 “permits a court to award attorney’s fees to a ‘prevailing borrower,’ and deems a borrower to have prevailed if the borrower ‘obtained injunctive relief or was awarded damages pursuant to this section.’” The Monterossa court concluded that the language and purpose of the statutory scheme demonstrate ‘the Legislature intended to authorize an award of attorney fees and costs when a preliminary injunction issues.’ The Fifth District further declared that a TRO is a form of injunctive relief – that the statute does not distinguish between temporary, preliminary, and permanent relief – and, therefore, entitles Borrowers in this matter to attorney’s fees.

        However, the Fifth District did agree with Defendant – that the request for attorney’s fees was procedurally defective in that it was not brought in a properly noticed motion. On that basis, the Fifth District reversed and remanded for further proceedings – noting that the Borrowers may elect to bring a properly noticed motion.