CALIFORNIA ATTORNEY'S FEES

Prevailing Party, Special Fee Shifting Statutes: Misinterpretation Of Civil Code § 8460 Cost Pro Per Plaintiff His Mechanics’ Lien Claim And An Award Of Attorney Fees To Prevailing Defendant

Pro Per Plaintiff Timely Filed Action After Recording Mechanics’ Lien, But Sought To Recover Compensation Owed For His Work Rather Than The Sale Of The Property Subject To The Lien And Application Of The Sale Proceeds To Pay The Amount Secured By The Lien.

            In Settimi v. Hart, Case No. F079181 (5^th Dist., December 3, 2019) (unpublished), provides an interesting discussion of Civil Code § 8460(a)’s requirement that “an action to enforce a lien” be commenced within 90 days of the recording of a mechanics’ lien claim.

            Here, Plaintiff recorded a mechanics’ lien and sued Defendant dentist for unpaid compensation after working as project coordinator for 22 months on construction of a new dental building on property owned by Defendant.  The trial court dismissed Plaintiff’s claim – concluding his action was not an action to enforce the lien.  Defendant then successfully moved to have the lien released and for an award of attorney fees/costs as the prevailing party – with the trial court finding the lien had expired due to Plaintiff’s failure to file an “action to enforce a lien” within 90 days of the lien recording.

            The 5^th District affirmed – interpreting section 8460(a) to mean an action seeking judgment that directs the sale of the property subject to the lien, and the application of the sale proceeds to pay the amount secured by the lien.  However, the 5^th District, in denying Defendant’s motion for sanctions against Plaintiff for filing a frivolous appeal, found Plaintiff did not file the appeal for frivolous or delay purposes.  Rather, Plaintiff misinterpreted section 8460’s requirement, and Defendant’s attorney did not provide him explanation in their communications when he advised Plaintiff that the mechanics’ lien had expired.

            In addressing the difficulty in communicating with pro per litigants, the 5^th District cited Gamet v. Blanchard (2001) 91 Cal.App.4^th 1276 which held that: “Judges should recognize that a pro per litigant may be prone to misunderstanding court requirements or orders – that happens enough with lawyers – and take at least some care to assure their orders are plain and understandable.”  The 5^th District further added that “lawyers opposing a self-representing litigant should recognize ‘that pro per litigants often do not have an attorney’s level of knowledge about the legal system and are more prone to misunderstanding the [law’s] requirements.’ (Id. at p. 1284) Accordingly, lawyers should draft their correspondence with that in mind.”

Landlord/Tenant: Attorney Fees/Costs Award Of $895,163.42 In Favor Of Prevailing Landlord Affirmed, But $585,383.61 Damages Award Remanded For A Reduced Calculation

Despite Remand For A Recalculation Of Damages, The Fees/Costs Award Was Not So Disproportionate To The Value Of The Legal Services Provided So As To Equate To An Abuse Of Discretion.

            In Alchemy Communications v. Carlsberg Lax Center, Case No. B278068 (2d Dist., Div. 1 December 3, 2019) (unpublished), commercial Landlord and one of its Tenants got into a dispute over fees for electricity. 

            During the first few years of this Tenant’s lease, Landlord was suffering an approximate $30,000 per month deficit in electric bill reimbursements.  An investigation revealed the source to be three outdated, inefficient chillers used to provide cool air for the HVAC system that were not metered.  Tenant exclusively used two of these three chillers for its space and computer equipment.  After Landlord updated the equipment and added meters to the chillers, it sent Tenant a bill for its share of the cost of the improvements, the metered usage for the two chillers used by Tenant, and for an estimation of the electrical costs prior to the installation of the updated equipment and meters.  Tenant refused to pay – claiming Landlord was responsible for the costs of the chillers.  The trial court disagreed – awarding Landlord $585,383.61 in damages, which included estimated electricity fees for 6 months prior to the installation of the meters, and also awarded $895,163.42 in prevailing party fees/costs.

            Tenant appealed both awards.  With respect to the fees for electricity, the 2/1 DCA reversed with instruction to amend the judgment to reduce the amount of damages by the 6 months of estimated electric fees prior to the installation of the meters.  As to the fees/costs, the 2/1 DCA, while noting that there was “room for disagreement with respect to the amount of the award,” found the trial court’s decision did not amount to an abuse of discretion and affirmed.

Family Law: No Abuse Of Discretion In Trial Court’s Denial Of Need-Based Attorney Fees To Husband With Significantly Less Income Than Wife

Husband Devoted The Majority Of His Time To A Failing Cycling Apparel Business, And Although Wife Had More Income From Sources Designed For The Care Of The Couple’s Disabled Child, She Also Had More Expenses Than Husband.

            Husband in Marriage of Castia, Case No. A155088 (1^st Dist., Div. 1 December 2, 2019) (unpublished) appealed lower court’s orders terminating his spousal support and denying his request for need-based attorney fees and costs.  It was all for not.  The 1/1 DCA found no abuse of discretion in the lower court’s decisions.  Husband had not acted in good faith in trying to become self-sufficient.  Instead, he focused on his failing cycling apparel business.  Although Wife’s income was roughly 10 times that of her Husband, she was not in a superior financial position.  Her income was derived from sources established for the care of the couple’s disabled son, she was a full-time caregiver to their son, and her debt and expenses were significantly greater than Husband’s expenses.  The 1/1 DCA found the lower court had properly evaluated every single one of the more than a dozen factors under Family Code section 4320 in its order for spousal support, and had properly found financial parity between the parties existed – especially considering that the lower court had equally divided the parties’ marital assets – in its denial of attorney fees and costs.

Family Law: Denial Of Fourth Request For “Needs-Based” Appellate Fees By Ex-Wife Reversed

Res Judicata Ground For Denial Was Not Borne Out Because Earlier Three Denials Were Without Prejudice.

            Marriage of Uriostegui and Maffei, Case No. B289948 (2d Dist., Div. 7 Dec. 23, 2019) (unpublished) demonstrates that sometimes the fourth time is the charm.

            What happened in this dissolution case is that a family law commissioner, on three prior occasions, denied ex-wife’s “needs-based” request for attorney’s fees primarily to prosecute an ultimately successful appeal based on deficient financial information.  In response to a fourth request for fees, a different judge interpreted the commissioner’s third ruling as being with prejudice such that res judicata required a denial of the fourth request.

            The 2/7 DCA reversed.  Res judicata did not apply because the commissioner never indicated that the earlier denials were with prejudice, such that the request could be renewed.  Also, res judicata usually does not apply to earlier rulings in an action, unless they were appealable orders and never appealed from—not the situation in this matter.

Fee Clause Interpretation, Section 1717: Plaintiff Nonparty Manager To An LLC Operating Agreement Not Subject To Attorney’s Fees When Losing Tort Claims Against An LLC Member

Even though Plaintiff Was A Suspended Entity, Retroactive Revival Preserved Ability To Oppose Fees Motion, Which Could Still Not Be Granted If No Fee Entitlement.

           In 9450 Topanga Properties, LLC v. Alpine Consultants, LLC, Case No. B293178 (2d Dist., Div. 4 Dec. 23, 2019) (unpublished), plaintiff manager, not a party to an LLC Operating Agreement with a fees clause applicable between the LLC and members, lost fraud claims brought against a defendant member, with managers having a separate management agreement defining rights and obligations as to the LLC.  Defendant member moved for fees under the Operating Agreement fees clause, with plaintiff opposing even though it was a suspended entity.  Plaintiff later revived its status.  The lower court denied fees to defendant, prompting an appeal.

            The 2/4 DCA affirmed.  With respect to the suspension issue, the retroactive revival validated the prior fee opposition.  (Moofly Productions, LLC v. Favila, 24 Cal.App.5^th 993, 1000 (2018).)  However, given there was no fee entitlement basis, the lower court was correct to deny a meritless motion notwithstanding plaintiff’s status.  Losing plaintiff manager was not a party to the Operating Agreement, so there was no fee entitlement as a matter of substantive law.  Beyond that, the action was grounded in tort, not contractually based, an independent reason justifying denial of fees. 

In The News . . . . California Is Number Two Worst Jurisdiction For Defendants/Good For Plaintiffs In ATRA’s 2019-2020 “Judicial Hellholes” Report

Philadelphia Surpasses California This Time, With California Number One In 2018-2019.

            The American Tort Reform Association (ATRA) has come out with its 2019-2020 “Judicial Hellholes” Report.  California slipped from #1 to #2, but only because Philadelphia was rated as really bad by ATRA.

            Here is the listing of the worst venues for defendants and best for plaintiffs:  (1) Philadelphia; (2) California; (3) New York City; (4) Louisiana; (5) St. Louis, Missouri; (6) Georgia; (7) Illinois (especially Cook County); (8) Oklahoma; (9) Twin Cities, Minnesota; and (10) New Jersey.

            With respect to California, ATRA cited The Perryman Group as estimating that excessive tort litigation results in $11.6 billion in annual direct negative costs and loss of 197,776 jobs. 

            Here were the litigation areas/developments which ATRA listed as being plaintiff boons in California:  Proposition 65; Private Attorneys General Act (PAGA); expansion of public nuisance law; new data privacy law; lemon law matters; class actions (especially food and beverage); invalidation of arbitration clauses; liberal independent contractor expansion via the Dynamex test; wage/hour cases; and ADA matters. 

Interpleader: $16,000 Fee Award To Neutral Stakeholder Interpleading About $91,000 Was Appropriate

Even Though Award Larger Than Most Interpleader Fee Awards, No Abuse Of Discretion In Denying $83,473.09 Fee Request By Neutral Stakeholder Plaintiff. 

            In California Apartment Properties Ltd v. Norton, Case No. B291601 (2d Dist., Div. 2 Dec. 20, 2019) (unpublished), an investment advisor—the neutral stakeholder—filed an interpleader action against ex-wife, ex-husband’s estate, and two sons, and deposited almost $91,000 of disputed funds into the court registry.  After plaintiff was discharged from liability, it sought $83,473.09 in attorney’s fees under CCP § 386.6(a) [a statutory fee provision relating to interpleaders].  The lower court awarded $16,000 out of the requested fees, determining it was a larger fee award than usual in interpleaders but finding the matter was more complicated than the general vanilla interpleader.  The 2/2 DCA affirmed those conclusions as well as the amount of the fees given the trial judge’s conclusion that the request was exorbitant. 

Family Law: $5,000 In Needs-Based Appellate Fees To Ex-Wife Was Not A Reasonable Award

Trial Judge Failed To Focus On What Husband Had Spent As Well As Failed To Appreciate Ex-Wife Was Both A Respondent And Cross-Appellant.

            The 4/1 DCA in Marriage of Fiore & Jimenez, Case No. D074927 (4^th Dist., Div. 1 Dec. 20, 2019) (unpublished) reversed a $5,000 Family Code section 2020 “needs based” fees award to ex-wife for necessary attorney appellate services, although she had asked for $65,559.  The appellate court concluded that $5,000 was too low of an award given the financial disparity between ex-wife and ex-husband, failing to factor in that (1) husband himself had spent $30,000 on his appeal, and (2) ex-wife was not only a respondent but also a cross-appellant in dissolution appellate proceedings.  The fact that she went in pro per at some point on appeal did not require a different result given that she had substantial consultation with an appellate attorney.

Homeowner Associations, Section 1717: $220,000 Fee Award To HOA Under CC&Rs Fees Clause Was Proper

Plaintiff’s Unsuccessful Action Was Founded On CC&Rs Rights, Not Just Solely Sounding In Tort; HOA; Directors Had Sought $322,840 In Fees.

            HOA and HOA directors were awarded $220,000 in attorney’s fees against an unsuccessful plaintiff bringing a suit to challenge HOA’s policies and CC&Rs about parking and the permitting process, as well as enforcement thereof.  In Merritt v. Gandhi, Case No. H043615 (6^th Dist. Dec. 20, 2019) (unpublished), the lower court based the fees award upon Civil Code section 1717 (CC&Rs) and section 5975 (the Davis-Stirling Act fee-shifting provision).  The Sixth District affirmed based on the section 1717 fee entitlement basis.  It found that the gravamen of plaintiff’s action was founded upon rights under the CC&Rs rather than sounding only in tort.  It also found the fee award to be reasonable, given that the lower court did not award the $322,840 in fees requested by HOA and the directors. 

Civil Rights: After Appellate Court Reversed $5 Million Punitive Damages Component OF FEHA Jury Verdict And After Defendants Paid The Trial Level Fee Award, Lower Court Did Not Abuse Its Discretion in Refusing To Award Additional Fees To Plaintiff

$1,037,286 Fee Award Was Paid On Remand From $3.769 Million FEHA Compensatory Verdict.

            Plaintiff in Leggins v. Rite Aid Corp. & Thrifty Payless, Inc., Case No. B290700 (2d Dist., Div. 1 Dec. 20, 2019) (unpublished) had won a FEHA harassment/wrongful discharge verdict against defendants to the tune of $3.79 million in compensatory damages, $5 million in punitive damages, and $1,037,286 in attorney’s fees.  In an earlier appeal, defendants overturned the punitive damages award, with Rite Aid paying the previous attorney’s fees award in full on remand.  Plaintiff moved for additional fees after the earlier appeal, but the lower court refused to grant the request.  The 2/1 DCA affirmed, finding no abuse of discretion in denial of awarding any more fees given that the defendants were successful in knocking out punitive damages.  Plaintiff’s attorneys still obtained about 27% of the compensatory award, which was not a bad pay day in the appellate panel’s view. 

Fee Clause Interpretation: Settlement Agreement Fee Clause Language Did Not Apply To Postjudgment Court Order Violation Activities

Beyond That, Judgment Did Not Have A Fees Award In It.

            In Salcido v. Platinum Home Mort. Corp., Case No. B289010 (2d Dist., Div. 2 Dec. 20, 2019) (unpublished), the trial judge awarded $137,700 in attorney’s fees to a party to a settlement agreement which encompassed “enforcement” or “interpretation” of the agreement, which had been reduced to a judgment which did not contain fees award language.  The 2/2 DCA reversed, finding that the fees involved activities to enforce various court postjudgment enforcement orders, which did not fall within the “enforce/interpret” language of the fees clause.  Furthermore, the settlement agreement had been merged into and extinguished by the judgment, which fatally did not contain a fees award component.

            “Respondents do not cite any case supporting the conclusion that an agreement authorizing attorney fees for a prevailing party in an action to interpret or enforce a settlement agreement applies to an action to enforce court collection orders entered pursuant to a subsequent judgment.”

Civil Rights: Lower Court’s Denial Of Attorney’s Fees Under 42 U.S.C. § 1988 Was Reversed Because Substantial Federal Civil Rights Claims Alleged And Plaintiff Prevailed On Factually-Related Non-Civil Rights Claim Of Merit

Key Decision For Civil Rights and Municipal Attorneys To Read!

            Beames v. City of Visalia, Case No. F075855 (5^th Dist. Dec. 19, 2019) (published) is key reading for civil rights and municipal practitioners on attorney’s fees entitlement under 42 U.S.C. § 1988.

            What happened in this case is that plaintiff/petitioner obtained superior court relief from a zoning hearing officer determination on a commercial property dispute where legalization of a business and a different problem had to be resolved.  City, unfortunately, did not budge, the zoning administrative officer did not budge, but the trial court did do so by granting relief (not insubstantial in nature from a pragmatic perspective), although denying plaintiff’s request for fees under the federal civil rights statute as well as California’s private attorney general statute.

            This fee denial got reversed, in somewhat emphatic fashion. 

            Although plaintiff did not prevail on the federal civil rights claims, plaintiff did on a state law claim in no small degree after City failed to crater at all.  The problem was that the reasoning in Filipino Accountants Assn. v. State Bd. of Accountancy, 155 Cal.App.3d 1023, 1032 was really case determinative, because plaintiff did plead a substantial, non-federal civil rights claim and because plaintiff ultimately prevailed on a factually intertwined, non-civil rights claim.  Given the liberal construction in the federal civil rights arena, the other arguments—no public interest and limited success—did not resonate based on the total circumstances of record.  So, the matter was remanded to consider plaintiff’s fees under § 1988, not the private attorney general statute because this basis was forfeited on appeal.

Consumer Statutes, Prevailing Party: Abuse Of Discretion Where Trial Court Limited Attorney Fees Award Without Regard To Actual Time Expended By Plaintiffs’ Counsel In Successfully Initiating And Prosecuting Case Under The Song-Beverly Act

Trial Court Erroneously Used Plaintiffs’ Separate Net Monetary Recovery As Basis For Determining Prevailing Party Rather Than Plaintiffs’ Success In Meeting Litigation Objectives.

           Patel v. Mercedes-Benz USA, Case No. B293813 (2d Dist., Div. 4 December 17, 2019) (unpublished), includes a nice discussion on prevailing parties under the Song-Beverly Act.

            Here, a plaintiff sued Mercedes-Benz USA, LLC alleging it had leased to him a defective vehicle.  After four years of litigation, and several days of trial, Mercedes moved for nonsuit on the basis that the plaintiff had suffered no damages as the lease payments he made were reimbursed to him by his friend who was the primary driver of the vehicle.  The trial court denied the motion for nonsuit, but ordered that the friend be added to the case as a plaintiff, and the trial continued.  Plaintiffs moved for attorney fees after the jury returned its verdict against Mercedes.  Because the jury awarded damages solely to the friend who had been added as a plaintiff during the trial, the trial court awarded fees only to him – determining he was the only prevailing party as he was the only one awarded a monetary recovery by the jury.  The trial court also limited the fee award only to the fees incurred while the friend was a party to the case – from the penultimate day of trial onward. 

            Plaintiffs appealed, and the 2/4 DCA reversed – explaining that although prevailing party is not defined under Civ. Code § 1794(d), attorney fee recovery under the Song-Beverly Act is governed by the fee-shifting statute itself, rather than a rigid adherence to Code Civ. Proc. section 1032(a)(4) which defines a prevailing party as a party “with a net monetary recovery.” (Wohlgemuth v. Caterpillar Inc. (2012) 207 Cal.App.4^th 1252, 1264 – discussed in our July 25, 2012 post.)  Civ. Code § 1794(d) provides that a buyer who prevails on an action brought under the Song-Beverly Act is entitled to recover fees and costs reasonably incurred for actual time expended in the commencement and prosecution of such an action.  Here, the trial court failed to consider the actual time expended in the commencement and prosecution of this case.  Additionally, the original plaintiff in this action was a prevailing party.  Though he was not personally awarded a monetary recovery, he had met his litigation objective because the lease payments made on the defective vehicle were returned with the jury’s award of damages. 

Arbitration, Nonsignatories, Quantum Meruit, Retainer Agreements: Judgment Confirming Arbitration Award Of $1,273,765.91 In Fees Owed To Two Law Firms Plus Another $508,678.82 For Fees And Costs Incurred In The Arbitration Affirmed

Arbitration Was Properly Ordered Because The Claims Between Client And The Two Law Firms Arose Out Of The Underlying Retainer And Arbitration Agreements Client Signed With The First Law Firm.

            Client retained a law firm to represent her in an ongoing dissolution action – signing a Retainer Agreement and a binding Arbitration Agreement.  During the next 15 months, the law firm billed Client more than $4.5 million in fees and costs, which included fees/costs incurred for the first 23 days of trial (with an estimated 45 additional trial days to follow).  Around this time, the trial court denied the law firm’s request for an award of $1 million in interim attorneys’ fees to continue representing Client.  That same day, an attorney from the law firm notified Client that the law firm had dissolved and that he was forming a new law firm where the same staff would be available to continue working on her case.  He requested Client sign an acknowledgment that the new firm would represent her under the same terms as the Retainer and Arbitration Agreements from the first firm.  She refused to sign, but requested the new firm represent her.  The new firm and Client did not sign a retainer agreement.

            About a week-and-a-half later, the attorney filed a motion to withdraw as Client informed him she would not make additional payments until completion of the trial.  Client opposed the motion – stating she had “no irreconcilable differences with [the attorney]” and only disputed his demand for additional fees.  A year after the motion to withdraw was granted, the attorney, dissolved firm, and the new firm collectively filed a lawsuit against Client for breach of contract – among other causes of action – resulting from the unpaid fees.  On the same day, Client filed a lawsuit against the attorney and firms alleging breach of fiduciary duty, breach of contract, and legal malpractice – based on representations Client alleged were made to her when she agreed to retain the now dissolved law firm.

            The trial court related the two lawsuits, and attorney/firms successfully moved to compel arbitration of all claims raised in both lawsuits based on the Arbitration Agreement signed between Client and the now dissolved firm.  Several months after completion of the multi-day arbitration, the arbitrator issued written award in favor of the firms – awarding the now dissolved firm $1,037,719.16 in unpaid fees and costs, plus interest, under breach of contract; awarding the second law firm $236,046.75 for the reasonable value of its services, under the theory of quantum meruit, using the same billing rates outlined in the Retainer Agreement signed with the now dissolved firm; and awarding an additional $508,678.82 to the “prevailing party” attorney/firms for fees/costs incurred in the arbitration.  After the trial court confirmed the arbitration award, Client filed a motion for a new trial – arguing the trial court erred in granting the petition to confirm the arbitration award.  Upon denial of that motion, Client appealed.

            On appeal, Client argued that none of the claims concerning the new law firm arose out of the obligations created by the Retainer Agreement and Arbitration Agreement signed with the now dissolved firm, and that she never signed such agreements with the new firm.  The 2/3 DCA in Kolodny v. Wondries, Case No. B293985 (2d Dist., Div. 3 November 25, 2019) (unpublished) disagreed. 

            Citing Strasbourger Pearson Tulcin Wolff Ins. v. Wiz Technology, Inc. (1999) 69 Cal.App.4^th 1399, 1404, the 2/3 DCA found “an attorney-client relationship can be created by an express or implied agreement; the terms of an implied agreement ‘are manifested by conduct’.”  Here, although Client refused to sign anything with the new law firm, she requested that the attorney continue representing her through the new firm.  She never proposed different terms, nor did she ask to negotiate a different retainer agreement, when she requested the continued representation.  Further, Client pursued claims against the new law firm based on obligations originating out of the Retainer Agreement signed with the now dissolved firm.  Therefore, the trial court was correct in determining that the original Retainer and Arbitration Agreements were the source of the attorney-client relationship between Client and new firm, and that the disputes between the law firms and Client arose from those original agreements.

POOF!: $687,000 FEHA Fee Award Evaporates When FEHA Retaliation Verdict Reversed On Appeal For Lack Of Substantial Evidence

Compensatory Award Was Only $62.127.20; Reversal Was Based On A 2-1 Opinion On The Substantial Evidence Issue.

            Just to show you how reversal on appeal for insubstantial evidence can result in havoc, we point you to the result in Flores v. County of Los Angeles Probation Dept., Case No. B287382 (2d Dist., Div. 2 Dec. 13, 2019) (unpublished).  There, a plaintiff won a $62,127.20 FEHA retaliation jury verdict against defendant and also an attorney’s fees award of $687,000.  On appeal, the jury verdict was reversed as a matter of law based on a lack of substantial evidence (in a 2-1 opinion).  However, the reversal meant that the $687,000 fee award went POOF! also, much to the chagrin of plaintiff and much to the relief of Los Angeles County.

Intellectual Property: SCOTUS Decides That USPTO Cannot Recover Salaries of Legal Personnel In A Section 145 Patent Application New Civil Action

Expenses Are Not Attorney’s Fees Unless Made Clear Under Statutory Language, Which Was Not The Case.

            In Peter v. NantKwest, Inc., No. 18-801 (U.S. Dec. 11, 2019), the United States Supreme Court decided that the U.S. Patent and Trademark Office (USPTO) cannot recover attorney’s fees—salaries of its legal personnel—under 35 U.S.C. § 145, which authorized the applicant to pay “all expenses of the proceeding” in a section 145 new civil action by a patent applicant.  The American Rule applied here, with “expenses” not clearly encompassing attorney’s fees in a section 145 action.  After all, if the USPTO was not successful (which was not the case here), it would still get attorney’s fees as expenses under the government’s construction.  No way, said SCOTUS, based on American Rule and statutory interpretation principles.

Family Law: Family Code Section 271 Sanctions Of $65,000 Against Ex-Wife Affirmed On Appeal

Ex-Wife Prevented Ex-Husband’s Access To His Lawyer Such That Conservatorship Had To Be Established, And Wife Had Ability To Pay From Her Divorce Equalization Payment.

            A family law judge concluded in Marriage of Henkel, Case No. H044147 (6^th Dist. Dec. 12, 2019) (unpublished) that ex-wife should be assessed with Family Code section 271 sanctions of $65,000 to inure to the benefit of ex-husband.  After all, ex-wife had engaged in a bogus incapacitation scheme which prevented ex-husband’s lawyer from having access to him, requiring initiation of a successful conservatorship so the attorney could gain access.  The Sixth District affirmed the sanctions order, determining that the order did compensate ex-husband for some of the expenses of the conservatorship proceeding.  Although no financial need is required for a 271 sanctions order, ex-wife did have the financial wherewithal based on a divorce equalization payment ordered earlier in the dissolution matter. 

SLAPP: $44,890 Mandatory Fee Award To Defendants Affirmed On Appeal Due To Failure To Explicitly Show Error In Briefing

Defendants Had Sought $50,190.

            In Breeze v. Baer, Case Nos. D073898/D074381 (4^th Dist., Div. 1 Dec. 12, 2019) (unpublished), defendants won a SLAPP motion—affirmed on appeal—and a subsequent fee award of $44,890 (out of a requested $50,190).  The fee award was affirmed on appeal, too.  Appellant challenged the hourly rates as excessive and argued that some of defendants’ requested work was unrelated to the SLAPP motion itself.  Those contentions were rejected because appellant failed to explicitly point out citations supporting the arguments, with the appellate court not required to cull a voluminous record to make the argument for appellant.

Fee Clause Interpretation, Indemnity: Prevailing Cross-Complainant Entitled To $87,024.91 In Attorney’s Fees And Costs From Cross-Defendant In Customer Suit Defense Costs

Terms Of The Indemnity Did For Recovery Of Fees And Costs From Cross-Defendant.

            The 2/8 DCA, in ZIM American Integrated Shipping Services, Co. v. GES Logistics, Inc., Case No. B292259 (2d Dist., Div. 8 Dec. 11, 2019) (unpublished), had no trouble interpreting the contractual interpretation reached by a trial judge below.  What happened is that ZIM, which was contracted with by GES to provide shipping services at specified rates, was directed by GES to place a hold on one of GES’s customer’s cargo.  Customer sued ZIM, who in turned cross-claimed against GES based on contractual indemnity language.  The lower court awarded ZIM its legal fees incurred in the customer lawsuit based on ZIM’s cross-complaint against GES.  The fees/costs award totaled $87,024.91.  The appellate court affirmed based on clear contractual language requiring indemnification of fees/expenses incurred to ZIM “as a consequence of ZIM acting in accordance with GES’s instructions and information, or the inaccuracy of insufficiency thereof, ….”

Family Law: $2,500 Fee Award Reversed For Abuse Of Discretion

Trial Court Failed To Consider Any Actual Evidence And Based Its Decision Solely On Argument Of Counsel and Unsworn Statements.

            In Marriage of Pasco, Case No. C085721 (3d Dist., November 25, 2019) (published), husband requested an order terminating spousal support based on wife’s new job and increased monthly income.  To support his request, husband hired an expert to review financial records to determine the monthly amount wife would need to maintain the marital standard of living. 

            Wife opposed husband’s request, retained her own expert, and made a request for attorney fees.  The court set the matter for a two-day trial.  On the first day of trial, the trial court found no changed circumstances warranting an order terminating spousal support, but did so without considering any evidence.  Rather, the trial court listened to arguments from counsel, and may have reviewed wife’s trial brief and the parties’ declarations which were never entered into evidence.  In addition to denying husband’s request to terminate spousal support, the trial court also awarded wife $2,500 in attorney fees. 

            Husband appealed – arguing that the trial court abused its discretion by denying his request “without ever actually taking evidence.”  Wife opposed – arguing that the trial court acted within its discretion in refusing to hear oral evidence.

            The Third District, in disagreement with wife's contention, reversed and remanded with direction to proceed with the previously scheduled two-day trial barring any settlement or circumstances negating the need for the trial.  Citing In re Marriage of Swain (2018) 21 Cal.App.5^th 30, 836-837, the Third District concluded that while trial courts have broad discretion in deciding whether to modify a spousal support order, findings must be based on substantial evidence – something not done here.  The appellate court went on to add that the trial court was precluded from relying on the parties’ declarations which had not been admitted into evidence because a prima facie showing of changed circumstances existed based on husband’s declarations at trial (In re Marriage of Boblitt (2014) 223 Cal.App.4^th 1004, 1022), and that it was further precluded from relying on unsworn statements of either party and on argument of counsel pursuant to In re Heather H. (1988) 200 Cal.App.3d 91, 95; People v. Superior Court (Crook) (1978) 83 Cal.App.3d 335, 342; and California State Bar Rules of Professional Conduct, Rule 3.4(g).

Private Attorney General: Fourth District Reverses $53,165.95 Section 1021.5 Attorney Fees Award To Construction Company That Obtained Writ Of Mandate And Injunction Against $149,200 Assessment Imposed By Division of Labor Standards Enforcement

Dissenting Justice Found Fee Award Appropriate As Successful Writ Petition Conferred A Significant Benefit To The Public Or At Least To The Large Class Of California Public Works Contractors.

            In Hobbs Construction, Inc. v. Dept. of Industrial Relations, Case No. D074385 (4^th Dist., Div. 1 November 22, 2019) (unpublished), the Division of Labor Standards Enforcement received notice that a construction company performing park renovations for the City of Tracy may have underpaid an employee who worked on the project.  Following up on this notice, the Division requested the construction company provide its payroll records – including original time cards for all work performed on the project.  When the construction company produced payroll records without providing original time cards, the Division issued a $149,200 civil wage and penalty assessment.

            Construction company then sought administrative review of the assessment, but the Department of Industrial Relations affirmed – concluding the Division was statutorily authorized to request original time cards under Labor Code section 1776(b).  Construction company then sought a writ of mandate to vacate the administrative decision and an injunction prohibiting imposition of the assessment – arguing Labor Code section 1776 did not authorize the Division to request original time cards.  The trial court agreed – finding the Division was allowed to issue assessment under section 1776 only when a public works contractor fails to produce/make available certified copies of payroll records, and not for failure to produce original (uncertified) payroll records.  Construction company then successfully moved for an attorney fees award of $53,165.95 pursuant to Code Civ. Proc. section 1021.5. 

            The Division and Dept. of Industrial Relations appealed the fees award – arguing that the award was improper under section 1021.5 because the writ proceeding/injunction benefited the construction company and not the general public, and because the financial cost the construction company faced in filing suit did not outweigh its personal incentive for doing so as the construction company was facing an assessment of $149,200.

            A 2-1 majority of the 4/1 DCA agreed – with an 18-page dissent from Justice O’Rourke – and additionally found that the $53,165.95 in fees incurred by the construction company included prelitigation costs for the initial response to the assessment and for the administrative appeal process.  Although the 2-1 majority of the 4/1 DCA found the record insufficient in showing whether the construction company met its “heavy burden” of establishing such costs contributed to the success of the litigation, it found the prelitigation fees provided an inaccurate and inflated representation of the construction company’s financial burden in filing the writ petition. 

            In an 18-page dissent, Justice O’Rourke discussed his belief that the record supported, and the trial court had properly concluded, that construction company’s action had conferred a significant benefit to the public or at least to the large class of California public works contractors.  Further, Justice O’Rourke also agreed with the trial court’s finding that the award was appropriate in light of the necessity and financial burden of construction company’s writ procedure as construction company did not expect, nor realize, financial gains through its writ procedure that would offset the litigation costs.  Finally, Justice O’Rourke found that pre-filing costs are awardable as long as they are reasonable (Stokus v. Marsh (1990) 217 Cal.App. 3d 647, 655), and that the trial court’s implied findings should not have been disturbed.  He found the burden was on the appellants to show the trial court could not reasonably conclude pre-filing fees were appropriately awarded – not on the construction company to highlight evidence supporting the court’s implicit conclusion. 

Probate: Beneficiary Presumed To Be Missing Or Deceased Surfaces In Time To Unsuccessfully Object To Settlement Of Trust And Approval Of $295,000 In Attorney Fees To Trustee

Trustee’s Efforts Were Reasonable And Appropriate For The Benefit Of The Trust And Resulted In Restoration Of Beneficiary’s Trust Benefits.

            Father of two sons was trustee to the trust established in his late wife’s name in Polonsky v. Polonsky, Case Nos. B290480 and B293958 (2d Dist., Div. 3 November 22, 2019) (unpublished).  The trust held a 50% undivided interest in the Beverly Hills family home for the benefit of the two sons.  The father owned the other 50% of the property. 

            Father remarried sometime later and eventually executed a grant deed to convey the son’s 50% interest in the property held in the trust to himself.  To replace his sons’ interest in the property, Father formed a new trust with the intention of funding it with $747,500, which equated to 50% of the appraised value of the property at the time of transfer.  However, father only funded the new trust with $100,000 before passing away.

            With one son being deceased, the other son missing or deceased, and no trustee to administer the original trust upon Father’s passing, the former wife of the missing son stepped in and became appointed trustee.  Once appointed, she sought restoration of the 50% property interest to the trust pursuant to Probate Code section 850. 

            After two years of litigation, she reached a settlement with Father’s new wife which restored to the trust, for her former husband’s benefit, the value of his interest in the Beverly Hills property at the time Father executed the grant deed.

            The missing son surfaced and objected to the settlement agreement and trustee’s attorney fees.  However, at the hearing for approval of the settlement agreement, he admitted that he wanted the settlement agreement to be approved.  As to the attorney fees, beneficiary did not claim they were excessive.  Rather, he claimed Trustee had obtained no benefit for the trust.  The trial court approved both the settlement agreement and the attorney fees.  Beneficiary appealed.

            The 2/3 DCA found no abuse of discretion.  Beneficiary admitted he wanted the settlement agreement approved, and his argument that fees should not be awarded because Trustee had not obtained a benefit for the trust was without merit.  It was Trustee’s actions that caused beneficiary’s trust benefits to be restored.

Class Action, Substantiation Of Reasonableness Of Fees: District Judge Adequately Explained 25% Reduction In Lowered Lodestar Hours, Says The Ninth Circuit

Reasonableness Of Fee Award Confirmed By Percentage Of Recovery Cross-Check, Where Ultimate Award Was Beyond 25% Benchmark.

            Class counsel in a consumer protection class action, which was settled, sought an unopposed $350,000 fee recovery.   The district judge, after setting the reasonable hourly rate, then applied a 25% reduction to the lower lodestar determination based on some block billing, excessive time spent on law conferences that did not advance the case or the interests of the class, unreasonable travel time billed without any showing that substantive work was performed, duplicative work, unsupported identical conclusory statements of class counsel as the only explanation for why the hours requested were reasonable, and puffery in describing work performed.  The district judge ultimately awarded fees of $184,665 based on the lodestar approach, but also performed a cross-check using the percentage of recovery methodology.  This cross-check showed that much more than the 25% benchmark was being awarded through the $184,665 fee order, but that class counsel rather than the defendants should receive any class action settlement monetary excess.

            Plaintiff challenged that the district court did not adequately explain its award, but the Ninth Circuit disagreed in Johnson v. MGM Holdings, Inc., No. 18-35967 (9^th Cir. Dec. 2, 2019) (published).  No magic words are needed to explain a reduction, with the record in entirety showing an adequate explanation for the reduction.  The Ninth Circuit also was pleased that the district judge cross-checked through the percentage of recovery method, again encouraging district judges to do so when they can. 

Fee Clause Interpretation, Section 1717: Nonsignatory Prevailing Parties, Alleged To Be Alter Egos, Were Entitled To Attorney’s Fees Under Contractual Fees Clause When They Beat The Alter Ego Allegations

Reynolds Was Controlling, Not Blickman Turkus.

            What happened in Kaddu, Inc. v. Gauze, Case No. H045090 (6^th Dist. Nov. 27, 2019) (unpublished) is that a cross-complainant filed a contractually-based cross-complaint against nonsignatory cross-defendants where they were alleged to be alter egos of the primary cross-defendant.  Cross-complainant sought attorney’s fees, in addition to damages, based on the theory that the nonsignatory cross-defendants were in actuality the “Buyers” under a business purchase agreement given the alter ego theory predicate.  (Of course, the business purchase agreement had a contractual “prevailing party” fees clause.)   Nonsignatory cross-defendants successfully moved for summary judgment, but the lower court denied their request for attorney’s fees because they were not defined “buyers” under the business purchase agreement, relying on Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC, 162 Cal.App.4^th 858, (2008) in reaching its conclusion.

            The Sixth District reversed.  The reason why Blickman Turkus was distinguishable had to do with cross-complainant’s alter ego allegations, which under Reynolds Metals Co. v. Alperson, 25 Cal.3d 124, 129 (1979) [our Leading Case No. 5] would have exposed nonsignatory cross-defendants to exposure had the alter ego allegations had been proven.  They were not, such that Reynolds controlled over Blickman Turkus. 

Reviews: Trap for the Unwary: Malpractice and the Missed Attorney's Fees Issue

Co-Contributor Marc Has An Article In The Latest Issue Of The Orange County Lawyer.

         And here's the link to Marc Alexander, Trap for the Unwary: Malpractice and the Missed Attorney's Fees Issue, Orange County Lawyer, December 2019, Vol. 61, No. 12, p. 30.

Probate: No Abuse Of Discretion In Lower Court’s Denial Of Probate Code § 2642 Petition For Attorney Fees Of $64,398.75 And $4,145.31 Costs To Law Firm Representing Co-Guardians Of Minor’s Estate

Law Firm Failed To Cease Work As Instructed By One Of The Co-Guardians.

            Probate Code § 2105(c)(1) requires that “[w]here there are two guardians or conservators, both must concur to exercise a power.”  Unfortunately for the law firm seeking fees in Guardianship of the Estate of L.T., Case No. B288733 (2d Dist., Div. 5 November 22, 2019) (unpublished), it filed a legal malpractice action under authorization from only one of two co-guardians.  As a result, the malpractice action had to be withdrawn, and although the law firm eventually received temporary authorization from other co-guardian to continue work, that authorization was revoked with instruction to cease work less than two weeks later – an instruction the law firm did not follow. 

            In the meantime, co-guardians brought in other counsel to resolve the dispute they had with their former attorney/firm.  Once that dispute was resolved, the law firm that had been instructed to cease work petitioned for $64,398.75 in attorney fees and $4,145.31 in costs.  The trial court denied – with its implied finding that the $10,000 retainer fee paid to the law firm to be reasonable and adequate compensation for the work performed during the time period work was authorized by both co-guardians.  Everything else

            The 2/5 DCA affirmed – finding substantial evidence supported the trial court’s ruling – and included a nice discussion on Cal. Rules of Court, Rules 7.751 and 7.702 (interest of ward considered instead of interest of beneficiaries of estate, and the showing required for an attorney filing a petition for extraordinary compensation) and Probate Code section 2642 (attorney providing legal services for guardian may petition for fees with court determining reasonable compensation).

Fee Clause Interpretation, Section 1717: Collections Fees/Costs Provision In A Preprinted Form Which Was Incorporated In The Parties’ Bargain Provided Fee Entitlement

Fees Are Costs, And Do Not Have To Be Pled/Proven Unless In A Third Party Tort or Brandt Situation.

            Ya know, fee entitlement under a contractual fees clause can be based on very simple language set forth in a preprinted form.  In Ozuna Electric Co., Inc. v. Integrated Process Control Engineering, Inc., Case No. G056765 (4^th Dist., Div. 3 Nov. 26, 2019) (unpublished), the language was as simple as “All [c]ollection costs and [a]ttorney fees shall be added to the unpaid balance” in an exhibit which was incorporated into the overall bargain between the parties through an integration clause.  A prevailing party in a contract action was awarded fees under this contractual provision, which triggered an appeal by the opposing party.  To no avail—the clause was clear in granting fee entitlement and was integrated into the overall bargain between the parties.  With respect to the argument that fees had to be pled and proven as damages at trial, that is simply not the case because attorney’s fees are costs which do not have to go through this process, except in inapplicable third-party tort or Brandt situations.  Presiding Justice O’Leary authored the 3-0 panel opinion. 

POOF!, Probate: Four Successor Trustees’ Attorney’s Fees Of $74,824.50 Went POOF! Based Upon Failure To Show One Beneficiary Petition Was Prosecuted In Bad Faith And With No Differentiation Of Fees Between Two Petitions

Trustees Failure To File A Respondents’ Brief Sealed The Result!

            A beneficiary filing two petitions concerning two qualified personal residence trusts likely was shocked when a probate court granted $74,824.50 in attorney’s fees to four successor trustees after beneficiary voluntarily dismissed petitions after obtaining some desired results.  Beneficiary did well to appeal in Sterne v. Sterne, Case Nos. B289907/B290099 (2d Dist., Div. 2 Nov. 26, 2019) (unpublished).

            The appellate court reversed the fees award as a matter of law.  Beneficiary was successful in obtaining results via his first petition.  Trustees failed to apportion their fees between the two petitions, such that the success on the first petition meant the whole fees award had to fall.  Beyond that, the probate court imposed fees against beneficiary personally, not out of his share of the trust estates--an order beyond the equitable power of the probate court.  (Pizarro v. Reynoso, 10 Cal.App.5^th 172, 189 (2017).) 

            It also bears noting that trustees filed no Respondents’ Brief—bad idea, where the other side raises cognizable arguments for reversal on appeal. 

Prevailing Party, Probate: Appellate Court’s Reversal Of A Probate Court Asset Characterization Required A Reexamination Of Whether Trustee’s Attorney’s Fees Were Proper Because She Was Really The Prevailing Party

A Re-Do Was Ordered To Be Done By The Trial Judge In The First Instance.

            In Placencia v. Strazicich, Case No. G055631 (4^th Dist., Div. 3 Nov. 26, 2019) (published), our local Santa Ana appellate court reversed a trial judge’s characterization of bank account funds which had led the lower court to award attorney’s fees to trustee as the prevailing party.  Given that the appellate ruling might have undermined that conclusion, the trial judge had to revisit the fee entitlement issue and amount of any fees to be awarded on remand.  Justice Ikola authored the decision, which deals with an interpretation of provisions of California’s Multiple-Party Accounts Law.

Private Attorney General, Special Fee Shifting Statute: 2/8 DCA Follows Earlier 2/1 DCA Opinion In Recognizing That Successful Requesting Party/Intervenor Was Entitled To Fees In A California Public Records Act Proceeding And A Reverse-CPRA Action

End Result Was A San Diego Newspaper Garnered Almost $149,000 In Attorney’s Fees After The Judgment Modified To Allow For Additional Reply Brief Work.

           In City of Los Angeles v. Metropolitan Water District of Southern California, Case No. B272169 (2d Dist., Div. 8 Nov. 19, 2019) (published), a San Diego newspaper which successfully intervened in a reverse-California Public Records Act (CPRA) action and successfully brought its own CPRA cross-petition against the MWD.  The trial judge awarded fees under both the CPRA and California’s private attorney general statute, which was augmented on appeal to include some further reply brief work, for a total of almost $149,000 to the successful newspaper.

            The adverse parties, on appeal, challenged the fee award before the appellate court added $12,350.33 more for reply brief work.  Those challenges were unsuccessful.

            On the most significant legal issue, the 2/8 DCA agreed with the 2/1 DCA’s reasoning in Pasadena Police Officers Assn. v. City of Pasadena, 22 Cal.App.5^th 147, 157 (2018) [reviewed in our April 15, 2018 post], which recognized that a successful requesting/intervening party was eligible for CPRA fees on a CPRA cross-petition and for CCP § 1021.5 attorney’s fees in the reverse-CPRA action.

            The appellate court then went on to analyze why the successful newspaper did vindicate important public rights relating to how public utilities were reimbursing for turf programs when the drought was at an extreme in earlier years.  Newspaper did obtain disclosure of certain public agency records on water consumers, such that it did vindicate the “public’s right to know how the government uses public money” (including claims that the two public agencies involved in the primary CPRA proceedings were colluding with each other to prevent the disclosure of public information on various grounds). 

Judgment Enforcement: Fees/Costs Incurred In Successfully Adding Judgment Debtors, Including Appellate Work To Obtain That Successful Outcome, Were Prejudgment Costs Not Governed By EJL Procedures Or Deadlines

Award Of $80,000 Each In Fees To Two Successful Plaintiffs Remanded For A Re-Do.

            In Highland Springs Conference and Training Center v. City of Banning, Case No. E069248 (4^th Dist., Div. 2 Nov. 21, 2019) (published), two CEQA petitioners obtained a successful judgment relating to an EIR certification, obtaining significant attorney’s fees under the private attorney general statute, each, against the main real party in interest.  After real party lost certain property to a foreclosure and exhausted around $14 million in capital, petitioners filed a motion under CCP § 187 to add a new party as a judgment debtor to the judgment.  The trial judge denied the motion based on a lack of diligence, but the appellate court reversed in a prior decision (see 244 Cal.App.4^th 267, 273, 282-289 (2016)).  Petitioners then sought attorney’s fees connected with the 187 motion and attendant appellate work reversing the earlier denial order; petitioners sought fees over $1,274,000 in fees based on the private attorney general statute (which included a 1.5 multiplier).  The trial court refused to award fees for the 187/appellate work, primarily determining that the Enforcement of Judgments Law (EJL) postjudgment procedures/limitations applied.  The trial judge awarded each petitioner $80,000 in fees, rejecting the lodestar request, under CCP § 11021.5.

            The 4/2 DCA reversed and remanded.

            The appellate court concluded that prejudgment costs procedures, not EJL directives, applied to petitioners’ fee work for ultimately obtaining the 187 addition of judgment debtor order (inclusive of appellate work in the prior appeal).  They reached this conclusion even though petitioners had caused confusion by indicating they were making requests under the EJL, with the appellate court piercing to the substance and determining instead that prejudgment costs were at stake.  With respect to the remand, the appellate court did not voice any definitive guidance, but did remind the trial judge that private attorney general fee awards should generally be fully compensatory in nature.  This decision has a very good discussion of the differences between prejudgment and EJL postjudgment costs procedures/ limitations (especially parsing through the germane California Rules of Court).

Prevailing Party, Section 1717: Losing Plaintiffs’ Strained Interpretation of Prevailing Party Language In Fees Clause Did Not Disturb Trial Judge’s Award Of Fees And Costs To Prevailing Defendants

$40,202 Was The Fees/Costs Award In Easement Dispute, Reduced From The Requested $79,675 In Fees.

            Defendants/cross-complainants in an easement dispute won on every issue except for cross-complainants” claim that plaintiffs owed them money for utilities, garnering $1,350 for damages for injury to their livestock.  Even though there was no unqualified winner, the trial court in its discretion deemed defendants the prevailing party, awarding $40,000 in attorney’s fees and $202 in costs (reduced from the requested $79,675 in fees).

            The appellate court affirmed in Yerman v. Parker, Case No. C080254 (3d Dist. Nov. 20, 2019) (unpublished).

            There was a “prevailing party” fees clause in the easement agreement, with plaintiffs advancing a rather convoluted argument that they were not the nonprevailing party in light of contractual language saying fees and costs could be recovered from “the nonprevailing party.”  Aside from not accepting this strained interpretation, the Third District concluded that plaintiff’s argument would contravene the “prevailing party” definition in Civil Code section 1717, something the parties cannot do contractually.  (Walker v. Ticor Title Co. of California, 204 Cal.App.4^th 363, 372-373 (2012).) 

            At the outset, there was an argument that plaintiffs’ appeal of the fees award was untimely, but that did not succeed because plaintiff did appeal from the “fixed” fee order—not having to appeal from an earlier judgment which left fees blank and to be determined at a later juncture.

            BLOG OBSERVATION—The lower court venue was none other than Calaveras County, the site of Mark Twain’s tale about the notorious jumping frog!

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

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

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

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

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

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

POOF!: Plaintiff Prevailing On Summary Adjudication Has His Contractual Damages Award, Interest, Costs And Contractual Attorney’s Fees Award Go POOF! On Appeal

The Trial Court Erred In Granting Plaintiff’s Motion For Summary Adjudication On Breach Of Contract Claim Because Defendants Had Established A Triable Issue Of Fact, And That Error Prejudiced The Subsequent Bench Trial On Other Claims.

            In Groth v. Gilad, Case Nos. A151497 and A150493 (1^st Dist., Div. 5 November 18, 2019) (unpublished), plaintiff and other individuals signed a Partnership Engagement Letter that provided each person signing would contribute capital equally for the purpose of engaging in a cigar club.  Shortly thereafter, plaintiff agreed to fund the purchase of real property for the club – depositing $735,000 into a business account belonging to one of the defendants.  That defendant then transferred the funds into an LLC account – with the LLC having been formed to own the real property.  The cigar club (which has since failed) was operated under a California corporation incorporated about a month later.

            Approximately four months after depositing the $735,000, plaintiff requested a written promissory note for $610,001 showing the corporation as the borrower.  The promissory note was signed by the corporation’s Secretary and CFO – both of whom had signed the Partnership Engagement Letter with plaintiff – on behalf of the corporation.

            After receiving only one payment from the LLC of $10,001, plaintiff received no additional payments.  He sued the Secretary and CFO who had signed the promissory note, and one corporate entity, alleging breach of contract, negligence, and breach of fiduciary duty.  His motion for summary adjudication on the breach of contract claim was granted and, after a bench trial on other issues, the trial court issued judgment against all defendants for $400,000 in contract damages and interest, plus costs and contractual attorney’s fees.

            On appeal, defendants argued that the trial court erred in granting summary adjudication on the breach of contract claim because defendants had established triable issues of fact that brought into question whether the parties agreed that the partnership, as opposed to solely the corporation or the LLC, would be obligated under the note.  They also argued that this erroneous ruling had prejudiced the subsequent bench trial on other claims.  The 1/5 DCA agreed and reversed the judgment and post-judgment fees order – finding the promissory note to be ambiguous with competing reasonable inferences regarding liability.  Because triable issues of material fact exist as to the breach of contract, summary adjudication was precluded.  With that, plaintiff's damages, interest, costs and fees awards went POOF! (at least for now).

Appealability, Homeowner Associations, Prevailing Party, Special Fee Shifting Statutes: Second District Affirms $67,458.07 Attorneys’ Fees Awarded To Prevailing Defendant On Remand

Gravamen of Plaintiffs’ Action Was Based On Governing CC&Rs Which Made Defendant Prevailing Party For Attorneys’ Fees Purposes When She Defeated The Action Through Demurrers And Plaintiffs’ Voluntary Dismissal.

            We first discussed our next case – Durack v. Wang, Case No. B293597 (2d Dist., Div. 7 November 18, 2019) (unpublished) – in a September 27, 2017 post.  In that appeal, Wang, who prevailed on demurrer against most of plaintiffs’ causes of action – with the remaining causes of action voluntarily dismissed by plaintiffs – challenged the trial court’s denial of her motion for attorneys’ fees. There, the 2/7 DCA found Wang to be the prevailing party under Civ. Code section 5975(c) [the Davis-Stirling Act] as Plaintiffs’ complaint sought to enforce CC&Rs.  With that, the 2/7 DCA reversed and remanded with direction to the lower court to enter a fee award to Wang with proper apportionment.

            On remand, Wang filed a peremptory challenge under Code Civ. Proc. § 170.6 to the trial judge who determined the first attorneys’ fees motion.  After the case was reassigned to a different department, Wang filed her second motion for attorneys’ fees seeking $72,158.57.  Plaintiffs opposed – seeking denial of Wang’s motion in its entirety – with the trial court finding the request to be “patently improper in light of the Court of Appeal’s direction to grant Wang’s motion for attorneys’ fees.”  After some apportionment and reductions, the trial court awarded Wang $67,458.07.

            Plaintiffs were not deterred.  They marched right back to the 2/7 DCA with a slew of failing arguments to support their claim that the trial court erred in awarding the fees as directed on remand.

            First, they argued the peremptory challenge should not have been accepted.  However, the proper procedure for such a review is a petition for writ of mandate.  Next, they argued the trial court failed to properly assess fee and non-fee claims.  This was without merit as the trial court had conducted an evaluation of the legal work Wang’s attorneys performed and appropriately reduced and apportioned for time spent litigating causes of action that did not allow Wang to recover fees. 

            Plaintiffs also focused two of their arguments on Wang’s specific factual defense – claiming she was not entitled to fees because she did not prevail on that specific defense, and because that defense was a lie.  Neither argument gained any traction because Civ. Code section 5975(c) did not require Wang to prevail on every issue or defense, just to achieve her main litigation objective – which she did by defeating all of the causes of action against her.  As to her specific defense being a lie, there was no “lie.”  The parties never resolved/litigated that issue with plaintiffs dismissing their complaint against Wang.

            Finally, plaintiffs attacked the fees charged by Wang’s counsel – claiming her counsel deferred work to a law clerk and submitted improper block billing entries to support the fees request.  To these arguments, the 2/7 DCA found the trial court had correctly ruled that legal assistant and support staff time is routinely included in fee awards – that, if anything, work delegated to the law clerk only served to reduce the amount of an otherwise reasonable fee award.  As to the examples plaintiffs cited as “block billing,” the 2/7 DCA came to no such conclusion.  Rather, they found them to be descriptive entries showing the amount of time spent on each specific task.  One exception to this was the 85.6 appellate work hours Wang’s counsel included in his declaration.  Although the declaration did not include detail, the 2/7 DCA found the significance of detailed time entries reduced for appellate work – with only a few kinds of tasks for which an appellate lawyer bills.  In this case, the amount of time cited was very reasonable given the filing of both an opening and reply brief, appearance for oral argument, and successful reversal of the trial court’s fee denial.

Appealability, Lis Pendens: The Sixth District Expresses No Opinion As To Defeated Plaintiff’s Challenge To Lis Pendens Expungement And Attorneys’ Fees Order

Plaintiff Appealed Defendants’ Successful Demurrer Without Leave To Her First Amended Complaint, But Failed To Appeal The Later Issued Expungement and Fees Order.

            Bryer v. J.P. Morgan Chase, N.A., Case No. H045407 (6^th Dist., November 18, 2019) (unpublished), provides a reminder that appeal of an underlying judgment generally does not include matters later decided – such as orders on attorneys’ fees motions.

            Here, plaintiff filed a lawsuit to prevent foreclosure of her residence.  The lower court sustained defendants’ demurrers to plaintiff’s first amended complaint without leave to amend.  Plaintiff appealed.

            Months later, the trial court granted defendants’ motion to expunge the lis pendens plaintiff had recorded and also awarded attorneys’ fees for the expungement motion.

            On appeal, plaintiff challenged the lower court’s order sustaining the demurrers without leave to amend, but also challenged the awarded attorneys’ fees and expungement order.  Unfortunately for plaintiff, she failed to file a notice of appeal for the later and separate attorneys’ fees and expungement order.  

            Following the principles set forth in Polster, Inc. v. Swing (1985) 164 Cal.App.3d 427, 436 (limiting scope of jurisdiction on appeal to the notice of appeal and judgment/order appealed from) and Soldate v. Fidelity Nat. Financial, Inc. (1998) 62 Cal.App.4^th 1069, 1073 (matters occurring after a judgment are rendered irrelevant on appeal), the Sixth District “express[ed] no opinion regarding the merits of plaintiff’s challenge” to the expungement and attorneys’ fees order. 

 

Family Law: Ex-Wife’s Needs Based Support Fee Request Properly Denied

She Had More Assets/Wealth After Dissolutions Rulings And Future Payments By Husband Which Meant She Should Pay Her Attorneys When She Recoups!

            Ex-wife was probably not happy that her Family Code sections 2030/2032 “needs based” attorney’s fees request was denied again in Marriage of Restaino, Case No. G054778 (4^th Dist., Div. 3 Nov. 14, 2019) (unpublished).  However, her appeal of this fee denial did not change the result.

            The 4/3 DCA, in an opinion authored by Justice Ikola, found there was no abuse of discretion based on family law judge’s findings that (1) ex-wife had more assets/wealth than ex-husband after rulings in the dissolution matter, and (2) both ex-spouses had the ability to pay their own attorneys.  Ex-wife argued that the needs-based award was warranted because ex-husband owed her $650,000; however, the appellate court found this did not resonate because ex-wife could simply pay her attorneys once she collected from ex-husband—no foul here!

            BLOG OBSERVATION—A footnote in the opinion may be even more telling.  Wife spent $1.2 million in the divorce, and husband spent $900,000, with the family law judge observing that much of this occurred because ex-wife over-litigated the case. 

Costs, Special Fee Shifting Statute: Venue Transfer Order—Under Penalty Of Dismissal—Ran From Service Of Minute Order, With Plaintiff’s Noncompliance Leading To A Reversal

Failure To Dismiss Case Lead To A Real Reversal Of Fortune!

           In Southwestern Law School v. Benson, Case No. BV032895 (L.A. County Superior Ct. App. Div. Oct. 25, 2019, posted Nov. 14, 2019) (published), a very narrow issue was presented on appeal, with dire consequences for the plaintiff.  The issue was whether a plaintiff which did not pay for costs and expenses, including attorney’s fees, under a venue transfer order under CCP § 399(a), was subject to dismissal based on receiving a minute order on the venue transfer order conditions.  The answer to the issue was “yes,” but with repercussions being of a fairly dramatic fashion.  Plaintiff did not pay the transfer costs/expenses, the defense dismissal order was denied, and—on appeal—this failure to dismiss was found erroneous because the minute order provided notice of what plaintiff should have done (but did not do).  As a result, a civil judgment of $28,341.10 (inclusive of $2,500 attorney’s fees and $95 in costs) in plaintiff’s favor evaporated on appeal, all based on failure to pay a couple of thousands of dollars in venue transfer fees.

Intellectual Property: E.D. Michigan Federal Magistrate Judge Explores The Exceptional Circumstances Under Which A Prevailing Party Can Be Awarded Attorney’s Fees By A District Court Based On PTAB IPR Successful Work

Exceptionality Standard Presents A High Obstacle For PTAB Fee Recovery.

            In American Vehicular Sciences LLC v. Autoliv Inc., 2019 U.S. Dist. LEXIS 164343 (E.D. Mich. Aug. 30, 2019), report and recommendation adopted in 2019 U.S. Dist. LEXIS 162914 (E.D. Mich. Sept. 24, 2019), U.S. Magistrate Judge Anthony P. Patti explored what circumstances might warrant a district court to award attorney’s to prevailing parties for Patent Trial and Appeal Board (PTAB)-related work which was successful in invalidating several patents after inter parties review (IPR) before the PTAB.

            What happened here is that a plaintiff sued numerous defendants for patent infringement, with the district court case eventually stayed during the pendency of the IPR process based on IPR petitions filed by several defendants.  The IPR petitions resulted in invalidity determinations for several patents, with the prevailing parties then turning to the federal magistrate for an award of discretionary attorney’s fees relating to PTAB work based on the case being “exceptional” in nature under the Octane standard.

            Magistrate Judge Patti recognized that “exceptional” cases can include (1) when PTAB proceedings play a central role in the federal case outcome, or (2) there was a stay of the related district court case, such that the PTAB proceedings effectively took the place of the federal court (with this second situation being present).  However, he still determined that the circumstances did not support a fee award in a report and recommendation to the district judge, which was adopted, based on the following factors:  (1) the jurist did not see any bad faith arguments being presented before the PTAB; (2) the validity challenges had not been found persuasive earlier by the USPTO examining corps; and (3) the PTAB refused to sanction the losing party, although it has power to do so.

            For an excellent article on this issue and the magistrate judge’s decision, see a November 9, 2019 post on the Finnegan & Henderson website. 

Family Law: $10,000 2030 Award To Ex-Wife With A Big Disparity In Income/Assets Affirmed On Appeal As Against Ex-Husband

Appellate Court Implored That Appealing Ex-Husband Get Beyond Past Dissolution Disputes.

            Marriage of Dodson, Case No. E070719 (4^th Dist., Div. 2 Nov. 12, 2019) (unpublished) is an interesting acrimonious dissolution case where husband and wife went back and forth in a marriage where only a finite of assets/income were at issue.  (Sound familiar?)

            In the end, the trial court awarded ex-wife $10,000 in “needs-based” fees against ex-husband, rebuffing multiple requests for Family Code section 271 sanctions by both sides.  Ex-husband appealed this award, even though he moved on and has an apparent new finance.   This was no abuse of discretion in light of the record showing that husband had over 4 times earning taxable income over wife’s disability income. 

            Here is the telling ending observation by the Court of Appeal:  “We are hopeful that [ex-husband/appellant] will find a way to move past this very difficult and stressful period in his life and find a happier and brighter future for himself, his fiancé, and his adult children.”