CALIFORNIA ATTORNEY'S FEES

Choice Of Law: Prevailing Texas Defendant Sued In California For Dispute Centered In Texas Did Not Meet Its Burden To Show Civil Code Section 1717 Fee Denial Was Incorrect

Defendant Did Not Satisfy Nedlloyd Interest Analysis To Swing The Scales Back To California.

            This next case may have limited utility because its result really hinged on defendant’s failure to meet its burden of proof under the appropriate choice-of-law analysis.

            In River Oaks Self-Storage TIC 4, LP v. River Oaks Storage, LLC, Case No. A155418 (1^st Dist., Div.2 Sept. 12, 2019) (unpublished), defendant—a Texas LLC alleged to have a business presence in California—was sued by three out-of-state entities involving disputes under a Tenant In Common Agreement and LLC Agreement relating to a self-storage property facility in Texas.  Defendant defeated plaintiffs’ TIC Agreement claims on demurrer, and plaintiffs voluntarily dismissed the LLC Agreement claims on the eve of a defense summary judgment motion.  Defendant then moved for $201,003 in fees as the prevailing party under the two written agreements, a request denied in entirety by the lower court.

            The 1/2 DCA affirmed on narrow grounds.

            Defendant first relied on a Texas statute which only unilaterally applies to prevailing plaintiffs, but argued it was reciprocal based on California Civil Code section 1717, and then the TIC Agreement which only applied to tenants in common.  (The trial judge determined that defendant was not a tenant in common, so the TIC Agreement theory did not work.)

            The appellate court determined that defendant had not made enough of a nuanced argument to show whether Texas or California had a greater interest in the dispute so as to justify fees, which means the fee denial order had to be affirmed.  It did discuss the conflicting ABF Capital decisions (see our Choice of Law category for a discussion of these two Second District decisions), but simply determined that defendant did not show why Texas law rather than California reciprocity principles should apply given the competing interests of both states.  That result was likely salted by the fact that the dispute involved Texas property. 

Family Law: $10,000 Needs-Based Fee Award To Wife Reversed Because Family Court Failed To Make Mandatory Findings Required Under Family Code Sections 2030/2032

Fifth District’s Morton Decision Found Persuasive To The 4/1 DCA.

            The Fourth District, Division 1 in Marriage of Bustillo, Case No. D075369 (4^th Dist., Div. 1 Sept. 12, 2019) (unpublished) reversed a $10,000 “needs-based” fee award to ex-wife under Family Code section 2030 and 2032 for a multiday support hearing.  The reason was that the family law judge failed to make mandatory findings for needs-based awards as detailed in In re Marriage of Morton, 27 Cal.App.5^th 1025, 1049-1054 (2018), a Fifth District decision which the 4/1 DCA found to be well-reasoned and persuasive.  Morton is must reading for family law practitioners, in our view, when asking for pendente lite fee awards of this nature.

Sanctions: Under 2014 Version Of CCP § 128.5 (Objective Standard Only), Trial Judge Correctly Imposed Sanctions Against Plaintiff For Filing A Complaint Without Evidentiary Support

Sanctions Order Was $27,253.51 In Fees/Costs, Out Of A Requested $36,304.11.

            We have seen an uptick in appeals involving CCP § 128.5 in the last several months, with California’s intermediate appellate courts dealing with the differences in the 2014 and 2017 versions of the statute.  In Avalanche Funding, LLC v. Swickard, Case No. C083954 (3d Dist. Sept. 12, 2019) (unpublished), the Third District was dealing with the 2014 version of section 128.5.

            The case involved an underlying dispute over grazing rights on rangeland in Lassen County, with the Third District (as the Fifth and the Second, Division 6) frequently addressing cases in more rural, agricultural areas. 

            In this one, the trial judge wanted to see evidence that a reservation of grazing rights was in plaintiff’s chain of title, sustaining a demurrer with leave so as to inspire plaintiff to request a dismissal of its complaint without prejudice eight days later.  Defendants moved for section 128.5 sanctions against plaintiff, requesting $36,304.11 in attorney’s fees and costs.  The trial judge granted the motion, awarding instead $27,253.51 ($25,000 in fees and the remainder in costs).

            The Third District affirmed.  The 2014 version only required an objective standard (rather than both objective and subjective), but plaintiff’s complaint was filed without evidentiary basis to claim defendant had no grazing rights reservation given that the right to pasture cattle on land belonging to another is a profit a prendre of indefinite duration.  That plaintiff dismissed its action without prejudice was fine, with nothing demonstrating the trial judge was punishing plaintiff for exercise of that right.  The amount of the sanctions was no abuse of discretion, given that the trial judge did reduce the request by defendant.

            BLOG OBSERVATION—In a footnote, the Third District observed that the 2017 amendment to section 128.5 may have resulted in a change such that both objective and subjective standards had to be satisfied, but it did not have to reach that issue.  We commend readers to consult Marriage of Sahafzadeh-Taeb and Taeb, Case No. A152178 (1^st Dist., Div. 2 Aug. 26, 2019) (published) [discussed in our August 26, 2019 post], which held that the 2017 amendment does have both objective and subjective standards needing to be satisfied.

Sanctions: Lack Of Reporter’s Transcript Of Trial Proceedings Doomed Challenge To CCP § 128.5 Sanctions Order For Plaintiff Prosecuting A Frivolous Discrimination Claim

Trial Judge Awarded $36,037.54 In Fees (Out Of Requested $298,649) And $18,524.13 (Out Of Requested $54,986.19) To Defendant, Assessed Jointly And Severally Against Plaintiff And Her Attorneys.

            The lack of an adequate record doomed an abuse of discretion challenge by plaintiff to a CCP § 128.5 sanctions order in Cabrera v. Popchips, Inc., Case No. B286222 (2d Dist., Div. 7 Sept. 11, 2019) (unpublished).

            What occurred is that plaintiff bringing a multi-count FEHA/discrimination case beat a defense summary judgment motion, but she lost on all counts when the jury returned a verdict in favor of two defendants.  The major business defendant Popchips brought a section 128.5 motion for bad-faith tactics against plaintiff and her attorneys based on the case being frivolous as demonstrated by the jury verdict, requesting $298,649 in attorney’s fees and $54,985.19 in costs.  The lower court granted the motion, but only with respect to the discrimination claim.  The sanctions order, made jointly and severally against plaintiff and her attorneys and in favor of Popchips, was for $36,037.54 in fees—12% of the request (unlike the defense advocating 75% of the total request)—and $18,524.12 in expert fees/costs.

            Plaintiff appealed, with the 2/7 DCA affirming. 

            Plaintiff first argued that the denial of the summary judgment motion was dispositive in showing there was no bad faith prosecution of the action.  Not so, said the appellate panel, because sometimes the unfounded nature of a case is only revealed after a trial and an adverse trial result.  (Rosenman v. Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, 91 Cal.App.4^th 859, 866 (2001); Bond v. Pulsar Video Productions, 50 Cal.App.4^th 918, 923 (1996).)  The other principal argument was that the sanctions order was an abuse of discretion, but this one was submarined by plaintiff’s failure to provide a reporter’s transcript of the trial proceedings (presenting only selective trial exhibits, with no indication of which ones were admitted into evidence) such that an inadequate record was presented for review of the issue.

Discovery, Sanctions: Failure To Designate The Deposition Video In The Appellate Court Doomed Challenge To $11,000 Sanction For Unilaterally Terminating A Videotaped Deposition

Motion To Augment The Record To Include The Video, One Day After The Appellate Argument, Was Deemed Untimely.

            Genesis Media, LLC v. Misle, Case No. B294620 (2d Dist., Div. 3 Sept. 10, 2019) (unpublished) is an appeal from a discovery sanction where an inadequate appellate record and untimely motion to augment sealed the fate of the sanctioned parties.

            However, the facts are interesting to say the least. 

Plaintiff Genesis Media, whose founder was Howard Misle, filed a breach of contract action against Ownzones Media and an individual in connection with Ownzones’ agreement to produce and operate a cannabis-focused media and lifestyle business.  Defendant Ownzones noticed Mr. Misle’s videotaped deposition in Las Vegas at the defense firm which had an armed security guard in the firm’s lobby.  A kerfuffle then ensued, with Mr. Misle apparently leaving the deposition room before any question could be answered based on the security guard’s presence in the law firm lobby.  Ultimately, plaintiff’s attorney terminated the deposition because the security guard was not removed from the lobby.  Plaintiff moved to compel the deposition and for resultant sanctions, even though no protective order motion was filed by the defense (although defense counsel claimed he suspended the deposition in order to seek a protective order).  The lower court reviewed the deposition video, granting the motion to compel and sanctioning Mr. Misle, plaintiff, and plaintiff’s counsel, jointly and severally, in the reduced amount of $11,000—expressly finding that the deposition video confirmed defendant counsel’s account of events leading to the motion to compel. 

            Mr. Misle and plaintiff’s counsel appealed, but they failed to designate the deposition video.  Big mistake.  The sanctions award was affirmed based on an inadequate record.  However, appellants obviously sensed at the appellate argument that they should have designated the video, bringing a motion to augment the record with the video one day after the oral argument.  This was denied as untimely.  (Regents of University of California v. Sheily, 122 Cal.App.4^th 824, 826 n. 1 (2004).) 

Appealability, Receivers: $92,952 In Receivership Fees Affirmed In Judgment In Favor Of Landlord Elks Building Association Of Santa Ana And Against Tenant JK Properties

Appealing Both Merits And Fee Judgments Was Properly Done Here; Special Benefit Doctrine Was Not Proven By Tenant.

            In Elks Building Association of Santa Ana v. J.K. Properties, Inc., Case No. G056187 (4^th Dist., Div. 3 Sept. 10, 2019) (unpublished), tenant JK Properties assumed a lease to the Saddleback Inn in Santa Ana, whose landlord was the Elks Building Association of Santa Ana.  The Saddleback Inn, although visited by Presidents Nixon and Reagan in its glory days, was likely being illegally used as an apartment complex rather than a motel—with a 2011 fire severely damaging the building on the property.  JK was able to recover almost $2.9 million in insurance proceeds, but the City of Santa Ana ordered JK to demolish all four buildings (with JK defying this order for three of the remaining buildings because the fourth building was almost gone and was demolished by JK).  Apartment squatters stayed on, with the City obtaining a receiver to attend to the property.  Believe it or not, a second fire occurred, damaging the remaining buildings such that the receiver borrowed over $1.2 million to demolish the entire property.  Elks then sued JK for unpaid rent, receivership costs, receivership attorney’s fees, unpaid property taxes, the $2.9 million in JK-received insurance proceeds (given the lease specified that the buildings be returned intact to landlord), and prejudgment interest.  The lower court awarded almost $6 million in damages to Elks, with $92,952 being receivership attorney’s fees.  JK appealed.

            The 4/3 DCA affirmed, in an opinion authored by Justice Bedsworth.

            First of all, it did observe that JK properly separately appealed both the merits and fee judgments such that it preserved challenges to both—something we bloggers have advocated all along the way.  (Torres v. City of San Diego, 154 Cal.App.4^th 214, 222 (2007).)

            JK’s principal argument on appeal was that it conferred on the Elks the special benefit of free demolition, given that landlord was able to sell the property for about $4 million more because the expense of demolition had been spared.  There were two problems with the argument: (1) the underlying facts were not proven at trial (given that the sale involved both an inn and adjoining lodge parcel, with no apportionment on a valuation basis); and (2) the receiver did the yeoman’s work of demolition such that the special benefit doctrine was not causally demonstrated.  With respect to fees, that award stood given the failure to reverse the damages award to any extent.

            BLOG OBSERVATION—Kevin A. Day and Jacob M. Clark of AlvaradoSmith were the winning attorneys on appeal, and we believe they were both involved in the trial on this matter.  Congratulations!

Private Attorney General, Civil Rights: Plaintiffs’ Bane Act/Whistleblower Retaliation Victories Justified An Award Of Attorney’s Fees Under CCP § 1021.5

$1,054,286.88 Was Fee Award Affirmed Against Los Angeles.

           Two fired Department of Transportation hearing examiners sued the City of Los Angeles under the Bane Act and for whistleblower retaliation, claiming that the City pressured them to change adverse decisions in hearings on parking citations.  They won their claims before a jury which awarded them total compensatory damages of $427,162, with the lower court later awarding them attorney’s fees in the sum of $1,054,286.88.

            City’s appeal of the merits and fee awards were unsuccessful in Hawkins v. City of Los Angeles, Case Nos. B279719/B282416 (2d Dist., Div. 3 Sept. 9, 2019) (unpublished).

            The fee award was justified under CCP § 1021.5, California’s private attorney general statute.  A significant benefit was conferred on the public by a verdict which vindicated the principle that administrative tribunals should be impartial and not have their decisions subject to influence based on municipal revenue concerns.  Fee award affirmed, showing that these types of awards do not have to be proportional at all when there is a substantial benefit conferred on the public in general.

Employment, Multipliers, Substantiation Of Reasonableness Of Fees: FEHA Plaintiff Properly Awarded Fees At Reduced Hourly Rates, But Augmented By Hourly Rates For Enhancement Factors, And Then Correctly Denied Any Multiplier Beyond That

Almost $1.5 Million In Fees/Costs Sought, But Ultimate Affirmed Award Was About $649,000.

            The next case is an interesting example of how a trial judge’s decision to not credit prior fee awards to an employment contingency attorney was affirmed because there was not sufficient foundation to show the prior awards were similar to the case under scrutiny, but provided a positive enhancement to hourly rates to make up for the contingency risk factor.

            In Navarro v. 4Earth Farms, Inc., Case No. B288105 (2d Dist., Div. 5 Sept. 4, 2019) (unpublished), a FEHA plaintiff won a jury verdict of $309,310 against certain defendants.  Filling emboldened, plaintiff’s counsel then moved for attorney’s fees of $1,473,315, inclusive of a 2.0 positive multiplier, against the non-prevailing defendants, with hourly rates requested which ranged from $450-850 per hour.  Plaintiff’s counsel supported these rates with a list of 10 recent fee awards the firm had received from other courts.  The trial judge found the rates to be too high in a tentative decision, but he wanted to give further thought to the multiplier request.  Later, the lower court awarded lower hourly rates to plaintiff’s lawyers, but it enhanced them somewhat for “multiplier” factors after observing the case was not complex and was a single plaintiff case (mainly, for contingency risk).  Ultimately, it awarded $649,020.62 in fees and costs to plaintiff.

            The 2/5 DCA affirmed.

            Although acknowledging that prior fee awards could be relevant (Margolin v. Regional Planning Com., 134 Cal.App.3d 999, 1005-1006 (1982)), the appellate court affirmed the trial court’s conclusion that plaintiff’s counsel did not give an “apples to apples” comparison—the listed cases were class actions unlike the involved single plaintiff case with not as much complexity, such that the similarity nexus was missing.  Also, even though most trial judges simply award a multiplier after reductions, the trial judge here did not discount any hourly work effort tasks at all but simply applied a higher hourly rate as an enhancement—something perfectly proper under California law.  (Horsford v. Board of Trustees of California State University, 132 Cal.App.4^th 359, 394-395 (2005).)  So, the fact that he did not apply a multiplier, but enhanced the hourly rates beyond what he considered reasonable, was no abuse of discretion.  

Liens For Attorney’s Fees, Settlement: Judgment Creditor’s Settlement And Release Of Judgment Debtor Did Not Release Interference Claims Against Judgment Creditor’s Attorney Obtaining Judgment Against Judgment Debtor

Interference Claim Was Righteous And Not Released By Judgment Debtor’s Unilateral Settlement With Judgment Creditor.

            Mancini & Associates v. Schwetz, Case No. B290498 (2d Dist., Div. 6 Sept. 4, 2019) (published) goes to show you that a client/judgment creditor has no ability to unilaterally release claims that client’s attorney has against a third-party judgment debtor. 

            Attorney obtained a substantial jury verdict for his client/judgment creditor against defendant/judgment debtor, with the attorney’s retainer agreement indicating that the attorney would receive a percentage of recovery and costs as well as an attorney’s lien against any recovery.  Without attorney’s knowledge or consent, client/judgment creditor entered into a settlement agreement with judgment debtor, releasing that party.  Judgment creditor’s attorney then sued judgment debtor for interference with his retention agreement and attorney’s lien rights, obtaining a $409,351 judgment against judgment debtor.

            On appeal, judgment debtor principally relied on the release in the settlement agreement with judgment creditor.  However, that agreement did not bind judgment creditor’s attorney who was not a party to the settlement, given that interference by a third party with attorney’s lien rights is a cognizable claim in California.  (Little v. Amber Hotel Co., 202 Cal.App.4^th 280, 291 (2011).)  As observed at the start of the opinion, “Does this release preclude the attorney from pursuing his costs and fees from the defendant [judgment debtor]?  Of course not.” 

Class Actions: With Respect to Removed Matters From State Court, Prospective Attorney’s Fees Allowable Under A Statute Or Contract Are To Be Considered For Determining Amount In Controversy For Removal Purposes

Ninth Circuit So Holds, Even Though There Does Seem To Be A Split Among Other District Courts.

            In Arias v. Residence Inn by Marriott, No. 19-55803 (9^th Cir. Sept. 3, 2019) (published), defendant filed a notice of removal of a state court wage/hour class action case to federal court.  It did so under the Class Action Fairness Act based on its estimate of damages and prospective attorney’s fees allowed under various labor statutes.  The district judge sua sponte remanded back to state court based on its view that the CAFA removal amount-in-controversy requirement was not met.  The Ninth Circuit reversed, determining defendant should have had the opportunity to present some proof on the amount-in-controversy threshold.  It also found that, notwithstanding a split among district courts, it had, in a prior opinion, countenanced the inclusion of prospective attorney’s fees allowable under a statute of contract for purposes of determining the amount in controversy.  (Fritsch v. Swift Transp. Co. of Ariz., LLC, 899 F.3d 785, 788, 794 (9^th Cir. 2018).) 

Books: Co-Contributor Marc Reviews Three Books Relating To Government Regulation And Citizen Safety

The Book Reviews Are In The Current Issue Of California Litigation.

            Co-contributor Marc reviews three books in the current issue of California Litigation, Vol. 32, No. 2, 2019. With the permission of California Litigation, we make the article available if you click here. Any opinions expressed are those of the author alone, and for which the author alone, and not the California Lawyers Association, is responsible. 

            From the article:

    "Our government has been described as an insurance conglomerate and a large army. A core function of government is identifying and managing risk to protect the public from harm. The thread tying together the three books under review is government’s ability to manage risk. Dark Tide, about a horrific industrial accident, has been reissued in time to mark the 100th anniversary of the great molasses flood of 1919 that killed 21 people and devastated the North End of Boston. The Poison Squad, about the efforts to protect the public from dangerous and adulterated food, focuses on a heroic public servant. And, The Fifth Risk is about contemporary neglect, incompetence, and short-sightedness in federal agencies."

Prevailing Party: Settling Plaintiff Abandoning Some Claims, Suffering A Summary Adjudication, And Only Obtaining A Much Scaled-Back Settlement Payment On One Claim, Was Properly Found To Not Be A Prevailing Party For Fee Recovery Purposes

This Was A Discretionary Call, Which Was Affirmed; Appellate Court Refused To Find That Appellate Fees Were Appropriate Either, With An Interesting Discussion On Why Documents Were Improperly Sealed By Trial Court With Respect to Fee Proceedings.

            Although a settling plaintiff was found not be to a prevailing party for fee recovery purposes, the most interesting aspect of Hospodka v. J. Rockcliff, Inc., Case No. A153991 (1^st Dist., Div. 4 Aug. 30, 2019) (unpublished) is the appellate court’s determination that sealing the settlement agreement and fee proceedings was erroneous—strongly suggesting that there was no public importance circumstance which would support this in most civil cases as it relates to fee motion pleadings.

            Plaintiff sued to collect allegedly unpaid real estate commissions under an Independent Contractor Agreement with a contractual fees clause.  However, during the course of the litigation, she abandoned some claims and suffered an adverse summary adjudication on a claim, leaving only one claim against defendant for breach of contract for allegedly unpaid commissions on three real properties.  The parties agreed to a settlement, successfully lobbying the trial court to allow the settlement agreement and fee motion paperwork to be filed under seal.  Plaintiff moved to recoup fees of $181,172.00, but the lower court denied that request based on the conclusion that she was not the prevailing party. 

            Plaintiff’s appeal was unsuccessful. 

            The 1/4 DCA first considered the sealing of records by the trial court and in the appellate court.  It found that was error because the lower court did not file the standards for sealing records as set forth in CRC 2.550 and because no basis for sealing on appeal was presented under CRC 8.46(b)(2).  It reasoned that generally such documents should be available to the public as with most other court records.  However, it ordered the records to be unsealed 60 days after issuance of the appellate remittitur unless the parties could obtain a proper sealing order from the lower court.

            With respect to the “no prevailing party” determination, plaintiff had sought more than $200,000 in damages as well as prejudgment interest and punitive damages, but she received much less under one claim under the settlement.  This was hardly an unqualified win, especially given that dismissed claims can be considered as far as determining if a party prevailed (even if no fee recovery could attend to the dismissed claims).  Beyond that, defendant did win some interim victories, which were also relevant to the prevailing party analysis.

            However, the appellate court decided no one would recover fees for winning on appeal.  The lower court determined there was no prevailing party, plus the order denying the fee motion was not an action to enforce a settlement term. 

Homeowner Associations: Adams Stirling Law Firm In Los Angeles Has An Excellent Summary Of Fee Shifting Provisions With Respect To HOA And Davis-Stirling Act Issues

Numerous Civil Code and CCP Provisions, As Well Case Law, Summarized By The Firm On Its Website.

            We would like to thank Adams Stirling, a Los Angeles law firm specializing in HOA issues, for its excellent summary of HOA and Davis-Stirling Act fees issues and case law, which we post verbatim below and which can be found on its Website.  We would note that the firm is headed by Adrian Adams and Hon. Larry Stirling (Ret.), who authored the Davis-Stirling Act legislation when he was a member of the California Legislature and before he was appointed as a judge (thereafter retiring and joining forces with Mr. Adams to form Adams Stirling).

            Thanks, Adams Stirling law firm for your synopsis below:

            American Rule. “With regard to an award of attorney fees in litigation, California generally follows what is commonly referred to as the ‘American Rule,’ which provides that each party to a lawsuit must ordinarily pay his or her own attorney fees.  The American Rule is codified in Code of Civil Procedure section 1021, which states in relevant part:  ‘Except as attorney’s fees are specifically provided for by statute, the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties . . . .’”  (Tract 19051 Homeowners Assn. v. Kemp (2015) 60 Cal.4th 1135, 1142.) 

            Pre-Litigation Legal Fees. Neither owners nor associations are entitled to legal fees incurred in a dispute that does not lead to litigation. For example, each side hires a lawyer and exchanges a series of letters with demands and counter-demands. If the matter is resolved or dies away, neither side is entitled to their attorney's fees. Civil Code 5975 only authorizes a prevailing owner to recover their reasonable attorneys’ fees and costs following the conclusion of a successful action (i.e. lawsuit)

            If, however, the dispute turns into litigation, the prevailing party is entitled to reasonable attorney's fees as determined by the court and depending on the nature of the dispute. The starting point for calculating attorney's fees begins with pre-litigation ADR. Because the amount of the award is discretionary with the court, the prevailing party could incur $50,000 in legal fees but be awarded only $20,000 or less by the court. Parties should never enter into litigation believing they will recover their legal fees. Recovery is always uncertain.

STATUTES: The following statutes provide for attorneys' fees and/or costs:

ADR costs		Civil Code §5955
Anti-SLAPP motion		Code of Civil Procedure §425.16
Assessment collection		Civil Code §5650(b), §5740, §5650(a), §5705(a), §5715(a), §5720(a),  §5685, §5658
Governing document enforcement		Civil Code §5975
Contract actions		Civil Code §1717
Escrow Disclosure violations		Civil Code §4540
Discriminatory CC&Rs		Civil Code §4225
Disputed charges		Civil Code §5658
Flags		Civil Code §4705(c)
Foreclosure		Civil Code §5730(a)
Inspection of records		Civil Code §5235
Managing agent		Civil Code §5380
Records inspection		Civil Code §5145
Satellite dishes		Civil Code §4725(d)
Small claims appeal		Code of Civil Procedure §116.780
Solar energy		Civil Code §714

CASE LAW

Marina Pacifica v. S.C. Fin. Corp. (2018). A party's failure to obtain its litigation objective does not automatically make the other party the prevailing party.

Artus v. Gramercy Towers (2018). Neither the language of the Davis-Stirling Act, nor the legislative history of the fee provision Artus invokes, evidences any intent on the part of the Legislature to depart from well-established principles that fees and costs are ordinarily not granted for interim success, and that the prevailing party is determined, and fees and costs awarded, at the conclusion of the litigation.

Retzloff v. Moulton Parkway Assn (2017). Former board members sued their association alleging the board was conducting business outside of meetings and failing to maintain and provide certain corporate records. Plaintiffs failed to attempt ADR as required by Civil Code §5950. The association demurred and the court sustained without leave to amend. As prevailing party, the association moved for attorneys' fees. The Court of Appeal reversed the lower court's award of attorneys' fees concluding that Civil Code §5235 does not authorize a court discretion to award fees to a prevailing association. A plain reading of “any costs” as used in section 5235(c) does not support the inclusion of attorney fees as costs. Section 5235(c) entitles a prevailing association to costs, not attorney fees and costs.

Almanor Lakeside Villas Owners Association v. Carson (2016). Even though the court struck down 90% of the fines levied by the association against and owner for a rental violation, the court decided the key issue was the association's right to enforce rules and impose fines for violations, thereby making it the prevailing party.

            The Davis-Stirling Act does not define “prevailing party” or provide a rubric for that determination. In the absence of statutory guidance, California courts have analyzed analogous fee provisions and concluded that the test for prevailing party is a pragmatic one, namely whether a party prevailed on a practical level by achieving its main litigation objectives. ( Heather Farms Homeowners Assn. v. Robinson (1994) 21 Cal.App.4th 1568, 1574 ( Heather Farms); Salehi, supra, at pp. 1153–1154.) The California Supreme Court implicitly has confirmed this test. In Villa De Las Palmas Homeowners Assn. v. Terifaj (2004) 33 Cal.4th 73, 94, the court affirmed the award of attorney’s fees in an action to enforce a restrictive covenant under the Davis-Stirling Act, stating: “We conclude the trial court did not abuse its discretion in determining that the Association was the prevailing party … . On a ‘practical level’ 13 [citation], the Association ‘achieved its main litigation objective.’ ” (Ibid. [quoting Heather Farms, at p. 1574 and Rancho Santa Fe Assn. v. Dolan-King (2004) 115 Cal.App.4th 28, 46].)

Nellie Gail Ranch OA v. McMullin (2016). Failure to appeal a fee ruling deprives an appellate court of jurisdiction to decide the fee challenge.

Rancho Mirage Country Club HOA v. Hazelbaker (2016). An association's lawsuit to enforce a settlement agreement entered into during ADR is deemed an action to enforce the governing documents under the Davis-Stirling Act, which entitles the association to recover reasonable attorneys' fees.

Tract 19051 Homeowners Assn v. Kemp (2015). Prevailing owner can recover attorney fees under Civil Code section 5975(c) in a case brought by association against owner to enforce governing documents even though the court found the association didn’t exist. The Supreme Court held the plain reading of 5975(c) supports that the award of attorney fees is reciprocal in an action where the association brings the claim to enforce the governing documents regardless of whether the association exists. The recovery is based solely on the association’s claim to enforce the governing documents and not based on determining whether the association is a common interest development.

Grossman v. Park Fort Washington Assn. (2013). Normally, any attorneys' fees incurred prior to the filing of the complaint are not awarded. Here, the court concluded that the pre-litigation ADR process mandated by the Davis-Stirling Act is the actual start of litigation. Accordingly, it awarded attorneys' fees expended by the homeowner expended in pre-litigation ADR.

Salehi v Surfside III (2011). Susan Salehi sued her association alleging 10 causes of action. Three days before trial, she dismissed eight of her ten claims against the association. The association spent approximately $250,000 defending against her claims. Three days before trial, Salehi dismissed eight of her ten claims. The association subsequently sought recovery of the legal fees it incurred defending against Salehi's dismissed causes of action. The trial court denied the association’s request but the court of appeal reversed. The appellate court found that the association was entitled to recover attorneys fees from Salehi, reasoning that a party suing to enforce the CC&Rs must get their “ducks in a row” both procedurally and substantively before filing suit. Salehi had done neither.

That v. Alders Maintenance Assn (2012). That brought a frivolous election challenge. As the prevailing party, the association sought attorney's fees under the Davis Stirling Act. The award of attorneys' fees is allowable only when authorized by contract, statute or law. If a statute refers to the award of "costs and attorney's fees," attorney's fees are an item and component of the osts to be awarded and are allowable as costs. The court reviewed the statute (now Civ. Code 5145(b)) and concluded the statute did not authorize associations to recover attorney's fees.

Bear Creek Planning Committee v. Ferwerda (2011). If empowering language is provided for in the CC&Rs, architectural committees may adopt standards beyond those set forth in the CC&Rs, i.e., it can adopt new design standards related to the improvement or development of lots. However, a committee may not unilaterally establish an attorneys’ fees provision for itself. Attorneys’ fees must be reciprocal and contractual--the committee's fee provisions did not seek to clarify existing language in the CC&Rs. Rather, it was an inappropriate attempt by the committee to insert a new provision that bound homeowners without their approval. Nothing in the CC&Rs gave the committee the power to insert into their architectural standards an attorney fee provision that was never in the CC&Rs.

Parrott v. Mooring Townhomes Assn. (2003). Plaintiff sought a preliminary injunction against his association. When he failed to receive one, he dismissed his complaint. The court awarded the association attorneys' fees. A prevailing party is one who prevailed on a practical level.

Mount Olympus POA v. Shpirt (1997). An owner does not have the right to recover attorneys' fees under the Davis-Stirling Act if his HOA is a voluntary association of homeowners having no power to charge or collect assessments. Such associations do not fit the definition of a common interest developments under the Act.

Heather Farms HOA v. Robinson (1994). The court declined to adopt a rigid interpretation of the term "prevailing party" and, instead, analyzed which party had prevailed on a practical level. The court concluded that a a voluntary mutual dismissals as part of a global settlement does not create a prevailing party.

Landlord/Tenant: Reversal Of Tenant’s Civil Harassment Restraining Order In Landlord/Tenant Dispute Did Not Require Fee Award In Landlord’s Favor

Trial Court Did Not Abuse Its Discretion In Denying Fees Under CCP § 527.6(s).

            In Ewing v. Greenlee, Case No. A155828 (1^st Dist., Div. 3 Aug. 30, 2019) (unpublished), a trial judge denied a discretionary request for a $15,000 attorney’s fees award by the prevailing party in a civil harassment.  Code of Civil Procedure section 527.6(s) specifies that the prevailing party in a civil harassment actions “may” be awarded attorney’s fees.  Earlier, the appellate court had reversed the lower court’s grant of a harassment restraining order because the dispute between the parties concerned disputed property rights, not civil harassment, so the proper forum for its resolution was through an unlawful detainer action.  The 1/3 DCA also affirmed the fee denial order, determining that the harassment request by the non-attorney was not brought in bad faith—a factual call by the trial judge it was unwilling to interfere with. 

Fee Clause Interpretation: Plaintiff Obtaining Breach Of Contract Damages In Court Lawsuit Was Not Entitled To Fee Recovery, Because Fees Clause Only Applied To Arbitration Results

Contractual Interpretation Of Fees Clause So Confirmed.

           A plaintiff sued and obtained contractual breach damages of $317,512, but really wanted to obtain prevailing party fees under a contractual fees clause.  The trial court did not bite, and the same too for the appellate court in SPAP Company, LLC v. Clinical Products, LLC, Case No. B282405 (2d Dist., Div. 3 Aug. 29, 2019) (unpublished).

            The problem was that the fees clause was contained in a section entitled ARBITRATION, which did not expand its scope outside of that context (unless possibly court-related proceeding related to the arbitration itself).  That required affirmance of the fee denial order, because the relief was obtained in court rather than arbitration proceedings.

Costs, Deadlines, Reasonableness Of Fees, SLAPP: 2/3 DCA Affirms SLAPP Fee Award To Defendant Of $53,915.50, The Full Defense Request, Rejecting Untimely Motion Filing Argument

However, Costs Award Reversed Because It Was Untimely Filed And Prejudiced Plaintiff.

            In Residual Income Opportunities, Inc. v. Cynergy Data, LLC, Case No. B289219 (2d Dist., Div. 3 Aug. 29, 2019) (unpublished), the defense won a SLAPP motion, filing for recovery of costs to the tune of $3,567.77 and moving for attorney’s fees totaling $53,915.50.  The trial judge denied plaintiff’s motion to tax costs and rejected its opposition arguments by awarding fees as requested by the defense.  Plaintiff appealed, obtaining no change on the fee award but obtaining a reversal of the costs award.

            Attorney’s Fees Award.  Plaintiff first argued the fee motion was untimely, because it was filed 61 days after notice of entry of the SLAPP order.  The appellate court disagreed, because the 60-day deadline under CRC 3.1702 was extended two court days pursuant to CCP § 1010.6(a)(4)(B).  The amount of the award was no abuse of discretion, because (1) the trial court was in the best position to reduce for any duplication, which was not done; (2) paralegals can be compensated and do not have to show their licenses as part of any fee request; (3) the work descriptions in submitted billings were not vague; and (4) $330-790 hourly rates were reasonable for L.A.-venued work, especially given the defense attorneys made a voluntary 15% across-the-board reduction.  Fee award affirmed.

            Costs Award.  The filing was determined to be untimely, coming 46 days after service of a notice of entry of the SLAPP grant (which acted to dismiss the extant complaint as against Cynergy).  This was beyond the 15-day deadline set forth in CRC 3.1700(a)(1).  Cynergy argued that the minute order dismissing the case was unsigned such that time to file was extended, but the appellate court determined that there was a SLAPP grant order which was signed, a document qualifying as a judgment triggering the 15-day costs filing deadline.  (Code Civ. Proc., §§ 581d, 577.)  Although a trial judge can extend the 15-day deadline for up to another 30 days, the 46 days lapse divested authority from the trial court to entertain the costs request.  But, that brought the costs issue to the ultimate question of whether entertaining the costs bill was prejudicial.  The appellate panel concluded that it was, because the costs bill included demurrer expenses which it did not find to be related to the SLAPP motion work, not embracing reasoning otherwise in Metabolife Intern., Inc. v. Wornick, 213 F. Supp.2d 1220 (S.D. Cal. 2002).  Costs award reversed.

            HAT TIP—The main basis for the appeal was the fees award.  Congratulations to Joshua R. Mandell and Alicia Y. Hou of Ackerman for sustaining the fee award for Cynergy on appeal.

Consumer Statutes, Deeds Of Trust: Third District Agrees That TRO Relief Can Justify Fee Recovery To Prevailing Borrower Under The California Homeowner Bill Of Rights Even If Borrower Loses Later Preliminary Injunction

This Decision Tracks The Reasoning Of The Fifth District In Hardie.

            In Bustos v. Wells Fargo Bank, N.A., Case No. C085657 (3d Dist. Aug. 28, 2019) (partially published), the Third District Court of Appeal agreed that a borrower obtaining a temporary restraining order (TRO) under the California Homeowner Bill of Rights (HBOR) for a lender’s “dual tracking” violations, although later losing a preliminary injunction OSC,  is entitled to a discretionary award of attorney’s fees, in this case affirming an award of $4,260 in fees and costs out of a requested $10,800.  Although agreeing that TRO and preliminary injunction determinations are different in nature, the statutory language applies broadly to “Injunctive relief” which would include a TRO.  In so concluding, it agreed with the reasoning in a federal case and a fairly recent Fifth District decision.  (Lac v. Nationstar Mortgage LLC, 2016 U.S. Dist. LEXIS 98250 (E.D. Cal. July 26, 2016); Hardie v. Nationstar Mortgage LLC, 32 Cal.App.5^th 714, 718, 720, 723 (2019) [reviewed in our March 6, 2019 post].) 

Prevailing Party: Defendant/Cross-Complainant Prevailing On Note W/Contractual Fees Clause Not Subject To Fee Exposure On Subsequent Appeals And Lis Pendens Expungement Proceeding, As Other Side Never Sought Specialized Fee Relief From Appellate Court

Prevailing Party Did Accept Satisfaction Of Judgment While Appeals Were Pending, With Court Of Appeal Concluding There Can Only Be One Prevailing Party; CCP § 128.5 Sanctions Also Inapt.

            De la Carriere v. Greene, Case No. B285793 (2d Dist., Div. 8 Aug. 28, 2019) (published) is a good addition to the jurisprudence in the prevailing party area, establishing that there is only one prevailing party and that subsequent posttrial/appellate proceedings do not usually alter the result.

            What happened here is that plaintiff, an estranged friend of defendant, sued to void a note and deed of trust under a note which had a contractual fees clause.  Defendant cross-complained for breach of the note.  After a four-day bench trial, defendant was declared the prevailing party based on a merits $150,329.21 judgment, even though some usurious interest was subtracted from the note principal, with the lower court later awarding defendant $123,975 in attorney’s fees.  Both sides appealed, with defendant claiming that the usury “subtraction” was erroneous.  While the appeals were pending, plaintiff paid defendant/cross-complainant the full amount owed under the merits and fees judgments, with an acknowledgment of satisfaction being filed.  Plaintiff filed a motion to expunge a lis pendens while the appeals were pending, which was denied based on lack of jurisdiction due to the pendency of the appeals.  Plaintiff filed a motion to dismiss defendant’s appeal as moot, with defendant dismissing his appeal.  One day later, plaintiff requested a dismissal of her cross-appeal.  Plaintiff then filed a motion for attorney’s fees for work in connection with the appeal and lis pendens post-trial motion, under both Civil Code section 1717 and CCP § 128.5.  The lower court awarded plaintiff $67,238 under Civil Code section 1717, prompting an appeal by defendant.

            The 2/8 DCA reversed.

            No section 1717 fees were justified because there can only be one prevailing party, which defendant was.  Trial and appellate proceedings are considered together, such that plaintiff’s success on appeal and her post-judgment determination did not affect that determination.  (Wood v. Santa Monica Escrow Co., 176 Cal.App.4^th 802, 806-808 (2009).)  Even with execution of a judgment satisfaction acknowledgment, plaintiff could cite no authority indicating that the appeal constituted a new matter separate from the underlying lawsuit.  Plaintiff should have asked for relief from the appellate court to add to costs on appeal under certain circumstances or to sanctions for a frivolous appeal, but none of these options were pursued.

            Plaintiff then argued that the award could be affirmed based on the CCP § 128.5 sanctions request.  The Court of Appeal disagreed.  It first found that the trial judge did not award sanctions, awarding fees instead under section 1717—so it could not presume how the lower court would rule.  However, plaintiff did not provide any authority that the lower court, rather than the appellate court, could award sanctions for a frivolous appeal.  In fact, CRC 8.276(a)(1) vests this sanctioning power to the reviewing court only.  Finally, defendant’s appeal was not necessarily barred even though the defendant collected the full amount of the judgment from plaintiff given that the appeal might have resulted in a reversal where actually more was owed than what had been collected earlier—put another way, the judgment might have been increased so the appeal was not frivolous.  (Heacock v. Ivorette-Texas, Inc., 20 Cal.App.4^th 1665, 1670-1672 (1993).) 

Probate: Intestate Estate Co-Administrators/Beneficiaries, Defending An Appeal By Which Distribution Of Assets Denied To Certain Claimed Beneficiaries, Justified Compensation For Appellate Fee Work Incurred By Them

Common Fund Doctrine Or Expenses Of Administration Theory Justified Compensation.

            In Estate of Ochoa, Case No. A150018 (1^st Dist., Div. 2 Aug. 27, 3019) (unpublished), a dispute arose involving intestate inheritance rights between statutory heirs of the decedent and siblings of the decedent’s predeceased spouse erupted, with the probate court determining the estate should be distributed to the decedent’s heirs.  Respondents were co-administrators of the estate and decedent’s niece and nephew, contesting the objections by the siblings of the predeceased spouse.  Respondents petitioned the lower court to have the estate pay for their attorney’s efforts in defending against the appeal (which was affirmed on the merits eventually), a request which was denied.

            The appellate court reversed the fee reimbursement request from the estate.  Respondents represented the interests of all decedent’s heirs, given that the unsuccessful objections to the estate distribution would have reduced the total inheritance to those heirs by half.  So, respondents—even though they too were beneficiaries—maintained a benefit for many other heirs, such that the common fund doctrine supported awarding appellate fees to respondents.  Furthermore, in line with Estate of Stauffer, 53 Cal.2d 124, 132 (1959), the fees were also compensable as administration expenses given that total estate property was involved.  So, the matter was remanded to the lower court to determine the amount of appellate attorney’s fees to be paid by the estate for respondents’ successful defense on appeal. 

Civil Rights: $3,780 In Attorney’s Fees Against Petitioner Losing Civil Harassment Restraining Order Reversed On Procedural Grounds

Oral Motion For Fees Or Fee Request In Responsive Pleading Before A Hearing Did Not Satisfy The Requirement To Bring Through A Noticed Motion.

            Petitioner losing a civil harassment restraining order was assessed with attorney’s fees under CCP § 527.6 (a fee-shifting provision in this area) to the tune of $3,780 in favor of prevailing respondent.  Petitioner appealed, with the 4/3 DCA reversing on procedural grounds in Sorgente v. Eagen, Case No. G056056 (4^th Dist., Div. 3 Aug. 26, 2019) (unpublished).

            The problem here was that CCP § 1033.5 generally requires a noticed motion for a fees award, with the civil harassment statute (CCP § 527.6) being no exception to this general rule.  (612 South LLC v. Lacone Limited Partnership, 184 Cal.App.4^th 1270, 1284 (2010); see also, generally, Hardie v. Nationstar Mortgage, LLC, 32 Cal.App.5^th 714, 720 (2019).)  Petitioner only sought fees through an oral motion or through a request in a responsive pleading filed right before the hearing.  That did not satisfy the noticed motion requirement such that a reversal was required.

            Presiding Justice O’Leary authored the 3-0 panel opinion. 

Homeowner Associations: Defendant Condo Owner Voluntarily Dismissed From Suit Against HOA And Condo Owner By Other Condo Owners Before Trial Improperly Denied Fee Recovery Under Both Davis-Stirling Act And Code Of Civil Procedure Section 1032(a)(4)

Suit Did Involve CC&Rs, And Defendant Did Prevail By Being Dismissed, Such That Reversal Means Defendant Condo Owner Will Get Some Fees On Remand.

            Fee entitlement and prevailing party determinations often are matters of law, as they were here where the pleadings and facts made a reversal of a fee denial – something which was directed by our local Santa Ana appellate court in Richardson v. Stevenson, Case No. G056112 (4^th Dist., Div. 3 Aug. 26, 2019) (unpublished).

            Of all things, this was a dispute challenging defendant condo owner’s successful HOA application to convert a window into a door, a decision challenged by another condo owner.  Plaintiff sued HOA and defendant for injunctive relief under the Davis-Stirling Act, not the CC&Rs directly (even though the claim arose from the CC&Rs).  Defendant condo owner was voluntarily dismissed from the action before trial and three years into the litigation for “tactical” reasons, leaving injunctive-based claims against the HOA.  The lower court denied defendant’s request for fees against plaintiff, not believing that plaintiff was suing under CC&Rs and not finding that defendant had prevailed because it was unknown whether the owner could convert window into a door.

            The 4/3 DCA, in an opinion authored by Presiding Justice O’Leary, reversed.    The first ground for denial did not hold up because the pleading showed that the CC&Rs were the basis for the suit (even though not directly sued upon), such that the Davis-Stirling Act was triggered because the case was a suit based on HOA “governing documents.”  Defendant also did prevail on two grounds:  (1) he was now a stranger to the case with the dismissal, which meant he achieved an important litigation objective to get out of the dispute; and (2) he prevailed under CCP § 1032(a)(4) which allows contractual attorney’s fees for non-contractual claims such as this suit under the Davis-Stirling Act.  (See Honey Baked Hams, Inc. v. Dickens, 37 Cal.App.4^th 421, 428 (1995).)

Sanctions: 1/1 DCA Clarifies That Subjective Bad Faith Is Required Under CCP § 128.5, With Only Objective Bad Faith Required Under CCP § 128.7

San Diegans for Open Government Decision Is No Longer Good Law Under Section 128.5.

            Looks like Marriage of Sahafzadeh-Taeb and Taeb, Case No. A152178 (1^st Dist., Div. 1 Aug. 26, 2019) (published) has finally clarified the differences in “bad faith” now required for the version of CCP § 128.5 in effect under 2017 urgency litigation.

            Here is what the Court of Appeal had to say:

            “We publish this opinion to make explicit that no vestige remains of the holdings in San Diegans for Open Government v. City of San Diego (2016) 247 Cal.App.4th 1306 (San Diegans) concerning the requirements of section 128.5.  Among other things, San Diegans held that an objective standard applies when determining whether a party’s or an attorney’s conduct is sanctionable under section 128.5, as it does under section 128.7. (Id. at pp. 1314–1317.) As we explain, section 128.5 has since been amended to specifically overrule San Diegans on this point. . . .  The law concerning the kind of conduct sanctionable under sections 128.5 and 128.7 has, thus, largely returned to its pre-San Diegans state—with a more stringent standard requiring subjective bad faith applicable to section 128.5, and a lesser standard, requiring only objective bad faith, applicable to section 128.7.”  In footnote 2 of its opinion, the 1/1 DCA also observed this (although not central to its decision): “These amendments also abrogated another of San Diegans’ holdings—that section 128.5 did not incorporate the safe harbor provisions of section 128.7. (Nutrition Distribution, LLC v. Southern SARMs, Inc. (2018) 20 Cal.App.5th 117, 126–130.)”

            What happened here is that attorneys on both sides of a dissolution dispute said they were ready for trial in a hearing such that a readiness conference was excused.  On the date of the scheduled trial, wife and her attorney were present, but only husband appeared, explaining to the lower court that his attorney was engaged in another trial which ran over.  The family law judge entertained briefing and did not buy it, assessing $3,575 in § 128.5 sanctions, $1,575 against husband and $2,000 against husband’s attorney.

            The 1/1 DCA affirmed the award against husband’s attorney, but it reversed the award against husband.  It agreed that, in light of the 2017 urgency amendments, section 128.5 requires subjective bad faith rather than objective bad faith.  However, the award was sustained against husband’s attorney because she engaged in unjustifiable dereliction of her obligations conducted with an improper purpose, given that she should have known the other matter might spill over and made no attempt to notify opposing party/the family law judge.

            The lower court’s order was not procedurally improper because it did recite the factual circumstances behind the order in sufficient specificity.  However, there was no evidence that husband engaged in subjective bad faith, because nothing showed he knew of his attorney’s prior representation to the court on readiness and husband actually appeared to relay what his attorney had told him about not being able to attend. 

Class Action: Ninth Circuit Affirms Awarding Only 15% Settlement Fund Fee Recovery, Half That Requested By Class Counsel, Based On Deferential Abuse Of Discretion Standard

2-1 Majority Also Found Denying Motion For Reconsideration Did Not Require A Different Result; Dissenting Circuit Judge Thought The 50% Reduction Was Too Much Without More Explanation, And The Unopposed Reconsideration Request Should Been Considered.

           Schwartz (Kaplan Fox & Kilsheimer LLP) v. Arena Pharmaceuticals, Inc., et al., No. 18-55618 (9^th Cir. Aug. 20, 2019) (unpublished Memorandum Decision) is an interesting 2-1 Ninth Circuit decision showing how circuit judges apply the abuse of discretion standard to a reduced fee award even where there was a clear sailing clause in a class action settlement.

            A $24 million settlement was reached in a class action case in which the district judge acknowledged that excellent results were achieved in a difficult matter.  However, she only awarded 15% of the settlement fund as attorney’s fees rather than the 30% requested—awarding $3.6 million rather than the requested $7.2 million—even though the settlement agreement had a “clear sailing” provision.  The Ninth Circuit affirmed in a 2-1 decision, determining that the district court has wide discretion in determining the percentage-of-fund number in class actions, had no great lodestar “check” because class counsel failed to provide reliable evidence (rates or hours), and did discuss the relevant guidelines enough so that no more specificity was required. 

            Class Counsel filed an unopposed reconsideration motion with expert declarations and records to support the requested fees, unlike the presentation in the opening motion.  The Ninth Circuit majority found that the district court did not err in denying the reconsideration motion, because this same information was available for counsel to present earlier and the motion is not a substitute for presenting the right evidence in the first instance.  (Am. Ironworks & Erectors, Inc. v. N. Am. Const. Corp., 248 F.3d 892, 899 (9^th Cir. 2001); In re Wash. Pub. Power Supply Sys. Sec. Litig., 19 F.3d 1291, 1306 (9^th Cir. 1994).) 

            Although not discussed in this Memorandum Decision, the district court also cut the claimed $251,313.10 in costs and expenses by $32,712.33 with respect to “Travel/Meals” and $65,095 with respect to “Experts/Consultants,” leaving $152,781.44 as the awarded costs.

            In dissent, Circuit Judge Rawlinson found that the 50% reduction was too much without a more detailed explanation.  (Stanger v. China Elec. Motor, Inc., 812 F.3d 734, 739 (9^th Cir. 2016).)  Also, she believed that it was error not to reconsider the request in light of the unopposed reconsideration motion with additional documentation.

In The News . . . . Citi Private Bank’s Law Firm Group’s Survey Shows Expenses Ate Up Revenue Gains Based On Polling Results From 191 U.S. Law Firms

Receivable Collection Cycles With Clients Lengthened During The First Half Of 2019.

            In an August 21, 2019 article by Debra Cassens Weiss on ABA’s on-line journal, she reports on the results of a Citi Private Bank’s Law Firm Group’s survey of 191 U.S. firms, ranging from top-grossing to boutique firms.

            Although the polled law firms’ revenues grew 4.1% in the first half of 2019 (mainly due to billing rate growth of 4.6%), expenses also grew 5.9%.  That meant that the increase in expenses—mainly, 7.3% jumps in lawyer compensation—exceeded the revenue growth.  The survey also noted that collection cycles lengthened by 1.6% for clients.  The report cited e-billing systems and greater scrutiny of bills, with some clients unilaterally changing payment terms, as driving the receivable collection “lag.”

Sanctions: Failure To Raise Safe Harbor Argument In Opposition To CCP § 128.5 Sanctions Before Judicial Referee Was A Waiver

However, A Waiver—But Only One Endorsed Through A 2-1 Panel Opinion Split By The 2/5 DCA.

            1100 Wilshire Property Owners Assn. v. Wilshire Commercial LLC, Case No. B285336 (2d Dist., Div. 5 Aug. 23, 2019) (unpublished) is a case where a court-appointed referee sanctioned plaintiff HOA $31,065 for taking a frivolous legal position in connection with a board of directors election, one at odds with the referee’s own previously expressed interpretation of HOA election cumulative voting rules.  (The winning side asked for $117,075.50 in fees and costs.)  Referee’s sanction award was affirmed on appeal, but drew a split opinion on whether the winning side had to provide “safe harbor” notice under CCP § 128.5 given the intermediate difference of opinion on the safe harbor issue as expressed in San Diegans for Open Government v. City of San Diego, 247 Cal.App.4^th 1306, 1316-1317 (2016) and Nutrition Distribution, LLC v. Southern SARMs, Inc., 20 Cal.App.5^th 117, 126-127 (2018).  The majority believed that the issue was waived, because the losing side did not even raise it—"Such arguments to depart from precedent are routinely made, and made precisely for the reason why we hold forfeiture applies:  to preserve an issue for appeal.”  (Slip Op., pp. 15-16 n. 10; Justice Baker, author of majority opinion.)  In dissent, Justice Moor would have found no waiver applied because San Diegans was the only decision around such that losing side’s failure to object was forgivable.

Consumer Statutes: $296,055 Fee Award To Prevailing Lemon Law Vehicle Plaintiff Was Not Disproportionate Or Shocking When Jury Awarded $101,909.52 In Damages

Trial Judge Did Fashion An Award Less Than The $413,866.50 Fee Request.

            Lemon law cases under the Song-Beverly Act can lead to significant fee exposure given a fee-shifting provision liberally interpreted to further the remedial nature of the Act in favor of vehicle purchasers.  That large fee exposure happened here, much to the chagrin of the well-known defendant in Cofield v. Kia Motors America, Inc., Case Nos. F074977/F075811 (5^th Dist. Aug. 23, 2019) (unpublished).

            Plaintiff owner of a 2010 Kia Forte obtained total damages of $101,909.52 (inclusive of a civil penalty of $67,939.68) against defendant after a jury trial.  Plaintiff then moved for fees under the Song-Beverly Act, requesting $413,866.60 (lodestar of $344,888.75 plus a 1.2 positive multiplier).  The trial judge awarded $296,055, after reducing for duplicative time (dual lead trial attorneys) and denying the enhancement request.  Kia appealed.

            The Fifth District affirmed.

            The appellate panel rejected the argument that the fee award was disproportionate to the $101,909.52 in damages assessed by the jury.  Besides that, there is no rigid proportionality requirement in civil rights cases, which case law provides an excellent analogy to the remedial purposes under California’s lemon law available to vehicle purchasers.

            It also swatted away the argument that the fee awarded “shocked the conscience.”  Its proportionality analysis did away with this contention, not to mention that the trial judge did scale back the request quite a bit.

            Kia then argued that it offered to settle for $25,730.44 over 18 months before trial.  However, that argument did not resonate because that would not come close to covering the admitted purchase price of the vehicle as financed.

Civil Rights: $206,157.50 Attorney’s Fees Request By Defendant Prevailing On Summary Judgment Against FEHA Plaintiff Properly Denied

Action Was Not Frivolous And Was Not Prosecuted In Bad Faith.

            County of Los Angeles, in Shah v. County of Los Angeles, Case No. B291084 (2d Dist., Div. 3 Aug. 22, 2019) (unpublished), was not happy when the trial judge denied its attorney’s fees request of $206,157.50 after prevailing against plaintiff on FEHA claims. The problem is that a prevailing defendant must show the FEHA claims were frivolous under Government Code section 12965(d).  Unfortunately, even though County prevailed on a summary judgment motion, there was sufficient opposition and potentially triable factual issues to justify the denial of fees.  After all, simply losing the case does not mean plaintiff’s action was frivolous.  (Baker v. Mulholland Security & Patrol, Inc., 204 Cal.App.4^th 776, 784 (2012); Robert v. Stanford University, 224 Cal.App.4^th 67, 70 (2014).) 

Family Law: Husband Properly Assessed DVPA Mandatory Fees Because Of Wife’s Financial Disparity

Wife Prevailed In Obtaining Certain DVRO Orders Which Justified Mandatory Fees.

            In In re Marriage of Karen & Jason H., Case No. E068153 (4^th Dist., Div. 2 Aug. 21, 2019) (unpublished), among other things, wife was awarded some attorney’s fees (all in all, totaling $275,000) against husband.  However, some related to her winning domestic violence orders along the way, including personal-conduct and stay-away orders as well as a stipulated restraining order.  That was a sufficient basis under the Domestic Violence Prevention Act (DVPA), which has a mandatory fee-shifting clause in favor of a prevailing party like wife here who could not afford the fees based on the relative financial positions of the two sides.  (Fam. Code, § 6344(b).) 

Costs, Deadlines: Costs Memorandum Filed Outside Of 15-Day Entry Of Judgment Deadline By Clerk Was Properly Stricken By Trial Judge

Claiming Party’s Counsel Continued To Use East L.A. Address For Pleadings, Even Though Moving To Simi Valley, Such That Clerk’s Entry Notice To East L.A. Address Supported Striking Costs Memorandum, Which Was Filed Almost Five Months Later.

            I guess we can say that the moral of AV Sikh Center v. Antelope Valley Sikh Center, Case No. B289045 (2d Dist., Div. 8 Aug. 21, 2019) (unpublished) is if you move your law practice to a new address, make sure your pleadings are consistent with that move to make sure you do not blow deadlines.

            In this one, a prevailing party’s counsel moved from an east L.A. office address to Simi Valley, even filing a change of address with the court.  However, counsel continued to file pleadings listing the east L.A. address, with the superior court clerk sending a notice of entry of judgment to counsel at the same east L.A. address.  Almost five months after the clerk served notice of entry of judgment, counsel filed a costs memorandum on behalf of his client, although indicating that he checked the internet docket along the way.  The trial judge found the costs memorandum was untimely, striking it because it was way after the 15-day deadline under CRC 3.1700.  The appellate court affirmed the result based on counsel’s confusing conduct and testimony that he checked the docket—if counsel had, the entry of judgment would have popped up.

            Lesson here:  if you change offices and send a change of location, stick to that new change!

Fee Clause Interpretation, Landlord/Tenant: Guarantor Limitation Of Liability Provision Did Not Limit Fee Recovery

Guaranty Limitation Applied Only To Damages, Not To Attorney’s Fees Which Are Costs Instead.

            In Valencia Gateway Retail IV, LLC v. Woltman, Case No. B288726 (2d Dist., Div. 5 Aug. 20, 2019) (unpublished), two defendant guarantors of a breached lease argued that a guaranty liability limitation—“equal to six months’ charges due under the lease” after tenant successfully performed for three years—prevented an award of attorney’s fees against them as non-prevailing parties despite a fees clause in the guaranty stating “[i]f Landlord is required to enforce Guarantor’s obligations by legal proceedings, Guarantor shall pay to Landlord all costs incurred including, without limitation, reasonable attorney’s fees.”  The trial court did not buy the argument, awarding prevailing landlord $30,365.000 in fees under the guaranty fees clause.

            The 2/5 DCA affirmed the fee recovery.  It, too, did not believe that the guaranty limitation applied to fees because the guaranty fees clause was not so limiting, and the limitation only applied to damages rather than costs such as attorney’s fees.

Appealability, Discovery: Appeal From Final Judgment Does Preserve Challenges To Discovery Rulings.

2/4 DCA Finds Persuasive Reasoning From Prior 2/8 Decision On This Issue.

            We found Baiul-Farina v. Crown Media Holdings, Inc., Case No. B279653 (2d Dist., Div. 4 Aug. 21, 2019) (unpublished) interesting, not because it affirmed discovery sanctions rulings, but for its discussion on appealability.  Appellant argued that discovery sanctions rulings were not appealable under CCP § 906 because they were not on the merits.  The 2/4 DCA disagreed, finding persuasive the reasoning in In re A.L., 224 Cal.App.4^th 354, 362 n. 4 (2014), a Second District, Division 8 decision, which found that an appeal of a final judgment will encompass prior discovery rulings also. 

Costs, Deadlines: Premature Filing Of Costs Memorandum In 2010 Did Not Mean It Was A Nullity, Such That 2018 Motion To Tax Costs Was Way Too Late

Unpublished Opinion Does A Nice Job Of Discussing Modern View On Premature Costs Memo Filings.

            In Paland v. Brooktrails Township Services Dist. Bd. of Directors, Case No. A156229 (1^st Dist., Div. 5 Aug. 19, 2019) (unpublished), Defendant filed and served a memorandum of costs in February 2010 seeking $1,029.02 in costs incurred on appeal.  In November 2018, the other side filed a motion to tax costs, arguing that the costs memorandum was prematurely filed before the remittitur issued in the prior appeal way back in the day.  The trial court denied the motion to tax costs as untimely, a conclusion affirmed by the 1/5 DCA.

            The appealing party argued that the lower court lacked jurisdiction to award costs because the costs memorandum was prematurely filed.  There was some older authority which supported this argument.  (See, e.g., Johnson v. Schimpf, 91 Cal. App. 26, 36-37 (1928); Abney v. Belmont Country Club Properties, Inc., 100 Cal. App. 12, 17 (1929).)  However, jurisprudence does evolve, with the modern view being that premature filing of a costs memorandum is a mere irregularity which is waived unless the opponent files a motion to strike/tax costs.  (Haley v. Casa Del Rey Homeowners Assn., 153 Cal.App.4^th 863, 880 (2007); Brown v. West Covina Toyota, 26 Cal.App.4^th 555, 560 (1994), disapproved on other grounds in Murillo v. Fleetwood Enterprises, Inc., 17 Cal.4^th 985, 996 (1998).)  Because the appealing party did not file a motion to tax costs under the time deadlines of California Rules of Court, rules 2.278 and 3.1700(b), the costs memorandum became a judgment for costs.

            BLOG UNDERVIEW—Shanna Strader is a legal assistant for co-contributors Mike and Marc.  We find one of the leading “modern trend” cases fitting, because Shanna has a granddaughter named Haley.   

Family Law, Sanctions: Father Making Another Sanctions Motion After Trial Judge Already Ruled On Prior Request Was Properly Denied

“A Party Cannot Be Sanctioned Twice For the Same Misconduct.”

           Presiding Justice Gilbert, who has a unique writing style, summed up the “end result” in Marriage of Anka & Yeager, Case No. B289610 (2d Dist., Div. 6 Aug. 19, 2019) (unpublished) this way: “A party cannot be sanctioned twice for the same misconduct.”

            In this case, a trial judge earlier imposed sanctions against a mother and her attorney to the tune of $50,000, jointly and severally (payable to the superior court), for disclosing confidential information contained in a child custody evaluation report, which authorizes a lower court to impose monetary sanctions under Family Code section 3111(d).  Mother and her attorney appealed, with the 2/6 DCA affirming the sanctions award against the attorney, but not as to mother.  While the appeal was pending, father made a motion for attorney’s fees and costs for the appeal as additional sanctions, which was denied by the trial judge. 

            The 2/6 DCA affirmed the “further” sanctions denial.  The problem here was that the trial court had previously imposed sanctions for attorney’s conduct, such that “[i]t cannot now impose additional sanctions for the same misconduct.”  (Sabado v. Moraga, 189 Cal.App.3d 1, 10-11 (1987).)

Civil Rights: E.D. Pennsylvania District Judge Denies Title VII Fee Recovery To Plaintiff Only Winning Nominal Damages Of $1 Dollar On One Title VII Retaliation Claim

Plaintiff Sought To Recover $358,383 In Fees; Limited Success Was Key Reason For Denial.

            In Pierce v. City of Philadelphia, Civil Action No. 17-5539 (E.D. Pa. Aug. 2, 2019), a Native American plaintiff brought various civil rights, constitutional, Title VII, and state-related claims against City of Philadelphia for discrimination, harassment, retaliation, and hostile work environment.  Plaintiff withdrew some claims, and City obtained summary judgment on some claims relating to a 2017 failure-to-promote theory.  The case proceeded to trial on certain claims, with City beating discrimination claims but awarding plaintiff one dollar in nominal damages under a Title VII retaliation claim.  Plaintiff then moved to recover $358,383 in attorney’s fees and $29,436.56 in costs as the prevailing party on the retaliation claim. 

            District Judge Gerald J. Pappert of the Eastern District of Pennsylvania denied the attorney’s fees request altogether and remanded for the clerk to review a request for routine costs by plaintiff.

            The main reason for the fee denial was the limited success obtained by plaintiff in the overall scheme of things, even though it is not per se dispositive.  (Farrar v. Hobby, 506 U.S. 103, 112, 117 (1992); see also Carroll v. Clifford Twp., 2014 WL 2860994 at *3 (M.D. Pa. June 23, 2014), aff’d, 625 F. App’x 43, 36 (3d Cir. 2015).)  However, the circumstances showed that the limited success was crucial in this case, with no subsidiary factors cutting the other way. 

Section 998: Rejecting Offeree Which Rejects First And Second CCP § 998 Offers Is Entitled To Addition Of Pre-Offer Fees/Costs Up Through Date Of Second Offer To The Base Judgment

Any Other Conclusion Would Run Afoul Of Section 998’s Purpose To Encourage Settlement.

            Hersey v. Vopava, Case No. B287896 (2d Dist., Div. 8 Aug. 14, 2019) (published) involved a situation where a plaintiff tenant who vacated an apartment sued for inhabitability issues.  Defendant landlord made two CCP § 998 offers, one for $10,000 and one for $20,001, both of which were rejected.  Tenant was awarded $7,438 in damages, but the trial judge found landlord to prevail after refusing to add pre-offer costs to the damages for determining if tenant “beat” the 998 offers.  The lower court awarded landlord costs and fees totaling $30,483.55.

            The 2/8 DCA reversed.  It found that the trial court should have added plaintiff’s costs and attorney’s fees up to the time of the second 998 offer to determine the correct “net” judgment.  The appellate court found there was no reason to “freeze” plaintiff’s costs to those incurred only before the first offer.  “Accordingly, we hold that where an offeree achieves a judgment more favorable than a first offer, the determination of whether an offeree obtained a judgment more favorable than a second offer should include all costs reasonably incurred up to the date of the second offer.”  (Slip Op., at p. 12.)  The judgment was reversed and remanded to have the trial court recalculate plaintiff’s total judgment.  We would predict, once this is done, plaintiff is likely the one to prevail for fees/costs purposes—a total reversal of fortune!

Section 998: When Offeree Beats First Offer, Court Refuses To Freeze Offeree's Costs At Time Of First Offer When Offeror Makes Second Offer

Court Could Not Find Case On Point,  So It Was Guided By Statutory Purpose Of Section 998.

        In Hersey v. Vopava, B287896 (2nd Dist. Div. 8 Aug. 14, 2019) (Stratton, Grimes, Wiley), the Court holds, "where an offeree achieves a judgment more favorable than a first offer, the determination of whether an offeree obtained a judgment more favorable than a second offer should include all costs reasonably incurred up to the date of the second offer."

        The background was a landlord-tenant dispute between tenant Hersey and landlord Vopava. The landlord made a $10,000 section 998 offer, followed by a $20,001 offer right before trial. The tenant rejected both offers, went to trial, and recovered $7,438. Concluding that the landlord's offers were reasonable and in good faith, and that the landlord's offer was better than the tenant's recovery, the Court awarded post-initial offer costs, which included attorney's fees, and amounted to $30,483.55. The tenant appealed.

        The trial court erred by not taking tenant's pre-first offer costs into consideration, which when added to the damages award, added up to $12,369.75, beating the landlord's initial $10,000 offer. And because the trial court failed to take into account costs that the tenant incurred between the time of the initial offer, and the time of the second offer, a remand is necessary to determine if the second offer of $20,001 was reasonable and in good faith.

        COMMENT: The Court explained that, while it could not find the same fact pattern in another case, its decision was guided by the principle that "the appropriate analytic framework for all multiple offer scenarios is to determine which rule will effectuate the statutory purposes of section 998." And it concluded that, "[i]t would not further the purpose of section 998, or be consistent with its statutory implementation to punish an offeree who beats an offeror's first offer by freezing her costs at the date of that low first offer."

        So now the trial court needs to determine whether the tenant beat the second offer. However, even if the tenant does not beat the second offer, the landlord's recovery will be limited to fees and costs incurred after the second offer --a  recovery that would include the fees and costs incurred in trial.

Private Attorney General: $93,000 In Appeal Fees Under CCP § 1021.5 Affirmed For Work On Prior Appeal Where Partial Reversal Resulted In Three Other EIR Deficiencies Identified For Correction By Orange County

Trial Judge Reduced Fee Request By About 20%.

            In on-going CEQA litigation between nonprofit citizen groups and a residential developer over a Yorba Linda project, the lower court initially found merit only on a greenhouse emission issue out of a myriad of EIR challenges in a proceeding involving Orange County and the developer.  However, in a prior appeal, our local Santa Ana appellate court found that three other issues—project description, fire hazards, and water supply—needed to be better addressed by the EIR.  (Incidentally, the fire hazards ruling came right after some horrendous Southern California fires.)  For partially prevailing in the prior appeal (because developer won on some issues also), nonprofit citizen groups requested $116,217.50 in appellate fees.  The trial judge awarded about $93,000, a 20% reduction.  Developer appealed.

            The 4/3 DCA, in an opinion authored by Justice Thompson, affirmed in Protect Our Homes and Hills v. County of Orange, Case No. G056618 (4^th Dist., Div. 3 Aug. 12, 2019) (unpublished).

            Developer first argued that the appellate court ordered each side to bear their own costs in the appeal such that no fee recovery was justified.  However, that did not retard a fee award given that fees and costs are treated separately in this regard even if the appellate court believes justice is served by having each side bear their own costs.  (Butler-Rupp v. Lourdeaux, 154 Cal.App.4^th 918, 927 (2007).)

            Next up was the argument that no significant benefit to the public was accomplished through the partial reversal.  Wrong, because reanalysis of the three issues were important, given that a lot of EIR restudies further the objectives of CEQA.

            The third challenge was that the nonprofit citizen groups did not demonstrate that they could not bear the fee expense under the Whitley costs/benefits analysis.  The problem here is that the groups indicated they had no financial stake in the litigation, with the lack of rebuttal by developer ending the inquiry into this argument.

            Last up was that fees should have been reduced more for the nonprofit citizen group’s lack of success, parsing out work on unsuccessful claims.  The appellate court determined that this is a discretionary exercise altogether, with none or not all of the time on unsuccessful claims needing to be excluded.  After all, there was a 20% reduction off of the fee request.

            BLOG OBSERVATION—This last issue on partial success is something which needs to be visited by the Legislature.  Before he left office, Jerry Brown said CEQA reform was the “Lord’s work.”  Well, there is more to be done here.  Right now, trial judges have total discretion to do what they want when a partial success argument is raised, with a lot of decisions saying that unsuccessful claims sometimes are brought in CEQA cases and affirming full CEQA requested fees even though there was limited success.  This case involved around 30 issues, with the noncitizen groups only winning four—garnering substantial trial and appellate court fees when the partial success and other challenges were made but rejected for the most part.  Some reform is needed on allowing fees on unsuccessful CEQA claims, like this case where many claims were either abandoned or were feeble in nature.  Otherwise, “kitchen sink” CEQA cases will abound, with prospect of large attorney’s fees untethered to actual success. 

Intellectual Property: Second Circuit Joins Third, Fourth, Fifth, Sixth, Ninth, and Federal Circuits In Applying Patent Act’s “Exceptional Case” Factors To Determine If Fee Recovery Warranted In Lanham Act Case

Second Circuit Did So In 2018, Recently Remanding A District Judge’s Award of Fees Under Lanham Act For A New Scrutiny Using The Octane Fitness Factors.

            In Sleepy’s LLC v. Select Comfort Wholesale Corp., 909 F.3d 519, 530-531 (2d Cir. 2018), the Second Circuit joined the Third Fourth, Fifth, Sixth, Ninth, and Federal Circuits in determining that the Patent Act’s standards for determining whether a case was exceptional for purposes of awarding fees to a prevailing party (as articulated in Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545 (2014)), also applied with respect to fee recovery in a Lanham Act case.  Recently, in 4 Pillar Dynasty LLC v. New York & Co., Inc., Nos. 17-2398/17-2399 (2d Cir. Aug. 8, 2019), the Second Circuit remanded a pre-Sleepy’s LLC fee award to a prevailing trademark infringement plaintiff so it could be rescrutinized through the more flexible Octane Fitness test rather than the district court’s utilization of the fact that a willful infringement case was per se exceptional.  (The Second Circuit observed that Octane Fitness establishes no presumption that cases involving willful infringement are exceptional.) 

            BLOG BONUS—The Ninth Circuit decision on this issue is Sun Earth, Inc. v. Sun Earth Solar Power Co., 839 F.3d 1179, 1181 (9^th Cir. 2016). 

Construction, Section 998: Defendant Pipe Supplier In Condo Construction Defect Suit Properly Denied HOA Section 998 Offer Of $325,000 As Too Token Given $22.7 Million Costs Of Repair For Defendant’s Scope Of Work

HOA Sought To Recoup $298,178.69 In Costs, Including $176,870.54 In Expert Witness Fees.

            In Acqua Vista Homeowners Assn. v. MWI, Inc., Case No. D073666 (4th Dist., Div. 1 Aug. 9, 2019) (unpublished), plaintiff homeowners association sued developer defendants as well as pipe supplier defendant MWI in a construction defect suit under the Right to Repair Act (Civ. Code, § 895 et seq.).  MWI made a pre-trial CCP § 998 offer of $325,000, which HOA did not accept.  The jury rendered a verdict in favor of HOA as against all defendants for nearly $24 million, with 92% responsibility being assigned to MWI.  However, in a prior appeal, the 4/1 DCA reversed the trial court’s judgment as a matter of law because HOA had failed to carry its burden of proof under Civil Code section 936 given that it required HOA to prove that MWI’s negligence or breach of a contract caused a violation of the Right to Repair Act.  (See 7 Cal.App.5^th 1129, 1135, 1164.)  MWI then moved to recoup against HOA $298,178.69 in costs, including $176,870.54 in expert witness fees based on the unaccepted 998 offer.  The trial judge declined to award any of these costs against HOA.

            The appellate court affirmed.  Like the lower court, the 4/1 DCA panel found the offer was too token in nature.  The $325,000 offer paled in comparison to the HOA’s $22.7 million costs-of-repair exposure with respect to MWI (which actually was confirmed through the reversed jury verdict).  The offer bore little prospect of acceptance.

            BLOG HAT TIP—We noticed that Justice Gilbert Nares was one of the concurring justices in this 3-0 opinion.  The Fourth District website has announced that Justice Nares will be retiring as of August 30, 2019 after 31 years on the appellate bench.  We wish him well. 

Landlord/Tenant, Section 998, Special Fee Shifting Statute: In Two Related Opinions, 1/2 DCA Explores San Francisco Eviction Ordinance Fee-Shifting Provision, Determining Owners Were Properly Awarded Attorney’s Fees Against Two Tenants

In One Case, Section 998 Offer Was Not Beat Even Though Two Plaintiff Tenants Did Get Positive Damages Under The San Francisco Residential Rent Stabilization And Arbitration Ordinance.

            The 1/2 DCA in two opinions, Pitre v. Lam and Wong, Case No. A151061 (1^st Dist., Div. 2 Aug. 7, 2019) (unpublished) and Randt v. Lam, Case No. A151062 (1^st Dist., Div. 2 Aug. 7, 2019) (unpublished), faced an appeal from two tenants after the trial judge awarded apartment owners attorney’s fees under a specific provision of the San Francisco Residential Rent Stabilization and Arbitration Ordinance (Rent Ordinance).  The appellate court affirmed the fee awards.

            In Pitre, one of the plaintiff tenants rejected a CCP § 998 offer for $50,000, including waiver of unknown claims arising from the theories in his complaint, but only recovered $32,250 from apartment owners after a jury trial.  The complaint was predicated on the theory that owners interfered with tenant’s right to quiet use and enjoyment by unlawfully evicting him through an improper relative move-in.  The trial judge awarded tenant pre-offer fees of $5,857.19, as well as awarding owners $47,564 in post-offer attorney’s fees under a fee-shifting provision of the Rent Ordinance.  Tenant appealed, but the fee award remained intact.  First of all, the section 998 offer was valid because requesting waiver of derivative claims relating to the theories in the complaint was proper (Ignacio v. Caracciolo, 2 Cal.App.5^th 81, 84, 89-90 (2016)), and the offer was made deep enough in the case such that the tenant had enough information to reasonably evaluate it.  Second, tenant’s theory was grounded in a section of the Rent Ordinance having a bilateral fee provision allowing fee recovery by a prevailing defendant, such that it was distinct from fee recovery under another Rent Ordinance provision which was unilateral in favor of only a prevailing plaintiff.  This was not a situation where the defense prevailed on claims which were intertwined with unilateral attorney’s fees provisions, where fee recovery is not allowed.  (Compare with Turner v. Association of American Medical Colleges, 193 Cal.App.4^th 1047, 1071 (2011); Carver v. Chevron U.S.A., Inc., 119 Cal.App.4^th 498, 504 (2004); Wood v. Santa Monica Escrow Co., 151 Cal.App.4^th 1186, 1191 (2007).)

            Randt involved a suit against the same apartment owners by a tenant who was defensed (finding tenant was evicted in good faith), which prompted the lower court to award owners $51,318 in attorney’s fees under the Rent Ordinance provision at issue in Pitre and $19,279 in costs.  Those awards, too, stood on appeal.  The parties’ discussion of a CCP § 998 offer was puzzling to the appellate court, because owners outright prevailed so as to be entitled to fees and costs based on the Rent Stabilization provision given that tenant’s theory arose under a section where there was a bilateral fee-shifting provision.