CALIFORNIA ATTORNEY'S FEES

SLAPP: SLAPP Fee Award Affirmed Because Hourly Rates Were Reasonable

Opposing Arguments Were Dismissed, Including That A Prior Disciplined Attorney’s Rates Should Be Compromised Where No Causal Connection Demonstrated.

            SLAPP fees are mandatory to a prevailing defendant, such that a challenge to their reasonableness must have some bite.  That bite was missing in Creative Care, Inc. v. McEntyre, Case No. B308643 (2d Dist., Div. 3 Aug. 17, 2022) (unpublished).  The litigant suffered a $14,030 adverse SLAPP fee attorney’s fees order.  That litigant challenged the $550 hourly rate by opposing counsel, but the appellate court affirmed after deciding that (1) some faulty legal arguments by counsel did not necessarily justify a reduction under the circumstances of the matter, and (2) the claimant’s attorney’s prior Bar discipline did not warrant a deduction because there was no causal connection between the discipline and the fee request which was made in this case. 

Private Attorney General: $468,228.73 Fee Award To Sierra Club In CEQA Case Affirmed

.5 Multiplier Based On Contingency Factor Also Sustained.

            In Sierra Club v. County of San Diego, Case No. D079518 (4^th Dist., Div. 1 Aug. 17, 2022) (unpublished), the 4/1 DCA affirmed a $468,228.73 fees award to the Sierra Club under the private attorney general statute where a lower court vacated an EIR certification and approval for two developments, with a .5 positive multiplier being awarded.  The appellate court, as we bloggers see from the news, validated that carbon-offset mitigation measures need to be considered.  It also found this was not just a “tag along” to related proceedings and a positive multiplier was justified based on a contingency risk factor.

            BLOG OBSERVATION—Although she was not involved in this case, we note that 4/1 DCA Justice Judith L. Haller will be retiring from this appellate division after 28 years of service.  We wish her well. 

Sanctions: $960 Sanctions Order Issued For A Frivolous Motion For Reconsideration Is Affirmed On Appeal

Decision Also Has A Colorful Quote On A Confusing Appellant’s Brief.

            If a motion for reconsideration is meritless, frivolous, or filed in bad faith, the trial court may order sanctions against the movant pursuant to section 128.7 of the Code of Civil Procedure. (Code Civ. Proc., § 1008, subd. (d); Young v. Rosenthal (1989) 212 Cal.App.3d 96, 123; In re Marriage of Green (1989) 213 Cal.App.3d 14, 26.)  A lower court in Banks v. Mastorakos, Case No. B309937 (2d Dist., Div. 2 Aug. 16, 2022) (unpublished) imposed $960 in sanctions against plaintiff for bringing a frivolous motion for reconsideration after an adverse summary grant, a result affirmed on appeal because the reconsideration motion did not mention any new facts and cited improper statutes/ordinances.

            BLOG OBSERVATION:  We also enjoyed Justice Ashmann-Gerst’s observation about the quality of appellant’s briefing on appeal, which should remind us all of how real care needs to be devoted to developing arguments on appeal or whether to appeal in the first place: “On appeal, Banks raises a confusing miasma of arguments.  As another court observed of a similarly perplexing opening brief, ‘this document is strongly reminiscent of those magazine puzzles of yesteryear where the reader was challenged to “guess what is wrong with this picture.”’ (People v. Dougherty (1982) 138 Cal.App.3d 278, 280.)”

Section 1717: $70,882.50 Attorney’s Fees Award Based On A Construction Subcontract Is Affirmed On Appeal

Neither Legal Entitlement Nor Fee Amount Arguments Prevailed On Appeal.

            Plaintiff subcontractor brought a third-party beneficiary action against general contractor which was resolved adversely on res judicata and statute of limitations grounds in a situation where there was a subcontract with a contractual fees clause encompassing “actual” attorney’s fees incurred.  With a few subtractions from the claimed request, the lower court awarded prevailing general contractor $70,882.50 in contractual attorney’s fees.

            That result was affirmed by the Fifth District in Ayala Boring, Inc. v. HPS Mechanical, Inc., Case No. F082276 (5^th Dist. Aug. 16, 2022) (unpublished).  Fee entitlement was present based on the complaint allegations referencing a subcontract with a fees clause, even though in a footnote the appellate panel indicated that it was unlikely that “actual” instead of “reasonable” fees could be awarded under Civil Code section 1717.  As to the amount, the award was not shocking given the detailed substantiation of hourly rates and fee work by the fee claimant.

SLAPP: Sixth District Reverses Denial Of Attorney’s Fees And Costs To SLAPPing Defendant Achieving Partial Success

The Record Did Not Support Trial Court’s Finding That Defendants Derived No Practical Benefit From Their Partially Successful SLAPP Motion.

            California’s Code of Civil Procedure section 425.16(c)(1) entitles a prevailing defendant on a special motion to strike to recover attorney’s fees and costs, but does not define the term “prevailing defendant” and is silent on entitlement where a SLAPPing defendant achieves only partial success – leaving to the trial court’s broad discretion determination as to whether a defendant prevailed and is entitled to fees.  However, as a general rule, a SLAPPing defendant who achieves even partial success must generally be considered the prevailing party.  An exception to this general rule exists where the results of a defendant’s SLAPPing success are so insignificant that they achieve no practical benefit.  (See Mann v. Quality Old Time Service, Inc., 139 Cal.App.4th 328, 340 (2006).)

            Success without benefit is what the trial court determined defendants had achieved in Maleti v. Wickers, Case No. H048393 (6^th Dist., August 15, 2022) (published) because they were not successful in achieving their ultimate goal of dismissing the entire complaint.  This resulted in the trial court’s denial of defendants’ attorney’s fees motion.  However, the Sixth District disagreed and reversed – finding defendants’ success in striking one of the two causes of action alleged against them to be no pyrrhic victory.  Unlike the situation in Moran v. Endres, 135 Cal.App.4th 952 (2006) – the case relied on by plaintiff – defendants’ partial SLAPPing success did not accomplish nothing.  Rather, it had the practical benefits of eliminating the possibility of facing liability under the stricken cause of action, and of narrowing the litigation, discovery, motion practice, and trial prep. 

Costs: Fifth District, In A 2-1 Split Decision, Confirms That Judicial Council Trial Court Costs Memorandum Form Sufficed For A Verification Despite Not Having “Under Penalty of Perjury” Language

Panel Also Concluded That Aggregate Costs Descriptions And Failure To Apportion Out For Nonprevailing Parties Are Solid Bases To Tax Costs.

            In Srabian v. Triangle Truck Center, Case No. F080066 (5^th Dist. Aug. 12, 2022) (unpublished), the Fifth District faced an interesting legal question where a prevailing party used the MC-010 Judicial Council form for claiming costs, which does not have “under penalty of perjury” language.  So, the question was whether this was a compliant verification.  The majority concluded that it was under CCP § 2015.5, while a dissenting justice found it was not properly sworn to as to comply with CRC 3.1700(a)(1) dictates.  What this might countenance is that practitioners include penalty of perjury language in a costs memorandum (adding it to the MC-010 form), with the Judicial Council maybe contemplating an action to include this added language—given that this issue likely may be raised in future cases.

            With respect to other issues, the appellate court did agree with some “tax costs” decisions by the lower court, the most important ones teaching us this:  (1) each defendant must be considered separately as far as determining the propriety of claimed costs; (2) an aggregate dollar amount without any costs itemization may not be facially proper, especially with respect to specifying costs for each deponent; (3) there is no need for a trial judge to shift through invoices to determine what is proper; and (4) where apportionment is raised as an objection, the burden may indeed shift to the costs claimant for purposes of showing which claimed costs are appropriate.

Appealability, Special Fee Shifting Statute: Despite No Real Opposition To Civil Harassment Restraining Order Fee Motion, Reversal Of Damages Award Means Fee Award Had To Be Revisited

Appellate Court Agreed That No Opposition To Fees Would Normally Be Dispositive, But Reversal In Eliminating Damages Changed The Landscape.

            Hao v. Wang, Case o. B306737 (2d Dist., Div. 8 Aug. 12, 2022) (unpublished) is an interesting case in showing how even a litigant not opposing a fees motion may still get a remand where there is a significant merits reversal.  However, there was a threshold appealability issue which we also discuss.

            What happened here is that a tenant obtained issuance of a civil harassment restraining order, including an award of special damages and damages for pain and suffering against landlord.  More pain was imposed with an attorney-fee shifting award under the harassment statute because there was no opposition by landlord.  The fee award was reversed because damages were not recoverable under the harassment scheme. 

            The appealability issue was resolved against landlord because tenant’s appeal of an order awarding fees but not fixing the amount means that the first order encompasses the subsequent order fixing the amount.  (Golightly v. Molina, 229 Cal.App.4^th 1501, 1520-1521 (2014).)  [BLOG NOTE—We do not opine often on the correctness of the award, but a subsequent order fixing fees should also be appealed as we have blogged on many times under our category “APPEALABILITY,” just to avoid on a jurisdictional appellate challenge.]

            Despite landlord not contesting the fee motion, the forfeiture was not dispositive because the damages elimination reversal required a “revisit” of the fee award, given this was a legal issue which could be considered de novo.

Deadlines, Section 998: Plaintiff’s Acceptance Of A 998 Offer With Stipulated Fee Cap Took The Steam Out Of Later Attorney’s Fees Motion

Beyond That, The Motion Was Not Filed On 16-Court Days’ Required Notice.

            This case shows how a litigant and his attorney’s prior actions can have a dramatic impact on a later attempt to obtain more attorney’s fees through a noticed fee motion.

            In Baiocchi v. Ford Motor Co., Case No. G059143 (4th Dist., Div. 3 August 11, 2022) (unpublished) plaintiff accepted Ford’s CCP § 998 pretrial settlement offer for $27,000 for a car buyback, plus $10,000 in attorney’s fees, expenses, and costs (even though plaintiff had the option of moving for a different fee award by a motion addressed to the court, an option he did not elect although claiming otherwise later on).  Plaintiff accepted, negotiating a check which had the $10,000 capped fees in the amount of the check.  Then, after continued status conferences where plaintiff’s attorney sent a special appearance attorney despite the court wanting retained counsel to be present, and despite indications from the lower court and Ford that it wanted to see a noticed fee motion soon, plaintiff filed a Song-Beverly Act statutory motion for attorney’s fees of $179,481 (inclusive of a 1.5 multiplier) on less than the 16-court days’ required notice.  The lower court denied the motion based on lack of proper notice and on the ground that plaintiff had accepted the $10,000 fee feature of the statutory offer.

            The 4/3 DCA, in an opinion authored by Justice Goethals, affirmed.  The two bases relied on by the lower court resonated with the appellate court—especially given that plaintiff accepted the $10,000 attorney fee offer by negotiating the check. 

Fee Clause Interpretation, Mediation: Fee Clause Allowing Only Prevailing Party Attorney’s Fees For Mediation Or Arbitration Proceedings Enforced As Written

Fees Clause Did Not Allow For Recovery Of Fees In Litigation.

            In Glass v. Whills, LLC, Case Nos. B304806 et al. (2d Dist., Div. 4 Aug. 10, 2022) (unpublished), both the trial and appellate court were dealing with a civil litigant’s claim for prevailing party attorney’s fees recovery under a fees clause providing that any disputes must be submitted first to mediation and, if unresolved, to binding arbitration, and that “[t]he non-prevailing party in any such mediation or arbitration, as determined by the mediator or arbitrator, shall pay the prevailing party’s court cost and attorneys’ fees.”  The lower court denied the litigant’s motion for fees, finding that the mediations in which the parties participated failed to result in a prevailing party resolution or determination, and the parties did not thereafter pursue arbitration.

            The appellate court affirmed that conclusion.  It found that the clause was unambiguous; the binding mediator had the ability to determine the prevailing party such that the absence of language indicating a court could award prevailing party fees sealed the deal.

Arbitration, Retention Agreements: Second Dist. Div. 8 Holds Work Improperly Done By Attorney Not Licensed In California Does Not Completely Invalidate Arbitration Or Retention Agreement

Just Because Some Work Was Done By An Attorney Not Licensed In California Doesn't Necessarily Mean The Arbitration Agreement Or The Fee Agreement Is Unenforceable.

        Plaintiff Mark Brawerman sued Loeb & Loeb, arguing the law firm failed to protect his interests in  negotiating with the venture capital firm Wasserstein & Co., resulting in the eventual loss of control of his successful business TMI marketing healthy frozen food desserts. As a result of the arbitration agreement in his retention agreement with Loeb & Loeb, the parties arbitrated. Brawerman was unhappy with the result. Learning that a substantial amount of Loeb & Loeb's services (382 of 928 hours) had been performed by an attorney unlicensed to practice law in California (but licensed in other states), Brawerman argued his agreement with Loeb & Loeb was against public policy, the arbitrator had exceeded the scope of his powers by proceeding under an invalid arbitration agreement, and the arbitration award should therefore be vacated rather than confirmed. The arbitration award was confirmed, and Brawerman's appeal followed. Mark Brawerman et al. v. Loeb & Loeb LLP et al, B305802 (2/8  8/3/22) (Harutunian, Grimes, Wiley).

        The Court of Appeal affirmed, based on its analysis of two key cases: Sheppard, Mullin, Richter & Hampton, LLP v. J-M Manufacturing Co., Inc., 6 Cal.5th 59 (2018) and Birbrower, Montalbano, Condon & Frank v. Superior Court,  17 Cal.4th 119 (1998).

        Sheppard held that the retention of the law firm, which happened to result in a severe conflict of interest, could be invalid as against public policy, resulting in a loss of attorney fees. In Brawerman, the court limited Sheppard by explaining Sheppard applied to a situation where a breach of professional ethics infected the entire agreement from its inception. Birbrower, like Brawerman, involved a situation in which an attorney unlicensed in California performed work for a California client. While the California Supreme Court held that the Birbrower firm could not collect under the contract for work illegally performed in California by New York attorneys, it did not void the entire retention agreement, because it was possible that some of the work had been properly done by New York attorneys in New York, and that work might be severable from the work illegally performed.

        Unlike in Sheppard, in Brawerman there was no conflict of interest, nor was there a basis for finding that the retention agreement was improper from the beginning. In fact, but for the fact that an attorney unlicensed in California had performed some of the work in Brawerman, there would have been no basis for attacking the fees. Loeb & Loeb has plenty of California attorneys who could have been enlisted to do work for a California client under the retention agreement. Similar to Birbrower, the work improperly done by the attorney unlicensed in California, which involved filing an arbitration demand, might be separated from the work done by licensed California attorneys. The agreement in Brawerman need not be entirely invalid if work that was done properly can be severed from work that was done improperly. 

            The Court of Appeal affirmed the confirmation of the arbitration award in Brawerman.

        COMMENT: Interestingly, the award in Brawerman resulted in disgorgement of fees to plaintiffs in the amount $138,075 for work done by the unlicensed attorney, and fees incurred in the arbitration of $94,833. So the retention agreement and arbitration agreement were legal, but the work done by the attorney unlicensed in California was not compensable. But this was surely small potatoes for Brawerman, who believed his attorneys had not protected him properly, resulting in loss of control over a multi-million dollar company, and who therefore wanted to undo the arbitration award in its entirety. 

        Out-of-state attorneys are, of course, happy to know that California fixed the problem after Birbrower regarding out-of-state participation in arbitrations. California now has what is essentially a "pro hac vice" approach to out-of-state attorneys wishing to participate in California arbitrations. Cal. Code Civ. Proc., § 1282.4.

        This post appeared earlier on co-contributor Marc's California Mediation and Arbitration website.

Private Attorney General: Homeowners Prevailing In Malibu District Assessment Validation Battle Properly Denied Over $2.4 Million In Requested Attorney’s Fees

Whitley Financial Analysis Adopted By Lower Court Sustained On Appeal.

            In Broad Beach Geologic Hazard Abatement Dist. v. 31506 Victoria Point LLC, Case Nos. 304699 et al. (2d Dist., Div. 4 filed Aug. 2, 2022; posted Aug. 3, 2022) (published), a group of Malibu homeowners successfully prevailed in an assessment validation proceeding against District under Proposition 218, a determination affirmed on appeal.  Certain homeowners then moved for attorney’s fees under California’s private attorney general statute, CCP § 1021.5, for fees totaling over $2.4 million.  The lower court denied those requests, triggering an appeal by certain homeowners.  The fee denial, too, was affirmed on appeal.

            The principal reason for affirmance was that the homeowners’ economic benefit in the litigation exceeds their litigation costs under the cost/benefit analysis of Conservatorship of Whitley, 50 Cal.4^th 1206 (2010) [our Leading Case #14].  The lower court used a formula in arriving at this determination, taking the 10-year benefit to the separate group of homeowners, discounting by 50%, and then comparing that discounted benefit number to the homeowners’ litigation costs.  The appellate court saw nothing wrong with this math, as well as rejected the argument that the possibility of a future assessment was enough to justify fee awards. 

            BLOG HAT TIP—Matthew Kanin, who has co-counseled several appeals with co-contributor Mike Hensley, won on the merits but lost the fee battle on appeal.  Hat tip just the same.

Bankruptcy, Costs, Ethics: Ninth Circuit Reiterates That Costs Associated With Attorney Disciplinary Proceedings Are Nondischargeable In A Chapter 7 Case

$61,122.27 Was The Tab.

            In Kassas v. State Bar of California, No. 21-55900 (9^th Cir. Aug. 1, 2022) (published), the Ninth Circuit reiterated that, in line with In re Findley, 593 F.3d 1048 (9th Cir. 2010), the costs associated with a Chapter 7 debtor attorney’s disciplinary proceedings were nondischargeable under § 523(a)(7).

Section 1717: Interim Award Of Contractual Fees Under Civil Code Section 1717 Are Not Allowable Unless All The Claims In An Action Are Resolved

Premature Award Of $1.1 Million In Fees By Group Of Plaintiffs Reversed.

            A group of tenant plaintiffs in Chen v. Valstock Ventures, LLC, Case No. A161885 (1^st Dist., Div. 4 July 29, 2022) (published) won about $1.1 million in an interim fee award against a defendant after winning a summary adjudication motion on their declaratory relief contract claim.  However, tenants had remaining non-contract claims to be resolved.  The 1/4 DCA reversed.  After an examination of the language and policies underlying Civil Code section 1717, the Rules of Court, and other statutes, it determined that interim section 1717 fee awards are impermissible, especially given that a summary adjudication order is not appealable and that section 1717 envisions a final judgment, dismissal, or other final disposition before fee requests can be pursued. 

Deeds Of Trust, Fee Clause Interpretation: Borrower Losing Wrongful Foreclosure Action Was Properly Assessed With Contractual Attorney’s Fees Under the Note To The Tune Of $878,067.11

“Security First”/Antideficiency Arguments Did Not Prevail Because Contractual Fee Exposure For Wrongful Foreclosure Claims Were Independent Contractual Obligations.

            This next appeal is a somewhat related appeal to our independent July 26, 2022 post regarding sanctions awarded against plaintiff borrower’s attorney for violation of trial preparation rules.  In Shiheiber v. JPMorgan Chase Bank, N.A., Case No. A160189 (1^st Dist., Div. 2 July 28, 2022) (unpublished), plaintiff lost wrongful foreclosure claims against lender (the merits ruling affirmed in an earlier appeal), with the trial judge assessing $878,067.11 in contractual fees against borrower and in favor of lender based on a promissory note fee clause.

            That fee award was affirmed on appeal, with borrower not challenging the amount of the award, but only challenging fee entitlement.  Because the wrongful foreclosure loss triggered contractual fee exposure under separate loan documents, the fee award was legally warranted.  (See Passanisi v. Merit-McBride Realtors, Inc., 190 Cal.App.3d 1496, 1507-1509 (1987); Flynn v. Page, 218 Cal.App.3d 342, 349 (1990); Jones v. Union Bank of California, 127 Cal.App.4^th 542, 551 (2005).)  These cases establish “that a foreclosure sale does not extinguish or preclude enforcement of a prevailing party attorney fee clause in the loan instruments.  Such a provision represents a separate contractual covenant, distinct from the covenant to repay the loan on specified terms, that is simply intended to alter the traditional American rule that each side bear their own attorney fees in the event of litigation between them.”  (Slip Opn., p. 9.)  The promissory note clause was broad enough to encompass tort wrongful foreclosure claims.  (Yoon v. Cam IX Trust, 60 Cal.App.5^th 388, 391, 393 (2021).)  So, the fee award was upheld.

Section 1717: If You Claim A Redlined Draft Agreement Is The Contract And You Lose, Fee Exposure Can Occur

4/1 DCA Affirms Fee Award Where Pleadings Made It Clear That Redlined Draft Agreement Was The Operative Contract By Losing Plaintiff.

            Plaintiff lost a demurrer without leave founded upon contractual breach, duty to negotiate in good faith, and promissory estoppel claims, a determination affirmed on appeal because the letter of intent made it clear there was no agreement until a formal contract was agreed to and signed and because there was a draft redlined agreement with multiple changes which was never accepted.  The lower court then awarded $104,545 in attorney’s fees, the full request, based on a contractual fees clause in the redlined draft and under Civil Code section 1717.

            The fee award was upheld by the 4/1 DCA in Evans v. Bosa Development California II, Inc., Case Nos. D078272/D078818 (4^th Dist., Div. 1 July 27, 2022) (unpublished).  The LOI showed there was no duty to negotiate in good faith, although the redlined draft agreement showed that this did take place.  Defendant beat the contractual breach and derivative promissory estoppel claims such that it proved the nonexistence of the contract, entitling the defense to fees under section 1717.  (Hom v. Petrou, 67 Cal.App.5^th 459, 465 (2021).

Private Attorney General: Where Plaintiff Did Vindicate Users Of Dangerous Condition Area But Obtained A $1.326 Million Damage Award, Cost/Benefit Analysis Supported Denial Of CCP § 1021.5 Fee Recovery

Case Was Not Unusual For Allowing A Fee Award Under Cases Which Did Allow Under Rare Circumstances Where A Benefit Exceeded Litigation Costs.

            In Williams v. County of Sonoma, Case No. A162966 (1^st Dist., Div. 5 July 27, 2022) (unpublished), plaintiff won $1.326 million in a jury verdict against County for a public property dangerous condition where, on a bicycle, she struck a pothole.  In a prior appeal, County argued that she assumed the risk, but the appellate court rejected that argument based on the particular facts of the case—a narrow decision, although published.  Plaintiff then filed to recover lodestar attorney’s fees of $112,710 against County under CCP § 1021.5.  The lower court denied them based on the reasoning that her costs/benefits in the litigation, given the substantial jury verdict (even if discounted by 50% as far as hindsight expectancy which did occur), did not fall within unusual cases warranting such an award.

            The 1/5 DCA affirmed.  The appellate court did a nice review of “unusual cases” warranting a 1021.5 award where litigant’s expected benefits exceeded its actual costs.  The problem is that plaintiff did not fall within these categories because the published decision was quite narrow, plaintiff was not seriously impecunious, and her judgment was of the type that could fund an attorney to litigate the matter.  [If you want to know the “unusual cases” distinguished, they are Los Angeles Police Protective League v. City of Los Angeles, 188 Cal.App.3d 1, 10 (1986); City of Oakland v. Oakland Police & Fire Retirement System, 29 Cal.App.5^th 688, 703, 708 (2018); and Beasley v. Wells Fargo Bank, 235 Cal.App.3d 1407, 1418 (1991).]

Appeal Sanctions, Sanctions: $950 Sanctions For Violating Pre-Trial Preparatory Local Rules Affirmed On Appeal

Panel Also Issues Cautionary Warning For Badly Written, Nonpersuasive Appellate Briefs In The Future.

            The 1/2 DCA, in Shiheiber v. JPMorgan Chase Bank, N.A., Case No A160188 (1^st Dist., Div. 2 July 25, 2022) (published), affirmed a $950 sanctions award against an attorney for violating local pre-trial preparatory filing rules under Code of Civil Procedure section 575.2, even noting the trial judge was generous in awarding only this amount which was below State Bar reporting requirements.  Attorney, on appeal, advanced arguments rejected by the appellate panel:  that section 575.2 was limited only to pre-trial proceedings (no), and there was a necessity to have a bad faith demonstration (no).  It also published to indicate that appellant’s appellate briefing was dismissed and totally unpersuasive, warning practitioners that the Division will award appeal sanctions in the future for this type of briefing.  (The Division also indicated that respondent did not properly ask for sanctions in a separate noticed motion, only in respondent’s brief, which is in violation of CRC directives, so it would have been disingenuous to award sanctions given this error by the other side.)

Deadlines, Judgment Enforcement: $38,115 In Attorney’s Fees For Prior Appeal And Judgment Enforcement Reversed As A Matter Of Law, Leaving About $26,055 In Fees Intact

Prior Appeal Fees Were Untimely Sought And Judgment Enforcement Request Related To A Judgment Without A Fees Clause Award.

            In Peng v. F.M. Tarbell Co., Case No. B317907 (2d Dist., Div. 2 July 25, 2022) (unpublished), a trial judge awarded an additional $64,170 in attorney’s fees relating to appeal expenses and judgment enforcement costs as against appellant.  The 2/2 DCA affirmed, but it modified the award to reflect that $38,115 had to be excluded as a matter of law.  Specifically, $14,715 related to work on a first appeal, costs which were not timely claimed under the 40-day post-remittitur deadline in light of the costs being requested in connection with the second appeal.  The “stricken” other $23,400 amount was infirm because it did not constitute judgment enforcement costs recoverable because the judgment did not contain a fee award at the time the enforcement costs were incurred.  (Conservatorship of McQueen, 59 Cal.4^th 602, 605, 608-610 (2014) [efforts by a party to oppose an appeal from an underlying judgment are not efforts undertaken to enforce the judgment but to defend it against reversal or modification].)

Arbitration: FAA Does Not Preempt State Court Provisions Requiring Business To Timely Pay Its Share Of Arbitration Expenses In An Arbitration Involving An Employee Or A Consumer

Order Compelling Arbitration Was Vacated And $2,310 In Monetary Sanctions Against Company Affirmed On Appeal.

            The California Legislature recently enacted Code of Civil Procedure sections 1281.97, 1281.98, and 1281.99 which obligate a company which drafts an arbitration agreement relating to an employee or a consumer to pay its share of arbitration fees no later than 30 days after the due date, with a failure to do so being a material breach of the arbitration agreement that gives the employee or consumer, in addition to a mandatory award of attorney’s fees and costs related to the breach as well as other discretionary sanctions, the options of either (1) continuing to arbitrate, with the company paying fees and costs related to the arbitration as a whole, or (2) withdrawing from arbitration and resuming the litigation in a judicial forum.

            In Gallo v. Wood Ranch USA, Inc., Case No. B311067 (2d Dist., Div. 2 July 25, 2022) (published), the lower court vacated an order compelling arbitration and awarded $2,310 in monetary sanctions against a company which paid late its arbitration expenses under the state statutory provisions.  The defense argued that the result was preempted by the Federal Arbitration Act (FAA), 9 U.S.C. § 1 et seq.  The appellate court agreed with the trial court’s conclusion that the result was not preempted by the FAA, in line with consonant federal court decisions. 

Appeal Sanctions: Unsuccessful Patent Infringement Plaintiff, Losing Summary Judgment Motion Badly, And Its Counsel Are Jointly And Severally Assessed With Frivolous Appeal Sanctions Of $107,748.27

This Was A 2-1 Opinion, With A Reduction For Sanctions Motion “Fees On Fees”; Dissent Felt That Just A Weak Appeal Did Not Warrant Sanctions.

            Under Federal Rules of Appellate Procedure 38, a circuit court may award “just damages and single or double costs to the appellee” if an appeal is determined to be frivolous.  The Federal Circuit, in Pop Top Corp. v. Rakuten Kobo Inc., No. 2021-2174 (Fed. Cir. July 14, 2022) (nonprecedential order), used this rule to assess frivolous appeal sanctions of $107,748.27 against an unsuccessful patent infringement plaintiff badly losing a summary judgment motion which also did not go well on the merits appeal of the summary judgment later, as well as its counsel.  Apparently, the district court also issued Federal Rules of Civil Procedure 11 sanctions, although only the dissenting opinion alludes to this fact and that order was still under appeal. 

            Appellee then moved for attorney’s fees and double it costs of $140,964.46, inclusive of $53,216.19 in “fees on fees” for presenting the appeal sanctions motion before the Federal Circuit.  The majority of justices, in the order, granted the appeal sanctions request, but reduced it to $107,748.27, because it found that 83 hours to brief the sanctions motion as compared to 107.6 hours to respond to the appeal showed that $20,000 instead was the reasonable amount for “fees on fees.”  The sanctions award was assessed jointly and severally against plaintiff/appellant and its counsel.  The majority found the appeal frivolous based on its weakness and appellant’s misrepresentation about appellee’s position throughout the appeal.

            The dissent saw things differently, believing that even a weak appeal is something which does not justify appeal sanctions.  The dissent said this in part: “Litigation by its nature reflects the spin of advocacy, and the right of appellate review is a safeguard to the rule of law.  The judicial burden of reviewing a weak appeal or receiving one-sided argumentation does not warrant the sanction of award of attorneys’ fees.”

Sanctions: CCP §§ 128.5 And 128.7 Sanctions Motions Are Noncompliant Unless Filed 22 Days After Service Of The Unfiled “Safe Harbor” Motion

4/2 DCA Followed Broadcast Music Opinion From Earlier This Year.

            It looks like we are getting a gathering consensus from the intermediate appellate courts on the compliant timing for filing a CCP § 128.5 or 128.7 sanctions motion after service of the “unfiled, but served” safe harbor motion.  Agreeing with the conclusion of the 2/2 DCA in Broadcast Music, Inc. v. Structured Asset Sales, LLC, 75 Cal.App.5^th 596, 605 (2022) [reviewed in our March 12, 2022 post], the 4/2 DCA in Transcon Financial, Inc. v. Reid & Hellyer, APC, Case No. E076728 (4^th Dist., Div. 2 July 22, 2022) (published), reversed 128.5 and 128.7 sanctions because the motion was filed one day early.  Put another way, the true sanctions motion after expiration of the “safe harbor” period can be filed no earlier than 22 days after service of the unfiled, safe harbor pleading to be compliant.

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

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

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

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

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

Lodestar, Private Attorney General, Reasonableness Of Fees: FEHA Fee Recovery To Plaintiff’s Attorney Affirmed As Far As Reductions But Remand Issued To Determine Reasonable Hourly Rate Based On Out-Of-Town Rates

Plaintiff’s FEHA Request Was Reduced Drastically, But The Award Likely Will Go Up Some When Out-Of-Town Rates Are Considered—Although The $700,000 Award Was Substantial.

            When you are doing appellate work on abuse of discretion issues, the primary issue may be whether the lower court used the correct legal principles as far as reaching its discretionary decision.  That principle was in play to lead to a limited remand on a fee recovery in Elizondo v. Dept. of Transportation, Case No. C088987 (3d Dist. July 22, 2022) (unpublished).

            In this one, FEHA plaintiff won a $605,000 jury verdict, with the trial court later awarding over $700,000 in attorney’s fees, inclusive of a 1.2 positive multiplier out of a $4 million request (we kid you not), and $117,488.60 in costs (with the costs award largely affirmed on appeal).  The thrust of plaintiff’s appeal was that more fees should be awarded, with the principal contention being that much higher out-of-town hourly rates should have been awarded by a Bay Area attorney versus much lower rates for San Joaquin County attorneys, given that the venue was San Joaquin County.

            The Third District affirmed the fee award, except to remand with a trial court exploration of higher out-of-town hourly rates.  The lower court awarded $350 per hour to plaintiff’s counsel even though Bay Area rates were more in the $825 per hour range.  What led to the reversal was a good evidentiary showing by plaintiff’s counsel that local attorneys in Stockton and Sacramento would not take the case such that local counsel rates were not germane, with the lower court not applying the correct legal principles on out-of-town rates once plaintiff made this evidentiary showing.  With that said, the matter was remanded to look at a higher out-of-town hourly rate, but that did not detract from affirmed conclusions that the lodestar fee request was inflated for lack of preparation by plaintiff’s counsel at some junctures of the litigation, billing for political activities, billing for travel to conferences which could have been attended telephonically instead, billing for ministerial tasks, billing for unrelated administrative proceedings not expressly allowable under FEHA (see K.I. v. Wagner, 225 Cal.App.4^th 1412, 1423 (2014)), overlitigating the case, and billing for unproductive legal research.  Also, no private attorney general fees were justified because simply vindicating one plaintiff in a FEHA case did not meet the significant benefit prong of CCP § 1021.5.

Civil Rights: EAJA Attorney’s Fees Were Properly Denied In Immigration Matter Where It Took A Ninth Circuit En Banc Panel To Decide, Over The Vote Of Three Dissenting Justices, On The Ultimate Merits Issue.

Novelty And First Impression Of The Issue Showed That The Government’s Position Was Substantially Justified For EAJA Purposes.

            In Medina Tovar v. Zuchowski, No. 21-35664 (9^th Cir. July 21, 2022) (published), plaintiffs invalidated a regulation limiting derivative U-visas to spouses married at the time of the filing of the principal petition.  Plaintiffs moved for costs and attorney’s fees under the Equal Access to Justice Act (EAJA), 28 U.S.C. § 2412, but the district court denied the request because it concluded the government’s position was substantially justified.  The Ninth Circuit affirmed.  Simply because plaintiffs prevailed was insufficient, not creating any adverse presumption in favor of a costs/fee recovery.  Here, there was a novel, first impression issue which took an en banc circuit court to ultimately decide, over the votes of three dissenting justices and with the prior three judge decision being 2-1 on the merits issue.  The government’s position was not out of bounds. 

Prevailing Party: Lower Court’s Determination That Cross-Defendant Did Not Prevail In Lawsuit, Where Cross-Defendant Paid Some Settlement Funds To Plaintiff and Dueling Summary Adjudication/Motions Were Granted, Was No Abuse Of Discretion

Cross-Defendant Did Not Obtain Its Crucial Litigation Objectives.

            Catalina Media Development, LLC v. Thyssenkrupp Elevator Corp., Case Nos. B306012/B309162 (2d Dist., Div. 1 July 20, 2022) (unpublished) demonstrates how a discretionary no “prevailing party” determination is not easily overturned unless it is lopsided in nature.

            In this one, a servicer responsible for elevator maintenance was sued on cross claims by the owner of a building when a personal injury plaintiff allegedly was injured in an elevator incident. The servicer lost a summary adjudication motion on the duty to defend under a contractual indemnification clause vis-à-vis owner, both sides settled with plaintiff (servicer paid $99,000 and owner $11,000), and owner lost a summary judgment by servicer under which servicer had no ultimate liability to owner.  The lower court granted routine costs to servicer and against owner based on the summary judgment on owner’s cross-complaint, but it denied any attorney’s fees to servicer.

            Servicer’s appeal of the “no prevailing party” determination as to fees did not result in any change.  With respect to main litigation objectives, servicer did not achieve them because (1) it did not get its legal defense costs paid; (2) it did not beat back the obligation to pay owner’s defense costs under a duty to defend analysis; and (3) it did have to pay plaintiff some settlement moneys.  The dueling rulings on the summary adjudication/judgment motions was evidence that the parties got mixed results.   

Equity: Appellate Court Agrees To Stipulated Reversal Of Postjudgment Fee Award Given Merits Reversal

However, It Does Raise The Issue Of Whether Stipulated Reversals Specifically Apply To Postjudgment Fee Orders.

            This next post is likely of interest to appellate practitioners, because sometimes appellate issues are very technical if not arcane in nature. 

            In Mid-Wilshire Property, L.P. v. Dr. Leevil, LLC, Case No. G059899 (4^th Dist., Div. 3 July 20, 2022) (unpublished), a merits judgment against plaintiffs was reversed.  That left plaintiffs’ appeal of an adverse $476,353.55 in attorney’s fees to the former prevailing party.  The parties stipulated to a summary reversal of the postjudgment attorney’s fees award based on the merits reversal.

            The appellate court granted it, but only after drawing attention to an interesting postjudmgent, appellate issue.  Specifically, stipulated reversals under Code of Civil Procedure section 128(a)(8) only relate to judgments, not to other appealable orders such as a postjudgment orders awarding attorney’s fees.  However, given that the reversal of the fee order was inevitable based on the merits judgment reversal, there was no reason to not grant the stipulated reversal request—even if it was unclear whether the presumption against stipulated reversals applies to a postjudgment fee order. 

Private Attorney General: $66,725 CCP § 1021.5 Fee Award To Real Party In Interest Reversed Under Private Enforcement Necessity Prong

Court Of Appeal Found That Real Party’s Contribution Was Duplicative Of City’s Opposition On The Controlling Issue.

            In Oak Hill Park Co. v. City of Antioch (Let Antioch Voters Decide), Case No. A162604 (1^st Dist., Div. 4 July 18, 2022) (unpublished), real party in interest won a $66,725 private attorney general award based on its opposition to plaintiff’s pre-election challenge to a local ballot initiative.  However, the appellate court saw things differently based on the facts its efforts were duplicative of the city’s opposition on the controlling issue so that real party’s efforts to defend the initiative were neither necessary nor productive.  In doing so, the reviewing court relied upon the constructs set forth in Committee to Defend Reproductive Rights v. A Free Pregnancy Center, 229 Cal.App.3d 633, 642-644 (1991), finding the undisputed facts showed the award was an abuse of discretion based on city’s carrying of the load on this particular issue.

Civil Rights, Landlord/Tenant: Frivolous FEHA Case By Plaintiffs In Rental Dispute Justified $228,123.77 Attorney’s Fees, Expert Fees, And Costs Award In Favor Of Prevailing Defendant Owner

No Abuse Of Discretion Shown, With Prior Denial Of Summary Judgment Not Disqualifying Owner From Award Of FEHA Fees Under The Right Circumstances.

            FEHA has a pro-plaintiff fee shifting statute; however, under the right circumstances, a prevailing defendant can obtain fee shifting against a plaintiff where the case is shown to be frivolous in nature.

            That was the case in Bonhage v. Rawson, Case Nos. H047362 et al. (6^th Dist. July 18, 2022) (unpublished), which involved two plaintiff friends’ Unruh Act and FEHA case against defendant owners and brokers for failing to rent to them based on “unmarried persons” discrimination.  Brokers got out on a summary judgment motion, owner’s summary judgment motion was denied, and plaintiffs lost their case against owner after a full trial.  The lower court determined plaintiffs’ case was frivolous, awarding owner $228,123.77 in attorney’s fees, expert fees, and other costs under the FEHA statutory provision.

            The result was affirmed on appeal.  Under an abuse of discretion standard, the lower court could conclude that plaintiffs had no evidence of discrimination, especially given that the owner had rented to other unmarried couples before, and that the rental transaction fell out because the plaintiffs could not agree on a rental sharing agreement.  Finally, the caselaw in this area shows that a prior denial of a summary judgment to an eventually prevailing defendant does not disqualify that defendant from a frivolous FEHA fee recovery.

POOF!, Prevailing Party: Court Of Appeal Determines That Defendant Did Not Prevail Such That $454,071.50 Fee And Additional Costs Award To County Went POOF!

This Was A 2-1 Decision; Dissenting Justice Would Have Given Deference To Trial Court’s Reversed Prevailing Party Determination.

            Just to show how prevailing party determinations can be to subject to different interpretations, we now post on Youssef v. County of Los Angeles, Case Nos. B302773/B306187 (2d Dist., Div. 1 July 15, 2022) (unpublished).  The equities clearly figured into the result on appeal.

            What happened here is that plaintiff filed suit against L.A. County for failure to live up to the terms of a wrongful termination settlement agreement, failing to classify his termination as a voluntary resignation in its computer systems.  Along the way, County stipulated that it had not complied and agreed to provide a direct human resource contact to divulge no more than basic information about his former employment with the County.  However, a jury found that plaintiff suffered no damages and County did not breach the settlement agreement by providing information to prospective employers.  The lower court granted $454.071.50 in attorney’s fees to County as the prevailing party and against plaintiff under a settlement agreement fees clause, as well awarding routine costs to County.

            The 2/1 DCA reversed the fees and costs awards as a matter of law, in a 2-1 opinion.  The majority decided that the County’s stipulation effectively granted plaintiff injunctive relief and that County had admitted that it breached the settlement agreement, which occurred years into the litigation.  Although plaintiff failed to obtain damages, he achieved his main goal to require the County to comply with the settlement agreement.  That meant that no party prevailed such that the huge fee award against plaintiff was unjust.  The dissenting justice saw things differently:  plaintiff did not garner damages and the County was vindicated as to prospective employer liability—such results vindicated the lower court’s prevailing party determination even though the majority came to the opposite result.

            BLOG OBSERVATION—The result in this case reminds me of what Retired Judge Tevrizian (now an independent neutral) used to sometimes say about cases where an attorney’s fees award was a matter of discretion, “pocketbook” may mean that fees are not awarded under the right circumstances.  That seemed to be the case here. 

SLAPP: $5,081.25 SLAPP Fee Award To Defense Sustained On Appeal

Attorney Disqualification Efforts Properly Excluded.

            This one is interesting because it evokes the old adage “be content with what you have; rejoice in the way things are.”  In Elliott v. Maland, Case No. D078935 (4^th Dist., Div. 1 July 15, 2022) (unpublished), a partially successful SLAPP defendant sought $23,976.50 in attorney’s fees but the trial court disallowed $13,805 relating to attorney disqualification efforts and then reduced further for only partial success on the SLAPP motion.  Defendant appealed, seeking more fees, but the appellate court found the lower court’s reduction for disqualification efforts was no abuse of discretion (they were not inextricably intertwined with SLAPP work) and the further reduction for partial success on the SLAPP motion was the proper result under case law.

Sanctions: $7,725 In CCP § 128.7 Sanctions Affirmed For Filing A Frivolous Complaint

Justice Perren References The Pierian Spring In His Authoring Of The Opinion.

            Here is how the opinion in Ben-Yashar’el v. Kirschbaum, Case No. B315184 (2d Dist., Div. 6 July 15, 2022) (unpublished) starts out:

          "A little learning is a dangerous thing;

           Drink deep, or taste not the Pierian spring:

           There shallow draughts intoxicate the brain,

           And drinking largely sobers us again.”

                --Alexander Pope, An Essay on Criticism, 1711.

            This quote segues nicely into both a lower and appellate court’s conclusion that dismissal of a quiet title action and award of $7,725 in CCP § 128.7 sanctions against an in pro per plaintiff was proper, where plaintiff tried to claim that a cashed check in the amount of $800 to a trustee on a Thousand Oaks property worth $30 million, stemming from a goofy ad, somehow created a binding real estate purchase agreement.  Trustee tried to dissuade plaintiff from pursuing the action, even sending out the section 128.7 “safe harbor” warning notice to no avail.  Both the demurrer grant without leave dismissal and sanctions order were affirmed in a 3-0 decision authored by Justice Perren based on the frivolous nature of the pleading.

            BLOG EXPLANATION:  In Greek mythology, the Pierian Spring in Macedonia was sacred to the Muses (the inspirational goddesses of literature, science, and the arts) and the Pierides (the nine sisters defying the Muses into a song contest which the sisters lost, with the defeat meaning they were turned into birds).  The spring was believed to be a fountain of knowledge for whoever drank from it.  Justice Perren’s writing style in this one shows that his other colleagues on the panel, Justices Gilbert and Yegan, are inspiring him.

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

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

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

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

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

Costs: Challenges To Three Items Of Awarded Routine Costs Were Rejected On Appeal

Electronic Filing Fees, Messenger Costs For Serving Reply Papers, and Private Court Reporter Fees Were At Issue.

            Plaintiff losing her case was hit with a relatively small routine costs award.  On appeal in Koerber v. Encyclopaedia Britannica, Inc., Case No. B312047 (2d Dist., Div. 2 July 13, 2022) (unpublished), plaintiff to no avail challenged three items of the costs award.  In affirming, the 2/2 DCA reasoned in these ways why the costs were proper: (1) electronic filing fees are recoverable under CCP § 1033.5(a)(1); (2) overnight courier or messenger fees for serving a reply brief are discretionarily allowable if reasonably necessary to the litigation (Foothill-De Anza Community College v. Emerich, 158 Cal.App.4^th 11, 30 (2007)), with overnight service of replies being one of the recognized service methods; and (3) private court reporter service expenses are authorized under CCP § 1033.5(a)(11) [not capped as they are for court reporter services provided by the court under the Government Code], with $425 not being a patently unreasonable charge. 

Laffey Matrix, Probate, Sanctions, SLAPP: Lower Court Did Not Err In Fixing SLAPP Defense Fees In Two Defendants’ Favor

Also, A Probate Court Properly Sanctioned Attorney For Violating Local Rule Page Limitations.

            In Tukes v. Richard, Case Nos. B307242 et al. (2d Dist., Div. 8 July 12, 2022) (published), plaintiff lost SLAPP motions against two defendants, with the lower court awarding mandatory prevailing party fees of $49,071.50 and $26,905, respectively, after making some downward adjustments for duplicative work by the firms representing different defendants.  Also, a litigant’s counsel was sanctioned $4,000 (out of a requested $8,085) for failing to comply with local rule page limitations in filing certain pleadings.  Different appeals were taken, but these two results were affirmed.

            As to the SLAPP fees, here were the takeaways: (1) fees expended in monitoring another action are compensable when necessary to prosecute the SLAPP motion; (2) prevailing on a standing issue does mean that a defendant prevailed for SLAPP fee recovery purposes; and (3) a trial court has discretion to use the Laffey Matrix when it comes to establishing attorneys’ reasonable hourly rates in California state courts even though some courts decline to utilize it (Syers Properties III, Inc. v. Rankin, 236 Cal.App.4^th 691, 702 (2014)).

            On the sanctions order, California Rule of Court, rule 2.30 does authorize a probate court to impose sanctions for failure to comply with applicable rules without good cause, including an award of “fees on fees” for bringing the sanctions motion.  The award was no abuse of discretion under the circumstances.

            BLOG OBSERVATION—Appellant on the fees awards misquoted and mischaracterized attorney declarations on appeal, which we believe led to a loss of credibility before the panel—which only gently chided Appellant on this transgression.

Appealability, SLAPP: 2/7 DCA Affirms Its Conclusion In Earlier Published Opinion That Denial Of SLAPP Fees To Plaintiff After A Defense SLAPP Denial Is Not Immediately Appealable

In Doing So, It Disagreed With Different Conclusions By Two Sister Appellate Courts.

            Kaplan v. Davidson, Case No. B312826 (2d Dist., Div. 7 July 11, 2022) (unpublished) highlights a rift between this Division and other sister appellate courts on the question of whether denial of attorney’s fees to a plaintiff after a merits denial of a SLAPP motion is appealable.  The 2/7 DCA, in the earlier decision of Doe v. Luster, 145 Cal.App.4^th 139, 142 (2006), concluded it was not immediately appealable.  Later, other appellate courts came to a completely different conclusion.  (Baharian-Mehr v. Smith, 189 Cal.App.4^th 265, 275 (2010); Chitsazzeh v. Kramer & Koslow, 199 Cal.App.4^th 676, 680 n. 2 (2011).)  Now, after considering the issue yet again, the Kaplan panel confirmed that Doe was correct and did not endorse the other sister court decisions, finding that the Legislature did not indicate such a denial order was immediately appealable under Code of Civil Procedure sections 425.16 or 904.1.  It did not rule out that an extraordinary writ of mandate petition might be proper under the right circumstances.

Equity, Judgment Enforcement: Lower Court’s Denial Of Fees To Judgment Debtor In State Case Based On ERISA Fee Shifting Statute and Denial Of Judgment Debtor’s Motion To Tax Costs Were Both Sustained On Appeal

ERISA Fee Entitlement Not Shown And The Winning ERISA Argument Was Not Raised Until Judgment Creditor’s Assignee Racked Up More Judgment Enforcement Expenses.

            Everyone does need to keep in mind, within certain legal strictures, that attorney’s fees awards are frequently driven by the equities of a case.  Coastline JX Holdings LLC v. Bennett, Case No. G059552 (4^th Dist., Div. 3 July 7, 2022) (published) demonstrates that perfectly.

            This case involved very protracted, tenacious litigation between a judgment creditor’s assignee and judgment debtor, with a lower court eventually concluding that certain assets of the debtor were exempt from levy based on ERISA protections even though those winning arguments were raised deep into the proceedings such that the trial judge had to exercise inherent authority to redetermine the dispositive issue.  Judgment creditor was granted some additional post-judgment enforcement costs under CCP §§ 685.040 and 685.070 (with judgment debtor’s motion to tax costs being denied).  The lower court also denied judgment debtor’s request for attorney’s fees as the “prevailing” party.

            The 4/3 DCA affirmed, in an opinion authored by Orange County Superior Court Judge Linda Marks, sitting by assignment.  With respect to the fee denial, it was correct because (1) judgment debtor brought it with no invitation to do so by the lower court, and (2) judgment debtor provided no authority that this was a true ERISA action which allows prevailing party fees as opposed to raising an ERISA argument in a civil state court action.  Furthermore, granting fees to judgment debtor would be inequitable given his stalwart resistance to the other side’s collection efforts.  On the post-judgment costs awarded to judgment creditor’s assignee, that ruling was no abuse of discretion given that the ERISA argument was raised late in the game and the issues were complex, justifying the costs claimed by the other side. 

Allocation, Section 1717: $125,000 Fee Award To A Defendant Winning At The Pleading Stage Affirmed On Appeal

This Decision Has A Nice Discussion Of The Policies Underlying Civil Code Section 1717.

            There is a nice discussion of the policies underlying Civil Code section 1717 and the claims which trigger fee exposure under this statute in Engage BDR, LLC v. Amobee, Inc., Case No. B309263 (2d Dist., Div. 8 July 7, 2022) (unpublished).

            There, a Master Agreement formed the backdrop for plaintiff’s contract, usury, and declaratory relief claims, with that Agreement containing a fees clause which had no recitation that each party to the contract was represented by counsel.  The trial judge sustained demurrers and entered judgment in favor of defendant, later awarding about $125,000 in attorney’s fees and declining to apportion the fees.

            The 2/8 DCA, in an opinion authored by Justice Wiley, affirmed. 

            Initially, the panel explored how Civil Code section 1717 expands a contractual attorney’s fees clause: (1) the first way is reciprocity, with a unilateral fees clause deemed to apply to both parties; and (2) the second way is “broadened scope,” which means a narrow fees clause applies to the entire contract unless the contract specifies that counsel represented the parties; and, if not, section 1717 broadens the fees provision absent the recitation.

            It then examined whether plaintiff’s claims were “on the contract,” determining that the contract breach claims obviously were, the usury/restitution claims were (Del Mar v. Caspe, 222 Cal.App.3d 1316, 1335 (1990)), the economic duress claim relating to entry into the contract were, and the declaratory relief claims related to the contracts (City and County of San Francisco v. Union Pacific Railroad Co., 50 Cal.App.4^th 987, 999-1000 (1996)). 

            The fees clause was broadened because there was no specific recitation that the parties were represented by counsel.  Although there were some other more amorphous references, section 1717 requires that parties of roughly equal power need to make this recitation to demonstrate legal sophistication so that the fees clause is narrowed in scope.  The “broadened scope” rationale applied.

            No apportionment was required because all of plaintiff’s claims involved shared common issues.  Also, because plaintiff did not specifically identify what attorney billings were duplicative until a supplemental brief which was filed too late and not entertained, plaintiff waived its challenges to the reasonableness of the fees requested by defendant.

            BLOG OBSERVATION—Although appellate jurists are good writers, we will note that Justice Wiley has a distinctive writing style.  We would put him in company, on that front, with his contemporaries such as Justices Manella, Ashmann-Gerst, Perluss, Gilbert, Yegan, and Bedsworth.

Fee Clause Interpretation: Denial Of Attorney’s Fees Was Reversed Because Debt Extension Agreement Was Inextricably Interrelated With Loan Agreement Containing A Fees Clause

Looking Only At The Debt Extension Agreement Was Too Myopic In Nature.

            In Cable v. O’Neill, Case No. D079096 (4^th Dist., Div. 1 July 7, 2022) (unpublished), debtor defaulted under a loan agreement containing a contractual fees clause.  Creditor and debtor then entered into a debt extension agreement not having a fees clause, but obviously referencing the original loan agreement and inextricably interrelated to that first agreement.  The lower court recognized plaintiff creditor was a prevailing party after entering judgment for the unpaid loan amount, but it denied fees because there was no fees clause in the subsequent extension agreement.  The 4/1 DCA reversed, finding that the two agreements were inextricably interrelated such that fees should be awarded on remand to plaintiff creditor.

Class Actions: Lower Court Reduction Of Lodestar Fees From Preliminary Amount To A Lesser Reduced Amount In A Final Order Was No Abuse Of Discretion

Preliminary Approval Amount Was $1.04 Million, But Final Amount Sustained On Appeal Was $880,000.

            In Turman v. Parent, Case No. G060330 (4^th Dist., Div. 3 July 6, 2022) (unpublished), after a decade of litigation producing several appellate decisions, all things must come to rest, parties or counsel notwithstanding.  That finally occurred in this case, despite class counsel yet again wanting to maximize attorney’s fees for an additional amount—something which did not occur.

            What happened here is that a preliminary class action settlement order awarded class counsel $1.04 million in fees.   However, after more hearings, the fee award was reduced to $880,000.  Class counsel was not happy, appealing to no avail.

            Plaintiffs initially argued that a more detailed explanation of the fee award was required, but no statement of decision is required, no statement of decision was requested, and the advocated Kerkeles decision was a civil rights decision not apropos when it comes to California state court decisions.  The real problem for class counsel was a credibility problem:  they first proposed $1.04 million but then got greedy and said the real lodestar was $2.807 million.  Not a good idea, with neither the trial nor appellate courts buying the significant “pivot” in positions.  In fact, the $880,000 fee award equaled 40% of the $2.2 million gross settlement, with the $1.04 million prior amount being 47% of the gross settlement.  The end-all in this case was summarized this way: “Plaintiffs do not offer any authority that the trial court’s final attorney fee award, constituting 40 percent of a multimillion dollar class action gross settlement amount, is inappropriate, unreasonable, or arbitrary given the history and circumstances of this case.”  (Slip Opn., at p. 16.)  The award was no abuse of discretion. 

            Orange County Superior Court Judge Linda Marks, sitting by designation, authored the 3-0 decision by the 4/3 DCA.

Private Attorney General: Although Vindicating A Conceptually Important Interest, The Discretion Invested In The Governmental Entity On A Fact-By-Fact Basis Properly Supported A Trial Court’s Refusal To Award Fees

Factual Nature Of The Specific Issue Was Dispositive.

            Litigants which win some relief against a municipality may be entitled to private attorney general fees under CCP § 1021.5.  However, there are several elements they must surmount, including a paramount concern that they vindicated a significant benefit on behalf of the public or a large class of persons. 

            Unfortunately, the lower court in Cassilly v. City of Los Angeles, Case No. B311132 (2d Dist., Div. 8 July 6, 2022) (unpublished) found that a conceptually important right was vindicated but it was not a “significant benefit” in denying fees to partially prevailing plaintiffs.   The appellate court agreed. 

            Plaintiffs did win a narrow dispute against Los Angeles based on whether a historical assessment needed to be made to demolish and rebuild a house in the Venice area of L.A.  The trial court granted very narrow relief on whether a survey creating a presumption of a historical resource was in play, but it did not rule out that a further historical resource assessment or EIR might be needed in the future, given some discretionary decisions in this area by the city.  The city did some technical amendments in line with the lower court’s ruling.  Plaintiffs then moved for CCP § 1021.5 attorney’s fees, which were denied.

            Both the lower and appellate courts acknowledged that because CEQA rights were involved, a “conceptual” important right was involved.  But that is where the discussion dovetailed into the factual weeds of the case.  The problem is that the survey issue did impact some Venice property owners, but the city’s discretion on the issue made it a fact-by-fact determination, with no proof showing a uniform municipal practice of requiring a EIR across the board.  Given the discretionary nature of decision making on this issue and lack of a uniform policy, the fee denial was affirmed on appeal.