CALIFORNIA ATTORNEY'S FEES

Special Fee Shifting Statutes: Dueling Fee Motions By County And Supervisor Produced An Interesting Legal Discussion By The Sixth District On Municipal Fee/Indemnity Shifting Provisions

In The End, the Supervisor Might Get Some Litigation Reimbursement Fees Of A Somewhat Limited Nature.

            Municipality practitioners should be well advised to read County of San Benito v. Scagliotti, Case No H045887 (6^th Dist. Sept. 24, 2020) (unpublished) about fee shifting statutes under the Political Reform Act (PRA) and Government Claims Act (GCA), not to mention indemnification for settlement payments made by public employees.

            Boiling things down, County and former supervisor Richard Scagliotti were sued for violations of the Political Reform Act of 1974.  County agreed to indemnify and defend Mr. Scagliotti based on the ambiguous nature of some complaint allegations.  The lower court assessed some $12,500 in penalties against Mr. Scagliotti for some unintentional reporting omissions under the PRA and $220,000 under Government Code section 81700 for use of governmental position for financial gains in the plaintiff suit.   That determination provoked a firestorm by which the County withdrew its indemnification/defense decisions based on the premise that Mr. Scagliotti’s conduct might have been outside the course and scope of his employment, especially in connection with the $220,000 penalty.  Mr. Scagliotti substituted in another attorney, incurring about $27,000 in fees for beating back the plaintiff’s $800,000 fee motion.  He also eventually reached a settlement with plaintiff by which he paid $220,000 out of his own pocket, effectively having plaintiff waive the PRA penalties.  This set off secondary litigation where County sued to recoup $470,000 in fees spent in defending Mr. Scagliotti in the underlying case based on GCA and Labor Code section 2865 fee-shifting provisions.  Mr. Scagliotti cross-complained under Government Code section 825 and Government Claims Act section 995 for the $27,000 attorney’s fees he expended on the substituted attorney and for the $220,000 settlement payment he made to the plaintiff.  In the end, the trial judge denied each side’s requests for fee awards and indemnification.  Both sides moved for reimbursement of litigation fees expended in litigating the secondary action for fees/settlement payments under Code of Civil Procedure section 1038(a), motions which were denied.

            That gets us to the Sixth District appeal decision in the matter. 

            The Court of Appeal had no problem finding County was not entitled to underlying fees because nothing in a contractual letter with Mr. Scagliotti overrode the more inclusive fee-shifting reimbursement provisions in Government Code section 996, with Labor Code section 2805 not displacing the general reimbursement provision which is pro-public employee.  With respect to Mr. Scagliotti, he was not entitled to recovery of settlement payments because it did not fit GCA’s “injury” definition; however, he was entitled to reimbursement of his defense costs under Government Code section 996.4 for the failure to report violations, after a very detailed discussion of the interaction between GCA and PRA statutory schemes.  On the section 1038 dueling motions, County was properly denied fees based on Mr. Scagliotti’s reporting result, with Mr. Scagliotti’s fee denial being correct because the County’s defenses were not totally baseless in nature.  Each side had to bear their own appellate costs.  So, the former supervisor gets a shot at recovering some attorney’s fees of a limited nature—otherwise, everyone went home empty-handed!

Landlord/Tenant, Substantiation Of Reasonableness Of Fees: $1,586 Fees Award To Landlord Affirmed Based On Inadequate Lack Of Substantiating Evidence

$84,995.25 Was Requested; Only $1,586 In Fees Awarded.

            Although there was no explicit appellate discussion on this issue, Triplett v. Decron Properties Corp., Case No. B295126 (2d Dist., Div. 1 Sept. 24, 2020) (unpublished) is a reminder for parties seeking fee recovery to provide sufficient evidence in support of a substantial request.  The particulars are not reported, but the prevailing party sought $84,995.25 in attorney’s fees and was awarded only $1,586 based on lack of sufficient evidence.  The moral to this one is to make sure there is a competent proof support to your fee motion. 

Family Law: Ex-Husband’s Denial Of Fees Based On Lack Of Jurisdiction Was Correct Where Fee Request Not Made In Responsive Pleadings Or Requested In A Motion To Leave To Amend Pleadings At The Time Of Trial

Make A Motion To Amend Pleadings, Or Get The Result Here!

            Marriage of Fader, Case No. B296972 (2d Dist., Div. 5 Sept. 24, 2020) (unpublished) is a situation teaching that a litigant should make a motion to amend deficient pleadings in order to preserve an attorney’s fee request.    If not, the consequences are dire:  both the trial and appellate court will sustain a lower court’s conclusion it had no jurisdiction to award fees.

            What happened here was that ex-husband was denied a fees request where he did not ask them in responsive pleadings to a dissolution petition, but only asked for such a recovery at trial.  The fatal flaw was that husband did not ask for permission to amend pleadings to assert a fees request.  That failure was preclusive, because it supported the family judge’s reasoning that he had no jurisdiction to award fees absent a pleadings request or request to amend. 

Appealability, Family Law, Sanctions: $5,000 Sanctions Award Against Ex-Husband’s Attorney Found Not Appealable

Specific Appealability Provisions Governed The Result.

            In Marriage of Rattan & Prasad, Case No. A157880 (1^st Dist., Div. 3 Sept. 24, 2020) (unpublished), ex-husband’s attorney was disqualified and was assessed with a CCP §§ 128.5/128.7 sanctions motion of $5,000 for filing frivolous motions.  Attorney’s appeal of the sanctions order was unsuccessful because (1) CCP § 904.1(a)(12) only allows appeal of sanctions exceeding $5,000; and (2) CCP § 904.1(a)(12) did not rescue appeals of non-discovery sanctions below $5,000 because it only allowed a party to appeal from them.

SLAPP: SLAPP Fees Denied To Plaintiff Where Trial and Appellate Courts Determined The Motion Was Not Frivolous

Meritless Does Not Necessarily Translate To Frivolous.

            In Phelps v. McBratney, Case No. A156638 (1^st Dist., Div. 1 Sept. 23, 2020) (unpublished), defendants lost a SLAPP motion (appealing the merits determination and losing).  However, the lower court refused to award plaintiff attorney’s fees because it found the motion was not frivolous.  That determination was affirmed on appeal, with this case being interesting reading for practitioners on illegal eavesdropping recording (dealing with Canadian law, which allows, versus California law, which does not) and the boundaries of a public dispute (with the lower and appellate courts concluding the matter was really a private dispute).  Lack of merit does not automatically translate to frivolity is the message of this one in the SLAPP fee context.

Appealability: 2/3 DCA Affirmed Fee Awards Against Borrower Based On Failure To Provide Compliant Appellate Briefing

Appellate Courts Increasingly Are Not Forgiving Appealing Parties’ Mistakes.

            The next case, JPMorgan Chase Bank, N.A. v. Raskin, Case No. B292597 (2d Dist., Div. 3 Sept. 23, 2020) (unpublished), demonstrates an increasing trend we have seen in appellate decisions:  affirming an appeal where an appellant fails to comply with important “gateway” appellate briefing rules.

            Appellant borrower challenged two orders awarding fees to respondent banks.  Those orders were affirmed because of appellant’s:  (1) failure to provide citations to the appellate record; (2) failure to provide legal support in a discussion of each point of error; (3) failure to discuss the applicable legal standard of appellate review; (4) failure to discuss applicable statutes; and (5) making only conclusory arguments.  The appellate court also observed it was unfair for the intermediate courts to take on appellant’s burdens to the detriment of other appeals waiting their turn to be decided.  On appeal, it is best to hire an appellate specialist or at a minimum consult with one to avoid what happened here. 

Deadlines, Probate: Trustee Obtaining $285,363.10 Fee Award Against Beneficiary Who Brought Objections In Bad Faith Affirmed On Appeal

Probate Code Sections, Contractual Fee Provisions, And Equitable Powers Provided Fee Entitlement, With CRC 3.1702 Fee Motion Filing Deadlines Not Applicable To Probate Proceedings.

            In Rudnick v. Rudnick, Case No. F079105 (5^th Dist. Sept. 23, 2020) (unpublished), a beneficiary in a long-standing trust dispute withdrew objections to a final distribution/termination of the trust on the eve of a hearing.  The lower court determined the objections were in bad faith and, while an appeal was pending on that determination (ultimately affirmed), trustee brought a fee motion to recover $314,000 in fees under Probate Code section 17211(a) [a fee-shifting provision involving challenges to a trustee’s account activities which were made without reasonable cause and in bad faith], a contractual fees clause in a settlement agreement between the parties, and Probate Code section 1310(b) [equitable powers of the probate court to take actions to prevent loss or injury to property].  The probate court awarded $285,363.10 in fees and $5,167.52 in costs to trustee.  Aggrieved beneficiary appealed.

            The Fifth District, in a 3-0 opinion authored by Acting Justice Levy, affirmed.  All of the issues raised were legal in nature, and none of them bore fruit from beneficiary’s viewpoint.

            Appellant first argued that the lower court lacked jurisdiction to pass on fees because the prior appeal stayed any such determination, but caselaw was to the contrary.  (Bankes v. Lucas, 9 Cal.App.4^th 365, 368 (1992); Silver v. Gold, 211 Cal.App.3d 17, 26 (1989).)  There were three independent bases for fee entitlement:  section 17211(a), the settlement agreement fees clause, and the general equitable powers of the probate court.  Even though reasonable cause to object to a trustee’s account is a legal issue (Uzyel v. Kadisha, 188 Cal.App.4^th 866, 927 (2010)), the timing of the beneficiary’s withdrawal of objections in tandem with the meritless nature of them easily supported the lower court’s conclusion.  Appellant also contended that the fee motion was untimely based on failure to follow the CRC 3.1702 deadlines, but the problem there was that those deadlines do not apply to probate proceedings.  (Hollaway v. Edwards, 68 Cal.App.4^th 94, 97-99 (1998) [construing predecessor to rule 3.1702].)

Consumer Statutes: Reversal Of Substantial Punitive Damages Award Required Reversal Of $953,793.90 CLRA/Song-Beverly Act Fee Award

Compensatory Award Was $72,564.04, Song-Beverly Act Civil Penalties Were $141,973.30, and Punitive Damages Award Was $725,640.40 (After Plaintiff Accepted A Remitted Amount From A $1,451,973.30 Jury Punitive Award).

            Margeson v. Ford Motor Co., Case No. B287445 (2d Dist., Div. 5 Sept. 22, 2020) (unpublished) involved a substantial jury verdict and large attorney’s fees award under the Consumers Legal Remedies Act (CLRA) and Song-Beverly Consumer Warranty Act (Song-Beverly Act) based on a defective new Ford F-350 truck equipped with a 6.0-liter, 350 horsepower diesel engine.  The jury awarded plaintiff $72,564.04 in compensatory damages (a stipulated amount), $141,973.30 in civil penalties under the Song-Beverly Act, and $1,451,973.30 in punitive damages (20 times the compensatory damages, reduced to $725,640.40 by the trial judge—a reduction accepted by plaintiff in order to avoid a new trial on the punitive damages issue).  Subsequently, the lower court awarded plaintiff $953,793.90 under the CLRA and Song-Beverly Act fee-shifting provisions (with the lodestar amount augmented by a 1.8 multiplier in reaching this amount).

            The 2/5 DCA reversed the punitive damages award for a retrial because plaintiff’s expert impermissibly invaded the jury’s province in testifying on how punitive damages should be calculated.  Since resolution of the punitive damages question might figure in the determination of attorney’s fees, the partial reversal of the judgment compelled reversal of the fee award as well.  (California Grocers Assn., Inc. v. Bank of America, 22 Cal.App.4^th 205, 220 (1994).)  Goes to show you how substantial fee awards can occur under consumer fee-shifting statutes, even though we should guess the punitive damage and fee issues will be settled before there is a new trial or renewed fee proceeding.

Partition: No Abuse Of Discretion Where Trial Court Awarded Entirety Of Fees Incurred To Party In Partition Action When Other Party’s Litigation Conduct Unnecessarily Increased Fees For Both Sides

Code Civ. Proc. § 847.040 Allows For Equitable Considerations In Apportioning Costs, And § 847.010 Authorizes The Award Of Fees Incurred To Defend Meritless Claims.

            In Diepen v. Bollinger, Case No. B299696 (2d Dist. Div. 6 September 21, 2020) (unpublished), a trial court granted an elderly mother’s request to partition a house she co-owned with her daughter.  Afterward, pursuant to Code Civ. Proc. §§ 847.010 and 847.040, the trial court awarded mother the entirety of the more than $91,000 in fees she had incurred.  Daughter argued that not all fees incurred by her mother were recoverable as not all fees were incurred for the common benefit of the parties.  The trial court disagreed – finding daughter had raised meritless arguments and taken an unnecessary “hardball” approach during litigation that inflated the fees for both sides, and that a balancing of the equities justified the award to mother.

            Daughter fared no better with her argument on appeal.  The appellate panel explained that daughter’s argument was based on an outdated understanding of the law, and that § 874.040 – unlike former § 796 which it replaced in 1976 – includes a general equitable exception to the rule of apportioning costs in a partition action in proportion to the parties’ interests in the property.  Section 874.040 unambiguously provides the trial court with broad discretion to apportion fees based on equitable considerations, without limit.  (Lin v. Jeng, 203 Cal.App.4^th, 1008 (2012).) Additionally, § 847.010 authorizes a trial court to find that fees incurred for advocating a meritless position are not for the common benefit and should be borne by the party raising them. 

            The 2/6 DCA found that an inverse scenario occurred in this case – with mother incurring fees to defend each of daughter’s arguments which served to prolong what should have been a simple partition action.  Daughter was responsible for the fees she caused her mother to incur by pressing “spurious matters.” (Forrest v. Elam, 88 Cal.App.3d 164, 173-174 (1979).)

Partition, Undertaking: No Abuse Of Discretion In Trial Court’s Denial To Plaintiff Of Fees/Costs Not Incurred In Partition Action, And No Error In Granting Disbursement Of Funds To Defendants While Appeal Was Pending

Plaintiff Was Not Entitled To Recover Code Civ. Proc. §§ 874.010 and 847.040 Fees/Costs Incurred Prior To Defendants’ Assertion Of Partition Claim, Nor To Fees/Costs Incurred Strictly For Plaintiff’s Benefit, And Undertaking Was Required To Stay The Case As Judgment Did Not Consist Of Only Fees/Costs.

            Land Value Holdings, LLC v. Miller, Case No. A153992 (1^st Dist., Div. 3 September 18, 2020) (unpublished), involved a residential property a decedent left to his niece, Clara, for the term of her natural life.  Upon Clara’s death, the property was to be divided equally among six other nieces and nephews – or their surviving issues.  A later probate order confirmed Clara’s life estate and named the nieces and nephews as remaindermen, but failed to include the phrase “or to their surviving issues by right of representation.”

            Four years after Clara passed, the property was scheduled to be auctioned for unpaid property taxes.  Plaintiff, relying on the theory of adverse possession, voluntarily paid the past due taxes and moved for quiet title and ejectment against twenty living issues of the remaindermen – some of whom entered into settlement negotiations and provided plaintiff with assignments and executed quitclaim deeds.  

            In the end, the trial court found plaintiff had achieved only a 41.66% ownership interest in the property based on the assignments it obtained, and that defendants were entitled to an interest in the property based on decedent uncle’s will - approving sale of the property and ordering division of the proceeds.  Based on a partition claim asserted by defendants some three years into the litigation, the trial court granted in part each party’s Code Civ. Proc. §§ 874.010 and 847.040 fees request, to be paid by the other parties in proportion to their respective percentage interests.  As to plaintiff, it sought $206,185.73 in fees, but was awarded only $98,301 – with the trial court determining fees incurred by plaintiff prior to the partition claim were not recoverable.  Plaintiff also suffered a significant reduction to its $36,434.73 costs request – with defendants successfully moving to tax more than half because certain costs were found not reasonable, necessary, nor for the common benefit of the parties.  Plaintiff then unsuccessfully moved for additional fees incurred for post-judgment work – with the trial court finding the fees requested in the late-filed fees request were not incurred for the common benefit of the parties, but for plaintiff alone. 

            After plaintiff appealed, two defendants moved ex-parte for disbursement of certain funds pursuant to the judgment.  Plaintiff opposed – arguing the trial court did not have jurisdiction to rule because plaintiff’s appeal created an automatic stay.  The trial court disagreed, because plaintiff had not given an undertaking, and granted defendants’ ex-parte request.

            On appeal, plaintiff tried to overcome the trial court’s finding that plaintiff was entitled to recover fees/costs only from the date that defendants asserted a partition claim, and only for fees incurred for the common benefit – arguing it had worked for the common benefit from the get-go, and that its cause of action for declaratory relief was essentially a partition action.  The 1/3 DCA found no abuse of discretion.  Plaintiff’s declaratory relief cause of action sought a declaration as to which parties were responsible for the property taxes and upkeep of the property – not the equivalent of a partition action.

            As to plaintiff’s argument that the trial court lacked jurisdiction to grant defendants’ ex-parte motion for disbursement, the appellate panel disagreed.  There was no error in the trial court’s determination that the case was not automatically stayed, and that an undertaking was required to stay the case pending the appeal as the judgment did not only consist of costs/fees.  (Code Civ. Proc. § 917.1; Dowling v. Zimmerman 85 Cal.App.4^th 1400, 1432 (2001).)

SLAPP: Justice Richman, On Behalf Of A First District, Division 2 Panel, Makes A Plea For The Legislature Or California Supreme Court To Revisit SLAPP Denial Appeal Abuses

The Particular Issue Was The Impact Of The SLAPP Stay During An Appeal, But Fee Issues Are Implicated In The Mix—But Of Course.

            Although not directly involving a fees issue, Oakland Bulk and Oversized Terminal, LLC v. City of Oakland, Case No. A157330 (1^st Dist., Div. 2 Sept. 17, 2020) (published) is a very illuminating decision by an appeals court which has taken particular interest in the abuses it has seen by litigants appealing a SLAPP motion denial so as to automatically stay subsequent proceedings for many years.  Justice Richman was the author of this decision, and he is no novice in this substantive area.

            What happened procedurally was that plaintiff filed a 3 count contractual and 7 count tort complaint against the City of Oakland (City), which in turn filed a demurrer and filed a SLAPP motion directed to only parts of the complaint.  The lower court overruled most of the demurrer but sustained some of it in part with leave to amend.  The SLAPP motion was denied without prejudice to see what happened once the amended complaint was filed.  City appealed the SLAPP denial, which did stay the action although it was clear that a major portion of the overruled (and possibly amended) claims were going to proceed.

            On appeal, City requested that the appellate court rule on the merits of its SLAPP motion—and it obliged.  It found that the motion did not succeed on the merits.  However, that was hardly the end of the 1/2 DCA’s opinion; that is where the poignant part began, because Justice Richman earlier had talked about SLAPP appeal impacts in Grewal v. Jammu, 191 Cal.App.4^th 977 (2001).

            After discussing some of the general implications resulting from an automatic stay of a SLAPP motion denial, the panel zeroed in how it impacted the particular facts where the case was going to proceed anyway based on the demurrer ruling (and likely after complaint amendments)—pure and simple, delay and an expenditure of more fees on appeal by both sides. 

            Now we go to the parts of the opinion relating to fee issues. 

            At oral argument, the appellate court asked for the City’s motive in appealing a SLAPP denial which did not dispose of the entire case.  The answer:  it might get potential mandatory SLAPP fees if it succeeded on even limited claims/allegations.  That did not resonate, so we quote the response by Justice Richman and his colleagues:

“In other words, this appeal, with its attendant delay and the generation of thousands and thousands of dollars of attorney fees, was justified by the City’s possible claim to attorney fees.  We have two comments. First, we know of no law that says an amended complaint somehow causes a defendant to lose its right to attorney fees if a SLAPP motion is successful. To the contrary, there is law that holds fees can be awarded in such circumstance. (See Richmond Compassionate Care Collective v. 7 Stars Holistic Foundation (2019) 33 Cal.App.5th 38 [action allowed to proceed following third amended complaint; attorney fees for partially successful SLAPP motions affirmed].)  Second, assuming the City were to be successful, just how much does the City expect to be awarded for the successful striking of two lines in a 63-page complaint?  We said it in Grewal, supra, 191 Cal.App.4th 977, and we’ll say it again: ‘something is wrong with this picture.’  And we end with the observation that perhaps the time has come for the Supreme Court to revisit the issue of an automatic stay, at least in the situation where it is indisputable that the action will proceed.” (Slip Op., pp. 36-37.)

            But there is more.  The California Supreme Court’s Baral decision allows SLAPP striking of allegations within a particular claim.  The First District panel observed that there was some disagreement on the breadth of Baral in this respect, not to mention the panel’s puzzlement of the amount of mandatory fees which should be awarded where only some allegations of a claim were SLAPPed.  We bloggers will indicate that appellate courts have generally required some apportionment or remanded for reduced fees when there was only successful “allegation piercing,” a topic which will be subject of a future post by co-contributor Mike. 

            BLOG COMMENT—We noticed that Ben Shatz and his appellate crew at Manatt, Phelps represented the prevailing plaintiff/respondent side.  Congratulations, Ben (and others).

Family Law, Sanctions: Section 271 Sanctions Affirmed But CCP § 128.7 Sanctions For Reconsideration Motion Reversed Based On Lack Of Appropriate Procedural Compliance

Failure To Follow 128.7 Procedural Requirements Doomed Part Of Sanctions Award.

            CCP § 128.7 sanctions are procedural in nature and rule bound.  Do not follow the procedural rules, and you will lose a sanctions order in the lower court.  Marriage of Nott, Case No. B293055 (2d Dist., Div. 5 Sept. 16, 2020) (unpublished), is a good illustration of what will result in a reversal when due process requirements are not satisfied.

            What happened here was that ex-wife was hit with a Family Code section 271 sanction of $2,500, which was affirmed because the record showed she did not cooperate with a QDRO attorney to get closure on the issue.  However, because she was hit with a $4,500 sanctions for filing a frivolous reconsideration motion (one governed by CCP § 128.7), that one had to be reversed because ex-husband failed to file a separate 128.7 sanctions motion and failed to serve it at least 21 days before filing the motion with the court.  That required a reversal on this aspect of the appeal.  (Martorana v. Marlin & Saltzman, 175 Cal.App.4^th 685, 698-700 (2009).)

Family Law, Sanctions: $4,290 Sanctions Against Wife’s Attorney Under CCP § 128.7 Reversed On Two Grounds

First, A Section 2030 Earlier Denial Request Is Not Subject To Reconsideration Limitations, And Husband Did Not Give Proper Section 128.7 Notice Of The Bases For Sanctions—Double Whammy Reversal On Appeal.

            The Fourth District, Division Two, in Marriage of Hull, Case No. E072222 (4^th Dist., Div. 2 Sept. 15, 2020) (unpublished) was a 3-0 panel decision reversing a $4,290 CCP § 128.7 sanctions award against wife’s attorney for renewing a needs-based motion after an earlier denial of attorney’s fees.  [The concurring justice did not disagree with some footnotes which he believed disparaged appealing attorney.}

            The bases for reversal was two-fold in nature:  (1) a section 2030 renewed motion cannot be sanctioned because it is not subject to reconsideration request limitations; and (2) the section 128.7 motion did not contain the precise grounds upon which sanctions were ultimately granted, something which cannot happen based on the “safe harbor” and due process strictures codified under this statute. 

Discovery, Sanctions: $5,684 Discovery Sanction Against Plaintiffs Affirmed Where They Could Not Produce A Written Confirmation Of A Discovery Extension

Beyond That, The Defense Did Not Pull The Trigger Too Hastily On Motions To Compel, Trying To Work It Out.

            Discovery frequently is the bane of both practitioners and judges, not to mention studies that confirm it has led to an increase in the costs of civil litigation for many, many cases.  California has a scheme allowing parties to stipulate to discovery extensions, but they must be confirmed in writing (although emails certainly satisfy this requirement).  The next case shows the importance of creating an adequate record where sanctions are being fought on the basis that a discovery extension was obtained from the other side.

            In Cantu v. Equinox Holdings, Inc., Case No. B295973 (2d Dist., Div. 5 Sept. 15, 2020) (unpublished), Plaintiffs failed to answer some paper discovery requests and failed to obtain a firm written confirmation of a discovery extension, although the propounding defense attorneys tried to work it out.  Plaintiffs finally propounded boilerplate objections to the requests and tried to argue that a blanket-type extension had been granted without evidence of a written confirmation.  The defense waited a little while longer, filing motions to compel and seeking $9,440 in attorney’s fees as discovery sanctions.  The trial judge used a blended hourly rate and reduced the number of hours to impose a sanction of $5,684 against plaintiffs.

            Plaintiffs’ appeal was not successful.  As a stark reminder to which we have posted on before, the failure to provide a reporter’s transcript of the relevant law-and-motion hearings was fatal, especially where a discretionary ruling was involved as opposed to one on legal issues.  Further, there was no clear proof of a written discovery extension such that there was no substantial justification for the opposition to the motions to compel.  The appellate court also observed that the defense did not file the motions to compel too soon, only doing so after receiving boilerplate objections and no plan by the other side as to providing real answers.

Retainer Agreements, Trade Secrets: In The Absence Of An Express Retainer Agreement Otherwise, Fees Earned Under Uniform Trade Secrets Act Belong To The Attorney, Not The Client

Third District Applied Analogous Reasoning From Flannery Decision.

            Many times, “ownership” of an attorney’s fees award can be critical—does it belong to the attorney or the client, especially after disputes fester?  The Third District in Aerotek, Inc. v. Johnson Group Staffing Co., Inc., Case No. C078435 (3d Dist. Sept. 15, 2020) (published) decided where ownership should lie for a fee award under California’s Uniform Trade Secret Act, Civ. Code, § 3426.4, after a trial judge decided the attorneys were entitled to fees of $827,938.17 plus interest following representation of a client resulting in a zero award by the other side.

            The Third District, drawing from analogous reasoning in Flannery v. Prentice, 26 Cal.4^th 572 in the FEHA context, decided that a trade secret fee award belongs to the attorney, not the client, unless there was an express fee agreement dictating otherwise.  Here, the facts appeared to be solidly on the law firm’s side for purposes of reaching this conclusion:  its client defendant was behind in its receivable, the law firm agreed to substantially write down a receivable with the ability to collect the write-off through a fee award on a “modified pro bono” basis (except the client had to reimburse routine or expert costs), and nothing indicated in the written fee agreement where surplus fees over the write-off would go.  The parties’ fee agreement did not dictate otherwise, because it did not address the ownership issue on fees award over the written-off amount. 

            Client argued that its attorneys needed to provide a notice of right to arbitrate under the Mandatory Fee Arbitration Act, but that did not apply to fee disputes determined pursuant to statute as it was here.  Client also contended that the trial judge should have allowed a jury trial on the ownership issue, but the appellate court disagreed by finding that the gist of the dispute was equitable in nature. 

Deadlines, Homeowner Associations: Later Finding That HOA-Homeowner Settlement Agreement Was Invalid Presented Good Cause To File Fee Motion After 60-Day Deadline

Settlement Misconception By The Parties Allowed Dismissed Board Members To Seek Fees.

            In Gallian v. Gragnano, Case No. G057198 (4^th Dist., Div. 3 Sept. 15, 2020) (unpublished), HOA sued a homeowner for architectural violations under the CC&Rs, which prompted homeowner to crossclaim against the board members for indemnification, fault apportionment, and declaratory relief.  The board members were dismissed with prejudice, with HOA and homeowner reaching what they believed to be a binding settlement agreement which also bound board members (although not signed by them)—with the HOA attorney also representing the dismissed board members.  Later, when the HOA sought to enforce the settlement agreement, the trial judge found there was no meeting of the minds.  Well after the 60-day deadline for filing an attorney’s fees motion after the notice of dismissal was served, board members moved for fees as prevailing parties under Civil Code section 5975, the Davis-Stirling Act fee-shifting statute.  The lower court awarded board members $46,138 in fees, finding good cause to allow the fee motion filing based on the mutual misconception that the settlement agreement was binding.

            Homeowner’s appeal of the fee award did not alter the result in a 3-0 panel decision authored by Justice Ikola.

            Homeowner first argued that board members, after dismissal, could not file a fee motion.  This was dispatched easily because former parties after dismissal have collateral rights to seek fees and costs.  (Day v. Collingwood, 144 Cal.App.4^th 1116, 1124 (2006).)  Although the board members were not technical parties to the settlement agreement because they did not sign or expressly assent to its terms before the court, the circumstances at play—everyone’s belief the settlement agreement was valid such that no fees would be sought if it was—presented good cause to file the fee motion later.  “We would not expect a party attempting in good faith to negotiate a settlement to throw a wrench in the works by moving for an award of attorney fees during the negotiation.”  (Slip Op. at 6.)  Homeowner’s argument that the cross-complaint was not one to enforce the CC&Rs did not gain much traction, given that it was derivative of the HOA suit to enforce the governing common interest documents. 

Family Law, Sanctions: 4/2 DCA Affirms $29,993 In Family Code §§ 271 and 2030 Sanctions Issued Against Ex-Husband, Plus Another $3,892.50 In Code Civ. Proc., § 1987.2(a) Fees And Costs For Ex-Wife’s Successful Motion To Quash

Self-Represented Ex-Husband Learned The Hard Way That Uncooperative Conduct, Unduly Delaying Resolution, And Refusal To Participate In RFO Hearing Can Be Incredibly Costly – And This Was On Top Of $13,200 In Sanctions Already Issued Against Him Earlier In This Case.

            In Marriage of Ehirim, Case No. E072397 (4^th Dist., Div. 2 September 14, 2020) (unpublished), husband and wife with no minor children were involved in a post-judgment dispute related to some community investment account balances held in wife’s name, and community credit card debt paid after separation by wife with her separate property funds.  The investment accounts and credit card debt had not been adjudicated in the earlier judgment – with the trial court reserving jurisdiction to determine the balance of those investments, as well as community bank accounts and debts.

            Self-represented husband was uncooperative in resolving the investment/credit card issues with wife.  As a result, both parties filed requests for orders related to the investment/credit card issues.  Husband then subpoenaed credit card companies and other financial institutions, where wife held accounts, seeking overly broad and irrelevant information – including requests for items such as signature cards – for dates extending well beyond the parties’ date of separation.  Additionally, husband subpoenaed wife’s employer seeking overly broad and irrelevant information that extended well beyond the date of separation.  When husband refused to scale back the scope of his subpoenas, wife successfully moved to quash or limit the subpoenas to relevant time frames and to information relevant to the parties’ dispute.  Afterward, the trial court awarded wife $3,892.50 in fees and costs pursuant to Code Civ. Proc., § 1987.2(a).  Section 1987.2(a) provides the trial court with the discretion to award reasonably incurred expenses, including reasonable attorney fees, to a party prevailing in a motion to quash.

            When trial on the remaining investment accounts and credit card debt came about, husband refused to participate and walked out.  Only wife testified and provided documentation.  After determining community division of the investment accounts, offsets from the paid community credit card debt and other unpaid equalization payments from husband to wife, the trial court issued $10,000 in Family Code § 271 sanctions against husband for his conduct – conduct which frustrated the policy of the law promoting settlement and reducing the cost of litigation.  The trial court additionally ordered husband to pay $19,993 of wife’s attorney fees “as and for additional sanctions” pursuant to Family Code §§ 271 and 2030.  These awards were on top of $13,200 in unpaid sanctions previously issued against husband in this case.

            The 4/2 DCA found no abuse of discretion and affirmed – concluding the trial court’s factual findings and awards of fees/costs and issuance of sanctions were amply supported by the record.

Section 998: 998 Offer To Defendants, Conjunctively, Was Invalid Where It Did Not Have Separate Acceptance Lines In The Offer

Case Reminds Practitioners To Allow For Acceptance By Each Defendant.

            CCP § 998 is a “stick and carrot” statute designed to encourage settlements.  However, it does have some procedural requirements which are mandatory in nature.  Burchell v. Faculty Physicians & Surgeons of The Loma Linda University School of Medicine, Case No. E071146 (4^th Dist., Div. 2 Sept. 10, 2020) (published) explores one of the mandatory requirements:  the need to provide a separate acceptance line for each defendant when a multiple offer is made (especially where liability is joint and several in nature, not requiring apportionment).

            Burchell involved a professional negligence/medical battery case where plaintiff won a multi-million jury verdict.  Earlier, plaintiff had sent a section 998 offer, conjunctively, to multiple defendants with a signature line for the attorney of the “Defendants.”  The offer was not accepted, with plaintiff moving to recovery certain costs (including expert witness fees) under section 998 after the jury verdict “beat” the $1.5 million pretrial offer.  One of the defendants moved to tax these costs, but that motion was denied.  That denial was one of the issues raised on appeal.

            The 4/2 DCA reversed the 998 costs award.  The reason was that the offer was invalid because it was improperly conditioned on acceptance by both defendants, rather than made in a manner allowing individual offerees to accept it.  That violated very clear case law, such that the costs award was reversed on appeal, as well as a $1 million-plus prejudgment interest award.  (Menees v. Andrews, 122 Cal.App.4^th 1540, 1544 (2004); Wickware v. Tanner, 53 Cal.App.4^th 570, 576-577 (1997).)

Section 998: 998 Offer Extending To All Claims Was Too Uncertain To Shift Fees

Precise Language In 998 Offer Is Needed To Limit Its Scope—Otherwise, Beware Because You Will Not Get Fee Shifting.

            Appellate courts do not like broad, uncalibrated 998 offers.  Kennedy v. City of Fresno, Case Nos. F077029/F077585 (5^th Dist. Sept. 10, 2020) (unpublished) illustrates this principle well, as we discuss below.

            There, City of Fresno did prevail on a dangerous condition case after a jury trial, seeking to recover over $266,000 in expert witness costs based on a CCP §998 offer to settle the matter for $50,001.00.  The trial judge denied Fresno’s 998 fee-shifting motion, a determination affirmed on appeal by the Fifth District.

            The problem was that Fresno’s 998 offer was overbroad, asking for a full release of “all claims against defendant Fresno.”  Unlike cases cited by Fresno, there was no attempt to reign in the broad language, including potential claims, so that the trial and appellate defaults were easy to enlist:  the general language “strayed” from what was permissible.  No fee shifting here.

Prevailing Party: Aljabban Decision Now Published

Case Dealt With Reversal Of Fee Award On Security Deposit Withholding, Requiring A Restudy Of An Older Fee Award.

            On August 21, 2020, we posted on the decision of Aljabban v. Fontana Indoor Swap Meet, Inc., Case No. D076214 (4^th Dist., Div. 2), which was unpublished at the time.  That case reversed a $121,043 fees award against a swap meet licensee after it reversed a security deposit withholding loss, requiring a restudy of an “older” fees award to determine which side actually prevailed.  We can now report that this case was certified for publication on September 10, 2020. 

Private Attorney General, Special Fee Shifting Statutes: Unilateral Fee-Shifting Clause In DFEH’s Favor Preempted An Award Of Private Attorney General Fees To Prevailing Defendants

Specific Statute Prevailed Over More General One As Far As Fee Entitlement.

            When two fee-shifting statutes collide, they sometimes can be reconciled but sometimes cannot—the latter was the conclusion in Dept. of Fair Employment & Housing v. Cathy’s Creations, Inc., Case No. F077802 (5^th Dist. Sept. 9, 2020) (published).

            There, defendants prevailed in an action brought by the Department of Fair Employment and Housing (DFEH) in a sexual discrimination matter.  Defendants then sought an award of fees under California’s private attorney general statute, CCP § 1021.5.  The trial court denied the fee request, a determination affirmed by the Fifth District on appeal.

            After review of dueling fee entitlement statutes, the Court of Appeal concluded that Government Code 12974 was preemptive because it was a unilateral fee-shifting clause in DFEH’s favor.  It was more specific than the more generalized private attorney general statute such that section 12974 governed, meaning the fee denial was correct.

Private Attorney General: Unincorporated Association In Election Contest Challenge Was A De Facto Intervenor With Standing To Seek Section 1021.5 Fees As A Successful Party

Fifth District Enunciates Test For Unincorporated Associations.

            In Vosburg v. County of Fresno, Case No. F078081 (5^th Dist. Sept. 9, 2020) (partially published; fees standing issue published), an unincorporated association representing mental patients in a representative capacity sought to recover $44,218.13 in attorney’s fees under Code of Civil Procedure section 1021, California’s private attorney general fee-shifting statute.  The association was not granted formal intervention, but it was allowed to participate in an election contest challenge, providing evidence and legal arguments which were ultimately successful along with participation by other parties to the dispute.  The trial judge denied the fees motion, principally on standing grounds that association was not a “party” entitled to fees.

            The Fifth District reversed and remanded, in an opinion authored by Justice Franson.

            It found that the association was a de facto intervenor, not just an amicus curiae participant.  In doing so, it established this test for an unincorporated association being eligible for fees under section 1021.5:  “we conclude an unincorporated association has standing to appear in an election contest as a representative of its members if (1) its members live in the area affected by the outcome of the election, (2) its members would suffer injury from an adverse outcome in the election contest, and (3) the questions involved were of a public nature.”  That test was satisfied under the circumstances, although the fee denial was remanded to make sure association met other elements of the 1021.5 statute.

            Association also requested fees for prevailing on appeal.  Some of that depended on the remand conclusions, but the Fifth District did indicate there was an independent basis for granting appellate fees—association generated a published opinion such that this could be a separate basis for a fee award.  So, in the end, all was remanded, but de facto intervenor jurisprudence obtained another opinion in the evolving case law on this issue—which, like a river, depends on the decisions decided by courts on a daily basis.

Reasonableness Of Fees, SLAPP: The Previously Unpublished Fee Discussion In Marshall v. Webster Is Now Published

Higher Hourly Rate Awarded For Out-Of-County Attorney Affirmed Where Successful SLAPP Defendant Showed Good Faith Effort To Hire Local Counsel.

            We discussed Marshall v. Webster, Case No. C088240 (3d Dist. August 27, 2020) in our August 27, 2020 post – a partially published case, with the fee discussion unpublished.

            In Marshall, the Third District affirmed the trial court’s award to successful SLAPP defendant of attorney fees at a higher hourly rate than that of local counsel.  Typically, the amount of award is computed using the lodestar method – multiplying the number of hours reasonably expended by the reasonable prevailing hourly rate in the community for similar work.  However, in this case, defendant made the requisite good faith effort to hire local counsel before hiring counsel from an outside community where the local prevailing rates were higher.

            We can now report that the previously unpublished fee portion of the Marshall opinion was published on September 4, 2020.

Bankruptcy: The Ninth Circuit Denies 28 U.S.C. § 2412(d)(1)(A) Recovery Of Attorney Fees To Debtors Who Successfully Appealed Denials Of Their Chapter 13 Bankruptcy Plans

A Bankruptcy Court Does Not Fall Within The Definition Of “United States” Under The Equal Access to Justice Act, And An Uncontested Bankruptcy Case Does Not Constitute A Civil Action Brought By Or Against The United States.

            Four separate debtors, in four separate actions, successfully appealed to the 9^th Circuit after their unopposed Chapter 13 plans were denied by the lower bankruptcy court and Bankruptcy Appellate Panel (“BAP”) due to their estimated, rather than fixed, plan durations.  Afterward, each debtor moved against the bankruptcy court and BAP under the Equal Access to Justice Act (“EAJA”), 28 U.S. Code § 2412 – seeking to recover the attorney fees they incurred.

            The EAJA, under 28 U.S.C. § 2412(d)(1)(A), provides that “[A] court shall award to a prevailing party . . . fees and other expenses . . . incurred by that party in any civil action . . . including proceedings for judicial review of agency action, brought by or against the United States . . . unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust.”

            Due to the similar circumstances underlying the four fee requests, the 9^th Circuit considered them together in In re: Nanette Sisk, Case Nos. 18-17445 et al. (9^th Cir. September 1, 2020) (published).  While the 9^th Circuit acknowledged that Debtors’ counsel spent considerable time and resources pursuing the successful appeals, it nonetheless denied debtors’ applications for fees.

            Because the EAJA provides separate definitions for “court” and “United States,” a bankruptcy court does not fall within the EAJA’s definition of “United States,” and uncontested bankruptcy cases do not constitute “civil action[s] brought by or against the United States” within the meaning of the EAJA.  “[B]ecause the EAJA is a limited waiver of the government’s sovereign immunity, it must be strictly construed in favor of maintaining immunity not specifically and clearly waived.”  Kreines v. United States, 33 F.3d 1105, 1109 (9th Cir. 1994).

Consumer Statutes, Prevailing Party: Attorney Fees Of $144,200 Plus Costs Of $5,969.15 Awarded Under Section 1794 To Song-Beverly Plaintiff Affirmed On Appeal Despite Lack of Prevailing Party Ruling

The Trial Court Made An Implied Finding, Which Was Supported By Substantial Evidence, That Plaintiff Obtained His Litigation Objective And Was The Prevailing Party.

            Civ. Code § 1794(d) allows a prevailing buyer to recover reasonable attorney fees incurred in connection with the commencement and prosecution of an action under Civ. Code § 1790 et. seq. – the Song-Beverly Warranty Act (commonly known as California’s “lemon law”.

            In Giamela v. Jaguar Land Rover North America, Case No. B299729 (2d Dist., Div. 2 September 1, 2020) (unpublished), a Song-Beverly plaintiff, who settled with defendant for the repurchase of plaintiff’s vehicle, moved for section 1794 fees of $144,200 plus a 1.25 multiplier for a total of $180,250, and $5,969.15 in costs – with the trial court awarding the full request minus the requested 1.25 multiplier. 

            On appeal, defendant argued the fees/costs award had to be reversed because the trial court did not make an express finding that plaintiff was the prevailing party, substantial evidence did not support a finding that plaintiff achieved his litigation objective, and the trial court applied the wrong legal standard if it determined plaintiff was the prevailing party.

            The 2/2 DCA affirmed.  First, the absence of an express finding is no basis for reversal, and an implied finding – if reached by applying the correct legal standard – must be upheld if supported by substantial evidence.  Second, substantial evidence supported the trial court’s implied finding that plaintiff obtained his litigation objective.  Plaintiff’s acceptance of defendant’s repurchase settlement offer supported a logical and reasonable inference that obtaining repurchase was plaintiff’s litigation objective.  Finally, defendant failed to meet its obligation to affirmatively show that the trial court failed to apply the correct legal standard of achieving litigation objective in reaching its implied finding that plaintiff was the prevailing party in this action.

Retainer Agreements: Trial Court Erred In Narrow Interpretation Of Retainer Agreement That Did Not Hold Client Responsible For Unpaid Fees/Costs

Pursuant To Statutory Rules Of Contract Interpretation, Contracts Should Be Construed As A Whole So As To Interpret The Mutual Intention Of The Parties.

            In Lerner & Veit v. Power, Case No. A158322 (1^st Dist., Div. 5 August 31, 2020) (unpublished), plaintiff law firm and defendant client entered into a written retainer agreement  wherein defendant would be responsible for paying the firm’s fees, costs and expenses.  Because defendant’s cousin, who was not a party to the underlying action, verbally agreed to pay defendant’s fees, the retainer agreement contained a “Payment by Other Party” clause that allowed the firm to invoice and collect from cousin, and held defendant responsible for any fees/costs not paid by cousin.

            Cousin paid $30,000 to plaintiff law firm – leaving a balance of $84,047.25, which defendant client refused to pay.  Seeking payment of the unpaid fees/costs, plaintiff first filed an action against cousin.  When that case settled and was dismissed with prejudice, plaintiff filed an action against defendant for payment of the $84,047.25 in unpaid fees/costs.  Plaintiff demurred – claiming plaintiff’s action was barred under the doctrine of res judicata.   The trial court granted demurrer without leave to amend – concluding that the retainer agreement required defendant to pay only fees/costs owed by cousin but not paid, and that because the action against cousin was dismissed, cousin owed no fees and, therefore, defendant owed no fees.  Plaintiff appealed.

            The 1/5 DCA reversed – finding that the trial court erred in its narrow interpretation of the retainer agreement.  Rather, when interpreting contracts, the mutual intention of the parties at the time the contract is formed governs interpretation.  (Civ. Code § 1636.)  Therefore, the trial court should have construed the contract as a whole so as to interpret the mutual intention of the parties.  By focusing on only the one clause related to cousin’s payments, the trial court interpreted that defendant client was not responsible for plaintiff law firm’s unpaid fees/costs, when the mutual intention of the parties was that defendant would be responsible for the fees/costs and pay any fees/costs not paid by cousin. 

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Reasonableness Of Fees, SLAPP: Defense Fees Of $79,000 Were Warranted Where Out-Of-County Lawyer Efforts Were Needed To Oppose SLAPP Motion In Siskiyou County

Defense Showed Good Faith Efforts, Albeit Unsuccessful, To Hire Local Counsel, So Higher Hourly Rate Compensation Was In Order.

            So this case was venued in Siskiyou County, which is a northern California county abutting on the Oregon border near Mount Shasta and having a population of 44,000 – 45,000 depending on how you count things. We gotta think the lawyer census is much less than that in more populous California counties.  That is borne out by the end result in Marshall v. Webster, Case No. C088240 (3d Dist. Aug. 27, 2020) (partially published; fee discussion not published).

            There, the defense won a SLAPP motion and was awarded $79,000 in mandatory fees, although this was a reduction from the requested $121,815 in fees—with the defense using San Francisco rather than local attorneys. 

            The fee award was affirmed.  Plaintiffs’ principal contention was that it was err to award defense hourly rates based on San Francisco rates versus local venue rates.  Although generally a venue-based lodestar standard is the measure, that can bend when local attorneys are not available or the hiring of local counsel was impracticable.  In this case, the defense presented evidence that he could not obtain local counsel on a contingency basis for representation given defendant did not have the resources for traditional hourly representation.  The local attorney did tell defendant that $350 per hour was typical for Siskiyou County, even though he declined to take on a contingency matter.  The $450 and $500 hourly rates for the experienced defense counsel from San Francisco did not offend either the trial or appellate courts given the inability to obtain local counsel willing to take the matter on a contingency basis.  However, given the reduction in the requested amount by almost $43,000 (about a 35% reduction), this only cemented the fee award as being reasonable in amount. 

            UPDATE:  We can now report that the (previously unpublished) fee discussion was published on September 4, 2020.

Appeal Sanctions, SLAPP: In Pro Per Defendants’ SLAPP Motion Was Frivolous, Entitling Plaintiff To $9,900 In Attorney’s Fees

Frivolous Appeal Sanctions Denied, But Plaintiff Was Entitled To Appellate Fees For Prevailing On The SLAPP Denial.

            Sometimes, there is more than one way to “skin a cat” as the proverbial saying goes.  That is what happened in Martin v. Smith, Case No. A157129 (1^st Dist., Div. 5 Aug. 26, 2020) (unpublished).

            There, two in pro per defendants filed a SLAPP motion which was deemed frivolous by the lower court, resulting in an award of $9,900 in attorney’s fees to plaintiff.  Defendants, still in pro per, then appealed.  The appellate court agreed that the SLAPP motion was frivolous and the fee award justified.  Plaintiff moved for frivolous appeal sanctions, although she failed to file a motion for sanctions and supporting declaration as required under California Rules of Court, rule 8.276.  However, because she did prevail on appeal, plaintiff was entitled to further SLAPP fees, something remanded to the lower court to determine.  (The only difference is that SLAPP fees cannot be imposed against a party’s attorney, although frivolous sanctions can.)

Arbitration, Employment: Although Arbitration Clause Had Invalid Attorney’s Fees/Costs Provision Relating To FEHA Claims, It Was Severed Such That Motion Denying Arbitration Was Reversed

Severability Saved The Day!

            In Conyer v. Hula Media Services, LLC, Case No. B296738 (2d Dist., Div. 8 Aug. 26, 2020) (published), the appellate court reversed a trial judge’s decision denying arbitration to an employer even though employee acknowledged receiving a handbook with the arbitration clause but argued that there was an employer duty to highlight the clause.  However, the arbitration clause did have an infirm attorney’s fees/costs provision, requiring each party to pay a pro rata share of the arbitrator’s fees and costs.  For FEHA claims, the employee does not have to pay fees and costs greater than the amount to file a claim under Armendariz v. Foundation Health Psychcare Services, Inc., 24 Cal.4^th 83, 112 (2000).  The arbitration clause also provided that the arbitrator shall award fees to the prevailing party carte blanche, despite the fact that a prevailing defendant in a FEHA case can only recover fees if the plaintiff’s action was frivolous in nature.  (Chavez v. City of Los Angeles, 47 Cal.4^th 970, 985 (2010).)  However, the severability doctrine came to the rescue—the agreement was not so permeated with unconscionability such that the fees provisions could be severed out so as to leave an enforceable agreement.  That is how the appellate court ruled, reversing the denial of the motion to compel arbitration.

Family Law: Ex-Wife Properly Denied Family Code Section 271 Sanctions Because Financial Need Is Irrelevant

Besides, Ex-Husband’s Jackson Credit Motion Had Sound Factual/Legal Bases.

            In Marriage of Siva, Case No. A157554 (1^st Dist., Div. 4 Aug. 25, 2020) (published), ex-husband was granted a Jackson child support credit, even though the trial judge denied dueling Family Code section 271 sanctions requests filed by both sides.  Ex-wife appealed the merits and sanction denial, with the merits ruling affirmed in a 2-1 decision and with the 271 sanctions denial affirmed by a 3-0 vote.

            Ex-wife initially argued that she needed fees because of financial disparity, but she had made no Family Code section 2020/2032 request such that it would not be entertained the first time on appeal.  She principally argued that she was not as financially secure as ex-husband so that 271 sanctions were justified, but this contention was dispatched because financial need is irrelevant to a 271 request.  Besides that, ex-husband’s credit motion had sound factual and legal basis behind it. 

Deadlines, Intellectual Property: Ninth Circuit Rules That Filing A Fees Motion, Absent A District Court Extension Or Decision To Treat It As A Rule 59 Motion, Does Not Extend The 30-Day Deadline To Review An Earlier Merits Decision

Practice Tips—Ask The District Judge To Treat Fee Motion As A Rule 59 Motion Or File Two Appeals, One On The Merits And One On The Fees Ruling.

            Nutrition Distribution LLC v. IronMag Labs, LLC, No. 19-55251 (9^th Cir. Aug. 25, 2020) (published) was a Lanham Act case where a plaintiff was denied monetary relief, was issued an injunction, and was denied fees on a preliminary basis through a December 13, 2018 judgment.  On December 27, 2018, plaintiff moved for post-judgment fees, a motion denied on January 30, 2019.  Plaintiff filed an appeal of the merits and fee rulings on March 1, 2019, within 30 days of the eventual fees ruling but almost 80 days after the initial judgment. 

            The Ninth Circuit first decided that the appeal of the merits ruling was untimely because it was way after 30 days from December 13, 2018.  The filing of the fees motion did not extend the time for filing an appeal unless the district judge grants an extension under FRCP 58(e) or agrees to treat the fees motion as a Rule 59 motion which allows for more time.

            With respect to the fees ruling (which could be reviewed), the district judge did not abuse its discretion in determining that it was not “exceptional” under the Lanham Act fee-shifting statute:  the motion itself violated local rules; plaintiff obtained no damages from defendant’s advertising activities; and plaintiff had filed 80 similar advertising lawsuits over a 3-year span.

            BLOG PRACTICE TIP—This case provides a practice tip in this area.  Either ask the district court to treat the fees motion as a Rule 59 motion or, if no extension is granted by the district judge, appeal the merits and fees rulings separately (with the Ninth Circuit suggesting this double appealing process carries no consequences, feeding into “healthy lawyer paranoia”). 

Allocation, Partition: Code Civ. Proc. § 874.010 Attorney’s Fee Award Of $105,147.50 For Partition Claim Affirmed Notwithstanding The Inclusion Of Fees Incurred For Other Causes Of Action

All Of The Claims And Defenses In The Action Were Inextricable Intertwined.

            In partition actions, Code Civ. Proc. § 874.010(a) authorizes an award of “[r]easonable attorney’s fees incurred or paid by a party for thee common benefit,” and Code Civ. Proc. § 874.040 requires the trial court to “apportion the costs of partition among the parties in proportion to their interests or make such other apportionment as may be equitable.”

            In Flannery v. Murray, Case No. B287284 (2d Dist., Div. 3 August 24, 2020) (unpublished), plaintiff and defendant purchased a 13-acre horse boarding ranch.  They agreed to be 50/50 owners, and each contributed toward the down payment and improvements, but defendant had a low credit score, so her name was not on the loan nor the title.  The parties’ 20-year relationship ended 7 years later, and litigation ensued over ownership of the parties’ boarding ranch – as well an insurance payout for a fire at the ranch.  Among the many causes of action alleged, both claimed a cause of action for partition.

            In the end, the trial court determined defendant was a half-owner of the ranch along with plaintiff, and was entitled to one-half of the insurance proceeds.  Defendant then moved for a post-judgment fees award pursuant to § 874.010 – seeking from plaintiff one-half of the $371,076.66 in fees she incurred.  Plaintiff opposed – arguing the fees were excessive and that defendant was entitled to recover only the reasonable fees she incurred in prosecuting her partition claim. 

            The trial court disagreed with plaintiff's contention, and awarded defendant $105,147.50 – reduced from the requested $185,538.33 for some excessiveness in time claimed to have been spent by plaintiff’s counsel, for excessive hourly rates, and for time entries for unrelated litigation. 

            Plaintiff appealed – arguing the trial erred because defendant was entitled to fees for no more than 26.5 hours of time spent on her partition claim, not for fees defendant incurred in connection with her other claims or in defense of plaintiff’s claims.

            The 2/3 DCA affirmed – finding no abuse in discretion in the trial court’s determination that all of the claims and defenses in the case related to the partition claims, and finding the trial court properly determined all the attorney fees incurred in the action were inextricably intertwined.  As a result, all the expenses incurred qualified for an award.   (Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124, 129-130.)

Class Actions: Award Of $158,446, Out Of Requested $228,133.38 In Fees/Costs, To Non-Lead Plaintiff’s Counsel Affirmed On Appeal

Plaintiff’s Counsel Failed To Demonstrate That It Conferred A Benefit On The Class Beyond The $158,446 In Incurred Fees For Some Authorized Document Review.

            Attorney fee awards in class actions are wholly contingent on achieving benefit for the class – a requirement applying to both lead and non-lead counsel, with each required to demonstrate their work actually benefited the class.  As such, duplicative efforts by non-lead counsel are generally not recoverable out of the class’s recovery unless those efforts increased the recovery to the class.

            In Wheeler v. King Digital Entertainment PLC, Case No. A158660 (1^st Dist., Div. 5 August 21, 2020) (unpublished), the trial court consolidated six putative class actions seeking damages, pursuant to §§ 11, 12(a)(2), and 15 of the Securities Act of 1933 (15 U.S.C. §§ 77k, 771(a)(2) and 77o), for misstatements and omissions made in connection with defendant’s initial public offering.  The trial court also appointed a firm to serve as lead counsel, and appointed plaintiff’s counsel to serve with two other firms as an executive committee – with lead counsel responsible for authorizing the work of the other firms in order to avoid duplicative or unproductive efforts. 

            About a year later, the parties settled – with defendant agreeing to pay $18.5 million, plus accrued interest, into a settlement fund.  The trial court granted preliminary approval and set a schedule for final approval and the filing of an attorney fees application.  Plaintiffs’ counsel sought $225,799.50 in fees, plus $2,333.88 in costs – submitted to lead counsel in the form of a declaration.  When lead counsel filed its fees application, it did not include the declarations submitted by the other executive committee firms.  Rather, it submitted only its own declarations of time and expenses – seeking 29.5% of the $18.5 million recovery, or $5,457,500, which equated to an approximate 1.5 lodestar multiplier.  The trial court granted, but based the fee award on 29.5% of the recovery rather than using the lodestar/multiplier method.  Afterward, lead counsel allocated only $124,000 to plaintiff’s counsel without discussion – ultimately leading plaintiff’s counsel to seek relief from the trial court.

            Lead counsel argued that the payment of fees to plaintiff’s counsel reflected the contributions to the litigation and settlement plaintiff’s counsel had made – not a calculation of hours and rates – and that plaintiff’s counsel had performed work not authorized by lead counsel.  The trial court concluded that plaintiff’s counsel was entitled to $158,446 for authorized work it had performed. 

            On appeal, the 1/5 DCA affirmed – finding plaintiff’s counsel did not meet its burden to show it conferred a benefit on the class that went beyond the $158,446 in fees incurred for some authorized document review it performed. 

Private Attorney General: Award Of $387,593 In Attorney Fees And $15,771 In Costs To Plaintiffs Who Dismissed Their Lawsuit Was Proper And Consistent With California Policy Under Catalyst Theory

Plaintiffs Filed A Class-Action Lawsuit After Making Several Pre-Litigation Attempts At Settlement, And Dismissed The Case After Achieving Their Main Litigation Objective.

            Skinner v. Ken’s Foods, Inc., Case No. B299907 (2d. Dist., Div. 6 August 21, 2020) (published) has a nice discussion on the requirements for a Code Civ. Proc. section 1021.5 fee award under a catalyst theory.

            Plaintiffs filed a class action complaint against defendant for CLRA (Consumer Legal Remedies Act), FAL (False Advertising Law), and UCL (Unfair Competition Law) violations – alleging false and misleading labels and advertising based on the front labels of defendant’s salad dressings describing them as being made with “olive oil” when, in reality, the dressings contained mostly vegetable or canola oil and only a miniscule amount of olive oil. 

            Within five days of learning that defendant had permanently changed their labels to eliminate the misleading information, plaintiffs notified defendant that their primary litigation objective – the cessation of the “made with olive oil” claims on the front labels – had been met, and their claims for injunctive relief appeared to be moot.  Plaintiffs offered to settle the case or file a motion for catalyst fees.  Defendant rejected the offer to discuss settlement, so a motion for catalyst fees followed – with the trial court granting $387,593 in attorney fees and $15,771 in costs once plaintiffs dismissed their lawsuit.

            Defendant’s appeal went nowhere.  The 2/6 DCA found the fees/costs award proper and entirely consistent with the public policy of this state.  Plaintiffs met all of the requirements for a fees award under the catalyst theory – with defendant’s actions dragging out the case. 

            First, plaintiffs exceeded the standard requirement that they “reasonably attempt to settle the matter short of litigation,” as set forth in Graham v. DaimlerChrysler Corp. (2004) 34 Cal.4^th 553, 577.  Plaintiffs made a requisite pre-litigation demand, which was denied by defendant.  Plaintiffs then attended a neutral case evaluation conducted by a retired judge who concluded plaintiffs could likely show defendant’s conduct was deceptive under the CLRA, would likely be able to establish liability pursuant to the FAL and UCL, and could likely get the FAL and UCL claims certified as class actions.   When defendant continued to dig its heels into the ground, plaintiffs offered to attend mediation – to which defendant responded that it was “not prepared to make any offer of settlement” and would “vigorously defend [itself] against any and all claims.” 

            Next, plaintiffs’ lawsuit had merit, and defendant executives admitted that plaintiffs’ lawsuit was a motivating factor in defendant’s label change.

            Finally, because plaintiffs achieved their main litigation goal of having defendant change its salad dressing labels, the trial court correctly found them to be the successful party under Code Civ. Proc. section 1021.5.

Celebrities, Prevailing Party, Section 1717: President Donald J. Trump Ordered To Pay $44,100 In Attorney’s Fees In Story Daniels Dismissed Case After It Goes Back to LASC

However, $10,030.65 Costs Request Denied.

            By now, a lot of us are familiar with the Stephanie Clifford (aka Stormy Daniels) case against President Daniel J. Trump, which had been litigated both in federal courts and the Los Angeles County Superior Court (LASC).  In fact, Ms. Clifford got tagged with some SLAPP fees at the federal stage.  What happened eventually was that Ms. Clifford, who brought a declaratory relief suit based on a nondisclosure agreement with a fees clause, sought to invalidate a nondisclosure where $130,000 was wired to her through Michael Cohen’s trust account.  Eventually, the defendants which included President Trump, although he did not sign the nondisclosure agreement, signed a covenant not to sue and acknowledged that the settlement agreement was never formed.  Based on this, defendants moved to dismiss the suit for lack of subject matter jurisdiction in the federal court and remanded the case back of the LASC, which dismissed the case with prejudice upon Ms. Clifford’s request to do so after the defense filed a motion.

            Then, Ms. Clifford moved to recover $64,440.65 in fees and costs under both Civil Code section 1717 and the federal removal statute (28 U.S.C. §1447(c)) in Clifford v. Trump, Case No. BC696568 (L.A.S.C.).   L.A. County Superior Court Judge Robert B. Broadbelt III, in a detailed order entered on August 17, 2020 after substantial briefing by both sides, granted Ms. Clifford $44,100 in fees against President Trump, but denied $10,030.65 in costs.

            The lower court found that fees were warranted under section 1717 because Ms. Clifford prevailed given that she achieved her main litigation objective by having the defendants attempt to enforce the nondisclosure agreement against her.  The result was a procedural dismissal, but a final resolution unlike cases where a procedural dismissal was temporary with no resolution of the merits.  Because President Trump was not a signatory to the nondisclosure agreement with a fees clause, the assigned state judge had to confront whether there was a nonsignatory exception under section 1717 which applied.  He determined there was, finding that President Trump was a third-party beneficiary of the nondisclosure agreement.  With respect to the contention that fees were allowable under the federal removal statute, this did not provide an entitlement basis because the federal court never determined that removal was improper.  Judge Broadbelt found that the lead counsel’s fees were reasonable, but that fees claimed by local counsel were not substantiated by competent evidence (because lead counsel could not competently testify about their efforts in cursory fashion).  On the $10,030.65 costs request, it was denied because Ms. Clifford did not prevail under the routine costs statute—she obtained no net recovery and neither side obtained any relief.  Beyond that, Ms. Clifford failed to file a costs memorandum, a requirement for obtaining costs most of the time in California state courts. 

Family Law: $75,000 Section 271 Sanctions Award Against Ex-Wife Upheld On Appeal

Recorded Supported Award, Plus She Had $343,000 Net Worth—Ability To Pay.

            In In re Marriage of Gagliano, Case Nos. B284308 et al. (2d Dist., Div. 4 Aug. 20, 2020) (unpublished), ex-wife suffered an adverse award of $75,000 in Family Code section 271 sanctions.  The record showed that she presented altered emails to a doctor and delayed completing a 730 evaluation, with ex-husband spending $122,083.82 in attorney’s fees and costs during the process.  It also showed that she had $343,000 in net worth, with the lower court believing that she was willfully suppressing her income pictures.  Guess what, on appeal in light of this record, the 2/4 DCA affirmed.

Special Fee Shifting Statute: Brother Who Had To Bear Fees For Fruitless Appraisal Process In Involuntary Dissolution Buyout Nonperformance By Brothers Was Entitled To Appraisal Fees

However, He Was Not Entitled To Injunction-Related Fees Not Directly Tethered To The Statutory Buyout Appraisal Process.

            A statutory scheme, when considered in context, may well govern what attorney’s fees are awardable in a certain context.  That is what occurred in Schrage v. Schrage, Case No. B288478 (2d Dist., Div. 7 Aug. 19, 2020) (unpublished).

            What happened in this case was that brother Leonard filed an action against his two brothers to involuntarily dissolve a family owned business.  The two brothers invoked the statutory right to buyout the business rather than risk a dissolution order.  The problem is that the two brothers went through the appraisal process, obtained a purchase number, but did not perform.  Leonard moved to recoup attorney’s fees under various sections of the Corporations Code which guide this process, namely, sections 2000(c), 15908.02(d), and 17707.03(c)(3).  Leonard sought some referee expenses, $379,009.50 for appraisal-related fees, and $561,393.63 in injunction-related fees (given he obtained some injunctions to keep the other two brothers from abusing the family company).  In some bizarre procedural contortions, the first judge issued a tentative to grant the fees except for the injunction-related fees, but never issued an order.  A second judge was later assigned, who granted the entirety of the fees request, which gave rise to the appeal.

            The 2/7 DCA affirmed, but it did not sustain the entire fee request award.  Rather, after analyzing the Corporations Code fee-shifting provisions, it determined that only appraisal-related fees were allowable, not the injunction-related fees.  The appellate court also found that it was no error for the second judge to fail to conduct a hearing, because it was not required under the statutory scheme.  So, even though some of the costs/fees award was affirmed, $561,393.63 went bye-bye as a matter of law.

SLAPP: Partially Prevailing SLAPP Cross-Defendant’s Award Of $8,310 In Fees/Costs Affirmed

Cross-Defendant Sought $24,760, With Trial Judge Reducing For Only SLAPPing One Claim.

            Cross-defendant in Tran v. Eat Club, Inc., Case No. H046773 (6^th Dist. Aug. 19, 2020) (unpublished) successfully SLAPPed a first cause of action, but not other claims.  Because SLAPP grant fees are mandatory for a defendant/cross-defendant, plaintiff sought $24,760 in fees/costs.  The trial judge awarded $8,310 instead.  The appellate court affirmed, determining that plaintiff did strike one claim and achieved a significant benefit by narrowing the case for a claim which had some exposure.  The reduction confirmed the reasonableness of the order. 

Discovery, Sanctions: Trial Court Cannot Impose Discovery Sanctions Once A Vexatious Litigant Motion Is Filed

Imposition Of Sanctions Was Error Because Filing Of Motion Stayed Further Proceedings Except A Ruling On The Vexatious Litigant Motion.

            In Hanna v. Little League Baseball, Inc., Case Nos. E070995 et al. (4^th Dist., Div. 2 Aug. 18, 2020) (partially published; sanctions discussion published), defendant filed a motion to have plaintiff declared a vexatious litigation under CCP § 391(b), requesting plaintiff post security and requiring plaintiff to obtain judicial prefiling permission for other pleadings—common requests in this type of motion.  Defendant also had moved to obtain discovery sanctions against plaintiff.  The lower court entertained all these motions at the same time, granting the vexatious litigant motion and ordering plaintiff to pay $1,200 in discovery sanctions.  Although affirming the vexatious litigant determination, the 4/2 DCA reversed the grant of discovery sanctions.  The reason was based on the clear statutory language of CCP § 391.6, which stays proceedings such that the lower court lacked jurisdiction to entertain and to impose discovery sanctions.

Civil Rights, Costs: In Mixed FEHA/Non-FEHA Action, Costs Properly Assessed Against Nonprevailing Plaintiff

Although FEHA Case Was Not Frivolous, Costs Allowable On Non-FEHA Claims.

            Even though a losing FEHA plaintiff only gets tagged with routine costs if plaintiff’s case is frivolous, that does not mean that plaintiffs in all actions do not face exposure, which is the situation when non-FEHA claims are involved.

            Obi v. L.A. County Sheriff’s Office, Case No. B296553 et al. (2d Dist., Div. 2 Aug. 18, 2020) (unpublished) illustrates the point.  In that appeal, a plaintiff suffered an adverse summary judgment in a case with mixed FEHA and non-FEHA claims.  The trial court awarded the defense $13,191.95 in routine costs although finding that the FEHA claims were not frivolous in nature.  The appellate court affirmed the costs award because costs are recoverable with respect to non-FEHA claims, and nothing showed that the awarded costs were not incurred on all the mixed claims.  In its reply brief, plaintiff tried to challenge costs not contested in the motion to tax costs, but the 2/2 DCA said that was waived by not moving to tax them in the previous motion before the trial judge.