CALIFORNIA ATTORNEY'S FEES

Family Law: Celebrity Chef Cat Cora Had To Pay Attorney’s Fees Of $444,000 To Her Ex-Wife

Lower Court Did Not Abuse Its Discretion In Appointing A Receiver To Help Enforce Spousal And Child Support Issues.

            Any fans of HGTV likely know of Catherine (Cat) Cora, a well-known celebrity chef.  In 2017, her marriage to Jennifer Cora was dissolved, with the lower court ordering Cat to pay $8,118 in monthly child support for four children, $9,500 in spousal support to Jennifer (who stayed at home with the children while Cat worked outside the house), and $440,000 to Jennifer’s divorce attorney.  Cat eventually paid the $444k fee award, but she claimed not being able to afford the support in light of the pandemic.  The lower court appointed a receiver in order to assist in the collection of the support awards, results all affirmed on appeal in Cora v. Cora, Case No. B308834 (2d Dist., Div. 6 Dec. 14, 2021) (unpublished). 

Arbitration, Retainer Agreements: $192,000 Arbitration Award To Ex-Attorney Affirmed On Appeal

After MFAA Arbitration, Ex-Attorney Rightly Went To Contractual Arbitration; Argument That Block Billing Violates B&P Section 6148 Is Rejected Although Retainer Said Attorney Could Block Bill.

            In Kling v. Horn, Case No. B305967 (2d Dist., Div. 7 Dec. 14, 2021) (unpublished), defendant ex-attorney, after engaging in a Mandatory Fee Arbitration Act (FAA) under which ex-client obtained partial relief from paying delinquent fee bills and after rejecting the award, won a contractual arbitration award of $192,000—with ex-client, in a bad move, not participating in the subsequent arbitration.  Among other arguments, ex-client argued that ex-attorney did not comply with the MFAA procedures and that a provision in the retainer agreement allowing ex-attorney the option to block bill violated B&P § 6148(b) [“Bills for the fee portion of the bill shall include the amount, rate, basis for calculation, or other method of determination of the attorney’s fees and costs.”].

            The trial court confirmed the award and denied a petition to vacate it, determinations affirmed on appeal.  Ex-attorney did comply with the MFAA by participating in the MFAA arbitration and then demanding contractual arbitration, as allowed under Rosenson v. Greenberg Glusker Fields Claman & Machtinger LLP, 203 Cal.App.4^th 688, 693-694 (2012).  With respect to block billing, the appellate court concluded that (a) ex-client did not cite authority indicating it violated section 6148 (which does not require disclosing the date of services or specifically describing the services rendered, although indicating that block billing can require a discount of a fee request), and (b) the block billing provision was severable even if was considered to be illegal in nature.

Employment: Plaintiff Prevailing On 10% Of Primarily FEHA-Based Claims Properly Awarded $320,000 In Attorney’s Fees Out Of A Requested $2.1 Million Based On Overlitigation Of The Case, Limited Success, And Unexceptional Nature Of The Case

However, Denial Of Expert Fees Remanded Because Trial Judge May Have Believed He Had No Discretion To Award.

            Herron v. County of Los Angeles, Case No. B295184 (2d Dist., Div. 7 Dec. 8, 2021) (unpublished) is an interesting case which shows how trial judges have wide discretion in awarding attorney’s fees of a reasonable amount with respect to hourly rates, activities in the litigation, degree of success in the litigation, and comparison to other attorney efforts in other like kind cases.

            In Herron, a plaintiff sought to recover $2 million from County, but only won 10% of his claims to the tune of a jury verdict of $200,000.  Under FEHA, plaintiff’s counsel moved for a fee award of over $2.1 million (inclusive of a 2.0 positive multiplier) and for costs of $121,000 (including expert witness expenses).  The trial judge awarded counsel $320,000 in fees and $28,472.58 in costs (awarding no expert witness fees).  The 2/7 DCA affirmed the fee award, but it reversed and remanded on the expert witness fee denial.

            The lower court reduced lead counsel’s requested $600 hourly rate to $500 based on that attorney being a solo practitioner and previously never being awarded $600 as an hourly rate.       The appellate court found no flaw with this analysis.  The trial judge also reduced by quite a bit the hours being requested because of overlitigation, limited success, and comparison of hours the presiding jurist had seen in a more complicated employment case by another experienced lawyer in that other matter.  The Court of Appeal found that consideration of these factors was proper, especially the comparative analysis to the activities spent by an employment lawyer in a different FEHA case.  (See, e.g., Stratton v. Beck (2017) 9 Cal.App.5th 483, 496 [finding no abuse of discretion in court setting attorney’s hourly rate based on comparison of rates from similarly experienced attorneys in same field and area]; Children’s Hospital & Medical Center v. Bonta (2002) 97 Cal.App.4th 740, 783 [affirming award where “the hourly rates allowed by the trial court are within the range of reasonable rates charged by and judicially awarded comparable attorneys for comparable work”].)   Finally, given an express finding that the case was not exceptional in nature, awarding no multiplier was within the trial judge’s discretion.

            However, the refusal to award expert fees was reversed because FEHA, unlike the routine costs statute, does allow a lower court discretion to award them, with no limitation that the experts had to be ones appointed under court order.  A further examination was in order.

Costs: Fifth District Discusses A Myriad Of Costs Issues, Agreeing That Some Were Improperly Awarded But Others Were Properly Awarded

Costs Necessary And Reasonable To The Litigation Are Discretionary Award Calls By The Trial Judge.

            In O’Neal v. Stanislaus County Employees’ Retirement Assn., Case No. F079887 (5^th Dist. Dec. 8, 2021) (unpublished), non-prevailing plaintiffs appealed certain costs awarded to The Retirement Association and Stanislaus County.  The Fifth District concluded that some costs were improperly awarded but others were properly ordered, with the major takeaways being these:  (1) summary judgment exhibit costs and costs of a person never deposed were not properly awarded; (2) copies of trial exhibits is a discretionary costs award such that there was no abuse of discretion in so awarding; (3) messenger fees for filings by outside, non-local counsel are a discretionary costs item which can be awarded by the trial judge; (4) UPS shipping costs are not allowable under the costs statutes; (5) CourtCall telephonic appearance expenses can be awarded in the trial judge’s discretion; (6) unused trial exhibit expenses are properly awardable discretionary costs, although noting that the issue is pending before the California Supreme Court in Segal v. ASICS America Corp., No. S263569; and (7) transcript costs for transcripts not ordered by the court are not a proper costs item.

            BLOG UPDATE:  Segal was argued and submitted on November 3, 2021, so a decision should be upcoming in the near future.

SLAPP: 4/3 DCA Agrees With 4/2 DCA Analysis On SLAPP Frivolous Fee Plaintiffs’ Requests

About $83,000 In Frivolous SLAPP Fees Affirmed On Appeal.

            In Ibbetson v. Grant, Case Nos. G059067/G059352 (4^th Dist., Div. 3 Dec. 7, 2021) (unpublished), the appellate court affirmed about an $83,000 attorney’s fees award in favor of plaintiffs for a frivolous SLAPP motion.  [So, defendants, beware, you can get mandatory SLAPP fees if a trial judge determines the motion was frivolous.]  However, for blogging purposes, we picked up on the defense argument that plaintiffs had not meet the CCP § 128.7 safe harbor provisions as far as making the fee request.   The 4/3 DCA rejected this argument, agreeing with the 4/2 DCA analysis of this issue in Changsha Metro Group Co., Ltd. v. Xufeng, 57 Cal.App.5^th 1, 19 (2020). 

Deadlines: Plaintiff’s Failure To Timely Request Fees/Costs After CCP § 998 Acceptance Means The Request Was Waived

Lack of Diligence Was the End Conclusion Of This Matter.

            In Frye v. The Legends Golf Club, LLC, Case No. E075191 (4^th Dist., Div. 2 Dec. 6, 2021) (unpublished), the appellate court colorfully led off this way: “A trial court’s award of contractual attorney fees and costs is not like a stock dividend—you must request it in a timely and appropriate manner.”  Well, the plaintiff here never managed to do that.  After accepting a section 998 offer which preserved the ability to move for fees, and after rolling OSC re dismissal requests on numerous occasions, the trial judge finally dismissed the case before any fee motion could be resolved.  That result was affirmed on appeal.  Plaintiff could not show any diligence in moving for fees, getting extension after extension but not properly filing the fee request.  This type of conduct led to the conclusion that no fee request was still in play for plaintiff. 

POOF! Earlier Reversal of Judgment On Less Than All Causes of Action Required Reversal Of Subsequent Fees/Costs Award

4/1 DCA So Rules In Unpublished Opinion.

            In Cui v. Secured Capital Ltd. Partnership, Case No. D078538 (4^th Dist., Div. 1 Dec. 2, 2021) (unpublished), a trial judge entered a $97,000 fees/costs award against a commercial tenant based on tort and premises liability claims against landlord and its real estate broker about the suitability of the leased premises for tenant’s intended uses.  The lower court earlier had granted summary judgment on all claims based upon an unlawful detainer possession stipulation, with the appellate court reversing the summary judgment on all claims but the premises liability count.  That meant the fees/costs award when POOF! also.  That held true even when, as here, the judgment was reversed as to fewer than all causes of action. (See Harris v. Wachovia Mortgage, FSB, 185 Cal.App.4th 1018, 1021 [reversal of postjudgment fee and cost order required where judgment was reversed as to only one of three causes of action]; Ventas Finance I, LLC v. Franchise Tax Bd. (2008) 165 Cal.App.4th 1207, 1212 [reversing fee award following partial reversal of judgment].)

Employment: Even Though Wage Statement Penalty Award Is Reversed, $944,860 Fee Award To Prevailing Flight Attendants Sustained Upon Review

Penalties Will Be Recalculated And Likely Still Result In A Sizeable Penalty Award Despite Reversal, So Fee Award Was Not Disturbed.

            In Gunther v. Alaska Airlines, Inc., Case No. D077313 (4^th Dist., Div. 1 Dec. 1, 2021) (partially published; fee discussion published), Alaska Airlines was found to be in noncompliance with California state wage statement requirements, resulting in a substantial PAGA penalty award of $25 million under Labor Code section 226.3.  The lower court, substantially adopting a lodestar request but only granting a 1.25 positive multiplier rather than the 4.3 requested multiplier, awarded plaintiffs postjudgment fees of $944,860 under Labor Code sections 226(h) and 2699(g)(1)—with the defense not contesting fee entitlement.  However, the appellate court reversed the PAGA penalty award, finding it should be calculated under the less heavy-handed penalty of PAGA section 2699(f)(2).

            Alaska Airlines argued that this reversal meant the fee award should fall also, along with other challenges.  The 4/1 DCA upheld the fee award.  It found that the error in adoption of an incorrect penalty would not disturb the overall success of plaintiff, given penalties were still going to be recalculated and likely would be substantial in nature.  Put another way, plaintiffs still succeeded.  The trial court’s refusal to reduce for time spent on dismissed claims was sustained because jettisoning those claims resulted in a more efficient trial such that plaintiffs would be awarded for their counsel’s good judgment.  The appellate court also rejected the defense’s limited success challenge, finding that the unsuccessful claims were related to the successful claims, drawing upon civil rights and CEQA cases for its analysis.  Fee award affirmed even though the penalty award was sent for a remand calculation. 

Request for Admissions: $239,170.86 Costs Of Proof Sanctions Order Affirmed On Appeal

Appellate Court Rejects Per Se Rule That Denials of Summary Judgment Motion Or Directed Verdict Presents Imposition Of These Type Of Sanctions.

            Hi, everyone.  We are back from the Thanksgiving break and hope you are all well.  The fee decisions were very sparse from mid-November to now, but they are ramping back up as we close in on the December Holidays.

            Code of Civil Procedure section 2033.420 allows a lower court to award “costs-of-proof” sanctions, typically attorney’s fees, unless it falls within one of these exceptions:  (1) an objection was sustained to the request or a response was waived; (2) the admission sought was of no substantial importance; (3) there was reasonable ground to believe the party refusing to admit the matter would prevail on the matter; or (4) there was other good reason for the failure to admit.” (Doe v. L.A. County Dept. of Children and Family Services, 37 Cal.App.5^th 675, 690 (2019).)  Usually, (2) or (3) are involved in most cases we have posted on since early May 2008.  However, the reasonable belief exception, as colorfully described in one case, involves showing more than a “hope or roll of the dice.”  (Doe, 37 Cal.App.5^th at 690.)

            Plaintiff learned that all too well, after being hit with a costs-of-proof sanctions order of $239,170.86 after an unsuccessful bench trial in Spahn v. Richards, Case No. A159495 (1^st Dist., Div. 3 Nov. 30, 2021) (published).

            The problem was that Plaintiff had no trial proof that defendant contractor had orally agreed to build a home at a specified fix price.  Based on the abuse of discretion review standard, the lower court did not err in awarding the “sanctions.”  Plaintiff tried to avoid that by advocating a per se rule that the previous denials of a summary judgment motion and a directed verdict motion at trial conclusively established a good faith belief that plaintiff would prevail at trial.  Given that summary judgment and directed verdict motions do not involve weighing of evidence, the appellate court refused to adopt the per se approach suggested by plaintiff given that the evidence presented at trial drives the section 2033.420 analysis.

Sanctions: $28,882.29 CCP § 128.7 Sanctions Award Reversed On Appeal

Plaintiff Made A Plausible, Nonfrivolous Argument That The Statute Of Limitations Did Not Bar An Action.

            In Kumar v. Ramsey, Case No. C092610 (3d Dist. Nov. 29, 2021) (published), plaintiff was socked with CCP § 128.7 sanctions of $28,882.29 because the lower court believed that the action clearly was time barred under the applicable statute of limitations (SOL).  The appellate court saw things differently, believing a plausible, nonfrivolous argument was made as to why the SOL did not bar the action.  Given that determination, it was an abuse of discretion to dispense sanctions against plaintiff. 

Equity, Retainer Agreements: Voiding A Contingency Agreement Under Business & Professions Code Section 6147(b) Does Not Extend To Reasonable Litigation Costs

Contingency Agreement Provided Client Would Pay For All Costs, With Quantum Meruit Equitable Principles Bolstering The Conclusion.

            Henry M. Lee Law Corp. v. Chang, Case No. B288895 (2d Dist., Div. 3 Nov. 29, 2021) (unpublished) was quite an odyssey.  Law firm agreed to represent client in a wage/hour case under a 50% contingency agreement under which client agreed to reimburse all costs advanced by the firm.  There also was a severability clause in the retainer agreement.  Unfortunately, the retainer agreement did not have “negotiability” language required under Business and Professions Code section 6147(c).  Plaintiff client received a jury verdict of $62,000 plus an award of attorney’s fees in the amount of $300,000 under Labor Code sections 226(e) and 1194(a), with the fees ultimately held to go to the law firm rather than the client.  [BLOG NOTE—This shows how many wage/hour cases can result in substantial fees where the compensatory recovery is much less.]  But there was more bad news to come—the appellate court reversed the jury compensatory verdict and fee award in a subsequent opinion. 

            So, the battle turned to litigation costs advanced by law firm in representing the ex-client who terminated the firm along the way.  Client properly voided the fee agreement under section 6147(c), such that quantum meruit was the basis for fee recovery, which was a moot issue given the earlier appellate reversal.  A jury awarded law firm $28,250 in a collection suit against ex-client to collect the advanced litigation costs.  The issue presented in the appeal was whether section 6147(c) invalidated attorney’s attempt to recoup advanced litigation costs from client.

            The appellate court found that the section only applied to fee recovery and did not impact recovery of litigation costs which were to be borne by the client ultimately.  Nothing in the statutory provision applied to litigation costs, and quantum meruit equitable principles demonstrated it would be unfair to deny those expenses to client’s law firm. 

Prevailing Party, Section 1717: Where Result Was Mixed, Trial Court Did Not Err In Determining That Prevailing Party Borrowers Prevailed More Than Lender

$107,605.20 Fee Award Was The Borrowers’ Gain; Some Tort Claims, If Related To Enforcement Of A Note, Are Recoverable Under Civil Code Section 1717.

            In Bays v. Ashcraft, Case No. D079056 (4^th Dist., Div. 1 Nov. 18, 2021) (unpublished), borrowers and lender got into a tussle, with there being mixed results but with the lower court concluding the loan was “clearly usurious” such that all note interest had to be forfeited.  To put the mixed result in context, lender claimed about $233,000 was owed, and the trial court concluded only $24,868.32 in principal/interest was owed by borrowers—as well as cancelling the NOD and quieting title to the property in borrowers’ favor.  Then, after finding that the litigation results were mixed, the lower court determined borrowers obtained the greater relief and awarded them, as prevailing parties, $107,605.20 in attorney’s fees under Civil Code section 1717 (predicated on promissory note and deed of trust fee clauses). 

            The 4/1 DCA affirmed the fees award.  Based on the ultimate result combined with the voiding of the NOA and quieting of title in borrowers’ favor, the lower court did not err in finding borrowers to be the prevailing parties.  However, lender claimed that there could be no fees awarded on a breach of fiduciary duty and B&P § 17200 claim.  Section 1717’s “on the contract” language is liberally construed, with the pleadings showing that these two claims did relate to the loan such that they were allowable under the statutory provision.  (Cf. Yoon v. Cam IX Trust, 60 Cal.App.5^th 388, 393 (2021), discussed in our Jan. 31, 2021 post [claims against lender for negligence and fraud arose from enforcement of the note, so they were covered under section 1717].)  The fees for the tort/section 17200 claims were correctly awarded. 

Special Fee Shifting Statute: Attorney Knowing That A Torts Claim Had An Invalid Proof Of Service, Leading To A County Directed Verdict, Exposed Plaintiff To A Substantial Fees Award

Losing Plaintiff Ordered To Pay $121,837.50 In Attorney’s Fees And $11,637.85 In Costs

            Government Code section 1038 penalizes a plaintiff who files and pursues an action subject to a tort claims presentation to defense costs against the governmental entity, when a directed verdict is granted, where plaintiff proceeded in bad faith and without reasonable cause.  Plaintiff in Harrington v. County of El Dorado, Case No. C092559 (3d Dist. Nov. 18, 2021) (unpublished) learned the pain of that penalty all too well. 

            There, a directed verdict was granted on all causes of action in a water drainage damage case which required proper presentation of a torts claim.  The problem is that plaintiff’s attorney knew that there was no valid proof of service on the claim letter—the service was purportedly made in 2016 on a 2017 Judicial Council form, with no explanation how such a later date form could be used.  Unfortunately for plaintiff, the attorney’s knowledge of this defect was imputed to his/her client.  (Hall v. Regents of University of California, 43 Cal.App.4^th 1580 1586 (1996).)  Given that reality, the appellate court affirmed the lower court’s award of defense fees of $121,837.50 and costs of $11,637.50 against plaintiff.

Section 998, Workers’ Compensation: 2/2 DCA Decides § 998 Is To Be Applied Before Lab. Code § 3856 In Determining If 998 Offeror Obtained Postoffer Costs Such That A Workers’ Comp. Fee Recovery Or Lien Is Not Factored Into The Net Judgment Calculus

2/2 DCA Reconciled Two Statutory Schemes In Coming To Its Conclusion.

            In Oakes v. Progressive Transportation Services, Case No. B305535 (2d Dist., Div. 2 Nov. 10, 2021) (partially published; 998 discussion published), a plaintiff employee was hurt by an employee of another company in a rear-end car accident, and plaintiff former employer’s workers compensation insurance carrier paid for various medical treatments.  Plaintiff then sued as defendants both the employee who hit him as well as that employee’s employer for negligence and negligence per se.  Plaintiff, although receiving a positive judgment through a jury trial, had nixed a prior CCP § 998 defense offer, with the question being whether plaintiff employee’s Labor Code section 3856 contingency lawyer fee recovery should be deducted from the judgment to arrive at a new number for purposes of seeing if the 998 offeror beat the judgment.  The 2/2 DCA had to reconcile two schemes, section 998 and Labor Code section 3856.  It determined that section 998 was applied first, which meant that the calculus went this way: (1) jury verdict amount plus plaintiff’s preoffer costs before the 998 offer; and (2) deduction of the defense 998 offer postoffer costs, to arrive in a net judgment amount.  Once that was done, the resulting judgment was in defendant’s favor because the postoffer costs ate up the “gross initial” judgment such that there was no judgment for lawyer contingency fees or employer’s worker’s compensation lien.  Put another way, section 988 took precedence over Labor Code section 3856.

Fee Clause Interpretation, POOF! After A Merits Reversal, Language Of The Fees Clause Meant That The Reversed Party Did Not Prevail

Fee Clauses Without Prevailing Party Language Have Such A Condition Implied.

            Drink Tank Ventures, LLC v. Real Soda in Real Bottles, Ltd., Case Nos. B29881/B302215 (2d Dist., Div. 2 Nov. 10, 2021) (published) is an interesting case where a “prevailing party” had its intentional interference claim reversed as a matter of law.  At the lower court, where judgment was entered on this reversed claim, the trial judge granted the “then” prevailing party $280,700 in attorney’s fees based on a nondisclosure contract clause (out of a requested $785,981, based primarily on overbilling as well as denying a multiplier request).  The attorney’s fees award also evaporated because of the reversal of the merits judgment.  The appellate court looked at the fees clause, which did not have “prevailing clause” language, but implied it under CCP § 1021 and Civil Code $ 1717.  Once what was done, based on the reversal, the fee award went POOF!

Costs: Court Transcripts, Electronic Presentations, Arbitration Transcripts, and Trial Support Vendor Fee Items Considered In Discussion Of Properly Awarded Routine Costs

Only One Item Out Of The List Was Improperly Awarded.

            The general rules for awarding routine costs to a prevailing party can be distilled down this way:  some are expressly allowable; some are expressly not allowable; and if costs are not mentioned in the first two categories, they are awardable in the courts discretion if found reasonable and necessary to the conduct of the litigation.  (Code Civ. Proc., § 1033.5(a), (b), (c)(4).)  The appellate court in Engel & Engel, LLP v. Shuck, Case Nos. B297421/B300755 (2d Dist., Div. 2 Nov. 4, 2021) (unpublished) affirmed a lower court’s award of three items of costs, but reversed one costs award as being improper.  Here are the results:  (1) trial transcripts were improperly awarded because they are not recoverable unless “court ordered” (which they were not) and are distinct from allowable court reporter fees; (2) electronic presentation expenses were proper because the lower court expressly found they were helpful; (3) arbitration transcripts were allowable because only court transcripts are expressly disallowed unless court ordered; and (4) a trial support vendor’s fee was proper because it was subsumed in the electronic presentation component. 

Costs: 2/2 DCA Refuses To Carve Out Costs Exception For Prevailing Defendant In Knox-Keene Act Cases

Costs Determination Remanded To Address Specific Objections To Claimed Costs By Kaiser.

            In Long Beach Memorial Medical Center v. Kaiser Foundation Health Plan, Inc., Case Nos. B304183/ B306322 (2d Dist., Div. 2 Nov. 4, 2021 partially published; costs discussion unpublished), Kaiser was the prevailing defendant for costs because no relief was obtained against it and it obtained no relief in a Knox-Keene Act emergency medical services case.  The appellate court found that it was error for the lower court to deny costs.  The other side argued that the appellate court should fashion an exception for cases under the Act, but the court refused on the ground that it is “not our role to rewrite statutes [inclusive of the general costs statutes].”  The matter was remanded to consider opponents’ objections to specific items.

Trade Secrets: Law Firm Loosing Trade Secret Case Against Former Employee, A Transactional Attorney, Properly Assessed With Costs Of $51,477.44 And $714,382.50 In Fees Under Civil Code Section 3426.4

Appellate Court Rejected That A Frivolousness, Rather Objectively Specious, Standard Governed.

            Civil Code section 3426.4 is the fee-shifting statute under California’s Uniform Trade Secret Act.  It allows a trial court to discretionarily award reasonable fees and costs to a prevailing defendant where a misappropriation claim “is made in bad faith,” which under interpretive case law means satisfying both an objective speciousness prong and a subjective bad faith in bringing/maintaining the claim prong.  (Gemini Aluminum Corp. v. California Custom Shapes, Inc., 95 Cal.App.4^th 1240, 1262 (2002).) 

            Plaintiff law firm learned the sting of that provision when it lost its CUTSA claim against a former employee transactional attorney in SwedelsonGottlieb v. Noland, Case Nos. A156334/A156766 (1^st Dist., Div. 3 Nov. 2, 2021) (unpublished).  Right after he was passed over for equity partner and he set up his own firm in which multiple clients chose to go with him, law firm sued.  The problem was that they could not prove that defendant attorney had used any trade secrets (not even discussing over 300 documents the firm previously claimed were trade secrets), either because they were not or were publicly shared with clients/third parties, as well as not being able to show that former attorney improperly solicited clients away.  The lower court found against plaintiff, subsequently awarding defendant $51,477.44 in costs and $714,382.50 in section 3426.4 attorney’s fees.

            The 1/3 DCA affirmed.  Both prongs of section 3426.4 were met, rejecting the notion that a more stringent frivolousness standard supplanted the objective speciousness prong.  The timing of the law firm’s suit, in tandem with it lacking evidence to show trade secrets were misappropriated, sealed the result.  Ouch! – and attorney can now be awarded more appellate fees and was awarded appellate costs by the reviewing court. 

SLAPP, Substantiation Of Reasonableness Of Fees: $23,100 SLAPP Fee Award Affirmed On Appeal, Minus A Small Amount For A Nonrelated Demand Letter

Lack Of Evidentiary Challenges To Hourly Rates Justified No Reduction, And Block Billing Does Not Have To Be Reduced Depending On The Circumstances.

            In Nejad v. Abernathy, Case Nos. B304481/ B307759 (2d Dist., Div. 4 Nov. 1, 2021) (unpublished), the lower court granted $23,362.50 to a SLAPP winner, which was affirmed on appeal except for a demand letter not required under the SLAPP statute so as to reduce the award a little less to $23,100.  The appellate court rejected challenges to the hourly rates because no evidence was introduced to challenge the rates.  With respect to a block billing challenge, the trial judge has discretion not to reduce block billing—but it depends on very particular circumstances and the nature of the billing entries.  Based on a detailed record by the lower court in granting fees, the deferential abuse of discretion standard showed that the award should be sustained.

Insurance: Intervenor Obtaining Substantial Contribution Into Insurance Rate Making Process Entitled To About $650,000 In Fees

Proposition 103 Fee-Shifting Provision Was Liberally Construed In Favor Of Intervenor “Watch Dogs.”

            State Farm Gen. Ins. Co. v. Lora, Case No. D077731 (4^th Dist., Div. 1 Oct. 29, 2021) (published) is one of the first decisions under Proposition 103, which has a fee-shifting provision allowing an award of advocacy fees to a consumer representative which makes a “substantial contribution” to efforts relating to adoption of an order in an insurance rate hearing decision making process.   (Ins. Code, § 1861.10.)  The consumer advocacy intervenor was able to prevent an insurer from sealing certain records in a positive manner along the rate-making process.  The lower court awarded intervenor about $650,000 in fees, a conclusion affirmed by the appellate court.  The “substantial contribution” language was to be interpreted liberally, such that fee compensation should be allowed for unsuccessful alternative arguments (as opposed to losing on unsuccessful claims).

Arbitration, Fee Clause Interpretation, Landlord/Tenant: 1/3 DCA Affirms Trial Court’s Denial Of Attorney Fees To Prevailing Tenant

Fees Incurred For The Court Proceedings Were Part Of The Arbitration Process Called For In The Lease For Resolving Fair Market Rent Value And Not Recoverable Under The Prevailing Party Provision Which Applied To An Action Involving A Breach Of The Contract Or Determination of Rights

            In California Union Square L.P. v. Saks & Company LLC, Case No. A162043 (1^st Dist., Div., 3 October 29, 2021) (published), defendant tenant exercised its option to renew its lease following the initial 25-year term.  Because landlord and tenant were unable to agree on the fair market value of the base rent, the dispute resolution provision of the lease was triggered – which mandated arbitration.  Tenant ultimately prevailed after two arbitrations and multiple litigation proceedings in superior, federal, and appellate courts – including a petition for review with the California Supreme Court (which was denied).   Tenant then moved for roughly $1 million in attorneys’ fees – expressly noting that, pursuant to the fees provision of the lease, it was seeking fees incurred only in court proceedings, not any of the fees or costs incurred in the two arbitrations.   The trial court denied tenant’s motion following full briefing and a hearing.

            Tenant argued on appeal that the trial court erred because the parties’ lease – although providing that arbitration costs were to be divided equally between the parties – included a provision mandating “that the prevailing party in any action or proceeding to enforce the [l]ease or obtain a declaration of rights under the [l]ease recover its attorneys’ fees and costs from the losing party.”  Tenant claimed this prevailing party provision controlled the allocation of fees for the various court proceedings.  The appellate panel disagreed – finding the court proceedings were not undertaken for the purpose of enforcing or obtaining a “declaration of rights” under the lease, such as a dispute over a contractual term or obligation.  Rather, the court proceedings arose from the parties’ obligations under the provision for disputes on the fair market value of the base rent requiring arbitration.  As a result, the fees incurred for the court proceedings were a part of the process for resolving the value of the base rent and not recoverable under the prevailing party provision.

Section 998: Trial Court’s Granting Of Former Employer’s Motion To Tax Plaintiff’s Post-§ 998 Costs Based On Plaintiff’s Failure To Accept § 998 Offer Reversed On Appeal

Former Employer Had The Burden Of Proving A Valid § 998 Offer Had Been Made, But Belatedly Attached The § 998 Offer To Its Reply Papers Instead Of Its Moving Papers

            In Snoeck v. Exaktime Innovations, Case Nos. B302178/B304054 (2d Dist., Div. 3 October 29, 2021) (unpublished), plaintiff sued former employer for violations of the Fair Employment and Housing Act (FEHA) (Gov. Code, § 12900 et seq.). After a five-day trial, the jury returned a verdict in former employer’s favor – with exception to one cause of action for which plaintiff was awarded $130,088 in damages.  Afterward, plaintiff moved to recover costs, but the trial court granted former employer’s motion to tax from the date plaintiff rejected former employer’s $500,000 Code Civ. Proc., § 998 offer to compromise, and awarded plaintiff $49,353.46 after taxing $30,056.44. 

            Plaintiff appealed and the 2/3 DCA reversed with direction that the trial court enter a new order awarding plaintiff $79,409.90 in costs.  The problem was that former employer – with the burden of proving a valid § 998 offer had been made – failed to include a copy of its § 998 offer in its moving papers. Instead, former employer attached a copy to its counsel’s reply declaration after plaintiff opposed the motion to tax based on former employer’s failure to meet its burden to demonstrate it made a valid § 998 offer, and objected on hearsay and secondary evidence grounds to defense counsel’s description of the § 998  offer.  Citing Carbajal v. CWPSC, Inc., 245 Cal.App.4th 227, 241(2016) for the general rule that new evidence is not permitted with reply papers, the panel found the trial court abused its discretion by permitting former employer to submit the § 998 offer with its reply papers.  Submitting new evidence with reply papers should be permitted only in the exceptional case and, in such an event, the other party should be allowed to respond to the new evidence - which was not the case and did not happen here.   

Requests for Admission: Trial Court Did Not Err In Denying “Costs Of Proof” Sanctions Where Trial Court Implied A License Based On Recorded Documents

RFA Denials Were Properly Based On Documents Which Would Not Necessarily Conclude An Implied License Was At Issue.

            We have posted, many times, on “costs of proof” sanctions under CCP § 2033.420.  Most generally, these awards or denial of requests under that provision are factually oriented.  Badger v. Terribilini, Case No. A161178 (1^st Dist., Div. 3 Oct. 28, 2021) (unpublished), confirms that this is the usual case.  There, a dispute arose as to whether there was an irrevocable license on an adjacent lot, with the trial court determining there was an implied license not facially dependent on the express wording of the recorded documents.  The trial judge denied “costs of proof” sanctions, a ruling affirmed on appeal.  The RFA denials were made in good faith given that intent is subject to proof, and nothing showed that the contested issues were denied wrongfully given the heavily-contested intent issue.

Fee Clause Interpretation, Reasonableness Of Fees: Attorney Awarded Prior Frivolous Appeal Sanctions Denied “Second Bite” Request For Civil Code § 1717 Additional Fees Based On Prior Representations Made To Court Of Appeal On Reasonableness Of Work

Also, Fee Clause With “Incurred” Language Means That Fees Did Need To Be Incurred.

            The result in Korff v. Goodrich, Case No. A160917 (1^st Dist., Div. 2 Oct. 27, 2021) (unpublished) shows the wisdom in the saying “pigs get fat, hogs get slaughtered,” coined by Rubbery Figures, a satirical rubber puppet series screened in Australia in the 1890s. 

            What happened in this dispute between caregiver and deceased husband’s daughter, which led to a will contest and an eventual settlement agreement with a fees clause, is that caregiver took position inconsistent from the settlement and eventually lost three appeals after adverse decisions were made at the trial court stage.  The appellate court earlier determined that the appeals were frivolous, awarding fees as sanctions to the main prevailing party’s attorney in the sum of $49,875 (but totaling $91,084 as to other attorneys involved)—with the main attorney indicating to the appellate court that this amount represented 142.5 hours at $350/hour.  Then, before the lower court, the main attorney sought another $103,000 in compensation for additional hours at a $675 hourly rate.

            The lower and appellate courts did not buy it, with the reviewing court affirming the lower court’s denial of the requested additional compensation.  After all, main attorney’s “additional ask” contradicted representations made to the appellate court such that he was judicially estopped from claiming otherwise.  Also, the fee submissions raised the specter that there was duplicative work by three attorneys (“too many cooks in the kitchen”).  Finally, attorneys asking for additional fees did not show that their client actually “incurred” fees, although such a requirement in a fee agreement is something which must be satisfied.  (San Diego Partnership v. San Dieguito River Valley Regional etc. Authority, 61 Cal.App.4^th 910, 915, 919 (1998). 

Ethics: Simultaneous Representation Of Corporation And Major Shareholder For Common Goal Not Related To Corporate Mgmt./Control May Not Be A Conflict, But A Dispute Over Corporate Mgmt. Can Create A Conflict Between The Corporation And Major Shareholder

Discussion Occurred When Corporate Attorney Sought To Collect Unpaid Fees.

            When a trial court granted and disallowed some unpaid fees by a corporate attorney representing the corporation and major shareholder, separately and together at times, the Fifth District in Cyril Lawrence, Inc. v. K.S. Aviation, Inc., Case No. F079662 (5^th Dist. Oct. 26, 2021) (unpublished) reminded us that there may not be a conflict between representing a corporation and a major shareholder, depending on the circumstances.  Where the corporation, major shareholder, and other shareholders are unified in interest in opposing a third party claim not implicating management issues, simultaneous representation of the corporation and a major shareholder will not pose a problem.  However, where there is a dispute about corporate management or control, it would be a conflict to represent both the corporation and major shareholder as against other shareholders.  (Buehler v. Sbardellati, 34 Cal.App.4^th 1527, 1540 (1995).) 

Costs, Experts, Section 998: Trial Court’s Costs Award To Prevailing Plaintiffs, Which Accounted For Costs From Two Trials Where First Trial Resulted In Mistrial Due To Plaintiffs’ Counsel, Affirmed On Appeal

Trial Court’s Order Awarding Costs Did Not Operate As An Improper Reconsideration Of A Previous Order, And Defendants Failed To Support With Any Authority Their Contention That Plaintiffs Could Not Recover Fees Where Their Attorney Caused Mistrial.

            In Esparza v. Win Distribution, Case No. E072880 (4^th Dist., Div. 2 October 25, 2021) (unpublished), the 4/2 DCA analyzed whether a party whose counsel’s conduct resulted in a mistrial but prevailed at a second trial can recover costs from both trials.

            A family of four personal injury plaintiffs prevailed in a second jury trial following a mistrial of the first.  Afterward, the trial court awarded plaintiffs $188,057.53 in ordinary costs which accounted for both trials after partially granting defendants’ motion to tax.  Because plaintiff husband’s portion of the award exceeded the $10 million Code Civ. Proc., § 998 offer of compromise he made to defendants, the trial court also awarded him $366,976.42 in expert witness fees plus prejudgment and postjudgment interest exceeding $2 million.

            Defendants, a commercial truck driver and his employer, appealed the judgment and argued, alternatively, that their motion to tax costs from the first trial had been improperly denied and resulted in an improper award of expert fees and prejudgment interest to plaintiffs. Relying on Mullin v. Rousseau, 112 Cal.App. 719 (1931), argued that plaintiffs could not be awarded costs for both the first and second trial when their own attorney’s closing argument prompted the mistrial. 

            The 4/2 DCA disagreed and affirmed the judgment, including the costs award.  Although Mullin also involved the plaintiff prevailing at a second trial after plaintiff’s counsel caused a mistrial in the first trial, costs for both trials being awarded to plaintiff, and defendant’s motion to tax costs from the first trial being denied – Mullin is inapposite. In Mullin, the trial court charged the costs of the first trial to plaintiff as a penalty for the attorney’s misconduct. When the trial court subsequently awarded plaintiff with those same costs from the first trial, that award operated as an order reconsidering the prior costs award – which was improper.  Here, the trial court denied defendants’ request for the attorney fees and costs of the first trial as Code Civ. Proc., § 128.5 sanctions – finding plaintiff’s counsel’s made an honest mistake during closing arguments which did not warrant the imposition of sanctions. Therefore, the trial court’s order was not improper as it did not operate as a reconsideration of a previous order.  Additionally, defendants failed to support their contention with any authority.

SLAPP: 1/2 DCA Affirms Trial Court’s Attorney Fees Award To Successfully SLAPPing Defendant That Included A Reduction To The Hourly Rates Charged By His Counsel

No Abuse Of Discretion In Basing Lodestar On Local Sonoma County Counsel Rates Rather Than Major Metropolitan San Francisco Bay Area Rates When Defendant Did Not Demonstrate Impracticability Or Impossibility Of Hiring Local Counsel.

            The only question before the 1/2 DCA in Gentile v. Cohodes, Case No. A161721 (1^st Dist., Div. 2 October 25, 2021) (unpublished), was whether the trial court – in its award of attorney fees to successfully SLAPPing defendant – abused its discretion by reducing the hourly rates charged by defendant’s attorneys.

            Defendant claimed that the lodestar utilized by the trial court was improperly based on rates charged by law firms practicing in Sonoma County (where the case was brought) rather than firms in the San Francisco Bay area and was not based on similar work.  The appellate panel found no abuse of discretion, rejected defendant’s arguments, and affirmed.

            First, the ordinary rule in setting the lodestar, which is in the trial court’s discretion, is that the relevant geographic market for determining a reasonable hourly billing rate is the location where the trial court sits – unless the party claiming fees demonstrates that local counsel was unavailable or otherwise impracticable to hire, something not done in this case.  Next, defendant bore the burden of demonstrating that the fees he sought were reasonable.  However, defendant provided no evidence of rates specific to Sonoma County – leaving the trial court with no choice but to make its determination as to the reasonable rates based on its own familiarity with local billing rates for comparable legal work and on the evidence submitted by plaintiff related to Sonoma County rates.

SLAPP: No Abuse Of Discretion Nor Improper Legal Analysis In Trial Court’s Separate Awards To Five Groups Of Successfully SLAPPing Defendants Totaling $280,098.15

Plaintiff’s Federal Claim Did Not Preempt SLAPP Fee Award Which Trial Court Reduced From Requested $516,548.13 After Considering Hours Reasonably Expended And Duplicative Efforts, And Plaintiff Demonstrated No Abuse Of Discretion.

            In AWI Builders v. Alliant Consulting, Case Nos. B294662, B297189, B298699 and B300834 (2d Dist., Div. 4 October 22, 2021) (unpublished), a public works construction company sued five separate groups of defendants – with one group being the State of California and Maria Sandoval, an investigator for the Division of Labor Standards Enforcement – after being investigated for labor compliance and removed from a project rehabbing a Public Defender’s building by Riverside County.   All five groups of defendants SLAPPed back (Code Civ. Proc., § 425.16) – with the trial court granting in full the anti-SLAPP motions brought by four groups of defendants and dismissing all claims against them. As to the State defendants, the trial court granted their anti-SLAPP motion in part and dismissed all claims against State, but denied their motion as to plaintiff’s claim of violation of civil rights (42 U.S. Code § 1983) against Maria Sandoval. Afterward, all five groups separately moved for attorneys’ fees under § 425.16 – seeking a combined total of $516,548.13 (plus one group of defendants requested fees on fees of $15,475 for fees incurred to bring their fees motion).  Through five orders, after reductions to each fees request, the trial court awarded a combined total of $280,098.15. Plaintiff appealed.

            As to the fee awards, plaintiff argued that: section 425.16(c)’s mandatory fee provision is preempted by federal law when applied to a § 1983 cause of action; the trial court failed to determine whether defendants sought fees reflecting duplicative legal arguments in several of the anti-SLAPP motions; and the hours spent by one group of defendants reviewing the files on the district attorney’s investigation of plaintiff should not be awarded because that review was not necessary to the anti-SLAPP motion.

            The 2/4 DCA affirmed – concluding the trial court conducted the proper legal analysis of the fee motions and did not abuse its discretion.  The panel found plaintiff’s federal preemption argument ignored that defendants were awarded fees for prevailing on an anti-SLAPP motion, not because they prevailed on a § 1983 claim – with the purpose of § 425.16(c) being to provide relief to persons victimized by meritless, retaliatory SLAPP lawsuits because of their protected activity. (Ketchum v. Moses, 24 Cal.4th 1122, 1131(2001); Liu v. Moore, 69 Cal.App.4th 745, 750 (1999).) The trial court reduced the requested fees from each group of defendants and noted in each order that it was required to award fees only for hours reasonably expended and reduce for duplication.  Finally, the trial court addressed the investigative records review issue in its order awarding fees to that group of defendants – finding defendant group’s claim that the review and analysis of the investigative records was “inextricably intertwined” with the anti-SLAPP motion credible, and the billing reasonable – and plaintiff failed to show that the trial court’s decision was arbitrary or irrational.

Deeds of Trust, Section 1717: Trial Court’s Award Of $508,186.49 In Attorney’s Fees To Loan Servicer Acting As Agent For Mortgage Loan Owner In Judicial Foreclosure Action Affirmed On Appeal

Mortgage Loan Owner’s Entitlement To Contractual Fees Under Note And Deed Of Trust Fee Provisions Transferred To Loan Servicer When It Was Authorized To Act As Loan Owner’s Agent In Enforcing The Deed Of Trust.

            In Nationstar Mortgage v. Abalkhad, Case No. B303946 (2d Dist., Div. 1 October 22, 2021) (unpublished), homeowner in judicial foreclosure action appealed from the judgment entered against him, which included an award of $508,186.49 in attorney fees to the loan servicer for fees it incurred in enforcing the promissory note on the mortgage loan and deed of trust securing the loan.

            As to the fees, homeowner did not challenge the amount awarded. Instead, he argued – for the first time on appeal – that loan servicer was not entitled to recover fees under the attorney fees provisions in the note and deed of trust because it was not the lender.

            The 2/1 DCA affirmed – finding there could be no dispute as to the mortgage loan owner’s entitlement to contractual fees based on the fees provisions under the Note and Deed of Trust.  Because mortgage loan owner gave authority to loan servicer to act as its agent in enforcing the deed of trust, loan servicer was acting in place of mortgage loan owner, and was entitled to recover the fees it expended as if it were the mortgage loan owner. (Channel Lumber Co., Inc. v. Porter Simon, 78 Cal.App.4th 1222, 1227 (2000).)

Class Actions: Ninth Circuit Determines Vouchers Are Coupons, And Pre-Certification Settlement Must Be Reviewed With Heightened Scrutiny

Ninth Circuit Showing A Significant Trend To Review Class Action Settlements Closely, Especially Where Non-Cash Relief, Clear Sailing Provisions, And Reverter Features Are Involved.

            The Ninth Circuit certainly has taken a much closer scrutiny of coupon/voucher/non-cash relief settlements in a series of decisions we have posted on in the past under our category “Class Actions”—Kim (our Aug. 17, 2021 post); Briseno (our June 1, 2021 post); and Chambers (our Nov. 11, 2020 post).  Baerbel McKinney-Drobins v. Massage Envy Franchising, LLC, No. 20-15539 (9^th Cir. Oct. 20, 2021) (published) is another published opinion which exemplifies this trend.

            There, a pre-certification class action settlement was reached between class members (users of spa products and services through a membership arrangement) and defendant.  The settlement provided vouchers to class members, with there being a $10 million settlement “floor” such that the issued vouchers not requested by class members would be increased pro rata in value so as to reach this “floor” amount.  The settlement had a “clear sailing” provision by which the defense would not object to a $3.3 million fee request by class counsel.  It also had a reverter provision by which any fee amount awarded under $3.3 million would revert back to the defendant rather than the class.  6.2% of the class requested vouchers (under $3 million in value), so that those requesting them had their vouchers adjusted upward so the vouchers ranged from $36.28 - $180.68.  The district judge approved the settlement as fair and reasonable, finding this was not a CAFA “coupon” settlement.  However, he awarded class counsel $2,612,500, 25% of the $10 million face amount after making an adjustment for $450,000 in notice/class administration costs.

            The Ninth Circuit vacated and remanded the settlement, including the fee award. 

            Most crucial to its determination was that the vouchers were CAFA “coupons,” which required a different examination on the actual redemption rates of the issued vouchers—not the $10 million face value of the vouchers.  The Ninth Circuit panel (3-0, but with a concurring opinion) found that a de novo review analysis applied on whether a coupon was involved, determining a coupon was truly involved under its Online DVD opinion.  (The concurring justice wanted an en banc review of Online DVD.) That alone required a restudy.

            However, the panel also indicated that this pre-certification settlement needed heightened scrutiny, with certain “red flags” of collusion between class counsel and defendant potentially being present.  Specifically, the presence of non-cash relief, the clear sailing provision, and the reverter were indicia that defendant reached a settlement unduly benefiting class counsel rather than the interest of the class.  These factors needed to be looked at further on remand.

Fee Clause Interpretation, Section 1717: Where Cross-Complaint Did Not Involve Any Enforcement Or Promise Breaches Of A Purchase Agreement With A Fees Clause, Attorney’s Fees Lacked Any Entitlement Basis

Section 1717 Did Not Change The Analysis, Because The Scope Of The Fee Clause Can Only Relate To Contractual Claims—Meaning CCP § 1021 Must First Be Overcome.

            Otay Land Co., LLC v. U.E. Limited LLC, Case No. D077274 (4^th Dist., Div. 1 Oct. 20, 2021) (unpublished) reminds us that Civil Code section 1717 reciprocity principles do not kick in unless the fees clause, by its terms, covers the claims which are at issue in the case.  If not, CCP § 1021 is not overcome, and section 1717 makes no difference.

            In this case, plaintiff/cross-defendant prevailed on its positive claims and on the claims of defendant/cross-complainant such that plaintiff/cross-defendant was the prevailing party.  Cross-complainant had prayed for attorney’s fees in its prayer, with the trial judge denying an earlier motion to strike because a 1998 purchase agreement was at least proffered as a basis for fee entitlement.  The purchase agreement had a contractual fees clause which read this way: “If any legal action . . . is brought for the enforcement of this Agreement, or because of a breach, default, or misrepresentation in connection with this Agreement, the prevailing party shall be entitled to recover reasonable attorneys’ fees.”  After its win, plaintiff/cross-defendant moved for fees under the purchase agreement, a request denied by the trial court.

            The 4/1 DCA affirmed the fee denial.  Nothing in the two cases fell within the scope of the fee clause, with misrepresentation allegations only relating to an adverse possession claim rather than having causal connection with the 1998 purchase agreement containing the fees clause.  Plaintiff/cross-defendant argued that Civil Code section 1717 altered the result, but the appellate court reminded everyone that its reciprocity principle only applies if the fee clause could be interpreted broadly enough to encompass the claims at issue in the cases—meaning Code of Civil Procedure section 1021 (leaving the parties to strike their own bargain on fee recovery) having to be surmounted before section 1717 is considered.  Finally, plaintiff/cross-defendant claimed that the other side was estopped from denying fee entitlement based on the prayer in the cross-complaint and earlier motion to strike victory; however, this was rejected because a mere assertion of the right to fees does not operate as an estoppel where there is no true fee entitlement under the contractual clause.  (R.W.L. Enterprises v. Old Castle, Inc., 17 Cal.App.5^th 1019, 1035-1036 (2017).) 

Appealability, Costs, Deadlines: $10,800 Costs Recovery To Certain Defendants After Plaintiff Dismissed Case Without Prejudice And Refiled In Texas Was Not Erroneous

4/3 DCA Sides With The View That A Costs Award Entered After A Voluntary, Without Prejudice Dismissal Is Appealable.

            In Thomas v. St. Joseph Health System, Case No. G059408 (4^th Dist., Div. 3 Oct. 20, 2021) (unpublished), plaintiff doctor sued certain health care defendants in Orange County Superior Court for interference/unfair competition.  Certain defendants gained a tentative ruling by which a motion to quash based on lack of personal jurisdiction was going to be set for a final hearing, based on the notion that the case belonged in Texas.  (The lower court had allowed plaintiff to take jurisdictional-directed depositions in both California and Texas in order to oppose the motions to quash.)  Before that hearing could be held, plaintiff filed a voluntary, without prejudice dismissal and later refiled the case in Texas.  Defendants filed a costs memorandum, with the trial judge awarding $10,800 to defendants and denying a motion to strike/tax costs.  Plaintiff appealed.  The costs order was affirmed, in a 3-0 opinion authored by Orange County Superior Court Judge Linda Marks, sitting by assignment.

            In a footnote, the 4/3 DCA panel observed that there is a split in authority on whether a costs order entered after a voluntary dismissal without prejudice is an appealable order.  (Compare Gassner v. Stasa, 30 Cal.App.5^th 346, 351-355 (2018) [is] with Monn Chong Loong Trading Corp. v. Superior Court, 218 Cal.App.4^th 87, 92 (2013) [isn’t, but can be treated as a discretionary petition for writ of mandate].)  The panel sided with Gassner, but also indicated it would have reviewed it under the mandate petition alternative.

            Plaintiff argued that defendants filed the costs memorandum 9 days too late based on the 15-day deadline, but that failed because no notice of entry of dismissal was served such that the longer 180-day rule applied.

            Next, plaintiff contended that the pendency of the case in Texas meant that there was no prevailing party for costs purposes.  Not so, said the appellate court.  CCP § 1032(a)(4) allows costs to “a defendant in whose favor a dismissal is entered,” with a dictionary definition of “in favor of” supporting the position that defendants had prevailed notwithstanding the pendency of the Texas action.  (The analysis likely would have been different if attorney’s fees were involved, but the result was different for costs.)

            Plaintiff then suggested that defendant needed to file the customary Costs Worksheet, but the appellate court observed that the only initial required pleading is the costs memorandum itself (CRC, rule 3.1700(a)(1)), although it is a good idea to file the Worksheet.

            The amount of costs, mainly for in-state and Texas travel deposition expenses by counsel, were reasonable, with the fact that plaintiff’s counsel’s travel costs were $450 less not altering the result—costs do not have to be the lowest possible for purposes of reasonableness.  (Landwatch San Luis Obispo County v. Cambria Community Services Dist., 25 Cal.App.5^th 638, 646 (2018).)

Prevailing Party: Trial Court’s Awards Of Attorney’s Fees And Costs To Landlord Before Final Judgment Entered Did Require Reversal Of Awards

Fee/Costs Awards Before Final Judgment Entered Were Premature And Infirm.

            After a plaintiff tenant surrendered possession but before a final judgment was entered in an unlawful detainer action, a trial judge—thinking the case effectively was “over”—entered an attorney’s fees award to landlord as prevailing party in the sum of $221,849 (out of a requested $292,902.53) and a costs award to landlord to the tune of $8,317.57.  Tenant smartly appealed, because the appellate court in PhxCap II, LLC v. AG Mobile Restaurant Concepts, LLC, Case No. D078074 (4^th Dist., Div. 1 Oct. 19, 2021) (unpublished) reversed. 

            The reason was fairly elemental:  there can be no prevailing party until a final judgment has been reached.  (Jimenez v. City of Oxnard, 134 Cal.App.3d 856, 858 n. 3 (1982) [costs]; Butler-Rupp v. Lourdeaux, 154 Cal.App.4^th 918, 928 (2007) [section 1717 prevailing party can only be determined “by the final result of the litigation”].)  Beyond that, there were remaining landlord claims for damages which were hanging out there, with the “final judgment” only dealing with possession.  No final judgment, no prevailing party—too premature.

Appeal Sanctions, Sanctions, Settlement: No Abuse Of Discretion In Trial Court’s Order Sanctioning Plaintiffs $10,000 For Failure To Execute Settlement Agreement

The Record Reflected That The Parties Agreed In Open Court To Put The Oral Settlement Agreement In Writing And That Deadlines For Payment Of Settlement Funds Would Be Triggered By Full Execution Of The Written Settlement Agreement.

            In Tricoast Builders v. Frederick, Case No. B307825 (2d Dist., Div. 6 October 18, 2021) (unpublished), homeowner defendants/cross-complainants in a construction defect case moved ex parte for an order to show cause why the oral settlement agreement, which had been reached months earlier in open court during a mandatory settlement conference and subsequently reduced to writing, had not been signed by plaintiffs/cross-defendants builder and its principal (who also served as one of builder’s attorneys) and for $25,627.51 in monetary sanctions. At a continued hearing on homeowner’s motion, the trial court awarded $10,000 in Code Civ. Proc., § 128.5 sanctions against builder and its principal, jointly and severally, instructed the court clerk to execute the settlement agreement on behalf of builder and its principal, and ordered that the sanctions be paid from the portion of settlement that was to be paid to builder. 

            The 2/6 DCA rejected both arguments advanced by builder and its principal on appeal – that the trial court lacked jurisdiction to enforce the settlement agreement, and that the oral settlement agreement was not contingent upon the preparation of a written agreement.  First, although the MSC judge did not retain jurisdiction under Code Civ. Proc., § 664.6 because one of the parties to the case was not present at the MSC, that party subsequently signed the written settlement agreement  thereby making the settlement agreement enforceable against it – along with the other parties who were present at the MSC. Second, the record showed that the parties agreed that a written agreement would be prepared, that the written agreement was consistent with the oral settlement agreement’s terms made in open court, that the deadlines for making the settlement payments would be triggered by the date the written settlement agreement was fully executed, and that builder/its principal did not communicate with homeowners until after the OSC and motion for sanctions was filed. The panel found no abuse of discretion in the trial court’s imposition of sanctions given that builder’s and its principal’s unreasonable delay caused homeowners to incur the expense of applying for the OSC and obtaining a court order authorizing release of the $420,000 in settlement funds owed to them.

            Although finding builder’s/its principal’s arguments on appeal to be unsupported, the 2/6 DCA did not find their appeal to be so void of merit so as to justify granting homeowners’ request for $5,313 in appeal sanctions against builder/its principal.

Prevailing Party: Denial Of Attorney Fees To Civil Harassment Defendant Claiming Prevailing Party Status In Voluntarily Dismissed Case Affirmed On Appeal

Award Of Attorney Fees Under Code Civ. Proc. § 527.6 Is Committed To The Discretion Of The Trial Court Regardless Of Prevailing Party Status

            In Myers v. Dorsaneo, Case No. A161586 (1^st Dist., Div. 1 October 18, 2021) (unpublished), the 1/1 DCA affirmed the trial court’s denial of Code Civ. Proc. § 527.6 attorney fees to civil harassment defendant following plaintiff’s voluntarily dismissal of the case after having obtained a temporary restraining order against defendant.

            Defendant argued on appeal that in denying her § 527.6(s) fees, the trial court had abused its discretion by undercutting the right of dismissed defendants to prevailing party costs and fees under Code Civ. Proc. § 1032(a)(4).  While the panel found that no case has held that a trial court must use the definitions provided in § 1032(a)(4) to determine a prevailing party in a civil harassment case, it found it unnecessary to determine whether the provisions of § 1032(a)(4) are controlling or just provide guidance in a civil harassment case.  An award of § 527.6(s) fees is committed to the discretion of the trial court regardless of prevailing party status.  In this case, the trial court determined it would not be appropriate to grant the attorney fees, and the panel saw no basis to conclude that the trial court abused its discretion.

Arbitration, Civil Rights, Employment: Employee’s Petition For Writ Of Mandate Granted Where Employer Was Awarded $6,912 In Attorney Fees For Successfully Bringing Motion To Compel Arbitration Of FEHA Claims

Based On The Standards Set Forth For Imposition Of Fees Under FEHA, Employer’s Arbitration Agreement Did Not Authorize Recovery Of Attorney Fees Absent A Finding That Employee’s Opposition To Motion To Compel Arbitration Was Groundless.

            California Fair Employment and Housing Act (FEHA) (Gov. Code, § 12900 et seq.) provides that a prevailing FEHA defendant may not recover attorney fees or costs absent a finding that the action was frivolous, unreasonable, or groundless when brought, or the plaintiff continued to litigate after it clearly became so. (§ 12965(b).)

            In Patterson v. Superior Court, Case No. B312411, (2d Dist., Div. 7 October 18, 2021) (published), employer successfully sought to compel arbitration of plaintiff employee’s FEHA claims.  Afterward, employer sought $10,583 in attorney fees pursuant to a prevailing party fee provision in its arbitration agreement – with the trial court awarding it $6,912 in fees and determining that the standard set forth in § 12965(b) applied only after adjudication of the case on the merits.

            Employee petitioned for writ of mandate – with the question before the 2/7 DCA being whether an employer’s arbitration agreement may authorize the recovery of attorney fees for a successful motion to compel arbitration of a FEHA lawsuit even if the plaintiff’s opposition to arbitration was not frivolous, unreasonable or groundless.     

            Pursuant to the standards set forth under FEHA regarding the imposition of fees and costs, the answer was no – with the panel concluding “[b]ecause a fee-shifting clause directed to a motion to compel arbitration, like a general prevailing party fee provision, risks chilling an employee’s access to court in a FEHA case absent section 12965(b)’s asymmetric standard for an award of fees, a prevailing defendant may recover fees in this situation only if it demonstrates the plaintiff’s opposition was groundless.”

            The panel granted employee’s petition and directed the trial court to vacate its order granting employer’s fees and to conduct a new hearing on the fee request to determine whether employee’s opposition to the motion to compel arbitration was frivolous, unreasonable or groundless.

Employment, Multipliers, Reasonableness of Fees: No Abuse Of Discretion In Trial Court’s Award Of Attorney Fees To Prevailing Plaintiffs In DJOA Action

Amount Of Fee Award Was Justified Given Trial Court’s Analysis Of The Complexity Of The Case, Results Achieved By Plaintiffs, And Plaintiffs’ Showing To Support The Fee Request.

            The Displaced Janitors Opportunity Act (Lab. Code, §§ 1060–1065) “requires contractors who are awarded contracts for janitorial or building maintenance services at a particular site to retain certain employees working for the terminated contractor for a 60-day transition employment period, and to offer those workers continued employment if their performance during the 60-day period is satisfactory.” (§ 1061, subds. (b)(1) & (f).) Under the DJOA, an employee of the terminated contractor who was not offered employment by the successor contractor may sue the successor for back pay, including the value of any lost employment benefits. (§ 1062, subd. (a).) An employee prevailing in such an action “shall” be awarded “reasonable attorney’s fees and costs as part of the costs recoverable.” (§ 1062, subd. (c).) (Jones v. Quality Coast, Inc. (2021), 62 Cal.App.5th 372, 379–380 (2021) [discussed in our February 27, 2021 post].) The Displaced Worker Protection Act (S.F. Police Code, §§ 3300C.1–3300C.6) provides for a similar 90-day transition period. (§§ 3300C.1(c) & (f), 3300C.2(b).)

            In SEIU-USWW v. Preferred Building Services, Inc., Case No. A159790 (1^st Dist., Div. 5 October 15, 2021) (partially published – fees discussion not published), a successor janitorial contractor appealed after a class of displaced janitors and their union – suing for violations of the DJOA and DWPA – successfully moved for summary judgment and were subsequently awarded attorneys’ fees.

            On appeal, Defendant challenged the amount of fees awarded – arguing the trial court should have adjusted the lodestar downward due to overstaffing with eight attorneys, double counted the attorneys’ skill by applying a multiplier when the skill level was already factored into the lodestar, and that the 1.4 multiplier (reduced from Plaintiffs’ requested 2.0) was not supported by the factors involved in the case.  The 1/5 DCA affirmed.  The trial court properly considered and analyzed the complexity of the case, results achieved by Plaintiffs, and Plaintiffs’ showing to support the fee request.  Ninety percent of Plaintiffs’ billed hours came from lead counsel and four associates, time for attorneys billing less than 10 hours was excluded, and Plaintiffs had applied an across-the-board lodestar reduction of ten percent.  As to its other contentions, Defendant did not demonstrate that the trial court improperly double counted counsel’s skill nor abused its discretion in applying the multiplier. The trial court identified four factors warranting the multiplier – where “any one of those factors may be responsible for enhancing or reducing the lodestar.” (Krumme v. Mercury Ins. Co., 123 Cal.App.4th 924, 947 (2004).)

Retainer Agreements: Termination Provision Applicable To Client Responsibility For Expenses And Fees Did Not Become Unenforceable After Client Terminated The Attorney

Termination Provisions Set Fee Recovery With Reasonable Hourly Rates.

            In David Allen, APLC v. Gentry, Case No. A160180 (1^st Dist., Div. 5 Oct. 15, 2021) (unpublished), client terminated an attorney where the Retainer contained a provision stating, “I agree this Agreement may be terminated by either Attorney or me. In the event of termination, I realize I will be responsible for the expenses incurred and for the value of the services provided. I agree the services will be valued at $275 per hour for attorneys, $150 per hour for legal assistants and paralegals and $50 per hour for all other persons who work on my case.”  Attorney then sought to collect $74,350 per the costs/fee arrangement in the termination provision, obtaining summary judgment on a quantum meruit claim.  On appeal, client claimed that the termination of the agreement rendered the termination provision unenforceable.  No way, said the appellate court.  In this situation, the attorney sought to recover via the termination formula under quantum meruit, unlike other cases where counsel sought to be piggish and obtain greater compensation than that set under the agreement. 

            BLOG COMMENT—The result in this case was, in large part to us, based on the reasonableness of the termination provision, which only made client response for expenses and reasonable hourly rate compensation. 

Judgment Enforcement: 2/1 DCA Finds That Proportionality Analysis Can Be Used In Postjudgment Enforcement Fee Recovery Efforts

Upshot Is That Judgment Creditors May Need To Pursue The Most Cost Effective Remedy.

            In Wertheim, LLC v. Currency Corp., Case No. B304655 (2d Dist., Div. 1 Oct. 14, 2021) (published), the Court of Appeal determined that a judgment creditor’s pursuit of over $800,000 in fees against a judgment debtor where the base judgment was a little over $39,000 (although it had swelled to $250,000 with interest and costs) was disproportional to the judgment amount at issue.  Put another way, disproportionality analysis can be used, in postjudgment fee proceedings with the key factor here being that judgment creditor failed to timely file a collection motion against a surety bond but opted instead to file a separate lawsuit where fees escalated.  This opinion suggests that judgment creditors need to carefully think about using the most efficient postjudgment collection strategy in this area of the law.  One of the things, though, that this opinion did not consider was that judgment creditor tried to negotiate an informal solution with the judgment debtor, which led to not timely filing a surety collection motion. 

SLAPP: Award Of $9,800 In Attorney Fees, Pursuant to § 425.16(c)(1), To Prevailing Cross-Complainant Reversed On Appeal

Trial Court Made No Finding That SLAPP Motion Was Frivolous Or Filed Solely To Cause Unnecessary Delay

            Code of Civil Procedure § 425.16(c)(1) entitles a plaintiff, or cross-complainant as the case may be, prevailing on an anti-SLAPP motion to recover costs and reasonable attorney’s fees if the court finds the anti-SLAPP motion to be frivolous or brought solely to cause unnecessary delay. 

            The trial court in Nielsen v. MacPherson, Case No. G059758 (4^th Dist., Div. 3 October 8, 2021) (unpublished) made no such express or implied finding in awarding prevailing cross-complainants $9,800 in attorney fees pursuant to § 425.16(c)(1).  Rather, the trial court awarded the fees simply because cross-complainants had prevailed against the anti-SLAPP motion and were "therefore" entitled.  As a result, the 4/3 DCA, in a 3-0 opinion authored by Justice Fybel, reversed.

            “An award of sanctions under the anti-SLAPP statute has two elements. First, the trial court must make a finding the SLAPP motion was frivolous or brought solely to delay the proceedings. Second, the court must follow the procedural requirements for a sanction order set out in section 128.5 which requires, among other things, the order ‘shall recite in detail the conduct or circumstances justifying the order.’” (Morin v. Rosenthal, 122 Cal.App.4th 673, 682 (2004).)