CALIFORNIA ATTORNEY'S FEES

Prevailing Party: Determination That No Side Prevailed Under Contentious Parking Easement Dispute Was Affirmed On Appeal

Where One Side Wanted Exclusive Parking Easement And Other Side Wanted Termination Of Easement/Tort Damages, Trial Court’s Decision To Share Parking Was A True “Lose-Lose” Case For Everyone.

            One of our leading cases, Hsu v. Abbara, 9 Cal.4th 863 (1995), is must reading and the blueprint for the decision to affirm a trial court’s decision to award no fees to either side as a prevailing party under a contractual fees clause (Civ. Code, § 1717).

            In AHZ Co. v. Sharp Healthcare, Case Nos. D075975/D076362 (4^th Dist., Div. 1 Dec. 29, 2020) (unpublished), corporate neighbors got involved in contentious litigation over parking spaces—not uncommon, given the necessity for this in many commercial and retail businesses.  One side claimed that it had an exclusive use of parking spaces, while the other claimed that the parking easement was terminated and was entitled to millions in tort damages.  In the end, the trial judge found that the warring parties had to share the pertinent parking spaces.  The trial judge also decided that no side prevailed, because it was a “lose-lose” case.

            That determination held up on appeal.  Utilizing the Hsu “blueprint,” no one got a clear victory, such that a prevailing party decision was a discretionary one for the trial judge.  Given that both sides went nuclear but were ultimately held to share the use of spaces (not consistent with the relief either wanted), the “lose-lose case” assessment resonated with the reviewing court.  No attorney’s fees awarded here.

Family Law: Lower Court’s Failure To Specifically Make Explicit Findings Under Family Code Section 2030 As To Ex-Wife’s Needs-Based Request Necessitated A Remand

Equivocal Reasoning That Wife “Might Prevail In A 2030 Argument, But Certainly Not Prevail Under A 271 Argument” Was Too Cryptic An Explanation.

            In order to level the dissolution playing field where one spouse has a greater access to financial resources (so as to pay attorneys and forensic accountants), Family Code section 2030 allows a trial judge to order the more financially set spouse to pay attorney’s fees for the other spouse’s counsel during the course of a dissolution proceeding.  When ruling on such a request, a family law judge must make three specific findings:  (1) whether an award of fees and costs is appropriate; (2) whether there is a disparity in access to funds to retain counsel; and (3) whether one side is able to pay for legal representation of both parties.  (§ 2030, subd. (a)(2); see also In re Marriage of Morton, 27 Cal.App.5th 1025, 1050 (2018).)  The findings “must be explicit”; they may not be implicit. (Morton, 27 Cal.App.5^th at 1050.)

            In re Marriage of Nevai & Klemunes, Case No. C086584 (3d Dist. Dec. 29, 2020) (published) involved a situation where, when married, husband and wife enjoyed a high standard of living, owning several properties with high mortgages due to husband’s spending during the marriage.  Husband had a good job, while wife quit work in 2005 to raise their child and never went back to work.  After the dissolution proceeding was filed, husband made almost $16,000-18,000 per month (exclusive of bonuses) and lived with a girlfriend with a good job who contributed to household expenses, while wife claimed she had $10,000 in monthly expenses.  Prior to trial, ex-husband agreed to pay $25,000 to ex-wife with respect to her attorney fee bill.  Ex-wife forecasted spending $80,000 in divorce fees, requesting that husband pay half—another $25,000 in addition to the previous $15,000.  Ex-husband did his own counter-salvo by requesting $24,000 in need-based fees and $4,000 for a forensic accountant, as well as seeking $10,000 in Family Code section 271 sanctions against ex-wife based on her litigation stances.  The lower court ordered both sides to pay their own fees, expressly stating that wife “might prevail in a 2030 argument, but certainly not prevail under a 271 argument.”

            The Third District reversed and remanded.

            The family law judge’s cryptic remarks did show that there was an absence of the required findings or there was no proper weighing of the 2030 factors; “more was required,” the Third District decided in a 3-0 opinion authored by Justice Krause. 

Requests For Admission: Plaintiff Boyfriend Winning Loan Dispute Against Girlfriend Properly Awarded $44,242.50 In Costs Of Proof Sanctions Where Boyfriend Won A $111,325 Recovery

However, Boyfriend Not Awarded Fees On Appeal Based On Failing To Identify A Fee Entitlement Basis.

            As the famous comedian Jackie Mason once quipped, “Money is not the most important thing in the world.  Love is.  Fortunately, I love money.”  That quote well encapsulates the result in the next case we post on.

            Plaintiff boyfriend, over a period of time, loaned a total of $110,000 to his girlfriend—his life savings.  We surmise that after things soured, boyfriend sued girlfriend for repayment of the loan, eventually recovering $111,385 against her.  During the litigation, boyfriend propounded three key requests for admission going to the heart of the case, which drew boilerplate objection and denials.  After his court victory, boyfriend sought to recoup $44,242.50 in costs of proof sanctions under CCP § 2033.420, which allows recovery of reasonable attorney’s fees if certain relevant requests for admission are denied without substantial justification.

            The trial court awarded boyfriend his entire request, which triggered an appeal by girlfriend in Fuller v. Campos, Case No. B296403 (2d Dist., Div. 2 Dec. 24, 2020) (unpublished).

            The 2/2 DCA affirmed.  Plaintiff’s counsel did a good job of explaining the fees being sought, carefully only claiming expenses incurred after the requests for admission were denied.  There was no requirement for itemized billing statements, because counsel’s breakdown of the hours expended was sufficient.  Boyfriend also requested attorney’s fees on appeal (if he won, which he did), but the appellate panel concluded nothing in section 2033.420 contained authorization for an award of “fees on fees,” the costs of bringing the costs of proof sanctions motion such that the lack of fee entitlement for such trial fees could not justify an award of appellate fees either.

Fee Clause Interpretation: $1,487,990.30 Attorney’s Fees Award Based On Settlement Agreement Contractual Fees Clause Affirmed In Favor Of Prevailing Mobile Home Plaintiffs

Appellate Court Rejected Election Of Remedies Argument Where Plaintiffs Prevailed On Both Contract And Tort Claims With Overlapping, Yet Different, Facts.

            Mobile home park/related property management defendants had reached an earlier settlement with two mobile home residents, with the settlement agreement having a contractual fees clause for a breach limited to contract claims.  Subsequently, the mobile home residents became plaintiffs, suing the prior settling defendants for breach of the settlement agreement as well as tort claims when the residents’ mobile homes were removed from the park without their knowledge or consent.  The jury was not pleased with this conduct, awarding one resident $477,000 in compensatory damages, the other resident $468,000 in compensatory damages, and $4 million in punitive damages to each.  Later, the plaintiffs moved to recover $1,790,984 in attorney’s fees, with the lower court awarding them $1,487,990.30 after eliminating fee work on non-contract claims.

            Defendants, in Belanger v. Biggs, Case Nos. B296853/B297614 (2d Dist., Div. 3 Dec. 24, 2020) (unpublished), appealed both the merits and fees award.  Except for reversal of a fraudulent conveyance count based on lack of harm, the compensatory/punitive verdicts and fee award were affirmed in entirety.

            The defense argued that the fee award was precluded based on election of remedies, contending that plaintiffs had to choose between emotional distress/punitive damages recourse or contractually based relief.  The appellate court disagreed.  The problem here is that the tort claims, while involving some overlapping facts with the contract claims, did involve independent and different facts such that no election needed to be made because the claims were not inconsistent. 

Private Attorney General: Intervenor In Reverse-PRA Action, Where Only Limited Disclosure Of Publicly Available Documents Was Ordered, Did Not Satisfy Separate Significant Benefit Prong Of CCP § 1021.5

Public Interest And Significant Benefit Prongs Of Private Attorney General Statute Must Be Satisfied Independently.

            In Burgess v. Coronado Unified School Dist., Case No. D076263 (4^th Dist., Div. 1 Dec. 24, 2020) (published), a reverse action under the California Public Records Act (PRA) was filed by a news outlet employee to enjoin District from disclosing certain requested records sought by a news outlet, which intervened in the reverse-PRA case.  Intervenor in the action, who did want disclosure of records, did obtain trial court relief in the form of an order mandating disclosure of only limited publicly available information by the District.  Intervenor then moved for recovery of CCP § 1021.5 attorney’s fees of $78,720. The lower court denied the motion, determining that intervenor did not demonstrate the limited document disclosure conferred a significant benefit—one of the prongs to be satisfied under section 1021.5.

            The 4/1 DCA affirmed, in a 3-0 opinion authored by Justice Dato.  Several salient points were made in the published decision:  (1) a significant benefit is a separate element from vindicating a public interest, with the two issues not properly conflated; (2) attorney’s fees are not awardable to intervenors in reverse-PRA actions under PRA, but they might be under section 1021.5; (3) the significant benefit element does not justify attorney’s fees to an intervenor solely because disclosure of documents was ordered, because this would automatically confer fee entitlement upon intervenors in most cases; and (4) the disclosure order relating to publicly available information added no substantive benefit under section 1021.5.

Section 998: CalTrans’ Pretrial CCP § 998 Offer To Losing Motor Vehicle Plaintiff Based On Design Immunity Was Valid And Reasonable

$24.516.05 In Expert Witness Fees Awarded By Lower Court Was No Abuse Of Discretion, Although The Dissent In A 2-1 Decision Would Have Reversed The Design Immunity Summary Judgment Ruling.

            Menges v. Dept. of Transportation, Case Nos. G057643/G058148 (4^th Dist., Div. 3 Dec. 24, 2020) (published) involved a plaintiff, through a guardian ad litem, who lost a motor vehicle personal injury case against CalTrans based upon a summary judgment ruling predicated upon a design immunity defense.  The lower court found valid and reasonable Caltrans’ CCP § 998 offer of $25,000, awarding CalTrans $42,926.05 (out of a requested $66,218.74) in costs, mainly expert fees for a service in analyzing medical records and for a medical expert on plaintiff’s life care plan.  The 4/3 DCA affirmed the costs award, although a dissenting justice would have reversed the merit decision (such that he implicitly would have denied the costs award to see what happened on remand).

            Plaintiff argued that the section 998 offer was invalid because it requested a dismissal with prejudice and a release, but these terms are proper as long as the releases only relate to claims at issue in the case.  The $25,000 offer was reasonable, vindicated by the zero award and the fact it was made two years out after the action was commenced (such that plaintiff had plenty of time to assess defenses, including the design immunity defense).  The assertions of unreasonableness as to the expert witness fees was simply that—an assertion with no reasoned analysis of why the award was an abuse of discretion.

            Presiding Justice O’Leary penned the majority opinion, drawing a dissent by Justice Thompson.

Co-Contributor Marc Has Article In December 24, 2020 Daily Journal About Qui Tam Actions And Arbitration

Qui Tam Actions May Avoid Arbitration.

        Marc's article in the December 24, 2020 Daily Journal is entitled, "Qui tam actions can avoid arbitration in California." The article is prompted by an opinion authored by Justice Arthur Gilbert in State of California ex rel. Aetna Health of California, Inc. et al., B299025 (2nd Dist. Div. 6  12/21/20). The opinion held that a qui tam action involving the California Insurance Fraud Protection Act to combat insurance fraud, avoids a binding arbitration agreement. The reasoning is in line with a California Supreme Court opinion addressing arbitration and qui tam actions in the context of the California Private Attorney General Act of 2004, Iskanian v. CLS Transportation Los Angeles, LLC.

Equity: Economic Duress Doctrine Supports No Award Of Post-Judgment Collection Fees In Dissolution Action Involving, Yes, A $20,000 Marital Settlement Agreement Sum

Husband Was Forced To Pay Off Exorbitant Fee Judgment Lien Amounts, With Equity Coming To The Rescue!

            We wish all of our readers Happy Holidays as we come to the close of an interesting year.

            Although involving convoluted facts and procedural history, Marriage of White & Hunter, Case No. A157398 (1^st Dist., Div. 2 Dec. 23, 2020) (unpublished) goes to show you how the equities do play a part in attorney’s fees disputes, ironically involving substantial post-judgment fee collection requests relating to a $20,000 marital settlement debt.  In the end, the economic duress doctrine rescued ex-husband, because the record supported the lower court’s conclusion that he had to pay off an exorbitant judgment lien, mainly attorney’s fees, in order to close a property escrow where he faced liability no matter which way he turned.  Given this lack of choice, duress came to rescue the day and relieve him from paying attorney’s fees which grew in number over a substantial number of years.  (Hester v. Public Storage, 49 Cal.App.5^th 666, 679 (2020); Rich & Whillock, Inc. v. Ashton Development, Inc., 157 Cal.App.3d 1154, 1159 (1984).)

SLAPP: 1/2 DCA, Although Acknowledging Slim Nature Of Defense SLAPP Motion, Sustained Not Awarding Fees To Plaintiff For A Claimed Frivolous SLAPP Motion

Matter Was Close, But Deference To Trial Judge Made The Difference.

            In Guinnane Construction Co., Inc. v. Chess, Case No. A157781 (1^st Dist., Div. 2 Dec. 22, 2020) (unpublished), plaintiff won a SLAPP motion and moved for fees based on the contention that the defense motion was frivolous.  The trial judge denied plaintiff’s fee request.  The 1/2 DCA, showing some sympathy for the fee motion given that business-related communications usually do not arise out of protected activity, found enough of a “sniff of merits” to sustain the deference accorded to trial judge’s decision on denying frivolous fee award under a CCP § 128.5 standard—given that an offer to indemnify fell within the cracks and might have fallen within the litigation privilege.  Fee denial affirmed, but close to going the other way.

Lodestar, Multiplier, Reasonableness Of Fees: Prevailing FEHA Plaintiff Only Recovering $400,800 In Fees Out Of Requested $1,064,062.70 Did Not Recover Any More On Appeal

Compensatory Award Was $575,000.

            Plaintiff did prevail on some wrongful termination/FEHA claims to the tune of $575,000 in past noneconomic damages.  Plaintiff later moved to recoup $1,064,062.70 in fees (lodestar of $532,031.35 plus a 2.0 positive multiplier), with the trial judge awarding $400,800.  Both sides appealed, with plaintiff filing a cross-appeal seeking more fees.  Both sides lost in Lave v. Charter Communications, LLC, Case No. D076206 (4^th Dist., Div. 1 Dec. 21, 2020, posted on Dec. 22, 2020) (unpublished).

            The problem was that plaintiff waived any fees challenges by not raising them below—with forfeiture being a key appellate principle often applied if an appellant did not contest it before the trial judge.  With respect to not awarding the 2.0 multiplier, plaintiff could not demonstrate how the lower court abused its discretion, given that a multiplier is not automatic and a discretionary call unless legal criteria are not properly followed in coming to a decision.  That was the case in this particular matter.

Allocation, Section 1717: No Abuse Of Discretion In Trial Court’s Allocation Which Reduced Plaintiff’s Fee Award To $143,257.92 From Requested $800,165.00, Nor In Its Award Of $105,000 In Fees And $4,609.77 In Costs To Prevailing Defendants

Plaintiff Did Not Support Its Arguments With An Adequate Record On Appeal, Citations To The Record And Legal Authority.

            Newstart Real Estate Investment v. Huang, Case No. B289513 (2d Dist., Div. 8 December 18, 2020) (unpublished) is a breach of contract, fraud, and conspiracy action involving the sale of a Las Vegas Ramada Inn.  Plaintiff purchaser claimed its principal did not speak or read English, that defendants had conspired together to take advantage and sell the property at an inflated price and had failed to disclose the requirements to transfer of the Ramada franchise license to plaintiff – with the transfer of the franchise being the primary consideration for the purchase, but something plaintiff was unable to obtain.  Plaintiff sued seller and its members as alter egos, the escrow company and its principal, and the real estate brokerage and its principal who brokered the transaction.  The jury trial resulted in awards against broker and broker’s principal in $1.62 million in damages, over $1.2 million against seller, and another $280,000 in punitive damages against broker’s principal.  However, the trial court entered judgment omitting broker as a joint tortfeasor following post-trial hearings regarding some ambiguities as to the broker and its principal in the jury’s special verdict, and granted broker principal’s post-trial motion for a new trial on the punitive damages based on broker principal’s inability to pay .  The escrow defendants received judgment in their favor, and seller’s members were found not to be alter egos of seller in a bifurcated trial. 

            Plaintiff moved for $800,165 in attorney fees against seller based on the fees provision in the purchase agreement – with the trial court awarding $143,257.92 after reducing the fee to 1/6^th the amount requested based on the number of defendant groups and including fees for bringing the fee motion.  Individual seller defendants sought $596,598 in fees, pursuant to Civ. Code § 1717, but were awarded $105,000 as the trial court observed they had failed to demonstrate the reasonableness of their requested fees and could not recover fees incurred by seller in its defense.  Finally, broker sought prevailing party costs of $23,000, and the trial court – in partially granting plaintiff’s motion to tax – awarded broker $4,609.77 in costs.

            Plaintiff appealed, raising a number of challenges against the trial court’s final judgment.  Unfortunately for plaintiff, it failed to support its arguments with an adequate record on appeal, citations to the record and legal authority – thereby demonstrating no abuse of discretion and sealing its fate.  In a 3-0 opinion, the 2/8 DCA affirmed.

Probate: $21,053.33 In Attorney Fees Awarded To Stepdaughter Executor, Which Included § 10811 Additional Fees For Extraordinary Services, Affirmed On Appeal Along With $5,075 In § 859 Penalties Imposed Against Decedent’s Son

Failure To Provide The Appellate Court With An Adequate Record Doomed Self-Represented Son’s Appeal.  

            In Estate of Greer, Case No. C087492 (3^rd Dist., December 21, 2020) (unpublished), decedent’s will gave his entire estate to the trustee of his trust – with his son and stepdaughter each being a fifty percent beneficiary – and appointed his son and stepdaughter as co-executors.

            Son had lived with decedent in decedent’s home and continued to live there after decedent passed.  When son filed a petition for letters of administration, he claimed decedent had died intestate and had partially revoked his trust for the purpose of allowing his real property to pass to son through intestate succession.  Stepdaughter objected and filed a petition for probate of decedent’s will.  The probate court determined the will was valid, admitted it to probate, denied son’s petition, and appointed stepdaughter as executor after determining son and stepdaughter were unable to work together.  Additionally, the probate court partially granted stepdaughter’s Prob. Code § 850 petition – requiring son to vacate decedent’s home, surrender decedent’s property, pay $10,200 in unpaid rent to the estate (reduced from $20,400 because son was a 50% beneficiary) and imposed a penalty against son of $5,075 under Prob. Code § 859 for son’s bad faith possession of the estate property.  Finally, the probate court awarded administration costs, some reimbursements to son and stepdaughter, $7,605.83 to stepdaughter as executor, plus $7,605.83 in fees for her attorney and an additional $13,447.50, pursuant to Prob. Code § 10811, in attorney fees for “extraordinary services” for litigation on son’s various motions, services related to the sale of decedent’s home, and litigation on the § 850 petition – all of which the probate court found went beyond the scope of a typical probate proceeding. 

            Son appealed, but forfeited arguments and limited the appellate panel’s ability to review the case by providing an incomplete record on appeal – with no reporter’s transcript and key evidentiary items excluded from the record.  Although son represented himself, “[p]ro. per. litigants are held to the same standards as attorneys.”  Kobayashi v. Superior Court (2009) 175 Cal.App.4th 536, 543 (2009).  The probate court’s judgment was affirmed.

Landlord/Tenant, Prevailing Party, Section 1717: Reversal Of $172,375 In Attorney Fees Awarded To Defendant Based On Trial Court’s Abuse Of Discretion In Finding Defendant Was The Prevailing Party

Pursuant To Section 1717, Defendant Was Not The Prevailing Party As It Lost The Sole Cause Of Action In The Case – With The Jury Awarding $45,050 In Damages To Plaintiff For Defendant’s Breach Of The Written Lease Contract.

            Waterwood Enterprises, LLC v. City of Long Beach, Case No. B296830 (2d Dist., Div. 1 December 18, 2020) (published) includes a nice discussion on the proper legal standard for determination of a prevailing party for purposes of attorney fees where neither party achieved a simple, unqualified win on the contract claim(s) based on a contract containing a fees provision.

            In this case, plaintiff sued its former commercial tenant, City of Long Beach, alleging a single cause of action for breach of a written contract – seeking at least $150,000 for property damage.  In its answer, City denied owing anything to plaintiff and raised 18 affirmative defenses.  Each party served the other with § 998 offers which were rejected.  At trial, City admitted that it owed some amount to plaintiff for asphalt damage, but not for any other damages claimed by plaintiff.  The jury returned a verdict in plaintiff’s favor and awarded it $45,050 in damages, but did not identify the repairs for which it awarded damages.

            Both parties moved post-trial for fees and costs, with each arguing they were the prevailing party.  Plaintiff sought $307,068.50 in fees, plus $15,000 for fees on fees for bringing the fees motion, and $12,000 in costs.  City argued it had achieved its main litigation objective to pay “for some, but not all, of the claimed repairs.”  City sought $172,375 in fees, $17,673.50 in costs, and $39,483.50 in expert fees.  The trial court found plaintiff was the prevailing party under Code Civ. Proc. § 1032 for having achieved a net monetary recovery, and awarded it costs of $19,905.04.  But, looking to the parties’ pre-litigation settlement discussions and § 998 settlement offers, the trial court found City was the prevailing party for the purpose of awarding attorney fees.  In awarding City $172,375 in fees, the trial court reasoned that City’s 998 offer was closer to the jury’s damages award than plaintiff’s 998 offer.  Under the amended judgment – which added interest, fees and costs awards – plaintiff ended up owing City $105,432.90. 

            Plaintiff appealed and the 2/1 DCA reversed as to City’s attorney fees award.  On remand, the appellate panel limited the trial court’s discretion to finding either that plaintiff was the prevailing party, or there was no prevailing party for the purposes of awarding fees.

            Section § 1717 governs the determination of prevailing party in an action on a contract containing a fees provision.  The trial court abused its discretion in determining City was the prevailing party by relying on wholly unsupported facts, improper legal criteria, and applying the wrong legal standard.  Trial courts may not consider the parties’ settlement communications in determining the prevailing party under § 1717.  Additionally, although § 998 may permit fee awards in certain circumstances even when a party was not the prevailing party under § 1717, such circumstances require that the party’s § 998 offer exceeded the judgment.  City’s 998 offer did not beat the jury’s damages award. To achieve prevailing party status under § 1717, based on City’s claim its objective was to pay only for some asphalt repair, City would have had to admit and pay its debt prior to the trial – something that did not happen.

SLAPP: 2/2 DCA Affirms $33,060 In Fees Awarded Against SLAPPing Defendants For Filing A Frivolous Motion To Strike For The Sole Purpose Of Delay

Defendants Could Not Strike A Cause Of Action For Breach Under The Anti-SLAPP Statute On The Ground Of Privileged Conduct Where Defendants Clearly Breached A Contract Not To Assert Particular Claims.

            Rubin v. Kessler, Case No. B301967 (2d Dist., Div. 2 December 18, 2020) (unpublished) involves a bitter neighbor dispute – described by Los Angeles Superior Court Judge Chalfant as a “tempest in a teapot” – over a sewer easement.  Actually, the neighbors were previously involved in litigation when plaintiff neighbor, who owns an easement for a sewer on defendant neighbors’ property, applied for permits to build a new, larger house on his property.  Defendant neighbors opposed and filed a petition for writ of mandate against the City of Los Angeles when it approved plaintiff’s project.  That action was settled in 2015 – with plaintiff and defendants agreeing to a mutual release of any and all claims against each other from the beginning of time to the date of execution of the release.  Additionally, pursuant to their settlement agreement, plaintiff and defendants promised that they would not “commence, aid in any way, prosecute or cause to be commenced or prosecuted, any action or other proceeding based upon any claims, demands, causes of action, obligations, damages or liabilities” that were released in the settlement agreement. 

            A few years later, just as plaintiff was completing construction of the new house, his plumbers mistakenly cut defendants’ water line.  Defendants responded by denying plaintiff access to the easement, so plaintiff filed a lawsuit and was granted a preliminary injunction requiring defendants’ to allow easement access.

            In opposing the preliminary injunction, defendants claimed plaintiff had forfeited his easement – citing the mistaken cut to their water line as well as issues previously resolved through the parties’ settlement agreement and release.  Additionally, defendants filed a cross-complaint seeking to nullify the easement based on the same claims – prompting plaintiff to file a first amended complaint alleging defendants breached the settlement agreement by raising claims previously disposed of in the settlement agreement.  Defendants SLAPPed back – claiming plaintiff’s new cause of action and other portions of his FAC arose from defendants’ protected petitioning activity. The trial court denied the motion and awarded plaintiff $33,060 in attorney fees on the ground that the defendants’ motion was frivolous and designed solely to cause delay and expense.

            The 2/2 DCA affirmed both the trial court’s denial of defendants’ anti-SLAPP motion and award of fees to plaintiff.  Although disagreeing with the trial court’s conclusion that plaintiff’s breach cause of action did not arise from protected activities, the appellate panel found that plaintiff met his burden in the second step of the anti-SLAPP analysis.  Based upon defendants’ own pleadings, plaintiff easily showed that his claim for breach of the settlement agreement had the “minimal merit” necessary to defeat defendants’ SLAPP motion. Additionally, the trial court reasonably concluded defendants' anti-SLAPP motion was the latest example of a litigation strategy to cause delay and expense based on defendants' prior pattern of using litigation as a means to obstruct and harass plaintiff.

Year In Review - 2020

Year End Wrap-Up: Mike, Marc, and Shanna’s Top 30 Decisions in 2020

Sculpture "The Decisions" at the Robert T. Matsui U.S. Courthouse, Sacramento, California. Carol M. Highsmith, photographer. October 2009.  Library of Congress.

Part 1 of 2—Lemon Law, Class Action Settlement, Ethics, Civil Rights, and Specific Fee-Shifting Statutes Took the Stage.

            It is the Holiday season, and we continue our tradition to present our personal favorite decisions from our blog postings during 2020, keeping in mind they are simply a distillation of what we selectively picked as important.  (This year, we include our legal assistant Shanna, who did postings throughout the year—with M&M thanking her for the work on this blog.)  2020, although a challenging year due to the COVID-19 pandemic, produced an unusual amount of California state court and Ninth Circuit decisions on fee issues, such that we wrap up with a Top 30 Decisions list.  We wish our readers Happy Holidays, hoping you all stay safe.

            30.  APPEALABILITY.  K.J. v. Los Angeles Unified School Dist., 8 Cal.5^th 875 (Cal. Supreme Court Jan. 30, 2020)—authored by Justice Groban, discussed in our Feb. 19, 2020 post:  Client only appealing a sanctions award against an attorney properly preserved appellate jurisdiction over the appeal on attorney’s behalf where the circumstances showed that the attorney’s interests were at stake and no prejudice resulted to the other side.

            29.  CIVIL RIGHTS.  Vargas v. Howell, 949 F.3d 1188 (9^th Cir. Feb. 5, 2020)—majority decision authored by Circuit Judge Miller and dissent authored by District Judge Benitez, discussed in our Feb. 7, 2020 post:  90% reduction in fee request of civil rights plaintiff under 42 U.S.C. section 1983 remanded for a more adequate explanation where a mechanical arithmetic reduction was the methodology utilized by the district judge.

            28.  FAMILY LAW/SANCTIONS.  George v. Shams-Shirazi, 45 Cal.App.5^th 124 (Cal. App. 1^st Dist., Div. 1 Feb. 11, 2020)—authored by Justice Sanchez, discussed in our Feb. 19, 2020 post:  Family Code section 271 sanctions motion filing deadline is not hinged to civil deadlines for filing fees motions under the California Rules of Court; doctrine of laches determines if the motion filing is too late.

            27.  ETHICS/RETAINER AGREEMENTS.  Hance v. Super Store Industries, 44 Cal.App.5^th 676 (Cal. App. 5^th Dist. Jan. 23, 2020)—authored by Presiding Justice Hill, discussed in our Jan. 29, 2020 post:  Referring attorney to class action specialists, who failed to disclose that he had no professional liability insurance, had his fee division agreement invalidated under Rule of Professional Conduct, rule 1.4.2, although the trial judge on remand could decide if quantum meruit recovery was warranted.

            26.  PRIVATE ATTORNEY GENERAL.  Canyon Crest Conservancy v. County of Los Angeles, 46 Cal.App.5^th 398 (Cal. App. 2d Dist., Div. 4 Mar. 12, 2020 certified for publication)—authored by Justice Collins, discussed in our Feb. 20, 2020 post when unpublished:  No private attorney general fee award under Code of Civil Procedure section 1021.5 was justified because no public interest was implicated from a mere issuance of a “status quo” administrative stay which only vindicated plaintiff’s private interests rather than those of a large number of persons.

            25.  SPECIAL FEE SHIFTING STATUTE—REVIEW GRANTED BY CALIFORNIA SUPREME COURT.  Siry Investment, L.P. v. Farkondehpour, 45 Cal.App.5^th 1098 (Cal. App. 2d Dist., Div. 2 Mar. 3, 2020), rev. granted, No. S262081 (Cal. Supreme Court July 8, 2020)—DCA opinion authored by Justice Hoffstadt, discussed in our Mar. 4, 2020 post:  Attorney’s fees award based on Penal Code section 496(c) reversed because it does not apply to fraudulent diversion of business funds, but only applies to trafficking in stolen goods, parting company with the opposite conclusion reached in Switzer v. Wood, 35 Cal.App.5^th 116 (2019).  Fees/costs issue on review is: “May a trial court award treble damages and attorney fees under Penal Code section 496, subdivision (c), in a case involving the fraudulent diversion of business funds rather than trafficking in stolen goods?”

            24.  CIVIL RIGHTS.  Citizens for Free Speech, LLC v. County of Alameda, 953 F.3d 655 (9^th Cir. Mar. 24, 2020)—authored by District Judge Adelman, discussed in our Mar. 25, 2020 post:  Younger-based abstention dismissals can give rise to fee exposure for civil rights plaintiffs where a particular dismissal materially altered the parties’ legal relationships.

            23.  ETHICS/REFERRAL AGREEMENTS.  Reeve v. Meleyco, 46 Cal.App.5^th 1092 (Cal. App. 3d Dist. Mar. 24, 2020)—authored by Justice Mauro, discussed in our Mar. 25, 2020 post:  Attorneys need to obtain an express, written client consent to a fee referral arrangement under State Bar Rules of Professional Conduct, former rule 2-200 (now rule 1.5.1), with a signed acknowledgment by client of having received disclosure of the referral arrangement not satisfying the requirement; however, quantum meruit recovery may still be available in the trial court’s discretion if it is not time barred.

            22.  CIVIL RIGHTS/COSTS—REVIEW GRANTED BY CALIFORNIA SUPREME COURT.  Ducksworth v. Tri-Modal Distribution Services, 47 Cal.App.5^th 532 (Cal. App. 2d Dist., Div. 8 Apr. 7, 2020), rev. granted, No. S262699 (Cal. Supreme Court Aug. 12, 2020)—DCA opinion authored by Justice Wiley, not posted on by us because costs issue not discussed in DCA opinion which affirmed a summary judgment order on a statute of limitations administrative claims issue (but costs on appeal granted to the prevailing defendants on a FEHA claim victory):  The particular costs issue on review is this:  “Was it proper for the Court of Appeal to award costs on appeal under rule 8.278 of the California Rules of Court against an unsuccessful FEHA claimant in the absence of a finding that the underlying claims were objectively frivolous?”

            21.  CONSUMER STATUTES (LEMON LAW).  Mikhaeilpoor v. BMW of North America, 48 Cal.App.5^th 240 (Cal. App. 2d Dist., Div. 1 Apr. 1, 2020)—authored by Los Angeles County Superior Court Judge White, discussed in our Apr. 2, 2020 post:  Song-Beverly Act lemon law plaintiff winning a $35,805.80 jury verdict properly had a $344,639 fee request reduced to $94,864 in awarded fees by a trial judge based on a detailed explanation of reductions based on inefficiencies, over-lawyering, and unnecessary duplication.

            20.  CONSUMER STATUTES (CONSTRUCTION).  Moore v. Teed, 48 Cal.App.5^th 280 (Cal. App. 1^st Dist., Div. 1 Apr. 24, 2020)—authored by Justice Sanchez, discussed in our Apr. 27, 2020 post:  No contract is necessary to allow fee entitlement under Business and Professions Code section 7160 for a person induced to enter into a construction agreement on the basis of false or fraudulent statements by a contractor or a solicitor.

            19.  CONSUMER STATUTES (LEMON LAW).  Reynolds v. Ford Motor Co., 47 Cal.App.5^th 1105 (Cal. App. 1^st Dist., Div. 3 Apr. 21, 2020)—authored by Justice Petrou, discussed in our Apr. 23, 2020 post:  Plaintiff’s contingency fee agreement in a Song-Beverly Act (lemon law) case is irrelevant as far as setting the lodestar for fee calculation purposes, affirming a $201,891 fee award under the Song-Beverly Act fee shifting provision.

            18.  SECTION 998.  Anthony v. Li, 47 Cal.App.5^th 815 (Cal. App. 1^st Dist., Div. 3 Apr. 13, 2020)—authored by Justice Petrou, discussed in our Apr. 15, 2020 post:  Code of Civil Procedure section 998 joint offer to two defendants was invalid where prevailing plaintiff failed to specify that one defendant was included only as an insurer.

            17.  PRIVATE ATTORNEY GENERAL.  Carlsbad Police Officers Assn. v. City of Carlsbad, 49 Cal.App.5^th 135 (Cal. App. 4^th Dist., Div. 1 May 18, 2020)—authored by Justice Dato, discussed in our May 20, 2020 post:  Trial court cannot condition intervenors’ intervention in a reverse-Public Records Act action upon their agreement to strike an attorney’s fees prayer request under Code of Civil Procedure section 1021.5.

            16.  CLASS ACTION.  In re Optical Disk Drive Products Antitrust Litig., 959 F.3d 922 (9^th Cir. May 15, 2020)—authored by Circuit Judge Christen, discussed in our May 18, 2020 post:  No “bright-line” rule exists for percentage-of-recovery benchmarks in a mega-fund class action settlement, with variance between class counsel’s fee request and its upfront competitive bid being a factor to be considered in awarding fees. 

 

           

SLAPP: $43,000 Out Of Requested $66,750 In Fees Was Awarded Because The Defense Brought A Frivolous SLAPP Motion

Hourly Rate For One Attorney And Hearing Appearance Work Was Reduced.

            Defendants, in bringing SLAPP motions, do not get a “pass the jail/wild card.”  If a defense motion is frivolous, then the plaintiff can move to recover attorney’s fees for successfully opposing the SLAPP motion.  That is what occurred in Lora v. Parter Medical Products, Inc., Case No. B304027 (2d Dist., Div. 4 Dec. 17, 2020) (unpublished).

            After a SLAPP motion was found to be frivolous (a determination upheld on appeal), plaintiff moved for $66,750 in attorney’s fees, recovering $43,000 after reduction of one attorney’s hourly rate from $750 to $500 and after reduction for appearance at hearings from seven to four hours.  The appellate court sustained the result, determining that 86 hours at the rate of $500 per hour was a fair compensation—in line with what the lower court decided. 

Consumer Statutes, Fee Clause Interpretation, Settlement: $65,000 Attorney’s Fees Award And $7,987.40 Costs Award Under Lemon Law Settlement Stipulation Are Affirmed On Appeal

Lower Court Properly Harmonized Seemingly Conflicting Terms Of Settlement Stipulation.

            In Boykin v. Premier Universal, Inc., Case No. F078689 (5^th Dist. Dec. 17, 2020) (unpublished), the parties settled a lemon law case, but reserved the issue of recovery of attorney’s fees for a subsequent motion.  The problem was that the settlement stipulation had conflicting terms: (1) “fees and costs are to be resolved by motion to the Court;” and (2) “there will be no prevailing party status and no admission of liability.”  The defense seized on (2), in opposing a fees/costs motion, to boldly contend that plaintiff stipulated that there would be no prevailing party such that fee entitlement did not lie.  The lower court harmonized the two settlement provisions and determined fees/costs were justified to the tune of $65,000 in fees and $7,087.40 in costs.  The Fifth District affirmed, because the (1) settlement stipulation would be rendered meaningless, and the trial judge deciding the issue was the one presiding over the settlement colloquy such that any reasonable inferences on stipulation construction was guided by the substantial evidence rule.  (Winograd v. American Broadcasting Co., 68 Cal.App.4^th 624, 627, 632-633 (1998).)

Homeowner Associations, POOF!: $109,760 Fees Award Went Away Based Upon Merits Reversal

$154,744 In Fees Was Requested.

            One Ford Road Homeowners Assn. v. Johnson, Case No. G058269 (4^th Dist., Div. 3 Dec. 17, 2020) (unpublished), is just a reminder about how expensive HOA/homeowners disputes can be.  Here, HOA won a CC&R dispute which was reversed on appeal as a matter of law.  That resulted in an attorney's fees award to the HOA of $109,760 (out of a requested $154,744) going POOF!  Winning homeowners may get appellate fees later unless a settlement is reached.  But it does show how expensive these cases can be, as Justice Fybel—the author of a 3-0 opinion—so found.

Family Law: $1,225 Section 271 Sanctions Award Reversed As A Matter Of Law

No Due Process Was Satisfied And Ex-Husband Had No Ability To Pay.

            Family law practitioners should pay attention to Mar v. Ligne, Case No. A158768 (1^st Dist., Div. 2 Dec. 16, 2020) (unpublished) with respect to what needs to be done to sustain a Family Code section 271 sanctions award.

            The 271 sanctions award, only $1,225, did not hold up on appeal.  The reasons were two-fold.  First, litigants need to satisfy notice requirements, with the family court never indicating, nor the litigants, that these types of sanctions were being sought.  Second, the record showed that ex-husband had no ability to pay these sanctions—with the transcript showing he had a hard time making “ends meet” and could not pay any sanctions award.  Reversed. 

Appeal Sanctions: 2/3 DCA Sanctions Losing Appellant And Its Counsel $56,000 Total

Published Opinion Has A Nice Discussion Of CCP § 907 Frivolous Appeal Standards.

            We commend everyone to read the 2/3 DCA’s published decision in Malek Media Group LLC v. AXGC Corp., Case No. B299743 (2d Dist., Div. 3 Dec. 16, 2020) (published), which contains a nice discussion of the standards for appeals sanctions under Code of Civil Procedure section 907, but also reinforces that litigants and their attorneys need to be civil—avoiding sexist and crazy theories which waste parties’ resources and make the appellate courts waste taxpayer resources.

            What happened here is that an arbitration party challenged an adverse arbitration award and superior court’s denial of a motion to vacate the award.  Appellant’s briefing on appeal was laced with far-fetched conspiracy theories, sexism, homophobia, personal attacks against the arbitrator, and failure to abide by appellate court rules as far as briefing and judicial notice requests.  The appellate court affirmed the merits of the award, but then went on to sanction appellant and its counsel under CCP § 907—both the objective and subjective prongs in a decision which is worthy of reading by both litigators and appellate practitioners.

            The end result was that appellant and its counsel, jointly and severally, were liable for $46,000 in sanctions to respondent and an additional $10,000 to the appeals court clerk for the time spent by the appellate panel in considering the frivolous appeal.  Justice Dhanidina authored this well-penned decision.

            BLOG ADDITIONAL COMMENT—The arbitrator was Ambassador David Huebner (Ret.), who served as an ambassador to New Zealand and Samoa.  Co-contributor Mike remembers Ambassador Huebner well, because they were at Irell & Manella for some overlapping period of time.  Mike wishes him well—he was a stand-up individual.

Landlord/Tenant, Substantiation Of Reasonableness Of Fees: Landlord Seeking To Overturn $988,539 Attorney Fees Award To Prevailing Commercial Tenants In UD Action Gets Fee Award Reduced By Only $14,125 On Appeal

No Abuse Of Discretion In The Trial Court’s Implied Finding That The Total Time Tenant’s Attorneys Spent Working On The UD Case And Subsequent Appeal Was Reasonable Given The High Stakes Involved In The Litigation.

            In NHP/PMB Burbank Medical, etc. v. Premiere Medical, etc., Case No. B299841 (2d Dist., Div. 7 December 14, 2020) (unpublished), prevailing commercial lease tenants (a medical center and doctor) in an unlawful detainer action were awarded $988,539 in attorney fees on remand.  The 2/7 DCA, concluding landlord’s notices to quit were defective, had previously reversed the trial court’s initial judgment which found in favor of and awarded landlord $1,141,074.60 – comprised of $373,592.68 in rental fees, operating expenses and late charges, $624,207.97 in holdover damages, $53,121.16 in prejudgment interest, and $90,152.79 in attorney fees and costs. 

            On appeal, landlord argued that an award of nearly $1 million in attorney fees – for what it described as a routine unlawful detainer action – was absurd, that tenants failed to show the fees were incurred in the UD action and not the parties’ other related actions, that the award included sums for nonexistent or duplicative work, and that the fees were purposely inflated to approximate the amount of damages landlord anticipated tenants would be found liable for in the other related actions.

            The 2/7 DCA agreed only with landlord’s contention regarding nonexistent or duplicative work – striking $14,125 from the award for such billing entries.  The fees awarded to tenants covered the UD action as well as pre-litigation, post-judgment and appellate work related to the UD action.  The panel found no abuse in discretion in the trial court’s implied finding that the total time expended by tenants’ attorneys was reasonable.  The litigation involved much higher stakes for the tenants than it did the landlord – with medical center’s doctor declaring the unlawful detainer action “posed an existential threat to [his] business and seriously threatened his livelihood” and that if the monetary portion of the initial judgment had been enforced, “it would have been financially devastating to [him] and his family.”  The trial court had correctly observed detailed time or billing records are not required under California law – accepting the declarations and summaries submitted by tenants’ counsel – which listed by broad category the time expended by each attorney.  In fact, the panel observed, this method “has been upheld and even recommended, as ‘an especially helpful compromise between reporting hours in the aggregate (which is easy to review, but lacks informative detail) and generating a complete line-by-line billing report (which offers great detail, but tends to obscure the forest for the trees).’” (Syers Properties III, Inc. v. Rankin, 226 Cal.App.4th 691, 700 (2014) [discussed in our May 06, 2014 post].)

Arbitration: Denial Of Attorney’s Petition To Confirm Non-Binding Arbitration Award Under MFAA Affirmed

Client Timely And Properly Rejected Non-Binding Award By Commencing A Trial After Arbitration And Notifying Attorney’s Counsel Of Client’s Intent To Reject The Award.

            The Mandatory Fee Arbitration Act (MFAA) (Bus. & Prof. Code, § 6200 et seq.) recognizes “the disparity in bargaining power in attorney fee matters which favors the attorney in dealings with infrequent consumers of legal services” (Schatz v. Allen Matkins Leck Gamble & Mallory LLP, 45 Cal.4th 557, 564-565 (2009)) and was established in 1978 “to protect clients as consumers of legal services in general.” (Alternative Systems, Inc. v. Carey, 67 Cal.App.4th 1034, 1044 (1998).)   Pursuant to § 6201(a), a client may request nonbinding arbitration under the MFAA despite having a contractual agreement for binding arbitration with his/her attorney, and if a client commences non-binding arbitration under the MFAA, it is mandatory for the attorney pursuant to § 6200(c).  A non-binding arbitration award under the MFAA becomes binding if the parties agree in writing to make it binding, or upon the passage of 30 days after service of notice of the award – unless, within the 30 days, a party has sought a trial after arbitration. (§ 6204(a); §6203(b).)

            This is what happened in Torru v. Price, Case No. A158400 (1^st Dist., Div. 3 December 14, 2020) (unpublished), when a fee dispute arose between attorney and client.  After receiving notice of the arbitrator’s award to attorney of $26,046.70, after a reduction to attorney’s fees of $875, client sent a letter to attorney’s counsel with a confidential settlement offer and notice that she intended to reject the arbitrator’s decision.  Additionally, client timely filed a complaint against attorney following service of the notice of the award concerning the fees at issue. 

            When attorney initiated a separate action to confirm the arbitration award, the trial court denied the petition – finding client had timely rejected the award.

            The 1/3 DCA affirmed.  Client’s letter to attorney’s counsel was admissible as evidence she intended to reject the non-binding decision.  Additionally, client’s filing of complaint properly served as her rejection of the non-binding decision, and satisfied MFAA provisions requiring her to seek and commence a trial after arbitration. 

Homeowner Associations, Special Fee Shifting Statutes: Trial Court’s Denial Of Civil Code Section 5975(c) Fees To Prevailing HOA Was Error

The Davis-Stirling Act Fee-Shifting Provision, Section 5975(c), Mandates The Award Of Fees To The Prevailing Party With The Trial Court's Only Discretion Being To Determine The Reasonable Amount Of Fees.

            Hope Ranch Park Homes Assoc. v. Rubin, Case No. B299932 (2d Dist., Div. 6 December 14, 2020) (unpublished) involved a $30,600 penalty assessed against a homeowner for failure to complete a home remodeling project by the deadline extended by the HOA and pursuant to the HOA's CC&Rs.  The trial court determined that the penalties were properly imposed by the HOA and that homeowner owed HOA $26,600 after having paid $4,000 of the penalty by the time of trial.  Additionally, the trial court awarded HOA $1,358.92 in costs, but denied HOA’s motion for attorney fees under Civil Code § 5975(c) – the Davis-Stirling Act fee-shifting provision.

            The 2/6 DCA reversed – finding the trial court erred in denying the HOA’s motion for fees because § 5975(c) mandates the award of attorney fees to the prevailing party.  “Attorney fees under section 5975 ‘are awarded as a matter of right, and there is no discretion afforded to the trial court in granting or denying such fees, other than as to their reasonableness and amount.’” (Chapala Management Corp. v. Stanton, 186 Cal.App.4th 1532, 1546 (2010); see also Rancho Mirage Country Club Homeowners Assn. v. Hazelbaker, 2 Cal.App.5th 252, 260-261 (2016) [trial court has no discretion to deny attorney fees to a prevailing HOA]; Salehi v. Surfside III Condominium Owners Assn., 200 Cal.App.4th 1146, 1152 (2011).)

            On remand, the panel instructed the trial court to exercise its discretion to determine the amount of reasonable attorney’s fees to which the HOA is entitled.

Reasonableness Of Fees: Top 10 Fee Awards In Published And Unpublished California State Court Decisions In The Last Few Years For Civil, Noncontingency Cases

Our David Letterman’s Top 10.

Treasury. A $75,000 wheelbarrow of mutilated money on way to vaults. Employee in picture has wheeled barrow 50 years. From the National Photo Company Collection, photograph taken between 1909 and 1925. Library of Congress.

            We got a fun email from Damian Castaneda, a San Jose-based attorney who specializes in business law, contracts, employment, fraud, and real estate.   He asked us bloggers if we could generate a David Letterman type of “Top Ten Attorney’s Fees Awards” based on blogging since May 2008.  Here is our attempt, keeping in mind that we are not including contingency fee awards (such as those encountered in class action, employment/FEHA, lemon law, and private attorney fee cases—which are usually contingency based and can be quite large, subject to positive multipliers).  We also are limiting it to results in published and unpublished California intermediate appellate court decisions for the period May 2008 to present.  We apologize if we missed some other fee awards, but us bloggers invite readers to share them so that we can amend our list.  (Here is Mr. Castaneda’s ending comment to us: “Simply put, if I had known as a young man the stress of being a lawyer, I would have been a comedian instead.  But the closest I can do now is to hope for a Top Ten list and we can all have a laugh at what those lawyers did to deserve it.”). There you go, and here is our list:

            1.  CONTRACTUAL FEES—Kline v. Redevelopment Agency of the City of Pomona, Case No. B184453 (2d Dist., Div. 7 June 17, 2008 unpublished):  Redevelopment agency properly was awarded $4,126,638.98 in fees against plaintiffs in a retail commercial center dispute involving a contractual fees clause. 

            2.  TRADE SECRETS—Altavion, Inc. v. Konica Minolta Systems Laboratory, Inc., Case Nos. A134343/A135831 (1^st Dist., Div. 5 May 8, 2014 unpublished):  Plaintiff prevailing on a trade secret misappropriation claim was awarded statutory fees of $3,297,102.50 under Civil Code section 3426.4 where plaintiff won compensatory damages of $1,513,400. 

            3.  CONTRACTUAL FEES UNDER CONSENT DECREE—In re Tobacco Cases I, 216 Cal.App.4^th 570 (4^th Dist., Div. 1 2013):  People of the State of California prevailed upon a consent decree with a contractual fee clause against a large tobacco company, awarded $2,943,920.63 in attorney’s fees.

            4.  CONTRACTUAL FEES CLAUSE UNDER JOINT VENTURE AGREEMENT—San Vicente Investment, LP v. Trammel Crow Santa Monica Development, LLC, Case No. B296147 (2d Dist., Div. 1 Oct. 1, 2020 unpublished):  Prevailing defendants in joint venture construction dispute, based on contractual fees clause, were correctly awarded $2,135,688.75 in attorney’s fees (out of a requested $2,234,607.21).

            5.  SURETY BOND FEES CLAUSE/CIVIL CODE SECTION 1717—Los Angeles Unified School Dist. v. Torres Construction Group, Case No. B291940 (2d Dist., Div. 8 Nov. 17, 2020 certified for publication):  $2,100,000 (out of a requested $2,123,277.20) fee award to LAUSD against a surety company, based upon a surety bond fees clause, affirmed on appeal.

            6.  CONTRACTUAL FEES UNDER A LEASE—Cal-Murphy, LLC v. Hines Interests Limited Partnership, Case Nos. A137605/A139772 (1^st Dist., Div. 5 Aug. 1, 2014 unpublished):  Non-prevailing parties who assumed a lease were subject to $1,600,000 attorney’s fees award based upon a contractual fee provision.

            7.  CONTRACTUAL FEES UNDER AN ATTORNEY ENGAGEMENT LETTER—Calvo Fisher & Jacob LLP v. Lujon, 234 Cal.App.4^th 608 (1^st Dist., Div. 2 2015):  Former attorneys obtained a full requested award of $1,532,674.81 in attorney’s fees against former client based on a broad contractual fee clause in the engagement letter. 

            8.  CONTRACTUAL FEES UNDER EASEMENT AGREEMENT—IMT Capital 11525 Blucher v. NMS Properties, Case No. B255823 (2d Dist., Div. 3 Mar. 4, 2016 unpublished):  Party winning a contentious easement dispute awarded $1,185,783 in attorney’s fees, out of a requested $1,820,282.98—a 35% reduction.

            9.  CONTRACTUAL FEES IN A COMMERCIAL LOAN/GUARANTY DISPUTE—Legendary Investors Group v. Nieman, Case No. B284736 (2d Dist., Div. 4 Jan. 16, 2019 unpublished):  Prevailing defendants, in a long-running commercial loan and guaranty dispute, recovered $1,047,313.72 out of a requested $1,061,208.22. 

            10. LANDLORD/TENANT—NHP/PMB Burbank Medical Plaza I, LLC v. Premiere Medical Center of Burbank, Inc., Case No. B299841 (2d Dist., Div. 7 Dec. 14, 2020 unpublished):  Former prevailing tenants were awarded $988,539 (a full fee request) against former landlord in a commercial unlawful detainer action which generated lots of appellate work ultimately reversing an initial $1.14 million judgment against former tenants and which also generated related actions.

Prevailing Party, Receivers, Special Fee Shifting Statutes: $60,798.94 Awarded To Prevailing City In Abatement Nuisance Action Affirmed On Appeal

City’s Arrangement With Outside Counsel Did Not Violate Defendant Property Owner’s Due Process Rights, Fee Award Was Not Meant To Penalize Defendant For Defending Property Rights, And Trial Court Properly Determined City The Prevailing Party Under Catalyst Theory.

            Plaintiff City and defendant property owner had a long history of conflict regarding substandard conditions on defendant’s property – going all the way back to 2007 – and resulting in criminal charges against defendant at one point in City of Norco v. Mugar, Case No. E072858 (4^th Dist., Div. 2 December 11, 2020) (unpublished).  In 2017, defendant’s property was red tagged and declared a substandard building, a public nuisance, and unsafe to occupy.  When defendant failed to abate the 19 cited conditions, even after an extension of time, City filed a receivership action through its outside counsel, to abate what it described as “life-safety hazards.”  Although a receiver was appointed and filed his oath, he took no abatement action as City and defendant had reached an agreement that allowed defendant another opportunity to abate the conditions himself, obtain any necessary permits, and schedule, undergo and pass a final inspection.  In the parties’ stipulation, City reserved its “right to file a motion to be declared the prevailing party in this matter and/or a motion for attorneys’ fees and costs.”  After some continuances and deadline extensions, defendant finally abated the 19 conditions, and City requested termination of the receivership.  City then successfully sought to be declared the prevailing party and for an award of $60,798.94 in attorney fees and costs under Health and Safety Code § 17980.7(c)(11) .

            The 4/2 DCA affirmed.  Defendant’s arguments that his due process rights were violated by the arrangement between City and its outside counsel were not supported by the record.  Rather, City’s contract with outside counsel showed that each of City’s demands and responses were determined by the City Council – not City’s outside counsel.  Additionally, outside counsel was not hired on a contingency basis and had no direct financial interest in the outcome of the litigation. 

            The panel also was not persuaded by defendant’s argument that the fees/costs award was an unconstitutional burden on his First Amendment right to access and petition the courts as it penalized him for defending his property rights.  While the purpose of the fee award is not to penalize petitioning activity, but to encourage litigation by the successful party by making it financially feasible, the panel acknowledged that a prevailing party fee statute may cause incidental restriction on conduct protected by the First Amendment.  However, as is the case here, under United States v. O’Brien, 391 U.S. 367, 377 (1968), such incidental restriction is sufficiently justified “[1] if it is within the constitutional power of the Government; [2] if it furthers an important or substantial governmental interest; [3] if the governmental interest is unrelated to the suppression of free expression; and [4] if the incidental restriction on alleged First Amendment freedoms is no greater than is essential to the furtherance of that interest.” 

            Finally, the 4/2 DCA found no abuse of discretion in the trial court’s finding that City was the prevailing party using the catalyst theory – with City achieving its litigation objective to abate a public nuisance .  The trial court reasonably determined defendant would not have complied with City’s abatement demands without the appointment of a receiver.

BLOG UPDATE: We can now report that City of Norco v. Mugar was certified for publication on January 8, 2021.

Allocation, Costs: No Abuse Of Discretion Where Trial Court Refused To Tax Costs Among Multiple Defendants Who Settled Out Of The Case Before Trial

Costs Incurred By Plaintiffs In Relation To Other Defendants Were Directly Relevant To Case Against Appealing Defendant And Reasonably Necessary To The Litigation.

            In Booker v. Imerys Talc America, Case No. A153995 (1^st Dist., Div. 3 December 11, 2020) (unpublished), wife and heirs of decedent continued mesothelioma-related litigation against seven defendants after his death.  Most defendants settled with plaintiffs prior to the jury trial – with the remaining two defendants found liable for increasing decedent’s risk of mesothelioma.  When plaintiffs moved post-judgment for prevailing party costs in the amount of $319,549.54, one of the two defendants filed a motion to tax costs.  Specifically, defendant sought to reduce plaintiffs’ recovery of costs by $80,890.28 for costs related to other defendants.  The trial court partially granted in the amount of $44,948.58 for the costs of expert witness services incurred prior to plaintiffs’ § 998 offers, photocopying and enlarged exhibits, but declined to tax costs related to other defendants. 

            The 1/3 DCA affirmed – finding no abuse of discretion.  First, all cases cited by defendant, to support its contention that trial courts have discretionary authority in all cases to reduce costs against a defendant by amounts apportionable to other defendants no longer in the case, were distinguishable in that they involved cases where some of the parties prevailed against the party seeking costs. Additionally, none of the cases involved a dispute concerning the trial court’s discretion to allocate costs among multiple defendants to reduce plaintiffs’ recovery of costs.  Second, the costs that the trial court refused to tax were directly relevant to plaintiff’s case against defendant and reasonably necessary to the litigation.  Plaintiffs incurred filing, motion, service of process and deposition costs – related to other defendants – in order to determine the amount of asbestos that caused decedent’s mesothelioma, determine the merit of defendant’s affirmative defenses that other defendants were responsible for decedent’s mesothelioma, and ascertain defendant’s share of fault for liability and settlement purposes.

Arbitration, Civil Rights, Costs: 4/3 DCA Reverses Fees Awarded To FEHA Defendants For Motion To Compel Arbitration Efforts And Costs Awarded For Prevailing In The Arbitration

Plaintiffs Achieved Partial Success In Their Opposition To Defendants’ Motion To Compel Arbitration, And Fees/Costs Are Not Awardable To Prevailing FEHA Defendant, Pursuant To Gov. Code § 12965(b), Unless The Court Finds Action Was Frivolous, Unreasonable, Or Groundless When Brought, Or The Plaintiff Continued To Litigate After It Became Clearly So.

            In Humphrey v. Harvest Holdings, Case No. G056614 (4^th Dist., Div. 3 December 11, 2020) (unpublished), plaintiffs opposed FEHA defendants’ motion to compel arbitration with limited success – with the trial court determining a confidentiality provision in the arbitration agreement was unconscionable, but severable, and compelling arbitration.  Defendants defeated plaintiffs’ FEHA claims in arbitration, and the arbitrator awarded defendants $3,181.35 in costs – consisting of copying charges and deposition transcript fees – as the prevailing party.  Additionally, the arbitrator awarded defendants $10,000 in attorney fees for their motion to compel arbitration efforts.  The trial court entered judgment confirming the arbitration award and denied plaintiffs’ cross-petition to vacate the arbitration award.  As to the fees/costs issue, the trial court concluded that analysis under FEHA was not necessary because prevailing defendants did not seek fees incurred for the arbitration proceedings – only for the motion to compel arbitration. 

            In a 3-0 opinion authored by Justice Goethals, the 4/3 DCA reversed in their entirety the fees and costs awarded to prevailing defendants.

            Plaintiffs’ opposition to defendants’ motion to compel arbitration achieved some success – demonstrating plaintiffs’ opposition was not frivolous, unreasonable, or groundless (the minimum threshold for FEHA defendants to recover fees under Chavez v. City of Los Angeles, 47 Cal.4th 970, 985 (2010)), so fees incurred by defendants to compel arbitration were not recoverable.  Likewise, the California Supreme Court, under Williams v. Chino Valley Independent Fire Dist., 61 Cal.4th 97, 107-109, 115 (2015) has extended that rule to apply to costs (see also Gov. Code § 12965(b).).   

            Finally, although former employer’s contract with plaintiffs contained an arbitration provision with a separate attorney fees and costs clause for the successful party on a motion to compel arbitration, the fee-shifting nature of the clause risked a chilling effect on employees’ access to court on FEHA claims.

Special Fee Shifting Statutes: $2,000 In Code Civ. Proc., § 527.6(s) Attorney Fees Awarded To Prevailing Civil Harassment Respondent Affirmed On Appeal

Petitioner Failed To Cite Any Legal Authority To Support Her Contention That The Trial Court Abused Its Discretion By Awarding Fees And Provided No Reporter’s Transcript Of The Evidentiary Hearing.

            We have posted many times before on the importance of providing an adequate record on appeal and supporting arguments with legal authority and citations to the record.  Failure to do so will almost certainly doom an appeal.

            In Reed v. Edison, Case No. B297816 (2d Dist., Div. 3 December 11, 2020) (unpublished), petitioner sought a civil harassment restraining order, under Code Civ. Proc., § 527.6, against respondent with claims that respondent was a friend of a neighbor tenant and had locked her out of her Los Angeles apartment and threatened to kill her if she tried to reenter.  Respondent opposed and sought $2,000 in attorney fees – claiming he was a licensed real estate broker retained by Fannie Mae to market the property, had never met petitioner, and was not on the property on the date she claimed the incident occurred.  Further, respondent’s attorney declared, petitioner was “a serial pro per litigant” who appeared to actually live in Joshua Tree.  The trial court held an evidentiary hearing, then denied the petition with prejudice and dismissed the case – finding no basis for the issuance of a permanent restraining order – and awarded respondent the $2,000 he sought in attorney fees.

            Petitioner appealed, but the 2/3 DCA affirmed.  Petitioner failed to provide an adequate record on appeal – proceeding only with a clerk’s transcript and failing to include a reporter’s transcript, or suitable substitute, of the evidentiary hearing.  Additionally, petitioner forfeited her arguments that she was not given sufficient time to address respondent’s claims and that the court abused its discretion by awarding fees because she failed to cite any supporting legal authority.

Nonsignatories: Non-prevailing Individual Plaintiff Was Not Subject To Attorney’s Fees Exposure Because Nothing Indicated He Was A Contractual Third-Party Beneficiary

$430,000 In Fees Awarded Against Signatory LLC, But Not Against Losing Individual Plaintiff.

            For a non-prevailing nonsignatory party to be exposed to fees, there must be some substantial link to the underlying contract involving signatory parties—such as the nonsignatory being a third-party beneficiary of a contract.  (Real Property Services Corp. v. City of Pasadena, 25 Cal.App.4^th 375, 382 (1994).)  In the absence of that relationship, an individual plaintiff losing a case may not be liable for substantial fee exposure, as happened to be the case in Kavoukjian v. Imnaishvili, Case No. B300459 (2d Dist., Div. 8 Dec. 10, 2020) (unpublished).

            Defendants won a bench trial against both signatory and nonsignatory plaintiffs involving a joint venture agreement with a contractual fees clause.  The lower court awarded $430,000 in fees against the LLC signatory plaintiff, but not the losing nonsignatory, individual plaintiff.  Defendants appealed the fee denial as against the nonsignatory plaintiff.

            The 2/8 DCA panel affirmed.  Nonsignatory plaintiff’s claims were not based on breach of contract, given that only the LLC sued on this theory.  Although nonsignatory claimed to be a third-party beneficiary in a discovery response after commencement of litigation, this statement alone did not mean he was—with the joint venture agreement not manifesting any intent by the signatories to confer a direct benefit on the nonsignatory plaintiff.  The fact that the LLC could assign its interests and options to the nonsignatory did not make the nonsignatory a third-party beneficiary.  (Don Rose Oil Co., Inc. v. Lindsley, 160 Cal.App.3d 752, 756 (1984).)  Naming nonsignatory in the notice provision of the contract also was too incidental.  (Walters v. Calderon, 25 Cal.App.3d 863, 871 (1972).) 

Deeds Of Trust, Section 1717: $28,645 In Contractual Fees To Lender Reversed As A Matter Of Law

Reason Is That There Was No True Attorney’s Fees Clause, Just One Where It Was Added As Additional Debt.

            Borrower in Tang v. JPMorgan Chase Bank, N.A., Case Nos. H045898/H046697 (6^th Dist. Dec. 9, 2020) (unpublished) was not happy when he lost challenges to a nonjudicial foreclosure by the lender under a deed of trust and then was hit with contractual attorney’s fees of $28,645 (out of a requested $31,338.18) in favor of lender.

            Although the merits decision against him remained, borrower should be somewhat happier because the attorney’s fees award was reversed as a matter of law on appeal.  The reason why is that the operative deed of trust clause was not a true attorney’s fees provision, given that it only indicated fees would be added to the loan as additional debt.  Under the circumstances, this did not give entitlement to fees as would be case under a classic contractual fees provision.  (Accord, Hart v. Clear Recon Corp., 27 Cal.App.5^th 322, 325-329 (2018), cited by the Tang court in support of its opinion and discussed in our September 19, 2018 post.)

Costs: $11,288 Costs Award To County For Outside Counsel/Paralegal’s Administrative Record Work Was No Abuse Of Discretion

If Reasonable And Necessary, CCP § 1094.6(c) Allows For Recovery Of These Costs.

            In McMillan v. County of Siskiyou, Case No. C087960 (3d Dist. Dec. 9, 2020) (unpublished), plaintiffs wanted a hearing before the County’s Planning Commission to determine whether they had vested rights to a surface mine on a 1,741-acre property.  They got their wish, but lost their claim before the Commission, then the Board of Supervisors, and then the superior court in a mandamus proceeding challenge.  The lower court then awarded County $14,655.17 in costs, mostly for preparation of the administrative record in the mandamus proceedings.  On appeal, plaintiffs challenged $11,288 of A/R preparation work by County’s outside counsel and paralegals.

            The Third District affirmed.  Code of Civil Procedure section 1094.6(c) allows for costs recovery of mandamus proceeding A/R work if it is reasonable and necessary.  Plaintiffs argued that only staff agency work, not that of County’s outside counsel or paralegals, was solely compensable, but that argument flew in the face of contrary reasoning from The Otay Ranch, L.P. v. County of San Diego, 230 Cal.App.4^th 60, 70-71 (2014).  With respect to the reasonableness and necessity of the costs under Code of Civil Procedure section 1033.5(c)(2), (3), the record revealed that the work of outside counsel and paralegal satisfied the requirements such that there was no abuse of discretion by the superior court in awarding those costs.

Partition: Costs Of Partition, Including Some Reasonable Attorney’s Fees, Were Properly Awarded Against Defendant Brother Who—After 11 Years Of Resistance—Sold A Tenant In Common Property Based On Plaintiff Sister’s Partition Action

Fifth District, In An Emerging Trend, Sides With Lin Opinion On Allowing Partition Costs Award Disproportionate To One Party’s Interest In The Property.

            In Tolley v. Kobzoff, Case No. F078021 (5^th Dist. Dec. 8, 2020) (unpublished), plaintiff sister brought a partition action to force a sale of tenant-in-common property owned with defendants sister and brother.  After 11 years of the brother not selling the property, the partition action finally triggered a sale.  The lower court awarded costs of partition—the cost of a title insurance policy and plaintiff sister’s reasonable attorney’s fees—to be deducted from the brother’s share of sale proceeds, prompting an appeal by brother and the defendant sister.

            The Fifth District affirmed, given that all of these costs were allowable under Code of Civil Procedure section 874.010 in the discretion of the court, including apportionment of “the costs of partition among the parties in proportion to their interests or make such other apportionment as may be equitable.”  After determining that the interlocutory order on costs/fees was appealable because it decided those issues with finality, the appellate panel had to confront the split in appellate thinking between Finney v. Gomez, 111 Cal.App.4^th 527, 545-546 (2d Dist., Div. 7 2003) [apportionment cannot be disproportionately allowed against one party] and Lin v. Jeng, 203 Cal.App.4^th 1008, 1023-1025 (2d Dist., Div. 4 2012) [section 874.040’s broad language does not limit the trial court’s equitable discretion to disproportionately allocate the costs of partition, disagreeing with Finney].  The Tolley panel agreed with the holding in Lin, such that the allocation of costs against single party brother was a discretionary decision for the lower court to make, and was no abuse of discretion under the circumstances.

            BLOG OBSERVATION—Although the conflict on this issue has not been resolved by the California Supreme Court, an emerging majority of intermediate appellate courts have sided with Lin.  (See, e.g., Orien v. Lutz, 16 Cal.App.5^th 957, 968, n. 12 (2d Dist., Div. 8 2017); Pittman v. Vau, Case No. A148222 (1^st Dist., Div. 3 Apr. 27, 2018) [unpublished, discussed in our Apr. 28, 2018 post]; Rahgoshay v. Luo, Case No. G056735 (4^th Dist., Div. 3 Sept. 19, 2019) [unpublished, discussed in our Sept. 23, 2019 post].)

Ethics: Orange County Bar Association Civility Guidelines Will Be Made A Part Of Local Rules

However, They Are Only Guidelines And Not An Independent Basis For Sanctions, Discipline, Or More Litigation—But They Are Salutary In Nature And Should Be Followed.

Tut Jackson (left) and Jack Johnson shaking hands prior to their bout for the World’s Heavyweight Championship, W.E. Palmer, photographer, 1922. Library of Congress.

            Co-contributor Marc was given a “heads up” that the Orange County Bar Association Civility Guidelines will be made a part of the O.C. Superior Court Local Rules (approved December 21, 2016), although they are guidelines and not intended as an independent basis for sanctions, discipline, or more litigation.  Here is a synopsis of the guidelines:

            1.  Counsel shall show civility to other counsel and self-represented litigants—communicate professionally; respond to communications within a reasonable time; provide redlines/note significant changes when exchanging drafts; avoid personal attacks, demeaning comments, and misleading characterization of positions; act civilly toward opposing counsel’s staff members; extend professional courtesies, such as extensions which do not prejudice a client/violate court orders, and honor commitments; advise clients about the need for civility.

            2.  Counsel shall show civility during discovery—work together to make discovery self-executing; meet and confer in good faith to resolve disputes without the necessity for court intervention; provide written discovery in electronic format and agree on search terms for e-discovery; respond forthrightly and timely to non-objectionable requests; schedule depositions reasonably, accommodating the schedules of other parties, counsel, and witnesses; delay or cancel depositions only with good cause and sufficient advance notice; behave professionally at depositions, avoiding abusive/rude behavior and avoiding extension of a deposition for another day when at all practicable.

            3.  Counsel shall show civility to the courts—respect the court’s time by narrowing issues or avoiding unnecessary/losing issues; have witnesses available on time, consider on-call agreements; notify the court expeditiously when a matter informally resolves; avoid personal attacks, disrespectful familiarity, the appearance of impropriety, and improper ex parte communications; be punctual and prepared for every appearance; let others speak without interruption; do not blame subordinates for handling of a case; show civility to all bench officers, arbitrators, mediators, other ADR providers, and their staffs. 

           

Taxation: $180,000 Fees Award To Chinese Theatres Under Revenue And Taxation Code Section 1611.6 Reversed As A Matter Of Law

Yes, The Case Did Involve The Historical Grauman’s Chinese Theatre In Hollywood.

Grauman’s Chinese Theatre. Carol M. Highsmith, photographer. Library of Congress.

            The real property upon which the historical Grauman’s Chinese Theatre in Hollywood was located happened to be involved in a tax assessment dispute in the next opinion we discuss, Chinese Theatres, LLC v. County of Los Angeles, Case No. B302708 (2d Dist., Div. 3 Dec. 8, 2020) (unpublished).

            The background facts were that Chinese Theatres, LLC, which owned the historical Hollywood real estate, entered into an agreement with another party involving naming rights, advertising rights, and operation rights relating to Grauman’s.  The L.A. County Assessor then assessed the value of the property at $69.3 million, with $26 million being allocated to the revenue generated by the third-party agreement.  Chinese Theatres appealed the $26 million allocation to the L.A. County Assessment Appeals Board, which found half of it was an intangible asset exempt from the property’s assessment under California law.  However, Chinese filed a refund lawsuit in superior court, also requesting that the entire $26 million be excluded and the Assessor challenged the $13 million exclusion.  The superior court judge decided that the entire $26 million was an intangible asset exempt from property assessment, specifically remanding to the Board to make an arithmetic calculation of the refund if the parties could not agree otherwise.  Then, upon motion by Chinese Theatres, the lower court awarded nearly $180,000 in attorney’s fees in its favor and against L.A. County under Revenue and Taxation Code section 1611.6. 

            County appealed, and good thing it did.

            The fee award was reversed as a matter of law in entirety.  That result was dictated by the narrow circumstances under which section 1611.6 fee entitlement arises in tax refund actions: (1) a county board fails to make requested findings, or (2) the lower court concludes the Board’s findings are so deficient that it remands the matter with directions for the Board to make findings that fairly disclose its determination on the point at issue.  However, neither of these circumstances existed in the case.  The Board actually made a finding on the $13 million exclusion, but simply didn’t explain how it found only half was a taxable asset (versus no finding at all).  The superior court did not remand to correct deficient findings, but simply did a more limited remand to calculate the refund mathematically based on the lower court’s finding that the entire $26 million was not taxable.  So, in the end, the plain meaning of the narrow fee entitlement statute warranted a reversal as a matter of law. 

BLOG UPDATE: We can now report that Chinese Theatres was certified for publication on January 4, 2021.

Section 1717: Third District Reverses Denial of § 1717 Attorney Fees To Alter Ego Defendant Who Prevailed Against Tort Claims Following Plaintiff’s Voluntary Dismissal Of Breach Of Contract Claim

Court Of Appeal Followed Reasoning In MSY Trading.

            Two alter ego defendants moved for Civ. Code § 1717 attorney fees subsequent to prevailing on the tort causes of action against them after plaintiff voluntarily dismissed its breach of contract claims.  The trial court determined that there was no basis for reciprocal fees on the tort causes of action under § 1717 and denied. 

            One defendant appealed, and the Third District reversed in 347 Group, Inc. v. Philip Hawkins Architect, Inc., Case No. C091273 (3d Dist., December 7, 2020) (published).

            Following the reasoning in MSY Trading Inc. v. Saleen Automotive, Inc., 51 Cal.App.5th 395 (2020) [discussed in our June 30, 2020 post], the appellate panel found that, contrary to plaintiff’s contention, plaintiff’s post-judgment alter ego action was an action on the contract where it sought to establish liability for the underlying judgment on a contract.   If plaintiff had prevailed in its post-judgment action to have defendant deemed an alter ego of judgment debtor, defendant would have been liable for attorney fees pursuant to the fees provision in the underlying contract.  Based on the reciprocal remedy provided by § 1717 to a nonsignatory defendant sued on a contract as if a party to it, defendant was entitled to fees for prevailing in the alter ego action.

Arbitration, Section 1717: Denial Of Plaintiff’s Petition To Compel Arbitration And Award Of $32,757.04 In § 1717 Attorney Fees To Defendant Based On Fees Provision In Arbitration Clause Affirmed On Appeal

Inconspicuous Nature Of Arbitration Clause Deprived Defendant Of Procedural Due Process, And Denial Of Plaintiff’s Petition Disposed Of The Action Entitling Prevailing Defendant To Attorney Fees Per Civil Code § 1717.

            In Domestic Linen Supply Co., Inc. v. L J T Flowers, Inc., Case Nos. B292863/B294788 (2d Dist., Div. 6 December 4, 2020) (published), plaintiff filed a petition to compel arbitration based on an arbitration clause in its double-sided single page contract with defendant.  Based on the “inconspicuous” nature of the arbitration provision – which was hidden among seventeen other closely spaced provisions on the backside, in 8-point type, with no heading, boldface, or italics, and with plaintiff’s sales reps not trained to bring attention to the arbitration clause – the trial court determined there was no agreement to arbitrate and denied.  Defendant was subsequently awarded $32,757.04 in Civ. Code § 1717 attorney fees based on the fee provision in the arbitration clause.  Plaintiff appealed both the denial of its petition and the award of attorney fees.

            In a 3-0 opinion authored by Justice Gilbert, the 2/6 DCA held that “[a]n arbitration clause in a contract is invalid because the clause is as inconspicuous as a frog in a thicket of water lilies. The prevailing party is entitled to attorney fees per Civil Code section 1717.1. Speaking of frogs, Frog Creek Partners, LLC v. Vance Brown, Inc. (2012) 206 Cal.App.4th 515 (Frog Creek) does not prohibit the award of attorney fees.”

            The trial court reasonably determined that there was no agreement to arbitrate – with the rental agreement being deceptive. 

            As to the fees, the arbitration provision contained a one-sided provision for fees in plaintiff’s favor.  However, as the purpose of § 1717 is to ensure mutuality of remedy for attorney fees under contractual fee provisions, the panel treated the provision as providing for an award of fees to the prevailing party.  Plaintiff argued that, under Frog Creek, defendant was not entitled to fees for defeating the arbitration provision as it had not prevailed on the contract.  Not so, said the 2/6 DCA.  Frog Creek distinguished between cases where an arbitration petition is filed in an existing contract action and those in which the action is initiated by filing an arbitration petition.  Plaintiff brought an independent petition to compel arbitration.  Defeat of that petition terminated the action and left defendant as the prevailing party entitled to fees.

Reviews: Sweet Taste Of Liberty, Reviewed By Blog Co-Contributor Marc

Co-Contributor Marc Has Reviewed Sweet Taste of Liberty, And A Link To The Review Is Included Below.

        Rice University historian W. Caleb McDaniel won the Pulitzer Prize in history for this remarkable story about Henrietta Wood, an enslaved person in Kentucky, who was freed in Ohio, kidnapped by a slave broker, re-enslaved, sold in Kentucky, and freed after the Civil War. After returning to Ohio, she sued for restitution in federal court. 

        Wood was illiterate and signed her name with an X, so it is a tremendous feat of scholarship that her story can be told at all.

        The most recent issue of California Litigation, the journal of the litigation section of the California Lawyers Association, is devoted to the theme of racial justice. Marc is one of the editors of the journal, and his review of the book, which appears in the recent issue, can be read by clicking here.

Ethics, Retainer Agreements: December 2020 Article In The Orange County Lawyer Has Nine Practical Tips To Increase Collections And Avoid Costly Fee Disputes

Local Orange County Attorney Michael S. LeBoff Provides The Nine Tips.

            In the December 2020 edition of the Orange County Lawyer magazine, Michael S. LeBoff, a partner at Klein & Wilson, in Newport Beach, California, has authored an article entitled “Increase Collections and Avoid Costly Fee Disputes:  Nine Practical Tips.”  We now summarize some of his suggestions on how to avoid collection disputes with respect to attorney’s fees and costs:

            1.  Sign and return your fee agreement—provide a fully signed duplicate copy of the retainer agreement to the client.

            2.  Be wary of conflict waivers—tailor conflict waivers to specific situations; a lack of an adequate waiver can result in a fee compensation denial (at worst) or a quantum meruit recovery (even if the waiver is not found to be non-egregious in nature).

            3.  Know what is in your fee agreement—review agreements over time; follow it as far as billing practices; fix any ambiguities before any dispute arises.

            4.  Avoid surprises by proper budgeting and communication—avoid client surprises; prepare a comprehensive budget upfront and update the budget; get client approval in writing for expensive or extraordinary projects.

            5.  Do not overpromise or underdeliver—manage client expectations; explain risks such as a potential losing case; explain risks along the course of a case.

            6.  Address problems early—“Unlike scotch, billing issues do not get better with age”; have a frank talk with a client who gets behind, understanding why and trying to resolve, if possible.

            7.  Separate from problem clients—clients on third or fourth attorneys (for example) are a red flag; refusal to make a retainer deposit is a warning sign.

            8.  Invoices should be clear and concise:  detail is better; invoices must contain separation as far as fees and costs; invoices must set forth the amount, billing rate, and work descriptions for entries.

            9.  If you sue, don’t forget the Mandatory Fee Arbitration Act (MFAA) Notice—a collection action will likely be dismissed if the attorney does not send the required MFFA notice; clearly state the amount due in the MFAA Notice.

Civil Rights, In The News: Lawyer Winning $1 From Jury, In Federal Civil Rights Case, Was Awarded $1 In Attorney’s Fees And $862 In Costs Arising From Police Snatching Of A Pen

$44,800 In Fees Requested, But Symbolic Victory Only Entitled A Nominal Fee Award—This Was Not A Federal Case; “Don’t Make A Federal Case Out Of That.”

            An attorney got into an altercation at a police headquarters when attempting to serve a lawsuit.  The police’s office for receipt for service was closed, and two officers refused to accept service, with one officer grabbing the attorney’s writing pen away from him as the attorney was attempting to write down the officer’s name and shield number—even though the officer had a relatively minor reprimand by a Civilian Complaint Review Board.  The attorney also alleged that another officer threw the legal papers at the attorney, an allegation which was not proven later on.  Believe it or not, the attorney filed a federal civil rights and state tort suit against the City of New York and various individual defendants, primarily law enforcement officers—mainly seeking compensatory and punitive damages.

            After many of the claims were dismissed both pretrial and during trial (with the federal district judge signaling punitive damages were unwarranted), attorney eventually recovered a $1 jury verdict (no punitive damages) and then sought to recover $44,800 in fees as well as $862 in costs (only with respect to trial costs). 

            Chief U.S. District Judge Colleen McMahon of the Southern District of New York federal court, in Rothman v. The City of New York, Case No. 19 Civ. 225 (CM) (S.D.N.Y. Nov. 30, 2020 Opinion and Order on Motion for Attorney’s Fees, Doc. No. 171), awarded attorney $1 in attorney’s fees and $862 in costs. 

            The main problem for the prevailing plaintiff attorney, although there is a federal civil rights fee-shifting statute, was that his victory was nominal and really symbolic in nature, not benefitting the public at large.  The degree of success is a critical factor in the civil rights area, with plaintiff not achieving a meaningful victory.  Although he argued that the other side would not settle, the district judge had to observe that his demands never went below five figures such that this argument was not persuasive because those demands could be prudently rejected. 

            Here is a great quote from this decision: “Once upon a time, we urged people not to make too much of real but petty grievances by saying, ‘Don’t make a federal case out of that.’  This lawsuit was a violation of that principle writ large.” 

Discovery, Sanctions: Monetary Discovery Sanctions Improperly Denied Against Litigants Under “Unjust” Exception Simply Because Other Terminating Sanctions Granted Previously

However, Litigant’s Attorneys Were Not Subject To Sanctions Because No Evidence Indicated The Attorneys Advised The Clients To Engage In The Discovery Violations.

            Litigators need to read the Sixth District’s recent decision in Kwan Software Engineering, Inc. v. Hennings, Case Nos. H042715 et al. (6^th Dist. Dec. 2, 2020) (published) on sanctions available for discovery abuses.  In a very scholarly opinion, the Court of Appeal held that (1) monetary sanctions cannot be denied against litigants engaging in discovery abuses simply because terminating sanctions (in this case, dismissing some claims) had been previously granted, because this does constitute injustice under the “sanctions unjust” exception; and (2) litigant’s attorneys cannot be sanctioned under Code of Civil Procedure section 2023.030 unless there is evidence that they advised the clients to engage in the discovery violations.  Here is what the Sixth District had to say on the attorney issue: “We understand defendants’ observation about the difficulty of eliciting direct proof of such conduct in light of an attorney’s ethical obligations and privileges protecting attorney-client communications. However, the difficulty of carrying this burden stems from the statute itself, and we lack the authority to ignore its explicit statutory directive.”