CALIFORNIA ATTORNEY'S FEES

Allocation, Indemnity, Section 1717, Seriously: 4/1 DCA Affirms $6,000 Damages Award And $143,183.55 Out Of Requested $572,730.11 § 1717 Fees To Prevailing Breach Of Contract Plaintiff Who Proved $1,463,745 In Damages At Trial

Plaintiff’s Failure To Conduct Due Diligence Prior To Entering Into Commercial Lease And Failure To Mitigate Damages Once Problems Arose Left Him Upside-Down By More Than A Million Dollars When All Was Said And Done

            Sherwood v. Vogele, Case No. D076776 (4^th Dist., Div. 1 May 7, 2021) (unpublished) highlights the importance of conducting due diligence before entering into a commercial property lease (or purchase), and of working to mitigate damages when problems arise.

            Plaintiff leased a commercial building for the purpose of building and operating a coffee house with an added rooftop deck – accepting the zero lot line property “as is,” and signing a lease with a hold harmless clause indemnifying landlords in the event he caused a claim to be filed against them.  Afterward, plaintiff became aware that a neighboring property had roof eaves that overhung onto his leased property and hindered his ability to build his project.  When neighboring property owner failed to begin removing those eaves on the date specified in a written agreement with plaintiff, plaintiff instructed landlords to cut off communications with neighbor – claiming he did not believe neighbor intended to remove the eaves, that he would have to proceed as if the eaves would not be removed, and that he intended to sue neighbor for a million dollars because he would have to spend considerable more on a build-out to accommodate the encroaching eaves.  Plaintiff then received landlords’ permission for a complete tear down, rather than a remodel, of their building based on their belief plaintiff’s construction of a new building included a “workaround” to the problem.  This was not the case, however, with plaintiff obtaining permits, and going forward with the demolition, based on plans that did not take the encroaching eaves into account. 

            After filing his lawsuit against neighbor, plaintiff terminated his lease and left landlords with a vacant lot.  Neighbor cross-claimed against plaintiff and landlords for damage to his property caused by the demolition, landlords cross-claimed against plaintiff for breach of lease and indemnity, and plaintiff cross-claimed against landlords alleging fraud and breach of the covenant of quiet enjoyment.  The jury found neighbor breached its binding contract with plaintiff, negligently trespassed and maintained a private nuisance – causing plaintiff $1,463,745 in past and future economic damages.  However, judgment was entered with plaintiff being awarded only $6,000 in damages against neighbor as the jury found plaintiff could have mitigated all but $30,000 of his damages, and that plaintiff was 75% responsible for his losses, while neighbor was only 20% responsible.  Additionally, neighbor was awarded $50,000 in property damage, plus $29,027.50 in costs, against plaintiff, while landlords were awarded $620,492 in damages against plaintiff.  Finally, in a postjudgment order, plaintiff received an award of $143,183.55 in § 1717 attorney fees – only 25% of the $572,730.11 he sought based on the trial court’s allocation for plaintiff’s breach of contract cause of action.  Plaintiff appealed.

            The 4/1 DCA affirmed – finding substantial evidence concerning plaintiff’s failure to mitigate damages supported the judgment.  “One has an obligation to avoid an unwarranted enhancement of damages ‘through passive indifference or stubborn insistence upon a conceived legal right . . . .’ ” (Valle de Oro Bank v. Gamboa, 26 Cal.App.4^th 1686, 1691 (1994).)  As to the fees, the panel found no abuse of discretion in the trial court’s 75% reduction given allocation among plaintiff’s contract and tort claims was proper, and plaintiff did not assert that his claims were so intertwined to make allocation impracticable.   

Seriously, SLAPP: $8,050 SLAPP Fees Award Affirmed On Appeal To Prevailing Defendant

Counsel’s Declarations Alone Can Support Such An Award, Especially One Modest In Amount.

            This one falls in our SERIOUSLY category, a new one coined by Shanna Strader, who does do some great posts for this blog.

            In Wong v. Wong, Case No. A159009 (1^st Dist., Div. 5 Mar. 3, 2021) (unpublished), defendant partially struck some claims from a complaint through a SLAPP motion, with the trial judge awarding mandatory fees of $8,050.  That award was affirmed on appeal. 

            Defense counsel properly documented the time he spent on unsuccessfully striking some claims, excluding it from the fee submission calculus.  No billing records or retainer agreement is required to support a fee motion.  (G.R. v. Intelligator, 185 Cal.App.4^th 606, 620 (2010).). The lodestar based on 13.5 hours was found reasonable by both the lower and appellate court, resulting in the fee award being upheld upon review.

Family Law, Seriously: $7,325 Sanctions Award Under Section 271 Affirmed Where Ex-Wife Failed To Sign Stipulated Judgment After Agreeing To Written Settlement Terms

Postjudgment Activities Are Covered Under Section 271.

            This next case, Marriage of Randazzo, Case No. E073891 (4^th Dist., Div. 2 Feb. 23, 2021) (unpublished), falls under our “SERIOUSLY” new category which we have added to our blog.

            What happened here, in brief, was that ex-wife moved to set aside a judgment entered after she refused to sign a stipulated judgment based on a written settlement agreement to which she agreed.  The family law judge was not impressed, sanctioning her $7,325 in Family Code section 271 fees for not attempting to resolve the dispute as required in dissolution matters.

            Nothing in section 271 makes it inapplicable to postjudgment proceedings unless the court previously reserved jurisdiction to award future sanctions in the judgment.  There was no such language in the judgment, such that the trial judge had jurisdiction to award sanctions. 

            Seriously ….

Costs, Deeds of Trust, Prevailing Party, Section 1717, Seriously: 4/3 DCA Affirms Mixed Results Fee Awards To One Of Two Plaintiffs Of $34,740 And A Combination Of $35,577 To Two Of Three Defendants

The Title Issue That Started It All Was Partly Corrected And Seller Resumed Payments Years Before, But The Parties Battled On All The Way To Trial – Incurring A Combined Total Of $202,299.50 In Fees, Plus Costs.

            In our Mission Statement, we quote a statement made by Retired Justice Wallin in Deane Gardenhome Assn. v. Dentkas, 13 Cal.App.4th 1394, 1399 (1993).  “All too often attorney fees become the tail that wags the dog in litigation.”  As Justice Wallin explained, “Often the economic value of what the [litigant] gains is minute compared to the litigation costs.”  This next case exemplifies Justice Wallin’s observation.

            In Real Properties Network v. D’Alessio, Case No. G058351 (4^th Dist., Div. 3 February 22, 2021) (unpublished), plaintiff Michael Mitchell and his company Real Properties Network, LLC (Network) sued defendant Dennis D’Alessio and his two companies, Newport Harbor Ventures, LLC (Ventures) and D’Alessio Investments, LLC (Investments) seeking quiet title to a Newport Beach condo Mitchell purchased from D’Alessio – along with causes of action for fraud, slander of title, and other related claims – following discovery of a title problem wherein defendant Ventures recorded a grant deed transferring the condo to plaintiff Network, but weeks prior had also recorded a quitclaim deed transferring the condo to defendant Investments. 

            Defendant Investments also filed its own lawsuit against plaintiff Network for repayments, also seeking late fees for various payments, when plaintiffs stopped making interest payments because of the title problem and refused to make the scheduled balloon payment pursuant to the 2-year note on the property.  The lawsuits were consolidated.

            Despite the title and payment disputes being partly resolved by a corrective grant deed and interest/balloon payments years before, the parties argued entitlement to additional remedies – battling all the way to trial where they received mixed results.  Plaintiff Mitchell did not prevail on any of his causes of action, but the trial court found in favor of plaintiff Network against defendants Investments and Ventures on the quiet title cause of action, against defendant Ventures only on plaintiffs’ breach of warranty claim, and defendants prevailed on plaintiffs’ remaining causes of action.  Additionally, plaintiff Network prevailed on defendants’ only remaining claim by the time of trial – the late fees.  No party recovered money from any other party.

            Then came the motions for fees and costs from both sides.  The parties had incurred a combined total of $202,299.50 in fees, plus costs.  Plaintiffs sought $74,722.50 in fees, and defendants sought $127,577 in fees.  We cannot imagine the parties were too happy with the mixed results they received.  The trial court granted the motions to tax costs on both sides – so no costs were awarded due to the parties’ failures to apportion between successful and unsuccessful claims.  Additionally, the trial court made reductions on both sides for excessive billing and other issues.  In the end, plaintiff Network was awarded $34,740 in attorney fees for defeating Investments’ late fee claims, but no fees on the title claim because it did not prevail against D’Alessio – the only signatory to the Agreement, and plaintiff Mitchell was denied fees.  Defendant Investments’ fee request was denied because the fee provision in the Note was too narrowly worded to reach the claims in the title action.  As to D’Alessio, the trial court found he was entitled to an award of his fees as he had prevailed on all claims in the title action.  However, because defendant Ventures was a non-signatory to the parties’ Agreement, it was entitled only to its fees on the contract claims in the title action, under Civil Code section 1717, not on the tort claims.  This resulted in a combined $35,577 award to defendants D’Alessio and Ventures – which beat out Network’s award by $837, although defendants incurred $52,854.50 more in fees than plaintiffs. 

            Defendants appealed, but the results were not mixed this time – with the 4/3 DCA affirming in a 3-0 opinion authored by Justice Thompson.

            Three out of four of defendants’ arguments declared prevailing party entitlement, but the appellate panel disagreed.  Investments was not the prevailing party on its claims by having induced plaintiffs to make the interest and balloon payments.  By the time of trial, Investments only remaining claim was for late payments and was defeated.  Likewise, defendants were not entitled to their costs as the prevailing parties where they had failed to allocate their costs between the claims where they were successful and those where they were not.  Additionally, defendants’ contention that D’Alessio’s complete victory entitled him to all claimed fees failed to take into account that Civil Code section 1717 only permits recovery of “reasonable” attorney fees by a prevailing party in an action on a contract containing an attorney fee provision.  The trial court had properly reduced for excessive billing, clerical tasks, work performed on a cross-complaint against unrelated parties, and fees incurred for the late fees claim.  Finally, the panel found no abuse of discretion in defendants’ challenge of the evidentiary support for plaintiffs’ fee motion.

BLOG NOTE:  This case, like some others before it, caused us to ask, “Seriously?!” – hence the addition of a new category beginning with this post because . . . seriously . . . how could we not?