Source: https://www.calattorneysfees.com/2015/08/index.html
Timestamp: 2019-04-24 21:51:20+00:00

Document:
Although Fees Are Mandatory, Prevailing Party Determination Is Threshold Call For Trial Judge Under Prompt Payment Statutes.
James L. Harris Printing & Decorating, Inc. v. West Bay Builders, Inc., Case No. C072169 (3d Dist. Aug. 27, 2015) (published) was dealing with fee-shifting provisions in some prompt payment statutes, specifically, Business and Professions Code section 7108.5 and Public Contract Code sections 7107 and 10262.5. What happened is that neither side prevailed, given that one of the defendants also brought a cross-complaint in a construction payment dispute. The trial court denied the defense motion for fees under the prompt payment statutes.
The Third District affirmed, determining that the lower court indeed had discretion to determine if any side was the prevailing party for purposes of prompt payment statute fee-shifting. In this particular case, the adversaries did not obtain what each really wanted, so the “no one prevailed” call by the court below was sustained.
Split Opinion Decided Novation Defense Was “On The Contract” For Fee Clause Interpretation/Section 1717 Purposes.
On November 21, 2014, we posted on Mountain Air Enterprises, LLC v. Sundowner Towers, LLC, 2014 WL 6488418 (Nov. 20, 2014) [1st Dist., Div. 2; majority opinion by Stewart, J. and dissenting opinion by Richman, J.], which held that “action” language in fees clause was interpreted broadly to allow recovery of fees for successful novation defense, agreeing with Windsor and dissenting opinion in Gil (both Second District decisions).
The case was fully briefed as of August 6, 2015.
City Was Not Aggrieved So As To Have Appellate Standing.
In Walker v. City of San Clemente, Case No. G050987 (4th Dist., Div. 3 Aug. 28, 2015) (unpublished), plaintiffs successfully obtained a refund from San Clemente of about $10.5 million in unexpended development fees to property owners on which the City had imposed unwarranted new beach parking fees in violation of the Mitigation Fee Act—a refund award affirmed on appeal in a companion published decision. Plaintiffs then moved for recovery of attorney’s fees under both the private attorney general statute and common fund doctrine.
The trial judge awarded $1.5 million to plaintiffs under the common fund doctrine, meaning the fee recovery came out of the judgment rather than funds of City over and above the common fund. City appealed the fee award.
The Fourth District, Division 3, in an opinion authored by Justice Aronson, dismissed the appeal.
The reason? City was not aggrieved on appeal so as to have standing to appeal the fee award. After all, the fee award came out of the common fund such that it did not increase the City defendant’s liability. (Sanders v. City of Los Angeles, 3 Cal.3d 252, 263 (1970).) Even though the City had standing to oppose the fee request under the private attorney general doctrine, plaintiffs did not have to raise the lack of standing under the common fund theory until the trial judge made the award—so it was not forfeited by not being raised below. No Catch 22 here.
HAT TIP -- Madison S. Spach, Jr. was one of the successful attorneys for respondents below, an attorney who has worked with co-contributors Marc and Mike on some matters. Congratulations.
Case Dealt With Fee Recovery Under Labor Code Section 98.2.
On July 30, 2015, we posted on Royal Practice Funding Corp. v. Arneson, Case No. G050158 (4th Dist., Div. 3 July 28, 2015), which decided that an ex-employer’s withdrawal of a superior court petition respecting an ex-employee’s Labor Commissioner wage claim award did give rise to fee recovery under Labor Code section 98.2. We can now report that this case was certified for publication on August 24, 2015 and posted on the public website on August 27, 2015.
Seventh Circuit Disagrees With Contrary Conclusion By Ninth Circuit In In re HP Inkjet.
The Seventh Circuit Court of Appeals has authored an important opinion in the class action fee area.
In In re Southwest Airlines Voucher Litig., Nos. 13-3264 et al. (7th Cir. Aug. 20, 2015), the Seventh Circuit construed several coupon settlement provisions in the Class Action Fairness Act (CAFA), 28 U.S.C. § 1712, concluding that the lodestar method may be used to award class counsel a fee rather than utilizing instead the value of redeemed coupons. In doing so, it departed company from the divided Ninth Circuit majority in In re HP Inkjet Printer Litig., 716 F.3d 1173, 1183-1185 (9th Cir. 2013) and instead sided with Circuit Judge Berzon’s dissent.
The Southwest Airlines Voucher court found that CAFA allows three approaches to fee awards: (1) percentage-of-recovery, which cannot be based on just the face value of coupons; (2) lodestar, a permissible alternative to the percentage-of-recovery method; or (3) a combination of the two, where cash and equitable relief is involved in the settlement.
In this case, the class got everything it wanted—a renewed drink voucher which was good for up to another year and one which was obtained through a simple claims process. This resulted in class counsel receiving lodestar fees, augmented by a 1.5 positive multiplier, to the tune of $1.65 million (plus expenses of $18,522.32).
The Seventh Circuit reaffirmed the notion that “clear sailing” provisions (where the defense agrees not to object to requested fees of a certain amount) and “kicker “ clauses in settlement (where any decrease in fees goes back to the benefit of the defendant rather than the class) should be scrutinized intensely, but found no cause for alarm given that the class got everything it wanted such that the settlement was fair.
However, for all litigators, there is a footnote in the opinion to pay attention to. The panel chastised class counsel for using an ellipsis to distort the meaning in a quote, especially where over 1,000 words were deleted by the ellipsis. . . .
Non-testifying Physician Deposition Costs, Videotaped Deposition Costs, And “Real-Time” Deposition Transcript Costs Properly Awarded By Lower Court Below.
Leduc v. West Anaheim Medical Center, Case No. G049895 (4th Dist., Div. 3 Aug. 24, 2015) (unpublished) has a good discussion of routine trial costs awardable in the discretion of the trial judge. It discusses burden of proof, specific items, and substantiation in the process, all authored by Acting Presiding Justice Bedsworth on behalf of a 3-0 panel of the 4/3 DCA.
The essential backdrop is that plaintiff did not win her wrongful termination lawsuit and was hit with some routine costs after the defendant submitted a costs memorandum in the amount of $29,218, although some were granted and some were denied. Plaintiff requested that the entire costs memorandum be stricken as untimely filed, which was denied.
Plaintiff’s challenges on appeal were not persuasive.
As far as lateness, it was true the defense filed the costs memorandum too late, but the trial judge’s finding that she was not prejudiced and considering same in light of non-prejudice determination resolved the issue properly—given the time limits for filing a costs memorandum are not jurisdictional and a lower court has discretion to allow a late filing sans prejudice.
Because all of the costs were specifically awardable under the CCP, the burden of proving they were unreasonable or unnecessary fell on plaintiff. This burden issue is an important one that is iterated time and time again in both published and unpublished decisions.
Although Suffering $8,210 “Net” Adverse Jury Verdict, Section 998 Expert Witness Fees/Other Costs Actually Resulted In Positive Award To Defense.
Talk about a Code of Civil Procedure section 998 offer being a “game changer,” it was that in the next case and with football season looming, should be heeded by all litigators no matter what area they practice in.
Plaintiff in Cantu v. Hermansen, Case No. B257534 (2d Dist., Div. 6 Aug. 24, 2015) (unpublished) won a jury verdict of $23,200, which was reduced to $14,990 based on a settlement with another defendant. However, the primary defendant sent out a CCP § 998 offer of $25,000, which was rejected. Based on this successful 998 offer, the trial judge awarded primary defendant $57,919 based on the 998 rejection, with a “net” judgment of $48,786.94 awarded overall to the primary defendant after deducting the prior settlement from the jury verdict.
Despite plaintiff’s challenges on appeal, the result held up. Plaintiff first argued that the 998 offer was too uncertain because it offered a settlement “inclusive of any and all liens.” The appellate court found this language was not ambiguous, simply referring to matters like attorney’s or medical liens against the recovery in the matter, not other outside liens (such as mortgages). However, in a creative twist, plaintiff argued that CCP § 2033.420 cost-of-proof sanctions for denying certain RFAs should have been granted such that the 998 offer was unsuccessful. However, the killer here was that the defense wisely admitted, before trial, a crucial causation RFA even though initially denying it. That last minute “falling on the sword” meant the lower court properly denied the RFA costs-of-proof sanctions such that the defense made out at the end of the day based on cost-shifting feature of CCP § 998.
Southwest Airlines Garners Fees, Including Fees Expended in USPTO Reexamination Proceedings.
Betty Boop Owner/Manatt Score Fees From L.A. Superior Court Judge as Malicious Prosecution Prevailing Parties.
Be careful when you are thinking about suing for malicious prosecution, because if you lose attorney’s fees and costs could be assessed against you as damages. Plaintiff movie artwork publisher, after defensing Betty Boop’s owner in a prior infringement case, then sued BB’s owner and its counsel Manatt Phelps for malicious prosecution. Plaintiff lost and, on August 21, 2015, Los Angeles County Superior Court Judge Elizabeth Feffer awarded BB’s owner over $200,000 in fees and Manatt $315,608 in fees for fending off the malicious prosecution suit.
Author: http://en.wikipedia.org/w/index.php?title=User:H3yjt&action=edit. GNU Free Documentation License, v. 1.2.
Apple Is the Costs Winner In Its Patent Infringement Suit Against Samsung.
U.S. District Judge Lucy Koh (N.D. Cal.) recently determined on August 20, 2015 that Apple Inc. was entitled to recover about $1.1 million in costs as prevailing party in its smartphones patent infringement suit against Samsung Electronics. Samsung, too, had asked for recovery of costs based on winning one counterclaim, but that request was denied.
$755,925.86 Is Total Fee/Costs Award Against Large Audience Display.
As we have discussed in many posts, the U.S. Supreme Court decision in Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S.Ct. 1749 (2014) has been a real game changer as far as increasing the case-by-case discretion conferred on district judges to determine if a case is exceptional for purposes of awarding fees against a losing patent infringement litigant.
Recently, U.S. District Judge Manuel L. Real decided that Large Audience Display should reimburse Justin Timberlake and Britney Spears for attorney’s fees and costs in defending a patent infringement suit. He found that the case was exceptional under Octane Fitness, with the final tally looking like this: $733,414.34 in fees and $22,511.52 in costs, for a total of $755,925.86.
. . . . Meaning Plaintiff Should Recover Fees Below And On Appeal.
Although plaintiff won both at the trial and appellate levels as far as defeating the defense SLAPP motion, plaintiff did well to cross-appeal from the denial of attorney’s fees in LA Taxi v. Independent Taxi Owners, Case No. B255909 (2d Dist., Div. 4 Aug. 20, 2015) (published). The appellate court determined that the challenged false advertisements fell within the pure commercial speech exception to the SLAPP statutory scheme, meaning that no reasonable attorney should have brought the motion. That also meant that the fee denial was legally erroneous such that the matter was remanded to allow plaintiff to recoup trial and appellate fees for winning at the SLAPP juncture of the case.
Failure To Oppose Fee Request Sealed The Deal.
In Wofford v. Hollicks, Case No. B254518 (2d Dist., Div. 8 Aug. 20, 2015) (unpublished), an in pro per plaintiff brought a civil rights action based on a car impounding against the LAPD. He lost a summary judgment motion and did not oppose a request for an adverse fee award under Code of Civil Procedure section 1038, which provides for a mandatory award in favor of a governmental entity where a court determines that at the time of the granting of a summary judgment motion that the plaintiff failed to bring the proceeding with reasonable cause and in good faith belief that there was a justifiable controversy. The trial court granted LAPD fees of $152,120 out of a requested $271,555.
The fee award was found proper on appeal, mainly because plaintiff failed to oppose the section 1038 request at various phases of the proceeding. Beyond that, plaintiff could not demonstrate that his action was either objectively or subjectively plausible in nature. Plaintiff was also declared to be a vexatious litigant because he had more than five litigations determined adversely to him in the preceding seven years.
Neither One Conferred A Fee Entitlement Basis To Defendants, Requiring Reversal Of Fee Award.
In Judicial Council of California v. Jacobs Facilities, Inc., Case Nos. A140890/A141393 (1st Dist., Div. 1 Aug. 20, 2015) (partially published; fee discussion not published), defendants were awarded contractual attorney’s fees under an indemnity provision and a guaranty. That ruling had to be overturned given that they were no longer prevailing parties based upon a reversal by the appellate court. However, the reviewing court put the kibosh on fee entitlement altogether, determining (1) the indemnity clause was a true third-party indemnity clause which should not be transformed into a fee-shifting clause, and (2) the guaranty could not confer an independent right to fees where the underlying contractual obligation had no fees clause applicable to the “base” contract.
$2.15 Million Was The Fee Request.
City of Richmond, through counsel Morrison & Foerster, obtained a motion for judgment on the pleadings in a contract breach suit brought by the Guidiville Rancheria of California, a federally recognized Indian tribe, and affiliate developer of a canceled casino project. Unfortunately for the losing plaintiffs, there was a Land Disposition Agreement with a fees clause. City moved to recover a total of $2,149,370 in fees and $156,259.26 in costs, based on a lower blended hourly rate charged to the public entity by MoFo.
U.S. District Judge Yvonne Gonzalez Rogers, on August 25, 2015, decided that $1.9 million was a reasonable fee award to City, finding its overall request to be reasonable in nature and determining the tribe had waived a sovereign immunity defense by commencing suit. The basis for the fee award was Civil Code section 1717, and the case is The Guidiville Rancheria of California v. U.S.A., No. CV 12-1326-YGR (N.D. Cal.).
Lots of Procedural, Allocation, and Reasonableness Challenges Rejected.
In Save Westwood Village v. Luskin, Case No. B257354 (2d Dist., Div. 2 Aug. 18, 2015 posting) (unpublished), defendants brought a SLAPP motion, triggering plaintiffs to voluntarily dismiss them from the case. However, the trial court determined the merits of the SLAPP motion, granted it, and ordered the parties to meet and confer over the amount of fees awardable to defendants under the mandatory SLAPP fee-shifting statute. The parties reached an impasse, with defendants indicating an intention to file a costs memorandum. The trial judge asked if there was a deadline to do so, but plaintiffs’ counsel indicated he was not going to “sandbag” on the issue. After some billings were exchanged and no agreement on fees could be obtained, the defense filed a costs memorandum seeking $29,246.75 in fees. Plaintiffs raised a host of arguments, some of them contrary to the “sandbag” representation: procedural noncompliance; untimeliness; failure to allocate; reasonableness. The trial judge did not buy the first three, but did reduce the amount of the fee request to an actual award of $19,012.29 (a one-third reduction) after finding some of the time had been spent on a SLAPP motion in a separate case.
The appellate court upheld the result. First of all, it found that the proper way to claim SLAPP fees was through a determination on the merits motion, through the filing of a noticed fee motion, or through the filing of a costs memorandum—the last option being the one properly utilized by plaintiffs. Second, although the trial judge found the costs memorandum was technically untimely, good cause existed to extend the time under CRC 3.1702(d) and deem it to be a noticed motion, especially given the “sandbagging” comment by plaintiffs’ counsel. Third, there was no need to apportion because all of the work was inextricably intertwined. Finally, the reduction by the trial judge was fair and did not need to be anything any deeper as advanced by plaintiffs.
10% Per Annum Rate Governed Costs Award.
In our June 19, 2014 post, we discussed Chodos v. Borman, 227 Cal.App.4th 76 (2014) (Chodos I), where the appellate court refused to sustain a multiplier were the attorney had no retainer agreement with the client such that the lodestar, with two stipulated adjustments, adequately compensated the attorney. That was not the end of the story, though. The lower court entered a new final judgment following the first appellate remittitur, but apparently did not award trial costs from Chodos I or interest on the requested costs.
Those omissions were cured in Chodos v. Borman, Case No. B260326 (2d Dist., Div. 5 Aug. 18, 2015) (published) (Chodos II).
California Choice of Law Principles Governed, With Ninth Circuit Believing California Supreme Court Would Decide 1717 Evinces Fundamental State Policy.
In one of our early posts on June 11, 2008, we talked about Civil Code section 1717—which makes unilateral contractual fees clauses reciprocal in nature—and its interplay with choice of law decision—decisions considering whether a choice of law clause in jurisdictions allowing unilateral clauses to prevail will “trump” section 1717. Right now, there is a split among decisions, the Grove Properties and Berglass California appellate intermediate decisions both involving ABF Capital Co. Grove Properties determined that 1717 trumped another choice-of-law clause as far as fee recovery, with Berglass going the other way. The California Supreme Court has yet to weigh in.
However, the Ninth Circuit has in First Intercontinental Bank v. Ahn, Case No. 13-56097 (9th Cir. Aug. 18, 2015) (published).
The basic facts were that a defendant was released from a loan under a court ruling, subsequently moving for recovery of attorney’s fees under a contractual fees clause based on Civil Code section 1717. Bank said, wait a moment – this is governed by Georgia law which allows for unilateral fee clauses (like the one in the loan documents) only in favor of bank. That meant, according to Bank, that fee recovery was not permissible against Bank. The district judge awarded fees to prevailing defendant and against Bank.
The Ninth Circuit found Grove Properties more applicable and persuasive than Berglass. After going through California choice-of-law analytical factors (finding involvement both in California and Georgia), the federal appeals court significantly found that California would deem 1717 to be a fundamental policy of the state in line with Grove Properties and not akin to Berglass which found a weaker interest to be at issue (an equal access rationale). Fee recovery affirmed and reasoning which will likely be used in future California state court battles on the choice-of-law issue involved here.
NOTE: Marc and Mike were involved in a choice-of-law case in which there was no fee provision, but there was a Hong Kong choice-of-law provision. The trial court held that Hong Kong law, which applies the English Rule that the prevailing party recovers fees, allowed the prevailing party to recover fees. An unpublished Court of Appeal decision upheld the order shifting fees to the prevailing party. See our October 17, 2013 post on Dampier v. Solar & Environmental Technologies Corp.
Defendant Simply Having Contradictory Version Of Events Does Not Negate Costs-Of-Proof Sanctions.
The defense also should have admitted that plaintiff injured his ankle in the accident and this required medical treatment. That, too, was reasonably undisputed. However, the appellate court did find that the defense might dodge some significant costs-of-proof expenses given he did “stipulate in” plaintiff’s medical bills such that some of the RFAs were reasonably denied in light of disputes over the reasonableness of certain treatments. For example, because the defense did stipulate to ankle treatment medical bills, this certainly mitigated any exposure to RFA costs-of-proof sanctions on the ankle injury issue. So, in the end, the matter was remanded for a more refined hearing on what should be awarded under CCP § 2033.420.
Fee Recovery Properly Denied, With Lower Court Correctly Construing Jury Special Verdict.
In Letizia v. Wentworth, Paoli & Purdy, LLP, Case No. G050132 (4th Dist. Div. 3 Aug. 17, 2015) (unpublished), cross-complainant obtained a jury verdict in her favor, with the jury making these specific findings: (1) cross-complainant was terminated by cross-defendant as an employee effective October 12, 2011, (2) cross-complainant and cross-defendant entered into a different contract on October 12, 2011, and (3) cross-complainant incurred travel expenses as cross-defendant’s employee or at the direction of cross-defendant. Cross-complainant then moved to recover attorney’s fees under Labor Code section 2802(c), which allows for reimbursement of attorney’s fees for claimants successfully enforcing their rights for indemnification of expenses incurred as a result of employees’ discharge of their duties. The lower court denied any fee recovery to cross-complainant.
That result was sustained on appeal. Because cross-complainant had been terminated as an employee on October 12, 2011, the only reasonable construction of the special verdict was that she became an independent contractor at the direction of cross-defendant, which means no fee entitlement under the employee fee-shifting statute.
Justice Ikola was the author of the 3-0 decision.
This Is An Update For Our December 20, 2014 Post On An Unpublished Appellate Decision.
On December 30, 2014, we posted on Paletz v. Adaya, a Second District, Division 3 unpublished decision affirming most of a substantial attorney’s fees award of $2.1 million in favor of plaintiffs, except for a minor reallocation issue remanded to the trial court. In this case, a hotel owner was found to have excluded Jewish patrons at a Santa Monica hotel pool party specifically designed by an outside promoter to benefit fallen Israeli soldiers.
We can now report, based on a recent post by the on-line Jewish Journal, that the lower court, on remand, ruled that plaintiffs’ other causes of action were “inextricably intertwined” with the fee-bearing civil rights causes of actions, awarding plaintiffs more than $70,000 in further fees. Beyond this, the trial judge awarded plaintiffs an additional $340,000 in fees for winning on appeal in the December 2014 decision.
Fees On Legal Malpractice For Former Attorneys Are $659,047 And Cross-Claims Recovery Is $227,420.
In a case where “[t]he facts underlying this appeal are much more interesting than most facts we see on appeal,” the appellate court in Chapman v. Bollard, Case No. G049579 (4th Dist., Div. 3 Aug. 11, 2015) (unpublished) confronted an appeal after Duane “Dog” Chapman—of the reality T.V. show Dog the Bounty Hunter—and other members of his entourage lost an arbitration to their former attorneys who helped them avoid Mexican kidnapping and other criminal exposure. They sued for legal malpractice and lost, with the arbitrator determining that the attorneys were entitled to $659,042 in attorney’s fees, costs, and post-award interest. The attorneys filed a cross-claim for unpaid fees, winning $96,813 which was bumped up to a total of $227,420 when fees, costs, and interest were also included.
“Dog” appealed, but lost again. Writing for a 3-0 panel, Presiding Justice O’Leary rejected technical arguments that the parties’ retainer agreements or invoices violated California law. The main reason was that “Dog” & Company decided to enforce the agreements through arbitration; that being said, the agreements were voidable but not void under illegality principles. Because only limited review is available for arbitration awards under Moncharsh v. Heily & Blasé, 3 Cal.4th 1, 10 (1992), nothing was wrong with the arbitrator’s award of substantial fees/costs and cross-claim recovery. Also, former attorneys were awarded costs on appeal and can also seek for appellate fees on appeal if there was a retainer agreement with a fees clause (presumably was).
Clint Eastwood as a bounty hunter in “A Fistful of Dollars.” 1967. Library of Congress.
. . .Under Limited “Padded Bill” Circumstances.
We do commend that any insurance or tort practitioners read Hartford Cas. Ins. Co. v. J.R. Marketing, LLC, Case No. S211645 (Cal. Supreme Court Aug. 10, 2015) (published) given that it does allow insurers to directly pursue Cumis counsel for restitution based discovery for padded bills (likely counsel fees). This is a fairly narrow ruling, but if readers think it extends beyond the narrow facts and circumstances of this particular case, we invite any and all commentary on this interesting decision.
Lower Court Erroneously Believed Post-Judgment Enforcement Motion Was Under Statute Allowing For Fees.
Fee entitlement is always a threshold issue in attorney’s fees proceeding. It was no less the case in Cardona v. Licher Direct Mail, Inc., Case No. B254783 (2d Dist., Div. 2 Aug. 6, 2015) (unpublished).
There, a judgment creditor (J/C) served an earnings withholding order on judgment debtor’s (J/D’s) presumed employer. Later, J/C filed a motion to impose third party liability on the presumed employer and employer’s president for noncompliance with the earnings withholding order. The lower court granted the motion, ordering the employer and employer’s president to pay certain moneys on the order and an additional $5,000 in attorney’s fees pursuant to CCP §701.020(c).
The fee order was reversed for lack of statutory authority upon which to hinge such a recovery.
The problem was that J/C moved to impose third party liability on the employer and employer’s president based on a third party’s noncompliance with a “writ of execution and a notice of levy”—with this being a separate and distinct post-judgment enforcement method from an earnings withholding order. So, J/C moved under the wrong statute, but should have moved under section 706.154. Although CCP § 706.154 does contain a provision empowering a court to impose liability upon a third party that does not comply with an earnings withholding order, and that is the provision which did allow for the relief sought by J/C, section 706.154—unlike section 701.020(c)—does not have fee entitlement language. So, without any statutory basis for the award, the American Rule barred recovery of attorney’s fees.
Limiting Expenses To Wife’s Trial Preparation Was Reasonable, Given Prior Activity In The Case.
Wife, the party who controlled the finances during her marriage with ex-husband, was sorely disappointed when the family law judge only awarded attorney’s fees for her trial preparation. Her appeal of this discretionary decision was not successful in Marriage of Douthit and Jones, Case No. B254719 (2d Dist., Div. 5 Aug. 6, 2015) (unpublished). Drawing a “trial preparation” line in the sand was a reasonableness determination which was fair, given that the record showed the case was not complicated, wife had serially hired four law firms to represent her during the 5 ½ years that the case was pending, much of the trial evidence was obtained by the first firm representing her interests, and wife’s pursuit of implausible/non-credible claims required consideration in the “mix” of what should be awarded as fees.
Dispute Was Over Ownership Of Purebred Australian Terriers.
Australian Terrier Puppy. Wikipedia. Author: Jay22897. Creative Commons Attribution-Share Alike 4.0 International license.
Dogs, palm trees, ocean views, and invading vegetation seem to draw the rankle of many a litigant, often leading to contentious suits where one side wins or no one prevails—all meaning that the fee award (or lack thereof) is either the great equalizer or a big disappointment depending on the fee outcome ruling.
Steele v. Wornall, Case No. B259546 (2d Dist., Div. 8 Aug. 6, 2015) (unpublished) involved a defamation/extortion suit arising over ownership of certain purebred Australian Terriers. Defendants filed a SLAPP motion against plaintiff, but it was denied because only a private dispute was involved—a determination affirmed by the appellate court in a prior opinion. Then, the plaintiff moved for recovery of fees based on the contention that the SLAPP motion was frivolous. The lower court agreed, awarding $101,184.32 in attorney’s fees against defendants as the unsuccessful SLAPP moving parties.
The 2/8 DCA affirmed in a 3-0 decision authored by Justice Flier. Given that a private matter was truly involved and no privileged communications were at issue, the deferential standard of review—abuse of discretion—constrained the appellate court to find that the lower court was within its authority, with the opportunity for a different opinion not being sufficient. The defense argued that it spent much less time on the motion papers than plaintiff, but the appellate panel concluded that this comparison was not necessarily accurate given that plaintiff likely had more work to do in opposing a frivolous motion. The routine costs award for exhibit photocopying was proper, given that exhibits were used in plaintiff’s opposition papers.
Judgment Awarding Fees Was Not Void, So Attack Was Unsuccessful.
In Francis v. Foxx, Case No. B256423 (2d Dist., Div. 8 Aug. 6, 2015) (unpublished), plaintiff tenants won $3,445 in a landlord dispute after a bench trial, but then were awarded $47,430 (out of a requested $70,000) in Civil Code section 1717 contractual fees under a lease provision. (Goes to show you that fee awards do not have to be proportional to the compensatory damages recovery.) Defendant landlord, over one year after the fee order, moved to vacate and set aside the order, arguing that it was a void judgment because fees were not warranted under section 1717. The lower court disagreed.
The appellate court agreed with the lower court’s denial of the motion to vacate/set aside.
This case has an excellent discussion about the difference between a void versus an erroneous judgment for purposes of a collateral attack under CCP § 473(d). In this situation, mistake of law is not a jurisdictional error and the lower court did have the power to enter an attorney’s fees order. Landlord really argued that it was erroneous, but that does not provide a meritorious basis upon which to set it aside an order as void. The motion was way too late, as was landlord’s challenge to the fee award.
We Predicted It—Due To Split On Whether Forum Selection Clause Dismissal Allows One To Claim Prevailing Party Status Under Civil Code Section 1717.
Well, we sometimes actually make correct predictions. In our April 15, 2015 post, we discussed DisputeSuite.com, LLC v. Scoreinc.com, 235 Cal.App.4th 1261 (2d Dist. 2015), where a fee denial order was affirmed even though the defendant obtained dismissal of a California case based on a Florida forum selection clause. Defendants sought review by the California Supreme Court based on the belief that they had prevailed for purpose of Civil Code section 1717 fee recovery. We posted that the case seemed destined for California Supreme Court review, given that there appeared to be a concrete split between the Sixth District (Drummond) and the Fourth District, Division 3 (Profit Concepts/PNEG).
Shoen v. Vista Lanai Apts. Partnership, Case No. B260726 (2d Dist., Div. 5 Aug. 5, 2015) (unpublished).
An appeal of a SLAPP grant and a subsequent order granting SLAPP fees to the prevailing was dismissed. The appeal of the SLAPP grant was untimely, with losing plaintiffs going 30 days past the jurisdictional 180-day deadline under the circumstances. Just as critical, plaintiffs’ notice of appeal made no reference to the fees issue constituting a jurisdictional defect (Martin v. Inland Empire Utilities Agency, 198 Cal.App.4th 611, 632-633 (2011); Polster, Inc. v. Swing, 164 Cal.App.3d 427, 436 (1985)), and the opening brief made no reference to the fee issue such that the contention was forfeited.
Wilkes v. Bongo LLC, Case No. B258794 (2d Dist., Div. 5 Aug. 4, 2015) (unpublished).
Plaintiff beat back a defense SLAPP motion, but the trial court denied awarding fees to plaintiffs on the basis that the SLAPP motion was frivolous in nature—given that this is the only ground justifying an award against a defendant under CCP §425.16(c). The appellate court found no abuse of discretion but also found the lack of a reporter’s transcript was similarly fatal (given no transcript was submitted either by the defense in filing a non-winning appeal of the SLAPP denial or by plaintiff in its cross-appeal of the SLAPP fee denial).
Award Of $101,154 Out Of Requested $337,180 In Fees Affirmed On Appeal.
Plaintiff prevailed on both breach of lease and fraudulent transfer claims against the defense, with the lease having a fees clause allowing for recovery of fees geared to “enforce” the contract. When it came time to move for attorney’s fees, plaintiff sought $337,180 for all efforts—both breach of lease and fraudulent conveyance work effort. However, the lower court only awarded $101,154 based on its perception that 30% of the time was spent on the lease claim versus the fraudulent transfer claim that it believed was non-compensable from a fee recovery standpoint.
That allocation held up against plaintiff’s challenges on appeal in 330 South Fair Oaks Ave., LLC v. De La Flor, Case No. B253991 (2d Dist., Div. 5 Aug. 3, 2015) (unpublished).
Although arguing that the lease and fraudulent transfer work were intertwined in nature, the appellate court did not buy the argument, given that the fees clause only allowed for “on the contract” work which would exclude a tort claim like that brought under the Uniform Fraudulent Transfer Act (UFTA). Because no other statutory basis was cited, the lower court did not err by failing to award more fees for fraudulent transfer claim work.
BLOG UNDERVIEW—This result is actually consistent with two other unpublished decisions we surveyed in the past, finding that the UFTA does not have language allowing for recovery of attorney’s fees. For those of you wanting to see those prior decisions, see Justice Ikola’s unpublished 4/3 DCA decision in Palacio Del Mar HOA v. McMahon (our December 2, 2008 post) and the 4/1 DCA’s unpublished decision in Levine v. McAvoy (our August 3, 2012 post).
As summarized in the August 2015 edition of the California Lawyer, Archer Norris conducted a survey in March 2015 of corporate lawyers and other businesspeople about California’s legal climate, with 121 respondents (94% of whom were attorney and more than half working for companies with yearly revenue over $1 billion) providing feedback.
72% - responsiveness to phone calls; 69% - overall proposed litigation costs; and 69% - knowledge of the industry.
Here is the feedback about legal risks cited most by respondents: 67% - employment litigation; 59% - environmental and regulatory matters; and 43% - commercial litigation.
Looks Like Many Corporate Clients See Continued Used of Alternative Fee Arrangements.
According to data from Norton Rose Fulbright’s 2015 Litigation Trends Annual Survey (as summarized in the August 2015 edition of the ABA Journal), which polled law departments both in the U.S. and 26 countries based on 803 corporate counsel responses, alternative fee arrangements (AFAs) look to be here to stay and likely growing in preference by corporate law departments. 62% of U.S. respondents used AFAs, while 56% of all respondents (including some global law departments) used AFAs. 39% of the law firms saw some gain or no loss in providing clients with AFAs, although 41% of the law department respondents expected to increase use of AFAs and 57% expected to maintain the current level (with only 2% predicting a decline in AFA use).
ABA Journal’s Survey Of 10 Decades Of the Most Important Legal Films.
1915-1924: (1) The People v. John Doe (1916); (2) The Majesty of the Law (1915); (3) The Man Without a Country (1917).
1925-1934: (1) The Passion of Joan of Arc (1928); (2) The Scarlet Letter (1926); (3) Blackmail (1929).
1935-1944: (1) Mutiny on the Bounty (1935); (2) Young Mr. Lincoln (1939); (3) The Ox-Bow Incident (1943).
1945-1954: (1) Adam’s Rib (1949); (2) The Caine Mutiny (1954); (3) Miracle on 34th Street (1947).
1955-1964: (1) 12 Angry Men (1957); (2) Anatomy of a Murder (1959); (3) Judgment at Nuremberg (1961) and To Kill a Mockingbird (1962) [tie vote].
1965-1974: (1) A Man for All Seasons (1966) and The Paper Chase (1973) [tie vote]; (2) In Cold Blood (1967); (3) Lenny (1974).
1975-1984: (1) The Verdict (1982); (2) Kramer vs. Kramer (1979); (3) Breaker Morant (1980).
1985-1994: (1) The Accused (1988), with one reviewer saying very close vote with Death and the Maiden; (2) A Few Good Men (1992); (3) Presumed Innocent (1990).
1995-2004: (1) Dead Man Walking (1995); (2) A Civil Action (1998); (3) The People vs. Larry Flynt (1996).
2005-2014: (1) The Social Network (2010); (2) North Country (2005); (3) Fracture (2007).
We Came To The Same Conclusion In A July 6, 2009 Prior Post.
The Second Circuit Court of Appeals, in Gortat v. Capala Brothers, Inc., No. 14-3304-cv (2d Cir. July 29, 2015), decided that prevailing plaintiffs in a Fair Labor Standards Act (FLSA) case are not entitled to reimbursement of expert witness expenses under 29 U.S.C. § 216(b). Plaintiffs argued these were costs, but the Second Circuit disagreed by placing heavy reliance on Arlington Central School District Board of Education v. Murphy, 548 U.S. 291, 297 (2006) to the contrary. Instead, plaintiffs could recoup fairly minor per diem witness appearance/travel expenses.
We reached the same conclusion in our earlier post of July 6, 2009.
. . . . Increasing The Legal Budget By $373,000 On An Annual Basis For The L.A. Law Firm Representing The District In The Matter.
Gloria Romero, a former Democratic senator from L.A. and an education reformer, has written a piece in the OpEd section of the August 2, 2015 edition of The Orange County Register entitled “District should stop thwarting parents.” In her article, she reports that the Anaheim City School District’s trustees voted to appeal Orange County Superior Court Judge Andrew P. Banks’ July 16, 2015 ruling that the district had unlawfully rejected the reform effort of 67% of the Palm Lane Elementary School’s parents, through a parent trigger petition under the Parent Empowerment Act, to create an independent charter school in replacement of what she said was a “chronically underperforming school.” What is more, Ms. Romero reports, is that the district’s trustees boosted the contract of the law firm they retained to fight parents from $305,000 annually to $678,000 annually—a $373,000 increase and apparently to help fund the ensuing appeal.
Here is a link to Judge Banks’ decision on this matter, and we could locate nothing on the Fourth District, Division 3 public website to show that the appeal had been filed.
Although not mentioned in the OpEd article, the district increased the legal budget of L.A.’s Fagen, Friedman & Fulfrost. The parents look to have been represented by Mark Holscher of Kirkland & Ellis, LP, apparently on a pro bono basis.
600% Markups, However, Have Not Passed The Grade.
We can report that contract attorneys used by law firms have been treated as attorneys for lodestar purposes, subject to reasonable limitations. Two examples in class action cases suggest how they should be presented in order to be compensable in the lodestar analysis as fees rather than just pass-through expenses at much lower hourly rates.
In In re Tyco International Ltd. Multidistrict Litig., 535 F. Supp.2d 249, 272-273 (D.N.H. 2007), the district judge rejected an objector’s argument that contract attorney work should be treated as an expense and not included as a fee submission in the lodestar analysis. Among other things, the district court reasoned that it is “appropriate to bill a contract attorney’s time at market rates and count these time charges toward the lodestar,” even though higher than what those attorneys actually were paid.
In Balian v. Reliance Environmental Consulting, Inc., Case No. B255730 (2d Dist., Div. 1 July 31, 2015) (unpublished), defendant prevailing party was awarded costs for travel to certain depositions and for Case Home Page expenses (the latter which are electronic document service provider expenses). Losing plaintiff challenged the lower court’s denial of his motion to tax these cost items.
He did not succeed on appeal.
On the merits, deposition travel costs are expressly authorized under CCP § 1033.5(a)(3). With respect to the Case Home page expenses, the recovery for an electronic document service provider is neither expressly permitted nor expressly prohibited by section 1033.5, with the lower court determining it was a “reasonably necessary” expenditure given that the lower court expressly authorized the parties to utilize such a service provider as far filing documents.

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