Source: https://www.calattorneysfees.com/cases_war_stories/
Timestamp: 2019-04-25 16:29:50+00:00

Document:
Judge Bauer Imposes Fees Against City When Interest Group Obtains Reversal of the City’s Council Approval of a Freeway-Sign Exception Permit.
In May 2008, Orange County Superior Court Judge Ronald Bauer overturned the San Clemente City Council’s prior approval of a freeway sign exception permit for a proposed outlet mall project. The exception permit had allowed up to 32 freeway-oriented signs for Plaza San Clemente on Marblehead Coast property along the I-5 freeway at the Avenida Vista Hermosa exist. This reversal was obtained in a lawsuit brought by San Clemente Citizens for Integrity in Development, headed by Richard Boyer.
Later, in early October 2008, Judge Bauer awarded the City of San Clemente to pay $114,427 in attorney’s fees and costs to plaintiff as the prevailing party. This award was over and above about $125,000 that the City had paid in defending against the lawsuit in the first instance.
More details on this award can be found in an October 6, 2006 Orange County Register article by Fred Swegles, “San Clemente must pay plaintiff’s fees in lawsuit over all signs,” which is available for review by clicking here.
Small Claims Appeals—What Attorney’s Fees Are Available to the Winning Party?
Code of Civil Procedure sections 116.780 and 116.790 Provide Answers.
Mike Hensley recently had to appear at a trial de novo of a small claims judgment won by a developer client. Small claims jurisdiction reaches disputes of either $5,000 or $7,500, depending on the type of case. When a losing litigant appeals the judgment, the matter proceeds to a trial de novo (which ranges from being very informal to a full-fledged trial on the merits). Attorneys may participate in the appeal hearing. Code Civ. Proc. sec. 116.770.
What attorney’s fees can be obtained by the winner in the small claims appeal hearing?
The answers are found in Code of Civil Procedure sections 116.780 and 116.790. Section 116.780(c) provides that the court may award the winning party attorney’s fees actually and reasonably incurred in connection with the appeal, but not exceeding $150 (as well as lost earnings and transportation/lodging expenses not exceeding an additional $150). Section 116.790 allows the court, if it finds the appeal “was without substantial merit and not based on good faith, but was intended to harass or delay the other party, or to encourage the other party to abandon the claim,” discretion to award the other party actual, reasonable fees that do not exceed $1,000 (as well as an additional $1,000 in lost earning and transportation/lodging expenses).
Mike’s client prevailed, and Judge Margaret Anderson, who sits in Orange County-Harbor court, awarded the client $150 in attorney’s fees.
What if there is a contractual attorney’s fees clause? Can the winner obtain the actual and reasonable fees over the small claims statutory limits? We know of no decision that has considered this issue. The “pro” argument would be that the winner of a small claims appeal had to hire an attorney in many cases and that the litigant will not be made whole unless more fees are awarded. The “con” argument relies on the statutory limits as reaffirmation by the Legislature that the small claims procedure is meant to inexpensively resolve minor disputes without fear of a large fee exposure.
Trial Judge Held That Lender Lost Any Right to Deficiency So That There Was No Obligation In Existence for Offsetting Purposes.
For several years culminating in a trial in late 2002, Mike Hensley represented borrowers in a judicial foreclosure action brought by an out-of-state lender seeking to obtain the collateral real estate and a substantial deficiency when values plummeted in the late 1990s. Mike’s clients successfully defensed the deficiency claim after a protracted bench trial, even though the property was ordered sold at a future sheriff’s sale. (For those of you that are interested, the case is Beal Bank, S.S.B. v. Lot 9 Industrial, Ltd., 2003 WL 22390286 (4th Dist., Div. 2 Oct. 21, 2003, affirmed on appeal in a nonpublished decision).) The loan documents had a fee clause. Borrowers sought to recover a little shy of $346,000 in fees in a law and motion proceeding before the trial judge.
Lender primarily opposed on the basis that nothing should be awarded because any possible fee award was eclipsed by the deficiency between the value of the collateral to be foreclosed and the loan balance. In response, Borrowers countered that the trial judge found there was no deficiency, meaning that Borrowers owed no obligation to Lender that could be the subject of an offset by the fee award. Borrowers relied on Birman v. Loeb, 64 Cal.App.4th 502 (1998), an analogous case arising in a nonjudicial foreclosure context. Ruling? The trial judge found Birman instructive and rejected Lender’s argument.
However, the trial judge did reject Borrowers’ claim to recoup about $30,000 in overhead costs as fees. The lower court found that Bussey v. Affleck, 225 Cal.App.3d 1162, 1166 (1990), reviewed in our June 4, 2008 post, had been discredited—a prescient ruling in light of the fact that the Bussey court itself abrogated its own holding in 2005.
That left Borrowers with a fee award of approximately $315,000, which was increased some more after the appellate court also awarded them fees for prevailing in the appeal of the underlying “no deficiency” judgment.
POST-TRIAL ARBITRATION PROCEEDING NETS ATTORNEYS FEES FOR PREVAILING PARTIES WHO LOST AT TRIAL.
Defendants in Real Estate Concealment Case Win at Arbitration and Get Partial Recoupment of Attorneys Fees.
At a month trial in Orange County Superior Court, two individual clients of Mike Hensley suffered an adverse jury award of about $285,000. The clients sold their prior San Juan Capistrano house to plaintiff buyers, who did suffer water intrusion after heavy rains in early 2003—which followed on the heels of several dry years from a precipitation standpoint. Buyers sued sellers (Mike’s clients), sellers’ brokers, and buyers’ retained home inspectors for fraudulent concealment, negligent misrepresentation, breach of fiduciary duty, negligence, and nuisance. The jury absolved all defendants but the sellers.
Sellers brought a new trial motion based on the theory that the evidence showed they had actually made disclosures of prior water intrusion incidents that had been fixed and never recurred. The trial judge granted a new trial unless buyers remitted down to around $85,000. Buyers chose not to do so, with the result that both buyers appealed the new trial ruling and sellers appealed the adverse judgment based on the jury verdict.
While the case was on appeal, buyers suggested a binding JAMS arbitration, as long as all claims were in play (including negligent misrepresentation, fiduciary duty breach, and nuisance claims that had been jettisoned through pretrial motions). Sellers agreed under a written arbitration agreement that chose Justice William A. Masterson (Ret.) as the Arbitrator. Both sides dismissed their appeals and went to arbitration.
In the underlying residential purchase agreement between sellers and buyers, there was an attorney’s fees clause that has been held to give rise to a fee award by the prevailing party even though the thrust of a case happens to involve a nondisclosure situation. See Lerner v. Ward, 13 Cal.App.4th 155 (1993); Palmer v. Shawback, 17 Cal.App.4th 296 (1993). Sellers were willing to arbitrate, but only if they could recoup fees for winning the second time around. The written arbitration agreement reflected that reality, indicating that only costs and fees expended in the pending appeals would be borne by each side.
After a two and ½ day arbitration, Justice Masterson decided in favor of sellers, effectively reversing the prior jury verdict (a verdict he was unaware of based upon an agreement between the parties). Because of the attorney’s fees clause in the residential purchase agreement, and based on the written arbitration agreement that never waived fees except limited appellate costs, Justice Masterson set a schedule for a hearing on sellers’ fee petition.
Even though sellers’ fees eclipsed $325,000 in total, Mike Hensley was concerned that the Arbitrator might believe awarding this full amount was high given that some of the pretrial motions and actual trial work was not germane to the arbitration. So, although presenting evidence of the higher fee, sellers also apportioned out work directly related to the arbitration (including discovery or trial testimony related to the arbitration witnesses) and asked for an alternative award of $153,000.
*The language of the fee clause was broad enough to allow an award of fees and costs for the entirety of the litigation, but the Arbitrator found it reasonable to award fees for work that directly benefited the arbitration, namely, the $153,000 award.
The message here is that litigants, under the right circumstances, can garner post-trial arbitration fee awards of a substantial nature, if they are willing to focus on the Arbitrator’s frame of mind and take a discount to face concerns that would naturally arise from the “retrial” of a prior jury matter.
VENTURA TRIAL JUDGE AWARDS FEES TO SUCCESSFUL PLAINTIFFS IN TRESPASS FLOODING CASE.
Gregory P. Regier, a colleague of Mike Hensley when he was at Jackson DeMarco Tidus & Peckenpaugh, and Mike won a case for citrus farming clients in Ventura County who were flooded by their neighboring farmers when the neighbors notched a watercourse on their property, resulting in various property damages and citrus production loss to clients. Greg/Mike’s clients prevailed on trespass and nuisance theories, winning compensatory awards of $255,598.14 on the trespass claim and other monies on the nuisance claim. The case is Hobsons v. Leavens, Ventura County Superior Court Case No. CIV 238746.
The trial judge denied defense motions for judgment notwithstanding the verdict and for new trial.
That brings us to the stage of the proceedings which this blog was created to report on: the fee motion, which was heard on May 14, 2008.
So, having won, Greg and Mike presented a fee petition under section 1021.9 for over $784,000. The fee petition was supported by attorney declarations that attached monthly invoiced billings of a detailed nature.
The defense came back with lots of arguments, both procedural and factual in nature.
*ARGUMENT: The trial court lacks jurisdiction to consider the fee petition because the underlying judgment is on appeal.
ANSWER: Wrong; the trial court has continuing jurisdiction. See Gregory v. State Board of Control, 73 Cal.App.4th 584, 599 n.8 (1999).
*ARGUMENT: The fee petition was untimely filed, because it was filed more than 15 days after the cost memorandum deadline.
ANSWER: Wrong; Cal. Rules Ct., rule 3.1702 (former rule 870.2) provides that the fee petition must be filed within the time to file an appeal, not the quicker timetable for routine costs memorandum, which is dealt with in rule 3.1700—the shorter 15 day deadline.
*ARGUMENT: The fee petitioner must prove that petitioner actually paid the fees for which recovery is sought from the other side.
ANSWER: Wrong; the fee petitioner need only show that the costs were “incurred” even if another outside party agreed to be primarily liable. See Lolley v. Campbell, 28 Cal.4th 367, 374 (2002); Beverly Hills Properties v. Marcolino, 221 Cal.App.3d Supp. 7, 11-12 (1990).
That brought the parties to the main challenge—the fees were unreasonable in nature.
The trial judge kept reminding the losing parties that they had heavily contested every legal and factual issue in the case and asked what they proposed the court should do.
The response was interesting, to say the least—knock down the civil litigator rates by two thirds because losing parties’ counsel charged at insurance defense rates. The trial judge challenged this as being unrealistic because the argument did not reflect the true marketplace, namely, noninsurance civil litigator rates. Support for the trial judge’s sentiments can be found in such cases as Trevino v. Gates, 99 F.3d 911, 925 (9th Cir. 1996); U.S. v. City & County of San Francisco, 748 F.Supp. 1416, 1431 (N.D.Cal. 1990), aff’d in relevant part sub nom., 976 F.2d 1539, 1547 (9th Cir. 1992); National Assn. of Concerned Veterans v. Secretary of Defense, 675 F.2d 1319 (D.C.Cir. 1982).
The trial judge did want Greg/Mike to answer if they needed to apportion fees between the trespass (fee basis) claim and the nuisance (no fee basis) claim. Mike answered “yes, but not much,” because the discovery and proof on each were “inextricably intertwined,” but went on to note that some hours were devoted exclusively to the nuisance claim while he was involved during trial.
The trial judge also expressed concerns about legal research and internal lawyer conferencing charges, which mirrors a “hot button” with many in-house attorneys when reviewing bills. However, the same judge did indicate that he saw many “NO CHARGE” entries, a mitigating factor which weighed in the winning parties’ favor. The judge indicated that he wanted to independently review the monthly bills for duplication, unreasonableness, and apportionment.
The judge took the matter under submission, and recently issued his order.
The result: Hobsons were awarded attorneys fees of $319,000. Judge Walsh reduced attorney hourly rates by about $50 (not the two thirds proposed by the defense), and also reduced the fee petition for (1) duplicative entries and (2) entries that went to the nuisance claims (and, under his reasoning, needed to be apportioned out and not counted for prevailing on the fee compensable trespass claim).

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