Source: https://www.calattorneysfees.com/cases-interest/
Timestamp: 2019-04-25 15:49:32+00:00

Document:
Complicated Interpleader Dispute Still Results In Interest Accrual Result Described Above.
Wertheim, LLC v. Currency Corp., Case No. B270926 (2d Dist., Div. 5 Aug. 25, 2017) (unpublished) involved a complicated interpleader/postjudgment dispute between various parties, among which was an insurer of an appeal bond in favor of plaintiff Wertheim. For purposes of this blog, Wertheim won a postjudgment accrual of interest issue that implicates attorney’s fees and costs. Specifically, the Court of Appeal concluded that interest begins to accrue on an initial judgment amount, even if it is later amended to include significant costs and attorney’s fees. However, in an interesting twist, the appellate panel concluded interest stopped once the appeal bond surety tendered a rejected check to the superior court during convoluted proceedings, although it did agree that simply obtaining an appeals bond was not the equivalent of a tender or payment of the judgment for purposes of stopping interest accrual.
Plaintiff’s Attempt To Depose Hyundai CEO For $462.50 Did Not Impress Appellate Court, Much Less Hyundai’s Emergency Stay Request.
Here, plaintiff brought a lemon law case against Hyundai, eventually accepting a defense 998 offer by which the car would be returned, the lawsuit dismissed, Hyundai would pay certain money back to the car buyer and lienholder, and the buyer’s attorney’s fees and costs would be determined by court motion. Plaintiff eventually accepted a check in payment of the 998 amount, then moving for recovery of $60,536 in fees and interest. The trial judge awarded $42,203 in fees, denied the interest request, and dismissed the case, prompting an appeal by plaintiff from the dismissal minute order.
Subsequently, Hyundai tendered $42,203 in payment of the fees award, but plaintiff claimed it was short on post-award interest of $462.30. The appellate court later informed plaintiff it might dismiss the appeal, but plaintiff rectified by this by filing a proposed judgment resulting in issuance of a formal judgment of dismissal. Plaintiff then sought to depose Hyundai’s CEO in a debtor judgment exam after incurring another $13,000 for additional interest and fees relating to the $462.50 interest claim. (As the appellate panel noted, the $13,000 claim was “one of the best growth investments we have seen.”) This prompted Hyundai to file a writ and seek an emergency stay relating to the debtor exam, with the stay being granted pending further order of the appellate court.
Hyundai won its writ petition claiming that the debtor exam was unnecessary because no interest was due on the satisfied fee award. This was so because postjudgment interest only accrues, by law, on a final judgment. (Code Civ. Proc., § 685.020; Civ. Code, §1794(d).) The only final judgment was the judgment of dismissal, not the prior minute order. The fee award has already been paid before the judgment of dismissal was entered, so no interest was due.
However, the writ panel publishing this decision—Justices Rylaarsdam, Aronson, and Thompson—did caution both sides about contesting such small interest and seeking an emergency writ stay (versus Hyundai seek a protective order based on the debtor exam being akin to an “apex” deposition).
Court of Appeal Did Affirm 998 Cost-Shifting As To Rejected 998 Offer.
In Bean v. Pacific Coast Elevator Corp., Case No. D064587 (4th Dist., Div. 1 Mar. 10, 2015) (partially published; prejudgment interest on costs discussion published/998 costs discussion not published), plaintiff won a substantial $1.271 damages award resulting from a rear end vehicle accident against an employer whose employee ran into him. The lower court later awarded costs under CCP § 998 as well as prejudgment interest on those costs.
The appellate court affirmed all rulings, but the prejudgment interest on routine costs. It determined that prejudgment interest is only allowable as to damages under Civil Code section 3291, with damages being much different than routine costs.
The 998 cost shifting in favor of plaintiff was also sustained. The defense rejected a $999,999 section 998 offer from plaintiff, with plaintiff recovering $1.271 million after a trial. The 998 offer was “spot on,” with the defense having enough medical evidence and indication that plaintiff’s injuries were serious so as to support the conclusion the offer was reasonable and made in good faith.
. . . Unless Retainer Agreement Requires Otherwise.
Hernandez v. Siegel, Case No. A139653 (1st Dist., Div. 5 Sept. 30, 2014) (published) decided, unless a client-attorney retainer agreement dictates otherwise, post-judgment interest on a fee award and routine costs generally are interests vested in the attorney, rather than the client. The appellate court placed great reliance on Flannery v. Prentice, 26 Cal.4th 572 (2001) in reaching its result on the fee post-judgment interest issue.
The First District, Division 5 in Lucky Unified Properties Investments, Inc. v. Lee, Case No. A132914 (1st Dist., Div. 5 Feb. 4, 2013) (partially published) provided clarity on the issue of when interest begins to run on postjudgment fee/costs awards where the fees/costs were incurred postjudgment or on appeal. The appellate court determined that, in both cases, interest began to run from the date of “fixing” of the postjudgment cost/fee awards, not earlier. Although determining that a trial court award of fees and costs for appellate work is incorporated into the original judgment for enforcement purposes, interest does not begin to run until the date that the appellate costs/fees are “fixed” by the lower court.
Appellate Court Dismisses Applying Perdue in California State Court Cases and Affirms that Interest Ran From Date of Remanded New Fee Determination.
In our March 31, 2009 post, we extensively discussed Khazan v. Braynin (Khazan II), an unpublished appellate court decision where the First District, Division 4 remanded a fee award because it felt some apportionment and relook at the degree of success justifying the fees actually awarded was warranted on the part of the lower court. It also wanted the lower court to consider when interest should run -- from the date of earlier awards or the date of the new fee decision on remand.
We can now report that the trial judge did award significant fees to prevailing plaintiffs, to the tune of $1,370,604, under Civil Code section 1717 based on a fees clause, apportioning out some time and also considering the degree of success. The judge also found that the prior appellate opinion was a reversal, so interest on the fee award ran from the date of its new fee decision on remand. The appellate court was happy with these determinations, affirming in Khazan v. Braynin (Khazan III), Case No. A128536 (1st Dist., Div. 4 Sept. 12, 2012) (opinion following rehearing).
Two points caught our eye in Khazan III.
Also Rejects Application of Perdue v. Kenny A. To State Cases Involving Lodestar Multipliers.
Khazan v. Braynin, Case No. A128536 (1st Dist., Div. 4 May 30, 2012) (certified for partial publication; fee interest issue published) is an interesting decision that has a scholarly discussion on when interest begins to run on a fee award. The opinion basically held that Stockton Theatres, Inc. v. Palermo, 55 Cal.2d 439 (1961) is still good law, and that interest accrual timing depends on whether there was a reversal versus just a modification of a prior fee award. If a reversal (as in Khazan, where the fee award papers had to be reconsidered on remand), then interest runs from the new award as compared to interest running from the original award if there was just a modification. Khazan also has an interesting discussion of the federal rule, where there is a split on whether interest runs from the date of a fee entitlement award or from the date of the fixing of the amount of fees, and the differences in rates of interest (10% per year in California state courts versus interest tied to T-bill rate in the federal system).
In the unpublished portion of the case, the appellate court affirmed a substantial lodestar award, reduced by 30% on remand after apportionment of noncompensable or unsuccessful claims, and then enhanced by a 1.5 multiplier (for a total award of $1,115,204 to the lead counsel). The interesting aspect of the discussion here is that the appellate court rejected application of Kenny A. v. Perdue, 130 S.Ct. 1662 (2010) to state multiplier situations, finding that the considerations in federal fee-shifting cases were distinguishable and that California is more liberal in allowing enhancements.

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