Source: https://www.calattorneysfees.com/2008/09/index.html
Timestamp: 2019-12-07 01:19:52
Document Index: 347950830

Matched Legal Cases: ['§ 10800', '§ 10801', '§ 2412', '§ 2412', '§ 2412', 'art, 461', '§ 1988', '§ 2412', '§ 12989', '§ 3613', 'art, 461', 'art, 154']

CALIFORNIA ATTORNEY'S FEES : September 2008
Elder Financial Abuse Attorney's Fees Award Affirmed Against Attorney With Undisclosed Conflict of Interest
Second District, Division Six Sustains Award under Welfare and Institutions Code section 15657.5.
Welfare and Institutions Code section 15657.5(a) provides for an award of costs and reasonable attorney's fees to the prevailing plaintiff where the defendant has been found liable for financial elder abuse under section 15610.30.
In Wood v. Jamison, Case No. B196898 (2d Dist., Div. 6 Sept. 30, 2008) (certified for publication), an attorney representing an elderly client did not disclose his conflict of interest, resulting in financial harm to his client, institutional harm to his profession, and catastrophic harm to himself. Specifically, attorney never disclosed that he represented an elderly wife, that he took a $4,000 referral fee in a loan that wife made to attorney's real client (a younger man who wanted to open a night a club), and that he obtained $10,000 from the night club loan to repay a prior loan attorney had made to younger man. No conflict waivers, no conflict disclosures, and no referral of the elderly wife to independent counsel. Elderly wife defaulted on the loan and foreclosure proceedings were commenced against wife's residence (the security for the night club loan). Elderly wife died, and her executor sued younger man, attorney, and lender. The trial court stayed foreclosure proceedings, and the lender parties settled by reconveying the residential property in exchange for payment of loan interest. After a bench trial, the lower court found attorney committed malpractice, breached his fiduciary duty to elderly wife, and committed financial abuse of an elder under section 15610.30(a). The trial court also awarded attorney's fees against attorney pursuant to section 15657.7(a). Attorney appealed.
Presiding Justice Gilbert, writing for a 3-0 panel of the Second District, Division Six, found that the evidence did support a finding of financial elder abuse. Attorney did take an undisclosed finder's fee, and he aided and abetted younger man's scheme to take the night club loan proceeds for a speculative venture inappropriate for risk taking by elderly wife. The attorney's fees award against attorney was affirmed, and costs on appeal were awarded as well to executor of decreased elderly wife's estate.
Condominium Owner In Commercial Office Complex Denied An Award of Attorney's Fees Against Condominium Association
Court of Appeal Affirms Denial of Fee Request under Civil Code section 1354.
Section 1354 of the Davis-Sterling Common Interest Development Act, Civil Code section 1354(d), provides that the prevailing party shall be awarded attorney's fees in an action to enforce the governing documents (usually, CC&Rs). Because the statute contains no definition of "prevailing party," case law establishes that courts are to analyze the issue under a flexible test focusing on "which party had prevailed on a practical level." (See Heather Farms Homeowners Association v. Robinson, 21 Cal.App.4th 1568, 1574 (1994); Donald v. Cafe Royale, Inc., 218 Cal.App.3d 168, 185 (1990); Elster v. Friedman, 211 Cal.App.3d 1439, 1444 (1989).) Both the lower and appellate courts in the next case used this "practical level" test in denying a fee request to a condominium owner which had a dispute over interconnection of its unit fire alarms into the condominium association's master fire alarm system.
Owner owned a commercial condominium in a Chula Vista 13-building project managed by a condominium association. Owner did not obtain prior approval from the association before interconnecting its unit alarm system to the master alarm system, and did not comply with a recorded declaration provision requiring the procurement of proof of insurance and naming the association as a named insured. Owner sued association and association's president for damages, declaratory relief, and injunctive relief. The lower court denied a TRO to owner, requiring the parties to work the matter out through submission of alarm plans to the association. Not much later, association approved owner's submitted plans with some conditions. Eventually, the action was dismissed at owner's request.
Owner then moved for $24,813 in attorney's fees under section 1354 as the "prevailing party" in the litigation. The lower court denied the request, stating that both parties achieved what they sought to achieve—plaintiff was able to interconnect to the master alarm system, while association did obtain oversight and made the interconnection subject to certain conditions. Owner appealed.
In Starboard Street, LLC v. Venture Commerce Center-Eastlake Condominium Assn., Case No. D051955 (4th Dist., Div. 1 Sept. 30, 2008) (unpublished), the Fourth District, Division One affirmed the denial of owner's fee request.
Using the Heather Farms pragmatic test for determining the "prevailing party," the Court of Appeal found that the lower court correctly recognized that both sides achieved relief: owner obtained the interconnection, but association was able to approve the interconnection upon certain terms (including a proof of insurance requirement). The appellate panel was influenced by the fact that owner had initially neither sought association approval nor obtained proof of insurance such that "[t]o allow [owner] fees under these circumstances would encourage the violation of the governing documents of common interest developments."
Posted at 10:41 PM in Cases: Homeowner Associations | Permalink | Comments (0) | TrackBack (0)
Governor Schwarzenegger Vetoes AB 1830, Which Targeted Mortgage Brokers
Governor Cites Unilateral Fee-Shifting Attorney’s Fees Provision As One Basis For His Veto.
Recently, on September 25, 2008, California Governor Arnold Schwarzenegger vetoed AB 1830, pending legislation sponsored by Assemblyman Ted Lieu (Democrat—Torrance). AB 1830 would have expanded mortgage broker regulation and contained a provision that borrowers must be awarded attorney’s fees if they are prevailing parties for violations of the proposed prohibitions in AB 1830.
As one basis for his veto of AB 1830, Governor Schwarzenegger cited his distaste of the attorney’s fees provision of the proposed legislation. He believed that it made mortgage brokers liable for technical violations and was not enthralled with the attorney’s fees provision that was unilateral in nature—borrowers get fees if they prevail, but mortgage brokers do not recoup them if they win.
For more on AB 1830 and other consumer-oriented legislation that was signed into law or vetoed, see this September 26, 2008 article from the San Francisco Chronicle which was posted on SFGate.
Posted at 10:28 PM in Legislation | Permalink | Comments (1) | TrackBack (0)
Recent Title IX Suit Settlement Demonstrates How Fee-Shifting Statute Impacts The Structure of A Compromise
$450,000 of the Settlement Was For Reimbursement of Attorney’s Fees.
Title IX is one of the federal fee-shifting attorney’s fees statutes that encourages litigants to confront various forms of discrimination. It does play a role in settlements, as we next discuss in connection with a recent compromise reached between a California public school and a former swim coach.
San Diego State former swim coach Deena Deardurff Schmidt recently gained $1.45 million in a settlement of her Title IX sexual discrimination lawsuit against the school. The settlement broke down as follows: (1) $317,420 lump sum payment; (2) $682,580 annuity; and (3) $450,000 for attorney’s fees, some of which were going back to the plaintiff in reimbursement of what she had apparently already paid. This settlement shows how fees do play a part in the compromise of cases with fee-shifting statutes in play.
For more on the settlement as well as interesting reader splits of opinion on Title IX’s efficacy and on whether San Diego State should have litigated further, see this article.
Posted at 08:20 AM in Cases: Civil Rights | Permalink | Comments (0) | TrackBack (0)
Trial Court Ordered To Honor Personal Injury Plaintiff’ Request For Priority Payment Of Attorney’s Fees And Costs
“Equitable Apportionment” Doctrine To Be Applied on Remand.
We welcome personal injury practitioners to one of our first blogs in their substantive area of the law.
In Eby v. DeJong, Case No. A118498 (1st Dist., Div. 5 Sept. 26, 2008) (unpublished), plaintiff was driving a City pickup in the course of his duties as a municipal employee when he collided with defendant’s vehicle. Plaintiff brought a negligence suit against defendant, with City intervening to seek reimbursement for workers’ compensation benefits of $46,783.37 paid out to plaintiff. City then assigned its lien rights to defendant as part of a settlement between these two parties only. A jury later awarded plaintiff a net judgment (after apportioning negligence) of $27,182.40 against defendant. Defendant, as City’s assignee, filed a motion to offset the lien against the judgment. Plaintiff opposed the motion on the basis he was entitled to priority payment of his reasonable litigation expenses and attorney’s fees under Labor Code section 3856(b), which incorporates the doctrine of equitable apportionment. (BLOG NOTE--When an employer benefits from a judgment obtained through the employee’s efforts alone, the trial court must apportion reasonable fees and expenses incurred in effecting the recovery, which is a priority payout from the recovery—before offsetting for employer lien rights. See, e.g., Quinn v. State of California, 15 Cal.3d 162, 166, 169-173 (1975). However, if the separate attorneys of the employee and employer are both active in producing the result, the apportionment doctrine does not apply and the fees come out of the client’s share of the recovery. See Crampton v. Takegoshi, 17 Cal.App.4th 308, 318 (1993), overruled on other grounds in Phelps v. Stostad, 16 Cal.4th 23, 34 (1997).) The trial court granted defendant’s lien offset request and denied plaintiff’s claim for priority payment of fees and expenses.
Plaintiff appealed these adverse determinations, and obtained a reversal upon review.
Judge Reardon, sitting by assignment from the Alameda County Superior Court and authoring a 3-0 decision, determined the focal factual issue was whether City’s counsel played an active role in obtaining the judgment in plaintiff’s favor. Even under the deferential substantial evidence review standard, the appellate court could find no evidence of active participation by City’s counsel in the litigation. It rejected these proffers as bases for finding active participation:
· A conclusory assertion that does not demonstrate anything more than a “tag along,” failing to describe the employer’s attorney’s services and hours expended (Hartwig v. Zacky Farms, 2 Cal.App.4th 1550, 1556-1557 (1992));
· Actively participating in the case, but failing to actively participate so as to help procure a recovery (Luque v. Herrera, 81 Cal.App.4th 558, 562 (2000));
· Merely retaining separate counsel or filing a complaint in intervention or a lien (Hartwig, supra, 2 Cal.App.4th at 1556);
· Token attendance at a deposition in which only a few questions were asked (Kindt v. Otis Elevator Co., 32 Cal.App.4th 452, 459-460 (1995));
· Plaintiff’s failure to obtain a net recovery in light of the fact that the employer still obtains a benefit from the judgment (Draper v. Aceto, 26 Cal.4th 1086, 1088-1089, 1094-1095 (2001)); or
· The rules applicable to noticed motions for attorney’s fees under California Rules of Court, rule 3.1702, are applicable to the allocation of judgment proceeds between a workers’ compensation lien and fees/costs incurred by an employee plaintiff in producing a result that benefits the employer.
The case was remanded for the lower court to apply the equitable apportionment doctrine and requiring the determined sum to be paid out first from the judgment.
Court of Appeal Affirms Award Of About $57,500 To Trial Attorney Suing Former Client For Successful Trial Efforts
Six-Plus Hours During Trial Not Deemed Unreasonable For Litigation Attorney's Efforts.
Client retained a trial litigation Attorney less than two months before a trial in which she claimed ownership to an Oakland condominium even though her relatives paid significant mortgage expenses and loan interest costs on the condominium. Attorney hit the ball out of the park during an 8-day jury trial, receiving a direct verdict by which Former Client gained possession of a $450,000 property and did not have to reimburse relatives during their years of occupancy. Attorney submitted billings for what even Former Client conceded was a "good result." Even though Former Client had previously paid $18,000, she balked at paying the remainder of $50,000 owed to Attorney for trial activities. Attorney sued Former Client under the written retainer agreement between the two. After a bench trial, Attorney recouped a fee judgment of $57,562.87 (the remainder plus prejudgment interest).
Appleton v. Tu, Case No. A118006 (1st Dist., Div. 4 Sept. 26, 2008) (unpublished) dealt with Former Client's appeal of the fee judgment in favor of Attorney. Former Client did not prevail, because the Court of Appeal affirmed.
The fees claimed by Attorney were not exorbitant. Former Client was horrified that a trial litigator could bill more than six hours per day to the Client's case. Get real, was the appellate panel's response. Here are bullet points for litigators to savor:
· "Six of the eight trial days exceed 12 hours, which is not surprising. Contrary to [Former Client's] supposition, long hours are not unusual for an attorney, especially one trying a case."
· Responding to Former Client's contention that Attorney could not have worked six hours out of a seven hour day—"The central flaw in this logic is that there are not seven hours in a work day for trial attorneys, who routinely work into the night on behalf of their clients."
The bloggers, who are both trial litigators, would like to thank Justice Sepulveda (and the First District, Division Four panel endorsing Appleton) for its recognition that trial days well exceed 6-7 hours per day—in fact, we can attest that they sometimes double or treble these amounts depending on the nature of the case. (However, 7 hour days during trial are not the norm, but the base minimum in our experience.)
Posted at 10:26 PM in Cases: Reasonableness of Fees | Permalink | Comments (0) | TrackBack (0)
This case cautions that attorney’s fees prayer “strikes” should not be done lightly, especially where the record shows a very plausible basis for fee entitlement.
Posted at 09:56 PM in Cases: Pleading, Cases: Private Attorney General (CCP 1021.5) | Permalink | Comments (0) | TrackBack (0)
Posted at 10:48 PM in Cases: Consumer Statutes, Cases: Quashing/Lack of Jurisdiction | Permalink | Comments (0) | TrackBack (0)
Successful Plaintiff Who Protects, Preserves Or Increases A Fund In A Probate Proceeding May Be Entitled To Compensation Under Equitable “Common Fund” Principles
First District, Division One Discusses This Equitable Doctrine.
In our September 16, 2008 post, we discussed Estate of Daley, which summarized the normal compensation principles applicable in probate proceedings. Usually, the court awards compensation as either “ordinary” or “extraordinary” in categorical nature. “Extraordinary compensation” includes attorney’s fees that the probate court, in its discretion, may award to the personal representative and his/her attorney to compensate unusual activities. (Prob. Code, secs. 10801, 10811; Estate of Hilton, 44 Cal.App.4th 890, 895 (1996).) However, the First District, Division One, in the unpublished decision of Estate of Morra, Case No. A119574 (1st Dist., Div. 1 Sept. 24, 2008) (unpublished), reminds us that there are equitable doctrines that do allow persons other than personal representatives or their attorneys to obtain compensation for legal services.
Morra involved a situation where a son filed a probate petition of his father Louis’s estate after his stepmother Bobbye claimed control over the universe of the couple’s community assets. Both the probate and appellate courts rejected Bobbye’s claim and ordered the estate to be funded with Louis’s 50% share of community assets. However, the probate court declined to reimburse son for any attorney’s fees incurred in pursuing his successful probate petition. He appealed, and enter the appellate court to pass upon this fee denial.
Justice Margulies, writing on behalf of a 3-0 panel of the 1/1 DCA, reversed the fee denial to son.
After noting the ordinary “extraordinary compensation” rules which usually operate, the appellate panel highlighted an equitable exception (or add-on, depending on your perspective). Where a probate plaintiff succeeds in protecting, preserving or increasing a fund for the benefit of himself or others, compensation may be awarded from the fund pursuant to the equitable “common fund” doctrine. (See Estate of Reade, 31 Cal.2d 669, 671-672 (1948); accord, Estate of Stauffer, 53 Cal.2d 124, 131-132 (1959); Hutchinson v. Gertsch, 97 Cal.App.3d 605, 614-615 (1979); Estate of Gopcevic, 228 Cal.App.2d 280, 281 (1964).)
Applied to the facts before it, one could make the argument that Louis’s estate was funded solely as a result of the efforts of son John, who filed a probate petition and prevailed over Bobbye’s argument that all of Louis’s assets were subject to distribution under her new living trust. As Justice Margulies succinctly summarized: “Had John Morra taken no action, Bobbye’s position would have left Louis’s estate bare. On its face, this appears to be an appropriate situation for application of the common fund doctrine.” (Slip Opn., at p. 9.)
Because the probate court failed to consider the impact of the “common fund” doctrine, the fee denial was reversed and remanded for reconsideration. (BLOG OBSERVATION—Given the language used by the appellate panel, we would be surprised if son John does not obtain a recovery of fees upon remand.)
Posted at 10:10 PM in Cases: Probate | Permalink | Comments (0) | TrackBack (0)
Posted at 09:52 PM in Cases: Consumer Statutes | Permalink | Comments (0) | TrackBack (0)
Presiding Justice Cooper, writing for a 3-0 panel, also agreed with the trial court that the fees clause in the contract between plaintiff and defendant was limited, only covering breaches such as failing to pay, moving the truck out of the country, transferring it without written permission, and misusing it. The language of the fee clause did not extend to product nonconformity.
However, that was hardly the end of the matter. The second sentence of section 1717(a) prevented upholding the result reached by the lower court.
Posted at 09:43 PM in Cases: Fee Clause Interpretation, Cases: Section 1717 | Permalink | Comments (0) | TrackBack (0)
Client got way behind, but reached a catch-up arrangement in January 2004. However, the 1999 fee retainer agreement was never rescinded, and Law Firm continued to do more work. By the end of 2004, Client was delinquent to the tune of $3 million. Law Firm initiated arbitration, and Former Client never objected to the arbitrator's jurisdiction. The arbitrator eventually awarded Law Firm $3,171,456.80, plus interest, based on the 1999 fee retainer agreement. Later, Law Firm sought a further award of attorney's fees and costs, which was granted in mid 2007—swelling the final award to $5,044,762.80. The award was confirmed as a judgment, and Former Client appealed.
Law Firm's fee judgment was affirmed in Howrey LLP v. Casden, Case No. B202839 (2d Dist., Div. 2 Sept. 22, 2008) (unpublished). Nothing demonstrated that the arbitrator exceeded the authority granted him under a plain construction of the fee retainer arbitration clause. The 1999 fee agreement was still in force, and the arbitrator was well within his rights to conclude that the catch-up arrangement did not extinguish the earlier fee retainer. Because Moncharsh v. Heily & Blase, 3 Cal.4th 1, 11 (1992) generally immunizes the merits of an arbitral award from judicial review, the appellate court did not even need to address Former Client's redux of defenses he lost at the arbitration.
Posted at 10:15 PM in Cases: Arbitration, Cases: Fee Clause Interpretation | Permalink | Comments (0) | TrackBack (0)
Mobile Homeowners Awarded $350,000 Attorney's Fees Under The San Rafael Mobilehome Rent Stabilization Ordinance
Court of Appeal Also Determines that Settlement Ambiguity Allows Homeowners An Opportunity to Seek More Fees for Sustaining Result on Appeal.
A mobilehome park owner increased rent to homeowners in the mobilehome park to recoup the costs of capital expenditures. Following an arbitration, settlement, and lawsuit alleging noncompliance with the arbitration award, an ultimate settlement was reached by which both sides agreed to a $3.72 monthly increase for 20 years (as opposed to a park owner assessment of $18.37 or $7.50 per month, as originally promulgated at different points in time). As part of the settlement, each side could apply to the trial court for an award of attorney's fees (which applications could be contested), even though homeowners agreed that their counsel "shall not seek to recover more than $375,000 in attorneys' fees and costs, and any such fee application or recovery by Plaintiffs' Counsel shall be limited to those fees that Plaintiffs' Counsel incurred in connection with the Action up through the Court's December 18, 2001 Order, as well as any subsequent appeals from that December 18, 2001 Order." Park owner was denied a fees award, while the trial court awarded $346,749 to homeowners (pursuant to the settlement cap, even though their counsel expended $1.3 million to gain the lower monthly increase).
Park owner appealed, mounting numerous challenges. Park owner lost.
In Contempo Marin Homeowners Assn. v. Manufactured Home Communities, Case No. A117394 (1st Dist., Div. 5 Sept. 19, 2008) (unpublished), the Court of Appeal affirmed the homeowners' fee award on these grounds:
· There was fee entitlement to homeowners under San Rafael Mobilehome Rent Stabilization Ordinance section 20.16.040, which provides that a court shall award reasonable attorney's fees and costs to the prevailing party in its discretion. Even though "prevailing party" was not defined, the pragmatic inquiry of who achieved their objectives should be utilized (borrowing from private attorney general statute case law). See Heather Farms Homeowners Assn. v. Robinson, 21 Cal.App.4th 1568, 1574 (1994); Winick Corp. v. Safeco Ins. Co., 187 Cal.App.3d 1502, 1507-1508 (1986). Although the Ordinance was not mentioned as a basis for fee entitlement until later on in the fee proceeding paperwork, it was raised and argued. Because the enforcement of a prior settlement agreement was akin to enforcing the maximum lawful rent chargeable under the Ordinance, homeowners were successful in their quest to keep the monthly charges low in nature. Cf. Berti v. Santa Barbara Beach Properties, 145 Cal.App.4th 70, 72 (2006); Gilbert v. Monsanto Co., 216 F.3d 695, 698, 702-703 (8th Cir. 2000) [enforcement of settlements vindicated important statutory directives so as to justify a fee award].
· Plaintiff's partial success was a factor to be considered in determining the amount of a fee award, not the party's entitlement to the fees. See Lyons v. Chinese Hospital Assn., 136 Cal.App.4th 1331, 1345-1346 (2006).
· Even though a later federal decision had declared the Ordinance invalid, park owner had waived it by not raising the issue until oral argument of the appeal. Beyond that, homeowners did prevail in the earlier state court action under the Ordinance; that park owner prevailed in the federal action later did not dilute homeowners' entitlement to fees in the state action. (However, the Court of Appeal did cite a Washington case for the proposition that a defendant who successfully defends an action by demonstrating unconstitutionality may recover fees as the prevailing party under a fee-shifting statute. See Mt. Hood Beverage Co. v. Constellation Brands, Inc., 149 Wash.2d 98, 120-122 (2003).)
Even better for homeowners, the appellate panel found that homeowners could recover fees for winning on appeal. Park owner countered in the negative, arguing that the prior settlement agreement capped recovery at $375,000 and was limited fee recovery only to the initial fee application rather than fees on appeal. Although ambiguities are usually construed against the drafter, this rule did not apply because the parties had a "joint drafting/no ambiguities charged to either side" clause that was honored by the Court. (Slip Opn., at p. 39.) Because parol evidence is admissible to resolve contractual ambiguities even with respect to an integrated contract, Casa Herrera, Inc. v. Beydoun, 32 Cal.4th 336, 343 (2004), the appellate panel found that the "cap" language was susceptible of conflicting interpretations and should be interpreted in favor of the normal rule that a prevailing fee proponent also obtains appellate costs for winning upon review. That meant the settlement agreement did not bar homeowners from requesting more fees for successfully litigating the appeal of the fee award.
Posted at 10:00 PM in Cases: Special Fee Shifting Statutes | Permalink | Comments (0) | TrackBack (0)
Posted at 03:49 PM in Cases: Referral Agreements | Permalink | Comments (0) | TrackBack (0)
Second District, Division One Sustains Fee Award Based on Plaintiff’s Success in a Jury Trial.
In our August 10, 2008 post, we discussed the unpublished decision of Naidu v. Cal. Pub. Util. Comm’n. That case relied extensively on Cummings v. Benco Building Services, 11 Cal.App.4th 1383, 1387 (1992), which held that attorney’s fees should normally be awarded in favor of a prevailing plaintiff under California’s Fair Employment Housing Act (FEHA) fee-shifting provision (Government Code section 12965(b) “unless special circumstances would render such an award unjust.” Cummings was followed recently by the Court of Appeal in affirming a substantial plaintiff fee award in the next case we explore.
Plaintiff, a Los Angeles school district employee with a physical disability, sued the School District under FEHA, alleging three claims: (1) disability discrimination; (2) failure to reasonably accommodate; and (3) failure to engage in the interactive process. A jury deadlocked on the first two claims (which were dismissed), but found for plaintiff on the third claim, awarding $380,306 in damages. Subsequently, the trial court awarded plaintiff $21,836 in costs and $568,108 in attorney’s fees. After District brought a post-trial offset motion that was denied, the trial judge awarded plaintiff another $1,500 in additional attorney’s fees.
School District appealed both the merits and posttrial rulings, losing across the board.
The Second District, Division One—in a 3-0 decision authored by Justice Rothschild—affirmed in Schermerhorn v. L.A. Unified Sch. Dist., Case No. B196937 (2d Dist., Div. 1 Sept. 19, 2008) (unpublished). Relying on Cummings, the appellate panel agreed with the trial court’s assessment that plaintiff obtained total success on one claim, which means the award did not have to be reduced for having not prevailed on the two dismissed claims. Beyond that, plaintiff was entitled to attorney’s fees for sustaining his damage and fee recovery on appeal.
Posted at 03:37 PM in Cases: Civil Rights | Permalink | Comments (0) | TrackBack (0)
First District Vacates Attorney’s Fees and Expert Fees Awarded Against School District
Appellate Panel Finds No Basis for Fee Award Because District Did Not Violate “Prompt Payment” Penalty Statute.
Public Contract Code section 7107 is a “prompt payment” statute specifying consequences for a public agency that withholds retention proceeds from a general contractor. It basically provides that a public agency may withhold from final payment an amount not to exceed 150% of the disputed amount and specifies that the unpaid amounts are subject to a 2% per month penalty charge on any “improperly withheld amount” in lieu of interest otherwise due. Also, in any action for the collection of funds wrongfully withheld, the prevailing party shall be entitled to an award of attorney’s fees and costs.
Section 7107 was the subject of considerable discussion in Tricon Construction v. Liberty Union High School Dist., Case No. A1116491 & A117022 (1st Dist., Div. 3 Sept. 18, 2008) (unpublished).
There, general contractor Tricon was awarded damages due to the District’s breach of a contract to build a swimming pool. In the second phase of a trial, a jury found that while the District acted in good faith, contractually-specified liquidated damages were wrongfully withheld. Later, the trial court assessed against District penalties, interest and attorney’s fees under the Public Contract Code (with $41,276.94 being penalties and $240,000 being attorney’s fees) and expert fees of $6,877 for District’s rejection of a Code of Civil Procedure section 998 offer.
District appealed. The First District, Division Three vacated the award of penalties, interest, attorney’s fees, and expert fees, although affirming the remainder of the damages recovery by Tricon.
Reversal was required based on the appellate panel’s determination that the District withheld disputed retention funds. “But we do not read 7107’s public entity penalty to apply to a disputed payment. . . Simply put, section 7107 allows a public agency to withhold beyond 60 days up to 150 percent of a disputed amount from the retention proceeds due a contractor. That is precisely what occurred in this case.” (Slip Opn., at p. 14.) Because section 7107 did not authorize imposition of penalties, the attorney’s fees award pursuant to the penalty statute also had to be vacated. (See Denver D. Darling, Inc. v. Controlled Environments Construction, Inc., 89 Cal.App.4th 1221, 1241 (2001) [“attorney fees are to be awarded only in cases in which the retention payments are not made within the required time periods”].)
Similarly, the expert fee award had to be vacated. Tricon had offered to settle the case with a 998 offer of $680,000, inclusive of attorney’s fees and costs. Even though the total judgment inclusive of damages and fees approximated $690,000, the reversal of the penalty and fee components meant that the Tricon judgment no longer exceeded the 998 offer. So, the expert fee award fell with the reversal of the prior portions of the judgment.
Posted at 07:36 AM in Cases: Section 998, Cases: Special Fee Shifting Statutes | Permalink | Comments (0) | TrackBack (0)
Posted at 07:25 AM in Cases: Special Fee Shifting Statutes | Permalink | Comments (0) | TrackBack (0)
Can Attorneys Intervene In Certain Cases To Recover Fees When Clients Will Not Allow Them to File A Fee Petition Request?
Answer: Yes, in FEHA and CCP 1021.5 Situations.
Generally, attorneys must file an independent collection action or enforce a contractual attorney’s lien in order to collect fees from an obstinate client, especially a client that will not allow an attorney to file a fee recovery motion against the non-prevailing side. (See, e.g., In re Marriage of Read, 97 Cal.App.4th 476, 481-482 (2002) [divorce proceeding]; Bandy v. Mt. Diablo Unified Sch. Dist., 56 Cal.App.3d 230, 234-235 (1976) [contractual lien in personal injury case].) However, in cases grounded in California’s Fair Employment and Housing Act (Gov. Code sec. 12965) and private attorney general statute (Code Civ. Proc. sec. 1021.5), attorneys have been held to be proper intervenors for purposes of moving to recover attorney’s fees from client’s non-prevailing opponent.
For purposes of FEHA, the California Supreme Court endorsed the right of attorneys to intervene to recoup fees in Flannery v. Prentice, 26 Cal.4th 572 (2001). It held that, absent an enforceable agreement to the contrary, attorney’s fees awarded in FEHA cases “belong to the attorneys who labored to earn them.” Id. at 575, 590.) Because the term “prevailing party” under Government Code section 12965(b) was susceptible to multiple interpretations, the Flannery court embraced protecting attorneys based on prior unrepudiated precedents and the public policy to encourage legal assistance for attorneys undertaking cases that vindicate fundamental public policies.
In reaching this result, the majority in Flannery refused to follow Evans v. Jeff D., 475 U.S. 717, 730-732 (1986), a federal civil rights decision interpreting the federal fee-shifting provision (42 U.S.C. sec. 1988) as referring to litigants alone. Justice Kennard, dissenting in Flannery, would have followed Evans.
Flannery was extended in a way to allow attorney intervention in private attorney general cases by the First District, Division Five in Lindelli v. Town of San Anselmo (Lindelli II), 139 Cal.App.4th 1499 (2006). There, the Court of Appeal saw no “sound basis” to distinguish the FEHA fee-shifting provision and section 1021.5 as far constructing the term “party” for fee recovery purposes. (Id.at 1509.) The Lindelli II court found there were sound policy reasons for concluding as it did: “Were we to interpret section 1021.5 as precluding intervention and an attorney’s request for fees where the client declines to move for a fee award, we would diminish the certainty that attorneys who undertake public interest cases will receive reasonable compensation and dilute section 1021.5”s effectiveness at encouraging counsel to undertake litigation enforcing important public policies.” (Id. at 1512-1513). The appellate court rejected a contrary conclusion reached by the Ninth Circuit in Churchill Village v. General Electric, 361 F.3d 566, 578-579 (9th Cir. 2004), finding it incompatible with the reasoning of Flannery.
Posted at 11:25 AM in Cases: Private Attorney General (CCP 1021.5), Cases: Special Fee Shifting Statutes | Permalink | Comments (0) | TrackBack (0)
Cross-Complainant Owners, In Home Renovation Contract Dispute, Are “Prevailing Parties” And Were Not Answerable To Ambiguous CCP Section 998 Offer
Fourth District, Division One So Rules in Interpreting Civil Code section 1717 and Code of Civil Procedure section 998.
The next case is a nice refresher on Civil Code section 1717 “prevailing party” principles and on clarity requirements for Code of Civil Procedure section 998 offers. (For more case discussion, see our cross-referenced categories of “Section1717” and “Section 998” which can be found at the left-hand side of the site’s first page.)
M.R. Contreras Construction, Inc. v. Fansler, Case No D051771 (4th Dist., Div. 1 Sept. 17, 2008) (unpublished) had its genesis in a homeowner-contractor dispute arising out of a home renovation contract with an attorney’s fees clause.
Contractor and contractor’s owner/managing agent sued to recover either $82,862.95 (under the contract for allegedly unpaid work and for unpaid extras) or $41,500 (for defense and resolution of subcontractor mechanic’s liens), while homeowners cross-complained to recoup $145,767.90 (under the contract) and $141,375 (for negligence) based on contractor’s failure to complete the project in a timely and workmanlike manner. (Some trial evidence was bad for contractor, including a recorded phone message in which he apologized for a lack of supervision. BLOG OBSERVATION—Save those recorded messages; they can be killer proof during trial.) Contractor (the company, not the owner) served a 998 offer upon homeowners, offering to compromise in the amount of $90,001 “as full and final judgment in favor of the [homeowners].” The 998 lapsed when homeowners did not respond.
After a bench trial, homeowners were awarded $54,250 for repairs and completion costs based on contractor/owner’s failure to properly complete the project, while contractor was awarded $38,9058 on its suit—both determinations arising under the home renovation contract. The net judgment was $15,292 in favor of homeowners and against contractor/owner.
That brings us to the phase that happens to be most pertinent for us blogs. Both sides brought “dueling” attorney’s fees motions, with both sides claiming they were the “prevailing parties” and with contractor company claiming it was the winner based on homeowners’ failure to exceed the 998 offer.
The trial court found homeowners were the prevailing parties and that the 998 offer was too ambiguous to have validity. The result was an award of attorney’s fees in the amount of $27,279 and costs in the amount of $2,226.88 to homeowners and against contractor company/owner, with both litigants appealing the adverse fee award.
The Fourth District, Division One—in a 3-0 opinion authored by Justice Nares—affirmed the fee award and awarded costs on appeal to homeowners.
First, the appellate panel discussed the “prevailing party” issue. Civil Code section 1717 was the governing statute, with the trial court tasked with determining who had litigation success based on “equitable considerations” reviewed under the deferential abuse of discretion standard of review. (See Sears v. Baccaglio, 60 Cal.App.4th 1136, 1151, 1158 (1998).) Generally, the trial court compares the relief awarded on the contract claims with the parties’ demands on those claims and their litigation objectives, as disclosed by pleadings, briefs, opening statements, and similar sources. (Hsu v. Abbara, 9 Cal.4th 863, 876 (1995) [one of our Leading Cases].) Nevertheless, Justice Nares cogently observed that “[t]he Hsu court, however, did not preclude the trial court from considering other equitable factors bearing on the question of which party prevailed by obtaining ‘greater relief …on the contract’ for purposes of Civil Code section 1717.” (Slip Opn., at p. 9.) Contractor/owner creatively argued that homeowners obtained less than 6% of the relief they sought when presenting $287,142.90 as their total damage claim during written closing argument, while contractor/owner received 47% of the $82,862.95 damage demand or 94% of the $41,500 alternate damage demand. The Court of Appeal found that the trial court had clarified in its amended statement of decision that homeowners could not recover both in contract and tort, such that the relevant damages award was only half of what was relied on in contractor/owner’s argument. However, more importantly, the overriding equities were what predominated—the action arose from contractor/owner’s failure to properly complete the project and supervise the renovation. The negligence of the contractor/owner made it proper for the lower court to find homeowners were the “prevailing parties.”
Second, attention next shifted to the impact of contractor company’s 998 offer. This entailed a de novo review, because it involved the interpretation of a written offer (with contractual interpretation being a classic legal exercise). In the end, the Court of Appeal found that the 998 offer was ambiguous and unenforceable. Because contractor company and owner had a “unity of interest,” their 998 offer was uncertain in stating that acceptance of the $90,001 would result in a “full and final judgment in favor of [homeowners]” when owner had been omitted from the offer’s calculus. Because owner had been omitted, there could by force of logic be no “full and final judgment” had homeowners accepted the offer. It similarly was unclear whether homeowners’ cross-claims against owner would be compromised by the offer, because this subject was not addressed at all. Because 998 offers are strictly construed in favor of offerees subject to their potential adverse consequences, the offer in this case was correctly found by the lower court to be ambiguous in nature. (Burch v. Children’s Hospital of Orange County Thrift Stores, Inc., 109 Cal.App.4th 537, 543 (2003).)
Posted at 08:08 AM in Cases: Section 1717, Cases: Section 998 | Permalink | Comments (0) | TrackBack (0)
Posted at 07:40 AM in Cases: Deeds of Trust, Cases: Fee Clause Interpretation, Cases: Section 1717 | Permalink | Comments (0) | TrackBack (0)
In Sulzmann v. Colton Joint Unified Sch. Dist., Case No. E040853 (4th Dist., Div. 2 Sept. 16, 2008) (unpublished), a disabled high school student, through her guardian ad litem, sued School District defendants for negligence in failing to perform certain life-saving measures after she collapsed on campus. As a result, disabled adult suffered brain damage and lived in a vegetative state. The trial court granted summary judgment to all defendants, and plaintiff appealed. The Fourth District, Division Two issued a tentative appellate decision, prior to argument, affirming as to some defendants and reversing as to others—with the tentative reversal encompassing the School District. (The Fourth District, Division Two is the only appellate division in the state to actually issue tentative decisions to the parties before argument.) After issuance of the tentative opinion, the parties reached a settlement and asked that the appeal be dismissed.
The Court of Appeal, on its own motion, directed the superior court to conduct a hearing and make findings that the settlement was in the best interests of the plaintiff under rule 8.244(d). The superior court found the settlement to be fair, and the appellate panel agreed. The School District agreed to pay $1.3 million. From that amount, there were deductions of $184,825 in unpaid medical charges/liens and $411,220 in unpaid attorney’s fees/expenses, leaving a remainder of $703,955—which would be used to purchase a $500,000 annuity, pay for future additional expenditures, and set up a $141,203 special needs trust.
Based on the fairness of the settlement, the Court of Appeal reversed the judgment under Code of Civil Procedure section 128(a)(8) as to School District and dismissed the appeal as to the remaining defendants.
In our August 8, 2008 post, we discussed minor’s compromises and certain fee award guidelines. This case illustrates that fees exceeding 25% of the gross settlement proceeds will be approved in certain situations. The fee awarded in Sulzmann was about 31.6%, reflecting the hard fought nature of the overall litigation and plaintiff’s pending appellate win against a governmental entity.
Posted at 10:19 PM in Cases: Minors | Permalink | Comments (0) | TrackBack (0)
Mobile Home Purchasers Prevail On Contract Breach And Negligence Claims, But Have No Basis For Fee Recovery
Second District, Division Six Case Illustrates the Need to Have a Fee Entitlement Predicate for Recovery of an Attorney’s Fees Award.
Mobile home purchasers sued mobile home dealer and installer, with the jury awarding plaintiffs $36,275 each against the dealer (based on breach of contract) and the installer (for negligence). The trial court denied purchasers’ motion to recover $166,147.50 in attorney’s fees against dealer and installer. All parties appealed, including plaintiff’s separate appeal of the fee denial order.
In Castillo v. Flohr, Case Nos. B189123 & B193625 (2d Dist., Div. 6 Sept. 16, 2008) (unpublished), the Second District, Division Six affirmed across the board, in an opinion authored by Presiding Justice Gilbert (who has a blog we have cross-referenced).
All bases advanced by plaintiffs failed to show a basis for fee recovery:
Breach of contract with a fees clause (Civil Code section 1717)—The purchase agreement between plaintiffs and dealer had no fees clause. Although plaintiffs argued that the purchase agreement, escrow instructions, and security agreement were an integrated transaction, this did not aid them. The escrow instructions’ fee clause only applied to actions by or against the escrow agent. The security agreement’s fee provision was inapt, because plaintiffs did not prevail on causes of action to collect money owed under the security agreement or for possession.
Health and Safety Code section 18035(f). Although this provision does allow the prevailing party to recover attorney’s fees, it did not work because neither dealer nor installer violated the statute. The statutory provision places a duty on the escrow agent not to close escrow upon being notified of a dispute; no such duty was placed upon dealer or installer.
Code of Civil Procedure section 1021.5. Plaintiffs claimed a “public benefit” under the private attorney general statute based on being a victor in a prior published decision. The flaw with this theory is that the prior decision was against the escrow agent, rather than dealer or installer.
Civil Code section 1794(d). A new mobile home buyer who prevails in an action for breach of warranty against a dealer is entitled to an award of attorney’s fees. However, plaintiff never pled a breach of warranty, and jurors never made findings on such a claim. Thus, there was no predicate for a fee award.
The message from this case is clear: make sure you have a fee entitlement basis for fee recovery. Otherwise, it is likely that trial and appellate courts will parse through the advanced theories to see if a basis truly exists to sustain fee recovery.
Posted at 09:59 PM in Cases: Special Fee Shifting Statutes | Permalink | Comments (0) | TrackBack (0)
First District, Division Two Affirms Attorney's Fees Award To Wife On The Basis of "Need"
Husband's Acquiescence to Family Court's Determinations During Fee Proceeding Constituted Acquiescence to the Award.
If there is a cardinal rule that bears repeating, it is this: in order to preserve one's challenges for a future appeal, make your objections on the record. If not, brace yourself for a subsequent retort by appellate justices that you waived the argument or acquiesced to what the trial court did below.
The failure to object haunted the appellant in Marriage of Morcoso, Case No. A118594 (1st Dist., Div. 2 Sept. 16, 2008) (unpublished).
A family law judge ordered that husband was to advance $5,000 to cover wife's attorney's fees, subject to later apportionment at the end of the case. On appeal, husband argued that the judge failed to consider the parties' relative ability to pay as required by Family Code section 2030, a requirement we have explored in past posts. (See, e.g., August 28, 2008 post on Marriage of Peterson and Weiss, which also reference prior posts on section 2030.) However, husband did not come close to creating a record that would preserve this challenge.
When the award was being discussed, the judge indicated husband's counsel had represented that husband had much greater ability to pay, to which counsel responded "all right." This failure to object to this remark was deemed an acquiescence to the trial court's conclusion.
Beyond that, the fee award was based on an agreement between the parties by which husband's mother's house was going to be liened so the fee advance could be obtained by husband. Wife's counsel indicated that the mother had offered to do it but needed time to arrange the financing. When the family law judge inquired of husband's counsel whether that was an acceptable arrangement, counsel similarly responded, "Yes." As the Court of Appeal tersely observed: "Again, acquiescence."
The failures to object resulted in an all-too-familiar disposition on appeal – affirmance of the $5,000 fee award in wife's favor.
Posted at 11:16 PM in Cases: Family Law | Permalink | Comments (0) | TrackBack (0)
Probate Compensation To Administrator's Attorney Upheld By First District
Division One Notes the Difference Between "Ordinary" and "Extraordinary" Compensation From An Estate.
In a case that apparently has generated roundelays of appeals, the First District, Division One did a nice job of distinguishing "ordinary" and "extraordinary" compensation from the probate estate. The Court of Appeal, in Estate of Daley, Case No. A120213 (1st Dist., Div. 1 Sept. 16, 2008) (unpublished), affirmed attorney's fees of counsel for the administrator in preparing both a court-ordered statement of decision and counsel's second fee petition (totaling around $5,000).
A personal representative and its attorney may obtain "ordinary" (statutory) compensation for typical services to collect, care for, maintain, and preserve estate property. Ordinary statutory compensation is usually approved in accordance with a compensation schedule set forth in the Probate Code. (See, e.g., Prob. Code, §§ 10800, 10810.) Compensation for ordinary services is mandatory.
In contrast, "extraordinary" compensation is authorized for exceptional or nonroutine services, if they are "just and reasonable" in nature. (Prob. Code, §§ 10801(a), 10811(a); Cal. Rules of Court, rule 7.703.) Generally, executor's attorney's fees are considered "extraordinary," and are paid from the estate as an expense of administration. "Extraordinary" compensation is allowed in the discretion of the probate court. (Estate of Stokley, 108 Cal.App.3d 461, 473 (1980).)
Because the court ordered preparation of the statement of decision, the time spent was well justified. With respect to "fees on fees" for preparing the attorney's second fee petition, the appellate court scoffed at the objector/appellant's suggestion that fees incurred in defending fee petitions will inevitably result in "the Kafkaesque judicial nightmare of an infinite regression of fee litigation." Quoting from Estate of Trynin, 49 Cal.3d 868, 879 (1989), the appellate panel reiterated: "Experience in statutory fee-shifting contexts suggests that this perceived problem is largely theoretical and seldom arises in practice. In any event, we are confident that trial courts, in the exercise of the broad discretion granted them in ruling on fee applications, have the means to resolve this problem should it arise." It was less of a problem in the case at hand, because the amount at issue was only $1,254 in "fees on fees."
Posted at 11:05 PM in Cases: Probate | Permalink | Comments (0) | TrackBack (0)
Ninth Circuit Vacates And Remands Attorney's Fees Award Under EAJA For Successfully Obtaining Navy's Mitigation Measures For Sonar Disrupting Marine Mammal Activities
Federal Court of Appeals Find That Some Junior Attorney Work Was Not Distinctive and That Plaintiffs Needed to Show Attorneys Were Not Available to Work at Lower Hourly Rates.
Under the Equal Access to Justice Act (28 U.S.C. § 2412), prevailing parties in cases brought by or against the United States are allowed to recovery attorney's fees unless the Government's position was substantially justified or special circumstances make such an award unjust. See 28 U.S.C. § 2412(d)(1)(A). EAJA allows for the award of attorney's fees "based upon the prevailing market rates for the kind and quality of the services furnished," capped at $125 per hour, "unless the court determines that an increase in the cost of living or a special factor, such as the limited availability of qualified attorneys for the proceedings involved, justifies a higher fee." 28 U.S.C. § 2412(d)(1)(D)(2)(A). The Ninth Circuit, in Love v. Reilly, 924 F.2d 1492, 1496 (9th Cir. 1991), set out a three-pronged test for awarding enhanced attorney's fees: (1) the attorney must possess distinctive knowledge and skills developed through a specialty practice; (2) the distinctive skills were needed in the litigation at issue; and (3) the distinctive skills must not be available elsewhere at the lower $125 per hour statutory rate. All of these principles were at play in the next case, where a district court award of attorney's fees against the Navy was affirmed in part as well as vacated and remanded in part.
In Natural Resources Defense Council, Inc.(NRDC) v. Winter, Case No. 07-55294 (9th Cir. Sept. 16, 2008), several environmental groups obtained a temporary restraining order against the Navy enjoining the use of mid-frequency active sonar during it Rim of the Pacific 2006 training exercise given the disruption to some marine mammals in the area. After the TRO, the parties reached a settlement by which the Navy implemented or modified several mitigation measures that it had previously rejected. Environmental group—represented by two senior and two junior in-house attorneys from NRDC as well as one senior litigation partner and three junior associates at Irell & Manella LLP (an alma mater for contributors Marc Alexander and Mike Hensley)—sought an award of attorney's fees under EAJA. The district court granted the motion, awarding frees totaling $437,584.24 after applying enhanced rates above the statutory $125 cap based on finding counsel brought distinctive skills unavailable at the statutory rate. Navy appealed the amount of the fee award on various grounds.
The Ninth Circuit affirmed enhanced fees for the NRDC in-house counsel and Irell senior litigation partner. However, they reversed the enhanced fee award with respect to the Irell junior associates working on the case. Because these junior associates had no environmental expertise, the Court of Appeals refused to find that "distinctive knowledge and skill" extended to encompass the expertise that the junior associates learned from the pending or companion cases. (Slip Opn., at pp. 12958-12959.) In a footnote, the appellate panel observed that other circuits read the "special factor" test even more narrowly (meaning the attorney must have a specialty outside the field of American law), such that recognizing a case specific acquisition of expertise "would further widen this split." (Id. at n. 2.) The Ninth Circuit also rejected exigency or expedited needs as bases to find a "special factor" for enhancement purposes. (Accord, Role Models Am., Inc. v. Brownlee, 353 F.3d 962, 969 (D.C. Cir. 2004).)
Independently, the Court of Appeals remanded because no evidence was presented by plaintiffs to demonstrate that other attorneys were not available to prosecute the case at the statutory capped hourly rates. Plaintiffs were allowed an added opportunity to demonstrate they satisfied the third prong of the Love test discussed in the first paragraph of our post.
However, the Ninth Circuit did not buy Navy's argument that the claimed hours needed to be reduced due to plaintiffs' limited success. Even limited success like that presented in this case—an "excellent" TRO resulting in changed conduct by the Navy—sufficed to justify an award of fees under EAJA. (See Hensley v. Eckerhart, 461 U.S. 424, 440 (1983) [42 U.S.C. § 1988]; Sorenson v. Mink, 239 F.3d 1140, 1145 n. 2 (9th Cir. 2001) [Hensley applied to EAJA fee awards].)
Last, Navy challenged the award of attorney's fees for work done on appeal of the TRO, arguing that the request should have been filed with the Ninth Circuit rather than the district court. Absent a statutory provision to the contrary, Circuit Rule 39-1.6 would have sustained the correctness of the Navy's argument, because case law has held that analogous section 1988 appellate fees must be sought from the Ninth Circuit. (See Cummings v. Connell, 402 F.3d 936, 947-948 (9th Cir. 2005).) However, EAJA had a contrary statutory provision—28 U.S.C. § 2412(d)(1)(A)—which allows the district court to determine fee awards at all levels of litigation, distinguishing it from section 1988.
Posted at 10:53 PM in Cases: Special Fee Shifting Statutes | Permalink | Comments (0) | TrackBack (0)
Mr. Rocco, a member of the Board of Education of the Orange Unified School District (District), brought a lawsuit, along with Californians Aware (an organization that advocates open government) and Richard P. McKee (CalAware’s president of its board of directors), alleging First Amendment free speech and associated state right violations when Mr. Rocco was censured for commenting on a principal’s relocation in the District and when his comments were edited from cable television videotape. The trial court granted an anti-SLAPP motion against the mandate/injunction petition brought by CalAware, Mr. McKee, and Mr. Rocco. Subsequently, the lower court awarded attorney’s fees of $37,000 in favor District/one individual defendant and against CalAware/Mr. Rocco.
CalAware/Mr. Rocco appealed, but lost in a recent 3-0 affirmance by the Fourth District, Division Three in Californians Aware v. Orange Unified Sch. Dist., Case No. G038499 (4th Dist., Div. 3 Sept. 4, 2008) (unpublished), authored by Presiding Justice Bedsworth. Justice Bedsworth also has his own Wikipedia entry.
So what about the fee award during appeal? Dowling held that it had to be bonded or else the winning defendants should pursue the assets of CalAware or Mr. Rocco. An article by Eugene W. Fields, in the September 12, 2008 edition of The Orange County Register, gives us insight into what happened. During appeal, Mr. McKee, on behalf of CalAware, posted a bond to cover the fees. Mr. Rocco explained in a quote from the September 12, 2008 article: “Win or lose, I won’t be paying a cent. That’s why you get big organizations to back these things for you and fight them for you.”
Dennis A. Winston, the main attorney for the Rocco group, confirmed that Mr. McKee and CalAware posted a bond to cover the legal fees, which means that the surety for the bond will pay the fees for the losing parties (after someone put up some assets to obtain the bond).
Mike Hensley, who was a 1974-1976 member of the University of Southern California Trojan Debate Squad, sends his greetings to Mr. Winston. He was a first-class debater amassing many awards during his collegiate years at USC.
Posted at 10:55 PM in Cases: SLAPP | Permalink | Comments (0) | TrackBack (0)
Anti-SLAPP Prevailing Party Properly Appeals Post-Dismissal Fee Award
However, Prevailing Party's Anti-SLAPP Win Is Overturned, With a Resulting Reversal of the Fee Award.
A notary was named in a conspiracy-charging civil lawsuit brought by a disgruntled plaintiff arising out of a loan he made to others on a series of real estate transactions. Plaintiff charged that the notary failed to record a trust deed, knew that one of the signatures notarized was a forgery, and benefited from the purported fraudulent transactions. Notary was not amused in the least, bringing an anti-SLAPP motion that was successful and resulted in a complete judgment of dismissal as to the notary, a ruling appealed by the plaintiff. Notary subsequently was awarded $10,500 in sought-after $83,250 attorney's fees pursuant to a postjudgment fee award. Notary, again, was not amused by the fee order, and cross-appealed from that order in an attempt to challenge what notary obviously viewed as a miserly fee award.
In an interesting decision on both the merits and fee awards, the Second District, Division Eight reversed both determinations in Altman v. Azrilyan, Case No. B195061 (2d Dist., Div. 8 Sept. 12, 2008) (unpublished).
On the merits, the appellate panel determined that notary's conduct in notarizing certain documents was not an official proceeding authorized by lawâ so as to give her absolutely immunity under Civil Code section 47 and to provide a basis for the anti-SLAPP motion. Relying heavily on Garretson v. Post, 156 Cal.App.4th 1508, 1520-1521 (2007) (a case in which contributors Marc Alexander and Mike Hensley provided research to the winning in pro per plaintiff), the Court of Appeal determined that notarial activity âis more akin to a nonjudicial foreclosure sale [found to not give rise to an anti-SLAPP motion in Garretson]â and âdoes not require the exercise of discretion or the adjudication of a fact.â (Slip Opn., at p. 13.)
That brought the appellate panel to notary's cross-appeal of what she believed was an unduly low fee award. Was the fee award appealable? You bet, said the Court of Appeal. In this particular case, the anti-SLAPP motion win had resulted in a judgment of dismissal, such that the fee award was a postjudgment order that was expressly appealable under Code of Civil Procedure section 904.1(a)(2). Although not mentioned by the appellate panel, its result is supported by the First District, Division Four's recent decision in Melbostad v. Fisher, Case No. A119514 (lst Dist., Div. 4) (published on court's own motion on August 4, 2008). Melbostad reasoned that a judgment of dismissal as to some parties is a judgment so that a subsequent postjudgment fee order can be separately appealed under section 904.1(a)(2). (See our July 25, 2008 post for a further discussion of Melbostad.) However, because notary was no longer the prevailing party after reversal of her anti-SLAPP motion win on appeal, the fee order had to be reversed also. (See Gallimore v. State Farm Fire & Cas. Ins. Co., 102 Cal.App.4th 1388, 1401 (2002).)
Posted at 05:05 PM in Cases: Appealability, Cases: SLAPP | Permalink | Comments (0) | TrackBack (0)
Appealability Of Interlocutory Fee Awards Before Entry Of Underlying Judgment: No Need To Appeal The Interlocutory Order.
We Clarify a Good Question on Past Posts on Appellate Decisions in the Area.
Mark Hooshmand of The Hooshmand Law Group in San Francisco sent us a good question on our August 25, 2008 post discussion of Carr Business Enterprises, Inc. v. City of Chowchilla, Case No. F051999 (Aug. 20, 2008) (certified for partial publication; unpublished on pertinent fee award issue). He was curious about why fee grant and fee denial awards would be treated differently in some contexts unless there was no prior underlying judgment on the merits. Actually, Mr. Hooshmand has hit upon an important distinction that is worthy of repetition.
Before entry of judgment, orders either granting or denying fees are not appealable but can only be reviewed on appeal from the judgment. (See Code Civ. Proc., sec. 904.1(a)(2) [postjudgment order is appealable]; Doe v. Luster, 145 Cal.App.4th 139, 146-147 (2006) [interlocutory order granting or denying fees following a successful anti-SLAPP motion generally not appealable unless the motion resulted in a judgment or dismissal disposing of plaintiff’s action]; Lacey v. Bertone, 33 Cal.2d 649, 654 (1949) [separate appeal from order denying tax costs motion appealable only when order made after final judgment; if order made before final judgment, review is made upon appeal of the judgment]; Carr Business Enterprises, Inc., supra, Slip Opn. at 8-9 [order denying fees made before entry of judgment may only be reviewed on appeal from the judgment]; Renteria v. Cruz, Case No. B196359 (2d Dist., Div. 8 Aug. 18, 2008) (unpublished and reviewed on our August 18, 2008 post) [appeal dismissed where appeal taken from order denying fees motion where no judgment entered on matters impacting the appellant].)
Nonetheless, we would remind readers of two important caveats:
PR Burke, a decision reviewed in our June 7, 2008 post, does hold that where an initial judgment does determine a litigant’s prevailing party status and a subsequent order fixes the amount of fees, the appeal from the initial judgment subsumes the later order fixing the fee award amount. (See also Grant v. List & Lathrop, 2 Cal.App.4th 993, 998 (1992).)
Where an initial judgment is silent about costs and attorney’s fees, the failure to appeal a subsequent postjudgment order awarding costs and fees jurisdictionally bars review of the costs/fee award. (See, e.g., Norman I. Krug Real Estate Investments, Inc. v. Praszker, 220 Cal.App.3d 35, 46 (1990); Robinson v. City of Yucaipa, 28 Cal.App.4th 1506, 1517 (1994); Johnson v. Greenberg, Case No. B197894 (2d Dist., Div. 5 June 5, 2008) [unpublished].)
See also our June 6, 2008 post for Johnson v. Greenberg.
Posted at 04:29 PM in Cases: Appealability | Permalink | Comments (0) | TrackBack (0)
FEHA Prevailing Party Can Be Awarded Expert Witness Fees By Noticed Motion Even Though Cost Memorandum Deadlines Are Exceeded
Second District, Division Eight So Rules in Case Involving Non-Court Ordered Expert Witness Fees.
Government Code section 12965(b) specifies that, in retaliation claims under California’s Fair Employment and Housing Act (FEHA), “the court, in its discretion, may award to the prevailing party reasonable attorney’s fees and costs, including expert witness fees ….” So, the issue arises—are these expert fees more akin to routine costs (subject to 15 day cost memo deadlines) or discretionary nonroutine costs (subject to the longer appeal deadlines)? Not even close, the Second District, Division Eight rules—they are not governed by the more rigid routine costs deadlines.
In Anthony v. City of Los Angeles, Case No. B202457 (2d Dist., Div. 8 Sept. 11, 2008) (certified for publication), Plaintiff prevailed in a lawsuit against her Employer (City of Los Angeles) under FEHA. Plaintiff did not claim expert witness fees in her costs memorandum that was timely filed within 15 days of entry of judgment. Instead, 25 days later, Plaintiff filed a noticed motion for recovery of expert witness fees, much like a litigant would do for recoupment of attorney’s fees. Even though City Employer opposed the motion, the trial court awarded Plaintiff $23,770.91 in expert fees, an order challenged by City on appeal.
City lost its appellate challenges.
Presiding Justice Cooper—writing on behalf of a 3-0 panel of 2/8—affirmed.
Based on its view that FEHA expert witness costs are not “routine,” the appellate panel determined that they do not have to be claimed as costs within the shorter deadlines dictated by California Rules of Court, rule 3.1700(a)(1). Rather, expert witness fees not ordered by the court—just like attorney’s fees—are costs items that cannot be entered by the clerk and await a subsequent award in the discretion of the court upon a more protracted noticed motion. “We agree with the trial court that, in the absence of a specific rule applicable to the discretionary award of expert witness fees, a motion for the expert witness fees permitted under FEHA is timely if filed within the same time constraints as those applicable to a noticed motion for attorney fees.” (Slip Opn., at p. 5.)
City made a bizarre argument that expert fees were not awardable to the prevailing plaintiff. This contention went nowhere. Amendments to Government Code section 12965(b) plainly authorized the award of expert witness fees made by the lower court in this case. (See Olson v. Automobile Club of So. Cal., 42 Cal.4th 1142, 1149 n. 4 (2008).)
BLOG OBSERVATION—The reasoning in Anthony can be used to argue that attorney’s fees are “nonroutine costs” that must be bonded on appeal. (See our discussion of the topic in our July 11, 2008 post regarding bonding of attorney’s fees awards obtained by defendants.)
Posted at 08:11 AM in Cases: Civil Rights, Cases: Costs | Permalink | Comments (0) | TrackBack (0)
Civil Code Section 1717 Mandates Fee Award To Unqualified Winner On Contract Claim And Requires Reversal of Award Against Contract Nonsignatories
Second District, Division One Affirms and Reverses Portions of Fee Award Under Contractual Provision and Discretionary Fee-Shifting Statutes.
By now, it should be apparent that there are stark differences in how some fee-shifting statutes operate. Civil Code section 1717 mandates an award to a "prevailing party" under a contractual fees clause, although there is some discretion in determining who "prevails." California's Fair Employment and Housing Act (FEHA), Gov. Code, § 12989.2, and the federal Fair Housing Act (FHA), 42 U.S.C. § 3613(c)(2), allow courts at their discretion to award reasonable attorney's fees and costs to the prevailing party (other than California and the United States, under each respective scheme), although a prevailing party should normally recover fees unless special circumstances make an award unjust. (Hensley v. Eckerhart, 461 U.S. 424, 429 (1983).) Under all these statutes, the "prevailing party" determination is a predicate concern. Beyond that, however, a prevailing party under section 1717 is usually a signatory to a contract with a fees clause, unless special exceptions are in play. All of these principles led the Second District, Division One to affirm some parts and reverse other parts of fee awards in the case we next discuss.
In Cardenas v. Seven Palms Apts., Case No. B193241 (2d Dist., Div. 1 Sept. 10, 2008) (unpublished), three plaintiffs—husband (the only signatory under a residential apartment rental agreement), wife, and the Fair Housing Council of San Fernando Valley (FHC)—sued an apartment complex (the other signatory to the rental agreement) and its managers for violation of state and federal fair housing laws (FEHA and FHA), violations of California's Unruh Act, assault/battery, breach of the covenant of quiet enjoyment under the rental agreement, unfair business practices (a claim later withdrawn), negligent hiring and supervision, and intentional infliction of emotional distress. The main focus of the action was plaintiffs' claims that certain apartment rules relating to children and occupancy limits were discriminatory in nature. After a bench trial, a predominantly defense verdict was entered against all plaintiffs, except plaintiff wife was awarded $8,250.00 for violation of her quiet enjoyment and for emotional distress as well as $10,000 in punitive damages, all against two defendants (the apartment complex and a resident property manager).
Defendants filed a motion seeking $109,700 in fees under section 1717, FEHA, and FHA. Wife filed her own fee motion under the same statutes, seeking to recover $213,170.96 in fees and $6,125 in costs.
The trial court denied wife's motion, but granted defendants' motion for fees/costs under section 1717 and the rental agreement as against all three plaintiffs in the sums of $39,725 (fees) and $6,820.55 (costs). Plaintiffs also recovered $5,975 as their costs of suit.
Both sides appealed, with some modifications to the lower court's fee orders.
Retired Judge Neidorf, sitting by assignment on the Court of Appeal and assigned authorship of the cause, first addressed the propriety of the fee rulings under section 1717. Because wife was a clear winner on the quiet enjoyment claim arising under the rental fee agreement (the only contract-based claim), she "prevailed." It did not matter that she did not prevail on noncontract-based claims. (See Hsu v. Abbara, 9 Cal.4th 863, 876 (1995) [focus is on an evaluation of the parties' comparative litigation success on the contract-based claims].) Similarly, defendants were entitled to a fee recovery against husband, who was a signatory to the rental agreement with the fees clause. However, because the other nonsignatories could never have recovered fees from defendants had they prevailed on the contract claims, there was no legal basis for defendants to recoup fees from the two nonsignatories, the wife and FHC. (See Real Property Services Corp. v. City of Pasadena, 25 Cal.App.4th 375, 380, 382 (1994).) No special circumstances such as alter ego, guarantor, assignee, or third party beneficiary principles were present to invoke exceptions to the nonsignatory "no recovery" rule. (See Wilson's Heating & Air Conditioning v. Wells Fargo Bank, 202 Cal.App.3d 1326, 1332-1334 nn. 6-7 (1988).)
Next, appellate attention turned to the wife's claim that she was improperly denied fee recovery under FHA and FEHA. No abuse of discretion occurred in denying fees. Because the trial record backed up the trial court's conclusion that plaintiffs were not evicted for engaging in any protected activity, none of the plaintiffs prevailed under the federal or state fair housing fee-shifting provisions.
Finally, the appellate panel considered defendants' contention that they should have been awarded more than $39,725 in fees of the $109,700 sought-after amount. Only the husband was subject to fee exposure, because wife won the quiet enjoyment claim and FHC was not a party to the rental agreement. Although articulating no reason other than that the requested amount was "absolutely out of bounds," the trial court's discretion was sustained on reducing the defense fee request against husband.
The end result is that husband was liable for defense fees in having lost the quiet enjoyment claim, but no similar exposure was extended to wife or FHC. Wife was found to have prevailed on the quiet enjoyment claim, so that she could not be liable for fees under section 1717. (However, because she was not a signatory to the lease, she had no ability to recoup fees as the winner.)
Posted at 09:57 PM in Cases: Civil Rights, Cases: Prevailing Party, Cases: Section 1717, Cases: Special Fee Shifting Statutes | Permalink | Comments (0) | TrackBack (0)
Tail that Wags the Hog
Bratz dolls, it would appear, are material girls.
The September 10, 2008 Los Angeles Daily Journal leads with this story: "Doll Case Legal Services Costing a Pretty Penny." Jason W. Armstrong, the Daily Journal Staff Writer, reports, "[t]he combined legal fees of MGA Entertainment and rival Mattel Inc. in the ongoing Bratz doll case have risen to at least $93 million so far, making the litigation among the costliest in the state."
Lest one leap to an unsupported conclusion, Mr. Armstrong points out that this is far from the most expensive litigation ever. Earlier this week, Coughlin Stoia Geller Rudman & Robbins in San Diego received court approval for $688 million in attorney's fees for its work on the $7.2 billion settlement in the Enron litigation.
In a perfect world, $93,000,000 might go some way towards curing malaria in Africa, or providing school lunches in California. But Bratz dolls have needs that must not be overlooked, and evidently a hefty litigation budget must be included among those needs.
Interestingly, the fee amounts were not disclosed in the ordinary course of discovery in the Bratz doll case. Instead, the Daily Journal reports that MGA revealed the fee information when it filed suit against several of its insurance carriers for – you guessed it – failing to pay the company's attorney's fees. And Mattel's fee costs were disclosed by a stock analyst taking part in a conference call with company executives. You can't make this stuff up.
Mr. Armstrong quotes Frederick "Rick" L. McKnight of Jones Day's LA office as saying the fees incurred thus far are "breathtaking."
"Breathsucking" might be more like it.
Inadequate Fee Substantiation: Winner In Attorney Fee Award Fails to Rebut Substantial Opposition Showing Glitches in the Substantiation Process
First District, Division Two Reverses Fee Award For Further Remand Proceedings to Scrutinize Substantial Fee Award.
In our “Cases: Fee Substantiation” category, we have reviewed past decisions showing that California has a fairly “loosey goosey” standard for substantiating the amounts claimed in attorney’s fee petition requests. However, the next case illustrates that an unrebutted detailed opposition on the substantiation issue can help even an appellate court to conclude that the trial court abused its discretion in awarding substantial fees to the prevailing party.
Rossa v. D.L. Falk Construction, Inc., Case No. A116151 (1st Dist., Div. 2 Sept. 9, 2008) (unpublished) involved a contest over the reasonableness of requested attorney’s fees, not entitlement—there was a clear contractual fee clause resolving the entitlement issue in plaintiffs/respondents’ favor.
The germane facts go this way. Disgruntled homeowners sued their prime contractor on numerous theories, after contractor abandoned the project and owner completed the project on their own. Owners sought to recover about $688,272 in damages. Owners settled an encroachment claim based on a missurvey by another defendant, prior to trial, for $185,000 (way less than their expert’s calculations), with the settlement being confirmed as a good faith settlement that would be “credited” against any ultimate judgment in owners’ favor. At the conclusion of evidence in a jury trial, homeowners dismissed three warranty claims. A jury found for owners and against contractor, on a breach of contract claim, in the sum of $100,000. However, the jury also returned a defense verdict in favor of contractor and against owners on a negligence (construction defect and delay) count.
Owners were awarded $45,344 in routine costs (unopposed by contractor). Owners then sought $681,390.15 in attorney’s fees and other expenses, broken down as the $45,344 in routine costs, $133,250.66 in costs “not on cost bill,” $500,170.49 in trial attorney fees, and $2,625 in fees by expert witness Richard Pearl (who authored the CEB treatise on “California Attorney Fee Awards” and provided a declaration to owners on the propriety of hourly rates charged by owners’ successful attorneys). Significantly, no attorney time sheets or other detailed records were submitted with the moving papers.
Contractor decided to devote a lot of resources to its opposition to owners’ fee request. They opposed on these grounds: (1) owners had failed to meet their burden of proof necessary to support a fee award; (2) the amount must be reduced because owners had limited success; (3) the amount must be reduced because owners did not prevail on the encroachment claim against contractor; (4) the amount must be reduced because owners lost the warranty and negligence claims; and (5) the amount must be reduced because there were litigation inefficiencies, over-complication of the trial, and duplicative efforts. Contractor submitted a lengthy opposition memorandum (citing Mr. Pearl as support on some occasions) and a 2000-page declaration from one of contractor’s counsel, which the appellate court dubbed as possibly being “the longest declaration in the history of California jurisprudence” (Slip Opn., at p. 10)—showing why substantial amounts of time had to be apportioned out to “losing” encroachment or negligence claims.
In reply, owners countered with a 6 ½ page memorandum and three page attorney declaration. Not much attention was devoted toward controverting the analysis in contractor’s opposition brief. However, owners did file a supplemental declaration with some billings, but billings that were so completely redacted that one could not even discern the nature of the services provided.
The lower court hearing was an interesting affair, although it certainly would not have been a good predictor of the ultimate result in the court below. The trial judge agreed that the supplemental billing information was uninformative, because it was redacted so severely. The lower court was also confused about why owners’ attorneys did not submit more meaningful information in light of defense challenges to the fee request.
Care to guess what happened next? (I will bet some litigators will get it right.) The trial judge awarded “full monty” fees and costs to owners in the sum of $681,390.15. He found that apportionment should “not be utilized where the action deals only with a pecuniary claim, and not a matter dealing with the public interest” and that it was inappropriate “to penalize plaintiffs because their attorney utilized multiple theories of defendant’s liability to recover damages but did not recover on each cause of action.”
The First District, Division Two’s opinion—a 3-0 decision authored by Justice Richman—is must reading for practitioners about the type of fee substantiation and opposition to the amount of a fee request that will persuade justices at the appellate level to overturn a suspect fee award.
Even under the deferential abuse of discretion standard, the appellate panel found that the trial judge actually ignored governing law in awarding everything that owners requested in fees despite a credible opposition from contractor. A reasonable attorney’s fee is what must be awarded, not the amount claimed or theoretically owing by the client to the attorney under the retainer or contingency fee agreements. (See Vella v. Hudgins, 151 Cal.App.3d 515, 521 (1984) [“it does not follow that the fees awarded must necessarily equal the full amount of the client’s obligation when the contract is enforceable.”].)
The first flaw with the trial court’s perspective, wrote Judge Richman, is the assumption that a lodestar approach only applies in “public interest” settings. Wrong, citing to PLCM Group, Inc. v. Drexler, 22 Cal.4th 1084, 1095 (2000) as well as Mr. Pearl’s own CEB treatise. In the situation before it, the appellate court could not discern whether the trial judge eliminated duplicative, wasteful or other noncompensable work—the specter of which was raised by the opposition—because of its erroneous “public interest” mindset.
It was also mistaken to not apportion under the circumstances. Owners’ counsel acknowledged that the contract case and the negligence case were different in nature. However, the germane contractual fee clause was narrow in nature, only extending to contractual “interpretation/enforcement” disputes rather than broader tort disputes arising between the parties. So, apportionment was a necessary task for owners in requesting fees.
Owners tried to beat apportionment by a very familiar retort—issues were so “interrelated” such that apportionment was impracticable. The main defect in this contention was that owners did not just lose on variant theories, but actually lost disparate claims. Where separate claims are won and lost, apportionment must be undertaken, Justice Richman reasoned on behalf of the 1/2 panel. (See Sokolow v. County of San Mateo, 213 Cal.App.3d 231, 248, 250 (1989); Bell v. Chula Vista Unified Sch. Dist., 82 Cal.App.4th 672, 689 (2000).)
The Court of Appeal next addressed the claim for $133,250.66 in “expert witness fees and costs.” Although the contractual fee clause would allow for recoverability of these costs, owners failed to plead and prove them as damages at trial, deficiently claiming them as costs after judgment. (See First Nationwide Bank v. Mountain Cascade, Inc., 77 Cal.App.4th 871, 878-879 (2000); Jones v. Union Bank of California, 127 Cal.App.4th 542, 551 (2005); Hsu v. Semiconductor Systems, Inc., 126 Cal.App.4th 1330, 1341 (2005); Carwash of America-PO LLC v. Windswept Ventures No. 1, LLC, 97 Cal.App.4th 540, 544 (2002).) Beyond that, many of the claimed non-expert costs had no support under the Code of Civil Procedure routine costs provisions, except for “some support services and paralegal time … includable within an award of attorneys’ fees ….”
(See City of Oakland v. McCullough, 46 Cal.App.4th 1, 7 (1996); see also our June 4, 2008 post about recovering paralegal fees as attorney’s fees in certain contexts.)
End result in Rossa? Reversed and remanded for further proceedings. Owners lost their $681,000 fees/costs award, and are likely to recover substantially less on remand (especially since the original trial judge is retired and the matter likely will be assigned to a new trial court having mainly the appellate decision to guide it on remand).
BLOG FAVORITE QUOTE IN DECISION—Owners criticized one of contractor’s attorney declarations for drawing “questionable statistical conclusions.” Justice Richman colorfully retorted: “It reminds one of Mark Twain’s recitation that there are ‘lies, damn lies and statistics.’” (Slip Opn., at p. 10 n. 6.)
Posted at 10:32 PM in Cases: Allocation, Cases: Costs, Cases: Substantiation of Reasonableness of Fees | Permalink | Comments (0) | TrackBack (0)
Borrower Prevailing On Contract Claim Entitled To Fee Award Even Though He Did Not Prevail On Noncontractual Claims
Fourth District, Division One Reverses Fee Denial Based on Hsu v. Abbara.
We survey unpublished decisions because they frequently reinforce distinctions that get lost in translation because of the diffuse opinions on the “prevailing party” concept in California attorney’s fees award jurisprudence. The next case reminds us that the “prevailing party” determination means that the proper focus must remain on results reached under the contract-based claims, not the contract winner’s success or failure on noncontract claims.
FDIC v. Dintino, Case No. D051447 (4th Dist., Div. 1 Sept. 9, 2008) (unpublished) involved a borrower who had prevailed against the lender on a breach of contract cause of action. However, borrower did not do so well on lender’s unjust enrichment claim, with lender recovering over $415,000 on its unjust enrichment claim. Borrower moved for attorney’s fees of $41,285.98 and $7,000 in costs based on a fee clause in the promissory note, contending he was the prevailing party under Civil Code section 1717 for having been the victor on bank’s contract claim. The trial court denied the fee request, explaining that bank was the prevailing party by having “achieved its main litigation objectives.”
Borrower appealed both the merits and the fee denial. He lost the merits appeal, but the Fourth District, Division One reversed the order refusing to grant borrower an award of attorney’s fees.
Justice McDonald—writing for a 3-0 panel—found that borrower was entitled to an award of reasonable attorney’s fees for prevailing on the contract claim. Hsu v. Abbara, 9 Cal.4th 863, 873-874 (1995) [one of our Leading Cases] noted that in 1987 the Legislature amended Civil Code section 1717 to replace the term “prevailing party” with “prevailing party on the contract,” “evidently to emphasize that the determination of prevailing party for purposes of contractual attorney fees was to be made without reference to the success or failure of noncontract claims.” Because a trial court has no discretion to deny fees to a clear winner (such as borrower on bank’s contract claim), borrower was entitled to a fee recovery.
However, the appellate panel would not simply award the requested $48,285.98 in fees and costs on a carte blanche basis. Justice McDonald, on behalf of the 4/1 panel, remanded to the trial court with directions to (1) award reasonable fees; and (2) apportion fees and costs between those expended against the contract claim and those incurred in defending the noncontract causes of action. Also, borrower was awarded reasonable fees for prevailing on appeal.
BLOG OBSERVATION #1—The Court of Appeal did cite to the leading apportionment cases, which we repeat here: PM Group, Inc. v. Stewart, 154 Cal.App.4th 55, 68-69 (2007); Erickson v. R.E.M. Concepts, Inc., 126 Cal.App.4th 1073, 1083-1086 (2005); Akins v. Enterprise Rent-A-Car Co., 79 Cal.App.4th 1127, 1133 (2000); Abdallah v. United Savings Bank, 43 Cal.App.4th 1101, 1111 (1996); Reynolds Metals Co. v. Alperson, 25 Cal.3d 124, 129 (1979) [another one of our Leading Cases].
BLOG OBSERVATION #2—Dintino also had two merits rulings of interest: (1) it expressly disagreed with the conclusion reached in Sierra Craft, Inc. v. Magnum Enterprises, Inc., 64 Cal.App.4th 122 (1998) that a summary judgment denial can only be reviewed by extraordinary writ petition, determining that the denial can be challenged upon review of the ultimate judgment; and (2) it decided that the “discovery accrual” rule applied to borrower as far as determining when the applicable three-year statute of limitations (Code Civ. Proc., sec. 338, subd. (d)) began running on lender’s unjust enrichment claim.
Posted at 10:06 PM in Cases: Allocation, Cases: Section 1717 | Permalink | Comments (0) | TrackBack (0)
Fifth Time Is Not The Charm For Losing Homeowner: HOA Homeowners Awarded $47,335.72 In Costs And $264,549.60 In Attorney’s Fees
Fourth District, Division Three Sustains Fee Award Against Nonvictorious Homeowner Under Civil Code section 1354(c).
Civil Code section 1354(c) provides: “In an action to enforce the governing documents [such as homeowner association CC&Rs], the prevailing party shall be awarded reasonable attorney’s fees and costs.” Because statutory provisions present issues of law for de novo appellate review, homeowner—who had lost five prior appeals—went 6-0, when our local Santa Ana-based appellate court affirmed an award of $47,335.72 in costs and $264,549.60 in attorney’s fees after the trial court granted a summary adjudication against homeowner (finding that a CC&R amendment was valid) and after homeowner lost a bench trial for claimed incidental “damages” of $400,000 that he suffered before the effective date of the amendments. (Appellant had named 120 fellow members in the HOA as defendants.)
In Tezak v. Blanco, Case No. G038314 (4th Dist., Div. 3 Sept. 9, 2008) (unpublished), Justice Ikola—writing for a 3-0 panel—found that appellant’s “damages” claim was tantamount to a claim requesting enforcement of the CC&Rs. The panel found that the reasoning in Chee v. Amanda Goldt Property Mgt., 143 Cal.App.4th 1360, 1380-81 (2006) was apt, which also found that an action for breach of contract was equivalent to an action to enforce the CC&Rs.
Justice Ikola also found no abuse of discretion in sustaining the fee award at a practical level. Because defendant homeowners clearly prevailed in the action, no error occurred in affirming the entire award. (See Heather Farms Homeowners Assn. v. Robinson, 21 Cal.App.4th 1568, 1574 (1994).) Beyond that, losing appellant had failed to comply with the alternative dispute resolution procedure required for homeowner-HOA disputes—which involve solely declaratory, injunctive, or relief writ below small claims limits of $5,000-$7,500—a factor that can be weighed by a trial judge in awarding attorney’s fees. (Code Civ. Proc., sec. 1369.580.)
Posted at 06:08 PM in Cases: Homeowner Associations | Permalink | Comments (0) | TrackBack (0)
· The category: disposition of civil appeals—Courts of Appeal.
The results: 66% -- full affirmance;
The results: 18% on a statewide basis.
(Lowest civil publication rate – Fourth District, Division Two – 4%;