CALIFORNIA ATTORNEY'S FEES

Time 2021-06-04 21:14:32

Web Name: CALIFORNIA ATTORNEY'S FEES

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2008-2009-2010-2011-2012-2013-2014-2015-2016-2017-2018 Marc Alexander & William M. Hensley Positive Gains Were Outweighed By Harm To Bank’s Reputation And Its Years Of Struggles With Regulators/Federal Criminal Prosecutors. The “tort of another doctrine” is a nuanced one allowing attorney’s fees to be awarded as damages in certain situations. Fees under this doctrine may be mitigated by consideration of special benefits that the alleged tortfeasor brought to the positive side of the suing plaintiff. Gateway Bank, F.S.B. v. Metaxas, Case No. A158793 (1st Dist., Div. 2 June 3, 2021) (published) establishes that the special benefits “defense” is driven by equities, such that simply an arithmetic consideration of positive benefits must be balanced against negative benefits which can consist of both monetary and nonmonetary factors. What happened in this case is that defendant/appellant, the president and CEO of plaintiff Gateway Bank, was sued by the bank based on certain transactions with a third party (with that third party using Bank as a warehouse lender) after the bank ran into trouble in the Great Recession. Appellant pled guilty to criminal bank fraud charges, with the Bank battling numerous regulator and federal criminal prosecutor efforts. Eventually, some positive monetary gain came from the third-party transaction. The Bank sued for fraud, fraudulent omission, and breach of fiduciary duty, winning these claims against appellant. Then, on the capital loan transaction, an appointed referee found damages of $382,154, $250,000 being “tort of another” damages. Appellant argued that the positive “special benefits” required a finding that tort of another fees should not be allowed. The First District, Division 2 rejected the challenge. It found that the “special benefits” defense in the tort of another area was equitable based such that both monetary and non-monetary considerations should be evaluated, as they were by the referee. Here, the positive side was outweighed by the harm to bank’s reputation, as well as expenditure of financial resources to battle regulators, federal criminal prosecutors, and indemnify appellant in certain actions. Defendants Failed To Properly Appeal Postjudgment Fees Award, As Well As Not Presenting Adequate Appellate Record. In Hernandez v. Princess Windows, LLC, Case No. B302750 (2d Dist., Div. 2 June 1, 2021) (unpublished), plaintiff employee won wage/hour and rest break claims/penalties against defendant, totaling $58,861. Based on fee-shifting statutes, another $75,105 in attorney’s fees were awarded to plaintiff. Defendant never appealed the subsequent fee award. That was bad, given the court had no jurisdiction to entertain a review of this order. Beyond that, defendant never provided the fee award as part of the appellate record and a prior motion to augment the record was denied. In sum, the fee award was affirmed. Inordinate Fee Distributions, Clear Sailing Provisions, And Reverter Of Reduced Fees Award To Defendant Were Storm Warnings In This Particular Case. Briseno v. Henderson (ConAgra Foods, Inc.), Case No. 19-56297 (9th Cir. June 1, 2021) (published) is a must review for any clients and practitioners in the class action area. It certainly shows the Ninth Circuit will use In re Bluetooth Headset Products Liab. Litig., 654 F.3d 535 (9th Cir. 2011) [discussed in our August 25, 2011 post] to judge class action settlement fee terms at the post-certification stage (even though Bluetooth was at the pre-certification stage). Numerous “red flags” led to a reversal and remand of the fee award in this case, with the Ninth Circuit indicating that the presence of these factors, singularly or in the aggregate, would not lead to a reversal unless the circumstances dictate otherwise—as they did in this case. The class action case involved a challenge to a natural labeling of Wesson Oil which was alleged to be deceptive. The parties reached a small per unit of oil bottle settlement with the class, with the parties valuing the settlement at around $95 million, $67 million for cash payouts and $27 million for injunctive relief—with the Ninth Circuit determining that the injunctive relief valuation was virtually worthless later on in the published opinion. However, the actual “redemption” results showed only $8 million was shelled out, with $7 million going to class counsel for fees and costs (net result: $1 million to the class). There were other areas of the settlement which showed a hefty settlement was reached with the defense at the largesse for class counsel, such that the result had to be overturned for a restudy. The Ninth Circuit, in strong terms, reversed and remanded. Three factors primarily led to this result: (1) plaintiffs’ counsel was going to receive a disproportionate distribution of the settlement, roughly 90%, despite the small “redemption rates” and the worthless injunction evaluation; (2) the parties agreed to a “clear sailing clause,” which could be neutral, but was not here given ConAgra’s settlement negotiations indicating they would not pay anywhere near the set upward “optics” established in the overall compromise (put another way, it was banking on a low “redemption” rate); and (3) the settlement contained a “reverter” where any reduced fees to class counsel went back to ConAgra, another indication of collusion. Litigant Will Get Another Shot At It. In In re Marriage of Orr and Traina, Case No. H046090 (6th Dist. June 1, 2021) (unpublished), a litigant won a $4,500 attorney’s fees award as a sanction under Family Code section 271 against the other side. That was reversed and remanded, without prejudice, because litigant only claimed the fees under CCP § 128.7. Litigant got another shot at it upon remand. The Significant Public Benefits Achieved In This Case Were Very High – Impacting Over 7,500 Water District Customers Facing An Unconstitutional Rate Increase Of Approximately 200%. In KCSFV I, LLC v. Florin County Water District, Case No. C088824 (3rd Dist., May 28, 2021) (published; fee discussion unpublished), plaintiffs succeeded in their petition for writ of mandate and complaint for declaratory and injunctive relief – claiming Water District had violated Proposition 218 (approved by California voters in 1996 to restrict the ability of state and local governments to impose taxes and fees) with its December 2016 water rate increase. Plaintiffs then moved postjudgment for, and were awarded, $66,345.50 in Code of Civil Procedure § 1021.5 attorney fees. Defendants appealed both the judgment and postjudgment fees order, and the Third District affirmed. As to the fees, the panel disagreed with each of defendants’ arguments, and found plaintiffs met their required showing under § 1021.5 and were entitled to fees. Plaintiffs’ action vindicated an important public right and conferred a significant benefit on a large class of persons as over 7,500 Water District customers, facing an unconstitutional rate increase of approximately 200%, benefited directly from plaintiff’s action. Because the significant public benefits achieved were very high, there was no abuse of discretion in the trial court awarding fees where plaintiffs’ personal benefit outweighed the litigation costs. (Los Angeles Police Protective League v. City of Los Angeles, 188 Cal. App.3d 1, 10 (1986).) Finally, defendants argued that the trial court abused its discretion by failing to reduce plaintiffs’ fees for redactions, block-billing, and because plaintiffs did not prevail on every legal theory they advanced. Again, the Third District found no abuse of discretion – disregarding defendants’ conclusory arguments not supported by reasoning. (United Grand Corp. v. Malibu Hillbillies, LLC, 36 Cal.App.5th 142, 153 (2019).) The Defense Relied On California Procedural And Substantive Law At The Trial Court Level, Such That Invoking Hawaii Law Was Unfair Given The Settlement Agreement Had No Fee Clause. McLaughlin v. Machen, Case No. H045869 (6th Dist. May 28, 2021) (unpublished) was an interesting choice of law case where plaintiffs lost certain claims against defendant based on California’s statute of limitations, with the defendant awarded $81,705 in attorney’s fees under Hawaii law (which has a statute allowing prevailing party fees for claims like the one raised) even though a prior settlement between the parties, with a Hawaii choice of law clause, had no express contractual fees provision. The Sixth District reversed the fee award. It did so on unfairness grounds: the defense had relied on California procedural and substantive law, with Hawaii having a longer statute of limitations on the primary claim versus the shorter California limitations period which led the lower court to find the claims were time barred. This unfairness distinguished the situation from a somewhat similar fact pattern involving a Swiss choice of law clause in Applera Corp. v. MP Biomedicals, LLC, 173 Cal.App.4th 769 (2009), reinforced by the fact California law would not have allowed a fees award given the existence of no fees clause in the settlement agreement. BLOG OBSERVATION AND KUDOS: As recently announced on the courts.ca.gov website, Justice Ikola—who authored Applera—is retiring from the 4/3 DCA bench effective July 1, 2021 (where he served for 18 ½ years) after a 47-year legal career including a prior seat on the Orange County Superior Court bench. Co-contributor Mike, who attended an OCBA seminar earlier this year, believes Justice Ikola will be retiring to Michigan. A little earlier, his colleague Justice Aronson was announced as retiring from the 4/3 DCA bench effective June 15, 2021 (where he served for about 20 years) after a 46-year legal career including a prior seat on the Orange County Superior Court bench, too. We wish them both well, and thank them for their service on the bench—co-contributor Mike has argued before them often over the years. SLAPP Fee/Costs Request Was Reasonable, Rejecting That Under $30,000 Should Be Awarded. On May 27, 2021, a Los Angeles County Superior Court judge ruled that Rep. Maxine Waters should be awarded $53,590 in attorney’s fees and costs under a mandatory SLAPP fee-shifting provision for SLAPP-ing a defamation action brought against her by political foe Joe E. Collins III, according to an on-line post by City News Service. The judge found that Rep. Waters did not act with malice towards Mr. Collins. The defense requested a fees/costs award of under $30,000, but the lower court found that the requested hourly rate and work effort, both, were warranted. Fees Were Justified Based On Broad Contractual Fees Clause. In Peng v. F.M. Tarbell Co., Case No. B307484 (2d Dist., Div. 2 May 27, 2021) (unpublished), a plaintiff—a licensed real estate agent—lost a fight on whether he was an employee, versus an independent contractor, both at a Labor Commissioner and a superior court de novo level. The problem for plaintiff was that there was a broad contractual fees clause in an independent contractor agreement which encompassed “any action, proceeding, or arbitration” between plaintiff and Tarbell “arising from or related to the agreement.” The lower court awarded Tarbell contractual fees of $72,519.03, the full ask. (Of interest, plaintiff was disputing $20,168.01 in unpaid wages under Labor Code provisions.) The fee award was affirmed based on the broad contractual fees clause. Even An Objective Whitley Analysis Justified The Lower Court Decision, Especially Where The Ultimate Award Was Less Than The Requested $240,000 In Fees. Under our category “Private Attorney General,” we have posted on numerous decisions on fee awards under CCP § 1021.5. Many involve the costs/benefit “financial prong” analysis required under Conservatorship of Whitley, 50 Cal.4th 1206, 1214-1215 (2010) [our Leading Case No. 14]. Here, the trial court decision to order a reduced fee request was warranted based on an objective, costs-benefit analysis under Whitley. In Gomes v. Mendocino City Community Services Dist., Case No. A160420 (1st Dist., Div. 4 May 27, 2021) (unpublished), plaintiff obtained partial success in his challenge to a groundwater-extraction cap that the District applied to his property, in a published decision. Plaintiff had some draconian options to pay (likely $141,000) or to abandon with a reducing to property value up to $59,000. After his win, plaintiff moved to recover $240,000 in section 1021.5 fees, with the lower court awarding $129,000 to plaintiff as against the District. District’s appeal on the Whitley financial prong did not prevail. Under an objective “costs-benefit” analysis, plaintiff demonstrated enough of a range to show that his expenditure in fees deserved section 1021.5 compensation, especially given the uncertainties in outcome: plaintiff’s potential upside was $141,000 if he did not decide to abandon his well as a source of groundwater or at least a $59,000 property loss if he did abandon much less puruse an extraction permit including possibly more loss of property value. Given these ranges of uncertainty, the section 1021.5 fees expenditures certainly were way beyond what plaintiff could have recovered personally in this case—given the analysis is not a post facto review. But Appeal Was Denied On The Merits. In Ko v. Liang, Case No. B303813 (2d Dist., Div. 8 May 27, 2021) (unpublished), appellants appealed a fee award based on failing to satisfy a pre-condition mediation requirement, something decided long ago. Ultimately, appellant lost on the merits. However, respondent argued that the appeal was untimely based on a typo in the notice of appeal, even though this was corrected in the Civil Case Information Statement which must be filed in the appellate court. This typo did not mean the appeal could not go forward because it was untimely—after all, notices of appeal are liberally construed and the error was corrected in the subsequent Statement. With that said, appellant lost on the merits. $412,500 Fee Award Under Escrow Fees Contract Clause Affirmed On Appeal. In Kim v. Lee, Case Nos. B295665/B303317 (2d Dist., Div. 7 May 26, 2021) (unpublished), plaintiff buyers won a fraudulent concealment claim against defendant seller/affiliates. The buyers then moved for an attorney’s fees award under a broad escrow fees clause containing “arising out of” language relating to disputes between the two sides. The lower court awarded buyers $412,500 out of a requested $591,936 in fees (disregarding a positive multiplier request). The appellate court affirmed the fee award based on a de novo review of the contractual fee clause. This sort of broad language has been held to cover torts in instructive earlier cases, so there was no reason to find otherwise given the similarity of the fees clause language to clauses in those previous published appellate court decisions. (See, e.g., Lerner v. Ward, 13 Cal.App.4th 155, 160 (1993); Xuereb v. Marcus Millichap, Inc., 3 Cal.App.4th 1338, 1344 (1992).) Where Section 998 Offer Did Not Expressly Reference Dismissal Of Action, Entry Of Judgment By Accepting Offerees Was Proper. In our April 30, 2021 post, we discussed Arriagarazo v. BMW of North America, LLC, Case No. C090980 (3d Dist. May 26, 2021) (published), which was unpublished when first issued on April 30, 2021. It held that a section 998 acceptance contemplates entry of judgment, as opposed to a dismissal of the action, unless the 998 offer expressly indicates dismissal as a condition otherwise. The Third District certified this opinion for publication on May 26, 2021. About $2.2 Million In Fees, Plus Multiplier, Denied To Plaintiff In Supplemental Fee Request. Willis v. L.A. County Waterworks Dist. No. 40, Case No. F082766 (5th Dist. May 26, 2021) (unpublished) is an example of where a carefully crafted fees clause in a settlement agreement may govern supplemental fee requests by a claiming party. This had to do with a plaintiff/class representative in the Antelope Valley Groundwater cases which, previously, had been awarded pre-settlement fees of about $3.8 million. The parties reached a settlement agreement allowing for post-judgment fees under very specific circumstances. Plaintiff moved for supplemental fees of $1.558-2.143 million plus a positive multiplier. However, both the trial and appellate courts agreed the supplemental fee request should be denied because the predicate “triggers” for a supplemental fee request were not met, per the settlement agreement fees clause. No extrinsic evidence was introduced, such that the review of the “triggers” was a de novo look-at, and the fees clause did not allow for supplemental fee recovery. Sophisticated Client, An Attorney, Participated In MFAA Arbitration Such That Failure To Provide Notice Was Not Jurisdictional. After participating in a Mandatory Fee Arbitration Act (MFAA), Bus. Prof. Code, §§ 6200-6206, fee arbitration and losing to the tune of about $13,000, ex-client—a licensed attorney--appealed a confirmed fee award in favor of her ex-attorneys. The award was confirmed on the merits in Knitter Knitter, LLP v. Du Par, Case No. A157660 (1st Dist., Div. 3 May 26, 2021) (unpublished). However, she did raise the issue that her former attorneys’ failures to provide a notice to arbitrate under B P Code § 6201(a) necessarily required a dismissal of the arbitration proceeding. Not so, said the appellate court. The failure to give this notice only makes dismissal a discretionary, not mandatory decision. Relevant to the decision is whether the client is sophisticated and aware of the arbitration rights even in the absence of notice. (Richards, Watson Gerson v. King, 39 Cal.App.4th 1176, 1180 (1995).) Here, ex-client was an attorney and fully participated in the arbitration during which the ex-attorneys’ client action was stayed. As such, no dismissal was required, as well as no prejudice shown given that ex-client was an attorney and participated in proceedings below. The Trial Court Improperly Cut Off Fees Incurred After Plaintiffs’ Rejection Of The § 998 Offer Instead Of Engaging In A Lodestar Analysis Of The Entire Case Pursuant to Civil Code § 1794(d). In Reck v. FCA US LLC, Case No. A157966 (1st Dist., Div. 1 May 24, 2021) (published), the trial court awarded attorney fees of only $30,237 ($20,158 lodestar with a .5 multiplier) out of a requested $187,247 ($124,831 lodestar with a .5 multiplier) to Song-Beverly plaintiffs. The trial court determined the reduction was appropriate because plaintiffs beat defendant’s pretrial Code of Civil Procedure § 998 offer by only $8,500 during a mandatory settlement conference two days after trial began, and had incurred almost $100,000 in fees between the time they rejected the § 998 offer and ultimately settled. The trial court also excluded fees incurred by plaintiffs for two unsuccessful motions. Plaintiffs appealed. The 1/1 DCA reversed and remanded – finding the trial court abused its discretion by failing to base its award – pursuant to the Song-Beverly Act (California’s Lemon Law) – on “actual time expended” for hours that were “reasonably incurred.” (Civil Code § 1794(d).) The trial court improperly cut off all attorney fees incurred after plaintiffs’ rejection of the § 998 offer instead of properly engaging in a lodestar analysis of the entire case – one where the final settlement represented more than a 10% increase over the § 998 offer and also resulted in a .5 multiplier being added to plaintiffs’ recovery. Contractor Failed To Support Its Roughly $570,000 Fees/Costs Request With Underlying Documentation And Testimony, And Made No Attempt To Allocate Fees Between Compensable And Noncompensable Claims. In Paul Ryan Associates v. Catlin Specialty Ins., Case No. A156755 (1st Dist., Div. 5 May 21, 2021) (unpublished), contractor prevailing on summary judgment, against contractual indemnity claims, appealed the trial court’s order denying its motion for roughly $570,000 in contractual prevailing party attorney fees and costs. The 1/5 affirmed – finding the trial court acted well within its discretion. Contractor – if it were entitled to fees (something the panel did not determine) – “utterly failed to satisfy its burden of demonstrating a reasonable fee award.” Contractor made no attempt to estimate or apportion the fees/costs incurred in defending against the contractual indemnity claims from fees it incurred defending against other claims made by other parties involved in the litigation. Rather, contractor divided the litigation into 3-month quarterly periods of time, separately calculated the amount of fees and costs incurred during each quarterly period in which the parties asserting the indemnity claims were involved in the litigation, and divided the total by the number of parties involved in the litigation at the time. Additionally, contractor did not submit billing records, provide attorney testimony as to the number of hours worked on the contractual indemnity claims, nor provide any other underlying data that would assist the trial court in making a determination as to the reasonableness of the fees requested. All Of Tenant’s Claims Stemmed From Protected Activity Pursuant To Litigation Privilege. Tenant sued landlord – claiming the content and service of a 3-Day Notice to Cure constituted breaches of covenants of good faith and fair dealing, quiet enjoyment, were defamatory, and interfered with the contractual and economic relationship between tenant and tenant’s domestic assistant (for whom plaintiff had attempted to sublet space in Landlord’s home). Landlord successfully SLAPPed back, claiming plaintiff’s causes of action stemmed from protected petitioning activity, and was awarded $4,890 in attorney fees and costs – consisting of $4,800 in attorney fees, a $60 filing fee, and $30 for court reporter fees. Plaintiff appealed. The 4/3 DCA affirmed in Escamilla v. Encarnacion, Case No. G059276 (4th Dist., Div. 3 May 21, 2021) (unpublished). In a 3-0 opinion authored by Justice Moore, the panel found that both the service and content of the Notice were activities protected, under Civil Code § 47, pursuant to the litigation privilege – which applies to “any communication (1) made in judicial or quasi-judicial proceedings; (2) by litigants or other participants authorized by law; (3) to achieve the objects of the litigation; and (4) that have some connection or logical relation to the action.” (Silberg v. Anderson, 50 Cal.3d 205, 212 (1990).) Because the only acts challenged in plaintiff’s complaint were the service of the notice and content of the notice, all of plaintiff’s causes of action arose from protected activity. As such, plaintiff was unable to demonstrate a probability of prevailing on the merits of his claims. As to the fees, plaintiff argued that defendant’s attorney charged an unreasonable hourly rate and failed to fully document the fees. The panel disagreed – finding the award was supported by declaration detailing the fees, billing rates and hours. Additionally, plaintiff provided no proof that the hourly rate was unreasonable. Test Is Whether The SLAPP Motion Would Have Been Granted Prior To Dismissal. We have run into this issue before. A plaintiff dismisses his/her case before a SLAPP motion is heard. Does that preempt a mandatory SLAPP fees motion? Answer: Not at all, according to the next case—the lower court must determine if the SLAPP motion would have been granted; and, if so, fees and costs should be awardable. Weischadle v. Charboneau, Case No. B304032 (2d Dist., Div. 7 May 20, 2021) (unpublished) involved a situation where a plaintiff dismissed her complaint while a SLAPP motion was pending. The lower court then entertained a defense motion for mandatory SLAPP fees, awarding $38,550 in attorney’s fees and $2,498.55 in costs against plaintiff. That result was affirmed on appeal, possibly strengthened by the record which showed the defense offered a release to plaintiff if she dismissed her complaint before things got more protracted in nature. At least in the Second District, the test is whether a defendant would have been successful on a SLAPP motion as far as being awarded fees/costs where a plaintiff dismisses the action before a SLAPP motion can be heard. (Tourgeman v. Nelson Kennard (2014) 222 Cal.App.4th 1447, 1456-1457; Law Offices of Andrew L. Ellis v. Yang (2009) 178 Cal.App.4th 869, 879; Pfeiffer Venice Properties v. Bernard (2002) 101 Cal.App.4th 211, 217.) That test was meet in this matter, with the appellate court rejecting the merits challenges to the SLAPP grant. That Vacated $77,980 In Attorney’s Fees And $12,144.45 In Costs In Favor Of Settling Plaintiff. In Vasquez v. Jameson Management, Inc., Case No. D077598 (4th Dist., Div. 1 May 20, 2021) (unpublished), plaintiff/former employee and defendant/former employer tentatively agreed to a letter settlement on the eve of a FEHA disability trial by which financially distressed defendant agreed to settle for $12,000, but nothing in the letter contained a discussion about allocation of attorney’s fees—although earlier discussions certainly showed this was a material term. (In earlier discussion, some proposals left the fees issue silent and others indicated fees were included in the offers.) A lower court subsequently confirmed the letter settlement, awarding plaintiff $77,980 in attorney’s fees and $12,144.25 in costs in addition to the $12,000 base settlement amount. (Plaintiff had requested $222,230 in fees and $12,144.25 in costs.) The 4/1 DCA reversed, finding there had been no mutual asset to any attorney’s fees allocation based on the specific circumstances. Fee allocation was a material term, but there was no material meeting of the mind on this important issue. The appellate court questioned whether CCP § 998 “silence” cases could be applied in a settlement agreement context. In this case, the absence of any reference to fees in the letter agreement demonstrated no enforceable agreement was reached, such that it was improper for the lower court to supply a missing material term. That means the judgment was reversed and the parties returned to status quo position. However, the appellate panel was careful to observe that this was driven by the specific factual circumstances of the case—there was no broad-brush implication that silence regarding fees in a settlement agreement necessarily negated contract formation or that attorney’s fees were always a material term. It depends on the facts! First Amendment Won Out In This One. According to an article in the May 20, 2021 issue of The Orange County Register (online version here), Fullerton City’s Council last week voted to settle a lawsuit it filed against two bloggers for publishing certain information which the City claimed was stolen (later found out not to be so). A lower court had issued gag orders against the bloggers, but an appellate court overturned them because they amounted to impermissible First Amendment prior restraints. In settling the suit, the City agreed to pay $230,000 in legal fees as well as $60,000 to the two bloggers.

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