CALIFORNIA ATTORNEY'S FEES

Unlicensed Contractors: $1.55 Million Fee Award To Defendant Alleging Successful Unlicensed Contractor Challenge Was Affirmed Under Civil Code Section 1717

Mountain Air Affirmative Defense Argument Rejected On Appeal.

               In American Bldg. Innovations LP v. Balfour Beatty Constr., LLC, Case Nos. G062471 et al. (4^th Dist., Div. 3 Sept. 3, 2024) (published), plaintiff was found to have violated the unlicensed contractor law by failing to pay workers’ compensation insurance payments on a project, losing a suit to the defendant because it was unlicensed.  Based on a subcontract contractual fees clause and Civil Code section 1717, defendant moved for and was awarded $1.55 million in fees.  (If we are reading this opinion correctly, plaintiff was seeking over $700,000 in unpaid construction compensation). 

               Defendant appealed, not challenging the reasonableness of the fee award.  Instead, it staked its appeal on Mountain Air, which held that an affirmative defense like an unlicensed contractor defense does not give rise to a fee award.  The 4/3 DCA affirmed, reading Mountain Air more broadly because it applied to a novation defense on a different agreement.  However, in the case before it, plaintiff was suing on a subcontract with a fees clause such that it was imperative licensure status needed to be demonstrated as part of its affirmative case.  Fee award affirmed, in a 3-0 opinion by Acting Presiding Justice Goethals.

Employment, Reasonableness Of Fees, Section 998: FEHA Plaintiff Finally Winning $1.25 Million In a Third Jury Trial, After An Earlier Appellate Reversal On The First Trial And A New Trial On The Second Trial, Was Properly Awarded $3,264,906 In Fees

Both Sides Appealed, But Their Challenges Were Unsuccessful.

               Simers v. Los Angeles Times Communications LLC, Case No. B323715 (2d Dist., Div. 8 Aug. 30, 2024) (published) involved a long-standing dispute between plaintiff T.J. Simers, a controversial columnist, and defendant L.A. Times involving constructive termination, age discrimination, and disability discrimination claims under FEHA.  Needless to say, there were three jury trials producing this chronology:  (1) a first jury trial resulted in over $7.137 million in damages, which was reversed and remanded on appeal for a new trial; (2) a second jury trial resulted in an award of $15.4 million in noneconomic damages, with the lower court granting a new trial on that result; and (3) a third jury trial resulted in a noneconomic damages verdict of $1.25 million, even though this matched an identical defense CCP § 998 offer for that amount plus reasonable pre-offer fees and costs to be determined by the lower court (a rejected offer).  Plaintiff requested attorney’s fees of $15.5 million (lodestar plus a 2.0 multiplier) involving time on all three trials and the appeals after the first trial.  The defense raised various objections, some of which were credited, eventually resulting in an award to plaintiff of $3,264,906 in attorney’s fees.  (Plaintiff was awarded $210,882.22 in costs, but that award was not contested on appeal.)  Both sides appealed, defendant claiming the award was excessive, and plaintiff contending the section 998 offer did not cut-off post-offer fees.

               The 2/8 DCA opinion, authored by Justice Grimes, affirmed the fee determinations. Here are the takeaways on this appeal, which did involve unique circumstances (mainly the multiple new trials):

• • • The lower court did possess considerable discretion to allow or disallow (or go within those two extremes) fees for the second trial and appeal even though a new trial was granted for attorney misconduct—the trial judge does not have to disallow all fees requiring a third trial if the penalty for misconduct is too harsh with respect to a fee award.
    • The second trial was related sufficiently to the overall result such that it could be compensable.
    • Plaintiff’s work on the unsuccessful appeal from the first trial verdict was compensable in the lower court’s discretion.
    • The defense 998 offer did cut off attorney’s fees and costs after the rejected, successful 998 offer was borne out to match plaintiff’s ultimate recovery.

Family Law: Denial Of Section 2030 Fees To Wife With A Disparity In Income/Assets Needed To Be Remanded To Award Reasonable Fees To Her

Lack Of Express Findings On The Factors Required A Remand.

               In In re Marriage of Patton, Case No. B329509 et al. (2d Dist., Div. 4 Aug. 29, 2024) (unpublished), the appellate court reversed a family law judge’s failure to award Family Code section 2030 fees to ex-wife, where the record showed she made $60,000 a year versus $500,000 a year for ex-husband, and she had no savings versus ex-husband receiving $2 million from the sale of stock options.  The lower court failed to make express findings on the section 2030(a)(2) factors, much less weighed the reasonableness of ex-wife’s fee request.  This was an abuse of discretion leading to a remand to award some amount of reasonable fees to ex-wife.

Special Fee Shifting Statute: Where Defendant Voluntarily Compensated Plaintiff After Filing Of Suit, Plaintiff Could Not Claim To Have “Successfully Prosecuted” The Matter For Purposes Of Fees Under The Longshore and Harbor Workers’ Compensation A

Catalyst Theory Was Unavailable Under The Fee-Shifting Statute.

               In Berry v. Air Force Central Welfare Fund, Case No. 23-15551 (9^th Cir. Aug. 29, 2024) (published), plaintiff sued to recover disability benefits from defendant under the Longshore and Harbor Workers’ Compensation Act (Longshore Act).  After suit was filed, defendant voluntarily paid all the compensation plaintiff was owed.  Plaintiff sought attorney’s fees under section 928 of the Act, 33 U.S.C. § 928(a), which allows a claimant to recover fees incurred “in the successful prosecution of” a Longshore Act claim.

               The district judge denied the fee request, and the Ninth Circuit affirmed.  Because defendant voluntarily paid off the claim, the case was moot, and no judicial relief was obtained by plaintiff.  She argued that the catalyst theory applied to a section 928(a) fee request, but the Ninth Circuit found this theory unavailable given the language of the statute and caselaw construing similar language.

Reasonableness Of Fees: Plaintiff Home Designer Winning $64,000 In Compensatory Damages And Defeating Owner’s Unlicensed Contractor Defense/Cross-Claims Was Properly Awarded Prevailing Party Fees Of $1,568,501

Owner Over-litigated The Case, With Fee Awards Not Having To Be Proportionate To A Litigant’s Recovery.

               Attorney’s fees awards can be substantial, especially where an opposing party over-litigates a case and drives up the prevailing party’s litigation expenses.  That is what happened in Zale Design Studio v. Leevan, Case Nos. B324871 (2d Dist., Div. 1 Aug. 28, 2024) (unpublished).

               Plaintiff home designer sued defendant owner, who raised an unlicensed contractor defense and brought cross-claims for fraud and under RICO (with the RICO claim knocked out on a demurrer).  The case was litigated over about 7 years.  A jury awarded $64,000 to designer, answered special verdict interrogatories finding she did not have to be a licensed contractor, and found against owner on his cross-claims.  Under a prevailing party contractual fees provision, the trial judge awarded designer the full lodestar ask of $1,568,501 over fee objections by owner, although the lower court refused designer’s 1.5 positive multiplier request.

               The 2/1 DCA affirmed the jury’s verdict and the fee award.  It agreed with the lower court that owner had over-litigated the case and that he had refused two CCP § 998 offers from plaintiff (one of which required her to pay him $100,000).  Finally, the Court of Appeal cited a case indicating that a fees award does not have to be proportional to the ultimate recovery—even though plaintiff did more than get a compensatory award because she also defeated owner’s cross-claims.  (See Taylor v. Nabors Drilling USA, LP, 202 Cal.App.4^th 1228, 1251 (2014).)

               BLOG OBSERVATION—This case has a nice discussion of unlicensed contractor and mechanics lien principles as applied to home designers who do no installation or where only removable items are installed.  Interestingly, plaintiff admitted that she had overcharged owner and included some false charges, but she gave credit for these errors—with the jury finding she did defraud owner, yet it caused no damages. 

Arbitration: Where Employee Paid Employer’s Arbitration Fees And Then Obtained A Refund, Employer Timely Paid Arbitration Fees From Issuance Of Second Invoice Within 30 Days

CCP § 1281.97 Ties The 30-Day Deadline From The Date Of An Arbitrator Invoice.

               We have posted about the CCP § 1281.97 30-day deadline for an employer to pay arbitration fees, with most courts strictly construing the deadline (although whether the provision is preempted by the FAA is an issue recently taken up the California Supreme Court in Hohenshelt).  However, given how unique circumstances can drive results, the trial and appellate courts in Anoke v. Twitter, Inc., Case No. A168675 (1^st Dist., Div. 5 Aug. 27, 2024) (unpublished) took a practical approach to a unique situation.

               There, employee’s counsel mistakenly paid employer’s share of arbitration fees quickly after issuance of that invoice.  Employer checked and saw that the arbitration portal reflected the fees as being paid.  Later, employee’s counsel then demanded a refund (which was made with no apparent notice to employer).  The arbitrator issued a second invoice to employer, which paid within 30 days.

               Employee challenged the payment as untimely, but the appellate court disagreed after the lower court denied employee’s request for a motion to compel an arbitration in which employer was liable for her reasonable fees and costs (an untimely payment remedy available under § 1281.97(b)(2)).  Based on the statutory language having a “passive voice,” the 2/5 DCA determined that the statute ties the 30-day deadline to an invoice from the arbitrator, with employer timely paying the second invoice.  It further observed that any other result could result in some gamesmanship by employee, a “gotcha” the appellate court did not like.  “Here, a mistaken payment resulted in a second invoice, which is consistent with ordinary business billing practices.  We are not going to rewrite the statute to say that, in the event one invoice is mistakenly paid, a second invoice is improper.”

Family Law, Retainer Agreements, Sanctions: CCP § 128.7 Sanctions Award Reversed Because Litigant Not Given Safe Harbor Notice/OSC Notice That The Sanctions Response Was Sanctionable

Also, We Learn New Things All The Time—Contingency Agreements In Family Law Proceedings Are Against Public Policy.

               Wright v. Wright, Case No. B330901 (2d Dist., Div. 1 Aug. 23, 2024) (unpublished) is interesting on two points:  (1) it reversed a CCP § 128.7 sanctions order against a litigant based on litigant’s response to a sanctions motion because no separate safe harbor or OSC notice targeted that response; and (2) Rules of Professional Conduct, rule 1.5(c)(1) provides that contingency agreements in family law proceedings are void against public policy because they incentivize attorneys to discourage reconciliation between the family law litigants, although the panel did not have to apply this provision because the subject retainer arrangement was not a contingency arrangement.

Discovery: California Supreme Court Decides That General Discovery Statutes Allow A Trial Judge, Where Specific Discovery Sanctions Statutes Do Not Cover Egregious Discovery Abuses, To Inherently Impose Monetary Sanctions For Abuses

However, Notice/Causation/Reasonableness Principles Are Still In Play, Just Under Specific Discovery Abuse Statutes.

               In City of Los Angeles v. Pricewaterhousecoopers, LLP, Case No. S277211 (Cal. Supreme Ct. Aug. 22, 2024) (published), the California Supreme Court decided that the general sections of the Civil Discovery Act, CCP § 2023.010 and § 2023.030, allow a trial judge to impose monetary sanctions for egregious discovery abuses, rather than being relegated to imposition of discovery violations under specific sections of the Discovery Act where the egregious conduct falls outside of the specific discovery sections.  That meant that the $2.5 million in discovery sanctions was being reinstated.  However, our state supreme court was careful to observe that notice/causation/reasonableness principles, as applicable in specific discovery abuse provisions, would also be in play under more general “inherent” power of the court situations. 

Civil Rights: $55,414.84 Attorney’s Fees Award Under ADA Against Plaintiff’s Attorneys Reversed On Appeal, Although Plaintiff Dismissed A Website Action After Not Opposing A Summary Judgment Motion

Appellate Court Concluded That ADA Statute’s Silence On Fee Award Against Plaintiff’s Attorneys Was Dispositive.

               Statistically speaking, California state and federal courts (especially federal courts) are inundated with ADA disability lawsuits, many based on Website disabilities for disabled persons.  The next case establishes, as far as ADA claims are concerned, dismissals or judgments against an ADA plaintiff, even where the case is deemed frivolous, does not impose an attorney’s fees award against plaintiff’s counsel (as opposed to the plaintiff).

               Morgan v. Zarco Hotels Incorporated, Case No. B332319 (2d Dist., Div. 2 Aug. 21, 2024) (unpublished) was a situation where a plaintiff brought an American with Disabilities Act (ADA) lawsuit against hotel for certain alleged website accessibility issues.  The defense filed a summary judgment motion complete with a declaration from a hotel accessibility expert showing that the defendant was compliant with respect to a plaintiff using screen reader software (SRS) to navigate the Internet.  Plaintiff never opposed the summary judgment motion, choosing to dismiss the case.  Among other things, the defense filed a motion to recover attorney’s fees against plaintiff and her attorneys under the ADA fee-shifting statute, which does allow fees to a prevailing defendant if plaintiff’s case is deemed to be frivolous.  The lower court denied fees against plaintiff, but it ordered plaintiff’s counsel to pay $55,414.84 in fees to the defendant.

               The 2/2 DCA reversed, finding that the ADA fee-shifting provision (42 U.S.C. § 12205) was silent with respect to a fee award against a litigant’s counsel, such that it should not be construed to allow for such recovery, citing to similar cases under the federal civil rights statute, ERISA, Title VII, and the anti-SLAPP statute among others. 

Reasonableness Of Fees, SLAPP, Substantiation Of Reasonableness Of Fees: Successful SLAPPing Defendant Entitled To An Award Of $48,790 In Fees And $1,574.60 In Costs

Winning Defendant Did Something Smart:  After SLAPP Motion Granted, Offered To Stipulate To A Much Lower Fees And Costs Award, Rejected By Plaintiff.

               When it comes to the reasonableness of a fee award, we have posted on situations where the prevailing party offered to stipulate to a lower fees/costs award and then obtained a higher fees/costs award after that offer was rejected.  Proof of this was made in Aminpour v. Verdi, Case No. B327213 (2d Dist., Div. 5 Aug. 21, 2024) (unpublished), with the lower and appellate courts persuaded that the defense higher fee request was justified in part by an attempt to resolve the controversy by the winning side.

               In this one, the defense prevailed on a SLAPP motion, including having to reply to a 150-page opposition by plaintiff.   Before any fees/costs motion was filed by the prevailing defendant, his counsel sent an email willing to stipulate to a definite fees/costs award in order to avoid further expenses to file an actual attorney’s fees motion, an offer which was not responded to apparently.  Later, the trial judge ordered a higher fees award of $48,790 and higher costs award of $1,574.60 to defendant.  Plaintiff appealed, but the appellate court determined the awards were no abuse of discretion because (1) plaintiff had argued that he should be awarded $56,225 in fees in an earlier pleading, such that the work by plaintiff demonstrated the defense request was not outrageous, citing In re Tobacco Cases I. 216 Cal.App.4^th 570, 584 (2013); (2) the “fees on fees” to bring the fee motion were allowable; and (3) sufficient declaration testimony was presented to support the award given no billing records/invoices were required (although as bloggers, we would say they are highly advisable).

Homeowner Associations: One Homeowner And HOA Properly Awarded A Grand Total Of $460,573.95 In Condo Noise Dispute Where Neither Party Won Their Arbitration Claims

However, Arbitrator Determined One Homeowner And HOA Prevailed, Hence The Awards.

               In this category, we have posted on many homeowner disputes where one side prevailed and obtained substantial fee awards under CC&Rs and the Davis-Stirling Act’s fee-shifting statute.  We also have posted on where both sides went away empty on fees because an arbitrator or trial judge found no one prevailed.  Well, here is another one that falls within category number one.

               Zokaei v. Mansoir, Case No. A167365 et al. (1^st Dist., Div. 3 Aug. 20, 2024) (unpublished) involved noise disputes between downstairs and upstairs condominium owners where there was a CC&R initial provision allowing for fee recovery in a civil action and later amended through a CC&R provision providing for mandatory arbitration of these disputes.  The parties, including HOA which was added to the dispute, had dueling demands and cross-demands on noise issues, with all parties praying for recovery of fees in their arbitration pleadings.  The arbitrator denied all parties’ arbitration claims, but the arbitrator determined one of the homeowners and the HOA prevailed.  After confirmation of the arbitration awards by the superior court, judgments were entered, in total, for the one homeowner/HOA and against the losing homeowner for $460,573.95.

               The fee awards were affirmed, after a scholarly discussion of fee principles relating to arbitrator fee awards.  First, all parties prayed for fees such that this issue was “teed up” for arbitrator determination.  Second, AAA arbitration rules allow for fee recovery where all parties requested it and the law allows, the case here.  Third, the CC&R arbitration amendment allowed for recovery of fees—such that even if this interpretation of the contractual provision was erroneous, it was not reviewable under Moshonov.  Fourth, the term “civil action” in the original CC&R provision might be rationally interpreted to include arbitration, especially where other amendments referred to arbitration. 

Class Actions, Employment, POOF!: Reversal Of Class Action Summary Adjudication On Class Meal/Rest Breaks Claim Meant Substantial Fee Award Reversed Also

Plaintiffs’ Reasons To Not Reverse The Award Were Unpersuasive.

               Acting Presiding Justice Segal, author on behalf of the 2/7 DCA in Benton v. Telecom Network Specialists, Inc., Case No. B318867 (2d Dist., Div. 7 Aug. 19, 2024), confronted a very spirited opposition by plaintiffs/class winning substantial fees for why the reviewing court should not deviate from the general rule that “reversal of the judgment usually also reverses a fee award.”  Well, that general rule won out at the end, as it usually does.

               What happened was that the lower court granted class plaintiffs’ motion for summary adjudication on some wage/hour claims, resulting in entry of a judgment.  However, the appellate court reversed on the summary adjudication grant on causes of action for failure to provide meal/rest breaks.  While that appeal was pending, the lower court awarded over $17 million in attorney’s fees and $700,000 in costs for fees incurred before the summary adjudication grant.  The problem was that the appellate court was not necessarily buying into plaintiffs’ argument that the earlier appellate result was a narrowly limited reversal (likely more than plaintiffs thought) such that a “renew” look was warranted.  Besides, even the defense agreed that some further statutory fees might be authorized by Naranjo, yet another reason to send it for a further review because possible fee work after the summary adjudication grant was in play for plaintiffs.  A “replay” here.

Section 1717, Section 998: Because Plaintiff Voluntarily Dismissed Its Unlawful Detainer Action Without Prejudice, Santisas Prevented Recovery Of Contractual Attorney’s Fees By The Other Side Despite The Winning 998 Offer

However, Plaintiff Did Pay The Other Side $118,372.65 In Routine Costs.

               In Riverside Mining Limited v. Quality Aggregates, Case No. E081228 (4^th Dist., Div. 2 Aug. 19, 2024) (published), Quality leased 73 acres from Riverside Mining, operating a quarry on the land.  Quality brought a civil lawsuit against Riverside Mining for infringing its leasehold, while Riverside Mining countered by filing an unlawful detainer action against Quality.  Quality offered to compromise under a CCP § 998 offer by having Riverside Mining dismiss the UD action with prejudice, each side to bear their own fees and costs.  Riverside Mining did not accept the offer and, after substantial discovery but before trial, it voluntarily dismissed its UD action without prejudice.  Riverside Mining paid $118,372.65 in routine costs to Quality (inclusive of expert witness expenses) based on the winning 998 offer, but successfully resisted Quality’s motion for an attorney’s fees award of $199,514.38 (inclusive of a 1.25 multiplier).

               The 4/2 DCA affirmed the fee denial, agreeing that the lower court properly applied the reasoning of Ford Motor Credit Co. v. Hunsberger, 163 Cal.App.4^th 1526, 1533 (2008).  Because the unlawful detainer action was contractual in nature, Ford found that Civil Code section 1717(b)(2) blocked recovery of fees because CCP § 998 does not expressly authorize a fees award and section 1717(b)(2) effectively “trumped” section 998 in disallowing fees based on the voluntary dismissal. 

               BLOG HAT TIP—We note that Susan Allison of Jeffer Mangels Butler & Mitchell was one of the winning appellate attorneys.  Co-contributor Mike worked with her and other Jeffer attorneys during a Pomona Superior Court trial.  Congratulations, Susan.

Section 998: Plaintiff University Student Owed Judgments Against Two Defendants As A Result Of A Successful Section 998 Offer

Costs Shifting Frequently Can Be The Result With A Well-Crafted 998 Offer.

               Plaintiff student sued Loyola Marymount University and Los Angeles Television Access Corporation (Access) for premises liability and negligence after Access’ photography light fell on student.  After a bench trial, University was held blameless, and student won $22,834 in damages against Access.  However, in Adger v. Loyola Marymount University, Case No. B322707 (2d Dist., Div. 8 Aug. 13, 2024), judgments were entered in favor of University ($30,319.03) and Access ($61,720.98--$88,814.52 in costs minus the judgment against it) because student rejected a CCP § 998 offer which beat the results as to University and Access.  The appellate court affirmed, demonstrating how the judgment calculus can shift when a 998 offer is successful and when there are expert-intensive personal injury cases that do not go as plaintiff had hoped.

Fee Clause Interpretation: Based On A Broad Fee Clause, The Lower Court Correctly Construed An Option Agreement And Awarded Over $1.371 Million In Fees

Shows How Fee Motions Can Be Mini-Trials On Interpretation Of Fee Clauses.

               In Preservation, Finance, Rehabilitation & Development, LP v. Associated Financial Corp., Case No. B325694 (2d Dist., Div. 4 Aug. 13, 2024) (unpublished), defendant won a bench trial in a complex loan transaction case, with the lower court awarding defendant prevailing party fees of $1,371,017 (out of a requested $1,414,748) under a fee clause contained in an options agreement.  The 2/4 DCA affirmed, agreeing with the trial judge that it was necessary to engage in contractual interpretation to see if the option agreement was in play.  It was, and operative broad fees clause was inclusive to cover the option dispute.

Private Attorney General: Defendant Who Provided Appellate Amicus In A Proposition 65 Case Finding No Violations Properly Was Denied CCP § 1021.5 Fee Against A Plaintiff Dismissing The Case After Issuance Of The Earlier Appellate Opinion

Reason Was That Defendant’s Avoidance Of Civil Penalties And The Costs Of Warnings Outweighed Any Important Right, Which Was Coincidental To Its Economic Interests.

               In Environmental Health Advocates, Inc. v. Bio Hazard, Inc., Case No. A168332 (1^st Dist., Div. 1 Aug. 12, 2024) (unpublished), a plaintiff dismissed a Proposition 65 case against defendant after an earlier appellate ruling in a different case (Sream)—where defendant filed an amicus brief—put the kibosh on plaintiff’s position such that it dismissed the pending lawsuit.  Defendant moved for section 1021.5 fees totaling $73,931, a request which was denied.  The 1/1 DCA affirmed.  Although it was successful, defendant did not vindicate an important right, because that was coincidental to its own economic interests of avoiding substantial civil penalties and of avoiding the costs of product warnings—finding “on fours” the reasoning in an earlier First District opinion on private attorney general fees, DiPirro v. Bondo Corp., 153 Cal.App.4^th 150, 196 (2007).  As to the argument about vindicating an important right through the amicus briefing, the Court of Appeal concluded that (1) the brief was only 8 pages long, mainly pointing the panel to the Lee opinion (with two of the justices on Lee also on the Sream panel), and (2) it was inferable that the justices on Sream where well aware of Lee anyway.

Discovery: $4,508 In Attorney’s Fees Awarded Against MyPillow Mogul Mike Lindell In November 2020 Election Case Resulting In An Earlier $5 Million Adverse Judgment

Fee Request Reduced For Excessive Hourly Rates And For Overbroad Discovery Requests.

               In an August 8, 2024 post by some writers for the Business Insider, they report that MyPillow mogul Mike Lindell—who supposedly offered to pay $5 million to any person who could disprove his cyber data and other data relating to the November 2020 election—lost a challenge to Robert Zeidman, with an arbitration panel awarding Mr. Zeidman $5 million and with a Minnesota district judge confirming the award (although an appeal has been filed).  Then, in In re Lindell Management LLC Litigation, Case No. 23-cv-1433 (JRT/DJF) Doc. No. 98 (fee award order filed 8/8/24), U.S. Magistrate Judge Dulce J. Foster confronted Mr. Zeidman’s request for reimbursement of attorney’s fees incurred in bringing a motion to compel where deficient discovery responses were apparently submitted by the respondent LLC.  We post to show you how the thinking of one federal magistrate on how to handle such a request, with fee entitlement not at issue because it arose under FRCP 37.

               Magistrate Judge Foster observed that respondent basically admitted some discovery sanctions were in order, but not the $12,800 claimed by Mr. Zeidman’s attorneys for 16.1 hours at $800/hour (especially given the venue was the Twin Cities legal community).  The magistrate agreed in part, reducing the hourly rate to $400/hour and applying a 30% reduction for some overbroad, scaled-back discovery requests, such that the final fee award was $4,508.

Employment, Settlement: $226,000 Stipulated Amount For Attorney’s Fees To Plaintiffs Under PAGA Settlement Validated On Appeal

The Defense Could Not Retract From Its Agreed-Upon Settlement Amount.

               In Loudon v. DHSE, Inc., Case No. E081497 (4^th Dist., Div. 2 Aug. 8, 2024) (unpublished), defendants agreed to settle a PAGA action through a written settlement agreement providing plaintiffs were entitled to attorney’s fees of $226,000, or one-third of the PAGA settlement amount.  The defense tried to deviate from this amount down the line on appeal after approval of the fee sum, but the lower court approved the fee amount and so, too, did the appellate court.  The reviewing court believed the agreed-upon amount should prevail, but also observed that (1) plaintiffs’ counsel billed more than the agreed-upon amount before approval of the fees, and (2) individual plaintiffs’ fees would have been a lot more had the case gone to trial. 

Settlement: CCP § 664.6 Settlement Validated Where Lemon Law Plaintiff Agreed To Settle For $100,000 Inclusive Of Attorney’s Fees

Effective 1/1/2021, Section 664.6 Allows A Litigant’s Attorney To Orally Stipulate To A Settlement On The Record.

               Lemon law plaintiff was not happy with a lower court’s ruling that found a binding oral, on-the-record settlement which was reached with defendants by her attorneys to settle the case for $100,000 inclusive of attorney’s fees through an MSC ZOOM session which was recorded in stenographic and audio formats.   She argued before the lower court that the settlement was “exclusive” of fees; after a 4-day evidentiary hearing, the lower court agreed with the defense that the settlement was enforceable and that it was “inclusive” of fees.  Plaintiff appealed in Greisman v. FCA US, LLC, Case No. A166919 (1^st Dist., Div. 2 Aug. 5, 2024) (partially published), but the appellate court affirmed the settlement decision by the lower court.

               The legal issue resulting in publication was that, effective January 1, 2021, CCP § 664.6 allows a litigant’s attorney to sign a binding settlement stipulation or orally stipulate on the record that a settlement was reached, abrogating the former rule that litigants had to endorse the settlement under the Levy decision which was superseded.  With respect to whether substantial evidence supported the lower court’s conclusion, it did:  the lower court credited the court reporter’s stenographic and audio evidence that “inclusive” was the word used.  Not to mention that the lower credited the MSC judge’s statement on the record that the settlement for $100,000 was reached despite whatever terms plaintiff reached with her attorneys between themselves.

Prevailing Party, Section 1717: Defendants Winning A Demurrer Dismissal Without Leave Was Contractually Prevailing Party Under Section 1717

Conspiracy And Unjust Enrichment Claims Fell Within An Operating Agreement Contractual Dispute Ambit.

               Many contractual fee disputes depend on whether the claims were “on the contract” under Civil Code section 1717; and if so, who prevailed.  In Zhou v. Hotel Winters, LLC, Case No. C099278 (3d Dist. Aug. 2, 2024) (unpublished), defendants won a demurrer without leave resulting in a dismissal, a merits determination affirmed on appeal, in a case involving conspiracy and unjust enrichment claims under a broad fee dispute contractual clause.  Defendants obtained a $45,000 attorney’s fees award (out of a requested $134,396.25 fee claim), although $625 hourly rates were reduced to $450 for principal attorneys.  The Third District affirmed:  defendants won by showing that the operating agreement was inapplicable, invalid, unenforceable, or nonexistent given that the conspiracy and unjust enrichment claims were “on the contract” under section 1717.  Also, the dismissal based on the demurrer being sustained without leave was a merits determination rather than just a premature or interim victory.