REVISION OF COAL MINING PERMIT BY ENVIRONMENTAL GROUP RESULTS IN ATTORNEY FEE AWARD

 

In Black Mesa v. Jewell, 2015 DJDAR 1050, the United States Court of Appeals for the Ninth Circuit concluded that an environmental group was entitled to an award of attorney fees arising out of their challenge to the Office of Surface Mining and Reclamation (“OSM”) permit concerning coal mining.

The Black Mesa Water Coalition (“BM”) challenged a permit revision that the OSM granted. An administrative law judge (“ALJ”) granted a summary decision for one challenge brought by an individual. The ALJ subsequently dismissed the remaining petitions as moot. A party who had its petition dismissed petitioned OSM for costs and expenses.  The ALJ dismissed the petition, deciding that BM was not eligible because its specific challenge had not been successful. On appeal, the ruling was affirmed by the district court.

The Ninth Circuit reversed the decision and remanded the case. The Ninth Circuit noted that the Surface Mining Control and Reclamation Act has an administrative fee award provision that allows parties to recover costs and expenses. Under the rules, such fees may be awarded to parties who prevail “in whole or in part, achieving at least some degree of success on the merits.” 43 C.F.R. section 4.1294(b). The Ninth Circuit concluded that because one of the individuals succeeded, this was enough to show that BM participated and achieved “some degree of success.”

FEES FOR PUBLIC RECORDS ACT REQUEST IS ONLY PROPER WHERE THE REQUEST IS "CLEARLY FRIVOLOUS"

 

In Bertoli v. City of Sebastopol, 2015 DJDAR 779, the California Court of Appeal for the First Appellate District decided a case involving a fee request under the California Public Records Act (“CPRA”).

The plaintiff was rendered disabled after she was hit by a car while crossing the street in the City of Sebastopol. Her attorney, David Rouda, requested various documents, including emails and other electronically stored information (“ESI”) from the City pursuant to the California Public Records Act. The City refused to comply. The City claimed the request was overly broad and burdensome. The plaintiff petitioned for writ of mandate seeking to enforce the document request under the CPRA. The trial court concluded that the request was “clearly frivolous” and it awarded the City its attorney fees and costs.

The First Appellate District reversed the award of attorney fees. The court noted that the CPRA allows access to public records, including ESIs, related to the state or local agency’s business. However, the agency is only limited to disclose public records that can be located with reasonable effort. An award for attorney fees and costs related to a CPRA claim is proper only where the CPRA request was prosecuted to harass or delay. The court noted that the plaintiff’s CPRA request was not “clearly frivolous.”  Because the plaintiff’s position was not entirely baseless, the appellate court overturned the decision.

REALTY REPURCHASE AGREEMENT PROVIDED A BASIS FOR THE RECOVERY OF FEES

 

In Mountain Air Enterprises LLC v. Sundowner Towers LLC, 2014 DJDAR 15552, the California Court of Appeal for the First Appellate District decided a complex contractual dispute. The litigation involved several different contracts, eventually resulting in an award of attorney fees.

Mountain Air Enterprises LLC (“Mountain Air”) had one member of a limited liability company. That member entered into two separate agreements involving a piece of real property. Under the first agreement, the defendant (“Sundowner”) agreed to sell the property to Mountain Air. Under the second contract, Sundowner agreed to repurchase the property (the “Repurchase Agreement”) from that same member. Mountain Air subsequently acquired the member’s rights under both agreements. Mountain Air also executed a written option agreement, granting the members of the Sundowner LLC the right to purchase the property during the option period.

Subsequently, Sundowner transferred the property to Mountain Air, but never repurchased the property pursuant to its contractual obligation under the Repurchase Agreement. Mountain Air then sued Sundowner and its members for breach of contract under the Repurchase Agreement. In response to the complaint, Sundowner asserted the affirmative defenses of “novation” and “illegality.”

In a bench trial, the trial court ruled in favor of Sundowner on both defenses, and entered judgment in its favor. Sundowner then moved for attorney fees but the trial court inexplicably rejected the fee petition in its entirety.

The court of appeal reversed the trial court’s rejection of the fee claim. The court of appeal reasoned that the trial court erroneously concluded that fees were simply unavailable under the Repurchase Agreement, which was incorrect. Because that conclusion was erroneous, it resulted in a reversal of the ruling and a remand of the case for further proceedings relating to the amount of fees which could be recovered.

ATTORNEY LIEN LETTER FOR FEES IS NOT THE PROPER SUBJECT OF SLAPP SUIT MOTION

 

 

In Drell v. Cohen, 2014 DJDAR 16055, the California Court of Appeal for the Second District decided whether an attorney’s lien letter which asserted the right to fees, was the proper subject of an anti‑SLAPP suit motion.

A client hired a law firm to represent him in a matter on a contingent fee basis. Subsequently, the trial court granted the law firm’s motion to be relieved as counsel. After winning the motion, the firm sent a letter asserting an attorney fee lien to the insurance carrier for one of the defendants. The client then hired new counsel. Following settlement of the case, the insurance carrier made a check payable to both the old and new lawyers. The new lawyer sued the old one, seeking declaratory relief as to each attorney’s respective rights to fees. In response, the former lawyer filed an anti‑SLAPP motion under Code of Civil Procedure Section 425.16. The new lawyer argued that the complaint was filed because the firm was lawfully asserting its rights under the lien. The trial court denied the motion.

On appeal, the court affirmed the decision of the trial court. The court noted that to prevail on an anti‑SLAPP motion, the moving party must show that the challenged causes of action arose from protected activity such as free speech rights. The claim must be “based on” the protected petitioning activity. A complaint is considered a SLAPP suit when the gravamen of such complaint states that the defendants acted wrongfully by engaging in protected activity. Because the complaint here sought a declaration of the parties’ rights to attorney fees, the court of appeal concluded that the claim did not meet that threshold.  The court of appeal concluded that the trial court correctly denied the anti‑SLAPP motion because the gravamen of the complaint was not based on protected activity.

VINEYARD'S ATTORNEY FEES CLAIM TURNS INTO SOUR GRAPES

 

In Belle Terre Ranch Inc. v. Wilson, 2015 DJDAR 506, the California Court of Appeal for the First Appellate District decided an agricultural trespass action involving an attorney fees claim.

The defendant purchased the Soda Rock Winery. He intended to repair a winery building on the property. A portion of the winery building was adjacent to the Belle Terre Ranch Inc. (Belle Terre) vineyard. In between the winery building and the vineyard was a path.

A dispute arose when the defendant’s use of the path allegedly damaged the plaintiff’s grape vines. The plaintiff filed a lawsuit to quite title and for trespass, contending that the path was actually on its property. Ultimately, the trial court found in favor of the plaintiff, awarding nominal damages of $1. The court did award the plaintiff, however, $116,920.00 in attorney fees pursuant to Code of Civil Procedure Section 1021.9.

The defendant appealed, arguing that the plaintiff was not entitled to attorney fees, and the court of appeal agreed. The court noted that in an action to recover “damages to personal or real property” resulting from trespass onto agricultural land or a ranch, the prevailing plaintiff is entitled to attorney fees, under Section 1021.9. However, the statute requires some “actual injury” to the property. Because the plaintiff prevailed on the trespass claim, but was only awarded nominal damages, the court concluded that the plaintiff was not entitled to attorney fees under Section 1021.9.

LAW FIRM LOSES FEE CLAIM: TOTAL VICTORY TURNS INTO CRASHING LOSS

                 In David S. Karton, A Law Corporation, v. Dougherty, 2014 DJDAR 15340, the California Court of Appeal for the Second Appellate District decided a case with a long, convoluted complex fact pattern under California Code of Civil Procedure Section 1717, the prevailing party statute, and Section 1032, which governs cost awards.

The defendant retained David S. Karton, A Law Corporation, to represent him in a marital dissolution case. The attorney expended significant time and resources on the matter but the client did not pay for the services rendered. Three years later, the attorney sued the client to recover $65,247.00 in unpaid fees, costs and interest. The defendant failed to appear and the trial court entered a default judgment against the former client. The attorney then sought to enforce the judgment as well as attorney fees incurred in the divorce case. After further complex proceedings, the attorney was granted relief which actually increased the principal judgment. The former client then appealed the judgment rendered by the trial court.

The appellate court reversed the attorney fees award on the basis that the original default judgment was void because the judgment exceeded the attorney’s original demand. On remand, the trial court granted the former client’s motion to vacate the default. The matter then proceeded to arbitration under Business and Professions Code Section 6201, the mandatory attorney fees arbitration statute. The arbitration panel concluded that the former client had already paid his debt to the law firm and, on that basis, no relief was appropriate for the attorney.

The attorney then moved the case back to state court where the trial judge ruled that the law firm was the “prevailing party” under the definition of Civil Code Section 1717 and awarded it more than $1 million in attorney fees. The former client appealed yet again.

The court of appeal reversed, noting that under Section 1717, in the event of litigation on a contract, the party prevailing on the contract has a right to recover attorney fees. The prevailing party is the person who received a “greater level of relief” in the action on the contract. The court noted that under Section 1717(b)(2), if a defendant fully tenders a contractual debt, deposits it with the court and proves that this was the full debt, the defendant is the prevailing party for attorney fee purposes. Because the law firm recovered no relief in the action on the contract, the defendant was the  prevailing party.

Is a tenant is entitled to attorney fees when landlord's anti-SLAPP motion is denied?

In Ben‑Shahar v. Pickart, 2014 DJDAR 15712, the California Court of Appeal for the Second District decided a complex landlord/tenant case involving the interplay of unlawful detainer proceedings and California’s Special Motion to Strike under Code of Civil Procedure Section 426.16.

The defendant (“Pickart”) purchased a rent‑controlled apartment building. He then served the tenant with a 60‑day notice to vacate the premises. Pickart initiated unlawful detainer proceedings after the tenant refused to vacate the premises. The trial court granted the unlawful detainer petition and ordered the tenant to vacate. The parties then entered into an agreement to settle the unlawful detainment action.

The tenant agreed to vacate the unit and the landlord agreed to move in the unit within the time period specified under the local rent control ordinance. After the landlord failed to move in by the deadline, the tenant sued the landlord for breach of the settlement agreement.

The landlord filed an anti‑SLAPP motion, asserting that his conduct was protected as it was related to the unlawful detainer action. The trial court denied the landlord’s anti‑SLAPP motion and the tenant’s motion for attorney fees.

The court of appeal reversed, stating that the anti‑SLAPP statute allows the trial court to strike any cause of action that arises from the defendant’s exercise of the “right of petition” or “free speech.” However, the court of appeal noted that the record was clear that the tenant’s lawsuit was directed at the landlord’s purported breach of the settlement agreement and did not arise from the unlawful detainer action. 

The court of appeal remanded the matter to the trial court to make the required determination whether the tenant was entitled to fees and, if so, the amount of the recovery.

Court rules percentage based award is reasonable under California law - ignores federal precedent

In Laffitte v. Robert Half International Inc.,  2014 DJDAR 15575, the California Court of Appeal for the Second Appellate District decided an interesting attorney fee case arising from class action wage and hour litigation.

In 2001, a class plaintiff filed a wage and hour class action against Robert Half International Inc. (“Robert Half”) and related entities. After a number of years of intense litigation, all parties agreed to settle the case. Pursuant to the terms of the settlement, Robert Half agreed to pay a gross settlement amount of $19,000,000. The agreement further provided that class counsel would seek approval of not more than $6,333,333.33, or 33.33 percent of the $19,000,000 settlement.

Thereafter, the class representatives filed a motion for attorney fees, requesting $6,333,333.33 in fees for class counsel. One class member filed an objection to the application. The objector argued that the notice to the class members denied due process because the nature and timing of the settlement approval was unfair.

The objector also argued that, in reviewing the class counsel’s request for attorney fees, the trial court erred by using the “percentage of fund method” and that there were irregularities and mistakes in the court’s lodestar calculation.

The objector cited federal authorities in support of the objection. The objector argued that requiring class members to file objections to the proposed settlement and request for attorney fees before class counsel filed their motion for attorney fees was a violation of due process. In support of this argument, the objector relied on FRCP 23 (rule 23) and 54 (rule 54) (28 U.S.C.), and the Ninth Circuit’s opinion in In re Mercury Interactive Corp. Securities Litigation (9th Cir. 2010) 618 F.3d 988, 993‑995.

In deciding the issue, the second appellate district stated that FRCP 23 and related federal case law does not control in California. The court stated that:

As a general rule, California courts are not bound by the federal rules of procedure but may look to them and to the federal cases interpreting them for guidance or where California precedent is lacking.”

The court of appeal stated that under the “common fund” doctrine, the goal is to compensate counsel for their efforts, regardless of the method of calculation. Thus, the “percentage‑of‑the‑benefit” analysis or the lodestar method for determining attorney fees is appropriate so long as the chosen method is applied consistently and accurately reflects the type of legal work performed in the relevant community.

When automatic stay violations require fee awards

In America’s Servicing Co. v. Schwartz‑Tallard, 2014 DJDAR 12063, the United States Court of Appeal for the Ninth Circuit decided an interesting case arising from allegations that a debt servicing entity violated the Bankruptcy Code’s automatic stay provisions.

A debt servicing entity entered into a contract to service a debtor’s home mortgage. The debtor subsequently filed for bankruptcy, but continued to make mortgage payments to the entity. However, the servicing entity contended that there was a default, and moved to lift the automatic stay, allowing it to foreclose on the debtor’s home. The court granted the motion to lift the stay.

The Bankruptcy Court subsequently reinstated the stay orally at a hearing at which the debt servicer did not make an appearance. The court did not render a written order reinstating the stay until after the debtor’s home was sold at a trustee’s sale at the behest of the debt servicing entity. In response, the debtor filed a motion for violation of the automatic stay, seeking sanctions and other relief. Subsequently, the bankruptcy court found in favor of the debtor and awarded damages against the debt servicer. The court also ordered a return of the home back to the debtor.

The debt servicer appealed the lower court’s order. The district court upheld the Bankruptcy Court’s decision. The debtor then moved to recover the attorney fees incurred in the appeal by the debt servicer to the district court. The Bankruptcy Court denied the request for fees, concluding that the fees were not incurred in “enforcing” the automatic stay provisions of the Bankruptcy Code. The Bankruptcy Appellate Panel (BAP) overturned that decision.

The Ninth Circuit affirmed the ruling of the BAP, noting that under Bankruptcy Code Section 362, a party injured by any willful violation of a stay is entitled to recover actual damages, including costs and attorney fees.  The Ninth Circuit reasoned that because the debtor was not pursuing a damage award, but was defending against the debt servicer’s appeal of the Bankruptcy Court’s ruling, the fees should have been awarded.

Post award correction of attorney fees award by arbitrator is reversed

In Cooper v. Lavely Singer Professional Corp., 2014 DJDAR 13272, the California Court of Appeal for the Second Appellate District ruled that a post‑hearing substantive “correction” of a “Final Award” of attorney fees awarded by an arbitrator was inappropriate.

Jeffrey Cooper (“Cooper”) hired a law firm (“law firm”) to represent him in a fraud case. The case was submitted to arbitration and the arbitrator ruled against Cooper. Cooper then commenced an arbitration with JAMS against the law firm, alleging attorney negligence and malpractice. The law firm represented itself in the arbitration. Following a hearing, the arbitrator found that the law firm was the prevailing party and permitted the law firm to submit a motion for attorney fees. The arbitrator then issued a “Final Award” but denied the request for attorney fees in total. Thereafter, the law firm moved for “correction” of the award, arguing that the arbitrator had the discretion to “correct the award” in the “interest of justice.” Based on new paperwork and evidence that was submitted by the law firm, the arbitrator made a revised award granting an award of attorney fees.

The court of appeal reversed the decision and actions of the arbitrator. The court of appeal noted that under CCP§ 1284, an arbitrator has the power to “correct” a final arbitration award only if the correction is for “miscalculation of figures” or “nonsubstantive matters of form” that have no impact on the substantive merits of the arbitration. The court of appeal specifically concluded that an arbitrator is prohibited from substantively amending the final award to include new awards of damages or attorney fees. The court of appeal concluded that the arbitrator’s award of attorney fees in the revised final award was not a “correction” as defined by CCP§ 1284. The court of appeal concluded that the trial court erred in denying Cooper’s petition to vacate the attorney fee award on that basis.