UNDER CALIFORNIA LAW, ATTORNEY BILLING STATEMENTS ARE CONFIDENTIAL COMMUNICATIONS

 

In County of Los Angeles Board of Supervisors et al. v. The Superior Court of Los Angeles, 2015 DJDAR 4085, the California Court of Appeal for the Second District ruled that attorney invoices may be confidential communications and are immune from production during discovery.

The attorney‑client privilege is fundamental to the practice of law.  It encourages the client to be honest with his attorney for the purposes of obtaining the best legal advice and advocacy.  Such protection of communications between an attorney and client foster an environment where the client may divulge all relevant information, which he may have otherwise withheld without this safeguard.

But, just how far does this privilege reach?  In County of Los Angeles Board of Supervisors et al. v. The Superior Court of Los Angeles, a California Court of Appeal clarified an issue not previously decided by California courts, holding that attorney invoices are confidential communications.

This may be surprising since many practitioners would likely conclude that billing invoices are not the type of confidential communications reflecting significant decisions with potentially lasting legal consequences.  What made these bills different?  Nothing, but they were communicated in the course of an attorney‑client relationship.  In its decision, the court broadly interpreted Evidence Code section 952, which defines “confidential communications” in the context of attorney‑client privilege, and determined that attorney‑client communication does not have to include legal advice or opinion in order to be protected communications.

The court explained that “…the proper focus in the privilege inquiry is not whether the communication contains an attorney’s opinion or advice, but whether the relationship is one of attorney‑client and whether the communication was confidentially transmitted in the course of that relationship.”

Since the invoices were transferred in the course of the attorney‑client relationship, the court ruled that they fell within the zone of privacy.  Thus, under this recent precedent, attorney invoices are confidential communications and immune from production during discovery.

WHERE ATTORNEY FEES ARE AN INCIDENT TO A CAUSE OF ACTION, THEY NEED NOT BE PLEADED AND PROVEN

 

In Faton v. Ahmedo, 2015 DJDAR 5256, the California Court of Appeal for the Fourth Appellate District held that where an attorney fee request is a mere “incident to a cause of action,” they need not be pleaded and proven, as a prerequisite for a fee award.

The Plaintiff sought a restraining order. On the restraining order request form, she left “blank” the section providing for a request of attorney fees. The trial court subsequently granted the TRO and left open the potential for a future attorney fee award. The Defendant filed a motion for reconsideration. The trial court granted that motion.  An evidentiary hearing took place thereafter. After reconsideration, the trial court reissued the restraining order and the Plaintiff then successfully moved for attorney fees under California Family Code Section 6344. The Defendant contended that the Plaintiff forfeited her right to request attorney fees because she failed to request them on the original restraining order request form.

The Court of Appeal affirmed, noting that statutory attorney fees under these circumstances need not be pleaded and proved at trial. The court cited Mabee v. Nurseryland Garden Centers, Inc. (1979) 88 Cal. App. 3d 422, 425. The court of appeal noted that where a claim for attorney fees is part of the “cause of action” rather than being authorized by statute, a fee claim must be pleaded and proven. However, where attorney fees are authorized by statute, no similar procedural or evidentiary base is required. Based on this reasoning, the Court of Appeal affirmed the ruling of the trial court.

ATTORNEY FEES GRANTED IN PRISONER LITIGATION UNDER PRIVATE ATTORNEY GENERAL DOCTRINE

 

In In re Butler, 2015 DJDAR 5345, the California Court of Appeal for the First Appellate District decided a prison case and awarded attorney fees under the Private Attorney General Doctrine contained in CCP§ 1021.5. The court noted that attorney fees can be awarded in an action that “resulted in the enforcement of an important right affecting the public interest if . . . a significant benefit . . . has been conferred on the general public or a large class of persons.” CCP§ 1021.5. Here, the court concluded that the calculation of a prison term and the constitutionality of that process, was the subject of a “settlement.”  The court found that the resolution potentially favored a large class of persons. On this basis, the court concluded that the prisoner was entitled to attorney fees because the settlement conferred a benefit as defined by the statute. The amount of fees requested, however, was found to be excessive and unreasonable, and the court ordered the parties to meet and confer to determine whether a settlement could be reached as to that issue as well.

ATTORNEY FEES AWARDED IN FIRST IMPRESSION

 

In Ryan v. Editions Limited West Inc., 2015 DJDAR 5455, the U.S. Court of Appeal for the Ninth Circuit decided an important issue of first impression: does the Copyright Act of 1976 preclude enforcement of a contractual attorney fee provision in copyright based litigation?

An artist sued Editions Limited West Inc. (ELW), an artwork publisher, alleging claims for contributory copyright infringement. The artist ultimately prevailed in her copyright claim after protracted litigation. The district court awarded her attorney fees pursuant to the fee‑shifting provision of the parties’ publishing agreement.

The artist requested $328,078.00 in fees plus interest and costs. The district court awarded her only $51,364.00 by allocating fees to earlier phases of the litigation. The trial court reasoned that these activities were not directly attributable to prosecution of the copyright claim.

The Ninth Circuit reversed in part. The court noted that the Copyright Act preempts all state law claims that fall within the general scope of copyright. However, prior precedent has established that the Copyright Act does not preempt state law allowing for a “fee‑shifting provision.” The court specifically pointed to CCP § 1021, which permits contractual fee‑shifting under California law. Since the fee‑shifting provision under CCP § 1021 was not in conflict with the Copyright Act, and because the defendant was on actual notice of the artist’s rights with respect to her artwork, the Ninth Circuit concluded that the district court properly awarded the artist attorney fees.

The Ninth Circuit went on to find that the trial court’s reduction in fees was not appropriate for lack of documentation. Although a district court has the authority to reduce the amount requested, it must provide “an adequate explanation” for its fee calculation. The district court abused its discretion in failing to provide an adequate explanation given the great disparity between the artist’s requested fees and the ultimate award.

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.