In Coalition for a Sustainable Future in Yucaipa v. City of Yucaipa, 2015 DJDAR 7857, the California Court of Appeal for the Fourth Appellate District decided an interesting case under the California Environmental Quality Act (CEQA).

An environmental organization filed a CEQA petition.  It challenged a municipality’s approval of a “big box” store.  The trial court denied the petition and the environmental group filed an appeal of that decision.  While the appeal was pending, the developer abandoned the project due to a contractual dispute and the city revoked the permits for the project.  The environmental group then filed a motion for attorney fees pursuant to Code of Civil Procedure Section 1021.5.  The group claimed “their actions” led to denial of the permit.  The trial court rejected that “catalyst argument.”

The court of appeal affirmed the trial court’s decision.  The appellate court noted that CCP Section 1021.5 allows the court upon motion to award attorney fees to a successful party against an opposing party where the litigation results in the enforcement of an important public policy interest.  The “catalyst theory” allows fees “if the defendant changes its behavior substantially” due to the litigation.  The court ruled that the catalyst argument failed in the instant matter as the developer abandoned its project solely due to a contractual dispute.  Because the CEQA action was not “the cause” for the city’s revocation of the land use permit, the environmental group was not entitled to fees.



 In T.B. v. San Diego United School District, 2015 DJDAR 8756, the United States Court of Appeals for the Ninth Circuit decided a fee case arising under the Individuals with Disabilities in Education Act (IDEA).

The case involved a protracted dispute between parents and the San Diego Unified School District regarding an individualized education plan under the IDEA.  The parents alleged that the School District violated their child’s civil rights under both the Americans with Disabilities Act and the Rehabilitation Act.  Summary judgment was granted to the School District.  However, the court also awarded the parents more than $50,000 in attorney fees and costs for a “partial victory” they had secured in the course of the administrative litigation.  The parents then filed an appeal on the fee award (and other issues).

The Ninth Circuit affirmed in part and reversed in part.  The case was remanded for further proceedings.  The Ninth Circuit panel noted that under the IDEA the court may award reasonable attorney fees to a “prevailing party.”  However, the statute prohibits an award if “the relief finally obtained . . . is not more favorable . . . than the offer of settlement.”  The Ninth Circuit found that the settlement offer made by the School District was not more favorable from the perspective of the parents when viewed from the standpoint of the relief sought in the case.  The Ninth Circuit also noted that the parents were justified in rejecting the settlement because it had “inferior” characteristics.  The Ninth Circuit concluded that the court should not have denied the fees requested.


 In Monterossa v. Superior Court (PNC Bank), 2015 DJDAR 6488, the California Court of Appeal for the Third District decided a case of first impression under Code of Civil Procedure Section 2924.12(i) enacted in 2012.  The statute allows a borrower to recover attorney fees if they obtain injunctive relief.  The question posed here was whether the borrower was entitled to fees when they only received a preliminary injunction as opposed to permanent injunctive relief.

The borrowers sought and obtained a mortgage from a bank.  Subsequently, the petitioners were unable to pay the loan and they submitted a loan modification agreement to the bank.  The borrowers were told their loan modification was denied due to missing financial documentation.  However, the borrowers had previously received confirmation that the bank had received a “completed application.”  The borrowers were granted a preliminary injunction enjoining the sale of their residence and filed a motion for attorney fees and costs under Civil Code Section 2924.12(i).  The Superior Court denied the fee request, concluding that the statute did not allow for a fee award where the party obtained only a preliminary injunction.

The borrowers attacked the ruling of the Superior Court via writ relief.  The court of appeal reversed, noting that Section 2923.6(c) prohibits the common bank tactic of “dual tracking.”  The court of appeal commented that when a bank pursues foreclosure at the same time a defaulting borrower seeks a loan modification, a borrower may seek injunctive relief.  Section 2924.12(i), meanwhile, allows a “prevailing borrower . . . in an action” who obtained injunctive relief or damages, to recover reasonable attorney fees and costs.  Because the clear language incorporates both preliminary and permanent injunctive relief, the borrowers should have been awarded fees.



 In U.S. v. Kim, 2015 DJDAR 9233, the United States Court of Appeals for the Ninth Circuit decided a complex case under the Civil Asset Forfeiture Reform Act (CAFRA).

An attorney successfully represented a family in defeating the federal government’s attempts to forfeit property seized in the course of a criminal investigation.  The attorney retainer agreement provided for assignment of any attorney fee award to the lawyer.  The family received attorney fee awards under CAFRA, which mandated that the United States pay the prevailing plaintiff’s reasonable attorney fees incurred in the proceedings.  The court ordered the attorney fees be paid directly to the lawyer, noting that the family “was allowed” to assign the fee awards.

The Ninth Circuit vacated the award, noting that under the Act, a claim against the United States may not be assigned to a third party unless certain technical requirements are met.  The Ninth Circuit concluded that the retainer agreement did not satisfy the Act’s requirements.  Because the attorney fees were awarded under CAFRA, they were payable to the claimant and not the claimant’s attorney.




In Bergstein v. Strook & Strook & Lavan LLP, 2015 DJDAR 5177, the California Court of Appeal for the Second District ruled that a plaintiff cannot establish the requisite “probability of success on the merits” in a SLAPP suit motion where the claims are barred as a matter of law by the litigation privilege.

The Plaintiff sued the Defendants’ attorneys, alleging among other things that they aided and abetted another party’s alleged breach of fiduciary duty. The allegations focused on an alleged improper attempt to obtain the Plaintiff’s proprietary information to use in litigation. The Defendants’ attorneys moved to strike the complaint under the anti‑SLAPP statute. The court granted the Defendants’ motion and awarded reasonable attorney fees.

The Plaintiff appealed and the court affirmed. The court noted that under California Code of Civil Procedure Section 425.16(b)(1), the anti‑SLAPP statute, a defendant may bring a special motion to strike a cause of action arising from that person’s rights of free speech under the United States and California Constitutions. To prevail, the moving party has to show that the challenged cause of action arises from protected activity. “Statements made in litigation, or in connection with litigation, are protected” by Section 425.16(c). If the moving party meets its burden, the other party has to show a probability of prevailing in the litigation. In this case, the court ruled that the Defendants’ litigation activities were at the “core” of the Plaintiff’s claims and were thus protected. Thus, the court of appeal concluded that the trial court correctly granted the Defendants’ SLAPP suit motion.



In Baker Botts LLP v. ASARCO LLC, 2015 DJDAR 6509, the United States Supreme Court ruled that Section 330(a)(1) of the U.S. Bankruptcy Code does not authorize an award of attorney fees for defending a fee application.

ASARCO hired law firms to assist in a Chapter 11 bankruptcy. The two law firms prosecuted fraudulent‑transfer claims against ASARCO’s parent company. After the victory, the law firms sought compensation for their fees and filed applications in bankruptcy court. The parent company challenged the fee petitions and lost. In addition to receiving an award for the services performed, the Court also awarded the firms fees for the services incurred in “defending” a fee application. The Court of Appeals for the Fifth Circuit reversed that part of the decision and on appeal to the high court, SCOTUS affirmed.

The Court referenced the often cited to American Rule, which states that “[e]ach litigant pays his own attorney’s fees” unless otherwise provided by contract or statute. Here, the firms cited Section 327(a) of the Bankruptcy Code, which states that fees can be awarded to “professionals . . . hired to serve the administrator of the estate for the benefit of the estate.” The Court noted, however, that litigating fee applications against the bankruptcy administrator are not services performed for the benefit of the estate. The Court noted that if the legislature wanted to shift the burdens of fee‑defense litigation, it could have done so as it has in other Bankruptcy Code provisions.



In Litt v. Eisenhower Medical Center, 2015 DJDAR 6921, the California Court of Appeal for the Fourth District ruled that CCP § 998 fees were recoverable by a defendant even though another defendant had an obligation to indemnify the party for the very same costs incurred.

The Plaintiff sued Eisenhower Medical Center (EMC) for negligence. EMC served the Plaintiff with a CCP Section 998 (CCP § 998) offer. The Plaintiff rejected the 998 offer. The Plaintiff then added another entity as a Defendant. That entity owed an indemnity obligation to EMC.

Ultimately, the jury returned a verdict in the Plaintiff’s favor and against both Defendants jointly and severally. The Defendants then jointly requested costs and expert fees. The court ruled that EMC was the prevailing party. The court, however, declined to award EMC its § 998 expert fees because the later named defendant owed EMC an indemnity obligation, including the § 998 fees. The court entered an order striking all of EMC’s costs incurred after the new entity was named a Defendant.

The court of appeal reversed that part of the trial court’s ruling. The court stated that CCP § 998 is a fee‑shifting provision that allows the court to require the plaintiff to pay “a reasonable sum to cover costs…of expert witnesses…actually incurred and reasonably necessary…” (where an offer is made by a defendant and rejected, and the plaintiff fails to obtain a more favorable judgment). The court focused on language in Code of Civil Procedure Section 1033.5, which states that “costs are allowable if incurred, whether or not paid.” The court stated that the only interpretation of that language required payment of the § 998 fees, even where an indemnity obligation covered the same costs.



In Law Offices of Marc Grossman v. Victor Elementary School District, 2015 DJDAR 8356, the California Court of Appeal for the Fourth Appellate District ruled that the Trope Doctrine did not apply in litigation under the California Public Records Act. The Trope Doctrine states that a law firm that represents itself is not eligible to recover attorney fees.

A law firm represented a student in an action against an elementary school following an incident at the school. The firm pursued a mandamus petition pursuant to Government Code Section 6259, commonly known as the California Public Records Act (CPRA), to obtain documents specifying the amount of money the elementary school district had spent on its defense related to the incident. The Superior Court denied the petition. The law firm then filed an appeal.

The Fourth District granted the petition for writ of mandate and ordered the court to grant the request for information, as well as costs and attorney fees. After remand, the trial court denied the law firm’s request for attorney fees. The law firm filed another appeal, arguing that the court erred when it denied the attorney fees on the grounds an attorney representing himself could not recover such fees (the Trope Doctrine).

The Fourth District reversed the trial court a second time. The court noted that under the CPRA, members of the public can seek judicial enforcement to inspect public records. The court must award court costs and reasonable attorney fees to the prevailing plaintiff pursuant to Section 6259(d). Here, the law firm was the prevailing party in the underlying mandamus proceeding and should have received a fee award. The court stated that the Trope Doctrine did not apply as that action was based on CCP § 1717 which permits an award based on an action on a contract. This case was brought pursuant to the CPRA and involved completely separate public policy considerations.



By David McMahon


Susan Ye

In Bean v. Pacific Coast Elevator Corp. (2015) 234 Cal.App.4th 1423 , the California Court of Appeal for the Fourth Appellate District held that a trial court erred when it granted prejudgment interest on costs awarded in a personal injury lawsuit.

Plaintiff Daniel Bean was victorious in a personal injury lawsuit in which the jury awarded the him more than $1.2 million in damages. Subsequently, the trial court entered judgment in favor of the plaintiff for $1,306,425, which included $34,830 in costs that the trial court found to be proper. The trial court, however, also ordered prejudgment interest to be calculated on the entire amount of the judgment and the costs.

The Court of Appeal reversed the award of prejudgment interest on the entire sum. The court noted that pursuant to Civil Code Section 3291, the statute provides authority for a party to recover “interest on the damages” in “any action brought to recover damages for personal injury.” Also, where a plaintiff makes a pretrial offer under CCP 998, where the defendant does not accept the offer, and plaintiff then obtains a more favorable judgment, Section 3291 provides that “the judgment shall bear interest” pursuant to CCP 998.

The Court of Appeal analyzed the statutory language and concluded the wording was ambiguous. The court then reviewed applicable case law and concluded that no case has ever held that prejudgment interest may be awarded on costs. The court reasoned that awarding prejudgment interest on costs was improper because costs are not ordinarily considered part of the judgment. Hence, the court found that the trial court erred in awarding prejudgment interest on costs.



In Lee v. Silveira, 2015 DJDAR 5287, the California Court of Appeal for the Fifth Appellate District ruled on an interesting tort case involving the interpretation of CCP § 998. In the appeal, a personal injury plaintiff contended the trial court erred in denying her request for expert witness fees and prejudgment interest under Civil Code Section 3291. The Plaintiff argued she was entitled to such fees and interest, which totaled over $350,000, because the defendants “fail[ed] to obtain a more favorable judgment” (citing CCP § 998). The Plaintiff had previously made a § 998 offer in the sum of $1 million but the Defendant ignored the offer.

At issue in the case was the holding in the California Supreme Court case of Howell v. Hamilton Meats & Provisions Inc. (2011) 52 Cal.4th 541, 548.  In that case the court interpreted the “negotiated rate differential.” The differential is the difference between the billed rate for medical care and the actual amount paid for the services. However, the court concluded that a plaintiff was not entitled to recover the differential as economic damages in a personal injury lawsuit.

At trial, the Plaintiff received a verdict in excess of the $1 million § 998 offer. However, the court made specific findings that the Plaintiff’s judgment was subject to amendment concerning the reduction for the Plaintiff’s past medical expenses under the rate differential. The Defendant moved to reduce the jury verdict by the differential, which put the verdict under $1 million. The trial court sided with the Defendant and entered judgment for $887,098, which excluded the Plaintiff’s fees and interest. The Plaintiff filed an appeal of that decision.

The court of appeal affirmed. The court noted that under CCP 998, a party who declines an offer to compromise and fails to obtain a more favorable settlement may be compelled to pay the offeror’s expert witness fees incurred during trial. Because the judgment of more than $1 million expressly stated that it was subject to the stipulated reduction for the Plaintiff’s past medical expenses, the Defendant was only liable for $887,098. Because the net verdict was less than the Plaintiff’s CCP 998 offer, the court concluded that the Defendant was not liable for the Plaintiff’s fees under CCP 998.