Gary A. Bresee

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Gary Bresee is a partner in the firm’s San Francisco office. He has worked on a wide range of business litigation matters for insurance companies, corporations, partnerships and individuals.
Mr. Bresee is a trial attorney with more than 20 years litigation and trial experience in complex business litigation, insurance coverage, complex insurance litigation, bad faith, employment law, attorney fee disputes, appellate practice, and claims under California’s Unfair Business Practices statutes. He also has experience in disability, life, health and annuity claims, as well as real property transactions and litigation. Since 1992 he has litigated, consulted and served as an expert in attorneys’ fee disputes and the nature and scope of an insurer’s duty to defend. The underlying cases have involved construction defect litigation, commercial disputes, personal injury claims arising from clean room litigation, Buss allocations, employment claims, intellectual property and workers’ compensation litigation. His experience includes jury trials, court trials, mediations and arbitrations. His appellate experience includes appeals and petitions for review before the California Courts of Appeal and the United States Court of Appeals for the Ninth Circuit.
Mr. Bresee’s representative matters include:

  • In a case where the insurance industry avoided a significant tax increase on deductible worker’s compensation policies, Mr. Bresee defended an insurance company against the taxing authority for workers’ compensation premiums for the State of Arizona. The State alleged that the insurance industry, as a whole, was under-reporting premium taxes on large deductible workers compensation policies sold in the state. The case was dismissed on the merits in November 2007.
  • In several construction defect coverage cases Mr. Bresee successfully defended the insurers from bad faith allegations and claims for punitive damages.
  • Mr. Bresee helped obtain a verdict in excess of one million dollars against a law firm after a jury trial concerning the firm’s billing practices.

  • Significant Cases
    Mr. Bresee served as a defense expert in a case which decided the reasonableness of attorney fees, City of Los Angeles v. County of Kern, Case No. CV 06-5094 GAF (VBKx), (September 3, 2008). U.S. District Judge Gary Allen Feess found Mr. Bresee’s testimony highly persuasive and adopted the majority of his recommendations. Click here to read the full decision.


Articles By This Author

Can Your Fee Dispute Rise to the Level of Unfair Competition? Maybe; but Not This Time.

A fee dispute between Travelers, its contractor/insured and the insured's counsel, is not your run of the mill fee dispute.  Travelers alleges the existence of an illicit rate agreement between the contractor and its lawyers whereby the lawyers allegedly billed Travelers at a higher rate than the firm actually charged the contractor/insured.  Travelers property Casualty Company of America v. Centex Homes et al. (Case Nos. 3:13-cv-00088 and 4:12-cv-00371, Northern District of California). 

Centex Homes, Travelers' insured, was represented by Newmeyer & Dillon LLP in several construction defect actions arising out of multiple housing developments.  Travelers agreed to defend Centex in the underlying cases.  However, on May 11, 2011, Travelers uncovered the existence of the illicit rate agreement between Centex and Newmeyer.  Travelers sued Centex and Newmeyer for, inter alia, fraud, breach of fiduciary duty and unfair competition.

Judge Samuel Conti recently ruled, however, that:

  • The unfair competition claim should be dismissed due to the lack of any impact on the general public -- one of the requirements of the fraud prong of the UCL;
  • The fraud claim should be narrowed to include only billing invoices submitted prior to May 11, 2011 -- the date Travelers discovered the illicit agreement; and
  • The breach of fiduciary duty claims can only apply to the period after Travelers agreed to defend Centex, since prior to that date Newmeyer owed no fiduciary duty to Travelers. 

Are Courts Becoming More Willing to Carefully Scrutinize Claims for Fees?

In Ellis v. Toshiba America Information Systems, Inc., C.A. 2nd/1, DAR p. 10497, plaintiffs counsel, after settling a class action, initially requested over $24 million in attorneys' fees.  However, the court not only denied that request, but then sanctioned the lawyer $165,000. The California Court of Appeal for the Second Appellate District affirmed those sanctions. 

The class action was filed against Toshiba based upon laptops which allegedly shut down intermittently. When plaintiff's counsel requested over $24 million in fees after the case settled, Toshiba sought discovery in response.

When Toshiba asked for copies of time sheets, despite repeated court orders, counsel allegedly delayed the production, claiming she deleted original copies of the time sheets. The lower court found that Plaintiffs' counsel refused to cooperate with a court ordered investigation into her fee request, found contradictory, multiple billing entries, and also determined the request lacked credibility.

Counsel later decreased her request to $12 million, but discrepancies were still found between written time slips and summary tables.  The court described the initial request as unrealistic, and found that she refused to produce information, failed to preserve data (and perhaps willfully destroyed underlying time records).  Based upon these findings, the court denied her fee request, instead awarding $176,900 to the law office staff.

When Does an Insurer Forfeit Its Right to Claim Fees Were Unreasonable or Unnecessary?

J.R. Marketing LLC v. The Hartford Cas. Ins. Co., A133750 (May 17, 2013)(unpublished), was just recently decided by the California Court of Appeal for the First District. This is a fascinating case from an insurance perspective, with Cumis counsel issues, attorneys' fees claims, Buss allocation of fees between matters and waivers of Civil Code Section 2860 protections. This case has it all.   

A carrier issued two CGL policies, and when the insured tendered their defense of a lawsuit under the policies the carrier initially denied a duty to defend, claiming the occurrences took place prior to the policy periods.  After the insureds filed a lawsuit against their insurer, the carrier agreed to defend under a reservation of rights, but declined to provide and pay for independent counsel, or Cumis counsel, pursuant to the California Supreme Court decision in San Diego Fed. Credit Union v. Cumis Ins. Society Inc. (1984) 162 Cal.App.3d 358.

When the court granted the insureds’ motion for summary adjudication, it held that the carrier not only had a duty to defend, but also had a duty to retain independent Cumis counsel.  The carrier then paid over $15 million in fees and costs incurred by Cumis counsel, but in an effort to seek reimbursement of certain fees, the carrier then filed a cross-complaint against the Cumis firm for reimbursement of fees incurred in unrelated, uncovered matters, fees incurred for uninsured entities, pre-tender fees and any unnecessary and unreasonable fees. 

The Court of Appeal first recognized that certain protections were normally available to the carrier under Civil Code Section 2860, including a provision limiting the hourly rates paid to independent counsel, and the right to arbitrate the fee issues.  But the carrier was deemed to have forfeited those 2860 protections due to its refusal to accept tender of the defense.

Secondly, the Court recognized that an insurer may very well have a right of reimbursement under Buss v. Superior Court, (1997)16 Cal.4 35, but the novel question before the Court was, “from whom?”  

Reasoning that due to the important policies created by 2860, the court held that the breach of 2860 meant that the carrier lost all right to control the defense, and that consequently the carrier should not be able to obtain the same result by seeking reimbursement from the firm after the fact.  The insured was left to negotiate the fee arrangement with the firm on its own, and otherwise control the defense of the action, so the carrier was not allowed to seek reimbursement in a direct action against the firm. 

But the Court also limited its holding to the facts of the case, explicitly stating that the decision did not apply to carriers seeking reimbursement from the insureds directly, and did not apply to those situations where the carrier may be claiming that independent counsel utilized fraudulent billing practices.

 

Another Lawyer Disbarred Over Fen-Phen Class Action Settlement

The Kentucky Supreme Court disbarred a Cincinatti class action lawyer for his role in the notorious $200 million class action settlement concerning the diet drug Fen-Phen.

But he was not the first.  According to this article, several lawyers and even a judge were similarly disbarred, and two of those lawyers were convicted on federal charges and remain behind bars. 

Unfortunately, the general public tends to assume that a few bad apples spoil the whole bunch.  And so it goes.  The general reputation of lawyers continues to suffer.

On Profitability of Alternative Fee Arrangements

District Courts "Must Show Their Work" and Provide Detailed Figures when Deciding Fee Awards

In Padgett v. Loventhal, the Ninth Circuit Court of Appeals decided District Courts must explain how they reduce requests for fees and costs from partially victorious plaintiffs.  

Joseph and Darla Padgett filed a civil rights complaint against eight defendants arising from a dispute with the City of Monte Sereno, California, and enforcement of a fence height ordinance. Plaintiffs claimed violation of their First Amendment rights to free speech and their Fourteenth Amendment rights not to be subjected to selective enforcement of the law (as well as other claims).  

Defendants chipped away at the claims and by the time of trial only two claims survived and only two defendants remained.  By the time it reached the jury only one claim remained.  Ultimately, only one plaintiff prevailed on one claim against one defendant.  The jury awarded $1 in nominal damages and $200,000 in punitive damages. 

The prevailing plaintiff then sought attorneys' fees under 42 U.S.C. section 1988. Judge Ware properly held that some of his claims were not successful, so fees for the entire litigation may be excessive. The District Court eventually reduced plaintiff's $3.2 million fee request to $500,000, and reduced the $900,000 request for costs to $100,000. 

However, because the District Court did not explain how it determined these figures, the Ninth Circuit panel was unable to review the court's reasoning and vacated and remanded for a more complete explanation. While the lower court properly recognized that plaintiff did not prevail on the vast majority of his claims, without a calculation, the appellate panel was unable to review the decision for an abuse of discretion. 

We have long held that district courts must show their work when calculating attorneys fees," citing several previous cases for that conclusion.

Moreover, the lower court must "specify reasons" for not awarding costs. This rule is particularly important when, as here, there are many overlapping claims and a very mixed result. In these types of cases, work often bears on multiple claims, only some of which are successful. Fees for work which relate only to unsuccessful claims should not be awarded. The difficult test, of course, is work which proves to be beneficial to both successful claims and unsuccessful claims. Generally, the court should award fees for work contributing to the successful result even if the work is also useful to an unsuccessful claim. Finally, the fees must also be reasonable. 

Because the lower court did not show it's work, the court vacated the award of both costs and fees and remanded for an explanation of how it used the lodestar method to reduce Padgett's fees and costs.

New ABA Formal Opinion Allows Counsel to "Change Horses Midstream"

What if a client requests that the lawyer switch from being compensated by the hour to accepting a contingency fee instead?  How would the lawyer avoid any conflicts, fulfill her duties of disclosure and avoid any other ethical violations to make that change, and how would this be done in a way to maximize its enforceability?

The American Bar Association (ABA) issued a new formal opinion (11-458, Changing Fee Arrangements During Representation, Aug. 4, 2011) which may help answer that question.  11-458 clarifies the circumstances wherein a lawyer may modify an existing fee agreement during the representation, or "change horses midstream."  

Generally, modifications of fee arrangements are permissible under the Model Rules, but the lawyer must show any modification was (1) reasonable under the circumstances [ABA Model Rule 1.5(a), hereinafter "Rule"], (2) communicated and explained to the client [Rule 1.4 and 1.5(b)], and (3) accepted by the client. 

Being a contract between two parties, fee arrangements are generally governed by simple rules of contract law.  However, counsel has special burdens due to the lawyer's fiduciary duty to the client.  Thus, any changes in the arrangement will be initially regarded as suspect, and lawyers are not free to change the existing relationship by only giving notice to the client.  First and foremost, the new arrangement must be fair and reasonable for the client in light of the circumstances, under Rule 1.5(a).      

  • For example, many firms increase their hourly billing rates annually without negotiating every rate increase with the client.  If clearly communicated to the client this may be permissible, so long as (1) the client is informed, (2) the client consents, and (3) the increase is reasonable under the circumstances;   
     
  • A lawyer and client also may agree to change an hourly fee agreement to a contingent fee agreement, or vice-versa, provided that the lawyer complies with Rule 1.5(c) (requirements for a contingent fee agreement include a writing signed by the client);
     
  • However, a lawyer may not unilaterally impose a "success fee" on a client, in essence altering the arrangement from an hourly rate to a contingency fee, without the client's informed consent; and
     
  • An attorney may request new security for a fee, provided that Rule 1.8(a) is complied with (disclosure and consent requirements of doing business with a current client).

Consequently, it is possible to change horses midstream, but the jump from one horse to the other should be done carefully, and with both eyes wide open.

Supreme Court Allows Attorneys' Fees in Mixed Action; Defendants Entitled to Fees for the Friviolous Portion of the Suit

Plaintiffs often file lawsuits which eventually contain frivolous as well as non-frivolous claims.  When the defendant prevails in a civil rights suit which contains both types of claims, what is the court to do when the defendant requests its attorneys' fees as the prevailing party? 

Generally, in certain civil rights cases the "prevailing party" may be entitled to "reasonable attorneys' fees" under 42 U.S.C. 1988.  Typically, the plaintiff is in the position of requesting it's fees, but when the defendant prevails courts have held defendants may be entitled to it's fees only when the claims are frivolous, unreasonable or without foundation.  Can the defendant in such a mixed case seek all of it's fees from the plaintiff?

The United States Supreme Court recently answered that question "no."  However, defendant may seek a portion of it's fees; but only those attributable solely to the frivolous portion of the suit.

In Fox v. Vice (June 6, 2011), ___ U.S. ___, 10-114, the newly elected police chief of Vinton, LA, claimed he was subjected to dirty tricks during his campaign, and filed suit against the incumbent chief based on state law claims (defamation) as well as federal civil rights violations under 42 U.S.C. 1983.  Once the defendant filed a motion for summary judgment, plaintiff admitted that his federal civil rights claims were not valid.  

The District Court then granted defendant his request for attorneys fees under Section 1988 based on all of the hours incurred in the suit, on the grounds that the federal claims were frivolous.  However, plaintiff's state law claims had yet to be determined, and therefore had not been determined to be frivolous.  No differentiation was made between the fees incurred for the state law vs. the federal claims.

The Supreme Court reversed, holding defendant would be entitled to only those costs defendant would not have incurred but for the frivolous claims.  Stated without the double negative, defendants may be entitled to fees in a case of both frivolous and non-frivolous claims, but the entitlement goes to those fees incurred for the frivolous claims only. 

The court reasoned since plaintiffs may be entitled to fees even though they do not prevail on every claim, so too should defendants be entitled to a portion of their fees if some of the claims are frivolous. 

The critical question, then, is one of allocation.  The Supreme Court provided us with some guidance on that process as well:

  • The fees attributable to non-frivolous claims are not recoverable;
  • The fees attributable exclusively to frivolous claims are recoverable;
  • The difficult questions, of course, arise from the fees for defense against non-frivolous and frivolous claims alike (such as depositions which involve both issues);
    • Defendants are entitled to the fees incurred because of, but only because of, the frivolous claims;
    • If the deposition, for example, would have taken the same amount of time regardless of the existence of the frivolous claims, then the fees incurred for that deposition should not be recovered;
    • If the frivolous claims created the right to remove to federal court, thereby increasing the litigation costs, then those fees may be recoverable; and
    • If the frivolous claims triggered a new area of the law, requiring specialized counsel, the increased marginal costs and fees of new counsel may be recoverable.

 

Is It Becoming Near Impossible for a Prevailing Defendant to Collect Its Fees?

Once again, the Ninth Circuit Court of Appeals has reversed a District Court decision granting a prevailing defendant its attorneys' fees and costs. 

In R.P. v. Prescott Unified School District, 09-15651 (9th Cir., Feb. 4, 2011), the parents of an autistic child brought an administrative action under the Individuals with Disabilities Education Act (IDEA) against the School District, alleging the District failed to provide their child with free, appropriate public education. 

When an administrative law judge ruled against them, the parents appealed to the District Court alleging the same IDEA violations, but also included claims under the Americans with Disabilities Act (ADA) and the Rehabilitation Act

The District Court not only found for the School District, but also found the parents' action both without foundation and brought for an improper purpose, consquently awarding the District its attorneys' fees and costs. 

While the Ninth Circuit generally affirmed the substantive portion of the lower court's decision, it reversed the fee award.  

The court determined the action was not unfounded, citing to the parents' claim for additional education, which was a remedy available to them under the IDEA statutory scheme. The parents had made plausible arguments; the fact that their arguments did not carry the day did not make those arguments automatically frivolous.

Similary, the court determined the action was not brought for an improper purpose. 

If the claims were not frivolous, then as a matter of law they could not have been filed for an improper purpose. Moreover, the non-IDEA claims were not frivolous either, because the parents would have had plausible claims under the ADA and Rehabilitation Act, but they were not allowed to amend their complaint after the cutoff date for amended pleadings.

While it is not impossible for a prevailing defendant to collect its statutory fees from a plaintiff, the burden of proof can be daunting in most instances.

Dividing Attorneys' Fees Pro Rata by Number of Claims May Not be Sufficient

In Harris v. Maricopa Count Superior Court, the Ninth Circuit remanded an attorneys' fee award back to the District Court when defendants and the lower court allocated fees to the prevailing defendant by determining which claims carried the right to fees to the prevailing defendant, and then using a pro rata approach to divide some of the fees by the number of claims.  The majority opinion held that this was improper. 

Judge Bybee's dissent strikes to the heart of the matter.  Does the "new rule" from the majority render a defendant's ability to recovery attorneys' fees almost impossible?

Vernon Harris brought a civil rights action against the Superior Court of Maricopa County alleging gender and race discrimination as well as state law claims of breach of contract and defamation.  Harris' claims were ultimately dismissed when defendant's pre-trial summary adjudication motions were granted. 

The court held it improper to allocate the general fees across the ten claims and then determining one-tenth of the fees were incurred for each claim.  This strikes at the heart of the civil rights policy. which is to encourage victims of discrimination to seek judicial relief and avoid self-help actions.  First, if defendant is seeking fees in a civil rights case, exceptional circumstances must be demonstrated.  Then, only the amount of attorneys' fees attributable exclusively to a plaintiffs' frivolous claims will be awarded.  When, as here, both non-frivolous and frivolous claims were brought, the burden rests with the fee claimant -- the defendant -- to show certain work performed which would not have been necessary but for the inclusion of the frivolous claims.  The Ninth Circuit then acknowledged that when, again as here, the complaint lists various legal theories all based on essentially the same facts, the burden on the defendant to establish which specific fees were attributable solely to the frivolous claims is, from a practical viewpoint, extremely difficult to prove.  At any rate, the Ninth Circuit held the burden is not carried by allocating fees in the pro rata fashion which was employed here.

I do not believe the burden is impossible, as Judge Bybee has intimated in his dissent.  But the amount of specificity is certainly important to a prevailing party, fee claimant defendant.

Older Entries

January 7, 2011 — Does Negotiating a Fee Award along with Substantive Relief Create a Conflict of Interest?

November 12, 2010 — Be Careful When Alleging Your Client's Right to Attorneys' Fees Because It May Come Back to Haunt You

September 16, 2010 — Dismissal of a Party Does Not Always a Prevailing Party Make

August 13, 2010 — Native Americans Entitled to $239,620 in Fees By Conferring a Public Benefit

June 10, 2010 — Federal Courts Have Jurisdiction to Review Title VII Administrative Attorney Fee Awards

April 30, 2010 — US Supreme Court Limits Fee Enhancements to "Exceptional Cases"

January 11, 2010 — Before You Request Your Fees from Your Opponent, Be Sure You Have Prevailed

January 5, 2010 — Carrier Responsible for the Insured's Fees Based Upon Attorney Contingency Fee Agreement

December 1, 2009 — Insurer's Duty of Good Faith Extends to All Insureds in Multiparty Litigation

August 24, 2009 — Federal Judge Reduces Fees Requested by 75%

June 26, 2009 — Attorney's Fees Recoverable Under Victim's Bill of Rights, but Only If Reasonably Incurred

May 21, 2009 — Class Counsel and Objectors May Both Be Entitled to Fees

May 15, 2009 — Fees Must Be Allocated Between Successful and Unsuccessful Claims in the Pigford Litigation

May 1, 2009 — Ninth Circuit Reverses Trial Court's McCowan Decision on Prevailing Party Fees

March 24, 2009 — Personal Credibility is the Key to Success

March 6, 2009 — Practice Pointer: Have You Appealed Both the Final Judgment and the Fee Award?

March 6, 2009 — Prevailing Parties Only Entitled to Fees Reasonably Incurred: Beware the Duplication of Efforts

March 3, 2009 — The San Francisco Attorney Fee Dispute Program: "Attorney Fee Disputes in a Volatile and Uncertain Economy"

March 3, 2009 — Welcome to Our Blog

March 3, 2009 — Know Your Relevant Community and Prevailing Market Rates

February 17, 2009 — Has the Billable Hour Taken Another Hit?

January 14, 2009 — Scott Turow Believes The Billable Hour Must Die!