Date of Accrual of Interest on Attorney Fee Award Is Not Necessarily from the Date of the Original Judgment

In Khazan v. Braynin, 2012 DJDAR 7124 (2012), the California Court of Appeal for the First Appellate District clarified the rule on when interest begins to run on a fee award which is the subject of an appeal. The court of appeal clarified the applicable rule in the situation involving an appeal and a remand for further proceedings. In those situations, the court held that interest begins to run not from the date of the original judgment, but from the date the fee award is rendered after the case is remanded for further proceedings and decided.

The plaintiff sued the defendant on a promissory note, claiming there was a default. The plaintiff prevailed on most claims in the litigation.

The trial court issued an order awarding the plaintiff contractual attorney fees of over $1.3 million. In an earlier appeal, the court affirmed the judgment on the merits and reversed and remanded the case for further proceedings relating to the amount of attorney fees which were the subject of the award.

On remand, the trial court reduced the fee award. The trial court also ordered that the interest would accrue on the award from the date of the modified judgment reflecting that order. The plaintiff challenged the trial court’s ruling on when interest on the award should begin to accrue. The plaintiff contended that interest should run from the date of the original judgment on the merits.

The court of appeal affirmed the lower court’s decision. The court stated that in these situations, interest on the fees runs from the date of the modified order awarding the amount of fees, not from the date of the original judgment. When a judgment is reversed on appeal, the new award bears interest only from the date of the new judgment.

Counsel's Mistaken Decision Constituted Good Cause to Extend the Deadline for Filing of a Fee Petition

In Lewow v. Surfside III Condominium Owners’ Assn. Inc., 2012 DJDAR 1445 (2012), the California Court of Appeal for the Second Appellate District decided a novel case dealing with the interplay between a fee award entered under California’s “common interest development” statute and the Federal Bankruptcy Code.

On February 3, 2010, judgment was entered in favor of a condominium owners’ association (“Association”) on a complaint filed by one of the condominium owners. He alleged that the Association failed to perform critical duties.

On February 10, notice of entry of judgment was mailed to the defendant, and the defendant filed for relief under Chapter 13 of the U.S. Bankruptcy Code. On July 23, the bankruptcy proceedings were dismissed. Thereafter, notice of the dismissal was served two days later on the Association.

Later, approximately 32 days after the mailing of the notice of dismissal, the Association filed a motion for attorney fees pursuant to Civil Code Section 1354(c). This statute is commonly referred to as the “common interest development” statute. The defendant objected to the fee petition, arguing that it was untimely. The Association argued that the motion for attorney fees must be filed no later than 60 days after notice of entry of judgment.

Implicit in the Association’s argument was that the time to file the motion was suspended during the bankruptcy proceedings. The trial court agreed with the Association’s argument. The court awarded the Association its reasonable attorney fees. The defendant pursued an appeal and the court of appeal affirmed the judgment of the lower court.

The court of appeal ruled that 11 U.S.C. Section 108(c)(2) did extend the time frame for filing the attorney fee motion and that the time frame to bring a claim for attorney fees was extended until 30 days after notice of the dismissal of bankruptcy proceedings.

Although the deadline was extended, the lawyer for the defendant missed the deadline by two days. The court ruled that good cause existed to relieve the missed deadline.

Under California Rules of Court Rule 3.1702(b), the court may extend the time for filing a motion for attorney fees for good cause. Good cause includes a mistaken but objectively reasoned decision by the lawyer.

Because Association’s counsel made a mistaken but reasonable determination that the 60‑day period was tolled by the bankruptcy stay, the court allowed the late filing of the motion for attorney fees.