Mixed bags create competing incentives. Here, one incentive got the best of Satchmed.

UWMC complied with the judgment by offering the 22 offices to Satchmed, which decided to purchase them. But those other 12 units. . . well, Satchmed just couldn’t let go. And those guys at Satchmed must have thought, “Hey, if you think about it, we won on 22 of 34 units, so aren’t we the prevailing party?” So Satchmed appealed, challenging those portions of the judgment regarding the 12 units and the prevailing party determination.

Under the established doctrine that a party’s voluntary acceptance of the benefits of a judgment — or even a portion of them — precludes an appeal by that party, Satchmed’s appeal is dismissed on the ground that it waived its right to appeal by purchasing the 22 units. Satchmed claimed the doctrine did not apply because of two equally established equitable exceptions. The court not only rejected the arguments, but noted that Satchmed’s conduct was manipulative.

First, Satchmed claimed that its acceptance of the benefits was compelled, rather than voluntary, because it risked losing its right to purchase the 22 units if it appealed the judgment. After noting that Satchmed could have appealed “without fear that its right to accept UWMC’s offer would evaporate by the simple act of filing” because matters relating to enforcement of the judgment would have been automatically stayed by the appeal, the court points out the lack of any real compulsion:

The judgment did not put Satchmed at risk of losing any property it already owned. Furthermore, Satchmed was not at risk of forfeiting monies to which it was entitled by statute if it chose to prosecute an appeal. Satchmed just wanted to aggrandize its award without risk. It simply had to choose whether it wanted to file an appeal in pursuit of an even greater award than the judgment provided to it, which would entail risking a reversal of the favorable portion of the judgment, or whether it wanted to simply accept the benefit of the favorable portion of the judgment, and thereby waive the right to appeal from the unfavorable portions. Having to make a choice of this nature does not make the chosen avenue involuntary.

Second, Satchmed contended the judgment was severable, but the court find that the only facts that Satchmed relied on were created by it after the judgment, and points out that a party may not make a nonseverable judgment severable by its post-judgment actions:

[T]he portions of the judgment pertaining to the 12 leased units and the prevailing party status are not severable. Satchmed attempts to use clever timing to convert a nonseverable judgment into a severable one. We look here at the judgment at the time it was entered, before any party appealed therefrom. At that point in time, it is clear that the judgment was not severable. A ruling pertaining to the 12 leased units easily could have affected the 22 owned units, and vice versa. But Satchmed seized the portion of the judgment beneficial to itself, and took title to the 22 owned units. It then said that no ruling on the 12 leased units could possibly affect the status of the 22 owned units. In other words, it had then put the 22 owned units beyond the reach of UWMC’s attack and beyond the purview of this court. Satchmed’s claim that the judgment was then severable is essentially a claim that the judgment had become severable because Satchmed had made it so. It does not work that way. Satchmed cannot have its cake and eat it too. Having accepted the benefits of the portion of the judgment making title to the 22 owned units available to it, it cannot now attack the portion of the judgment making title to the 12 leased units unavailable to it.

In short: a judgment is either severable when entered or not. One cannot convert a severable judgment into a severable one.

Are you tempted by the juicy part of a judgment, but tempted to appeal the rest? Think it over carefully before you decide what to do, and especially think twice about maneuvering to make the facts fit within an exception to the “acceptance equals waiver” rule. It won’t pay off.

In Melbostad, the trial court granted defendant’s special motion to strike under California’s anti-SLAPP statute (Code of Civil Procedure section 425.16) and entered an order dismissing the complaint “with prejudice.” It subsequently granted a motion for fees brought by one of the defendants, then entered a judgment that “recapitulated” the previous orders granting the special motion to strike and granting the motion for attorney fees.

Appellant challenged the fee award by appealing from this second “judgment” rather than from the order granting the fee motion.  Which is what brought the timeliness of the notice of appeal into play.  His notice of appeal was untimely as meadured from the order granting the fee motion, but timely as measured from the final “judgment.”  Apellant conceded that his time to appeal the order granting the special motion to strike ran from the original order granting that motion (see Code Civ. Proc. sec. 904.1, subd. (a)(13)), but contended that his time to appeal the fee award ran from entry of the subsequent judgment.  Even the respondent agreed.

Not so.  The court finds that because the order dismissing the complaint disposed of all the substantive claims between the parties, it was an appealable judgment under Code of Civil Procedure section 904.1, subdivision (a)(1), and thus the fee award was a separately appealable order after judgment pursuant to section 904.1, subdivision (a)(2).  The subsequent judgment “appears to have served no purpose here, and appellant’s appeal from it does not save his otherwise untimely appeal.”

There was some clever, but unavailing argument from the appellant, and the decision goes into some depth on why the order granting the section 425.16 motion is a “judgment.”  In reading the case, you’ll also discover important differences in appealability based on whether the plaintiff or defendant prevails on the section 425.16 motion.

Of particular interest is the section on fees for the appeal. Here’s a two-question quiz.

Do you know the proper forum for making your application for fees on appeal? If you said the court of appeals, you’re wrong! Fee applications are brought in the district court after remand.

You probably already know that the standard of review on a fee award is abuse of discretion. Is it any different when reviewing an award for fees on appeal? Well, yes and no. The award is still reviewed for abuse of discretion but the court of appeals will “look more closely” at fee awards involving appeals. Call it an enhanced review for abuse of discretion, if you will.

The district court trimmed the appellate fees by a third! But it did so without offering a good explanation . . . a problem that pervaded its fee determination. It’s interesting to see how Judge Kozinski analyzes the time and fees on appeal versus the time and fees for a summary judgment motion in the case:

The district court noted that plaintiff’s counsel spent twice as long on the appeal than on the summary judgment, but this does not mean the additional time spent on appeal was unjustified; after all, plaintiff lost claims at summary judgment that he won on appeal. More fundamentally, preparing summary judgment motions and appeals are not commensurate tasks, though they have some elements in common. What matters is whether spending more time winning on appeal than losing on summary judgment was an imprudent use of hours. The district court points to nothing to support the conclusion that it was.

Then there is the discussion of the “cost effectiveness of various law firm models” for staffing cases, and which personnel get assigned which tasks at which rates. As I read through it, I thought, “All this concern over hourly rates and who did what! What would the court do if the firm charged a flat fee and didn’t keep track of anyone’s hours?”

I haven’t seen a fee decision based on a flat fee without time records. But the courts still appear to be in love with the “lodestar” system: reasonable hourly rate times reasonable time expended. Which is why I tend to keep time records even when I charge a flat fee.

Now I’m really curious. If anyone knows of a case analyzing the propriety of a fee award based on a flat fee, please send me the cite.

UPDATE (8/7/08): California Attorney’s Fees examines some of the standards employed by the Moreno court to fees incurred prior to appeal, notes the significance of the case, and responds to my query about flat fees.

The ADA fee provision makes fees discretionary, but that has led to a practice of awarding fees to defendants only where the plaintiff’s case is frivolous.  The CDPA, on the other hand, makes fees recoverable by the “prevailing party.”  Since liability is coextensive – a violation of the ADA is a violation of the CDPA  -  the   federal provision wins out.

From an appellate angle, the interesting thing about the case is that the court addressed the preemption issue even though it was not raised in the district court.  Because it is an issue of law, the Ninth Circuit had discretion to consider the issue for the first time on appeal.

More interesting yet, this wasn’t the first time a district court missed the issue.  The defendants cited two district court opinions that awarded fees to prevailing defendants sued under both the ADA and the CDPA, but the Ninth cites a major flaw in both of them: “Neither of these cases, however, considered the issue of preemption.”  The Ninth finds a third district court decision consistent with its own, but even that decision failed to address preemption.

I suppose it’s easy to say that at least one of the lawyers or judges in these three cases should have seen and dealt with the preemption issue.  But in the the throes of litigation, the parties and the court sometimes miss an issue that later seems obvious in hindsight.  That can be dangerous, as the appellate court won’t always be able or inclined to address the missed issue.

California Attorney’s Fees has a good post, based on an unpublished decision filed last Monday, reminding everyone to appeal separately from a fee award in addition to any appeal from the judgment.  The appellant in the case filed an untimely notice of appeal from the judgment that did not include an appeal from the subsequent fee award, then filed an untimely notice of appeal from the fee award.  Result: untimely appeal, no jurisdiction, appeal dismissed.

California Attorney’s Fees demonstrates that it is not only newer lawyers who are blogging.  The junior of the two contributors, Marc Alexander, has 25 years of law practice under his belt, and his co-blogger, Mike Hensley, has nearly 30.

Welcome aboard, guys.

Hat tip: Cal Biz Lit.

Defendant appealed from a judgment for plaintiff on a retaliation claim under the Fair Employment and Housing Act (Govt. Code, § 12900 et seq.). Damages were barely $9,000, but plaintiff’s attorney was awarded more than $146,000 in fees, which is almost certainly what drove the appeal.

Defendant’s only contention regarding fees on appeal, however, was that the fee award must be reversed because the underlying judgment must be reversed. No claim that the fees were excessive, just that the fee award must fall with the underlying judgment.

The judgment survives substantial evidence review, however. Which means that the fee award of more than 16 times the judgment survives, too.

Oh, the merits make sense. California-based Profit Concepts sued former employee Griffith in California under an employment agreement that contained an attorney fee provision. But Griffith lived in Oklahoma and successfully moved to quash service for lack of personal jurisdiction. The trial court awarded Griffith contractual attorney fees as the prevailing party.

Reasonable enough. The court rejects Profit Concept’s argument that because the lawsuit, which it had resumed in Oklahoma, left contract issues pending resolution, Griffith could not be considered the prevailing party under Civil Code section 1717. Griffith clearly prevailed on the claims in California, and that is all the award was concerned with.

The part that’s hard to understand is the reasoning employed by Profit Concepts in pursuing the appeal, both legally and practically.

Legally, it’s hard to understand why Profit Concepts cited case authority interpreting an older version of Civil Code section 1717 that had changed in a very material respect. Specifically, while the former statute defined a “prevailing party” in terms of obtaining a final judgment, the current version defines prevailing party as, among others, a party that obtains a dismissal. That’s a pretty clear and relevant distinction.

The practical part is just as hard, if not harder, to understand. The attorney fees awarded were barely $3400. What made this appeal practical?

So, here’s the skinny:

Date: June 19, 2008

Time: noon- 5 pm

Place: Southwestern Law School (Los Angeles)

This description of coverage comes straight from straight from the promotional materials (PDF download) from the presenting organization, the National Association of Legal Fee Analysis:

Fee‐Shifting Provisions & Prevailing Party: Statutes & Case Law

Fee Recovery in Commercial Litigation

Attorney Fees in Class Action Litigation

Attorney Fees & Legal Billing: A Practical Guide

Reasonable Fees in Cumis Counsel Situations

Recovering Attorney Fees in Insurance Bad Faith Litigation

Looks promising. The PDF materials include a link to th registration site, or just click here.

My original post about the case concerned what some might consider a procedural oddity: a new trial motion where no trial ever occurred. A new trial motion is validly made after a grant of summary judgment.

Here are the remaining points I think worth bringing out of the case:

The Protective Cross Appeal. Congratulations, you’ve won your new trial motion! Your adversary appeals the grant of a new trial. And if you think you’re going to be disappointed if they prevail on appeal, you’re going to be absolutely horrified if you forgot to file a protective cross-appeal from the underlying judgment.

Forfeiture of Evidentiary Objections. California decisions generally hold that objections to evidence offered in summary judgment are not preserved for appeal unless the objecting party secures a ruling from the trial court. But with the recent development of a split of authority, the Supreme Court has agreed to review the issue.

Affirmance of New Trial Orders on Alternative Grounds. Read that new trial statute (Code Civ. Proc., § 657) closely. Section 657 provides, in part, that (emphasis added) “[o]n appeal from an order granting a new trial the order shall be affirmed if it should have been granted upon any ground stated in the motion, whether or not specified in the order or specification of reasons,” followed by exceptions to this rule.

Several weeks ago, I reported on Adaimy v. Ruhl, case no. B193745 (2d Dist. Feb. 28, 2008), in which the court of appeal held that serving just one of multiple attorneys representing a party with a notice of entry of an order denying a motion for new trial suffices to trigger the deadline to appeal.  In this order modifying the opinion without change in the judgment and denying rehearing, the court tacks two paragraphs on to its original opinion that lead me to the question posed in the title of this post.

Though the original opinion refers to an August 7, 2006 “notice of entry of the order” denying the appellant’s new trial motion, the modified opinion refers to a document of the same date titled “Ruling on Submitted Matter,” apparently the same document.  The generic reference has some significance in the context of the new argument that the court quickly disposes of.

Appellant claimed that the “Ruling on Submitted Matter” was not a notice of entry of order within the meaning of rule 8.108(b)(1)(A), California Rules of Court (extending the time to appeal to 30 days after notice of entry of order denying new trial) because it was not titled “Notice of Entry of Order” and was not file-stamped with the date of entry.

The court notes, however, that the words “Notice of Entry of Order” appear at page 6 of the document.  That’s enough.  But is that necessary?  Rule 8.108(b)(1)(A) triggers the deadline for appealing from the service of “an order denying the motion or a notice of entry of that order.”  It’s hard to say exactly what this document was comprised of, but I’m guessing that the “Ruling on Submitted Matter” was not the order itself, but a document with the order attached. If it were simply the order itself, it seems the court could have found it sufficient to trigger the appeal deadline regardless of the presence of the words “notice of entry.”

As for the missing file stamp, the court notes that while a file-stamp must appear on any copy of the judgment served in lieu of a notice of entry of judgment (rule 8.104(a)(1)), there is no such requirement under rule 8.108 for notice of entry or a copy of the order denying a new trial.

But the answer is “yes.”

A reminder comes in the form of Doe v. United Airlines, case no. B192865 (2d Dist. Mar. 20, 2008).  After United successfully moved for summary judgment, Doe moved for a new trial on the ground of “newly discovered evidence” that purportedly raised a triable issue of fact precluding summary judgment.

Not that it ultimately did her any good.  The court of appeal holds that the trial court abused its discretion in granting the new trial motion and affirms on plaintiff’s protective cross-appeal from the grant of summary judgment.

There are lots of post-trial and appellate tidbits in this case.  Nothing new, just well-established principles for which the case provides a reminder.  I’ll probably be putting up separate posts on them (or consolidate them into a new post) in the next few days.

Error in the form of the verdict is subject to waiver if no objection is made. But ambiguity created by the jury’s responses is not waived, even if no objection is raised until after the jury is discharged. (See fn. 6 of the case.) Indeed, in this case, the appellant argued initially that the verdict was unambiguous and only changed its tune after entry of judgment, and the court reverses because the verdict is “hopelessly ambiguous.”

Keep the distinction in mind, and make sure which you are dealing with.

If you said attorney fees of $500 are about right, give yourself a gold star. In Harrington v. Payroll Services, Inc., case no. B198883 (2d Dist. Feb. 28, 2008), the trial court found that once class certification was denied, the case was so simple that plaintiff was not entitled to fees at all, let alone the $46k sought.

The court of appeal reverses on entitlement to fees, finding they are statutorily mandated, but that $500 is reasonable. It fixes fees in that amount rather than remand for determination in the trial court.

This case might seem contrary to Cruz v. Ayromloo, decided by another division of the same district, which awarded fees far in excess of the damages awarded and the fee schedule set out in the local rules. But there, the court found nothing unreasonable about the time spent on the case. By contrast, the court in Harrington found the hours unreasonable on their face: “At the risk of understatement, there is no way on earth this case justified the hours purportedly billed by Harrington’s lawyers.”

California Labor & Employment Law Blog has some commentary on how this “levels the playing field” in wage and hour cases.

I’m very curious how this $44 case settled for $10.5k. Any wage & hour practitioners out there — or anyone else — care to speculate?

At issue is the scope of the “catalyst” theory for recovering attorney fees under California’s “private attorney general” statute, Code of Civil Procedure section 1021.5. The catalyst rule provides that a party can recover fees under the statute even if it is not the prevailing party “if the lawsuit was the ‘catalyst’ that caused ‘the defendant [to] change[] its behavior substantially because of, and in the manner sought by, the litigation.’ (Graham v. DaimlerChrysler Corp. (2004) 34 Cal.4th 553, 560 . . . .)”

Does that rule allow a plaintiff to recover fees if its lawsuit is the catalyst for change in how the public entity defendant operates if the change is mandated by the legislature in response to the suit, rather than instigated internally by the public entity? The Court of Appeal says no. Reading the catalyst rule of Graham literally, it holds that the change must be implemented unilaterally by the defendant, rather than be imposed on the defendant by a third party like the legislature, to bring the change within the catalyst theory. Thus, the fact that the legislature changed the law in response to a Supreme Court ruling in an earlier appeal from the case does not support fee recovery under the catalyst theory.

It was this statement in the opinion’s introduction that made me think the court of appeal was trying to set the case up for Supreme Court review::

To the extent it can be said that the rationale of the catalyst theory should apply to a lawsuit like this, which was the moving force resulting in a change in statutory law that conferred a significant benefit on the general public regarding important rights affecting the public, the argument must be made to the California Supreme Court because we are bound by the ruling in Graham, supra, 34 Cal.4th at p. 560. (Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 455.)

But there were other obstacles to a fee recovery in this case. The court of appeal found first that the plaintiff had not achieved the primary relief it sought. That is the first condition of a “catalyst” – based fee recovery, and plaintiff’s failure to meet it should have been enough to deny fees. The impetus for the changed behavior was merely an additional reason to deny fees.

By the way, Tom Caso at The Opening Brief has had a number of interesting posts on section 1021.5 in the last few months.

As the court notes, the statute explicitly authorizes an award of “attorney fees” and is silent about expert witness fees. Which should have made for an easy decision.

Yet the court is compelled to delve behind the plain language of the statute. The decision is a good primer on how to read behind the lines of a statute by examining its enactment and amendments relative to existing case law.  That doesn’t work to change the plain meaning in this case, though.

There is sure to be more posted by other bloggers. I’ll provide links as I find them.

This is merely an extension of the similar holding in Trope v. Katz (1995) 11 Cal.4th 274, which held that a self-represented attorney could not recover fees under a contractual fee provision. The Taheri court makes clear that an attorney-client relationship is necessary before fees may be recovered.

The identical issue of anti-SLAPP attorney fees was treated in much greater detail, and with the same result, in a 2004 decision by the same district (but different division) of the Court of Appeal. That decision was depublished when the Supreme Court granted review on a different issue. But you can find the case in the California Reporter (at least on Westlaw), and I recommend doing so if you are interested in a more detailed rationale than the Taheri opinion provides. Soukup v. Stock (2004) 15 Cal.Rptr.3d 303.

It would be a mistake to extrapolate from Taheri and Trope that fees are not recoverable in every situation in which they are not actually “incurred.” Regular readers will remember that when it comes to attorney fees, “incurred” doesn’t always mean “become obligated to pay” for. Courts have awarded fees in pro bono cases under fee shifting statutes, and will probably do the same someday under a contractual fee provision. As Taheri notes, the touchstone for recovery is an attorney-client relationship.

In Planned Parenthood v. American Coalition, case no. 06-35733 (Feb. 11, 2008), we see an example in the context of a federal requirement; specifically, where the Federal Rules of Appellate Procedure impose an obligation ot the Court of Appeals and the court fails to honor it.

The rule at issue is FRAP 37(b), which provides that “[i]f the court modifies or reverses a judgment with a direction that a money judgment be entered in the district court, the mandate must contain instructions about the allowance of interest.” In a previous appeal in the case, the Ninth reversed a punitive damages award as violative of due process and remanded for retrial unless the creditors accepted the judgment with a reduced punitive damages component, but the court failed to include in its mandate the date on which interest started to accrue on the judgment. The trial court entered a new judgment allowing for accrual of post-judgment interest as of the date of the original judgment.

The Ninth holds that failure to specify a judgment accrual date where required by FRAP 37(b) precludes a district court from entering the newly mandated judgment with interest accruing from the date of the original judgment. Interest accrues from the date where the amount of the judgment is “meaningfully ascertained.” and this ordinarily means the date of the mandate from the Court of Appeals if the mandate directs entry of a money judgment different from that in the original judgment.

Here, however, the judgment creditors get interest from the date of the original judgment in any event. The court recognizes that its omission was inadvertent and that despite the reduction in punitive damages on remand, the creditors’ right to interest on the reduced amount had been “meaningfully ascertained” in the original trial. Accordingly, it exercises its right to recall its prior mandate and amends it to include interest from the date of the original judgment.

That said, the court makes clear that it is affording this courtesy only because its prior jurisprudence was unclear, and that litigants should treat this case as a cautionary tale:

Henceforth, we expect that litigants in this circuit will clearly understand that if we modify or reverse a judgment with a direction that a money judgment be entered in the district court, our mandate must contain instructions about the allowance of post-judgment interest. Fed. R. App. 37(b). If our mandate omits such instructions, a party that believes it is entitled to interest from a date other than the date of entry of judgment on remand must expeditiously seek reform of the mandate.

Professor Martin calls this “an entirely just and equitable opinion.” I think that’s correct. But keep the court’s caution in mind.

I think a federal court litigant in this situation can have much more peace of mind than a party in a California case involving a new trial or summary judgment situation mentioned above. A party can expect a ruling one way of the other on a motion to recall and amend the mandate. Pleas to California trial courts to rule definitively on evidentiary objections often fall on deaf ears. And a party seeking a new trial is prohibited from doing too much to facilitate the trial court’s compliance with new trial procedures. Nonetheless, this greater peace of mind only applies if the party remembers to “expeditiously seek reform of the mandate.”

In a very detailed post entitled The Pro Bono Road to Riches! last October, I discussed the issue in the context of a California case, in which the dictum of the Court of Appeal seemed to indicate a predisposition to awarding fees in pro bono cases. In that case, the trial court trimmed the fee request by 50% right off the top because it deemed the engagement “mildly pro bono,” and ultimately awarded less than one third of the amount requested. The Court of Appeal’s dictum leaves little doubt that the firm left plenty of money on the table by not cross-appealing to contest the amount awarded. (My earlier post includes several links to information about the Seattle Schools case, by the way.)

My post caught the attention of the Overlawyered blog, which sent me a ton of traffic when they linked my post. In fact, the traffic from Overlawyered was responsible for my highest traffic ever for a single day, and accounts for the anomalous bump in traffic during October that you see in the chart to the right. Clearly, this is a hot issue. So I also followed it up with an article in our local bar publication, CITATIONS.

I continue to believe that a large part of the controversy in the Seattle Schools case is driven by the nature of the party from whom fees are sought: a school district. Obviously, many members of the public are going to think that the district has better uses for the money. (Of course, there were probably a lot of people who said the same thing about the money spent by the district in fighting the case.) I wonder, though, if the people who are outraged at the firm seeking fees from the school district would have been just as angry with the firm in the case I profiled, which successfully represented more than 30 tenants seeking damages on various causes of action arising from the landlord’s refusal to let the tenants return to their units after they were evacuated from an unsafe building by the city. That firm, too, was a BigLaw heavy-hitter, but I’m sure the landlord of an unsafe building is going to get far less sympathy from the public than a school district.

One commentator in the NLJ article raises a point I made to a reporter who called me about my post: Is it right for well-heeled firms who often burnish their images by conspicuously accepting pro bono engagements to then seek fees for those engagements? This is an especially valid question if the firm announces the engagement with some fanfare but keeps the fee request rather quiet. It makes one wonder whether anyone honored for their pro bono work has actually been collecting fees for part of it.

Actually, that wouldn’t bother me, as long as fees were disclosed. A semi-pro bono case — in which an attorney agrees to an engagement for which he is paid only if he can recover fees under a contractual or statutory provision — is really just another form of contingency fee case, with all of the same risks.

Hat tip to How Appealing for the link to the National Law Journal article.

After sentencing a gang member to prison for murder, a Ventura County judge ripped into the jury foreman Tuesday, holding the juror in contempt of court for writing a blog that exposed details of the case during the trial.

The blog, or Web log, also criticized the judge’s staff and complained that the 19-day trial was taking too long.

Ventura County Superior Court Judge Edward Brodie told the jury member, identified only as Juror No. 7, that he had failed to follow the judge’s daily instructions to refrain from discussing the case with anyone during the trial.

Attorneys said this apparently marks the first time a jury member in Ventura County has been accused of misconduct for producing a blog, an increasingly popular type of journal on the Internet.

“. . . an increasingly popular type of journal on the Internet.”  Ya think?

The jury foreman testified at his contempt proceedings that “he didn’t believe his blog constituted ‘discussing the case’ in defiance of the judge’s instructions.”  Really?  According to the defendant’s lawyer, the blog included a chat room where readers asked questions and the juror answered them.

The article includes some sparring between counsel over the merits of raising the blog as an issue on appeal.  The trial judge’s ruling, obviously, means that he did not think that the misconduct prejudiced the fairness of the trial.

According to the article, the blog is titled “The Misanthrope,” but none of the blogs I found that included “misanthrope” in the title had posts about the trial.  It’s possible the judge ordered the juror to take down the posts, but I couldn’t even find cached pages in Google.

If the private AG statute interests you generally, make sure you didn’t miss this post from yesterday, which appears immediately below this one on the home page.

Tom knows about attorney fees in public interest cases, having been chief counsel for Pacific Legal Foundation.

The court reasoned that where an action is brought solely to enforce a contractual arbitration provision, then a defendant’s defeat of that petition is effectively a final judgment because it disposes of the only issue before the court, even if further litigation is contemplated.

Thus, an order denying an award of attorney fees to the party who successfully opposed the petition for arbitration is appealable as a “special order after final judgment” under Code of Civil Procedure section 1294, subdivision (e). Section 1294 controls, rather than Code of Civil Procedure section 904.1, subdivision (a)(2), which makes appealable an order made after a final judgment, because the former is part of legislatively created “comprehensive procedural scheme to govern arbitration proceedings.”

On the merits, the court of appeal reverses the order denying fees. Since the order denying the petition to compel arbitration disposed of the only issue before the court, the defendant was the “prevailing party” for purposes of Civil Code section 1717, notwithstanding that the parties may later litigate the substance of their dispute in a later action.

The article, titled“Pro Bono Attorney Fees” Is Not an Oxymoron, highlights the Cruz court’s dictum on the recovery of attorney fees in pro bono cases and examines the implications of that reasoning for future cases. The article appears at page 18 of the January 2008 issue of CITATIONS, which you can download as a PDF by clicking here.

But I never read about that actually happening until the decision in Hossain v. Hossain, case no. 196198 (2d Dist. Nov. 30, 2007). Plaintiff’s opposition to a motion to enforce a settlement agreement and his cross-motion to enforce it on different terms were both untimely, and the trial court refused to consider them because of their untimeliness. Plaintiff filed a section 473(b) motion for relief from the order enforcing settlement and appealed from the order denying relief.

The court notes a split of authority regarding the orders to which the mandatory relief provision of section 473(b) applies. Section 473(b) provides for mandatory relief from a “default entered by the clerk against his or her client, and which will result in entry of a default judgment,” or “default judgment or dismissal” provided that the default or default judgment or dismissal results from the attorney’s “mistake, inadvertence, surprise, or neglect,” the attorney so admits in an affidavit, and application is made within six months. The split concerns interpretation of “default.”

Plaintiff cited several cases holding that mandatory relief applies to situations that are the “procedural equivalent of a default.” Those cases found mandatory relief from failure to appear for trial, failure to appear for arbitration, and failure to oppose a summary judgment motion.

But the Second District Court of Appeal adopts the position of English v. IKON Business Solutions,
Inc. (2001) 94 Cal.App.4th 130, which, after examining the legislative history of the provision, held that mandatory relief applied only to defaults explicitly described in the statute, i.e., a default “entered by the clerk against his or her client, and which will result in entry of a default judgment.” Thus, it affirms the order denying relief.

I don’t know if this issue arises often enough to make this split of authority important enough for the Supreme Court to grant review. But it is certainly a significant split, not just for parties, but also for attorneys, who admit fault in the course of seeking relief. A scary proposition for those attorneys who are unsure of whether mandatory relief applies, even if the mistake, inadvertence, surprise or neglect was arguably excusable.

As a side note, the court only certified for publication the introductory paragraph, a section of its discussion, and the disposition. It did not certify the “Factual and Procedural Summary.” Oversight?

Plaintiffs in this case alleged 10 causes of action for damages and one for injunctive relief, alleging that their constitutional rights were violated by overly intrusive x-ray technology (more about that later) used by the California Department of Corrections to search visitors at certain state penitentiaries. The CDC successfully moved for summary adjudication on the class damages claims on the ground that damages were unavailable, leaving only the injunctive relief claim. The court then issued a sua sponte reconsideration order specifying that the summary adjudication order only barred plaintiffs’ class claims to the extent they sought damages. Thus, all claims remained active to the extent they sought injunctive or declaratory relief.

The parties then entered into a stipulated judgment that entered judgment on the claims insofar as they sought damages but, rather than dismiss, enter an injunction, or otherwise finally dispose of the equitable claims, merely referred to the parties’ agreement concerning them. Among other things, the CDC agreed to curtail use of the machines and not to reinstitute use without giving notice that would provide plaintiffs an opportunity to move for a preliminary injunction first.

The stipulated judgment set forth 16 issues for potential adjudication and provided that the court retained jurisdiction “to enforce the terms of the agreement.” It also stated that it was “only appealable as stipulated.”

Plaintiffs appealed on the basis that summary adjudication on the damages claims was improperly granted. The appeal was clearly contemplated by both sides when they entered into the stipulation.

Nonetheless, the court dismisses the appeal for lack of jurisdiction because the stipulated judgment is not an appealable final judgment. A judgment is “the final determination of the rights of the parties in an action or proceeding.” (Code Civ. Proc. § 577.) The failure of the stipulated judgment to determine the parties’ rights on the equitable claims, either by an injunction to perform as agreed, by dismissal, or otherwise, prevents it from being an appealable judgment for purposes of Code of Civil Procedure section 904.1, subdivision (a)(1). Regardless of the parties’ intent in drafting the stipulated judgment in this way, and regardless of their obvious intent to allow appeal on the damages claims, the court lacks jurisdiction as a result of this missing element.

The court goes on to address and reject several arguments raised by plaintiffs.

First, the appeal cannot be “saved” by liberally construing of the notice of appeal. To do so, there must be another appealable order or judgment from which the appeal can be deemed to have been taken. Here, there is no such appealable order or judgment.

Second, plaintiffs could not invoke the exception to the general rule against appealability of stipulated judgments. Recognizing that most stipulated judgments are not appealable, the court concludes that this one does not fall within the exception for judgments entered into to facilitate appeal after an adverse determination of a critical issue. While the summary adjudication on the class damages claims was indeed critical, the failure of the stipulated judgment to dispose of all claims prevents the exception from applying. In other words, even the exception applies only to stipulated judgments that are final. Had plaintiffs, for example, dismissed their equitable claims as part of the stipulated judgment, thereby disposing of all claims, they could have invoked this exception.

Finally, plaintiffs unsuccessfully argued that the 16 issues for potential adjudication anticipated nothing more than proceedings to enforce the stipulation. The court finds these were complex questions of constitutional and statutory law that related to litigation of the equitable claims, not enforcement.

Now, about that technology. The x-ray machines were so sophisticated that they produced “a spectral-like computer image of the body, including an outline of breasts, genitalia and folds of skin.”

This juicy fact led to some great, funny posts. The post at Legal Pad includes a photograph that demonstrates the imaging capability of the x-ray machine (quite amazing) and made me chuckle. The post at California Appellate Report had me laughing out loud.

And I write about appellate jurisdiction. I am such a geek.

UPDATE (11/23/07):   My Dad was looking at this post (thanks for the traffic, Dad!) and told me that the links in the post at California Appellate Report are a bit . . . racy.  You might want to avoid them.  What I found so funny about the post was in the post itself.  Wrote Professor Martin: “I mean, sure, if I enter a prison, and am carrying a package, you can x-ray my package. But x-raying — and looking at the shape and size — of my package?! Crikey!”

MEGA was ordered to pay costs and fees when the action was remanded. It claimed the only non-diverse defendant, an individual, had been fraudulently joined for the purpose of defeating diversity jurisdiction because the statute of limitations had run as to that defendant.

Applying the rule that fees and costs should ordinarily not be awarded where the removing defendant had an objectively reasonable basis for removing, the Ninth Circuit reverses the award of fees and costs. Interestingly, it finds that MEGA had a reasonable basis for removal purely on its own analysis of whether the claim against the non-diverse defendant was barred under California law and without considering one of the reasons MEGA cited for the reasonableness of removal — that on remand, the California court sustained MEGA’s demurrer.

That makes sense, in a way, since reasonableness should be measured as of the time of removal. On the other hand, it seems like the state court dismissal is pretty solid evidence of the objective reasonableness of MEGA’s fraudulent joinder contention.

The case came up on appeal from a summary judgment granted on the ground that the plaintiff’s administrative complaint was untimely. The timeliness of the administrative complaint turned on whether the Department of Fair Employment and Housing caused plaintiff to miss his filing deadline for filing a verified administrative complaint (thus equitably tolling the limitations period) rather than whether there was a triable issue on the substantive allegations of his complaint against his employer. (Thus, the Court of Appeal deemed the substantive allegations of the complaint “largely irrelevant,” so we needn’t discuss them here.) The court found that equitable tolling applied, the summary judgment on timeliness grounds was error, and remanded to the trial court to consider the remaining issues

The most interesting aspect of the case (at least for this jurisdiction geek) is how the court addressed the plaintiff’s contention that the court commissioner lacked jurisdiction to decide the motion. After evaluating the competing evidence over whether plaintiff had consented to the commissioner and the legal positions of the parties, the court says that it is “immaterial” which side is right on the jurisdictional question.

Wow. The existence of jurisdiction is, in the eyes of this panel and in this particular case, immaterial. I think this is wrong, wrong, wrong.

The court deems the trial court’s jurisdiction immaterial because it figures that if it remands, the case will just come up on appeal again on the exact same papers, so remanding would waste judicial resources:

Even if we were to concur that the judge pro tem lacked jurisdiction to hear the motion, there would not be any purpose in reversing the judgment and remanding the matter, only to exercise de novo review of the same materials on appeal from a ruling of a judge of the trial court (as our remittitur would not authorize reopening the motion), if we believe the outcome would be the same on the substantive timeliness issue. This only wastes scarce judicial resources and causes needless expense to the parties. We therefore proceed to the matter of whether the plaintiff’s failure to file a timely administrative complaint is excusable.

I don’t think I’ve ever seen the potential lack of jurisdiction treated so casually. If jurisdiction is lacking, the grant of summary judgment is void. So the court of appeal is analyzing the merits of a potentially void judgment. That is a big deal, and hardly consistent with the court of appeal’s usually zealous protection of its jurisdiction.

I think the court should have been more diligent in determining whether there was jurisdiction. Had it determined a lack of jurisdiction by the commissioner, it should have reversed and remanded without an examination on the merits. The reasons the court offers for the immateriality of jurisdiction don’t stand up well to scrutiny.

First, the court’s position that it would be reviewing “the same materials” on a subsequent appeal seems misguided. It rests on an anticipated remittitur that “would not authorize reopening the motion.” While it might be appropriate to preclude new declarations in support or opposition to the summary judgment motion, there seems no reason to restrict the scope of review by the new trial judge on legal issues. Suppose the new judge hearing the motion sees a legal point that the commissioner missed and wants to ask for additional briefing on an issue? Would the remittitur also preclude that?

A second problem with the “same materials” rationale is that even if the summary judgment papers are unchanged, a second appeal would afford the parties an opportunity to revise their appellate briefs. One of the briefs might be substantially more persuasive, cite additional authority, or otherwise differ from the briefs on this appeal, potentially leading the court of appeal to a different result.

Even more obviously, it is uncertain whether the Court of Appeal would ever see the case again. Suppose the superior court judge on remand disagreed with the commissioner’s disposition and denied the motion. The defendant would have to file a petition for writ of mandamus (which has a 90% + chance of not being heard on the merits) or await final judgment before appealing on the ground that the motion was improperly denied. The case would have a decent chance of settling with a trial on the horizon, so the court of appeal might not see the case again.

All of these possibilities argue against what the Court of Appeal did here.

The Guenthers were limited partners in two limited partnerships (“the CORF entities”). When the CORF entities were sued, the Guenthers and other owners sought counsel regarding their potential personal liability for the liabilities of the CORF entities. On that much, the parties agreed.

But the Guenthers claimed that the CORF entities were the clients, and that, as limited partners, they were not liable for fees. The attorneys argued the Guenthers were liable because: (1) the owners, not the CORF entities, were the clients so the fees were attributable to representing the Guenthers personally, and (2) even if the fees were for representation of the CORF entities, the Guenthers were liable because the attorneys reasonably believed the Guenthers were general partners.

After a one-day bench trial, the district court entered judgment in favor of the attorneys on claims for contract and action on account, even though it found that the attorneys represented the CORF entities, on the ground that the attorneys reasonably believed the Guenthers were general partners. It did not reach the unjust enrichment claim.

The Ninth reverses. Because advice regarding the personal exposure of the owners was a subject of the engagement, the attorneys had a duty to review the organic documents of the CORF entities to determine if any limited partners had exposed themselves to liability by acting as a general partner. Since those documents identified the Guenthers as limited partners, that information was imputed to the attorneys. Thus, the attorneys could not reasonably believe the Guenthers were general partners.

The attorneys don’t appear to be entirely out of luck. The Ninth remands for consideration of the unjust enrichment claim because the Guenthers are liable to the extent they were billed for services that benefitted them.

UPDATE (10/17/07):   For coverage of this and ethical/professional legal issues generally, the Legal Profession Blog is a good resource.

Both points are important to keep in mind.

That post has generated a lot of attention. It’s been linked to by two very prominent law blogs, Overlawyered and The UCL Practitioner. It also earned me a phone call from a reporter.

I think this is evidence that although the Cruz court’s discussion of the issue is dictum, it carries weighty implications. Which is why, I suspect, the court went through the trouble to write in such detail and cite so many cases from other jurisdictions. Its discussion may encourage a litigant to bring up the issue on appeal and get a definitive ruling in a future case. I doubt that will take long.

UPDATE (10/10/07): Overlawyered, tha tagline of which is “chronicling the high cost of our legal system,” has been following this issue for some time. Type “pro bono” in the search box at Overlawyered to see what I mean.

UPDATE #2 (10/10/07):  I’ve added a second update to the original post, The Pro Bono Road to Riches!

Technorati Tags: pro bono

The plaintiff had hired some “big gun” attorneys from the big city to litigate her employment case in a small town. The case was settled, and the settlement provided for attorney fees to be fixed by the court. The essential holdings are that (1) before seeking statutory attorney fees in excess of fees that would be charged in the local community, a party must demonstrate that it sought local representation before being forced to use outside counsel; (2) whether the fees should be adjusted upward from what would be reasonable in the small town location is within the discretion of the court. In the end, the big guns may have to be satisfied with the small town fees.

I got to wondering if courts will allow an attorney from outside the local area to seek rates reasonable for that area if they are higher than the rates that attorney charges in his hometown. In my town of Ventura, for example, hourly rates tend to be significantly lower than they are for attorneys of similar experience in Los Angeles, which is barely an hour’s drive away (an hour away in time, but a world away in lifestyle). If I prevail in a case in a Los Angeles court and seek fees under a fee-shifting statute, am I entitled to recover at a higher hourly rate — the one I would charge if I were an L. A.-based attorney?

In my exchange with Tom Caso at The Opening Brief in the comments to his post covering the case, he seems to think that I could. I agree with him that the reasoning in Nichols leads to that result. Better than that, Tom has some real world experience with the question.

UPDATE (10/9/07):  Cal Biz Lit has a very detailed, and highly recommended, post on this topic generally, including comments on Nichols. Here’s a line from it that will make litigants cringe:  “And, on top of everything else, the plaintiff attorneys are likely entitled to their fees incurred in obtaining fees.”

Had O’Melveny and Myers been more forward, they might have received more than the roughly $124,000 in fees approved by the trial court and affirmed by the Court of Appeal in Cruz v. Ayromloo, case no. B190959 (2d Dist. Oct. 3, 2007).

The Case

The landlord in Cruz was sued by more than 30 tenants on several causes of action arising from landlord’s refusal to let the tenants return to their units after they were evacuated by the city because the building was unsafe. The trial court awarded a per-rental-unit measure of damages, plus damages individual to each tenant, such as the return of security deposits, loss of personal property, and emotional distress.

Four of the tenants — apparently the only ones with written lease agreements that included an attorney fee provision — moved for attorney fees of more than $400,000. They insisted this figure excluded fees unique to the remaining plaintiffs (such as for discovery relating only to other plaintiffs or for trial time related to issues exclusive to the other plaintiffs).

The trial court significantly trimmed the amount but awarded nearly $124,000 in fees. The Court of Appeal affirms in full.

The Rejected Challenges to the Attorney Fee Award

First, the fact that the award exceeds the amount set forth in the schedule of suggested fees in the local rules (specifically, Los Angeles Superior Court Local Rule 3.2) — indeed, the landlord contends the amount of fees awarded is 39 times the guideline in the schedule (and the fees awarded were less than a third of what was requested!) — doesn’t mean the court abused its discretion. The rule itself allows the court to depart from the guidelines and Civil Code section 1717 says fees shall be “fixed by the court.” It was reasonable for the court to use a “lodestar” method of calculation: hours times hourly rates.

Second, the court did not abuse its discretion in awarding fees in an amount greater than the damages awarded. “It is not uncommon to award attorneys’ fees in an amount higher than the total damages awarded to a plaintiff or plaintiffs in a particular case.”

Third, the court did not err by awarding fees for the non-contract claims as well as the contract claim. The fee provision in this case applied to any action “in connection with” the lease. Since all the claims and damages, including those in tort, arose from the breach of the lease, there was no need to apportion fees between contract and tort causes of action.

Fourth, the decision confirms that fees for work done regarding issues of fact or law common to all the plaintiffs do not have to be reduced to the requesting plaintiffs’ pro rata share:

In any event, respondents sought fees for legal work performed solely on their behalf and the fees were awarded only to them and not to the other tenants. Respondents and the other tenants all lived in the same building, were evacuated from the building, and were not allowed to return to the building by appellant. All tenants asserted the same causes of action. The attorneys conducted legal research pertaining to the overarching legal issues common to all tenants, including the Los Angeles Rent Stabilization Ordinance and the claims for forcible detainer, wrongful eviction, and negligent infliction of emotional distress. The attorneys had to do the same legal research and analysis in preparing their case on behalf of respondents, irrespective of the number of potential tenants benefiting from the legal work performed.

***

[T]he fact other tenants incidentally benefited from the legal work performed on behalf of respondents does not diminish respondents’ contractual right to recover attorneys’ fees litigating issues common to all.

(Footnotes omitted.)

The Pro Bono Angle

Finally, it’s very interesting that the trial court trimmed the $413,000 request by half right off the top because “counsel knew this was a mildly pro bono type of work.” Mildly pro bono?

Plaintiffs did not cross-appeal to contest the amount of the award. I’m sure O’Melveny now wishes they did:

Finally, we find it important to emphasize something we are not deciding in this case. Respondents elected not to appeal the trial court’s ruling the fee award should be reduced in part because respondents’ counsel had agreed to provide representation on a “pro bono” basis. This court’s affirmance of the judgment should not be construed as signifying our approval of this particular element of that judgment. We do not find it self-evident a law firm’s commendable willingness to provide its services on a pro bono basis to low income clients should necessarily justify a diminishment in the fee award when that pro bono representation proves successful. Because respondents did not directly challenge the court’s decision to reduce the fee award based on the pro bono nature of the litigation, we had no reason to invite the parties to brief the issue. Our research indicates courts reduce a fee award to adjust, for example, for duplicative work, for lack of success on certain issues, or the like. However, our research uncovered no case in which a trial court reduced a fee award simply because of the “pro bono type of work” involved. Moreover, in the analogous situation of contingent fee and legal aid lawyers—where again the clients are not responsible for paying legal fees out of their own pockets—the majority of courts have approved awards at a full level of “reasonable” fees.

(Footnotes omitted.)

This is very interesting in light of the fact that the attorneys who represented the plaintiffs “pro bono” in the recent U.S. Supreme Court case against Seattle Public Schools have generated some controversy for seeking $1.8 million in statutory fees.

Admittedly, the cases do implicate somewhat different concerns. In Cruz, no one is going to complain much about sticking it to a landlord who is seen as stealing his tenants’ homes out from under them. In the Seattle Schools case, however, much of the controversy centers around the fact that the attorneys are seeking fees from a public entity, and specifically from a school district. The argument against recovery is that if pro bono representation is indeed for the public good, then the attorneys should not take funds from education.

Might the Cruz court have felt differently in the case of a public sector defendant?

For more on the Seattle schools case

From the Seattle Times: If attorneys get paid for pro bono work, is it still pro bono?

From the Seattle Post-Intelligencer: “. . . a little contrary to the idea that pro bono is for the public good” and some letters to the editor that include several on the side of the attorneys.

And here’s some coverage by the ABA, the Sound Politics blog, and Overlawyered.

UPDATE (10/9/07): I did not make this point as clearly as I should have – the court’s discussion on recovering fees in pro bono cases is dictum, as is made plain by the court’s opening words: “Finally, we find it important to emphasize something we are not deciding in this case.” (Emphasis added.) This is all interesting discussion, but not something that can result in Supreme Court review of the issue.

One other item to note in the decision is that the trial court’s award of fees was pursuant to a contractual provision rather than a fee-shifting statute. The California cases cited in the court’s dictum in support of the proposition that fees should be recoverable in pro bono cases were all concerned with fee-shifting statutes. One wonders whether a party who agrees to a contractual fee provision contemplates paying out fees where none actually accrue.

UPDATE # 2 (10/10/07): I am writing an article on this case, and so looked at it yet again.  Relevant to my contract provision/fee statute dichotomy, the fee provision in this case entitled a party to recover “any reasonable attorney’s fees,” much like many fee statutes do.  It did not explicitly require fees to be “incurred” to be recoverable.  The existence of “incurred” as a modifier of “fees” in a fee-shifting statute, however, has seldom, if ever, been an obstacle to recovery in a California pro bono case.  I’ll elaborate in the article.

We conclude that a district court may require an appellant to secure appellate attorney’s fees in a Rule 7 bond, but only if an applicable fee-shifting statute includes them in its definition of recoverable costs, and only if the appellee is eligible to recover such fees.

Appellant Wilkinson is a class member who objected to the class action settlement approved by the district court between the certified class of consumers and a number of retail stores accused of antitrust violations with respect to cosmetics.  She appealed from the order approving the settlement.

Plaintiffs sought a bond under FRAP 7 of nearly $13 million, which included a $600,000 component for twice the plaintiffs’ anticipated attorney fees on appeal.  FRAP 7 provides that the district court “may require an appellant to file a bond or provide other security in any form and amount necessary to ensure payment of costs on appeal.”

The district court ordered a bond of only $42,000, but it included a $40,000 appellate attorney fee component.  It reasoned that appellate attorney fees could be considered “costs” on appeal because: “(1) the fee-shifting provision in Section 4 of the Clayton Act, 15 U.S.C. § 15, defines attorney’s fees as among the costs recoverable, and (2) ‘the Court of Appeals [was] likely to find that the instant ppeal[ ] [was] frivolous.’”

Regarding the district court’s first justification, the court goes through a very detailed analysis of the cases from other circuits, then states that “[w]e agree with the Second, Sixth, and Eleventh Circuits and hold that the term ‘costs on appeal’ in Rule 7 includes all expenses defined as ‘costs’ by an applicable fee-shifting statute, including attorney’s fees.” The court gave four reasons for its holding:

(1) FRAP 7 does not define “costs on appeal,” and multiple statutes already defined attorney fees as recoverable costs when FRAP 7 was adopted.  Thus, the court concludes that the drafters of the rule intended it to apply whenever a fee-shifting statute defines attorney fees as costs.

(2) FRAP 39, which governs the award of costs on appeal, does not contain any language that would prohibit the adopted approach.

(3) Statutes defining costs to include attorney fees should be taken “at their word.”

(4) Including fees on appeal in calculating the bond whenever they may be recovered as costs is consistent with the district court’s role in taxing “the full range” of costs on appeal after the case is transferred back to the district court at the conclusion of the appeal.

In the end, this doesn’t help these plaintiffs, however, because they are not eligible to recover fees under the fee-shifting statute at issue.  Thus, the court vacates the portion of the bond corresponding to attorney fees on appeal.

Note, too, that the Ninth Circuit rejected the second rationale of the district court: the likelihood that the appeal would be found frivolous, and thus the plaintiffs-appellees would be entitled to their attorney fees as a sanction.  The court finds that it is too difficult for the district court to judge the frivolousness of an appeal, and that large bonds based on this uncertainty could unjustifiably chill an appeal.  Finally, it notes that it is up to the Court of Appeals, rather than the district court, to award fees in the case of a frivolous appeal.

Bottom line: don’t forget to include anticipated attorney fees on appeal as a component of your request for a bond under FRAP 7 whenever the case involves a fee-shifting provision that includes attorney fees in the definition of recoverable costs to which you would be entitled.

ADDENDUM (8/23/07): The Ninth Circuit also notes that FRAP 7 is permissive. Thus, a district court is not required to include a fee component in a cost bond any time there is a fee shifting provision that makes the appellee eligible to recover its fees. Countervailing considerations, such as financial hardship that would unduly burden the right of appeal, may justify not incuding a fee component in the bond amount.

The members filed a motion for attorneys fees under Government Code section 800 and Code of Civil Procedure section 128.5.  On reply, they also argued they were entitled to fees under the resolution.  After giving the City an opportunity to file additional briefing on the issue, the court granted the motion, finding that the resolution entitled the board members to fees in the indemnification action.

The City appealed from the order awarding attorney fees.  The board members moved to dismiss the appeal insofar as it purported to challenge the underlying judgment.

The Court of Appeal grants the motion to dismiss, and its opinion invokes a rule it would be good to remember: an amendment to a judgment does not “restart the clock” on the time to appeal from it unless the amendment amounts to a “substantial modification” of the judgment.  It is well-settled that the insertion of the amount of fees and costs into an existing judgment does not constitute the requisite substantial modification.

The City tried to get around this general rule in three ways.  First, it contended that the blanks were left for fees and costs in the two underlying actions for which indemnification was sought and that the insertion of fees and costs from the present action therefore constituted a substantial change.  The language of the judgment itself contradicted this argument.  Second, it argued that because fees were sought under the City resolution rather than under an unambiguous statute or contract provision or the code sections raised in the prayer of the complaint (Government Code section 800 and Code of Civil Procedure 128.5), that the motion raised “new legal issues” and thus the award of fees and costs was a substantial modification of the judgment.  This argument is also easily rebuffed:

The legal basis for a fee award, however, is reviewed in the appeal from the order awarding fees; it does not resurrect a stale appeal of the judgment.  The legal basis for the award has nothing to do with the propriety of the underlying summary judgment.

Finally, the court also easily disposes of the City’s due process argument, which the City based on the fact that the board members only raised the resolution as a basis for the fee award in their reply memorandum.  Since the trial court afforded the city an opportunity for supplemental briefing, there was no due process violation in awarding fees on a basis raised for the first time on reply.

UPDATE (8/21/07): The Opening Brief blogs the case with an eye on the irony of the decision on the merits.

Today, he has an excellent post entitled “Can Fees Exceed Damages?”  He discusses yesterday’s decision in Estrada v. Fedex Ground Package System, Inc., case no. B189031 (2d Dist. August 13, 2007), in which the Court of Appeal reverses an attorney fee award for plaintiff and remands for reconsideration of the amount.  This was no “small potatoes” case.  From the opinion:

Estrada’s motion asked for $619,691 in costs and $6,789,325 for his attorneys’ fees, a total of $7,409,016 — plus a 2.0 multiplier as compensation for delay and contingency, a total of $14,818,032. The trial court reduced the fee by 18 percent (finding the amount “slightly bloated”) but otherwise granted the motion (including the 2.0 multiplier) and gave Estrada a total of $12,373,875 for costs and fees, noting the risk inherent in a contingent fee, the “financial burden of private enforcement,” and the years of “long, hard-fought” and “labor intensive” litigation involving “enforcement of an important right” that conferred a “significant benefit on a large class.”  FedEx contends the award is erroneous because Estrada was motivated primarily by his own financial interests, that any benefit to a larger class was incidental, that no significant benefit was conferred on the public or a larger class, and that the trial court’s dual use of the same reasons to both calculate the fee and justify the multiplier created a windfall.

Tom provides the highlights of the court’s resolution of the issues at his blog, including an excellent tip for any attorney briefing a fee motion in a public interest case, especially any attorney considering requesting a multiplier.

The court says the property owner is entitled to attorney fees under the general-sub contract.  The property owner is indisputably an intended third party beneficiary of the general-sub contract, the attorney fee provision is extremely broad, and the contract imposes no limitation on third party rights.  Thus, the third party beneficiary’s right to enforce the contract includes the right to enforce the attorney fee provision.

Brittalia purchased walnut trees from Stuke and later sued for breach of warranty and other causes of action based on allegations that many of the trees were either the wrong variety or diseased.  There was no single, clearly identified written contract governing the sale.  The parties had a course of dealing during which they had agreed to a transaction, then canceled it, then agreed to a new transaction.  The documents (order confirmation, invoice) memorializing the canceled transaction contained warranty disclaimers and an attorney fee provision.  The documents memorializing the completed transaction (purchase proposal and check for down payment) did not.  The jury rendered a general verdict for Brittalia for $5.4 million, and the court awarded Brittalia $750,000 in attorney fees.  Stuke appealed the judgment and fee award . . .

The Standard of Review.

The Court of Appeal is very careful to identify the contract question at issue in order to arrive at the correct standard of review.  The issue is not one of law for the court because the issue is not what the contract means.  The issue is what the contract is. That is, does the contract include the earlier documents as well as the later ones?  That issue is a hotly disputed factual issue, thus subject to substantial evidence review.  The court affirms the judgment because substantial evidence supports the jury’s implicit finding that the warranty disclaimer in the documents regarding the canceled transaction was not a term of the completed transaction.

Availability of Attorney Fees.

Here’s the really interesting part of the opinion . . .  

If the terms in the earlier documents don’t apply to the completed transaction, then the attorney fee provision cannot be a term of the sale any more than the warranty disclaimer can.  Thus is posed the issue: If the plaintiff asserts that the contract terms do not include a fee provision and the defendant claims that the terms do include a fee provision, does the mutuality requirement of Civil Code section 1717 entitle the prevailing plaintiff to recover fees?

I thought Brittalia had a decent argument it should recover its fees.  After all, section 1717 has long been construed to require mutuality, even when a defendant successfully defends against a contract with a fee provision by proving the contract is unenforceable.  The logic behind that rule is simple: the defendant in such a case must be able to recover fees because allowing only a successful party seeking enforcement of the agreement to recover fees effectively renders the fee provision unilateral in violation of Civil Code section 1717.

Here, the court sees the situation somewhat differently, and rejects Brittalia’s claim that it should be awarded fees.  Because Brittalia did not allege that the contract it sued upon contained a fee provision and Stuke argued that terms from a contract different from the one sued upon included the fee provision, the court concludes “there simply was no ‘mutuality’ of attorney fee remedy that Stuke could have invoked to obtain its attorney fees under section 1717.”

Did the court get it right?  Its reasoning appears vulnerable for a couple of reasons.

First, Stuke wasn’t really arguing that the terms of a different contract applied.  Stuke argued that the earlier documents were part of a course of dealing that made the earlier documents part of the same contract, covering the  same transaction, over which Brittalia was suing.  The parties disagreed about what terms were included.

Second, while it is true that Stuke couldn’t invoke mutuality because Brittalia didn’t assert that the operative terms included a fee provision, why should mutuality only apply when a plaintiff claims a fee provision is in the contract and not when a defendant does so?

Perhaps the answer lies in the court’s final consideration: equity.  The court finds that it would be inequitable to allow Brittalia to recover fees when it asserted that the contract didn’t include a fee provision:

It simply is unfair to award Brittalia its attorney fees under section 1717. Brittalia cannot be allowed to win on its contract action by championing one contract without an attorney fee provision, and then turn around and ask for attorney fees as prevailing party based on a different contract, with an attorney fee provision, that Brittalia had to defeat to secure its victory.

But this reasoning likewise seems flawed.  If the court’s characterization of the documents as two different contracts is based on the implicit jury finding, then the court’s holding seems to produce exactly what Civil Code section 1717 prohibits: a unilateral fee provision.  Because Brittalia won on a contract it insisted did not provide for fees, it was not entitled to them.  But had Stuke won because the jury decided that the warranty disclaimer applied, the attorney fee provision would have likewise applied, and Stuke presumably would have been entitled to its fees.

My analysis in the preceding paragraph presumes, of course — as did Brittalia’s argument — that Stuke would have been entitled to recover fees had it prevailed by proving that the warranty disclaimer (and thus the fee provision as well) was part of the contract.  Oddly, though, the court never answers this question.  Perhaps that is why it does not see the lack of mutuality in its holding — it presumes, but never tells us, that Stuke could not have recovered its fees, either.

Let’s look at the pertinent postion of Civil Code section 1717 (emphasis added):

In any action on a contract, where the contract specifically provides that attorney’s fees and costs, which are incurred to enforce that contract, shall be awarded either to one of the parties or to the prevailing party, then the party who is determined to be the party prevailing on the contract, whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorney’s fees in addition to other costs.

The emphasized language is pretty tough to get around.  Had Stuke stated an affirmative claim based on including the warranty and fee provisions in the contract, it’s hard to see how section 1717 wouldn’t apply.

One effect of the decision is that it appears to place the power of deciding whether fees are at stake solely in the hands of the party seeking enforcement.  That may be in line with the intent of the staute, which addresses provisions awarding fees “which are incurred to enforce that contract.” 

Here, Brittalia initially defined the scope of what it contended was the contract and sought to enforce it.  But suppose instead that Stuke had sued for nonpayment and asserted the contract terms encompassed the fee provision in the earlier documents.  Wouldn’t that require a fee award to Brittalia if Britallia established that the fee provision was inapplicable?  What if Stuke had filed a crossclaim for breach of contract, making the same assertion?

I wonder whether Brittalia’s lawyers formed a strong opinion early in the case that Brittalia would be entitled to fees if it prevailed, or if they merely saw an opening at the end of the case.  It’s hard for me to belive they didn’t consider it early and repeatedly, especially with a case so expensive to litigate.  Were they shocked by the result?

This area of the law is just not as simple as Section 1717 might lead one to believe.  Trial counsel must very carefully evaluate whether their clients will be able to recover — or may be liable for — attorney fees at the end of the case.  They may have a hard time forming a concrete opinion.

Now, just pray the trial judge doesn’t screw it up.

Yesterday’s Supreme Court opinion in The Oakland Raiders v. National Football League, case no. S132814 (July 2, 2007) demonstrates again that no winner of a new trial can have confidence in the order granting the new trial unless the court specifies its reasons in the order or files its specification of reasons within 10 days of the order, as required by Code of Civil Procedure section 657.  In this case, the court’s failure to specify its reasons results in a different standard of review on appeal that effectively shifts the burden of persuasion from the party appealing the order granting the new trial to the party defending the appeal . . .

In this dispute between The Oakland Raiders and their owner, the ever-colorful Al Davis, the trial court granted The Raiders’ motion for new trial on the ground of juror misconduct.  The Raiders had submitted juror declarations that juror J.A. had openly expressed severe bias against The Raiders during deliberations and that juror L.H., who was an attorney, committed misconduct by injecting her view of the law into the deliberations.  There ensued from there a battle of juror declarations, with the NFL submitting declarations from the alleged misbehaving jurors and others denying the accounts in the moving declarations, and The Raiders submitting yet more juror declarations in reply.  The trial court’s order granting the motion stated it was doing so on the ground of juror misconduct but did not specify its reasons, nor did the court file a separate specification of reasons within the jurisdictional 10-day limit.

Ordinarily — that is, if the trial court had filed the required specification of reasons for granting the new trial — the grant of the new trial would have been subject to review for abuse of discretion, and it would be up to the party appealing the grant of the new trial to convince the reviewing court that the new trial should not have been granted.  However, since in the absence of the specification of reasons the reviewing court in this case could not determine whether the trial court granted the motion on the basis of J.A.’s bias, L.H.’s misconduct, or both, the Supreme Court holds that “independent review” is the proper standard of review. 

Under the “independent review” standard, the court of appeal was not required to show deference to the trial judge’s factfinding because the trial court failed to set forth findings.  The burden thus falls to the party that actually won the new trial motion — the respondent on the appeal  — to convince the reviewing court that the new trial should have been granted.  In other words, the roles of appellant and respondent are reversed regarding the burden of persuasion on appeal.  Under this “independent review” standard, the Supreme Court holds that The Raiders did not meet that burden of persuasion because “the testimonial evidence submitted by the parties in the form of juror declarations is sharply conflicting on every material issue, and the Raiders submitted no other evidence to support their motion for a new trial.”

For football fans, there is plenty of news coverage about the case.  For lawyers, the important part is . . . well, you just read it.  But you should also read the case, especially if you are a trial lawyer, because it details additional pitfalls in the new trial procedure. The bottom line is that a successful new trial movant is at the mercy of the court when it comes to the specification of reasons.

I have more thoughts on the case, not yet fully formed and requiring a second look at the opinion.  (Besides, this post is already long enough!)  If my thoughts pan out like I think they will, I’ll post a follow-up.

UPDATE (7/4/07): There is also some coverage at How Appealing and Law.com.

In Nitco Holding Corp. v. Boukijian, case no. 05-16438 (June 25, 2007), the Ninth Circuit holds that such plain error review is likewise precluded by Unitherm.  In the absence of both a Rule 50(a) motion and a post-verdict Rule 50(b) motion either for judgment as a matter of law or for a new trial, the Court of Appeals cannot review even for plain error.

So don’t forget those post-verdict motions.

There is a lot that can be written about this process, but this post is limited to points raised in last Friday’s decision in the Fourth District Court of Appeal case of Ermoian v. Desert Hospital, case no. E036982 (June 22, 2007).  The published portion of the case contains some good nuggets for trial counsel who may be involved in a bench trial.

First, the case is a pretty decent primer on the doctrine of implied findings.

Second, the case emphasizes that the doctrine of implied findings binds the hands of the Court of Appeal.  The court takes the doctrine seriously and is not likely to look for ways around it.  In fact, in this case, the court asked for supplemental briefing about whether the appellant had brought inadequacies in the statement of decision to the trial court’s attention.

Third, it holds that some purported objections to the statement of decision simply don’t count.  A notice pursuant to rule 8.130 (formerly rule 4), California Rules of Court, pursuant to which an appellant who orders less than a complete reporter’s transcript must state the points to be raised on appeal, doesn’t cut it.  It is intended for the clerk of the superior court, not the court itself, and the mere recitation of points to be raised on appeal would not put the superior court on notice of statement of decision deficiencies in any event.  Nor is it enough to object to the entire proposed statement of decision drafted by your adversary (at the request of the court) with a demand that the court prepare its own statement.  This amounts to nothing more than a second demand for a statement of decision.  Objections must be specific enough for the court to be able to take corrective action.

Fourth, the statement of decision need not respond point by point to every purported contested issue in the request for the statement of decision.  It is enough for the superior court to disclose its determinations “as to the ultimate facts and material issues in the case.”

Sound advice to trial counsel as to the doctrine of implied findings and the statement of decision process: Learn it.  Live it.  Love it.

Update (6/25/07): The Appellate Practitioner has a post about the case, with special mention of the court’s handling of the premature nature of the appeal.  You’ll recall I posted about “saving” premature appeals here, wondering whether the practice might someday be challenged in the Supreme Court.  The Appellate Practitioner’s point highlights the implication in the headline for this post — while the Court of Appeal seems often to go out of its way to preserve a procedurally improper appeal, it does not appear to be nearly as generous in construing various filings as proper objections to a statement of decision, at least not judging by the facts of this case.  Then again, the objections in this case were not substantively sufficient either.  In the right case, however, where the objections are specific enough and presented to the superior court, even by an improper procedure, might the court grant some leeway?

There is one other interesting aspect of the decision.  The appellant contended, for reasons the court opinion does not disclose, that she was entitled to de novo review of the evidence on negligence and causation.  The Court notes that the only situation in which de novo review of factual findings is appropriate is where only one reasonable inference can be drawn from undisputed facts, and finds way too many such disputes to apply the de novo standard.  Thus, the Court of Appeal evaluates the evidence under the venerable “substantial evidence” standard.  The disputes seem so obvious that I’m left to wonder if the appellant did not advance some other basis for de novo review that the court simply decided not to set forth in its opinion.

You ask the court to invoke the judicial equivalent of time travel: the entry of an order nunc pro tunc to a date before your husband died.  In Cadlo v. Metalclad Insulation Corp., case no. A111353 (June 11, 2007), the First District Court of Appeal holds that a valid exercise of the court’s power to antedate the judgment makes the earlier date the one relevant for section 337.34 purposes.  Since the Cadlo decedent was alive on the date of entry nunc pro tunc, section 337.34 does not apply.

The Court of Appeal finds that the trial court validly exercised its power here.  The date of nunc pro tunc entry was a date on which judgment could have been entered, the delay in entry was not due to plaintiff’s inaction, and the trial court was within its discretion to decide that antedating the judgment was necessary to avoid injustice because the defendants would have earned a large windfall (relief from millions of dollars in liability) without it.

UPDATE (6/13/07): Professor Martin has some commentary on what this case says about our desire for “finality” and whether we might desire it just a little too much.

Technorati Tags: California Post-Trial Practice, judgment

Carpenter brought an action for wrongful termination, defamation, and other tort and contract claims related to the termination of employment by Jack in the Box.  Jack in the Box brought an anti-SLAPP motion (special motion to strike) under Code of Civil Procedure section 425.16, claiming that plaintiff’s claims targeted Jack in the Box’s actions in the course of an investigation into allegations that plaintiff had sexually harassed another employee and that such actions were protected under the First Amendment.  The trial court denied the special motion to strike, and the Court of Appeal affirmed.

After remittitur to the trial court, plaintiff filed his application for fees and costs under section 425.16(c).  The court held that the trial court did not lose jurisidction over the aplication simply because the remittitur of the case after the denial of the anti-SLAPP motion did not include instructions to determine attorney fees and costs.  The trial court retains jurisdiction to decide a motion for fees and costs even while the appeal is pending, and a statute authorizing an award of attorney fees in the trial court includes appellate fees unless the statute explicitly states otherwise.

Finding jurisdiction, the court next turned to the issue of whether the application was timely under rules 3.1702 and 8.104 of the California Rules of Court.  After a rigorous and complicated analysis of the rules to resolve a facial ambiguity, the court concludes that an application for fees under section 425.16(c) is timely so long as it is brought any time before final judgment in the action.

Technorati Tags: California attorney fees, Anti-SLAPP

Technorati Tags: California cost awards, California post-trial procedure