However, “Prevailing” Landlord Did Not Garner 998 Postoffer Expert Fees or Get More Fees, In Case Implicitly Founded “Over Litigated” By Lower Court—With Landlord Trying To Get $365,000-$387,000 In Fees.
If you have followed us over the years (we thank you for those that have, hoping we have provided some insights, or welcome you newcomers to the blog), we have stressed that litigation is frequently an activity for the well heeled, notwithstanding civil rights and consumer fee-shifting statutes to the contrary. Especially in civil cases involving litigants under a contract, the litigation costs can way outstrip the amounts at issue (or, even more precisely, the amounts eventually awarded) in a particular case.
Slayton v. Ruscha, Case No. B251188 (2d Dist., Div. 1 Nov. 21, 2014) (unpublished) is a classic illustration of these principles, so enjoy–followers of our blog and newcomers.
In this one, a landlord and long-term tenant under a commercial lease, artist Edward Ruscha, got involved in a litigation maelstrom. Landlord sued for premises damages/unpaid rent of $635,000, with tenant paying for $86,004 in unpaid rent but then counterclaiming for $30,000 in relation to a security deposit. Then, we got some 998 offers. Tenant offered to pay $100,000 to Landlord and dismiss the cross-complaint (total value $130,000), but Landlord rejected it because he had about $110,000 in pre-offer attorney’s fees. Landlord then sent his own 998 offer for $345,000 to resolve it all, an offer not accepted by Tenant.
Speed ahead to trial. Landlord recovered $30,000 on his complaint and defeated Tenant’s $30,000 cross-complaint.
Next up were dueling motions for recovery of attorney’s fees and costs—after all, what else was left? Landlord requested fees somewhere between $364,000-$387,000 based on our reading of the opinion, which does not reveal what Tenant requested.
The trial court determined that Landlord, under a lease fees clause, was the prevailing party because he beat Tenant’s $100k 998 offer—he recovered $30,000, beat Tenant’s cross-complaint to the tune of $30,000, and had about $110,000 in pre-offer fees. However, the trial judge only awarded Landlord $125,000 in fees and $22,479 in costs, denying Landlord’s request for recovery of post-offer expert witness fees.
Both sides appealed, although the whole megillah was affirmed on appeal.
Under Civil Code section 1717, the prevailing party determination was a discretionary one based on the overall results in the matter, even though no one really shined. Landlord did beat Tenant’s $100k 998 offer based on the math calculated by the trial judge (described above)—so he could be determined to prevail on a discretionary call basis. However, Tenant made a creative argument that the $110k in pre-offer costs had to be reduced by two thirds (the reduction in the eventual 1717 award to the request of Landlord). Nope, said the 2/1 appellate panel, Landlord could never know what a trial judge might do later on such that the $110k in actual fees known to him at the time was the correct standard in gauging whether the 998 offer was beat or not.
Landlord was properly denied post-offer expert fees, given that he recovered nowhere close to his $345,000 998 offer. Discretionary call by the trial judge, and one affirmed on appeal.
As far as Landlord’s claim that the fee award was too low, the appellate court—although eloquently—gave short shrift to this argument, given that the lower court implicitly found the matter was “over litigated.”
So, the fee wagon did drive this case and we are not sure the litigants were overjoyed with the “end results” on either side of the matter.
BLOG BONUS: Pacific Standard Time at the Getty interview with Ed Ruscha.