Lower Court Did Not Properly Consider Plaintiff’s Degree of Success in Fixing Fees.
Under the Truth in Lending Act, attorney’s fees must be awarded in any successful action to enforce its requirements. (15 U.S.C. § 1640(a)(3); Purtle v. Eldridge Auto Sales, 91 F.3d 797, 802 (6th Cir. 1996).) In the next case, our local appellate court remanded a substantial lower court fee award to TILA plaintiffs based on the trial court’s failure to properly consider the plaintiffs’ degree of success.
LaLiberte v. Pacific Mercantile Bank, Case No. G045275 (4th Dist., Div. 3 June 13, 2012) (unpublished) involved a TILA case with both individual and class action claims which took two prior trips to the appellate court with some wins for both sides during the course of the case. Ultimately, the case was narrowed to a class claim for statutory damages based on bank’s failure to accurately disclose finance charges and an individual claims seeking loan rescission/statutory damages for the alleged failure to provide accurate disclosure statements and notices of right to cancel. Eventually, the class claim was certified based on directives of the appellate court, and then a settlement was reached by the parties through which plaintiffs were given a $22,500 incentive award and $202,500 was distributed to class members. The settlement preserved plaintiffs’ right to seek fees under TILA, and they were awarded $738,216.09 out of a requested nearly $759,000 in fees after some reductions were made based upon bank’s opposition to the fee request.
On the appeal of the fee award, the order was reversed and remanded for a recalculation of fees.
The overarching basis was the lower court’s failure to properly consider plaintiffs’ limited degree of success. The settlement only applied to plaintiffs’ class claim for statutory damages based on the alleged finance charge nondisclosure, with nothing paid out on the individual claims. Although the successful claim was related to the individual claims based on a common core of facts (the refinance transactions with bank), the lower court–in the reviewing court’s view–did not properly focus on the degree of success factor, which involves analyzing the objectives plaintiffs sought to achieve through the litigation and what they actually achieved. (Sokolow v. County of San Mateo, 213 Cal.App.3d 231, 248-250 (1989); Hensley v. Eckerhart, 461 U.S. 424, 436, 440 (1983).) In this particular instance, no loan rescissions were obtained, bank successfully opposed the class claims for rescission/actual damages, and plaintiffs failed to establish bank violated TILA in any way other than its failure to accurately disclose finance charges. The lower court improperly based the award on plaintiffs having “broken new legal ground” in the prior published opinion that held rescission claims were not subject to class treatment, given that this is not a degree of success factor and in any event was an unsuccessful development for plaintiffs.
Although the lower court stated in its award that it considered the “result obtained,” this cursory statement was not elaborate enough to explain a decision awarding plaintiffs 97% of their attorney’s fees. On remand, the appellate court did offer some guidance, saying the trial court (1) should compare the relief/litigation objectives obtained with the relief/litigation objectives plaintiffs failed to obtain; (2) should prioritize the various forms of relief/litigation objectives to determine degree of success; and (3) should determine whether the various claims plaintiffs alleged were separate litigation objectives or merely alternative theories for obtaining the same litigation objective, but should not consider plaintiffs’ later success, if any, on individual claims because the fee motion only dealt with recovery on the single class claim.
Justice Aronson wrote the 3-0 opinion on behalf of the panel hearing the case.