$185,674.22 Fee Award and $12,829 Costs Award Sustained on Appeal.
Chino Municipal Code section 12.02.030 provides that any applicant (usually a telecommunications company obtaining an encroachment permit) failing to restore city or private property to the like or better condition after any encroachment damages “shall be liable for all costs to restore same and for reasonable attorneys fees and expert witness fees in the event litigation and other legal action is required to collect such costs.” That provision came to haunt Verizon in the next case we discuss.
Cosolo v. Verizon California, Inc., Case No. E049017 (4th Dist., Div. 2 Mar. 14, 2011) (unpublished) was a situation where a sub-subcontractor of Verizon punctured some lateral and city main sewer lines resulting in raw sewage flooding into plaintiff’s homes. After some discovery intensive litigation between plaintiffs, Verizon, Verizon’s subcontractors, and the city, the parties entered into a settlement agreement reserving the lower court’s jurisdiction to rule on the issue of attorney’s fees and costs. Rule it did, awarding plaintiffs $185,674.22 in fees and $12,829 in costs, prompting an appeal by Verizon.
Things did not open well for Verizon. It requested appellate augmentation of the record to include some deposition transcripts not before the trial court and to include a mediation brief. These were inappropriate items for augmentation, resulting in imposition of a $900 sanction against Verizon for some of plaintiffs’ attorney’s fees in opposing the motion.
The Chino ordinance was found to provide a fee entitlement basis for the awards of fees and expert witness fees (with the latter being a component of the costs award).
Verizon argued that plaintiffs had already been made whole by payments from their insurance carriers, but the appellate court dispatched this one by pointing out that “the fact that plaintiffs’ insurer paid some or even all of the damages plaintiffs incurred does not negate plaintiffs’ right to pursue an action for damages against Verizon, the entity ultimately responsible for the damages.” Any double recovery likely was prevented because the insurer has a subrogation lien against any outside recovery obtained by the plaintiffs from Verizon. Beyond that, the subrogation payment by insurers did not cover court costs and attorney’s fees, so the awards were justified.
This brought the appellate court to confront Verizon’s contention that the awards were excessive in amount, a determination reviewed under the deferential abuse of discretion standard. Not on this record, said the appellate court. Plaintiffs asked for $277,677.92, but were awarded $92,003.70 less–principally because the lower court lowered the requested hourly rate of partners on plaintiffs’ side from $550 to $350 per hour. No apportionment had to be made, because Verizon waived the argument by failing to request that it be done in the lower court. (Premier Medical Mgt. Systems, Inc. v. CIGA, 163 Cal.App.4th 550, 564 (2008).) The costs and fees expended by plaintiffs against the City were properly included in the equation because the city litigation arising from the ordinance was directly related to the overall litigation against Verizon, with Verizon’s behavior being the catalyst for the necessity to sue the city in the first place.
Expert witness fees in the costs award did not have to be divided between defendants (especially excluding costs incurred by defendants settling earlier with plaintiffs), because as the lower court insightfully said “[y]ou know the age-old saying that whoever settles first usually gets the better deal when there’s multiple defendants in the case. They settled out first. They reached their deal. I don’t have them before me now. I can’t order them to pay a part of the costs.”
Fee and costs awards affirmed, a result that will likely not please Verizon (or, more likely, Verizon’s insurance carrier depending on the coverage in Verizon’s policy).