Fourth District, Division 3 Affirms and Augments Fee Awards, After Also Determining that Defense Tactics Required Terminating Sanctions For Bad Faith Discovery Abuses.
Here is another wild one, dictated by the unusual set of facts at play. It is also a modern day parable reminding all litigators that they need to avoid “hiding the ball” during discovery. The decision also reinforces that, by and large, trial court reductions for inefficiencies and padding will be affirmed under the deferential abuse of discretion review standard.
Doppes v. Bentley Motors, Inc., Case No. G038734 (c/w other cases) (4th Dist., Div. 3 June 8, 2009) (certified for publication) was a 3-0 decision emanating from our local Santa Ana Court of Appeal, authored by Justice Fybel. The opinion is not only interesting reading, but reinforces that litigation attorneys will be punished for discovery abuses—with appellate jurists determining that punishment should be increase over and above recommendations by discovery referees and trial judges. However, the case also happens to be instructive in the attorney’s fees area.
Briefly summarized, plaintiff won a lemon law vehicle case against a defendant based on the car having an obnoxious odor in the interior. Defendant engaged in numerous discovery tactics that led to numerous terminating sanctions requests (including behavior relating to defendant’s failure to produce responsive e-mails), but the discovery referee recommended giving–and ultimately the trial court only gave—an adverse jury instruction. The jury awarded plaintiff $214,300 as vehicle reimbursement and additional prejudgment interest (with the prejudgment interest determination affirmed in a separate opinion). Plaintiff moved to recover $586,844.63 in attorney’s fees under Civil Code section 1794(d), a mandatory, plaintiff-oriented, fee-shifting provision. The trial court actually awarded plaintiff $344,600 in fees based on its own detailed spreadsheet analyzing the specific fee substantiation. The lower court denied all paralegal time billed; disallowed $53,213 as time spent against another nonliable party and on unsuccessful claims; reduced the billing rate of the lead attorney from $400 to $300 per hour; allowed recovery for only one attorney at trial; disallowed all time billed for sanctions motions before the discovery referee; and reduced the amount billed by one attorney’s office by 25% “for general excessive time billing for items.” Plaintiff later moved for further postjudgment attorney’s fees of $72,789.80, but the trial court only awarded $4,427. Plaintiff appealed.
In a stunning non-fee development, the appellate panel determined that terminating sanctions should have been awarded against the defense for discovery abuses, striking the defendant’s answer on the fraud claim and remanding for a prove-up (including a potential consideration of punitive damages). Ouch! The decision is must reading for litigators who do not take discovery (especially e-mail) obligations seriously and shows the repercussions that can occur when a “hide the ball” mentality is pursued in civil cases.
Under the Song-Beverly Act’s fee-shifting provision, fees are only warranted based on “actual time expended” and for fees “reasonably incurred.” (Civ. Code, sec. 1794(d).) This, in essence, is the lodestar approach, subject to adjustment or reduction for the factors outlined in Serrano v. Priest, 20 Cal.3d 25, 48-49 (1977). (Robertson v. Fleetwood Travel Trailers of California, Inc., 144 Cal.App.4th 785, 819-820 (2006).) This leaves considerable discretion with the trial court in determining reasonableness of fees, especially in determining if a fee request is inflated in nature. (Christian Research Institute v. Alnor, 165 Cal.App.4th 1315, 1322-1323 (2008).) Justice Fybel, on behalf of the appellate court, by and large affirmed the trial court’s findings, with these tweaks:
- Second chair attorney disallowance—Although indicating that “having a second chair at trial is not unusual and often necessary,” the lower court was in a better position than the appellate court to determine if a second chair at this particular trial was necessary (Levy v. Toyota Motor Sales, U.S.A., Inc., 4 Cal.App.4th 807, 816 (1992));
- Reduction of award for excessive billing—The trial court’s 25% reduction for one law office’s bills could not be found unreasonable as a matter of law;
- Eliminating all fees for discovery motions and terminating sanctions—Because plaintiff had been put through numerous discovery motions and proceedings for which terminating sanctions were justified, the trial court abused its discretion in disallowing recovery of $57,587 in attorney’s fees incurred in connection with discovery referee proceedings; and
- Minimal award of postjudgment fees for preparing fee petition paperwork—The trial court erred in not allowing recovery of fees for preparing the pertinent motion paperwork (Estate of Trynin, 49 Cal.3d 868, 875 (1989)).
Besides terminating sanctions, the winning plaintiff obtained recovery of the original $344,600 fee award, additional of fees of $57,587 for discovery referee proceedings (subtotal of $402,187), and further future fees for preparing the postjudgment fee motion paperwork. Quite a resounding victory for plaintiff and, frankly, a bummer for the defense.