1: Legal Services Agreement Was Foundation For Both Contract/Tort Claims, Resulting in Substantial Fee Award.
In Gaggero v. Knapp, Petersen & Clarke, Case No. B207567 (2d Dist., Div. 8 May 6, 2010) (unpublished), former client sued former law firm for breach of contract, breach of fiduciary duty and professional negligence (among others) in connection with 5 matters handled by the firm. All of the claims centered on a legal services agreement, with a fee clause. After defensing the claims, law firm moved for, and received, $1,202,994.50 in attorney’s fees as the prevailing party under Civil Code section 1717. Although former client argued that it was error to not apportion fees between contract and noncontract claims, the appellate panel disagreed and affirmed that apportionment was required. The trial court found the claims and proof were intertwined, so that “it would be impossible to divvy up this cause of action, because they are so intertwined” from both a claim and proof perspective. The appellate court found that this determination was no abuse of discretion.
#2: Issues Common to Swap Document (With No Fees Clause) and Credit Agreement (With Fees Clause) Meant No Apportionment Needed.
Rossco Holdings Inc. v. Bank of America, N.T. & S.A., Case Nos. B209201 c/w B213607 (2d Dist., Div. 3 May 6, 2010) (unpublished) involved a case that went to arbitration, having two important documents—a swap document (without a fees clause) and a credit agreement (with a fees clause). Bank won and was awarded $721,456 in attorney’s fees and $203,254.46 in costs by the arbitrators. Supplemental fees of about $500,000 more were granted after a contentious arbitration confirmation battle. On appeal, losing party argued that the lower court erred in not apportioning fees between the covered credit agreement and noncovered swap agreement. Not so, said the appellate panel. All of the fees awarded related to Bank’s efforts to confirm the arbitration award, with all the claims being intertwined in nature.
BLOG BONUS COVERAGE—Rossco Holdings also addressed a recurring argument that a prior appellate decision providing “each party is to bear its own on costs on appeal” precludes an award of attorney’s fees. The Court of Appeal rejected this argument, relying on the reasoning in Butler-Rupp v. Lourdeaux, 154 Cal.App.4th 918, 924-928 (2007)—must reading for all attorneys confronted with this issue.