Fourth District, Division Three Reverses $2,700 Fee Award As Without Basis.
The next case arose from a rather bizarre set of facts, showing fee awards will be withheld if the fee is awarded as an unwarranted penalty in the guise of a statutory fee award.
This legal saga goes like this. Plaintiff brought negligence and statutory unfair competition/false advertising claims against affiliated defendants in two related actions. When counsel for both sides failed to show for trial call, the trial court dismissed, only to vacate the dismissals upon the urging of plaintiff’s counsel when he arrived later. Defendants’ counsel was still a “no show,” sending a “specially appearing” counsel to inform the court he was caught up in a court-ordered mediation in a different matter. Even though defendants had answered, the trial court directed a “default” and refused to continue the matter to another date.
However, plaintiff’s counsel had no one present who could competently provide evidence for the default “prove-up.” After a short continuance, one plaintiff came in and provided testimony, with the court awarding $10,000 in damages. The trial court then insisted that the other plaintiff’s case proceed. Plaintiff’s counsel had no one to present competent or authenticating testimony and lost due to an absence of evidence proving negligence or any statutory violations. The trial court still entered a zero damage award in favor of plaintiff based on the default, with the proposed judgment leaving a blank for insertion of fees and costs.
The “losing” plaintiff then filed a cost memorandum and a fee motion under the notion she was the prevailing party. At the fee hearing, the trial court rejected awarding fees under Code of Civil Procedure section 1021.5 (the public interest enforcement statute), because “this case didn’t result in the enforcement of anything.” Sua sponte, the trial court stated that fees might be appropriate under Business and Professions Code section 17082 (a fee shifting provision under the statutory unfair competition/false advertising schemes). By virtue of section 17082, the trial court awarded $2,700 in fees to the “losing” plaintiff, the “nominal winner.” Plaintiff appealed and won a reversal, as well as costs on appeal and a directive that the trial court on remand consider her worthy of a cost award for trial court work.
In Do v. Kimberly Skin, Inc., Case No. G039328 (4th Dist., Div. 3 June 23, 2008)(unpublished), Justice Bedsworth (writing for a 3-0 panel of our local appellate court) overturned the fee award because a plaintiff who recovers nothing cannot be a “prevailing” party under cost or fee statutes. It was incorrect for the lower court to believe a “default” could be entered for missing a trial call; after all, defendants had answered. The proper options were to proceed to trial or to continue the trial, citing Heidary v. Yadollahi, 99 Cal.App.4th 857, 863-864 (2002).
The Fourth District, Division Three found “other problems” with the fee award. Section 1021.5 was no basis for the award, because the lower court stated that it would not support an award in the case. The trial judge should not have relied on Business and Professions Code section 17082 for two reasons: (1) due process rights were violated by raising the issue sua sponte without providing the parties an opportunity to brief it; and (2) the award “look[ed] suspiciously like a penalty” given that no Business and Professions violations were proven due to the absence of “prove-up” evidence. In the end, Justice Bedsworth believed it improper for the trial judge, in the absence of a “show cause”order so the attorney could explain his conduct, to impose a functional “sanction in the guise of a statutory fee award.” (Slip Opn., at pp. 7-8.)
Plaintiff lost her fee award based on a failure to show she was a prevailing party or had statutory entitlement to a fee recovery, two of the elements that Messrs. Bergman and Dacey reminded us were keys to a successful fee award in their June 19, 2008 first session presentation at the NALFA seminar in Los Angeles (See our NALFA summary post on June 20, 2008.)