Second District, Division 3 Finds Defendant Lessors Prevailed Despite Claim of “Triplicative” Work By Three Law Firms.
The next one is a wild one and illustrates that substantial attorney’s fees will be awarded under Civil Code section 1717 once the court determines which litigants “prevailed” by achieving their main objectives in the germane litigation.
In Superior Property of Carson LLC v. Regency Outdoor Advertising, Inc., Case No. B203251 (2d Dist., Div. 3 Apr. 16, 2009) (unpublished), certain billboard lessors prevailed in a protracted lawsuit involving wild claims of what lease governed (an October 10 or 11 document) and whether lessors were judicially estopped after many of them had earlier banked on the October 11 lease—but then shifted course late in the litigation and stood on the October 10 lease, which was indeed found governing by the trial court following a bench trial. Because the plaintiff wanted removal of the billboard and defendants prevented this from happening, the trial court determined the defendants were the prevailing parties under Civil Code section 1717 (based on the existence of fee clauses in both leases) and awarded the three defendants collectively $892,944 in fees—after all, each defendant had its own counsel to defend its interests. Plaintiff appealed.
Except to reverse a prejudgment interest ruling, the entirety of the judgment was affirmed in a 3-0 decision authored by Justice Croskey on behalf of the Second District, Division 3.
First, Justice Croskey did conclude that defendants were the prevailing parties. He resorted to an economic analysis to show that defendants had prevailed, using analysis that would have made Chicago School proponents proud. Plaintiff’s main litigation objective was removal of the billboard, which could generate monthly revenue of $60,000 per month (or, as the appellate panel put it, a “staggering” $720,000 per year or $5.9 million of revenues to defendants during the term of the lease through October 2012). Instead, defendants prevailed such they paid only $3,000 per month for the right to keep the billboard on the property, much less than the $15,000 per month sought by plaintiff (with rent being plaintiff’s backup position if removal was not ordered). Even though plaintiff did obtain some payment of back rent, its “minor success in obtaining the agreed-upon rent simply does not compare” to plaintiff’s loss on the billboard removal issue.
Second, plaintiff argued that only a single prevailing party may obtain its attorney’s fees, not three different parties. (Justice Croskey cleverly dubbed this as plaintiff’s objection to “triplicative” work.) Not so, said the Court of Appeal. Even though the lease talked about prevailing with respect to “either party,” other language indicated that “Lessor” meant “Lessors” and that the lease applied to assigns/successors of both the Lessor and Lessees (Lessees, plural). Given that the contracts contemplated multiple parties in the roles of lessor and lessee, it was no stretch to conclude that it also contemplated multiple parties for purposes of determining the “prevailing” parties under the fees clauses. Also, case law provided that a party can receive fees for using more than one attorney, as long as the services rendered by the attorneys were not unnecessarily duplicative in nature. (Mix v. Tumanjan Development Corp., 102 Cal.App.4th 1318, 1324 (2002).)
Third, that brought the appellate panel to the key issue—whether the triplicative fees were reasonable in amount. They were found to be appropriate under the circumstances. Citing Hadley v. Krepel, 167 Cal.App.3d 677, 683-684 (1985), Justice Croskey determined that each defendant had separate interests to protect, with plaintiff failing to identify very many specific incidents of duplicative work (“plaintiff’s arguments are long on rhetoric and short on detail”). Based on the lack of specificity to the triplicative objection, the appellate panel found the challenge was unpersuasive. Beyond that, the trial court did reduce the defendants’ fees for their delay in identifying the governing October 10 lease to the court, a proper equitable adjustment based on the way the defense shifted away from the October 11 lease that had been banked on at previous points in the litigation.
So, in the end, nearly $900,000 in fees were upheld on appeal—to the victors went the spoils.
BLOG UNDERVIEW—While at Jackson DeMarco Tidus & Peckenpaugh, co-contributors Marc and Mike worked on some Regency billboard cases. All of them had very interesting wrinkles, with most venued in Los Angeles County Superior Court—as the Superior case was.