Scaling Back to One Fifth Meant that a Fee Fixing Remand Was Necessary.
Here is a very pragmatically-based decision from our local Fourth District, Division 3 appellate court, dealing with a situation where a lower court fixed fees on the premise that a higher compensatory award was in play when a prior appellate court decision dashed the underpinnings of the fee award assumption in later proceedings.
In Stephens v. Gaustad, Case No. G045464 (4th Dist., Div. 3 Apr. 11, 2012) (unpublished), a trial court found that reasonable attorney’s fees of $175,000 (out of a requested $246,277) should be awarded to two beneficiaries by a trustee contesting their accounting without reasonable cause and in bad faith so as to trigger fee entitlement under Provbate Code section 17211(b). However, the premise of the fee award was that beneficiaries recovered compensatory damages somewhere in the neighborhood of $220,000. However, the appellate court only affirmed about $45,400 of compensatory damages in favor of beneficiaries, only one-fifth of the recovery on which the trial judge predicate the fee award.
Our local appellate court, in a 3-0 panel decision by Acting Presiding Justice Rylaarsdam, reversed and remanded.
The problem was that fees really had to be recalculated given the trial judge’s reliance on the higher–by nearly four-fifths–compensatory award which was not by any means a close approximation to the actual award affirmed later on appeal after fixing of the $175,000 fee award. A remand was necessary. (Cf. City of Long Beach Redevelopment Agency v. Morales, 157 Cal.App.4th 287, 289, 291, 295 (2007) [eminent domain action; mathematical error of less than 2% percent in evaluating public’s agency final offer for unreasonableness required a remand for reconsideration].) Even the trial judge indicated that no more than $52,000 in fees were justified if the $220,000 judgment was not in play.
There also was an interesting discussion on block billing, which may lead us to predict that our local appellate court believes that these type of entries should lead to a discount, but not an outright denial–even though there is California precedent that allows a discretionary denial altogether. In this opinion, the Court of Appeal seemed to condone generalized entries to protect the attorney-client privilege–with other unpublished decisions being critical of severe redactions on this basis–although still allowing trial court discretion on acceptance of entries to reign supreme. (Jaramillo v. County of Orange, 200 Cal.App.4th 811, 829-830 (2011).) Here, however, the trial court did reduce fees by about $71,000, so that might have been enough and any error was harmless. We will have to await how state appellate courts deal with block billing entries, although the trend seems to be tilting in favor of a reduction rather than an outright denial of fees.