Second District Affirms Fee Award and Review Principles We Have Previously Surveyed.
Once in a while, we all need refresher courses. That all holds true in the fee award area. The next case is just that—reviewing principles we have earlier discussed on mediation clauses, prevailing party status, and trial court review of fee substantiation evidence submitted in support of fee motions.
In Casillas v. Westhaven, LLC, Case No. B200553 (2d Dist., Div. 7 June 11, 2008) (unpublished), plaintiff initially sued everyone but the seller for defects in his purchased house. Plaintiff settled with several parties, before finally adding defendant seller in through a “Doe 1” amendment. Even though there were mediation/arbitration clauses in the purchase agreement, plaintiff resisted arbitration. He failed diligently to engage in arbitration while the trial judge stayed the underlying case and set status conferences at which he monitored the “nonprogress.” Eventually, enough being enough, the trial judge (a real veteran, Hon. Ernest M. Hiroshige) dismissed the lawsuit with prejudice, under his inherent authority, for plaintiff’s failure to comply with his orders to arbitrate the matter to completion. This determination was affirmed on appeal to the Second District.
Following a motion based upon an attorney’s fees clause in the purchase agreement, defendant seller also was awarded $17,310.60 in attorney’s fees and $355.26 in costs, although originally asking for $23,684 in fees and $3,040.99 in costs. Justice Zelon, writing for a 3-0 Second District, Division Seven panel, rejected a multi-pronged challenge by plaintiff on appeal. In doing so, she reinforced many principles that we have reviewed in past posts.
First, because the CAR purchase agreement had a mediation clause, the appellate court addressed the argument that defendant was disqualified from seeking fees because it refused to mediate. Wrong, the reviewing court said. Citing Frei v. Davey, 124 Cal.App.4th 1506, 1520 (2004) (one of the leading opinions on mediation clauses authored by Justice of our local Fourth District, Division Three), the Second District panel found that plaintiff could never have received fees because, although the parties did unsuccessfully try to mediate later on, he “Doed” defendant into the lawsuit before initiating mediation—a “no no” because the mediation clause “means what is says.” Defendant did participate in the belated mediation sought by plaintiff, and that was enough to fulfill its obligations under the mediation clause. (RETROSPECTIVE—See our May 30, 2008 post on Lange v. Schilling.)
Second, plaintiff claimed there was no “prevailing party” under Civil Code section 1717 because plaintiff achieved his financial remuneration through prior settlements with other parties such that the dismissal of defendant was inconsequential. Wrong again. Defendant, who obtained the dismissal, is properly considered a prevailing party under Code of Civil Procedure section 1032(a)(4). Also, the Court of Appeal pragmatically noted that plaintiff obtained no benefit from adding defendant to the lawsuit, such that the one obtaining the greater relief was certainly defendant. (RETROSPECTIVE—See our June 12, 2008 post on Benson v. Little.)
Third, the fee reasonableness arguments were found unpersuasive. Even though the moving party submitted an attorney declaration attesting to hourly rate ranges based “on information and belief,” Justice Zelon dismissed the argument because “[plaintiff ] cites no authority for the proposition an asserted hourly rate for an attorney when requesting an attorney fee award must be based on personal knowledge, rather than on information and belief.” (Slip Opn., at p. 15.) There also was no bite to plaintiff’s general challenge to the reasonableness of the fee award, given that the record showed the trial judge did an item-by-item review and eliminated amounts for duplicative work, inflated work hours, and ineligible cost items—reducing the requested fee component by about 25% and the cost component by 90%. (RETROSPECTIVE—See our June 2, 2008 post on Premier Medical Mgt. Sys., Inc. v. Cal. Ins. Guar. Assn.)
(FINAL RETROSPECTIVE—Although the gist of plaintiff’s lawsuit was for fraud or concealment, there is solid case law indicating that the fee clause in the CAR purchase agreement is a sufficient predicate for fee recovery. See our May 22, 2008 post on “Post-Trial Arbitration Proceeding” for a listing of those authorities.)