Code of Civil Procedure sections 116.780 and 116.790 Provide Answers.
Mike Hensley recently had to appear at a trial de novo of a small claims judgment won by a developer client. Small claims jurisdiction reaches disputes of either $5,000 or $7,500, depending on the type of case. When a losing litigant appeals the judgment, the matter proceeds to a trial de novo (which ranges from being very informal to a full-fledged trial on the merits). Attorneys may participate in the appeal hearing. Code Civ. Proc. sec. 116.770.
What attorney’s fees can be obtained by the winner in the small claims appeal hearing?
The answers are found in Code of Civil Procedure sections 116.780 and 116.790. Section 116.780(c) provides that the court may award the winning party attorney’s fees actually and reasonably incurred in connection with the appeal, but not exceeding $150 (as well as lost earnings and transportation/lodging expenses not exceeding an additional $150). Section 116.790 allows the court, if it finds the appeal “was without substantial merit and not based on good faith, but was intended to harass or delay the other party, or to encourage the other party to abandon the claim,” discretion to award the other party actual, reasonable fees that do not exceed $1,000 (as well as an additional $1,000 in lost earning and transportation/lodging expenses).
Mike’s client prevailed, and Judge Margaret Anderson, who sits in Orange County-Harbor court, awarded the client $150 in attorney’s fees.
What if there is a contractual attorney’s fees clause? Can the winner obtain the actual and reasonable fees over the small claims statutory limits? We know of no decision that has considered this issue. The “pro” argument would be that the winner of a small claims appeal had to hire an attorney in many cases and that the litigant will not be made whole unless more fees are awarded. The “con” argument relies on the statutory limits as reaffirmation by the Legislature that the small claims procedure is meant to inexpensively resolve minor disputes without fear of a large fee exposure.