Appellate Court Details Proper Application of Mir.
Business and Professions Code section 809.9 provides that the court shall award attorney’s fees “to a substantially prevailing party” in a peer review lawsuit “if the other party’s conduct in bringing, defending, or litigating the suit was frivolous, unreasonable, without foundation, or in bad faith.” In Smith v. Selma Community Hospital, Case No. F057802 (5th Dist. Sept. 1, 2010) (certified for publication), the trial court denied winning doctor $117,837.50 in requested attorney’s fees based on its interpretation of “frivolous, unreasonable, without foundation, or in bad faith” under Mir v. Charter Suburban Hospital, 27 Cal.App.4th 1471 (1994). Because fees are more often than not the “tail that wags the litigation dog,” physician appealed this fee denial.
The fee denial was reversed and remanded, with the Fifth District undertaking a detailed analysis of the section 809.9 standards—must reading for any litigator involved in peer review disputes. Here is a quick summary of its conclusions:
- Section 809.9 is mandatory, not discretionary, in nature (it uses “shall award”);
- The statutory phrase “frivolous, unreasonable, without foundation, or in bad faith” sets forth separate grounds for a fee award;
- The first three terms are objective standards that might overlap;
- The term “bad faith” is a subjective standard concerned with a defendant’s motives for defending or litigating a lawsuit (such as personal animosity, intent to hinder a competitor, or intent to inflict harm); and
- A defendant’s prelitigation and postlitigation conduct is relevant circumstantial evidence for gauging the defendant’s subjective state of mind in this area.
The case was remanded so the evidence could be evaluated under these standards. The 49-page slip opinion was authored by Justice Dawson on behalf of a 3-0 panel.
BLOG UNDERVIEW—The discussion of “frivolous, unreasonable, without foundation, or in bad faith” is also helpful for litigators in other practice areas, because the opinion looks at the elements in other statutes or legal areas (e.g., trade secrets, frivolous appeals, etc.)