Archive for the ‘Attorney Fees’ Category

Can Fees Exceed Damages?

Tuesday, August 14th, 2007

Code of Civil Procedure §1021.5 does not limit the amount of attorney fees a court may award in public interest cases, and specifically recognizes the power of a court to award a “multiplier” (an augmentation to the reasonable hourly rate multiplied by the reasonable hours expended in the matter).  In a recent decision, however, the Court of Appeal has signaled that trial courts should be careful about fee awards that exceed the amount of recovery.

The court in Estrada v. Fedex Ground did not issue any new rules or particular guidelines.  It did comment, however, that the trial court “[in recalculating an appropriate award on remand … must determine anew whether any multiplier is appropriate in this case” in light of both the limited success andthe fact that the fee award without the multiplier already exceeded the amount of the recovery.

The court acknowledge that it was only reviewing the trial court’s order for “abuse of discretion,” but cautioned that “the fee must above all else be reasonable.”

Further — and this is the point counsel must keep in mind in the fee applications and in drafting proposed orders awarding fees — “a multiplier, if used, must be based on facts other than those used to trigger the application of section 1021.5.”  In a footnote, the court noted that in this case “the reasons justifying any award at all and an award based on high hourly rates … were the same as those used to justify the multiplier — the benefit to the class, the risk taken, the lawyers’ skill, the excellent results.”

An Attorney Who Represents Himself Won’t Get Paid!

Friday, August 3rd, 2007

Disagreeing with two prior appellate decisions, the First District Court of Appeal has ruled that a trial court cannot award attorney fees as a sanction under Code of Civil Procedure §128.7 to an attorney that is representing himself. 

The decision, Musaelian v. Adams, is based on the California Supreme Court ruling in Trope v. Katz.  There, the supreme court held the attorney fee provision of Civil Code §1717 (if a contract provides for attorney fees for one party, it applies to all parties to the contract) does not authorize an award of fees to an attorney appearing pro per.  The court reasoned that since the language of the statute referred to attorney fees “incurred” in seeking enforcement, it could not apply to an attorney representing himself.

Later decisions have noted that the “incurred” language does not require a client obligation to pay the attorney for the action (so fees are recoverable by in-house counsel and by attorneys in pro bono litigation).  Essentially, then, the requirement that the fees be “incurred” now means only that the the fees would go to an attorney who is not also a party to the case.

Attorney Fees Free Rider!

Monday, July 30th, 2007

Normally, a contractual provision providing for an award of attorney fees is enforceable against either party to the contract.  What happens, however, when the contract is assigned for the benefit of creditors?  If the assignee sues and loses, who bears the burden of the attorney fees?

 

According to the Second District Court of Appeal, the assignee gets a free ride.  In this case, the assignee for a bankrupt tenant sought to invoke the attorney fees for the benefit of the creditors when it brought the law suit against the tenant’s landlord.  When the assignee lost, however, it argued that it had no obligation to pay attorney fees.   Since it was not bound by the contract, the assignee argued, it could not be liable for attorney fees under that contract.  The appellate court agreed, and the landlord was left to try to collect the fee award from the bankrupt tenant.