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Employers and Insurance Carriers need to be mindful of the risks of attorney fee and costs awards, which may – at the end of the day – be a major disincentive for using a courtroom to resolve conflicts. As one appellate jurist wisely observed, “All too often attorney fees become the tail that wags the dog in litigation.” Deane Gardenhome Assn. v. Dentkas, 13 Cal.App.4th 1394, 1399 (1993).

An award of fees and costs in litigation may be authorized by statutory provisions, such as in Public Attorney General Actions (PAGA) involving employers. Or by a provision stated in a contract agreed to by the litigating parties before the dispute arose. In the latter instance Cal. Civ. Code §1717(a)(1) provides that attorney’s fees be awarded to the prevailing party in any action on a contract where the contract specifically provides that attorney’s fees and costs shall be awarded to the prevailing party.

The website California Attorney Fees provides a resource tool to practitioners, jurists, and the public about the law governing attorneys’ fees/costs awards, but focused on the law and pragmatic experiences in California state or California federal judicial forums. Their most recent post on Monday provided insights about how attorney fees and costs are allowed, and disallowed, in a report on a Los Angeles County Superior Court (Norwalk) final ruling on attorney’s fees and costs to a prevailing plaintiff in WnG Construction JV, Inc. v. AAA Solar Electric, Inc., et al., L.A. Superior Court Case No. VC065473 [Judge Porras].

Plaintiff WnG won a construction dispute with a contractual fees clause against the defense, winning compensatory damages of about $3.116 million (inclusive of prejudgment interest) despite an offset and plaintiff not winning all that it wanted. However, given that plaintiff did gain much of what it wanted, plaintiff was the prevailing party under the fees clause. Plaintiff then moved for fees and costs, with various law firms submitting fee requests totaling around $2.1 million and with costs claimed of over $205,000.

After some reductions on both counts, Judge Porras awarded fees of about $1.309 million and costs of around $82,000.

Here are some interesting highlights to show his thinking on awarding reasonable fees and costs:

– – An attorney disqualified based on ethical obligation violations is not entitled to any fees, an almost $223,000 reduction;
– – A law firm requesting over $653,000 in fees did not get them because they were involved in a discovery dispute which showed plaintiff deliberately spoliated evidence;
– – The principal law firm did get a majority of its requested fees, although J.D. law clerk/non-J.D. law clerk/secretarial work was not allowed and the main attorney charging $500 per hour for a breach of contract case was reasonable (but not an enhanced $750 hourly rate based on the Laffey Matrix, which the lower court found did not reflect L.A. County rates);
– – A law firm billing for potential post-trial/appellate consultation was not entitled to fees until those events materialized into situations allowing for fee recovery;
– – Although a CCP § 998 offer was rejected and could have potentially resulted in expert fee recoupment (although it is not clear from the record), the failure to identify pre-offer versus post-offer costs did not allow for an award of expert fees without a clearer allocation;
– – Charges for additional or duplicate copies of court reporter transcripts resulted in a reduction of expenses for these items.

The litigation between the parties in this case started with a complaint filed in April 2016, and this month a Notice of Appeal has been filed, thus it is likely there will be several more years of litigation, and subsequent motions for additional attorney fees and costs.

The 11 page Minute Order prepared by Judge Porras is a good read, and good resource on the case law he relied on in making his complex review of the requested attorney fees and costs. Plaintiffs here claimed they paid $2.1 million in attorney fees and costs of $205,000 to ultimately obtain a judgment of $3.116 million in damages.  It would be reasonable to assume the defense also had a similar expense for their attorneys and litigation costs. Overall, it would seem that the parties together spent about $4.5 million in fees and costs to resolve this dispute adjudicated to be worth about $3.116 million. And it is likely that another million or two will be spent on the appeal process over the next few years.  In rough numbers, it will probably cost about $6 million to resolve a $3 million dispute.

Returning then to what was said in 1993 by Justice Wallen in Deane Gardenhome Assn. v. Dentkas, – litigation between a homeowner association and Dentkas – who owned a home there over the color of the paint applied to their home – the homeowner prevailed and filed a motion seeking an award of $11,533 in attorney fees. The trial court denied their request noting, “I remember I made some remarks about this when the case ended. [¶] I think I said don’t come back here looking for attorneys [sic] fees. [¶] My thought is with a micro ounce of cooperation, insight and judgment, this could have been a ten-minute small claims case. [¶] I’m not giving attorneys [sic] fees to anybody.”

On appeal, the trial judge was reversed and Dentkas was awarded attorney fees and costs. In doing so the Court of Appeal noted “We are not at all unsympathetic to the trial court’s concerns. All too often attorney fees become the tail that wags the dog in litigation. Particularly in homeowner disputes such as this where the allegedly offending homeowner, rather than comply with neighborhood demands he or she remove something deemed to be offensive, decides to stand on his or her “property rights.” Often the economic value of what the homeowner gains is minute compared to the litigation costs.”