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The Impact of Attorney Fees in Civil Litigation and The Importance of Early Analysis of The Merits of The Case

By admin | October 27th, 2016 | Tags: , , , | 0 Comments.

The award of attorney fees at the conclusion of a civil lawsuit often constitutes the most important recovery to the prevailing party.  If the prevailing party is the defendant, recovery of attorney fees permits the defendant to “break even.”  If the prevailing party is the plaintiff, the attorney fee award may provide for additional compensation above and beyond any recovery of actual damages.  In fact, the fee award often exceeds a plaintiff’s recovery for actual damages.

Because of the significant impact of attorney fees awards in civil litigation, it is important to evaluate cases early in the process in terms of such potential awards.

General Principles regarding the award of attorney fees:

California follows the “American Rule” regarding attorney fees – each party bears the cost of their respective legal representation.  However, exceptions exist.  First, if the action is based on a contract which contains an attorney fees provision, the prevailing party is entitled to recover their reasonable fees.  Second, certain statutes provide for attorney fees to the prevailing party.  Examples include certain labor claims and consumer actions.

As such, the prevailing party must establish a predicate contract or statute providing for an award of attorney fees.  Cargill, Inc. v. Souza (2011) 201 Cal.App.4th 962, 966.

            A trial court is afforded wide latitude in ruling on fee motions and it ruling is reviewed on appeal by the abuse of discretion standard.   The trial court’s determination:

“…will only be disturbed when there is no substantial evidence to support the trial court’s findings or when there has been a miscarriage of justice.” ’ ” (citation) As with all orders and judgments, this fee order “is presumed correct, all intendments and presumptions are indulged in its favor, and ambiguities are resolved in favor of affirmance.” (citation). “Ascertaining the fee amount is left to the trial court’s sound discretion. (citations); Trial judges are entrusted with this discretionary determination because they are in the best position to assess the value of the professional services rendered in their courts. (citations); Thus, the court’s fee award “ ‘will not be disturbed unless the appellate court is convinced that it is clearly wrong.’ ” (citation).  Ellis v. Toshiba America Information Systems, Inc. (2013) 218 Cal.App.4th 853, 882, as modified (Aug. 14, 2013), as modified on denial of reh’g (Sept. 10, 2013).

In determining the reasonableness of attorney fees requested, the court should consider:

The nature of the litigation, its difficulty, the amount involved, the skill required and the skill employed in handling the litigation, the attention given, the success of the attorney’s efforts, his learning, his age, and his experience in the particular type of work demanded; the intricacies and importance of the litigation, the labor and the necessity for skilled legal training and ability in trying the cause, and the time consumed. Clayton Development Co. v. Falvey (1988) 206 Cal.App.3d 438, 447 (quoting Clejan v. Reisman (1970) 5 Cal.App.3d 224, 241 (internal citations omitted)).

Furthermore, whether a case is difficult or involves a novel question or questions of law is important in determining the reasonableness of the attorney fees.  Olson v. Cohen (2003) 106 Cal.App.4th 1209, 1218.  Courts have determined that attorneys’ rates are reasonable if they are within the range of rates charged by private attorneys of similar skill and reputation for comparably complex litigation.  Bihun v. AT&T Info.Sys. (1993) 13 Cal.App.4th 976, 997.  As to the hours expended, a successful party is entitled to “compensation for all hours reasonably spent.” Serrano v. Unruh (1982) 32 Cal.3d 621, 639.

When a party prevails on some, but not all, claims – allocation of fees is required:

Cases often resolve where a party prevails on some claims but not on others.  In that situation, the party is entitled to recovery only those fees associated with their successful prosecution or defense.

“A trial judge deciding attorney fees may appropriately “allocate” or “apportion” fees…”  Ritter & Ritter, Inc. v. Churchill Condominium Ass’n (2008) 166 Cal.App.4th 103, 129. “Apportionment of a fee award between fees incurred on a contract cause of action and those incurred on other causes of action is within the trial court’s discretion.”  Abdallah v. United Savings Bank (1996) 43 Cal.App.4th 1101, 1111, as modified on denial of reh’g (Mar. 22, 1996).

In the context of a contractual attorney fees, the California Supreme Court has observed that:

Where a cause of action based on the contract providing for attorney’s fees is joined with other causes of action beyond the contract, the prevailing party may recover attorney’s fees under section 1717 only as they relate to the contract action. (McKenzie v. Kaiser-Aetna (1976) 55 Cal.App.3d 84, 88-90, 127 Cal.Rptr. 275; see Schlocker v. Schlocker, supra, 62 Cal.App.3d 921, 923, 133 Cal.Rptr. 485.) Describing the attorney’s fees provision, section 1717 specifically refers to fees “incurred to enforce the provisions of such contract.” A litigant may not increase his recovery of attorney’s fees by joining a cause of action in which attorney’s fees are not recoverable to one in which an award is proper.   Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124, 129-30.

Thus, under California law, trial courts should exercise its discretion to apportion attorney fee award in at least two circumstances: (1) in cases in which fees are contractually or statutorily recoverable on some but not all causes of action; and (2) in cases in which the prevailing party was unsuccessful on portion of its suit.   In re Gorina (Bankr.C.D.Cal.2002) 296 B.R. 23, 32–33.

Partial success, however, reduces the awardable fees and costs; and the party seeking attorney fees bears the burden of demonstrating to the court the time and costs expended on the claims on which it prevailed.  ComputerXpress, Inc. v. Jackson (2001) 93 Cal.App.4th 993, 1016-1020; Bowman v. City of Berkeley (2005) 131 Cal.App.4th 173, 177-178; Lyons v. Chinese Hosp. Ass’n (2006) 136 Cal.App.4th 1331, 1344.

In Conclusion:

Attorney fee awards can have significant impact on the ultimate outcome of a case.  For the prevailing defendant, an attorney fees provision in the contract at issue or the applicable statute may allow the defendant to shift the cost of the defense to the plaintiff.  For the prevailing plaintiff, such an award may substantially increase the recovery.  For these reasons, it is important to realistically analyze the merits of a civil lawsuit at the outset where attorney fees may be awarded to the prevailing party.

Implementation of San Diego’s New Sick Leave Ordinance

By admin | October 20th, 2016 | Tags: , , | 0 Comments.

Last year, the state of California adopted new sick leave laws that mandate all employees be provided with at least three days (twenty-four hours) of sick leave.  On June 7, 2016, San Diego passed a sick leave ordinance that require two additional sick days beyond the state requirements, effective July 11, 2016.  Given the short implementation period, human resources departments need to move quickly to make sure your company is in compliance with the law.

The new San Diego sick leave ordinance requires that all employers in the city of San Diego – regardless of size – award 1 hour of sick leave for every thirty hours worked, for a total of forty (40) hours of sick leave per year.  Fortunately for employers, the San Diego passed an implementing ordinance that clarifies employers are allowed to use general Paid Time Off (“PTO”) leave, thus providing a cost-effective way to satisfy the ordinance.  In order to use an existing PTO policy in lieu of additional sick leave, employers must satisfy the following:

  • The employer must allow employees to use paid leave for the “same purposes and under the same conditions” as is required by the ordinance.

 

  • The employer must allow accrual of at least eighty (80) hours of leave. Thus, if using an existing PTO policy to fulfill sick leave requirements, you must be mindful that any cash-out or reduction of leave policy satisfies the ordinance.

 

  • The employee must accrue at least forty (40) hours per year of PTO. Employers are permitted to use accrual calculations other than those set forth in the ordinance.  In other words, the PTO policy does not need to award exactly one hour leave for every thirty (30) hours worked.  A PTO policy can satisfy the ordinance by front-loading no less than forty (40) hours of PTO at the beginning of each benefit year.

 

  • An employee must begin accruing earned sick leave and/or PTO at the time of employment, and is entitled to begin using sick leave on the 90th day following the employee’s start date. This is where the use of existing PTO gets a little tricky.  Many employers have a waiting period before PTO begins to accrue.  Assuming a traditional 40-hour week, the employee must have approximately 18 hours of accrued sick time at the 90-day mark to satisfy the ordinance.  Employers can satisfy this requirement by giving a lump-sum award at the start of employment.

 

Most importantly, the ordinance lays out that an employer cannot deny requests for any use covered under sick leave, regardless of whether employer separates sick leave or uses a qualifying PTO policy.  The sick leave ordinance creates a rebuttable presumption that an employer’s adverse action against an employee within ninety (90) calendar days of the use of sick leave constitutes retaliation.  The ordinance also mandates that any employee subject to retaliation for using sick leave is entitled to the greater of double-back wages, or $1,000 for each violation not resulting in termination, and the greater of double-back wages of $3,000 where an employee is termination.

Read the entire approved Implementing Ordinance.

Employers can be subject to civil penalties for engaging in retaliation, failure to comply with sick leave requirements, and/or failure to satisfy posting and notice requirements.  Consult with us today to ensure that your sick leave and PTO policies are in line with new San Diego requirements and to discuss cost-saving mechanisms to satisfy the ordinance.

Lessons Learned from Brangelina and Other Celebrity Divorces in Estate Planning

By admin | October 12th, 2016 | Tags: , | 0 Comments.

Essentials of Estate Planning for Couples

With all the recent news on the Brangelina divorce and custody battle, you begin to wonder if it were to happen to you do you have all of the necessary agreements and estate planning in place to protect your assets. In this case learning by example is so much better than learning by experience.

On the opposite end of the spectrum is Curt Cobain’s daughter, Frances Bean Cobain, where her estranged husband is claiming that Cobain gave him her father’s guitar worth millions of dollars which she refutes; both will spend hundreds of thousands of dollars claiming stake to her fortune, all of this could have simply been avoided by having the right agreements in place.

In the long run it will save you from any battles in court and hold everyone to the agreements made prior to the marriage. Learning by example from the countless celebrity divorces and untimely deaths like Prince, who had no will, help us understand the importance of being prepared for any unexpected changes that happen in life.

The Divorce is Final – What Do I Do Now?

Guardianship and Minor Children

If you currently do not have a trust and you have children, now may be a good to time create one. If anything should happen to you, either a death or mental disability, your ex-spouse will have full custody of the children and whatever you leave to them. Setting up a trust with a beneficiary will give you control on who manages those assets for your children.

Trusts and Other Estate Plan Pieces

If you currently have a trust, that trust stays in effect, if it is a joint trust with your ex-spouse, they remain as a trustee of the trust. Even if your trust discusses what happens in the event of a divorce the automatic revocation law can be applied, you should revoke the current trust and create a new trust that is now tailored to your new goals and situation.

For more information on how you can create an estate plan or revoke one. contact us