Case Number: BC430142    Hearing Date: April 23, 2014    Dept: 34

Plaintiffs Mt. Holyoke Homes L.P. and Darla Jones’ motion for attorney’s fees on appeal is DENIED.

Defendants Jeffer, Mangels, Butler & Mitchell LLP and John Bowman’s request to strike plaintiffs’ request for attorney’s fees in their memorandum of costs is GRANTED. Defendants’ motion to tax costs is otherwise DENIED.

BACKGROUND:

Plaintiffs commenced this action on 1/21/10 against defendants for legal malpractice. Plaintiffs had employed defendants to represent plaintiffs in the process of obtaining governmental entitlements and approvals for a property development project. (Compl., ¶ 8.) Plaintiffs allege that defendants were negligent in their representation, which resulted in plaintiffs losing the necessary requirements for developing the property. (Id., ¶¶ 9-12.) Scott Adler was originally a plaintiff in this action, but he dismissed his complaint on 5/6/11.

On 3/4/10, defendants moved to compel the dispute to arbitration. On 5/10/10, the Court, the Hon. Zaven V. Sinanian presiding, granted the petition to compel arbitration and stay the action.

On 4/5/12, plaintiffs moved to vacate the arbitration award. Defendants thereafter moved to confirm the award. The Court, Hon. Michael P. Linfield presiding, heard these petitions on 6/14/12. The Court denied the petition to vacate the award and granted the petition to confirm the award.

On 7/20/12, the Court entered judgment in accordance with the arbitration award. Defendants thereafter moved for attorney’s fees pursuant to Civil Code section 1717. On 9/6/12, the Court granted the motion and awarded defendants attorney’s fees in the amount of $43,762.40.

Plaintiffs filed a notice of appeal on 9/14/12. On 9/24/13, the Court of Appeal issued its ruling, and a remittitur was filed on 1/9/14. The court found that the order compelling arbitration was correct; however, the denial of the petition to vacate the arbitration award was error. (Mt. Holyoke Homes, L.P. v. Jeffer Mangels Butler & Mitchell, LLP (2013) 219 Cal.App.4th 1299, 1307-1314.) The court reversed the judgment with directions to “vacate the arbitration award and conduct further proceedings consistent with the views expressed in this opinion.” (Id. at p. 1315.) The court noted: “Plaintiffs are entitled to recover their costs on appeal.” (Ibid.)

On 2/14/14, the Court issued an order vacating its orders of 6/14/12 and 9/6/12, and entered an order granting plaintiffs’ petition to vacate the arbitration award.

ANALYSIS:
Plaintiffs’ Motion for Attorney’s Fees

A notice of motion to claim attorney’s fees on appeal must be served and filed within 40 days after the clerk sends notice of issuance of the remittitur. (Cal. Rules of Court, rules 3.1702(c)(1), 8.278(c)(1).) The remittitur in this action was issued on 1/9/14. Plaintiffs’ motion was filed and served less than 40 days later, on 2/14/14.

Attorney’s fees may only be recovered from an opposing party where they are authorized either by statute or contract. (See Code Civ. Proc., § 1033.5(a)(10).) Such fees may be recovered for services both at trial and on appeal. (Harbour Landing-Dolfann, Ltd. v. Anderson (1996) 48 Cal. App. 4th 260, 263.) Here, the Retainer Agreement provides:

The prevailing party in any arbitration or litigation arising out of or relating to our engagement, this letter agreement, any obligations created by this letter agreement, and/or the performance or failure to perform services (including, without limit, claims of breach of duty or professional negligence) shall be entitled to recover all attorneys’ fees (including the value of time of attorneys in the Firm at their normal billing rates), all experts’ fees and expenses and all costs (whether or not such costs are recoverable pursuant to the California Code of Civil Procedure) as may be incurred in connection with either obtaining or collecting any judgment and/or arbitration award, in addition to any other relief to which that party may be entitled.

(Mot., Exh. B, ¶ 12 [emphasis in original].) This provision is broad enough to include attorney’s fees on appeal.

Plaintiffs assert that they are entitled to attorney’s fees as the prevailing parties on appeal under California Rules of Court rule 8.278(a)(2), which provides, in part, that the “prevailing party is the appellant if the court reverses the judgment in its entirety.” However, plaintiff ignores that rule 8.278 pertains to the award of costs on appeal, and not attorney’s fees. (See generally, Cal. Rules of Court, rule 8.278.) Attorney’s fees are not specifically listed as recoverable costs on appeal. (See Cal. Rules of Court, rule 8.278(d)(1).) Indeed, the rule specifically provides: “Unless the court orders otherwise, an award of costs neither includes attorney’s fees on appeal nor precludes a party from seeking them under rule 3.1702.” (Cal. Rules of Court, rule 8.278(d)(2).) Here, the Court of Appeal only ordered that plaintiffs are entitled to recover their costs on appeal; it did not expressly order that attorney’s fees would be included in these costs. Therefore, plaintiffs are not automatically entitled to recover their attorney’s fees because they prevailed on the appeal.

Plaintiffs are also not entitled to recover their attorney’s fees on appeal as a prevailing party on the Retainer Agreement under Code of Civil Procedure section 1033.5 or Civil Code section 1717. Section 1717 defines a prevailing party on a contract, and provides, in relevant part:

(1) The court, upon notice and motion by a party, shall determine who is the party prevailing on the contract for purposes of this section, whether or not the suit proceeds to final judgment. Except as provided in paragraph (2), the party prevailing on the contract shall be the party who recovered a greater relief in the action on the contract. The court may also determine that there is no party prevailing on the contract for purposes of this section. [¶] (2) Where an action has been voluntarily dismissed or dismissed pursuant to a settlement of the case, there shall be no prevailing party for purposes of this section.

(Civ. Code, § 1717(b).)

A prevailing party may be the party who prevails in its litigation objective. (See Santisas v. Goodin (1998) 17 Cal.4th 599, 609.) “The prevailing party determination is to be made only upon final resolution of the contract claims and only by ‘a comparison of the extent to which each party ha[s] succeeded and failed to succeed in its contentions.’ [Citation.]” (Hsu v. Abbara (1995) 9 Cal.4th 863, 876 [emphasis added].)

In Presley of Southern California v. Whelan (1983) 146 Cal.App.3d 959, the plaintiff (Presley) brought a breach of contract action against the defendant (Whelan) and the trial court granted Whelan’s motion for summary judgment. (Id. at p. 960.) The appellate court reversed and Presley filed a memorandum of costs on appeal that included attorney’s fees. (Ibid.) The attorney’s fees request was based on a provision in the contract allowing the prevailing party to recover such fees. (Ibid.) Whelan moved to tax costs on the ground that the California Rules of Court did not allow attorney’s fees as an element of costs on appeal and that the contract clause was not applicable because there is no prevailing party since the underlying action is still ongoing. (Ibid.) The appellate court agreed with the latter argument:

Civil Code section 1717 validates the type of contractual provision involved here and requires the courts to award fees to the prevailing party in actions on contracts containing such clauses. Here, however, there is no prevailing party. The winner in the action between Presley and Whelan is yet to be determined. The reversal of the summary judgment is merely an interim stage of the litigation, much the same as a denial of a summary judgment motion or an overruling of a demurrer in the trial court. For this reason, it is well settled a party who prevails on appeal is not entitled under a section 1717 fee provision to the fees he incurs on appeal where the appellate decision does not decide who wins the lawsuit but instead contemplates further proceedings in the trial court [citations]. An attorney fee award under a provision such as the one involved here must wait until the lawsuit is completely and finally decided [citation].[footnote omitted]

(Id. at p. 961.) “A plaintiff who succeeds in having a summary judgment against him reversed and then goes on to prevail at trial is, of course, entitled to the fees he incurred on appeal [citation]. Where, however, the defendant ultimately prevails, he is entitled to his fees on appeal without offset based on the fees plaintiff incurred on appeal.” (Id. at p. 963.)

In Liu v. Moore (1999) 69 Cal.App.4th 745, the appellants filed a cross-complaint against the respondent for breach of fiduciary duty, interference with prospective economic advantage, indemnity, apportionment of fault, and declaratory relief. (Id. at p. 749.) The respondent filed an anti-SLAPP motion to strike the cross-complaint, and the appellants thereafter dismissed their cross-complaint as to the respondent. (Ibid.) The respondent then moved for attorney’s fees under Code of Civil Procedure section 425.16, and the trial court denied this motion after finding that respondent could not be a prevailing party under that statute because the cross-complaint was dismissed. (Ibid.) On appeal, respondent argued that she was entitled to attorney’s fees under section 425.16 and sections 1032 and 1033.5. (Id. at p. 750.) The appellate court ruled that the respondent was entitled to have her anti-SLAPP motion heard as a predicate to a determination on her motion for attorney’s fees, regardless of the dismissal, and that the respondent was not entitled to attorney’s fees under sections 1032 and 1033.5. (Id. at pp. 750-754.) The court also addressed the respondent’s contention that she was entitled to recover her attorney’s fees on the appeal pursuant to section 425.16. (Id. at p. 754.) The court held:

Section 425.16 . . . specifically states that a defendant is only entitled to attorney’s fees if he or she prevails on the motion to strike the complaint. Therefore, if [respondent] prevails on her motion to strike, upon our remand of this case for hearing on that motion, the trial court shall award reasonable attorney’s fees to her for her trial court efforts (both before and after this appeal), and her efforts in this appeal.

At this stage of the proceedings, however, [respondent] finds herself in a situation which is similar to that of a litigant who has succeeded in securing the reversal of a summary judgment on appeal. In such a case, attorney’s fees are not awardable to the litigant at that time under section 1021.5 (the private attorney general statute) or under Civil Code section 1717 (providing for reciprocal contractual attorney’s fees). Rather, the issue of the right to attorney’s fees for the successful appeal is deferred until the final resolution of the merits of the case. [Citations.] Thus, . . . while [respondent] may ultimately be entitled to an award of attorney’s fees, an award for this interim appellate success would be premature. Of course, [respondent] is entitled to her other appellate costs, under section 1034 and California Rules of Court, rule 26, because such costs do not depend on her status as the prevailing party on the motion to strike, but rather on her having prevailed in this appeal. However, as already noted, if [respondent] is ultimately determined to be the prevailing party on her motion, any award of attorney’s fees under section 425.16, subdivision (c), shall also include the fees incurred in prosecuting this appeal.

(Id. at pp. 754-755.)

The same reasoning applies to the situation at hand, where the Court of Appeal vacates an arbitration award. In Lindenstadt v. Staff Builders, Inc. (1997) 55 Cal.App.4th 882, the parties agreed to submit any controversy to binding arbitration. Lindenstadt initiated arbitration proceedings against the company, seeking the payment of finder’s fees in connection with the company’s acquisition of four businesses. The arbitrator concluded that the Lindenstadt was entitled to finder’s fees on two of the transactions, but not on the other two, since he had acted as an unlicensed broker and was therefore precluded from receiving payment for those two deals by the Real Estate Law (Bus. & Prof. Code, § 10000 et seq.). The trial court granted Lindenstadt petition to confirm the arbitration award, and rejected the company’s argument that the trial court was obligated to undertake a de novo review of the evidence.

The Court of Appeal reversed, directing the trial court on remand to conduct a de novo review of the evidence. (Id., at p. 895.)

Relevant to the issue at hand, the Court of Appeal concluded, “Because we are reversing the trial court’s order and remanding the case for further proceedings, we do not decide whether either party is entitled to attorney fees on appeal. The resolution of that issue must necessarily await the outcome of the proceedings on remand since, at this point, there is no ‘prevailing party’ in the case. At an appropriate time after remand, the trial court should determine if either party is entitled to fees for this appeal and, if so, the amount of the award.” (Id., at p. 895, fn. 9.)

The reasoning of Presley, Liu and Lindenstadt determines the outcome of this motion. Because the judgment has been vacated pursuant to the appellate court’s decision to vacate the arbitration award and conduct further proceedings, there has not yet been a final determination as to the contract claims. If the case is not settled before then, presumably this will be determined in a new arbitration proceeding.

At the present time, there is no prevailing party on the retainer agreement. If plaintiffs ultimately prevail on their claims, they may at that time seek to recover their attorney’s fees incurred during the appeal.

Plaintiffs’ motion for attorney’s fees is DENIED.

Defendant’s Motion to Tax Costs

The memorandum of costs and instant motion were both timely filed and served. (See Cal. Rules of Court, rules 3.1700(a), (b),8.278(c).)

Defendants seek to tax or strike the following costs from plaintiffs’ memorandum of costs on appeal: attorney’s fees ($74,148.00); filing fees ($1,270.00); and copying costs ($1,420.00).

For the reasons discussed above, the Court strikes the request for attorney’s fees in plaintiffs’ memorandum of costs.

“Except as provided in this rule, the party prevailing in the Court of Appeal in a civil case other than a juvenile case is entitled to costs on appeal.” (Cal. Rules of Court, rule 8.278(a)(1).) There is no dispute that plaintiff is the prevailing party on the appeal for the purposes of recovering costs. (See Mot., p. 2:3-4.)

During the hearing, “the verified memorandum of costs is prima facie evidence of their propriety, and the burden is on the party seeking to tax costs to show they were not reasonable or necessary.” (Nelson v. Anderson (1999) 72 Cal.App.4th 111, 131.) “This procedure provides an orderly and efficient way of placing disputed costs at issue on a line item basis.” (612 South LLC v. Laconic Ltd. Partnership (2010) 184 Cal.App.4th 1270, 1285.)

[T]he mere filing of a motion to tax costs may be a “proper objection” to an item, the necessity of which appears doubtful, or which does not appear to be proper on its face. [Citation.] However, “[i]f the items appear to be proper charges the verified memorandum is prima facie evidence that the costs, expenses and services therein listed were necessarily incurred by the defendant [citations], and the burden of showing that an item is not properly chargeable or is unreasonable is upon the [objecting party].” [Citations.]

The court’s first determination, therefore, is whether the statute expressly allows the particular item, and whether it appears proper on its face. [Citation.] If so, the burden is on the objecting party to show them to be unnecessary or unreasonable. [Citation.]

(Nelson, 72 Cal.App.4th at p. 131.)

Therefore, when the Court determines the costs are allowable and proper on their face, the burden is on defendants to show they are unreasonable or not necessary. Where the award of costs is discretionary, the burden is on plaintiff to establish that the costs were reasonable and necessary.

Filing Fees

Filing fees are recoverable as costs on appeal. (See Cal. Rules of Court, rule 8.278(d)(1)(A).) A party may also recover amounts paid for any portion of the record. (Id., rule 8.278(d)(1)(B).) Plaintiffs seek to recover $1,270.00 in filing fees for the appeal. Defendants argue that these costs are unreasonable because the filing fee for an appeal is $775.00. Plaintiffs’ counsel declares that the requested fees included a $775.00 appeal fee, a $100.00 fee to this Court for the deposit on the transcript, and a $395.00 fee to the California Supreme Court on the filing of an answer to the petition for review. (McGonigle Decl., ¶ 2.) This is sufficient to support plaintiff’s requests for these costs. Rule 8.278 includes “filing fees” and costs paid “for any portion of the record” as recoverable costs. Nothing in the rule precludes the recovery of filing fees for an answer to a petition for review or for deposits on transcripts.

Defendants’ request to tax plaintiffs’ filing fee costs is DENIED.

Printing Costs

Rule 8.278 allows a party to recover costs “to print and reproduce any brief, including any petition for rehearing or review, answer, or reply.” (Cal. Rules of Court, rule 8.278(d)(a)(E).) Defendants’ only support for their argument that the requested costs are unreasonable is their assertion that they only incurred $100.00 for such costs. This is not sufficient to meet defendants’ burden of establishing that the costs are unreasonable. Moreover, plaintiffs’ counsel has sufficiently explained that these costs encompass not only the printing of the appellate briefs, but also the appendix on appeal and other documents. (See McGonigle Decl., ¶ 3.)

Defendants’ request to tax plaintiffs’ costs for printing copies of briefs is DENIED.