Haller v. Chiya
Filed 5/19/11 Haller v. Chiya CA4/3
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE
| CHANNAE N. HALLER, Plaintiff and Appellant, v. ERIC HIDEYOSHI CHIYA, Defendant and Respondent. | G043566 (Super. Ct. No. 30-2009-00122724) O P I N I O N |
Appeal from a judgment of the Superior Court of Orange County, Linda S. Marks, Judge. Reversed and remanded with directions.
Law Offices of Joseph R. Baer and Joseph R. Baer; Law Offices of Nate G. Kraut and Nate G. Kraut, for Plaintiff and Appellant.
Ford, Walker, Haggerty & Behar, William O. Woodland and Maxine J. Lebowitz, for Defendant and Respondent.
This attorney fee dispute arises out of a somewhat unusual personal injury case. On August 31, 2007, Haller suffered serious injury while riding as a passenger in a pickup truck driven by Chiya, and owned by his father, Allen Hideyoshi Chiya.
Prior to the accident, Haller and Chiya had been at a party together, and Chiya had ingested one or more intoxicating substances.[1] When they left the party, Chiya assured Haller he was fit to drive. Apparently, he wasn’t, however, and while operating the vehicle, he fell asleep, veered off the road and struck a parked car. The primary point of impact was the right front corner of the pickup truck, and Haller suffered the brunt of that impact. She was seriously injured, and Chiya was convicted of three felonies in connection with the accident.
In May of 2009, Haller and her mother, Sharra Haller, filed a form complaint against Chiya and his father, seeking damages for personal injury. The complaint specifically alleged an entitlement to attorney fees pursuant to Code of Civil Procedure section 1021.4 (section 1021.4).[2] According to the statement of damages filed concurrently with the complaint, Haller was seeking $10,000,000 in general damages, $2,000,000 in special damages, and $10,000,000 in punitive damages. Haller also propounded interrogatories, requests for admissions and requests for production of documents to Chiya and his father.
On July 7, 2009, Chiya filed an answer to the complaint, along with a motion to strike the punitive damages allegations. Chiya’s answer alleged eight separate affirmative defenses to liability, including statute of limitations, contributory negligence, negligence of third parties, and unreasonable failure to mitigate damages. On that same date, Chiya’s father demurred to the complaint on the ground that it failed to state a cause of action in favor of Sharra Haller. He also filed a motion to strike the punitive damages allegations.[3]
Haller filed briefs in opposition to the demurrer and motions to strike, and her counsel appeared telephonically at the hearing to argue the issues. The court sustained the demurrer to the cause of action alleged in favor of Sharra Haller, with leave to amend, but Haller elected to dismiss that cause of action rather than pursue an amendment. The court denied Chiya’s motion to strike the punitive damages allegations against him, and dismissed as moot the motion to strike filed by his father, after the parties agreed that Haller would strike her punitive damage allegations against the father, without prejudice.
In August of 2009, Chiya’s father filed his answer to the complaint, alleging five separate affirmative defenses.
In September of 2009, after receiving discovery responses which provided information about insurance coverage applicable to the accident, Haller served Chiya with an offer to compromise for $250,000 (the liability limit of the applicable insurance policy), pursuant to Code of Civil Procedure section 998. Chiya accepted that offer on September 21, 2009, and on October 22, 2009, judgment was entered thereon.[4]
On December 23, 2009, Haller filed a motion for an award of attorney fees pursuant to section 1021.4. Haller sought an award of $100,000, which was the measure of the contingent fee her attorney was entitled to under his retainer agreement. In support of the motion, Haller’s counsel filed a declaration in which he stated that he had been practicing law for over 23 years, and had a billing rate of $350 per hour. He explained he had undertaken Haller’s representation on a contingency basis, which entitled him to 40 percent of her recovery. He then described the work he had done in connection with the case during specified time periods, and quantified the amounts of time he had devoted to that described work. For example, counsel stated that he began representing Haller in late 2008, and initially assisted her in “arrang[ing] for necessary medical treatment and payment of outstanding bills,” and in “completing necessary activities with the County of Orange Probation Department pertaining to the conviction and sentencing of [Chiya.]” Counsel stated he was “also involved in marshalling and preserving necessary evidence for the prosecution of the lawsuit against [Chiya].” He estimated he devoted in excess of 20 hours to those tasks prior to April 22, 2009, when he commenced preparation of the complaint and related documents.
Counsel declared he spent in excess of 15 hours on the case between April 22, 2009 and early June of 2009, which included preparation of the pleadings and discovery (including communications with Haller), arranging for service of the complaint, researching the judge assigned to the case, and communicating with an unspecified insurance adjuster.
Counsel estimated he spent in excess of 21 hours on the case in July and August of 2009. During that time he reviewed and analyzed the pleadings filed in response to the complaint, prepared oppositions to the demurrer and motions to strike, communicated with opposing counsel regarding Chiya’s inadequate discovery responses and appearing telephonically for the hearing on the demurrer and motions to strike. He devoted another 20 hours to the case in September, with further wrangling with Chiya’s counsel regarding his discovery responses, reviewing the discovery propounded by Chiya, reviewing Chiya’s further responses to discovery, researching and drafting the offer to compromise, and discussing all of those things with Haller.
In October and November of 2009, counsel spent an additional 11.5 hours preparing and filing the judgment based upon the offer to compromise, preparing a memorandum of costs, and researching and preparing the attorney fee request. In December, counsel spent an additional 4 hours, completing the fee motion, following up on the status of the judgment, and taking care of other details. Altogether, counsel estimated he had devoted in excess of 92 hours to Haller’s representation.
Haller’s counsel also estimated, that despite what he characterized as Chiya’s “unexpected acceptance” of the statutory offer to compromise, he still anticipated spending an additional 50 hours representing Haller during the ensuing six-month period, on issues such as seeking reimbursement of medical expenses, obtaining a restitution order and “ensuring that she gets appropriate and timely medical care and treatment.” Counsel noted that all those anticipated services “arise from defendant’s illegal behavior.”[5]
Counsel also declared that at all times prior to the compromise judgment, there was significant risk that he would not receive adequate compensation for his work. He explained that prior to Chiya’s service of verified discovery responses in September of 2009, it was unclear whether, or to what extent, there was insurance coverage applicable to Haller’s injuries, as Haller and her counsel had been unable to obtain that information informally. Moreover, there was uncertainty whether Haller’s status as Chiya’s secret wife might exclude her from coverage under whatever policy might exist. That uncertainty required additional research and investigation. The issue of insurance was particularly critical in this case, given Chiya’s finances.
Chiya opposed the attorney fee motion, arguing primarily that the terms of the statutory offer to compromise did not allow for any additional award of attorney fees. He also argued that attorney fees under section 1021.4 were not recoverable in cases where defendant had pleaded guilty to the felony offense, or where the civil case was resolved by a statutory offer to compromise.
Finally, Chiya argued that even if the court concluded that an award of fees was warranted, the amount requested by Haller was “grossly excessive,” because the case had only been “litigated for four months, with very little work being done.” Despite the eight separate affirmative defenses he alleged in his answer, Chiya characterized this case as so clearly a winner for Haller that it was “the legal equivalent to ‘low hanging fruit.’” Chiya went so far as to claim that, in light of Haller’s extensive injuries, if she had made a policy limit demand prior to filing the lawsuit, it would have “been easily accepted.” Chiya does not, however, deny Haller’s contention that prior to filing the lawsuit, her informal attempts to garner information about applicable insurance policies, and their limits of liability, were rebuffed. It would be difficult, to say the least, to make a policy limits demand on an unknown policy. Chiya also fails to explain why, if a policy limits demand was so obviously the appropriate resolution to this case, he did not offer it.
In its ruling, the court rejected Chiya’s contention that Haller was entitled to no fees at all, noting that when a statutory offer to compromise pursuant to Code of Civil Procedure section 998 is silent on the issue of attorney fees and costs, those fees and costs are separately recoverable. The court then explained its reasoning for awarding Haller only $5,150 in attorney fees: “Plaintiff’s counsel is requesting attorney fees of $100,000. Billing is provided in blocks of time, and not in hours that are contemporaneous with work completed. The case is not complex given that plaintiff sustained bona fide personal injury and the defendant was a drunk driver. No novel or difficult legal issues were involved. Case preparation involved the filing of a form complaint; one hearing on a demurrer and a motion to strike; limited discovery that was served prematurely on defendant who was [in propria persona] at the time; a [Code of Civil Procedure section] 998 offer; and one status conference. It should be noted that plaintiff’s counsel appeared via court call for court appearances. No depositions were taken in the case. . . .[¶] The Court exercises its discretion when awarding attorney fees and has looked at the complexity of the case; length of the case; amount of pleading and court time involved, along with the nature of the case. Given all of the forgoing, . . . [¶]
. . . Plaintiff is awarded reasonable attorney[] fees in the sum of $5,150.00 pursuant to [Code of Civil Procedure section] 1021.4.”
I
Haller’s primary contention on appeal is that the court failed to properly apply a lodestar analysis to her fee award. We agree. “‘The starting point of every fee award, once it is recognized that the court’s role in equity is to provide just compensation for the attorney, must be a calculation of the attorney’s services in terms of the time he has expended on the case. Anchoring the analysis to this concept is the only way of approaching the problem that can claim objectivity, a claim which is obviously vital to the prestige of the bar and the courts.’ [Citations.]” (Serrano v. Priest (1977) 20 Cal.3d 25, 48, fn. 23.)
This figure, known as the “lodestar,” is based upon the “‘careful compilation of the time spent and reasonable hourly compensation of each attorney . . . involved in the presentation of the case.’ [Citation.] . . . [¶] . . . [T]he lodestar is the basic fee for comparable legal services in the community; it may be adjusted by the courts based on factors including . . . (1) the novelty and difficulty of the questions involved, (2) the skill displayed in presenting them, (3) the extent to which the nature of the litigation precluded other employment by the attorneys, (4) the contingent nature of the fee award. [Citation.] The purpose of such adjustments is to fix a fee at the fair market value for the particular action.” (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1131-1132.)
Here, there is no indication the court ever calculated a lodestar amount. Instead, the court’s order suggests it simply assigned a fee amount to the case, without engaging in any of the specific analysis required by the lodestar method. As a result, the court’s fee award effectively concludes that Haller’s counsel should have been paid for less than 15 hours of work, at his regular hourly rate of $350. While we might agree that an assessment of a “reasonable” hours spent on this case could be lower than the amount of time claimed by Haller’s counsel (although we reach no such conclusion), we doubt any attorney would have been able to investigate the case, research appropriate issues, prepare pleadings, discovery, oppositions to demurrer and motions to strike, respond to discovery, wrangle with opposing counsel about discovery and other issues, appear at two hearings (even telephonically), prepare a statutory offer to compromise and a judgment based upon that compromise, and prepare a attorney fee motion, all in less than 15 hours.[6]
And had the court given specific consideration to each of those tasks, and added up the time reasonably required to complete them all in accordance with the required standard of care, it seems likely the number would have been substantially higher than 15 hours. The court was then required to multiply that number – whatever it was – by a reasonable hourly rate for the work (and no one disputed that Haller’s counsel’s rate of $350 per hour was reasonable) to arrive at a lodestar number. Only after that number is calculated, can the court move to the second step, which is deciding whether it is appropriate to apply a multiplier to adjust that lodestar amount.
There is no all-encompassing list of appropriate adjustments to the lodestar figure, and any reasonable factors may be considered. (PLCM Group, Inc. v. Drexler
(2000) 22 Cal.4th 1084, 1096 [in addition to basic factors, the court may consider “‘other circumstances in the case.’ [Citation.]”].) A negative adjustment is permissible. (Graciano v. Robinson Ford Sales, Inc. (2006) 144 Cal.App.4th 140, 160-161.)
However, in making adjustments to the lodestar, the trial judge must do more than simply state the factors considered and announce a deduction. (Ramos v. Countrywide Home Loans, Inc. (2000) 82 Cal.App.4th 615, 620, 629 [abuse of discretion to provide no more detail than saying an increase was warranted by risks taken, complexity of issues, skill of counsel, etc].) Beyond that, there is great leeway, and it is sufficient to identify each factor and state a dollar amount without being more precise. (See, e.g., Chavez v. Netflix, Inc. (2008) 162 Cal.App.4th 43, 63-64 [permissible to reduce lodestar by $308,000 with explanation that document reviews by partners could have been done by associates or paralegals, and excess time was spent responding to discovery]; EnPalm, LLC v. Teitler (2008) 162 Cal.App.4th 770 [permissible to reduce $50,000 fee to $5,000 because action could have been resolved early on had client been more truthful].)
In this case, the court only stated a list of factors which contributed to the determination of her fee award – offering no explanation of the extent to which each factor affected the total. A significant goal of the lodestar fee method is to “increase the predictability and to reduce the randomness of attorney fees awards in fee shifting cases.” (Ramos v. Countrywide Home Loans, Inc., supra, 82 Cal.App.4th at p. 626.) That goal is thwarted when the trial court skips the analytical steps and simply announces a fee award that feels like an appropriate amount for the work that should have been required in the case. What should have happened in this case (and apparently everyone seems to agree – in retrospect – that what should have happened was a prompt payment to Haller of the policy limits in the wake of the accident), and what actually happened, are quite different. The court’s fee award must be based upon the latter, and calculated in accordance with the lodestar method.
Although we apply an abuse of discretion standard to the trial court’s fee decision, there are limits to the scope of that deference. “When the record is unclear whether the trial court’s award of attorney fees is consistent with the applicable legal principles, we may reverse the award and remand the case to the trial court for further consideration and amplification of its reasoning. [Citations.]” (In re Vitamin Cases (2003) 110 Cal.App.4th 1041.) “[D]iscretion must not be exercised whimsically, and reversal is appropriate where there is no reasonable basis for the ruling or the trial court has applied ‘the wrong test’ or standard in reaching its result.” (Nichols v. City of Taft (2007) 155 Cal.App.4th 1233, 1239.)
That is the case here. Consequently, we reverse the court’s attorney fee order, and remand the case for reconsideration based upon application of the lodestar method. Haller is to recover her costs on appeal.
BEDSWORTH, J.
WE CONCUR:
RYLAARSDAM, ACTING P. J.
O’LEARY, J.
[1] Unbeknownst to either of their families, Haller and Chiya were secretly married at the time of the accident.
[2] Section 1021.4 provides: “In an action for damages against a defendant based upon that defendant’s commission of a felony offense for which that defendant has been convicted, the court may, upon motion, award reasonable attorney’s fees to a prevailing plaintiff against the defendant who has been convicted of the felony.”
[3] It is unclear why Chiya’s father demurred to the cause of action stated in favor of Sharra Haller, while Chiya did not.
[4] On October 20, 2009, Haller filed a request for dismissal against Chiya’s father, with prejudice.
[5] Haller’s counsel also estimated he would spend yet another 50 hours in the future trying to collect on the judgment. He gives no indication why that might be, since it was apparently anticipated that the original amount of the compromise judgment was to be paid from an insurance policy. However, counsel may be referring specifically to expected difficulty in collecting on the requested attorney fee award itself, which would not be covered by insurance. (Baker v. Mid-Century Ins. Co. (1993) 20 Cal.App.4th 921.) As counsel states, “the defense attorney has already indicated an intent not to pay attorney fees and costs.” Moreover, at another point in his declaration, counsel characterizes Chiya himself as “judgment proof.” Of course, any reasonable person would have to wonder why counsel would fight so hard to obtain, and then expect to spend an additional 50 hours trying to collect, a fee award against a “judgment proof” defendant. (The term “throwing good money after bad” comes to mind.).
[6] Haller suggests the court “penalized” her counsel for making telephonic court appearances. We do no construe the order that way. The court’s order simply mentions the fact that counsel made telephonic appearances, in apparent support for its implied determination that the case required relatively little time to litigate. The court could properly consider the fact that counsel made telephonic court appearances in assessing the amount of time he actually devoted to the case.
We simply reject out of hand Chiya’s suggestion that the entire litigation may have been unnecessary, because if Haller had only asked for the applicable policy limits in the first place, she would have been given them. There is simply no evidence suggesting that is true. Clearly, Chiya (and presumably his insurer) knew at all times that Haller was gravely injured, and that her injuries were caused when Chiya drove his truck off the road while under the influence. If they wanted to offer her the limits of his applicable insurance policy, they were free to do so. However, by the time she filed her lawsuit, more than a year and a half after the accident, there was no evidence they had made any such offer. We must presume they considered the matter to be somewhat more complicated than Chiya acknowledges in his opposition to the attorney fee motion.
