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How to win attorney fees awards under California CCP 1021.5

Jan 24th, 2015 | By | Category: Litigation Warrior

Civil Litigation Basics with Attorney Steve (How to recover attorney fees in your case)

How to recover attorney fees in  california lawsuits

Introduction

In litigation, it’s dog eat dog.  You file a lawsuit, or you are sued, and each party is claiming a right to attorney fees.  This is typical fare in the litigation process.  But whether or not you actually collect an attorney fee award will depend on many different factors.  Chief among those are whether there is a contract, or statute, that permits the recovery of an attorney fee award.  This blog seeks to provide some general insight into this interesting, and all-important topic.

The American Rule

The general rule is that parties engaged in litigation will bear their own costs and attorney fees.  This is known as the “American Rule.”  Trope v. Katz, 11 Cal. 4th 274, 278-79, 902 P.2d 259, 262 (1995) was a case that illustrated this legal concept:

“California follows what is commonly referred to as the American rule, which provides that each party to a lawsuit must ordinarily pay his own attorney fees. (Gray v. Don Miller & Associates, Inc. (1984) 35 Cal.3d 498, 504, 198 Cal.Rptr. 551, 674 P.2d 253; United Services Auto. Assn. v. Dalrymple (1991) 232 Cal.App.3d 182, 187, 283 Cal.Rptr. 330. The Legislature codified the American rule in 1872 when it enacted California Code of Civil Procedure section 1021, which states in pertinent part that “Except as attorney’s fees are specifically provided for by statute, the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties.”
This sets the basic rule in California litigation cases – NO ATTORNEY FEES CAN BE AWARDED TO EITHER PARTY UNLESS A CONTRACT AUTHORIZES IT, OR A STATUTE AUTHORIZES IT.  This is the general litigation “American Rule.”

Statutes that offer Attorney Fee Awards

There are many different types of STATUTES that have attorney fees awards built in (usually meaning if you file a lawsuit and prevail on these causes of action you can seek to recover attorney fees.  Some statutes call for the Court to exercise its legal discretion (i.e. the Court “may award” reasonable attorney fees) while others are MANDATORY (i.e. the Court “shall award” attorney fees to the prevailing party).  Here are some statutes that provide the possibility of attorney fees awards:

1.  Federal Truth in Lending Act (“TILA”)

2.  Fair Debt Collection Practices Act (“FDCPA”)

3.  California Homeowner’s Bill of Rights (“CHBOR”)

4.  California Financial Elder Abuse (Welfare & Institutions Code)

5.  Federal Copyright Statute (ex. Willful Infringement lawsuits)

6.  Federal Trademark Infringement

These are just a few sample statutes.  There are literally hundreds of other statutes that may provide a basis for attorney fee awards if you win your civil lawsuit.  Contact us using the form below to discuss other potential grounds for recovery of attorney fees.

Many Agreements (“Contracts”) will provide that the “prevailing party shall be awarded its reasonable attorney fees and costs.”

Even where the facts of your case do not raise grounds to seek statutory recovery of attorney fees, a good lawyer will always look for a CONTRACT that provides for the award of attorney fees and costs.  For example, you may have signed a retainer agreement, vendor agreement, or independent contractor agreement that has an ARBITRATION PROVISION.  The provision may call for the award of attorney fees and costs to the prevailing party.  These will normally be honored (unless there is a defense such as fraudulent inducement to enter into the contract).

Whenever you are involved in litigation, you need to closely examine all contracts that you have signed to see what you agreed to.

California Code of Civil Procedure Section 1021.5

This code section states as follows:

CCP 1021.5.  Upon motion, a court may award attorneys’ fees to a successful party against one or more opposing parties in any action which has resulted in the enforcement of an important right affecting the public interest if:

(a) a significant benefit, whether pecuniary or nonpecuniary, has been conferred on the general public or a large class of persons,

(b) the necessity and financial burden of private enforcement, or of enforcement by one public entity against another public entity, are such as to make the award appropriate,

and

(c) such fees should not in the interest of justice be paid out of the recovery, if any. With respect to actions involving public entities, this section applies to allowances against, but not in favor of, public entities, and no claim shall be required to be filed therefor, unless one or more successful parties and one or more opposing parties are public entities, in which case no claim shall be required to be filed therefor under Part 3 (commencing with Section 900) of Division 3.6 of Title 1 of the Government Code.

Attorneys’ fees awarded to a public entity pursuant to this section shall not be increased or decreased by a multiplier based upon extrinsic circumstances, as discussed in Serrano v. Priest, 20 Cal. 3d 25, 49.”

But what does this code section mean in real life?  Here is some  California case law to review.  Some Courts look to specified actions (such as a corporate derivate lawsuit). See Mandel v. Hodges, 54 Cal. App. 3d 596, 620-21, 127 Cal. Rptr. 244, 260 (Ct. App. 1976) which held:

“However, the California courts have recognized two other exceptions to the general rule pronounced in Code of Civil Procedure section 1021, both of which are based upon exercise of the broad equitable powers of the courts in appropriate cases. The first, the ‘common fund doctrine,’ may be invoked when a number of persons are entitled in common to a specific fund of money and an action brought by a plaintiff results in its recovery or preservation for the benefit of all. According to the ‘common fund doctrine,’ as applied in these circumstances, the successful plaintiff may be awarded attorneys’ fees from the fund involved. (Winslow v. Harold G. Ferguson, Corp. (1944) 25 Cal.2d 274, 277, 153 P.2d 714; Fletcher v. A. J. Industries, Inc. (1968) 266 Cal.App.2d 313, 320, 72 Cal.Rptr. 146 and authorities there cited. See D’Amico v. Board of Medical Examiners, supra, 11 Cal.3d 1 at p. 25, 12 Cal.Rptr. 786, 520 P.2d 10.).
The second exception recognized in California is the so-called ‘substantial benefit rule’ under which, when a corporate derivative action or a class action results in the conferral of substantial benefits upon the defendant (either pecuniary or nonpecuniary in nature), the defendant may be required to yield some of those benefits in the form of an award of attorneys’ fees to the successful plaintiff.”

Other cases do not require a corporate derivative action:

In Coal. for L. Cnty. Planning etc. Interest v. Bd. of Supervisors, 76 Cal. App. 3d 241, 248-49, 142 Cal. Rptr. 766, 771 (Ct. App. 1977) the California Court of Appeals held:

“Clearly the fact that the action is not a corporate derivative or class action does not prevent application of the substantial benefit principle. Rather, to qualify for use of the principle, a suit must:
(1) be one in which the court’s equitable powers come into play,
(2) be commenced and maintained as a representative action (see Card v. Community Redevelopment Agency, 61 Cal.App.3d 570, 583, 131 Cal.Rptr. 153),
and
(3) result in a disposition that confers substantial benefits either pecuniary or nonpecuniary upon the persons represented. (Mandel v. Hodges, 54 Cal.App.3d 596, 622, 127 Cal.Rptr. 244.)
“In such circumstance, the court, in the exercise of its equitable discretion, thereupon may decree that under dictates of justice those receiving the benefit should contribute to the costs of its production.” (Serrano v. Priest, 20 Cal.3d 25, 38, 141 Cal.Rptr. 315, 321, 569 P.2d 1303, 1309.).   The trial court found the elements of the substantial benefit theory to be present in this case and exercised its discretion to award fees.
Defendants proceed to argue, however, that there is no ascertainable class of persons benefiting form the result in the main action citing certain federal authorities (e. g., Satoskar v. Indiana Real Estate Commission (7th Cir. 1975) 517 F.2d 696, 698) to the effect that the benefited group must be comparatively small and readily ascertainable. In the trial court’s opinion the class of persons benefited is the residents of the County of Los Angeles. This class is no less ascertainable than and on the same order of size as taxpayers of the City and County of San Francisco (Knoff ), citizens and taxpayers of the state (Mandel ), the public school children and taxpayers of the state (see Serrano v. Priest, 20 Cal.3d 25, 40, fn. 10, 141 Cal.Rptr. 315, 569 P.2d 1303), or the citizens of the City of Los Angeles (Woodland Hills Residents Assn.).”

We help you fight to recover attorney fees in your case

The best bet is to have your case examined in detail before you file a lawsuit (in state or federal court), and to see if you have a possibility to recover attorney fees in your case either under a state or federal statute, contract or under Cal. Code of Civil Procedure Section 1021.5.

Civil litigation Attorneys – Contact Us

Whether you have an insurance case, real estate (ex. CHBOR litigation), business litigation, or intellectual property (copyright, trademark, right of publicity lawsuit), we can evaluate your rights and see if you might be in a position to recover attorneys fees in your case.  This determination can make a huge impact in the outcome of your case.  You can reach one of our civil litigation attorneys by calling (877) 276-5084 or by leaving your phone number and case details by filling out the litigation contact form below.

 

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We are a business and civil litigation firm with a focus on copyright infringement cases involving illegal movie downloads (torrent cases such as London Has Fallen and Malibu Media defense), software audits (ex. Microsoft audits, SPLA, Autodesk audit notification letter, Siemens PLM defense, SIIA, Adobe and Business Software Alliance defense) and other software vendors threatening piracy and infringement. We also handle cases involving internet law, anti-SLAPP, media law, right of publicity, trademarks & domain name infringement, and we have a niche practice area handling California BRE licensing disputes, accusations, subpoena response, statement of issues and investigations. We have offices in San Francisco, Beverly Hills, Newport Beach, San Diego & Phoenix, Arizona and accept federal copyright and trademark cases nationwide. All content on our website is general legal information only and not a substitute for legal advice, and should not be relied upon. Decisions to hire counsel should not be based on advertising alone. Blogs, videos and podcasts are authored by Steve Vondran, Esq. unless otherwise noted. We can be reached at (877) 276-5084.

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