Fischlein v. Collins

Filed 9/24/07 Fischlein v. Collins CA4/2

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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 TWO

APPEAL from the Superior Court of San Bernardino County. Christopher J. Sheldon and H. Morgan Dougherty, Judges. Affirmed in part and reversed in part.

Horvitz & Levy, David M. Axelrad, Jason R. Litt; West & Miyamoto, Eugene F. West and Ian Corzine for Defendants and Appellants.

Robinson Burns, Don C. Burns and Glen S. Robinson for Plaintiffs and Respondents.

Defendants appeal from an award of statutory attorney fees in a personal injury action brought pursuant to section 1021.4 of the Code of Civil Procedure.^[1] They contend that the trial court abused its discretion because it awarded plaintiffs attorney fees in the full amount provided for in their contingent fee agreements, without reference to the lodestar method of determining a reasonable award of attorney fees. We agree that the courts failure to apply the lodestar method as its starting point was an abuse of discretion, and will remand for further proceedings.

FACTUAL AND PROCEDURAL HISTORY

Plaintiffs Craig Fischlein and Richard Wasson were severely injured when the minivan Fischlein was driving and in which Wasson was a passenger was struck by a tow truck driven by defendant James Collins. Collins was employed by defendants Plaza Shell, Inc., and Plaza Towing and Storage. Collins was convicted of felony driving under the influence of methamphetamine in connection with the accident.

Defendants conceded liability. In a bench trial, the court awarded Fischlein $10 million in compensatory damages and awarded Wasson $12.34 million. Attorney fees were awarded to both plaintiffs against Collins pursuant to section 1021.4. (See fn. 1, ante.)

Plaintiffs attorneys submitted declarations estimating that they spent approximately 3700 hours on the case and stating that in noncontingent fee cases they billed at a rate of $300 per hour. Billed hourly, their fee in this case would have amounted to approximately $1.1 million. However, they contended that they were entitled to a fee in excess of $7 million, based exclusively on their contingent fee agreements with plaintiffs. After a hearing on defendants motion to tax costs, the court awarded Fischlein $3,333,333 and Wasson $4,133,333 in attorney fees. These were the amounts that plaintiffs counsel had sought, based on the terms of the contingent fee contracts.

Defendants filed a timely notice of appeal as to the award of attorney fees only.^[2]

LEGAL ANALYSIS

THE COURTS FAILURE TO USE THE LODESTAR METHOD AS ITS STARTING POINT FOR DETERMINING STATUTORY ATTORNEY FEES WAS AN ABUSE OF DISCRETION

As stated above, section 1021.4 provides that a court may award reasonable attorney fees to a prevailing plaintiff who has suffered injury as a result of the defendants felonious act. Plaintiffs attorneys contend that the court reasonably exercised its discretion in awarding them fees in the amount they were entitled to under the terms of their contingent fee agreements with plaintiffs. Defendants contend that the court was required to apply the lodestar method of determining a reasonable fee, and that it was per se an abuse of discretion to award fees approximately seven times the unadjusted lodestar amount.

The determination of what constitutes a reasonable fee generally begins with the lodestar, i.e., the number of hours reasonably expended multiplied by the reasonable hourly rate. (PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1095.) [T]he lodestar is the basic fee for comparable legal services in the community; it may be adjusted by the court based on factors including, as relevant herein, (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 adjustment is to fix a fee at the fair market value for the particular action. In effect, the court determines, retrospectively, whether the litigation involved a contingent risk or required extraordinary legal skill justifying augmentation of the unadorned lodestar in order to approximate the fair market rate for such services. (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1132 (Ketchum), citing Serrano v. Priest (1977) 20 Cal.3d 25, 49 (Serrano III); see also Serrano v. Unruh (1982) 32 Cal.3d 621, 626, fn. 6 (Serrano IV) [lodestar figure may be enhanced or diminished based on factors such as those set out in Serrano III ].) This approach anchors the trial courts analysis to an objective determination of the value of the attorneys services, ensuring that the amount awarded is not arbitrary. (PLCM Group, Inc. v. Drexler, supra, 22 Cal.4th at p. 1095.)

This is true even if the plaintiff has a contingent fee agreement with his or her attorney, at least where the contract or statute authorizing the award of attorney fees provides for an award of reasonable attorney fees. The court must still consider all relevant factors in determining an amount which constitutes a reasonable fee and may not determine a reasonable attorney fee solely by reference to the amount due under a contingent fee contract. (People ex rel. Dept. of Transportation v. Yuki (1995) 31 Cal.App.4th 1754, 1770-1771, citing Salton Bay Marina, Inc. v. Imperial Irrigation Dist. (1985) 172 Cal.App.3d 914, 957; and Aetna Life & Casualty Co. v. City of Los Angeles (1985) 170 Cal.App.3d 865, 881.) The contingent fee agreement is some evidence of the reasonable value of the attorneys services, but it is not controlling: Although the terms of the contract may be considered, they [ordinarily] do not compel any particular award. (PLCM Group, Inc. v. Drexler, supra, 22 Cal.4th at p. 1096; see also Vella v. Hudgins (1984) 151 Cal.App.3d 515, 519-521; All-West Design, Inc. v. Boozer (1986) 183 Cal.App.3d 1212, 1227.)

Sommers v. Erb (1992) 2 Cal.App.4th 1644, relied upon by plaintiffs, does not compel a different conclusion. In that case, the trial court awarded the full amount due under the contingent fee contract. The Court of Appeal found no abuse of discretion because trial counsels estimate of the time he spent on the case, billed at his usual hourly rate, yielded a fee which closely approximated the amount due under the contingent fee contract. (Id. at p. 1651.) Under those circumstances, and in light of the fact that the trial court reviewed the parties moving and opposition papers and allowed the parties to argue their respective positions in a hearing on the motion to tax costs, the Court of Appeal found that the trial court properly exercised its discretion. (Id. at pp. 1651-1652.) The court did not hold, however, that an award of the full fee due under a contingent fee contract is reasonable per se. Here, the fee awarded did not closely approximate the fee which was supported by the attorneys declarations concerning the hours expended if billed at their usual rate. On the contrary, the award was approximately seven times that amount. Thus, Sommers does not assist us in determining whether the award was within the trial courts discretion.

We conclude that the award was not within the scope of the courts discretion, not because the amount was necessarily excessive, but because the court failed to apply the correct method in determining the amount. [J]udicial discretion must be measured against the general rules of law and, in the case of a statutory grant of discretion, against the specific law that grants the discretion. (Horsford v. Board of Trustees of CaliforniaStateUniversity (2005) 132 Cal.App.4th 359, 393.) Thus, because the courts exercise of discretion must be based on the lodestar adjustment method (Ketchum, supra, 24 Cal.4th at pp. 1134-1135; Press v. Lucky Stores, Inc. (1983) 34 Cal.3d 311, 322), we must reverse an award of attorney fees, even if it is a reasoned and reasonable award, if the court has started from any premise other than that method.

Here, the court explained its reasoning as follows: [B]ased upon what I heard at trial and the condition of the two plaintiffs in this case, I [ ] could characterize the award as parsimonious because it could have been a lot more given what happened to these two fellows, and given that Im not inclined to reduce any of the requests for fees and costs or expert witnesses fees. The courts comment that it would not reduce the fees indicates that it used the contingent fee percentage as its starting point. This, of course, is improper: The starting point of every fee award . . . must be a calculation of the attorneys services in terms of the time he has expended on the case. . . . [Citations.] (Serrano III, supra, 20 Cal.3d at p. 48, fn. 23.) It is well recognized that lawyers generally will not take a case on a contingent fee basis unless they can anticipate earning a premium to compensate for the risk of receiving no payment, should the litigation be unsuccessful, and an adjustment in the lodestar amount may therefore be appropriate. (Ketchum, supra, 24 Cal.4th at p. 1136.) However, the lodestar must be the starting point.

We note as well that the courts determination of the fee appears to have been based solely on its perception that the award of damages was itself perhaps insufficient to compensate plaintiffs fully for their injuries. An award of attorney fees on that basis is not consistent with the considerations discussed in Serrano III and in subsequent cases, which hold that the focus must be on fixing fair compensation for the attorney. (Serrano III, supra, 20 Cal.3d at p. 48, fn. 23; People ex rel. Dept. of Transportation v. Yuki, supra, 31 Cal.App.4th at pp. 1770-1771.)The only exception to this rule is where the award of attorney fees is authorized by a statute which eschews the lodestar method. (Ketchum, supra, 24 Cal.4th at p. 1135.) Normally, the Legislature explicitly states any restrictions on how attorney fees are to be calculated, if it intends to have the courts apply a method other than the lodestar. (Ibid.) Section 1021.4 contains no such language. In Ketchum, the court left open the possibility that a statute which does not explicitly provide for a different method may nevertheless require a method other than the lodestar, and held that each fee-shifting statute must be construed on its own merits. (Id. at p. 1136.) Plaintiffs argue that the statutory purpose of section 1021.4 is better realized by requiring the convicted felon to pay the full amount of attorney fees incurred by his victim. However, they did not make that argument below and they have not provided any authority which would support the conclusion that the drafters of section 1021.4 intended that attorney fees be calculated other than by applying the lodestar method. Plaintiffs may, of course, litigate that issue on remand.

DISPOSITION

The award of attorney fees is reversed and the cause remanded for reconsideration of the motion to tax costs. The judgment is otherwise affirmed.

Defendants are awarded their costs on appeal.

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

/s/ McKinster

J.

We concur:

/s/ Ramirez

P.J.

/s/ Hollenhorst

J.

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^[1]All further statutory references will be to the Code of Civil Procedure unless otherwise indicated. Section 1021.4 provides, In an action for damages against a defendant based upon that defendants commission of a felony offense for which that defendant has been convicted, the court may, upon motion, award reasonable attorneys fees to a prevailing plaintiff against the defendant who has been convicted of the felony.

^[2]We dismissed defendants appeal from the judgment as time-barred.