The trial court, in granting defendants' request to strike plaintiffs' memorandum of costs seeking attorney fees incurred as the prevailing parties in a prior appeal, concluded that a law firm and its two partners, by using an associate in the law firm, had, in effect, represented themselves in the prior appeal. In this appeal, plaintiffs contend that the trial court erred in granting the motion to tax costs because the attorney who represented them on appeal was not a partner and otherwise had no financial interest in their law firm. Also, plaintiffs contend that, even if the law firm plaintiff cannot recover fees
In affirming the order denying plaintiffs' request for attorney fees for services rendered by the associate to the firm and its partners, we hold that (1) substantial evidence supports the trial court's finding that the attorney who represented plaintiffs in the prior appeal was doing so as an associate of the law firm and not as an independent contractor, and, therefore, plaintiffs legally are not entitled to an award of attorney fees and (2) the trial court was justified in concluding that based on the record, the individual plaintiffs could not recover attorney fees in connection with the appeal because there was no showing of any distinction between the cross-claims against the law firm plaintiff and those against the individual plaintiffs.
Defendants and respondents Paul Cohen and Personal Injury Solutions, Inc.,
Plaintiffs submitted a memorandum of costs in the trial court listing a single item of cost in the amount of $33,168.75 for "Attorneys' Fees (including [a] lodestar enhancement)." At a subsequent hearing, however, the trial court could not locate the cost memorandum in the court file. As a result, plaintiffs filed a motion for an order deeming a new memorandum of costs filed nunc pro tunc. The trial court granted the motion, and defendants then moved to tax costs on the ground that plaintiffs were not entitled to attorney fees because they represented themselves on appeal.
Plaintiffs opposed the motion to tax costs and submitted two declarations of Attorney Candice Klein in support of their opposition. In the first of those
At the hearing on the motion to tax costs, the trial court considered a prior declaration filed by plaintiff John Carpenter.
"`"An order granting or denying an award of attorney fees is generally reviewed under an abuse of discretion standard of review; however, the `determination of whether the criteria for an award of attorney fees and costs have been met is a question of law.' [Citations.]"'" (SC Manufactured Homes, Inc. v. Canyon View Estates, Inc. (2007) 148 Cal.App.4th 663, 673 [56 Cal.Rptr.3d 79].) An issue of law concerning entitlement to attorney fees is reviewed de novo. (See Conservatorship of Whitley (2010) 50 Cal.4th 1206, 1213-1214 [117 Cal.Rptr.3d 342, 241 P.3d 840]; Sessions Payroll Management, Inc. v. Noble Construction Co. (2000) 84 Cal.App.4th 671, 677 [101 Cal.Rptr.2d 127].) "When a trial court has resolved a disputed factual issue, an appellate court reviews the ruling according to the substantial evidence rule. The trial court's resolution of the factual issue must be affirmed if it is supported by substantial evidence. (Winograd v. American Broadcasting Co. (1998) 68 Cal.App.4th 624, 632 [80 Cal.Rptr.2d 378].) We look at the evidence in support of the trial court's finding, resolve all conflicts in favor of the respondent and indulge in all legitimate and reasonable inferences to uphold the finding." (Heppler v. J.M. Peters Co. (1999) 73 Cal.App.4th 1265, 1290 [87 Cal.Rptr.2d 497].)
The issue on appeal involves a line of cases dealing with attorney fee awards for pro se
On review, the Supreme Court in Trope, supra, 11 Cal.4th 274 began its analysis by noting that the issue was controlled by Civil Code section 1717.
The court in Trope, supra, 11 Cal.4th 274 concluded that to allow pro se attorney litigants to recover fees to compensate them for their time would result in disparate treatment of attorney and nonattorney pro se litigants, and reasoned as follows: "Let us assume for the sake of discussion that ... an attorney litigant devotes as much time and effort to litigating a matter on his own behalf as he does to litigating a case on behalf of a client, and that his time is equally valuable whether he is acting on behalf of himself or of a client. It does not necessarily follow from this premise, however, that he is entitled to receive compensation from his opponent simply because the time he devotes to litigating a matter on his own behalf has value. The time that a doctor, for example, spends litigating a case on his own behalf also has value, both to the doctor himself and to society generally, for that time could otherwise be spent treating the sick or pursuing medical research for the benefit of all; an architect's time could otherwise be spent designing or building houses; a painter's time could be spent creating works of art for future generations to enjoy. However, it is clear that when it enacted [Civil Code] section 1717 the Legislature did not intend to allow doctors, architects, painters, or any other nonattorneys to receive compensation for the valuable time they spend litigating a contract matter on their own behalf. [Citations.]... There is no support in either the language or legislative history of [Civil Code] section 1717 for ... disparate treatment of pro se litigants on the basis of their occupations." (Id. at pp. 284-285.) The court explained that "such disparate treatment would conflict with the legislative purpose of [Civil Code] section 1717. The statute was designed to establish mutuality of
In affirming the award of attorney fees, the Supreme Court in PLCM, supra, 22 Cal.4th 1084, concluded that none of the factors that supported the denial
In Gilbert, supra, 87 Cal.App.4th 212, the Court of Appeal applied the holdings in Trope, supra, 11 Cal.4th 274 and PLCM, supra, 22 Cal.4th 1084 to a fee request made by an attorney who had been represented in a litigation by members of his own firm. (Gilbert, supra, 87 Cal.App.4th at p. 214.) In that case, the tenant, in a consolidated landlord-tenant case, sued his landlord and the landlord's attorney, Gernsbacher, alleging, inter alia, that Gernsbacher had wrongfully prevented the tenant from recovering its property from the leased premises. (Ibid.) It is not clear if Gernsbacher's alleged misconduct had occurred in the course of his firm's representation of the client, although the court said that the matter involved Gernsbacher's "personal interests." (Ibid.) Gernsbacher obtained a judgment in his favor and filed a motion for an order fixing attorney fees and costs. (Id. at p. 216.) The trial court, citing Trope, supra, 11 Cal.4th 274, denied Gernsbacher's attorney fees motion on the ground that he was represented by his law firm.
The court in Gilbert, supra, 87 Cal.App.4th 212 reversed the order denying fees. According to the court, the holding in Trope, supra, 11 Cal.4th 274 did not support the trial court's order denying fees to Gernsbacher, who had been represented by other attorneys in his firm. "Having examined the policy considerations leading to the Trope and PLCM[, supra, 22 Cal.4th 1084] decisions, we apply those considerations to the case before us. We hold Gernsbacher, as an attorney litigant represented by other attorneys in his firm, is not a litigant in propria persona and thus Trope does not bar his recovery of reasonable attorney fees under Civil Code section 1717." (Gilbert, supra, 87 Cal.App.4th at p. 220.) In reaching this conclusion, the court in Gilbert reasoned that an attorney who is represented by other attorneys in his firm "`incurs' fees within the meaning of Civil Code section 1717. Either the represented attorney will experience a reduced draw from the partnership (or a reduced salary from the professional corporation) to account for the amount of time his or her partners or colleagues have specifically devoted to his or
The distinction made in Gilbert, supra, 87 Cal.App.4th 212 between lost opportunity costs and a reduced draw or salary or other reductions in income because of time spent on the case is a bit obscure. For example, in Trope, supra, 11 Cal.4th 274, Trope & Trope, either as individuals or as a law firm consisting of more than one attorney, was represented by partners or associates in the firm. As a consequence, members of the firm would "absorb a share of the reduction in other income the firm experiences because of the time spent on the case" (Gilbert, supra, 87 Cal.App.4th at p. 221), which seems to be comparable to the so-called lost "opportunity costs." The Supreme Court in Trope did not draw the distinction made in Gilbert.
In Witte v. Kaufman (2006) 141 Cal.App.4th 1201 [46 Cal.Rptr.3d 845] (Witte), the plaintiff sued, inter alia, a law firm, KLA, for interference with contract. (Id. at p. 1206.) The trial court granted KLA's special motion to strike under section 425.16 and awarded that law firm attorney fees. (141 Cal.App.4th at p. 1206.) The plaintiff appealed from, inter alia, the order granting KLA attorney fees, contending that KLA was not entitled to attorney fees because it represented itself in the trial court. (Id. at p. 1207.)
The court in Witte, supra, 141 Cal.App.4th 1201 reversed the order awarding attorney fees to KLA, citing Trope, supra, 11 Cal.4th 274 and distinguishing both PLCM, supra, 22 Cal.4th 1084 and Gilbert, supra, 87 Cal.App.4th 212. "Here, unlike PLCM ... and Gilbert, but like Trope, there is no attorney-client relationship between KLA and its individual attorneys. The individual KLA attorneys are not comparable to in-house counsel for a corporation, hired solely for the purpose of representing the corporation. The attorneys of KLA are the law firm's product. When they represent the law firm, they are representing their own interests. As such, they are comparable to a sole practitioner representing himself or herself. Where, as in Gilbert, an attorney is sued in his or her individual capacity and he obtains representation from other members of his or her law firm, those other members have no personal stake in the matter and may, in fact, charge for their work. Not so with a law firm that is sued in its own right and appears through various members. [¶] Here, KLA incurred no attorney fees in bringing its motion to strike, because all the work was done by members of the firm on their own behalf. Thus, KLA is not entitled to attorney fees." (Witte, supra, 141 Cal.App.4th at p. 1211.)
The court in Gorman, supra, 178 Cal.App.4th 44 explained that the plaintiffs could not recover fees for the time Attorney Gorman personally spent representing himself and his wife. (Id. at pp. 93-97.) But, relying on Gilbert, supra, 87 Cal.App.4th 212, the court also held that the plaintiffs could recover attorney fees for the time expended by attorneys the plaintiffs hired to represent them, including attorneys and paralegals in Gorman's law firm. (Id. at pp. 95-96.) "We do not understand contractor on appeal to renew its efforts to distinguish Gilbert. It argues only that `nothing in the Gilbert case supports the view that appellants in this case are entitled to recover fees for the work performed personally by appellant Gorman.' ... We believe that Trope[, supra, 11 Cal.4th 274] does not preclude the recovery of fees for other attorneys and paralegals hired by [Attorney] Gorman to represent him, even if they work in his law firm. (Gilbert, supra, 87 Cal.App.4th 212; Mix v. Tumanjan Development Corp. [(2002)] 102 Cal.App.4th 1318, 1324-1325 [126 Cal.Rptr.2d 267].)" (Gorman, supra, 178 Cal.App.4th at p. 96.)
Plaintiffs contend that because we awarded them attorney fees on the prior appeal, the trial court erred in refusing to enter such an award. But at the time of the filing of the opinion in the prior appeal, the issue of whether plaintiffs had, as a matter of fact, incurred recoverable fees was not before this court. Therefore, the order awarding attorney fees did not determine that issue. Rather, the order on appeal left to the trial court the issue of whether and to what extent plaintiffs had incurred reasonable attorney fees. Our order established only that plaintiffs were entitled to attorney fees, assuming that they could demonstrate that they had, in fact, incurred such fees that are legally recoverable.
Plaintiffs contend that because Ms. Klein was not a partner in the law firm and did not have any financial interest in that firm or have any personal liability dependent on the outcome of the underlying litigation, plaintiffs are entitled to recover attorney fees based on the services she rendered on appeal of the order under the anti-SLAPP statute dismissing the cross-complaint. According to plaintiffs, for purposes of this appeal, it does not matter whether, as they contended below, Ms. Klein was an independent contractor or, as the trial court found, an associate attorney of the law firm plaintiff. From plaintiffs' perspective, Ms. Klein's representation of them in either capacity is not the equivalent of self-representation, and they therefore argue they are not precluded under Trope, supra, 11 Cal.4th 274 from recovering attorney fees. Relying on the recent ruling in Gorman, supra, 178 Cal.App.4th 44—that allowed an attorney litigant to recover attorney fees for services rendered on his behalf by associates and paralegals of his firm—plaintiffs contend that they are entitled to the requested fee award here.
Contrary to plaintiffs' assertion, the issue of whether Ms. Klein was acting in her capacity as an associate attorney or as an independent contractor is significant to the disposition of the appeal. And, the trial court found she was an associate, a factual finding that was supported by substantial evidence, including the declaration of Mr. Carpenter that Ms. Klein was an associate in the firm of Carpenter & Zuckerman and the page from the State Bar Web site showing the firm of Carpenter & Zuckerman as Ms. Klein's address of
Plaintiffs' reliance on Gorman, supra, 178 Cal.App.4th 44 is misplaced. As discussed above, the associate attorney in that case represented Attorney Gorman in connection with a personal matter concerning the defective construction of his home. Thus, the associate was not representing the interests of the law firm for which he worked, but rather the personal interests of one of its partners. (See id. at p. 91.) As the court in that case concluded, the associate's legal services on behalf of Attorney Gorman and his wife were analogous to the services rendered to the attorney litigant by other members of his firm in Gilbert, supra, 87 Cal.App.4th 212. In that case, the court emphasized that those other members of the firm represented the attorney litigant's personal interests, whereas in Trope, supra, 11 Cal.4th 274, the partner represented his law partnership's interest in a collection action.
Ms. Klein was representing the interests of the law firm for which she worked—not just the personal interests of individual partners in that firm, such as in Gilbert, supra, 87 Cal.App.4th 212. Although she was not a partner in that firm, she, as an employee of the firm, acted on behalf of the firm in protecting it from potential liability from defendants' cross-claims. Moreover, unlike the in-house counsel in PLCM, supra, 22 Cal.4th 1084, who was employed by and represented the interests of the corporation, Ms. Klein's status as an associate suggests that she was hired primarily to represent the interests of the clients of the law firm plaintiff. There is no suggestion that she functioned as in-house counsel to the firm. Based on Ms. Klein's status as an associate, the law firm and its partners, in seeking to recover the reasonable value of her services on appeal, in effect, were seeking to recover "lost opportunity costs" (PLCM, supra, 22 Cal.4th at p. 1093; see Gilbert, supra, 87 Cal.App.4th at p. 221), i.e., the value they would have received from a client had Ms. Klein expended a comparable amount of hours representing that client's interests. The involvement of "lost opportunity costs" is one rationale for denying attorney fees for self-representation. (PLCM, supra, 22 Cal.4th at p. 1093.) Therefore, notwithstanding that Ms. Klein was not a partner of the law firm plaintiff with a direct financial interest in the outcome of the claims asserted against it, she was an employee of that firm hired primarily to perform services for firm clients and, presumably, to generate profits for the firm. This status distinguishes her from the "independent third party" in-house counsel in PLCM and makes her status analogous to the attorneys who represented their pro se law firm in Witte, supra, 141 Cal.App.4th 1201. As the court in that case observed, the attorneys of the pro se law firm were the "product" of the firm and were therefore "comparable to a sole practitioner representing himself or herself." (Id. at p. 1211.)
Relying on Gilbert, supra, 87 Cal.App.4th 212, the individual plaintiffs contend that even if their law firm cannot recover attorney fees based on the services of its associate, they are entitled to recover fees for services she rendered to them in their individual capacity. According to plaintiffs, because the claims against them placed their personal interests at stake, they were in the same position as the attorney litigant in Gilbert.
In response to this contention at the hearing on the motion to tax costs, the trial court found that there was nothing in the record to support the conclusion that there was "potential personal liability" on the part of the individual plaintiffs. According to the trial court, if there was a genuine potential for personal liability, separate and apart from potential liability of the limited liability partnership, the individuals would have retained separate counsel, presumably because of conflicting or differing interests.
The court in Gorman, supra, 178 Cal.App.4th 44 addressed a similar issue. There the plaintiffs argued that even if Attorney Gorman could not recover attorney fees for the time he spent representing himself, his wife could recover fees for the time he spent representing her separate interests. In rejecting the plaintiffs' argument, the court in Gorman explained that "[w]e can certainly imagine cases in which a true attorney-client relationship exists between spouses. However, in this case, husband and wife sued for and obtained recovery for the defective construction of their residence. There is no indication that [the wife] suffered any damages apart from those suffered by her husband. Their interests in this matter appear to be joint and indivisible. There is no claim that [Attorney] Gorman spent extra time in this case representing his wife in addition to the time he spent representing himself. There is no claim that each of them owes half his fees. Their community estate is liable for their contracts. (Fam. Code, § 910, subd. (a).) Since [Attorney] Gorman's billable hours appear to be entirely attributable to representing his common interests with [his wife], we conclude that the rule of Trope[, supra, 11 Cal.4th 274] applies to this situation." (Id. at p. 95.)
Here, plaintiffs did not submit any evidence that the cross-complaint subjected them to potential individual liability separate and apart from the potential liability of their law firm. To the contrary, defendants in their cross-complaint asserted the causes of action jointly against the law firm and its two partners. Defendants alleged that the law firm plaintiff was a limited liability partnership, that Mr. Carpenter and Mr. Zuckerman were partners and agents of that firm, and that each of the plaintiffs had participated in a "scheme" to interfere with a client relationship and defendants' business. Defendants also alleged that Mr. Carpenter and Mr. Zuckerman made defamatory statements about defendants. Thus, the cross-complaint was based upon
Moreover, there was no evidence that Ms. Klein performed any services on behalf of the individuals, in addition to the time she spent representing the interests of the law firm. And, there was no evidence that either of the individuals agreed to be responsible for Ms. Klein's fees for services rendered on behalf of their personal interests. Thus, as in Gorman, supra, 178 Cal.App.4th 44, plaintiffs' interests in this matter appear to be joint and indivisible, and plaintiffs submitted no evidence to the contrary. And, although plaintiffs suggested to the trial court during oral argument that an allocation of attorney fees between time spent representing the firm and time spent representing the individuals might be appropriate, they never specified how such an allocation could or should be made, much less point to evidence that would support any such allocation.
The order granting defendants' motion to tax costs is affirmed. Defendants are awarded costs on appeal.
Armstrong, Acting P. J., and Kumar, J.,