This case illustrates that "[a]ll too often attorney fees become the tail that wags the dog in litigation." (Deane Gardenhome Assn. v. Denktas (1993) 13 Cal.App.4th 1394, 1399 [16 Cal.Rptr.2d 816].) Here, Nevada City Sugar Loaf Properties, LLC (Sugar Loaf), challenges an award of $14,553.50 in attorney fees to Ellis Law Group, LLP (ELG), as the prevailing party on a special motion to strike pursuant to Code of Civil Procedure section 425.16 (anti-SLAPP motion). Sugar Loaf contends the trial court erred in awarding attorney fees for work on the anti-SLAPP motion performed by Attorney Joseph R. Major because Major was a member of ELG on whose behalf the motion was filed. Relying on case law holding self-represented law firms may not be awarded attorney fees for an anti-SLAPP motion, Sugar Loaf argues the fee award must be reversed.
ELG counters that Major acted as an independent contractor to that law firm because he had no billable hour requirements, did not accrue vacation time, received no health care benefits, and was paid by the hour without deduction for taxes. The trial court agreed with ELG that Major's status as an independent contractor to ELG allowed the law firm to receive attorney fees under the anti-SLAPP statute.
We conclude the trial court erred in awarding fees to ELG under the anti-SLAPP statute. With only a single exception, Major was listed as a member of ELG in the caption of documents filed in support of ELG's anti-SLAPP motion. Moreover, Major signed documents for ELG's anti-SLAPP motion as an attorney with ELG. Major did not file a notice of association or substitution to indicate he was acting as outside counsel to ELG. And, when Major contacted opposing counsel regarding the filing of a document concerning the anti-SLAPP motion, he used an e-mail address and signature that identified him as a member of ELG. The possibility that Major was paid in a manner different than a regular "employee" of ELG may render him an independent contractor for taxation purposes, but does not make him
In December 2010, a second amended cross-complaint was filed by the law firm of ELP for unpaid legal fees owed by Marison M. Mull, George W.M. Mull, and Nevada City Sugar Loaf Properties. In August 2011, plaintiff filed a notice of change of law firm name to ELG. In September 2011, Sugar Loaf filed a cross-complaint for breach of fiduciary duty.
On November 16, 2011, "Mark E. Ellis, Ronald R. Poirier, and Joseph R. Major, attorneys of record" filed a notice they were associating the Law Offices of Larry Lockshin as cocounsel for ELG. Also on November 16, 2011, ELG filed an anti-SLAPP motion to Sugar Loaf's cross-complaint. Lockshin was not listed as counsel for the anti-SLAPP motion. Instead, the caption for the notice of the anti-SLAPP motion listed Mark E. Ellis, Ronald Poirier, and Joseph R. Major as attorneys for ELG. Although the accompanying memorandum of points and authorities for the motion listed only Ellis and Poirier as counsel for ELG, Major was included as an ELG attorney in the caption on the following documents: Ellis's declaration in support of the anti-SLAPP motion, Poirier's declaration in support of the motion, the proof of service for the initial anti-SLAPP documents, and notice of errata for the anti-SLAPP motion documents.
On December 19, 2011, Major sent an e-mail to counsel for Sugar Loaf in which he sought a stipulation for ELG's request to file an oversize reply brief. The signature of the e-mail read: "Joseph R. Major [¶] Contract Attorney [¶] Ellis Law Group LLP." The e-mail address used by Major was "jmajor@ellislawgrp.com."
Major's name again appeared as an attorney with ELG in the caption of a request to file an oversize reply brief to Sugar Loaf's opposition to the anti-SLAPP motion. Major signed the request, "Joseph R. Major [¶] Attorney for Plaintiff/Cross-Defendant [¶] ELLIS LAW GROUP, LLP." In the accompanying declaration, Major declared: "I am a contract attorney at the Ellis Law Group, LLC." Major was included as an ELG member on the caption of the reply to Sugar Loaf's opposition and the caption on the proposed order for granting the anti-SLAPP motion.
In May 2012, ELG filed a motion for attorney fees as the prevailing party on the anti-SLAPP motion. Other than the memorandum of points and authorities in support of the anti-SLAPP motion itself, this marked the first time Major's name did not appear on the caption of an anti-SLAPP related document. However, Major provided a declaration in support of attorney fees that explained: "I have been a contract attorney doing work with ELG since November 2011. As a contract attorney, I do not have a salary or billable hour requirement with ELG." Major stated $37,160 should be awarded based on a $200 per hour billing rate and the claim he "spent a total of 183.3 hours in connection with ELG's special motion to strike the cross-complaint and motion for attorney fees."
On December 18, 2012, Sugar Loaf filed a notice of appeal from an order entered on September 10, 2012. The notice of appeal stated a motion for reconsideration had been filed on September 21, 2012, and was denied on November 14, 2012. To further specify the trial court decision being appealed, Sugar Loaf checked the box on the notice of appeal specifying an "order or judgment under Code of Civil Procedure section 904.1(a)(3)-(13)."
On February 15, 2013, ELG filed in this court a motion to dismiss the appeal on grounds the notice of appeal was not timely filed and Sugar Loaf was not an aggrieved party. On March 8, 2013, we summarily denied the motion along with ELG's request for attorney fees in bringing the motion to dismiss.
ELG reiterated the same arguments in its respondent's brief. To these, ELG added the contention that the notice of appeal was fatally defective because Sugar Loaf "failed to check/mark the correct box" on the notice of appeal. The arguments have no merit.
Second, we determine whether Sugar Loaf's notice of appeal is timely. Notice of entry of the order awarding attorney fees was given on September 14, 2012. Within the 10-day period provided by Code of Civil Procedure section 1008, subdivision (a), ELG filed a valid motion for reconsideration on September 21, 2012. The trial court denied the motion for reconsideration on November 14, 2012. The denial of the motion for reconsideration was not served on any party. Sugar Loaf filed its notice of appeal on December 18, 2012 — within 90 days after ELG filed its motion for reconsideration.
The notice of appeal was timely because California Rules of Court, rule 8.108 provides that after a valid motion to reconsider is filed, "the time to appeal from that order is extended for all parties until the earliest of: (1) 30 days after the superior court clerk or a party serves an order denying the motion or a notice of entry of that order; [¶] (2) 90 days after the first motion
Sugar Loaf contends the trial court erred in awarding attorney fees for the work provided by Attorney Major on the anti-SLAPP motion because he was a member of ELG. Relying on case law holding attorneys may not recover fees for self-representation, Sugar Loaf urges us to reverse the fee award. ELG counters Major was an independent contractor who had no billable hour requirement, sometimes worked from home, did not accrue vacation time, and was paid without deduction for taxes or Social Security. We conclude the attorney fees must be stricken.
"`The issue of a party's entitlement to attorney's fees is a legal issue which we review de novo.'" (Sands & Associates v. Juknavorian (2012) 209 Cal.App.4th 1269,
The Trope court reasoned 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.] Therefore, to [award attorney fees] in this context would be to hold that the time and opportunity that an attorney gives up when he [or she] chooses to litigate a case in propria persona are somehow qualitatively more important and worthy of compensation than those of other pro se litigants. There is no support in either the language or legislative history of [Civil Code] section 1717 for such disparate treatment of pro se litigants on the basis of their occupations." (Trope, supra, 11 Cal.4th at p. 285.)
In striking the fees, Witte distinguished the situation of in-house legal counsel who can recover fees for the representation of their organizations. (Witte, supra, 141 Cal.App.4th at p. 1210.) As we pointed out, in "PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084 [95 Cal.Rptr.2d 198, 997 P.2d 511] (PLCM Group), the state high court permitted an award of attorney fees under Civil Code section 1717 to a corporation that appeared in the action through its in-house attorney. The court explained that none of the considerations that animated Trope apply in the case of in-house counsel. `There is no problem of disparate treatment; in-house attorneys, like private counsel but unlike pro se litigants, do not represent their own personal interests and are not seeking remuneration simply for lost opportunity costs that could not be recouped by a nonlawyer. A corporation represented by in-house counsel is in an agency relationship, i.e., it has hired an attorney to provide professional legal services on its behalf. Nor is there any impediment to the effective and successful prosecution of meritorious claims because of possible ethical conflict or emotional investment in the outcome. The fact that in-house counsel is employed by the corporation does not alter the fact of representation by an independent third party. Instead, the payment of a salary to in-house attorneys is analogous to hiring a private firm on a retainer.' (22 Cal.4th at p. 1093.) The court could `discern no basis for discriminating between counsel working for a corporation in-house and private counsel engaged with respect to a specific matter or on retainer.' (Id. at p. 1094.)" (Witte, supra, at p. 1210.)
As the Sands court acknowledged, the "of counsel" designation for attorneys "`"has, over the years, come to mean a variety of things in jurisdictions across the nation." Attorneys who are of counsel to a firm may be permanent full-time practitioners who for various reasons are not on the traditional career path towards partnership in the firm. Of counsel attorneys also may be part-time affiliates of a firm who have other personal or professional commitments, or they may be potential partners brought into a firm for a probationary period.'" (Sands, supra, 209 Cal.App.4th at p. 1291.) Despite the variation in practical arrangements for "of counsel" attorneys, the Sands court created "a bright-line rule" that attorneys of counsel to a law firm are sufficiently integral to a law firm as to disallow fees for defense of the firm. (Id. at p. 1295.) "To do otherwise would permit an `of counsel' attorney to create a factual dispute as to whether his or her relationship with a law firm is close, personal, continuous, and regular." (Ibid.)
The Sands court considered dispositive the facts that "the Sands firm communicated to the public that Leonard Sands and Heleni Suydam were `of
In contrast to the Sands court's ability to craft a bright-line rule for recovery of attorney fees by lawyers "of counsel" to the same law firms they defend, we are unable to do so for "independent contractor" attorneys. "Independent contractor" is not one of the recognized categories of membership or nonmembership of a law firm for purposes of ethical duties and obligations. (Sands, supra, 209 Cal.App.4th 1269; see State Bar Rules Prof. Conduct, rules 1-100(A) [referring to attorneys governed by the Rules of Professional Conduct as "members of the State Bar"], 3-310 [referring to attorneys employed with a law firm only as "member[s]" for purposes of determining conflicts in representation]; Bus. & Prof. Code, § 6002 ["The members of the State Bar are all persons admitted and licensed to practice law in this State except justices and judges of courts of record during their continuance in office."].) The standards adopted by the Board of Governors of the State Bar for the Rules of Professional Conduct speak only of members of a firm as partners, associates, officers, shareholders, and "of counsel." (See, e.g., 23 pt. 5, West's Ann. Court Rules (2008 ed.) Std. (8), foll. Rules Prof. Conduct, rule 1-400.) Thus, the description of "independent contractor" to a law firm lacks fixed definition insofar as it is intended to describe the legal relationship between an attorney and a law firm.
Instead, "independent contractor" is a term commonly used for tax characterization purposes. Indeed, ELG urges us to conclude Major was an independent contractor on the basis of Internal Revenue Service, Revenue Ruling 87-41, 1987-1 C.B. 296 (Revenue Ruling 87-41). Revenue Ruling 87-41
Major was a member of ELG during the time he worked on the anti-SLAPP motion because that was what ELG and Major repeatedly represented to the trial court and opposing counsel. The caption of every anti-SLAPP document filed by ELG in which Major's name appeared listed him as an attorney with ELG. Along with Ellis and Poirier, Major was listed as counsel for ELG on the notice and amended notice for the anti-SLAPP motion, declarations of Ellis and Poirier in support of the motion, proof of service for the motion, memorandum of points and authorities for the motion, notice of errata for the motion, application to file an oversize reply brief in support of the motion, reply to Sugar Loaf's opposition to the motion, and proposed order for the motion. Major's name is missing on only one document filed on
It has long been "presumed that an attorney appearing and acting for a party to a cause has authority to so do." (Pacific Paving Co. v. Vizelich (1903) 141 Cal. 4, 8 [74 P. 352].) "There can scarcely be a more gross violation of the duty of an attorney than knowingly and willfully to appear for and represent a party to an action without authority." (San Francisco Sav. Union v. Long (1898) 123 Cal. 107, 113 [55 P. 708].) Thus, ELG's caption announced Major's membership in that law firm and his concomitant ability to act on behalf of ELG. Major acted as attorney for ELG by signing the notice of errata and request to file an oversize reply brief as "Attorney for Plaintiff/Cross-Defendant [¶] ELLIS LAW GROUP, LLP." Major also sent an e-mail to Sugar Loaf's counsel regarding the request to file an oversize reply brief he signed as a "Contract Attorney" to "Ellis Law Group LLP." The e-mail address used by Major was jmajor@ellislawgrp.com, and further showed his connection with ELG.
ELG emphasizes the method by which it paid Major, i.e., by the hour and without benefits or tax deductions, as showing Major's independence from the firm. ELG also argues Major had no stake in the litigation other than his hourly fee. However, as we have noted, how Major was paid under federal taxation rules does not inform his status as legal counsel with ELG. In Sands and SpeeDee Oil, the possibility an attorney was not on the payroll of a law firm and even may have had a "separate" law practice did not allow for sufficient separation to allow for an award of attorney fees. (Sands, supra, 209 Cal.App.4th at p. 1295; SpeeDee Oil, supra, 20 Cal.4th at p. 1142.) So too, the method of compensation does not negate ELG and Major's repeated representations to the trial court and opposing counsel that he was appearing as a member of ELG and authorized to act on its behalf.
ELG would be entitled to recover attorney fees if Major had been outside counsel hired for purposes of the anti-SLAPP motion. In such an instance, outside counsel "hired to assist a litigant in propria persona has an attorney-client relationship with the litigant and owes the litigant fiduciary and ethical obligations." (Mix v. Tumanjan Development Corp. (2002) 102 Cal.App.4th 1318, 1324 [126 Cal.Rptr.2d 267].)
Here, the record discloses no indicia of an attorney-client relationship between ELG and Major. For example, there was no attorney-client fee agreement as required by Business and Professions Code section 6148. As required by rule 3-410 of the Rules of Professional Conduct, Major did have legal malpractice insurance. But ELG procured it for him by listing him as "of counsel" with the insurer. The record does not show Major used anything other than ELG computers and software to record his time. Major did not file an association of counsel to appear on the anti-SLAPP motion. However,
The order directing Nevada City Sugar Loaf Properties to pay $14,553.50 in attorney fees to Ellis Law Group, LLP, as the prevailing party on a special motion to strike pursuant to Code of Civil Procedure section 425.16 is reversed. Nevada City Sugar Loaf Properties shall recover its costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1) & (2).)
Hull, Acting P. J., and Robie, J., concurred.