Wednesday, December 22, 2010
C.A. Grants Increased Attorney Fees in Red Light Abatement Action
Judge Should Have Used Lodestar, Not ‘Cost-Plus’ Method, Panel Rules
By a MetNews Staff Writer
An attorney fee award to a city that prevailed in a red light abatement action should have been calculated under the lodestar method, rather than one that took into account the city’s actual legal costs, the First District Court of Appeal ruled yesterday.
Div. Four ordered a Sonoma Superior Court judge to recalculate his fee award to the City of Santa Rosa in connection with a ruling holding Ranan Patel, owner of the Llano Motel, responsible for allowing prostitution at the now-demolished lodgings.
The appellate panel ruled earlier this year, in an unpublished opinion, that Judge Mark Tansil did not err in holding that Patel had violated both the red light abatement and unfair competition laws by allowing prostitution to flourish at the motel. Tansil called the Llano, which was demolished before the case came to trial in 2008, “hooker haven” and “the go-to prostitution destination in Sonoma County.”
The judge ordered payment of more than $500,000 in penalties and restitution, including $70,000 in disgorgement of profits, based on the difference between what the motel would normally have been able to charge for rooms and the inflated amounts it obtained from pimps and prostitutes.
The appellate court struck the disgorgement, saying there was no statutory basis for it, but otherwise upheld the judgment.
In a separate ruling, the trial judge awarded the city about $152,000 in attorney fees, rather than the $275,000 it was seeking. Tansil reasoned that the fees should be set at $177.34 per hour, based on the actual amounts paid by the city to its in-house lawyers, plus overhead, rather than the $325 per hour the city said was reasonable based on fees charged by private attorneys for handling similar matters.
Justice Maria Rivera, writing for the Court of Appeal, said the city had the better of the argument, and the trial judge abused his discretion in using the cost-plus approach.
Recovery of attorney fees in red light abatement cases, the justice explained, is provided for by Civil Code Sec. 3496. While the method of calculating fees is not specified, she added, the appellate courts have expressed a preference for the lodestar method.
The trial judge, Rivera reasoned, erred in relying on language in City of Oakland v. McCullough (1996) 46 Cal.App.4th 1, which held the city’s overhead was properly included in calculating fees awarded in a drug house abatement action.
The McCullough court, Rivera wrote, only addressed “the narrow question of whether overhead costs were recoverable” and the ruling “is not authority for the proposition that a cost-plus approach is mandated for fee recovery under section 3496.”
The California Supreme Court, she noted, has endorsed the use of the lodestar method in calculating fees of in-house counsel awarded in contract cases under Sec. 1717. The justice said there was no reason not to use the same method in calculating the fees of a public entity’s lawyers under statutes specifically applicable to actions on behalf of the public.
Attorneys on appeal were Assistant City Attorney Michael J. Casey for Santa Rosa and Los Angeles sole practitioner Frank A. Weiser for Patel.
The case is City of Santa Rosa v. Patel, A124199.
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