Wednesday, July 6, 2011
C.A. Reverses Fee Award Where Part of Lawyer’s Work Unrelated to Anti-SLAPP Motion
By SHERRI M. OKAMOTO, Staff Writer
A Los Angeles lawyer who filed a malicious prosecution action that was subjected to a special motion to strike as a strategic lawsuit against public participation yesterday was relieved of liability for attorney fees claimed by the prevailing defendants for work unrelated to their anti-SLAPP motion.
In an unpublished decision by this district’s Court of Appeal, Div. Three explained John R. Fuchs could only be held liable for the fees incurred by Mary Ann Smith and Michael Graham in connection with their motion to strike.
Smith and Graham, represented by Los Angeles attorney Mark S. Levine, had sued Titan Sparkplug Company Inc. and its directors for alleged representations in a private placement memorandum given to investors.
After obtaining the defaults of Titan and two of its directors, and settling with a third, Smith and Graham dismissed their action on the eve of trial against the sole remaining defendant, Fuchs, a director who held less than 2 percent of Titan’s stock.
Fuchs later filed his claim for malicious prosecution against Smith, Graham and Levine. Smith and Graham, now represented by Lurie, Zepeda, Schmalz & Hogan, filed a motion to strike the complaint as a SLAPP, pursuant to Code of Civil Procedure 425.16. Levine joined their motion and filed a separate motion as well.
Los Angeles Superior Court Judge Joseph S. Biderman granted each of these motions and dismissed Fuchs’s malicious prosecution claim. Div. Three affirmed the dismissal in an unpublished decision in February.
While the appeal was pending, Smith and Graham moved for $85,600 in attorney fees and $2779.55 costs as prevailing defendants on an anti-SLAPP motion. They supported their motion with a declaration of counsel, which authenticated billing records for 238 hours of work by LZSH.
Based on Metabolife International, Inc. v. Wornick 213 F.Supp.2d 1220—a 2002 case decided by the U.S. District Court for the Southern District of California, which held that all fees incurred in the action were recoverable as they were all incurred “in connection with” an anti-SLAPP motion—Biderman found all of the attorney fees and expenses sought by Smith and Graham met this standard since their anti-SLAPP motion had resulted in the entire action being dismissed.
Biderman further found the rates claimed by LZSH—ranging from $470 for a partner, down to $55 for a junior clerk—were reasonable, but that the hours it billed were “excessive.” He determined that an appropriate award would be 110 hours at a “blended” rate of $375 per hour, for a total award of $41,250.
Fuchs appealed, contending this award was excessive, while Smith and Graham cross-appealed, claiming their recovery was too low.
Justice H. Walter Croskey, in his decision for the appellate court, explained that “an award of attorney fees to a prevailing defendant on an anti-SLAPP motion properly includes attorney fees incurred in litigating the fee award itself, and fees incurred defending on appeal the order granting the anti-SLAPP motion and the fee award,” pursuant to Wanland v. Law Offices of Mastagni, Holstedt & Chiurazzi (2006) 141 Cal.App.4th 15.
This award, he said, is intended to reimburse the prevailing defendants for expenses in extracting themselves from baseless lawsuits, “not to reimburse the defendant for all expenses incurred in the baseless lawsuit.”
Croskey said “the trial court correctly used the lodestar method to calculate an award of fees that it, within its discretion, believed to be reasonable,” but was incorrect in reasoning that “because the entire lawsuit was subject to the anti-SLAPP motion, all attorney fees incurred in the case were incurred in connection with the anti-SLAPP motion and were therefore recoverable (to the extent they were reasonable).”
He emphasized “the test is not whether the fees were incurred in connection with the action, but whether they were incurred in connection with the anti‑SLAPP motion.”
For example, the justice said fees incurred by Smith and Graham in resisting Fuch’s motion to lift the anti-SLAPP discovery stay were recoverable, but the costs connected with their dispute with their insurance carrier relating to the litigation were not, since they likely would have had to negotiate with this insurer even if they had not filed their anti-SLAPP motion.
Croskey also said the time LZSH spent conferring with Levine was incurred “in connection with” the anti-SLAPP motion to the extent that such communications addressed Levine’s prior representation of Smith and Graham in the underlying action, but not to the extent they involved Levine’s anti-SLAPP motion, since LZSH “would have been required to review Attorney Levine’s anti-SLAPP motion regardless of whether Smith and Graham had filed their own anti-SLAPP motion.”
Joined by Presiding Justice Joan D. Klein and Justice Patti S. Kitching, Croskey directed the matter be remanded for a recalculation of an appropriate attorney fee award based on a number of hours reasonably spent in connection with the anti‑SLAPP motion.
Fuchs represented himself, with co-counsel Gail S. Gilfillan of Fuchs & Associates. Kurt L. Schmalz and M. Damien Holcomb of Lurie, Zepeda, Schmalz & Hogan represented Smith.
The case is Fuchs v. Smith, B222470
Copyright 2011, Metropolitan News Company