Friday, June 20, 2014
C.A. Takes Huge Slice Out of Jury Award for Services in Divorce
Panel Overturns Verdict Granting Hillel Chodos $5,000 an Hour for Representing Entrepreneur’s Ex-Wife
By KENNETH OFGANG, Staff Writer
The Court of Appeal for this district has ordered a huge cut in a judgment awarding prominent litigator Hillel Chodos $7.8 million for representing the ex-wife of a wealthy businessman in her divorce and related matters.
Div. Five Wednesday ordered that the award be cut to $1.8 million, which the court said represented a reasonable hourly rate of $1,000 for the 1,800 hours the jury found Chodos put in on the case. A defense expert testified that Chodos didn’t need to spend more than 500 hours representing Navabeh Borman, and that his services to her weren’t worth much more than $300,000.
Chodos and Hugh John Gibson had represented Borman between 2007 and 2009. During that time, she sought a divorce from her husband, Burton Borman, changed her mind and dismissed the action, brought a second divorce action, and sued under Marvin v. Marvin for an interest in a Malibu beach house and other property that Burton Borman owned before they were married.
Burton Borman, who was CEO of PennCorp Financial and later of Todd Shipyards, died in 2012 at the age of 84. He and Navabeh Borman lived together beginning in 1983 and married in 1998.
Chodos, who did not have a statutorily required written fee agreement, sued in quantum meruit. He contended that he had obtained excellent results for his client, obtaining a settlement worth $26 million, and deserved a multiplier of his usual $1,000-per-hour fee.
Family law specialist Dennis Wasser, who has handled a number of big-dollar divorce cases, testified that Chodos’ efforts, and the results he obtained in the case justified a multiplier of six, for a fee of over $9 million. The defense scoffed at the testimony, citing Wasser’s acknowledgment that his own usual billing rate was $900 an hour, and pointing out that Chodos—although one of the state’s most highly-regarded business litigators—is not a family law specialist and had very little experience with palimony actions.
The acrimonious fee litigation spawned a cross-complaint by Borman against Chodos for malpractice. She claimed that he failed to prepare, persuaded her to enter into an unfavorable settlement by misrepresenting the terms, failed to enforce interim court orders, and otherwise misadvised her.
Chodos in turn filed his own cross-complaint, seeking equitable indemnity from Borman’s subsequent attorneys, Dana Cole, Michael Dempsey, and Stephen Johnson. Chodos claimed that Borman had stopped taking his advice and had retained the cross-defendants, and that if she suffered any malpractice damages, it was their fault, not his, even though he and Gibson had remained counsel of record for a time.
Case to Trial
After Chodos prevailed in Chodos v. Cole (2012) 210 C.A.4th 692, in which a divided panel said the cross-complaint did not arise from protected activity under the anti-SLAPP statute, the case went to trial before Los Angeles Superior Court Judge Barbara Ann Meiers.
Meiers told the jury that, in addition to determining a reasonable hourly rate for Chodos’ services, it could grant a fee multiplier based on the traditional lodestar factors such as skill, risk, effort, results, impairment of other employment opportunities, novelty of legal issues presented, and time limitations.
Jurors concluded that Chodos was entitled to $1,000 per hour for 300 hours he worked on the first divorce case before it was dismissed, and $1,000 per hour, times five, for 1,500 hours he worked on the second divorce and the Marvin action.
But Justice Richard Mosk, writing for the Court of Appeal, said the judge should not have allowed the jury to consider a multiplier.
“We hold that under the circumstances of this case, there was no legal or equitable justification for applying a multiplier to the lodestar amount of attorney fees found by the jury,” Mosk wrote. “Such multipliers generally are appropriate when, from the outset of an action, an attorney voluntarily assumes the contingent risk of nonpayment for his services—a risk not present here.”
Mosk also called the judgment “excessive and inequitable” and “contrary to public policy,” since it would reward Chodos for not complying with the State Bar Act’s requirement of a written fee agreement.
Chodos represented himself on appeal, with Phillip Kaufler as co-counsel. Borman was represented by Ronald Richards and Steven J. Joffe.
The case is Chodos v. Borman, 14 S.O.S. 3064.
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