Tuesday, November 13, 2018
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C.A. Questions Lowering Attorney Fees Based on Displeasure With Lemon Law
By a MetNews Staff Writer
The Fourth District Court of Appeal yesterday reversed an attorney fee award by a San Diego Superior Court judge based on his miscalculation, adding that his reduction of the fees appeared to be improperly based on his opinion that the lemon law fee shifting provisions had been “twisted” from their original purpose.
The unpublished opinion was written by Justice Terry B. O’Rourke of Div. One. It remands the case to Judge Timothy B. Taylor to afford the plaintiff another chance to present his attorney’s fees request after the judge erred in comparing the defendant’s settlement offer to the plaintiff’s final award.
William McCullough sued FCA US LLC (Fiat Chrysler’s American subsidiary) after purchasing a Jeep and later demanding a refund under the Song-Beverly Consumer Warranty Act (Civ. Code §1790 et seq.), known colloquially as the “lemon law.” It requires automobile dealers to buy back vehicles which have problems unrepairable after a reasonable number of attempts.
Sec. 998 Offer
During litigation, Fiat Chrysler made an offer pursuant to Code of Civil Procedure §998 to settle the case for $24,000, which McCullough rejected. He ultimately prevailed in the case, receiving an award of roughly $17,000 in damages.
Taylor denied his request for $125,000 in attorney’s fees, awarding him only $18,685. He did not add the $10,000 in pre-offer interest to which McCullough was entitled to the final award in comparing it to the §998 offer, and based the fee award solely on pre-offer litigation after finding the offer had not been exceeded by the final damages.
O’Rourke said:
“Because we direct the trial court on remand to give McCullough an opportunity to seek attorney fees and costs unlimited by section 998’s cost-shifting, we set out for the court’s benefit the methodology it must use to calculate the award under the Act. We do so because it is not clear that the court’s ruling was ‘consistent with the applicable legal principles’…, and under the circumstances, the court on remand can give ‘further consideration and amplification of its reasoning.’ ”
Appellate Review Urged
Taylor, in awarding McCullough attorney’s fees, declared:
“To ask for $125,000.00 in a case in which there was an offer of $24,000.00 and which was worth $17,163.83 confirms the view held by many trial court judges: that the fee shifting provisions of the ‘lemon law’ statutes have been twisted from the purpose contemplated by the Legislature into something the well‐intentioned drafters of the statutory framework would scarcely recognize. The court urges the parties to seek appellate review of this ruling, urges the Court of Appeal to publish an opinion reiterating this widely held view, and urges the Legislature to re‐visit the statutory fee‐shifting construct.”
He went on to say:
“The court has a hard time imagining that the Legislature intended to reward the excessive assignment of 14 lawyers to this modest, straightforward, commodity case (one which the defendant tried to settle at the outset). Proper staffing of this case would have been (at most) one partner, one senior associate, one junior lawyer and one legal assistant. Instead, the attorneys with the experience to know better allowed the existence of a series of transitory billers, which no doubt gave rise to inefficiency, unnecessary work, and an obvious lack of focus.”
Fee Calculation Metric
O’Rourke noted that Taylor had accurately set forth the familiar metric for calculating attorney fees under the lemon law, which starts with a lodestar amount based on the reasonable hours spent by the attorneys on the case, and modifies it with a multiplier based on factors such as unusual skill or a contingency arrangement.
He wrote:
“Despite the court’s recitation of these settled legal principles, we question whether it applied them objectively and dispassionately in reaching the award, which substantially reduced the requested fees by some 78 percent. The court’s attorney fee ruling was grounded in its criticism of the fee-shifting construct as an abstract matter, going so far as inviting appellate review of whether the statutory fee-shifting framework is in keeping with the Legislature’s purpose. But it is not this court’s function to address the wisdom of a statute’s policy; such arguments are best left to the Legislature.”
Nevertheless, O’Rourke pointed out that the lemon law “is a ‘strongly pro-consumer’ law, whose remedies are in addition to those available to consumers under other laws,” and that “an award of attorney fees, expenses and costs is the ‘primary financial benefit’ the Act offers to consumers.”
Improper Comparison
The jurist continued:
“The court also compared the total fees requested by McCullough (the lodestar plus the 1.5 multiplier) with McCullough’s $17,163.83 in damages. This led the court at the outset of its analysis to rely on the notion that a ‘reasonable person’ would not spend $125,000 to receive an award of $17,163.83. The court did not state what number of hours it believed would have been reasonable to litigate the case. Even when the court correctly characterized the lodestar, pointing out the lodestar constituted McCullough’s requested fees of $83,370, the court continued to engage in a strict comparison, pointing out that sum was ‘nearly five times the damages awarded in this case.’ But the fact the amount involved in the litigation was low in comparison to the fee request does not relieve the court from relying on a lodestar analysis.”
He added that Taylor “did not provide any examples of actual inefficiency and duplicated effort (apart from pointing out numerous attorneys worked on the matter), and we cannot infer it had carefully reviewed the statements and was familiar with them so as to identify particular issues supporting its reduction.”
The case is McCullough v. FCA US LLC, D073330.
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