A recent Metropolitan News story, “Settlement Offer Irrelevant to Setting of Attorney Fees,” reports that ta California Court of Appeals reversed an attorney fee award of $72,000 because the judge took into account the amount of the cross-defendant’s settlement offer, also $72,000.
The client, cross-complainant Dependable Highway Express, Inc., had gained a judgment for $3,096.94 for freight and delivery charges which the shipper, plaintiff and cross-defendant TSE Worldwide Press, refused to pay, instead suing Dependable for damages based on late delivery of yearbooks to New York. TSE eventually dismissed its action, with prejudice.
Dependable’s lawyer, David E.R. Woolley (who also represented the client on appeal), sought attorney fees of $110,999.40, based on a contractual provision for fees to the prevailing party. The time he said he devoted to the case included time spent in connection with the defense of TSE’s action on the complaint, explaining that the rival actions were intertwined.
Los Angeles Superior Court Judge Gregory W. Alarcon said, in his order awarding $72,000:
“Defendant appeared in court on February 24, 2015, the original trial date, and pursuant to code, should have been prepared to begin trial. Though the case was trailed until March 23, 2015, counsel did not need to conduct any further trial preparation at this time….Defendant claims that he has continued to expend fees in the amount of $26,408.18. This increase in fees is unreasonable considering trial preparation should have been completed on February 24, 2015.”
Alarcon also said that Dependable had offered to settle the case for $72,000, an offer TSA spurned. He remarked that the amount of the offer “is persuasive in informing the Court as to the value Defendant puts on his time.”
On appeal, TSE asserted that the amount of the settlement offer was an irrelevant factor. Div. Four of the Los Angeles-based appeals court, in an unpublished opinion by Justice Nora Manella, agreed. She wrote:
“In its order, the court made no reference to the trial or pre-trial proceedings, or to the character or reasonableness of the work performed by counsel. Its only findings were that the $72,000 settlement offer represented a good indication of ‘the value [respondent’s attorney] puts on his time,’ and that the amounts incurred after February 24, 2015 were ‘unreasonable.’
Although the court observed that its award of $72,000 represented 160 hours of work compensated at a rate of $450 per hour, it did not state that it found 160 hours to be a reasonable amount of time for an attorney to have billed during the litigation or $450 to be a reasonable hourly fee. As the court’s explanation relied on the final settlement offer, rather than on the amount of work the court determined was reasonably performed by respondent’s counsel, and did not indicate whether pursuit of the cross-complaint was inextricably intertwined with defending against the complaint, the order must be reversed.”
The matter was remanded for a re-setting of fees. The case is TSE Worldwide Press v. Dependable Highway Express, B269747.