{"id":898815,"date":"2021-06-02T15:04:36","date_gmt":"2021-06-02T21:04:36","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=898815"},"modified":"2021-06-02T15:04:41","modified_gmt":"2021-06-02T21:04:41","slug":"litigate-a-dispute","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/litigate-a-dispute\/","title":{"rendered":"You Can Litigate a Dispute. Just Don\u2019t LITIGATE a Dispute."},"content":{"rendered":"\n

Garret Murai | California Construction Law Blog<\/a><\/p>\n\n\n\n

\"Wild<\/figure>\n\n\n\n

Litigation<\/a> can get personal. But when you\u2019re an attorney\u00a0as well as<\/em>\u00a0the litigant, things can get both personal as well as nasty, and this can come back to bite you as was the case in\u00a0Karton v. Ari Design & Construction, Inc.<\/em>, Case No. B298003 (March 9, 2021), 2nd District Court of Appeals.<\/p>\n\n\n\n

The Karton Case<\/h3>\n\n\n\n

It started out, as many a case does, pretty straightforwardly. Attorney David Karton and his wife hired a contractor, Ari Design & Construction, Inc., to do some work on their house. After the Kartons had paid Ari $92,651 a dispute arose. Actually, two disputes arose. The Kartons believed that Ari was performing work without workers\u2019 compensation insurance although it had it had two to four people working on the project. The Kartons also believed that Ari had overbilled for work completed, which they contended was to the tune of $35,096, and while Ari didn\u2019t disagree, contended that it was only $13,000, a difference of $22,096. And it was over this, that the parties litigated the matter, resulting in attorneys\u2019 fees and sanction requests of $543,307.<\/p>\n\n\n\n

In the lawsuit filed by the Kartons they sued Ari, three of its principals, Shahar Toledano, Jonathan Guttman and Ilan Messika, and Ari\u2019s license bond surety Wesco Insurance Company, alleging five causes of action for breach of contract, money had and received, violation of Business and Professions Code section 7031, claim against license bond, and unfair competition.<\/p>\n\n\n\n

After a three-and-a-half-day bench trial the Kartons prevailed, with the trial court finding that Ari overbilled the Kartons the amount they claimed of $35,096, but awarding the Kartons all of the $92,651 they had paid to Ari, because the court found that Ari was subject to Business and Professions Code section 7031 by failing to have workers\u2019 compensation insurance although it had employees. The trial court also awarded the Kartons an additional $10,000 under Code of Civil Procedure section 1029.8 which provides for treble damages, capped at $10,000, and attorneys\u2019 fees against \u201c[a]ny unlicensed person\u201d whose work injures another person. And, finally, the trial court awarded the Kartons $2,850 for storage fees, for a total award of $109,501. The trial court also awarded the Kartons $12,500 against Ari\u2019s license bond surety Wesco.<\/p>\n\n\n\n

Following the trial, the Kartons filed a post-trial motion for attorneys\u2019 fees. At the time of the motion the trial court judge had been reassigned and a new judge assigned to the case. In their motion, the Kartons requested $271,530 in attorneys\u2019 fees, $52,021 in discovery sanctions, and $203,646 for proving matters at trial that had been denied in discovery for a total amount sought of $543,307. In its tentative ruling, the trial court determined that $450 per hour was a reasonable rate for the Kartons\u2019 attorney but noted that Kartons\u2019 motion lacked a breakdown of hours spent by counsel beyond a \u201cbare-bones declaration\u201d asserting that a total of 603.4 hours was spent on the case and an estimate of percentages devoted to different tasks. The trial court proposed to continue the hearing to allow the Kartons to supply the missing evidence to justify their request.<\/p>\n\n\n\n

At the hearing, David Karton and his attorney appeared although Karton did most of the talking. Karton asked for 30 days to submit supplemental papers, which the court granted, and set a 10-page limit on the filing excluding exhibits. Thereafter, the Kartons filed 11 pages of text and 400 pages of supplemental briefing and updated their demand to add $16,110 to their fee request.<\/p>\n\n\n\n

At the hearing, in which only David Karton appeared, the trial court expressed surprise that Karton had increased his fee request \u201cbeyond what had previously been requested.\u201d The trial court also commenced on Karton\u2019s lack of civility in his briefing, stating that it was \u201creplete with attacks on defense counsel such as that defense counsel filed \u2018knowingly false claims of witness tampering,\u2019 \u2018her comments were frivolous\u2019 [and that] something was \u2018typical of the improper tactics employed by defendant and their counsel’\u201d \u201cIt was really offensive to me,\u201d stated the trial court, \u201cthe attacks made in the case.\u201d<\/p>\n\n\n\n

While acknowledging that among the documents filed by the Kartons were billing records, although block billing records, the trial court noted that 300 of the 400 pages of supplemental briefing was \u201cextraneous documentation . . . that I did not need and did not want in ruling on this motion.\u201d \u201cIf this is reflective of the litigation that went on in this relatively simple-sounding case,\u201d stated the court, \u201cI understand how you may and your counsel may have spent the number of hours that you claim to have spent,\u201d noting that the Kartons had gone \u201cso far beyond what was necessary on this matter.\u201d<\/p>\n\n\n\n

Before taking the matter under submission, the trial court observed that Karton was \u201cagitated about this case. This is your personal matter, and I understand that. I see that you have strong feelings about this case and strong feelings about the course of this litigation and how it has proceeded.\u201d At one point, the court also told Karton, \u201ccan you not interrupt me. I would appreciate your letter me finish my sentence,\u201d to which Karton apologized.<\/p>\n\n\n\n

The following day, the trial court issued a minute order approving 200 hours at $450 per hour for a total fee award of $90,000. The minute order noted that the trial court had given Karton leave to file supplemental briefing of 10 pages but that Karton had filed hundreds of pages with 20 or more additional exhibits as well as Karton\u2019s \u201cinflammatory language.\u201d The minute order also reviewed the law surrounding the lodestar method of determining reasonable attorneys\u2019 fees and noted its broad discretion to adjust an award downward or to deny it completely if it determined a fee request was excessive. The trial court also ruled that there was no statutory or contractual basis to award attorneys\u2019 fees against Wesco.<\/p>\n\n\n\n

The Kartons appealed.<\/p>\n\n\n\n

The Appeal<\/h3>\n\n\n\n

On appeal, the 2nd District Court of Appeal noted that \u201c[c]ourts have developed two ways to define a reasonable fee\u201d:<\/p>\n\n\n\n

The first method is the lodestar approach. This method traces back at least to the famous\u00a0Lindy<\/em>\u00a0case:\u00a0Lindy Bros. Builders, Inc. of Philadelphia v. American Radiator & Standard Sanitary Corp.<\/em>\u00a0(3d Cir. 1973) 487 F.2d 161, 168. The lodestar is the multiplicand of a reasonable hourly rate and a reasonable number of hours. The court then may adjust the lodestar based on a variety of factors. Germane factors include the nature, difficulty, and extent of the litigation, the skill it required, the attention given, and the success or failure of the enterprise, as well as other factors. Whether the attorney worked on a contingency is relevant. A trial court is not required to state each charge it finds reasonable or unreasonable. A reduced award might be fully justified by a general observation that an attorney over-litigated a case.<\/p>

The second method is the percentage-of-recovery approach. The percentage approach arose in the class action context and predated the lodestar method, but has always shared the lodestar method\u2019s fundamental goal of defining \u201creasonableness\u201d in a given case.<\/p>

Over the decades, there has been a nationwide tug-of-war about which method is superior: lodestar versus percentage. Each approach has advantages and disadvantages. The lodestar method better accounts for the amount of work done, while the percentage approach more accurately reflects the results achieved.<\/p>

In 2010, the American Law Institute concluded \u201c`most courts and commentators now believe that the percentage method is superior. Critics of the lodestar method note, for example, the difficulty in applying the method and cite the undesirable incentives created by that approach\u2014i.e., a financial incentive to extend the litigation so that the attorneys can accrue additional hours (and thus, additional fees).’\u201d<\/p><\/blockquote>\n\n\n\n

The Court of Appeal then went on to state, in a number of must-quote passages, why it was \u201creject[ing] the Karton\u2019s complaint that the $90,000 attorney fee award is too small\u201d:<\/p>\n\n\n\n