Opinion
F074615
07-19-2018
JOHN R. LAWSON ROCK & OIL, INC. et al., Plaintiffs and Appellants, v. STATE AIR RESOURCES BOARD et al., Defendants and Appellants.
Xavier Becerra, Attorney General, Robert W. Byrne, Assistant Attorney General, Randy L. Barrow and Nhu Q. Nguyen, Deputy Attorneys General, for Defendants and Appellants. Wanger Jones Helsley, Timothy Jones, John P. Kinsey, and Nicolas R. Cardella for Plaintiffs and Appellants.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 14CECG01494)
OPINION
APPEAL from a judgment of the Superior Court of Fresno County. Mark Wood Snauffer, Judge. Xavier Becerra, Attorney General, Robert W. Byrne, Assistant Attorney General, Randy L. Barrow and Nhu Q. Nguyen, Deputy Attorneys General, for Defendants and Appellants. Wanger Jones Helsley, Timothy Jones, John P. Kinsey, and Nicolas R. Cardella for Plaintiffs and Appellants.
-ooOoo-
In this cross-appeal, we resolve the issue of attorneys' fees in the litigation between John R. Lawson Rock & Oil, Inc. (Lawson) and the California Trucking Association (Trucking Association), on the one side, and the State Air Resources Board and its executive officer, Richard Corey, in his executive capacity (collectively, the Board), on the other, over amendments to the "Truck and Bus Regulation" (the regulations). In our recently published case concerning the underlying merits of this dispute, we generally affirmed the trial court's conclusion that the Board violated certain aspects of both the California Environmental Quality Act (CEQA) and California's Administrative Procedures Act (APA) when adopting amendments to the regulations. (See John R. Lawson Rock & Oil, Inc. v. State Air Resources Bd. (2018) 20 Cal.App.5th 77 (Lawson Rock).) Following that ruling, the trial court awarded attorneys' fees under Code of Civil Procedure section 1021.5 to Lawson but denied fees under the same statute to the Trucking Association. The Board appealed the award of fees to Lawson, and the Trucking Association appealed the fee denial. For the reasons set forth below, we conclude the trial court correctly awarded fees to Lawson although erred in its calculation and, on the logic of that decision, erred in denying fees to the Trucking Association. We therefore affirm in part and reverse in part the trial court's judgment regarding fees.
Further statutory references are to the Code of Civil Procedure.
FACTUAL AND PROCEDURAL BACKGROUND
The Underlying Petition and Substantive Proceedings
The operative petition in this case was filed on December 23, 2014. In that petition, Lawson and the Trucking Association asserted claims under CEQA and the APA relating to the Board's decision to adopt certain changes to regulations commonly known as the Truck and Bus Regulation. Lawson and the Trucking Association alleged that, at the time of the amendments, 85 percent of regulated parties had complied with the existing regulations, investing millions of dollars in upgrades to their diesel trucks and buses. Lawson alleged it had "invested millions of dollars proactively complying with the operative Regulation" while the Trucking Association stated it represented "members who have over 350,000 trucks." Both alleged they were part of the 85 percent who had properly complied with the existing deadlines before any changes.
Lawson and the Trucking Association also alleged that, after the vast majority of regulated entities complied with the regulations, the Board improperly modified those regulations to provide the remaining parties with more time to comply. This created a competitive disadvantage for Lawson and the Trucking Association when competing "against the companies that actively ignored the Regulation or delayed compliance." With respect to the APA claim, Lawson and the Trucking Association argued, by way of highlighting comments in the record stating that compliant trucking fleets were being undercut in their pricing by noncompliant fleets, that compliant fleets were being harmed by noncompliant fleets that were able to operate "unburdened by the cost of compliance with the Regulation."
As detailed in the merits appeal, the trial court initially found the Board had failed to comply with the requirements of CEQA and the APA on various grounds. (Lawson Rock, supra, 20 Cal.App.5th at pp. 93-94.) We concluded the trial court correctly found the Board had violated CEQA by approving a project too early and by ignoring a fair argument that the regulatory changes would have a substantial effect on the environment. (Lawson Rock, supra, at pp. 98-102, 109-110.) We also affirmed that the Board had violated the APA by failing to properly consider intrastate impacts identified in community comments submitted to the proposed changes. (Lawson Rock, supra, at pp. 114-116.) In our analysis of that particular claim, we noted that the testimonials submitted to the Board informed it "that significant expenditures had been required to comply with the previous compliance deadlines, that noncompliant fleets without those additional expenses were therefore able to undercut compliant fleets on pricing, and that providing additional time for those noncompliant fleets to meet the relevant standards under the modified regulations could result in substantial harm to some of those businesses, including bankruptcy." (Id. at p. 115.)
The Request for Attorneys' Fees
Following the trial court's ruling in their favor, Lawson and the Trucking Association filed a joint motion for attorneys' fees. Lawson and the Trucking Association requested, supported by a lodestar calculation, a lump sum fee award of $149,845.50, increased by a multiplier of 1.5 and estimated fees for the pending motion, taxed at a 10 percent annual interest rate, for a total request of $251,445.53. Throughout the motion, Lawson and the Trucking Association argued as a single entity, explaining why they met the statutory requirements for a fee award under section 1021.5 based on their joint petition. With respect to the financial burden element, both Lawson and the Trucking Association submitted declarations stating they were not "aware of any direct economic benefit" arising from their successful lawsuit. They further argued there was no evidence available by which to readily calculate potential indirect benefits, rendering them speculative at best.
On the fees requested, Lawson and the Trucking Association submitted billing records showing the work done by the various lawyers involved. These records did not readily differentiate between the two potential clients. The billing records were supplemented by declarations from the various attorneys detailing their normal rates and overall experience. In a supplemental declaration submitted with their reply brief, Lawson and the Trucking Association's counsel averred that Lawson had paid $68,182.55 of the total fees incurred.
The trial court initially issued a tentative ruling denying attorneys' fees to both Lawson and the Trucking Association. The court set forth the general test for awarding attorneys' fees under section 1021.5, stating it was ultimately "Petitioners' burden to show the costs of their legal victory transcend their pecuniary interest." The court then rejected the evidence that Lawson and the Trucking Association were not aware of any direct economic benefit from the litigation, finding "[t]hese statements are conclusory and incomplete, because they leave out the fact that the 'true impact' to be analyzed were economic impacts, economic impacts that would benefit Petitioners." The court concluded the obligation on the Board to consider adverse economic impacts under the APA would "economically benefit Petitioners going forward." Finally, the court found no difference between Lawson and the Trucking Association in the analysis, noting that if Lawson's "cost of legal victory transcended its own separate personal interest in the litigation, it was its burden to so demonstrate in the moving papers."
At a subsequent hearing, the court noted it had considered whether there was a way to split the fees between private and public interests, but found no way to do so. The parties then spent their time discussing whether Lawson and the Trucking Association had any direct financial benefit from the litigation, resolving the court's questions concerning whether economic harm alleged in the petition equated to an economic benefit if the lawsuit was successful, and debating whether actual financial gains are relevant or only the intent of the petitioners when filing suit. Following the hearing, the court issued a modification to its tentative ruling. Citing to Plumbers & Steamfitters, Local 290 v. Duncan (2007) 157 Cal.App.4th 1083, 1097, the trial court concluded Lawson was "in a different position than [the Trucking Association] for purposes of an attorney's fees claim and award under . . . section 1021.5" and that Lawson met "the requirements of . . . section 1021.5 based on the record submitted in this case." With this modification, the court adopted its prior tentative ruling. It then awarded Lawson the $68,182.55 in attorneys' fees it had requested and denied an award of attorneys' fees to the Trucking Association.
The cross-appeals in this matter timely followed.
DISCUSSION
Attorneys' Fees Motions
In this case, we are tasked with resolving cross-appeals related solely to the trial court's decision to award fees to Lawson but deny them to the Trucking Association. In their briefing, both sides focus on whether Lawson and the Trucking Association had a financial interest in the litigation that outweighed the financial burden of bringing suit. We thus focus on that issue here.
Standards of Review and Applicable Law
Under general principles in the United States, litigants are expected to pay for their own attorneys. Various statutes and doctrines create exceptions to this general expectation. (See Tract 19051 Homeowners Assn. v. Kemp (2015) 60 Cal.4th 1135, 1142, fn. 2.) Section 1021.5 is one of those statutes. Known as a private attorney general statute, section 1021.5 is designed to compensate "all litigants and attorneys who step forward to engage in public interest litigation when there are insufficient financial incentives to justify the litigation in economic terms." (Conservatorship of Whitley (2010) 50 Cal.4th 1206, 1211 (Whitley).)
Section 1021.5 provides in relevant part:
"Upon motion, a court may award attorneys' fees to a successful party against one or more opposing parties in any action which has resulted in the enforcement of an important right affecting the public interest if: (a) a significant benefit, whether pecuniary or nonpecuniary, has been conferred on the general public or a large class of persons, (b) the necessity and financial burden of private enforcement, or of enforcement by one public entity against another public entity, are such as to make the award appropriate, and (c) such fees should not in the interest of justice be paid out of the recovery, if any."
We have previously concluded this statute sets out six elements. Thus, trial courts are authorized to award "attorney fees to (1) a successful party in any action (2) that has resulted in the enforcement of an important right affecting the public interest if (3) a significant benefit has been conferred on the general public or a large class of persons, (4) private enforcement is necessary because no public entity or official pursued enforcement or litigation, (5) the financial burden of private enforcement is such as to make a fee award appropriate, and (6) in the interests of justice the fees should not be paid out of the recovery." (Robinson v. City of Chowchilla (2011) 202 Cal.App.4th 382, 390, fn. omitted (Robinson).) Each element must be met for a trial court to have authority to award fees under the statute. (County of Colusa v. California Wildlife Conservation Bd. (2006) 145 Cal.App.4th 637, 648.)
As noted above, the core issue in this appeal turns on the financial burden criteria of section 1021.5. "In determining the financial burden on litigants, courts have quite logically focused not only on the costs of the litigation but also any offsetting financial benefits that the litigation yields or reasonably could have been expected to yield. ' "An award on the 'private attorney general' theory is appropriate when the cost of the claimant's legal victory transcends his personal interest, that is, when the necessity for pursuing the lawsuit placed a burden on the plaintiff 'out of proportion to his individual stake in the matter.' [Citation.]" ' [Citation.] 'This requirement focuses on the financial burdens and incentives involved in bringing the lawsuit.' " (Whitley, supra, 50 Cal.4th at p. 1215.) A party seeking fees under section 1021.5 has the burden of establishing its litigation costs transcend its personal interests. (Children & Families Com. of Fresno County v. Brown (2014) 228 Cal.App.4th 45, 55 (Brown).)
The structure of this analysis was illustrated in Los Angeles Police Protective League v. City of Los Angeles (1986) 188 Cal.App.3d 1 and approved by reference in Whitley. (Brown, supra, 228 Cal.App.4th at pp. 56-57.)
" 'The trial court must first fix—or at least estimate—the monetary value of the benefits obtained by the successful litigants themselves. . . . Once the court is able to put some kind of number on the gains actually attained it must discount these total benefits by some estimate of the probability of success at the time the vital litigation decisions were made which
eventually produced the successful outcome. . . . Thus, if success would yield . . . the litigant group . . . an aggregate of $10,000 but there is only a one-third chance of ultimate victory they won't proceed—as a rational matter—unless their litigation costs are substantially less than $3,000.
" 'After approximating the estimated value of the case at the time the vital litigation decisions were being made, the court must then turn to the costs of the litigation—the legal fees, deposition costs, expert witness fees, etc., which may have been required to bring the case to fruition. . . . [¶] The final step is to place the estimated value of the case beside the actual cost and make the value judgment whether it is desirable to offer the bounty of a court-awarded fee in order to encourage litigation of the sort involved in this case. . . . [A] bounty will be appropriate except where the expected value of the litigant's own monetary award exceeds by a substantial margin the actual litigation costs.' " (Whitley, supra, 50 Cal.4th at pp. 1215-1216.)
" ' "On review of an award of attorney fees after trial, the normal standard of review is abuse of discretion. However, de novo review of such a trial court order is warranted where the determination of whether the criteria for an award of attorney fees and costs in this context have been satisfied amounts to statutory construction and a question of law." ' " (Whitley, supra, 50 Cal.4th at p. 1213.)
In Robinson, we identified a two-step process for resolving which of the standards of review to apply. (Robinson, supra, 202 Cal.App.4th at p. 391.) The first step involves a determination "whether the superior court applied the proper legal standards in reaching its determination." (Ibid.) If the proper legal standards were applied, the appellate court takes the second step and determines "whether the result was within the range of the superior court's discretion—that is, whether there was a reasonable basis for the decision." (Ibid.) However, in Brown we noted that the "financial burden element of section 1021.5 requires a determination of the cost of the litigation relative to its value" to the prevailing party, and therefore "is not a question of law." (Brown, supra, 228 Cal.App.4th at p. 58.) As the trial court, "being more familiar with the dynamics of the litigation, is in a better position to assess the financial burden of the lawsuit in relation to its value," we review awards turning on that consideration for an abuse of discretion. (Ibid.) In such a scenario, the " 'trial court's determination may not be disturbed on appeal absent a showing that there is no reasonable basis in the record for the award.' " (Ibid.)
The Trial Court's Financial Interest Determination
The primary dispute in this appeal centers on whether the trial court correctly considered the financial interests Lawson and the Trucking Association had in bringing the underlying litigation. Lawson and the Trucking Association contend that neither had any direct financial stake in bringing the underlying litigation and that any potential financial interests were both indirect and speculative, thus rendering them unsuitable for sustaining the trial court's decision to deny fees to the Trucking Association. They further claim that their declarations of no direct financial interest were sufficient under RiverWatch v. County of San Diego Dept. of Environmental Health (2009) 175 Cal.App.4th 768, 778 to shift the burden of producing evidence of a relevant financial interest to the Board.
Lawson and the Trucking Association focus on assertions that neither party sought or received any compensation in the lawsuit, that litigation success would not unwind the amounts spent to comply with the existing regulations before they were changed, and that they had submitted evidence demonstrating they had no direct financial interest in the litigation. The Board focuses on Lawson and the Trucking Association's statements in their petition and made during the litigation demonstrating that Lawson and others in the industry had invested millions of dollars and risked financial solvency to complete the regulatory upgrades, that up to 15 percent of the industry had failed to upgrade expecting regulatory relief at the last moment, and that the eventual relief from the Board placed compliant fleets at a competitive disadvantage potentially qualifying as a regulatory taking. The trial court's ultimate ruling and its rejection of the no-financial-interest declarations indicates it found at least some of these statements to be evidence of a financial interest on the part of both Lawson and the Trucking Association, although it never identified what evidence it found relevant or how it quantified those interests.
We can infer from its ruling that the trial court determined Lawson's stake was less than the fees awarded and that the industry as a whole's stake was higher than the total fees requested.
Although there is an inherently factual aspect to the financial interests analysis under section 1021.5 the issues in this case initially turn on a legal conclusion that the referenced statements made by Lawson and the Trucking Association are relevant evidence of a financial interest in the litigation that support rejecting their assertions of no direct financial interest. As such a conclusion requires a legal determination concerning what constitutes a financial interest, we consider this initial dispute de novo. In our de novo review, we conclude that none of the types of evidence identified by the Board to demonstrate a financial interest in the litigation are sufficient under Whitley and related cases to affect the estimated value of the case at the time vital litigation decisions were being made and, therefore, are legally insufficient to support a conclusion by the trial court that either Lawson or the Trucking Association had an objective financial incentive to file the underlying litigation.
We begin by considering what types of financial interests are relevant to the section 1021.5 analysis. In their arguments, both sides parse Whitley in ways favorable to their positions. Lawson and the Trucking Association argue Whitley stands for the proposition that internal financial motivations for bringing suit are irrelevant to the financial interest calculation and that only direct financial gain from a lawsuit may be considered. The Board contrarily argues that Whitley stands for the proposition that any pecuniary motivation to bring the lawsuit, including subjective goals underlying the decision to file, are sufficient to disqualify a fee applicant. In considering Whitley's analysis, we find Lawson and the Trucking Association have the stronger position under the facts of this case, although their analysis is too strict a reading of Whitley.
Although Whitley's core focus was the relevance of nonpecuniary interests to the financial incentive inquiry, it reached its conclusion in part by surveying the practices of the various courts of appeal in analyzing such issues and weighing in on the proper analysis courts should apply. (Whitley, supra, 50 Cal.4th at pp. 1215-1221.) Whitley explained that the emphasis of section 1021.5 was on "remediating the infeasibility of public interest litigation" (Whitley, supra, at p. 1218) and, thus, the core focus in the financial incentive analysis should be upon the financial burdens placed on those that may engage in costly litigation leading to nonpecuniary outcomes (id. at p. 1224). In doing so, the court made a point to distinguish between motivations to file a lawsuit and actual "objective financial incentives." (Id. at pp. 1220-1221.) The court clarified that the financial interest test evaluates "incentives rather than outcomes" (id. at p. 1220), looking not at the actual recovery after trial but instead considering " 'the estimated value of the case at the time the vital litigation decisions were being made' " (ibid.). It then explained that although "objective financial incentives and subjective motives may overlap, and indeed sometimes may be indistinguishable, it is clear from the language and purpose of the statute that only the former is the proper subject of the court's inquiry." (Id. at p. 1221.)
When looking at the types of statements the Board argues constitutes a financial interest, two types of potential interests emerge. The first are direct financial costs already incurred in complying with the regulations that could be lost if the regulations are changed. The second are ongoing competitiveness issues in which compliant fleets are losing out on ongoing business opportunities because the modified regulations allow approximately 15 percent of the industry to avoid the costs of the first type. We note that, contrary to Lawson and the Trucking Association's arguments, these types of incentives are not necessarily indirect or unquantifiable. The ability to preserve the value of investments already made or counter lost profits from a competitive disadvantage are legitimate, objective, and potentially direct incentives given the right type of case. However, under the structure of this litigation, we agree with Lawson and the Trucking Association that such financial incentives are too speculative given the nature of the lawsuit pursued to be properly considered by the trial court in this instance.
In the present case, Lawson and the Trucking Association challenged modifications to the Truck and Bus Regulation on the ground that their approval was improper under various CEQA and APA procedural requirements. As we noted in our prior published opinion, success on these claims did not mandate the regulations be reversed. Rather, options remained by which the Board could theoretically re-adopt the proposed changes provided they complied with the procedural requirements of CEQA and the APA. (Lawson Rock, supra, 20 Cal.App.5th at p. 103.) Furthermore, by the time the litigation wound its way through the courts portions of the modified regulations were reaching their extension points, reducing the potential future injuries to Lawson and the Trucking Association from the alleged economic unfairness. (Id. at pp. 87-88, 109.)
In light of the nature of the claims brought and relief available to Lawson and the Trucking Association, in the form of a writ for declaratory relief that procedural flaws existed in the adoption of the modifications, there was no legal basis upon which Lawson or the Trucking Association could obtain a financial benefit from the litigation that would actually compensate them for any lost value to their investments or any past loss of revenue from anticompetitive results. Furthermore, Lawson and the Trucking Association could not ensure their investments would suffer no future depreciation nor that they could avoid future anticompetitive losses as their lawsuit could not result in the permanent repeal of the modifications or a guarantee that such modifications would have to be repealed. At best Lawson and the Trucking Association could hope for an order requiring compliance with CEQA and the APA going forward only to then pursue that new avenue in an attempt to convince the Board that its proposed regulations should not be adopted at all. In simpler terms, there was no reasonable expectation of a financial gain from the lawsuit filed.
Potential future outcomes, not tied to the outcome of the litigation actually brought, are too speculative and remote from the litigation to be considered objective financial incentives that affect the estimated value of the case at the time litigation decisions were being made. Rather, such hopes of future results are more readily understood as separable subjective motives for litigation, albeit pecuniary ones, that are not the proper subject of the court's inquiry. That Lawson and the Trucking Association suffered a pecuniary harm and wanted to create openings to mitigate that harm is what motivated them to bring a public interest lawsuit. Those motives are not, without more, financial incentives derived from the suit. (See Press v. Lucky Stores, Inc. (1983) 34 Cal.3d 311, 321, fn. 11 [where future financial gain from successful petitioning was possible, such interests, while "sufficient to induce" party to bring lawsuit, are irrelevant, the section "focuses not on plaintiffs' abstract personal state, but on the financial incentives and burdens related to bringing suit"].) Such financial incentives must be objectively quantifiable opportunities to benefit from the litigation, either through monetary recompense or secure legal consequences that create specific financial benefits. Future potential benefits contingent upon further action are too intangible to qualify. (See Whitley, supra, 50 Cal.4th at p. 1219 [noting public interest litigation, despite its high costs, often only produces nonpecuniary and intangible or widely diffused benefits].)
In applying its analysis to the facts of this case, the trial court concluded the Trucking Association had a financial interest in the case that outweighed its financial burden, while Lawson was "in a different position." The distinction drawn by the trial court could be logically based on one of two grounds. Either the court concluded there was a financial incentive that applied to both Lawson and the Trucking Association but that Lawson's financial burden exceeded that incentive while the Trucking Association, with many more members, did not, or the court concluded Lawson's motives for bringing the litigation were less financial in nature than the Trucking Association's. Under either possibility, the trial court abused its discretion in treating the prevailing parties differently.
Under the latter possibility, that the Trucking Association had greater financial motive for filing a lawsuit, the trial court would necessarily have focused on prohibited motive considerations rather than the required objective financial interests. As these considerations are prohibited as a matter of law, such conduct by the court would abuse its discretion. (See Hernandez v. Amcord, Inc. (2013) 215 Cal.App.4th 659, 678 (Hernandez) [court abuses discretion when it misapplies law].)
Likewise, in the former and more likely possibility, the trial court would have erred by basing its decision on evidence that does not bear on either Lawson or the Trucking Association's correctly understood financial incentives. The only evidence before the trial court actually bearing on financial incentives demonstrated that neither moving party was aware of any direct financial incentives from the lawsuit and that the trial court's order created no specific and quantifiable financial results for the prevailing parties. As we explained above, the remaining proffered evidence concerning financial investments and potential pricing losses does not bear on the objective financial incentives underlying the lawsuit when filed. With no evidence on which to conclude there was any meaningful financial incentive to file the lawsuit, the trial court abused its discretion in rejecting the only reasonable conclusion remaining, that for both prevailing parties the financial interests of the litigation were outweighed by the financial burdens of proceeding. (See People v. Cluff (2001) 87 Cal.App.4th 991, 998 [court abuses its discretion if there is no evidence supporting ruling].) Furthermore, with the only credible evidence demonstrating no meaningful financial interests existed, the trial court correctly concluded Lawson satisfied that criteria for a fee award. As such, it should have treated the two prevailing parties similarly and awarded fees to both.
Because we conclude that the only relevant evidence on financial incentives in the record demonstrates both Lawson and the Trucking Association had no meaningful financial incentive to file the lawsuit, we need not reach whether the trial court could properly impute individual members of the Trucking Association's potential financial interests to the entity itself.
The Trial Court's Fee Award to Lawson
In their initial moving papers, both Lawson and the Trucking Association argued and filed evidence in a joint effort to obtain fees. There was little if anything included in either's arguments or in the evidence of billing records that indicated how the parties' split the fees for payment or whether certain fees were incurred on one party's behalf as opposed to another's. Only in reply did counsel for both submit a declaration stating that Lawson paid $68,182.55 of the total fees billed in the matter. The trial court awarded exactly this amount to Lawson. The Board argues the trial court erred in awarding this figure because there is no indication it arose from a proper lodestar calculation. We agree.
The calculation of fees to award is well within a trial court's discretion and is therefore reviewed deferentially for an abuse of that discretion. (Nichols v. City of Taft (2007) 155 Cal.App.4th 1233, 1239 (Nichols).) However, the exercise of that discretion must be based on a proper application of the lodestar method, both in determining the lodestar and analyzing factors relevant to adjustments. (Id. at pp. 1239-1240.) Awards that apply the wrong standard, and thereby transgress the confines of the applicable principles of law, are necessarily outside the scope of the court's discretion. (Id. at p. 1239.)
The lodestar amount is generally calculated "by deciding 'the reasonable hours spent' on the case and multiplying that number by 'the hourly prevailing rate for private attorneys in the community conducting noncontingent litigation of the same type.' " (Nichols, supra, 155 Cal.App.4th at p. 1240.) This figure is then adjusted as necessary based on factors including " '(1) the novelty and difficulty of the questions involved, (2) the skill displayed in presenting them, (3) the extent to which the nature of the litigation precluded other employment by the attorneys, [and] (4) the contingent nature of the fee award.' " (Ibid.) While the court need not make adjustments from the lodestar, in " 'each case, the trial court should consider whether, and to what extent, the attorney and client have been able to mitigate the risk of nonpayment, e.g., because the client has agreed to pay some portion of the lodestar amount regardless of outcome. . . .' " (Id. at p. 1241.)
In the briefing to the trial court, the overall fees requested were presented and argued in conjunction with an appropriate lodestar calculation. Each attorney's hourly rates and hours worked, along with declarations concerning experience and skill, were presented as evidence of the reasonable hours spent by and the hourly prevailing rate for such attorneys. Arguments were presented for and against the use of a 1.5 multiplier. Objections raised concerns about inefficient and duplicated work and partial success rates. However, the trial court never ruled on these issues. Rather, as the briefing and argument progressed, Lawson submitted a declaration purportedly related to its portion of the overall fees. This declaration stated only what Lawson had paid but did not explain how Lawson came to pay such amounts, whether it covered a representative portion or some other amount, or whether the amount paid reflected discounts or other reductions from the figures billed and offered as evidence of reasonable hours and rates. The trial court, without any argument on the specific amount of fees to award, then awarded exactly the amount paid by Lawson after determining only Lawson was entitled to fees.
While it is possible the court accepted the total fees incurred as a reasonable lodestar amount and the evidence of the amount paid by Lawson as a representation that Lawson, the Trucking Association, and their counsel attempted to mitigate the risk of nonpayment by splitting the fees incurred such that Lawson's share was a fair representation of its litigation burden, we cannot conclude this is what occurred based on the record before us. The court never indicated whether a multiplier was appropriate, nor what it considered to be the actual and correct lodestar amount. It never discussed or identified deductions. It never determined that the fees awarded were an appropriate offset to Lawson's separate litigation burden to address the inherent unaffordability of legal services for cases like this. Nor did it have sufficient evidence before it to make such a determination without speculating about the nature of Lawson's billing arrangement. Rather, on the record before us, it appears the court simply awarded Lawson the amount of fees it paid, regardless of whether that was appropriate compensation under section 1021.5 and the lodestar method. An award merely compensating for fees paid applies the wrong legal standard and constitutes an abuse of discretion.
Lawson's fees paid constitute roughly 45.5 percent of the initial lump sum lodestar fee requested. There is no indication in the record that this is the split agreed to between the parties or that otherwise constitutes the trial court's determination of the proper amount to reduce the fee awarded to compensate for what it saw as the Trucking Association's reasonable share.
Given that this case is being remanded for further proceedings to determine the proper fee award to both Lawson and the Trucking Association, the trial court will have an opportunity to clarify its lodestar calculus.
DISPOSITION
The decision to award attorneys' fees to John R. Lawson Rock & Oil, Inc. is affirmed while those portions of the judgment calculating the fees awarded and denying attorneys' fees to the California Trucking Association are reversed. The case is remanded to determine attorneys' fees for both John R. Lawson Rock & Oil, Inc. and the California Trucking Association under a lodestar analysis. Costs on appeal are awarded to John R. Lawson Rock & Oil, Inc. and the California Trucking Association.
/s/_________
DETJEN, J. WE CONCUR: /s/_________
LEVY, Acting P.J. /s/_________
POOCHIGIAN, J.