Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Kern County No. S-1500-CV-263945, David R. Lampe, Judge.
Dannis Woliver Kelley, Sue Ann Salmon Evans and Enrique M. Vassallo for Defendant and Appellant.
Law Offices of William D. Olcott, William D. Olcott, for Plaintiff and Respondent.
OPINION
Wiseman, Acting P.J.
The only issue in this appeal is whether the trial court abused its discretion when it refused to award defendant Board of Education of the Bakersfield City School District (the district) any costs or attorneys’ fees under Code of Civil Procedure section 1038. The court found the necessary predicate for an award of fees under section 1038: Plaintiff Gwendolyn Johnson did not bring the underlying litigation in good faith and with reasonable cause. It awarded nothing in spite of this because it found the billing records of the district’s counsel were “so redacted … as to be useless, ” and counsel’s declarations were “too general and conclusory to support” an award in any amount. Section 1038, however, provides that the court shall award costs and fees where the necessary predicate exists. Despite the deficiencies in the district’s submissions and the court’s understandable frustration, the court had a number of options for ascertaining a reasonable figure. We reverse the order denying the motion for costs and fees and remand with directions to use one or more of those options.
Subsequent statutory references are to the Code of Civil Procedure unless noted otherwise.
FACTUAL AND PROCEDURAL HISTORIES
Johnson, an elementary school principal, sued the district for whistleblower retaliation under Labor Code section 1102.5. The district prevailed on summary judgment and we affirmed. The factual and procedural histories are set out in detail in our opinion in the prior appeal. (Johnson v. Board of Education of the Bakersfield City School District (Aug. 18, 2010, F058877) (Johnson I).) A plaintiff suing for whistleblower retaliation under Labor Code section 1102.5 must prove that she was retaliated against for reporting conduct by the employer that she reasonably believed was a violation of the law. We held that the district’s motion for summary judgment showed Johnson could not prove she reasonably believed the district violated the law when it formulated her school’s budget, which was the conduct she reported. (Johnson I, supra, at pp. 2, 15-17.)
After the court granted summary judgment, the district filed a motion for defense costs, including attorneys’ fees, under section 1038. Section 1038 provides for a motion for defense costs and fees “reasonably and necessarily incurred” when a plaintiff sues a government entity under the California Tort Claims Act and the trial court finds the suit was “not brought in good faith and with reasonable cause.…” (§ 1038, subd. (a).) Public entities cannot sue for malicious prosecution, and one of the purposes of section 1038 is to provide them with an alternative remedy. (Gamble v. Los Angeles Dept. of Water and Power (2002) 97 Cal.App.4th 253, 258-259.)
The district argued that Johnson’s suit was brought without reasonable cause because she could not reasonably believe that the district’s budget violated the law or that she suffered any adverse employment action. It claimed attorneys’ fees of $248,243.80 and other defense costs of $9,194.08.
The district’s motion was supported by declarations by its private attorneys from the firm of Miller Brown & Dannis (now Dannis Woliver Kelley, which still represents the district in this appeal). Attorney Enrique Vassallo declared that he worked 429.8 hours on the matter at $240 per hour. Attorney Damon Brown declared that he worked 331.5 hours at $200 per hour. Attorney Sue Ann Salmon Evans declared that she worked 255.25 hours at $250 per hour. Evans also declared that attorney Lee Gale worked 81.4 hours at $200 per hour. The attorneys’ declarations contained general descriptions of the work they did. For instance, Vassallo’s declaration says he spent time on “drafting and review of District’s written discovery” and “taking and defending depositions” among other things. The declarations did not, however, include any breakdown of the attorneys’ hours. The district did not submit any attorney billing records with its motion.
At the hearing on the motion on August 27, 2009, the court stated that it had tentatively found Johnson brought the action without good faith and reasonable cause and the district would be entitled to some amount of costs and fees. Then it said it was going to continue the hearing for 30 days because it “need[ed] further information to evaluate the reasonableness of the requested fees and costs.” Specifically, the purpose of the continuance was “to give the moving party the opportunity to submit further evidence in support of the request for fees and costs, including copies of all billing records or statements, so that I can evaluate the reasonableness of the requests.”
The court and the district’s counsel had the following discussion about billing statements:
“MR. VASSALLO: We have a concern about privileged information in our billing statements. And I wanted to make a suggestion on how I think we could handle it. We would certainly feel comfortable providing you for an in-camera review the statements with the privileged information not redacted. We would suggest providing Counsel redacted statements as well as supplementing the declarations so that, for example, I could state, because one of the declarations is mine, that I spent so many hours preparing and taking the deposition of Gwen Johnson, things like that. Would that be sufficient to satisfy the Court’s request?
“THE COURT: That would be fine. The other way you could do it is to simply provide the redacted information. I’m not particularly concerned about the privileged information that would be contained in the billing record, but more just the nature of the task, who was performing it. You know, if it says time spent preparing for summary judgment or deposition or taking deposition, that’s really not privileged. However, I do understand billing records could contain some privileged communications. So either way is fine with me.”
On September 18, 2009, the district submitted additional evidence in support of its request for attorneys’ fees. At the continued hearing on September 29, 2009, the court had not yet reviewed the new evidence and said, “I have indicated an intent to award some attorney’s fees, but I do need to go through the material.” Johnson’s counsel argued that the billing records lacked specificity. The district’s counsel responded by saying, “your Honor, if you’d like, we could submit under seal unredacted attorney’s fees for your review if that would help you in making your evaluation.” The court replied, “Well, I’ll have to find out if there is any particular entry that is confusing because of the redaction. [¶] … [¶] I just have to essentially do that homework.” The district interpreted the court’s remarks as a ruling granting the motion and taking the amount of the award under submission; it filed a notice of ruling asserting that the court had taken those actions on September 29, 2009.
The appellate record contains no minute order or other document issued by the court indicating that the court issued any ruling on September 29, 2009.
The new evidence the district submitted consisted of redacted billing records and supplemental declarations by the attorneys. The supplemental declarations broke the attorneys’ time down into large blocks with descriptions of general task categories but without further division into individual tasks performed on specific dates. For instance, attorney Vassallo declared that he spent 41.9 hours on “Review of opposition, research and preparation of Reply to Opposition to District’s Demurrers to Plaintiff’s complaints, ” and 99.1 hours on “Preparing notices of depositions, deposition subpoenas, correspondence and preparation for depositions.”
The redacted billing records did not contribute any additional useful information. The bills showed the names of the attorneys, the dates on which they performed tasks, and how much time they spent on each task, but they did not show what tasks were performed. The task descriptions were so severely redacted that they communicated nothing in virtually every instance. Many task descriptions were completely redacted. Almost all the rest were redacted to leave only a verb or two, such as “Review, ” “Research” or “Prepare.” The few instances in which intelligible task descriptions were provided involved direct interactions with opposing counsel, such as drafting and reviewing letters to and from opposing counsel and taking and defending depositions.
The court issued its written ruling on November 24, 2009. It stated that “defendant satisfied the court that plaintiff did not bring her action in ‘good faith’ and with ‘reasonable cause.’” It also ruled that “Defendant’s counsel have not provided any detailed accounting of work performed from which the court can determine the ‘reasonableness’ and ‘necessity’ for the requested fees, and have failed in their burden of proof.” The supplemental declarations were “too general and conclusory to support a finding that [the attorneys’] expenditure of 1, 154.85 hours or any lesser number was ‘reasonable’ and ‘necessary’ for the defense of defendant here.” The billing records were “so redacted (for example, [they] showed a function such as ‘preparation’ but no further description as to what document was prepared) as to be useless for the purpose of determining a ‘reasonable’ and ‘necessary’ attorney’s fee.” The court also stated that the district submitted billing records for Vassallo only. As the district points out, this is not correct. The billing records submitted for the other attorneys, however, had drastic redactions like the redactions in Vassallo’s bills.
The court acknowledged the district’s claim that the redacted portions of the bills were protected by attorney-client privilege, but held that “[i]n a civil matter one may not invoke the judicial process seeking affirmative relief and at the same time use the privileges granted by that process to avoid development of proof having a bearing upon the rights to such relief. (Alvarez v. Sanchez (1984) 158 Cal.App.3d 709.)” “[S]ome amount of fees are probably awardable, ” the court ruled, but “by standing upon the evidentiary privilege, defendant has prevented the plaintiff from effectively disputing the issues of ‘reasonableness’ and ‘necessity’ from a standpoint of due process, and has also prevented the court from making a fair determination.”
The district filed a motion for reconsideration on December 14, 2009. Concurrently, it submitted unredacted billing records for the court’s in camera review, along with a motion to allow the records to be filed under seal. The district argued that it believed the court was going to ask for unredacted bills before ruling if it found it needed them; it said its motion should not be denied “over what appears to have been no more than a miscommunication between counsel and the Court.” On February 1, 2010, however, before the court ruled on the motion, the district filed its notice of appeal. On February 5, 2010, the district withdrew the motion.
DISCUSSION
The only issue on appeal is whether the court properly ruled that no costs would be awarded to the district because the district failed to carry its burden of proving its attorneys’ fees were reasonable and necessary. Johnson explicitly states in her appellate brief that the issue of whether she brought her suit in good faith and with reasonable cause is “not now under appeal.”
The parties have not cited and we have not found any case directly stating the standard of review for an order denying a section 1038 motion, but the parties agree that the abuse-of-discretion standard applies to the trial court’s determination here that the district failed to establish any amount of reasonable fees. It is well established under other bases for awarding attorneys’ fees, such as Civil Code section 1717, that the amount of the award is committed to the trial court’s discretion. (E.g., PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1095; EnPalm, LLC v. Teitler (2008) 162 Cal.App.4th 770, 774; Honey Baked Hams, Inc. v. Dickens (1995) 37 Cal.App.4th 421, 429, overruled on other grounds by Santisas v. Goodin (1998) 17 Cal.4th 599, 614, fn. 8.)
Both parties cite Laabs v. City of Victorville (2008) 163 Cal.App.4th 1242. This case involves section 1038 but states no standard of appellate review for it. It applies the abuse-of-discretion standard in connection with another statute, section 2033.420. (Laabs, supra, at pp. 1275-1276.)
The trial court’s discretion is broad in determining the amount of the award. (Serrano v. Priest (1977) 20 Cal.3d 25, 49 [“‘experienced trial judge is the best judge of the value of professional services rendered in his [or her] court, and while his [or her] judgment is of course subject to review, it will not be disturbed unless the appellate court is convinced that it is clearly wrong’”].) This discretion includes the power to find that most of the hours actually expended by counsel were not reasonably expended and then to reduce the award. (EnPalm, LLC v. Teitler, supra, 162 Cal.App.4th at pp. 774-775.) The court’s discretion is not unlimited, however. The language of section 1038 is mandatory:
“If the court should determine that the proceeding was not brought in good faith and with reasonable cause, an additional issue shall be decided as to the defense costs reasonably and necessarily incurred by the party or parties opposing the proceeding, and the court shall render judgment in favor of that party in the amount of all reasonable and necessary defense costs, in addition to those costs normally awarded to the prevailing party.” (§ 1038, subd. (a) (italics added).)
Johnson has not cited and we have not found any case holding that a trial court had discretion to find that, although a plaintiff’s suit was not brought in good faith and with reasonable cause, defense counsel’s documentation was so inadequate that the appropriate award under section 1038 was zero. One case, Dudman v. State of California (1983) 145 Cal.App.3d 617 (Dudman), rejected the same contention. After summary judgment was granted for the state in that case, the trial court ruled that Dudman’s action was not brought in good faith and with reasonable cause. It denied the state’s motion for defense costs, including attorneys’ fees, under section 1038 “‘for the reason that [the state’s] moving papers do not contain sufficient information to enable the Court to determine the amount of defense costs.’” The trial court also denied the state’s request to submit additional evidence. (Id. at pp. 618-619.) The Court of Appeal reversed, holding that the trial court abused its discretion because it could have either allowed the state to submit additional information or fixed a figure for defense costs and fees on the basis of its own knowledge and experience, but it chose to do neither. (Id. at pp. 619-620.) The appellate court remanded with directions to determine a reasonable amount of costs and fees and to enter judgment in that amount. (Id. at pp. 620-621.)
We do not take Dudman to imply that a moving party’s showing could never be so poor that the court would have discretion to award nothing. The court might have that discretion if the moving party did not submit and did not offer to submit any evidence at all of the attorney time expended. Here, however, the district submitted some evidence, and means were available of supplementing that evidence.
First, the court could have given the district another opportunity to submit billing records with intelligible task descriptions. The district asserted attorney-client or attorney work-product privilege regarding all the information it redacted, but it does not seem likely that the only way to conceal privileged information in an attorney’s bills is to redact the task descriptions entirely or to redact everything in them except single words like “review” and “prepare.” Although the court ruled that the district could not simultaneously claim the fees and stand on a privilege to withhold all the task descriptions, it never ruled on whether either privilege applies so broadly in the first place. On remand, the court could rule on that question. To assist it in doing so, it could require the district to prepare information comparable to a privilege log. “‘The purpose of a “privilege log” is to provide a specific factual description of documents in aid of substantiating a claim of privilege in connection with a request for document production. [Citation.] The purpose of providing a specific factual description of documents is to permit a judicial evaluation of the claim of privilege. [Citations.]’ [Citation.]” (Best Products, Inc. v. Superior Court (2004) 119 Cal.App.4th 1181, 1188-1189.) Here, the log would provide not a description of documents but a description of billing entries sufficient to substantiate the claim that those entries are privileged. Alternatively, the district could simply be directed to submit billing records in which the information a privilege log inevitably would contain has not been redacted. This would surely include intelligible task descriptions in an overwhelming majority of instances. The fact that an attorney prepared a particular motion on a certain date, for instance, is not arguably privileged where the motion has been filed and decided and the litigation terminated long ago. It is not necessary that the information be submitted in the form of billing records, however; declarations containing the same information in the same detail could also suffice.
Second, the court could have relied on its own knowledge and experience to determine reasonable fees. (PLCM Group, Inc. v. Drexler, supra, 22 Cal.4th at p. 1096 [trial court has its own expertise on value of attorney services].) It could have used its own knowledge and experience to fix a reasonable amount based either on a reduction of the amounts the district requested or simply on its own independent assessment of the value of the services counsel rendered. If, on remand, the district declines to submit billing information showing specific tasks performed by its attorneys on specific dates and fails to substantiate its claim of privilege to the court’s satisfaction, the court can take this into account in determining the reasonable value of the attorneys’ services.
The district suggests that the court also could simply accept its offer to submit unredacted billing records for in camera review. The court believed that awarding fees without revealing more billing information to Johnson would violate Johnson’s due process rights. Neither the court nor the parties have cited any authority on whether an in camera review would create a due process problem, and we express no opinion on the issue. On remand, the court can avoid the issue by either obtaining useful billing information from the district or by relying on its own knowledge and experience, as outlined above.
In arguing that Dudman does not support reversal here, Johnson relies on a footnote in which the Dudman court stated that, although the trial court might be unaware of some defense costs, such as the use of experts or consultants not reflected in the record, the moving party is still “entitled to a judgment for as much of its costs as is supported by the evidence.” (Dudman, supra, 145 Cal.App.3d at p. 619, fn. 2.) Contrary to Johnson’s argument, this footnote does not support the view that the court had discretion to award no defense costs and fees in this case. The footnote simply means that if an item of costs is not reflected in the record at all, the court still must award costs for all the items that are reflected. “The record” includes not just the evidence submitted by the moving party in support of its motion, but the entire record of the proceedings in the trial court, to which the trial judge can apply his or her knowledge and experience and fix a reasonable fee figure independent of the moving party’s submissions.
Johnson also argues that the evidence the district submitted shows the claimed fees are unreasonable. For instance, she points out that the district’s declarations show that four attorneys spent more than 400 hours on the motion for summary judgment; she argues that the motion could not reasonably have taken so long to prepare. The question of whether the district should be awarded less than it requested is for the trial court to decide in the first instance on remand. We express no opinion on the amount that should be awarded.
The district argues for the first time in its reply brief that it is entitled under section 1038 to costs and fees it incurred in the previous appeal, this appeal, and the litigation on the cost-and-fee motion in the trial court. This appears to be correct at least with respect to costs and fees incurred in the previous appeal (see Bosetti v. United States Life Ins. Co. in City of New York (2009) 175 Cal.App.4th 1208, 1226; Gonzales v. ABC Happy Realty, Inc. (1997) 52 Cal.App.4th 391, 394-395), but because Johnson has not had an opportunity to respond on the issue, we will not rule on it. The district can assert the claim in the trial court on remand.
DISPOSITION
The order denying the district’s motion for defense costs under section 1038 is reversed. The matter is remanded to the trial court with directions to determine the amount of reasonable and necessary defense costs incurred by the district and render judgment for the district in that amount. The district shall recover its costs on appeal.
WE CONCUR: Cornell, J.Franson, J.