Opinion
NOT TO BE PUBLISHED
Superior Court County No. CV50047, of San Luis Obispo, Teresa Estrada-Mullaney, Judge
Jere N. Sullivan, Jr. for Defendants and Appellants.
Thomas E. Frankovich and Jennifer L. Steneberg, for Plaintiff and Respondent.
COFFEE, J.
Appellants Peachy Canyon Winery, Douglass P. Beckett, and Nancy L. Beckett, as trustees of the Beckett Family Trust ("Peachy Canyon") appeal from an order awarding attorneys' fees in the amount of $25,391.60 and costs in the amount of $2,105.48 to respondent Jarek Molski, the prevailing party in this disability access litigation. (Civ. Code, §52, subd. (a), the Unruh Civil Rights Act.)
All statutory references are to the Civil Code unless otherwise stated.
Peachy Canyon does not dispute that Molski is entitled to an award of fees and costs. Peachy Canyon challenges the amount of attorney's fees awarded. It contends that the trial court should have reduced Molski's award by using a negative multiplier because Molski's success was limited and his attorney's demand letter was unethical. Peachy Canyon also contends that the award should have excluded fees that were incurred in a related federal action. We affirm.
FACTS AND PROCEDURAL BACKGROUND
Molski is a disabled person who uses a wheelchair. On August 9, 2003, Molski visited the Peachy Canyon winery. About a month later, Molski and co-plaintiff, Disability Rights, Enforcement, Education Services: Helping You Help Others (DREES), filed a lawsuit in federal court alleging that Molski had encountered architectural barriers to full and equal access that violated the Americans with Disabilities Act of 1990 (42 U.S.C. § 12101, et seq., the ADA), the Disabled Persons Act (Civ. Code, §§ 54, 54.1, & 54.3, the DPA), Health and Safety Code section 19955, the Unruh Civil Rights Act (Civ. Code, § 51), and Business and Professions Code section 17200 et seq. (Case 2-03-CIV-06216, the federal action.) Molski has filed about 400 similar lawsuits, in many of which he has been represented by counsel herein.
Molski's attorney served the federal complaint on Peachy Canyon with a demand letter. The demand letter was substantially identical to one used by Molski and his attorney in hundreds of other cases. (Molski v. Mandarin Touch Restaurant (C.D. Cal., 2005) 359 F.Supp.2d 924, 928.) It offered "friendly advice" and explained that once Peachy Canyon retained counsel there could be no direct communication. It advised Peachy Canyon that the action would proceed in federal court, that Peachy Canyon had no meritorious defense to the action, that it would be required to pay Molski's attorney's fees if he prevailed and that those fees might not be covered by insurance. The letter advised Peachy Canyon that certain provisions of its insurance policy might afford coverage and offered to discuss the merits of a bad faith lawsuit with Peachy Canyon if coverage were refused. The letter stated, "We urge you in this instance, to seek independent counsel, and not to rely upon insurance defense attorneys, to determine your rights and your exposure." It warned Peachy Canyon that once an attorney responded to the complaint on its behalf, the attorney would "embark on a 'billing' exercise," forcing Molski and his attorney to do more work, and that "[t]he more work we do is just that much more money you may be responsible for paying." The letter encouraged Peachy Canyon, or its attorney, to enter into an early settlement.
Peachy Canyon retained counsel and responded to the federal complaint. By November 8, 2004, Peachy Canyon had brought its facility into compliance with the ADA. Peachy Canyon moved for summary judgment and dismissal in the federal action on the grounds that the ADA claim for injunctive relief was moot and that the federal court should decline to exercise ancillary jurisdiction over the remaining state claims. On December 22, 2004, the district court dismissed the entire federal action.
On January 10, 2005, Molski and DREES filed this action for monetary damages, statutory penalties and attorney's fees based on violation of the DPA (§§ 54, 54.1, 54.3) and the Unruh Civil Rights Act (§ 51). No claim for injunctive relief was made in this action. Molski and his attorney served the summons and complaint on Peachy Canyon with another demand letter, which was substantially identical to the first, including the (outdated) statements that the action "is filed in Federal District Court," and that "once you have retained counsel, we will not be able to communicate with you directly."
On October 31, 2005, the trial court sustained Peachy Canyon's demurrer to DREES' claims without leave to amend on the ground that DREES lacked standing. The court also granted Peachy Canyon's motion to strike Molski's claim for cumulative daily damages, his claims for punitive damages and attorneys' fees to the extent they were based on statutes other than the DPA or the Unruh Civil Rights Act, and his allegation that he had previously "secured injunctive relief."
After taking judicial notice of the pleadings in the federal action, the state trial court found that "no injunctive relief was sought in the prior federal action . . . and that no injunctive relief is sought in this action." In fact, in his federal complaint, Molski did seek "injunctive relief compelling [Peachy Canyon] to make [its winery] readily accessible to and usable by individuals with disabilities" pursuant to the ADA.
In November of 2005, Molski filed an amended complaint, which eliminated DREES as a plaintiff and made other corrections, but retained the allegation that the violations were "ongoing." The trial court granted a motion by Peachy Canyon to strike that allegation, to strike allegations that referred to representation of a "class," and to strike allegations that the August 9, 2003, barriers constituted more than one statutory violation. Peachy Canyon's motion was not entirely successful. The court denied Peachy Canyon's request to strike allegations that the architectural barriers had violated Health and Safety Code section 19955 et seq.
In February of 2005, Molski filed a second amended complaint, which Peachy Canyon answered. In the fall of 2006, Peachy Canyon made a statutory offer to compromise for $4,001, "[a]ttorney fees and costs to be determined by the Court." The parties stipulated to judgment on those terms in open court and judgment was entered.
Molski moved for attorney's fees in the amount of $29,672 and costs in the amount of $5,166.98. Peachy Canyon agreed that Molski was a prevailing party entitled to fees and costs, but argued that his success was limited and that his demand letter was unethical so he should only be awarded fees for one half hour spent in a settlement conference. The trial court awarded $25,391.60 in attorneys' fees and $2,105.48 in costs, disallowing an expert's fees and reducing the claimed hourly fee but otherwise awarding all fees and costs claimed.
DISCUSSION
Negative Multiplier
Peachy Canyon argues that special circumstances mandated application of a .999 negative multiplier because Molski's success was limited and his attorney's conduct was unprofessional. We conclude that the trial court acted within its discretion when it chose not to apply a negative multiplier.
A plaintiff who prevails under the Unruh Civil rights act is entitled to a minimum statutory penalty of $4,000 for each offense and "any attorney's fees that may be determined by the court." (§ 52, subd. (a).) Peachy Canyon concedes that Molski prevailed when he recovered $4,001 in settlement pursuant to section 52 of the Civil Code. A fee award is mandatory. (Engel v. Worthington (1997) 60 Cal.App.4th 628, 632, 635.)
The amount of the award is a matter for the trial court's discretion (Engel v. Worthington, supra, 60 Cal.App.4th at pp. 632, 635), and will not be disturbed on appeal unless it is clearly wrong. (PLCM Group v. Drexler (2000) 22 Cal.4th 1084, 1095.) To calculate a fee award, a trial court must first determine a "lodestar" figure by multiplying the hours expended by a reasonable hourly rate. (Serrano v. Priest (1977) 20 Cal.3d 25, 48.) It may then exercise its discretion to apply a multiplier to adjust the lodestar upward or downward in order to arrive at a fee that reflects the fair market value of the service rendered, 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. (Graham v. DaimlerChrysler Corp. (2004) 34 Cal.4th 553, 579.) These factors are not exhaustive, and special factors may also be considered.
Peachy Canyon contends that Molski's limited success was a special factor. Peachy Canyon points out that in state court Molski did not prevail on his first cause of action for violation of the DPA. (§ 54.3.) The contention is without merit because Molski's first cause of action for violation of the DPA and his second cause of action for violation of the Unruh Civil Rights Act were necessarily alternative theories of relief. "A person may not be held liable for damages pursuant to both [Section 54.3, the DPA] and Section 52 [the Unruh Civil Rights Act] for the same act or failure to act." (§ 54.3, subd. (c).) Molski prevailed under the more difficult of the two theories. The Unruh Civil Rights Act requires a higher degree of proof and provides higher minimum statutory penalties than does the DPA. (Harris v. Capital Growth Investors XIV (1991) 52 Cal.3d 1142, 1149 [§ 51 claim requires proof of intentional discrimination]; § 52, subd. (a) [$4,000 minimum penalty for violation of § 52]; § 54.3 [$1,000 minimum penalty for violation of § 54].) The trial court did not abuse its discretion when it declined to reduce the lodestar based on limited success.
Peachy Canyon points out that DREES' claims were dismissed for lack of standing. The outcome of DREES' claims is irrelevant to Molski's success. If any of the claimed fees were incurred by DREES, rather than Molski, Peachy Canyon has not demonstrated that on this record. An exhibit itemizing the claimed fees was referred to in the declaration of Molski's counsel that was submitted to the trial court in support of his request for fees, but that exhibit was not included in appellant's appendix of the record. The evidence is presumed sufficient to support the judgment. (SFPP v. Burlington Northern & Santa Fe Ry. Co. (2004) 121 Cal.App.4th 452, 461-462.)
The trial court did not abuse its discretion when it declined to reduce the fee award based on professional misconduct of Molski's counsel. An attorney's breach of a rule of professional conduct may negate an attorney's claim for fees (Clark v. Milsap (1926) 197 Cal. 765, 785), but as Peachy Canyon concedes, a violation of ethical rules does not automatically preclude an award of fees (Pringle v. LaChappelle (1999) 73 Cal.App.4th 1000, 1005-1006), and "there must be a serious violation of the attorneys' responsibilities before an attorney who violates an ethical rule is required to forfeit fees." (Id. at p. 1006.) There was no finding by the trial court in this case that Molski's counsel committed an ethical violation. Peachy Canyon relied solely on a finding by a federal trial court in separate litigation between Molski and another defendant that Molski's form demand letter violated ethical rules against advising an unrepresented party with conflicting interests. (Molski v. Mandarin Touch Restaurant, supra, 359 F.Supp.2d at p. 929.)
In Molski v. Mandarin Touch Restaurant, supra, 359 F.Supp.2d 924,a district court declared Molski to be a vexatious litigant and subjected him and his attorney to pre-filing orders. The decision was based on findings that counsel's demand letters were unethical, that complaints filed in many of Molski's cases contained contrived and exaggerated injury claims designed to trigger insurance coverage, and that Molski and his counsel used delay tactics designed to inflate his claims in order to harass businesses into cash settlements. In a divided opinion, the Ninth Circuit affirmed the pre-filing orders. (Molski v. Evergreen Dynasty Corp. (2007) 500 F.3d 1047, 1060-1061.) The Ninth Circuit found the record sufficient to support the district court's discretionary findings that Molski and his counsel had exaggerated injuries and used tactics that were intended to harass business owners into cash settlements, such as delaying a year to file suit to increase daily damages claims. The Ninth Circuit did "not rely on the possible ethical violations [in the demand letter] as a ground for affirming the sanction imposed on [Molski's counsel]." (Id. at 1063.) The Ninth Circuit noted that a different federal district court had refused to declare Molski a vexatious litigant (Molski v. Rapazzini Winery (N.D. Cal. 2005) 400 F.Supp.2d 1208, 1212), and acknowledged that Molski's lawsuits had some merit because the establishments he sued were probably not in compliance with the ADA. (Molski v. Evergreen Dynasty Corp., at p. 1062.)
Whether Molski's counsel committed a serious ethical violation warranting forfeiture of fees in this case was a matter for the trial court's sole discretion. It was not bound to agree with the district court judge's evaluation of a similar demand letter in Molski v. Mandarin Touch Restaurant, supra, 359 F.Supp.2d 924, particularly when there was no pre-filing delay in this case. The award of the lodestar amount without use of a negative multiplier did not constitute an abuse of discretion.
Fees Incurred in Federal Litigation
Peachy Canyon contends that Molski should not have recovered fees incurred in federal court because he did not prevail there; Peachy Canyon obtained summary judgment. A plaintiff may be determined to be the prevailing party if the lawsuit acts as the catalyst motivating the defendant to modify its behavior or the plaintiff achieves the primary relief sought. (Donald v. Café Royale, Inc. (1990) 218 Cal.App.3d 168, 185.) A trial court has "discretion to award a fee that compensates work performed in a collateral action that may not have been absolutely necessary to the action in which fees are awarded but was nonetheless closely related to the action in which fees are sought and useful to its resolution." (Children's Hospital & Medical Center v. Bonta (2002) 97 Cal.App.4th 740, 779-790.)
The trial court acted within this discretion when it awarded fees incurred in the federal action. Peachy Canyon's motion for summary judgment in federal court was successful only because Peachy Canyon had fully remediated all alleged barriers to access. Molski's counsel declared that Peachy Canyon remediated all existing access violations after the federal action was filed, and that the federal action had been dismissed as moot before he could collect damages and fees pursuant to his state law claims. He also declared that he relied upon the work performed in the federal action in handling Molski's state law claims. His declaration does not distinguish fees incurred in federal court from those incurred in state court, but refers to the attached itemization of attorney and paraprofessional time which was not included in appellant's appendix of record. Appellant has not demonstrated an abuse of the trial court's discretion on this record.
The judgment is affirmed. Each side shall bear its own costs on appeal.
We concur: GILBERT, P.J., PERREN, J.