Garedakis v. Brentwood Union School District

Filing 293

ORDER re 239 MOTION for Attorney Fees /Defense Costs filed by Margo Olson, Merrill Grant, Brian Jones, Margaret Kruse, Lauri James, Jean Anthony, Brentwood Union School District. Signed by Judge Hamilton on 7/13/2017. (pjhlc1, COURT STAFF) (Filed on 7/13/2017)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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MICHAEL GAREDAKIS, et al.,

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United States District Court
Northern District of California

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Case No. 14-cv-04799-PJH

Plaintiffs,

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v.

BRENTWOOD UNION SCHOOL
DISTRICT, et al.,

ORDER RE BRENTWOOD UNION
SCHOOL DISTRICT DEFENDANTS'
MOTION FOR ATTORNEY'S FEES

Defendants.
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On February 24, 2017, the court issued an order (Doc. 282) granting the motion of

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defendants Brentwood Union School District, Lauri James, Brian Jones, Jean Anthony,

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Margo Olson, Margaret Kruse, and Merrill Grant (“Brentwood defendants”) for defense

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costs including attorney’s fees pursuant to California Code of Civil Procedure § 1038. In

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their motion, originally filed on July 13, 2016 (Doc. 239), defendants requested

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$578,854.20 in fees and costs. In the February 24, 2017 order, the court deferred ruling

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on the amount of the award pending further briefing.

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Under the California Tort Claims Act (“CTCA”), Cal. Gov’t Code § 810, et seq., a

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person who wishes to sue a public entity “for money or damages” based on a state-law

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cause of action relating to personal injuries must first present a claim to the entity within

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six months of the date the cause of action accrues. See Cal. Gov’t Code §§ 911.2,

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945.4. Compliance with the CTCA filing requirements is mandatory. Cal. Gov't Code

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§ 945.4. Failure to present a claim within this six month period is a bar to future tort suits.

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See San Jose v. Superior Court, 12 Cal. 3d 447, 455 (1974); Renteria v. Juvenile Justice,

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135 Cal. App. 4th 903, 908-09 (2006).
Here, some of the plaintiffs filed no CTCA claims at all; others filed CTCA claims,

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but the claims were denied by the Brentwood Union School District as untimely, and none

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of those plaintiffs sought leave to file a late claim or attempted to appeal the denial.

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California Code of Civil Procedure § 1038 “provides public entities with a protective

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remedy for defending against unmeritorious litigation.” Knight v. City of Capitola, 4 Cal.

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App. 4th 918, 931 (1992) (citation and quotation omitted). Section 1038 permits a public

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entity to recover defense costs, including attorney’s fees, from a plaintiff who files a civil

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action under the CTCA without “reasonable cause” or a “good faith belief that there was a
justifiable controversy under the facts and law which warranted the filing of the

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United States District Court
Northern District of California

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complaint[.]” Cal. Civ. P. Code § 1038.

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Here, the basis for defendants’ motion for fees and costs was that plaintiffs had

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asserted state-law claims against them in the present action but had failed to submit

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timely claims under the CTCA before filing suit. The request for fees and costs under

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§ 1038 was based solely on work performed by defendants’ counsel in defending against

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the state law claims.

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Plaintiffs made various arguments in opposition to defendants’ motion. The only

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argument that the court found to be potentially meritorious was plaintiffs’ contention that

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even if the Brentwood defendants were entitled to fees and costs, the award should be

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reduced because of plaintiffs' limited financial resources and their inability to pay the

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claimed amount. Plaintiffs attached declarations from the parents of the minor plaintiffs,

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but the court found that those declarations did not include sufficient information.

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The court found that the Brentwood defendants were entitled to fees and costs

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under § 1038. The court deferred ruling on the amount of the award, and requested that

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the parties provide any available California authority on the subject of whether the court

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should take plaintiffs' financial condition into account in determining the amount of an

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award of fees and costs under § 1038, and also requested that plaintiffs provide

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additional declarations supporting their claim that they lack sufficient financial resources
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to pay the fees and costs owed to the Brentwood defendants. The court specified that

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the declarations should be similar to the affidavits required in this district of plaintiffs

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seeking to proceed with a lawsuit in forma pauperis, with supporting documentation

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showing their income and financial resources.

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On March 17, 2017, plaintiffs filed a supplemental brief. Plaintiffs concede that

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they have uncovered no California authority authorizing the court to consider a plaintiff's

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financial resources when deciding whether to award fees and costs under § 1038, but

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argue that the court should apply "strong public policies" under Federal Rule of Civil

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Procedure 54 to prevent the imposition of potentially financially ruinous fee awards.
Plaintiffs acknowledge that in an action involving state law claims, a federal court applies

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Northern District of California

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the law of the forum state to determine entitlement to attorney's fees, but assert that this

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is true only if the state law does not conflict with a valid federal statute or procedural rule.

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They contend that they have shown in their declarations that paying the fees

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requested by defendants would ruin them financially, and assert that imposition of such a

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sum ($115,770.84 per family) would conflict with "clearly expressed policy" of federal

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courts in applying Rule 54(d)(1). The contend that under Rule 54(d)(1), the court has

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discretion to decline to award fees and costs to a prevailing party, which they urge the

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court to do in this case.

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Plaintiffs also argue that because district courts in federal civil rights cases are

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required to consider the financial resources of the plaintiffs in awarding fees to prevailing

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defendants under 42 U.S.C. § 1988 (applicable to claims under 42 U.S.C. § 1983, Title VI

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of the Civil Rights Act of 1964, and § 504 of the Rehabilitation Act) and 42 U.S.C.

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§ 2000e-5 (applicable to claims under Title VII of the Civil Rights Act of 1964), the court

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here should do the same.

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Plaintiffs have submitted declarations from Danielle Gullo (parent and guardian ad

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litem of B.G.), Lawrence Gullo (parent of B.G.), Michael Garedakis (parent and guardian

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ad litem of M.G.), Yolanda Jackson (guardian ad litem of A.G.), Ahmad Razaqi (parent of

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E.R.), Dania Razaqi (parent and guardian ad litem of E.R.), and Viviana Rose (parent
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and guardian ad litem of B.R.). In their declarations, plaintiffs all assert that they do not

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have the financial resources to pay defendants’ fees and costs.

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The Brentwood defendants argue that the court should reject plaintiffs’ proposal

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that the court consider their financial resources based on federal case law interpreting the

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attorney's fees provisions contained in § 1988 and Title VII. In particular, defendants

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note, those federal statutes expressly grant the trial court the discretionary authority to

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award fees ("in its discretion, the court may allow"), whereas § 1038 is not discretionary,

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as it provides that an award of defense costs including attorney's fees is mandatory after

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entry of summary judgment and upon a finding that a claim against a public entity is
frivolous or brought in bad faith ("the court shall render judgment in favor of that party in

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Northern District of California

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the amount of all reasonable and necessary defense costs"). Thus, defendants argue,

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federal courts' interpretations of § 1988 – including the provision that a plaintiff's financial

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condition should be taken into consideration as part of the court's discretionary authority

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to award fees – simply do not apply in this context.

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Additionally, defendants assert, plaintiffs have failed to provide the financial

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information requested by the court, as they have not submitted declarations similar to the

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affidavits required in this district of plaintiffs seeking to proceed in forma pauperis. For

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example, defendants note, plaintiffs have not provided information regarding whether

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they own a home, and if so, the value of that home, and have not specified the present

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value of their bank accounts or other financial accounts or property.

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The court already determined that the Brentwood defendants are entitled to

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recover fees and costs under Code of Civil Procedure § 1038, because plaintiffs pursued

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the state-law claims without reasonable cause. Reasonable cause exists “if the claim is

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legally sufficient and can be substantiated by competent evidence.” Antounian v. Louis

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Vuitton Malletier, 189 Cal.App.4th 438, 449 (2010). Reasonable cause to file the state-

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law claims in the present action did not exist because, as indicated above, the filing a

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timely CTLA claim is a prerequisite to filing a lawsuit seeking tort damages against a

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public entity.
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Thus, given that the court has already determined that the Brentwood defendants

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are entitled to recover fees and costs under § 1038, plaintiff's contention that the court

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should ignore § 1038 and apply a standard derived from Rule 54 and federal civil rights

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fee-shifting statutes is misplaced and non-responsive. In addition, as defendants

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correctly point out, an award of fees/costs under § 1038 is mandatory, whereas the

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decision whether to award fees under the federal fee-shifting statutes rests with the

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discretion of the district court.

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As for the amounts plaintiffs should be required to pay, there is no California

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authority holding that the court should consider the losing party's ability to pay in reaching
that determination. This alone is sufficient to deny plaintiffs’ request that the court

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Northern District of California

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consider their financial resources and ability to pay. While the court has discretion to

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determine whether the hours claimed by counsel were “reasonably and necessarily

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incurred,” see Cal. Civ. P. Code § 1038(a), the court has no discretion in determining

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whether to award fees and costs: “If the court should determine that the proceeding was

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not brought in good faith and with reasonable cause, . . . the court shall render judgment

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in favor of [the defendant] in the amount of all reasonable and necessary defense

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costs[.]” Cal. Civ. P. Code § 1038(a) (emphasis added). Thus, the only discretion is with

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regard to determining which costs were reasonably and necessarily incurred by

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defendants.

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In their opposition to the Brentwood defendants’ motion, plaintiffs did not challenge

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the time spent or the number of hours claimed. In this court’s experience, the billing rates

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claimed by defendants’ counsel were extremely low for a Bay Area law firm – in the range

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of 50% or less than the rates claimed in attorney’s fees motions generally. In addition,

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the court has reviewed the declarations of defendants’ counsel and the attached

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materials, including counsel’s detailed time records (Docs 239-1 to 239-9), and finds the

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amounts claimed to have been reasonably and necessarily incurred by defendants in

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connection with their defense against the state-law claims.

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Plaintiffs declarations do not comply with the court’s instruction to submit
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information similar to the information the court requires of plaintiffs seeking to proceed in

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forma pauperis. Nevertheless, the adequacy of the declarations is a moot point, as the

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award of fees under § 1038 to a prevailing public entity defendant is mandatory, and

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there is no statutory or case authority requiring the court to consider the financial

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resources of the losing plaintiffs.

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Finally, it may be that plaintiffs pursued the state-law claims without first filing
timely CTLA claims solely on advice of counsel, without having any understanding of the

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CTLA requirements. Thus, it would arguably be more equitable if the burden of paying

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the fees were shifted to plaintiffs' counsel. The Brentwood defendants suggested in their

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reply to plaintiffs’ opposition to the original motion for fees and costs that the court should

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Northern District of California

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consider ordering plaintiffs’ counsel to pay the fees as a sort of sanction, but as the court

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noted in the February 24, 2017, order, defendants filed a motion seeking relief under

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§ 1038, not under 28 U.S.C. § 1927 or pursuant to the court's inherent power.

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As for § 1038, while the statute is silent on whether defense costs may be

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imposed on counsel, the California Court of Appeal has held that a court may not impose

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§ 1038 defense costs on a plaintiff's attorney even if counsel lacked reasonable cause

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and good faith in filing or maintaining a tort action against a public entity. Settle v. State

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of Calif., 228 Cal. App. 4th 215, 219 (2014); see also Suarez v. City of Corona, 229 Cal.

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App. 4th 325, 333-34 (2014).
CONCLUSION

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In accordance with the foregoing, the court GRANTS the Brentwood defendants’

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motion for fees and costs under California Code of Civil Procedure § 1038, in the amount

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of $578,854.20.

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IT IS SO ORDERED.

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Dated: July 13, 2017

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__________________________________
PHYLLIS J. HAMILTON
United States District Judge
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