Calvo Fisher & Jacob LLP v. Lujan
234 Cal. App. 4th 608
Cal. Ct. App.2015Background
- David J. Lujan (Guam attorney) retained Calvo Fisher & Jacob (formerly Calvo & Clark) in 2009 via an engagement letter to defend/prosecute multiple matters (Hawaii, California, Guam, guardianship reopening) arising from litigation over the Hillblom estate and related trust disputes.
- Substantial fees were incurred; Lujan paid about $326,180 and disputed the remainder. Calvo sued for unpaid fees and prevailed at jury trial, obtaining $945,947.90 in damages and prejudgment interest; the judgment reserved costs and fees for later determination.
- Calvo filed a memorandum of costs (seeking among other things $123,227 in expert witness fees under Code Civ. Proc. § 998) and a motion for attorney fees under the engagement letter’s collection-fees clause, seeking roughly $1.53 million.
- The trial court denied most cost-tax challenges, awarded Calvo $123,227 in expert fees based on the § 998 offer, and granted attorney fees of $1,532,674.81; appellate court modified award by $210 (clerical) and affirmed.
- Central factual/legal posture: whether the contractual collection-fees clause permitted recovery of fees incurred defending against Lujan’s cross-claims and whether the § 998 offer was valid and supported the expert-fee award.
Issues
| Issue | Plaintiff's Argument (Calvo) | Defendant's Argument (Lujan) | Held |
|---|---|---|---|
| Whether Calvo could recover attorney fees beyond fees incurred to prosecute its breach-of-contract claim (i.e., fees defending against Lujan’s cross-claims) | Engagement letter’s collection-fees clause covers "costs of collection" and authorizes fees for proceedings needed to collect fees, including defending intertwined cross-claims | Fees should be limited to those incurred to pursue the contract claim; fees for noncontract causes (e.g., malpractice) are not recoverable | Court held the fee clause covered fees here: defense of cross-claims was necessary and inextricably intertwined with collection; award affirmed (minus $210 clerical error) |
| Whether the trial court abused discretion by failing to apportion fees between contract and noncontract work | Apportionment not required where claims are inextricably intertwined or defense of noncontract claims is necessary to succeed on contract claim | Apportionment required because some work related solely to noncontract claims | Court held apportionment was discretionary; given intertwined claims and record, refusing to apportion was not an abuse of discretion |
| Whether the § 998 offer was made in bad faith because it was silent about attorney fees | A § 998 can be silent on attorney fees; a higher verdict than the offer is prima facie evidence the offer was reasonable | Offer was defective in bad faith for not addressing fees and unfairly left ambiguity about releases and scope | Court rejected bad-faith claim: silence on fees is not per se bad faith; verdict exceeding offer supports reasonableness |
| Whether the § 998 offer was ambiguous (release scope and whether it covered cross-claims) | Offer expressly required dismissal with prejudice of all causes of action against Calvo in Lujan’s cross-complaint and a general release; thus clear | Offer left ambiguity (especially about general release terms) and could create post-acceptance disputes | Court held the offer was not ambiguous: language explicitly addressed dismissal of Calvo-related cross-claims and included a general release as part of the offer |
Key Cases Cited
- Ketchum v. Moses, 24 Cal.4th 1122 (discusses lodestar and abuse-of-discretion standard for fee awards)
- PLCM Group, Inc. v. Drexler, 22 Cal.4th 1084 (standards for fee calculation and review)
- Serrano v. Priest, 20 Cal.3d 25 (trial judge deference on value of professional services)
- Finalco, Inc. v. Roosevelt, 235 Cal.App.3d 1301 (contract fee clause may cover defense against cross-claims when necessary to collect)
- Siligo v. Castellucci, 21 Cal.App.4th 873 (defense of noncontract claims may be compensable when necessary to enforce contract)
- Maxim Crane Works, L.P. v. Tilbury Constructors, 208 Cal.App.4th 286 (apportionment not required when claims are inextricably intertwined)
- Reynolds Metals Co. v. Alperson, 25 Cal.3d 124 (attorney’s fees need not be apportioned for work on issues common to compensable and noncompensable claims)
- Ritzenthaler v. Fireside Thrift Co., 93 Cal.App.4th 986 (§ 998 silence on fees does not preclude later recovery of contractual or statutory fees)
- Engle v. Copenbarger & Copenbarger, 157 Cal.App.4th 165 (discusses whether a § 998 offer must expressly exclude fees to be effective)