Pasternack v. McCullough
B302137
| Cal. Ct. App. | Jun 25, 2021Background
- Pasternack sued McCullough for malicious prosecution; on appeal the denial of McCullough’s anti‑SLAPP motion was reversed and the case was remanded for attorney fees under Code Civ. Proc. § 425.16(c)(1).
- On remand McCullough (represented by Lewis Brisbois) sought $330,420, submitting declarations showing over 500 hours and asserted market rates of $300–$600/hr.
- Pasternack submitted evidence that McCullough’s insurer paid defense counsel a discounted block rate of $140/hr and argued the award should be capped at the amount actually paid.
- The trial court used the lodestar method, reduced claimed hours and lowered one partner’s rate from $600 to $250/hr, awarded $146,010, and rejected the $140/hr “package” rate as the proper market rate.
- Pasternack’s motion for reconsideration was denied and he appealed, arguing the court should not award rates exceeding the insurer‑paid rate and that the fee award was unreasonable.
- The Court of Appeal affirmed, holding a trial court may use prevailing market rates under the lodestar method even if they exceed rates actually paid by an insurer and that the trial court did not abuse its discretion here.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a prevailing defendant’s fee award under §425.16 may exceed the hourly rate actually paid by the defendant’s insurer | Pasternack: the award must be capped at the amount actually paid (paid‑in‑full/make‑whole approach) | McCullough: lodestar uses reasonable market rates; discounted insurer rates do not limit recovery | Court: Lodestar market‑rate standard controls; trial court may award rates above insurer‑paid rates; no per se cap |
| Whether the trial court abused its discretion in determining reasonable hours and hourly rates | Pasternack: trial court should have used $140/hr and reduced fees accordingly | McCullough: trial court properly evaluated declarations and adjusted hours/rates | Court: No abuse of discretion; trial court reasonably reduced hours and rates and rejected narrow focus on package rate |
| Whether the award ‘‘shocks the conscience’’ or reflects passion/prejudice | Pasternack: fee amount was excessive relative to work and insurer payment | McCullough: award was substantially reduced from request and within court’s discretion | Court: Award did not shock the conscience; presumption supports trial court valuation |
| Whether use of lodestar adjustments/enhancements was improper here | Pasternack: some components were improper enhancements/unrelated work | McCullough: lodestar and reductions were proper; no impermissible enhancement | Court: Pasternack forfeited some arguments; court did not add an enhancement and the fee determination was proper |
Key Cases Cited
- PLCM Group, Inc. v. Drexler, 22 Cal.4th 1084 (lodestar market‑rate method appropriate; contractual or in‑house/discounted rates do not automatically limit fee awards)
- Ketchum v. Moses, 24 Cal.4th 1122 (anti‑SLAPP fee provisions interpreted to use lodestar approach)
- Chacon v. Litke, 181 Cal.App.4th 1234 (market rate governs even if attorney charged discounted or contingency arrangements)
- Nemecek & Cole v. Horn, 208 Cal.App.4th 641 (declined to cap awarded rate at insurer‑paid rate; market rate control)
- Syers Properties III, Inc. v. Rankin, 226 Cal.App.4th 691 (trial court may determine relevant market and award rates exceeding insurer discounts)
- Horsford v. Board of Trustees of California State University, 132 Cal.App.4th 359 (verified attorney time records entitled to credence absent clear error)