60 Cal.App.5th 396
Cal. Ct. App.2021Background:
- In July 2016 Pulliam bought a Certified Pre‑Owned 2015 Nissan that was advertised to have cruise control and 6‑way power‑adjustable seats; the vehicle lacked those features.
- The retail installment sales contract contained the FTC "Holder Rule" notice; TD Auto Finance later became the assignee/holder of the contract.
- Pulliam sued the dealership and TD asserting Song‑Beverly (implied warranty) and other claims; after a jury trial she prevailed on the Song‑Beverly claim and the court entered judgment for $21,957.25.
- Pulliam moved for attorney’s fees and sought $169,602 (lodestar $141,335 plus 0.2 multiplier) supported by firm billing statements and counsel declarations; defendants objected to proof of rates, sought apportionment, opposed the multiplier, and argued the Holder Rule capped recovery.
- The trial court awarded $169,602, declining apportionment (claims and facts were intertwined), accepting the lodestar and a modest multiplier, and found TD liable for fees; defendants appealed.
- The Court of Appeal affirmed: substantial evidence supported the lodestar and multiplier award; apportionment was not required; and the Holder Rule does not limit recovery of attorney’s fees from a creditor‑assignee.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Proof of hourly rates and lodestar | Rosner/firm billing statements (with rates) and declarations suffice to prove hours and prevailing rates | Counsel failed to establish Rosner’s hourly rate and prevailing community rates | Substantial evidence supported the lodestar; billing and declarations established rates and market reasonableness; trial court may rely on its market knowledge |
| Apportionment of fees (plaintiff won 1 of 6 claims) | No meaningful allocation possible because claims shared a common core of facts and intertwined theories | Fees should be reduced proportionally (e.g., by ~83%) because of limited success | No abuse of discretion refusing apportionment where claims arise from same facts/legal theory |
| Lodestar multiplier (0.2) | Modest multiplier justified by contingency risk, fronting costs, and defense tactics that complicated litigation | Multiplier improper because case was simple and not legally novel | No abuse of discretion; multiplier modest and supported by contingency risk and litigation complexity caused by defendants |
| Liability of assignee (TD) for attorney’s fees under the Holder Rule | Holder Rule’s cap on "recovery" applies to compensatory/consequential damages but does not limit statutory or otherwise allowable attorney’s fees; statutory remedy (Cal. Civ. Code §1459.5) supports fee recovery | Holder Rule’s phrase "recovery… shall not exceed amounts paid by the debtor" caps all recovery including attorney’s fees; FTC Rule Confirmation supports that interpretation | Court rejects Lafferty/Spikener reasoning: Holder Rule cap does not include attorney’s fees; FTC Rule Confirmation not entitled to dispositive deference under Kisor; TD liable for fees beyond amounts paid |
Key Cases Cited
- Ketchum v. Moses, 24 Cal.4th 1122 (Cal. 2001) (lodestar method and factors for augmenting fees with a multiplier)
- PLCM Group, Inc. v. Drexler, 22 Cal.4th 1084 (Cal. 2000) (reasonable hourly rate is that prevailing in the community)
- Kisor v. Wilkie, 139 S. Ct. 2400 (U.S. 2019) (limits and conditions on deference to agency interpretations)
- Lafferty v. Wells Fargo Bank, N.A., 25 Cal.App.5th 398 (Cal. Ct. App. 2018) (construed Holder Rule as capping recovery including attorney’s fees)
- Spikener v. Ally Financial, Inc., 50 Cal.App.5th 151 (Cal. Ct. App. 2020) (followed FTC Rule Confirmation; held Holder Rule cap applied to fees and discussed preemption)
- Robertson v. Fleetwood Travel Trailers of California, Inc., 144 Cal.App.4th 785 (Cal. Ct. App. 2006) (application of lodestar approach in Song‑Beverly/auto lemon cases)