Judge: Martha K. Gooding, Case: 2018-01006762, Date: 2022-10-03 Tentative Ruling
1) Motion for Attorney Fees
2) Motion to Strike or Tax Costs
These motions were continued from September 19, 2022.
1) Motion for Attorney Fees
2) Motion to Strike or Tax Costs
The Motion by Defendants Phillip Bellafaire and Semit Properties, LLC for attorneys’ fees against Plaintiff Hipolito Lopez under Government Code section 12965(c)(6) is DENIED.
Plaintiff’s motion to strike Defendants’ memorandum of costs is GRANTED.
This is an action for disability discrimination, various causes of action under the FEHA, and wrongful termination.
Plaintiff filed and served four doe amendments adding as defendants to this action Phillip Bellafaire (Doe 1), Saddleback Electric Cars, Inc. (Doe 2), Bellafaire Enterprises, Inc. (Doe 3), and Semit Properties, LLC (Doe 4) (collectively, the “Doe Defendants”). Plaintiff alleged they are liable as alter egos of Saddleback Golf Cars, Inc.
The Court tried the alter ego issue first, leaving liability and damages to be tried before a jury in a bifurcated trial.
At the alter ego trial, Defendants informed the Court that Defendants Bellafaire Enterprises, Inc., Saddleback Electric Cars, Inc., and Saddleback Golf Cars, Inc. are one and the same, effectively conceding the alter ego issue as to them. [ROA #401.] The Court therefore proceeded to try the alter ego issues as to Defendants Phillip Bellafaire and Semit Properties, LLC. [Id.] The Court found that Plaintiff did not show either a unity of interest or that failing to disregard the corporate entities would work a fraud or promote injustice. [ROA #398.]
Prevailing Defendants filed the pending motion for attorneys’ fees in the amount of $61,763.00 and a memorandum of costs for $1,110.00. [ROA #507.]
In a civil FEHA action, “the court, in its discretion, may award to the prevailing party, including the department, reasonable attorney's fees and costs, including expert witness fees, except that, notwithstanding Section 998 of the Code of Civil Procedure, a prevailing defendant shall not be awarded fees and costs unless the court finds the action was frivolous, unreasonable, or groundless when brought, or the plaintiff continued to litigate after it clearly became so.” (Gov. Code, § 12965(c)(6).)
Awarding attorney fees and costs to a prevailing defendant should not be permitted routinely, simply because defendant succeeds, but only where the action brought is found to be unreasonable, frivolous, meritless, or vexatious. (Cummings v. Benco Building Services (1992) 11 Cal.App.4th 1383, 1387, citing Christiansburg Garment Co. v. E.E.O.C. (1978) 434 U.S. 412, 421.)
“For these reasons, we conclude the Christiansburg standard applies to discretionary awards of both attorney fees and costs to prevailing FEHA parties under Government Code section 12965(b). To reiterate, under that standard a prevailing plaintiff should ordinarily receive his or her costs and attorney fees unless special circumstances would render such an award unjust. (Christiansburg, supra, 434 U.S. at pp. 416–417, 98 S.Ct. 694.) A prevailing defendant, however, should not be awarded fees and costs unless the court finds the action was objectively without foundation when brought, or the plaintiff continued to litigate after it clearly became so. (Id. at pp. 421–422, 98 S.Ct. 694.)” (Williams v. Chino Valley Independent Fire Dist. (2015) 61 Cal.4th 97, 115.)
The term meritless “is to be understood as meaning groundless or without foundation, rather than simply that the plaintiff has ultimately lost his case, and that the term ‘vexatious’ in no way implies that the plaintiff's subjective bad faith is a necessary prerequisite to a fee award against him.” (Cummings vs. Benco Building Services, 11 Cal.App.4th at 1387.)
“[L]ack of merit is not a proper standard for awarding fees against a losing plaintiff.” (Villanueva v. City of Colton (2008) 160 Cal.App.4th 1188, 1203.)
“Because the majority of cases under the FEHA involve litigants who would not have the financial means to prosecute this type of case, the public policy behind the FEHA is served by not discouraging them from pursuing the litigation by potentially imposing fees that could easily devastate them financially simply because a few file frivolous claims. Thus, a plaintiff's ability to pay must be considered before awarding attorney fees in favor of the defendant.” (Id.)
This same standard applies to a prevailing defendant seeking costs in a FEHA case. (Williams v. Chino Valley Independent Fire Dist. (2015) 61 Cal.4th 97, 99-100.)
Government Code section 12965(c)(6) applies here.
In his Complaint, Plaintiff alleges five causes of action for violation of California Fair Employment and Housing Act ("FEHA"), a cause of action for declaratory relief based on FEHA, a cause of action for wrongful termination in violation of public policy that is based on FEHA violations, and a cause of action for failure to permit inspection of personnel and payroll records. In short, Plaintiff’s complaint is essentially a FEHA action.
Plaintiff’s opposition to the fee motion and motion to strike does not argue that section 12965(c) is not applicable. Plaintiff argues only that his action against Phillip Bellafaire and Semit Properties was not frivolous. He also contends he does not have the ability to pay an award. [Lopez Decl., ROA #537.]
The Court notes that Plaintiff’s case against Phillip Bellafaire and Semit Properties as alter egos was not strong, although at trial Defendants agreed that two other defendants were in fact alter egos of Saddleback Golf Cars, Inc. – which suggests that Plaintiff’s alter ego allegations were not wholly lacking in merit.
Ultimately, however, the Court need not decide whether Plaintiff’s action against Phillip Bellafaire and Semit Properties was frivolous, as the Court finds that, in any event, Plaintiff has shown he does not have the ability to pay the fees or costs requested.
In his declaration, Plaintiff testifies he earns approximately $2,150.00/month and is the sole support for himself and his ill wife, who is unable to work and requires treatments and medication. [Lopez Decl., ¶¶ 3-5.] Additionally, Plaintiff was recently diagnosed with skin cancer and does not know if or how much it will affect his ability to work. [Id., ¶ 6.]
Defendants do not counter this evidence. Instead, Defendants make three arguments.
First, Defendants request that discovery be re-opened for them to take a limited deposition of Plaintiff on his ability to pay.
Second, they contend Plaintiff’s inability to pay is irrelevant because any award of attorneys’ fees and costs to Defendants Semit Properties, LLC and Phillip Bellafaire can be used as an offset to any judgment Plaintiff Lopez obtains against Defendant Saddleback Golf Cars, Inc.
Third, Defendants assert that Plaintiff can demand that his attorneys’ pay any award since it was their advice that led him to assert and maintain a malicious prosecution against Defendants.
As to Defendants’ first point, Plaintiff points out that Defendants should have conducted – and did conduct - discovery into his lost wages for his FEHA case. So Defendants should already have evidence regarding his income and ability to pay.
Defendants’ second point, that a fee award can be used as an offset to Plaintiff’s judgment against Saddleback Golf Carts, is problematic. First, as Plaintiff points out, it is based on a wholly hypothetical scenario, since there is no such judgment at this point. Second, if Defendants are not alter egos of Saddleback Golf Carts, then it is difficult to see how a fee award for them could properly be used to offset a judgment against Saddleback Golf Carts.
Finally, Defendants’ assertion that Plaintiff can demand that his lawyers pay any fees and costs awarded against him is unsupported by any factual or legal analysis. On its face, it is not persuasive.
The Court finds Plaintiff has shown he cannot afford to pay the fees and costs requested. On that basis, the Court DENIES Defendants’ motion for attorneys’ fees and GRANTS Plaintiff’s motion to strike the memorandum of costs.
Plaintiff is ordered to give notice.