Justia Legal Ethics Opinion Summaries

Mikhaeilpoor sued BMW and an auto dealership, asserting claims under the Song-Beverly Act (Civ. Code, 1790) stemming from her lease of a 2013 BMW. Mikhaeilpoor alleged that the defendants: failed to promptly replace her car or make restitution; failed to commence repairs aimed at conforming the car to its warranty; failed to make available adequate service and repair facilities; and breached express and implied warranties. A jury awarded $17,902.54 in compensatory damages and $17,902.54 in civil penalties. Mikhaeilpoor sought attorney fees of $344,639 under section 1794(d): $226,426, plus a 0.5 multiplier enhancement and $5,000 for the fee resolution process. Her motion was opposed as vastly overstating the work performed with excessive hourly rates and an unwarranted adjustment.The judge “went through all the bills” and was “aghast” that counsel sought $343,000 in fees for “a very simple case.” The court did not consider whether Mikhaeilpoor should have accepted a Code of Civil Procedure section 998 offer, but calculated 225 hours at a $350 hourly rate and found that $95,900 was the reasonable amount of attorney fees. The court of appeal affirmed. The trial court was in the best position to evaluate the professional services rendered before it; its decision is supported by substantial evidence. View "Mikhaeilpoor v. BMW of North America, LLC" on Justia Law

Reynolds purchased a Ford truck. Over the next six years, Reynolds had the truck repaired 15 times but it continued to malfunction. Ford denied Reynolds’s request that it buy back or replace the truck under the Song-Beverly Act. Reynolds filed suit, raising several claims, including one under the Song-Beverly Act. The parties settled for $277,500.00. Ford agreed to “pay [Reynolds’s ] attorney’s fees, costs, and expenses pursuant to Civil Code section 1794(d) in an amount determined by the Court ... to have been reasonably incurred by [Reynolds].” Reynolds sought fees of $308,696.25. Reynolds had retained counsel on a contingency fee basis.The court conducted a lodestar analysis and awarded $201,891--compensation for 457.85 hours at reasonable hourly rates ($225-500/hour), plus a lodestar multiplier of 1.2, “reasonable and appropriate" to the objectives of the Act. The court ruled Reynolds had no obligation to disclose the terms of the retainer agreement: “Many statutory fee-award provisions begin with the lodestar method but are governed by the specific statutory requirement that the final fee award be ‘reasonable’ in nature. No such requirement is found in the Song-Beverly Act. The fee award must be based on the court’s calculation of the ‘actual time expended ... determined by the court to have been reasonabl[y] incurred. ... The court does not have the discretion to consider whether plaintiff’s attorney received additional compensation by ... a separate retaine[r] agreement.The court of appeal affirmed. Ford's concern that it is improper for a court to disregard a potential contingency fee award in determining the statutory fee under section 1794 is a question “more appropriately directed to the Legislature.” View "Reynolds v. Ford Motor Co." on Justia Law

Spiegel served as a homeowners’ association directed until the members voted him out. The association sued Spiegel in Illinois state court, alleging that he falsely held himself out as president, attempted to unilaterally terminate another board member, froze the association’s bank accounts, sent unapproved budgets to unit owners, and filed unwarranted lawsuits on behalf of the association. The association sought to enjoin Spiegel from interfering with board decisions or holding himself out as a director and to recover damages, costs, and attorneys’ fees. A declaration that Spiegel signed when he bought his unit provided that owners who violated the board’s rules or obligations would pay any damages, costs, and attorneys’ fees that the association incurred as a result. Spiegel filed complaints and motions against the association, its lawyers, and other residents. The state court dismissed his claims and enjoined him from interfering with the board’s activities, characterizing Spiegel’s filings as “a pattern of abuse, committed for an improper purpose to harass, delay and increase the cost of litigation.” The court ordered Spiegel to pay $700,000 in fees and sanctions.Spiegel filed this federal suit against the association’s counsel, citing the Fair Debt Collection Practices Act, 15 U.S.C. 1692a(5). The district court dismissed, concluding that the attorneys’ fees Kim requested were not a “debt” within the meaning of the FDCPA. The Seventh Circuit affirmed. An award of attorneys' fees does not constitute a “debt” under the FDCPA’s limited, consumer-protection-focused definition. View "Spiegel v. Kim" on Justia Law

Van Hoven, a Michigan attorney, defaulted on a credit card debt. The Buckles law firm, collecting the debt, won a state court lawsuit. Van Hoven did not pay. Buckles filed four requests for writs of garnishment. Van Hoven says those requests violated the Michigan Court Rules by including the costs of the request ($15 filing fee) in the amount due and, in later requests, adding the costs of prior failed garnishments. Van Hoven filed a class-action lawsuit under the Fair Debt Collection Practices Act, which prohibits debt collectors from making false statements in their dunning demands, 15 U.S.C. 1692e. Years later, after “Stalingrad litigation” tactics, discovery sanctions, and professional misconduct allegations, Van Hoven won. The court awarded 168 class members $3,662 in damages. Van Hoven’s attorneys won $186,680 in attorney’s fees.The Sixth Circuit vacated. When Buckles asked for all total costs, including those of any garnishment request to date, it did not make a “false, deceptive, or misleading representation.” It was a reasonable request at the time and likely reflected the best interpretation of the Michigan Rules. The court remanded for determinations of whether Buckles made “bona fide” mistakes of fact in including certain costs of prior failed garnishments and whether its procedure for preventing such mistakes suffices. In some instances, Buckles included the costs of garnishments that failed because the garnishee did not hold any property subject to garnishment or was not the debtor’s employer. View "Van Hoven v. Buckles & Buckles, P.L.C." on Justia Law

Plaintiff filed suit against MBUSA under the Song-Beverly Consumer Warranty Act after the navigation system in the vehicle he leased from MBUSA experienced recurring problems. The jury found that the vehicle had a substantial impairment and that MBUSA failed to repair or replace the vehicle. Plaintiff did not lease the vehicle for his own use, but for his friend, Arjang Fayaz, who was the primary driver. The jury awarded damages solely to Fayaz. Both plaintiff and Fayaz moved for attorney fees as prevailing parties. The trial court granted the motion as to Fayaz only, and limited the award to fees incurred while Fayaz was a party to the case.The Court of Appeal reversed and held that the Act provides that successful plaintiffs are entitled to collect attorney fees based on actual time expended, determined by the court to have been reasonably incurred by the buyer in connection with the commencement and prosecution of such action. In this case, plaintiffs successfully proved to a jury that the vehicle was defective in breach of MBUSA's express warranty, MBUSA failed to repair or replace it, and damages resulted from MBUSA's breach. Therefore, the jury award did not support the trial court's holding and the court remanded for a hearing to determine a reasonable fee award. View "Patel v. Mercedes-Benz USA" on Justia Law

Wolfington brought a claim under the Truth in Lending Act, 15 U.S.C. 1601, stemming from reconstructive knee surgery he received from Reconstructive Orthopaedic Associates (the Rothman Institute). Wolfington alleged that Rothman failed to provide disclosures required by the Act when it permitted him to pay his deductible in monthly installments following surgery. The district court entered judgment, rejecting Wolfington’s claim because it determined he had failed to allege that credit had been extended to him in a “written agreement,” as required by the Act’s implementing regulation, Regulation Z. The court also sua sponte imposed sanctions on Wolfington’s counsel. The Third Circuit affirmed in part, agreeing that Wolfington failed to adequately allege the existence of a written agreement, but concluded that counsel’s investigation and conduct were not unreasonable. In imposing sanctions, the district court placed emphasis on the statement by Rothman’s counsel, not Wolfington’s. The statement by Wolfington’s counsel did not amount to an “unequivocal” admission that there was no written agreement. View "Wolfington v. Reconstructive Orthopaedic Associates II, PC" on Justia Law

The Rodenburg Law Firm appealed a judgment dismissing its action against Kathy Sira, Mikhail Usher, and the Usher Law Group, P.C., for malicious prosecution, abuse of process, and exemplary damages. Sira initiated a Fair Debt Collection Practices Act (“FDCPA”) action against Rodenburg in New Jersey federal court, alleging Rodenburg, a North Dakota law firm, engaged in harassment and abusive debt collection tactics and violated 15 U.S.C. 1692 et. seq. Sira’s action was ultimately dismissed by agreement of the parties. After the dismissal of Sira’s action, Rodenburg sued Sira and her attorney, Usher and the Usher Law Group, in this action, alleging malicious prosecution. Rodenburg subsequently amended its complaint to include claims for abuse of process and exemplary damages. After a bench trial, the district court dismissed Rodenburg’s claims. The court found Sira lived in New Jersey, her allegations in the federal FDCPA action stated a claim for relief, and her allegations were based on reasonable trustworthy information made after a reasonable inquiry under the circumstances. The court found Sira’s lawsuit was not for an improper purpose and was not an abuse of process. The court also found her lawsuit was not a malicious prosecution because there was probable cause for the action and there was no malice. The North Dakota Supreme Court concluded the district court did not clearly err in dismissing Rodenburg’s claims for abuse of process and malicious prosecution. View "Rodenburg Law Firm v. Sira, et al." on Justia Law

Paz defaulted on a $695 credit card debt. PRA, a debt collector, purchased the debt and attempted to collect but violated the Fair Debt Collection Practices Act by failing to report that Paz disputed the debt. Paz filed suit in June 2014. PRA invoked FRCP 68, offering to eliminate the debt and pay Paz $1,001 plus reasonable attorneys’ fees and costs as “agreed ... and if no agreement can be made, to be determined by the Court.” The agreement stated that “[t]his … is not to be construed as an admission that ... Plaintiff has suffered any damage.” Paz accepted PRA’s offer. Counsel agreed to attorneys’ fees of $4,500. PRA nonetheless continued to report Paz’s debt to credit reporting agencies, even confirming its validity in response to inquiries. Paz filed another lawsuit and unsuccessfully attempted to add class claims. PRA again invoked Rule 68, offering $3,501 on the same terms as the first settlement. Paz never responded. The court limited the claims allowed to go to trial. Days before trial, PRA offered Paz $25,000 plus attorneys’ fees and costs. Paz rejected the offer. A jury found for Paz but determined that Paz had sustained no actual damages, so his recovery was limited to $1,000 in statutory damages for his FDCPA claim. Paz sought $187,410 in attorneys’ fees and $2,744 in costs, 15 U.S.C. 1692(k)(a)(3). The Seventh Circuit affirmed an award of $10,875, reasoning that Paz’s rejection of meaningful settlement offers precluded a fee award so disproportionate to his recovery. View "Paz v. Portfolio Recovery Associates, LLC" on Justia Law

Abdollahzadeh opened an MBNA credit-card account in 1998. He defaulted on the debt, making his last payment in August 2010. In June 2011 he attempted another payment that never cleared. In April 2013 MBNA sold his account to CACH, which referred Abdollahzadeh’s debt to Mandarich, a debt-collection law firm. CACH identified the later, unsuccessful payment attempt as the last payment on the account. Relying on this date, Mandarich sent Abdollahzadeh a collection letter in December 2015. Mandarich sued when it received no response. The state court dismissed the suit because the last payment to clear occurred outside of Illinois’s five-year statute of limitations. Abdollahzadeh sued Mandarich for attempting to collect a time-barred debt (Fair Debt Collection Practices Act, 15 U.S.C. 1692). The court granted Mandarich summary judgment, concluding that the violations were unintentional and occurred despite reasonable procedures aimed at avoiding untimely collection attempts. The Seventh Circuit affirmed, rejecting Abdollahzadeh’s arguments that Mandarich’s continuation of the collection action after it learned the true last-payment date created a factual dispute on the issue of intent; that the firm’s reliance on CACH’s representations about the last-payment date was an abdication of its duty to engage in meaningful review; and that the firm’s procedures for weeding out time-barred debts were insufficient to support the affirmative defense. The bona fide error defense doesn’t require independent verification and procedural perfection. Mandarich had procedures in place that were reasonably adapted to avoid late collection efforts. View "Abdollahzadeh v. Mandarich Law Group, LLP" on Justia Law

Plaintiffs-appellants Jamie and Kelly Etcheson brought an action under the Song-Beverly Consumer Warranty Act (commonly known as the "lemon law") against defendant and respondent FCA US LLC (FCA) after experiencing problems with a vehicle they had purchased new for about $40,000. After admitting the vehicle qualified for repurchase under the Act, FCA made two offers to compromise under Code of Civil Procedure section 998: one in March 2015, to which plaintiffs objected and the trial court found was impermissibly vague, and a second in June 2016, offering to pay plaintiffs $65,000 in exchange for the vehicle's return. Following the second offer, the parties negotiated a settlement in which FCA agreed to pay plaintiffs $76,000 and deem them the prevailing parties for purposes of seeking an award of attorney fees. Plaintiffs moved for an award of $89,445 in lodestar attorney fees with a 1.5 enhancement of $44,722.50 for a total of $134,167.50 in fees, plus $5,059.05 in costs. Finding the hourly rates and amount of counsels' time spent on services on plaintiffs' behalf to be reasonable, the trial court tentatively ruled plaintiffs were entitled to recover $81,745 in attorney fees and $5,059.05 in costs. However, in its final order the court substantially reduced its award, concluding plaintiffs should not have continued to litigate the matter at all after FCA's March 2015 section 998 offer. It found their sought-after attorney fees after the March 2015 offer were not "reasonably incurred," and cut off fees from that point, awarding plaintiffs a total of $2,636.90 in attorney fees and costs. Pointing out their ultimate recovery was double the estimated value of FCA's invalid March 2015 section 998 offer, which they had no duty to counter or accept, plaintiffs contended the trial court abused its discretion by cutting off all attorney fees and costs incurred after that offer. The Court of Appeal agreed and reversed the order and remanded back to the trial court with directions to award plaintiffs reasonable attorney fees for their counsels' services, including those performed after FCA's March 2015 offer, as well as reasonable fees for services in pursuing their motion for fees and costs. View "Etcheson v. FCA US LLC" on Justia Law