Appeals court rejects $685K in lawyer fees on $1 Lemon Law judgment

A California appeals court reversed an award of $685,000 in fees for a lawyer who won his client $1 in a complicated dispute over a leased Jaguar.

Saying it was time to revisit its liberal interpretation of the law allowing plaintiffs to recover outsized legal fees under California’s “lemon law,” the Fourth Appellate Division sent the fee request back to trial court for another look.

Ken Duff and his lawyer Michael Lindsey sued Jaguar Land Rover after Duff had to take his leased vehicle back to the dealer multiple times for repairs, including a complete engine replacement. He sued Jaguar in January 2016, while it was undergoing its final repair, claiming violation of the Song-Beverly Act, which allows car buyers to recover legal fees and even double damages if defective products aren’t repaired in a timely manner. Despite his complaints, Duff bought the car at the end of its lease period.

The trial judge found Jaguar had violated the implied warranty provision of Song-Beverly but awarded Duff only $1, saying he hadn’t suffered any damages as a result. Lindsey claimed Duff was the “prevailing party” under the law and he was entitled to $939,700 in legal fees at $650 an hour plus $22,900 in costs. Lindsey said the fees were high because Jaguar had litigated aggressively, including causing repeated trial continuances.

Jaguar urged the judge to reject the fees and award it costs because it had offered Duff $28,500, and possibly more, for the car before trial. California law allows defendants to recover legal costs when a plaintiff rejects their settlement offer and goes on to win less at trial.

The trial judge rejected Jaguar’s motion, however, saying the offer to buy Duff’s car was “not sufficiently specific” because the company said it might increase the offer if Duff established certain facts. The judge noted that Jaguar had argued the case should have been handled in small-claims court and in a hearing said “this should have been a relatively simple case.”

“It wasn’t treated as a simple case” by Duff or Jaguar, however, the judge said, noting that Jaguar filed more than 20 motions. He cut the lawyer’s hourly rate to $575 from $650 and the billable hours to 1,190 from 1,505, bringing the total to $684,250.

In a Jan 27 decision, the Fourth District appeals court reversed the fee award, saying the judge misinterpreted the Song-Beverly Act. The appeals court acknowledged its definition of “prevailing party” was more liberal than a majority of California courts but said that didn’t mean plaintiffs were entitled to legal fees regardless of how little they recover under the Song-Beverly Act.

To reduce confusion in future, the court said it was adopting the more “pragmatic” approach of other courts by assessing whether the plaintiff achieved his goals through litigation, rather than whether he won anything at all.

“Although we do not shy away from standing alone if we believe our approach to the law is correct, we believe the pragmatic approach of determining whether Duff prevailed in his Song Beverly action is the more sound one under the unique facts of this case,” the court concluded.

“Mechanically awarding attorney’s fees to a buyer is not the purpose of the Act.”

The court remanded the case to trial court to reconsider whether Duff is entitled to any fees at all. The court said the ruling had no effect on its interpretation of California Code of Civil Procedure Section 1032, which defines “prevailing party” as whoever achieved a “net monetary recovery.”