BILL ANALYSIS �
AB 2395
Page 1
Date of Hearing: May 8, 2012
ASSEMBLY COMMITTEE ON JUDICIARY
Mike Feuer, Chair
AB 2395 (Davis) - As Amended: March 29, 2012
SUBJECT : Civil Actions: Pro Per Litigants
KEY ISSUE : Should a pro per litigant who prevails in litigation
be entitled to reasonable compensation for the time and effort
devoted to LITIGATING the matter?
FISCAL EFFECT : As currently in print this bill is keyed
non-fiscal.
SYNOPSIS
Under the so-called "American Rule" - which California has
adopted - each party to a civil dispute bears the expense of
attorney's fees unless a statute or a contract between the
parties provides otherwise. California has adopted a number of
"fee shifting" statutes: some of these expressly provide that a
"prevailing party" shall recover attorney's fees; others provide
that only a "prevailing plaintiff" shall recover attorney's
fees. The author believes that a similar logic should apply to
pro per litigants: that is, they should be compensated for their
time and effort if they manage to prevail. This bill,
therefore, would allow the court to award reasonable
compensation to a prevailing pro per litigant, with the level of
compensation based upon the standard rate of compensation for a
paralegal assistant and the extent of economic hardship suffered
by the prevailing party. It should be noted, however, that the
purpose of a fee-shifting statute, according to the California
Supreme Court among others, is to enable parties to obtain legal
representation by guaranteeing that the lawyer will be
compensated for his or her efforts if he or she prevails. While
this bill is effectively a fee-shifting statute - to the extent
that it would require the losing party to compensate the
prevailing party for legal work performed - it is inconsistent
with the overriding purpose of fee-shifting statutes: enabling
litigants to obtain legal representation. Indeed, to the extent
that the bill would potentially encourage a litigant to proceed
without representation, it would appear to be contrary to the
underlying purpose of fee-shifting statutes. It should also be
noted that existing law already generally permits a prevailing
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party - including a pro per litigant - to recover all other
costs of litigation.
SUMMARY : Requires a court, upon motion, to award reasonable
compensation to a prevailing pro per litigant, as specified.
Specifically, this bill :
1)Provides that in any civil proceeding in which a pro per
litigant is the prevailing party, the court, upon motion,
shall award reasonable compensation to the prevailing party
for the time and effort required to litigate the matter.
2)Specifies that, for purposes of the above, reasonable
compensation shall be based on both of the following factors:
a) The standard rate of compensation for a paralegal
assistant in the local market.
b) Any economic hardship suffered by the prevailing party
in litigating the matter.
1)Specifies that the above provisions shall not apply to
unlawful detainer actions.
EXISTING LAW :
1)Adopts the "American Rule," under which each party to a
lawsuit ordinarily must pay his or her own attorney's fees,
except as attorney's fees are specifically provided for by
statute or contract. (Code of Civil Procedure Section 1021;
Musaelian v. Adams (2009) 45 Cal. 4th 512.)
2)Provides that a prevailing party is entitled as a matter of
right to recover costs in any civil action or proceeding,
except as otherwise expressly provided by statute. (Code of
Civil Procedure Section 1032; see also Westamerica Bank v. MBG
Industries (2007) 158 Cal. App. 4th 109, holding that "costs"
awarded under Section 1032 do not include attorney's fees.)
3)Holds that the purpose of fee-shifting statutes is to enable
private parties to obtain legal help in seeking redress for
injuries resulting from the actual or threatened violation of
specific laws; hence if plaintiffs find it possible to engage
a lawyer based on the statutory assurance that the lawyer will
be paid a reasonable fee, the purpose behind the fee-shifting
statute has been satisfied. (Flannery v. Prentice (2001) 26
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Cal. 4th 572.)
COMMENTS : According to the author, this bill arises from the
case of Williams v. Bentley Motors, Inc., a case that originated
in the Los Angeles Superior Court. According to the author, the
plaintiff in that case "fired her attorneys about mid-way
through the case and successfully litigated it to a conclusion."
The plaintiff was "shocked to discover she could not receive
compensation for her time, despite the fact that she had quit
her job to litigate the case full-time and had incurred
financial hardship as a result."
Williams v. Bentley Motors, Inc. was appealed to California's
Second Appellate Court of Appeal. (2012 Cal. App. Unpub. LEXIS
890.) The facts and procedural history of this case, summarized
below, suggest a more complicated scenario than a simple demand
by a pro per litigant for compensation.
Mr. and Mrs. Williams purchased a Bentley Arnage limousine from
Bentley Motors, Inc. in Pasadena in 2004. The vehicle
apparently had many defects and was returned to the dealer
multiple times, where it apparently spent considerable time in
the repair shop. Mr. and Mrs. Williams obtained counsel and
eventually sued Bentley Motors, alleging breach of express
warranty, breach of implied warranty of merchantability, and
violations of the Song-Beverly Consumer Warranty Act. The
plaintiffs sought to recover not only the purchase price and
finance charges, but also sought reimbursement for other losses
and expenses related to the loss of use of the vehicle. In
November of 2006, Bentley Motors made a compromise offer (which
included, among other things, payment of the plaintiff's costs
and attorney's fees). The plaintiffs refused the offer in part,
according to the trial court, due to the plaintiff's "insistence
that they be reimbursed for a full time chauffer to drive them
in their limousine �while the Bentley was in the shop] and to
seek lost profits for when their limousine was unavailable to be
hired."
Significantly, pursuant to Code of Civil Procedure Section 998,
if a plaintiff rejects a settlement offer and then fails to
obtain a more favorable judgment or award, the plaintiff is
barred from recovering post-offer costs and, upon motion by the
defendant, may be liable for defendant's costs from the time of
the offer. Indeed, this is precisely what happened; while the
plaintiffs eventually won a judgment from the trial court in
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2007 - apparently after firing their lawyer - the final judgment
was less than the settlement offer. Following the initial
trial, Bentley Motors moved to recover the legal costs that it
had incurred since the rejection of the offer, and the trial
court awarded those costs. The plaintiffs appealed, alleging,
among other things, that the court erred in awarding costs to
the defendants. In February of 2012, the Court of Appeals
upheld all of the trial court holdings in favor of the
defendant, including the award of the defendant's post-offer
costs.
It is not clear to the Committee how the facts and procedural
history of this case suggest the need for this bill. Because
Mr. and Mrs. Williams rejected the Section 998 settlement offer,
even if they had retained their attorney, they would not have
been entitled to recover attorney's fees for any legal work done
after the offer. It is not entirely clear when the plaintiff's
dismissed their attorney, though the attorney clearly did some
of the work since the settlement offer included payment of the
plaintiff's attorney's fees. It is also not clear from the
facts of the case when or if the plaintiffs actually moved for
attorney's fees or compensation; the issue addressed by the
appellate court was not the plaintiff's claims for costs or
fees, but the defendant's claim for post-offer costs pursuant to
Section 998. The plaintiffs did raise other issues on appeal,
some of which were waived, but a claim for attorney's fees or
any other form of compensation is not mentioned in the decision.
If the plaintiff's had raised a claim for attorney's fees, they
would not have been entitled to anything incurred after the
settlement offer. Moreover, given that the final judgment was
less than the settlement offer, even under this bill it is not
clear that the plaintiff would have qualified as a "prevailing
party." (See e.g Scott Co. v. Blount (1999) 20 Cal. 4th 1103,
1114 (holding that "a losing defendant whose settlement offer
exceeds the judgment is treated for purposes of post-offer costs
as if it were the prevailing party.")
ARGUMENTS IN SUPPORT : The author writes in support of this
bill:
The general principle in current law is that absent a
specifically applicable fee-shifting statute, each party
bears his own costs of litigation. In the case of In Pro
Per parties, they bear their own costs of litigation and
receive no compensation, nor do they receive any award for
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lost wages or other expenses as a result of the litigation.
AB 2395 would resolve this problem by providing that
prevailing In Pro Per parties receive reasonable
compensation based on the following formula: (1) The
standard rate of compensation for a paralegal assistant in
the local market. (2) Any economic hardship suffered by the
prevailing party in litigating the matter - it is the
author's intent that this include lost wages.
ARGUMENTS IN OPPOSITION : The Civil Justice Association of
California (CJAC) opposes this bill because it believes that it
will "lead to increased unjustified litigation by paying
self-represented litigants compensation for going to court."
Citing a study indicating an increase in the number of pro per
cases, CJAC contends that parties who are unfamiliar with the
law - or even what constitutes an actionable claim - results in
"unmeritorious claims being filed, delays in the court's
processes and burdens on judicial officers who try to aid the
litigants but may not compromise their impartiality." CJAC adds
that attorney "representation can help the legal system by
identifying and streamlining the process by which disputes can
be resolved." Additionally, CJAC claims that existing
"contingency-fee arrangements help parties afford to retain
counsel by allowing the attorney to be paid out of the final
judgment. During a time when our court resources are already
stretched thin," CJAC concludes, "this bill would encourage the
filing of more unwarranted litigation at a cost to all users of
the courts."
REGISTERED SUPPORT / OPPOSITION :
Support
None on file
Opposition
Civil Justice Association of California
Analysis Prepared by : Thomas Clark / JUD. / (916) 319-2334
AB 2395
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