Ketchum v. Moses

• Citation: 104 Cal.Rptr.2d 377,24 Cal.4th 1122,17 P.3d 735
• Decision Date: 26 February 2001
• Docket Number: No. S077350.,S077350.
• Court: United States State Supreme Court (California)
• Parties: Smith A. KETCHUM III, Plaintiff and Appellant, v. John M. MOSES, Defendant and Respondent.

104 Cal.Rptr.2d 377

24 Cal.4th 1122

17 P.3d 735

Smith A. KETCHUM III, Plaintiff and Appellant, v. John M. MOSES, Defendant and Respondent.

No. S077350.

Supreme Court of California.

February 26, 2001.

Rehearing Denied May 16, 2001.

Krause & Baskin, Marshall W. Krause and Lawrence A. Baskin, San Rafael, for Plaintiff and Appellant.

Bill Lockyer, Attorney General, Pamela Smith-Steward, Chief Assistant Attorney General, Margaret A. Rodda, Assistant Attorney General, Tyler B. Pon and Lisa A. Tillman, Deputy Attorneys General, for California Highway Patrol as Amicus Curiae on behalf of Plaintiff and Appellant.

Casey Gwinn, City Attorney (San Diego), as Amicus Curiae on behalf of Plaintiff and Appellant.

Remcho, Johansen & Purcell, Robin B Johansen and James C. Harrison, San Francisco, for Education Legal Alliance as Amicus Curiae on behalf of Plaintiff and Appellant.

Jeremy L. Friedman; Law Office of Richard M. Pearl and Richard M. Pearl, for Defendant and Respondent.

Law Offices of Charles B. Renfrew, Charles B. Renfrew, San Francisco; Lieff, Cabraser, Heimann & Bernstein, Robert J. Nelson, San Francisco, Joshua P. Davis and Caryn Becker, San Francisco, for The Bar Association of San Francisco, as Amicus Curiae on behalf of Defendant and Respondent.

The Sturdevant Law Firm, James C. Sturdevant, San Francisco, and Jack P. Hug for Consumer Attorneys of California, as Amicus Curiae on behalf of Defendant and Respondent.

Saperstein, Goldstein, Demchak & Bailer, Linda M. Dardarian, Debra A Smith, Oakland; and Brad Seligman, Berkeley, for The Impact Fund, et al., as Amici Curiae on behalf of Defendant and Respondent.

Mark Goldowitz, Richmond, for California Anti-SLAPP Project, as Amicus Curiae on behalf of Defendant and Respondent.

MOSK, J.

Defendant sought mandatory attorney fees after he moved to strike allegations in a so-called strategic lawsuit against public participation, or SLAPP action, under section 425.16 of the Code of Civil Procedure. The superior court granted the motion and awarded attorney fees, including fee enhancements based on contingent risk and the exceptional quality of the legal services provided. We granted review to address the question whether the attorney fees were properly calculated in this matter. As will appear, based on our review of record, we conclude that they were not.

I

Plaintiff Smith A. Ketchum III owns a multi-unit apartment building in Sausalito. His tenant, defendant John M. Moses, reported numerous code violations to government agencies, including the Sausalito fire and building departments. According to another tenant, Ketchum referred to Moses as a "troublemaker" and stated that he would "get [him] into court" and "keep him there," asserting that he could "afford the best lawyers" while Moses could obtain only "cheap legal aid."

In October 1995, Ketchum filed an action against Moses seeking compensatory and exemplary damages, including allegations that he had made false complaints to the various local government agencies in an effort to harass, annoy, and inflict emotional distress on him. Attorney Jeremy L. Friedman agreed to represent Moses on a contingent fee basis. In January 1996, he filed a special motion to strike under Code of Civil Procedure section 425.16, on the ground that the suit constituted a SLAPP action. The special motion was supported by declarations of government officials to the effect that their inspections based on Moses's reports revealed numerous code violations involving hazardous conditions, and that tenants should not be discouraged from reporting such information. Friedman attempted to negotiate a dismissal without formal court action, but was informed by Ketchum's counsel that there was no possibility of settlement. Instead, Ketchum filed an opposition to the motion, supported by declarations by himself and an attorney.

In April 1996, the superior court granted the special motion. Other claims by the parties, including a claim by Ketchum of assault and battery, and claims by Moses of harassment, breach of the warranty of habitability, and retaliatory eviction, were subsequently settled by the parties.

In June 1996, Moses moved for an award of attorney fees, as authorized by Code of Civil Procedure section 425.16, subdivision (c). The motion was supported by extensive documentation, including itemized time and expense notes and a declaration describing Attorney Friedman's experience and expertise. Moses also included declarations of attorneys in the area averring to the local market rate for comparable representation, including the additional premium typically charged for representation undertaken on a contingent fee basis. The declarations stated, inter alia, that upward adjustments in the range of two to four times normal hourly rates are the prevailing practice in the area for contingent risk cases and that a fee enhancement of at least 2.0 is required to attract competent counsel to cases where statutory fees are authorized; they provided numerous examples of fee enhancements awarded in cases involving statutory fee-shifting provisions.

Ketchum sought a full evidentiary hearing, including oral testimony of experts and cross-examination of Moses's counsel. Although the superior court observed that the motion was "being overtried" by Ketchum, it permitted him to depose Moses's counsel and to submit the declaration of a fee expert. With regard to the possibility of an additional fee request based on the fee dispute, Ketchum's attorney replied: "I'll take the risk."

At the hearing, in August 1996, the superior court explained: "I practiced law mostly as a litigator for about 15 years. I've been on the bench 18 years reviewing fee requests on numerous types of cases, being familiar with many law firms practicing in rural areas as well as in the big city south of here [i.e., San Francisco].... I know what the going rates are. I know what lawyers have to do and I know what cases are worth and how much time it takes." With respect to the fee enhancement, it continued: "[T]he case law is clear that the Court should consider seriously setting the fees in the form of a lodestar and considering a multiplier, and I think this is a good case for it." It ruled that a fee enhancement should be applied to the lodestar figure, based on "the contingent nature of the case and because of the exceptional representation by Mr. Friedman and his qualifications as proven by the quality of his work as well as declarations as to his legal expertise." It acknowledged that attorney fees under the statute should not be punitive but indicated that it was troubled by the evidence concerning Ketchum's motivation for bringing the action: "There shouldn't be anything punitive in this proceeding although I will say I can't get out of my mind the alleged statement that Dr. Ketchum made [about] Mr. Moses that Mr. Friedman quoted in his opening paper several months ago," apparently referring to Ketchum's statement to another tenant that he would make the case so expensive that Moses would not be able to afford a lawyer. With regard to additional attorney fees incurred in the fee dispute, it found that Ketchum was responsible for the increased fees, describing his "full formal battle" as "somewhat like building a sand castle at low tide."

In August 1996, the superior court awarded Moses attorney fees in the amount of $140,212. The fees included a lodestar amount of $70,106, for costs incurred in the motion to strike and for the fee motion. The lodestar was based on the market rate for comparable legal services in a noncontingent matter. The superior court applied a fee enhancement of 2.0 based on the contingent risk of nonpayment and the exceptional quality of representation by Friedman.

Ketchum substituted new counsel and sought reconsideration and a stay of the fee order. He asserted, for the first time, that he was unaware of the filing of the SLAPP litigation until April 1996, after the motion to strike had been granted. Moses responded that the assertion was false and perjurious, citing in-court statements by Ketchum prior to April 1996 acknowledging his personal knowledge of the SLAPP litigation.

The superior court denied the motions for reconsideration and a stay. At the hearing on the motions, in November 1996, the superior court referred to the basis for its award: "I remember something about six months ago pointing out to Dr. Ketchum the fact that his statement to one of the other tenants in the apartment building was that he would really put the defendant, Mr. Moses, through hoops and make it impossible for him to get a lawyer. That was part of my thinking and ruling on the amount of attorney's fees and the multiplier as well. And I intended by that to give my message that that kind of statement goes against his interests." It also indicated that it was inclined to award supplemental fees and costs for work expended on the motion for reconsideration and enforcement of the judgment subject to the same multiplier that was applied to the August 1996 award: "And I pointed out that Mr. Moses isn't being decompensated if he worked for fees, but has to spend three times that to collect them, and therefore, I awarded fees on fees. And that doesn't indicate my bias, or prejudice, or inten[t] to punish, but it is a message."

In December 1996, the superior court awarded supplemental attorney fees and costs in the amount of $112,160. At the hearing, the superior court again referred to Ketchum's apparent motivation in bringing the SLAPP action: "[A]ssigning blame for the length and complexity of this proceeding doesn't serve any purpose no matter who's blamed. And I don't know if the genesis of all this problem was the five lines that [original counsel for Ketchum] put in the complaint or Dr. Ketchum's alleged statement to the other tenant of the apartment building that he denies making. I say alleged statement that he denies making, that he's going to...