The following is our summary of the Supreme Court’s actions on petitions for review in civil cases from the Court’s conference on Wednesday, February 25, 2015. The summary includes those civil cases in which (1) review has been granted, (2) review has been denied but one or more justices has voted for review, or (3) the Court has ordered depublished an opinion of the Court of Appeal.
Laffitte v. Robert Half International (Brennan), S222996—Review Granted—February 25, 2015.
The question presented is whether Serrano v. Priest (1977) 20 Cal.3d 25, permits a trial court to anchor its calculation of a reasonable attorneys’ fees award in a class action on a percentage of the common fund recovered?
In a class action, a member of the plaintiff class objected to the settlement, appealing both the order approving the settlement and the final judgment. The defendant challenged both the settlement notice regarding the award of attorneys’ fees and the amount of attorneys’ fees awarded.
The Court of Appeal, Second District, Division Seven, held in a published opinion, Laffitte v. Robert Half International (2014) 231 Cal.App.4th 860, that, as a general rule, while the lodestar method is the primary method for calculating attorneys’ fees, the percentage approach may be proper where, as here, there is a common fund. The percentage of fund method survives in California class action cases, and the trial court did not abuse its discretion in using it, in part, to approve the fee request in this case. Contrary to plaintiff’s assertion, the trial court’s use of 33 1/3 percent of the common fund as a benchmark is consistent with, and in the range of, awards in other class actions. The Court of Appeal held it therefore is appropriate for the trial court to cross-check an award of attorneys’ fees calculated by one method against an award calculated by the other method to confirm whether the award is reasonable.
First California Bank v. McDonald, S222858—Review Granted & Held—February 25, 2015.
The court ordered briefing deferred pending decision in Coker v. JP Morgan Chase Bank, N.A., S213137, which presents the following questions: (1) Do the anti-deficiency protections in Code of Civil Procedure section 580(b) apply to a borrower who engages in a “short sale” of real property when the lender approved the sale and re-conveyed its deed of trust to facilitate the sale on the condition that the borrower remain liable for any outstanding balance on the loan following the sale? (2) Does a borrower’s request that the creditor release its security interest in real property to facilitate a short sale result in a waiver of the protection of the “security first” rule set forth in Code of Civil Procedure section 726?
The plaintiff bank filed a judicial foreclosure action to collect a loan secured by two parcels of real estate. After the loan went into default, both parties agreed to a private sale of one of the parcels that was the borrower’s separate property. Plaintiff then filed this action to foreclose on the remaining parcel and obtain a deficiency judgment.
The Court of Appeal, Fifth District, held in a published opinion, First California Bank v. McDonald (2014) 231 Cal.App.4th 550, that to obtain a deficiency judgment, all real property collateral must be exhausted in one single action for judicial foreclosure. If any of the real property collateral is exhausted through any other means, such as a private sale without the consent of the debtors, a deficiency judgment is barred. Because plaintiff failed to follow the requirements of section 726 by disposing of the property outside of judicial foreclosure and without the defendants’ consent or waiver, plaintiff waived any right to a deficiency against defendants.
Review Denied (with dissenting justices)