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De La Torre v. Legal Recovery Law Office

United States District Court, S.D. California

September 12, 2014

LEGAL RECOVERY LAW OFFICE, et al., Defendants.


LARRY ALAN BURNS, District Judge.

Plaintiff Marta De La Torre, proceeding through by counsel, filed her complaint in this case bringing federal and state claims arising out of a state court lawsuit that she claims was an unlawful debt-collection effort. Defendants moved to dismiss (Docket no. 19), and to strike pursuant to California's anti-SLAPP law, Cal. Civ. Proc. Code § 425.16 (Docket nos. 21, 22), and their motions were granted in part. (Docket no. 30, "Order Striking Claims".)

As requested in the motions, the complaint was dismissed, but not with prejudice as to all claims; De La Torre was given leave to amend if she thought she could do so successfully. The order identified various deficiencies in the complaint. De La Torre then filed her amended complaint (Docket no. 31), omitting all claims against Defendants David Cotter and Mark Walsh. The parties jointly moved to dismiss Cotter and Walsh as parties (Docket no. 32), which was later granted. (Docket no. 42). Cotter and Walsh then moved for attorney's fees (Docket no. 38), which are available to defendants who prevail on an anti-SLAPP motion to strike. That motion is the subject of this order.

De La Torre opposes the motion on three grounds. First, she argues that the parties had privately agreed that because Cotter and Walsh joined in the motion to dismiss themselves, they have no standing to bring a fee motion. Second, she argues they did not prevail on their motion to strike. And third, she argues the requested fees are unreasonable.

Legal Standards

An anti-SLAPP motion can only be used to strike claims brought under California law, not federal claims. See Globetrotter Software v. Elan Computer Group, Inc., 63 F.Supp.2d 1127, 1130 (N.D. Cal., 1999).

Under § 425.16(c)(6), a prevailing defendant is entitled to attorney's fees; an award of fees is mandatory, not discretionary. Ketchum v. Moses, 24 Cal.4th 1122, 1131 (2001). The questions for the Court, therefore, are whether Cotter and Walsh are prevailing defendants as contemplated by the statute, and if so, what a reasonable fee award should be. See id. (approving use of lodestar method of calculating reasonable attorney's fees). Such a fee award is authorized only for a defendant prevailing on an anti-SLAPP motion; if the defendant prevails on an ordinary motion to dismiss, fees are not authorized. See Metabolife Int'l, Inc. v. Wornick, 213 F.Supp.2d 1220, 1221-24 (S.D.Cal. 2002).

A prevailing defendant is entitled only to an award of reasonable attorney's fees and costs. Robertson v. Rodriguez, 36 Cal.App.4th 347, 362 (Cal.App. 2 Dist. 1995). The determination of reasonable fees lies within the Court's discretion. Mann v. Quality Old Time Serv., Inc., 139 Cal.App.4th 328, 340 (Cal.App. 4 Dist. 2006). Fees are awarded both for bringing the motion to strike, and also for bringing a motion to enforce the right to mandatory fees. Ketchum, 24 Cal.4th at 1141.

Whether Cotter and Walsh Are Entitled to a Fee Award

Cotter and Walsh unquestionably prevailed on their motion. As the Order Striking Claims pointed out, De La Torre's Rosenthal Act claims against them were improper, because there is no state law cause of action against individual attorneys, and the tort claims against them, as pleaded, were barred by the litigation privilege. Their motion nominally sought only to strike state law claims, not federal claims; those were the subject of the motion to dismiss. And, as noted, federal claims cannot be stricken under the anti-SLAPP statute anyway. After the motion was successful, De La Torre effectively dismissed all claims against Cotter and Walsh, by omitting them as defendants in the amended complaint. No motion to strike was pending at the time.

The joint motion to dismiss Cotter and Walsh as parties gave no explanation for the dismissal, but stipulated that they should be dismissed with prejudice. De La Torre argues that because Cotter and Walsh were dismissed as parties, they lack standing to move for fees. This argument is supported by her attorney's declaration, stating that he understood that after the joint motion to dismiss was filed, the fee motion would be withdrawn. What De La Torre is describing is not lack of standing, however, but a private stipulation by the parties about the applicable law and what the parties agreed between themselves to do. Whatever the parties' understanding of the law may have been, it was not reduced to writing and there is no signed agreement to this effect. Moreover, the Court never adopted any such view of the law. De La Torre's contention that the Court approved this stipulation (Opp'n at 2:5-12) is incorrect.[1]

The status of dismissed parties is not directly addressed by any federal rule. While they no longer have an ongoing stake in the action and are no longer expected to take part in it, their status is not the same as those who have never been part of the suit. They do retain some interest in what occurred in the suit before their dismissal, and sometimes even events occurring after their dismissal, if those events have a direct effect on their rights. As such, they have standing to seek to vindicate violations of their interests. See, e.g., Brown v. Board of Bar Examiners of State of Nev., 623 F.2d 605, 608 (9th Cir. 1980) (dismissed defendants had standing to appeal from an order that appeared to enjoin them). See also Hoxworth v. Blinder, Robinson & Co., Inc., 903 F.2d 186, 194 n.2 (3d Cir. 1990) (non-party company whose assets were encumbered by court order had standing to appeal). Here, the fact that Cotter and Walsh earlier incurred attorney's fees in order to file their anti-SLAPP motion suffices to give them standing to bring a motion to recover those fees.

The argument that dismissed defendants lack standing to move for fees under § 425.16(c) is also incorrect. California courts agree that even when a defendant is dismissed while an anti-SLAPP motion is pending, the defendant may move for fees. See Liu v. Moore, 69 Cal.App.4th 745, 753 (Cal.App. 2 Dist. 1999); Coltrain v. Shewalter, 66 Cal.App.4th 94, 107 (Cal.App. 4 Dist. 1998). Here, however, Cotter and Walsh prevailed on the motion to strike before they were dismissed. See also Carpenter v. Jack in the Box Corp., 151 Cal.App.4th 454, 460, 468 (Cal.App. 2 Dist. 2007) (holding that a defendant prevailing on an anti-SLAPP motion to strike could move for fees at any time until entry of judgment).

While the Order Striking Claims gave De La Torre leave to amend, it did point out certain irreparable defects in her claims, among which were the facts that Cotter and Walsh were not debt collectors for purposes of California's Rosenthal Act. Furthermore, even though De La Torre might have amended her state tort claims, the Court pointed out Cotter and Walsh were entitled to rely on California's litigation privilege as a defense against those (or any other) state claims. She was told she could only amend her state tort claims against Cotter and Walsh successfully if she could show they made ...

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