Thursday, November 05, 2015

Dorsey v. Superior Court (Cal. Ct. App. - Oct. 22, 2015)

Here's a neat little trick that you can use if you're worried about an attorney's fee clause in a contract (or, most likely, anywhere else, for that matter):

Sue 'em in small claims court.

Normally, if the prevailing party is entitled to fees, that's the deal.  If the other side spends $20,000 in fees defending even a minimal lawsuit -- here, for example, a lawsuit against an HOA -- and that side prevails and the fees are reasonable, you'll have to pay 'em.  Which may well deter you from filing a claim against 'em if you're not sure you're going to win.

But in small claims court, lawyers aren't allowed.  So that partially solves the problem.  No lawyers means no fee award.  And you can (usually) sue 'em for up to $10,000.  So that's a big upside that effectively limits your downside as well.  Plus very low filing fees (and a quick trial)!

The part that's interesting -- and the part that the Court of Appeal resolves in this opinion -- is what happens if the defendant loses in small claims court.  At which point it can "appeal" to the superior court, which conducts a trial de novo.  In a forum in which attorneys are allowed.  So are you now on the hook for the other side's massive attorney fees if you lose?  Since they indeed expended 'em?

The Court of Appeal says "No."

The statute limits the maximum attorney fee award in a small claims appeal to $150 (or $1000 if the appeal was in bad faith).  Justice Nares holds that this statute overrides the other statutes that provide full recovery of attorney's fees pursuant to statute, contract, etc.  These things should be short.  So the attorney's fees should be minimal.  While the other side might be able to recover $20,000 in fees if the plaintiff initially filed in superior (or limited jurisdiction) court, that's not the case if the matter ends up there pursuant to a small claims appeal.

So if the matter's (relatively) small, and you're not sure you're going to win, and you don't feel like taking the risk of a hefty attorney's fee award to the other side, small claims court may indeed be the way to go.