Preview
1 PETER C. De GOLIA (SBN 113103)
JEFFREY S. LYONS (SBN 227277)
2 CLEMENT, FITZPATRICK & KENWORTHY
3333 Mendocino Avenue, Suite 200
3 Santa Rosa, CA 95403
4 Telephone: (707) 523-1181
Facsimile: (707) 546-1360
5 pdegolia@cfk.com
jlyons@cfk.com
6
7 Attorneys for Plaintiff, Villa Rosa Homeowners Association
8
9 SUPERIOR COURT OF THE STATE OF CALIFORNIA
10
COUNTY OF SONOMA
11
12 VILLA ROSA HOMEOWNERS Case No. SCV-267991
ASSOCIATION,
13 VILLA ROSA HOMEOWNERS
Plaintiff, ASSOCIATION’S OPPOSITION TO
14
DEFENDANT’S MOTION FOR
vs. ATTORNEY FEES
15
16 VALLEN W. COOPER, an individual;
DATE: February 8, 2023
VALLEN W. COOPER, CPM, INC.,
17 individually and dba COMMONWEALTH TIME: 3:00 p.m.
PROPERTY MANAGEMENT; CTRM: 18
18 COMMONWEALTH ASSOCIATION
MANAGEMENT, INC.; KELLIN A. Assigned to the Honorable Christopher M.
19
BAKER, individually and dba Honigsberg
20 ACCURATE PROPERTY SERVICES aka
ACCURATE MAINTENANCE &
21 JANITORIAL; CHAD W. COOPER, an
individual; and DOES 1 through 50,
22
Defendants.
23
24
25
26 /////
27 /////
28 /////
VILLA ROSA HOMEOWNERS ASSOCIATION’S OPPOSITION TO
DEFENDANT’S MOTION FOR ATTONREY FEES
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1 I. INTRODUCTION
2 The Motion for Attorney Fees and Costs (“Motion”) of Defendant Vallen W. Cooper,
3 CPM, Inc. dba Commonwealth Property Management (“Defendant” or “Commonwealth”)
4 should be denied by this Court. Plaintiff’s voluntary pretrial dismissal of this remaining
5 Defendant was filed based on Plaintiff achieving its objectives of the litigation through (1)
6 judgments taken against three other defendants; (2) a settlement agreement negotiated by
7 Plaintiff’s litigation attorney with Travelers Insurance Company (“Travelers”); and (3) the
8 prospect that judgments against the defendants will likely be uncollectable due to Traveler’s
9 pending lawsuit seeking over $6 million. Plaintiff’s voluntary pretrial dismissal of Defendant is
10 consistent with the court’s policy of not encouraging pointless litigation in moot cases or against
11 insolvent defendants solely to avoid liability for attorney fees.
12 II. LEGAL ARGUMENT
13 A. LEGAL AUTHORITY FOR ATTORNEY FEES IN VOLUNTARY PRETRIAL DISMISSAL CASES
14 Defendant argues that it is “entitled to its attorney fees” based on California Supreme
15 Court’s holding in Santisas v. Goodin (1998) 17 Cal.4th 599 (Motion 2:19-21). However,
16 Defendant renders this conclusion without applying the factors required by Santisas and its
17 progeny to determine a prevailing party—an analysis that confirms Plaintiff is the prevailing
18 party in this case.
19 1. Attorney Fees Are Not to be Awarded Automatically in Voluntary Pretrial
20 Dismissal Cases.
21 In 1998, the Santisas court held that in pretrial dismissal cases, attorney fees are available
22 as costs in defense of tort claims if the contract provision is broad enough. Santisas, 17 Cal.4th at
23 622. However, it also confirmed its holding in International Industries, Inc. v. Olen (1978)
24 21 Cal.3d 218 that such recovery of fees is not automatic:
25 The Olen majority soundly reasoned that attorney fees should not be awarded
automatically to parties in whose favor a voluntary dismissal has been entered. In
26 particular, it seems inaccurate to characterize the defendant as the "prevailing party" if
the plaintiff dismissed the action only after obtaining, by means of settlement or
27 otherwise, all or most of the requested relief, or if the plaintiff dismissed for reasons, such
as the defendant's insolvency, that have nothing to do with the probability of success on
28 the merits. The Olen majority also soundly reasoned that scarce judicial resources should
VILLA ROSA HOMEOWNERS ASSOCIATION’S OPPOSITION TO
DEFENDANT’S MOTION FOR ATTONREY FEES
2
not be used to try the merits of voluntarily dismissed actions merely to determine which
1 party would or should have prevailed had the action not been dismissed.
2 Santisas, 17 Cal.4th at 621-622.
3 The Santisas decision tasked the trial courts to determine who is a prevailing party in
4 voluntary pretrial dismissal cases. “While section 1032 defines a prevailing party as including ‘a
5 defendant in whose favor a dismissal is entered,’ Santisas held that an award, to such a
6 defendant, of a specific type of costs--attorney's fees--is not automatic when there is a voluntary
7 pretrial dismissal of that defendant. Rather, the trial court should determine which party, if any,
8 is the prevailing party for purposes of attorney's fees claimed as costs under sections 1032 and
9 1033.5.” Silver v. Boatwright Home Inspection, Inc. (2002) 97 Cal.App.4th 443, 450-51
10 (internal citations omitted).
11 2. The Trial Court Determines Prevailing Party Using Equitable Considerations.
12 “[I]n determining litigation success, courts should respect substance rather than form, and
13 to this extent should be guided by ‘equitable considerations.’ For example, a party who is denied
14 direct relief on a claim may nonetheless be found to be a prevailing party if it is clear that the
15 party has otherwise achieved its main litigation objective.” Hsu v. Abbara (1995) 9 Cal.4th 863,
16 877. “In exercising that discretion, the court may consider the reason for the dismissal, including
17 whether the parties have reached their litigation objectives by settlement, judgment, or other
18 means.” Silver, 97 Cal.App. 4th at 452.
19 B. PLAINTIFF IS THE PREVAILING PARTY
20 The prevailing party determination is based “on a pragmatic definition of the extent to
21 which each party has realized its litigation objectives, whether by judgment, settlement, or
22 otherwise.” Santisas, 17 Cal. 4th at 622. Here, Plaintiff achieved its objectives through
23 judgments and a settlement; in addition, Plaintiff’s discovery of a separate lawsuit by Travelers
24 against these same defendants claiming over $6 million in damages rendered the prospect of
25 collection of any further remedies unlikely.
26 1. Summary of Plaintiff’s Claims.
27 Plaintiff’s claims are based on fraud. See Second Amended Complaint (“SAC”),
28 attached as Exhibit 1 to the Request for Judicial Notice (“RFJN”) submitted herewith.
VILLA ROSA HOMEOWNERS ASSOCIATION’S OPPOSITION TO
DEFENDANT’S MOTION FOR ATTONREY FEES
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1 Commonwealth was under contract with the Association to act as its property management firm,
2 did all of the Association’s accounting, did all of the accounts payable, paid the Association’s
3 bills, and kept all the books. Declaration of Daniel W. Ellecamp (“Ellecamp Decl.”) ¶ 3; and
4 Ellencamp Decl. ¶ 22, Exhibit 3, Ellencamp Deposition Transcript (“Ellencamp Depo.”) 39:4-17.
5 On December 7, 2020, Plaintiff learned from Rachel Adams, its insurance broker at
6 George Peterson Insurance, that defendant Vallen W. Cooper, on behalf of Commonwealth,
7 tendered two claims to Plaintiff’s insurance carrier, Travelers Insurance Company (“Travelers”)
8 for alleged smoke/ash damage to Plaintiff’s property. Ellecamp Decl. ¶¶ 4, 10; Ellecamp Depo.
9 66:12-69:1; and Declaration of Rachel Hefele aka Rachel Adams, RFJN ¶ 2, Exhibit 2 (“Adams
10 Decl.”) ¶¶ 29-31. The first claim was tendered on or about November 13, 2019 based on damage
11 allegedly caused by the Kincade fire (Adams Decl. ¶ 7); and, the second claim was tendered on
12 or about September 4, 2020, based on damage alleged to have been caused by the Walbridge
13 Fire. Ellecamp Decl. ¶¶ 4, 10; Adams Decl. ¶ 13, Ex. B, ¶¶ 14-15, Ex. C. Travelers paid
14 $493,708.16 on the Kincade Fire insurance claim and $248,990.59 on the Walbridge Fire
15 insurance claim. Ellecamp Decl. ¶¶ 5, 11; Ellecamp Depo. 84:2-25; and Adams Decl. ¶¶ 8, 19.
16 Commonwealth used funds paid by Travelers to pay defendant Accurate Property Services, aka
17 Accurate Maintenance & Janitorial (“AMJ”), a company that is owned and/or operated by
18 defendant Chad Cooper (Vallen Cooper’s son), and his fiancée at the time, defendant Kellin A.
19 Baker. Ellecamp Decl. ¶¶ 5-6, 12. In addition to these claims made to Travelers allegedly on
20 behalf of but unbeknownst to Plaintiff, on November 30, 2019, Commonwealth issued itself a
21 check from Plaintiff’s account in the amount of $24,685.41 representing a 5% fee for
22 “managing” the $493,708.16 insurance claim. Ellecamp Decl. ¶ 7.
23 Plaintiff was unaware of any claims because it was unaware of any evidence that its
24 property had incurred damage as a result of the Kincade Fire or Walbridge Fire sufficient to
25 make an insurance claim and as such, would never have authorized these claims. Ellecamp Decl.
26 ¶¶ 8, 13. Furthermore, no evidence exists that AMJ performed any of the remediation work for
27 which it was paid on either claim. Ellecamp Decl. ¶¶ 9,13; Ellecamp Depo. 97:5-19, 121:2-5.
28 /////
VILLA ROSA HOMEOWNERS ASSOCIATION’S OPPOSITION TO
DEFENDANT’S MOTION FOR ATTONREY FEES
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1 On December 7, 2020, Plaintiff learned from Rachel Adams at George Peterson
2 Insurance, that Travelers was not going to be renewing the Association’s policy as a result of
3 those claims. Ellecamp Decl. ¶ 14; Ellecamp Depo. 66:12-69:1, 93:6-13. As a direct result of
4 the Kincade Fire insurance claim and the Walbridge Fire insurance claim, the Association was
5 deemed an unacceptable insurance risk in the standard insurance marketplace and was forced to
6 seek insurance from a non-standard provider. Ellecamp Decl. ¶ 15. Ellecamp Depo 108:13-
7 110:10, 113:1-11. Plaintiff’s premium was raised 622% due to the two smoke damage claims
8 paid by Travelers. Ellecamp Decl. ¶¶ 15-16, Ex. 1; Adams Decl. ¶¶ 39-40, Ex. M.
9 When confronted about the claims, Vallen Cooper, on behalf of Commonwealth, offered
10 to return the Walbridge Claim money to the Association so it could offer it back to Travelers and
11 cancel the claim, even though she had already released the money to AMJ. Ellecamp Decl. ¶¶
12 17-18, Ellecamp Depo. 112:1-18. Cooper retrieved the funds from AMJ, and returned the
13 $248,990.59 to the Association, but when the Association offered to return the funds to
14 Travelers, it was told that Travelers would not take it back in exchange for canceling the claim.
15 Ellecamp Decl. ¶ 18, Ellecamp Depo 112:19-25.
16 Plaintiff decided to bring this lawsuit against the defendants in this case to recover the
17 $24,685.41 for the “claim management fee” taken by Commonwealth, the cost of increased
18 premiums that were a result of the fraudulent claims made by Commonwealth, and punitive
19 damages. SAC ¶¶ 69-72.
20 2. Plaintiff Achieved its Litigation Objectives.
21 Plaintiff filed its complaint on March 12, 2021. On June 22, 2021, Defendants filed a
22 demurrer and motion to strike. The hearing on the demurrer and motion to strike was held on
23 December 8, 2021 and plaintiff was given leave to amend. On January 6, 2022, Plaintiff filed its
24 SAC, and on February 7, defendants filed a second motion to strike. The hearing on the second
25 motion to strike was held on July 20, 2022, where the court overruled the motion. On August 3,
26 2022, after achieving judgments against the individual defendants, and having negotiated a
27 reinstatement of the Travelers policy at a reduced premium, Plaintiff dismissed the remaining
28 entity defendants. Commonwealth’s motion now asks for a half million dollars in attorney fees
VILLA ROSA HOMEOWNERS ASSOCIATION’S OPPOSITION TO
DEFENDANT’S MOTION FOR ATTONREY FEES
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1 for what was two motions, some limited written discovery, and one deposition in a case where
2 three of the defendants had judgments taken against them and the other two are likely insolvent.
3 a. Plaintiff Achieved Judgments Against 3 of the 5 Defendants.
4 Parties who attain their litigation objective by settlement includes a plaintiff “who obtains
5 a settlement from a party other than a defendant who has been voluntarily dismissed prior to trial
6 and who is asserting entitlement to contractual attorney's fees under sections 1032 and 1033.5.”
7 Silver v. Boatwright Home Inspection, Inc. (2002) 97 Cal.App.4th 443, 452. After learning that
8 Travelers 1 brought a case against these defendants seeking over $6 million in damages, Plaintiff
9 made section 998 offers at $10,000 to each defendant to try to recover its out-of-pocket losses.
10 On May 2, 2022, three defendants, Vallen Cooper, Chad Cooper, and Kellin Baker, accepted the
11 offers. The judgments were entered on June 7, 2022 and were satisfied on July 8, 2022.
12 Plaintiff’s recovery of $30,000 through judgments achieved its objective of recovering
13 the $24,685.41 that it was charged by Commonwealth for a “claim management fee.” Since this
14 would act as a setoff for the joint tortfeasor, Commonwealth, under Code of Civil Procedure §
15 877, there was no reason to pursue those damages against Commonwealth.
16 b. Plaintiff Obtained a Settlement with Travelers to Offset it Damages
17 Due to Increased Premiums.
18 The Santisas directive is that “when the contractual attorney's fees provision does not
19 define who is a prevailing party and does not specifically require or prohibit recovery of
20 attorney's fees when a defendant is voluntarily dismissed prior to trial, courts should be
21 pragmatic about their attorney's fees decisions by examining the extent to which the parties
22 realized their litigation objectives.” Silver, 97 Cal.App.4th 453 (citing Santisas).
23 Plaintiff’s money damages were the “claim management fee” and increased premiums
24 due to the fraudulent claims submitted by Commonwealth. On or about August 13, 2021,
25 Travelers filed its complaint in Travelers v. Cooper, under seal, against each of the defendants
26 named in this case. See Travelers v. Cooper, RFJN ¶3, Ex. 3. In that case, Travelers sought
27 1
See Complaint in The People of the State of California, ex rel. Travelers Casualty
28 Insurance Company of America, et al. v. Vallen W. Cooper, et al., (hereinafter “Travelers v.
Cooper”) Sonoma County Superior Court Case No. SCV-269077, RFJN ¶3, Exhibit 3.
VILLA ROSA HOMEOWNERS ASSOCIATION’S OPPOSITION TO
DEFENDANT’S MOTION FOR ATTONREY FEES
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1 damages against these same defendants for insurance fraud. Id. On or about April 27, 2021,
2 Travelers’s counsel, Dennis Kass, informed Plaintiff’s counsel, Nick Bernate, that Villa Rosa
3 was being investigated for fraudulent claims because the $248,990.59 Walbridge Claim funds
4 were, in fact, in Villa Rosa’s account and they had no right to keep it. Declaration of Nicolas
5 Bernate (“Bernate Decl.”) ¶ 2.
6 On October 13, 2021, as a direct result of this lawsuit, Bernate was able to negotiate a
7 settlement with Travelers whereby Travelers would reinstate the Association’s policy at its prior
8 rate, and the Association would return the Walbridge Claim funds of $248,990.59 to Travelers,
9 in installments to be applied as a credit to the Walbridge claim reducing it to $0. In addition to
10 releasing any and all claims Travelers may have against Villa Rosa, the settlement nullified the
11 effect the fraudulent claims had on Plaintiff’s future premiums saving it $239,000 per year.
12 Ellecamp Decl. ¶20 and Exhibit 2 attached thereto. Since the Association was no longer facing
13 damages due to increased premiums, it made little sense to pursue the two remaining defendants.
14 Ellecamp Decl. ¶ 21; Ellecamp Depo. 136:3-8, 136:24-137:15, 137:22-138:9.
15 c. Recovery of Punitive Damages and other Incidental Damages from
16 the Remaining Defendants was Unlikely.
17 On or about May 19, 2021, Plaintiff’s counsel, Bernate, spoke with an investigator with
18 the California Insurance Commission and an investigator for Nationwide Insurance Company
19 who both explained to Bernate that, while they had not completed their respective investigations,
20 almost all of Commonwealth’s HOA clients were reporting that Commonwealth had been
21 tendering claims on their behalf and without their knowledge, and Bernate passed that
22 information along to Villa Rosa. Bernate Decl. ¶¶ 3-4. On February 4, 2022, the court unsealed
23 the Travelers v. Cooper complaint. Order, RFJN, ¶ 4, Ex. 4. Travelers’s attorney sent a copy of
24 that complaint to counsel for the Association, Nick Bernate, and he forwarded it to the
25 Association. Bernate Decl. ¶¶ 5, 6 and Ex. 1. The complaint revealed the scope of the fraud that
26 Travelers was suing these same defendants for. The damages claim is over $6 million for not
27 only the two claims made against the Villa Rosa property, but also claims made on behalf of
28 seven other HOAs whose properties were insured by Travelers and Commonwealth was
VILLA ROSA HOMEOWNERS ASSOCIATION’S OPPOSITION TO
DEFENDANT’S MOTION FOR ATTONREY FEES
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1 managing. Since Travelers has much more resources to litigate the case, and the unlikely ability
2 of these defendants to satisfy judgments of that magnitude, it made sense to Villa Rosa not to
3 pursue the remaining two entity defendants, so it dismissed them, ending this lawsuit. Ellecamp
4 Decl. ¶21.
5 C. AN AWARD OF ATTORNEY FEES WOULD PRODUCE AN INEQUITABLE RESULT.
6 The court utilizes equitable considerations in awarding attorney fees in voluntary pretrial
7 dismissal cases. Int'l Indus., Inc. v. Olen (1978) 21 Cal.3d 218, 223 (“[S]ound public policy and
8 recognized equitable considerations require that we adhere to the prior practice of refusing to
9 permit recovery of attorney fees based on contract when the plaintiff voluntarily dismisses prior
10 to trial.”). Also, Hsu v. Abbara (1995) 9 Cal.4th 863, 877 (“[I]n determining litigation success,
11 courts should respect substance rather than form, and to this extent should be guided by
12 ‘equitable considerations.’ For example, a party who is denied direct relief on a claim may
13 nonetheless be found to be a prevailing party if it is clear that the party has otherwise achieved its
14 main litigation objective.”
15 This case is on all fours with Silver v. Boatwright cited above. In Silver, Defendant
16 Boatwright Home Inspection, Inc. (Boatwright) appealed from an order that denied its motion for
17 attorney's fees filed after a pretrial voluntary dismissal was entered in its favor. Boatwright
18 contended it was the prevailing party as between itself and the plaintiffs who filed the dismissal,
19 and therefore the trial court abused its discretion when it denied Boatwright such fees.
20 Boatwright filed a memorandum of costs which included $24,300 in attorney fees and a motion
21 for attorney fees as costs. Citing Civil Code section 1717 and Code of Civil Procedure section
22 1033.5, Boatwright contended it was entitled to attorney fees because plaintiffs dismissed their
23 suit against it. Silver, 97 Cal. App. 4th at 445-447. The trial court disagreed stating:
24 [E]quitable principles govern awards of attorney's fees made pursuant to contract, and
when plaintiffs' case is viewed as a whole, plaintiffs are the prevailing parties because
25 they have recovered, or are in the process of recovering, significant relief. On the other
hand, said the court, if only plaintiffs' case against Boatwright is considered, Boatwright
26 is the prevailing party because it was dismissed from the suit. The court observed that if it
awarded Boatwright the fees it requested, "it would virtually eliminate the relief procured
27 by plaintiffs from any other parties. This result is inequitable. The court also believes that
public policy considerations favoring voluntary dismissal of before trial [sic] to avoid
28 maintaining pointless litigation takes priority over the recovery of attorney fees.
VILLA ROSA HOMEOWNERS ASSOCIATION’S OPPOSITION TO
DEFENDANT’S MOTION FOR ATTONREY FEES
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1 Silver, 97 Cal.App.4th at 448. The appellate court affirmed. Id.
2 Here, Commonwealth is seeking a quarter million dollars in attorney fees 2 and requesting
3 a loadstar increase to a half-million dollars for a case that was limited to 2 pre-answer motions
4 (one that it lost), some written discovery and one deposition by claiming “prevailing party”
5 status solely on the basis of being dismissed; however, that analysis must be an equitable one.
6 Here, the evidence reveals that Plaintiff did not dismiss the case because it lacked merit. It
7 dismissed because it achieved its litigation objectives, there was little left to pursue, and the
8 likelihood that any further judgment would be uncollectible. Here, as in Silver, a fee award
9 would work an inequity by wiping-out the substantial relief Plaintiff was able to procure through
10 this litigation.
11 III. CONCLUSION
12 This case represents the quintessential situation defined by the holdings in Santisas and
13 Olen reasoning that attorney fees should not be awarded automatically to parties in whose favor
14 a voluntary dismissal has been entered. This is a clear case of a plaintiff dismissing the action
15 after obtaining all or most of the requested relief by means of settlement or otherwise, and the
16 defendants’ likely insolvency. As such, the motion should be denied.
17
18 DATED: January 26, 2023 CLEMENT, FITZPATRICK & KENWORTHY
19
By:
20
JEFFREY S. LYONS
21 Attorneys for Plaintiff
Villa Rosa Homeowners Association
22
23
24
25
26
27
2
28 It should be noted that all five defendants share the same attorney, and of the five, three
had judgments taken against them.
VILLA ROSA HOMEOWNERS ASSOCIATION’S OPPOSITION TO
DEFENDANT’S MOTION FOR ATTONREY FEES
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Preview
1 PETER C. De GOLIA (SBN 113103) JEFFREY S. LYONS (SBN 227277) 2 CLEMENT, FITZPATRICK & KENWORTHY 3333 Mendocino Avenue, Suite 200 3 Santa Rosa, CA 95403 4 Telephone: (707) 523-1181 Facsimile: (707) 546-1360 5 pdegolia@cfk.com jlyons@cfk.com 6 7 Attorneys for Plaintiff, Villa Rosa Homeowners Association 8 9 SUPERIOR COURT OF THE STATE OF CALIFORNIA 10 COUNTY OF SONOMA 11 12 VILLA ROSA HOMEOWNERS Case No. SCV-267991 ASSOCIATION, 13 VILLA ROSA HOMEOWNERS Plaintiff, ASSOCIATION’S OPPOSITION TO 14 DEFENDANT’S MOTION FOR vs. ATTORNEY FEES 15 16 VALLEN W. COOPER, an individual; DATE: February 8, 2023 VALLEN W. COOPER, CPM, INC., 17 individually and dba COMMONWEALTH TIME: 3:00 p.m. PROPERTY MANAGEMENT; CTRM: 18 18 COMMONWEALTH ASSOCIATION MANAGEMENT, INC.; KELLIN A. Assigned to the Honorable Christopher M. 19 BAKER, individually and dba Honigsberg 20 ACCURATE PROPERTY SERVICES aka ACCURATE MAINTENANCE & 21 JANITORIAL; CHAD W. COOPER, an individual; and DOES 1 through 50, 22 Defendants. 23 24 25 26 ///// 27 ///// 28 ///// VILLA ROSA HOMEOWNERS ASSOCIATION’S OPPOSITION TO DEFENDANT’S MOTION FOR ATTONREY FEES 1 1 I. INTRODUCTION 2 The Motion for Attorney Fees and Costs (“Motion”) of Defendant Vallen W. Cooper, 3 CPM, Inc. dba Commonwealth Property Management (“Defendant” or “Commonwealth”) 4 should be denied by this Court. Plaintiff’s voluntary pretrial dismissal of this remaining 5 Defendant was filed based on Plaintiff achieving its objectives of the litigation through (1) 6 judgments taken against three other defendants; (2) a settlement agreement negotiated by 7 Plaintiff’s litigation attorney with Travelers Insurance Company (“Travelers”); and (3) the 8 prospect that judgments against the defendants will likely be uncollectable due to Traveler’s 9 pending lawsuit seeking over $6 million. Plaintiff’s voluntary pretrial dismissal of Defendant is 10 consistent with the court’s policy of not encouraging pointless litigation in moot cases or against 11 insolvent defendants solely to avoid liability for attorney fees. 12 II. LEGAL ARGUMENT 13 A. LEGAL AUTHORITY FOR ATTORNEY FEES IN VOLUNTARY PRETRIAL DISMISSAL CASES 14 Defendant argues that it is “entitled to its attorney fees” based on California Supreme 15 Court’s holding in Santisas v. Goodin (1998) 17 Cal.4th 599 (Motion 2:19-21). However, 16 Defendant renders this conclusion without applying the factors required by Santisas and its 17 progeny to determine a prevailing party—an analysis that confirms Plaintiff is the prevailing 18 party in this case. 19 1. Attorney Fees Are Not to be Awarded Automatically in Voluntary Pretrial 20 Dismissal Cases. 21 In 1998, the Santisas court held that in pretrial dismissal cases, attorney fees are available 22 as costs in defense of tort claims if the contract provision is broad enough. Santisas, 17 Cal.4th at 23 622. However, it also confirmed its holding in International Industries, Inc. v. Olen (1978) 24 21 Cal.3d 218 that such recovery of fees is not automatic: 25 The Olen majority soundly reasoned that attorney fees should not be awarded automatically to parties in whose favor a voluntary dismissal has been entered. In 26 particular, it seems inaccurate to characterize the defendant as the "prevailing party" if the plaintiff dismissed the action only after obtaining, by means of settlement or 27 otherwise, all or most of the requested relief, or if the plaintiff dismissed for reasons, such as the defendant's insolvency, that have nothing to do with the probability of success on 28 the merits. The Olen majority also soundly reasoned that scarce judicial resources should VILLA ROSA HOMEOWNERS ASSOCIATION’S OPPOSITION TO DEFENDANT’S MOTION FOR ATTONREY FEES 2 not be used to try the merits of voluntarily dismissed actions merely to determine which 1 party would or should have prevailed had the action not been dismissed. 2 Santisas, 17 Cal.4th at 621-622. 3 The Santisas decision tasked the trial courts to determine who is a prevailing party in 4 voluntary pretrial dismissal cases. “While section 1032 defines a prevailing party as including ‘a 5 defendant in whose favor a dismissal is entered,’ Santisas held that an award, to such a 6 defendant, of a specific type of costs--attorney's fees--is not automatic when there is a voluntary 7 pretrial dismissal of that defendant. Rather, the trial court should determine which party, if any, 8 is the prevailing party for purposes of attorney's fees claimed as costs under sections 1032 and 9 1033.5.” Silver v. Boatwright Home Inspection, Inc. (2002) 97 Cal.App.4th 443, 450-51 10 (internal citations omitted). 11 2. The Trial Court Determines Prevailing Party Using Equitable Considerations. 12 “[I]n determining litigation success, courts should respect substance rather than form, and 13 to this extent should be guided by ‘equitable considerations.’ For example, a party who is denied 14 direct relief on a claim may nonetheless be found to be a prevailing party if it is clear that the 15 party has otherwise achieved its main litigation objective.” Hsu v. Abbara (1995) 9 Cal.4th 863, 16 877. “In exercising that discretion, the court may consider the reason for the dismissal, including 17 whether the parties have reached their litigation objectives by settlement, judgment, or other 18 means.” Silver, 97 Cal.App. 4th at 452. 19 B. PLAINTIFF IS THE PREVAILING PARTY 20 The prevailing party determination is based “on a pragmatic definition of the extent to 21 which each party has realized its litigation objectives, whether by judgment, settlement, or 22 otherwise.” Santisas, 17 Cal. 4th at 622. Here, Plaintiff achieved its objectives through 23 judgments and a settlement; in addition, Plaintiff’s discovery of a separate lawsuit by Travelers 24 against these same defendants claiming over $6 million in damages rendered the prospect of 25 collection of any further remedies unlikely. 26 1. Summary of Plaintiff’s Claims. 27 Plaintiff’s claims are based on fraud. See Second Amended Complaint (“SAC”), 28 attached as Exhibit 1 to the Request for Judicial Notice (“RFJN”) submitted herewith. VILLA ROSA HOMEOWNERS ASSOCIATION’S OPPOSITION TO DEFENDANT’S MOTION FOR ATTONREY FEES 3 1 Commonwealth was under contract with the Association to act as its property management firm, 2 did all of the Association’s accounting, did all of the accounts payable, paid the Association’s 3 bills, and kept all the books. Declaration of Daniel W. Ellecamp (“Ellecamp Decl.”) ¶ 3; and 4 Ellencamp Decl. ¶ 22, Exhibit 3, Ellencamp Deposition Transcript (“Ellencamp Depo.”) 39:4-17. 5 On December 7, 2020, Plaintiff learned from Rachel Adams, its insurance broker at 6 George Peterson Insurance, that defendant Vallen W. Cooper, on behalf of Commonwealth, 7 tendered two claims to Plaintiff’s insurance carrier, Travelers Insurance Company (“Travelers”) 8 for alleged smoke/ash damage to Plaintiff’s property. Ellecamp Decl. ¶¶ 4, 10; Ellecamp Depo. 9 66:12-69:1; and Declaration of Rachel Hefele aka Rachel Adams, RFJN ¶ 2, Exhibit 2 (“Adams 10 Decl.”) ¶¶ 29-31. The first claim was tendered on or about November 13, 2019 based on damage 11 allegedly caused by the Kincade fire (Adams Decl. ¶ 7); and, the second claim was tendered on 12 or about September 4, 2020, based on damage alleged to have been caused by the Walbridge 13 Fire. Ellecamp Decl. ¶¶ 4, 10; Adams Decl. ¶ 13, Ex. B, ¶¶ 14-15, Ex. C. Travelers paid 14 $493,708.16 on the Kincade Fire insurance claim and $248,990.59 on the Walbridge Fire 15 insurance claim. Ellecamp Decl. ¶¶ 5, 11; Ellecamp Depo. 84:2-25; and Adams Decl. ¶¶ 8, 19. 16 Commonwealth used funds paid by Travelers to pay defendant Accurate Property Services, aka 17 Accurate Maintenance & Janitorial (“AMJ”), a company that is owned and/or operated by 18 defendant Chad Cooper (Vallen Cooper’s son), and his fiancée at the time, defendant Kellin A. 19 Baker. Ellecamp Decl. ¶¶ 5-6, 12. In addition to these claims made to Travelers allegedly on 20 behalf of but unbeknownst to Plaintiff, on November 30, 2019, Commonwealth issued itself a 21 check from Plaintiff’s account in the amount of $24,685.41 representing a 5% fee for 22 “managing” the $493,708.16 insurance claim. Ellecamp Decl. ¶ 7. 23 Plaintiff was unaware of any claims because it was unaware of any evidence that its 24 property had incurred damage as a result of the Kincade Fire or Walbridge Fire sufficient to 25 make an insurance claim and as such, would never have authorized these claims. Ellecamp Decl. 26 ¶¶ 8, 13. Furthermore, no evidence exists that AMJ performed any of the remediation work for 27 which it was paid on either claim. Ellecamp Decl. ¶¶ 9,13; Ellecamp Depo. 97:5-19, 121:2-5. 28 ///// VILLA ROSA HOMEOWNERS ASSOCIATION’S OPPOSITION TO DEFENDANT’S MOTION FOR ATTONREY FEES 4 1 On December 7, 2020, Plaintiff learned from Rachel Adams at George Peterson 2 Insurance, that Travelers was not going to be renewing the Association’s policy as a result of 3 those claims. Ellecamp Decl. ¶ 14; Ellecamp Depo. 66:12-69:1, 93:6-13. As a direct result of 4 the Kincade Fire insurance claim and the Walbridge Fire insurance claim, the Association was 5 deemed an unacceptable insurance risk in the standard insurance marketplace and was forced to 6 seek insurance from a non-standard provider. Ellecamp Decl. ¶ 15. Ellecamp Depo 108:13- 7 110:10, 113:1-11. Plaintiff’s premium was raised 622% due to the two smoke damage claims 8 paid by Travelers. Ellecamp Decl. ¶¶ 15-16, Ex. 1; Adams Decl. ¶¶ 39-40, Ex. M. 9 When confronted about the claims, Vallen Cooper, on behalf of Commonwealth, offered 10 to return the Walbridge Claim money to the Association so it could offer it back to Travelers and 11 cancel the claim, even though she had already released the money to AMJ. Ellecamp Decl. ¶¶ 12 17-18, Ellecamp Depo. 112:1-18. Cooper retrieved the funds from AMJ, and returned the 13 $248,990.59 to the Association, but when the Association offered to return the funds to 14 Travelers, it was told that Travelers would not take it back in exchange for canceling the claim. 15 Ellecamp Decl. ¶ 18, Ellecamp Depo 112:19-25. 16 Plaintiff decided to bring this lawsuit against the defendants in this case to recover the 17 $24,685.41 for the “claim management fee” taken by Commonwealth, the cost of increased 18 premiums that were a result of the fraudulent claims made by Commonwealth, and punitive 19 damages. SAC ¶¶ 69-72. 20 2. Plaintiff Achieved its Litigation Objectives. 21 Plaintiff filed its complaint on March 12, 2021. On June 22, 2021, Defendants filed a 22 demurrer and motion to strike. The hearing on the demurrer and motion to strike was held on 23 December 8, 2021 and plaintiff was given leave to amend. On January 6, 2022, Plaintiff filed its 24 SAC, and on February 7, defendants filed a second motion to strike. The hearing on the second 25 motion to strike was held on July 20, 2022, where the court overruled the motion. On August 3, 26 2022, after achieving judgments against the individual defendants, and having negotiated a 27 reinstatement of the Travelers policy at a reduced premium, Plaintiff dismissed the remaining 28 entity defendants. Commonwealth’s motion now asks for a half million dollars in attorney fees VILLA ROSA HOMEOWNERS ASSOCIATION’S OPPOSITION TO DEFENDANT’S MOTION FOR ATTONREY FEES 5 1 for what was two motions, some limited written discovery, and one deposition in a case where 2 three of the defendants had judgments taken against them and the other two are likely insolvent. 3 a. Plaintiff Achieved Judgments Against 3 of the 5 Defendants. 4 Parties who attain their litigation objective by settlement includes a plaintiff “who obtains 5 a settlement from a party other than a defendant who has been voluntarily dismissed prior to trial 6 and who is asserting entitlement to contractual attorney's fees under sections 1032 and 1033.5.” 7 Silver v. Boatwright Home Inspection, Inc. (2002) 97 Cal.App.4th 443, 452. After learning that 8 Travelers 1 brought a case against these defendants seeking over $6 million in damages, Plaintiff 9 made section 998 offers at $10,000 to each defendant to try to recover its out-of-pocket losses. 10 On May 2, 2022, three defendants, Vallen Cooper, Chad Cooper, and Kellin Baker, accepted the 11 offers. The judgments were entered on June 7, 2022 and were satisfied on July 8, 2022. 12 Plaintiff’s recovery of $30,000 through judgments achieved its objective of recovering 13 the $24,685.41 that it was charged by Commonwealth for a “claim management fee.” Since this 14 would act as a setoff for the joint tortfeasor, Commonwealth, under Code of Civil Procedure § 15 877, there was no reason to pursue those damages against Commonwealth. 16 b. Plaintiff Obtained a Settlement with Travelers to Offset it Damages 17 Due to Increased Premiums. 18 The Santisas directive is that “when the contractual attorney's fees provision does not 19 define who is a prevailing party and does not specifically require or prohibit recovery of 20 attorney's fees when a defendant is voluntarily dismissed prior to trial, courts should be 21 pragmatic about their attorney's fees decisions by examining the extent to which the parties 22 realized their litigation objectives.” Silver, 97 Cal.App.4th 453 (citing Santisas). 23 Plaintiff’s money damages were the “claim management fee” and increased premiums 24 due to the fraudulent claims submitted by Commonwealth. On or about August 13, 2021, 25 Travelers filed its complaint in Travelers v. Cooper, under seal, against each of the defendants 26 named in this case. See Travelers v. Cooper, RFJN ¶3, Ex. 3. In that case, Travelers sought 27 1 See Complaint in The People of the State of California, ex rel. Travelers Casualty 28 Insurance Company of America, et al. v. Vallen W. Cooper, et al., (hereinafter “Travelers v. Cooper”) Sonoma County Superior Court Case No. SCV-269077, RFJN ¶3, Exhibit 3. VILLA ROSA HOMEOWNERS ASSOCIATION’S OPPOSITION TO DEFENDANT’S MOTION FOR ATTONREY FEES 6 1 damages against these same defendants for insurance fraud. Id. On or about April 27, 2021, 2 Travelers’s counsel, Dennis Kass, informed Plaintiff’s counsel, Nick Bernate, that Villa Rosa 3 was being investigated for fraudulent claims because the $248,990.59 Walbridge Claim funds 4 were, in fact, in Villa Rosa’s account and they had no right to keep it. Declaration of Nicolas 5 Bernate (“Bernate Decl.”) ¶ 2. 6 On October 13, 2021, as a direct result of this lawsuit, Bernate was able to negotiate a 7 settlement with Travelers whereby Travelers would reinstate the Association’s policy at its prior 8 rate, and the Association would return the Walbridge Claim funds of $248,990.59 to Travelers, 9 in installments to be applied as a credit to the Walbridge claim reducing it to $0. In addition to 10 releasing any and all claims Travelers may have against Villa Rosa, the settlement nullified the 11 effect the fraudulent claims had on Plaintiff’s future premiums saving it $239,000 per year. 12 Ellecamp Decl. ¶20 and Exhibit 2 attached thereto. Since the Association was no longer facing 13 damages due to increased premiums, it made little sense to pursue the two remaining defendants. 14 Ellecamp Decl. ¶ 21; Ellecamp Depo. 136:3-8, 136:24-137:15, 137:22-138:9. 15 c. Recovery of Punitive Damages and other Incidental Damages from 16 the Remaining Defendants was Unlikely. 17 On or about May 19, 2021, Plaintiff’s counsel, Bernate, spoke with an investigator with 18 the California Insurance Commission and an investigator for Nationwide Insurance Company 19 who both explained to Bernate that, while they had not completed their respective investigations, 20 almost all of Commonwealth’s HOA clients were reporting that Commonwealth had been 21 tendering claims on their behalf and without their knowledge, and Bernate passed that 22 information along to Villa Rosa. Bernate Decl. ¶¶ 3-4. On February 4, 2022, the court unsealed 23 the Travelers v. Cooper complaint. Order, RFJN, ¶ 4, Ex. 4. Travelers’s attorney sent a copy of 24 that complaint to counsel for the Association, Nick Bernate, and he forwarded it to the 25 Association. Bernate Decl. ¶¶ 5, 6 and Ex. 1. The complaint revealed the scope of the fraud that 26 Travelers was suing these same defendants for. The damages claim is over $6 million for not 27 only the two claims made against the Villa Rosa property, but also claims made on behalf of 28 seven other HOAs whose properties were insured by Travelers and Commonwealth was VILLA ROSA HOMEOWNERS ASSOCIATION’S OPPOSITION TO DEFENDANT’S MOTION FOR ATTONREY FEES 7 1 managing. Since Travelers has much more resources to litigate the case, and the unlikely ability 2 of these defendants to satisfy judgments of that magnitude, it made sense to Villa Rosa not to 3 pursue the remaining two entity defendants, so it dismissed them, ending this lawsuit. Ellecamp 4 Decl. ¶21. 5 C. AN AWARD OF ATTORNEY FEES WOULD PRODUCE AN INEQUITABLE RESULT. 6 The court utilizes equitable considerations in awarding attorney fees in voluntary pretrial 7 dismissal cases. Int'l Indus., Inc. v. Olen (1978) 21 Cal.3d 218, 223 (“[S]ound public policy and 8 recognized equitable considerations require that we adhere to the prior practice of refusing to 9 permit recovery of attorney fees based on contract when the plaintiff voluntarily dismisses prior 10 to trial.”). Also, Hsu v. Abbara (1995) 9 Cal.4th 863, 877 (“[I]n determining litigation success, 11 courts should respect substance rather than form, and to this extent should be guided by 12 ‘equitable considerations.’ For example, a party who is denied direct relief on a claim may 13 nonetheless be found to be a prevailing party if it is clear that the party has otherwise achieved its 14 main litigation objective.” 15 This case is on all fours with Silver v. Boatwright cited above. In Silver, Defendant 16 Boatwright Home Inspection, Inc. (Boatwright) appealed from an order that denied its motion for 17 attorney's fees filed after a pretrial voluntary dismissal was entered in its favor. Boatwright 18 contended it was the prevailing party as between itself and the plaintiffs who filed the dismissal, 19 and therefore the trial court abused its discretion when it denied Boatwright such fees. 20 Boatwright filed a memorandum of costs which included $24,300 in attorney fees and a motion 21 for attorney fees as costs. Citing Civil Code section 1717 and Code of Civil Procedure section 22 1033.5, Boatwright contended it was entitled to attorney fees because plaintiffs dismissed their 23 suit against it. Silver, 97 Cal. App. 4th at 445-447. The trial court disagreed stating: 24 [E]quitable principles govern awards of attorney's fees made pursuant to contract, and when plaintiffs' case is viewed as a whole, plaintiffs are the prevailing parties because 25 they have recovered, or are in the process of recovering, significant relief. On the other hand, said the court, if only plaintiffs' case against Boatwright is considered, Boatwright 26 is the prevailing party because it was dismissed from the suit. The court observed that if it awarded Boatwright the fees it requested, "it would virtually eliminate the relief procured 27 by plaintiffs from any other parties. This result is inequitable. The court also believes that public policy considerations favoring voluntary dismissal of before trial [sic] to avoid 28 maintaining pointless litigation takes priority over the recovery of attorney fees. VILLA ROSA HOMEOWNERS ASSOCIATION’S OPPOSITION TO DEFENDANT’S MOTION FOR ATTONREY FEES 8 1 Silver, 97 Cal.App.4th at 448. The appellate court affirmed. Id. 2 Here, Commonwealth is seeking a quarter million dollars in attorney fees 2 and requesting 3 a loadstar increase to a half-million dollars for a case that was limited to 2 pre-answer motions 4 (one that it lost), some written discovery and one deposition by claiming “prevailing party” 5 status solely on the basis of being dismissed; however, that analysis must be an equitable one. 6 Here, the evidence reveals that Plaintiff did not dismiss the case because it lacked merit. It 7 dismissed because it achieved its litigation objectives, there was little left to pursue, and the 8 likelihood that any further judgment would be uncollectible. Here, as in Silver, a fee award 9 would work an inequity by wiping-out the substantial relief Plaintiff was able to procure through 10 this litigation. 11 III. CONCLUSION 12 This case represents the quintessential situation defined by the holdings in Santisas and 13 Olen reasoning that attorney fees should not be awarded automatically to parties in whose favor 14 a voluntary dismissal has been entered. This is a clear case of a plaintiff dismissing the action 15 after obtaining all or most of the requested relief by means of settlement or otherwise, and the 16 defendants’ likely insolvency. As such, the motion should be denied. 17 18 DATED: January 26, 2023 CLEMENT, FITZPATRICK & KENWORTHY 19 By: 20 JEFFREY S. LYONS 21 Attorneys for Plaintiff Villa Rosa Homeowners Association 22 23 24 25 26 27 2 28 It should be noted that all five defendants share the same attorney, and of the five, three had judgments taken against them. VILLA ROSA HOMEOWNERS ASSOCIATION’S OPPOSITION TO DEFENDANT’S MOTION FOR ATTONREY FEES 9