More on Davis v. Ford Motor Credit Co.: the attorneys' fees holding

The other interesting holding of Davis v. Ford Motor Credit Co., ___ Cal.App.4th ___ (Nov. 19, 2009), relates to attorneys' fees.  After the trial court sustained the defendant's demurrer without leave to amend, the defendant moved for attorneys' fees, arguing that the statute that plaintiff borrowed for his UCL "unlawful" prong claim (the Rees-Levering Act) contained a reciprocal attorneys' fees provision (specifically, Civil Code section 2983.4), which should apply.  The trial court disagreed, and denied the motion for fees.  The Court of Appeal affirmed.

As an initial matter, the Court of Appeal explained that "the UCL does not provide for attorney fees" and that prevailing plaintiffs generally "seek attorney fees as a private attorney general pursuant to Code of Civil Procedure section 1021.5."  Slip op. at 22 (quoting Walker v. Countrywide Home Loans, Inc., 98 Cal.App.4th 1158, 1179 (2002)).  "There is no provision for such a right for a successful defendant." Id. (quoting Walker) (emphasis in original).  As a result,"where a plaintiff sues only under the unfair competition law, fees may not be recovered by a prevailing defendant."  Id. (quoting Walker).

The Court of Appeal expressly rejected the argument that an attorneys' fees provision in a "borrowed" statute should apply in a UCL "unlawful" prong case:

Here, ... although the underlying transaction was subject to the provisions of Rees-Levering, the action was not prosecuted under Rees-Levering. Davis did not sue directly under Rees-Levering -- rather, the alleged Rees-Levering violation was merely a predicate to the complaint’s UCL claims. We hold Rees-Levering’s reciprocal fee provision is inapplicable when an alleged Rees-Levering violation is merely a predicate to a UCL claim, in that the public policy underlying the UCL must prevail over the reciprocal fee provision of Rees-Levering. Therefore, Ford was not entitled to recover attorney fees pursuant to Rees-Levering’s attorney fees provision (Civ. Code, § 2983.4).

Slip op. at 24 (footnote omitted).

One reciprocal attorneys' fees provision this holding brings to mind is Labor Code section 218.5, which applies to certain actions for nonpayment of wages.  Query whether bringing such actions solely under the UCL's "unlawful" prong might be the better route, particularly since Cortez holds that earned but unpaid wages are recoverable as UCL "restitution."  The UCL has a longer statute of limitations than the Labor Code, which is another advantage.  And the Supreme Court is now considering (in Pineda v. Bank of America, no. S170758) whether the penalties available for some Labor Code violations are recoverable in a UCL "unlawful" prong case. 

Comments

[Andrew Sussman]

One solution to this problem = amend CCP Sec. 1021.5 to permit a defendant's recovery of fees in UCL cases, like those permitted by CC Sec. 1780(e) for CLRA cases prosecuted in bad faith.