Monday, April 01, 2013

One way to address the S.B. 1062 fee shifting issue

S.B. 1062, currently in the Maryland State Senate (see two posts on it below), deals with the problem of attorney fee shifting in covenant enforcement cases where the fees are grossly disproportionate to what is at stake in the case.  Here is one way it could be amended, using the California approach. This is from California Civil Code Section 1354 b, c, d, and e, in the Davis-Stirling Common Interest Developments Act:

  (f) In any action specified in subdivision (a) to enforce the
governing documents, the prevailing party shall be awarded reasonable
attorney's fees and costs.  Upon motion by any party for attorney's
fees and costs to be awarded to the prevailing party in these
actions, the court, in determining the amount of the award, may
consider a party's refusal to participate in alternative dispute
resolution prior to the filing of the action.

So the court can adjust the amount of fees downward if the losing party refused to participate in ADR prior to filing of the action. Why not do the same thing with the problem addressed by S.B. 1062?--fees that are excessive not because they fail the test of the "lodestar method," (i.e., can't be justified on time and effort and ability grounds), but because the fees are ridiculous in view of how little was at stake. 

Just specify in S.B. 1062 what kinds of cases it applies to, which would be covenant enforcement actions involving nonmonetary violations; define nonmonetary violations;  say that this section is in addition to the factors that already apply under existing law and court rules;  and then add "the court, in determining the amount of the award, may consider the degree to which the amount of the attorney's fees is reasonable in relation to the amount in controversy or the nature of the nonmonetary violation."  Perhaps the language could be changed to read "the nature and seriousness" of the nonmonetary violation.

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