Split of Authority on Appealability of Post-Reversal Fee Orders

Timothy Kowal, Esq.
  •  
January 27, 2021

If you find yourself back in the trial court after a remand by the Court of Appeal, things are supposed to be much the same as before. Yet sometimes, things are not the same.

This case provides one example: after a perfectly routine order granting attorney fees, defendant appeals the fee order, which is, likewise, perfectly routine as a postjudgment order. But this time, the effect of the Court of Appeal's reversal means there is no judgment, and you can't appeal as a postjudgment order if you don't have a judgment in the first place, with the effect that the perfectly routine appealable order arguably is not appealable.

Here is what happened in Apex LLC v. Korusfood.com (D4d3 2013) 222 Cal.App.4th 1010. Plaintiff sued defendant Sharing World, Inc. for nonpayment of a delivery of cottonseed under a contract between plaintiff and Sharing World. The contract contained an attorney fee provision. Both Sharing World and its successor entity, Korusfood, answered the complaint in a joint document. Korusfood, however, was not a signatory to the contract with plaintiff.

A judgment for defendants was reversed. On remand, the now-successful plaintiff sought attorney fees against nonsignatory Korusfood. The motion was granted, and Korusfood appealed.

Raising a surprisingly novel point in a motion to dismiss the appeal, plaintiff argued that an award of fees following reversal on appeals is not an appealable order. While fee awards are treated as postjudgment orders appealable under Code of Civil Procedure section 904.1(a)(2), the Apex v. Korusfood court notes that "The effect of a general reversal is to create a situation where no judgment is deemed to have been entered." The decision of the Court of Appeal is not a judgment for purposes of section 904.1(a)(1) or (2).

Worse still, "We have found no published decision addressing whether a trial court order granting attorney fees on appeal, made on remand after reversal of the underlying judgment, is directly appealable."

Fortunately, the post-appeal fee award could be deemed appealable as a collateral order. Collateral orders are an exception to the general rule that only final orders are appealable. To be appealable as a collateral order, the order must be (1) collateral, i.e., separate from the merits of the matter, (2) final, and (3) directing the payment of money or performance of an act.

Interestingly, there is a split of authority whether this third element is truly essential: Compare Barnes v. Litton Systems, Inc. (1994) 28 Cal.App.4th 681, 685, fn. 4 [order does not literally direct payment of money, thus not appealable], and Krikorian Premiere Theatres, LLC v. Westminster Central, LLC (2011) 193 Cal.App.4th 1075, 1083-1085 [no meaningful distinction between an order awarding costs and an order denying a motion to tax costs, thus, order denying motion to tax, whole or in part, is appealable collateral order].

The Fourth District notes this split of authority, but concludes this is not the occasion to decide it because it easily finds all three factors met here. The post-reversal fee award is an appealable collateral order. But the Fourth District appears to take the view that the order must involve the payment of money or performance of an act. So had the trial court denied the fee motion, it seems likely the court would have held the order not appealable, and dismissed the appeal.

This would have been an injustice, because as the court goes on to hold, plaintiff had a right to fees. The court agreed with plaintiff that Korusfood had "stepped into the shoes of [the signatory], and should be estopped from denying liability for attorney fees." (Id. at p. 1017.) The Court stated the rule, supporting by numerous authorities, that [a] nonsignatory will be bound by an attorney fees provision in a contract when the nonsignatory party stands in the shoes of a party to the contract. (Id. at pp. 1017-18.) The Court noted that both the signatory and nonsignatory defendants filings were always blended into one, which was substantial evidence supporting a finding Korusfood stepped into the shoes of the signatory defendant. (Id. at p. 1018.)

The upshot: If you successfully reverse a judgment and there is an appeal concerning the right to fees or costs after reversal, be mindful of the collateral order doctrine. And be sure to note the split of authority over whether the order must compel the payment of money or performance of an act.

Tim Kowal helps trial attorneys and clients win their cases and avoid error on appeal. He co-hosts the Cal. Appellate Law Podcast at www.CALPodcast.com, and publishes a newsletter of appellate tips for trial attorneys at www.tvalaw.com/articles. Contact Tim at tkowal@tvalaw.com or (714) 641-1232.