Reported / Citable
Background
Daniel Del Biaggio prevailed in a breach-of-contract case against Pete and Mary Ann Bansen stemming from a dairy succession arrangement in Humboldt County. After a jury awarded him $52,850 in damages, Del Biaggio sought attorney fees under a provision in the parties’ contract entitling the prevailing party to “a reasonable sum as and for its attorneys’ fees in the litigation.”
The trial court awarded $56,000 in fees, cutting the requested 283.1 attorney hours roughly in half because Del Biaggio’s counsel had over-litigated the case with causes of action that were legally unsupported. The court also excluded all paralegal fees on its own initiative, concluding that the contract’s “attorneys’ fees” language did not reach paralegal work. It then sanctioned Del Biaggio’s counsel, Carlton Floyd, for filing a motion for reconsideration challenging that paralegal-fee ruling.
Del Biaggio appealed the lodestar reduction, the paralegal-fee exclusion, and the sanctions. The Bansens cross-moved for appellate sanctions, contending the appeal was frivolous and that Del Biaggio’s opening brief contained fabricated quotations from real cases. The court issued its own order to show cause directed at Floyd regarding the false citations.
The Court’s Holding
The First Appellate District affirmed the lodestar reduction, reversed the exclusion of paralegal fees, vacated the trial court’s sanctions order, and imposed $1,500 in sanctions on Floyd payable to the clerk of the appellate court.
On paralegal fees, the court held that a contractual attorney-fee clause ordinarily encompasses separately billed paralegal time. The purpose of such a provision is to restore the prevailing party to the position it would have occupied had litigation not been necessary, which means compensating for what it actually paid its legal team. Treating paralegal fees as categorically excluded would perversely push parties to use more expensive attorney time for tasks paralegals could handle, and would operate at cross-purposes with the clause’s requirement that the amount be “reasonable.” The court remanded for the trial court to assess what portion of the requested paralegal time and rate was reasonable.
The trial court’s sanctions were vacated because the reconsideration motion was both procedurally proper and substantively meritorious. The paralegal-fee issue had been decided by the court sua sponte—without giving either party notice or an opportunity to brief it—and a motion for reconsideration is a recognized vehicle to address exactly that kind of surprise ruling.
The appellate sanctions tell the more cautionary tale. Floyd’s opening brief contained multiple fictional quotations attributed to real cases, including invented language from the California Supreme Court’s PLCM Group, Inc. v. Drexler—a case that does not discuss paralegal fees at all. Floyd attributed the errors to generative AI used during trial recesses in another matter, explaining that a “communication error” left the AI-supplied quotations unverified. The court accepted that the errors were unintentional but found the explanation insufficient. Under State Bar guidance, attorneys must personally review AI-generated legal authority before filing; that duty cannot be delegated to a paralegal performing a spot-check. The court also noted that the AI had conveniently generated quotations articulating the exact proposition Floyd sought to advance—language that had eluded him during earlier research—which should itself have been a red flag. Floyd was ordered to pay $1,500 to the court clerk, and the opinion was forwarded to the State Bar.
Key Takeaways
- A contractual “attorneys’ fees” clause presumptively includes separately billed paralegal time at a reasonable market rate. Parties who want to exclude paralegal work must use explicit language to do so.
- A trial court that rules on an issue sua sponte—without notice to the parties—cannot sanction counsel for filing a motion for reconsideration to address that ruling.
- Attorneys who use generative AI in briefing must personally verify that quoted language actually appears in the cited source; the duty cannot be discharged by a paralegal spot-check. Failure to do so is sanctionable even without intent to deceive.
- AI-generated quotations that happen to articulate the attorney’s exact legal position, and that the attorney could not locate during earlier manual research, are a built-in red flag warranting heightened scrutiny before filing.
- California courts will refer AI-fabrication sanction opinions to the State Bar, with professional-responsibility consequences beyond the monetary sanction itself.
Why It Matters
The AI fabrication holding joins a rapidly growing line of California decisions treating hallucinated citations as a sanctionable breach of counsel’s duty of candor regardless of intent, including the First District’s own prior decisions in Sheerer v. Panas (2026) and Noland v. Land of the Free (2025). The $1,500 sanction is relatively modest by itself, but the accompanying State Bar referral and the requirement that Floyd provide a copy of the opinion to his own client transform it into a more serious professional consequence. Any litigator using AI tools to research or draft briefs should treat this decision as a checklist item: personally open and read every case before the brief is filed, not after opposing counsel flags a problem.
The paralegal-fee holding has everyday significance for California transactional and litigation practitioners operating under standard fee-shifting contracts. Rather than having to argue that a clause affirmatively authorizes paralegal fees, prevailing parties can now rely on the presumption that “attorneys’ fees” is broad enough to include them. The burden shifts to the opposing side to show that the specific contract language was meant to exclude paralegal work—a harder argument when, as is common, the fee clause uses generic language and neither party raised the exclusion during the underlying fee motion.