Judge: Alison Mackenzie, Case: 22SMCV01180, Date: 2023-05-17 Tentative Ruling

Case Number: 22SMCV01180    Hearing Date: May 17, 2023    Dept: 207

Background

Plaintiff Kavi Virk (“Plaintiff”) brings this action against Defendants Radical Studios, Inc., Matthew Berger, and Jesse Burger (collectively “Defendants”) alleging fraud by Defendants in connection with two contracts between the parties. The parties have a long history which is too long to fully recount here, but has involved several different lawsuits between the parties, some of which are still pending in other departments of the Los Angeles Superior Court. Defendant Radical Studios, Inc., is a film studio which appears to have contracted with Plaintiff to act as a consultant in connection with certain films. Plaintiff’s Complaint in this matter, filed July 22, 2022, asserts one cause of action for fraud against all Defendants, alleging Defendants fraudulently induced him to enter into contracts, including one for a film called “Aladdin.”

On October 11, 2022, the Court sustained Defendants’ demurrer to Plaintiff’s Complaint without leave to amend pursuant to Code Civ. Proc. § 430.10(c) as there was another action pending between the same parties on the same cause of action. On April 7, 2023, the Court granted Defendants’ motion to have Plaintiff declared a vexatious litigant. On April 11, the Court granted Defendants’ ex parte application to dismiss the action with prejudice following the Court’s sustaining of Defendants’ demurrer without leave to amend.

Defendants now move for an award of attorney’s fees pursuant to Code Civ. Proc. § 1021.5. Defendants’ motion is unopposed.

Legal Standard

Code Civ. Proc. § 1033.5(a)(10)(B) permits a Court to award attorney’s fees as costs where authorized by statute. Code Civ. Proc. § 1021.5 codifies the “private attorney general” exception to the general rule that each side bears its own fees unless the parties contracted otherwise. Section 1021.5 permits a trial court to award fees to a successful party in any action that: “has resulted in the enforcement of an important right affecting the public interest if: (a) a significant benefit, whether pecuniary or nonpecuniary, has been conferred on the general public or a large class of persons, (b) the necessity and financial burden of private enforcement … are such as to make the award appropriate, and (c) such fees should not in the interest of justice be paid out of the recovery, if any.” (C.C.P. § 1021.5.)

To qualify for an award of fees under section 1021.5, the prevailing party must establish that: (1) the litigation resulted in the enforcement of an important right affecting the public interest; (2) a significant benefit has been conferred on the general public or a large class of individuals; and (3) the necessity and financial burden of private enforcement renders the award appropriate. (Adoption of Joshua S. (2008) 42 Cal.4th 945, 952.) Each of these three elements must be proved. (County of Colusa v. California Wildlife Conservation Bd. (2006) 145 Cal.App.4th 637, 648.) The “necessity” requirement “addresses the issue of the comparative availability of public enforcement, not the causal relationship between the claimant’s action and the result.” (Sacramento v. Drew (1989) 207 Cal.App.3d 1287, 1298-99.) “An award is appropriate when the cost of the claimant’s legal victory transcends his or her personal interest. Stated another way, the question is whether the need for pursuing the lawsuit placed a burden on the [litigant] out of proportion to his or her individual stake in the matter. ‘This requirement focuses on the financial burdens and incentives involved in bringing the lawsuit.’” (Washburn v. City of Berkeley (1987) 195 Cal.App.3d 578, 584 [citation omitted].)

“The purpose of an award of attorney fees pursuant to section 1021.5, is to encourage suits that enforce ‘common interests of significant societal importance, but which do not involve any individual’s financial interest to the extent necessary to encourage private litigation to enforce the right. To encourage such suits, attorneys fees are awarded when a significant public benefit is conferred through litigation pursued by one whose personal stake is insufficient to otherwise encourage the action. Section 1021.5 was not designed as a method for rewarding litigants motivated by their own pecuniary interests who only coincidentally protect the public interest.’” (Eugene Satrap v. Pacific Gas and Electric Company (1996) 42 Cal.App.4th 72, 77 [citations omitted]; see also Beach Colony II Limited v. California Coastal Commission (1985) 166 Cal.App.3d 106, 111 [“The rationale of the private attorney general theory is to encourage the presentation of meritorious claims affecting large numbers of people by providing successful litigants attorneys fees incurred in public interest lawsuits”].)

While section 1021.5 is primarily directed at rewarding plaintiffs who initiate litigation in the public interest, defendants may nonetheless obtain the benefit of the statute where they can satisfy the statutory requirements. (See City of Sacramento v. Drew (1989) 207 Cal.App.3d 1287, 1302 [“A prevailing defendant who meets the criteria of the statute is entitled to an award even without a cross-complaint”].) The question of whether to award fees pursuant to section 1021.5 is committed to the trial court’s discretion. (Flannery v. California Highway Patrol (1998) 61 Cal.App.4th 629, 634.)

Analysis

On April 7, 2023, the Court granted Defendants’ motion to have Plaintiff declared a vexatious litigant pursuant to Code Civ. Proc. § 391 and granted their request to impose a prefiling order against Plaintiff pursuant to Code Civ. Proc. § 391.7, which prohibits Plaintiff from filing any new litigation in propria persona without first obtaining leave of the presiding judge of the Court where the action is filed. Defendants now seek an award of $86,350 in attorney fees pursuant to Code Civ. Proc. § 1021.5 because they succeeded on their motion to have Plaintiff deemed a vexatious litigant.

The Court finds Defendants have failed to show their success in having a prefiling order imposed against Plaintiff has conferred a significant benefit on the general public or a large class of persons. Defendants argue the Court’s order granting their motion conferred a benefit on other unspecified parties who are currently litigating matters against Plaintiff, yet Defendants do not quantify how large this purported class of persons is aside from claiming three attorneys contacted Defendant Matthew Berger. (Motion at 3, fn. 1.) Defendants also claim the imposition of the prefiling order against Plaintiff will protect parties in the future from the filing of meritless litigation by Plaintiff, but the Court has no way to quantify this class of potential future litigants. Defendants argue Plaintiff “has been a litigant in [sic] no fewer than 30 times since 2010.” (Id. at 6, fn. 2.) But this figure is not limited to meritless litigation initiated by Plaintiff, but includes actions which were filed against Plaintiff rather than by him, and includes matters on which Plaintiff ultimately prevailed. Such matters have no bearing on whether the imposition of a prefiling order has benefited the general public. Defendants also assert Plaintiff’s “actions have negatively impacted dozens, if not more, citizens though [sic] his Vexatious Litigant Behavior.” (Id. at 5.) This figure is unsupported by any evidence, and Defendants offer no explanation as to how the Court’s April 7 order would confer a benefit on those who were previously harmed by Plaintiff.

All of Defendants’ arguments would apply with equal force whenever a party succeeds on a motion to declare a vexatious litigant and impose a prefiling order pursuant to Code Civ. Proc. § 391 et seq. In each of those cases a vexatious litigant will necessarily be precluded from filing meritless litigation against parties in the future, which would benefit those parties who in the future may have otherwise been forced to expend time and money in defending meritless litigation. Yet the statutory framework regarding vexatious litigants does not include any provision allowing for the recovery of attorney’s fees by a successful moving party (C.C.P. §§ 391-391.8), nor have Defendants put before the Court any case in which attorney’s fees were awarded pursuant to section 1021.5 based on a party’s success in having an individual declared a vexatious litigant under section 391. There is, however, authority that such an award is inappropriate. (People ex rel. Brown v. Tehama County Bd. of Supervisors (2007) 149 Cal.App.4th 422, 450 [“it is apparent Code of Civil Procedure section 1021.5 does not provide any basis for a court to award attorney fees for vexatious litigation or obdurate behavior”].) To grant Defendants’ motion for attorneys’ fees would require the Court to find that the moving party is entitled to recover attorney’s fees every time a motion under section 391 is granted. The Court declines to read such a provision into the Code of Civil Procedure.

As the Court explained in Flannery v. California Highway Patrol (1988) 61 Cal.App.4th 629, 635-636:

Because the public always has a significant interest in seeing that laws are enforced, it always derives some benefit when illegal private or public conduct is rectified. Nevertheless, the Legislature did not intend to authorize an award of fees under section 1021.5 in every lawsuit enforcing a constitutional or statutory right. The statute specifically provides for an award only when the lawsuit has conferred ‘a significant benefit’ on ‘the general public or a large class of persons.’ The trial court must determine the significance of the benefit and the size of the class receiving that benefit by realistically assessing the gains that have resulted in a particular case. When the record indicates that the primary effect of a lawsuit was to advance or vindicate a plaintiff's personal economic interests, an award of fees under section 1021.5 is improper. ‘Section 1021.5 was not designed as a method for rewarding litigants motivated by their own pecuniary interests who only coincidentally protect the public interest.’ ‘Instead, its purpose is to provide some incentive for the plaintiff who acts as a true private attorney general, prosecuting a lawsuit that enforces an important public right and confers a significant benefit, despite the fact that his or her own financial stake in the outcome would not by itself constitute an adequate incentive to litigate.

(Id. at 635-636 [citations omitted].) Defendants’ conclusory statements to the contrary, it is clear that the primary effect of Defendants’ motion to have Plaintiff declared a vexatious litigant was to protect Defendants from having to defend further meritless litigation filed by Plaintiff. The record in this action makes it clear that there is no shortage of animosity between Defendants and Plaintiff. The parties’ filings have been replete with accusations of perjury and fraud, as well as demands for attorney’s fees and sanctions in connection with nearly every motion that has been filed. The Court does not give credence to Defendants’ conclusory and self-congratulatory assertions that they only filed the motion to have Plaintiff declared a vexatious litigant “to do right in the profession and help and protect others.” (Berger Decl. at ¶6.) The only tangible benefit identified by Defendants is “Now that Kavi Virk has been declared to be a Vexatious Litigant, it is unlikely that he will be able to continue to harass Radical Studios, Inc. or anyone related with Radical Studios, Inc.” (Id. at ¶5.) In other words, Defendants received the primary benefit of filing their motion, and any benefit to the public was merely coincidental. This is insufficient to show a significant benefit has been conferred on the general public or a large class of persons.

The Court also finds Defendants have made no showing as to the third requirement under Code Civ. Proc. § 1021.5: that the necessity and financial burden of private enforcement renders the award appropriate. As noted above, to satisfy this requirement the Defendants must show the need for pursuing the relief placed a burden on them out of proportion to their individual stake in the matter. Defendants’ motion does not even attempt to make such a showing. As Defendants have repeatedly stated in this action, Plaintiff has filed several actions against them, as well as numerous appeals. Defendants thus had a significant stake in curtailing Plaintiff’s ability to file meritless claims against them in the future. Defendants have not demonstrated that their burden in bringing a motion under Code Civ. Proc. § 391 was out of proportion to the benefit they would receive if it was successful.

For these reasons the Court finds Defendants have not met their burden in satisfying the statutory requirements for an award of attorney’s fees under Code Civ. Proc. § 1021.5 and their motion is DENIED.

This result is further bolstered by the established rule “that an attorney appearing on his own behalf could not recover attorney fees under either a statutory exception to the American rule or under a contractual attorney fee provision, because in such circumstances the attorney did not pay or become liable to pay consideration in exchange for legal representation.” (Trope v. Katz (1995) 11 Cal.4th 274, 280-281.) Defendant Matthew Berger is an attorney representing himself in this action. He also represents Defendant Jesse Berger, his son, and Radical Studios Inc., an entity for which his son is the Chief Executive Officer and he is counsel and Secretary. It is not clear to the Court that any Defendant has paid any amount in legal fees in connection with this action, or incurred anything close to the claimed $86,350 in attorney’s fees in bringing the motion to declare Plaintiff a vexatious litigant. Courts have called into question whether an award pursuant to Code Civ. Proc. § 1021.5 is appropriate in such circumstances (See Olsen v. Breeze, Inc. (1996) 48 Cal.App.4th 608, 629 [noting self-represented attorney’s right to fees under § 1021.5 is doubtful].) Ultimately, the Court need not decide the question as Defendants have otherwise failed to show an entitlement to an award of fees under section 1021.5.

Conclusion

Defendants’ motion for an award of attorney’s fees is DENIED.