Judge: Anne Richardson, Case: 19STCV02723, Date: 2024-01-18 Tentative Ruling

DEPARTMENT 40 - JUDGE ANNE RICHARDSON - LAW AND MOTION RULINGS
The Court issues tentative rulings on certain motions.The tentative ruling will not become the final ruling until the hearing [see CRC 3.1308(a)(2)]. If the parties wish to submit on the tentative ruling and avoid a court appearance, all counsel must agree and choose which counsel will give notice. That counsel must 1) email Dept 40 by 8:30 a.m. on the day of the hearing (smcdept40@lacourt.org) with a copy to the other party(ies) and state that all parties will submit on the tentative ruling, and 2) serve notice of the ruling on all parties. If any party declines to submit on the tentative ruling, then no email is necessary and all parties should appear at the hearing in person or by Court Call. 

Case Number: 19STCV02723    Hearing Date: January 18, 2024    Dept: 40

Superior Court of California

County of Los Angeles

Department 40

Background

Initial Pleadings and Judgment

On January 25, 2019, Plaintiff First American Properties and Acquisitions, Inc. (First American) filed a Complaint suing Defendants Fornia Hospitality Group, LLC (Fornia), Jatkinder K. Shante (J. Shante), Satwant C. Chethal (S. Chetal), Bhupinder S. Shante (B. Shante), Harban S. Chehal (H. Chetal), and Does 1 through 25.

The Complaint alleged claims of (1) Breach of Written Contract and Promissory Note, (2) Breach of Guarantee, (3) Breach of Security Agreement and Possession of Collateral, (4) Unjust Enrichment, (5) Money Had and Received, and (6) Account Stated.

The claims arose from allegations that in exchange for certain collateral and pursuant to a promissory note, First American’s assignor, the United States Small Business Administration (SBA), loaned Defendants $1,347,000, a loan on which Defendants defaulted in August 2017 by failing to make monthly payments.

On August 20, 2019, Plaintiff First American dismissed Defendants S. Chetal and H. Chetal from this action, without prejudice.

On October 16, 2020, Defendant J. Shante moved for summary judgment in Shante’s favor as against Plaintiff First American.

On February 18, 2021, Plaintiff First American opposed Defendant J. Shante’s motion for summary judgment.

That same day, Plaintiff First American filed a motion for leave to file a First Amended Complaint (FAC).

On February 22, 2021, Plaintiff First American filed its proposed FAC. The FAC added Fornia Hospitality & Investments, LLC (Fornia H&I) as a Defendant and reduced the causes of action to (1) Breach of Guarantee against J. Shante, B. Shante and Does 1 through 10 and (2) Judicial Foreclosure on Deed of Trust against Fornia, Fornia H&I, and Does 1 through 20.

On February 26, 2021, Defendant J. Sander replied to Plaintiff First American’s opposition to the motion for summary judgment.

On March 2, 2021, Defendants Fornia, J. Shante, and B. Shante opposed Plaintiff First American’s motion for leave to file a FAC.

On March 4, 2021, the Court heard and granted Defendant J. Shante’s motion for summary judgment. The Court determined that Shante made a prima facie showing that no triable issues of material fact existed as to the Complaint’s claims based on the claims being time barred and that First American failed to make a sufficient rebuttal showing.

On March 16, 2021, the Court heard and denied Plaintiff First American’s motion for leave to file its FAC. The Court reasoned that the proposed FAC did not add new fact(s) to the Breach of Guarantee claim, which failed on summary judgment, and that the proposed FAC’s new Judicial Foreclosure claim was futile and did not favor granting leave to amend given that the claim would also be time barred.

On March 24, 2021, Defendants Fornia, J. Shante, and S. Shante filed a proposed judgment.

On April 13, 2021, the Court signed the proposed judgment, adjudging and decreeing that Plaintiff, First American Properties and Acquisitions, Inc., shall take nothing by this action, and Defendants Fornia, J. Shante, and B. Shante shall recover from First American the costs of suit per memorandum of costs if allowed.

Fees and Costs in Trial Court Proceedings, Appeal, and Remittitur

On April 27, 2023, Defendants Fornia, J. Shante, and B. Shante filed a motion for attorney fees and costs pursuant to a contractual agreement for that relief in the loan agreement with the SBA.

That same day, these Defendants filed a memorandum of costs.

May 10, 2021, Plaintiff First American appealed the judgment after grant of summary judgment.

On July 8, 2021, Plaintiff First American opposed the motion for attorney fees and costs.

On July 14, 2021, Defendants Fornia, J. Shante, and B. Shante replied to the opposition to fees and costs.

On July 21, 2021, the Court granted the motion for attorney fees and costs, in part.

That same day, the Court dismissed Fornia H&I from this action.

On July 26, 2023, the court of appeal issued its opinion in Plaintiff First American’s appeal, which affirmed the Court’s judgment and awarded Defendant J. Shante costs on appeal.

On October 5, 2023, the court of appeal issued its remittitur to the Clerk.

Motion Before the Court - Fees and Costs on Appeal

On November 14, 2023, Defendant J. Shante filed a motion for attorney fees and costs related to the appeal proceedings and the motion itself.

That same day, Defendant J. Shante filed a memorandum of costs.

On January 4, 2024, Plaintiff First American opposed the motion for fees and costs.

On January 10, 2024, Defendant J. Shante replied to the opposition.

Defendant J. Shante’s motion for attorney fees and costs is now before the Court.

Motion for Attorney Fees and Costs

Legal Standard 

Attorney’s fees are recoverable as costs on appeal. (Cal. Rules of Court, rule 8.278.) “[T]o collect appellate attorney fees, a party must demonstrate the right to do so under either a statute or a contract, independent of a costs statute.” (Butler-Rupp v. Lourdeaux (2007) 154 Cal.App.4th 918, 927; see Civ. Code, § 1717, subd. (a) [award when contract between the parties specifically provides for fees and costs and one party prevails over the other on the contract].)

The Court begins a fees award inquiry “with the ‘lodestar [ method]’ i.e., the number of hours reasonably expended multiplied by the reasonable hourly rate.” (PLCM Group v. Drexler (2000) 22 Cal.4th 1084, 1095.) From there, the “lodestar figure may then be adjusted [according to a multiplier enhancement] based on consideration of factors specific to the case, in order to fix the fee at the fair market value for the legal services provided.” (Ibid.) Relevant multiplier factors include “(1) the novelty and difficulty of the questions involved, (2) the skill displayed in presenting them, (3) the extent to which the nature of the litigation precluded other employment by the attorneys, [and] (4) the contingent nature of the fee award.” (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1132.)

No specific findings reflecting the court’s calculations for attorney’s fees are required; the record need only show that the attorney’s fees were awarded according to the “lodestar” or “touchstone” approach. (Rebney v. Wells Fargo Bank (1991) 232 Cal.App.3d 1344, 1349, disagreed with on other grounds in In re Marriage of Demblewski (1994) 26 Cal.App.4th 232, 236, fn. 7 [disagreement as to statement of decision requirements].) The Court has broad discretion to determine the amount of a reasonable attorney’s fee award, which will not be overturned absent a “manifest abuse of discretion, a prejudicial error of law, or necessary findings not supported by substantial evidence.” (Bernardi v. County of Monterey (2008) 167 Cal.App.4th 1379, 1393-1394.)

Order Granting Fees and Costs: GRANTED, in part.

Plaintiff seeks a court order granting $48,385.62 in fees related to J. Shante’s defense of the judgment on appeal and in relation to this motion, as well as $540 in recoverable costs. (See Mot., p. 4.)

I. Applicability of Civ. Code, § 1717, Fees, and Reciprocity

Where a contract specifically provides for an award of attorney fees, recovery of attorney fees is allowed by whichever contracting party prevails, regardless of whether the contract specifies that party. (Hart v. Clear Recon Corp. (2018) 27 Cal.App.5th 322, 326, citing Cargill, Inc. v. Souza (2011) 201 Cal.App.4th 962, 966.)

Here, the court of appeal allowed Defendant J. Shante to recover costs on appeal, which may include attorney’s fees when allowed by statute, contract, or law. (See 10/4/23 Remittitur, p. 15; Coded Civ. Proc., § 1033.5, subd. (a)(10); see also Code Civ. Proc., § 1032, subds. (a)(4), (b) [costs as matter of right to prevailing party].) Shante also prevailed on appeal and points to the fees clause in the loan agreement to support entitlement to fees. (See 10/4/23 Remittitur, p. 15; see also Mot., pp. 5-7 [discussion of award by court of appeals, applicability of Civ. Code, § 1717, attorney’s fees clause, and prevailing party discussion]; Mot., Mann Decl., ¶ 2, citing Mot., Mann Decl., Ex. A, § 9.A. [clause pursuant to which Shante as Guarantor for the loan agreed to pay for legal fees incurred by the lender to enforce the guarantee in the loan agreement as against Shante].)

Based on the Enforcement Expenses clause in the loan agreement, the outcome and award of the appeal, and the reciprocity of section 1717, Defendant J. Shante is entitled to reasonable fees and costs as the prevailing party on appeal. (See Code Civ. Proc., §§ 1717, subd. (a); see also 1032, subds. (a)(4), (b), 1033.5, subd. (a)(10).)

II. Reasonable Fee Rates

Defendant J. Shante argues that the fee rate sought for the work of counsel on appeal and in relation to this motion—work of Lloyd S. Mann, Esq. (Mann), under two law firms, at a rate of $350 per hour—is reasonable because Mann is charging a discounted rate from between $375 to $475 per hour and because the rate is below market for attorneys with similar skills and experience at comparable law firms. Shante also argues that Mann’s summary of qualifications supports the requested fee rate. (Mot., p. 10.)

In opposition, Plaintiff First American challenges only the reasonableness of the hours expended, not the fee rate requested by Defendant J. Shante. (See Opp’n, pp. 2-3.)

In reply, Defendant J. Shante supports the reasonableness of the hours expended by counsel on appeal and in relation to this motion without discussing fee rates. (See Reply, pp. 2-5.)

The Court finds that the fee rate of $350 per hour is reasonable.

Lloyd Mann is a 40-year practitioner that has provided a declaration briefly summarizing Mann’s legal career. (Mot., Mann Decl., ¶ 6.) A rate of $350 per hour for a long-time practitioner that was successful on appeal is more than reasonable for attorneys of similar experience in the Los Angeles County area.

III. Reasonable Hours

Defendant J. Shante argues that an unspecified number of hours expended by counsel on appeal and on this motion justified the requested fee award. Shante supports the request by contending that the statute-of-limitations argument upon which Shante prevailed was clear early on in the litigation and that a new attorney came into the case to file the appeal for the plaintiffs, and thus defendants had to conduct a substantial amount of additional research given the new perspective. Shante also argues that the appeal, which was successful, involved difficult issues in a specialized area of federal and state law relating to loans SBA loans. Shante adds that the case staffing was appropriate because no more than one attorney worked on the assignment at a time and none of the work performed or billed could have been performed by a non-attorney. Last, Shante argues that the time spent on this motion was reasonable because it comprises the amount of time necessary to review billing records and prepare the moving papers and supporting exhibits. (Mot., pp. 8-9.)

In opposition, Plaintiff First American challenges two entries in the billing records that reflect work in the trial court proceedings and thus involves fees requested in a prior motion. First American then challenges various specific time entries in the verified billing records filed in the moving papers. (Opp’n, pp. 2-3.)

In reply, Defendant J. Shante argues that the appeal was reviewed de novo, requiring a fresh look at the record, where case law advises that practitioners should not rely on legal research from trial court proceedings when advancing or defending an appeal. While Shante concedes that time entries for April and May 2021 are not recoverable, Shante argues that the hours expended by counsel on appeal were reasonable, particularly where much of the time expended by counsel was responsive to Plaintiff First American’s litigation conduct. (Opp’n, pp. 2-3.)

The Court finds that most of the hours expended on the appeal and on this motion are reasonable.

The hours in the billing records detailing $3,439 in fees for trial court proceedings between April and May 2021 are not recoverable, as conceded in the reply.

Neither are the other trial court proceeding entries recoverable, i.e., the July 12 to 21, 2021 and September 22, 2021 fees work, totaling $3,167.50 in reduced fees, with the July 13 and 22, 2021 entries split in half for the stated work. (Mot., Mann Decl., Ex. B.)

The Court otherwise finds that the hours expended on appeal and on this motion are reasonable.

Defendant J. Shante’s motion is thus GRANTED, in part, in the amount of $41,779.12.

IV. Multiplier Enhancement

No multiplier enhancement award is sought by Defendant J. Shante, for which reason this topic is not further discussed.

V. Costs

Within 40 days after issuance of the remittitur, a party claiming costs awarded by a reviewing court must serve and file in the superior court a verified memorandum of costs under rule 3.1700. (Cal. Rules of Court, rule 8.278, subd. (c)(1).)

The Court of appeal issued remittitur on October 5, 2023 and awarded costs. (10/4/23 Remittitur, pp. 1, 15.)

On November 14, 2023—exactly 40 days after the issuance of remittitur—Defendant J. Shante filed a memorandum of costs.

Defendant J. Shante’s briefing focuses solely on fees while concluding on various occasions without elaboration that costs should also be granted. The costs are summarized in the memorandum of costs. (See Mot., pp. 2-11 [notice and points and authorities, references at pp 2, 3, 10, 11]; 11/14/23 Memo of Costs [$390 in filing fees and $150 in expenses relating to printing and copying briefs].)

Plaintiff First American did not file a motion to strike or tax the memorandum of costs. The failure to do so waived any opposition to costs. (Cal. Rules of Court, rule 8.278, subd. (c)(2) [timeframe for challenging costs on appeal, adopting Cal. Rules of Court, rule 3.1700]; Cal. Rules of Court, rule 3.1700, subd. (b)(1) [motion to strike or tax costs to be filed within 15 days of service of costs memorandum]; Griffith v. Wellbanks & Co. (1915) 26 Cal.App. 477, 480 (Griffith) [“In other words, the terms of [Code of Civil Procedure section 1033] are mandatory, and a substantially strict compliance therewith is required, not alone of the party claiming costs, but also of the party dissatisfied with the costs claimed,” emphasis added]; cf. Hydratec, Inc. v. Sun Valley 260 Orchard & Vineyard Co. (1990) 223 Cal.App.3d 924, 929 (Hydratec) [“The time provisions relating to the filing of a memorandum of costs, while not jurisdictional, are mandatory, ” citing authority derived from Griffith]; see, e.g., Sanabria v. Embrey (2001) 92 Cal.App.4th 422, 426 [holding a trial court erred by granting untimely costs request, citing Hydratec].)

The Clerk should thus enter costs on the appeal. (Cal. Rules of Court, rule 8.278, subds. (c)(1)-(2); Cal Rules of Court, rule 3.1700, subd. (b)(4).) 

Conclusion

Defendants Fornia Hospitality Group, LLC, Jatkinder K. Shante, and Bhupinder S. Shante’s Motion for Attorney Fees of $48,385.62 and Costs of $540.00 After Appeal is GRANTED, in part, in the amount of $41,779.12.

The Clerk is notified of the need to enter costs on the appeal. (Cal. Rules of Court, rule 8.278, subds. (c)(1)-(2); Cal Rules of Court, rule 3.1700, subd. (b)(4).)