Judge: Anne Richardson, Case: BC659295, Date: 2023-08-28 Tentative Ruling

Case Number: BC659295    Hearing Date: August 28, 2023    Dept: 40

Superior Court of California

County of Los Angeles

Department 40

Background

Plaintiff PS Advanced Engineering sued Defendants/Cross-Complainants SkinClinical Technologies, LLC, SkinClinical, LLC (formerly known as (fka) SC SkinCare, LLC), Thibiant Beverly Hills, LLC, True North Brands, LLC (fka True North Equity, LLC), R Lane Associates, Inc., and Qual-Pro Corporation pursuant to a March 13, 2023 Third Amended Complaint alleging claims of (1) Fraud in the Inducement, (2) Civil Conspiracy, (3) Conversion, (4) Misappropriation of Trade Secret, (5) Interference with Economic Relations, (6) Unfair Business Practices, (7) Breach of Fiduciary Duty, (8) Breach of Contract, (9) Quantum Meruit, and (10) Judicial Dissolution.

Defendants/Cross-Complainants SkinClinical Technologies, LLC, SkinClinical, LLC, Thibiant Beverly Hills, LLC, and True North Brands, LLC, in turn, sued Plaintiff/Cross-Defendant PS Advanced Engineering and Cross-Defendants C. Don Feak, III, Wen Winny Yang, Esq., Azure Medical Technology, AMT Global, and Roes 1 through 10 pursuant to a September 19, 2019 First Amended Cross-Complaint (FAXC) alleging claims of (1) Declaratory Judgment, (2) Fraudulent Inducement, (3) Breach of Fiduciary Duty, (4) Aiding and Abetting Breach of Fiduciary Duty, (5) Breach of Contract (Operating Agreement), (6) Breach of Contract (Subscription Agreement), (7) Breach of Contract (Consulting Agreement), (8) Indemnification, (9) Breach of Implied Covenant of Good Faith and Fair Dealing, (10) Fraudulent Misrepresentation, (11) Tortuous Interference with Contract, (12) Tortuous Interference with Economic Relations, (13) Unfair Business Practices, (14) Unjust Enrichment, (15) Patent Infringement, (16) Misappropriation of Trade Secret, (17) Conversion, (18) Unfair Business Practices, and (19) Unjust Enrichment.

Trial took place between April and May 2022.

On November 8, 2022, the Court issued a statement of decision in favor of Defendants/Cross-Complainants.

On December 28, 2022, Defendants/Cross-Complainants SkinClinical Technologies, SkinClinical, LLC, and True North Brands moved for attorney’s fees and costs in this action. The motion was set for hearing on July 26, 2023.

On December 29, 2022, SkinClinical Technologies, SkinClinical, LLC, and True North Brands filed a memorandum of costs and corresponding declaration from counsel. The costs sought in the memorandum of costs differ from those requested in the motion for attorney’s fees and costs.

On January 9, 2023, SkinClinical Technologies, SkinClinical, LLC, and True North Brands made an ex parte application to advance the hearing date on the motion for attorney’s fees and costs to January 23, 2023.

On January 10, 2023—Department 40 being dark on that date—Department 32 heard the ex parte and denied the same without prejudice.

On January 19, 2023, Defendants/Cross-Complainants filed a proposed judgment.

On February 1, 2023, the Court entered the proposed judgment, which rendered all contracts between the parties unenforceable, awarded damages in favor of the Cross-Complainants, and left blank an entry for attorney’s fees and costs in favor of Defendants and Cross-Complainants as the prevailing parties in this action.

On March 24, 2023, PS Advanced Engineering filed a notice of appeal against the judgment.

On May 2, 2023, the Clerk issued a notice of default against PS Advanced Engineering for failure to timely serve and file notice designating the record on appeal, failure to timely pay the deposit for reporter’s transcript, failure to pay a $50 fee to hold the reporter’s transcript deposit, and failure to deposit $100 with the Superior Court upon filing the notice of appeal.

On May 25, 2023, the Clerk issued a notice of default and notice of non-compliance of default on appeal against PS Advanced Engineering.

On June 27, 2023, the court of appeal dismissed PS Advanced Engineering’s appeal for being in default.

On July 26, 2023, the motion for attorney’s fees and costs and memorandum of costs came before the Court. Counsel for Plaintiff and Cross-Defendants appeared but counsel for the moving Defendants/Cross-Complainants—SkinClinical Technologies, SkinClinical, LLC, and True North Brands—failed to appear. The Court therefore continued the hearing to August 28, 2023.

On July 27, 2023, the Clerk noticed a vacatur of the May 25, 2023 notices of default and of non-compliance because the notices were entered in error. That same day, the Clerk also filed a notice to prepare transcript on appeal.

On August 1, 2023, the Court issued a nunc pro tunc order amending the appearances for the July 26, 2023 hearing.

On August 10, 2023, Plaintiff/Cross-Defendant PS Advanced Engineering and Cross-Defendants C. Don Peak, III, Wen Winny Yang, and AMT Global (hereafter, Cross-Defendants) opposed the motion for attorney’s fees and costs.

The motion for attorney’s fees and costs and memorandum of costs are now again before the Court.

Motion for Attorney’s Fees and Costs; Memorandum of Costs

Legal Standard

A prevailing party is entitled to recover costs as a matter of right. (Code Civ. Proc., § 1032, subds. (a)(4), (b).) Attorney’s fees are also recoverable as costs when authorized by contract, statute, or law. (Code Civ. Proc., § 1033.5, subd. (a)(10).) Attorney’s fees and costs may be awarded where a contract between the parties at issue specifically provides for such fees and costs and one party prevails over the other on the contract. (See Civ. Code, § 1717, subd. (a).)

The Court begins this inquiry “with the ‘lodestar,’ 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 Attorney’s Fees and Costs and Memorandum of Costs: GRANTED.

As prevailing parties in this contract-based action, Defendants/Cross-Complainants SkinClinical Technologies, LLC, SkinClinical, LLC, and True North Brands, LLC seek $426,411.70 in attorney’s fees and arbitration costs. (See Mot., pp. 1, 11.)

SkinClinical Technologies, SkinClinical, LLC, and True North Brands also seek a separate $17,741.63 in other costs as prevailing parties in this action. (See 12/29/22 Memo of Costs, MC-010, p. 1.)

The motion is opposed by Cross-Defendants, with their arguments addressed below.

The Court first determines that there is a proper basis for attorney’s fees, i.e., a contract between the parties permitting recovery of attorney’s fees for the prevailing party in an action based on the contract. (See Mot., Labat Decl., Ex. A, pp. 7, § 16, subd. (c) [attorney’s fees clause], 11 [operating agreement signed by SkinClinical, LLC and PS Advanced Engineering, where agreement contemplates operation of SkinClinical Technologies]; see also 2/1/23 Judgment, pp. 2-4, ¶¶ 7, 9, 10-10(c)(b).)

The Court briefly notes that, despite not being raised by the moving parties, even though True North Brands was not a signatory to the operating agreement that contains the attorney’s fees provision (see Mot., Labat Decl., Ex. A, pp. 1, 11, sched. A), True North Brands later obtained a member interest in SkinClinical Technologies, such that True North Brands was subject to the operating agreement containing the attorney’s fees provision (see, e.g., TAC, ¶ 31, 42(c)).

The Court next determines that the sought-after fee rates between $335 and $945 per hour for attorneys and between $145 and $250 per hour for paralegals are reasonable in the Los Angeles County market, though the Court notes that the Labat Declaration could have done more to explain the professional and academic background of the attorneys and paralegals at issue. (Mot., Labat Decl., ¶¶ 6-29.)

The Court also determines that the hours expended by counsel and paralegals are reasonable, particularly where supported by verified time records. (Mot., Labat Decl., ¶¶ 6-29, Exs. B-X; Horsford v. Board of Trustees of Calif. State Univ. (2005) 132 Cal.App.4th 359, 397 [“[T]rial court abused its discretion in rejecting wholesale counsels’ verified time records” where “verified time statements of the attorneys, as officers of the court, are entitled to credence in the absence of a clear indication the records are erroneous”].) Such time records show billings for April 2016 to November 2022, i.e., more than six years of litigation in arbitration and trial court proceedings, where SkinClinical Technologies, SkinClinical, LLC, and True North Brands prevailed before this Court. (Mot., Labat Decl., Exs. B-X.)

No multiplier enhancement award is requested.

The Court last determines that the costs requested in the December 29, 2022 memorandum of costs are reasonable, particularly where they are limited to $17,741.63 despite having been incurred during long, drawn-out litigation. (See 12/29/22 Memo of Costs, MC-010, pp. 1-2, MC-011, pp. 1-6; see also Memo of Costs, Labat Decl., pp. 1-2, Exs. A-O [receipts spanning May 2017 to November 2022].)

To the extent that Cross-Defendants have opposed the motion for attorney’s fees and costs, the Court finds that their arguments are not availing.

First, the Court finds that it is not necessary for the three moving parties to have submitted separate billing statements for worked performed by counsel that represented all these parties (first Vedder Price, and then, Greenspoon Marder). (See Opp’n, pp. 3-4; see also Mot., Mot., Labat Decl., ¶¶ 1 [Greenspoon Marder is counsel for SkinClinical, LLC, SkinClinical Technologies, Thibiant, and True North Brands], 2 [Germain D. Labat explaining that Vedder Price was first retained by SkinClinical LLC, Thibiant Beverly Hills, and Skinclinical Technologies LLC, with Labat as a partner in Vedder Price, and that later, Labat became a partner in Greenspoon Marder], Exs. B-X [billing records from Vedder Price and Greenspoon Marder].)

Second, the Court finds that the fee award would not be duplicative of the February 1, 2023 $800,000 judgment in favor of True North Brands because the judgment itself makes clear that True North’s award is separate from an attorney’s fees and costs award. (See Opp’n, p. 4; compare 2/1/23 Judgment, p. 3, ¶¶ 10(b)(3) [award to True North Brands, fka True North Equity, LLC], with id. at pp. 3-4, ¶ 10(c) [blank slot for fees and costs award].)

Third, the Court has already determined that the fees sought by SkinClinical Technologies, SkinClinical, LLC, and True North Brands are reasonable per the above discussion. (See Opp’n, pp. 4-5.)

Fourth, the Court finds that the parties’ operating agreement appears to permit recovery of fees for the arbitration proceedings because the agreement does not limit recovery of fees to judicial proceedings, instead stating that “[i]n the event [that] any suit, action, or other legal proceeding [is] instituted to declare or enforce any right created by th[e] Agreement, or by reason of any breach of th[e] Agreement, the prevailing party shall be entitled to recover reasonable attorney fees as fixed by the trial court and all appellate courts.” (See Opp’n, p. 5; see also Mot., Labat Decl., Ex. A, pp. 7, §§ 16, subd. (c) [attorney fees clause], 17 [arbitration clause].) Here, SkinClinical Technologies, SkinClinical, LLC, and True North Brands were the prevailing parties. (See 2/1/23 Judgment, pp. 3-4, ¶¶ 9, 10(c).)

Fifth, the Court finds that despite the filing of an appeal to the judgment by PS Advanced Engineering (which the Court assumes to still be pending at this time), the Court may award attorney’s fees and costs because such matters are collateral to the judgment being appealed. (See Opp’n, p. 5; see also Bankes v. Lucas (1992) 9 Cal.App.4th 365, 368-369, superseded by statute on other grounds as stated in Lee v. Wells Fargo Bank (2001) 88 Cal.App.4th 1187, 1197 [“[T]he filing of a notice of appeal does not deprive the trial court of jurisdiction to award attorney fees as costs post trial” and “[a]lthough a prevailing party at trial may not be the prevailing party after an appeal, it has been held that a motion for attorney fees is not premature despite the filing of a notice of appeal” because “an award of attorney fees as costs is a collateral matter [that] is embraced in the action but is not affected by the order from which an appeal is taken,” for which reason the “filing of a notice of appeal does not stay any proceedings to determine the matter of costs and does not prevent the trial court from determining a proper award of attorney[’s] fees claimed as costs”].)

The Court thus GRANTS SkinClinical Technologies, LLC, SkinClinical, LLC, and True North Brands, LLC’s motion for attorney’s fees and costs, specifically as to fees and the arbitration fee requested therein in the total amount of $426,411.70.

The Court also GRANTS SkinClinical Technologies, SkinClinical, LLC, and True North Brands’ memorandum of costs in the amount of $17,741.63. 

Conclusion

Defendants/Cross-Complainants SkinClinical Technologies, LLC, SkinClinical, LLC, and True North Brands, LLC’s Motion for Attorney’s Fees and Costs is GRANTED.

Plaintiff/Cross-Defendant PS Advanced Engineering and Cross-Defendants C. Don Peak, III, Wen Winny Yang, and AMT Global are ORDERED to remit payment of $426,411.70 to SkinClinical, LLC and True North Brands, LLC within 90 days of this ruling. (See 2/1/23 Judgment, pp. 3-4, ¶¶ 10-10(c).)

Defendants/Cross-Complainants SkinClinical Technologies, LLC, SkinClinical, LLC, and True North Brands, LLC’s Memorandum of Costs is GRANTED.

Plaintiff/Cross-Defendant PS Advanced Engineering and Cross-Defendants C. Don Peak, III, Wen Winny Yang, and AMT Global are ORDERED to remit payment of $17,741.63 to SkinClinical, LLC and True North Brands, LLC within 90 days of this ruling. (See 2/1/23 Judgment, pp. 3-4, ¶¶ 10-10(c).)

Note: SkinClinical Technologies, LLC is not included in the order as to attorney fees because the 2/1/23 Judgment does not include SkinClinical Technologies as one of the parties to receive fees. (See 2/1/23 Judgment, pp. 3-4, ¶¶ 10-10(c).)