Judge Bruce G. Iwasaki, Case Number: 18STCV04084, Date: 2024-04-17 Tentative Ruling

Tentative Ruling: The Motion for attorney’s fees is granted in the amount of $271,291.25.

Plaintiff, attorney Richard Pech, represented Defendant Thomas E. Morgan, III (Morgan) in numerous legal matters. Pech alleged that Morgan breached the parties’ written retainer agreement by failing to pay all amounts owed, which had reached $525,914.90 at the time of Pech’s withdrawal as attorney in an underlying trust litigation matter.

Plaintiff Pech’s Second Amended Complaint alleged causes of action for (1.) breach of written contract, (2.) account stated, (3.) false promise, (4.) intentional misrepresentation, (5.) quantum meruit, (6.) breach of oral contract, and (8.) quantum meruit.

Defendant Morgan filed a cross-complaint. The Second Amended Cross-Complaint alleges causes of action for (1.) legal malpractice, (2.) breach of fiduciary duty, (3.) legal malpractice, (4.) breach of fiduciary duty, and (5.) equitable disgorgement.

The jury returned a mixed verdict. It rejected attorney Pech’s claim for breach of contract, and awarded him, on theories of quantum meruit and account stated, $497,880.90 in “damages.” The jury also found that Plaintiff Pech had acted negligently toward, and thereby caused harm to, his client and awarded Morgan $323,188.25. A Judgment was entered on September 29, 2023, which found Plaintiff Pech was entitled to a judgment against Defendant Morgan in the net amount of $174,692.65.

Thereafter, Defendant Morgan filed a motion for judgment notwithstanding the verdict and Plaintiff Pech filed a motion for new trial. The Court denied Pech’s motion for new trial, but granted Defendant Morgan’s motion for judgment notwithstanding the verdict. On January 19, 2024, a new Judgment was entered finding that Defendant Morgan was the prevailing party and that Plaintiff Pech was liable to Defendant Morgan the amount of $323,188.25.

On February 2, 2024, Defendant Morgan filed and served a Memorandum of Costs in the amount of $59,232.33. No motion to tax costs was filed.

On February 29, 2024, Defendant Morgan filed a motion for attorney fees that also included a request for $88,245.42 in costs.

On March 20, 2024, Plaintiff Pech filed a motion for relief from his failure to file a motion to tax costs. After the Court issued a tentative ruling to deny the motion, Pech withdrew it.

The Court grants the motion for attorney’s fees in the amount of $217,291.25. The request for costs, except for the $61.25 for filing fees of this motion, is denied.

Defendant Morgan seeks attorney’s fees pursuant to Business and Professions Code section 6204, subdivision (d). Defendant Morgan is the prevailing party pursuant to this statute.

“The party seeking a trial after arbitration shall be the prevailing party if that party obtains a judgment more favorable than that provided by the arbitration award, and in all other cases the other party shall be the prevailing party. The prevailing party may, in the discretion of the court, be entitled to an allowance for reasonable attorney's fees and costs incurred in the trial after arbitration, which allowance shall be fixed by the court. In fixing the attorney's fees, the court shall consider the award and determinations of the arbitrators, in addition to any other relevant evidence.”

By way of background to this motion, Plaintiff claimed he was entitled to approximately $600,000 in unpaid attorney fees from Defendant Morgan. As result of this fee dispute, Plaintiff Pech and Defendant Morgan attended a fee arbitration under the Mandatory Fee Arbitration Act (MFAA) to resolve Pech’s fee claim. At the arbitration proceeding, Defendant Morgan claimed that the parties’ Fee Agreement was not valid, and the amount charged were unreasonable.

At the conclusion of the proceeding, the arbitration panel determined that there was no valid fee agreement between Plaintiff Pech and Defendant Morgan, and thus, Plaintiff Pech was only entitled to – at most – the reasonable value of his services. The Arbitrators determined that the amount of unpaid legal fees incurred for the benefit of Defendant Morgan was $0; additionally, Plaintiff Pech was required to pay to Defendant Morgan the cost of $5,000 in arbitration filing fees. (Furman Decl., ¶ 2, Ex. A.)

Thereafter, Plaintiff Pech rejected the arbitration award pursuant to Business and Professions Code section 6204 and filed the instant civil action seeking these unpaid fees. (Furman Decl., ¶ 3, Ex. B.)

At the conclusion of a jury trial and several post-trial motions, the Court entered judgment finding that Plaintiff Pech was entitled to nothing on his claims for quantum meruit and account stated and Defendant Morgan was entitled to $323,188.25 on his cross-claims for legal malpractice. (12/6/2023 Minute Order; 1/19/2024 Judgment.)

Thus, based on the foregoing, Plaintiff Pech – as the party moving for trial after arbitration – did not obtain “a judgment more favorable than that provided by the arbitration award.” As such, Defendant Morgan is the prevailing party under the statute and entitled to reasonable attorney fees at the discretion of the Court.

In support of his motion for attorney fees, Defendant Morgan seeks attorney fees in the amount of $212,130, based on an hourly rate of $425.

In assessing the reasonableness of hourly billing rates,¿“the court may rely on its own knowledge and familiarity with the legal market, as well as the experience, skill, and reputation of the attorney requesting fees [citation], the difficulty or complexity of the litigation to which that skill was applied [citations], and affidavits from other attorneys regarding prevailing fees in the community and rate determinations in other cases.”¿(569 East County Boulevard LLC v. Backcountry Against the Dump, Inc.¿(2016) 6 Cal.App.5th 426, 437; see¿Mountjoy v. Bank of America, N.A.¿(2016) 245 Cal.App.4th 266, 272 [“ ‘ “a reasonable hourly rate is the product of a multiplicity of factors…[including] the level of skill necessary, time limitations, the amount to be obtained in the litigation, the attorney’s reputation, and the undesirability of the case” ’ ”].)¿

A review of the declaration submitted in support of the motion for attorney’s fees supports finding that Defendant’s attorney’s hourly rate of $425 is reasonable; the rate is supported by substantial evidence. (Furman Decl., ¶ 8.) Moreover, Plaintiff Pech does not argue otherwise in opposition.

Defendant’s counsel also submits billing records showing 528.70 hours of work for a total of $224,485 in fees. The billing records were reduced by $22,335 to account for hours incurred that were redacted and deemed “Not applicable.” (Furman Decl., ¶10.) Defendant’s counsel also requests $5,100 for this fee motion for 12 hours of work. (Furman Decl., ¶ 12.)

The amount of fees requested is reasonable. The billing records demonstrate this litigation has been ongoing for almost 5 years. Further, this matter has been heavily litigated; there has been extensive motion practice involved (including challenges to the pleadings, discovery disputes and post-trial motions), litigation on both a complaint and cross-complaint, and a more than weeklong jury trial. (Furman Decl., Ex. E.) Plaintiff Pech’s opposition does not challenge these amounts as unreasonable.

Nor does Plaintiff contend that Defendant should have apportioned these fees based to exclude the fees Defendant Morgan incurred on his crossclaims. As the moving papers concede, only Plaintiff’s claims were subject to the arbitration proceeding and thus these are the only fees recoverable under Business and Professions Code section 6204. However, the moving papers argue, and the opposition does not dispute, that the billing entries establish that these issues “were inextricably intertwined and cannot be suitably allocated to any specific issue.” (Mot., 7:19-22.)

The principle of apportioning fee awards has long been recognized. When, for example, a claim based on a contract providing for attorney fees is joined with noncontract claims, the prevailing party is only entitled to recover fees related to the contract action and the court may properly apportion out the fees for the noncontract claims. (Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124, 129.) Where the attorney fees are incurred in connection with both the contract and noncontract claims, they may, but need not, be apportioned. (Id. at pp. 129–130.)

“ ‘ “Apportionment is not required when the claims for relief are so intertwined that it would be impracticable, if not impossible, to separate the attorney's time into compensable and noncompensable units.” ’ ” (Hjelm v. Prometheus Real Estate Group, Inc. (2016) 3 Cal.App.5th 1155, 1178.)

“[A]pportionment of that award rests within the court's sound discretion.’ ” (Hjelm, supra, 3 Cal.App.5th at p. 1177.)

Here, the legal malpractice issues and the unpaid legal fee issues cannot be readily apportioned from the billing records and Plaintiff does not contend any apportionment is required.

Thus, the Court grants the motion for attorney fees in the amount of $217,291.25 ($212,130 + $5,100 + $61.25 filing fee).

Defendant requests additional costs beyond what was included – and allowed – in Defendant’s Memorandum of Costs, in the amount of $88,245.42. On February 2, 2024, Defendant Morgan filed a Memorandum of Costs seeking prejudgment costs in the amount of $59,232.33. Now, Defendant seeks additional prejudgment costs that all predate the February 2, 2024 costs memorandum. This request for omitted prejudgment costs is not well taken.

Except as otherwise provided, a prevailing party is entitled as a matter of right to recover costs in any action or proceeding. (Code Civ. Proc., § 1032, subd. (b).) To obtain costs, the prevailing party must file and serve a memorandum of costs “within 15 days after the date of of the notice of entry of judgment,” which “must be verified by a statement of the party, attorney, or agent that to the best of his or her knowledge the items of cost are correct and were necessarily incurred in the case.” (Cal. Rules of Court, rule 3.1700(a).)

These newly requested costs should have been included in the February 2, 2024 cost memorandum. Seeking these fees that were omitted from the timely filed memorandum of costs by way of this motion now is improper because it does not comply with Rule 3.1700.[2]

Finally, as noted above, the arbitration award issued by the panel on July 11, 2019, provided that Pech was not owed any additional fees, and that he was required to pay Morgan the $5,000 arbitration filing fee, plus interest. (Decl. Furman, ¶ 2; Ex. A.)

Morgan now argues that the arbitration award’s determination that Plaintiff Pech was required to pay to Defendant Morgan the $5,000 filing fee plus interest should be added to the civil judgment here. It is unclear why this portion of the arbitrator’s award is binding on this Court under Business and Professions Code section 6203, subdivision (a) where a party opted to pursuant civil litigation after an arbitration award. The Court is disinclined to add this arbitration cost from the non-binding arbitration panel decision.

Plaintiff Pech is ordered to pay to Defendant’s counsel the sum of $217,291.25 on or before June 5, 2024.

[1] The reply notes that the opposition was filed and served a day late on April 16, 2024. However, Defendant identifies no prejudice was this untimely filing. The Court will consider the opposition.

[2] The Court held that Plaintiff Pech was subject to the timing requirements for filing a motion to tax costs. To allow Defendant to avoid these same timing requirements would be unjust.

Department 58