Judge: Colin Leis, Case: 22AHCV00317, Date: 2023-01-13 Tentative Ruling

Case Number: 22AHCV00317    Hearing Date: January 13, 2023    Dept: 3

Superior Court of California

County of Los Angeles – NORTHEAST District

Department 3

MOVING PARTY:                Defendants Edward Lo, David Wan, Wilson Ngai, and Julian Fong

RESPONDING PARTY:       Plaintiff Stephen Lu

Motion for Attorney’s Fees

The court considered the moving papers, opposition, and reply papers filed in connection with this motion.

BACKGROUND

On May 31, 2022, Plaintiff Stephen Lu (“Plaintiff”) filed this action against Defendants Edward Lo, Chang Huan Hsueh, David Wan, Wilson Ngai, and Julian Fong. The operative First Amended Complaint (“FAC”), filed on November 2, 2022, asserts causes of action for (1) breach of fiduciary duty, and (2) declaratory relief.

On September 29, 2022, the court granted, in part, Defendants Edward Lo, David Wan, Wilson Ngai, and Julian Fong (“Defendants”) special motion to strike portions of Plaintiff’s original complaint.

            Defendants now seek attorney’s fees in the amount of $126,233.60 pursuant to Code of Civil Procedure section 425.16(c)(1).

EVIDENTIARY OBJECTIONS

            Defendants raise nine objections to the declaration of Claire Espina. The court rules as follows:

            Objections 1-7 are sustained.

            Objections 8-9 are overruled.

LEGAL STANDARD

“[A] prevailing defendant on a special motion to strike shall be entitled to recover that defendant’s attorney’s fees and costs.” (Code Civ. Proc. § 425.16(c)(1); see Ketchum v. Moses (2001) 24 Cal.4th 1122, 1131 [“Thus, under Code of Civil Procedure section 425.16, subdivision (c), any SLAPP defendant who brings a successful motion to strike is entitled to mandatory attorney fees.”].) 

“Code of Civil Procedure section 425.16 permits the use of the so-called lodestar adjustment method under our long-standing precedents…” (Ketchum, 24 Cal.4th at 1131.) “Under the lodestar method, the trial court ‘tabulates the attorney fee touchstone, or lodestar, by multiplying the number of hours reasonably expended by the reasonable hourly rate prevailing in the community for similar work.’” [Citation.] (Frym v. 601 Main Street LLC (2022) 82 Cal.App.5th 613, 621.) “The lodestar figure ‘may be increased or decreased depending on a variety of factors, including the contingent nature of the fee award.’ [Citation.] Indeed, the trial court has discretion to determine the amount of reasonable fees to award based on ‘a consideration of such factors as the nature of the litigation, the complexity of the issues, the experience and expertise of counsel and the amount of time involved. [Citation.] The court may also consider whether the amount requested is based upon unnecessary or duplicative work.’ [Citation.] (Ibid.)

DISCUSSION

Defendants argue they are entitled to $126,233.60 in attorney’s fees as the prevailing party to their special motion to strike portions of Plaintiff’s original complaint. Plaintiff acknowledges that the court partially granted Defendants’ motion, and that in general parties who prevail on a motion to strike are entitled to their attorney’s fees. However, Plaintiff argues in this case that Defendants’ requested fees are patently excessive and therefore the court should outright deny or substantially reduce Defendants’ request.

Here, Defendants’ principal attorney Keith Fink brought in outside attorney Olaf Muller to prepare the motion to strike because of Muller’s expertise with such motions. Defendants aimed their motion to strike at two allegations by Plaintiff: first, Plaintiff’s allegation that over a one-or-two day period, Defendants told a few Mega Bank shareholders that the bank’s merger with another bank had fallen through because Plaintiff had filed a lawsuit against the bank; and, second, Plaintiff’s allegation that Defendants told the shareholders that the shareholders should vote against Plaintiff’s reelection to the bank’s board of directors. Defendants’ motion to strike partly succeeded; the court struck the allegations (and the cause of action for slander that rested solely on that allegation) that Defendants told a few shareholders that the merger had fallen through because of Plaintiff’s lawsuit. The court otherwise denied the motion to strike.

            Based on their partial success, the court finds that Defendants are entitled to attorney's fees but that their request is excessive. Using the lodestar method, the court starts by determining the appropriate hourly rate. “The courts repeatedly have stated that the trial court is in the best position to value the services rendered by the attorneys in his or her courtroom, and this includes the determination of the hourly rate that will be used in the lodestar calculus.” (569 East County Boulevard LLC v. Backcountry Against the Dump, Inc. (2016) 6 Cal.App.5th 426, 436-437 [internal citations omitted].)

Defendants seek fees for three attorneys: Keith Fink, Sarah Hernandez, and Olaf Muller. Defendants seek $997 per hour for Fink and Hernandez, and $829 per hour for Muller. In support, Defendants offer declarations from each attorney describing their qualifications and experience. (Fink Decl., ¶¶ 11-13; Hernandez Decl., ¶¶ 12-13; Muller Decl., ¶¶ 19-20.) But notably, Olaf Muller is the SLAPP-expert to whom principal attorney Fink and Defendants turned to prepare the motion. The court thus finds Muller’s hourly rate – instead of Fink’s and Hernandez’s rates – is the more appropriate reasonable hourly rate to apply to this matter. Muller’s rate is $829 per hour, which the court applies in its lodestar calculation.

The court’s next step under the lodestar method is to determine whether the hours billed by Defendants’ counsel are reasonable. Parties “are entitled to recover attorney fees and costs incurred in moving to strike the claims on which they prevailed, but not fees and costs incurred in moving to strike the remaining claims.” (Jackson v. Yarbray (2009) 179 Cal.App.4th 75, 82.) In addition, trial courts may reduce the award where the fee request appears unreasonably inflated, such as where the attorneys’ efforts are duplicative. (Serrano v. Unruh (1982) 32 Cal.3d 621, 635, fn. 21.) Finally, parties entitled to SLAPP fees likewise are entitled to fees and costs relating to the fees motion itself. (Ketchum, supra, 24 Cal.4th at 1141.)

Fink states he spent 50 hours on Defendants’ anti-SLAPP motion and 3.5 hours (2.5 hours expended thus far and 1.0 hours anticipated) on this motion for attorney’s fees. (Fink Decl., ¶¶ 16-17.) Hernandez states she spent 17.9 hours on Defendants’ anti-SLAPP motion and 1 hour on this motion for attorney’s fees. (Hernandez Decl., ¶¶ 19-20.) Muller states he spent 52.7 hours on Defendants’ anti-SLAPP motion and 12.5 hours on this motion for attorney’s fees. (Muller Decl., ¶¶ 24-25.) In total, Defendants seek reimbursement for 120.6 hours related to their anti-SLAPP motion and 17 hours related to this motion for attorney's fees.

Turning first to the hours billed for the motion to strike, the court finds 120.6 hours is excessive.  Although Defendants offer a detailed narrative of their attorneys’ preparation of the anti-SLAPP motion, counsel do not explain how much time was spent on each task. In addition, Defendants do not differentiate between the time spent on portions of their anti-SLAPP motion that were successful versus portions that were unsuccessful. Put simply, Defendants cannot justify their attorneys spending 120.6 hours on the successful portions of the anti-SLAPP motion filed in this case – moreover, and especially when, Fink spent about as much time as Muller (50 hours vs. 52.7 hours), who was retained specifically to prepare the motion because of Muller’s experience with motions to strike. Because the motion to strike was not unusually complicated legally or factually, the court finds that one work-week calculated at nine billable hours per day for five days – not two-and-a-half weeks of attorney time working 9 hours per day (120.6 ÷ 9 = 13.4 days) – was a reasonable amount of time to prepare the motion to strike. Thus the court awards Defendants $37,305 (45 hours x $829/hour) as a reasonable fee award for the motion to strike itself.

As for the motion for attorney’s fees, the court finds that the motion is a straightforward request involving no unusual legal or factual issues. The court finds that 17 hours (12.5 + 3.5 + 1.0 for Muller’s, Fink’s, and Hernandez’s time, respectively) is a reasonable amount of time to have prepared the motion. However, an attorney less experienced (and thus less expensive) could have handled the fee motion at an hourly rate less than Fink’s and Hernandez’s $997 per hour and Muller’s $829 per hour. Accordingly, the court reduces for the fee motion the lodestar hourly rate based on its familiarity with hourly rates in the relevant market to $600 per hour. Thus, the court awards Defendants $10,200 (17 hours x $600/hour) for the fee motion itself.

CONCLUSION

Based on the foregoing, Defendants Edward Lo, David Wan, Wilson Ngai, and Julian Fong’s motion for attorney’s fees is granted. The court finds that Defendants are entitled to $47,505 in attorney’s fees.

Defendants are ordered to give notice of this ruling.

IT IS SO ORDERED.

DATED:  January 13, 2023

_____________________________

Colin Leis

Judge of the Superior Court