Judge: Daniel M. Crowley, Case: 22SMCV00519, Date: 2023-03-27 Tentative Ruling

Case Number: 22SMCV00519    Hearing Date: March 27, 2023    Dept: 207

Background

Plaintiff Larry Moore (“Plaintiff”) brings this action against Defendant 2444 Fourth Street, LLC (“Defendant”) seeking to purchase Unit 5 of a 10-unit condominium building owned by Defendant and located at 2444 4th Street in Santa Monica, California. Plaintiff’s operative Complaint, filed April 11, 2022, asserts two causes of action for breach of contract against Defendant. Defendant previously brought a demurrer to Plaintiff’s Complaint. On October 17, 2022, the Court sustained Defendant’s demurrer without leave to amend, finding Plaintiff’s causes of action against Defendant were barred by issue preclusion stemming from prior litigation between the parties. On December 7, 2022, the Court entered an order dismissing Plaintiff’s Complaint and awarding Defendant its costs in this action.

Defendant now moves for an award of attorney’s fees as the prevailing party in this action. Plaintiff opposes the motion.

Request for Judicial Notice

Plaintiff requests the Court take judicial notice of Defendant’s demurrer and notice of entry of judgment or order previously filed in this action. Plaintiff’s request is unopposed and is GRANTED.

Objections to Evidence

The Court SUSTAINS Defendant’s objection No. 2 to the Declaration of Geronimo Perez as irrelevant. Defendant’s objections to the Declaration of Geronimo Perez are otherwise OVERRULED.

Legal Standard

A prevailing party is entitled to recover costs, including attorneys’ fees, as a matter of right. (Code Civ. Proc., § 1032(a)(4).) Civil Code § 1717 states in pertinent part: “[i]n any action on a contract, where the contract specifically provides that attorney's fees and costs, which are incurred to enforce¿that contract, shall be awarded either to one of the parties or to the prevailing party, then the party who is determined to be the¿party¿prevailing¿on the contract, whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorney’s fees in addition to¿other¿costs.” (Civ. Code, § 1717(a).)

The fee setting inquiry in California ordinarily begins with the “lodestar” method, i.e., the number of hours reasonably expended multiplied by the reasonable hourly rate. A computation of time spent on a case and the reasonable value of that time is fundamental to a determination of an appropriate attorneys’ fee award. The lodestar figure may then be adjusted, based on factors specific to the case, in order to fix the fee at the fair market value for the legal services provided. (Serrano v. Priest (1977) 20 Cal.3d 25, 49.) Such an approach anchors the trial court’s analysis to an objective determination of the value of the attorney’s services, ensuring that the amount awarded is not arbitrary. (Id. at p. 48, fn. 23.) After the trial court has performed the lodestar calculations, it shall consider whether the total award so calculated under all of the circumstances of the case is more than a reasonable amount and, if so, shall reduce the section 1717 award so that it is a reasonable figure. (PLCM Group v. Drexler (2000) 22 Cal.4th 1084, 1095-1096.)

“[T]he lodestar is the basic fee for comparable legal services in the community; it may be adjusted by the court based on factors including, as relevant herein, (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, (4) the contingent nature of the fee award. [Citation.] The purpose of such adjustment is to fix a fee at the fair market value for the particular action. In effect, the court determines, retrospectively, whether the litigation involved a contingent risk or required extraordinary legal skill justifying augmentation of the unadorned lodestar in order to approximate the fair market rate for such services.” (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1132

“It is well established that the determination of what constitutes reasonable attorney fees is committed to the discretion of the trial court, whose decision cannot be reversed in the absence of an abuse of discretion. [Citations.] The value of legal services performed in a case is a matter in which the trial court has its own expertise. . . . The trial court makes its determination after consideration of a number of factors, including the nature of the litigation, its difficulty, the amount involved, the skill required in its handling, the skill employed, the attention given, the success or failure, and other circumstances in the case. [Citations.]” (Melnyk v. Robledo (1976) 64 Cal.App.3d 618, 623624.) 

No specific findings reflecting the court’s calculations are required. The record need only show that the attorney fees were awarded according to the “lodestar” or “touchstone” approach. The court’s focus in evaluating the facts should be to provide a fee award reasonably designed to completely compensate attorneys for the services provided. The starting point for this determination is the attorney’s time records. (Horsford v. Board of Trustees of Calif. State Univ. (2005) 132 Cal.App.4th 359, 395-397 [verified time records entitled to credence absent clear indication they are erroneous].) An experienced trial judge is in a position to assess the value of the professional services rendered in his or her court. (Id.; Serrano v. Priest (1977) 20 Cal.3d 25, 49; Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224, 255.)

Analysis

Defendant seeks an award of $47,880 in attorney’s fees as the prevailing party in this action pursuant to Civil Code § 1717. Plaintiff’s Complaint in this action asserted two causes of action against Defendant for breach of contract. Each of these causes of action are premised on the same underlying facts concerning Plaintiff’s attempt to purchase Unit 5 pursuant to Santa Monica’s Tenant Ownership Rights Charter Amendment (“TORCA”). TORCA extended protections to tenants from owner-occupancy evictions by apartment owners who sought to convert their apartment buildings to condominiums. “Under TORCA, a conversion could be accomplished without a removal permit if the tenants were offered an opportunity to purchase their units, and two-thirds of the tenants supported the conversion application. TORCA also granted a protection against owner-occupancy evictions to all tenants in the building at the time of the conversion who chose not to purchase. With respect to the tenants who rented after the conversion, TORCA gave no protection….” (Bohbot v. Santa Monica Rent Control Bd. (2005) 133 Cal.App.4th 456, 460.) “TORCA protects ‘participating tenants’ from owner-occupancy evictions, but gives no additional protections to ‘nonparticipating tenants.’” (Id. at 464.)

In 1991 Defendant’s predecessor in interest, Charles M. Edwards, Trustee of the Revocable Inter Vivos Trust of Charles M. Edwards (“Edwards”) submitted a TORCA application to the City of Santa Monica to convert the subject building from a rent-controlled apartment into condominiums. Edwards’ application was accepted as codified in a 1992 agreement between the City of Santa Monica and Edwards entitled Consent to Conditions for Tenant Ownership Rights Conversion. (Ex. 1 to Lorman Decl.; Ex. 3 to Complaint.) This Consent to Conditions agreement forms the basis of both of Plaintiff’s causes of action for breach of contract. Plaintiff’s first cause of action for breach of contract is premised on his rights as an alleged third-party beneficiary to the agreement. (Complaint at ¶¶23-28.) Plaintiff’s second breach of contract action asserts rights under the agreement as an alleged “participating tenant” under TORCA. (Id. at ¶¶29-35.)

Section 10 of the Consent to Conditions agreement provides “In the event of any controversy, claim or dispute between the parties hereto arising out of or relating to this Agreement or breach thereof, the prevailing party or parties shall be entitled to recover from the losing party reasonable expenses, attorney’s fees and costs.” (Ex. 1 to Lorman Decl. at §10; Ex. 3 to Complaint at §10.) Plaintiff’s Complaint sought an award of “contractual and statutory attorney’s fees” pursuant to the Consent to Conditions agreement. (Complaint at p. 8.)

Defendant now relies on this same provision to seek recovery of its attorney’s fees incurred in this action as a prevailing party. Plaintiff argues he is only bound by the Consent to Conditions agreement if he was a TORCA participating tenant, and Defendant is estopped from claiming he is a participating tenant because Defendant’s demurrer was premised on Plaintiff’s not being a participating tenant under TORCA. In essence, Plaintiff is arguing the Court has already determined him not to be a party to the Consent to Conditions agreement, and thus he cannot be bound by the attorney fee provision therein.

Courts have acknowledged nonsignatories may be bound by contractual attorney fee provisions where they would have been entitled to an award of attorney’s fees if they had prevailed:

Accordingly, in cases involving nonsignatories to a contract with an attorney fee provision, the following rule may be distilled from the applicable cases: A party is entitled to recover its attorney fees pursuant to a contractual provision only when the party would have been liable for the fees of the opposing party if the opposing party had prevailed. Where a nonsignatory plaintiff sues a signatory defendant in an action on a contract and the signatory defendant prevails, the signatory defendant is entitled to attorney fees only if the nonsignatory plaintiff would have been entitled to its fees if the plaintiff had prevailed.

(Real Property Services Corp. v. City of Pasadena (1994) 25 Cal.App.4th 375, 382; accord Cargill, Inc. v. Souza (2011) 201 Cal.App.4th 962, 967.) Under this rule, Plaintiff’s liability turns not on whether Plaintiff can be held to be a party to the agreement in contravention of the Court’s prior ruling sustaining Defendant’s demurrer, but rather on whether Plaintiff would have been able to obtain such fees pursuant to the agreement if he had prevailed on his claims against Defendant. Plaintiff offers no argument on this point.

Plaintiff’s Complaint claims the Statement of Official Action attached and incorporated as Exhibit B to the Consent to Conditions agreement expressly makes participating tenants parties to the agreement. Condition 1 set forth in the Statement of Official Action provides:

The owner shall agree to each condition imposed in connection with the approval of a Tenant-Participating Conversion Application. Written consent shall be filed prior to the approval of the required final parcel/subdivision map and shall be in a form approved by the City Attorney. The filing of such written consent shall constitute an agreement, with the City of Santa Monica and each Participating Tenant, binding upon the owner and any successors in interest, to comply with each and every condition imposed in connection with approval of this Tenant-Participating Conversion Application. The City and any Participating Tenant shall have the right to specific enforcement of this Agreement in addition to any other remedies provided by law.

(Ex. 1 to Lorman Decl. at Ex. B, p. 5-6; Ex. 3 to Complaint at Ex. B, p. 5-6.)

Thus, if Plaintiff had prevailed on his claim for breach of contract stemming from his alleged status as a participating tenant under TORCA, he would have been entitled to the benefit of the attorney fee provision in the Consent to Conditions agreement. The same is true with respect to his claim for breach of contract premised on his alleged status as a third party beneficiary of the agreement. (See, e.g., Cargill, supra, 201 Cal.App.4th at 966 [“Two situations may entitle a nonsignatory party to attorney fees. First is where the nonsignatory party ‘stands in the shoes of a party to the contract. [Citation.] Second is where the nonsignatory party is a third party beneficiary of the contract”].)

The Court finds Plaintiff would have been entitled to recover attorney’s fees pursuant to the contractual provision in the Consent to Conditions agreement if he had succeeded on his claims against Defendant. Under the rule enunciated in Real Property Services, Plaintiff is thus liable for Defendant’s attorney’s fees under Civil Code § 1717(a).

Having found Defendant is entitled to an award of attorney’s fees as the prevailing party in this action, the Court turns to the examination of the $47,880 in attorney’s fees claimed by Defendant. Plaintiff does not dispute the hourly rate or qualifications of Defendant’s counsel but rather argues Defendant’s requested award is unreasonable and inflated, arguing Plaintiff only incurred $18,540 in attorney’s fees in this action. Plaintiff does not identify any billing entries or work claimed by Defendant which is purported to be unreasonable. This sort of generalized assertion of unreasonableness is insufficient to warrant reduction in an award of attorney’s fees. “In challenging attorney fees as excessive because too many hours of work are claimed, it is the burden of the challenging party to point to the specific items challenged, with sufficient argument and citations to the evidence. General arguments that fees claimed are excessive, duplicative, or unrelated do not suffice.” (Premier Medical Management Systems, Inc. v. California Ins. Guarantee Assn. (2008) 163 Cal.App.4th 550, 564.)

The Court has conducted its own review of the billing records attached to Defendant’s motion. (Ex. 2 to Lorman Decl.) These billings records indicate Defendant incurred attorney’s fees for drafting a motions which were never filed in this action, specifically a motion to disqualify Plaintiff’s counsel and a motion to expunge a lis pendens recorded by Plaintiff. Defendant’s counsel began working on a motion to expunge the lis pendens in June 2022. Billing records from October 2022 indicate that rather than file the motion to expunge, Defendant’s counsel spoke with Plaintiff’s counsel regarding the lis pendens which led to Plaintiff voluntarily withdrawing the lis pendens in November 2022, rendering the prior work on a written motion moot.

These billing records also contain references to matters beyond the scope of this action, particularly issues regarding the payment of loans in default and the payoff of a deed of trust. Defendant’s counsel explains in his declaration that these issues related to a prior lawsuit brought by Plaintiff’s counsel against Susan Jeffers, Defendant’s sole member, concerning unpaid legal fees, which ultimately led to the recording of deeds of trust to Plaintiff’s counsel. Plaintiff’s counsel then assigned these deeds to Plaintiff, who subsequently recorded a Notice of Trustee’s Sale Under Notice of Delinquent Assessment and Claim of Lien against the subject property. (Lorman Decl. at ¶¶19, 26-38.) While these deeds of trust and notice of trustee’s sale involve the same parties to this lawsuit, they do not relate to the subject matter of this action, and thus cannot form the basis for an award of Defendant’s attorney’s fees and costs in this lawsuit.

As counsel’s billing entries are blended to include multiple descriptions for single time entries, the Court cannot determine with precision the amount of fees incurred in connection with these unfiled motions or deeds of trust. The Court in its discretion will reduce Defendant’s award by $8,100, or 18 hours, to account for this work which was not necessary for the defense of this action or unrelated to the subject matter of this lawsuit. The Court otherwise GRANTS Defendant’s motion for attorney’s fees.

Conclusion

Defendant’s motion for attorney’s fees and costs is GRANTED and Defendant is awarded $39,780 in attorney’s fees and costs.