Judge Daniel M. Crowley, Case Number: BC652020, Date: 2023-07-20 Tentative Ruling

Department 71: Attorneys who elect to submit on these published tentative rulings, without making an appearance at the hearing, may so notify the Court by communicating this to the Department's staff via the Department's email: SMCdept71@lacourt.org before the set hearing time. See, e.g., CRC Rule 324(b). All parties are otherwise encouraged to appear by LACourtConnect for all matters.

Defendants McLear Ltd.’s and McLear & Co.’s unopposed motion for attorneys’ fees against Cross-Defendant Michelle Silverstein is granted in the total amount of $7,160,830.76 and in the reduced amount of $26,666.14 on the instant motion for a total reduced amount of attorneys’ fees of $7,187,496.90.

Defendants McLear Ltd. and McLear & Co. (collectively, “McLear”) move unopposed for an order awarding them attorneys’ fees and costs against Cross-Defendant Michelle Silverstein (“Silverstein”) (“Cross-Defendant”) in the total amount of $7,210,830.76 as the prevailing party in litigation arising out of Silverstein’s breach of the Independent Contractor Agreement (“ICA”). (Notice of Motion, pg. 1; C.C.P. §§1021, 1033.5; Civ. Code §1717.)

On March 10, 2016, Silverstein entered into the ICA with McLear UK. (Decl. of Tanaguchi, Exh. 1 at pg. 1.) The ICA provided that Silverstein’s “duties” or “work” would involve “day-today operations management for [the] U.S. subsidiary of NFC Ring, Inc. [i.e., McLear US], including but not limited to business development, facilities, vendor relationships, media, and general business planning.” (Decl. of Tanaguchi, Exh. 1 at pg. 1 & “Schedule A”.) The ICA contained a confidentiality clause prohibiting Silverstein from using any of McLear US’s confidential information for any purpose except for the performance of her duties under the ICA. (Decl. of Tanaguchi, Exh. 1 at §4.) The parties agreed in the dispute resolution clause that: “[a]ny dispute concerning, arising from, or in connection with this Agreement or the Work shall be resolved through good-faith negotiation, and failing that, in the state and federal courts located in the State of California, County of Los Angeles or San Francisco. The prevailing Party, if any, in such litigation shall be entitled to reimbursement of its reasonable attorneys’ fees and costs.” (Decl. of Tanaguchi, Exh. 1 at §14.)

On May 2, 2023, McLear filed this motion for attorneys’ fees. On July 11, 2023, McLear filed a notice of non-opposition to its motion for attorneys’ fees and notice that Silverstein did not file a motion to strike or tax costs related to the memorandum of costs McLear filed on March 7, 2023. This Court issued a tentative ruling on the instant motion on July 19, 2023, for a hearing scheduled on July 20, 2023. This Court continued the July 20, 2023, hearing to ensure Silverstein had proper notice of the motion. McLear provided notice of the continuance of this motion on July 21, 2023, serving Silverstein with notice of the continuance and moving papers via email and mail. McLear filed a second notice of Silverstein’s non-opposition on August 16, 2023. As of the date of this hearing Silverstein has not filed an opposition.

A party may not recover attorneys’ fees unless allowed by contract or statute. (Hom v. Petrou (2021) 67 Cal.App.5th 459, 464; C.C.P. §1021.) Here, McLear is entitled to recover its attorneys’ fees pursuant to the attorneys’ fees provision in its ICA with Silverstein.

“In the absence of a statute authorizing the recovery of attorney fees, the parties may agree on whether and how to allocate attorney fees.” (Hom, 67 Cal.App.5th at pg. 464; see also C.C.P §1021.) When the parties enter into a contract that “specifically provides that attorney’s fees and costs [incurred to enforce the contract are recoverable] . . . then the party who is determined to be the prevailing party on the contract . . . shall be entitled to reasonable attorneys’ fees in addition to other costs.” (Civ. Code §1717(a).) The phrase “‘shall be entitled’ reflect[s] a legislative intent that a party prevailing on a contract receive attorney fees as a matter of right (and that the trial court is therefore obligated to award attorney fees) whenever the statutory conditions have been satisfied.” (Hsu v. Abbara (1995) 9 Cal.4th 863, 872.) McLear US prevailed on all claims at issue in

this lawsuit, including its breach of contract claim against Silverstein, and the Judgment entitled McLear to attorneys’ fees against Silverstein. (See Judgment, pg. 6.)

An attorneys’ fees provision that allows fees for any action relating to “any dispute” or “any legal action” under an agreement is broad enough to encompass tort claims. (See Thompson v. Miller (2003) 112 Cal. App. 4th 327, 336 [“any dispute under the [agreements]” held broad enough to encompass tort action for fraud]; see also San Francisco CDC LLC v. Webcor Const. L.P. (2021) 62 Cal.App.5th 266, 285-287; Cruz v. Ayromloo (2007) 155 Cal.App.4th 1270, 1277 [holding that attorneys’ fees provision included tort claims because the “the lease contemplated recovery of attorneys’ fees for all claims in any civil action in connection with the lease.”].)

Here, all claims were “directly tied” to the ICA. The breach of fiduciary duty and conversion claims prosecuted by McLear against Silverstein directly flowed from the work Silverstein was hired to perform for McLear US, namely, to assist McLear US with the development and sale of payment rings in the United States using the ‘609 Patent. Likewise, all of Esos’ claim arose from Silverstein’s and Esos’ theft of the ‘609 Patent. More specifically, Esos and Silverstein stole the Patent from McLear in an effort to develop and sell payment rings for a new start-up company, which was the exact work Silverstein was hired to do for McLear pursuant to the ICA. Because the ICA’s dispute resolution and fee provision covers any dispute arising from or in connection with the ICA and the work Silverstein was to perform for McLear, all the tort claims fall within the ICA’s broad fee provision.

To calculate a lodestar amount, the Court must first determine the reasonableness of the hourly rates sought by the McLear’s counsel. The Supreme Court of California has concluded that a reasonable hourly lodestar rate is the prevailing rate for private attorneys “conducting non-contingent litigation of the same type.” (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1133, emphasis added.) “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.” (PLCM Group v. Drexler (2000) 22 Cal.4th 1084, 1096.)

McLear’s Counsel declares the intricacies of the present action, involving among other things, extensive discovery and motion practice related to Silverstein’s and Plaintiff’s use of forged documents in the case and misuse of the discovery process, an 8-day bench trial followed by a three-week jury trial, required the expertise of seasoned commercial litigators. The services for this matter were performed by lawyers from several firms with extensive experience and skill within their specific practice areas. (See Decl. of Harford ¶¶15-35, Exh. 7; Decl. of Taniguchi Exhs. 2-6.) McLear’s counsel have sufficiently demonstrated their hourly rates are reasonable in their community of practice in their specialized area of law.

The verified time entries of the attorneys are entitled to a presumption of credibility, which extends to an attorney’s professional judgment as to whether time spent was reasonably necessary to the litigation. (Horsford v. Board of Trustees of California State University (2005) 132 Cal.App.4th 359, 396 [“We think the verified time statements of the attorney as officers of the court are entitled to credence in the absence of a clear indication the records are erroneous.”].) “California courts do not require detailed time records, and trial courts have discretion to award fees based on declarations of counsel describing the work they have done and the court’s own view of the number of hours reasonably spent.” (Syers Properties III, Inc. v. Rankin (2014) 226 Cal.App.4th 691, 698-699.)

Here, the verified time records and invoices, the Court’s own record of vigorously contested litigation over five years, and the declarations by counsel demonstrate the reasonableness of the time spent on this case by the firms that worked on this case. (See Decl. of Harford ¶¶15-30 & Exh. 8; Decl. of Taniguchi Exhs. 2-6.) McLear prevailed in a complex case that lasted longer than five years and the 10,000+ hours McLear’s counsel spent over the years was both reasonable and necessary. Accordingly, McLear’s billed hours are reasonable.

To obtain a costs award, a party must serve and file a memorandum of costs. (C.R.C. Rule 3.1700(a).) McLear submitted a memorandum of costs that was not subject to a motion to strike or tax costs.

Accordingly, the Court awards McLear’s costs in the total amount of $259,984.67.

McLear’s counsel requests $39,999.21 in attorneys’ fees for the instant motion. (Decl. of Harford ¶39.) However, the motion was worked on by three attorneys for a total of 68 hours, which appears excessive and duplicative. (See Decl. of Harford ¶39.) The Court reduces the requested amount of attorneys’ fees for the instant motion by 1/3 of the requested amount for a total of $26,666.14. Further, McLear’s counsel’s request for $10,000 in anticipated fees on this motion are not reasonable, as the instant motion is unopposed.

Accordingly, McLear’s unopposed motion for attorneys’ fees is granted in the amount of $7,160,830.76 and $26,666.14 on the instant motion for a total reduced amount of attorneys’ fees of $7,187,496.90. The Court awards McLear’s request for costs in the amount of $259,984.67. The Court awards McLear the total amount of fees and costs for $7,447,481.57.

Hon. Daniel M. Crowley

Judge of the Superior Court