Judge Edward B. Moreton, Jr., Case Number: 23SMCV00184, Date: 2024-03-04 Tentative Ruling

Judge: Edward B. Moreton, Jr., Case: 23SMCV00184, Date: 2024-03-04 Tentative Ruling

Superior Court of California

County of Los Angeles – West District

Beverly Hills Courthouse / Department 205

LEIGH COLLIER,

Plaintiff,

THE NEW MEDIA COLLECTIVE, et al.,

Defendants.

Case No.: 22SMCV00184

Hearing Date: March 4, 2024

ORDER RE:

DEFENDANTS’ MOTION FOR

ATTORNEYS’ FEES IN THE SUM OF

$115,720 PURSUANT TO CODE CIV.

PROC. §2033.420

BACKGROUND

This action arises from a contemplated business venture which never materialized. Plaintiff Leigh Collier alleges that Defendants Bergram van Munster, Elise Doganieri, Mark Dziak, Douglas Vargas and TNMC Group, LLC (“TNMC”) breached an oral contract or partnership agreement with her to “form a business.” The parties explored forming a new business – referred to as “Newco”—which if formed would be a “new media production company whereby a network of local, physical production companies would effectively be rolled up under the auspices of a single entity to develop and create programming in local and often untapped markets for global use”. (First Amended Complaint, ¶2.)

The operative complaint alleges six claims for (1) fraud/false promise, (2) breach of fiduciary duty, (3) breach of confidence, (4) breach of oral contract/implied in fact contract, (5) breach of the implied covenant of good faith and fair dealing, and (6) declaratory relief.

The Court previously granted summary adjudication as to the first, second, fourth, fifth and sixth causes of action. As relevant here, the Court concluded there was no oral agreement to start a new company; there was only an agreement to agree. Further, and specifically as to Dziak and Vargas, the Court concluded they were not contracting parties because Plaintiff admitted as much in her deposition, and as to TNMC, it had not been formed until 2017, and therefore it could not have been a contracting party to an alleged 2015 oral contract.

This hearing is on Defendants’ motion for attorneys’ fees pursuant to Code Civ. Proc. § 2033.420, for Plaintiff’s alleged failure to admit certain RFA’s. Defendants argue that Plaintiff unreasonably failed to admit she had no contract with van Munster, Vargas, Dziak, and TNMC Group; the existence of the contract was an issue of substantial importance in the case; and in prevailing on their motion for summary adjudication, Defendants established that the denials of the RFA’s were unreasonable.

The specific RFAs and Plaintiff’s responses are as follows:

RFA No. 53 asked Plaintiff to admit “You did not enter into any contract with DZIAK.” Plaintiff denied the request. (Ex. E at p. 8-9.)
RFA No. 54 asked Plaintiff to admit “YOU did not enter into any contract with VARGAS.” Plaintiff denied the request. (Id. at p. 9.)
RFA No. 55 asked Plaintiff to admit “YOU did not enter into any contract with VAN MUNSTER.” Plaintiff denied the request. (Ex. D at p. 26.)
RFA No. 56 asked Plaintiff to admit “YOU did not enter into any contract with TNMC.” Plaintiff denied the request. (Ex. E at p. 10.)
RFA No. 57 asked Plaintiff to admit “You did not enter into any oral partnership agreement with DZIAK.” Plaintiff denied the request. (Id. at pp. 10-11)
RFA No. 58 asked Plaintiff to admit “YOU did not enter into any oral partnership agreement with VARGAS.” Plaintiff denied the request. (Id. at pp. 11-12.)
RFA No. 59 asked Plaintiff to admit “YOU did not enter into any oral partnership agreement with VAN MUNSTER.” Plaintiff denied the request. (Ex. D at p. 27.)
RFA No. 60 asked Plaintiff to admit “YOU did not enter into any oral partnership agreement with TNMC.” Plaintiff denied the request. (Ex. E at pp. 12-13.)

LEGAL STANDARD

Code Civ. Proc. § 2033.420, subdivision (a)¿provides that a party may seek the reasonable expenses including attorney fees of proving requests of admission that were denied by a responding party:

If a party fails to admit the genuineness of any document or the truth of any matter when requested to do so under this chapter, and if the party requesting that admission thereafter proves the genuineness of that document or the truth of that matter, the party requesting the admission may move the court for an order requiring the party to whom the request was directed to pay the reasonable expenses incurred in making that proof, including reasonable attorney's fees.

(Code Civ. Proc., § 2033.420, subd. (a).) Section 2033.240¿shifts costs and expenses of proof only where the responding party refused to admit, i.e., denied, a request. (See¿Code Civ. Proc., § 2033.240, subd. (a)¿(“If a party fails to admit ... .”).)

If the responding party simply objected or gave an incomplete answer, the proponent must first move to compel further answers. (Wimberly v. Derby Cycle Corp. (1997) 56 Cal.App.4th 618, 636.) A failure to do so results in waiver. (See¿American Federation of State, County & Municipal Employees v. Metropolitan Water Dist. (2005) 126 Cal.App.4th 247, 268.)

Costs may be awarded when the requesting party proves the matter at trial or on a motion for summary judgment. (Barnett v. Penske Truck Leasing Co., L.P. (2001) 90 Cal.App.4th 494, 497-499.)

An award of such costs is mandatory unless the court finds one of the following:

(1) An objection to the request was sustained or a response to it was waived under Section 2033.290.

(2) The admission sought was of no substantial importance.

(3) The party failing to make the admission had reasonable ground to believe that that party would prevail on the matter.

(4) There was other good reason for the failure to admit.

“An RFA has substantial importance if it is central to disposition of the case. In evaluating whether a good reason exists for denying a request to admit, a court may properly consider whether at the time the denial was made the party making the denial held a reasonably entertained good faith belief that the party would prevail on the issue at trial. The determination of whether there were no good reasons for the denial, whether the requested admission was of substantial importance, and the amount of expenses to be awarded, if any, are all within the sound discretion of the trial court.”¿(Doe v. Los Angeles County Dept. of Children & Family Services (2019) 37 Cal.App.5th 675, 690, as modified (July 18, 2019), reh'g denied (Aug. 9, 2019), review filed (Aug. 27, 2019). (internal quotations and citations omitted).)

“When a party denies an RFA, [t]he question is not whether a reasonable litigant would have denied the RFAs. Nor is the question simply whether the litigant had some minimum quantum of evidence to support its denial (i.e., ‘probable cause’). The relevant question is whether the litigant had a reasonable, good faith belief he or she would prevail on the issue at trial. Consideration of this question requires not only an assessment of the substantiality of the evidence for and against the issue known or available to the party, but also the credibility of that evidence, the likelihood that it would be admissible at trial and persuasive to the trier of fact, the relationship of the issue to other issues anticipated to be part of trial (including the issue’s importance), the party’s efforts to investigate the issue and obtain further evidence, and the overall state of discovery at the time of the denials and thereafter.” (Samsky v. State Farm Mutual Automobile Ins. Co. (2019) 37 Cal.App.5th 517, 526, as modified on denial of reh'g (July 23, 2019), review denied (Sept. 11, 2019)¿(internal citations and quotations omitted).)

Section 2033.420 mandates that the Court award attorneys’ fees in connection with a failure to admit RFAs unless one of four exceptions applies. None of the exceptions apply as to the RFAs directed to an oral partnership agreement with Vargas, Dziak and TNMC (RFA Nos. 57, 58 and 60).

First, no objection to the RFAs was sustained, and a response to the RFAs was not waived. Plaintiff provided responses in the form of denials to the relevant RFAs.

Second, the admissions sought were of substantial importance. “An issue is of substantial importance if it has at least some direct relationship to one of the central issues in the case, i.e., an issue which if proven, would have altered the results in the case.” (Wimberly v. Derby Cycle Corp. (1997) 56 Cal.App.4th 618, 634.) Here, the issues posed in the RFAs went to the heart of Plaintiff’s case – whether there was a contract to form a new entity and whether there was a partnership agreement.

Plaintiff argues that whether she had an oral partnership with Dziek and Vargas was not material to her claims. But this argument is contradicted by the operative complaint. Plaintiff was suing Dziek and Vargas for breach of the oral partnership agreement. (First Amended Complaint (“FAC”) ¶¶ 48-59.)

Third, Plaintiff cannot demonstrate she had reasonable grounds to believe she would prevail on her denials as to Vargas and Dziak because her own deposition testimony directly contradicted her responses to the RFAs. In deposition, Plaintiff admitted she was not partners with Dziak and Vargas. Her argument that Vargas and Diziak were liable as agents was contrary to law and rejected by the Court in its Order on Defendants’ motion for summary adjudication (“MSA”). Likewise, Plaintiff cannot demonstrate she had reasonable grounds to believe she would prevail on her denials as to TNMC because TNMC was formed in 2017, well after Plaintiff claims there was an oral partnership agreement.

However, the Court concludes Plaintiff had reasonable grounds to believe she would prevail on her claim of an agreement with van Munster. While the Court ultimately concluded there was no such contract, it was by no means a fait accompli. Plaintiff presented evidence of an agreement as to at least one term (i.e., ownership split), that the parties were working to create Newco (including a business plan, pitch deck, market report and the hiring of a law firm and business advisory firm), and also that Defendants represented to third parties they had “recently established a new company.” Although the Court ultimately concluded these facts did not create a triable issue of a contract, they nonetheless show that Plaintiff had some reasonable basis to believe she would prevail on her claim of a contract with van Munster.

Plaintiff argues that this Court’s MSA ruling supports her denial of the RFAs directed to Dziak and Vargas because the Court concluded “Plaintiff has raised a triable issue as to whether the parties had an oral agreement to maintain the confidentiality of the Idea.” While this argument suggests there was a basis to deny the RFAs directed to whether there was any contract at all with Dziak and Vargas (RFA Nos. 53-54), it fails to address the denials of the RFAs directed to the existence of an oral partnership agreement with Dziak and Vargas (RFA Nos. 57 and 58).

Plaintiff next argues that she had a reasonable basis to believe there was an oral partnership with Dziak and Vargas, in the lay sense. Plaintiff contends the evidence shows she was “closely involved” and “associated” with Vargas and Dziak, which makes them her partners in the lay sense. Plaintiff’s argument is unpersuasive. Clearly, the RFAs meant partnership in the legal sense, as Plaintiff’s lay understanding is irrelevant.

Fourth, Plaintiff cannot show there was any other good reason for her failure to admit the RFAs as to the oral partnership agreements with Vargas, Dziak and TNMC. She never obtained any evidence to support the denials and had no such evidence at the time she denied the RFAs.

Plaintiff cites three pieces of evidence which she claims shows she had an oral partnership with Vargas and Dziak: (1) in June 2016, a demand was made that Dziak and Vargas receive equity in this Newco, (2) around that time, Newco was named “New Media Collective,” and (3) when Dziek reconnected with Plaintiff years later, his social media reflected that he was working for “The New Media Collective.” None of this evidence supports a finding of a partnership. A demand to receive equity by itself does not create a partnership. The similarity between the names of the companies also does not create a partnership. And Dziek’s social media posting about TNMC does not prove there was a partnership.

Plaintiff also argues that at the time she denied the RFAs, Defendants had not yet completed their document production, nor had they been deposed. However, that Plaintiff did not have discovery from Defendants does not say anything about whether she had reasonable grounds to deny the RFAs. Plaintiff argues that absent this discovery, all she had was her personal belief that there was a partnership, but if that belief is unsupported by any evidence (as is clear here), then she had no reasonable basis to deny the RFAs.

The Court next considers the amount of attorneys fees to award. 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.”¿ (Graciano v. Robinson Ford Sales, Inc. (2006) 144 Cal.App.4th 140, 154.)¿ The lodestar figure may then be adjusted, 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.¿ (See Serrano v. Priest (1977) 20 Cal.3d 25, 49.)¿ The factors considered in determining the modification of the lodestar 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.”¿ (Mountjoy v. Bank of Am. (2016) 245 Cal.App.4th 266, 271.)¿¿

“Under the lodestar method, a party who qualifies for a fee should recover for all hours reasonably spent unless special circumstances would render an award unjust.” (Vo v. Las Virgenes Mun. Water Dist. (2000) 79 Cal.App.4th 440, 446.) As a matter of law, an attorney declaration is all that is required to support Plaintiff’s fees. “An attorney’s testimony as to the number of hours worked is sufficient evidence to support an award of attorney fees, even in the absence of detailed time records.” (Mardirossian & Associates, Inc. v. Ersoff (2007) 153 Cal.App.4th 257, 269.)

In challenging attorneys’ 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 a sufficient argument and citations to the evidence.¿ (Premier Medical Management Systems, Inc. v. California Ins. Guaranty Assoc. (2008) 163 Cal.App.4th 550, 564.)¿ General arguments that fees claimed are excessive, duplicative, or unrelated do not suffice.¿ (Id.)

Here, counsel’s hourly rate is $600 per hour. Gary Gorham has 28 years of experience. He is a graduate of Syracuse University College of Law. He has extensive first chair experience in civil litigation matters, including trials in state and federal courts and numerous arbitration hearings. (Gorham Decl. ¶20.) Lucy Mekhael has 25 years of experience. She is a graduate of Loyola Law School. She has extensive litigation experience. (Id. ¶21.)

The Court concludes these hourly rates are reasonable and within the range of prevailing market rates in Los Angeles. (See, e.g.,¿Schneider v. Chipotle Mexican Grill Inc. (N.D. Cal. 2020) 336 F.R.D. 588, 601¿(finding rates of $830 to $1,275 for partners reasonable);¿Infanzon v. Allstate Ins. Co. (C.D. Cal. 2020) 335 F.R.D. 305, 314¿(finding lead counsel’s hourly rate of $575 in January 2020 reasonable);¿San Diego Comic Convention v. Dan Farr Productions (S.D. Cal. 2019) 2019 U.S. Dist. LEXIS 64418, at *39-*45 (finding reasonable hourly rates of $760 for partners with 28-29 years of experience and $685 for a partner with 14 years of experience);¿Hefler v. Wells Fargo & Co. (N.D. Cal. 2018) 2018 U.S. Dist. LEXIS 213045 at *39¿(rates from $650 to $1,250 for partners or senior counsel are reasonable);¿Kikkert v. Berryhill (S.D. Cal. 2018) 2018 U.S. Dist. LEXIS 127237 at *5 (finding hourly rate of $943 reasonable, citing other decisions in the district approving rates from $656 to $886);¿Medina v. Metropolitan Interpreters & Translators, Inc. (S.D. Cal. 2015) 139 F. Supp. 3d 1170, 1179¿(finding reasonable hourly rate of $850 for a partner with 38 years of experience and $625 for a partner with 17 years of experience);¿Makaeff v. Trump Univ. LLC (S.D. Cal. 2015) 2015 U.S. Dist. LEXIS 46749 at *11-*15 (finding¿reasonable rates of $600 to $825 for partners);¿Carr v. Tadin, Inc. (S.D. Cal. 2014) 51 Supp.3d 970, 978 (awarding in 2014,¿hourly rate of $650 for a partner);¿Eastwood Ins. Servs., Inc. v. Titan Auto Ins. of N.M., Inc. (C.D. Cal. Nov. 23, 2010) 2010 WL 11595919, at *3 (hourly rates of $775 for a partner in 2010 were reasonable).)