Judge: Elaine Lu, Case: 21STCV19434, Date: 2023-05-24 Tentative Ruling

Case Number: 21STCV19434    Hearing Date: May 24, 2023    Dept: 26

Superior Court of California

County of Los Angeles

Department 26

Procedural Background

            On May 24, 2021, Plaintiff Narbeh Mardirosian (“Plaintiff”) filed the instant action against Defendant Mercedes-Benz USA, LLC (“Defendant”) arising out of the purchase of a 2020 Mercedes-Benz CLA 250C.  The Complaint asserts four causes of action for (1) Breach of Written Warranty, (2) Breach of Implied Warranty, (3) Breach of Written Warranty, and (4) Breach of Implied Warranty. 

            On July 22, 2021, pursuant to the stipulation of the parties, the Court ordered the instant action to binding arbitration.  (Order 7/22/21.)  On November 29, 2022. Plaintiff filed a notice of settlement of the entire action.

            On April 28, 2023, Plaintiff filed the instant motion for attorneys’ fees and costs.  On May 11, 2023, Defendant filed an opposition.  On May 17, 2023, Plaintiff filed a reply.

Evidentiary Objections

            In opposition, Defendant has submitted evidentiary objections to portions of the declarations of Hovanes Margarian.  However, these objections are unnecessary because the Court, when reviewing the evidence is presumed to ignore material it knows is incompetent, irrelevant, or inadmissible.  (In re Marriage of Davenport (2011) 194 Cal. App. 4th 1507, 1526.)  Courts are presumed to know and apply the correct statutory and case law and to be able to distinguish admissible from inadmissible evidence, relevant from irrelevant facts, and to recognize those facts which properly may be considered in the judicial decision-making process.  (People v. Coddington (2000) 23 Cal.4th 529, 644.)

Legal Standard

Pursuant to Code of Civil Procedure section 1033.5, subdivision (a)(10)(A), attorney fees when authorized by contract or statute are allowable as costs and may be awarded upon a noticed motion pursuant to Code of Civil Procedure section 1033.5, subdivision (c)(5).

In determining what fees are reasonable, California courts apply the “lodestar” approach. (See, e.g., Holguin v. DISH Network LLC (2014) 229 Cal.App.4th 1310, 1332.)  This inquiry “begins with the ‘lodestar,’ i.e., the number of hours reasonably expended multiplied by the reasonable hourly rate.” (See PLCM Group v. Drexler (2000) 22 Cal.4th 1084, 1095.)  From there, the “[t]he 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.” (Ibid.)  Relevant factors 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.” (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1132.)

Discussion

Right to Recover

A prevailing buyer in an action under the Song-Beverly Act “shall be allowed by the court to recover as part of the judgment a sum equal to the aggregate amount of costs and expenses, including attorney's fees based on actual time expended, determined by the court to have been reasonably incurred by the buyer in connection with the commencement and prosecution of such action.” (Civ. Code, § 1794(d).)  “[W]hen ‘prevailing party’ is undefined by the statute, ‘a court may base its attorney fees decision on a pragmatic definition of the extent to which each party has realized its litigation objectives, whether by judgment, settlement or otherwise. [Citations.] In assessing litigation success, Hsu v. Abbara (1995) 9 Cal.4th 863, 877, ... instructs: ‘[C]ourts should respect substance rather than form, and to this extent should be guided by “equitable considerations.”’”  (MacQuiddy v. Mercedes-Benz USA, LLC (2015) 233 Cal.App.4th 1036, 1048.)

            On approximately January 13, 2023, the parties settled the instant action.  (Supp. Margarian Decl. ¶ 3.)  As part of this settlement, Plaintiff was established as the prevailing party for purposes of attorneys’ fees and costs under Civil Code section 1794(d).  (Supp. Margarian Decl. ¶ 3.)  No party disputes that Plaintiff is entitled to attorney’s fees and expenses as the prevailing party.

Reasonableness of Attorneys’ Fees

Plaintiff seeks attorney’s fees and costs totaling $70,297.50 consisting of $46,865.00 in attorneys’ fees, $23,432.50 in a 1.50 fee multiplier, and $3,646.91 in costs.

The trial court has broad authority to determine the amount of a reasonable fee. (PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1095.) The party bears the burden of proof as to “reasonableness” of any fee claim. (Code Civ. Proc., § 1033.5, subd. (c)(5).) The party seeking fees has the burden of documenting the appropriate hours expended and hourly rates. (City of Colton v. Singletary (2012) 206 Cal.App.4th 751, 784.) This burden requires competent evidence as to the nature and value of the services rendered. (Martino v. Denevi (1986) 182 Cal.App.3d 553, 559.)

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 or billing statements, and there is no requirement that such records or statements be offered in evidence. (Steiny & Co., Inc. v. California Electric Supply Co. (2000) 79 Cal.App.4th 285, 293.)  Ascertaining the fee amount is left to the trial court’s sound discretion. (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1132.)  Moreover, “[t]here is ‘no mathematical rule requiring proportionality between compensatory damages and attorney's fees awards’, [Citation], and courts have awarded attorney's fees where plaintiffs recovered only nominal or minimal damages.”  (Harman v. City and County of San Francisco (2007) 158 Cal.App.4th 407, 421.)

Attorney Hovanes Margarian – Counsel of Record for Plaintiff – states that he has “been practicing law for more than 16 years, nearly exclusively focusing on automotive litigation.”  (Margarian Decl. ¶ 14.)  Margarian notes that he has handled over “2,500 such cases and presently have over 200 such pending matters.”  (Margarian Decl. ¶ 16.)  Margarian bills at an hourly rate of $550 for non-contingency cases and $650 per hour for contingency cases such as the instant action.  (Margarian Decl. ¶ 12.)  Margarian further notes that this hourly rate of $650 has been approved in other proceedings within this Court in other departments.  (Margarian Decl. ¶¶ 17-18.)  Margarian claims 72.1 hours on the instant action, consisting of 16.70 on pre-filing work, 27.7 hours on post-filing and discovery, 5.3 hours on Client communication, 0.9 hours on attending hearings, 3.1 hours on the settlement, and 18.4 hours on the instant motion.  (Margarian Decl. ¶¶ 9-10, Exh. A.) 

In opposition, Defendant contends that the hourly rate is unreasonable, pre-litigation fees are not recoverable, and the overall time spent is unreasonable.  The Court agrees in part.

Defendant first claims that none of the hours spent on prelitigation matters is recoverable.  In support of this contention, Defendant cites one case -- Dominguez v. American Suzuki Motor Corp. (2008) 160 Cal.App.4th 53. 

Defendant’s reliance on Dominguez is misplaced.  In Dominguez, the plaintiff purchased a motorcycle that he alleged was defective in a way that was in violation of the express warranty.  (Id. at p.55.)  After the buyer demanded restitution, civil penalties, and $2500 attorneys’ fees, the defendant quickly agreed to pay the total purchase price, as well as $750 for reasonable attorney's fees.  (Id. at 56.)   The plaintiff responded with a repeated demand for $2500 in attorney's fees. (Ibid.) After the defendant declined this counteroffer, the plaintiff commenced an action in which he alleged a willful violation of Civil Code § 1793.2(d)(1).  (Id. at p.59.)  In reversing the denial of summary judgment, the Court of Appeal concluded that the manufacturer had complied with its duties under the Song–Beverly Act when it made a timely offer to repurchase the vehicle in conformance with Civil Code § 1793.2(d)(1). (Id. at pp.59-60.)  Unlike Dominguez, Defendant here has never contended that it immediately complied with the Song-Beverly Act by attempting to repurchase the subject vehicle before Plaintiffs filed the instant action.  Further, Dominguez involved Civil Code, § 1793.2(d)(1) as the motorcycle was not a new motor vehicle.  (Id. at p.60, fn. 4.) 

Second, as to the hourly rate, Defendant points to the United States Central District Court of California’s ruling on a motion for attorney’s fees for a lemon law action in Arias v. Ford Motor Company, No. 5:18-cv-01928-PSG-SP, (C.D. Cal. Jan. 27, 2020) (ECF Dkt 50).  (Bassi Decl. ¶ 13, Exh. C.)  There the District Court found that the requested rates of $650 for partners outpaced the prevailing rate for similar work and reduced the rate for partners to $325.  (Bassi Decl. ¶ 13, Exh. C.)  The other cases cited by Defendant as support for reducing Plaintiff’s counsel hourly rate merely rely on the reasoning and findings in Arias.  (Bassi Decl. ¶¶ 14-15, Exhs. 14-15.)  However, Defendant fails to show that the reasoning in Arias is applicable here.

In Arias, the plaintiff filed suit in 2018 and eventually settled in late 2019.  (Bassi Decl. ¶ 13, Exh. C.)  There the plaintiff’s counsel hourly rates ranged from $275 for associates and $650 for partners for work performed in 2018 and 2019.  (Bassi Decl. ¶ 13, Exh. C.)  Based on the 2018 Real Rate Report: The Industry’s Leading Analysis of Law Firm Rates, Trends, and Practices, the District Court concluded that the hourly rates were excessive and outpaced the true market rates in consumer litigation cases.  (Bassi Decl. ¶ 13, Exh. C.) 

The instant action was not filed until May of 2021, three years after Arias was filed.  As such the rates mentioned in Arias would be outdated.  Moreover, unlike in Arias, an applicable Real Rate Report such as one for 2021 has not been provided.  Moreover, the Court has no evidence of what the respective counsel’s experiences were in Arias such that a reasonable comparison could be made.  Rather, at best, the Court could merely speculate based on Arias that $650 per hour would be unreasonable for a partner in consumer litigation. 

Here, based on the evidence presented to the Court and Plaintiff’s Counsel’s experience, the Court finds Plaintiff’s Counsel’s hourly rate is reasonable.  However, in light of Plaintiff’s Counsel’s expertise in lemon law actions, as reflected in Margarian’s hourly rates, the Court finds the hours billed excessive. 

As Defendant notes, very little – if any – litigation occurred in the instant action.  The action was filed on May 24, 2021.  Within two months, the parties had stipulated and been ordered to arbitration.  Nearly a year after arbitration had been ordered, the parties have still not even initiated arbitration as the parties were only discussing settlement.  (Minute Order 7/18/22.)  By August of 2022, the parties initiated arbitration with the AAA.  (Minute Order 8/8/22.)  However, “[b]efore Defendant even filed an arbitration answer, the parties reached settlement and advised AAA as such on November 8, 2022.”  (Bassi Decl. ¶ 5.)  No motions were filed other than the instant motion.  (Bassi Decl. ¶ 6.)  No discovery was ever served, no depositions notices were served, and no vehicle inspections with both parties took place.  (Bassi Decl. ¶¶ 6-10.)  Given that very little litigation occurred, and Margarian’s high expertise in the field of lemon law litigation – as noted by his hourly rate – the amount of time claimed should be minimal.  However, Plaintiff’s Counsel claims that 72.1 hours were spent.  (Margarian Decl. ¶¶ 9-10, Exh. A.)  This is plainly unreasonable.

Plaintiff’s Counsel claims over 10 hours spent on discovery matters.  (Margarian Decl. ¶¶ 9-10, Exh. A.)  However, no discovery was ever served.  Accordingly, such time is clearly unreasonable.  Similarly, a significant amount of time is spent on clerical tasks such as creating folders.  It is unclear how clerical housekeeping tasks would be related to Plaintiffs’ claims. Accordingly, a slight reduction is warranted.  Further, the claimed 18.4 hours on the instant motion is unreasonable.  The instant motion is simple and straightforward requiring little work or legal argument and given the exceptional expertise claimed by Plaintiff’s Counsel such a massive time claim is unreasonable.  Accordingly, a significant reduction is warranted.

Given the totality of these factors the Court concludes based on the claimed experience of Plaintiff’s Counsel, as reflected in his hourly rate, a significant reduction is warranted.  Utilizing a lodestar approach, and in view of the totality of the circumstances, the Court finds that the total and reasonable amount of attorney’s fees incurred is $30,615.00.

Lodestar Enhancement

Plaintiff requests a lodestar enhancement multiplier of 1.50 given the contingent risk, the substantial delay in payment, preclusion of other work, the skill displayed in presenting the issues, and the outcome achieved. 

In whether to apply a multiplier the California Supreme Court has given clear guidance for the trial courts to follow.

Of course, the trial court is not required to include a fee enhancement to the basic lodestar figure for contingent risk, exceptional skill, or other factors, although it retains discretion to do so in the appropriate case; moreover, the party seeking a fee enhancement bears the burden of proof. In each case, the trial court should consider whether, and to what extent, the attorney and client have been able to mitigate the risk of nonpayment, e.g., because the client has agreed to pay some portion of the lodestar amount regardless of outcome. It should also consider the degree to which the relevant market compensates for contingency risk, extraordinary skill, or other factors under Serrano III. We emphasize that when determining the appropriate enhancement, a trial court should not consider these factors to the extent they are already encompassed within the lodestar. The factor of extraordinary skill, in particular, appears susceptible to improper double counting; for the most part, the difficulty of a legal question and the quality of representation are already encompassed in the lodestar. A more difficult legal question typically requires more attorney hours, and a more skillful and experienced attorney will command a higher hourly rate.

(Ketchum, supra, 24 Cal.4th at pp.1138–1139.)

Here, many of the factors raised have already been addressed in the calculations of the hours worked and hourly rate above.  Therefore, the court finds that an enhancement multiplier is not appropriate for this case.

Costs

In opposition, Defendant contends that the expert witness fees should be stricken. 

            Expert witness fees are generally not permitted unless ordered by the court under Code of Civil section 1033.5(a)(8) or “except when expressly authorized by law.”  (CCP § 1038(b).)  However, Plaintiffs are prevailing buyers under the Song-Beverly Act.  “Section 1794, subdivision (d), permits the prevailing buyer to recover both ‘costs’ and ‘expenses.’”  (Jensen v. BMW of North America, Inc. (1995) 35 Cal.App.4th 112, 137.) 

The Legislature added the “costs and expenses” language to section 1794 in 1978. (Stats. 1978, ch. 991, § 10, p. 3065.) An analysis by the Assembly Committee on Labor, Employment, and Consumer Affairs states: “Indigent consumers are often discouraged from seeking legal redress due to court costs. The addition of awards of 'costs and expenses' by the court to the consumer to cover such out-of-pocket expenses as filing fees, expert witness fees, marshall’s fees, etc., should open the litigation process to everyone.” (Assem. Com. on Labor, Employment & Consumer Affairs, Analysis of Assem. Bill No. 3374 (May 24, 1978) p. 2.)

(Id. at p.138.)

“[T]he Legislature amended section 1794 to provide for the recovery of “costs and expenses.” The legislative history indicates the Legislature exercised its power to permit the recovery of expert witness fees by prevailing buyers under the Act[.]”  (Ibid.)  “[T]he Legislature intended the phrase ‘costs and expenses’ to cover items not included in ‘the detailed statutory definition of “costs” ’ set forth in Code of Civil Procedure section 1033.5.”  (Warren v. Kia Motors America, Inc. (2018) 30 Cal.App.5th 24, 42.)  Therefore, a prevailing buyer is entitled to “costs and expenses” that have been “determined by the court to have been reasonably incurred by the buyer in connection with the commencement and prosecution of such action.”  (Civ. Code, § 1794(d).)

Expert fees clearly fall within the intended expenses and legislative history of Civil Code section 1794.  (Jensen, supra, 35 Cal.App.4th at p.138.)  However – while permissible – the claimed expert fees are not supported as reasonable in the instant action.  As noted above, no discovery was propounded in the instant action.  (Bassi Decl. ¶¶ 7-9.)  Further, “[n]o vehicle inspection took place in the instant matter during which both parties were present.”  (Bassi Decl. ¶ 10.)  Moreover, the action settled before Defendant answered arbitration.  (Bassi Decl. ¶ 5.)  Given these circumstances, it is not clear why expert discovery would be reasonable.  Plaintiff fails to provide any evidence as to why these costs were reasonably incurred in connection with the commencement and prosecution of the instant action.  Accordingly, the expert fees are stricken.

No other costs are challenged.

CONCLUSIONS AND ORDER

            Based on the forgoing, Plaintiffs Luis Huang and Richard Meng’s motion for attorneys’ fees and costs is granted in the total amount of $31,255.81 consisting of $30,615.00 in Attorneys’ Fees and $640.81 in Costs.

            Moving Parties are ordered to provide notice of this order and file proof of service of such.

DATED: May 24, 2023                                                          ___________________________

                                                                                    Elaine Lu

                                                                                    Judge of the Superior Court