Judge: Elaine Lu, Case: 21STCV42211, Date: 2023-12-12 Tentative Ruling

Case Number: 21STCV42211    Hearing Date: December 12, 2023    Dept: 26

Superior Court of California

County of Los Angeles

Department 26

Procedural Background

            On November 16, 2021, Plaintiffs John Felix Maselli and Tanida Maselli (jointly “Plaintiffs”) filed the instant action against Defendant Mercedes-Benz USA, LLC (“Defendant”) arising out of the purchase of a 2020 Mercedes-Benz GLE 350W4.  The Complaint asserts nine causes of action for (1) Fraud and Deceit, (2) Breach of Written Warranty pursuant to the Magnuson-Moss Warranty Act, (3) Breach of Implied Warranty pursuant to the Magnuson-Moss Warranty Act, (4) Breach of Written Warranty pursuant to the Song-Beverly Consumer Warranty Act, (5) Breach of Implied Warranty pursuant to the Song-Beverly Consumer Warranty Act, (6) Violation of Business & Professions Code section 17200, (7) Violation of Business & Professions Code section 17500, (8) Negligence, and (9) Strict Liability.

            On January 4, 2022, pursuant to the stipulation of the parties, the Court ordered the instant action to binding arbitration.  (Order 1/4/22.)  On January 10, 2023. Plaintiff filed a notice of settlement of the entire action.

            On May 31, 2023, Plaintiffs filed the instant motion for attorneys’ fees and costs.  On November 30, 2023, Defendant filed an opposition.  On December 5, 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 4, 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.)  Moreover, no party disputes that Plaintiff is entitled to attorney’s fees and expenses as the prevailing party.

Reasonableness of Attorneys’ Fees

Plaintiffs seek attorney’s fees and costs totaling $60,008.41 consisting of $38,605.00 in attorneys’ fees, $18,785.00 in a 1.50 fee multiplier, and $2,618.41 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.)

The court has broad discretion in determining the amount of a reasonable attorney’s fee award, which will not be overturned absent a “manifest abuse of discretion, a prejudicial error of law, or necessary findings not supported by substantial evidence.” (Bernardi v. County of Monterey (2008) 167 Cal.App.4th 1379, 1393-1394.)  The court need not explain its calculation of the amount of attorney’s fees awarded in detail; identifying the factors considered in arriving at the amount will suffice. (Ventura v. ABM Indus. Inc. (2012) 212 Cal.App.4th 258, 274-275.)

Attorney Hovanes Margarian – Counsel of Record for Plaintiffs – 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 57.8 hours on the instant action, consisting of 15.70 on pre-filing work, 19.30 hours on post-filing and discovery, 4.7 hours on Client communication, 3 hours on breaking down expended hours for the instant motion, and 15.1 hours drafting and filing the instant motion.  (Margarian Decl. ¶¶ 9-10, Exh. A.) 

In opposition, Defendant contends that all fees incurred after December 28, 2021 should be rejected as Defendant made a Code of Civil Procedure section 998 Offer for the same amount that the parties eventually settled for. 

The Song-Beverly Act “provides no exception to the provisions of section 998.”  (Murillo v. Fleetwood Enterprises, Inc. (1998) 17 Cal.4th 985, 1000.)  However, Code of Civil Procedure § 998 is not applicable in the instant case.  Code of Civil Procedure § 998 provides in relevant part that “[i]f an offer made by a defendant is not accepted and the plaintiff fails to obtain a more favorable judgment or award, the plaintiff shall not recover his or her postoffer costs and shall pay the defendant's costs from the time of the offer.”  (Id. at (c)(1).)  “The language of section 998 ‘on its face’ prevents a plaintiff who rejects a settlement offer that is greater than the recovery it ultimately obtains at trial from recovering ‘postoffer’ costs and attorney fees.”  (Duale v. Mercedes-Benz USA, LLC (2007) 148 Cal.App.4th 718, 726.) 

Here, Defendants made a Code of Civil Procedure § 998 offer consisting of a repurchase of the Subject Vehicle for $71,000.00 to Plaintiffs and Plaintiffs’ lender and an additional cash settlement of $7,000.00 to Plaintiffs on December 28, 2021 which Plaintiffs did not accept.  (Bassi Decl. ¶ 5, Exh. C.)  On January 4, 2023, Plaintiffs accepted an offer to settle the instant action for a repurchase total of $71,000.00 to Plaintiffs and Plaintiffs’ lender.  (Bassi Decl. ¶ 8, Exh. D.)  Here, there was no trial, and thus, section 998 is inapplicable.

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 November 26, 2021.  Within two months, the parties had stipulated and been ordered to arbitration.  Half a year after arbitration had been ordered, the parties had still not even initiated arbitration as the parties were only discussing settlement.  (Minute Order 9/7/22.)  Within a month, the parties had settled in principle.  (Minute Order 10/12/22.)  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.)  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 57.8 hours were spent.  (Margarian Decl. ¶¶ 9-10, Exh. A.)  This is unreasonable.

Plaintiff’s Counsel claims to have spent nearly 20 hours on discovery matters.  (Margarian Decl. ¶¶ 9-10, Exh. A.)  However, no discovery was ever served.  (Bassi Decl. ¶ 6.)  Accordingly, spending 20 hours drafting common template discovery that was not even served 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 15.1 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 $22,615.00.

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. ¶ 6.)  Further, “[n]o vehicle inspection took place in the instant matter during which both parties were present.”  (Bassi Decl. ¶ 6.)  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.  Further, no evidence is presented by Plaintiff setting forth why such expert costs were warranted despite the near complete lack of litigation.  Accordingly, the expert fees are stricken.

No other costs are challenged.

CONCLUSIONS AND ORDER

            Based on the forgoing, Plaintiffs John Felix Maselli and Tanida Maselli’s motion for attorneys’ fees and costs is granted in the total amount of $23,212.51 consisting of $22,615.00 in Attorneys’ Fees and $597.51 in Costs.

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

DATED: December ___, 2023                                               ___________________________

                                                                                          Elaine Lu

                                                                                          Judge of the Superior Court