Judge: Gregory Keosian, Case: BC692058, Date: 2023-10-09 Tentative Ruling

Case Number: BC692058    Hearing Date: February 27, 2024    Dept: 61

Defendant Permacity Construction Corp.’s Motion for Attorney Fees is DENIED

Plaintiffs Dan Sherlock and Jason Blaylock’s Motion for Attorney Fees is GRANTED in the amount of $670,115.00

Plaintiffs to provide notice.

I.                OBJECTIONS

Plaintiffs object to the materials submitted by Defendant in support of its motion for attorney fees. These objections are OVERRULED, as the declarants may testify to their hourly rates and the fees incurred in this action. Plaintiffs’ Objection No. 6 to the declaration of Arezoo Jamshidi is SUSTAINED, as it consists of a hearsay analysis of average hourly California rates without regional specificity. The other objections are OVERRULED.

II.             MOTION FOR ATTORNEY FEES

“Except as attorney's fees are specifically provided for by statute, the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties; but parties to actions or proceedings are entitled to their costs, as hereinafter provided.” (Code Civ. Proc., § 1021.)

“In 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, subd. (a).) “[T]he party prevailing on the contract shall be the party who recovered a greater relief in the action on the contract.” (Civ. Code, § 1717, subd. (b)(1).)

In determining the proper amount of fees to award, courts use the lodestar method.  The lodestar figure is calculated by multiplying the total number of reasonable hours expended by the reasonable hourly rate.  “Fundamental to its determination . . . [is] a careful compilation of the time spent and reasonable hourly compensation of each attorney . . . in the presentation of the case.”  (Serrano v. Priest (1977) 20 Cal.3d 25, 48 (Serrano III).)  A reasonable hourly rate must reflect the skill and experience of the attorney.  (Id. at p. 49.)  “Prevailing parties are compensated for hours reasonably spent on fee-related issues.  A fee request that appears unreasonably inflated is a special circumstance permitting the trial court to reduce the award or deny one altogether.”  (Serrano v. Unruh (1982) 32 Cal.3d 621, 635 (Serrano IV).)  The Court in Serrano IV also stated that fees associated with preparing the motion to recover attorneys’ fees are recoverable.  (See id. at p. 624.)

Plaintiffs Dan Sherlock and Jason Blaylock (Plaintiff) seek attorney fees following a trial verdict in their favor and a total judgment thus far amounting to $673,895.39, including orders awarding Stearman fees and costs. Defendant Permacity Corporation seeks an award of attorney fees based on the discrepancy between Plaintiff’s trial demands and its ultimate award, which Defendant contends was not far above a $500,000 section 998 offer served by Defendant in November 2021. Plaintiff seeks $715,865.00 in fees, while Defendant seeks $1,885,160.60.

Defendant is not entitled to fees as it is not the prevailing party in this action. “[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.” (Kachlon v. Markowitz (2008) 168 Cal.App.4th 316, 349.) Defendant bases its claim to prevailing party status upon an offer for compromise served on November 29, 2021, for $500,001.00, inclusive of costs and attorney fees. (Parme Decl. Exh. B.) Although Plaintiff’s ultimate recovery exceeds this offer, Defendant argues that the offer is far closer to the amount obtained by Plaintiff than the $4.6 million that Plaintiff sought at trial. (Defendant Motion at p. 8.)

This argument conflates the “litigation objectives” of the parties with the parties objectives at the time of trial. Defendant’s litigation objectives have changed over the course of this litigation. At one point it asserted affirmative defenses based on the absence of any breach and a limitation of liability clause in the parties’ contract, as noted by this court in ruling on Plaintiff’s motion for summary adjudication on January 5, 2021. It is true that trial in this matter was limited to the issue of damages, but this was based on a stipulation to liability executed by the parties in December 2021. Defendant’s concession of negligence and liability was itself a substantial achievement of Plaintiff’s litigation objectives. Moreover, Defendant’s November 2021 offer was inclusive of costs and fees, and thus not only fell below Plaintiff’s ultimate recovery, but also would have left Plaintiff on the hook for costs and fees, and thus offered a substantially lesser recovery than that ultimately obtained. Defendant is not the prevailing party, and its motion for fees is DENIED.

Defendant argues that the contract at issue does not permit attorney fees in any event. (Opposition at pp. 7–9.) But the court already rejected this argument in denying Defendant’s motion for summary adjudication on December 2, 2021. The contract at issue states that “Contractor shall be entitled to reimbursement of collection costs, including, without limitation, reasonable attorneys’ fees, court costs, filing fees, and costs of securing its rights to payment.” (Motion Exh. A, § 13.) As the court explained in denying Defendant’s motion for summary adjudication on this same provision:

Civil Code § 1717 allows a prevailing party in a contract action to enforce a provision allowing for attorney fees to enforce the contract, even if they are not the party described in that provision. (See Civ. Code § 1717, subd. (a).) That subsection also states: “Where a contract provides for attorney's fees, as set forth above, that provision shall be construed as applying to the entire contract, unless each party was represented by counsel in the negotiation and execution of the contract, and the fact of that representation is specified in the contract.” (Ibid.) This language was specifically added in 1983 to overturn the case Sciarrotta v. Teaford Custom Remodeling, Inc. (1980) 110 Cal.App.3d 444, in which the court held that property owners suing a contractor for unworkmanlike construction could not invoke the attorney fees provision in the contract that allowed only for fees in the contractor’s suit to “enforce payment” under the contract. (See Paul v. Schoellkopf (2005) 128 Cal.App.4^th 147, 152–153 [describing case and legislative history].) The import of this language is that “parties may not limit recovery of attorney fees to a particular type of claim.” (Id. at p. 153.) Thus the limitation of an attorney fees provision to collection costs, escrow costs, or costs incurred to enforce payment, does not inhibit a party’s ability to invoke the reciprocating powers of Civil Code § 1717.

 
(12/2/2021 Order.)

Plaintiff’s request for attorney fees in the amount of $742,907.00 consists of the following components:

·       $269,640.00, representing 599.2 hours of attorney work by David Bederman at $450 per hour;

·       $2,925.00, representing 6.5 hours of attorney work by Brianna Franco at $450 per hour;

·       $276,500.00, representing 368.8 hours of attorney work by Terry Bailey at $750 per hour;

·       $166,800.00, representing 139 hours of attorney work by Boris Treyzon at $1,200.00 per hour.

(Motion at pp. 3–4.)

Defendant argues that the hourly rates sought are excessive. (Opposition at pp. 12–14.) Defendant further argues that Plaintiff’s lodestar ought to be reduced due to their relative lack of success at trial. (Opposition at p. 14.) Defendant argues that the fees should be apportioned among the other settling and dismissed defendants. (Opposition at pp. 14–16.) Defendant finally argues that certain of the fees sought are vague or unreasonable. (Opposition at pp. 16–18.)

Defendant’s argument as to hourly rates has some merit as to the $1,200 hourly rate sought for Plaintiffs’ trial counsel Boris Treyzon. “[T]he lodestar is the basic fee for comparable legal services in the community and that it may be adjusted by the court based on a number of factors in order to fix a fee at the fair market value for the particular action.” (Syers Properties III, Inc. v. Rankin (2014) 226 Cal.App.4th 691, 697–698.) Here, the hourly rate sought by Treyzon is supported by his own testimony concerning his 26 years of attorney experience and years of trial experience, but includes no explanation concerning the fees for comparable legal services in the community. And unlike the hourly rates for Bederman, Franco, and Bailey, Treyzon’s fees are somewhat out of step with the Laffey Matrix adopted by Defendant to assess the reasonable fees for their own services. (Parme Decl. Exh. H.) Treyzon’s hourly rate is properly reduced from $1,200 to $900 per hour, resulting in a reduction of his lodestar from $166,800 to $125,100, a reduction of $41,700.00.

Defendant’s argument as to the apportionment of fees is unpersuasive. Fees incurred in a multi-party action ought to be apportioned, so far as possible, between those related to dismissed or settling defendants and to defendants against whom plaintiffs have ultimately prevailed. (Heppler v. J.M. Peters Co. (1999) 73 Cal.App.4th 1265, 1297.) Fees need not be apportioned between multiple parties, however, where the issues are “inextricably intertwined.” (Id. at p. 1297.) Defendant does not argue that the fees sought here were incurred solely as to other defendants, and does not argue that the charges are not for intertwined issues. Rather, Defendant merely seeks a percentage reduction of the fee amounts according to the number of defendants active in the case at any given time. (Opposition at pp. 14–16.) No such apportionment is proper here.

However, Defendant’s arguments as to the propriety of certain fees does have some merit.  Defendant notes that Treyzon billed 4.5 hours of attorney work to prepare for trial on the evening of February 28, 2023 — the same as in all preceding days of trial — when the next day involved only a hearing on Defendant’s motion for mistrial and the beginning of the jury’s deliberations. (Opposition at p. 17.) This warrants a reduction of $4,050.00. The claiming of this same amount of hours in trial prep for the preceding days of trial does not render these amounts suspect, however, and only the latest entry need be reduced.

Accordingly, the $715,865.00 fee lodestar is properly reduced by $45,750.00 to $670,115.00. Plaintiff’s motion is GRANTED in this amount.