Judge: H. Jay Ford, III, Case: 21SMCV01157, Date: 2022-10-20 Tentative Ruling

Case Number: 21SMCV01157    Hearing Date: October 20, 2022    Dept: O

  Case Name:  Crooymans, et al. v. Givner, et al

SUBJECT:                MOTION FOR ATTORNEY’S FEES

MOVING PARTY:   Defendant Eric L. Foumberg, in his capacity as Trustee of the Bruce Givner Personal Residence Trust and Kathleen Givner Person Residence Trust  

RESP. PARTY:         Plaintiffs Kathryn Crooymans, et al.

TENTATIVE RULING

            Defendant Eric L. Foumberg’s Motion for Attorney’s Fees is GRANTED.  Foumberg is awarded fees in the amount of _____________

I.  Foumberg entitled to fees as nonsignatory sued as alter ego of judgment debtors

            A nonsignatory sued as if a party to the contract (e.g., as alter ego or partner or coventurer of the signatory corporation) can recover fees as a prevailing party.  See Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124, 128-129.  Because the nonsignatory would have been liable for fees had it lost, it can recover fees when it wins.  Id. 

“The reason an alter ego can be added to a judgment is because, in the eyes of the law, the alter ego was a party, albeit by a different name.  To give effect to the principles inherent in Reynolds Metals and Civil Code section 1717, we employ a similar analysis for a prevailing alleged alter ego: it is as though the alleged alter ego was a party to the original lawsuit, and prevailed. Consequently, a postjudgment, independent action to establish alter ego liability for a judgment on a contract is itself an action on the contract.”  MSY Trading Inc. v. Saleen Automotive, Inc. (2020) 51 Cal.App.5th 395, 403.

“Civil Code section 1717 is also interpreted to further provide a reciprocal remedy for a nonsignatory defendant, sued on a contract as if he were a party to it, when a plaintiff would clearly be entitled to attorney's fees should he prevail in enforcing the contractual obligation against the defendant.  Thus, a defendant who did not sign the contract containing the fee provision was held to be entitled to attorney fees where the defendant was unsuccessfully sued as an alleged coventurer bound by the contract. Had plaintiff in that case prevailed on its claim, defendant would have had to pay plaintiff's attorney fees.  The court reasoned that defendant therefore had a reciprocal right to fees when she prevailed.”  Diamond Heights Village Assn., Inc. v. Financial Freedom Senior Funding Corp. (2011) 196 Cal.App.4th 290, 306–307 (discussing  Reynolds). 

Foumberg was sued as an alter ego of the Bruce and Kathleen Givner.  Plaintiffs sought to add Foumberg, as Trustee, to the underlying Judgment pursuant to CCP §187.  See FAC, ¶¶28-29.  The Judgment was based on Plaintiffs’ legal malpractice claim against Bruce Givner and his law firm.  See RJN, Ex. A, Attachment 8(c).  The Judgment was based on the Engagement Agreement between Plaintiffs’ and Givner and Kaye.  Id. at pp. 13-14.  The Judgment included an award of attorney’s fees to Plaintiffs as prevailing parties under the Engagement Agreement.  Id.  When Plaintiffs filed this action, they were seeking to bind Foumberg the Engagement Agreement through the Judgment.  Plaintiffs were also seeking to impose liability on Foumberg for Plaintiffs’ attorneys’ fee award in in the underlying judgment. 

            Foumberg is in a different position from the nonsignatory defendant in Diamond Heights Village Assn.  In Diamond Heights Village Assn., the plaintiff had not sued the nonsignatory defendant under the CC&Rs containing the fee provision, never sought fees against the nonsignatory defendant under the CC&Rs and would not have been entitled to fees against the nonsignatory defendant had it prevailed.  See Diamond Heights Village Assn., Inc., supra, 196 Cal.App.4^th at 307. 

Here, Plaintiffs sought to add Foumberg to the Judgment based on alter ego.  See FAC, ¶¶28-29.  If Plaintiffs had prevailed, Foumberg would essentially have been a party to the underlying action in which the Judgment was entered, and Plaintiffs would have obtained a fee award against Foumberg under the Engagement Agreement.  “To give effect to the principles inherent in Reynolds Metals and Civil Code section 1717, we employ a similar analysis for a prevailing alleged alter ego: it is as though the alleged alter ego was a party to the original lawsuit, and prevailed. Consequently, a postjudgment, independent action to establish alter ego liability for a judgment on a contract is itself an action on the contract.”  MSY Trading Inc., supra, 51 Cal.App.5th at 403.

Foumberg is not a signatory to the Engagement Agreement.  However, Foumberg satisfies the criteria for a nonsignatory to recover attorney’s fees on a contract and pursuant to CC §1717(a). 

II. Foumberg is the prevailing party under CC §1717. 

Foumberg is also undisputedly the prevailing party in this action. Foumberg obtained a dismissal of the entire action against him. 

Plaintiffs argue the parties’ underlying dispute has not been resolved and therefore Foumberg is not the prevailing party.  Plaintiffs rely on DisputeSuite.com, LLC v. Scoreinc.com (2017) 2 Cal.5^th 968, 971. 

The Supreme Court addressed a very narrow issue in DisputeSuite.com, LLC:  “Is the defendant in an action arising out of contract entitled to an award of attorney fees under Civil Code section 1717 (section 1717) by virtue of having obtained a dismissal from a California court on the ground that the agreement at issue contained a forum selection clause specifying the courts of another jurisdiction? In the circumstances of this case, we conclude the trial court did not abuse its discretion in finding that defendants were not prevailing parties for purposes of section 1717. Considering that the action had already been refiled in the chosen jurisdiction and the parties' substantive disputes remained unresolved, the court could reasonably conclude neither party had yet achieved its litigation objectives to an extent warranting an award of fees. (See § 1717, subd. (b)(1) [court may determine that there is no party prevailing on the contract]; Hsu v. Abbara (1995) 9 Cal.4th 863, 876, 39 Cal.Rptr.2d 824, 891 P.2d 804 [prevailing party determination is to be made by comparing the parties' relative degrees of success “upon final resolution of the contract claims”].)”  DisputeSuite.com, LLC v. Scoreinc.com (2017) 2 Cal.5th 968, 971.

The Court finds DisputeSuite.com, LLC distinguishable. The Court did not dismiss this action in response to a motion to quash based on a forum selection clause.  The Court sustained Defendant Foumberg’s demurrer without leave to amend and the order was not based solely on lack of jurisdiction.  The Court’s ruling on the 2^nd c/a to Impose Alter Ego Liability under CCP §187 was not based on lack of jurisdiction.  The Court found there was no such cause of action. 

Finally, unlike the plaintiffs in DisputeSuite.com, LLC, Plaintiffs did not reassert their 2^nd cause of action in their Petitions before the Probate Court.  Based on the record before the Court, the dispute over whether Foumberg can be bound by the Judgment, and consequently the Engagement Agreement, has been finally resolved. 

III. Reasonableness of fee request

            Plaintiffs argue Defendant Foumberg is limited to the costs set forth in the memo of costs. Plaintiffs fail to cite any authority to support this assertion.  A request for attorney’s fees pursuant to a contract must be sought by noticed motion, not a memo of costs.  CCP §1033.5(c)(5)(A). 

            Defendant Foumberg requests fees in the amount of $70,635.00. The amount is based on $65,135 in fees in connection with litigating the action and $5,500 in fees for this motion for fees.  The amount of fees is based on 78.5 hours @ $450/hr and 59.35 horus @ $500/hr.  See Motion, Dec. of D. Spitzer, ¶13.  The amount of fees incurred for this motion is based on 11 hours @ $500/hr. 

            Plaintiffs did not object to the amount of fees requested.  “In challenging attorney 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. General arguments that fees claimed are excessive, duplicative, or unrelated do not suffice. Failure to raise specific challenges in the trial court forfeits the claim on appeal.”  Premier Medical Management Systems, Inc. v. California Ins. Guarantee Assn. (2008) 163 Cal.App.4th 550, 564.