Judge: Holly J. Fujie, Case: 20STCV21196, Date: 2023-09-08 Tentative Ruling

DEPARTMENT 56 JUDGE HOLLY J. FUJIE, LAW AND MOTION RULINGS. The court makes every effort to post tentative rulings by 5.00 pm of the court day before the hearing. The tentative ruling will not become the final ruling until the hearing [see CRC 3.1308(a)(2)], and are also available in the courtroom on the day of the hearing [see CRC 3.1308(b)]. If the parties wish to submit on the tentative ruling and avoid a court appearance, all counsel must agree and choose which counsel will give notice. That counsel must 1) call Dept 56 by 8:30 a.m. on the day of the hearing (213/633-0656) and state that all parties will submit on the tentative ruling, and 2) serve notice of the ruling on all parties. If any party declines to submit on the tentative ruling, then no telephone call is necessary and all parties should appear at the hearing in person or by Court Call. Court reporters are not provided, and parties who want a record of motions and other proceedings must hire a privately retained certified court reporter.

Case Number: 20STCV21196    Hearing Date: September 8, 2023    Dept: 56

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES - CENTRAL DISTRICT

MOVING PARTY: Defendants Redwood Mortgage Investors VII (“Redwood”) and PLM Loan Management Services, Inc. (“PLM”) (collectively, “Moving Defendants”)

RESPONDING PARTY: Plaintiff

The Court has considered the moving, opposition and reply papers. 

BACKGROUND

This action arises out of a dispute concerning the foreclosure sales of two real properties (collectively, the “Properties”).  The operative second amended complaint (the “SAC”) alleges: (1) set aside trustee sale; (2) cancellation and rescission of instruments; (3) quiet title; (4) wrongful foreclosure; (5) unfair business practices; and (6) declaratory relief.  In relevant part, the SAC alleges that Redwood was the beneficiary and trustee of two deeds of trust (the “DOTs”) recorded against the Properties.  (SAC ¶ 17.)  PLM was the trustee who conducted the sale after Plaintiff was issued notices of default (the “NODs”) on the DOTs.  (See SAC ¶¶ 45-47.)

            On June 3, 2021, the entire SAC was dismissed as a sanction for being filed as a sham pleading.  Notice of the dismissal was served on June 8, 2021.  Plaintiff filed a notice of appeal regarding the dismissal on August 12, 2021.  The appellate court issued a remittitur (the “Remittitur”) upholding the SAC’s dismissal on May 30, 2023.  The Remittitur specifies that Moving Defendants are entitled to costs on appeal.

            On June 29, 2023, Redwood filed a motion for attorney’s fees (the “Redwood Motion”) that seeks to recover attorney’s fees incurred defending against the claims in the SAC at both the trial and appellate level.  On July 7, 2023, PLM filed a motion for attorney’s fees (the “PLM Motion”) that seeks to recover attorney’s fees incurred on appeal.

REQUEST FOR JUDICIAL NOTICE

            Redwood’s Request for Judicial Notice is GRANTED.

DISCUSSION

Legal Basis for Recovery of Attorney’s Fees

Civil Code section 1717, subdivision (a) provides for an award of attorney’s fees and costs to a prevailing party 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).)  Where a contract or a statute creates a right for the prevailing party to recover attorney fees, the prevailing party is also entitled to attorney fees on appeal.  (Villinger/Nicholls Development Co. v. Meleyco (1995) 31 Cal.App.4th 321, 329.)  

Time Limit to Seek Attorney’s Fees

California Rules of Court (“CRC”), rule 3.1702(b)(1) provides that a notice of motion to claim attorney’s fees for services up to and including the rendition of judgment in the trial court—including attorney’s fees on an appeal before the rendition of judgment in the trial court—must be served and filed within the time for notice of appeal under rules 8.104 and 8.108 in an unlimited civil case.  (CRC, r. 3.1702(b)(1).)  CRC, rules 8.104 and 8.108 articulate a time limit of 60 days from the date after the notice of entry of judgment is served.  (See CRC, r. 8.104, 8.108.)  A motion for attorney fees is not premature despite the filing of a notice of appeal.  (Korchemny v. Piterman (2021) 68 Cal.App.5th 1032, 1052.)  In any event, an award of attorney fees as costs is a collateral matter which is embraced in the action but is not affected by the order from which an appeal is taken.  (Id.)  Consequently, filing a notice of appeal does not stay any proceedings to determine the matter of costs and does not prevent the trial court from determining a proper award of attorney’s fees claimed as costs.  (Id.)

Determining the Reasonableness of Attorney’s Fees

A court awards attorney’s fees based on the “lodestar” method which is the number of hours reasonably expended multiplied by the reasonable hourly rate.  (PLCM Group v. Drexler (2000) 22 Cal.4th 1084, 1095.)  The trial court has broad authority to determine the amount of a reasonable fee.  (Id.)  The lodestar figure may be adjusted, based on a consideration of factors specific to the case, in order to fix the fee at the fair market value for the legal services provided.  (Id.)  Generally, the reasonable hourly rate used for the lodestar calculation is that prevailing in the community for similar work.  (Center for Biological Diversity v. County of San Bernardino (2010) 188 Cal.App.4th 603, 616.)  Nevertheless, where an attorney has been awarded attorney’s fees for comparable work at comparable hourly rates in other actions, the hourly rate will be deemed reasonable.  (Goglin v. BMW of North America, LLC (2016) 4 Cal.App.5th 462, 473-74.) 

Attorney billing records are given a presumption of credibility.  (Horsford v. Board of Trustees of California State University (2005) 132 Cal.App.4th 359, 396.)  In determining what constitutes a reasonable compensation for an attorney who has rendered services in connection with a legal proceeding, the court may and should consider the nature of the litigation, its difficulty, the amount involved, the skill required and the skill employed in handling the litigation, the attention given, the success of the attorney’s efforts, his learning, his age and his experience in the particular type of work demanded.  (Church of Scientology v. Wollersheim (1996) 42 Cal.App.4th 628, 659.)  An award of attorney’s fees may be based on counsel’s declarations, without production of detailed time records.  (Raining Data Corp. v. Barrenechea (2009) 175 Cal.App.4th 1363, 1375.)  The verified time statements of attorneys, as officers of the court, are entitled to credence in the absence of a clear indication the records are erroneous.  (Horsford v. Board of Trustees of California State University (2005) 132 Cal.App.4th 359, 396.)  The party challenging the reasonableness of attorney’s fees as excessive must attack itemized billing with evidence that the fees claimed were not appropriate or obtain the declaration of an attorney with expertise in the procedural and substantive law to demonstrate that the fees claimed were unreasonable.  (Premier Medical Management Systems, Inc. v. California Ins. Guarantee Assn. (2008) 163 Cal.App.4th 550, 563-64.)  A reduced award might be fully justified by a general observation that an attorney over-litigated a case or submitted a padded bill or that the opposing party has stated valid objections.  (Gorman v. Tassajara Development Corp. (2009) 178 Cal.App.4th 44, 101.) 

Redwood Motion

            Redwood seeks $68,085 in attorney’s fees for work performed before the June 3, 2021 dismissal order and $18,090 in attorney’s fees for work performed during the appeal.  Redwood contends that it is entitled to contractual attorney’s fees pursuant to terms contained in the DOTs. 

The DOTs both contain a provision that requires the trustor: “To appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; and to pay all costs and expenses, including cost of evidence of title and attorney’s fees in a reasonable sum, in any such action or proceeding in which Beneficiary or Trustee may appear.”  (Declaration of Michael R. Burwell (“Burwell Decl.”) ¶ 21, Exhibits B-C.)

The DOTs also state:

“Should Trustor fail to make any payment or to do any act as herein provided, then Beneficiary or Trustee, but without obligation so to do and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may:  make or do the same in such manner and to such extent as either may deem necessary to protect the security hereof, Beneficiary or Trustee being authorized to enter upon said property for such purposes; appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; pay, purchase, contest or compromise any encumbrance, charge or lien, which in the judgment of either appears to be prior or superior hereto; and, in exercising any such powers, pay necessary expenses, employ counsel and pay his reasonable fees.”  (Id.) 

            Plaintiff argues that Moving Defendants’ work performed on a demurrer to an earlier iteration of the SAC were not related to the DOTs.  Plaintiff also argues that the Redwood Motion is not timely to the extent that it seeks attorney’s fees for work performed before the June 3, 2021 entry of dismissal and that Redwood’s claimed fees are excessive and inflated by Redwood’s use of block billing. 

            Redwood’s reply brief (the “Redwood Reply”) argues that the DOTs provide for Redwood’s power of sale of the Properties, and that the entirety of the claims alleged in the SAC therefore arise from a contract.  The Redwood Reply does not address Plaintiff’s arguments regarding the belated attempt to recover attorney’s fees for pre-appeal work. 

            The Court finds that the DOTs contain provisions that allow Redwood to recover attorney’s fees.  Notwithstanding its contractual right to recover attorney’s fees, the Court further finds that Redwood failed to timely seek attorney’s fees for the non-appellate work it performed at the trial court level.  The Court therefore finds that the Redwood Motion only establishes Redwood’s entitlement to fees on appeal and will consider the reasonableness of those claimed fees.

            Reasonableness of Redwood’s Attorney’s Fees on Appeal

Block billing occurs when a block of time is assigned to multiple tasks rather than itemizing the time spent on each task.  (Mountjoy v. Bank of America, N.A. (2016) 245 Cal.App.4th 266, 279.)  Trial courts retain discretion to penalize block billing when the practice prevents them from discerning which tasks are compensable and which are not.  (Christian Research Institute v. Alnor (2008) 165 Cal.App.4th 1315, 1324-25.)

Redwood’s calculation of its attorney’s fees on appeal is based on the work of one attorney at a rate of $450 per hour.  (See Declaration of Benjamin R. Levinson (“Levinson Decl.”) ¶¶ 37, 39.)  The fees incurred on appeal are broken down into three categories: (1) studying and responding to the court regarding appellate documents (6.6 hours); (2) preparing and filing respondent’s brief and supplemental letter brief (21.4 hours); and (3) issues related to oral argument, oral argument and decision (7.7 hours).  (Levinson Decl. ¶ 39.) 

            Although Redwood’s billing records are broadly separated into categories, the appellate billing categories, apart from the first category, do not prevent the Court from determining compensable tasks.  The Court’s ability to parse the compensability of the fees is somewhat limited with respect to the first category, as the Court is unable to determine which (if any) tasks were administrative in nature and could have been performed by a paralegal, and which tasks required the work of counsel.  The Court therefore exercises its discretion and reduces Redwood’s recovery for work performed in this category from 6.6 hours to 3.3 hours.

            Based on the foregoing, the Court finds that Redwood is entitled to $16,830 in attorney’s fees based on work performed while this matter was on appeal.  Redwood is also entitled to appellate costs in the amount of $978.67.  The Court therefore GRANTS the Redwood Motion in part, consistent with the foregoing.

PLM Motion

            PLM requests attorney’s fees in the amount of $24,004.  The PLM Motion bases PLM’s entitlement to attorney’s fees on the DOTS that are cited in the Redwood Motion.  As with the Redwood Motion, the Court finds that PLM has demonstrated a contractual basis for an attorney’s fee award.  Plaintiff makes a brief argument that the claims in the SAC are not solely contractually based and notes that PLM’s previously filed demurrer did not make contract-based arguments.  As determined with respect to the Redwood Motion, the Court finds this argument unpersuasive.  Moreover, the PLM Motion solely requests attorney’s fees for work performed while this matter was on appeal, and Plaintiff makes no arguments that the work on appeal was not based on claims rooted in the DOTs.  As Plaintiff raises no arguments disputing the reasonableness of the attorney’s fees detailed by PLM, the Court GRANTS the PLM Motion in its entirety. 

Moving parties are ordered to give notice of this ruling.

Parties who intend to submit on this tentative must send an email to the Court at SMC_DEPT56@lacourt.org as directed by the instructions provided on the court website at www.lacourt.org.  If the department does not receive an email and there are no appearances at the hearing, the motion will be placed off calendar. 

  Dated this 8th day of September 2023