Judge: Holly J. Fujie, Case: 20STCV41331, Date: 2023-12-08 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: 20STCV41331    Hearing Date: December 8, 2023    Dept: 56

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES - CENTRAL DISTRICT

MOVING PARTY: Defendant Hana Escrow Company, Inc. (“Moving Defendant”)

RESPONDING PARTY: Plaintiffs Sushi KJ Corporation (“Sushi KJ”) and Sang Woo Lee (“Lee”) (collectively, “Plaintiffs”)

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

BACKGROUND

            This action arises out of a dispute concerning the sale of a business.  On April 27, 2022, the Court granted Moving Defendant’s demurrer (the “Demurrer”) to the negligent misrepresentation claim in Plaintiffs’ third amended complaint (the “TAC”).  On May 10, 2022, the Court entered judgment in favor of Moving Defendant that declared Moving Defendant the prevailing party entitled to costs.  Plaintiffs appealed the judgment, and the Court of Appeal issued a remittitur affirming the judgment in its entirety on July 5, 2023.

On August 13, 2023, Moving Defendant filed a motion for attorney’s fees (the “Motion”) to recover $11,600 in fees that it incurred on appeal.   

DISCUSSION

Basis for Recovering Attorney’s Fees

Under California Code of Civil Procedure (“CCP”) section 1033.5, reasonable attorney’s fees may be awarded where they are authorized by a contract, statute, or law.  (CCP § 1033.5, subd. (a)(10).)  Unless authorized by either statute or agreement, attorney’s fees ordinarily are not recoverable as costs.  (Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124, 128.)  Civil Code section 1717 provides: in any action on a contract, where such contract specifically provides that attorney’s fees and costs, which are incurred to enforce the provisions of such contract, shall be awarded to one of the parties, the prevailing party, whether he is the party specified in the contract or not, shall be entitled to reasonable attorney’s fees in addition to costs and necessary disbursements.  (Civ. Code § 1717, subd. (a).)  The phrase “action on a contract” in Civil Code section 1717 includes not only a traditional action for damages for breach of a contract containing an attorney fees clause, but also any other action that “involves” a contract under which one of the parties would be entitled to recover attorney fees if it prevails in the action.  (Eden Township Healthcare Dist. v. Eden Medical Center (2013) 220 Cal.App.4th 418, 426-27.)  An action for fraud sounds in tort and is not “on a contract” for purposes of an attorney fee award, even though the underlying transaction in which the fraud occurred involved a contract containing an attorney fee clause.  (Cussler v. Crusader Entertainment, LLC (2012) 212 Cal.App.4th 356, 366.)  If a contractual attorney fee provision is phrased broadly enough, however, it may support an award of attorney fees to the prevailing party in an action alleging both contract and tort claims.  (Santisas v. Goodin (1998) 17 Cal.4th 599, 608.)

Moving Defendant argues that it is entitled to an award of attorney’s fees pursuant to the Escrow Instructions and Amended Escrow Instructions (collectively, the “Escrow Instructions”) executed on December 20, 2017 and April 11, 2018, respectively.  (See Declaration of Glenn A. Williams (“Williams Decl.”), Exhibits 1-2.)  The original Escrow Instructions contain a provision that provides:

“The parties hereto, jointly and severally, promise to pay on demand, as

well as to indemnify and hold the escrow holder harmless from any and all costs, damages, judgments, attorney fees, expenses and liabilities of any kind or nature whatsoever, occasioned any party, including costs incurred by the escrow holder in connection with instituting, prosecuting or defending litigation, which in good faith the escrow holder may thus incur and sustain."  (Declaration of Glenn A. Williams (“Williams Decl.”) ¶ 2, Exhibit 1 at p. 7.) 

The attorney’s fee provision in the Escrow Instructions is sufficiently broad to encompass the negligent misrepresentation claim with respect to Sushi KJ.  It is undisputed that Lee assigned his rights under the Escrow Instructions to Sushi KJ, and Moving Defendant’s reply brief (the “Reply”) concedes that it is not entitled to recover attorney’s fees from Lee. 

Reasonableness of Requested Attorney’s Fees

The party moving for attorney’s fees has the burden of establishing entitlement to an award and documenting the appropriate hours expended and hourly rates.  (Christian Research Institute v. Alnor (2008) 165 Cal.App.4th 1315, 1320.)  To that end, the court may require a defendant to produce records sufficient to provide a proper basis for determining how much time was spent on particular claims.  (Id.)  The court also may properly reduce compensation on account of any failure to maintain appropriate time records.  (Id.)  The evidence should allow the court to consider whether the case was overstaffed, how much time the attorneys spent on particular claims, and whether the hours were reasonably expended.  (Id.)

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 loadstar 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.) 

Moving Defendant’s fee request is based on: (1) 24 hours billed on the appeal of the Demurrer; and (2) an anticipated one hour to review Plaintiffs’ opposition papers, three hours to prepare the Reply, and one hour to attend the hearing at a rate of $400 per hour.  (See Williams Decl. ¶¶ 5-7.) 

The Motion does not include sufficient evidence for the Court to determine that the hours billed were reasonable, as no itemized time logs have been produced and the amount of hours billed does not distinguish between work performed in response to arguments made by Sushi KJ, which are recoverable, and Lee, which are not. 

Based on the lack of evidence presented with the Motion, the Court exercises its discretion and GRANTS the Motion in part.  Moving Defendant’s recovery is limited to $4,000, which represents 10 hours of work at a rate of $400 per hour.  (See 569 East County Boulevard LLC v. Backcountry Against the Dump, Inc. (2016) 6 Cal.App.5th 426, 436-37.)

Moving party is 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 December 2023