Judge James C. Chalfant, Case Number: 23STCP01361, Date: 2023-09-19 Tentative Ruling

Mohammad Honarkar v. MOM AS Investco, LLC, et al., 23STCP01361

Tentative decision on motion for attorney fees: granted in part

Petitioners Mohammad Honarkar (“Honarkar”) and 4G Wireless, Inc. (“4G”), individually and as a member of Respondents MOM AS Investco, LLC (“MOM AS”), MOM BS Investco (“MOM BS”), LLC, and MOM CA Investco, LLC (“MOM CA”) (collectively, “MOMs”), move for an award of $106,732.50 in attorney’s fees and $1,542.55 in costs from MOMs. In reply, Petitioners assert an additional $9,375 in fees.

The court has read and considered the moving papers, opposition, and reply,[1] and renders the following tentative decision.

Petitioner Honarkar commenced this proceeding against Respondent MOMs on April 26, 2023, alleging a cause of action for traditional mandamus under Corporations Code sections 17704.10 and 17704.13. Honarkar brought the Petition both individually and in his capacity as a member of each MOM. The operative pleading is the First Amended Petition (“FAP”) filed on September 26, 2023 which added 4G as a Petitioner. The verified FAP alleges in pertinent part as follows.

Honarkar is a member of the MOMs, either directly or through 4G. Before March 2023, Honarkar sent each MOM’s Managing Member multiple requests for various corporate and financial records. He renewed the requests on March 30, 2023 and asked the MOMs to permit inspection by April 7, 2023. The purpose of Honarkar’s requests were to (1) value Honarkar’s interests in the MOMs, their subsidiaries, and other owned limited liability companies (“LLCs”), and (2) determine the extent to which MOMs’ Managing Members and other members committed waste, failed to maintain books and records, or breached their obligations to the entities and Honarkar.

On March 27, 2023, the MOMs refused to produce any records. On April 7, 2023, they only agreed to produce the MOM’s tax returns and refused to produce any financial statements or any documents related to their debts and liabilities. The MOMs alleged that Honarkar had not stated a proper purpose for his requests.

Petitioners seek an order compelling Respondents to permit inspection and copying of the materials requested and awarding Honarkar attorney’s fees and costs.

On April 27, 2023, Honarkar served Respondent MOMs with the Petition and Summons.

On September 19, 2023, the court granted Honarkar’s motion to add 4G a Petitioner through the FAP. Because the MOMs already had filed their opposition, the court allowed the MOMs to file an amended opposition.

On November 9, 2023, the court granted the FAP. Judgment was entered on December 13, 2023.

On January 19, 2024, MOMs filed a return asserting compliance with the court’s writ of mandate.

The parties agree that, although the MOMs’ Operating Agreements are governed by Delaware law, California law on attorneys’ fees under a contract is substantially similar. Mot. at 4; Opp. at 10, n. 4.

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. CCP §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.” Civil Code §1717(a).

“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. Reasonable attorney's fees shall be fixed by the court and shall be an element of the costs of suit.” Id.

“Attorney's fees provided for by this section shall not be subject to waiver by the parties to any contract which is entered into after the effective date of this section. Any provision in any such contract which provides for a waiver of attorney's fees is void.” Id.

“The court, upon notice and motion by a party, shall determine who is the party prevailing on the contract for purposes of this section…[and] the party prevailing on the contract shall be the party who recovered a greater relief in the action on the contract. The court may also determine that there is no party prevailing on the contract for purposes of this section.” Civil Code §1717(b)(1).

The petitioner bears the burden of proof as to the “reasonableness” of any fee claim. CCP §1033.5(c)(5). 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. “Testimony of an attorney as to the number of hours worked on a particular case is sufficient evidence to support an award of attorney fees, even in the absence of detailed time records.” Id. “‘The reasonable market value of the attorney's services is the measure of a reasonable hourly rate. [Citations.] This standard applies regardless of whether the attorneys claiming fees charge nothing for their services, charge at below-market or discounted rates, represent the client on a straight contingent fee basis, or are in-house counsel. [Citations.]’” Center For Biological Diversity v. County of San Bernardino, (“Center”) (2010) 188 Cal.App.4th 603, 619.

A plaintiff’s verified billing invoices are prima facie evidence that the costs, expenses, and services listed were necessarily incurred. See Hadley v. Krepel, (1985) 167 Cal.App.3d 677, 682. “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.” Lunada Biomedical v. Nunez, (“Lunada”) (2014) 230 Cal.App.4th 459, 488.

In determining whether the requested attorney’s fees are reasonable, the court’s “first step involves the lodestar figure—a calculation based on the number of hours reasonably expended multiplied by the lawyer’s hourly rate. The lodestar figure may then be adjusted, based on consideration of facts specific to the case, in order to fix the fee at the fair market value for the legal services provided.” Gorman v. Tassajara Development Corp., (2008) 162 Cal.App.4th 770, 774. In adjusting the lodestar figure, the court may consider the nature and difficulty of the litigation, the amount of money involved, the skill required and employed to handle the case, the attention given, the success or failure, and other circumstances in the case. EnPalm LLC v. Teitler, (2008) 162 Cal.App.4th 770, 774; see also PLCM Group, Inc. v. Drexler, (2000) 22 Cal.4th 1084, 1095.

Honarkar is a real estate developer. May Decl., Ex. 3 (Honarkar Decl., ¶2). Before the business relationships at issue, Honarkar held real estate in Southern California through various LLCs he wholly owned and controlled. Honarkar Decl., ¶3. In the Spring 2021, Honarkar faced a cash crunch and sought an infusion of capital into his real estate portfolio. Honarkar Decl., ¶4. Nano Banc introduced Honarkar to Mahender Makhijani (“Makhijani”). Honarkar Decl., ¶4. Honarkar believes that Makhijani is a large shareholder of Nano Banc through his company, Continuum Analytics (“Continuum”). Honarkar Decl., ¶4.

On June 8, 2021, Makhjani and Honarkar formed the MOMs via three substantially similar Operating Agreements. Honarkar Decl., ¶7, Exs. 2-4. Each Operating Agreement identified a “Manager LLC” as that MOM’s Managing Member, an Investor Group LLC as a member (“MOM Member”), and Honarkar as the “MO Member” and Administrative Manager. Honarkar Decl., ¶7, Exs. 2-4. The recitals identified Continuum as a Managing Member affiliate and 4G as a Honarkar affiliate. Honarkar Decl., ¶7, Exs. 2-4. The MOM Member was admitted as a member with membership interest based on the Participation Percentages and Capital Percentages set forth in each Operating Agreement. Honarkar Decl., ¶7, Ex. 2.

If any party instituted an action to enforce any provision of the Operating Agreements, the prevailing parties would be entitled to recover reasonable attorneys’ fees and costs for services rendered in such an action. Honarkar Decl., ¶7, Ex. 2, §17.

The Operating Agreements are to be governed by and construed in accordance with Delaware law without regard to conflict of law principles. Honarkar Decl., ¶7, Ex. 2, §19.1.

On March 22, 2023, Honarkar served each MOM with a request for inspection of financial statements, tax documents, information about entity members, business plans, ledgers, information about assets, loan agreements, vendor information, bank accounts, and other information about payments and reimbursements. Honarkar Decl., ¶14, Exs. 8-10. This included (1) a current list of the full name and address of every member or person authorized to act on behalf of the MOMs, Subsidiaries, and Other Owned LLCs; (2) the full name and business or residence address of the Managing Manager; (3) the Certificate of Formation and charter documents of each of the Owned Companies and any and all amendments thereto; (4) federal, state, and local tax or information and reports of the MOMs and Owned Companies for the last two taxable years; (5) complete financial statements of the MOMs and Owned Companies for each month since June 2021; (6) complete financial statements of the MOMs and Owned Companies for each fiscal year since the start date; (7) their books and records as they relate to the internal affairs of the Company from the start date; (8) their general ledgers from the start date; (9) their business plans, budgets, and ARGUS files from the start date; (10) estimates or projections of their past, present or future performance and value and any documents related thereto; (11) all materials concerning their content and value from the start date; (12) all materials identifying and reflecting the value of their assets from the start date; (13) all materials concerning their debts or liabilities; (14) all materials reflecting, substantiating, calculating, describing, or constituting payments, fees, or benefits provided or paid to the Manager or its affiliates; (15) any such materials for reimbursements or advances the Manager or its affiliates requested or that the MOMs and Owned Companies paid; (16) all materials setting forth the budgeting, forecasts, strategy, business plans, inventory planning, and cash management for the MOMs and Owned Companies; (17) materials that identify any vendors that MOMs and Owned Companies have paid over $5,000 from the start date for goods and services; (18) all materials related to outside funding for MOMs and Owned Companies and attempts to explore such funding opportunities; (19) any materials reflecting sums received from MOMs and Owned Companies to the Manager or a MOM member; and (20) materials, including month-end statements, for any bank account associated with MOMs and Owned Companies. Honarkar Decl., ¶14, Exs. 8-10.

Honarkar made this request both as a member and as an Administrative Manager of each MOM. Honarkar Decl., ¶15, Exs. 8-10. His stated purpose was to value his interest in the MOMs, determine if any other members or any Managers breached their duties, and identify any waste, wrongdoing, self-dealing, commingling, and other improper conduct with respect to the MOMs. Honarkar Decl., ¶15, Exs. 8-10. He also wanted to determine whether and to what extent the Managers failed to maintain the books and records. Honarkar Decl., ¶15, Exs. 8-10.

On April 26, 2023, individually and as a member of the MOMs, Honarkar filed the Petition underlying this action to compel production of the requested documents. Honarkar Decl., ¶18, Ex. 13. On June 6, 2023, the MOMs filed an Answer admitting that Honarkar is a member of the MOMs and their former Administrative Manager. Honarkar Decl., ¶21, Ex. 14.

During Honarkar’s document review for other litigation, he discovered a July 14, 2022 Letter Agreement amending the Operating Agreements for each MOM so that 4G, a company wholly owned by Honarkar, would be the member instead of Honarkar as an individual. Honarkar Decl., ¶22, Ex. 15.

On November 9, 2023, the court granted the FAP in large part and directed the MOMs to produce documents responsive to the relevant categories of requested documents. May Decl., Ex. 4.

On December 13, 2023, the court issued a judgment granting the FAP. May Decl., Ex. 5. The writ compelled Respondents to produce 15 of the 20 categories of documents Honarkar sought through the FAP. May Decl., Ex. 5. The judgment stated that Petitioners were the prevailing parties and entitled to attorney’s fees and costs as determined pursuant to a timely motion. May Decl., Ex. 5. A writ of mandate was issued on December 15, 2023. May Decl., Ex. 6.

Aaron May, Esq. (“May”) and Joseph Ybarra, Esq. (“Ybarra”) are founding partners of their practice, Halpern May Ybarra Gelberg LLP, and both bill $975 per hour. May Decl., ¶¶ 2-3, Ex. 2; Ybarra Decl., ¶¶ 2-3, Ex. 2. Ybarra worked for 12 years, and May worked for six years, at Munger, Tolles and Olson LLP before they founded their firm in 2014. May Decl., Ex. 2; Ybarra Decl., Ex. 2.

May spent 17.9 hours on this matter, including 1.2 to draft the Petition, 0.5 for the motion to permit inspection, 0.9 for the reply brief, 3.8 to prepare for the hearing, 2.7 to attend it, 7.4 on either revising the writ and judgment or preparing for the hearing thereon, and 0.6 for the motion for fees and costs. May Decl., ¶2, Ex. 1.

Ybarra spent 37.6 hours on this matter, including 1.1 hours on the motion to amend the Petition, 0.7 to prepare for the hearing on the motion, and 1.1 hours for this motion for fees and costs. Ybarra Decl., ¶2, Ex. 1. His hours also include 8.4 hours to draft or revise the Petition, 1.3 for “legal research re books and records petition,” 12 hours to “draft moving papers on motion to permit inspection of books and records,” 0.8 to revise the motion, 11 on the reply brief, and 0.3 to review and revise the judgment. Ybarra Decl., ¶2, Ex. 1.

Thomas Rubinsky, Esq. (“Rubinsky”) is an associate who charges $775 per hour. Rubinsky Decl., ¶¶ 2-3, Ex. 2. After a federal clerkship in Seattle, he joined Munger, Tolles and Olson LLP in 2016. Rubinsky Decl., Ex. 2. He has spent 18.4 hours on this matter, including 5.4 hours on the motion to amend the Petition, 3.2 hours for the reply brief on that motion, 2.6 on the merits reply brief, and 7.2 hours for this motion for fees and costs. Rubinsky Decl., ¶2, Ex. 1.

Abigail Marion, Esq. (“Marion”) is an associate with seven years of experience who charges $775 per hour. Marion Decl., ¶¶ 2-3, Ex. 2. She spent 35.9 hours on this matter, including 7.1 hours on matters related to the proposed judgment, 18.3 hours for this motion, and 10.5 hours for entries that concern both matters. Marion Decl., ¶2, Ex. 1.

Jillian Song (“Song”) is May’s paralegal of 30 years and bills $375 per hour. Song Decl., ¶¶ 2-3. Song spent 28.1 hours on that matter, including 1.3 hours to draft and revise the Petition, 9.7 hours on the motion to amend the Petition, and 9.6 on the motion for fees and costs. Song Decl., ¶2, Ex. 1.

The MOMs Operating Agreements delegated overriding management rights to the Managing Members. Kluchin Decl., ¶10. Under the Operating Agreements, Honarkar was originally the MOMs’ Administrative Manager. Kluchin Decl., ¶9. In that capacity, his role in management of those entities was limited to the duties that the Managing Managers defined for him. Kluchin Decl., ¶9.

The MOMs maintain books, records, files, accounting ledgers, leases, emails, and other documents relating to the business. Kluchin Decl., ¶4.

The MOMs discovered that Honarkar engaged in self-dealing, including the diversion of corporate assets to himself and third parties for his personal benefit. Kluchin Decl., ¶14. MOMs therefore issued Honarkar notices of default on March 28, 2023 (Kluchin Decl., ¶14, Ex. 7) and notice of his dismissal as Administrative Manager effective March 29, 2023. Kluchin Decl., ¶14, Ex. 6.

On March 27, 2023, the MOMs sent a consolidated response to Honarkar’s inspection demands. Hsu Decl., ¶2, Ex. 1. They asserted that his five-day deadline to respond to such a broad request was unreasonable. Hsu Decl., ¶2, Ex. 1. The Operating Agreements for each MOM also limit the scope of documents that a member can request. Hsu Decl., ¶2, Ex. 1. Most of the requested documents should already be in Honarkar’s control because he “has and presently remains” the MOMs’ Administrative Manager. Hsu Decl., ¶2, Ex. 1. Nevertheless, the MOMs agreed to permit the inspection of certain records at a “mutually agreeable date and time” after Honarkar retained counsel free of a conflict of interest. Hsu Decl., ¶2, Ex. 1.

On March 30, Honarkar reaffirmed his demand. Hsu Decl., ¶3. On April 7, 2023, the MOMs reiterated that, while Honarkar should have the requested documents and has failed to identify a legitimate reason, they would provide certain documents at a mutually agreeable date and time. Hsu Decl., ¶3, Ex. 2.

MOMs provided almost 2,000 pages of documents to Honarkar on June 7 and 13, 2023. Hsu Decl., ¶4. This production included a list of Managing Members and addresses, identification of members, 2021 tax returns for the Other Owned LLCs, formation documents for the MOMs and Other Owned LLCs, loan documents for the Other Owned LLCs, and DOTs. Hsu Decl., ¶4. Honarkar never attmpted to meet and confer as to the sufficiency of this production. Hsu Decl., ¶4.

On July 11, 2023, Honarkar filed a declaration in the Related Cases that 4G is a member of the MOMs under the July 14, 2022 Letter Agreement. Hsu Decl., ¶7, Ex. 3 (Honarkar Decl., ¶26, Ex. Q). The Letter Agreement asserts an intent for 4G to be a member, not Honarkar as an individual. Ex. 3, Ex. Q.

When Respondents told the court about Honarkar’s declaration at the trial setting, Honarkar’s counsel conceded that he is not a member of the MOMs. Hsu Decl., ¶8. Honarkar then moved for leave to amend the Petition to add 4G as a Petitioner, which was granted. Hsu Decl., ¶10. By then, Respondents had filed their trial opposition brief and asked for leave to file a revised opposition. Hsu Decl., ¶¶ 9-10. The court granted leave to do so and opined that the failure to name 4G as a Petitioner in the Petition could be considered when analyzing attorney fees for this case. Hsu Decl., ¶10.

When the court granted the FAP in part, it explained that some of the categories of documents for which it denied the petition were “not necessary and essential” to Honarkar’s goals of determining potential wrongdoing or company value. Hsu Decl., Ex. 6, pp. 28-29. During the hearing, the court ordered the parties to meet and confer on ways to limit production, the method of production, and who would pay costs thereto. Hsu Decl., Ex. 7, p. 20. The court commented it seemed like “a big attorney’s fee case or cases.” Hsu Decl., Ex. 7, p. 20. It then clarified this comment referred to the Related Cases, and that “My baby case is not going to generate that much.” Hsu Decl., Ex. 7, p. 21.

The MOMs have produced all documents ordered under the writ and filed a return in January 2024. Hsu Decl., ¶13. On February 1, 2024, as part of meet and confer efforts, Petitioners asserted the MOMs failed to comply with their obligations under the writ. Hsu Decl., ¶13, Ex. 9. Among their objections, Petitioners argued that they created most of the financial records the MOMs now produced. Hsu Decl., ¶13, Ex. 9. The MOMs had yet to produce any records they generated themselves, either before or after Honarkar’s ouster. Hsu Decl., ¶13, Ex. 9. The MOMs responded to this letter on February 8, 2024. Hsu Decl., ¶13, Ex. 10.

On October 23, 2023, Respondents advised that Petitioners should send all correspondence about this action to three partners and four associates at Respondents’ counsels’ firm. Rubinsky Reply Decl., ¶3. As of February 20, 2024, two of those associates are listed as senior counsel on the firm’s website. Rubinsky Reply Decl., ¶3.

In preparing the reply brief on this motion, Rubinsky spent 9.6 hours, Ybarra spent 0.5, May spent 0.4, Marion spent 0.3, and Song spent 2.2. Rubinsky Reply Decl., ¶2. At the same rates as other fees, the fees accrued on reply total (9.6 x $775) + (0.3 x $775) + (0.5 x $975) + (0.4 x $975) + (2.2 x $375) = $9,375. Rubinsky Reply Decl., ¶2.

Petitioners’ moving papers seek an award from Respondent MOMs of $106,732.50 in attorney’s fees and $1,542.55 in costs. In reply, Petitioners seek an additional $9,375 in fees, for a total of $117,650.05.

The Operating Agreements are governed by Delaware law. Honarkar Decl., ¶7, Ex. 2, §19.1. Petitioners seek attorney fees under the MOMs’ Operating Agreements and not Delaware statutory law.

The parties agree that California law on attorneys’ fees under a contract is substantially similar to Delaware law. Mot. at 4; Opp. at 10, n. 4. In any action on a contract, where the contract specifically provides for an award of attorney's fees and costs, the prevailing party shall be entitled to reasonable attorney's fees in addition to other costs. §1717(a). The Operating Agreements provide that if any party institutes an action to enforce any provision thereof, the prevailing parties are entitled to recover reasonable attorneys’ fees and costs for services rendered in such an action. Honarkar Decl., ¶7, Ex. 2, §17.

The judgment expressly stated that Petitioners are the prevailing parties and entitled to attorney fees and costs. May Decl., Ex. 5. The MOMs do not argue otherwise.

The court employs the lodestar analysis when looking to determine the reasonableness of an attorney’s fee award. The lodestar figure is calculated by multiplying the number of hours reasonably spent by the reasonable market billing rate. Serrano v. Priest, (1977) 20 Cal.3d 25, 48.

Generally, the reasonable hourly rate used for the lodestar calculation is the rate prevailing in the community for similar work. Center, supra, 188 Cal.App.4th at 616. In making its calculation, the court may rely on its own knowledge and familiarity with the legal market, as well as the experience, skill, and reputation of the attorney requesting fees, the difficulty or complexity of the litigation to which that skill was applied, and affidavits from other attorneys regarding prevailing fees in the community and rate determinations in other cases. 569 East County Boulevard LLC v. Backcountry Against the Dump, Inc., (2016) 6 Cal.App.5th 426, 437.

May and Ybarra are founding partners of their practice and both bill at $975 per hour. May Decl., ¶¶ 2-3, Ex. 2; Ybarra Decl., ¶¶ 2-3, Ex. 2. Associates Rubinsky and Marion charge $775 per hour. Rubinsky Decl., ¶¶ 2-3, Ex. 2; Marion Decl., ¶¶ 2-3, Ex. 2. Song is May’s paralegal and bills at $375 per hour. Song Decl., ¶¶ 2-3.

The petitioner bears the burden of proof as to the reasonableness of any fee claim. CCP §1033.5(c)(5). 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. “Testimony of an attorney as to the number of hours worked on a particular case is sufficient evidence to support an award of attorney fees, even in the absence of detailed time records.” Id.

“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.” Lunada, supra, 230 Cal.App.4th at 488; Premier Medical Management Systems, Inc. v. California Ins. Guarantee Assn., (2008) 163 Cal. App. 4th 550, 564.

As of the moving papers, May spent 17.9 hours on this case (May Decl., ¶2, Ex. 1), Ybarra spent 37.6 hours (Ybarra Decl., ¶2, Ex. 1), Rubinsky spent 18.4 hours (Rubinsky Decl., ¶2, Ex. 1), Marion spent 35.9 hours (Marion Decl., ¶2, Ex. 1), and Song spent 28.1 hours (Song Decl., ¶2, Ex. 1).

In reply, Petitioners assert that Rubinsky spent an additional 9.6 hours, Ybarra spent 0.5 hours, May spent 0.4 hours, Marion spent 0.3 hours, and Song spent 2.2 hours. Rubinsky Reply Decl., ¶2. At the same rates as the initial fees, the fees accrued for the reply total (9.6 x $775) + (0.3 x $775) + (0.5 x $975) + (0.4 x $975) + (2.2 x $375) = $9,375. Rubinsky Reply Decl., ¶2.

The MOMs cite Serrano v. Unruh, (“Unruh”) (1982) 32 Cal. 3d 621, 635, which authorizes a court to reduce or deny attorney’s fees altogether when the request was unreasonably inflated. Opp. at 12. Unruh recognized that if a court were required to award a reasonable fee when an outrageously unreasonable one has been asked for, claimants would be encouraged to make unreasonable demands. Id. at 635. Such a litigant would know that the only unfavorable consequence of such misconduct would be reduction of their fee to what they should have asked in the first place. Id.

The MOMs argue that the fees claimed by Petitioners are so unreasonable that the court should deny them altogether. This action was a simple and straightforward mandamus petition to compel inspection of books decided by a motion and not trial. The MOMs ask why it was necessary for four attorneys to spend over 100 hours on an action when Petitioners already briefed similar allegations in the Related Cases. The MOMs add that this court said the fees would be minimal in this “baby case.” Hsu Decl., Ex. 7, p. 21. Opp. at 11-13.

The court made the statement about a baby case in comparing the case to the Related Cases, which could be “a big attorney’s fee case or cases.” Hsu Decl., Ex. 7, pp. 20-21. The court’s discretion under Unruh exists to discourage greed by those who would make unreasonable demands because they know fees would only be reduced to what they should be to begin with. 32 Cal. 3d at 635. The MOMs have failed to show Petitioners’ billed hours are so excessive as to merit that response. The court declines to deny attorney fees altogether and will address the number of hours post.

The MOMs also assert that the fees are unreasonable because of Respondents’ attempts to resolve this matter short of litigation. Opp. at 12. It agreed to produce some records and objected to overbroad requests it felt were not reasonably related to a proper purpose. Id. By the time the court ruled on the FAP, the MOMs had already produced almost 2,000 pages of business records. Hsu Decl., ¶4. This production included a list of Managing Members and addresses, identification of members, 2021 tax returns for the Other Owned LLCs, formation documents for the MOMs and Other Owned LLCs, loan documents for the Other Owned LLCs, and DOTs. Hsu Decl., ¶4. Honarkar never attempted to meet and confer as to the sufficiency of this production. Hsu Decl., ¶4. The MOMs cite Vasquez v. State of Calif., (“Vasquez”) (2008) 45 Cal.4th 243, 247-48, which holds that a court should consider whether the party seeking fees attempted to resolve the matter before resorting to litigation. Opp. at 14.

As Petitioners note, Vasquez concerned the attorney fee requirements of CCP section 1021.5 and the court’s obligation to determine whether private enforcement was necessary. Id. at 247-48. Reply at 5, n. 2. That case does not bear on the reasonableness of fees claimed pursuant to contract. Nonetheless, “the necessity for” the litigation is also a factor to consider in a fee award based on contract. EnPalm, supra, 162 Cal.App.4^th at 774. Thus, pre-litigation efforts to resolve the matter are relevant. However, the court granted the FAP for 75% of the listed categories of documents. May Decl., Ex. 4, pp. 17-19. Plainly, the MOMs did not fulfill their statutory obligation under Delaware law to permit inspection of documents. An award of attorney fees is appropriate.

Petitioners expended 1.1 hours by Ybarra (Ybarra Decl., Ex. 1), 5.5 hours by Rubinsky (Rubinsky Decl., Ex. 1), and 9.7 hours by Song (Song Decl., Ex. 1) on the motion for leave to amend the Petition. The MOMs assert that fees from this motion should be disallowed because the motion corrected a standing issue by adding 4G as a Petitioner. Petitioners should have known about this issue and not filed a motion at the eleventh hour after MOMs’ counsel raised it at a status conference. Petitioners forced the MOMs to incur additional fees to file an amended opposition after the court granted the motion. Id. The court opined that the failure to name 4G as a Petitioner in the Petition could be considered when analyzing attorney fees for this case. Hsu Decl., ¶10. The court should reduce the fees by $11,437.50 as a result. Opp. at 14-15.

The court agrees. Petitioners argue that the motion to amend was only necessary because of the MOMs’ gamesmanship. The MOMs admitted in the Related Cases that Honarkar was initially a member in the MOMs and that 4G subsequently replaced him. May Decl., Ex. 4, p. 13, n. 4. Their Answer also admitted that Honarkar is a member. Honarkar Decl., ¶21, Ex. 14. This should have meant his membership was treated as fact in this matter. CCP §431.20(a). Reply at 7. The MOMs instead chose to contest standing in its opposition to the FAP. Reply at 7.

The fact remains that Honarkar should have known that he transferred his interest to 4G. Petitioners waited to seek to address the standing issue until after the MOMs filed their trail opposition, forcing them to incur additional fees to amend the opposition. The MOMs should not have to pay their own attorney fees and Petitioners attorney fees for an amendment to the Petition that should have alleged the proper Petitioner in the first place. The fees totaling $11,437.50 for the motion for leave the amend the Petition are disallowed.

The hours spent on the moving papers for this fee motion include 0.6 hours by May (May Decl., ¶2, Ex. 1), 1.1 hours by Ybarra (Ybarra Decl., ¶2, Ex. 1), 7.2 hours by Rubinsky (Rubinsky Decl., ¶2, Ex. 1), at least 18.3 hours by Marion (Marion Decl., ¶2, Ex. 1), and 9.6 hours by Song (Song Decl., ¶2, Ex. 1). Another 10.5 hours on Marion’s timesheets were spent on both the fee motion and other matters. Marion Decl., ¶2, Ex. 1. The hours for the reply brief include 0.4 hours by May, 0.5 hours by Ybarra, 9.6 hours by Rubinsky, 0.3 hours by Marion, and 2.2 hours by Song. Rubinsky Reply Decl., ¶2. A total of 60.3 hours were incurred for the fee motion, and the total fee sought is $36,720 ($27,345 + $9,375).

The MOMs assert that these hours were duplicative. For example, every litigator drafted his or her own declaration for the hours spent on this case when a single declaration would have sufficed. This is the kind of inefficient or duplicative effort that an attorney’s fee award should not include. Ketchum v. Moses, (2001), 24 Cal. 4th 1122, 1132. Opp. at 15-16.

Petitioners assert that the claimed hours are reasonable, in part because they needed to research the applicable case law and statutes, including the almost two dozen cases cited by the MOMs opposition. Reply at 9.

Petitioners were required to research Delaware case law governing the Operating Agreements. Honarkar Decl., ¶7, Ex. 2, §19.1. However, that burden was limited because this court had already decided Petitioners were entitled to attorney’s fees. May Decl., Ex. 5. The court also does not agree with the MOMs that the use of five declarations was inefficient or improper. Nonetheless, $36,720 for a relatively simple fee motion is excessive. Specifically, Marion spent 29.1 hours and Rubinsky spent another 16.8 hours on this motion. This is unreasonable.

The court granted the FAP as to 15 of the 20 categories of documents at issue. May Decl., Exs. 4-6. The MOMs assert that the fees are sought for a glorified discovery motion. Opp. at 16, 19. This court has already held that the standard for production of documents in this case was not the same as under a request for production of documents in a civil action. May Decl., Ex. 4, p. 16.

The MOMs argue this court should discount the fees by 25% to reflected the limited degree of success. See Feminist Women's Health Center v. Blythe, (1995) 32 Cal.App.4th 1641, 1675, n. 8 (the most critical factor is the degree of success obtained and the full lodestar may be an excessive where only partial success obtained); Americas Mining Corp. v. Theriault, (Del. Supreme Court 2012) 51 A.3d 1213, 1254-55 (Delaware law assigns the greatest weight to the benefit achieved in litigation). Opp. at 17.

Aside from compelling production for 75% of the requested categories, the court accepted Petitioners’ reasons for requesting the documents (May Decl., Ex. 4, pp. 17-19) and rejected reason the MOMs’ arguments for denying them. Reply at 6. The court chose not to compel production of 25% of the categories because they were not necessary and essential to Petitioners’ valid purposes. Hsu Decl., Ex. 6, pp. 28-29. Delaware case law holds that it is the legal services purchased by the fees at issue, not the degree of success achieved in the litigation, on which fees should be based. Mahani v. Edix Media Grp., Inc., (Del. 2007) 935 A.2d 242, 248. Reply at 6-7.

Three attorneys drafted the Petition, including 1.2 hours by May (May Decl., ¶2, Ex. 1), 8.4 hours by Ybarra (Ybarra Decl., ¶2, Ex. 1), and 1.3 hours by Song (Song Decl., ¶2, Ex. 1).

Three attorneys drafted the moving and reply papers for trial, and to attend the hearing, including 7.9 hours by May (May Decl., ¶2, Ex. 1), 23.8 hours by Ybarra (Ybarra Decl., ¶2, Ex. 1), and 2.6 hours by Rubinsky (Rubinsky Decl., ¶2, Ex. 1).

Two attorneys drafted the judgment and writ, including 7.4 hours by May (May Decl., ¶2, Ex. 1), 7.1 hours by Marion (Marion Decl., ¶2, Ex. 1), and up to an additional 10.5 hours by Marion based on billing entries for both the writ and this motion (Marion Decl., ¶2, Ex. 1).

Petitioners assert that this effort cannot be duplicative; the MOMs retained almost twice as many attorneys, some more senior than the partners at Petitioners’ law firm. Rubinsky Reply Decl., ¶3; Reply at 8.

This evidence is not persuasive. Petitioners provide no evidence that all seven MOM attorneys receiving correspondence from Petitioners were working on this case as opposed to the Related Cases. See Rubinsky Reply Decl., ¶3.

In any event, Petitioners overstaffed this case. Two partners and two associates are unreasonable for a member inspection case. The two partners billed 17.9 + 37.6 = 55.5 hours. May Decl., ¶2, Ex. 1; Ybarra Decl., ¶2, Ex. 1. The two associates billed 18.4 + 35.9 = 54.3 hours, less than the partners. Rubinsky Decl., ¶2, Ex. 1; Marion Decl., ¶2, Ex. 1. Ybarra’s work includes 1.3 hours for “legal research re books and records petition” and 12 hours to “draft moving papers on motion to permit inspection of books and records.” Ybarra Decl., ¶2, Ex. 1. Petitioners fail to explain why the associates could not have performed these tasks.

The hours were unreasonable and the fees will be reduced by 15 of Ybarra’s hours, or $14,625.

The fees are reduced by $33,810.50 ($11,437.50 +$7750 + $14,625). The total fees awarded are $83,839.55 ($117,650.05- $33,810.50).[2]

[1] Petitioners failed to lodge a courtesy copy of its reply in violation of the Presiding Judge’s First Amended General Order Re: Mandatory Electronic Filing. Their counsel is admonished to provide courtesy copies in all future filings.

[2] Any notice of motion to strike or to tax costs must be served and filed 15 days after service of the cost memorandum. CRC 3.1700(b)(1). Judgment was entered on December 13, 2023. Petitioners assert $1,542.55 in costs in a timely filed memorandum of costs on December 21, 2023. The MOMs’ opposition to the instant motion was filed on February 13, 2024, almost two months after service of the memorandum. The opposition does not address Petitioners’ costs, and it would be untimely if it did. Petitioners are entitled to $1,542.55 in costs.