Judge: James L. Crandall, Case: 19-01085676, Date: 2022-08-25 Tentative Ruling

1.    Motion for Attorney Fees:

2.    Motion to Strike Tax Costs:

Motion for Attorney Fees

The motion for attorney fees by Defendants Christopher Moore, M.D., and Christopher J. Quilligan, M.D. (Moving Defendants) is CONTINUED to October 20, 2022, at 10:00 a.m. in this Department.

Civil Code section 1717(a) provides in part, “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.”

Plaintiff contends the motion for attorney fees is premature. The Court granted summary judgment as to Moving Defendants Moore and Quilligan, but the case proceeds as to the remaining Defendants.

Plaintiff cites a recent case, Chen v. Valstock Ventures, LLC (Cal. Ct. App., July 29, 2022, No. A161885) 2022 WL 3009418, for the proposition that summary judgment as to Moving Defendants is an “interim order” which doesn’t support a motion for fees under Civil Code section 1717. However, in Chen, the plaintiffs obtained summary judgment of their sole contractual cause of action, while their non-contract claims were still pending against the same party. The appellate court in Chen held summary adjudication as to the contract claim was an “interim” non-appealable order and the trial court’s award of attorney fees was premature under Civil Code section 1717.

Here, unlike in Chen, the Court granted summary judgment as to the entire operative complaint against Moving Defendants. Judgment was entered in favor of Moving Defendants on 4/4/22.

Code of Civil Procedure section 904.1(a)(1) states that an appeal may be taken “[f]rom a judgment. . .” Defendants were required to file their motion for attorney fees within the time period set out under California Rules of Court, Rule 3.1702. Therefore, in the present case, a final judgment was entered as to Moving Defendants and the motion for attorney fees is not premature.

Plaintiff next argues that Moving Defendants cannot recover attorney fees because the Court found that no partnership agreement existed among the parties.

On 3/3/22, the Court granted summary adjudication as to the first and second COAs in the operative complaint for breach of partnership agreement and breach of partner fiduciary duties, which were based on the existence of an alleged partnership agreement reflected in the contract entitled “General Partnership Agreement” which was executed by Defendant Waki, Defendant Quilligan, and Plaintiff Kim on 1/5/16.

The 3/3/22 minute order stated, “Plaintiff has not presented evidence demonstrating that the physicians intended to abandon the corporate form and operate as a general partnership instead.” The order further stated, “While Defendants have demonstrated the business did not operate as a partnership under the Corporation Code, this does not mean the Partnership Agreement has no legal effect. The issue of whether the Partnership Agreement created additional rights or obligations is not before the Court in this motion, and the Court declines to rule on such issues at this time.”

Moreover, Santisas v. Goodin (1998) 17 Cal.4th 599, 611, holds that a defendant who prevails on a contract claim by showing the contract is inapplicable or unenforceable can still seek attorney fees under the contract relied upon by the plaintiff:

“The second situation in which section 1717 makes an otherwise unilateral right reciprocal, thereby ensuring mutuality of remedy, is when a person sued on a contract containing a provision for attorney fees to the prevailing party defends the litigation “by successfully arguing the inapplicability, invalidity, unenforceability, or nonexistence of the same contract.” (North Associates v. Bell (1986) 184 Cal.App.3d 860, 865 [229 Cal.Rptr. 305].) Because these arguments are inconsistent with a contractual claim for attorney fees under the same agreement, a party prevailing on any of these bases usually cannot claim attorney fees as a contractual right. If section 1717 did not apply in this situation, the right to attorney fees would be effectively unilateral—regardless of the reciprocal wording of the attorney fee provision allowing attorney fees to the prevailing attorney—because only the party seeking to affirm and enforce the agreement could invoke its attorney fee provision. To ensure mutuality of remedy in this situation, it has been consistently held that when a party litigant prevails in an action on a contract by establishing that the contract is invalid, inapplicable, unenforceable, or nonexistent, section 1717 permits that party's recovery of attorney fees whenever the opposing parties would have been entitled to attorney fees under the contract had they prevailed. (See, e.g., Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124, 128-129 [158 Cal.Rptr. 1, 599 P.2d 83]; North Associates v. Bell, supra, at p. 865.)”

Therefore, although the Court determined the subject contract didn’t create a “general partnership,” Plaintiff has not shown that the attorney fee provision at section XII (7) of the contract does not apply.

Plaintiff further argues the contract is unenforceable because it was executed by Plaintiff and Moving Defendant Quilligan, but not by Moving Defendant Moore.

However, “A party who has signed a written contract may be compelled specifically to perform it, though the other party has not signed it, if the latter has performed, or offers to perform it on his part, and the case is otherwise proper for enforcing specific performance.” (Civ. Code § 3388.)

Therefore, Plaintiff hasn’t shown that the absence of Defendant Moore’s signature precludes Moore from seeking to enforce the attorney fee provision.

Finally, Plaintiff contends that the motion for attorney fees should be denied because he “voluntarily dismissed” Moving Defendants by filing an amended complaint omitting Moving Defendants before judgment was entered.

However, the amended complaint was filed on 3/25/22, after the motion for summary judgment was granted on 3/3/22. Allowing Plaintiff to avoid Civil Code section 1717 by filing an amended complaint to withdraw his claims against Moving Defendants after summary judgment was granted would undermine the purpose of the statute.

The attorney fee provision states:

“ATTORNEY FEES. In any legal action brought by either party to enforce the terms of this Agreement, whether based in contract or in tort, the prevailing party will be entitled to reasonable attorney’s fees, costs, and expenses incurred in connection with that action.”

The attorney fee provision employs broad language which can reasonably be construed to encompass Plaintiff’s causes of action against Moving Defendants in the operative complaint.

Therefore, Plaintiff has not shown that the attorney fee provision of the contract cannot be enforced by Moving Defendants. Defendants are entitled to recover their attorney fees as prevailing parties under Civil Code section 1717 and the contract.

However, Moving Defendants have not shown the amount of attorney fees requested is reasonable.

Hill v. Affirmed Housing Group (2014) 226 Cal.App.4th 1192, 1197, states:

“A prevailing defendant “may recover only reasonable attorney fees incurred in [its] defense of the action by [the plaintiff].” (Zintel Holdings, LLC v. McLean (2012) 209 Cal.App.4th 431, 443, 147 Cal.Rptr.3d 157.) “To the extent [a prevailing defendant's] shared counsel engaged in litigation activity on behalf of [a codefendant] for which fees are not recoverable, the [trial] court has broad discretion to apportion fees.” (Ibid.) “ ‘A court may apportion fees even where the issues are connected, related or intertwined.’ ” (Ibid.) And, “‘although time-keeping and billing procedures may make a requested segregation difficult, they do not, without more, make it impossible.’” (Heppler v. J.M. Peters Co. (1999) 73 Cal.App.4th 1265, 1297, 87 Cal.Rptr.2d 497.) “Allocation of fees incurred in representing multiple parties is not required,” however, when the claims at issue are “ ‘ “ ‘inextricably intertwined,’ ” ’ ” such that it is not possible to differentiate between compensable and noncompensable time. (Cruz v. Ayromloo (2007) 155 Cal.App.4th 1270, 1277, 66 Cal.Rptr.3d 725 (Cruz ).)”

Defendants’ counsel has submitted invoices for attorney fees totaling $346,916.00. However, defense counsel has omitted all descriptions of work performed from the invoices. Instead of including itemized descriptions in the bills, counsel submits a declaration generally describing his firm’s work on the case.

Defendants haven’t shown that the fees incurred in the defense of Moving Defendants are so “inextricably intertwined” with fees incurred in the defense of other Defendants that the Court cannot apportion the fees between the Moving Defendants and Defendants who remain in the case.

Defendants have not made a reasonable effort to distinguish between fees incurred in the defense of Moving Defendants and fees incurred in the defense of the remaining Defendants.

No later than 9/15/22, Moving Defendants shall file and serve a supplemental declaration of counsel, describing counsel’s work performed specifically in the defense of Moving Defendants as distinguished from counsel’s work performed in defense of Defendant Waki.

At minimum, Defendants’ counsel shall specify the time spent preparing Moving Defendants’ responses to written discovery and preparing Moving Defendants’ motion for summary judgment.

Defense counsel shall also submit itemized invoices, including detailed descriptions of work performed next to each time entry which Moving Defendants contend was necessary for their defense.

The descriptions of work performed in the itemized attorney bills may be partially redacted only to the extent necessary to protect privileged information.

No later than 10/6/22, Plaintiff may file and serve a supplemental brief responding to the declaration of Defendants’ counsel.

Motion to Strike or Tax Costs

Plaintiff’s motion to strike or tax costs is GRANTED in part.

Defendants submitted an amended memorandum of costs on 4/20/22, seeking recoverable costs in the amount of $13,108.99. In the declaration of counsel and motion for attorney fees, Defendants also seek an additional $11,503.75 in costs which they contend should be awarded pursuant to the Court’s discretion.

Code of Civil Procedure section 1033.5(a) specifies the matters which are recoverable costs. Code of Civil Procedure section 1033.5(c) provides in part:

“An award of costs shall be subject to the following:

(1) Costs are allowable if incurred, whether or not paid.

(2) Allowable costs shall be reasonably necessary to the conduct of the litigation rather than merely convenient or beneficial to its preparation.

(3) Allowable costs shall be reasonable in amount.

(4) Items not mentioned in this section and items assessed upon application may be allowed or denied in the court's discretion.”

Doe v. Los Angeles County Dept. of Children & Family Services (2019) 37 Cal.App.5th 675, 694, holds:

“Doe next challenges the recovery of fees related to service of process for witnesses who were never deposed and never testified at trial. In general, service of process fees are recoverable under section 1033.5, subdivision (a)(4). As Doe acknowledges, the Code of Civil Procedure does not limit the recovery of service of process fees to witnesses used at trial. Doe presents no evidence to demonstrate the witnesses were not “reasonably necessary to the conduct of the litigation” (§ 1033.5, subd (c)(2)) despite not having testified at trial. Thus, the trial court did not abuse its discretion to decline to tax these costs.”

Here, Plaintiff objects to the memorandum of costs on the grounds that Defendants fail to distinguish between costs incurred by Defendants Moore and Quilligan versus costs incurred by the remaining Defendants.

In opposition, Defendants state that, “Defendants recognize that where prevailing defendants incur costs jointly with other defendants who remain in the pending litigation, the court shall, on the objection of the plaintiff, award costs incurred by or in behalf of the prevailing parties, and not costs incurred solely by the remaining defendants. Fennessy v. Deleuw-Cather Corp., 218 Cal. App. 3d 1192, 1196 (1990).” (Opposition, p. 9.) Defendants contend that a 15% reduction in costs is appropriate.

Defendants have shown that they incurred the following costs that were reasonably necessary to the conduct of the litigation:

1. First appearance fees: $870

2. Filing fee for motion for summary judgment: ($500)

3. The cost of Plaintiff’s deposition, which was relied upon by the Court in granting the motion for summary judgment, as equally apportioned among the Defendants (2/5 x $2,475 = $990)

In summary, Defendants Moore and Quilligan have shown that they incurred total recoverable costs of $2,360. Defendants have failed to meet their burden of showing that additional costs were reasonably necessary to their defense.

Future Events:

10/13/22 - MSJ

10/14/22 - MSC

10/31/22 – Jury Trial