Judge: John J. Kralik, Case: EC064805, Date: 2022-08-12 Tentative Ruling

Case Number: EC064805    Hearing Date: August 12, 2022    Dept: NCB

Superior Court of California

County of Los Angeles

North Central District

Department B

BACKGROUND

A.    Allegations in the EC067628 Action

In Becharoff Capital Corp. v. Dagstanyan et al. (Case No. EC067628, “Becharoff Action”), Becharoff Capital Corp. (“Becharoff”) sought to enforce a judgment entered on June 26, 2009 in the amount of $110,340.72 in a prior case (Case No. BC047457, “Underlying Action”) against Defendant Grant Dagstanyan and Sav-On-Monolan, Inc., which Becharoff claimed was wholly unsatisfied.  Becharoff alleged that Mr. Dagstanyan engaged in a fraudulent transfer of property, including the property at 1317 N Lamer St. in Burbank (“Lamer Property”) to avoid the judgment.  The Becharoff complaint was filed on November 30, 2017.

The cases were consolidated and the Leal v. Dagstanyan action (Case No. EC064805, “Leal Action”), was deemed the lead case. 

The Becharoff and Leal actions came for trial in May 2021. 

The Court issued its Final Statement of Decision on December 15, 2021.

On February 15, 2022, the Court entered judgment.  With regard to the Leal Action’s SAC, the Court found:

·         On the 1^st cause of action for fraudulent transfer of real property under Civil Code § 3439 in favor of Plaintiff and against the Dagstanyans, Stepanyan, Haroutunian, Bastrimajian, and Aleksanyan. 

·         On the 2^nd cause of action for fraudulent transfer of corporate property in favor of the Dagstanyans and Mestchyan.

·         On the 3^rd cause of action for constructive trust, such cause of action was dismissed.

·         On the 4^th cause of action for declaratory relief, Plaintiff did not request that the findings in the Statement of Decision to be included in the final judgment.

·         On the 5^th cause of action for declaratory relief in favor of the Dagstanyans and Mestchyan.

·         On the 6^th cause of action for tort of another in favor of Plaintiff and against Stepanyan, Haroutunian, Bastrmajian, and Aleksanyan.  The Court stated that Plaintiff shall recover attorney’s fees and costs from them.

·         On the 7^th cause of action in favor of Mestchyan. 

With regard to the Becharoff Action, the Court found in favor of the Dagstanyans, Aleksanyan, and Haroutunian and against Plaintiff Becharoff, such that Becharoff shall recover nothing from Defendants.  The Court allowed Defendants to recover from Becharoff their costs of suit. 

B.     Motion on Calendar

On April 18, 2022, Defendants Adranik Aleksanyan, Grant Dagstanyan, and Nelly Dagstanyan filed a motion to determine prevailing party and for attorney’s fees.

On August 1, 2022, Plaintiff Becharoff filed an opposition brief. 

On August 8, 2022, Defendants filed a reply brief.

REQUEST FOR JUDICIAL NOTICE

            With the opposition brief, Becharoff requests judicial notice of: (A) the June 26, 2009 judgment in the Underlying Action in the sum of $110,340.72; (B) the October 18, 2015 assignment of the BOFA Judgment to Becharoff; (C) Becharoff’s FAC filed in Case No. EC064805; and (D) the Court’s February 15, 2022 Judgment in the Becharoff Action. The request for judicial notice of these documents is granted.  To the extent Becharoff seeks judicial notice of certain statements, the request is denied.

DISCUSSION

            Defendants Adranik Aleksanyan, Grant Dagstanyan, and Nelly Dagstanyan (hereinafter, “Defendants”) move for attorney’s fees in the amount of $203,202.00 against Plaintiff Becharoff. 

A.    Prevailing Party and Entitlement to Fees

Defendants argue that they should be deemed the prevailing party pursuant to Civil Code, § 1717 and CCP § 1021.

Civil Code § 1717 states that a party may recover attorney’s fees when the party prevails in an action based on a contract that provides for the prevailing party to recover attorney’s fees.  The court, upon notice and motion by a party, shall determine who is the prevailing party on the contract for purposes of section 1717, whether or not the suit proceeds to final judgment.  (Civ. Code, § 1717(b)(1).)  “Section 1717 was enacted to establish mutuality of remedy where contractual provision makes recovery of attorney's fees available for only one party [citations], and to prevent oppressive use of one-sided attorney's fees provisions.”  (Reynolds Metals Co. v. Alperosn (1979) 25 Cal.3d 124, 128; Eden Twp. Healthcare Dist. v. Eden Med. Ctr. (2013) 220 Cal. App. 4th 418, 429 [“Under that doctrine, if the party would have been exposed to fees had the court found against it, then that party is entitled to fees for prevailing.”].) 

Defendants argue that on June 26, 2099, a California Bank of America Judgment for $203,202.00 was entered for breach of written contract against Mr. Dagstanyan and Sav-On Monolan in Case No. EC047457 (“BOFA Judgment”).  (Mot., Ex. A [EC047457 Summons and Complaint].)  The contract that was subject to the BOFA Judgment included the following terms:

K. … Costs. If the Bank incurs any expense in connection with administering or enforcing this Agreement, or if the Bank takes collection action under this Agreement, it is entitled to costs and reasonable attorneys' fees, including any allocated costs of in-house counsel. At the Bank's option, the Bank may add these costs to the principal amount outstanding under this Agreement.

M. Attorneys' Fees. In the event of a lawsuit or arbitration proceeding, the prevailing party is entitled to recover costs and reasonable attorneys' fees (including any allocated costs of in-house counsel) incurred in connection with the lawsuit or arbitration proceeding, as determined by the court or arbitrator.

(See EC047457 Complaint at Ex. 1 [BOFA Contract at page 6 of 6].)  Thereafter, on November 2, 2015—i.e., 8 years and 5 months after the property transfer and 6 years and 5 months after the BOFA Judgment—the BOFA Judgment was assigned to Becharoff.  (See Mot. at Ex. B [11/2/15 Assignment of Judgment Pursuant to CCP § 673].)  On November 30, 2017, Becharoff filed the complaint for fraudulent transfer of property, which had taken place on June 19, 2007.  At trial in this action and in the Court’s Statement of Decision, the Court found that Becharoff’s claims were barred by the statute of repose.
            Defendants argue that they are the prevailing parties in Becharoff’s action, which was based on the BOFA contract.  The BOFA contract would have allowed Becharoff—had it prevailed on this action—to collect fees from Mr. Dagstanyan.  Thus, applying the mutuality of remedy in section 1717 would allow Mr. Dagstanyan to recover attorney’s fees against Becharoff if they prevailed.  Here, Defendants did prevail in their defense against Becharoff’s claims by raising the statute of repose.  However, although Defendants prevailed on their claims against Becharoff, only Mr. Dagstanyan was a party to the BOFA contract—Mrs. Dagstanyan and Aleksanyan were not signatories to the BOFA contract nor is there any indication that they were intended beneficiaries of the contract. 

            In opposition, Becharoff argues that its complaint in this action was to enforce the unpaid BOFA Judgment by unwinding fraudulent transfers and none of its causes of action were based on enforcing a contract claim.  Becharoff also argues that the BOFA contract was merged into the BOFA Judgment, which does not include an award for attorney’s fees; Becharoff itself could not recover attorney’s fees under the BOFA contract as the assignee of the BOFA Judgment; and only Mr. Dagstanyan was a signatory to the BOFA contract. 

            However, the BOFA Judgment was assigned to Becharoff in full.  The November 2, 2015 Assignment of Judgment states that Bank of America, N.A. assigned, transferred, set over, and sold, with all rights, title, and interest to Becharoff, the judgment entered in favor of Bank of America, N.A., and Assigned to Security Credit Services, LLC, and all monies under the EC067457 case.  (Brewer Decl., Ex. B.)  By assigning the BOFA Judgment to Becharoff, all rights, title, and interest in the judgment was assigned to Becharoff, including Becharoff’s right to enforce the BOFA Judgment against Mr. Dagstanyan.  Hence, if BOFA would have been entitled to recover attorney’s fees from Mr. Dagstanyan in this action, then Becharoff too would be able to seek fees.  Conversely, applying the mutuality of remedies, Mr. Dagstanyan would be able to recover fees from Becharoff if Mr. Dagstanyan prevailed.

            In the reply brief, Defendants argue that they are entitled to attorney’s fees because Becharoff’s 3^rd cause of action was for tort of another.  Defendants argue that they are entitled to fees based on this theory. The Court will not allow fees on the basis of the tort of another doctrine.  Defendants have not showed that the tort of another doctrine applies to this case.  Further, this argument was only raised for the first time in the reply brief. 

            As discussed above, Defendants are the prevailing parties in this action.  However, only Mr. Dagstanyan was a signatory to the BOFA contract, such that only Mr. Dagstanyan is entitled to recover fees pursuant to Civil Code, § 1717.  As such, Mr. Dagstanyan has established his entitlement to attorney’s fees against Becharoff. 

B.     Reasonableness of Attorney’s Fees

Defendants seek $203,202.00 in attorney’s fees.  In support of the motion, Defendants provide the declarations of their counsel Tony Forberg.

Mr. Forberg states he has been practicing law for approximately 30 years.  (Forberg Decl., ¶4.)  He states that his hourly rate in this matter was $540/hour.  (Id.)  He states that his hours and fees are reasonable and not excessive, and that he has billed time that was necessary to defend against Becharoff’s complaint.  (Id., ¶7.)  Mr. Forberg provides his billing sheet, showing that from February 7, 2017 to February 14, 2022, he billed at $540/hour.  (Mot., Ex. C.) 

The Court has reviewed the billing records.  Mr. Forberg’s billing records do not include a total tally of the hours he spent on this action for the Court to conduct a lodestar analysis.  In addition, the Court cannot ascertain whether time was deducted for the time Mr. Forberg may have spent on this action, the Leal Action, and/or both actions.  In particular, closer to the time of trial, Mr. Forberg seeks time associated with reviewing Becharoff and Leal’s closing briefs, as well as reviewing closing and reply briefs filed by Leal.  (See Billing Record at 7/26/21 and 9/15/21 entries.)

The Court will adjust the attorney’s fees awarded as follows.

In its opposition, Becharoff points out that Mr. Forberg previously objected to Leal’s counsel’s fees of $450/hour, arguing they were excessive in light of the experience of counsel and nature of the case and that a rate of $275/hour was more appropriate.  (See Opp. at p.12.)  Based on Mr. Forberg’s experience and the service he provided in defense of this action, the Court will award fees at $400/hour. 

            Second, Mr. Forberg does not tally the total amount of hours he spent on this action.  However, taking $203,202 divided by $540/hour amounts to 376.3 hours.  The Court finds that a reduction of half of the hours (or a 188.15-hour reduction) is appropriate to account for the time spent on this action only, as opposed to time Mr. Forberg may have spent on the Leal Action or on both the Becharoff and Leal Actions together.  In opposition, Becharoff objects to specific times that Mr. Forberg is seeking to recover that was spent in the Leal Action only, and not in the Becharoff Action.  (See Opp. at pp.13-14.)  The Court’s one-half reduction of hours should adequately address these concerns. 

Third, the Court also notes that had Mr. Forberg raised the statute of repose earlier, the time he incurred in representing Defendants in this matter would have been drastically reduced.  This could have easily been raised had more investigation and research of the statute of limitations and defenses against fraudulent conveyance actions been conducted by counsel or an associate.  The Court will reduce the hours further by 50 hours in consideration of this factor.  

Taking into account the above adjustments, this would amount to 138.15 hours total (=376.3 total hours, minus a 188.15-hour reduction for time spent between the Becharoff and Leal Actions, minus 50 hours adjustment).

Finally, the Court will allow Mr. Forberg to recover only one-third of the hours, as this would represent the time he spent in representing Mr. Dagstanyan—the only prevailing party who is entitled to recover fees pursuant to the BOFA contract—as opposed to the time spent representing Mrs. Dagstanyan and Aleksanyan.  Thus, the total amount of hours that the Court will award to Mr. Forberg for the time he spent representing Mr. Dagstanyan in the Becharoff Action is 46.05 hours (= 138.15 hours divided by 3). 

            Thus, the Court will award attorney’s fees in the amount of $18,600.  This takes into account an hourly rate of $400/hour x 46.5 hours. 

CONCLUSION AND ORDER

Defendants Adranik Aleksanyan, Grant Dagstanyan, and Nelly Dagstanyan’s motion for attorney’s fees against Plaintiff Becharoff Capital Corp. is granted in the amount of $18,600.  In view of the history of fraudulent conveyances by the Defendants, it is appropriate that Plaintiff Becharoff Capital Corp. be permitted to set off that portion of the attorneys’ fees that is attributable to Mr. Dagstanyan against the judgment that Plaintiff Becharoff Capital Corp. has against him. 

Defendants shall give notice of this order.