Judge: John J. Kralik, Case: EC064805, Date: 2024-12-06 Tentative Ruling

Case Number: EC064805    Hearing Date: December 6, 2024    Dept: NCB

Superior Court of California

County of Los Angeles

North Central District

Department B

BACKGROUND

A.    Allegations in the EC064805 Action

On December 8, 2015, Plaintiff Maria Carmen Leal (“Leal”) filed an action against Nelly Dagstanyan, Mario Haroutunian, and DOES 1-20, entitled Maria Carmen Leal v. Nelly Danstanyan, LASC Case No. EC064805 (the “Leal Action”).

On September 1, 2016, Plaintiff Leal filed a First Amended Complaint in the Leal Action against Defendants Nelly Dagstanyan, Maro Haroutunian, Marika Bastrmajian, Khachig Mestchyan, and DOES 1-20.

On June 22, 2018, Plaintiff Leal filed the operative Second Amended Complaint (“SAC”) in the Leal Action against Defendants Nelly Dagstanyan, Grant Dagstanyan, Maro Haroutunian, Marika Bastrmajian, Khachig Mestchyan,  Andranik Aleksayan, Aresen Stepanyan, and DOES 1-20, alleging causes of action for: (1) fraudulent transfer of real property under Uniform Voidable Transactions Act; (2) fraudulent transfer of corporate property and assets under Uniform Voidable Transactions Act; (3) constructive trust; (4) declaratory relief; (5) declaratory relief; (6) tort of another; and (7) tort of another.

In the Leal Action, Plaintiff Leal alleged that she obtained a February 2014 judgment in LASC Case No. LS024960, which was entered after Plaintiff Leal obtained an award for $66,756.57 in unpaid wages against Nelly Dagstanyan and Sqwash Corporation on October 3, 2013. (SAC, ¶ 23.) Plaintiff Leal alleged that Defendant Nelly Dagstanyan and her codefendants engaged in a series of fraudulent conveyances of real property, including real property located at 1317 N. Lamer St. in Burbank, CA, to avoid enforcement of the judgment. (SAC, ¶ 33.)

B.     Allegations in the EC067628 Action

On November 30, 2017, Plaintiff Becharoff Capital Corporation (“Becharoff”) filed a complaint against Defendants Grant H. Dagstanyan, Nelly Dagstanyan, Maro Harotunian, Khachig A. Mestchyan, Marika Bastrmajian, Andranik Aleksanyan, and DOES 1-20 in LASC Case No. EC067628 entitled Becharoff Capital Corporation v. Grant H. Dagstanyan, et al. (the “Becharoff Action”).

On May 10, 2021, Plaintiff Becharoff filed the operative First Amended Complaint (“FAC”) against Defendants Grant H. Dagstanyan, Nelly Dagstanyan, Maro Harotunian, Khachig A. Mestchyan, Marika Bastrmajian, Andranik Aleksanyan, Aresen Stepanyan, and DOES 1-30, inclusive, alleging causes of action for: (1) to set aside fraudulent conveyance; (2) to set aside fraudulent conveyance; (3) common law fraudulent conveyance; (4) conspiracy to commit fraudulent conveyance; (5) aiding and abetting fraudulent conveyance; and (6) to quiet title to real property commonly known as 1317 N. Lamer Street, Burbank, CA 91506.

The operative FAC as to the Becharoff Action alleges the following: on June 26, 2019, a judgment was entered for $110,340.72 in LASC Case No. BC047457, entitled Bank of America, N.A. v. Sav-On-Monolan, Inc., et al., and the judgment was entered in favor of Bank of America, N.A. and jointly against Defendant Grant Dagstanyan and Sav-On-Monolan, Inc. (the “Bank of America Judgment”). (FAC, ¶¶ 12, 13.) A writ of execution was issued on August 26, 2009, in favor of the original creditor, Bank of America. (FAC, ¶ 14.) An abstract of judgment was subsequently issued on April 12, 2010, and recorded in Los Angeles County on April 21, 2010. (FAC, ¶ 14.) On October 19, 2015, all right, title, and interest in the Bank of America Judgment was assigned to Plaintiff Becharoff. (FAC, ¶ 15.) On November 11, 2015, the assignment was filed, and Plaintiff Becharoff became the assignee of record of the Bank of America Judgment, entitled to enforce the Bank of America Judgment. (FAC, ¶ 15.) Such judgment remains wholly unsatisfied. (FAC, ¶ 15.) Plaintiff Becharoff alleged that the Dagstanyans engaged in a fraudulent transfer of real property, including the property located at 1317 Lamer St. in Burbank, to avoid the Bank of America Judgment. (FAC, ¶¶ 24, 32, 35.)

C.     Relevant Background

On September 7, 2018, the Leal Action and the Becharoff Action were related and consolidated for the purposes of being tried together. The Leal Action was deemed the lead case.

On May 4, 2021, after taking the matter under submission, the Court denied Defendants Andranik Aleksanyan, Maro Haroutunian, Grant Dagstanyan, and Nelly Dagstanyan’s motion for summary judgment, or alternatively, summary adjudication.

On May 11, 2021, non-jury trial commenced in the Leal Action and the Becharoff Action, and Defendant Aresen Stephanyan and all Doe defendants were dismissed with prejudice as to the FAC filed by Plaintiff Becharoff on motion of the Court.

On December 15, 2021, the Court issued its final statement of decision.

On February 15, 2022, the Court entered judgment in both the Leal Action and the Becharoff Action.

As to the SAC in the Leal Action, judgment was entered as follows: Judgment was entered in favor of Plaintiff Leal and against Defendants as to the first and sixth causes of action; judgment was entered in favor of the Dagstanyans and Mestchyan on the second and fifth causes of action; the seventh cause of action was entered in favor of Mestchyan; the third cause of action was dismissed; and, as to the fourth cause of action for declaratory relief, Plaintiff Leal did not request that the findings in the Court’s statement of decision be included in the final judgment.

As to the FAC in the Becharoff Action, judgment was entered in favor of Defendants and against Plaintiff Becharoff. The Court allowed Defendants to recover their costs of suit from Plaintiff Becharoff.

On April 18, 2022, Aleksanyan and the Dagstanyans filed a motion for attorneys’ fees in which they sought prevailing party attorneys’ fees in the sum of $203,202.00 from Plaintiff Becharoff.

On August 15, 2022, after taking the matter under submission, the Court granted the Dagstanyans and Aleksanyan’s motion for attorneys’ fees against Plaintiff Becharoff in the amount of $31,083.75. The Court indicated that “[i]n 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.” (08/15/22 Minute Order.)

On August 23, 2022, Defendant Grant Dagstanyan filed a notice of entry of judgment or order, which attached the Court’s August 15, 2022 order thereto.

On September 15, 2022, Defendant Grant Dagstanyan filed a notice of appeal, which indicated that he was appealing the Court’s August 15, 2022 order.

On December 22, 2022, the appeal filed by Defendant Grant Dagstanyan on September 15, 2022 was dismissed due to such defendant being in default.

On January 20, 2023, the Second District Court of Appeal, vacated the order of dismissal entered on December 22, 2022, and reinstated Defendant Grant Dagstanyan’s September 15, 2022 appeal.

On September 18, 2024, the Second District Court of Appeal issued remittitur, in which the Second District Court of Appeal affirmed this Court’s August 15, 2022 order. The Second District Court of Appeal found that Defendants did not meet their burden in showing that the Court abused its discretion in reducing the number of requested hours or hourly rates. Further, the Second District Court of Appeal found that the Defendants did not meet their burden in showing that the Court erred when it ordered the fee award to be offset against an earlier judgment. The Second District Court of Appeal opinion provides that Plaintiff Becharoff is awarded costs on appeal.

D.    Motion on Calendar

On September 30, 2024, Plaintiff Becharoff filed a motion for attorneys’ fees and costs on appeal. Plaintiff Becharoff seeks attorneys’ fees against Defendant Grant Dagstanyan in the sum of $31,995.00.   

On November 26, 2024, Defendants Aleksanyan, Grant Dagstanyan, and Nelly Dagstanyan (“Defendants”) filed an opposition to the motion.

On November 27, 2024, Plaintiff Becharoff filed a reply brief.

Although filed and served late, the Court will consider the opposition brief. (Cal. Rules of Court, Rule 3.1300(d).)

DISCUSSION

A.    Entitlement to Attorneys’ Fees

            Plaintiff Becharoff contends that it is entitled to attorneys’ fees because the Second District Court of Appeal affirmed this Court’s ruling concerning Defendants’ motion for attorneys’ fees. Defendants argue that Plaintiff Becharoff is not entitled to attorneys’ fees and costs because, in opposition to Defendants’ motion for attorneys’ fees, Plaintiff Becharoff argued that attorneys’ fees are not recoverable. 

Civ. Code § 1717 provides that “[i]n 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).) “[A] prevailing party is entitled as a matter of right to recover costs in any action or proceeding.” (Santisas v. Goodin (1998) 17 Cal.4th 599, 606.) “[A]ttorney fees are allowable as costs . . . when they are authorized by either [c]ontract, [s]tatute, or [l]aw.” (Ibid.) “[R]ecoverable litigation costs do include attorney fees, but only when the party entitled to costs has a legal basis, independent of the costs statutes and grounded in an agreement, statute, or other law, upon which to claim recovery of attorney fees.” (Ibid.)

“The mutuality of remedy doctrine is typically used in cases in which a party establishes that it is either not a party to a contract, or that the contract it is a party to is void or unenforceable.” (Eden Township Healthcare Dist. v. Eden Medical Center (2013) 220 Cal.App.4th 418, 429 (Eden Township).) “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.” (Ibid.)

Here, Plaintiff Becharoff seeks the attorneys’ fees it incurred on appeal in defending itself against Defendants’ appeal of this Court’s August 15, 2022 order. The Court references its August 15, 2022 order on Defendants’ motion for attorneys’ fees. The Court stated therein that “[t]he 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.” (08/15/22 Order at p. 4:13-16.) The Court found that “[b]y 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.” (Id. at p. 5:7-12.) Thus, the Court found that “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.” (Id. at p. 5:19-22.)

The Court finds that although Plaintiff Becharoff did not prevail on the FAC as judgment was entered in favor of Defendants, Plaintiff Becharoff did prevail on the appeal filed by Defendants. Had Defendants prevailed on appeal, it follows that they would have been entitled to attorneys’ fees incurred on appeal pursuant to Eden Township, supra, 220 Cal.App.4th 418, 429. Given that the Second District Court of Appeal affirmed this Court’s August 15, 2022 order as to Defendants’ motion for attorneys’ fees, the Court finds that Plaintiff Becharoff is entitled to its attorneys’ fees in opposing Defendants’ appeal of this Court’s August 15, 2022 order.

Thus, Plaintiff Becharoff is entitled to attorneys’ fees incurred on appeal under the mutuality of remedy doctrine.   

B.     Reasonableness of Attorneys’ Fees

“It is well established that the determination of what constitutes reasonable attorney fees is committed to the discretion of the trial court, whose decision cannot be reversed in the absence of an abuse of discretion.” (Melnyk v. Robledo (1976) 64 Cal.App.3d 618, 623.) The fee setting inquiry in California ordinarily “begins with the ‘lodestar’ [method], i.e., the number of hours reasonably expended multiplied by the reasonable hourly rate.” (Graciano v. Robinson Ford Sales, Inc. (2006) 144 Cal.App.4th 140, 154.) “The reasonable hourly rate is that prevailing in the community for similar work.” (Margolin v. Regional Planning Com. (1982) 134 Cal.App.3d 999, 1004.) Where a party is challenging the reasonableness of attorney’s fees as excessive that party 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, 563-564.)  “[I]t is the burden of the challenging party to point to the specific items challenged, with a sufficient argument and citations to the evidence and arguments that fees claimed are excessive, duplicative, or unrelated do not suffice.” (Id. at p. 564.)  It is well established that the determination of what constitutes reasonable attorney fees is committed to the discretion of the trial court.  (PLCM Group v. Drexler (2000) 22 Cal.4th 1084, 1096.) 

Plaintiff Becharoff presents the declaration of its counsel, Lance A. Brewer (“Brewer”), in support of the instant motion. Mr. Brewer attests that he has been an attorney since December of 1986 and has extensive experience in all facets of litigation practice, including all aspects of law and motion matters. (Brewer Decl., ¶ 3.) Mr. Brewer attests to the reasonableness of the time spent in defending the appeal as well as his hourly rate of $450.00 per hour. (Brewer Decl., ¶ 4.) Mr. Brewer spent 71.1 hours in connection with defending Plaintiff Becharoff on appeal. (Brewer Decl., ¶ 4.) Mr. Brewer has provided the Court with billing records. (Brewer Decl., ¶ 4; Ex. A.)

Although Defendants take issue with the reasonableness of the claimed fees, Defendants have presented no evidence as to the unreasonableness of the requested attorneys’ fees. Mr. Brewer has attested that all the hours spent were reasonable and justified in defense of the appeal. Mr. Brewer has also attested to the reasonableness of his hourly rate.

However, upon review of the billing records, the Court finds that Plaintiff Becharoff has presented numerous billing entries which are block-billed. (Brewer Decl., Ex. A.) “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.) Out of the 19 entries on the billing records presented to the Court, 13 of those entries are block billed. Only the January 15, January 22, June 12, July 21, August 23, and November 17, 2023, entries are not block billed. (Brewer Decl., Ex. A.)

The Court therefore exercises its discretion and will discount Plaintiff Becharoff’s fee request due to the pervasiveness of block billing. (Jaramillo v. County of Orange (2011) 200 Cal.App.4th 811, 830 (“block billing is not objectionable per se, though it certainly does increase the risk that the trial court, in a reasonable exercise of its discretion, will discount a fee request.”).) The Court will reduce the hourly rate of Mr. Brewer from $450 per hour to $400 per hour due to the block billing.

Thus, taking into account these adjustments, the Court will award a total of $28,440.00 in attorneys’ fees (= 71.1 hours x $400/hour). 

CONCLUSION AND ORDER

            Plaintiff Becharoff Capital Corporation’s motion for attorneys’ fees and costs on appeal is granted in the amount of $28,440.00.   

            Plaintiff Becharoff shall provide notice of this order.

DATED:  December 6, 2024                                      ___________________________

                                                                              John Kralik

                                                                              Judge of the Superior Court