Judge John J. Kralik, Case EC065007 2022-12-09 Tentative Ruling

Plaintiffs Secret Recipes, Inc., Hovik Grigorian, and Andreh H. Koygani filed the Second Amended Complaint (“SAC”) on November 28, 2016 against Defendants Felix Lopez, Luis Rodriguez, and Oak Escrow Inc., alleging causes of action for: (1) specific performance; (2) breach of contract; (3) conversion; (4) constructive trust; (5) fraud; (6) breach of fiduciary duty; (7) negligence; (8) IIED; (9) money had and received; (10) rescission of contract; and (11) declaratory relief.

On February 23, 2021, Cross-Complainants Felix Lopez and Luis Rodriguez (“Cross-Complainants”) filed the Third Amended Cross-Complaint (“TAXC”), alleging causes of action for: (1) defamation; (2) slander; (3) statutory unfair competition (Bus. & Profs. Code, §17200); (4) successor-in-interest liability; (5) creditor’s suit; (6) preliminary and permanent injunctive relief; (7) action against guarantor on guaranty; and (8) declaratory relief.

On April 18, 2022, the Court held a hearing regarding the status of representation of Secret Recipes, Inc. (“SRI”). The Court struck the SAC filed on November 28, 2016 as to SRI only, as well as all pleadings filed on behalf of SRI only. On May 4, 2022, the default of SRI was entered “per Court’s order dated April 18, 2022.”

On July 15, 2022, the Court granted Lopez and Rodriguez’s motion to dismiss this action based on the Five-Year Rule. The Court ordered Lopez, Rodriguez, and Loracast, Inc. in the SAC filed by Grigorian et al. on November 28, 2016 to be dismissed without prejudice. The Court noted that the Fifth[1] Amended Cross-Complaint (filed February 23, 2021) was still pending in the action.

On September 12, 2022, Defendants Lopez and Rodriguez filed a motion for attorney’s fees.

On November 28, 2022, Plaintiffs/Cross-Defendants filed an opposition to the motion. As SRI is in default, the Court assumes the opposition was filed by Grigorian and Koygani.

(a) 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.

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

(b)(1) The court, upon notice and motion by a party, shall determine who is the party prevailing on the contract for purposes of this section, whether or not the suit proceeds to final judgment. Except as provided in paragraph (2), 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.

(2) Where an action has been voluntarily dismissed or dismissed pursuant to a settlement of the case, there shall be no prevailing party for purposes of this section.

(Civ. Code, §1717(a).) “When a contract or a statute authorizes the prevailing party to recover attorney fees, that party is entitled to attorney fees incurred at trial and on appeal.” (Douglas E. Barnhart, Inc. v. CMC Fabricators, Inc. (2012) 211 Cal.App.4th 230, 250.)

The trial court has broad authority to determine the amount of a reasonable fee. (PLCM Group, Inc. v. Drexler (2000) 22 Cal. 4th 1084, 1095.) The award of attorney fees under section 1717 is governed by equitable principles. (Id.) The experienced trial judge is the best judge of the value of professional services rendered and the trial judge’s decision will not be disturbed unless the appellate court is convinced that it is clearly wrong, i.e., that it abused its discretion. (Id.)
The fee setting inquiry in California ordinarily begins with the "lodestar," i.e., the number of hours reasonably expended multiplied by the reasonable hourly rate. (Id.) California courts have consistently held that a computation of time spent on a case and the reasonable value of that time is fundamental to a determination of an appropriate attorneys' fee award. (Id.) The lodestar figure may then be adjusted, based on consideration of factors specific to the case, in order to fix the fee at the fair market value for the legal services provided. (Id.) Such an approach anchors the trial court's analysis to an objective determination of the value of the attorney's services, ensuring that the amount awarded is not arbitrary. (Id.) No specific findings reflecting the Court’s calculations are required. (Wershba v. Apple Computer, Inc. (2001) 91 Cal. App. 4th 224, 254-255.) The record need only show that the attorney fees were awarded according to the ‘lodestar' approach. (Id.)

Defendants move for attorney’s fees pursuant to the Court’s July 15, 2022 order dismissing Plaintiffs SRI, Grigorian, and Koygani’s complaint.

In their opposition brief, Grigorian and Koygani argue that there are 2 notices of appeal filed in this case that have enacted a stay, such that the Court cannot hear any motions. They argue that appeals were filed on: (1) the May 5, 2022 Court Ruling, the Civil Case Information Statement, Notice Designating Records on Appeal, and the Notice of Stay; and (2) the July 15, 2022 Court Ruling, the Civil Case Information Statement, Notice Designating Records on Appeal, and the Notice of Stay. (Opp. at Exs. 1 and 2.) Other than the notice and the two attached exhibits, no further arguments were presented and no substantive memorandum of points and authorities was filed.

With respect to the May 5, 2022 appeal, the Court notes that on September 26, 2022, a Remittitur was filed with this Court, attaching the Court of Appeal’s July 19, 2022 order deeming the appellants in default for their appeal filed on May 5, 2022.

With respect to the July 15, 2022 appeal, the Court notes that on August 23, 2022, a Notice of Default (Unlimited Civil Appeal) was filed notifying the appellants that their appeal was placed on default for failure to timely serve and file the notice designating the record on appeal, failure to timely pay the deposit for the reporter’s transcript, and failure to timely pay $50 for holding the reporter transcript deposit in trust.

As such, the appellants appear to be in default on both the May 5, 2022 and July 15, 2022 appeals filed.

Further, the Court may consider a motion for attorney’s fees though an appeal is pending. (CRC Rule 3.1702(b)(1) [“A notice of motion to claim attorney's fees for services up to and including the rendition of judgment in the trial court--including attorney's fees on an appeal before the rendition of judgment in the trial court--must be served and filed within the time for filing a notice of appeal under rules 8.104 and 8.108 in an unlimited civil case….”].) “[T]he filing of a notice of appeal does not deprive the trial court of jurisdiction to award attorney fees as costs post trial. Although a prevailing party at trial may not be the prevailing party after an appeal, it has been held that a motion for attorney fees is not premature despite the filing of a notice of appeal.” (Bankes v. Lucas (1992) 9 Cal.App.4th 365, 368.) “[A]n award of attorney fees as costs is a collateral matter which is embraced in the action but is not affected by the order from which an appeal is taken.” (Id. at 369 [see Civ. Code, §916(a)].) “Consequently, filing of a notice of appeal does not stay any proceedings to determine the matter of costs and does not prevent the trial court from determining a proper award of attorney fees claimed as costs.” (Id.)

As the appellants are in default for both the May 5, 2022 and July 15, 2022 appeals filed, the Court finds that there is no stay in this action. Thus, the Court will rule on the substantive merits of this motion for attorney’s fees.

The Agreement to Purchase Assets, ABC and Building Lease entered between Rodriguez sand SRI states:

15. Attorneys Fee. If either party files a [sic] action or bring [sic] any proceedings against the other arising from this agreement,… the prevailing party shall be entitle [sic] to recover as an element of its costs of suit, and not as damages, reasonable attorney fee [sic] to be fixed by the court.

The Sublease entered between Grigorian and Koygani (buyers) and Lopez (seller) also states:

11. Attorney’s fees. If any Party or Broker brings an action or proceeding involving the Premises whether founded in tort, contract or equity, or to declare rights thereunder, the Prevailing Party (as hereafter defined) in any such proceeding, action, or appeal thereon, shall be entitled to reasonable attorneys’ fees. Such fees may be awarded in the same suit or recovered in a separate suit, whether or not such action or proceeding is pursued to decision or judgment. The term, “Prevailing Party” shall include, without limitation, a Party or Broker who substantially obtains or defeats the relief sought, as the case may be, whether by compromise, settlement, judgment, or the abandonment by the other Party or Broker of its claim or defense. The attorneys’ fees award shall not be computed in accordance with any court fee schedule, but shall be such as to fully reimburse all attorneys’ fees reasonably incurred….

In addition, the AIR CRE – Guaranty of Lease entered between Rodriguez (lessor), SRI (lessee), and Grigorian and Koygani (guarantors) includes a provision as follows:

In the event any action be brought by said Lessor against Guarantors hereunder to enforce the obligation of Guarantors hereunder, the unsuccessful party in such action shall pay to the prevailing party therein a reasonable attorney’s fee. The attorneys’ fee award shall not be computed in accordance with any court fee schedule but shall be such as to fully reimburse all attorneys’ fees reasonably incurred.

Defendants argue that based on these contract provisions, they have shown that they are entitled to attorney’s fees against SRI, Grigorian, and Koygani. They argue that they have prevailed on the contract claims as Plaintiffs’ complaint was recently dismissed. The Court finds that Defendants are the prevailing party on the contracts and that the dismissal was not entered voluntarily or pursuant to a settlement. (See Civ. Code, § 1717(b)(2).)

Defendants also argue that they should be deemed the prevailing party with respect to the non-contractual, tort claims. Based on the language of the attorney’s fees provisions, the Court finds that the scope of the parties’ agreements included the recovery of fees in connection with tort claims. For example, the Purchase Agreement has broad language allowing fees to the prevailing party for any proceedings arising out of the agreement and the Sublease expressly includes fees for tort or contract claims. (See e.g., Mountain Air Enterprises, LLC v. Sundowner Towers, LLC (2017) 3 Cal.5th 744, 757 [“[T]he term ‘in connection with’ is broad, and has been interpreted to extend to both contract and tort claims in a contractual attorney fees provision.”].)

Here, the Court finds that Defendants have established their entitlement to attorney’s fees against Plaintiffs.

Defendants move for attorney’s fees. On page 3 of the moving papers, Defendants seek $172,932.50. (Mot. at p.3.) On page 9 and in the declaration of Michael A. Abramson, Defendants seek $170,932.50. (Mot. at p.9; Abramson Decl., ¶12.)

Mr. Abramson provides his billing records in Exhibit E. He states that he omitted billing entries for work performed on the cross action and for various appeals, except where the tasks were necessarily and integrally related to the defense of the main action. (Abramson Decl., ¶12, Ex. E.) He states that his billing rate is $375/hour; attorney Ilana Schwartzberg billed at $350/hour; and associate attorney billing was at $100/hour. (Id., ¶11.) Mr. Abramson states that he has expended 359.5 hours (or $134,812.50), Ms. Schwarzberg billed 6.4 hours (or $2,240), and other associates at his firm billed 310.05 hours (or $31,005) over the past 6 years in defending this action, for a total of $168,057.50. (Id., ¶13.) Mr. Abramson states that his associates billed 10 hours at $100/hour to draft this motion (or $1,000) and that he anticipates billing 5 hours at $375/hour to review any opposition and draft a reply brief (or $1,875), which would raise the total to $170,932.50. (Id., ¶¶11-13.)

The Court finds the hourly rates to be reasonable and will award fees at the rates requested.

o Mr. Abramson billed 77.4 hours. As some of the time spent appears to be excessive/duplicative and some of the entries are vague (references to “Attn.”; unidentified person “Hector”), the Court will reduce the hours sought by Mr. Abramson by 10 hours. (10-hour reduction at $375/hour = $3,750 reduction)

o Ms. Schwarzberg billed 6.4 hours, but the hours appear to be somewhat duplicative of the time spent by Mr. Abramson. Thus, the Court will reduce the hours recoverable to 2 hours only. (4.4-hour reduction at $350/hour = $1,540 reduction)

o Unidentified paralegal/associate billed 5.25 hours for “Grigorian v. Rodriguez – Attn. to order expunging lis pendens.” It is unclear what this billing entry means. Further, Mr. Abramson also billed time with respect to the lis pendens. Thus, the 5.25 hours at $100/hour will be reduced. ($525 reduction)

o Mr. Abramson billed 246.7 hours. As some of the time spent appears to be excessive/duplicative and some of the entries are vague (references to “Attn.,” “Hector,” “Noypitz,” “McBride,” etc.), the Court will reduce the hours sought by Mr. Abramson by 25 hours. (25-hour reduction at $375/hour = $9,375 reduction)

o Unidentified paralegal/associate billed 112.5 during this period. There are some billing entries that are vague. For example, the $750 billing for “Grigorian v. Rodriguez – 933 N Brand Lease Assignment” in “12/2016” and entries for “Grigorian v. Rodriguez” for “06/2017” and 7/9/17 for $180 and $190 respectively, without any further explanation. There are also other vague entries like “Secret Recipes v. Felix Lopez – Various Filings” (7/18/18) and other meetings with Mr. Abramson. The Court will also reduce some of time spent on motions and doing administrative tasks. Thus, the Court will reduce the hours spent by the paralegal/associate by 37.5 hours. (37.5-hour reduction at $100/hour = $3,750)

o Mr. Abramson billed 35.4 hours. The hours spent on the tasks during this period appear to be reasonable and will not be reduced.

o Unidentified paralegal/associate billed 192.3 hours. The Court will reduce some of the time billed for excessive time, such as time spent on the motion for summary judgment (over 38 hours), 18.4 hours spent on 3/14/22 to draft a motion for setoff, the 12.1 hours to spent on the motion for setoff on 3/15/22, etc. The Court will reduce the time spent by paralegal/associate by 65 hours. (65-hour reduction at $100/hour = $6,500)

o The 10 hours spent by paralegal/associate to draft this motion for attorney’s fees will be reduced by 5 hours. (5-hour reduction at $100/hour = $500)

o The Court will reserve whether to award any additional fees for defense counsel’s review of the opposition and reply brief (if any). Mr. Abramson anticipated $1,857 (5 hours at $375/hour) for this work.

The total amount of attorney’s fees that will be reduced is in the sum of $27,797. Thus, the total amount of attorney’s fees that will be awarded is $143,135.50 ($170,932.50 requested - $27,797 reduction).

Defendants/Cross-Complainants Felix Lopez and Luis Rodriguez’s motion for attorney’s fees is granted in the amount of $143,135.50.

[1] Although the minute order states that the Fifth Amended Cross-Complaint is still pending, the cross-complaint filed by Lopez and Rodriguez on February 23, 2021 is titled “Third Amended Cross-Complaint.”

Superior Court of California

County of Los Angeles

Department B