Judge John J. Kralik, Case EC068660 2023-04-14 Tentative Ruling

Plaintiff Arthur Ambarachyan (“Ambarachyan”) alleges that he is an investor who was defrauded by Defendants Sona Chukhyan (“Chukhyan”) and George Plavjian (“Plavjian”), as well as their co-conspirators KSR Realty, Inc. (“KSR”), Reta Narkaz, Ruzana Badeer (“Badeer”), Kiane Shabazian (“Shabazian”), and Mariam Kakoian (“Kakoian”). Ambarachyan alleges that Kakoian was the owner of property located at 1737 Bel Aire Dr. in Glendale and that Chukhyan and Kakoian took out loans on the property to pay off other investors that Chukhyan scammed or defrauded. In February 2015, Chukhyan and Kakoian approached Plaintiff for a loan in the amount of $355,000.00. Plaintiff lent the money and Kakoian signed a promissory note agreeing to pay the money back with interest, and the note was secured by a deed of trust against the property. However, the property was sold for $935,300.00 in 2017 and Plaintiff was not paid from the proceeds of the sale.

The fourth amended complaint (“4AC”), filed March 17, 2020, alleges causes of action for: (1) fraud and conspiracy against Kakoian; (2) negligent misrepresentation against Kakoian; (3) breach of contract against Kakoian; (4) equitable lien against Kakoian; (5) negligence against Lawyers Title; (6) equitable indemnity against Chukhyan, Plavjian, KSR, Badeer, Shabazian, and Narkaz; (7) comparative indemnity against Chukhyan, Plavjian, KSR, Badeer, Shabazian, and Narkaz; (8) declaratory relief against Chukhyan, Plavjian, KSR, Badeer, Shabazian, and Narkaz; and (9) declaratory relief against Petrosian, Baburyan, and Lawyers Title.

In the 4AC, Ambarachyan notes that the Court previously sustained the demurrer without leave to amend as to the 1^st, 4^th, and 9^th causes of action.

On June 20, 2022, Kakoian filed a third amended cross-complaint (“TAXC”), alleging causes of action for: (1) fraud – misrepresentation against Chukhyan, Plavjian, KSR, Badeer, Shabazian, and Narkaz; (2) fraud – concealment against Ambarachyan, Narkaz, Escrow, and National Properties; (3) breach of contract against Agakhanyan and Penway; (4) intentional interference with contractual relations against Chukhyan, Ambarachyan, Narkaz, Escrow, KSR, Shabazian, Badeer, and Plavjian; (5) breach of fiduciary duty against Chukhyan, Ambarachyan, Narkaz, Nazarian, Escrow, KSR, Shabazian, Badeer, Plavjian, and National; (6) constructive fraud against Plavjian, Chukhyan, KSR, Badeer, Shabazian, Ambarachyan, Narkaz, Escrow, and National Properties; (7) breach of statutory duty (Bus. & Profs. Code, § 10177(h)) against Ambarahcyan and Narkaz; (8) conversion against Chukhyan, Plavjian, Badeer, Shabazian, and Ambarachyan; and (9) IIED against Chukhyan, Plavjian, Badeer, Shabazian, Ambarachyan, Narkaz, Nazarian, KSR, and Escrow.

On June 28, 2022, Ms. Kakoian filed her initial motion for attorney’s fees, which was opposed by Ambarachyan. The matter came for hearing on October 5, 2022, and was taken under submission. On October 7, 2023, the Court denied without prejudice Ms. Kakoian’s motion for attorney’s fees. The Court previously found that Ms. Kakoian’s motion for attorney’s fees was premature as it was filed prior to entry of judgment. The Court stated that Ms. Kakoian may re-file the motion following entry of judgment in this matter.

On March 20, 2023, Ms. Kakoian filed a motion for attorney’s fees. The Court is not in receipt of an opposition brief.

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).)

“To ensure mutuality of remedy … 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.” (Santisas v. Goodin (1998) 17 Cal.4th 599, 611.)

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.)

Ms. Kakoian moves for attorney’s fees against Ambarchyan pursuant to the contractual provision in the loan agreement between Ms. Kakoian and Penway in the amount of $524,423, and an enhancement of 100% so that she seeks a total of $1,048,846 in attorney’s fees for her attorneys’ great risk in taking this case, the difficulty in defending the case, and the preclusion of other employment.

Ms. Kakoian seeks attorney’s fees pursuant to Paragraph 1.14 of the Promissory Note dated February 6, 2015 that was entered between M.s Kakoian and Penway. (Mot., Ex. A.) Paragraph 1.14 states:

Enforcement Fees and Costs. Borrower [Ms. Kakoian] shall immediately reimburse Holder [Penway LLC and/or its transferees or assigns] for all fees and costs, including reasonable attorneys’ fees and experts’ fees and costs, incurred by Holder for: (a) enforcement of this Note or any of its terms, or the exercise of any rights or remedies hereunder and/or at law, in equity or otherwise, whether or not any action or proceeding is filed; (b) representation of Holder in any bankruptcy, insolvency, reorganization or other debtor-relief or similar proceeding of or relating to Borrower or Borrower’s transferees or assigns, to any person liable (by way of guaranty, assumption, endorsement or otherwise) upon any of the obligations of this Note, or to the Property; or (c) representation of Holder in any action or proceeding relating to the Property, whether commenced by Holder or any other person, including foreclosure, receivership, lien or stop-notice enforcement, bankruptcy, eminent domain and probate actions or proceedings. All such fees and costs shall bear interest until paid at the rate applicable from time to time under this Note,

Ms. Kakoian also moves for attorney’s fees pursuant to the Settlement Agreement and Mutual Release entered between Ms. Kakoian and Ambarachyan, Nazarian, Escrow on Brand, National Properties, Penway, and Agakhanyan on January 19, 2023. (Mot. at Ex. 3.) According to the Settlement Agreement, at Section B, under the section entitled “Concerning the TAXC,” Ambarachyan shall pay Ms. Kakoian $40,000 for a dismissal of the TAXC after the settlement amount is paid, each party shall bear their own attorney’s fees and costs in connection with the TAXC, and there shall be no prevailing party on the TAXC. (Mot., Ex. 3 [Settlement Agreement at § B, at page 2].) In the section entitled “Concerning the 4AC,” the parties agreed as follows:

Kakoian is now and forever deemed the prevailing party on the 4AC and shall be entitled to her attorney fees by a “Motion for Fees” from Ambarachyan, which will be ruled on by the court in this Action. Kakoian shall not be entitled to her bill of costs. Ambarachyan will have the opportunity to oppose Kakoian’s Motion for Fees, and both Ambarachyan and Kakoian will retain the rights provided by statute to appeal the Court’s decision as to the Motion for Fees.

In the 4AC (filed on March 17, 2020), the 1^st (fraud and conspiracy), 2^nd (negligent misrepresentation), 3^rd (breach of contract), and 4^th (equitable lien) causes of action were alleged against Ms. Kakoian. In the 4AC, Ambarachyan alleges that the Court sustained a demurrer without leave to amend as to the 1^st, 4^th, and 9^th causes of action. On March 15, 2021, the Court granted Ms. Kakoian’s motion for judgment on the pleadings without leave to amend as to the 3^rd cause of action in the 4AC, finding that Ambarachyan had not alleged sufficient facts to support a breach of contract cause of action against Ms. Kakoian despite providing Ambarachyan multiple opportunities to amend the complaint. On April 22, 2022, the Court granted Ms. Kakoian’s motion for judgment on the pleadings without leave to amend as to the 2^nd cause of action in the 4AC. Ms. Kakoian argues that she was successful against Ambarachyan’s breach of contract claim and caused the dismissal of the 3^rd cause of action, which entitles her to attorney’s fees.[1]

Ms. Kakoian argues that she has successfully defeated all of Ambarachyan’s claims. (Mot. at p.7.) The motion is directed at Ambarachyan only and does not seek fees against any other parties.

Based on the procedural history of the case and as a result of the Settlement Agreement, the Court deems Ms. Kakoian as the prevailing party on the 4AC as against Ambarachyan. Further, Ms. Kakoian has shown her entitlement to attorney’s fees against Ambarachyan based on the Promissory Note and the Settlement Agreement. As such, the Court will determine whether the requested fees are reasonable.

Ms. Kakoian argues that her counsel has incurred $524,243.10 in attorney’s fees for defending this action and that she seeks a 100% enhancement so that the total amount of attorney’s fees she seeks is $1,048,486.20. Ms. Kakoian argues that H. Jack Kakoian has spent 866.64 hours on this case at $300/hour (= $259,991.10) and David L. Amkraut has spent 556.32 hours at $475/hour (= $264,252.00). (Mot. at p.6.)

“The reasonable hourly rate is that prevailing in the community for similar work. [Citation.] 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.” (PLCM Group v. Drexler (2000) 22 Cal.4th 1084, 1095.) An enhancement may be awarded upon the discretion of the Court upon the consideration of several factors as stated in Ketchum v. Moses (2001) 24 Cal.4th 1122:

Of course, the trial court is not required to include a fee enhancement to the basic lodestar figure for contingent risk, exceptional skill, or other factors, although it retains discretion to do so in the appropriate case; moreover, the party seeking a fee enhancement bears the burden of proof. In each case, the trial court should consider whether, and to what extent, the attorney and client have been able to mitigate the risk of nonpayment, e.g., because the client has agreed to pay some portion of the lodestar amount regardless of outcome. It should also consider the degree to which the relevant market compensates for contingency risk, extraordinary skill, or other factors under Serrano III. We emphasize that when determining the appropriate enhancement, a trial court should not consider these factors to the extent they are already encompassed within the lodestar. The factor of extraordinary skill, in particular, appears susceptible to improper double counting; for the most part, the difficulty of a legal question and the quality of representation are already encompassed in the lodestar. A more difficult legal question typically requires more attorney hours, and a more skillful and experienced attorney will command a higher hourly rate. (See Margolin v. Regional Planning Com. (1982) 134 Cal.App.3d 999, 1004 [185 Cal.Rptr. 145].) Indeed, the “ 'reasonable hourly rate [used to calculate the lodestar] is the product of a multiplicity of factors ... the level of skill necessary, time limitations, the amount to be obtained in the litigation, the attorney's reputation, and the undesirability of the case.' ” (Ibid.) Thus, a trial court should award a multiplier for exceptional representation only when the quality of representation far exceeds the quality of representation that would have been provided by an attorney of comparable skill and experience billing at the hourly rate used in the lodestar calculation. Otherwise, the fee award will result in unfair double counting and be unreasonable. Nor should a fee enhancement be imposed for the purpose of punishing the losing party.

Mr. Kakoian states that he was admitted to practice in California on August 13, 2018. (J. Kakoian Decl., ¶4.) He states that he began representing his aunt, Mrs. Kakoian, a month after he became barred and has been defending her from September 10, 2018 to April 29, 2022. (Id., ¶¶5, 7.) Mr. Kakoian states that in defending the action, Mrs. Kakoian had to take 11 depositions and defend 4 depositions, file 2 demurrers and 2 MJOPs against the 5 versions of Ambarachyan’s complaint, attend many hearings, appear for 2 mediation sessions, etc., and that all the work performed was necessary. (Id., ¶11.) He states that his timesheet strictly bills for the time spent (866.65 hours) on defending Mrs. Kakoian against the complaint, that the time spent prosecuting her cross-complaint exceeded 1,500 hours (which he states have been removed from the timesheets), and that entries that were not reasonably necessary have been deleted from the timesheet. (Id., ¶¶13, 15, Ex. 2.) He states his billing rate is $300/hour, which he believes is compatible with the Los Angeles area. (Id., ¶14.) He requests an enhancement of 100% because he accepted the defense of the complaint contingent upon his ability to prevail on the claims and collect attorney’s fees from Plaintiff, he has not yet received compensation for his time or work from Mrs. Kakoian, and based on the difficulty of the defense and the work performed. (Id., ¶¶6, 18.)

Mr. Amkraut also provides his declaration in support of the motion. He states that he has been practicing law since 1987. (Amkraut Decl. at page 18 of the motion, lines 7-9.) He states that his billing rate is $475/hour and that the work he performed was reasonably necessary to defend Mrs. Kakoian. (Id. at p. 18, lines 10-14.) He states that he excluded time that might be excessive, redundant, or unnecessary and did not include time billed by his paralegal or legal secretary. (Id. at p. 18, lines 21-23.) He states that the hours billed understates the actual time he spent because he did not record time for calls he made while driving where he discussed the case, as well as his communications with real estate brokers, title officers, and others. (Id. at p. 18, lines 24-27.) Mr. Amkraut states that he and Mr. Kakoian were “outgunned” by Ambarachyan’s greater and wealthier resources and attorneys, opposing counsel tried to “grind down” Mrs. Kakoian and her counsel with burdensome discovery and numerous depositions, and Ambarachyan refused to provide any response to discovery. (Id. at p.10, line 2 to p.2, line 14.) He seeks an enhancement for similar reasons stated by Mr. Kakoian. (Id. at p.21 at lines 2-7.) The Court notes that Mr. Amkraut has not provided billing records to support the hours that he billed on this case. (Exhibit 2 of the moving papers only includes the billing records of Mr. Kakoian.)

While the Court is in receipt of Mr. Kakoian’s billing records, the Court is not in receipt of any billing records to support the hours billed by Mr. Amkraut. The Court would like to see a copy of Mr. Amkraut’s billing records to ensure the time spent by Mr. Amkraut was reasonable and necessary and are not duplicative of the time spent by Mr. Kakoian in handling this action.

Defendant/Cross-Complainant Mariam Kakoian’s motion for attorney’s fees against Plaintiff Arthur Ambarachyan is continued to May 5, 2023 at 8:30 a.m. Defendant is ordered to file a supplemental declaration of her counsel David L. Amkraut, which includes a copy of the billing records for the time that he billed in this case.

[1] According to Ms. Kakoian, the action will still proceed to trial as Ms. Kakoian still has claims on the cross-complaint against Plavjian, Chukhyan, Badeer, and Shabazian. (Mot. at p.3.)

Superior Court of California

County of Los Angeles

Department B