Judge: Jon R. Takasugi, Case: BC604859, Date: 2023-04-10 Tentative Ruling

Case Number: BC604859    Hearing Date: April 10, 2023    Dept: 17

Superior Court of California

County of Los Angeles

DEPARTMENT 17

TENTATIVE RULING

On 12/22/15, Plaintiff Tower Hotels Fund 2014, LLC, on behalf of Tower Kauai Lagoons, LLC brought suit against Defendants Kauai Lagoons Grand Ave Partners, LLC; Timbers Resort Management, LLC; and Tower Kauai Lagoons, LLC. On 8/19/16, Plaintiff filed an FAC, alleging: (1) breach of contract; (2) breach of fiduciary duty; (3) intentional misrepresentation; (4) negligent misrepresentation; (5) accounting; and (6) declaratory relief.

            Defendant Kauai Lagoons Grand Avenue Partners, LLC moves for $3,431,281.00 in attorney’s fees.

Legal Standard

The party claiming attorneys’ fees must establish entitlement to such fees and the reasonableness of the fees claimed.  (Civic Western Corporation v. Zila Industries, Inc. (1977) 66 Cal.App.3d 1, 16.)  “Except as attorney’s fees are specifically provided for by statute, the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties[.]”  (CCP § 1021.)

“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.)  In exercising its discretion, the court should consider a number of factors, including the nature of the litigation, its difficulty, the amount involved, the skill required in handling the matter, the attention given, the success or failure, and the resulting judgment.  (Ibid.)

In determining what constitutes a reasonable compensation for an attorney who has rendered services in connection with a legal proceeding, the court may and should consider the nature of the litigation, its difficulty, the amount involved, the skill required and the skill employed in handling the litigation, the attention given, the success of the attorneys’ efforts, their learning, their age, and their experience in the particular type of work demanded the intricacies and importance of the litigation, the labor and necessity for skilled legal training and ability in trying the cause, and the time consumed.  (Stokus v. Marsh (1990) 217 Cal.App.3d 647, 657 (Stokus).)

In determining the proper amount of fees to award, courts use the lodestar method.  The lodestar figure is calculated by multiplying the total number of reasonable hours expended by the reasonable hourly rate.  “Fundamental to its determination … [is] a careful compilation of the time spent and reasonable hourly compensation of each attorney … in the presentation of the case.”  (Serrano v. Priest (1977) 20 Cal.3d 25, 48 (Serrano III).)  A reasonable hourly rate must reflect the skill and experience of the attorney.  (Id. at 49.)  “Prevailing parties are compensated for hours reasonably spent on fee-related issues.  A fee request that appears unreasonably inflated is a special circumstance permitting the trial court to reduce the award or deny one altogether.”  (Serrano v. Unruh (1982) 32 Cal.3d 621, 635 (Serrano IV); see also Weber v. Langholz (1995) 39 Cal.App.4th 1578, 1587 (“The trial court could make its own evaluation of the reasonable worth of the work done in light of the nature of the case, and of the credibility of counsel’s declaration unsubstantiated by time records and billing statements.”)

Reasonable attorney fees should be based on an objective standard of reasonableness, i.e., the market value of services rendered, not on some notion of cost incurred. (PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1090.)  The value of legal services performed in a case is a matter in which the trial court has its own expertise.  (Id. at 1096.)  The trial court may make its own determination of the value of the services contrary to, or without the necessity for, expert testimony.  (Ibid.)  The trial court makes its determination after consideration of a number of factors, including the nature of the litigation, its difficulty, the amount involved, the skill required in its handling, the skill employed, the attention given, the success or failure, and other circumstances in the case.  (Ibid.)

Discussion

Civil Code section 1717 provides:

(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.

The parties do not dispute that there is a provision in the Operating Agreement that entitles the prevailing party to attorney’s fees.  The issue is whether Defendant is entitled to attorney’s fees based on whether or not it incurred them. 

            Plaintiff argues that Defendant fails to provide evidence that it actually incurred attorney’s fees or that it paid any attorney’s fees.  Plaintiff requests the Court deny Defendant’s motion on the grounds that it failed to sustain its burden in proving it is entitled to attorney’s fees.  Plaintiff points to the fact that all invoices were directed to non-party Oaktree Capital Management, a non-party to the Operating Agreement.

            In reply, Defendant argues that it did pay for attorney’s fees incurred and that the bills were sent to Oaktree because two of Tower Kauai Lagoons, LLC’s executive committee members are also employees of Oaktree, and Defendant uses the same office as Oaktree.  However, even if Defendant did not directly pay its counsel’s fees, it still incurred attorney’s fees under Civil Code section 1717.  As stated in Lolley v. Campbell (2002) 28 Cal. 4th 367, 373, “California courts have routinely awarded fees to compensate for legal work performed on behalf of a party pursuant to an attorney-client relationship, although the party did not have a personal obligation to pay for such services out of his or her own assets.” 

            Under Lolley, the Court finds that Defendant has incurred attorney’s fees since it engaged counsel to provide legal services.  “[A]n award of attorney fees is not necessarily contingent upon an obligation to pay counsel.”  (Lolley v. Campbell (2002) 28 Cal.4th 367, 373.) 

Rate

David P. Crochetiere and Mark Baute each claim $750 an hour, which was increased to $825 in 2023.  Mr. Crochetiere claims he and Mr. Baute served as Defendanat’s lead trial counsel.  Mr. Crochetiere and Mr. Baute have been law partners for over 30 years.  Mr. Crochetiere is a 1984 graduate of the University of Michigan Law School, a commercial litigator and has tried more than 35 cases to verdict as lead counsel.  Mr. Baute is a 1986 graduate of UCLA Law School and a commercial litigator who has tried more than 50 cases to verdict as lead counsel.  Counsels claim that these rates are reasonable and less than market given their legal skill and experience, however, Counsels’ evidentiary support is lacking as they do not provide any authority or evidence which otherwise show the market rate or demonstrate how the claimed rates are reasonable.  However, considering the duration of the litigation, numerous issues, and extent of discovery, the Court finds that a reasonable hourly rate for attorneys with similar skill and experience is $750 an hour.  (Stokus v. Marsh (1990) 217 Cal.App.3d 647, 657 (Stokus).)

In Mr. Crochetiere’s declaration, he states that Bryan D. Roth claims $450 per hour.  However, the chart provided in the moving papers show Mr. Roth’s rate to be $475 an hour, with an increased rate of $525 for 2023.  Mr. Roth is a 2014 graduate of U.C. Hastings College of the Law and is a commercial litigator with over eight years of experience.  Despite Counsel’s mistake in stating different rates in the moving papers and declaration, the Court finds the $450 rate to be reasonable. 

There are four other attorneys and staff members who worked on this matter over its seven-year history.  Scott Street, worked on the case from 2017 to 2020.  Mr. Street claims $575 an hour.  Mr. Street is a Dean’s List graduate of Loyola Law School, and a commercial litigator who started his career with the law firm of Akin Gump Strauss Hauer & Feld.  Counsel does not state when Mr. Street graduated from law school nor how many years of experience he has.  Accordingly, the Court finds $450 an hour to be a reasonable rate. 

Frank Broccolo assisted Mr. Street and worked on the case from 2016 to 2018.  Mr. Broccolo claims $575 an hour.  Mr. Broccolo is a 2000 graduate of U.C. Berkeley School of Law and a commercial litigator.  The Court finds this rate to be reasonable.

Laura E. Robbins worked on the case from 2016 to 2016.[1]  Ms. Robbins claims $575 an hour.  Ms. Robbins is a 2004 Stanford Law School graduate and a commercial litigator who now works as a Deputy Attorney General.  The Court finds this rate to be reasonable.

Although Mr. Crochetiere states in his declaration that Jacob R. Patterson is a paralegal, the chart provided in the moving papers claim that Mr. Patterson is an attorney who worked from 2016 to 2017 and claims $475 an hour.  The Court finds no basis for this award since Counsel fails to provide support for this rate.  Therefore, the Court will not consider Mr. Patterson’s hours in the fee calculation.

Mr. Crochetiere does not provide any evidence of experience and skill for the following attorneys identified in the chart: Sasha Farahi (worked from 2016 to 2016)[2] who claims $475 an hour and Monique Alonso (worked from 2022 to 2023) who claims $600 an hour.  Nor does he provide any information regarding the professional staff identified in the chart: Johonna Veloso, Julie Diep, and Irma Gomez.  All of whom claim $185 an hour.  Given Counsel’s lack of information, the Court is unable to determine the reasonableness of the proposed rates.  Thus, the Court will not consider these attorneys and professional staff in the fee calculation.

            As Defendant points out in its reply, the Court agrees that Plaintiff’s arguments are without merit.  Plaintiff argues for a blanket reduction of a percentage without providing any evidentiary support for its proposal.  Plaintiff fails to sufficiently challenge the reasonableness of counsel’s rates, and merely argues that Defendant fails to satisfy its burden.  Additionally, Plaintiff fails to provide any authority for its claim that Defendant should be denied fees for the work done by attorneys who are no longer part of the case and/or who did not participate in trial.  If these fees were reasonably incurred, then the Court fails to see why they should be denied.  Thus, Plaintiff’s proposal for fee calculation will not be considered.

Hours

            Section 14.04 of the TKL Operating Agreement states: “If the Company or any Member obtains a judgment against any other Member by reason of the breach of this Agreement or the failure to comply with the terms hereof, reasonable attorney’s fees and costs as fixed by the Court shall be included in the judgment.”  The parties dispute whether Defendant’s attorney’s fees should be apportioned.  Defendant argues that the Court need not apportion because Defendants are not seeking fees for work done which can be logically distinguished from the defense of Plaintiff’s breach of contract claim.  Plaintiff argues that fees must be properly apportioned to restrict prohibited costs associated with litigating tort claims, pursuing cross-claims, and defending Defendant Timbers.

            It appears that parties do agree that Defendant is only entitled to attorney’s fees associated with the breach of contract claim as the attorney’s fees provision in the Operating Agreement only allows recovery for fees incurred from breach of the agreement or failure to comply with its terms.  Defendant claims that it reviewed the invoices and excluded fees for work done on the tort claims and cross-complaint.  Upon review of the invoices and the claimed hours in the chart provided in the moving papers, it does appear that Defendant has eliminated fees which could be solely attributed to work which was not for the breach of contract claim.  The hours reflected in the chart show a reduction of hours billed in the invoice. 

            Plaintiff has not adequately shown that Defendant’s requested fees are unreasonable and excessive.  Plaintiff cannot request for an arbitrary reduction of fees based on a percentage, as this does not demonstrate the unreasonableness of Defendant’s claimed rates and/or hours.  The Court finds that Defendant has sufficiently shown its entitlement to the requested fees and demonstrated proper apportionment by eliminating those fees which were entirely separate from the breach of contract claim.  Plaintiff fails to sufficiently rebut this.  Plaintiff argues that the requested fees are unreasonable because it was only for a single claim, but it fails to recognize that this was a seven-year litigation, with a jury trial, and many issues which were inextricably entangled with the contract matter.  The Court finds Defendant’s initial showing of evidence to be sufficient in demonstrating that it properly distinguished the contract fees from the remaining unrecoverable fees.  Plaintiff is the one who fails to sustain its burden in rebutting Defendant’s evidence.

            After careful review of the invoices and comparing the total hours for each attorney with the hours claimed in the chart, the Court finds the following calculation to be reasonable.

            As discussed above, the Court has not included the hours for those individuals who were not provided a description, preventing the Court from assessing the reasonableness of their rates.  Those individuals are as follows: Jacob R. Patterson, Sasha Farahi, Monique Alonso, Johonna, Veloso, Julie Diep, and Irma Gomez.  As for the hours, the Court finds the hours provided in the chart to be reasonable.  For Mr. Baute, the moving papers claim he worked 785.9 hours, while a calculation of the hours from the invoices reflect a total of 836.3 hours.  This reduction indicates that Defendant appropriately excluded work which should not be claimed.  For Mr. Crochetiere, the moving papers claim he worked 1,135 hours, but a calculation of the total hours from the invoices shows a total of 844.7 hours.  Thus the Court has taken the smaller hours for purposes of the fee calculation.  For Mr. Roth, the moving papers claim he worked 1,280 hours, while a calculation of the hours from the invoices reflect a total of 1,395.6 hours.  This reduction indicates that Defendant appropriately excluded work which should not be claimed.  For Mr. Stret, the moving papers claim he worked 1,207 hours, while a calculation of the hours from the invoices reflect a total of 1,216.2 hours.  This reduction indicates that Defendant appropriately excluded work which should not be claimed.  For Mr. Broccolo, the moving papers claim he worked 456.7 hours, a calculation of the hours from the invoices reflect the same hours.  Finally, for Ms. Robbins, the moving papers claim she worked 127.2 hours, while a calculation of the hours from the invoices reflect a total of 130.7 hours.  This reduction indicates that Defendant appropriately excluded work which should not be claimed. 

Conclusion

            In light of the foregoing, the Court GRANTS in part Defendant’s motion for attorney’s fees for a reduced award of $2,604,702.50.

It is so ordered.

Dated: April    , 2023

   Hon. Jon R. Takasugi
   Judge of the Superior Court

Parties who intend to submit on this tentative must send an email to the court at smcdept17@lacourt.org by 4 p.m. the day prior as directed by the instructions provided on the court website at www.lacourt.org.  If a party submits on the tentative, the party’s email must include the case number and must identify the party submitting on the tentative.  If all parties to a motion submit, the court will adopt this tentative as the final order.  If the department does not receive an email indicating the parties are submitting on the tentative and there are no appearances at the hearing, the motion may be placed off calendar. 

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