Judge: Katherine Chilton, Case: 19STLC10602, Date: 2022-08-11 Tentative Ruling

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Case Number: 19STLC10602    Hearing Date: August 11, 2022    Dept: 25

PROCEEDINGS:      MOTION FOR ATTORNEY’S FEES AND COSTS

MOVING PARTY:   Plaintiff Maria Teresa Juarez-Rivera

RESP. PARTY:         Defendant Jesus Plascencia

MOTION FOR ATTORNEY’S FEES AND COSTS

(CCP § 1281.97, 1281.99)

TENTATIVE RULING:

Plaintiff Maria Teresa Juarez-Rivera’s Motion for Attorney’s Fees is GRANTED in the amount of $31,801.85 as follows: $30,000.00 in attorney’s fees and $1,801.85 in costs.

SERVICE: 

[X] Proof of Service Timely Filed (CRC, rule 3.1300)                 OK

[X] Correct Address (CCP §§ 1013, 1013a)                                                 OK

[X] 16/21 Court Days Lapsed (CCP §§ 12c, 1005(b))                     OK

OPPOSITION:          Filed on August 1, 2022.                                    [X] Late                       [   ] None

REPLY:                     None filed as of August 5, 2022.               [   ] Late                      [X] None

ANALYSIS:

I.                Background

On November 15, 2019, Plaintiff Maria Teresa Juarez-Rivera (“Plaintiff”) filed this action against Defendants Jesus Plascencia dba PM Auto Sales (“Plascencia” or “Dealer”), Westlake Services, LLC dba Westlake Financial Services (“Westlake”), and Hudson Insurance Company (“Hudson”) (collectively “Defendants”) for (1) violation of Consumer Legal Remedies Act, Civil Code § 1750 et seq.; (2) violation of California Business and Professions Code § 17200, et seq., Unlawful Acts or Practices; (3) negligent misrepresentation; (4) violation of Civil Code § 1632; and (5) claim against surety.  Defendants Hudson and Defendant Plascencia filed their Answers on January 3 and January 8, 2020, respectively.

Plaintiff filed a Motion to Compel Arbitration on January 2, 2020, which was granted by this Court on October 20, 2020.  (10-20-20 Minute Order.)  On February 19, 2021, Plaintiff filed a Motion to Lift Stay of the proceedings; Defendant filed an Opposition April 13, 2021.  At the April 27, 2021, status conference, the parties represented that arbitration could not be conducted, so the Court scheduled the matter for trial for March 14, 2022.  (4-27-21 Minute Order.)

On September 21, 2021, Plaintiff filed the First Amended Complaint.  Hudson filed an Answer to the First Amended Complaint on October 19, 2021 and Plascencia filed an Answer on December 6, 2021, followed by Amended Answer on January 6, 2022.  Westlake filed an Answer on January 14, 2022.

On March 14, 2022, the Court was informed that the case had settled with two of the defendants and Plaintiff would be dismissing causes of action one through five (1-5) and only proceeding with the sixth cause of action for Violation of Code of Civil Procedure § 1281.97 and 1281.99.  (See 9-21-21 Amended Complaint, 3-14-22 Minute Order.)  Plaintiff filed a Request for Dismissal of Defendants Hudson and Westlake on May 4, 2022, and May 24, 2022, respectively.

On May 12, 2022, Plaintiff filed the instant Motion for Fees and Costs, in the amount of $37,901.65, against Defendant Plascencia.  Defendant Plascencia filed an Opposition on August 1, 2022, and served it on Plaintiff by overnight delivery.  (Opposition p. 33.)  No reply was filed.

II.              Legal Standard

Attorney’s fees may be recovered as costs when authorized by contract, statute, or law.  (Code Civ. Proc., § 1033.5(a)(10).)

“In an employment or consumer arbitration that requires, either expressly or through application of state or federal law or the rules of the arbitration provider, the drafting party to pay certain fees and costs before the arbitration can proceed, if the fees or costs to initiate an arbitration proceeding are not paid within 30 days after the due date the drafting party is in material breach of the arbitration agreement, is in default of the arbitration, and waives its right to compel arbitration under Section 1281.2..”  (Code of Civ. Proc. § 1281.97(a).)  “If the drafting party materially breaches the arbitration agreement and is in default under subdivision (a), the employer or consumer may do either of the following: (1) [w]ithdraw the claim from arbitration and proceed in a court of appropriate jurisdiction [or] (2) [c]ompel arbitration in which the drafting party shall pay reasonable attorney’s fees and costs related to the arbitration.” (Code of Civ. Proc. § 1281.98(b)(1).)  “If the employee or consumer proceeds with an action in a court of appropriate jurisdiction, the court shall impose sanctions on the drafting party in accordance with Section 1281.99.”  (Code of Civ. Proc. § 1281.97(d).)

Under § 1281.99, “[t]he court shall impose a monetary sanction against a drafting party that materially breaches an arbitration agreement pursuant to subdivision (a) of Section 1281.97 … by ordering the drafting party to pay the reasonable expenses, including attorney’s fees and costs, incurred by the employee or consumer as a result of the material breach.”  (CCP § 1281.99(a).)  Other types of sanctions are also available, in addition to monetary sanctions.  (Code of Civ. Proc. § 1281.99(b).)

III.            Discussion

A.    Entitlement to Fees and Costs

On or around March 5, 2019, Plaintiff sent Defendant a letter pursuant to the Consumer Legal Remedies Act demanding arbitration with the American Arbitration Association if Defendant did not make a reasonable offer to remedy the Plaintiff’s grievance.  (Sadr Decl. ¶ 3; Ex. 1.)  No reasonable offer of correction was made, so Plaintiff filed a claim with the American Arbitration Association (“AAA”) on July 11, 2019.  (Ibid. at ¶¶ 4-5.)  On July 23, 2019, the AAA sent a letter to Plaintiff and Defendants stating that, due to Defendant Plascencia’s previous refusal to comply with AAA rules, it would not “arbitrate the case unless Dealer re-registered its name with AAA or a court order was obtained.”  (Ibid. at ¶ 6; Ex. 3.)  As a result, Plaintiff had to file a Motion to Compel Arbitration with the Court.  (Ibid. at ¶ 8; 1-2-20 Motion.)  On October 20, 2020, the Court granted the Motion, ordered arbitration before the AAA, and ordered Defendants to pay outstanding fees to AAA to proceed with the arbitration.  (Sadr Decl. ¶ 9; Ex. 5 – 10-20-20 Minute Order.)  Plaintiff proceeded with filing a Statement of Claims with the AAA; the AAA accepted arbitration over the case and required Defendants to “pay all required arbitration fees by December 7, 2020,” and if it did not receive the payments by January 6, 2021, it would close the case.  (Sadr Decl. ¶¶ 10-11; Ex. 6.)  The email was also delivered to Defendant’s counsel.  (Sadr Decl. ¶ 11; Ex. 7.)  Defendants did not pay the required fees by the deadline.  (Ibid. at ¶ 12.)  The AAA sent another letter on December 9, 2020, reminding Defendants that it had to receive the payment by January 6, 2021, and that “the claimant has met the filing requirements, [so] respondent’s fee is due regardless of whether the case settles or is withdrawn.”  (Ibid. at ¶ 13; Ex. 8.)  Defendants did not pay the required fees, so on February 10, 2021, the AAA sent another letter to all parties declining to arbitrate the case and closing the file.  (Ibid. at ¶ 16; Ex. 10.)

Plaintiff argues that Dealer is the “drafting party” in this case and because of its refusal to pay the arbitration fees, in violation of a court order, it has materially breached the arbitration clause.  (Mot. p. 7.)  As a result, Plaintiff has had to withdraw the claim from arbitration and proceed with litigation.  (Ibid. p. 5.)  Plaintiff requests an order whereby Defendant will pay all reasonable attorney’s fees associated with the litigation.

            Defendant opposes Plaintiff’s Motion on the grounds that 1) Plaintiff failed to serve the Motion on the Defendant and 2) Plaintiff waived the right to arbitration because she failed to reschedule the Arbitration Hearing and lifted the stay on the case in the middle of settlement negotiations.  (Opposition p. 2.)  First, Defendant states that from November 4, 2020, through March 2021, the parties were negotiating settlement and therefore, “incurring the expense of arbitration was unnecessary.”  (Ibid. at p. 3.)  Defendant did not find out about Plaintiff’s request for arbitration until December 9, 2020, and requested a hold on the arbitration given that settlement negotiations were ongoing.  (Ibid. at p. 5.)  Defendant contends that, since the parties were actively negotiating settlement, Defendant Plascencia did not violate the arbitration requirements.  Yet, in the middle of those negotiations, Plaintiff lifted the stay on the proceedings.  (Ibid. at p. 3.)  Furthermore, Defendant argues that Plaintiff’s conduct was inconsistent with its attempts to arbitrate because Plaintiff was also negotiating a settlement with Defendant and by stalling negotiations, Plaintiff was “responsible for the failure to reschedule arbitration while settlement negotiations were ongoing.”  (Ibid. at p. 8.)  He argues that “Plaintiff committed [a breach of Code of Civil Procedure § 1281.97] by lulling Defendant PLASCENCIA into believing the parties were achieving a settlement, allowing the arbitration deadline to pass, and moving to lift the stay and proceed with litigation in lieu of arbitration.”  Second, Defendant states that it never received a copy of the Motion, despite the Plaintiff’s Proof of Service showing that it was served.  (Ibid. at p. 3.)  Given that Defendant’s counsel discovered the Motion on July 29, 2022, he did not have sufficient time to file a timely Opposition.  (Ibid. at p. 4.)

The Court finds that Plaintiff is entitled to attorney’s fees and costs associated with the abandoned arbitration proceeding.  As a matter of law, Defendant’s failure to pay arbitration costs constituted a material breach of the arbitration agreement, placed Defendant in default of the arbitration provision, and waived Defendant’s right to compel Plaintiff to proceed with the arbitration.  (Code of Civ. Proc. § 1281.98(a).)  Further, as a matter of law, Plaintiff had the statutory right to withdraw her claims from arbitration, proceed with her claims in court, bring a motion to recover all attorney’s fees and all costs associated with the abandoned arbitration proceeding, and obtain a court order imposing monetary sanctions on Defendant.  (Code of Civ. Proc. § 1281.98(b)(1), (c)(1)-(2).)  Plaintiff’s simultaneous attempts to settle the case do not excuse Defendant’s failure to pay the arbitration fees and did not prohibit Plaintiff from lifting the stay on the arbitration.

Defendant also argues that he was never served with the Notice of the Motion and the Motion.  Plaintiff’s Proof of Service, filed with the Motion, demonstrates that Defendant was served on May 12, 2022, by mail and email.  Additionally, Defendant has filed an Opposition, so he is aware of the Motion.

The Court considers both the Motion and the Opposition and finds that Plaintiff is entitled to reasonable attorney’s fees and costs.

B.    Reasonableness

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.  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.  The lodestar figure may then be adjusted, based on factors specific to the case, in order to fix the fee at the fair market value for the legal services provided.  (Serrano v. Priest (1977) 20 Cal.3d 25, 49.)  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., at p. 48, fn. 23.)  After the trial court has performed the lodestar calculations, it shall consider whether the total award so calculated under all of the circumstances of the case is more than a reasonable amount and, if so, shall reduce the award so that it is a reasonable figure.  (PLCM Group v. Drexler (2000) 22 Cal.4th 1084, 1095-1096.)

As explained in Graciano v. Robinson Ford Sales, Inc. (2006) 144 Cal.App.4th 140, 154:

“[T]he lodestar is the basic fee for comparable legal services in the community; it may be adjusted by the court based on factors including, as relevant herein, (1) the novelty and difficulty of the questions involved, (2) the skill displayed in presenting them, (3) the extent to which the nature of the litigation precluded other employment by the attorneys, (4) the contingent nature of the fee award. [Citation.] The purpose of such adjustment is to fix a fee at the fair market value for the particular action. In effect, the court determines, retrospectively, whether the litigation involved a contingent risk or required extraordinary legal skill justifying augmentation of the unadorned lodestar in order to approximate the fair market rate for such services. . . . This 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.” [Internal citations and internal quotation marks omitted.]

(Graciano v. Robinson Ford Sales, Inc. (2006) 144 Cal.App.4th 140.)  “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. [Citations.]  The value of legal services performed in a case is a matter in which the trial court has its own expertise. . . . 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.  [Citations.]”  (Melnyk v. Robledo (1976) 64 Cal.App.3d 618, 623624.)

No specific findings reflecting the court’s calculations are required.  The record need only show that the attorney fees were awarded according to the “lodestar” or “touchstone” approach.  The court’s focus in evaluating the facts should be to provide a fee award reasonably designed to completely compensate attorneys for the services provided.  The starting point for this determination is the attorney’s time records.  (Horsford v. Board of Trustees of Calif. State Univ. (2005) 132 Cal.App.4th 359, 395-397 [verified time records entitled to credence absent clear indication they are erroneous].)  However, California case law permits fee awards in the absence of detailed time sheets.  (Sommers v. Erb (1992) 2 Cal.App.4th 1644, 1651; Dunk v. Ford Motor Co. (1996) 48 Cal.App.4th 1794, 1810; Nightingale v. Hyundai Motor America (1994) 31 Cal.App.4th 99, 103.)  An experienced trial judge is in a position to assess the value of the professional services rendered in his or her court.  (Id.; Serrano v. Priest (1977) 20 Cal.3d 25, 49; Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224, 255.)

Plaintiff requests $37,901.65 in attorney’s fees and costs.  (Mot. p. 15.)  Plaintiff’s attorney (KS) has been practicing in the specialized consumer protection litigation for over 25 years and his ordinary hourly rate is $650 per hour.  (Sadr Decl. ¶ 18.)  The contract attorney in the case (NH) bills at a rate of $375 per hour and the paralegal in the case (LP) bills at a rate of $135 per hour.  (Ibid. at ¶¶ 23-24.)  Plaintiff’s counsel argues that if these rates are found to be high, “Plaintiffs should be entitled to a multiplier to account for counsel’s contingent risk involved in carrying out litigation on a contingent fee basis on behalf of lower income consumers.”  (Mot. p. 12.)  Plaintiff also argues that the hourly rate is reasonable in the community and given the typical rates in the Laffey Matrix, an official source of attorney rates in the District of Columbia, which can also be adjusted by locality.  (Ibid. at pp. 13-14.)  These rates and the legal work done were reasonably necessary for Plaintiff to prevail and Plaintiff’s attorneys “do not have any incentive to perform unnecessary work, especially considering they work on a contingency basis.”  (Ibid. at p. 15.)

Defendant argues that the fees are unreasonable because Plaintiff is represented on a contingency basis and no success has been achieved in the case, so there is no prevailing party.  (Oppos. pp. 9-10.)

The Court disagrees that Plaintiff had to prevail in the case to be awarded attorney’s fees and costs, because Plaintiff is entitled to these fees and costs based on Defendant’s material breach of the arbitration provision.

However, the Court considers counsels’ expertise, number of hours expended on each task, and other necessary factors, and finds Petitioner’s request for attorney’s fees to be unreasonable.  Given Counsel’s extensive experience in the specific area of law, the number of hours spent on certain tasks appear to be excessive.  For example, the Court finds 3.4 hours spent on a motion to compel arbitration, 3.3 hours spent to draft a motion to lift stay, and 6.7 hours spent drafting motion for leave to amend to be excessive.  (Sadr Decl. pp. 51-52 – Ex. 13.)  The Court finds $30,000.00 in attorney’s fees to be reasonable.

            The Court also finds Plaintiff’s request for $1,801.85 to be reasonable.

IV.           Conclusion & Order

For the foregoing reasons, Plaintiff Maria Teresa Juarez-Rivera’s Motion for Attorney’s Fees is GRANTED in the amount of $31,801.85 as follows: $30,000.00 in attorney’s fees and $1,801.85 in costs.

Moving party is ordered to give notice.