Judge: Kenneth J. Medel, Case: 37-2020-00016039-CU-BC-CTL, Date: 2024-01-12 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

DEPT.:

EVENT DATE:

EVENT TIME:

HALL OF JUSTICE

TENTATIVE RULINGS - January 11, 2024

01/12/2024  09:30:00 AM  C-66 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Kenneth J Medel

CASE NO.:

CASE CATEGORY:

EVENT TYPE:

CASE TITLE: CASE TYPE:

Civil - Unlimited  Breach of Contract/Warranty Motion Hearing (Civil) 37-2020-00016039-CU-BC-CTL SVAP III POWAY CROSSINGS LLC VS LA FITNESS INTERNATIONAL LLC [IMAGED] CAUSAL DOCUMENT/DATE FILED: Motion for Attorney Fees, 07/14/2023

PLAINTIFF SVAP III POWAY CROSSINGS, LLC's Motion for Attorney Fees and Costs is GRANTED in part and DENIED in part.

It is undisputed that plaintiff is a prevailing party on the contract and entitled to reasonable attorney fees and costs pursuant to the Lease contract between the parties.

Fitness and Landlord each separately moved for motion for summary judgment. The Court denied Fitness' motion in September, 2021 and granted Landlord's motion on October 22, 2022. Based on the fact that Plaintiff was the prevailing party and based on the contract between the parties, the Court awarded attorney fees and costs to plaintiff on January 28, 2022.

This Court entered the Judgment against Fitness in April 2022. Prior to entry of the Judgment, on January 3, 2022, Fitness noticed its appeal of the Court's summary judgment decisions (which appeal also encompassed and applied to the subsequent Judgment) and, on June 24, 2022, Fitness deposited $974,411.77 with this Court pursuant to Code of Civil Procedure section 995.750 to stay enforcement pending appeal.

In January 2023 the Court of Appeal affirmed this Court's summary judgment rulings and Judgment, and in April 2023 the California Supreme Court denied Fitness' petition for further review. Following Fitness' unsuccessful appeal, the Court of Appeal thereafter issued a remittitur pursuant to which SVAP was 'awarded its costs on appeal.' Based on the motion SVAP has incurred $284,141.25 in attorneys' fees and $6,460.19 in costs since its previous motion for fees and costs filed on December 27, 2021 (the 'Initial Fees and Costs Motion'), which sought an award of SVAP's fees and costs through November 30, 2021. (Id. at ¶¶ 3-18 Exhibits B-E.) To date, SVAP also has incurred $20,550 in attorneys' fees preparing the instant fees and costs motion. (Id. at ¶ 19.) Counsel for SVAP estimates that SVAP will incur an additional $9,920 in attorneys' fees in reviewing and analyzing Fitness's opposition to the motion, preparing reply papers, and preparing for and attending any hearing. (Id. at ¶ 19.) 'Where a written contract expressly provides for the award of attorney fees,' Civil Code section 1717 establishes that 'the prevailing party in an action under or relating to the contract is entitled to recover its fees, whether incurred at trial or on appeal.' (Starpoint Properties, LLC v. Namvar, (2011) 201 Cal. App. 4th 1101, 1111 [emphasis added].) '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; Starpoint Properties, LLC v. Calendar No.: Event ID:  TENTATIVE RULINGS

2996446  35 CASE NUMBER: CASE TITLE:  SVAP III POWAY CROSSINGS LLC VS LA FITNESS INTERNATIONAL  37-2020-00016039-CU-BC-CTL Namvar (2011) 201 Cal. App. 4th 1101, 1111.) As summarized in the previous order of this Court in January, 2022, 'reasonable attorney's fees' under a contract 'shall be fixed by the court, and shall be an element of the costs of suit.' (Cal. Civ. Code § 1717.) '[T]he burden is on the party seeking attorney fees to prove that the fees it seeks are reasonable.' (Gorman v. Tassajara Dev. Corp. (2009) 178 Cal.App.4th 44, 98, as modified on denial of reh'g (Nov. 4, 2009); accord Ajaxo Inc. v. E*Trade Grp. Inc. (2005) 135 Cal.App.4th 21, 65 ['Ajaxo had the burden of introducing evidence to prove that the fees it sought for its prior counsel's work were reasonable.'].) As the moving party seeking fees and costs, Landlord has the burden of establishing an entitlement to an award and of documenting the appropriate hours expended and hourly rates applied for the claimed fees. (Christian Research Institute v. Alnor (2008) 165 Cal.App.4th 1315, 1320; Levy, supra, 4 Cal.App.4th at 807, 816 [the moving party has the burden of showing fees incurred were 'allowable,' were 'reasonably necessary to the conduct of the litigation' and were 'reasonable in amount'].) 'It is well established that the determination of what constitutes reasonable attorney fees is committed to the discretion of the trial court[.]' (PLCM Grp. v. Drexler (2000) 22 Cal.4th 1084, 1096, as modified (June 2, 2000).) 'A trial court may not rubber stamp a request for attorney fees, but must determine the number of hours reasonably expended.' (Donahue v. Donahue (2010) 182 Cal.App.4th 259, 271.) 'The trial court may make its own determination of the value of the services contrary to, or without the necessity for, expert testimony.' (Id.) '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.' (Id.) [T]he fee setting inquiry in California ordinarily begins with the 'lodestar,' i.e., the number of hours reasonably expended multiplied by the reasonable hourly rate. '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.'' (Ctr. for Biological Diversity v. Cty. of San Bernardino (2010) 188 Cal.App.4th 603, 616, as modified (Oct. 18, 2010).) Reasonable Hourly Rate Ordinarily, 'in determining hourly rates, the court must look to the 'prevailing market rates in the relevant community.'' (Heritage Pac. Fin., LLC v. Monroy (2013) 215 Cal.App.4th 972, 1009, internal citation omitted.) The Court recognizes that in its previous order awarding fees for work at the Superior Court level, the Court reduced the hourly rate. In the Order of January 28, 2022, the Court found that the Landlord's counsel's rates to be excessive and determined that the appropriate community rate (in San Diego County) is $110 an hour for paralegals, $325 for associates and $450 for partners. (Semerdjian Decl., ¶16.) Fitness argues that the Court should similarly impose the same rates for the appellate work at issue in this motion.

To be consistent with the Court's previous order, the Court agrees that the 'community rate' for attorneys practicing in San Diego should be imposed in place of the actual rates of SVAP's attorneys. As stated in the previous order of January, 2022, prevailing market rates are the 'hourly amount to which attorneys of like skill in the area would typically be entitled.' (Ketchum, supra, 24 Cal.4th at 1133, emphasis added.) Pryor Cashman, Plaintiff's counsel's firm is headquartered in New York, New York with an office in Los Angeles, but no office in San Diego (https://www.pryorcashman.com/about-us). (Semerdjian Decl. at ¶6.) Landlord claims hourly rates ranging from $445 to $1,200. The vast majority of the time billed by Landlord's attorneys was by partners with hourly rates ranging from $600 to $1,200 an hour. The hourly rate range of $445-$500 for a junior associates, $600-$1200 for counsel and partners is not consistent with the legal market in San Diego County.

Calendar No.: Event ID:  TENTATIVE RULINGS

2996446  35 CASE NUMBER: CASE TITLE:  SVAP III POWAY CROSSINGS LLC VS LA FITNESS INTERNATIONAL  37-2020-00016039-CU-BC-CTL In determining a reasonable hourly rate for an attorney fee award under Civil Code section 1717, the trial court has discretion to apply out-of-town counsel's rates 'when the prevailing party shows it was impracticable to use local counsel.' In re Tobacco Cases I, 216 Cal. App. 4th 570, 581 (2013) (trial court did not err in using market rates for San Francisco Bay Area ($500-625 per hour) rather than rates for local San Diego market).

As addressed in SVAP's moving papers, SVAP argues that it is the owner of twelve million square feet of commercial space throughout the entire United States and has been forced to litigate countless similar actions against intransigent non-paying commercial tenants across the country since the beginning of the pandemic, utilizing Pryor Cashman's services in many instances. 'Given Pryor Cashman's extensive experience and success prosecuting SVAP's rights to recover rents in these similar cases, and its familiarity with the factual and legal issues presented in the instant action, it was entirely reasonable for SVAP to utilize its customary New York and Los Angeles-based attorneys to handle this litigation. And, after prevailing at summary judgment , it was entirely reasonable for SVAP to retain its attorneys at Pryor Cashman to defeat Fitness's appeals.' The fact that counsel was more convenient is not standard. While it is within Court discretion, courts allowing higher rates outside the community rate involve situations where counsel in the local area is unavailable or not capable. 'Where unrefuted evidence shows that qualified local counsel is unavailable, it is error to base the allowable lodestar hourly rate on local rates without regard to reasonable hourly rates charged by competent counsel outside the local legal market.' Ctr. for Biological Diversity, supra, 188 Cal.App.4th (2010) 188 Cal.App.4th 603, 608–609, as modified. Further, in their analysis of the matter, the court in Ctr. for Biological Diversity analogized Horsford v. Bd. of Trustees of California State Univ. (2005) 132 Cal.App.4th 359. In Horsford, the plaintiff submitted 'overwhelming and uncontradicted' evidence he had contacted several attorneys in the local Fresno area, but not one of them was willing to represent him. (Id. at p. 398.) The court explained the 'method of achieving adequate compensation for out-of-town counsel, when reasonably necessary, rests within the trial court's discretion. If all lawyers for the prevailing party are from the high-fee area, the court might consider that factor in determining whether to award an enhancement multiplier to a lodestar initially calculated using local hourly rates.' (Id. at p. 399.) Quite opposite to Horsford, here, Landlord has not submitted any evidence that local counsel is unavailable, aside from its counsel stating it would be impracticable.

In this case, as stated in the previous January 2022 order, this Court granted pro hac vice requests to allow defendant to be represented by counsel of choice and the Court respects that a client can and should be able to choose counsel. However, the financial burden of out-of-town counsel does not necessarily shift to the opposing side. In evaluating what the opposing side risks in contractual attorney fees, the community standard for the attorney rate is required. The community standard is assessed according to the forum's community rates (here, the forum is San Diego County.). (Horsford v. Board of Trustees of California State University (2005) 132 Cal.App.4th 359, 397.) However, the Court recognizes that these rates should be for comparable work. The rates should be consistent with 'the range of reasonable rates charged by and judicially awarded comparable attorneys for comparable work.' (Children's Hosp. & Med. Ctr. v. Bontá (2002) 97 Cal.App.4th 740, 783.) The appellate proceedings that primarily are the subject of this fee request occurred in an entirely different context and forum than the trial court-level proceedings which were the subject of this Court's prior fees Order. Since that Order, the bulk of Pryor Cashman's work was performed before or within the purview of the Fourth Appellate District of the Court of Appeal and the California Supreme Court. Thus, though tempting, the Court cannot simply apply the prior rates in the previous order as argued in Fitness' Opposition.

When assessing the community fee, '[t]he court may rely on its own knowledge and familiarity with the legal market in setting a reasonable hourly rate.' (Heritage, supra, 215 Cal.App.4th at 972, 1009 [citing Ingram v. Oroudjian (9th Cir. 2011) 647 F.3d 925, 928].) The community rate will be the prevailing rate Calendar No.: Event ID:  TENTATIVE RULINGS

2996446  35 CASE NUMBER: CASE TITLE:  SVAP III POWAY CROSSINGS LLC VS LA FITNESS INTERNATIONAL  37-2020-00016039-CU-BC-CTL unless the fee requesting party presents evidence showing it was impossible or unusually difficult to find a local attorney, which required them to hire an out-of-town attorney. (Horsford, supra, 132 Cal.App.4th at 398; see also Ctr. For Biological Diversity, supra, 188 Cal.App.4th at 603, 616-619, as modified (Oct.

18, 2010) [discussing case law regarding when and how out-of-town fees have been awarded].) Based on the Court's experience, the Court determines that the appropriate community rate appropriate for appellate work in the community is $125 an hour for paralegals, $450 for associates and $600 for partners.

Number of Hours The determination of which fees are reasonable is made at the court's broad discretion, 'according to the particular circumstances of each case'- including the procedural history of the matter and the tasks performed. (See Bernardi v. Cty. Of Monterey (2008) 167 Cal.App.4th 1379, 1394.) In the Court's January, 2022 order, the Court found redundancy and excessive hours in the billing. The Court found much of the legal work to be duplicative and consisted of 'multiple entries which are excessive on their face,' redundant, duplicative, and ministerial. The Court reduced the total claimed billable hours of 418 to 226.50 hours – a reduction of 54% of the total billable hours. (Semerdjian Decl., ¶¶15, 17.) In this case, Landlord also argues that there is duplicate and excessive billing. Specifically, Fitness cites to the following in its Opposition brief: (i) preparing/drafting First Motion for attorney's fees (totaling 31.75 hours in December 2021 by various attorneys); (ii) preparing for appeal oral argument (totaling at least 45 hours in late December/early January); (iii) multiple attorneys and a paralegal attending an oral argument (totaling at least 6 hours on January 11, 2023); (iv) attend to appeal opposition brief (totaling at least 11.25 hours in June 2022); and (v) finalize appeal brief (totaling at least 8 hours on July 7 and 8, 2022).

The Court cannot conclude that fees requested are duplicative or otherwise excessive. This was a significant appeal. The hours expended by SVAP's counsel, properly supported by detailed time entries, are reasonable. The hours and billing records reflect a years-long effort to protect SVAP's Judgment at the appellate level, involving multiple briefs in proceedings before both the Court of Appeal and Supreme Court, ultimately resulting in SVAP's victory and the affirmance of the Judgment in favor of SVAP.

Drafting an appellate brief and preparing for and attending oral argument on appeal are both reasonable and necessary to meaningfully participate in appellate proceedings, and the mere fact that there are multiple entries related to those procedures does not make the work 'duplicative.' Costs SVAP's request for costs is supported (copies of invoices for filing fees, costs to obtain the record on appeal, and costs to file SVAP's appeal briefs). The Costs reflected are authorized by Rule 8.278 of the California Rules of Court, and the Remittitur, which explicitly states that 'SVAP is awarded its costs on appeal.' The Court awards $6,460.19 in costs sought by SVAP.

Order The Court orders SVAP to calculate the fees according to rates allowed above. The Court will order those fees.

Calendar No.: Event ID:  TENTATIVE RULINGS

2996446  35