Judge Margaret L. Oldendorf, Case Number: 22AHCV00268, Date: 2023-08-07 Tentative Ruling

Judge: Margaret L. Oldendorf, Case: 22AHCV00268, Date: 2023-08-07 Tentative Ruling

This is a collection action with an unusual wrinkle. In the main action, Plaintiff Cadlerock Joint Venture, L.P. (Cadlerock) alleges it purchased all right and title to a Citibank, N.A.(Citibank) business loan. Cadlerock alleges Citibank had extended the loan to Edith Enterprise, Ltd. (Edith) and that the loan was guaranteed by Edith’s principal, Helen Young (Young).

The central contention is that Edith defaulted on the loan in October 2020, owing $22,999.79, plus interest and late charges. Cadlerock alleges that after purchasing the loan from Citibank it sent correspondence to Edith in an attempt to collect the debt, but that Edith disputed it. This action was filed in May 2022.

Edith filed a cross-complaint against Citibank. Edith alleges that from 2008 to November 2020 it maintained a business checking account. It alleges that in 2011, Citibank offered Edith a business line of credit, requiring that the business checking account be designated to repay the loan. Edith alleges that once approved it began using the line of credit and always paid on time, never missing a payment. Edith alleges that in November 2020, it discovered that Citibank had zeroed out its entire business checking account without explanation. At the time, the checking account had a balance of $31,396.60. Edith believed that the business account funds had been used to pay the line of credit until it was contacted by Cadlerock.

The main action was resolved by way of a motion for summary adjudication granted September 15, 2023. Cadlerock now moves for an order fixing their fee award. The motion is granted and fees are awarded in the amount requested.

Code Civ. Proc. §1033.5(a)(1) provides for attorney fees as costs when provided for by contract, statute, or law.

Civ. Code §1717 (a) provides in part that “reasonable attorney’s fees shall be fixed by the court and shall be an element of the costs of suit.”

PLCM Group v. Drexler (2000) 22 Cal.4th 1084 contains the Supreme Court’s explanation of how fees are to be determined. It states that Civ. Code §1717, “reflects the legislative purpose ‘to establish uniform treatment of fee recoveries in actions on contracts containing attorney fee provisions.’ (Citation.) Consistent with that purpose, the trial court has broad authority to determine the amount of a reasonable fee.” (Id. at 1095.) PLCM teaches that fees are to be determined by calculating the “‘lodestar,’ i.e., the number of hours reasonably expended multiplied by the reasonable hourly rate.” (Ibid.)

“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.” (CCP § 1717(a).) “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.” (CCP § 1717(b)(1).) “To achieve its goal, [Civil Code section 1717] generally must apply in favor of the party prevailing on a contract claim whenever that party would have been liable under the contract for attorney fees had the other party prevailed.” (Hsu v. Abbara (1995) 9 Cal.4th 863, 870–871.)

Here, Cadlerock argues that it is entitled to attorney’s fees. Cadlerock urges that it “prevailed upon summary adjudication on September 15, 2023.” (Motion, p. 3: 9-10.) Cadlerock attaches the ruling on the summary adjudication in support. (Motion, Exh. 4.) Cadlerock also argues that “costs permitted under statute and reasonable attorney fees are recoverable here[.]” (Motion, p.3: 7-8.) Cadlerock avers that “[b]ut for the efforts of Plaintiff’s attorney and the costs accrued in pursuit of this matter, Plaintiff would not have been successful on the motion for summary judgment.” (Motion, p.3: 15-17.) Cadlerock urges that “[t]he entirety of Plaintiff’s claims against Defendants other than this Motion have been resolved[.]” (Reply, p. 3: 13-14.) Cadlerock does not argue that it is the prevailing party on the contract using prevailing party language but functionally does so.

In reply, Cadlerock urges that it is not a party to the pending cross-complaint. (Reply, p.4: 17-18.) To the extent that Cadlerock is attempting to argue that it is the prevailing party on the contract, this is sufficient as it does address the cross-complaint and argue why the court should consider it the prevailing party on the complaint.

Case law establishes that “[a]n order granting partial summary judgment—or summary adjudication—is not an appealable order.” (Zucker Ellis LLP v. Superior Court (Nelson) (2017) 12 Cal.App.5th 1233, 1240.) “When a defendant obtains a simple, unqualified victory by defeating the only contract claim in the action, [Civil Code] section 1717 entitles the successful defendant to recover reasonable attorney fees incurred in defense of that claim if the contract contained a provision for attorney fees. The trial court has no discretion to deny attorney fees to the defendant in this situation by finding that there was no party prevailing on the contract.” (Hsu, at p. 877, emphasis added.)

Here, Cadlerock lodged a proposed judgment on September 15, 2023. (9/15/23 Proposed Judgment.)

In a related case citing Hsu, the Court granted attorney fees to the party that prevailed on the contract causes of action, without respect to the non-contract causes of action, such as unjust enrichment. (Federal Deposit Ins. Corp. v. Dintino (2008) 167 Cal.App.4th 333, 357.) Whoever prevailed on the non-contract causes of action did not affect attorney fees granted under CC 1717. Therefore, the fact that the Court declined to rule on the unjust enrichment cause of action does not defeat the motion for attorney’s fees.

Furthermore, CC section 1717 has a limited application. “[Civil Code section 1717] covers only contract actions, where the theory of the case is breach of contract, and where the contract sued upon itself specifically provides for an award of attorney fees incurred to enforce that contract.” (Xuereb v. Marcus & Millichap, Inc. (1992) 3 Cal.App.4th 1338, 1342.) Therefore, as Cadlerock is the prevailing party on the breach of contract cause of action, it is the prevailing party in terms of CC 1717. As such, it is entitled to attorney’s fees.[1]

It is a well-established law that, in civil matters, only final judgments are appealable under that statute, which codifies the "one final judgment rule" (9 Witkin, Cal. Procedure (3d ed. 1985) Appeal §§ 43-44, pp. 66-68; Eisenberg et al., Cal. Practice Guide: Civil Appeals & Writs (Rutter 1989) §§ [2.21]-[2.23], pp. 2-8 - 2-9), "and there cannot be such a final judgment with respect to parties as to whom a cross-complaint remains pending, even though the complaint has been fully adjudicated. (9 Witkin, supra, § 56, p. 78.)" (California Dental Assn. v. California Dental Hygenists' Assn. (1990) 222 Cal. App. 3d 49, 59.)

Defendants argue that attorney fees are not appropriate here because they are sought on the basis of a non-final judgment. (Opposition, p.2: 12-13.) Defendant and Cross-Complainant Edith Enterprises filed a cross-complaint on April 3, 2023, amending it twice to file the Second Amended Cross-Complaint filed August 28, 2023. Here, Edith Enterprises attempted to amend their complaint to rename the fictitious Roe 1 as Cadlerock. (10/17/23 Amendment to Complaint- Fictitious or Incorrect Name.) However, the October 17 amendment has not been signed and entered by the Court. (Id.) Cadlerock has not been served with summons on the Cross-Complaint. (Reply, p.4: 20-21.) Unless and until the Court signs the October 17 amendment naming Cadlerock as Roe 1 in the cross-complaint, there is no pending cross-complaint against Cadlerock. (Reply, p. 4: 21-23.) Additionally, any cross-complaint against Cadlerock would be subject to CCP section 426.30 and is untimely on that basis. (Reply, p.4: 24-26; see CCP § 426.30.)

In sum, the cross-complaint does not preclude Cadlerock from prevailing on their motion for attorney fees.

Defendants argue that the billing records attached to the Sayyar declaration contain several issues, namely, what the billing records relate to, and that several other individuals’ names appear on the billing records. As there are no declarations from these individuals, defendants argue the billings may not be correct.

There is no requirement that billing records be provided in connection with a motion for fees pursuant to contract. The declaration of counsel as to the hours expended on this litigation and the hourly rates charged for such time is all that is required. “[T]here is no legal requirement that an attorney supply billing statements to support a claim for attorney fees.” (Mardirossian & Associates, Inc. v. Ersoff (2007) 135 Cal.App.4th 257, 269.) “[T]here is no legal requirement that such statements be offered in evidence. An attorney’s testimony as to the number of hours worked is sufficient evidence to support an award of attorney fees, even in the absence of detailed time records.” (Steiny & Co., Inc. v. California Electric Supply Co. (2000) 79 Cal.App.4th 285, 293.)

“ ‘Although a fee request ordinarily should be documented in great detail, it cannot be said ... that the absence of time records and billing statements deprive[s] [a] trial court of substantial evidence to support an award....’ (Citation.) ‘[T]he verified time statements of [an] attorney [ ], as [an] officer[ ] of the court, are entitled to credence in the absence of a clear indication the records are erroneous.’ (Citation.)” (City of Colton v. Singletary (2012) 206 Cal.App.4th 751, 784-785.) “The law is clear, however, that an award of attorney fees may be based on counsel’s declarations, without production of detailed time records.” (Raining Data Corp. v. Barrenchea (2009) 175 Cal.App.4th 1363, 1375.)

Per City of Colton, the billing records are assumptively correct, without indication that the records are erroneous. Defendants do not provide support for their contention that the billing records are erroneous. As such, because the request for attorney fees is accompanied by a signed declaration of Ms. Sayyar, plaintiff’s counsel, the request is sufficiently supported.

As to the argument that Cadlerock is limited to recovering costs related to the collection of amounts due on the account, this argument is supported by the contract between the parties. (Opposition, Exh. A.) Defendants do not support how Cadlerock is not doing this, however. In reply, Cadlerock urges that the attorney fees requested are amounts expended attempting to collect on the Loan documents. (Reply, p.6: 14-15.)

As to the argument that Cadlerock should not recover fees for discovery, Defendants cite no applicable law or cases as to why this is true. Defendants argue that “[i]t is patently unreasonable for an assignee to conduct discovery regarding the Loan that it bought from its assignor in a subsequent collection action for the purposes of driving up more legal fees.” (Opposition, p.4: 15-16.) To the extent that defendants are arguing that the discovery was unreasonable, this is insufficient as they do not support this contention. Additionally, the reply provides that these amounts were incurred trying to recover on the Loan Documents, which the attorney fees provision in the contract provides for. (Reply, p.7: 6-7.)

Here, the declaration of counsel provides a sufficient basis for its fee request. Sayyar avers that “In this action, attorneys in my Firm have spent a total of 106.80 invoiced hours of attorney time and an additional 20.20 hours incurred but not yet invoiced as of September 30, 2023 for a grand total of 127 billable hours.” (Sayyar Decl., ¶ 6.) She further declares that “In this matter, I and any licensed attorneys of my firm billed my time at $175.00 an hour, well below the market value for an attorney of our skill and experience. I have been practicing since 2004 and have been licensed in California since 2008. My firm also includes an of counsel attorney who has been practicing law in California since 1988.” (Sayyar Decl., ¶ 4.) In sum, Sayyar’s averments that the billing records attached to her declaration reflect hours billed in this action are statements made as an officer of the court.

The Court has examined the evidence presented by Cadlerock and makes the following findings: $175.00 per hour is a reasonable hourly rate. 127 billable hours, while high, reflects the amount of time expended in this litigation. As such, the Court GRANTS the motion for attorney fees in the amount of $22,225.00. As to costs, the Court finds that the memorandum of costs filed September 28, 2023 provides sufficient basis to award the costs requested in the amount of $2,168.88. (9/28/23 Memorandum of Costs.)

Cadlerock’s motion for attorney fees and costs is granted. Attorney Fees are awarded in the amount of $22, 225.00. Costs are awarded in the amount of $2,216.88.

[1] In the September 15 order, the Court declined to rule on the other two causes of action in the complaint, unjust enrichment and promissory estoppel. As these causes of action have not been ruled on or dismissed, they are technically still operative. The Court invites Cadelrock to address this issue at the hearing.