Judge: Michael E. Whitaker, Case: 19SMCV00537, Date: 2023-12-01 Tentative Ruling

Case Number: 19SMCV00537    Hearing Date: December 6, 2023    Dept: 207

TENTATIVE RULING

BACKGROUND

On March 18, 2019, Plaintiffs Milan Cvejic (“Plaintiff”) and Kareem Akhtar filed the instant action against Defendants Skyview Capital, LLC, Newnet Communications Technologies, LLC, Newnet Investment Group, Alex Soltani, and Christopher Aye (“Defendants”). The Complaint asserts causes of action for (1) breach of contract; (2) breach of the implied covenant of good faith and fair dealing; (3) willful failure to pay wages; (4) quantum meruit; (5) promissory estoppel; (6) conversion; (7) intentional misrepresentation; (8) violation of Labor Code section 970; (9) wrongful termination in violation of public policy; (10) unlawful business practices; (11) failure to reimburse; (12) breach of fiduciary duty; (13) unjust enrichment; and (14) declaratory relief.

On December 5, 2019, the Court granted Defendants’ motion to compel arbitration and stayed the proceedings pursuant to Code of Civil Procedure section 1281.4.  Arbitration fees were due by June 4, 2021.  On July 9, 2021, Defendants had still not paid the arbitration fee.

Plaintiff moved to withdraw the matter from arbitration, pursuant to Code of Civil Procedure section 1281.98, which the Court granted on February 14, 2022.  (See Feb. 14, 2022 Minute Order.)  Defendants appealed the order, and the Court of Appeal affirmed the order on June 28, 2023. 

Plaintiff filed a memorandum of costs seeking only the $154,830.00 in attorneys’ fees Plaintiff incurred in connection with litigating the appeal pursuant to Code of Civil Procedure sections 1281.98, subdivision (c) and 1281.99, subdivision (a)(1).  Plaintiff separately filed a motion for attorneys’ fees pursuant to Code of Civil Procedure sections 1281.98 and 1281.99, which includes the $154,830.00 incurred in connection with the appeal.  On December 1, 2023, the Court granted Plaintiff’s motion and awarded Plaintiff attorneys’ fees and costs, including the $154,830 sought in connection with the appeal.  (See December 1, 2023 Minute Order.)

Defendants move to tax Plaintiff’s costs in their entirety.  Plaintiff opposes the motion and Defendants reply.

LEGAL STANDARDS

Code of Civil Procedure section 1281.98 provides, in relevant portion:

(a)(1) 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, that the drafting party pay certain fees and costs during the pendency of an arbitration proceeding, if the fees or costs required to continue the 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 the employee or consumer to proceed with that arbitration as a result of the material breach.

[…]

(b) If the drafting party materially breaches the arbitration agreement and is in default under subdivision (a), the employee or consumer may unilaterally elect to do any of the following:  (1) Withdraw the claim from arbitration and proceed in a court of appropriate jurisdiction. 

[…]

(c) If the employee or consumer withdraws the claim from arbitration and proceeds in a court of appropriate jurisdiction pursuant to paragraph (1) of subdivision (b), both of the following apply:  (1) The employee or consumer may bring a motion, or a separate action, to recover all attorney's fees and all costs associated with the abandoned arbitration proceeding. The recovery of arbitration fees, interest, and related attorney's fees shall be without regard to any findings on the merits in the underlying action or arbitration.  (2) The court shall impose sanctions on the drafting party in accordance with Section 1281.99.

Section 1281.99 provides:

(a)   The court shall impose a monetary sanction against a drafting party that materially breaches an arbitration agreement pursuant to subdivision (a) of Section 1281.97 or subdivision (a) of Section 1281.98, 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.

(b)   In addition to the monetary sanction described in subdivision (a), the court may order any of the following sanctions against a drafting party that materially breaches an arbitration agreement pursuant to subdivision (a) of Section 1281.97 or subdivision (a) of Section 1281.98, unless the court finds that the one subject to the sanction acted with substantial justification or that other circumstances make the imposition of the sanction unjust.

(1)   An evidence sanction by an order prohibiting the drafting party from conducting discovery in the civil action.

(2)   A terminating sanction by one of the following orders:

(A) An order striking out the pleadings or parts of the pleadings of the drafting party.

(B) An order rendering a judgment by default against the drafting party.

(3) A contempt sanction by an order treating the drafting party as in contempt of court.

DISCUSSION

            As explained on the memorandum of costs form, attorney’ fees are only appropriately entered as an entry on the memorandum of costs “if contractual or statutory fees are fixed without necessity of a court determination; otherwise a noticed motion is required[.]”  Here, the amount of attorneys’ fees is not fixed by statute or contract without need for a court determination.  In fact, Plaintiff has filed a separate motion for attorneys’ fees, where the parties briefed the issues, and the Court heard argument before ultimately granting the motion on December 1 (but denying the requested lodestar multiplier). 

CONCLUSION AND ORDER

Therefore, the Court grants Defendants’ motion and taxes the requested $154,830.00 from the memorandum of costs, as the issue is moot, having already been decided in the Court’s December 1, 2023 Minute Order. 

Defendants shall provide notice of the Court’s ruling and file a proof of service regarding the same. 

DATED:  December 6, 2023                                                  ___________________________

                                                                                          Michael E. Whitaker

                                                                                          Judge of the Superior Court