Judge Michael E. Whitaker, Case Number: SC127147, Date: 2023-08-03 Tentative Ruling

On August 10, 2023, the Court granted Plaintiff Pacific Carpets, LLC’s (“Plaintiff” or “Pacific”) motion for summary adjudication. (See August 10, 2023 Minute Order.) Pacific subsequently dismissed the remaining causes of action, and judgment was entered in favor of Pacific on November 20, 2023. (See November 20, 2023 Judgment.) On January 30, 2024, the Court awarded Pacific its costs. (See January 30, 2024 Minute Order.)

Plaintiff now moves to recover attorneys’ fees and prejudgment interest as the prevailing party. Defendant Western National Builders (“WNB”) has filed an opposition, and Defendants PPF AMLI 4242 Via Marina, LLC; PPF AMLI 4242 Via Marina GP, LLC, and Fidelity and Deposit Company of Maryland (collectively, “AMLI”) have filed a separate opposition.

Plaintiff has separately replied to each opposition with respect to attorneys’ fees and filed a combined reply with regard to the request for prejudgment interest.

Code of Civil Procedure section 1033.5, which outlines recoverable costs to a prevailing party under Code of Civil Procedure section 1032, permits the recovery of attorneys’ fees when authorized by contract, statute, or law. (Code Civ. Proc.. § 1033.5, subd. (a)(10).) Code of Civil Procedure section 1021 provides “[e]xcept 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 [….]” Similarly, Civil Code section 1717 provides “[i]n 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.” (Civ. Code § 1717(a).)

[T]he party with a net monetary recovery, a defendant in whose favor a dismissal is entered, a defendant where neither plaintiff nor defendant obtains any relief, and a defendant as against those plaintiffs who do not recover any relief against that defendant. If any party recovers other than monetary relief and in situations other than as specified, the “prevailing party” shall be as determined by the court, and under those circumstances, the court, in its discretion, may allow costs or not and, if allowed, may apportion costs between the parties on the same or adverse sides pursuant to rules adopted under Section 1034.

Plaintiff seeks attorneys’ fees as to WNB, pursuant to the parties’ agreement and as to AMLI pursuant to Civil Code section 8558.

Paragraph 44(d) of the agreement between Plaintiff and WNB provides, “In the event of any dispute regarding the interpretation or enforcement of any of the terms and provisions of this Subcontract, the prevailing party shall be entitled to actual attorneys' fees, expenses and costs incurred.” (Walker Decl. ¶ 4 and Ex. A.)

Although the agreement purports to entitle the prevailing party to recover “actual attorneys’ fees” incurred, Code of Civil Procedure section 1717 limits the attorneys’ fees recoverable to “reasonable attorneys’ fees” incurred.

Plaintiff seeks, among other fees, $10,632.50 incurred in connection with bringing the first motion for summary judgment, which the court denied due to Pacific’s failure to include a certified copy of its licensure history with the filing (see March 7, 2023 Minute Order) and $7,225.00 incurred in preparing the second motion for summary adjudication, which was ultimately successful.

WNB contends that $7,225 Plaintiff incurred in preparing the amended motion for summary adjudication should be excluded from Plaintiff’s attorney fee award, because the two motions were largely identical, and therefore the $7,225 incurred is unnecessarily duplicative and unreasonable.

After reviewing the entries, the Court disagrees. The time entries associated with the first motion for summary judgment indicate time spent reviewing the pleadings, preparing an initial draft of the memorandum of points and authorities, preparing the ancillary declarations, separate statement, proposed judgment, and request for judicial notice, revising the memorandum of points and authorities, checking citations, and finalizing the filing. By contrast, the time entries associated with the second motion for summary adjudication indicate updating or amending the existing motion and ancillary documents, with most of the time entries describing updating the declarations, separate statement, and request for judicial notice. These time entries are consistent with what one would expect from filing a second motion that is derivative of the first.

Civil Code section 8558, subdivision (a) provides: “In an action to enforce payment of the claim stated in a bonded stop payment notice, the prevailing party is entitled to a reasonable attorney’s fee in addition to costs and damages.”

AMLI contends (1) Pacific is not entitled to attorneys’ fees because the bond is necessary only for a subcontractor to obtain payment from a lender, which AMLI is not; and (2) Pacific’s requested fees are excessive insofar as they include fees related to Pacific’s first (failed) motion for summary judgment and AMLI should be responsible only for those fees incurred in bringing the single cause of action against AMLI, not the entire lawsuit.

Unlike a mechanic’s lien, which attaches to the real property at issue, a stop notice attaches to the owner’s finances, as an additional and cumulative remedy, to protect subcontractors in the event a senior lienholder forecloses on the property. (Mechanical Wholesale Corp. v. Fuji Bank, Ltd. (1996) 42 Cal.App.4th 1647, 1654 (hereafter Mechanical Wholesale).) A bonded stop notice requires the owner’s lender to withhold and pay the subcontractor funds owed, and also entitles the prevailing party to reasonable attorneys’ fees. (Ibid.)

With respect to Pacific’s entitlement to fees, AMLI contends that it is not responsible for paying Pacific’s attorneys’ fees incurred in connection with enforcing its bonded stop notice, because the bond was not strictly necessary to compel AMLI’s compliance, since AMLI is not a lender. AMLI does not cite to any case law standing for such a proposition. The only case AMLI cites, Mechanical Wholesale, held that in instances where the construction project occurs outside of California but the lender is located in California, plaintiffs may not recover attorneys’ fees pursuant to Civil Code section 8558.

Ultimately, Pacific served AMLI with a bonded stop notice, requiring AMLI to set aside funds owed to Pacific, which AMLI failed to do, continuing to pay WNB instead. Thus, pursuant to the plain text of Civil Code section 8558, AMLI is responsible for paying Pacific’s reasonable attorneys’ fees incurred in bringing the instant action to enforce payment.

As for the amount of attorneys’ fees, the Court has already held, in connection with Pacific’s request for costs, that Pacific is entitled to recover costs incurred in connection with the first, unsuccessful motion for summary judgment. (See January 23, 2024 Minute Order.) Further, Akins v. Enterprise Rent-A-Car Co. (2000) 79 Cal.App.4^th 1127, 1133-1134, expressly authorizes such attorneys’ fees “to the extent that those attacks led to a successful claim.” As previously held, here, they did. The only authority Defendant cites in opposition are unbinding federal district court cases. Therefore, Plaintiff is entitled to attorneys’ fees incurred in bringing the initial, unsuccessful motion for summary judgment.

With respect to apportioning the fees, as AMLI concedes, “courts have declined to apportion fees as to common issues shared between claims or where the claims are so intertwined that it would be impossible to separate them.” (AMLI’s Opposition at p. 7, fn. 4 (citing Bell v. Vista Unified School Dist. (2000) 82 Call App 4th 672, 689).) The Court previously held, “the claims against AMLI (and the corresponding bonded stop notices) are ‘inextricably intertwined’ with the contractual claims against WNB.” (See January 23, 2024 Minute Order.) Thus, the Court declines to apportion attorneys’ fees.

· $42,872.59 from WNB, calculated at the legal interest rate of 10%, pursuant to Civil Code section 3289, from the date the final retention payment became due (October 24, 2020) through February 1, 2024;

· $47,536.55 from AMLI[1], calculated at the legal interest rate of 10% pursuant to Civil Code section 8560 from the date Pacific served AMLI the bonded stop notice (June 16, 2020) through February 1, 2024; and

· $35,697.26 from Fidelity, calculated at the legal interest rate of 7% from the date Pacific recorded its mechanic’s lien (May 12, 2021) through February 1, 2024.

WNB contends the Court should exclude from the prejudgment interest the 73 days between when the judgment was entered on November 20, 2023, and the February 1, 2024 hearing date on Pacific’s motion for prejudgment interest. Pacific counters that the order granting the attorneys’ fees and costs will amend the judgment, and therefore the February 1 date controls.

Pacific does not cite to any authority supporting the proposition that the February 1 date controls. Here, judgment was entered on November 20, 2023. As such, interest accrued prior to November 20, 2023 is prejudgment interest. To the extent Pacific seeks interest accrued after that date, Pacific may seek postjudgment interest. A postjudgment order regarding costs or attorneys’ fees is ministerial in nature, and does not substantively alter or amend the judgment. (See Torres v. City of San Diego, 154 Cal.App.4^th 214, 222 [“where the judgment is modified merely to add costs, attorney fees and interest, the original judgment is not substantially changed” and “When a party wishes to challenge both a final judgment and a postjudgment costs/attorney fee order, the normal procedure is to file two separate appeals: one from the final judgment, and a second from the postjudgment order.”])

AMLI argues that the correct interest rate is 7%, not 10%, because AMLI and Pacific have no contractual relationship. Pacific counters that the 10% contractual rate of Civil Code section 3289 applies to stop payment notice claims. In support, Pacific cites to The Rutter Group, California Practice Guide – Insurance Litigation, Chapter 6I. (Surety Bonds) at 6:3280 (Interest). That provision merely provides, “A plaintiff who prevails on a stop payment notice claim is entitled to interest at the legal rate from the date the stop payment notice was served. [Civ.C. § 8560] (The legal rate is 10% per annum on contract claims; see Civ.C. § 3289.)” It does not establish that a plaintiff may recover the 10% contractual rate against a party with whom it has no contractual relationship, on a stop payment notice claim.

Plaintiff’s motion for attorneys’ fees is granted. Plaintiff is entitled to recover the requested $95,297.50 in attorneys’ fees from WNB and AMLI, jointly and severally.

Plaintiff’s motion for prejudgment interest is granted in part and denied in part. Plaintiff is entitled to prejudgment interest as follows:

· $40,257.36 from WNB, calculated at the legal interest rate of 10%, pursuant to Civil Code section 3289, for the 1,122 days from the date the final retention payment became due (October 24, 2020) through November 20, 2023;

· $31,437.72 from AMLI, calculated at the legal interest rate of 7% pursuant to Civil Code section 8560 for the 1,252 days from the date Pacific served AMLI the bonded stop notice (June 16, 2020) through November 20, 2023; and

· $33,081.36 from Fidelity, calculated at the legal interest rate of 7% for the 922 days from the date Pacific recorded its mechanic’s lien (May 12, 2021) through November 20, 2023.

Thus, of the $40,257.36 total prejudgment interest to which Plaintiff is entitled, WNB, AMLI, and Fidelity are jointly responsible for $31,437.72; WNB and Fidelity are jointly responsible for the additional $1,643.64 balance up to $33,081.36; and WNB is solely responsible for the additional $7,176.00 balance up to $40,257.36.

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

[1] For purposes of the remainder of the ruling, “AMLI” shall refer to Defendants PPF AMLI 4242 Via Marina, LLC and PPF AMLI 4242 Via Marina GP, LLC only, and “Fidelity” shall refer to Defendant Fidelity and Deposit Company of Maryland.

DEPARTMENT	207
HEARING DATE	February 1, 2024
CASE NUMBER	SC127147
MOTIONS	Motion for Attorneys’ Fees Motion for Prejudgment Interest
MOVING PARTY	Plaintiff Pacific Carpets, LLC
OPPOSING PARTIES	(1) Western National Builders (2) PPF AMLI 4242 Via Marina, LLC; PPF AMLI 4242 Via Marina GP, LLC; and Fidelity and Deposit Company of Maryland