Judge: Michael J. Strickroth, Case: 2019-01049441, Date: 2023-05-22 Tentative Ruling
Motion for Attorney Fees
Defendant, Stephen Jarrells’ (Defendant) Motion for Attorney’s Fees is GRANTED in part as set forth below.
California follows the “American rule,” pursuant to which litigants ordinarily pay their own attorney fees. Musaelian v. Adams (2009) 45 Cal.4th 512, 516. Thus, a request for attorney fees must be based on either a statutory or contractual provision authorizing their recovery. Code of Civil Procedure § 1021.
Civil Code, section 1717, subdivision (a) provides in relevant part:
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. Civ. Code, § 1717, subd. (a).
“[T]he party prevailing on the contract shall be the party who recovered a greater relief in the action on the contract.” Civ. Code, § 1717, subd. (b).) Attorney fees are awarded based “upon the terms of the contractual attorney fee provision” pursuant to Code of Civil Procedure, section 1021. Santisas v. Goodin (1998) 17 Cal.4th 599, 602. “The primary purpose of section 1717 is to ensure mutuality of remedy for attorney fee claims under contractual attorney fee provisions.” Id. at 610. The Supreme Court recognized that in order to ensure mutuality, “it has been consistently held that when a party litigant prevails in an action on a contract by establishing that the contract is invalid, inapplicable, unenforceable, or nonexistent, section 1717 permits that party’s recovery of attorney fees whenever the opposing parties would have been entitled to attorney fees under the contract had they prevailed. Id. at 611.
Defendant moves for ALL attorney’s fees and costs in the amount of $557,258 pursuant to Civil Code section 1717, on the grounds Defendant was determined to be the prevailing party on contract.
In Opposition, Plaintiff contends the Honorable Robert J. Moss previously determined Plaintiff to be the party prevailing on contract in his 3-14-22 ruling on Plaintiff’s Motion for Attorney’s Fees.
“ ‘If neither party achieves a complete victory on all the contract claims, it is within the discretion of the trial court to determine which party prevailed on the contract or whether, on balance, neither party prevailed sufficiently to justify an award of attorney fees.’ [Citation.] ‘Because the statute allows such discretion, it must be presumed the trial court has also been empowered to identify the party obtaining “a greater relief ” by examining the results of the action in relative terms: the general term “greater” includes “[l]arger in size than others of the same kind” as well as “principal” and “[s]uperior in quality.” [Citation.]’ [Citation.] [¶] When determining the prevailing party under section 1717, the trial court ‘is to compare the relief awarded on the contract claim or claims with the parties’ demands on those same claims and their litigation objectives as disclosed by the pleadings, trial briefs, opening statements, and similar sources.’ [Citation.] Additionally, ‘in determining litigation success, courts should respect substance rather than form, and to this extent should be guided by “equitable considerations.” For example, a party who is denied direct relief on a claim may nonetheless be found to be a prevailing party if it is clear that the party has otherwise achieved its main litigation objective.’ ” Silver Creek, LLC v. Blackrock Realty Advisors, Inc. (2009) 173 Cal.App.4th 1533, 1538–1539.
On 3-22-21, the jury found Defendant had breached the contract. (ROA No. 778.) However, the jury also found Plaintiff did not suffer any damages as a result of this breach. (Id.)
On 3-14-22, trial Judge Moss awarded attorney’s fees to Plaintiff only as to the time spent obtaining injunctive relief. Judge Moss’s ruling stated in pertinent part: “The court’s determination here is to deny apportionment and permit plaintiff’s attorney fees as to the time spent on obtaining the injunctive relief only. Had plaintiff not made, and the court had not granted, the post-trial permanent injunction, plaintiff wouldn’t be entitled to any fees at all.” (ROA No. 971.)
Additionally, Judge Moss’s ruling specifically indicated Plaintiff is not the prevailing party on the breach of contract cause of action, as follows: “Plaintiff contends it should be reimbursed for all hours it spent prosecuting this case. Defendant claims the award should be limited to the hours spent in obtaining the injunctive relief. The court agrees with defendant. Plaintiff was prosecuting four causes of action. The right to attorney fees sprung from the provisions of the contract, but the jury did not find in favor of plaintiff in that cause of action. Although technically plaintiff is not the prevailing party on that claim, pursuant to the terms of the contract it is entitled to attorney fees. (“I agree that…if any such equitable relief is granted, I shall be obligated to reimburse the company for the reasonable attorney’s fees, costs and expenses incurred in obtaining such relief.” Exhibit 7 to the declaration of S. Zadravecz, page 030, paragraph 9.) The language doesn’t mention “prevailing party.” (ROA No. 978.)
Judge Moss found that Plaintiff’s breach of contract claim is based in part on the allegation that Defendant’s misappropriation of trade secrets constitutes a breach of contract. Specifically, paragraph 70 of the First Amended Complaint alleges: “Jarrells entered into valid and binding contracts with AMDC, including an employment agreement and a Proprietary Information agreement. Jarrells’ agreements required, among other things, that he not work for another business entity while employed at AMDC, to not engage in acts that amounted to a conflict of interest while employed at AMDC, and to devote his time and attention to working at AMDC while employed by the Company. Additionally, Jarrells agreed to hold AMDC’s trade secrets and confidential and proprietary information in strict confidence and not use the information for the benefit of himself or any third party, nor disclose the information to any third party, including after his employment ended. Jarrells’ agreement further required him to seek authorization in writing by a duly authorized representative of AMDC if he sought to use its trade secrets and confidential and proprietary information for purposes beyond the benefit of AMDC. Jarrells’ agreements required him to return all property, including emails and electronic documents, prepared by him in the course of employment, along with all proprietary information belonging to AMDC at the end of his employment. The agreements between AMDC and Jarrells formed valid and enforceable contracts.”
Based on the foregoing, the court finds Defendant is the prevailing party as to all claims not related to injunctive relief. Plaintiff was found to be the prevailing party on the misappropriation of trade secrets claim and awarded fees based on the contractual language which allowed for fees if Plaintiff obtained injunctive relief. Defendant is therefore not entitled to fees for this portion of Plaintiff’s claims but is entitled to his fees for the remaining portion of Plaintiff’s claims based on contract.
As stated by Judge Moss in his 3/14/2022 ruling (ROA 971):
“As discussed above, plaintiff prevailed in obtaining injunctive relief, entitling it to contractual attorney fees. Therefore it should be determined whether plaintiff is entitled to fees only on the contract claim or whether the fees expended in prosecuting all four of the causes of action should be considered. Attorney fee awards are generally not available for cases of misappropriation of trade secrets. The court has discretion to award attorney fees to the prevailing party on such a claim, but only if it finds a misappropriation was “willful and malicious,” or a claim of misappropriation was made in “bad faith,” or a motion to terminate an injunction was made or resisted in bad faith. Civ.C. § 3426.4. Here, there was no express finding by the court that the alleged misappropriation was “willful and malicious” to support a claim for attorney fees. Therefore, plaintiff is only entitled to fees for the prosecution of the breach of contract claim. “Where a cause of action based on the contract providing for attorney’s fees is joined with other causes of action beyond the contract, the prevailing party may recover attorney's fees under [Civil Code] section 1717 only as they relate to the contract action. [Citation] ... A litigant may not increase his recovery of attorney’s fees by joining a cause of action in which attorney’s fees are not recoverable to one in which an award is proper.” (Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 129; Amtower v. Photon Dynamics, Inc. (2008) 158 Cal.App.4th 1582, 1603–1604.) Accordingly, a prevailing party seeking contractual attorney fees generally must apportion fees between claims that support the recovery of attorney fees and those that do not. (Ibid.) A court properly refuses a request for apportion attorney fees incurred in defending a contract claim and those incurred in defending non-contract claims where all causes of action rely on the same factual allegations. Amtower v. Photon Dynamics (2008) 158 Cal.App.4th 1582, 1603. The court’s determination here is to deny apportionment and permit plaintiff’s attorney fees as to the time spent on obtaining the injunctive relief only. Had plaintiff not made, and the court had not granted, the post-trial permanent injunction, plaintiff wouldn’t be entitled to any fees at all.”
Reasonableness of attorney’s fees
Defendant argues that ALL fees requested, in the total amount of $557,258, are reasonably incurred and must be awarded. The Motion does not demonstrate which portion of Defendant’s fees were incurred in relation to Plaintiff’s claim for injunctive relief and which portions were incurred in relation to the other claims. The Caspino Declaration in support of Motion also fails to make this distinction.
The court has reviewed Defense counsel’s billing statements, attached as Exhibits A-C to the Caspino Declaration.
Based upon this review, the court reduces the amount requested because these billing entries either specifically indicated they were billed in conjunction with Plaintiff’s Motion for Permanent Injunction, or because the billing entries were entirely redacted. The court does not award Defendant fees in conjunction with Plaintiff obtaining injunctive relief for the reasons previously stated in the discussion about prevailing party. The court cannot award fees for billing entries which are entirely redacted because Defendant does not demonstrate that these fees bear a reasonable relationship to the portion of Defendant’s work on claims on which he prevailed.
From Exhibit A—Forward Counsel Billing
The following items are recoverable/stricken:
Inv. 1593—Recoverable $520.00
10/4/22
10/10
10/13
10/28
Inv. 1536-- Recoverable $130.00
9/20/22
Inv. 1451-- Recoverable $7,439.00
Inv. 1404—Recoverable $9,360.00
Inv. 1341—Stricken in Entirety
Inv. 1120—Recoverable $1,820.00
Inv. 1080—Recoverable $11,995.00
1/13/22
Inv. 1053—Recoverable $1,920.00
Inv. 1000—Stricken in Entirety
Inv. 919—Recoverable $1,230.40
Inv. 852—Stricken in Entirety
Exhibit A Recoverable $34,414.40
From Exhibit B—Buchalter Billing
Inv. 924423—Recoverable $1,265.00
Inv. 978717—Recoverable $6,701.08
7/16/19
7/20
Inv. 982769—Recoverable $4,656.45
8/13/19
8/16
8/18
8/22
8/28
Inv. 987876—Recoverable $10,075.60
9/4/19
9/12
9/20
9/24
Inv. 989503—Recoverable $9,147.62
10/3/19
10/7
Inv. 997011—Recoverable $21,138.21
Inv. 1000985—Recoverable $14,979.89
Inv. 1009092—Recoverable $25,990.19
2/7/20
2/19
2/20
2/24
2/26
Inv.1013376—Recoverable $10,982.48
3/11/20
3/12
3/25
Inv. 1017860—Recoverable $16,188.61
4/1/20
4/3
4/6
4/8
4/13
4/14
4/15
4/22
Inv. 1021668—Recoverable $3,214.00
5/6/20
5/11
5/22
Inv. 1025265—Recoverable $2,368.00
Inv. 1031318—Recoverable $2,018.00
Inv. 1035405—Recoverable $6,401.00
8/3/20
8/19
Inv. 1039665—Recoverable $23,830.00
9/21/20
Inv. 1044463—Recoverable $22,123.21
10/19/20
10/20
10/21
Inv. 1045950—Recoverable $57,690.00
11/5/20
11/12
Inv. 1054443—Recoverable $1,185.50
Inv. 1059027—Recoverable $4,202.00
1/11/21
Inv. 1064417—Recoverable $107,876.44
2/8/21
2/14
2/18
Inv. 1069271—Recoverable $118,855.49
3/11/21
Inv. 1074541—Recoverable $8,322.57
Inv. 1079813—Recoverable $8,292.34
Inv. 1081329—Recoverable $328.00
6/17/21
6/18
6/21
6/22
6/23
6/24
6/25
6/30
Inv. 1086259—Recoverable $572.76
7/1/21
7/2
7/8
7/9
Inv. 1094421—Recoverable $10,267.35
Exhibit B recoverable $498,671.79
Exhibit C Theodora Oringher Billing
As a general rule, block billing is an undisciplined practice that can “render it virtually impossible to break down hours on a task-by-task basis between those related to the [particular claims at issue] and those that are not.” Bell Vista Unified School Dist. (2000) 82 Cal.App.4th 672, 689 (Bell Vista). Trial courts retain discretion to penalize block billing when the practice prevents them from discerning which tasks are compensable and which are not. Heritage Pacific Fin., LLC v. Monroy (2013) 215 Cal.App.4th 972, 1010-1011, citing Christian, supra, 165 Cal.App.4th at pp. 1324-1325.
Accordingly, as this exhibit is comprised of block billing, it is stricken.
Therefore, Defendant’s Motion is GRANTED in part as to the request for attorney’s fees and costs. The court awards Defendant $533,086.19 in attorney’s fees and costs.
Order to Show Cause re: Sanctions
Code of Civil Procedure section 128.7 states a court may impose sanctions on a party or attorney that presents a pleading, petition, motion, or other similar papers in the following circumstances:
1) the document is presented primarily for an improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation.
2) the claims, defenses, and other legal contentions therein are not warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law.
3) the allegations and other factual contentions have no evidentiary support;
4) the denials of factual contentions are not warranted on the evidence.
Code of Civil Procedure section 128.7 permits the Court to impose monetary sanctions on an attorney or an unrepresented party that violates any one of these requirements. Eichenbaum v. Alon (2003) 106 Cal App 4th 967, 976. In addition, section 128.7 does not require a finding of subjective bad faith; instead it requires only that the Court find the conduct be objectively unreasonable. In re Marriage of Reese & Guy (1999) 73 Cal. App. 4th 1214, 1221.
Under section 128.7, a court may impose sanctions if it concludes a pleading was filed for an improper purpose or was indisputably without merit, either legally or factually. Bucur v. Ahmad (2016) 244 Cal.App.4th 175, 189-190. A claim is factually frivolous if it is “not well grounded in fact” and is legally frivolous if it is “not warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law.” (Ibid.) In either case, to obtain sanctions, the moving party must show the party's conduct in asserting the claim was objectively unreasonable. (Ibid.) A claim is objectively unreasonable if “any reasonable attorney would agree that [it] is totally and completely without merit.” (Ibid.) However, “section 128.7 sanctions should be ‘made with restraint’ [Citation], and are not mandatory even if a claim is frivolous.” Peake v. Underwood (2014) 227 Cal.App.4th 428. at 448.
Plaintiff requests an Order to Show Cause re: Sanctions on the grounds Defendant’s argument that he is the prevailing party is frivolous. Plaintiff argues Defendant’s argument is frivolous because it is contradicted by the language of Judge Moss’s 3-14-22 order and has been rejected on two previous occasions.
The Court denies Plaintiff’s request for an Order to Show Cause hearing. Based on the foregoing discussion, Defendant’s argument he is the prevailing party is not frivolous, as Defendant was found to be prevailing on certain portions of Plaintiff’s claims. Therefore, sanctions under Code of Civil Procedure section 128.7 are not warranted.
In summary, Defendant, Stephen Jarrells’ (Defendant) Motion for Attorney’s Fees is GRANTED in part. The court awards $533,086.19 in attorney’s fees and costs to Defendant.
Defendant to give notice.