Judge: Mitchell L. Beckloff, Case: BC567865, Date: 2023-03-29 Tentative Ruling

Case Number: BC567865    Hearing Date: March 29, 2023    Dept: 86

KHORSHIDI v. JAVAHERI

Case Number: BC567865 [r/t BC408948]

Hearing Date: March 29, 2023

[Tentative]       ORDER GRANTING THE MOTION FOR ATTORNEY FEES

Defendants, Alexander Javaheri and David Javaheri (jointly, the Javaheris), move for an award of attorney’s fees in the sum of $163,945.17. Plaintiffs, Michael Khorshidi and Nejatolah Rabbanian (jointly, K&R) oppose the motion.

The motion is granted.

K&R’s request for judicial notice of Exhibits B through I is granted. (Evid. Code, § 452, subd. (d).)

RELEVANT PROCEDURAL HISTORY

This court entered judgment in favor of K&R (the 2017 Judgment). The court found in favor of K&R on their breach of contract and breach of fiduciary duty claims. The judgment awarded K&R each $89,364.90 jointly and severally against the Javaheris. The court found the Javaheris improperly adjusted and diverted joint venture distributions owed to K&R.

To reach its conclusion concerning damages for K&R, the court found the Javaheris were entitled to $276,100 from each of K&R as of February 28, 2010 and then considered the Javaheris sweep of K&R joint venture distributions over the years. The court did not, however, make an award of prejudgment interest for the Javaheris on that February 28, 2010 amount due from K&R.

The Court of Appeal reversed this court’s 2017 Judgment on the narrow issue of the Javaheris’ entitlement, if any, of prejudgment interest on K&R’s $276,100 obligation. The Court of Appeal remanded for consideration of that issue.

On November 22, 2022, this Court entered a new judgment (the 2022 Judgment) awarding the Javaheris prejudgment interest as of February 28, 2010 on K&R’s $276,100 obligation to them. Based on the prejudgment interest award, the court found K&R would receive no damages on their breach of contract and breach of fiduciary duty claims. Instead, the court awarded Alexander Javaheri and David Javaheri of $44,735.33 and $32,528.56 respectively from K&R.

The Javaheris move for their prejudgment attorney’s fees.

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ANALYSIS

The Javaheris seek attorney’s fees of $163,945.17 pursuant to Civil Code section 1717, subdivision (b)(1) [prevailing party on a contract], and the attorney’s fees provision in the joint venture agreement. The Javaheris report they incurred the fees in obtaining the 2022 Judgment as well as for services related to K&R’s motion for a new trial.

              Entitlement

As a preliminary matter, K&R contend consideration of any attorney’s fees motion is premature. K&R advise: “. . . long-standing California case law stands in direct contrast to the Javaheris’ position in this respect, in that such a determination can only be made once there has been a final disposition of the entire matter, including the issues pending on appeal.” (Opposition 6:24-7:2.) K&R contend a prevailing party determination for purposes of Civil Code section 1717 cannot be made until any appeal is decided. As K&R filed an appeal of the 2022 Judgment, K&R conclude any award of attorney’s fees must wait until the conclusion of their appeal.

The authorities K&R rely upon to support their position, however, are inapposite. For example, Liu v. Moore (1999) 69 Cal.App.4th 745, 754-755, addressed a request for attorney’s fees related to a reversal of a trial court’s denial of a special motion to strike where the operative pleading had been voluntarily dismissed prior to hearing. The Court of Appeal noted:

“At this stage of the proceedings, however, [the successful appellant] finds herself in an situation which is similar to that of a litigant who has succeeded in securing the reversal of a summary judgment on appeal. In such a case, attorney’s fees are not awardable to the litigant at that time under section 1021.5 . . . or under Civil Code section 1717 . . . . Rather, the issue of the right to attorney’s fees for the successful appeal is deferred until the final resolution of the merits of the case. [Citation.] Thus, under these statutes, . . . while [the successful appellant] may ultimately be entitled to an award of attorney’s fees, an award for this interim appellate success would be premature. . . .” (Ibid.)

Jackson v. Homeowners Assn. Monte Vista Estates-East (2001) 93 Cal.App.4th 773, 776, also relied upon by K&R, addresses Civil Code section 1717, subdivision (b)(2), a provision not relied upon by the Javaheris. The case explains Bank of Idaho v. Pine Avenue Associates (1982) 137 Cal.App.3d 5 and its holding that “[w]hen an [interim] order sustaining a demurrer is reversed, the prevailing party obviously cannot be determined because the case had not yet been tried.” (Id. at 780.)

Snyder v. Marcus & Millichap (1996) 46 Cal.App.4th 1099 is similar. Despite having prevailed on the two issues raised on appeal, the defendant “was still only the prevailing party in its partial appeal, not the prevailing party in its lawsuit.” (Id. at 1102.) The plaintiff recovered greater monetary relief albeit reduced somewhat based on the defendant’s successful appeal.

Additionally, as noted by the Javaheris, the California Rules of Court required them to file their motion “within the time for filing a notice of appeal . . . .” (Cal. Rules of Court, Rule 3.1702, subd. (b)(1).) Such filing is required for a “notice of motion to claim attorney’s fees for services up to and including the rendition of judgment in the trial court—including attorney’s fees on an appeal before rendition of the judgment in the trial court—[].” (Ibid.)

Simply stated, the filing a notice of appeal does not stay any proceedings to determine the matter of costs and does not prevent the trial court from determining a proper award of attorney fees claimed as costs. (Korchemny v. Piterman (2021) 68 Cal.App.5th 1032, 1052.)[1]

Accordingly, K&R’s position this motion is premature is unpersuasive.

As to the merits of the motion, K&R contend the Javaheris are not prevailing parties and therefore not entitled to an award of attorney’s fees pursuant to Civil Code section 1717. K&R support their position with a recitation of a partial history of this long-running and contentious litigation and this Court’s findings in the 2017 Judgment. They argue the Javaheris “attempt to paint themselves here as being entirely blameless and imply that they were exonerated from any wrongdoing in this matter in order to support their fictional narrative that they are the ‘unqualified prevailing party.’ ” (Opposition 8:20-22.)

The court acknowledges the many twists and turns in this litigation—litigation that began in 2014—and the related litigation. That said, relevant to this motion is the 2022 Judgment issued after remand by the Court of Appeal. In the 2022 Judgment, the court awarded the Javaheris $44,735.33 and $32,528.56. K&R take nothing under the 2022 Judgment. The Javaheris are the parties who “recovered a greater relief in the action on the contract . . . .” (Civ. Code, § 1717, subd. (b)(1). See also Raucher Decl., ¶ 13, Ex. B [parties’ contract language “parties prevailing in such an action”].)

Based on the 2022 Judgment, the court finds no dispute about who prevailed on the action on the contract. The Javaheris received a net monetary recovery; K&R received nothing. The basis for the Javaheris’ recovery—the award and calculation of prejudgment interest—is of no moment. The Javaheris “recovered a greater relief in the action on the contract.” (Civ. Code, § 1717, subd. (b)(1).)

While the prejudgment calculations ultimately resulted in the Javaheris recovering greater relief on the contract, they did do just that. They are the prevailing parties despite K&R’s focus on wrongdoing by the Javaheris.

The court is also not persuaded a finding of no prevailing party is appropriate here. The Javaheris obtained a net judgment of $44,735.33 and $32,528.56 against K&R. There can be no dispute the Javaheris recovered greater relief against K&R. That is, in the complete action on the contract, the Javaheris recovered a greater amount.

As explained by the Supreme Court in a case relied upon by K&R:

“We are persuaded that this construction of section 1717 properly reflects and effectuates legislative intent. It is consistent with the underlying purposes of the statute—to achieve mutuality of remedy—and it harmonizes section 1717 internally by allowing those parties whose litigation success is not fairly disputable to claim attorney fees as a matter of right, while reserving for the trial court a measure of discretion to find no prevailing party when the results of the litigation are mixed.” (Hsu v. Abbara (1995) 9 Cal.4th 863, 876 [emphasis added].)

The Supreme Court provided examples where courts found mixed litigation results resulting in an appropriate finding of no prevailing party. (Kytasty v. Godwin (1980) 102 Cal.App.3d 762 [claimed easement valid, scope of easement more narrow than claim]; Nasser v. Superior Court (1984) 156 Cal.App.3d 52 [lease extension valid, rent fixed substantially higher than claimed]; Banks v. Lucas (1992) 9 Cal.App.4th 365 [no relief granted on cross-actions on covenants, conditions and restrictions].)

Based on the foregoing, the court finds the Javaheris are the prevailing on the contract.

              Reasonable Award

The Javaheris contend the amount of attorney’s fees they seek is reasonable. They request fees in the amount of $163,945.17. The explain they incurred $67,292.50 in attorney’s fees with their prior counsel, Derek Tabone and $96,652.67 with their current counsel.

“[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.” (PLCM Group v. Drexler (2000) 22 Cal.4th 1084, 1095.) “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.” (Margolin v. Regional Planning Com. (1982) 134 Cal.App.3d 999, 1004-1005.)

“Section 1717 provides for the payment of a ‘reasonable’ fee. After the trial court has performed the calculations [of the lodestar], it shall consider whether the total award so calculated under all of the circumstances of the case is more than a reasonable amount and, if so, shall reduce the section 1717 award so that it is a reasonable figure.” (Sternwest Corp. v. Ash (1986) 183 Cal.App.3d 74, 77.)

“[T] the determination of what constitutes reasonable attorney fees is committed to the discretion of the trial court.” (Melnyk v. Robledo (1976) 64 Cal.App.3d 618, 623-624.)

K&R argue the fees sought by the Javaheris are unreasonable. In fact, K&R assert the court should apply a “significant negative multiplier” based on the Javaheris’ allegedly limited success on the merits of their claims. (Opposition 12:6.)

K&R also assert the Javaheris have made proper allocation of attorney’s fees “an impossible task because they do not segregate out the hours spent on claims for they did not prevail on, for which attorney’s fees are not recoverable.” (Opposition 12:8-9.) The Javaheris’ attorneys “do not segregate those fees they are claiming based on successful claims for which attorney’s fees would be appropriate versus those claims they did not prevail on, such as K&R’s breach of contract and breach of fiduciary duty claims.” (Opposition 12:10-13.)

The court acknowledges it cannot connect attorney tasks to specific claims in the litigation. Nonetheless, the court is not required to apportion an award of attorney’s fees where a party has not prevailed on every claim asserted. In fact, given the complex nature of the case, the competing claims, the consolidated trial, and the overlap of claims, the court declines to reduce fees for the Javaheris based on a lack of success as to all of their claims.

K&R also challenge a few categories of services in Mr. Tabone’s billing records. The only “specific” challenge to the attorney fees is limited to the following categories:

8/31/15 – 9/6/15: K&R contend 10.5 hours billed generally for “work on opposition to petition” is without sufficient description or breakdown. (Tabone Decl., Ex. A.)

12/1/15 – 12/11/15: K&R contend 5.8 hours billed generally for “work on discovery responses” is without sufficient description or breakdown. (Tabone Decl., Ex. A.)

5/16/17 – 5/18/17: K&R contend 13.5 hours billed generally for work related to “objections” is without sufficient description or breakdown. (Tabone Decl., Ex. A.)

7/29/19 – 8/27/19: K&R contend 22.5 hours billed generally for “work on opening brief” is without sufficient description or breakdown justifying the significant time billed. (Tabone Decl., Ex. B.)

K&R minimize and understate the amount of information provided in the descriptions for work performed by the Javaheris’ counsel. The court finds based on its own review of the billing records adequate detail is provided to allow the court to ascertain the nature of the services provided, and whether the time expended was reasonable.

As to the specifically challenged time entries, the court declines to reduce the number hours expended for the tasks described.

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CONCLUSION

Based on the foregoing, the motion is granted as prayed.

IT IS SO ORDERED.

March 29, 2023                                                                      ________________________________

                                                                                                                   Hon. Mitchell Beckloff

                                                                                                                   Judge of the Superior Court