Judge: Monica Bachner, Case: 21STCV22000, Date: 2023-03-21 Tentative Ruling

Department 71: Attorneys who elect to submit on these published tentative rulings, without making an appearance at the hearing, may so notify the Court by communicating this to the Department's staff at (213) 830-0771 before the set hearing time.  See, e.g., CRC Rule 324(b).   All parties are otherwise encouraged to appear by Court Call for all matters.

Case Number: 21STCV22000    Hearing Date: March 21, 2023    Dept: 71

Superior Court of California

County of Los Angeles

DEPARTMENT 71

TENTATIVE RULING

Plaintiff KMI Group, Inc.’s, unopposed motion for attorneys’ fees is granted in the reduced amount of $70,000. 

Plaintiff’s unopposed motion to fix prejudgment interest is granted in the amount of $11,641.10.

Defendants Donald Demery Diaz’s and Postd Merchant Banque, Inc.’s motion to set aside/vacate judgment is denied.

          Plaintiff KMI Group, Inc. (“KMI”) (“Plaintiff”) moves unopposed for an order awarding it attorneys’ fees in the amount of $85,488.00 and fixing prejudgment interest in the amount of $1,452,536.99 against Defendants PostD Merchant Banque, Inc. (“PDMB”), Richard Scott Dvorak (“Dvorak”), Donald Demery Diaz (“Diaz”), GEC Explorations, Inc. (“GEC”), Coleman Ferguson (“Ferguson”), and Sonia Kumar (“Kumar”) (collectively, “Defendants”).  (Notice of Motion Attorney Fees, pg. 2; Civ. Code §3287; C.C.P. §1021.5, §§1033.5(a)(10)(B), (c)(5)(A); Bus. & Prof. Code §17802.)

          Defendants Donald Demery Diaz (“Diaz”) and Postd Merchant Banque, Inc. (“Postd”) moves unopposed to set aside/vacate the judgment.  (Notice of Motion Diaz.)

Request for Judicial Notice

          Plaintiff’s 12/21/22 request for judicial notice of the judgment; summary of evidence, findings, conclusions, and decision of law following court trial; and complaint in the instant action is denied, as this Court does not need to take judicial notice of filings in the instant case.

          Background

On June 11, 2021, Plaintiff filed a complaint alleging causes of action for (1) Breach of Contract (Bank Comfort Letter Agreement); (2) Breach of Contract (Non-Circumvention Agreement); (3) Breach of Contract (Escrow Agreement); (4) Breach of Implied Covenant of Good Faith and Fair Dealing; (5) Fraud (Intentional Misrepresentation); (6) Fraud (Negligent Misrepresentation); (7) Fraud (Concealment); (8) Intentional Interference with Prospective Relations; (9) Conversion; (10) Specific Performance; (11) Unfair Business Practices; and (12) Aiding and Abetting against Defendants arising from Defendants’ alleged conspiracy to defraud Plaintiff, a plastics manufacturer and PPE reseller and redistributor.  (See Complaint.)  This Court held a bench trial on October 3, 2021, and found Defendants conspired and aided and abetted each other to defraud Plaintiff and convert Plaintiff’s funds.  (Judgment.)  This Court entered judgment in favor of Plaintiff and against Defendants, jointly and severally, for general and lost profit damages in the principal sum of $7,720,000.00, punitive damages of $1,000,000.00, prejudgment interest, and attorneys’ fees and costs, to be determined.  (Judgment.)

1.    Plaintiff’s Motion for Attorneys’ Fees and Prejudgment Interest

Plaintiff filed the instant motion on December 21, 2022.  As of the date of this hearing, Defendants have not filed an opposition.  At the Court’s request, on March 13, 2023, Plaintiff filed a supplemental Declaration of Maleki in support of Plaintiff’s motion for attorneys’ fees and a supplemental memorandum of points and authorities in support of Plaintiff’s motion for prejudgment interest.

A plaintiff prevailing on a Business & Professions Code §17200 claim may seek attorneys’ fees as a private attorney general pursuant to C.C.P. §1021.5.  (Walker v. Countrywide Home Loans, Inc. (2002) 98 Cal.App.4th 1158, 1179 [“If a plaintiff prevails in an unfair competition law claim, it may seek attorney fees as a private attorney general pursuant to Code of Civil Procedure section 1021.5.”].).

C.C.P. §1021.5 provides,

[A] court may award attorneys’ fees to a successful party against one or more opposing parties in any action which has resulted in the enforcement of an important right affecting the public interest if: (a) a significant benefit, whether pecuniary or nonpecuniary, has been conferred on the general public or a large class of persons, (b) the necessity and financial burden of private enforcement, or of enforcement by one public entity against another public entity, are such as to make the award appropriate, and (c) such fees should not in the interest of justice be paid out of the recovery, if any. 

(C.C.P. §1021.5.)

A party who prevails on the issues which were actually litigated at the trial will be deemed the prevailing party.  (Foothill Properties v. Lyon/Copley Corona Assocs., L.P. (1996) 46 Cal.App.4th 1542, 1555; see Goodman v. Lozano (2008) 159 Cal.App.4th 1313, 1324-1325 [explaining that the four categories set forth in C.C.P. §1032(a)(4) define “a prevailing party as a matter of law”].)  

Plaintiff’s cause of action under Business & Professions Code §17200 alleged the following: (1) Defendants engaged in a systematic pattern of unfair and fraudulent business practices, including, without limitation, engagement in financial transaction fraud and the herein alleged “Ponzi” scam (Complaint ¶89); (2) Defendants’ conduct was not only fraudulent, by virtue of defendants’ false representations and active concealment of material adverse facts, but also unfair because it provided a false sense of protection to Plaintiff and other enterprises utilizing defendants’ services, thus leaving such enterprises (Complaint ¶90); (3) Defendants systematically and pervasively advanced a business operating model based on unlawful and fraudulent practices as alleged herein using interstate commercial resources, wire and electronic means, all while using electronic means to create, advance and facilitate their conspiracy to perpetrate fraud (Complaint ¶91); and (4) Plaintiff (and other enterprises) have been direct victims of Defendants’ unfair and fraudulent business practices, all of which undermine and compromise the integrity of the established financial, banking and regulatory systems, and the foregoing conduct serves as predicate acts for purpose of Business & Professions Code §17000 et seq. and §17200 et seq (Complaint ¶93).

Plaintiff fully prevailed as to same and obtained a judgment which specifically found in Plaintiff’s favor as to the Business & Professions Code §17200 unfair business practices claim.  Pursuant to C.C.P. §1021.5, Plaintiff is entitled to an award of reasonable attorneys’ fees.  (C.C.P. §1021.5.) Under the plain language of C.C.P. §1032, Plaintiff is the prevailing party.  (Goodman, 159 Cal.App.4th at pgs.1324-1325.)

Reasonableness of Hourly Rate

“[T]the 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.)  In making this calculation, the reasonable hourly rate is the “prevailing rate for private attorneys in the community” handling litigation of the same type.  (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1133.)  The lodestar may then be adjusted to account for other factors, such as the contingent nature of any fee recovery, the results obtained, and the public interests served.  (Id. at pgs. 1133-1136.)  In making its calculation, the court may rely on its own knowledge and familiarity with the legal market, as well as the experience, skill, and reputation of the attorney requesting fees, the difficulty or complexity of the litigation to which that skill was applied, and affidavits from other attorneys regarding prevailing fees in the community and rate determinations in other cases.  (569 East County Boulevard LLC v. Backcountry Against the Dump, Inc. (2016) 6 Cal.App.5th 426, 437.) 

Plaintiff’s counsel declares his hourly rate was $560.00 in 2021 and $600 in 2022.  (Decl. of Maleki ¶4.)  Plaintiff submitted an invoice of attorneys’ fees for professional services rendered for a total of 144 hours.  (Decl. of Maleki ¶2, Exh. A.)  Plaintiff sufficiently demonstrated counsel’s hourly rates are reasonable and commensurate with the rates of other attorneys of comparable skill and experience in the legal community.  (Supp.-Decl. of Maleki ¶¶3-13.)

Reasonableness of Hours for Actual Work Performed

Plaintiff’s counsel presented detailed billing records.   Here, the Court notes that counsel included hours spent for motions to compel which have already been awarded as monetary sanctions, and that certain hours billed were for clerical rather than legal work (for example, preparing trial notebooks).  The Court will reduce the requested hours to reflect these issues. Based upon these reductions, the Court finds that attorney’s fees in the amount of $70,000 are reasonable and supported. (Decl. of Maleki ¶2, Exh. A.) 

Prejudgment Interest

Prejudgment interest compensates a plaintiff for the loss of the use of property or money during the period before a judgment is entered.  (Segura v. McBride (1992) 5 Cal.App.4th 1028, 1041.)  “It is commonly recognized that prejudgment interest represents the accretion of wealth that particular property could have produced during a period of loss.”  (Newby v. Vroman (1992) 11 Cal.App.4th 283, 289.)  As such, “[it] is well established that prejudgment interest is not a cost, but an element of damages.”  (North Oakland Medical Clinic v. Rogers (1998) 65 Cal.App.4th 824, 830.)

Prejudgment interest may be awarded even if it is not specifically authorized by the statute underlying the claims.  (County of Solano v. Lionsgate Corp. (2005) 126 Cal.App.4th 741, 752.)  All that is required for an award of prejudgment interest is for the underlying damages to be “certain” or “capable of being made certain by calculation.”  (Civ. Code §3287(a); Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 174-175.)  Here, the amount of damages that was “lost profits” were not certain or capable of being made certain by calculation.  Nor are punitive damages certain.  Thus, the Court declines to award prejudgment interest on the “lost profits” or punitive damages. As to the $100,000, the appropriate rate of interest is 7%.  The Court calculates prejudgment interest from the period from February 25, 2021 – October 25, 2022 as $11,641.10.

Accordingly, Plaintiff’s motion for prejudgment interest is granted in the amount of $11,641.10.

Conclusion

Accordingly, Plaintiff’s unopposed motion for attorneys’ fees is granted in the amount of $85,488.00. 

Plaintiff’s unopposed motion to fix prejudgment interest is granted in the amount of $11,641.10

2.    Defendants Diaz’s and Postd’s Motion to Set Aside/Vacate Judgment

On February 17, 2023, Defendants Diaz and Postd filed a motion to set aside/vacate judgment in the instant matter.[1]  On March 13, 2023, Plaintiff filed the Declaration of Maleki, Re: Non-Service of Motion to Set Aside Judgment, indicating Plaintiff was not served with Defendants Diaz’s and Postd’s motion, in violation of C.C.P. §1005(b).  Plaintiff’s declaration states Defendants’ failure to serve the motion on Plaintiff constitutes a due process violation and Plaintiff requests this Court deny Defendants’ motion, or in the alternative, provide Plaintiff an opportunity to submit an opposition thereto.  In light of the Court’s ruling on Defendants’ motion, Plaintiff’s request to file an opposition is moot.

Defendants move to set aside judgment under Rule 12(b)(6) of the Federal Rules of Civil Procedure, which are not applicable to nor binding on this Court, but which the Court construes as a motion for a new trial.  Notice of entry of judgment was filed on October 27, 2022.  Accordingly any motion for a new trial is not timely.  (See C.C.P. § 659(a)(2).)

Accordingly, Defendants’ motion to set aside/vacate judgment is denied.

Dated: March _____, 2022

Hon. Monica Bachner

Judge of the Superior Court