Judge Monica Bachner, Case BS172538 2023-03-28 Tentative Ruling

Specially Appearing Non-Party Los Angeles Apparel, Inc.’s motion for attorneys’ fees and costs is granted in the reduced amount of $695,000.

Specially Appearing Non-Party Los Angeles Apparel, Inc. (“LAA”) (“Non-Party”) moves for an order awarding attorneys’ fees to be paid by Judgment Creditors P Standard General Ltd. (“P Standard”) and Standard General Master Fund, L.P. (“Standard General”) (collectively, “Judgment Creditors”). (Notice of Motion, pg. 2; Civ. Code §1717.) Specifically, LAA seeks attorneys’ fees in the amount of $992,155.00, as well as costs for bringing this motion. (Notice of Motion, pg. 2.) In opposition, Judgment Creditors argue LAA because the statute on which LAA relies is not applicable, California law does not govern this action, and LAA’s outsized request is unreasonable. (Opposition, pg. 1.)

Judgment Creditors’ 1/18/2023 request for judicial notice is granted as to the Judgment of the Superior Court of California, County of Los Angeles, Central District in Case No. BC581130, dated January 29, 2016 (P-RJN, Exh. 1); Judgment of the Superior Court of California, County of Los Angeles, Central District in Case No. BC581130, dated September 25, 2017 (P-RJN, Exh. 2); and Appellants’ Motion to Vacate Dismissal and Reinstate Appeal; and Declaration of Jessica Taran; [Proposed] Order, filed by Judgment Creditors in Case No. B323413 on January 9, 2023 (P-RJN, Exh. 12).

Judgment Creditors have three judgments against Judgment Debtor Dov Charney (“Charney”) (“Judgment Debtor”): (1) Judgment entered on January 29, 2016, in the amount of $151,808.16 (“First Judgment”); (2) Judgment entered on September 25, 2017, in the amount of $92,045.79 (“Second Judgment”); and (3) Judgment entered in the Delaware Court of Chancery and filed in this Court on February 16, 2018, in the amount of $29,481,097.60 (“Third Judgment”) (collectively, “Judgments”). (P-RJN, Exhs. 1, 2.) On August 26, 2019, this Court amended the Third Judgment to add two of Defendant Charney’s alter egos, Art, Commerce and Manufacturing Solutions, LLC (“ACMS”) and Apex Real Estate Management, LLC (“Apex RE”) as Judgment Debtors. (8/26/19 Amended Judgment.) On July 26, 2022, this Court added Schmatta LA, Inc. (“Schmatta LA”) as an additional Judgment Debtor. (7/26/22 Ruling.) On August 30, 2022, this Court denied Judgment Creditors’ motion to amend the judgment to add Non-Parties LAA and Morris as Trustee as additional judgment debtors. (8/30/22 Ruling.)

Non-party LAA filed the instant motion on October 31, 2022. Judgment Creditors filed their opposition on January 18, 2023. On January 24, 2023, LAA filed its reply. On February 6, 2023, this Court continued the hearing on the instant motion and directed parties to file supplemental declarations and briefs and responses. On February 28, 2023, Judgment Creditors filed their supplemental brief in opposition. On March 7, 2023, LAA filed its supplemental brief. The Court held a hearing on March 21, 2023. Based upon that hearing, the Court ordered supplemental briefing regarding C.C.P. § 685.040. Judgment Creditors filed their second supplemental brief on March 23, 2023, and LAA filed its response on March 27, 2023.

Judgement Creditors argue no fees should be awarded to LAA on the basis that it is unconstitutional to look behind a sister state judgment to examine its basis and impose conditions on its enforcement under California law, such as an award of attorneys’ fees under §1717. (Aspen International Capital Corp. v. Marsch (1991) 235 Cal.App.3d 1199.) However, Aspen International provides that the prohibition for the collection of attorneys’ fees under C.C.P. §685.040 does not apply to a provision within a sister state judgment that expressly provides for awarding such fees, which must be enforced pursuant to the full faith and credit clause of the U.S. Constitution. (U.S. Const. art. IV, §1; Aspen International Capital Corp., 235 Cal.App.3d at pg. 1206.) Furthermore, Aspen International states that the California Sister State Money Judgments Act, C.C.P. §§1710.10 et seq., specifically C.C.P. §1710.35 provides,

“Except as otherwise provided in this chapter, a judgment entered pursuant to this chapter shall have the same effect as an original money judgment of the court and may be enforced or satisfied in like manner.” At minimum, this section provides for enforcement of the original money judgment as if it were in fact a California decree. In other words, because the original decree provided for recovery of those costs and attorney’s fees incurred in collecting the judgment, it becomes enforceable as a part of that decree, outside the application and proscription of section 685.040.

(Aspen International Capital Corp., 235 Cal.App.3d at pgs. 1205-1206.) Here, like in Aspen International, attorneys’ fees are recoverable as costs, and this Court must look to the underlying contracts that expressly provide for attorneys’ fees.

Civil Code §1717 provides, in 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(a), emphasis added.)

“The court, upon notice and motion by a party, shall determine who is the party prevailing on the contract for purposes of this section, whether or not the suit proceeds to final judgment. Except as provided in paragraph (2), the party prevailing on the contract shall be the party who recovered a greater relief in the action on the contract. The court may also determine that there is no party prevailing on the contract for purposes of this section.” (Civ. Code §1717(b)(1).)

LAA argues Civil Code §1717 applies because the section “refers to ‘any action on a contract’ thus including any action where it is alleged that a person is liable on a contract, whether or not the court concludes he is a party to that contract.” (Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124, 128.) LAA argues in Reynold Metals Co. v. Alperson, where the plaintiff unsuccessfully claimed that non-signatory defendants were liable as alter egos of the debtor companies that defaulted on two promissory notes, the Supreme Court of California concluded that “[s]ince the [non-signatory defendants] would have been liable for attorney’s fees pursuant to the fees provision had plaintiff prevailed, they may recover attorney’s fees pursuant to section 1717 now that they have prevailed.” (Id., at pgs. 127-129.) LAA seeks to recover attorneys’ fees pursuant to the unilateral attorneys’ fees provisions in the PSG Note, MF Note, Pledge Agreement, and Credit Agreement, described below.

On June 25, 2014, Judgment Creditor Standard General emailed a letter addressed to Judgment Debtor Charney that detailed the arrangement by which Judgment Creditor Standard General would enter into security and loan agreements to finance Judgment Debtor Charney’s purchase of American Apparel shares. (Decl. of Charney ¶4.) Dov Charney signed that letter the same day (the “Letter Agreement”). (Decl. of Charney ¶4, Exh. A.) The Letter Agreement contained a New York choice-of-law provision. (Decl. of Charney ¶4, Exh. A at pg. 3.)

On August 25, 2014, Judgment Debtor Dov Charney (“Charney”) (“Judgment Debtor”) signed promissory notes with Judgment Creditor P Standard for the principal amount of $4,595,593.86 (“PSG Note”) and with Judgment Creditor Standard General for the principal amount of $14,960,662.14 (“MF Note”). (Decl. of Charney ¶6, Exhs. D, E.) Both the PSG Note and the MF Note had New York choice-of-law provisions and unilateral attorney’s fees provisions. (Decl. of Charney ¶6, Exhs. D, E at ¶¶13, 20.) The unilateral attorneys’ fees provision reads as follows:

The Borrower agrees to pay on demand all costs and expenses in connection with the enforcement (whether through legal proceedings, negotiations or otherwise) of this Note and all other Credit Documents (such costs and expenses shall include, without limitation, the reasonable fees and disbursements of legal counsel to [Standard General] and the Lenders) . . .. The obligations of the Borrower under this paragraph shall survive the payment in full of this Note.

Judgment Creditor Standard General and Judgment Debtor Charney entered into a Credit Agreement on August 25, 2014, which had a New York choice-of-law provision and was signed by Judgment Debtor Charney in Los Angeles. (Decl. of Charney ¶7, Exh. F at pg. 2.) The Credit Agreement contains a unilateral attorneys’ fees provision that reads:

You agree to indemnify [Standard General], the Lenders and their respective Affiliates and agents against… (ii) all costs and expenses (including reasonable attorneys’ fees, disbursements and costs) incident to the collection of amounts owed by you under the Credit Documents or the enforcement of [Standard General]’s or any Lender’s rights hereunder and any document or instrument referred to herein or executed in connection herewith, and any legal proceedings related hereto.

You agree to indemnify [Standard General], the Lenders and their respective Affiliates and agents against… (ii) all costs and expenses (including reasonable attorneys’ fees, disbursements and costs) incident to the collection of amounts owed by you under the Credit Documents or the enforcement of SG’s or any Lender’s rights hereunder and any document or instrument referred to herein or executed in connection herewith, and any legal proceedings related hereto.

Judgment Creditor Standard General and Judgment Debtor Charney entered into a Pledge Agreement on August 25, 2014, which had a New York choice-of-law provision and was signed by Judgment Debtor Charney in Los Angeles. (Decl. of Charney ¶7, Exh. G at §14.) The Pledge Agreement contains a unilateral attorneys’ fees provision that reads:

The Pledgor [Charney] agrees to pay to [Standard General] all reasonable expenses (including, without limitation, reasonable attorneys’ fees and costs) incident to (a) the exercise or enforcement of any of the rights of [Standard General] or any Lender hereunder, and (b) the failure by the Pledgor to perform or observe any provision hereof.

The Letter Agreement provides that “SG will lend to Charney,” “Charney shall enter into the following Warrant Agreements,” and “Charney shall enter into a cooperation agreement.” (Decl. of Charney ¶4, Exh. A at ¶¶1-3.) The Credit Agreement states: “This Credit Agreement, the Notes, the Pledge Agreement and the other Credit Documents constitute the definitive loan contemplation contemplated by the June 25 Letter Agreement,” and then states that the effectiveness of the Credit Agreement is conditioned on Standard General having received the signed Credit Agreement, PSG Note, MF Note, Pledge Agreement, and Warrant Agreement. (Decl. of Charney ¶7, Exh. F at pgs. 1-2.) Altogether, the agreements constituted one transaction. Because the agreements together constituted one transaction, Judgment Creditor Standard General sued Judgment Debtor Charney for breach of all seven agreements and moved for judgment on the pleadings in the Court of Chancery of the State of Delaware on February 28, 2017, seeking entry of a judgment confirming the enforceability of the seven written agreements and ordering Judgment Debtor Charney to pay the amount of PSG Note and the MF Note, plus interest and attorney’s fees. (Decl. of Charney ¶8.) The Court of Chancery of Delaware granted the motion in part on December 19, 2017, finding that each of the seven agreements were valid, binding, and enforceable. (Decl. of Charney ¶8, Exh. J at ¶¶4-11.)

Judgment Creditors argue in opposition that Civil Code §1717 is inapplicable here because LAA is not a party to this proceeding, let alone a “party prevailing on the contract” under §1717. (Opposition, pg. 9.) Judgment Creditors argue there must be “final resolution” of contract claims to give rise to a prevailing party, and the Court in determining who prevails looks to the extent of each party’s success and failure. (In re American Suzuki Motor Corp. (C.D. Cal. 2013) 494 B.R. 466, 493; see also Chen v. Valstock Ventures, LLC (2022) 81 Cal.App.5th 957 [“interim attorney’s fees awards are anomalous in civil litigation”], as modified (Aug. 24, 2022).) The Court may exercise its “discretion to decline to award fees to either party” “[w]hen the results are mixed” and “may also weigh equitable considerations when exercising its discretion.” (City of Los Angeles Department of Airports v. U.S. Specialty Insurance Co. (2022) 79 Cal.App.5th 1039, 1043, review denied (Sept. 28, 2022).)

Judgment Creditors further argue in opposition that Reynold Metals Co. is inapposite because it contemplates that a contractual non-signatory seeking fees under §1717 would be “sued on a contract as if he were a party to it,” whereas here, this Court simply denied Judgment Creditors’ Motion to Amend with respect to LAA and Morris as Trustee in this proceeding because the evidence it had available at that point did not satisfy its “burden to establish [LAA] is the alter ego of Charney for purposes of amending the operative judgment.” (Opposition, pg. 9, citing Reynolds Metals Co., 25 Cal.3d at pg. 128.)

Judgment Creditors further argue that LAA can not recover fees since SG was precluded from recovering fees pursuant to C.C.P. § 685.040. (Second Supp. Brief, pgs. 1-2.) This argument has been rejected by MSY Trading, Inc. v. Saleen Automotive, Inc. (2020) 51 Cal. App. 5^th 395 (“MSY Trading”) where the Court held:

Plaintiffs contend this is not an action on the contract and, therefore, fees are unavailable under Civil Code section 1717. Instead, it is an enforcement action. They cite case law for the proposition that a judgment on the contract subsumes and extinguishes contractual rights. On the other hand, had plaintiffs included Steve as a defendant in the Riverside suit, making the exact same alter ego allegations they make here, undoubtedly Steve would have been entitled to contractual attorney fees under the doctrine of reciprocity established by Civil Code section 1717 and Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124, 158 Cal.Rptr. 1, 599 P.2d 83 (Reynolds Metals), even though he was not a signatory on the contract.

We conclude Steve has the better argument. The timing of an alter ego claim—either prejudgment or postjudgment—is too arbitrary a consideration on which to base the right to attorney fees. When a judgment creditor attempts to add a party to a breach of contract judgment that includes a contractual fee award, the suit is essentially “on the contract” for purposes of Civil Code section 1717.

In a cross-appeal, defendants contend the court lacked jurisdiction to hear this case under the doctrine of exclusive concurrent jurisdiction, and that, in any event, Code of Civil Procedure section 685.040 did not permit plaintiffs to recover fees from the defendant that the court found was the alter ego of the judgment debtors. We conclude the cross-appeal lacks merit. Accordingly, we affirm the judgment in full.

MSY Trading further held, for the purposes of fees, an alter ego proceeding is an action on a contract: “ a postjudgment, independent action to establish alter ego liability for a judgment on a contract is itself an action on the contract,” within the meaning of § 1717, entitling a defendant to an award of attorney’s fees if the underlying contract allowed for them. (Id. at pg. 403.) As explained by MSY Trading, treating an alter ego claim like the one here as an action on a contract maintains consistent treatment regardless of the procedural mechanism a judgment creditor adopts to seek recovery against an alter ego. Judgment Creditors could have: (1) “sue[d] the alter ego directly in an action for breach of contract,” (2) “obtain[ed] a judgment for breach of contract against the signatories of the contract, followed by a motion to amend the judgment to add the alter egos as defendants,” or (3) “obtain[ed] a judgment against the signatories,” and then “institute an independent action against the alter egos.” (See Id. at pgs. 402-03.) These different procedural vehicles would be “identical in substance: in all three, the proof of alter ego is the same.” (Id. at pg. 403.) Thus, to avoid having the availability of fees depend on the procedural route chosen, courts deem all 3 to be actions on the contract, permitting the recovery of attorney’s fees under § 1717. (Id.)

The Court is not convinced by Judgment Creditors’ argument. Here, as in Reynolds Metals Co., had Judgment Creditors prevailed on its claim that LAA and Morris as Trustee were alter egos of Judgment Creditor Charney, LAA and Morris as Trustee would have been liable on the notes, and as such, they may recover attorney’s fees pursuant to §1717 now that they have prevailed. (Id. at pgs. 127-129.)[1] Accordingly, §1717 applies to LAA as the prevailing party under the contract. (See also Rainier National Bank v. Bodily (1991) 232 Cal. App. 3d 83 [applying § 1717 to a domesticated judgment].)

In the case of contracts with choice-of-law provisions, California will not apply the substantive law designated by the contract if the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for selecting that state. (Nedlloyd Lines B.V. v. Superior Court (1992) 3 Cal.4th 459, 466.). Thus, once a court determines the parties’ intention as to a choice-of-law clause, the court will next analyze whether the chosen jurisdiction has a substantial relationship to the parties or their transaction; or there is any other reasonable basis for the choice-of-law provision exists. (Hatfield v. Halifax PLC (9th Cir. 2009) 564 F.3d 1177.) If the chosen jurisdiction has a substantial relationship to the parties or their transaction, a California court will enforce a choice-of-law provision unless the chosen jurisdiction’s law is contrary to California public policy. (Id.) “If there is no such conflict, the court shall enforce the parties’ choice of law. If, however, there is a fundamental conflict with California law, the court must then determine whether California has a ‘materially greater interest than the chosen state in the determination of the particular issue.’ (Rest., § 187, subd. (2).) If California has a materially greater interest than the chosen state, the choice of law shall not be enforced, for the obvious reason that in such circumstance we will decline to enforce a law contrary to this state’s fundamental policy.” (Nedlloyd Lines B.V., 3 Cal.4th at pg. 466.)

Judgment Creditors argue even if §1717 applies to LAA, this Court can deny the instant motion on the basis that California law does not apply to the issue of contractual attorneys’ fees because the agreements that contain unilateral attorneys’ fees provisions include New York choice of law provision and the litigation that gave rise to the Judgment occurred in Delaware. (Opposition, pg. 10.)

Assuming arguendo, that the first determination in Neddloyd Lines could be met, having conflicting choice of law provisions of New York or Delaware and the entire nexus of the transaction in California support a finding against the first determination. (See id. at pg. 459.) Next, California case law and the legislative record demonstrate that Civil Code §1717 establishes a fundamental policy of California for uniform treatment of fee recoveries in actions on contracts containing attorney fee provisions, which is contrary to New York and Delaware law. (PLCM Group v. Drexler (2000) 22 Cal.4th 1084, 1091, as modified (June 2, 2000), quoting Santisas v. Goodin (1998) 17 Cal.4th 599, 616; ABF Capital Corp. v. Grove Properties Co. (2005) 126 Cal.App.4th 204, 217; see also Ribbens International, S.A. de C.V. v. Transport Intern. Pool, Inc. (C.D. Cal. 1999) 47 F.Supp.2d 1117, 1122.)

Finally, California has a materially greater interest than New York and Delaware in determination of the instant case and is analogous to ABF Capital Corp. v. Grove Properties Co. In ABF Capital Corp, the relevant transaction was a New York partnership agreement to be performed in New York, with a New York choice of law clause, concerning business outside of California. (ABF Capital Corp., 126 Cal.App.4th, at pg. 219.) In ABF Capital Corp., the party choosing litigation availed itself of California courts, and the court held that “the interest of California in seeing its residents receive fair play with respect to attorney fees, when resort is made to the California courts, is a fundamental equitable policy of this state.” (Id. at pgs. 219-220.) The ABF Capital Corp. Court stated, “California has a materially greater interest in enforcing the equitable rules governing access to its courts—including the reciprocal attorney fees rule—than New York in assuring the enforcement of New York law concerning attorney fees, when those attorney fees are not incurred as a result of any use of New York courts and have no effect on the accessibility to New York courts.” (Id. at pg. 220.)

Judgment Creditors argue ABF Capital Corp. is inapposite because the action in ABF occurred in California, whereas here the action giving rise to the Judgment in took place in Delaware, and LAA is a Delaware Corporation, not a California Corporation. (Opposition, pg. 10; Decl. of Taran, Exh. B.) However, the underlying lawsuit has a substantial nexus to California: Here, before June 2014, Standard General had made two proposals to finance American Apparel, Inc., a California-based company that employed California resident Charney as its chief executive officer and conducted extensive due diligence. (Decl. of Charney ¶2.) Within a day or two of American Apparel terminating Charney on June 18, 2014, Standard General approached Charney and offered to finance his fight to retake American Apparel. (Decl. of Charney ¶2.) On June 25, 2014, Standard General sent the Letter Agreement to Charney and his Los Angeles counsel, and Charney signed the Letter Agreement in Los Angeles. (Decl. of Charney ¶2.) Charney signed the Cooperation Agreement and Nomination Agreement on July 9, 2014, the latter of which contained a Civil Code §1542 waiver provision. (Decl. of Charney ¶2.) The Credit Agreement, Pledge Agreement, Warrant Agreement, PSG Note, and MF Note were signed on August 25, 2014, and Charney’s signature on the PSG and MF Notes were notarized in Los Angeles, California. (Decl. of Charney ¶6, Exhs. D, E.) The place of performance for the various contracts was also California. The PSG and MF Notes paid funds to Charney in California to assist his purchase of shares of a California-based company, which shares were then pledged to secure the PSG and MF Notes. (Decl. of Charney ¶6, Exhs. D, E.) The Warrant Agreement provided that Charney would issue warrant certificates to Standard General, which could be exchanged by surrender of a warrant certificate at 1809 Apex Avenue in Los Angeles, California. (Decl. of Charney ¶7, Exh. H at §§2.3, 4.1(a).) After Standard General secured the judgment at issue against Charney in Delaware—while simultaneously engaged in litigation with Charney in Los Angeles—Standard General then availed itself of this Court to enforce the contract against LAA, a California-based company. The place of LAA’s incorporation is not as significant a factor in assessing this dispute’s connection to California as is LAA’s business operations in the state. (Ribbens International, S.A. de C.V., 47 F.Supp.2d at pg. 1122 [“The fact that TIP is incorporated in Pennsylvania is substantially less important, for purposes of the issues under consideration, than the fact that TIP operates significant facilities and conducts substantial business in California. This is particularly true in light of the fact that the instant lawsuit arises directly out of those California business activities.”].) Thus, the factors in Neddloyd Lines support the application of California law in the instant case because California has a materially greater interest in enforcing Civil Code §1717 than New York and Delaware.

Statutory awards for attorneys’ fees, such as the fees LAA seeks here pursuant to C.C.P. §1717, are calculated using the “lodestar” or “market value” method, which is based on the reasonable hours spent on a matter multiplied by the hourly prevailing rate for private attorneys in the community of similar skill conducting non-contingent litigation of the same type. (Chodos v. Borman (2014) 227 Cal.App.4th 76, 93, as modified on denial of reh’g (July 9, 2014); Serrano v. Unruh (1982) 32 Cal.3d 621; see PLCM Group v. Drexler (2000) 22 Cal.4th 1084, 1095.) “The lodestar . . . may be adjusted by the court based on factors including, as relevant herein, (1) the novelty and difficulty of the questions involved, (2) the skill displayed in presenting them, (3) the extent to which the nature of the litigation precluded other employment by the attorneys, (4) the contingent nature of the fee award.” (Graciano v. Robinson Ford Sales (2006) 144 Cal.App.4th 140, 154.) “The purpose of such adjustment is to fix a fee at the fair market value for the particular action.” (Id.) In considering the lodestar factors, a trial court must “focus on providing an award of attorney fees reasonably designed to fully compensate [the prevailing party’s] attorneys for the services provided.” (Horsford v. Board of Trustees (2005) 132 Cal.App.4th 359, 395.)

Judgment Creditors argue in the alternative that should this Court consider awarding attorneys’ fees, LAA’s claimed fees are unreasonable and request an evidentiary hearing before any such award. (Opposition, pg. 11.) Judgment creditors take issue with LAA’s retention of Steptoe & Johnson LLP (“Steptoe”), the excessive redactions in Steptoe’s time entries, and billed time that appears excessive, redundant, or otherwise unnecessary. (Opposition Supp. Brief, pgs. 1-3.)

LAA argues the fees requested in connection with its defense against Standard General’s Motion to Amend are justified and reasonable under the circumstances—defending against a motion that would have resulted in a $30 million judgment—and should be awarded in full. (Memorandum, pg. 12.)

In terms of the hourly rates of LAA’s counsel, the Court finds them reasonable. LAA submitted documentation supporting its counsel’s hourly rates: (1) Jeffrey Reisner at an hourly rate of $1,345.00, (2) Thomas Watson at an hourly rate of $1,145.00, (3) Geoffrey Warner at an hourly rate of $880.00, (4) Joseph Sanderson at an hourly rate of $880.00; (5) Alexander Avery at an hourly rate of $880.00; and (6) Robert W. Mockler at an hourly rate of $1,135.00. (Decl. of Mockler ¶¶2, 4, Exhs. K, L; Decl. of Seddigh ¶7; Decl. of Caldwell ¶¶20-28; Decl. of Watson ¶¶2-6.) Based on the submissions and the Court’s experience, LAA’s counsel’s rates are reasonable. However, although these rates are reasonable, these rates come with “an expectation that [counsel] will complete tasks efficiently and that its more senior attorneys will limit their involvement to tasks requiring their level of expertise.” (Banas v. Volcan Corporation (2014) 47 F.Supp.3d 957, 966.)

Under California law, counsel is entitled to compensation for every hour reasonably spent on the matter. (Ketchum, 24 Cal.4th at pg. 1133 [“Absent circumstances rendering the award unjust, an attorney fee award should ordinarily include compensation for all the hours reasonably spent, including those relating solely to the fee.”].)

Here, LAA submitted documentation regarding the work performed by its attorneys. (Decl. of Mockler ¶4, Exh. L.) LAA submits a total of 1059 hours of actual work performed on this matter from January 20, 2022, through August 30, 2022, relating to LAA’s defense of Judgment Creditors’ Motion for Judgment Amendment to Add Additional Judgment Debtors (“Motion to Amend”). (Decl. of Mockler ¶4, Exh. L.) Counsel Mockler declares LAA also incurred approximately $350,000 in attorneys’ fees for services performed by Seddigh Arbetter, LLP, in connection with defending against the Motion to Amend, but is not seeking recovery for those fees by this motion. (Motion pg. 13; Decl. of Mockler ¶11.)

In opposition, Judgment Creditors argue they should not be responsible for compensating LAA for its decision to hire new counsel who performed duplicative work that LAA had already performed through its prior counsel. (Opposition, pg. 12; see Thayer v. Wells Fargo Bank (2001) 92 Cal.App.4th 819, 834 [reversing attorney fee award of $215,000 because of the “unjustified duplication of work that took place”]; see also Ketchum, 24 Cal. 4th at 1131-1132 [reasonable compensation does not include “compensation for . . . inefficient or duplicative efforts”].)

Judgment Creditors challenge LAA’s counsel’s charges by date range rather than by individual entry and divide the charges into three categories: (1) time spent learning about the case, duplicating what prior counsel already knew; (2) time spent on needless last-minute and ex parte applications; and (3) time genuinely spent on opposing the motion to amend. (Opposition Supp. Brief, pg. 2.)

Judgment Creditors argue Steptoe’s billed time for 1/20/2022 to 2/15/2022 related to attorneys coming up to speed about this action and seeking continuances caused by LAA’s change of counsel and not a need to respond to Judgment Creditors’ motion, rendering the work during this period “excessive, redundant, or otherwise unnecessary.” (Hensley v. Eckerhart (1983) 461 U.S. 424, 434.) This time totals more than $113,000. The Court concurs that this time is excessive and will accordingly reduce the final award.

Judgment Creditors argue Steptoe’s billed time for 7/25/2022 to 8/25/2022 pertains to a request for continuance, an ex parte application to sequence hearing on jurisdictional issues, a conditional request to present oral testimony, a request for an evidentiary hearing, an ex parte application to shorten time, and a motion to strike, all of which Judgment Creditors content were not necessary for resolving the Motion to Amend and were vexatious. This totaled approximately $175,000. The Court concurs that the multiple ex partes and other motion work was excessive, and the Court will accordingly reduce the final award. (See 2/22/22 Minute Order; 7/26/22 Minute Order; 8/25/22 Minute Order.)

Although some time LAA’s Counsel’s time spent on opposing the Motion to Amend from 3/12/2022 to 8/30/2022[2] was reasonable, review of the billing indicates its staffing was excessive, especially at the high rates requested.

It is very difficult to discern exactly which lawyer did exactly which work as there is an abundance of redactions. For example, on June 1, 1022, Reisner billed 3.6 hours at $1,345 an hour and the only unredacted description is “call.” But it is clear that multiple lawyers worked on the same documents or attended the same meetings or hearings. For example, Mockler, Watson, Sanderson all reviewed briefs on March 7-10, 2022. Similarly, on April 27 and 28 Reisner and Watson had multiple calls with Charney. On May 7, 2022, Watson, Avery and Reisner all billed for a conference with Charney and others. On August 25, 2022, Watson, Warner, Reisner and Mockler all prepared, attended and billed for appearing at an ex parte application to shorten time regarding a motion to strike. This overstaffing on conferences, motions and hearings justifies a reduction in attorneys’ fees, which is reflected in the overall lodestar amount.

Based on the foregoing, the court finds that the hourly rates requested for LAA’s counsel are reasonable. The Court awards LAA a reduced lodestar of $695,000.

[1] Although the Delaware Court did not grant Judgment Creditors attorney’s fees, the Court held: “Standard General also seeks an award for ‘attorneys’ fees as provided by in the Agreements.’ Standard General failed, however, to offer any evidence as to the magnitude of attorneys’ fees it was seeking or how those fees were payable under the Agreements. Given the lack of any meaningful attention to the issue, I decline to award Standard General attorneys’ fees on this motion.” (Charney Dec. ¶ 8, Exh. I at pg. 50.)

[2] Although Judgement Creditor described the period as 3/12/2022 through 7/24/2022, the motion to amend was heard on 8/30/22.