Judge: Nathan R. Scott, Case: Family Investment Co. v. Mach-1 Autogroup, Date: 2022-11-18 Tentative Ruling

Cross-complainant Mach-1 RSMH’s motion for attorney fees.

The court finds Mach-1 is the prevailing party on the Restatement and Promissory Note contract claims, either as the recipient of a “simple unqualified win” or as the party who achieved its litigation objectives.  (See Code Civ. Proc., §§ 1021, 1033.5, subd. (a)(10)(A); Harris v. Rojas (2021) 66 Cal.App.5th 817, 823-826.)  Phase 1a awarded $550,000 to Mach-1 as a refund of its Restatement deposit.  Phase 2 awarded $2.2 million to Mach-1 for breach of the Promissory Note.  (See 2/11/21 & 4/7/22 rulings.)

The court further finds the Restatement’s and Promissory Note’s attorney fees clauses are too narrow to allow recovery of attorney fees incurred on other issues.  (See Orien v. Lutz (2017) 16 Cal.App.5th 957, 964-965; Casella v. SouthWest Dealer Services, Inc. (2007) 157 Cal.App.4th 1127, 1161-1162; see also Restatement ¶ 16

[authorizing attorney fees for litigation “to enforce any provisions or rights hereunder”]; Promissory Note ¶ 8 [authorizing attorney fees for “any legal action . . . necessary to enforce or collect this Note or any other obligations for nonpayment at maturity”].)

The question is what amount of attorney fees did Mach-1 reasonably incur to “enforce” the Restatement and “enforce or collect” on the Promissory Note?

Mach-1’s request for $1.6 million dating back to the 2009 inception of this case is excessive.  It is hard to conclude every step and misstep over 13 years of concededly “bitter and complex litigation” (Mot. at p. 2) was reasonably necessary at all – let along reasonably necessary to the narrow issues on which Mach-1 may recover attorney fees.

Nor is it apparent that all of the attorney fees incurred on all of the myriad issues in this litigation are inextricably intertwined.  Much of Phase 2 concerned Mach-1’s fraud claim that is fundamentally unrelated to the Promissory Note.

It seems reasonable to allow Mach-01 to recover attorney fees it reasonably incurred in:

·         the 2021 Phase 1a trial, which enforced the Restatement, and

·         some portion of the 2021-2022 Phase 2 trial that can be allocated to enforcing and collecting on the Promissory Note.

The parties should be prepared to offer either counterarguments to this analysis or calculations of a reasonable attorney fee award under it.