Judge Peter A. Hernandez, Case Number: 19PSCV01127, Date: 2023-08-29 Tentative Ruling

Defendant Nhuan Gia Huynh’s Motion for Attorney Fees is GRANTED, in the reduced amount of $29,172.75.

AMCA I, LLC (“AMCA”) was the owner of the commercial property located at 10138 E. Garvey Ave., El Monte, CA 91733 (“Property”). The Property is a “strip mall” consisting of several units which were occupied by businesses owned by Brian Lai (“B. Lai”) (i.e., Central Furniture and Home Store [“Central Furniture”] and Yes 98 Cents, LLC [“Yes 98 Cents”].). B. Lai is believed to be the sole member of AMCA. B. Lai, acting as a listing broker, listed the Property for sale; the listing advertisement stated that Yes 98 Cents was the anchor tenant of the Property. During or about April 2014, after seeing the commercial listing, Plaintiff’s representative Gary Tsai (“Tsai”) contacted B. Lai regarding Plaintiff’s interest in the Property; thereafter AMCA and Plaintiff began negotiations for the purchase of the Property, including assignment of the lease agreements with Yes 98 Cents and Liu/Central Furniture (which had been executed by Pau Cun Liu (“Liu”) on behalf of Yes 98 Cents and by Doe 2 on behalf of Central Furniture). B. Lai made several representations to Tsai regarding the Property’s rental income, including providing rental agreements and operation statements for 2012-2014. B. Lai concealed his ownership interests in Yes 98 Cents and Central Furniture. On or about April 22, 2014, AMCA and Plaintiff entered into a purchase agreement for the sale of the Property in the amount of $5,525,000.00, which included AMCA’s assignment of the rental agreements for the Property. Central Furniture and 98 Cents thereafter vacated the Property. When Plaintiff’s representative went to the City of El Monte (“City”) to search for prior City-approved construction plans on or about October 3, 2019, the representative located the Certificates of Occupancy for the Property from June 2004 to the present, which showed B. Lai’s ownership interests in Yes 98 Cents and Central Furniture.

On April 8, 2020, Liu’s default was entered. On May 18, 2020, Central Furniture’s default was entered. On July 30, 2020, Plaintiff filed two “Amendment[s] to Complaint,” wherein Nhuan Gia Huynh (“Nhuan”) was substituted in lieu of Doe 1 and Hong Gia Huynh (“Hong”) was substituted in lieu of Doe 2.

On January 6, 2021, Plaintiff filed a Second Amended Complaint (“SAC”), asserting causes of action against B. Lai, AMCA, Yes 98 Cents, Central Furniture, Liu, Maggie Lo Huynh (“Maggie”) and Does 1-25 for:

On October 3, 2023, an “Order Granting Defendant Doe 1 (Nhuan G. Huynh) Motion for Mandatory Dismissal for Failure to Serve Complaint Within Three Years of Filing the Action Pursuant to Code of Civil Procedure, §§ 583.210, 583.250” was entered.

A Final Status Conference is set for June 13, 2024. Trial is set for July 16, 2024.

“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…” (Civil Code § 1717, subd. (a).)

“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…” (Civil Code § 1717, subd. (b)(1).)

Nhuan moves the court, per Civil Code § 1717, for an award of attorney’s fees against Plaintiff in the amount of $39,702.75[1].

The court rules on Nhuan’s Request for Judicial Notice (“RJN”) as follows:

2. Granted as to Exhibit “2” (i.e., “Motion to Vacate Void Default Entered March 23, 2021” filed December 8, 2022);

5. Granted as to Exhibit “5” (i.e., “Order Granting Defendant Doe 1 (Nhuan G. Huynh) Motion for Mandatory Dismissal for Failure to Serve Complaint within Three Years of Filing the Action Pursuant to Code of Civil Procedure, §§ 583.210, 583.250”).

Nhuan asserts that he is entitled to attorney’s fees pursuant to ¶ 26 of the Commercial Property Purchase Agreement (“Purchase Agreement”) attached as Exhibit “H” to Plaintiff’s SAC, which reads as follows:

and Seller arising out of this Agreement, the prevailing Buyer or Seller shall be

Seller, except as provided in paragraph 34A[2].

(RJN, Exh. 1(H); Levine Decl., ¶ 4, Exh. A.)

Plaintiff alleged that it entered into the Purchase Agreement with AMCA for the sale of the Property in the amount of $5,525,000.00, which included AMCA’s assignment of the rental agreements for the Property. (RJN, Exh. 1, ¶ 32). Plaintiff sued Nhuan for, inter alia, Breach of Duty of Good Faith & Fair Dealing, alleging that he was an alter ego and acted, jointly and severally, as the agent of the other defendants. (Id., ¶¶ 13 and 72). Plaintiff alleged, inter alia, that “Defendants’ conduct . . . unfairly interfered with Plaintiffs ability to receive the benefits under the Purchase Agreement . . . in breach the implied covenant of good faith and fair dealing that exists in the Purchase Agreement.” (Id., ¶ 76). Plaintiff sought attorney’s fees against all defendants in ¶ 5 of its prayer for relief.

“As a general rule, [contractual] attorney fees are awarded only when the lawsuit is between signatories to the contract. However, under some circumstances, the Civil Code section 1717 reciprocity principles will be applied in actions involving signatory and nonsignatory parties,” including “where the nonsignatory party ‘stands in the shoes of a party to the contract.’” (Cargill, Inc. v. Souza (2011) 201 Cal.App.4th 962, 966 [citation omitted].)

In Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124, Plaintiff brought an action against two shareholders and directors (together, “defendants”) of two bankrupt corporations, seeking to hold them liable for debts owed plaintiff by the corporations (which included two unpaid promissory notes) via an alter ego theory of liability. The promissory notes, which provided for the recovery of attorney fees, had not been signed by defendants. The trial court rejected the alter ego theory and awarded defendants attorney fees. The California Supreme Court recognized that defendants, though nonsignatories to the promissory notes, would have been liable for attorney fees pursuant to the fees provision in the promissory notes had plaintiff prevailed, were entitled to recover attorney fees under Civil Code § 1717 since they prevailed. (Id. at 129).

Nhuan acknowledges that he is not a signatory to the Purchase Agreement, but argues that he is nevertheless entitled to attorney’s fees as the prevailing party pursuant to Reynolds. Plaintiff, in turn, contends that Reynolds is distinguishable from instant matter because “there is no contractual cause of action in the SAC, and Plaintiff is only seeking relief under tort causes of action.” (Opp., 3:6-7). Plaintiff’s argument, however, overlooks the fact that it sued Nhuan for Breach of Duty of Good Faith & Fair Dealing.

Next, Plaintiff contends that Reynolds is inapplicable because attorneys fees were awarded to defendants after trial, whereas no trial occurred in the instant matter. Civil Code § 1717, subdivision (b)(1), however, allows a party to qualify as a “prevailing party” “whether or not the suit proceeds to final judgment.” Further, an “Order Granting Defendant Doe 1 (Nhuan G. Huynh) Motion for Mandatory Dismissal for Failure to Serve Complaint Within Three Years of Filing the Action Pursuant to Code of Civil Procedure, §§ 583.210, 583.250” was entered here on October 3, 2023. (Levine Reply Decl., ¶ 3, Exh. A). Code of Civil Procedure § 581d provides, in relevant part, that “[a]ll dismissals ordered by the court shall be in the form of a written order signed by the court and filed in the action and those orders when so filed shall constitute judgments and be effective for all purposes . . .”

Finally, Plaintiff asserts that Nhuan is not a “prevailing party” because he “has not received a net monetary recovery” and because “the dismissal was a result of Plaintiff’s inability to serve the summons and complaint within the 3-year statute, which cannot be construed as dismissal in his favor.” (Opp., 4:1-5). Plaintiff has not provided the court with any legal authority for its position. Further, the court of appeal in Elms v. Builders Disbursements, Inc. (1991) 232 Cal.App.3d 671 held that a defendant sued on a contract entitling a successful litigant to attorney’s fees Civil Code § 1717 may recover such fees where plaintiff’s action is dismissed because it was not brought to trial within five years; in doing so, the court looked to the “pragmatic inquiry” undertaken by the court in Winick Corp. v. Safeco Insurance Co. (1986) 187 Cal.App.3d 1502, wherein defendant was awarded attorney’s fees as a prevailing party under former Civil Code § 3250 because it successfully obtained a dismissal of the plaintiff’s action for failure to serve and return summons within three years pursuant to former Code of Civil Procedure § 581a. The Winick court reasoned that “The most Safeco—or any other civil defendant—ordinarily can hope to achieve is to have the plaintiff’s claim thrown out completely. This is exactly what happened here. . . In any practical sense of the word, the defendant ‘prevailed.’” (Id. at 674-675, quoting Winnick, supra, 187 Cal. App.3d at 1508).

The court determines that Nhuan is entitled to attorney’s fees as the “prevailing party” pursuant to Civil Code § 1717.

The court turns to the issue of the reasonableness of the fees sought. “[T]rial courts have broad discretion in determining the amount of a reasonable attorney's fee award. This determination is necessarily ad hoc and must be resolved on the particular circumstances of each case.” (Meister v. Regents of University of California (1998) 67 Cal.App.4th 437, 452.) “Trial judges are entrusted with this discretionary determination because they are in the best position to assess the value of the professional services rendered in their courts.” (Christian Research Institute v. Alnor (2008) 165 Cal.App.4th 1315, 1321.)

“[O]nce a party has established he or she is entitled to fees, the lodestar method is generally presumed to be the starting point in analyzing the appropriate amount of attorney fees. Under this method, a court first calculates the number of hours reasonably spent multiplied by the reasonable hourly rate for each billing professional, and then may adjust the amount based on various relevant factors to ensure the fee reflects the fair market value [of the attorney services] for the particular action. (K.I. v. Wagner (2014) 225 Cal.App.4^th 1412, 1425 [quotation marks and citations omitted].)

“In determining hourly rates, the court must look to the prevailing market rates in the relevant community. The rates of comparable attorneys in the forum district are usually used. In making its calculation, the court should also consider the experience, skill, and reputation of the attorney requesting fees. The court may rely on its own knowledge and familiarity with the legal market in setting a reasonable hourly rate.” (Heritage Pacific Financial, LLC v. Monroy (2013) 215 Cal.App.4th 972, 1009 [internal quotations and citations omitted].)

Plaintiff, in response, points out that the billing records attached to the motion reflect a reduced attorney fee rate of $550.00. Based on plaintiff’s argument, the court’s own experience and knowledge, and the experience and qualifications of counsel as set forth in Levine’s declaration, finds that a reduction of Levine’s hourly rate from $750.00 to $550.00 is appropriate here.

“[T]he verified time statements of the attorneys, as officers of the court, are entitled to credence in the absence of a clear indication the records are erroneous.” (Horsford v. Board of Trustees of California State University (2005) 132 Cal.App.4th 359, 396.) “In challenging attorney fees as excessive because too many hours of work are claimed, it is the burden of the challenging party to point to the specific items challenged, with a sufficient argument and citations to the evidence. General arguments that fees claimed are excessive, duplicative, or unrelated do not suffice.” (Premier Medical Management Systems, Inc. v. California Ins. Guarantee Assn. (2008) 163 Cal.App.4th 550, 564.)

Levine represents that he has expended 52.65 hours (including 4 hours preparing the reply) and that Segovia has expended an additional 1.23 hours on this matter. Plaintiff argues that the billing records do not separate as between which tasks or entries pertain to Nhuan versus Yes 98 Cents, LLC (which are both represented by Levine). The court, however, is satisfied after reviewing the billing records that the fees requested are related to Levine’s efforts to first set aside Nhuan’s default and then have Nhuan dismissed.

Plaintiff asserts that a negative multiplier should be applied. “[T]he lodestar. . . may be adjusted by the court based on factors including, . . . (1) the novelty and difficult 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. The purpose of such adjustment is to fix a fee at the fair market value for the particular action. In effect, the court determines, retrospectively, whether the litigation involved a contingent risk or required extraordinary legal skill justifying augmentation of the unadorned lodestar in order to approximate the fair market rate for such services.” (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1131-1132.)

The court determines that Plaintiff has not articulated any basis warranting the imposition of a negative multiplier.

[1] This amount includes the $36,702.75 requested in the notice of motion, plus counsel’s request for an additional 4 hours of attorney time expended in preparing the reply.

[2] Paragraph 34A pertains to Dispute Resolution, particularly mediation., and is not applicable here.