Judge: Peter A. Hernandez, Case: KC070674, Date: 2023-08-15 Tentative Ruling

Case Number: KC070674    Hearing Date: August 15, 2023    Dept: K

Plaintiff Chan Woo Jang’s Motion for Attorney Fees is GRANTED, in the reduced amount of $152,405.00.

Background   

Plaintiff Chan Woo Jang (“Plaintiff”) alleges as follows:

Plaintiff and Defendants Young C. Oh (“Young”), Chung Wu Oh (“Chung”) and Hoon Oh (“Hoon”) are cousins; Young, Chung and Hoon are brothers. In or about June 2016, Plaintiff and Young entered into an oral agreement wherein Young borrowed $240,324.91 from Plaintiff. Young promised to repay Plaintiff upon Plaintiff’s demand, and to pay interest at 10%/annum in the interim. At the time of the agreement, Young, Chung and Hoon represented that they owned high value real properties with sufficient equity to cover the loan which they would put up as collateral. Chung and Hoon provided Plaintiff with deeds of trust to real property (i.e., the Cathedral City and San Jacinto Properties, respectively) which they claimed they owned; the aforesaid properties, however, were really owned by Young and lacked sufficient equity to secure the loan. On August 18, 2018, Plaintiff made demand to Young to repay the loan principal, but Young refused.

On August 28, 2020, Plaintiff filed a Second Amended Complaint (“SAC”), asserting causes of action against Young, Chung, Hoon and Does 1-50 for:

1.                  Breach of Loan Agreement (v. Young only)

2.                  Fraud and Deceit (v. Young only)

3.                  Civil Conspiracy

4.                  Common Counts (v. Young only)

5.                  Unjust Enrichment (v. Young only)\

6.                  Judicial Foreclosure (v. Young and Hoon only)

7.                  Declaratory Relief

On August 23, 2021, Hoon’s default was entered. The case proceeded to bench trial on July 22 and 25, 2022, September 16 and 29, 2022 and January 5, 2023.

On January 5, 2023, the court ruled in favor of Plaintiff on the first and fourth through seventh causes of action against Young and on the sixth cause of action against Hoon. The court ruled in favor of “Defendants” on the second and third causes of action and in favor of Chung on the seventh cause of action.

On June 2, 2023, judgment was filed; that day, “Notice of Entry of Judgment” was filed.

Legal Standard

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

Discussion

Plaintiff moves for an award of attorney’s fees in the amount of $159,970.00 against Young and Hoon.

1.                  Entitlement to Fees

Plaintiff asserts he is entitled to attorney fees pursuant to the terms of two promissory notes executed by Hoon, which he attaches as Exhibits 2 and 3 respectively to the motion. The aforesaid notes both contain the following language: “If action be instituted on this note, I promise to pay such sum as the Court may fix as attorney’s fees.”

Plaintiff asserts that, while the aforesaid notes were signed by Hoon, the attorney’s fee provisions set forth therein are enforceable against Young, inasmuch as Young testified that (1) he prepared the notes and instructed Hoon to sign same and that (2) Hoon received no money or other consideration for signing same and that he (i.e., Young) was the only borrower of the funds.

Young and Hoon[1], in turn, argue that Plaintiff is not entitled to recoup attorney’s fees, on the basis that Plaintiff’s suit against Young and Hoon was not instituted on the notes and that the notes are not part of the contract. The court disagrees. “An ‘action on a contract,’ as used in Civil Code section 1717, refers to ‘the whole of a lawsuit rather than to discrete proceedings within a lawsuit.’” (de la Carriere v. Greene (2019) 39 Cal.App.5th 270, 276.) Plaintiff points out that Young and Hoon were both sued for judicial foreclosure of the San Jacinto Property and for declaratory relief as to determination of the parties’ rights and obligations with respect to “the loan agreement, promissory notes, and deeds of trust” and that both causes of action necessarily included action on the notes. (SAC, ¶ 71). The deeds of trust and aforesaid notes were admitted into evidence as Plaintiff’s Trial Exhibits 8, 9, 14 and 15, respectively.

The court’s Statement of Decision (“SOD”) as to the sixth cause of action reads, in relevant part, as follows:

            At trial, the court heard evidence that the loans were initially secured by a

Deed of Trust against a property owned by Defendant Chung. . .Plaintiff

testified that after this initial Deed of Trust had been recorded, Defendant

Young sought the release of this initial Deed of Trust had been recorded,

Defendant Young sought the release of this initial Deed of Trust and Plaintiff

agreed in exchange for two subsequent Deeds of Trust in the amount of

$200,000 against a property owned by Defendant Hoon. (Exhibits 8 and 9).

The court finds that HOON’s property secured Plaintiff’s second loan in the

principal amount of $150,324.91. . .

1.         Defendants Young and Hoon have failed to repay any of said sums to

Plaintiff.

2.         As stated above, the two loans were due and payable upon Plaintiff’s demand,

which Plaintiff made demand on August 18, 2018.

3.         Then court finds that Defendant Young prepared Defendant Hoon’s promissory

notes, which contained false terms including a 5-year due date and ‘zero’

interest rate. . . .

The court grants a decree of judicial foreclosure on Defendant Hoon’s property

located at 769 Zephiro Court, San Jacinto, State of California (hereafter ‘San

Jacinto property’) in the principal sum of $150,324.91 plus prejudgment interest

at the rate of 10% per annum commencing August 18, 2018, and attorney fees

and costs, as determined by motion.” (Motion, Exh. 4, pp. 6-7).

The court’s SOD as to the seventh cause of action reads as follows:

            Plaintiff is entitled to declaratory relief on the issue of the money owed by

Defendant Young, as well as the Deed of Trust issued by Defendant Hoon.

The court declares that Plaintiff is owed the amounts as alleged in his First,

Fourth and Fifth Causes of Action. . ., and that Plaintiff is entitled to judicial

foreclosure of Defendant Hoon’s property located at 769 Zephiro Court, San

Jacinto, State of California.

(Id., p. 5).

Young argues that Plaintiff is estopped from asserting the enforceability of the attorney’s fees provision in the notes because “Plaintiff disavowed the Notes in his trial testimony.” (Opposition, 4:27-28). Again, the court disagrees. Under section 1717, “[a]s long as an action ‘involves’ a contract, and one of the parties would be entitled to recover attorney fees under the contract if that party prevails in its lawsuit, the other party should also be entitled to attorney fees if it prevails, even if it does so by successfully arguing the inapplicability, invalidity, unenforceability, or nonexistence of the same contract.” (North Associates v. Bell (1986) 184 Cal.App.3d 860, 865.)

Young next asserts that attorney’s fees cannot be awarded against him pursuant to section 1717 because he would not be entitled to sue Plaintiff and recover attorney’s fees on either of the notes. “[W]hen a party litigant prevails in an action on a contract by establishing that the contract is invalid, inapplicable, unenforceable, or nonexistent, section 1717 permits that party’s recovery of attorney fees whenever the opposing parties would have been entitled to attorney fees under the contract had they prevailed.” (Santisas v. Goodin (1998) 17 Cal.4th 599, 611.) Plaintiff claims that Young would have been entitled to attorney fees under the note had he prevailed. The court agrees. “A nonsignatory will be bound by an attorney fees provision in a contract when the nonsignatory party stands in the shoes of a party to the contract. In that situation, the nonsignatory party is liable for attorney fees if it would have been entitled to fees if it prevailed.” (Apex LLC v. Korusfood.com (2013) 222 Cal.App.4^th 1010, 1017, 1018 [internal quotations and citations omitted].) The court, in its SOD, determined that Plaintiff loaned to Young the sum of $90,000.00 and $150,324.91, for a total principal sum of $240,324.91, that Young provided collateral for the loans via a deed of trust initially from Chung and then replaced with deeds of trust from Hoon, that Young refused to repay Plaintiff and that Young prepared the promissory notes, which contained false terms including a 5-year due date and ‘zero’ interest rate. (Motion, Exh. 4, pp. 2-3 and 6). The evidence presented by Plaintiff and accepted by the court supports a finding that Young “stood in the shoes of” Hoon.

The court determines that Plaintiff is the prevailing party for purposes of Civil Code § 1717, subdivision (b)(1) and is entitled to recoup attorney’s fees against Young and Hoon.

2.                  Reasonableness of Fees

The court turns to the issue of 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.4^th 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.4th 1412, 1425 [quotation marks and citations omitted].)

a.         Reasonableness of Hourly Rates

“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.4^th 972, 1009 [internal quotations and citations omitted].)

Attorney James C. Lee (“Lee”) seeks an hourly rate of $425.00. Young does not challenge Lee’s hourly rate.

Based on the court’s own experience and knowledge, as well as on the experience and qualifications of counsel as set forth in Lee’s declaration and Young’s non-opposition, the court finds that Lee’s hourly rate is appropriate.

b.                  Reasonableness of Time Incurred

“[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.)

Young asserts that the court should disallow attorney’s fees of $7,565.00 because the following entries in Exhibit 5 to the motion are “explicitly attributed to Chung-related work:” 11/16/2018, 12/14/2018, 01/03/2019, 01/03/2019, 01/03/2019, 01/30/2019, 02/01/2019, 03/19/2020, 05/01/2020, 06/15/2020, 07/13/2020, 09/30/2020, 10/21/2020, and 10/27/2020.” (Oppo., 6:18-21). Plaintiff does not oppose this request. The court has perused the cited entries and agrees that a reduction is warranted in this amount.

Hoon asserts that the court should reduce the attorney fee award as to Hoon for work performed in proving the case against Young. Again, Hoon is in default. Further, “[a]pportionment is not required when the claims for relief are so intertwined that it would be impracticable, if not impossible, to separate the attorney's time into compensable and noncompensable units.”  (Bell v. Vista Unified School Dist. (2000) 82 Cal.App.4th 672, 687.) As well, “[a]ttorney’s fees need not be apportioned when incurred for representation on an issue common to both a cause of action in which fees are proper and one in which they are not allowed.” (Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124, 129.) The court determines that the causes of action asserted against Hoon were intertwined and in common with issues involved in proving the case against Young such that apportionment is not required.

Finally, Young and Hoon assert that the court should reduce attorney’s fees “to a reasonable amount.” (Opp., 7:15). The court rejects this argument as conclusory and unsupported. Young and Hoon do challenge any specific entries, aside from complaining that changes to the original complaint were “minimal.” (Opp., 7:16-17). The instant case was aggressively litigated and taken to, and through, trial. Further, a defendant “cannot litigate tenaciously and then be heard to complain about the time necessarily spent by the plaintiff in response.” (Peak-Las Positas Partners v. Bollag (2009) 172 Cal.App.4th 101, 114 [internal quotations and citation omitted].)

Conclusion

The motion is granted, in the reduced amount of $152,405.00.