GCA Equity Partners PR, LLC, et al. v. Bryan Domyan, et al.

MOTION TO DETERMINE PREVAILING PARTY AND TO FIX AMOUNT OF ATTORNEY’S FEES AND COSTS

 

MOVING PARTY: Defendants DP004 Berkeley, LLC and Bryan Domyan

RESPONDING PARTY(S): None

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

Plaintiffs loaned Defendants money in exchange for profits from the development and sale of real property in Santa Monica.  Plaintiffs allege Defendants have absconded with the funds.  The complaint lists causes of action for (1) breach of contract, (2) fraud, (3) civil theft, (4) conversion, and (5) unjust enrichment.

The matter proceeded to trial on November 20 and 21, 2023. During trial, this court granted Defendant Domyan’s motion for judgment under CCP § 631.8 as to all causes of action against him individually. In addition, DP004’s § 631.8 motion was granted as to the Second, Third, and Fourth causes of action. On January 19, 2024, this court issued its Informal Statement of Decision, entering judgment in Plaintiff’s favor in the amount of $95,000.

Defendants now move to determine the prevailing party at trial and for an award of attorney’s fees and costs. The motion is unopposed. 

TENTATIVE RULING:

Defendants’ Motion for Attorney’s Fees is GRANTED in the requested amount of $115,340.00. Defendants’ are also awarded costs in the requested amount of $4,097.43.

This award is ORDERED to be applied to the initial Judgment in this case.  Hence the award of $95,000.00 is adjusted by this attorneys fees/cost award, to wit, $115,340 plus $4,097.43 minus $95,000 equals a net award in favor of Defendants, and against Plaintiff, for $24,437.43.

Defendants are to file and lodge a proposed Amended Judgment, consistent with this Ruling.

Defendants are also ordered to give notice.

DISCUSSION:

Motion to Determine Prevailing Party and Fix Amount of Attorney’s Fees and Costs

A. Procedural History

This matter first came for hearing on April 11, 2024. The court continued that hearing to May 14, 2024, because the moving paper had not served Plaintiff with the motion. (See 04/11/2024 Minute Order.) At the May 14, 2024 hearing, the court raised the issue of whether Defendant Domyan—who was not a party to the contract—could still recover fees and costs under CCP § 1717(b)(2).) The court then invited supplemental briefing to address this issue and continued the hearing.

B. The Contract Applies to Both Defendants

Defendants seek to recover attorney’s fees and costs for both Bryan Domyan, an individual, and DP004 Berkeley, an entity. The Agreement Between Lender and Borrower, trial Exhibit 14, stated “the Note dated February 26, 2016 is still in force and effect until completely satisfied, including the negotiated exit fee of $540,000.” (See Green Decl. ¶¶ 13, 14.) That Note, trial Exhibit 11, contains a provision for attorney’s fees at paragraph 9. (Id; see also Compl. Exh. 3, ¶ 9, “Attorney Fees.”)  By failing to oppose, Plaintiff does not dispute this premise or the right to fees.

Defendants do not dispute that the February 16, 2016 Note governing the award of attorney’s fees and costs does not apply on its face to Defendant Domyan as an individual. 

Civil Code section 1717(a) provides:

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.

In its Supplemental Brief, Defendants state the “argument is simple and there is little, if anything, to add.” (Supp. Brief 2: 5-6.) Defendants’ counsel contends in declaration that because Plaintiffs “tied the individual, Bryan Domyan, to be inextricable from DP004,…the said contracts and attorney fee clause should enure to” Defendant Domyan’s benefit. (Supp. Green Decl. ¶ 17.) Defendants cite no authority for that position. But based on this court’s independent review, there is support for it. 

In Reynolds Metals Company v. Alperson (1979) 25 Cal.3d 124, the plaintiff sued individual defendants as alter egos of two insolvent companies, seeking to hold them liable for the debts of the companies. (Id. at 127.) The trial court rejected the plaintiff's alter ego theory, absolving the defendants from personal liability for the obligations of the companies. (Id.) The court then awarded the defendants attorney fees although they were not parties to the contracts containing the attorney fee clauses. 

In affirming, the Supreme Court held that section 1717 should be interpreted to “provide a reciprocal remedy for a nonsignatory defendant, sued on a contract as if he were a party to it, when a plaintiff would clearly be entitled to attorney's fees should he prevail in enforcing the contractual obligation against the defendant.” (Id. at 128.) In that case, the Court reasoned that if plaintiff had “prevailed on its cause of action claiming defendants were in fact the alter egos of the corporation [citation] defendants would have been liable on the notes.” (Id. at 129.) Based on the reciprocal policy, the defendants could “recover attorney's fees pursuant to section 1717 now that they have prevailed.” (Id.)

The Court of Appeal has adopted Reynolds to award attorney’s fees to the managing member of an entity after the member defeated liability as an alter ego of the entity.  In Burkhalter Kessler Clement & George LLP v. Hamilton (2018) 19 Cal. App. 5th 38, 46, the Court explained that “even though [defendant entity’s managing partner] was not a party to the contract, she is entitled to recover her attorney fees under section 1717, because [the plaintiff] would have been entitled to recover its attorney fees against [her] had it prevailed on its alleged alter ego theory of liability.” 

In the operative complaint, Plaintiff alleged that Defendant Domyan was “the Manager of Domyan Properties, LLC” which is “one of the managing members” of Defendant DP004 Berkeley. (Compl. ¶ 4.) Plaintiff asserted the first cause of action for breach of contract against only Defendant DP004 Berkeley, but asserted the Second, Third, Fourth, and Fifth Causes of Action against all Defendants jointly, including Defendant Domyan. 

In Plaintiffs’ 08/09/2021 Trial Brief, Plaintiffs asserted that “Mr. Domyan’s deceptions and fraudulent behavior more than warrant the piercing of the corporate veil.” (P’s Trial Brief, p. 9: 13-14.) This is an apparent reliance on an alter ego theory, which “traditionally is applied to pierce the corporate veil so that a shareholder may be held liable for the debts or conduct of the corporation.” (Postal Instant Press, Inc. v. Kaswa Corp. (2008) 162 Cal. App. 4th 1510, 1518.)

These are consistent with Plaintiffs’ steadfast attempts at trial to hold Domyan liable for the alleged debts or torts of the entity Defendant, DP004 Berkeley. On these facts, and without opposition, the court finds that the underlying provision for attorney’s fees applies to both Defendants Domyan and DP004 Berkeley. 

C. Defendants are Both “Prevailing Parties”

Defendants Bryan Domyan and DP004 Berkeley argue they were each the prevailing parties at trial. 

First, there is no question that Defendant Domyan was a prevailing party. He prevailed in defending all causes of action against him, as his court granted his CCP § 631.8 motion during trial. (See Informal Statement of Decision, p. 2.)

Defendant DP004’s § 631.8 motion was granted as to the Second, Third, and Fourth causes of action. (Id.) As to the remaining two claims—breach of contract and unjust enrichment—the court entered judgment in Plaintiff’s favor in the amount of $95,000, concluding Plaintiff was entitled to the entirety of the remaining funds in the Berkeley project escrow account. (Id. at p. 3.) The court expressly made no findings in the Informal Statement of Decision as to who was the “prevailing party” in the matter. 

Defendants argue DP004 was also a prevailing party because Defendant admitted and maintained throughout the litigation that it owed the $95,000 in escrow to Plaintiff—but nothing more. This was precisely the result DP004 obtained at trial. 

 “[T]ypically, a determination of no prevailing party results when both parties seek relief, but neither prevails, or when the ostensibly prevailing party receives only a part of the relief sought.” (Deane Gardenhome Assn. v. Denktas (1993) 13 Cal.App.4th 1394, 1398.) “By contrast, when the results of the litigation on the contract claims are not mixed—that is, when the decision on the litigated contract claims is purely good news for one party and bad news for the other—the Courts of Appeal have recognized that a trial court has no discretion to deny attorney fees to the successful litigant. Thus, when a defendant defeats recovery by the plaintiff on the only contract claim in the action, the defendant is the party prevailing on the contract under section 1717 as a matter of law.” (Hsu v. Abbara (1995) 9 Cal. 4th 863, 875–76.)

Here, Defendant obtained the result at trial that it was looking for and that it maintained it owed to Plaintiff. Plaintiff, on the other hand, obtained far less than the award it initially sought. Considering the facts and circumstances—and in the lack of any opposition from Plaintiff—the court concludes Defendant DP004 is also a prevailing party who is entitled to recover its attorney’s fees in defending this action.

D. Award of Attorney’s Fees

Having determined that both Defendants were prevailing parties, Defendants are entitled to recover their reasonable attorney’s fees. Defendants seek $115,340 in total fees.

The determination of reasonable amount of attorney fees is within the sound discretion of trial courts.  (PLCM Group v. Drexler (2000) 22 Cal.4th 1084, 1095; Akins v. Enterprise Rent-A-Car Co. (2000) 79 Cal. App. 4th 1127, 1134.)  “The determination of what constitutes a reasonable fee generally ‘begins with the ‘lodestar,’ i.e., the number of hours reasonably expended multiplied by the reasonable hourly rate….’”  “[T]he lodestar is the basic fee for comparable legal services in the community; it 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, Inc. (2006) 144 Cal.App.4th 140, 154.)  In setting the hourly rate for an attorney fees award, courts are entitled to consider the rate of “‘fees customarily charged by that attorney and others in the community for similar work.’”  (Bihun v. AT&T Information Systems, Inc. (1993) 13 Cal. App. 4th 976, 997 [affirming rate of $450 per hour], overruled on other grounds by Lakin v. Watkins Associated Indus. (1993) 6 Cal. 4th 644, 664.)  The burden is on the party seeking attorney fees to prove reasonableness of the fees.  (Center for Biological Diversity v. County of San Bernardino (2010) 188 Cal. App. 4th 603, 615.)

 

The Court has broad discretion in determining the amount of a reasonable attorney's fee award which will not be overturned absent a “manifest abuse of discretion, a prejudicial error of law, or necessary findings not supported by substantial evidence.” (Bernardi v. County of Monterey (2008) 167 Cal. App. 4th 1379, 1393-94.  The Court need not explain its calculation of the amount of attorney’s fees awarded in detail; identifying the factors considered in arriving at the amount will suffice. (Ventura v. ABM Industries Inc. (2012) 212 Cal.App.4th 258, 274-75.)

1. Reasonable Hourly Rate

Upon review of the billing records, it appears counsel billed at a rate of $400 per hour for all or most of the work done in this matter. (See Green Decl., Exhs. A & B.)

The court finds these rates are consistent with the general prevailing rates in the Los Angeles area and have recently been approved by courts in similar circumstances. Thus, under the totality of the circumstances and based upon general prevailing rates in the Los Angeles area for this type of litigation, this court finds the quoted rates to be reasonable. 

2. Number of Hours Expended

Based on the billing accords, counsel billed 288.35 hours through the course of this matter. 

"[I]t is the burden of the challenging party to point to the specific items challenged [within the moving party’s verified billing invoice], with a sufficient argument and citations to evidence.  General arguments that fees claimed are excessive, duplicative, or unrelated do not suffice.”  (Lunada Biomedical v. Nunez (2014) 230 Cal.App.4th 459, 488.)  

Here, by failing to oppose, Plaintiff has not challenged any of the billing records, nor even generally argued that the fees sought are excessive and inflated.

Based on the court’s independent review, it finds that the time expended was reasonable for a case that proceeded to bench trial and verdict.  

Accordingly, Defendants are awarded the full attorney’s fees sought in the total amount of $115,340.00.

E. Award of Costs

Defendants also seek to recover their costs. In general, the prevailing party is entitled as a matter of right to recover costs for suit in any action or proceeding.  (Code Civ. Proc., §1032(b); Santisas v. Goodin (1998) 17 Cal.4th 599, 606; Scott Co. Of Calif. v. Blount, Inc. (1999) 20 Cal.4th 1103, 1108.) With regard to the definition of “prevailing party”, section 1032(a)(4) provides that: 

 

“‘Prevailing party” includes the party with a net monetary recovery, a defendant in whose favor a dismissal is entered, a defendant where neither plaintiff nor defendant obtains any relief, and a defendant as against those plaintiffs who do not recover any relief against that defendant. If any party recovers other than monetary relief and in situations other than as specified, the “prevailing party” shall be as determined by the court, and under those circumstances, the court, in its discretion, may allow costs or not and, if allowed, may apportion costs between the parties on the same or adverse sides pursuant to rules adopted under Section 1034.” 

 

Allowable costs under Code of Civil Procedure section 1033.5 must be reasonably necessary to the conduct of the litigation, rather than merely convenient or beneficial to its preparation, and must be reasonable in amount.  An item not specifically allowable under section 1033.5(a) nor prohibited under subdivision (b) may nevertheless be recoverable in the discretion of the court if they meet the above requirements (i.e., reasonably necessary and reasonable in amount). (Ladas v. California State Automotive Assoc. (1993) 19 Cal.App.4th 761, 773-774.)   In determining litigation success, Courts should “respect substance rather than form” and consider “the unique facts and circumstances of each case.” (Marina Pacifica Homeowners Assn. v. S. California Fin. Corp. (2018) 20 Cal. App. 5th 191, 206.) 

For the reasons explained above, and again without opposition, the court finds that Defendants are the prevailing parties for purposes of a cost award. 

Defendants seek $4,097.43 in costs, as documented in the billing record. (Green Decl., Exh. B.) When the items on the verified cost bill appear to be proper, the burden of proof is on the contesting party. (Fennessy v. Deleuw-Cather Corp. (1990) 218 Cal. App. 3d 1192.) By failing to contest the costs sought, Plaintiff has conceded they are recoverable and reasonable.

Accordingly, Defendants’ are awarded costs in the requested amount of $4,097.43.

IT IS SO ORDERED.

Dated:   July 19, 2024 ___________________________________