Judge Randolph M. Hammock, Case Number: 23STCV12301, Date: 2024-11-21 Tentative Ruling

Judge: Randolph M. Hammock, Case: 23STCV12301, Date: 2024-11-21 Tentative Ruling

In 23STCV12301, Plaintiffs George Rappard, M.D. and Los Angeles Minimally Invasive Surgery Center, LLC, allege they provided medical treatment to Defendant Yuan Luo after an accident. Attorney Defendants Eric Chen and Ying Xu represented Defendant Luo in a personal injury action. Plaintiffs allege they obtained a medical lien for the treatment against all Defendants. After the matter settled, Plaintiffs allege that Defendants have failed to pay the amounts owed under the liens. Plaintiffs bring causes of action for (1) breach of contract, (2) book account, (3) account stated, (4) accounting, (5) interference with prospective economic relations, and (6) conversion.

In 23STCV20879, Plaintiff Law Offices of Eric Chen brought a complaint in interpleader against Defendants George Rappard, M.D., Los Angeles Minimally Invasive Surgery Center LLC, and Yuan Luo. Plaintiffs sought a determination of who among Defendants was entitled to funds held by Plaintiff under the medical lien.

The actions were consolidated and proceeded to a bench trial on July 5, 2024. At the conclusion of trial and after consideration of the parties’ post-trial briefs, the court entered judgment in Plaintiffs’ favor against Defendant Luo in the amount of $66,000. The court also entered judgment in favor of Defendants Chen and Zu and against Plaintiffs, finding Plaintiffs had not met their burden of proof on any cause of action against those Defendants.

In 23STCV12301, Plaintiffs George Rappard, M.D. and Los Angeles Minimally Invasive Surgery Center, LLC, alleged they provided medical treatment to Defendant Yuan Luo after an accident. Attorney Defendants Eric Chen and Ying Xu represented Defendant Luo in a personal injury action. Plaintiffs alleged they obtained a medical lien for the treatment against all Defendants. After the matter settled, Plaintiffs alleged that Defendants failed to pay the amounts owed under the liens, asserting causes of action for (1) breach of contract, (2) book account, (3) account stated, (4) accounting, (5) interference with prospective economic relations, and (6) conversion.

The actions were consolidated and proceeded to a bench trial on July 5, 2024. The trial lasted less than 8-hours. At the conclusion of trial and after consideration of the parties’ post-trial briefs, the court entered judgment on the First Cause of Action only in Plaintiffs’ favor against Defendant Luo in the total amount of $132,000 ($66,000 for each Plaintiff). (See 08/14/2024 Informal Statement of Decision/Verdict.) The court also entered judgment in favor of Defendants Chen and Zu and against Plaintiffs on all causes of action, finding Plaintiffs had not met their burden of proof on any cause of action against those Defendants. (Id.)

This court found that Defendants Chen and Xu were the prevailing parties at trial and thus are entitled their reasonable attorney’s fees and costs as may be allowed by law. (Id.) Defendants now seeks attorney’s fees in the amount of $82,440 and costs in the amount of $9,056.25, for a total award of $91,496.25.

In California, “[a] party may not recover attorney fees unless expressly authorized by statute or contract.” (Hom v. Petrou (2021) 67 Cal. App. 5th 459, 464; See Code Civ. Proc., §§ 1021, 1033.5, subd. (a)(10).) Defendants argue they are entitled to recover attorney’s fees here for two reasons. First, because Plaintiffs unreasonably failed to admit that they had no facts to support their cause of action for breach of contract against Defendants in response to Defendants’ requests for admissions. And second, because the lien contract contains an attorney’s fees provision.

“A party to a civil action may propound a written request that another party ‘admit the genuineness of specified documents, or the truth of specified matters of fact, opinion relating to fact, or application of law to fact.’ ” (City of Glendale v. Marcus Cable Associates, LLC (2015) 235 Cal.App.4th 344, 351-352.) The “main purpose” of a RFA “is to set issues at rest by compelling admission of things that cannot reasonably be controverted.” (LCPFV, LLC v. Somatdary Inc., No. B325599, 2024 WL 4762549, at *6 (Cal. Ct. App. Nov. 13, 2024) [certified for publication].) “[A]s a practical matter, ‘the important facts in a case are usually legitimately disputed’ and cannot be resolved by requests for admissions. [Citation]. As a result, requests for admissions are useful ‘only as to matters of lesser importance (for which they may not be necessary, since unimportant matters can usually be handled by stipulation with opposing counsel)’.” (Id.) “A trial court must judge whether use of a request for admissions is in conformity with the spirit of the law and serves substantial justice. [Citation]. When a court is ‘troubled’ by the way a party has used requests for admission, the court may take corrective action.” (LCPFV, LLC, supra, 2024 WL 4762549, at *6.)

Section 2033.420, subdivision (a) provides for an award of costs of proof where a party responding to such a request fails to admit the truth of a matter that is later proved: “If a party fails to admit the genuineness of any document or the truth of any matter when requested to do so under this chapter, and if the party requesting that admission thereafter proves the genuineness of that document or the truth of that matter, the party requesting the admission may move the court for an order requiring the party to whom the request was directed to pay the reasonable expenses incurred in making that proof, including reasonable attorney's fees.” Such an award must be made unless, among other things, “[t]he party failing to make the admission had reasonable ground to believe that that party would prevail on the matter” or “[t]here was other good reason for the failure to admit.” (§ 2033.420, subd. (b)(3)-(4).) The award is not a penalty, but rather, “is designed to reimburse reasonable expenses incurred by a party in proving the truth of a requested admission where the admission sought was ‘of substantial importance’ [citations] such that trial would have been expedited or shortened if the request had been admitted.” (Orange Cnty. Water Dist. v. The Arnold Eng'g Co. (2018) 31 Cal. App. 5th 96, 115.)

Here, Plaintiffs had “good reason for the failure to admit” the RFAs, and that reason was simple: The RFA’s were not designed to be reasonably admitted. (CCP § 2033.420(b)(4).) Defendants’ RFAs went to the ultimate issues in the case, asking Plaintiffs to simply admit that they had not facts to support their causes of action against Xu and Chen. But to “essentially ask[] plaintiffs to admit that they ha[ve] no claim against” the Defendants in this manner is an improper use of RFAs. (Universal Home Improvement, Inc. v. Robertson (2020) 51 Cal. App. 5th 116, 128.) As aptly stated by the Court of Appeal, the reason is obvious:

“Frankly, we are troubled that a defendant can at the very inception of litigation, at a time when, as best we can tell, no discovery had taken place, and certainly no deposition, serve RFAs essentially seeking responses admitting that plaintiff had no case, and then, if plaintiff ultimately proves unsuccessful, recover costs of proof attorney fees, as here. This, it could be said, is tantamount to a form of strict liability: make a claim; deny an early-served RFA that the claim has no merit; vigorously pursue the claim; lose the claim; and pay. That cannot be the law.”

Next, Defendants argue they are entitled to fees under the Medical Lien Agreements. Defendants gave this argument short shrift in their moving memorandum. Plaintiffs entirely filed to address this argument in their opposition. For the first time in Reply, Defendants cite the governing statute, Civil Code § 1717.

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.

“California courts liberally construe the term ‘on a contract’ in Civil Code section 1717.” (Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 894.) “‘As long as the action “involve[s]” a contract, it is “ ‘on [the] contract’ ” within the meaning of section 1717.’ ” (Id.) “To determine whether an action is on the contract, we look to the complaint and focus on the basis of the cause of action. [Citations.] Any action that is based on a contract is an action on that contract regardless of the relief sought.” (Yoon v. Cam IX Tr. (2021) 60 Cal. App. 5th 388, 392.)

First, there is no question that the action here was “on a contract.” The basis of the action was Defendants’ breach of the Medical Lien Agreements. Second, there is also no question that Defendants Chen and Xu are the prevailing parties here, having received a defense verdict in their favor at trial.

If any action at law or in equity, including an action for declaratory relief or interpleader, or any processing in arbitration, is brought to enforce or interpret the provisions of this Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees, which may be set by the court or the arbitration panel in the same action or any separate action brought for that purpose, in addition to any other relief to which such party may be entitled.

Accordingly, Defendants, being the prevailing party in the action brought by Plaintiffs to enforce the Agreements, “shall be entitled to reasonable attorneys’ fees” in connection with their defense of this action. (Id.) Finding Defendants are entitled to fees, the court now continues to address the reasonableness of the fees sought.

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.)

Counsel for Defendants seeks an hourly rate of $600.00. (Jerisat Decl. ¶ 4.) In opposition, Plaintiffs object to this rate, arguing that counsel has not established that it “ever had a client which paid the claimed $600 per hour rate.” (Opp. 11: 20-21.) However, it is well settled that the firm is entitled to recover the full value of its reasonable hourly rate, even if that rate is more than what the firm actually charges a client. (See, e.g., Nemecek & Cole v. Horn, 208 Cal.App.4th 641, 651–52 (2012) (prevailing party is entitled to fees based on reasonable hourly rates, even if the client was charged a lower discounted rate; see also, Pasternack v. Mccullogh (2021) 65 Cal.App.5th 1050, 1054-1055 [There is no “paid in full” or “made whole” rule in awarding attorney’s fees. A court may award reasonable fees greater than was actually paid by the client as part of a discounted rate or package deal].)

Under the totality of the circumstances and based upon general prevailing rates in the Los Angeles area for this type of litigation, the court will award an hourly rate of $600. This is a reasonable rate based on the complexity of the case, the quality of services provided, and the attorney’s experience.

A fee award “should ordinarily include compensation for all the hours reasonably spent, including those relating solely to the fee.” (Ketchum v. Moses (2001) 24 Cal. 4th 1122, 1133 [emphasis in the original].) “[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, Plaintiffs’ opposition to the motion does not address the reasonableness of the time spent in this matter. Based on this court’s independent review—and without any argument from Plaintiffs—the court concludes the time quoted is somewhat excessive and unreasonable under the circumstances. For example, eleven (11) hours for the attorney’s fees motion was unreasonable given the fact that then primary basis claimed (CCC §2033.420 (a)) was specious. This should have been a simple motion under Civil Code §1717.

First, Plaintiffs argue that claimed costs for deposition costs ($3,273.75) should be taxed based on Defendants’ failure to attach a costs worksheet (Form MC-011) to its cost memo. While this argument is a fair one, Plaintiffs have not demonstrated (or even argued) that the claimed costs for depositions are unreasonable or excessive. Therefore, the court finds them recoverable.

Second, Plaintiffs argue that fees for expert witnesses ($4,500) are not recoverable. Absent exceptions not applicable here, “[f]ees of experts not ordered by the court” are generally not allowable as costs. (CCP § 1033.5(b)(1).) Recognizing this limitation, Defendants contend that experts were ordered by the court to address the “insurance aspect.” (See Opp. 2: 14-27.)

However, the court’s directive was not an order to include an expert witness. Defendants presumably could have demonstrated the “insurance aspect” in other ways. That they chose to do so by expert testimony was entirely proper. But it does not justify recovery of costs.

Accordingly, costs of $4,500 for expert witness fees is ordered TAXED. Once accounting for this deduction, Defendants are awarded a total of $4,556.25 in costs ($9,056.25 - $4,500 = $4,556.250).

Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept49@lacourt.org by no later than 4:00 p.m. the day before the hearing. All interested parties must be copied on the email. It should be noted that if you submit on a tentative ruling the court will still conduct a hearing if any party appears. By submitting on the tentative you have, in essence, waived your right to be present at the hearing, and you should be aware that the court may not adopt the tentative, and may issue an order which modifies the tentative ruling in whole or in part.