Judge: Richard Y. Lee, Case: 30-2013-00665314, Date: 2022-12-07 Tentative Ruling
Defendants, Morris Cerullo World Evangelism (“MCWE”) and Roger Artz, individually and as trustee of the Plaza Del Sol Real Estate Trust (“Artz”) (collectively, “Defendants”) move for an award of $1,523,194, or any other amount that the court deems appropriate in attorney fees to be assessed jointly and severally against Plaintiffs Newport Harbor Ventures, LLC (“NHV”) and Vertical Media Group, Inc. (“VMG”) under Civil Code §1717, Code of Civil Procedure §1033.5, and Code of Civil Procedure §1032, as allowed by contract.
Defendants contend that they are prevailing parties and are entitled to fees under the property management agreement and Civil Code section 1717, and that the Judgment already found that Defendants are prevailing parties after trial and are entitled to fees and costs under Code of Civil Procedure sections 1032 and 1717. Defendants assert that all of Plaintiffs’ causes of action arose from a property management agreement with a broad fee-shifting clause and that any tort claims derive from the contract and are intertwined with the contract claims such that fees are recoverable from all work done in defense of this case, including fees spent on efforts that were unsuccessful, such as the appeal of the denial of the anti-SLAPP motion. Defendants assert that $1,523,194, consisting of time spent in the sum of 3,232 hours, excluding July and August 2022, in this action for nine years is reasonable for this case which involved multiple demurrers, motions for judgment on the pleadings, motions for summary judgment/adjudication, a motion to bifurcate, motions to consolidate, an anti-SLAPP motion, Plaintiffs’ appeal from a ruling on a motion for summary judgment, Defendants’ appeal from an anti-SLAPP ruling, a Supreme Court appeal, a petition to the appellate court for writ of mandate, depositions of multiple expert and lay witnesses, and preparation for a jury trial but which became a bench trial. Defendants additionally assert that the hourly rates of $550 for the firm’s partners, $400 to $450 for associate attorneys, and $150 to $225 for paralegals and law clerks with J.D.s are reasonable for attorneys and staff with their experience and match what has been approved for similar work by similar attorney by other judges, including this court. Defendants further argue that expert William Hensley supports that the rates are reasonable.
Plaintiffs appear to be currently unrepresented and no opposition has been filed.
Timeliness of Motion
California Rules of Court, rule 3.1702 applies in civil cases to claims for statutory attorney’s fees and claims for attorney’s fees provided for in a contract. (California Rules of Court (“CRC”), rule 3.1702(a).) California Rules of Court, rule 3.1702(b) and (c) “apply when the court determines entitlement to the fees, the amount of the fees, or both, whether the court makes that determination because the statute or contract refers to ‘reasonable’ fees, because it requires a determination of the prevailing party, or for other reasons.” (Ibid.)
A notice of motion claiming attorney’s fees for services up to and including rendition of the trial court judgment, including attorney fees on an interim appeal before rendition of the judgment, must be served and filed within the time for filing a notice of appeal under CRC, rules 8.104, 8.108 in an unlimited civil case or under CRC, rules 8.822 and 8.823 in a limited civil case. (CRC, rule 3.1702(b)(1); see P R Burke Corp. v. Victor Valley Wastewater Reclamation Auth. (2002) 98 Cal.App.4th 1047, 1052 [motion “almost always” filed after entry of judgment because until then “there is technically no prevailing party” and “parties may still incur additional fees.”].)
The normal time limit for filing a notice of appeal [and hence for an attorney fees motion] is 60 days after the clerk's or any party's service of notice of entry of judgment, or 180 days after the date of entry, whichever is the earliest. (CRC, rule 8.104(a).)
For good cause, the trial judge may extend the time for filing a motion for attorney’s fees in the absence of a stipulation or for a longer period than allowed by stipulation. (CRC, rule 3.1702(d).)
Here, Judgment was entered on June 8, 2022, after trial, in favor of MCWE and Artz and against VMG and NHV. (Ex. B to Declaration of Daniel Watts (“Watts Decl.”), ROA 1006.) The instant motion for attorneys’ fees was filed on August 31, 2022. It does not appear from the Court’s file that notice of entry of judgment was made by either the clerk or any party. No evidence is submitted on this point although the memorandum of points and authorities in support of the motion assert that notice of entry of judgment was not given by the clerk or any party. Thus, it appears that the motion would need to be made 180 days after the date of entry and the motion was timely made.
Entitlement to Attorney’s Fees
“[E]ach party to a lawsuit is responsible for his or her own attorney’s fees in the absence of an agreement between the parties for fees or a statute specifically authorizing fees. [Citations.]” (Pederson v. Kennedy (1982) 128 Cal.App.3d 976, 979.) Under Code of Civil Procedure section 1032, attorney’s fees are recoverable as costs when authorized by contract. (Code Civ. Proc. § 1033.5(a)(10)(A).)
Civil Code section 1717, subdivision (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.” (Civil Code § 1717(a).)
Civil Code section 1717(b)(1) states: “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(b)(1).)
Here, the Management Agreement upon which this action is based states:
“20. Attorneys’ Fees
“In any lawsuit or proceeding hereafter brought or commenced by any party to this Agreement for the purpose of enforcing the terms hereof, or for the purpose of enforcing any rights that derive from this Agreement, such party shall be entitled to its reasonable attorney’s fees and costs incurred in such lawsuit or proceeding through final appeal, including experts’ fees.”
(ROA 273; Plaintiffs’ Third Amended Complaint, Exhibit 1, at p. 10, § 20.)
Judgment was entered for Morris Cerullo World Evangelism, Inc. and Roger Artz (individually and as trustee of the Plaza Del Sol Real Estate Trust) and against Vertical Medica Group, Inc. and Newport Harbor Ventures, LLC. (Ex. B to Watts Decl.; Judgment, 2:4-6, ¶ 1.) The Judgment states, “Vertical Media Group, Inc. and Newport Harbor Ventures, LLC shall take nothing by way of their complaint.” (Ex. B to Watts Decl.; Judgment, 2:7-8, ¶ 2.) The Judgment states, “[u]nder Code of Civil Procedure §1032 and Civil Code §1717, Defendant Morris Cerullo World Evangelism, Inc. and Defendant Roger Artz, individually and as trustee of the Plaza Del Sol Real Estate Trust, are the prevailing parties.” (Ex. B to Watts Decl.; Judgment, 2:9-11, ¶3.) The Judgment additionally states, “[t]he exact amount of fees and costs will be determined upon ruling on any filed motions or memoranda of costs, after which the clerk of the court shall interlineate the amount of fees and costs into this judgment without further order from the court.” (Ex. B to Watts Decl.; Judgment, 2:15-18, ¶ 4.)
Based on the foregoing, MCWE and Artz are the prevailing parties under Civil Code section 1717 and are entitled to reasonable attorney’s fees.
Reasonableness of Fees
A court has wide discretion in determining what constitutes reasonable attorney fees. The court typically makes this determination based upon declarations without live testimony. The value of legal services performed in a case is a matter in which the court has its own expertise, and thus may make its own determination of the value of the services contrary to, or without the necessity for, expert testimony. (PLCM Group v. Drexler (2000) 22 Cal.4th 1084, 1096; Padilla v. McClellan (2001) 93 Cal.App.4th 1100, 1107; Syers Properties III, Inc. v. Rankin (2014) 226 Cal.App.4th 691, 698 [“experienced trial judge is the best judge of the value of professional services rendered in his court”].)
The determination ordinarily begins with ascertainment of the “lodestar,” i.e., the number of hours reasonably expended multiplied by the reasonable hourly rate. (EnPalm, LLC v. Teitler Family Trust (2008) 162 Cal.App.4th 770, 774; see Mountjoy v. Bank of America, N.A. (2016) 245 Cal.App.4th 266, 271-282 [discussing general principles governing attorney fee awards].) The lodestar figure may then be adjusted, based on consideration of factors specific to the case, to fix the fee at the fair market value for the legal services provided. (PLCM Group v. Drexler (2000) 22 Cal.4th 1084, 1095.)
“ ‘[T]he [party] . . . seeking fees and costs “ ‘bear[s] the burden of establishing entitlement to an award and documenting the appropriate hours expended and hourly rates.’ [Citation.]” ’ (Christian Research Institute v. Alnor (2008) 165 Cal.App.4th 1315, 1320, 81 Cal.Rptr.3d 866.) ‘ “To that end, the court may require [a] defendant[] to produce records sufficient to provide ‘ “a proper basis for determining how much time was spent on particular claims.” ’ [Citation.]” ‘ (Ibid.) ‘The evidence should allow the court to consider whether the case was overstaffed, how much time the attorneys spent on particular claims, and whether the hours were reasonably expended. [Citation.]’ (Ibid.) ‘ “The court . . . may properly reduce compensation on account of any failure to maintain appropriate time records. [Citation.]” ’ (Ibid.)”
“To enable the trial court to determine whether attorney fees should be awarded and in what amount, an attorney should present ‘(1) evidence, documentary and oral, of the services actually performed; and (2) expert opinion by [the applicant] and other lawyers, as to what would be a reasonable fee for such services.’ [Citations.] (Martino v. Denevi (1986) 182 Cal.App.3d 553, 558-559.) “In California, an attorney need not submit contemporaneous time records in order to recover attorney fees, . . . . [Citation.]” (Id. at p. 559.) “Testimony of an attorney as to the number of hours worked on a particular case is sufficient evidence to support an award of attorney fees, even in the absence of detailed time records. [Citations.]” (Ibid.)
Fees incurred in preparing a motion for fees are recoverable in the award. (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1133.)
When confronted with hundreds of pages of legal bills, trial courts are not required to identify each charge they find to be reasonable or unreasonable, necessary or unnecessary.” (Gorman v. Tassajara Development Corp. (2009) 178 Cal.App.4th 44, 101.) “The party opposing the fee award can be expected to identify the particular charges it considers objectionable. A reduced award might be fully justified by a general observation that an attorney overlitigated a case or submitted a padded bill or that the opposing party has stated valid objections.” (Ibid.)
Necessary support services for attorneys, including secretarial and paralegal services, are includable within an attorney fee award where those services are necessary and reasonable. (Salton Bay Marina, Inc. v. Imperial Irrigation District (1985) 172 Cal.App.3d 914, 951.)
Where fees are incurred by jointly-represented parties for claims that are inextricably intertwined apportionment of fees is not required. (Hill v. Affirmed Housing Group (2014) 226 Cal.App.4th 1192, 1197-1198.)
“ ‘The attorney’s fees clause in a contract may be broad enough to cover tort as well as contract causes of action. [Citations.]’ ‘ “If a contractual attorney fee provision is phrased broadly enough, . . . it may support an award of attorney fees to the prevailing party in an action alleging both contract and tort claims . . . .’ [Citation.]” (Cruz v. Ayromloo (2007) 155 Cal.App.4th 1270, 1276-1277 [finding that apportionment of fees for the breach of contract and tort causes of action was unnecessary where broad language of attorney fee clause in lease agreement permitted recovery of attorneys’ fees for breach of contract or any other claim asserted in connection with the lease].)
The trial court have “the discretion to exclude from a fee award the fees incurred by a prevailing party in making frivolous procedural maneuvers.” (Presley of Southern California v. Whelan (1983) 146 Cal.App.3d 959, 963.)
Here, the broad language of the attorney’s fees provision in the agreement covers all fees stemming from the agreement as it provides for attorney’s fees “for the purpose of enforcing any rights that derive from this Agreement, . . . .” (ROA 273; Plaintiffs’ Third Amended Complaint, Exhibit 1, at p. 10, § 20.)
Thus, it covers all contract and tort claims at issue here which derive from the Management Agreement. Attorney Watts also provides that the fees were “incurred jointly by Morris Cerullo World Evangelism and Roger Artz, as trustee of the Plaza Del Sol Real Estate Trust.” (Watts Decl., ¶ 28.) This supports that no allocation of fees between the jointly represented Defendants is required.
In support of its motion for attorney’s fees, Defendants submit the declaration of counsel, Daniel Watts, which sets forth the rate and the hours expended by 15 timekeepers including four partners/shareholders, five associate attorneys, one “of counsel,” and five paralegals/law clerks; a breakdown of all timekeepers as to the number of hours each worked on the case using an excel spreadsheet where Attorney Watts personally entered each time entry and added up all the time for each timekeeper, multiplying by the hourly rates; and copies of time entries created by Defendants’ counsel’s firm’s employees since 2013 on software called “Amicus” which Attorney Watts personally reviewed, and redacted such that the time entries shown are only those for work that was reasonably necessary to the conduct of this litigation. (Watts Decl., ¶¶ 2-18, 28-29; Ex. A.) The time entries are in excess of 200 pages and contain entries dated from August 12, 2013 through June 2022. The Watts Declaration also provides that this lawsuit involved anti-SLAPP issues, including a Supreme Court decision. (Watts Decl., ¶ 20.)
Attorney Watts provides the following breakdown:
1. Daniel T. Watts (shareholder/attorney) – 1170.2 hours
2. Steven W. Blake (shareholder/attorney/partner) – 198.5 hours
3. Louis A. Galuppo (managing shareholder/founder/attorney) – 267.2 hours
4. Georgia Schneider (shareholder/attorney/head of litigation team) – 73.6 hours
5. Lynn T. Galuppo (20-year attorney/“of counsel”)– 135.5 hours
6. Jared M. Salvati (associate attorney) - 532.3 hours
7. Dominick Severance (associate attorney) – 16.2 hours
8. Jasleen Ahuja (associate attorney) – 64.9 hours
9. Nairi Chopurian (associate attorney) – 37.5 hours
10. Andrew E. Hall (associate attorney) – 279.6 hours
11. Julia L. Anderson (paralegal/law clerk) – 5.7 hours
12. Linda Koller (legal assistant/paralegal) – 198.5 hours
13. Julienne Call (paralegal/law clerk) – 29.9 hours
14. Terah J. Drent (paralegal/law clerk) – 59.5 hours
15. Jill N. Trost (paralegal) – 163.5 hours
16. Daniel T. Watts – 27.6 hours for this fee motion
(Watts Decl., ¶¶ 2-18, 29.)
Given the extensive law and motion and appellate work involved in this matter through to trial, the Court finds that the 3,232 hours expended over the course of the past nine years, plus 27.6 hours for this fee motion were reasonably expended.
Reasonableness of Hourly Rate for Plaintiff’s Counsel
In determining a reasonable rate for the attorney's services, courts usually consider: (1) the prevailing rate charged by attorneys of similar skill and experience for comparable legal services in the community; (2) the nature of the work performed; and (3) the attorney's customary billing rates. (See Serrano v. Unruh (1982) 32 Cal.3d 621, 643.)
“In making its calculation [of a reasonable hourly rate], the court may rely on its own knowledge and familiarity with the legal market, as well as the experience, skill, and reputation of the attorney requesting fees [citation], the difficulty or complexity of the litigation to which that skill was applied [citations], and affidavits from other attorneys regarding prevailing fees in the community and rate determinations in other cases.” (Morris v. Hyundai Motor America (2019) 41 Cal.App.5th 24, 41 [citations omitted].)
One enhancement factor for fees includes a significant delay in the payment of fees. (Graham v. DaimlerChrysler Corp. (2004) 34 Cal.4th 553, 583.) “[T]his enhancement, which is tantamount to an interest rate, is by itself quite small and may be reduced or eliminated if the lodestar rate is based on the present hourly rate rather than the lesser rate applicable when the services were rendered.” (Id. at p. 584.)
Here, in support of the hourly rates for each of the 15 timekeepers, Defendants submit the declaration of Attorney Watts and exhibits, including but not limited to, rates approved by this court in other cases, the hourly rates sought by Plaintiffs in their motion for attorney’s fees under Code of Civil Procedure section 425.16(c), the 2020 Real Rate Report, the 2014-2015 version of the Laffey Matrix, another version of the Laffey Matrix retrieved May 23, 2022, the USAO Attorney’s Fees Matrix for 2015-2018 and 2015-2021, and the 2015 National Law Journal’s Billing Survey.
Attorney Watts provides the following hourly rates for the attorney and paralegals/law clerks who worked on this case:
1. Daniel T. Watts (11-year attorney) – $550 per hour
2. Steven W. Blake (licensed since 2005) – $550 per hour
3. Louis A. Galuppo (licensed since 1989) – $550 per hour
4. Georgia Schneider (15-year attorney) – $550 per hour
5. Lynn T. Galuppo (23-year attorney) – $535 per hour
6. Jared M. Salvati (licensed since 2021) - $400 per hour
7. Dominick Severance (9-year attorney) – $475 per hour
8. Jasleen Ahuja (10-year attorney) – $450 per hour
9. Nairi Chopurian (10-year attorney) – $475 per hour
10. Andrew E. Hall (14-year attorney) – $525 per hour
11. Julia L. Anderson (paralegal since 2001/law clerk pending J.D.) – $195 per hour
12. Linda Koller (35-year legal assistant/paralegal) – $195 per hour
13. Julienne Call (20-year paralegal/law clerk with J.D.) – $150 per hour
14. Terah J. Drent (13-year paralegal/law clerk with J.D.) – $225 per hour
15. Jill N. Trost (8-year paralegal) – $150 per hour
(Watts Decl., ¶¶ 2-16.)
Defendants also submit the Declaration of William M. Hensley, a fee expert, whose education and experience show that he is qualified to express an opinion as to the reasonableness of hourly rates for attorneys, and whose investigation and explanation of the fees sets forth the foundation for his opinion. (Declaration of William M. Hensley, ¶¶ 1-9.) Mr. Hensley provides that he has had discussions with Attorney Watts; has reviewed past pleadings and judgment; has reviewed Attorney Watts’ fee declaration and exhibits; has reviewed the court docket as well as significant pleadings, motions, briefs, and a minute order addressing Joint Controverted Issues and dismissing the Cross-Complaint; has reviewed the summary of hours billed for the attorneys and other legal professionals billing on this case and the billings on the matters for which fees are sought; has conducted internet research on Attorney Watts’ law firm and the billing attorneys in this case; and has conducted legal investigative research on hourly rates in this case and in Orange County. (Id., ¶ 9.) Mr. Hensley explains the guiding principles bases for his opinion, and opines that the hourly rates of G10 professionals [Defendants’ attorneys and paralegal professionals] described in paragraph 14 above are reasonable in the Orange County legal market for the litigation and appellate work in the underlying case and related appellate proceedings.” (Id., ¶¶ 10-26.) Paragraph 14 sets forth the same hourly rates as stated in Attorney Watts’ declaration.
Based on all of the above, the Court finds that the hourly rates claimed by the attorneys and paralegals/law clerks in this case to be reasonable and to be commensurate with attorneys of similar skill and experience for comparable legal services in the Orange County community.
The Court GRANTS Defendants’ Motion for Attorney’s Fees in the amount of $1,523,194, jointly and severally against Plaintiffs Newport Harbor Ventures, LLC and Vertical Media Group, Inc.
Defendants to give notice.