Judge: Richard Y. Lee, Case: 30-2020-01138245, Date: 2023-08-10 Tentative Ruling
Plaintiffs Michael Tang and Candice Yang (“Plaintiffs”) move pursuant to Civil Code § 1717 for an order directing Defendants, The Nursery, LLC and/or Frank Berry (“Defendants”) to pay Plaintiffs’
1. Attorneys’ fees in the amount of $81,727.00; In addition, Plaintiffs seek to have:
2. Prejudgment interest from the date that they incurred economic damages until the date of the judgment in the amount of $5388.70; and
3. Post-judgment interest added to the judgment against Defendants as follows:
Candace Yang:
• The Nursery and Frank Berry to Candace Yang, on the principal sum of $16,551.88, the total interest to be added as of August 10, 2023, will be $947.77;
• Frank Berry to Candace Yang, on the principal sum of $5000, the total interest to be added as of August 10, 2023, will be $286.30;
• The Nursery to Candace Yang, on the principal sum of $15,000, the total interest to be added as of August 10, 2023, will be $858.90;
Michael Tang:
• The Nursery and Frank Berry to Michael Tang, on the principal sum of $16,551.88, the total interest to be added as of August 10, 2023, will be $947.77;
• Frank Berry to Michael Tang, on the principal sum of $5000, the total interest to be added as of August 10, 2023, will be $286.30;
• The Nursery to Michael Tang, on the principal sum of $15,000, the total interest to be added as of August 10, 2023, will be $858.90.
Ca Civ Code§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.”
Here, Plaintiff seeks $81,727.00 in attorney’s fees against Defendants, The Nursery, LLC and/or Defendant Frank Berry. The subject Event Agreement signed by Plaintiff Michael Tang and by “Robin Ballard” for The Nursery by Southwinds provides, “This Event Agreement (the "Agreement") is made by and between The Nursery by Southwinds ("The Nursery") and the Primary Contact named above ("Client").” The primary contact appears to be Michael Tang. The Agreement also provides:
“Should any legal proceedings be required to enforce any provision of this Agreement, the prevailing party, as determined by the finder of facts, will be entitled to recover all of its costs and expenses related thereto including without limitation expert witness', consultants', and attorneys' fees and court costs.”
(Strongin Decl. ¶8, Exh. 2 at 11-10.)
Notably, the subject contract was not signed by Defendant Berry. Furthermore, there was no breach of contract cause of action pled against Defendant Berry in the Second Amended Complaint.
In Opposition to the Motion to Tax Costs (which attorney’s fees portion was continued to this date), Plaintiffs argued that Frank Berry, as the owner of The Nursery, was a third-party beneficiary of the contract, and nothing in the agreement limited Plaintiffs right to bring suit against him personally. Therefore, Plaintiffs argue they are entitled to fees from the third-party beneficiary. Yet, they did not bring a breach of contract cause of action against him. In fact, although the original complaint did include a breach of contract cause of action against Defendant Berry, Plaintiffs appeared to abandon that claim by the Second Amended Complaint.
Plaintiffs also argue that California Code of Corporations § 17703.04, subd. (c), (e)) states that a business owner may be held directly liable for actions of their business if they participate in tortious conduct. While The Nursery may be liable for Berry’s actions, this alone does not allow them to recover attorney’s fees pursuant to Civil Code§1717 based on contract.
As such, the request for attorneys fees as against Defendant Frank Berry is DENIED.
Attorney’s Fees Against Defendant The Nursery, LLC
In an action to enforce a contract authorizing an award of fees and costs to one party, the party “prevailing on the contract” is entitled to reasonable fees. [See Civ.C. § 1717] Such fee awards are allowable as court costs under CCP § 1032. [CCP § 1033.5(a)(10)(A) & last para.]
On November 1, 2022, the jury returned a verdict in favor of Plaintiffs against both Defendants. The jury’s total award to Plaintiffs was $73,103.76. (Strongin Decl. Exh. 3.) With respect to Defendant Frank Berry (“Defendant Berry”), the jury found him liable on the following causes of action: Fraud/Deceit. (Strongin Decl. ¶8, Exh. 3.) The jury returned a verdict in favor of Berry with respect to Plaintiffs’ cause of action for Negligent Misrepresentation. (Id.) On January 13, 2023, the Court entered judgment in accordance with the jury’s verdict. (Id.) With respect to Defendant The Nursery, LLC (“Defendant The Nursery”), the jury found it liable on the following causes of action: Breach of Written Contract; Fraud/Deceit. (Id.) The jury returned a verdict in favor of The Nursery with respect to Plaintiffs’ causes of action for Breach of the Implied Covenant of Good Faith and Fair Dealing, Negligent Misrepresentation, and Intentional Infliction of Emotional Distress. (Id.) On January 13, 2023, the Court entered judgment in accordance with the jury’s verdict. (Id.)
Plaintiffs herein were the prevailing parties on the contract at issue and are thus entitled to reasonable fees at the very minimum as to the Breach of Contract cause of action.
When an attorney fee provision authorizes fees for some causes of action, but not others, allocation of fees is within the trial court's discretion. [Amtower v. Photon Dynamics, Inc. (2008) 158 Cal.App.4th 1582, 1604-1605—all causes of action relied on same facts and legal services for contract causes of action could not be separated from lawsuit as a whole (trial court did not abuse its discretion in failing to apportion fees); see Thompson Pac. Const., Inc. v. City of Sunnyvale (2007) 155 Cal.App.4th 525, 555-556.]
Trial courts are not required to allocate fees incurred in counsel's representation of multiple parties “when the liability of the parties is so factually interrelated that it would have been impossible to separate the activities … into compensable and noncompensable time units.” [Cruz v. Ayromloo (2007) 155 Cal.App.4th 1270, 1277 (internal quotes omitted); Hill v. Affirmed Housing Group (2014) 226 Cal.App.4th 1192, 1197]
In this instance, the attorney fee provision set forth in the Event Agreement appears to be so broadly worded (i.e., “Should any legal proceedings be required”) as to include fees incurred in prosecuting tort actions as well the contract causes of action. [Contractual language “any dispute under the [agreements]” broad enough to encompass tort action for fraud; see San Francisco CDC LLC v. Webcor Const. L.P. (2021) 62 Cal.App.5th 266, 285-287.] Therefore, it does not appear necessary for the Court to allocate fees between the various causes of action, or as to fees incurred prosecuting the action against Defendants Berry and The Nursery, LLC. Nor does either Defendant seek any allocation beyond what is argued above.
However, Defendants have made the argument that fees occurred in prosecuting the action against co-Defendant The Event Loft, LLC are not reasonable as to them. This argument will be addressed in detail below.
Amount of Attorney’s Fees.
Courts apply a lodestar method to calculate reasonable attorney’s fees. [Meister v. U.C. Regents (1998) 67 Cal.App.4th 437, 448-49.] The court determines a lodestar figure based on a careful compilation of the time spent and reasonable hourly compensation of each attorney involved. [Serrano v. Priest (1977) 20 Cal.3d 25.] A reasonable fee is determined in the trial court’s discretion. [PLCM Group v. Drexler (2000) 22 Cal.4th 1084.] The trial court is uniquely suited to determine the value of the services rendered. [In re Marriage of Keech (1999) 75 Cal.App.4th 860, 870.]
To determine reasonable attorney’s fees, the Court considers the nature of the litigation, its difficulty, the amount involved, the skill required and employed in handling the matter, the attention given, the success of the attorney’s efforts, the intricacies and importance of the litigation, the labor and necessity for skilled legal training and ability in trying the cause, and the time consumed. [Church of Scientology v. Wollersheim (1996) 42 Cal.App.4th 628, 659 [disapproved on other grounds in Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53].
Counsel’s Hourly Rate
Plaintiffs’ counsel seeks the following hourly rates:
Partners = $395/hour
Of Counsel = $345/hour
Special Counsel = $315/hour
Associates = $285/hour
Paralegals = $150/hour
(Strongin Decl. ¶ 6-7.)
The opposition does not dispute the reasonableness of counsel’s hourly rates; and therefore, the Court finds the rates reasonable.
Hours Incurred.
Plaintiffs seek $81,727 in attorney’s fees incurred through trial, entry of judgment and preparation of memo of costs. It appears the total may also include fees for this motion, Attorney Strongin declaring, “The total amount includes $4673.00 in unbilled attorneys’ fees which the Plaintiffs are responsible for, but they have not yet been paid because they have not yet been invoiced.” (Strongin Decl. ¶5.) Nowhere in the motion, nor the Declaration of Strongin are the TOTAL hours spent set forth.
The testimony of counsel is sufficient evidence of an award of attorney’s fees, even in the absence of billing records. Martino v. Denvi (1986) 182 Cal.App.3d 553, 339. Here, Plaintiffs present both the declaration of counsel, and provide detailed billing statements. The amount of time incurred is supported by the detailed billing records.
In challenging attorney’s fees as excessive, it is the duty of the opposing party to point to the specific items challenged with sufficient argument and citation to evidence. [Premier Md. Mgmt., Inc. v. Calif. Insur. Guarantee Ass’n (2016) 136 Cal.App.4th 550, 564.]
Defendants’ challenge thirteen (13) specific items in pages 6-13 of their Opposition.
1. $4,673.00 in “unbilled attorneys’ fees” as stated in paragraph 5 of the Amended Declaration of Eric B. Strongin. To the extent these are likely to be explained in the reply as fees incurred in drafting this motion, the Court will not reduce based on this particular challenge.
2. Invoice #INV4594 and 14631: at least 22.2 hours on drafting demand letters (at a rate of $345/hr., for a total of $7,659.00). Attached to the Declaration of Cottone, as Ex. C. The demand letter is a comprehensive, eight (8) page letter setting forth the incident, the timeline of events, the various theories of liability, and various types of damages. Incurring $7,659.00 in attorneys fees and 22.2 hours does not appear unreasonable.
As to items 3-7, Defendants specifically challenge attorney’s fees incurred on matters involving co-Defendant Event Loft. Defendant Event Loft, LLC was dismissed with prejudice on 12/13/2022. Plaintiffs do not indicate in the Motion that any fees were reduced due to work related to this dismissed co-Defendant. Plaintiffs have not established they are the prevailing party as to claims against The Event Loft, LLC.
Accordingly, the Court reduces fees in the amount of $2,229.50. Please see below:
3. Invoice #INV4982: The two entries by Mr. Strongin (totaling 0.6 hours at $395/hr. for a total of $237.00) concern communications with Event Loft’s counsel relating to matters such settlement, demurrer, and case status.
4. Invoice #INV5041: Entries by Ms. Hobbs on 5/5/20 (0.7 hours at a rate of $345/hr.), 5/6/20 (0.3 hours), 5/8/20 (0.1 hours), and 5/20/20 (0.1 hours) that pertain to matters solely relating to Plaintiffs’ claims against Event Loft/Verdult (e.g., Plaintiffs’ “demand” to Event Loft, granting an extension of Event Loft’s deadline to file a responsive pleading to the complaint, etc.). Those entries total 1.2 hours for $414.00. In addition, Mr. Strongin also expended 0.5 hours (at a rate of $395/hr. for a total of $197.50) relating to potential settlement with Event Loft.
5. Invoice #INV5106: Entries by Ms. Hobbs on 6/20/20 (0.1 hours), 6/26/20 (0.3 hours), and 6/30/20 (0.1 hours) relating to Plaintiffs’ demand to/potential settlement with Event Loft. At a rate of $345/hr., the combined 0.5 hours total $172.50 In addition, all of the entries by Mr. Strongin on this invoice (excluding 0.2 hours relating to The Nursery’s demurrer and motion to strike) pertain to potential settlement with Event Loft. These entries add up to 1.4 hours (at a rate of $395/hr.) for a total of $553.00.
6. Invoice #INV5174: Entries by Ms. Hobbs on 7/2/20 (0.2 hours) and 7/23/20 (0.6 hours) relating to Plaintiffs’ discussions with Event Loft regarding potential settlement, Plaintiffs’ complaint, and responsive pleadings. These entries add up to 0.8 hours (at a rate of $345/hr.) for a total of $276.00.
7. Invoice #INV5480: Entry by Ms. Hobbs on 11/5/20 (1.6 hours at a rate of $345/hr.) to prepare for and attend the hearing on Event Loft’s motion to disqualify Plaintiffs’ counsel. The Nursery and Berry did not bring this motion, nor did they join in Event Loft’s motion. In total, $552.00 was billed for this work.
8. Invoice #8300 Entry by Ms. Stephanie Ng on 4/11/22 (0.2 hours) relating to Plaintiffs’ motions to compel the depositions of Berry and the person most knowledgeable of The Nursery. At a rate of $285/hr., $57.00 was billed for this work. 9/15/2022 the Court denied Plaintiffs’ motion and ordered Plaintiffs to pay sanctions. (ROA 204) As such, seeking fees for this work appears unreasonable. Court will reduce by $57.
9. Invoice #657: Entries by Ms. Jaclyn French on 6/9/22 (0.1 hours), 6/10/22 (0.1 hours), and again on 6/10/22 (0.3 hours) relating to potential settlement with Event Loft. At a rate of $315/hr., the combined 0.5 hours total $157.50. In addition, entries by Ms. French on 6/1/22 (0.9 hours), 6/1/22 (0.8 hours), 6/1/22 (2.1 hours), 6/15/22 (1.9 hours), 6/15/22 (1.9 hours), 6/15/22 (0.6 hours), and 6/15/22 (0.6 hours) relating to Plaintiffs’ motions to compel the depositions of Berry and the person most knowledgeable of The Nursery. In total, the combined 8.8 hours (at a rate of $315/hr.) total $2,772.00. For the reasons stated above, Court will reduce by $2,772.00.
10. Invoice #1002 Entries by Ms. French on 7/5/22 (0.7 hours), 7/19/22 (3.1 hours), 7/21/22 (0.2 hours), and 7/25/22 (0.1 hours) relating to Plaintiffs’ motions to compel the depositions of Berry and the person most knowledgeable of The Nursery (including Plaintiffs’ efforts to seek such re1lief on an ex parte basis). In total, the combined 4.1 hours (at a rate of $315/hr.) total $1,291.50. For the reasons stated above, Court will reduce by $1,291.50.
11. Invoice #1384: Entries by Ms. French on 8/18/22 (0.7 hours) and 8/25/22 (0.3 hours) relating solely to Plaintiffs’ settlement efforts with the Event Loft. At a rate of $315/hr., the combined 1.0 hours total $315.00. For the reasons set forth above, the Court will reduce by $315.
12. Invoice # 1755: There are several entries again relating to the unsuccessful discovery motions. In total $2819.50 will be reduced for the unsuccessful discovery motions. There are also several entries as to the settlement with co-Defendant The Event Loft. In total $1616.00 will be reduced for the fees incurred relating to The Event Loft.
13. Invoice #13
$60 will be reduced for entries by Ms. Berger relating to Plaintiffs’ settlement with Event Loft. $118.50 will be reduced for entry by Mr. Strongin relating to Plaintiffs’ settlement with Event Loft.
In total, the Court will reduce the attorney’s fees sought by $8,459.50. Therefore, total fees allowed are $73,267.50 against Defendant The Nursery , LLC.
PRE JUDGMENT AND POST JUDGMENT INTEREST
It appears Plaintiffs are also requesting that the Court award them pre-judgment and post-judgment interest pursuant to Civil Code section 3287, subdivision (a) and Civ. Code § 3289, subd. (b).)
Civil Code §3287
“(a) A person who is entitled to recover damages certain, or capable of being made certain by calculation, and the right to recover which is vested in the person upon a particular day, is entitled also to recover interest thereon from that day, except when the debtor is prevented by law, or by the act of the creditor from paying the debt. This section is applicable to recovery of damages and interest from any debtor, including the state or any county, city, city and county, municipal corporation, public district, public agency, or any political subdivision of the state.”
Civ. Code, § 3287 (b) provides, “If a contract entered into after January 1, 1986, does not stipulate a legal rate of interest, the obligation shall bear interest at a rate of 10 percent per annum after a breach.”
However, here, as indicated above, there is no breach of contract as against Defendant Berry. As such, the rate of interest is not 10 percent. For tort-based claims, the applicable prejudgment interest rate is 7% per annum. (See Children’s Hosp. & Med. Ctr. v. Bonta (2002) 97 Cal.App.4th 740, 775.)
Therefore, the Court will allow interest as against The Nursery, LLC in the amount of 10% per annum as sought but as to Defendant Berry in the amount of 7% per annum.
To the extent that Plaintiffs in their reply brief claim they are entitled to approximately $20,000 more in attorney’s fees, these additional fees are being requested for the first time in the reply brief. The motion was filed in April, and the opposition was due in June 2023. No explanation is provided for the delay in correcting the amount sought in fees. Accordingly, the additional $20,000 is DENIED.
Plaintiff to submit a proposed Amended Judgment to reflect these findings.
Plaintiff to give notice.