Judge: Robert S. Draper, Case: BC542350, Date: 2022-07-26 Tentative Ruling

Case Number: BC542350    Hearing Date: July 26, 2022    Dept: 78

Superior Court of California

County of Los Angeles

Department 78

Defendants’ Motion for Attorney Fees is GRANTED in the amount of $1,387,128.25.

FACTUAL BACKGROUND

This is an action to determine proper ownership of a successful surgical center. The operative Third Amended Complaint alleges as follows.

Plaintiff Randhi S. Tuli (“Plaintiff") was a founding 11.3% minority interest holder in Defendant Specialty Surgery Center of Thousand Oaks, LLC (“Surgical Center”). (TAC ¶ 1.) Defendants conspired to squeeze Plaintiff out of his ownership by trumping up false charges against Plaintiff, thereby invoking a provision in the Operating Agreement that allows the Surgical Center to expel a member for engaging in conduct disruptive to the affairs of the business. (TAC ¶¶ 1-2.) Additionally, Defendants conspired to remove Plaintiff from a consulting business he had established with the Surgical Center. (TAC ¶ 4.)

PROCEDURAL HISTORY

On April 11, 2014, Plaintiff filed the Complaint asserting nine causes of action:

1.    Breach of Fiduciary Duties;

2.    Aiding and Abetting Breach of Fiduciary Duties;

3.    Breach of Contract No. 1;

4.    Breach of Contract No. 2;

5.    Breach of the Implied Covenant of Good Faith and Fair Dealing;

6.    Tortious Breach of the Implied Covenant of Good Faith and Fair Dealing;

7.    Tortious Interference with Contractual Relations;

8.    Violation of Cal. Bus. & Prof. Code § 17200 et seq; and

9.    Declaratory and Injunctive Relief.

On June 2, 2014, Defendants filed an Answer.

On March 16, 2015, Plaintiff filed a Motion for Summary Adjudication of the Eighth and Ninth Causes of Action.

On May 28, 2015, Defendants filed a Motion for Summary Judgment.

On June 4, 2015, this Court denied Plaintiff’s Motion for Summary Adjudication.

On December 11, 2015, Plaintiff filed a First Amended Complaint asserting five causes of action:

1.    Breach of Fiduciary Duty;

2.    Breach of Written Operating Agreement;

3.    Breach of Written Consulting Agreement;

4.    Breach of the Implied Covenant of Good Faith and Fair Dealing; and

5.    Violation of Business and Professions Code § 17200 et seq.

On January 20, 2016, Defendants answered the First Amended Complaint.

On January 25, 2016, Defendants filed a Motion for Summary Judgment.

On March 22, 2016, this Court granted Defendants’ Motion for Summary Judgment in its entirety.

On April 25, 2016, this Court entered Final Judgment and dismissed Plaintiff’s Complaint with prejudice.

On May 17, 2016, Defendants filed a Motion for Attorneys’ Fees

On June 23, 2016, Plaintiff filed a Notice of Appeal.

On July 5, 2016, this Court granted Defendants’ Motion for Attorneys’ Fees in the amount of $515,374.67.

On April 19, 2018, the Court of Appeal filed a Remittitur directing this Court to vacate judgment so the parties could dispose of the cross-complaint. The Court of Appeal granted Defendants costs on appeal.

On February 1, 2019, Plaintiff filed a Second Amended Complaint asserting six causes of action:

1.    Breach of Fiduciary Duties;

2.    Breach of Written Operating Agreement;

3.    Breach of Written Consulting Agreement;

4.    Breach of the Implied Covenant of Good Faith and Fair Dealing;

5.    Violation of Business and Professions Code § 17200, et seq.; and

6.    Restitution / Unjust Enrichment.

On February 11, 2019, Defendants filed a Demurrer to the Second Amended Complaint.

On March 7, 2019, this Court sustained Defendants’ Demurrer to the First through Fifth causes of action without leave to amend, and to the Sixth cause of action with leave to amend.

On March 18, 2019, Plaintiff filed a Third Amended Complaint asserting a single cause of action asserting the same six causes of action as the Second Amended Complaint.

On April 17, 2019, Defendants filed a Demurrer to the Third Amended Complaint.

On July 11, 2019, this Court sustained Defendants’ Demurrer without leave to amend as to the First through Fifth causes of action, and Overruled Defendants’ Demurrer as to the Sixth cause of action.

On July 30, 2019, Defendants answered Plaintiff’s Third Amended Complaint.

Between April 1, 2021, and April 23, 2021, Non-Jury Trial was held.

On June 7, 2021, this Court dismissed Plaintiff’s Sixth cause of action with prejudice.

On April 4, 2022, this Court entered Judgment.

On April 18, 2022, Defendants filed the instant Motion for Attorney Fees.

On April 28, 2022, Plaintiff filed an Opposition.

On May 4, 2022, Defendants filed a Reply.

On May 31, 2022, Plaintiff filed a Notice of Appeal.

DISCUSSION

      I.          MOTION FOR ATTORNEYS’ FEES

Defendants seek attorney fees and costs in the amount of $1,387,128.25. Defendants note that this Court previously awarded Defendants attorneys’ fees in the amount of $515,374.67 for work performed through July 5, 2016. (Exh. E.) Now, Defendants seek $871,753.58 for the period between July 5, 2016, and today.

In a breach of contract action, attorneys’ fees shall be awarded when a contract provides that one of the parties or the prevailing party shall be awarded attorneys’ fees in an action on that contract. (See Civ. Code, §1717.)

Here, the Court has already found that the prevailing party is owed attorneys’ fees pursuant to a fee provision in the operating agreement. (Exh. E at p. 3.)

The fee setting inquiry in California ordinarily begins with the “lodestar” method, i.e., the number of hours reasonably expended multiplied by the reasonable hourly rate. A computation of time spent on a case and the reasonable value of that time is fundamental to a determination of an appropriate attorneys’ fee award. The lodestar figure may then be adjusted, based on consideration of factors specific to the case, in order to fix the fee at the fair market value for the legal services provided. (Serrano v. Priest (1977) 20 Cal.3d 25, 49.)  Such an approach anchors the trial court’s analysis to an objective determination of the value of the attorney’s services, ensuring that the amount awarded is not arbitrary. (Id. at 48, n.23.) After the trial court has performed the lodestar calculations, it shall consider whether the total award so calculated under all of the circumstances of the case is more than a reasonable amount and, if so, shall reduce the section 1717 award so that it is a reasonable figure. (PLCM Group v. Drexler (2000) 22 Cal.4th 1084, 1095-96.) 

The factors considered in determining the modification of the lodestar include the nature and difficulty of the litigation, the amount of money involved, the skill required and employed to handle the case, the attention given, the success or failure, and other circumstances in the case. (EnPalm, LLC v. Teitler Family Trust (2008) 162 Cal. App. 4th 770, 774 (emphasis in original).) A negative modifier was appropriate when duplicative work had been performed. (Thayer v. Wells Fargo Bank, N.A. (2001) 92 Cal.App.4th 819.) 

Here, Defendants seek $871,753.58 in addition to the $515,374.67 already awarded.

This amount represents the work of three law firms who assisted in the instant litigation, as follows:

1.    $515,374.67 previously awarded by this Court on July 5, 2016.

2.    $585,081.03 in fees billed by Waller Landsen Dortch & Davis (“Waller”) from July 8, 2016, to April 6, 2022.

3.    An estimated $16,860.83 in fees to be billed by Waller from April 7, 2022, through the instant hearing.

4.    $229,951.72 in fees billed by The Ruttenberg Law Firm, P.C. (“Ruttenberg”) from September 3, 2019, through April 15, 2022.

5.    $5,500 in anticipated fees to be billed by Ruttenberg in finalizing the instant Motion.

6.    $34,360 billed by Benedon & Serlin, LLP (“Benedon”), Defendants’ appellant attorneys.

To substantiate these amounts, Defendants provide declarations from Attorney Jenifer L. Weaver from Waller, Attorney Kenneth G. Ruttenberg from Ruttenberg, and Attorney Gerald M. Serlin from Benedon.  

In Opposition, Plaintiff argues that Defendants hours are overinflated and urges the Court to greatly reduce the award, or to deny it entirely. Plaintiff objects, specifically, on the following grounds.

A.    The Requested Fees are Duplicative, Unnecessary, and Unreasonable

First, Plaintiff argues that the requested fees are duplicative, unnecessary, and unreasonable. Plaintiff notes that two attorneys attended and billed for the September 23, 2019, Final Status Conference, and argues that this is over-staffing. Plaintiff cites no authority stating that two attorneys attending a hearing is inherently overstaffing.

Second, Plaintiff notes that Defendants’ Counsel bills for their time spent on the filing of unsuccessful motions, such as a motion for summary judgment. However, “[l]itigants in good faith may raise alternative legal grounds for a desired outcome, and the court’s rejection of or failure to reach certain grounds is not a sufficient reason for reducing a fee. The result is what matters.” (Sundance v. Municipal Ct. (1987) 192 Cal.App.3d 268, 273.)

Absent indication that the unsuccessful motions were frivolous or filed in bad faith, the Court will not punish Defendants’ counsel for pursuing every available option in defending their clients. Plaintiff provides no evidence of frivolous motions.

Third, Plaintiff argues that Counsel for Defendants “spent hundreds of hours for ‘conferring’ with each other (with several individuals attending the same conference).” (Opposition at p. 5.) Throughout the course of an eight-year action, an appeal, multiple motions for summary judgment, and a trial, it is not unreasonable that a team of attorneys would spend substantial time conferring with one another. This is not a clear indication of padding or overbilling.

B.   Overstaffing

Next, Plaintiff argues that the billing records indicate that counsel overstaffed. Plaintiff contends that “Defendants use of three firms and seventeen lawyers or support staff on a one cause of action claim was unreasonable, duplicative and unnecessary.” (Opposition at p. 6.)  

As an initial matter, the Court does not agree with Plaintiff’s reference to the instant action as a “one cause of action claim.” Although trial was held on only one cause of action, the process of winnowing down to that one cause of action included three amended complaints, multiple demurrers and motions for summary judgment, and an appeal. Were it true that the action, from the beginning, consisted of only one cause of action, then Plaintiff’s argument would be more compelling. However, as even the Third Amended Complaint contained six causes of action, this is a blatant mischaracterization.

Next, Plaintiff argues that the firm of Benedon & Serlin LLP should have their billing struck in its entirety, as they worked entirely on the unsuccessful writ petition, and “also because they did not use law clerks or paralegals to do any work on the writ; the entire work was done by the firm’s founding partners who bill at $600/hour.” (Opposition at p. 7.) This argument is confusing, as the billing table inserted directly above the quoted text in Plaintiff’s Opposition shows that a Law Clerk billing at $205 hours did 12 hours of work on the writ. This was the second most hours billed by any agent of Benedon. As the evidence presented is plainly contrary to Plaintiff’s argument, and as the issue of work on unsuccessful motions was addressed above, the Court will not reduce the Benedon hours.

C.  Block Billing

Next, Plaintiff argues that Defendant Counsel’s use of block billing indicates clearly padded billing. While this is possible, block billing alone is not inherently evidence of inflation, and absent clearer evidence of padding, the Court will not reduce hours based on this factor alone. As Plaintiff provides no evidence of inflated hours, other than the block billing itself, this argument is unavailing

D.  Cross-Complaint

Next, Plaintiff argues that, despite Defendants Counsel’s declarations stating otherwise, Counsel failed to omit hours spent on litigation of Defendants’ Cross-Complaints.

Specifically, Plaintiff argues that Defendants’ Counsel should omit time spent opposing Plaintiff’s Motion for Summary Judgment on Defendants’ Cross-Complaint. However, Plaintiff’s color-coded objections to Defendants’ billing sheets (Lowe Decl., Exh. C), does not contain a code for time related to hours spent litigating Defendants’ Cross-Complaints. Upon review of the record, the Court could not find entries related to that practice.

E.   Redacted Entries

Next, Plaintiff argues that the Court should omit any entry that has a description redacted for attorney-client privilege.

As Defendants note in their reply, “[i]t is long-settled law in California that a party seeking attorneys’ fees may redact portions of the attorneys’ billing invoices that are protected by attorney-client privilege.” (Reply at p. 6; See Lafayette Morehouse, Inc. v. Chronicle Publ’g Co. (1995) 39 Cal. App. 4th 1379, 1382.)

Defendants offer to provide the unredacted billing records to the Court in camera. As the use of redaction is limited, and as the Court considers attorney-client privilege a fundamental protection in the judicial system, the Court does not deem this necessary.

F.   Declaration for Each Billing Attorney

Finally, Plaintiff argues that the submitted declarations are insufficient to support the billing record, as not all seventeen attorneys and various support staff who worked on the case submitted individual declarations supporting their hours.

Plaintiff provides no authority stating that a declaration is necessary from each attorney, and the Court finds that the declarations provided from a managing partner at each firm is sufficient to substantiate their veracity.

Accordingly, Defendants’ Motion for Attorneys’ Fees is GRANTED in the amount of $1,387,128.25.

DATED:  July 26, 2022

___________________________

Hon. Robert S. Draper

Judge of the Superior Court