Judge: Stephen P. Pfahler, Case: 20STCV31042, Date: 2024-10-17 Tentative Ruling

Case Number: 20STCV31042    Hearing Date: October 17, 2024    Dept: 68

Dept. 68

Date: 10-17-24

Case: 20STCV31042

Trial Date: N/A

ATTORNEY FEES

MOVING PARTY: Plaintiff, Bank of Hope

RESPONDING PARTY: Defendant, Nishant Patel

RELIEF REQUESTED

Motion for Attorney Fees

SUMMARY OF ACTION

On August 14, 2021, Plaintiff Bank of Hope filed a complaint for Breach of Contract/Guaranty and Money Due alleging a balance due of $482,959.60. On November 2, 2023, the court entered summary judgment in favor of Plaintiff and against Nishant Patel on the second and fourth causes of action. On November 17, 2023, the court entered judgment in favor of Plaintiff for $112,448.33 representing the remaining unpaid balance due.

On March 13, 2023, Plaintiff filed a memorandum of costs.

RULING: Granted.

Plaintiff Bank of Hope moves for $22,023.91 in attorney fees as the prevailing party in the action and upon the terms of the underlying contract/commercial guaranty. Defendant Nishant Patel in opposition challenges the motion on grounds that Plaintiff is not entitled to recover fees pursuant to the contract; said contract provision is unconscionable and unenforceable due to the lack of mutuality; and the fees are unreasonable. Plaintiff in reply reiterates the right to attorney fees pursuant to contract, and denies any unconscionability. Plaintiff also defends the reasonableness of the sought after fees

A motion for attorney fees must be served and filed within the time for the filing of a notice of appeal in a civil case. (Cal. Rules Ct., rule 3.1702(b)(1).) The time for the filing of a notice of appeal in an unlimited action is 60 days if a “Notice of Entry” of Judgment was served by the court clerk or a party to the action, or within 180 days of entry of judgment. (California Rules of Court rule 8.104.) Judgement was entered on November 17, 203. The motion was filed on April 29, 2024—164 days after entry of judgment. The motion was filed less than 180 days from entry of judgment, and is therefore timely under California Rules of Court rule 3.1702(b)(1).

Code of Civil Procedure section 1021 provides “[e]xcept as attorney's fees are specifically provided for by statute, the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties; but parties to actions or proceedings are entitled to their costs, as hereinafter provided.” A prevailing party in entitled to recover costs, including attorneys’ fees when authorized by contract. (Code Civ. Proc., §§ 1032, subd. (a)(4); 1033.5, subd. (a)(10)(A).) “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….” (Civ. Code, § 1717, subd. (a).)

“‘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.” (Code Civ. Proc., § 1032.)

“(1) 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.” (Civ. Code, § 1717, subd. (b).) The court found in favor of Plaintiff. The court determines Plaintiff is the prevailing party.

The commercial guaranty agreement provides for the recovery attorney fees: “Guarantor agrees to pay upon demand all of Lender’s [Bank] costs and expenses, including Lender’s attorneys’ fees and Lender’s legal expenses, incurred in connection with the enforcement of this [Patel] Guaranty. Lender may hire or pay someone else to enforce this Guaranty, and Guarantor shall pay the costs and expenses of such enforcement. Costs and expenses include Lender’s attorneys’ fees and legal expenses whether or not there is a lawsuit, including attorneys’ fees and legal expenses for bankruptcy proceedings . . . Guarantor also shall pay all court costs and such additional fees as may be directed by the court.” [Declaration of Ki Wook Lee, Ex. 3: Commercial Guaranty, Attorneys Fees; Expenses; Declaration of Steven Han, Ex. 4.]

Plaintiff challenges the basis for recovery based on references to the “Note,” quoted as follows: “ATTORNEYS’ FEES; EXPENSES. Lender may hire or pay someone else to help collect this Note if Borrow does not pay. Borrower will pay Lender that amount. This includes, subject to any limits under applicable law, Lender’s attorneys’ fees and Lender’s legal expenses, whether or not there is a lawsuit, including attorneys’ fees, expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), and appeals. Borrower will also pay any court costs, in addition to all other sums provided by law.” Nothing in the motion includes any actual document identified as “Note.”

A business loan agreement (“Promissory Note”) was executed by other parties, along with the Guaranty documents, but Patel was not a party to said “Note.” The only agreement between the actual parties in the subject action is the above referenced “Commercial Guaranty.” [Lee Decl., Ex. 3.] Even if such “Note” agreement existed between the parties in the instant motion, Defendant offers absolutely no address to the lack of any adjudication on said “Note” rather than the presented, unchallenged Guaranty executed by Defendant.

The court therefore relies on the actual cited language in said Guaranty agreement. The plain language of the agreement allows Plaintiff to recover attorney fees pursuant to the contractual agreement.

The court finds no support barring recovery based on a claim that any fees should be added to the debt itself. Patel is not a borrower. Any additional debt on the note involves a non-party to the subject guaranty. Application of the rule to add on “charges” to the debt (Note) otherwise violates mutuality rules. (See Chacker v. JPMorgan Chase Bank, N.A. (2018) 27 Cal.App.5th 351, 356-357; Hart v. Clear Recon Corp. (2018) 27 Cal.App.5th 322, 327.)

Patel next challenges the agreement on grounds of unconscionability. The court finds no application of the standard utilized for employment arbitration clauses to commercial loans on a guaranty. (See Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114; Carmona v. Lincoln Millennium Car Wash, Inc. (2014) 226 Cal.App.4th 88-89.) To the extent Patel appears to additionally challenge the clause on the lack of mutuality of remedy (e.g. lack of language allowing Patel to seek recovery of fees), the court declines to make a finding on unarticulated positions regarding the lack of an equal remedy if Patel prevailed (which is unsupported by the law even if stated). (See Hsu v. Abbara (1995) 9 Cal.4th 863, 870.)

The court therefore considers the request for $22,023.91 in attorney fees. Plaintiff submits a detailed billing sheet in support of the request. [Han Decl., Ex. 11.] Patel challenges the recovery as “unreasonable and excessive,” including redundant entries and billing entries at attorney fee time for administrative tasks. Patel also challenges fees incurred on behalf of co-defendant Rajinder Adlakha.

The reasonableness of attorney fees lies within the discretion of the trial court. (PLCM Group v. Drexler (2000) 22 Cal.4th 1084, 1096.) The court makes it determination based on the consideration of a number of factors, including, “the nature of the litigation, its difficulty, the amount involved, the skill required in its handling, the skill employed, the attention given, the success or failure, and other circumstances in the case.” (Ibid.) The court should apply an objective standard of reasonableness. (Id. at p. 1098.) “A fee request that appears unreasonably inflated is a special circumstance permitting the trial court to reduce the award or deny one altogether.” (Serrano v. Unruh (1982) 32 Cal.3d 621, 635.) The court adheres to the “market rate” approach for contingency cases, and finds the “Laffey” charts general and only suggestive. (Pasternack v. McCullough (2021) 65 Cal.App.5th 1050, 1057; Center for Biological Diversity v. County of San Bernardino (2010) 188 Cal.App.4th 603, 619-620.)

Counsel requests a billable rate of $350 per hour for all three handling attorneys, but the actual billing statement indicates a rate of $300/hour. [Han Decl., ¶ 13 & Ex. 11.] The subject action in no way presents unusual or remarkably difficult legal issues. The court finds the unchallenged $300 hourly rate reasonable for Los Angeles County. (Mikhaeilpoor v. BMW of North America, LLC (2020) 48 Cal.App.5th 240, 247, 256; Center for Biological Diversity v. County of San Bernardino (2010) 188 Cal.App.4th 603, 619-620; see Lindy Bros. Builders, Inc. of Phila. v. American Radiator & Standard Sanitary Corp. (3d Cir. 1973) 487 F.2d 161, 167.)

On the number of hours in total, Plaintiff lists 91.90 hours total. Counsel represents a $4,281.09 credit based on an agreement for payment of said amount in exchange for setting aside the default and default judgment. The court finds the deduction reasonable and accurate. The court otherwise finds no identified administrative staff, only handling attorneys. As addressed further below, the court addresses the reasonableness of the entries associated with the case against Patel alone, which subsumes concerns regarding reasonableness for administrative tasks billed at $300/hour.

Patel raises a valid argument in that Plaintiff should not recover for work completed against co-defendant Rajinder Adlakha. All entries however identify Rajinder Adlakha in the “matter” column, which presumably occurred due the complaint being filed against both guarantors. Examination of the actual entries clearly identify items related to Patel, while a number of items contain redacted entries or other references to third party creditors, with no specific distinctions allowing determination whether the fees were incurred only as to Patel.

The declaration of Han lacks specific address to any differences between the parties. (Mountjoy v. Bank of America, N.A., supra, 245 Cal.App.4th at p. 280 accord Christian Research Institute v. Alnor (2008) 165 Cal.App.4th 1315, 1329.) The court considers both the descriptive and chronological entries.

The default was entered against Patel on January 19, 2021. Summary judgment was granted against Rajinder Adlakha and judgment entered on October 6, 2022. The motion for summary judgment against Patel was not filed until after August 15, 2023. Applying the credit for payment of fees on the vacated default, and with the answer by Patel only filed on June 15, 2023, the court declines to find any and all fees between the default and answer attributable to Patel. In other words, given the two separate guaranty agreements and complaint with individual causes of action against each individual guarantor, the court finds no basis for the recovery of fees against Patel for fees involving the claims against Rajinder Adlakha. [Han Decl., ¶ 15.]

The entries relating to the default are already credited. The court also deducts entries directly related to Rajinder Adlakha preceding both the judgment and the entry of default against Patel, as well as all blocked entries (though certain entries are presumably already deducted if they relate to vacating the default). The court therefore deducts all fees between the default and the set aside default. Said fees total $13,370.

The court cannot make assumptions as to the applicability of the described entry given the potential for work against both co-defendants at this time period. The court finds certain joint entries, such as the drafting of the complaint, reviews of the bankruptcy filings, and third party creditor claims valid as to Patel however in that such expenses appear inextricably intertwined. The court therefore finds these entries valid.

Beginning with the base of $22,023.91 less $13,370 in additional deductions for the period between default and vacated default, including the blocked billing deduction, the total, equals $8,653.91.

The motion only awards attorney fees. The memorandum of costs was unchallenged and any time for a motion to tax lapsed.

Because the amount of fees exceeds $5,000, the order is immediately appealable. (Code Civ. Proc., 904.1, subd. (a)(12); Doe v. Luster (2006) 145 Cal.App.4th 139, 146.) The court will set an OSC re: Status of Appeal(s) at the time of the hearing.

Plaintiff to give notice.