Judge: Stephen P. Pfahler, Case: 21CHCV00135, Date: 2022-08-25 Tentative Ruling

Case Number: 21CHCV00135    Hearing Date: August 25, 2022    Dept: F49

Dept. F-49

Date: 8-25-22

Case # 21CHCV00135

Trial Date: N/A

ATTORNEY FEES

MOVING PARTY: Defendant, Granada Hills Center, LLC

RESPONDING PARTY: Plaintiffs, Stephen Burns, et al.

RELIEF REQUESTED

Motion for Attorney Fees

SUMMARY OF ACTION

On June 21, 1985, “Plaintiff’s successor in interest entered into a Ground Lease with Defendant’s successor in interest for a term of thirty-five (35) years. In 2005, the Defendant’s successor in interest assigned the LEASE to Defendant.” The lease required $50,000 in annual rent, with an option for years 35 to 40 increasing rent to $165,000.

Plaintiffs Stephen and Judith Burns, et al. allege Defendant is in breach of the lease as of March 2020, including a deficiency on property tax. Plaintiffs allege a total deficiency of $175,000.

On February 25, 2021, Plaintiff filed a complaint for Breach of Lease. On September 16, 2021, the court sustained the demurrer with leave to amend. Plaintiff filed a first amended complaint for Breach of Lease on October 14, 2021.

On January 27, 2022, the court sustained the demurrer to the first amended complaint without leave to amend. On March 24, 2022, the court entered judgment. On April 8, 2022, Defendant filed a Memorandum of Costs.

RULING: Granted.

Defendant Granada Hills Center, LLC moves for $21,300 in attorney fees. Defendant seeks recovery of attorney fees pursuant to section 34 of the ground lease, which provides for the recovery of fees to any party prevailing on a dispute arising from the terms of the agreement.

Plaintiff in opposition contends Defendant is not a prevailing party as defined in the relied upon ground lease. Plaintiff next challenges the reasonableness of the requested fees.

Defendant in reply reiterates the right to recover fees under the contract, and the subject action arises from the parties’ lease. Defendant also asserts it was the prevailing party based on the dismissal of the action in its favor. Finally, defendant maintains the fees are reasonable, and defends the challenges entries for work related to third parties, and the unfiled answer.

A prevailing party in entitled to recover costs, including attorneys’ fees when authorized by contract. (Code Civ. Proc., §§ 1032(a)(4); 1033.5(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).)

(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).)

“‘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 ...”

(Code Civ. Proc., § 1032.)

Recovery of attorney fees is limited to those fees necessarily incurred in prevailing on the claim. (Civil Code § 1717; Santisas v. Goodin (1998) 17 Cal.4th 599, 622 [“a court may base its attorney fees decision on a pragmatic definition of the extent to which each party has realized its litigation objectives, whether by judgment, settlement, or otherwise”].) An award should therefore reflect only those fees necessarily incurred for prevailing against Plaintiff.

Plaintiff in opposition frames the successful demurrer as the result of a statutory bar to the action, rather than adjudication on the merits of the lease terms. Plaintiff seeks to characterize the dismissal in favor of Defendant as not reflective of the public policy criteria for declaring a prevailing party on the merits.

Section 34 of the ground lease states: “In the event of any suit under this Ground Lease, there shall be allowed to the prevailing party, to be included in any judgment recovered, reasonable attorney’s fees to fixed by the court.” Plaintiff cannot deny the existence of the suit, and instead challenges the finding of a prevailing party.

“[I]n deciding whether there is a ‘party prevailing on the contract,’ the trial court is to compare the relief awarded on the contract claim or claims with the parties' demands on those same claims and their litigation objectives as disclosed by the pleadings, trial briefs, opening statements, and similar sources. The prevailing party determination is to be made only upon final resolution of the contract claims and only by ‘a comparison of the extent to which each party ha[s] succeeded and failed to succeed in its contentions.’” (Hsu v. Abbara (1995) 9 Cal.4th 863, 876; Acree v. General Motors Acceptance Corp. (2002) 92 Cal.App.4th 385, 400 [“The Civil Code section 1717 phrase ‘greater relief ... on the contract” does not necessarily mean greater monetary relief’”]; DisputeSuite.com, LLC v. Scoreinc.com (2017) 2 Cal.5th 968, 973; see Bowman v. City of Berkeley (2005) 131 Cal.App.4th 173, 177-178.) “As one Court of Appeal has explained, “‘[t]ypically, a determination of no prevailing party results when both parties seek relief, but neither prevails, or when the ostensibly prevailing party receives only a part of the relief sought.’” (Hsu v. Abbara, supra, 9 Cal.4th at p. 875.) “We agree that in determining litigation success, courts should respect substance rather than form, and to this extent should be guided by “‘equitable considerations.’” (Id. at p. 877.)

It is undisputed that the underlying complaint for breach of lease specifically arises from the claimed non-payment of property taxes due under the lease. The court sustained the demurrer without leave to amend in part, due to the City of Los Angeles moratorium barring actions seeking the collection of rent and/or payments due under any lease involving real property during the relevant period. Because the court found the moratorium barred the action until possibly as late as May 2023, the case was dismissed. Plaintiff seeks to create a distinction between the moratorium ordinance, and the merits of the case indisputably arising from Plaintiff’s efforts to recover allegedly past due payments from the terms of the ground lease, on grounds that the superseding impact of the moratorium decoupled the underlying action from an adjudication on the merits.

The dismissal of the action in favor of Defendant in and of itself constitutes a statutorily defined basis for the finding of a prevailing party. (Code Civ. Proc., § 1032.) Even considering the more contextual analysis regarding a prevailing party on a contract action, however, the court still finds the moratorium in now way constitutes an overriding source for a finding of no prevailing party. The complaint was specifically filed for the purpose of enforcing the right to collect rent and/or property taxes as provided in the ground lease terms. Sections 27 and 28 of the lease defines a default, and provides for the right to collect any unpaid assessments and fees as well following a delinquency.

While the imposition of an external moratorium prevented enforcement of the contractual term sought after by Plaintiff, nothing prevented Plaintiff from seeking to enforce the terms notwithstanding the preexisting moratorium. Defendant successfully repelled the collection effort through valid legal means whether part of the contractual terms or not. The thwarting of the attempt to enforce the contract and collaterally challenge the moratorium constitutes a complete victory for defendant. To seek enforcement of the contract then claim the suspension of the means to enforce the contract rendered the court ruling neutral is disingenuous and lacking in equitable support. The court therefore finds the plain language of the contract and argument in opposition provides no supported basis for the finding of a basis of relief under the prevailing party standard.

The court therefore considers the requested fees.

“‘[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. [Citation.] The purpose of such adjustment is to fix a fee at the fair market value for the particular action. In effect, the court determines, retrospectively, whether the litigation involved a contingent risk or required extraordinary legal skill justifying augmentation of the unadorned lodestar in order to approximate the fair market rate for such services.’”

(Graciano v. Robinson Ford Sales, Inc. (2006) 144 Cal.App.4th 140, 154.)

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.)

Counsel states a total of 87.40 hours spent at a billable rate of $250 per hour. The court finds the hourly rate reasonable.

On the actual entries, Plaintiff correctly points out billing entries regarding unrelated third party entities, as well as other unrelated items regarding lender communications. The court agrees the fees are not properly related to the relief obtained in the subject action, and therefore deducts the 11 hours from the billing statement. The court also concurs with Plaintiff that Defendant should not recover two hours of billing time for the proposed answer that became obsolete as a result of the demurrer ruling. Finally, the court deducts seven hours from the 15.2 total hours in support of the demurrer to the first amended complaint. The court finds the demurrer to the original complaint provided the foundation for the demurrer to the first amended complaint, and the City of Los Angeles moratorium was part of the original demurrer. The additional time spent researching is therefore unsupported.

The court therefore deducts a total of 20 hours from the 87.40 hours sought for a net of 67.40 hours. Plaintiff otherwise concedes to the validity of the remaining balance and offers no challenge to the reasonableness of the claim. The court therefore awards $16,850 in attorney fees to Defendant, which includes fees for the instant motion, reply, and appearance.

Defendant to give notice.