Judge: Stephen P. Pfahler, Case: 21CHCV00922, Date: 2023-04-17 Tentative Ruling

Case Number: 21CHCV00922    Hearing Date: April 17, 2023    Dept: F49

Dept. F-49

Date: 4-17-23

Case # 21CHCV00922

Trial Date:

ATTORNEY FEES

MOVING PARTY: Defendant, Infinity Insurance Company

RESPONDING PARTY: Plaintiff, Rodney Wright, et al.

RELIEF REQUESTED

Motion for Attorney Fees on the Special Motion to Strike Cross-Complaints

SUMMARY OF ACTION

Plaintiff Infinity Insurance Company (Infinity) provided an insurance policy to Defendant Rodney Wright (Wright) from August 7, 2016 to August 7, 2017 with a $15,000 per person limit and $30,000 total for the accident. On January 21, 2017, the insured vehicle operated by Wright was involved in a car accident, which led to the death of Aidan and Ainsley Hubbard in one vehicle, and injuries to Nikolas Linaritakis in a second, separate vehicle. The accident was the result of Wright operating the vehicle under the influence of alcohol and driving the wrong way on the 405 Freeway.

Following the submission of claims from the parents of Ainsley and Aidan Hubbard, defendants Kent and Sherrill Hubbard, and Linaritakis, Infinity tendered the $30,000 policy limit to all claimants to split amongst themselves. On April 24, 2019, the Hubbards filed a wrongful death claim, which yielded a jury verdict of $10,600,000 against Wright ($5.3 million per child). Wright was represented at trial by insurance counsel.

On December 6, 2020, Infinity filed its complaint and Declaratory Relief. Infinity contends it is not liable for damages beyond the policy limits. On February 1, 2022, Wright answered the complaint and filed a cross-complaint for Breach of Covenant of Good Faith and Fair dealing, and Breach of Contract. On February 2, 2022, the Hubbards answered and filed a cross-complaint for Declaratory Relief.

On November 4, 2022, the court granted the special motion to strike portions of the cross-complaints of Wright (paragraphs 23-28, portions of paragraphs 31-33, and 39), and the Hubbards (paragraphs 23-28, portions of paragraphs 31-33, and 39).

RULING: Granted.

Cross-Defendant Infinity Insurance Company (Infinity) moves for $191,480 in attorney fees following the successful special motion to strike portions of the separate cross-complaints filed by Rodney Wright. Cross-Complainants oppose the motion on grounds that the moving parties are not entitled to fees and that the hourly rate and the number of represented billed hours are excessive. Cross-Complainants determine and counteroffer that Infinity is entitled to no more than $17,100 in fees. Infinity in reply defends both its hourly rate and stated hours. Infinity challenges any reduction of the requested fee.

Cross-Defendants filed their notices of appeal on the underlying order granting the special motion to strike. The court retains jurisdiction to hear the motion for attorney fees. (Carpenter v. Jack in the Box Corp. (2007) 151 Cal.App.4th 454, 461.)

It remains undisputed that Infinity may seek attorney fees as a result of successfully prevailing on the special motion to strike. (Code Civ. Proc., § 425.16, subd. (c)(1); Ketchum v. Moses (2001) 24 Cal.4th 1122, 1141-1142.) “An award of attorney fees to a prevailing defendant on an anti-SLAPP motion properly includes attorney fees incurred to litigate the special motion to strike (the merits fees) plus the fees incurred in connection with litigating the fee award itself (the fees on fees).” (569 East County Boulevard LLC v. Backcountry Against the Dump, Inc. (2016) 6 Cal.App.5th 426, 433; Wanland v. Law Offices of Mastagni, Holstedt & Chiurazzi (2006) 141 Cal.App.4th 15, 21; Lafayette Morehouse, Inc. v. Chronicle Pub. Co. (1995) 39 Cal.App.4th 1379, 1383.)

The lodestar method for determination of fees applies in special motions to strike. (Ketchum v. Moses (2001) 24 Cal.4th at p. 1136.) “‘[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.)

Prevailing counsel seeks $191,480 based on 330 hours of work at an hourly rate of $580, plus $80 in costs. The summarized billing statement shows time spent reviewing the challenged pleadings; client conference time; time spent on the SLAPP motion and the instant motion; review of impacts from the appeal on the order granting the special motion to strike; and, discovery issues preceding the motion. All work was billed by two attorneys at their respective offices at a represented discounted rate from their usual $915/hour.

Cross-Complainants categorically challenge the hourly rate by comparison with the rate paid to prior counsel, Ford Walker, et al., and citation to a source identified as CLIO. Cross-Complainants argue for a rate of $200/hour, though even the CLIO source itself presents a higher minimum rate for “insurance” defense work. As discussed further below, the court finds the relied upon application of a ubiquitous “reasonable” insurance defense law firm billable rate, even with an experienced partner in charge of litigation, both lacks a valid basis of support, and ignores the realities of the instant action prompted by the aggressive tactics of cross-complainants’ counsel thereby leading to the assignment of the case to new counsel.

Infinity tendered a full defense to Wright, and found its predetermined liability cap well supported by the law. While prior counsel provided indisputably competent representation at a lower hourly rate, Cross-Complainants continued to aggressively prosecute the action in seeking an amount in excess of $10,000,000 from Infinity. The increased potential exposure of liability from the prior $30,000 limitation, in addition to incurred trial counsel expenses, prompted Infinity to bring in new counsel for the specialty work on the bad faith claim. The additional rigor elevating the action from a tragic car accident to an eight digit bad faith action justified the assignment to new, specialized counsel providing representation at a higher, recoverable billable rate commensurate with the additional required resources and specialty offered. (Heritage Pacific Financial, LLC v. Monroy (2013) 215 Cal.App.4th 972, 1004-1006.)

Infinity supports the request for a higher hourly rate than deemed reasonable by Cross-Complainants. The court finds rates for the subject work by a partner in a mid to large sized law firm can start at $600/hour and well exceed $900 per hour. The court also notes Cross-Complainants’ demand letter sent in response to the SLAPP motion listing counter-threatening billable rates topping out at $1,100/hour, as part of their intended motion for attorney fees on an expected successful opposition to the SLAPP motion. [Declaration of Theona Zhordania, ¶ 6, Ex. A.]

Cross-Complainants may suggest that any insurance defense firm would be sufficient at a rate of $200/hour, but Cross-Complainants cannot determine how a party choses its representation. The reply also correctly notes the lack of any distinctions regarding the level of sophistication and resources required among the vast range of insurance coverage cases assigned by insurers. For all of the reasons addressed, any claims of an excessive rate are unfounded. [See Declaration of Daniel Elli, ¶ 14, Ex. 5.] Furthermore, the cited authority in opposition addresses a punitive damages claim, rather than any basis for determining the reasonableness of attorney fees. (Grassilli v. Barr (2006) 142 Cal.App.4th 1260, 1295.) The court therefore concludes the $580 listed rate is very fair and reasonable. (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.)

The next step involves the determination of the reasonableness of the number of hours spent. Cross-Complainants challenge the general summary of work; the necessity of two attorneys concurrently billing for the same work; challenge to the number of hours given the experience of counsel in the subject area; examination of counsel’s trial schedule as a means of undermining the credibility of the represented hours spent; assumption that Infinity will reduce the total billed amount paid; and, once again reliance on the amount of work billed by prior counsel as a basis of comparison billing. Cross-Complainants then suggest an “ulterior motive” to “inflate the fee claim” following the offer of Infinity to waive any fee claim in exchange for a dismissal.

On reasonableness, the court considers the substantive support presented by moving counsel contrasted with the counter statement of opinion on the topic of “reasonableness,” combined with an arguably obtuse denial of the time and fees incurred as a result of the litigation tactics of cross-complainants’ counsel. The summarized and redacted billing statements prevent specific parsing of certain micro-details, but the court finds the information sufficient to holistically determine the reasonableness of time spent.

Again, the court finds all categories of entries reasonable for purposes of fee recovery. The court also specifically adheres to the representation of Infinity that the billing represents combined time of two partners, not singular entries, as well as billed time over a longer time frame that argued by Cross-Complainants at times.

Infinity provides categories in support of the 330 hours of work listed: 4.9 (3.9 +1) hours for review of the action and client discussion; 150.6 hours strictly involving the SLAPP motion; 9.6 hours for correspondence with opposing counsel; 129.7 (45.5 + 84.2) hours opposing leave for discovery and subsequent discovery; 2.8 hour review of whether cross-complainants’ appeal stays the action; and, 32.4 (17.4 + 15) hours for the instant motion, including the reply and appearance. Cross-Complainants present their own revised chart of reasonable hours, whereby the hours are reduced from 165.1 to 38.2 hours for time spent on the on the SLAPP motion, with additionally hours summarized in the “conclusion” section allowing a total increases to 85.5 hours, with the inclusion of discovery and ex parte appearances. The $80 in costs is not challenged.

On the amount of hours spent on the motion itself, the court acknowledges the debate regarding reasonableness of hours spent by experienced counsel on the presented subject matter. [Zhordania Dec., ¶¶ 24-25; Elli Dec., ¶¶ 28-30.] “A fee request that appears unreasonably inflated is a special circumstance permitting the trial court to reduce the award or deny one altogether. ‘If ... the Court were required to award a reasonable fee when an outrageously unreasonable one has been asked for, claimants would be encouraged to make unreasonable demands, knowing that the only unfavorable consequence of such misconduct would be reduction of their fee to what they should have asked in the first place. To discourage such greed, a severer reaction is needful. ...’” (Serrano v. Unruh (1982) 32 Cal.3d 621, 635.)

At a baseline (with reference back to the $580/hour reasonable rate finding), the court finds the heightened scrutiny and assignment of specialty counsel by Infinity brought on by the ten million dollar plus demand sought via a less frequently presented insurance bad faith scenario, yet vigorously litigated by Cross-Complainants, completely justifies the expenditure of heightened resources. Again, the scope of the claim and posture of Cross-Complainants’ counsel validly prompted an elevated level of attention. The court therefore declines to automatically assume inflated or wrongful billing committed by prevailing counsel with the only concern being a lowered recovery from an overstated bill.

The court also rejects the characterization of counsel for Infinity as demonstrating an “ulterior motive.” Infinity in fact offered Cross-Complainants an option to reduce the scope of the motion. Whether the offer was within the best interests of Cross-Complainants or not, is not germane to the discussion. Given the underlying conduct of Cross-Complainants in the trial, and correspondence, the court finds no reasonable threshold showing of improper motive behind making an offer before engaging in the process of bringing a correctly anticipated vociferously argued special motion to strike. The court also rejects Cross-Complainants assertions regarding assumed singular compressed time frames for determination of “reasonable” billing practices. [Supp. Zhordania Dec., ¶¶ 34-36.]

Incidental to the process, the court also finds support for the billing for at least part of the discovery work necessarily prompted by the prosecution of the cross-complaints. [Zhordania Dec., ¶¶ 7-12, 21; Elli Dec., ¶¶ 3, 5, 15, 28; Supplemental Declaration of Theona Zhordania, ¶¶ 33-37, 40, 45] Cross-Complainants arguments regarding the stay of discovery automatically imposed by the time filing requirements of the special motion to strike statutory sections in no way demonstrates an improper tactic for the purpose of increasing billing. Cross-Complainants drafted the cross-complaints, filed them, successfully obtained leave for additional time to conduct discovery after previously litigating the prior action, then propounded discovery. The court finds the first ex parte applications associatively reasonable regardless of Cross-Complainants disagreement over the refusal to stipulate to a continuance, thereby forcing the motion for leave.

On the specific hours, the 4.9 hours of time spent consulting with the client and reviewing the file appears reasonable. Cross-Complainant presents no specifically compelling argument challenging the 9.6 hours listed for correspondence time. As stated above, the court finds the circumstances seeking to negotiate a less expensive solution proper, and Cross-Complainants choice of response in now way renders the prior effort unworthy of recovery. On the 32.4 hours in fees for recovery on the instant motion, the issue of the right to recover fees incurred for the subject motion remains undisputed. While Cross-Complainants cap all fees for the instant motion at 15 hours, the court finds the 32.4 hours listed, including an estimate of the spent on the thorough reply and appearance somewhat justified given the scope and velocity of of everything presented with this action. Nevertheless, the court in its discretion reduces the hours spent on the subject motion to 24 hours. Thus, total hours of 38.5 multiplied by the rate of $580/hour amounts to a recovery of $22,300 for this portion.

On the 137.7 hours spent on discovery (84.2 + 45.5), the court accepts the thousands of pages of document review required, as well as the propounded discovery necessitated by the action of cross-complainants. Again, Infinity in fact gave Cross-Complainants an opportunity to curtail this discovery and limit the discussion to one of legal remedies. While the court order granting the special motion to strike validates the proposed path as driven more as a matter of law, rather than a factually driven debate thereby necessitating discovery, Infinity was still required to review and respond, which were presented at least in part via the hundreds of pages of exhibits in opposition to the motion.

The court has discretion however to consider whether the 137.7 was reasonably necessary given the legally driven focus of the motion. Furthermore, the court also remains cognizant that the special motion to strike only addressed a limited number of paragraphs in the operative cross-complaints. Thus, the cross-complaints still remain active (notwithstanding any potential stay on appeal), which presumably still required discovery review on said remaining allegations. As presented in the standard, recovery of fees remains limited to fees necessarily incurred on the motion itself.

Preparing for arguments and contingencies of an anticipated opposition while justified, will not necessarily support a finding of an almost equal amount of time spent on a separate and independent entry of 150.6 hours for preparation of the motion. The legally driven content of the motion, and court order supporting such grounds, demonstrates a certain level of unnecessary discovery focused work. Infinity was aware of the possibility of a less rigorous discovery driven motion at the time of negotiations for a proposed simpler solution. Again, the court cannot disregard the incidental benefit of conducting discovery on the remaining claims as well. The court therefore reduces the number of hours recoverable on grounds of excessive billing. (Serrano v. Unruh, supra, 32 Cal.3d at p. 635; see Christian Research Institute v. Alnor (2008) 165 Cal.App.4th 1315, 1329.)

The court however will not use the experience of counsel in drafting SLAPP motions as a means of deducting fees, in that the motion still involved an issue of insurance coverage in context of protected activities within settlement negotiations. The legal issues remain complicated, with Infinity facing both a potential for eight digit liability, as well as an inevitable appeal, win or loss on the special motion to strike, at the time of considerations for drafting the motion. The liability therefore prompted as thorough a motion as possible.

The court also agrees with Cross-Complainant that time spent on determining the right to seek a special motion to strike as to allegations within a complaint, and time spent regarding an appellate stay, perhaps required slightly less time than indicated, even if billed. The 2.8 hour entry is therefore reduced to one hour. The court also questions the necessity of the total hours spent on the later ex parte motion seeking to bifurcate the motion or continue the hearing, and therefore declines to include the second ex parte as part of the recovery. [Zhordania Dec., ¶¶ 7, 14, 18, 22; Elli Dec., ¶¶ 22-23; Supplemental Declaration Theona Zhordania, ¶¶ 45-46.] Still, the court cannot determine the actual time spent, but finds the ex parte motion only required a single attorney, including time spent for travel, presents justification for a total of seven hours.  

The court awards a total of eight hours on the single ex parte and appellate review, plus the 38.5 hours addressed above for a total of 46.5 hours at $580 for a cumulative fee of $26,970. On the three remaining largest entries, Infinity seeks a total 280.3 hours (84.2 + 45.5 + 150.6) notwithstanding the reduction of fees for the ex parte.

The court finds the hours spent on the legal issues, even on a legal argument driven motion, and discovery time beneficial to the remaining claims. The finding is based in part on the fact that the motion only addressed limited paragraphs within the operative cross-complaints, and the cross-complaints were substantially duplicative, if not entirely copied. The court also finds in its discretion that 280.3 hours cumulatively billed by two partners in a major law firm excessive.  Thus, given the smaller scale albeit larger public policy questions presented, and the hours represented relative to the court’s own experience in private legal practice as well as judicial experience in handling complex litigation, finds justification for and an exercise of discretion in permitting 90 hours (50 hours for the motion and 40 hours for the discovery) spent on the motion, and discovery, rather than the cumulatively billed 280.3 hours. Again, these reflected categories of bills also fall into context with the review of the action, client and former counsel discussions, negotiations, and ex parte activity. While the court separately allowed the break out of these items, the court cannot disregard the likelihood of carryover/crossover work between the entries.

Motion and discovery fees are therefore separately capped at 90 hours, which when multiplied by $580 renders this portion equal to $52,200 in fees. The court therefore adds this balance to the prior categorized amount ($52,200 + $26,970), plus the uncontested $80 costs, for a total award of attorney fees and costs of $79,250.

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.)

Moving parties to give notice.