Judge Thomas D. Long, Case Number: 19STCV03238, Date: 2024-11-12 Tentative Ruling

On November 15, 2021, Plaintiffs FEI Enterprises, Inc.; Gabriel Fedida, individually and as Trustee of the Toy 2014 Revocable Trust and as Trustee of the 514 North Highland Trust; and Esther Fedida (collectively, “Plaintiffs”) filed a fourth amended complaint (“4AC”) against Defendant Massachusetts Bay Insurance Company and others.

On March 9, 2022, the Court granted Defendant’s motion for summary judgment, and on September 21, 2022, the Court entered judgment in favor of Defendant and against Plaintiffs.

On November 17, 2022, Defendant filed a motion for attorney fees in the amount of $413,556.51. On April 5, 2023, the Court denied the motion, finding that the attorney fees provision in the Indemnity Agreement did not authorize an award of attorney fees in this action.

On April 2, 2024, remittitur issued for Plaintiffs’ appeal, affirming the summary judgment order and judgment (“First Appeal”). The Court of Appeal awarded Defendant its costs on appeal.

On June 25, 2024, remittitur issued for Defendant’s appeal, reversing the attorney fees order and remanding to determine whether allocation of fees is necessary and to determine the reasonable amount of fees to award (“Second Appeal”). The Court of Appeal awarded Defendant its costs on appeal.

On August 5, 2024, Defendant filed a motion for attorney fees incurred during the appeals.

California courts apply the “lodestar” approach to determine what fees are reasonable. (See, e.g., Holguin v. DISH Network LLC (2014) 229 Cal.App.4th 1310, 1332.) This inquiry “begins with the ‘lodestar,’ i.e., the number of hours reasonably expended multiplied by the reasonable hourly rate.” (PLCM Group v. Drexler (2000) 22 Cal.4th 1084, 1095.) From there, 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.” (Ibid.) Relevant factors include “(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, [and] (4) the contingent nature of the fee award.” (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1132.) The party seeking fees has the burden of documenting the appropriate hours expended and hourly rates. (City of Colton v. Singletary (2012) 206 Cal.App.4th 751, 784.)

The Court of Appeal remanded this matter to determine whether allocation of fees is necessary and to determine the reasonable amount of fees to award. Plaintiffs’ original opposition to Defendant’s motion solely argued that attorney fees were not available under the contracts. The Court therefore permitted supplemental briefing addressing the amount of fees.

Plaintiff’s objections to the Declaration of Rebecca R. Wienreich are overruled.

Plaintiff’s objections to the Supplemental Declaration of Angela A. Zanin are overruled. Although new evidence submitted in reply is not ordinarily considered (see¿Jay v. Mahaffey¿(2013) 218 Cal.App.4th 1522, 1537-1538), this declaration supports Defendant’s additional request for $30,899.48 in post-appeal fees to date, plus an additional $9,000 in anticipated post-appeal fees briefing. This evidence could not have been provided with the original motion filed on November 17, 2022.

Defendant requests a total of $413,556.51 in attorney fees and costs incurred from June 29, 2019 through June 30, 2022. Defendant provides a copy of counsel’s billing records. (Weinreich Decl., Ex. 1.) Defendant’s counsel charges $275 or $300 per hour for attorneys. These rates are reasonable, and Plaintiffs do not challenge the rates.

Defendant separately filed a memorandum of costs on October 6, 2022 for $9,170.83 in costs. Plaintiffs argue that Defendant improperly includes these and additional costs in its motion. (Suppl. Opposition at pp. 6-7.)

Defendant acknowledges that the motion is for both attorney fees and costs. (Reply at pp. 6-7; Suppl. Reply at pp. 4-5.) Defendant explains that the parties’ 2010 Agreement specifically provided for Plaintiffs indemnifying Defendant for all costs and expenses. (Suppl. Reply at pp. 4-5.) Defendant therefore included its full costs of $11,063.07 because Plaintiffs have not yet paid the statutory costs claimed in the memorandum of costs. (Id. at p. 5.)

A prevailing party may recover certain statutory costs. (Code Civ. Proc., § 1032, subd. (b); see Code Civ. Proc., § 1033.5.) Defendant’s request for additional contract-based costs via this motion is improper. The additional unpaid contract-based costs may have been recoverable as damages for breach of contract, but Defendant dismissed its cross-complaint, and the judgment did not award Defendant any damages.

Defendant is already entitled to $9,170.83 in costs pursuant to its October 6, 2022 memorandum of costs. This is separately enforceable and does not need to be re-awarded in this order.

The Court deducts $11,063.07 in costs and expenses from the total request, resulting in a revised total of $402,493.44 in attorney fees.

The 4AC contained two causes of action against Defendant: breach of the 2015 Agreement and breach of an implied-in-fact contract. Plaintiffs argue that Defendant cannot recover fees for prevailing on the cause of action for breach of an implied-in-fact contract because there was no allegation that the implied-in-fact contract contained an attorney fees provision. (Suppl. Opposition at p. 9.) Plaintiffs therefore request that the attorney fees should be apportioned on a 50/50 basis between the two causes of action. (Id. at p. 10.)

“Apportionment is not required when the issues in the fee and nonfee claims are so inextricably intertwined that it would be impractical or impossible to separate the attorney’s time into compensable and noncompensable units.” (Graciano v. Robinson Ford Sales, Inc. (2006) 144 Cal.App.4th 140, 159.) That is the case here. The causes of action relied on the same basic factual allegations. Both the parties’ briefing and the Court’s March 9, 2022 order granting summary judgment did not distinguish between the causes of action. Instead, Defendant’s success was based on Plaintiffs’ inability to prove that it suffered damages—equally applicable to both causes of action.

Because it is impractical or impossible to separate the time spent on the two causes of action, the Court will not apportion the fees.

Plaintiffs argue that the motion improperly includes time spent on behalf of former defendant The Hanover Insurance Company. (Suppl. Opposition at pp. 7-8.) Defendant argues that because Hanover is also a prevailing party on the 4AC, the fees should not be apportioned and fees for both defendants are recoverable. (Suppl. Reply at pp. 8-9.) Defendant notes that the 2010 Agreement states the parties to it are “The Hanover Insurance Company, Massachusetts Bay Insurance Company,” and Plaintiff FEI. (Id. at p. 8.) Defendant also argues that the 4AC named both Defendant and Hanover as defendants, and they had a unity of interest in the litigation. (Id. at pp. 8-9)

The Court entered judgment in favor of Hanover on November 22, 2021. Hanover did not seek its attorney fees. Defendant’s motion for summary judgment and the subsequent judgment (the basis for this fees motion) was only on behalf of Defendant Massachusetts Bay. Accordingly, Hanover is not entitled to its attorney fees.

Defendant’s additional argument that it and Hanover had a unity of interest also fails. Hanover prevailed on summary judgment on the grounds that it was not a proper party, whereas Defendant later prevailed on a different summary judgment motion based on the merits of the claims. This argument is also belied by Defendant’s own billing records. (See Suppl. Opposition at p. 8.) For example, Defendant has distinct entries for “Pleadings: Draft/Revise: Demurrer to complaint on behalf of Hanover,” “Demurrer as to Mass Bay to include only Mass Bay allegations,” “Hanover reply to opposition to demurrer regarding arguments of joint and several liability,” “Analysis/Strategy: Draft/Revise: Analysis of litigation approach as to Hanover,” and “Analysis/Strategy: Draft/Revise: Litigation approach as to breach of contract cause of action against MBIC.” (See Weinreich Decl., Ex. 1.) These are only a few examples of many where time was specifically allocated between the defendants on different tasks.

The Court determines that some deductions are warranted for time spent on only Hanover.

Plaintiffs argue that 1,300 hours of time and the related fees are unreasonable. (Suppl. Opposition at pp. 10-12.) As examples, Plaintiffs identify more than 100 hours of billing by partners on two demurrers and a motion to strike, and more than 110 hours for each of the two summary judgment motions (Id. at pp. 11-12.) The Court agrees that this is excessive, and additional deductions are warranted for these amounts.

Defendant also seeks $30,899.48 in post-appeal fees to date, plus $9,000 in anticipated post-appeal fees briefing, for an additional total of $39,899.48. (Zanin Suppl. Decl. ¶¶ 4-6.) After reviewing Defendant’s billing records (Zanin Suppl. Decl., Ex. 7), the Court determines that a reasonable amount of fees post-appeal is $36,000.00.

Considering the type of case, complexity of the case, length of litigation, and the record as a whole (including time improperly billed for Hanover), the Court concludes that a reasonable amount of attorney fees is $358,000.00 ($402,493.44 revised total minus $80,493.44, plus $36,000.00 incurred after the appeals).

Defendant’s request for judicial notice of documents filed during the appeals is granted. Defendant’s request for judicial notice of documents filed in this action is denied as irrelevant because those documents are already party of this case’s record.

Defendant’s objections to the Declaration of David R. Krause-Leemon are overruled.

Within 40 days after issuance of the remittitur, a party claiming costs awarded on appeal must serve and file a verified memorandum of costs within 40 days after issuance of the remittitur. (California Rules of Court, rule 8.278(c)(1).) An award of costs can include attorney fees under Rule 3.1702. (California Rules of Court, rule 8.278(d)(2).) A motion for attorney fees on appeal must be served and filed within the time for serving and filing the memorandum of costs under Rule 8.278(c)(1). (California Rules of Court, rule 3.1702(c)(1).)

Plaintiffs argue that the motion is untimely as to fees for the First Appeal because that motion should have been filed no later than May 13, 2024. (Opposition at pp. 1, 5-6.) Defendant argues that it did not gain the ability to move for attorney fees incurred during the First Appeal until the appellate court issued its opinion reversing the attorney fee order and jurisdiction over the attorney fee issue returned to this Court on June 25, 2024. (Reply at pp. 2-5.)

At the time the remittitur issued for the First Appeal, this Court had found that Defendant was not entitled to attorney fees pursuant to contract, and the appeal of that order was still pending. Defendant could have filed a motion for attorney fees incurred for the First Appeal within 40 days of the April 2, 2024 remittitur and scheduled a hearing for after the Second Appeal was decided. But that could have been a waste of party and judicial resources if the Court of Appeal had affirmed this Court’s denial of attorney fees.

Under the rulings in place after the First Appeal, attorney fees were presumptively unrecoverable. Attorney fees became recoverable after the Second Appeal. Accordingly, the Court will not deny the motion as untimely for the First Appeal. Moreover, “[f]or good cause, the trial judge may extend the time for filing a motion for attorney’s fees in the absence of a stipulation or for a longer period than allowed by stipulation.” (California Rules of Court, rule 3.1702(d).) The Court finds that these circumstances constitute good cause to extend the time to file for the First Appeal. The motion is deemed timely filed on August 5, 2024 for fees incurred in both appeals.

Defendant seeks a total of $158,863.00 in attorney fees for both appeals, consisting of $61,320.00 for the First Appeal and $97,543.00 for the Second Appeal.

Defendant provides a copy of counsel’s billing records. (Miller Decl., Ex. A.) Defendant’s counsel charges $240, $245, or $300 per hour for attorneys and $110 per hour for paralegals. These rates are reasonable, and Plaintiffs do not challenge the rates. (Opposition at p. 9.)

Plaintiffs argue that it was excessive to have five different attorneys bill more than 200 hours to prepare a single brief for the First Appeal and appear at oral argument. (Opposition at p. 10.) Plaintiffs estimate that a reasonable amount of time should have been no more than 100 hours. (Ibid.) Plaintiffs also argue that it was excessive to have eight different attorneys and one paralegal spent more than 330 hours on the Second Appeal. (Opposition at p. 10.) Plaintiffs estimate that a reasonable amount of time should have been no more than 150 hours. (Id. at p. 11.) The Court agrees that these amounts are excessive and that some reductions are warranted.

According to Plaintiffs, Defendant’s invoices are insufficiently descriptive due to the partial redacting. (Opposition at pp. 8-9.) Defendant’s counsel declares that “[a]ll entries not related to the appeals are redacted and not part of the $158,863 calculation.” (Miller Decl. ¶ 3.) The redactions are of the entire entry: date, attorney, description, and hours. This is a reasonable redaction for simplicity. There are no partially redacted descriptions that make it difficult to determine how the time for the combined entry should be allocated.

Plaintiffs specifically identify “the entry for 03/18/2024 for attorney ‘Slome, E.’ [that] states ‘and worked on outline for oral argument (continued)’ for 4.7 hours.” (Opposition at p. 8.) Plaintiffs wonder, “But what is before the ‘and’? What other work did Slome, E. do that day that is included in the 4.7 hours billed? The invoice does not say, and neither does the Miller Declaration.” (Ibid.) There are no redactions before the “and.” There is no evidence (and no reasonable inference) that this is any more than an inconsistent manner of entering descriptions.

Plaintiffs also challenge Defendant’s 38.6 hours and $11,580.00 in fees incurred for filing an answer to Plaintiffs’ petition for review to the California Supreme Court. The Court agrees that this post-appeal billing is unreasonable, especially because a respondent “may,” but not “must,” file an answer to a petition. (California Rules of Court, rule 8.500(a).)

From the requested $158,863.00, the Court deducts $11,580.00 related to the petition for review, resulting in a revised total of $147,283.00.

Considering the type of case, complexity of the case, length of litigation, and the record as a whole, the Court concludes that a reasonable amount of attorney fees on appeal is $135,000.00. (See Kerkeles v. City of San Jose (2015) 243 Cal.App.4th 88, 102 [a court may impose a rate reduction of up to ten percent based on its exercise of discretion and without a more specific explanation].)

The motion for attorney fees in the trial court is GRANTED IN PART. Defendant is awarded $358,000.00 in attorney fees in the trial court.

The motion for attorney fees on appeal is GRANTED IN PART. Defendant is awarded $135,000.00 in attorney fees on appeal.

Parties who intend to submit on this tentative must send an email to the Court at SMCDEPT48@lacourt.org indicating intention to submit. If all parties in the case submit on the tentative ruling, no appearances before the Court are required unless a companion hearing (for example, a Case Management Conference) is also on calendar.

Hon. Thomas D. Long

Judge of the Superior Court