Judge Thomas D. Long, Case 19STCV10285 2023-05-16 Tentative Ruling

On July 8, 2019, Maria Carrasco filed a first amended complaint (“FAC”) against Tania Saroyan, alleging (1) violation of Los Angeles Municipal Code sections 151.04 and 151.10, (2) declaratory relief, and (3) unlawful business practices in violation of Business and Professions Code section 17200. On February 23 and 24, 2022, the Court tried the section 17200 cause of action first in a bench trial, and on May 2, 2022, the Court issued its Statement of Decision, finding in favor of Saroyan on the third cause of action.

On June 30, 2022, the Court granted Saroyan’s motion for judgment on the pleadings on the first and second causes of action because the Court’s May 2, 2022 ruling mooted those causes of action.

On September 21, 2022, Saroyan filed a motion for attorney fees, and on September 22, 2022, she filed a proposed judgment of dismissal of the FAC.

On September 29, 2022, the Court noted that entry of judgment on the FAC did not appear proper at that time because Saroyan had a pending second amended cross-complaint naming Carrasco as a cross-defendant.

Saroyan dismissed Carrasco from her cross-complaint, so on December 7, 2022, the Court ordered her to file a proposed judgment. The Court also continued the hearing on the motion for attorney fees so Carrasco could file a full opposition on the merits of the motion.

On December 30, 2022, the Court entered judgment of dismissal in favor of Saroyan and against Carrasco.

On January 9, 2023, Carrasco filed her opposition to the motion for attorney fees.

Carrasco asks the Court to take judicial notice of the August 28, 2019 Order in Rhambo v. Tabor Palms Apts., 2019 Cal. Super. LEXIS 13186. This order is unpublished and nonprecedential. (See Santa Ana Hospital Medical Center v. Belshe (1997) 56 Cal.App.4th 819, 831 [“a written trial court ruling has no precedential value”].) The request is denied.

“[A] prevailing party is entitled as a matter of right to recover costs in any action or proceeding.” (Code Civ. Proc., § 1032, subd. (b).) These costs include attorney fees that are authorized by contract, statute, or law. (Code Civ. Proc., § 1033.5, subd. (a)(10).)

Saroyan seeks attorney fees of $330,230.63 under Civil Code section 1947.11, which provides for attorney fees and costs to a prevailing party in an action where a tenant alleges that rent was charged in excess of the city or county’s rent-control ceiling. Carrasco alleged, in part, violation of Los Angeles Municipal Code (“LAMC”) section 151.04, which prohibits a landlord from demanding, accepting, or retaining more than the maximum adjusted rent permitted by the Rent Stabilization Ordinance of the City of Los Angeles (“RSO”). Thus, this is an action that appears to fall within Civil Code section 1947.11 and its authorization of attorney fees. However, the parties disagree about whether Saroyan is actually entitled to fees under that statute.

Carrasco argues that Saroyan is not the prevailing party because Carrasco did obtain a net monetary recovery after initiation of the lawsuit. (Opposition at pp. 6-7.) The 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.” (Code Civ. Proc., § 1032, subd. (a)(4).)

Saroyan obtained a judgment of dismissal. But Carrasco argues that she had a net monetary recovery because “the trial court decided that Defendant had returned overpaid rent after the initiation of this litigation.” (Opposition at p. 7.) The Court noted that Saroyan immediately sent Carrasco a check for $847.87 after the housing department issued a report in May 2019. (Statement of Decision at pp. 4-5.) Even though that payment occurred about two months after Carrasco filed this action, it was in response to complaints she filed with the housing department—not in response to this action. “‘The word “recover” means “to gain by legal process” or “to obtain a final legal judgment in one’s favor.”’” (Goodman v. Lozano (2010) 47 Cal.4th 1327, 1333 [agreeing with the definition from Webster’s Collegiate Dict. (10th ed. 1993].) Thus, Carrasco’s refund of her overpayment pursuant to a housing department investigation and report is not a “net monetary recovery” in this action.

Additionally, “in situations other than as specified, the ‘prevailing party’ shall be as determined by the court.” (Code Civ. Proc., § 1032, subd. (a)(4).) Even if Saroyan’s return of Carrasco’s overpayment is partial success, when considered with Saroyan’s judgment of dismissal, the Court determines that Saroyan is the prevailing party.

Saroyan seeks attorney fees under Civil Code section 1947.11, which allows for an award of attorney fees to the “prevailing party” in an action alleging that an owner charged excess rent in violation of the RSO.

Carrasco argues that LAMC provides for an award of attorney fees and costs only for prevailing tenants. LAMC section 151.10 authorizes a civil action for a violation of the RSO, making the person who demanded the rent “liable in a civil action to the person from whom such payment is demanded, accepted or retained for damages of three times the amount [of the excess rent] together with reasonable attorneys’ fees and costs as determined by the court.”

“Fee-shifting provisions in municipal ordinances ordinarily have the force and effect of such provisions in statutes.” (Carter v. Cohen (2010) 188 Cal.App.4th 1038, 1053.) Thus, there is an apparent conflict between the fee-shifting provision in Civil Code section 1947.11, which provides that the “prevailing party shall be awarded attorney’s fees and court costs,” and LAMC 151.10, which awards fees and costs to “the person from whom such payment is demanded, accepted or retained.”

1. Carrasco’s claim, through titled as being brought only under LAMC section 151.10, is identical to a claim under Civil Code section 1947.11.

Carrasco argues that she did not bring an action under Civil Code section 1947.11, and Saroyan never raised Civil Code section 1947.11 in her pleadings. (Opposition at pp. 3-6; cf. Lyles v. Sangadeo-Patel (2014) 225 Cal.App.4th 759, 763 [plaintiff brought claims for both violation of the RSO and Civil Code section 1947.11].) Carrasco also argues that Saroyan “failed to apportion or distinguish the defense of the LAMC Section 151.10 claim from the non-existing claim for Civil Code Section 1947.11.” (Opposition at p. 5.) Carrasco’s attorney declares, “At no point did I intend to nor brought a claim under Civil Code Section 1947.11.” (Nava Decl. ¶ 2.)

In the Statement of Decision, the Court noted that Saroyan’s answer asserted a defense of “good-faith conduct,” which was sufficient to raise a defense of good faith and substantial compliance. (Statement of Decision at p. 4.) That defense was framed as one under the Petris Act, Civil Code sections 1947.7 and 1947.8. (Statement of Decision at p. 4.) Under the Petris Act, an owner who substantially complies with a rent control ordinance shall not be accessed a penalty. (Civ. Code, § 1947.7, subd. (a).) Saroyan prevailed on this defense to the extent that Plaintiff proved any lack of full compliance with the laws. (Statement of Decision at p. 6.) Saroyan’s successful defense of substantial compliance under Civil Code section 1947.7 supports the conclusion that Civil Code section 1947.11 applies here.

Moreover, Carrasco’s claim under the LAMC is the same as a claim under Civil Code section 1947.11.

LAMC section 151.10(a) states: “Any person who demands, accepts or retains any payment of rent in excess of the maximum rent or maximum adjusted rent in violation of the provisions of this chapter, or any regulations or orders promulgated hereunder, shall be liable in a civil action to the person from whom such payment is demanded, accepted or retained for damages of three times the amount by which the payment or payments demanded, accepted or retained exceed the maximum rent or maximum adjusted rent which could be lawfully demanded, accepted or retained together with reasonable attorneys’ fees and costs as determined by the court.”

Civil Code section 1947.11, subdivision (a) states: “In any city, county, or city and county which administers a system of controls on the price at which residential rental units may be offered for rent or lease and which requires the registration of rents, upon the establishment of a certified rent level, any owner who charges rent to a tenant in excess of the certified lawful rent ceiling shall refund the excess rent to the tenant upon demand. If the owner refuses to refund the excess rent and if a court determines that the owner willfully or intentionally charged the tenant rent in excess of the certified lawful rent ceiling, the court shall award the tenant a judgment for the excess amount of rent and may treble that amount. The prevailing party shall be awarded attorney’s fees and court costs.”

Both the LAMC and the Civil Code authorize the same type of claim: a tenant who paid more than the RSO’s maximum rent may recover the excess amount, trebled, from the landlord who charged the excess rent.

“The law respects form less than substance.” (Civ. Code, § 3528.) Carrasco’s intentional avoidance of a claim under Civil Code section 1947.11 (instead pleading a claim only under LAMC section 151.10) does not change the claim’s underlying character: this was an action alleging that Saroyan charged rent in excess of the RSO, and Carrasco sought a refund and treble damages on the excess sum. Specifically, the FAC alleges that Saroyan “intentionally demanded, accepted, or retained payments of rent in excess of the maximum rent or maximum adjusted rent permitted at that time,” in violation of the RSO, and it sought damages, including treble damages. (FAC ¶ 10; see FAC ¶¶ 17-20.)

Accordingly, Carrasco’s claim based on payment of excess rent is a claim under Civil Code section 1947.11, regardless of the title she gave it.

2. Public policy prohibits a statutory fee award for hours spent on claims inextricably intertwined with claims with a unilateral fees provision.

Carrasco argues that public policy prohibits an award of attorney fees here because LAMC section 151.10 contains a unilateral fee-shifting provision. (See Opposition at pp. 3-4.)

The Court of Appeal in Turner v. Association of American Medical Colleges (2011) 193 Cal.App.4th 1047, 1059 (Turner) was faced with a prevailing defendant who incurred fees defending claims under Civil Code sections 52, 54.3, and 55, and the fees were inextricably intertwined. The court noted the conflict between Civil Code sections 52 and 54.3, which authorized fee awards to prevailing plaintiffs, and Civil Code section 55, which authorized attorney fee awards to a “prevailing party.” (Id. at pp. 1059-1060.) Specifically, section 52 provides for an award of damages and attorney fees to “any person denied the rights provided in Section 51, 51.1, or 51.6.” (Civ. Code, § 52, subd. (a).) Section 54.3 provides for an award of damages and attorney fees to “any person denied any of the rights provided in Sections 54, 54.1, and 54.2.” (Civ. Code, § 54.3, subd. (a).) Section 55 provides for an award of attorney fees to the “prevailing party” in an action to enjoin violations of section 54 or 54.1. (Civ. Code, § 55.)

The court observed that “[t]he statutory language [in Civil Code sections 52 and 54.3] authorizing fee awards only to prevailing plaintiffs reflects a determination that prevailing defendants should not receive a fee award for hours spent defending such claims,” and the court considered the legislative history. (Turner, supra, 193 Cal.App.4th at pp. 1060-1061.) “[U]nilateral fee-shifting provisions are ‘created by legislators as a deliberate stratagem for advancing some public purpose, usually by encouraging more effective enforcement of some important public policy.’ In particular, such provisions reflect the Legislature’s intent ‘to encourage injured parties to seek redress—and thus simultaneously enforce public policy—in situations where they otherwise would not find it economical to sue.’” (Id. at p. 1060, quoting Covenant Mutual Ins. Co. v. Young (1986) 179 Cal.App.3d 318, 324-325 (Covenant).) The court also noted that many California decisions have followed Covenant “in recognizing that unilateral fee provisions reflect a considered legislative judgment that prevailing defendants should not receive fees.” (Id. at p. 1061.) The court’s public policy analysis supported a “conclusion that sections 52 and 54.3 should be read to create an exception to section 55 by implication. (Id. at p. 1071.)

Ultimately, the court held that “where a defendant prevails against a plaintiff who sought relief under section 55 as well as under section 52 and/or section 54.3, the defendant may not obtain an attorney fee award under section 55 for attorney hours inextricably intertwined with hours spent defending claims under section 52 and/or section 54.3.” (Turner, supra, 193 Cal.App.4th at p. 1073.) The court specified that its “decision does not foreclose a defendant from seeking an award under section 55 for hours that it can show were not intertwined with defense of a cause of action with a unilateral fee-shifting provision; those are the only hours that represent additional litigation expenses due to inclusion of a request for relief under section 55.” (Ibid.)

3. Those public policy concerns are not present here, where Carrasco brought a single statutory claim.

The Turner court held that a defendant’s attorney fee award under a statute awarding fees to a “prevailing party” could not include hours inextricably intertwined with hours spent defending claims with unilateral fee-shifting for plaintiffs only. (Turner, supra, 193 Cal.App.4th at pp. 1073.) The public policy considerations did not bar the defendant from seeking its statutory attorney fees under Civil Code section 55’s “prevailing party” fees provision in the same action; the defendant simply conceded that all attorney hours were inexplicably intertwined and could not be apportioned. (Id. at pp. 1072-1073.)

Here, the conflict does not involve separate, inexplicably intertwined, and conflicting statutory claims. The conflict arises from a single claim that is authorized by both the LAMC and the Civil Code. Just as the Turner defendant would still be permitted to seek attorney fees on the singular claim that awarded fees to the “prevailing party,” Saroyan seeks her attorney fees on the singular claim that awards fees to the “prevailing party.” The conflict arises from the LAMC’s and the Civil Code’s differing authorizations of attorney fees.

The California Constitution provides that “[a] county or city may make and enforce within its limits all local, police, sanitary, and other ordinances and regulations not in conflict with general laws.” (Cal. Const., art. XI, § 7.) “‘If otherwise valid local legislation conflicts with state law, it is preempted by such law and is void.’” (Sherwin-Williams Co. v. City of Los Angeles (1993) 4 Cal.4th 893, 897.) “A conflict exists if the local legislation duplicates, contradicts, or enters an area fully occupied by general law, either expressly or by legislative implication.” (Ibid., quotation marks omitted.)

The LAMC’s attorney fee provision is in direct conflict with the general California law under the Civil Code. Accordingly, Civil Code section 1947.11 preempts LAMC section 151.10 with respect to the attorney fee award, and Saroyan is entitled to her attorney fees and costs as a prevailing party under Civil Code section 1947.11.

Nowhere in Carrasco’s November 22, 2022 or January 9, 2023 oppositions does she dispute the requested amount of attorney fees. Nevertheless, the Court must award only reasonable attorney fees.

“When a cause of action for which attorney fees are provided by statute is joined with other causes of action for which attorney fees are not permitted, the prevailing party may recover only on the statutory cause of action.” (Akins v. Enterprise Rent-A-Car Co. (2000) 79 Cal.App.4th 1127, 1133.) “Such fees need not be apportioned when incurred for representation on an issue common to both causes of action in which fees are proper and those in which they are not. [Citation.] Apportionment is not required when the claims for relief are so intertwined that it would be impracticable, if not impossible, to separate the attorney’s time into compensable and noncompensable units.” (Bell v. Vista Unified School Dist. (2000) 82 Cal.App.4th 672, 687.)

Carrasco alleged violations of LAMC sections 151.04 and 151.10, with intertwined claims for declaratory relief and unfair business practices (without statutory attorney fees) based on the same allegations and conduct. Both parties appear to agree that the declaratory relief and unfair business practices claims are inexplicably intertwined here. The Court’s order granting judgment on the pleadings for the legal claims after determination of the equitable claim further illustrates the intertwined nature of the claims. Thus, Saroyan is entitled to her fees and costs incurred in defending against all of Carrasco’s claims.

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.)

Saroyan seeks a total of $330,230.63 in attorney fees. Her counsel asserts various reasonable hourly rates: $595 for Jon Atabek; $695 for Christian S. Molnar; and $350 for various associates. (Atabek Decl. ¶¶ 5-7.) The rates of $595 and $695 are relatively high for this type of litigation. Counsel “note[s] there is a discrepancy between my firm’s reasonable hourly rate and what we actually charged to the client” because they “sympathized with Defendant and agreed to heavily discount our rates so Defendant could financially survive Plaintiff’s scorched earth tactics” due to Carrasco’s “litigious nature” and Saroyan’s meritorious defense. (Atabek Decl. ¶ 9.)

The Statement of Decision noted that the evidence “indicated bad blood between [Carrasco] and [Saroyan], as well as between [Carrasco]’s family and [Saroyan]’s boyfriend, resulting in ongoing litigation and disputes.” (Statement of Decision at p. 2.) The Court found that Carrasco did not act in good faith leading up to the litigation, using her own refusal to accept overpayment refunds to “create[] a complicated accounting situation that Defendant tried to navigate fairly,” with continued overpayments to Saroyan illustrating “intent to induce [Saroyan] into committing a violation.” (Id. at p. 5.) This animus was further evident through the way this case was over-litigated for a dispute that ultimately appears to have come down to overpayments of $39.00 and $847.87, which were quickly refunded. (See id. at p. 4.) Even before the hearing on this motion, there are 397 entries on the Court’s docket, spanning over four years of litigation. After Saroyan prevailed on the equitable claim in a bench trial, Carrasco opposed the motion for judgment on the pleadings for the remaining intertwined legal claims, instead of dismissing those claims. After entry of judgment, Carrasco moved for a new trial, requiring Saroyan’s opposition. Given the history of this litigation, a high fee bill is not unusual.

Saroyan’s counsel provides copies of their billing records. (Atabek Decl. ¶ 4 & Exs. 1-4.) Counsel made handwritten notations on the billing records to reduce or eliminate some items that were administrative, clerical, joint with other cross-defendants, or related to the arbitration. (Atabek Decl. ¶ 3.) Even with these reductions, the time billed is somewhat excessive and unreasonable. For example, in January 2020, counsel billed for items related to service and proofs of service for Cross-Defendants Broker Parties and Cross-Defendant Lin. In February 2021, counsel billed for opposing the Broker Parties’ demurrer and motion to strike the cross-complaint. Counsel also logged many time entries related to Saroyan’s discovery responses to Lin and the Broker Parties, as well as for preparation for, taking of, and summarizing Lin’s deposition. In August 2021, counsel billed in connection with Carrasco’s motion to compel Cross-Defendant Phan’s discovery responses. Although discounted to half-time on some of the billing records, this time is not properly charged to Carrasco at all. Counsel also billed for administrative tasks, such as “Utilizing Court Link, obtain a copy of the Court’s Minute Order,” “Download copies of Tania and Shahe’s posts to Lin’s yelp page,” and “Moved Electronic Case Files from L Drive to Google Drive.”

The four exhibits total 163 pages of billing records. The handwritten notations did not include updates to each invoice’s summary of hours and amount billed by each attorney. This complicates the Court’s calculation of actual reasonable hours.

Considering the type of case, complexity of the case, length of litigation, billing records, and the record as a whole, the Court concludes that a reasonable amount of attorney fees is $280,696.03, a 15% reduction from Saroyan’s request of $330,230.63. (See Kerkeles v. City of San Jose (2015) 243 Cal.App.4th 88, 102 [“When a ‘voluminous fee application’ is made, the court may . . . ‘make across-the-board percentage cuts either in the number of hours claimed or in the final lodestar figure.’”].)

The motion for attorney fees is GRANTED IN PART. The Court awards Tania Saroyan $280,696.03 in attorney fees from Maria Carrasco.

Parties who intend to submit on this tentative must send an email to the Court at SMCDEPT48@lacourt.org indicating intention to submit. Parties intending to appear are encouraged to appear remotely and should be prepared to comply with Dept. 48’s new requirement that those attending court in person wear a surgical or N95 or KN95 mask.

Hon. Thomas D. Long

Judge of the Superior Court