Judge Virginia Keeny, Case 19VECV01803 2023-02-21 Tentative Ruling

Judge: Virginia Keeny, Case: 19VECV01803, Date: 2023-02-21 Tentative Ruling

Case Number: 19VECV01803 Hearing Date: February 21, 2023 Dept: W

Osvaldo Martignoni, et al., v. Arash Majlessi, et al.,

Motion for attorney fees

Date of Hearing: February 21, 2023 Trial Date: N/A

Department: W Case No.: 19VECV01803

Moving Party: Defendants Kamran Hekmat and Gloria Center LLC

Responding Party: Plaintiffs Osvaldo Martignoni and Claudia Martignoni

BACKGROUND

This is a contractual fraud action. On December 19, 2019 Plaintiffs Osvaldo Martignoni and Claudia Martignoni (“Plaintiff”) filed this action. The operative pleading is the Fourth Amended Complaint, which was filed on February 9, 2022, against Defendants Arash Majlessi, Majlessi Corporation, Gloria Center LLC, Kamran Hekmat, United Escrow Co., John C. Lee, and Ian Bhak for (1) rescission, (2) fraud, (3) breach of contract, (4) rescission, (5) breach of duty and gross negligence, (6) breach of duty and gross negligence, (7) fraud, and (8) declaratory relief.

On November 18, 2022, the court sustained, without leave to amend, Defendants Kamran Hekmat and Gloria Center LLC’s (“Defendants”) demurrer to the fourth and seventh causes of action and dismissed Defendants with prejudice.

[Tentative] Ruling

Defendants Kamran Hekmat and Gloria Center LLC’s Motion for Attorney Fees is CONTINUED.

REQUEST FOR JUDICIAL NOTICE

The court grants Defendant’s request for judicial notice of former counsel’s declaration signed under penalty of perjury on Juned 15, 2022 and filed in the instant matter on June 16, 2022 (Exh. A) along with former counsel’s legal invoices attached to the declaration (Exh. B) pursuant to Evidence Code section 452(d), (h).

ANALYSIS

Defendants Kamran Hekmat and Gloria Center LLC (“Hekmat Defendants”) move the court for an award of attorney fees and costs pursuant to Civil Code section 1717 in the amount of $65,291.54, which includes amounts not previously included in the Hekmat Defendants' Memorandum of Costs. The Hekmat Defendants make this motion on the grounds that they are the prevailing party pursuant to the dismissal of Plaintiff’s complaint against them.

A prevailing party is entitled to recover costs, including attorneys’ fees, as a matter of right, except as otherwise expressly provided by statute. (See Code Civ. Proc., §§ 1032(a)(4), 1032(b), 1033.5.) A prevailing party is “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.” (Id., § 1032(a)(4).)

Section 10.20 of the lease agreement provides the following: “In the event of any action at law or in equity to interpret or enforce the provisions of this Lease, the prevailing party shall be entitled to recover from the other reasonable attorney's fees and costs. If Lessee files or causes the filing of any legal action against Lessor and subsequently dismisses or causes the dismissal of such legal action, Lessee shall immediately reimburse Lessor for all its incurred legal expenses, whether or not Lessee was justified in filing such legal action against Lessor. If Lessor, without fault on Lessor's part, be made a party to any litigation instituted by or against Lessee, Lessee shall pay to Lessor all costs and expenses incurred by Lessor, including attorney's fees…” (Manlin Decl., Exh. 2.)

The court finds the Hekmat Defendants are the prevailing parties in the instant matter. As noted above, the definition of a prevailing party includes “the party who recovered a greater relief in the action on the contract” and “a defendant in whose favor a dismissal is entered.” (Civ. Code § 1717(b)(1); see also, CCP §1032(a)(4).) Here, the Hekmat Defendants are the prevailing party as they recovered a greater relief (costs) on the contract and the case was involuntarily dismissed against them. The court further notes this provision is broad enough to encompass both tort and breach of contract claims against the Hekmat Defendants. (See Drybread v. Chipain Chiropractic Corp. (2007) 151 Cal.App.4th 1063, 1071.)

The court next addresses whether $65,291.54 in attorney fees and costs is reasonable. The Hekmat Defendants seek $65,291.54 in attorney fees, which includes approximately 190 hours of work performed by former defense counsel Mr. Manlin[1] at the hourly rate of $300 and approximately 17 hours of work performed by current defense counsel, Ms. Fierman-Cribbs, at the hourly rate of $395 an hour. (Manlin Decl. ¶9, Fierman-Cribbs Decl. ¶10.) Counsel attests the fees are reasonable given the complexity of issues including review and analysis of numerous detailed and related real estate documents as well as review and analysis of the four different complaints filed and ongoing discovery which Plaintiff resisted. (Manlin Decl. ¶¶13-16; Fierman-Cribbs Decl. ¶¶15-19.)

In opposition[2], Plaintiff argues the request is unreasonable and will force Plaintiffs to file for bankruptcy. There is a split of authority as to whether a losing party's financial condition is a proper equitable consideration in setting the amount of “reasonable” attorney's fees. In Walker v. Ticor Title Co. of California (2012) 204 Cal.App.4th 363, a First District case, the court held that “a losing party's financial condition should not be considered in setting the amount of such an award.” (Id. p. 374.) In an earlier Second District case, the majority held: “In determining the amount of fees to be awarded to the prevailing party where the statute, as here, requires that the fee be reasonable, the trial court must therefore consider the other circumstances in the case in performing the lodestar analysis. Those other circumstances will include, as appropriate, the financial circumstances of the losing party and the impact of the award on that party.” (Garcia v. Santana (2009) 174 Cal.App.4th 464.)

Following the Second District, the court will take into account Plaintiffs’ financial situation. Plaintiffs, however, fail to include any evidence of their financial condition. The court continues Defendant’s motion for attorney fees so Plaintiff may present evidence of their financial condition.

Accordingly, the motion for attorney fees is CONTINUED.

As for Defendant’s Memorandum of Costs, the court strikes the following[3]:

Filing Fee $509 – October 24, 2020. Defendant seeks the first filing fee twice. (See 12/3/2020 $509 cost)

Copying Fees $10.40 – 10/1 to 10/7/20