Judge: Walter P. Schwarm, Case: 30-2016-00892772, Date: 2023-08-08 Tentative Ruling
Defendant (Ascentium Capital, LLC) Motion for Attorneys’ Fees (Motion), filed on 1-26-23 under ROA No. 564, is GRANTED as set forth below.
Prevailing Party:
Defendant seeks to recover attorneys’ fees pursuant to Civil Code section 1717. (Motion; 2:15-20.) Plaintiff’s (Femtometrix, Inc.) Opposition to Motion of Defendant Ascentium Captial, LLC for Attorney’s Fees (Opposition), filed on 5-31-23 under ROA No. 580, states, “Ascentium contends that it is entitled to attorney’s fees from Femtometrix. . . . This claim is without merit. As stated above, the Court found its Final Statement of Decision that the rescission voided the assignment to Ascentium. . . . None of the cases cited by Ascentium involve an assignment, let alone an assignment was [sic] voided by the rescission of the underlying contract.” (Opposition; 4:1-5.) The Opposition further states, “Moreover, in addition to the rescission and reformation causes of action being based on fraud in the inducement, the Second Amended Complaint also alleged fraud and negligent misrepresentation, two tort claims. . . . “These causes of action were not, ‘on the contract.’ ” (Opposition; 4:19-25.)
Code of Civil Procedure section 1033.5 states in part, “(a) The following items are allowable as costs under Section 1032: . . .[¶] (10) Attorney's fees, when authorized by any of the following: [¶] (A) Contract. [¶] (B) Statute. [¶] (C) Law. . . .” Civil Code section 1717 states in part, “(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, whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorney's fees in addition to other costs. [¶] Where a contract provides for attorney's fees, as set forth above, that provision shall be construed as applying to the entire contract, unless each party was represented by counsel in the negotiation and execution of the contract, and the fact of that representation is specified in the contract. [¶] Reasonable attorney's fees shall be fixed by the court, and shall be an element of the costs of suit. [¶] Attorney's fees provided for by this section shall not be subject to waiver by the parties to any contract which is entered into after the effective date of this section. Any provision in any such contract which provides for a waiver of attorney's fees is void. [¶] (b)(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. . . .”
Hsu v. Abarra (1995) 9 Cal.4th 863, 876 (Hsu), states “. . . in 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 has succeeded and failed to succeed in its contentions.’ [Citation.]” “But when one party obtains a ‘simple, unqualified win’ on the single contract claim presented by the action, the trial court may not invoke equitable considerations unrelated to litigation success, such as the parties’ behavior during settlement negotiations or discovery proceedings, except as expressly authorized by statute.” [Citations.]” (Id., at p. 877.)
Plaintiff’s Second Amended Complaint (SAC), filed on 6-27-17 under ROA No. 51, alleged cause of action against Defendant for Rescission Based on Fraud (Rescission), Reformation of Contract (Reformation), Fraud and Deceit, and Negligent Misrepresentation. The trial of this case began on 7-14-21. (7-14-21 Minute Order.) The evidentiary phase of the trial closed on 7-22-21. (7-22-21 Minute Order.) On 9-27-22 under ROA No. 533, the court issued its Final Statement of Decision (FSOD). The FSOD states, in part, “The court does not award any equitable relief against Ascentium because the court has found that Ascentium did not cause harm to Plaintiff. The court has found rescission based on the act of negligent misrepresentation by Culver. Plaintiff’s harm resulted from Culver’s negligent misrepresentation. The extinguishment of the Lease Agreement based on Culver’s negligent misrepresentation results in nothing passing to Ascentium in terms of Culver’s liability passing to Ascentium. Since the court is not awarding equitable relief against Ascentium, the court finds judgment for Ascentium on the rescission cause of action.” (FSOD; 37-7-14.) The FSOD also states, “The court finds judgment for Ascentium against Plaintiff on the first cause of action because Ascentium did not cause the harm to Plaintiff that justified rescission.” (FSOD; 38:4-7.) The Judgment, filed on 11-10-22 under ROA No. 548, states in part, “Femtometrix shall recover nothing by way of its SAC against Ascentium.”
The Opposition does not dispute that the Lease Agreement between the parties (Exhibit 330 at Trial; (Alper Decl., ¶ 4) contains an attorneys’ fees provision. Paragraph 13 of the Lease Agreement states, in part, “. . . In the event we are required to enforce the Lease, you are responsible for reimbursing us for all costs we incur including our attorneys’ fees and all costs of repossession, repair, storage and remarketing of the Equipment. . . .” (Alper Decl., ¶ 4 and Exhibit 2.)
As to whether Plaintiff’s Rescission cause of action was an action on a contract within the meaning of Civil Code section 1717, subdivision (a), Super 7 Motel Associates v. Wang (1993) 16 Cal.App.4th 541, 549 (Super 7), states, “We preliminarily note that an action for fraud seeking damages sounds in tort, and is not ‘on a contract’ for purposes of an attorney fee award, even though the underlying transaction in which the fraud occurred involved a contract containing an attorney fee clause. [Citation.] However, where the plaintiff's claim instead seeks rescission based on fraud, the courts have concluded such claim does sound in contract and permits the award of fees. [Citation.]” (See also, Hastings v. Matlock (1985) 171 Cal.App.3d 826, 841 (Hastings).) Turner v. Schultz (2009) 175 Cal.App.4th 974, 979-980 (Turner), states, “We first reject Turner's contention that the action was not “on the contract.” California courts construe the term ‘on a contract’ liberally. ‘ “As long as the action ‘involve[s]’ a contract it is ‘ “on [the] contract” ’ within the meaning of section 1717. [Citations.]” [Citations.]’ [Citation.] Where an attorney fee clause provides for an award of fees incurred in enforcing the contract, the prevailing party is entitled to fees for any action ‘on the contract,’ whether incurred offensively or defensively. [Citations.]” Such fees are properly awarded under section 1717 ‘to the extent that the action in fact is an action to enforce—or avoid enforcement of—the specific contract.’ [Citation.]”
Based on Super 7 and Schultz, Plaintiff’s cause of action for Rescission against Defendant was on the contract within meaning of Civil Code section 1717 because Plaintiff’s Rescission cause of action sought to avoid enforcement of the Lease Agreement against it. The assignment of the Lease Agreement to Defendant does not change the fact that Plaintiff sought to avoid the enforcement of the Lease Agreement by Defendant through the Rescission cause of action.
As to the tort claims included in the SAC (the third and fourth causes of action), Abdallah v. United Savings Bank (1996) 43 Cal.App.4th 1101, 1111 (Abdallah), provides, “Apportionment of a fee award between fees incurred on a contract cause of action and those incurred on other causes of action is within the trial court's discretion [citation], and we find no abuse of that discretion in this case. ‘Where a cause of action based on the contract providing for attorney's fees is joined with other causes of action beyond the contract, the prevailing party may recover attorney's fees under [Civil Code] section 1717 only as they relate to the contract action.’ [Citation.] However, ‘[a]ttorney's fees need not be apportioned when incurred for representation on an issue common to both a cause of action in which fees are proper and one in which they are not allowed.’ [Citation.] For example, the holder of a note which provides for payment of fees incurred to collect the balance due is entitled to fees incurred in defending itself against ‘interrelated’ allegations of fraud. [Citation.] Here, the court could reasonably find that appellants’ various claims were ‘ “inextricably intertwined” ’ [citation], making it ‘impracticable, if not impossible, to separate the multitude of conjoined activities into compensable or noncompensable time units’ (Fed-Mart Corp. v. Pell Enterprises, Inc. (1980) 111 Cal.App.3d 215, 227 [168 Cal.Rptr. 525]).”
The court finds that the issues raised by Plaintiffs’ contract claims and tort claims were inextricably intertwined because the SAC based the Rescission cause of action on fraud. It is impracticable for the court to distinguish between the time counsel expended litigating the contract claims and the tort claims because the SAC relied on fraud to support the Rescission cause of action. Further, the Opposition does not distinguish between the time Defendant’s attorneys expended on contract claims compared to the time they expended on the tort claims.
Based on the above, the court finds that Defendant is the prevailing party under Civil Code section 1717, subdivision (b)(1).
Reasonableness of Attorneys’ Fees:
PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1095, explains, “As the Court of Appeal herein observed, the fee setting inquiry in California ordinarily begins with the ‘lodestar,’ i.e., the number of hours reasonably expended multiplied by the reasonable hourly rate. ‘California courts have consistently held that a computation of time spent on a case and the reasonable value of that time is fundamental to a determination of an appropriate attorneys’ fee award.’ [Citation.] The reasonable hourly rate is that prevailing in the community for similar work. [Citation.]” “In referring to ‘reasonable’ compensation, we indicated that that trial courts must carefully review attorney documentation of hours expended; ‘padding’ in the form of inefficient or duplicative efforts is not subject to compensation. [Citation.]” (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1132 (Ketchum); Italics in Ketchum.) Christian Research Institute v. Alnor (2008) 165 Cal.App.4th 1315, 1322, provides, “ ‘To the extent a trial court is concerned that a particular award is excessive, it has broad discretion to adjust the fee downward or deny an unreasonable fee altogether.’ [Citation.]”
Syers Properties III, Inc. v. Rankin (Syers) (2014) 226 Cal.App.4th 691, 698–700 (Syers Properties III, Inc.) states, “The trial court did not abuse its discretion in accepting defense counsel's computation of attorney hours as hours reasonably spent working on the case. It is well established that ‘California courts do not require detailed time records, and trial courts have discretion to award fees based on declarations of counsel describing the work they have done and the court's own view of the number of hours reasonably spent. [Citations.]’ [Citations.] . . . [¶] ‘Because time records are not required under California law . . ., there is no required level of detail that counsel must achieve. See, e.g., PLCM Group[, supra, 22 Cal.4th at p.] 1098, 95 Cal.Rptr.2d 198, 997 P.2d 511 (“We do not want ‘a [trial] court, in setting an attorney's fee, [to] become enmeshed in a meticulous analysis of every detailed facet of the professional representation. It . . . is not our intention that the inquiry into the adequacy of the fee assume massive proportions, perhaps dwarfing the case in chief,’ ” quoting Serrano v [.] Unruh (Serrano IV) (1982) 32 C[al.]3d 621, 642 [186 Cal.Rptr. 754, 652 P.2d 985]). See, e.g., . . . Jaramillo v [.] County of Orange (2011) 200 [Cal.App.] 4th 811, 830 [133 Cal.Rptr.3d 751] (noting that records included very general descriptions, e.g., ‘trial prep,’ ‘T/C-Client’); City of Colton v [.] Singletary (2012) 206 [Cal.App.] 4th 751, 784 [142 Cal.Rptr.3d 74] (declaration stating time spent on various activities); [citation].’ [Citation.]” (Footnotes 3, 4, and 5 omitted.) In Syers, “. . ., Feeney's declaration set forth the hours billed by Associate Attorney David J. Gibson, as well as by each of four paralegals who assisted on the case. This declaration also described the qualifications and experience of Gibson and each of the paralegals, as well as a brief description of the work each performed.” (Id., at p. 695; Footnote 1 omitted.) “We think, however, necessary support services for attorneys, e.g., secretarial and paralegal services, are includable within an award of attorney fees.” (Salton Bay Marina, Inc. v. Imperial Irrigation Dist. (1985) 172 Cal.App.3d 914, 951.)
Premier Medical Management Systems, Inc. v. California Insurance Guarantee Association (2008) 163 Cal.App.4th 550, 564 (Premier), states, “In challenging attorney fees as excessive because too many hours of work are claimed, it is the burden of the challenging party to point to the specific items challenged, with a sufficient argument and citations to the evidence. General arguments that fees claimed are excessive, duplicative, or unrelated do not suffice. Failure to raise specific challenges in the trial court forfeits the claim on appeal.”
The Opposition states, “Ascentium has failed to provide adequate justification for the attorney’s fees alleged. Exhibit 4 to Mr. Alpers declaration is a mere data dump of invoices without context or support. Should this Court decide it is appropriate to award Ascentium attorney’s fees in this matter, this Court should reduce the award by at least 50% based on the lack of adequate justification, excessive amount of time spent, and the unreasonable hourly rates charged.” (Opposition; 5:9-13.)
In light of the above rules, the court reviewed the billing records submitted by Defendant. (Alper Decl., ¶ 6 and Exhibit 4.) These records included invoices that started on 1-17-17 and ended on 1-12-23. (Alper Decl., ¶ 6 and Exhibit 4.) First, the court finds that the hourly rates are reasonable. (Alper Decl., ¶ 8.) The declaration in support of the Motion shows that Defendant’s attorneys are experienced who have shown that the hourly rates between $365.00 and $427.00 are reasonable in representing financial institutions in litigation. (Alper Decl., ¶¶ 8-12; 2-26-22 Goldflam Decl., ¶ 2 (It appears that the Goldflam Decl. is mistakenly dated as 2-26-22.).)
Plaintiff’s Opposition identifies only two examples of billing that associates or paralegals could have performed. (Opposition; 6:10-7:8.) Plaintiff identifies an entry on 9-13-21 for .2 hours ($79.00) and 10-18-21 for .2 hours ($79.00). (Opposition; 6:23-7:7.) The court agrees that a legal staff could have performed these tasks and reduces the amount requested as attorneys’ fees by .4 hours based on the 9-13-21 and 10-18-21 entries. Other than entries on 9-13-21 and 10-18-21 items, the Opposition does not direct the court to any other specific entries that Plaintiff considers as examples of excessive or duplicative billing.
In the court’s review of the records, the court finds that the following entries were unnecessary to the litigation or tasks that a legal staff could have performed: (1) 2-28-18 entry for .1 hours ($39.50); (2) 10-26-18 for 1.2 hours ($474.00); 10-26-18 for .2 hours ($79.00); 10-28-18 for .5 hours ($197.50); 10-29-18 for .9 hours ($355.50); 10-30-18 for .4 hours ($158.00); 11-5-18 for .7 hours ($276.50); 11-5-18 for .1 hours ($39.50); 11-5-18 for .3 hours ($118.50); 11-6-18 for .1 hours ($39.50); 11-7-18 for .2 hours ($79.00); 11-7-18 for .3 hours ($118.50); and 11-7-18 for 2.8 hours ($1,106.00). (These entries reflect tasks performed related to an ex parte application.); (3) 5-30-19 for .1 hours ($39.50); (4) Entries on 3-16-21 for .2, .4. and .2 hours ($79.00, $84.00, and $42.00); 3-24-21 entry for .3 hours ($118.50). (These entries pertain to a case involving U.S. Bank v. Femtometrix.); and (5) 7-10-21 entry for 1 hour and 8 hours ($395.00 and $316.00) (These entries pertain to an employee lawsuit.)
The Motion requests $424,004.24 in attorneys’ fees which includes $6,618.50 in fees incurred in bring this Motion. (2-26-22 Goldflam Decl., ¶ 3.) The court reduces the amount of $424,004.24 by the amounts specified above for a total of $419,691.24. The court adds to $1,750.70 for the time spend in preparing the Reply. (6-5-23 Goldflam Decl., ¶ 4.). Thus, the total attorneys’ fees award is $421,441.94. The court finds that this award is reasonable in light of the law and motion and trial time expended toward the case.
Based on the above, the court GRANTS Defendant (Ascentium Capital, LLC) Motion for Attorneys’ Fees, filed on 1-26-23 under ROA No. 564, in the amount of $421,441.94.
Defendant is to give notice.