Judge William A. Crowfoot, Case Number: EC066531, Date: 2024-01-08 Tentative Ruling

On April 6, 2017, plaintiff Uni-Glory Development, Inc. (“Uni-Glory”) filed this action for breach of written contract against defendant Fairview East LLC (“Fairview East”) for unpaid sums owed for construction work on ten condominium units (the “Condominium Project”) under an agreement dated May 29, 2013 (the “Agreement”). On August 26, 2017, Fairview East filed a cross-complaint against Uni-Glory, George Zhang aka George Yuguang Zhang (“Zhang”), Lucy Xiangxin Gao (“Gao”), Chien-Kuo Liu (“Liu”), Engles Shen & Associates, Inc., DLAC, Inc. (“DLAC”), Eco Concrete, Inc., GDT Framing, Inc., California Construction & Roofing, Inc. (“California Construction”), and Golden City International, Inc. (“Golden City”), asserting tort-based claims including fraud, and alleging that Uni-Glory was unlicensed.

Uni-Glory’s operative Second Amended Complaint against Fairview East was filed on November 8, 2017, in which Uni-Glory asserted causes of action for breach of written contract, implied indemnity, and declaratory relief. Fairview East filed its operative Fourth Amended Cross-Complaint on August 31, 2020.

On November 16, 2023, following a jury trial which ended on August 17, 2023, judgment was entered in favor of Uni-Glory and cross-defendants Zhang, Gao, and Liu (collectively, “Cross-Defendants”) and against Fairview East.

This order addresses two motions: (1) Fairview East’s motion to strike or tax costs, and (2) Uni-Glory’s motion for attorneys’ fees. The chronology of the relevant filings is set forth below:

- On September 28, 2023, Uni-Glory and Cross-Defendants filed their memorandum of costs.

- On December 13, 2023, Fairview East filed an amended notice of motion and motion to strike or tax costs.

- On December 19, 2023, Uni-Glory and Cross-Defendants filed an opposition brief to Fairview East’s motion to strike or tax costs.

- On December 22, 2023, Fairview East filed an opposition to Uni-Glory's motion for attorneys’ fees.

- On December 27, 2023, Uni-Glory filed its reply brief in support of its fee motion.

- On December 29, 2023, Fairview East filed a reply brief in support of its motion to strike or tax costs.

- On January 8, 2024, the Court continued the hearing to allow for supplemental briefing.

- On January 29, 2024, Uni-Glory and Fairview East filed their supplemental briefs.

- On January 30, 2024, Uni-Glory filed an objection to Fairview East’s briefing.

- On February 2, 2024, Fairview East filed a response to Uni-Glory’s objection.

A prevailing party is entitled as a matter of right to recover costs in any action or proceeding, except as otherwise expressly provided by statute. (C.C.P. §1032(b).) “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. (C.C.P. §1032(a)(4).) California law recognizes three types of litigation costs: allowable, not allowable, and discretionary. (C.C.P. §1033.5(a), (b), (c)(4).) Any award of costs — whether categorically recoverable under section 1033.5, subdivision (a) or allowable in the court's discretion under section 1033.5(c)(4) — must also be “reasonably necessary to the conduct of the litigation” and “reasonable in amount.” (Segal v. ASICS America Corp. (2022) 12 Cal.5th 651, 667.)

“‘If the items appearing in a cost bill appear to be proper charges, the burden is on the party seeking to tax costs to show that they were not reasonable or necessary. On the other hand, if the items are properly objected to, they are put in issue and the burden of proof is on the party claiming them as costs.’” (Nelson v. Anderson (1999) 72 Cal.App.4th 111, 131.) “[T]he mere filing of a motion to tax costs may be a ‘proper objection’ to an item, the necessity of which appears doubtful, or which does not appear to be proper on its face. [Citation] However, ‘[i]f the items appear to be proper charges the verified memorandum is prima facie evidence that the costs, expenses and services therein listed were necessarily incurred by the defendant [citations], and the burden of showing that an item is not properly chargeable or is unreasonable is upon the [objecting party].’ [Citations]” (Id.) “The court’s first determination, therefore, is whether the statute expressly allows the particular item, and whether it appears proper on its face. [Citation] If so, the burden is on the objecting party to show them to be unnecessary or unreasonable. [Citation]” (Id.)

Here, Uni-Glory and Cross-Defendants are the prevailing parties entitled to costs because Uni-Glory is the party with a net monetary relief and Fairview East failed to recover any relief against Uni-Glory or Cross-Defendants on the Fourth Amended Cross-Complaint. In a memorandum of costs filed on September 28, 2023, Uni-Glory and Cross-Defendants claim $147,314.94 in costs.

In its motion filed on October 12, 2023, Fairview East objects to nearly all of the claimed costs. On December 12, 2023, Fairview East filed an “amended notice of motion and motion” which basically functions as a supplemental brief and expands on its arguments made in its initial moving papers. Uni-Glory and Cross-Defendants filed an opposition brief on December 19, 2023. Fairview East filed a reply brief on December 29, 2023.

On January 29, 2024, the parties submitted supplemental briefs. Uni-Glory and Cross-Defendants filed an objection to Fairview East’s supplemental briefing on February 2, 2024. They claim that Fairview East’s 9-page filing exceeded the page limit set by the Court because its brief was 5 pages long and the Supplemental Declaration of Ronald Ho was an additional 4 pages long. This objection is specious and overruled. The Court’s order specifically stated that declarations, exhibits, or attachments would not be counted towards the page limit.

Uni-Glory and Cross-Defendants argue that the Agreement allows them to recover “all costs and expenses incurred” beyond the statutory costs and expenses allowed under Code of Civil Procedure sections 1032 and 1033.5. Uni-Glory and Cross-Defendants cite generally to two cases, Bussey v. Affleck (1990) 25 Cal.App.3d 1162 and Arntz Contracting Co. v. St. Paul Fire & Marine Ins. Co. (1996) 47 Cal.App.4th 464, 491-492, which were decided by the Court of Appeal in the First District, Divisions 4 and 1, respectively. Shortly after, in 2000, First Nationwide Bank v. Mountain Cascade, Inc. (2000) 77 Cal.App.4th 871, 878-879 Division 2 of the First District Court of Appeal rejected Bussey and instead adopted the Third Appellate District’s holding in Ripley v. Pappadopoulos (1994) 23 Cal.App.4th 1616. In Ripley, the Third Appellate District disagreed with the Bussey court’s reasoning and held that even if expert witness fees were recoverable under a contractual provision, “[s]pecial contract damages are subject to pleading and proof in the main action and cannot be recovered by mere inclusion in a memorandum of costs” with the sole exception of contractual attorney fees pursuant to Civil Code section 1717 and Code of Civil Procedure section 1033.5(a)(10)(A). A year after First Nationwide Bank was decided, the Second Appellate District also declined to follow Bussey and held in Fairchild v. Park (2001) 90 Cal.App.4th 919, that a contractual provision which broadly provides for “all costs and expenses” does not enlarge the costs allowable under Code of Civil Procedure section 1033.5 to include expert witness fees. The Fairchild court discussed the legislative history of Civil Code section 1717, which prohibits parties from adopting a different definition of “prevailing party” in order to “establish uniform treatment of fee recoveries in actions on contracts” and applied this reasoning to prohibit expanding the definition of “costs” to include items not permitted under section 1033.5 of the Code of Civil Procedure. (Id. at p. 929-930.) And in 2005, the First Appellate District, Division 4, refused to follow Arntz (and abrogated its own ruling in Bussey on different grounds), stating that the recovery of costs broader than the statutory definition must be “specially pleaded and proven at trial.” (Hsu v. Semiconductor Systems, Inc. (2005) 126 Cal.App.4th 1330, 1341.) Citing to First Nationwide Bank, the Hsu court reasoned that the proper interpretation of a contractual agreement for shifting litigation costs is a question of fact that turns upon the intentions of the contracting parties; therefore, this issue must be submitted to the trier of fact for resolution pursuant to a prejudgment evidentiary proceeding, not a summary postjudgment motion. (Hsu, supra, 126 Cal.App.4th at p. 1341.)

Based on the weight of the available authority and the First Appellate District’s own subsequent departure from Bussey and Arntz, the Court declines to adopt Uni-Glory and Cross-Defendant’s position that they are entitled to all costs without limitations under the Agreement and proceeds to analyze Fairview East’s motion to tax costs within the meaning of Code of Civil Procedure section 1033.5.)

Uni-Glory and Cross-Defendants seek $1,584.91 in filing and motion fees. Filing fees and motion fees are expressly allowed by Code of Civil Procedure section 1033.5(a)(1). Therefore, it is Fairview East’s burden to show that the fees were not reasonable or necessary; Fairview East fails to meet this burden by merely claiming that “plaintiff has failed to identify the purposes of [several ex parte] applications.” (See Motion, Ho Decl., ¶ 2.)

In Fairview East’s moving papers, Fairview East’s counsel states in his declaration that “[e]xpert fee is not recoverable and is unreasonable.” (Motion, Ho Decl., ¶ 48.) In its “amended motion” filed on December 16, 2023 (“December 16 Motion”), Fairview East explains the basis for its cursory claim that the expert witness fees are not recoverable and are unreasonable by making several arguments. First, Fairview East argues that Uni-Glory and the Cross-Defendants did not make an offer pursuant to Code of Civil Procedure section 998; Fairview East claims that a “joint offer” is improper. Second, Fairview East also argues that even if a joint offer was appropriate, Uni-Glory and Cross-Defendants did not obtain a more favorable result after offering to settle for $450,000 on July 29, 2022 (“998 Offer”). Alternatively, Fairview East argues that, even if Uni-Glory and Cross-Defendants obtained a more favorable result, they are limited to recovering expert fees incurred after they served their 998 Offer. Counsel surmises that the expert fees were incurred before the 998 Offer was extended and also claims that Uni-Glory and Cross-Defendants’ invoices, submitted in support of their motion for attorneys’ fees, show that they cannot recover $700 for Bart Brimhall because this amount was later refunded. (Amended Motion, Ho Decl., ¶¶ 5-6.)

In opposition, Uni-Glory and Cross-Defendants argue that Fairview East forfeited its challenge to the expert witness fees because it was only raised in Fairview East’s December 16 Motion, which was filed long after the 15-day deadline to file a motion to tax costs. Uni-Glory and Cross-Defendants also erroneously argue that they are entitled to recover expert witness fees, regardless of when they were incurred.

On reply, Fairview East argues that the December 16 Motion should be considered because it “merely amplifies” its original motion and “provid[e]s amended argument/authority as to categories that were already contested in the original motion.” (Reply, p. 2.) Fairview East also argues that the December 16 Motion was served and filed 16 court days before the hearing date; therefore, it contends, Uni-Glory and Cross-Defendants had “full statutory notice and an opportunity to address the points raised” and cannot identify any resulting prejudice. (Reply, p. 3.)

California Rules of Court rule 3.1700 requires any notice of motion to strike or tax costs to be served and filed 15 days after service of the cost memorandum. (CRC 3.1700, subd. (b)(1).) The period is extended as provided in Code of Civil Procedure section 1013 and 1010.6(a)(4) for mail or electronic service, respectively. (CRC 3.1700, subd. (b)(3).) “Unless objection is made to the entire cost memorandum”, the motion “must refer to each item objected to by the same number . . . and must state why the item is objectionable.” (CRC 3.1700, subd. (b)(1).) The party moving to tax costs may present any competent evidence, oral or written, at the hearing and the Court “is entitled to take all of the circumstances [of the case] into account” when reviewing a party’s claimed costs. (Hadley v. Krepel (1985) 167 Cal.App.3d 677, 682-683.)

As stated above, in Fairview East’s initial motion, Fairview East challenges the costs as “not recoverable” and “unreasonable.” Although the objection in the initial moving papers is conclusory, the Court finds that the motion to tax adequately identified the item challenged and the grounds for that challenge; it further exercises its discretion to consider all of the arguments and evidence before it, and therefore considers the arguments made in Fairview East’s amended motion and its reply brief, which is that the expert fees claimed were inaccurately calculated and incurred before the 998 Offer was served.

In its reply brief, Fairview East refers to Uni-Glory and Cross-Defendants’ invoices submitted in support of their motion for attorneys’ fees as grounds for questioning when their expert witness fees were incurred and whether they were accurately stated. Instead, they cite case law that predates the 2016 amendment of CCP 998. (Reply, p. 5.) The current version of CCP 998 explicitly provides that a defendant who rejects a plaintiff’s offer and fails to obtain a more favorable judgment may be required, in the court’s discretion, “to pay a reasonable sum to cover postoffer costs of the services of expert witnesses” which were actually incurred and reasonably necessary, in addition to the plaintiff’s costs. (Code Civ. Proc., § 998, subd. (d).) Therefore, Fairview East, as the cross-complainant who fails to obtain a more favorable judgment, is only required to pay Uni-Glory and Cross-Defendant’s “postoffer costs of the services of expert witness.” (Code Civ. Proc., § 998, subd. (c)(1).)

The Court granted Uni-Glory and Cross-Defendants the opportunity to show in their supplemental briefing that these costs were, in fact, incurred after July 29, 2022. They did not do so but only argued that the Agreement provides for all “costs and expenses” (an argument which the Court addressed and rejected above). Therefore, they have not met their burden of showing that the costs were proper. (Ladas, supra, 19 Cal.App.4th at p. 774.)

Uni-Glory and Cross-Defendants claim $12,0584.06 in deposition costs, $3,910.85 for service of process, and $170 for ordinary witness fees.

First, transcripts and video recordings of “necessary depositions” are allowable costs. (Code Civ. Proc., § 1033.5, subd. (a)(3).) Fairview East claims that Uni-Glory and Cross-Defendants should not recover costs for Chuan Shan (Kevin) Guo (“Guo”) or Stephen Cook’s depositions because neither individual testified at trial. In opposition, Uni-Glory and the Cross-Defendants argue that it was necessary to depose Kevin Guo and Stephen Cook because Guo was Fairview East’s project manager and Stephen Cook was the investigator who responded to Fairview East’s complaint to the Contractors State License Board about Uni-Glory’s alleged work. The Court agrees that these depositions are necessary to the litigation, even if they were not necessary to the trial, so the motion to tax costs as to these depositions is DENIED.

Fairview East also claims that the memorandum of costs falsely claims that there were 4 depositions of Eric Ho. In opposition, Uni-Glory and the Cross-Defendants clarify that they seek to recover costs for 3 depositions of Eric Ho and the cancellation fee paid to the court reporter when Mr. Ho refused to appear at his noticed deposition on September 4, 2020. Fairview East did not address this issue on reply and the Court considers it abandoned. Therefore, the motion to tax costs is DENIED as to the deposition costs claimed in Item 4.

Second, Uni-Glory and Cross-Defendants claim $3,910.85 for costs incurred in connection with service of process. In its initial motion, Fairview East argues that Uni-Glory and Cross-Defendants cannot recover the cost to subpoena persons and entities other than Hasz Fund Control, Inc., Winchester Realty, L.A. County Building, and Mega Bank, because none of the subpoenaed witnesses, other than these four entities, appeared at trial. Fairview East also argues that the memorandum of costs improperly includes $380 for several filings. In its amended motion, Fairview East additionally points out that costs incurred for photocopying records produced by nonparty witnesses – such as Winchester Realty, L.A. County Building, Hasz Fund Control, and Mega Bank – are not allowed because service of process by a registered process server, in the context of section 1033.5 which identifies allowable costs, does not include a professional photocopier whose only service of process relates to subpoenas for the production and copying of records. (Amended Motion, p. 7, citing to Bus. & Prof. Code, § 22350.)

In opposition, Uni-Glory and Cross-Defendants argue that the costs to serve Winchester Realty, L.A. County Building, and Mega Bank with subpoenas should be allowed because their records supported Plaintiff’s “lack of delay damages” claim at trial. However, photocopying costs are not allowed and messenger fees are only allowed at the discretion of the trial court if they are reasonably necessary to the conduct of the litigation. (CCP 1033.5, subd. (b)(3); Ripley v. Pappadopoulos (1994) 23 Cal.App.4th 1616.) Uni-Glory and Cross-Defendants do not submit invoices distinguishing photocopying costs from the cost to serve the subpoenas. They also do not explain why it was necessary to incur $380 to personally serve Fairview East with various filings, nor do they explain why it was necessary to serve subpoenas and trial subpoenas on the witnesses who did not testify.

Accordingly, the motion to tax is GRANTED as to the service of process costs claimed in Item 5.

Third, Fairview East claims that ordinary witness fees should not be allowed because none of the individuals identified and allegedly served appeared as witnesses at the trial, and it has no information as to who these people are. (Motion, p. 5.) For the same reasons discussed in connection with the service of process costs, the motion to tax is GRANTED as to the ordinary witness fees claimed in Item 8.a.

Models, the enlargements of exhibits and photocopies of exhibits, and the electronic presentation of exhibits, including costs of rental equipment and electronic formatting, may be allowed if they were reasonably helpful to aid the trier of fact. (CCP § 1033.5, subd. (a)(13).) Costs incurred in preparing demonstratives and photocopies of trial exhibits that are ultimately not used at trial are allowable in the trial court’s discretion. (Segal v. ASICS America Corp. (2022) 12 Cal.5th 651, 667.)

Uni-Glory and Cross-Defendants claim $23,212.50 in costs for “[m]odels, enlargements, and photocopies of exhibits”, specifically “Trial Blowups, Exhibits, Monitors for Court and Witnesses, and Audio Visual Staff at Trial.” In its initial motion, Fairview East argues that it has already paid half of the technical costs in the sum of $2,024 and, as the losing party, it should not be automatically burdened with these costs. (Motion, p. 6; Ho Decl., ¶ 7.) In its amended motion, Fairview East complains that “there is no breakdown, backup or support for these costs.” (Amended Motion, p. 15.) It also argues that the cost for exhibits not used at trial are not recoverable, and only 8 out of over 150 exhibits were admitted. (Amended Motion, p. 15.) Fairview East additionally argues that the services of audio-visual staff and monitors are not “necessary” services, but rather for the convenience of counsel. (Amended Motion, p. 16.)

The Court disagrees with Fairview East. As articulated at the hearing by counsel for Uni-Glory and Cross-Defendants, an audio-visual and computer consultant was necessary to operate an overhead projection system at trial and present key dates, construction documents, and deposition testimony to the jury. Therefore, although only 8 exhibits were used, the technical support and equipment provided by the audiovisual consultants are a reasonably necessary expense.

Uni-Glory and Cross-Defendants seek $67,487 in court reporter fees in Item 12. Fairview East argues that given this large amount, it is apparent that Uni-Glory and Cross-Defendants are seeking reimbursement for the cost of transcripts, which is not recoverable under section 1033.5(b)(5) unless ordered by the court. Fairview East calculates that the court reporter fee for an 11-day trial would be only $8,404, but Uni-Glory and Cross-Defendants claim that the court reporter fees for a final status conference, jury selection, and trial total $34,846.50. (Amended Motion, p. 10.)

In their opposition brief and supplemental opposition brief, Uni-Glory and Cross-Defendants do not differentiate between the court reporter fee and the cost of the transcript. Instead, they argue that the transcripts were “reasonably necessary to the conduct of the litigation” because Fairview East also ordered them. This argument fails to recognize that “[t]ranscripts of court proceedings not ordered by the court” are “not allowable as costs, except when expressly authorized by law.” (CCP § 1033.5, subd. (b)(5).) In fact, the case cited in their supplemental opposition brief, Chaaban v. Wet Seal (2012) 203 Cal.App.4th 49, made this distinction between court reporter fees and transcripts.

Uni-Glory and Cross-Defendants also argue that Fairview East agreed to share the costs for court reporting and transcripts at trial. This representation is refuted by an email from Uni-Glory’s counsel dated September 8, 2021, in which counsel informed Fairview East it would need to obtain its own court reporter for all subsequent hearings. (Supp. Ho Decl., ¶¶ 3-6; Ex. 2.)

Accordingly, Uni-Glory and Cross-Defendants fail to show that anything over $8,404 is allowed. The motion to tax with respect to the “court reporter fees” claimed in Item 12, which actually reflect the cost for transcripts, is GRANTED in the amount of $59,083.

In its initial motion, Fairview East argues that Uni-Glory and Cross-Defendants may not recover the fees paid for interpreters or jury consultants. The issue of interpreter fees is omitted from Fairview East’s amended motion and reply brief. The Court thus considers the issue abandoned and denies the motion to tax as to the interpreter fees listed in Item 13.

As for the $12,591 sought for jury consultant fees, Fairview East argues that a jury consultant is merely a convenience because many cases are tried before juries without the benefit of a consultant. In its opposition brief and supplemental opposition brief, Uni-Glory and Cross-Defendants point out that Fairview East also used a jury consultant at trial, showing that a jury consultant is not merely convenient, but “reasonably necessary.” In its reply, Fairview East points out that its counsel tried the case alone and that its own retention of a jury consultant was irrelevant to determining whether Uni-Glory and Cross-Defendants’ incurred costs were reasonably necessary.

At the hearing and in the supplemental opposition brief, Uni-Glory and Cross-Defendants argued that a jury consultant was reasonably necessary in order to “streamline things” during voir dire and “conduct tthings efficiently” so that counsel could concentrate on questioning potential jurors while the consultant took notes. Accordingly, based on counsel’s representation as to the value of the jury consultant as well as the fact that Fairview East’s counsel also used a jury consultant, the Court exercises its to discretion to allow Uni-Glory and Cross-Defendants to recover the cost incurred for the jury consultant.

The motion to strike or tax costs is GRANTED in part and $80,933.85 is taxed from Uni-Glory and Cross-Defendant’s cost bill.

Uni-Glory asserts that it is entitled to $413,773.25 in attorneys’ fees as the prevailing party under both Civil Code 1717 and Code of Civil Procedure section 1032 because: (1) it recovered compensatory damages in the amount of $796,672 under its claim for Breach of Contract in the Complaint, and (2) it successfully defended against Fairview East’s breach of contract claim and tort claims alleging fraud in the formation of the Agreement, fraudulent and negligent misrepresentations, and negligent performance of the Agreement.

An attorney fee clause can provide for an attorney fee award in an action on the contract pursuant to Civil Code section 1717 or, if worded more broadly, can provide for a fee award in any litigation between the parties as costs. (Santisas v. Goodin (1998) 17 Cal.4th 599, 608.)

Civil Code section 1717 governs an award of reasonable attorneys’ fees in an action on a contract. The term “on a contract” is liberally construed to include any action that “involves” a contract. (Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 894.) “To determine whether an action is on the contract, we look to the complaint and focus on the basis of the cause of action.” (Brown Bark III, L.P. v. Haver (2013) 219 Cal.App.4th 809, 821.) The prevailing party for contractual attorney fees award purposes is the party who recovered greater relief in an action “on the contract.” (Civ. Code § 1717(b)(1).)

“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.” (Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124, 129.) However, “attorney'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.” (Id. at pp. 129-130.)

The fee setting inquiry in California ordinarily begins with the “lodestar” method, i.e., the number of hours reasonably expended multiplied by the reasonable hourly rate. 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. (Serrano v. Priest (1977) 20 Cal.3d 25, 49.) The submitted evidence should allow the court to consider whether the case was overstaffed, how much time the attorneys spent on particular claims, and whether the hours were reasonably expended. (City of Colton v. Singletary (2012) 206 Cal.App.4th 751.) 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. Such an approach anchors the trial court’s analysis to an objective determination of the value of the attorney’s services, ensuring that the amount awarded is not arbitrary. (Serrano, supra, 20 Cal.3d at p. 48, n.23.) The burden is on the party seeking attorney fees to prove that the fees it seeks are reasonable. (Gorman v. Tassajara Development Corp. (2009) 178 Cal. App. 4th 44, 98.)

1. Whether Uni-Glory May Recover Fees Incurred for Defending Against Fairview East’s Non-Contract Claims

The attorneys’ fee provision in the Agreement between Uni-Glory and Fairview East states, in pertinent part: “[I]n the event a suit or action is filed to enforce this agreement or with respect to this agreement, the prevailing party or parties shall be reimbursed by the other party for all costs and expenses incurred in connection with the suit or action, including without limitation reasonable attorney’s fees at the trial level and on appeal.” (See Slome Decl., Exhibit “B” (marked at “Exhibit 1” at trial), page 2.)

Uni-Glory argues that this is an action on a contract under Civil Code section 1717. It also argues that, as the prevailing party, it should recover all attorneys’ fees, including those incurred to defend against Fairview East’s tort claims for negligence, fraudulent misrepresentation, and negligent misrepresentation, because all of the claims involved common issues regarding the formation and performance of the contract. (Motion, pp. 6-8.))

In opposition, Fairview East contends that the fee provision should be narrowly construed because the phrase “with respect to” differs from phrases such as “arising out of” or “relating to”, which courts have commonly interpreted to be broad enough to allow for fees based on non-contract claims. (Opp., p. 11.) Fairview East admits that “there are no California cases that discuss this ‘with respect to’ language” in the context of attorney fees.” (Opp., p. 11.)

On reply, Uni-Glory reiterates the “common issues” between the operative complaint and cross-complaint as well as the broad scope of the attorneys’ fee provision. Uni-Glory argues that the provision’s phrases such as “costs and expenses” and “suit or action” signal an intent to embrace a more expansive interpretation and thus should include non-contract claims along with claims to “enforce a contract.” (Reply, pp. 13-14.)

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, and to the extent that the action in fact is an action to enforce—or avoid enforcement of—the specific contract. (Turner v. Schultz (2009) 175 Cal.App.4th 974, 980.) Thus, while Uni-Glory’s reliance on conjunctions and enthusiastic underlining is not particularly persuasive, the Court finds that the gravamen of Fairview East’s claims brings them under Civil Code section 1717 and are “on a contract” insofar as it seeks to invalidate the Agreement and seek disgorgement of funds paid to Uni-Glory under the Agreement. (Eden Township Healthcare Dist. v. Eden Medical Center (2013) 220 Cal.App.4th 418, 429 [successful defense against claim that underlying contract is void entitled party to fees under Civil Code § 1717].)

2. Whether Uni-Glory May Recover Fees for Dismissed Claims, Fees Incurred in Connection with Cross-Defendants, and Fees Incurred in Connection with Other Dismissed Parties

Fairview East claims that Uni-Glory cannot recover fees incurred for representing Cross-Defendants, who were not signatories to the Agreement. (Opp., 12-13.) In its moving papers, reply brief, and supplemental brief, Uni-Glory argues that there was no additional discovery or motion practice involved in representing the Cross-Defendants and that there were common questions to be determined including whether Fairview East was fraudulently induced to enter into the Agreement, whether Uni-Glory and Cross-Defendants failed to perform under the Agreement, and whether Uni-Glory and Cross-Defendants were unlicensed contractors. The Court agrees that these overlapping issues make it impracticable to require apportionment between Uni-Glory and the Cross-Defendants.

Fairview East also contends that Uni-Glory should not be able to recover $4,561.23 incurred with its motion for leave to amend because the motion sought to add claims for implied contractual indemnity and declaratory relief, which Uni-Glory subsequently dismissed before trial. (Opp., p. 15.) The Court agrees with Fairview East. Under Civil Code section 1717(b)(2), a voluntary dismissal of a claim means that there is no “prevailing party” for purposes of Civil Code section 1717. Uni-Glory complains in its reply brief that Fairview East did not cite any legal authority for this but ignores that Fairview East cited to a subdivision of section 1717. Fairview East additionally argues that Uni-Glory cannot recover fees incurred in connection with Fairview East’s claims made against California Construction, Golden City, and DLAC, which total $18,182.55. (Opp., pp. 18-19.) These entities were also later dismissed from the action. Uni-Glory fails to address the entries identified on pages 18 and 19 or this argument about these dismissed cross-defendants in general. Nevertheless, the work performed in connection with California Construction, Golden City, DLAC, or the motion for leave to amend were not performed by Mr. Hsu, but by other timekeepers whose billing rates are not identified or explained.

In a prior tentative ruling, the Court concluded that it was unable to determine whether Uni-Glory’s counsel’s fees were reasonable and gave Uni-Glory an opportunity to provide supplemental evidence.

In the original round of briefing, Uni-Glory’s representative, George Zhang, authenticated 200 pages of invoices paid over these time periods to Lexint Law Group, APLC (“Lexint”) and Meylan Davitt Jain Arevian & Kim LLP (“Meylan Davitt”) totaling $796,672. For the time period of April 2017 to August 2023, Uni-Glory paid $190,123.25 to Lexint. (Motion, Zhang Decl., ¶ 2.) For the time period of March 2020 to August 2023, Uni-Glory paid $223,650 to Meylan Davitt. According to Troy H. Slome of Meylan Davitt, Robert Hsu of Lexint and he performed the vast majority of the work and they each have over 20 years of experience. (Slome Decl., ¶ 12.) Mr. Slome then declared that Mr. Hsu billed at a rate of $350 an hour while his own hourly rate was $300 (which was discounted from his typical rate of $350/hour). (Ibid.)

At the hearing on January 8, 2024, the Court noted that Uni-Glory’s invoices and conclusory declaration did not address Fairview East’s legitimate arguments that this action involved a multitude of claims and parties which were dismissed before trial. The Court demanded that Uni-Glory make some attempt at allocating time between claims, parties, or even litigation phases would be expected, especially in response to the specific objections to individual entries identified by Fairview East. (Opp., Ho Decl., ¶¶ 4-9.)

In its supplemental brief, Uni-Glory argues that its original declarations from Mr. Slome and Mr. Zhang detailing the total time expended were sufficient. (Supp. Brief, p. 5.) Uni-Glory summarizes the amount of time spent by its attorneys and paralegals within its brief and states that Mr. Hsu spent 96.1 hours working on this matter from April 2017 to February 2020 before Meylan Davitt joined as co-counsel and his tasks included “drafting and finalizing pleadings, drafting or opposing motions, attending hearings, reviewing, preparing, and participating in discovery requests, attending depositions, attend inspection of property, attend mediation, communicating and meeting with clients, and researching issues.” (Ibid.) For the approximately-3-year period of March 2020 to July 30, 2023, after Meylan Davitt associated into the case and before trial, Mr. Hsu spent 218.5 hours “reviewing pleadings and law and motion, researching issues in motions, drafting oppositions to motions, drafting pleadings, attending hearings, meeting with clients, review and participate in discovery requests, attend depositions, drafting correspondence to clients, attending multiple FSC and related hearings, preparing trial documents, and attending meetings with clients to prepare for trial.” (Ibid.) Lastly, from July 31, 2023 to September 2023, which is the period during and after trial, Mr. Hsu spent 97 hours “providing legal advice and input on trial strategy and witness questioning and evidence to be presented during three week trial, conducting research and input on legal and factual issues raised at trial, providing input on briefs filed with Court at trial, providing input on post-trial motions and oppositions, attending the trial, meeting with client during trial to discuss trial testimony and evidence.” (Ibid.)

With respect to fees incurred for Meylan Davitt’s work, Mr. Slome represented to the Court at the hearing on January 8, 2024, that he was the only attorney who worked on the case and already billed Uni-Glory at a discounted rate of $300 an hour instead of his typical $350. The total amount paid for Mr. Slome’s services, $223,650, divided by Mr. Slome’s hourly rate of $300 means that Uni-Glory is claiming he spent 745.5 hours on this case from March 2020 to September 2023, for an average of approximately 213 hours per year over 3.5 years. This amount, upon reflection of the difficulties in litigating this case, appears to be reasonable because this case was factually complicated, lasted over six years and was heavily litigated throughout, ultimately culminating in an 11-day jury trial with an unambiguous victory for Uni-Glory. The Court notes in particular that the parties engaged in heavy motion practice, which included 25 motions, as well as 15 motions in limine.

As for paralegal work, Uni-Glory contends that paralegals performed 24.5 hours of work before Meylan Davitt joined, 27.1 hours of work after Meylan Davitt joined and before trial, and 1.6 hours during and before trial. (Id.) Uni-Glory also identifies work by two other attorneys, Spencer Wong and Byron Chung. However, Uni-Glory did not identify (or justify) the billing rates for these individuals. Therefore, it cannot determine whether or not the amount requested for their work is reasonable and the request to recover their fees is denied.

Based on the foregoing, the Court concludes that a reasonable attorneys’ fee award consists of $223,650 for work provided by Meylan Davitt and Mr. Slome and $144,060 for services provided by Mr. Hsu at Lexint, for a total of $367,710.

The motion to strike or tax costs is GRANTED in part and $80,933.85 is taxed from Uni-Glory and Cross-Defendant’s cost bill.

The motion for fees is GRANTED in part and Uni-Glory may recover $367,710 in attorneys’ fees.

William A. Crowfoot

Judge of the Superior Court

Parties who intend to submit on this tentative must send an email to the Court at ALHDEPT3@lacourt.org indicating intention to submit on the tentative as directed by the instructions provided on the court website at www.lacourt.org. Please be advised that if you submit on the tentative and elect not to appear at the hearing, the opposing party may nevertheless appear at the hearing and argue the matter. Unless you receive a submission from all other parties in the matter, you should assume that others might appear at the hearing to argue. If the Court does not receive emails from the parties indicating submission on this tentative ruling and there are no appearances at the hearing, the Court may, at its discretion, adopt the tentative as the final order or place the motion off calendar.