Case Number: BC609405 Hearing Date: March 23, 2018 Dept: 46

Case Number: BC609405
SECOND GENERATION INC VS KODY BRANCH OF CALIFORNIA INC ET AL

Filing Date: 02/05/2016
Case Type: Contract – Tortious Interference

03/23/2018
#1: Motion for an Order Awarding Prejudgment Interest

#2: Motion for Award of Attorney’s Fees

TENTATIVE RULING

Motion #1 is GRANTED. Plaintiff’s Request for Judicial Notice is GRANTED. Plaintiff Second Generation, Inc. is awarded prejudgment interest in the amount of $615,946.88 pursuant to Civil Code §3287.

Motion #2 is GRANTED. Plaintiff’s Request for Judicial Notice is GRANTED. Plaintiff Second Generation, Inc. is awarded attorney’s fees in the amount of $752,383.78 pursuant to CCP §§1032 & 1033.5 and Civ. Code §1717.

DISCUSSION

Civil Code §3287 states as follows:

“(a) A person who is entitled to recover damages certain, or capable of being made certain by calculation, and the right to recover which is vested in the person upon a particular day, is entitled also to recover interest thereon from that day, except when the debtor is prevented by law, or by the act of the creditor from paying the debt. This section is applicable to recovery of damages and interest from any debtor, including the state or any county, city, city and county, municipal corporation, public district, public agency, or any political subdivision of the state.

(b) Every person who is entitled under any judgment to receive damages based upon a cause of action in contract where the claim was unliquidated, may also recover interest thereon from a date prior to the entry of judgment as the court may, in its discretion, fix, but in no event earlier than the date the action was filed…”

If there is no factual dispute with regard to the amount of damages, the certainty requirement is satisfied. “Damages are deemed certain or capable of being made certain within the provisions of subdivision (a) of section 3287 where there is essentially no dispute between the parties concerning the basis of computation of damages if any are recoverable but where their dispute centers on the issue of liability giving rise to damage.” Leff v. Gunter (1983) 33 C.3d 508, 519 (internal quotations and citations omitted).

“[T]he policy underlying the requirement for prejudgment interest where the damages are deemed “certain” or “capable of being made certain …” (Civ. Code, § 3287) is that in situations where the defendant could have timely paid that amount and has thus deprived the plaintiff of the economic benefit of those funds, the defendant should therefore compensate with appropriate interest.” Wisper Corp. v. California Commerce Bank (1996) 49 C.A.4th 948, 962. Therefore, “if, during any prejudgment period, a party has dominion and control over money that is awarded to it as damages, it is not entitled to prejudgment interest for that period.” Greg Opinski Const., Inc. v. City of Oakdale (2011) 199 C.A.4th 1107, 1119.

Defendants argue that that rule extends naturally to goods as well as money. Appealing as that contention is, it suffers from two fatal flaws. First, prejudgment interest is not paid on goods, because the value of goods is inherently uncertain. Second, Defendants are focusing on the wrong damages. The parties awarded damages for the non-conforming goods before the goods were ever shipped; that is the whole point of a liquidated damages clause. The damages awarded in this action are not the damages for the non-conforming goods, they are damages for Defendants failure to pay the agreed amount. If Defendants had paid the liquidated damages amount, there would be no breach of contract claim. Plaintiff was entitled to that amount from the beginning.

Defendants raise the question of what Plaintiff did with the non-conforming goods that it kept. However, the issue of what Plaintiff could or could not do with the goods is a separate issue. This is the point of liquidated damages clauses; there is no argument about mitigation or actual harm or market value or percentages or anything. Defendants owe Plaintiff the amount specified as liquidated damages by the agreement. What happened to the goods themselves is the subject of a separate claim.

For these reasons, Plaintiff’s motion is GRANTED.

MOTION #2—ATTORNEY’S FEES

CCP §1033.5 provides, in relevant part, as follows:

(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…

(c) Any award of costs shall be subject to the following:…

(5) … Attorney’s fees allowable as costs pursuant to subparagraph (A) or (C) of paragraph (10) of subdivision (a) shall be fixed either upon a noticed motion or upon entry of a default judgment, unless otherwise provided by stipulation of the parties.

Attorney’s fees awarded pursuant to Section 1717 of the Civil Code are allowable costs under Section 1032 of this code as authorized by subparagraph (A) of paragraph (10) of subdivision (a).

Civ. Code §1717 states, in relevant part, as follows:

“(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…

Reasonable attorney’s fees shall be fixed by the court, and shall be an element of the costs of suit…

(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…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…

(2) Where an action has been voluntarily dismissed or dismissed pursuant to a settlement of the case, there shall be no prevailing party for purposes of this section.”

The contract on which Plaintiff prevailed states “The prevailing party in any litigation related to this contract shall be entitled to its reasonable attorney’s fees and costs.” (Declaration of Michael P. Weisberg, Exhibit A).

Plaintiff is clearly the prevailing party here. Defendants’ initial argument is a mixture of two contentions: that the contract which awards fees isn’t really a contract, and that various Defendants were not party to the agreement. These arguments have already been decided adversely to Defendants: this court has already awarded judgment based on the contract, and as part of that ruling, the court found that Defendants were alter egos of one another. (RJN Exhibit D). Defendants’ attempt to re-argue the summary judgment at this point is improper.

Ds also argue that the total amount of fees sought is excessive. But it should be noted that the impetus for the expenditure of attorney time and litigation effort by Plaintiff largely came from the Defenses strategy and tactics. Plaintiff had to slog through a marsh of motions to arrive at its summary judgment date nearly two years after filing. This case has been marked by repeated motions to quash, intransigence in discovery, a motion to disqualify, late filings that delayed hearings, and finally a successful motion for sanctions under CCP § 128.5. If the request for fees is large, the fault lies mostly with the Defense.

Standard for Attorney Fee Award

“To enable the trial court to determine whether attorney fees should be awarded and in what amount, an attorney should present “(1) evidence, documentary and oral, of the services actually performed; and (2) expert opinion, by [the applicant] and other lawyers, as to what would be a reasonable fee for such services.” (1 Witkin, Cal. Procedure (3d ed. 1985) § 165, p. 192; Hensley v. Eckerhart (1983) 461 U.S. 424, 433, 437 [76 L.Ed.2d 40, 50, 53, 103 S.Ct. 1933]; see Los Angeles v. Los Angeles-Inyo Farms Co. (1933) 134 Cal.App. 268, 274 [25 P.2d 224].) “In many cases the trial court will be aware of the nature and extent of the attorney’s services from its observation of the trial proceedings and the pretrial and discovery proceedings reflected in the file.” (In re Marriage of Cueva, supra., 86 Cal.App.3d at p. 301 – fn. omitted.) However, in the absence of such crucial information as the number of hours worked, billing rates, types of issues dealt with and appearances made on the client’s behalf, the trial court is placed in the position of simply guessing at the actual value of the attorney’s services. That practice is unacceptable and cannot be the basis for an award of fees.” Martino v. Denevi (1986) 182 C.A.3d 553, 558-559.

“In determining the amount of reasonable attorney fees to be awarded under a statutory attorney fees provision, the trial court begins by calculating the ‘lodestar’ amount…[t]he ‘lodestar’ is ‘the number of hours reasonably expended multiplied by the reasonable hourly rate.’ (Citation.) To determine the reasonable hourly rate, the court looks to the ‘hourly rate prevailing in the community for similar work.’ (Citation.) Using the lodestar as the basis for the attorney fee award ‘anchors the trial court’s analysis to an objective determination of the value of an attorney’s services, ensuring that the amount awarded is not arbitrary. (Citation.)’” Bernardi v. County of Monterey (2008) 167 C.A.4th 1379, 1393-1394.

“Some federal courts require that an attorney maintain and submit ‘contemporaneous, complete and standardized time records which accurately reflect the work done by each attorney’ in support of an application for attorney fees…[i]n California, an attorney need not submit contemporaneous time records in order to recover attorney fees…[t]estimony of an attorney as to the number of hours worked on a particular case is sufficient evidence to support an award of attorney fees, even in the absence of detailed time records.” Martino v. Denevi (1986) 182 Cal.App.3d 553, 559. “[A]n award of attorney fees may be based on counsel’s declarations, without production of detailed time records.” Raining Data Corp., 175 Cal.App.4th at 1375. “‘“[P]adding’ in the form of inefficient or duplicative efforts is not subject to compensation.’” Premier Medical Management Systems, Inc. v. California Insurance Guarantee Association (2008) 163 C.A.4th 550, 556.

“[T]he lodestar is the basic fee for comparable legal services in the community; it may be adjusted by the court based on factors including, as relevant herein, (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, (4) the contingent nature of the fee award. (Serrano III, supra, 20 Cal.3d at p. 49, 141 Cal.Rptr. 315, 569 P.2d 1303.) The purpose of such adjustment is to fix a fee at the fair market value for the particular action. In effect, the court determines, retrospectively, whether the litigation involved a contingent risk or required extraordinary legal skill justifying augmentation of the unadorned lodestar in order to approximate the fair market rate for such services. The “ ‘experienced trial judge is the best judge of the value of professional services rendered in his court, and while his judgment is of course subject to review, it will not be disturbed unless the appellate court is convinced that it is clearly wrong.’ ” (Ibid.)” Ketchum v. Moses (2001) 24 C.4th 1122, 1132.

“[T]he contingent and deferred nature of the fee award in a civil rights or other case with statutory attorney fees requires that the fee be adjusted in some manner to reflect the fact that the fair market value of legal services provided on that basis is greater than the equivalent noncontingent hourly rate. (Ketchum v. Moses, supra, 24 Cal.4th at pp. 1132–1133, 104 Cal.Rptr.2d 377, 17 P.3d 735.) “ ‘A lawyer who both bears the risk of not being paid and provides legal services is not receiving the fair market value of his work if he is paid only for the second of these functions. If he is paid no more, competent counsel will be reluctant to accept fee award cases.’ ” (Id. at p. 1133, 104 Cal.Rptr.2d 377, 17 P.3d 735, quoting with approval from Leubsdorf, The Contingency Factor in Attorney Fee Awards (1981) 90 Yale L.J. 473, 480.) The contingency adjustment may be made at the lodestar phase of the court’s calculation or by applying a multiplier to the noncontingency lodestar calculation (but not both). (Ketchum v. Moses, supra, 24 Cal.4th at pp. 1133–1134, 104 Cal.Rptr.2d 377, 17 P.3d 735.)” Horsford v. Board of Trustees of California State University (2005) 132 C.A.4th 359, 394-395.

Plaintiff provides detailed billing records showing the following hours expended and hourly rates: 1,796.2 hours divided between Ritholz Levy Fields LLP [effective rate of $441.46/hour for 1090.5 hours]; Jenner & Block LLP [effective rate of $681.18/hour for 178.1 hours]; Stubbs Alderton & Markiles, LLP [effective rate of $465.16/hour for 55.2 hours]; and Venable LLP [effective rate of $357/hour for 472.4 hours]. (Declarations of David H. Boren, Daniel A. Rozansky, and Alex M. Weingarten).

Lodestar Calculation

Total Hours Properly Billed

Defendants’ objections can be summarized as a disagreement with Plaintiff’s various counsel on how much time and effort was necessary to the case.

While the Defendants contend that the Plaintiff could have been more efficient, it appears that the hours spent were reasonable and reasonably necessary to the successful outcome.

Defendants’ attack on what appears to be an error in calculating the rate for Alex Weingarten is not precisely germane; whatever the rate billed, “the experienced trial judge is the best judge of the value of professional services rendered in the trial court.” Espejo v. Copley Press, Inc. (2017) 13 C.A.5th 329, 383. The rate calculation will be discussed below, but the error is not a reason to totally eliminate counsel’s billing estimates.

For the foregoing reasons, the total hours billed by Plaintiff’s counsel are not reduced.

Hourly Rate

This court is empowered to award fees based on a firm-wide effective rate which averages the rates charged by the various attorneys and weights them based on the amount of time expended. See Id. This is the kind of rate calculation with which counsel have presented the court, and it seems particularly appropriate given the wide variety of counsel who have appeared in this case.

The effective rates of $441.46/hour for Ritholz Levy Fields LLP and $357/hour for Venable LLP are reasonable. However, the rates for Jenner & Block and Stubbs Alderton & Markiles, LLP are reduced to $440/hour, commensurate with that of lead counsel, Ritholz Levy Fields.

The lodestar figure calculated using the above-determined hours and hourly rate is $752,383.78.

Costs

Plaintiff includes costs in its motion, and represents that a memorandum of costs has been filed. But no such memorandum appears in the court file. The court declines to rule on a request for costs until a memorandum of costs appears. Defendants may be entitled to file a motion to tax costs.

Conclusion

P’s motion for attorney’s fees is GRANTED. Fees are awarded in the amount of $752,383.78. Costs are not awarded until a memorandum of costs appears in the file, and the time for a motion to tax costs has run.

IT IS SO ORDERED:

___________________________
Frederick C. Shaller, Judge