Case Number: EC065598 Hearing Date: February 14, 2020 Dept: NCD

TENTATIVE RULING

Calendar: 11

Date: 2/14/20

Case No: EC 065598

Case Name: Hilton, et al. v. Malek, et al.

MOTION FOR ATTORNEY’S FEES

MOTION FOR EXPENSES OF PROOF

Moving Party: Plaintiff Constance Hilton, individually and as Trustee

Responding Party: Defendant Maria Malek (No Opposition)

RELIEF REQUESTED:

Order awarding plaintiff prevailing party attorney’s fees and costs in the amount of $169,509.

Order that defendant Maria Malek pay to plaintiff the sum of $119,932, as expenses incurred in proving the truth of facts denied by Malek in her responses to requests for admissions.

SUMMARY OF FACTS:

Plaintiff Constance Hilton alleges that in early 2014 she was introduced to defendant Maria Malek, whose son was dating plaintiff’s granddaughter, who was then a minor, had recently experienced traumatic events, and had moved into defendant Malek’s home.

Plaintiff was at the time suffering health problems, and Malek started helping plaintiff with her daily needs and financial affairs, and regularly asked plaintiff for cash, which plaintiff gave to Malek.

The complaint alleges that at the time plaintiff’s trust owned two adjoining real properties in Glendale, and that defendant Malek, along with defendant Arthur Bernal, advised that they had a buyer for one of the properties, but plaintiff was not interested in selling. Plaintiff alleges that afterward, Malek presented blank papers for plaintiff to sign, representing they were for plaintiff’s granddaughter to go to college. Plaintiff signed the papers, and later learned the properties had been sold, and the blank documents she had signed were sales and escrow documents. Plaintiff alleges that she received no proceeds from the sales of either property, as the proceeds were transferred to Malek’s companies, defendants Allegria Estates, LLC, Supercar Engineering, and Healthcare Management, LLC. Pursuant to a settlement agreement with the buyers of the properties, funds recovered by escrow in the total amount of $393,478.09 were released to plaintiff. Plaintiff alleges that there remains a combined total of approximately $252,551.40 from the sales proceeds which was wired-transferred to Malek’s companies which has not been recovered.

The matter went to jury trial on August 20, 2019. The answers of defendants Allegria Estates, LLC and Healthcare Management LLC were stricken, and those defendants deemed in default. Defendant First Care Medical Group was noted to have been in default.

The matter proceeded as against defendants Malek and Supercar Engineering and was bifurcated, for punitive damages. On September 5, 2019, the jury returned its special verdict. On September 9, 2019, additional testimony was given regarding punitive damages, and the jury returned its further verdict to the court. The jury found in favor of plaintiffs and against defendant Maria Malek on a cause of action for breach of contract in the sum of $5,000 and on a cause of action for conversion in the amount of $242,000, and punitive damages in the amount of $125,000. The jury did not find defendant Malek liable under the fraud or financial elder abuse causes of action. On September 27, 2019, judgment was entered in conformity with the jury’s verdict, with the court determining prejudgment interest to be added in the sum of $137,507.88, for a total judgment of $509,507.88. No damages were awarded against Supercar Engineering, LLC.

ANALYSIS:

Motion for Attorney’s Fees

Plaintiffs Constance Hilton, individually and as Trustee of her revocable trust, argues that they are entitled to attorney’s fees on this contract action because the promissory note between the parties provides for reasonable attorney’s fees to be paid incurred in the enforcement of the note.

In general, under CCP § 1021:

“Except as attorney’s fees are specifically provided for by statute, the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties…”

Under CCP section 1032(b), “a prevailing party is entitled as a matter of right to recover costs in any action or proceeding.” Section 1033.5 (a) provides that an allowable cost under §1032 includes:

“(10) Attorney’s fees, when authorized by any of the following:

(A) Contract.”

Where there is an agreement for attorney’s fees, Civil Code 1717 provides:

“(a) In an 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.”

CCP § 1032 defines “prevailing party”:

“(4) “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. If any party recovers other than monetary relief and in situations other than as specified, the “prevailing party’ shall be as determined by the court, and under those circumstances, the court, in its discretion, may allow costs or not and, if allowed, may apportion costs between the parties on the same or adverse sides…”

Here, since plaintiffs are the parties with the net monetary recovery here, they are the prevailing parties in this action as to Malek.

The Promissory Note between the parties for the $5,000 loan provides:

“If an action is instituted on this note, the undersigned promise to pay reasonable attorney fees incurred in the enforcement of this note.”

[Phillips Decl., Ex. 1].

It accordingly is established that plaintiff Constance Hilton, as an individual who entered into the Promissory Note is entitled to reasonable attorney fees incurred in the enforcement of the note.

Court’s Determination of Reasonableness of Fees

The California Supreme Court in PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084 established the standard for evaluating the appropriate amount of attorney’s fees to be awarded:

“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.” (Margolin v. Regional Planning Com. (1982) 134 Cal.App.3d 999, 1004-1005 [185 Cal.Rptr. 145].) The reasonable hourly rate is that prevailing in the community for similar work. (Id. at p. 1004; Shaffer v. Superior Court (1995) 33 Cal.App.4th 993, 1002 [39 Cal.Rptr.2d 506].) 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. (Serrano v. Priest, supra, 20 Cal.3d at p. 49.) 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. (Id. at p. 48, fn. 23.)

Thus, applying the lodestar approach to the determination of an award under Civil Code section 1717, the Court of Appeal in Sternwest Corp. v. Ash (1986) 183 Cal.App.3d 74, 77 [227 Cal.Rptr. 804] explained: “Section 1717 provides for the payment of a ‘reasonable’ fee. After the trial court has *1096 performed the calculations [of the lodestar], it shall consider whether the total award so calculated under all of the circumstances of the case is more than a reasonable amount and, if so, shall reduce the section 1717 award so that it is a reasonable figure.”

“It is well established that the determination of what constitutes reasonable attorney fees is committed to the discretion of the trial court …. [Citations.] The value of legal services performed in a case is a matter in which the trial court has its own expertise. [Citation.] The trial court may make its own determination of the value of the services contrary to, or without the necessity for, expert testimony. [Citations.] The trial court makes its determination after consideration of a number of factors, including the nature of the litigation, its difficulty, the amount involved, the skill required in its handling, the skill employed, the attention given, the success or failure, and other circumstances in the case.” (Melnyk v. Robledo (1976) 64 Cal.App.3d 618, 623-624 [134 Cal.Rptr. 602].)

PLCM, at 1095-1096. (Bold print added).

The Court also held that the standard of review with respect to this determination is abuse of discretion:

““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”– meaning that it abused its discretion.”

PLCM at 1094, quoting Serrano v. Priest (1977) 20 Cal.3d 25, 49.

The problem with this motion is that it seeks all attorney’s fees incurred in litigating this matter, not just those incurred in connection with enforcement of the note. The motion argues briefly that the money Malek owed Hilton pursuant to the contract was intertwined with the two real estate transactions at the center of the lawsuit because Malek claimed that she repaid the $5,000 loan to Hilton by decreasing the commission she was owed from one of the real estate transactions by $5,000.

This is not particularly persuasive, as the conversion cause of action with respect to the real properties appears distinct and severable from the pursuit of enforcement of the $5,000 note, and the judgment on the special verdict of the jury in this matter states, “Past attorney’s fees and costs. Enter the amount below if you find that Maria Malek is liable to Mrs. Hilton for financial elder abuse, fraud, conversion, or breach of contract. $ 0 ” [Ex. 4, Judgment on Special Verdicts, Question #9, 5 (p.10:4-6)].

Moreover, the expenses with respect to the punitive damage phase would not be recoverable, as Civil Code § 3294 authorizes recovery of punitive damages only “in an action for breach of an obligation not arising from contract…”

In general, where an action involves other causes of action beyond the contract, the prevailing party may recover attorney’s fees under § 1717 only as they relate to the contract action. Reynolds Metal Co. v. Alperson (1979) 25 Cal.3d 124, 129-130. Reynolds also held, however, the plaintiff’s joinder of causes of action should not dilute its right to attorney’s fees, and that 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.” Reynolds, at 130. It appears that the trial court may apportion fees among the contractual and non-contractual claims, as long as it sufficiently substantiates its order to reduce a fee award. See Hadley v. Krepel (1985) 167 Cal.App.3d 677, 690 (finding record before the court of appeal devoid of indication that the trial court had apportioned between contractual and noncontractual claims in reducing award).

The moving papers fail to sufficiently establish here that the promissory note claim, and tort claims for conversion and fraud involved common issues, other than the issue of whether a real estate commission was owed on one of the real estate transactions, which appears to have been a minor issue which likely did not take much time. Again, no fees for pursuing punitive damages should be awarded, so these trial expenses should be deducted.

The billing records also include various fees incurred in connection with pursuing other defendants who were not parties to the promissory note, which fees should also not be allocated against Malek on the contract claim.

The total sought also appears to include $25,311.44 in expenses, which should have been sought in a memorandum of costs, and, in fact, it appears that a cost memorandum seeking $14,371.39 in costs has been filed and not objected to. The court cannot determine whether there is duplication between these expense requests, and no expenses are awarded here in addition to the fees sought.

This leaves:

Fees sought (not including expenses) $144,197.75

LESS Punitive damages work = $9,832.50

LESS Matters directed to other defendants = $5,920.00

Subtotal= $128,445.23

The remainder involved the pursuit of five causes of action against defendant Malek, for breach of contract, fraud—intentional misrepresentation, fraud—concealment, conversion, and financial elder abuse. The court awards one-fifth of the remaining sum.

One fifth of the above subtotal would be $25,689.05, which the court finds to be a reasonable award.

Motion for Order to Pay Expenses of Proof

Plaintiffs seek by this motion an order that defendant Maria Malek pay the sums incurred by plaintiffs in proving the truth of facts denied by Malek in her responses to requests for admissions.

Relief is sought under CCP § 2033.420, which provides:

“(a) If a party fails to admit the genuineness of any document or the truth of any matter when requested to do so under this chapter, and if the party requesting that admission thereafter proves the genuineness of that document or the truth of that matter, the party requesting the admission may move the court for an order requiring the party to whom the request was directed to pay the reasonable expenses incurred in making that proof, including reasonable attorney’s fees.

(b) The court shall make this order unless it finds any of the following:

(1) An objection to the request was sustained or a response to it was waived under Section 2033.290.

(2) The admission sought was of no substantial importance.

(3) The party failing to make the admission had reasonable ground to believe that that party would prevail on the matter.

(4) There was other good reason for the failure to admit.

The requests for admissions at issue include requests that Malek admit that documents she gave to Hilton in February 2014 included escrow instructions to wire transfer sales proceeds from one of the subject properties, that Malek breached a contract with plaintiff, that Malek converted monies belonging to Hilton, that Hilton did not receive repairs and upgrades from Supercar Engineering, as referenced in an invoice, that Hilton did not receive remodeling or construction from Supercar as reflected in another invoice, that Hilton was the trustee of the trust which owned the subject properties, and that Malek was the managing member of Healthcare Management, LLC.

The moving papers appear to sufficiently establish that six of these eight matters were established at trial, but admit that Requests Nos. 74 and 75 were not required to be so proven, as “There was no question of ownership at trial…” [Phillips Decl. ¶ 10 (f) and (g)].

There is no opposition to the motion, so defendant has not shown that the six other admissions were of no substantial importance, that defendant had reasonable ground to believe she would prevail, or that there was other good reason for failure to admit.

However, the problem with the motion remains that plaintiffs evidently seek to recover for every minute of time spent on this litigation after the responses to the requests for admissions were served in July of 2018. [See Ex. 7].

This is problematic, as only the time spent to prove the matters denied is recoverable, not time spent generally or in proving other matters at trial. See Garcia v. Hyster Co. (1994) 28 Cal.App.4th 724, 737.

There is no showing here of exactly what amount of time was spent proving each of the facts which had to be proven, and no way for the court to divine from the billings what amount of time this might have been.

This matter is discussed by Weil & Brown in Civil Procedure Before Trial:

“As with any other motion, the moving party must set forth specific facts supporting the amount of costs and expenses sought…

1) An accounting is required (e.g., by declarations from moving party’s counsel) setting forth the hourly fees and time spent to ‘prove’ the specific matters denied, as opposed to time spent in preparation for trial generally or in proving other matters at trial of the case. [Garcia v. Hyster Co. (1994) 28 Cal.App.4th 724, 737—conclusory statements by counsel not sufficient].”

Civ. Proc. Before Trial, 8:1413.1, 8:1413a, italics in original.

Accordingly, Weil & Brown advise practitioners:

“Carefully track your time and costs associated with proving matters on an issue-by-issue (RFA-by-RFA) basis to facilitate granting of your motion for compensation.”

Civ. Proc. Before Trial, 8:1413.1b, italics in original.

The request for attorney’s fees based on the requests for admissions is denied.

RULING:

[No opposition].

Motion for Attorney’s Fees and Costs in the Amount of $169,509 is GRANTED in part. The court finds that plaintiff Constance Hilton was a prevailing party in the action, and that the action arose in part from a written promissory note between the parties which provides that each party agreed to pay reasonable attorney fees incurred in the enforcement of the note. The court has determined that the fees sought are for the litigation of the entire matter, not just for fees incurred in the enforcement of the note. The court also finds that the expenses sought appear to overlap with the memorandum of costs, and expenses will not also be awarded on this motion. The lodestar for the attorney’s fees award is accordingly $144,197.75, as reflected in the attached billings. The court has reviewed the billing statements and finds that at least $9,832 in fees claimed were incurred in pursuing punitive damages, which are not recoverable fees on a breach of contract action. The court also finds that at least $5,920 in fees claimed were incurred in pursuit of defendants other than Malek. These calculations reduce the lodestar to $128,445.23. The court also finds that the remaining fees should be apportioned such that only one-fifth are allocated to the breach of promissory note cause of action against defendant Malek. The court accordingly awards reasonable attorney’s fees in the sum of $25,689.05, which are to be awarded to plaintiff Constance Hilton against defendant Maria Malek.

Motion for Order Requiring Defendant Maria Malek to Pay Expenses of Proof in the Amount of $119,932 is DENIED. Plaintiffs have failed to meet their burden of showing what fees and expenses were reasonably incurred in proving the truth of the matters at issue. The court cannot from the billings submitted determine what time was spent proving the matters denied, as opposed to litigating this matter in its entirety. See Garcia v. Hyster Co. (1994) 28 Cal.App.4th 724, 737. It also appears that the moving papers concede that plaintiffs were not required to prove at trial the matters denied in response to Request No. 74, and Request No. 75. [Phillips Decl. ¶ 10 (f) and (g)].