Case Number: EC061283    Hearing Date: August 01, 2014    Dept: NCB

Motion for Attorneys’ Fees

This is a partition action in which the Plaintiffs requested an adjudication that quiets title and declares the rights of the parties regarding the title to real property at 408 and 408 1/2 South Electric Avenue, Alhambra, CA. The dispute arose because Isabel Sierra died intestate and had four surviving children who each became an owner of a 25% interest in the property.
The case was resolved by stipulation on March 20, 2014 and the Court issued an interlocutory judgment that the property would be sold and the proceeds distributed in the following manner:

1) 25% to Mitchell Moore, as administrator of the Estate of Theodore Sierra;
2) 25% to Gloria Moore, Trustee of the Moore Family Trust;
3) 25% to Pauline Moore; and
4) 25% to Antonia Stauder.

The Court also appointed a referee, Harry Hull, who is a licensed real estate broker, to sell the property. The property was sold and the referee is holding $432,579.51 from the close of escrow that occurred on July 3, 2014 (see Referee’s Report filed on July 22, 2014 regarding pending motion for attorney’s fees). The final judgment will determine the amount distributed to each party.

This hearing concerns the Plaintiffs’ motion for an order awarding them attorney’s fees under CCP sections 874.010 and 874.020. These sections are part of the statutory scheme for partition actions that is enacted at CCP sections 872.010 to 874.240.
CCP section 874.010 states that the costs of partition include:

a) Reasonable attorney’s fees incurred or paid by a party for the common benefit.
b) The fee and expenses of the referee.
c) The compensation provided by contract for services of a surveyor or other person employed by the referee in the action.
d) The reasonable costs of a title report procured pursuant to Section 872.220 with interest thereon at the legal rate from the time of payment or, if paid before commencement of the action, from the time of commencement of the action.
e) Other disbursements or expenses determined by the court to
have been incurred or paid for the common benefit.

Section 874.020 states that the costs of partition include reasonable expenses, including attorney’s fees, necessarily incurred by a party for the common benefit in prosecuting or defending other actions or other proceedings for the protection, confirmation, or perfection of title, setting the boundaries, or making a survey of the property, with interest thereon at the legal rate from the time of making the expenditures.

The purpose of CCP section 874.010 is to divide the cost of the legal services among the parties benefited by the result of the proceeding. Stutz v. Davis (1981) 122 Cal. App. 3d 1, 4. CCP section 874.040 states that Court shall apportion the costs of partition among the parties in proportion to their interests or make such other apportionment as may be equitable.

The costs, including the attorney’s fees, awarded under CCP section 874.010 may be apportioned only when they were expended for the common benefit. Stutz, 122 Cal. App. 3d 1, 5 to 6. There must be evidence that the attorney’s fees were incurred for the common benefit. Id. This includes attorney’s fees incurred to determine the litigant’s interests in the property so that the proceeds may be distributed to the litigants.
The presence and litigation of controversial issues between all the parties does not preclude the allowance of attorney’s fees for services connected with such issues where such services are found to be for the common benefit of the parties. Regalado v. Regalado (1961) 198 Cal. App. 2d 549, 551.

In the pending case, the Plaintiffs’ attorney, Theodore Anderson, provided legal services to ascertain the interests of each party and to obtain a sale and distribution of the proceeds pursuant to each party’s interests. These legal services were for the common benefit of both the Plaintiffs and the Defendants because they were performed to resolve a dispute about the ownership interests in the property so that the property could be partitioned. Accordingly, there are grounds under CCP section 874.010 to authorize the Plaintiffs to recover the portion of attorney’s fees that Mr. Anderson charged to ascertain the interests of each party, obtain a sale, and distribute the proceeds.
For example, a review of the Plaintiffs’ Complaint in this action revealed that it was not solely a partition action. The fourth cause of action seeks damages for wrongful dispossession. The fifth cause of action sought an injunction to prevent interference with the Plaintiffs. The sixth cause of action sought damages for conversion. Since these causes of action seek damages and remedies solely for the Plaintiffs, they are not in the common interest of the Plaintiffs and the Defendant. Accordingly, the Plaintiffs cannot recover the attorney’s fees incurred on these issues.
The Plaintiff’s attorney, Theodore Anderson, did not apportion his legal services to identify the amount he incurred on legal services for the common interest of the parties. Further, the Plaintiffs’ attorney provided services under an agreement that would entitled him to a contingency fee. A copy of the retainer agreement is attached as exhibit 3 to the motion. This agreement provides that the Plaintiffs would pay attorney’s fees on the following basis:

1) if the property sold within 3 years of the date of the agreement, which was August 8, 2013, then the Plaintiffs would pay 17.5 percent of the gross sale price of the property;
2) if the property was sold after 3 years of August 8, 2013, then the contingency agreement would expire and the Plaintiffs would pay hourly rates for the legal services billed to them.

In the pending case, the referee is holding $432,579.51 from the sale of the property. Since this occurred within three years of August 8, 2013, Theodore Anderson is entitled to be paid under the contingency fee provision. Under the contingency fee provision, Mr. Anderson will receive attorney’s fees of $75,701.41 (17.5 percent of $432,579.51). Since this is a contingency fee, it is impossible to identify the attorney’s fees that were incurred for the common interest of the parties. But out of whose share?

In the alternative, the Court may identify the reasonable amount of attorney’s fees that were incurred on issues of the common interest. In this litigation, the issues of the common interest concerned a determination of the interests of each party, the sale of the property, and the distribution of the proceeds pursuant to each party’s interests. There was no actual dispute regarding the interests of each party because their interests arise from the 25% interest that each received after the death of Isabel Sierra.
The only meaningful dispute was the manner by which the property would be sold. The parties resolved this through a stipulation to enter an interlocutory judgment that identified each party’s interest and stated that a referee would be appointed to manage the sale of the property.
Further, a review of the Court file reveals that there have been six hearings in this case:

1) a motion for a preference and a case management conference on January 29, 2014;
2) an ex parte application on March 18, 2014;
3) a final status conference on March 20, 2014;
4) an ex parte application on April 2, 2014;
5) a status conference regarding the referee’s report on May 29, 2014; and
6) a hearing on the referee’s petition to confirm the sale of the property on June 20, 2014.

Additional information provided by Theodore Anderson provided the legal billing he has kept in this case. Copies of the billing records are attached as exhibit E. The total amount of this billing is $58,356.75.
It is possible for Mr. Anderson to review his bills and identify the amounts for legal services he performed on issues in the common interest. An example of an unnecessary fee would be the 5 hours spent on reviewing his own billing records (see exhibit E, page 1, May 23, 2014 entry). It is not in the common interest of the parties to this partition action for Mr. Anderson to spend 5 hours reviewing his own billing records and the amount of these legal fees should not be included as a cost of partition.
This would require Mr. Anderson to submit a supplemental declaration in which he provides facts regarding the amount of billing spent on issues for the common interest of the parties. However, the Plaintiffs argue in the reply it is impossible to apportion the fees because the claims are so interrelated. The Court rejects this argument. The issues pertaining solely to the Plaintiff and those that are common to all parties can be clearly delineated.

Alternatively, the Court can determine the reasonable amount of time to spend on issues of the common interest. The Court finds that a total of 50 hours is more than should be necessary to prepare the case on the common issues, ascertain each party’s interests, and resolve the dispute regarding the sale of the property. A reasonable amount to bill for business litigation is $450 per hour. This would result in attorney’s fees of $22,500 on issues of the common interest. Under the code, this amount would be apportioned 25% to each of the parties or $5625 each.

Accordingly, at the hearing, the Court will determine whether it is preferable to set the reasonable amount of attorney’s fees spent on issues of the common interest or to continue the hearing so that Mr. Anderson may submit a supplemental declaration.

Further, the costs of partition do not involve solely the attorney’s fees incurred by the Plaintiffs. The Defendant filed opposition papers in which she noted that she also hired an attorney, Mark O’Brien, and that her attorney provided legal services to resolve the disputes regarding the partition of the property. Under CCP section 872.010 and 872.020, the Defendant may recover legal fees as costs if they were incurred for the common interest of the parties.
The Defendant’s attorney, Mr. O’Brien, offered a copy of his billing and a declaration to demonstrate that he charged a total of $5,963 for his legal services to resolve the dispute by ascertaining the interests of each party, obtain a sale, and distribute the proceeds. It is worth noting that Mr. O’Brien charged a substantially lower amount than the fees charged by the Plaintiffs’ attorney, i.e., Mr. O’Brien’s fees are 10% of the amount charged by the Plaintiffs’ attorney.
A review of Mr. O’Brien’s billing reveals that he billed for services to review the pleadings, correspond with opposing counsel, complete discovery, communication with the client, and resolve the disputes needed for the partition of the property in this case. Since these legal fees were incurred in the common interest of resolving this partition action, Mr. O’Brien’s fees are also costs of the partition under CCP section 872.010. Accordingly, Mr. O’Brien’s fees of $5,963 are added to the amount of the attorneys’ fees incurred by the Plaintiffs on issues of the common interest of the parties.

Finally, the Plaintiffs requested that the Court apportion a greater share of the costs of partition to the Defendant. The Plaintiffs suggest that the Court should increase the Defendant’s share from 25% up to 60%.
As noted above, CCP section 874.040 states that the Court shall apportion the costs of partition among the parties in proportion to their interests or make such other apportionment as may be equitable. In the pending case, each party has a 25% interest. The Plaintiffs argue that it is equitable to make a different apportion of the costs of the partition arising from attorney’s fees because this action arose due to the refusal of the Defendant to agree to sell the property. A review of the declarations for Plaintiff, Mitchell Moore, and Theodore Anderson reveals that this action arose when Isabel Sierra died intestate and a 25% interest was assigned to her four surviving heirs under Probate Code section 6402.5. The Defendant, Antonia Stauder, resided on the property and refused to cooperate with the sale of the real property, e.g., she removed a “For Sale” sign and announced that she would remain on the property until her death.
This indicates that this litigation arose as a result of Antonia Stauder’s refusal to cooperate with the partition and sale of the property after the death of Isabel Sierra. Since Antonia Stauder had a 25% interest in the property, she had no legal basis for refusing to cooperate with the partition and sale of the property. This indicates that there are equitable grounds to apportion the costs of partition so that Antonia Stauder bears a greater share of the attorney’s fees that she caused the parties to incur through her refusal to cooperate with the partition and sale of the property. If the Plaintiffs had incurred a reasonable amount of attorney’s fees to resolve this dispute, it would be equitable to adjust the share of costs that the Defendant should bear.
However, as noted above, the Plaintiffs’ attorney, Theodore Anderson, charged a substantially higher amount of attorney’s fees than the Defendant’s counsel, i.e., the Plaintiffs agreed to pay $75,701.41 under the contingency fee agreement to their counsel. Further, if the Court considers the legal bills submitted by Mr. Anderson, then his charges are $58,356.75 as opposed to Mr. O’Brien’s bills of $5,963. It is not equitable to require Antonia Stauder to bear a greater share of the costs of the partition when these costs include an unreasonable amount of attorney’s fees charged by opposing counsel or the fees did not concern issues involving the common interests of the parties.
Finally, there is no evidence that the Defendant engaged in fraud or deceit. Instead, this case appears to be the result of the Defendant’s reluctance to partition and sell the property where she was residing. There is little equity in ordering the Defendant to pay a greater share of the substantial attorney’s fees that the Plaintiffs incurred to resolve this partition action.
Accordingly, the Court declines to apportion a greater share of the costs of the partition to the Defendant.

Therefore, the Court will determine at the hearing whether it is preferable to:

1) identify a reasonable total amount of attorney’s fees to charge to resolve the issues of common interest to the parties in this action, e.g., $13,500 total from which 25%, or $3,375 would be apportioned to the Defendant as the costs of partition; or
2) continue the hearing and order the Plaintiffs’ attorney to submit a supplemental declaration that identifies the amounts that he charged solely for work that involved the common interests of the parties.

Further, the Court declines to apportion a greater share of the costs of the partition to the Defendant.

If the Court sets the total amount of reasonable attorney’s fees to charge to resolve the issues of common interest to the parties in this partition action, then the Court can resolve this motion by ordering that the Plaintiffs may recover 25% of the amount as costs from each of the Defendant heirs.