Case Number: BC596975 Hearing Date: November 21, 2018 Dept: 51

MOVING PARTY:Defendants Peyman Khazari and Farnaz Kharazi

OPPOSITION:Plaintiffs Farr Ajir, M.D.; Terry Ajir; and Ariana Rajaee

REPLY:None

Background:

Trial in this matter was held on May 30, 2018. On August 6, 2018, Defendants Peyman Khazari and Farnaz Kharazi (“Defendants Kharazis”) filed a motion for attorney fees as the prevailing party. In Opposition, Plaintiffs Farr Ajir, M.D.; Terry Ajir; and Ariana Rajaee (“Plaintiffs Ajirs”) dispute that Defendants are the prevailing party, and dispute the reasonableness of Defendants’ attorney fee request.

This matter was continued from October 23, 2018 to November 21, 2018 so that Defendants could attach the contract pursuant to which Defendants argue that they are owed reasonable attorney fees as the prevailing party.

The Court considered the moving and opposing papers and rules as follows.

Standard:

A prevailing party in an action on a contract may seek an award of attorneys’ fees pursuant to either Civil Code § 1717 or CCP § 1032. ¿

Civil Code § 1717(a) specifically provides for an award of attorney’s fees on a contract, stating:

“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.”

(Civ. Code § 1717, subd. (a).)

Civil Code section 1717(b)(1) provides the following rule for determining which party, if any, is the “prevailing party”:

“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.

(Civ. Code, § 1717, subd. (b)(1).)

Alternatively, CCP § 1032(a)(4) allows a prevailing party to recover its costs. Pursuant to CCP § 1033.5(a)(10)(A), attorneys’ fees, when authorized by contract, are allowable as costs under CCP § 1032 and may be awarded upon a noticed motion.

Specifically, Code of Civil Procedure section 1032(b) states that “[e]xcept as otherwise expressly provided by statute, a prevailing party is entitled as a matter of right to recover costs in any action or proceeding.”

Code of Civil Procedure section 1032(a)(4) defines “prevailing party” as follows:

“‘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”

(Code Civ. Proc., § 1032, subd. (a)(4).)

The party claiming attorneys’ fees must establish entitlement to such fees as well as the reasonableness of the fees claimed. Civic Western Corporation v. Zila Industries, Inc. (1977) 66 Cal.App.3d 1, 16. “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[.]” CCP § 1021.

“It is well established that the determination of what constitutes reasonable attorney fees is committed to the discretion of the trial court, whose decision cannot be reversed in the absence of an abuse of discretion.” Melnyk v. Robledo (1976) 64 Cal.App.3d 618, 623. In exercising its discretion, the court should consider a number of factors, including the nature of the litigation, its difficulty, the amount involved, the skill required in handling the matter, the attention given, the success or failure, and the resulting judgment. Ibid.

In determining the proper amount of fees to award, courts use the lodestar method. The lodestar figure is calculated by multiplying the total number of reasonable hours expended by the reasonable hourly rate. “Fundamental to its determination … [is] a careful compilation of the time spent and reasonable hourly compensation of each attorney … in the presentation of the case.” Serrano v. Priest (1977) 20 Cal.3d 25, 48 (Serrano III). A reasonable hourly rate must reflect the skill and experience of the attorney. Id. at 49. “Prevailing parties are compensated for hours reasonably spent on fee-related issues. A fee request that appears unreasonably inflated is a special circumstance permitting the trial court to reduce the award or deny one altogether.” Serrano v. Unruh (1982) 32 Cal.3d 621, 635 (Serrano IV); see also Weber v. Langholz (1995) 39 Cal.App.4th 1578, 1587 (“The trial court could make its own evaluation of the reasonable worth of the work done in light of the nature of the case, and of the credibility of counsel’s declaration unsubstantiated by time records and billing statements.”)

Reasonable attorney fees should be based on an objective standard of reasonableness, i.e., the market value of services rendered, not on some notion of cost incurred. PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1090. The value of legal services performed in a case is a matter in which the trial court has its own expertise. Id. at 1096. The trial court may make its own determination of the value of the services contrary to, or without the necessity for, expert testimony. Ibid. 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. Ibid.

Analysis

Defendants Kharazis (“Defendants”) move for attorneys’ fees under both Civil Code section 1717 and Code of Civil Procedure section 1032. Defendants argue that they are owed reasonable attorney fees as the prevailing party pursuant to a clause in a contract. (Mtn., p. 8.)

Defendants attach the contract awarding reasonable attorney fees to the prevailing party. Specifically, Defendants attach the Residential Purchase Agreement, which at ¶ 21 provides that “in any action, proceeding, or arbitration between Buyer and Seller arising out of this Agreement, the prevailing Buyer or Seller shall be entitled to reasonable attorney fees and costs from the non-prevailing Buyer or Seller.” (Supplement, Montgomery Decl., ¶ 2, second exhibit, ¶ 21.)

As such, the next question is whether Defendants Kharazis are the prevailing party.

Prevailing Party

Here, Plaintiffs sued two sets of Defendants, the Kharazis and brokers, for their failure to disclose the thinness of flooring in their newly purchased condominium. As a result, Plaintiffs incurred costs of nearly $11,000 to replace the flooring to solve the noise problem. (June 5, 2018 Verdict Following Court Trial.)

Court trial in this matter was held on May 30, 2018, in front of Judge Raphael. In a detailed written verdict following court trial, Judge Raphael found the Kharazis Defendants liable for the nearly $11,000 incurred by Plaintiffs to replace the floors, but held that Plaintiffs would not recover that amount because they had already received it from a $30,000 settlement with other Defendants, the brokers. As such, Judge Raphael concluded that “neither party is obtaining relief in the judgments.” (June 5, 2018 Verdict Following Court Trial, p. 4.)

Judge Raphael awarded costs to Defendants Kharazis under CCP 1032 as the prevailing party since they were “defendant[s] where neither plaintiff nor defendant obtains any relief.” (Code Civ. Proc., § 1032, subd. (a)(4).) As to the question of prevailing party for purposes of attorneys’ fees, CCP 1032 directly addresses this situation as well. Specifically, CCP section 1032(a)(4) provides that the definition of “prevailing party” includes “a defendant where neither plaintiff nor defendant obtains any relief.” As that is the case here, Defendants Khazaris are the prevailing party under CCP § 1032.

Accordingly, Defendants are entitled to recover reasonable attorneys’ fees incurred as the prevailing party pursuant to CCP § 1032 and the Residential Purchase Agreement. The next question is whether Defendants’ attorneys’ fees request is reasonable.

Reasonableness of Attorneys’ Fees Request

Here, Defendants Kharazis request a total of $32,656.00 in attorneys’ fees. Defendant Peyman Kharazi declares that two attorneys worked on this matter – Louis Lipofsky (who requests $18,396.00) and Michael B. Montgomery (who requests $14,260.00). (Peyman Kharazi Decl., ¶¶ 3,4.) The Court addresses the reasonableness of each attorney’s fee request in turn.

Michael B. Montgomery

Defendants provide a “Itemized Time Spent” document which shows the hours expended on this matter by Montgomery. Upon review, the hours Montgomery spent on each task seem reasonable. In addition, Montgomery’s hourly rate of $350 is reasonable. As such, the request is reasonable as to Montgomery.

Louis Lipofsky

However, as to Lipofsky, the Court is unable to determine if the number of hours billed is reasonable because the evidence does not present time records in a way in which reasonableness can be determined. The Itemized Time Spent document merely lists a total fee amount for Lipofksy, for $18,396.00. While the Itemized chart references Exhibit A, upon review, the contents of Exhibit A fail to provide a comprehensive and itemized breakdown of the hours Lipofsky spent on this matter. Instead, Exhibit A only contains selective breakdowns and photocopies of checks with little to no description of the work they were for.

This presentation renders it difficult for the Court to assess the reasonableness of the hours billed by Lipofksy. Moreover, the Court admonishes Defendants that such aggregate, or “block-billing” is disfavored as it tends to inflate the time expended. (See Christian Research Institute v. Alnor (2008) 165 Cal.App.4th 1315, 1325 [Block billing, while not objectionable per se, can exacerbate the vagueness of counsel’s fee request and, thus, is a risky choice since the burden of proving entitlement to fees rests on the moving party.])

Accordingly, Defendant’s Motion for Attorneys’ Fees is CONTINUED so that itemized time records may be submitted as to Lipofsky.

Conclusion

Defendants’ Motion for Attorneys’ Fees is CONTINUED to January 4, 2019, so that itemized time records may be submitted as to Lipofsky.

Defendants to give notice.

Dated:

__________________________________________

Dennis Landin

Superior Court Judge