Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County No. MC011639, Victor E. Chavez, Judge.
Law Offices of F. Glenn Nichols and F. Glenn Nichols for Plaintiff and Appellant.
Stradling Yocca Carlson & Rauth and Douglas J. Evertz for Defendant and Appellant.
FLIER, J.
In M.A. Butters & Associates v. City of Lancaster, No. B171806, filed on August 12, 2005 [nonpub. opn.], we affirmed a judgment in favor of M.A. Butters & Associates (Butters) for $1,069,988 in contract damages. We disapproved a further award of $750,000 for the loss of future profits on the ground that, under the facts of this case, these damages were speculative. The trial court did not award any attorney fees on the ground that the contract entered into between Butters and the City of Lancaster (City) did not contain a provision for fees. We disagreed with this conclusion and remanded with directions to hear and determine the amount of attorney fees to be awarded to Butters.
Upon the remand, and following comprehensive briefing and argument, the trial court awarded Butters $519,750 in attorney fees on May 24, 2006. Butters appeals, contending that the award is inadequate. City also appeals, claiming that the award is too high. We hold Butters is entitled to recover an additional $37,030 in attorney fees.
PROCEDURAL BACKGROUND OF THE MOTION FOR ATTORNEY’S FEES AND THE TRIAL COURT’S ORDERS
Following our original remand, Butters filed its motion for attorney fees in January 2006. The motion set forth that counsel had expended 1,524.8 hours on the case. The motion set forth comparable billing rates and requested compensation at $350 per hour. This came to $533,680. The motion requested a multiplier of 1.75, which brought the sum sought to $933,940. A supplemental filing raised hours spent to 1,602.2, bringing that sum to $560,770 for a total of $981,347.50 with the multiplier.
Counsel graduated from law school in 1976 and has practiced law continuously since then. He specializes in construction litigation, real property and municipal law. In his affidavit, counsel stated that he took this case on a contingency in February 2002, had not received any payments from the client, and had had to borrow in excess of $100,000 to finance this case.
City opposed the motion. First, City contended that the main thrust of Butters’ case had been a claim in excess of $2.5 million for the loss of future profits due to a loss of bonding capacity; our opinion disallowed the award for loss of future profits and the Supreme Court denied review. City contended that time spent on this claim should be disallowed. Second, City pointed out that some of work for which compensation was sought was on other litigation. Third, City alleged that Ulico Bonding Company became involved in 1999 and took the laboring oar in the case during discovery and trial preparation; that Butters’ counsel came aboard in February 2002 and was “second chair” in all pretrial matters. Ulico was awarded $105,753 in attorney fees, after obtaining a judgment of $669,540 against City; City pointed out that the motion sought nine times the amount of fees awarded to Ulico. Fourth, City contested the billing rate of $350 per hour on the ground that on certain billing documents the rate was given as $250 per hour. Fifth, City contended that a multiplier was not indicated, and that the multiplier sought would produce a billing rate of $612.50 per hour.
The trial court heard the matter and then issued the following order on March 13, 2006: (1) time spent on the loss of future profits was to be excluded; (2) time spent on other litigation was also to be excluded; (3) a multiplier would not be awarded. The order requested Butters to file a new request for fees that excluded time spent on the loss of future profits and other litigation.
Butters complied with the order by filing a new request which set the total hours at 1,613.3; this included time spent in January and February 2006 not previously billed. This filing by Butters also included a request that the court reconsider its decision not to award a multiplier, which counsel now reduced to 1.5, producing a total of $718,751.25.
This filing was superseded by a new one that reflected work done in March and April 2006. It was this request upon which the trial court’s final award of fees is based. The final request claimed a total of 1,703.1 hours at the rate of $350 for a total request by F. Glenn Nichols of $596,085. The final request deducted from this in accordance with the trial court’s order 188.15 hours spent on loss of future profits and 56.10 hours for time spent on other litigation, yielding 1,458.85 hours for a new total of $510,597.50.
City filed an opposition to the foregoing in which it claimed, among other things, that Butters had not eliminated all the time spent on the loss of future profits. City’s counsel supported this with his declaration in which he stated that the time spent on this issue “should be conservatively reduced by another 320.90 hours.” This was in no sense a conclusory claim. Counsel’s declaration stated: “I have gone through each of the invoices and highlighted in yellow and made appropriate comments in blue ink, identifying where and why I believe hours should be further reduced to be in compliance with this court’s order of March 13, 2006.” The invoices, so marked, are attached to the declaration. The degree to which this is a disputed issue is shown by a reply declaration of Butters’ counsel which, point by point, attempts to rebut City’s contentions regarding this matter.
The court again heard argument on the matter but offered no verbal comments of its own. On April 27, 2006, the court issued an order in which it reiterated its decisions not to award fees for time spent on the loss of future profits and not to award a multiplier. On May 24, 2006, the trial court entered an order that awarded F. Glenn Nichols, Esq. $510,597.50, which was the final request minus 188.15 hours on the lost profits issue and 56.10 relating to other litigation, and a further award of $9,152.5 for services of associate counsel, Ronald E. White, Esq., for a total of $519,750.
As noted, City has paid the sum of $519,750 and Butters has filed a satisfaction of judgment for that amount on or about July 13, 2006.
DISCUSSION
1. The Trial Court Did Not Err in Not Awarding a Multiplier
Butters stressed in the trial court, and continues to contend on appeal, that the fact that counsel took the case on a contingency warrants the adoption of a multiplier. Butters relies in large part on Ketchum v. Moses (2001) 24 Cal.4th 1122, 1138 where our Supreme Court observed that “the unadorned lodestar reflects the general local hourly rate for a fee-bearing case; it does not include any compensation for contingent risk, extraordinary skill, or any other factors a trial court may consider under Serrano [v. Priest (1977) 20 Cal.3d 25].” Butters also relies on Greene v. Dillingham Construction N.A., Inc. (2002) 101 Cal.App.4th 418, 428-429, where the court of appeal remanded the case because the trial court had concluded that, in determining whether a multiplier should be awarded, it could not take into consideration that the case had been taken on a contingency. The court of appeal remanded the matter with directions to consider whether the contingent fee nature of the retainer warranted a fee enhancement. (Ibid.)
The trial court in this case correctly observed that Ketchum v. Moses, supra, 24 Cal.4th 1122 and a case cited in Ketchum at page 1132, Rader v. Thrasher (1962) 57 Cal.2d 244, 253, do not hold that a multiplier is required in contingency fee agreements, only that this is one consideration that is to be entertained in considering whether to award a multiplier. Indeed, there is express textual support in Ketchum v. Moses, supra, 24 Cal.4th at page 1138 for this conclusion: “Of course, the trial court is not required to include a fee enhancement to the basic lodestar figure for contingent risk, exceptional skill, or other factors, although it retains discretion to do so in the appropriate case; moreover, the party seeking a fee enhancement bears the burden of proof.”
We do not agree with Butters that the trial court was under the impression that it could award a multiplier only if “important constitutional rights” were involved. Butter’s argument is premised on the fact that the trial court’s order “bolded” the quoted phrase when it cited the following passage from Ketchum v. Moses, supra, 24 Cal.4th at page 1132: “The purpose of a fee enhancement, or so-called multiplier, for contingent risk is to bring the financial incentives for attorneys enforcing important constitutional rights, such as those protected under the anti-SLAPP provision, into line with incentives they have to undertake claims for which they are paid on a fee-for-services basis.”
We cannot ascribe to the trial court a palpably erroneous ruling for no other reason than that it chose to “bold” a single phrase in a citation from a Supreme Court decision. The error would have been that the trial court believed it could award a multiplier only if “important constitutional rights” were involved. No such ruling appears anywhere.
Other than rejecting the claim that a contingency fee agreement requires the application of a multiplier, the trial court did not give specific reasons for declining to apply a multiplier. We think that the court’s decision on this matter was well within the ambit of its discretion.
The Supreme Court has held that the trial judge ultimately has discretion to determine the value of the attorney services and that the exercise of that discretion must be based on the lodestar. (Press v. Lucky Stores, Inc. (1983) 34 Cal.3d 311, 324.) Ketchum v. Moses, supra, 24 Cal.4th 1122, 1138, specifically holds that the award of a multiplier is consigned to the discretion of the trial court.
Among the factors justifying a multiplier are “the novelty and difficulty of the questions involved, and the skill displayed in presenting them.” (Serrano v. Priest, supra, 20 Cal.3d at p. 49.) Without wishing to detract from counsel’s efforts, the questions presented by this case were neither novel nor difficult. As shown in our previous opinion, the issue was whether City breached its agreement before it purported to terminate Butters. While the fairly extensive facts required a careful and methodical presentation, the case did not present complex or difficult questions of fact or law. This was a breach of contract case against a public entity, with the usual difficulties that such a case entails; certainly, it cannot be said that every breach of contract case against a public entity is novel and difficult. The facts that the defendant, according to Butters, was a “well financed public agency” and that counsel advanced the costs of litigation do not warrant the award of a multiplier.
As far as the level of skill is concerned, as the court noted in Ketchum v. Moses, supra, 24 Cal.4th at pages 1138-1139, this factor may already be compensated in the hourly fee chosen for the lodestar. This appears to be a factor in this case, where there was some showing that counsel’s regular rate was not always $350 per hour, which was the amount used to arrive at the lodestar. It is also true, as noted by the trial court, that in order to support the award of a multiplier based on the lawyer’s performance, the level of representation must “far exceed[] the quality of representation that would have been provided by an attorney of comparable skill and experience billing at the hourly rate used in the lodestar calculation.” (Ketchum v. Moses, supra, 24 Cal.4th 1122, 1139.) We cannot say that the trial court abused its discretion in concluding that counsel’s performance, while undoubtedly capable and competent, did not rise to this exacting standard.
The “contingent nature of the fee award, both from the point of view of eventual victory on the merits and the point of view of establishing eligibility for an award” is another factor that justifies a multiplier. (Serrano v. Priest, supra, 20 Cal.3d 25, 49.) While this factor presents a closer question than the preceding factors we have analyzed, a consideration of the nature and extent of the contingency that was involved here supports the trial court’s decision not to award a multiplier. The question was whether City had materially breached the agreement prior to September 15, 1999, when City purported to terminate the contract. The trial court found no less than eight breaches by the City prior to September 15, 1999; some of these breaches were sharply defined, such as withholding a payment of $39,000 in August 1999. The trial court’s decision not to award a multiplier based on the contingent nature of the fee agreement is justified by the circumstance that Butters had a rather solid case when it came to establish a breach on City’s part. Thus, the risk of default, i.e., loss of the case (Ketchum v. Moses, supra, 24 Cal.4th at p. 1132), and nonpayment was not markedly high, or at least not high enough to warrant a multiplier. We return to the consideration that we are reviewing the exercise of the trial court’s discretion, which was informed by its familiarity with, and knowledge of, the case over which it had presided. We find no abuse of that discretion.
The remaining reasons that Butters advances in support of its claim for a multiplier are not persuasive in that these are not reasons that have been held to justify a fee enhancement. The circumstance that City “never offered a single penny to settle the case until half way through the trial,” while undoubtedly a major irritant during the course of litigation, does not warrant a fee enhancement. Nor do the facts that City had three lawyers working on the case and that it fought Butters “on every point throughout the course of the litigation” warrant a multiplier.
In sum, we affirm the trial court’s decision not to award a multiplier.
2. A Moderate Negative Multiplier Applied to All the Hours Spent on the Matter of Future Profits Is Warranted Because Butters’ Separate Claim for Lost Future Profits Was Ultimately Not Successful
We begin with the proposition that counsel is entitled to compensation for all hours reasonably spent. (Serrano v. Unruh (1982) 32 Cal.3d 621, 639.) This means that counsel is entitled to be compensated for theories that did not turn out to be successful because “[a]ttorneys generally must pursue all available legal avenues and theories in pursuit of their clients’ objectives; it is impossible, as a practical matter, for an attorney to know in advance whether or not his or her work on a potentially meritorious legal theory will ultimately prevail. [Citation.] Where plaintiffs are entirely successful on all their claims for relief, it is not important that some of the legal theories used to support those claims were not found meritorious, so long as the plaintiffs did prevail.” (Sokolow v. County of San Mateo (1989) 213 Cal.App.3d 231, 250.)
The situation is different if the plaintiff did not succeed on a claim that is severable from a claim or claims on which he or she did succeed. In such an instance, the court, in arriving at an award of reasonable attorney fees, “should take into consideration the limited success achieved by [the plaintiff].” (Sokolow v. County of San Mateo, supra, 213 Cal.App.3d at p. 250.) “A reduced fee award is appropriate when a claimant achieves only limited success.” (Feminist Women’s Health Center v. Blythe (1995) 32 Cal.App.4th 1641, 1674; see generally Pearl, Cal. Attorney Fee Awards (Cont.Ed.Bar 2d ed. 2006) § 13.11, pp. 394-396.)
In this case, the trial disallowed the entire time that Butters reported it had spent on the loss of future profits claim. Three things can be said of this ruling.
First, future profits is neither exactly a claim nor a legal theory but a measure of damages, falling between claim and theory. As such, it is severable from the remainder of Butters’ case. Thus, it was appropriate for the trial court to consider whether to reduce the lodestar claimed by Butters.
Second, the trial court disallowed all of the time that Butters reported to have spent on the loss of future profits claim. Under the circumstances of this case, this was not appropriate. Butters had achieved limited success on this claim, in that it had recovered $750,000 in the trial court, only to have this set aside in our previous opinion. It is only fair to say that Lewis Jorge Construction Management, Inc. v. Pomona Unified School Dist. (2004) 34 Cal.4th 960 was an important part of our opinion, although we also found that the damage calculations of future profits to be artificial and unreliable. In any event, until Lewis Jorge was decided, Butters had a colorable claim for loss of bonding capacity under Arntz Contracting Co. v. St. Paul Fire & Marine Ins. Co. (1996) 47 Cal.App.4th 464, a decision that was cited in the trial court’s statement of decision. Since the standard is that counsel is entitled to be compensated for all hours reasonably spent, when this case was tried, it was reasonable for Butters to pursue damages for loss of future bonding capacity. This interest must be balanced against the unfairness of requiring City to pay fees for damages that were ultimately not recovered. This calculation should lead to the reduction, not the elimination, of time spent on this claim.
Third, the trial court appears to have ignored the sharp conflict about how much time was actually spent on this claim. We have independently reviewed the matter and find that it is very difficult, if not impossible, to resolve this conflict between the parties. “When the time spent by plaintiff’s attorneys on successful and unsuccessful claims cannot be easily segregated, however, California courts have occasionally applied a negative multiplier to account for that partial success. See Sokolow v County of San Mateo[, supra,] 213 CA3 231, 250, [citation]; Californians for Responsible Toxics Mgmt. v Kizer (1989) 211 CA3 961, 975, [citation].” (Pearl, Cal. Attorney Fee Awards, supra, § 13.11, p. 394.)
We have before us all of the papers filed in the trial court by the parties on the issue of attorney fees. We are therefore in as good a position as the trial court to determine what, if any, negative multiplier would be appropriate in this case. We have concluded that a negative multiplier of 5 percent applied to the lodestar represents the proper balance between Butters’ and City’s rights to a fair treatment on this issue. A reduction of 5 percent of the total time spent represents approximately 105 hours of counsel’s time (see text, post) which seems a fair reduction from the 188.15 hours claimed on the lost future profits issue, considering that it was reasonable to pursue the claim for lost future profits, but that ultimately Butters did not prevail on this claim.
We begin with the final request for $596,085, which covers all time spent including that on lost future profits. We deduct the time spent on other litigation, 56.10 hours, since there is no colorable basis to award fees generated by other litigation. This leaves $576,450 as the base amount to which the negative multiplier is applied. Five percent (5%) of this is $28,822.50. When the latter sum is deducted from $576,450, we arrive at $547,627.50. The difference between this amount and the $510,597.50 already awarded to Mr. Nichols is $37,030. This represents 105.8 hours of Mr. Nichols’s time at $350 per hour or roughly 56 percent of the 188.15 hours spent on the lost future profits issue. All things considered, we conclude that this is fair and adequate compensation for work done on a claim that was ultimately unsuccessful.
We have given the parties an opportunity to brief the question whether this court should apply a negative multiplier. Butters advances two contentions in response to our invitation. First, Butters states that we should not apply a negative multiplier because the trial court has already excluded all the hours related to the lost future profits claim. Unfortunately, this makes no sense. The whole point is that exclusion of all the time spent on this issue is not the correct decision, and that a negative multiplier will exclude only a portion of this time and compensate Mr. Nichols for the balance. The second point Butters makes is that the trial court erred in excluding all the time spent on the lost profits issue. With this we agree; the application of a negative multiplier cures this error.
In response to our invitation for its views on the negative multiplier, City agrees, of course, that we should apply it in this case and suggests a negative multiplier of 40 percent, which would reduce the fees to $238,662. For the reasons that we have already given, we think that such a multiplier would be excessive.
In its cross-appeal, City contends that the trial court erred in accepting Butters’ representation that the loss of future profits claim involved 188 hours of time; City contends, as we have pointed out, that at least 320.9 hours were spent on this effort.
It is notoriously difficult to sort out a lawyer’s time when the case is of long duration and involves a multiplicity of intertwined facts, legal theories and claims. Rather than to endeavor to reconstruct counsel’s time -- and still not arrive at a conclusion that can lay claim to be accurate -- our decision to apply a negative multiplier comes, in our opinion, as close to fairness to both sides as possible. Accordingly, we reject City’s request to remand the case with directions to re-compute how much time was spent on the loss of future profits claim (with attendant additional expenses to both parties and possibly another appeal and further attorney fees).
3. The Satisfaction of Judgment Is Deemed To Be a Partial Satisfaction
As we have noted, Butters filed a satisfaction of judgment on or about July 13, 2006.
“The reason why an appeal is dismissed if the judgment is satisfied is because the satisfaction moots the issues on appeal.” (A.L.L. Roofing & Bldg. Materials Corp. v. Community Bank (1986) 182 Cal.App.3d 356, 359.) “A party who voluntarily complies with the terms of a judgment, or who satisfies it by voluntary payment or otherwise, impliedly waives the right to appeal from it.” (9 Witkin, Cal. Procedure (4th ed. 1997) Appeal, § 209, p. 264; see also Eisenberg, et al., Cal. Practice Guide: Civil Appeals and Writs (The Rutter Group 2006) ¶ 5:25, p. 5-6.).
Prior to oral argument, we requested the views of the parties on this matter. Both parties have submitted supplemental briefs on this issue. City contends that its “cross-appeal” should be heard if Butters’s appeal is heard. Citing among other cases Heacock v. Ivorette-Texas, Inc. (1993) 20 Cal.App.4th 1665, Butters contends that since it did not recover as much as it had sought, it is entitled to appeal. During oral argument both parties contended that the appeals should be heard on the merits.
In light of our disposition of the appeals taken by Butters and City from the order awarding fees, the order awarding fees need not be reversed and can in fact be affirmed. Thus, the satisfaction of judgment does not bar the appeals. (Preluzsky v. Pacific Co-operative Cafeteria Co. (1925) 195 Cal. 290, 294; see generally 9 Witkin, Cal. Procedure (4th ed. 1997) Appeal, § 216, pp. 272-273.) In view of the fact that Butters, i.e., Mr. Nichols, is awarded a further $37,030, we deem the satisfaction of judgment filed on or about July 13, 2006, to be a partial, and not a full satisfaction of the judgment.
We observe for the guidance of counsel in future cases that if our decision would have been to reverse the order, the satisfaction of judgment would have had to be vacated, with attendant complications for both parties.
DISPOSITION
The judgment (order) is affirmed to the extent it awards $510,597.50 in attorney’s fees to F. Glenn Nichols, Esq., and $9,152.50 in attorney fees to Ronald E. White, Esq. The case is remanded with directions to enter a new judgment (order) that awards F. Glenn Nichols, Esq., the additional sum of $37,030. Butters is to recover its costs on appeal.
We concur: COOPER, P. J. RUBIN, J.