Opinion
21-cv-09683-KAW
08-07-2023
UNION NO.3 OF THE INTERNATIONAL UNION OF OPERATING ENGINEERS, AFL-CIO, Plaintiff, v. CAPPURO AG SOLUTIONS, LLC, Defendant
OPERATING ENGINEERS LOCAL ORDER REASSIGNING CASE TO A DISTRICT JUDGE; REPORT AND RECOMMENDATION TO GRANT MOTION TO ENFORCE SETTLEMENT AGREEMENT AND TO GRANT MOTION FOR ATTORNEY FEES RE: DKT. NOS. 14, 15
KANDIS A. WESTMORE UNITED STATES MAGISTRATE JUDGE
On June 14, 2023, Plaintiff Operating Engineers Local Union No. 3 of the International Union of Operating Engineers, AFL-CIO filed a motion to enforce a settlement agreement reached with Defendant Cappuro AG Solutions, LLC. (Enforcement Mot., Dkt. No. 14.) The same day, Plaintiff filed a motion for attorney fees and costs. (Fee Mot., Dkt. No. 15.) The Court held a hearing on the motions on July 20, 2023, and Defendant did not appear.
As Defendant has neither appeared nor consented to magistrate judge jurisdiction, the Court REASSIGNS the case to a district judge. Having considered the filings, the relevant legal authorities, and the arguments made at the hearing, the Court RECOMMENDS that the motion to enforce the settlement agreement be granted and that the motion for attorney fees also be granted.
I. BACKGROUND
On December 15, 2021, Plaintiff, a labor organization, commenced this action to confirm and enforce two arbitration decisions ordering Defendant to pay two employees lost wages and benefits pursuant to a collective bargaining agreement. (Compl., Dkt. No. 1.) Plaintiff served Defendant through its registered agent and owner, Weston Cappuro, on May 28, 2022. (Dkt. No. 8.) When Defendant failed to appear, Plaintiff requested and obtained entry of default against Defendant on January 26, 2023. (Dkt. Nos. 9, 10.)
After the default was entered, Plaintiff's counsel, Kenneth C. Absalom, began to communicate with Cappuro by email, informing Cappuro of his intention to seek default judgment against Defendant. (Decl. of Kenneth C. Absalom (“Absalom Decl.”), Dkt. No. 14-1 at 2.) Cappuro asked to “work out a payment plan to cover all these debts.” (Absalom Decl. at 2, Ex. 2.) Absalom and Cappuro continued to discuss a potential settlement over email and agreed to terms on January 31, 2023. (Absalom Decl. at 3.) Cappuro signed a “Full Release and Settlement Agreement” on behalf of himself and Defendant on February 3, 2023, and Plaintiff counter signed it on February 7, 2023. (Absalom Decl. at 3, Ex. 3 (“Settlement Agreement”).)
Under the Settlement Agreement, Cappuro agreed to pay the full $50,940.01 awarded in the arbitration decisions in three installments payable on February 5, 2023, February 15, 2023, and March 15, 2023. (Settlement Agreement at 2.) If Cappuro failed to make any of the required payments, he agreed to pay Plaintiff $5,000 for its attorney fees and costs incurred in this action. (Settlement Agreement at 3.) Additionally, the Settlement Agreement provided that Cappuro was liable “for paying all costs and attorney fees incurred by [Plaintiff] for enforcing and collecting any sums owed under this Agreement.” (Settlement Agreement at 3.) In return for the completed payments, Plaintiff agreed to release Defendant from all causes of action and dismiss this case. (Settlement Agreement at 3.)
On February 9, 2023, Absalom emailed Cappuro to inform him that the first installment payment was not received as provided for in the Settlement Agreement. (Absalom Decl. at 3.) Cappuro responded that the payment was supposed to be made earlier in the week and offered to send a copy of the check to Absalom. (Absalom Decl. at 3-4.) However, Absalom did not receive a copy of the check and he emailed Cappuro again on February 14, 2023, informing him that he was in default and Plaintiff would seek default judgment against him. (Absalom Decl. at 4.)
On March 15, Plaintiff filed an application for default judgment. (Dkt. No. 11.) However, because the Complaint sought confirmation and enforcement of the arbitration awards but the application for default judgment sought judgment based on the settlement agreement, the Court indicated it was “inclined to recommend that the application for default judgment be denied” and allowed Plaintiff a period of time to withdraw the application. (Dkt. No. 12.) Plaintiff subsequently withdrew the application. (Dkt. No. 13.)
On June 14, 2023, Plaintiff filed the instant motions to enforce the Settlement Agreement and recover attorney fees and costs incurred in seeking enforcement. To date, Defendant has still not appeared in this action.
II. LEGAL STANDARD
A. Motion to Enforce Settlement
“[A] district court has the equitable power to enforce summarily an agreement to settle a case pending before it.” Callie v. Near, 829 F.2d 888, 890 (9th Cir. 1987) (citations omitted). “[T]he district court may enforce only complete settlement agreements.” Id. “To prevail on a motion to enforce, the movant must show both that the parties have reached agreement on all material terms, and that the parties have either agreed to the terms of the settlement or authorized their respective counsel to settle the dispute.” Rosen v. Urban Commons, LLC, No. 8:20-CV-01973-JLS-DFM, 2023 WL 4155368, at *3 (C.D. Cal. May 10, 2023) (cleaned up).
“The construction and enforcement of settlement agreements are governed by principles of local law which apply to interpretation of contracts generally.” Jeff D. v. Andrus, 899 F.2d 753, 759-60 (9th Cir. 1989). “Under California law, four elements must be present to form a valid contract: (1) parties capable of contracting; (2) their mutual consent; (3) a lawful object; and (4) sufficient consideration.” Rosen, 2023 WL 4155368, at *3 (cleaned up). “In turn, mutual consent requires that a specific offer is communicated to the offeree, and an acceptance is subsequently communicated to the offeror.” Id.
B. Motion for Attorney Fees
“The prevailing party in an action to enforce a contract may recover reasonable attorney's fees 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.” Lemberg v. San Francisco Opera Ass'n, No. 17-CV-06641-MMC, 2020 WL 5291877, at *1 (N.D. Cal. Sept. 4, 2020), aff'd, 848 Fed.Appx. 724 (9th Cir. 2021) (internal quotation marks omitted) (citing Cal. Civ. Code § 1717). A party who prevails on a motion to enforce a settlement agreement that specifically provides for attorney's fees and costs may recover such even if the underlying cause of action did not arise from a contract. Id. Additionally, “a court may assess attorney's fees when a party has acted in bad faith, vexatiously, wantonly, or for oppressive reasons.” Chambers v. NASCO, Inc., 501 U.S. 32, 45-46 (1991) (quotation marks omitted).
When calculating reasonable attorney's fees, the Court must consider both the reasonableness of the hourly billing rate and the number of hours required. See Larfarge Conseils Et Etudes, S.A. v. Kaiser Cement & Gypsum Corp., 791 F.2d 1334, 1341-42 (9th Cir. 1986) (citations omitted). Upon a finding of bad faith, a court may award an additional amount over the reasonable attorney's fees as a remedial sanction. Ingenuity13 LLC v. Doe, 651 Fed.Appx. 716, 720 (9th Cir. 2016) (affirming district court's “punitive multiplier” doubling attorney's fees as a remedial sanction).
III. DISCUSSION
A. Motion to Enforce Settlement
Plaintiff seeks an order requiring Defendant to pay damages totaling $55,940.01 based on the terms of the Settlement Agreement. (Enforcement Mot. at 2.) The Court concludes that Plaintiff has presented sufficient evidence to show that the parties reached a settlement on all material terms and agreed to the specific terms outlined in the Settlement Agreement. Specifically, the parties agreed that Defendant would pay a specific amount according to a payment schedule and in exchange Plaintiff would dismiss this action and release Defendant from liability. (See Settlement Agreement at 2-3.) Defendant's consent is evidenced by Cappuro's signature on the Settlement Agreement. Beltran v. PeopleReady, Inc., No. 3:23-cv-00179-WHO, 2023 WL 3092973, at *7 (N.D. Cal. Apr. 25, 2023) (quoting Najarro v. Superior Ct., 70 Cal.App. 5th 871, 886 (2021)). Because Defendant has not appeared in this action, there is no evidence suggesting the parties did not reach a valid Settlement Agreement.
Additionally, Plaintiff submitted evidence supporting that Defendant did not submit the installment payments as required by the Settlement Agreement. (Absalom Decl. at 4.) At the hearing on Plaintiff's motions, the Court confirmed that no payments have been received to date.
Thus, under the terms of the Settlement Agreement, Plaintiff is entitled to payment of the $50,940.01 due under the arbitration awards and $5,000.00 for attorney fees incurred prior to the Enforcement Motion. (Settlement Agreement at 2-3.)
Accordingly, the Court recommends the Enforcement Motion be GRANTED.
B. Motion for Attorney Fees
Plaintiff requests an order awarding it $14,280 for attorney fees related to the enforcement of the Settlement Agreement. (Fees Mot. at 5.) Plaintiff argues Defendant agreed to pay such fees in the Settlement Agreement and, alternatively, that awarding fees is an appropriate sanction for Defendant's bad faith. (Fees Mot. at 5.)
Because the Settlement Agreement provides that Defendant shall be liable for fees and costs Plaintiff incurs seeking to enforce the Agreement and because the Court has recommended the Enforcement Motion be granted, Plaintiff is entitled to recover its fees and costs. Thus, the Court must determine whether the $300 hourly billing rate and 47.6 hours required are reasonable.
i. Reasonableness of the Hourly Billing Rate
To determine the appropriate lodestar amount, the reasonableness of the hourly billing rate must be assessed. Credit Managers Ass'n of S. Cal., 25 F.3d 743, 750 (9th Cir. 1994). In doing so, the Court must look to the prevailing market rates in the relevant community for similar work by attorneys of comparable skill, experience, and reputation. Camacho v. Bridgeport Fin., Inc., 523 F.3d 973, 979 (9th Cir. 2008). Generally, the relevant community is the forum where the district court sits. Id.
Here, Plaintiff's claimed hourly rate is $300 per hour, a discounted rate from Absalom's customary hourly rate of $400 per hour. (Supp. Decl. of Kenneth C. Absalom, Dkt. No. 15-1 (“Supp. Decl.”).) Absalom has practiced law since 1984 with a focus on labor and employment law and related civil rights matters. (Supp. Decl. at 3.) This hourly rate is within the range found reasonable by other judges in the Northern District for attorneys with comparable experience. See, e.g., Bd. of Trustees of Cement Masons Health & Welfare Tr. Fund for N. Cal. V. Eagle Rock Indus., No. 3:22-CV-03666-WHO, 2023 WL 2989024, at *8 (N.D. Cal. Apr. 17, 2023). Thus, the Court finds the hourly rate reasonable.
ii. Reasonableness of the Hours Billed
To assess whether the number of hours billed is reasonable, Plaintiff must submit detailed records justifying the hours that have been expended. Chalmers v. City of L.A., 796 F.2d 1205, 1210 (9th Cir. 1986). The Court may reduce the hours through its discretion “where documentation of the hours is inadequate; if the case was overstaffed and hours are duplicated; if the hours expended are deemed excessive or otherwise unnecessary.” Id.
Because the Plaintiff did not initially provide sufficiently detailed time records, the Court ordered Plaintiff to provide supplemental briefing in advance of the hearing. (Dkt. No. 17.) Plaintiff submitted such briefing on July 18, 2023. (Dkt. No. 18.)
The Court does not believe the 47.6 hours expended on the post-settlement efforts was reasonable. As an initial matter, the Court does not believe Plaintiff is entitled to recover fees for 2.7 hours of work spent before the Settlement Agreement was finalized as such fees were presumably covered by the $5,000 agreed to by the parties for fees and not covered as time spent seeking to enforce the Settlement Agreement. Additionally, the Court declines to award fees for the 4 hours spent preparing the motion for default judgment given that Plaintiff ultimately withdrew that motion. And the Court does not see any reason to award fees for the .6 hours spent drafting the notice of withdrawal.
As to the drafting of the present motions, counsel spent approximately 13.3 hours researching and drafting the six-page Fees Motion which contains only a single citation to controlling authority and relies almost entirely on the Settlement Agreement. The Court finds such time excessive and reduces it by 5.3 hours.
Accordingly, the Court recommends that the reasonable hours be reduced from 47.6 to 35, a reduction of 12.6 hours, making a reasonable award $10,500.
iii. Sanctions
As an alternative basis for fees, Plaintiff argues the Court should impose sanctions based on Defendant's bad faith, specifically his dishonesty in saying that he sent the first payment and total failure to comply with the Settlement Agreement. (Pl.'s Mot. at 5.) Based on the record, there is evidence Defendant engaged in settlement negotiations to resolve these proceedings without any intention to honor his obligations under the Settlement Agreement. The Court finds Defendant's actions amount to bad faith and warrant the imposition of sanctions. Thus, the Court RECOMMENDS the attorney's fees be increased by $3,780 to compensate Plaintiff. Ingenuity13, 651 Fed.Appx. at 720. Thus, the Court RECOMMENDS Plaintiff be awarded $14,280 in attorney's fees.
IV. CONCLUSION
For the reasons stated above, the Court RECOMMENDS that the motion to enforce the settlement agreement be GRANTED. The Court RECOMMENDS that the motion for attorney fees be GRANTED, and that Plaintiff be awarded $14,280 in attorney's fees.
No later than 3 days from the date of this report and recommendation, Plaintiff is instructed to serve Defendant with a copy by any means reasonably calculated to provide actual notice and file a proof of service to that effect. Any party may file objections to these recommendations within 14 days of being served with a copy. See 28 U.S.C. § 636(b); see 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b); N.D. Civil L.R. 72-3. The parties are advised that failure to file objections within the specified time may waive the right to appeal the District Court's order. IBEW Local 595 Trust Funds v. ACS Controls Corp., No. C-10-5568, 2011 WL 1496056, at *3 (N.D. Cal. Apr. 20, 2011).
IT IS SO ORDERED.