Opinion
D072231
06-13-2018
BANK OF SOUTHERN CALIFORNIA, N.A., Plaintiff, Cross-defendant and Appellant, v. D&D GORYOKA, INC., Defendant, Cross-complainant and Appellant.
Mulvaney Barry Beatty Linn & Mayers and Everett George Barry, John Arthur Mayers and Christopher Bennett Ghio for Plaintiff, Cross-defendant and Appellant. Franklin & Franklin and J. David Franklin for Defendant, Cross-complainant and Appellant.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 37-2011-00101423-CU-OR-CTL) APPEALS from an order of the Superior Court of San Diego County, John S. Meyer, Judge. Affirmed. Mulvaney Barry Beatty Linn & Mayers and Everett George Barry, John Arthur Mayers and Christopher Bennett Ghio for Plaintiff, Cross-defendant and Appellant. Franklin & Franklin and J. David Franklin for Defendant, Cross-complainant and Appellant.
This case comes to us after further attorney fee proceedings following remand. In Bank of Southern California, N.A. v. D&D Goryoka, Inc. (Nov. 29, 2016, D069767) [nonpub. opn.], we reversed a postjudgment order denying defendant, cross-complainant and appellant D&D Goryoka, Inc.'s (DGI) motion for an award of prevailing party attorney fees and costs and directed the court to award it reasonable attorney fees after determining the extent to which, if at all, the fees incurred may be apportioned among DGI and its four unsuccessful codefendants. DGI then filed post-remand motions seeking to recover fees incurred for counsel's 1560.6 hours of time at trial and for the attorney fee motions, as well as for 359.5 hours spent on appeal. Determining in part that a $450 hourly rate was the fair market value of the legal services, that counsel spent 55.5 hours on matters for DGI that did not need to be apportioned, and apportioning 20 percent of the hours spent on the joint defense as reasonable attorney fees spent on DGI's behalf, the trial court awarded DGI $203,667.75 in attorney fees for the trial and attorney fee motion work. It awarded another $161,775 to DGI for appellate attorney fees, for a total attorney fee award of $365,442.75.
DGI appeals, challenging the award as to the trial court's apportionment, its determination of the market rate for comparable attorneys and assignment of $450 as a reasonable hourly fee for DGI's counsel, and its reductions in compensable hours for certain motions and other work. Bank of Southern California, N.A (Bank) cross-appeals, contending the court erred by failing to exercise its discretion to consider a downward adjustment to the lodestar for (1) DGI's failure to notify Bank that it had filed a certificate of dissolution in December 2012; or (2) DGI's counsel's asserted violation of rules of professional conduct and legal obligation to include a particular statement in his retainer agreement. Bank asks that we remand the matter for the trial court to address these issues in a further hearing, or conduct a de novo review of them so as to determine that DGI should be denied its attorney fees in their entirety based on counsel's failures to disclose, and obtain his clients' informed written consent to, his conflicts of interest. We reject all of these contentions, and affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
We have set out the facts of the underlying trial and previous attorney fee proceedings in prior opinions. (Bank of Southern California, N.A. v. D&D Goryoka, Inc. (Feb. 18, 2016, D068093) [nonpub. opn.]; Bank of Southern California, N.A. v. D&D Goryoka, Inc., supra, D069767.) We need not repeat those facts here, other than to say that in a lawsuit filed by Bank for breach of guaranty agreements, the trial court entered judgment in DGI's favor on Bank's complaint but entered a joint and several judgment in Bank's favor against DGI's four codefendants Ghassan Goryoka, Amir Goryoka, Izik Aziz Goryoka, and Goryoka, Inc. Each of the five defendants had signed identical unconditional guaranty agreements for an $880,000 loan to another entity, D&D Goryoka, LLC. All five defendants asserted an affirmative defense of "sham guaranty," but the trial court determined only DGI had a valid defense, ruling that Bank viewed it as the principal obligor under a different name and DGI was thus a true borrower under the loan.
On DGI's first attorney fee motion, the trial court, Judge Katherine Bacal, who had presided over the bench trial, determined DGI was the prevailing party on the contract at issue in the action. However, the court denied DGI recovery of its attorney fees and costs, reasoning DGI was "only entitled to those attorney's fees that would not have been incurred but for the fact that it was named as an additional defendant" and DGI had not shown what fees were incurred by it alone. In Bank of Southern California, N.A. v. D&D Goryoka, Inc., supra, D069767, we reversed that postjudgment order and remanded with directions that the court "award DGI its reasonable attorney fees as the prevailing party after determining the extent to which, if at all, the fees incurred may be apportioned among DGI and its unsuccessful codefendants." (Id. at *7.) We directed the court to determine DGI's costs and attorney fees on appeal. (Ibid.)
Following remand, DGI successfully challenged Judge Bacal, and moved again for its attorney fees and costs under Civil Code section 1717 before Judge John S. Meyer. DGI claimed its counsel, J. David Franklin, had reasonably and necessarily spent 1315.1 hours defending DGI against Bank's claims, as well as 245.5 hours in moving for an attorney fee award on DGI's behalf. Though attorney Franklin had represented all of the defendants on a contingent fee basis, DGI sought a lodestar figure based on a reasonable market hourly rate for an attorney with comparable skills in the community, plus a fee enhancement. DGI argued it could not show it had incurred fees alone, because all of Franklin's work was done on behalf of all five defendants, not as to any single one, and thus there could be no apportionment or allocation among defendants. In another motion, DGI sought to recover fees for 359.5 hours of legal work on the appeal at a market rate to be determined by the court.
DGI supported the motions with the declarations of an expert, Peter Thompson, as well as its counsel. In part, attorney Thompson stated the market rate for an attorney of Franklin's experience and skill level would be no less than $675 to $750 per hour in San Diego. Thompson opined that the "same fees would have been incurred throughout discovery and trial in any event whether Mr. Franklin was defending one party or [five]" and that under the circumstances apportionment was impossible. Using interrogatories as an example, he asserted if attorney Franklin "had represented only [DGI] as a defendant, he would have had to incur the same exact amount of time to prepare the answers for [DGI] individually as for all the defendants because the answers were the same."
In opposition, Bank accused attorney Franklin of "shameless opportunism" in his contingent fee retainer agreement in that the Goryokas and their entities "were not 'clients' in the traditional sense" but "served as vehicles to a possible payday for a scurrilous lawyer." According to Bank, under the fee agreement, Franklin could only be paid by taking the case to trial, so he had no incentive to settle or reach a resolution that would limit his client's exposure, but instead exposed some of them to personal liabilities exceeding $1 million. It argued the retainer agreement was voidable at the Goryokas' option because it did not comply with Business and Professions Code section 6147, which required a statement that " 'the fee is not set by law but is negotiable between attorney and client.' " Under the circumstances, Bank argued, an attorney was only entitled to a quantum meruit fee, but such recovery was not warranted in Franklin's case. Bank argued Franklin's fee agreement was void as against the public interest and the court should deny him any fee award, because structuring his agreement in the manner he did put himself in direct conflict with his clients' best interests. It challenged Franklin's fee arrangement on numerous other grounds. Bank presented a declaration from its own expert, Edward J. McIntyre. Among other things, McIntyre explained that attorney Thompson's test supported unethical billing; under Thompson's theory, a lawyer appearing at a one-hour hearing representing each of five clients with identical positions would not be required to apportion his time among the five clients, but could charge each for a single hour's work. McIntyre stated this was impermissible multiple billing.
These reasons included that the fee agreement did not contain adequate disclosures or obtain the clients' informed written consent, contrary to rules of professional conduct; the requested fees were unconscionable and/or illegal; the sought-after fees were unreasonable as disproportionate to the value of Franklin's services, the amount involved, and bore no nexus to the results; the fees grossly exceeded the time and labor involved and were unreasonable for the matter, which was not complex and could have been handled by any relatively competent business trial lawyer; various factors from California Rules of Court, rule 4.400 weighed against Franklin; Franklin could not recover fees for the self-serving act of seeking fees; the fees were improperly block-billed and overbilled for clerical services; and apportionment by taking 20 percent of the lodestar hours was both necessary and feasible, as the legal work was identical on each client's behalf.
The court ruled that attorney Franklin's $525 hourly rate was reasonable in the San Diego market considering his experience and skill level. However, it found the matter was "a fairly straightforward business litigation lawsuit" with "not particularly difficult or novel" issues; approximately 50 percent of the work performed could have been performed by an associate; and "[w]hile DGI was ultimately successful, the cross-complaint was a failure." It ruled, "Considering all the circumstances, an hourly rate of $450 is the fair market value for the legal services provided." After "scrutiniz[ing]" the billing statement and reviewing the court file and all operative pleadings, the summary judgment motions, the motion for new trial, Judge Bacal's statement of decision, and the first appellate opinion as to attorney fees in this matter, the court deducted 34 hours of clerical work, 81.375 hours for work performed on a cross-complaint, and 82.5 hours for work on motions for new trial and to vacate the judgment on behalf of other defendants, leaving 1,061.725 hours to be apportioned. It found 55.5 hours were spent primarily related to DGI that did not need apportionment. Given that DGI alone prevailed on the sham guaranty defense and Bank did not know that as of December 2012 DGI was a dissolved corporation with no assets, the court ruled it was "eminently unfair" for Bank to pay for fees incurred primarily for the other four defendants. It ruled the reasonable fee for work performed on DGI's behalf was 20 percent of the hours spent on the joint defense. The court reduced attorney Franklin's 245.5 hours spent on the two attorney fees motion to 184.75, and awarded all of Franklin's 359.5 hours spent on the appeal. Thus, the court awarded DGI $203,667.75 in attorney fees for the trial and attorney fee motion work. It awarded another $161,775 for appellate attorney fees, for a total attorney fee award to DGI of $365,442.75.
Both DGI and Bank appeal from the court's May 5, 2017 order.
DISCUSSION
I. Standard of Review
This court reviews the trial court's attorney fee awards for abuse of discretion, as trial judges have broad authority to determine the amount of a reasonable fee. (Laffitte v. Robert Half Intern. Inc. (2016) 1 Cal.5th 480, 488; PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1095; see also Holguin v. DISH Network LLC (2014) 229 Cal.App.4th 1310, 1329.) The trial court " 'may make its own determination of the value of the services contrary to, or without the necessity for, expert testimony. [Citations.] [It] 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.' " (PLCM Group, Inc., at p. 1096.) " '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." ' " (Laffitte, at p. 488.)
A trial court will abuse its discretion if there is no substantial evidence to support its findings or if there has been a miscarriage of justice. (Ellis v. Toshiba America Information Systems, Inc. (2013) 218 Cal.App.4th 853, 882.) Likewise, a court will abuse its discretion by taking " '[a]ction that transgresses the confines of the applicable principles of law . . . .' " (Holguin v. DISH Network LLC, supra, 229 Cal.App.4th at p. 1329; see also Lealao v. Beneficial California, Inc. (2000) 82 Cal.App.4th 19, 25.) "When the record is unclear whether the trial court's award of attorney fees is consistent with the applicable legal principles, we may reverse the award and remand the case to the trial court for further consideration and amplification of its reasoning." (Graciano v. Robinson Ford Sales, Inc. (2006) 144 Cal.App.4th 140, 149.) "As with all orders and judgments, this fee order 'is presumed correct, all intendments and presumptions are indulged in its favor, and ambiguities are resolved in favor of affirmance.' " (Ellis v. Toshiba America Information Systems, Inc., at p. 882; Cruz v. Ayromloo (2008) 155 Cal.App.4th 1270, 1274.)
II. DGI's Appeal
A. Court's Apportionment Ruling
The trial court's ruling as to apportionment states: "In this litigation, defense counsel asserted the 'sham guaranty' defense for all five defendants, when the defense was viable for only one defendant. This resulted in wasted time spent trying to justify the defense for the four unsuccessful defendants, time that would not have been needed to justify the one viable claim. [¶] It is also notable that it is likely that most of the fees would not have been incurred by DGI had counsel informed the opposing party in December 2012 that DGI was a dissolved corporation with no assets from which to recover. [¶] In light of this, it would be eminently unfair to require the Bank to pay for fees incurred primarily for the other four defendants. The reasonable attorney fees for work performed for DGI as the only prevailing defendant is 20 [percent] of the hours spent on the joint defense."
" ' "When a prevailing party has incurred costs jointly with one or more other parties who are not prevailing parties for purposes of an award of costs, the judge must apportion the costs between the parties" [based on the reason the costs were incurred and whether they were reasonably necessary to the conduct of the litigation by the jointly represented party who prevailed].' " (Charton v. Harkey (2016) 247 Cal.App.4th 730, 744; see also Hill v. Affirmed Housing Group (2014) 226 Cal.App.4th 1192, 1197 ["A prevailing defendant 'may recover only reasonable attorney fees incurred in [its] defense of the action by [the plaintiff]' "].) "Whether to award costs that were incurred by both the prevailing party and the nonprevailing party, and were reasonably necessary to the conduct of the litigation for both the prevailing and nonprevailing party, is left to the trial court's sound discretion based on the totality of the circumstances." (Charton, at p. 744; Hill, at p. 1197.) Under this standard, the question for the reviewing court is whether the trial court's order exceeded the bounds of reason: " '[W]hen two or more inferences can reasonably be deduced from the facts, the reviewing court lacks power to substitute its deductions for those of the trial court.' " (Bustos v. Global P.E.T., Inc. (2017) 19 Cal.App.5th 558, 563.) The appellant must affirmatively establish an abuse of discretion; this court will not presume it. (Wolfe v. Wolfe (1947) 30 Cal.2d 1, 5; Denham v. Superior Court (1970) 2 Cal.3d 557, 566.)
Pointing out that there is no dispute that all five defendants presented a common or unified sham guaranty defense, gave the same answers to identical sets of discovery responses, and were otherwise united in interest, DGI contends the trial court erred in apportioning fees. It relies on expert Thompson's declaration, submitted in connection with its motion, in which Thompson opined that apportionment of fees among the five Goryoka individual and entity codefendants could not occur because the same fees would have been incurred throughout discovery and trial in any event regardless of the number of defendants. According to Thompson, if DGI had separate counsel from the other four defendants, the services on the billing statement would be no different: "the individual bill to [DGI] would have been for the same amount of time in the same amount of money." DGI characterizes the trial court's ruling as "not point[ing] to a single time entry where work was done solely on behalf of [DGI] or solely on behalf of any of the other four Defendants" and argues that it demonstrates "it was not possible to differentiate between compensable and noncompensable hours worked." It further argues: "Judge Meyer gave three reasons as to why he apportioned attorney's fees in this case, none of which made any sense whatsoever." It proceeds to challenge the reasons, mainly arguing the court did not "point to examples" or "point out any hours" that were either wasted or spent on behalf of the other defendants. DGI maintains Judge Meyer "ignored the facts presented in [its] motion" and could not have apportioned fees at all because the liability of all of the defendants was "so factually interrelated that it would have been impossible to separate the activities into compensable and noncompensable time units." Finally, DGI asserts, citing Center for Biological Diversity v. County of San Bernardino (2010) 188 Cal.App.4th 603, that this court may "exercise somewhat more latitude" in determining an abuse of discretion where Judge Meyer was not the trial judge, but "was assigned to the case only to hear the second [attorney fee] motion."
We address the latter contention first, and decline to apply a more lenient standard in DGI's favor in deciding whether Judge Meyer's ruling constitutes an abuse of discretion. DGI cannot be heard to complain that Judge Meyer was unfamiliar with the underlying trial, when it affirmatively challenged Judge Bacal, who presided over the trial, and sought to have a different judge decide the post-remand attorney fee motions. In any event, Judge Meyer's ruling reflects a careful and detailed consideration of the matter, including the court file and Judge Bacal's statement of decision, and we conclude on this record the court was fully informed and familiar with the underlying proceedings. Center for Biological Diversity v. County of San Bernardino, on which DGI relies, itself relied on Ninth Circuit authority (id. at p. 616) in the context of private attorney general fees, which are not involved in the present case. Hence, the Biological Diversity court expressly acknowledged that federal precedent in that area was persuasive. (Center for Biological Diversity v. County of San Bernardino, supra, 188 Cal.App.4th at p. 616, fn. 7.) In the context of DGI's appeal, federal authority is not binding. (People v. Avena (1996) 13 Cal.4th 394, 431; Otay Land Company, LLC v. U.E. Limited, L.P. (2017) 15 Cal.App.5th 806, 820, fn. 4 [lower federal court decisions are not binding, even on federal questions].)
As for DGI's other contentions, they are based in part on a misrepresentation of Judge Meyer's ruling, and they disregard the relevant review standards for the trial court's determinations. DGI would have us second guess Judge Meyer's reasoned decisions not only concerning apportionment among the prevailing and nonprevailing defendants, but also as to his general reductions for unrecoverable time, his views about the complexity of the case, the need to use counsel having attorney Franklin's skill level, and the fair market value of the legal services Franklin provided. In ruling on DGI's fee motions, Judge Meyer expressly acknowledged the relevant law as set out in our prior opinion (Bank of Southern California, N.A. v. D&D Goryoka, Inc., supra, D069767), pointing out in multiple party situations where a codefendant represented by shared counsel was not entitled to recover fees, the court nevertheless had discretion and ability to allocate or apportion fees, "even where the issues are connected, related or intertwined" and even when time-keeping or billing procedures may make a requested segregation difficult. Judge Meyer correctly observed, based on the California Supreme Court's decision in PLCM Group, Inc. v. Drexler, supra, 22 Cal.4th at page 1096, the court was under no obligation to award DGI the full extent of fees claimed, but could omit inefficient or duplicative fees. Judge Meyer had "scrutinized" attorney Franklin's billing statement in reaching the attorney fees ruling. The court recognized it was entitled to look broadly at the nature of the litigation, the difficulty, the amount involved and skill required, and defendants' success or failure. It based the award on the number of hours expended by Franklin multiplied by what it decided was the prevailing market rate for similar work, which is the proper standard. (Id. at pp. 1095 ["The reasonable hourly rate is that prevailing in the community for similar work"], 1096 [superior court used the "proper standard" in calculating fees where it based its award on the number of hours expended by counsel multiplied by the prevailing market rate for comparable legal services in San Francisco].) Indeed, its award was to be governed by equitable principles. (Id. at p. 1095.)
The trial court's analysis in this case was consistent with the overall consideration for a Civil Code section 1717 attorney fees award, that is, an "objective standard of reasonableness, i.e., the prevailing market value of comparable legal services." (PLCM Group v. Drexler, supra, 22 Cal.4th at p. 1098.) PLCM emphasized, " ' "We do not want 'a [trial] court, in setting an attorney's fee, [to] become enmeshed in a meticulous analysis of every detailed facet of the professional representation. It . . . is not our intention that the inquiry into the adequacy of the fee assume massive proportions, perhaps dwarfing the case in chief.' " ' " (Ibid.) To the extent the court was "required to go through attorney Franklin's time records and separate the time into time units billed on behalf of each of the five individual Defendants to the exclusion of the other Defendants," as DGI argues, we presume it undertook this analysis when it scrutinized the billing statements as its ruling indicates it did. But the court was not required to delineate each and every hour attributable to DGI in its ruling, it was within the court's broad discretion to estimate how much of the time spent on the joint defense might have been duplicative, unnecessary for, or unrelated to attorney Franklin's representation of DGI, the only successful defendant in the action.
Under all of the circumstances, DGI has not established a manifest and unmistakable abuse of the court's broad discretion in its apportionment of DGI's fees. The court was not required to adopt the theories of either party's experts, as it "has its own expertise" (PLCM Group, Inc. v. Drexler, supra, 22 Cal.4th at p. 1096) on the matter. Nor does its ruling reflect an arbitrary across-the-board reduction as DGI asserts. DGI argues: "Judge Meyer did not segregate any time from the time record of attorney Franklin which could have been segregated. Rather than go through that exercise, Judge Meyer simply divided the total compensable hours into five equal parts, only awarding [DGI] attorney's fees equal to 20 [percent] of the compensable hours." But the court expressly stated in its ruling: "The [time] entries on 12/31/14, 1/2/15, 1/3/15, and 2/14/15-2/17/15 appear to be primarily related to DGI, its standing and dissolution, for a total of 55.5 hours. These do not need to be apportioned." This part of the ruling contradicts DGI's assertion that "Judge Meyer did not point to a single time entry where work was done solely on behalf of [DGI] . . . ." The ruling thus does not constitute "strong evidence that it was not possible to differentiate between compensable and noncompensable hours worked" as DGI argues. In this way, Judge Meyer's ruling is unlike that of the trial court in Charton v. Harkey, supra, 247 Cal.App.4th 730, in which the trial judge, without considering "the reason for incurring the costs and whether they were reasonably necessary for the prevailing party," made an improper across-the-board reduction, "awarding [the defendant] 25 percent of the defense costs because she was one of four jointly represented defendants." (Id. at p. 735, italics added; see also Nelson v. Anderson (1999) 72 Cal.App.4th 111, 130 ["an across-the-board reduction based upon the number of plaintiffs, without regard to the reason the costs were incurred, is not a determination of the necessity or reasonableness of the costs," italics added].) The point of the court in Charton was that the trial judge made such a reduction without more analysis. That is not the case here.
That DGI and the other four defendants all presented a sham guaranty defense does not require us to conclude the court abused its discretion in its allocation. It is not outside the bounds of reason to conclude under the circumstances of this case that attorney Franklin would have spent less time defending one client than in defending five, even when those clients present the same defense. There is necessarily less effort in preparing one set of discovery than five duplicate sets. And the court expressly accounted for Franklin's failure to prove the sham guaranty defense with respect to the other four codefendants, as it was required to do. (Charton v. Harkey, supra, 247 Cal.App.4th at p. 744 [court "must apportion" costs between prevailing and nonprevailing parties incurring joint costs], italics added; see PLCM Group, Inc. v. Drexler, supra, 22 Cal.4th at p. 1096 [allowing the court to consider the "success or failure" of the litigation]; Heritage Pacific Financial, LLC v. Monroy (2013) 215 Cal.App.4th 972, 1005 [attorney's time must be reasonable in relation to the success achieved].) That affirmative defense stood or fell as to each individual or entity codefendant and his or its relationship to the loan and the enterprise, and required factual determinations as to the legal separation between the borrower and each guarantor. (See LSREF2 Clover Property 4, LLC v. Festival Retail Fund 1, LP (2016) 3 Cal.App.5th 1067, 1075.) We cannot say that the analysis required for each codefendants' assertion of the defense was so interconnected that apportionment was rendered impossible.
Additionally, the court did not declare the defense to be "frivolous" as DGI suggests, it simply acknowledged that counsel's time spent seeking to prove the unsuccessful defense for the four nonprevailing codefendants was either duplicative or not reasonably necessary to the conduct of litigation for DGI. The court was not required to otherwise explain its allocation ruling (Hjelm v. Prometheus Real Estate Group, Inc. (2016) 3 Cal.App.5th 1155, 1178 [ruling on a fee motion does not require judicial explanation or a statement of decision]; 569 East County Boulevard LLC v. Backcountry Against the Dump, Inc. (2016) 6 Cal.App.5th 426, 440, fn. 17; Graciano v. Robinson Ford Sales, Inc., supra, 144 Cal.App.4th at p. 156, fn. 7 [no statement of decision required unless requested]), and we conclude it was within its broad discretion when dealing with a case involving five defendants who all executed the same guaranty agreement and asserted a sham guaranty defense. When the court makes a reasoned decision as it did here, using its expertise and taking into account appropriate factors in setting an award of fees, we will not second guess its judgment. (Accord, Heritage Pacific Financial, LLC v. Monroy, supra, 215 Cal.App.4th at pp. 1007-1008 [appellant did not demonstrate trial court exceeded the bounds of reason in figuring reasonable numbers of hours expended by attorney; though appellant pointed to specific increments of time amounting to 23.26 hours that it argued were spent on unsuccessful matters, court "considered [its] argument . . . and obviously concluded that the argument . . . lacked merit," went over billings, and "specifically stated that it found the hours worked . . . to have been reasonably spent" thus "[t]he trial court had a reasonable basis for making this determination in light of the detailed timekeeping records and supporting declarations provided by [counsel]"].)
None of the cases relied upon by DGI compel us to find an abuse of discretion in the court's allocation decision. Each case is highly fact specific, and has little bearing on the ruling in this particular case. Cordero-Sacks v. Housing Authority of City of Los Angeles (2011) 200 Cal.App.4th 1267 involved related causes of action, not multiple defendants with mixed success. In Hill v. Affirmed Housing Group, supra, 226 Cal.App.4th 1192 the Court of Appeal held the trial court did not abuse its discretion to decline allocation where it found claims against an LLC and its managing member for violations of a single written easement agreement were interrelated. (Id. at pp. 1194-1195, 1197-1198.) In Cruz v. Ayromloo, supra, 155 Cal.App.4th 1270, the Court of Appeal upheld an approximately $124,000 attorney fee award to four of 32 tenants who all made the same claims, after the trial court reduced the approximately $400,000 original request of the four tenants first by half, then by 25 percent to account for non-contract issues, then by another 20 percent to account for fees incurred for work done for the other 28 tenants. (Id. at pp. 1272-1274, 1278.) Such reductions and apportionment were not an abuse of discretion even though the attorneys conducted legal research pertaining to issues common to all tenants and had to do the same research and analysis in preparing their case. (Id. at pp. 1277-1278.) Nothing in these cases causes us to question the court's exercise of discretion to apportion attorney Franklin's time among the successful and unsuccessful defendants under the circumstances of this case. B. Determination of Hourly Rate
And in that case, each cause of action alleged wrongful termination connected to the plaintiff's investigation of fraud in a housing authority, and the defendant did not identify work by her attorneys chargeable only to her unsuccessful causes of action. (Cordero-Sacks v. Housing Authority of City of Los Angeles, supra, 200 Cal.App.4th at p. 1285.) The court held, "Where a lawsuit consists of related claims, and the plaintiff has won substantial relief, a trial court has discretion to award all or substantially all of the plaintiff's fees even if the court did not adopt each contention raised." (Id. at p. 1286.)
As summarized above, the court used a $450 per hour attorney fee rate for DGI's counsel in performing its lodestar calculation. In reaching that decision, the court explained: "According to Attorney Franklin, his hourly rate since 2009 has been $525. According to his expert, Mr. Thompson, the market rate in San Diego for an attorney with Attorney Franklin's experience and skill level in business litigation would be in a range between $675-$750 per hour. [¶] According to the Bank's expert, the reasonable hourly rate for the tasks that required Mr. Franklin's skill level is no more than $450 per hour, but that 66 [percent] of the tasks could and should have been performed by an associate level attorney at the rate of $275 per hour, or even a paralegal at $100 per hour. [¶] The Court determines that Attorney Franklin's hourly rate of $525 is a reasonable hourly rate in the San Diego market considering his experience and skill level. However, this was a fairly straightforward business litigation lawsuit; the issues were not particularly difficult or novel. Approximately 50 [percent] of the work performed could have been performed by an associate; Mr. Franklin's skill level was not necessary. While DGI was ultimately successful, the cross-complaint was a failure. Considering all the circumstances, an hourly rate of $450 is the fair market value for the legal services provided."
DGI contends the trial court did not determine the market rate for attorneys of reasonably comparable skill, experience and reputation to attorney Franklin in the San Diego community. It maintains the court erred by considering that the cross-complaint had been dismissed by summary judgment as Franklin had eliminated all work in prosecuting that cross-complaint from his time records, and the outcome of that cross-complaint should not be considered in determining the market rate for attorney fees in the San Diego community. DGI further argues the court erred by failing to consider a contingent fee risk enhancement or multiplier to the basic market rate as recognized in various cases, including Horsford v. Board of Trustees of California State University (2005) 132 Cal.App.4th 359, Ketchum v. Moses (2001) 24 Cal.4th 1122, and Amaral v. Cintas Corporation No. 2 (2008) 163 Cal.App.4th 1157. It maintains the court should have started its calculation by using a prevailing market rate in the San Diego community rather than attorney Franklin's $525 hourly rate, and then applied any reduction. Pointing out attorney Franklin is a sole practitioner with no associates or paralegals, DGI additionally argues the court erred by approaching the issue as if he was part of a large law firm, and the court erred by setting the fee based on speculation on how other law firms would have staffed the case.
These arguments do not establish a clear and unmistakable abuse of discretion. Contrary to DGI's arguments, in the face of conflicting expert declarations on the matter the trial court in fact specifically determined that the market rate for attorneys in San Diego with comparable skill to attorney Franklin was $525 per hour, and its finding has evidentiary support in attorney Franklin's own declaration stating that it had been his hourly billing rate between 2009 and 2015. A declaration of counsel is sufficient evidence of the market rates charged in the legal community (see Davis v. City of San Diego (2003) 106 Cal.App.4th 893, 902-903), especially when evaluated in the light of the trial court's own knowledge and expertise regarding the value of legal services prevailing in the community. (See Ketchum v. Moses, supra, 24 Cal.4th at p. 1132 [experienced trial judge is the best judge of the value of professional services rendered in his court].) The court then decided that $450 was an appropriate overall rate based on what it characterized as the straightforward and relatively standard nature of the litigation, and the fact certain tasks should have been more appropriately handled by less senior attorneys. These were permissible grounds to set the overall rate. (See Heritage Pacific Financial, LLC v. Monroy, supra, 215 Cal.App.4th at p. 1009 [in setting hourly rates, the court must look to the prevailing market rates in the relevant community; it may consider the experience, skill, and reputation of the attorney requesting fees as well as rely on its own knowledge and familiarity with the legal market]; 569 East County Boulevard LLC v. Backcountry Against the Dump, Inc., supra, 6 Cal.App.5th at pp. 436-437 [court may look to these factors as well as the "difficulty or complexity of the litigation to which that skill was applied," and appellate court upheld award calculated at an overall $275 per hour rate in the face of request for fees at $750 (for lead counsel) and $350 per hour (for associates)].) We and other courts have made clear that superior court judges are in the best position to value the services rendered by attorneys, and this includes the hourly rate. (569 East County, at pp. 436-437; see also Kerkeles v. City of San Jose (2015) 243 Cal.App.4th 88, 105 [court may rely on its own knowledge and familiarity with the legal market in setting a reasonable hourly rate].) It is apparent the court in this case agreed with the opinion of Bank's expert, who in his declaration opposing the fee motion stated that "no more than $450 an hour is a reasonable hourly rate during 2012-2015 for a lawyer with Mr. Franklin's experience doing the kind of litigation this case involved . . . ." The court was not bound to accept DGI's expert's opinion. (569 East County, at p. 438.) Thus, its decision was additionally supported by substantial evidence.
Attorney Franklin goes on to say that he believed his rate was "substantially lower than the rates charged by other attorneys of comparable experience for similar work." The court, however, was entitled to disregard this assertion, which was not further explained, as well as expert Thompson's opinion on the matter. (See Goglin v BMW of North America, LLC (2016) 4 Cal.App.5th 462, 473-474.)
Nor did the court abuse its discretion by declining to apply a multiplier, as DGI maintains. Though the court may increase or decrease the lodestar by applying a positive multiplier for, among other factors, the "contingent nature of the fee award" (Rey v. Madera Unified School Dist. (2012) 203 Cal.App.4th 1223, 1240), it is not required to do so. (Id. at p. 1242; see Ketchum v. Moses, supra, 24 Cal.4th at p. 1138.) "Rather, applying a multiplier is discretionary. [Citation.] Further, the party seeking the fee enhancement bears the burden of proof." (Rey, at p. 1242.) And courts are cautioned not to apply a fee enhancement for factors that are accounted for in the basic lodestar calculation. We presume the court knew and applied the correct law concerning use of a multiplier. (Keep Our Mountains Quiet v. County of Santa Clara (2015) 236 Cal.App.4th 714, 741.) In this case, the court was faced with factors justifying both negative (lack of novelty or difficulty and no requirement for extraordinary legal skill) or positive (contingent nature of the fee) multipliers. It ultimately did not include a positive multiplier. Nothing in the record convinces us the court's decision was clearly wrong, particularly since it had already determined DGI's proposed lodestar ($675 to $750 per hour multiplied by 1920.1 hours incurred) was excessive. (See Christian Research Institute v. Alnor (2008) 165 Cal.App.4th 1315, 1329 ["the trial court need not consider a multiplier when presented with an inflated, unreasonable fee request"].)
We reach the same conclusion as to the court's use of the $450 hourly rate for the first attorney fee motion and the related appeal. DGI complains that the court "did not state any facts, nor are there any facts, which would justify" the $450 rate for attorney Franklin's work on the attorney fee motions, which it characterizes as "complicated" and "difficult," with issues not normally found with respect to such a motion, and for its appeal of Judge Bacal's ruling on the attorney fee issue. It points to the fact its briefing seeking attorney fees was lengthy (17 pages for it supporting points and authorities and 14 pages for its reply), and had to deal with the trial court's "unity of interest" rationale under which it denied attorney fees. DGI provides no authority for the proposition that the length of briefing is a relevant consideration for a court's determination of an appropriate hourly rate, and we conclude it is not. Further, DGI's assertion that the issues involved in the attorney fee motion and appeal were complex, even if true, does not demonstrate a $450 hourly rate was unreasonably low. We nevertheless disagree that the unity of interest issue was so difficult as to warrant more than a $450 hourly rate; the issue and 1986 repeal and reenactment of section 1032's language was discussed in a 2012 opinion, Zintel Holdings, LLC v. McLean (2012) 209 Cal.App.4th 431, 441-442, and thus the issue was not one of first impression or particularly complicated. In our view, DGI has not shown the court's decision in setting the hourly rate was "clearly wrong." (Goglin v BMW of North America, LLC, supra, 4 Cal.App.5th at p. 474.) C. Court's Reduction for Time Spent on Summary Judgment Motions
DGI challenges the trial court's reduction of 81.375 hours for work attorney Franklin performed opposing Bank's two summary judgment motions. It maintains the court's calculations were inaccurate. DGI provides tables listing only dates and time increments that purportedly reflect the actual hours on work performed on the motions, without a reasoned explanation for its position. For example, DGI states: "The Court's figure of 162.75 hours is not accurate. The precise number is 115.50 hours. The specific time entries that make up the 115.50 hours are as follows: [DGI inserts table with dates and time increments.] The 115.50 total hours must then be divided by 2 in order to eliminate the time worked by attorney Franklin in opposing the bank's motion for summary judgment with respect to the Cross-Complaint." DGI provides no evidentiary analysis to support these arguments, which do not take into account the appropriate standard of review. We cannot determine from dates and hours spent alone that the trial court, which had scrutinized the billing records, abused its discretion in reducing attorney Franklin's work for particular motions. It is not for this court to exercise our own discretion to determine anew the time spent on various tasks for DGI; we review the exercise of discretion by the trial court. DGI has not affirmatively shown the court manifestly abused its discretion in figuring its recoverable attorney time on these motions. D. Reduction for Clerical Work
DGI challenges the reduction of 34 hours for what the court characterized as clerical work, which the court explained consisted of such things as "telephone calls regarding deposition dates, discovery extensions and motion dates; organizing the file; making copies; [and] going to the courthouse to file a stipulation." DGI argues the actual number of hours for such clerical work amounts to only 13.30 hours as reflected in attorney Franklin's time records and thus the court erred by deducting 20.70 hours. DGI further contends, relying on two federal district court cases, that the court should not have eliminated any of those hours for clerical work at all, on the theory that such time could have been reasonably billed to a private client.
DGI presents no authority establishing what properly may be considered clerical versus nonclerical tasks for which a fee may be recovered, and we will not revisit the trial court's view as to what constitutes noncompensable time spent on such tasks. As for its argument that federal district courts have determined attorney time may be compensable for calendaring or review and organization of documents, one of the cases involved "special problems" (Powell v. U.S. Dept. of Justice (N.D.Cal. 1983) 569 F.Supp. 1192, 1202) with the federal government's production of a large amount of documents and its policy of releasing them in small installments over a six-month period (ibid.), and thus it is inapposite to the time and tasks the court excluded from compensation in this case. In another, counsel explained that the "clerical" or "administrative" time was in fact "case management tasks such as conferring with co-counsel and the client on strategy, document management, plus routine supervision of other legal personnel . . . ." (Rosenfeld v. U.S. Dept. of Justice (N.D.Cal. 2012) 904 F.Supp.2d 988, 1007.) Neither case compels us to find an abuse of discretion here, and as we have stated, we are not bound in any event by federal authorities. E. Reduction of 10 Hours Spent on Peremptory Challenge
With respect to attorney Franklin's time spent on DGI's motion challenging Judge Bacal, the court ruled: "There are 23.5 hours to research and prepare the peremptory challenge motion. The time spent for a 6-page memorandum, notice and declaration is excessive, particularly in light of the fact that the law is straightforward. The hours are reduced by 10 hours."
DGI contends the 10-hour reduction was error. It argues a peremptory challenge motion brought under Code of Civil Procedure section 170.6, subdivision (a)(2), after a successful appeal, is not straightforward but presented a "difficult" and "complicated" issue requiring substantial legal research of whether this court's reversal of Judge Bacal's order denying attorney fees returned the case to the trial court for a "new trial" within the meaning of the statute. Citing the Ninth Circuit's opinion in Moreno v. City of Sacramento (9th Cir. 2008) 534 F.3d 1106, other federal district court authority, and Kerkeles v. City of San Jose, supra, 243 Cal.App.4th 88, DGI argues the trial court should have deferred to Franklin's professional judgment as to how much time he was required to spend; that he was not likely to spend unnecessary time on a contingency fee case in the hope of inflating his fee. According to DGI, "it is obvious that all the 23.5 hours expended by attorney Franklin on the peremptory challenge motion of Judge Bacal were reasonable and necessary."
DGI's arguments do not establish a clear and manifest abuse of the trial court's broad discretion in determining a reasonable fee. We note that Code of Civil Procedure section 656 since at least 1907 has defined a new trial as a "re-examination of an issue of fact in the same court after a trial and decision by a jury, court, or referee," and DGI points to case law decided in 2003 and 2006 addressing the issue presented by this court's reversal and remand. DGI has not established the question was so novel or difficult as to render the court's ruling absurd or beyond the bounds of reason, and we perceive no basis to disturb the court's reduction of the attorney time for that motion to 13.5 hours. F. Reduction of 50 Hours for Attorney Fee Motions
The court awarded DGI fees for the two attorney fee motions, stating: "DGI submitted a separate billing statement for the original motion for fees and this motion for fees. The amount of time spent on both is simply excessive for an attorney who has the extensive legal experience as Mr. Franklin. [¶] The total hours are 245.5. Out of that, there is an entry for clerical work of 0.75 hours, which are excluded. There are 23.5 hours to research and prepare the preemptory challenge motion. . . . Th[ose] hours are reduced by 10 hours. [¶] The balance of the 234.75 hours is for two fee motions. . . . [T]he two motions are not identical, but there is some overlap. The Court's experience with heavy fee motions is that a reasonable amount of time for one motion would be 75-100 hours. The Court reduces the hours by 50 hours, and allows a total of 184.75 hours (or 92.37 hours per motion) for hours set forth for the two fee motions."
DGI contends that trial court reversibly erred by reducing attorney Franklin's compensable time with respect to the attorney fees motions. DGI argues the total amount of Franklin's hours on the motions was actually 222 hours: 111 hours per fee motion, not 245.5 hours as the trial court stated (because the court improperly included 23.5 hours attorney Franklin spent on the peremptory challenge motion), and that its deduction of 50 hours was without any "basis." It argues it is entitled to be compensated for all 111 hours per motion, and this court should add 37.25 hours to the attorney fees award.
Regardless of how the court reached the 184.75 sum, we will not revisit the court's determination that 92.37 hours per fee motion was a reasonable amount of time spent by attorney Franklin. We have already determined that the issues presented concerning the unity of interest theory were not unduly complicated or difficult. DGI has provided no reasoned basis for us to conclude the issues pertaining to its certificate of dissolution were so challenging as to render the court's rulings an abuse of discretion. And the authority it does cite—Kerkeles v. City of San Jose, supra, 243 Cal.App.4th 88—is inapposite as there, the court did not explain its cut of more than 80 percent of the individual plaintiff's requested fees, which was in addition to the court's reduction in his counsel's hourly rates. (Id. at p. 103.) Further, in Kerkeles, the appellate court held that the trial court's reasoning "does not meet the federal criterion of a clear and specific explanation sufficient for meaningful appellate review." (Id. at p. 104, italics added.) No such federal criteria apply here. (Accord, 569 East County Boulevard LLC v. Backcountry Against the Dump, Inc., supra, 6 Cal.App.5th at p. 440, fn. 17 [pointing out Kerkeles involved an award of fees under a federal code section and that it applied "federal criterion"].) Contrary to Kerkeles, the trial court in this case gave reasons for apportioning fees between DGI and its four unsuccessful codefendants. In sum, DGI has not established that the court's award of approximately 92 hours of fees per motion—a significant amount of time for any motion—was a decision that exceeded the bounds of reason.
III. Bank's Appeal
Pointing out the court's attorney fee order does not "evaluate the ethical issues raised" in its opposition to DGI's attorney fees motion, Bank contends the court erred by not considering a downward adjustment of the lodestar due to DGI's failure to notify opposing counsel of its December 2012 dissolution, or for attorney Franklin's violation of specified California Rules of Professional Conduct and Business and Professions Code section 6147. It characterizes the court's failure to exercise its discretion on these matters as an abuse of discretion in and of itself. Bank asks this court to remand the matter for a further hearing as to whether an additional reduction of the fee award or outright elimination of the award is necessary, or to review the issues de novo, and either reduce or completely eliminate the fee award in light of the ethical issues and Franklin's conflicts of interest. A. DGI's Certificate of Dissolution
With respect to DGI's December 27, 2012 filing of a certificate of dissolution, we cannot agree with Bank's characterization of the trial court's ruling. Bank correctly points out that Judge Meyer "recognized the significance of [DGI's] failure to notify [Bank] of the December 27, 2012, Certificate of Dissolution in a timely fashion" when Judge Meyer ruled that "but for this failure 'most of [DGI's attorney] fees would not have been incurred.' " However, Bank then asserts that Judge Meyer did not "consider a further reduction of the lodestar" on that basis; it maintains, "Plainly, the dissolution was not a factor in the Trial Court's decision to apportion, as apportionment was based strictly on the ratio of prevailing codefendants (one) to non-prevailing codefendants (four) and resulted in an award of one-fifth of the total pre-trial and trial-related time . . . ."
To the contrary, as we read the trial court's ruling, it expressly considered the fact that DGI was a dissolved corporation as of December 2012 when it made its allocation of fees between DGI and the other codefendants. The court was entitled to consider this as a factor in its apportionment decision (see PLCM Group v. Drexler, supra, 22 Cal.4th at p. 1096; Holguin v. DISH Network LLC, supra, 229 Cal.App.4th at p. 1332 [assessment of apportionment requires "analysis of the interplay between the . . . various [claims and parties], the evidence offered at trial, and the reasonableness of the time spent on various aspects of the [defendants'] trial presentation"]; Zintel Holdings, LLC v. McLean, supra, 209 Cal.App.4th at p. 443 [prevailing party may recover only reasonable attorney fees incurred in its defense of action]), and we understand it apportioned 20 percent of the fees to DGI not only because it was one of five codefendants, but also because in its view, litigation in the matter would have been more focused on the remaining—ultimately unsuccessful—codefendants had Bank known of DGI's corporate status. The court's apportionment decision was properly based on the totality of the circumstances, including DGI's status as a dissolved corporation, and we conclude it did not fall outside the bounds of reason. B. Franklin's Asserted Violations of Rules of Professional Conduct or Noncompliance with Legal Requirements for Contingent Fee Contracts
As stated, Bank contends the court was entitled to further reduce DGI's recoverable attorney fees, or deny them entirely, due to Franklin's purported ethical failures or noncompliance with contingent fee agreement legal requirements, and that the court's failure to consider these matters was itself an abuse of discretion. In particular, Bank points to asserted violations of Franklin's duty to disclose his own financial interests as well as his duty to not represent adverse interests, and his obligation to obtain the clients' informed written consent after such disclosures. (Rules of Prof. Conduct, rule 3-310.) It asserts Franklin's contingency fee agreement violated Business and Professions Code section 6147, which regulates the form and content of contingency fee agreements. (Leighton v. Forster (2017) 8 Cal.App.5th 467, 483.) Bank points out that courts have denied awards of attorney fees in their entirety for such ethical violations.
Rule 3-310 of the Rules of Professional Conduct provides in part: "(B) A member shall not accept or continue representation of a client without providing written disclosure to the client where: [¶] . . . [¶] (4) The member has or had a legal, business, financial, or professional interest in the subject matter of the representation.
"(C) A member shall not, without the informed written consent of each client:
"(1) Accept representation of more than one client in a matter in which the interests of the clients potentially conflict; or
"(2) Accept or continue representation of more than one client in a matter in which the interests of the clients actually conflict . . . ." Under this rule, " 'Disclosure' means informing the client or former client of the relevant circumstances and of the actual and reasonably foreseeable adverse consequences to the client or former client" and " 'Informed written consent' means the client's or former client's written agreement to the representation following written disclosure . . . ." (Rules of Prof. Conduct, rule 3-310(A)(1), (2).)
Business and Professions Code section 6147 requires that a contingency fee agreement be in writing and include "a statement that the fee is not set by law but is negotiable between attorney and client." (Bus. & Prof. Code, § 6147, subd. (a)(4); see Reed v. Gallagher (2016) 248 Cal.App.4th 841, 848.) Subdivision (b) of Business and Professions Code section 6147 provides that "[f]ailure to comply with any provision of this section renders the agreement voidable at the option of the plaintiff, and the attorney shall thereupon be entitled to collect a reasonable fee." (See Reed v. Gallagher, at p. 848.) Franklin asserts that he did not violate this provision; that all of his clients signed a second fee agreement that included such a provision and the two agreements should be considered together. Bank responds that the second agreement relates to the unsuccessful cross-complaint and is entirely separate. We need not resolve that question, as Bank has no standing to assert the violation, and even assuming such a violation, Franklin would be entitled to his reasonable fee in any event. (Bus. & Prof. Code, § 6147, subd. (b); Huskinson & Brown, LLP v. Wolf (2004) 32 Cal.4th 453, 460-461 [acknowledging that even when a fee agreement is voided under Business and Professions Code section 6147, counsel is nevertheless entitled to a reasonable fee; the court permitted quantum meruit recovery as between law firms who negotiated a fee-sharing agreement without complying with a rule of professional conduct requiring written client consent to it, holding such recovery "is consistent with case law holding or otherwise recognizing that attorneys may recover from their clients the reasonable value of their legal services when their fee contracts or compensation agreements are found to be invalid or unenforceable for other reasons"].)
DGI responds in part that Bank has no standing to complain about such violations. The standing argument has merit. "Standing generally requires that the plaintiff be able to allege injury, that is, an invasion of a legally protected interest." (Great Lakes Construction, Inc. v. Burman (2010) 186 Cal.App.4th 1347, 1356, quoting Angelucci v. Century Supper Club (2008) 41 Cal.4th 160, 175; Surrey v. TrueBeginnings (2008) 168 Cal.App.4th 414, 417.) The focus of the standing inquiry is whether the person seeking standing has "a special interest that is greater than the interest of the public at large and that is concrete and actual rather than conjectural or hypothetical." (Surrey, at p. 417.)
"Rule 3-310 [of the Rules of Professional Conduct] and conflict of interest rules are designed to 'assure the attorney's absolute and undivided loyalty and commitment to the client and the protection of client confidences.' " (Sharp v. Next Entertainment, Inc. (2008) 163 Cal.App.4th 410, 427, some italics added; see also Goldstein v. Lees (1975) 46 Cal.App.3d 614, 619 [The primary purpose of ethical rules regarding accepting adverse employment is to protect the confidential relationship that exists between attorney and client].) Likewise, "[t]he Legislature enacted [section 6147 and other fee contract] statutes '[i]n order to protect clients and to assure fee agreements are fair and understood by clients.' [Citation.] These statutes 'operate to ensure that clients are informed of and agree to the terms by which the attorneys who represent them will be compensated.' " (Leighton v. Forster, supra, 8 Cal.App.5th at p. 483.)
Bank, of course, is not Franklin's client to which these duties and obligations are owed, and thus has no legally protected interest in the type, nature, or validity of Franklin's fee agreement. (Accord, Sullivan v. Dorsa (2005) 128 Cal.App.4th 947.) In Sullivan, the court questioned the standing of property owners in a partition action to attack a fee award to a law firm based on the firm's asserted representation of conflicting interests. There, the firm was engaged to represent the referee, not the owners, which in the court's view "raise[d] a serious question about their standing to protest the alleged representation of adverse interests." (Id. at pp. 964-965.) Bank asserts that Sullivan "is not a standing case, but a standard of review case." Sullivan's statement about the parties' standing may be dictum, but its observation happens to be applicable here. In any event, we do not rely solely on Sullivan in reaching our conclusion.
Bank relies on the general principle that the Rules of Professional Conduct and applicable provisions of the Business and Professions Code "are an important expression of fundamental public policy and exist to foster trust in the legal system" and "do not exist merely to protect clients." But this argument does not confer standing on it to assert its challenge. And this policy would not warrant complete denial of Franklin's fees in any event with regard to his violation of Business and Professions Code section 6147. (Huskinson & Brown, LLP v. Wolf, supra, 32 Cal.4th at pp. 460, 463 ["Where services are rendered under a contractual compensation arrangement that is unenforceable as against public policy, but the subject services are not otherwise prohibited, quantum meruit may be allowed"]; see, e.g., Mardirossian & Assoc., Inc. v. Ersoff (2007) 153 Cal.App.4th 257, 272 ["It is well settled that a contingency fee lawyer discharged prior to settlement may recover in quantum meruit for the reasonable value of services rendered up to the time of discharge," italics added].) We see little difference in a quantum meruit inquiry and that undertaken by the trial court in this case. (See Chodos v. Borman (2014) 227 Cal.App.4th 76, 96-97 [measure of recovery in quantum meruit is the reasonable value of the services rendered that are of direct benefit to the defendant; lodestar method applied]; Fergus v. Songer (2007) 150 Cal.App.4th 552, 560-562, 569 [in action by attorneys for quantum meruit recovery, trial court instructed jury to consider multiple factors in calculating a reasonable attorney fee, including the time and labor, novelty and difficulty of questions, the experience of the attorney, the amount involved and results obtained; jury awarded attorney a reasonable attorney fee of $1.2 million, which the Court of Appeal held was not "against law"].)
As for the other asserted ethical violations raised by Bank—Franklin's asserted failure to disclose to his clients his pecuniary interest in the outcome of the litigation, his failure to disclose actual or potential conflicts among the jointly represented defendants, and his failure to obtain informed written consent to those conflicts—Bank has not established its exposure to attorney fees was the result of such violations. Its sole argument is that "Bank was directly prejudiced" by the violations because "Attorney Franklin had a pecuniary interest in taking all claims to trial, so that he had as many chances as possible of obtaining a judgment in favor of at least one of the defendants—whether or not such a strategy was in the best interest of his clients" and he was "incentivized to conceal the fact of [DGI's] dissolution, because this allowed him to have one additional defendant to represent—an additional 20 [percent] shot at achieving some fee recovery." To the extent Bank was somehow prejudiced or injured by having to face an attorney fee award, it was not due to Franklin's assertedly conflicting representations or failure to obtain his clients' written consent, it was because DGI had prevailed on its sham guaranty affirmative defense.
Bank further asserts that Cal Pak Delivery v. United Parcel Services, Inc. (1997) 52 Cal.App.4th 1 supports its position that it as a nonclient can assert ethical violations of an opponent's counsel to bar a fee award. Cal Pak involved a disqualification motion brought by a nonclient, a defendant who sought to disqualify the plaintiffs' class counsel who had committed an egregious ethical violation against his clients. (Cal Pak, at pp. 6-7.) Plaintiffs' counsel had "admitted he had offered to sell out his client and the class which the client was seeking to represent for a payment to himself personally of approximately $8 to $10 million [dollars]" in exchange for releasing the plaintiff's claims and dismissing the class action. (Id. at pp. 5-6.) The court's order disqualifying counsel prohibited him from receiving any fees in connection with his representation. (Id. at pp. 8, 14.) The Court of Appeal upheld the disqualification, but reversed in part the order concerning fees, pointing out that in cases where the client did not object to the attorney's recovery of fees, courts had permitted some fee recovery. (Id. at p. 16, citing Clark v. Milsap (1926) 197 Cal. 765.) It held the order was partly premature, as "no client-victim of [counsel's] misconduct has yet sought to deny him fees" and thus the question of whether the attorney's violation warranted denial of fees, at least for services incurred before his breach, would have to await the outcome of the litigation. (Cal Pak, at pp. 16, 18.) The Court of Appeal in Cal Pak held the court did not abuse its discretion by denying fees for services after the date of the attorney's egregious offer to sell out his client. (Ibid.)
Given the Cal Pak court's focus on whether the clients had asserted their rights to deny their counsel fees, we are not persuaded this case favors Bank in its effort to deny attorney Franklin his reasonable fees for the asserted ethical violations, which do not come close to rising to the level of that in Cal Pak warranting complete denial of fees. (See Bernard v. Langer (2003) 109 Cal.App.4th 1453, 1459 [pointing out, citing Clark v. Millsap, supra, 197 Cal. at p. 785, that "the violation must be serious before the lawyer is deprived of all or even a portion of his fee"].) Further, the predominant rule in the disqualification context is that before such relief is proper, the complaining party " 'must have or must have had an attorney-client relationship with that attorney' " or at least " 'some sort of confidential or fiduciary relationship must exist or have existed.' " (In re Marriage of Murchison (2016) 245 Cal.App.4th 847, 851; see Chih Teh Shen v. Miller (2012) 212 Cal.App.4th 48, 56-57; Great Lakes Construction, Inc. v. Burman, supra, 168 Cal.App.4th at p. 1356.) Even under the minority view, "a moving 'nonclient must establish a "personal stake" . . . that is sufficient to satisfy the standing requirements of article III of the United States Constitution.' " (Murchison, at p. 852.)
Assuming disqualification standards apply to Bank's effort to deny attorney Franklin his attorney fees, Bank does not have the requisite stake to challenge his fee request based on his asserted ethical lapses. As stated, it was not Franklin's purportedly conflicting representation that "harmed" Bank, it was DGI's success in the litigation. Finally, "a 'violation of a rule of the State Bar Rules of Professional Conduct does not necessarily compel disqualification.' " (In re Marriage of Murchison, supra, 245 Cal.App.4th at p. 853.) The Murchison court "found no case which permits a court to disqualify a lawyer for ethical violations when the nonmoving party wishes to continue the representation and the representation does not harm the opposing party's interest" and it was compelled to "respect [the client's] choice to retain Lawyer." (Ibid., citing in part City and County of San Francisco v. Cobra Solutions, Inc. (2006) 38 Cal.4th 839, 851 ["clients have a right to retain their chosen counsel"].)
DISPOSITION
The order is affirmed. The parties shall bear their own costs on appeal.
O'ROURKE, J. WE CONCUR: HALLER, Acting P. J. AARON, J.