Opinion
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
Appeal from a postjudgment order of the Superior Court of Orange County No. 04CC12264, Charles Margines, Judge.
Enterprise Counsel Group, David A. Robinson, Benjamin P. Pugh; Jeffrey Lewis for Plaintiffs and Appellants.
Kulik, Gottesman, Mouton & Siegel LLP, Thomas M. Ware II, Sharon Barber; Borton Petrini & Conron, LLP, Matthew J. Trostler for Defendant and Appellant.
O’LEARY, J.
In a companion case filed concurrently with this opinion (Ekstrom et al. v. Marquesa at Monarch Beach Homeowners Association [Nov. 3, 2008, G038537] (Ekstrom I)), we affirm the judgment against Marquesa at Monarch Beach Homeowners Association (the Association), in favor of the Plaintiffs, who are individual homeowners within the Marquesa at Monarch Beach development, compelling the Association to enforce a recorded declaration of conditions, covenants, and restrictions (CC&Rs) as concerns neighborhood palm trees that obstruct the Plaintiffs’ ocean views. The judgment awarded the Plaintiffs their costs and attorney fees in accordance with the CC&Rs and Civil Code section 1354, subdivision (c). The Plaintiffs subsequently requested attorney fees of over $686,816.44. The trial court awarded them $522,216.
The plaintiffs and respondents are Robert and Margaret Ekstrom, James and Shendel Haimes, Michael and Betty Sue Hopkins, Robert and Leona Kampling, Stephen and Cheryl Kron, Jim O’Neil, G. John and Joanne Scheffel, and Nicholas Shubin. For convenience, they will hereafter be referred to collectively as the Plaintiffs, unless the context indicates otherwise. In their respondents’ brief, the Plaintiffs inform us that while this appeal was pending, Robert Kempling passed away. His estate was not substituted in. Additionally, Jim O’Neil and Michael and Betty Sue Hopkins no longer reside in Marquesa, although they have not been dismissed from this action.
The Association appeals from the order awarding the Plaintiffs their attorney fees. It concedes the Plaintiffs are entitled to attorney fees, but contends the amount actually awarded does not comport with the trial court’s stated intention to reduce the Plaintiffs’ total claimed hours by 40 percent. We agree with the Association and reverse the attorney fees award and remand the matter to the trial court with directions to recalculate the attorney fees award.
The Plaintiffs also appeal from the postjudgment order contending: (1) the trial court abused its discretion in reducing its attorney fees because the court relied on factors, such as overstaffing and overbilling, that are not supported by the evidence; and (2) the court erred by denying its request for over $40,000 in litigation costs that are otherwise not permitted under Code of Civil Procedure section 1033.5. We find no merit to either of the Plaintiffs’ contentions.
FACTS AND PROCEDURE
The facts and the parties’ underlying dispute are thoroughly discussed in the companion case, Ekstrom I, and we need not reiterate them here. Following entry of judgment, the Plaintiffs submitted a memorandum of costs seeking $37,297.83 in litigation costs allowed under Code of Civil Procedure section 1033.5, of which the court awarded the Plaintiffs $36,192.61. The Plaintiffs filed a separate motion for attorney fees and nonstatutory costs totaling $731,446.03. The nonstatutory costs totaled $44,629.59. The Plaintiffs sought attorney fees of $673,130.19 up through March 2007. They sought an additional $13,686.25 in attorney fees for preparing the motion and responding to the Association’s motion to tax costs. The total attorney fees requested were $686,816.44.
The Plaintiffs submitted their counsel’s detailed billing statements in support of the motion. They excised from the invoices hours attributable to pursuing this action against individual members of the Association’s Board, who were dismissed on summary judgment, and the Association’s property management company, which settled out. The invoiced attorney hours on the underlying matter from October 2004 through February 2007, totaled 3,326.80, from which the Plaintiffs deleted 455.5 hours, for a requested total of 2,871.3 hours. In their brief, the Plaintiffs agree the total hours they claimed through February 2007 were 2,871. The Plaintiffs’ attorneys declared that since February 2007, they had or intended to spend an additional 54.75 hours in preparing the motion for attorney fees and nonstatutory costs, replying to opposition, and responding to the Association’s motion to tax costs.
In his declaration, the Plaintiffs’ counsel Benjamin Pugh explained this case was primarily staffed by himself (a partner in his law firm), another partner, and a senior associate, and their hourly rates ranged from $210 to $450 per hour. Additionally, 10 other attorneys in his office (whose hourly rates ranged from $135 to $450 per hour) and three paralegals (with hourly rates ranging from $85 to $100 per hour) also worked on the case at various times. The Plaintiffs submitted a declaration from attorney Thomas R. Malcom, as an attorney fees expert witness, opining the total of the fees and costs billed by the Plaintiffs’ attorneys was “extremely reasonable.”
In its opposition to the attorney fees and nonstatutory costs motion, the Association submitted a declaration from attorney Daniel A. Nordberg offering his own opinion as an attorney fees expert witness. He explained various billing practices detailed in the Plaintiffs’ counsels’ invoices that he believed rendered the total hours billed unreasonable. Those practices included billing in quarter-hour increments (minimum increments of 15 minutes), when the standard for this type of case is one-tenth (i.e., six minute increments); rounding up time entries for each individual task to the next 15 minute increment; unreasonable congregational billing for meetings and telephone calls (all attorneys at a meeting bill for their time thereby unreasonably compounding the time), excessive billing for e-mails (every attorney working on the case is copied on every e-mail and each bills a minimum of 15 minutes to review each e-mail); and overbilling. Nordberg opined the Plaintiffs’ reasonable attorney fees should not exceed $200,000.
The trial court awarded the Plaintiffs $522,216 in attorney fees and denied their request for nonstatutory litigation costs. With regards to attorney fees, the court’s order stated its reasoning as follows: “In reducing the amount of fees claimed, the court is persuaded by [the Plaintiffs’] counsel’s excessive billing. Counsel’s firm employed a virtual army—[13] attorneys and three paralegals—to work on this case, at rates which varied from $85 . . . to $450 . . . per hour. No explanation was provided for the need to employ so many people and why the hourly rates were reasonable. Plaintiffs’ argument, that essentially their counsel is worth twice as much per hour as counsel for the director defendants, is without any support. That argument also ignores the fact that ‘cheaper’ counsel prevailed against them in the lawsuit. The court finds merit in defendant’s argument that billing in minimum .25 hour increments results in overbilling. The industry standard is .10 hours. One example of overbilling is the amount sought for this motion, a staggering $13,686.25 in fees, reflecting work performed by two attorneys who bill $295 . . . and $210 per hour, respectively. Why does a partner need to spend some 20 hours working on a fees and costs motion when an associate is also billing a similar number of hours on the same motion? The court cannot come up with a reasonable explanation. Thus, the court reduces the hours claimed by 40 [percent] to 2,596.08, to which the court adds 15 hours for preparation of the motion and reply thereto, for a total of 2,611.08 hours. Moreover, using plaintiffs’ own benchmark of $150 . . ., the amount charged by counsel for the director defendants (who prevailed in the lawsuit), and accepting that counsel for the director defendants reduced their customary hourly rates, the court finds that a reasonable hourly rate for work by plaintiff’s counsel is $200 . . . .”
DISCUSSION
1. Attorney Fees
The Association concedes that as the prevailing party in the underlying litigation, the Plaintiffs are entitled to an award of their attorney fees. It argues, however, the amount awarded is not supported by substantial evidence in the record in view of the trial court’s statements in the order as to how the figure was reached. We find merit to the claim.
As prevailing party in this litigation, the Plaintiffs were entitled to an award of their reasonable attorney fees. (Civ. Code, §§ 1717, subd. (a), 1354, subd. (c).) The amount to be awarded as reasonable attorney fees is left to the sound discretion of the trial court. (City of Oakland v. Oakland Raiders (1988) 203 Cal.App.3d 78, 85.) The trial judge is in the best position to evaluate the services rendered, and the court’s decision will not be disturbed on appeal unless it is clearly wrong. (Ibid.) “‘The trial court makes its determination after consideration of a number of factors, including the nature of the litigation, its difficulty, the amount involved, the skill required in its handling, the skill employed, the attention given, the success or failure, and other circumstances in the case.’” (PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1096.) The hours claimed for fee-related services must be reasonable and an excessive claim may constitute special circumstances justifying reduction or denial of the fee award. (Serrano v. Unruh (1982)32 Cal.3d 621, 635; Meister v. Regents of University of California (1998) 67 Cal.App.4th 437, 455.)
The court awarded the Plaintiffs $522,216 in attorney fees. In its order, the trial court explained because the hours claimed were, in the court’s view, grossly excessive, it reduced the hours claimed by the Plaintiffs’ counsel by 40 percent to come up with a total number of allowable hours of 2,596.08, to which the court added another 15 hours for preparation of the motion, for a total of 2,611.08 hours. The court then multiplied that by a reasonable hourly rate of $200 per hour (2,611.08 x $200 = $522,216).
The problem with the award, as the Association points out, is that the bills submitted by the Plaintiffs counsel show total billed hours of 3,326.80, from which the Plaintiffs excised 455.5 hours as being related to the individual defendants, for a total of 2,871.3 hours being claimed by the Plaintiffs. If that number were then reduced by 40 percent, the total hours allowed should have only been 1,722.6 (2,871 x .60 = 1,722.6), not 2,596.08, and the resulting attorney fees award should have been $347,520 (1,722.6 + 15 = 1,737.6; 1,737.6 x $200 = $347,520) not $522,216. For the court to have arrived at the number of hours it awarded, it would have had to start with claimed hours of 4,326.08 (2,596.08/.6 = 4,326.8; 4,326.8 x .60 = 2,596.08)—an amount that is not supported by the bills submitted.
We agree with the Association, no matter how one does the math, the numbers set forth in the trial court’s minute order do not add up. The court stated its intention in fashioning the final award was to reduce the total hours the Plaintiffs had claimed by 40 percent. But the total number of hours it awarded (2,596.08) was over 90 percent of the total hours the Plaintiffs claimed to have billed (2,871.3). (And if one begins with the Plaintiffs’ unexcised hours of 3,326.80, the total awarded was for over 78 percent of that number.) The final dollar amount the court awarded ($522,216) was over 75 percent of the total dollar amount the Plaintiffs sought ($686,816.44).
Faced with the obvious uncertainties in the trial court’s calculations, the Plaintiffs feebly respond, “[t]he trial court did not necessarily make a math error[.]” (Italics added.) While acknowledging that as demonstrated by the Association, to get to the number of hours it awarded, the court had to begin with a number of hours that was “well in excess of the amount of hours the Plaintiffs’ claimed[,]” the Plaintiffs’ nonetheless argue the court might have used a different method of calculating the number that would get closer to the amount the court awarded. They suggest that to calculate the number the court started with (which it then reduced by 40 percent), one could also multiply the hours it awarded (2,596.08) by 1.4, which would suggest the court started with 3,634.5 hours. But a 40 percent reduction of 3,634.5 is 2,180.7—still several hundred hours less than the court awarded. And, the Plaintiffs acknowledge that starting number (3,634.5) is also unsupported by the bills they submitted claiming a total of only 2,871 hours.
The Plaintiffs also offer another possible calculation. They suggest the court might have taken the number of hours they sought 2,871 and then taken the hours they expressly did not claim (i.e., the 455 hours solely attributable to the individual defendants), reduced the already excised hours by another 40 percent (455 x .6 = 273), and subtracted that amount (273) from the claim. The Plaintiffs are correct that 2,871 minus 273 equals 2,598, which is almost exactly what the court awarded—2,596. While those numbers do conveniently align, it defies common sense the trial court in calculating an award it clearly intended to equal 60 percent of the total hours claimed would calculate that number by simply resubtracting a percentage of the hours that expressly were not claimed.
Finally, the Plaintiffs cite us to two familiar rules. First, “In examining [an] order on appeal, we review the trial court’s actual ruling, not its reasons. A judgment or order correct in theory will be affirmed, even where the trial court’s given reasoning is erroneous. [Citation.]” (Punsly v. Ho (2003) 105 Cal.App.4th 102, 113.) And second, “Where, as here, a trial court has discretionary power to decide an [attorney fee award], its decision will be reversed only if there has been a prejudicial abuse of discretion. ‘“To be entitled to relief on appeal . . . it must clearly appear that the injury resulting from such a wrong is sufficiently grave to amount to a manifest miscarriage of justice . . . .”’ [Citation.]” (Baggett v. Gates (1982) 32 Cal.3d 128, 142-143.)
Accordingly, the Plaintiffs argue it is of no importance the court’s order indicates an obvious miscalculation in arriving at the amount of the fees. The amount the court awarded, $522,216, was less than what the Plaintiffs originally sought, $686,816.44. And the amount they originally sought was supported by the bills they submitted and the declaration from Malcom stating those fees were reasonable. The Association has not demonstrated the actual amount awarded in the end was excessive or shocks the conscience. (Acree v. General Motors Acceptance Corp. (2001) 92 Cal.App.4th 385, 404.) Thus, because the court had evidence that would have supported awarding higher fees, the order was within its discretion, and the Association has not been prejudiced by any mathematical errors in calculating the final number.
We cannot agree with the Plaintiffs’ argument. The trial court’s order left no doubt it found the total hours the Plaintiffs’ counsel billed to be excessive due to overstaffing the case and unjustified billing practices that inflated the hours. It specifically stated the total hours claimed should be reduced by 40 percent. The Plaintiff concedes they claimed 2,871 hours, yet the order awarded them 2,596 hours—over 90 percent of what was claimed. There is sufficient uncertainty in the resulting award to persuade us the matter should be remanded for recalculation of attorney fees. (See Ketchum v. Moses (2001) 24 Cal.4th 1122, 1141.)
In their cross-appeal, the Plaintiffs argue the court abused its discretion by reducing the attorney fees at all based on the factors the court relied upon—overstaffing and unjustified billing practices. They argue the number of attorneys and the lawfirm’s billing practices were entirely appropriate. Accordingly, they assert that if the matter is remanded for recalculation of the attorney fees award due to the errors the Association has pointed out, we direct the trial court that it may not consider any of the factors set forth in its order to reduce the award. The Plaintiffs cite to no legal authority in support of their contention. The argument is waived for failure to provide any authority to support it. (Kim v. Sumitomo Bank (1993) 17 Cal.App.4th 974, 979.) As we have already noted, the trial court is in the best position to determine what constitutes a reasonable attorney fee. (City of Oakland v. Oakland Raiders, supra, 203 Cal.App.3d at p. 85.) The Plaintiffs have not demonstrated the court abused its discretion by reducing the hours they claimed for the reasons stated in its order.
2. Nonstatutory Costs
Also in their cross-appeal, the Plaintiffs contend the trial court erred by denying their request for $44,629.59 in litigation costs that were not included in their memorandum of costs because the costs are not permitted by Code of Civil Procedure section 1033.5. We find no error.
The Plaintiffs’ motion sought costs including photocopying expenses, messenger fees, attorney travel expenses, computerized research fees, and fees paid to expert witnesses. While conceding the costs are not allowed by Code of Civil Procedure section 1033.5, subdivision (b), the Plaintiffs contend they were nonetheless entitled to them by statute and contract.
We address the Plaintiffs’ statutory argument first. Code of Civil Procedure section 1033.5, subdivision (b), does not permit the costs the Plaintiffs sought “except when expressly authorized by law[.]” Civil Code section 1354, subdivision (c), provides that in an action to enforce CC&Rs, the prevailing party is entitled to recover “reasonable attorney’s fees and costs.” The Plaintiffs contend Civil Code section 1354, subdivision (c)’s authorization of “costs” must be interpreted as permitting an award of all costs that are otherwise not allowed by Code of Civil Procedure section 1033.5, subdivision (b). Code of Civil Procedure section 1032, subdivision (b), already provides for an award of costs to the prevailing party, and Code of Civil Procedure section 1033.5, describes those costs. The Plaintiffs assert “costs” as used in Civil Code section 1354, subdivision (c), must mean something more than the costs already permitted under Code of Civil Procedure section 1032, or the former statute is meaningless.
The same argument was rejected by our Supreme Court in Davis v. KGO-T.V., Inc. (1998) 17 Cal.4th 436 (Davis). Davis considered Government Code section 12965, subdivision (b), which at the time provided that in a Fair Employment and Housing Act action, “‘the court, in its discretion, may award to the prevailing party reasonable attorney fees and costs . . . .” (Id. at p. 439.) The prevailing plaintiff argued “costs” necessarily included fees for expert witnesses not ordered by the court, even though such fees were not allowed by Code of Civil Procedure section 1033.5, subdivision (b). The Supreme Court disagreed concluding, “Code of Civil Procedure section 1033.5 was intended to give a more precise meaning to the term ‘costs’ in existing fee-shifting statutes—including Government Code section 12965, subdivision (b)—by defining which items of costs are allowable and which are not.” (Id. at pp. 443-444.) Unless the fee-shifting statute specifically authorized expert witness fees, the broader authorization to award costs did not include such fees. The Plaintiffs spend considerable time in their reply brief explaining why they believe Davis was poorly reasoned. But their arguments are unpersuasive, and in any event, we are bound by Supreme Court precedent. (Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 455.)
We turn next to the Plaintiffs’ contract argument. They contend they are entitled to all litigation costs under section 13.7 of the CC&Rs, which provides that in litigation arising out of the CC&Rs “the prevailing party shall be entitled to receive costs of suit and such sum for attorney’s fees as the Court deems reasonable.” While the CC&Rs allow costs, such “contractual costs provisions are presumed to adopt the statutory definition absent evidence to the contrary. [Citation.]” (Hsu v. Semiconductor Systems, Inc. (2005) 126 Cal.App.4th 1330, 1341-1342 (Hsu); Arntz Contracting Co. v. St. Paul Fire & Marine Ins. Co. (1996) 47 Cal.App.4th 464, 491-492.) Accordingly, nonstatutory costs may only be recovered as special contract damages, after pleading and proof at trial, which did not occur here. (Hsu, supra, 126 Cal.App.4th at p. 1342; see also Carwash of America-PO v. Windswept Ventures No. I (2002) 97 Cal.App.4th 540, 543-544; First Nationwide Bank v. Mountain Cascade, Inc. (2000) 77 Cal.App.4th 871, 878; Robert L. Cloud & Associates, Inc. v. Mikesell (1999) 69 Cal.App.4th 1141, 1154; Ripley v. Pappadopoulos (1994) 23 Cal.App.4th 1616, 1625-1626; contra Bussey v. Affleck (1990) 225 Cal.App.3d 1162, 1165-1167 .) Accordingly, the Plaintiffs are not entitled to recover litigation costs that are not allowed under Code of Civil Procedure section 1033.5.
DISPOSITION
The award of attorney fees is reversed and the matter remanded for recalculation of attorney fees. In all other respects, the postjudgment order is affirmed.
WE CONCUR: RYLAARSDAM, ACTING P. J. ARONSON, J.