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holding that the above attorneys' fees provisions at issue here entitled the "prevailing defendant in a foreclosure action to attorney's fees under section 1717," and citing to other cases finding the same
Summary of this case from Becker v. Wells Fargo Bank, Na, Inc.Opinion
CIV. NO. 2:13-444 WBS CKD
07-01-2014
TERRY L. HOPKINS, Plaintiff, v. WELLS FARGO BANK, N.A., and DOES 1-10, Defendant.
MEMORANDUM AND ORDER RE: MOTION
FOR ATTORNEY'S FEES
Plaintiff Terry L. Hopkins brought this action against defendant Wells Fargo Bank arising out of defendant's foreclosure of plaintiff's property and its allegedly improper failure to disburse insurance proceeds to plaintiff. On February 24, 2014, the court granted defendant's motion for judgment on the pleadings on the basis that plaintiff failed to disclose the existence of her claims against defendant in her bankruptcy filings and was therefore estopped from asserting those claims. Defendant now moves to recover attorney's fees pursuant to California Civil Code section 1717.
At the time the court granted judgment on the pleadings, two claims remained at issue: a claim for breach of
Plaintiff timely appealed the court's Order granting judgment on the pleadings, (Docket No. 37), and that appeal is currently pending before the Ninth Circuit. Although the filing of an appeal typically divests a district court of jurisdiction over the action while the appeal is pending, "the Ninth Circuit has made it clear that district courts retain jurisdiction to decide issues regarding attorney's fees after an appeal is taken." United States v. Real Property Located at 475 Martin Lane, 727 F. Supp. 2d 876, 882 (C.D. Cal. 2010) (citing Masalosalo ex rel. Masalosalo v. Stonewall Ins. Co., 718 F.2d 955, 956-57 (9th Cir. 1983)).
Defendant has not submitted a Bill of Costs and expressly indicates that it does not seek to recover costs. (McClendon Decl. ¶ 9 (Docket No. 41).)
As a preliminary matter, defendant's motion for attorney's fees is timely because defendant moved for fees twenty-eight days after the court denied plaintiff's motion for alter or amend the judgment. See E.D. Cal. L.R. 293(a). Although the court originally granted defendant's motion for judgment on the pleadings on February 24, 2014, the time limit for filing attorney's fees is "tolled pending the outcome of . . . motions under Rule 50 or Rule 59 . . . because those motions operate to suspend the finality of the district court's judgment." Bailey v. County of Riverside, 414 F.3d 1023, 1025 (9th Cir. 2005).
Plaintiff asserts that since "[s]tate procedures govern the timing of [an] attorney's fees motion," defendant's motion is untimely because it was filed after the fifteenday period prescribed by California Rule of Court 3.1700(a). (Pl.'s Opp'n 13 (Docket No. 43).) This argument relies on a fundamental misunderstanding of the Erie doctrine, under which "federal courts sitting in diversity apply state substantive law and federal procedural law." Gasperini v. Ctr. for Humanities, Inc., 518 U.S. 415, 427 (1996). The Ninth Circuit has specifically applied the Erie doctrine to hold that in a diversity case, "the procedure for requesting an award of attorney fees," including relevant deadlines for filing a fees motion, "is governed by federal law." Carnes v. Zamani, 488 F.3d 1057, 1059 (9th Cir. 2007) (citing In re Larry's Apartment, L.L.C., 249 F.3d 832, 83738 (9th Cir. 2001)).
I. Entitlement to Fees
"In a diversity case, the law of the state in which the district court sits determines whether a party is entitled to attorney fees." Carnes, 488 F.3d at 1059 (citing Larry's Apartment, 249 F.3d at 837-38). Section 1717 of the California Civil Code provides that, in "any action on a contract," the prevailing party "shall be entitled to reasonable attorney's fees" if the contract so provides. Cal. Civ. Code. § 1717(a). An attorney's fees provision "shall be construed as applying to the entire contract," even if its language ostensibly permits recovery of attorney's fees only under more limited circumstances. Id.; see Kangarlou v. Progressive Title Co., 128 Cal. App. 4th 1174, 1178 (2d Dist. 2005) (noting that under section 1717(a), "parties may not limit recovery of attorney fees to a particular type of claim"). The California Supreme Court has emphasized that a trial court is "obligated to award attorney fees[] whenever the statutory conditions have been satisfied." Hsu v. Abbara, 9 Cal. 4th 863, 872 (1995).
"California courts liberally construe the term 'on a contract' as used within section 1717. As long as the action 'involve[s]' a contract it is 'on [the] contract' within the meaning of [s]ection 1717." Dell Merk, Inc. v. Franzia, 132 Cal. App. 4th 443, 455 (3d Dist. 2005) (first two alterations in original) (citations omitted). The Ninth Circuit likewise emphasizes that this language "is interpreted liberally," and that an action is "on a contract" whenever "the underlying contract between the parties is not collateral to the proceedings but plays an integral part in defining the rights of the parties." Barrientos v. 1801-1825 Morton LLC, 583 F.3d 1197, 1216 (9th Cir. 2009).
Here, plaintiff alleged that defendant breached its obligations under the Note and Deed of Trust by failing to disburse insurance proceeds and foreclosing on her property. (See Compl. ¶¶ 1-19 (Docket No. 1-1).) Because her claims implicate the parties' covenants to one another under those loan instruments, this action is "on a contract" under section 1717. See Dell Merk, 132 Cal. App. 4th at 455; Barrientos, 583 F.3d at 1216.
Moreover, both loan instruments contain language that entitles defendant to attorney's fees. The Note states that defendant "will have the right to be paid back by [plaintiff] for all of its costs and expenses in enforcing this Note . . . includ[ing], for example, reasonable attorneys' fees and court costs." (Dolan Decl. Ex. 6 at 4 (Docket No. 40-1).) Likewise, the Deed of Trust provides that defendant may do "whatever is reasonable or appropriate to protect [its] rights in the Property . . . includ[ing], without limitation, appearing in court [and] paying reasonable attorney's fees," and that plaintiff is obligated to repay "any amount which [defendant] advances under this [section]." (Dolan Decl. Ex. 7 at 7 (Docket No. 40-1).)
Even if this language seemingly entitles defendant only to those fees it incurred while attempting to enforce its rights in the underlying property--for instance, fees incurred in the foreclosure proceedings themselves--section 1717(a) requires the court to construe this language to provide for an award of fees whenever a defendant is the prevailing party on an action involving a contract. See Cal. Civ. Code § 1717(a); Kangarlou, 128 Cal. App. 4th at 1178; see also Roy Allan Slurry Seal v. Laborers Int'l Union, 241 F.3d 1142, 1145 n.3 (9th Cir. 2001) (noting that section 1717 does not provide "an independent basis for a fee award," but rather "operates by broadening already-existing contractual fee-shifting provisions").
Several judges in this district have held that identical language in a mortgage loan instrument entitled a prevailing defendant in a foreclosure action to attorney's fees under section 1717. See, e.g., Coppes v. Wachovia Mortg. Corp., Civ. No. 2:10-1689 GEB DAD, 2011 WL 4852259, at *2 (E.D. Cal. Oct. 12, 2011) (holding that defendant was entitled to fees under section 1717 because its "defense of this case was undertaken 'to protect [its] rights in the property'"); Smith v. World Sav. & Loan Ass'n, Civ. No. 2:10-2855 JAM JFM, 2011 WL 1833088, at *1-2 (E.D. Cal. May 12, 2011). And other district courts "have routinely held that Section 1717 authorizes the recovery of attorneys' fees where, as here, the plaintiff's claims directly relate to a contracting party's attempts to enforce a contract." Thomas v. Wells Fargo Bank, N.A., Civ. No. 13-2065 JSW, 2014 WL 1245034, at *5 (N.D. Cal. Mar. 25, 2014).
Finally, defendant is indisputably the prevailing party. When "the results of the litigation are mixed," the court may decline to award fees to either party. Hsu, 9 Cal. 4th at 876. Here, however, defendant achieved a "simple, unqualified win," id., rather than a mixed result: the court dismissed three of plaintiff's claims with prejudice, granted judgment in defendant's favor on the other two claims, and denied plaintiff's motion to reconsider the court's Order granting judgment on the pleadings. (See Docket Nos. 16, 29, 36.)
While plaintiff cites section 1717(b) and several decisions by California Courts of Appeal to support the proposition that the court "has jurisdiction not to declare a prevailing party," (Pl.'s Opp'n at 3), the California Supreme Court has made clear that the court may do so only if the results are mixed. Hsu, 9 Cal. 4th at 876. Here, because "the results of the litigation on the contract claims are not mixed[,] . . . [the] court has no discretion to deny attorney['s] fees." Id. at 875-76.
In short, defendant is the prevailing party in an action on a contract, and the contracts at issue in this case contain provisions that permit defendant to recover attorney's fees. Accordingly, defendant has met the statutory criteria set forth by section 1717(a), and it is thus entitled to attorney's fees. See Cal. Civ. Code § 1717(a); Hsu, 9 Cal. 4th at 872.
II. Reasonable Attorney's Fee
Under section 1717(a), fees are "fixed by the court," Cal. Civ. Code § 1717(a), which "has broad authority to determine the amount of a reasonable fee," PLCM Grp. v. Drexler, 22 Cal. 4th 1084, 1095 (2000). The court ordinarily begins this process by determining a "'lodestar,' i.e., the number of hours reasonably expended multiplied by a reasonable hourly rate." Id. The court may then adjust that figure based on "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." Id. at 1096 (citation and internal quotation marks omitted). While the court retains wide discretion over the amount of a reasonable attorney's fee, the California Supreme Court has emphasized that courts "may not invoke equitable considerations unrelated to litigation success" to determine the size of a fee award. Hsu, 9 Cal. 4th at 877.
A. Hours Reasonably Expended
Under California law, a court determining the number of hours reasonably expended on a case "must carefully review attorney documentation of hours expended." Ketchum v. Moses, 24 Cal. 4th 1122, 1132 (2001) (quoting Serrano v. Priest, 20 Cal. 3d 25, 48 (1977)). In so doing, the court must exclude hours that "were not reasonably expended in pursuit of successful claims," Harman v. City & County of San Francisco, 158 Cal. App. 4th 407, 417 (1st Dist. 2007), "[a]ttorney time spent on services which produce no tangible benefit for the client," Meister v. Regents of Univ. of Cal., 67 Cal. App. 4th 637, 652 (6th Dist. 1998), or hours that were otherwise "duplicative or excessive," Graciano v. Robinson Ford Sales, Inc., 144 Cal. App. 4th 140, 161 (4th Dist. 2006).
Defendant's counsel Regina McClendon has submitted a declaration outlining the number of hours that defendant's law firm, Locke Lord LLP, spent on this matter. (Docket No. 41.) Plaintiff has not objected to any of the time entries listed in this declaration as unreasonable. The court has reviewed the declaration and does not find that any of the billing entries submitted by defendant's counsel are excessive. In fact, defendant voluntarily declined to recover fees for over one hundred hours of time spent in discovery, preparation of a motion for summary judgment, and opposition to plaintiff's motion to amend or alter the judgment. (See id. at ¶¶ 10-13.) Defendant also declined to recover fees for nearly $3,000 in expenses it incurred during the litigation, (see id. at ¶ 9), and seeks only to recover those fees it incurred in its initial review of the case, preparation of its motion to dismiss, and preparation of its motion for judgment on the pleadings.
The court therefore determines that McClendon reasonably billed 27.8 hours, associate attorney Jonathan Lieberman reasonably billed 82.6 hours, and associate attorney Jonathan Collins reasonably billed 36.8 hours. In addition, the court determines that paralegal Tiffany Till reasonably billed 2.2 hours and paralegal P.N. Richards reasonably billed 0.7 hours.
B. Reasonable Hourly Rate
The reasonable hourly rate is generally the "prevailing rate in the community for similar work." Drexler, 22 Cal. 4th at 1095; accord Blum v. Stenson, 465 U.S. 886, 895 (1984)). Here, defendant's counsel requests rates ranging from $180 to $496 per hour and represents that those rates are reasonable in light of the nature of the services rendered. (McClendon Decl. ¶ 7.) Plaintiff submitted no evidence to contest those rates. To the contrary, plaintiff's counsel explicitly represented at oral argument that he believed that the rates sought by defendant's counsel were reasonable. Because the attorneys for the parties are in the best position to know what rates are reasonable under the circumstances of this case, the court sees no need to second-guess their assessment or to conduct independent research to determine whether the proposed rates are consistent with those customarily awarded in the Eastern District of California.
The court therefore determines that McClendon is entitled to a reasonable hourly rate of $496 for work billed in 2014 and $480 for work billed before 2014. In addition, the court finds that Lieberman is entitled to an hourly rate of $300 for work billed through October 2014 and $240 for work billed thereafter and that Collins is entitled to a reasonable hourly rate of $297. Finally, the court determines that defendant's paralegals are entitled to a reasonable hourly rate of $180 per hour.
In sum, the court finds that McClendon reasonably billed 13.4 hours at a reasonable hourly rate of $480 and 14.4 hours at a reasonable hourly rate of $496, that Lieberman reasonably billed 76 hours at a reasonable hourly rate of $300 and 6.6 hours at a reasonable hourly rate of $240, that Collins reasonably billed 36.8 hours at a reasonable hourly rate of $297, and that defendant's paralegals reasonably billed 2.9 hours at a reasonable hourly rate of $180.
This results in a lodestar of $49,410.00, computed as follows:
| McClendon: | 13.4 x $480 = $6432.00 14.4 x $496 = $7142.40 |
| Lieberman: | 76.0 x $300 = $22,800.00 6.6 x $240 = $1,584.00 |
| Collins: | 36.8 x $297 = $10,929.60 |
| Paralegals: | 2.9 x $180 = $522.00 |
| $49,410.00 |
C. Adjustments to the Lodestar
After calculating the lodestar, the court must "consider whether the total fee award so calculated under all of the circumstances is more than a reasonable amount"; if so, it must "reduce the . . . award so that it is a reasonable figure." Drexler, 22 Cal. 4th at 1095-96. In making this determination, the court considers "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 success or failure, and other circumstances of the case." Id. at 1096 (citation omitted). While the court may rely on any of these factors to increase or decrease the lodestar figure, there is a "'strong presumption' that the lodestar is the reasonable fee." Crawford v. Astrue, 586 F.3d 1142, 1149 (9th Cir. 2009) (quoting City of Burlington v. Dague, 505 U.S. 557, 562 (1992)); accord Harman v. City & County of San Francisco, 158 Cal. App. 4th 407, 416 (1st Dist. 2007).
Likewise, the Ninth Circuit has held that courts awarding attorney's fees under section 1717 should consider several factors in determining whether to adjust the lodestar, including:
(1) the time and labor required, (2) the novelty and difficulty of the questions involved, (3) the skill necessary to perform the legal services properly, (4) the preclusion of other employment by the attorney due to acceptance of the case, (5) the customary fee, (6) whether the fee is fixed or contingent, (7) time limitations imposed by the client or circumstances, (8) the amount involved and the results obtained, (9) the experience, reputation and ability of the attorneys, (10) the "undesirability" of the case, (11) the nature and length of the professional relations with the client, and (12) awards in similar cases.
Here, no adjustment to the lodestar is necessary. Although mortgage foreclosure cases do not typically present novel or complex questions of law, this case involved issues of contract and bankruptcy law that were somewhat more complex than the ordinary mortgage foreclosure case. (See Docket Nos. 16, 29.) Nor is there any evidence that defendant litigated this case in an inefficient or artificially expensive manner. Rather, defendant's attorneys attempted to resolve this matter efficiently by filing dispositive motions, and defendant seeks to recover only those fees it incurred in filing those motions. (See McClendon Decl. ¶¶ 10-15.) In light of these factors and the "strong presumption" that the lodestar is the reasonable fee, see Crawford, 586 F.3d at 1149, the court need not adjust the lodestar figure. Accordingly, the court will award defendant $49,410.00 in attorney's fees.
IT IS THEREFORE ORDERED that defendant's motion for attorney's fees be, and the same hereby is, GRANTED in the amount of $49,410.00.
__________
WILLIAM B. SHUBB
UNITED STATES DISTRICT JUDGE
Lafarge Conseils et Etudes, S.A. v. Kaiser Cement & Gypsum Corp., 791 F.2d 1334, 1341-42 (9th Cir. 1986) (citing Kerr v. Screen Extras Guild, Inc., 526 F.2d 67, 70 (9th Cir. 1975)). The Ninth Circuit has made clear that courts need not explicitly address all twelve factors, id. at 1342, and the inquiry required under Lafarge is therefore materially identical to the inquiry required under Drexler.