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Quin v. EL Cajon Grand Cocktail Lounge

California Court of Appeals, Fourth District, First Division
Nov 6, 2008
No. D052193 (Cal. Ct. App. Nov. 6, 2008)

Opinion


YVONNE T. QUIN, TRUSTEE OF THE JOSEPH QUIN FAMILY TRUST, Cross-complainant, Cross-defendant and Appellant, v. EL CAJON GRAND COCKTAIL LOUNGE, Cross-defendant, Cross-complainant and Respondent IMAGE 2000 MULTIMEDIA, INC., et al., Cross-defendants and Respondents. D052193 California Court of Appeal, Fourth District, First Division November 6, 2008

NOT TO BE PUBLISHED

APPEAL from a postjudgment order of the Superior Court of San Diego County No. GIE030351, Jan I. Goldsmith, Judge. Reversed and remanded with directions.

O'ROURKE, J.

Appellant Yvonne T. Quin, acting as trustee of the Joseph Quin Family Trust, was the prevailing party in a bench trial on competing declaratory relief cross-complaints in which the court determined respondents El Cajon Grand Cocktail Lounge, Inc. and Image 2000 Multimedia, Inc. responsible for ensuring certain leased commercial premises were in compliance with the Americans with Disabilities Act (ADA). Following entry of judgment in her favor, appellant moved for $171,569.50 in attorney fees based on 605.60 hours of attorney time spent on the litigation, of which the trial court found 75 hours reasonably expended. Appellant appeals from the resulting postjudgment order awarding her $21,123.75 in attorney fees, arguing the court erred as a matter of law in analyzing her fee request and abused its discretion by arbitrarily deciding what constituted a reasonable attorney fee award. Because it is not clear the trial court relied upon proper considerations in calculating the attorney fee award and on this record we cannot infer it did so, we remand the matter for a new determination of the amount of attorney fees to be awarded appellant's counsel.

FACTUAL AND PROCEDURAL BACKGROUND

We take the underlying facts in part from the parties' joint stipulation of undisputed facts submitted to the trial court. Appellant and respondents are respectively lessor and lessees of commercial premises in the City of El Cajon under a standard "Industrial/Commercial Single-Tenant Lease" (the lease). The lease contains an attorney fee clause. In December 2005, a disabled individual sued the parties (as well as Alexander Kalogianis and Jason Kreider, personal guarantors of the lease who are not parties to this appeal) for damages as well as injunctive and declaratory relief in part on grounds their facilities violated the ADA (the ADA action). The plaintiff sought to have appellant and respondents make the necessary improvements, modifications and repairs to the premises to ensure compliance with the ADA. In March 2006, appellant, represented by attorneys Slater & Truxaw, LLP, answered the complaint and filed a cross-complaint against respondents for equitable indemnity, equitable apportionment and contribution, declaratory relief and breach of contract, alleging the lease required respondents to defend and indemnify her for any damages or payments made to the plaintiff in the ADA action. Respondents also answered and cross-complained against appellant alleging causes of action for declaratory relief, breach of contract, negligence, premises liability, contribution and apportionment and injunctive relief.

Paragraph 31 of the lease provides in part: "Attorneys' Fees. If any Party . . . brings an action or proceeding involving the Premises to enforce the terms hereof or to declare rights hereunder, the Prevailing Party (as hereafter defined) in any such proceeding, action, or appeal thereon, shall be entitled to reasonable attorneys' fees. Such fees may be awarded in the same suit or recovered in a separate suit, whether or not such action or proceeding is pursued to decision or judgment. The term, "Prevailing Party" shall include, without limitation, a Party . . . who substantially obtains or defeats the relief sought, as the case may be, whether by compromise, settlement, judgment, or the abandonment by the other Party . . . of its claim or defense. The attorneys' fees award shall not be computed in accordance with any court fee schedule, but shall be such as to fully reimburse all attorneys' fees reasonably incurred."

Appellant's operative pleading is her first amended cross-complaint.

In May 2006, appellant and the plaintiff in the ADA action reached a settlement in which appellant paid plaintiff $6,000, appellant agreed to make specified changes to the premises, and plaintiff agreed to release all of the defendants and dismiss his action with prejudice. That same month, appellant's counsel propounded form and special interrogatories and document requests to each lessee.

In June 2006, appellant and respondents attended a case management conference in which they agreed to submit their cross-complaint disputes to the court's mediation program, and the court set the case for trial on March 9, 2007. The parties participated in mediation sessions in August and September 2006 without reaching a settlement. Appellant's counsel proceeded to take depositions of all lessee parties and other nonparty witnesses on November 20, 2006, November 28, 2006, January 15, 2007 and February 2, 2007.

On February 23, 2007, less than a month before trial, respondents' counsel David Peters requested a continuance on grounds that due to injuries and health risks, he was not physically capable of trying the case and his clients needed time to locate new counsel. The court continued the trial to March 23, 2007 and ordered the parties to file trial briefs. On March 16, 2007, appellant submitted her trial brief in keeping with that order. Thereafter, appellant's counsel submitted declarations about case status to the trial court, explaining that attorney Peters had essentially failed to communicate with them with the exception of an email proposing dates for a settlement conference and another email apologizing for not responding to counsel's communications. According to appellant's counsel, Peters had not met and conferred for the advance trial review order, had not responded to a request to carve out stipulations and agreements to streamline the submission of trial evidence, and had twice failed to appear with the expert deponent at a noticed (and renoticed) expert deposition.

On the day set for trial, attorney Peters submitted a declaration seeking another trial continuance, asserting his clients had not yet retained new counsel in part because he had suffered additional medical problems and also because his clients had recently attempted to exercise their option to extend the lease another five years, which appellant's counsel had rejected. That day, the court on the parties' stipulation continued the trial to April 6, 2007.

On April 4, 2007, respondents filed substitution of attorney forms replacing attorney Peters with new attorneys Maldonado & Markham, LLP. The next day, respondents filed an ex parte application to again continue the trial date to a date no earlier than June 8, 2007, and reopen discovery for certain depositions. In a declaration, respondents' new attorney recounted his communications with appellant's counsel, who agreed to submit a joint stipulation of uncontested facts but would not agree to permit discovery or a continuance, and who also "acknowledged that [respondents'] former attorney . . . had been seemingly incapacitated and unable for the past several months to respond promptly or properly to proceedings and deadlines in this case." Respondents' counsel asked the court to allow the parties to submit the joint stipulation, grant his clients certain discovery and order the parties to attend a mandatory judicial settlement conference. The court granted a continuance of trial to June 29, 2007, and ordered the parties to submit their joint stipulation of facts and law by April 19, 2007.

Thereafter, the parties submitted their stipulation of undisputed facts and contested legal issues in which they asked the trial court to resolve who bore responsibility for ensuring the premises met ADA standards. Alternatively, they asked the court to decide whether the parties each bore responsibility in some proportionate share.

The matter proceeded to an approximately three-hour bench trial on July 12, 2007, after which the court found in favor of appellant. In oral findings interpreting various provisions of the lease in view of the numerous strike-outs, as well as assessing the relationship of the cost of curative action and the rent obligation, the nature of the curative action, and the likelihood that the parties contemplated the ADA's application, the court ruled that appellant's responsibility for ADA compliance had been shifted to respondents. It found appellant the prevailing party on her cause of action. After trial, the parties could not agree on appellant's proposed judgment and submitted letters to the court proffering their own proposed judgments. Thereafter, the court entered judgment in appellant's favor in the amount of $11,463 jointly and severally against respondents, Kalogianis and Kreider.

Appellant moved for an award of attorney fees and costs as the prevailing party under Civil Code section 1717. She sought $7,377.34 in costs and $171,569.50 in attorney fees (including $1,000 in expert consultant fees), based on 605.60 hours of legal services provided during twenty months of litigation at a blended hourly rate of $281.65. Appellant's counsel Gary Slater submitted a declaration detailing his and his law partner's years of experience and billing rates (as well as the rates of paralegals involved on the matter), explaining appellant was forced to defend against the ADA plaintiff's complaint due to respondents' failure to indemnify her or hold her harmless under the terms of their lease, and pointing out respondents had refused to participate in settlement negotiations with the ADA plaintiff. Slater asserted that despite appellant's willingness to participate in court-ordered mediation, respondents refused to reciprocate and would not make a settlement offer to appellant until a token offer was orally communicated the day before trial commenced, and they refused to reimburse appellant for any of the legal fees and costs she had incurred in connection with the action.

In opposition, respondents did not challenge counsel's blended rate or appellant's entitlement to fees for defending against the ADA plaintiff's claims, but instead argued the time spent on the litigation was unreasonable in relation to the issues presented and monetary amount at stake. They also argued appellant was seeking to evict them from the leased premises based on her characterization of the court's ruling as a finding that they had breached the lease. Respondents agreed to pay for alterations to the premises, but asked the court to revise its decision to state that there had been no breach of lease and that appellant could not recover attorney fees or costs for the disputes between them over lease interpretation. Submitting a declaration from Kalogianis stating he and respondents had spent $70,000 in attorney fees to litigate the case from start to finish, respondents asked the court to exercise its discretion to award appellant only her reasonable attorney fees for defending against and settling the ADA plaintiff's claims. In reply, appellant argued respondents had not provided any supporting professional opinion about the reasonableness or necessity of any of the attorney fees she had incurred and thus had not rebutted the reasonableness and necessity of her requested fees. As part of her reply papers, appellant submitted an October 2006 letter from her counsel to respondents' counsel offering to settle the entire matter for a lump sum payment of $45,000.

The court awarded appellant all of her requested costs and $21,123.75 in attorney fees. Observing there were "two separate but related portions" of the case: the original ADA claim that was settled in May 2006 and the subsequent litigation between the parties over their responsibility for ADA compliance, the court set reasonable attorney fees for the ADA plaintiff's claims at $4,224.75 based on 15 hours of attorney time at the blended rate, and reasonable attorney fees for the lessor/lessee litigation at $16,899 based on 60 hours of attorney time. The court acknowledged that in determining reasonable fees, a judge "should consider the nature of the litigation, its difficulty, the amount involved, the skill required, the success of the attorney's efforts, the attorney's experience in the particular type of work demanded, the intricacies and importance of the litigation, the labor and necessity for skilled legal training and ability in trying the case, and the time spent."

As to the ADA claim, the court ruled, "[The ADA plaintiff's] complaint was served on the lessor on January 20, 2006[,] and was dismissed on May 16, 2006. In reviewing lessor's attorney records, during those four months there were no depositions, motions or trial. The court is quite familiar with ADA claims similar to those raised in [the ADA plaintiff's] complaint. For the litigation with [plaintiff], the court sets reasonable attorney fees at $4,224.75 based upon 15 hours at [a] $281.65 average hourly rate. [¶] In reaching this determination, the court takes into consideration each of the factors listed above. ADA claims of this nature are not rare or unique. It is not unusual to have pro per defendants. The nature of the claims was not complicated and did not involve substantial issues of law. [¶] Although the court recognizes that fees incurred on [the ADA plaintiff's] claim are items of damages and were not evidenced at the time of trial, both counsel stated at the hearing that the court was to hear all attorney fee requests."

As to the lessor/lessee dispute, the court ruled: "After the May[ ] 2006 settlement with [the ADA plaintiff], the lessor and lessee continued to litigate to determine which party had responsibility for the $11,463.00 settlement. The issue was contractual interpretation based upon the wording of the lease and surrounding circumstances. The court is quite familiar with lease interpretation cases similar to that involved in this case. . . . [¶] . . . The only issue was interpretation of the lease agreement. It was a simple and straightforward case that was presented to the court as a short cause trial whereby most of the facts were stipulated to. The parties and attorneys knew since May[ ] 2006, that the amount in controversy was liquidated at $11,463.00 plus attorney fees and costs. The amount of 60 hours is quite high for a typical short cause matter, but the court calculated the hours in light of discovery, legal research and work on the stipulation of fact, all of which raised the amount of hours needed to present the case." Respondents filed this appeal.

DISCUSSION

I. Standard of Review

This court reviews an order granting or denying attorney fees for abuse of discretion. (PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1095 (PLCM); Graciano v. Robinson Ford Sales, Inc. (2006) 144 Cal.App.4th 140, 148 (Graciano).)

" 'Because the "experienced trial judge is the best judge of the value of professional services rendered in his court," we will not disturb the trial court's decision unless convinced that it is clearly wrong, meaning that it is an abuse of discretion. [Citations.] However, " '[t]he scope of discretion always resides in the particular law being applied, i.e., in the "legal principles governing the subject of [the] action. . . ." Action that transgresses the confines of the applicable principles of law is outside the scope of discretion and we call such action an "abuse" of discretion.' " [Citations.] 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, at pp. 148-149, quoting In re Vitamin Cases (2003) 110 Cal.App.4th 1041, 1052; see also Nichols v. City of Taft (2007) 155 Cal.App.4th 1233, 1239-1240; Horsford v. Board of Trustees of California State University (2005) 132 Cal.App.4th 359, 393 (Horsford).)

II. Reasonable Attorney Fees and the Lodestar Method

"[R]ecoverable litigation costs . . . include attorney fees, but only when the party entitled to costs has a legal basis, independent of the cost statutes and grounded in an agreement, statute, or other law, upon which to claim recovery of attorney fees." (Santisas v. Goodin (1998) 17 Cal.4th 599, 606; see Code Civ. Proc., §§ 1032, subds. (a)(4) & (b), 1033.5, subd. (a)(10), (c)(5); Civ. Code, § 1717, subd. (a).) Civil Code section 1717 governs actions on a contract, and provides in part: "In any action on a contract, where the contract specifically provides that attorney's fees and costs, which are incurred to enforce that contract, shall be awarded either to one of the parties or to the prevailing party, then the party who is determined to be the party prevailing on the contract, whether he or she is the party specified in the contract or not, shall be entitled to attorney's fees in addition to other costs." (Civ. Code, § 1717, subd. (a).) Attorney fees awarded under Civil Code section 1717 are not an element of damages, but an item of costs. (Civ. Code, § 1717, subd. (a) ["Reasonable attorney's fees shall be fixed by the court, and shall be an element of the costs of suit"]; see also Code Civ. Proc., § 1033.5, subd. (a)(10)(A) [attorney fees authorized by contract are allowable as costs].)

In Ketchum v. Moses (2001) 24 Cal.4th 1122, 1131 (Ketchum), the California Supreme Court discussed the use of the "lodestar" adjustment method as set out in Serrano v. Priest (1977) 20 Cal.3d 25 (Serrano III) in the context of an attorney fee award under Code of Civil Procedure section 425.16: "Under Serrano III, a court assessing attorney fees begins with a touchstone or lodestar figure, based on the 'careful compilation of the time spent and reasonable hourly compensation of each attorney . . . involved in the presentation of the case.' [Citation.] We expressly approved of the prevailing hourly rates as a basis for the lodestar, noting that anchoring the calculation of attorney fees to the lodestar adjustment method ' "is the only way of approaching the problem that can claim objectivity, a claim which is obviously vital to the prestige of the bar and the courts." ' [Citation.] In referring to 'reasonable' compensation, we indicated that trial courts must carefully review attorney documentation of hours expended; 'padding' in the form of inefficient or duplicative efforts is not subject to compensation." (Ketchum, at pp. 1131-1132; see also Christian Research Institute v. Alnor (2008) 165 Cal.App.4th 1315, 1321.)

The court went on to state that a court may then adjust the basic lodestar fee based on different factors in order to fix a fee at the fair market value for the particular action. (Ketchum, at pp. 1132, 1034.) This adjustment as it applies to contractual attorney fee awards was explained in PLCM: " '[Civil Code] section 1717 provides for the payment of a "reasonable" fee. After the trial court has performed the calculations [of the lodestar], it shall consider whether the total award so calculated under all of the circumstances of the case is more than a reasonable amount and, if so, shall reduce the [Civil Code] section 1717 award so that it is a reasonable figure.' " (PLCM, supra, 22 Cal.4th at pp. 1095-1096, quoting Sternwest Corp. v. Ash (1986) 183 Cal.App.3d 74, 77.) The lodestar may be adjusted by the court based on 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, at p. 1096; see also Graciano, supra, 144 Cal.App.4th at p. 154, quoting Ketchum, supra, 24 Cal.4th at p. 1132 [lodestar may be adjusted by " 'the novelty and difficulty of the questions involved, [] the skill displayed in presenting them, [] the extent to which the nature of the litigation precluded other employment by the attorneys, [and] the contingent nature of the fee award' "].) In exercising its discretion, the trial court must not intertwine considerations relevant to the determination of the lodestar amount with factors relevant to whether the lodestar should be adjusted. (Northwest Energetic Services, LLC v. California Franchise Tax Bd. (2008) 159 Cal.App.4th 841, 879.)

Because the determination of the lodestar figure is so fundamental to arriving at an objectively reasonable amount, the exercise of the trial court's discretion " 'must be based on the lodestar adjustment method.' " (Ketchum, supra, 24 Cal.4th at p. 1134, quoting Press v. Lucky Stores, Inc. (1983) 34 Cal.3d 311, 322; see also Maria P. v. Riles (1987) 43 Cal.3d 1281, 1295; Nichols v. City of Taft, supra, 155 Cal.App.4th at p. 1240.)

III. Analysis

Appellant challenges the trial court's attorney fee award on several grounds. First, she argues the court ignored the PLCM lodestar adjustment factors, instead assigning parts of the litigation to theoretical categories and giving an absolute value to each category. She points out her attorneys actually expended 49.3 hours on the initial ADA portion of the case from January 2006 until the plaintiff's complaint was settled and dismissed on May 16, 2006, in part in efforts to force respondents to "live up to the lease and settle with" the ADA plaintiff. She further points out that during that time, she spent 49.3 hours on the cross-complaints forming the basis of the declaratory relief trial, and 471.5 hours on the declaratory relief case in the 14 months from June 2006 to the end of July 2007. She argues the only factor that could possibly apply to the court's decision to limit the "reasonable" attorney hours to a total of 75 (15 for the ADA action and 60 for the declaratory relief cross-actions) is the "nature of the litigation," which she maintains refers not to the label of her claim or cause of action but to all of the PCLM factors. According to appellant, the court abused its discretion by relying only on that single factor in reaching its attorney fee decision.

Respondents counter that the court expressly considered the appropriate factors as set out in Contractors Labor Pool, Inc. v. Westway Contractors, Inc. (1997) 53 Cal.App.4th 152, including the time consumed, the need for skilled legal training and ability in trying the case, the amount involved, the success of the attorney's efforts as well as the attorney's learning, age and experience, and the intricacies and importance of the litigation. (Id. at p. 168.) They argue these are the same criteria considered when the lodestar approach is used, where the court first decides how much time was reasonably spent on the matter and then assigns an hourly or blended rate for that time. Respondents maintain this was the approach used by the court in EnPalm, LLC v. Teitler Family Trust (2008) 162 Cal.App.4th 770, in which the court of appeal upheld the trial court's reduction of the prevailing party's attorney fee request by 90 percent – from a lodestar calculated by the court at $50,000 to $5,000 – by use of equitable considerations including the unreasonableness of the fees. (Id. at pp. 773, 775-778.) Respondents alternatively argue a court calculating attorney fees under Civil Code section 1717 is not required to use the lodestar approach.

We reject this latter assertion outright. The case on which respondents rely, Montgomery v. Biomed Specialties, Inc. (1986) 183 Cal.App.3d 1292, did not reject the use of the lodestar approach in Civil Code section 1717 cases, it simply recognized a trial court using the lodestar approach nevertheless retains broad discretion in deciding the amount of a reasonable attorney fee award so as to maintain an abuse of discretion standard of review on appeal. (Id. at p. 1297 ["Thus, having determined that Serrano III[, supra, 20 Cal.3d 25] has not changed our standard of review, our search is for a 'manifest abuse of discretion' "].) Further, Montgomery was decided before PCLM, in which the California Supreme Court plainly sanctioned the lodestar approach in determining an attorney fee award under Civil Code section 1717. (PCLM, supra, 22 Cal.4th at pp. 1095-1097 [explaining that in calculating fees for in-house counsel, the lodestar method is presumptively reasonable though in "exceptional circumstances, the trial court is not precluded from using other methodologies"]; see also Ketchum, supra, 24 Cal.4th at p. 1135 [lodestar adjustment method is widely applied under a broad range of statutes including Civil Code section 1717, and Legislature has endorsed that method of calculating fees " 'except in certain limited situations' "]; EnPalm, LLC v. Teitler Family Trust, supra, 162 Cal.App.4th at p. 774 [using lodestar method in calculating Civil Code section 1717 fees].)

Our assessment of the trial court's exercise of discretion hinges on a more precise understanding of how a court calculates the initial lodestar figure, which, as Ketchum describes, is based on the " 'careful compilation of the time spent and reasonable hourly compensation of each attorney . . . involved in the presentation of the case.' " (Ketchum, supra, 24 Cal.4th at p. 1131, quoting Serrano III, supra, 20 Cal.3d at p. 48.) In Ketchum and PCLM, the court emphasized that the lodestar method requires a court to determine the number of hours reasonably expended. (PCLM, supra, 22 Cal.4th at p. 1095 [it isthe "number of hours reasonably expended multiplied by the reasonable hourly rate. 'California courts have consistently held that a computation of time spent on a case and the reasonable value of that time is fundamental to a determination of an appropriate attorneys' fee award' "]; Ketchum, at p. 1134 [quoting PCLM].)

The question at hand is whether we may infer the trial court applied proper considerations in deciding the "number of hours reasonably expended" aspect of its lodestar calculation. Ketchum holds that "fee awards should be fully compensatory" and thus absent circumstances rendering the award unjust, an attorney fee award should ordinarily include compensation for all the hours reasonably spent" in litigating the action to a successful conclusion. (Ketchum, supra, 24 Cal.4th at p. 1133, italics in original; see also Horsford, supra, 132 Cal.App.4th at p. 394.) The Ketchum court explained, "In referring to 'reasonable' compensation, we indicated that trial courts must carefully review attorney documentation of hours expended; 'padding' in the form of inefficient or duplicative efforts is not subject to compensation." (Ketchum, supra, 24 Cal.4th at p. 1132, citing Serrano III, supra, 20 Cal.3d at p. 48; Christian Research Institute v. Alnor, supra, 165 Cal.App.4th at p. 1321.) In Harman v. City and County of San Francisco (2006) 136 Cal.App.4th 1279, the court analyzed the considerations relevant to this initial lodestar determination by looking to the seminal decision of Hensley v. Eckerhart (1983) 461 U.S. 424, 434, in which the court "instruct[ed] that the initial lodestar calculation should exclude 'hours that were not reasonably expended' " and drew an analogy to private billing practices: " 'Counsel for the prevailing party should make a good-faith effort to exclude from a fee request hours that are excessive,redundant, or otherwise unnecessary, just as a lawyer in private practice ethically is obligated to exclude such hours from his fee submission. "In the private sector, 'billing judgment' is an important component in fee setting. It is no less important here. Hours that are not properly billed to one's client also are not properly billed to one's adversary pursuant to statutory authority." ' " (Harman v. City and County of San Francisco, at p. 1310, quoting Hensley v. Eckerhart, at p. 434.)

The court in Hensley v. Eckerhart, supra, 461 U.S. 424 cited Copeland v. Marshall (C.A.D.C. 1980) 641 F.2d 880, in which the court stated: "Compiling raw totals of hours spent . . . does not complete the inquiry [as to the factor of "hours reasonably expended"]. It does not follow that the amount of time actually expended is the amount of time reasonably expended. . . . Thus, no compensation is due for nonproductive time. For example, where three attorneys are present at a hearing when one would suffice, compensation should be denied for the excess time. . . . " (Copeland v. Marshall, supra, 641 F.2d at p. 891.)

As we shall explain, we agree with appellant that it is not clear that the court first performed a proper initial lodestar calculation before proceeding to apply the lodestar adjustment factors. The record does not reveal this case to be a simple and straightforward lease dispute. The case concerned a lease with many strikeouts and modifications forming the basis of competing declaratory relief cross-complaints, requiring appellant to both simultaneously prosecute and defend claims relating to the lease obligations. Respondents' counsel was not responsive and ultimately sought numerous last-minute trial continuances, requiring appellant to expend efforts in preparing for an anticipated trial call on more than one occasion. Appellant's efforts to settle the matter with respondents were not successful, despite two court-ordered mediation sessions and other apparent settlement efforts. Appellant submitted detailed billing records breaking down in six minute increments the time spent by her attorneys, Gary Slater and Timothy Truxaw, with descriptions of the type of task, subject matter of each time expenditure, and the percentage hourly rate. The amount of fees appellant sought is carefully documented in the billing records.

In the face of detailed and comprehensive billing records, it is incumbent on the party opposing an attorney fee motion to provide some explanation – as by an attorney declaration – why the efforts of counsel were inefficient or duplicative. (E.g., Ketchum, supra, 24 Cal.4th at p. 1132; Hensley v. Eckerhart, supra, 461 U.S. at p. 434; Alnor, at p. 1321.) It is not enough to merely assert the request is unreasonable in light of the nature of the litigated matters. "In challenging attorney fees as excessive because too many hours of work are claimed, it is the burden of the challenging party to point to the specific items challenged, with a sufficient argument and citations to the evidence." (Premier Medical Management Systems, Inc. v. California Insurance Guarantee Assoc. (2008) 163 Cal.App.4th 550, 564.)

Here, the sole evidence presented by respondents in opposition to the attorney fee motion was Kalogianis's declaration, in which he stated: "From the time that this was begun until present, the 'lessee parties' . . . have spent a total of $70,000.00 in attorney's fees to litigate all matters in the case, which above all included responding to the massive discovery requests and lengthy depositions conducted by the Lessor. These fees were incurred to pay for attorney Peters time [sic], the time of attorney Peters' [sic] staff and associate, and attorney Markham's time as well as the time of his staff. In addition, we have incurred costs of suit of approximately $6,000.00. [¶] . . . We have tried to exercise our option under the lease. The lessor has rejected our effort to do so, stating among other things that we are ineligible to exercise the option because we have breached the lease." Respondents did not question the accuracy of appellant's billing records or the blended billing rate used by counsel to calculate the total fees, nor did they present their own attorney's declaration explaining why the sought-after fees were inflated or not reasonably necessary to the conduct of the litigation. Respondents merely argued (without support by any declaration of their own counsel or expert on the matter) that the fees were "unreasonable in relation to the underlying matters that were being litigated," that the matter was tried to the court in "less than one day," and that appellant "did not act reasonably if [she] expended $171,000 in attorney's fees to litigate these matters." Respondents acknowledged spending $70,000 themselves in attorney fees "to litigate the entire case from start to finish," arguing it presented its evidence and arguments with reasonable skill in the case, which involved contract interpretation. They did not demonstrate with any evidence that appellant's counsel's time was inflated, duplicative, inefficient or unproductive, or that counsel's efforts were somehow unnecessary to the litigation.

We are cognizant the trial court was not required to issue a statement of decision with regard to the fee award. (Ketchum, supra, 24 Cal.4th at p. 1140; Graciano, supra, 144 Cal.App.4th at p. 156, fn. 7.) We also acknowledge our review must be highly deferential to the trial court's views. Yet, we may conclude the court abused its discretion if it applied the wrong standard in reaching its result. (Nichols v. City of Taft, supra, 155 Cal.App.4th at p. 1239; Graciano, supra, 144 Cal.App.4th at pp. 148-149.) Here, we cannot say the court evaluated the relevant criteria in utilizing the lodestar adjustment method. The attorney's submissions form the starting point for the court's determination of the " 'hours reasonably expended' " (Ketchum, supra, 24 Cal.4th at p. 1134) component of the lodestar. (Christian Research Institute v. Alnor, supra, 165 Cal.App.4th at p. 1324; Horsford, supra, 132 Cal.App.4th at p. 397.) And here, as stated, the hours requested by appellant's counsel were well documented. Absent a particularized showing from respondents demonstrating how or why the documented hours spent by appellants' counsel were inflated or duplicative, or counsel's work on the matter inefficient or unproductive, we find little in the record to support an inference that the trial court analyzed these threshold reasonableness questions in calculating the initial lodestar figure.

We recognize that in cases where a trial court substantially reduces a fee or cost request, reviewing courts have inferred that the trial court determined the fee was padded or inflated. (Christian Research Institute v. Alnor, supra, 165 Cal.App.4th at pp. 1323, 1325; Levy v. Toyota Motor Sales, U.S.A., Inc. (1992) 4 Cal.App.4th 807, 817.) We are also mindful that we must presume the court performed its duty to examine the billing entries and supporting evidence. (Evid. Code, § 664.) But in Alnor, the record "amply" demonstrated the trial court's familiarity with counsel's billing submissions; the Court of Appeal noted the trial court specifically found in its tentative ruling that " 'much of the work done by the different lawyers was duplicative and unnecessary,' " that use of "block billing" obscured the nature of the work claimed, and that much of the attorneys' work appeared more related to preparing the case for trial than advancing the anti-SLAPP motion for which attorney fees were awarded. (Alnor, at p. 1324.) The Court of Appeal observed that the record showed numerous billing entries for work unrelated to the anti-SLAPP motion as well as vague, block-billed entries, and it concluded the trial court "could reasonably determine counsel's fee request was unreasonably padded, vague, and worthy of little credence." (Id. at pp. 1325-1327.) The billing records in this case do not on their face reveal such deficiencies, and thus we cannot reach the same inference as in Alnor.

Instead, it appears the court, based on its general familiarity with both "ADA claims" and "lease interpretation cases," chose a number of hours in view of what it subjectively believed was a reasonable amount of time spent on litigating those types of cases, as opposed to undertaking an objective analysis of the time and billing records of counsel, the nature of the claims, and the conduct of the parties and their counsel in this case. Further, it appears the court considered the PCLM adjustment factors in its determination of the "hours reasonably expended" component of the lodestar, when those factors are typically considered after the initial lodestar is calculated. Under the circumstances, we are not able to uphold the trial court's decision as a reasonable exercise of its discretion.

Respondents' reliance on EnPalm, LLC v. Teitler Family Trust, supra, 162 Cal.App.4th 770 does not change our conclusion. In EnPalm, the appellants obtained a judgment in a real estate fraud and breach of contract action and as prevailing parties moved for $116,000 in contractual attorney fees. (EnPalm, at pp. 772-773.) Appellants' fee request, as the Court of Appeal noted, "did not include a calculation based on their lawyers' time and hourly rates (the lodestar) and did not include attorney timesheets." (Id. at p. 773.) Despite this, the trial court applied its familiarity with the case and lodestar principles to reach a reasonable attorney fee of $50,000, which it reduced to $5,000 because one of the appellants intentionally lied under oath about various material matters. (Ibid.) The trial court ruled that the action could have been resolved in its early stages had the witness had been more forthcoming as to the true facts, and specifically found " 'the vast majority of the time incurred by the Teitler Defendants' counsel was not reasonably incurred.' " (Ibid.) The EnPalm appellants' appellate challenge to the trial court's attorney fee ruling was similarly unaccompanied by any argument, discussion, analysis or citation to the record, leaving the Court of Appeal without any ability to evaluate the merits of their contention that the court reduced their fees as "punishment" for litigation misconduct and compelling it to deem the issue waived. (EnPalm, at p. 775.) Any further discussion by the EnPalm court is therefore dicta. In any event, EnPalm is distinguishable because the trial court there looked to the particular circumstances of the parties' litigation conduct in that case and made an undisputed finding as to the necessity of counsel's fees in the absence of supporting billing documentation (id. at p. 775, fn. 5), positing a $50,000 lodestar and then reducing that lodestar on grounds the fees were largely unreasonable due to the appellant's conduct. On the face of the record before us, we cannot reach a similar inference that the trial court here took those steps.

For the above reasons, we are compelled to reverse the trial court's order and remand with directions that the court determine a reasonable attorney fee award by first reaching a lodestar figure using the proper standard of reasonableness referenced above. The court is then free to apply the PCLM factors to adjust the fees downward based on the novelty or difficulty of the questions, the skill displayed by appellant's counsel or other relevant factors. (Ketchum, supra, 24 Cal.4th at p. 1132; see Thayer v. Wells Fargo Bank (2001) 92 Cal.App.4th 819, 834 [list of adjustment factors is not exclusive]; Nichols v. City of Taft, supra, 155 Cal.App.4th at p. 1240, fn. 4 [same].)

DISPOSITION

The post judgment order is reversed. The matter is remanded for determination of a reasonable attorney fee award in accordance with the principles set forth in this opinion. Appellant is entitled to costs and attorney fees on appeal to be determined by the trial court.

WE CONCUR: McCONNELL, P. J., HALLER, J.


Summaries of

Quin v. EL Cajon Grand Cocktail Lounge

California Court of Appeals, Fourth District, First Division
Nov 6, 2008
No. D052193 (Cal. Ct. App. Nov. 6, 2008)
Case details for

Quin v. EL Cajon Grand Cocktail Lounge

Case Details

Full title:YVONNE T. QUIN, TRUSTEE OF THE JOSEPH QUIN FAMILY TRUST…

Court:California Court of Appeals, Fourth District, First Division

Date published: Nov 6, 2008

Citations

No. D052193 (Cal. Ct. App. Nov. 6, 2008)

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