Opinion
No. CIV. S-04-2344 LKK/JFM.
July 18, 2006
Pending before the court is plaintiff Ford Motor Credit Company's motion for attorney fees and costs pursuant to California Civil Code § 1717 and Rule 54 of the Federal Rules of Civil Procedure. I decide the matter based on the papers and pleadings filed herein.
California Civil Code § 1717(a) provides:
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 reasonable attorney's fees in addition to other costs.
I. FACTS
Ford Motor Credit Company, brought suit against defendant Michael Daugherty for two breach of guaranty claims regarding a wholesale agreement and a capital loan agreement and promissory note. Defendant answered, and along with third-party plaintiff Daugherty Lincoln-Mercury, Inc. ("DLMI"), brought a counterclaim against plaintiff as well as third-party defendant Ford Motor Company, Lincoln Division. The counterclaims alleged that plaintiff breached the guaranty agreements, the covenant of good faith and fair dealing, engaged in unfair business practices and interfered with plaintiff's prospective business advantage. A number of the counterclaims were dismissed on February 21, 2006. The court granted summary judgment in favor of plaintiff on all claims on May 1, 2006. Judgment in the amount of $505,217.67 was entered on May 16, 2006.
II. STANDARDS
Where, as here, suit is based on California substantive law, an award of attorneys' fees incurred in the suit is governed by state law. See Kona Enters., Inc. v. Estate of Bishop, 229 F.3d 877, 883 (9th Cir. 2000). Under California law, a prevailing party is ordinarily not entitled to attorneys' fees unless the parties have previously agreed to the fees, or the fees are otherwise provided by statute. See Lerner v. Ward, 13 Cal.App.4th 155, 158 (1993) (citing, inter alia, Reynolds Metals Co. v. Alperson, 25 Cal.3d 124, 127-128 (1979)).
The two contracts at issue provided for attorneys' fees. The Capital Loan Agreement, which this court found defendant breached, provides that:
If Borrower shall fail to make any payment or perform any act required by this Agreement or the Security Documents, then Lender, without notice to or demand upon Borrower and without waiving or releasing any obligation or default, may make such payment or perform such act for the account of and at the expense of Borrower. All sums so paid by Lender, and all costs and expenses, including, without limitation, reasonable attorney's fees and expenses so incurred together with interest thereon . . . shall constitute additions to the Indebtedness secured by the Security Documents, and shall be paid by Borrower to Lender, on demand.
Beyer Dec., Ex. C. Furthermore, the guaranty on the capital loan agreement provides that:
Guarantor agrees to pay reasonable attorneys' fees and expenses incurred by Lender in enforcement of the Security Documents, including this Guaranty.
Beyer Dec., Ex. E. It is clear that the contracts between the parties include provisions allowing plaintiff to recover attorney fees.
Both the federal and the California courts have adopted the "lodestar" method for calculating attorney's fees. Hensley v. Eckerhart, 461 U.S. 424, 433 (1983); Serrano v. Priest, 20 Cal.3d 25, 48-49 (1977). To determine the appropriate fee amount, the court multiplies the number of hours reasonably expended in the litigation by a reasonable hourly rate. Id.
III. ANALYSIS
A. PREVAILING PARTYThe Supreme Court has articulated the standard for a finding of "prevailing party" as whether the party has "succeed[ed] on any significant issue in litigation which achieves some of the benefit the parties sought in bringing suit." Hensley, 461 U.S. at 433 (citing Nadeau v. Helgemoe, 581 F.2d 275, 278-279 (1st Cir. 1978)). The Ninth Circuit, in discussing whether a party has achieved "prevailing" status, has noted that a party can achieve that status by establishing a "clear, causal relationship between the litigation brought and the practical outcome realized."Rutherford v. Pitchess, 713 F.2d 1416, 1419 (9th Cir. 1983) (quoting American Communist Party v. Munro, 650 F.2d 184, 188 (9th Cir. 1981).
Plaintiff brought suit against defendant for breach of two guaranty agreements and as a result of the litigation, the court concluded that defendant breached those agreements. There is clearly a causal relationship between the litigation brought and the outcome achieved. Accordingly, plaintiff is entitled to attorney's fees as the prevailing party.
B. REASONABLE HOURLY RATE
The appropriate hourly fee should be based on the rates charged by counsel with similar experience, reputation, and skill for similar cases in the legal community. See White v. City of Richmond, 713 F.2d 458, 460 (9th Cir. 1985). The burden is on the fee applicant to produce satisfactory evidence that the requested rates are in line with those in the prevailing community for similar services by lawyers of comparable skill, experience, and reputation. Blum v. Stenson, 465 U.S. 886, 895, n. 11 (1984).
Plaintiff's counsel, David E. Pinch, seeks $225.00 per hour for work performed on this case. Mr. Pinch has over nineteen years of experience practicing commercial litigation law. Pinch Dec. at ¶ 6. Duane M. Geck, a senior partner of the Severson Werson law firm, has over twenty years of commercial litigation experience. Pinch Dec. at ¶ 7. Plaintiff explains that the rate of $225 is a discounted rate from the usual hourly rate charged by Mr. Pinch ($275) and Mr. Geck ($395). Pinch Dec. at ¶ 6-7. Defendant alleges that plaintiff has failed to provide adequate support that the rates being requested by plaintiff's counsel are the prevailing rates in the community. Def.'s Opp'n at 2. Instead, defendant invites the court to "use its own knowledge of the relevant market" to determine a reasonable hourly rate. Id. at 3.
After considering counsel's legal experience, the court determines that the rate of $225 adequately reflects the prevailing hourly rate in the Sacramento area for similar work performed by attorneys of comparable skill, experience and reputation. Plaintiff has not tendered evidence as to comparable rates in the Sacramento legal community, instead providing only evidence as to the rate typically charged by Mr. Pinch and Mr. Geck. The Ninth Circuit has repeatedly held that "determination of a reasonable hourly rate is not made by reference to the rates actually charged [by] the prevailing party." Mendenhall v. NTSB, 213 F.3d 464, 471 (9th Cir. 2000) (quotations omitted).
Nevertheless, the rate sought by plaintiff more than comports with fees awarded by this court in other cases. See, e.g., Johnson v. Norman and Edith Hill Trust, No. Civ. S-04-699 (E.D. Cal. May 2006) (Karlton, J.) (awarding attorney with twenty seven years experience in Sacramento $250 per hour); Healy v. MCI Worldcom Network Services, Inc., No. Civ. S-02-1575 (E.D. Cal. Mar. 2006) (Karlton, J.) (awarding attorney with thirty years experience in Sacramento $325 per hour); Asberry v. City of Sacramento, No. Civ. S-01-2343 (E.D. Cal. Apr. 2004) (Karlton, J.) (awarding attorney with fifteen years of experience in Sacramento $275-$325 per hour). The court therefore calculates the lodestar figure based on the hourly rate of $225.
Plaintiff also seeks to recover attorney fees for 7.7 hours of work by Catherine Stark at a rate of $225 per hour. Pinch Dec. at ¶¶ 5, 9. Plaintiff's declaration, however, is silent as to Ms. Stark's legal experience. Since plaintiff has failed to meet its burden of proof as to Ms. Stark's experience, the court declines to award attorney's fees for the 7.7 hours she allegedly spent on the case.
C. REASONABLENESS OF HOURS BILLED
Plaintiff seeks to recover attorney fees for a total of 257.8 hours expended in the litigation. In arriving at the lodestar figure, the district court should exclude hours that are "excessive, redundant, or otherwise unnecessary. . . ."Hensley, 461 U.S. at 434.
Plaintiff's motion requests attorney's fees for 265.5 hours spent on the litigation. Deducting 7.7 hours for the work billed by Ms. Stark, the court arrives at 257.8 hours.
Defendant raises several objections to the amount of hours plaintiff's counsel seeks to recover in fees. First, defendant asserts that an attorney's fee award must be apportioned and that plaintiff should not recover for time spent defending certain counterclaims filed by Daugherty and DLMI. Def.'s Opp'n at 4. Defendant points out that the terms of the guaranty agreement allow for reasonable attorneys' fees and expenses incurred "in enforcement of the Security Documents," and implies that attorneys' fees can be sought only for such enforcement. Beyer Dec., Ex. E. Apportionment is not required where claims are "inextricably interwined, making it impracticable, if not impossible, to separate the multitude of conjoined activities into compensable or noncompensable time units." Abdallah v. United Sav. Bank, 43 Cal.App.4th 1101, 1111 (1996) (citations and quotations omitted). The decision to apportion claims are within the discretion of the court. Hubbard v. Twin Oaks Health and Rehabilitation Center, 406 F.Supp.2d 1096, 1100 (E.D. Cal. 2005) (Karlton, J.).
It would be impracticable for the court to apportion the fees in this case because plaintiff's claims and defendant's counterclaims all arise out of the same set of facts and involve the same guaranty agreement. Plaintiff alleged in its complaint that defendant breached the guaranty agreement. Defendant counterclaimed that it was plaintiff who was in breach of the guaranty agreement. Defendant's remaining counterclaims against plaintiff all arose out the consequences of the alleged breach by plaintiff. In short, both parties were relying on the guaranty agreement in order to secure relief. See Beyer Dec., Ex. E. Consequently no apportionment is necessary or practicable as the claims are "inextricably intertwined." Abdallah, 43 Cal.App.4th at 1111.
Second, defendant asserts that invoices submitted by plaintiff are vague as to how much time was spent on each specific claim and that some of the invoices are redacted and do not explain what a fee for "legal research" was specifically for or about. Def.'s Opp'n at 3-4. As noted above, the claims and counterclaims were so "inextricably intertwined" that apportionment would be impracticable. Abdallah, 43 Cal.App.4th at 1111. While the guaranty agreement itself provides for attorney's fees incurred as a result of enforcing the rights under the agreement, all of plaintiff's alleged subsequent injuries were suffered as a result of the breach of the guaranty agreement. The court ultimately granted summary judgment on all of plaintiffs claims. Therefore, all legal work performed by plaintiff's counsel was to enforce the guaranty agreements, efforts for which plaintiff was ultimately successful.
Finally, defendant argues that the amount of hours plaintiff claims to have spent on the litigation is excessive. Def.'s Opp'n at 4. An examination of Mr. Pinch's papers, declaration, and accompanying billing records leads the court to draw the conclusion that 257.8 hours is a reasonable amount of hours spent under the circumstances. While defendant objects to the amount of hours spent on the litigation, he cannot point to specific examples of work that took an unreasonable amount of time. This litigation has been ongoing for nearly two years and involved numerous amended complaints, answers, and counterclaims. Additionally, plaintiff filed motions to compel, dismiss and a successful motion for summary judgment. Accordingly, 257.8 hours of work plaintiff spent on the litigation is reasonable.
D. BILL OF COSTS
Plaintiff requests $644.68 for costs related to this suit. Specifically, plaintiff requests a $150 filing fee, $308.63 paid to Attorney's Diversified Services for serving defendant and $186.05 in court reporter fees for the transcript of a deposition. Plaintiff has tendered to the court invoices evidencing these costs. Because these expenses are taxable pursuant to 28 U.S.C. § 1920, the court shall award plaintiff this requested amount.
28 U.S.C. § 1920 states:
A judge or clerk of any court of the United States may tax as costs the following:
1. Fees of the clerk and marshal;
2. Fees of the court reporter for all or any part of the stenographic transcript necessarily obtained for use in the case;
3. Fees and disbursements for printing and witnesses;
4. Fees for exemplification and copies of papers necessarily obtained for use in the case;
5. Docket fees under section 1923 of this title;
6. Compensation of court appointed experts, compensation of interpreters, and salaries, fees, expenses, and costs of special interpretation services under section 1828 of this title.
A bill of costs shall be filed in the case and, upon allowance, included in the judgment or decree.
IV. CONCLUSION
Accordingly, plaintiff's counsel is AWARDED attorney's fees and costs in the amount of $58,649.68.IT IS SO ORDERED.
David Pinch 231.4 $225/hr $52,065.00 Duane Geck 26.4 $225/hr 5,940.00 Costs Expenses 644.68 __________ $58,649.68 Defendant points out that the guaranty on the wholesale agreement limits attorneys' fees to "15% of the amount then owing by Dealer, if permitted." Beyer Dec., Ex. D. Defendant argues that the amount recoverable by plaintiff for breach of that guaranty should be limited based on this contractual clause. Def.'s Opp'n at 5. Since there was more than one agreement at issue, and since none of the other agreements specify any sort of limit, those agreements can support the award even with the 15% limit set forth in the wholesale agreement.