Opinion
NOT TO BE PUBLISHED
Santa Clara County Super. Ct. No. CV140874
Bamattre-Manoukian, J.
Defendant GMP Plating, Inc. (GMP), appeals from a post-judgment order granting plaintiff Daniel Gonzalez’s motion for reasonable attorney’s fees. The attorney’s fees motion was filed after the trial court granted GMP’s motion to enforce a written settlement agreement pursuant to Code of Civil Procedure section 664.6. GMP contends that Gonzalez’s attorney is not entitled to recover his fees and costs from GMP, as the parties intended their written settlement agreement to settle all claims in the underlying lawsuit, including Gonzalez’s claims for statutory attorney’s fees and costs. GMP further contends that the amount of the ordered fees and costs is unreasonable. As we find that the settlement agreement does not preclude a statutory request for reasonable attorney’s fees and costs, and that the trial court did not abuse its discretion in making its award, we will affirm the order.
BACKGROUND
On April 24, 2009, counsel for Gonzalez, Tomas E. Margain, filed an unverified complaint by Gonzalez against GMP that included causes of action for failure to pay overtime wages, failure to pay wages owed at the time of termination of employment, failure to provide rest periods or compensation therefor, failure to provide meal periods or compensation therefor, failure to provide accurate wage statements, and unfair business practices. The complaint generally alleged that during the four years prior to the filing of the complaint, while Gonzalez was employed by GMP in a non-exempt position at a restaurant, his wage statements did not list and he was not paid for overtime and all the hours he actually worked. In the prayer for relief, the complaint sought unpaid overtime wages under Labor Code section 1194, liquidated damages pursuant to section 1194.2, waiting time penalties pursuant to section 203, damages and penalties for inadequate wage statements pursuant to section 226, interest pursuant to section 1194, and reasonable attorney’s fees and costs.
Further unspecified statutory references are to the Labor Code.
On June 6, 2009, Martin Gutierrez, the president of GMP, met Gonzalez at a Bank of America in Gilroy, where they negotiated a settlement of the action. Neither man had counsel present at the time. Gutierrez gave Gonzalez a check for $10,000, with the following handwritten statement on the front (in Spanish): “Payment in full in the case of Daniel Gonzalez vs. GMP Plating, Inc. & Martin Gutierrez. Daniel Gonzalez must remain silent and make no comment in this respect or a complaint will be filed by GMP Plating, Inc. [¶] Upon encashment hereof, he will be considered to have been paid for this and future claims against GMP Plating, Inc.” The check also had the following handwritten statement on the back (in Spanish): “You must not make any comments to any present, past or future worker; if you do so, [illegible] or not be a witness in any case vs. GMP Plating, Inc.” Gutierrez watched as Gonzalez signed and deposited the check into his account. Gutierrez alleges that Gonzalez then stated that he would instruct his attorney to cease all actions against GMP.
GMP obtained and submitted a certified translation of the handwritten statements on the check, and the parties do not dispute the submitted translation.
On June 18, 2009, counsel for GMP, Daniel Casas, sent Margain a letter asking that a formal settlement agreement which included a waiver of attorney’s fees and costs be executed. On September 27, 2009, Margain informed Casas by email that he would not dismiss Gonzalez’s complaint unless or until GMP agreed to pay Gonzalez’s attorney’s fees in the amount of $3,500.
On October 9, 2009, GMP filed a motion to enforce settlement pursuant to Code of Civil Procedure section 664.6. In the motion, GMP argued that the parties had entered into a written agreement in full settlement and satisfaction of the dispute, and GMP had fully performed its obligations under the terms of the settlement, but Gonzalez had failed and refused to dismiss the action with prejudice. Gonzalez filed a “PARTIAL OPPOSITION” to the motion to enforce settlement on November 10, 2009, arguing that the settlement did not extinguish claims for attorney’s fees and costs. At the scheduled hearing on the motion on November 19, 2009, the court stated, and Casas agreed, that the parties had previously stipulated that the motion was to be “granted without prejudice to plaintiff filing a motion for attorney’s fees and costs.” The formal order granting the motion filed December 10, 2009, states in pertinent part: “Defendant’s Motion to Enforce Settlement is GRANTED; [¶] The Court having found that the parties entered into binding, written settlement agreement, JUDGMENT is entered in favor of Defendant, pursuant to Code of Civil Procedure section 664.6. [¶] The granting of this Motion is without prejudice to Plaintiff’s counsel’s bringing a Motion for recovery of his fees and costs incurred in litigating this matter on behalf of Plaintiff, which Motion shall be filed and served no later than 21 calendar days following Entry of this Order. The Court notes that Defendant expressly denies liability for any fees and/or costs asserted herein by Plaintiff or his attorney of record.”
On or about December 30, 2009, Margain filed a motion for reasonable attorney’s fees and costs pursuant to section 1194. Margain argued in part that the written settlement agreement did not extinguish a claim for attorney’s fees and costs as there was not an explicit agreement to do so, and that a claim for attorney’s fees belongs to counsel, not the party. Margain further argued that his request for $8,750 in fees and $490 in costs was reasonable. GMP filed opposition to the motion on January 28, 2010, arguing that “[a]s the Defendant owes nothing to Mr. Margain, the Motion for fees and costs must be denied. Mr. Margain remains free to pursue his claim for fees against his client, who evidently failed to honor his fee agreement.”
At the hearing on the motion on February 11, 2010, after hearing argument from the parties, the court ruled as follows: “With regard to this matter, I am going to grant the request for attorney’s fees. The settlement agreement was completely silent about the matter. There’s no intent to resolve the question of attorney’s fees, so I’m not addressing the issue of who the attorney’s fees belong to, only that they will be permitted. I will accept the hourly rate, and the hourly... rate, was... [¶]... [¶] $350 per hour. I will, however, make an adjustment to it as far as I’ll allow the hours you claim, the 25 hours. I didn’t see that you adjusted the hours as noted in the opposition as far as the filing of the complaint, given your level of experience and the nature of the complaint. Instead of six hours, I’m going to allow four hours. The court’s going to reduce the amount by $700. Otherwise, it will be granted.”
On February 23, 2010, the court filed its formal order granting the motion for reasonable attorney’s fees. The order states in pertinent part: “The Motion for fees is granted. Plaintiff’s counsel’s hourly rate of $350.00 is found to be proper. Of the 25 hours requested, the Court shall only award 4 hours for drafting the Complaint - as opposed to the 6 hours requested - and the amount shall be reduced to 23 hours. Plaintiff’s counsel waived fees for work performed after the motion was filed. [¶] The Court awards $8,050.00 in fees and costs in the amount of $490.00 for a total of $8,530.00 [sic].”
DISCUSSION
The Right to Statutory Fees and Costs
Gonzalez’s various claims against GMP were governed by different parts of the Labor Code. Section 1194 governs the duty of the employer to pay minimum wages and overtime. It provides in relevant part: “(a) Notwithstanding any agreement to work for a lesser wage, any employee receiving less than the legal minimum wage or the legal overtime compensation applicable to the employee is entitled to recover in a civil action the unpaid balance of the full amount of this minimum wage or overtime compensation, including interest thereon, reasonable attorney’s fees, and costs of suit.”
As explained in Bell v. Farmer’s Ins. Exchange (2001) 87 Cal.App.4th 805, at page 829 (Bell), the attorney’s fees provision of section 1194 is a one-way fee-shifting statute. It gives employees the right to recover reasonable attorney’s fees in a successful action for minimum wage and/or overtime compensation. (See also Eicher v. Advanced Business Integrators, Inc. (2007) 151 Cal.App.4th 1363, 1380.) “[T]he one-way fee-shifting rule in section 1194 was meant to ‘encourage injured parties to seek redress-and thus simultaneously enforce [the minimum wage and overtime laws]-in situations where they otherwise would not find it economical to sue.’ [Citation.]” (Earley v. Superior Court (2000) 79 Cal.App.4th 1420, 1430.)
Here, Gonzalez’s unverified complaint asserted in part a claim for nonpayment of overtime wages. Such a claim was governed by section 1194. The matter was settled for a payment by his employer to Gonzalez of $10,000, with no specific designation of how much of that amount was attributed to Gonzalez’s various claims, such as overtime, meal or rest break compensation. In addition, the settlement was silent on the issue of attorney’s fees and costs and the settlement check was made out to Gonzalez only, not to Gonzalez and his attorney. The trial court determined that the parties had entered into a valid and binding settlement agreement (Code Civ. Proc., § 664.6) that did not include disposition of the statutory right to an award of reasonable attorney’s fees and costs. Thus, the question before us is whether the parties’ settlement agreement precluded Gonzalez’s attorney from seeking reasonable attorney’s fees and costs.
A settlement agreement is a contract to terminate or forestall all or part of a lawsuit. (Gorman v. Holte (1985) 164 Cal.App.3d 984, 988-989.) “Compromise settlements are governed by the legal principles applicable to contracts generally. [Citations.] A settlement contract also has the attributes of a judgment in that it is decisive of the rights of the parties and serves to bar reopening of the issues settled. Absent a fundamental defect in the agreement itself the terms are binding on the parties. [Citations.]” (Ibid.; see also Weddington Productions, Inc. v. Flick (1998) 60 Cal.App.4th 793, 810-811.) A trial court’s interpretation of a settlement agreement is a legal question that is reviewed de novo so long as it does not depend upon the credibility of extrinsic evidence. (Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 865-866.)
GMP contends that, notwithstanding the language on the check, the parties’ conduct and statements make it clear that they intended that the case “in total” be resolved. “[T]he employee did not pursue his right to statutory attorney’s fees because he believed the case was settled, and he agreed that the lawsuit would be dismissed. Ownership of the statutory fee claim resides with the employee, not his attorney. Consequently, [Gonzalez’s] attorney did not ‘own’ the right to fees and his motion for fees should have been denied.”
GMP also contends that, because the order granting the motion to enforce settlement states that judgment is entered in favor of defendants, Gonzalez is not a prevailing employee. However, notwithstanding the language of the order granting the motion to enforce settlement, the trial court impliedly found that Gonzalez was the prevailing party when it granted the motion for attorney’s fees and costs as his legal action was successful. (Bell, supra, 87 Cal.App.4th at p. 829.) GMP may have been the prevailing party on the motion to enforce settlement, but it is undisputed that GMP paid $10,000 to Gonzalez to settle the claims in his unverified complaint.
Gonzalez contends, citing Folsom v. Butte County Assn. of Governments (1982) 32 Cal.3d 668 (Folsom), that “the settlement agreement did not extinguish a claim for attorneys’ fees and costs as there was no[t] an explicit mutual agreement to do so. While the agreement called for a settlement of the lawsuit it was silent as to fees and costs.” We agree with Gonzalez.
In Folsom, the parties entered into a settlement agreement silent as to costs and attorney fees, which had been included in the complaint’s prayer for relief, and the plaintiffs promised to dismiss their action, with prejudice, on substantial performance of the defendants’ promise to establish four transit systems. The question before the Supreme Court was “whether that agreement operates as a merger and bar of all preexisting claims, depriving the trial court of jurisdiction to award costs and statutory attorney fees.” (Folsom, supra, 32 Cal.3d at p. 671.) The court concluded that “an agreement silent as to costs and fees does not create a bar to either a cost bill or a motion [for statutory attorney fees].” (Ibid.) In so concluding, the court stated: “Compromise agreements... ordinarily conclude all matters put in issue by the pleadings-that is, questions that otherwise would have been resolved at trial. [Citation.] They do not, however (absent affirmative agreement of the parties), conclude matters incident to the judgment that were no part of the cause of action.” (Id. at p. 677.)
“It is established that the right to costs is statutory and that costs ‘are allowed solely as an incident of the judgment given upon the issues in the action. [Citation.]... They constitute no part of a judgment at the moment of its rendition....’ [Citations.] Thus it is that costs are allowed, absent the parties’ express agreement to the contrary, following entry of a consent decree. [Citation.]” (Folsom, supra, 32 Cal.3d at p. 677.) “The same reasoning applies to attorney fees that are authorized solely by statute and hence are not a part of the cause of action. They are incidents to the cause, properly awarded after entry of a stipulated judgment, unless expressly or by necessary implication excluded by the stipulation.” (Id. at p. 678, fn. omitted.) “Therefore, absent affirmative agreement of the parties to the contrary, the trial court retains jurisdiction after the filing of a compromise agreement to entertain a cost bill. It also retains jurisdiction to consider a statutory fee motion-at least where the showing required by statute could not have been made prior to judgment.” (Id. at p. 679, fn. omitted; see also Berti v. Santa Barbara Beach Properties (2006) 145 Cal.App.4th 70, 77 (Berti) [a judgment on a settlement agreement does not act as a merger and a bar to statutory fees; such fees are incident to the judgment]; Chinn v. KMR Property Management (2008) 166 Cal.App.4th 175, 184-185 (Chinn) [a Code. Civ. Proc., § 998 offer that is silent on the issue of attorney fees and costs does not preclude recovery of fees and costs by the prevailing party].)
“As the United States Supreme Court recently observed as to fee motions under the Civil Rights Attorneys’ Fee Awards Act (42 U.S.C. § 1988), ‘Section 1988 provides for awards of attorney’s fees to a “prevailing party.” Regardless of when attorney’s fees are requested, the court’s decision of entitlement to fees will therefore require an inquiry separate from the decision on the merits-an inquiry that cannot even commence until one party has “prevailed.” ’ [Citation.]” (Folsom, supra, 32 Cal.3d at pp. 679-680, fn. omitted.)
The aim of the fee-shifting provision of section 1194 is to enable employees to obtain legal help in seeking redress for injuries resulting from the violation of the wage and hour laws. An award of reasonable attorney’s fees and costs to a prevailing employee in section 1194 cases is a matter of right. (Harrington v. Payroll Entertainment Services, Inc. (2008) 160 Cal.App.4th 589, 594.) Settlement agreements conclude all matters put in issue by the pleadings, but they do not, absent an affirmative agreement of the parties, conclude matters incident to the judgment. Statutory costs and attorney’s fees are incident to the judgment, and may be awarded absent an express agreement of the parties. (Folsom, supra, 32 Cal.3d at pp. 677-678; Berti, supra, 145 Cal.App.4th at p. 75.) Therefore, Gonzalez’s attorney’s entitlement to reasonable attorney’s fees and costs in this case logically follows upon the final determination of the rights of the parties on the main subject matter of the action, as the question of attorney’s fees and costs would not have been resolved at a trial and the settlement agreement did not expressly or by necessary implication include them. (Folsom, supra, 32 Cal.3d at pp. 678-680.)
GMP contends that Folsom is distinguishable and that this case more closely resembles Vaillette v. Fireman’s Fund Ins. Co. (1993) 18 Cal.App.4th 680. We disagree. In Vaillette, the plaintiff “covenanted not to execute on the judgment or any potential claim ‘except as is specifically reserved, ’ and there [was] no specific reservation in the agreement.” (Id. at pp. 688-689, fn. omitted.) The appellate court found that, “while in Folsom the issue of costs and fees did not ‘appear clearly to be comprehended in [the compromise agreement] by the intention of the parties and the necessary consequences thereof’ [citation], and was not ‘expressly or by necessary implication excluded by the stipulation’ [citation], here, the issue of costs and fees appears clearly to be comprehended in the agreement; by necessary implication, Vaillette’s covenant not to execute includes seeking to pursue any claim to costs and fees.” (Id. at p. 689, fn. omitted.) In the case before us, like in Folsom and unlike in Vaillette, the issue of costs and fees was not expressly or by necessary implication included in the settlement agreement.
The parties may include disposition of attorney’s fees within a settlement agreement. There is no reason to believe that the amount of attorney’s fees cannot be compromised, as well as any other issue in the case. (Chinn, supra, 166 Cal.App.4th at p. 185 [a party intending an offer to compromise to encompass attorney fees and costs can easily provide in the offer that each side is to bear its own attorney’s fees and costs]; but see Folsom, supra, 32 Cal.3d at p. 681 [“ ‘Although such situations may raise difficult ethical issues for a plaintiff’s attorney, we are reluctant to hold that no resolution is ever available to ethical counsel’ ”].) In addition, the check used to pay the settlement proceeds may be made out to the employee and his or her counsel. However, there is nothing about the settlement agreement in this case that precluded Gonzalez’s attorney from seeking compensation from GMP for his reasonable fees and for the costs of the civil action he filed on Gonzalez’s behalf, after Gonzalez settled the claims in his lawsuit. As the trial court found, there is no mention of the disposition of the statutory right to attorney’s fees and costs in the settlement agreement. In addition, the check was made out to Gonzalez only, not to Gonzalez and his counsel.
Even if we were to conclude that the settlement agreement was ambiguous as to whether Gonzalez could seek statutory attorney’s fees and costs, as the party who set out the terms of the settlement, GMP caused any ambiguity. Gutierrez could have provided in the settlement agreement that GMP was the prevailing party, or that Gonzalez waived his statutory right to fees and costs, or that the parties would bear their own costs. As GMP caused any uncertainty that exists in the settlement agreement, the agreement must be interpreted against GMP and Gutierrez. (Civ. Code, § 1654; Chinn, supra, 166 Cal.App.4th at p. 185.)
On this record, we find that the trial court correctly concluded that Gonzalez’s counsel was entitled to file a motion for reasonable attorney’s fees and costs.
Reasonableness of the Award
GMP further contends that, even if this court finds that Gonzalez’s attorney was entitled to recover fees and costs, the amount Margain requested was unreasonable. He “should be entitled to no more than $4,516.25, an amount that covers his work prior to entering the settlement agreement, including preparing and filing a standard wage-and-hour lawsuit.”
Gonzalez contends that, “at the trial level [his] counsel substantiated his hourly rate and the lodestar by actual billings. Moreover, the motion shows that fees escalated when [GMP] chose to litigate the matter. As such the reasonableness of the fees should be seen in relationship with [GMP’s] acts on litigating the case. In analyzing this, and given the deferential standard of review, the award amount should be affirmed.”
GMP, as the complaining party, has the burden to establish an abuse of discretion. “ ‘The standard of review on issues of attorney’s fees and costs is abuse of discretion. The trial court’s decision will only be disturbed when there is no substantial evidence to support the trial court’s findings or when there has been a miscarriage of justice....’ [Citation.]” (Frei v. Davey (2004) 124 Cal.App.4th 1506, 1512.)
A “lodestar” method should be used to determine a statutory attorney’s fee award unless the statutory authorization for the award provides for another method. (Meister v. Regents of University of California (1998) 67 Cal.App.4th 437, 448-449.) “[T]he lodestar method vests the trial court with the discretion to decide which of the hours expended by the attorneys were ‘reasonably spent’ on the litigation. [Citation.] The lodestar amount is the product of the number of hours ‘reasonably spent’ and the reasonable rate.” (Id. at p. 449.) A party may be compensated for hours reasonably spent on recovering attorney’s fees. (Id. at p. 455.) However, if a fee request appears unreasonably inflated, the trial court may reduce the award or deny it altogether. (Id. at p. 448.) A fee award must “bear some rational relationship to the amount of the substantive recovery.” (Bakkebo v. MunicipalCourt (1981) 124 Cal.App.3d 229, 236.)
“No specific findings reflecting the court’s calculations [are] required. [Citation.] ‘The record need only show that the attorney fees were awarded according to the “lodestar” or “touchstone” approach.’ [Citation.] On appeal we infer all findings in favor of the prevailing parties. [Citation.]” (Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224, 254.)
In this case, Margain requested fees for 25 of the 33.6 hours he spent on the matter, and he did not seek fees for time spent on the motion for attorney’s fees. The trial court then found that the hours Margain “reasonably spent” on drafting the complaint should be reduced from six to four. As the record reveals that the fee award was determined according to a lodestar approach, and the attorney’s fee award does not appear to be “unreasonably inflated, ” we cannot say that the trial court abused its discretion in awarding Margain $8,050 in attorney’s fees plus $490 in costs.
DISPOSITION
The order of February 23, 2010, granting the motion for reasonable attorney’s fees is affirmed.
WE CONCUR: PREMO, ACTING P.J., GROVER, J.
Judge of the Monterey County Superior Court assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.