DKN HOLDINGS v. FAERBER

Appellant’s Petition for Review

Cal.May 28, 2014

$21859%7 S IN THE SUPREME COURT OF THE STATE OF CALIFORNIA DKN HOLDINGSLLC, SUPREME COURT FILE PlaintiffandAppellant, ) ¥. MAY 28 7014 WADE FAERBER, Frank &. McGuire Clerk Defendant and Respondent. Deputy On Review From The Court Of Appeal For the Fourth Appellate District, Division Two, 4th Civil No. E055732, E056294 After An Appeal From the Superior Court For The State of California, County of Riverside, Case Number RIC1109512, Hon. John Vineyard PETITION FOR REVIEW PRENOVOST, NORMANDIN, BERGH & DAWE Michael G. Dawe, SBN 94987 Kristin F. Godeke Baines, SBN 254524 2122 North Broadway, Suite 200 Santa Ana, California 92706-2614 Telephone: (714) 547-2444 Facsimile: (714) 835-2889 Attorneys for DKN HOLDINGS, LLC 7054.0008 / 929503.1 IN THE SUPREME COURT OF THE STATE OF CALIFORNIA DKN HOLDINGSLLC, Plaintiffand Appellant, V. WADE FAERBER, Defendant and Respondent. On Review From The Court OfAppeal For the Fourth Appellate District, Division Two, 4th Civil No. E055732, E056294 After An Appeal From the Superior Court For The State of California, County of Riverside, Case Number RIC1109512, Hon. John Vineyard PETITION FOR REVIEW PRENOVOST, NORMANDIN, BERGH & DAWE Michael G. Dawe, SBN 94987 Kristin F. Godeke Baines, SBN 254524 2122 North Broadway, Suite 200 Santa Ana, California 92706-2614 Telephone: (714) 547-2444 Facsimile: (714) 835-2889 Attorneys for DEN HOLDINGS, LLC 7054.0008 / 929503.1 7054.0008 / 929503.1 TABLE OF CONTENTS Page I. INTRODUCTION AND SUMMARYOF RULING.....eeeesceeceeseeeeees 1 A. Summary Of ISSUeS.00.......eeecessecesscceseeceecnsesseseuseneesseuseeeseseeeseseeses2 B. Background ..........cescscesceeeecesesseceseessessseseessessesasssseusecesnsensseseessesess 3 C, DKN Cited Three Primary Sources In Support Of The Assertion That JointlyAndSeverally Liable Co-Obligors May Be Sued Severally In Separate Suits .0..... cece cscscesceseseeesecessseneene4 D. The Appeals Court Agreed That The Supreme Court Is “Wrong” In WilliQims 2 w..ceeecssccesssessssesenessesesssceseosscsscnseasecassaseaaease 5 E. The Opinion Disparagingly Rejected A Passage From Witkin, Consistent With Williams 2, As A “Classic Example” Of Witkin Mischaracterizing The Law .00...... eee eseesesseesesecseeeeneeneeees9 F, The Opinion Next Rejected The Plain Language And Legislative Intent Of Corporations Code §16307(B)...........cc0 10 TL. ARGUMENToeeeeeeeeesccscssescneesesescseseesssessasensecseesesecensseessasesessessseeasensenesesienes 12 A. Grounds For ReVieW........:cccccccsssecesseceesseeeensetseesceeeseeessesseeseeenseesaees 12 B. The Appellate Court ExceededIts Jurisdiction By IgnoringIts Duty Under Stare Decisis .....ccccccccescecceneesesesestscseteseneneetenenenseneaeens 13 C. The Facts Of Williams 2 Render Its Holding Controlling Here.....14 D. There Is No Material Factual Distinction Between This Case And The Williams Cases That Would Preclude The Application OfThe Controlling Principle OfLaw In Williams 2 To This Case ........ccccccscsssesecesececesceceeseneeceeceeessetsseesnereaceceseneeesaees 16 E. The Appellate Court’s Reliance Upon Melander, Grundel, And Codeof Civil Procedure §§410.70, 578, and 579 As An Accurate Statement OfThe General Rule Necessarily Defeats The New Rule .....cccccccsccssessscsseececnecesceecceeeeeseeeseescesenecneeeaeeeeteeeseaees 17 F, The Appellate Court’s Reliance On Lippert To Support Its Res Judicata Holding Is Misplaced, As Lippert Is Not A Res TUiCALA CASE ..ececcssccceenscsnccesssetesceneceseesnaceesseseaeescessesseessseseseeesesates20 G. Neither Arias Nor Vandenberg Supports The New Rule.............-.22 H. The Appellate Court Exceeded Its Jurisdiction By Ignoring The Clear Legislative Intent Of Corporations Code §16307(B), And By Judicially Legislating An Exception Which Eviscerates The Rule Of The Statute 00...eeeseeeeees25 I. It Is Important That Review Be Granted In Order To Eliminate The Current Material Conflict In Published Law Created By The Opinion 2.00.0... eeesesesesssssessssescseesessenecensensereeees27 J. Is Stare Decisis Still Applicable In California? .......eee27 K. It Is Important Not To Depublish The Opinion............cece29 L. If The Opinion Is Not Reversed, It Is Important For This Court To Instruct The Bench AndBar As To Unreliable Prior Precedent...........ccccccccssseseescccceesccccessssesscascecceescensscesscecececceeessneeseeseees31 TIT. CONCLUSION|... ccececeseesseeeeescesesosscensesssenensneseceseessesnssnsaeeseensenasseeanenss Deseeans32 7054,0008 / 929503.1 ii TABLE OF AUTHORITIES Page CASES Arias v. Superior Court (2009) AG Cal. 47 969 oo. cccccscsesesssccessscessceeeseeeceseceseessaeeseeeateeseaseenseatens 23, 24 Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal. 2d 430 .u...cccescccssscesssecesseeeeceescessseecssesessaeensesseesseseasoesaeees 13, 14 California Teachers Assn. v. Governing Bd. ofRialto Unified School Dist. (1997) 14 Cal4th 627 ...ccccccccccscseccssneccseceeeeeseessneessneeceneesseseasesesesnesseeesesaees 25 City and County ofSan Francisco v. Sweet (1995) 12 Cal.4th 105 occcccecscecsseecseeceeeseeeecseesseeeesesesssssssensesssscesseneonees 25 Grundel v. Union Iron Works (1900) 127 Cal. 438, 442 occeccccesseeeeseseseesteeeenees 6, 7, 9, 16, 17, 28, 29, 31 Lippert v. Bailey (1966) 241 Cal. App. 2d 376.0... eeeeceesseseseesseesesssseseesensesesseeesseesssesseees 20, 22 Melander v. Western Nat. Bank (1913) 21 Cal. App. 462eee7, 9, 16, 17, 18, 19, 20, 28, 29, 31 Sierra Clubv. Sqn Joaquin Local Agency Formation Com. (1999) 21 Cal. 4° 489 ooecccessceceseecesececeeecesseesaeseaeeceaneseerseessecnseersseeosenese 13 Vandenbergv. Superior Court (1999) QL Cal. 4815 vicccccccccccscsescsessssessssscsssessecsesesseesststsesssseesseetees 235 24 Williams v. Reed (1952) 113 Cal. App. 2d 195 weeces seeseesseseensensseneesesereeens 4,9, 15, 31, 32 Williams v. Reed (1957) 48 Cal.2d 57, 64-65... 4,5, 6, 9, 12, 13, 14, 15, 16, 17, 28, 29 OUT OF STATE CASES Sayre v. Coleman (1839) 9 Dana 173, 1839 WL 2623 (Ky. App.) ......ceeeeeseeesseeeseeeereeeeseeees 18 STATUTES Code of Civ. Proc. §§420.70, 578 and 579 uo.eeeceeseessteettseeseeeeneeeees 31 Code of Civil Procedure §§ 410.70, 379 and 389ceceecsseseeeseeeeeeees 9 7054,0008 / 929503.1 ili Code of Civil Procedure §§410.70, 578, and 579 0... ce eeesessseeeeeetseeeeeees 17 Corporations Code §16307(b).......::sssssseeeees 1, 3, 4, 11, 13, 14, 25, 26, 28 OTHER AUTHORITIES 4 Witkin,California Procedure (5 ed. 2008) Pleading, 365, p. 124.00... 4,5, 9, 10, 27, 28, 31, 32 West’s California Reported Cases 0.0.0... cescessssccsseesessessseescnessesesssessseees 28 RULES California Rules of Court, Rule 8.500(b)(1) and (2).........eeeeeeeseeeseeeeeenes 12 7054.0008 / 929503.1 iv L INTRODUCTION AND SUMMARYOF RULING’ Both the trial court and the Court of Appeal in the underlying case refused to apply controlling Supreme Court precedent. Affirmed by the Court of Appeal, the trial court pronounced that the Supreme Court’s holding in Williams 2 was “wrong”with respect to the proposition thatjoint and several obligors can be suedeither jointly in a single lawsuit, or severally in separate lawsuits. Both the trial court and the Court of Appeal announced that commentary in Witkin consistent with the Williams 2 opinion wasa “classic example” of Witkin mischaracterizing the law. Finally, the Court ofAppeal refused to apply the clear languageandlegislative intent ofCorporations Code §16307(b), which expressly permits partners to be sued jointly in a single lawsuit, or severally in separate lawsuits. A petition for rehearing was not filed in the Court of Appeal. DKNsubmits that review by this court is not only appropriate, but essential. The underlying Opinion creates a material conflict in published law, refuses to comply with stare decisis, and judicially legislates a material exception to Corporations Code §16307(b) which is manifestly contrary to the plain language andlegislative intent of that section. ' The “Opinion” is appended as exhibit “A” pursuant to Cal. Rules Ct. 8.504(b)(4). 7054.0008 / 929503.1 1 A. Summary Of Issues Petitioner DKN Holdings, LLC, (“Lessor” or “DKN”) was one oftwo Lessors under a commerciallease in which there were three individualtenants. (“Lessees.”) The individual Lessees were Caputo, Faerber, and Neel. The term of the lease was ten years. The lease expressly stated that the Lessees were jointly and severally liable underthelease. Lessee Caputo, but not the other two Lessees, sued Lessors for rescission, breach of contract and tort damages. (“Caputo Action.”) As cross- complainants in the Caputo Action, commercial Lessors DKN and CDFT obtained a judgment for unpaid rent and damages for breach of the ten yeat lease against Caputo. After having prevailed at trial on its claims against Caputo, but before entry ofjudgment, DKNinitiated a separate action against the co-Lessees Faerber and Neel seeking to hold them severally liable for breach of the lease and related damages. (“Faerber Action.”) Thetrial court in the Faerber Action held the judgment in the Caputo Action precluded the Faerber Action as a matter of law under the claim preclusion arm of resjudicata. The three principalissues presented here are: (1) Whether the Court of Appeal, in holding that joint and several obligors cannot be sued in separate actions, exceeded its jurisdiction by ignoring the compulsory mandate of stare decisis; (2) Whether the Opinion creates an untenable conflict in published law by rejecting Supreme Court precedent; and (3) Whether the Court ofAppeal exceededits jurisdiction by refusing to apply 7054,0008 / 929503.1 2 the clear legislative mandate in Corporations Code §16307(b), and by judicially legislating aNew Rule oflaw whicheviscerates the plain meaning of the statute. B. Background In 2007 Lessee Caputo broughthis action for rescission and damages against the Lessors. The Lessors cross-complained for money damages for breach of the ten year lease. Though the Lessorsinitially cross-complained against all three Lessees, they proceeded against only the single Lessee Caputo. This was a result of contentions made on behalf of the Lessees Faerber and Neelthat they were notin fact intended Lessees under thelease. The documentation of the Lease was not well done, and there wasat least room for some uncertainty as to the identity of the intended Lessees at the outset of the action. The Caputo Action proceeded to trial. Caputo lost onhis affirmative claims. The Lessors prevailed on their claim for breach of lease. Judgment wasentered in favor ofthe Lessors against Caputo on November 11, 2011, in the amount of three million one hundred fifteen thousand eight hundred eighty-six dollars [$3,115,886.00]. On June 1, 2011, several monthsprior to the entry of Judgment against Lessee Caputo, Lessor DKNinitiated an action against the Lessees Faerber and Neel. During thetrial it had becomeclear that, contrary to the contentions 7054.0008 / 929503.1 3 earlier made on behalfofLessees Faerber and Neel, they were indeed Lessees, and “partners” with Caputo. Faerber wasserved andfiled a demurrer. Neel wasserved andfailed to respond, and default was entered. Faerber’s demurrer contended that DKN’s action constituted an improper“splitting” ofa cause ofaction, and was barred, inter alia, by the doctrine of resjudicata. C. DKN Cited Three Primary Sources In Support Of The Assertion That Jointly And Severally Liable Co-Obligors May Be Sued Severally In Separate Suits DKNopposed the Faerber demurrer, citing Williams v. Reed (1957) 48 Cal.2d 57, 64-65, (“Williams 2”)for the proposition that wheretheliability of co-obligors on a contract is bothjoint andseveral, ? it is permissible to sue the obligors either jointly in a single lawsuit, or severally in separate lawsuits. DKNalso cited 4 Witkin, California Procedure (5" ed. 2008) Pleading, 365, p. 124 in support ofthis legal principle. Finally, DKN cited Corporations Code §16307(b), which provides, inter alia, that “an action may be brought against the partnership andanyorall ofthe partners in the sameaction or in separate actions.” (Emphasis added.) 2 Williams 2 followed the previously published appellate level opinion in Williams v. Reed (1952) 113 Cal. App. 2d 195. (“Williams 1°’) 3 It is undisputed that a written provision of the standard form Commercial Lease employed in this case provided that the contractual liability of the lessees was joint and several. 7054.0008 /929503.1 4 Faerber’s demurrer was granted without leave to amend. The court opined, inter alia, that this court’s holding in Williams 2 was “wrong.”It further concluded that the consistent discussion in Witkin was “one of those classic examples of Witkin referring to and relying on a case that doesn’t support the theory published in Witkin.” The Opinionincludesthis pejorative reference to Witkin at footnote 5. Thetrial court subsequently ordered on its own motion that the defaulted Lessee Neel also have judgment entered in his favor. DKNappealed the judgment. D. The Appeals Court Agreed That The Supreme Court Is “Wrong” In Williams 2 Relying on Williams 2, DKN argued on appealthat ajudgmentagainst one joint and several obligor does not foreclose a later action against another joint and several obligor on the sameobligation. In rejecting DKN’s argument the Court ofAppeal quoted the following passage from Williams 2: It is true in most jurisdictions, including California, that joint obligors upon the same contract are indispensible parties. They may not be sued separately [citations]. If judgment is obtained in a separate action against one,it bars an action against the others. [Citation.] When the obligation is joint and several, it is not nonjoinder to sue one alone [citations]. The sameis true of an action against one or more and less than all of a numberof personsjointly and severally obligated as tort feasors. In such a case the judgment obtained against oneis not a bar to an action against the remaining joint and several 7054,0008 / 929503.1 5 obligors. ‘Nothing short ofsatisfaction in some form constitutes a bar....” (Ibid., quoting Grundel v. Union Iron Works (1900) 127 Cal. 438, 442.) Opinion 11 (bold added,italics original). Noting that, based on this passage from Williams 2, DKN argued that because Caputo, Faerber, and Neel “are jointly and severally liable for the unpaid rents and other monies due under the lease, the judgment against Caputo does not bar DKN’s identical claims against Faerber and Neelin the present action. . .”, (id.) the Court of Appeal stated its disagreement with the following explanation: As the trial court noted in sustaining the demurrer, the passage from Williams is “wrong” and incorrectly states the law—tothe extent it may be construedas allowing an obligee, such as DKN,to obtain separate judgments in separate actions against joint and several obligors, based on the sameclaims. Opinion 11 (emphasis added). The Court ofAppeal attempted to distinguish ° the holding in Williams Williams did not addressthe issue presented here: whether a final judgment on the merits against one joint and several obligor bars a subsequent * The Opinion conflicts not only with this Court’s holding in Williams 1, but also with this Court’s opinion in Grundel, supra. > DKN will argue below why it believes Williams 2 is not materially distinguishable from the facts here. 7054,0008 / 929503.1 6 action and judgment against additional joint and several obligors, on the same obligation, by the same claimant. Opinion 11-12. Noting that “cases are not authority for propositions not considered.. .,” the Court concluded that “Williams does not support DKN’s position.” Opinion, 12. Confusingly, the court proceeded to acknowledge the General Rule relating to the permissibility of separate actions against joint and several obligors. As argued below, the Court’s acknowledgementofthe GeneralRule appears directly inconsistent with the rule establishedbyits holding(the “New Rule”) that, thoughjointly and severally liable on the Lease, Faerber and Neel had to have been includedin the judgmentin the Caputo Action, or they were exonerated from their several liability. Ironically, the court emphasized the contrary General Rule in establishingthe New Rule: To be sure, courts are generally authorized to render separate judgments, in the sameaction or in separate actions, against joint and several obligors. (Melander v. Western Nat. Bank (1913) 21 Cal. App. 462, 474-78 ° [construing former§ 414, now § 410.70 & §§ 578, 579, as authoring (sic) courts to enter separate judgments in separate actions against joint and several obligors]; (fn. omitted) see also Grundel v. Union Iron Works, supra, 127 Cal. at p. 442[joint and 6 As discussed below, the holding in Melander, relied upon by the appellate ~ court, is antithetical to the ruling affirmed by the court. 7054.0008 / 929503.1 7 several tort feasors may be sued in separate actions].) Opinion 12 (bold added,italics in original). Notwithstanding this recognition of the General Rule, the appellate court divined the New Rule exception to the General Rule: But even whenjoint and several obligors are not required to be sued in the same action (see §§ 410.70, 379, 389)’ when, as here, a final judgment on the merits has been rendered in one action against a joint and severalobligor, res judicata will bar the assertion of identical claimsagainst other joint and severalobligors, in a subsequentaction, by parties bound by the judgmentin the prior action. Opinion 12-13 (emphasis). Asargued below, the New Rule necessarily eviscerates the General Rule acknowledgedin the Opinion. They cannot coexist or withstand logical analysis. Inevitably, whether the separate actions against severally liable co- obligors are simultaneously pending separate actions, or successively pending separate actions, there will always be a first judgment in time, which will be obtainedprior to any secondjudgmentin time. The New Rule necessitates the result that, in every situation where the GeneralRule putatively applies, once a judgment on the merits is obtained against one jointly and severally liable obligor, all remaining jointly and severally liable obligors not subject to that ’ The Opinion acknowledgesthat these current sectionsof the Codeof Civil Procedure are consistent with the General Rule. 7054.0008 / 929503.1 8 judgmentwill be simultaneously exonerated of the obligation for which they were supposedly severally liable. Under the New Rule, the statutes discussed in Melander and their successors referenced in the Opinion, as well as the case law expressly permitting the filing of separate actions against several obligors, would constitute nothing more than a dangerous mirage anda trap for the unwary lawyerandhis orher client. The New Rule would necessarily require the re- writing of these statutes, and the reversal of the holdingsin all cases such as Williams I and 2, Grundel and Melander, and a clear declaration from this Court that the General Rule is officially defunct. E. The Opinion Disparagingly Rejected A Passage From Witkin, Consistent With Williams 2, As A “Classic Example” Of Witkin Mischaracterizing The Law Followingits rejection of the General Rule, the court dealt a blow to Witkin. Quoted by the Court of Appeal, the Witkin passage relied upon by DKNstates, consistent with the holdings in the Williams cases, Melander, Grundel, and the provisions in Code of Civil Procedure §§ 410.70, 379 and 389: If defendants are bothjointly and severallyliable, joinder is not mandatory but permissive, and the plaintiff, although he or she has but one cause ofaction, may sue one defendantfirst and another later. Despite the theoretical incongruity, the plaintiff is not barred in the second action becausethe defense ofresjudicata 7054.0008 / 929503.1 9 is available only when both the cause of action and the parties are the same.” (4 Witkin, Cal. Procedure (5" Ed. 2008) Pleading §65 p.124, italics added.) Opinion 13. In rejecting this accurate statement of the General Rule ironically recognized in its Opinion, the Court noted: Like the passage from Williams, supra, 48 Cal.2d at page 65, the trial court rejected this passage from Witkin as an incorrect statement ofthe law, [fn.] and weagreeit is incorrect. The passage from Witkin mistakenly indicates that defendants in the current proceeding must have beenparties to the prior proceeding, in whicha final judgment on the merits was obtained on the sameclaims,in order to invoke res judicata in the current proceeding, but this is not the law. Id. Relying on the holdingsin, inter alia, Arias, Vandenberg and Lippert, infra, the Court concludedthat the successful establishmentoftheliability of one joint and severally liable obligor in the Caputo Action barred DKN from seeking to establish the legal responsibility ofthe severally liable co-obligors in a separate action. F. The Opinion Next Rejected The Plain Language And Legislative Intent Of Corporations Code §16307(B) The Court of Appeal proceeded to reject DKN’s contention that Faerber’s alleged “partnership liability’ under the Lease “creates an independentbasis” for holding him responsible on the Lease. DKN argued 7054.0008 / 929503.1 10 that since Corp. Code §16307(b) provides that an action on a partnership obligation may be brought against the partnership “and any orall of the partners in the same action or in separate actions. . .” (emphasis), it was permissible for DKN to sue the alleged partner Faerberin an action separate from the cross-complaint against Faerber’s co-Lessee in the Caputo Action. The Court of Appeal swept this contention aside in less than a full sentence, without any citation of authority. It peremptorily held that “this statutory authorization to sue partners in separate actions does not apply when, as here, the claimsasserted in the subsequent action are barred by res judicata principles.” Opinion 14. In rejecting the partnership claim, the Court of Appeal contested DKN’s assertion that the trial court had “found that Faerber, along with Caputo and Neel, were “partners” on the lease.” Jd. The Court ofAppeal did recognize, however, that the trial court in the Caputo Action had “loosely referred to Caputo, Faerber and Neel, as “partners” who “wantedto lease and build out premises fora fitness club... .” Jd. Whether or not the trial court in the Caputo Action actually ruled a partnership relationship existed is immaterial here. DKN could certainly have alleged, had it been allowed to amend its complaint, that Faerber and Neel were partners with Caputo. It was therefore necessary for the Court ofAppeal to make the formalfinding that Corporations Code §16307(b) did not permit separate actions against the putative partners, even if they were assumedto 7054.0008 / 929503.1 11 have been partners, because underthe liberal rules permitting amendment of pleadings, the supposition necessarily had to be made that DKN could have alleged the partnership relationship in an amended complaint. Il. ARGUMENT A. Grounds For Review Supreme Court review of a Court of Appeal decision will be ordered “[w]hen necessary to secure uniformity ofdecision or to settle an important question of law..., [or] [w]hen the Court of Appeal lacked jurisdiction.” California Rules of Court, Rule 8.500(b)(1) and (2) (emphasis added). The Opinion’s rejection of the California Supreme Court’s holding in Williams 2 as “wrong” both creates a material conflict in published law, and exceeds the jurisdiction of the court under the doctrine of stare decisis. It effectively disposes of a General Rule of law, extant for well over a century, by conflating the separate and distinct legal concepts ofjointliability, on the one hand, andjoint and severalliability on the other hand. The New Rule in the Opinionis plainly untenable if courts, attorneys andparties litigant are to be able to proceedrationally,relying on the integrity ofprecedential authority, in the conductoftheir important decision making and other responsibilities.If the Opinionis allowed to stand,the concept ofstare decisis mustofficially be recognized as defunct. 7054,0008 / 929503.1 12 The sameis true with respect to the Opinion’s refusal to follow the clearly stated legislative intent ofCorporations Code §16307(b). Thejudicially legislated New Rule exception to the clear language ofthe statute is both beyondthe jurisdiction ofthe Court and creates a material conflict in the law, which renders a key issue of law completely unpredictable and a matter of chance. B. The Appellate Court Exceeded Its Jurisdiction By Ignoring Its Duty Under Stare Decisis Bypublishing and endorsing the formaltrial position that the holding of this Court in Williams 2 is “wrong,” the Court of Appeal both created a material conflict in published California law, and violated stare decisis. Stare decisis is “based on the assumption that certainty, predictability and stability in the law are the major objectives ofthe legal system;1.e., that parties should be able to regulate their conduct and enter into relationships with reasonable assurance of the governingrules of law.” Sierra Club v. San Joaquin Local Agency Formation Com. (1999) 21 Cal. 4™ 489, 503-04. Asit applies to the responsibility of a lower court to adhere to governing legal precedent issued by a higher court, the principle of stare decisis has been declared bythis court to be jurisdictional. Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal. 2d 430, 454-55. Speaking generally, any acts which exceed the defined powerofa court in any instance, whether that powerbe defined by constitutional provision, 7054.0008 / 929503.1 13 express statutory declaration,® or rules developed by the courts and followed under the doctrine of stare decisis are in excess of jurisdiction, in so far as that terms is used to indicate that those acts may be restrained by prohibition or annulled on certiorari. Court’s exercising inferior jurisdiction must accept the Jaw declared by courts of superiorjurisdiction. It is not their function to attempt to overrule decisions of a higher court. Auto Equity Sales, supra, at 455. Asnoted by the Supreme Court, it would “. .. create chaosin ourlegal system if. . . courts were not bound by higher court decisions.” Jd. at 456 (emphasis). C. The Facts Of Williams 2 Render Its Holding Controlling Here Though it agreed with the trial court’s express statement that the passage from Williams 2 is “wrong,” the Opinion attempted to mitigate this violation of stare decisis by suggesting that Williams 2 did “not support DKN’s position” because “cases are not authority for propositions not considered.” Opinion, 12. The suggestion is that Williams 2 did not rule upon the legal issue integral to this case. ® This rule applies equally to the Court ofAppeal’s refusal to comply with the clear legislative intent of Corporations Code §16307(b). The court does not have ‘jurisdiction,’ in this sense, to refuse to comply with clear legislative intent reflected in unambiguousstatutory language. 7054.0008 / 929503.1 14 Contrary to the inference in the Opinion,the holding in Williams 2 was focused directly upon whether or not a creditor could maintain successive actions against joint and several co-obligors, on the same obligation, after a judgmenthad been obtained against one but not others. Williams 2 involved four co-obligors on a promissory note. Ashere, it was uncontestedthatthe co- obligors were jointly and severally liable on the note. The creditors first settled with one co-makerof the note and obtained a judgmentagainst him, which wasnot paid. Subsequent to obtaining thejudgmentagainstthe first co- obligor, the creditor sued the three other co-obligors. Just as Faerber successfully argued here, the successively-sued co-obligors in Williams 2 arguedthatthe initial judgment againstthefirst co-obligor barred the latersuit against the remaining three co-obligors: [The] co-makers claim that in such a case the bringing ofan action against one ofthe makers. . . without joining theothers, and obtaining judgment against him alone, bars the plaintiff from later suing any of the others in respect to that obligation. Williams 2, supra, at 64-65. The Supreme Court, quoting with approval the earlier published Williams I opinion, rejected that argument: Whenthe obligation is joint and severalit is not non-joinder to sue one alone (Citations.) The sameis true of an action against one or more and less than all of a number of persons jointly and severally obligated as tort-feasors. In such a case the judgment obtained against one is not a bar 7054.0008 / 929503.1 15 to an action against the remaining joint and several obligors. ‘Nothing short of satisfaction in some form constitutes a bar . . . [A] mere judgmentagainst[the first co-maker] in a separate action against him upontheoriginal notes would not preclude [the creditor] from bringing subsequent actions against [the] co-makers.’ Williams 2, supra at 65 (emphasis). Theclear legal principle reflected in Williams2 is that joint and several obligors may be suedjointly in a single suit, or severally in separate suits. It appears beyond rational argument to the contrary that this legal principle applies directly in this case. Indeed, as noted above, the Court below emphasized and acknowledged the General Rule: “To be sure, courts are generally authorized to render separate judgments, in the same action or in separate actions, against joint and several obligors.” Opinion, 12, citing Melander (1913) and Grundel (1900), supra (emphasis added). D. There Is No Material Factual Distinction Between This Case And The Williams Cases That Would Preclude The Application Of The Controlling Principle Of Law In Williams 2 To This Case There is only one factual distinction upon which one might attempt to mount an argumentthat the holding in Williams 2 does not govern the facts of the current case. In Williams 2 the co-obligor against whomthefirstjudgment wasobtained agreedto settle with the creditor, who then obtained ajudgment against that co-obligor on the settlement agreement. One could therefore 7054.0008 / 929503.1 16 argue, as the appellate court appearsto infer, that the facts are, to that extent, distinguishable from the current case. It is distinction without any material difference. It does not changethe fact that the longstanding fundamentallegal principle relied upon in Williams 2, emanating from Grundel and Melander, infra,’ is that joint and several contractual obligors can be suedeitherjointly in a single action, or severally in separate actions. That is the very essence ofthe difference between merely “joint” and “joint and several.” E. The Appellate Court’s Reliance Upon Melander, Grundel, And Code of Civil Procedure §§410.70, 578, and 579 As An Accurate Statement Of The General Rule Necessarily Defeats The New Rule The extensive discussion in Melander, supra, at 476, clearly reflects that the General Rule cannot coexist with the New Rule. This 1913 decision provided a thorough analysis ofthe difference between merelyjoint, andjoint and severalliability. Concisely put, it states the General Rule as follows: Where the contract or obligation is joint and several, it is not merged in the judgment against one of the contractors, and such judgment remaining unsatisfied will not bar an action against anotherof the debtors. Melander, supra at 476 (emphasis). ” Eachofthese holdings is over one hundredyearsold. 7054.0008 / 929503.1 17 Melander provides an in depth analysis of several jurisdictions, including old English cases, and an 1839 case from Kentucky, Sayre v. Coleman (1839) 9 Dana 173, 1839 WL 2623 (Ky. App.). In adopting the General Rule as the basis for its holding, Melander discussed Sayre as follows: [W]here the action was upon a joint and several obligation, one of the defendants was not served with process, andjudgment wastaken against the others who were served.’? Judgment was thereafter obtained against the obligor not originally served, and the contention on his appeal wasthat the debt or obligation had been extinguished by the judgment against the others.”The Kentucky Supreme Court, refusing to accept that view said: “But conceding,.. . that according to the principles of the common law, such a judgment would be a bar in the case of joint obligors, it is so because of the unity or entirety of the obligation, the consequence of whichis that whateverreleases or extinguishes the causeofaction as to one hasthe sameeffect as to the other, there being no power to discriminate between them in this respect. ..But in the case of a joint and several obligation the fundamental principle on which these consequences rest is wanting. There is a several obligation andliability resting on each obligor, independent that which rests upon the others. The release of one without satisfaction does not necessarily release the others... '0 This factual construct is directly on point with the facts here. '! This is akin to the Faerber contention validated by the Court of Appealin adopting the New Rule, while purporting to recognize the General Rule of Melanderas controlling law. 7054.0008 / 929503. 1 18 Melander, supra at 477-78. (Emphasis added.) Simply put, the General Rule enunciated with clarity in Melanderis that, where the liability of more than one obligor is merely joint, then the creditor must pursueall obligors in a single action, or accept that any obligors not boundbytheresult in that single action are necessarily exonerated. This is because the merely joint obligationis a single unified obligation giving rise to but one right of action. The material distinction between that and ajoint and several obligation is that the “several” nature of the obligation gives rise to multiple separate causes ofaction which maybepursuedjointly or severally in separate actions. The Opinion failed to abide by this General Rule, instead creating the manifestly contrary New Rule despite acknowledging Melanderasreflecting governing law. If the General Rule is applied to the joint and severally liable obligors in the currentcase, it necessarily follows that ajudgment in the Caputo Action does not preclude DKN’spursuit ofthe jointly and severally liable co-obligors Faerber and Neel in the Faerber Action. /// /// | /// /// /// 7054.0008 / 929503.1 19 F. The Appellate Court’s Reliance On Lippert To Support Its Res Judicata Holding Is Misplaced, As Lippert Is Not A Res Judicata Case The Opinion held that the claim preclusion element of res judicata applied in the current case to prohibit the Faerber Action. In this regard the Court held: DKN argues that the because joint and several obligors are jointly and severally, or individually, liable on an obligation, a claim against each of them constitutes a separate claim. DKN is mistaken. Under the primary rights theory, and for purposes of applying the res judicata doctrine,” the claims are identical. (Lippertv. Bailey (1966) 241 Cal. App. 2d 376, 382... .) Opinion 10. It is here, in failing to recognizethat the precise basis for the Melander holding wasthat the claims are not “identical” wherethe liability is joint and several, that the Opinion failed to apply the General Rule it nonetheless acknowledgedis the law. The holding in Lippert is distinguishable in several respects. First, though the Opinion relies upon Lippert “for purposes of applying the res judicata doctrine . . .” (id.), the holding in Lippert had nothing to do with res judicata. Lippert involved a claim bya plaintiff-insured against the insurance 2 Lippertis clearly not a resjudicata holding. 7054.0008 / 929503.1 20 company, and the company’s sales agents, in connection with an alleged failure to provide sufficient insuranceto the insured. Priorto trial against the agents, the insured settled with the insurance company. Theinsured provided the insurance companya general release, reserving the right to proceed against the sales agents. After trial on the merits, the court held that the insured’s general release ofthe insurer barred further action against the agents. This conclusion was not based in any way uponthe principle of res judicata. It was based upon the trial court’s conclusion, based on substantial evidence, that the nature of the defendants’ agency was such that they were the agents of the insurance company only, and not agents of the plaintiff insured. Relying on that fact- based conclusion as to the nature of the agency, the trial court applied the principle of law that an agent does not bear liability for the breachesofits principal, if the nature of the agency relationship is properly disclosed at the time of the transaction between the third party and the principal, through its disclosed and authorized agent. In this regard the court provided the following rationale: While an insurance agent may be personally liable to the insured for damages which are the result of the agent’s negligent failure to insure property as contracted, the agent’s personal liability is dependent upon the extent of the disclosure of the agency. ... ‘(L)iability to the applicant or insured for acts or contracts of an insurance agent within the scope of his agency, with a full disclosure of the principal, rests on 7054.0008 / 929503.1 21 the company. . .” ‘Where an agent is duly constituted and nameshis principal and contracts in his [principal’s] name and does not exceed his authority, the principal is responsible and not the agent’ Lippert, supra, at 382. (Emphasis added.) The holding in Lippert has nothing to do with the materialfacts or legal principles in this case. Unlike here, there was no expressly stated contractual joint and severalliability in the insurance companyandits agent. There was no allegation that the insurance company and the agents werepartners, subject to joint and several partnership liability, which a statute provided could be pursued in a single, or several lawsuits. On the contrary, the basis for the Court of Appeal upholding thetrial court’s fact-based conclusion, under the substantial evidence standard ofreview wholly inapplicable here, was the law which providesthat a disclosed agent acting within the scope of his agency does notbearliability for the obligations of his or her principal. Ironically, if the ruling in Lippert applied in the present case, as suggested in the Opinion, it would simply give rise to another example ofthe Opinion being irreconcilably at odds with the General Rule it concedes. Lippert does not support the proposition for which it is submitted in the Opinion. G. Neither Arias Nor Vandenberg Supports The New Rule The Opinion holds that Lessees Faerber and Neel were entitled to “invoke res judicata against DKN in the present action based on the final 7054.0008 / 929503.1 22 judgmentin Caputo action, even though Faerber and Neel were notparties to the Caputo action.” Opinion 8-9. The Opinion cited Arias v. Superior Court (2009) 46 Cal. 4" 969, 985 and Vandenberg v. Superior Court (1999) 21 Cal. 4® 815, 828, for this proposition. Neither of these holdings extends to the facts of this case, nor do they justify the creation of the New Rule. As explained in Vandenberg: Collateral estoppel is one of two aspects of the doctrine ofres judicata. In its narrowest form res judicata “‘precludes parties or their privies from re-litigating a cause ofaction [finally resolved in a prior proceeding].’” (Citations.) But res judicata also includes a broader principle, commonly termed collateral estoppel, under which an issue “ ‘necessarily decided in [prior] litigation [may be] conclusively determined as [against] theparties [thereto] or theirprivies ... in a subsequent lawsuit on a different cause of action]’” (Citations.) Vandenberg, supra at 828. The text abovereflects an essential element for the application of the “claim preclusion” arm of res judicata. Where, as here, a non-party to the initial litigation seeks to apply claim preclusion or collateral estoppel against a party plaintiff in a secondlitigation, the ruling from thefirst litigation must have been “against” the party plaintiff in the second litigation. The party plaintiff in the second litigation must be seeking a secondbite at the apple whereby it hopes to obtain a beneficial ruling in the second action, notwithstanding a negative ruling in the sameissue in the first action. 7054,0008 / 929503.1 23 Accordingly, the collateral estoppel doctrine may allow one whowasnota party to priorlitigation to take advantage, in a later unrelated matter, of a finding! madeagainst his current adversary in the earlier proceeding. This meansthat the loss of a particular dispute against a particular opponent in a particular forum may impose adverse unforeseeablelitigation consequencesfar beyond the parameters ofthe original case. Vandenberg, supra at 828-29. It is throughthis prohibition against a party seeking different results on the same issue in a subsequentlitigation, that collateral estoppel and claim preclusionassist in maintaining the integrity of the legal system. Collateral estoppel (like the narrower “claim preclusion” aspect of resjudicata) is intended to preserve the integrity of the judicial system, promote judicially commonly, and protect litigants from harassmentofvexatious litigation. Vandenberg, supra at 829. Neither Vandenberg nor Arias, which relies upon Vandenberg, supports the New Rule holdings. Faerber does not seek to hold any “finding” in the Caputo Action against DKN. DKN doesnot seek a secondbite at the apple in the Faerber Action. On the contrary, the judgmentin the Caputo Action was entirely in favor of DKN. This renders both collateral estoppel and claim preclusion inapplicable in the Faerber Action. '3 There was nofinding in the Caputo Action ofwhich Faerbersoughtto take advantage. 7054.0008 / 929503.1 24 H. The Appellate Court Exceeded Its Jurisdiction By Ignoring The Clear Legislative Intent Of Corporations Code §16307(B), And By Judicially Legislating An Exception Which Eviscerates The Rule Of The Statute The unequivocal mandate of Corporations Code §16307(b) is that a creditor may pursuelegal action against “any orall ofthe partners in the same action or in separate actions.” (Emphasis.) This mandate is unambiguous. It is fundamentalthat the judiciary is obliged to carry out the intent of the Legislature. From a constitutional standpoint, the Court does not have jurisdiction to legislate or to ignore a constitutional legislative mandate.4 [““When the Legislature has spoken, the court is not free to substitute its judgmentasto the better policy. We are obliged to carry outthe intent ofthe Legislature if it can be ascertained.” City and County of San Francisco v. Sweet (1995) 12 Cal.4th 105, 121; “[W]Je follow the Legislature’s intent, as exhibited by the plain meaningofthe actual words ofthe law, whatever may be thought of the wisdom, expediency, or policy of the act.” California Teachers Assn. v. Governing Bd. ofRialto Unified School Dist. (1997) 14 Cal.4th 627, 632. (Internal quotations omitted.)] /// 4 Thereis no basis for suggesting that Corporations Code §16307(b)is in any way unconstitutional. 7054.0008 / 929503.1 25 TheNew Rule has transformedthe legislatively mandatedright to bring “separate actions” against partners with ajudicially legislated caveat not even hinted at by the Legislature. The import of the New Rule is that, in order for §16307(b) to be correctly understood, the express statutory authorization to bring “separate actions” against partners needsto be supplemented with words to the effect of: “...but if a creditor complies with the ‘separate actions’ languageofthis statute, and then obtains ajudgment against any one or more partners in one of those permissible separate actions, then, though the judgment may remain completely unsatisfied,all other partners not subject to the first judgment are exonerated by that judgment, and the permissible ‘separate actions’ must therefore be immediately dismissed.” One wondersin this context, are the partners in the “must be dismissed” actions the prevailing parties? Are they entitled to an award of costs, or attorney’s fees where the contract at issue so provides? Thesearejust some of the many questions and issues born of the New Rule. /// /// /// /// /// /// //1 7054.0008 / 929503.1 26 I. It Is Important That Review Be Granted In Order To Eliminate The Current Material Conflict In Published Law Created By The Opinion With the Court ofAppeal’s published statement ofthe New Rule, there are now extant materially conflicting holdings on the commonly-faced *° issue which long ago gaverise to the General Rule. This conflict of law has created a collateral conflict of law in the doctrine of stare decisis. The New Rule, issued by a subordinate court, treats the Supreme Court’s governing precedent, as well as statutory law with respect to the governing General Rule, as “wrong.” Worse thanjust treating the Supreme Court’s governing precedent as “wrong”on a principle of law which is venerable, the Opinion broadcasts to the world that the trial court acted correctly whenit held that the Supreme Court was “wrong,” and whenit disparaged Witkin’s concurring discussion as a “classic example” of that respected treatise mischaracterizing the law. J. Is Stare Decisis Still Applicable In California? Ifthe Opinion stands,it presents a brave new world forlitigators, their clients, and the judiciary. Where trial courts are openly affirmed on appeal for 'S Lenders and lessors are just two types of creditors to which this legal principle is critical in innumerable commercial and non-commercial transactions. 7054.0008 / 929503.1 27 having held the Supreme Court “wrong,” without so much as a nodto the compulsory doctrine of stare decisis, is the new standard of care among litigating attorneysthe obligation to urgetrial courts of inferiorjurisdiction to reject prior holdings of courts ofsuperiorjurisdiction? Will lawyersbe held to havefailed to honortheir profound professional responsibilities ifthey do not urgetrial and appellate courts to reject controlling superior precedent? The same questions arise in connection with the statutory law. Lawyers will be obliged to encouragecourts to disregard the plain literal meaningofthe languageof statutes, because the Opinion here rejected the plain meaning of Corp. Code. §16307(b) andjudicially legislated an exceptionto the statute that Vitiates its obviousintent. A collateral aspect of this issue is the manner in whichthetrial court gave the metaphorical back of its hand to a highly respected legal treatise 16 While it is true that thecommonly cited by lawyers and courts alike. pronouncements of Witkin are not controlling on any court, it is no less true that principles stated in Witkin in this instance are consistent with this Court’s holding in Williams 2, Grundel, Melander, and centuries of common law. 16 While Witkin may not always getit right, a Westlaw searchfor “Witkin”in “West’s California Reported Cases”library turned up ten thousand (10,000) results. Plainly, Witkin is well respected and commonly relied upon by the courts of California. 7054.0008 / 929503.1 28 One mustalso ask the question of how the New Rule can be squared with its own citation and approbation ofthe General Rule. The General Rule simply cannotbe squared with the New Rule. Directly contrary to the intended effect of the long-standing General Rule that separately sued, jointly and severally liable co-obligors are susceptible to separate judgment and enforcement, the New Rule compels the opposite result, Under the New Rule, the issuance of a first judgment triggers the claim preclusion arm of res judicata and therebynecessarily precludes the General Rule from having any meaning. The purported exception ofthe New Rule necessarily consumes and eliminates the General Rule. K. It Is Important Not To Depublish The Opinion There is a genuine need for clarification of the General Rule as it relates to principles ofresjudicata, collateral estoppel, and claim preclusion. In agreeing with the trial court’s observation that Williams 2 was “wrong,”the Opinion observed that Williams 2 was fifty-six years old. The Grundel and Melander(infra) decisions are over a hundred years old. Thus, the principles at issue, though they should be blackletter law, have not been enunciated in clear and current law in a manner which would have allowed the courts below to avoid the errors reflected in the Opinion. Asreflected by the Opinion, the state of published law is such that there can be genuine confusion as to whether or not principles emanating from the doctrine of resjudicata trump the essence of the General Rule. 7054.0008 / 929503.1 29 The issue ofwhetheror not the GeneralRule applies does and will arise frequently as a common elementofsubstantial commerce in California. Using only promissory notes (commercialandprivate lenders) and property leases as two common examples, where many others undoubtedly exist, there are innumerable transactions which have already occurred, and innumerable transactions which are occurring daily, and which will regularly continue to occur in the future, wherein the issue of whether or not joint and severally liable obligors can be sued in separate actions will arise. This is a area of law and commerce whereclear instruction is essential. Both the courts and legal practitioners require clear direction from this Court in the dischargeoftheir important fiduciary obligations to clients, and their no less important obligations as officers of the court. From a purely practical standpoint, the interests of justice call for a published opinion in this case. The Opinion observed that the attorneys representing DKN could not have reasonably relied upon the misleading arguments that Faerber and Neel were not intended lessees when they chose to proceed against Caputo alone in the Caputo Action. Plainly, that observation gives rise to malpractice implications for both those attorneys and DKN. These implications could well affect the court system with additional litigation, avoidable ifthis Court publishes an opinion. Since thejudgment was for over three million dollars ($3,000,000.00), it is of material financial significance to both DKN,a husband and wife owned businessentity, and to 7054.0008 / 929503.1 30 the attorneys who counseled them not to be able to proceed against Faerber — and Neel. For the foregoing reasons, DKN respectfully submits that this case rises to a sufficient level of importance to preclude depublication. Depublication would leave the interests ofjustice and the need forclarification in the law wanting. L. If The Opinion Is Not Reversed, It Is Important For This Court To Instruct The Bench And BarAs To Unreliable Prior Precedent Ifthis Opinionis not reversed, thenit is critical for this Court to publish an instructive opinion advising the bench, the bar, and legal commentators such as Witkin that prior authorities of Williams I and 2, Grundel, and Melander, supra, as well as the plain language of Corporations Code §16307(b), and Code of Civ. Proc. §§420.70, 578 and 579 are unreliable and misleading authority. A bright-line rule must be stated answering the question: Is it permissible, or not, for a contractualobligee to sue jointly and severally liable contractual obligors in separate lawsuits withoutthe risk that a judgment in one, though unsatisfied, will bar any further action against other co-obligors? 7054.0008 / 929503.1 31 Hil. CONCLUSION DKNsubmits that the holding ofthe Court ofAppeal Opinionis clearly wrong. More than just being wrong, the Opinion promulgates a New Rule whichis well beyondthe jurisdiction ofthe issuing court, and which conflicts with controlling precedent from this Court’’ and controlling statutory law. The Court ofAppeal hasclearly violated stare decisis. In an almost revolutionary move,it has given open approbationto trial court that, for some inexplicable reason, construed itself as having the authority to expressly hold controlling precedent of the Supreme Court as “wrong,” while demeaning consistent commentary in Witkin as a “classic example” ofWitkin mischaracterizing the law. Hopefully it does not amountto hyperbole to suggest that the effect of the Opinion represents an assault, surely unintended, on the integrity of common law jurisprudence and fundamental principles upon which that system is based. As noted in Auto Equity, supra at 455, legal “chaos” will ensueif the principle of stare decisis is ignored. It has been ignoredin this case. '’ The Opinion not only holds Williams I and 2 “wrong,” it also ignoresits jurisdictional limitations under Auto Equity, supra. 7054.0008 / 929503.1 32 DATED: May 15, 2014 7054.0008 / 929503.1 Respectfully submitted, PRENOVOST, NORMANDIN, BERGH & DAWE A Professional Corporation MICHAEL G. DAWE KRISTIN F. GODEKE Attorneys for DKN HOLDINGS, LLC 33 CERTIFICATE OF WORD COUNT (Cal. Rules of Court, rule 8.504(d)1)) The text of this brief consists of 7,465 words as counted by the Microsoft Word version 7 Professional word-processing program used to generate the brief, exclusive of the cover, table of contents, table of authorities, and this certificate of word : Dated: May15, 2014 “Cee MICHAEL G. DAWE 7054,0008 / 929503.1 34 EXHIBIT A Filed 4/9/14: pub. order 4/25/14 (see end of opn.) IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FOURTH APPELLATE DISTRICT DIVISION TWO DKN HOLDINGSLLC, Plaintiff and Appellant, E055732, E056294 V. (Super.Ct.No. RIC1109512) WADE FAERBER, OPINION Defendant and Respondent. APPEAL from the Superior Court of Riverside County. John Vineyard, Judge. Affirmed. Prenovost, Normandin, Bergh & Dawe, Michael G. Daweand Paula M. Harrelson for Plaintiff and Appellant. Callahan & Blaine, Edward Susolik and Michael S. LeBoff for Defendant and Respondent. I. INTRODUCTION PlaintiffDKN Holdings LLC (DKN)appeals from a judgment of dismissalafter the trial court sustained, without leave to amend, defendant Wade Faerber’s demurrer to DKN’s complaint for monies due under a commercial lease. (Code Civ. Proc., § 430.10 subd. (e).)! DKN also appeals from a postjudgment order awarding Faerber $54,817.50 in attorney feesas the prevailing party in the action onthe lease, claiming the fee award is unreasonable. The two appeals have been consolidated for oral argument and decision. In this appeal, we affirm the judgment of dismissal and the attorney fee award. In case No. E056497, DKN appeals a postjudgment order dismissing another defendant, Matthew Neel, whose default was entered after he was served with the complaint but failed to appear. In that appeal, we affirm the order dismissing Neel. II. BACKGROUND A. Synopsis By its complaint in the present action, DKN,a lessor on a commerciallease, sued Faerber and Neel, two of three colessees, for unpaid rents and other monies due under the lease. In a prior action, DKN obtained a money judgmentfor over $3 million against the third colessee, Roy Caputo, following a court trial on the merits for monies due under the lease. The lease provides that colessees shall be “jointly and severally responsible”to comply with its terms. Although DKN sued Faerber and Neelin the prior action, along 1 All further statutory references are to the Code of Civil Procedure unless otherwise indicated. with Caputo, DKN dismissed them without prejudice before trial and judgment. The judgmentagainst Caputois apparently unsatisfied. The question on the present appeal from the judgment of dismissal is whether the judgmentagainst Caputo in the Caputo action bars DKN’s claims against Faerber and Neelin the present action. Thetrial court concludedthat the judgment against Caputo bars DKN’s claims in the present action, and we agree. We concludethat the complaint does not and cannotstate a cause of action against Faerber and Neel for monies due under the lease, because DKN’s claims against Faerber and Neel in the present action are barred by the claim preclusion aspect of the res judicata doctrine. B. The Lease Agreement In June 2004, Faerber, Neel, and Caputo agreedto lease retail space in a Murrieta shopping center known as Margarita Square from the center’s co-owners andlessees, DKN and CDFTLimited Partnership (CDFT). The parties signed a “Standard Retail/Multi-Tenant Lease-Net” lease with a 10-year term. Section 48 of the lease providesthat “multiple parties” signing the lease as lessors or lessees “shall havejoint and several responsibility” to comply with its terms. (Italics added.) For purposes ofthe present demurrer, Faerber and DKN donotdispute that Caputo, Faerber, and Neel were jointly and severally liable to DKN underthelease. Faerberis an orthopedic surgeon, and Caputois also a physician. Faerber, Caputo, and Neel intended to use the leasehold to build and operate an “upscale” fitness and training center under the trade name Evolution Elite Sports and Fitness Club. In September 2004, the lease was amendedto increase the size ofthe leasehold from approximately 15,000 square feet to approximately 22,000 square feet, and the rent was increased. Around March 2007, Faerber and Caputo acquired Neel’s interest in the business and orally agreed to indemnify Neel for any liability he may incur for monies due underthelease. C. The First Action on the Lease In June 2007, Caputo sued DKN,seeking to rescind or cancel the lease and for money damagesbasedonfraud, breach offiduciary duty, and other grounds or causes of action (the Caputo action).? In a nutshell, Caputo alleged that DKN failed to make material disclosures concerning the leasehold and breachedits obligations under the lease, resulting in the failure of the fitness club. Among other things, Caputo claimed DKN failed to disclose that (1) a streambed near the shopping center was required by law to be planted with native vegetation that could not be trimmedand that would block viewsto the leasehold, and (2) a center median would have to be constructed on Murrieta Hot Springs Road, reducing and inhibiting access to the shopping center. In the Caputo action, DKN and CDFT cross-complained against Caputo, Faerber, and Neel for monies due underthe lease. Caputo was served with DKN’s first amended cross-complaint, but Faerber and Neel were not served. Following a June 2011 court trial and statement of decision on the complaint and first amended cross-complaint, Caputo 2 The Caputo action, Roy Caputo, M.D. v. DKNHoldings LLCet al., wasfiled in the Riverside County Superior Court and was assigned case No. RIC474609. 4 was denied anyrelief on his complaint, and DKN/CDFT wasawarded over $2.8 million in money damagesonits cross-complaint against Caputo. Faerber and Neel were dismissed as (unserved) cross-defendants following the entry of the judgmentagainst Caputo. Thereafter, DKN/CDFT did not move to add Faerber or Neel to the judgment against Caputo as additional judgment debtors. (§ 989.) D. The Present Complaint Against Faerber and Neel On June 1, 2011, shortly before the statement of decision was issued in the Caputo action, DKNfiled the present action against Faerber and Neel, asserting two cause of action. The first cause of action, for breach of the lease, names both Faerber and Neel and seeks the same money damages that DKN was awarded against Caputo in the Caputo action. The second causeof action, for breach of an oral indemnity agreement against Faerber, alleges DKN is entitled to the benefit of Faerber’s March 2007 oral agreementto indemnify Neel for any liability Neel may incur underthe lease. The claim alleges Faerber “is now obligated to DEN for Neel’s non-payment of rent on the oral contract for indemnity.” E. Faerber’s General Demurrer Faerber demurred to the complaint on the groundit failed to state a cause of action because the judgment against Caputo barred DKN’sclaims against Faerber and Neel for monies due underthe lease. (§ 430.10, subd. (e).) Faerber claimed that DKN was improperly splitting its single cause of action or primary right for monies due underthe lease into two separatesuits, the first against Caputo in the Caputo action and the second against Farber and Neelin the present action. In opposing the demurrer, DKN claimed that joint and several obligors, such as Caputo, Faerber, and Neel, may be sued in separate actions under California law. Thetrial court sustained Faerber’s demurrer, without leave to amend, and entered judgmentin favor of Faerber. In a postjudgmentorder, Faerber was awarded $54,817.50 in attorney fees. III. DISCUSSION/FAERBER’S GENERAL DEMURRER A. Standard ofReview on Demurrer Weindependently review the court’s order sustaining, without leave to amend, Faerber’s general demurrer to DKN’s complaint in the present action. (Federal Home Loan Bank ofSan Francisco v. Countrywide Financial Corp. (2013) 214 Cal.App.4th 1520, 1526.) “Wefirst review the complaint de novo to determine whetherit contains facts sufficient to state a cause of action under any legal theory. [Citation.] ‘“‘We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusionsof fact or law. [Citation.] We also consider matters which maybejudicially noticed.’ [Citation.}”" [Citation.] ‘We affirm if any ground offered in support of the demurrer was well taken butfind errorif the plaintiff has stated a cause of action under any possible legal theory. [Citations.] We are not boundbythetrial court’s stated reasons, if any, supporting its ruling; we review theruling, notits rationale. [Citation.]’ [Citation.]” (Estate ofDito (2011) 198 Cal.App.4th 791, 800.) B. The Judgment Against Caputo in the Caputo Action Bars DKN’s Claims Against Faerber and Neelin the Present Action DKN claims Faerber’s demurrer was erroneously granted and the complaint states a cause of action. DKN arguesthat, under California law, joint and several obligors, such as Faerber, Neel, and Caputo, may be sued in separate actions. As we explain, DKN is mistaken. Joint and several obligors may not be sued in separate actions when,ashere, the claim or claims against them are barred by a prior judgmentunder the claim preclusion aspect ofthe res judicata doctrine. “As generally understood,“[t]he doctrine of resjudicata gives certain conclusive effect to aformerjudgment in subsequentlitigation involving the same controversy.” [Citation.] The doctrine “has a double aspect.” [Citation.] “In its primary aspect,” commonly knownasclaim preclusion,it “operates as a bar to the maintenance of a second suit between the same parties on the same cause of action. [Citation.]” [Citation.] “In its secondary aspect,” commonly knownas collateral estoppel, “[t]he prior judgment ... ‘operates’”in “a second suit... based on a different cause of action. . . ‘as an estoppel or conclusive adjudication as to such issues in the second action as were actually litigated and determinedin the first action.’ [Citation.]” [Citation.]’” (Boeken v. Philip Morris USA, Inc. (2010) 48 Cal.4th 788, 797.) The purposeofthe doctrine of res judicata is “‘to preserve the integrity ofthe judicial system, promote judicial economy,and protectlitigants from harassment by vexatiouslitigation.’ [Citations.]” (Brinton v. Bankers Pension Services, Inc. (1999) 76 Cal.App.4th 550, 556.) “‘“The prerequisite elements for applying the doctrine to either an entire cause of action or one or more issues are the same: (1) A claim or issue raised in the present actionis identical to a claim orissue litigated in a prior proceeding; (2) the prior proceeding resulted in a final judgment on the merits; and (3) the party against whom the doctrine is being asserted wasa party or in privity with a party to the prior proceeding. [Citations.]”’ [Citation.]” (Boeken v. Philip Morris USA, Inc., supra, 48 Cal.4th at p. 797.) The party asserting the preclusive effect of a prior judgment bears the burden of establishing it. (Ferraro v. Camarlinghi (2008) 161 Cal.App.4th 509, 529.) The present case concerns the claim preclusion aspect of res judicata, not the issue preclusion or collateral estoppel aspect. We independently concludethatall three elements of the res judicata doctrine apply, and that the judgment in the Caputo action bars DKN’s claims against Faerberin the presentaction. First, it is undisputed, and the judicially noticed records from the Caputo action show, that DKN wasa party to the Caputo action and the actionresulted in a final judgment on the merits against Caputo. As a party to the Caputo action, DKN is bound by the judgmentin that action, and res judicata may be invoked against DKN based on the final judgment. (Arias v. Superior Court (2009) 46 Cal.4th 969, 985 [res judicata operates “only against those who were parties, or in privity with parties, to that prior litigation and who are thus boundbythe resulting judgment.”].) Furthermore, Faerber and Neel may invokeres judicata against DKN in the present action based on the final judgmentin the Caputo action, even though Faerber and Neel were not parties to the Caputo action. “The party seekingthe benefit of the [res judicata] doctrine . . . need not have been a party to the earlier lawsuit.” (Ariasv. Superior Court, supra, 46 Cal.4th at p. 985.) “Only the party against whom the doctrine [of res judicata] is invoked must be boundbythe prior proceeding.” (Vandenberg v. Superior Court (1999) 21 Cal.4th 815, 828.) In addition, the present action against Faerber and Neel is based on the same claims that DKN asserted against Caputo in the Caputo action. In California, the primary rights theory applies in determining whether two proceedings involve identical causes of action, for purposes of claim preclusion. (Mycogen Corp. v. Monsanto Co. (2002) 28 Cal.4th 888, 904.) Under the primary rights theory of code pleading, which has long been followed in California, “‘a “cause of action” is comprised of a “primary right” of the plaintiff, a corresponding “primary duty” of the defendant, and a wrongfulact by the defendant constituting a breach of that duty. [Citation.] The most salient characteristic of a primaryright is thatit is indivisible: the violation of a single primary right gives rise to but a single cause of action. [Citation.] ... “*As far as its content is concerned, the primary right is simply the plaintiff's right to be free from the particular injury suffered. [Citation.] It must therefore be distinguished from the /egal theory on whichliability for that injury is premised: “Even where there are multiple legal theories upon which recovery might be predicated, one injury gives rise to only one claim for relief.” [Citation.] The primary right must also be distinguished from the remedy sought: “The violation of one primary right constitutes a single cause ofaction, though it may entitle the injured party to many formsofrelief, and the relief is not to be confounded with the cause of action, one not being determinative of the other.” [Citation.]’” (Mycogen Corp. v Monsanto Co., supra, 28 Cal.4th at p. 904.) DKN’sclaims against Faerber and Neel are based on the same primary right—the right to recover monies due under the lease—that DKN asserted against Caputoin the Caputo action. Thefirst cause of action against both Faerber and Neelfortheir failure to pay monies due underthelease is based squarely on DKN’sright to recover monies due under the lease. Similarly, DKN’s second cause of action against Faerber (only) seeks the benefit of Faerber’s oral agreement to indemnify Neel for any liability Neel may incur under the lease. As such, the second cause of action is based on DKN’sprimary right to recover monies due underthe lease, even thoughit seeks to vindicate that right by the alternative remedy of obtaining the benefit of Faerber’s agreement to indemnify Neel. (Boeken v. Philip Morris USA, Inc., supra, 48 Cal.4th at p. 798 [“under the primary rights theory, the determinative factor is the harm suffered.”].) DKN arguesthat because joint and several obligors are jointly and severally, or individually, liable on an obligation, a claim against each of them constitutes a separate claim. DKN is mistaken. Underthe primary rights theory, and for purposes of applying the res judicata doctrine,the claims are identical. (Lippert v. Bailey (1966) 241 Cal.App.2d 376, 382 [Fourth Dist., Div. Two] [“A single cause of action may not be maintained against various defendants in separate suits as the plaintiff has suffered but one injury.”’].) 10 Relying on a passage from the California Supreme Court’s 56-year-old decision in Williams v. Reed (1957) 48 Cal.2d 57, 65 (Williams), DKN argues that a judgment against one joint and several obligor does not foreclose a later action against another joint and several obligor on the same obligation. The Williams court observed: “It is true in mostjurisdictions, including California, thatjoint obligors upon the samecontract are indispensible parties. They may not be sued separately [citations]. Ifjudgmentis obtained in a separate action against one, it bars an action against the others. [Citation.] Whenthe obligation is joint and several, it is not nonjoinder to sue one alone [citations]. The sameis true of an action against one or more andless than all of a number of persons jointly and severally obligated as tort feasors. In such a case the judgment obtained against one is not a bar to an action against the remaining joint and several obligors. 399‘Nothing short ofsatisfaction in someform constitutes a bar....” (bid., quoting Grundel v. Union Iron Works (1900) 127 Cal. 438, 442.) Based on this passage from Williams, DKN arguesthat because Caputo, Faerber, and Neelare jointly and severaily liable for the unpaid rents and other monies due under the lease, the judgment against Caputo does not bar DKN’s identical claims against Faerber and Neelin the present action. We disagree. Asthetrial court noted in sustaining the demurrer, the passage from Williams is “wrong” and incorrectly states the law—to the extent it may be construed as allowing an obligee, such as DKN,to obtain separate judgments in separate actions against joint and several obligors, based on the same claims. Williams did not address the issue presented here: whethera final 11 judgmenton the merits against one joint and several obligor bars a subsequent action and judgmentagainst additional joint and several obligors, on the same obligation, by the same claimant. (People v. Alvarez (2002) 27 Cal.4th 1161, 1176 [“cases are not authority for propositions not considered.”].) Thus, Williams does not support DKN’sposition.3 To be sure, courts are generally authorized to render separate judgments,in the same action or in separate actions, against joint and several obligors. (Melanderv. Western Nat. Bank (1913) 21 Cal.App. 462, 474-478 [construing former § 414, now § 410.70 & §§ 578, 579, as authoring courts to enter separate judgments in separate actions against joint and several obligors];* see also Grundel v. Union Iron Works, supra, 127 Cal. at p. 442 [joint and several tort feasors may be suedin separate actions].) But even when joint and several obligors are not required to be sued in the same action (see §§ 410.70, 379, 389) when,as here, a final judgmenton the merits has been rendered in 3 DKN similarly relies on a 1918 Georgia appellate court case which, like Williams, did not address the effect of the res judicata doctrine of a prior judgment on successive actions on the same claims against joint and several obligors. (Johnson v. Georgia Fertilizer & Oil Co. (1918) 21 Ga.App. 530 [94 S.E. 850].) 4 Section 410.70 provides: “In an action against two or more persons whoare jointly, jointly and severally, or severally liable on a contract, the court in which the action is pending has jurisdiction to proceed against such of the defendants as are served as if they were the only defendants.” Section 578 provides: “Judgment may be given for or against one or more of several plaintiffs, and for or against one or more of several defendants; and it may, when the justice of the case requires it, determine the ultimate rights of the parties on each side, as between themselves.” Section 579 provides: “In an action against several defendants, the Court may,in its discretion, render judgment against one or more of them, leaving the action to proceed against the others, whenevera several judgmentis proper.” 12 one action against a joint and several obligor, res judicata will bar the assertion of identical claims against other joint and several obligors, in a subsequent action, by parties boundby the judgmentin the prior action. DKN alsorelies on the following passage from Witkin: “If the defendants are both jointly and severally liable, joinder is not mandatory but permissive, and the plaintiff, although he or she has but one cause of action, may sue one defendant first and anotherlater. Despite the theoretical incongruity, the plaintiff is not barred in the second action because the defense of res judicata is available only when both the cause ofaction and the parties are the same.” (4 Witkin, Cal. Procedure (Sth ed. 2008) Pleading, § 65, p. 124, italics added.) Like the passage from Williams, supra, 48 Cal.2d at page 65, thetrial court rejected this passage from Witkin as an incorrect statementofthe law,> and we agree it is incorrect. The passage from Witkin mistakenly indicates that defendants in the current proceeding must have been parties to the prior proceeding, in which final judgment on the merits was obtained on the same claims, in order to invokeres judicata in the current proceeding, but this is not the law. As discussed, only the party against whom resjudicata is invoked must have been a party to the prior action and boundby the judgmentin that action. (Arias v. Superior Court, supra, 46 Cal.4th at p. 985.) It is not necessary that the party invoking the doctrine in the prior proceeding have been a party to the prior proceeding, or bound by the judgmentin that proceeding. (bid.) 5 Thetrial court commentedthat the quoted passage from Witkin was “one of those classic examples of Witkin referring to and relying on a case that doesn’t support the theory published in Witkin.” (Underlining omitted.) 13 C. DKN’s Partnership Claim is Unavailing DKN further claimsits complaint states a cause of action becausethetrial court in the Caputo action found that Faerber, along with Caputo and Neel, were “partners” on the lease. DKN is mistaken. In its statement of decision in the Caputo action,the trial court did not find that Caputo, Faerber, and Neel were partners, and evenif it had, the finding would not be binding on Faerber or Neel because they were notparties to the Caputo action. In generally describing the lease, the trial court in the Caputo action loosely referred to Caputo, Faerber, and Neel as “partners” who “wanted to lease and build out premises for a fitness club... .” In any event, DKN argues Faerber’s “partnership liability” under the lease “creates an independentbasis” for holding him responsible in the present action on the lease, apart from his joint and severalliability as a colessee. DKN reasonsthat California’s Uniform Partnership Act of 1994 (Corp. Code, § 16100 et seq.) permits a plaintiff to sue partners in separate actions. Though the Uniform Partnership Act of 1994 provides that “an action” may be broughtagainst the partnership “and any orall of the partners in the same action or in separate actions” (Corp. Code, § 16307, subd. (b), italics added), this statutory authorization to sue partners in separate actions does not apply when,as here, the claims asserted in the subsequentaction are barred by res judicata principles. D. DKN’s Misrepresentation Claim is Unavailing Based onfacts neither alleged in the complaint norjudicially noticed, DKN claims Faerber misled and deceived DKN to dismiss Faerber from the Caputo action, without 14 prejudice. DKN arguesthat Faerber has “unclean hands” because, near the outset of the Caputo action, the attorney representing Caputo, Faerber, and Neel falsely represented to DKN that, shortly after the lease was signed in June 2004,the three colessees, together with DKN’srepresentative, Bill Dendy, amendedthe lease to exclude Faerber and Neel as colessees and to provide that Caputo wasthe sole lessee. Dendy was the managing partner of CDFT,the co-ownerofthe shopping center, and DKN’s colessor on the lease with Caputo, Faerber, and Neel. DKN represents that Dendy, who died in 2005, was the only person on DKN’s side of the transaction who had personal knowledge of whether the lease was amendedto exclude Faerber and Neelas lessees, as Faerber claimed. The lease was not well documented, and there were ambiguities and omissions in the documents constituting the lease. DKN claimsit did not serve Faerber or Neel with its amended cross-complaint in the Caputo action and instead dismissed Faerber and Neel, without prejudice, based on their attorney’s representation that the lease was amendedto exclude them. Now, however, DKN arguesthat the evidence presentedat trial in the Caputo action, including Faerber’s testimony, shows Faerber’s counsel misrepresented the facts, and that Faerber and Neel were in fact intended to be boundbythelease. DKN’s argumentis unavailing. Even if the complaint were amendedto allege that Faerber negligently or intentionally misled DKN regarding his and Neel’s status as colessees underthe lease, the complaint would not state a cause of action against Faerber or Neel. (Estate ofDito, supra, 198 Cal.App.4th at pp. 800-801 [whenthe facts pleaded 15 do notstate a cause of action, we determine whetherthe plaintiff has demonstrated a reasonable possibility that the defect can be cured by amendment].) DKN doesnot argue that Faerber is equitably estopped from asserting that the present action against him is barred by res judicata principles, and even if it did, it could notstate facts sufficient to support the reasonable reliance element of equitable estoppel. (See Superior Dispatch, Inc. v. Insurance Corp. ofNew York (2010) 181 Cal.App.4th 175, 187-188 [reasonable reliance element of equitable estoppel is question of fact for the trier of fact unless reasonable minds could reach only one conclusion based on the evidence].)® DKN wasrepresented by counsel in the Caputo action, and DKN dismissed Faerber and Neel from that action before discovery was completed and the matter proceededto trial. In the absence of documentation showing the lease had been amended to exclude Faerber and Neel as colessees, DKN did not reasonably rely on any oral misrepresentation by Faerberor his counselthat the lease had been amended,shortly after it was signed, to exclude Faerber and Neel as colessees. IV. DISCUSSION/THE ATTORNEY FEE AWARD Thetrial court awarded Faerber $54,817.50 in attorney fees as the prevailing party on DKN’s complaint pursuant to a fee provision in the lease. (Civ. Code, § 1717.) The award was around 30 percent less than the $78,177.50 sum Faerber sought for defending 6 In the trial court, DKN argued Faerber wasjudicially estopped from arguing in the present action that he should have been a party to the Caputo action, because in the Caputo action he took the inconsistent position of claiming he wasnot intendedto be a lessee and had to be dismissed from the Caputo action. 16 the complaint. DKN claims the $54,817.50 award is unreasonably high, and constitutes an abuseofthetrial court’s discretion. We find no abuse ofdiscretion. A. Background In support of the $78,177.50 attorney fee motion, Faerber’s lead counsel, Edward Susolik, submitted a declaration, together with invoices to Faerber, showing the hours billed and the hourly rates charged to Faerber in connection with representing him in the present action. The hoursbilled were recorded contemporaneously with the hours worked. Susolik had over 20 years of experienceasa litigator andtrial lawyer, had handled “numerous complexreal estate litigation matters,” and charged $525 an hour. Twoattorneys whoassisted Susolik had 12 and 13 years of experience,and were billed at $395 an hour. A paralegal’s time was charged at $155 per hour. In Susolik’s experience, the hourly rates charged were consistent with the hourly rates charged by other attorneys and paralegals “in the community” with similar skill and experience. Susolik’s law firm, Callahan & Blaine, waslocated in Orange County. The law firm representing DKN, Prenovost, Normandin, Bergh & Dawe, wasalso located in Orange County. The total number of hours billed was 167.2. The invoices show the attorneys billed for time incurred in preparing the demurrer and the attorney fee motion, attending the hearings on the motions, reviewing and analyzing the complaint and the rulings in the Caputo action, arranging for and attending a one-day mediation at Judicial Arbitration and Mediation Services, preparing “a comprehensive mediation brief,” engaging in 17 further settlement discussions, conducting “factual investigation and legal research relevant to the claims and defenses” in the present action, and preparing and serving a motion for sanctions (§ 128.7), which wasnotfiled. The attorneys also prepared and presented a demandletter to DKN’s counsel, with case citations, demanding the dismissal of the complaint because its claims were barred by “the rule againstsplitting causes of action.” The letter warned that DKN andits attorneys would be subject to sanctionsif the complaint was not dismissed. By its complaint, DKN was seeking over $5.2 million from Faerber for monies due underthe lease. In opposing the attorney fee motion, DKN argued the amount sought was “grossly excessive for the filing of a single demurrer” based on a simple, straightforward legal theory. In addition, the community for determining counsel’s compensable hourly rates was“the Riverside County Area,” and the rates charged, an average of $460. an hour, was excessive for Riverside County. Further, there was “no need” for Faerberto hire new counselin the present action, and the fees counsel billed in order to “get up to speed” on the Caputo action were unnecessary and duplicative of the work performed by the attorney whorepresented Faerber, Neel, and Caputo in the Caputo action. DKN also asked the court to subtract 16.55 hoursbilled for preparing the sanctions motion because the motion wasnotfiled and was prepared and served “for the purpose of intimidation and gamesmanship.” DKN also objected to various hoursbilled in connection with preparing intra-firm memoranda, the demandletter, the mediation brief, and the demurrer. For example, DKN noted that 18 1.55 hours in paralegal time wasbilled for making copies of the demurrer and placing them in a binder. More generally, DKN complained there were “multiple attorneys billing to perform the same task, sometimes more than once, throughoutthe invoices.” At the hearing on the motion,thetrial court awarded Faerber $54,817.50 as a reasonable fee, which was $23,360, or approximately 30 percent, less than the $78,177.50 amount Faerber requested. The court said: “The billing rate is borderline, but I have not reducedit. I think it’s a little high, but not so high I can say it’s unreasonable.” The court did not identify each billing entry it excluded, but said it was excluding the 16.5 hoursbilled for the unfiled sanctions motion, and what “appeared to be inflated a number of hours for an internal memo,” as well as twoletters to opposing counsel demanding dismissal of the complaint, and other time entries that appeared to be unrelated to the action. B. Applicable Law andAnalysis An order granting or denying attorney fees is reviewed for an abuse ofdiscretion. (Graciano v. Robinson Ford Sales, Inc. (2006) 144 Cal.App.4th 140, 148.) Civil Code section 1717, the basis for the attorney fee award to Faerber, provides that “[r]easonable attorney’s fees shall be fixed by the court ....” A trial court has broad authority to fix the amount of a reasonable fee. (PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1095.) The amount awarded is governed by equitable principles and will not be disturbed on appealunlessit is “‘clearly wrong’” (ibid.) or “‘manifestly excessive in the circumstances.’” (Horning v. Shilberg (2005) 130 Cal.App.4th 197, 210.) 19 A trial court’s fee setting inquiry “ordinarily begins with the “‘lodestar,’”i.e., the numberof hours reasonably expended multiplied by the reasonable hourly rate.” (PLCM Group, Inc. v. Drexler, supra, 22 Cal.4th at p. 1095.) “‘[A] computation of time spent on a case and the reasonable value ofthat time is fundamental to a determination of an appropriate attorneys’ fee award.’ [Citation.]” (/bid.) The reasonable hourly rate is “that prevailing in the community for similar work.” ([bid.; see also Ketchum v. Moses (2001) 24 Cal.4th 1122, 1133 [lodestar rate is the “prevailing rate for private attorneys in the community conducting noncontingentlitigation of the same type.”].) Oncethe lodestar figure is fixed, the court may adjust it based on a consideration of factors specific to the case, in orderto arrive at an amount representing the fair market value of the legal services provided. (PLCMGroup, Inc. v. Drexler, supra, 22 Cal.4th at p. 1095; Building a Better Redondo, Inc. v. City ofRedondo Beach (2012) 203 Cal.App.4th 852, 870.) As relevant here, these factors include the nature ofthelitigation, its difficulty, the amount involved, the skill required in its handling, and the success or failure of the representation. (PLCM Group, Inc. v. Drexler, supra, at p. 1096.) The court may also reduce or deny a fee request that appears unreasonably inflated or duplicative. (Serrano v. Unruh (1982) 32 Cal.3d 621, 635 & fn. 21.) DKN claimsthe court abusedits discretion in failing to calculate the lodestar and useit as “the starting point” in determining the $54,817.50 fee award, and that the court instead used “the excessive fee totals” submitted by Faerberas a starting pointin its analysis, resulting in an excessive fee award. Wedisagree. 20 Counsel’s time recordsare ordinarily the proper starting point in determining the lodestar. (See Horsford v. Board ofTrustees ofCalifornia State University (2005) 132 Cal.App.4th 359, 397.) Here, the court calculated the lodestar and determined a reasonable fee by examining counsel’s detailed time records and considering whether the hours billed were reasonable and the particular services rendered were reasonably related to the case. The court also determined that counsel’s hourly rates were “borderline” and “a little high,” but not unreasonable. The court then reduced the $78,177.50 fee request by $23,360,by striking the 16.5 hoursbilled for the unfiled sanctions motion and other items the court deemed “inflated,” duplicative, or not reasonably related to the case. After eliminating these items, the court arrived at $54,817.50 as a reasonable fee. This wasproper. DKN claimsthe hourly rates billed by Faerber’s Orange County-based attorneys— from $395 to $525 an hour—werehigher than the hourly rates charged by attorneys performing comparable work in Riverside County. (Camachov. Bridgeport Fin., Inc. (9th Cir. 2008) 523 F.3d 973, 979 [“Generally, when determining a reasonable hourly rate, the relevant communityis the forum in whichthe district court sits.”].) DKN claims it adduced “uncontroverted evidence,” based on the “Laffey Matrix” that the hourly rates for lawyers in Riverside County was $355.26. Not so. The Laffey matrix is “an inflation-adjusted grid of hourly rates for lawyers of varying levels [i.e., years] of experience in Washington D.C.” published by the Departmentof Justice. (Prison Legal News v. Schwarzenegger (9th Cir. 2010) 608 F.3d 21 446, 454.) As Faerberpoints out, the Ninth Circuit has questioned whether the Laffey matrix is a reliable indicator of hourly rates for lawyers practicing outside Washington D.C. (ibid. [“[Tjust because the Laffey matrix has been acceptedin the District of Columbia does not mean thatit is a sound basis for determining rates elsewhere”); but see Nemecek & Cole v. Horn (2012) 208 Cal.App.4th 641, 651-652 [affirming attorney fee award based on $419.43 hourly rate calculated under the Laffey matrix as reasonable, even though that hourly rate was higher than the hourly rates billed to the client and resulted in a fee award higher than the fee actually incurred].) The Laffey matrix assumesthat the only relevant consideration in establishing an attorney’s reasonable hourly rate is the number of years an attorney has beenpracticing. (See In re HPL Techs., Inc., Secs. Litig. (2005) 366 F.Supp.2d 912, 921-922.) Under the Laffey matrix for 2011-2012, Susolik, with over 20 years of experience, would have an hourly rate of $734, if he were working in Washington D.C. The two attorneys who worked under Susolik had 11 to 19 years of experience, and on that basis would have an hourly rate of $609 in Washington D.C. But rather than applying these rates, DKN argued that a $355.26 blended hourly rate should have been applied. DKN calculated this rate by applying a “local quotient” of .484 to Susolik’s $734 hourly rate ($734 x .484 = $355.26). The local quotient was taken from the May 2010 Metropolitan and Nonmetropolitan Area Occupational Employment and Wage Estimates for the Riverside- San Bernardino-Ontario area, published by the Bureau of LaborStatistics. 22 The court was by no meansrequired to use the Laffey matrix in calculating the reasonable hourly rates chargeable to DKN in the Faerber matter. Instead, the court was entitled to rely upon its own experience, and on the representations of Faerber’s counsel, in determining those rates. (Serrano v. Priest (1977) 20 Cal.3d 25, 49 [“The ‘experiencedtrial judge is the best judge of the value of professional services rendered in his court... .’”]; Davis v. City ofSan Diego (2003) 106 Cal.App.4th 893, 902-904 [trial court may rely on representations of counsel in determining counsel’s reasonable hourly rate].) As noted, the court determined that the $395 to $525 hourly rates charged by Faerber’s attorneys were “a little high,” but not unreasonable. This was not an abuse of discretion, given the attorneys’ experience, the complexity of the issues involved, the $5.2 million amount at stake, and the result obtained. DKN further argues Faerber failed to establish the reasonableness of his attorney’s $395 to $525 hourly rates because he did not explain why he neededto hire attorneys based in Orange County, rather than attorneys based in Riverside County. DKN points out that when local counselis available to perform the same work at lowerrates than counsel from outside the area, “[a] plaintiff must at least make ““a good-faith effort to find local counsel.”’” (Rey v. Madera Unified School Dist. (2012) 203 Cal.App.4th 1223, 1241.) This is because, in calculating the lodestar, “[t]he reasonable hourly rate is that prevailing in the community for similar work.” (PLCM Group, Inc. v. Drexler, supra, 22 Cal.4th at p. 1095.) 23 Here, however, DKN presented no evidence that the rates charged by Faerber’s Orange County attorneys were higher than the rates Riverside County attorneys would have charged for comparable work. It is by no meansa given that Riverside County attorneys would have charged lower hourly rates than Faerber’s attorneys charged for the work they performed, as DKN assumes. (See Perrin v. Goodrich (C.D. Cal. May 14, 2012, ED CV 08-00595 LLP) 2012 U.S. Dist. LEXIS 67933 [at pp. *16-17] [in awarding attorney fees in civil rights litigation, hourly rate of $600 would not be unreasonable “Te]ven if the Court were to consider Riverside the relevant community for establishing hourly rates”].) Further, nothing in the record suggests the trial court did not consider or wasnot aware of the rates Riverside County attorneys would have charged in determining that the rates charged by Faerber’s Orange County attorneys were reasonable, and comparable, to Riverside County rates. Lastly, DKN complains that the 167.2 in hoursbilled was “grossly unreasonable,” for various reasons, including because the time spent getting “up to speed” on the Caputo action was unnecessary;the time spent preparing the unfiled sanctions motion was unnecessary; there was no need for Faerber to hire new counsel; the present case only involved a “simple demurrer”; and other time billed by the attorneys was overlapping or duplicative. But as indicated, the court reduced Faerber’s fee request by $23,360, and in doing so specifically eliminated the 16.5 hours billed for the unfiled sanctions motion and numerousitems the court deemed“inflated,” duplicative, or not reasonably related to the litigation. Faerber fails to point to any hours billed that were not eliminated but should 24 have been eliminated from the fee award. (Premier Medical ManagementSystems, Inc. v. California Ins. Guarantee Assn. (2008) 163 Cal.App.4th 550, 564 [party challenging attorney fees as excessive because too many hours are claimed has burdenofpointing to specific items challenged; general argumentsthat fees are excessive, duplicative, or unrelated do notsuffice].) V. DISPOSITION The judgment dismissing DKN’s complaint and the postjudgment order awarding Faerber $54,817.50 in attorney fees are affirmed. Faerber shall recover his costs on each appeal. (Cal. Rules of Court, rule 8.278.) NOT TO BE PUBLISHEDIN OFFICIAL REPORTS KING We concur: HOLLENHORST Acting P. J. RICHLI J. 25 Filed 4/25/14 COURT OF APPEAL -- STATE OF CALIFORNIA FOURTH DISTRICT DIVISION TWO ORDER DKN HOLDINGSLLC, Plaintiff and Appellant, E055732, E056294 v. (Super.Ct.No. RIC1109512) WADE FAERBER, The County of Riverside Defendant and Appellant. THE COURT Requests having been madeto this Court pursuant to California Rules of Court, rule 8.1120(a), for publication of a nonpublished opinion heretofore filed in the above entitled matter on April 9, 2014, and it appearing that the opinion meets the standard for publication as specified in California Rules of Court, rule 8.1105(c), 26 IT IS ORDEREDthat said opinion be certified for partial publication, with the exception of part IV, pursuant to California Rules of Court, rule 8.1105(b). KING Weconcur: HOLLENHORST Acting P.J. RICHLI J. 27 PROOF OF SERVICE STATE OF CALIFORNIA, COUNTY OF ORANGE At the time of service, I was over 18 years ofage and nota party to this action. I am employed in the County of Orange, State of California. My business address is 2122 North Broadway, Suite 200, Santa Ana, CA 92706- 2614. On May 15, 2014,I served true copies of the following document(s) described as PETITION FOR REVIEW ontheinterested parties in this action as follows: Edward Susolik, Esq. Attorneys for: Defendant and Callahan & Blaine Respondent Wade Faerber 3 Hutton Centre Drive, Ninth Floor Santa Ana, CA 92707 Telephone: (714) 241-4444 Riverside County Superior Court Court of Appeal 4050 Main Street, Fourth Appellate District Riverside, CA 92501 3389 12th Street (Hon. John Vineyard) Riverside, CA 92501 BY MAIL: enclosed the document(s) in a sealed envelope or package addressedto the persons at the addresseslisted in the Service List and placed the envelope for collection and mailing, following our ordinary businesspractices. I am readily familiar with Prenovost, Normandin, Bergh & Dawe'spractice for collecting and processing correspondence for mailing. On the same day that correspondenceis placed for collection and mailing, it is deposited in the ordinary course of business with the United States Postal Service, in a sealed envelope with postage fully prepaid. I am a resident or employedin the county where the mailing occurred. The envelope was placed in the mail at Santa Ana, California. I declare under penalty of perjufy under State of i —— Executed on May 15,/2014, at-Santa Ana,} al f Yvette Gra has 7054.0008 / 929503.1