Reyes v. Hoekstra

Filed 9/4/08 Reyes v. Hoekstra CA6

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SIXTH APPELLATE DISTRICT

After settling his action against Shawn Hoekstra and associated individuals and entities, plaintiff Salvador Reyes moved for attorney fees pursuant to a term of the settlement agreement. The trial court granted all of the fees requested, finding them reasonable. Defendants appeal, contending that the trial court showed excessive deference to plaintiff and failed to deduct fees for the time plaintiff's counsel had spent in "wasteful" pursuit of unreasonable positions. They further contest the prejudgment interest ordered in the course of granting defendants a continuance of the hearing. We find no error and will therefore affirm the judgment in plaintiff's favor.

Background

Plaintiff initiated this action on August 18, 2005, with a complaint for violation of the statutory scheme commonly known as the Home Equity Sales Contract Act (HESCA or the Act), which is described in sections 1695 through 1695.17 of the Civil Code.[1] The parties paint vastly different pictures of what transpired to bring them to litigation. We disregard much of both parties' accounts of these events. Both purport to offer statements of fact, but their citations to the record track no evidence but only assertions in the briefs they submitted to the court below. It is useless to this court to present argument as statements of fact; such references clearly do not comport with the requirement that each reference to a matter in the record identify the location in the record where the matter appears. (See Cal. Rules of Court, rule  8.204.)

In any event, as the case did not reach trial and the issues on appeal concern only attorney fees, it is unnecessary for us to untangle the strands of the controversy over the underlying facts. In short, Reyes's complaint accused Shawn Hoekstra, Me'shel Baldwin, Dorothy and Thommas Yarak, Equity Recovery Services (ERS), and South Valley Planners, Inc. of violating multiple provisions of the Act. Plaintiff alleged that defendants had approached him on the eve of a foreclosure sale of plaintiff's home. Defendants had purported to offer to help plaintiff save his property by advancing him the money to cure his default. Plaintiff signed a grant deed conveying title to ERS. They promised to allow him to re-acquire the residence, and as part of the transaction they had him sign a rental agreement and option to purchase the property for $314,000.[2] Plaintiff alleged that he had attempted to re-acquire the property, but defendants had told him he could not do so.

At some point after acquiring title and refinancing the property, defendants evicted plaintiff for nonpayment of rent. In the ensuing complaint by plaintiff, defendants were alleged to have violated multiple provisions of HESCA, as they "failed to provide plaintiff with the statutory notices required by said statutes, misled plaintiff regarding the contract and the foreclosure, took unconscionable advantage of plaintiff, failed to provide proof of and a declaration regarding the required licensure and bonding for the equity purchasers' representatives, evicted plaintiff from the Residence without actual service of the summons and complaint, and acted in concert and conspired with the other defendants to commit such acts and/or failures to act."

In late November 2006, after 15 months of pretrial litigation -- including Dorothy Yarak's motion for judgment on the pleadings, Thommas Yarak's motion to quash service of summons, Thommas Yarak's demurrer, extensive trial briefs, motions in limine, and motions for continuance of discovery cutoff and trial -- the parties settled the action. In early January 2007 they signed a Settlement Agreement and Mutual Release, which called for defendants to pay plaintiff $125,000 in exchange for his release of claims and dismissal of the action. In addition, El Dorado Holding Company (of which Thommas Yarak owned 50 percent, and which in turn owned about two thirds of ERS) agreed to pay "reasonable attorneys fees and costs" pursuant to the Act. Defendants reserved all defenses and objections to the amount of those fees and costs. Plaintiff, however, retained the right to seek enforcement of the agreement under Code of Civil Procedure section 664.6. The prevailing party on such a motion would be entitled to attorney fees and costs.

After settling the underlying dispute in November 2006, plaintiff moved for attorney fees and costs and for approval of the settlement. Accompanying the motion was a declaration from plaintiff's counsel and a billing record, amounting to $117,296 in attorney fees and $6,291 in costs. On December 11, 2006, defense attorney Klaus J. Kolb asked plaintiff's counsel, Douglas W. Oldfield, to stipulate to a continuance of the hearing on the motion from December 22, 2006 to January 8, 2007. Mr. Kolb described his conflict and completed his written request with the following statements: "Please advise whether you will stipulate to continue the hearing date to the week of January 8, 2006 [sic]. I will stipulate that you will be entitled to interest on any attorney fee award for the period of December 22 to January 8, 2006 [sic], so there will be no prejudice to you by continuing the hearing date. If you do not agree to the continuance, I will file an ex parte application to continue the hearing date for the reasons set forth above." In his response, Mr. Oldfield suggested that "the more prudent way to proceed" was to delay Mr. Kolb's conflicting December 22 deposition until after the brief hearing, since the court calendar for that morning looked very light. Defense counsel then moved ex parte for a continuance. In the motion he set forth the reasons the continuance was necessary. Counsel further advised the court that defendants had "offered to stipulate to pay interest on whatever amount is awarded to plaintiff's counsel for the time period of the delay in hearing the motion, so there is no prejudice to plaintiff in continuing the hearing date."

Over plaintiff's objection, the trial court granted the motion and continued the hearing three weeks to January 12, 2007. The order added that defendants "shall pay Plaintiff interest at the legal rate from December 22, 2006 to January 12, 2007 on the amount of fees and costs awarded by the court."

After one additional continuance due to the trial judge's unavailability, the matter was finally heard on January 19, 2007. Defense counsel challenged the amount claimed in attorney fees as unreasonable, assertedly because Mr. Oldfield had overlitigated the case, had spent twice as much time as the defense for covering the same issues, and had exaggerated the work he had performed. The court, however, disagreed that the case was overlitigated. The trial judge's familiarity with billing practices, with Mr. Oldfield's skill and experience, and with the prevailing legal rates in the local community led her to conclude that the billing statement was reasonable. The rate, which was "eminently reasonable and . . . in fact, maybe a little on the lower side" for the county, was properly calculated according to the lodestar method, and counsel had not sought enhancements. The court rejected the theory that attorney time and expense should be equivalent. It also rejected the defendants' effort to minimize the case by depicting it as the result of "technical errors"; on the contrary, the trial judge observed, from plaintiff's reasonable perspective "there was some real wrongdoing on the part of Mr. Yarak and his mother" which supported the work performed by plaintiff's legal counsel.

Accordingly, the court granted plaintiff's motion for fees and costs, finding reasonable attorney fees of $120,673. The court also included the interest ordered previously for defendants' continuance between December 22, 2006 and January 12, 2007. On April 5, 2007, defendants having paid the settlement amount but none of the attorney fees, the court entered a stipulated judgment allowing for partial payments, for a total of $131,246.93, plus interest from March 12, 2007, and it reserved jurisdiction over the parties to enforce the settlement.

Discussion

1. Standard of Review

Two rulings are challenged in this appeal: the December 19, 2006 continuance of the attorney-fees hearing conditioned upon defendants' payment of prejudgment interest, ordered by the Honorable Adrienne M. Grover; and the determination of the amount awarded for plaintiff's attorney fees, ordered by the Honorable Kay T. Kingsley. As to the first ruling, defendants contend that no interest should have been required because the motion for attorney fees was improperly and untimely served. They also take issue with the rate of interest set by Judge Kingsley in the January 19, 2007 order. These issues, they argue, should be examined independently on appeal because they involve the application and interpretation of statutes and rules governing service of process. (Code Civ. Proc.,  1005;  1013, subd. (e); Cal. Rules of Court, rules 2.260, 2.306). The attorney fees award, they concede, is subject to review for abuse of discretion.

2. Interest Award

Defendants make a point of emphasizing the untimeliness of plaintiff's motion for attorney fees, an assertion plaintiff disputes. According to defendants, because they had not agreed to electronic filing of service, then the notice they received was "at least one day short" of the notice required, and the court therefore "did not have the right to force defendants" to litigate the motion. This argument would be more plausible if they were challenging the denial of a continuance, or if they had failed to receive notice of a request for prejudgment interest by plaintiff (rather than their own offer), or if they had objected to Judge Grover's order for interest "at the legal rate" as a condition of the continuance. None of these circumstances applied here, however. Defendants did not object to the order for interest either before or after it was issued. At most, the day before Judge Grover filed the order, Mr. Kolb withdrew his offer to stipulate to the payment of interest and suggested that this was a matter for the court to decide in determining the merits of plaintiff's motion for attorney fees. We further note that while the failure of notice was a legitimate ground for affording defendants a continuance, defendants did not cogently assert this procedural flaw as the basis of denying plaintiff prejudgment interest during the period of the delay.

In any event, the court's order for interest implies a finding that the parties had agreed to instantaneous e-mail service, or at least that defense counsel had actually received notice in a timely manner. We have no basis for overturning such a factual determination by the lower court. Furthermore, having received argument from the parties regarding this issue, the court had discretion to grant a continuance to accommodate defense counsel upon conditions to minimize prejudice to the opposing party. Defendants offer no authority that demonstrates otherwise.

Nor can we find any abuse of such discretion on the record before us. The court evidently believed that any defect in service was unrelated to the question of whether a continuance was justified. The court apparently found credible the declaration by Mr. Oldfield explaining why plaintiff was concerned about a three-week delay in the hearing date. The court implicitly struck a balance between the plaintiff's perception of urgency and defense counsel's need for a continuance. The court's decision to add interest -- which ultimately amounted to $730 -- to minimize any prejudice to plaintiff was well within its authority.

Defendants maintain, however, that even if the imposition of interest was authorized, the 10 percent rate selected by the court was not. Defendants blame plaintiff for this asserted error because "he chose to demand prejudgment interest as part of an ex parte application for a continuance, instead of by way of noticed motion. Had Respondent properly noticed and briefed his request for prejudgment interest, the trial court would have had the benefit of proper research and reasoned argument from both parties." Defendants' response is but a poorly concealed attempt to evade responsibility for their own failure to object to the interest rate selected. It was not plaintiff but defendants who initiated the application for a continuance, and it was they who first suggested prejudgment interest as a condition of the continuance. Although they urged the court at the January 19 hearing to impose no prejudgment interest, they did not take issue with the rate either before or after the order. There can be no question that defendants have forfeited any error in the selection of a 10 percent interest rate by their failure to call the court's attention to the problem. (Cf. Jones v. Wagner (2001) 90 Cal.App.4th 466, 481-482.)

3. The Attorney Fees Award

The parties agree that the proper measure of attorney fees in this case was the "lodestar method" of calculationthat is, the reasonable number of hours worked multiplied by the reasonable hourly rate. "California courts have consistently held that a computation of time spent on a case and the reasonable value of that time is fundamental to a determination of an appropriate attorneys' fee award." (Margolin v. Regional Planning Com. (1982) 134 Cal.App.3d 999, 1004.) The reasonable hourly rate is that prevailing in the community for similar work. (Id. at p. 1004.) Once the lodestar is calculated, the figure may be adjusted to fix the fee at the fair market value for the services rendered. (PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1095.)

Defendants contend that the trial court abused its discretion in deciding the amount of attorney fees to grant plaintiff.[3] Defendants maintain that the court failed to deduct amounts attributable to unreasonable discovery and trial preparation time. They cite Thayer v. Wells Fargo Bank (2001) 92 Cal.App.4th 819, where the appellate court ordered a reduction of the enhanced compensation awarded for attorney time that was unreasonable and unproductive. (Id. at p. 844.) Here, defendants argue, the court was "overly deferential to plaintiff's counsel, and by failing or refusing to reduce the fees claimed by plaintiff's counsel for time spent on unreasonable, unproductive or failed litigation tactics."

But defendants' position overlooks the principle that what constitutes unreasonable, unproductive, or unsuccessful litigation is a question for the trial court in the first instance, not the appellate court. "[T]he awarding of attorney fees and the calculation of attorney fee enhancements are highly fact-specific matters best left to the discretion of the trial court." (Graham v. DaimlerChrysler Corp. (2004) 34 Cal.4th 553, 581.) The trial court has discretion to decide the reasonable rate of compensation and "which of the hours expended by the attorneys were 'reasonably spent' on the litigation" in light of the facts and procedural history of the case. (Meister v. Regents of University of California (1998) 67 Cal.App.4th 437, 449.)

" 'The value of legal services performed in a case is a matter in which the trial court has its own expertise. [Citation.] The trial court may make its own determination of the value of the services contrary to, or without the necessity for, expert testimony. [Citations.] The trial court makes its determination after consideration of a number of factors, including the nature of the litigation, its difficulty, the amount involved, the skill required in its handling, the skill employed, the attention given, the success or failure, and other circumstances in the case.' " (PLCM Group, Inc. v. Drexler, supra, 22 Cal.4th at p. 1096, quoting Melnyk v. Robledo (1976) 64 Cal.App.3d 618, 623-624.) Accordingly, the trial court has "broad authority to determine the amount of a reasonable fee." Thus, "[t]he 'experienced trial judge is the best judge of the value of professional services rendered in his [or her] court, and while his [or her] judgment is of course subject to review, it will not be disturbed unless the appellate court is convinced that it is clearly wrong.' " (Serrano v. Priest (1977) 20 Cal.3d 25, 49.)

Of course, the trial court's discretion is not an uncontrolled power. It is a legal discretion, limited by the legal tenets governing the subject of its action. Reversal is warranted where the record discloses no reasonable basis for the action. (Westside Community for Independent Living, Inc. v. Obledo (1983) 33 Cal.3d 348, 355.) Thus, "[w]e do not defer to the trial court's ruling when there is no evidence to support it." (Robbins v. Alibrandi (2005) 127 Cal.App.4th 438, 452.) In this case, however, we find no abuse of the trial court's broad authority. The court expressly relied on its expertise and found that Mr. Oldfield's claim was based on not only a reasonable rate, but a reasonable number of hours spent on the litigation.

Defendants focus on specific hours they believe were exaggerated. They believe, for example, that the opposition to their motion to continue should not have been rewarded because that motion had merit in light of the improper notice they had received regarding the attorney fees hearing. This argument, however, rests on the premise that plaintiff's opposition to the continuance was unjustified. The trial court determined otherwise. Defendants did not object to fees for this activity; such objection, they believe, would have been futile. Their forbearance is understandable, but the consequence is that defendants did not create a record of the specific amount plaintiff's counsel charged for his opposition to the continuance. We thus have no evidentiary basis for finding error in awarding these fees.

Similarly, defendants did not object to the time plaintiff's counsel spent opposing Thommas Yarak's motion for limited discovery. If they had, they would have had the opportunity to identify the precise amount subject to challenge. Defendants' suggestion that we presume an inordinate amount of attorney time and remand for opposing counsel to identify the time spent on this issue not only seeks to place the burden on plaintiff for their own failings, but attempts a second bite at the litigation apple.

Defendants further dispute the time spent revising plaintiff's discovery responses. They even accuse Mr. Oldfield of telling plaintiff to lie when plaintiff signed the verification forms and of knowingly submitting a false verification. They contest the charge for the discovery work by attributing the 6.83 hours of attorney time as being solely for revision of "approximately two and one-half pages of discovery responsesnone of which look like they are the result of extensive thought." Defendants' attempt to cast aspersions on the conduct of plaintiff's counsel, together with their failure to set forth an accurate picture of the charges, does not contribute to a winning position. The 6.83 hours recorded on Mr. Oldfield's billing statement reflects multiple activities, not just drafting responses to Thommas Yarak's discovery requests. Thus, again we have no factual basis on which to find error.

Defendants also question the time spent gathering evidence of Dorothy Yarak's involvement in past transactions, an "irrelevant distraction" in their view. The trial court apparently believed, however, that Dorothy Yarak's role in refinancing other properties was important evidence contributing to a potential inference of liability on the part of both Yarak defendants. The trial court was entitled on the facts before it to conclude that a successful settlement could not have been achieved without fully investigating Dorothy Yarak's function in the defendants' business, particularly in light of plaintiff's complaint that she had been evasive in her deposition testimony.

Defendants further argue that a downward multiplier should have been applied for the delay in serving Thommas Yarak, for pursuing punitive damages, and for making "extravagant" claims of emotional distress. Finally, defendants urge us to consider the fact that they spent "roughly 65 %" of the amount claimed by plaintiff's attorney. None of these arguments has merit. The first point consists in a reargument of the unsuccessful motion to quash service on Thommas Yarak; the court nonetheless considered the argument and expressly found that time spent adding this defendant as a party was not a basis for reducing plaintiff's attorney fees. The second and third challenges were also considered by the trial court and found wanting in a proper exercise of the court's discretion. Defendants' last point was also properly rejected. The court explained in great detail why attorneys on opposite sides do not necessarily spend the same amount of time on a case. The court further expressed the view that this was a complex case that was litigated "very strenuously by both sides." It was not "an over litigated case by plaintiffs," considering the nature of the case and the vigorous defense. The trial judge relied on her familiarity not only with the prevailing hourly rates charged by attorneys of various skills in various practice areas, but also with Mr. Oldfield's work experience and skill in particular. The court's reasoning was thoughtful, balanced, and logical, and its factual findings are supported by the record. No abuse of the court's broad discretion is shown.

Disposition

The judgment is affirmed. Plaintiff is entitled to costs and reasonable attorneys' fees on appeal, the amount to be determined by the superior court. (Civ. Code,  1695.7; Boquilon v. Beckwith (1996) 49 Cal.App.4th 1697, 1723.)

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ELIA, J.

WE CONCUR:

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RUSHING, P. J.

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PREMO, J.

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[1] All further statutory references are to the Civil Code unless otherwise stated.

[2]The $1,650 rent had to be received by 5:00 pm on the first of each month or plaintiff was obligated to pay a late charge of six percent. Failure to pay rent when due was to result in immediate termination of the agreement and eviction. Under the accompanying option agreement, all of the terms of the rental agreement, including payment of rent on time, had to be complied with in order for the option agreement to be valid.

[3]Throughout this appeal defendants assumeindeed, arguethat plaintiff "is no longer a party" in this case. Instead, they insist that plaintiff's attorney is the respondent on appeal. It is unclear under what authority the role of litigant has been transferred on appeal from the party in the action to his attorney.