GILBERT, P.J.
This case is before us once again. It teaches a lesson: A surfeit of litigation over a relatively modest damage claim can produce an abundance of attorney's fees far in excess of that claimed and payable by the losing side.
Defendant T.O. IX, LLC (T.O. IX) appeals an award of $1.65 million as attorney's fees to plaintiff Asphalt Professionals, Inc. (API), after API obtained a judgment against T.O. IX for breach of contract, foreclosure on a mechanic's lien and quantum meruit for its work on a housing development project. We conclude, among other things, that the trial court did not abuse its discretion when it: 1) rejected T.O. IX's request to apportion fees; 2) awarded fees for pretrial work on issues that were not resolved at trial; 3) authorized the filing of an attorney's fee motion after the judgment on the first phase of a bifurcated trial; and 4) awarded attorney's fees that were larger than the damage award. In addition, we conclude that on the limited record, T.O. IX has not shown the award was excessive. It failed to rebut the trial court's findings on the reasonableness of the fees and the excessive litigation the defense generated. We affirm.
In 2004, T.O. IX was the owner and builder of a housing development in Thousand Oaks, California. It signed a subcontract agreement with API, a licensed contractor. API agreed to perform street paving services. After completing its work, API demanded payment. T.O. IX refused to pay for all of API's work. The subcontract contains an attorney's fee provision.
In 2005, API filed an action against T.O. IX stating causes of action for breach of contract and foreclosure on a mechanic's lien. It later amended its complaint and added causes of action for fraud, conspiracy and quantum meruit. API added defendants and alleged that T.O. IX, a limited liability company, was "a mere shell and sham without capital, assets, stock, stockholders, membership interests or members"; and that T.O. IX was an alter ego and was "conceived, intended, and used" by defendants Darin Davis, Stephen Bock and other entities "as a device to avoid individual liability." In the fourth cause of action for fraud, API alleged that it was induced to sign the subcontract by T.O. IX's false representations that it was the contractor for the project and that it had a license.
The trial court bifurcated the case into two trial phases. The first phase involves API's causes of action for breach of contract, foreclosure on a mechanic's lien and quantum meruit. The second phase involves fraud and alter ego issues.
In 2010, the trial court conducted a "bench trial" on the first phase. It entered judgment for API against T.O. IX. It ruled that: 1) API "did everything it was supposed to do under the contract," 2) T.O. IX's action of "withholding . . . payments due the plaintiff under the contract . . . was not done in good faith," 3) API had the right to foreclose on its mechanic's lien, 4) API was entitled to damages of $79,831.18 on its contract claim and an "additional" $40,019.30 as interest, 5) API also was entitled to $98,990.60 as "additional statutory bad faith retention" damages on the contract cause of action, and $98,990.60 "delay damages" on the quantum merit cause of action.
API filed a motion for an award of attorney's fees. In his declaration, Ray Bowen, API's counsel, said his hourly rate was $300; and that the defense had retained six different law firms during this case, and those firm's hourly rates "either equaled or exceeded [his] hourly rate of $300.00 per hour." API sought a total attorney's fee award of $1,662,195. Bowen claimed that much of the work he performed was in response to "unreasonable and ineffective tactics" the defense employed.
The trial court granted API's motion and awarded $1.65 million fees. It said this sum was "the reasonable value of services rendered to date in order for plaintiff to prevail upon the counts adjudicated." It found that T.O. IX had "no bona fide factual or legal defense." It said, "The attorney fee clause and only the attorney fee[] clause can ultimately render the aggrieved party whole when the developer, with no bona fide defense, compels an entitled contractor to spend $1.6+ million to collect on a legitimate contract claim; [¶] . . . [¶] . . . The Court reached the sum of $1,650,000.00 after discounting fees which may have been incurred by plaintiff on discovery matters determined without substantial justification . . . ." It rejected T.O. IX's request to apportion fees.
An overriding impediment to T.O. IX's arguments is its failure to cite to the record in support of its claims.
T.O. IX contends the trial court erred by awarding fees to API without apportioning counsel's services on the contract cause of action from the work API's counsel performed on the other issues in the case. It claims that because this case involved a bifurcated first-stage trial on contract issues, the court should have awarded fees only for services related to the contract issues, and not for work on fraud claims.
API claims apportionment is not appropriate because the trial court could reasonably find that the contract and fraud issues were "inextricably intertwined." We agree.
"Apportionment is not required when the claims for relief are so intertwined that it would be impracticable, if not impossible, to separate the attorney's time into compensable and noncompensable units." (Bell v. Vista Unified School Dist. (2000) 82 Cal.App.4th 672, 687.)
In the trial court, T.O. IX argued API could recover fees for the work on the contract claim, but not on other issues such as fraud. But the court found apportionment was not appropriate. It said, "I just don't think that the contract claims are severable from the tort claims in this case. I think they are all part and parcel of the same, and I would be creating an artifice by trying to separate them for purposes of attorney fees."
T.O. IX has not shown where in the record the trial court erred in its findings. (Premier Medical Management Systems, Inc. v. California Ins. Guarantee Assn. (2008) 163 Cal.App.4th 550, 564 [party challenging the attorney's fee award must make a sufficient showing specifying the hours and services that should not have been compensated].) There is no appropriate citation to the record.
T.O. IX argues that apportionment is required because there are no provisions that allow for attorney's fees on fraud issues. But "[a]ttorney's fees need not be apportioned when incurred for representation on an issue common to both a cause of action in which fees are proper and one in which they are not allowed." (Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d 124, 129-130.) Here the trial court found that the various causes of action were based on proof of underlying transactional facts. It said API was "the prevailing party on the core issue in this case—the contract work that [it] performed for the developer in this case . . . ."
There is a connection between the contract and fraud issues and API's services. API claimed T.O. IX's promises and false representations induced it to sign the agreement and perform its services. T.O. IX has not shown why the trial court could not reasonably find that API's counsel properly worked on these closely connected issues together instead of segregating the pretrial work. The court did not decide the fraud issues at this trial, but that does not mandate a different result. "Where a lawsuit consists of related claims, . . . a trial court has discretion to award all or substantially all of the plaintiff's fees even if the court did not adopt each contention raised." (Downey Cares v. Downey Community Development Com. (1987) 196 Cal.App.3d 983, 997.)
T.O. IX notes that API amended its complaint to add alter ego issues and additional defendants. It contends these issues were not connected to the contract claims. It argues that because the first phase trial did not resolve the alter ego issues, API is not entitled to compensation for this work. But again T.O. IX does not cite to the record to support this claim. It does not designate the hours that it claims are severable from the first phase trial issues. Its conclusory assertion that these hours should not have been compensated is not sufficient. "[I]t is the burden of the challenging party to point to the specific items challenged, with a sufficient argument and citations to the evidence. General arguments that fees claimed are . . . unrelated do not suffice." (Premier Medical Management Systems, Inc. v. California Ins. Guarantee Assn., supra, 163 Cal.App.4th at p. 564.)
But even on the merits, the result does not change. API claimed T.O. IX obstructed its contractual rights by refusing to pay for its services and by employing an alter ego status. Its theory was that T.O. IX was an undercapitalized "shell" and assets were being hidden to prevent payment on the contract. The trial court found T.O. IX acted in bad faith by refusing to pay for API's services. The court could reasonably infer that these alter ego issues were directly connected to API's contract claims. (Reynolds Metals Co. v. Alperson, supra, 25 Cal.3d at pp. 129-130.)
T.O. IX notes that the trial court did not finally resolve the alter ego issues in this trial, but this does not change the result. "`Litigants in good faith may raise alternative legal grounds for a desired outcome, and the court's . . . failure to reach certain grounds is not a sufficient reason for reducing a fee. The result is what matters.'" (Sundance v. Municipal Court (1987) 192 Cal.App.3d 268, 274.) Here the result was favorable. Work on unresolved, or even unsuccessful, issues may be compensated if it furthers the ultimate goal of the action or "aided the work done on the merits." (Herrington v. County of Sonoma (9th Cir. 1989) 883 F.2d 739, 747; Downey Cares v. Downey Community Development Com., supra, 196 Cal.App.3d. at p. 997.) Here API made a strong pretrial evidentiary showing that there was a financial link between T.O. IX and other defendants. That showing was necessary to establish the basis for proceeding to a second stage trial and to achieve API's ultimate litigation goals. The court also could reasonably infer that API had a valid justification for pursuing these issues with the goal of obtaining a judgment API could collect.
T.O. IX suggests that the trial court erred by considering claims for fees on fraud and alter ego issues. It notes these issues will be decided in the second phase of the bifurcated trial. But the court was not deciding future attorney's fees. It was only awarding fees for the work performed up to and including the judgment on the first trial. The court found that the services that were compensated were reasonably incurred "in order for plaintiff to prevail upon the counts adjudicated." T.O. IX claims the alter ego issues involve parties or entities that were not involved in the first phase trial. But as API correctly notes, T.O. IX did not cite to any evidence showing the court awarded fees for work related to "any defendant other than T.O. IX." (Premier Medical Management Systems, Inc. v. California Ins. Guarantee Assn., supra, 163 Cal.App.4th at p. 564.) In the trial court, T.O. IX objected that API spent some time on alter ego issues involving other defendants. But the court responded that it was aware of this; it had made adjustments, "subtracted [in] some places," and had granted an award that was "less than the amount [Bowen] requested." Consequently, it indicated it was able to distinguish between the work performed on these issues relating to T.O. IX as opposed to other defendants. T.O. IX has not shown otherwise.
API also suggests that T.O. IX is estopped to complain that the procedure the trial court selected was premature. We agree. The court advised the parties that because the case would be tried in two phases, there were two options: 1) wait until both phases were completed before considering an attorney's fee motion, or 2) allow API to file its motion for fees after its successful first phase judgment. The court suggested the second option and T.O. IX agreed to this procedure. "[A]n appellant may waive his right to attack error by expressly or impliedly agreeing at trial to the ruling or procedure objected to on appeal." (Redevelopment Agency v. City of Berkeley (1978) 80 Cal.App.3d 158, 166.)
But even on the merits, a trial court may properly consider an attorney's fee motion after the completion of the first phase of a bifurcated case even if some issues remain to be tried later. (Sundance v. Municipal Court, supra, 192 Cal.App.3d at p. 271; see also Marks v. Clarke (9th Cir. 1996) 102 F.3d 1012, 1034 ["`The fact that the dispute between the parties may continue does not preclude a fee award'"].) "[A] plaintiff who prevails at an interim stage of the litigation may be entitled to an award of attorney fees without having to wait until the rest of the case is completed." (Pearl, Cal. Attorney Fee Awards (Cont.Ed.Bar 3d ed. 2011) vol. 1, § 2.90, p. 96.) Here API prevailed on the merits against T.O. IX.
T.O. IX claims the award of $1.65 million attorney's fees is large in comparison to the amount of damages awarded by the trial court.
Courts may award counsel fees that are substantially larger than the damage award. (Harman v. City and County of San Francisco (2007) 158 Cal.App.4th 407, 421; Niederer v. Ferreira (1987) 189 Cal.App.3d 1485, 1507 ["the United States Supreme Court held an award of $245,456.25 was reasonable, even though the damages were only $33, 350.00"]; see also Greene v. Dillingham Construction N.A., Inc. (2002) 101 Cal.App.4th 418, 422, 429 [attorney's fee award $1,095,794.55 affirmed, damages $490,000, and case remanded to trial court to determine whether attorney's fee award should be increased]; U.S. Football League v. National Football League (2d Cir. 1989) 887 F.2d 408, 409, 417 [attorney's fee award $5,529,247.25 affirmed, antitrust damages $3].)
Here, T.O. IX attempts to minimize the relief obtained by API to claim that the fee was disproportionately high. But API's judgment provided substantial relief. It obtained the right to foreclose on its mechanic's lien. The value of that right must be considered in determining the fee. The court also awarded monetary relief including $79,831.18 "principal" on API's contract claim and an "additional" $40,019.30 for interest. It awarded $98,990.60 as "additional statutory bad faith retention" damages on the contract cause of action, and $98,990.60 "delay damages" on the quantum meruit cause of action.
T.O. IX suggests that the mathematical ratio of the award to the damages is too large. But an "award of attorney fees is not subject to reversal simply because it lacks definitive proportionality to the amount of damages recovered by respondent." (Harman v. City and County of San Francisco, supra, 158 Cal.App.4th at p. 421.)
T.O. IX has a strong burden to establish an abuse of discretion for an attorney's fee award. "`The "experienced trial judge is the best judge of the value of professional services rendered in his [or her] court . . . ."'" (Sommers v. Erb (1992) 2 Cal.App.4th 1644, 1651.) An award of fees "`"will not be disturbed unless the appellate court is convinced that it is clearly wrong."'" (Ibid.)
T.O. IX notes that API's counsel said that its fees were "higher than normal" in its motion. It claims this "should have alerted" the trial judge that, "on its face, API's request might indeed be excessive." T.O. IX suggests that the trial court did not carefully consider the request for fees and merely acted as a "rubber stamp" for API's motion. But the court was well aware of the amount of fees API was requesting. It knew this was a long and highly contested case. The trial judge said he had been "living with this particular case on many occasions and at trial during the last three years . . . ." The record discloses that the court carefully considered this motion. In reaching the award, the court said: 1) it "discount[ed]" fees for unjustified discovery; 2) it did not award fees for "claims and counts which ultimately" proved to be unsuccessful; and 3) it granted higher fees where "the quality of the services . . . exceeded the value of the fees requested," which included API's counsel's "services performed at trial." "`"The value of legal services performed in a case is a matter in which the trial court has its own expertise."'" (Center for Biological Diversity v. County of San Bernardino (2010) 185 Cal.App.4th 866, 896.)
T.O. IX claims it was unreasonable for API to have incurred $1.65 million in fees. But the size of the award cannot be judged in the abstract. Whether it is excessive depends on the nature of the case. (See, e.g., In re Initial Public Offering Securities Litig. (S.D.N.Y. 2009) 671 F.Supp.2d 467, 516 [attorney's fee award of $170 million was reasonable based on the nature of the case].) T.O. IX claims this case was not complex. But other than a brief reference to the pleadings, the statement of facts in T.O. IX's opening brief contains no description of the various stages of the pretrial proceedings, no citations to the record to document the entire litigation history, and no summary of the trial testimony. The trial court found that API's costs were in line with the defense costs. It said the parties had collectively spent $3 million on attorney's fees. T.O. IX concedes, "It is no secret that fees in this case are high for all concerned."
T.O. IX states that "API wove a web of unnecessary complexity that increased cost and unnecessarily delayed the litigation." But the trial court found that the opposite was true. It found that T.O. IX caused API to incur extra litigation expenses, that T.O. IX asserted a non-meritorious defense and acted in bad faith. The trial judge said T.O. IX, "with no bona fide defense," compelled API "to spend $1.6" million in fees. The court added, "[T]here is no rule that compels the damaged contractor [API] to abandon the claim or compromise the claim pendent lite because the developer [T.O. IX] raises the costs . . . disproportionately beyond the face value of the case. In such situations, which are the exception rather than the rule, it is the attorney fee clause and only the attorney fee clause which can ultimately render the aggrieved party whole."
Substantial evidence supports the trial court's findings that T.O. IX increased litigation costs. T.O. IX has failed to cite to the record to show otherwise.
In his declaration in support of the motion for fees, Bowen said API's litigation expenses were increased by a long pattern of improper defense tactics, which included: 1) "duplicitous conduct and disingenuous testimony"; 2) evasive discovery answers requiring "dozens of meet and confer letters" and motions to compel; 3) "frivolous" defense motions and "ridiculous demands"; 4) after three years of "[d]ocument production," discovery "became a nightmare" when it was discovered that the defense did not disclose "all of the documents in their computer servers, which involved thousands more documents"; and 5) bad faith—the defense made motions solely "to try to wear plaintiff down and finally give up."
In his declaration, API President Jeffrey Ludlow said that while he was waiting for a deposition in this case, one of the owners of the sued entities told him "he was worth over $100,000,000.00 and that he was going to run [Ludlow] and [his] company into the ground." Ludlow said this statement was consistent with the defense conduct "throughout this entire litigation."
Leonard Tavera, counsel for T.O. IX, filed a declaration in opposition to API's motion. But he did not contest or respond to Bowen's and Ludlow's claims about the improper defense tactics. A party's aggressive litigation tactics may cause the opponent's attorney's fees to rapidly escalate. (In re Marriage of Dick (1993) 15 Cal.App.4th 144, 168.) When the defense engages in such conduct, it cannot complain that its opponent's fee award has increased in response. (Copeland v. Marshall (D.C. Cir. 1980) 641 F.2d 880, 904 ["The government cannot litigate tenaciously and then be heard to complain about the time necessarily spent by the plaintiff in response"]; Perkins v. New Orleans Athletic Club (E.D. La. 1976) 429 F.Supp. 661, 667 ["Those who elect a militant defense in the face of a statute allowing attorney's fees if they are defeated must take into account the time and effort they exact from their opponents"].)
T.O. IX argues that API enlarged this case by amending its pleadings to add parties and expand the issues. But the trial court implicitly found this was appropriate. It could reasonably infer the complexity of this case stemmed from the need for API to locate and investigate to adequately prepare for the second stage.
API's counsel filed a declaration that explained his hourly rate and made a showing why it was reasonable. His $300 an hour rate falls well within the range of hourly rates generally charged by experienced trial counsel. (Center for Biological Diversity v. County of San Bernardino, supra, 185 Cal.App.4th at p. 900 [citing National Law Journal annual billing rate survey].) Bowen submitted 286 pages of extensive and highly detailed time sheets documenting his hours and the specific services he performed on this case over a five-year period. In his declaration and time sheets, he explained the necessity for the hours of service he performed. T.O. IX has not shown the court's award was inconsistent with the "lodestar" method of determining fees based on the hours of service multiplied by the reasonable hourly rates. (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1134-1135; U.S. Football League v. National Football League, supra, 887 F.2d at pp. 409, 413, 417 [National Football League did not meet burden to show that lodestar attorney's fee award of $5,529,247.25 was excessive].) A successful plaintiff is ordinarily entitled to "compensation for all hours reasonably spent." (Serrano v. Unruh (1982) 32 Cal.3d 621, 639.)
Here the trial court did not grant all the fees API requested. T.O. IX notes that it prevented API from presenting some of its fraud claims with a successful summary adjudication motion and that some of API's discovery was improper. But the court said that it rejected fees for "discovery matters determined [to be] without substantial justification" and for "counts which were unsuccessful." T.O. IX claims the court required it to pay for API work involving other defendants. It argues that although the court said it had not compensated API for such work, the size of the award impeaches the court's findings. These claims fail because T.O. IX has not cited in the record what services and hours were improperly included.
We must give substantial deference to the trial court because it had the benefit of knowing the details of the entire litigation history of this action. The record on appeal which T.O. IX produced does not include most of the proceedings mentioned in Bowen's declaration. We cannot presume error from an incomplete record. (In re Kathy P. (1979) 25 Cal.3d 91, 102.)
We have reviewed T.O. IX's remaining contentions, and we conclude it has not shown error and it raised arguments without supporting citations to the record.
The judgment is affirmed. Costs on appeal are awarded in favor of respondent API.
YEGAN, J. and PERREN, J., concurs.
