KENDALL J. NEWMAN, Magistrate Judge.
Presently pending before the court is defendants Wells Fargo Bank NA, Inc. and Wachovia Mortgage Corporation's (collectively "defendant")
On the court's own motion, this matter was taken under submission without oral argument. The undersigned has fully considered the parties' briefs and appropriate portions of the record. For the reasons that follow, the court recommends that defendant's Motion for Attorneys' Fees be granted, and defendant be awarded attorneys' fees in the amount of $146,493.50.
Plaintiff initiated this action against defendant in the San Joaquin County Superior court on September 15, 2010, alleging four state law causes of action based on fraud and violations of California's Business and Professions Code against defendant concerning defendant's actions in connection with plaintiff's mortgage loan modifications efforts for three rental properties located at: 865 Shelborne Drive in Tracy, California; 2416 Third Street in Lincoln, California; and 1895 Larkflower Way in Lincoln, California. (ECF No. 1-1.) Defendant removed this case to this court on October 15, 2010, on the basis of this court's diversity jurisdiction and subsequently filed a motion to dismiss the complaint. (ECF Nos. 1, 11.)
Plaintiff subsequently filed his first amended complaint on November 29, 2010. (ECF No. 19.) Plaintiff also filed a motion for a preliminary injunction seeking to enjoin defendant from foreclosing on the three properties during the pendency of this litigation, which was granted by the District Judge on December 12, 2010. (ECF Nos. 14, 21.) Defendant filed a motion to dismiss the first amended complaint, which was granted by the court. (ECF Nos. 26, 49.) When granting defendant's motion to dismiss, the court also granted plaintiff leave to amend with respect to some of his claims. (ECF No. 49.) Plaintiff filed a second amended complaint on September 12, 2011, and defendant subsequently filed a motion to dismiss this complaint. (ECF Nos. 68, 71.) Plaintiff then sought the court's leave to amend his complaint for a third time. (ECF No. 89.)
Plaintiff alleged the following thirteen claims against defendant in his proposed third amended complaint: (1) fraud; (2) "promissory estopple [sic]"; (3) violations of the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. §§ 2605 et seq.; (4) violations of 12 C.F.R. § 560.101 and California Civil Code § 2923.6; (5) "preempted/unlawful foreclosure"; (6) "improper foreclosure process"; (7) defamation; (8) negligence and negligent infliction of emotional distress; (9) violations of the Racketeer Influenced and Corrupt Organizations ("RICO") Act, 18 U.S.C. §§ 1962 et seq.; (10) intentional infliction of emotional distress; (11) elder abuse; (12) violations of the Truth in Lending Act ("TILA"), 15 U.S.C. §§ 1601 et seq.; and (13) violations of California's Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code §§ 17200, et seq. (ECF No. 98.) On September 19, 2014, the court granted plaintiff's motion for leave to amend in part, and denied it in part. (ECF Nos. 115, 123.) Specifically, the court granted plaintiff leave to amend his claims for fraud, promissory estoppel, RESPA violations, defamation, negligence and negligent misrepresentation, RICO violations, intentional infliction of emotional distress, and UCL violations. (
On September 28, 2012, defendant filed a motion to dismiss plaintiff's remaining claims asserted in the third amended complaint. (ECF No. 125.) This motion was denied. (ECF No. 137.) Defendant subsequently filed its answer to the third amended complaint on December 12, 2012. (ECF No. 138.) The parties initiated discovery in February of 2013.
On February 27, 2014, three days after the discovery cutoff, defendant filed a motion for summary judgment with respect to plaintiff's remaining claims. (ECF No. 179.) The court granted this motion in full on September 9, 2014, and entered judgment for defendant on that same day. (ECF Nos. 197, 202, 203.) Plaintiff subsequently appealed the court's grant of summary judgment. (ECF No. 205.) This appeal is currently pending before the Ninth Circuit Court of Appeals.
As an initial matter, the court addresses plaintiff's argument that defendant's motion for attorneys' fees should be summarily dismissed for failure to file an affidavit in support of the motion that meets the requirements set forth in Local Rule 293. Local Rule 293 requires that all motions for awards of attorneys' fees filed in this court include an affidavit showing the following: (1) "that the moving party was a prevailing party"; (2) "that the moving party is eligible to receive an award of attorneys' fees, and the basis of such eligibility"; (3) "the amount of attorneys' fees sought"; (4) "the information pertaining to each of the criteria set forth in [Local Rule 293](c)";
Defendant has filed two declarations in support of its motion, one made by David Newman, defense counsel in this action, and the other made by Mark Flewelling, the billing attorney assigned to this case by the firm representing defendant. (ECF Nos. 213-1, 213-2.) Plaintiff claims that neither of these declarations state that defendant was the prevailing party in this action, that defendant is eligible to receive an award of attorneys' fees, the basis for defendant's eligibility for such an award, or information pertaining to each of the criteria set out in Local Rule 293(c). Plaintiff concedes that these items were included in defendant's motion, but argues that the inclusion of such information in the motion itself does not satisfy the requirements of Local Rule 293 because it was not filed under penalty of perjury.
Contrary to plaintiff's contentions, a review of defendant's declarations in support of its motion shows that defendant's motion complies with Local Rule 293. As defendant notes in its reply, the two declarations clearly demonstrate that defendant was the prevailing party in this action, that defendant is eligible to receive an award of attorneys' fees, and the basis for that award. Furthermore, the declarations provide information concerning the time and labor required of the attorneys; the novelty and difficulty of the questions presented; the skill required to perform the legal service properly; the customary fee charged in matters of the type involved in this case; whether the contracted fee was contingent or fixed; the amount of money, or the value of the rights involved, and the results obtained; the experience, reputation, and ability of defendant's attorneys; the "undesirability" of the action; and the nature and length of the professional relationship between the attorneys and the client. Defendant also notes in its reply brief that information regarding the preclusion of other employment by the attorneys and a time limit imposed by defendant or the circumstances was not included in either declaration because these issues were not applicable to the fees as no such limitations were imposed in this case.
While defendant admits in its reply brief that neither declaration addresses attorneys' fees that have been awarded in similar cases, such an omission does not warrant the dismissal of defendant's motion on procedural grounds as suggested by plaintiff. Even though this information is not included in the declarations, defendant devotes an entire section of its motion to this topic. Plaintiff argues that defendant's failure to present this information under penalty of perjury is prejudicial to plaintiff because "he does not have the experience to challenge the statements made in the motion that were not made under penalty of perjury." (ECF No. 220 at 4.) However, the case law cited to by defendant in its motion regarding attorneys' fee awards in other similar actions is readily accessible and verifiable. Accordingly, plaintiff's ability to address defendant's assertion that the case law supports its argument that the requested fees are reasonable has not been prejudiced by the fact that defendant did not address this particular factor through the attached declarations. Plaintiff's argument is, therefore, unpersuasive. The court finds that defendant's motion and supporting declarations satisfy the affidavit requirements set forth in Local Rule 293.
"In a diversity case, the law of the state in which the district court sits determines whether a party is entitled to attorney fees, and the procedure for requesting an award of attorney fees is governed by federal law."
California Civil Code Section 1717 governs the recovery of attorneys' fees pursuant to an underlying contract. Section 1717 authorizes an award of reasonable attorneys' fees "in any action on a contract" where the contract "specifically provides that attorney's fees and costs, which are incurred to enforce that contract, shall be awarded. . . ." Cal. Civ. Code § 1717(a). An attorneys' fees provision "shall be construed as applying to the entire contract," even if its language ostensibly permits recovery of attorneys' fees only under more limited circumstances.
To recover attorneys' fees pursuant to a contractual provision under Section 1717, the moving party must be able to show that: (1) the underlying contract authorizes such fees, (2) the moving party is the prevailing party, and (3) the attorneys' fees incurred are reasonable.
Defendant argues that the loan instruments concerning each of plaintiff's three properties at issue in this action contain language that entitles defendant to attorneys' fees with respect to all of the claims that were asserted by plaintiff in this action. The promissory notes for each of the three properties contain the following identical fees provision:
(ECF No. 179-4 at 5 [Shelborne property], 29 [Third Street property], 53 [Larkflower property].) Similarly, the deeds of trust for each of the three parcels of property identically provide:
(ECF No. 179-4 at 14 [Shelborne property], 38 [Third Street property], 62 [Larkflower property].)
Defendant argues that all of the claims plaintiff asserted in this action "challenged [defendant's] rights under the parties' agreements" in a manner that, if meritorious, would have "significantly affected [defendant's] rights in the Propert[ies]." (ECF No. 213 at 9.) Furthermore, defendant asserts that the attorneys' fees incurred in defending this action were incurred in furtherance of defendant's efforts to "enforc[e] th[e] Note[s]" regarding the three properties at issue. (
The plain language of the above-quoted provisions in the promissory notes and the deeds of trust entitle defendant to attorneys' fees in this action if defendant was "enforcing th[e] Note" or if this proceeding could "significantly affect [defendant's] rights in the Property." Both of these prerequisites are met. In the third amended complaint, plaintiff sought relief in the form of an order enforcing the alleged promise that defendant would modify the terms of plaintiff's loans, which would materially and permanently alter defendant's rights under the loan contracts for each property. (ECF No. 98 at ¶ 56 ("This injustice can be avoided only through enforcement of the promise to permanently modify plaintiff's Shelborne, Larkflower, and 3rd Street loans to lower each by $500 per month. . . .").) Furthermore, plaintiff also sought and obtained preliminary injunctive relief in this case that precluded defendant from foreclosing on the three properties during the pendency of this action, and sought additional injunctive relief that would have further restricted defendant's right to non-judicially foreclose on the properties. (ECF Nos. 21, 126.)
Moreover, all of plaintiff's causes of action are either based on the contract, concern alleged actions significantly related to the contract, or seek to substantially modify the terms of the contract with respect to each of the three properties at issue in this case. Other courts have found claims similar to those asserted by plaintiff to fall squarely within the exact same language provided by the above fee-shifting provisions.
Here, all of plaintiff's claims relate either to defendant's servicing of the three loans or to defendant's attempts to non-judicially foreclose on those loans. Thus, plaintiff's causes of actions are intertwined with the contracts at issue such that they could not be separated out and defendant mounted its defense of this case in order to protect its interest in the properties at issue. Accordingly, defendant is entitled to attorneys' fees for its defense of this case under the above fee-shifting provisions.
Plaintiff does not contest defendant's argument that the claims asserted in this action would significantly affect defendant's interest in the three properties or that plaintiff's claims were intertwined with the contracts containing the above fee-shifting provisions.
As defendant notes in its reply, plaintiff asserted similar arguments regarding HOLA preemption of the non-judicial foreclosure procedure set forth in California Civil Code Section 2924 at previous points during this litigation and the court found those arguments unavailing. (
Defendant is indisputably the prevailing party. When "the results of the litigation are mixed," the court may decline to award fees to either party.
Because defendant is the prevailing party, and the promissory notes and deeds of trust for each property entitle it to reasonable attorneys' fees, plaintiff is obligated to pay reasonable attorneys' fees to defendant.
After the court determines that an award of fees is warranted, it must then determine whether the amount requested is reasonable. Fees awarded under section 1717(a)are "fixed by the court," Cal. Civ. Code § 1717(a), which "has broad authority to determine the amount of a reasonable fee,"
Under California law, a court determining the number of hours reasonably expended on a case "must carefully review attorney documentation of hours expended."
Here, defendant has attached to the declaration of Mark Flewelling copies of the billing statements sent to defendant by Anglin, Flewelling, Rasmussen, Campbell, & Trytten LLP ("AFRCT") detailing the hours billed, the nature of the professional services rendered, and the customary hourly rate of each attorney. (
Plaintiff has not objected to any of the time entries listed in the attached billing statements as unreasonable. Furthermore, a review of these records shows that hours for which defendant seeks recovery are not excessive in light of the circumstances presented by this case. As noted above, defendant only seeks to recover fees for three of the attorneys who worked on this case even though other attorneys and paralegals at AFRCT also billed defendant for time spent working on this case. Furthermore, defendant has also omitted certain attorneys' fees associated with unsuccessful motions filed by defendant over the course of this litigation. In sum, the billing statements submitted by defendant show that defendant seeks to recover only fees incurred for work performed by Carr, Newman, and Little in connection with the extensive law and motion practice that occurred at the pleading stages of this case, discovery and discovery-related motions, and the preparation of its motion for summary judgment. Based on a careful review of the billing records attached to the Flewelling declaration, the court determines that Carr reasonably billed 51.7 hours, Newman reasonably billed 457.9 hours, and Little reasonably billed 22.3 hours for services rendered to defendant in connection with these actions in litigating this case.
David Newman also states in his declaration that he will have spent "at least six hours in connection with [the present] fee motion" beyond those hours accounted for in the billing statements. (Newman Decl. ¶ 7.) Specifically, he states that he spent three hours of billable time preparing the current motion, two hours reviewing and responding to plaintiff's opposition briefing, and "expect[s] to spend an additional hour preparing for and attending a hearing on this motion." (
In order to determine what rate is "reasonable," courts look at "prevailing market rates in the relevant community."
Here, defendant requests the court's approval of rates ranging from $265 to $330 per hour and represents that those rates are reasonable in light of the nature of the services rendered.
The hourly rates defendant charged by Carr, Newman, and Little are consistent with those awarded in similar cases within this district for the work of attorneys of similar skill levels.
In sum, the court finds that the billing records and declarations provided by defendant in support of its motion show that Carr reasonably billed 13.9 hours at $300 per hour, 37.3 hours at $330 per hour, and 0.5 hours at $320 per hour; that Newman reasonably billed 547.9 hours at $265 per hour and 5 hours at $275 per hour; and that Little reasonably billed 22.3 hours at $320 per hour. Overall, these billings result in a lodestar of $146,493.50, calculated as follows:
"After calculating the lodestar, the court must `consider whether the total fee award so calculated under all of the circumstances is more than a reasonable amount'; if so, it must `reduce the . . . award so that it is a reasonable figure.'"
Here, defendant asserts that the
While the legal questions posed in this action were not particularly novel or difficult, the number of claims at issue in the case and amount of time and labor required to defend this action was unusually great. The law and motion practice at the pleading stage in this case was remarkably extensive, lasting over two years and including, among other filings, several successful motions to dismiss filed by defendant and numerous motions to amend the complaint and motions for reconsideration filed by plaintiff. Furthermore, the docket in this case generally indicates that defendant did not litigate this case in an inefficient or artificially expensive manner. Generally, defendant limited its own filings in this case to dispositive motions and spent much of its time and effort opposing plaintiff's many filings. Defendant filed its successful motion for summary judgment with respect to all of plaintiff's remaining claims immediately after the close of discovery. Furthermore, the billing records submitted by defendant demonstrate that the fees defendant seeks to recover are primarily attributable to the hours spent by its attorneys drafting its dispositive motions, engaging in reasonable discovery efforts, and responding to plaintiff's various motions and other filings.
Defendant's potential liability in this action was rather large for a case of this nature. This action involved mortgage loans concerning three separate parcels of residential real property to which defendant was the mortgagee. Had plaintiff succeeded in this action and received his requested relief, defendant would have been enjoined from foreclosing on all three loans. Plaintiff also sought compensatory, statutory, and punitive damages that, by plaintiff's own calculations, would have amounted to a recovery of many millions of dollars.
While other courts have awarded smaller sums in other foreclosure cases presenting claims and issues similar to those present here, those cases were resolved at the pleading stages, involved fewer claims than were at issue in this case, and were ultimately far less protracted in nature.
The court also finds that the fees are reasonable in light of the experience, reputation and ability of the attorneys given that their hourly rates appear to be in line with the rates of other attorneys of similar experience and skill that have been approved by other courts in this district with regard to similar actions.
In light of these factors and the strong presumption that the lodestar is the reasonable fee, the court need not adjust the lodestar figure. Accordingly, the court recommends that defendant be awarded $146,493.50 in attorneys' fees.
Plaintiff asserts that if the court does not deny defendant's motion on the merits, the court should deny defendant's motion without prejudice in light of plaintiff's appeal of the court's grant of summary judgment in defendant's favor, which is currently pending before the Ninth Circuit Court of Appeals. Plaintiff argues that the court should decline to hear this motion at this time because there is uncertainty as to who will prevail on appeal. Plaintiff cites to the Advisory Committee Notes to the 1993 Amendments to Federal Rule of Civil Procedure 54 in support of this argument, which provides that subdivision (d)(2)(B) of Rule 54 permits a district court to defer its ruling on a motion for attorneys' fees or deny the motion without prejudice and direct the moving party to refile the motion after the resolution of the appeal. The court finds plaintiff's reasoning unpersuasive.
While it is true that the Federal Rules of Civil Procedure permit a district court to delay ruling on a motion for attorneys' fees during the pendency of an appeal on the merits, nothing requires the court to do so. In this case, the more prudent course of action would be to address defendant's motion at this juncture rather than at some later time. As defendant highlights, the Advisory Committee Notes to Federal Rule 58 provide that:
This case clearly falls into the latter category. Plaintiff in no way demonstrates how the court's decision on this motion will likely be affected by the Court of Appeals' decision on plaintiff's appeal of summary judgment, or even why there is a plausible uncertainty as to which party will prevail on that appeal. Therefore, plaintiff has not provided a compelling reason for the court to withhold judgment on defendant's motion for attorneys' fees until after plaintiff's appeal of summary judgment has been fully adjudicated. Accordingly, defendant's motion should be ruled on at this juncture instead of after plaintiff's merits appeal has concluded.
Based on the foregoing, IT IS HEREBY RECOMMENDED that:
1. Defendant's motion for attorneys' fees (ECF No. 213) be GRANTED.
2. Defendant be awarded $146,493.50 in attorneys' fees.
These findings and recommendations are submitted to the United States District Judge assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(1). Within fourteen (14) days after being served with these findings and recommendations, any party may file written objections with the court and serve a copy on all parties. Such a document should be captioned "Objections to Magistrate Judge's Findings and Recommendations." Any reply to the objections shall be served on all parties and filed with the court within fourteen (14) days after service of the objections. The parties are advised that failure to file objections within the specified time may waive the right to appeal the District Court's order.
IT IS SO RECOMMENDED.
