Plaintiff Syers Properties III, Inc., challenges the trial court's award of attorney fees in its unsuccessful legal malpractice action against defendant attorneys Ann Rankin and Terry Wilkens and the Law Offices of Ann Rankin. In a separate opinion, we have affirmed the judgment in that action. (Syers Properties III, Inc. v. Rankin (May 5, 2014, A136018) [nonpub. opn.].) The trial court awarded defendants attorney fees totaling $843,245.27, pursuant to Civil Code section 1717 and Code of Civil Procedure section 1033.5, subdivision (a)(10)(A), as prevailing parties. Plaintiff contends the trial court abused its discretion in two respects in awarding the fees: First, plaintiff maintains the court's determination of reasonable hours relied upon inadequate documentation that failed to show the reasonableness of the hours and the specific tasks performed by defense counsel. Second, plaintiff asserts the court abused its discretion in calculating the reasonable rate, as it did not inquire into the actual hourly rate charged or whether that actual rate was reasonable under the lodestar formula. We shall affirm the award.
Plaintiff sued defendants for legal malpractice and breach of fiduciary duty in defendants' representation of plaintiff in a construction defect case over the course of seven years. Following numerous hearings and motions in limine to resolve legal issues in the action, a jury was empanelled, opening statements were given and plaintiff's first witness was called. The court then granted defendants' pending nonsuit motion. Following the judgment in their favor, defendants sought their attorney fees as the prevailing parties in the malpractice action, pursuant to the attorney-client fee agreement with plaintiff and Civil Code section 1717. Defendants sought a total of $843,245.27 for the combined 2,324.5 hours of attorney and paralegal time spent on the case from its inception, through discovery, numerous pretrial motions, trial, and post-judgment work.
In support of the requested fee, the law firm Murphy, Pearson, Bradley & Feeney, which had represented defendants in the malpractice action, filed declarations from three attorneys who performed the majority of the work (1,949 total hours): named shareholder John H. Feeney and associates Adam M. Koss and Arthur J. Harris. Each of the declarations set forth the attorney's qualifications and experience, described the stages or motions in the litigation in which he had been primarily engaged, and summarized his
In addition, Feeney's declaration set forth the hours billed by Associate Attorney David J. Gibson, as well as by each of four paralegals who assisted on the case. This declaration also described the qualifications and experience of Gibson and each of the paralegals, as well as a brief description of the work each performed.
As to the "reasonable rate" of pay, Feeney stated in his declaration that based on his more than 20 years of civil litigation experience, it was his understanding that the prevailing rate or market rate in the San Francisco Bay Area for the services performed by associates Koss and Harris, who were admitted to the California State Bar in December 2006, was approximately $300 per hour; for Gibson, who was admitted in December 2010, it was approximately $250 per hour; and for paralegals Miranda, Tetlow, Hill and Ota it was approximately $150 per hour.
Defendants also relied upon the Laffey Matrix, attached as exhibits to the motion. As described by defendants, the Laffey Matrix "is an official source of attorney rates based in the District of Columbia area, which can be adjusted to the San Francisco Bay Area by using the Locality Pay Tables." Application of the same formula used by Chief Judge Walker in In re HPL Technologies, Inc. Securities Litigation (N.D.Cal. 2005) 366 F.Supp.2d 912, 922, footnote 1 (HPL Technologies) provided an approximately 9 percent
Plaintiff opposed the fee motion on the grounds the amount sought was unreasonable. It contended the hourly rate requested was significantly higher than the rate actually billed the clients and that the lodestar formula applied had historically been reserved for contingency fee cases and not to a conventional hourly fee case such as the instant attorney malpractice case. Further, plaintiff argued that the declarations were inadequate to document the hours expended and that defendants failed to provide enough specificity about the fees incurred for the court to properly assess their reasonableness. Specifically, plaintiff claimed defense counsel had not disclosed their actual hourly rates and had not provided either redacted billing statements or a comparable itemized summary of the expenses incurred. Arguing that defense counsel marketed itself as a premiere insurance defense firm in areas of professional negligence, among others, plaintiff asserted that insurance defense firms usually charged insurance company clients hourly rates significantly below the prevailing market rate, permitting the firm to take on a huge caseload of insurance defense work without the usual administrative overhead issues incurred with a more individual client practice. In short, plaintiff argued the rate sought was much higher than the "market rate for this type of work or law firm." Plaintiff maintained the court should rule defendants were entitled to a fee award based on the fees actually incurred by them and should direct defendants to provide supplemental information with more detail, so plaintiff and defendants could review the billing records to determine whether the time spent was reasonable, necessary, and not duplicative.
On January 9, 2013, the court granted defendants' fee motion, finding that the rates and hours requested were reasonable and that the adjusted Laffey Matrix rates requested by defendants were reasonable and appropriate for the lodestar calculation. Accordingly, it awarded defendants the sum of $843,245.27 based on the hours and rates requested by defendants. This timely appeal followed.
The abuse of discretion standard governs our review of the trial court's determination of a reasonable attorney fee. (E.g., Ketchum v. Moses (2001) 24 Cal.4th 1122, 1140 [104 Cal.Rptr.2d 377, 17 P.3d 735]; PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1096 [95 Cal.Rptr.2d 198, 997 P.2d 511] (PLCM Group); accord, Nemecek & Cole v. Horn (2012) 208 Cal.App.4th 641, 650 [145 Cal.Rptr.3d 641] (Nemecek).)
The type of categorical breakout of time expended by each attorney and paralegal provided here has been specifically lauded by Hon. Vaughn Walker, former Chief Judge of the United States District Court for the Northern District of California, as "an especially helpful compromise between reporting hours in the aggregate (which is easy to review, but lacks informative detail) and generating a complete line-by-line billing report (which offers great detail, but tends to obscure the forest for the trees)." (In re HPL Technologies, supra, 366 F.Supp.2d 912, 920.)
Finally, we observe that the three attorneys primarily involved in the litigation provided declarations under penalty of perjury in support of the hours sought, which were broken down by hours expended in each category of services rendered. Feeney also averred he had exercised his "billing judgment" to excise hours actually expended, but which he believed either exceeded the time required for the task or had other reasons to cut. Most importantly, the trial judge presided over the entire matter and was well able to evaluate whether the time expended by counsel in this case, given its complexity and other factors, was reasonable. We find no abuse of discretion here.
Plaintiff also challenges the rates applied by the trial court to the hours expended by defense attorneys. Plaintiff contends the trial court abused its discretion in adopting as "reasonable," rates far exceeding the actual rates billed the insurance company footing the bill for the defense. Plaintiff further maintains that the reasonable rate measured by the "market rate" for attorneys in insurance defense firms on cases such as this one was far below that determined by the court to be reasonable and, therefore, the court's reliance on the adjusted Laffey Matrix was misplaced.
There is no requirement that the reasonable market rate mirror the actual rate billed. As we stated in Chacon v. Litke, supra, 181 Cal.App.4th 1234: "`The reasonable market value of the attorney's services is the measure of a reasonable hourly rate. [Citations.] This standard applies regardless of whether the attorneys claiming fees charge nothing for their services, charge at below-market or discounted rates, represent the client on a straight contingent fee basis, or are in-house counsel. [Citations.]' [Citation.]" (Id. at p. 1260; accord, Center for Biological Diversity v. County of San Bernardino (2010) 188 Cal.App.4th 603, 619 [115 Cal.Rptr.3d 762]; see PLCM Group, supra, 22 Cal.4th 1084, 1094 [Civ. Code. § 1717 permits an award of attorney fees for in-house counsel and the calculation was properly based upon the prevailing market rate in the community for comparable legal services].)
Plaintiff suggests this general rule allowing the "reasonable rate" to vary from the actual rate billed does not apply in cases, such as this, where there is neither a contingent risk regarding payment of the fees, nor other special circumstance. We disagree.
Nemecek, supra, 208 Cal.App.4th 641 [145 Cal.Rptr.3d 641], is on point. There, the Court of Appeal expressly rejected the argument that the rate billed by insurance defense counsel in an arbitration over claimed attorney malpractice and fees represented the maximum hourly rate reasonably recoverable as attorney fees. The appellate court refused to "accept a rule that requires a trial court to limit its fee award to the amount incurred in all circumstances except under `unique factual circumstances' such as pro bono cases, contingency fee cases and representation by in-house counsel." (Id. at p. 652.) The Nemecek litigants prevailed in the arbitration. They were represented by counsel hired by their insurer. Nemecek's counsel sought an hourly rate based on the Laffey Matrix (for a total fee of $45,759.81) and did not disclose their actual hourly rates in the matter. (Id. at pp. 650-651.) In opposition, the appellant presented expert testimony that counsel for Nemecek billed the insurer $100 to $215 per hour for attorney services in the arbitration. The trial court awarded defendant $42,207.31 in reasonable attorney fees and costs — close to the amount sought. The Court of Appeal affirmed. (Id. at pp. 651-652.) In so doing, the court not only rejected the argument that the rate billed by Nemecek's counsel represented the maximum reasonable hourly rate in insurance defense cases, but also rejected the claim that the fee request should have been denied because fees were paid by the insurer rather than by the client itself. The court relied upon authority stating that "`[p]laintiffs
In the instant case, the trial court's rate determination was supported not only by the adjusted Laffey Matrix, but also by Feeney, an attorney with more than 20 years' experience in civil litigation of this type, who stated under penalty of perjury his opinion as to the prevailing rate in the San Francisco Bay Area for the services performed by the attorneys and paralegals in the case — at rates virtually identical to those calculated in the Laffey Matrix as adjusted for the San Francisco-San Jose-Oakland region. Moreover, the trial judge who had presided over the matter viewed the services performed as "sophisticated" legal work and stated the hourly rate requested was "not even close to the highest hourly rate that I have seen in this area."
We reiterate that the trial court is in the best position to value the services rendered by the attorneys in his or her courtroom. (E.g., Ketchum v. Moses, supra, 24 Cal.4th at p. 1132.) In the circumstances presented here, we cannot say this judge was "`"clearly wrong."'" (Ketchum v. Moses, supra, 24 Cal.4th at p. 1132.) Consequently, we find no abuse of discretion.
The order granting defendants' motion for attorney fees is affirmed. Each party shall recover its own costs on this appeal.
Haerle, J., and Brick, J.,