Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_04-cv-02344/USCOURTS-caed-2_04-cv-02344-8/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Account Receivable

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 California Civil Code § 1717(a) provides:

where the contract specifically provides that attorney's

fees and costs, which are incurred to enforce that

contract, shall be awarded either to one of the parties

or to the prevailing party, then the party who is

determined to be the party prevailing on the contract,

whether he or she is the party specified in the contract

1

UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

FORD MOTOR CREDIT COMPANY,

Plaintiff,

v. NO. CIV. S-04-2344 LKK/JFM

MICHAEL DAUGHERTY,

Defendant.

 /

AND RELATED COUNTER-CLAIM AND 

THIRD-PARTY COMPLAINT.

 /

Pending before the court is plaintiff Ford Motor Credit

Company’s motion for attorney fees and costs pursuant to California

Civil Code § 1717 and Rule 54 of the Federal Rules of Civil

Procedure.1 I decide the matter based on the papers and pleadings

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or not, shall be entitled to reasonable attorney's fees

in addition to other costs.

2

filed herein.

I.

FACTS

Ford Motor Credit Company, brought suit against defendant

Michael Daugherty for two breach of guaranty claims regarding a

wholesale agreement and a capital loan agreement and promissory

note. Defendant answered, and along with third-party plaintiff

Daugherty Lincoln-Mercury, Inc. (“DLMI”), brought a counterclaim

against plaintiff as well as third-party defendant Ford Motor

Company, Lincoln Division. The counterclaims alleged that

plaintiff breached the guaranty agreements, the covenant of good

faith and fair dealing, engaged in unfair business practices and

interfered with plaintiff’s prospective business advantage. A

number of the counterclaims were dismissed on February 21, 2006.

The court granted summary judgment in favor of plaintiff on all

claims on May 1, 2006. Judgment in the amount of $505,217.67 was

entered on May 16, 2006.

II.

STANDARDS

Where, as here, suit is based on California substantive law,

an award of attorneys' fees incurred in the suit is governed by

state law. See Kona Enters., Inc. v. Estate of Bishop, 229 F.3d

877, 883 (9th Cir. 2000). Under California law, a prevailing party

is ordinarily not entitled to attorneys' fees unless the parties

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have previously agreed to the fees, or the fees are otherwise

provided by statute. See Lerner v. Ward, 13 Cal.App.4th 155, 158

(1993) (citing, inter alia, Reynolds Metals Co. v. Alperson, 25

Cal.3d 124, 127-128 (1979)).

The two contracts at issue provided for attorneys’ fees. The

Capital Loan Agreement, which this court found defendant breached,

provides that:

If Borrower shall fail to make any payment or perform

any act required by this Agreement or the Security

Documents, then Lender, without notice to or demand upon

Borrower and without waiving or releasing any obligation

or default, may make such payment or perform such act

for the account of and at the expense of Borrower. All

sums so paid by Lender, and all costs and expenses,

including, without limitation, reasonable attorney’s

fees and expenses so incurred together with interest

thereon . . . shall constitute additions to the

Indebtedness secured by the Security Documents, and

shall be paid by Borrower to Lender, on demand.

Beyer Dec., Ex. C. Furthermore, the guaranty on the capital loan

agreement provides that:

Guarantor agrees to pay reasonable attorneys’ fees and

expenses incurred by Lender in enforcement of the

Security Documents, including this Guaranty.

Beyer Dec., Ex. E. It is clear that the contracts between the

parties include provisions allowing plaintiff to recover attorney

fees.

Both the federal and the California courts have adopted the

“lodestar” method for calculating attorney’s fees. Hensley v.

Eckerhart, 461 U.S. 424, 433 (1983); Serrano v. Priest, 20 Cal.3d

25, 48-49 (1977). To determine the appropriate fee amount, the

court multiplies the number of hours reasonably expended in the

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litigation by a reasonable hourly rate. Id.

III.

ANALYSIS

A. PREVAILING PARTY

The Supreme Court has articulated the standard for a finding

of "prevailing party" as whether the party has "succeed[ed] on any

significant issue in litigation which achieves some of the benefit

the parties sought in bringing suit." Hensley, 461 U.S. at 433

(citing Nadeau v. Helgemoe, 581 F.2d 275, 278-279 (1st Cir. 1978)).

The Ninth Circuit, in discussing whether a party has achieved

"prevailing" status, has noted that a party can achieve that status

by establishing a "clear, causal relationship between the

litigation brought and the practical outcome realized." 

Rutherford v. Pitchess, 713 F.2d 1416, 1419 (9th Cir. 1983)

(quoting American Communist Party v. Munro, 650 F.2d 184, 188 (9th

Cir. 1981). 

Plaintiff brought suit against defendant for breach of two

guaranty agreements and as a result of the litigation, the court

concluded that defendant breached those agreements. There is

clearly a causal relationship between the litigation brought and

the outcome achieved. Accordingly, plaintiff is entitled to

attorney’s fees as the prevailing party.

B. REASONABLE HOURLY RATE

The appropriate hourly fee should be based on the rates

charged by counsel with similar experience, reputation, and skill

for similar cases in the legal community. See White v. City of

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Richmond, 713 F.2d 458, 460 (9th Cir. 1985). The burden is on the

fee applicant to produce satisfactory evidence that the requested

rates are in line with those in the prevailing community for

similar services by lawyers of comparable skill, experience, and

reputation. Blum v. Stenson, 465 U.S. 886, 895, n.11 (1984).

Plaintiff’s counsel, David E. Pinch, seeks $225.00 per hour

for work performed on this case. Mr. Pinch has over nineteen years

of experience practicing commercial litigation law. Pinch Dec. at

¶ 6. Duane M. Geck, a senior partner of the Severson & Werson law

firm, has over twenty years of commercial litigation experience.

Pinch Dec. at ¶ 7. Plaintiff explains that the rate of $225 is a

discounted rate from the usual hourly rate charged by Mr. Pinch

($275) and Mr. Geck ($395). Pinch Dec. at ¶ 6-7. Defendant

alleges that plaintiff has failed to provide adequate support that

the rates being requested by plaintiff’s counsel are the prevailing

rates in the community. Def.’s Opp’n at 2. Instead, defendant

invites the court to “use its own knowledge of the relevant market”

to determine a reasonable hourly rate. Id. at 3.

After considering counsel’s legal experience, the court

determines that the rate of $225 adequately reflects the prevailing

hourly rate in the Sacramento area for similar work performed by

attorneys of comparable skill, experience and reputation. 

Plaintiff has not tendered evidence as to comparable rates in the

Sacramento legal community, instead providing only evidence as to

the rate typically charged by Mr. Pinch and Mr. Geck. The Ninth

Circuit has repeatedly held that “determination of a reasonable

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2

 Plaintiff also seeks to recover attorney fees for 7.7 hours

of work by Catherine Stark at a rate of $225 per hour. Pinch Dec.

at ¶¶ 5, 9. Plaintiff’s declaration, however, is silent as to Ms.

Stark’s legal experience. Since plaintiff has failed to meet its

burden of proof as to Ms. Stark’s experience, the court declines

to award attorney’s fees for the 7.7 hours she allegedly spent on

the case.

3

 Plaintiff’s motion requests attorney’s fees for 265.5 hours

spent on the litigation. Deducting 7.7 hours for the work billed

by Ms. Stark, the court arrives at 257.8 hours. 

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hourly rate is not made by reference to the rates actually charged

[by] the prevailing party.” Mendenhall v. NTSB, 213 F.3d 464, 471

(9th Cir. 2000)(quotations omitted).

Nevertheless, the rate sought by plaintiff more than comports

with fees awarded by this court in other cases. See, e.g., Johnson

v. Norman and Edith Hill Trust, No. Civ. S-04-699 (E.D. Cal. May

2006)(Karlton, J.)(awarding attorney with twenty seven years

experience in Sacramento $250 per hour); Healy v. MCI Worldcom

Network Services, Inc., No. Civ. S-02-1575 (E.D. Cal. Mar. 2006)

(Karlton, J.)(awarding attorney with thirty years experience in

Sacramento $325 per hour); Asberry v. City of Sacramento, No. Civ.

S-01-2343 (E.D. Cal. Apr. 2004) (Karlton, J.)(awarding attorney

with fifteen years of experience in Sacramento $275-$325 per hour).

The court therefore calculates the lodestar figure based on the

hourly rate of $225.2

C. REASONABLENESS OF HOURS BILLED

Plaintiff seeks to recover attorney fees for a total of 257.8

hours expended in the litigation.3 In arriving at the lodestar

figure, the district court should exclude hours that are

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“excessive, redundant, or otherwise unnecessary . . . .” Hensley,

461 U.S. at 434. 

Defendant raises several objections to the amount of hours

plaintiff’s counsel seeks to recover in fees. First, defendant

asserts that an attorney’s fee award must be apportioned and that

plaintiff should not recover for time spent defending certain

counterclaims filed by Daugherty and DLMI. Def.’s Opp’n at 4.

Defendant points out that the terms of the guaranty agreement allow

for reasonable attorneys’ fees and expenses incurred “in

enforcement of the Security Documents,” and implies that attorneys’

fees can be sought only for such enforcement. Beyer Dec., Ex. E.

Apportionment is not required where claims are “inextricably

interwined, making it impracticable, if not impossible, to separate

the multitude of conjoined activities into compensable or

noncompensable time units.” Abdallah v. United Sav. Bank, 43

Cal.App.4th 1101, 1111 (1996) (citations and quotations omitted).

The decision to apportion claims are within the discretion of the

court. Hubbard v. Twin Oaks Health and Rehabilitation Center, 406

F.Supp.2d 1096, 1100 (E.D. Cal. 2005)(Karlton, J.). 

It would be impracticable for the court to apportion the fees

in this case because plaintiff’s claims and defendant’s

counterclaims all arise out of the same set of facts and involve

the same guaranty agreement. Plaintiff alleged in its complaint

that defendant breached the guaranty agreement. Defendant

counterclaimed that it was plaintiff who was in breach of the

guaranty agreement. Defendant’s remaining counterclaims against

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plaintiff all arose out the consequences of the alleged breach by

plaintiff. In short, both parties were relying on the guaranty

agreement in order to secure relief. See Beyer Dec., Ex. E. 

Consequently no apportionment is necessary or practicable as the

claims are “inextricably intertwined.” Abdallah, 43 Cal.App.4th

at 1111.

Second, defendant asserts that invoices submitted by plaintiff

are vague as to how much time was spent on each specific claim and

that some of the invoices are redacted and do not explain what a

fee for “legal research” was specifically for or about. Def.’s

Opp’n at 3-4. As noted above, the claims and counterclaims were

so “inextricably intertwined” that apportionment would be

impracticable. Abdallah, 43 Cal.App.4th at 1111. While the

guaranty agreement itself provides for attorney’s fees incurred as

a result of enforcing the rights under the agreement, all of

plaintiff’s alleged subsequent injuries were suffered as a result

of the breach of the guaranty agreement. The court ultimately

granted summary judgment on all of plaintiffs claims. Therefore,

all legal work performed by plaintiff’s counsel was to enforce the

guaranty agreements, efforts for which plaintiff was ultimately

successful. 

Finally, defendant argues that the amount of hours plaintiff

claims to have spent on the litigation is excessive. Def.’s Opp’n

at 4. An examination of Mr. Pinch’s papers, declaration, and

accompanying billing records leads the court to draw the conclusion

that 257.8 hours is a reasonable amount of hours spent under the

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 28 U.S.C. § 1920 states:

A judge or clerk of any court of the United States may tax as costs

the following: 

1. Fees of the clerk and marshal; 

2. Fees of the court reporter for all or any part of the

stenographic transcript necessarily obtained for use in

the case; 

3. Fees and disbursements for printing and witnesses; 

4. Fees for exemplification and copies of papers

necessarily obtained for use in the case; 

5. Docket fees under section 1923 of this title; 

6. Compensation of court appointed experts, compensation of

interpreters, and salaries, fees, expenses, and costs of

special interpretation services under section 1828 of

this title. 

A bill of costs shall be filed in the case and, upon allowance,

included in the judgment or decree. 

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circumstances. While defendant objects to the amount of hours

spent on the litigation, he cannot point to specific examples of

work that took an unreasonable amount of time. This litigation has

been ongoing for nearly two years and involved numerous amended

complaints, answers, and counterclaims. Additionally, plaintiff

filed motions to compel, dismiss and a successful motion for

summary judgment. Accordingly, 257.8 hours of work plaintiff spent

on the litigation is reasonable.

D. BILL OF COSTS

Plaintiff requests $644.68 for costs related to this suit.

Specifically, plaintiff requests a $150 filing fee, $308.63 paid

to Attorney’s Diversified Services for serving defendant and

$186.05 in court reporter fees for the transcript of a deposition.

Plaintiff has tendered to the court invoices evidencing these

costs. Because these expenses are taxable pursuant to 28 U.S.C.

§ 1920, the court shall award plaintiff this requested amount.4

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 The amount is based on those fees sufficiently documented

by plaintiff’s counsel as follows: 

Attorney’s Fees

Hours Rate Total

David Pinch 231.4 $225/hr $52,065.00

Duane Geck 26.4 $225/hr 5,940.00

Costs & Expenses 644.68

$58,649.68

Defendant points out that the guaranty on the wholesale

agreement limits attorneys’ fees to “15% of the amount then owing

by Dealer, if permitted.” Beyer Dec., Ex. D. Defendant argues

that the amount recoverable by plaintiff for breach of that

guaranty should be limited based on this contractual clause. 

Def.’s Opp’n at 5. Since there was more than one agreement at

issue, and since none of the other agreements specify any sort of

limit, those agreements can support the award even with the 15%

limit set forth in the wholesale agreement.

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IV.

CONCLUSION

Accordingly, plaintiff’s counsel is AWARDED attorney’s fees

and costs in the amount of $58,649.68.5

IT IS SO ORDERED.

DATED: July 18, 2006.

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