Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_13-cv-02179/USCOURTS-casd-3_13-cv-02179-1/pdf.json

Nature of Suit Code: 140
Nature of Suit: Negotiable Instruments
Cause of Action: 28:1331 Fed. Question: Breach of Contract

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

THOMAS C. HEBRANK, Federal

Equity Receiver,

Plaintiff,

CASE NO. 3:13-cv-2179-GPC-JMA

ORDER:

(1) GRANTING IN PART AND

DENYING IN PART PLAINTIFF’S

MOTION FOR ATTORNEY FEES

AND COSTS;

(2) VACATING HEARING DATE

[ECF No. 19]

v.

LINMAR MANAGEMENT, INC., a

California corporation, and Does 1-25,

Defendants.

I. INTRODUCTION

Before the Court is Plaintiff Thomas C. Hebrank’s (“Plaintiff”) Motion for

Attorney Fees and Costs. (ECF No. 19.) Defendant LinMar Management, Inc.

(“Defendant”) opposes Plaintiff’s motion. (ECF No. 22.) Plaintiff responded to

Defendant’s opposition. (ECF No. 23.)

The parties have fully briefed the motion. (ECF Nos. 19, 22, 23.) TheCourt finds

the motion suitable for disposition without oral argument pursuant to Civil Local Rule

7.1(d)(1). Upon review ofthe moving papers, admissible evidence, and applicable law,

the Court GRANTS IN PART AND DENIES IN PART Plaintiff’s Motion for

Attorney Fees and Costs.

II. PROCEDURAL BACKGROUND

On September 13, 2013, Plaintiff filed a complaint against Defendant alleging:

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(1) breach of contract, (2) money had and received, (3) unjust enrichment, and (4)

disgorgement. (ECF No. 1.) On May 22, 2014, Plaintiff moved for summary judgment

on the breach of contract cause of action. (ECF No. 14.) On July 29, 2014, the Court

granted Plaintiff summary judgment on the breach of contract cause of action. (ECF

No. 18.)

On August 12, 2014, Plaintiff filed this motion for attorney fees and costs

incurred: (1) through July 31, 2014; (2) after July 31, 2014, in relation to this motion;

and (3) anticipated to be incurred for post-collection work. (ECF No. 19.) On

September 4, 2014, Defendant filed an opposition to Plaintiff’s motion. (ECF No. 22.)

On September 19, 2014, Plaintiff filed a response to Defendant’s opposition. (ECF No.

23.)

III. FACTUAL BACKGROUND

On March 13, 2013, the Court appointed Plaintiff as permanent receiver over

Western Financial Planning Corporation (“Western”) in the main action out of which

this action arises: SEC v. Schooler (the “SEC Action”). Sec. and Exch. Comm’n v.

Schooler, et al., No. 3:12-cv-2164-GPC-JMA (S.D. Cal. Mar. 13, 2013), ECF No. 174.

On May 23, 2013, Plaintiff moved in the SEC Action for authority to pursue

enforcement of promissory notes executed in favor of Western by Defendant and other

entities. SEC v. Schooler, No. 3:12-cv-2164-GPC-JMA (S.D. Cal. May 23, 2013), ECF

No. 192. On August 16, 2013, the Court granted Plaintiff’s motion for authorization.

SEC v. Schooler, No. 3:12-cv-2164-GPC-JMA, 2013 WL 4548525 (S.D. Cal. Aug. 16,

2013), ECF No. 470. On September 13, 2013, Plaintiffinstituted three actions pursuant

to the Court’s order (the “LinMar Lawsuits”). Hebrank v. LinMar Management, Inc.,

et al., No. 3:13-cv-2179-GPC-JMA (S.D. Cal. Sept. 13, 2014), ECF No. 1; Hebrank v.

LinMar III, LLC, et al., No. 3:13-cv-2179-GPC-JMA (S.D. Cal. Sept. 13, 2014), ECF

No. 1; Hebrank v. LinMar IV, LLC, et al., No. 3:13-cv-2179-GPC-JMA (S.D. Cal.

Sept. 13, 2014), ECF No. 1.

On April 14, 2009, Defendant executed a promissory note evidencing a loan by

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Western to Defendant in the amount of $40,000. (ECF No. 19-1, Ex. A.) The

promissory note provides that:

Lender may hire or pay someone else to help collect this Note if Borrower

does not pay. Borrower also will pay Lender that amount. This includes,

subject to any limits under applicable law, Lender’s attorneys’ fees and

Lender’s legal expenses whether or not there is a lawsuit, including

attorneys’ fees and legal expenses for bankruptcy proceedings(including

efforts to modify or vacate any automatic state or injunctions), appeals,

and any anticipated post-judgment collection services. Borrower will pay

any court costs, in addition to all other sums provided by law.

(Id. ¶ 8.) Further, the promissory note states that it is “governed by and construed in

accordance with the laws of the State of California.” (Id. ¶ 9.) On February 12, 2013,

Plaintiff issued a demand to Defendant for full repayment of the loan. (ECF No. 1, ¶

13.) After Plaintiff issued the demand, the parties engaged in document production and

settlement negotiations. (Id. ¶¶ 13–14.)

IV. LEGAL STANDARD

A. Attorney Fees

California Civil Code § 1717 allows for the recovery of attorney fees and costs

incurred to enforce the contract where the contract specifically provides for such

recovery. CAL. CIV. CODE § 1717; PLCM Group, Inc. v. Drexler, 997 P.2d 511, 515

(Cal. 2000). “[T]he trial court has broad authority to determine the amount of a

reasonable fee.” PLCM Group, 997 P.2d at 515. First, the trial court must determine

the “lodestar”: “the number of hours reasonably expended multiplied by the reasonable

hourly rate.” Id. (citation omitted). The reasonable hourly rate is the prevailing hourly

rate “in the community for similar work.” Id. In federal cases, the relevant legal

community is “the forum in which the district court sits.” Camacho v. Bridgeport Fin.,

Inc., 523 F.3d 973, 979 (9th Cir.2008).

The party seeking an award of attorney fees bears the burden of proving that the

fees it seeks are reasonable. Yenidunya Invs., Ltd. v. Magnum Seeds, Inc., No.

2:11-cv-01787-WBS-CKD, 2012 WL 538263, at *7 (E.D. Cal. Feb. 17, 2012), aff’d,

562 Fed. Appx. 560 (9th Cir. 2014) (citations omitted). The party opposing an award

of attorney fees has the “burden of rebuttal” which requires submitting evidence

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“challenging the accuracy and reasonableness of the hours charged or the facts

asserted.” Gates v. Deukmejian, 987 F.2d 1392, 1397–98 (9th Cir. 1992) (citations

omitted). If the party seeking an award of attorney fees fails to adequately document

the hours or the hours are deemed excessive, the Court may reduce the award.

Chalmers v. City of Los Angeles, 796 F.2d 1205, 1210 (9th Cir. 1986) opinion

amended on denial of reh’g, 808 F.2d 1373 (9th Cir. 1987).

B. Costs

FederalRule ofCivil Procedure 54 allows a prevailing party to recover litigation

costs. FED.R.CIV.P. 54(d)(1). Civil Local Rule 54.1 allows for the recovery of various

additional costs. CivLR 54.1.

C. Judicial Notice

A court may take notice of undisputed “matters of public record” subject to

judicial notice. Lee v. City of Los Angeles, 250 F.3d 668, 688–89 (9th Cir. 2001)

(citing FED.R.EVID.201; MGIC Indem. Corp. v. Weisman, 803 F.2d 500, 504 (9th Cir.

1986)). Under Federal Rule of Evidence 201, a district court may take notice of facts

not subject to reasonable dispute that are capable of accurate and ready determination

by resort to sources whose accuracy cannot reasonably be questioned. FED. R. EVID.

201(b); see also Lee, 250 F.3d at 689.

V. DISCUSSION

A. Judicial Notice

Defendant seeks judicial notice of the three dockets and case files for the SEC

Action and the two other LinMar Lawsuits. (ECF No. 22, at 4 n.1.) Defendant’s request

for judicial notice is properly noticeable. The docket and case files in a federal court

case are matters of public record and are capable of accurate and ready determination.

Finding the dockets and case files of the SEC Action and two other LinMar Lawsuits

relevant, the Court takes judicial notice of all three dockets and case files.

B. Attorney Fees

Plaintiff argues that he is entitled to $35,910.30 in attorney fees. (ECF No. 19,

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at 6.) Defendant does not challenge that Plaintiff should be awarded attorney fees, but

does challenge the specific amount Plaintiff proposes as unreasonable. (See ECF No.

22, at 1–2.) As Plaintiff has prevailed on his breach of contract claimagainst Defendant

and that contract provides for attorney fees, the Court finds that Plaintiff is entitled to

an award of attorney fees for work done through this motion and any anticipated postjudgment collection work.

Because of the similarity of the three LinMar Lawsuits, Plaintiff arrives at the

$35,910.30 figure by calculating all of the attorney fees for the three suits and dividing

by three. (ECF No. 19, at 1–2.) Plaintiff breaks down the hourly rates he is requesting

for work done through July 31, 2014, $29,532.00, as follows:

1. $585–$616.50 per hour for 7.0 hours by partner David Zaro;

2. $418.50–$445.50 per hour for 98.30 hours by senior associate Ted Fates;

3. $351 per hour for 37.30 hours by junior associate Josi Swonetz;

4. $265.50–$297 per hour for 82.80 hours by junior associate Kim Bui;

5. $279 per hour for 6.6 hours by junior associate Alana Thorbourne;

6. $238.50 per hour for 4.9 hours by paralegal Sara Cramton; and

7. $279 per hour for 0.9 hours by paralegal Rhonda Reid.

(ECF No. 19-2 ¶¶ 5–9.) Plaintiff requests approximately 106 hours for preparing the

partial summary judgment motions and reply papers and approximately 132 hours for

all other work done through July 31, 2014. (Id. ¶ 9; ECF No. 19-2, Ex. A.) Plaintiff

estimates the attorney fees for preparing this motion and its response and for

anticipated post-judgment collection work at $6,378.30. (ECF No. 19-2 ¶ 10.)

Defendant argues that Plaintiff’s attorney fees amount is unreasonable for two

reasons:(1) because ofthe settlement negotiations between the parties, and (2) because

the LinMar Lawsuits are simple and involve “pleadings, motions, and discovery” that

are “straightforward” and “heavily duplicative.” (ECF No. 22, at 2–4.)

Defendant has provided no authority for its contention that the alleged

unreasonableness of Plaintiff’s settlement offer or Plaintiff’s rejection of Defendant’s

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settlement offer justifies reducing an award of attorney fees and costs. Moreover, courts

in this circuit and in others have found that rejections ofsettlement offers do not justify

reducing an award of attorney fees and costs. See, e.g., Ortiz v. Regan, 980 F.2d 138,

at 140 (2d Cir. 1992); Joe Hand Promotions, Inc. v. Albright, No. 2:11-cv-2260-WBSCMK, 2013 WL 4094403, at *5 (E.D. Cal. Aug. 13, 2013); Mformation Techs., Inc.

v. Research in Motion Ltd., No. 08-cv-4990-EMC, 2012 WL 6025746, at *2 (N.D. Cal.

Dec. 4, 2012). Accordingly, the Court finds that the settlement negotiations between

the parties does not serve to reduce Plaintiff’s award of attorney fees and costs.

In support of his attorney fee rates, Plaintiff cites Hess v. Ramona Unified

School District, No. 3:07-cv-0049-W-CAB, 2008 WL 5381243, at *3 (S.D. Cal. Dec.

19, 2008), and Brighton Collectibles, Inc. v. Coldwater Creek Inc., No. 3:06-cv-1848-

H-POR, 2009 WL 160235, at *4 (S.D. Cal. Jan. 20, 2009). In Hess, the court found

rates of $250–$500 for attorneys and $125 for paralegals reasonable. 2008 WL

5381243, at *3. In Brighton Collectibles, the court found rates of $125–$625 for

attorneys and $90–210 for paralegals reasonable. 2009 WL 160235, at *4. Plaintiff’s

highest rates are $616.50 for David Zaro, a partner with 27 years of litigation

experience and $445.50 for Ted Fates, a senior associate with 10 years of litigation

experience. (ECF No. 19-2 ¶ 6.) Plaintiff proposes rates of $279–$351 for three junior

associates, and $238.50–$279 for two paralegals with over 20 years of experience. (Id.)

Plaintiff’s overall blended rate is $372.57. (Id. ¶ 5.) In light of the amounts charged by

other attorneys and paralegals of similar skill and experience in the Southern District

of California, the Court finds that Plaintiff’s proposed rates are reasonable.

For work done through July 31, 2014, Plaintiff proposes a total of 237.8 attorney

and paralegal hours worked on the LinMar Lawsuits through July 31, 2014. (ECF No.

19-2 ¶ 5.) This includes a demand letter, a document subpoena, Plaintiff’s motion for

authority in the SEC Action, a motion for summary judgment, and settlement

negotiations, among other work. (Id. ¶ 9.) While Defendant is correct that much of the

work performed by Plaintiff’s attorneys and paralegals in the three LinMar Lawsuits

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is similar, Plaintiff’s attorneys and paralegals must still complete the work for three

lawsuits that involve three different loans given to three different entities.

Following a thorough review of Plaintiff’s summary of fees incurred relating to

the three LinMar lawsuits, the Court finds that approximately 132 attorney and

paralegal hours is reasonable for all of the work other than the summary judgment

motions. However, the Court finds the approximately 106 hours spent on the partial

summary judgment motions and repliesto be excessive. The partialsummary judgment

motions contain approximately 6 pages of points and authorities, 5 pages of facts, and

5 pages of declaration. (See, e.g., ECF Nos. 14-1, 14-2, 14-3, 14-4.) The replies in

support of the partial summary judgment motions contain approximately 8 pages of

legal argument and responses to approximately 13 material facts. (See, e.g., ECF Nos.

17, 17-1.) Plaintiff contends that spending approximately 66 hours on the motions and

40 hours on the replies is reasonable. (See ECF No. 19-2, Ex. A.) Plaintiff’s summary

judgment motions were on straightforward breach of contract causes of action with

minimal facts. The facts underlying the three motions were very similar and the law for

all three was the same. In light of the motions’ simplicity and brevity, spending over

60 hours drafting three nearly identical motions is excessive. See Chalmers, 796 F.2d

at 1211 (instructing that district courts are to consider the “novelty or the difficulty of

the question presented”). The Court finds that a more reasonable total for the motions

would be approximately 46 hours preparing the motions and 40 hours preparing the

replies. See id. at 1210. Accordingly, the Court reduces the amount proposed by

Plaintiff by 20 hours at the blended rate of $372.57, for a total reduction of $7,451.40

which, divided acrossthe three LinMar lawsuits, resultsin a reduction of $2,483.80 for

this case. See, e.g., Cataphora Inc. v. Parker, 848 F. Supp. 2d 1064, 1070–71 (N.D. Cal.

2012) (reducing hours deemed excessive); Marshall v. Kirby, No. 3:07-cv-0222-RAM,

2010 WL 4923486, at *11–12 (D. Nev. Nov. 29, 2010) (same). For work done through

July 31, 2014, the Court awards a total of $27,038.20 in attorney fees for this case.

For work done after July 31, 2014, Plaintiff does not include a detailed hours

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breakdown and instead makes vague referencesto approximate hour numbersthat fails

to include hourly rates. (See ECF No. 19-2 ¶ 10.) Plaintiff knew, at the time he

submitted his reply brief, the number of hours worked by his attorneys and paralegals

on this motion, yet has not included such a breakdown in his reply brief. For postjudgment collection work, Plaintiff again makes vague referencesto approximate hour

numbers and fails to include hourly rates. (See id.)

The Court finds that Plaintiff has failed to provide an adequately detailed

breakdown of hourly rates and time spent on this motion, and failed to provide an

adequately detailed breakdown of hourly rates and time anticipated for post-judgment

collection work. The Court hereby requiresthat Plaintiffsubmitsupplemental briefing

breaking down the attorney fees spent on this motion after July 31, 2014, and breaking

down any anticipated post-judgment collection work. As Plaintiff failed to include a

more detailed breakdown in his reply brief—when Plaintiff knew the exact amount

spent on this motion—the breakdown in Plaintiff’s supplemental brief shall not include

any time spent on the supplemental brief.

C. Costs

Plaintiff argues that he is entitled to $400 in costs, the filing fees paid in this

case. (ECF No. 19, at 10.) Defendant does not challenge that Plaintiff is entitled to

costs. As Plaintiff has prevailed on his breach of contract claim against Defendant and

that contract provides for costs, the Court finds that Plaintiff is entitled to $400 in

costs.

VI. CONCLUSION AND ORDER

For the reasons stated above, IT IS HEREBY ORDERED that:

1. Plaintiff’s Motion for Attorney Fees and Costs, (ECF No. 19), is

DENIED asto the proposed $29,532.00 in attorney feesincurred through

July 31, 2014, and $6,378.30 in attorney fees for work done and

anticipated after July 31, 2014; GRANTEDasto the modified $27,038.20

in attorney fees for work done through July 31, 2014; GRANTED as to

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the $400 in costs incurred through July 31, 2014; GRANTED as to

attorney fees incurred in relation to Plaintiff’s Motion for Attorney Fees

and Costs incurred after July 31, 2014; GRANTED asto anticipated postcollection work;

2. Plaintiff shall submit a supplemental brief identifying the attorney fees

incurred after July 31, 2014 in relation to this Motion for Attorney Fees

and Costs and identifying the anticipated post-collection work on or

before October 17, 2014, and Defendant may file a supplemental brief in

opposition on or before October 24, 2014;

3. The hearing set for October 10, 2014, is VACATED.

DATED: October 9, 2014

HON. GONZALO P. CURIEL

United States District Judge

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