Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_09-cv-02739/USCOURTS-casd-3_09-cv-02739-4/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 15:0077 Securities Fraud

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

TAMER SALAMEH, an individual, et

al.,

Plaintiffs,

CASE NO. 09cv2739-GPC(BLM)

SUPPLEMENTAL ORDER RE

TARSADIA DEFENDANTS’

MOTION FOR ATTORNEYS’

FEES AND COSTS

vs.

TARSADIA HOTEL, a California

Corporation, et. al.,

Defendants.

On March 25, 2014, the Court granted in part and denied in part Tarsadia

Defendants’ motion for attorneys’ fees and costs; and denied Defendant Playground 1

Destination Properties, Inc.’s motion for attorneys’ fees. (Dkt. No. 240.) Specifically,

the Court granted Defendants 5th Rock, LLC and MKP One, LLC’s motion for

attorneys’ fees on the fraud causes of action based on the attorneys’ fee provisions in

the Purchase Contract, and denied the remaining Tarsadia Defendants’ request for

attorneys’ fees on the federal and state securities causes of action based on the RMA

and UMA. The Court also denied Defendant Playground’s motion for attorneys’ fees

based on § 11(e) of the Securities Act of 1933. In the order, the Court ordered

supplemental documentary evidence to determine what part of the attorneys’ fees

Tarsadia Defendants consist of Tarsadia Hotels, Tushar Patel, B.U. Patel,

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Gregory Casserly, 5th Rock, LLC, MKP One, LLC and Gaslamp Holdings, LLC. 

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incurred in this case are attributable to the litigation arising out of the fraud causes of

action under the Purchase Contract between the signatories. (Id.) Defendants filed

their supplemental response on April 11, 2014. (Dkt. No. 241.) Plaintiffs filed their

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supplemental response on April 25, 2014. (Dkt. No. 242.) Based on the reasoning

below, the Court GRANTS Tarsadia Defendants’ motion for attorneys’ fees in the

amount of $405,371.25. 

Background

On December 8, 2009, Plaintiffs, investors in the Hard Rock Hotel San Diego

(“Hard Rock”), filed a putative class action against Tarsadia Defendants and others. 

(Dkt. No. 1.) On September 10, 2010, Plaintiffs filed a second amended complaint

(“SAC”) alleging violations of federal and state securities laws and fraud based on

misrepresentation and fraud by concealment against numerous defendants involved in

the development of the Hard Rock. (Dkt. No. 86, SAC.) On October 8, 2010,

numerous Defendants, including Tarsadia Defendants and Playground, filed motions

to dismiss. (Dkt. Nos. 93, 98.) On March 22, 2011, District Judge Sabraw granted

Defendants’ motion to dismiss the second amended complaint with prejudice. (Dkt.

No. 158.) The Court concluded that the SAC failed to sufficiently allege a plausible

claim that the Hard Rock transactions constituted securities under federal and state

securities law. (Id. at 12.) The Court also concluded that even it the Court found that

the SAC alleged the existence of a security, Plaintiffs’ claim would be time-barred

under the applicable statute of limitations. (Id. at 13.) On the same day, judgment was

entered in favor of Defendants and against Plaintiffs. (Dkt. No. 159.) 

Plaintiffs are Tamer Salameh; Real Estate 4 Hospitality, LLC; Aleksey Kats;

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Diana Kats; Mitchell J. Pereira; Gary A.Torretta; Robert Alvarenga; Alexis Cosio;

Cesar Mota; Denis B. Rothe Jr.; Charlene Schrufer; David R. Bushy; Dale Curtis;

Zondra Schmidt; Dolores Green; Christy Jeske; Tazia Reyna; Mary L. Wee Song;

Kerry L. Steigerwalt; Beth Steigerwalt; Stuart M. Wolman; Jeffrey E. Lubin and

Barbara L. Lubin, Individually and as CoTrustees of the Lubin Family Trust Dated

March 26, 2002; Mikael Havluciyan and Therese Havluciyan Individually and as

Co-Trustees of the Havluciyan Family Trust; Sadoux Kim; Vito Micale; Phillip

Gutirrez; Danon Slinkard; Joey Clement; Andrew Paul; Steven Paul; Matthew Hoerr;

Sylvia Hoerr; Kevin Henry; Kim Henry; Thomas Behrle; Barabara Behrle; Jose

Gallanosa; and Virgina Gallanosa. 

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On March 23, 2011, Plaintiffs filed a notice of appeal. (Dkt. No. 160.) On April

5, 2011, Tarsadia Defendants filed a motion for attorneys’ fees and costs. (Dkt. No.

164.) On April 6, 2011, Defendant Playground Destination Properties, Inc. filed a

motion for attorneys’ fees. (Dkt. No. 168.) On April 22, 2011, District Judge Sabraw

continued the hearing on the pending motionsfor attorneys’ fees until the NinthCircuit

resolved Plaintiffs’ appeal. (Dkt. No. 174.) On October 12, 2012, the case was

transferred to the undersigned judge. (Dkt. No. 215.) 

On October 7, 2013, the Ninth Circuit affirmed the district court’s decision. 

(Dkt. No. 224.) On February 24, 2014, the United States Supreme Court denied

Plaintiffs’ petition for writ of certiorari. Salameh v. Tarsadia, –S.Ct. –, 2014 WL

684134 (U.S. Feb. 24, 2014) (cert. denied). On March 25, 2014, the Court granted

Defendants 5th Rock, and MKP One’s motion for attorneys’ fees and granted Tarsadia

Defendants motion for costs in the amount of $163.25. (Dkt. No. 240.) The Court

denied attorneys’ fees for all other defendants. (Id.)

Discussion

In the supplemental brief, Tarsadia Defendants now seek attorneys’ fees in the

amount of $358,490.00 for work performed from December 14, 2009 through

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February 28, 2011. (Dkt. No. 241, Kranz Decl. ¶ 11.) They also seek attorneys’ fees

and costs in connection with the filing of the instant motion in the amount of

$46,881.25 for work performed in March and April 2011, November 2013 and March 4

2014. (Id., Kranz Decl. ¶ 14, Ex. B.) Plaintiffs do not object to the additional

attorneys’ fees and costs in connection with filing the instant motion. In sum, 5th Rock

and MPK One, LLC seek an award of attorneys’ fees and costs in the total amount of

$405,371.25. (Id. ¶ 17.) 

In the initial moving papers, Tarsadia Defendants sought attorneys’ fees in the

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amount of $456,490.00. (Dkt. No. 164.) 

This also represents a reduced amount. The amount billed during this time to 4

Tarsadia Defendants was $115,098.75 of which $68,217.50 was deducted. (Dkt. No.

241, Kranz Decl. ¶ 16.) 

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The district court has wide discretion in determining the reasonableness of

attorneys fees. Gates v. Deukmejian, 987 F.2d 1392, 1398 (9th Cir. 1992);

Montgomery v. Bio-Med Specialities, Inc., 183 Cal. App. 3d 1292, 1297 (1986). 

Attorneys’ fees under California Civil section 1717, the provision for attorney’s fees

in a contract action, are calculated using the lodestar method. PLCM Grp. v. Drexler,

22 Cal. 4th 1084, 1095 (2000). To calculate the amount of attorneys’ fees under the

lodestar method, a court must calculate “the number of hours reasonably expended

multiplied by a reasonable hourly rate.” Id.; Ketchumv. Moses, 24 Cal. 4th 1122, 1140

(2001). To determine a reasonable rate for each attorney, the Court must look to the

rate prevailing in the community for similar work performed by attorneys of

comparable skill, experience and reputation. PLCM Grp., 22 Cal. 4th at 1095. The

lodestar number can be adjusted upward or downward, based on consideration of

factors specific to the case. Serrano v. Priest, 20 Cal. 3d 25, 49 (1977). 

Plaintiffs only challenge the total number of hours reasonably expended and do

not argue for an adjustment of the lodestar amount. 

A. Hours Reasonably Expended

The moving party bears the burden of documenting the appropriate hours spent

in the litigation and submit evidence in support of the hours worked. Hensley v.

Eckerhart, 461 U.S. 424, 433 (1983). Counsel should exclude hours that are

“excessive, redundant or otherwise unnecessary.” Id. at 434. The Court should

decrease the hours that were not “reasonably expended.” Id. 

Courts in California do not require detailed time records and can award fees

based on declarations of counsel describing the work they performed and the court’s

own review of the number of hours reasonably spent. Syers Props. III, Inc. v. Rankin,

226 Cal. App. 4th 691, 698 (2014); Trustees of Cent. States, Southeast & Southwest

Areas Pension Fund v. Golden Nugget, Inc., 697 F. Supp. 1538, 1558 (1988) (noting

lenient California standard on time records). 

“Apportionment of a fee award between fees incurred on a contract cause of

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action and those incurred on other causes of action is within the trial court’s

discretion.” Abdallah v. United Savings Bank, 43 Cal. App. 4th 1101, 1111 (1996); see

also Erickson v. R.E.M. Concepts, Inc., 126 Cal. App. 4th 1073, 1083 (2005). “Where

a cause of action based on the contract providing for attorney’s feesisjoined with other

causes of action beyond the contract, the prevailing party may recover attorney’s fees

under [Civil Code] section 1717 only asthey relate to the contract action.” Id. (quoting

Reynolds Metals Co., 25 Cal.3d at 129. However, “[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.” Id. As long

as the various claims are “inextricably intertwined,” Finalco, Inc. v. Roosevelt, 235

Cal. App. 3d 1301, 1308 (1991), making it “impracticable, if not impossible, to

separate the multitude of conjoined activities into compensable or noncompensable

time units,” attorney’s fees need not be apportioned. Fed–Mart Corp. v. Pell

Enterprises, Inc., 111 Cal. App. 3d 215, 227 (1980); see also Thompson Pac. Const.,

Inc. v. City of Sunnyvale, 155 Cal. App. 4th 525, 555–56 (2007); Int’l Marble &

Granite of Colorado, Inc. v. Congress Fin. Corp., 465 F. Supp. 2d 993, 1003 (C.D. Cal.

2006) (concluding that the contract cause of action are inextricably linked to the other

causes of action and attorney’s fees need not be allocated).

“Allocation offeesincurred in representing multiple partiesis not required when

the liability of the parties is ‘so factually interrelated that it would have been

impossible to separate the activities . . . into compensable and noncompensable time

units.’” Cruz v. Ayromloo, 155 Cal. App. 4th 1270, 1277 (2007). The standard is

whether the “issues are so interrelated that it would have been impossible to separate

them into claims for which attorney fees are properly awarded and claims for which

they are not.” Brown Bark III, L.P. v. Haver, 219 Cal. App. 4th 809, 829-30 (2013)

(quoting Akins v. Enterprise Rent-A-Car Co., 79 Cal. App. 4th 1127, 1133 (2000)). 

In their supplemental briefing, Tarsadia Defendants state they reviewed the

billing statements and removed amounts that related directly to the securities issues;

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however, they did not strike entries devoted to general case management and work

performed that are so intertwined with the fraud causes of action that it is not possible

to segregate the time spent. (Dkt. No. 241, Kranz Decl. ¶¶ 8, 9.) Plaintiffs do not

object to specific entries but argue generally that 5th Rock and MKP One failed to

present appropriate documentary evidence to show the specific fees incurred by them

especially since there were seven Tarsadia Defendants and eight causes of action. 

The essence ofthe Second Amended Complaint(“SAC”)isthe fraud perpetrated

by Tarsadia Defendants on Plaintiffs by deceptively inducing them, the investors, to

purchase the Hard Rock Units through false misrepresentations and omissions of

material facts. The SAC states “[t]his action arises from defendants’ knowing and

intentional violation of registration, qualification, and broker licensing requirements

of the federal and California State securities laws.” (Dkt. No. 86, SAC ¶ 1.) The SAC

asserts eight causes of action:six securities and two fraud causes of action. The federal

and state securities causes of action concern fraudulent misrepresentations and

omissions of material facts. (Dkt. No. 86, SAC at 49-52.) The two fraud causes of

action, subject to the attorneys fees award, are fraudulent misrepresentation and

fraudulent concealment which involve affirmative false misrepresentations and

concealment of facts. While the elements of a securities and fraud cause are distinct,

there are overlapping elements. Moreover, all the claims arise from the same core

facts. Tarsadia Defendants’ attorneys conducted legal research on issues common to

all causes of action. In addition, while there were seven Tarsadia Defendants, and only

two were awarded attorneys’ fees, these parties were named and collectively labeled

“Tarsadia Defendants.” The SAC does not allege different causes of action as to each

Tarsadia Defendant. Therefore, the attorneys would have had to do the same legal

research and analysis despite the number of defendants. See Cruz, 155 Cal. App. 4th

at 1278. Lastly, Tarsadia Defendants’ attorney states that he has already removed

entries that related directly to the securities issues. Plaintiffs do not point to specific

entries to challenge any entries that were or were not struck. Based on this, the Court

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concludes that the issues and facts are so interrelated and inextricably intertwined that

apportioning fees would be “impracticable, if not impossible.” Fed-Mart Corp., 111

Cal. App. 3d at 227. 

Conclusion

Based on the reasoning above, the Court awards Defendants 5th Rock and MKP

One, LLC attorneys’ fees in the amount of $405,371.25 which breaks down to

$358,490.00 for work performed from December 14, 2009 through February 28, 2011,

and $46,881.25 for attorneys’ feesin connection with the instant request for attorneys’

fees and for work performed in March and April 2011, November 2013 and March

2014. 

IT IS SO ORDERED.

DATED: July 31, 2014

HON. GONZALO P. CURIEL

United States District Judge

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