Court Opinion

ID: 2719902
Source: CourtListenerOpinion
Date Created: 2014-08-21 19:01:58.467916+00
Date Added: 2024-06-11T11:56:14.225978
License: Public Domain

Filed 8/21/14
                            CERTIFIED FOR PUBLICATION

          IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                             SECOND APPELLATE DISTRICT

                                     DIVISION FOUR

BARRY B. KAUFMAN et al.,                       B248151
                                               (Los Angeles County
                 Plaintiffs and Respondents,   Super. Ct. No. BS137215)

v.

DISKEEPER CORPORATION,

                Defendant and Appellant.

        APPEAL from an order of the Superior Court of Los Angeles, Kevin C.
Brazile, Judge. Reversed and remanded.
        Law Offices of Barry B. Kaufman for Plaintiffs and Respondents.
        Jeffer Mangels Butler & Mitchell, Louise Ann Fernandez, Dan P. Sedor and
An Nguyen Ruda; Jones Day, Elwood Lui and Peter E. Davids for Defendant and
Appellant.
      Appellant Diskeeper Corporation (Diskeeper) challenges the trial court’s
denial of a contract-based award of attorney fees following the confirmation of an
arbitration award. Diskeeper contends the court improperly denied the award on
the ground that Diskeeper filed no memorandum of costs in seeking the award.
We conclude that Diskeeper’s contention is correct. Specifically, we hold that a
party seeking attorney fees pursuant to Civil Code section 1717 need not, in
addition to filing a noticed motion, file a memorandum of costs. We therefore
reverse the court’s ruling and remand for further proceedings.

                RELEVANT FACTUAL AND PROCEDURAL
                                BACKGROUND
      This is the second time this case has come before us on appeal. Diskeeper is
a software company located in Burbank. In 2006, Diskeeper hired respondent
Alexander Godelman as its Chief Information Officer, and also hired Marc
LeShay, who worked as Godelman’s subordinate. After LeShay resigned from his
position, Diskeeper terminated Godelman.
      In 2007, Godelman and LeShay initiated a lawsuit against Diskeeper in
which Godelman asserted claims for wrongful termination. Respondent Barry B.
Kaufman, an attorney, represented Godelman and LeShay in the action. Later, in
2009, Godelman and LeShay entered into a settlement of their action against
Diskeeper. The settlement agreement required Godelman and LeShay to return
Diskeeper’s property, including enumerated records, and imposed nondisclosure
obligations on them and Kaufman. Other terms of the agreement obliged the
parties to submit disputes to binding arbitration. The agreement also contained an
attorney fee provision, which provided for a fee award to the prevailing party in

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“any litigation, arbitration, or other proceeding . . . brought for the interpretation
or enforcement of” the agreement.
      In January 2011, Diskeeper commenced an arbitration, alleging that
respondents Godelman and Kaufman had failed to comply with their obligations
under the settlement agreement to return some documents and not to disclose their
contents. Diskeeper asserted claims against respondents for breach of the
settlement agreement, breach of the implied covenant of good faith and fair
dealing, unjust enrichment, misrepresentation, and civil conspiracy. The matter
was submitted to arbitration. On April 4, 2012, the arbitrator issued his final
award, concluding, inter alia, that Godelman had breached his duty to return
Diskeeper’s property, and that Kaufman had breached his nondisclosure
obligations. The arbitrator further determined that Diskeeper was entitled to
$70,000 in damages, $297,000 in attorney fees, and $88,034.69 in costs and
expenses.1
      In May 2012, appellants filed a petition to vacate the arbitration award.
They later filed an amended petition and motions to vacate the award. Diskeeper
opposed the petitions and motions, and filed a motion to confirm the award.
Following a hearing, the trial court confirmed the arbitration award. On December
14, 2012, the court entered a judgment in favor of Diskeeper, from which
respondents noticed an appeal. In an unpublished opinion, we affirmed the
judgment (Kaufman v. Diskeeper Corp. (Apr. 28, 2014, B247315)).
      On January 31, 2013, Diskeeper filed a motion for an award of attorney fees
and costs as the prevailing party in the arbitration confirmation proceeding.

1     Although the arbitrator found that Diskeeper had prevailed against both Godelman
and Kaufman, he concluded that it was appropriate to assess the damages, fees, costs, and
expenses solely against Kaufman.

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Relying on Civil Code section 1717 and Code of Civil Procedure section 1033.5,
Diskeeper requested attorney fees totaling $183,419, plus $878 for other costs and
expenses. In opposing the motion, respondents contended that Diskeeper had filed
no memorandum of costs, as specified in rule 3.1700 of the California Rules of
Court (rule 3.1700). Diskeeper’s reply maintained that rule 3.1702 of the
California Rules of Court (rule 3.1702), which regulates the recovery of
contractual attorney fees, imposes no requirement of a memorandum of costs. On
March 6, 2013, the trial court denied Diskeeper’s motion, concluding that under
the controlling statutes and rules of court, “a memorandum of costs must be filed
in order to establish an entitlement to costs, including attorney[] fees.” This
appeal followed.

                                    DISCUSSION
      Diskeeper’s contention on appeal focuses exclusively on the denial of its
request for an award of attorney fees. That contention raises an issue of first
impression, as our research has disclosed no published decision examining
whether a party seeking contractual attorney fees subject to Civil Code section
1717 must file a memorandum of costs regarding the fees. As explained below,
we conclude that the applicable statutes and court rules imposed no such
requirement on Diskeeper.2

2       We agree with the trial court that Diskeeper was required to file a memorandum of
costs in order to recover the other costs and expenses it sought, and that Diskeeper’s
failure to do so worked a forfeiture regarding them. Diskeeper does not dispute that
ruling on appeal.

                                            4
      A. Governing Principles
      We independently review the trial court’s interpretation of the applicable
statutes and court rules. (Pineda v. Williams-Sonoma Stores, Inc. (2011) 51
Cal.4th 524, 535; Sino Century Development Limited v. Farley (2012) 211
Cal.App.4th 688, 693.) “In construing a statute ‘[o]ur task is to discern the
Legislature’s intent. The statutory language itself is the most reliable indicator, so
we start with the statute’s words, assigning them their usual and ordinary
meanings, and construing them in context. If the words themselves are not
ambiguous, we presume the Legislature meant what it said, and the statute’s plain
meaning governs.’” (Schatz v. Allen Matkins Leck Gamble & Mallory LLP (2009)
45 Cal.4th 557, 571, quoting Wells v. One2One Learning Foundation (2006) 39
Cal.4th 1164, 1190.) When appropriate, we may resort to other aids, including the
maxims of statutory construction and extrinsic evidence of intent; moreover, we
may examine the consequences of alternative interpretations. (Ibid.) The same
principles are also applicable to the interpretation of the California Rules of Court.
(Crespin v. Shewry (2004) 125 Cal.App.4th 259, 265 (Crespin).)

      B. Applicable Statutes
      As statutes control over court rules (California Court Reporters Assn. v.
Judicial Council of California (1996) 39 Cal.App.4th 15, 21-22), we begin by
examining the statutory scheme applicable to Diskeeper’s fee request. Because
Diskeeper incurred its fees in confirming an arbitration award arising from a
mandatory arbitration provision in the settlement agreement, and its attorney fee
request was based on the fee provision in that agreement, the request was subject
to Civil Code section 1717. (MBNA America Bank, N.A. v. Gorman (2006) 147
Cal.App.4th Supp. 1, Supp. 7-8.) Subdivision (a) of that statute provides:

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“Reasonable attorney’s fees shall be fixed by the court, and shall be an element of
the costs of suit.” Subdivision (b) of the statute further provides that “[t]he court,
upon notice and motion by a party, shall determine who is the party prevailing on
the contract for purposes of this section.”
      The principal statutes governing the recovery of costs are found in the Code
of Civil Procedure (§ 1021 et seq.). (7 Witkin, Cal. Procedure (5th ed. 2008)
Judgment, § 83, pp. 620-621.) Pertinent here is Code of Civil Procedure section
1033.5, which addresses the recovery of attorney fees under Civil Code section
1717. Section 1033.5, subdivision (a)(10), permits an award of attorney fees as an
item of costs “when authorized by . . . : [¶] (A) Contract.” Subdivision (c)(5) of
that statute further provides that attorney fees awarded under Civil Code section
1717 fall within the scope of subdivision (a)(10)(A), and thus must “be fixed
either upon a noticed motion or upon entry of a default judgment, unless otherwise
provided by stipulation of the parties.” The Legislature enacted the relevant
portions of Code of Civil Procedure section 1033.5, subdivision (c)(5) to clarify
that the proper method to recover contractual attorney fees is “as an item of costs
awarded upon noticed motion,” rather than as an element of damages pleaded in
the complaint. (Chinn v. KMR Property Management (2008) 166 Cal.App.4th
175, 194.) As noted in Bankes v. Lucas (1992) 9 Cal.App.4th 365, 371, in
amending subdivision (c)(5) of the statute to contain those provisions, the
Legislature stated that its intent was “to confirm that . . . attorney’s fees [under
Civil Code section 1717] are costs which are to be awarded only upon noticed
motion, except where the parties stipulate otherwise or judgment is entered by
default.” (Quoting Stats. 1990, ch. 804, § 2, p. 3552.)

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       Also pertinent here is Code of Civil Procedure section 1034, which
authorizes the Judicial Council to propound rules regulating the recovery of
allowable costs incurred before the trial court or on appeal.3 Although Code of
Civil Procedure section 1033.5 obliges a party seeking attorney fees under Civil
Code section 1717 to do so by a noticed motion, neither statute expressly
mandates that the party also file a memorandum of costs to secure such fees. For
that reason, resolution of the issue before us ultimately hinges on the key rules
adopted by the Judicial Council. These are the rules found in Division 17 of the
Rules of Court under the title, “Attorney’s Fees and Costs,” namely, rules 3.1700
and 3.1702.

       C. Rules 3.1700 And 3.1702
       Rule 3.1700 is entitled “PREJUDGMENT COSTS.” Rule 3.1700(a)(1),
which addresses “[t]rial costs,” states that “[a] prevailing party who claims costs
must serve and file a memorandum of costs” within 15 days after notice of entry of
judgment, or within 180 days after entry of judgment, whichever is first. 4 Rule
3.1700(b) establishes a procedure for contesting costs by means of a motion to tax
costs. Absent special circumstances, that motion must be served and filed 15 days
after the service of the memorandum of costs. (Rule 3.1700(b)(1).)

3      Code of Civil Procedure section 1034 provides: “(a) Prejudgment costs allowable
under this chapter shall be claimed and contested in accordance with rules adopted by the
Judicial Council. [¶] (b) The Judicial Council shall establish by rule allowable costs on
appeal and the procedure for claiming those costs.”
4      Rule 3.1700(a) further provides: “The memorandum of costs must be verified by a
statement of the party, attorney, or agent that to the best of his or her knowledge the items
of cost are correct and were necessarily incurred in the case.”

                                             7
      Rule 3.1702 is entitled “CLAIMING ATTORNEY’S FEES.” Rule
3.1702(a), entitled “Application,” states: “Except as otherwise provided by statute,
this rule applies in civil cases to claims for statutory attorney’s fees and claims for
attorney’s fees provided for in a contract. Subdivisions (b) and (c) apply when the
court determines entitlement to the fees, the amount of the fees, or both, whether
the court makes that determination because the statute or contract refers to
‘reasonable’ fees, because it requires a determination of the prevailing party, or for
other reasons.”
      Subdivisions (b) and (c) of rule 3.1702 specify deadlines for filing motions
to claim attorney fees incurred in trial court proceedings and on appeal. The
former, entitled “Attorney’s fees before trial court judgment,” is applicable
here. It states: “A notice of motion to claim attorney’s fees for services up to and
including the rendition of judgment in the trial court . . . must be served and filed
within the time for filing a notice of appeal . . . .” In an unlimited civil action such
as the case before us, that deadline ordinarily falls 60 days after notice of entry of
judgment, or 180 days after entry of judgment, whichever is first. (Cal. Rules of
Court, rule 8.104.)
      Neither subdivision (b) nor subdivision (c) of rule 3.1702 mentions a
memorandum of costs. The sole express reference to a memorandum of costs in
rule 3.1702 appears in subdivision (e), addressing “Attorney’s fees fixed by
formula”: “If a party is entitled to statutory or contractual attorney’s fees that are
fixed without the necessity of a court determination, the fees must be claimed in
the memorandum of costs.”

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      D. Analysis
      In our view, rule 3.1700 is inapplicable to Diskeeper’s request for attorney
fees under Civil Code 1717, and rule 3.1702 imposes no requirement that a
memorandum of costs be filed. By its plain language, rule 3.1702 constitutes the
sole rule governing Diskeeper’s request: “Except as otherwise provided by
statute, this rule applies in civil cases to claims for . . . attorney’s fees provided for
in a contract.” (Rule 3.172(a), italics added.) As noted above (see pt. B, ante), no
statute governing fee requests under Civil Code section 1717 mandates the filing
of a memorandum of costs. Under rule 3.1702, a memorandum of costs is required
only when a fee motion is not required, that is, when “contractual attorney’s fees
. . . are fixed without the necessity of a court determination . . . .” (Rule
3.1702(e).) To read rule 3.1700 as the governing rule, as respondents suggest,
would be to construe the directive of rule 3.1702(a) that “this rule applies,” to
mean “another rule (viz., 3.1700) applies.” We decline to ignore the unambiguous
directive of rule 3.1702.
      Other considerations support our conclusion. Generally, in construing a
court rule, we seek “‘a reasonable and commonsense interpretation consistent with
its apparent purpose, practical rather than technical in nature, which upon
application will result in wise policy rather than mischief or absurdity.’” (Crespin,
supra, 125 Cal.App.4th at p. 265, quoting Lammers v. Superior Court (2000) 83
Cal.App.4th 1309, 1321.) Here, rules 3.1700 and 3.1702 establish distinct
procedures for asserting and contesting claims within their scope: whereas the
former rule imposes relatively brief periods for the filing of a memorandum of
costs and motion to tax costs, the latter rule affords a much longer period for the
filing of a motion for attorney fees in unlimited civil actions. Thus, if a request for
attorney fees under Civil Code section 1717 were subject to both rules, the party

                                            9
making the request would be obliged to trigger two duplicative but temporally
divergent procedures. Because that interpretation invites “‘mischief or
absurdity,’” we reject it. (Crespin, supra, at p. 265.)
      Our conclusion finds additional support from the optional forms the Judicial
Council has approved for use in conjunction with rule 3.1700, namely form MC-
010 (entitled “Memorandum of Costs (Summary)”) and form MC-011 (entitled
“Memorandum of Costs (Worksheet)”).5 Each provides a blank space for the
amount of attorney fees sought, and states: “[E]nter here if contractual or statutory
fees are fixed without necessity of a court determination; otherwise a noticed
motion is required.” (Italics deleted.) Thus, when a party seeks attorney fees
under Civil Code section 1717 that must be fixed by the trial court, the forms
effectively advise the party that (a) a figure is not to be entered in the blank space,
and (b) doing so will not secure the requested fees, as a noticed motion is required.
We decline to infer that the Judicial Council would direct a party seeking
contractual attorney fees to engage in an act neither statutorily required nor
procedurally sufficient to secure such fees.
      We recognize that rule 3.1702, as construed above, may appear to be
inconsistent with the general directive in rule 3.1700(a) that “[a] prevailing party
who claims costs must . . . file a memorandum of costs,” in view of Civil Code
section 1717, subdivision (a), which characterizes fees awarded under that
provision as “an item of costs.” However, in such circumstances, the maxims of
interpretation dictate that the particular or specific rule takes precedence over the
general rule. (Conservatorship of Moore (1986) 185 Cal.App.3d 718, 731 [“[I]t is

5       We may properly consider such forms in construing the Rules of Court. (Anthony
v. City of Los Angeles (2008) 166 Cal.App.4th 1011, 1016.)

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a fundamental principle of statutory construction that in interpreting an
interrelated statutory scheme, a specific provision controls a more general one.”];
Code. Civ. Proc., § 1859 [“[W]hen a general and [a] particular provision are
inconsistent, the latter is paramount to the former.”]; Civ. Code, § 3534
[“Particular expressions qualify those which are general.”].) As noted, rule 3.1700
bears the generic title “PREJUDGMENT COSTS,” while rule 3.1702 bears the
specific title “CLAIMING ATTORNEY’S FEES.” Our Supreme Court has
explained that “Whe[n] the same subject matter is covered by inconsistent
provisions, one of which is special and the other general, the special one, whether
or not enacted first, is an exception to the general statute and controls unless an
intent to the contrary clearly appears.” (Warne v. Harkness (1963) 60 Cal.2d 579,
588.) No such contrary intent is manifested here.
        Respondents’ reliance on Hydratec, Inc. v. Sun Valley 260 Orchard &
Vineyard Co. (1990) 223 Cal.App.3d 924, Russell v. Trans Pacific Group (1993)
19 Cal.App.4th 1717, Sanabria v. Embrey (2001) 92 Cal.App.4th 422, Bankes v.
Lucas (1992) 9 Cal.App.4th 365, and Nazemi v. Tseng (1992) 5 Cal.App.4th 1633
is misplaced. In each of those cases, the party seeking attorney fees failed to file a
timely fee motion.6 In contrast, Diskeeper filed its fee motion within the time
limits specified in rule 3.1702.

6       In the first two cases, the appellate court affirmed the denial of attorney fees
falling under Civil Code section 1717 when no fee motion was filed. (Hydratec, Inc. v.
Sun Valley 260 Orchard & Vineyard Co., supra, 223 Cal.App.3d at pp. 926-929 [trial
court properly denied costs and attorney fees because party claiming entitlement to fees
and costs filed neither memorandum of costs nor fee motion]; Russell v. Trans Pacific
Group, supra, 19 Cal.App.4th at pp. 1722-1731 [trial court properly denied fees requested
in memorandum of costs because party failed to file fee motion and established no basis
for relief from that failure under Code of Civil Procedure 473].) In the remaining cases,
the appellate court concluded that attorney fees could not be awarded because the fee
(Fn. continued on next page.)

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       Respondents also contend that the denial of Diskeeper’s fee request may be
affirmed on another ground, namely, that the fees sought were unreasonable. We
disagree. Generally, the amount of fees properly awarded under Civil Code
section 1717 is consigned to the trial court’s discretion. (PLCM Group, Inc. v.
Drexler (2000) 22 Cal.4th 1084, 1095.) Here, the court did not exercise that
discretion, as it ruled that Diskeeper’s failure to file a memorandum of costs
precluded a fee award. We decline to substitute our own judgment regarding the
proper amount of fees.
       In sum, a party seeking fees incurred before judgment under Civil Code
section 1717 need not file a memorandum of costs regarding the fees, in addition
to filing a fee motion in compliance with rule 3.1702. Accordingly, the trial court
erred in denying Diskeeper’s fee request for want of a memorandum of costs.

motion was untimely. (Sanabria v. Embrey, supra, 92 Cal.App.4th at pp. 426-429 [trial
court improperly granted belated fee motion]; Bankes v. Lucas, supra, 9 Cal.App.4th at
pp. 369-372 [trial court erred in awarding fees under Civil Code section 1717 to party
who was not the “prevailing party” and whose fee motion was untimely]; Nazemi v.
Tseng, supra, 5 Cal.App.4th at p. 1641 [trial court erred in awarding fees under Civil
Code section 1717 to party who filed untimely fee motion].)
        Respondents also suggest that the trial court’s ruling finds support from Swain v.
CACH, LLC (N.D. Cal. 2009) 699 F.Supp.2d 1109 (Swain). There, the plaintiff prevailed
in a California state action, but filed no memorandum of costs to recover her $180 filing
fee. (Id. at pp. 1115-1116.) She initiated an action in federal court, and asserted a claim
for the fee. (Ibid.) The federal court concluded that her failure to file a memorandum of
costs forfeited her right to recover the $180 filing fee. (Ibid.) As the plaintiff did not
assert a claim for attorney fees, Swain provides no guidance on the question before us.
(Ginns v. Savage (1964) 61 Cal.2d 520, 524 (“[A]n opinion is not authority for a
proposition not therein considered.”].)

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                                 DISPOSITION
      The order denying Diskeeper’s fee request is reversed, and the matter is
remanded for further proceedings in accordance with this opinion. Diskeeper is
awarded its costs on appeal.
      CERTIFIED FOR PUBLICATION

                                             MANELLA, J.

We concur:

EPSTEIN, P. J.

WILLHITE, J.

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