Court Opinion

ID: 4908301
Source: CourtListenerOpinion
Date Created: 2021-09-03 20:01:30.620059+00
Date Added: 2024-06-11T08:13:14.660924
License: Public Domain

NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                        SEP 3 2021
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

NOMADIX, INC.,                                  No.    20-56008

                Plaintiff-Appellee,             D.C. No.
                                                2:19-cv-04980-AB-FFM
 v.

GUEST-TEK INTERACTIVE                           MEMORANDUM*
ENTERTAINMENT LTD.,

                Defendant-Appellant.

                   Appeal from the United States District Court
                      for the Central District of California
                   Andre Birotte, Jr., District Judge, Presiding

                      Argued and Submitted August 4, 2021
                              Pasadena, California

Before: PAEZ, CALLAHAN, and BENNETT, Circuit Judges.

      In this diversity action, Nomadix, Inc. (“Nomadix”) sued Guest-Tek

Interactive Entertainment Ltd. (“Guest-Tek”), alleging that Guest-Tek had breached

the forum selection clause in the parties’ License Agreement by challenging the

validity of Nomadix’s patents before the U.S. Patent and Trademark Office’s Patent

Trial and Appeal Board (“PTAB”). The district court granted summary judgment to

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Nomadix and entered a permanent injunction enjoining Guest-Tek from filing

certain petitions with the PTAB. We affirm those orders in a simultaneously filed

separate disposition.   In this appeal, Guest-Tek challenges the district court’s

$1,099,310 attorneys’ fee award. We have jurisdiction under 28 U.S.C. § 1291 and

affirm in part and reverse in part.

      We review questions of law concerning a party’s entitlement to attorneys’ fees

de novo. Lagstein v. Certain Underwriters at Lloyd’s of London, 725 F.3d 1050,

1056 (9th Cir. 2013). Whether a party is entitled to attorneys’ fees in a diversity

case is governed by state law. Id.

      1.      Guest-Tek argues that the district court should not have awarded

Nomadix attorneys’ fees for its defense of the PTAB proceedings. Before awarding

contractual attorneys’ fees under California law, “it is necessary to determine

whether the parties entered an agreement for the payment of attorney fees, and if so,

the scope of the attorney fee agreement.” Mountain Air Enters., LLC v. Sundowner

Towers, LLC, 398 P.3d 556, 561 (Cal. 2017) (citation omitted). “This determination

requires us to apply traditional rules of contract interpretation,” including that the

“clear and explicit meaning” of the contract “controls judicial interpretation.” Id.

(quotation marks and citation omitted). “Thus, if the meaning a layperson would

ascribe to contract language is not ambiguous, we apply that meaning.” Id. (citation

omitted).

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      Here, the attorneys’ fee provision provides: “The Parties agree that the

prevailing Party in such District Court or Superior Court action will be entitled to

reimbursement by the losing Party for any and all legal fees and costs incurred by

the prevailing Party in preparing for and conducting such action.” Nomadix was the

prevailing party in the forum-selection dispute before the district court, so Nomadix

is entitled to all legal fees and costs incurred in preparing for and conducting that

action—not the PTAB proceedings. Under the “clear and explicit meaning” of the

attorneys’ fee provision, any fees incurred in the PTAB proceedings are not

recoverable.1

      2.     Guest-Tek argues that the district court should not have awarded

Nomadix attorneys’ fees for its unsuccessful motion for a preliminary injunction.

But in California, “a party who ultimately prevails on a contract action is entitled to

all of its fees, including fees incurred during the lawsuit in proceedings where it did

not prevail.” Frog Creek Partners, LLC v. Vance Brown, Inc., 141 Cal. Rptr. 3d

834, 859 (Ct. App. 2012); cf. Cabrales v. County of Los Angeles, 935 F.2d 1050,

      1
        Nomadix cites Children’s Hospital and Medical Center v. Bonta, 118 Cal.
Rptr. 2d 629 (Ct. App. 2002), for the proposition that “trial courts enjoy discretion
to award attorneys’ fees for work performed in proceedings closely related to the
action in which fees are sought.” See id. at 659. But Children’s Hospital was
applying California Civil Code § 1021.5. Here, in contrast, Nomadix is asking us to
apply California Civil Code § 1717, the statute governing contractual attorneys’
fees. According to the California Supreme Court, we must determine the scope of
an attorneys’ fee agreement “[b]efore section 1717 comes into play.” Mountain Air,
398 P.3d at 561 (emphasis added) (citation omitted).

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1052–53 (9th Cir. 1991) (same). Thus, because Guest-Tek ultimately prevailed on

summary judgment, it is entitled to attorneys’ fees incurred in connection with the

summary judgment, the permanent injunction, and the preliminary injunction, the

latter of which “was simply a temporary setback on the way to a complete victory.”

Cabrales, 935 F.2d at 1053.

      3.     Guest-Tek argues that the district court should not have awarded

Nomadix attorneys’ fees for time spent by in-house counsel as a “corporate liaison”

rather than an active participant in preparing the case. In California, in-house

counsel fees are recoverable, but only when the in-house counsel “actively

participate[s] in the preparation of the case.” Garfield Bank v. Folb, 31 Cal. Rptr.

2d 239, 241 (Ct. App. 1994) (citation omitted), overruled on other grounds by Trope

v. Katz, 902 P.2d 259 (Cal. 1995). Nomadix does not dispute that its in-house

counsel was not actively participating in preparing the case when the portions of the

in-house counsel fees at issue were incurred.        Thus, those portions are not

recoverable, although the rest of the in-house counsel fees are.

      We thus remand this case to the district court to recalculate the attorneys’ fee

award in accordance with this disposition.

      AFFIRMED IN PART, REVERSED IN PART, AND REMANDED, with

the parties to bear their own costs.

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