LAW OFFICES
OF
ANDREA LYNN RICE
A Professional Corporation
12100 Wilshire Boulevard
Suite 780
Los Angeles, California 90025
Telephone (310) 207-3717
Facsimile (310) 207-6785
www.andreariceesq.com
LIABILITY UPDATE
January 25, 2008
In Cruz v. Ayromloo 2007 Daily Journal D.A.R 13358, the Second Appellate District of the California Court of Appeal held that a trial court did not abuse its discretion in awarding higher fees than allowed for in the Los Angeles Superior Court guidelines for contested contract cases.
Thirty-two tenants sued their former landlord, Shawn Ayromloo (“Ayromloo”). The tenants prevailed on multiple causes of action stemming from Ayromloo’s wrongful refusal to allow the tenants to return to their apartments after the City of Los Angeles evacuated them because the building was unsafe. All of the tenants prevailed on their claims for forcible detainer, wrongful eviction, and negligent infliction of emotional distress.
Four of the thirty-two tenants who prevailed against Ayromloo on their breach of contract and other claims had written leases and are the plaintiffs in this case. These written leases included a contractual provision which allowed for the recovery of attorneys’ fees to the prevailing party in any civil action “in connection with” the lease. Plaintiffs made a motion for attorneys’ fees pursuant to their leases with defendant. The amount of fees sought was $413,306. Plaintiffs had already excluded from their claims attorneys’ fees for all work which applied exclusively to other families or units. For example, plaintiffs excluded time spent on interrogatory responses for other families and time spent preparing for trial and for trial time regarding these other families’ issues.
Ayromloo conceded that plaintiffs were entitled to attorneys’ fees under Civil Code section 1717 but only for fees incurred litigating the contract causes of action. He challenged the reasonableness of the requested fees, noting the amount sought was 131 times the Superior Court’s guidelines for fee awards in contract cases. Moreover, he argued plaintiffs could not recover fees counsel incurred in representing the other tenants who did not have written leases containing the attorneys’ fees clause. The appellate court rejected each of these arguments.
The court observed that Los Angeles Superior Court Rule 3.2 provides that its fee guidelines apply when a contract provides for reasonable attorneys’ fees “unless otherwise determined by the court[.]” “[J]udges are free to depart from its provisions whenever the interests of justice require[.] [Citations.]” Moreover, “[t]o the extent a local rule conflicts with a state statute, the rule is invalid. Citations.]” “ ‘[T]he determination of what constitutes reasonable attorney fees is committed to the discretion of the trial court. . . .’ ” “ ‘The trial court makes its determination after consideration of a number of factors, including the nature of the litigation, its difficulty, the amount involved, the skill required in its handling, the skill employed, the attention given, the success or failure, and other circumstances in the case.’ ”
Here, the trial court permissibly departed from the guidelines and based its fee award on the “lodestar” method of calculating attorneys’ fees. Civil Code section 1717 authorizes the trial court to award reasonable attorneys’ fees “[i]n any action on a contract, where the contract specifically provides” for attorneys’ fees, “which are incurred to enforce that contract [.]” Also, Civil Code section 1717 mandates reasonable attorneys’ fees to be “fixed by the court[.]” Here, the trial court awarded fees consistent with Civil Code section 1717. Civil Code section 1717 permitted the trial court to award “reasonable” attorneys’ fees incurred “in connection with” the lease at issue in this case.
The court rejected the landlord’s contention the trial court abused its discretion because the fee award was higher than the overall damages awarded to plaintiffs. “It is not uncommon to award attorneys’ fees in an amount higher than the total damages awarded to a plaintiff or plaintiffs in a particular case. [Ayromloo] cites no authority for the proposition an award of attorneys’ fees must always be less than the award of damages in a given case, and we are aware of none.”
The landlord also contended that the plaintiffs were only entitled to the attorneys’ fees incurred in litigating the contract cause of action for return of their security deposit. The court disagreed, pointing out that “[t]he attorney’s fees clause in a contract may be broad enough to cover tort as well as contract causes of action. [Citations.]” “ ‘If a contractual attorney fee provision is phrased broadly enough, . . . it may support an award of attorney fees to the prevailing party in an action alleging both contract and tort claims. . . .’ ” (Santisas v. Goodin (1998)] 17 Cal.4th 599.)
Here, the broad language of the attorneys’ fees clause in the lease agreement covered all fees in any civil action stemming from the lease. The attorneys’ fees clause in the lease provided, “If civil action is instituted in connection with this Agreement, the prevailing party shall be entitled to recover court costs and any reasonable attorney’s fees.” The underlying civil action encompassed both breach of contract and tort causes of action arising from the tenants’ leases with [defendant]. Therefore, the trial court did not have to base its award solely on breach of contract damages because the lease contemplated recovery of attorneys’ fees for all claims in any civil action in connection with the lease. Apportionment of fees for the breach of contract and tort causes of action was thus unnecessary because the broad language of the attorney fee clause in the contract permitted recovery of attorneys’ fees for breach of contract or any other claim asserted in connection with the lease.
Defendant was equally unsuccessful in arguing that the plaintiffs could not recover the fees that their counsel incurred in representing the other tenants who did not have written leases containing the attorneys’ fees clause. “Allocation of fees incurred in representing multiple parties is 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. [Citation.]’ In the present case, the trial court reasonably found the tenants’ various claims were ‘ “ ‘inextricably intertwined’ ” [Citation], making it “impracticable, if not impossible, to separate the multitude of conjoined activities into compensable or noncompensable time units. [Citation.]” ’ ”
Finally, we find it important to emphasize something we are not deciding in this case. [Plaintiffs] elected not to appeal the trial court’s ruling the fee award should be reduced in part because [plaintiffs’] counsel had agreed to provide representation on a “pro bono” basis. This court’s affirmance of the judgment should not be construed as signifying our approval of this particular element of that judgment. We do not find it self-evident a law firm’s commendable willingness to provide its services on a pro bono basis to low income clients should necessarily justify a diminishment in the fee award when that pro bono representation proves successful. Because [plaintiffs] did not directly challenge the court’s decision to reduce the fee award based on the pro bono nature of the litigation, we had no reason to invite the parties to brief the issue. Our research indicates courts reduce a fee award to adjust, for example, for duplicative work, for lack of success on certain issues, or the like. However, our research uncovered no case in which a trial court reduced a fee award simply because of the “pro bono type of work” involved. Moreover, in the analogous situation of contingent fee and legal aid lawyers—where again the clients are not responsible for paying legal fees out of their own pockets—the majority of courts have approved awards at a full level of “reasonable” fees.
----Andrea Lynn Rice
OF
ANDREA LYNN RICE
A Professional Corporation
12100 Wilshire Boulevard
Suite 780
Los Angeles, California 90025
Telephone (310) 207-3717
Facsimile (310) 207-6785
www.andreariceesq.com
LIABILITY UPDATE
January 25, 2008
In Cruz v. Ayromloo 2007 Daily Journal D.A.R 13358, the Second Appellate District of the California Court of Appeal held that a trial court did not abuse its discretion in awarding higher fees than allowed for in the Los Angeles Superior Court guidelines for contested contract cases.
Thirty-two tenants sued their former landlord, Shawn Ayromloo (“Ayromloo”). The tenants prevailed on multiple causes of action stemming from Ayromloo’s wrongful refusal to allow the tenants to return to their apartments after the City of Los Angeles evacuated them because the building was unsafe. All of the tenants prevailed on their claims for forcible detainer, wrongful eviction, and negligent infliction of emotional distress.
Four of the thirty-two tenants who prevailed against Ayromloo on their breach of contract and other claims had written leases and are the plaintiffs in this case. These written leases included a contractual provision which allowed for the recovery of attorneys’ fees to the prevailing party in any civil action “in connection with” the lease. Plaintiffs made a motion for attorneys’ fees pursuant to their leases with defendant. The amount of fees sought was $413,306. Plaintiffs had already excluded from their claims attorneys’ fees for all work which applied exclusively to other families or units. For example, plaintiffs excluded time spent on interrogatory responses for other families and time spent preparing for trial and for trial time regarding these other families’ issues.
Ayromloo conceded that plaintiffs were entitled to attorneys’ fees under Civil Code section 1717 but only for fees incurred litigating the contract causes of action. He challenged the reasonableness of the requested fees, noting the amount sought was 131 times the Superior Court’s guidelines for fee awards in contract cases. Moreover, he argued plaintiffs could not recover fees counsel incurred in representing the other tenants who did not have written leases containing the attorneys’ fees clause. The appellate court rejected each of these arguments.
The court observed that Los Angeles Superior Court Rule 3.2 provides that its fee guidelines apply when a contract provides for reasonable attorneys’ fees “unless otherwise determined by the court[.]” “[J]udges are free to depart from its provisions whenever the interests of justice require[.] [Citations.]” Moreover, “[t]o the extent a local rule conflicts with a state statute, the rule is invalid. Citations.]” “ ‘[T]he determination of what constitutes reasonable attorney fees is committed to the discretion of the trial court. . . .’ ” “ ‘The trial court makes its determination after consideration of a number of factors, including the nature of the litigation, its difficulty, the amount involved, the skill required in its handling, the skill employed, the attention given, the success or failure, and other circumstances in the case.’ ”
Here, the trial court permissibly departed from the guidelines and based its fee award on the “lodestar” method of calculating attorneys’ fees. Civil Code section 1717 authorizes the trial court to award reasonable attorneys’ fees “[i]n any action on a contract, where the contract specifically provides” for attorneys’ fees, “which are incurred to enforce that contract [.]” Also, Civil Code section 1717 mandates reasonable attorneys’ fees to be “fixed by the court[.]” Here, the trial court awarded fees consistent with Civil Code section 1717. Civil Code section 1717 permitted the trial court to award “reasonable” attorneys’ fees incurred “in connection with” the lease at issue in this case.
The court rejected the landlord’s contention the trial court abused its discretion because the fee award was higher than the overall damages awarded to plaintiffs. “It is not uncommon to award attorneys’ fees in an amount higher than the total damages awarded to a plaintiff or plaintiffs in a particular case. [Ayromloo] cites no authority for the proposition an award of attorneys’ fees must always be less than the award of damages in a given case, and we are aware of none.”
The landlord also contended that the plaintiffs were only entitled to the attorneys’ fees incurred in litigating the contract cause of action for return of their security deposit. The court disagreed, pointing out that “[t]he attorney’s fees clause in a contract may be broad enough to cover tort as well as contract causes of action. [Citations.]” “ ‘If a contractual attorney fee provision is phrased broadly enough, . . . it may support an award of attorney fees to the prevailing party in an action alleging both contract and tort claims. . . .’ ” (Santisas v. Goodin (1998)] 17 Cal.4th 599.)
Here, the broad language of the attorneys’ fees clause in the lease agreement covered all fees in any civil action stemming from the lease. The attorneys’ fees clause in the lease provided, “If civil action is instituted in connection with this Agreement, the prevailing party shall be entitled to recover court costs and any reasonable attorney’s fees.” The underlying civil action encompassed both breach of contract and tort causes of action arising from the tenants’ leases with [defendant]. Therefore, the trial court did not have to base its award solely on breach of contract damages because the lease contemplated recovery of attorneys’ fees for all claims in any civil action in connection with the lease. Apportionment of fees for the breach of contract and tort causes of action was thus unnecessary because the broad language of the attorney fee clause in the contract permitted recovery of attorneys’ fees for breach of contract or any other claim asserted in connection with the lease.
Defendant was equally unsuccessful in arguing that the plaintiffs could not recover the fees that their counsel incurred in representing the other tenants who did not have written leases containing the attorneys’ fees clause. “Allocation of fees incurred in representing multiple parties is 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. [Citation.]’ In the present case, the trial court reasonably found the tenants’ various claims were ‘ “ ‘inextricably intertwined’ ” [Citation], making it “impracticable, if not impossible, to separate the multitude of conjoined activities into compensable or noncompensable time units. [Citation.]” ’ ”
Finally, we find it important to emphasize something we are not deciding in this case. [Plaintiffs] elected not to appeal the trial court’s ruling the fee award should be reduced in part because [plaintiffs’] counsel had agreed to provide representation on a “pro bono” basis. This court’s affirmance of the judgment should not be construed as signifying our approval of this particular element of that judgment. We do not find it self-evident a law firm’s commendable willingness to provide its services on a pro bono basis to low income clients should necessarily justify a diminishment in the fee award when that pro bono representation proves successful. Because [plaintiffs] did not directly challenge the court’s decision to reduce the fee award based on the pro bono nature of the litigation, we had no reason to invite the parties to brief the issue. Our research indicates courts reduce a fee award to adjust, for example, for duplicative work, for lack of success on certain issues, or the like. However, our research uncovered no case in which a trial court reduced a fee award simply because of the “pro bono type of work” involved. Moreover, in the analogous situation of contingent fee and legal aid lawyers—where again the clients are not responsible for paying legal fees out of their own pockets—the majority of courts have approved awards at a full level of “reasonable” fees.
----Andrea Lynn Rice
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