Stahl Law Firm v. Apex Medical Technologies CA4/1 (2020) · DecisionDepot
Stahl Law Firm v. Apex Medical Technologies CA4/1
California Court of Appeal Aug 26, 2020 No. D073155Unpublished
Filed 8/26/20 Stahl Law Firm v. Apex Medical Technologies CA4/1 NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
STAHL LAW FIRM et al., D073155
Plaintiffs and Appellants,
v. (Super. Ct. No. 37-2010- 00097839-CU-CO-CTL) APEX MEDICAL TECHNOLOGIES INC. et al.,
Defendants and Respondents.
APPEAL from an order of the Superior Court of San Diego County,
Katherine Bacal, Judge. Affirmed.
Norbert Stahl, in pro. per., for Plaintiffs and Appellants.
Arthur A. Wellman, Jr. for Defendants and Respondents.
Stahl Law Firm, a sole proprietorship, and Norbert Stahl (collectively,
Stahl) appeal from an order of the superior court granting Apex Medical
Technologies, Inc. (Apex) and Zone Medical LLC (Zone) attorney fees in the
amount of $916,160 pursuant to Civil Code1 section 1717. Stahl asserts that
the superior court improperly determined that Apex and Zone were the
prevailing parties before entry of the judgment in violation of California
Rules of Court, rule 3.1702; that Apex and Zone were not entitled to an
award of attorney fees under section 1717; and that Apex and Zone failed to
meet their burden to prove the amount of attorney fees awarded. We are not
persuaded by Stahl’s arguments and affirm the order of the superior court.
This appeal arises from a dispute over legal fees and the quality of the
legal services for which those fees were charged. We have set forth the facts
regarding that dispute in our opinion in Stahl Law Firm v. Apex Medical
Technologies Inc. et al., D072906 [nonpub. op.], filed concurrently with this
opinion.2 Accordingly, we will focus our discussion on the facts directly
related to the award of attorney fees.
1 All further statutory references are to the Civil Code.
2 The Zone Defendants filed two requests that we take judicial notice of various portions of the reporter’s transcripts from the trial submitted in case number D072906. As the transcripts were available to the superior court at the time of the its ruling on the motion for attorney fees, and because we incorporate the factual and procedural background from our opinion in case number D072906 here, we hereby grant the Zone Defendants requests. (See Evid. Code §§ 452, subd. (d), 459; see also Cal. Rules of Court, rule 8.155(a)(1) [at any time, reviewing court may order the record augmented to include additional certified transcripts].) 2
Mark McGlothlin, an officer of Apex and Zone, executed Stahl’s written
agreement (the Engagement Letter) engaging him to provide services to the
companies related to patent litigation with a competitor (the Patent
Litigation).3 The Engagement Letter stated, in part, “you consent to pay all
fees and costs incurred in any bill collection matter.”
After the Patent Litigation concluded, Stahl sued Apex, Zone,
McGlothlin, and two other company officers, Michael Marasco and Alice
DePaul, (collectively, the Zone Defendants) for $103,465.15 in unpaid legal
bills (the Malpractice/Fee Litigation). Stahl alleged causes of action for
Breach of Contract, Breach of the Covenant of Good Faith and Fair Dealing,
Quantum Meruit for Services Rendered, Open Book Account, and Account
Stated. The Zone Defendants filed a cross-complaint and alleged causes of
action against Stahl for professional malpractice and breach of fiduciary
duty. The superior court granted a motion for nonsuit as to the professional
malpractice cause of action, and the jury returned a verdict in favor of the
Zone Defendants on all remaining causes of action.
3 The Engagement Letter is on Stahl Law Firm Letterhead, is addressed to McGlothlin, and is signed, “With best regards, Norbert Stahl.” The document itself thus suggest that it was prepared by Norbert Stahl and no party contends otherwise. 3
The Zone Defendants filed a motion for prevailing party attorney fees,
which the superior court heard along with a number of other post-trial
motions. The superior court concluded that Apex and Zone were entitled to
recover attorney fees as the prevailing parties on the contract causes of action
asserted in Stahl’s complaint pursuant to section 1717.4 Stahl appealed from
the superior court’s ruling on the post-trial motions and, as relevant to this
appeal, this court dismissed that portion of the appeal regarding the attorney
fees as a non-appealable order. (See D068929 [nonpub.] at pp. 27-30.)
The matter was remanded to the superior court, which then entered
judgment in favor of the Zone Defendants. Thereafter, the Zone Defendants
filed another motion for prevailing party attorney fees. In support of their
motion, the Zone Defendants provided detailed declarations from the two
attorneys that represented them in the Malpractice/Fee Litigation, Roger
Popeney and Arthur Wellman. Wellman also made his detailed time records
available to Stahl and the Superior Court for review.
4 The court concluded that the individual company officers, McGlothlin, DePaul, and Marasco, could not recover fees because they were not signatories to the contract and, thus, Stahl would not have been able to recover attorney fees from them, as individuals, based on the fees provision therein. However, the court also noted that, due to the way the case was litigated, “it may be impossible to apportion the fees incurred between individual and corporate defendants.” The parties do not dispute these findings on appeal. 4
Stahl filed a written opposition to the Zone Defendant’s motion for
attorney fees but did not appear at the hearing on that motion. The superior
court indicated it previously determined Apex and Zone were the prevailing
parties on the contract claims and were entitled to recover attorney fees for
their defense of Stahl’s complaint, and noted that Stahl had been given the
opportunity to review the billing records but declined. Based primarily on
the declarations submitted by the two attorneys, the court awarded Apex and
Zone $916,160 in attorney fees.
Stahl appeals.
DISCUSSION
I. Motion to Dismiss
While the appeal was pending, the Zone Defendants filed nearly
identical motions to dismiss this appeal and the appeal in case number
D072906 pursuant to the disentitlement doctrine. For the same reasons
explained in the concurrently filed opinion in D072906, we also decline to
exercise our discretion to dismiss this appeal.
II. The Superior Court Did Not Err in Awarding Attorney Fees to Apex and
Zone
Turning to the merits, Stahl asserts the superior court erred in
awarding Apex and Zone attorney fees because: (1) the superior court
improperly determined that Apex and Zone were entitled to attorney fees as
5
the prevailing parties before entry of judgment in violation of California
Rules of Court, rule 3.1702; (2) Apex and Zone were not entitled to fees
pursuant to section 1717 because the language regarding fees in Stahl’s
retainer agreement does not trigger a section 1717 award and because Stahl
could not have recovered fees for his self-representation; and (3) Apex and
Zone failed to carry their burden of proof as to the amount of attorney fees
incurred on the contract claims.
A. Standard of Review
“On appeal this court reviews a determination of the legal basis for an
award of attorney fees de novo as a question of law.” (Sessions Payroll
Management, Inc. v. Noble Construction Co. (2000) 84 Cal.App.4th 671, 677.)
However, the trial court has broad discretion to determine the amount of
attorney fees to be awarded pursuant to section 1717. (§ 1717; PLCM Group
v. Dexter (2000) 22 Cal.4th 1084, 1091, 1094-1095 (PLCM); Conservatorship
of Whitley (2010) 50 Cal.4th 1206, 1213.) As the trial court is in the best
position to determine the value of services rendered during the trial over
which it presided, we will not disturb the court’s decision regarding the
amount of attorney fees awarded absent a clear abuse of discretion.
(Graciano v. Robinson Ford Sales, Inc. (2006) 144 Cal.App.4th 140, 148
(Graciano).) We do not reweigh the evidence and indulge all presumptions in
6
support of the superior court’s award. (In re Tobacco Cases I (2013) 216
Cal.App.4th 570, 587.) Any error must be affirmatively shown. (Ibid.)
B. Analysis
1. Apex and Zone’s Motion for Attorney Fees Was Timely
California Rules of Court, rule 3.1702, subdivision (b)(1) states, “[a]
notice of motion to claim attorney’s fees for services up to and including the
rendition of judgment in the trial court-including attorney’s fees on an appeal
before the rendition of judgment in the trial court-must be served and filed
within the time for filing a notice of appeal under rules 8.104 [time to appeal]
and 8.108 [extending the time to appeal] in an unlimited civil case or under
rules 8.822 and 8.823 in a limited civil case.” Pursuant to rule 8.104,
subdivision (a)(1), a notice of appeal must be filed on or before the earliest of
60 days after the service of a notice of entry of judgment or 180 days after
entry of the judgment.
Here, Apex and Zone filed a motion for prevailing party attorney fees
along with a number of other post-trial motions and, in an order addressing
the various motions, the superior court noted that Apex and Zone were
entitled to recover attorney fees as the prevailing parties on the contract
claims in Stahl’s complaint pursuant to section 1717. Stahl argues the
court’s ruling was improper because Apex and Zone filed the notice of motion
7
and motion before the appropriate time as set forth in Cal. Rules of Court,
rule 3.1702, subd. (b)(1). We disagree.
A plain reading of California Rules of Court, rule 3.1702 indicates that
it establishes a deadline by which a party must file its notice of its motion for
attorney fees. It does not preclude a party from filing a notice or motion
before formal entry of the judgment. (See Yuba Cypress Housing Partners,
Ltd. V. Area Developers (2002) 98 Cal.App.4th 1077, 1086 (Yuba) [“a request
for fees incurred before rendition of the judgment in the trial court may be
timely even if it is filed prematurely prior to the entry of judgment” and
should be construed liberally in favor of sufficiency, particularly where the
other party was not misled or prejudiced].)5
Regardless, the superior court did not actually award attorney fees in
the pre-judgment order and the Zone Defendants, including Apex and Zone,
filed a subsequent motion for attorney fees after the judgment was entered.
In a separate ruling on that motion, the superior court reiterated its
5 We note that the court in Yuba analyzed rule 870.2, “which was in effect at the time of plaintiff’s attorney fee motion” in mid-1999. (Yuba, supra, 102 Cal.App.4th at p. 1085, fn. 2.) Since then, rule 870.2 has been amended several times and renumbered to rule 3.1702. (See Cal. Rules of Court, Rule 3.1702 [formerly Rule 870.2, renumbered Rule 3.1702 and amended, eff. Jan. 1, 2007, and further amended eff. July 1, 2008, Jan. 1, 2009, Jan. 1, 2011, and July 1, 2013].) None of the post-Yuba amendments are material to the analysis relevant to the present appeal and we therefore conclude that the analysis in Yuba is applicable. 8
preliminary ruling that Apex and Zone were entitled to recover section 1717
attorney fees as the prevailing parties on Stahl’s complaint, and awarded
attorney fees in the amount of $916,160. Thus, even if rule 3.1702 required
Apex and Zone to file its fee motion after entry of judgment, as Stahl asserts,
Apex and Zone complied with that requirement and, moreover, Stahl was not
prejudiced in any way by the previous ruling. (See Yuba, supra, 98
Cal.App.4th at p. 1086; See Hoover Community Hotel Development Corp. v.
Thomson (1985) 168 Cal.App.3d 485, 488 [reversal is not required absent a
showing of prejudice]; Serri v. Santa Clara University (2014) 226 Cal.App.4th
830, 857 [same].)
2. Apex and Zone Were Entitled to Fees Under Section 1717
Section 1717 was enacted “to establish mutuality of remedy . . . and to
prevent the oppressive use of one-sided attorney fees provisions.” (PLCM,
supra, 22 Cal. 4th at pp. 1090-1091.) It states, in part: “In any action on a
contract, where the contract specifically provides that attorney’s fees and
costs, which are incurred to enforce that contract, shall be awarded either to
one of the parties or to the prevailing party, then the party who is determined
to be the party prevailing on the contract, whether he or she is the party
specified in the contract or not, shall be entitled to reasonable attorney’s fees
in addition to other costs.” (§ 1717, subd. (a).)
9
As relevant here, where a contract provides a right to recover attorney
fees for one party but not the other, the effect of section 1717 is “to allow
recovery of attorney fees by whichever contracting party prevails, ‘whether he
or she is the party specified in the contract or not.’ ” (Santisas v. Goodin
(1998) 17 Cal.4th 599, 611.) “[W]hen a defendant defeats recovery by the
plaintiff on the only contract claim [or claims] in the action, the defendant is
the party prevailing on the contract under section 1717 as a matter of law.”
(Hsu v. Abbara (1995) 9 Cal.4th 863, 876.)
An agreement containing an attorney fees provision is subject to the
same rules of construction as any other contract. (See Mountain Air
its reciprocity principles a party must show . . . [that] the opponent would
have been entitled to recover attorney fees had the opponent
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prevailed.” When read in context, it is apparent the court in Brown Bark was
speaking more generally about the contract provision entitling an opposing
party to recover attorney fees, not whether the opposing party actually
incurred such fees. (Ibid.) Significantly, unlike this case, neither party in
Brown Bark was self-represented. (Ibid.) Accordingly, Brown Bark is
inapposite.
We therefore conclude that the superior court correctly determined that
Apex and Zone were entitled to recover attorney fees pursuant to section
1717.
3. The Superior Court Awarded Reasonable Attorney Fees
Stahl asserts Apex and Zone failed to meet their burden to establish
the amount of attorney fees they incurred on the contract claims and the
superior court simply “rubber stamped” the Zone Defendants’ fee request.
We disagree.
The court relied on the declarations of Popeney and Wellman, and
those declarations contained detailed information about the number of hours
each attorney spent on specific professional activities, including, for example,
discovery matters and trial preparation. (See Raining Data Corp. v.
Barrenechea (2009) 175 Cal.App.4th 1363, 1375 [“The law is clear, however,
that an award of attorney fees may be based on counsel’s declarations,
without production of detailed time records.”].)
13
Popeney declared that his hourly rate was $350 and he agreed to
represent the Zone Defendants on the contract claims on an hourly basis and
to take a contingency fee with respect to prosecution of the cross-complaint.
He further declared that he spent at least 600 hours defending the complaint
and “[b]ecause our affirmative defenses of negligence and breach of fiduciary
duty were co-extensive with our cross-complaint, I believe time spent
developing those affirmative defenses was necessary to the defense of the
complaint.” He requested $210,000 in attorney fees.
Wellman declared he routinely charged $350 to $600 per hour for legal
work, and that he agreed to represent the Zone Defendants at what he
considered to be a reduced rate of $350 per hour. He billed the Zone
Defendants 2,043.6 hours, which did not account for all of the time that he
devoted to the matter. Wellman offered to make those records available to
Stahl or the superior court for inspection. Like Popeney, he declared, “I
viewed the affirmative defenses of breach of fiduciary duty and negligence [on
the contract claims] as co-extensive with the cross-complaint and did not
distinguish in my time entries between defense and prosecuting the cross-
14
complaint.” After reducing the total amount sought based on sanctions
previously awarded to him, Wellman requested $706,160.6
As the superior court correctly noted, it was entitled to award attorney
fees based on the declarations and without detailed billing records. (See
Raining Data Corp. v. Barrenechea, supra, 175 Cal.App.4th at p. 1375;
PLCM, supra, 22 Cal.4th at pp. 1095-1096 [trial courts typically determine
the appropriate amount of attorney fees by multiplying the time reasonably
spent on the matter by the reasonable hourly rate]; Donahue v. Donahue
(2010) 182 Cal. App. 4th 259, 271 [“ ‘The evidence should allow the court to
consider whether the case was overstaffed, how much time the attorneys
spent on particular claims, and whether the hours were reasonably
expended.’ ”].)
We acknowledge that the fee award is significant, but Wellman
explained that the amount of attorney fees billed was a direct result of Stahl’s
continued use of evasive litigation tactics. Having presided over the trial, the
superior court had a complete view of the case and was in the best position to
determine whether the hours claimed by the attorneys were reasonable. (See
6 Wellman also requested reimbursement for counsel that he hired to assist him on the previous appeal, but the superior court denied that request. Neither party disputes that ruling. 15
§ 1717; PLCM, supra, 22 Cal.4th at pp. 1094-1095; Graciano, supra, 144
Cal.App.4th at p. 148.)
Stahl also argues that, pursuant to section 1717, Apex and Zone were
only entitled to collect attorney fees on the contract claims asserted in the
complaint, and that the declarations were not sufficient to allow the superior
court to segregate the amount of attorney fees attributable to those claims.
Stahl is correct that the recovery of attorney fees pursuant to section 1717 is
limited to fees for claims made “on the contract”. (See Santisas v. Goodin
(1998) 17 Cal.4th 599, 615 [“If an action asserts both contract and tort or
other noncontract claims, section 1717 applies only to attorney fees incurred
to litigate the contract claims”].) However, the superior court correctly
determined that it was not necessary to distinguish between time the
attorneys spent working on the complaint versus the cross-complaint. As our
Supreme Court stated in Reynolds Metals Co. v. Alperson (1979) 25 Cal.3d
124, “Attorney’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. at pp. 129-130.)
Here, the tenth affirmative defense to Stahl’s complaint alleged that Stahl
was only entitled to the reasonable value of the services he provided, if any,
and the eleventh affirmative defense alleged that the Zone Defendants were
entitled to a complete or partial setoff based on Stahl’s negligence. These
16
defenses required the Zone Defendants to develop and present essentially the
same evidence as necessary to prove the professional malpractice and breach
of fiduciary duty claims asserted in the cross-complaint.
Stahl further asserts that the superior court erred by failing to
apportion the fees requested between the contract claims and the additional
causes of action asserted in his complaint, including Quantum Meruit for
Services Rendered, Open Book Account, and Account Stated. To support his
assertion, he points out that the superior court noted, in its August 2015
order on the post-trial motions, that “only the first two causes of action (those
asserted against Zone and Apex) were truly actions ‘on a contract’ for which
Stahl could have recovered attorney’s fees if he prevailed.”
Regardless, “[a]pportionment of a fee award between [attorney] fees
incurred on a contract cause of action and those incurred on other causes of
action is within the trial court’s discretion.” (Abdallah v. United Savings
Bank (1996) 43 Cal.App.4th 1101, 1111 (Abdallah); In re Tobacco Cases I,
supra, 216 Cal.App.4th at p. 589.) The superior court does not abuse that
discretion by failing to apportion attorney fees between claims that are so
intertwined it would be “ ‘impracticable, if not impossible’ ” to separate the
time spent on one versus the other. (Abdallah, at p. 1111; see also Reynolds,
supra, 25 Cal.3d at pp. 129-130.)
17
Here, even if the additional causes of action in Stahl’s complaint were
not technically “on the contract”, they were alternative bases upon which
Stahl sought to collect the outstanding fees due on that contract and, thus,
were inextricably intertwined with the contract claims. (See Abdallah,
supra, at p. 1111; Professional Collection Consultants v. Lauron (2017) 8
Cal.App.5th 958, 970 [underlying theory of relief indicated gravamen of
complaint was breach of contract despite claims labeled as “account stated”
and “open book account”].) Accordingly, we cannot conclude that the superior
court abused its discretion by failing to apportion the attorney fees incurred
on a contract cause of action and those incurred on other causes of action.
Finally, Stahl asserts that Apex and Zone were only entitled to
attorney fees they actually paid or became liable to pay, and that Popeney
and Wellman’s declarations were not sufficient to establish how many of the
claimed hours were actually billed to Apex and Zone. (See San Dieguito
Partnership v. San Dieguito River Valley Reg’l (1998) 61 Cal.App.4th 910, 918
(San Dieguito) [purpose of section 1717 fee provision “is to reimburse a party
for attorney fees the party has paid, or to indemnify the party for fees the
party has become liable to pay”]; see also PLCM, supra, 22 Cal.4th at p. 1097,
fn. 5 [concluding San Dieguito does not require the superior court to use any
particular method for calculating fees].)
18
To the contrary, Popeney specifically declared that the requested
amount was based on 600 hours that he spent “in defense of the complaint.”
Similarly, Wellman declared that his detailed time records reflected “2,043.6
hours of billable time, for total fees of $715,260.” We view the evidence,
including the declarations, in the light most favorable to support the superior
court’s order. (See In re Tobacco Cases I, supra, 216 Cal.App.4th at p. 587;
Heppler v. J.M. Peters Co. (1999) 73 Cal.App.4th 1265, 1292.) Stahl has not
presented any affirmative evidence to establish that Zone and Apex had not
paid or were not liable to pay the amounts claimed, and thus has not
affirmatively shown any error. (In re Tobacco Cases I, at p. 587.) Again,
having presided over the trial, the superior court was in the best position to
determine whether the total number of hours claimed was reasonable. (See
§ 1717; PLCM, supra, 22 Cal.4th at pp. 1094-1095; Graciano, supra, 144
Cal.App.4th at p. 148.)
For the foregoing reasons, we conclude that the superior court did not
abuse its discretion in awarding attorney fees in the amount of $916,160 to
Apex and Zone.
19
DISPOSITION
The order of the superior court is affirmed. Respondents are awarded
their costs on appeal.
IRION, J.
WE CONCUR:
BENKE, Acting P. J.
O’ROURKE, J.
20
AI Brief
AI-generated · verify before citing
Holding. The court affirmed an award of $916,160 in attorney fees to the defendants, holding that the contractual provision requiring the defendants to pay fees incurred in bill collection matters triggered the reciprocity requirements of Civil Code section 1717. The court further held that the trial court did not abuse its discretion in determining the fee amount or in declining to apportion fees between contract and non-contract claims that were inextricably intertwined.
Issues
Whether the trial court erred in determining the defendants were prevailing parties under Civil Code section 1717 before the entry of judgment.
Whether the language in the engagement letter was sufficient to trigger an award of attorney fees under Civil Code section 1717.
Whether the trial court abused its discretion in the amount of attorney fees awarded and in failing to apportion fees between contract and non-contract claims.
Disposition. Affirmed
Quotations verified verbatim against the opinion
“the superior court concluded that the provision in the Engagement Letter stating that Apex and Zone “consent to pay all fees and costs incurred in any bill collection matter” was similarly sufficient to trigger section 1717.”
“Attorney’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.”
“The superior court does not abuse that discretion by failing to apportion attorney fees between claims that are so intertwined it would be “ ‘impracticable, if not impossible’ ” to separate the time spent on one versus the other.”