Franowicz v. Cook

• Court: United States Bankruptcy Court, C.D. California
• Decided: December 20, 2019
• Docket: 2:15-ap-01323
• Status: Unknown

Opinion

2 FILED & ENTERED

4 DEC 20 2019

5 C CL enE tR raK l U D. iS st. r B icA t N ofK CR aU liP foT rC nY ia COURT 6 BY b a k c h e l l DEPUTY CLERK

7 NOT FOR PUBLICATION

8 UNITED STATES BANKRUPTCY COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 LOS ANGELES DIVISION 11

12 In re: No. 2:15-bk-10768-RK

13 BRIAN J. COOK and VICTORIA Chapter 7 VELASQUEZ COOK, 14 Adv. No. 2:15-ap-01323-RK

15 Debtor. ORDER GRANTING IN PART AND 16 DENYING IN PART MOTION OF PLAINTIFF EDWARD FRANOWICZ FOR ORDER 17 AWARDING ATTORNEY’S FEES AND COSTS 18

19 EDWARD FRANOWICZ, et al., 20 Plaintiffs, 21 vs. 22 BRIAN J. COOK, 23 Defendant. 24

25 Having reviewed and considered the motion of Plaintiff Edward Franowicz for 26 order awarding attorney’s fees and costs, filed on September 9, 2019 (Electronic Case 27 Filing Number (ECF)) 130), the unredacted billing entries of the law firm of Hinds and 28 Shankman, filed on November 14, 2019, and the lack of timely written opposition of 1 Defendant Brian J. Cook to the motion by the extended deadline of November 27, 2019 2 as stated in the court’s order of November 6, 2019, the court grants in part and denies 3 in part the motion as follows: 4 1. The legal basis for granting the motion in part and denying it in part is set 5 forth in the court’s findings of fact and conclusions of law, ECF 128 at 25-30, 6 which the court incorporates by reference here, and provides for making an 7 award of attorneys’ fees and costs to Plaintiff Edward Franowicz pursuant to 8 California Code of Civil Procedure §§ 1021, 1032 and 1033.5 based on the 9 contractual agreements that he and Defendant Brian J. Cook signed 10 regarding the purchase, sale and lease of the subject real property, Sales 11 Contract, Trial Exhibit 3, ¶21, Option Agreement, Trial Exhibit 4, ¶14, and 12 Lease Agreement, Trial Exhibit 5, ¶40. These attorney’s fees provisions 13 provided that “[i]n any action, proceeding, or arbitration between [Franowicz 14 and Cook] arising out of [the agreement], the prevailing [party] shall be 15 16 entitled to reasonable attorney fees and costs from the non-prevailing [party].” 17 Id. In this litigation arising out of these agreements, Franowicz was the 18 prevailing party, and Cook was the non-prevailing party. 19 2. The court also deems the lack of timely written opposition by Defendant Brian 20 J. Cook as consent to a ruling adverse to him in granting the motion in part 21 pursuant to Local Bankruptcy Rule 9013-1(h). 22 3. The motion is denied as to the fees requested for the legal services of the law 23 firm of White and Bright LLP in the amount of $2,810.87 because the 24 evidence consisting of the firm’s invoice and the declaration of Plaintiff 25 Edward Franowicz is insufficient to show that the fees were for services 26 reasonably necessary to the conduct of litigation arising out of the contract 27 agreements. There are only vague references in the invoice to “Review of 28 Addendum” which are insufficient to show that the fees relate to legal services 1 rendered on behalf of Plaintiff Edward Franowicz in an action, proceeding or 2 arbitration arising out of the contractual agreements. The invoice does not 3 contain billing entries showing the date service was rendered, a description of 4 the service, the amount of time spent, and the identification of the person who 5 rendered service, which would provide information for the court to determine 6 the reasonableness of the fees. See Local Bankruptcy Rule 2016-1(a)(1)(E). 7 Moreover, there is no indication in this evidence that the services related to 8 an action arising out of the contractual agreements between Franowicz and 9 Cook. 10 4. The motion is granted as to the fees requested for the legal services of the 11 Ginder Law Group in the amount of $1,335.00 because the evidence 12 consisting of billing entries and the declaration of Plaintiff Edward Franowicz 13 is sufficient to show that the fees were for services of this law firm 14 representing Plaintiff Edward Franowicz reasonably necessary to the conduct 15 16 of litigation arising out of the contractual agreements relating to the specific 17 performance action filed by Franowicz against Cook and based on the court’s 18 review, the fees are reasonable in amount. California Code of Civil 19 Procedure § 1021, 1032, 1033.5(a)(10)(A) and 1033.5(c)(3). 20 5. The motion is granted as to the fees requested for the legal services of the 21 law firm of Baker, Burton & Lundy in the amount of $31,572.94 because the 22 evidence consisting of billing entries and the declaration of Plaintiff Edward 23 Franowicz is sufficient to show that the fees were for services of this law firm 24 representing Plaintiff Edward Franowicz reasonably necessary to the conduct 25 of litigation arising out of the contractual agreements relating to the landlord- 26 tenant action brought by Cook against Franowicz, and based on the court’s 27 review, the fees are reasonable in amount. California Code of Civil 28 Procedure § 1021, 1032, 1033.5(a)(10)(A) and 1033.5(c)(3). 1 6. The motion is granted as to the fees requested for the legal services of the 2 Law Offices of Kirk J Retz, APC in the amount of $44,350.49 because the 3 evidence consisting of billing entries and the declaration of Plaintiff Edward 4 Franowicz is sufficient to show that the fees were for services of this law firm 5 representing Plaintiff Edward Franowicz reasonably necessary to the conduct 6 of litigation arising out of the contractual agreements relating to the landlord- 7 tenant action brought by Cook against Franowicz, and based on the court’s 8 review, the fees are reasonable in amount. California Code of Civil 9 Procedure § 1021, 1032, 1033.5(a)(10)(A) and 1033.5(c)(3). 10 7. The motion is granted as to the fees requested for the legal services of the 11 Greenberg, Whitcombe, Gibson & Grayver in the amount of $25,707.70 12 because the evidence consisting of billing entries and the declaration of 13 Plaintiff Edward Franowicz is sufficient to show that the fees were for services 14 of this law firm representing Plaintiff Edward Franowicz reasonably necessary 15 16 to the conduct of litigation arising out of the contractual agreements relating to 17 the landlord-tenant action brought by Cook against Franowicz and the specific 18 performance action brought by Franowicz against Cook, and based on the 19 court’s review, the fees are reasonable in amount. California Code of Civil 20 Procedure § 1021, 1032, 1033.5(a)(10)(A) and 1033.5(c)(3). 21 8. The motion is granted in part and denied in part as to the fees requested for 22 the legal services of Hinds & Shankman, LLP and allowed in the amount of 23 $460,607.98 (the requested amount of $484,850.51 reduced by 5 percent, or 24 $24,242.53) because the evidence consisting of the firm’s unredacted billing 25 entries and the declaration of Plaintiff Edward Franowicz is sufficient to show 26 that the fees were for services mostly, but not completely, reasonably 27 necessary to the conduct of litigation arising out of the contractual 28 agreements, and based on the court’s review, the fees are mostly reasonable 1 in amount. California Code of Civil Procedure § 1021, 1032, 1033.5(a)(10)(A) 2 and 1033.5(c)(3). Reasonable attorneys’ fees are normally measured by the 3 lodestar method which multiplies a reasonable hourly rate by the reasonable 4 hours of services rendered. Wegner, Fairbank and Epstein, Rutter Group 5 California Practice Guide: Civil Trials and Evidence, ¶¶17:915 – 17:916 6 (online edition, September 2019 update); see also, Castro v. Han (In re Han), 7 Adv. No. 2:11-ap-02632 RK, 2015 WL 5610886 (Bankr. C.D. Cal., September 8 22, 2015). The court has considered the hourly rates charged by the 9 attorneys of Hinds & Shankman and finds that the rates are reasonable for 10 purposes of California Code of Civil Procedure § 1021, 1032, 11 1033.5(a)(10)(A) and 1033.5(c)(3). The court has reviewed the voluminous 12 billing entries submitted by the firm in support of Plaintiff’s request for an 13 award of attorneys’ fees for the firm’s services, consisting of 460 pages with 14 an average of 10 billing entries per page, or approximately 4600 separate 15 16 billing entries. Having reviewed the firm’s billing entries, the court has a good 17 sense of the reasonableness of the fees as a whole and exercises its 18 discretion to impose a small reduction in fees no greater than 10 percent, a 19 “haircut,” without a more specific explanation based on a lodestar analysis as 20 recognized in Moreno v. City of Sacramento, 534 F.3d 1106, 1112 (9th Cir. 21 2008). See also, Gonzalez v. City of Maywood, 729 F.3d 1196, 1203 (9th Cir. 22 2013) (same, citing Moreno). Although the firm exercised appropriate billing 23 judgment and appears to have acted in good faith for the most part, there 24 were some problems in the exercise of billing judgment in this case, and thus, 25 the court exercises its discretion to reduce fees by 5 percent. In the court’s 26 view, this was not a difficult case involving dischargeability of debt based on 27 fraudulent misrepresentations by Defendant and specific performance of a 28 contract for the sale and purchase of a single parcel of real property, which 1 did not present complex legal or factual issues. Two attorneys worked on the 2 litigation, and in the court’s review, one attorney was enough. It seemed to 3 the court that the associate attorney could have worked on the matter alone 4 with minimal supervision by the partner supervisor, but both attorneys 5 substantively worked on the case, which resulted in some duplication of effort 6 and some inefficiencies. For example, it is inefficient for both attorneys to 7 work on the same tasks, such as reviewing all the pleadings and orders filed 8 in the litigation and to meet or otherwise communicate with the clients, which 9 occurred sometimes. Sometimes the firm mitigated the redundancy by only 10 charging fees for one attorney when both attorneys performed the same task, 11 but not always. The court also noted that in some instances, the firm charged 12 for an attorney to do basic research, such as looking up the court’s local rules 13 or the Federal Rules of Bankruptcy or Civil Procedure, and to perform clerical 14 nonattorney tasks. In the court’s view, not all of the downloading and sending 15 16 files to clients was reasonable, particularly at a partner billing rate, and not all 17 of the conferencing between the two attorneys was adequately explained and 18 justified. 19 9. The motion is granted as to the costs of the expenses requested for the legal 20 services of Hinds & Shankman, LLP for transcription fees, court reporter fees, 21 photocopying and scan fees, postage, overnight shipping fees, messenger 22 fees, expert fees (Stephen Speier and Robert Griswold (retainer)), CourtCall 23 telephone appearance charges, parking costs for court appearances, and 24 PACER court file electronic access charges incurred by Plaintiff Edward 25 Franowicz in the amount of $26,058.22 in this bankruptcy case and this 26 adversary proceeding because the evidence consisting of the invoices and 27 the declaration of Plaintiff Edward Franowicz is sufficient to show that the 28 costs were reasonably necessary in the conduct of litigation arising out of the 1 contractual agreements in this adversary proceeding and in the underlying 2 bankruptcy case and based on the court’s review, the costs were reasonable 3 in amount. California Code of Civil Procedure § 1032 and 1033.5; 28 U.S.C. 4 § 1920; see also, Wyatt Technology Corp. v. Malvern Instruments, Inc., No. 5 CV 07-8298 ABC (RZx), 2010 WL 11404472 (C.D. Cal., June 17, 2010), slip 6 op. at *2-4 (in some circumstances, reasonable out-of-pocket expenses 7 normally charged to a client may be recoverable even if not taxable pursuant 8 to 28 U.S.C. § 1920, so long as those expenses are customarily charged to 9 the client), citing Grove Wells Fargo Financial California, Inc., 606 F.3d 577, 10 579-582 (9th Cir. 2010). In this regard, the court notes that under California 11 Code of Civil Procedure § 1033.5(b)(1), fees of experts not ordered by the 12 court are not allowable costs, and this would apply to fees for Plaintiff’s 13 experts Griswold and Speier since they were not ordered by the court, and 14 such fees are not taxable costs under 28 U.S.C. § 1920, Local Bankruptcy 15 16 Rule 7054-1(d) and the Court Manual. Plaintiff does not cite any authority for 17 allowance of such costs other than California Code of Civil Procedure § 1032 18 providing that costs may be recovered by contract. In this regard, the court 19 also notes that under California Code of Civil Procedure § 1033.5(b)(3) and 20 (5), postage, telephone and photocopying charges (including overnight 21 express mail costs), except for exhibits, transcripts of court proceedings not 22 ordered by the court and fees of experts not ordered by the court are not 23 allowable, and this would apply to many of the costs claimed by Plaintiff. 24 However, under 28 U.S.C. § 1920, fees for transcripts, fees for 25 exemplification and the costs of making copies of any materials “necessarily 26 obtained for use in the case” are taxable as costs, though use at trial may be 27 a prerequisite (as opposed to the convenience of counsel). See Jones, 28 Rosen, Wegner and Jones, Rutter Group Practice Guide: Federal Civil Trials 1 and Evidence, ¶¶ 19:170 – 19:174 (online edition, June 2019 update), citing 2 inter alia, Kalitta Air L.L.C. v. Central Texas Airborne System Inc., 741 F.3d 3 955, 959 (9th Cir. 2013) and Haagen-Dazs Co., Inc. v. Double Rainbow 4 Gourmet Ice Creams, Inc., 920 F.2d 587, 588 (9th Cir. 1990); see also, Banas 5 v. Volcano Corp., 47 F.Supp.3d 957, 979 (N.D. Cal. 2014)(deducting 50% of 6 copying costs for “lack of detail”). Regarding whether costs otherwise not 7 allowable under California law may be recovered pursuant to contract, one 8 treatise has commented: “A contract provision allowing the prevailing party to 9 recover ‘all necessary expenses’ (or similar language) arguably may permit 10 an award of expert witness fees not ordered by the court and other items not 11 recoverable as attorney fees or as court costs under CCP § 1033.5.” 12 Wegner, Fairbank and Epstein, Rutter Group California Practice Guide: Civil 13 Trials and Evidence, ¶17:926 (online edition, September 2019 update). As 14 this treatise further noted: “The [California] Supreme Court has noted: ‘Our 15 16 present analysis, which involves statutory construction, may not be dispositive 17 in a matter involving the effect of a contractual agreement for shifting litigation 18 costs, which turns on the intentions of the contracting parties.” [Davis v. 19 KGO-T.V., Inc. (1998) 17 C4th 436, 446-447, 71 CR2d 452, 457, fn. 5 20 (emphasis added)(disapproved on other grounds in Williams v. Chico Valley 21 Independent Fire Dist. (2015) 61 Cth 97, 105-107, 186 CR3d 826, 832-833)].” 22 Id. Finally, this treatise observed: “Courts are split on whether such 23 expenses authorized by contract must be specially pleaded and proven at trial 24 or instead can be awarded through the normal procedures for requesting and 25 taxing costs. [See Carwash of America-PO LLC v. Windswept Ventures No. 26 1, LLC, [(2002)] 97 CA4th [540] at 544, 118 CR2d [536] at 538---under 27 contract authorizing award of ‘all reasonable costs and fees’ of litigation, 28 expert witness fees could not be awarded as item of ‘costs’ unless pleaded 1 and proven separately; compare Thrifty Payless, Inc. v. Mariners Mile 2 Gateway, LLC (2010) 185 CA4th 1050, 1065, 111 CR3d 173, 186---when 3 ‘sophisticated parties’ specifically provide for recovery of expert witness fees 4 ‘in a freely negotiated contract,’ such fees may be recovered by including 5 them on memorandum of costs and proving them if motion to tax costs is 6 filed].” Id. In this case, many of the costs claimed by Plaintiff are not 7 allowable costs under California Code of Civil Procedure § 1033.5, such as 8 most of the photocopying and postage charges, and the transcript and expert 9 witness fees not ordered by the court. Such costs are arguably allowed by 10 contract, though the case law is unsettled. In Carwash of America and 11 Mariners Mile Gateway, the courts held that such costs may be allowed 12 where there are sophisticated contracting parties, which is not the case here 13 since the parties were not sophisticated business parties, and that such costs 14 may not be allowed unless specifically pleaded and proven at trial, and 15 16 neither of these two cases specifically supports Plaintiff’s request here. 17 Moreover, it is arguable that the lack of detail to explain how the photocopying 18 and scan charges (here no explanation was given other than stating the 19 amounts for “Photocopying Charges” and “Scan Charges”) were “necessarily 20 obtained for use in the case” and thus, taxable as costs under 28 U.S.C. § 21 1920, such as for use at trial, deposition or other hearing as opposed to just 22 the convenience of counsel or the client. See Kalitta Air L.L.C. v. Central 23 Texas Airborne System Inc., 741 F.3d at 959 (use or exemplification generally 24 means use at trial and not for the convenience of counsel and the court); 25 Banas v. Volcano Corp., 47 F.Supp.3d at 979; see also, California Code of 26 Civil Procedure § 1033.5(c)(2). Nevertheless, the court will hold that these 27 costs are allowable in most part pursuant to federal law under 28 U.S.C. § 28 1920, which allows transcript and photocopying charges “necessarily 1 obtained for use in the case” as taxable costs and are otherwise arguably 2 allowable by contract as stated above. The court makes this ruling in large 3 part because such costs are not disputed by Defendant pursuant to Local 4 Bankruptcy Rule 9013-1(h). However, in any event, the court disallows 5 claimed attorney meal costs of $44.96 incurred on July 26, 2016 as non- 6 taxable, unreasonable litigation costs as not within reasonable contemplation 7 of the contractual agreements. 8 10. The motion is granted as to the cost of fees for mediation incurred by Plaintiff 9 Edward Franowicz in the amount of $800.00 in the state court action related 10 to the Sales Contract in Franowicz v. Cook, No. YC069159 (Superior Court of 11 California, County of Los Angeles) because the evidence consisting of the 12 invoice of the mediator, Peter J. Lesser, and the declaration of Plaintiff 13 Edward Franowicz is sufficient to show that the cost was reasonably 14 necessary to the conduct of litigation arising out of the contract agreements 15 16 and based on the court’s review, the cost was reasonable in amount. 17 Although the mediator’s fees are not specifically allowable or not allowable 18 under California Code of Civil Procedure § 1033.5, the court may allow such 19 costs in the exercise of its discretion pursuant to California Code of Civil 20 Procedure § 1033.5(c)(4). For the same reasons that the court has allowed 21 the litigation costs in the adversary proceeding pursuant to the contractual 22 agreements under California Code of Civil Procedure §§ 1032 and 1033.5 as 23 discussed above, the court will allow these costs. 24 11. The motion is granted as to the costs of depositions, deposition transcripts 25 and court reporters incurred by Plaintiff Edward Franowicz in the amount of 26 $3,377.87 in the state court action related to the Sales Contract in Franowicz 27 v. Cook, No. YC069159 (Superior Court of California, County of Los Angeles) 28 and in this adversary proceeding because the evidence consisting of the 1 invoices and the declaration of Plaintiff Edward Franowicz is sufficient to 2 show that the costs were reasonably necessary to the conduct of litigation 3 arising out of the contract agreements and based on the court’s review, the 4 costs were reasonable in amount. For the same reasons that the court has 5 allowed the litigation costs in the adversary proceeding pursuant to the 6 contractual agreements under California Code of Civil Procedure §§ 1032 and 7 1033.5 as discussed above, the court will allow these costs. 8 12. The motion is granted as to the cost of the fees of Robert Griswold, the expert 9 witness for Plaintiff Edward Franowicz, in the amount of $18,438.70, for work 10 in rendering an expert opinion on the standard of care of Defendant Brian J. 11 Cook and his agents in the real estate transactions relating to the contract 12 agreement because the evidence consisting of the expert witness’s invoice 13 and the declaration of Plaintiff Edward Franowicz is sufficient to show that the 14 cost was reasonably necessary to the conduct of litigation arising out of the 15 16 contract agreements, and based on the court’s review, the cost was 17 reasonable in amount. For the same reasons that the court has allowed the 18 litigation costs in the adversary proceeding pursuant to the contractual 19 agreements under California Code of Civil Procedure §§ 1032 and 1033.5 as 20 discussed above, the court will allow this cost. 21 13. As set forth herein, the court awards attorneys’ fees and costs in favor of 22 Plaintiff Edward Franowicz and against Defendant Brian J. Cook. 23 /// 24

26 27 28 1 14.Having issued its findings of facts and conclusions of law on the adversary 2 complaint and this order ruling on the motion for attorney's fees, the court 3 directs Plaintiff Edward Franowicz to lodge a proposed final judgment in this 4 adversary proceeding within 30 days of the date of entry of this order. 5 6 IT 1S SO ORDERED. Hitt 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 5 Date: December 20, 2019 5 Robert Kwan United States Bankruptcy Judge 26 27 28