FILED JUL 08 2013 1 SUSAN M SPRAUL, CLERK U.S. BKCY. APP. PANEL 2 OF THE NINTH CIRCUIT
3 UNITED STATES BANKRUPTCY APPELLATE PANEL 4 OF THE NINTH CIRCUIT 5 In re: ) BAP No. SC-12-1272-BaPaJu ) 6 ANTONIO GALINDO, ) Bk. No. 10-12794-MM7 ) 7 Debtor. ) Adv. No. 10-90473 ______________________________) 8 ) ANTONIO GALINDO, ) 9 ) Appellant, ) 10 ) v. ) M E M O R A N D U M1 11 ) JARRED WHITED, ) 12 ) Appellee. ) 13 ______________________________) 14 Argued and Submitted on May 15, 2013 at Pasadena, California 15 Filed - July 8, 2013 16 Appeal from the United States Bankruptcy Court 17 for the Southern District of California 18 Honorable Margaret M. Mann, Bankruptcy Judge, Presiding 19 Appearances: Daniel Marshall, Esq. argued for Appellant; 20 Ellen Ezelle Turnage, Esq. of McCoy, Turnage & Robertson LLP argued for Appellee. 21 _______________________________ 22 Before: BASON,2 PAPPAS, and JURY, Bankruptcy Judges. 23 24 25 1 This disposition is not appropriate for publication. Although it may be cited for whatever persuasive value it may 26 have (see Fed. R. App. P. 32.1), it has no precedential value. See 9th Cir. BAP Rule 8013-1. 27 2 Hon. Neil W. Bason, Bankruptcy Judge for the Central 28 District of California, sitting by designation. 1 Chapter 73 debtor Antonio Galindo (“Galindo”) appeals from 2 the bankruptcy court’s judgment awarding $78,075.07 in attorney 3 fees and costs against him on a nondischargeability judgment of 4 $1,648.29. Galindo’s principal arguments are that the fees and 5 costs are excessive, disproportionate to actual damages, and 6 should not include compensation for prosecution of a state court 7 action that was commenced before this adversary proceeding. We 8 AFFIRM. 9 I. FACTS 10 In December 2009, appellee Jarred L. Whited (“Whited”), a 11 twenty-year-old Navy sailor, together with his eighteen-year-old 12 wife visited Galindo’s used car dealership, National KARS, Inc. 13 dba Southbay Preowned (“Southbay”). The Whiteds became 14 interested in a 2006 Hyundai Sonata (the “Sonata”) that they saw 15 on the lot. 16 Whited offered his wife’s Ford Focus (the “Focus”) as a 17 trade-in on the sale. At Galindo’s suggestion, the Whiteds 18 transferred the Focus to Southbay for a $1,500 credit on the 19 sale. 20 A. Galindo’s Wrongful Acts 21 Whited financed the $12,100 balance under a Retail 22 Installment Sales Contract (the “Contract”) that listed Southbay 23 as the secured creditor and seller of the Sonata. The Contract 24 stated that Southbay had ten days after the sale of the Sonata to 25 sell the Contract to a financing company or else Southbay would 26 3 Unless otherwise indicated, all chapter and section 27 references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532. All rule references are to the Federal Rules of Bankruptcy 28 Procedure, Rules 1001-9037.
- 2 - 1 carry the financing itself. 2 Galindo told Whited that Security National Automotive 3 Acceptance Corporation (“SNAAC”) had agreed to finance the sale, 4 and Galindo arranged an automatic debit to SNAAC from Whited’s 5 bank account. On December 31, 2009, SNAAC received the first 6 payment on the Contract from Whited’s bank account, although the 7 payment was not actually due until January 17, 2010. 8 In fact, SNAAC had not committed to purchase the Contract. 9 When Whited discovered that fact and other misrepresentations by 10 Galindo, he sought either to rescind the Contract or to clarify 11 that the purchase was being financed by Southbay. Whited offered 12 to set up another allotment from his military pay for Southbay’s 13 benefit for the February payment, and he asked for a payment plan 14 or invoice to reflect the status of the payments that he had 15 already made on the Contract. 16 Galindo refused these requests. Instead he insisted that 17 Whited make the January payment a second time – this time to 18 Southbay instead of SNAAC – and stated that otherwise Southbay 19 would repossess the Sonata. 20 On January 31, 2010, at Galindo’s direction, a tow company 21 repossessed the Sonata. Whited retained counsel, who wrote to 22 Galindo on February 2, 2010, asserting numerous violations of 23 California law and demanding that Galindo rescind the deal and 24 return Mrs. Whited’s Focus. Instead, Southbay foreclosed on the 25 Sonata (and sold it to another customer on March 19, 2010 for 26 slightly more than the sale price to Whited). At the end of May, 27 2010, Southbay sold the Focus to a related dealership owned by 28
- 3 - 1 Galindo (which resold it for $5,495).4 Southbay then closed its 2 business. 3 B. Whited’s Actions Against Galindo 4 Whited sued Galindo and Southbay in state court. Galindo 5 did not respond but, before Whited could obtain a default 6 judgment, Galindo filed a voluntary petition under Chapter 7 of 7 the Bankruptcy Code on July 21, 2010 (the “Petition Date”). 8 On September 28, 2010, Whited timely filed his 9 nondischargeability complaint in the bankruptcy case. On 10 January 3, 2012, the bankruptcy court conducted a trial regarding 11 Whited’s claims under Sections 523(a)(2)(A) and 523(a)(6).5 12 After a trial the bankruptcy court issued a memorandum 13 decision finding that Galindo made false statements to Whited 14 with regard to the condition of the vehicle and financing, and 15 concluding that Galindo was liable to Whited for statutory and 16 common law fraud and conversion, including under the California 17 Consumers Legal Remedies Act (the “Consumer Remedies Act”). Cal. 18 Civ. Code § 1770 et seq. The bankruptcy court ruled that the 19 debt was nondischargeable under Section 523(a)(2)(A), and that 20 because Galindo’s acts were willful and malicious, the debt was 21 also nondischargeable under Section 523(a)(6). 22 C. Attorney fees and costs 23 The bankruptcy court ruled that Galindo was liable for 24 25 4 The bankruptcy court did not evaluate any claims relating to the trade-in of the Focus because that was Mrs. Whited’s 26 separate property and she was not designated as a co-plaintiff. 27 5 The Complaint also asserted a claim for denial of discharge under Section 727(a)(2). But Whited abandoned that 28 claim before trial.
- 4 - 1 Whited’s legal expenses under California Civil Code § 1780(e). 2 In post-trial proceedings the parties filed briefs addressing the 3 dollar amount of fees and costs to be awarded. 4 Whited sought $91,600.00 in attorney fees and $2,785.07 in 5 costs. The bankruptcy court issued a tentative ruling (the 6 “Tentative Ruling”) allowing $75,440.00 in fees and $2,635.07 in 7 costs. After hearing oral argument the bankruptcy court adopted 8 the Tentative Ruling and included the fees and costs in its 9 judgment. Galindo timely filed a notice of appeal. He does not 10 challenge the underlying nondischarcheability judgment of 11 $1,648.29, but he does challenge the award of legal fees and 12 costs. 13 II. ISSUE 14 Whether the bankruptcy court abused its discretion in its 15 award of attorney fees and costs to Whited.6 16 III. JURISDICTION AND AUTHORITY 17 We have jurisdiction under 28 U.S.C. § 158. The bankruptcy 18 court had both the jurisdiction and authority to hear Whited’s 19 claims, including any award of attorney fees. Deitz v. Ford 20 (In re Deitz), 469 B.R. 11 (9th Cir. BAP 2012) (interpreting 21 Stern v. Marshall, 131 S.Ct. 2594 (2011)). See also 28 U.S.C. 22 §§ 157(b)(2)(I) & 1334(b). 23 IV. STANDARD OF REVIEW 24 We review the bankruptcy court’s award of attorney fees for 25 an abuse of discretion. Feder v.
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FILED JUL 08 2013 1 SUSAN M SPRAUL, CLERK U.S. BKCY. APP. PANEL 2 OF THE NINTH CIRCUIT
3 UNITED STATES BANKRUPTCY APPELLATE PANEL 4 OF THE NINTH CIRCUIT 5 In re: ) BAP No. SC-12-1272-BaPaJu ) 6 ANTONIO GALINDO, ) Bk. No. 10-12794-MM7 ) 7 Debtor. ) Adv. No. 10-90473 ______________________________) 8 ) ANTONIO GALINDO, ) 9 ) Appellant, ) 10 ) v. ) M E M O R A N D U M1 11 ) JARRED WHITED, ) 12 ) Appellee. ) 13 ______________________________) 14 Argued and Submitted on May 15, 2013 at Pasadena, California 15 Filed - July 8, 2013 16 Appeal from the United States Bankruptcy Court 17 for the Southern District of California 18 Honorable Margaret M. Mann, Bankruptcy Judge, Presiding 19 Appearances: Daniel Marshall, Esq. argued for Appellant; 20 Ellen Ezelle Turnage, Esq. of McCoy, Turnage & Robertson LLP argued for Appellee. 21 _______________________________ 22 Before: BASON,2 PAPPAS, and JURY, Bankruptcy Judges. 23 24 25 1 This disposition is not appropriate for publication. Although it may be cited for whatever persuasive value it may 26 have (see Fed. R. App. P. 32.1), it has no precedential value. See 9th Cir. BAP Rule 8013-1. 27 2 Hon. Neil W. Bason, Bankruptcy Judge for the Central 28 District of California, sitting by designation. 1 Chapter 73 debtor Antonio Galindo (“Galindo”) appeals from 2 the bankruptcy court’s judgment awarding $78,075.07 in attorney 3 fees and costs against him on a nondischargeability judgment of 4 $1,648.29. Galindo’s principal arguments are that the fees and 5 costs are excessive, disproportionate to actual damages, and 6 should not include compensation for prosecution of a state court 7 action that was commenced before this adversary proceeding. We 8 AFFIRM. 9 I. FACTS 10 In December 2009, appellee Jarred L. Whited (“Whited”), a 11 twenty-year-old Navy sailor, together with his eighteen-year-old 12 wife visited Galindo’s used car dealership, National KARS, Inc. 13 dba Southbay Preowned (“Southbay”). The Whiteds became 14 interested in a 2006 Hyundai Sonata (the “Sonata”) that they saw 15 on the lot. 16 Whited offered his wife’s Ford Focus (the “Focus”) as a 17 trade-in on the sale. At Galindo’s suggestion, the Whiteds 18 transferred the Focus to Southbay for a $1,500 credit on the 19 sale. 20 A. Galindo’s Wrongful Acts 21 Whited financed the $12,100 balance under a Retail 22 Installment Sales Contract (the “Contract”) that listed Southbay 23 as the secured creditor and seller of the Sonata. The Contract 24 stated that Southbay had ten days after the sale of the Sonata to 25 sell the Contract to a financing company or else Southbay would 26 3 Unless otherwise indicated, all chapter and section 27 references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532. All rule references are to the Federal Rules of Bankruptcy 28 Procedure, Rules 1001-9037.
- 2 - 1 carry the financing itself. 2 Galindo told Whited that Security National Automotive 3 Acceptance Corporation (“SNAAC”) had agreed to finance the sale, 4 and Galindo arranged an automatic debit to SNAAC from Whited’s 5 bank account. On December 31, 2009, SNAAC received the first 6 payment on the Contract from Whited’s bank account, although the 7 payment was not actually due until January 17, 2010. 8 In fact, SNAAC had not committed to purchase the Contract. 9 When Whited discovered that fact and other misrepresentations by 10 Galindo, he sought either to rescind the Contract or to clarify 11 that the purchase was being financed by Southbay. Whited offered 12 to set up another allotment from his military pay for Southbay’s 13 benefit for the February payment, and he asked for a payment plan 14 or invoice to reflect the status of the payments that he had 15 already made on the Contract. 16 Galindo refused these requests. Instead he insisted that 17 Whited make the January payment a second time – this time to 18 Southbay instead of SNAAC – and stated that otherwise Southbay 19 would repossess the Sonata. 20 On January 31, 2010, at Galindo’s direction, a tow company 21 repossessed the Sonata. Whited retained counsel, who wrote to 22 Galindo on February 2, 2010, asserting numerous violations of 23 California law and demanding that Galindo rescind the deal and 24 return Mrs. Whited’s Focus. Instead, Southbay foreclosed on the 25 Sonata (and sold it to another customer on March 19, 2010 for 26 slightly more than the sale price to Whited). At the end of May, 27 2010, Southbay sold the Focus to a related dealership owned by 28
- 3 - 1 Galindo (which resold it for $5,495).4 Southbay then closed its 2 business. 3 B. Whited’s Actions Against Galindo 4 Whited sued Galindo and Southbay in state court. Galindo 5 did not respond but, before Whited could obtain a default 6 judgment, Galindo filed a voluntary petition under Chapter 7 of 7 the Bankruptcy Code on July 21, 2010 (the “Petition Date”). 8 On September 28, 2010, Whited timely filed his 9 nondischargeability complaint in the bankruptcy case. On 10 January 3, 2012, the bankruptcy court conducted a trial regarding 11 Whited’s claims under Sections 523(a)(2)(A) and 523(a)(6).5 12 After a trial the bankruptcy court issued a memorandum 13 decision finding that Galindo made false statements to Whited 14 with regard to the condition of the vehicle and financing, and 15 concluding that Galindo was liable to Whited for statutory and 16 common law fraud and conversion, including under the California 17 Consumers Legal Remedies Act (the “Consumer Remedies Act”). Cal. 18 Civ. Code § 1770 et seq. The bankruptcy court ruled that the 19 debt was nondischargeable under Section 523(a)(2)(A), and that 20 because Galindo’s acts were willful and malicious, the debt was 21 also nondischargeable under Section 523(a)(6). 22 C. Attorney fees and costs 23 The bankruptcy court ruled that Galindo was liable for 24 25 4 The bankruptcy court did not evaluate any claims relating to the trade-in of the Focus because that was Mrs. Whited’s 26 separate property and she was not designated as a co-plaintiff. 27 5 The Complaint also asserted a claim for denial of discharge under Section 727(a)(2). But Whited abandoned that 28 claim before trial.
- 4 - 1 Whited’s legal expenses under California Civil Code § 1780(e). 2 In post-trial proceedings the parties filed briefs addressing the 3 dollar amount of fees and costs to be awarded. 4 Whited sought $91,600.00 in attorney fees and $2,785.07 in 5 costs. The bankruptcy court issued a tentative ruling (the 6 “Tentative Ruling”) allowing $75,440.00 in fees and $2,635.07 in 7 costs. After hearing oral argument the bankruptcy court adopted 8 the Tentative Ruling and included the fees and costs in its 9 judgment. Galindo timely filed a notice of appeal. He does not 10 challenge the underlying nondischarcheability judgment of 11 $1,648.29, but he does challenge the award of legal fees and 12 costs. 13 II. ISSUE 14 Whether the bankruptcy court abused its discretion in its 15 award of attorney fees and costs to Whited.6 16 III. JURISDICTION AND AUTHORITY 17 We have jurisdiction under 28 U.S.C. § 158. The bankruptcy 18 court had both the jurisdiction and authority to hear Whited’s 19 claims, including any award of attorney fees. Deitz v. Ford 20 (In re Deitz), 469 B.R. 11 (9th Cir. BAP 2012) (interpreting 21 Stern v. Marshall, 131 S.Ct. 2594 (2011)). See also 28 U.S.C. 22 §§ 157(b)(2)(I) & 1334(b). 23 IV. STANDARD OF REVIEW 24 We review the bankruptcy court’s award of attorney fees for 25 an abuse of discretion. Feder v. Lazar (In re Lazar), 83 F.3d 26 6 In his brief, Whited also requests that this Panel award 27 Whited his attorney fees for litigating this appeal. Whited may seek such fees by appropriate post-judgment proceedings before 28 the Bankruptcy Court.
- 5 - 1 306, 308 (9th Cir. 1996). A bankruptcy court abuses its 2 discretion if it bases its decision on an incorrect legal rule or 3 if its application of the correct legal standard was “illogical, 4 implausible, or without support in inferences that may be drawn 5 from the facts in the record.” Ellsworth v. Lifescape Med. 6 Assoc., P.C. (In re Ellsworth), 455 B.R. 904, 914 (9th Cir. BAP 7 2011) (quoting United States v. Hinkson, 585 F.3d 1247, 1261-62 & 8 n.21 (9th Cir. 2009) (en banc)). 9 V. DISCUSSION 10 On appeal, Galindo argues that the bankruptcy court did not 11 have authority to award attorney fees under California Civil Code 12 § 1780(e). Alternatively, Galindo argues that Whited was not the 13 prevailing party, or that the fees and costs awarded were not 14 reasonable. 15 A. The bankruptcy court had authority to award attorney fees to Whited under California law. 16 17 The “American Rule” is that attorney fees generally are not 18 recoverable by a prevailing party unless specifically allowed by 19 contract or statute. Alyeska Pipeline Serv. Co. V. Wilderness 20 Soc’y, 421 U.S. 240, 257-58 (1975); Heritage Ford v. Baroff 21 (In re Baroff), 105 F.3d 439, 441 (9th Cir. 1997). In a 22 nondischargeability action, attorney fees can be included if the 23 fees are recoverable under a state statute. Bertola v. N. Wis. 24 Prod. Co. (In re Bertola), 317 B.R. 95, 99-100 (9th Cir. BAP 25 2004); see also Deitz, 469 B.R. 11. 26 Under the Consumers Remedies Act, representations “that a 27 transaction confers or involves rights, remedies, or obligations 28 which it does not have or involve” constitute unlawful, unfair
- 6 - 1 practices. Cal. Civ. Code § 1770(a)(2) and (14). “Any consumer 2 who suffers any damage as a result of the use or employment by a 3 person of [an unlawful practice] may bring an action against that 4 person . . .” Cal. Civ. Code § 1780(a). Upon a final 5 determination, “[t]he court shall award court costs and 6 attorney’s fees to a prevailing plaintiff . . .” Cal. Civ. Code 7 § 1780(e) (emphasis added). 8 The bankruptcy court concluded, and Galindo does not 9 contest, that Whited’s claims come within the Consumer Remedies 10 Act, which mandates attorney fees to a prevailing plaintiff. 11 Therefore, if Whited is properly characterized as the prevailing 12 party, the bankruptcy court was both authorized and required to 13 award attorney fees and costs against Galindo. 14 B. Galindo misstates the facts. 15 Before addressing the merits of Galindo’s arguments, we must 16 clarify a number of factual matters that Galindo misstates. 17 Galindo assumes that approximately $27,210 of the bankruptcy 18 court’s judgment is attributable to the state court litigation. 19 Galindo challenges these fees and costs on several grounds: he 20 claims that Whited was not the prevailing party in that 21 litigation; he argues that the state court proceedings were 22 duplicative of work done in the bankruptcy court; and he claims 23 that it is virtually impossible to separate the attorney fees and 24 costs incurred in pursuing Southbay from those incurred in 25 pursuing Galindo himself. 26 It is true that according to Whited’s nondischargeability 27 complaint he had incurred attorney fees and costs of $27,210 as 28 of September 27, 2010. But Whited included only a portion of
- 7 - 1 those fees and costs in his total request to the bankruptcy 2 court. At oral argument before us Whited’s counsel confirmed 3 that Whited had omitted from his fee request any state court 4 litigation that might be duplicative and any fees incurred in 5 pursuing Southbay. We calculate, based on the daily time and fee 6 records submitted to the bankruptcy court, that the fees 7 requested through September 27, 2010 add up to an aggregate of 8 $14,080, not $27,210. 9 Moreover, most of that $14,080 involves nondischargeability 10 research and other matters that appear to be bankruptcy-related. 11 Only the initial, one-page invoice appears to include any 12 nonbankruptcy matters. That invoice is for $6,040, and after 13 deducting the one bankruptcy matter on that invoice – $1,120 to 14 “[d]raft motion to lift stay” – it appears that the dollar amount 15 sought by Whited in connection with the state court litigation 16 was only $4,920 ($6,040 - $1,120 = $4,920). 17 As for Galindo’s assertion that Whited was not the 18 prevailing party in the state court litigation, it is true that 19 Whited’s claims against Galindo eventually were dismissed by the 20 state court. But that appears to be because the litigation was 21 pursued in the bankruptcy court rather than the state court. 22 Galindo has not shown how the state court dismissal in any way 23 reflects negatively against Whited. 24 Galindo asserts that the fees and costs incurred in 25 connection with the state court litigation must have been 26 duplicative, but he has not pointed us to anything in the 27 excerpts of record to support that assertion. We are not 28 required to scour the record to find support for his arguments.
- 8 - 1 See Mitchel v. Gen. Elec. Co., 689 F.2d 877, 878-79 (9th Cir. 2 1982). 3 In any event we have thoroughly reviewed the daily time 4 records and they do not show any duplication. To the contrary, 5 they reflect non-duplicative tasks that are equally necessary to 6 litigation in either state court or bankruptcy court. For 7 example, the daily time records include an initial meeting 8 between the Whiteds and their attorney, drafting damage 9 calculations, drafting a notice to the dealership, reviewing 10 documents from the Department of Motor Vehicles, drafting a time 11 line of events, and researching the statutes and case law 12 relevant to the claims against Galindo. All of those tasks would 13 have been properly undertaken in contemplation of filing a 14 nondischargeability complaint if they had not already been done 15 in connection with the state court litigation. Likewise, the 16 minimal time billed for initial drafting of the state court 17 complaint is not duplicative because the same claims had to be 18 litigated in the nondischargeability action. In other words, 19 Galindo has not supported his factual assertions that any charges 20 were duplicative or unnecessary. 21 With these factual clarifications, we turn to the legal 22 merits of Galindo’s arguments. 23 C. The bankruptcy court did not abuse its discretion in determining that Whited was the prevailing party on 24 most issues. 25 Galindo argues that Whited’s prosecution of the state court 26 action did not “directly contribute” to resolution of the 27 nondischargeability litigation. Therefore, he claims, Whited was 28 the prevailing party for purposes of any fees relating to the
- 9 - 1 state action. 2 Galindo has not established that legal fees and costs are 3 only recoverable if they “directly contribute[d]” to the 4 bankruptcy litigation. Fees for preparing a demand letter to 5 Galindo, for example, would appear to be recoverable under the 6 Consumer Remedies Act regardless of whether that letter directly 7 contributed to the bankruptcy litigation. 8 Galindo relies on a case that involved parallel efforts by 9 both a private individual and an attorney general, each on behalf 10 of a government entity. Ciani v. San Diego Trust & Sav. Bank, 11 25 Cal. App. 4th 563 (1994). Unlike the parties in Ciani, Whited 12 was not a party to two matters that proceeded in parallel. 13 Rather, Whited commenced his claims against Galindo in state 14 court; that action was stayed by the automatic stay of 15 Section 362(a) when Galindo filed his chapter 7 petition; and 16 Whited successfully concluded his litigation in the bankruptcy 17 court by obtaining a judgment against Galindo. 18 It is true that Whited did not prevail on every issue in the 19 state court and the bankruptcy court. But the bankruptcy court 20 had broad discretion in determining whether to recognize Whited 21 as the prevailing party based on “equitable considerations” when 22 it was “clear that [he] has otherwise achieved [his] main 23 litigation objective.” Graciano v. Robinson Ford Sales, Inc., 24 144 Cal. App.4th 140, 151 (2006) (quoting Castro v. Super. Ct., 25 116 Cal. App.4th 1010, 1019-20 (2004)). 26 Moreover, as discussed below, the bankruptcy court did 27 disallow some fees for issues on which it found that Whited was 28 not the prevailing party. For all of these reasons, Galindo has
- 10 - 1 not shown any abuse of discretion in the bankruptcy court’s 2 treatment of Whited as the prevailing party on most issues. 3 D. The award should not be limited as if it were a default judgment in San Diego Superior Court. 4 5 Galindo asserts a frivolous argument that the attorney fee 6 award should be limited by analogy to a San Diego Superior Court 7 local rule regarding default judgments, apparently because the 8 state court action only advanced to the point at which Whited 9 requested a default judgment. The Superior Court’s local rule 10 provides that “[w]henever the obligation sued upon provides for 11 the recovery of a reasonable attorney fee, the fee in each 12 default case may be fixed pursuant to [a] schedule.” San Diego 13 Super. Ct. R. 2.5.10 (emphasis added).7 14 First, as shown by the emphasized text, the Superior Court’s 15 local rule is discretionary. Second, a local Superior Court rule 16 does not have the force of California law and is not binding on 17 the federal bankruptcy court. Third, the adversary proceeding in 18 the bankruptcy court did not result in a default judgment, so by 19 its own terms the rule is inapplicable. 20 Galindo appears to acknowledge all of these things but he 21 suggests that the Superior Court rule should be used as a 22 guideline because the Superior Court action was dismissed and, he 23 asserts, it did not contribute to the resolution of the adversary 24 proceeding. He provides no analysis or citations to the excerpts 25 of record and, as explained above, our own analysis contradicts 26 27 7 The local rule includes a schedule in which a court may award $375 in attorney fees for a default judgment in the amount 28 of $1,501 to $2,000.
- 11 - 1 Galindo’s factual assertions. He has not established any reason 2 why this inapplicable, discretionary Superior Court rule should 3 limit in any way the fee award in this case. 4 E. Galindo has not established that the award of actual and reasonable fees and costs was an abuse of 5 discretion simply because of the relatively small amount of actual damages. 6 7 Galindo’s most appealing argument is that the award of fees 8 and costs is very large in proportion to actual damages. He 9 cites various cases in which fees were reduced because the number 10 of hours spent were not reasonable in comparison with the results 11 obtained. See Winiger v. SI Mgmt, LP, 301 F.3d 1115, 1125 (9th 12 Cir. 2002); Abouab v. San Francisco, 141 Cal. App. 4th 643 13 (2006); Choate v. Cnty. of Orange, 86 Cal. App. 4th 312, 324 14 (2000); Sarah Morrison v. Vineyard Creek, 193 Cal. App. 4th 1254 15 (2011).8 16 Despite its initial appeal, this argument fails for two 17 alternative reasons. First, Galindo has not established that the 18 19 8 Galindo also cites to a California Supreme Court case for the proposition that attorney fees should be denied based on a 20 plaintiff’s minimal success. Serrano v. Unruh, 32 Cal.3d 621, 635-36 (1982). The court in Serrano did not address this issue 21 and Galindo appears to have simply made up an alleged quotation from this case regarding a “grossly inflated attorney fee 22 request.” Our own research reveals that the quoted language appears in 23 a different case - Chavez v. Los Angeles, 47 Cal.4th 970, 976 (2010) - but that case is likewise distinguishable. In Chavez 24 the California Supreme Court affirmed the trial court’s exercise of its discretion in denying a fee request of $870,935.50 on a 25 jury verdict of $1,500 in economic damages and $10,000 in noneconomic damages, which was “minimal success” in view of the 26 claims asserted in that case. In this case, in contrast, (a) Whited’s success was not “minimal” in relation to the claims 27 at issue, (b) the bankruptcy court exercised its discretion to award, not deny, most of the requested fees, and (c) the total 28 fees are a fraction of the dollar amount sought in Chavez.
- 12 - 1 ratio of damages to fees is relevant under the applicable 2 statute. The Consumers Remedies Act provides without any 3 qualification that “[t]he court shall award court costs and 4 attorney’s fees to the prevailing plaintiff.” Cal. Civ. Code 5 § 1780(e). The plain language of the statute does not include 6 any requirement that the fees be proportional to actual damages. 7 Second, assuming for the sake of argument that 8 proportionality were relevant under the statute, the bankruptcy 9 court already took that into consideration. It looked to an 10 analogous statute – one that, if anything, imposes more stringent 11 requirements than the Consumer Remedies Act to qualify for an 12 award of attorney fees and costs. The analogous statute provides 13 that a court may award attorney fees to a successful party “in 14 any action which has resulted in the enforcement of an important 15 right affecting the public interest . . . .” Cal. Civ. Proc. 16 Code § 1021.5 (emphasis added). The California Supreme Court 17 interpreted this statute in Graham v. DaimlerChrysler Corp., 18 34 Cal. 4th 553 (2004). In that case the purchasers of the 19 defendant’s trucks brought an action for breach of warranty 20 alleging that the defendant’s marketing materials included false 21 statistics. Id. at 561. The California Supreme Court affirmed 22 an award of fees under California Civil Code § 1021.5 – a 23 codification of the “private attorney general” doctrine – on the 24 basis that the lawsuit implicated an issue of “public safety” 25 because the results of the suit would benefit thousands of 26 customers. Id. at 578. 27 The bankruptcy court observed that Galindo’s situation 28 involves similar public interests:
- 13 - 1 Every customer that goes into a car dealership has been given a plethora of 2 rights to insure that the transaction is treated fairly between the dealer and the 3 consumer. And I found in numerous ways that Mr. Galindo had overlooked or intentionally 4 violated those requirements. . . . this is exactly the kind of case where a consumer 5 attorney basically needs the opportunity to have the attorney’s fees award be 6 disproportional to the amount of the loss, because otherwise these kinds of cases would 7 never be brought. 8 Status Conf. Hr’g Tr. 7:16-8:5, March 1, 2012. 9 We agree. Nothing in the excerpts of record contradicts 10 Whited’s assertions before the bankruptcy court that most 11 consumers lack the funds for this type of litigation. As 12 Whited’s counsel argued, without fee awards the remedial purpose 13 of the Consumer Remedies Act will fail. 14 The bankruptcy court also analogized to Hayward v. Ventura 15 Volvo, 108 Cal. App. 4th 509 (2003) (award of attorney fees was 16 appropriate to deter unfair and deceptive business practices). 17 Galindo attempts to distinguish Hayward because it involved a 18 civil penalty, and fees and costs that were approximately double 19 the damages award, whereas he points out that the judgment on 20 this appeal awarded fees and costs that are approximately 21 47 times the actual damages. But Galindo reads too much into 22 these differences. Hayward illustrates that when public 23 interests are at stake it is appropriate to award substantial 24 attorney fees and costs notwithstanding relatively small actual 25 damages. Hayward supports the bankruptcy court’s ruling. 26 In sum, Galindo has not established any abuse of discretion 27 in awarding legal fees and costs that are large in proportion to 28 the actual damages. As the bankruptcy court noted, the
- 14 - 1 California legislature has established a statutory scheme 2 intended to protect consumers when dealing with businesses such 3 as used car dealerships. Awarding actual, reasonable attorney 4 fees incurred in vindicating those consumer rights is entirely 5 appropriate. 6 F. The bankruptcy court has already reduced Whited’s legal fees and costs as appropriate. 7 8 Galindo argues that Whited was not successful on every issue 9 presented to the bankruptcy court, and therefore the award should 10 be reduced. The bankruptcy court already reduced the fees and 11 costs, and Galindo has not shown why any greater reduction would 12 be appropriate. 13 For example, the bankruptcy court’s Tentative Ruling, which 14 it subsequently adopted in its Judgment, reduced fees “related to 15 the motion for relief from the automatic stay totaling $5,240 16 (entries dated 8/15/10, 9/2/10, 9/9/10, 9/16/10, 11/2/10, 17 12/2/10, 12/15/10, 12/20/10) and costs of $150 because Whited did 18 not prevail in that matter and it is not directly related to his 19 prevailing cause of action.” Additionally, the bankruptcy court 20 reduced fees for the following reasons: 21 The Court also rejected the attorney fees related to preparing fee declaration $2,560 22 (entries dated 2/8/12, 2/9/12, 3/1/12). The Court was provided no authority that these 23 fees are customarily included in the award. 24 The Court deducted attorneys fees for work that appeared to be largely administrative 25 since it appeared the work could have been done by clerical staff. The reductions 26 totaled $3,360 for entries dated 4/8/11, 7/11/11, 11/3/11, 11/4/11, and 11/16/11. 27 Finally, the Court reduced the attorney fees 28 by $5,000 because the Court believes that
- 15 - 1 some of the work that Whited’s attorney performed at a rate of $400 per hour should 2 have been delegated to a less expensive associate. 3 4 The bankruptcy court’s careful review and adjustments to the 5 fees and costs are more than adequate to support its award. 6 Galindo has not established any abuse of discretion in not making 7 further reductions. 8 VI. CONCLUSION 9 Under California law, the bankruptcy court had both the 10 authority and the mandate to award attorney fees and costs to 11 Whited. Galindo has not established any abuse of discretion in 12 the amount awarded, particularly in view of the important public 13 interests in vindicating consumer rights. 14 The judgment is AFFIRMED. 15 16 17 18 19 20 21 22 23 24 25 26 27 28
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