Linde, LLC v. Valley Protein, LLC

District Court, E.D. California·Decided October 3, 2019·No. 1:16-cv-00527·Unknown

Opinion

LINDE, LLC, No. 1:16-cv-00527-DAD-EPG Plaintiff, v. ORDER GRANTING PLAINTIFF’S MOTION FOR ATTORNEYS’ FEES (Doc. No. 80) Defendant.

VALLEY PROTEIN, LLC, Counter-claimant, v. LINDE, LLC, Counter-defendant.

This matter is before the court on the motion for attorneys’ fees filed by plaintiff and counter-defendant Linde, LLC (“Linde”). (Doc. No. 80.) On October 1, 2019, that motion came before the court for hearing. Attorney Adam Scott Hamburg appeared on behalf of Linde. No appearance was made on behalf of defendant and counter-claimant Valley Protein, LLC (“Valley Protein”) but a statement of non-opposition was filed prior to the hearing. Having considered Linde’s briefing, and for the reasons that follow, Linde’s motion will be granted. The parties are familiar with the factual background of this case, which need not be repeated here. On July 11, 2019, the undersigned granted in part Linde’s motion for summary judgment. (Doc. No. 76.) As relevant here, the court granted summary judgment in Linde’s favor as to all claims and counter-claims except Linde’s claim against Valley Protein for breach of the implied covenant of good faith and fair dealing. (Id. at 40–41.) Subsequently, Linde filed an application for dismissal as to that remaining cause of action (Doc. No. 77), which the court granted on August 6, 2019. (Doc. No. 78.) Judgment against Valley Protein was entered that same day. (Doc. No. 79.) Linde filed the instant motion for attorneys’ fees on August 20, 2019. (Doc. No. 80.) In it, Linde seeks a total of $246,290.00 in attorneys’ fees, plus any additional fees that may be incurred in connection with the pending motion. (Id. at 7.) Linde argues that it is entitled to attorneys’ fees under the contracts at issue in this case and California Civil Code § 1717. As noted above, on September 26, 2019, Valley Protein filed a statement of non-opposition to the motion. (Doc. No. 88.) “Rule 54 provides a federal procedural mechanism for moving for attorney’s fees that are due under state law.” Cheffins v. Stewart, 825 F.3d 588, 597 (9th Cir. 2016). Where, as here, a federal district court exercises jurisdiction over a state law claim, the law of the forum state regarding the award of attorneys’ fees should generally be followed “so long as state law does not run counter to a valid federal statute or rule of court[.]” MRO Commc’ns, Inc. v. Am. Tel. & Tel. Co., 197 F.3d 1276, 1281 (9th Cir. 1999) (internal quotation marks omitted). Awards of attorneys’ fees in actions on a contract are governed by California Civil Code § 1717. That provision provides, in relevant part, that ///// 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. Cal. Civ. Code § 1717(a). The primary purpose of that provision, as recognized by the California Supreme Court, is “to establish mutuality of remedy when a contractual provision makes recovery of attorney fees available to only one party, and to prevent the oppressive use of one-sided attorney fee provisions.” Trope v. Katz, 11 Cal. 4th 274, 285 (1995). Thus, § 1717 is construed broadly, and “reflects legislative intent that equitable considerations must prevail over both the bargaining power of the parties and the technical rules of contractual construction.” Hjelm v. Prometheus Real Estate Grp., 3 Cal. App. 5th 1155, 1168 (2016) (quoting Int’l Indus., Inc. v. Olen, 21 Cal. 3d 218, 224 (1978)). To that end, courts have recognized that § 1717 applies “in a variety of circumstances extending beyond a direct breach of contract claim.” Id. at 1170; see also In re Baroff, 105 F.3d 439, 442–43 (9th Cir. 1997) (“California courts liberally construe ‘on a contract’ to extend to any action as long as an action involves a contract and one of the parties would be entitled to recover attorney fees under the contract if that party prevails in its lawsuit.”) (internal quotation marks and brackets omitted); Santisas v. Goodin, 17 Cal. 4th 599, 611 (1998) (noting that § 1717 applies “when a person sued on a contract containing a provision for attorney fees to the prevailing party defends the litigation by successfully arguing the inapplicability, invalidity, unenforceability, or nonexistence of the same contract”) (internal quotation marks omitted). Several preliminary issues must be addressed before reaching the ultimate question of the amount of attorneys’ fees to be awarded. First is the question of which state’s law applies here. Ordinarily, “[a] federal court sitting in diversity applies the law of the forum state regarding an award of attorneys’ fees.” Kona Enters., Inc. v. Estate of Bishop, 229 F.3d 877, 883 (9th Cir. 2000). Here, however, that analysis is less straightforward because the 2014 Product Supply Agreement entered into between Linde and Valley Protein (the “2014 Agreement”) contained a choice-of-law provision. (Doc. No. 52-2 at 38.) That provision stated that “New Jersey law governs all matters pertaining to the validity, construction, and effect of this agreement, without giving effect to any principles or rules of conflict of laws that apply the laws of another jurisdiction.” (Id.) Because California law embodies a “strong policy favoring enforcement” of contractual choice-of-law provisions, Nedlloyd Lines B.V. v. Superior Court, 3 Cal. 4th 459, 465 (1992), the court first turns to New Jersey law to determine the availability of attorneys’ fees in this case. In New Jersey, “the procedural law of the forum state applies even when a different state’s substantive law must govern.” N. Bergen Rex Transp., Inc. v. Trailer Leasing Co., 730 A.2d 843, 848 (N.J. 1999). Moreover, the Supreme Court of New Jersey has determined that “attorneys’ fees are a matter of practice and procedure, rather than of substantive law.” Id. Thus, because (1) California is the forum state to this action, (2) the 2014 Agreement states that New Jersey law applies to interpretation of the contract, (3) New Jersey law dictates that the procedural law of the forum state applies, and (4) entitlement to an award of attorneys’ fees is treated as procedural rather than substantive under New Jersey law, it follows that California law regarding attorneys’ fees applies to this motion. California Civil Code § 1717 determines the entitlement to an award of attorneys’ fees in an action “on a contract.” As noted already, that provision is interpreted broadly, and provides for an award of attorneys’ fees even where the cause of action is not specifically a claim for breach of contract. See In re Baroff, 105 F.3d at 442–43; Kachlon v. Markowitz, 168 Cal. App. 4th 316, 348 (2008) (concluding that an action seeking declaratory and injunctive relief to quiet title was “on a contract” for purposes of § 1717). To be sure, in an action asserting both tort and contract claims, “section 1717 applies only to attorney fees incurred to litigate the contract claims.” Santisas v. Goodin, 17 Cal. 4th 599, 615 (1998). But where, as here, the litigation involved related contract and tort claims, a court need not attempt to apportion attorneys’ fees according to the particular caus

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Linde, LLC v. Valley Protein, LLC, (E.D. Cal. 2019).

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