(PS) DeMartini v. DeMartini

Opinion

TIMOTHY P. DEMARTINI, et al., No. 2:14-cv-02722-DJC-CKD

Plaintiffs, v. MICHAEL J. DEMARTINI, et al., Defendants.

Before the Court is Plaintiffs Timothy DeMartini and Margie DeMartini’s Motion

for Allocation of Statutory Partition Costs. Plaintiffs argue they have incurred

attorney’s fees and costs while litigating this partition action for work that benefits all

Parties in common. Plaintiffs argue that, under California law, these fees and costs

must be apportioned among the Parties. Defendants Michael DeMartini and Renate

DeMartini oppose the apportionment of any fees and costs arguing they are excessive and the work performed by Plaintiffs’ counsel did not serve the common benefit. Having considered the Parties’ briefings and arguments, the Court finds that apportionment of Plaintiffs’ fees and costs is appropriate as they compensate Plaintiffs’ counsel for work performed for the Parties’ common good and are reasonable. Accordingly, the Court will order the fees and costs be apportioned according to the Parties’ property interests in the subject property.

The Parties and Court are well acquainted with the factual background of this

partition action as laid out in the Court’s prior orders. (See ECF No. 483 at 2–4; ECF

No. 529 at 1–6.) On December 3, 2024, Plaintiffs filed a Motion for Allocation of

Statutory Partition Costs. (Mot. (ECF No. 538).) The Motion is fully briefed and was

taken under submission by the Court pursuant to Local Rule 230(g). (ECF No. 545.)

California Code of Civil Procedure section 874.040 governs the apportionment

of costs in a partition action. It provides: “Except as otherwise provided in this article,

the court shall apportion the costs of partition among the parties in proportion to their

interests or make such other apportionment as may be equitable.” Code Civ. Proc.

§ 874.040. Allowable costs are set forth in Code of Civil Procedure section 874.010,

which include: “(a) [r]easonable attorney’s fees incurred or paid by a party for the

common benefit;” “(b) [t]he fee and expenses of the referee;” “(c) [t]he compensation

provided by contract for services of a surveyor or other person employed by the

referee in the action;” “(d) [t]he reasonable costs of a title report procured pursuant to

section 872.220;” and “(e) [o]ther disbursements or expenses determined by the court

to have been incurred or paid for the common benefit.” Id. § 874.010.

As California courts have explained, “[t]here is no ambiguity in the language of

section 874.040. It simply states that the trial court must apportion the costs incurred

in a partition action based upon either the parties’ interests in the property, or

equitable considerations.” Lin v. Jeng, 203 Cal. App. 4th 1008, 1025 (2012) (emphasis

added). Thus, while section 874.040 gives courts discretion to apportion costs based

upon equitable considerations, it also mandates that apportionment occur. Id.

“The costs of partition as apportioned by the court may be ordered paid in whole or in part prior to judgment.” Code Civ. Proc. § 874.110. Thus, courts may apportion partition costs before the entry of the final judgment on partition. “Any costs that remain unpaid shall be included and specified in the judgment.” Id.

Plaintiffs ask the Court to apportion their attorney’s fees and costs incurred from

March 2019 through September 2024 for the partition of the 12757, 12759, and

12761 Loma Rica Drive property (“Property”), which is jointly owned by Plaintiffs and

Defendants. (Mot. at 13.) Plaintiffs claim $247,263.25 in fees and $4,115.12 in law

firm costs. (Id. at 17.) Plaintiffs ask that the Court allocate those costs in proportion to

the Parties’ respective ownership interest in the Property, i.e., 50% to Plaintiffs and

50% to Defendants, or as the Court may deem equitable. (Id.)

As discussed below, the Court finds the claimed fees and costs are for the

common benefit and are largely reasonable. See Code Civ Proc. § 874.010(a). Thus,

the Court will apportion the fees and costs according to the Parties’ interests in the

Property.

I. Plaintiffs’ Motion is Not Barred by the Court’s Prior Denial of Plaintiffs’ Fee

Request

As a preliminary matter, Defendants argue that Plaintiffs’ request for

apportionment of partition costs is barred under the “law of the case” doctrine as the

Court previously denied Plaintiffs’ request for fees following trial in April 2018. (Opp’n

Mot. (ECF No. 543) at 2–4.) The Court disagrees. “The law of the case doctrine

ordinarily precludes a court from reexamining an issue previously decided by the

same court or a higher court in the same case.” S. Or. Barter Fair v. Jackson Cnty., 372

F.3d 1128, 1136 (9th Cir. 2004). Here, the prior request for fees was denied on the

basis that the request was untimely under Local Rule 293(a) because the request was

brought over a year after the Court issued a “final” Interlocutory Judgment (ECF No.

361) ordering the Property to be partitioned in kind. (See ECF No. 428;) see also E.D.

Cal. L.R. 293(a) (“Motions for awards of attorneys’ fees to prevailing parties pursuant to statute shall be filed not later than twenty-eight (28) days after entry of final judgment.”). However, the partition costs presented for allocation here are not prevailing parties’ fees; rather, they are the costs of implementing the Court’s Interlocutory Judgment, which inure to the benefit of all Parties. Indeed, the costs

Plaintiffs seek do not overlap with the costs sought in their prior motion, as the costs

presented here were incurred after the last fees motion. Further, the Ninth Circuit has

determined that the Interlocutory Judgment was not, in fact, a “final judgment,” such

that Plaintiffs’ prior request for fees was likely not untimely. (ECF 473 at 3.) Thus, the

Court’s prior denial of fees does not affect the timeliness of this current request, as the

basis for that decision has been effectively overruled, and Plaintiffs seek to apportion

costs for the common benefit, not their own prevailing party fees.

Additionally, Plaintiffs seek clarification as to whether the Court’s Partition

Order (ECF No. 529), which modified the Court’s prior Interlocutory Judgment and

orders partition by sale under California Code of Civil Procedure section 872.820, can

“be considered a ‘final judgment’ of sale such that the time constraints imposed by

Local Rule 239(a) [sic] for a partition costs allocation motion apply.” (Mot. at 1.) The

Court does not consider the Partition Order a final judgment for purposes of Local

Rule 293(a), as it contemplates numerous further steps that must be taken before the

Property can be sold and acknowledges that sale might not be possible if

environmental contamination on the Property ultimately proves too severe or costly to

remediate. (See ECF No. 529.) Thus, the Partition Order does not “end the litigation

on the merits and leave nothing for the court to do but execute the judgment.” Am.

Ironworks & Erectors, Inc. v. N. Am. Const. Corp., 248 F.3d 892, 897 (9th Cir. 2001)

(quoting Catlin v. United States, 324 U.S. 229, 233 (1945)).

Accordingly, Plaintiffs’ present Motion is timely and is not precluded by any

prior order of this Court.

II. The Costs and Fees are for the Common Benefit

Plaintiffs argue the claimed fees and costs were incurred while defending Plaintiffs’ and Defendants’ ownership interests and partition rights in the Property and were thus incurred “for the common benefit.” (Mot. at 13–14.) Specifically, Plaintiffs explain that the Court held a bench trial on Plaintiffs’ partition claim in April 2018. (Id. at 6.) During trial, Defendants asserted that a partnership, not the Parties, owned the

Property. (Id. at 6.) The Court rejected that assertion, finding there was no evidence

the Property was owned by a partnership, and, after trial concluded, issued an

Interlocutory Judgment ordering the Property be partitioned in kind according to

Plaintiffs’ and Defendants’ respective fifty percent ownership interests. (Id. at 6–8.)

Defendants appealed that Interlocutory Judgment in March 2019, arguing the

judgment was inappropriate because they had been precluded from presenting

evidence the Property was owned by a partnership at trial. (Id. at 7–8, 13–14.) That

appeal was dismissed. (Id. at 8.) Defendants then moved to set aside the

Interlocutory Judgment, again raising the argument that a partnership, not the Parties,

owned the Property, and that they had been precluded from providing evidence of

that at trial. (Id. at 8.) The Court denied that motion on the basis that Defendants had

been provided ample opportunity to provide evidence and argument at trial that the

Property was owned by a partnership, but that the Court had not deemed that

evidence credible. (Id. at 8–9.) Defendants subsequently moved for reconsideration

of that order, which the Court denied. (ECF Nos. 489, 497.) Thus, Plaintiffs argue that,

although Plaintiffs and Defendants hold title in the Property and have a right to

partition of the Property according to their property interests, “Defendants have

sought to defeat that title interest for the entirety of this case from inception until

present.” (Mot. at 9, 13–14.)

The Court finds the claimed attorney’s fees and costs are for the common

benefit. A review of the billing records provided by Plaintiffs’ counsel demonstrates

that the hours charged involve work on the appeal and motions mentioned above, as

well as communications with the partition referee appointed by the Court in this

matter, Charles R. Farrar. (See Billing Statements (ECF No. 538-2).) As such, the billing records demonstrate Plaintiffs’ post-trial work from March 2019 through September 2024 has been aimed at preserving both Plaintiffs’ and Defendants’ ownership interests in the Property as well as advancing partition of the Property. This

constitutes work for the common benefit.

Defendants protest that a good deal of Plaintiffs’ post-2019 work in this matter

cannot be considered for the “common benefit” because Plaintiffs have consistently

petitioned the partition referee and this Court to partition the Property by sale rather

than in kind. (Opp’n Mot. at 4.) Defendants argue that this work has been solely to

promote Plaintiffs’ interests, not the interests of all Parties. (Id.)

First, this argument fails to rebut Plaintiffs’ argument that at least some of the

fees and costs claimed were incurred defending both Plaintiffs’ and Defendants’

interests in the Property, work which was for the common benefit. Second, that

Plaintiffs advocated for partition by sale rather than in kind during the partition

process does not indicate their work was not for the common benefit. As courts have

explained, “the ‘common benefit’ in a partition action is the proper distribution of the

‘respective shares and interests in the said property by the ultimate judgment of the

court.’” Orien v. Lutz, 16 Cal. App. 5th 957, 967 (2017) (quoting Capuccio v. Caire,

215 Cal. 518, 528 (1932)). “This sometimes will require that controversies be litigated

to correctly determine those shares and interests, but this ultimately can be for the

common benefit as well.” Id. (internal citations and quotations omitted). “That fact

that a party resists the partition does not change this.” Id.

“[D]efendants are nonetheless protected from plaintiffs who bring unfounded

claims or otherwise drive up costs unnecessarily, just as plaintiffs are protected from

unscrupulous defendants.” Id. at 968. Courts may adjust the allocation of costs if, “for

example, fees are incurred for purposes that unduly exacerbate the dispute or do not

provide a common benefit to all parties.” Id. For instance, “a court may find that fees

incurred advocat[ing] a position of limited merit are not for the common benefit and should be borne by the party pressing such spurious matters.” Id. (alteration in original) (quotations omitted). However, the Court does not find that to be the case here. When the Court appointed the partition referee to oversee the partition process, the Court asked the partition referee to determine, as a first step, the most

equitable method of partition, whether by sale or in kind. (See ECF No. 529 at 2–3.)

The referee has proceeded to do just that by consulting with the Parties and other

experts concerning the appropriate method of partition. (See id. at 3–6.) Plaintiffs

should not be faulted for advocating for partition by sale during this process, just as

Defendants cannot be faulted for advocating partition in kind, as this advocacy has

been essential to determining the proper method of partition here.

Thus, Plaintiffs’ claimed fees and costs are for the common benefit.

III. The Costs and Fees are Largely Reasonable

Plaintiffs also argue that the $247,263.25 in attorney’s fees and $4,115.12 in law

firm costs are reasonable. (Mot. at 15–16.) Plaintiffs’ counsel Peter Kleinbrodt and

Christian Kemos state that they performed a detailed review of their billing records

prior to filing the Motion, and removed any fees that did not relate to the partition

action. (Id. at 15.) Counsel also state they excluded fees not for the common benefit,

adjusted fees that were for the common benefit by a reduced hourly rate, and

excluded legal work that was performed but not charged for. (Id.) Finally, counsel

note that the hourly rates charged by Kleinbrodt and Kemos, $450 and $325

respectively, are substantially lower than what they customarily charge and lower than

the market rate for their services. (Id.) Counsel provide evidence of both their hours

worked and the reasonableness of their hours. (See Kleinbrodt Decl. (ECF No. 538-1)

(attesting to reasonableness of hourly rate); Billing Statements.)

Defendants argue the fees and costs claimed are not reasonable because many

of the billing entries are too vague to determine if they can be considered for the

common benefit. (Opp’n Mot. at 4–7.) The Court does not generally fault Plaintiffs’

counsel for the lack of detail in those entries, as the Court recognizes a certain level of abstraction is required to preserve attorney-client privilege. The Court also credits counsel’s representation that they reviewed the billing entries in detail to exclude fees not for the common benefit. However, the Court will impose a small 10% reduction to counsel’s claimed fees to account for any vague entries that may not correspond to

fees for the common benefit and that were missed in counsel’s review. See Orien, 16

Cal. App. 5th at 968 (courts may adjust allocation of fees to the extent they do not

provide a common benefit to all parties or are not reasonable including by “setting

the fee amounts and determining the appropriate allocation”); see also Gonzalez v.

City of Maywood, 729 F.3d 1196, 1203 (9th Cir. 2013) (A district court can impose a

small reduction no greater than 10% based on its exercise of discretion and without a

more specific explanation).

Defendants also argue Plaintiffs claim fees and costs for work that was not for

the common benefit, such as work on the appeal, work advancing Plaintiffs’ position

with respect to the partition, and internal communications. (Opp’n Mot. at 6–8.) As

discussed above in Section II supra, the Court does not find these arguments

compelling. Plaintiffs have adequately demonstrated their work benefits the Parties’

common good.

Thus, the Court will apportion $222,536.93 (i.e., $247,263.25 x .9) in attorney’s

fees and $4,115.12 in law firm costs among the Parties.

IV. Pending Appeal

Finally, Defendants argue that they have appealed this Court’s Partition Order,

and that this “appeal raises significant issues, including the trial court’s alleged failure

to follow the Ninth Circuit’s mandate regarding Defendants’ right to a jury trial on the

partnership evidence,” resolution of which “will directly impact the final outcome of

the partition action, including the propriety of any fee award.” (Opp’n Mot. at 8.)

Defendants argue that the Court should stay any ruling on Plaintiffs’ Motion pending

this appeal under Federal Rule of Civil Procedure 54. (Id.)

The Court disagrees. First, Rule 54(d) governs the timing for a prevailing party to seek attorney’s fees after final judgment in a case. Plaintiffs here seek apportionment of partition costs, not prevailing party attorney’s fees. In addition, as discussed in Section I supra, the Court’s Partition Order was not a final judgment. Second, even assuming Rule 54 applied, Defendants have not made the required showing for astay. “If an appeal on the merits of the case is taken, the court may rule onthe claim for fees, may defer its ruling on the motion, or may deny the motion without prejudice, directing ... anew period for filing after the appeal has been resolved.” Fed. R. Civ. P. 54, Advisory Committee Note (1993). Courts consider four factors to determine whether to stay awarding attorney’s fees and costs pending appeal: (1) “whether the stay applicant has made a strong showing that he is likely to succeed on the merits;” (2) “whether the applicant will be irreparably injured absent a stay;” (3) “whether issuance of the stay will substantially injure the other parties interested in the proceeding;” and (4) “where the public interest lies.” Hilton v. Braunskill, 481 U.S. 770, 776 (1987). Defendants have failed to address any of these factors. Accordingly, the Court will not stay its ruling on Plaintiffs’ Motion. In accordance with the above, it is hereby ORDERED that Plaintiffs’ Motion for Allocation of Statutory Partition Costs (ECF No. 538) is GRANTED. The Court orders that the $222,536.93 in attorney's fees and $4,115.12 in law firm costs incurred by Plaintiffs shall be apportioned among the Parties according to their ownership interests in the Property, i.e., 50% to Plaintiffs and 50% to Defendants. IT IS SO ORDERED. Dated: _April 1, 2025 Donel J CDbnettr Hon. Daniel alabretta UNITED STATES DISTRICT JUDGE DJCa - DeMartini1 4ev2722. MotAllocationPartitionCosts