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Signatures Network, Inc. v. Estefan

January 24, 2005

SIGNATURES NETWORK, INC., PLAINTIFF,
v.
GLORIA ESTEFAN AND ESTEFAN ENTERPRISES, INC., DEFENDANTS.



REPORT AND RECOMMENDATION ON DEFENDANTS' MOTION FOR AN AWARD OF ATTORNEYS' FEES AND COSTS

On July 30, 2004, the Honorable Saundra Brown Armstrong granted defendants' motion for summary judgment. After judgment was entered defendants moved for an award of attorneys' fees and costs. Judge Armstrong referred that motion to me for a report and recommendation.

The underlying dispute arose out of a "Merchandising Licensing Agreement" entered into by defendant Estefan Enterprises, Inc. and plaintiff's predecessor, Sony Signatures, Inc., and the amendments thereto ("Agreement").*fn1 On October 20, 2003, Estefan Enterprises, Inc. and Gloria Estefan (collectively "the Estefan parties") filed an action in the United States District Court for the Southern District of Florida ("the Florida action") against Signatures Network, Inc. ("Signatures"). The Estefan parties sought a declaratory judgment that they were not obligated to repay unrecouped advances under the Agreement. Four days later, Signatures filed this action ("the California action") seeking to recover unrecouped advances under the Agreement. On November 26, 2003, Signatures moved to dismiss, stay, or in the alternative, transfer the Florida action. On December 12, 2003, the Estefan parties filed a similar motion in this Court.

The Honorable Ursula Ungaro-Benages, the district judge presiding over the Florida action, dismissed it on January 15, 2004, finding that the Estefan parties had "improperly filed" the declaratory relief action "in anticipation of a lawsuit by [Signatures] for breach of the parties' agreement."*fn2 January 15, 2004 Order Granting Defendant's Motion to Dismiss, p. 8. The Estefan defendants then elected to withdraw their motion to dismiss and proceed with this lawsuit. Defendants ultimately obtained summary judgment and now seek $256,847.00 in attorneys' fees and $12,004.90 in costs for filing the Florida action and defending this action.*fn3

One Florida and two California law firms represented defendants. Broad & Cassel, a Florida firm, has represented defendants from the inception of this dispute. Declaration of Karen Stetson in Support of Estefan Amended Motion for An Award of Attorneys' Fees and Costs ("Stetson Decl.") ¶¶1,3 Ex. A. The Los Angeles office of O'Melveny & Myers LLP represented defendants in this action from October 30, 2003 to February 2004. Declaration of Robert C. Welsh in Support of Estefan Amended Motion for An Award of Attorneys' Fees and Costs ("Welsh Decl.") ¶3. Coblentz, Patch, Duffy & Bass LLP replaced the O'Melveny firm and represented defendants in this action from February 2004 to present. Declaration of Jeffrey G. Knowles in Support of Defendants' Amended Motion for An Award of Attorneys' Fees and Costs ("Knowles Decl."), ¶3.

Under California law, the prevailing party in a contract action may recover reasonable attorneys' fees and costs where the contract so provides.*fn4 PLCM Group, Inc. v. David Drexler, 22 Cal. 4th 1084, 1099 (2000). Paragraph 15.14 of the Agreement provides:

15.14 Attorneys' Fees. If any legal action or any other proceeding is brought for the enforcement of this Agreement, or if a dispute arises under this Agreement, the successful or prevailing party shall be entitled to recover reasonable attorneys' fees and other costs incurred in that action or proceeding, in addition to any other relief to which it may be entitled.

Declaration of David M. Given in Opposition to Defendants' Motion for an Award of Attorneys' Fees and Costs ("Given Decl."), Ex. A. As defendants prevailed in the California action, they are entitled to reasonable attorneys' fees and costs.*fn5 See Cal. Civ. Code § 1717; Hsu v. Abbara, 9 Cal. 4th 863, 870 (1995)("It is now settled that a party is entitled to attorney fees under section 1717 even when the party prevails on grounds that the contract is inapplicable, invalid, unenforceable or nonexistent.") (citations omitted).

The trial court has broad authority to determine whether attorneys' fees are reasonable. PLCM Group, 22 Cal. 4th at 1095. The party requesting fees must make an adequate showing of the time expended and the rates claimed. Hensley v. Eckerhart, 461 U.S. 424, 433 (1983). In California, as in federal court, reasonable attorneys' fees are typically determined using the lodestar method. See Jordan v. Multnomah Cty., 815 F.2d 1258, 1262 (9th Cir. 1987); PLCM Group, 22 Cal. 4th at 1095. The lodestar is determined by multiplying the number of hours reasonably spent on the litigation by a reasonable hourly rate. PLCM Group, 22 Cal. 4th at 1095. The reasonable hourly rate is that prevailing in the community for similar work. Id. (citations omitted). "After the trial court has performed the calculations of the lodestar, it shall consider whether the total award so calculated under all of the circumstances of the case is more than a reasonable amount and, if so, shall reduce the section 1717 award so that it is a reasonable figure." Id. In awarding fees, the court should also consider "the nature of the litigation, its difficulty, the amount involved, the skill required in its handling, the skill employed, the attention given, the success or failure, and other circumstances in the case." Id. (quoting Melnyk v. Robledo, 64 Cal. App. 3d 618, 623-24 (1976)); see also Morales v. City of San Rafael, 96 F.3d 359, 363-64 & n.8 (9th Cir. 1996)(noting factors to be considered in awarding fees)(citing Kerr v. Screen Extra Guild, Inc., 526 F.2d 67, 70 (9th Cir. 1975)).

Prelitigation Fees

Defendants claim $15,976.89 in attorneys' fees and costs incurred prior to the filing of the Florida and California actions. Reasonable pre-litigation fees are compensable under both Ninth Circuit and California law. Frevach Land Co. v. Multonomah Cty., Dept. of Env. Svcs., 2001 WL 34039133, at *3 (D. Or. Dec. 18, 2001)(citing G & G Fire Sprinklers, Inc. v. Bradshaw, 156 F.3d 893 (9th Cir. 1998)); Stokus v. Marsh, 217 Cal. App. 3d 647, 655-56 (1990). However, "[t]he burden of establishing an entitlement to an attorneys' fee award lies solely with the claimant." Hensley, 461 U.S. at 437. Counsel must submit "detailed time records justifying the hours claimed to have been expended." Chalmers v. City of Los Angeles, 796 F.2d 1205, 1210 (9th Cir. 1986). "Where the documentation is inadequate, the district court is free to reduce an applicant's fee award accordingly." Hensley, 461 U.S. at 433.

To prove their prelitigation fees and costs, defendants have submitted the declaration of Karen Stetson, a partner at Broad & Cassel. Ms. Stetson's declaration establishes that she spent approximately thirty-five hours working on this case prior to the filing of either the Florida or California actions. Stetson Decl. ¶4, Ex. A. She practices in both federal and state court in Florida, and her customary rate of $335.00 per hour is reasonable based on her qualifications and experience. See id. at ¶4.

According to the spreadsheet, Ms. Stetson primarily spent her pre-litigation time in conferences with general counsel for defendants, telephonic and email communications with her client, and research on both factual and legal issues related to this dispute. Id., Ex. A. Three other individuals billed a small number of hours. Id., Ex. A. Thomas Rebull billed 5.7 hours at a rate of $235.00 per hour; Meredith Frank billed 5.5 hours at a rate of $210.00 per hour; and Patricia Anzalone billed 2.9 hours at $120.00 per hour. Id. The total lodestar is $14,567.50, which is less than the $15,474.00 requested by defendants for prelitigation fees.*fn6 Defendants also incurred $502.89 in prelitigation costs.

While the spreadsheet generally demonstrates that these fees were reasonably incurred, many of the entries fail to identify the subject matter of the work performed. See id. As a result, I am unable to determine whether the fees associated with these entries are reasonable.*fn7 I therefore recommend that the Court reduce the lodestar by ten percent, ...


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